As filed with the Securities and Exchange Commission on February 14, 2000
Registration No. 33-41245
811-6337
- -------------------------------------------------------------------------------
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. 16 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 / /
Amendment No. 21 /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
75 State Street
Boston, MA 02109
---------------------------------
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)
/__/ on ___________ pursuant to paragraph (b)
/__/ 60 days after filing pursuant to paragraph (a)(1)
/__/ on (date) pursuant to paragraph (a)(1)
/_X/ 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.
<PAGE>
[Graphic] High Yield Bond Fund
ACCESSOR(R)FUNDS, INC. Prospectus April 29, 2000
Advisor Class Shares
Investor Class Shares
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.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE. THESE SECURITIES MAY NOT BE
SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
[LOGO]
<PAGE>
THE ACCESSOR FUNDS
[graphic] A family of nine mutual funds, each with two classes of shares. This
prospectus describes the High Yield Bond Fund.
[graphic] A variety of fixed income and equity mutual funds. For
information about the other Accessor Funds, please request the current
Accessor Funds Prospectuses.
[graphic] Designed to help investors realize the benefits of asset
allocation and diversification.
[graphic] Managed and administered by Accessor Capital Management LP
("Accessor Capital").
[graphic] 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, diversification 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.
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
THE FUND
Fund Summary.......................................
Performance........................................
Fund Expenses......................................
Fund Objective and Strategy........................
Fund Principal Securities and Risks................
Management, Organization and Capital Structure.....
SHAREHOLDER INFORMATION
Purchasing Fund Shares.............................
Exchanging Fund Shares.............................
Redeeming Fund Shares..............................
Dividends and Distributions........................
Valuation of Securities............................
Taxation...........................................
Distribution and Service Plan and
Administrative Services Plan ....................
APPENDIX A
Lehman Brothers U.S. Corporate High Yield Index....
<PAGE>
- --------------------------------------------------------------------------------
GRAPHIC HIGH YIELD BOND FUND
Summary
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND PRINCIPLE STRATEGIES The High Yield Bond Fund seeks
high current income by investing primarily in lower-rated, high-yield corporate
debt securities.
The Fund invests primarily in lower-rated, high-yield corporate debt securities
commonly referred to as "junk bonds". Under normal conditions, at least 65% of
the Fund's total assets will be invested in debt securities rated lower than Baa
by Moody's Investors Service, Inc. or lower than BBB by Standard & Poor's
Corporation, or securities judged to be of equivalent quality by the Money
Manager. The Fund will normally maintain 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 U.S. Corporate High Yield Index.
Financial Management Advisors, Inc. ("FMA"), the Fund's Money Manager, selects
debt securities on a company-by-company basis, emphasizing fundamental research
and a long-term investment horizon. Their analysis focuses on the nature of a
company's business, its strategy, and the quality of its management. Based on
this analysis the Money Manager looks primarily for companies whose prospects
are stable or improving, and whose bonds offer an attractive yield. Companies
with improving prospects are normally more attractive in the opinion of the
Money Manager because they offer better assurance of debt repayment.
- --------------------------------------------------------------------------------
PRINCIPAL INVESTMENT RISKS Interest Rate Risk. Increases in interest rates can
cause the price of a debt security to decrease. Debt security prices overall,
including prices of those held by the Fund, may decline over short or even long
periods due to rising interest rates. Debt securities with longer maturities
tend to be more sensitive to interest rates than bonds with shorter maturities.
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. Lower quality debt securities
can be more sensitive to these factors. Lower quality debt securities can be
difficult to resell and issuers may fail to pay principal and interest when due
causing the Fund to incur losses and reducing the Fund's return.
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
As of the date of this prospectus, the Fund has no operating history.
Performance information will be available for the Fund after it has operated for
a calendar year.
<PAGE>
- --------------------------------------------------------------------------------
FUND EXPENSES
- --------------------------------------------------------------------------------
The following tables describe the estimated fees and expenses that you may pay
if you buy and hold either Advisor Class Shares or Investor Class Shares of the
Fund.
