As filed with the Securities and Exchange Commission on May 1, 1999
Registration No. 33-41245
811-6337
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------------
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES /X/
ACT OF 1933
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 15 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 /X/
Amendment No. 20 /X/
(Check appropriate box or boxes)
---------------------------------
ACCESSOR FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
1420 Fifth Avenue
Suite 3600
Seattle, Washington 98101
(206) 224-7420
(Address, including zip code, and telephone
number, including area code, of Principal
Executive Offices)
---------------------------------
J. ANTHONY WHATLEY III
1420 Fifth Avenue
Suite 3600
Seattle, Washington 98101
(Name and Address of Agent for Service)
---------------------------------
Copies of all communications, including all communications sent to the agent for
service, should be sent to:
PHILIP FINA
Kirkpatrick & Lockhart
One International Place
13th Floor
Boston, MA 02110
---------------------------------
Approximate date of proposed public offering: As soon as practicable after the
effective date of the registration statement. It is proposed that this filing
will become effective (check appropriate box):
/__/ immediately upon filing pursuant to paragraph (b)
/_X/ on May 1, 1999 pursuant to paragraph (b)
/__/ 60 days after filing pursuant to paragraph (a)(1)
/__/ on (date) pursuant to paragraph (a)(1)
/__/ 75 days after filing pursuant to paragraph (a)(2)
/__/ on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
/__/ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has elected, pursuant to Rule 24f-2 under the Investment Company Act
of 1940, to register an indefinite number of shares by this Registration
Statement. Registrant filed the Rule 24f-2 notice for its fiscal year ended
December 31, 1998 on March 29, 1999.
<PAGE>
[GRAPHIC] ADVISOR CLASS SHARES
ACCESSOR(R)FUNDS, INC. PROSPECTUS MAY 1, 1999
Equity Funds
GROWTH
VALUE
SMALL TO MID CAP
INTERNATIONAL EQUITY
Fixed-Income Funds
INTERMEDIATE FIXED-INCOME
SHORT-INTERMEDIATE FIXED-INCOME
MORTGAGE SECURITIES
U.S. GOVERNMENT MONEY
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this Prospectus. Any representation to
the contrary is a criminal offense.
[LOGO]ACCESSOR
<PAGE>
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THE ACCESSOR FUNDS
[Bullet] A family of eight mutual funds (each a "Fund"), each with two classes
of shares.
[Bullet] A variety of equity and fixed-income mutual funds.
[Bullet] Designed to help investors realize the benefits of asset allocation and
diversification.
[Bullet] Managed and administered by Accessor Capital Management LP ("Accessor
Capital").
[Bullet] Sub-advised by money managers ("Money Managers") who are selected and
supervised by Accessor Capital (other than the U.S. Government Money Fund which
is advised directly by Accessor Capital).
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DIVERSIFICATION is the spreading of risk among a group of investment assets.
Within a portfolio of investments, it means reducing the risk of any individual
security by holding securities from a variety of companies. In a broader
context, divesification means investing among a variety of security types to
reduce the importance of any one type or class of security.
ASSET ALLOCATION is a logical extension of the principle of diversification. It
is a method of mixing different types of investments (for example, stocks and
bonds) in an effort to enhance returns and reduce risks.
[Graphic]
DIVERSIFICATION AND ASSET ALLOCATION DO NOT, HOWEVER, GUARANTEE INVESTMENT
RESULTS.
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<PAGE>
TABLE OF CONTENTS
THE FUNDS
Fund Summaries.......................................................1
Performance..........................................................5
Equity Funds' Expenses...............................................9
Fixed-Income Funds' Expenses........................................10
Equity Funds' Objectives and Strategies.............................11
Equity Funds' Principal Securities and Risks........................13
Fixed-Income Funds' Objectives and Strategies.......................15
Fixed-Income Funds' Principal Securities and Risks..................17
Management, Organization and Capital Structure......................19
SHAREHOLDER INFORMATION
Purchasing Fund Shares..............................................27
Exchanging Fund Shares..............................................29
Redeeming Fund Shares...............................................30
Dividends and Distributions.........................................31
Valuation of Securities.............................................31
Taxation............................................................32
Financial Highlights................................................33
APPENDIX A
Description of Fund Indices.........................................41
<PAGE>
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GRAPHIC GROWTH FUND
SUMMARY
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INVESTMENT OBJECTIVE & PRINCIPLE STRATEGIES The Growth Fund seeks capital growth
through investing primarily in equity securities with greater than average
growth characteristics selected from the Standard & Poor's 500 Composite Stock
Price Index ("S&P 500").
The Fund invests primarily in stocks of companies chosen from the S&P 500 that
Geewax, Terker & Company ("Geewax Terker"), the Fund's Money Manager, believes
will experience higher than average growth of earnings or stock price. The Money
Manager attempts to exceed the performance of the S&P 500/BARRA Growth Index
over a cycle of five years.
Geewax Terker uses a disciplined investment approach and quantitative analytical
techniques designed to first select growth stocks with the largest market
capitalizations and well-established records of growth in profits and earnings,
and then eliminate those stocks with the greatest risk.
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PRINCIPAL INVESTMENT RISKS STOCK MARKET VOLATILITY. Stock markets are volatile
and can decline significantly in response to adverse issuer, political,
regulatory, market or economic developments.
COMPANY RISK. The value of an individual security or particular type of security
can be more volatile than the market as a whole and can perform differently than
the market as a whole. Growth stocks are often more sensitive to economic and
market swings than other types of stocks because market prices tend to reflect
future expectations.
FOREIGN EXPOSURE. Foreign markets can be more volatile than the U.S. market due
to increased risks of adverse issuer, political, regulatory, market or economic
developments and can perform differently than the U.S. market.
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GRAPHIC VALUE FUND*
SUMMARY
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INVESTMENT OBJECTIVE & PRINCIPLE STRATEGIES The Value Fund seeks generation of
current income and capital growth by investing primarily in income-producing
equity securities selected from the S&P 500.
The Fund's Money Manager, Martingale Asset Management ("Martingale"), analyzes
fundamental information about companies such as their assets, earnings and
growth to identify undervalued stocks. The Money Manager attempts to exceed the
total return performance of the S&P 500/BARRA Value Index over a cycle of five
years.
Martingale focuses primarily on stocks issued by:
[graphic] companies with low price to earnings and/or price to book ratios
[graphic] companies with improving growth of earnings and/or growth of
dividends
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PRINCIPAL INVESTMENT RISKS STOCK MARKET VOLATILITY. Stock markets are volatile
and can decline significantly in response to adverse issuer, political,
regulatory, market or economic developments.
COMPANY RISK. The value of an individual security or particular type of security
can be more volatile than the market as a whole and can perform differently than
the market as a whole. Value stocks tend to be issued by larger, more
established companies, and may underperform in periods of general market
strength.
Value stocks contained in the S&P 500 have generated less current income in
recent years than they have in earlier periods.
FOREIGN EXPOSURE. Foreign markets can be more volatile than the U.S. market due
to increased risks of adverse issuer, political, regulatory, market or economic
developments and can perform differently than the U.S. market.
*UNTIL MAY 1, 1999, KNOWN AS THE VALUE AND INCOME PORTFOLIO.
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AN INVESTMENT IN A FUND IS NOT A DEPOSIT OF A BANK AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY. YOU COULD LOSE MONEY BY INVESTING IN A FUND.
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<PAGE>
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GRAPHIC SMALL TO MID CAP FUND
SUMMARY
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INVESTMENT OBJECTIVE & PRINCIPLE STRATEGIES The Small to Mid Cap Fund seeks
capital growth through investing primarily in equity securities of small to
medium capitalization issuers.
The Fund invests at least 65% of its total assets in the stocks of small and
medium capitalization companies that are expected to experience higher than
average growth of earnings or stock price. Small capitalization companies have a
market capitalization of $1 billion or less, and medium capitalization companies
have a market capitalization between $1 billion and $5 billion.
Symphony Asset Management ("Symphony"), the Fund's Money Manager, uses a
quantitative approach to analyze earnings forecasts, price movements and other
factors to identify growth stocks with attractive fundamentals relative to
price. The Money Manager attempts to exceed the performance of the Wilshire 4500
Index over a cycle of five years.
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PRINCIPAL INVESTMENT RISKS STOCK MARKET VOLATILITY. Stock markets are volatile
and can decline significantly in response to adverse issuer, political,
regulatory, market or economic developments.
COMPANY RISK. The value of an individual security or particular type of security
can be more volatile than the market as a whole and can perform differently than
the value of the market as a whole. Small and medium capitalization companies
often have greater volatility, lower trading volume and less liquidity than
larger capitalization companies.
FOREIGN EXPOSURE. Foreign markets can be more volatile than the U.S. market due
to increased risks of adverse issuer, political, regulatory, market or economic
developments and can perform differently than the U.S. market.
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GRAPHIC INTERNATIONAL EQUITY FUND
SUMMARY
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INVESTMENT OBJECTIVE & PRINCIPLE STRATEGIES The International Equity Fund seeks
capital growth by investing primarily in equity securities of companies
domiciled in countries other than the United States and traded on foreign stock
exchanges.
The Fund will invest at least 65% of its total assets in the stocks of companies
domiciled in Europe and the Pacific Rim. The Fund normally intends to maintain
investments in at least three different countries outside the United States.
Nicholas-Applegate Capital Management ("Nicholas-Applegate"), the Fund's Money
Manager, uses quantitative and fundamental analysis to seek companies that are
industry leaders in the process of positive change to construct a portfolio that
generally parallels the countries comprising the Morgan Stanley Capital
International ("MSCI") EAFE + EMF Index. The Money Manager attempts to exceed
the total return of MSCI EAFE + EMF Index.
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PRINCIPAL INVESTMENT RISKS STOCK MARKET VOLATILITY. Stock markets are volatile
and can decline significantly in response to adverse issuer, political,
regulatory, market or economic developments.
COMPANY RISK. The value of an individual security or particular type of security
can be more volatile than the market as a whole and can perform differently than
the value of the market as a whole.
FOREIGN EXPOSURE. Foreign markets, particularly emerging markets, can be more
volatile than the U.S. market due to increased risks of adverse issuer,
political, regulatory, market or economic developments and can perform
differently than the U.S. market.
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AN INVESTMENT IN A FUND IS NOT A DEPOSIT OF A BANK AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY. YOU COULD LOSE MONEY BY INVESTING IN A FUND.
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<PAGE>
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GRAPHIC INTERMEDIATE FIXED-INCOME FUND
SUMMARY
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INVESTMENT OBJECTIVE & PRINCIPLE STRATEGIES The Intermediate Fixed-Income Fund
seeks generation of current income by investing primarily in fixed-income
securities with durations of between three and ten years and a dollar-weighted
average portfolio duration that does not vary more or less than 20% from that of
the Lehman Brothers Government/Corporate Index (the "LBGC Index").
Cypress Asset Management ("Cypress"), the Fund's Money Manager uses quantitative
analyses and risk control methods to ensure that the Fund's overall risk and
duration characteristics are consistent with the LBGC Index. Cypress seeks to
enhance returns by systematically overweighting its investments in the corporate
sector as compared to the index.
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PRINCIPAL INVESTMENT RISKS INTEREST RATE RISK. Increases in interest rates can
cause the price of a debt security to decrease.
ISSUER RISK. Changes in the financial condition of an issuer, changes in
specific economic or political conditions that affect a particular issuer, and
changes in general economic or political conditions can adversely affect the
credit quality or value of an issuer's securities.
================================================================================
HELP BOX: DURATION. Duration, one of the fundamental tools used by money
managers in security selection, is a measure of the price sensitivity of a debt
security or a portfolio of debt securities to relative changes in interest
rates. For instance, a duration of "one" means that a portfolio's or security's
price would be expected to change by approximately 1% with a 1% change in
interest rates.
================================================================================
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GRAPHIC SHORT-INTERMEDIATE FIXED-INCOME FUND
SUMMARY
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INVESTMENT OBJECTIVE & PRINCIPLE STRATEGIES The Short-Intermediate Fixed-Income
Fund seeks preservation of capital and generation of current income by investing
primarily in fixed-income securities with durations of between one and five
years and a dollar-weighted average portfolio duration that does not vary more
or less than 20% from that of the Lehman Brothers Government/Corporate 1-5 Year
Index (the "LBGC1-5 Index").
Cypress, the Fund's Money Manager, uses quantitative analyses and risk control
methods to ensure that the Fund's overall risk and duration characteristics are
consistent with the LBGC1-5 Index. Cypress seeks to enhance the Fund's returns
by systematically overweighting its investment in the corporate sector as
compared to the index.
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PRINCIPAL INVESTMENT RISKS INTEREST RATE RISK. Increases in interest rates can
cause the price of a debt security to decrease.
ISSUER RISK. Changes in the financial condition of an issuer, changes in
specific economic or political conditions that affect a particular issuer, and
changes in general economic or political conditions can adversely affect the
credit quality or value of an issuer's securities.
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AN INVESTMENT IN A FUND IS NOT A DEPOSIT OF A BANK AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY. YOU COULD LOSE MONEY BY INVESTING IN A FUND.
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<PAGE>
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GRAPHIC MORTGAGE SECURITIES FUND
SUMMARY
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INVESTMENT OBJECTIVE & PRINCIPLE STRATEGIES The Mortgage Securities Fund seeks
generation of current income by investing primarily in mortgage-related
securities with an aggregate dollar-weighted average portfolio duration that
does not vary outside of a band of plus or minus 20% from that of the Lehman
Brothers Mortgage-Backed Securities Index (the "LBM Index").
BlackRock Financial Management, Inc. ("BlackRock"), the Fund's Money Manager,
uses quantitative risk control methods to ensure that the Fund's overall risk
and duration characteristics are consistent with the LBM Index. BlackRock's
investment philosophy and process centers around four key principles: [bullet]
controlled duration; [bullet] relative value sector rotation and security
selection; [bullet] rigorous quantitative analysis to security valuation; and
[bullet] quality credit analysis.
BlackRock's Investment Strategy Committee determines the firm's broad investment
strategy based on macroeconomics and market trends, as well as input from Risk
Management and Credit Committee professionals. Fund managers then implement this
strategy by selecting the sectors and securities which offer the greatest
relative value within investment guidelines.
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PRINCIPAL INVESTMENT RISKS INTEREST RATE RISK. Increases in interest rates can
cause the price of a debt security to decrease.
PREPAYMENT RISK. The ability of an issuer of a debt security to repay principal
prior to a security's maturity can cause greater price volatility if interest
rates change.
ISSUER RISKS. Changes in the financial conditions of an issuer, changes in
specific economic or political conditions that affect a particular issuer, and
changes in general economic or political conditions can adversely affect the
credit quality or value of an issuer's securities.
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GRAPHIC U.S. GOVERNMENT MONEY FUND
SUMMARY
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INVESTMENT OBJECTIVE & PRINCIPLE STRATEGIES The U.S. Government Money Fund seeks
maximum current income consistent with the preservation of principal and
liquidity by investing primarily in short-term obligations issued or guaranteed
by the U.S. Government, its agencies or instrumentalities.
Accessor Capital directly invests the assets of the Fund. Accessor Capital uses
quantitative analysis to maximize the Fund's yield. The Fund follows industry
standard requirements concerning the quality, maturity and diversification of
its investments. The Fund seeks to maintain an average maturity of 90 days or
less, while maintaining liquidity and maximizing current yield.
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PRINCIPAL INVESTMENT RISKS INTEREST RATE RISK. The Fund's yield will vary and is
expected to react to changes in short-term interest rates.
INFLATION RISK. Over time, the real value of the Fund's yield may be eroded by
inflation.
STABLE NET ASSET VALUE. Although the U.S. Government Money 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.
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AN INVESTMENT IN A FUND IS NOT A DEPOSIT OF A BANK AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY. YOU COULD LOSE MONEY BY INVESTING IN A FUND.
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<PAGE>
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PERFORMANCE
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The following tables illustrate changes (and therefore, the risk elements) in
the performance of Advisor Class Shares of the Funds from year to year and
compare the performance of Advisor Class Shares to the performance of a market
index over time. As with all mutual funds, how the Funds have performed in the
past is not an indication of how they will perform in the future.
GROWTH FUND
- -----------
[Bar Chart] Year-by-Year Average Annual Total Return
Total Return As of 12/31/98
[Data Points] Life of
1 Yr 5 Yr Fund*
1993 14.21 ---- ---- -------
1994 3.99 Fund 46.65% 26.74% 24.90%
1995 34.32 S&P 500/BARRA 42.16 27.94 23.19**
1996 19.83 Growth Index(1)
1997 33.24 *8/24/92 inception date
1998 46.65 **Index measured from 9/1/92
As of 12/31 each year
Best Quarter Q4 `98 27.65%
Worst Quarter Q3 `98 -7.07%
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(1) THE S&P 500/BARRA GROWTH INDEX IS AN UNMANAGED INDEX OF GROWTH STOCKS IN THE
S&P 500. THE S&P 500 IS AN UNMANAGED INDEX OF 500 COMMON STOCKS CHOSEN TO
REFLECT THE INDUSTRIES IN THE U.S. ECONOMY. LARGE CAPITALIZATION GROWTH STOCKS
ARE THE STOCKS WITHIN THE S&P 500 THAT GENERALLY HAVE HIGH EXPECTED EARNINGS
GROWTH AND HIGHER THAN AVERAGE PRICE-TO-BOOK RATIOS.
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VALUE FUND
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[BAR CHART] Year-by-Year Average Annual Total Return
Total Return AS OF 12/31/98
[Data Points]
Life of
1993 14.69 1 Yr 5 Yr Fund*
1994 -1.93 ---- ---- -----
1995 33.25 Fund 12.89% 19.44% 18.57%
1996 23.94 S&P500/BARRA 14.67 19.87 19.42**
1997 32.94 Value Index(1)
1998 12.89 *8/24/92 inception date
As of 12/31 each year **Index measured from 9/1/92
Best Quarter Q4 `98 18.96%
Worst Quarter Q3 `98 -15.24%
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(1)THE S&P 500/BARRA VALUE INDEX IS AN UNMANAGED INDEX OF VALUE STOCKS IN THE
S&P 500. LARGE CAPITALIZATION VALUE STOCKS ARE THE STOCKS WITHIN THE S&P 500
THAT GENERALLY ARE PRICED BELOW THE MARKET AVERAGE BASED ON EARNINGS AND LOWER
THAN AVERAGE PRICE-TO-BOOK RATIOS.
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<PAGE>
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PERFORMANCE
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SMALL TO MID CAP FUND
- ---------------------
[Bar Chart] Year-by-Year Life of
Total Return 1 Yr 5 Yr Fund*
------------ ---- ---- -----
[Data Points] Fund 15.98% 20.07% 20.28%
Wilsire 4500
1993 14.39 Index(1) 8.63 15.76 17.01**
1994 -4.07 Small to Mid
1995 31.98 Cap Composite
1996 24.85 Index(2) 8.63 15.61 17.87**
1997 36.14
1998 15.98 *8/24/92 inception date
**Index measured from 9/1/92
As of 12/31 each year
Best Quarter Q4 `98 24.23%
Average Annual Total Return Worst Quarter Q3 `98 - 18.56%
As of 12/31/98
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(1)THE WILSHIRE 4500 INDEX IS AN UNMANAGED INDEX OF STOCKS OF MEDIUM AND SMALL
CAPITALIZATION COMPANIES NOT IN THE S&P 500.
(2) THE SMALL TO MID CAP COMPOSITE INDEX IS A HYPOTHETICAL INDEX CONSTRUCTED BY
ACCESSOR CAPITAL, WHICH COMBINES THE BARRA INSTITUTIONAL SMALL INDEX AND THE
WILSHIRE 4500 INDEX. THE COMPOSITE IS INTENDED TO PROVIDE A BENCHMARK FOR
COMPARISON THAT REFLECTS THE DIFFERENT INVESTMENT POLICIES THAT THE FUND HAS
FOLLOWED IN THE PAST. IN AUGUST 1995, SHAREHOLDERS APPROVED CHANGES TO THE
FUND'S INVESTMENT POLICIES TO CHANGE THE FUND FROM A SMALL CAP FUND TO A SMALL
TO MEDIUM CAP FUND. ACCORDINGLY, PRIOR TO OCTOBER 1995, THE BARRA INDEX IS USED.
STARTING OCTOBER 1995, THE WILSHIRE INDEX IS USED.
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INTERNATIONAL EQUITY FUND
- -------------------------
[Bar Chart] Year-by-Year Average Annual Total Return
Total Return As of 12/31/98
1995 7.63 Life of
1996 13.78 1 Yr Fund*
1997 10.96 ---- -----
1998 16.07 Fund 16.07% 10.60%
As of 12/31 each year MSCI EAFE + EMF Index(1) 15.23 5.95**
International Composite 15.23 6.94**
Index(2)
*10/3/94 inception date
**Index measured from 11/1/94
Best Quarter Q4 `98 14.45%
Worst Quarter Q3 `98 -13.36%
- -----------------------------------------------------------
(1)THE MSCI EAFE + EMF INDEX IS AN UNMANAGED INDEX OF 45 DEVELOPED (EXCLUDING
THE UNITED STATES) AND EMERGING MARKET COUNTRIES, INCLUDING JAPAN, THE UNITED
KINGDOM, GERMANY AND FRANCE.
(2) THE INTERNATIONAL COMPOSITE INDEX IS A HYPOTHETICAL INDEX CONSTRUCTED BY
ACCESSOR CAPITAL, WHICH COMBINES THE MSCI EAFE INDEX AND THE MSCI EAFE+EMF
INDEX. THE COMPOSITE IS INTENDED TO PROVIDE A BENCHMARK FOR COMPARISON THAT
REFLECTS THE DIFFERENT INVESTMENT POLICIES THAT THE FUND HAS FOLLOWED IN THE
PAST. PRIOR TO MAY 1996, THE FUND DID NOT INVEST IN EMERGING MARKET SECURITIES.
BEGINNING IN MAY 1996, THE FUND WAS PERMITTED TO DO SO. ACCORDINGLY, PRIOR TO
MAY 1996, THE MSCI EAFE INDEX IS USED. STARTING IN MAY 1996, THE MSCI EAFE+EMF
INDEX IS USED.
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<PAGE>
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PERFORMANCE
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INTERMEDIATE FIXED-INCOME FUND
- ------------------------------
[Bar Chart] Year-by-Year Average Annual Total Return
Total Return As of 12/31/98
[Data Points] Life of
1 Yr 5 Yr Fund*
1993 9.53 ---- ---- -----
1994 -5.24 Fund
1995 18.26 8.38% 6.23% 6.87%
1996 2.56 Lehman Govt/
1997 8.62 Corp Index(1) 9.47 7.30 7.84**
1998 8.38 *6/15/92 inception date
**Index measured from 7/1/92
As of 12/31 each year
Best Quarter Q2 `95 6.13%
Worst Quarter Q1 `94 - 3.53%
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(1)THE LEHMAN BROTHERS GOVERNMENT/CORPORATE INDEX IS AN UNMANAGED INDEX OF
FIXED-RATE GOVERNMENT AND CORPORATE BONDS RATED INVESTMENT GRADE OR HIGHER.
- --------------------------------------------------------------------------------
SHORT-INTERMEDIATE FIXED-INCOME FUND
- ------------------------------------
[Bar Chart] Year-by-Year Average Annual Total Return
Total Return As of 12/31/98
[Data Points] Life of
1993 5.63 1 Yr 5 Yr Fund*
1994 -1.42 ---- ---- -----
1995 11.42 Fund 6.87% 5.28% 5.46%
1996 3.63 Lehman Govt/
1997 6.33 Corp1-5 Index(1) 7.64 6.23 6.57**
1998 6.87 * 5/18/92 inception date
**Index measured from 6/1/92
As of 12/31 each year
Best Quarter Q1 `95 3.58%
Worst Quarter Q1 '94 -1.34%
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(1)THE LEHMAN BROTHERS GOVERNMENT/CORPORATE 1-5 YEAR INDEX IS AN UNMANAGED INDEX
OF FIXED-RATE GOVERNMENT AND CORPORATE BONDS RATED INVESTMENT GRADE OR HIGHER,
ALL WITH MATURITIES OF ONE TO FIVE YEARS.
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<PAGE>
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PERFORMANCE
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MORTGAGE SECURITIES FUND
- ------------------------
[Bar Chart] Year-by-Year Average Annual Total Return
Total Return As of 12/31/98
[Data Points] Life of
1 Yr 5 Yrs Fund*
1993 7.26 ---- ----- -----
1994 -1.65 Fund 6.43% 6.90% 6.91%
1995 16.03 Lehman Mortgage-Backed
1996 4.95 Securities Index(1) 6.97% 7.23% 7.30%**
1997 9.53 *5/18/92 inception date
1998 6.43 **Index measured from 6/1/92
As of 12/31 each year Best Quarter Q1 '95 5.11%
Worst Quarter Q1 '94 -1.21%
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(1)THE LEHMAN BROTHERS MORTGAGE-BACKED SECURITIES INDEX IS AN UNMANAGED INDEX OF
FIXED-RATE SECURITIES BACKED BY MORTGAGE POOLS OF THE GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION ("GNMA"), FEDERAL HOME LOAN MORTGAGE CORPORATIONS ("FHLMC")
AND FEDERAL NATIONAL MORTGAGE ASSOCIATION ("FNMA").
- --------------------------------------------------------------------------------
U.S. GOVERNMENT MONEY FUND
- --------------------------
[Bar Chart] Year-by-Year Average Annual Total Return
Total Return As of 12/31/98
[Data Points] Life of
1 Yr 5 Yr Fund*
1993 2.81 ---- ---- -----
1994 3.70 Fund 5.00% 4.77% 4.32%
1995 5.33 Salomon Brothers
1996 4.78 U.S. 3 Mo.
1997 5.07 T-bill Index 5.11% 5.11% 4.65%**
1998 5.00 * 4/9/92 inception date
As of 12/31 each year **Index measured from 5/1/92
Best Quarter Q2 '95 1.37%
Worst Quarter Q2 '93 0.60%
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(1) THE SALOMON BROTHERS INDEX IS DESIGNED TO MEASURE THE RETURN OF THE 3 MONTH
TREASURY BILLS.
THE U.S. GOVERNMENT MONEY FUND'S 7-DAY EFFECTIVE YIELD ON 12/31/98 WAS 4.58%.
FOR THE FUND'S CURRENT YIELD, CALL TOLL-FREE (800) 759-3504.
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<PAGE>
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EQUITY FUNDS' EXPENSES
- --------------------------------------------------------------------------------
The following tables describe the fees and expenses that you may pay if you buy
and hold Advisor Class Shares of the Equity Funds.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
GROWTH VALUE SMALL TO MID INTL EQUITY
CAP
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SHAREHOLDER FEES (1) (2)
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge imposed on Purchases (as a none none none none
percent of offering price)
Maximum Sales Charge imposed on Reinvested none none none none
Dividends
Maximum Deferred Sales Charge none none none none
Redemption Fee (3) none none none none
- ----------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management Fees (4) 0.77% 0.77% 1.02% 1.15%
Distribution & Shareholder Service Fees None None None None
Other Expenses 0.27% 0.29% 0.25% 0.44%
---- ---- ---- ----
Total Annual Fund Operating Expenses 1.04 1.06 1.27 1.59
==== ==== ==== ====
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</TABLE>
- ----------
(1) SHARES OF THE FUNDS ARE EXPECTED TO BE SOLD PRIMARILY THROUGH FINANCIAL
INTERMEDIARIES THAT MAY CHARGE SHAREHOLDERS A FEE. THESE FEES ARE NOT
INCLUDED IN THE TABLES.
(2) AN ANNUAL MAINTENANCE FEE OF $25.00 MAY BE CHARGED BY ACCESSOR CAPITAL, AS
THE TRANSFER AGENT ("TRANSFER AGENT") TO EACH IRA WITH AN AGGREGATE BALANCE
OF LESS THAN $10,000 ON DECEMBER 31 OF EACH YEAR.
(3) THE TRANSFER AGENT MAY CHARGE A PROCESSING FEE OF $10.00 FOR EACH CHECK
REDEMPTION REQUEST.
(4) MANAGEMENT FEES CONSIST OF THE MANAGEMENT FEE PAID TO ACCESSOR CAPITAL AND
THE FEES PAID TO THE MONEY MANAGERS OF THE FUNDS.
EXPENSE EXAMPLE
- ---------------
The Example shows what an investor in Advisor Class Shares of a Fund could pay
over time. It is intended to help you compare the cost of investing in the Funds
with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in Advisor Class Shares of a
Fund for the time periods indicated and then redeem all of your shares by
wire at the end of those periods. This Example does not include the effect
of the $10 fee for check redemption requests. The Example also assumes that
your investment has a 5% rate of return each year and that the Fund's
operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
================================================================================
One Year Three Years Five Years 10 Years
GROWTH $106.00 $331.00 $574.00 $1,271.00
VALUE 108.00 337.00 585.00 1,294.00
SMALL TO MID CAP 129.00 403.00 697.00 1,534.00
INTERNATIONAL EQUITY 162.00 502.00 866.00 1,889.00
================================================================================
<PAGE>
- --------------------------------------------------------------------------------
FIXED-INCOME FUNDS' EXPENSES
- --------------------------------------------------------------------------------
The following tables describe the fees and expenses that you may pay if you buy
and hold Advisor Class Shares of the Fixed-Income Funds.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Intermediate Short-Int Mortgage U.S. Govt
Fixed Fixed Securities Money
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SHAREHOLDER FEES(1)
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge imposed on Purchases
(as a percent of offering price) none none none none
Maximum Sales Charge imposed on
Reinvested Dividends none none none none
Maximum Deferred Sales Charge none none none none
Check Redemption Fee (3) none none none none
- -----------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses
(expenses that are deducted from Fund
assets)
Management Fees (4) 0.40% 0.40% 0.59% 0.25%
Distribution & Shareholder Service Fees None None None None
Other Expenses 0.33 0.35 0.29 0.28
---- ---- ---- ----
Total Annual Fund Operating Expenses 0.73 0.75 0.88 0.53
==== ==== ==== ====
- -----------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
(1) SHARES OF THE FUNDS ARE EXPECTED TO BE SOLD PRIMARILY THROUGH FINANCIAL
INTERMEDIARIES THAT MAY CHARGE SHAREHOLDERS A FEE. THESE FEES ARE NOT
INCLUDED IN THE TABLES.
(2) AN ANNUAL MAINTENANCE FEE OF $25.00 MAY BE CHARGED BY ACCESSOR CAPITAL, AS
THE TRANSFER AGENT ("TRANSFER AGENT") TO EACH IRA WITH AN AGGREGATE BALANCE
OF LESS THAN $10,000 ON DECEMBER 31 OF EACH YEAR.
(3) THE TRANSFER AGENT MAY CHARGE A PROCESSING FEE OF $10.00 FOR EACH CHECK
REDEMPTION REQUEST.
(4) MANAGEMENT FEES CONSIST OF THE MANAGEMENT FEE PAID TO ACCESSOR CAPITAL AND
THE FEES PAID TO THE MONEY MANAGERS OF THE FUNDS. ACCESSOR CAPITAL RECEIVES
ONLY THE MANAGEMENT FEE AND NOT A MONEY MANAGER FEE FOR THE U. S.
GOVERNMENT MONEY FUND THAT IT MANAGES DIRECTLY.
EXPENSE EXAMPLE
- ---------------
The Example shows what an investor in Advisor Class Shares of a Fund could pay
over time. It is intended to help you compare the cost of investing in the Funds
with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in Advisor Class Shares of a
Fund for the time periods indicated and then redeem all of your shares by
wire at the end of those periods. This Example does not include the effect
of the $10 fee for check redemption requests. The Example also assumes that
your investment has a 5% rate of return each year and that the Fund's
operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
================================================================================
One Year Three Years Five Years 10 Years
INTERMEDIATE FIXED-INCOME $75.00 $233.00 $406.00 $906.00
SHORT-INTERMEDIATE FIXED-INCOME 77.00 240.00 417.00 930.00
MORTGAGE SECURITIES 90.00 281.00 488.00 1,084.00
U.S. GOVERNMENT MONEY 54.00 170.00 296.00 665.00
================================================================================
<PAGE>
- --------------------------------------------------------------------------------
EQUITY FUNDS' OBJECTIVES AND STRATEGIES
- --------------------------------------------------------------------------------
GROWTH FUND
- -----------
INVESTMENT OBJECTIVE The Growth Fund seeks capital growth through investing
primarily in equity securities with greater than average growth characteristics
selected from the S&P 500.
- --------------------------------------------------------------------------------
INVESTMENT STRATEGY The Fund seeks to achieve its objective by investing
principally in common and preferred stocks, securities convertible into common
stocks, and rights and warrants of such issuers. The Money Manager will attempt
to exceed the total return performance of the S&P 500/BARRA Growth Index over a
market cycle of five years by investing primarily in stocks of companies that
are expected to experience higher than average growth of earnings or growth of
stock price. Under normal circumstances, up to 20% of the Fund's net assets may
be invested in common stocks of foreign issuers with large market
capitalizations whose securities have greater than average growth
characteristics. The Fund may engage in various portfolio strategies to reduce
certain risks of its investments and may thereby enhance income, but not for
speculation.
- --------------------------------------------------------------------------------
VALUE FUND
- ----------
INVESTMENT OBJECTIVE The Value Fund seeks generation of current income and
capital growth by investing primarily in income-producing equity securities
selected from the S&P 500.
- --------------------------------------------------------------------------------
INVESTMENT STRATEGY The Fund seeks to achieve its objective by investing
principally in common and preferred stocks, convertible securities, and rights
and warrants of companies whose stocks have lower price multiples (either
price/earnings or price/book value) than others in their industries, or which,
in the opinion of the Money Manager, have improving fundamentals (such as growth
of earnings and dividends). The Money Manager will attempt to exceed the total
return performance of the S&P 500/BARRA Value Index over a market cycle of five
years. Under normal circumstances, up to 20% of the Fund's net assets may be
invested in income producing equity securities of foreign issuers with large
market capitalizations. The Fund may engage in various portfolio strategies to
reduce certain risks of its investments and to enhance income, but not for
speculation.
Value stocks contained in the S&P 500 have generated less current income in
recent years than they have in earlier periods.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
EQUITY FUNDS' OBJECTIVES AND STRATEGIES
- --------------------------------------------------------------------------------
SMALL TO MID CAP FUND
- ---------------------
INVESTMENT OBJECTIVE The Small to Mid Cap Fund seeks capital growth through
investing primarily in equity securities of small to medium capitalization
issuers.
- --------------------------------------------------------------------------------
INVESTMENT STRATEGY The Fund seeks to achieve its objective by investing at
least 65% of the value of its total assets in stocks of small and medium
capitalization issuers. Small capitalization issuers are issuers that have a
capitalization of $1 billion or less at the time of investment whereas medium
capitalization issuers have a capitalization ranging from $1 billion to $5
billion at the time of investment. The Fund invests principally in common and
preferred stocks, securities convertible into common stocks, and rights and
warrants of such issuers. The Money Manager will attempt to exceed the total
return performance of the Wilshire 4500 Index over a market cycle of five years
by investing primarily in stocks of companies that are expected to experience
higher than average growth of earnings or growth of stock price. Under normal
circumstances, up to 20% of the Fund's net assets may be invested in common
stocks of foreign issuers with small to medium market capitalizations. The Fund
may engage in various portfolio strategies to reduce certain risks of its
investments and may thereby enhance income, but not for speculation.
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
- -------------------------
INVESTMENT OBJECTIVE The International Equity Fund seeks capital growth by
investing primarily in equity securities of companies domiciled in countries
other than the United States and traded on foreign stock exchanges.
- --------------------------------------------------------------------------------
INVESTMENT STRATEGY The Fund seeks to achieve its objective by investing at
least 65% of its total assets principally in stocks issued by companies
domiciled in Europe (including Austria, Belgium, Denmark, Finland, France,
Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Spain, Sweden,
Switzerland and the United Kingdom) and the Pacific Rim (including Australia,
Hong Kong, Japan, New Zealand and Singapore). The Fund may also invest in
securities of countries generally considered to be emerging or developing
countries by the World Bank, the International Finance Corporation, the United
Nations or its authorities ("Emerging Countries"). The Fund intends to maintain
investments in at least three different countries outside the United States. The
Fund may invest up to 20% of its net assets in fixed-income securities,
including instruments issued by foreign governments and their agencies, and in
securities of U.S. companies that derive, or are expected to derive, a
significant portion of their revenues from their foreign operations. The Money
Manager will attempt to exceed the net yield (after withholding taxes) of the
MSCI EAFE + EMF Index.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
EQUITY FUNDS' PRINCIPAL SECURITIES AND RISKS
- --------------------------------------------------------------------------------
Many factors affect each Fund's performance. A Fund's share price changes daily
based on changes in financial markets and interest rates and in response to
other economic, political or financial developments. A Fund's reaction to these
developments will be affected by the financial condition, industry and economic
sector, and geographic location of an issuer, and the Fund's level of investment
in the securities of that issuer. When you sell your shares of a Fund, they
could be worth more or less than what you paid for them.
In response to market, economic, political or other conditions, each Fund's
Money Manager may temporarily use a different investment strategy for defensive
purposes. If a Money Manager does so, different factors could affect a Fund's
performance and the Fund may not achieve its investment objective.
Each Fund is actively managed. Frequent trading of portfolio securities will
result in increased expenses for the Funds and may result in increased taxable
distributions to shareholders.
Each Fund's investment objective stated in the Equity Funds' Objectives and
Strategies section is fundamental and may not be changed without shareholder
approval.
PRINCIPAL SECURITY TYPES
[Graphic] EQUITY SECURITIES represent an ownership interest, or the right to
acquire an ownership interest, in an issuer. Different types of equity
securities provide different voting and dividend rights and priority in the
event of the bankruptcy of the issuer. Equity securities include common stocks,
preferred stocks, convertible securities and warrants.
PRINCIPAL RISKS
[GRAPHIC] STOCK MARKET VOLATILITY. Stock values fluctuate in response to issuer,
political, market and economic developments. In the short term, stock prices can
fluctuate dramatically in response to these developments.
[GRAPHIC] SECTOR RISK. Different parts of the market can react differently to
these developments. For example, large cap stocks can react differently than
small cap stocks, and "growth" stocks can react differently than "value" stocks.
Issuer, political or economic developments can affect a single issuer, issuers
within an industry or economic sector or geographic region, or the market as a
whole.
[GRAPHIC] COMPANY RISK. Changes in the financial condition of an issuer, changes
in specific economic or political conditions that affect a particular type of
issuer, and changes in general economic or political conditions can affect the
credit quality or value of an issuer's securities. The value of securities of
smaller capitalization issuers can be more volatile than that of larger issuers.
- --------------------------------------------------------------------------------
HELP BOX:
Like other mutual funds, the Funds could be adversely affected by
problems associated with the conversion of European currencies into the Euro and
the ability of computers to recognize the year 2000. In addition, it is possible
that the markets and securities, particularly the securities of emerging market
issuers in which the Funds invest, may be detrimentally affected.
[GRAPHIC]
Accessor Capital, as the manager, administrator and Transfer Agent of Accessor
Funds, has taken charge of ensuring that both Accessor Funds and Accessor
Capital will be able to effectively operate on January 1, 2000. Accessor Capital
has inventoried all computer systems, both hardware and software, and has sought
certification as to their readiness from all critical third-party vendors.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
EQUITY FUNDS' PRINCIPAL SECURITIES AND RISKS
- --------------------------------------------------------------------------------
[GRAPHIC] FOREIGN EXPOSURE. Foreign securities, foreign currencies and
securities issued by U.S. entities with substantial foreign operations can
involve additional risks relating to political, economic or regulatory
conditions in foreign countries. These risks include fluctuations in foreign
currencies; withholding or other taxes; trading, settlement, custodial and other
operational risks; and the less stringent investor protection and disclosure
standards of some foreign markets.
Investing in emerging markets involves risks in addition to and greater than
those generally associated with investing in more developed foreign markets. The
extent of foreign development, political stability, market depth, infrastructure
and capitalization and regulatory oversight are generally less than in more
developed markets. Emerging market economies can be subject to greater social,
economic regulatory and political uncertainties. All of these factors can make
foreign investments, especially those in emerging markets, more volatile and
potentially less liquid than U.S. investments. In addition, foreign markets can
perform differently than the U.S. market.
[GRAPHIC] INTEREST RATE CHANGES. The stock market is dependent on general
economic conditions. Changes in interest rates can affect the performance of the
stock market.
<PAGE>
- --------------------------------------------------------------------------------
FIXED-INCOME FUNDS' OBJECTIVES AND STRATEGIES
- --------------------------------------------------------------------------------
INTERMEDIATE FIXED-INCOME FUND
- ------------------------------
INVESTMENT OBJECTIVE The Intermediate Fixed-Income Fund seeks generation of
current income by investing primarily in fixed-income securities with durations
of between three and ten years and a dollar-weighted average portfolio duration
that does not vary more or less than 20% from that of the Lehman Brothers
Government/Corporate Index (the "LBGC Index") or another relevant index approved
by the Board of Directors.
- --------------------------------------------------------------------------------
INVESTMENT STRATEGY The Fund seeks to achieve its objective by investing at
least 65% and generally more than 80% of its total assets in fixed-income
securities and will have a dollar-weighted average duration of between three and
ten years. The Fund invests principally in debt securities with durations of
between three and ten years and rated A or higher by Standard & Poor's ("S&P")
or Moody's Investors Services, Inc. ("Moody's") or determined to be of
equivalent quality by the Money Manager or Accessor Capital at the time of
purchase. The Fund may invest in the following debt securities: 1) corporate
bonds, 2) U.S. government and agency bonds, and 3) mortgage and asset backed
securities.
Investment selections will be based on fundamental economic, market and other
factors leading to variation by sector, maturity, quality and other criteria
appropriate to meet the Fund's objective. The Money Manager will attempt to
exceed the total return performance of the LBGC Index. The Money Manager will
also seek to enhance returns through the use of certain trading strategies such
as purchasing odd lot securities. The Fund may utilize options on U.S.
Government securities, interest rate futures contracts and options on interest
rate futures contracts to reduce certain risks of its investments and to attempt
to enhance income, but not for speculation.
- --------------------------------------------------------------------------------
SHORT-INTERMEDIATE FIXED-INCOME FUND
- ------------------------------------
INVESTMENT OBJECTIVE The Short-Intermediate Fixed-Income Fund seeks preservation
of capital and generation of current income by investing primarily in
fixed-income securities with durations of between one and five years and a
dollar-weighted average portfolio duration that does not vary more or less than
20% from that of the Lehman Brothers Government/Corporate 1-5 Year Index (the
"LBGC 1-5 Index") or another relevant index approved by the Board of Directors.
- --------------------------------------------------------------------------------
INVESTMENT STRATEGY The Fund seeks to achieve its objective by investing at
least 65% and generally more than 80% of its total assets in fixed-income
securities and will have a dollar-weighted average duration of not less than two
years nor more than five years. The Fund invests principally in fixed-income
securities with durations between one and five years and rated A or higher by
S&P or Moody's or determined to be of equivalent quality by the Money Manager or
Accessor Capital at the time of purchase. The Fund may invest in the following
debt securities: 1) corporate bonds, 2) U.S. government and agency bonds, and 3)
mortgage and asset backed securities.
Investment selections will be based on fundamental economic, market and other
factors leading to variation by sector, maturity, quality and other criteria
appropriate to meet the Fund's objective. The Money Manager will attempt to
exceed the total return performance of the LBGC 1-5 Year Index. The Money
Manager will also seek to enhance returns through the use of certain trading
strategies such as purchasing odd lot securities. The Fund may utilize options
on U.S. Government securities, interest rate futures contracts and options on
interest rate futures contracts to reduce certain risks of its investments and
to attempt to enhance income, but not for speculation.
<PAGE>
- --------------------------------------------------------------------------------
FIXED-INCOME FUNDS' OBJECTIVES AND STRATEGIES
- --------------------------------------------------------------------------------
MORTGAGE SECURITIES FUND
- ------------------------
INVESTMENT OBJECTIVE The Mortgage Securities Fund seeks generation of current
income by investing primarily in mortgage-related securities with an aggregate
dollar-weighted average portfolio duration that does not vary outside of a band
of plus or minus 20% from that of the Lehman Brothers Mortgage-Backed Securities
Index (the "LBM Index") or another relevant index approved by the Board of
Directors.
- --------------------------------------------------------------------------------
INVESTMENT STRATEGY The Fund seeks to achieve its objective by investing at
least 65% and generally more than 80% of its total assets in mortgage related
securities. The Fund invests principally in mortgage related securities issued
or guaranteed by the U.S. Government, its agencies or instrumentalities, and
will only invest in non-U.S. Government mortgage related securities rated A or
higher by S&P or Moody's or determined to be of equivalent quality by the Money
Manager or Accessor Capital at the time of purchase.
Investment selections will be based on fundamental economic, market and other
factors leading to variation by sector, maturity, quality and such other
criteria appropriate to meet the Fund's objective. The Money Manager will
attempt to exceed the total return performance of the LBM Index. The Fund may
utilize options on U.S. Government securities, interest rate futures contracts
and options on interest rate futures contracts to reduce certain risks of its
investments and to attempt to enhance income, but not for speculation.
- --------------------------------------------------------------------------------
U.S. GOVERNMENT MONEY FUND
- --------------------------
INVESTMENT OBJECTIVE The U.S. Government Money Fund seeks maximum current income
consistent with the preservation of principal and liquidity by investing
primarily in short-term obligations issued or guaranteed by the U.S. Government,
its agencies or instrumentalities.
- --------------------------------------------------------------------------------
INVESTMENT STRATEGY The Fund follows industry guidelines concerning the quality
and maturity of its investments. The dollar-weighted average portfolio maturity
of the Fund will not exceed 90 days. The Fund seeks to achieve its objective by
investing at least 65% and generally more than 80% of the Fund's total assets in
fixed-income securities. The Fund may enter into repurchase agreements
collateralized by U.S. Government securities.
The U.S. Government Money Fund seeks to maintain a stable share par value of
$1.00 per share, although there is no assurance that it will be able to do so.
It is possible to lose money by investing in the U.S. Government Money Fund.
<PAGE>
- --------------------------------------------------------------------------------
FIXED-INCOME FUNDS' PRINCIPAL SECURITIES AND RISKS
- --------------------------------------------------------------------------------
Many factors affect each Fund's performance. A Fund's yield and (except the U.S.
Government Money Fund's) share price changes daily based on changes in the
financial markets, and interest rates and in response to other economic,
political or financial developments. A Fund's reaction to these developments
will be affected by the financial condition, industry and economic sector, and
geographic location of an issuer, and the Fund's level of investment in the
securities of that issuer. A Fund's reaction to these developments will also
affected by the types, durations, and maturities of the securities in which the
Fund invests. When you sell your shares of a Fund, they could be worth more or
less than what you paid for them.
In response to market, economic, political or other conditions, each Fund's
Money Manager may temporarily use a different investment strategy for defensive
purposes, including investing in short-term and money market instruments. If a
Money Manager does so, different factors could affect a Fund's performance and
the Fund may not achieve its investment objective.
Each Fund is actively managed. Frequent trading of portfolio securities will
result in increased expenses for the Funds and may result in increased taxable
distributions to shareholders.
Each Fund's investment objective stated in the Fixed-Income Funds' Objectives
and Strategies section is fundamental and may not be changed without shareholder
approval.
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY TYPES
- ------------------------
[GRAPHIC] DEBT SECURITIES are used by issuers to borrow money. The issuer
usually pays a fixed, variable or floating rate of interest, and must repay the
amount borrowed at the maturity of the security. Some debt securities, such as
zero coupon bonds, do not pay current interest but are sold at a discount from
their face values. Debt securities include corporate bonds, government
securities, and mortgage and other asset-backed securities.
[GRAPHIC] MORTGAGE RELATED SECURITIES are interests in pools of mortgages.
Payment of principal or interest generally depends on the cash flows generated
by the underlying mortgages. Mortgage securities may be U.S.
Government securities or issued by a bank or other financial institution.
[GRAPHIC] U.S. GOVERNMENT SECURITIES are high-quality securities issued or
guaranteed by the U.S. Treasury or by an agency or instrumentality of the U.S.
Government. U.S. Government securities may be backed by the full faith and
credit of the U.S. Treasury, the right to borrow from the U.S. Treasury, or the
agency or instrumentality issuing or guaranteeing the security.
[GRAPHIC] MONEY MARKET SECURITIES are high-quality, short-term debt securities
that pay a fixed, variable or floating interest rate. Securities are often
specifically structured so that they are eligible investments for a money market
fund. For example, in order to satisfy the maturity restrictions for a money
market fund, some money market securities have demand or put features which have
the effect of shortening the security's maturity.
[GRAPHIC] REPURCHASE AGREEMENTS are an agreement to buy a security at one price
and a simultaneous agreement to sell it back at an agreed upon price.
<PAGE>
- --------------------------------------------------------------------------------
FIXED-INCOME FUNDS' PRINCIPAL SECURITIES AND RISKS
- --------------------------------------------------------------------------------
PRINCIPAL RISKS
- ---------------
[GRAPHIC] BOND MARKET VOLATILITY. Individual securities are expected to
fluctuate in response to issuers, general economic and market changes. An
individual security or category of securities may, however, fluctuate more or
less than the market as a whole.
[GRAPHIC] ISSUER RISK. Changes in the financial condition of an issuer, changes
in specific economic or political conditions that affect a particular type of
issuer, and changes in general economic or political conditions can adversely
affect the credit quality or value of an issuer's securities. The value of an
individual security or category of securities may be more volatile than the debt
market as a whole. Entities providing credit support or a maturity-shortening
structure are also affected by these types of changes. Any of a Fund's holdings
could have its credit downgraded or could default, which could affect the Fund's
performance.
[GRAPHIC] INTEREST RATE CHANGES. Debt and money market securities have varying
levels of sensitivity to changes in interest rates. In general, the price of a
debt or money market security falls when interest rates rise and rises when
interest rates fall. Securities with longer durations generally are more
sensitive to interest rate changes. In other words, the longer the duration of a
security, the greater the impact a change in interest rates is likely to have on
the security's price. In addition, short-term securities tend to react to
changes in short-term interest rates, and long-term securities tend to react to
changes in long-term interest rates. Prepayments on assets underlying mortgage
or other asset backed securities held by a Fund can adversely affect those
securities' yield and price.
[GRAPHIC] PREPAYMENT RISK. Many types of debt securities, including mortgage
securities, are subject to prepayment risk. Prepayment occurs when the issuer of
a security can repay principal prior to the security's maturity. Securities
subject to prepayment generally offer less potential for gains during periods of
declining interest rates and similar or greater potential for loss in periods of
rising interest rates. In addition, the potential impact of prepayment features
on the price of a debt security can be difficult to predict and result in
greater volatility.
[GRAPHIC] INFLATION RISK. The real value of the U.S. Government Money Market
Fund's yield may be eroded by inflation over time. The Fund may underperform the
bond and equity markets over time.
[GRAPHIC] CREDIT RISKS. The U.S. Government Money Fund invests in repurchase
agreements, agencies and government securities. The risk of a credit rating
downgrade or default of U.S. Government securities is considered remote.
Agencies are not backed by the full faith and credit of the U.S. Government but
are considered just below U.S. securities in credit worthiness. Repurchase
agreements are corporate debt, but are 102% collateralized by agency and/or
government paper.
[GRAPHIC] REPURCHASE AGREEMENTS. Repurchase agreements carry certain risks
associated with direct investments in securities including possible declines in
the market value of the underlying securities and delays and costs to the Fund
if the other party to the repurchase agreement becomes bankrupt or otherwise
fails to deliver the securities.
- --------------------------------------------------------------------------------
Help Box:
Like other mutual funds, the Funds could be adversely affected by problems
associated with the ability of computers to recognize the year 2000. In
addition, it is possible that the markets and securities may be detrimentally
affected.
[GRAPHIC]
Accessor Capital, as the manager, administrator and Transfer Agent of Accessor
Funds, has taken charge of ensuring that both Accessor Funds and Accessor
Capital will be able to effectively operate on January 1, 2000. Accessor Capital
has inventoried all computer systems, both hardware and software, and has sought
certification as to their readiness from all critical third-party vendors.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE
- --------------------------------------------------------------------------------
MANAGER AND ADMINISTRATOR Accessor Capital Management LP, 1420 Fifth Avenue,
Suite 3600, Seattle, WA 98101
Each Fund is a portfolio of Accessor Funds, Inc. ("Accessor Funds"), a Maryland
corporation. Accessor Capital develops the investment programs for the Funds,
selects the Money Managers for the Funds, and monitors the performance of the
Money Managers. In addition, Accessor Capital invests the assets of the U.S.
Government Money Fund. J. Anthony Whatley, III, is the Executive Director of
Accessor Capital. Ravindra A. Deo, Vice President and Chief Investment Officer
of Accessor Capital, is primarily responsible for the day-to-day management of
the Funds either directly or through interaction with each Fund's Money Manager.
Mr. Deo is also responsible for managing the liquidity reserves of each Fund.
The Securities and Exchange Commission issued an exemptive order that allows
Accessor Funds to change a Fund's Money Manager without shareholder approval, as
long as, among other things, the Board of Directors has approved the change in
Money Manager and Accessor Funds has notified the shareholders of the affected
Fund within 60 days of the change.
Each Fund pays Accessor Capital an annual management fee for providing
management and administration services equal to the following percentage of each
Fund's average daily net assets:
- --------------------------------------------------------------------------------
MANAGEMENT FEE
TO ACCESSOR CAPITAL
(AS A PERCENTAGE OF
FUND AVERAGE DAILY NET ASSETS)
- --------------------------------------------------------------------------------
Growth 0.45%
Value 0.45
Small to Mid Cap 0.60
International Equity 0.55
Intermediate Fixed-Income 0.36
Short-Intermediate Fixed-Income 0.36
Mortgage Securities 0.36
U.S. Government Money 0.25
- --------------------------------------------------------------------------------
Each Fund has also hired Accessor Capital to provide transfer agent, registrar,
dividend disbursing agent and certain other services to the Funds. For providing
these services, Accessor Capital receives (i) a fee equal to 0.13% of the
average daily net assets of each Fund and (ii) a transaction fee of $.50 per
transaction.
On the following pages is information on each Fund's Money Manager and a
description of how each Money Manager is compensated for the services it
provides.
Each Fund paid the following management fees in fiscal year 1998 (reflected as a
percentage of average net assets) to Accessor Capital and/or the Fund's Money
Manager:
- --------------------------------------------------------------------------------
Fund Total Management Fees
(as a percentage of average net assets)
for fiscal year 1998
- --------------------------------------------------------------------------------
Growth 0.65%
Value 0.77
Small to Mid Cap 0.99
International Equity 1.15
Intermediate Fixed-Income 0.43
Short-Intermediate Fixed-Income 0.42
Mortgage Securities 0.59
U.S. Government Money 0.25
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE
- --------------------------------------------------------------------------------
GROWTH FUND
- -----------
MONEY MANAGER Geewax Terker & Company, 99 Starr Street, Phoenixville, PA 19460
John J. Geewax, Chief Investment Officer, is primarily responsible for the
day-to-day management and investment decisions for the Growth Fund. He founded
Geewax, Terker with Bruce Terker in 1982. Mr. Geewax is assisted by Christopher
P. Ouimet. Mr. Ouimet joined Geewax Terker in 1994. Before joining Geewax
Terker, Mr. Ouimet worked at The Vanguard Group.
Geewax Terker earns a management fee calculated and paid quarterly that consists
of a basic fee and a performance fee. The basic fee is equal to an annual rate
of 0.10 % of the Growth Fund's average daily net assets. The performance fee for
any quarter depends on the percentage amount by which the Growth Fund's
performance exceeds or trails that of the S&P 500/BARRA Growth Index during the
applicable measurement period based on the following schedule:
<TABLE>
<CAPTION>
Average Annual Performance Total
Differential vs. Annual Annual
Basic Fee Benchmark Index Performance Fee Fee
--------- --------------- --------------- ---
<S> <C> <C> <C>
0.10% Greater Than or Equal to 2.00% 0.22% 0.32%
Greater Than or Equal to 1.00% and Less Than 2.00% 0.20% 0.30%
Greater Than or Equal to 0.50% and Less Than 1.00% 0.15% 0.25%
Greater Than or Equal to 0.00% and Less Than 0.50% 0.10% 0.20%
Greater Than or Equal to -0.50% and Less Than 0.00% 0.05% 0.15%
Less Than -0.50% 0.00% 0.10%
</TABLE>
During the period from the sixth calendar quarter (3rd quarter 1998) through the
13th calendar quarter (2nd quarter 2000) of Geewax Terker's management of the
Growth Fund, the applicable measurement period will be the entire period since
the commencement of Geewax Terker's management of the Growth Fund with the
exception of the quarter immediately preceding the date of calculation.
Commencing with the 14th quarter (3rd quarter 2000) of Geewax Terker's
management of the Growth Fund, the applicable measurement period will consist of
the 12 most recent calendar quarters, except for the quarter immediately
preceding the date of calculation.
Under the performance fee formula, Geewax Terker will receive a performance fee
if the Growth Fund's performance either exceeds the S&P 500/BARRA Growth Index,
or trails the S&P 500/BARRA Growth Index by no more than 0.50%. Under certain
circumstances, Geewax Terker may receive a performance fee even if the Growth
Fund's total return is negative.
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE
- --------------------------------------------------------------------------------
VALUE FUND
- ----------
MONEY MANAGER Martingale Asset Management, 222 Berkeley Street, Boston, MA 02116
William E. Jacques, Chief Investment Officer since joining Martingale in 1987,
is primarily responsible for the investment decisions for the Value Fund.
Douglas E. Stark is primarily responsible for the day-to-day management of the
Value Fund. Mr. Stark joined Martingale in 1996. Before joining Martingale, Mr.
Stark was Senior Vice President and Fund Manager at InterCoast Capital Company
from 1994 to 1996. Prior to that, he was Vice President and managed
international stock portfolios at State Street Global Advisors, an area of State
Street Bank and Trust Company, from 1990 until 1994.
Martingale earns a management fee calculated and paid quarterly that consists of
a basic fee and a performance fee. The basic fee is equal to an annual rate of
0.10 % of the Fund's average daily net assets. The performance fee for any
quarter depends on the percentage amount by which the Value Fund's performance
exceeds or trails that of the S&P 500/BARRA Value Index during the applicable
measurement period based on the following schedule:
<TABLE>
<CAPTION>
Average Annual Performance Total
Differential vs. Annual Annual
Basic Fee Benchmark Index Performance Fee Fee
--------- --------------- --------------- ---
<S> <C> <C> <C>
0.10% Greater Than or Equal to 2.00% 0.22% 0.32%
Greater Than or Equal to 1.00% and Less Than 2.00% 0.20% 0.30%
Greater Than or Equal to 0.50% and Less Than 1.00% 0.15% 0.25%
Greater Than or Equal to 0.00% and Less Than 0.50% 0.10% 0.20%
Greater Than or Equal to -0.50% and Less Than 0.00% 0.05% 0.15%
Less Than -0.50% 0.00% 0.10%
</TABLE>
As of the 14th quarter (1st quarter 1996) of Martingale's management of the
Value Fund, the applicable measurement period consists of the 12 most recent
calendar quarters, excluding the quarter immediately preceding the date of
calculation.
Under the performance fee formula, Martingale will receive a performance fee if
the Value Fund's performance either exceeds the S&P 500/BARRA Value Index, or
trails the S&P 500/BARRA Value Index by no more than 0.50%. Under certain
circumstances, Martingale may receive a performance fee even if the Value Fund's
total return is negative.
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE
- --------------------------------------------------------------------------------
SMALL TO MID CAP FUND
- ---------------------
MONEY MANAGER Symphony Asset Management LLC, 555 California Street, San
Francisco, CA 94104
Praveen K. Gottipalli is primarily responsible for the day-to-day management and
investment decisions for the Small to Mid Cap Fund; he is assisted by David
Wang. Mr. Gottipalli has been Director of Investments with Symphony and its
predecessor entities since March 1994. From 1985 to 1994, he was with BARRA,
Inc., where he was Director of the Active Strategies Group. Since May 1994, Mr.
Wang has been a portfolio manager with Symphony Asset Management, Inc., which
owns 50% of Symphony Asset Management LLC. From 1993 to 1994, Mr. Wang was a
Programmer-Analyst with BARRA, Inc.
Symphony earns a management fee calculated and paid quarterly that consists of a
performance fee. The performance fee for any quarter depends on the percentage
amount by which the Small to Mid Cap Fund's performance exceeds, or trails that
of the Wilshire 4500 Index during the applicable measurement period based on the
following schedule:
Average Annualized
Percentage Differential Annualized
vs. Wilshire 4500 Index Performance Fee
----------------------- ----------------
Greater Than or Equal to 3.00% 0.42%
Greater Than or Equal to 2.00% and Less Than 3.00% 0.35%
Greater Than or Equal to 1.00% and Less Than 2.00% 0.30%
Greater Than or Equal to 0.50% and Less Than 1.00% 0.25%
Greater Than or Equal to 0.00% and Less Than 0.50% 0.20%
Greater Than or Equal to -0.50% and Less Than 0.00% 0.15%
Greater Than or Equal to -1.00% and Less Than -0.50% 0.10%
Greater Than or Equal to -1.50% and Less Than -1.00% 0.05%
Less Than -1.50% 0.00%
As of the 14th quarter (1st quarter 1999) of Symphony's management of the Small
to Mid Cap Fund, the applicable measurement period consists of the 12 most
recent calendar quarters, excluding the quarter immediately preceding the date
of calculation.
Under the performance fee formula, Symphony will receive a performance fee if
the Small to Mid Cap Fund's performance either exceeds the Wilshire 4500 Index,
or trails the Wilshire 4500 Index by no more than 1.50%. Under certain
circumstances, Symphony may receive a performance fee even if the Small to Mid
Cap Fund's total return is negative.
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
- -------------------------
MONEY MANAGER Nicholas-Applegate Capital Management, 600 West Broadway, 29th
Floor, San Diego, CA 92101
Catherine Somhegyi, Lawrence S. Speidell and Loretta J. Morris are primarily
responsible for making the day-to-day management and investment decisions for
the International Equity Fund. Ms. Somhegyi, Chief Investment Officer, Global
Equity Management, joined Nicholas-Applegate in 1987. Mr. Speidell, Partner and
Director of Global and Systematic Fund Management, joined Nicholas-Applegate in
1994. From 1983 to 1994, Mr. Speidell was a portfolio manager for Batterymarch
Financial Management. Ms. Morris, Partner and Senior Fund Manager,
International, joined Nicholas-Applegate in 1990.
Nicholas-Applegate earns a management fee calculated and paid quarterly that
consists of a basic fee and a performance fee. The basic fee is equal to an
annual rate of 0.20% of the Fund's average daily net assets. The performance fee
for any quarter depends on the percentage amount by which the International
Equity Fund's performance exceeds or trails that of the MSCI EAFE + EMF Index
during the applicable measurement period based on the following schedule:
<TABLE>
<CAPTION>
Average Annual Performance Total
Differential vs. Annual Annual
Basic Fee Benchmark Index Performance Fee Fee
--------- --------------- --------------- ---
<S> <C> <C> <C>
0.20% Greater Than or Equal to 4.00% 0.40% 0.60%
Greater Than or Equal to 2.00% and Less Than 4.00% 0.30% 0.50%
Greater Than or Equal to 0.00% and Less Than 2.00% 0.20% 0.40%
Greater Than or Equal to -2.00% and Less Than 0.00% 0.10% 0.30%
Less Than -2.00% 0.00% 0.20%
</TABLE>
As of the 14th quarter (2nd quarter 1998) of Nicholas-Applegate's management of
the International Equity Fund, the applicable measurement period consists of the
12 most recent calendar quarters, excluding the quarter immediately preceding
the date of calculation.
Under the performance fee formula, Nicholas-Applegate will receive a performance
fee if the International Equity Fund's performance either exceeds the MSCI EAFE
+ EMF Index, or trails the MSCI EAFE + EMF Index by no more than 2.00%. Under
certain circumstances, Nicholas-Applegate may receive a performance fee even if
the International Equity Fund's total return is negative.
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE
- --------------------------------------------------------------------------------
INTERMEDIATE FIXED-INCOME
SHORT-INTERMEDIATE FIXED-INCOME
- -------------------------------
MONEY MANAGER Cypress Asset Management, 26607 Carmel Center Place, Carmel, CA
93923
Cypress became the Money Manager of the Funds September 21, 1998. Mr. Xavier
Urpi, President and Chief Investment Officer, is primarily responsible for the
day-to-day management and investment decisions and is assisted by Ms. Rosemary
Brooks, Manager of Operations. Mr. Urpi founded Cypress in 1995. Prior to that,
Mr. Urpi was at Smith Barney Capital as a Director of Fixed-Income from March
1989 to September 1995. Ms. Brooks joined Cypress in January 1998. Previously,
Ms. Brooks was owner of Brooks Finance, and a registered representative with
H.D. Vest from June 1994 to July 1997.
Cypress earns a management fee from each Fund calculated and paid quarterly that
consists of a basic fee and a portfolio management fee. During the first five
complete calendar quarters of management, the basic fee and the portfolio
management fee are both equal to an annual rate of 0.02% and 0.02%,
respectively, or a total of 0.04% of each Fund's average daily net assets.
Prior to Cypress, Smith Barney Capital Management was the money manager of the
Intermediate Fixed-Income Fund and Bankers Trust Company, was the money manager
of the Short-Intermediate Fixed-Income Fund. The former money managers each
managed their Fund from inception in 1992 until April 30, 1998. Beginning on May
1, 1998, until September 21, 1998, when Cypress commenced, Accessor Capital
invested the assets of these two Funds directly.
The overall maximum fee for the first five complete calendar quarters payable to
the former money managers was 0.15% (comprised of a basic fee of 0.07% and a
portfolio management fee of 0.08%). Although each Fund has currently negotiated
a reduction in the Money Manager fee to a maximum of 0.04% payable to Cypress
during the first five calendar quarters of management, it is possible that in
the future the fee could be modified. In no event, however, shall the maximum
Money Manager fee payable by these Funds be greater than 0.15% during the first
five complete calendar quarters, without a vote of the shareholders.
Beginning with the sixth complete calendar quarter, Cypress will earn the basic
fee described above and a performance fee, calculated and paid quarterly. The
performance fee for any quarter depends on the percentage amount by which each
Fund's performance exceeds or trails that of its respective Benchmark Index, the
Lehman Brothers Government/Corporate Index (Intermediate Fixed-Income) and the
Lehman Brothers Government/Corporate 1-5 Year Index (Short-Intermediate
Fixed-Income) during the applicable measurement period based on the following
schedule:
Average Annual
Performance Total
Differential vs. Annual Annual
Basic Fee Benchmark Index Performance Fee Fee
--------- --------------- --------------- ---
0.02% Less Than 0.35% 0.00% 0.02%
Greater Than or
Equal to 0.35% and
Less than or Equal
to 0.50% 0.05% 0.07%
Greater Than 0.50% and
Less than or Equal 0.05% plus 1/2
to 0.70% (P-0.50%)* Up to 0.17%
Greater Than 0.70% 0.15% 0.17%
- --------------------------------------------------------------------------------
*P = PERFORMANCE. EXAMPLE: IF CYPRESS OUTPERFORMS THE BENCHMARK INDEX BY 0.60%,
THE FEE WOULD BE CALCULATED AS [0.02% BASIC FEE + 0.05% PERFORMANCE FEE +
{(0.60%-0.50%)/2}] = 0.12%
- --------------------------------------------------------------------------------
The measurement period from the sixth calendar quarter (2nd quarter 2000)
through the 13th calendar quarter (2nd quarter 2002) of Cypress' management of
each Fund will be the entire period since the commencement of Cypress'
management of each Fund, excluding the quarter immediately preceding the date of
calculation. Commencing with the 14th quarter (3rd quarter 2002) of Cypress'
management of each Fund, the applicable measurement period will consist of the
12 most recent calendar quarters, excluding the quarter immediately preceding
the date of calculation.
Under the performance fee formula, Cypress will receive a performance fee if
either Intermediate Fixed-Income Fund's or Short-Intermediate Fixed-Income
Fund's performance either exceeds the Lehman Brothers Government/Corporate Index
or the Lehman Brother Government/Corporate 1-5 Year Index, respectively, or
trails the respective Index by no more than 0.35%. Under certain circumstances,
Cypress may receive a performance fee even if a Fund's total return is negative.
- --------------------------------------------------------------------------------
MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE
- --------------------------------------------------------------------------------
MORTGAGE SECURITIES FUND
- ------------------------
MONEY MANAGER BlackRock Financial Management, Inc., 345 Park Place, New York,
NY 10154
BlackRock's Investment Strategy Group has primary responsibility for setting the
broad investment strategy and for overseeing the ongoing management of all
client portfolios. Mr. Andrew J. Phillips, Managing Director, is primarily
responsible for the day-to-day management and investment decisions for the
Mortgage Securities Portfolio. Mr. Phillips' primary responsibility is the
management of the firm's investment activities in fixed-rate mortgage
securities, including pass-throughs and CMOs. He directs the development of
investment strategy and coordinates execution for all client portfolios. Prior
to joining BlackRock in 1991, Mr. Phillips was a portfolio manager at
Metropolitan Life Insurance Company.
The Mortgage Securities Fund pays BlackRock a management fee that consists of a
basic fee and a performance fee. The management fee is calculated and paid
quarterly. The basic fee is equal to an annual rate of 0.07% of the Fund's
average daily net assets. The performance fee for any quarter depends on the
percentage amount by which the Mortgage Securities Fund's performance exceeds or
trails that of the Lehman Brothers Mortgage-Backed Securities Index during the
applicable measurement period based on the following schedule:
Average Annual
Performance Total
Differential vs. Annual Annual
Basic Fee Benchmark Index Performance Fee Fee
--------- --------------- --------------- ---
0.07% Greater Than or Equal
To 2.00% 0.18% 0.25%
Greater Than or
Equal To 0.50% and
Less Than 2.00% 0.16% 0.23%
Greater Than or
Equal To 0.25% and
Less Than 0.50% 0.12% 0.19%
Greater Than or
Equal To -025. and
Less Than 0.25% 0.08% 0.15%
Greater Than -0.50% and
Less Than -0.25% 0.04% 0.11%
Greater Than or
Equal To -0.50% 0.00% 0.07%
<PAGE>
continued on next page
- --------------------------------------------------------------------------------
MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE
- --------------------------------------------------------------------------------
The measurement period consists of the 12 most recent calendar quarters,
excluding the quarter immediately preceding the date of calculation. Under the
performance fee formula, BlackRock will receive a performance fee if the
Mortgage Securities Fund's performance either exceeds, or trails the Lehman
Brothers Mortgage-Backed Securities Index by no more than 0.50%. Under certain
circumstances, BlackRock may receive a performance fee even if the Mortgage
Securities Fund's total return is negative.
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE
- --------------------------------------------------------------------------------
U.S. GOVERNMENT MONEY FUND
- --------------------------
MANAGER Accessor Capital Management, 1420 Fifth Avenue, Suite 3600, Seattle, WA
98101
Accessor Capital directly invests the assets of the U.S. Government Money Fund.
Accessor Capital receives no additional fee beyond its management fee, as
previously described, for this service.
<PAGE>
- --------------------------------------------------------------------------------
PURCHASING FUND SHARES
- --------------------------------------------------------------------------------
WHERE TO PURCHASE
- -----------------
[GRAPHIC] DIRECT. Investors may purchase Advisor Class Shares directly from
Accessor Funds for no sales charge or commission.
[GRAPHIC] FINANCIAL INTERMEDIARIES. Advisor Class Shares may be purchased
through financial intermediaries, such as banks, broker-dealers, registered
investment advisers and providers of fund supermarkets. In certain cases, a Fund
will be deemed to have received a purchase or redemption when it is received by
the financial intermediary. The order will be priced at the next calculated NAV.
These financial intermediaries may also charge transaction, administrative or
other fees to shareholders, and may impose other limitations on buying, selling
or transferring shares, which are not described in this Prospectus. Some
features of the Advisor Class shares, such as investment minimums, redemption
fees and certain trading restrictions, may be modified or waived by financial
intermediaries. Shareholders should contact their financial intermediary for
information on fees and restrictions.
- --------------------------------------------------------------------------------
[HELP BOX: Advisor Class shares may not be purchased on days when the NYSE is
closed for trading: New Year's Day, Martin Luther King, Jr., Day, Presidents
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day.]
- --------------------------------------------------------------------------------
HOW TO PURCHASE
- ---------------
Purchase orders are accepted on each business day that the New York Stock
Exchange is open and must be received in proper form prior to the close of the
New York Stock Exchange, normally 4:00 p.m. Eastern time. If Accessor Capital
receives a purchase order for shares of U.S. Government Money Fund on any
business day and the invested monies are wired before 9:00 a.m., Pacific time,
the investor will be entitled to receive that day's dividend. Otherwise,
Accessor Capital must receive payment for shares by 12:00 p.m. Eastern time, on
the business day following the purchase request. All purchases must be made in
U.S. dollars. Purchases may be made in any of the following ways:
[GRAPHIC] BY CHECK. Checks made payable to "Accessor Funds, Inc." and drawn on a
U.S. bank should be mailed with the completed application or with the account
number and name of Fund noted on the check to:
Accessor Funds, Inc.
P. 0. Box 1748
Seattle, WA 98111-1748
[GRAPHIC] BY FEDERAL FUNDS WIRE. Wire instructions are included with the account
application.
[GRAPHIC] BY TELEPHONE. Shareholders with aggregate account balances of at least
$1 million may purchase Advisor Class shares by telephone at (800) 759-3504. To
prevent unauthorized transactions, Accessor Funds may use reasonable procedures
to verify telephone requests.
[GRAPHIC] BY PURCHASES IN KIND. Under some circumstances, the Funds may accept
securities as payment for Advisor Class Shares. Such securities would be valued
the same way the Funds' securities are valued (see "Valuation of Securities").
Please see "Additional Purchase and Redemption Information" in the Statement of
Additional Information for further information.
<PAGE>
- --------------------------------------------------------------------------------
PURCHASING FUND SHARES
- --------------------------------------------------------------------------------
IRAS/ROTH IRAS
- --------------
Investors may purchase Advisor Class Shares through an Individual or Roth
Retirement Custodial Account Plan. An IRA or Roth IRA account with an aggregate
balance of less than $10,000 across all Funds on December 31 of any year will be
assessed a $25.00 fee. Copies of an IRA or Roth IRA Plan may be obtained from
Accessor Capital by calling (800) 759-3504.
- --------------------------------------------------------------------------------
Investment Minimums
- -------------------------------------------------------------------------------
Regular Accounts Retirement Accounts
- --------------------------------------------------------------------------------
Initial Investment Initial Investment
One Fund only: $5,000 Traditional IRA/ $2,000 aggregated
Multiple Funds: $10,000 aggregated Roth IRA: among the Funds
among the Funds
Additional Investment(s)
One Fund only: $1,000 Additional Investment(s)
Multiple Funds: $2,000 aggregated Traditional IRA/ $2,000 aggregated
among the Funds Roth IRA: among the Funds
- --------------------------------------------------------------------------------
ACCESSOR FUNDS MAY ACCEPT SMALLER PURCHASE AMOUNTS OR REJECT ANY PURCHASE ORDER
IT BELIEVES MAY DISRUPT THE MANAGEMENT OF THE FUNDS
- --------------------------------------------------------------------------------
SHARE PRICING
- -------------
Investors purchase Advisor Class Shares of a Fund at its net asset value per
share ("NAV"). The NAV is calculated by adding the value of Fund assets
attributable to Advisor Class Shares, subtracting Fund liabilities attributable
to the class, and dividing by the number of outstanding Advisor Class Shares.
The NAV is calculated each day that the New York Stock Exchange ("NYSE") is open
for business. The Funds generally calculate their NAV at the close of regular
trading on the NYSE, generally 4:00 p.m. Eastern time. Shares are purchased at
the NAV that is next calculated after purchase requests are received by the
Funds.
MARKET TIMING
- -------------
Short-term or excessive trading into and out of a Fund may harm performance by
disrupting portfolio management strategies and by increasing expenses.
Accordingly, a Fund may reject any purchase orders, including exchanges,
particularly from market timers or investors who, in Accessor Capital's opinion,
have a pattern of short-term or excessive trading or whose trading has been or
may be disruptive to that Fund. For these purposes, Accessor Capital may
consider an investor's trading history in that Fund or other Funds, and accounts
under common ownership or control.
FOR MORE INFORMATION
- --------------------
For additional information about purchasing shares of the Accessor Funds, please
contact us at (800) 759-3504.
<PAGE>
- --------------------------------------------------------------------------------
EXCHANGING FUND SHARES
- --------------------------------------------------------------------------------
As a shareholder, you have the privilege of exchanging shares of the Funds for
shares of other Accessor Funds. Advisor Class Shares may be exchanged for
shares of any other Fund so long as shareholders meet the normal investment
requirements of the other Fund. Shareholders should read the prospectus of any
other Fund into which they are considering exchanging.
EXCHANGES THROUGH ACCESSOR FUNDS
- --------------------------------
Accessor Funds does not currently charge fees on exchanges directly through it.
This exchange privilege may be modified or terminated at any time by Accessor
Funds upon 60 days notice to shareholders. Exchanges may be made any of the
following ways:
[GRAPHIC] BY MAIL. Share exchange instructions may be mailed to:
Accessor Funds, Inc.
P. O. Box 1748
Seattle, WA 98111-1748
[GRAPHIC] BY FAX. Instructions may be faxed to Accessor Funds at (206) 224-4274.
AN EXCHANGE OF SHARES FROM A FUND INVOLVES A REDEMPTION OF THOSE SHARES AND WILL
BE TREATED AS A SALE FOR TAX PURPOSES.
EXCHANGES THROUGH FINANCIAL INTERMEDIARIES
- ------------------------------------------
You should contact your financial intermediary directly to make exchanges. Your
financial intermediary may charge additional fees for these transactions.
<PAGE>
- --------------------------------------------------------------------------------
REDEEMING FUND SHARES
- --------------------------------------------------------------------------------
Investors may request to redeem Advisor Class Shares on any day that the NYSE
is open for business. The request must be received in proper form by the Fund or
certain financial intermediaries prior to the close of the NYSE, normally 4:00
p.m. Eastern time. Shares will be redeemed at the next NAV calculated after
Accessor Capital receives the redemption request in proper form. Payment will
ordinarily be made within seven days of the request by wire-transfer to a
shareholder's domestic commercial bank account. Shares may be redeemed from
Accessor Funds any of the following ways:
[GRAPHIC] BY MAIL. Redemption requests may be mailed to:
Accessor Funds, Inc.
P. 0. Box 1748
Seattle, WA 98111-1748
[GRAPHIC] BY FAX. Redemption requests may be faxed to Accessor Funds at (206)
224-4274.
[GRAPHIC] BY TELEPHONE. Shareholders with aggregate account balances of at least
$1 million may request redemption of shares by telephone at (800) 759-3504. To
prevent unauthorized transactions, the Accessor Funds may use reasonable
procedures to verify telephone requests.
Shareholders may request that payment be made by check to the shareholders of
record at the address of record. Such requests must be in writing. Shareholders
may also request that a redemption be made payable to someone other than the
shareholder of record or be sent to an address other than the address of record.
Such requests must be made in writing, be signed by all shareholders of record,
and accompanied by a signature guarantee. The Transfer Agent may charge a $10.00
processing fee for each redemption check. Shares also may be redeemed through
financial intermediaries from whom shares were purchased. Financial
intermediaries may charge a fee for this service.
- --------------------------------------------------------------------------------
Help Box:
Redemption requests for shares that were purchased by check will be
honored at the next NAV calculated after receipt of the redemption request.
However, redemption proceeds will not be transmitted until the check used for
the investment has cleared.
- --------------------------------------------------------------------------------
Large redemptions may disrupt the management and performance of the Funds. Each
Fund reserves the right to delay delivery of your redemption proceeds -- up to
seven days -- if the Fund determines that the redemption amount will disrupt its
operation or performance. If you redeem more than $250,000 worth of a Fund's
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 cash. If payment is made in kind, you may incur brokerage commissions if
you elect to sell the securities.
[GRAPHIC] SYSTEMATIC WITHDRAWAL PLAN. Shareholders may request an automatic,
monthly, quarterly or annual redemption of shares under the Systematic
Withdrawal Plan (minimum monthly amount is $500). Applications for this plan may
be obtained from Accessor Funds and must be received by Accessor Funds at least
ten calendar days before the first scheduled withdrawal date. Systematic
Withdrawals may be discontinued at any time by a shareholder or Accessor Funds.
[GRAPHIC] LOW ACCOUNT BALANCES. Accessor Funds may redeem any account with a
balance of less than $500 per Fund or less than $2,000 in aggregate across the
Funds if the shareholder is not part of an Automatic Investment Plan.
Shareholders will be notified in writing when they have a low balance and will
have 60 days to purchase additional shares to increase the balance to the
required minimum. Shares will not be redeemed if an account drops below the
minimum due to market fluctuations.
In the event of an emergency as determined by Accessor Funds, it may suspend the
right of redemption or postpone payments to shareholders. If the Board of
Directors determines a redemption payment may harm the remaining shareholders of
a Fund, the Fund may pay a redemption in whole or in part by a distribution in
kind of securities from the Fund.
<PAGE>
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS
- --------------------------------------------------------------------------------
[GRAPHIC] DIVIDENDS. Each Fund intends to annually distribute as dividends to
its shareholders substantially all of its net investment income. The Board of
Directors presently intends to declare dividends on the following schedule:
- --------------------------------------------------------------------------------
Fund Declared Payable
- --------------------------------------------------------------------------------
Growth Quarterly, on last 1st business day
Value business day of quarter following end of
Small to Mid Cap calendar quarter
- --------------------------------------------------------------------------------
International Annually, 2nd to last Last business day
business day of Calendar year
of calendar year
- --------------------------------------------------------------------------------
Intermediate Fixed-Income Monthly, on last First business day
Short-Intermediate Fixed-Income business day of month of following month
Mortgage Securities
- --------------------------------------------------------------------------------
U.S. Government Money Daily First business day
of following month
- --------------------------------------------------------------------------------
[GRAPHIC] OTHER DISTRIBUTIONS. The Board of Directors intends to distribute to
each Fund's shareholders substantially all of its net realized long- and
short-term capital gains and net realized gains from foreign currency
transactions (if any) annually, generally in mid-December. A Fund may need to
make additional distributions at year-end to avoid federal income or excise
taxes.
[GRAPHIC] AUTOMATIC REINVESTMENT OF DIVIDENDS AND OTHER DISTRIBUTIONS. All
dividends and other distributions on Advisor Class Shares of a Fund will be
automatically reinvested in additional Advisor Class Shares of that Fund unless
a shareholder elects to receive them in cash. Shareholders may alternatively
choose to invest dividends or other distributions in Advisor Class Shares of
any other Fund.
- --------------------------------------------------------------------------------
VALUATION OF SECURITIES
- --------------------------------------------------------------------------------
The Funds generally value their securities using market quotations. However,
short-term debt securities maturing in less than 60 days are valued using
amortized cost, and securities for which market quotations are not readily
available are valued at fair value. Because foreign securities markets are open
on different days from U.S. markets, there may be instances when the NAV of a
Fund that invests in foreign securities changes on days when shareholders are
not able to buy or sell shares. If a security's value has been materially
affected by events occurring after the close of the exchange or market on which
the security is principally traded (for example, a foreign exchange or market),
that security may be valued by another method that the Board of Director's
believes accurately reflects fair value.
<PAGE>
- --------------------------------------------------------------------------------
TAXATION
- --------------------------------------------------------------------------------
Dividends and other distributions that shareholders receive from a Fund, whether
received in cash or reinvested in additional shares of the Fund, are subject to
federal income tax and may also be subject to state and local tax. Generally,
dividends and distributions of net short-term capital gains and gains from
certain foreign currency transactions are taxable as ordinary income, while
distributions of other gains are taxable as long-term capital gains (generally,
at the rate of 20% for non-corporate shareholders). The rate of tax to a
shareholder on distributions from a Fund of capital gains ordinarily depends on
the length of time the Fund held the securities that generated the gain, not the
length of time the shareholder owned his or her shares.
Certain dividends and other distributions declared by a Fund in October,
November, or December of any year are taxable to shareholders as though received
on December 31 of that year if paid to them during the following January.
Accordingly, those distributions will be taxed to shareholders for the year in
which that December 31 falls.
An exchange of a Fund's shares for shares of another Fund will be treated as a
sale of the Fund's shares, and any gain on the transaction will be subject to
federal income tax.
The International Equity Fund receives dividends and interest on securities of
foreign issuers that may be subject to withholding taxes by foreign governments,
and gains from the disposition of those securities also may be subject thereto,
which may reduce the Fund's total return. If the amount of taxes withheld by
foreign governments is material, the Fund may elect to enable shareholders to
claim a foreign tax credit regarding those taxes. After the conclusion of each
calendar year, shareholders will receive information regarding the taxability of
dividends and other distributions paid by the Funds during the preceding year.
Funds may be required to withhold and remit to the U.S. Treasury 31% of all
dividends, capital gain distributions, and redemption proceeds payable to
individuals and certain other non-corporate shareholders who have not provided
the Fund with a correct taxpayer identification number. Shareholders should
consult a tax adviser for further information regarding the federal, state, and
local tax consequences of an investment in Advisor Class Shares.
THE FOREGOING IS ONLY A BRIEF SUMMARY OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES
OF INVESTING IN THE FUNDS. PLEASE SEE THE STATEMENT OF ADDITIONAL INFORMATION
FOR A FURTHER DISCUSSION.
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
GROWTH FUND
The financial highlights table is intended to help you understand the Fund's
financial performance for the past 5 years. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned (or lost) 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, are included in the annual report, which is
available upon request.
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING
THROUGHOUT THE PERIOD
ADVISOR CLASS
1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 21.57 $ 19.51 $ 17.99 $ 14.37 $ 14.16
INVESTMENT OPERATIONS:
Net investment income (loss) 0.04 0.13 0.19 0.15 0.13
Net realized and unrealized gain
on investments 9.91 6.31 3.35 4.76 0.42
Total from investment operations 9.95 6.44 3.54 4.91 0.55
DISTRIBUTIONS:
Distributions from net investment income -0.03 -0.13 -0.19 -0.15 -0.13
Distributions from capital gains -2.61 -4.25 -1.83 -1.14 -0.21
Total distributions -2.64 -4.38 -2.02 -1.29 -0.34
- ----------------------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $ 28.88 $ 21.57 $ 19.51 $ 17.99 $ 14.37
- ----------------------------------------------------------------------------------------------------------------------
Total return (1) 46.65% 33.24% 19.83% 34.32% 3.99%
- ----------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $157,799 $87,907 $60,586 $48,532 $23,534
- ----------------------------------------------------------------------------------------------------------------------
Ratios of expenses to average net assets:
After Accessor Capital fee waivers 0.92% 0.93% 1.13% 1.26% 1.76%
Before Accessor Capital fee waivers 0.92 0.93 1.13 1.26 1.83
Ratio of net investment income (loss)
to average net assets
After Accessor Capital fee waivers 0.16 0.56 0.97 0.97 1.02
Before Accessor Capital fee waivers 0.16 0.56 0.97 0.97 0.95
Portfolio turnover rate 112.42 131.75 81.79 99.73 57.71
</TABLE>
- ----------
(1) Total return is calculated assuming a purchase of shares at net asset value
per share on the first day and a sale at net asset value per share on the
last day of each period reported. Distributions are assumed, for purposes
of this calculation, to be reinvested at the net asset value per share on
the respective payment dates.
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
VALUE FUND
The financial highlights table is intended to help you understand the Fund's
financial performance for the past 5 years. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned (or lost) 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, are included in the annual report, which is
available upon request.
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING
THROUGHOUT THE PERIOD
ADVISOR CLASS
1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 20.88 $ 17.75 $ 15.91 $ 13.01 $ 13.58
INVESTMENT OPERATIONS:
Net investment income 0.24 0.26 0.24 0.33 0.25
Net realized and unrealized gain
(loss) on investments 2.45 5.54 3.51 3.96 -0.51
Total from investment operations 2.69 5.80 3.75 4.29 -0.26
DISTRIBUTIONS:
Distributions from net investment income -0.24 -0.26 -0.24 -0.33 -0.25
Distributions from capital gains -2.12 -2.41 -1.67 -1.06 -0.05
Distributions in excess of capital gains -0.17 0.00 0.00 0.00 -0.01
Total distributions -2.53 -2.67 -1.91 -1.39 -0.31
- ----------------------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $ 21.04 $ 20.88 $ 17.75 $ 15.91 $ 13.01
- ----------------------------------------------------------------------------------------------------------------------
Total return (1) 12.89% 32.94% 23.94% 33.25% -1.93%
- ----------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $114,728 $81,127 $36,367 $ 24,915 $19,999
- ----------------------------------------------------------------------------------------------------------------------
Ratios of expenses to average net assets:
After Accessor Capital fee waivers 1.03% 1.05% 1.21% 1.40% 1.77%
Before Accessor Capital fee waivers 1.03 1.05 1.21 1.40 1.85
Ratio of net investment income to
average net assets:
After Accessor Capital fee waivers 1.06 1.32 1.43 2.18 2.00
Before Accessor Capital fee waivers 1.06 1.32 1.43 2.18 1.92
Portfolio turnover rate 104.85 68.14 93.54 100.88 54.26
</TABLE>
- ----------
(1) Total return is calculated assuming a purchase of shares at net asset value
per share on the first day and a sale at net asset value per share on the
last day of each period reported. Distributions are assumed, for purposes
of this calculation, to be reinvested at the net asset value per share on
the respective payment dates.
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SMALL TO MID CAP FUND
The financial highlights table is intended to help you understand the Fund's
financial performance for the past 5 years. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned (or lost) 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, are included in the annual report, which is
available upon request.
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING
THROUGHOUT THE PERIOD
ADVISOR CLASS
1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 21.82 $ 18.82 $ 17.60 $ 14.08 $ 14.79
INVESTMENT OPERATIONS:
Net investment income (loss) -0.05 0.00 0.07 0.06 -0.01
Net realized and unrealized gain
(loss) on investments 3.50 6.75 4.22 4.42 -0.59
Total from investment operations 3.45 6.75 4.29 4.48 -0.60
DISTRIBUTIONS:
Distributions from net investment income 0.00 0.00 -0.07 -0.06 0.00
Distributions from capital gains -1.74 -3.73 -3.00 -0.90 -0.10
Distribution in excess of net investment income 0.00 -0.02 0.00 0.00 0.00
Return of capital distributions 0.00 0.00 0.00 0.00 -0.01
Total distributions -1.74 -3.75 -3.07 -0.96 -0.11
- ----------------------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $ 23.53 $ 21.82 $ 18.82 $ 17.60 $ 14.08
- ----------------------------------------------------------------------------------------------------------------------
Total return (1) 15.98% 36.14% 24.85% 31.98% -4.07%
- ----------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $260,792 $125,221 $65,479 $49,803 $24,148
- ----------------------------------------------------------------------------------------------------------------------
Ratios of expenses to average net assets:
After Accessor Capital fee waivers 1.22% 1.15% 1.17% 1.31% 1.98%
Before Accessor Capital fee waivers 1.22 1.15 1.17 1.31 2.38
Ratio of net investment income
to average net assets
After Accessor Capital fee waivers -0.22 0.00 0.37 0.41 -0.18
Before Accessor Capital fee waivers -0.22 0.00 0.37 0.41 -0.58
Portfolio turnover rate 110.07 129.98 113.44 84.26 30.14
</TABLE>
- ----------
(1) Total return is calculated assuming a purchase of shares at net asset value
per share on the first day and a sale at net asset value per share on the
last day of each period reported. Distributions are assumed, for purposes
of this calculation, to be reinvested at the net asset value per share on
the respective payment dates.
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
The financial highlights table is intended to help you understand the Fund's
financial performance for the past 5 years. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned (or lost) 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, are included in the annual report, which is
available upon request.
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING
THROUGHOUT THE PERIOD
ADVISOR CLASS
1998 1997 1996 1995 1994 (1)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 14.83 $ 13.83 $ 12.55 $ 11.67 $12.00
INVESTMENT OPERATIONS:
Net investment income (loss) -0.03 -0.02 -0.06 0.05 0.01
Net realized and unrealized gain
(loss) on investments 2.41 1.54 1.80 0.83 -0.34
Total from investment operations 2.38 1.52 1.74 0.88 -0.33
DISTRIBUTIONS:
Distributions from capital gains -0.31 -0.50 -0.44 0.00 0.00
Distributions in excess of capital gains 0.00 -0.02 -0.02 0.00 0.00
Total distributions -0.31 -0.52 -0.46 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $ 16.90 $ 14.83 $ 13.83 $ 12.55 $11.67
- ----------------------------------------------------------------------------------------------------------------------
Total return (2) 16.07% 10.96% 13.78% 7.63% -2.75%
- ----------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $149,391 $151,441 $73,019 $39,102 $7,566
- ----------------------------------------------------------------------------------------------------------------------
Ratios of expenses to average net assets:
After Accessor Capital fee waivers 1.59% 1.55% 1.52% 1.83% 1.86%*
Before Accessor Capital fee waivers 1.59 1.55 1.52 1.93 4.06 *
Ratio of net investment income
(loss) to average net assets
After Accessor Capital fee waivers -0.24 -0.20 -0.26 0.10 0.38 *
Before Accessor Capital fee waivers -0.24 -0.20 -0.26 0.00 -1.82 *
Portfolio turnover rate 196.37 196.66 157.66 84.85 0.82
</TABLE>
- ----------
(1) For the period of October 3, 1994 (commencement of operations) through
December 31, 1994.
(2) Total return is calculated assuming a purchase of shares at net asset value
per share on the first day and a sale at net asset value per share on the
last day of each period reported. Distributions are assumed, for purposes
of this calculation, to be reinvested at the net asset value per share on
the respective payment dates.
* Annualized.
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
INTERMEDIATE FIXED-INCOME FUND
The financial highlights table is intended to help you understand the Fund's
financial performance for the past 5 years. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned (or lost) 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, are included in the annual report, which is
available upon request.
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING
THROUGHOUT THE PERIOD
ADVISOR CLASS
1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 12.19 $ 11.90 $ 12.29 $ 11.04 $ 12.34
INVESTMENT OPERATIONS:
Net investment income 0.67 0.71 0.67 0.71 0.65
Net realized and unrealized gain
(loss) on investments 0.32 0.29 -0.39 1.25 -1.28
Total from investment operations 0.99 1.00 0.28 1.96 -0.63
DISTRIBUTIONS:
Distributions from net investment income -0.67 -0.71 -0.67 -0.71 -0.65
Distributions from capital gains -0.04 0.00 0.00 0.00 -0.02
Total distributions -0.71 -0.71 -0.67 -0.71 -0.67
- ----------------------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $ 12.47 $ 12.19 $ 11.90 $ 12.29 $ 11.04
- ----------------------------------------------------------------------------------------------------------------------
Total return (1) 8.38% 8.62% 2.56% 18.26% -5.24%
- ----------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $48,489 $55,197 $52,248 $36,878 $31,405
- ----------------------------------------------------------------------------------------------------------------------
Ratios of expenses to average net assets:
After Accessor Capital fee waivers 0.79% 0.84% 0.88% 0.96% 1.24%
Before Accessor Capital fee waivers 0.79 0.84 0.88 0.96 1.28
Ratio of net investment income to
average net assets
After Accessor Capital fee waivers 5.46 5.88 5.79 6.07 5.65
Before Accessor Capital fee waivers 5.46 5.88 5.79 6.07 5.61
Portfolio turnover rate 113.00 84.35 94.69 187.62 255.11
</TABLE>
- ----------
(1) Total return is calculated assuming a purchase of shares at net asset value
per share on the first day and a sale at net asset value per share on the
last day of each period reported. Distributions are assumed, for purposes
of this calculation, to be reinvested at the net asset value per share on
the respective payment dates.
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SHORT-INTERMEDIATE FIXED-INCOME FUND
The financial highlights table is intended to help you understand the Fund's
financial performance for the past 5 years. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned (or lost) 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, are included in the annual report, which is
available upon request.
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING
THROUGHOUT THE PERIOD
ADVISOR CLASS
1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 12.27 $ 12.16 $ 12.32 $ 11.62 $ 12.29
INVESTMENT OPERATIONS:
Net investment income 0.68 0.64 0.59 0.60 0.50
Net realized and unrealized gain
(loss) on investments 0.14 0.11 -0.16 0.70 -0.67
Total from investment operations 0.82 0.75 0.43 1.30 -0.17
DISTRIBUTIONS:
Distributions from net investment income -0.63 -0.64 -0.59 -0.60 -0.50
Distributions from capital gains -0.13 0.00 0.00 0.00 0.00
Total distributions -0.76 -0.64 -0.59 -0.60 -0.50
- ----------------------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $ 12.33 $ 12.27 $ 12.16 $ 12.32 $11.62
- ----------------------------------------------------------------------------------------------------------------------
Total return (1) 6.87% 6.33% 3.63% 11.42% -1.42%
- ----------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 42,454 $40,942 $36,701 $35,272 $32,233
- ----------------------------------------------------------------------------------------------------------------------
Ratios of expenses to average net assets:
After Accessor Capital fee waivers 0.82% 0.86% 0.93% 0.94% 1.18%
Before Accessor Capital fee waivers 0.82 0.86 0.93 0.94 1.22
Ratio of net investment income to
average net assets
After Accessor Capital fee waivers 5.12 5.20 4.89 4.99 4.17
Before Accessor Capital fee waivers 5.12 5.20 4.89 4.99 4.13
Portfolio turnover rate 69.64 53.30 31.12 41.93 36.54
</TABLE>
- ----------
(1) Total return is calculated assuming a purchase of shares at net asset value
per share on the first day and a sale at net asset value per share on the
last day of each period reported. Distributions are assumed, for purposes
of this calculation, to be reinvested at the net asset value per share on
the respective payment dates.
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
MORTGAGE SECURITIES FUND
The financial highlights table is intended to help you understand the Fund's
financial performance for the past 5 years. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned (or lost) 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, are included in the annual report, which is
available upon request.
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING
THROUGHOUT THE PERIOD
ADVISOR CLASS
1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 12.60 $ 12.23 $ 12.38 $ 11.36 $ 12.17
INVESTMENT OPERATIONS:
Net investment income 0.70 0.72 0.73 0.76 0.60
Net realized and unrealized gain
(loss) on investments 0.09 0.42 -0.15 1.02 -0.80
Total from investment operations 0.79 1.14 0.58 1.78 -0.20
DISTRIBUTIONS:
Distributions from net investment income -0.70 -0.72 -0.73 -0.76 -0.60
Distributions from capital gains -0.10 -0.05 0.00 0.00 -0.01
Total distributions -0.80 -0.77 -0.73 -0.76 -0.61
- ----------------------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $ 12.59 $ 12.60 $ 12.23 $ 12.38 $ 11.36
- ----------------------------------------------------------------------------------------------------------------------
Total return (1) 6.43% 9.53% 4.95% 16.03% -1.65%
- ----------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $128,788 $109,747 $73,862 $49,830 $32,975
- ----------------------------------------------------------------------------------------------------------------------
Ratios of expenses to average net assets:
After Accessor Capital fee waivers 0.88% 0.84% 0.95% 1.03% 1.31%
Before Accessor Capital fee waivers 0.88 0.84 0.95 1.03 1.35
Ratio of net investment income to
average net assets:
After Accessor Capital fee waivers 5.59 5.93 6.08 6.41 5.18
Before Accessor Capital fee waivers 5.59 5.93 6.08 6.41 5.14
Portfolio turnover rate 278.18 211.66 356.23 422.56 603.51
</TABLE>
- ----------
(1) Total return is calculated assuming a purchase of shares at net asset value
per share on the first day and a sale at net asset value per share on the
last day of each period reported. Distributions are assumed, for purposes
of this calculation, to be reinvested at the net asset value per share on
the respective payment dates.
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
U.S. GOVERNMENT MONEY FUND
The financial highlights table is intended to help you understand the Fund's
financial performance for the past 5 years. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned (or lost) 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, are included in the annual report, which is
available upon request.
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING
THROUGHOUT THE PERIOD
ADVISOR CLASS
1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INVESTMENT OPERATIONS:
Net investment income 0.05 0.05 0.05 0.05 0.04
DISTRIBUTIONS:
Distributions from net investment income -0.05 -0.05 -0.05 -0.05 -0.04
- ----------------------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------------------------------------------------
Total return (1) 5.00% 5.07% 4.78% 5.33% 3.70%
- ----------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $153,148 $50,910 $61,672 $41,882 $12,008
- ----------------------------------------------------------------------------------------------------------------------
Ratios of expenses to average net assets:
After Accessor Capital fee waivers 0.53% 0.54% 0.59% 0.53% 0.45%
Before Accessor Capital fee waivers 0.53 0.54 0.59 0.78 1.27
Ratio of net investment income to
average net assets
After Accessor Capital fee waivers 4.83 4.96 4.73 5.14 3.51
Before Accessor Capital fee waivers 4.83 4.96 4.73 4.89 2.69
</TABLE>
- ----------
(1) Total return is calculated assuming a purchase of shares at net asset value
per share on the first day and a sale at net asset value per share on the
last day of each period reported. Distributions are assumed, for purposes
of this calculation, to be reinvested at the net asset value per share on
the respective payment dates.
<PAGE>
APPENDIX A
The following information has been supplied by the respective preparer of the
index or has been obtained from other publicly available information.
STANDARD & POOR'S 500 INDEX*
The purpose of the S&P 500 is to portray the pattern of common stock price
movement. Construction of the index proceeds from industry groups to the whole.
Currently there are four groups: 378 Industrials, 39 Utilities, 10
Transportation and 73 Financial. Since some industries are characterized by
companies of relatively small stock capitalization, the index does not comprise
the 500 largest exchange listed companies. The current S&P 500 membership
consists of 459 NYSE, 39 NASDAQ and 2 AMEX traded companies.
Component stocks are chosen for market size, liquidity and with the aim of
achieving a distribution by broad industry groupings that are representative of
the U.S. economy. Each stock added to the index must represent a viable
enterprise and must be representative of the industry group to which it is
assigned. Its market price movements must in general be responsive to changes in
industry affairs.
The formula adopted by Standard & Poor's is generally defined as a
"base-weighted aggregative" expressed in relatives with the average value for
the base period (1941-1943) equal to 10. Each component stock is weighted so
that it will influence the index in proportion to its respective market
importance. The most suitable weighting factor for this purpose is the number of
shares outstanding. The price of any stock multiplied by number of shares
outstanding gives the current market value for that particular issue. This
market value determines the relative importance of the security.
Market values for individual stocks are added together to obtain their
particular group market value. These group values are expressed as a relative,
or index number, to the base period (1941-1943) market value. As the base period
market value is relatively constant, the index number reflects only fluctuations
in current market values.
- --------------------------------------------------------------------------------
*"STANDARD & POOR'S," "S&P" AND "S&P 500" ARE TRADEMARKS OF STANDARD AND POOR'S,
A DIVISION OF THE MCGRAW-HILL COMPANIES, INC. THE GROWTH FUND AND VALUE FUND ARE
NOT SPONSORED, ENDORSED, SOLD OR PROMOTED BY STANDARD & POOR'S.
- --------------------------------------------------------------------------------
S&P500/BARRA GROWTH INDEX [GRAPHIC]
S&P500/BARRA VALUE INDEX
BARRA, in collaboration with Standard and Poor's, has constructed the
S&P500/BARRA Growth Index (the "Growth Index") and S&P500/BARRA Value Index (the
"Value Index") to separate the S&P 500 into value stocks and growth stocks.
The Growth and Value Indices are constructed by dividing the stocks in the S&P
500 according to their price-to-book ratios. The Value Index contains firms with
lower price-to-book ratios and has 50 percent of the capitalization of the S&P
500. The Growth Index contains the remaining members of the S&P 500. Each of the
indices is capitalization-weighted and is rebalanced semi-annually on January 1
and July 1 of each year.
Although the Value Index is created based on price-to-book ratios, the companies
in the index generally have other characteristics associated with "value"
stocks: low price-to-earnings ratios, high dividend yields, and low historical
and predicted earnings growth. Because of these characteristics, the Value Index
historically has had higher weights in the Energy, Utility, and Financial
sectors than the S&P 500.
Companies in the Growth Index tend to have opposite characteristics from those
in the Value Index: high earnings-to-price ratios, low dividend yields, and high
earnings growth. Historically, the Growth Index has been more concentrated in
Electronics, Computers, Health Care and Drugs than the S&P 500.
As of December 31, 1998 there were 378 companies in the Value Index;
consequently there are 122 companies in the Growth Index.
WILSHIRE 4500 INDEX*
While the S&P 500 includes the preponderance of large market capitalization
stocks, it excludes most of the medium- and small-size companies that comprise
the remaining 23% of the capitalization of the U.S. stock market. The Wilshire
4500 Index (an unmanaged index) consists of all U.S. stocks that are not in the
S&P 500 and that trade regularly on the NYSE and American Stock Exchange as well
as on the Nasdaq Stock Market. The Wilshire 4500 Index is constructed from the
Wilshire 5000 Equity Index, which measures the performance of all U.S.
headquartered equity securities with readily available price data. Approximately
7,000 capitalization weighted security returns are used to adjust the Wilshire
5000 Equity Index. The Wilshire 5000 Equity Index was created by Wilshire
Associates in 1974 to aid in performance measurement. The Wilshire 4500 Index
consists of the Wilshire 5000 Equity Index after excluding the companies in the
S&P 500.
Wilshire Associates view the performance of the Wilshire 5000's securities
several ways. Price and total return indices using both capital and equal
weightings are computed. The unit value of these four indices was set to 1.0 on
December 31, 1970.
- --------------------------------------------------------------------------------
"WILSHIRE 4500" AND "WILSHIRE 5000" ARE REGISTERED TRADEMARKS OF WILSHIRE
ASSOCIATES. THE SMALL TO MID CAP FUND IS NOT SPONSORED, ENDORSED, SOLD OR
PROMOTED BY WILSHIRE ASSOCIATES.
- --------------------------------------------------------------------------------
<PAGE>
MORGAN STANLEY CAPITAL INTERNATIONAL EAFE + EMF INDEX*
The MSCI EAFE + EMF Index is a market-capitalization-weighted index composed of
companies representative of the market structure of 45 Developed and Emerging
Market countries. The index is calculated without dividends or with gross
dividends reinvested, in both U.S. dollars and local currencies.
The MSCI EAFE Index is a market-capitalization-weighted index composed of
companies representative of the market structure of 20 Developed Market
countries in Europe, Australasia and the Far East. The index is calculated
without dividends, with net or with gross dividends reinvested, in both U.S.
dollars and local currencies.
MSCI Emerging Markets Free ("EMF") Index is a market-capitalization-weighted
index composed of companies representative of the market structure of 25
Emerging Market countries in Europe, Latin America and the Pacific Basin. The
MSCI EMF Index excludes closed markets and those shares in otherwise free
markets which are not purchasable by foreigners.
The MSCI indices reflect stock market trends by representing the evolution of an
unmanaged portfolio containing a broad selection of domestically listed
companies. A dynamic optimization process which involves maximizing float and
liquidity, reflecting accurately the market's size and industry profiles, and
minimizing cross ownership is used to determine index constituents. Stock
selection also takes into consideration the trading capabilities of foreigners
in emerging market countries.
As of December 31, 1998, the MSCI EAFE + EMF Index consisted of 1,911 companies
traded on stock markets in 45 countries. The weighting of the MSCI EAFE + EMF
Index by country was as follows:
Developed Markets: Australia 2.37%, Austria 0.31%, Belgium 1.78%, Denmark 0.82%,
Finland 1.44%, France 8.69%, Germany 9.85%, Hong Kong 1.91%, Ireland 0.46%,
Italy 4.82%, Japan 19.41%, Netherlands 6.01%, New Zealand 0.17%, Norway 0.35%,
Portugal 0.61%, Singapore 0.64%, Spain 3.10%, Sweden 2.43%, Switzerland 7.44%,
United Kingdom 19.65%.
Emerging Markets: Argentina 0.36%, Brazil Free 0.93%, Chile 0.35%, China Free
0.05%, Colombia 0.06%, Czech Republic 0.09%, Greece 0.57%, Hungary 0.13%, India
0.61%, Indonesia Free 0.14%, Israel 0.26%, Jordan 0.02%, Korea 0.83%, Mexico
Free 0.87%, Pakistan 0.03%, Peru 0.07%, Philippines Free 0.17%, Poland 0.11%,
Russia 0.10%, South Africa 0.80%, Sri Lanka 0.01%, Taiwan Free 0.77%, Thailand
Free 0.22%, Turkey 0.16%, Venezuela 0.08%.
Unlike other broad-based indices, the number of stocks included in MSCI EAFE +
EMF Index is not fixed and may vary to enable the Index to continue to reflect
the primary home markets of the constituent countries. Changes in the Index will
be announced when made. MSCI EAFE + EMF Index is a capitalization-weighted index
calculated by Morgan Stanley Capital International based on the official closing
prices for each stock in its primary local or home market. The base value of the
MSCI EAFE + EMF Index was equal to 100.0 on January 1, 1988. As of December 31,
1998, the current value of the MSCI EAFE + EMF Index was 180.3.
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"EAFE" IS A REGISTERED TRADEMARK OF MORGAN STANLEY CAPITAL INTERNATIONAL. THE
INTERNATIONAL FUND IS NOT SPONSORED, ENDORSED, SOLD OR PROMOTED BY MORGAN
STANLEY CAPITAL INTERNATIONAL.
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Lehman Brothers*
Government/Corporate Index
Government/Corporate 1-5 Year Index
Mortgage-Backed Securities Index
The Lehman Brothers Bond Indices include fixed-rate debt issues rated investment
grade (Baa3) or higher by Moody's. For those issues not rated by Moody's, the
equivalent S&P rating is used, and for those not rated by S&P, the equivalent
Fitch Investors Service, Inc. rating is used. These indices also include
fixed-rate debt securities issued by the U.S. Government, its agencies or
instrumentalities, which are generally not rated but have an implied rating
greater than AAA. All issues must have at least one year remaining maturity and
an outstanding par value of at least $100 million. Price, coupon and total
return are reported for all sectors on a month-end to month-end basis. All
returns are market value weighted inclusive of accrued interest.
The Lehman Brothers Government/Corporate Index is made up of the Government and
Corporate Bond Indices.
The Government Bond Index is made up of the Treasury Bond Index (all public
obligations of the United States Treasury, that have remaining maturities of
more than one year, excluding flower bonds and targeted investor notes) and the
Agency Bond Index (all publicly issued debt of U.S. Government agencies and
quasi-federal corporations, and corporate or foreign debt guaranteed by the U.S.
Government).
The Corporate Bond Index includes all publicly issued, fixed-rate,
nonconvertible investment grade domestic corporate debt. Also included are
Yankee bonds, which are dollar-denominated SEC registered public, nonconvertible
debt issued or guaranteed by foreign sovereign governments, municipalities or
governmental agencies, or international agencies.
The Government/Corporate 1-5 Year Index is composed of Agency and Treasury
securities and corporate securities of the type referred to in the preceding
paragraph, all with maturities of one to five years.
The Mortgage-Backed Securities Index covers pass-through securities backed by
mortgage pools of the Government National Mortgage Association (GNMA), Federal
Home Loan Mortgage Corporation (FHLMC) and Federal National Mortgage Association
(FNMA).
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THE INTERMEDIATE FIXED-INCOME FUND, THE SHORT-INTERMEDIATE FIXED-INCOME FUND AND
THE MORTGAGE SECURITIES FUND ARE NOT SPONSORED, ENDORSED, SOLD OR PROMOTED BY
LEHMAN BROTHERS.
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<PAGE>
SHAREHOLDER REPORTS. Accessor Funds publishes Annual and Semi-Annual Reports,
which contain information about each Fund's recent performance, including:
[BULLET] Management's discussion about recent market conditions, economic trends
and Fund strategies that affected their performance over the recent period
[BULLET] Fund performance data and financial statements
[BULLET] Fund holdings
STATEMENT OF ADDITIONAL INFORMATION ("SAI"). The SAI contains more detailed
information about Accessor Funds and each Fund. The SAI is incorporated by
reference into this Prospectus, making it legally part of this Prospectus.
Free copies of Accessor Funds' Annual Report, Semi-Annual Report, SAI and other
information through your financial intermediary or from:
ACCESSOR CAPITAL MANAGEMENT LP
1420 Fifth Street, Suite 3600
Seattle, Washington 98101
(800) 759-3504
(206) 224-7420
www.accessor.com
You may obtain copies of documents from the SEC, upon payment of duplicating
fees, or view documents at the SEC's Public Reference Room in Washington, D.C.
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549-6009
(800) SEC-0330 (Public Reference Section)
www.sec.gov
Accessor(R) is a registered trademark of Accessor Capital Management LP.
SEC file number: 811-06337.
<PAGE>
[GRAPHIC] INVESTOR CLASS SHARES
ACCESSOR(R)FUNDS, INC. PROSPECTUS MAY 1, 1999
Equity Funds
GROWTH
VALUE
SMALL TO MID CAP
INTERNATIONAL EQUITY
Fixed-Income Funds
Intermediate Fixed-Income
Short-Intermediate Fixed-Income
Mortgage Securities
U.S. Government Money
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this Prospectus. Any representation to
the contrary is a criminal offense.
[LOGO]ACCESSOR
<PAGE>
================================================================================
THE ACCESSOR FUNDS
[Bullet] A family of eight mutual funds (each a "Fund"), each with two classes
of shares.
[Bullet] A variety of equity and fixed-income mutual funds.
[Bullet] Designed to help investors realize the benefits of asset allocation and
diversification.
[Bullet] Managed and administered by Accessor Capital Management LP ("Accessor
Capital").
[Bullet] Sub-advised by money managers ("Money Managers") who are selected and
supervised by Accessor Capital (other than the U.S. Government Money Fund which
is advised directly by Accessor Capital).
================================================================================
DIVERSIFICATION is the spreading of risk among a group of investment assets.
Within a portfolio of investments, it means reducing the risk of any individual
security by holding securities from a variety of companies. In a broader
context, divesification means investing among a variety of security types to
reduce the importance of any one type or class of security.
ASSET ALLOCATION is a logical extension of the principle of diversification. It
is a method of mixing different types of investments (for example, stocks and
bonds) in an effort to enhance returns and reduce risks.
[Graphic]
DIVERSIFICATION AND ASSET ALLOCATION DO NOT, HOWEVER, GUARANTEE INVESTMENT
RESULTS.
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<PAGE>
TABLE OF CONTENTS
THE FUNDS
Fund Summaries.......................................................1
Performance..........................................................5
Equity Funds' Expenses...............................................9
Fixed-Income Funds' Expenses........................................10
Equity Funds' Objectives and Strategies.............................11
Equity Funds' Principal Securities and Risks........................13
Fixed-Income Funds' Objectives and Strategies.......................15
Fixed-Income Funds' Principal Securities and Risks..................17
Management, Organization and Capital Structure......................19
SHAREHOLDER INFORMATION
Purchasing Fund Shares..............................................27
Exchanging Fund Shares..............................................29
Redeeming Fund Shares...............................................30
Dividends and Distributions.........................................31
Valuation of Securities.............................................31
Taxation............................................................32
Distribution, Shareholder Service and Administrative
Services Arrangements.........................................32
Financial Highlights................................................33
APPENDIX A
Description of Fund Indices.........................................41
<PAGE>
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GRAPHIC GROWTH FUND
SUMMARY
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE & PRINCIPLE STRATEGIES The Growth Fund seeks capital growth
through investing primarily in equity securities with greater than average
growth characteristics selected from the Standard & Poor's 500 Composite Stock
Price Index ("S&P 500").
The Fund invests primarily in stocks of companies chosen from the S&P 500 that
Geewax, Terker & Company ("Geewax Terker"), the Fund's Money Manager, believes
will experience higher than average growth of earnings or stock price. The Money
Manager attempts to exceed the performance of the S&P 500/BARRA Growth Index
over a cycle of five years.
Geewax Terker uses a disciplined investment approach and quantitative analytical
techniques designed to first select growth stocks with the largest market
capitalizations and well-established records of growth in profits and earnings,
and then eliminate those stocks with the greatest risk.
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PRINCIPAL INVESTMENT RISKS STOCK MARKET VOLATILITY. Stock markets are volatile
and can decline significantly in response to adverse issuer, political,
regulatory, market or economic developments.
COMPANY RISK. The value of an individual security or particular type of security
can be more volatile than the market as a whole and can perform differently than
the market as a whole. Growth stocks are often more sensitive to economic and
market swings than other types of stocks because market prices tend to reflect
future expectations.
FOREIGN EXPOSURE. Foreign markets can be more volatile than the U.S. market due
to increased risks of adverse issuer, political, regulatory, market or economic
developments and can perform differently than the U.S. market.
- --------------------------------------------------------------------------------
GRAPHIC VALUE FUND*
SUMMARY
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE & PRINCIPLE STRATEGIES The Value Fund seeks generation of
current income and capital growth by investing primarily in income-producing
equity securities selected from the S&P 500.
The Fund's Money Manager, Martingale Asset Management ("Martingale"), analyzes
fundamental information about companies such as their assets, earnings and
growth to identify undervalued stocks. The Money Manager attempts to exceed the
total return performance of the S&P 500/BARRA Value Index over a cycle of five
years.
Martingale focuses primarily on stocks issued by:
[graphic] companies with low price to earnings and/or price to book ratios
[graphic] companies with improving growth of earnings and/or growth of
dividends
- --------------------------------------------------------------------------------
PRINCIPAL INVESTMENT RISKS STOCK MARKET VOLATILITY. Stock markets are volatile
and can decline significantly in response to adverse issuer, political,
regulatory, market or economic developments.
COMPANY RISK. The value of an individual security or particular type of security
can be more volatile than the market as a whole and can perform differently than
the market as a whole. Value stocks tend to be issued by larger, more
established companies, and may underperform in periods of general market
strength.
Value stocks contained in the S&P 500 have generated less current income in
recent years than they have in earlier periods.
FOREIGN EXPOSURE. Foreign markets can be more volatile than the U.S. market due
to increased risks of adverse issuer, political, regulatory, market or economic
developments and can perform differently than the U.S. market.
*UNTIL MAY 1, 1999, KNOWN AS THE VALUE AND INCOME PORTFOLIO.
- --------------------------------------------------------------------------------
AN INVESTMENT IN A FUND IS NOT A DEPOSIT OF A BANK AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY. YOU COULD LOSE MONEY BY INVESTING IN A FUND.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
GRAPHIC SMALL TO MID CAP FUND
SUMMARY
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INVESTMENT OBJECTIVE & PRINCIPLE STRATEGIES The Small to Mid Cap Fund seeks
capital growth through investing primarily in equity securities of small to
medium capitalization issuers.
The Fund invests at least 65% of its total assets in the stocks of small and
medium capitalization companies that are expected to experience higher than
average growth of earnings or stock price. Small capitalization companies have a
market capitalization of $1 billion or less, and medium capitalization companies
have a market capitalization between $1 billion and $5 billion.
Symphony Asset Management ("Symphony"), the Fund's Money Manager, uses a
quantitative approach to analyze earnings forecasts, price movements and other
factors to identify growth stocks with attractive fundamentals relative to
price. The Money Manager attempts to exceed the performance of the Wilshire 4500
Index over a cycle of five years.
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PRINCIPAL INVESTMENT RISKS STOCK MARKET VOLATILITY. Stock markets are volatile
and can decline significantly in response to adverse issuer, political,
regulatory, market or economic developments.
COMPANY RISK. The value of an individual security or particular type of security
can be more volatile than the market as a whole and can perform differently than
the value of the market as a whole. Small and medium capitalization companies
often have greater volatility, lower trading volume and less liquidity than
larger capitalization companies.
FOREIGN EXPOSURE. Foreign markets can be more volatile than the U.S. market due
to increased risks of adverse issuer, political, regulatory, market or economic
developments and can perform differently than the U.S. market.
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GRAPHIC INTERNATIONAL EQUITY FUND
SUMMARY
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE & PRINCIPLE STRATEGIES The International Equity Fund seeks
capital growth by investing primarily in equity securities of companies
domiciled in countries other than the United States and traded on foreign stock
exchanges.
The Fund will invest at least 65% of its total assets in the stocks of companies
domiciled in Europe and the Pacific Rim. The Fund normally intends to maintain
investments in at least three different countries outside the United States.
Nicholas-Applegate Capital Management ("Nicholas-Applegate"), the Fund's Money
Manager, uses quantitative and fundamental analysis to seek companies that are
industry leaders in the process of positive change to construct a portfolio that
generally parallels the countries comprising the Morgan Stanley Capital
International ("MSCI") EAFE + EMF Index. The Money Manager attempts to exceed
the total return of MSCI EAFE + EMF Index.
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PRINCIPAL INVESTMENT RISKS STOCK MARKET VOLATILITY. Stock markets are volatile
and can decline significantly in response to adverse issuer, political,
regulatory, market or economic developments.
COMPANY RISK. The value of an individual security or particular type of security
can be more volatile than the market as a whole and can perform differently than
the value of the market as a whole.
FOREIGN EXPOSURE. Foreign markets, particularly emerging markets, can be more
volatile than the U.S. market due to increased risks of adverse issuer,
political, regulatory, market or economic developments and can perform
differently than the U.S. market.
- --------------------------------------------------------------------------------
AN INVESTMENT IN A FUND IS NOT A DEPOSIT OF A BANK AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY. YOU COULD LOSE MONEY BY INVESTING IN A FUND.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
GRAPHIC INTERMEDIATE FIXED-INCOME FUND
SUMMARY
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE & PRINCIPLE STRATEGIES The Intermediate Fixed-Income Fund
seeks generation of current income by investing primarily in fixed-income
securities with durations of between three and ten years and a dollar-weighted
average portfolio duration that does not vary more or less than 20% from that of
the Lehman Brothers Government/Corporate Index (the "LBGC Index").
Cypress Asset Management ("Cypress"), the Fund's Money Manager uses quantitative
analyses and risk control methods to ensure that the Fund's overall risk and
duration characteristics are consistent with the LBGC Index. Cypress seeks to
enhance returns by systematically overweighting its investments in the corporate
sector as compared to the index.
- --------------------------------------------------------------------------------
PRINCIPAL INVESTMENT RISKS INTEREST RATE RISK. Increases in interest rates can
cause the price of a debt security to decrease.
ISSUER RISK. Changes in the financial condition of an issuer, changes in
specific economic or political conditions that affect a particular issuer, and
changes in general economic or political conditions can adversely affect the
credit quality or value of an issuer's securities.
- --------------------------------------------------------------------------------
HELP BOX:
DURATION. Duration, one of the fundamental tools used by money
managers in security selection, is a measure of the price sensitivity of a debt
security or a portfolio of debt securities to relative changes in interest
rates. For instance, a duration of "one" means that a portfolio's or security's
price would be expected to change by approximately 1% with a 1% change in
interest rates.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GRAPHIC SHORT-INTERMEDIATE FIXED-INCOME FUND
SUMMARY
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE & PRINCIPLE STRATEGIES The Short-Intermediate Fixed-Income
Fund seeks preservation of capital and generation of current income by investing
primarily in fixed-income securities with durations of between one and five
years and a dollar-weighted average portfolio duration that does not vary more
or less than 20% from that of the Lehman Brothers Government/Corporate 1-5 Year
Index (the "LBGC1-5 Index").
Cypress, the Fund's Money Manager, uses quantitative analyses and risk control
methods to ensure that the Fund's overall risk and duration characteristics are
consistent with the LBGC1-5 Index. Cypress seeks to enhance the Fund's returns
by systematically overweighting its investment in the corporate sector as
compared to the index.
- --------------------------------------------------------------------------------
PRINCIPAL INVESTMENT RISKS INTEREST RATE RISK. Increases in interest rates can
cause the price of a debt security to decrease.
ISSUER RISK. Changes in the financial condition of an issuer, changes in
specific economic or political conditions that affect a particular issuer, and
changes in general economic or political conditions can adversely affect the
credit quality or value of an issuer's securities.
- --------------------------------------------------------------------------------
AN INVESTMENT IN A FUND IS NOT A DEPOSIT OF A BANK AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY. YOU COULD LOSE MONEY BY INVESTING IN A FUND.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
GRAPHIC MORTGAGE SECURITIES FUND
SUMMARY
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE & PRINCIPLE STRATEGIES The Mortgage Securities Fund seeks
generation of current income by investing primarily in mortgage-related
securities with an aggregate dollar-weighted average portfolio duration that
does not vary outside of a band of plus or minus 20% from that of the Lehman
Brothers Mortgage-Backed Securities Index (the "LBM Index").
BlackRock Financial Management, Inc. ("BlackRock"), the Fund's Money Manager,
uses quantitative risk control methods to ensure that the Fund's overall risk
and duration characteristics are consistent with the LBM Index. BlackRock's
investment philosophy and process centers around four key principles: [bullet]
controlled duration; [bullet] relative value sector rotation and security
selection; [bullet] rigorous quantitative analysis to security valuation; and
[bullet] quality credit analysis.
BlackRock's Investment Strategy Committee determines the firm's broad investment
strategy based on macroeconomics and market trends, as well as input from Risk
Management and Credit Committee professionals. Fund managers then implement this
strategy by selecting the sectors and securities which offer the greatest
relative value within investment guidelines.
- --------------------------------------------------------------------------------
PRINCIPAL INVESTMENT RISKS INTEREST RATE RISK. Increases in interest rates can
cause the price of a debt security to decrease.
PREPAYMENT RISK. The ability of an issuer of a debt security to repay principal
prior to a security's maturity can cause greater price volatility if interest
rates change.
ISSUER RISKS. Changes in the financial conditions of an issuer, changes in
specific economic or political conditions that affect a particular issuer, and
changes in general economic or political conditions can adversely affect the
credit quality or value of an issuer's securities.
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GRAPHIC U.S. GOVERNMENT MONEY FUND
SUMMARY
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE & PRINCIPLE STRATEGIES The U.S. Government Money Fund seeks
maximum current income consistent with the preservation of principal and
liquidity by investing primarily in short-term obligations issued or guaranteed
by the U.S. Government, its agencies or instrumentalities.
Accessor Capital directly invests the assets of the Fund. Accessor Capital uses
quantitative analysis to maximize the Fund's yield. The Fund follows industry
standard requirements concerning the quality, maturity and diversification of
its investments. The Fund seeks to maintain an average maturity of 90 days or
less, while maintaining liquidity and maximizing current yield.
- --------------------------------------------------------------------------------
PRINCIPAL INVESTMENT RISKS INTEREST RATE RISK. The Fund's yield will vary and is
expected to react to changes in short-term interest rates.
INFLATION RISK. Over time, the real value of the Fund's yield may be eroded by
inflation.
STABLE NET ASSET VALUE. Although the U.S. Government Money 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.
- --------------------------------------------------------------------------------
AN INVESTMENT IN A FUND IS NOT A DEPOSIT OF A BANK AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY. YOU COULD LOSE MONEY BY INVESTING IN A FUND.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
PERFORMANCE
- --------------------------------------------------------------------------------
The following tables illustrate changes (and therefore, the risk elements) in
the performance of Advisor Class Shares of the Funds, which are not offered
through this prospectus, from year to year and compare the performance of
Advisor Class Shares to the performance of a market index over time. The
performance does not reflect certain expenses of Investor Class Shares, which,
if reflected, would result in lower performance for the periods shown. As with
all mutual funds, how the Funds have performed in the past is not an indication
of how they will perform in the future.
GROWTH FUND
[Bar Chart] Year-by-Year Average Annual Total Return
Total Return As of 12/31/98
[Data Points] Life of
1 Yr 5 Yr Fund*
1993 14.21 ---- ---- -------
1994 3.99 Fund 46.65% 26.74% 24.90%
1995 34.32 S&P 500/BARRA 42.16 27.94 23.19**
1996 19.83 Growth Index(1)
1997 33.24 *8/24/92 inception date
1998 46.65 **Index measured from 9/1/92
As of 12/31 each year
Best Quarter Q4 `98 27.65%
Worst Quarter Q3 `98 -7.07%
- --------------------------------------------------------------------------------
(1) THE S&P 500/BARRA GROWTH INDEX IS AN UNMANAGED INDEX OF GROWTH STOCKS IN THE
S&P 500. THE S&P 500 IS AN UNMANAGED INDEX OF 500 COMMON STOCKS CHOSEN TO
REFLECT THE INDUSTRIES IN THE U.S. ECONOMY. LARGE CAPITALIZATION GROWTH STOCKS
ARE THE STOCKS WITHIN THE S&P 500 THAT GENERALLY HAVE HIGH EXPECTED EARNINGS
GROWTH AND HIGHER THAN AVERAGE PRICE-TO-BOOK RATIOS.
- --------------------------------------------------------------------------------
VALUE FUND
[BAR CHART] Year-by-Year Average Annual Total Return
Total Return AS OF 12/31/98
[Data Points]
Life of
1993 14.69 1 Yr 5 Yr Fund*
1994 -1.93 ---- ---- -----
1995 33.25 Fund 12.89% 19.44% 18.57%
1996 23.94 S&P500/BARRA 14.67 19.87 19.42**
1997 32.94 Value Index(1)
1998 12.89 *8/24/92 inception date
As of 12/31 each year **Index measured from 9/1/92
Best Quarter Q4 `98 18.96%
Worst Quarter Q3 `98 -15.24%
- --------------------------------------------------------------------------------
(1)THE S&P 500/BARRA VALUE INDEX IS AN UNMANAGED INDEX OF VALUE STOCKS IN THE
S&P 500. LARGE CAPITALIZATION VALUE STOCKS ARE THE STOCKS WITHIN THE S&P 500
THAT GENERALLY ARE PRICED BELOW THE MARKET AVERAGE BASED ON EARNINGS AND LOWER
THAN AVERAGE PRICE-TO-BOOK RATIOS.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
PERFORMANCE
- --------------------------------------------------------------------------------
SMALL TO MID CAP FUND
[Bar Chart] Year-by-Year Life of
Total Return 1 Yr 5 Yr Fund*
------------ ---- ---- -----
[Data Points] Fund 15.98% 20.07% 20.28%
Wilsire 4500
1993 14.39 Index(1) 8.63 15.76 17.01**
1994 -4.07 Small to Mid
1995 31.98 Cap Composite
1996 24.85 Index(2) 8.63 15.61 17.87**
1997 36.14
1998 15.98 *8/24/92 inception date
**Index measured from 9/1/92
As of 12/31 each year
Best Quarter Q4 `98 24.23%
Average Annual Total Return Worst Quarter Q3 `98 - 18.56%
As of 12/31/98
- --------------------------------------------------------------------------------
(1)THE WILSHIRE 4500 INDEX IS AN UNMANAGED INDEX OF STOCKS OF MEDIUM AND SMALL
CAPITALIZATION COMPANIES NOT IN THE S&P 500.
(2) THE SMALL TO MID CAP COMPOSITE INDEX IS A HYPOTHETICAL INDEX CONSTRUCTED BY
ACCESSOR CAPITAL, WHICH COMBINES THE BARRA INSTITUTIONAL SMALL INDEX AND THE
WILSHIRE 4500 INDEX. THE COMPOSITE IS INTENDED TO PROVIDE A BENCHMARK FOR
COMPARISON THAT REFLECTS THE DIFFERENT INVESTMENT POLICIES THAT THE FUND HAS
FOLLOWED IN THE PAST. IN AUGUST 1995, SHAREHOLDERS APPROVED CHANGES TO THE
FUND'S INVESTMENT POLICIES TO CHANGE THE FUND FROM A SMALL CAP FUND TO A SMALL
TO MEDIUM CAP FUND. ACCORDINGLY, PRIOR TO OCTOBER 1995, THE BARRA INDEX IS USED.
STARTING OCTOBER 1995, THE WILSHIRE INDEX IS USED.
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
[Bar Chart] Year-by-Year Average Annual Total Return
Total Return As of 12/31/98
1995 7.63 Life of
1996 13.78 1 Yr Fund*
1997 10.96 ---- -----
1998 16.07 Fund 16.07% 10.60%
As of 12/31 each year MSCI EAFE + EMF Index(1) 15.23 5.95**
International Composite 15.23 6.94**
Index(2)
*10/3/94 inception date
**Index measured from 11/1/94
Best Quarter Q4 `98 14.45%
Worst Quarter Q3 `98 -13.36%
- -----------------------------------------------------------
(1)THE MSCI EAFE + EMF INDEX IS AN UNMANAGED INDEX OF 45 DEVELOPED (EXCLUDING
THE UNITED STATES) AND EMERGING MARKET COUNTRIES, INCLUDING JAPAN, THE UNITED
KINGDOM, GERMANY AND FRANCE.
(2) THE INTERNATIONAL COMPOSITE INDEX IS A HYPOTHETICAL INDEX CONSTRUCTED BY
ACCESSOR CAPITAL, WHICH COMBINES THE MSCI EAFE INDEX AND THE MSCI EAFE+EMF
INDEX. THE COMPOSITE IS INTENDED TO PROVIDE A BENCHMARK FOR COMPARISON THAT
REFLECTS THE DIFFERENT INVESTMENT POLICIES THAT THE FUND HAS FOLLOWED IN THE
PAST. PRIOR TO MAY 1996, THE FUND DID NOT INVEST IN EMERGING MARKET SECURITIES.
BEGINNING IN MAY 1996, THE FUND WAS PERMITTED TO DO SO. ACCORDINGLY, PRIOR TO
MAY 1996, THE MSCI EAFE INDEX IS USED. STARTING IN MAY 1996, THE MSCI EAFE+EMF
INDEX IS USED.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
PERFORMANCE
- --------------------------------------------------------------------------------
INTERMEDIATE FIXED-INCOME FUND
[Bar Chart] Year-by-Year Average Annual Total Return
Total Return As of 12/31/98
[Data Points] Life of
1 Yr 5 Yr Fund*
1993 9.53 ---- ---- -----
1994 -5.24 Fund
1995 18.26 8.38% 6.23% 6.87%
1996 2.56 Lehman Govt/
1997 8.62 Corp Index(1) 9.47 7.30 7.84**
1998 8.38 *6/15/92 inception date
**Index measured from 7/1/92
As of 12/31 each year
Best Quarter Q2 `95 6.13%
Worst Quarter Q1 `94 - 3.53%
- --------------------------------------------------------------------------------
(1)THE LEHMAN BROTHERS GOVERNMENT/CORPORATE INDEX IS AN UNMANAGED INDEX OF
FIXED-RATE GOVERNMENT AND CORPORATE BONDS RATED INVESTMENT GRADE OR HIGHER.
- --------------------------------------------------------------------------------
SHORT-INTERMEDIATE FIXED-INCOME FUND
[Bar Chart] Year-by-Year Average Annual Total Return
Total Return As of 12/31/98
[Data Points] Life of
1993 5.63 1 Yr 5 Yr Fund*
1994 -1.42 ---- ---- -----
1995 11.42 Fund 6.87% 5.28% 5.46%
1996 3.63 Lehman Govt/
1997 6.33 Corp1-5 Index(1) 7.64 6.23 6.57**
1998 6.87 * 5/18/92 inception date
**Index measured from 6/1/92
As of 12/31 each year
Best Quarter Q1 `95 3.58%
Worst Quarter Q1 '94 -1.34%
- --------------------------------------------------------------------------------
(1)THE LEHMAN BROTHERS GOVERNMENT/CORPORATE 1-5 YEAR INDEX IS AN UNMANAGED INDEX
OF FIXED-RATE GOVERNMENT AND CORPORATE BONDS RATED INVESTMENT GRADE OR HIGHER,
ALL WITH MATURITIES OF ONE TO FIVE YEARS.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
PERFORMANCE
- --------------------------------------------------------------------------------
MORTGAGE SECURITIES FUND
[Bar Chart] Year-by-Year Average Annual Total Return
Total Return As of 12/31/98
[Data Points] Life of
1 Yr 5 Yrs Fund*
1993 7.26 ---- ----- -----
1994 -1.65 Fund 6.43% 6.90% 6.91%
1995 16.03 Lehman Mortgage-Backed
1996 4.95 Securities Index(1) 6.97% 7.23% 7.30%**
1997 9.53 *5/18/92 inception date
1998 6.43 **Index measured from 6/1/92
As of 12/31 each year Best Quarter Q1 '95 5.11%
Worst Quarter Q1 '94 -1.21%
- --------------------------------------------------------------------------------
(1)THE LEHMAN BROTHERS MORTGAGE-BACKED SECURITIES INDEX IS AN UNMANAGED INDEX OF
FIXED-RATE SECURITIES BACKED BY MORTGAGE POOLS OF THE GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION ("GNMA"), FEDERAL HOME LOAN MORTGAGE CORPORATIONS ("FHLMC")
AND FEDERAL NATIONAL MORTGAGE ASSOCIATION ("FNMA").
- --------------------------------------------------------------------------------
U.S. GOVERNMENT MONEY FUND
[Bar Chart] Year-by-Year Average Annual Total Return
Total Return As of 12/31/98
[Data Points] Life of
1 Yr 5 Yr Fund*
1993 2.81 ---- ---- -----
1994 3.70 Fund 5.00% 4.77% 4.32%
1995 5.33 Salomon Brothers
1996 4.78 U.S. 3 Mo.
1997 5.07 T-bill Index 5.11% 5.11% 4.65%**
1998 5.00 * 4/9/92 inception date
As of 12/31 each year **Index measured from 5/1/92
Best Quarter Q2 '95 1.37%
Worst Quarter Q2 '93 0.60%
- --------------------------------------------------------------------------------
(1) THE SALOMON BROTHERS INDEX IS DESIGNED TO MEASURE THE RETURN OF THE 3 MONTH
TREASURY BILLS.
THE U.S. GOVERNMENT MONEY FUND'S 7-DAY EFFECTIVE YIELD ON 12/31/98 WAS 4.58%.
FOR THE FUND'S CURRENT YIELD, CALL TOLL-FREE (800) 759-3504.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
EQUITY FUNDS' EXPENSES
- --------------------------------------------------------------------------------
The following tables describe the fees and expenses that you may pay if you buy
and hold Investor Class Shares of the Equity Funds.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
GROWTH VALUE SMALL TO MID INTL EQUITY
CAP
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SHAREHOLDER FEES (1) (2)
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge imposed on Purchases (as a none none none none
percent of offering price)
Maximum Sales Charge imposed on Reinvested none none none none
Dividends
Maximum Deferred Sales Charge none none none none
Redemption Fee (3) none none none none
- ----------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management Fees (4) 0.77% 0.77% 1.02% 1.15%
Distribution & Shareholder Service Fees(5) 0.25 0.25 0.25 0.25
---- ---- ---- ----
Other Expenses 0.27 0.29 0.25 0.44
Administrative Services Fees(6) 0.25 0.25 0.25 0.25
Total Other Expenses 0.52 0.54 0.50 0.69
---- ---- ---- ----
Total Annual Fund Operating Expenses 1.54 1.56 1.77 2.09
==== ==== ==== ====
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
(1) SHARES OF THE FUNDS ARE EXPECTED TO BE SOLD PRIMARILY THROUGH FINANCIAL
INTERMEDIARIES THAT MAY CHARGE SHAREHOLDERS A FEE. THESE FEES ARE NOT
INCLUDED IN THE TABLES.
(2) AN ANNUAL MAINTENANCE FEE OF $25.00 MAY BE CHARGED BY ACCESSOR CAPITAL, AS
THE TRANSFER AGENT ("TRANSFER AGENT") TO EACH IRA WITH AN AGGREGATE BALANCE
OF LESS THAN $10,000 ON DECEMBER 31 OF EACH YEAR.
(3) THE TRANSFER AGENT MAY CHARGE A PROCESSING FEE OF $10.00 FOR EACH CHECK
REDEMPTION REQUEST.
(4) MANAGEMENT FEES CONSIST OF THE MANAGEMENT FEE PAID TO ACCESSOR CAPITAL AND
THE FEES PAID TO THE MONEY MANAGERS OF THE FUNDS.
(5) THE COMBINATION OF THE FEES PAID PURSUANT TO THE RULE 12B-1 DISTRIBUTION
PLAN AND THE SHAREHOLDER SERVICE PLAN FOR EACH FUND MAY BE NO MORE THAN
0.25% OF THE ANNUAL NET ASSETS ATTRIBUTABLE TO THAT FUND'S INVESTOR CLASS
SHARES.
(6) PURSUANT TO AN ADMINISTRATIVE SERVICES PLAN, ACCESSOR FUNDS MAY PAY
FINANCIAL INTERMEDIARIES WHO HAVE ENTERED INTO ARRANGEMENTS WITH ACCESSOR
FUNDS UP TO 0.25% OF THE AVERAGE DAILY NET ASSETS OF THEIR CLIENTS WHO MAY
FROM TIME TO TIME BENEFICIALLY OWN INVESTOR CLASS SHARES OF THE FUNDS.
EXPENSE EXAMPLE
- ---------------
The Example shows what an investor in Investor Class Shares of a Fund could pay
over time. It is intended to help you compare the cost of investing in the Funds
with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in Investor Class Shares of a
Fund for the time periods indicated and then redeem all of your shares by
wire at the end of those periods. This Example does not include the effect
of the $10 fee for check redemption requests. The Example also assumes that
your investment has a 5% rate of return each year and that the Fund's
operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
================================================================================
One Year Three Years Five Years 10 Years
GROWTH $157.00 $486.00 $839.00 $1,834.00
VALUE 159.00 493.00 850.00 1,856.00
SMALL TO MID CAP 180.00 557.00 959.00 2,084.00
INTERNATIONAL EQUITY 212.00 655.00 1,124.00 2,421.00
================================================================================
<PAGE>
- --------------------------------------------------------------------------------
FIXED-INCOME FUNDS' EXPENSES
- --------------------------------------------------------------------------------
The following tables describe the fees and expenses that you may pay if you buy
and hold Investor Class Shares of the Fixed-Income Funds.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Intermediate Short-Int Mortgage U.S. Govt
Fixed Fixed Securities Money
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SHAREHOLDER FEES(1)
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge imposed on Purchases
(as a percent of offering price) none none none none
Maximum Sales Charge imposed on
Reinvested Dividends none none none none
Maximum Deferred Sales Charge none none none none
Check Redemption Fee (3) none none none none
- ---------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses
(expenses that are deducted from Fund
assets)
Management Fees (4) 0.40% 0.40% 0.59% 0.25%
Distribution & Shareholder Service Fees(5) 0.25 0.25 0.25 0.25
Other Expenses 0.33 0.35 0.29 0.28
Administrative Services Fees(6) 0.25 0.25 0.25 0.25
Total Other Expenses 0.58 0.60 0.54 0.53
Total Annual Fund Operating Expenses 1.23 1.25 1.38 1.03
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
(1) SHARES OF THE FUNDS ARE EXPECTED TO BE SOLD PRIMARILY THROUGH FINANCIAL
INTERMEDIARIES THAT MAY CHARGE SHAREHOLDERS A FEE. THESE FEES ARE NOT
INCLUDED IN THE TABLES.
(2) AN ANNUAL MAINTENANCE FEE OF $25.00 MAY BE CHARGED BY ACCESSOR CAPITAL, AS
THE TRANSFER AGENT ("TRANSFER AGENT") TO EACH IRA WITH AN AGGREGATE BALANCE
OF LESS THAN $10,000 ON DECEMBER 31 OF EACH YEAR.
(3) THE TRANSFER AGENT MAY CHARGE A PROCESSING FEE OF $10.00 FOR EACH CHECK
REDEMPTION REQUEST.
(4) MANAGEMENT FEES CONSIST OF THE MANAGEMENT FEE PAID TO ACCESSOR CAPITAL AND
THE FEES PAID TO THE MONEY MANAGERS OF THE FUNDS. ACCESSOR CAPITAL RECEIVES
ONLY THE MANAGEMENT FEE AND NOT A MONEY MANAGER FEE FOR THE U. S.
GOVERNMENT MONEY FUND THAT IT MANAGES DIRECTLY.
(5) THE COMBINATION OF THE FEES PAID PURSUANT TO THE RULE 12B-1 DISTRIBUTION
PLAN AND THE SHAREHOLDER SERVICE PLAN FOR EACH FUND MAY BE NO MORE THAN
0.25% OF THE ANNUAL NET ASSETS ATTRIBUTABLE TO THAT FUND'S INVESTOR CLASS
SHARES.
(6) PURSUANT TO AN ADMINISTRATIVE SERVICES PLAN, ACCESSOR FUNDS MAY PAY
FINANCIAL INTERMEDIARIES WHO HAVE ENTERED INTO ARRANGEMENTS WITH ACCESSOR
FUNDS UP TO 0.25% OF THE AVERAGE DAILY NET ASSETS OF THEIR CLIENTS WHO MAY
FROM TIME TO TIME BENEFICIALLY OWN INVESTOR CLASS SHARES OF THE FUNDS.
EXPENSE EXAMPLE
- ---------------
The Example shows what an investor in Investor Class Shares of a Fund could pay
over time. It is intended to help you compare the cost of investing in the Funds
with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in Investor Class Shares of a
Fund for the time periods indicated and then redeem all of your shares by
wire at the end of those periods. This Example does not include the effect
of the $10 fee for check redemption requests. The Example also assumes that
your investment has a 5% rate of return each year and that the Fund's
operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
================================================================================
One Year Three Years Five Years 10 Years
INTERMEDIATE FIXED-INCOME $125.00 $390.00 $676.00 $1,489.00
SHORT-INTERMEDIATE FIXED-INCOME 127.00 397.00 686.00 1,511.00
MORTGAGE SECURITIES 141.00 437.00 755.00 1,657.00
U.S. GOVERNMENT MONEY 105.00 328.00 569.00 1,259.00
================================================================================
<PAGE>
- --------------------------------------------------------------------------------
EQUITY FUNDS' OBJECTIVES AND STRATEGIES
- --------------------------------------------------------------------------------
GROWTH FUND
- -----------
INVESTMENT OBJECTIVE The Growth Fund seeks capital growth through investing
primarily in equity securities with greater than average growth characteristics
selected from the S&P 500.
- --------------------------------------------------------------------------------
INVESTMENT STRATEGY The Fund seeks to achieve its objective by investing
principally in common and preferred stocks, securities convertible into common
stocks, and rights and warrants of such issuers. The Money Manager will attempt
to exceed the total return performance of the S&P 500/BARRA Growth Index over a
market cycle of five years by investing primarily in stocks of companies that
are expected to experience higher than average growth of earnings or growth of
stock price. Under normal circumstances, up to 20% of the Fund's net assets may
be invested in common stocks of foreign issuers with large market
capitalizations whose securities have greater than average growth
characteristics. The Fund may engage in various portfolio strategies to reduce
certain risks of its investments and may thereby enhance income, but not for
speculation.
- --------------------------------------------------------------------------------
VALUE FUND
- ----------
INVESTMENT OBJECTIVE The Value Fund seeks generation of current income and
capital growth by investing primarily in income-producing equity securities
selected from the S&P 500.
- --------------------------------------------------------------------------------
INVESTMENT STRATEGY The Fund seeks to achieve its objective by investing
principally in common and preferred stocks, convertible securities, and rights
and warrants of companies whose stocks have lower price multiples (either
price/earnings or price/book value) than others in their industries, or which,
in the opinion of the Money Manager, have improving fundamentals (such as growth
of earnings and dividends). The Money Manager will attempt to exceed the total
return performance of the S&P 500/BARRA Value Index over a market cycle of five
years. Under normal circumstances, up to 20% of the Fund's net assets may be
invested in income producing equity securities of foreign issuers with large
market capitalizations. The Fund may engage in various portfolio strategies to
reduce certain risks of its investments and to enhance income, but not for
speculation.
Value stocks contained in the S&P 500 have generated less current income in
recent years than they have in earlier periods.
<PAGE>
- --------------------------------------------------------------------------------
EQUITY FUNDS' OBJECTIVES AND STRATEGIES
- --------------------------------------------------------------------------------
SMALL TO MID CAP FUND
- ---------------------
INVESTMENT OBJECTIVE The Small to Mid Cap Fund seeks capital growth through
investing primarily in equity securities of small to medium capitalization
issuers.
- --------------------------------------------------------------------------------
INVESTMENT STRATEGY The Fund seeks to achieve its objective by investing at
least 65% of the value of its total assets in stocks of small and medium
capitalization issuers. Small capitalization issuers are issuers that have a
capitalization of $1 billion or less at the time of investment whereas medium
capitalization issuers have a capitalization ranging from $1 billion to $5
billion at the time of investment. The Fund invests principally in common and
preferred stocks, securities convertible into common stocks, and rights and
warrants of such issuers. The Money Manager will attempt to exceed the total
return performance of the Wilshire 4500 Index over a market cycle of five years
by investing primarily in stocks of companies that are expected to experience
higher than average growth of earnings or growth of stock price. Under normal
circumstances, up to 20% of the Fund's net assets may be invested in common
stocks of foreign issuers with small to medium market capitalizations. The Fund
may engage in various portfolio strategies to reduce certain risks of its
investments and may thereby enhance income, but not for speculation.
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
- -------------------------
INVESTMENT OBJECTIVE The International Equity Fund seeks capital growth by
investing primarily in equity securities of companies domiciled in countries
other than the United States and traded on foreign stock exchanges.
- --------------------------------------------------------------------------------
INVESTMENT STRATEGY The Fund seeks to achieve its objective by investing at
least 65% of its total assets principally in stocks issued by companies
domiciled in Europe (including Austria, Belgium, Denmark, Finland, France,
Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Spain, Sweden,
Switzerland and the United Kingdom) and the Pacific Rim (including Australia,
Hong Kong, Japan, New Zealand and Singapore). The Fund may also invest in
securities of countries generally considered to be emerging or developing
countries by the World Bank, the International Finance Corporation, the United
Nations or its authorities ("Emerging Countries"). The Fund intends to maintain
investments in at least three different countries outside the United States. The
Fund may invest up to 20% of its net assets in fixed-income securities,
including instruments issued by foreign governments and their agencies, and in
securities of U.S. companies that derive, or are expected to derive, a
significant portion of their revenues from their foreign operations. The Money
Manager will attempt to exceed the net yield (after withholding taxes) of the
MSCI EAFE + EMF Index.
<PAGE>
- --------------------------------------------------------------------------------
EQUITY FUNDS' PRINCIPAL SECURITIES AND RISKS
- --------------------------------------------------------------------------------
Many factors affect each Fund's performance. A Fund's share price changes daily
based on changes in financial markets and interest rates and in response to
other economic, political or financial developments. A Fund's reaction to these
developments will be affected by the financial condition, industry and economic
sector, and geographic location of an issuer, and the Fund's level of investment
in the securities of that issuer. When you sell your shares of a Fund, they
could be worth more or less than what you paid for them.
In response to market, economic, political or other conditions, each Fund's
Money Manager may temporarily use a different investment strategy for defensive
purposes. If a Money Manager does so, different factors could affect a Fund's
performance and the Fund may not achieve its investment objective.
Each Fund is actively managed. Frequent trading of portfolio securities will
result in increased expenses for the Funds and may result in increased taxable
distributions to shareholders.
Each Fund's investment objective stated in the Equity Funds' Objectives and
Strategies section is fundamental and may not be changed without shareholder
approval.
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY TYPES
- ------------------------
[Graphic] EQUITY SECURITIES represent an ownership interest, or the right to
acquire an ownership interest, in an issuer. Different types of equity
securities provide different voting and dividend rights and priority in the
event of the bankruptcy of the issuer. Equity securities include common stocks,
preferred stocks, convertible securities and warrants.
PRINCIPAL RISKS
- ---------------
[GRAPHIC] STOCK MARKET VOLATILITY. Stock values fluctuate in response to issuer,
political, market and economic developments. In the short term, stock prices can
fluctuate dramatically in response to these developments.
[GRAPHIC] SECTOR RISK. Different parts of the market can react differently to
these developments. For example, large cap stocks can react differently than
small cap stocks, and "growth" stocks can react differently than "value" stocks.
Issuer, political or economic developments can affect a single issuer, issuers
within an industry or economic sector or geographic region, or the market as a
whole.
[GRAPHIC] COMPANY RISK. Changes in the financial condition of an issuer, changes
in specific economic or political conditions that affect a particular type of
issuer, and changes in general economic or political conditions can affect the
credit quality or value of an issuer's securities. The value of securities of
smaller capitalization issuers can be more volatile than that of larger issuers.
- --------------------------------------------------------------------------------
HELP BOX:
Like other mutual funds, the Funds could be adversely affected by
problems associated with the conversion of European currencies into the Euro and
the ability of computers to recognize the year 2000. In addition, it is possible
that the markets and securities, particularly the securities of emerging market
issuers in which the Funds invest, may be detrimentally affected.
[GRAPHIC]
Accessor Capital, as the manager, administrator and Transfer Agent of Accessor
Funds, has taken charge of ensuring that both Accessor Funds and Accessor
Capital will be able to effectively operate on January 1, 2000. Accessor Capital
has inventoried all computer systems, both hardware and software, and has sought
certification as to their readiness from all critical third-party vendors.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
EQUITY FUNDS' PRINCIPAL SECURITIES AND RISKS
- --------------------------------------------------------------------------------
[GRAPHIC] FOREIGN EXPOSURE. Foreign securities, foreign currencies and
securities issued by U.S. entities with substantial foreign operations can
involve additional risks relating to political, economic or regulatory
conditions in foreign countries. These risks include fluctuations in foreign
currencies; withholding or other taxes; trading, settlement, custodial and other
operational risks; and the less stringent investor protection and disclosure
standards of some foreign markets.
Investing in emerging markets involves risks in addition to and greater than
those generally associated with investing in more developed foreign markets. The
extent of foreign development, political stability, market depth, infrastructure
and capitalization and regulatory oversight are generally less than in more
developed markets. Emerging market economies can be subject to greater social,
economic regulatory and political uncertainties. All of these factors can make
foreign investments, especially those in emerging markets, more volatile and
potentially less liquid than U.S. investments. In addition, foreign markets can
perform differently than the U.S. market.
[GRAPHIC] INTEREST RATE CHANGES. The stock market is dependent on general
economic conditions. Changes in interest rates can affect the performance of the
stock market.
<PAGE>
- --------------------------------------------------------------------------------
FIXED-INCOME FUNDS' OBJECTIVES AND STRATEGIES
- --------------------------------------------------------------------------------
INTERMEDIATE FIXED-INCOME FUND
- ------------------------------
INVESTMENT OBJECTIVE The Intermediate Fixed-Income Fund seeks generation of
current income by investing primarily in fixed-income securities with durations
of between three and ten years and a dollar-weighted average portfolio duration
that does not vary more or less than 20% from that of the Lehman Brothers
Government/Corporate Index (the "LBGC Index") or another relevant index approved
by the Board of Directors.
- --------------------------------------------------------------------------------
INVESTMENT STRATEGY The Fund seeks to achieve its objective by investing at
least 65% and generally more than 80% of its total assets in fixed-income
securities and will have a dollar-weighted average duration of between three and
ten years. The Fund invests principally in debt securities with durations of
between three and ten years and rated A or higher by Standard & Poor's ("S&P")
or Moody's Investors Services, Inc. ("Moody's") or determined to be of
equivalent quality by the Money Manager or Accessor Capital at the time of
purchase. The Fund may invest in the following debt securities: 1) corporate
bonds, 2) U.S. government and agency bonds, and 3) mortgage and asset backed
securities.
Investment selections will be based on fundamental economic, market and other
factors leading to variation by sector, maturity, quality and other criteria
appropriate to meet the Fund's objective. The Money Manager will attempt to
exceed the total return performance of the LBGC Index. The Money Manager will
also seek to enhance returns through the use of certain trading strategies such
as purchasing odd lot securities. The Fund may utilize options on U.S.
Government securities, interest rate futures contracts and options on interest
rate futures contracts to reduce certain risks of its investments and to attempt
to enhance income, but not for speculation.
- --------------------------------------------------------------------------------
SHORT-INTERMEDIATE FIXED-INCOME FUND
- ------------------------------------
INVESTMENT OBJECTIVE The Short-Intermediate Fixed-Income Fund seeks preservation
of capital and generation of current income by investing primarily in
fixed-income securities with durations of between one and five years and a
dollar-weighted average portfolio duration that does not vary more or less than
20% from that of the Lehman Brothers Government/Corporate 1-5 Year Index (the
"LBGC 1-5 Index") or another relevant index approved by the Board of Directors.
- --------------------------------------------------------------------------------
INVESTMENT STRATEGY The Fund seeks to achieve its objective by investing at
least 65% and generally more than 80% of its total assets in fixed-income
securities and will have a dollar-weighted average duration of not less than two
years nor more than five years. The Fund invests principally in fixed-income
securities with durations between one and five years and rated A or higher by
S&P or Moody's or determined to be of equivalent quality by the Money Manager or
Accessor Capital at the time of purchase. The Fund may invest in the following
debt securities: 1) corporate bonds, 2) U.S. government and agency bonds, and 3)
mortgage and asset backed securities.
Investment selections will be based on fundamental economic, market and other
factors leading to variation by sector, maturity, quality and other criteria
appropriate to meet the Fund's objective. The Money Manager will attempt to
exceed the total return performance of the LBGC 1-5 Year Index. The Money
Manager will also seek to enhance returns through the use of certain trading
strategies such as purchasing odd lot securities. The Fund may utilize options
on U.S. Government securities, interest rate futures contracts and options on
interest rate futures contracts to reduce certain risks of its investments and
to attempt to enhance income, but not for speculation.
<PAGE>
- --------------------------------------------------------------------------------
FIXED-INCOME FUNDS' OBJECTIVES AND STRATEGIES
- --------------------------------------------------------------------------------
MORTGAGE SECURITIES FUND
- ------------------------
INVESTMENT OBJECTIVE The Mortgage Securities Fund seeks generation of current
income by investing primarily in mortgage-related securities with an aggregate
dollar-weighted average portfolio duration that does not vary outside of a band
of plus or minus 20% from that of the Lehman Brothers Mortgage-Backed Securities
Index (the "LBM Index") or another relevant index approved by the Board of
Directors.
- --------------------------------------------------------------------------------
INVESTMENT STRATEGY The Fund seeks to achieve its objective by investing at
least 65% and generally more than 80% of its total assets in mortgage related
securities. The Fund invests principally in mortgage related securities issued
or guaranteed by the U.S. Government, its agencies or instrumentalities, and
will only invest in non-U.S. Government mortgage related securities rated A or
higher by S&P or Moody's or determined to be of equivalent quality by the Money
Manager or Accessor Capital at the time of purchase.
Investment selections will be based on fundamental economic, market and other
factors leading to variation by sector, maturity, quality and such other
criteria appropriate to meet the Fund's objective. The Money Manager will
attempt to exceed the total return performance of the LBM Index. The Fund may
utilize options on U.S. Government securities, interest rate futures contracts
and options on interest rate futures contracts to reduce certain risks of its
investments and to attempt to enhance income, but not for speculation.
- --------------------------------------------------------------------------------
U.S. GOVERNMENT MONEY FUND
- --------------------------
INVESTMENT OBJECTIVE The U.S. Government Money Fund seeks maximum current income
consistent with the preservation of principal and liquidity by investing
primarily in short-term obligations issued or guaranteed by the U.S. Government,
its agencies or instrumentalities.
- --------------------------------------------------------------------------------
INVESTMENT STRATEGY The Fund follows industry guidelines concerning the quality
and maturity of its investments. The dollar-weighted average portfolio maturity
of the Fund will not exceed 90 days. The Fund seeks to achieve its objective by
investing at least 65% and generally more than 80% of the Fund's total assets in
fixed-income securities. The Fund may enter into repurchase agreements
collateralized by U.S. Government securities.
The U.S. Government Money Fund seeks to maintain a stable share par value of
$1.00 per share, although there is no assurance that it will be able to do so.
It is possible to lose money by investing in the U.S. Government Money Fund.
<PAGE>
- --------------------------------------------------------------------------------
FIXED-INCOME FUNDS' PRINCIPAL SECURITIES AND RISKS
- --------------------------------------------------------------------------------
Many factors affect each Fund's performance. A Fund's yield and (except the U.S.
Government Money Fund's) share price changes daily based on changes in the
financial markets, and interest rates and in response to other economic,
political or financial developments. A Fund's reaction to these developments
will be affected by the financial condition, industry and economic sector, and
geographic location of an issuer, and the Fund's level of investment in the
securities of that issuer. A Fund's reaction to these developments will also
affected by the types, durations, and maturities of the securities in which the
Fund invests. When you sell your shares of a Fund, they could be worth more or
less than what you paid for them.
In response to market, economic, political or other conditions, each Fund's
Money Manager may temporarily use a different investment strategy for defensive
purposes, including investing in short-term and money market instruments. If a
Money Manager does so, different factors could affect a Fund's performance and
the Fund may not achieve its investment objective.
Each Fund is actively managed. Frequent trading of portfolio securities will
result in increased expenses for the Funds and may result in increased taxable
distributions to shareholders.
Each Fund's investment objective stated in the Fixed-Income Funds' Objectives
and Strategies section is fundamental and may not be changed without shareholder
approval.
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY TYPES
- ------------------------
[GRAPHIC] DEBT SECURITIES are used by issuers to borrow money. The issuer
usually pays a fixed, variable or floating rate of interest, and must repay the
amount borrowed at the maturity of the security. Some debt securities, such as
zero coupon bonds, do not pay current interest but are sold at a discount from
their face values. Debt securities include corporate bonds, government
securities, and mortgage and other asset-backed securities.
[GRAPHIC] MORTGAGE RELATED SECURITIES are interests in pools of mortgages.
Payment of principal or interest generally depends on the cash flows generated
by the underlying mortgages. Mortgage securities may be U.S.
Government securities or issued by a bank or other financial institution.
[GRAPHIC] U.S. GOVERNMENT SECURITIES are high-quality securities issued or
guaranteed by the U.S. Treasury or by an agency or instrumentality of the U.S.
Government. U.S. Government securities may be backed by the full faith and
credit of the U.S. Treasury, the right to borrow from the U.S. Treasury, or the
agency or instrumentality issuing or guaranteeing the security.
[GRAPHIC] MONEY MARKET SECURITIES are high-quality, short-term debt securities
that pay a fixed, variable or floating interest rate. Securities are often
specifically structured so that they are eligible investments for a money market
fund. For example, in order to satisfy the maturity restrictions for a money
market fund, some money market securities have demand or put features which have
the effect of shortening the security's maturity.
[GRAPHIC] REPURCHASE AGREEMENTS are an agreement to buy a security at one price
and a simultaneous agreement to sell it back at an agreed upon price.
<PAGE>
- --------------------------------------------------------------------------------
FIXED-INCOME FUNDS' PRINCIPAL SECURITIES AND RISKS
- --------------------------------------------------------------------------------
PRINCIPAL RISKS
- ---------------
[GRAPHIC] BOND MARKET VOLATILITY. Individual securities are expected to
fluctuate in response to issuers, general economic and market changes. An
individual security or category of securities may, however, fluctuate more or
less than the market as a whole.
[GRAPHIC] ISSUER RISK. Changes in the financial condition of an issuer, changes
in specific economic or political conditions that affect a particular type of
issuer, and changes in general economic or political conditions can adversely
affect the credit quality or value of an issuer's securities. The value of an
individual security or category of securities may be more volatile than the debt
market as a whole. Entities providing credit support or a maturity-shortening
structure are also affected by these types of changes. Any of a Fund's holdings
could have its credit downgraded or could default, which could affect the Fund's
performance.
[GRAPHIC] INTEREST RATE CHANGES. Debt and money market securities have varying
levels of sensitivity to changes in interest rates. In general, the price of a
debt or money market security falls when interest rates rise and rises when
interest rates fall. Securities with longer durations generally are more
sensitive to interest rate changes. In other words, the longer the duration of a
security, the greater the impact a change in interest rates is likely to have on
the security's price. In addition, short-term securities tend to react to
changes in short-term interest rates, and long-term securities tend to react to
changes in long-term interest rates. Prepayments on assets underlying mortgage
or other asset backed securities held by a Fund can adversely affect those
securities' yield and price.
[GRAPHIC] PREPAYMENT RISK. Many types of debt securities, including mortgage
securities, are subject to prepayment risk. Prepayment occurs when the issuer of
a security can repay principal prior to the security's maturity. Securities
subject to prepayment generally offer less potential for gains during periods of
declining interest rates and similar or greater potential for loss in periods of
rising interest rates. In addition, the potential impact of prepayment features
on the price of a debt security can be difficult to predict and result in
greater volatility.
[GRAPHIC] INFLATION RISK. The real value of the U.S. Government Money Market
Fund's yield may be eroded by inflation over time. The Fund may underperform the
bond and equity markets over time.
[GRAPHIC] CREDIT RISKS. The U.S. Government Money Fund invests in repurchase
agreements, agencies and government securities. The risk of a credit rating
downgrade or default of U.S. Government securities is considered remote.
Agencies are not backed by the full faith and credit of the U.S. Government but
are considered just below U.S. securities in credit worthiness. Repurchase
agreements are corporate debt, but are 102% collateralized by agency and/or
government paper.
[GRAPHIC] REPURCHASE AGREEMENTS. Repurchase agreements carry certain risks
associated with direct investments in securities including possible declines in
the market value of the underlying securities and delays and costs to the Fund
if the other party to the repurchase agreement becomes bankrupt or otherwise
fails to deliver the securities.
- --------------------------------------------------------------------------------
Help Box:
Like other mutual funds, the Funds could be adversely affected by problems
associated with the ability of computers to recognize the year 2000. In
addition, it is possible that the markets and securities may be detrimentally
affected.
[GRAPHIC]
Accessor Capital, as the manager, administrator and Transfer Agent of Accessor
Funds, has taken charge of ensuring that both Accessor Funds and Accessor
Capital will be able to effectively operate on January 1, 2000. Accessor Capital
has inventoried all computer systems, both hardware and software, and has sought
certification as to their readiness from all critical third-party vendors.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE
- --------------------------------------------------------------------------------
MANAGER AND ADMINISTRATOR Accessor Capital Management LP, 1420 Fifth Avenue,
Suite 3600, Seattle, WA 98101
Each Fund is a portfolio of Accessor Funds, Inc. ("Accessor Funds"), a Maryland
corporation. Accessor Capital develops the investment programs for the Funds,
selects the Money Managers for the Funds, and monitors the performance of the
Money Managers. In addition, Accessor Capital invests the assets of the U.S.
Government Money Fund. J. Anthony Whatley, III, is the Executive Director of
Accessor Capital. Ravindra A. Deo, Vice President and Chief Investment Officer
of Accessor Capital, is primarily responsible for the day-to-day management of
the Funds either directly or through interaction with each Fund's Money Manager.
Mr. Deo is also responsible for managing the liquidity reserves of each Fund.
The Securities and Exchange Commission issued an exemptive order that allows
Accessor Funds to change a Fund's Money Manager without shareholder approval, as
long as, among other things, the Board of Directors has approved the change in
Money Manager and Accessor Funds has notified the shareholders of the affected
Fund within 60 days of the change.
Each Fund pays Accessor Capital an annual management fee for providing
management and administration services equal to the following percentage of each
Fund's average daily net assets:
MANAGEMENT FEE
TO ACCESSOR CAPITAL
(AS A PERCENTAGE OF
FUND AVERAGE DAILY NET ASSETS)
Growth 0.45%
Value 0.45
Small to Mid Cap 0.60
International Equity 0.55
Intermediate Fixed-Income 0.36
Short-Intermediate Fixed-Income 0.36
Mortgage Securities 0.36
U.S. Government Money 0.25
Each Fund has also hired Accessor Capital to provide transfer agent, registrar,
dividend disbursing agent and certain other services to the Funds. For providing
these services, Accessor Capital receives (i) a fee equal to 0.13% of the
average daily net assets of each Fund and (ii) a transaction fee of $.50 per
transaction.
On the following pages is information on each Fund's Money Manager and a
description of how each Money Manager is compensated for the services it
provides.
Each Fund paid the following management fees in fiscal year 1998 (reflected as a
percentage of average net assets) to Accessor Capital and/or the Fund's Money
Manager:
Fund Total Management Fees
(as a percentage of average net assets)
for fiscal year 1998
Growth 0.65%
Value 0.77
Small to Mid Cap 0.99
International Equity 1.15
Intermediate Fixed-Income 0.43
Short-Intermediate Fixed-Income 0.42
Mortgage Securities 0.59
U.S. Government Money 0.25
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE
- --------------------------------------------------------------------------------
GROWTH FUND
- -----------
MONEY MANAGER Geewax Terker & Company, 99 Starr Street, Phoenixville, PA 19460
John J. Geewax, Chief Investment Officer, is primarily responsible for the
day-to-day management and investment decisions for the Growth Fund. He founded
Geewax, Terker with Bruce Terker in 1982. Mr. Geewax is assisted by Christopher
P. Ouimet. Mr. Ouimet joined Geewax Terker in 1994. Before joining Geewax
Terker, Mr. Ouimet worked at The Vanguard Group.
Geewax Terker earns a management fee calculated and paid quarterly that consists
of a basic fee and a performance fee. The basic fee is equal to an annual rate
of 0.10 % of the Growth Fund's average daily net assets. The performance fee for
any quarter depends on the percentage amount by which the Growth Fund's
performance exceeds or trails that of the S&P 500/BARRA Growth Index during the
applicable measurement period based on the following schedule:
<TABLE>
<CAPTION>
Average Annual Performance Total
Differential vs. Annual Annual
Basic Fee Benchmark Index Performance Fee Fee
--------- --------------- --------------- ---
<S> <C> <C> <C>
0.10% Greater Than or Equal to 2.00% 0.22% 0.32%
Greater Than or Equal to 1.00% and Less Than 2.00% 0.20% 0.30%
Greater Than or Equal to 0.50% and Less Than 1.00% 0.15% 0.25%
Greater Than or Equal to 0.00% and Less Than 0.50% 0.10% 0.20%
Greater Than or Equal to -0.50% and Less Than 0.00% 0.05% 0.15%
Less Than -0.50% 0.00% 0.10%
</TABLE>
During the period from the sixth calendar quarter (3rd quarter 1998) through the
13th calendar quarter (2nd quarter 2000) of Geewax Terker's management of the
Growth Fund, the applicable measurement period will be the entire period since
the commencement of Geewax Terker's management of the Growth Fund with the
exception of the quarter immediately preceding the date of calculation.
Commencing with the 14th quarter (3rd quarter 2000) of Geewax Terker's
management of the Growth Fund, the applicable measurement period will consist of
the 12 most recent calendar quarters, except for the quarter immediately
preceding the date of calculation.
Under the performance fee formula, Geewax Terker will receive a performance fee
if the Growth Fund's performance either exceeds the S&P 500/BARRA Growth Index,
or trails the S&P 500/BARRA Growth Index by no more than 0.50%. Under certain
circumstances, Geewax Terker may receive a performance fee even if the Growth
Fund's total return is negative.
- --------------------------------------------------------------------------------
MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE
- --------------------------------------------------------------------------------
VALUE FUND
- ----------
MONEY MANAGER Martingale Asset Management, 222 Berkeley Street, Boston, MA 02116
William E. Jacques, Chief Investment Officer since joining Martingale in 1987,
is primarily responsible for the investment decisions for the Value Fund.
Douglas E. Stark is primarily responsible for the day-to-day management of the
Value Fund. Mr. Stark joined Martingale in 1996. Before joining Martingale, Mr.
Stark was Senior Vice President and Fund Manager at InterCoast Capital Company
from 1994 to 1996. Prior to that, he was Vice President and managed
international stock portfolios at State Street Global Advisors, an area of State
Street Bank and Trust Company, from 1990 until 1994.
Martingale earns a management fee calculated and paid quarterly that consists of
a basic fee and a performance fee. The basic fee is equal to an annual rate of
0.10 % of the Fund's average daily net assets. The performance fee for any
quarter depends on the percentage amount by which the Value Fund's performance
exceeds or trails that of the S&P 500/BARRA Value Index during the applicable
measurement period based on the following schedule:
<TABLE>
<CAPTION>
Average Annual Performance Total
Differential vs. Annual Annual
Basic Fee Benchmark Index Performance Fee Fee
--------- --------------- --------------- ---
<S> <C> <C> <C>
0.10% Greater Than or Equal to 2.00% 0.22% 0.32%
Greater Than or Equal to 1.00% and Less Than 2.00% 0.20% 0.30%
Greater Than or Equal to 0.50% and Less Than 1.00% 0.15% 0.25%
Greater Than or Equal to 0.00% and Less Than 0.50% 0.10% 0.20%
Greater Than or Equal to -0.50% and Less Than 0.00% 0.05% 0.15%
Less Than -0.50% 0.00% 0.10%
</TABLE>
As of the 14th quarter (1st quarter 1996) of Martingale's management of the
Value Fund, the applicable measurement period consists of the 12 most recent
calendar quarters, excluding the quarter immediately preceding the date of
calculation.
Under the performance fee formula, Martingale will receive a performance fee if
the Value Fund's performance either exceeds the S&P 500/BARRA Value Index, or
trails the S&P 500/BARRA Value Index by no more than 0.50%. Under certain
circumstances, Martingale may receive a performance fee even if the Value Fund's
total return is negative.
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE
- --------------------------------------------------------------------------------
SMALL TO MID CAP FUND
- ---------------------
MONEY MANAGER Symphony Asset Management LLC, 555 California Street, San
Francisco, CA 94104
Praveen K. Gottipalli is primarily responsible for the day-to-day management and
investment decisions for the Small to Mid Cap Fund; he is assisted by David
Wang. Mr. Gottipalli has been Director of Investments with Symphony and its
predecessor entities since March 1994. From 1985 to 1994, he was with BARRA,
Inc., where he was Director of the Active Strategies Group. Since May 1994, Mr.
Wang has been a portfolio manager with Symphony Asset Management, Inc., which
owns 50% of Symphony Asset Management LLC. From 1993 to 1994, Mr. Wang was a
Programmer-Analyst with BARRA, Inc.
Symphony earns a management fee calculated and paid quarterly that consists of a
performance fee. The performance fee for any quarter depends on the percentage
amount by which the Small to Mid Cap Fund's performance exceeds, or trails that
of the Wilshire 4500 Index during the applicable measurement period based on the
following schedule:
Average Annualized
Percentage Differential Annualized
vs. Wilshire 4500 Index Performance Fee
----------------------- ----------------
Greater Than or Equal to 3.00% 0.42%
Greater Than or Equal to 2.00% and Less Than 3.00% 0.35%
Greater Than or Equal to 1.00% and Less Than 2.00% 0.30%
Greater Than or Equal to 0.50% and Less Than 1.00% 0.25%
Greater Than or Equal to 0.00% and Less Than 0.50% 0.20%
Greater Than or Equal to -0.50% and Less Than 0.00% 0.15%
Greater Than or Equal to -1.00% and Less Than -0.50% 0.10%
Greater Than or Equal to -1.50% and Less Than -1.00% 0.05%
Less Than -1.50% 0.00%
As of the 14th quarter (1st quarter 1999) of Symphony's management of the Small
to Mid Cap Fund, the applicable measurement period consists of the 12 most
recent calendar quarters, excluding the quarter immediately preceding the date
of calculation.
Under the performance fee formula, Symphony will receive a performance fee if
the Small to Mid Cap Fund's performance either exceeds the Wilshire 4500 Index,
or trails the Wilshire 4500 Index by no more than 1.50%. Under certain
circumstances, Symphony may receive a performance fee even if the Small to Mid
Cap Fund's total return is negative.
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
- -------------------------
MONEY MANAGER Nicholas-Applegate Capital Management, 600 West Broadway, 29th
Floor, San Diego, CA 92101
Catherine Somhegyi, Lawrence S. Speidell and Loretta J. Morris are primarily
responsible for making the day-to-day management and investment decisions for
the International Equity Fund. Ms. Somhegyi, Chief Investment Officer, Global
Equity Management, joined Nicholas-Applegate in 1987. Mr. Speidell, Partner and
Director of Global and Systematic Fund Management, joined Nicholas-Applegate in
1994. From 1983 to 1994, Mr. Speidell was a portfolio manager for Batterymarch
Financial Management. Ms. Morris, Partner and Senior Fund Manager,
International, joined Nicholas-Applegate in 1990.
Nicholas-Applegate earns a management fee calculated and paid quarterly that
consists of a basic fee and a performance fee. The basic fee is equal to an
annual rate of 0.20% of the Fund's average daily net assets. The performance fee
for any quarter depends on the percentage amount by which the International
Equity Fund's performance exceeds or trails that of the MSCI EAFE + EMF Index
during the applicable measurement period based on the following schedule:
<TABLE>
<CAPTION>
Average Annual Performance Total
Differential vs. Annual Annual
Basic Fee Benchmark Index Performance Fee Fee
--------- --------------- --------------- ---
<S> <C> <C> <C>
0.20% Greater Than or Equal to 4.00% 0.40% 0.60%
Greater Than or Equal to 2.00% and Less Than 4.00% 0.30% 0.50%
Greater Than or Equal to 0.00% and Less Than 2.00% 0.20% 0.40%
Greater Than or Equal to -2.00% and Less Than 0.00% 0.10% 0.30%
Less Than -2.00% 0.00% 0.20%
</TABLE>
As of the 14th quarter (2nd quarter 1998) of Nicholas-Applegate's management of
the International Equity Fund, the applicable measurement period consists of the
12 most recent calendar quarters, excluding the quarter immediately preceding
the date of calculation.
Under the performance fee formula, Nicholas-Applegate will receive a performance
fee if the International Equity Fund's performance either exceeds the MSCI EAFE
+ EMF Index, or trails the MSCI EAFE + EMF Index by no more than 2.00%. Under
certain circumstances, Nicholas-Applegate may receive a performance fee even if
the International Equity Fund's total return is negative.
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE
- --------------------------------------------------------------------------------
INTERMEDIATE FIXED-INCOME
SHORT-INTERMEDIATE FIXED-INCOME
- -------------------------------
MONEY MANAGER Cypress Asset Management, 26607 Carmel Center Place, Carmel, CA
93923
Cypress became the Money Manager of the Funds September 21, 1998. Mr. Xavier
Urpi, President and Chief Investment Officer, is primarily responsible for the
day-to-day management and investment decisions and is assisted by Ms. Rosemary
Brooks, Manager of Operations. Mr. Urpi founded Cypress in 1995. Prior to that,
Mr. Urpi was at Smith Barney Capital as a Director of Fixed-Income from March
1989 to September 1995. Ms. Brooks joined Cypress in January 1998. Previously,
Ms. Brooks was owner of Brooks Finance, and a registered representative with
H.D. Vest from June 1994 to July 1997.
Cypress earns a management fee from each Fund calculated and paid quarterly that
consists of a basic fee and a portfolio management fee. During the first five
complete calendar quarters of management, the basic fee and the portfolio
management fee are both equal to an annual rate of 0.02% and 0.02%,
respectively, or a total of 0.04% of each Fund's average daily net assets.
Prior to Cypress, Smith Barney Capital Management was the money manager of the
Intermediate Fixed-Income Fund and Bankers Trust Company, was the money manager
of the Short-Intermediate Fixed-Income Fund. The former money managers each
managed their Fund from inception in 1992 until April 30, 1998. Beginning on May
1, 1998, until September 21, 1998, when Cypress commenced, Accessor Capital
invested the assets of these two Funds directly.
The overall maximum fee for the first five complete calendar quarters payable to
the former money managers was 0.15% (comprised of a basic fee of 0.07% and a
portfolio management fee of 0.08%). Although each Fund has currently negotiated
a reduction in the Money Manager fee to a maximum of 0.04% payable to Cypress
during the first five calendar quarters of management, it is possible that in
the future the fee could be modified. In no event, however, shall the maximum
Money Manager fee payable by these Funds be greater than 0.15% during the first
five complete calendar quarters, without a vote of the shareholders.
Beginning with the sixth complete calendar quarter, Cypress will earn the basic
fee described above and a performance fee, calculated and paid quarterly. The
performance fee for any quarter depends on the percentage amount by which each
Fund's performance exceeds or trails that of its respective Benchmark Index, the
Lehman Brothers Government/Corporate Index (Intermediate Fixed-Income) and the
Lehman Brothers Government/Corporate 1-5 Year Index (Short-Intermediate
Fixed-Income) during the applicable measurement period based on the following
schedule:
Average Annual
Performance Total
Differential vs. Annual Annual
Basic Fee Benchmark Index Performance Fee Fee
0.02% Less Than 0.35% 0.00% 0.02%
Greater Than or
Equal to 0.35% and
Less than or Equal
to 0.50% 0.05% 0.07%
Greater Than 0.50% and
Less than or Equal 0.05% plus 1/2
to 0.70% (P-0.50%)* Up to 0.17%
Greater Than 0.70% 0.15% 0.17%
- --------------------------------------------------------------------------------
*P = PERFORMANCE. EXAMPLE: IF CYPRESS OUTPERFORMS THE BENCHMARK INDEX BY 0.60%,
THE FEE WOULD BE CALCULATED AS [0.02% BASIC FEE + 0.05% PERFORMANCE FEE +
{(0.60%-0.50%)/2}] = 0.12%
- --------------------------------------------------------------------------------
(continued on next page)
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE
- --------------------------------------------------------------------------------
The measurement period from the sixth calendar quarter (2nd quarter 2000)
through the 13th calendar quarter (2nd quarter 2002) of Cypress' management of
each Fund will be the entire period since the commencement of Cypress'
management of each Fund, excluding the quarter immediately preceding the date of
calculation. Commencing with the 14th quarter (3rd quarter 2002) of Cypress'
management of each Fund, the applicable measurement period will consist of the
12 most recent calendar quarters, excluding the quarter immediately preceding
the date of calculation.
Under the performance fee formula, Cypress will receive a performance fee if
either Intermediate Fixed-Income Fund's or Short-Intermediate Fixed-Income
Fund's performance either exceeds the Lehman Brothers Government/Corporate Index
or the Lehman Brother Government/Corporate 1-5 Year Index, respectively, or
trails the respective Index by no more than 0.35%. Under certain circumstances,
Cypress may receive a performance fee even if a Fund's total return is negative.
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE
- --------------------------------------------------------------------------------
MORTGAGE SECURITIES FUND
- ------------------------
MONEY MANAGER BlackRock Financial Management, Inc., 345 Park Place, New York, NY
10154
BlackRock's Investment Strategy Group has primary responsibility for setting the
broad investment strategy and for overseeing the ongoing management of all
client portfolios. Mr. Andrew J. Phillips, Managing Director, is primarily
responsible for the day-to-day management and investment decisions for the
Mortgage Securities Portfolio. Mr. Phillips' primary responsibility is the
management of the firm's investment activities in fixed-rate mortgage
securities, including pass-throughs and CMOs. He directs the development of
investment strategy and coordinates execution for all client portfolios. Prior
to joining BlackRock in 1991, Mr. Phillips was a portfolio manager at
Metropolitan Life Insurance Company.
The Mortgage Securities Fund pays BlackRock a management fee that consists of a
basic fee and a performance fee. The management fee is calculated and paid
quarterly. The basic fee is equal to an annual rate of 0.07% of the Fund's
average daily net assets. The performance fee for any quarter depends on the
percentage amount by which the Mortgage Securities Fund's performance exceeds or
trails that of the Lehman Brothers Mortgage-Backed Securities Index during the
applicable measurement period based on the following schedule:
Average Annual
Performance Total
Differential vs. Annual Annual
Basic Fee Benchmark Index Performance Fee Fee
--------- --------------- --------------- ---
0.07% Greater Than or Equal
To 2.00% 0.18% 0.25%
Greater Than or
Equal To 0.50% and
Less Than 2.00% 0.16% 0.23%
Greater Than or
Equal To 0.25% and
Less Than 0.50% 0.12% 0.19%
Greater Than or
Equal To -025. and
Less Than 0.25% 0.08% 0.15%
Greater Than -0.50% and
Less Than -0.25% 0.04% 0.11%
Greater Than or
Equal To -0.50% 0.00% 0.07%
The measurement period consists of the 12 most recent calendar quarters,
excluding the quarter immediately preceding the date of calculation. Under the
performance fee formula, BlackRock will receive a performance fee if the
Mortgage Securities Fund's performance either exceeds, or trails the Lehman
Brothers Mortgage-Backed Securities Index by no more than 0.50%. Under certain
circumstances, BlackRock may receive a performance fee even if the Mortgage
Securities Fund's total return is negative.
- --------------------------------------------------------------------------------
U.S. GOVERNMENT MONEY FUND
- --------------------------
MANAGER Accessor Capital Management, 1420 Fifth Avenue, Suite 3600, Seattle, WA
98101
Accessor Capital directly invests the assets of the U.S. Government Money Fund.
Accessor Capital receives no additional fee beyond its management fee, as
previously described, for this service.
<PAGE>
- --------------------------------------------------------------------------------
PURCHASING FUND SHARES
- --------------------------------------------------------------------------------
WHERE TO PURCHASE
- -----------------
[GRAPHIC] FINANCIAL INTERMEDIARIES. Investor Class Shares are usually purchased
through financial intermediaries, such as banks, broker-dealers, registered
investment advisers and providers of fund supermarkets, who may receive a
payment from Accessor Funds for distribution, shareholder services and/or
administrative services. In certain cases, a Fund will be deemed to have
received a purchase or redemption when it is received by the financial
intermediary. The order will be priced at the next calculated NAV. These
financial intermediaries may also charge transaction, administrative or other
fees to shareholders, and may impose other limitations on buying, selling or
transferring shares, which are not described in this Prospectus. Some features
of the Investor Class Shares, such as investment minimums, redemption fees and
certain trading restrictions, may be modified or waived by financial
intermediaries. Shareholders should contact their financial intermediary for
information on fees and restrictions.
[GRAPHIC] DIRECT. Investors may purchase Investor Class Shares directly from
Accessor Funds for no sales charge or commission.
- --------------------------------------------------------------------------------
HELP BOX:
Investor Class shares may not be purchased on days when the NYSE is closed for
trading: New Year's Day, Martin Luther King, Jr., Day, Presidents Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.
- --------------------------------------------------------------------------------
HOW TO PURCHASE
- ---------------
Purchase orders are accepted on each business day that the New York Stock
Exchange is open and must be received in proper form prior to the close of the
New York Stock Exchange, normally 4:00 p.m. Eastern time. If Accessor Capital
receives a purchase order for shares of U.S. Government Money Fund on any
business day and the invested monies are wired before 9:00 a.m., Pacific time,
the investor will be entitled to receive that day's dividend. Otherwise,
Accessor Capital must receive payment for shares by 12:00 p.m. Eastern time, on
the business day following the purchase request. All purchases must be made in
U.S. dollars. Purchases may be made in any of the following ways:
[GRAPHIC] BY CHECK. Checks made payable to "Accessor Funds, Inc." and drawn on a
U.S. bank should be mailed with the completed application or with the account
number and name of Fund noted on the check to:
Accessor Funds, Inc.
P. 0. Box 1748
Seattle, WA 98111-1748
[GRAPHIC] BY FEDERAL FUNDS WIRE. Wire instructions are included with the account
application.
[GRAPHIC] BY TELEPHONE. Shareholders with aggregate account balances of at least
$1 million may purchase Investor Class shares by telephone at (800) 759-3504. To
prevent unauthorized transactions, Accessor Funds may use reasonable procedures
to verify telephone requests.
[GRAPHIC] BY PURCHASES IN KIND. Under some circumstances, the Funds may accept
securities as payment for Investor Class Shares. Such securities would be valued
the same way the Funds' securities are valued (see "Valuation of Securities").
Please see "Additional Purchase and Redemption Information" in the Statement of
Additional Information for further information.
<PAGE>
- --------------------------------------------------------------------------------
PURCHASING FUND SHARES
- --------------------------------------------------------------------------------
IRAS/ROTH IRAS
- --------------
Investors may purchase Investor Class Shares through an Individual or Roth
Retirement Custodial Account Plan. An IRA or Roth IRA account with an aggregate
balance of less than $10,000 across all Funds on December 31 of any year will be
assessed a $25.00 fee. Copies of an IRA or Roth IRA Plan may be obtained from
Accessor Capital by calling (800) 759-3504.
- --------------------------------------------------------------------------------
Investment Minimums
- -------------------------------------------------------------------------------
Regular Accounts Retirement Accounts
- --------------------------------------------------------------------------------
Initial Investment Initial Investment
One Fund only: $5,000 Traditional IRA/ $2,000 aggregated
Multiple Funds: $10,000 aggregated Roth IRA: among the Funds
among the Funds
Additional Investment(s)
One Fund only: $1,000 Additional Investment(s)
Multiple Funds: $2,000 aggregated Traditional IRA/ $2,000 aggregated
among the Funds Roth IRA: among the Funds
- --------------------------------------------------------------------------------
ACCESSOR FUNDS MAY ACCEPT SMALLER PURCHASE AMOUNTS OR REJECT ANY PURCHASE ORDER
IT BELIEVES MAY DISRUPT THE MANAGEMENT OF THE FUNDS
- --------------------------------------------------------------------------------
SHARE PRICING
- -------------
Investors purchase Investor Class Shares of a Fund at its net asset value per
share ("NAV"). The NAV is calculated by adding the value of Fund assets
attributable to Investor Class Shares, subtracting Fund liabilities attributable
to the class, and dividing by the number of outstanding Investor Class Shares.
The NAV is calculated each day that the New York Stock Exchange ("NYSE") is open
for business. The Funds generally calculate their NAV at the close of regular
trading on the NYSE, generally 4:00 p.m. Eastern time. Shares are purchased at
the NAV that is next calculated after purchase requests are received by the
Funds.
MARKET TIMING
- -------------
Short-term or excessive trading into and out of a Fund may harm performance by
disrupting portfolio management strategies and by increasing expenses.
Accordingly, a Fund may reject any purchase orders, including exchanges,
particularly from market timers or investors who, in Accessor Capital's opinion,
have a pattern of short-term or excessive trading or whose trading has been or
may be disruptive to that Fund. For these purposes, Accessor Capital may
consider an investor's trading history in that Fund or other Funds, and accounts
under common ownership or control.
FOR MORE INFORMATION
- --------------------
For additional information about purchasing shares of the Accessor Funds, please
contact us at (800) 759-3504.
<PAGE>
- --------------------------------------------------------------------------------
EXCHANGING FUND SHARES
- --------------------------------------------------------------------------------
As a shareholder, you have the privilege of exchanging shares of the Funds for
shares of other Accessor Funds. Investor Class Shares may be exchanged for
shares of any other Fund so long as shareholders meet the normal investment
requirements of the other Fund. Shareholders should read the prospectus of any
other Fund into which they are considering exchanging.
EXCHANGES THROUGH ACCESSOR FUNDS
- --------------------------------
Accessor Funds does not currently charge fees on exchanges directly through it.
This exchange privilege may be modified or terminated at any time by Accessor
Funds upon 60 days notice to shareholders. Exchanges may be made any of the
following ways:
[GRAPHIC] BY MAIL. Share exchange instructions may be mailed to:
Accessor Funds, Inc.
P. O. Box 1748
Seattle, WA 98111-1748
[GRAPHIC] BY FAX. Instructions may be faxed to Accessor Funds at (206) 224-4274.
AN EXCHANGE OF SHARES FROM A FUND INVOLVES A REDEMPTION OF THOSE SHARES AND WILL
BE TREATED AS A SALE FOR TAX PURPOSES.
EXCHANGES THROUGH FINANCIAL INTERMEDIARIES
- ------------------------------------------
You should contact your financial intermediary directly to make exchanges. Your
financial intermediary may charge additional fees for these transactions.
<PAGE>
- --------------------------------------------------------------------------------
REDEEMING FUND SHARES
- --------------------------------------------------------------------------------
Investors may request to redeem Investor Class Shares on any day that the NYSE
is open for business. The request must be received in proper form by the Fund or
certain financial intermediaries prior to the close of the NYSE, normally 4:00
p.m. Eastern time. Shares will be redeemed at the next NAV calculated after
Accessor Capital receives the redemption request in proper form. Payment will
ordinarily be made within seven days of the request by wire-transfer to a
shareholder's domestic commercial bank account. Shares may be redeemed from
Accessor Funds any of the following ways:
[GRAPHIC] BY MAIL. Redemption requests may be mailed to:
Accessor Funds, Inc.
P. 0. Box 1748
Seattle, WA 98111-1748
[GRAPHIC] BY FAX. Redemption requests may be faxed to Accessor Funds at (206)
224-4274.
[GRAPHIC] BY TELEPHONE. Shareholders with aggregate account balances of at least
$1 million may request redemption of shares by telephone at (800) 759-3504. To
prevent unauthorized transactions, the Accessor Funds may use reasonable
procedures to verify telephone requests.
Shareholders may request that payment be made by check to the shareholders of
record at the address of record. Such requests must be in writing. Shareholders
may also request that a redemption be made payable to someone other than the
shareholder of record or be sent to an address other than the address of record.
Such requests must be made in writing, be signed by all shareholders of record,
and accompanied by a signature guarantee. The Transfer Agent may charge a $10.00
processing fee for each redemption check. Shares also may be redeemed through
financial intermediaries from whom shares were purchased. Financial
intermediaries may charge a fee for this service.
- --------------------------------------------------------------------------------
Help Box
Redemption requests for shares that were purchased by check will be
honored at the next NAV calculated after receipt of the redemption request.
However, redemption proceeds will not be transmitted until the check used for
the investment has cleared.
- --------------------------------------------------------------------------------
Large redemptions may disrupt the management and performance of the Funds. Each
Fund reserves the right to delay delivery of your redemption proceeds -- up to
seven days -- if the Fund determines that the redemption amount will disrupt its
operation or performance. If you redeem more than $250,000 worth of a Fund's
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 cash. If payment is made in kind, you may incur brokerage commissions if
you elect to sell the securities.
[GRAPHIC] SYSTEMATIC WITHDRAWAL PLAN. Shareholders may request an automatic,
monthly, quarterly or annual redemption of shares under the Systematic
Withdrawal Plan (minimum monthly amount is $500). Applications for this plan may
be obtained from Accessor Funds and must be received by Accessor Funds at least
ten calendar days before the first scheduled withdrawal date. Systematic
Withdrawals may be discontinued at any time by a shareholder or Accessor Funds.
[GRAPHIC] LOW ACCOUNT BALANCES. Accessor Funds may redeem any account with a
balance of less than $500 per Fund or less than $2,000 in aggregate across the
Funds if the shareholder is not part of an Automatic Investment Plan.
Shareholders will be notified in writing when they have a low balance and will
have 60 days to purchase additional shares to increase the balance to the
required minimum. Shares will not be redeemed if an account drops below the
minimum due to market fluctuations.
In the event of an emergency as determined by Accessor Funds, it may suspend the
right of redemption or postpone payments to shareholders. If the Board of
Directors determines a redemption payment may harm the remaining shareholders of
a Fund, the Fund may pay a redemption in whole or in part by a distribution in
kind of securities from the Fund.
<PAGE>
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS
- --------------------------------------------------------------------------------
[GRAPHIC] DIVIDENDS. Each Fund intends to annually distribute as dividends to
its shareholders substantially all of its net investment income. The Board of
Directors presently intends to declare dividends on the following schedule:
- --------------------------------------------------------------------------------
Fund Declared Payable
- --------------------------------------------------------------------------------
Growth Quarterly, on last 1st business day
Value business day of quarter following end of
Small to Mid Cap calendar quarter
- --------------------------------------------------------------------------------
International Annually, 2nd to last Last business day
business day of Calendar year
of calendar year
- --------------------------------------------------------------------------------
Intermediate Fixed-Income Monthly, on last First business day
Short-Intermediate Fixed-Income business day of month of following month
Mortgage Securities
- --------------------------------------------------------------------------------
U.S. Government Money Daily First business day
of following month
- --------------------------------------------------------------------------------
[GRAPHIC] OTHER DISTRIBUTIONS. The Board of Directors intends to distribute to
each Fund's shareholders substantially all of its net realized long- and
short-term capital gains and net realized gains from foreign currency
transactions (if any) annually, generally in mid-December. A Fund may need to
make additional distributions at year-end to avoid federal income or excise
taxes.
[GRAPHIC] AUTOMATIC REINVESTMENT OF DIVIDENDS AND OTHER DISTRIBUTIONS. All
dividends and other distributions on Investor Class Shares of a Fund will be
automatically reinvested in additional Investor Class Shares of that Fund unless
a shareholder elects to receive them in cash. Shareholders may alternatively
choose to invest dividends or other distributions in Investor Class Shares of
any other Fund.
- --------------------------------------------------------------------------------
VALUATION OF SECURITIES
- --------------------------------------------------------------------------------
The Funds generally value their securities using market quotations. However,
short-term debt securities maturing in less than 60 days are valued using
amortized cost, and securities for which market quotations are not readily
available are valued at fair value. Because foreign securities markets are open
on different days from U.S. markets, there may be instances when the NAV of a
Fund that invests in foreign securities changes on days when shareholders are
not able to buy or sell shares. If a security's value has been materially
affected by events occurring after the close of the exchange or market on which
the security is principally traded (for example, a foreign exchange or market),
that security may be valued by another method that the Board of Director's
believes accurately reflects fair value.
<PAGE>
- --------------------------------------------------------------------------------
TAXATION
- --------------------------------------------------------------------------------
Dividends and other distributions that shareholders receive from a Fund, whether
received in cash or reinvested in additional shares of the Fund, are subject to
federal income tax and may also be subject to state and local tax. Generally,
dividends and distributions of net short-term capital gains and gains from
certain foreign currency transactions are taxable as ordinary income, while
distributions of other gains are taxable as long-term capital gains (generally,
at the rate of 20% for non-corporate shareholders). The rate of tax to a
shareholder on distributions from a Fund of capital gains ordinarily depends on
the length of time the Fund held the securities that generated the gain, not the
length of time the shareholder owned his or her shares.
Certain dividends and other distributions declared by a Fund in October,
November, or December of any year are taxable to shareholders as though received
on December 31 of that year if paid to them during the following January.
Accordingly, those distributions will be taxed to shareholders for the year in
which that December 31 falls.
An exchange of a Fund's shares for shares of another Fund will be treated as a
sale of the Fund's shares, and any gain on the transaction will be subject to
federal income tax.
The International Equity Fund receives dividends and interest on securities of
foreign issuers that may be subject to withholding taxes by foreign governments,
and gains from the disposition of those securities also may be subject thereto,
which may reduce the Fund's total return. If the amount of taxes withheld by
foreign governments is material, the Fund may elect to enable shareholders to
claim a foreign tax credit regarding those taxes. After the conclusion of each
calendar year, shareholders will receive information regarding the taxability of
dividends and other distributions paid by the Funds during the preceding year.
Funds may be required to withhold and remit to the U.S. Treasury 31% of all
dividends, capital gain distributions, and redemption proceeds payable to
individuals and certain other non-corporate shareholders who have not provided
the Fund with a correct taxpayer identification number. Shareholders should
consult a tax adviser for further information regarding the federal, state, and
local tax consequences of an investment in Investor Class Shares.
THE FOREGOING IS ONLY A BRIEF SUMMARY OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES
OF INVESTING IN THE FUNDS. PLEASE SEE THE STATEMENT OF ADDITIONAL INFORMATION
FOR A FURTHER DISCUSSION.
- --------------------------------------------------------------------------------
DISTRIBUTION, SHAREHOLDER SERVICE AND ADMINISTRATIVE SERVICES ARRANGEMENTS
- --------------------------------------------------------------------------------
Accessor Funds has adopted a Distribution Plan that allows the Investor Class
Shares of the Funds to pay distribution fees to financial intermediaries for
sales and distribution-related activities. Accessor Funds has also adopted a
Shareholder Service Plan under which the Investor Class Shares of the Funds may
pay financial intermediaries for providing non-distribution related shareholder
services. The combination of fees under the Distribution Plan and the
Shareholder Service Plan will not exceed 0.25% in the aggregate annually.
Accessor Funds has also adopted an Administrative Services Plan to allow the
Investor Class Shares of the Funds to pay financial intermediaries for
non-distribution related administrative services provided to shareholders.
The administrative services fees will not exceed 0.25% annually.
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
GROWTH FUND
The financial highlights table is intended to help you understand the Fund's
financial performance for the past 5 years or, for the Investor Class Shares of
the Fund, the period of the Investor Class Shares' operations. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the rate that an investor would have earned (or
lost) 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, are included in the
annual report, which is available upon request.
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING
THROUGHOUT THE PERIOD INVESTOR
ADVISOR CLASS CLASS
1998 1997 1996 1995 1994 1998
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 21.57 $ 19.51 $ 17.99 $ 14.37 $ 14.16 $ 26.38
INVESTMENT OPERATIONS:
Net investment income (loss) 0.04 0.13 0.19 0.15 0.13 -0.05
Net realized and unrealized gain
on investments 9.91 6.31 3.35 4.76 0.42 4.52
Total from investment operations 9.95 6.44 3.54 4.91 0.55 4.47
DISTRIBUTIONS:
Distributions from net investment income -0.03 -0.13 -0.19 -0.15 -0.13 0.00
Distributions from capital gains -2.61 -4.25 -1.83 -1.14 -0.21 -2.03
Total distributions -2.64 -4.38 -2.02 -1.29 -0.34 -2.03
- ------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $ 28.88 $ 21.57 $ 19.51 $ 17.99 $ 14.37 $ 28.82
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (2) 46.65% 33.24% 19.83% 34.32% 3.99% 16.96%
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $157,799 $87,907 $60,586 $48,532 $23,534 $22,077
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios of expenses to average net assets:
After Accessor Capital fee waivers 0.92% 0.93% 1.13% 1.26% 1.76% 1.41%*
Before Accessor Capital fee waivers 0.92 0.93 1.13 1.26 1.83 1.41 *
Ratio of net investment income (loss)
to average net assets
After Accessor Capital fee waivers 0.16 0.56 0.97 0.97 1.02 -0.40 *
Before Accessor Capital fee waivers 0.16 0.56 0.97 0.97 0.95 -0.40 *
Portfolio turnover rate 112.42 131.75 81.79 99.73 57.71 112.42
</TABLE>
- ----------
(1) Class commenced operations on July 01, 1998.
(2) Total return is calculated assuming a purchase of shares at net asset value
per share on the first day and a sale at net asset value per share on the
last day of each period reported. Distributions are assumed, for purposes
of this calculation, to be reinvested at the net asset value per share on
the respective payment dates of each class.
* Annualized
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
VALUE FUND
The financial highlights table is intended to help you understand the Fund's
financial performance for the past 5 years or, for the Investor Class Shares of
the Fund, the period of the Investor Class Shares' operations. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the rate that an investor would have earned (or
lost) 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, are included in the
annual report, which is available upon request.
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING
THROUGHOUT THE PERIOD INVESTOR
ADVISOR CLASS CLASS
1998 1997 1996 1995 1994 1998
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 20.88 $ 17.75 $ 15.91 $ 13.01 $ 13.58 $ 23.41
INVESTMENT OPERATIONS:
Net investment income 0.24 0.26 0.24 0.33 0.25 0.05
Net realized and unrealized gain
(loss) on investments 2.45 5.54 3.51 3.96 -0.51 -0.31
Total from investment operations 2.69 5.80 3.75 4.29 -0.26 -0.26
DISTRIBUTIONS:
Distributions from net investment income -0.24 -0.26 -0.24 -0.33 -0.25 -0.06
Distributions from capital gains -2.12 -2.41 -1.67 -1.06 -0.05 -1.90
Distributions in excess of capital gains -0.17 0.00 0.00 0.00 -0.01 -0.15
Total distributions -2.53 -2.67 -1.91 -1.39 -0.31 -2.11
- -----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $ 21.04 $ 20.88 $ 17.75 $ 15.91 $ 13.01 $ 21.04
- -----------------------------------------------------------------------------------------------------------------------------------
Total return (2) 12.89% 32.94% 23.94% 33.25% -1.93% -1.09%
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $114,728 $81,127 $36,367 $ 24,915 $19,999 $12,987
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios of expenses to average net assets:
After Accessor Capital fee waivers 1.03% 1.05% 1.21% 1.40% 1.77% 1.55%*
Before Accessor Capital fee waivers 1.03 1.05 1.21 1.40 1.85 1.55 *
Ratio of net investment income to
average net assets:
After Accessor Capital fee waivers 1.06 1.32 1.43 2.18 2.00 0.44 *
Before Accessor Capital fee waivers 1.06 1.32 1.43 2.18 1.92 0.44 *
Portfolio turnover rate 104.85 68.14 93.54 100.88 54.26 104.85
</TABLE>
- ----------
(1) Class commenced operations on July 01, 1998.
(2) Total return is calculated assuming a purchase of shares at net asset value
per share on the first day and a sale at net asset value per share on the
last day of each period reported. Distributions are assumed, for purposes
of this calculation, to be reinvested at the net asset value per share on
the respective payment dates of each class.
* Annualized
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SMALL TO MID CAP FUND
The financial highlights table is intended to help you understand the Fund's
financial performance for the past 5 years or, for the Investor Class Shares of
the Fund, the period of the Investor Class Shares' operations. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the rate that an investor would have earned (or
lost) 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, are included in the
annual report, which is available upon request.
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING
THROUGHOUT THE PERIOD INVESTOR
ADVISOR CLASS CLASS
1998 1997 1996 1995 1994 1998
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 21.82 $ 18.82 $ 17.60 $ 14.08 $ 14.79 $ 24.44
INVESTMENT OPERATIONS:
Net investment income (loss) -0.05 0.00 0.07 0.06 -0.01 -0.09
Net realized and unrealized gain
(loss) on investments 3.50 6.75 4.22 4.42 -0.59 0.86
Total from investment operations 3.45 6.75 4.29 4.48 -0.60 0.77
DISTRIBUTIONS:
Distributions from net investment income 0.00 0.00 -0.07 -0.06 0.00 0.00
Distributions from capital gains -1.74 -3.73 -3.00 -0.90 -0.10 -1.74
Distribution in excess of net investment income 0.00 -0.02 0.00 0.00 0.00 0.00
Return of capital distributions 0.00 0.00 0.00 0.00 -0.01 0.00
Total distributions -1.74 -3.75 -3.07 -0.96 -0.11 -1.74
- ------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $ 23.53 $ 21.82 $ 18.82 $ 17.60 $ 14.08 $ 23.47
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (2) 15.98% 36.14% 24.85% 31.98% -4.07% 3.32%
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $260,792 $125,221 $65,479 $49,803 $24,148 $19,367
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios of expenses to average net assets:
After Accessor Capital fee waivers 1.22% 1.15% 1.17% 1.31% 1.98% 1.77%*
Before Accessor Capital fee waivers 1.22 1.15 1.17 1.31 2.38 1.77 *
Ratio of net investment income
to average net assets
After Accessor Capital fee waivers -0.22 0.00 0.37 0.41 -0.18 -0.84 *
Before Accessor Capital fee waivers -0.22 0.00 0.37 0.41 -0.58 -0.84 *
Portfolio turnover rate 110.07 129.98 113.44 84.26 30.14 110.07
</TABLE>
- ----------
(1) Class commenced operations on June 24, 1998.
(2) Total return is calculated assuming a purchase of shares at net asset value
per share on the first day and a sale at net asset value per share on the
last day of each period reported. Distributions are assumed, for purposes
of this calculation, to be reinvested at the net asset value per share on
the respective payment dates of each class.
* Annualized
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
The financial highlights table is intended to help you understand the Fund's
financial performance for the past 5 years or, for the Investor Class Shares of
the Fund, the period of the Investor Class Shares' operations. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the rate that an investor would have earned (or
lost) 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, are included in the
annual report, which is available upon request.
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING
THROUGHOUT THE PERIOD INVESTOR
ADVISOR CLASS CLASS
1998 1997 1996 1995 1994 1998
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 14.83 $ 13.83 $ 12.55 $ 11.67 $12.00 $ 17.88
INVESTMENT OPERATIONS:
Net investment income (loss) -0.03 -0.02 -0.06 0.05 0.01 -0.06
Net realized and unrealized gain
(loss) on investments 2.41 1.54 1.80 0.83 -0.34 -0.66
Total from investment operations 2.38 1.52 1.74 0.88 -0.33 -0.72
DISTRIBUTIONS:
Distributions from capital gains -0.31 -0.50 -0.44 0.00 0.00 -0.31
Distributions in excess of capital gains 0.00 -0.02 -0.02 0.00 0.00 0.00
Total distributions -0.31 -0.52 -0.46 0.00 0.00 -0.31
- ------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $ 16.90 $ 14.83 $ 13.83 $ 12.55 $11.67 $ 16.85
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (3) 16.07% 10.96% 13.78% 7.63% -2.75% -4.01%
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $149,391 $151,441 $73,019 $39,102 $7,566 $18,963
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios of expenses to average net assets:
After Accessor Capital fee waivers 1.59% 1.55% 1.52% 1.83% 1.86%* 2.05%*
Before Accessor Capital fee waivers 1.59 1.55 1.52 1.93 4.06 * 2.05 *
Ratio of net investment income
(loss) to average net assets
After Accessor Capital fee waivers -0.24 -0.20 -0.26 0.10 0.38 * -0.68 *
Before Accessor Capital fee waivers -0.24 -0.20 -0.26 0.00 -1.82 * -0.68 *
Portfolio turnover rate 196.37 196.66 157.66 84.85 0.82 196.37
</TABLE>
- ----------
(1) For the period of October 3, 1994 (commencement of operations) through
December 31, 1994.
(2) Class commenced operations on July 06, 1998.
(3) Total return is calculated assuming a purchase of shares at net asset value
per share on the first day and a sale at net asset value per share on the
last day of each period reported. Distributions are assumed, for purposes
of this calculation, to be reinvested at the net asset value per share on
the respective payment dates of each class.
* Annualized.
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
INTERMEDIATE FIXED-INCOME FUND
The financial highlights table is intended to help you understand the Fund's
financial performance for the past 5 years or, for the Investor Class Shares of
the Fund, the period of the Investor Class Shares' operations. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the rate that an investor would have earned (or
lost) 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, are included in the
annual report, which is available upon request.
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING
THROUGHOUT THE PERIOD INVESTOR
ADVISOR CLASS CLASS
1998 1997 1996 1995 1994 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 12.19 $ 11.90 $ 12.29 $ 11.04 $ 12.34 $12.29
INVESTMENT OPERATIONS:
Net investment income 0.67 0.71 0.67 0.71 0.65 0.28
Net realized and unrealized gain
(loss) on investments 0.32 0.29 -0.39 1.25 -1.28 0.24
Total from investment operations 0.99 1.00 0.28 1.96 -0.63 0.52
DISTRIBUTIONS:
Distributions from net investment income -0.67 -0.71 -0.67 -0.71 -0.65 -0.30
Distributions from capital gains -0.04 0.00 0.00 0.00 -0.02 -0.04
Total distributions -0.71 -0.71 -0.67 -0.71 -0.67 -0.34
- ------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $ 12.47 $ 12.19 $ 11.90 $ 12.29 $ 11.04 $12.47
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (2) 8.38% 8.62% 2.56% 18.26% -5.24% 4.29%
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $48,489 $55,197 $52,248 $36,878 $31,405 $9,146
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios of expenses to average net assets:
After Accessor Capital fee waivers 0.79% 0.84% 0.88% 0.96% 1.24% 1.27%*
Before Accessor Capital fee waivers 0.79 0.84 0.88 0.96 1.28 1.27 *
Ratio of net investment income to
average net assets
After Accessor Capital fee waivers 5.46 5.88 5.79 6.07 5.65 4.75 *
Before Accessor Capital fee waivers 5.46 5.88 5.79 6.07 5.61 4.75 *
Portfolio turnover rate 113.00 84.35 94.69 187.62 255.11 113.00
</TABLE>
- ----------
(1) Class commenced operations on July 14, 1998.
(2) Total return is calculated assuming a purchase of shares at net asset value
per share on the first day and a sale at net asset value per share on the
last day of each period reported. Distributions are assumed, for purposes
of this calculation, to be reinvested at the net asset value per share on
the respective payment dates of each class.
* Annualized
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SHORT-INTERMEDIATE FIXED-INCOME FUND
The financial highlights table is intended to help you understand the Fund's
financial performance for the past 5 years or, for the Investor Class Shares of
the Fund, the period of the Investor Class Shares' operations. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the rate that an investor would have earned (or
lost) 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, are included in the
annual report, which is available upon request.
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING
THROUGHOUT THE PERIOD INVESTOR
ADVISOR CLASS CLASS
1998 1997 1996 1995 1994 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 12.27 $ 12.16 $ 12.32 $ 11.62 $ 12.29 $12.32
INVESTMENT OPERATIONS:
Net investment income 0.68 0.64 0.59 0.60 0.50 0.27
Net realized and unrealized gain
(loss) on investments 0.14 0.11 -0.16 0.70 -0.67 0.17
Total from investment operations 0.82 0.75 0.43 1.30 -0.17 0.44
DISTRIBUTIONS:
Distributions from net investment income -0.63 -0.64 -0.59 -0.60 -0.50 -0.30
Distributions from capital gains -0.13 0.00 0.00 0.00 0.00 -0.13
Total distributions -0.76 -0.64 -0.59 -0.60 -0.50 -0.43
- ------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $ 12.33 $ 12.27 $ 12.16 $ 12.32 $11.62 $12.33
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (2) 6.87% 6.33% 3.63% 11.42% -1.42% 3.55%
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 42,454 $40,942 $36,701 $35,272 $32,233 $6,255
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios of expenses to average net assets:
After Accessor Capital fee waivers 0.82% 0.86% 0.93% 0.94% 1.18% 1.31%*
Before Accessor Capital fee waivers 0.82 0.86 0.93 0.94 1.22 1.31 *
Ratio of net investment income to
average net assets
After Accessor Capital fee waivers 5.12 5.20 4.89 4.99 4.17 4.57 *
Before Accessor Capital fee waivers 5.12 5.20 4.89 4.99 4.13 4.57 *
Portfolio turnover rate 69.64 53.30 31.12 41.93 36.54 69.64
</TABLE>
- ----------
(1) Class commenced operations on July 14, 1998.
(2) Total return is calculated assuming a purchase of shares at net asset value
per share on the first day and a sale at net asset value per share on the
last day of each period reported. Distributions are assumed, for purposes
of this calculation, to be reinvested at the net asset value per share on
the respective payment dates of each class.
* Annualized
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
MORTGAGE SECURITIES FUND
The financial highlights table is intended to help you understand the Fund's
financial performance for the past 5 years or, for the Investor Class Shares of
the Fund, the period of the Investor Class Shares' operations. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the rate that an investor would have earned (or
lost) 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, are included in the
annual report, which is available upon request.
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING
THROUGHOUT THE PERIOD INVESTOR
ADVISOR CLASS CLASS
1998 1997 1996 1995 1994 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 12.60 $ 12.23 $ 12.38 $ 11.36 $ 12.17 $ 12.67
INVESTMENT OPERATIONS:
Net investment income 0.70 0.72 0.73 0.76 0.60 0.31
Net realized and unrealized gain
(loss) on investments 0.09 0.42 -0.15 1.02 -0.80 0.01
Total from investment operations 0.79 1.14 0.58 1.78 -0.20 0.32
DISTRIBUTIONS:
Distributions from net investment income -0.70 -0.72 -0.73 -0.76 -0.60 -0.33
Distributions from capital gains -0.10 -0.05 0.00 0.00 -0.01 -0.07
Total distributions -0.80 -0.77 -0.73 -0.76 -0.61 -0.40
- ------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $ 12.59 $ 12.60 $ 12.23 $ 12.38 $ 11.36 $ 12.59
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (2) 6.43% 9.53% 4.95% 16.03% -1.65% 2.46%
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $128,788 $109,747 $73,862 $49,830 $32,975 $17,369
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios of expenses to average net assets:
After Accessor Capital fee waivers 0.88% 0.84% 0.95% 1.03% 1.31% 1.41%*
Before Accessor Capital fee waivers 0.88 0.84 0.95 1.03 1.35 1.41 *
Ratio of net investment income to
average net assets:
After Accessor Capital fee waivers 5.59 5.93 6.08 6.41 5.18 5.09 *
Before Accessor Capital fee waivers 5.59 5.93 6.08 6.41 5.14 5.09 *
Portfolio turnover rate 278.18 211.66 356.23 422.56 603.51 278.18
</TABLE>
- ----------
(1) Class commenced operations on July 10, 1998.
(2) Total return is calculated assuming a purchase of shares at net asset value
per share on the first day and a sale at net asset value per share on the
last day of each period reported. Distributions are assumed, for purposes
of this calculation, to be reinvested at the net asset value per share on
the respective payment dates of each class.
* Annualized
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
U.S. GOVERNMENT MONEY FUND
The financial highlights table is intended to help you understand the Fund's
financial performance for the past 5 years or, for the Investor Class Shares of
the Fund, the period of the Investor Class Shares' operations. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the rate that an investor would have earned (or
lost) 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, are included in the
annual report, which is available upon request.
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING
THROUGHOUT THE PERIOD INVESTOR
ADVISOR CLASS CLASS
1998 1997 1996 1995 1994 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INVESTMENT OPERATIONS:
Net investment income 0.05 0.05 0.05 0.05 0.04 0.02
DISTRIBUTIONS:
Distributions from net investment income -0.05 -0.05 -0.05 -0.05 -0.04 -0.02
- ------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (2) 5.00% 5.07% 4.78% 5.33% 3.70% 1.83%
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $153,148 $50,910 $61,672 $41,882 $12,008 $5,071
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios of expenses to average net assets:
After Accessor Capital fee waivers 0.53% 0.54% 0.59% 0.53% 0.45% 1.03%*
Before Accessor Capital fee waivers 0.53 0.54 0.59 0.78 1.27 1.03 *
Ratio of net investment income to
average net assets
After Accessor Capital fee waivers 4.83 4.96 4.73 5.14 3.51 4.40 *
Before Accessor Capital fee waivers 4.83 4.96 4.73 4.89 2.69 4.40 *
</TABLE>
- ----------
(1) Class commenced operations on July 29, 1998.
(2) Total return is calculated assuming a purchase of shares at net asset value
per share on the first day and a sale at net asset value per share on the
last day of each period reported. Distributions are assumed, for purposes
of this calculation, to be reinvested at the net asset value per share on
the respective payment dates of each class.
* Annualized.
<PAGE>
APPENDIX A
The following information has been supplied by the respective preparer of the
index or has been obtained from other publicly available information.
STANDARD & POOR'S 500 INDEX*
The purpose of the S&P 500 is to portray the pattern of common stock price
movement. Construction of the index proceeds from industry groups to the whole.
Currently there are four groups: 378 Industrials, 39 Utilities, 10
Transportation and 73 Financial. Since some industries are characterized by
companies of relatively small stock capitalization, the index does not comprise
the 500 largest exchange listed companies. The current S&P 500 membership
consists of 459 NYSE, 39 NASDAQ and 2 AMEX traded companies.
Component stocks are chosen for market size, liquidity and with the aim of
achieving a distribution by broad industry groupings that are representative of
the U.S. economy. Each stock added to the index must represent a viable
enterprise and must be representative of the industry group to which it is
assigned. Its market price movements must in general be responsive to changes in
industry affairs.
The formula adopted by Standard & Poor's is generally defined as a
"base-weighted aggregative" expressed in relatives with the average value for
the base period (1941-1943) equal to 10. Each component stock is weighted so
that it will influence the index in proportion to its respective market
importance. The most suitable weighting factor for this purpose is the number of
shares outstanding. The price of any stock multiplied by number of shares
outstanding gives the current market value for that particular issue. This
market value determines the relative importance of the security.
Market values for individual stocks are added together to obtain their
particular group market value. These group values are expressed as a relative,
or index number, to the base period (1941-1943) market value. As the base period
market value is relatively constant, the index number reflects only fluctuations
in current market values.
- --------------------------------------------------------------------------------
*"STANDARD & POOR'S," "S&P" AND "S&P 500" ARE TRADEMARKS OF STANDARD AND POOR'S,
A DIVISION OF THE MCGRAW-HILL COMPANIES, INC. THE GROWTH FUND AND VALUE FUND ARE
NOT SPONSORED, ENDORSED, SOLD OR PROMOTED BY STANDARD & POOR'S.
- --------------------------------------------------------------------------------
S&P500/BARRA GROWTH INDEX [GRAPHIC]
S&P500/BARRA VALUE INDEX
BARRA, in collaboration with Standard and Poor's, has constructed the
S&P500/BARRA Growth Index (the "Growth Index") and S&P500/BARRA Value Index (the
"Value Index") to separate the S&P 500 into value stocks and growth stocks.
The Growth and Value Indices are constructed by dividing the stocks in the S&P
500 according to their price-to-book ratios. The Value Index contains firms with
lower price-to-book ratios and has 50 percent of the capitalization of the S&P
500. The Growth Index contains the remaining members of the S&P 500. Each of the
indices is capitalization-weighted and is rebalanced semi-annually on January 1
and July 1 of each year.
Although the Value Index is created based on price-to-book ratios, the companies
in the index generally have other characteristics associated with "value"
stocks: low price-to-earnings ratios, high dividend yields, and low historical
and predicted earnings growth. Because of these characteristics, the Value Index
historically has had higher weights in the Energy, Utility, and Financial
sectors than the S&P 500.
Companies in the Growth Index tend to have opposite characteristics from those
in the Value Index: high earnings-to-price ratios, low dividend yields, and high
earnings growth. Historically, the Growth Index has been more concentrated in
Electronics, Computers, Health Care and Drugs than the S&P 500.
As of December 31, 1998 there were 378 companies in the Value Index;
consequently there are 122 companies in the Growth Index.
WILSHIRE 4500 INDEX*
While the S&P 500 includes the preponderance of large market capitalization
stocks, it excludes most of the medium- and small-size companies that comprise
the remaining 23% of the capitalization of the U.S. stock market. The Wilshire
4500 Index (an unmanaged index) consists of all U.S. stocks that are not in the
S&P 500 and that trade regularly on the NYSE and American Stock Exchange as well
as on the Nasdaq Stock Market. The Wilshire 4500 Index is constructed from the
Wilshire 5000 Equity Index, which measures the performance of all U.S.
headquartered equity securities with readily available price data. Approximately
7,000 capitalization weighted security returns are used to adjust the Wilshire
5000 Equity Index. The Wilshire 5000 Equity Index was created by Wilshire
Associates in 1974 to aid in performance measurement. The Wilshire 4500 Index
consists of the Wilshire 5000 Equity Index after excluding the companies in the
S&P 500.
Wilshire Associates view the performance of the Wilshire 5000's securities
several ways. Price and total return indices using both capital and equal
weightings are computed. The unit value of these four indices was set to 1.0 on
December 31, 1970.
- --------------------------------------------------------------------------------
"WILSHIRE 4500" AND "WILSHIRE 5000" ARE REGISTERED TRADEMARKS OF WILSHIRE
ASSOCIATES. THE SMALL TO MID CAP FUND IS NOT SPONSORED, ENDORSED, SOLD OR
PROMOTED BY WILSHIRE ASSOCIATES.
- --------------------------------------------------------------------------------
<PAGE>
MORGAN STANLEY CAPITAL INTERNATIONAL EAFE + EMF INDEX*
The MSCI EAFE + EMF Index is a market-capitalization-weighted index composed of
companies representative of the market structure of 45 Developed and Emerging
Market countries. The index is calculated without dividends or with gross
dividends reinvested, in both U.S. dollars and local currencies.
The MSCI EAFE Index is a market-capitalization-weighted index composed of
companies representative of the market structure of 20 Developed Market
countries in Europe, Australasia and the Far East. The index is calculated
without dividends, with net or with gross dividends reinvested, in both U.S.
dollars and local currencies.
MSCI Emerging Markets Free ("EMF") Index is a market-capitalization-weighted
index composed of companies representative of the market structure of 25
Emerging Market countries in Europe, Latin America and the Pacific Basin. The
MSCI EMF Index excludes closed markets and those shares in otherwise free
markets which are not purchasable by foreigners.
The MSCI indices reflect stock market trends by representing the evolution of an
unmanaged portfolio containing a broad selection of domestically listed
companies. A dynamic optimization process which involves maximizing float and
liquidity, reflecting accurately the market's size and industry profiles, and
minimizing cross ownership is used to determine index constituents. Stock
selection also takes into consideration the trading capabilities of foreigners
in emerging market countries.
As of December 31, 1998, the MSCI EAFE + EMF Index consisted of 1,911 companies
traded on stock markets in 45 countries. The weighting of the MSCI EAFE + EMF
Index by country was as follows:
Developed Markets: Australia 2.37%, Austria 0.31%, Belgium 1.78%, Denmark 0.82%,
Finland 1.44%, France 8.69%, Germany 9.85%, Hong Kong 1.91%, Ireland 0.46%,
Italy 4.82%, Japan 19.41%, Netherlands 6.01%, New Zealand 0.17%, Norway 0.35%,
Portugal 0.61%, Singapore 0.64%, Spain 3.10%, Sweden 2.43%, Switzerland 7.44%,
United Kingdom 19.65%.
Emerging Markets: Argentina 0.36%, Brazil Free 0.93%, Chile 0.35%, China Free
0.05%, Colombia 0.06%, Czech Republic 0.09%, Greece 0.57%, Hungary 0.13%, India
0.61%, Indonesia Free 0.14%, Israel 0.26%, Jordan 0.02%, Korea 0.83%, Mexico
Free 0.87%, Pakistan 0.03%, Peru 0.07%, Philippines Free 0.17%, Poland 0.11%,
Russia 0.10%, South Africa 0.80%, Sri Lanka 0.01%, Taiwan Free 0.77%, Thailand
Free 0.22%, Turkey 0.16%, Venezuela 0.08%.
Unlike other broad-based indices, the number of stocks included in MSCI EAFE +
EMF Index is not fixed and may vary to enable the Index to continue to reflect
the primary home markets of the constituent countries. Changes in the Index will
be announced when made. MSCI EAFE + EMF Index is a capitalization-weighted index
calculated by Morgan Stanley Capital International based on the official closing
prices for each stock in its primary local or home market. The base value of the
MSCI EAFE + EMF Index was equal to 100.0 on January 1, 1988. As of December 31,
1998, the current value of the MSCI EAFE + EMF Index was 180.3.
- --------------------------------------------------------------------------------
"EAFE" IS A REGISTERED TRADEMARK OF MORGAN STANLEY CAPITAL INTERNATIONAL. THE
INTERNATIONAL FUND IS NOT SPONSORED, ENDORSED, SOLD OR PROMOTED BY MORGAN
STANLEY CAPITAL INTERNATIONAL.
- --------------------------------------------------------------------------------
Lehman Brothers*
Government/Corporate Index
Government/Corporate 1-5 Year Index
Mortgage-Backed Securities Index
The Lehman Brothers Bond Indices include fixed-rate debt issues rated investment
grade (Baa3) or higher by Moody's. For those issues not rated by Moody's, the
equivalent S&P rating is used, and for those not rated by S&P, the equivalent
Fitch Investors Service, Inc. rating is used. These indices also include
fixed-rate debt securities issued by the U.S. Government, its agencies or
instrumentalities, which are generally not rated but have an implied rating
greater than AAA. All issues must have at least one year remaining maturity and
an outstanding par value of at least $100 million. Price, coupon and total
return are reported for all sectors on a month-end to month-end basis. All
returns are market value weighted inclusive of accrued interest.
The Lehman Brothers Government/Corporate Index is made up of the Government and
Corporate Bond Indices.
The Government Bond Index is made up of the Treasury Bond Index (all public
obligations of the United States Treasury, that have remaining maturities of
more than one year, excluding flower bonds and targeted investor notes) and the
Agency Bond Index (all publicly issued debt of U.S. Government agencies and
quasi-federal corporations, and corporate or foreign debt guaranteed by the U.S.
Government).
The Corporate Bond Index includes all publicly issued, fixed-rate,
nonconvertible investment grade domestic corporate debt. Also included are
Yankee bonds, which are dollar-denominated SEC registered public, nonconvertible
debt issued or guaranteed by foreign sovereign governments, municipalities or
governmental agencies, or international agencies.
The Government/Corporate 1-5 Year Index is composed of Agency and Treasury
securities and corporate securities of the type referred to in the preceding
paragraph, all with maturities of one to five years.
The Mortgage-Backed Securities Index covers pass-through securities backed by
mortgage pools of the Government National Mortgage Association (GNMA), Federal
Home Loan Mortgage Corporation (FHLMC) and Federal National Mortgage Association
(FNMA).
- --------------------------------------------------------------------------------
THE INTERMEDIATE FIXED-INCOME FUND, THE SHORT-INTERMEDIATE FIXED-INCOME FUND AND
THE MORTGAGE SECURITIES FUND ARE NOT SPONSORED, ENDORSED, SOLD OR PROMOTED BY
LEHMAN BROTHERS.
- --------------------------------------------------------------------------------
<PAGE>
SHAREHOLDER REPORTS. Accessor Funds publishes Annual and Semi-Annual Reports,
which contain information about each Fund's recent performance, including:
[BULLET] Management's discussion about recent market conditions, economic trends
and Fund strategies that affected their performance over the recent period
[BULLET] Fund performance data and financial statements
[BULLET] Fund holdings
STATEMENT OF ADDITIONAL INFORMATION ("SAI"). The SAI contains more detailed
information about Accessor Funds and each Fund. The SAI is incorporated by
reference into this Prospectus, making it legally part of this Prospectus.
Free copies of Accessor Funds' Annual Report, Semi-Annual Report, SAI and other
information through your financial intermediary or from:
ACCESSOR CAPITAL MANAGEMENT LP
1420 Fifth Street, Suite 3600
Seattle, Washington 98101
(800) 759-3504
(206) 224-7420
www.accessor.com
You may obtain copies of documents from the SEC, upon payment of duplicating
fees, or view documents at the SEC's Public Reference Room in Washington, D.C.
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549-6009
(800) SEC-0330 (Public Reference Section)
www.sec.gov
Accessor(R) is a registered trademark of Accessor Capital Management LP.
SEC file number: 811-06337.
<PAGE>
[FRONT COVER] ADVISOR CLASS SHARES
ACCESSOR(R) FUNDS, INC.
U.S. GOVERNMENT MONEY FUND PROSPECTUS MAY 1, 1999
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this Prospectus. Any representation to
the contrary is a criminal offense.
[LOGO] ACCESSOR
<PAGE>
TABLE OF CONTENTS
The Fund
FUND SUMMARY.............................................................3
PERFORMANCE..............................................................3
EXPENSES.................................................................4
OBJECTIVE AND STRATEGIES.................................................5
PRINCIPAL SECURITIES AND RISKS...........................................5
MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE...........................6
Shareholder Information
PURCHASING FUND SHARES...................................................7
Exchanging Fund Shares...................................................9
Redeeming Fund Shares...................................................10
Dividends and Distributions.............................................11
Valuation of Securities.................................................11
Taxation................................................................11
FINANCIAL HIGHLIGHTS....................................................12
<PAGE>
Fund Summary
- --------------------------------------------------------------------------------
GRAPHIC U.S. GOVERNMENT MONEY FUND
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE & PRINCIPLE STRATEGIES The U.S. Government Money Fund seeks
maximum current income consistent with the preservation of principal and
liquidity by investing primarily in short-term obligations issued or guaranteed
by the U.S. Government, its agencies or instrumentalities.
Accessor Capital directly invests the assets of the Fund. Accessor Capital uses
quantitative analysis to maximize the Fund's yield. The Fund follows industry
standard requirements concerning the quality and diversification of its
investments. The Fund seeks to maintain an average maturity of 90 days or less,
while maintaining liquidity and maximizing current yield.
- --------------------------------------------------------------------------------
PRINCIPAL INVESTMENT RISKS INTEREST RATE RISK. The Fund's yield will vary and is
expected to react to changes in short-term interest rates.
INFLATION RISK Over time, the real value of the Fund's yield may be eroded by
inflation.
STABLE NET ASSET VALUE An investment in the U.S. Government Money Fund is not a
deposit of a bank and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the U.S.
Government Money 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.
- --------------------------------------------------------------------------------
PERFORMANCE
- --------------------------------------------------------------------------------
The following table illustrates changes (and therefore the risk elements) in the
performance of Advisor Class Shares of the U.S. Government Money Fund from year
to year and compares the performance of Advisor Class Shares of the U.S.
Government Money Fund to the performance of a market index over time. As with
all mutual funds, how the U.S. Government Money Fund has performed in the past
is not an indication of how it will perform in the future.
U.S. GOVERNMENT MONEY FUND
[BAR CHART] Year by Year Average Annual Total Returns
Total Returns As of 12/31/98
DATA POINTS 1 Year 5 Years Life of
1993 2.81 Fund*
1994 3.70 U.S. Government
1995 5.33 Money Fund 5.00% 4.77% 4.32%
1996 4.78 Salomon 5.11 5.11 4.65**
1997 5.07 Brothers 3 mo.
1998 5.00 T-bill Index(1)
As of 12/31 each year * 4/9/92 inception date
**Index measured from 5/1/92
Best Quarter: Q2 '95 1.37%
Worst Quarter: Q2 '93 0.60%
- --------------------------------------------------------------------------------
(1) The Salomon Brothers Index is designed to measure the return of the 3-month
Treasury bills. The U.S. Government Money Fund's 7-day effective yield on
12/31/98 was 4.58%. For the Fund's current yield call (800) 759-3504.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
EXPENSES
- --------------------------------------------------------------------------------
The following table describes the fees and expenses that you may pay if you buy
and hold Advisor Class Shares of the U.S. Government Money Fund.
- --------------------------------------------------------------------------------
U.S. GOVT.
MONEY(B)
- --------------------------------------------------------------------------------
SHAREHOLDER FEES(A)
Maximum Sales Charge
imposed on Purchases
(as a % of offering price) None
Maximum Sales Charge imposed
on Reinvested Dividends None
Maximum Deferred Sales Charge None
Redemption Fee (c) None
ANNUAL FUND OPERATING EXPENSES
Management Fees 0.25%
Distribution Fees and Shareholder Service Fees None
Total Other Expenses 0.28%
----
Total Annual Fund Operating Expenses 0.53%
====
- ----------
(a) Shares of the Fund are expected to be sold primarily through financial
intermediaries that may charge shareholders a fee. These fees are not
included in the table.
(b) An annual maintenance fee of $25.00 may be charged by Accessor Capital, as
the transfer agent ("Transfer Agent") to each IRA with an aggregate balance
of less than $10,000 on December 31 of each year.
(c) The Transfer Agent may charge a processing fee of $10.00 for each check
redemption request.
- --------------------------------------------------------------------------------
EXPENSE EXAMPLE
- ---------------
The Example shows what an investor in the U.S. Government Money
Fund -- Advisor Class Shares could pay over time. It 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 Advisor Class Shares of the
U.S. Government Money Fund for the time periods indicated and then redeem all of
your shares by wire at the end of those periods. This Example does not include
the effect of the $10 fee for check redemption requests. The Example also
assumes that your investment has a 5% rate of return each year and that the
Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
One Year Three Years Five Years 10 Years
-------- ----------- ---------- --------
U.S. Government Money Fund $54 $170 $296 $665
<PAGE>
- --------------------------------------------------------------------------------
OBJECTIVE AND STRATEGIES
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE. THE U.S. GOVERNMENT MONEY FUND Seeks maximum current
income consistent with the preservation of principal and liquidity by investing
primarily in short-term obligations issued or guaranteed by the U.S. Government,
its agencies or instrumentalities.
- --------------------------------------------------------------------------------
INVESTMENT STRATEGIES. The Fund follows industry guidelines concerning the
quality and maturity of its investments. The dollar-weighted average portfolio
maturity of the Fund will not exceed 90 days. The Fund seeks to achieve its
objective by investing at least 65% and generally more than 80% of the Fund's
total assets in fixed-income securities. The Fund may enter into repurchase
agreements collateralized by U.S. Government securities.
The U.S. Government Money Fund seeks to maintain a stable share par of $1.00 per
share, although there is no assurance that it will be able to do so. It is
possible to lose money by investing in the U.S. Government Money Fund.
- --------------------------------------------------------------------------------
PRINCIPAL SECURITIES AND RISKS
- --------------------------------------------------------------------------------
Many factors affect the Fund's performance. The Fund's yield changes daily based
on changes in financial markets, interest rates and in response to other
economic, political or financial developments. The Fund's reaction to these
developments will be affected by the financial condition and economic sector of
an issuer, and the Fund's level of investment in the securities of that issuer.
The Fund's investment objective stated above is fundamental and may not be
changed without shareholder approval.
Principal Security Types
- ------------------------
U.S. GOVERNMENT SECURITIES are high-quality securities issued or guaranteed by
the U.S. Treasury or by an agency or instrumentality of the U.S. Government.
U.S. Government securities may be backed by the full faith and credit of the
U.S. Treasury, the right to borrow from the U.S. Treasury, or the agency or
instrumentality issuing or guaranteeing the security.
MONEY MARKET SECURITIES are high-quality, short-term debt securities that pay a
fixed, variable or floating interest rate. Securities are often specifically
structured so that they are eligible investments for a money market fund. For
example, in order to satisfy the maturity restrictions for a money market fund,
some money market securities have demand or put features that have the effect of
shortening the security's maturity.
REPURCHASE AGREEMENTS are an agreement to buy a security at one price and a
simultaneous agreement to sell it back at an agreed upon price.
<PAGE>
- --------------------------------------------------------------------------------
PRINCIPAL SECURITIES AND RISKS
- --------------------------------------------------------------------------------
Principal Risks
- ---------------
[GRAPHIC] CREDIT RISKS. The U.S. Government Money Fund invests in repurchase
agreements, agencies and government securities. The risk of a credit rating
downgrade or default of U.S. Government securities is considered remote.
Agencies are not backed by the full faith and credit of the U.S. Government but
are considered just below U.S. Government securities in credit worthiness.
Repurchase agreements are corporate debt, but are 102% collateralized by agency
and/or government paper.
[GRAPHIC] INTEREST RATE CHANGES. When interest rates fall, the U.S. Government
Money Fund's yield will generally fall as well. When interest rates fall, your
rate will fall but, unlike other fixed-income securities, in the U.S. Government
Money Fund there will be no corresponding increase in price. When rates go up,
if the movement is very sharp, the principal value of the share may fall below
$1.00.
[Graphic] INFLATION RISK. The real value of the U.S. Government Money Market
Fund's yield may be eroded by inflation over time. The Fund may underperform the
bond and equity markets over time.
[Graphic] REPURCHASE AGREEMENTS. Repurchase agreements carry certain risks
associated with direct investments in securities, including possible declines in
the market value of the underlying securities and delays and costs to the Fund
if the other party to the repurchase agreement becomes bankrupt or otherwise
fails to deliver the securities.
- --------------------------------------------------------------------------------
Help Box
Like other mutual funds, the Fund could be adversely affected by problems
associated with the ability of computers to recognize the year 2000. In
addition, if is possible that the markets and securities may be detrimentally
affected.
[Graphic]
Accessor Capital, as the manager, administrator and transfer agent of
Accessor Funds, has taken charge of ensuring that both Accessor Funds and
Accessor Capital will be able to effectively operate on January 1, 2000.
Accessor Capital has inventoried all computer systems, both hardware and
software, and has sought certification as to their readiness from all critical
third-party vendors.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE
- --------------------------------------------------------------------------------
MANAGER AND ADMINISTRATOR Accessor Capital Management LP, 1420 Fifth Avenue,
Suite 3600, Seattle, WA 98101,
The Fund is one of eight portfolios of Accessor Funds, Inc. ("Accessor Funds"),
a Maryland corporation. Accessor Capital develops the investment programs for
the Funds, selects the Money Managers for the other Funds, and monitors the
performance of the Money Managers. The Fund pays Accessor Capital an annual
management fee of 0.25% as a percentage of the Fund's average daily net assets
for providing management and administration services. In addition Accessor
Capital provides transfer agent, registrar, dividend disbursing agent and
certain other services to the Fund. For providing these services, Accessor
Capital receives (i) a fee equal to 0.13% of the average daily net assets of the
Fund and (ii) a transaction fee of $.50 per transaction.
J. Anthony Whatley, III, is the Executive Director of Accessor Capital. Ravindra
A. Deo, Vice President and Chief Investment Officer of Accessor Capital, is
primarily responsible for the day-to-day management of the Fund. Accessor
Capital directly invests the assets of the U.S. Government Money Fund. Accessor
Capital receives no additional fee beyond its management fee for this service.
The Fund paid 0.25% of the average net assets of the Fund to Accessor Capital
for management fees in fiscal year 1998.
<PAGE>
- --------------------------------------------------------------------------------
PURCHASING FUND SHARES
- --------------------------------------------------------------------------------
WHERE TO PURCHASE
- -----------------
[GRAPHIC] DIRECT. Investors may purchase Advisor Class shares directly from
Accessor Funds for no sales charge or commission.
[GRAPHIC] FINANCIAL INTERMEDIARIES. Advisor Class shares may be purchased
through financial intermediaries, such as banks, broker-dealers, registered
investment advisers and providers of fund supermarkets. In certain cases, the
Fund will be deemed to have received a purchase or redemption when it is
received by the financial intermediary. The order will be priced at the next
calculated NAV. These financial intermediaries may charge transaction,
administrative or other fees to shareholders and may impose other limitations on
buying, selling or transferring shares that are not described in this
Prospectus. Some features of the Advisor Class shares, such as investment
minimums, redemption fees and certain trading restrictions, may be modified or
waived by financial intermediaries. Shareholders should contact their financial
intermediary for information on fees and restrictions.
- --------------------------------------------------------------------------------
HELP BOX:
Advisor Class shares may not be purchased on days when the NYSE is
closed for trading: New Year's Day, Martin Luther King, Jr., Day, Presidents
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day.
- --------------------------------------------------------------------------------
HOW TO PURCHASE
- ---------------
Purchase orders are accepted on each business day that the New York Stock
Exchange is open and must be received in proper form prior to the close of the
New York Stock Exchange, normally 4:00 p.m. Eastern time. If Accessor Capital
receives a purchase order for shares of U.S. Government Money Fund on any
business day and the invested monies are wired before 9:00 a.m., Pacific time,
the investor will be entitled to receive that day's dividend. Otherwise,
Accessor Capital must receive payment for shares by 12:00 p.m. Eastern time on
the business day following the purchase request. All purchases must be made in
U.S. dollars. Purchases may be made any of the following ways:
BY CHECK. Checks made payable to "Accessor Funds, Inc." and drawn on a U.S. bank
should be mailed with the completed application or with the account number and
name of the Fund noted on the check to:
Accessor Funds, Inc.
P. 0. Box 1748
Seattle, WA 98111-1748
BY FEDERAL FUNDS WIRE. Wire instructions are included with the account
application.
BY TELEPHONE. Shareholders with aggregate account balances of at least $1
million may purchase Advisor Class shares by telephone at 1-800-759-3504. To
prevent unauthorized transactions, the Accessor Funds may use reasonable
procedures to verify telephone requests.
BY PURCHASES IN KIND. Under some circumstances, the Fund may accept securities
as payment for Advisor Class shares. Such securities would be valued the same
way the Fund's securities are valued. (See "Valuation of Securities".) Please
see "Additional Purchase and Redemption Information" in the Statement of
Additional Information for further information.
<PAGE>
- --------------------------------------------------------------------------------
PURCHASING FUND SHARES
- --------------------------------------------------------------------------------
IRAS/ROTH IRAS. Investors may purchase Advisor Class shares through an
Individual or Roth Retirement Custodial Account Plan. An IRA or Roth IRA account
with an aggregate balance of less than $10,000 across all Funds on December 31
of any year will be assessed a $25.00 fee. Copies of an IRA or Roth IRA Plan may
be obtained from Accessor Capital at (800) 759-3504.
- --------------------------------------------------------------------------------
INVESTMENT MINIMUMS
- --------------------------------------------------------------------------------
Regular Accounts Retirement Accounts
- --------------------------------------------------------------------------------
Initial Investment Initial Investment
One Fund only: $5,000 Traditional IRA/ $2,000 aggregated
Multiple Funds: $10,000 aggregated Roth IRA: among Funds
among Funds
Additional Investment
One Fund only: $1,000 Additional Investment
Multiple Funds: $2,000 aggregated Traditional IRA/ $2,000 aggregated
among Funds Roth IRA: among Funds
- --------------------------------------------------------------------------------
ACCESSOR FUNDS MAY ACCEPT SMALLER PURCHASE AMOUNTS OR REJECT ANY PURCHASE ORDER
THAT IT BELIEVES MAY DISRUPT THE MANAGEMENT OF THE FUND.
- --------------------------------------------------------------------------------
SHARE PRICING
- -------------
Investors purchase Advisor Class Shares of the Fund at its net asset value per
share ("NAV"). The U.S. Government Money Fund seeks to maintain a stable share
par of $1.00 per share. The NAV is calculated by adding the value of Fund assets
attributable to Advisor Class shares, subtracting Fund liabilities attributable
to the class, and dividing by the number of outstanding Advisor Class shares.
The NAV is calculated each day that the New York Stock Exchange ("NYSE") is open
for business. The Fund calculates its NAV at the close of regular trading on the
NYSE, generally 4:00 p.m. Eastern time. Shares are purchased at the next NAV
calculated after purchase requests are received by the Fund.
MARKET TIMING
- -------------
Short-term or excessive trading into and out of the Fund may harm performance by
disrupting portfolio management strategies and by increasing expenses.
Accordingly, the Fund may reject any purchase orders, including exchanges,
particularly from market timers or investors who, in Accessor Capital's opinion,
have a pattern of short-term or excessive trading or whose trading has been or
may be disruptive to the Fund. For these purposes, Accessor Capital may consider
an investor's trading history in the Fund or other Funds, and accounts under
common ownership or control.
FOR MORE INFORMATION
- --------------------
For additional information about purchasing shares of Accessor Funds, please
contact us at (800) 759-3504.
<PAGE>
- --------------------------------------------------------------------------------
EXCHANGING FUND SHARES
- --------------------------------------------------------------------------------
As a shareholder, you have the privilege of exchanging shares of the Fund for
shares of other Accessor Funds. Advisor Class Shares may be exchanged for shares
of any other Fund so long as shareholders meet the normal investment
requirements of the other Fund. Shareholders should read the prospectus of any
other Fund into which they are considering exchanging.
EXCHANGES THROUGH ACCESSOR FUNDS.
- ---------------------------------
Accessor Funds does not currently charge fees on exchanges directly through it.
This exchange privilege may be modified or terminated at any time by Accessor
Funds upon 60 days notice to shareholders. Exchanges may be made any of the
following ways:
[GRAPHIC] BY MAIL. Share exchange instructions may be mailed to
Accessor Funds
P. O. Box 1748
Seattle, WA 98111-1748
[GRAPHIC] BY FAX. Share exchange instructions may be faxed to Accessor Funds at
(206) 224-4274.
AN EXCHANGE OF SHARES FROM THE FUND INVOLVES A REDEMPTION OF THOSE SHARES AND
WILL BE TREATED AS A SALE FOR TAX PURPOSES.
EXCHANGES THROUGH FINANCIAL INTERMEDIARIES
- ------------------------------------------
If you invest through a financial intermediary, you should contact your
financial intermediary directly to make exchanges. Your financial intermediary
may charge additional fees for these transactions.
<PAGE>
- --------------------------------------------------------------------------------
REDEEMING FUND SHARES
- --------------------------------------------------------------------------------
Investors may request to redeem Advisor Class shares on any day that the NYSE is
open for business. Shares will be redeemed at the next NAV calculated after
Accessor Capital receives the redemption request in proper form. Payment will
ordinarily be made within seven days of the request by wire-transfer to a
shareholder's domestic commercial bank account. Shares may be redeemed from
Accessor Funds any of the following ways:
[GRAPHIC] BY MAIL. Redemption requests may be mailed to:
Accessor Funds
P. 0. Box 1748
Seattle, WA 98111-1748
[GRAPHIC] BY FAX. Redemption requests may be faxed to Accessor Funds at (206)
224-4274.
[GRAPHIC] BY TELEPHONE. Shareholders with aggregate account balances of at least
$1 million may request redemption of shares by telephone at (800) 759-3504. To
prevent unauthorized transactions, Funds may use reasonable procedures to verify
telephone requests.
Shareholders may request that payment be made by check to the shareholders of
record at the address of record. Such requests must be in writing. Shareholders
may also request that a redemption be made payable to someone other than the
shareholder of record or be sent to an address other than the address of record.
Such requests must be made in writing, be signed by all shareholders of record,
and accompanied by a signature guarantee. The Transfer Agent may charge a $10.00
processing fee for each redemption check. Shares also may be redeemed through
financial intermediaries from whom shares were purchased. Financial
intermediaries may charge a fee for this service.
- --------------------------------------------------------------------------------
Help Box:
Redemption requests for shares that were purchased by check will be
honored at the next NAV calculated after receipt of the redemption request.
However, redemption proceeds will not be transmitted until the check used for
the investment has cleared.
- --------------------------------------------------------------------------------
Large redemptions may disrupt the management and performance of the Fund. The
Fund reserves the right to delay delivery of your redemption proceeds -- up to
seven days -- if the Fund determines that the redemption amount will disrupt its
operation or performance. If you redeem more than $250,000 worth of the Fund's
shares within any 90-day period, the Fund reserves the right the pay part or all
of the redemption proceeds above $250,000 in kind, I.E., in securities, rather
than cash. If payment is made in kind, you may incur brokerage commissions if
you elect to sell the securities.
[GRAPHIC] SYSTEMATIC WITHDRAWAL PLAN. Shareholders may request an automatic,
monthly, quarterly or annual redemption of shares under the Systematic
Withdrawal Plan (minimum monthly amount is $500). Applications for this plan may
be obtained from Accessor Funds and must be received by Accessor Funds at least
ten calendar days before the first scheduled withdrawal date. Systematic
Withdrawals may be discontinued at any time by a shareholder or Accessor Funds.
[GRAPHIC] LOW ACCOUNT BALANCES. Accessor Funds may redeem any account with a
balance of less than $500 per Fund or less than $2,000 in aggregate across all
the Funds in the Accessor Funds complex, if the shareholder is not part of an
Automatic Investment Plan. Shareholders will be notified in writing when they
have a low balance and will have 60 days to purchase additional shares. Shares
will not be redeemed if an account drops below the minimum due to market
fluctuations.
In the event of an emergency as determined by Accessor Funds, it may suspend the
right of redemption or postpone payments to shareholders. If the Board of
Directors determines a redemption payment may harm the remaining shareholders of
the Fund, it may pay a redemption in whole or in part by a distribution in kind
of securities from the Fund.
<PAGE>
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS
- --------------------------------------------------------------------------------
[GRAPHIC] DIVIDENDS. The Fund intends to annually distribute as dividends to its
shareholders substantially all of its net investment income. The Board of
Directors presently intends to declare dividends for the U.S. Government Money
Fund daily and distribute them on the first business day of the following month.
[GRAPHIC] OTHER DISTRIBUTIONS. The Board of Directors intends to distribute to
the Fund's shareholders any capital gains annually, generally in mid-December.
[GRAPHIC] AUTOMATIC REINVESTMENT OF DIVIDENDS AND OTHER DISTRIBUTIONS. All
dividends and other distributions on Advisor Class shares will be automatically
reinvested in additional Advisor Class shares unless a shareholder elects to
receive them in cash.
- --------------------------------------------------------------------------------
VALUATION OF SECURITIES
- --------------------------------------------------------------------------------
The Fund generally values its securities using amortized cost, and securities
for which market quotations are not readily available are valued at fair value.
If a security's value has been materially affected by events occurring after the
close of the exchange or market on which the security is principally traded,
that security may be valued by another method that the Board of Director's
believes accurately reflects fair value.
- --------------------------------------------------------------------------------
TAXATION
- --------------------------------------------------------------------------------
Dividends and other distributions that shareholders receive from the Fund,
whether received in cash or reinvested in additional shares of the Fund, are
subject to federal income tax and may also be subject to state and local tax.
Generally, dividends and distributions of net short-term capital gains are
taxable as ordinary income, while distributions of other gains are taxable as
long-term capital gains (generally, at the rate of 20% or less for non-corporate
shareholders).
Certain dividends and other distributions declared by the Fund in October,
November, or December of any year are taxable to shareholders as though received
on December 31 of that year if paid to them during the following January.
Accordingly, those distributions will be taxed to shareholders for the year in
which that December 31 falls.
An exchange of the U.S. Government Money Fund's shares for shares of another
Fund of Accessor Funds will be treated as a sale of the Fund's shares, and any
gain on the transaction will be subject to federal income tax.
After the conclusion of each calendar year, shareholders will receive
information regarding the taxability of dividends and other distributions paid
by the Fund during the preceding year. The Fund may be required to withhold and
remit to the U.S. Treasury 31% of all dividends, capital gain distributions, and
redemption proceeds payable to individuals and certain other non-corporate
shareholders who have not provided the Fund with a correct taxpayer
identification number. Shareholders should consult a tax adviser for further
information regarding the federal, state, and local tax consequences of an
investment in Advisor Class shares.
The foregoing is only a brief summary of certain federal income tax consequences
of investing in the Fund. Please see the Statement of Additional Information for
Sa further discussion.
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
U.S. GOVERNMENT MONEY FUND
The financial highlights table is intended to help you understand the Fund's
financial performance for the past 5 years. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned (or lost) 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, are included in the annual report, which is
available upon request.
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING
THROUGHOUT THE PERIOD
ADVISOR CLASS
1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INVESTMENT OPERATIONS:
Net investment income 0.05 0.05 0.05 0.05 0.04
DISTRIBUTIONS:
Distributions from net investment income -0.05 -0.05 -0.05 -0.05 -0.04
- ----------------------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------------------------------------------------
Total return (1) 5.00% 5.07% 4.78% 5.33% 3.70%
- ----------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $153,148 $50,910 $61,672 $41,882 $12,008
- ----------------------------------------------------------------------------------------------------------------------
Ratios of expenses to average net assets:
After Accessor Capital fee waivers 0.53% 0.54% 0.59% 0.53% 0.45%
Before Accessor Capital fee waivers 0.53 0.54 0.59 0.78 1.27
Ratio of net investment income to
average net assets
After Accessor Capital fee waivers 4.83 4.96 4.73 5.14 3.51
Before Accessor Capital fee waivers 4.83 4.96 4.73 4.89 2.69
</TABLE>
- ----------
(1) Total return is calculated assuming a purchase of shares at net asset value
per share on the first day and a sale at net asset value per share on the
last day of each period reported. Distributions are assumed, for purposes
of this calculation, to be reinvested at the net asset value per share on
the respective payment dates.
<PAGE>
SHAREHOLDER REPORTS. Accessor Funds publishes Annual and Semi-Annual Reports,
which contain information about the Fund's recent performance, including:
[bullet] Fund performance data and financial statements
[bullet] Fund holdings
STATEMENT OF ADDITIONAL INFORMATION ("SAI"). The SAI contains more detailed
information about Accessor Funds and the Fund. The SAI is incorporated by
reference into this Prospectus, making it legally part of this Prospectus.
Free copies of Accessor Fund's Annual Report, SAI, and other information are
available through your financial intermediary or from:
ACCESSOR CAPITAL MANAGEMENT LP
1420 Fifth Street, Suite 3600
Seattle, Washington 98101
800-759-3504
206-224-7420
www.accessor.com
You may obtain copies of documents from the SEC, upon payment of duplicating
fees, or view documents at the SEC's Public Reference Room in Washington, D.C.
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549-6009
800-SEC-0330 (Public Reference Section)
www.sec.gov
Accessor(R) is a registered trademark of Accessor Capital Management LP.
SEC file number: 811-06337.
<PAGE>
ACCESSOR(R) FUNDS, INC.
1420 Fifth Avenue, Suite 3600
Seattle, WA 98101
(206) 224-7420/(800) 759-3504
www.accessor.com
Statement of Additional Information
Dated May 1, 1999
ACCESSOR(R) FUNDS, INC. (the "Company") is a multi-managed, no-load, open-end
management investment company, known as a mutual fund. The Company currently
consists of eight diversified investment portfolios (individually, a "Fund" and
collectively, the "Funds"), each with its own investment objective and policies.
The eight Funds are the Growth, Value, Small to Mid Cap and International Equity
Funds (the "Equity Funds") and the Intermediate Fixed-Income, Short-Intermediate
Fixed-Income, Mortgage Securities and U.S. Government Money Funds (the
"Fixed-Income Funds"). Each Fund offers two classes of shares, the Advisor Class
Shares and the Investor Class Shares, which are offered through two
prospectuses: the Advisor Class Shares Prospectus and the Investor Class Shares
Prospectus, each dated May 1, 1999 (collectively, the "Prospectuses"). In
addition, Advisor Class Shares of the U.S. Government Money Fund are also
offered through a solo Prospectus. A copy of the applicable Prospectus may be
obtained free of charge by writing to or calling the address or telephone number
listed above. This Statement of Additional Information is not a prospectus and
should be read in conjunction with the appropriate Prospectuses.
Information from the Annual Report to Shareholders for the fiscal year ended
December 31, 1998 is incorporated by reference into this Statement of Additional
Information. For a free copy of the Annual Report, call 1-800-759-3504.
The Company currently includes the following Funds:/1/
GROWTH FUND -- seeks capital growth through investing primarily in equity
securities with greater than average growth characteristics selected from the
500 U.S. issuers that make up the Standard & Poor's 500 Composite Stock Price
Index (the "S&P 500").
VALUE FUND/2/ -- seeks generation of current income and capital growth by
investing primarily in income-producing equity securities selected from the 500
U.S. issuers that make up the S&P 500.
SMALL TO MID CAP FUND/3/ -- seeks capital growth through investing primarily in
equity securities of small to medium capitalization issuers.
INTERNATIONAL EQUITY FUND -- seeks capital growth by investing primarily in
equity securities of companies domiciled in countries other than the United
States and traded on foreign stock exchanges.
INTERMEDIATE FIXED-INCOME FUND -- seeks generation of current income by
investing primarily in fixed-income securities with durations of between three
and ten years and a dollar weighted average portfolio duration that does not
vary more or less than 20% from that of the Lehman Brothers Government/Corporate
Index or another relevant index approved by the Company's Board of Directors
(the "Board of Directors").
SHORT-INTERMEDIATE FIXED-INCOME FUND -- seeks preservation of capital and
generation of current income by investing primarily in fixed-income securities
with durations of between one and five years and a dollar weighted average
portfolio duration that does not vary more or less than 20% from that of the
Lehman Brothers 1-5 Year Government/Corporate Index or another relevant index
approved by the Board of Directors.
MORTGAGE SECURITIES FUND -- seeks generation of current income by investing
primarily in mortgage-related securities with an aggregate dollar weighted
average portfolio duration that does not vary outside of a band of plus or minus
20% from that of the Lehman Brothers Mortgage-Backed Securities Index or another
relevant index approved by the Board of Directors.
U.S. GOVERNMENT MONEY FUND -- seeks maximum current income consistent with the
preservation of principal and liquidity by investing primarily in short-term
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.
- ----------
\1\ Effective May 1, 1999, in each Fund's name the term "Portfolio" was changed
to "Fund".
\2\ Formerly the "Value and Income Portfolio". Prior to May 1, 1999, the Value
Fund was known as the Value and Income Portfolio. The name was changed to more
accurately reflect the Fund's investment policies.
\3\ Formerly the "Small Cap Portfolio." Prior to September 15, 1995, the Small
Cap Portfolio sought to achieve its investment objective through investing
primarily in small capitalization issuers (selected from the 2,000 U.S. issuers
with the next largest market capitalization after, and excluding, the 1,000 U.S.
issuers with the largest market capitalization). On August 15, 1995, the
shareholders of the Small Cap Portfolio approved a change in its investment
objective effective September 15, 1995, to permit it to also invest in medium
capitalization issuers. This change in investment objective coincided with the
change of the name of the Fund to "Small to Mid Cap Portfolio" and the
commencement of management by a new Money Manager for it.
<PAGE>
Table of Contents
General Information and History................................................4
Investment Restrictions, Policies and Risk Considerations......................4
Management of the Funds.......................................................23
Control Persons and Principal Holders of Securities...........................25
Investment Advisory and Ohter Services........................................30
Valuation.....................................................................48
Portfolio Transaction Policies................................................49
Performance Information.......................................................53
Code of Ethics................................................................56
Tax Information...............................................................56
Additional Purchase and Redemption Information................................62
Financial Statements..........................................................64
<PAGE>
GENERAL INFORMATION AND HISTORY
The Company was incorporated in Maryland on June 10, 1991. The Company is
authorized to issue 15 billion shares of common stock, $.001 par value per
share, and is currently divided into eight Funds. Each Fund offers two classes
of shares, the Advisor Class Shares and the Investor Class Shares. The Board of
Directors may increase or decrease the number of authorized shares without the
approval of shareholders. Shares of the Company, when issued, are fully paid,
non-assessable, fully transferable and redeemable at the option of the holder.
Shares also are redeemable at the option of the Company under certain
circumstances. All shares of a Fund are equal as to earnings, assets and voting
privileges. There are no conversion, preemptive or other subscription rights. In
the event of liquidation, each share of common stock of a Fund is entitled to
its portion of all of the Fund's assets after all debts and expenses of the Fund
have been paid. The Funds' shares do not have cumulative voting rights for the
election of Directors. Pursuant to the Company's Articles of Incorporation, the
Board of Directors may authorize the creation of additional series of common
stock and classes within such series, with such preferences, privileges,
limitations and voting and dividend rights as the Board of Directors may
determine.
Accessor Capital Management L.P. ("Accessor Capital"), a Washington limited
partnership, is the manager and administrator of the Company, pursuant to a
Management Agreement with the Company. Accessor Capital is also the Company's
transfer agent, registrar, dividend disbursing agent and provides record
keeping, administrative and compliance services pursuant to its Transfer Agency
and Administrative Agreement ("Transfer Agent Agreement") with the Company.
INVESTMENT RESTRICTIONS, POLICIES AND RISK CONSIDERATIONS
Each Fund's investment objective and investment restrictions are
"fundamental" and may be changed only with the approval of the holders of a
majority of the outstanding voting securities of that Fund. As defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act"), a
majority of the outstanding voting securities of a Fund means the lesser of (i)
67% of the shares represented at a meeting at which more than 50% of the
outstanding shares are present in person or represented by proxy or (ii) more
than 50% of the outstanding shares.
INVESTMENT RESTRICTIONS
Each Fund is subject to the following "fundamental" investment
restrictions. Unless otherwise noted, these restrictions apply at the time an
investment is made. No Fund will:
1. Purchase any security (other than obligations of the U.S.
Government, its agencies or instrumentalities) if as a result (i) with respect
to 75% of the Fund's total assets, more than 5% of the Fund's total assets would
then be invested in securities of a single issuer, or (ii) 25% or more of the
Fund's total assets would be invested in one or more issuers having their
principal business activities in the same industry. The U.S. Government Money
Fund may not purchase any security (other than obligations of the U.S.
Government, its agencies or instrumentalities) if as a result: (a) more than 5%
of the Fund's total assets would then be invested in securities of a single
issuer, or (b) 25% or more of the Fund's total assets would be invested in one
or more issuers having their principal business activities in the same industry.
2. Issue senior securities, borrow money or pledge its assets, except
that a Fund may borrow up to 5% of the value of its total assets from banks for
temporary, extraordinary or emergency purposes and may pledge up to 10% of the
value of its total assets to secure such borrowings. In the event that the asset
coverage for the Fund's borrowings falls below 300%, the Fund will reduce within
three days the amount of its borrowings in order to provide for 300% asset
coverage. (For the purpose of this restriction, collateral arrangements with
respect to the writing of options, and, if applicable, futures contracts, and
collateral arrangements with respect to initial or variation margin are not
deemed to be a pledge of assets and neither such arrangements nor the purchase
or sale of futures is deemed to be the issuance of a senior security).
3. Buy or sell commodities or commodity contracts, or real estate or
interests in real estate, although it may purchase and sell financial futures
contracts, stock index futures contracts and related options, securities which
are secured by real estate, securities of companies which invest or deal in real
estate and publicly traded securities of real estate investment trusts. No Fund
may purchase interests in real estate limited partnerships. The U.S. Government
Money Fund may not buy or sell commodities or commodity contracts, or real
estate or interests in real estate, except that the Fund may purchase and sell
securities which are secured by real estate and securities of companies which
invest or deal in real estate, other than securities of real estate investment
trusts and real estate limited partnerships.
4. Act as underwriter except to the extent that, in connection with the
disposition of portfolio securities, it may be deemed to be an underwriter under
certain federal and state securities laws.
5. Invest in interests in oil, gas or other mineral exploration or
development programs.
6. Make loans, except through repurchase agreements (repurchase
agreements with a maturity of longer than seven days together with other
illiquid securities being limited to 15% of the net assets of the Fund) and
except through the lending of its portfolio securities as described below under
"Investment Policies--Lending of Portfolio Securities."
7. Make investments for the purpose of exercising control of
management.
8. Acquire more than 5% of the outstanding voting securities, or 10% of
all of the securities, of any one issuer. The U.S. Government Money Fund may not
purchase common stock or other voting securities, preferred stock, warrants or
other equity securities, except as may be permitted by restriction number 11.
9. Effect short sales (other than short sales against-the-box) or
purchase securities on margin (except that a Fund may obtain such short-term
credits as may be necessary for the clearance of purchases or sales of
securities, may trade in futures and related options, and may make margin
payments in connection with transactions in futures contracts and related
options).
10. Invest in securities, other than mortgage-related securities,
asset-backed securities or obligations of any U.S. Government agency or
instrumentality, of an issuer which, together with any predecessor, has been in
operation for less than three years if, as a result, more than 5% of the Fund's
total assets would then be invested in such securities.
11. Invest in securities of other registered investment companies,
except by purchases in the open market involving only customary brokerage
commissions and as a result of which not more than 5% of its total assets would
be invested in such securities, or as part of a merger, consolidation or other
acquisition, or as set forth under "Investment Policies -- Collateralized
Mortgage Obligations ("CMOs") and Real Estate Mortgage Investment Conduits
("REMICs")."
12. Purchase warrants if as a result the Fund would have more than 5%
of its total assets invested in warrants or more than 2% of its total assets
invested in warrants not listed on the New York or American Stock Exchanges.
Warrants attached to other securities are not subject to this limitation. The
U.S. Government Money Fund may not purchase warrants.
INVESTMENT POLICIES AND RISK CONSIDERATIONS
Liquidity Reserves. Each Fund (other than the U.S. Government Money
Fund) may have up to 20% of its total assets in cash or cash equivalents to meet
redemption requests, and each Fund may hold cash reserves in an unlimited amount
for temporary defensive purposes when its Money Manager believes that a more
conservative approach is desirable. In addition, Accessor Capital or a Money
Manager may create an equity or fixed-income exposure for cash reserves through
the use of options or futures contracts. This will enable the Funds to hold cash
while receiving a return on the cash which is similar to holding equity or
fixed-income securities.
Repurchase Agreements. Each Fund may enter into repurchase agreements
with a seller who agrees to repurchase the securities at the Fund's cost plus
interest within a specified time (ordinarily a week or less). The securities
purchased by the Fund have a total value in excess of the value of the
repurchase agreement and are held by Fifth Third Bank, the Funds' custodian (the
"Custodian") until repurchased. The Funds' repurchase agreements will at all
times be fully collateralized by U.S. Government securities or other collateral,
such as cash, and the securities held as collateral will be valued daily, and as
the value of the securities declines, the Fund will require additional
collateral. If the seller defaults and the value of the collateral securing the
repurchase agreements declines, the Fund may incur a loss. Repurchase agreements
assist a Fund in being invested fully while retaining "overnight" flexibility in
pursuit of investments of a longer-term nature. Each Fund will limit repurchase
transactions to commercial banks having at least $1 billion in total assets and
broker-dealers having a net worth of at least $5 million or total assets of at
least $50 million, and will limit repurchase transactions to entities whose
creditworthiness is continually monitored and found satisfactory by Accessor
Capital or the Fund's Money Manager under the supervision of the Board of
Directors. Subject to the limitation on investing not more than 15% of a Fund's
net assets in illiquid securities, no Fund will invest more than 15% of its net
assets (taken at current market value) in repurchase agreements maturing in more
than seven days; provided, however, the U.S. Government Money Fund will not
invest more than 10% of its net assets in illiquid securities (including
repurchase agreements maturing in more than seven days). See "Investment
Restrictions, Policies and Risk Considerations - Illiquid Securities."
Reverse Repurchase Agreements and Dollar Rolls. Each Fund may enter
into reverse repurchase agreements to meet redemption requests where the
liquidation of portfolio securities is deemed by the Fund's Money Manager to be
inconvenient or disadvantageous. A reverse repurchase agreement has the
characteristics of borrowing and is a transaction whereby a Fund transfers
possession of a portfolio security to a bank or a broker-dealer in return for a
percentage of the portfolio security's market value. The Fund retains record
ownership of the security involved, including the right to receive interest and
principal payments. At an agreed upon future date, the Fund repurchases the
security by paying an agreed upon purchase price plus interest. The Intermediate
Fixed-Income Fund, the Short-Intermediate Fixed-Income Fund and the Mortgage
Securities Fund (collectively, the "Bond Funds"), may also enter into dollar
rolls in which the Funds sell securities for delivery in the current month and
simultaneously contract to repurchase substantially similar (same type and
coupon) securities on a specified future date from the same party. During the
roll period, the Funds forego principal and interest paid on the securities. The
Funds are compensated by the difference between the current sales price and the
forward price for the future purchase (often referred to as the "drop") as well
as by the interest earned on the cash proceeds of the initial sale.
At the time a Fund enters into reverse repurchase agreements or dollar
rolls, the Fund will establish or maintain a segregated account with a custodian
approved by the Board of Directors, containing cash or liquid assets of the Fund
having an aggregate value, measured on a daily basis, at least equal in value to
the repurchase price including any accrued interest. Each Fund's entry into
reverse repurchase agreements and dollar rolls, together with its other
borrowings, is limited to 5% of its net assets. Reverse repurchase agreements
and dollar rolls involve the risk that the market value of securities retained
in lieu of sale may decline below the price of the securities the Fund has sold
but is obligated to repurchase. In the event the buyer of securities under a
reverse repurchase agreement files for bankruptcy or becomes insolvent, such
buyer or its trustee or receiver may receive an extension of time to determine
whether to enforce the Fund's obligation to repurchase the securities, and the
Fund's use of the proceeds of the reverse repurchase agreement may effectively
be restricted pending such decisions.
Reverse repurchase agreements and dollar rolls are considered
borrowings by the Funds for purposes of the percentage limitations applicable to
borrowings.
Real Estate-Related Securities. Each Fund may invest up to 5% of its
net assets in publicly traded real estate investment trusts ("REITs"). Publicly
traded REITs generally engage in acquisition, development, marketing, operating
and long-term ownership of real property. A publicly traded REIT meeting certain
asset income and distribution requirements will generally not be subject to
federal taxation on income distributed to its shareholders.
Short Sales Against-the-Box. Although to date the Funds have made no
short sales against-the-box, and no Money Manager currently anticipates making
such sales in the future, each Fund (other than the U.S. Government Money Fund)
may make such sales or maintain a short position, provided that at all times
when a short position is open, the Fund owns an equal amount of such securities
or securities convertible or exchangeable for such securities without the
payment of any further consideration for the securities sold short. Not more
than 25% of a Fund's net assets (determined at the time of the short sale) may
be subject to such sales.
Rights and Warrants. The Funds (except for the U.S. Government Money
Fund) may invest up to 5% of their net assets in rights and warrants of issuers
that meet the Funds' investment objective and policies. Warrants are instruments
which give the holder the right to purchase the issuer's securities at a stated
price during a stated term. Rights are short-term warrants issued to
shareholders in conjunction with new stock issues. The prices of warrants do not
necessarily move parallel to the prices of the underlying securities. No Fund
may purchase warrants (other than warrants attached to other securities) if as a
result the Fund would have more than 5% of its total assets invested in warrants
or more than 2% of its total assets invested in warrants not listed on the New
York or American Stock Exchanges. Warrants involve a risk of loss if the market
price of the underlying securities subject to the warrants never exceeds the
exercise price of the warrants. See "Investment Restrictions."
Mortgage-Related Securities. The Bond Funds may invest in
mortgage-related securities, and, in particular, mortgage pass-through
securities, Government National Mortgage Association ("GNMA") Certificates,
Federal National Mortgage Association ("FNMA") and Federal Home Loan Mortgage
Corporation ("FHLMC") mortgage-backed obligations and mortgage-backed securities
of other issuers (such as commercial banks, savings and loan institutions,
private mortgage insurance companies, mortgage bankers, and other secondary
market issuers). Some mortgage-related securities may be guaranteed by the U.S.
Government or an agency or instrumentality thereof; others are issued by
financial institutions such as commercial banks, savings and loan associations,
mortgage banks and securities broker-dealers (or affiliates of such institutions
established to issue these securities) in the form of mortgage-backed bonds and
are not guaranteed. Thus, credit risk among these instruments may vary. Payments
of principal and interest on Certificates issued by GNMA (but not the market
value of the Certificates themselves) are guaranteed by the full faith and
credit of the U.S. Government. Securities guaranteed by agencies or
instrumentalities of the U.S. Government, such as the FNMA or FHLMC, are
supported only by the discretionary authority of the U.S. Government to purchase
the agency's obligations. Mortgage-backed bonds are not guaranteed, although the
mortgage-related securities securing these obligations may be subject to U.S.
Government guarantee or third-party support. If the collateral securing the
privately issued obligation is insufficient to make payment on the obligation, a
holder could sustain a loss.
In the case of mortgage pass-through securities, such as GNMA
Certificates or FNMA and FHLMC mortgage-backed obligations, early repayment of
principal arising from prepayments of principal on the underlying mortgage loans
(due to the sale of the underlying property, the refinancing of the loan, or
foreclosure) may expose a Fund to a lower rate of return upon reinvestment of
the principal. For example, with respect to GNMA Certificates, although mortgage
loans in the pool will have maturities of up to 30 years, the actual average
life of a GNMA Certificate typically will be substantially less because the
mortgages will be subject to normal principal amortization and may be prepaid
prior to maturity. In periods of falling interest rates, the rate of prepayment
tends to increase, thereby shortening the actual average life of the
mortgage-backed security. Reinvestment of prepayments may occur at higher or
lower rates than the original yield on the Certificates.
In addition, tracking the "pass-through" payments on GNMA Certificates
and other mortgage-related and asset-backed securities may, at times, be
difficult. Expected payments may be delayed due to the delays in registering
newly traded paper securities. The Funds' Custodian's policies for crediting
missed payments while errant receipts are tracked down may vary. Some
mortgage-backed securities such as those of FHLMC and FNMA trade in book-entry
form and should not be subject to this risk of delays in timely payment of
income.
Asset-Backed Securities. The Bond Funds may invest in asset-backed
securities offered through trusts and special purpose subsidiaries in which
various types of assets, primarily home equity loans and automobile and credit
card receivables, are securitized in pass-through structures similar to the
mortgage pass-through structures described above or in a pay-through structure
similar to the collateralized mortgage structure. The Bond Funds may invest in
these and other types of asset-backed securities which may be developed in the
future.
Risks of Investing in Asset-Backed and Mortgage-Related Securities. The
yield characteristics of mortgage-related securities (including CMOs and REMICs)
and asset-backed securities differ from traditional debt securities. Among the
major differences are that interest and principal payments are made more
frequently, usually monthly, and that principal may be prepaid at any time
because the underlying mortgage loans or other assets generally may be prepaid
at any time. As a result, if the Bond Funds purchase such a security at a
premium, a prepayment rate that is faster than expected will reduce yield to
maturity, while a prepayment rate that is slower than expected will have the
opposite effect of increasing yield to maturity. Alternatively, if the Bond
Funds purchase these securities at a discount, faster than expected prepayments
will increase, while slower than expected prepayments will reduce, yield to
maturity.
Although the extent of prepayments in a pool of mortgage loans depends
on various economic and other factors, as a general rule prepayments on
fixed-rate mortgage loans will increase during a period of falling interest
rates and decrease during a period of rising interest rates. Accordingly,
amounts available for reinvestment by the Bond Funds are likely to be greater
during a period of declining interest rates and, as a result, likely to be
reinvested at lower interest rates than during a period of rising interest
rates. Asset-backed securities, although less likely to experience the same
prepayment rates as mortgage-related securities, may respond to certain of the
same factors influencing prepayments, while at other times different factors
will predominate. Mortgage-related securities and asset-backed securities may
decrease in value as a result of increases in interest rates and may benefit
less than other fixed-income securities from declining interest rates because of
the risk of prepayment.
Asset-backed securities involve certain risks that are not posed by
mortgage-related securities, because asset-backed securities do not usually have
the type of security interest in the related collateral that mortgage-related
securities have. For example, credit card receivables generally are unsecured
and the debtors are entitled to the protection of a number of state and federal
consumer credit laws, some of which may reduce a creditor's ability to realize
full payment. In the case of automobile receivables, due to various legal and
economic factors, proceeds from repossessed collateral may not always be
sufficient to support payments on these securities.
Collateralized Mortgage Obligations ("CMOs") and Real Estate Mortgage
Investment Conduits ("REMICs"). The Bond Funds may invest in CMOs and REMICs. A
CMO is a debt security that is backed by a portfolio of mortgages or
mortgage-backed securities. The issuer's obligation to make interest and
principal payments is secured by the underlying portfolio of mortgages or
mortgage-backed securities. CMOs generally are partitioned into several classes
with a ranked priority as to the time that principal payments will be made with
respect to each of the classes. The Bond Funds may invest only in
privately-issued CMOs that are collateralized by mortgage-backed securities
issued or guaranteed by GNMA, FHLMC or FNMA and in CMOs issued by FHLMC.
Currently, approximately 95% of all CMOs are issued by FHLMC.
The Bond Funds also may invest in REMICs. A REMIC must elect to be, and
must qualify for treatment as such under the Internal Revenue Code of 1986, as
amended (the "Code"). A REMIC must consist of one or more classes of "regular
interests," some of which may be adjustable rate, and a single class of
"residual interests." To qualify as a REMIC, substantially all the assets of the
entity must be in assets directly or indirectly secured, principally by real
property. The Bond Funds do not intend to invest in residual interests. Congress
intended for REMICs to ultimately become the exclusive vehicle for the issuance
of multi-class securities backed by real estate mortgages. If a trust or
partnership that issues CMOs does not elect and qualify for REMIC status, it
will be taxed at the entity level as a corporation.
In reliance on a Securities and Exchange Commission (the "SEC") rule,
the Bond Funds' investments in certain qualifying CMOs, including CMOs that have
elected to be treated as REMICs, are not subject to the Investment Company Act's
limitation on acquiring interests in other investment companies. In addition, in
reliance on an earlier SEC interpretation, the Fund's investments in certain
other CMOs which cannot or do not rely on the rule, are also not subject to the
Investment Company Act's limitation on acquiring interests in other investment
companies. In order to be able to rely on the SEC's interpretation, the CMOs and
REMICs must be unmanaged, fixed-asset issuers that (a) invest primarily in
mortgage-backed securities, (b) do not issue redeemable securities, (c) operate
under general exemptive orders exempting them from all provisions of the
Investment Company Act, and (d) are not registered or regulated under the
Investment Company Act as investment companies. To the extent that these Funds
select CMOs or REMICs that do not satisfy the requirements of the rule or meet
the above requirements, the Fund may not invest more than 10% of its assets in
all such entities and may not acquire more than 3% of the voting securities of
any single such entity.
Foreign Securities. Certain of the Funds may invest in foreign
securities. Foreign securities involve certain risks. These risks include
political or economic instability in the country of the issuer, the difficulty
of predicting international trade patterns, the possibility of imposition of
exchange controls and the risk of currency fluctuations. Such securities may be
subject to greater fluctuations in price than securities issued by U.S.
corporations or issued or guaranteed by the U.S. Government, its
instrumentalities or agencies. Generally, outside the United States there is
less government regulation of securities exchanges, brokers and listed companies
and, with respect to certain foreign countries, there is a possibility of
expropriation, confiscatory taxation or diplomatic developments which could
affect investments within such countries.
In many instances, foreign debt securities may provide higher yields
than securities of domestic issuers which have similar maturities and quality.
However, under certain market conditions, these investments may be less liquid
than investments in the securities of U.S. corporations and are certainly less
liquid than securities issued or guaranteed by the U.S. Government, its
instrumentalities or agencies.
If a security is denominated in a foreign currency, such security will
be affected by changes in currency exchange rates and in exchange control
regulations, and costs will be incurred in connection with conversions between
currencies. A change in the value of any such currency against the U.S. dollar
will result in a corresponding change in the U.S. dollar value of the Fund's
securities denominated in that currency. Such changes also will affect the
Fund's income and distributions to shareholders. In addition, although the Fund
will receive income in such currencies, the Fund will be required to compute and
distribute its income in U.S. dollars. Therefore, if the exchange rate for any
such currency declines after the Fund's income has been accrued and translated
into U.S. dollars, the Fund could be required to liquidate portfolio securities
to make such distributions, particularly when the amount of income the Fund is
required to distribute is not immediately reduced by the decline in such
security. Similarly, if an exchange rate declines between the time the Fund
incurs expenses in U.S. dollars and the time such expenses are paid, the amount
of such currency which must be converted into U.S. dollars to pay such expenses
in U.S. dollars will be greater than the equivalent amount in any such currency
of such expenses at the time they were incurred.
Investing in Emerging Countries. Political and Economic Factors.
Investing in Emerging Countries involves potential risks relating to political
and economic developments abroad. Governments of many Emerging Countries have
exercised and continue to exercise substantial influence over many aspects of
the private sector. Accordingly, government actions in the future could have a
significant effect on economic conditions in Emerging Countries, which could
affect the value of securities in the Funds. The value of the investments made
by the Funds will be affected by commodity prices, inflation, interest rates,
taxation, social instability, and other political, economic or diplomatic
developments in or affecting the Emerging Countries in which the Funds have
invested. In addition, there is a possibility of expropriation or confiscatory
taxation, imposition of withholding taxes on dividend or interest payments, or
other similar developments which could affect investments in those countries.
While the Money Managers intend to manage the Funds in a manner that will
minimize the exposure to such risks, there can be no assurance that adverse
political changes will not cause the Funds to suffer a loss of interest or
principal on any of its holdings. The Funds will treat investments that are
subject to repatriation restrictions of more than seven (7) days as illiquid
securities.
Foreign Exchange Risk. The value of non-U.S. dollar denominated
securities of issuers in Emerging Countries is affected by changes in currency
exchange rates or exchange control regulations. Foreign currency exchange rates
are determined by forces of supply and demand on the foreign exchange markets.
These forces are affected by the international balance of payments, economic and
financial conditions, government intervention, speculation and other factors.
Many of the currencies of Emerging Countries have experienced significant
devaluations relative to the U.S. dollar and major adjustments have been made in
certain of them at times.
Investing in Securities Markets of Emerging Countries. Certain of the
risks associated with investments generally are heightened for investments in
Emerging Countries. For example, securities markets in Emerging Countries may be
less liquid, more volatile and less subject to governmental regulation than U.S.
securities markets. There may be less publicly available information about
issuers in Emerging Countries than about domestic issuers. Emerging Country
issuers are not generally subject to accounting, auditing and financial
reporting standards comparable to those applicable to domestic issuers. Markets
in Emerging Countries also have different clearance and settlement procedures,
and in certain markets there have been times when settlements have been unable
to keep pace with the volume of securities transactions, making it difficult to
conduct such transactions. Delays in settlement could result in temporary
periods when a portion of the assets of the Funds are uninvested and no return
is earned thereon. Inability to dispose of securities due to settlement problems
could result in losses to the Funds due to subsequent declines in value of
securities or, if the Funds have entered into a contract to sell securities,
could result in possible liability to the purchaser.
Certain Emerging Countries require prior governmental approval of
investments by foreign persons, limit the amount of investment by foreign
persons in a particular company, limit the investment by foreign persons only to
a specific class of securities of a company that may have less advantageous
rights than the classes available for purchase by domiciliaries of the countries
and/or impose additional taxes on foreign investors. Certain Emerging Countries
may also restrict investment opportunities in issuers in industries deemed
important to national interests.
Certain Emerging Countries may require governmental approval for the
repatriation of investment income, capital or the proceeds of sales of
securities by foreign investors. In addition, if a deterioration occurs in an
Emerging Country's balance of payments or for other reasons, a country could
impose temporary restrictions on foreign capital remittances. The Funds could be
adversely affected by delays in, or a refusal to grant, any required
governmental approval for repatriation of capital, as well as by the application
to the Funds of any restrictions on investments.
Costs associated with transactions in securities of companies in
Emerging Countries are generally higher than costs associated with transactions
in U.S. securities. There are three basic components to such transaction costs,
which include brokerage fees, market impact costs (i.e., the increase or
decrease in market prices which may result when a Fund purchases or sells thinly
traded securities), and the difference between the bid-ask spread. Each one of
these components may be significantly more expensive in Emerging Countries than
in the U.S. or other developed markets because of less competition among
brokers, lower utilization of technology by exchanges and brokers, the lack of
derivative instruments and less liquid markets. In addition to these transaction
costs, the cost of maintaining custody of foreign securities generally exceeds
custodian costs for U.S. securities.
Throughout the last decade many Emerging Countries have experienced and
continue to experience high rates of inflation. In certain countries, inflation
has at times accelerated rapidly to hyperinflationary levels, creating a
negative interest rate environment and sharply eroding the value of outstanding
financial assets in those countries.
Illiquid Securities. No Fund may invest more than 15% of its net assets
in illiquid securities; provided, however, the U.S. Government Money Fund will
not invest more than 10% of its net assets in illiquid securities. Securities
which are illiquid include securities subject to contractual or legal
restrictions on resale because they have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), securities which are
otherwise not readily marketable, repurchase agreements having a maturity of
longer than seven days, certain interest only ("IO")/principal only ("PO")
strips and over-the-counter ("OTC") options. Repurchase agreements subject to
demand are deemed to have a maturity equal to the notice period. Securities
which have not been registered under the Securities Act are referred to as
private placements or restricted securities and are purchased directly from the
issuer or in the secondary market. Mutual funds do not typically hold a
significant amount of these restricted or other illiquid securities because of
the potential for delays on resale and uncertainty in valuation. Limitations on
resale may have an adverse effect on the marketability of portfolio securities,
and a mutual fund might be unable to dispose of restricted or other illiquid
securities promptly or at reasonable prices and might thereby experience
difficulty satisfying redemptions within seven days. A mutual fund might also
have to register such restricted securities in order to dispose of them
resulting in additional expense and delay. Adverse market conditions could
impede such a public offering of securities.
In recent years, a large institutional market has developed for certain
securities that are not registered under the Securities Act including repurchase
agreements, commercial paper, foreign securities, municipal securities and
corporate bonds and notes. Institutional investors depend on an efficient
institutional market in which the unregistered security can be readily resold or
on an issuer's ability to honor a demand for repayment. The fact that there are
contractual or legal restrictions on resale to the general public or to certain
institutions may not be indicative of the liquidity of such investments.
Rule 144A under the Securities Act allows for a broader institutional
trading market for securities otherwise subject to restriction on resale to the
general public by establishing a "safe harbor" from the registration
requirements of the Securities Act for resales of certain securities to
qualified institutional buyers (as such term is defined under Rule 144A).
Accessor Capital anticipates that the market for certain restricted securities
such as institutional commercial paper will expand further as a result of this
regulation and the development of automated systems for the trading, clearance
and settlement of unregistered securities of domestic and foreign issuers, such
as the PORTAL System sponsored by the National Association of Securities
Dealers, Inc. (the "NASD"). An insufficient number of qualified institutional
buyers interested in purchasing Rule 144A-eligible restricted securities held by
the Funds, however, could affect adversely the marketability of such Funds'
securities and, consequently, the Funds might be unable to dispose of such
securities promptly or at favorable prices. Accessor Capital will monitor the
liquidity of such restricted securities under the supervision of the Board of
Directors.
Restricted securities issued pursuant to Rule 144A are not deemed to be
illiquid. The Money Manager will monitor the liquidity of such restricted
securities subject to the supervision of Accessor Capital and the Board of
Directors. In reaching liquidity decisions, the Money Manager will consider,
among other things, the following factors: (1) the frequency of trades and
quotes for the security; (2) the number of dealers wishing to purchase or sell
the security and the number of other potential purchasers; (3) dealer
undertakings to make a market in the security; (4) the number of other potential
purchasers; and (5) the nature of the security and the nature of the marketplace
trades (e.g., the time needed to dispose of the security, the method of
soliciting offers and the mechanics of the transfer).
Lending of Portfolio Securities. Consistent with applicable regulatory
requirements, each Fund may lend its portfolio securities to brokers, dealers
and financial institutions, provided that outstanding loans do not exceed in the
aggregate the maximum allowable percentage under the applicable laws and
regulations of the value of the Fund's net assets and provided that such loans
are callable at any time by the Fund and are at all times secured by cash or
equivalent collateral that is at least equal to the market value, determined
daily, of the loaned securities. The advantage of such loans is that the Fund
continues to receive interest and dividends on the loaned securities, while at
the same time earning interest either directly from the borrower or on the
collateral which will be invested in short-term obligations.
A loan may be terminated by the borrower on one business day's notice
or by the Fund at any time. If the borrower fails to maintain the requisite
amount of collateral, the loan automatically terminates, and the Fund could use
the collateral to replace the securities while holding the borrower liable for
any excess of replacement cost over collateral. As with any extensions of
credit, there are risks of delay in recovery and in some cases loss of rights in
the collateral should the borrower of the securities fail financially. However,
these loans of portfolio securities will only be made to firms determined to be
creditworthy pursuant to procedures approved by the Board of Directors. On
termination of the loan, the borrower is required to return the securities to
the Fund, and any gain or loss in the market price during the loan would be
borne by the Fund.
Since voting or consent rights which accompany loaned securities pass
to the borrower, the Fund will follow the policy of calling the loan, in whole
or in part as may be appropriate, to permit the exercise of such rights if the
matters involved would have a material effect on the Fund's investment in the
securities which are the subject of the loan. The Fund will pay reasonable
finders', administrative and custodial fees in connection with a loan of its
securities or may share the interest earned on collateral with the borrower.
Forward Commitments. A Fund may make contracts to purchase securities
for a fixed price at a future date beyond customary settlement time ("forward
commitments") consistent with the Fund's ability to manage its investment
portfolio and meet redemption requests. The Fund may dispose of a commitment
prior to settlement if it is appropriate to do so and realize short-term profits
or losses upon such sale. When effecting such transactions, cash or liquid
assets of the Fund of a dollar amount sufficient to make payment for the
portfolio securities to be purchased, measured on a daily basis, will be
segregated on the Fund's records at the trade date and maintained until the
transaction is settled, so that the purchase of securities on a forward
commitment basis is not deemed to be the issuance of a senior security. Forward
commitments involve a risk of loss if the value of the security to be purchased
declines prior to the settlement date.
Options. The Funds' investment policies permit the Funds (other than
the U.S. Government Money Fund) to purchase put and call options and write
(sell) "covered" put and "covered" call options.
A call option is a contract whereby a purchaser pays a premium in
exchange for the right to buy the security on which the option is written at a
specified price during the term of the option. A written call option is
"covered" if the Fund owns the optioned securities or the Fund maintains in a
segregated account with the Company's Custodian, cash, U.S. Government
securities or other liquid assets with a value sufficient to meet its
obligations under the call option, measured on a daily basis, or if the Fund
owns an offsetting call option. When a Fund writes a call option, it receives a
premium and gives the purchaser the right to buy the underlying security at any
time during the call period, at a fixed exercise price regardless of market
price changes during the call period. If the call is exercised, the Fund forgoes
any gain from an increase in the market price of the underlying security over
the exercise price.
The purchaser of a put option pays a premium and receives the right to
sell the underlying security at a specified price during the term of the option.
The writer of a put option, receives a premium and in return, has the
obligation, upon exercise of the option, to acquire the securities or currency
underlying the option at the exercise price. A written put option is "covered"
if a Fund deposits with the Company's Custodian, cash, U.S. Government
securities or other liquid assets with an aggregate value, measured on a daily
basis, at least equal to the exercised price of the put option.
The Funds may purchase and write covered put and covered call options
that are traded on United States or foreign securities exchanges or that are
listed on the Nasdaq Stock Market. Currency options may be either listed on an
exchange or traded OTC. Options on financial futures and stock indices are
generally settled in cash as opposed to the underlying securities.
Listed options are third-party contracts (i.e., performance of the
obligations of the purchaser and seller is guaranteed by the exchange or
clearing corporation) and have standardized strike prices and expiration dates.
OTC options are privately negotiated with the counterparty to such contract and
are purchased from and sold to dealers, financial institutions or other
counterparties which have entered into direct agreements with the Funds. OTC
options differ from exchange-traded options in that OTC options are transacted
with the counterparty directly and not through a clearing corporation (which
guarantees performance). If the counterparty fails to take delivery of the
securities underlying an option it has written, the Funds would lose the premium
paid for the option as well as any anticipated benefit of the transaction.
Consequently, the Funds must rely on the credit quality of the counterparty and
there can be no assurance that a liquid secondary market will exist for any
particular OTC options at any specific time. The SEC has taken the position that
purchased OTC options and the assets used as cover for written OTC options are
illiquid securities subject to the 15% limitation described in "Illiquid
Securities."
The Funds will not write covered put or covered call options on
securities if the obligations underlying the put options and the securities
underlying the call options written by the Fund exceed 25% of its net assets
other than OTC options and assets used as cover for written OTC options.
Furthermore, the Funds will not purchase or write put or call options on
securities, stock index futures or financial futures if the aggregate premiums
paid on all such options exceed 20% of the Fund's total net assets, subject to
the foregoing limitations.
If the writer of an option wishes to terminate the obligation, he or
she may effect a "closing purchase transaction." This is accomplished by buying
an option of the same series as the option previously written. The effect of the
purchase is that the writer's position will be canceled by the clearing
corporation. However, a writer may not effect a closing purchase transaction
after he or she has been notified of the exercise of an option. Similarly, an
investor who is the holder of an option may liquidate his or her position by
effecting a "closing sale transaction." This is accomplished by selling an
option of the same series as the option previously purchased. Each Fund will
realize a profit from a closing transaction if the price of the transaction is
less than the premium received from writing the option or is more than the
premium paid to purchase the option; the Fund will realize a loss from a closing
transaction if the price of the transaction is more than the premium received
from writing the option or is less than the premium paid to purchase the option.
There is no guarantee that either a closing purchase or a closing sale
transaction can be effected. To secure the obligation to deliver the underlying
security in the case of a call option, the writer of the option is generally
required to pledge for the benefit of the broker the underlying security or
other assets in accordance with the rules of the relevant exchange or
clearinghouse, such as The Options Clearing Corporation, an institution created
to interpose itself between buyers and sellers of options in the United States.
Technically, the clearinghouse assumes the other side of every purchase and sale
transaction on an exchange and, by doing so, guarantees the transaction.
Risks of Transactions in Options. An option position may be closed out
only on an exchange, board of trade or other trading facility which provides a
secondary market for an option of the same series. Although the Funds will
generally purchase or write only those options for which there appears to be an
active secondary market, there is no assurance that a liquid secondary market on
an exchange will exist for any particular option, or at any particular time, and
for some options no secondary market on an exchange or otherwise may exist. In
such event it might not be possible to effect closing transactions in particular
options, with the result that the Fund would have to exercise its options in
order to realize any profit and would incur brokerage commissions upon the
exercise of call options and upon the subsequent disposition of underlying
securities acquired through the exercise of call options or upon the purchase of
underlying securities for the exercise of put options. If the Fund as a covered
call option writer is unable to effect a closing purchase transaction in a
secondary market, it will not be able to sell the underlying security until the
option expires or it delivers the underlying security upon exercise.
Reasons for the absence of a liquid secondary market on an exchange
include the following: (i) there may be insufficient trading interest in certain
options; (ii) restrictions may be imposed by an exchange on opening transactions
or closing transactions or both; (iii) trading halts, suspensions or other
restrictions may be imposed with respect to particular classes or series of
options or underlying securities; (iv) unusual or unforeseen circumstances may
interrupt normal operations on an exchange; (v) the facilities of an exchange or
a clearing corporation may not at all times be adequate to handle current
trading volume; or (vi) one or more exchanges could, for economic or other
reasons, decide or be compelled at some future date to discontinue the trading
of options (or a particular class or series of options), in which event the
secondary market on that exchange (or in the class or series of options) would
cease to exist, although outstanding options on that exchange that had been
issued by a clearing corporation as a result of trades on that exchange would
continue to be exercisable in accordance with their terms. There is no assurance
that higher than anticipated trading activity or other unforeseen events might
not, at times, render certain of the facilities of any of the clearing
corporations inadequate, and thereby result in the institution by an exchange of
special procedures which may interfere with the timely execution of customers'
orders. The Funds intend to purchase and sell only those options which are
cleared by clearinghouses whose facilities are considered to be adequate to
handle the volume of options transactions.
Futures Contracts. Each Fund (other than the U.S. Government Money
Fund) is permitted to enter into financial futures contracts, stock index
futures contracts and related options thereon ("futures contracts") in
accordance with its investment objective.
A futures contract is the contractual obligation to acquire or sell the
securities called for by the contract at a specified price on a specified date.
Futures contracts are traded on "contract markets" designated by the Commodity
Futures Trading Commission. Trading is similar to the manner stock is traded on
an exchange, except that all contracts are cleared through and guaranteed to be
performed by a clearing corporation associated with the commodity exchange on
which the futures contract is traded.
Upon entering into a futures contract, a Fund is required to deposit in
a segregated account with the Company's Custodian in the name of the futures
broker through whom the transaction was effected, initial margin consisting of
cash, U.S. government securities or other liquid assets having an aggregate
value, measured on a daily basis, at least equal to the amount of the covered
obligations. The initial margin is in the amount of cash or short-term
securities equal to a specified percentage of the futures amount (approximately
5% or more of the futures contract amount). Subsequent daily payments are made
between the Fund and futures broker to maintain the initial margin at the
specified percentage. The purchase and sale of futures contracts and collateral
arrangements with respect thereto are not deemed to be a pledge of assets and
such arrangements are not deemed to be a senior security.
A "short hedge" is taking a short position in the futures market (that
is, selling a financial instrument or a stock index futures contract for future
delivery on the contract market) as a temporary substitute for sale of the
financial instrument or common stock, respectively, in the cash market, when a
Fund holds and continues to hold the financial instrument necessary to make
delivery under the financial futures contract or holds common stocks in an
amount at least equal in value to the stock index futures contract.
A "long hedge" is taking a long position in the futures market (that
is, purchasing a financial instrument or a stock index futures contract for
future delivery on a contract market) as a temporary substitute for purchase of
the financial instrument or common stock, respectively, in the cash market when
the Fund holds and continues to hold segregated liquid assets sufficient to take
delivery of the financial instrument under the futures contract.
A "stock index futures contract" is a contract to buy or sell specified
units of a stock index at a specified future date at a price agreed upon when
the contract is made. A unit is the current value of the contract index. The
stock index futures contract specifies that no delivery of the actual stocks
making up the index will take place. Upon the termination of the contract,
settlement is the difference between the contract price and the actual level of
the stock index at the contract expiration and is paid in cash.
A "financial futures contract" (or an "interest rate futures contract")
is a contract to buy or sell a specified quantity of financial instruments such
as United States Treasury bonds, notes, bills, commercial paper and bank
certificates of deposit, an agreed amount of currencies, or the cash value of a
financial instrument index at a specified future date at a price agreed upon
when the contract is made. Substantially all futures contracts are closed out
before settlement date or call for cash settlement. A futures contract is closed
out by buying or selling an identical offsetting futures contract which cancels
the original contract to make or take delivery.
It is anticipated that the primary use of stock index futures contracts
will be for a long hedge in order to minimize the impact of cash balances. For
example, a Fund may sell stock when a Money Manager determines that it no longer
is a favorable investment, anticipating to invest the proceeds in different
stocks. Until the proceeds are reinvested in stocks, the Fund may purchase a
long position in a stock index futures contract.
The Funds may purchase options on futures contracts as an alternative
or in addition to buying or selling futures contracts for hedging purposes.
Options on futures are similar to options on the security upon which the futures
contracts are written except that options on stock index futures contracts give
the purchaser the right, in return for a premium paid, to assume a position in a
stock index futures contract at any time during the life of the option at a
specified price and options on financial futures contracts give the purchaser
the right, in return for a premium paid, to assume a position in a financial
futures contract at any time during the life of the option at a specified price.
Stock index futures contracts may be used by the Equity Funds as a
hedge during or in anticipation of market decline. For example, if the market
was anticipated to decline, stock index futures contracts in a stock index with
a value that correlates with the declining stock value would be sold (short
hedge) which would have a similar effect as selling the stock. As the market
value declines, the stock index future's value decreases, partly offsetting the
loss in value on the stock by enabling the Fund to repurchase the futures
contract at a lower price to close out the position.
Financial futures contracts may be used by the Bond Funds as a hedge
during or in anticipation of interest rate changes. For example, if interest
rates were anticipated to rise, financial futures contracts would be sold (short
hedge) which have a similar effect as selling bonds. Once interest rates
increase, fixed-income securities held in a Fund's portfolio would decline, but
the futures contract value decreases, partly offsetting the loss in value of the
fixed-income security by enabling the Fund to repurchase the futures contract at
a lower price to close out the position.
The Funds may purchase a put option on a stock index futures contract
instead of selling a futures contract in anticipation of market decline.
Purchasing a call option on a stock index futures contract is used instead of
buying a futures contract in anticipation of a market advance, or to temporarily
create an equity exposure for cash balances until those balances are invested in
equities. Options on financial futures are used in similar manner in order to
hedge portfolio securities against anticipated changes in interest rates.
There are certain investment risks in using futures contracts as a
hedging technique. One risk is the imperfect correlation between the price
movement of the futures contracts and the price movement of the portfolio
securities that are the subject of the hedge. The degree of imperfection of
correlation depends upon circumstances such as: variations in speculative market
demand for futures and for debt securities and currencies, and differences
between the financial instruments being hedged and the instruments underlying
the futures contracts available for trading with respect to interest rate levels
and maturities. Another risk is that a liquid secondary market may not exist for
a futures contract, causing a Fund to be unable to close out the futures
contract and thereby affecting a Fund's hedging strategy.
Limitations on Futures and Options Transactions. The Company on behalf
of each Fund has filed a notice of eligibility for exclusion from the definition
of the term "commodity pool operator" with the Commodity Futures Trading
Commission ("CFTC") and the National Futures Association, which regulate trading
in the futures markets. Pursuant to Section 4.5 of the regulations under the
Commodity Exchange Act, the notice of eligibility includes the following
representations:
(a) Each Fund will use commodity futures contracts and options solely
for bona fide hedging purposes within the meaning of CFTC regulations; provided
that the Fund may hold long positions in commodity futures contracts or options
that do not fall within the definition of bona fide hedging transactions if the
positions are used as part of a Fund management strategy and are incidental to
the Fund's activities in the underlying cash market, and the underlying
commodity value of the positions at all times will not exceed the sum of (i)
cash or U.S. dollar-denominated high quality short-term money market instruments
set aside in an identifiable manner, plus margin deposits, (ii) cash proceeds
from existing investments due in 30 days, and (iii) accrued profits on the
positions held by a futures commission merchant; and
(b) A Fund will not enter into any commodity futures contract or
options if, as a result, the sum of initial margin deposits on commodity futures
contracts or options the Fund has purchased, after taking into account
unrealized profits and losses on such contracts, would exceed 5% of the Fund's
total assets.
Foreign Currency Transactions. The International Equity Fund (the
"International Fund") may enter into foreign currency transactions. The value of
the assets of the International Fund as measured in U.S. dollars may be affected
favorably or unfavorably by changes in foreign currency exchange rates and
exchange control regulations, and it may incur costs in connection with
conversions between various currencies. The International Fund will conduct
foreign currency exchange transactions either on a spot (i.e., cash) basis at
the spot rate prevailing in the foreign currency exchange market or through
forward contracts to purchase or sell foreign currencies ("forward contracts").
A forward contract involves an obligation to purchase or sell a specific
currency at a future date, which may be any fixed number of days ("term") from
the date of the contract agreed upon by the parties, at a price set at the time
of the contract. These contracts are traded directly between currency traders
(usually large commercial banks) and their customers.
The International Fund may enter into forward contracts when the Money
Manager determines that the best interests of the International Fund will be
served. When the International Fund enters into a contract for the purchase or
sale of a security denominated in a foreign currency, it may desire to establish
the U.S. dollar costs or proceeds. By entering into a forward contract in U.S.
dollars for the purchase or sale of the amount of foreign currency involved in
an underlying security transaction, the International Fund will be able to
protect against possible losses between trade and settlement dates resulting
from an adverse change in the relationship between the U.S. dollar and such
foreign currency. Such contracts may limit potential gains that might result
from a possible change in the relationship between the U.S. dollar and such
foreign currency.
When a Money Manager believes that the currency of a particular foreign
country may suffer a substantial decline against the U.S. dollar, it may enter
into a forward contract to sell an amount of foreign currency approximating the
value of some or all of the International Fund's portfolio securities
denominated in such foreign currency. The forecasting of short-term currency
market movement is extremely difficult and the successful execution of a
short-term hedging strategy is highly uncertain. The International Fund will not
enter into forward contracts on a regular basis or continuous basis if it would
have more than 25% of its gross assets denominated in the currency of the
contract or 10% of the value of its total assets committed to such contracts,
where it would be obligated to deliver an amount of foreign currency in excess
of the value of its portfolio securities or other assets denominated in that
currency. Under normal circumstances, consideration of the prospect for currency
parities will be incorporated into the longer term investment decisions made
with regard to overall diversification strategies. The International Fund's
Custodian will segregate cash, equity or debt securities in an amount not less
than the value of the International Fund's total assets committed to forward
contracts entered into under this second type of transaction.
It is impossible to forecast with absolute precision the market value
of portfolio securities at the expiration of the contract. Accordingly, it may
be necessary for the International Fund to purchase additional foreign currency
on the spot market (and bear the expense of such purchases) if the market value
of the security is less than the amount of foreign currency the International
Fund are obligated to deliver and if a decision is made to sell the security and
make delivery of the foreign currency. Conversely, it may be necessary to sell
on the spot market some of the foreign currency received upon the sale of the
portfolio security if its market value exceeds the amount of foreign currency
the International Fund are obligated to deliver.
This method of protecting the value of the International Fund's
portfolio securities against a decline in the value of the currency does not
eliminate fluctuations in the underlying prices of the securities. It
establishes a rate of exchange which one can achieve at some future point in
time. Although such contracts tend to minimize the risk of loss due to a decline
in the value of the hedged currency, at the same time, they tend to limit any
potential gain which might result should the value of such currency increase.
U.S. Government Obligations. The types of U.S. Government obligations
in which the Funds may at times invest include: (1) a variety of United States
Treasury obligations, which differ only in their interest rates, maturities and
times of issuance, i.e., United States Treasury bills having a maturity of one
year or less, United States Treasury notes having maturities of one to ten
years, and United States Treasury bonds generally having maturities of greater
than ten years; (2) obligations issued or guaranteed by U.S. Government agencies
and instrumentalities which are supported by any of the following: (a) the full
faith and credit of the United States Treasury (such as GNMA Participation
Certificates), (b) the right of the issuer to borrow an amount limited to a
specific line of credit from the United States Treasury, (c) discretionary
authority of the U.S. Government agency or instrumentality, or (d) the credit of
the instrumentality (examples of agencies and instrumentalities are: Federal
Land Banks, Farmers Home Administration, Central Bank for Cooperatives, Federal
Intermediate Credit Banks, Federal Home Loan Banks and FNMA). No assurance can
be given that the U.S. Government will provide financial support to such U.S.
Government agencies or instrumentalities described in (2)(b), (2)(c) and (2)(d)
in the future, other than as set forth above, since it is not obligated to do so
by law. The Funds may purchase U.S. Government obligations on a forward
commitment basis.
Obligations issued or guaranteed as to principal and interest by the
U.S. Government may be acquired by a Fund in the form of custodial receipts that
evidence ownership of future interest payments, principal payments or both on
certain United States Treasury notes or bonds. These custodial receipts are
commonly referred to as U.S. Treasury STRIPS.
Variable and Floating Rate Securities. A floating rate security is one
whose terms provide for the automatic adjustment of interest rate whenever a
specified interest rate changes. A variable rate security is one whose terms
provide for the automatic establishment of a new interest rate on set dates. The
interest rate on floating rate securities is ordinarily tied to and is a
percentage of the prime rate of a specified bank or some similar objective
standard, such as the 90-day United States Treasury bill rate, and may change as
often as twice daily. Generally, changes in interest rates on floating rate
securities will reduce changes in the security's market value from the original
purchase price, resulting in the potential for capital appreciation or capital
depreciation being less than for fixed-income obligations with a fixed interest
rate.
The U.S. Government Money Fund may purchase variable rate U.S.
Government obligations which are instruments issued or guaranteed by the U.S.
Government, or any agency or instrumentality thereof, which have a rate of
interest subject to adjustment at regular intervals but less frequently than
annually. Variable rate U.S. Government obligations on which interest is
readjusted no less frequently than annually will be deemed to have a maturity
equal to the period remaining until the next readjustment of the interest rate.
The Funds may purchase floating and variable rate demand notes and
bonds, which are obligations ordinarily having stated maturities in excess of
397 days, but which permit the holder to demand payment of principal at any
time, or at specified intervals not exceeding 397 days, in each case upon not
more than 30 days' notice. Variable rate demand notes include master demand
notes which are obligations that permit a Fund to invest fluctuating amounts,
which may change daily without penalty, pursuant to direct arrangements between
the Fund, as lender, and the borrower. The interest rates on these notes
fluctuate from time to time. The issuer of such obligations normally has a
corresponding right, after a given period, to prepay in its discretion the
outstanding principal amount of the obligations plus accrued interest upon a
specified number of days' notice to the holders of such obligations. The
interest rate on a floating rate demand obligation is based on a known lending
rate, such as a bank's prime rate, and is adjusted automatically each time such
rate is adjusted. The interest rate on a variable rate demand obligation is
adjusted automatically at specified intervals. Frequently, such obligations are
collateralized by letters of credit or other credit support arrangements
provided by banks. Because these obligations are direct lending arrangements
between the lender and borrower it is not contemplated that such instruments
generally will be traded, and there generally is no established secondary market
for these obligations, although they are redeemable at face value. Accordingly,
where these obligations are not secured by letters of credit or other credit
support arrangements, a Fund's right to redeem is dependent on the ability of
the borrower to pay principal and interest on demand. Such obligations
frequently are not rated by credit rating agencies and a portfolio may invest in
obligations which are not so rated only if its Money Manager determines that at
the time of investment the obligations are of comparable quality to the other
obligations in which the Fund may invest. The Money Manager of a Fund will
consider on an ongoing basis the creditworthiness of the issuers of the floating
and variable rate demand obligations held by the Fund.
Inverse Floaters. Although to date the Funds have not invested in
inverse floaters, and no Money Manager anticipates investing in inverse
floaters, the Bond Funds and the International Fund may invest up to 5% of their
net assets in inverse floaters. Inverse floaters are securities with a variable
interest rate that varies in inverse proportion to the direction of an interest
rate, or interest rate index. Inverse floaters have significantly greater risk
than conventional fixed-income instruments. When interest rates are declining,
coupon payments will rise at periodic intervals. This rise in coupon payments
causes rapid dramatic increases in prices compared to those expected from
conventional fixed-income instruments of similar maturity. Conversely, during
times of rising interest rates, the coupon payments will fall at periodic
intervals. This fall in coupon payments causes rapid dramatic decreases in
prices compared to those expected from conventional fixed-income instruments of
similar maturity. If the Bond Funds or the International Fund invest in inverse
floaters, they will treat inverse floaters as illiquid securities except for (i)
inverse floaters issued by U.S. Government agencies and instrumentalities backed
by fixed-rate mortgages, whose liquidity is monitored by Accessor Capital and
the Money Managers for the Funds subject to the supervision of the Board of
Directors or (ii) where such securities can be disposed of promptly in the
ordinary course of business at a value reasonably close to that used in the
calculation of net asset value per share.
Privately-Issued STRIP Securities. The Funds may invest in principal
portions or coupon portions of U.S. Government Securities that have been
separated (stripped) by banks, brokerage firms, or other entities
("privately-issued STRIPS"). Stripped securities are usually sold separately in
the form of receipts or certificates representing undivided interests in the
stripped portion and are not considered to be issued or guaranteed by the U.S.
Government. Stripped securities may be more volatile than non-stripped
securities. No Fund will invest more than 5% of its net assets in
privately-issued STRIPS.
MANAGEMENT OF THE FUNDS
The Board of Directors is responsible for overseeing generally the
operation of the Company. The officers are responsible for the day-to-day
management and administration of the Company's operations.
<TABLE>
<CAPTION>
Name and Position with Principal Occupations
Address Age the Fund During Past Five Years
<S> <C> <C> <C>
*J. Anthony Whatley, III** 56 Director, President and Executive Director, Accessor Capital
1420 Fifth Avenue Principal Executive Officer Management L.P. since April 1991;
Seattle, WA President, Accessor Capital Management
Associates, Inc. since April 1991;
President, Northwest Advisors, Inc.
since 1990; Senior Vice President and
Director of Sales and Marketing, Frank
Russell Company (asset strategy
consultant) from 1986 to 1990.
George G. Cobean, III 61 Director Partner, Martinson, Cobean &
1607 South 341st Place Associates, P.S. (certified public
Federal Way, WA accountants) since 1973.
Geoffrey C. Cross 59 Director President, Geoffrey C. Cross P.S.,
252 Broadway Inc., (general practice of law) since
Tacoma, WA 1970.
Ravindra A. Deo 36 Vice President, Director and Vice President, Northwest
1420 Fifth Avenue Treasurer and Advisors, Inc. since July 1993; Vice
Seattle, WA Principal Financial President and Chief Investment Officer,
and Accounting Officer Accessor Capital Management L.P. since
January 1992; Senior Vice President,
Leland O'Brien Rubenstein Associates
Incorporated (investment adviser) from
1986 to 1991.
Linda V. Whatley** 41 Vice President and Director, Secretary and Treasurer of
1420 Fifth Avenue Assistant Secretary Northwest Advisors, Inc. since July
Seattle, WA 1993; Vice President, Accessor Capital
Management L.P. since April 1991;
Secretary since April 1991 and
Director and Treasurer since June
1992 of Bennington Capital
Management Associates, Inc.;
Student, University of Washington
MBA Program from 1987 to 1990; Vice
President, Russell Analytical
Services, Frank Russell Company
(asset strategy consultant) from
1984 to 1987.
Robert J. Harper 55 Vice President Director and Vice President, Northwest
1420 Fifth Avenue Advisers, Inc. since November 1995;
Seattle, WA Director of Sales and Client Service,
Accessor Capital Management L.P. since
October 1993; President, National
Training Program since January 1980.
Christine J. Stansbery 47 Secretary Assistant Vice President-Compliance
1420 Fifth Avenue since January 1997, Regulatory Manager
Seattle, WA from March 1996 to December 1996, Legal
Assistant from March 1993 to March
1996 at Accessor Capital Management
L.P.; Assistant to Administrator,
Bailey Boushay House, Virginia
Mason Hospital, from 1990 to 1992
(health care).
</TABLE>
- ----------
*"Interested Person" by virtue of his employment by and/or indirect interest in
Accessor Capital.
** J. Anthony Whatley, III and Linda V. Whatley are husband and wife.
- --------------------------------------------------------------------------------
The following table shows the compensation paid by the Company to the
Directors during the fiscal year ended December 31, 1998:
COMPENSATION TABLE
<TABLE>
<CAPTION>
Pension or Retirement Estimated Total Compensation
Aggregate Benefits Accrued as part Annual from Company Paid
Compensation of Company Expenses Benefits upon to Board Members
Director from the Company Retirement
<S> <C> <C>
J. Anthony Whatley III None None None None
George G. Cobean III $17,000.00 None None $17,000.00
Geoffrey C. Cross $17,000.00 None None $17,000.00
</TABLE>
Directors who are not "interested persons" of the Company are paid fees
of $2,500/4/ per meeting plus out-of-pocket costs associated with attending
Board meetings. Directors employed by Accessor Capital have agreed that, if
their employment with Accessor Capital is terminated for any reason, and a
majority of the remaining Directors of the Company so request, they will be
deemed to have resigned from the Board of Directors upon being informed of such
vote. The Company's officers and employees are paid by Accessor Capital and
receive no compensation from the Company.
- ----------
/4/ Until May 1999, each member of the Board of Directors received $2,500.00 per
meeting. Starting with the May 1999 meeting, each member of the Board of
Directors will receive $3,000.00 per meeting.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of April 15, 1999, the following persons were the owners, of record
or beneficially, of 5% or more of the shares of the Funds as set forth below:
Growth Fund
<TABLE>
<CAPTION>
Advisor Class Investor Class
Owner Owner
<S> <C> <C> <C>
Charles Schwab & Company 15.52% Zions First National Bank 68.57%
101 Montgomery St. One South Main Street
San Francisco, CA 94104 Salt Lake City, UT 84130
OneDun, account nominee for 6.29% The Trust Company of Sterne 14.99%
First American Bank 800 Shades Creek Pkwy
218 West Main Street Birmingham, AL 35209
Dundee, IL 60118
National Financial Service Corp. 9.06% First Interstate Bank 7.54%
For the Exclusive Benefit of its customers Attn: Trust Department
P. O. Box 3908 P. O. Box 30918
Church Street Station Billings, MT 59116
New York, NY 10008-3908
One Valley Bank NA
P. O. Box 1793 5.26%
Charleston, WV 25326
Eastern Bank & Trust Co. 6.09%
225 Essex St.
Salem, MA 01970
Trust Company of Illinois 5.60%
45 South Park Blvd., #300
Glen Ellyn, IL 60137
Value Fund
Advisor Class Investor Class
Beneficial Owner Beneficial Owner
Charles Schwab & Company 7.51% Zions First National Bank 61.32%
101 Montgomery St. One South Main Street
San Francisco, CA 94104 Salt Lake City, UT 84130
One Valley Bank NA 15.42% The Trust Company of Sterne 18.33%
P. O. Box 1793 Agee & Leach
Charleston, WV 25326 800 Shades Creek Pkwy
Birmingham, AL 35209
Eastern Bank & Trust Co. 10.18%
225 Essex St. First Interstate Bank 13.73%
Salem, MA 01970 Attn: Trust Department
P. O. Box 30918
Lew & Co., Inc., account nominee for Resource 11.70% Billings, MT 59116
Trust Company
900 2nd Avenue South, Suite 300
Minneapolis, MN 55402
First Interstate Bank 9.81%
Attn: Trust Department
P. O. Box 30918
Billings, MT 59116
Small to Mid Cap Fund
Advisor Class Investor Class
Beneficial Owner Beneficial Owner
Charles Schwab & Company 15.06% Zions First National Bank 72.20%
101 Montgomery St. One South Main Street
San Francisco, CA 94104 Salt Lake City, UT 84130
One Valley Bank NA 6.65% The Trust Company of Sterne 17.42%
P. O. Box 1793 800 Shades Creek Pkwy
Charleston, WV 25326 Birmingham, AL 35209
Hubco Regions Bank, account nominee for 17.72% First Interstate Bank 5.28%
Regions Bank Attn: Trust Department
P. O. Box 10247 P. O. Box 30918
Birmingham, AL 35202 Billings, MT 59116
International Equity Fund
Advisor Class Investor Class
Beneficial Owner Beneficial Owner
Fleet National Bank 20.89% Zions First National Bank 75.93%
For the Benefit of One South Main Street
Fleet Financial Group Salt Lake City, UT 84130
P.O. Box 9280
Rochester, NY 14692
One Valley Bank NA 12.32% The Trust Company of Sterne 18.96%
P. O. Box 1793 800 Shades Creek Pkwy
Charleston, WV 25326 Birmingham, AL 35209
Hubco Regions Bank, account nominee for 25.50%
Regions Bank
P. O. Box 10247
Birmingham, AL 35202
Intermediate Fixed-Income Fund
Advisor Class Investor Class
Beneficial Owner Beneficial Owner
Zions First National Bank 12.23% The Trust Company of Sterne 35.51%
One South Main Street 800 Shades Creek Pkwy
Salt Lake City, UT 84130 Birmingham, AL 35209
National Financial Service Corp. 9.89% Zions First National Bank 48.34%
For the Exclusive Benefit of its customers One South Main Street
P. O. Box 3908 Salt Lake City, UT 84130
Church Street Station
New York, NY 10008-3908
Eastern Bank & Trust Co. 10.10% First Interstate Bank 13.27%
225 Essex St. Attn: Trust Department
Salem, MA 01970 P. O. Box 30918
Billings, MT 59116
Mase & Co., account Nominee for 24.50%
Community First National
520 Main Ave
Fargo, ND 58124
Short-Intermediate Fixed-Income Fund
Advisor Class Investor Class
Beneficial Owner Beneficial Owner
Zions First National Bank 32.00% The Trust Company of Sterne 7.71%
One South Main Street 800 Shades Creek Pkwy
Salt Lake City, UT 84130 Birmingham, AL 35209
GreatBanc Trust Company 12.68% Zions First National Bank 73.51%
105 East Galena Blvd. One South Main Street
Aurora, IL 60505 Salt Lake City, UT 84130
One Valley Bank NA 27.58% First Interstate Bank 17.78%
P. O. Box 1793 Attn: Trust Department
Charleston, WV 25326 P. O. Box 30918
Billings, MT 59116
Fifth Third Bank TTEE 6.36%
Trust #7771173
PO Box 630074
Cincinnati, OH 45230
Mortgage Securities Fund
Advisor Class Investor Class
Beneficial Owner Beneficial Owner
Zions First National Bank 37.11% Zions First National Bank 83.74%
One South Main Street One South Main Street
Salt Lake City, UT 84130 Salt Lake City, UT 84130
North Carolina Trust Company #1 10.78% First Interstate Bank 7.65%
Attn: Trust Accounting Attn: Trust Department
PO Box 1108 P. O. Box 30918
Greensboro, NC 27402 Billings, MT 59116
One Valley Bank NA 9.15%
P. O. Box 1793
Charleston, WV 25326
Hubco Regions Bank, account nominee for 13.93%
Regions Bank
P. O. Box 10247
Birmingham, AL 35202
Mase & Co., account Nominee for 6.05%
Community First National
520 Main Ave
Fargo, ND 58124
US Government Money Fund
Advisor Class Investor Class
Beneficial Owner Beneficial Owner
Zions First National Bank 91.99% Zions First National Bank 98.91%
One South Main Street One South Main Street
Salt Lake City, UT 84130 Salt Lake City, UT 84130
One Valley Bank NA 5.74%
P. O. Box 1793
Charleston, WV 25326
</TABLE>
As of April 15, 1999, none of the Directors and officers of the
Company, as a group, beneficially owned more than 1% of the shares of each Fund.
If a meeting of the shareholders were called, the above-listed
shareholders, if voting together, may, as a practical matter, have sufficient
voting power to exercise control over the business, policies and affairs of the
Company and, in general, determine certain corporate or other matters submitted
to the shareholders for approval, such as a change in the Funds' investment
policies, all of which may adversely affect the net asset value of a Fund. As
with any mutual fund, certain shareholders of a Fund could control the results
of voting in certain instances. For example, a vote by certain majority
shareholders changing the Fund's investment objective could result in dissenting
minority shareholders withdrawing their investments and a corresponding increase
in costs and expenses for the remaining shareholders.
INVESTMENT ADVISORY AND OTHER SERVICES
SERVICE PROVIDERS
The Funds' day-to-day operations are performed by separate business
organizations under contract to the Company. The principal service providers
are:
Manager, Administrator, Transfer Agent, Accessor Capital
Registrar and Dividend Disbursing Agent Management L. P.
Custodian and Fund Accounting Agent Fifth Third Bank
Money Managers Six
professional
discretionary
investment
management
organizations and
Accessor Capital
Management L.P.
Manager, Administrator, Transfer Agent, Registrar and Dividend
Disbursing Agent. Accessor Capital is the manager and administrator of the
Company, pursuant to a Management Agreement with the Company. Accessor Capital
provides or oversees the provision of all general management, administration,
investment advisory and portfolio management services for the Company. Accessor
Capital provides the Company with office space and equipment, and the personnel
necessary to operate and administer the Funds' business and to supervise the
provision of services by third parties such as the Money Managers and Fifth
Third Bank that serves as the Custodian and Fund Accounting Agent. Accessor
Capital also develops the investment programs for the Funds, selects Money
Managers (subject to approval by the Board of Directors), allocates assets among
Money Managers, monitors the Money Managers' investment programs and results,
and may exercise investment discretion over the Funds and assets invested in the
Funds' liquidity reserves, or other assets not assigned to a Money Manager.
Accessor Capital currently invests all the assets of the U.S. Government Money
Fund. Accessor Capital also acts as the Transfer Agent, Registrar and Dividend
Disbursing Agent for the Company and provides certain administrative and
compliance services to the Company.
Under the Management Agreement, Accessor Capital has agreed not to
withdraw from the Company the use of the Company's name. In addition, Accessor
Capital may not grant the use of a name similar to that of the Company to
another investment company or business enterprise without, among other things,
first obtaining the approval of the Company's shareholders.
A Management Agreement containing the same provisions as the initial
contract but also providing for payment to Accessor Capital by the Funds of a
management fee was approved by the Board of Directors including all of the
Directors who are not "interested persons" of the Company and who have no direct
or indirect financial interest in the Management Agreement on June 17, 1992, by
the shareholders of the Growth, Value (formerly referred to as Value and
Income), Small to Mid Cap (formerly referred to as the Small Cap Fund) and
International Equity Funds on June 17, 1992, and by the shareholders of the
Short-Intermediate Fixed-Income, Intermediate Fixed-Income, Mortgage Securities
and U.S. Government Money Funds on August 3, 1992. The Management Agreement was
renewed by the Board of Directors including all of the Directors who are not
"interested persons" of the Company and who have no direct or indirect financial
interest in the Management Agreement on May 24, 1994, May 16, 1995, May 29,
1996, May 28, 1997 and May 20, 1998.
The general partners of Accessor Capital are Northwest Advisors, Inc.,
Accessor Capital Management Associates, Inc. and Accessor Capital Management
Investment Corp., all of which are Washington corporations. The sole limited
partner of Accessor Capital Management L.P. is Zions Investment Management,
Inc., a wholly-owned subsidiary of Zions First National Bank, N.A. The managing
general partner of Accessor Capital Management, L.P. is Accessor Capital
Management Associates, Inc., which is controlled by J. Anthony Whatley, III. The
mailing address of Accessor Capital is 1420 Fifth Avenue, Suite 3600, Seattle,
Washington 98101.
Accessor Capital's Fees. The schedule below shows fees payable to
Accessor Capital as manager and administrator of the Company, pursuant to a
Management Agreement between Accessor Capital and the Company. Each Fund pays
Accessor Capital a fee equal on an annual basis to the following percentage of
the Fund's average daily net assets.
MANAGEMENT FEE SCHEDULE FOR PAYMENTS TO ACCESSOR CAPITAL
Management Fee (as a
percentage of average
Fund daily net assets)
Growth 0.45%
Value 0.45%
Small to Mid Cap 0.60%
International 0.55%
Intermediate Fixed-Income 0.36%
Short-Intermediate Fixed-Income 0.36%
Mortgage Securities 0.36%
U.S. Government Money 0.25%
MANAGEMENT FEES PAID TO ACCESSOR CAPITAL
For the period ended December 31 Accessor Capital has received the
following fees under its Management Agreement with each Fund:
<TABLE>
<CAPTION>
Fund 1996 1997 1998
---- ---- ---- ----
<S> <C> <C> <C>
Growth $266,304 $367,893 $549,085
Value $139,463 $278,827 $517,550
Small to Mid Cap $344,080 $692,048 $1,212,941
International $305,524 $649,695 $923,305
Intermediate Fixed-Income $168,696 $177,340 $188,648
Short-Intermediate Fixed-Income $127,117 $145,308 $169,201
Mortgage Securities $226,073 $326,347 $490,887
U.S. Government Money $122,068 $139,972 $175,047
</TABLE>
Accessor Capital provides transfer agent, registrar and dividend
disbursing agent services to each Fund pursuant to a Transfer Agency and
Administration Agreement between Accessor Capital and the Company (the "Transfer
Agency Agreement"). Sub-transfer agent and compliance services previously
provided by Accessor Capital under the Sub-Administration Agreement are provided
to the Funds under the Transfer Agency Agreement. Accessor Capital also provides
certain administrative and recordkeeping services under the Transfer Agency
Agreement. For providing these services, Accessor Capital receives (i) a fee
equal to 0.13% of the average daily net assets of each Fund of the Company, and
(ii) a transaction fee of $0.50 per transaction. Accessor Capital is also
reimbursed by the Company for certain out-of-pocket expenses including postage,
taxes, wire transfer fees, stationery and telephone expenses. The table below
contains the fees paid to Accessor Capital for the fiscal years ended December
31.
TRANSFER AGENT FEES PAID TO ACCESSOR CAPITAL
<TABLE>
<CAPTION>
Fund 1996 1997 1998*
---- ---- ---- -----
<S> <C> <C> <C>
Growth $71,198 $102,701 $165,221
Value $41,055 $78,723 $152,446
Small to Mid Cap $68,977 $142,852 $266,187
International $66,815 $145,429 $218,581
Intermediate Fixed-Income $56,981 $62,731 $69,981
Short-Intermediate Fixed-Income $42,994 $51,705 $62,513
Mortgage Securities $75,564 $113,090 $179,824
U.S. Government Money $60,098 $69,929 $91,888
</TABLE>
- ----------
*The Transfer Agent Agreement was amended February 19, 1998,
to increase the annual fee from 0.12% to 0.13%.
Custodian and Fund Accounting Agent. The Fifth Third Bank, 38 Fountain
Square Plaza, Cincinnati, Ohio 45263, ("Fifth Third") a banking company
organized under the laws of the State of Ohio, has acted as Custodian of the
Funds' assets since October, 1996, and through an agreement between Fifth Third
and the Company may employ sub-custodians outside the United States which have
been approved by the Board of Directors. Fifth Third holds all portfolio
securities and cash assets of each Fund and is authorized to deposit securities
in securities depositories or to use the services of sub-custodians. Fifth Third
is paid by the Funds an annual fee and also is reimbursed by the Company for
certain out-of-pocket expenses including postage, taxes, wires, stationery and
telephone. Fifth Third acts as Custodian for investors of the Funds with respect
to the individual retirement accounts ("IRA Accounts"). Fifth Third also
provides basic recordkeeping required by each of the Funds for regulatory and
financial reporting purposes. Fifth Third is paid by the Funds an annual fee
plus specified transactions costs per Fund for these services, and is reimbursed
by the Company for certain out-of-pocket expenses including postage, taxes,
wires, stationery and telephone.
Independent Auditors. Deloitte & Touche LLP, Two World Financial
Center, New York, New York, 10281, serves as each Fund's independent auditor and
in that capacity audits the Funds' annual financial statements.
Fund Counsel. Kirkpatrick & Lockhart LLP, One International Place,
Boston, Massachusetts 02110.
Money Managers. Currently, Accessor Capital invests all of the assets
of the U.S. Government Money Fund. Each other Fund of the Company currently has
one Money Manager investing all or part of its assets. Accessor Capital may also
invest each Fund's liquidity reserves, and all or any portion of the Fund's
other assets not assigned to a Money Manager.
The Money Managers selected by Accessor Capital have no affiliation
with or relationship to the Company or Accessor Capital other than as
discretionary managers for each Fund's assets. In addition, some Money Managers
and their affiliates may effect brokerage transactions for the Funds. See
"Portfolio Transaction Policies--Brokerage Allocations."
Revised Money Manager Agreements for the Growth, Value, Intermediate
Fixed Income, Short-Intermediate Fixed-Income and Mortgage Securities Funds
containing the same terms and conditions as the former agreements for those
portfolios, except for a change in the method of calculating the fees paid to
the Money Managers, were approved by the Board of Directors, including all the
Directors who are not "interested persons" of the Company and who have no direct
or indirect interest in the Money Manager Agreements, on May 17, 1993 and by the
shareholders of those portfolios on September 1, 1993.
The Revised Money Manager Agreement for the International Fund was
approved by the Board of Directors, including all Directors who are not
"interested persons" and who have no direct or indirect interest in the Money
Manager Agreements, on May 17, 1993. The Money Manager Agreement for the
International Fund was approved by the sole shareholder as of September 30, 1994
and following the initial two year period is reviewed annually by the Board of
Directors, most recently at a meeting on August 25, 1998 and renewed for the
forthcoming year.
A new Money Manager Agreement for the Mortgage Securities Fund
providing for the change of ownership of BlackRock was approved by the Board of
Directors, including all the Directors who are not "interested persons" of the
Company and who have no direct or indirect interest in the Money Manager
Agreement, on November 10, 1994, and by the shareholders of the Mortgage
Securities Fund at a Special Meeting of Shareholders held on January 27, 1995,
and following the initial two year period is reviewed annually by the Board of
Directors, most recently at a meeting on February 24, 1999, and renewed for the
forthcoming year.
A new Money Manager Agreement for the Small to Mid Cap Fund in
connection with a change in Money Manager to Symphony Asset Management, Inc. was
approved by the Board of Directors, including all the Directors who are not
"interested persons" of the Company and who have no direct or indirect interest
in the Money Manager Agreement, on June 15, 1995, and by the shareholders of the
Small to Mid Cap Fund at a Special Meeting of Shareholders held on August 15,
1995, and following the initial two year period is reviewed annually by the
Board of Directors, most recently at a meeting on March 23, 1998, and renewed
for the forthcoming year.
A new Money Manager Agreement for the Value Fund in connection with the
proposed change of ownership of Martingale Asset Management L.P. ("Martingale")
was approved by the Board of Directors, including all the Directors who are not
"interested persons" of the Company and who have no direct or indirect interest
in the Money Manager Agreement, on June 15, 1995, and by the shareholders of the
Value Fund at a Special Meeting of Shareholders held on August 15, 1995, and
following the initial two year period is reviewed annually by the Board of
Directors, most recently at a meeting on August 25, 1998, and renewed for the
forthcoming year.
A new Money Manager Agreement effective July 21, 1997, for the Growth
Fund in connection with a change in Money Manager to Geewax, Terker & Company
was approved by the Board of Directors at a special meeting of the Board of
Directors called for that purpose, including all the Directors who are not
"interested persons" of the Company and who have no direct or indirect interest
in the Money Manager Agreement, on June 7, 1997. The Money Manager Agreement
following the initial two year period will be reviewed annually by the Board of
Directors.
A new Money Manager Agreement for the Small to Mid Cap Fund in
connection with the modification of the fee structure for the Money Manager was
approved by the shareholders of the Small to Mid Cap Fund at a Special Meeting
of Shareholders held on April 30, 1998. The new Money Manager Agreement was
among the Company, Accessor Capital and Symphony Asset Management LLC ("Symphony
LLC") and will be effective as of July 1, 1998, for a period of one year.
The Money Manager Agreements for the Intermediate Fixed-Income Fund and
Short-Intermediate Fixed-Income Fund were terminated by the Board of Directors
on February 19, 1998, effective May 1, 1998. Accessor Capital invested all of
the assets of the Intermediate Fixed-Income and Short-Intermediate Fixed-Income
Funds from May 1, 1998, through September 20, 1998. New Money Manager Agreements
effective September 21, 1998, for the Intermediate Fixed-Income and
Short-Intermediate Fixed-Income Funds in connection with a change in Money
Managers to Cypress Asset Management were approved by the Board of Directors at
a special meeting of the Board of Directors called for that purpose, including
all the Directors who are not "interested persons" of the Company and who have
no direct or indirect interest in the Money Manager Agreements on September 9,
1998. The Money Manager Agreement following the initial two year period will be
reviewed annually by the Board of Directors.
Listed below are the Money Managers selected by Accessor Capital to
invest each Fund's assets:
Geewax, Terker & Company ("Geewax Terker"), a Pennsylvania
general partnership whose general partners are John J. Geewax
and Bruce Terker, is the Money Manager for the Growth Fund.
The Money Manager expects to maintain a well-diversified
portfolio of stocks in the Growth Fund, holding market
representation in all major economic sectors. Geewax Terker
capitalizes on the overly optimistic expectations of most
growth stock investors by avoiding holdings with potential
problems. Specifically, stocks with poor financial quality,
questionable ability to finance future growth and/or high
downside price volatility are avoided. Funds are constructed
through a disciplined process that identifies potential risks
and systematically eliminates the riskiest of growth stocks
from consideration. Large capitalization growth stocks that
pass the screens are purchased. Benchmark-relative risk is
controlled by owning a core group of the very largest stocks
in the benchmark, and by capitalization-weighting portfolio
holdings. As of December 31, 1998, Geewax Terker managed
assets of approximately $4.7 billion.
Martingale Asset Management, L.P. ("Martingale") is the Money
Manager for the Value Fund. Martingale is a Delaware limited
partnership which consists of two general partners, Martingale
Asset Management Corporation ("MAMC"), a Massachusetts
corporation and Commerz Asset Management USA Corporation
("CAM"), and four limited partners. CAM, a Delaware
Corporation, is a wholly-owned subsidiary of Commerz
International Capital Management GmbH ("CICM") headquartered
in Frankfurt, Germany. Commerzbank AG ("Commerzbank") is the
parent company of CICM. Arnold S. Wood and William E. Jacques
each own 32.26% of MAMC and are active in the management of
the firm. Martingale emphasizes diversified individual stocks
which it believes will eventually produce smooth results. The
portfolio created has a combination of value characteristics
and growth opportunities. The portfolio does not attempt to
produce returns through market timing, sector or industry
selection. The firm uses a proprietary valuation process which
appraises stocks based on each stock's earnings, dividends,
book value, growth and risk. Industry and risk characteristics
are controlled through rigorous portfolio construction. As of
December 31, 1998, Martingale managed assets of approximately
$1.7 billion.
Symphony Asset Management, Inc. ("Symphony Inc.") is the Money
Manager of the Small to Mid Cap Fund until July 1, 1998, when
the Money Manager will become Symphony Asset Management LLC
("Symphony LLC"). Symphony Inc. is a California corporation
founded in March, 1994. Symphony Inc. is registered as an
investment adviser under the Investment Advisers Act of 1940,
as amended. Symphony Inc. is a wholly-owned subsidiary of
BARRA, Inc. ("BARRA"), a California corporation, which is
registered as an investment adviser with the Securities and
Exchange Commission and the California Department of
Corporations, and as a publicly traded corporation under
Section 12(g) of the Securities Exchange Act of 1934, as
amended. BARRA is one of the world's leading suppliers of
analytical financial software and has pioneered many of the
techniques used in systematic investment management, including
active management based on so-called factor return
predictions. Symphony LLC is a registered investment advisory
affiliate of Symphony Inc., organized as a California limited
liability company and operating under the same management, and
with the same personnel, at the same address as Symphony, Inc.
Symphony LLC is owned 50% by Symphony Inc., which is owned
100% by BARRA, and 50% by Maestro LLC, a California limited
liability company. Maestro LLC is owned by Jeffrey L. Skelton,
Neil L. Rudolph, Praveen K. Gottipalli and Michael J. Henman,
each of whom hold management roles with Symphony LLC.
Symphony Inc. is an investment management firm dedicated to
exploiting information inefficiencies in global financial
markets. Symphony Inc. has developed an approach to investing
that combines the qualities of both systematic and traditional
investment management. Symphony Inc.'s process begins with a
factor-return-based valuation model identifying securities
that are relatively under- or over-valued, which will be
continued by Symphony LLC. Symphony Inc.'s factor model is the
product of a decade of work by BARRA's active strategies
group. As of December 31, 1998, Symphony Inc. managed assets
of approximately $2.2 billion and Symphony LLC managed assets
of approximately $496 million.
Nicholas-Applegate Capital Management ("Nicholas-Applegate")
is the Money Manager for the International Fund.
Nicholas-Applegate is a California limited partnership and is
a registered investment adviser whose sole general partner is
Nicholas-Applegate Capital Management Holdings, L.P., a
California limited partnership controlled by Arthur E.
Nicholas. Nicholas-Applegate's investment approach reflects a
focus on individual security selection. Nicholas-Applegate
integrates fundamental and quantitative analysis to exploit
the inefficiencies within international markets. The firm's
bottom-up approach drives the portfolio toward issues
demonstrating positive fundamental change, evidence of
sustainability and timeliness. These criteria are defined
differently in each country to adjust for accounting, economic
and cultural differences, and varying reporting requirements.
As of December 31, 1998, Nicholas-Applegate managed assets of
approximately $31 billion.
BlackRock Financial Management, Inc. ("BlackRock") is the
Money Manager of the Mortgage Securities Fund. BlackRock is a
Delaware corporation which is a wholly-owned indirect
subsidiary of PNC Bank, N.A. ("PNC"). Approximately 20% of
BlackRock is owned by its senior management and the remaining
80% by PNC. PNC is a commercial bank whose principal office is
in Pittsburgh, PA and is wholly-owned by PNC Bank Corp., a
bank holding company. BlackRock's investment strategy and
decision-making process emphasize: (i) duration targeting,
(ii) relative value sector and security selection, (iii)
rigorous quantitative analysis to evaluate securities and
portfolios and (iv) intense credit analysis. Funds are managed
in a narrow band around a duration target determined by the
client. Specific investment decisions are made using a
relative value approach that encompasses both fundamental and
technical analysis. In implementing its strategy, BlackRock
utilizes macroeconomic trends, supply/demand analysis, yield
curve structure and trends, volatility analysis, and security
specific option-adjusted spreads. BlackRock's Investment
Strategy Group has primary responsibility for setting the
broad investment strategy and for overseeing the ongoing
management of all client portfolios. Mr. Andrew J. Phillips,
Managing Director, is primarily responsible for the day-to-day
management and investment decisions for the Mortgage
Securities Fund. Together with its affiliates, BlackRock
serves as investment adviser to fixed income, equity and
liquidity investors in the United States and overseas through
funds and institutional accounts with combined total assets at
December 31, 1998, of approximately $132 billion.
Cypress Asset Management ("Cypress"), a California corporation
and registered investment advisor with the Securities and
Exchange Commission and the State of California, is the Money
Manager of the Intermediate Fixed-Income Fund and
Short-Intermediate Fixed-Income Fund. Cypress is a California
corporation, owned by Mr. Xavier Urpi, President and Chief
Executive Officer. The Money Manager's strategy for both the
Intermediate Fixed-Income Fund and Short-Intermediate
Fixed-Income Fund is to use sector rotation and overweight the
most attractive and highest yielding sectors of the Lehman
Brothers Government/Corporate Index and the Lehman Brothers
1-5 Years Government/Corporate Index, respectively. Cypress'
strength and focus is on analyzing each individual security to
target undervalued opportunities. Specifically, Cypress looks
to add incremental return over an index while controlling
duration, convexity and yield curve risk. As of December 31,
1998, Cypress managed assets of approximately $500 million.
MONEY MANAGERS' FEES
The Money Managers have received the following fees pursuant to their
Money Manager Agreements, for the past three fiscal years ended December 31:
<TABLE>
<CAPTION>
Fund Money Manager 1996 1997 1998
---- ------------- ---- ---- ----
<S> <C> <C> <C> <C>
Growth/1/ Geewax, Terker N/A $84,965 $244,362
State Street $188,312 $72,872 N/A
Value Martingale $78,232 $180,881 $367,420
Small to Mid Cap Symphony $114,693 $369,071 $758,733
International Nicholas-Applegate $204,067 $660,458 $1,007,245
Intermediate Fixed-Income/2/ Cypress N/A N/A $6,298
Smith Barney $70,290 $73,891 $27,434
Short-Intermediate Fixed-Income/3/ Cypress N/A N/A $5,494
Bankers Trust $52,966 $60,545 $22,094
Mortgage Securities BlackRock $144,435 $188,413 $313,614
U.S. Government Money Accessor Capital4 $0 $0 $0
</TABLE>
- ----------
1 Until July 21, 1997, State Street Bank and Trust Company was the Money
Manager for the Growth Fund and received fees until that date.
Beginning on July 22, 1997, Geewax, Terker & Company became the Money
Manager for the Growth Fund and received pro-rated fees from that date.
2 Until April 30, 1998, Smith Barney was the Money Manager for the
Intermediate Fixed-Income Fund and received fees until that date.
Beginning on May 1, 1998, Accessor Capital invested the assets of the
Intermediate Fixed-Income Fund. No Money Manager fees were paid to
Accessor Capital. Effective September 21, 1998, Cypress Asset
Management was appointed as Money Manager for the Intermediate
Fixed-Income Fund.
3 Until April 30, 1998, Bankers Trust was the Money Manager for the
Short-Intermediate Fixed-Income Fund and received fees until that date.
Beginning on May 1, 1998, Accessor Capital invested the assets of the
Short-Intermediate Fixed-Income Fund. No Money Manager fees were paid
to Accessor Capital. Effective September 21, 1998, Cypress Asset
Management was appointed a Money Manager for the Short-Intermediate
Fund.
4 Accessor Capital does not receive a Money Manager fee.
Money Manager Fees. The fees paid to the Money Manager of a Fund are
paid pursuant to a Money Manager Agreement among the Company, Accessor Capital
and the Money Manager. The fees are based on the assets of the Fund and the
number of complete calendar quarters of management by the Money Manager.
Accessor Capital will attempt to have each Fund managed so that the Fund's
investment performance equals or exceeds the total return performance of a
relevant index (each a "Benchmark Index" and collectively the "Benchmark
Indices"), set forth below. See Appendix A of the Prospectuses for a description
of the Benchmark Indices.
For the first five complete calendar quarters managed by a Money
Manager of each Fund (except the U.S. Government Money Fund and Small to Mid Cap
Fund), such Fund will pay its respective Money Manager on a monthly basis based
on the average daily net assets of the Fund managed by such Money Manager, as
set forth in their respective Money Manager Agreements. With the exception of
the Intermediate Fixed-Income Fund and Short-Intermediate Fixed-Income Fund,
whose money manager commenced investment operations on September 21, 1998, the
Money Managers for the Growth, Value, Small to Mid Cap, International Equity and
Mortgage Securities Funds have completed five calendar quarters. During the
first five calendar quarters of management, the Money Manager Fee has two
components, the Basic Fee and Fund Management Fee. The Money Manager for the
Intermediate Fixed-Income Fund and the Short-Intermediate Fixed-Income Fund will
earn the following annual fee set forth below.
Fund Management
Fund Basic Fee Fee Total
Intermediate Fixed-Income 0.02% 0.02% 0.04%
Short-Intermediate Fixed Income 0.02% 0.02% 0.04%
Commencing with the sixth calendar quarter of management by a Money
Manager of an operating Fund, such Fund will pay its Money Manager based on the
"Money Manager Fee Schedule From A Money Manager's Sixth Calendar Quarter
Forward." The Money Manager's Fee commencing with the sixth quarter consists of
two components, the "Basic Fee" and "Performance Fee," with the exception of the
Small to Mid Cap Fund, which does not pay a Basic Fee to the Money Manager.
MONEY MANAGER FEE SCHEDULE FROM A MANAGER'S
SIXTH CALENDAR QUARTER OF MANAGEMENT FORWARD
<TABLE>
<CAPTION>
Average Annualized
Basic Performance Differential Annualized
Fund Fee vs. The Applicable Index Performance Fee
<S> <C> <C> <C>
Growth Fund 0.10% =>2.00% 0.22%
Value Fund =>1.00% and Less than 2.00% 0.20%
=>0.50% and Less Than 1.00% 0.15%
=>0.00% and Less Than 0.50% 0.10%
=>-0.50% and Less Than 0.00% 0.05%
Less Than -0.50% 0.00%
Small to Mid Cap N/A =>3.00% 0.42%
=>2.00% and Less Than 3.00% 0.35%
=>1.00% and Less Than 2.00% 0.30%
=>0.50% and Less Than 1.00% 0.25%
=>0.00% and Less Than 0.50% 0.20%
=>-0.50% and Less Than 0.00% 0.15%
=>-1.00% and Less Than -0.50% 0.10%
=>-1.50% and Less Than -1.00% 0.05%
Less Than -1.50% 0.00%
International Fund 0.20% =>4.00% 0.40%
=>2.00% and Less Than 4.00% 0.30%
=>0.00% and Less Than 2.00% 0.20%
=>-2.00% and Less Than 0.00% 0.10%
Less Than -2.00% 0.00%
Intermediate Fixed-Income 0.02% =>0.70% 0.15%
Fund and Short-Intermediate >0.50% and Less Than or =0.70% 0.05% plus 1/2 (P-0.50%)*
Fixed-Income Fund =>0.35% and Less Than or =0.50% 0.05%
Less Than 0.35% 0.00%
Mortgage Securities Fund 0.07% =>2.00% 0.18%
=>0.50% and Less Than 2.00% 0.16%
=>0.25% and Less Than 0.50% 0.12%
=>-0.25% and Less Than 0.25% 0.08%
=>-0.50% and Less Than -0.25% 0.04%
Less Than -0.50% 0.00%
</TABLE>
- ----------
*P=Performance. Example: If Cypress outperforms the benchmark index by 0.60%,
the fee would be calculated as [0.02% basic fee + 0.05% Performance Fee +
{0.60%-0.50%/2}]=0.12%.
The fee based on annualized performance will be adjusted each quarter and paid
monthly based on the annualized investment performance of each Money Manager
relative to the annualized investment performance of the "Benchmark Indices" set
forth below, which may be changed only with the approval of the Board of
Directors (shareholder approval is not required). During times Accessor Capital
invests the assets of any Fund, it uses the same benchmark indices that a Money
Manager would use. A description of each benchmark index is contained in
Appendix A of the Prospectuses. As long as the Growth or Value or the Mortgage
Securities Funds' performance either exceeds the index, or trails the index by
no more than 0.50%, a Performance Fee will be paid to the applicable Money
Manager. As long as Small to Mid Cap Fund's performance either exceeds the
index, or trails the index by no more than 1.50%, a Performance Fee will be paid
to the Money Manager. As long as the International Fund's performance either
exceeds the index, or trails the index by no more than 2%, a Performance Fee
will be paid to the Money Manager. A Money Manager's performance is measured on
the portion of the assets of its respective Fund managed by it (the "Account"),
which excludes assets held by Accessor Capital for circumstances such as
redemptions or other administrative purposes.
BENCHMARK INDICES
Fund Index
Growth S&P/BARRA Growth Index
Value S&P/BARRA Value Index
Small to MidCap Wilshire 4500
International Morgan Stanley Capital International
EAFE(R) + EMF Index/1/
Intermediate Fixed-Income Lehman Brothers Government/Corporate Index
Short-Intermediate Fixed-Income Lehman Brothers Government/Corporate 1-5
Year Index
Mortgage Securities Lehman Brothers Mortgage-Backed Securities
Index
- ----------
/1/Through the close of business on April 30, 1996, the benchmark index
used for the International Fund was the Morgan Stanley Capital
International EAFE(R) Index. Effective May 1, 1996, the benchmark index
is the Morgan Stanley Capital International EAFE(R) + EMF Index.
From the sixth to the 14th calendar quarter of investment operations,
each Money Manager's performance differential versus the applicable index is
recalculated at the end of each calendar quarter based on the Money Manager's
performance during all calendar quarters since commencement of investment
operations except that of the immediately preceding quarter. Commencing with the
14th calendar quarter of investment operations, a Money Manager's average annual
performance differential will be recalculated based on the Money Manager's
performance during the preceding 12 calendar quarters (other than the
immediately preceding quarter) on a rolling basis. A Money Manager's performance
will be calculated by Accessor Capital in the same manner that the total return
performance of the Fund's index is calculated, which is not the same method used
for calculating the Fund's performance for advertising purposes as described
under "Calculation of Fund Performance." See Appendix B to this Statement of
Additional Information for a discussion of how performance fees are calculated.
The "performance differential" is the percentage amount by which the
Account's performance is greater than or less than that of the relevant index.
For example, if an index has an average annual performance of 10%, an Equity
Fund Account's average annual performance would have to be equal to or greater
than 12% for the Money Manager to receive an annual performance fee of 0.22%
(i.e., the difference in performance between the Account and the index must be
equal to or greater than 2% for an equity portfolio Money Manager to receive the
maximum performance fee.) Because the maximum Performance Fee for the Domestic
Equity (except Small to MidCap and Bond Funds applies whenever a Money Manager's
performance exceeds the index by 2.00% (3.00% for Small to MidCap) or more, the
Money Managers for those Funds could receive a maximum Performance Fee even if
the performance of the Account is negative. Also, because the maximum
Performance Fee for the International Fund applies whenever a Money Manager's
performance exceeds the index by 4.00% or more, the Money Manager for the
International Fund could receive a maximum Performance Fee even if the
performance of the Account is negative.
In April 1972, the SEC issued Release No. 7113 under the Investment
Company Act (the "Release") to call the attention of directors and investment
advisers to certain factors which must be considered in connection with
investment company incentive fee arrangements. One of these factors is to "avoid
basing significant fee adjustments upon random or insignificant differences"
between the investment performance of a fund and that of the particular index
with which it is being compared. The Release provides that "preliminary studies
(of the SEC staff) indicate that as a `rule of thumb' the performance difference
should be at least +/-10 percentage points" annually before the maximum
performance adjustment may be made. However, the Release also states that
"because of the preliminary nature of these studies, the Commission is not
recommending, at this time, that any particular performance difference exist
before the maximum fee adjustment may be made." The Release concludes that the
directors of a fund "should satisfy themselves that the maximum performance
adjustment will be made only for performance differences that can reasonably be
considered significant." The Board of Directors has fully considered the Release
and believes that the performance adjustments are entirely appropriate although
not within the +/-10 percentage points per year range suggested by the Release.
Money Manager Fees - Intermediate Fixed-Income Fund and
Short-Intermediate Fixed-Income Fund. Beginning on September 21, 1998, the
Intermediate Fixed-Income Fund and Short-Intermediate Fixed-Income Fund were
managed by Cypress. In accordance with the exemptive order and interpretations
of the Securities and Exchange Commission, at any time the Manager replaces a
Money Manger, the Manager may negotiate a change in the fee schedule payable to
the new Money Manager (including a reduction) provided there is no increase in
the aggregate fee payable by the Fund. In the case of the Intermediate
Fixed-Income Fund and the Short-Intermediate Fixed-Income Fund, the overall
maximum fee for the first five calendar quarters payable to the former Money
Managers was 0.15% (comprised of a basic fee of 0.07% and a portfolio management
fee of 0.08%) and from the sixth calendar quarter forward payable to the former
Money Managers was 0.25% (comprised of a basic fee of 0.07% and a maximum annual
performance fee of 0.18%). Although the Manager has currently negotiated a
reduction in the Money Manager fee to a maximum of 0.04% during the first five
calendar quarters and 0.17% payable to the Money Manager of the Intermediate
Fixed-Income and Short-Intermediate Fixed-Income Funds from the sixth calendar
quarter of management forward (as described below), there is a possibility of
future modifications to such fee. In no event shall the maximum Money Manager
fee payable by the Fund be greater than 0.25% after the sixth calendar quarter
of management forward.
FUND EXPENSES
The Funds will pay all their expenses other than those expressly
assumed by Accessor Capital. Fund expenses include: (a) expenses of all audits
and other services by independent public accountants; (b) expenses of the
transfer agent, registrar and dividend disbursing agent; (c) expenses of the
Custodian, administrator and sub-administrator; (d) expenses of obtaining
quotations for calculating the value of the Funds' net assets; (e) expenses of
obtaining Fund activity reports and analyses for each Fund; (f) expenses of
maintaining each Fund's tax records; (g) salaries and other compensation of any
of the Company's executive officers and employees, if any, who are not officers,
directors, shareholders or employees of Accessor Capital or any of its partners;
(h) taxes levied against the Funds; (i) brokerage fees and commissions in
connection with the purchase and sale of portfolio securities for the Funds; (j)
costs, including the interest expense, of borrowing money; (k) costs and/or fees
incident to meetings of the Funds, the preparation and mailings of prospectuses
and reports of the Funds to their shareholders, the filing of reports with
regulatory bodies, the maintenance of the Company's existence, and the
registration of shares with federal and state securities authorities; (l) legal
fees, including the legal fees related to the registration and continued
qualification of the Funds' shares for sale; (m) costs of printing stock
certificates representing shares of the Funds; (n) Directors' fees and expenses
of Directors who are not officers, employees or shareholders of Accessor Capital
or any of its partners; (o) the fidelity bond required by Section 17(g) of the
Investment Company Act, and other insurance premiums; (p) association membership
dues; (q) organizational expenses; (r) extraordinary expenses as may arise,
including expenses incurred in connection with litigation, proceedings, other
claims, and the legal obligations of the Company to indemnify its Directors,
officers, employees and agents with respect thereto; and (s) any expenses
allocated or allocable to a specific class of shares ("Class-specific
expenses"). Class-specific expenses include distribution, service fees and
administration fees as described below payable with respect to Investor Class
Shares, and may include certain other expenses if these expenses are actually
incurred in a different amount by that class or if the class receives services
of a different kind or to a different degree than the other class, as permitted
by the Company's Multi-Class Plan (as defined below) adopted pursuant to Rule
18f-3 under the Investment Company Act and subject to review and approval by the
Directors. Class-specific expenses do not include advisory or custodial fees or
other expenses related to the management of a Fund's assets. The Funds are also
responsible for paying a management fee to Accessor Capital. Additionally, they
pay a Basic Fee and Fund Management Fee in the first five quarters of investment
operations to the applicable Money Managers, and a Basic Fee and Performance Fee
in the sixth quarter of investment operations to the applicable Money Managers,
as described below. Certain expenses attributable to particular Funds are
charged to those Funds, and other expenses are allocated among the Funds
affected based upon their relative net assets.
Dividends from net investment income with respect to Investor Class
Shares will be lower than those paid with respect to Advisor Class Shares,
reflecting the payment of administrative and/or service and/or distribution fees
by the Investor Class Shares.
MULTI-CLASS STRUCTURE
The Board of Directors of the Company, including a majority of the
non-interested Directors (as defined in the Investment Company Act), voted in
person at the Board meeting on February 19, 1998, to adopt a Rule 18f-3 Plan
(the "Multi-Class Plan") pursuant to Rule 18f-3 under the Investment Company
Act. The Directors determined that the Multi-Class Plan is in the best interests
of each class individually and the Company as a whole. The Directors established
two classes, the Advisor Class and the Investor Class. The initial shares of the
Company have been redesignated as Advisor Class Shares.
Under the Multi-Class Plan, shares of each class of each Fund represent
an equal pro rata interest in such Fund and, generally, have identical voting,
dividend, liquidation, and other rights, preferences, powers, restrictions,
limitations, qualifications and terms and conditions, except that: (a) each
class has a different designation; (b) each class of shares bears any
class-specific expenses allocated to it; and (c) each class has exclusive voting
rights on any matter submitted to shareholders that relates solely to its
distribution or service arrangements, and each class has separate voting rights
on any matter submitted to shareholders in which the interests of one class
differ from the interests of any other class.
As described in the Multi-Class Plan, the Company, on behalf of each
Fund's Investor Class Shares, has adopted a Shareholder Service Plan, a
Distribution Plan and an Administrative Services Plan, all as described below.
Pursuant to the appropriate plan, the Company may enter into arrangements with
financial institutions, retirement plans, broker-dealers, depository
institutions, institutional shareholders of record, registered investment
advisers and other financial intermediaries and various brokerage firms or other
industry recognized service providers of fund supermarkets or similar programs
(collectively "Service Organizations") who may provide distribution services,
shareholder services and/or administrative and accounting services to or on
behalf of their clients or customers who beneficially own Investor Class Shares.
Investor Class Shares are intended to be offered directly from the Company and
may be offered by Service Organizations to their clients or customers, which may
impose additional transaction or account fees. Accessor Capital may enter into
separate arrangements with some Service Organizations to provide accounting
and/or other services with respect to Investor Class Shares and for which
Accessor Capital will compensate the Service Organizations from its revenue.
As described in the Multi-Class Plan, the Company has not adopted a
Distribution Plan, Shareholder Service Plan or Administrative Plan for the
Advisor Class Shares. Advisor Class Shares shall be offered by the Company at
net asset value with no distribution, shareholder or administrative service fees
paid by the Advisor Class Shares of the Funds. Advisor Class Shares are offered
directly from the Company and may be offered through Service Organizations that
may impose additional or different conditions on the purchase or redemption of
Fund shares and may charge transaction or account fees. The Company, on behalf
of the Advisor Class Shares, pays no compensation to Service Organizations and
receives none of the fees or transaction charges. Accessor Capital may enter
into separate arrangements with some Service Organizations to provide
administrative, accounting and/or other services with respect to Advisor Class
Shares and for which Accessor Capital will compensate the Service Organizations
from its revenue.
Distribution Plan. The Company has adopted a Distribution Plan (the
"Distribution Plan") under Rule 12b-1 ("Rule 12b-1") of the Investment Company
Act with respect to the Investor Class Shares of each Fund. Under the terms of
the Distribution Plan, the Company is permitted, out of the assets attributable
to the Investor Class Shares of each Fund (i) to make directly or cause to be
made, payments for costs and expenses to third parties or (ii) to reimburse
third parties for costs and expenses incurred in connection with providing
services. Such distribution services, include but are not limited to (a) costs
of payments made to employees that engage in the distribution of Investor Class
Shares; (b) costs relating to the formulation and implementation of marketing
and promotional activities, including but not limited to, direct mail promotions
and television, radio, newspaper, magazine and other mass media advertising; (c)
costs of printing and distributing prospectuses, statements of additional
information and reports of the Company to prospective holders of Investor Class
Shares; (d) costs involved in preparing, printing and distributing sales
literature pertaining to the Company and (e) costs involved in obtaining
whatever information, analyses and reports with respect to marketing and
promotional activities that the Company may, from time to time, deem advisable
(the "Distribution Services"). The Company may enter into arrangements with
Service Organizations primarily intended to result in the sale of Investor Class
Shares. Subject to the limitations of applicable law and regulations, including
rules of NASD, the payments made directly to third parties or the reimbursements
for such distribution related costs or expenses, shall be in combination with
the service fee pursuant to the Shareholder Service Plan. The total annual rate
shall be up to but not more than 0.25% of the average daily net assets of the
Funds attributable to the Investor Class Shares. Any expense payable under the
Distribution Plan may be carried forward for reimbursement for up to twelve
months beyond the date in which it is incurred, subject always to the limit (in
combination with the service fee pursuant to the Shareholder Service Plan) that
not more than 0.25% of the average daily net assets of the Funds shall be
attributable to Investor Class Shares. Investor Class Shares shall incur no
interest or carrying charges for expenses carried forward. In the event the
Distribution Plan is terminated, the Investor Class Shares shall have no
liability for expenses that were not reimbursed as of the date of termination.
Any Service Organization entering into an agreement with the Company
under the Distribution Plan may also enter into a Shareholder Service Agreement
or an Administrative Services Agreement with regard to its Investor Class
Shares, which will not be subject to the terms of the Distribution Plan. The
total combination of fees paid to any Service Organization pursuant to the
Distribution Plan and Shareholder Service Plan shall not be more than 0.25% of
the average daily net assets of the Funds attributable to Investor Class Shares.
The Company under the Distribution Plan may enter into more than one agreement
for its Investor Class Shares, with different Service Organizations providing
services to different groups of shareholders.
The Distribution Plan may be terminated with respect to the Company by
a vote of a majority of the "non-interested" Directors who have no direct or
indirect financial interest in the operation of the Distribution Plan (the
"Qualified Directors") or by the vote of a majority of the outstanding voting
securities of the relevant class of the Company. Any change in the Distribution
Plan that would materially increase the cost to the class of shares of the
Company to which the Distribution Plan relates requires approval of the affected
class of shareholders of the Company. The Distribution Plan requires the Board
to review and approve the Distribution Plan annually and, at least quarterly, to
receive and review written reports of the amounts expended under the
Distribution Plan and the purposes for which such expenditures were made. The
Distribution Plan may be terminated at any time upon a vote of the Qualified
Directors.
Shareholder Service Plan. The Company has adopted a Shareholder Service
Plan with respect to Investor Class Shares of each Fund. Under the Shareholder
Service Plan the Company is authorized to enter into Shareholder Service
Agreements with Service Organizations who provide personal and/or account
maintenance services to their clients (the "Clients") who may from time to time
beneficially own Investor Class Shares of the Funds. Each Fund will pay directly
to Service Organizations a non-distribution related shareholder service fee
under the Shareholder Service Plan at an annual rate of up to 0.25% of the
average daily net assets of the Fund attributable to the Investor Class Shares
beneficially owned by the clients of the Service Organizations (the "Shareholder
Service Fee"), subject always to the limit (in combination with the distribution
service fee pursuant to the Distribution Plan) that not more than 0.25% of the
average daily net assets of the Funds shall be attributable to Investor Class
Shares. By way of example, such services may include some or all of the
following: (i) shareholder liaison services; (ii) providing information
periodically to Clients showing their positions in New Class Shares and
integrating such statements with those of other transactions and balances in
Clients' other accounts serviced by the Service Organizations; (iii) responding
to Client inquiries relating to the services performed by the Service
Organizations; (iv) responding to routine inquiries from Clients concerning
their investments in Investor Class Shares; and (v) providing such other similar
services to Clients as the Company may reasonably request to the extent the
Service Organizations are permitted to do so under applicable statutes, rules
and regulations. The Shareholder Service Plan will continue from year to year
provided that it is reviewed and approved by the Board of Directors of the
Company annually. In addition, the Board of Directors will ratify all agreements
entered into pursuant to the Shareholder Service Plan and shall review at each
quarterly meeting of the Directors the amounts expended under the Shareholder
Service Plan and the purposes for which those expenditures were made. The
Shareholder Service Plan may be terminated at any time by a vote of the
Qualified Directors.
Administrative Services Plan. The Company has adopted an Administrative
Services Plan whereby the Company is authorized to enter into Administrative
Service Agreements on behalf of the Investor Class Shares of the Funds (the
"Agreements"), the form of which has been approved by the Board of Directors of
the Company (the "Board") and each Agreement will be ratified by the Board of
Directors at the next quarterly meeting after the arrangement has been entered
into. Each Fund will pay an administrative services fee under the Administrative
Services Plan at an annual rate of up to 0.25% of the average daily net assets
of the Investor Class Shares of the Fund (the "Administrative Services Fee")
beneficially owned by the clients of the Service Organizations. Provided,
however, that no Fund shall directly or indirectly pay any distribution related
amounts that will be allocated under the Company's Distribution Plan.
Administrative Services Fees may be used for payments to Service Organizations
who provide administrative and support servicing to their customers who may from
time to time beneficially own Investor Class Shares of the Company, which, by
way of example, may include: (i) establishing and maintaining accounts and
records relating to shareholders; (ii) processing dividend and distribution
payments from the Fund on behalf of shareholders; (iii) providing information
periodically to shareholders showing their positions in shares and integrating
such statements with those of other transactions and balances in shareholders
other accounts serviced by such financial institution; (iv) arranging for bank
wires; (v) providing transfer agent or sub-transfer agent services,
recordkeeping, custodian or subaccounting services with respect to shares
beneficially owned by shareholders, or the information to the Fund necessary for
such services; (vi) if required by law, forwarding shareholder communications
from the Fund (such as proxies, shareholder reports, annual and semi-annual
financial statements and dividend, distribution and tax notices) to
shareholders; (vii) assisting in processing purchase, exchange and redemption
requests from shareholders and in placing such orders with our service
contractors; or (viii) providing such other similar services, which are not
considered "service fees" as defined in the NASD Rule 2830(b)(9), as a Fund may
reasonably request to the extent the Service Organization is permitted to do so
under applicable laws, statutes, rules and regulations. The Administrative
Services Plan may be terminated at any time by a vote of the Qualified
Directors. The Directors shall review and approve the Administrative Services
Plan annually and quarterly shall receive a report with respect to the amounts
expended under the Administrative Services Plan and the purposes for which those
expenditures were made
The Directors believe that the Distribution Plan, Shareholder Service
Plan and Administrative Services Plan will provide benefits to the Company. The
Directors believe that the multi-class structure may increase investor choice,
result in efficiencies in the distribution of Fund shares and allow Fund
sponsors to tailor products more closely to different investor markets. The
Directors further believe that multiple classes avoid the need to create clone
funds, which require duplicative portfolio and fund management expenses.
The Distribution Plan provides that it may not be amended to materially
increase the costs which Investor Class shareholders may bear under the Plan
without the approval of a majority of the outstanding voting securities of
Investor Class, and by vote of a majority of both (i) the Directors of the
Company and (ii) those Directors who are not "interested persons" of the Company
(as defined in the Investment Company Act) and who have no direct or indirect
financial interest in the operation of the Plan or any agreements related to it
(the "Qualified Directors"), cast in person at a meeting called for the purpose
of voting on the plans and any related amendments.
The Administrative Services Plan, Shareholder Service Plan and
Distribution Plan provide that each shall continue in effect so long as such
continuance is specifically approved at least annually by the Directors and the
Qualified Directors defined above, and that the Directors shall review at least
quarterly, a written report of the amounts expended pursuant to each plan and
the purposes for which such expenditures were made.
The Distribution Plan and Shareholder Service Plan provide that
expenses payable under each plan may be carried forward for reimbursement for up
to twelve months beyond the date in which the expense is incurred, subject to
the combined limit that not more that 0.25% of the average daily net assets
attributable to the Investor Class Shares may be used to pay distribution
expenses and/or service fees under each plan.
VALUATION
The net asset value per share of each class is calculated on each
business day on which shares are offered or orders to redeem may be tendered. A
business day is one on which the New York Stock Exchange, Fifth Third and
Accessor Capital are open for business. Non-business days for 1999 will be New
Year's Day, Martin Luther King Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day (observed), Labor Day, Thanksgiving Day and Christmas Day
(observed).
Portfolio securities are valued by various methods depending on the
primary market or exchange on which they trade. Most equity securities for which
the primary market is the United States are valued at last sale price or, if no
sale has occurred, at the closing bid price. Most equity securities for which
the primary market is outside the United States are valued using the official
closing price or the last sale price in the principal market in which they are
traded. If the last sale price (on the local exchange) is unavailable, the last
evaluated quote or closing bid price normally is used.
Fixed-income securities and other assets for which market quotations
are readily available may be valued at market values determined by such
securities' most recent bid prices (sales prices if the principal market is an
exchange) in the principal market in which they normally are traded, as
furnished by recognized dealers in such securities or assets. Or, fixed-income
securities and convertible securities may be valued on the basis of information
furnished by a pricing service that uses a valuation matrix which incorporates
both dealer-supplied valuations and electronic data processing techniques.
The International Fund's portfolio securities trade primarily on
foreign exchanges which may trade on Saturdays and on days that the Fund does
not offer or redeem shares. The trading of portfolio securities on foreign
exchanges on such days may significantly increase or decrease the net asset
value of the Fund's shares when the shareholder is not able to purchase or
redeem Fund shares.
Each Fund's liabilities are allocated among its classes. The total of
such liabilities allocated to a class plus that class's distribution and/or
servicing fees and any other expenses specially allocated to that class are then
deducted from the class's proportionate interest in the Fund's assets, and the
resulting amount for each class is divided by the number of shares of that class
outstanding to produce the class's "net asset value" per share. Generally, for
Funds that pay income dividends, those dividends are expected to differ over
time by approximately the amount of the expense accrual differential between a
particular Fund's classes.
Under certain circumstances, the per share net asset value of the
Investor Class Shares of the Funds may be lower than the per share net asset
value of the Advisor Class Shares as a result of the daily expense accruals of
the service and/or distribution fees applicable to the Investor Class Shares.
Generally, for Funds that pay income dividends, those dividends are expected to
differ over time by approximately the amount of the expense accrual differential
between the classes.
PORTFOLIO TRANSACTION POLICIES
Generally, securities are purchased for the Funds (other than the U.S.
Government Money Fund) for investment income and/or capital appreciation and not
for short-term trading profits. However, the Funds may dispose of securities
without regard to the time they have been held when such action, for defensive
or other purposes, appears advisable to their Money Managers.
If a Fund changes Money Managers, it may result in a significant number
of portfolio sales and purchases as the new Money Manager restructures the
former Money Manager's portfolio.
Fund Turnover Rate. The portfolio turnover rate for each Fund is
calculated by dividing the lesser of purchases or sales of portfolio securities
for the particular year, by the monthly average value of the portfolio
securities owned by the Fund during the year. For purposes of determining the
rate, all short-term securities are excluded.
Brokerage Allocations. Transactions on United States stock exchanges
involve the payment of negotiated brokerage commissions; on non-United States
exchanges, commissions are generally fixed. There is generally no stated
commission in the case of securities traded in the over-the-counter markets,
including most debt securities and money market instruments, but the price
includes a "commission" in the form of a mark-up or mark-down. The cost of
securities purchased from underwriters includes an underwriting commission or
concession.
Subject to the arrangements and provisions described below, the
selection of a broker or dealer to execute portfolio transactions is usually
made by the Money Manager. The Management Agreement and the Money Manager
Agreements provide, in substance and subject to specific directions from the
Board of Directors and officers of Accessor Capital, that in executing portfolio
transactions and selecting brokers or dealers, the principal objective is to
seek the best net price and execution for the Funds. Securities will ordinarily
be purchased from the markets where they are primarily traded, and the Money
Manager will consider all factors it deems relevant in assessing the best net
price and execution for any transaction, including the breadth of the market in
the security, the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the commission, if
any (for the specific transaction and on a continuing basis).
In addition, the Management Agreement and the Money Manager Agreements
authorize Accessor Capital and the Money Managers, to consider the "brokerage
and research services" (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934, as amended) in selecting brokers to execute a
particular transaction and in evaluating the best net price and execution,
provided to the Funds. Brokerage and research services include (a) furnishing
advice as to the value of securities, the advisability of investing, purchasing
or selling securities, and the availability of securities or purchasers or
sellers of securities; (b) furnishing analyses and reports concerning issuers,
industries, securities, economic factors and trends, monetary and fiscal policy,
portfolio strategy, and the performance of accounts; and (c) effecting
securities transactions and performing functions incidental thereto (such as
clearance, settlement, and custody). Accessor Capital or a Money Manager may
select a broker or dealer that has provided research products or services such
as reports, subscriptions to financial publications and compilations,
compilations of securities prices, earnings, dividends and similar data, and
computer databases, quotation equipment and services, research-oriented computer
software and services, consulting services and services of economic benefit to
the Company. In certain instances, Accessor Capital or the Money Manager may
receive from brokers or dealers products or services which are used both as
investment research and for administrative, marketing, or other non-research
purposes. In such instances, Accessor Capital or the Money Managers will make a
good faith effort to determine the relative proportions of such products or
services which may be considered as investment research. The portion of the
costs of such products or services attributable to research usage may be
defrayed by Accessor Capital or the Money Managers through brokerage commissions
generated by transactions of the Funds, while the portions of the costs
attributable to non-research usage of such products or services is paid by
Accessor Capital or the Money Managers in cash. In making good faith allocations
between administrative benefits and research and brokerage services, a conflict
of interest may exist by reason of Accessor Capital or the Money Managers
allocation of the costs of such benefits and services between those that
primarily benefit Accessor Capital or the Money Managers and those that
primarily benefit the Company.
As a general matter, each Fund does not intend to pay commissions to
brokers who provide such brokerage and research services for executing a
portfolio transaction, which are in excess of the amount of commissions another
broker would charge for effecting the same transaction. Nevertheless, occasional
transactions may fall under these circumstances. Accessor Capital or the Money
Manager must determine in good faith that the commission was reasonable in
relation to the value of the brokerage and research services provided in terms
of that particular transaction or in terms of all the accounts over which
Accessor Capital or the Money Manager exercises investment discretion.
In addition, if requested by the Company, Accessor Capital, when
exercising investment discretion, and the Money Managers may enter into
transactions giving rise to brokerage commissions with brokers who provide
brokerage, research or other services to the Company or Accessor Capital so long
as the Money Manager or Accessor Capital believes in good faith that the broker
can be expected to obtain the best price on a particular transaction and the
Company determines that the commission cost is reasonable in relation to the
total quality and reliability of the brokerage and research services made
available to the Company, or to Accessor Capital for the benefit of the Company
for which it exercises investment discretion, notwithstanding that another
account may be a beneficiary of such service or that another broker may be
willing to charge the Fund a lower commission on the particular transaction.
Subject to the "best execution" obligation described above, Accessor Capital may
also, if requested by a Fund, direct all or a portion of a Fund's transactions
to brokers who pay a portion of that Fund's expenses.
Accessor Capital does not expect the Funds ordinarily to effect a
significant portion of the Funds' total brokerage business with brokers
affiliated with Accessor Capital or their Money Managers. However, a Money
Manager may effect portfolio transactions for the Fund assigned to the Money
Manager with a broker affiliated with the Money Manager, as well as with brokers
affiliated with other Money Managers, subject to the above considerations
regarding obtaining the best net price and execution. Any transactions will
comply with Rule 17e-1 of the Investment Company Act.
Brokerage Commissions. The Board of Directors will review, at least
annually, the allocation of orders among brokers and the commissions paid by the
Funds to evaluate whether the commissions paid over representative periods of
time were reasonable in relation to commissions being charged by other brokers
and the benefits to the Funds. Certain services received by Accessor Capital or
Money Managers attributable to a particular transaction may benefit one or more
other accounts for which investment discretion is exercised by the Money
Manager, or a Fund other than that for which the particular portfolio
transaction was effected. The fees of the Money Managers are not reduced by
reason of their receipt of such brokerage and research services.
The Fixed Income Funds and the U.S. Government Money Fund generally do
not pay brokerage commissions.
BROKERAGE COMMISSIONS PAID BY EQUITY FUNDS
FOR THE FISCAL YEAR ENDED DECEMBER 31
Fund 1996 1997 1998
---- ---- ---- ----
Growth $ 57,658 $149,706/1/ $135,787
Value $ 47,418 $119,157/2/ $328,259/3/
Small to Mid Cap/4/ $120,336 $239,300 $385,130
International $467,230 $1,465,433/5/ $1,602,429/6/
/1/ Of this amount, $256 was paid to an affiliated broker (Smith Barney, Inc.)
and $40,897 was directed by Accessor Capital or the Money Manager to pay for
Research products or services, as described in Brokerage Allocations, above.
/2/ Of this amount $118,527 was directed by Accessor Capital or the Money
Manager to pay for research products or services, as described in Brokerage
Allocations, above.
/3/ Of this amount $306,230.43 was directed by Accessor Capital or the Money
Manager to pay for research products or services, as described in Brokerage
Allocations, above.
/4/ Until September 15, 1995, referred to as the Small Cap Fund.
/5/ Of this amount,$3,077 was paid to affiliated brokers (Salomon Brothers, Inc.
and Smith Barney Inc.) and $14,579 was directed by Accessor Capital or the Money
Manager to pay for research products or services, as described in Brokerage
Allocations, above.
/6/ Of this amount, $16,870.57 was paid to an affiliated broker (Salomon
Brothers, Inc.) and $27,122.32 was directed by Accessor Capital or the Money
Manager to pay for research products or services, as described in Brokerage
Allocations, above.
<PAGE>
PERFORMANCE INFORMATION
Yield and Total Return Quotations. The Funds (other than the U.S.
Government Money Fund) compute their average annual total return by using a
standardized method of calculation required by the SEC. Average annual total
return is computed by finding the average annual compounded rates of return on a
hypothetical initial investment of $1,000 over the one, five and ten year
periods (or life of the Funds, as appropriate), that would equate the initial
amount invested to the ending redeemable value, according to the following
formula:
P(1+T)n = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
N = number of years
ERV = ending redeemable value of a hypothetical
$1,000 payment made at the beginning of the
one, five or ten year period at the end of
the one, five or ten year period (or
fractional portion thereof)
The calculation assumes that all dividends and distributions of each
Fund are reinvested at the price stated in the Prospectuses on the reinvestment
dates during the period, and includes all recurring fees.
Each Fund's (Except U.S. Government Money Fund) average annual total
returns for periods ended December 31, 1998, calculated using the above method,
are set forth in the tables below:
Advisor Class
Fund 1 Year 5 Years Life of Fund*
---- ------ ------- ------------
Growth 46.65% 26.74% 24.90%
Value 12.89% 19.44% 18.57%
Small to Mid Cap 15.98% 20.07% 20.28%
International 16.07% N/A 10.60%
Intermediate Fixed-Income 8.38% 6.23% 6.87%
Short-Intermediate Fixed-Income 6.87% 5.28% 5.46%
Mortgage Securities 6.43% 6.90% 6.91%
*Advisor Class Shares of the Funds commenced operations on the following dates,
Growth - 08/24/92; Value - 08/24/92; Small to Mid-Cap - 08/24/92; International
- -10/03/94; Intermediate Fixed-Income - 06/15/92; Short-Intermediate Fixed-Income
- - 05/18/92; Mortgage Securities - 05/18/92.
Investor Class
Fund Life of Fund**
Growth 16.96%
Value -1.09%
Small to Mid Cap 3.32%
International -4.01%
Intermediate Fixed-Income 4.29%
Short-Intermediate Fixed-Income 3.55%
Mortgage Securities 2.46%
**Investor Class Shares of the Funds commenced operations on the following
dates: Growth - 07/01/98; Value- 07/01/98; Small to Mid-Cap - 06/24/98;
International - 07/06/98; Intermediate Fixed-Income - 07/14/98;
Short-Intermediate Fixed-Income - 07/14/98; Mortgage Securities - 07/10/98.
Yields are computed by using standardized methods of calculation
required by the SEC. Yields for the Fixed-Income Funds are calculated by
dividing the net investment income per share earned during a 30-day (or one
month) period by the maximum offering price per share on the last day of the
period, according to the following formula:
YIELD = 2[(a-b/cd+1)6-1]
Where: a = dividends and interest earned during the period;
b = expenses accrued for the period (net of reimbursements);
c = average daily number of shares outstanding during the
period that were entitled to receive dividends; and
d = the maximum offering price per share on the last day of
the period.
The annualized yields for the Fixed-Income Funds, calculated using the above
method based on the 30 day period ended on December 31, 1998, are as follows:
Advisor Class
Fund 30 Day Yield
Intermediate Fixed-Income 5.17%
Short-Intermediate Fixed-Income 4.82%
Mortgage Securities 5.48%
Investor Class
Fund 30 Day Yield
Intermediate Fixed-Income 4.67%
Short-Intermediate Fixed-Income 4.32%
Mortgage Securities 4.98%
The U.S. Government Money Fund computes its current annualized and
compound effective yields using standardized methods required by the SEC. The
annualized yield for this Fund is computed by (a) determining the net change,
exclusive of capital changes, in the value of a hypothetical account having a
balance of one share at the beginning of a seven calendar day period; (b)
dividing the difference by the value of the account at the beginning of the
period to obtain the base period return; and (c) annualizing the results (i.e.,
multiplying the base period return by 365/7). The net change in the value of the
account reflects the value of additional shares purchased with dividends from
the original share and dividends declared on both the original share and any
such additional shares, and all fees, other than nonrecurring account or sales
charges, that are charged to all shareholder accounts in proportion to the
length of the base period, but does not include realized gains and losses from
the sale of securities or unrealized appreciation and depreciation. Compound
effective yields are computed by adding 1 to the base period return (calculated
as described above), raising that sum to a power equal to 365/7 and subtracting
1.
Yield may fluctuate daily and does not provide a basis for determining
future yields. Because the U.S. Government Money Fund's yield fluctuates, its
yield cannot be compared with yields on savings accounts or other investment
alternatives that provide an agreed-to or guaranteed fixed yield for a stated
period of time. However, yield information may be useful to an investor
considering temporary investments in money market instruments. In comparing the
yield of one money market fund to another, consideration should be given to each
fund's investment policies, including the types of investments made, length of
maturities of portfolio securities, the methods used by each fund to compute the
yield (methods may differ) and whether there are any special account charges
which may reduce effective yield.
The annualized yields for the U.S. Government Money Fund as of December 31, 1998
are as follows:
Advisor Class
7-day Compounded
Annualized Yield Effective Yield
4.58% 4.68%
Investor Class
7-day Compounded
Annualized Yield Effective Yield
4.08% 4.16%
Current distribution information for the Investor Class Shares of a
Fund will be based on distributions for a specified period (i.e., total
dividends from net investment income), divided by the net asset value per
Investor Class share on the last day of the period and annualized. Current
distribution rates differ from standardized yield rates in that they represent
what Investor Class Shares of a Fund have declared and paid to shareholders as
of the end of a specified period rather than the Fund's actual net investment
income for that period.
CODE OF ETHICS
The Company, on behalf of the Funds, has adopted a Code of Ethics,
which establishes standards by which certain covered persons of the Company must
abide relating to personal securities trading conduct. The Code of Ethics also
contains provisions relating to the reporting of any personal securities
transactions, and requires that covered persons shall place the interests of
shareholders of the Company before their own.
TAX INFORMATION
TAXATION OF THE FUNDS -- GENERAL
Each Fund, which is treated as a separate entity for federal income tax
purposes, has elected to be, and intends to remain qualified for treatment as, a
regulated investment company under the Code ("RIC"). That treatment relieves a
Fund, but not its shareholders, from paying federal income tax on any investment
company taxable income (consisting of net investment income and the excess of
net short-term capital gain over net long-term capital loss) and net capital
gain (i.e., the excess of net long-term capital gain over net short-term capital
loss), if any, that are distributed to its shareholders.
To qualify for treatment as a RIC, a Fund must distribute to its
shareholders for each taxable year at least 90% of its investment company
taxable income ("Distribution Requirement") and must meet several additional
requirements. For each Fund, these requirements include the following: (1) at
least 90% of the Fund's gross income each taxable year must be derived from
dividends, interest, payments with respect to securities loans and gains from
the sale or other disposition of securities or foreign currencies, or other
income (including gains from options, futures or forward contracts) derived with
respect to its business of investing in securities or those currencies ("Income
Requirement"); (2) at the close of each quarter of the Fund's taxable year, at
least 50% of the value of its total assets must be represented by cash and cash
items, U.S. Government securities, securities of other RICs and other
securities, with these other securities limited, in respect of any one issuer,
to an amount that does not exceed 5% of the value of the Fund's total assets and
that does not represent more than 10% of the issuer's outstanding voting
securities; and (3) at the close of each quarter of the Fund's taxable year, not
more than 25% of the value of its total assets may be invested in securities
(other than U.S. Government securities or securities of other RICs) of any one
issuer or in two or more issuers that the Fund controls and that are engaged in
similar trades or businesses.
If any Fund failed to qualify for treatment as a RIC for any taxable
year, (1) it would be taxed as an ordinary corporation on the full amount of its
taxable income for that year without being able to deduct the distributions it
makes to its shareholders and (2) the shareholders would treat all those
distributions, including distributions of net capital gain, as dividends (that
is, ordinary income) to the extent of the Fund's earnings and profits. In
addition, the Fund could be required to recognize unrealized gains, pay
substantial taxes and interest and make substantial distributions before
requalifying for RIC treatment.
Each Fund will be subject to a nondeductible 4% excise tax ("Excise
Tax") to the extent it fails to distribute by the end of any calendar year at
least 98% of the sum of its ordinary income for that year and its capital gain
net income for the one-year period ending on October 31 of that year, plus
certain other amounts. For this and other purposes, dividends declared by a Fund
in October, November or December of any calendar year and payable to
shareholders of record on a date in one of those months will be deemed to have
been paid by the Fund and received by the shareholders on December 31 of that
year if the dividends are paid during the following January. Each Fund intends
to make sufficient distributions to avoid the Excise Tax.
TAXATION OF THE SHAREHOLDERS
All dividends out of investment company taxable income will be taxable
as ordinary income to shareholders, whether received in cash or reinvested in
additional Fund shares. Distributions of net capital gain by a Fund will be
taxable to its shareholders as long-term capital gains (i.e., as gain from
assets held for more than one year at the time of disposition), regardless of
the length of time the shareholders have held their Fund shares. The maximum tax
rate on that gain for non-corporate taxpayers generally is 20%. A lower rate of
18% will apply after December 31, 2000, for assets that are held for more than
five years and are acquired after that date (unless the taxpayer elects to treat
an asset held on that date as having been sold for its fair market value on
January 1, 2001). In the case of a non-corporate taxpayer whose ordinary income
is taxed at a 15% rate, the 20% and 18% rates are reduced to 10% and 8%,
respectively. A corporation's net capital gain is taxed at the same rate as its
ordinary income.
Any loss realized by a shareholder on a sale (redemption) or exchange
of shares of a Fund will be disallowed to the extent the shareholder purchases
other shares of that Fund, regardless of class, within 30 days before or after
the disposition.
A portion of the dividends from each Fund's investment company taxable
income, whether paid in cash or reinvested in additional Fund shares, may be
eligible for the dividends-received deduction allowed to corporations. The
eligible portion may not exceed the aggregate dividends the Fund receives from
domestic corporations; capital gain distributions thus are not eligible for the
deduction. Dividends received by a corporate shareholder and deducted by it
pursuant to the dividends-received deduction are subject indirectly to the
federal alternative minimum tax. Corporate shareholders should consult their tax
advisers regarding other requirements applicable to the dividends-received
deduction.
Any distribution paid shortly after a purchase of Fund shares by an
investor will reduce the net asset value of those shares by the distribution
amount. While such a distribution is in effect a return of capital, it is
nevertheless subject to federal income tax. This result may be magnified with
respect to a Fund that pay dividends only once a year, such as the International
Fund. Therefore, prior to purchasing shares of any Fund, an investor should
carefully consider the impact of distributions that are expected to be or have
been announced.
HEDGING STRATEGIES
The use of hedging strategies, such as writing (selling) and purchasing
options and futures contracts and entering into forward contracts, involves
complex rules that will determine for income tax purposes the amount, character
and timing of recognition of the gains and losses a Fund realizes in connection
therewith. Gain from the disposition of foreign currencies (except certain gains
that may be excluded by future regulations), and gains from options, futures and
forward contracts derived by a Fund with respect to its business of investing in
securities or foreign currencies, will be treated as qualifying income under the
Income Requirement.
To the extent a Fund recognizes income from a "conversion transaction,"
as defined in section 1258 of the Code, all or part of the gain from the
disposition or other termination of a position held as part of the conversion
transaction may be recharacterized as ordinary income. A conversion transaction
generally consists of two or more positions taken with regard to the same or
similar property, where (1) substantially all of the taxpayer's return is
attributable to the time value of its net investment in the transaction and (2)
the transaction satisfies any of the following criteria: (a) the transaction
consists of the acquisition of property by the taxpayer and a substantially
contemporaneous agreement to sell the same or substantially identical property
in the future; (b) the transaction is a straddle, within the meaning of section
1092 of the Code (see below); (c) the transaction is one that was marketed or
sold to the taxpayer on the basis that it would have the economic
characteristics of a loan but the interest-like return would be taxed as capital
gain; or (d) the transaction is described as a conversion transaction in future
regulations.
Certain futures, foreign currency contracts and non-equity options in
which a Fund may invest may be subject to section 1256 of the Code ("section
1256 contracts"). Any section 1256 contracts a Fund holds at the end of its
taxable year, other than contracts with respect to which the Fund has made a
"mixed straddle" election, must be "marked-to-market" (that is, treated as
having been sold at that time for their fair market value) for federal income
tax purposes, with the result that unrealized gains or losses will be treated as
though they were realized. Sixty percent of any net gain or loss recognized on
these deemed sales, and 60% of any net realized gain or loss from any actual
sales of section 1256 contracts, will be treated as long-term capital gain or
loss, and the balance will be treated as short-term capital gain or loss.
Section 1256 contracts also may be marked-to-market for purposes of the Excise
Tax. These rules may operate to increase the amount that a Fund must distribute
to satisfy the Distribution Requirement (i.e., with respect to the portion
treated as short-term capital gain), which will be taxable to the shareholders
as ordinary income, and to increase the net capital gain a Fund recognizes,
without in either case increasing the cash available to the Fund. A Fund may
elect to exclude certain transactions from the operation of section 1256,
although doing so may have the effect of increasing the relative proportion of
net short-term capital gain (taxable as ordinary income) and thus increasing the
amount of dividends that must be distributed.
Under Code section 1092, offsetting positions in any actively traded
security, option, futures or forward contract entered into or held by a Fund may
constitute a "straddle." Straddles are subject to certain rules that may affect
the amount, character and timing of a Fund's gains and losses with respect to
positions of the straddle by requiring, among other things, that (1) loss
realized on disposition of one position of a straddle be deferred to the extent
of any unrealized gain in an offsetting position until the latter position is
disposed of, (2) the Fund's holding period in certain straddle positions not
begin until the straddle is terminated (possibly resulting in gain being treated
as short-term rather than long-term capital gain) and (3) losses recognized with
respect to certain straddle positions, that otherwise would constitute
short-term capital losses, be treated as long-term capital losses. Applicable
regulations also provide certain "wash sale" rules, which apply to transactions
where a position is sold at a loss and a new offsetting position is acquired
within a prescribed period, and "short sale" rules applicable to straddles.
Different elections are available to each Fund, which may mitigate the effects
of the straddle rules, particularly with respect to "mixed straddles" (i.e., a
straddle of which at least one, but not all, positions are section 1256
contracts).
When a covered call option written (sold) by a Fund expires, the Fund
will realize a short-term capital gain equal to the amount of the premium it
received for writing the option. When a Fund terminates its obligations under
such an option by entering into a closing transaction, it will realize a
short-term capital gain (or loss), depending on whether the cost of the closing
transaction is less (or more) than the premium it received when it wrote the
option. When a covered call option written by a Fund is exercised, the Fund will
be treated as having sold the underlying security, producing long-term or
short-term capital gain or loss, depending on the holding period of the
underlying security and whether the sum of the option price received on the
exercise plus the premium received when it wrote the option is more or less than
the basis of the underlying security.
If a Fund has an "appreciated financial position" -- generally, an
interest (including an interest through an option, futures or forward contract
or short sale) with respect to any stock, debt instrument (other than "straight
debt") or partnership interest the fair market value of which exceeds its
adjusted basis -- and enters into a "constructive sale" of the same or
substantially similar property, the Fund will be treated as having made an
actual sale thereof, with the result that it will recognize gain at that time. A
constructive sale generally consists of a short sale, an offsetting notional
principal contract or a futures or forward contract entered into by a Fund or a
related person with respect to the same or substantially similar property. In
addition, if the appreciated financial position is itself a short sale or such a
contract, acquisition of the underlying property or substantially similar
property will be deemed a constructive sale. The foregoing will not apply,
however, to any transaction during any taxable year that otherwise would be
treated as a constructive sale if the transaction is closed within 30 days after
the end of that year and the Fund holds the appreciated financial position
unhedged for 60 days after that closing (i.e., at no time during that 60-day
period is the Fund's risk of loss regarding that position reduced by reason of
certain specified transactions with respect to substantially similar or related
property, such as having an option to sell, being contractually obligated to
sell, making a short sale or granting an option to buy substantially identical
stock or securities).
FOREIGN SECURITIES AND TRANSACTIONS
A Fund may invest in the stock of "passive foreign investment
companies" ("PFICs"). A PFIC is any foreign corporation (with certain
exceptions) that, in general, meets either of the following tests: (1) at least
75% of its gross income is passive or (2) an average of at least 50% of its
assets produce, or are held for the production of, passive income. Under certain
circumstances, a Fund will be subject to federal income tax on a portion of any
"excess distribution" received on the stock of a PFIC or of any gain on
disposition of the stock (collectively "PFIC income"), plus interest thereon,
even if the Fund distributes the PFIC income as a dividend to its shareholders.
The balance of the PFIC income will be included in a Fund's investment company
taxable income and, accordingly, will not be taxable to it to the extent it
distributes that income to its shareholders.
If a Fund invests in a PFIC and elects to treat the PFIC as a
"qualified electing fund" ("QEF"), then in lieu of the foregoing tax and
interest obligation, the Fund would be required to include in income each year
its pro rata share of the QEF's annual ordinary earnings and net capital gain --
which the Fund likely would have to distribute to satisfy the Distribution
Requirement and avoid imposition of the Excise Tax -- even if the Fund did not
receive those earnings and gain from the QEF. In most instances it will be very
difficult, if not impossible, to make this election because of certain
requirements thereof.
Each Fund may elect to "mark to market" its stock in any PFIC.
"Marking-to-market," in this context, means including in ordinary income each
taxable year the excess, if any, of the fair market value of the stock over a
Fund's adjusted basis therein as of the end of that year. Pursuant to the
election, a Fund also would be allowed to deduct (as an ordinary, not capital,
loss) the excess, if any, of its adjusted basis in PFIC stock over the fair
market value thereof as of the taxable year-end, but only to the extent of any
net mark-to-market gains with respect to that stock included in income by the
Fund for prior taxable years under the election (and under regulations proposed
in 1992 that provided a similar election with respect to the stock of certain
PFICs). A Fund's adjusted basis in each PFIC's stock subject to the election
would be adjusted to reflect the amounts of income included and deductions taken
thereunder.
Gains or losses (1) from the disposition of foreign currencies,
including forward contracts, (2) on the disposition of each
foreign-currency-denominated debt security that are attributable to fluctuations
in the value of the foreign currency between the dates of acquisition and
disposition of the security and (3) that are attributable to exchange rate
fluctuations between the time a Fund accrues interest, dividends or other
receivables, or accrues expenses or other liabilities, denominated in a foreign
currency and the time the Fund actually collects the receivables or pays the
liabilities generally are treated as ordinary income or ordinary loss. These
gains, referred to under the Code as "section 988" gains or losses, increase or
decrease the amount of a Fund's investment company taxable income available to
be distributed to its shareholders as ordinary income, rather than increasing or
decreasing the amount of its net capital gain. If section 988 losses exceed
other investment company taxable income during a taxable year, a Fund would not
be able to distribute any dividends, and any distributions made during that year
before the losses were realized would be recharacterized as a return of capital
to shareholders, rather than as a dividend, thereby reducing each shareholder's
basis in his or her Fund shares.
FOREIGN TAXES (INTERNATIONAL FUND ONLY)
Dividends and interest received and gains realized by the International
Fund on foreign securities may be subject to income, withholding or other taxes
imposed by foreign countries and U.S. possessions ("foreign taxes") that would
reduce the yield and/or total return on its investments. Tax conventions between
certain countries and the United States may reduce or eliminate foreign taxes,
however, and many foreign countries do not impose taxes on capital gains in
respect of investments by foreign investors. It is impossible to determine in
advance the effective rate of foreign tax to which the International Fund will
be subject, because the amount of the International Fund's assets to be invested
in various countries is not known.
If more than 50% of the value of the International Fund's total assets
at the close of any taxable year consists of securities of foreign corporations,
it will be eligible to, and may, file an election with the Internal Revenue
Service that would enable its shareholders, in effect, to benefit from any
foreign tax credit or deduction available with respect to any foreign taxes it
paid. Pursuant to the election, the International Fund would treat those taxes
as dividends paid to its shareholders and each shareholder (1) would be required
to include in gross income, and treat as paid by the shareholder, the
shareholder's proportionate share of those taxes, (2) would be required to treat
that share of those taxes and of any dividend paid by the International Fund
that represents income from foreign or U.S. possessions sources as the
shareholder's own income from those sources, and (3) could either deduct the
foreign taxes deemed paid by the shareholder in computing taxable income or,
alternatively, use the foregoing information in calculating the foreign tax
credit against the shareholder's federal income tax. If the International Fund
makes this election, it will report to its shareholders shortly after each
taxable year their respective shares of the foreign taxes it paid and its income
from sources within foreign countries and U.S. possessions. Individuals who have
no more than $300 ($600 for married persons filing jointly) of creditable
foreign taxes included on Forms 1099 and all of whose foreign source income is
"qualified passive income" may elect each year to be exempt from the extremely
complicated foreign tax credit limitation, in which event they would be able to
claim a foreign tax credit without having to file the detailed Form 1116 that
otherwise is required.
Shareholders will not be entitled to credit or deduct their allocable
portions of foreign taxes imposed on the International Fund if they have not
held their shares therein for 16 days or more during the 30-day period beginning
15 days before the ex-distribution date for those shares. The minimum holding
period will be extended if the shareholder's risk of loss with respect to those
shares is reduced by reason of holding an offsetting position. No deduction for
foreign taxes may be claimed by a shareholder who does not itemize deductions.
Foreign shareholders may not deduct or claim a credit for foreign taxes in
determining their U.S. income tax liability unless the dividends paid to them by
the International Fund are effectively connected with a U.S. trade or business.
FOREIGN SHAREHOLDERS
The tax consequences to a foreign shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described
herein. Foreign shareholders are advised to consult their own tax advisors with
respect to the particular tax consequences to them of an investment in the
Funds.
STATE AND LOCAL TAXES
Depending on the extent of a Fund's activities in states and localities
in which it office is maintained, in which its agents are located or in which it
is otherwise deemed to be conducting business, it may be subject to the tax laws
of those states or localities. Furthermore, the state and local income tax
treatment of a Fund and its shareholders with respect to distributions by the
Fund may differ from the federal income tax treatment thereof. Distributions to
shareholders may be subject to other state and local taxes as well. Prospective
investors are advised to consult with their own tax advisors regarding the state
and local income and other tax treatment of an investment in a Fund.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Shares of the Funds may be purchased directly from the Funds with no
sales charge or commission. Investors may also purchase shares of the Funds from
intermediaries, such as a broker-dealer, bank or other financial institution.
Such intermediaries may be required to register as a dealer pursuant to certain
states' securities laws and may charge the investor a reasonable service fee, no
part of which will be paid to the Funds. Shares of the Funds will be sold at the
net asset value next determined after an order is received and accepted,
provided that payment has been received by 12:00 p.m. Eastern Time on the
following business day. Net asset value is determined as set forth above under
"Valuation." All purchases must be made in U.S. dollars.
Orders are accepted on each business day. If Accessor Capital receives
a purchase order for shares of the U.S. Government Money Portfolio and
investment monies are wired prior to 9:00 a.m. Pacific time, the shareholder
will be entitled to receive that day's dividend. Neither the Funds nor the
Transfer Agent will be responsible for delays of wired proceeds due to heavy
wire traffic over the Federal Reserve System. Orders to purchase Fund shares
must be received by Accessor Capital prior to close of the New York Stock
Exchange, normally 4:00 p.m. Eastern time, on the day shares of those Funds are
offered and orders accepted, or the orders will not be accepted and invested in
the particular Fund until the next day on which shares of that Portfolio are
offered. Payment must be received by 12:00 p.m. Eastern time on the next
business day. Shares may be bought or sold through financial intermediaries who
are authorized to receive purchase and redemption orders on behalf of the Funds.
These financial intermediaries are authorized to designate their agents and
affiliates to receive these orders, and a Fund will be deemed to have received a
purchase or redemption order when the order is received by the financial
intermediary. The order will be priced at the NAV next computed after the order
is received.
Each Fund reserves the right to suspend the offering of shares for a
period of time. The Funds also reserve the right to reject any specific purchase
order, including certain purchases by exchange. Purchase orders may be refused
if, in Accessor Capital's opinion, they would disrupt management of a Fund. A
Fund also reserves the right to refuse exchange purchases by any person or group
if, in Accessor Capital's judgment, a Fund would be unable to invest the money
effectively in accordance with its investment objective and policies, or would
otherwise potentially be adversely affected.
Investor Class Shares are expected to be available through industry
recognized service providers of fund supermarkets or similar programs ("Service
Organizations") that require customers to pay either no or low transaction fees
in connection with purchases or redemptions. Certain features of the Investor
Class Shares, such as the initial and subsequent investment minimums, redemption
fees and certain trading restrictions, may be modified or waived by Service
Organizations. Service Organizations may impose transaction or administrative
charges or other direct charges, which charges or fees would not be imposed if
Investor Class Shares are purchased directly. Therefore, a client or customer
should contract the Service Organization acting on their behalf concerning the
fees (if any) charged in connection with a purchase or redemption of Investor
Class Shares. Service Organizations are responsible for transmitting to their
customers a schedule of any such fees and conditions. Service Organizations will
be responsible for promptly transmitting client or customer purchase and
redemption orders to a Fund in accordance with their agreements with clients or
customers.
For non-distribution related administration, subaccounting, transfer
agency and/or other services, a Fund may pay Service Organizations and certain
record keeping organizations with whom they have entered into agreements
pursuant to the Shareholder Servicer Plan and/or the Administrative Services
Plan. The fees payable to any one Service Organization or recordkeeper is
determined based upon a number of factors, including the nature and quality of
services provided, the operations processing requirements of the relationship
and the fee schedule of the Service Organization or recordkeeper.
Shares may be redeemed on any business day at the NAV next determined
after the receipt of a redemption request in proper form. Payment will
ordinarily be made within seven days and will be wire-transferred by automatic
clearing house funds or other bank wire to the account designated for the
shareholder at a domestic commercial bank that is a member of the Federal
Reserve System. If Accessor Capital receives a redemption request in good order
from a shareholder of the U.S. Government Money Portfolio by 9:00 a.m. Pacific
time, the shareholder will be entitled to receive redemption proceeds by wire on
the same day. Shareholders of the U.S. Government Money Portfolio who elect this
option should be aware that their account will not be credited with the daily
dividend on that day. If requested in writing, payment will be made by check to
the account owners of record at the address of record. The Transfer Agent
charges a processing fee of $10.00 for each redemption check requested by a
shareholder, which processing fee may be waived by the Transfer Agent at its
discretion.
The Funds may accept certain types of securities in lieu of wired funds
as consideration for Fund shares. Under no circumstances will a Fund accept any
securities in consideration of the Fund's shares the holding or acquisition of
which would conflict with the Fund's investment objective, policies and
restrictions or which Accessor Capital or the applicable Money Manager believes
should not be included in the applicable Fund's portfolio on an indefinite
basis. Securities will not be accepted in exchange for Fund shares if the
securities are not liquid or are restricted as to transfer either by law or
liquidity of market; or have a value which is not readily ascertainable (and not
established only by evaluation procedures) as evidenced by a listing on the
American Stock Exchange, the New York Stock Exchange, or the Nasdaq Stock
Market. Securities accepted in consideration for a Fund's shares will be valued
in the same manner as the Fund's portfolio securities in connection with its
determination of net asset value. A transfer of securities to a Fund in
consideration for Fund shares will be treated as a sale or exchange of such
securities for federal income tax purposes. A shareholder will recognize gain or
loss on the transfer in an amount equal to the difference between the value of
the securities and the shareholder's tax basis in such securities. Shareholders
who transfer securities in consideration for a Fund's shares should consult
their tax advisers as to the federal, state and local tax consequences of such
transfers.
FINANCIAL STATEMENTS
The Company's audited financial statements for the fiscal year ended
December 31, 1998, are contained in the Annual Report to Shareholders for the
fiscal year ended December 31, 1998, which is incorporated herein by this
reference and, unless previously provided, will be delivered together herewith.
<PAGE>
APPENDIX A
RATINGS OF DEBT INSTRUMENTS
Corporate Bond Ratings
Moody's Investors Service ("Moody's")
Aaa - Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt-edge." Interest payments are protected by a large or exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A - Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper-medium grade obligations. Factors
giving security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment some time in the
future.
Those bonds in the Aa and A group which Moody's believes possess the
strongest investment attributes are designated by the symbols Aa1 and A1.
Standard & Poor's Corporation ("S&P")
AAA - This is the highest rating assigned by S&P to a debt obligation
and indicates an extremely strong capacity to pay interest and repay principal.
AA - Bonds rated AA also qualify as high-quality debt obligations.
Capacity to pay interest and repay principal is very strong, and they differ
from AAA issues only in small degree.
A - Bonds rated A have a strong capacity to pay interest and repay
principal, although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than issues in higher-rated
categories.
The AA and A ratings may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within the AA or A rating category,
respectively.
Note Ratings
Moody's
Moody's rating for short-term obligations will be designated Moody's
Investment Grade ("MIG"). This distinction is in recognition of the differences
between short-term credit risk and long-term risk. Factors affecting the
liquidity of the borrower are uppermost in importance in short-term borrowing,
while various factors of the first importance in bond risk are of lesser
importance in the short run. Symbols used are as follows:
MIG-1 - Notes bearing this designation are of the best quality,
enjoying strong protection from established cash flows, superior liquidity
support or demonstrated broad-based access to the market for refinancing.
MIG-2 - Notes bearing this designation are of high quality, with
margins of protection ample although not so large as in the preceding group.
S&P
An S&P note rating reflects the liquidity concerns and market access
risks unique to notes. Notes due in three years or less will likely receive a
note rating. Notes maturing beyond three years will most likely receive a
long-term debt rating. The following criteria will be used in making that
assessment.
o Amortization schedule (the larger the final maturity relative
to other maturities, the more likely it will be treated as a
note).
o Source of Payment (the more dependent the issue is on the
market for its refinancing, the more likely it will be treated
as a note).
SP-1 - This designation denotes strong or very strong capacity to pay
interest and repay principal. Those issues determined to possess overwhelming
safety characteristics will be given a plus (+) sign designation.
SP-2 - This designation denotes satisfactory capacity to pay interest
and repay principal.
Commercial paper rated A by S&P has the following characteristics:
liquidity ratios are adequate to meet cash requirements. Long-term senior debt
is rated A or better. The issuer has access to at least two additional channels
of borrowing. Basic earnings and cash flow have an upward trend with allowance
made for unusual circumstances. Typically, the issuer's industry is well
established and the issuer has a strong position within the industry. The
reliability and quality of management are unquestioned. Relative strength or
weakness of the above factors determine whether the issuer's commercial paper is
rated A-1, A-2 or A-3.
A-1 - This designation indicates that the degree of safety regarding
timely payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus (+) sign
designation.
A-2 - This designation indicates the capacity for timely payment on
issues with this designation is strong. However, the relative degree of safety
is not as high as for issues designated A-1.
A-3 - This designation indicates a satisfactory capacity for timely
payment. Obligations carrying this designation are, however, somewhat more
vulnerable to the adverse effects of changes in circumstances than obligations
carrying the higher designations.
<PAGE>
APPENDIX B
CALCULATION OF PERFORMANCE FEES
Accessor Capital and the Board of Directors have carefully considered
Release No. IC-7113, issued by the SEC in April 1972, which addresses the
factors which must be considered by directors and investment advisers in
connection with performance fees payable by investment companies. In particular,
they have considered the statement that "[e]lementary fiduciary standards
require that performance compensation be based only upon results obtained after
[performance fee] contracts take effect." Accessor Capital and the Board of
Directors believe that the Funds' performance fee arrangement is consistent with
the position of the SEC articulated in Release No. IC-7113. No performance fees
may be paid if the Board of Directors determines that to do so would be unfair
to each Fund's shareholders.
For purposes of calculating the performance differential versus the
applicable index, the investment performance of each Fund (or Account) for any
day expressed as a percentage of its net assets at the beginning of such day, is
equal to the sum of: (i) the change in the net assets of each Fund (or Account)
during such day and (ii) the value of the Fund's (or Account's) cash
distributions accumulated to the end of such day. The return over any period is
the compounded return for all days over the period, i.e., one plus the daily
return multiplied together, minus one. The investment record of each index for
any period shall mean the sum of: (i) the change in the level of the index
during such period; and (ii) the value, computed consistently with the index, of
cash distributions made by companies whose securities comprise the index
accumulated to the end of such period; expressed as a percentage of the index
level at the beginning of such period. For this purpose cash distributions on
the securities which comprise the index shall be treated as reinvested in the
index at least as frequently as the end of each calendar quarter following the
payment of the dividend. For purposes of determining the fee adjustment for
investment performance, the net assets of a Fund (or Account) are averaged over
the same period as the investment performance of the Fund (or Account) and the
investment record of the applicable index are computed.
<PAGE>
BO-100298.01
PART C
OTHER INFORMATION
Item 23 Exhibits
(a)(1) Articles of Incorporation of Accessor Funds, Inc.,
("Registrant") dated June 7, 1991 are filed herein as
Exhibit No. (a)(1).
(a)(2) Amendment to Articles of Incorporation dated August 21, 1991
is filed herein as Exhibit No. (a)(2).
(a)(3) Amendment to Articles of Incorporation dated October 15,
1991 is filed herein as Exhibit No. (a)(3).
(a)(4) Amendment to Articles of Incorporation dated October 18,
1993 is filed herein as Exhibit No. (a)(4).
(b) By-Laws of the Registrant, as Amended, are filed herein as
Exhibit No. (b).
(c) Not applicable.
(d)(1) Management Agreement with Bennington Capital Management.
Incorporated by reference to Exhibit 5(c) to Post-Effective
Amendment No. 2 to the Registration Statement on Form N-1A
filed on September 1, 1992 (File No. 33-41245).
(d)(2) First Amendment to the Management Agreement between the
Registrant and Bennington Capital Management L. P., dated
May 24, 1994 and filed herein as Exhibit (d)(2).
(d)(3) Second Amendment to the Management Agreement between the
Registrant and Bennington Capital Management L.P., dated May
29, 1996, and filed herein as Exhibit No. (d)(3).
(d)(4) Money Manager Agreement among the Registrant on behalf of
Value Find, Bennington Capital Management L.P. and
Martingale Asset Management L.P. Incorporated by reference
to Exhibit A to Proxy Statement for Special Meeting of
Shareholders Held August 15, 1995, and filed on July 17,
1995 (File No. 33-41245).
(d)(5) Money Manager Agreement among the Registrant on behalf of
Mortgage Securities Fund, Bennington Capital Management L.P.
and BlackRock Financial Management, Inc. Incorporated by
reference to Exhibit No. 1 to the Proxy Statement For
Special Meeting of Shareholders Held on January 27, 1995 and
filed on January 6, 1995 (File No. 33-41245).
(d)(6) Money Manager Agreement among the Registrant on behalf of
Growth Fund, Bennington Capital Management and Geewax,
Terker & Company effective July 21, 1997, is filed herein as
Exhibit No. (d)(6).
(d)(7) Money Manager Agreement among the Registrant on behalf of
International Equity Fund, Bennington Capital Management L.
P. and Nicholas-Applegate Capital Management. Incorporated
by reference to Exhibit No. 5(l) to Post-Effective Amendment
No. 4 to the Registration Statement on Form N-1A filed on
September 15, 1993 (File No. 33-41245).
(d)(8) Money Manager Agreement among the Registrant on behalf of
the Small Cap Fund, Bennington Capital Management L.P. and
Symphony Asset Management, Inc. Incorporated by reference to
Exhibit B to Proxy Statement For Special Meeting of
Shareholder Held April 30, 1998, and filed on March 30, 1998
(File No. 33-41245).
(d)(9) Money Manager Agreement among the Registrant on behalf of
Intermediate Fixed-Income Fund, Bennington Capital
Management L.P. and Cypress Asset Management effective
September 21, 1998, is filed herein as Exhibit (d)(9).
(d)(10) Money Manager Agreement among the Registrant on behalf of
Short-Intermediate Fixed-Income Fund, Bennington Capital
Managment L.P. and Cypress Asset Management effective
September 21, 1998, is filed herein as Exhibit (d)(10).
(e) Not applicable.
(f) Not applicable.
(g)(1) IRA Custodian Agreement among Registrant, Bennington and The
Fifth Third Bank effective December 1, 1995. Incorporated by
reference to Exhibit (8)(d) to Post-Effective Amendment No.
10 to the Registration Statement on Form N-1A. (File No.
33-41245).
(g)(2) Custodian Agreement with Fifth Third Bank dated October 4,
1996. Incorporated by reference to Exhibit (8)(e) to
Post-Effective Amendment No. 11 to the Registration
Statement on Form N-1A filed on April 30, 1997 (File No.
33-41245).
(g)(3) First Amendment to Custody Agreement with Fifth Third Bank
dated November 14, 1997. Incorporated by reference to
Exhibit (8)(f) to Post-Effective Amendment No. 13 to the
Registration Statement on Form N-1A filed on April 29, 1998
(File No. 33-41245).
(g)(4) Second Amendment to Custody Agreement with Fifth Third Bank
dated February 19, 1998. Incorporated by reference to
Exhibit (8)(g) to Post-Effective Amendment No. 13 to the
Registration Statement on Form N-1A filed on April 29, 1998
(File No. 33-41245).
(h)(1) Transfer Agency and Administrative Agreement among the
Registrant and Bennington dated December 1, 1995.
Incorporated by reference to Exhibit (9)(a)(3) to
Post-Effective Amendment No. 10 to the Registration
Statement on Form N-1A filed on April 29, 1996 (File No.
33-41245).
(h)(2) Amended Appendix C dated February 19, 1998, to Transfer
Agency and Administrative Agreement among the Registrant and
Bennington dated December 1, 1995. Incorporated by reference
by Exhibit (h)(1)(D) to Post-Effective Amendment No. 13 to
the Registration Statement on Form N-1A, filed on April 29,
1998 (File No. 33-41245).
(h)(3) Fund Accounting and Other Services Agreement with Fifth
Third Bank and Bennington Capital Management L.P. dated
October 4, 1996. Incorporated by reference to Exhibit
(9)(c)(4) to the Registration Statement on Form N-1A filed
on April 30, 1996 (File No. 33-41245).
(i) Opinion and consent of Kirkpatrick & Lockhart LLP is filed
herein as Exhibit (i).
(j) Consent of Deloitte &Touche LLP is filed herein as Exhibit
(j).
(k) Not applicable.
(l) Agreement related to initial capital. Incorporated by
reference to Exhibit No. 13 to Pre-Effective Amendment No. 4
to the Registration Statement on Form N-1A filed on February
4, 1992 (File No. 33-41245).
(m)(1) Distribution Plan for Investor Class Shares dated February
19, 1998. Incorporated by reference to Exhibit No. (15)(f)
to Post-Effective Amendment No. 13 to the Registration
Statement on Form N-1A filed on April 29, 1998 (File No.
33-41245).
(m)(2) Shareholder Service Plan dated February 19, 1998.
Incorporated by reference to Exhibit No. (15)(g) to
Post-Effective Amendment No. 13 to the Registration
Statement on Form N-1A filed on April 29, 1998 (File No.
33-41245).
(m)(3) Form of Shareholder Service Agreement. Incorporated by
reference to Exhibit No. (15)(g)(1) to Post-Effective
Amendment No. 13 to the Registration Statement on Form N-1A
filed on April 29, 1998 (file No. 33-41245).
(n) Financial Data Schedules are filed herein.
(o)(1) Amended Rule 18f-3 Plan dated March 31, 1999 is filed
herein as Exhibit No. (o)(1).
(o)(2) Administrative Services Plan. Incorporated by reference to
Exhibit No. (15)(h) to Post-Effective Amendment No. 13 to
the Registration Statement on Form N-1A filed on April 29,
1998 (File No. 33-41245).
(o)(3) Form of Administrative Services Agreement. Incorporated by
reference to Exhibit No. (15)(h)(1) to Post-Effective
Amendment No. 13 to the Registration Statement on Form N-1A
filed on April 29, 1998 (File No. 33-41245).
Item 24. Persons Controlled by or Under Common Control with Registrant
Not applicable.
Item 25. Indemnification
As permitted by Section 17(h) and (i) of the Investment Company Act of
1940, as amended (the "1940 Act"), and pursuant to Article VI of the
Registrant's Articles of Incorporation, as amended, as filed herein. Section
2-418 of the Maryland General Corporation Law and Section 7 of the Management
Agreement (incorporated by reference to Exhibit Nos. 5(a) and 5(c) of the
Registration Statement on Form N-1A, filed on June 24, 1991 (File No. 33-41245)
and Post-Effective Amendment No. 2 thereto, filed on September 1, 1992,
respectively) (the "Management Agreement"), officers, directors, employees and
agents of the Registrant will not be liable to the Registrant, any stockholder,
officer, director, employee, agent or other person for any action or failure to
act, except for bad faith, willful misfeasance, gross negligence or reckless
disregard of duties, and those individuals may be indemnified against
liabilities in connection with the Registrant, subject to the same exceptions.
Section 2-418 of Maryland General Corporation Law permits indemnification of
directors who acted in good faith and reasonably believed that the conduct was
in the best interests of the Registrant.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Securities Act"), may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the foregoing
provisions or otherwise, the Registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in connection with the
successful defense of any action, suit or proceeding) is asserted against the
Registrant by such director, officer or controlling person in connection with
the shares being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
The Registrant has purchased an insurance policy insuring its officers
and directors against liabilities, and certain costs of defending claims against
such officers and directors, to the extent such officers and directors are not
found to have committed conduct constituting willful misfeasance, bad faith,
gross negligence or reckless disregard in the performance of their duties. The
insurance policy also insures the Registrant against the cost of indemnification
payments to officers and directors under certain circumstances.
Section 7 of the Management Agreement and Section 12 of the Money
Manager Agreements filed and incorporated herein limit the liability of Accessor
Capital Management L. P. ("Accessor") and the money managers, respectively, to
liabilities arising from willful misfeasance, bad faith or gross negligence in
the performance of their respective duties or from reckless disregard by them of
their respective obligations and duties under the agreements.
The Registrant hereby undertakes that it will apply the indemnification
provisions of its Articles of Incorporation, By-Laws, Management Agreement,
Transfer Agent Agreement and Money Manager Agreements in a manner consistent
with Release No. 11330 of the Securities and Exchange Commission under the 1940
Act so long as the interpretations of Section 17(h) and 17(i) of such Act remain
in effect and are consistently applied.
Item 26. Business and Other Connections of Investment Adviser
See Registrant's Prospectuses sections "Summary and "Management
Organization and Capital Structure of the Portfolios", and the Statement of
Additional Information section "Management of the Fund".
Item 27. Principal Underwriters
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
Item 28. Location of Accounts and Records
All accounts and records required to be maintained by section 31(a) of the 1940
Act and Rules 31a-1 to 31a-3 thereunder are maintained in the following
locations:
Manager, Administrator Custodian and
and Transfer Agent Fund Accounting Agent
Accessor Capital Management L. P. Fifth Third Bank
1420 Fifth Avenue, Suite 3600 38 Fountain Square Plaza
Seattle, WA 98101 Cincinnati, OH 45263
Money Managers Custodian of IRA Accounts
See Section of the prospectuses The Fifth Third Bank entitled "Management
Organization 38 Fountain Square Plaza and Capital Structure for names and
Cincinnati, OH 45263 addresses
Item 29. Management Services
Not applicable.
Item 30. Undertakings
Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, Accessor Funds, Inc. has duly caused this Post-Effective
Amendment to the Registration Statement to be signed on its behalf by the
undersigned, duly authorized, in the City of Seattle, and State of Washington,
on the 30th day of April, 1999.
ACCESSOR FUNDS, INC.
By:/s/J. Anthony Whatley III
----------------------------
J. Anthony Whatley III
President and Principal Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment No. 14 to the Registration Statement has been signed below by the
following persons in the capacities and on the date indicated:
Signature Title Date
/s/J. Anthony Whatley III 4/30/99
- ------------------------- ------
J. Anthony Whatley III President, Principal
Executive Officer
and Director
/s/George G. Cobean III 4/30/99
- ------------------------- ------
George G. Cobean III Director
/s/Geoffrey C. Cross 4/30/99
- ------------------------- ------
Geoffrey C. Cross Director
/s/Ravindra A. Deo 4/30/99
- ------------------------- ------
Ravindra A. Deo Principal Financial
and Accounting Officer
<PAGE>
Exhibit (a)(1)
ARTICLES OF INCORPORATION
OF
WORLD INVESTMENT NETWORK FUND, INC.
-----------------------------------
I, the incorporator, Karin Jagel Flynn, whose post office address is
Quaker Tower, 321 North Clark Street, Suite 3400, Chicago Illinois 60610, being
at least eighteen years of age, am, under and by virtue of the General Laws of
the State of Maryland authorizing the formation of corporations, forming a
corporation.
ARTICLE I.
The name of the corporation (hereinafter called the "Corporation") is
World Investment Fund, Inc.
ARTICLE II.
Purpose
-------
The purpose for which the Corporation is formed is to act as an
open-end investment company of the management type registered as such with the
Securities and Exchange Commission pursuant to the Investment Company Act of
1940 (the "Investment Company Act") and to exercise and generally to enjoy all
of the powers, rights and privileges granted to, or conferred upon, corporations
by the General Laws of the State of Maryland no or hereintofor in force. If the
Corporation shall cease to be registered under the Investment Company Act, it
shall have all of the powers to invest and reinvest its assets which it would
have if so registered, but without the restrictions on such powers imposed by or
under the Investment Company Act or by any "fundamental policy" (as that term is
used in the Investment Company Act) adopted by the Corporation pursuant to the
Investment Company Act. If the Corporation shall cease to be so registered, all
references in these Articles of Incorporation or in the Corporation's By-Laws
which limit the powers of the Corporation pursuant to or under the Investment
Company Act or which affect then manner in which action may be taken by the
Board of Directors or stockholders shall cease to be in affect.
ARTICLE III.
Address in Maryland
-------------------
The post office address of the place at which the principal office of
the Corporation in the State of Maryland is located is c/o CT Corporation
System, 32 South Street, Baltimore, Maryland 21202.
The name of the Corporation's resident agent is The Corporation Trust
Incorporated, and its post office address is 32 South Street, Baltimore,
Maryland 21202. Said resident agent is a corporation of the State of Maryland.
ARTICLE IV.
Common Stock
------------
Section 1. The total number of shares of capital stock which the
Corporation has authority to issue is 10,000,000,000 shares of the par value of
$.001 per share, having an aggregate par value of $10,000,000. The capital stock
is initially classified into ten series, which are designated as follows:
Number of
Series Authorized Shares
- ------ -----------------
Large Cap Growth Series Common Stock 1,000,000,000
Large Cap Value Series Common Stock 1,000,000,000
Small Cap Growth Series Common Stock 1,000,000,000
Small Cap Value Series Common Stock 1,000,000,000
European Series Common Stock 1,000,000,000
Pacific Rim Series Common Stock 1,000,000,000
Intermediate Term Fixed-Income Series Common Stock 1,000,000,000
Short-Intermediate Term Fixed-Income Series Common Stock 1,000,000,000
Mortgage-Backed Securities Series Common Stock 1,000,000,000
U.S. Government Money Market Series Common Stock 1,000,000,000
Section 2. The Board of Directors may, in its discretion, classify and
reclassify any unissued shares of the capital stock of the Corporation into one
or more additional or other classes or series by setting or changing in any one
more respects the designations, conversion or other rights, restriction,
limitations as to dividends, qualifications or terms or conditions of redemption
of such shares and pursuant to such classification or reclassification to
increase or decrease the number of authorized shares of any existing class or
series. If designations by the Board of Directors, Particular additional classes
or series of capital stock may relate to separate portfolios of investment.
Section 3. Unless otherwise expressly provided in the charter of the
Corporation, including any Articles Supplementary creating any class or series
of capital stock, the holders of each class and series of capital stock of the
Corporation shall be entitled to dividends and distributions in such amounts and
at such times as may be determined by the Board of Directors, and the dividends
and distributions paid with respect to the various classes or series of capital
stock may vary among such classes or series. Expenses related to the
distribution of, and other identified expenses that should properly be allocated
to, the shares of a particular class or series of capital stock may be charged
to and borne solely by a class or series may be appropriately reflected (in a
manner determined by the Board of Directors) and cause differences in the net
asset value attributable to, and the dividend, redemption and liquidation rights
of, the shares of each such class or series of capital stock.
Section 4. Unless otherwise expressly provided in the charter of the
Corporation, including any Articles Supplementary creating any class or series
of capital stock, on each matter submitted to a vote of stockholders, each
holder of a share of capital stock of the Corporation shall be entitled to one
vote for each share standing in such holder's name on the books of the
Corporation, irrespective of the class or series thereof, and all shares of all
classes and series shall vote together as a single class; provided, however,
that (a) as to any matter with respect to which a separate vote of any class or
series is required by the Investment Company Act, and in effect from time to
time, or any rules, regulations or orders issued thereunder, or by the Maryland
General Corporation Law, such requirement as to a separate vote of all classes
or series shall apply in lieu of a general vote of all classes and series as
described above; (b) in the event that the separate vote requirements referred
to in (a) above apply with respect to one or more classes or series, then
subject to paragraph (c) below, the shares of all other classes and series not
entitled to a separate vote shall vote together as a single class; and (c) as to
any matter which in the judgment of the Board of Directors (which shall be
conclusive) does not affect the interest of a particular class or series, such
class or series shall not be entitled to any vote, and only the holders of
shares of the one or more affected classes and series shall be entitled to vote.
Section 5. Unless otherwise expressly provided in the charter of the
Corporation, including any Articles Supplementary creating any class or series
of capital stock, in the event of any liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, holders of shares of capital
stock of the Corporation shall be entitled, after payment or provision for
payment of the debts and other liabilities of the Corporation (as such
liabilities may affect one or more of the classes of shares of capital stock of
the Corporation), to share ratably in the remaining net assets of the
Corporation; provided, however, that in the event the capital stock of the
Corporation shall be classified or reclassified into series, holders of any
shares of capital stock within such series shall be entitled to share ratably
out of assets belonging to such series pursuant to the provisions of Section 7
(c) of this Article IV.
Section 6. Each share of any class of the capital stock of the
Corporation, and in the event the capital stock of the Corporation shall be
classified or reclassified into series, each share of any class of capital stock
of the Corporation within such series shall be subject to the following
provisions:
(a) The net asset value of each outstanding share of capital stock
of the Corporation (or of a series, in the event the capital stock of
the Corporation shall be classified or reclassified into series),
subject to subsection (b) of the Section 6, shall be the quotient
obtained by dividing the value of the net assets of the Corporation (or
of the net assets of the Corporation attributable or belonging to that
series, in the event the capital stock of the Corporation shall be
classified or reclassified into series as designated in the charter or
pursuant to Articles Supplementary) by the total number of outstanding
shares of capital stock of the Corporation (or of such series, in the
event the capital stock of the Corporation shall be classified or
reclassified into series). Subject to subsection (b) of this Section 6,
the value of the net assets of the Corporation (or of a series, in the
event the capital stock of the Corporation shall be classified or
reclassified into series) shall be determined pursuant to the
procedures or methods (which procedures or methods, in the event the
capital stock of the Corporation shall be classified or reclassified
into series, may differ from series to series) prescribed or approved
by the Board of Directors in its discretion, and shall be determined at
the time or times (which time or times may, in the event the capital
stock of the Corporation shall be classified into series, may differ
from series to series) prescribed or approved by the Board of
Directors, in its discretion. In addition, subject to subsection (b) of
this Section 6, the Board of Directors, in its discretion, may suspend
the daily determination of net asset value of any share of any series
or class of capital stock of the Corporation.
(b) The net asset value of each share of the capital stock of the
Corporation or any series thereof shall be determined in accordance
with any applicable provision of the Investment Company Act, any
applicable rule, regulation or order of the Securities and Exchange
Commission thereunder and any applicable rule or regulation made or
adopted by any securities association registered under the Securities
Exchange Act of 1934.
(c) All shares now or hereafter authorized shall be subject and
redeemable at the option of the stockholder pursuant to the applicable
provisions of the Investment Company Act and laws of the State of
Maryland, including any applicable rules and regulations thereunder.
Each holder of a share of any class or series, upon request to the
Corporation (if such holder's shares are certificated, such request
being accompanied by surrender of the appropriate stock certificate or
certificates in proper form for transfer), shall be entitled to require
the Corporation to redeem all or any part of such shares standing in
the name of such holder on the books of the Corporation (or as
represented by share certificates surrendered to the Corporation by
such redeeming holder) at a redemption price per share determined in
accordance with subsection (a) of this Section 6.
(d) Notwithstanding subsection (c) of this Section 6, the Board of
Directors of the Corporation may suspend the right of the holders of
shares of any or all classes or series of capital stock to require the
Corporation to redeem such shares or may suspend any purchase of such
shares:
(i) for any period (A) during which the New York Stock
Exchange is closed, other than customary weekend and holiday
closing, or (B) during which trading on the New York Stock
Exchange is restricted;
(ii) for any period during which an emergency, as defined by
the rules of the Securities and Exchange Commission or any
successor thereto, exists as a result of which (A) disposal by the
Corporation of securities owned by it and belonging to the
affected series of capital stock (or the Corporation, if the
shares of capital stock of the Corporation have not been
classified or reclassified into series) is not reasonably
practicable, or (B) it is not reasonably practicable for the
Corporation fairly to determine the value of the net assets of the
affected series of capital stock; or
(iii) for such other periods as the Securities and Exchange
Commission or any successor thereto may by order permit for the
protection of the holders of shares of capital stock of the
Corporation.
(e) All share of the capital stock of the Corporation now
or hereafter authorized shall be subject to redemption and redeemable
at the option of the Corporation. The Board of Directors may by
resolution from time to time authorize the Corporation to require the
redemption of all or any part of the outstanding shares of any class
or series upon the sending of written notice thereof to each holder
whose shares are to be redeemed and upon such terms and conditions as
the Board of Directors, in its discretion, shall deem advisable out
of funds legally available therefor at the net asset value per share
of that class or series determined in accordance with subsections
(a) and (b) of this Section 6, and take all other steps deemed
necessary or advisable in connection therewith.
(f) The Board of Directors may by resolution from time to time
authorized the purchase by the Corporation, either directly or through
an agent, of shares of any class or series of the capital stock of the
Corporation upon such terms and conditions and for such consideration
as the Board of Directors, in its discretion, shall deem advisable out
of funds legally available therefor at prices per share not in excess
of the net asset value per share of that class or series determined in
accordance with subsections (a) and (b) of this Section 6 and to take
all other steps deemed necessary or advisable in connection therewith.
(g) Except as otherwise permitted by the Investment Company Act,
payment of the redemption price of shares of any class or series of the
capital stock of the Corporation surrendered to the Corporation for
redemption pursuant to the provisions of subsection (c) of this Section
6 or for purchase by the Corporation pursuant to the provisions of
subsection (e) or (f) of this Section 6 shall be made by the
Corporation within seven days after surrender of such shares to the
Corporation for such purpose. Any such payment may be made in whole or
in part in portfolio securities or in cash, as the Board of Directors,
in its discretion, shall deem advisable, and no stockholder shall have
the right, other than as determined by the Board of Directors, to have
his or her shares redeemed in portfolio securities.
(h) In the absence of any specification as to the purpose for
which shares are redeemed or repurchased by the Corporation, all shares
so redeemed or repurchased shall be deemed to be acquired for
retirement in the sense contemplated by the laws of the State of
Maryland. Shares of any class or series retire by repurchase or
redemption shall thereafter have the status of authorized but unissued
shares of such class or series.
Section 7. In the event the Board of Directors shall authorize the
classification or Reclassification of shares into classes or series, the Board
of Directors may (but shall not be obligated to) provide that each class or
series shall have the following powers, preferences and voting or other special
rights, and the qualifications, restrictions and limitations thereof shall be as
follows:
(a) All consideration received by the Corporation for the issue or
sale of shares of capital stock of each series, together with all
income, earnings, profits and proceeds received thereon, including any
proceeds derived from the sale, exchange or liquidation thereof, and
any funds or payments derived from any reinvestment of such proceeds in
whatever form the same may be, shall irrevocably belong to the series
with respect to which such assets, payments or funds were received by
the Corporation for all purposes, subject only to the rights of
creditors, and shall be so handled upon the books of account of the
Corporation. Such assets, payments and funds, including any proceeds
derived from the sale, exchange or liquidation thereof and any asset
derived from any reinvestment of such proceeds in whatever form the
same may be, are herein referred to as "assets belonging to" such
series.
(b) The Board of Directors may from time to time declare and pay
dividends or distributions, in additional shares of capital stock of
such series or in cash, on any or all series of capital stock, the
amount of such dividend and the means of payment being wholly in the
discretion of the Board of Directors.
(i) Dividends or distributions on shares of any series shall
be paid only out of earned surplus or other lawfully available
assets belonging to such series.
(ii)Inasmuch as one goal of the Corporation is to qualify as a
"regulated investment company" under the Internal Revenue Code of
1986, as amended, or any successor or comparable statute thereto,
and inasmuch as the computation of net income and gains for
federal income tax purposes may vary from the computation thereof
on the books of the Corporation, the Board of Directors shall have
the power, in its discretion, to distribute any fiscal year as
dividends, including dividends designated in whole or in part as
capital gains distributions, amounts sufficient, in the opinion of
the Board of Directors, to enable the Corporation to qualify as a
regulated investment company and avoid liability for the
Corporation for federal income tax in respect of that year. In
furtherance and not in limitation of the foregoing, in the event
that a series has a net capital loss for a fiscal year, and to the
extent that the net capital loss offsets net capital gains from
such series, the amount to be deemed available for distribution to
that series with the net capital gain may be reduced by the amount
offset.
(c) In the event of the liquidation or dissolution of the series
Corporation, holders of shares of capital stock of each shall be
entitled to receive, as a series, out of the assets of the Corporation
available for distribution to such holders, but other than general
assets not belonging to any particular series, the assets belonging to
such series; and the assets so distributable to the holders of shares
of capital stock of any series shall be distributed, subject to the
provisions of subsection (d) of this Section 7, among such stockholders
in proportion to the number of shares of such series held by them and
recorded on the books of the Corporation.In theevent that there are any
general assets not belonging to any particular series and available
for distribution, such distribution shall be made to the holders of all
series in proportion to the net asset value of the respective series
determined in accordance with the charter of the Corporation.
(d) The assets belonging to any series shall be charged with the
liabilities in respect to such series, and shall also be charged with
its share of the general liabilities of the Corporation, in proportion
to the asset value of the respective series determined in accordance
with the charter of the Corporation. The determination of the Board of
Directors shall be conclusive as to the amount of liabilities,
including accrued expenses and reserves, as to the allocation of the
same as to a given series, and as to whether the same or general assets
of the Corporation are allocable to one or more classes.
Section 8. Any fractional shares shall carry proportionately all the
rights of a whole share, excepting any right to receive a certificate evidencing
such fractional share, but including, without limitation, the right to vote and
right to receive dividends.
Section 9. No holder of shares of Common Stock of the Corporation
shall, as such holder, have any preemptive right to purchase or subscribe for
any shares of the Common Stock of the Corporation of any class or series which
it may issue or sell (whether out of the number of shares authorized by the
Articles of Incorporation or out of any shares of the Common Stock of the
Corporation acquired by it after the issue thereof, or otherwise).
Section 10. All persons who shall acquire any shares of capital stock
of the Corporation shall acquire the same subject to the provisions of the
charter and By-Laws of the Corporation.
Section 11. Notwithstanding any provisions of law requiring action to
be taken or authorized by the affirmative vote of the holders of a designated
proportion greater than a majority of the outstanding shares of all classes or
series or of the outstanding shares of a particular class or classes or series,
as the case may be, such action shall be valid and effective if taken or
authorized by the affirmative vote of the holders of a majority of the total
number of shares of all classes or of the total number of shares of such class
or classes or series, as the case may be, outstanding and entitled to vote
thereupon pursuant to the provisions of these Articles of Incorporation.
ARTICLE V.
Directors
---------
The initial number of directors of the Corporation shall be two, and
the names of those who shall act as such until the first meeting of stockholders
and until their successors are duly elected and qualify are as follows:
J. Bruce Jarvis
J. Anthony Whatley III
However, the By-Laws of the Corporation may fix the number of directors at no
less than two and may authorize the Board of Directors, by the vote of a
majority of the entire Board of Directors, to increase or decrease the number of
directors within a limit specified in the By-Laws (provided that, if there are
no Shares outstanding, the number of directors may be less than three but not
less than one), and to fill the vacancies created by any such increase in the
number of directors. Unless otherwise provided by the By-Laws of the
Corporation, the directors of the Corporation need not be stockholders.
The By-Laws of the Corporation may divide the directors of the
Corporation into classes and prescribe the tenure of office of the several
classes; but no class shall be elected for a period shorter than one year or for
a period longer than five years, and the term of office of at least one class
shall expire each year.
ARTICLE VI.
Indemnification of Directors and Officers
-----------------------------------------
The Corporation shall indemnify to the fullest extent permitted by law
(including the Investment Company Act), as currently in effect or as the same
may hereafter be amended, any person made or threatened to be made a party to
any action, suit or proceeding, whether criminal, civil, administrative or
investigative, by reason of the fact that such person or such person's testator
or intestate is or was a director or officer of the Corporation or serves at the
request of the Corporation any other enterprise as a director or officer. To the
fullest extent permitted by law (including the Investment Company Act), as
currently in effect or as the same may hereafter be amended, expenses incurred
by any such person in defending any such action, suit or proceeding shall be
paid or reimbursed by the Corporation promptly upon receipt by it of an
undertaking of such person to repay such expenses if it shall ultimately be
determined that such person is not entitled to be indemnified by the
Corporation. The rights provided to any person by this Article VI shall be
enforceable against the Corporation by such person who shall be presumed to have
relied upon it in serving or continuing to serve as a director or officer as
provided above. No amendment of this Article VI shall impair the rights of any
person arising at any time with respect to events occurring prior to such
amendment. For purposes of this Article VI, the term "Corporation" shall include
any predecessor of the Corporation and any constituent corporation (including
any constituent of a constituent) absorbed by the Corporation in a consolidation
or merger; the term "other enterprises" shall include any corporation,
partnership, joint venture, trust or employee benefit plan; service "at the
request of the Corporation" shall include service as a director or officer of
the Corporation which imposes duties on, or involves services by, such director
or officer with respect to an employee benefit plan, its participants or
beneficiaries; any excise taxes assessed on a person with respect to an employee
benefit plan shall be deemed to be indemnifiable expenses; and action by a
person with respect to any employee benefit plan which such person reasonably
believes to be in the interest of the participants and beneficiaries of such
plan shall be deemed to be action not opposed to the best interests of the
Corporation.
ARTICLE VII.
Miscellaneous
-------------
The following provisions are inserted for the management of the
business and for the conduct of the affairs of the Corporation, and for
creating, defining, limiting and regulating the powers of the Corporation, the
directors and the stockholders.
Section 1. The Board of Directors shall have the management and control
of the property, business and affairs of the Corporation and is hereby vested
with all the powers possessed by the Corporation itself so far as is not
inconsistent with law or these Articles of Incorporation. In furtherance and
without limitation of the foregoing provisions, it is expressly declared that,
subject to these Articles of Incorporation, the Board of Directors shall have
power:
(a) To make, alter, amend or repeal from time to time the By-Laws
of the Corporation except as such power may otherwise be limited in the
By-Laws.
(b) To issue shares of any class or series of the capital stock
of the Corporation.
(c) To authorize the purchase of shares of any class or series in
the open market or otherwise, at prices not in excess of their net
asset value for shares of that class, series or class within such
series determined in accordance with subsections (a) and (b) of Section
6 of Article IV hereof, provided that the Corporation has assets
legally available for such purposes, and to pay for such shares in
cash, securities or other assets then held or owned by the Corporation.
(d) To declare and pay dividends and distributions from funds
legally available therefor on shares of such class or series, in
such amounts, if any, and in such manner (including declaration
by means of a formula or other similar method of determination whether
or not the amount of the dividend or distribution so declared can
be calculated at the time of such declaration) and to the holders
of record as of such date, as the Board of Directors may determine.
(e) To take any and all action necessary or appropriate to
maintain a constant net asset value per share for shares of any class,
series or class within such series.
Section 2. Any determination made in good faith and, so far as
accounting matters are involved, in accordance with generally accepted
accounting principles by or pursuant to the direction of the Board of Directors
or as otherwise required or permitted by the Securities and Exchange Commission,
shall be final and conclusive, and shall be binding upon the Corporation and
all holders of shares, past, present and future, of each class or series, and
shares are issued and sold on the condition and undertaking, evidenced by
acceptance of certificates for such shares by, or confirmation of such shares
being held for the account of, any stockholder, that any and all such
determinations shall be binding as aforesaid.
Subject to Article VI, nothing in this Section 2 shall be construed to
protect any director or officer of the Corporation against any liability to the
Corporation or its stockholders to which such director or officer would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of duties involved in the conduct of his or her
office.
Section 3. The directors of the Corporation may receive compensation
for their services, subject, however, to such limitations with respect thereto
as may be determined from time to time by the holders of shares of capital stock
of the Corporation.
Section 4. Except as required by law, holders of shares of capital
stock of the Corporation shall have only such right to inspect the records,
documents, accounts and books of the Corporation as may be granted by the Board
of Directors of the Corporation.
Section 5. Any vote of the holders of shares of capital stock of the
Corporation authorizing liquidation of the Corporation or proceedings for its
dissolution may authorize the Board of Directors to determine, as provided
herein, or if provision is not made herein, in accordance with generally
accepted accounting principles, which assets are the assets belonging to the
Corporation or any series thereof available for distribution to the holders of
shares of capital stock of the Corporation or any series thereof (pursuant to
the provisions of Section 7 of Article IV hereof) and may divide, or authorize
the Board of Directors to divide, such assets among the holders of the shares of
capital stock of the Corporation or any series thereof in such manner as to
ensure that each such holder receives an amount from the proceeds of such
liquidation or dissolution that such holder is entitled to, as determined
pursuant to the provisions of Section 3 and 7 of Article IV hereof.
ARTICLE VIII.
Amendments
----------
The Corporation reserves the right from time to time to amend, alter or
repeal any of the provisions of these Articles of Incorporation (including any
amendment that changes the terms of any of the outstanding shares by
classification, reclassification or otherwise), and to add or insert any other
provisions that may, under the statutes of the State of Maryland at the time in
force, be lawfully contained in articles of incorporation, and all rights at any
time conferred upon the stockholders of the Corporation by these Articles of
Incorporation are subject to the provisions of this Articles VIII.
I acknowledge this document to be my act, and state under the penalties
of perjury that with respect to all matters and facts herein, to the best of my
knowledge, information and belief such matters and facts are true in all
material respects and that this statement is made under the penalties of
perjury.
/s/Karin Jagel Flynn
June 7, 1991 Karin Jagel Flynn
<PAGE>
Exhibit (a)(2)
ARTICLES OF
AMENDMENT OF ARTICLES OF INCORPORATION
OF
WORLD INVESTMENT NETWORK FUND, INC.
I, J. ANTHONY WHATLEY, III, the President of WORLD INVESTMENT NETWORK
FUND, INC., a Maryland corporation having its pricipal office in Seattle,
Washington (the "Corporation"), hereby certify to the State Department of
Assessments and Taxation of Maryland that:
FIRST: As of the date of these Articles of Amendment, the Corporation
has no stock outstanding or subscribed for entitled to be voted on a charter
amendment.
SECOND: The Corporation's board of directors approved by unanimous
written consent on August 19, 1991 to amend Article I of the Articles of
Incorporation, changing the name of the Corporation to:
Accessor Funds, Inc.
THIRD: The Corporation's board of directors approved by unanimous
written consent on August 19, 1991 to amend Section 1 of Article IV of the
Articles of Incorporation to read as follows:
The total number of shares of capital stock which the Corporation has
authority to issue is 10,000,000,000 shares of the par value of $.001 per share,
having an aggregate par value of $10,000,000. The capital stock is initially
classified into thirteen series, which are designated as follows:
Number of
Series Authorized Shares
Market Series Common Stock 1,000,000,000
Growth Series Common Stock 1,000,000,000
Value and Income Series Common Stock 1,000,000,000
Small Cap Series Common Stock 500,000,000
European Series Common Stock 1,000,000,000
Pacific Series Common Stock 1,000,000,000
Intermendiate Fixed-Income Series Common Stock 500,000,000
Short-Intermendiate Fixed-Income Series Common Stock 500,000,000
Mortgage Securities Series Common Stock 500,000,000
U.S. Government Money Series Common Stock 1,000,000,000
Prudent Management Series Common Stock 1,000,000,000
Short-Term Tax-Exempt Series Common Stock 500,000,000
Connecticut Tax-Free Series Common Stock 500,000,000
I acknowledge this document to be my act, and state under the penalties
of perjury that with respect to all matters and facts herein, to the best of my
knowledge, information and belief such matters and facts are true in all
material respects and that this statement is made under the penalties of
perjury.
August 20, 1991
/s/J. Anthony Whatley, III
J. Anthony Whatley, III
President
Attest:
/s/Linda V. Whatley
Linda V. Whatley
Secretary
<PAGE>
Exhibit (a)(3)
Articles of
Amendment of Articles of Incorporation
Of
Accessor Funds, Inc.
I, J. Anthony Whatley, III, the President of ACCESSOR FUNDS, INC., a
Maryland corporation having its principal office in Seattle, Washington (the
"Corporation"), Hereby certify to State Department of Assessments and Taxation
of Maryland that:
FIRST: As of the date of these Articles of Amendment, the Corporation
has no stock outstanding or subscribed for entitled to be voted on a charter
amendment.
SECOND: The Corporation's board of directors approved by unanimous
written consent on October 14, 1991 to amend Section 1 of Article IV of the
Articles of Incorporation to read as follows:
The total number of shares of capital stock which the Corporation has
authority to issue is 10,000,000,000 shares of the par value of $10,000,000. The
capital stock is initially classified into twelve series, which are designated
as follows:
Number of
Series Authorized Shares
- ------ -----------------
Equity Market Series Common Stock 1,000,000,000
Growth Series Common Stock 1,000,000,000
Value and Income Series Common Stock 1,000,000,000
Small Cap Series Common Stock 500,000,000
International Series Common Stock 2,000,000,000
Intermediate Fixed-Income Series Common Stock 500,000,000
Short-Intermediate Fixed-Income Series Common Stock 500,000,000
Mortgage Securities Series Common Stock 500,000,000
U.S. Government Money Series Common Stock 1,000,000,000
Prudent Management Series Common Stock 1,000,000,000
Short-Term Tax-Exempt Series Common Stock 500,000,000
Connecticut Tax-Free Series Common Stock 500,000,000
I acknowledge this document to be my act, and state under the penalties
of perjury that with respect to all matters and facts herein, to the best of my
knowledge, information and belief such matters and facts are true in all
material repescts and that this statement is made under the penalties of
perjury.
October 15, 1991
/s/ J. ANTHONY WHATLEY, III
J. Anthony Whatley, III
President
Attest:
/s/ LINDA V WHATLEY
Linda V Whatley
Secretary
THE UNDERSIGNED, President of ACCESSOR FUNDS, INC., who executed on
behalf of said corporation the foregoing Articles of Amendment, of which this
certificate is made a part, hereby acknowledges, in the name and on behalf of
said corporation, the foregoing Articles of Amendment to be the corporate act of
knowledge, information and belief, the matters and facts set forth therein with
respect to the approval thereof are true in all material respects, under the
penalties of perjury.
/s/ J. ANTHONY WHATLEY, III
J. Anthony Whatley, III
President
<PAGE>
Exhibit (a)(4)
ARTICLES OF
AMENDMENT OF ARTICLES OF INCORPORATION
OF
ACCESSOR FUNDS, INC.
I, J. ANTHONY WHATLEY, III, the President of Accessor Funds, Inc., a
Maryland corporation having its principal office in Seattle, Washington (the
"Corporation"), hereby certify to the State Department of Assessments and
Taxation of Maryland that;
FIRST: As of the date of these Articles of Amendment, the Corporation
has no stock outstanding or subscribed for entitled to be voted on a charter
amendment.
SECOND: The Corporation's board of directors unanimously agreed by
resolution adopted on May 17, 1993, to amend Section 1 of Article IV of the
Articles of Incorporation to read as follows:
The total number of shares of capital stock which the
Corporation has authority to issue is 15,000,000,000 shares of the par
value of $.001 per share, having an aggregate par value of $15,000,000.
The capital stock is initially classified into eleven series, which are
designated as follows:
Number of Authorized
Series Shares
Equity Market Portfolio 1,000,000,000
Growth Portfolio 1,000,000,000
Value and Income Portfolio 1,000,000,000
Small Cap Portfolio 1,000,000,000
International Equity Portfolio 1,000,000,000
Intermediate Fixed-Income Portfolio 1,000,000,000
Short-Intermediate Fixed-Income Portfolio 1,000,000,000
Mortgage Securities Portfolio 1,000,000,000
U. S. Government Money Portfolio 1,000,000,000
Municipal Intermediate Fixed-Income Portfolio 1,000,000,000
International Fixed-Income Portfolio 1,000,000,000
I acknowledge this document to be my act, and state under the penalties
of perjury that with respect to all matters and facts herein, to the best of my
knowledge, information and belief such matters and facts are true in all
material respects and that this statement is made under the penalties of
perjury.
10/18/93
/s/J. Anthony Whatley, III
J. Anthony Whatley, III
President
ATTEST:
/s/Jacinta E. Titialii
Jacinta E. Titialii
Secretary
<PAGE>
Exhibit (b)
ACCESSOR FUNDS, INC.
By-Laws
ARTICLE I.
Stockholders
------------
Section 1. Place of Meeting. All meetings of the stockholders shall be
held at the principal office of the Corporation in the State of Maryland or at
such other place within the United States as may from time to time be designated
by the Board of Directors and stated in the notice of such meeting.
Section 2. Annual Meetings. The annual meeting of the stockholders of
the Corporation shall be held on a date and at such hour as may from time to
time be designated by the Board of Directors and stated in the notice of such
meeting, within the month ending four months after the end of the Corporation's
fiscal year, for the transaction of such business as may properly be bought
before the meeting; provided, however, that an annual meeting shall not be
required to be held in any year in which the election of directors is not
required to be acted on by stockholders under the Investment Company Act of
1940.
Section 3. Meetings. Meetings of the stockholders for any purpose or
purposes may be called by the Chairman of the Board, the President or a majority
of the Board of Directors, and shall be called by the Secretary upon receipt of
the request in writing signed by the stockholders holding not less than 10% of
the common stock issued and outstanding and entitled to vote thereat. Such
request shall state the purpose or purposes of the proposed meeting. The
Secretary shall inform such stockholders of the reasonably estimated costs of
preparing and mailing such notice of meeting and upon payment to the Corporation
of such costs, the Secretary shall give notice stating the purpose or purposes
of the meeting as required in this Article and by-law to all stockholders
entitled to notice of such meeting. No meeting need be called upon the request
of the holders of shares entitled to cast less than a majority of all votes
entitled to be cast at such meeting to consider any matter which is
substantially the same as a matter voted upon at any meeting of stockholders
held during the preceding twelve months.
Section 4. Notice of Meetings of Stockholders. Not less than ten days'
and not more than ninety days' written or printed notice of every meeting of
stockholders, stating the time and place thereof and the general nature of the
business proposed to be transacted thereat, shall be given to each stockholder
entitled to vote thereat by leaving the same with such stockholder or at such
stockholder's residence or usual place of business or by mailing it, postage
prepaid, and addressed to such stockholder at such stockholder's address as it
appears upon the books of the Corporation. If mailed, notice shall be deemed to
be given when deposited in the United States mail addressed to the stockholder
as aforesaid.
No notice of the time, place or purpose of any meeting of stockholders
need be given to any stockholder who attends in person or by proxy or to any
stockholder who, in writing executed and filed with the records of the meeting,
either before or after the holding thereof, waives such notice.
Section 5. Record Dates. The Board of Directors may fix, in advance, a
date not exceeding ninety days preceding the date of any meeting of
stockholders, any dividend payment date or any date for the allotment of rights,
as a record date for the determination of the stockholders entitled to notice of
and to vote at such meeting or entitled to receive such dividends or rights, as
the case may be; and only stockholders of record on such date shall be entitled
to notice of and to vote at such meeting or to receive such dividends or rights,
as the case may be. In case of a meeting of stockholders, such date shall not be
less than ten days prior to the date fixed for such meeting.
Section 6. Quorum, Adjournment of Meetings. The presence in person or
by proxy of the holders of record of one-third of the shares of the common stock
of the Corporation issued and outstanding and entitled to vote thereat shall
constitute a quorum at all meetings of the stockholders except as otherwise
provided in the Articles of Incorporation. If, however, such quorum shall not be
present or represented at any meeting of the stockholders, the holders of a
majority of the stock present in person or by proxy shall have power to adjourn
the meeting from time to time, without notice other than announcement at the
meeting, until stockholders owning the requisite amount of stock entitled to
vote at such meeting shall be present. At such adjourned meeting at which
stockholders owning the requisite amount of stock entitled to vote thereat shall
be represented, any business may be transacted which might have been transacted
at the meeting as originally notified.
Section 7. Voting and Inspectors. At all meetings, stockholders of
record entitled to vote thereat shall have one vote for each share of common
stock standing in his name on the books of the Corporation (and such
stockholders of record holding fractional shares, if any, shall have
proportionate voting rights) on the date for the determination of stockholders
entitled to vote at such meeting, either in person or by proxy appointed by
instrument in writing subscribed by such stockholder or his duly authorized
attorney.
All elections shall be had and all questions decided by a majority of
the votes cast at a duly constituted meeting, except as otherwise provided by
statute or by the Articles of Incorporation or by these By-Laws.
At any election of directors, the Chairman of the meeting may, and upon
the request of the holders of ten percent (10%) of the stock entitled to vote at
such election shall, appoint two inspectors of election who shall first
subscribe an oath or affirmation to execute faithfully the duties of inspectors
at such election with strict impartiality and according to the best of their
ability, and shall after the election make a certificate of the result of the
vote taken. No candidate for the office of director shall be appointed such
inspector.
Section 8. Conduct of Stockholders' Meetings. The meetings of the
stockholders shall be presided over by the Chairman of the Board, or if he or
she is not present, by the President, or if he or she is not present, by a
Vice-President, or if none of them is present, by a Chairman to be elected at
the meeting. The Secretary of the Corporation, if present, shall act as a
Secretary of such meetings, or if he or she is not present, an Assistant
Secretary shall so act; if neither the Secretary nor the Assistant Secretary is
present, then the meeting shall elect its Secretary.
Section 9. Concerning Validity of Proxies, Ballots, etc. At every
meeting of the stockholders, all proxies shall be received and taken in charge
of an all ballots shall be received and canvassed by the Secretary of the
meeting, who shall decide all questions concerning the qualification of voters,
the validity of the proxies and the acceptance or rejection of votes, unless
inspectors of election shall have been appointed by the Chairman of the meeting,
in which event such inspectors of election shall decide all such questions.
ARTICLE II.
Board of Directors
------------------
Section 1. Number and Tenure of Office. The business and affairs of the
Corporation shall be conducted and managed by a Board of not less than three nor
more than twelve directors, as may be determined from time to time by vote of a
majority of the directors then in office, provided that if there is no stock
outstanding the number of directors may be less than three but not less than
one. Directors need not be stockholders.
Section 2. Vacancies. In case of any vacancy in the Board of Directors
through death, resignation or other cause, other than an increase in the number
of directors, a majority of the remaining directors, although a majority is less
than a quorum, by an affirmative vote, may elect a successor to hold office
until the next meeting of stockholders or until his successor is chosen and
qualifies.
Section 3. Increase or Decrease in Number of Directors. The Board of
Directors, by the vote of a majority of the entire Board, may increase the
number of directors and may elect directors to fill the vacancies created by any
such increase in the number of directors until the next meeting of stockholders
or until their successors are duly chosen and qualified. The Board of Directors,
by the vote of a majority of the entire Board, may likewise decrease the number
of directors to a number not less than three.
Section 4. Place of Meeting. The directors may hold their meeting, have
one or more offices, and keep the books of the Corporation, outside the State of
Maryland, at any office or offices of the Corporation or at any other place as
they may from time to time by resolution determine, or in the case of meetings,
as the may from time to time be resolution determine or as shall be specified or
fixed in the respective notices or waivers of notice thereof.
Section 5. Regular Meetings. Regular meetings of the Board of Directors
shall be held at such time and on such notice as the directors may from time to
time determine.
Section 6. Special Meetings. Special meetings of the Board of Directors
may be held from time to time upon call of the Chairman of the Board, the
President, the Secretary or two or more of the directors, by oral, telegraphic,
facsimile or written notice duly served on or sent or mailed to each director
not less than one day before such meeting. No notice need be given to any
director who attends in person or to any director who, in writing executed and
filed with the records of the meeting either before or after the holding
thereof, waives such notice. Such notice or waiver of notice need not state the
purpose or purposes of such meeting.
Section 7. Quorum. One-third of the directors then in office shall
constitute a quorum for the transaction of business, provided that a quorum
shall in no case be less then two directors. If at any meeting of the Board
there shall be less than a quorum present, a majority of those present may
adjourn the meeting from time to time until a quorum shall have been obtained.
The act of the majority of the directors at any meeting at which there is a
quorum shall be the act of the directors, except as may be otherwise
specifically provided by statute or by the Articles of Incorporation or by these
By-Laws.
Section 8. Executive Committee. The Board of Directors may appoint from
the directors an Executive Committee to consist of such a number of directors
(not less than two) as the Board may from time to time determine. The Chairman
of the Committee shall be elected by the Board of Directors. The Board of
Directors by such affirmative vote shall have power at any time to change the
members of such Committee and may fill vacancies in the Committee by election
from the directors. When the Board o Directors is not in session, to the extent
permitted by law, the Executive Committee shall have and may exercise any or all
of the powers of the Board of Directors in the management of the business and
affairs of the Corporation. The Executive Committee may fix its own rule of
procedure, and may meet when and as provided by such rules or by resolution of
the Board of Directors, but in every case the presence of a majority shall be
necessary to constitute a quorum. During the absence of a member of the
Executive Committee, the remaining members may appoint a member of the Board of
Directors to act in his place.
Section 9. Audit Committee. The Board of Directors may appoint from the
directors who are not "interested persons" of the Corporation, as defined in the
Investment Company Act of 1940, an Audit Committee to consist of such number of
directors (not less than two) as the Board may from time to time determine. The
Board of Directors by such affirmative vote shall have power at any time to
change the members of such Committee and may fill vacancies in the Committee by
election from the directors, provided that at all times the members of the Audit
Committee shall not be "interested persons" of the Corporation. The Audit
Committee shall have the power to recommend the appointment of auditors, meet
with the auditors from time to time as necessary, receive the report of
auditors, report to the Board of Directors and make recommendations to the Board
of Directors for improved internal auditing procedures. The Audit Committee may
fix its own rules of procedure, and may meet when and as provided by such rules
or by resolution of the Board of Directors, but in every case the presence of a
majority shall be necessary to constitute a quorum. The chief financial officer
of the Corporation shall be an ex officio member of the Audit Committee.
Section 10. Other Committees. The Board of Directors may appoint from
the directors other committees which shall in each case consist of such number
of directors (not less than two) and shall have and may exercise such powers as
the Board may determine in the resolution appointing them. A majority of all
members of any such committee may determine its action and fix the time and
place of its meetings, unless the Board of Directors shall otherwise provide.
The Board of Directors shall have power at any time to change the members and
powers of any such committee, to fill vacancies and to discharge any such
committee.
Section 11. Telephone Meetings. Members of the Board of Directors or a
committee of the Board of Directors may participate in a meeting by means of a
conference telephone or similar communications equipment if all persons
participating in the meeting can hear each other at the same time. Participation
in a meeting by these means constitutes presence in person at the meeting unless
otherwise provided by the Investment Company Act of 1940.
Section 12. Action Without a Meeting. Any action required or permitted
to be taken at any meeting of the Board of Directors or any committee thereof
may be taken without a meeting, if a written consent to such action is signed by
all members of the Board or of such committee, as the case may be, and such
written consent is filed with the minutes of the proceedings of the Board or
such committee, unless otherwise provided by the Investment Company Act of 1940.
Section 13. Compensation of Directors. No director shall receive any
stated salary or fees from the Corporation for his services as such if such
director is, other than by reason of being such director, an interested person
(as such term is defined by the Investment Company Act of 1940) of the
Corporation or of its investment adviser, any subadviser or its principle
underwriter. Except as provided in the preceding sentence, directors shall be
entitled to receive such compensation from the Corporation for their services as
may from time to time be voted by the Board of Directors.
Section 14. Removal of Directors. No director shall continue to hold
office after the holders of record of not less than two-thirds of the
Corporation's outstanding common stock of all series have declared that that
director be removed from office either by declaration in writing filed with the
Corporation's secretary or by votes cast in person or by proxy at a meeting
called for the purpose. The directors shall promptly call a meeting of
stockholders for the purpose of voting upon the question of removal of any
director or directors when requested in writing to do so by the record holders
of not less than 10 percent of the Corporation's outstanding common stock of all
series.
ARTICLE III.
Officers
--------
Section 1. Executive Officers. The executive officers of the
Corporation shall be chosen by the Board of Directors. These may include a
Chairman of the Board of Directors (who shall be a director) and shall include a
President (who shall be a director), one or more Vice-Presidents (the number
thereof to be determined by the Board of Directors), a Secretary and a
Treasurer. The Board of Directors or the Executive Committee may also in its
discretion appoint Assistant Secretaries, Assistant Treasurers and other
officers, agents and employees, who shall have such authority and perform such
duties as the Board or the Executive Committee may determine. The Board of
Directors may fill any vacancy which may occur in any office. Any two offices,
except those of President and Vice-President, may be held by the same person,
but no officer shall execute, acknowledge or verify any instrument in more than
one capacity, if such instrument is required by law to be executed, acknowledge
or verified by two or more officers.
Section 2. Term of Office. The term of office of all officers shall be
one year and until their respective successors are chosen and qualified. Any
officer may be removed from office at any time with or without cause by the vote
of a majority of the whole Board of Directors.
Section 3. Powers and Duties. The officers of the Corporation shall
have such powers and duties as generally pertain to their respective offices, as
well as such powers and duties as may from time to time be conferred by the
Board of Directors or the Executive Committee.
ARTICLE IV.
Capital Stock
-------------
Section 1. Certificates for Shares. Each stockholder of the Corporation
shall be entitled to a certificate or certificates for the full shares of stock
of the Corporation owned by him in such form as the Board from time to time
prescribe.
Section 2. Transfer of Shares. Shares of the Corporation shall be
transferable on the books of the Corporation by the holder thereof in person or
by his duly authorized attorney or legal representative, upon surrender and
cancellation of certificates, if any, for the same number of shares, duly
endorsed or accompanied by proper instruments of assignment and transfer, with
such proof of the authenticity of the signature as the Corporation or its agents
may reasonably require; in the case of shares not represented by certificates,
the same or similar requirements may be imposed by the Board of Directors.
Section 3. Stock Ledgers. The stock ledgers of the Corporation,
containing the names and addresses of the stockholders and the number of shares
held by them respectively, shall be kept at the principal office of the
Corporation or, if the Corporation employs a Transfer Agent, at the office of
the Transfer Agent of the Corporation.
Section 4. Lost, Stolen or Destroyed Certificates. The Board of
Directors or the Executive Committee may determine the conditions upon which a
new certificate of stock of the Corporation of any class may be issued in place
of a certificate which is alleged to have been lost, stolen or destroyed; and
may, in its discretion, require the owner of such certificate or such owner's
legal representative to give bond, with sufficient surety, to the Corporation
and each Transfer Agent, if any, to indemnify it and each such Transfer Agent
against any and all loss or claims which may arise by reason of the issue of a
new certificate in the place of the one so lost, stolen or destroyed.
ARTICLE V.
Corporate Seal
--------------
The Board of Directors may provide for a suitable corporate seal, in
such form and bearing such inscriptions as it may determine.
ARTICLE VI.
Fiscal Year
-----------
The fiscal year of the Corporation shall be fixed by the Board of
Directors.
ARTICLE VII.
Indemnification
---------------
Directors, officers, employees and agents of the Corporation shall not
be liable to the Corporation, any stockholder, officer, director, employee or
other person for any action or failure to act except for willful misfeasance,
bad faith, gross negligence or reckless disregard of the duites involved in the
conduct of their office. The Corporation shall indemnify directors, officers,
employees and agents of the Corporation against judgements, fines, settlements
and expenses to the fullest extent authorized and in the manner permitted by
applicable federal and state law. The Corporation may purchase insurance to
protect itself and its directors, officers, employees and agents against
judgements, fines, settlements and expenses to the fullest extent authorized and
in the manner permitted by applicable federal and state law. Nothing contained
in the Article VII shall be construed to indemnify directors, officers,
employees and agents of the Corporation against, not to permit the Corporation
to purchase insurance that purports to protect against, any liability to the
Corporation or any stockholder, officer, director, employee, agent or other
person to whom he or she would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office.
ARTICLE VIII.
Custodian
---------
Section 1. The Corporation shall have as custodian or custodians one or
more trust companies or banks of good standing, each having a capital, surplus
and undivided profits aggregating not less than fifty million dollars
($50,000,000), and , to the extent required by the Investment Company Act of
1940, the funds and securities held by the Corporation shall be kept in the
custody of one or more such custodians, provided such custodian or custodians
can be found ready and willing to act, and further provided that the Corporation
may use as subcustodians, for the purpose of the Corporation, such foreign banks
as the Board of Directors may approve and as shall be permitted by law.
Section 2. The Corporation shall upon the resignation or inability to
serve of its custodian or upon change of the custodian:
(a) in case of such resignation or inability to serve, use its
best efforts to obtain a successor custodian;
(b) require that the cash and securities owned by the Corporation
be delivered directly to the successor custodian; and
(c) in the event that no successor custodian can be found, submit
to the stockholders before permitting delivery of the cash and
securities owned by the Corporation otherwise than to a
successor custodian, the question whether or not this Corporation
shall be liquidation or shall function without a custodian.
ARTICLE IX.
Amendment of By-Laws
--------------------
The By-Laws of the Corporation may be altered, amended, added to or
repeal by the stockholders or vote of the Board of Directors; but any such
alteration, amendment, addition or repeal of the By-Laws by action of the Board
of Directors may be altered or repealed by stockholders.
Adopted: June 17, 1991
Revised: August 12, 1991
Revised: February 27, 1992
<PAGE>
Exhibit (d)(2)
FIRST AMENDMENT TO THE
MANAGEMENT AGREEMENT
BETWEEN
ACCESSOR FUNDS, INC.
AND
BENNINGTON CAPITAL MANAGEMENT L.P.
(formerly Bennington Capital Management)
This FIRST AMENDMENT TO THE MANAGEMENT AGREEMENT (the "Agreement"), is
entered into this 25th day of May, 1994, by and between ACCESSOR FUNDS, INC., a
Maryland corporation (the "Fund") and BENNINGTON CAPITAL MANAGEMENT L. P., a
Washington limited partnership, formerly Bennington Capital Management, a
Washington general partnership ("Bennington").
BACKGROUND
A. The Fund and Bennington entered into a Management Agreement on June
17, 1992 wherein the Fund employed Bennington to manage the investment and
reinvestment of the Fund's assets, to act as a discretionary money manager to
certain of the portfolios and to administer the Fund's business and
administrative operations. Pursuant to Section 6 of the Agreement, Bennington is
compensated for its services on a percentage of the average daily net assets of
the portfolios of the Fund.
B. The Board of Directors of the Fund approved the creation of three
new portfolios which became effective on November 15, 1993 by Post-Effective
Amendment No. 4 to the Fund's Registration Statement on Form N-1A filed with the
Securities and Exchange Commission on September 15, 1993. The three portfolios
are the Institutional Investor Fixed-Income Portfolio, the International
Fixed-Income Portfolio and the Municipal Intermediate Fixed-Income Portfolio.
C. The Board of Directors of the Fund approved the cessation of
operations and liquidation of the Equity Market Portfolio effective April 15,
1994.
D. The Fund and Bennington each wish to amend the Agreement to include
compensation of Bennington by the Fund for the three new portfolios and to
remove the Equity Market Portfolio.
AGREEMENT
Therefore, in consideration of the mutual covenants contained herein
and other valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. The first paragraph of Section 6 of the Agreement is hereby amended
and shall now read as follows:
The Manager shall receive annual fees from each Portfolio for providing
the services and furnishing the facilities pursuant to this Agreement
in the following amounts:
Management Fee (as a
percentage of average
Portfolio daily net assets)
Growth 0.45%
Value and Income 0.45%
Small Cap 0.60%
International Equity 0.55%
Intermediate Fixed-Income 0.36%
Short-Intermediate Fixed-Income 0.36%
Mortgage Securities 0.36%
U.S. Government Money 0.25%
International Fixed-Income 0.55%
Municipal Intermediate Fixed-Income 0.36%
Institutional Investor Fixed-Income 0.36%
IN WITNESS WHEREOF, the parties have entered into this First Amendment
to the Agreement as of the day and year first above set forth.
ACCESSOR FUNDS, INC.
By: /s/Ravindra A. Deo
Ravindra A. Deo
Vice President and Principal Financial and
Accounting Officer
BENNINGTON CAPITAL MANAGEMENT L.P.
By: Bennington Management Associates, Inc.
Its Managing General Partner
By: /s/J. Anthony Whatley III
J. Anthony Whatley III, President
Exhibit (d)(3)
SECOND AMENDMENT TO THE
MANAGEMENT AGREEMENT
BETWEEN
ACCESSOR FUNDS, INC.
AND
BENNINGTON CAPITAL MANAGEMENT L.P.
(formerly Bennington Capital Management)
This SECOND AMENDMENT TO THE MANAGEMENT AGREEMENT (the "Agreement"), is
entered into this 29th day of May, 1996, by and between ACCESSOR FUNDS, INC., a
Maryland corporation (the "Fund") and BENNINGTON CAPITAL MANAGEMENT L. P., a
Washington limited partnership, formerly Bennington Capital Management, a
Washington general partnership ("Bennington").
BACKGROUND
A. The Fund and Bennington entered into a Management Agreement on June
17, 1992 wherein the Fund employed Bennington to manage the investment and
reinvestment of the Fund's assets, to act as a discretionary money manager to
certain of the portfolios and to administer the Fund's business and
administrative operations. Pursuant to Section 6 of the Agreement, Bennington is
compensated for its services on a percentage of the average daily net assets of
the portfolios of the Fund.
B. On May 24, 1994, the Fund and Bennington entered into the First Amendment to
the Management Agreement, which amended the Management Agreement to include the
Institutional Investor Fixed-Income Portfolio, the International Fixed-Income
Portfolio and the Municipal Intermediate Fixed-Income Portfolio and to remove
the Equity Market Portfolio. C. The Board of Directors approved the cessation of
operations and liquidation of the Institutional Investor Fixed-Income Portfolio
effective August 28, 1995, the change of name of the Small Cap Portfolio to the
Small to Mid Cap Portfolio effective September 15, 1995, the cessation of
operations and liquidation of the Municipal Intermediate Fixed-Income Portfolio
effective December 4, 1995, and the termination of registration of the
International Fixed-Income Portfolio effective April 29, 1996. D. The Fund and
Bennington each wish to amend the Agreement to remove the Institutional Investor
Fixed-Income Portfolio, the Municipal Intermediate Fixed-Income Portfolio and
the International Fixed-Income Portfolio.
AGREEMENT
Therefore, in consideration of the mutual covenants contained herein
and other valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. The first paragraph of Section 6 of the Agreement is hereby amended
and shall now read as follows:
The Manager shall receive annual fees from each Portfolio for providing
the services and furnishing the facilities pursuant to this Agreement
in the following amounts:
Management Fee (as a
percentage of average
Portfolio daily net assets)
Growth 0.45%
Value and Income 0.45%
Small to Mid Cap 0.60%
International Equity 0.55%
Intermediate Fixed-Income 0.36%
Short-Intermediate Fixed-Income 0.36%
Mortgage Securities 0.36%
U.S. Government Money 0.25%
IN WITNESS WHEREOF, the parties have entered into this Second Amendment
to the Agreement as of the day and year first above set forth.
ACCESSOR FUNDS, INC.
By:/s/Ravindra A. Deo
Ravindra A. Deo
Vice President and
Principal Financial and
Accounting Officer
BENNINGTON CAPITAL MANAGEMENT L.P.
By: Bennington Management Associates, Inc.
Its Managing General Partner
By:/s/J. Anthony Whatley III
J. Anthony Whatley III, President
MONEY MANAGER AGREEMENT
Effective Date: July 21, 1997
Termination Date: Two years
after Effective Date
Portfolio and Account:
Approximately 90% of the
Growth Portfolio
Geewax, Terker & Company
99 Starr Street
Phoenixville, PA 19460
Re: Accessor Funds, Inc. Money Manager Agreement
Gentlemen:
Accessor Funds, Inc., a Maryland corporation (the " Fund"), is an
open-end management investment company of the series type registered as an
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"), and subject to the rules and regulations promulgated thereunder.
The Fund issues shares in separate diversified portfolios, each with a different
investment objective and policies.
Bennington Capital Management L. P., a Washington limited partnership
(the "Manager") acts as the manager and administrator of the Fund pursuant to
the terms of a Management Agreement, and is an "investment adviser," as that
term is defined in Section 2(a)(20) of the 1940 Act, to the Fund. The Manager is
responsible for the day-to-day management and administration of the Fund and for
the coordination of investments of each portfolio's assets; however, specific
portfolio purchases and sales for each portfolio's investment portfolio, or a
portion thereof, are to be made by the portfolio management organizations
recommended and selected by the Manager, subject to the approval of the Board of
Directors of the Fund (the "Board").
1. Appointment as a Money Manager. The Manager and the Fund hereby
appoint and employ Geewax, Terker & Company, a Pennsylvania general partnership
(the "Money Manager"), as a discretionary money manager to the Fund's Growth
Portfolio (all of the assets of the Growth Portfolio, including those assets not
managed by the Money Manager, hereinafter referred to as the "Portfolio"), on
the terms and conditions set forth herein, for that portion of the assets of the
Portfolio which the Manager determines from time to time to assign to the Money
Manager (those assets being referred to as the "Account").
2. Acceptance of Appointment; Standard of Performance. The Money Manager
accepts the appointment as a discretionary money manager and agrees to use its
best professional judgment to make and implement investment decisions for the
Fund with respect to the investments of the Account in accordance with the
provisions of this Agreement.
3. Portfolio Management Services of the Money Manager. The Money Manager
is hereby employed and authorized to select portfolio securities for investment
by the Portfolio, to determine to purchase and sell securities for the Account,
and upon making any purchase or sale decision, to place orders for the execution
of such portfolio transactions in accordance with paragraphs 5 and 6 hereof and
Exhibit A attached hereto and incorporated by this reference herein (as it may
be amended in writing by the parties from time to time). In providing portfolio
management services to the Account, the Money Manager shall be subject to such
investment restrictions as are set forth in the 1940 Act and rules thereunder,
the supervision and control of the Board, such specific instructions as the
Board may adopt and communicate to the Money Manager, the investment objectives,
policies and restrictions of the Portfolio furnished pursuant to paragraph 4,
and instructions from the Manager; and the Money Manager shall maintain on
behalf of the Fund the records listed in Exhibit B attached hereto and
incorporated by this reference herein (as it may be amended in writing by the
parties from time to time). At the Fund's or the Manager's reasonable request
(as communicated by the Board or the officers of such entities), the Money
Manager will consult with the officers of the Fund or the Manager, as the case
may be, with respect to any decision made by it with respect to the investments
of the Account.
4. Investment Objectives, Policies and Restrictions. The Fund shall
provide the Money Manager with a statement of the investment objectives and
policies of the Portfolio and any specific investment restrictions applicable
thereto as established by the Fund, including those set forth in its Prospectus
as amended from time to time. The Fund retains the right, on reasonable prior
written notice to the Money Manager from the Fund or the Manager, to modify any
such objectives, policies or restrictions in any manner at any time. The Money
Manager shall have no duty to investigate any instructions received from the
Fund, the Manager, or both, and, absent manifest error, such instructions shall
be presumed reasonable.
5. Transaction Procedures. All transactions will be consummated by
payment to or delivery by The Fifth Third Bank (the "Custodian"), or such
depositary or agents as may be designated by the Custodian, as custodian for the
Fund, of all cash and/or securities due to or from the Account, and the Money
Manager shall not have possession or custody thereof or any responsibility or
liability with respect thereto. The Money Manager shall advise the Custodian in
writing or by electronic transmission or facsimile of all investment orders for
the Portfolio placed by it with broker/dealers at the time and in the manner and
as set forth in Exhibit A hereto. The Fund shall issue to the Custodian such
instructions as may be appropriate in connection with the settlement of any
transaction initiated by the Money Manager. The Fund shall be responsible for
all custodial arrangements and the payment of all custodial charges and fees
and, upon the Money Manager giving proper instructions to the Custodian, the
Money Manager shall have no responsibility or liability with respect to
custodial arrangements or the acts, omissions or other conduct of the Custodian.
6. Allocation of Brokerage. The Money Manager shall have authority and
discretion to select broker/dealers to execute portfolio transactions initiated
by the Money Manager, and for the selection of the markets on/in which the
transaction will be executed.
A. In doing so, the Money Manager's primary objective shall be
to select a broker/dealer that can be expected to obtain the best net
price and execution for the Fund. However, this responsibility shall not
be deemed to obligate the Money Manager to solicit competitive bids for
each transaction; and the Money Manager shall have no obligation to seek
the lowest available commission cost to the Fund, so long as the Money
Manager believes in good faith, based upon its knowledge of the
capabilities of the firm selected, that the broker/dealer can be
expected to obtain the best price on a particular transaction and that
the commission cost is reasonable in relation to the total quality and
reliability of the brokerage and research services made available by the
broker/dealer to the Money Manager viewed in terms of either that
particular transaction or of the Money Manager's overall
responsibilities with respect to its clients, including the Fund, as to
which the Money Manager exercises investment discretion, notwithstanding
that the Fund may not be the direct or exclusive beneficiary of any such
services or that another broker/dealer may be willing to charge the Fund
a lower commission on the particular transaction.
B. The Fund shall retain the right to request that transactions
involving the Account that give rise to brokerage commissions in an
annual amount of up to 50% of the Money Manager's executed brokerage
commissions, shall be executed by broker/dealers which provide brokerage
or research services to the Fund or its Manager, or as to which an
ongoing relationship will be of value to the Fund with respect to the
Portfolio, which services and relationship may, but need not, be of
direct benefit to the Portfolio so long as (i) the Money Manager
believes in good faith, based upon its knowledge of the capabilities of
the firm selected, that the broker/dealer can be expected to obtain the
best price on a particular transaction and (ii) the Fund determines that
the commission cost is reasonable in relation to the total quality and
reliability of the brokerage and research services made available to the
Fund, or to the Manager for the benefit of its clients for which it
exercises investment discretion, notwithstanding that the Portfolio may
not be the direct or exclusive beneficiary of any such service or that
another broker/dealer may be willing to charge the Fund a lower
commission on the particular transaction. The Money Manager may reject
any request for directed brokerage that does not appear to it to be
reasonable.
C. The Fund agrees that it will provide the Money Manager with a
list of broker/dealers which are "affiliated persons" of the Fund and
its other money managers. Upon receipt of such list, the Money Manager
agrees that it will not execute any portfolio transactions with a
broker/dealer which is an "affiliated person" (as defined in the 1940
Act) of the Fund or of any money manager for the Fund without the prior
written approval of the Fund.
D. As used in this paragraph 6, "brokerage and research
services" shall be those services described in Section 28(e)(3) of the
Securities Exchange Act of 1934, as amended.
7. Proxies. Unless the Manager gives written instructions to the
contrary, the Money Manager shall vote all proxies solicited by or with respect
to the issuers of securities in which assets of the Account may be invested. The
Money Manager shall use its best good faith judgment to vote such proxies in a
manner which best serves the interests of the Portfolio's shareholders.
8. Reports to the Money Manager. The Fund and the Manager shall furnish
or otherwise make available to the Money Manager such information relating to
the business affairs of the Fund, including periodic reports concerning the
Portfolio, as the Money Manager at any time, or from time to time, may
reasonably request in order to discharge its obligations hereunder.
9. Fees for Services.
A. The compensation of the Money Manager for its services under
this Agreement shall be calculated and paid by the Fund in accordance
with Exhibit C attached hereto and incorporated by this reference
herein. The Money Manager acknowledges that any such fee is payable
solely out of assets of the Portfolio Account.
B. The Money Manager acknowledges that the index against which
the Money Manager's performance is based (the "benchmark index") may be
changed by the Board, including a majority of the directors who are not
parties to this Agreement (as defined in the 1940 Act) or interested
persons of any such party, upon at least one quarter's prior notice. The
Money Manager acknowledges that a change in the benchmark index may
alter the subsequent return of the index measure, but performance prior
to the change in the benchmark index will continue to be based on the
former benchmark index.
10. Other Investment Activities of the Money Manager. The Fund
acknowledges that the Money Manager, or one or more of its affiliates, may have
investment responsibilities or render investment advice to, or perform other
investment advisory services for, other individuals or entities (the "Affiliated
Accounts"). Subject to the provisions of paragraph 2 hereof, the Fund agrees
that the Money Manager and its affiliates may give advice, exercise investment
responsibility and take other action with respect to the Affiliated Accounts
which may differ from the advice given or the timing or nature of action taken
with respect to the Account, provided that the Money Manager acts in good faith,
and provided further that it is the Money Manager's policy to allocate, within
its reasonable discretion, investment opportunities to the Account over a period
of time on a fair and equitable basis relative to the Affiliated Accounts,
taking into account the investment objectives and policies of the Portfolio and
any specific investment restrictions applicable thereto. The Fund acknowledges
that one or more of the Affiliated Accounts may at any time hold, acquire,
increase, decrease, dispose of or otherwise deal with positions in investments
in which the Account may have an interest from time to time, whether in
transactions which may involve the Account or otherwise. The Money Manager shall
have no obligation to acquire for the Account a position in any investment which
any Affiliated Account may acquire, and the Portfolio shall have no first
refusal, co-investment or other rights in respect of any such investment, either
for the Account or otherwise.
11. Certificate of Authority. Each of the Fund, the Manager and the
Money Manager shall furnish to the others from time to time certified copies of
the resolutions of its Board of Directors, Board of Trustees, Managing Partner
or executive committee, as the case may be, evidencing the authority of its
officers and employees who are authorized to act on behalf of it.
12. Limitation of Liability. The Money Manager shall not be liable for,
and shall be indemnified by the Fund for any action taken, omitted or suffered
to be taken by it in its reasonable judgment, in good faith and believed by it
to be authorized or within the discretion or rights or powers conferred upon it
by this Agreement, or in accordance with (or in the absence of) specific
directions or instructions from the Fund or the Manager; provided, however, that
such acts or omissions shall not have resulted from the Money Manager's willful
misfeasance, bad faith or gross negligence, violation of applicable law, or
reckless disregard of its duty or of its obligations hereunder. The rights and
obligations that are provided for in this Paragraph 12 shall survive the
cancellation, expiration or termination of this Agreement.
13. Confidentiality. Subject to the right of each money manager and the
Fund to comply with applicable law, including any demand or request of any
regulatory or taxing authority having jurisdiction over it, the parties hereto
shall treat as confidential all information pertaining to the Portfolio and the
actions of each money manager, the Manager and the Fund in respect thereof,
other than any such information which is or hereafter becomes ascertainable from
public or published information or trade sources. The rights and obligations
that are provided for in this Paragraph 13 shall survive the cancellation,
expiration or termination of this Agreement.
14. Use of the Money Manager's Name. The Fund and the Manager agree to
furnish the Money Manager at its principal office prior to use thereof copies of
all prospectuses, proxy statements, reports to stockholders, sales literature,
or other material prepared for distribution to stockholders of the Fund or the
public that refer in any way to the Money Manager, and not to use such material
if the Money Manager reasonably objects in writing within three business days
(or such other time as may be mutually agreed) after receipt thereof. In the
event of termination of this Agreement, the Fund and the Manager will continue
to furnish to the Money Manager copies of any of the above-mentioned materials
that refer in any way to the Money Manager, and will not use such material if
the Money Manager reasonably objects in writing within three business days (or
such other time as may be mutually agreed) after receipt thereof.
15. Assignment. No assignment, as that term is defined in Section
2(a)(4) of the 1940 Act, of this Agreement shall be made by the Money Manager,
and this Agreement shall terminate automatically in the event that it is
assigned. The Money Manager shall notify the Manager and the Fund in writing
sufficiently in advance of any proposed change of control, as defined in Section
2(a)(9) of the 1940 Act, to enable the Manager and the Fund to consider whether
an assignment, as that term is defined in Section 2(a)(4) of the 1940 Act, will
occur, and to take the steps necessary to enter into a new money manager
agreement with the Money Manager.
16. Representations, Warranties and Agreements of the Investment
Company. The Fund represents, warrants and agrees that:
A. The Money Manager has been duly appointed by the Board to
provide investment services to the Account as contemplated hereby.
B. The Fund will deliver to the Money Manager a true and
complete copy of its current prospectus as effective from time to time,
such other documents or instruments governing the investments of
Portfolio, and such other information as is necessary for the Money
Manager to carry out its obligations under this Agreement.
C. The organization of the Fund and the conduct of the business
of the Portfolio as contemplated by this Agreement, materially complies,
and shall at all times materially comply, with the requirements imposed
upon the Fund by applicable law.
17. Representations, Warranties and Agreements of Manager. Manager
represents, warrants and agrees that:
A. The Manager acts as an "investment adviser," as that term is
defined in Section 2(a)(20) of the 1940 Act, pursuant to a Management
Agreement with the Fund.
B. The appointment of the Money Manager by the Manager to
provide the investment services as contemplated hereby has been approved
by the Board.
C. The Manager is registered as an "investment adviser" under
the Investment Advisers Act of 1940, as amended (the "Advisers Act").
18. Representations, Warranties and Agreements of Money Manager. The
Money Manager represents, warrants and agrees that:
A. The Money Manager is registered as an "investment adviser"
under the Advisers Act; or it is a "bank" as defined in Section
202(a)(2) of the Advisers Act or an "insurance company" as defined in
Section 202(a)(12) of the Advisers Act and is exempt from registration
thereunder.
B. The Money Manager will maintain, keep current and preserve on
behalf of the Fund, the records identified in Exhibit B, in the manner
required by such Exhibit. The Money Manager agrees that such records
(other than those required by No. 4 of Exhibit B) are the property of
the Fund and will be surrendered to the Fund promptly upon request.
C. The Money Manager will adopt or has adopted a written code of
ethics complying with the requirements of Rule 17j-1 under the 1940 Act,
will provide to the Fund a copy of the code of ethics and evidence of
its adoption, and will make such reports to the Fund as required by Rule
17j-1 under the 1940 Act. The Money Manager has policies and procedures
sufficient to enable the Money Manager to detect and prevent the misuse
of material, nonpublic information by the Money Manager or any person
associated with the Money Manager, in compliance with the Insider
Trading and Securities Fraud Enforcement Act of 1988.
D. The Money Manager will notify the Fund of any changes in the
membership of its partnership or in the case of a corporation in the
ownership of more than five percent of its voting securities, within a
reasonable time after such change.
19. Amendment. This Agreement may be amended at any time, but only by
written agreement among the Money Manager, the Manager and the Fund, which
amendment, other than amendments to Exhibits A and B, must be approved by the
Board in the manner required by the 1940 Act.
20. Effective Date; Term. This Agreement shall become effective for the
Portfolio on the effective date set forth on page 1 of this Agreement, and shall
continue in effect until the termination date set forth on page 1 of this
Agreement. Thereafter, the Agreement shall continue in effect for successive
annual periods only so long as its continuance has been specifically approved at
least annually (a) by a vote of a majority of the Board or (b) by a vote of a
majority of the outstanding voting securities (as defined in the 1940 Act) of
the Portfolio for which the Money Manager acts as money manager, and in either
case by a majority of the directors who are not parties to the Agreement or
interested persons of any parties to the Agreement (other than as directors of
the Fund) cast in person at a meeting called for purposes of voting on the
Agreement.
21. Termination. This Agreement may be terminated, without the payment
of any penalty, by the Board, the Manager, the Money Manager or by the vote of a
majority of the outstanding voting securities (as that term is defined in the
1940 Act) of the Portfolio for which the Money Manager acts as money manager,
upon 60 days' prior written notice to the other parties hereto. Any such
termination shall not affect the status, obligations or liabilities of any party
hereto to any of the other parties that accrued prior to such termination.
22. Applicable Law. To the extent that state law shall not have been
preempted by the provisions of any laws of the United States heretofore or
hereafter enacted, as the same may be amended from time to time, this Agreement
shall be administered, construed and enforced according to the laws of the State
of Washington.
<PAGE>
ACCESSOR FUNDS, INC.
BY: /s/J. Anthony Whatley, III
J. Anthony Whatley, III
President and Principal Executive Officer
DATE:
BENNINGTON CAPITAL
MANAGEMENT L.P.
By Bennington Management Associates, Inc.
Its Managing General Partner
BY: /s/J. Anthony Whatley, III
J. Anthony Whatley, III
President
DATE: 7/11/97
Accepted and agreed to:
GEEWAX, TERKER & COMPANY
By: /s/John J. Geewax
Name: John J. Geewax
Title: Partner
DATE: 7/4/97
<PAGE>
EXHIBITS: A. Operational Procedures (including Schedules 1 and 2).
B. Recordkeeping Requirements.
C. Fee Schedule.
<PAGE>
EXHIBIT A
OPERATIONAL PROCEDURES
The Money Manager shall abide by certain rules and procedures in order
to minimize operational problems. The Money Manager will be required to have
various records and files (as required by regulatory agencies) at its offices.
The Money Manager will have to maintain a certain flow of information to The
Fifth Third Bank ("Fifth Third"), the accounting agent and the custodian bank,
for the Fund.
The Money Manager will be required to furnish Fifth Third with daily
information as to executed trades. Fifth Third should receive this data no later
than the morning following the day of the trade. The necessary information
should be transmitted via facsimile machine or electronic transmission to Fifth
Third. Upon receipt of brokers' confirmations, the Money Manager or Fifth Third
will be required to notify the other party if any differences exist. The
reporting of trades by the Money Manager to Fifth Third must include the
following:
o Name of the Portfolio of the Fund as to which trade relates
o Whether purchase or sale
o Security name
o Number of shares or principal amount
o Price per share or bond
o Commission rates per share or bond, or if a net trade
o Executing broker
o Trade date
o Settlement date
o If security is not eligible for DTC (Purchase only)
Fifth Third will provide the necessary information to Fifth Third.
When opening accounts with brokers for the Fund, the account should be a
cash account. No margin accounts are to be maintained. The broker should be
advised to use Fifth Third's Institutional Delivery ("ID") system number to
facilitate the receipt of information by Fifth Third. If this procedure is
followed, DK problems will be held down to a minimum and additional costs of
security trades will not become an important factor in doing business. Delivery
and receipt instructions are attached as Schedule 1.
The Money Manager will also be required to submit to Fifth Third a daily
trade authorization form signed by two authorized individuals prior to
settlement date. A list of authorized persons with specimen signatures must be
sent to Fifth Third (see Schedule 2). The authorization will contain information
on which Fifth Third and Fifth Third can rely to either accept delivery or
deliver out of the account securities as per each trade by the Money Manager. A
preprinted form will be supplied to the Money Manager by the Fund, or the Money
Manager may use an equivalent form acceptable to Fifth Third, Fifth Third and
the Fund.
<PAGE>
SCHEDULE 1 TO EXHIBIT A
Mailing Instructions and Delivery Instructions:
Confirmation Instructions (Copy of Broker Advice):
MAILING ADDRESS: (to be used w/trade confirmations)
Fifth Third Bank, N.A.
Attn: Custody Operation
Mail Drop 1090F2
38 Fountain Square Plaza
Cincinnati, OH 45263
Portfolio # 010033141306
For the account of Accessor Funds, Inc.
GROWTH Portfolio
STREET ADDRESS:
Fifth Third Bank, N.A.
Attn: Custody Operation
Mail Drop 1090F2
38 Fountain Square Plaza
Cincinnati, OH 45263
NOMINEE NAME: AGEN & Co.
NOMINEE TAX ID: __________________
DTC NOMINEE Name: CEDE & Co.
Delivery Instructions:
Depository Trust Company (DTC) #10016 Agent Bank I.D.
# 2116 DTC Participant #
#11153 Institution No. (Note:
If you have your own
Institution number,
substitute that number for
Fifth Third's)
Portfolio #010033141306
New York Office: Commercial Paper (all Ineligible DTC Securities)
CHEMICAL BANK A/C STATE STREET BANK & TRUST 4
NEW YORK PLAZA RECEIVE WINDOW - GROUND FLOOR
NEW YORK, NY 10004 FFC: FIFTH THIRD BANK - A/C
#QF02
VS. payment (Fed Funds or Commercial Paper Only)
All physical deliveries of Corporate Bonds and other non-eligible DTC items
should be delivered as follows:
CHEMICAL BANK A/C STATE STREET BANK & TRUST 4
NEW YORK PLAZA RECEIVE WINDOW - GROUND FLOOR
NEW YORK, NY 10004 FFC: FIFTH THIRD BANK - A/C
#QF02
All Government Issues: Deliver through Federal Reserve Bank to:
Federal Reserve Eligible Securities through Fed Cincinnati
ABA#042000314/Fifth Cin/1050
FFC: Accessor Grown Portfolio A/C#010033141306
Repurchase Agreements through Fed Cincinnati
ABA#042000314/Fifth Cin/1040
FFC: Accessor Growth Portfolio A/C #010033141306
(VS Payment Federal Funds)
PTC Eligible Securities: Fifth Third Bank
A/C FIFTH
F/A/O Accessor Growth Portfolio
A/C #010033141306
Cash:
Receiving Bank ABA # 042000314
Information Further Credit to: #010033141306
Fifth Third Bank
Fifth Third Center
Cincinnati, OH 45263
Beneficiary BNF =Mutual Funds
Information DDA#71575856
Foreign Holdings:
Please contact Lisa Bernotas at Fifth Third Bank (Phone: (513) 744-7091) to
obtain delivery instructions.
<PAGE>
SCHEDULE 2 TO EXHIBIT A
Example of Authorized Signature Letter
(To Be Typed on Your Letterhead)
[DATE]
Fifth Third, Inc.
Attention: Accessor Funds, Inc.
Re: Persons Authorized to Execute Trades For Growth Portfolio
The following individuals are authorized to execute and report trade
instructions on behalf of the Portfolio. Should there be any changes to the list
of authorized persons , we will notify you immediately of those changes.
NAME SIGNATURE
Sincerely yours,
[Money Manager]
<PAGE>
EXHIBIT B
RECORDS TO BE MAINTAINED BY MONEY MANAGER
*1. A record of each brokerage order, and all other portfolio purchases and
sales, given by the Money Manager or on behalf of the Fund for, or in
connection with, the purchase or sale of securities, whether executed or
unexecuted. Such records shall include:
A. The name of the broker,
B. The terms and conditions of the order, and of any modification or
cancellation thereof,
C. The time of entry or cancellation,
D. The price at which executed,
E. The time of receipt of report of execution, and
F. The name of the person who placed the order on behalf of the Fund
(Rule 31a-1(b)(5) and (6) of the 1940 Act).
*2. A record for each fiscal quarter, completed within ten (10) days after the
end of the quarter, showing specifically the basis or bases upon which the
allocation of orders for the purchase and sale of portfolio securities to
brokers or dealers was made, and the division of brokerage commissions or
other compensation on such purchase and sale orders. The record:
A. Shall include the consideration given to:
(i) the sale of shares of the Fund
(ii) the supplying of services or benefits by brokers or dealers to:
(a) The Fund,
(b) The Manager (Bennington Capital Management), (c) Yourself
(i.e., the Money Manager), and (d) Any person other than the
foregoing
(iii)Any other considerations other than the technical
qualifications of the brokers and dealers as such.
B. Shall show the nature of the services or benefits made available.
C. Shall describe in detail the application of any general or specific
formula or other determinant used in arriving at such allocation of
purchase and sale orders and such division of brokerage commissions or
other compensation.
D. The identities of the persons responsible for making the determination
of such allocation and such division of brokerage commissions or other
compensation (Rule 31a-1(b)(9) of the 1940 Act).
<PAGE>
*3. A record in the form of an appropriate memorandum identifying the person or
persons, committees, or groups authorizing the purchase or sale of
portfolio securities. Where an authorization is made by a committee or
group, a record shall be kept of the names of its members who participate
in the authorization. There shall be retained as part of this record any
memorandum, recommendation, or instruction supporting or authorizing the
purchase or sale of portfolio securities (Rule 31a-1(b)(10) of the 1940
Act) and such other information as is appropriate to support the
authorization.**
*4. Such accounts, books and other documents as are required to be maintained
by registered investment advisers by rule adopted under Section 204 of the
Advisers Act , to the extent such records are necessary or appropriate to
record the Money Manager's transactions with the Fund. (Rule 31a-1(f) of
the 1940 Act).
5. All accounts, books, records or other documents that are required to be
maintained pursuant to the 1940 Act, the Advisers Act, or any rule or
regulation thereunder, need only be retained by the Money Manager as
required under such laws, rule or regulations. Any other account, book,
record or other document that is required to be maintained by the Money
Manager pursuant to this Exhibit B need only be maintained for five years
after the date of its creation.
- ----------
* Maintained as property of the Fund pursuant to Rule 31a-3(a) of the 1940
Act.
** Such information might include: the current Form 10-K, annual and quarterly
reports, press releases, reports by analysts and from brokerage firms
(including their recommendations, i.e., buy, sell, hold), and any internal
reports or portfolio manager reviews.
<PAGE>
EXHIBIT C
MONEY MANAGER FEE
The following compensation of the Money Manager for its services under
the Agreement shall be calculated and paid by the Fund (except that no such fees
shall be paid to the Manager as to any portion of the Portfolio for which it
acts as money manager):
Fees will be calculated and paid after the end of each calendar quarter
at one-fourth of an annual percentage rate as described in the following
paragraph and in the table below applied to the average daily net assets of the
Account. The net assets of the Account are determined by including receivables
and deducting payables. Expenses beyond the control of the Money Manager
including, but not limited to, fees payable to the Fund's Custodian, Accounting
Agent and Transfer Agent, fees of accountants, legal fees and expenses allocable
to the Portfolio are not included as payables of the Account, but expenses
within the control of the Money Manager including, but not limited to, brokerage
commissions are included in determining the net assets of the Account.
For the first five complete calendar quarters of management of the
Account by the Money Manager, the Fund will pay the Money Manager on a monthly
basis at the following annual fee rates, applied to the average daily net assets
of the Portfolio.
Basic Fee Portfolio Management Fee Total
0.10% 0.10% 0.20%
Commencing with the sixth calendar quarter of management by the Money
Manager for the Account, the Fund will pay the Money Manager based on the
schedule below as applied to the average daily net assets of the Portfolio.
Average Annual
Performance Differential Annual
Basic Fee vs. Benchmark Index Performance Fee
0.10% plus >=2.00% .22%
>=1.00% and Less Than 2.00% .20%
>=0.50% and Less Than 1.00% .15%
>=0.00% and Less Than 0.50% .10%
>=-0.50% and Less Than 0.00% .05%
Less Than -0.50% 0%
The Account's performance differential versus the benchmark index is
recalculated at the end of each calendar quarter based on the Account's
performance during all calendar quarters since commencement of management by the
Money Manager for the Account through the next preceding calendar quarter, so
that the performance fee, although measured on an average annual rate of return
basis, covers all prior quarters except that of the immediately preceding
quarter. Commencing with the 14th calendar quarter of management by the Money
Manager for the Account, the Account's average annual performance differential
will be recalculated based on the Account's performance during the preceding 12
calendar quarters (other than the immediately preceding quarter) on a rolling
basis.
For purposes of calculating the performance of the benchmark index, the
Fund, the Manager and the Money Manager agree to accept the calculation provided
by the publisher of the index or another mutually acceptable source. For
purposes of calculating the performance differential versus the benchmark index,
the investment performance of the Account for any period, expressed as a
percentage of its net asset value per share at the beginning of such period, is
equal to the sum of: (i) the change in the net asset value per share of the
Account during such period; (ii) the value of the Account's cash distributions
per share accumulated to the end of such period; and (iii) the value of capital
gains taxes per share paid or payable on undistributed realized long-term
capital gains accumulated to the end of such period. For this purpose, the value
of distributions per share of realized capital gains, or dividends per share
paid from investment income and of capital gains taxes per share paid or payable
on undistributed realized long-term capital gains, shall be treated as
reinvested in shares of the Account at the net asset value per share in effect
at the close of business on the record date for the payment of such
distributions and dividends and the date on which provision is made for such
taxes, after giving effect to such distributions, dividends and taxes. The
investment record of the benchmark index for any period shall mean the sum of:
(i) the change in the level of the index during such period; and (ii) the value,
computed consistently with the index, of cash distributions made by companies
whose securities comprise the index accumulated to the end of such period;
expressed as a percentage of the index level at the beginning of such period.
For this purpose cash distributions on the securities which comprise the index
shall be treated as reinvested in the index at least as frequently as the end of
each calendar quarter following the payment of the dividend.
<PAGE>
Exhibit (d)(9)
MONEY MANAGER AGREEMENT
Effective Date: September 21, 1998
Termination Date: Two years
after Effective Date
Portfolio and Account:
Approximately 90% of the
INTERMEDIATE FIXED-INCOME PORTFOLIO
Xavier Urpi
President & Chief Investment Officer
Cypress Asset Management
26607 Carmel Center Place, Suite 101
Carmel, CA 93923
Re: Accessor Funds, Inc. Money Manager Agreement
Dear Mr. Urpi:
Accessor Funds, Inc., a Maryland corporation (the " Fund"), is an
open-end management investment company of the series type registered as an
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"), and subject to the rules and regulations promulgated thereunder.
The Fund issues shares in separate diversified portfolios, each with a different
investment objective and policies.
Bennington Capital Management L. P., a Washington limited partnership
(the "Manager") acts as the manager and administrator of the Fund pursuant to
the terms of a Management Agreement, and is an "investment adviser," as that
term is defined in Section 2(a)(20) of the 1940 Act, to the Fund. The Manager is
responsible for the day-to-day management and administration of the Fund and for
the coordination of investments of each portfolio's assets; however, specific
portfolio purchases and sales for each portfolio's investment portfolio, or a
portion thereof, are to be made by the portfolio management organizations
recommended and selected by the Manager, subject to the approval of the Board of
Directors of the Fund (the "Board").
1. Appointment as a Money Manager. The Manager and the Fund hereby
appoint and employ Cypress Asset Management, a California corporation (the
"Money Manager"), as a discretionary money manager to the Fund's Intermediate
Fixed-Income Portfolio, on the terms and conditions set forth herein. The
Manager determines from time to time that portion of the assets of the
Intermediate Fixed-Income Portfolio that are to be assigned to the Money Manager
(the "Account"). The Account and those assets of the Intermediate Fixed-Income
Portfolio managed by the Manager or another money manager as determined by the
Manager are referred to as the "Portfolio".
2. Acceptance of Appointment; Standard of Performance. The Money Manager
accepts the appointment as a discretionary money manager and agrees to use its
best professional judgment to make and implement investment decisions for the
Fund with respect to the investments of the Account in accordance with the
provisions of this Agreement.
3. Portfolio Management Services of the Money Manager. The Money Manager
is hereby employed and authorized to select portfolio securities for investment
by the Portfolio, to determine to purchase and sell securities for the Account,
and upon making any purchase or sale decision, to place orders for the execution
of such portfolio transactions in accordance with paragraphs 5 and 6 hereof and
Exhibit A attached hereto and incorporated by this reference herein (as it may
be amended in writing by the parties from time to time). In providing portfolio
management services to the Account, the Money Manager shall be subject to such
investment restrictions as are set forth in the 1940 Act and rules thereunder,
the supervision and control of the Board, such specific instructions as the
Board may adopt and communicate to the Money Manager, the investment objectives,
policies and restrictions of the Portfolio furnished pursuant to paragraph 4,
and instructions from the Manager; and the Money Manager shall maintain on
behalf of the Fund the records listed in Exhibit B attached hereto and
incorporated by this reference herein (as it may be amended in writing by the
parties from time to time). At the Fund's or the Manager's reasonable request
(as communicated by the Board or the officers of such entities), the Money
Manager will consult with the officers of the Fund or the Manager, as the case
may be, with respect to any decision made by it with respect to the investments
of the Account.
4. Investment Objectives, Policies and Restrictions. The Fund shall
provide the Money Manager with a statement of the investment objectives and
policies of the Portfolio and any specific investment restrictions applicable
thereto as established by the Fund, including those set forth in its Prospectus
as amended from time to time. The Fund retains the right, on reasonable prior
written notice to the Money Manager from the Fund or the Manager, to modify any
such objectives, policies or restrictions in any manner at any time. The Money
Manager shall have no duty to investigate any instructions received from the
Fund, the Manager, or both, and, absent manifest error, such instructions shall
be presumed reasonable.
5. Transaction Procedures. All transactions will be consummated by
payment to or delivery by the Fund's custodian (the "Custodian"), or such
depositary or agents as may be designated by the Custodian, as custodian for the
Fund, of all cash and/or securities due to or from the Account, and the Money
Manager shall not have possession or custody thereof or any responsibility or
liability with respect thereto. The Money Manager shall advise the Custodian in
writing or by electronic transmission or facsimile of all investment orders for
the Portfolio placed by it with broker/dealers at the time and in the manner and
as set forth in Exhibit A hereto. The Fund shall issue to the Custodian such
instructions as may be appropriate in connection with the settlement of any
transaction initiated by the Money Manager. The Fund shall be responsible for
all custodial arrangements and the payment of all custodial charges and fees
and, upon the Money Manager giving proper instructions to the Custodian, the
Money Manager shall have no responsibility or liability with respect to
custodial arrangements or the acts, omissions or other conduct of the Custodian.
6. Allocation of Brokerage. The Money Manager shall have authority and
discretion to select broker/dealers to execute portfolio transactions initiated
by the Money Manager, and for the selection of the markets on/in which the
transaction will be executed.
A. In doing so, the Money Manager's primary objective shall be
to select a broker/dealer that can be expected to obtain the best net
price and execution for the Fund. However, this responsibility shall not
be deemed to obligate the Money Manager to solicit competitive bids for
each transaction; and the Money Manager shall have no obligation to seek
the lowest available commission cost to the Fund, so long as the Money
Manager believes in good faith, based upon its knowledge of the
capabilities of the firm selected, that the broker/dealer can be
expected to obtain the best price on a particular transaction and that
the commission cost is reasonable in relation to the total quality and
reliability of the brokerage and research services made available by the
broker/dealer to the Money Manager viewed in terms of either that
particular transaction or of the Money Manager's overall
responsibilities with respect to its clients, including the Fund, as to
which the Money Manager exercises investment discretion, notwithstanding
that the Fund may not be the direct or exclusive beneficiary of any such
services or that another broker/dealer may be willing to charge the Fund
a lower commission on the particular transaction.
B. The Fund shall retain the right to request that transactions
involving the Account that give rise to brokerage commissions in an
annual amount of up to 50% of the Money Manager's executed brokerage
commissions, shall be executed by broker/dealers which provide brokerage
or research services to the Fund or its Manager, or as to which an
ongoing relationship will be of value to the Fund with respect to the
Portfolio, which services and relationship may, but need not, be of
direct benefit to the Portfolio so long as (i) the Money Manager
believes in good faith, based upon its knowledge of the capabilities of
the firm selected, that the broker/dealer can be expected to obtain the
best price on a particular transaction and (ii) the Fund determines that
the commission cost is reasonable in relation to the total quality and
reliability of the brokerage and research services made available to the
Fund, or to the Manager for the benefit of its clients for which it
exercises investment discretion, notwithstanding that the Portfolio may
not be the direct or exclusive beneficiary of any such service or that
another broker/dealer may be willing to charge the Fund a lower
commission on the particular transaction. The Money Manager may reject
any request for directed brokerage that does not appear to it to be
reasonable.
C. The Fund agrees that it will provide the Money Manager with a
list of broker/dealers which are "affiliated persons" of the Fund and
its other money managers. Upon receipt of such list, the Money Manager
agrees that it will not execute any portfolio transactions with a
broker/dealer which is an "affiliated person" (as defined in the 1940
Act) of the Fund or of any money manager for the Fund unless it is in
accordance with the procedures of the Fund.
D. As used in this paragraph 6, "brokerage and research
services" shall be those services described in Section 28(e)(3) of the
Securities Exchange Act of 1934, as amended.
7. Proxies. Unless the Manager gives written instructions to the
contrary, the Money Manager shall vote all proxies solicited by or with respect
to the issuers of securities in which assets of the Account may be invested. The
Money Manager shall use its best good faith judgment to vote such proxies in a
manner which best serves the interests of the Portfolio's shareholders.
8. Reports to the Money Manager. The Fund and the Manager shall furnish
or otherwise make available to the Money Manager such information relating to
the business affairs of the Fund, including periodic reports concerning the
Portfolio, as the Money Manager at any time, or from time to time, may
reasonably request in order to discharge its obligations hereunder.
9. Fees for Services.
A. The compensation of the Money Manager for its services under
this Agreement shall be calculated and paid by the Fund in accordance
with Exhibit C attached hereto and incorporated by this reference
herein. The Money Manager acknowledges that any such fee is payable
solely out of assets of the Portfolio's Account.
B. The Money Manager acknowledges that the index against which
the Money Manager's performance is based (the "benchmark index"), as set
forth on Exhibit D, attached hereto and incorporated herein by reference
as may be amended from time to time, may be changed by the Board,
including a majority of the directors who are not parties to this
Agreement (as defined in the 1940 Act) or interested persons of any such
party, upon at least one quarter's prior notice. The Money Manager
acknowledges that a change in the benchmark index may alter the
subsequent return of the index measure, but performance prior to the
change in the benchmark index will continue to be based on the former
benchmark index.
10. Other Investment Activities of the Money Manager. The Fund
acknowledges that the Money Manager, or one or more of its affiliates, may have
investment responsibilities or render investment advice to, or perform other
investment advisory services for, other individuals or entities (the "Affiliated
Accounts"). Subject to the provisions of paragraph 2 hereof, the Fund agrees
that the Money Manager and its affiliates may give advice, exercise investment
responsibility and take other action with respect to the Affiliated Accounts
which may differ from the advice given or the timing or nature of action taken
with respect to the Account, provided that the Money Manager acts in good faith,
and provided further that it is the Money Manager's policy to allocate, within
its reasonable discretion, investment opportunities to the Account over a period
of time on a fair and equitable basis relative to the Affiliated Accounts,
taking into account the investment objectives and policies of the Portfolio and
any specific investment restrictions applicable thereto. The Fund acknowledges
that one or more of the Affiliated Accounts may at any time hold, acquire,
increase, decrease, dispose of or otherwise deal with positions in investments
in which the Account may have an interest from time to time, whether in
transactions which may involve the Account or otherwise. The Money Manager shall
have no obligation to acquire for the Account a position in any investment which
any Affiliated Account may acquire, and the Portfolio shall have no first
refusal, co-investment or other rights in respect of any such investment, either
for the Account or otherwise.
11. Certificate of Authority. Each of the Fund, the Manager and the
Money Manager shall furnish to the others from time to time certified copies of
the resolutions of its Board of Directors, Board of Trustees, Managing Partner
or executive committee, as the case may be, evidencing the authority of its
officers and employees who are authorized to act on behalf of it.
12. Limitation of Liability. The Money Manager shall not be liable for,
and shall be indemnified by the Fund for any action taken, omitted or suffered
to be taken by it in its reasonable judgment, in good faith and believed by it
to be authorized or within the discretion or rights or powers conferred upon it
by this Agreement, or in accordance with (or in the absence of) specific
directions or instructions from the Fund or the Manager; provided, however, that
such acts or omissions shall not have resulted from the Money Manager's willful
misfeasance, bad faith or gross negligence, violation of applicable law, or
reckless disregard of its duty or of its obligations hereunder. The rights and
obligations that are provided for in this Paragraph 12 shall survive the
cancellation, expiration or termination of this Agreement.
13. Confidentiality. Subject to the right of each money manager and the
Fund to comply with applicable law, including any demand or request of any
regulatory or taxing authority having jurisdiction over it, the parties hereto
shall treat as confidential all information pertaining to the Portfolio and the
actions of each money manager, the Manager and the Fund in respect thereof,
other than any such information which is or hereafter becomes ascertainable from
public or published information or trade sources. The rights and obligations
that are provided for in this Paragraph 13 shall survive the cancellation,
expiration or termination of this Agreement.
14. Use of the Money Manager's Name. The Fund and the Manager agree to
furnish the Money Manager at its principal office prior to use thereof copies of
all prospectuses, proxy statements, reports to stockholders, sales literature,
or other material prepared for distribution to stockholders of the Fund or the
public that refer in any way to the Money Manager, and not to use such material
if the Money Manager reasonably objects in writing within three business days
(or such other time as may be mutually agreed) after receipt thereof. In the
event of termination of this Agreement, the Fund and the Manager will continue
to furnish to the Money Manager copies of any of the above-mentioned materials
that refer in any way to the Money Manager, and will not use such material if
the Money Manager reasonably objects in writing within three business days (or
such other time as may be mutually agreed) after receipt thereof.
15. Assignment. No assignment, as that term is defined in Section
2(a)(4) of the 1940 Act, of this Agreement shall be made by the Money Manager,
and this Agreement shall terminate automatically in the event that it is
assigned. The Money Manager shall notify the Manager and the Fund in writing
sufficiently in advance of any proposed change of control, as defined in Section
2(a)(9) of the 1940 Act, to enable the Manager and the Fund to consider whether
an assignment, as that term is defined in Section 2(a)(4) of the 1940 Act, will
occur, and to take the steps necessary to enter into a new money manager
agreement with the Money Manager.
16. Representations, Warranties and Agreements of the Investment
Company. The Fund represents, warrants and agrees that:
A. The Money Manager has been duly appointed by the Board to
provide investment services to the Account as contemplated hereby.
B. The Fund will deliver to the Money Manager a true and
complete copy of its current prospectus as effective from time to time,
such other documents or instruments governing the investments of
Portfolio, and such other information as is necessary for the Money
Manager to carry out its obligations under this Agreement.
C. The organization of the Fund and the conduct of the business
of the Portfolio as contemplated by this Agreement, materially complies,
and shall at all times materially comply, with the requirements imposed
upon the Fund by applicable law.
17. Representations, Warranties and Agreements of Manager. Manager
represents, warrants and agrees that:
A. The Manager acts as an "investment adviser," as that term is
defined in Section 2(a)(20) of the 1940 Act, pursuant to a Management
Agreement with the Fund.
B. The appointment of the Money Manager by the Manager to
provide the investment services as contemplated hereby has been approved
by the Board.
C. The Manager is registered as an "investment adviser" under
the Investment Advisers Act of 1940, as amended (the "Advisers Act").
18. Representations, Warranties and Agreements of Money Manager. The
Money Manager represents, warrants and agrees that:
A. The Money Manager is registered as an "investment adviser"
under the Advisers Act; or it is a "bank" as defined in Section
202(a)(2) of the Advisers Act or an "insurance company" as defined in
Section 202(a)(12) of the Advisers Act and is exempt from registration
thereunder.
B. The Money Manager will maintain, keep current and preserve on
behalf of the Fund, the records identified in Exhibit B, in the manner
required by such Exhibit. The Money Manager agrees that such records
(other than those required by No. 4 of Exhibit B) are the property of
the Fund and will be surrendered to the Fund promptly upon request.
C. The Money Manager will adopt or has adopted a written code of
ethics complying with the requirements of Rule 17j-1 under the 1940 Act,
will provide to the Fund a copy of the code of ethics and evidence of
its adoption, and will make such reports to the Fund as required by Rule
17j-1 under the 1940 Act. The Money Manager has policies and procedures
sufficient to enable the Money Manager to detect and prevent the misuse
of material, nonpublic information by the Money Manager or any person
associated with the Money Manager, in compliance with the Insider
Trading and Securities Fraud Enforcement Act of 1988.
D. The Money Manager will notify the Fund of any changes in the
membership of its partnership or in the case of a corporation in the
ownership of more than five percent of its voting securities, within a
reasonable time after such change.
19. Amendment. This Agreement may be amended at any time, but only by
written agreement among the Money Manager, the Manager and the Fund, which
amendment, other than amendments to Exhibits A and B, must be approved by the
Board in the manner required by the 1940 Act.
20. Effective Date; Term. This Agreement shall become effective for the
Portfolio on the effective date set forth on page 1 of this Agreement, and shall
continue in effect until the termination date set forth on page 1 of this
Agreement. Thereafter, the Agreement shall continue in effect for successive
annual periods only so long as its continuance has been specifically approved at
least annually (a) by a vote of a majority of the Board or (b) by a vote of a
majority of the outstanding voting securities (as defined in the 1940 Act) of
the Portfolio for which the Money Manager acts as money manager, and in either
case by a majority of the directors who are not parties to the Agreement or
interested persons of any parties to the Agreement (other than as directors of
the Fund) cast in person at a meeting called for purposes of voting on the
Agreement.
21. Termination. This Agreement may be terminated, without the payment
of any penalty, by the Board, the Manager, the Money Manager or by the vote of a
majority of the outstanding voting securities (as that term is defined in the
1940 Act) of the Portfolio for which the Money Manager acts as money manager,
upon 60 days' prior written notice to the other parties hereto. Any such
termination shall not affect the status, obligations or liabilities of any party
hereto to any of the other parties that accrued prior to such termination.
22. Applicable Law. To the extent that state law shall not have been
preempted by the provisions of any laws of the United States heretofore or
hereafter enacted, as the same may be amended from time to time, this Agreement
shall be administered, construed and enforced according to the laws of the State
of Washington.
ACCESSOR FUNDS, INC. BENNINGTON CAPITAL
MANAGEMENT L.P.
By Bennington Management Associates, Inc.
Its Managing General Partner
BY:/s/Ravindra A. Deo BY:/s/J. Anthony Whatley, III
Ravindra A. Deo J. Anthony Whatley, III
Vice President President
DATE:9/15/98 DATE:9/21/98
Accepted and agreed to:
CYPRESS ASSET MANAGEMENT
By:/s/Xavier Urpi
Xavier Urpi
President & Chief Investment Officer
DATE:9/17/98
EXHIBITS: A. Operational Procedures (including Schedules 1 and 2).
B. Recordkeeping Requirements.
C. Fee Schedule.
<PAGE>
EXHIBIT A
OPERATIONAL PROCEDURES
----------------------
The Money Manager (the "MM") shall abide by certain rules and procedures
in order to minimize operational problems. The MM will be required to have
various records and files (as required by regulatory agencies) at its offices.
The MM will have to maintain a certain flow of information to Fifth Third Bank
("Fifth Third") the Fund's accounting agent and the custodian bank.
The MM will be required to furnish Fifth Third with daily information as
to executed trades. Fifth Third should receive this data no later than the
morning following the day of the trade. The necessary information should be
transmitted via facsimile machine or electronic transmission to Fifth Third.
Upon receipt of brokers' confirmations, the MM or Fifth Third will be required
to notify the other party if any differences exist. The reporting of trades by
the MM to Fifth Third must include the following:
o Name of the Portfolio of the Fund as to which trade relates
o Whether Purchase or Sale
o Security name
o Number of shares or principal amount
o Price per share or bond
o Commission rate per share or bond, or if a net trade
o Executing broker
o Trade date
o Settlement date
o If security is not eligible for DTC (Purchase only)
When opening accounts with brokers for the Fund, the account should be a
cash account. No margin accounts are to be maintained. The broker should be
advised to use Fifth Third's ID system number to facilitate the receipt of
information by Fifth Third . If this procedure is followed, DK problems will be
held down to a minimum and additional costs of security trades will not become
an important factor in doing business. Delivery and receipt instructions are
attached as Schedule 1.
The MM will also be required to submit to Fifth Third a daily trade
authorization form signed by two authorized individuals prior to settlement
date. A list of authorized persons with specimen signatures must be sent to
Fifth Third (see Schedule 2). The authorization will contain information on
which Fifth Third and Fifth Third can rely to either accept delivery or deliver
out of the account securities as per each trade by the MM. A preprinted form
will be supplied to the MM by the Fund, or the MM may use an equivalent form
acceptable to Fifth Third and the Fund.
<PAGE>
SCHEDULE 1 TO EXHIBIT A
-----------------------
FIFTH THIRD BANK
DELIVERY INSTRUCTIONS FOR
THE ACCESSOR FUNDS, INC. - INTERMEDIATE FIXED INCOME PORTFOLIO
I. DTC ELIGIBLE SECURITIES
-----------------------
Participant Number 2116
Agent Bank Number 10016
Institution Number 11153* *Note: If you have your own Institution
number, please substitute that
Customer Acct Number 010033141348 number for Fifth Third's.
II. FEDERAL RESERVE WIRE TRANSFERS
------------------------------
ABA #042000314
FOR FURTHER CREDIT TO: #010033141348
III. FEDERAL RESERVE ELIGIBLE SECURITIES: REPURCHASE AGREEMENTS:
------------------------------------ ----------------------
THROUGH FED CINCINNATI THROUGH FED CINCINNATI
ABA #042000314/Fifth Cin/1050 ABA #042000314/Fifth Cin/1040
FFC: Accessor Int Fxd Inc Portfolio, FFC: Accessor Int Fxd Inc
A/C 010033141348 Portfolio, A/C 010033141348
IV. PTC ELIGIBLE SECURITIES (i.e. GNMAs)
------------------------------------
A/C FIFTH
F/A/O Accessor Intermediate Fixed Income Portfolio
A/C #010033141348
V. PHYSICAL/INELIGIBLE
-------------------
PHYSICAL NEW YORK
Bank of New York
One Wall Street - Securities Department
3rd Floor - "Window A"
New York, NY 10286
FFC: Fifth Third Bank - A/C #135500
EUROCLEAR
(Payment due 1 day prior to settlement date)
Euroclear #97816
A/C The Bank of New York
Ref: Fifth Third Bank
A/C #135500
<PAGE>
SCHEDULE 2 TO EXHIBIT A
-----------------------
Example of Authorized Signature Letter
(To Be Typed on Your Letterhead)
[DATE]
Fifth Third, Inc.
Fifth Third Center
38 Fountain Square Plaza
Cincinnati, OH 45263
Attention: Accessor Funds, Inc. - Intermediate Fixed-Income Portfolio
Re: Persons Authorized to Execute Trades For Intermediate Fixed-Income Portfolio
The following individuals are authorized to execute and report trade
instructions on behalf of the Portfolio. Should there be any changes to the list
of authorized persons , we will notify you immediately of those changes.
NAME SIGNATURE
--------------------------------------------
Sincerely yours,
[Money Manager]
<PAGE>
EXHIBIT B
RECORDS TO BE MAINTAINED BY MONEY MANAGER
-----------------------------------------
*1. A record of each brokerage order, and all other portfolio purchases and
sales, given by the Money Manager or on behalf of the Fund for, or in
connection with, the purchase or sale of securities, whether executed or
unexecuted. Such records shall include:
A. The name of the broker,
B. The terms and conditions of the order, and of any modification
or cancellation thereof,
C. The time of entry or cancellation,
D. The price at which executed,
E. The time of receipt of report of execution, and
F. The name of the person who placed the order on behalf of the
Fund (Rule 31a-1(b)(5) and (6) of the 1940 Act).
*2. A record for each fiscal quarter, completed within ten (10) days after
the end of the quarter, showing specifically the basis or bases upon
which the allocation of orders for the purchase and sale of portfolio
securities to brokers or dealers was made, and the division of brokerage
commissions or other compensation on such purchase and sale orders. The
record:
A. Shall include the consideration given to:
(i) the sale of shares of the Fund
(ii) the supplying of services or benefits by brokers or
dealers to:
(a) The Fund,
(b) The Manager (Bennington Capital Management),
(c) Yourself (i.e., the Money Manager), and
(d) Any person other than the foregoing
(iii) Any other considerations other than the technical
qualifications of the brokers and dealers as such.
B. Shall show the nature of the services or benefits made available.
C. Shall describe in detail the application of any general or
specific formula or other determinant used in arriving at such
allocation of purchase and sale orders and such division of
brokerage commissions or other compensation.
D. The identities of the persons responsible for making the
determination of such allocation and such division of brokerage
commissions or other compensation (Rule 31a-1(b)(9) of the 1940
Act).
*3. A record in the form of an appropriate memorandum identifying the person
or persons, committees, or groups authorizing the purchase or sale of
portfolio securities. Where an authorization is made by a committee or
group, a record shall be kept of the names of its members who
participate in the authorization. There shall be retained as part of
this record any memorandum, recommendation, or instruction supporting or
authorizing the purchase or sale of portfolio securities (Rule
31a-1(b)(10) of the 1940 Act) and such other information as is
appropriate to support the authorization.**
*4. Such accounts, books and other documents as are required to be
maintained by registered investment advisers by rule adopted under
Section 204 of the Advisers Act , to the extent such records are
necessary or appropriate to record the Money Manager's transactions with
the Fund. (Rule 31a-1(f) of the 1940 Act).
5. All accounts, books, records or other documents that are required to be
maintained pursuant to the 1940 Act, the Advisers Act, or any rule or
regulation thereunder, need only be retained by the Money Manager as
required under such laws, rule or regulations. Any other account, book,
record or other document that is required to be maintained by the Money
Manager pursuant to this Exhibit B need only be maintained for five
years after the date of its creation.
* Maintained as property of the Fund pursuant to Rule 31a-3(a) of the
1940 Act.
** Such information might include: the current Form 10-K, annual and
quarterly reports, press releases, reports by analysts and from
brokerage firms (including their recommendations, i.e., buy, sell,
hold), and any internal reports or portfolio manager reviews.
<PAGE>
EXHIBIT C
MONEY MANAGER FEE
-----------------
The following compensation of the Money Manager for its services under
the Agreement shall be calculated and paid by the Fund (except that no such fees
shall be paid to the Manager as to any portion of the Portfolio for which it
acts as money manager):
Fees will be calculated and paid after the end of each calendar quarter
at one-fourth of an annual percentage rate as described in the following
paragraph and in the table below applied to the average daily net assets of the
Account. The net assets of the Account are determined by including receivables
and deducting payables. Expenses beyond the control of the Money Manager
including, but not limited to, fees payable to the Fund's Custodian, Accounting
Agent and Transfer Agent, fees of accountants, legal fees and expenses allocable
to the Portfolio are not included as payables of the Account, but expenses
within the control of the Money Manager including, but not limited to, brokerage
commissions are included in determining the net assets of the Account.
For the first five complete calendar quarters of management of the
Account by the Money Manager, the Fund will pay the Money Manager on a quarterly
basis at the following annual fee rates, applied to the average daily net assets
of the Portfolio.
Portfolio Total
Basic Fee Management Fee Annual Fee
--------------------------------------------------------
0.02% 0.02% 0.04%
Commencing with the sixth calendar quarter of management by the Money
Manager for the Account, the Fund will pay the Money Manager on a quarterly
basis an annual fee based on the schedule below as applied to the average daily
net assets of the Portfolio, capped at a maximum of 0.17%.
<TABLE>
<CAPTION>
Total
Average Annual Performance Annual Annual
Basic Fee Differential vs. Benchmark Index Performance Fee Fee
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
0.02% less than 0.35% 0.00% 0.02%
equal or greater than 0.35% and less than or equal to 0.50% 0.05% 0.07%
greater than 0.50% and less than or equal to 0.70% 0.05% plus 1/2 (P-0.50%)* Up to 0.17%
greater than 0.70% 0.15% 0.17%
- -- -----------------------
*P = Performance. Example: If Money Manager outperforms the benchmark index by 0.60%, the fee would be
calculated as [0.02% basic fee + 0.05% Performance Fee + {(0.60%-0.50%)/2}] = 0.12%
</TABLE>
The Account's performance differential versus the benchmark index is
recalculated at the end of each calendar quarter based on the Account's
performance during all calendar quarters since commencement of management by the
Money Manager for the Account through the next preceding calendar quarter, so
that the performance fee, although measured on an average annual rate of return
basis, covers all prior quarters except that of the immediately preceding
quarter. Commencing with the 14th calendar quarter of management by the Money
Manager for the Account, the Account's average annual performance differential
will be recalculated based on the Account's performance during the preceding 12
calendar quarters (other than the immediately preceding quarter) on a rolling
basis.
The Manager agrees to make every effort to minimize cash inflows and
outflows to the Account, and to attempt to limit them to once a month. For
purposes of calculating the performance of the benchmark index, the Fund, the
Manager and the Money Manager agree to accept the calculation provided by the
publisher of the index or another mutually acceptable source. For purposes of
calculating the performance differential versus the benchmark index, the
investment performance of the Account for any period, expressed as a percentage
of its net asset value per share at the beginning of such period, is equal to
the sum of: (i) the change in the net asset value per share of the Account
during such period; (ii) the value of the Account's cash distributions per share
accumulated to the end of such period; and (iii) the value of capital gains
taxes per share paid or payable on undistributed realized long-term capital
gains accumulated to the end of such period. For this purpose, the value of
distributions per share of realized capital gains, or dividends per share paid
from investment income and of capital gains taxes per share paid or payable on
undistributed realized long-term capital gains, shall be treated as reinvested
in shares of the Account at the net asset value per share in effect at the close
of business on the record date for the payment of such distributions and
dividends and the date on which provision is made for such taxes, after giving
effect to such distributions, dividends and taxes. The investment record of the
benchmark index for any period shall mean the sum of: (i) the change in the
level of the index during such period; and (ii) the value, computed consistently
with the index, of cash distributions made by companies whose securities
comprise the index accumulated to the end of such period; expressed as a
percentage of the index level at the beginning of such period. For this purpose
cash distributions on the securities which comprise the index shall be treated
as reinvested in the index at least as frequently as the end of each calendar
quarter following the payment of the dividend.
<PAGE>
EXHIBIT D
BENCHMARK INDEX
---------------
(September 21, 1998)
Portfolio Index
- --------- -----
Intermediate Fixed-Income Lehman Brothers Government/Corporate Index
<PAGE>
Exhibit (d)(10)
MONEY MANAGER AGREEMENT
Effective Date: September 21, 1998
Termination Date: Two years
after Effective Date
Portfolio and Account:
Approximately 90% of the
SHORT-INTERMEDIATE FIXED-INCOME PORTFOLIO
Xavier Urpi
President & Chief Investment Officer
Cypress Asset Management
26607 Carmel Center Place, Suite 101
Carmel, CA 93923
Re: Accessor Funds, Inc. Money Manager Agreement
Dear Mr. Urpi:
Accessor Funds, Inc., a Maryland corporation (the " Fund"), is an
open-end management investment company of the series type registered as an
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"), and subject to the rules and regulations promulgated thereunder.
The Fund issues shares in separate diversified portfolios, each with a different
investment objective and policies.
Bennington Capital Management L. P., a Washington limited partnership
(the "Manager") acts as the manager and administrator of the Fund pursuant to
the terms of a Management Agreement, and is an "investment adviser," as that
term is defined in Section 2(a)(20) of the 1940 Act, to the Fund. The Manager is
responsible for the day-to-day management and administration of the Fund and for
the coordination of investments of each portfolio's assets; however, specific
portfolio purchases and sales for each portfolio's investment portfolio, or a
portion thereof, are to be made by the portfolio management organizations
recommended and selected by the Manager, subject to the approval of the Board of
Directors of the Fund (the "Board").
1. Appointment as a Money Manager. The Manager and the Fund hereby
appoint and employ Cypress Asset Management, a California corporation (the
"Money Manager"), as a discretionary money manager to the Fund's
Short-Intermediate Fixed-Income Portfolio, on the terms and conditions set forth
herein. The Manager determines from time to time that portion of the assets of
the Short-Intermediate Fixed-Income Portfolio that are to be assigned to the
Money Manager (the "Account"). The Account and those assets of the
Short-Intermediate Fixed-Income Portfolio managed by the Manager or another
money manager as determined by the Manager are referred to as the "Portfolio".
2. Acceptance of Appointment; Standard of Performance. The Money Manager
accepts the appointment as a discretionary money manager and agrees to use its
best professional judgment to make and implement investment decisions for the
Fund with respect to the investments of the Account in accordance with the
provisions of this Agreement.
3. Portfolio Management Services of the Money Manager. The Money Manager
is hereby employed and authorized to select portfolio securities for investment
by the Portfolio, to determine to purchase and sell securities for the Account,
and upon making any purchase or sale decision, to place orders for the execution
of such portfolio transactions in accordance with paragraphs 5 and 6 hereof and
Exhibit A attached hereto and incorporated by this reference herein (as it may
be amended in writing by the parties from time to time). In providing portfolio
management services to the Account, the Money Manager shall be subject to such
investment restrictions as are set forth in the 1940 Act and rules thereunder,
the supervision and control of the Board, such specific instructions as the
Board may adopt and communicate to the Money Manager, the investment objectives,
policies and restrictions of the Portfolio furnished pursuant to paragraph 4,
and instructions from the Manager; and the Money Manager shall maintain on
behalf of the Fund the records listed in Exhibit B attached hereto and
incorporated by this reference herein (as it may be amended in writing by the
parties from time to time). At the Fund's or the Manager's reasonable request
(as communicated by the Board or the officers of such entities), the Money
Manager will consult with the officers of the Fund or the Manager, as the case
may be, with respect to any decision made by it with respect to the investments
of the Account.
4. Investment Objectives, Policies and Restrictions. The Fund shall
provide the Money Manager with a statement of the investment objectives and
policies of the Portfolio and any specific investment restrictions applicable
thereto as established by the Fund, including those set forth in its Prospectus
as amended from time to time. The Fund retains the right, on reasonable prior
written notice to the Money Manager from the Fund or the Manager, to modify any
such objectives, policies or restrictions in any manner at any time. The Money
Manager shall have no duty to investigate any instructions received from the
Fund, the Manager, or both, and, absent manifest error, such instructions shall
be presumed reasonable.
5. Transaction Procedures. All transactions will be consummated by
payment to or delivery by the Fund's custodian (the "Custodian"), or such
depositary or agents as may be designated by the Custodian, as custodian for the
Fund, of all cash and/or securities due to or from the Account, and the Money
Manager shall not have possession or custody thereof or any responsibility or
liability with respect thereto. The Money Manager shall advise the Custodian in
writing or by electronic transmission or facsimile of all investment orders for
the Portfolio placed by it with broker/dealers at the time and in the manner and
as set forth in Exhibit A hereto. The Fund shall issue to the Custodian such
instructions as may be appropriate in connection with the settlement of any
transaction initiated by the Money Manager. The Fund shall be responsible for
all custodial arrangements and the payment of all custodial charges and fees
and, upon the Money Manager giving proper instructions to the Custodian, the
Money Manager shall have no responsibility or liability with respect to
custodial arrangements or the acts, omissions or other conduct of the Custodian.
6. Allocation of Brokerage. The Money Manager shall have authority and
discretion to select broker/dealers to execute portfolio transactions initiated
by the Money Manager, and for the selection of the markets on/in which the
transaction will be executed.
A. In doing so, the Money Manager's primary objective shall be
to select a broker/dealer that can be expected to obtain the best net
price and execution for the Fund. However, this responsibility shall not
be deemed to obligate the Money Manager to solicit competitive bids for
each transaction; and the Money Manager shall have no obligation to seek
the lowest available commission cost to the Fund, so long as the Money
Manager believes in good faith, based upon its knowledge of the
capabilities of the firm selected, that the broker/dealer can be
expected to obtain the best price on a particular transaction and that
the commission cost is reasonable in relation to the total quality and
reliability of the brokerage and research services made available by the
broker/dealer to the Money Manager viewed in terms of either that
particular transaction or of the Money Manager's overall
responsibilities with respect to its clients, including the Fund, as to
which the Money Manager exercises investment discretion, notwithstanding
that the Fund may not be the direct or exclusive beneficiary of any such
services or that another broker/dealer may be willing to charge the Fund
a lower commission on the particular transaction.
B. The Fund shall retain the right to request that transactions
involving the Account that give rise to brokerage commissions in an
annual amount of up to 50% of the Money Manager's executed brokerage
commissions, shall be executed by broker/dealers which provide brokerage
or research services to the Fund or its Manager, or as to which an
ongoing relationship will be of value to the Fund with respect to the
Portfolio, which services and relationship may, but need not, be of
direct benefit to the Portfolio so long as (i) the Money Manager
believes in good faith, based upon its knowledge of the capabilities of
the firm selected, that the broker/dealer can be expected to obtain the
best price on a particular transaction and (ii) the Fund determines that
the commission cost is reasonable in relation to the total quality and
reliability of the brokerage and research services made available to the
Fund, or to the Manager for the benefit of its clients for which it
exercises investment discretion, notwithstanding that the Portfolio may
not be the direct or exclusive beneficiary of any such service or that
another broker/dealer may be willing to charge the Fund a lower
commission on the particular transaction. The Money Manager may reject
any request for directed brokerage that does not appear to it to be
reasonable.
C. The Fund agrees that it will provide the Money Manager with a
list of broker/dealers which are "affiliated persons" of the Fund and
its other money managers. Upon receipt of such list, the Money Manager
agrees that it will not execute any portfolio transactions with a
broker/dealer which is an "affiliated person" (as defined in the 1940
Act) of the Fund or of any money manager for the Fund unless it is in
accordance with the procedures of the Fund.
D. As used in this paragraph 6, "brokerage and research
services" shall be those services described in Section 28(e)(3) of the
Securities Exchange Act of 1934, as amended.
7. Proxies. Unless the Manager gives written instructions to the
contrary, the Money Manager shall vote all proxies solicited by or with respect
to the issuers of securities in which assets of the Account may be invested. The
Money Manager shall use its best good faith judgment to vote such proxies in a
manner which best serves the interests of the Portfolio's shareholders.
8. Reports to the Money Manager. The Fund and the Manager shall furnish
or otherwise make available to the Money Manager such information relating to
the business affairs of the Fund, including periodic reports concerning the
Portfolio, as the Money Manager at any time, or from time to time, may
reasonably request in order to discharge its obligations hereunder.
9. Fees for Services.
A. The compensation of the Money Manager for its services under
this Agreement shall be calculated and paid by the Fund in accordance
with Exhibit C attached hereto and incorporated by this reference
herein. The Money Manager acknowledges that any such fee is payable
solely out of assets of the Portfolio's Account.
B. The Money Manager acknowledges that the index against which
the Money Manager's performance is based (the "benchmark index"), as set
forth on Exhibit D, attached hereto and incorporated herein by reference
as may be amended from time to time, may be changed by the Board,
including a majority of the directors who are not parties to this
Agreement (as defined in the 1940 Act) or interested persons of any such
party, upon at least one quarter's prior notice. The Money Manager
acknowledges that a change in the benchmark index may alter the
subsequent return of the index measure, but performance prior to the
change in the benchmark index will continue to be based on the former
benchmark index.
10. Other Investment Activities of the Money Manager. The Fund
acknowledges that the Money Manager, or one or more of its affiliates, may have
investment responsibilities or render investment advice to, or perform other
investment advisory services for, other individuals or entities (the "Affiliated
Accounts"). Subject to the provisions of paragraph 2 hereof, the Fund agrees
that the Money Manager and its affiliates may give advice, exercise investment
responsibility and take other action with respect to the Affiliated Accounts
which may differ from the advice given or the timing or nature of action taken
with respect to the Account, provided that the Money Manager acts in good faith,
and provided further that it is the Money Manager's policy to allocate, within
its reasonable discretion, investment opportunities to the Account over a period
of time on a fair and equitable basis relative to the Affiliated Accounts,
taking into account the investment objectives and policies of the Portfolio and
any specific investment restrictions applicable thereto. The Fund acknowledges
that one or more of the Affiliated Accounts may at any time hold, acquire,
increase, decrease, dispose of or otherwise deal with positions in investments
in which the Account may have an interest from time to time, whether in
transactions which may involve the Account or otherwise. The Money Manager shall
have no obligation to acquire for the Account a position in any investment which
any Affiliated Account may acquire, and the Portfolio shall have no first
refusal, co-investment or other rights in respect of any such investment, either
for the Account or otherwise.
11. Certificate of Authority. Each of the Fund, the Manager and the
Money Manager shall furnish to the others from time to time certified copies of
the resolutions of its Board of Directors, Board of Trustees, Managing Partner
or executive committee, as the case may be, evidencing the authority of its
officers and employees who are authorized to act on behalf of it.
12. Limitation of Liability. The Money Manager shall not be liable for,
and shall be indemnified by the Fund for any action taken, omitted or suffered
to be taken by it in its reasonable judgment, in good faith and believed by it
to be authorized or within the discretion or rights or powers conferred upon it
by this Agreement, or in accordance with (or in the absence of) specific
directions or instructions from the Fund or the Manager; provided, however, that
such acts or omissions shall not have resulted from the Money Manager's willful
misfeasance, bad faith or gross negligence, violation of applicable law, or
reckless disregard of its duty or of its obligations hereunder. The rights and
obligations that are provided for in this Paragraph 12 shall survive the
cancellation, expiration or termination of this Agreement.
13. Confidentiality. Subject to the right of each money manager and the
Fund to comply with applicable law, including any demand or request of any
regulatory or taxing authority having jurisdiction over it, the parties hereto
shall treat as confidential all information pertaining to the Portfolio and the
actions of each money manager, the Manager and the Fund in respect thereof,
other than any such information which is or hereafter becomes ascertainable from
public or published information or trade sources. The rights and obligations
that are provided for in this Paragraph 13 shall survive the cancellation,
expiration or termination of this Agreement.
14. Use of the Money Manager's Name. The Fund and the Manager agree to
furnish the Money Manager at its principal office prior to use thereof copies of
all prospectuses, proxy statements, reports to stockholders, sales literature,
or other material prepared for distribution to stockholders of the Fund or the
public that refer in any way to the Money Manager, and not to use such material
if the Money Manager reasonably objects in writing within three business days
(or such other time as may be mutually agreed) after receipt thereof. In the
event of termination of this Agreement, the Fund and the Manager will continue
to furnish to the Money Manager copies of any of the above-mentioned materials
that refer in any way to the Money Manager, and will not use such material if
the Money Manager reasonably objects in writing within three business days (or
such other time as may be mutually agreed) after receipt thereof.
15. Assignment. No assignment, as that term is defined in Section
2(a)(4) of the 1940 Act, of this Agreement shall be made by the Money Manager,
and this Agreement shall terminate automatically in the event that it is
assigned. The Money Manager shall notify the Manager and the Fund in writing
sufficiently in advance of any proposed change of control, as defined in Section
2(a)(9) of the 1940 Act, to enable the Manager and the Fund to consider whether
an assignment, as that term is defined in Section 2(a)(4) of the 1940 Act, will
occur, and to take the steps necessary to enter into a new money manager
agreement with the Money Manager.
16. Representations, Warranties and Agreements of the Investment
Company. The Fund represents, warrants and agrees that:
A. The Money Manager has been duly appointed by the Board to
provide investment services to the Account as contemplated hereby.
B. The Fund will deliver to the Money Manager a true and
complete copy of its current prospectus as effective from time to time,
such other documents or instruments governing the investments of
Portfolio, and such other information as is necessary for the Money
Manager to carry out its obligations under this Agreement.
C. The organization of the Fund and the conduct of the business
of the Portfolio as contemplated by this Agreement, materially complies,
and shall at all times materially comply, with the requirements imposed
upon the Fund by applicable law.
17. Representations, Warranties and Agreements of Manager. Manager
represents, warrants and agrees that:
A. The Manager acts as an "investment adviser," as that term is
defined in Section 2(a)(20) of the 1940 Act, pursuant to a Management
Agreement with the Fund.
B. The appointment of the Money Manager by the Manager to
provide the investment services as contemplated hereby has been approved
by the Board.
C. The Manager is registered as an "investment adviser" under
the Investment Advisers Act of 1940, as amended (the "Advisers Act").
18. Representations, Warranties and Agreements of Money Manager. The
Money Manager represents, warrants and agrees that:
A. The Money Manager is registered as an "investment adviser"
under the Advisers Act; or it is a "bank" as defined in Section
202(a)(2) of the Advisers Act or an "insurance company" as defined in
Section 202(a)(12) of the Advisers Act and is exempt from registration
thereunder.
B. The Money Manager will maintain, keep current and preserve on
behalf of the Fund, the records identified in Exhibit B, in the manner
required by such Exhibit. The Money Manager agrees that such records
(other than those required by No. 4 of Exhibit B) are the property of
the Fund and will be surrendered to the Fund promptly upon request.
C. The Money Manager will adopt or has adopted a written code of
ethics complying with the requirements of Rule 17j-1 under the 1940 Act,
will provide to the Fund a copy of the code of ethics and evidence of
its adoption, and will make such reports to the Fund as required by Rule
17j-1 under the 1940 Act. The Money Manager has policies and procedures
sufficient to enable the Money Manager to detect and prevent the misuse
of material, nonpublic information by the Money Manager or any person
associated with the Money Manager, in compliance with the Insider
Trading and Securities Fraud Enforcement Act of 1988.
D. The Money Manager will notify the Fund of any changes in the
membership of its partnership or in the case of a corporation in the
ownership of more than five percent of its voting securities, within a
reasonable time after such change.
19. Amendment. This Agreement may be amended at any time, but only by
written agreement among the Money Manager, the Manager and the Fund, which
amendment, other than amendments to Exhibits A and B, must be approved by the
Board in the manner required by the 1940 Act.
20. Effective Date; Term. This Agreement shall become effective for the
Portfolio on the effective date set forth on page 1 of this Agreement, and shall
continue in effect until the termination date set forth on page 1 of this
Agreement. Thereafter, the Agreement shall continue in effect for successive
annual periods only so long as its continuance has been specifically approved at
least annually (a) by a vote of a majority of the Board or (b) by a vote of a
majority of the outstanding voting securities (as defined in the 1940 Act) of
the Portfolio for which the Money Manager acts as money manager, and in either
case by a majority of the directors who are not parties to the Agreement or
interested persons of any parties to the Agreement (other than as directors of
the Fund) cast in person at a meeting called for purposes of voting on the
Agreement.
21. Termination. This Agreement may be terminated, without the payment
of any penalty, by the Board, the Manager, the Money Manager or by the vote of a
majority of the outstanding voting securities (as that term is defined in the
1940 Act) of the Portfolio for which the Money Manager acts as money manager,
upon 60 days' prior written notice to the other parties hereto. Any such
termination shall not affect the status, obligations or liabilities of any party
hereto to any of the other parties that accrued prior to such termination.
22. Applicable Law. To the extent that state law shall not have been
preempted by the provisions of any laws of the United States heretofore or
hereafter enacted, as the same may be amended from time to time, this Agreement
shall be administered, construed and enforced according to the laws of the State
of Washington.
ACCESSOR FUNDS, INC. BENNINGTON CAPITAL
MANAGEMENT L.P.
By Bennington Management Associates, Inc.
Its Managing General Partner
BY:/s/Ravindra A. Deo BY:/s/J. Anthony Whatley,III
Ravindra A. Deo J. Anthony Whatley, III
Vice President President
DATE:9/15/98 DATE:9/21/98
Accepted and agreed to:
CYPRESS ASSET MANAGEMENT
By:/s/Xavier Urpi
Xavier Urpi
President & Chief Investment Officer
DATE:9/17/98
EXHIBITS: A. Operational Procedures (including Schedules 1 and 2).
B. Recordkeeping Requirements.
C. Fee Schedule.
<PAGE>
EXHIBIT A
OPERATIONAL PROCEDURES
----------------------
The Money Manager (the "MM") shall abide by certain rules and procedures
in order to minimize operational problems. The MM will be required to have
various records and files (as required by regulatory agencies) at its offices.
The MM will have to maintain a certain flow of information to Fifth Third Bank
("Fifth Third") the Fund's accounting agent and the custodian bank.
The MM will be required to furnish Fifth Third with daily information as
to executed trades. Fifth Third should receive this data no later than the
morning following the day of the trade. The necessary information should be
transmitted via facsimile machine or electronic transmission to Fifth Third.
Upon receipt of brokers' confirmations, the MM or Fifth Third will be required
to notify the other party if any differences exist. The reporting of trades by
the MM to Fifth Third must include the following:
o Name of the Portfolio of the Fund as to which trade relates
o Whether Purchase or Sale
o Security name
o Number of shares or principal amount
o Price per share or bond
o Commission rate per share or bond, or if a net trade
o Executing broker
o Trade date
o Settlement date
o If security is not eligible for DTC (Purchase only)
When opening accounts with brokers for the Fund, the account should be a
cash account. No margin accounts are to be maintained. The broker should be
advised to use Fifth Third's ID system number to facilitate the receipt of
information by Fifth Third . If this procedure is followed, DK problems will be
held down to a minimum and additional costs of security trades will not become
an important factor in doing business. Delivery and receipt instructions are
attached as Schedule 1.
The MM will also be required to submit to Fifth Third a daily trade
authorization form signed by two authorized individuals prior to settlement
date. A list of authorized persons with specimen signatures must be sent to
Fifth Third (see Schedule 2). The authorization will contain information on
which Fifth Third and Fifth Third can rely to either accept delivery or deliver
out of the account securities as per each trade by the MM. A preprinted form
will be supplied to the MM by the Fund, or the MM may use an equivalent form
acceptable to Fifth Third and the Fund.
<PAGE>
SCHEDULE 1 TO EXHIBIT A
-----------------------
FIFTH THIRD BANK
DELIVERY INSTRUCTIONS FOR
THE ACCESSOR FUNDS, INC. - SHORT/INTERMEDIATE FIXED INCOME PORTFOLIO
I. DTC ELIGIBLE SECURITIES
-----------------------
Participant Number 2116
Agent Bank Number 10016
Institution Number 11153* *Note: If you have your own Institution
number, please substitute that
Customer Acct Number 010033141355 number for Fifth Third's.
II. FEDERAL RESERVE WIRE TRANSFERS
------------------------------
ABA #042000314
FOR FURTHER CREDIT TO: #010033141355
III. FEDERAL RESERVE ELIGIBLE SECURITIES: REPURCHASE AGREEMENTS:
------------------------------------ ----------------------
THROUGH FED CINCINNATI THROUGH FED CINCINNATI
ABA #042000314/Fifth Cin/1050 ABA #042000314/Fifth Cin/1040
FFC: Accessor Short/Int Fxd Inc Port, FFC: Accessor Short/Int Fxd
A/C 010033141355 Inc Port, A/C 010033141355
IV. PTC ELIGIBLE SECURITIES (i.e. GNMAs)
------------------------------------
A/C FIFTH
F/A/O Accessor Short/Intermediate Fixed Income Portfolio
A/C #010033141355
V. PHYSICAL/INELIGIBLE
-------------------
PHYSICAL NEW YORK
Bank of New York
One Wall Street - Securities Department
3rd Floor - "Window A"
New York, NY 10286
FFC: Fifth Third Bank - A/C #135500
EUROCLEAR
(Payment due 1 day prior to settlement date)
Euroclear #97816
A/C The Bank of New York
Ref: Fifth Third Bank
A/C #135500
<PAGE>
SCHEDULE 2 TO EXHIBIT A
-----------------------
Example of Authorized Signature Letter
(To Be Typed on Your Letterhead)
[DATE]
Fifth Third, Inc.
Fifth Third Center
38 Fountain Square Plaza
Cincinnati, OH 45263
Attention: Accessor Funds, Inc. - Short-Intermediate Fixed-Income Portfolio
Re: Persons Authorized to Execute Trades For Short-Intermediate
Fixed-Income Portfolio
The following individuals are authorized to execute and report trade
instructions on behalf of the Portfolio. Should there be any changes to the list
of authorized persons , we will notify you immediately of those changes.
NAME SIGNATURE
------------------------------------------
Sincerely yours,
[Money Manager]
<PAGE>
EXHIBIT B
RECORDS TO BE MAINTAINED BY MONEY MANAGER
-----------------------------------------
*1. A record of each brokerage order, and all other portfolio purchases and
sales, given by the Money Manager or on behalf of the Fund for, or in
connection with, the purchase or sale of securities, whether executed or
unexecuted. Such records shall include:
A. The name of the broker,
B. The terms and conditions of the order, and of any modification
or cancellation thereof,
C. The time of entry or cancellation,
D. The price at which executed,
E. The time of receipt of report of execution, and
F. The name of the person who placed the order on behalf of the
Fund (Rule 31a-1(b)(5) and (6) of the 1940 Act).
*2. A record for each fiscal quarter, completed within ten (10) days after
the end of the quarter, showing specifically the basis or bases upon
which the allocation of orders for the purchase and sale of portfolio
securities to brokers or dealers was made, and the division of brokerage
commissions or other compensation on such purchase and sale orders. The
record:
A. Shall include the consideration given to:
(i) the sale of shares of the Fund
(ii) the supplying of services or benefits by brokers or
dealers to:
(a) The Fund,
(b) The Manager (Bennington Capital Management),
(c) Yourself (i.e., the Money Manager), and
(d) Any person other than the foregoing
(iii) Any other considerations other than the technical
qualifications of the brokers and dealers as such.
B. Shall show the nature of the services or benefits made available.
C. Shall describe in detail the application of any general or
specific formula or other determinant used in arriving at such
allocation of purchase and sale orders and such division of
brokerage commissions or other compensation.
D. The identities of the persons responsible for making the
determination of such allocation and such division of brokerage
commissions or other compensation (Rule 31a-1(b)(9) of the 1940
Act).
*3. A record in the form of an appropriate memorandum identifying the person
or persons, committees, or groups authorizing the purchase or sale of
portfolio securities. Where an authorization is made by a committee or
group, a record shall be kept of the names of its members who
participate in the authorization. There shall be retained as part of
this record any memorandum, recommendation, or instruction supporting or
authorizing the purchase or sale of portfolio securities (Rule
31a-1(b)(10) of the 1940 Act) and such other information as is
appropriate to support the authorization.**
*4. Such accounts, books and other documents as are required to be
maintained by registered investment advisers by rule adopted under
Section 204 of the Advisers Act , to the extent such records are
necessary or appropriate to record the Money Manager's transactions with
the Fund. (Rule 31a-1(f) of the 1940 Act).
5. All accounts, books, records or other documents that are required to be
maintained pursuant to the 1940 Act, the Advisers Act, or any rule or
regulation thereunder, need only be retained by the Money Manager as
required under such laws, rule or regulations. Any other account, book,
record or other document that is required to be maintained by the Money
Manager pursuant to this Exhibit B need only be maintained for five
years after the date of its creation.
* Maintained as property of the Fund pursuant to Rule 31a-3(a) of the
1940 Act.
** Such information might include: the current Form 10-K, annual and
quarterly reports, press releases, reports by analysts and from
brokerage firms (including their recommendations, i.e., buy, sell,
hold), and any internal reports or portfolio manager reviews.
<PAGE>
EXHIBIT C
MONEY MANAGER FEE
-----------------
The following compensation of the Money Manager for its services under
the Agreement shall be calculated and paid by the Fund (except that no such fees
shall be paid to the Manager as to any portion of the Portfolio for which it
acts as money manager):
Fees will be calculated and paid after the end of each calendar quarter
at one-fourth of an annual percentage rate as described in the following
paragraph and in the table below applied to the average daily net assets of the
Account. The net assets of the Account are determined by including receivables
and deducting payables. Expenses beyond the control of the Money Manager
including, but not limited to, fees payable to the Fund's Custodian, Accounting
Agent and Transfer Agent, fees of accountants, legal fees and expenses allocable
to the Portfolio are not included as payables of the Account, but expenses
within the control of the Money Manager including, but not limited to, brokerage
commissions are included in determining the net assets of the Account.
For the first five complete calendar quarters of management of the
Account by the Money Manager, the Fund will pay the Money Manager on a quarterly
basis at the following annual fee rates, applied to the average daily net assets
of the Portfolio.
Portfolio Total
Basic Fee Management Fee Annual Fee
--------------------------------------------------------
0.02% 0.02% 0.04%
Commencing with the sixth calendar quarter of management by the Money
Manager for the Account, the Fund will pay the Money Manager on a quarterly
basis an annual fee based on the schedule below as applied to the average daily
net assets of the Portfolio, capped at a maximum of 0.17%.
<TABLE>
Total
Average Annual Performance Annual Annual
Basic Fee Differential vs. Benchmark Index Performance Fee Fee
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
0.02% less than 0.35% 0.00% 0.02%
equal or greater than 0.35% and less than or equal to 0.50% 0.05% 0.07%
greater than 0.50% and less than or equal to 0.70% 0.05% plus 1/2 (P-0.50%)* Up to 0.17%
greater than 0.70% 0.15% 0.17%
- -- -----------------------
*P = Performance. Example: If Money Manager outperforms the benchmark index by 0.60%, the fee would be
calculated as [0.02% basic fee + 0.05% Performance Fee + {(0.60%-0.50%)/2}] = 0.12%
</TABLE>
The Account's performance differential versus the benchmark index is
recalculated at the end of each calendar quarter based on the Account's
performance during all calendar quarters since commencement of management by the
Money Manager for the Account through the next preceding calendar quarter, so
that the performance fee, although measured on an average annual rate of return
basis, covers all prior quarters except that of the immediately preceding
quarter. Commencing with the 14th calendar quarter of management by the Money
Manager for the Account, the Account's average annual performance differential
will be recalculated based on the Account's performance during the preceding 12
calendar quarters (other than the immediately preceding quarter) on a rolling
basis.
The Manager agrees to make every effort to minimize cash inflows and
outflows to the Account, and to attempt to limit them to once a month. For
purposes of calculating the performance of the benchmark index, the Fund, the
Manager and the Money Manager agree to accept the calculation provided by the
publisher of the index or another mutually acceptable source. For purposes of
calculating the performance differential versus the benchmark index, the
investment performance of the Account for any period, expressed as a percentage
of its net asset value per share at the beginning of such period, is equal to
the sum of: (i) the change in the net asset value per share of the Account
during such period; (ii) the value of the Account's cash distributions per share
accumulated to the end of such period; and (iii) the value of capital gains
taxes per share paid or payable on undistributed realized long-term capital
gains accumulated to the end of such period. For this purpose, the value of
distributions per share of realized capital gains, or dividends per share paid
from investment income and of capital gains taxes per share paid or payable on
undistributed realized long-term capital gains, shall be treated as reinvested
in shares of the Account at the net asset value per share in effect at the close
of business on the record date for the payment of such distributions and
dividends and the date on which provision is made for such taxes, after giving
effect to such distributions, dividends and taxes. The investment record of the
benchmark index for any period shall mean the sum of: (i) the change in the
level of the index during such period; and (ii) the value, computed consistently
with the index, of cash distributions made by companies whose securities
comprise the index accumulated to the end of such period; expressed as a
percentage of the index level at the beginning of such period. For this purpose
cash distributions on the securities which comprise the index shall be treated
as reinvested in the index at least as frequently as the end of each calendar
quarter following the payment of the dividend.
<PAGE>
EXHIBIT D
BENCHMARK INDEX
---------------
(September 21, 1998)
Portfolio Index
- --------- -----
Short-Intermediate Fixed-Income Lehman Brothers Government/Corporate 1-5
Year Index
<PAGE>
Exhibit i
Kirkpatrick & Lockhart, LLP
One International Place
13th Floor
Boston, Massachusetts 02110
Telephone (617) 261-3100
Facsimile (617) 261-3175
April 30, 1999
Accessor Funds, Inc.
1420 Fifth Avenue
Suite 3600
Seattle, Washington 98101
Ladies and Gentlemen:
We have acted as counsel to Accessor Funds, Inc., a Maryland
corporation (the "Company"), in connection with Post-Effective Amendment No. 15
(the "PEA") to the Company's Registration Statement on Form N-1A (File No.
33-41245), relating to the issuance and sale of Shares of the Company. You have
requested our opinion with respect to the matters set forth below.
In this opinion letter, the term "Shares" refers to the Investor Class
and Advisor Class shares of common stock of Growth Fund, Value Fund, Small to
Mid Cap Fund, International Equity Fund, Intermediate Fixed-Income Fund,
Short-Intermediate Fixed-Income Fund, Mortgage Securities Fund, and U.S.
Government Money Fund, each of which is a series ("Series") of the Company, that
may be issued during the time that the PEA is effective and has not been
superseded by a post-effective amendment and is limited to an aggregate
(including shares that are issued and outstanding as of the effective date of
the PEA but excluding shares that, as of the date a Share is issued, have been
redeemed) of 15,000,000,000 shares of the Company.
In connection with rendering the opinions set forth below, we have
examined copies of the Company's Articles of Incorporation and by-laws, and
resolutions and minutes of meetings of the Company's Board of Directors relating
to the PEA and the issuance and sale of the Shares. We have also examined and
relied upon certificates of public officials and, as to certain matters of fact
that are material to our opinions, we have also relied on a certificate of an
officer of the Company. We have not independently established the facts so
relied on.
The opinions expressed in this opinion letter are limited to the laws
(other than the laws relating to choice of law) of the State of Maryland that in
our experience are normally applicable to the issuance of shares by corporations
and to the Securities Act of 1933 ("1933 Act"), the Investment Company Act of
1940 ("1940 Act") and the regulations of the Securities and Exchange Commission
thereunder.
Based on and subject to the foregoing, it is our opinion that:
1. The issuance of the Shares has been duly authorized by the Company.
2. When sold in accordance with the terms contemplated by the PEA,
including receipt by the Company of full payment for the Shares and compliance
with the 1933 Act and the 1940 Act, the Shares will have been validly issued and
will be fully paid and non-assessable.
We hereby consent to the filing of this opinion letter as an exhibit to
the PEA and to the reference to our firm in the statement of additional
information that is being filed as part of the PEA.
Very truly yours,
KIRKPATRICK & LOCKHART LLP
/S/ KIRKPATRICK & LOCKHART LLP
<PAGE>
Exhibit (l)
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Post-Effective Amendment No. 15 to Registration
Statement under the Securities Act of 1933, filed under Registration Statement
No. 33-41245 of our report dated February 15, 1999, relating to Accessor Funds,
Inc., including Growth Portfolio, Value and Income Portfolio, Small to Mid Cap
Portfolio, International Equity Portfolio, Intermediate Fixed-Income Portfolio,
Short-Intermediate Fixed-Income Portfolio, Mortgage Securities Portfolio, and
U.S. Government Money Portfolio, incorporated by reference in the Statement of
Additional Information and to the references to us under the captions "Financial
Highlights" and "Independent Auditors", in such Registration Statement.
/s/Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
New York, New York
April 23, 1999
<PAGE>
Exhibit (o)(1)
ACCESSOR FUNDS, INC.
Amended Rule 18f-3 Plan
Rule l8f-3 under the Investment Company Act of 1940, as amended (the
"1940 Act"), requires that the board of directors of an investment company
desiring to offer multiple classes of shares (each a "Class") pursuant to the
Rule adopt a plan setting forth the separate distribution arrangements and
expense allocations of each Class, and any related conversion features or
exchange privileges. The differences in distribution arrangements and expenses
among these Classes, and the exchange features of each Class, are set forth
below in this Rule 18f-3 Plan (the "18f-3 Plan"), which is subject to change, to
the extent permitted by law and by the governing documents of Accessor Funds,
Inc., a corporation organized under the laws of the State of Maryland (the
"Fund"), by action of the Board of Directors (the "Directors") of the Fund.
This 18f-3 Plan is adopted as of February 19, 1998 by the Directors of
the Fund, including a majority of the non-interested Directors, which desires to
offer multiple classes for the portfolios set forth on Schedule A (each a
"Portfolio" and collectively, the "Portfolios"), as may be amended from time to
time, and has determined that the following 18f-3 Plan is in the best interests
of each class individually and the Fund as a whole:
1. Class Designation: Each now existing and hereafter created Portfolio
of the Fund is authorized to issue from time to time its shares of beneficial
interest in two classes: Advisor Class Shares and Investor Class Shares.
2. Differences in Services: The services offered to shareholders of
each Class shall be substantially the same, except that financial institutions,
retirement plans, broker-dealers, depository institutions, institutional
shareholders of record, registered investment advisers and other financial
intermediaries and various brokerage firms or other industry recognized service
providers of fund supermarkets or similar programs (collectively "Service
Organizations") may be compensated or have their expenses reimbursed for
providing distribution services, shareholder services and/or administrative and
accounting services to or on behalf of their clients or customers who
beneficially own Investor Class Shares of the Portfolios.
3. Differences in Distribution Arrangements: Shares of each Class of
the Portfolios shall represent an equal pro rata interest in such Portfolio and,
generally, shall have identical voting, dividend, liquidation, and other rights,
preferences, powers, restrictions, limitations, qualifications and terms and
conditions, except that: (a) each Class shall have a different designation; (b)
each Class of shares shall bear any Class Expenses, as defined in Section 4
below and (c) each Class shall have separate voting rights on any matter
submitted to shareholders in which the interests of one Class differ from the
interests of any other Class for which class voting is required under applicable
law, and each Class shall have exclusive voting rights on any matter submitted
to shareholders that relates solely to its distribution, shareholder service or
administrative services arrangements. These features are subject to change, to
the extent permitted by law and by the Articles of Incorporation and By-Laws of
the Fund, by action of the Board of Directors of the Fund.
The Fund has not adopted an administrative service plan, distribution
plan or shareholder service plan with respect to Advisor Class shares, which
shall be offered by the Fund at net asset value with no distribution,
shareholder or administrative service fees paid by the Fund. Advisor Class
shares are available to investors whose minimum initial purchase is at least
$5,000 per Portfolio or $10,000 in aggregate across the Portfolios and
subsequent investments of $1,000 per Portfolio or $2,000 in aggregate across the
Portfolios, subject to such waivers or variations as from time to may be in
effect. Advisor Class Shares may be offered through certain Service
Organizations that may impose additional or different conditions on the purchase
or redemption of Fund shares and may charge transaction or account fees, which
charges or fees would not be imposed if the Investor Class Shares are purchased
directly from the Fund. Service Organizations are responsible for transmitting
to their customers a schedule of any such fees and conditions. The Fund pays no
compensation to such entities and receives none of the fees or transaction
charges. Bennington may separately enter into arrangements from time to time
with certain Service Organizations to provide administrative, accounting and/or
other services with respect to Advisor Class Shares and may directly compensate
the Service Organizations.
Investor Class Shares may be charged a fee pursuant to a Shareholder
Service Plan, a fee pursuant to an Administrative Services Plan and/or shall
make directly or cause to be made payments for costs and expenses to third
parties or reimbursement of expenses to third parties incurred in connection
with a Distribution Plan adopted under Rule 12b-1 of the 1940 Act. The amounts
of the payments or fees under the relevant Distribution Plan, Shareholder
Service Plan or Administrative Services Plan are set forth on Schedule B hereto.
The minimum initial purchase of Investor Class Shares shall be $5,000 per
Portfolio or $10,000 in aggregate across the Portfolios and subsequent purchases
of Investor Class Shares shall be $1,000 per Portfolio or $2,000 in aggregate
across the Portfolios. Additional payments may be made by Bennington from time
to time to Service Organizations for providing other services with respect to
Investor Class Shares. Various brokerage firms or other industry recognized
service providers of fund supermarkets or similar programs generally require
customers to pay either no or low transaction fees in connection with purchases
or redemptions. Certain features of the Investor Class Shares, such as the
initial and subsequent investment minimums, redemption fees and certain trading
restrictions, may be modified or waived by Service Organizations. Service
Organizations may impose transaction or administrative charges or other direct
charges, which charges or fees would not be imposed if the Investor Class Shares
are purchased directly from the Fund.
4. Income and Expense Allocation: The following expenses (the "Class
Expenses") will be allocated, to the extent practicable, on a Class-by-Class
basis: (a) payments or reimbursements under the Distribution Plan, and fees
under the Shareholder Service Plan or Administrative Services Plan (as relevant)
; (b) printing and postage expenses related to preparing and distributing
materials, shareholder reports, prospectuses and proxies to current shareholders
of a specific Class; (c) Securities and Exchange Commission and Blue Sky
registration fees incurred by a specific Class; (d) the expense of
administrative personnel and services as required to support the shareholders of
a specific Class; (e) litigation or other legal expenses relating solely to a
specific Class; (f) Board members' fees incurred as a result of issues relating
to a specific Class; (g) expenses incurred in connection with shareholders'
meetings as a result of issues relating to a specific class; (h) transfer agent
fees identified by the Fund's Transfer Agent as being attributable to a specific
class; and (i) and; (b), to the extent practicable, any additional expenses, not
including advisory or custodial fees or other expenses related to the management
of the Fund's assets, if these expenses are actually incurred in a different
amount with respect to a Class, or if services are provided with respect to a
Class that are of a different kind or to a different degree than with respect to
one or more other Classes.
The distribution, shareholder and administrative services fees and
other expenses listed above, which are attributable to a particular Class are
charged directly to the net assets of the particular Class and, thus, are borne
on a pro rata basis by the outstanding shares of that Class; provided, however,
that the U.S. Government Money Portfolio and other Portfolios making daily
distributions of their net investment income may allocate these items on the
basis of relative net assets, after subtracting the value of subscriptions for
non-settled shares (i.e., shares for which payment in federal funds has not been
received, the "Settled Shares Method"). The gross income of each Portfolio, as
well as realized and unrealized capital gains and losses, shall be allocated to
each Class on the basis of net assets. All expenses not now or hereafter
designated as Class Expenses ("Fund Expenses") will be allocated to each class
and subtracted from the gross income on the basis of the net asset value of that
Class in relation to the net asset value of the Fund. Fund Expenses are expenses
incurred by the Fund (for example, advisory fees, custodial fees, or other
expenses relating to the management of the Fund's assets.)
5. Exchange Privileges: Shares of a Class are exchangeable for shares
of the same Class of another Portfolio of the Fund. Shareholders may also
exchange shares of one Class of a Portfolio at net asset value for shares of the
same Class offered by another Portfolio, provided that the exchange is made in
states where the securities being acquired are properly registered. Advisor
Class Shares of a Portfolio may be exchanged for Investor Class Shares offered
by a Portfolio, or vice versa, provided that the Advisor Class or Investor Class
shareholder, as the case may be, meets the eligibility requirements of the class
into which the shareholder seeks to exchange, as described in the relevant
Prospectus of the Fund.
6. Dividends and Distributions. Each Portfolio pays out as dividends
substantially all of its net investment income (which comes from dividends and
interest it receives from its investments) and net realized short-term capital
gains. All dividends and/or distributions will be paid in the form of additional
shares of the Class of shares of the Fund to which the dividends and/or
distributions relate or, at the election of the shareholder, of another
Portfolio of the Fund at net asset value of such Portfolio, unless the
shareholder elects to receive cash. Dividends paid by each Portfolio are
calculated in the same manner and at the same time with respect to each Class.
7. Additional Information. This 18f-3 Plan is qualified by and subject
to the terms of the then current Prospectus for the applicable Class; provided,
however, that none of the terms set forth in any prospectus shall be
inconsistent with the terms of the Classes contained in this 18f-3 Plan. The
prospectus for each Class contains additional information about that Class and
the applicable Portfolio's multi class structure.
8. Board Review. The Board of Directors shall review this 18f-3 Plan as
frequently as it deems necessary, the initial expense allocations, and any
subsequent changes thereof, shall be reviewed and approved by the Directors,
including a majority of the those Directors who are not interested persons
(deemed to have the same meaning that this term has under the 1940 Act, by the
Securities and Exchange Commission) of the Fund and who have no direct or
indirect financial interest in the operation of the Administrative Services Plan
(the "Qualified Directors"), cast in person at a meeting called for the purpose
of voting on the 18f-3 Plan in light of the requirements of the 1940 Act and the
Internal Revenue Code of 1986, as amended. Prior to any material amendment(s) to
this 18f-3 Plan, the Board of Directors, including a majority of the Qualified
Directors Directors who are not interested persons (deemed to have the same
meaning that this term has under the 1940 Act) of the Fund, shall find that the
18f-3 Plan, as proposed to be amended (including any proposed amendments to the
method of allocating Class and/or Fund Expenses), is in the best interest of
each Class of shares of a Portfolio individually, and the best interest of each
of the Portfolios and the Fund as a whole. In considering whether to approve any
proposed amendment(s) to the Plan, the Directors shall request and evaluate such
information as they consider reasonably necessary to evaluate the proposed
amendment(s) to the Plan.
Dated: February 19, 1998, as amended March 31, 1999.
<PAGE>
SCHEDULE A
February 19, 1998
This 18f-3 Plan shall be adopted with respect to the following
Portfolios of Accessor Funds, Inc.:
Growth Portfolio
Value and Income Portfolio
Small to Mid Cap Portfolio
International Equity Portfolio
Intermediate Fixed-Income Portfolio
Short-Intermediate Fixed-Income Portfolio
Mortgage Securities Portfolio
U.S. Government Money Portfolio
<PAGE>
SCHEDULE B
Amount of Distribution Plan--Each Portfolio shall pay directly or cause to be
paid to third parties on an annual basis based on the value of the average daily
net assets of the Portfolio attributable to the Investor Class Shares of no more
than:
Advisor Class Investor Class
N/A 0.25%
No Portfolio shall directly or indirectly pay any distribution related amounts
that will be allocated under the Investor Class Distribution Plan and in
combination with the Shareholder Service fee paid under the Shareholder Service
Plan, which exceeds 0.25% on an annual basis of the average daily net assets of
the Investor Class Shares.
Amount of Shareholder Service Plan--Each Portfolio shall pay a non-distribution
related shareholder service fee on an annual basis based on the value of the
average daily net assets of the Portfolio attributable to the Investor Class
Shares as follows:
Advisor Class Investor Class
N/A 0.25%
The combined total of the amounts paid under the Distribution Plan and
Shareholder Service Plan shall not exceed 0.25% on an annual basis of the value
of the average daily net assets of Portfolio attributable to the Investor Class
Shares.
Amount of Administrative Services Plan--Each Portfolio shall pay a
non-distribution related administrative services fee on an annual basis based on
the value of the average daily net assets of the Investor Class Shares as
follows:
Advisor Class Investor Class
N/A 0.25%
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 01
<NAME> GROWTH FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 125,354,904
<INVESTMENTS-AT-VALUE> 177,816,876
<RECEIVABLES> 6,732,230
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 184,549,106
<PAYABLE-FOR-SECURITIES> 2,257,247
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,415,494
<TOTAL-LIABILITIES> 4,672,741
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 126,057,469
<SHARES-COMMON-STOCK> 6,229,403
<SHARES-COMMON-PRIOR> 4,074,644
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,356,924
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 52,461,972
<NET-ASSETS> 179,876,365
<DIVIDEND-INCOME> 1,238,413
<INTEREST-INCOME> 75,128
<OTHER-INCOME> 0
<EXPENSES-NET> 1,170,087
<NET-INVESTMENT-INCOME> 143,454
<REALIZED-GAINS-CURRENT> 13,472,712
<APPREC-INCREASE-CURRENT> 36,852,522
<NET-CHANGE-FROM-OPS> 50,468,688
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (157,895)
<DISTRIBUTIONS-OF-GAINS> (14,586,452)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,135,516
<NUMBER-OF-SHARES-REDEEMED> 2,349,457
<SHARES-REINVESTED> 368,700
<NET-CHANGE-IN-ASSETS> 91,969,359
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 2,470,664
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 794,058
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,170,087
<AVERAGE-NET-ASSETS> 131,370,944
<PER-SHARE-NAV-BEGIN> 21.57
<PER-SHARE-NII> .04
<PER-SHARE-GAIN-APPREC> 9.91
<PER-SHARE-DIVIDEND> (.03)
<PER-SHARE-DISTRIBUTIONS> (2.61)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 28.88
<EXPENSE-RATIO> .92
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 02
<NAME> VALUE FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 112,520,726
<INVESTMENTS-AT-VALUE> 127,622,581
<RECEIVABLES> 967,840
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 128,590,421
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 875,207
<TOTAL-LIABILITIES> 875,207
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 113,488,376
<SHARES-COMMON-STOCK> 6,069,963
<SHARES-COMMON-PRIOR> 3,884,680
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (968,767)
<ACCUM-APPREC-OR-DEPREC> 15,195,605
<NET-ASSETS> 127,715,214
<DIVIDEND-INCOME> 1,983,416
<INTEREST-INCOME> 425,419
<OTHER-INCOME> 0
<EXPENSES-NET> 1,221,252
<NET-INVESTMENT-INCOME> 1,187,583
<REALIZED-GAINS-CURRENT> 10,807,315
<APPREC-INCREASE-CURRENT> 763,235
<NET-CHANGE-FROM-OPS> 12,758,133
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,199,600)
<DISTRIBUTIONS-OF-GAINS> (12,008,849)
<DISTRIBUTIONS-OTHER> (968,767)
<NUMBER-OF-SHARES-SOLD> 3,811,618
<NUMBER-OF-SHARES-REDEEMED> (2,028,022)
<SHARES-REINVESTED> 401,687
<NET-CHANGE-IN-ASSETS> 46,588,592
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1,201,534
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 892,253
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,221,252
<AVERAGE-NET-ASSETS> 120,666,412
<PER-SHARE-NAV-BEGIN> 20.88
<PER-SHARE-NII> .24
<PER-SHARE-GAIN-APPREC> 2.45
<PER-SHARE-DIVIDEND> (0.24)
<PER-SHARE-DISTRIBUTIONS> (2.29)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 21.04
<EXPENSE-RATIO> 1.03
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 03
<NAME> SMALL TO MID CAP FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 235,451,976
<INVESTMENTS-AT-VALUE> 276,781,314
<RECEIVABLES> 25,053,607
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 301,834,921
<PAYABLE-FOR-SECURITIES> 17,935,523
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,740,207
<TOTAL-LIABILITIES> 21,675,730
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 235,450,667
<SHARES-COMMON-STOCK> 11,908,787
<SHARES-COMMON-PRIOR> 5,739,844
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3,379,187
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 41,329,337
<NET-ASSETS> 280,159,191
<DIVIDEND-INCOME> 1,639,994
<INTEREST-INCOME> 371,675
<OTHER-INCOME> 0
<EXPENSES-NET> 2,517,103
<NET-INVESTMENT-INCOME> (505,434)
<REALIZED-GAINS-CURRENT> 15,196,539
<APPREC-INCREASE-CURRENT> 18,018,953
<NET-CHANGE-FROM-OPS> 32,710,058
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (18,128,949)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10,107,811
<NUMBER-OF-SHARES-REDEEMED> (4,300,650)
<SHARES-REINVESTED> 361,782
<NET-CHANGE-IN-ASSETS> 154,937,753
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 6,311,597
<OVERDISTRIB-NII-PRIOR> (102,695)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,995,029
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,517,103
<AVERAGE-NET-ASSETS> 209,271,528
<PER-SHARE-NAV-BEGIN> 21.82
<PER-SHARE-NII> (.05)
<PER-SHARE-GAIN-APPREC> 3.50
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (1.74)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 23.53
<EXPENSE-RATIO> 1.22
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 04
<NAME> INTERNATIONAL EQUITY FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 137,637,925
<INVESTMENTS-AT-VALUE> 171,557,251
<RECEIVABLES> 708,095
<ASSETS-OTHER> 22,849
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 172,288,195
<PAYABLE-FOR-SECURITIES> 1,963,874
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,970,403
<TOTAL-LIABILITIES> 3,934,277
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 133,048,687
<SHARES-COMMON-STOCK> 9,966,670
<SHARES-COMMON-PRIOR> 10,213,260
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,401,957
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 33,903,274
<NET-ASSETS> 168,353,918
<DIVIDEND-INCOME> 1,937,967
<INTEREST-INCOME> 346,768
<OTHER-INCOME> 0
<EXPENSES-NET> 2,727,793
<NET-INVESTMENT-INCOME> (443,058)
<REALIZED-GAINS-CURRENT> 3,399,692
<APPREC-INCREASE-CURRENT> 21,019,700
<NET-CHANGE-FROM-OPS> 23,976,334
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,585,921
<NUMBER-OF-SHARES-REDEEMED> (7,931,875)
<SHARES-REINVESTED> 99,366
<NET-CHANGE-IN-ASSETS> 16,912,787
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 202,707
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,946,464
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,727,793
<AVERAGE-NET-ASSETS> 177,165,630
<PER-SHARE-NAV-BEGIN> 14.83
<PER-SHARE-NII> (.03)
<PER-SHARE-GAIN-APPREC> 2.41
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.31)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.90
<EXPENSE-RATIO> 1.59
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 05
<NAME> INTERMEDIATE FIXED-INCOME FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 55,270,821
<INVESTMENTS-AT-VALUE> 56,329,478
<RECEIVABLES> 1,385,389
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 57,714,867
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 79,590
<TOTAL-LIABILITIES> 79,590
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 56,328,765
<SHARES-COMMON-STOCK> 4,622,902
<SHARES-COMMON-PRIOR> 4,528,468
<ACCUMULATED-NII-CURRENT> 3,185
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 244,670
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,058,657
<NET-ASSETS> 57,635,277
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,282,867
<OTHER-INCOME> 0
<EXPENSES-NET> 427,498
<NET-INVESTMENT-INCOME> 2,855,371
<REALIZED-GAINS-CURRENT> 1,805,578
<APPREC-INCREASE-CURRENT> (618,921)
<NET-CHANGE-FROM-OPS> 4,042,028
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,831,589
<DISTRIBUTIONS-OF-GAINS> 205,295
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,570,910
<NUMBER-OF-SHARES-REDEEMED> (3,557,369)
<SHARES-REINVESTED> 80,893
<NET-CHANGE-IN-ASSETS> 2,438,367
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (1,380,859)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 224,304
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 427,498
<AVERAGE-NET-ASSETS> 55,693,442
<PER-SHARE-NAV-BEGIN> 12.19
<PER-SHARE-NII> .67
<PER-SHARE-GAIN-APPREC> .32
<PER-SHARE-DIVIDEND> (.67)
<PER-SHARE-DISTRIBUTIONS> (.04)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.47
<EXPENSE-RATIO> .79
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 06
<NAME> SHORT INTERMEDIATE FIXED-INCOME FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 47,390,456
<INVESTMENTS-AT-VALUE> 47,867,883
<RECEIVABLES> 934,534
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 48,802,417
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 93,554
<TOTAL-LIABILITIES> 93,554
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 48,166,753
<SHARES-COMMON-STOCK> 3,951,685
<SHARES-COMMON-PRIOR> 3,337,535
<ACCUMULATED-NII-CURRENT> 18,764
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 45,919
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 477,428
<NET-ASSETS> 48,708,863
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,800,536
<OTHER-INCOME> 0
<EXPENSES-NET> 392,446
<NET-INVESTMENT-INCOME> 2,408,090
<REALIZED-GAINS-CURRENT> 615,501
<APPREC-INCREASE-CURRENT> 87,741
<NET-CHANGE-FROM-OPS> 3,111,332
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2,387,537)
<DISTRIBUTIONS-OF-GAINS> (522,655)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,974,853
<NUMBER-OF-SHARES-REDEEMED> 1,415,314
<SHARES-REINVESTED> 54,611
<NET-CHANGE-IN-ASSETS> 7,766,821
<ACCUMULATED-NII-PRIOR> (4,419)
<ACCUMULATED-GAINS-PRIOR> (47,745)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 198,000
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 392,446
<AVERAGE-NET-ASSETS> 48,874,982
<PER-SHARE-NAV-BEGIN> 12.27
<PER-SHARE-NII> .68
<PER-SHARE-GAIN-APPREC> .14
<PER-SHARE-DIVIDEND> (.63)
<PER-SHARE-DISTRIBUTIONS> (.13)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.33
<EXPENSE-RATIO> .82
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 07
<NAME> MORTGAGE SECURITIES FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 147,897,794
<INVESTMENTS-AT-VALUE> 149,832,346
<RECEIVABLES> 2,676,383
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 152,508,729
<PAYABLE-FOR-SECURITIES> 4,565,561
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,786,163
<TOTAL-LIABILITIES> 6,351,724
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 143,769,745
<SHARES-COMMON-STOCK> 11,607,851
<SHARES-COMMON-PRIOR> 8,712,125
<ACCUMULATED-NII-CURRENT> 111,203
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 293,439
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,982,618
<NET-ASSETS> 146,157,005
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8,865,162
<OTHER-INCOME> 0
<EXPENSES-NET> 1,251,359
<NET-INVESTMENT-INCOME> 7,613,803
<REALIZED-GAINS-CURRENT> 1,178,903
<APPREC-INCREASE-CURRENT> (454,778)
<NET-CHANGE-FROM-OPS> 8,337,928
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (7,548,641)
<DISTRIBUTIONS-OF-GAINS> (1,137,570)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,879,217
<NUMBER-OF-SHARES-REDEEMED> (3,120,016)
<SHARES-REINVESTED> 136,525
<NET-CHANGE-IN-ASSETS> 36,409,958
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 303,719
<OVERDISTRIB-NII-PRIOR> (37,546)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 811,596
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,251,359
<AVERAGE-NET-ASSETS> 145,308,831
<PER-SHARE-NAV-BEGIN> 12.60
<PER-SHARE-NII> .70
<PER-SHARE-GAIN-APPREC> .09
<PER-SHARE-DIVIDEND> (.70)
<PER-SHARE-DISTRIBUTIONS> (.10)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.59
<EXPENSE-RATIO> .88
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<TABLE> <S> <C>
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<NAME> U.S. GOVERNMENT MONEY FUND
<S> <C>
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