<TABLE>
<CAPTION>
Advisor Class Shares Investor Class Shares
-------------------- ---------------------
<S> <C> <C>
Shareholder Fees(1)(2)
(fees paid directly from your investment)
Maximum Sales Charge imposed on Purchases (as a percent of None None
offering price)
Maximum Sales Charge imposed on Reinvested Dividends None None
Maximum Deferred Sales Charge None None
Redemption Fee (3) None None
- ----------------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
Management Fee (4) 0.51% 0.51%
Distribution and Service Fee(5) 0.00% 0.25%
Other Expenses 0.45% 0.45%
Administrative Services Fee(5) 0.00% 0.25%
---- ----
Total Annual Fund Operating Expenses 0.96% 1.46%
</TABLE>
- ----------
(1) 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 tables.
(2) An annual maintenance fee of $25.00 may be charged on December 31 of each
year by Accessor Capital, as the transfer agent ("Transfer Agent") to each
IRA with an aggregate balance of less than $10,000.
(3) The Transfer Agent may charge a processing fee of $10.00 for each check
redemption request.
(4) The management fee consists of the management fee paid to Accessor Capital
(0.36%) and the fees paid to the Money Manager (0.15% during the first five
calendar quarters of operation and 0.07% plus a performance fee
thereafter).
(5) The fee paid pursuant to the Rule 12b-1 Distribution and Service Plan may
not exceed 0.25% of the annual net assets attributable to the 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 attributable to Investor
Class Shares of the Fund.
Expense Example: The Example shows what an investor in the Advisor Class Shares
and the Investor Class Shares of the Fund would pay over time based on estimated
expenses. The Example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in Advisor Class Shares or
Investor Class Shares 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
Advisor Class Shares
Investor Class Shares
<PAGE>
- --------------------------------------------------------------------------------
OBJECTIVE AND STRATEGIES
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE The Fund seeks high current income by investing primarily
in lower-rated, high-yield corporate debt securities.
INVESTMENT STRATEGY The Fund seeks to achieve its objective by investing
primarily in a diversified portfolio of lower-rated, high-yield corporate debt
securities, commonly referred to as "junk bonds". Under normal conditions the
Fund will invest at least 65% of its total assets in high-yield corporate debt
securities rated lower than Baa by Moody's Investors Services, Inc. or lower
than BBB by Standard & Poor's Corporation or unrated securities judged to be of
equivalent quality by the Money Manager. The Fund will not invest in securities
that, at the time of initial investment, are rated higher than Baa+ or lower
than B3 by Moody's or higher than BBB+ or lower than CCC- by Standard & Poor's.
The Fund may also invest in bonds of foreign issuers, preferred stocks,
convertible securities, and non-income producing high-yield bonds, such as zero
coupon bonds that pay interest only at maturity, or payment-in-kind bonds, which
pay interest in the form of additional securities.
The Fund will maintain 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 U.S. Corporate High Yield Index or another relevant index
approved by the Board of Directors.
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 Lehman Brothers U.S.
Corporate High Yield 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.
- --------------------------------------------------------------------------------
PRINCIPAL SECURITIES AND RISKS
- --------------------------------------------------------------------------------
Many factors affect the Fund's performance. A Fund's yield and share price
changes daily based on changes in the financial markets and 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,
industry and the Fund's level of investment in the securities of that issuer. A
Fund's reaction to these developments will also be 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, the Fund's Money
Manager may temporarily use a different investment strategy for defensive
purposes, including investing in short-term and money market instruments. If the
Money Manager does so, different factors could affect a Fund's performance and
the Fund may not achieve its investment objective.
The Fund is actively managed. Frequent trading of portfolio securities will
result in increased expenses for the Fund and may result in increased taxable
distributions to shareholders.
The Fund's investment objective stated in the Investment Objective and
Strategies section is fundamental and may not be changed without shareholder
approval.
PRINCIPAL SECURITY TYPES
- ------------------------
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 debt securities including convertible
bonds, government securities, and mortgage and other asset-backed securities.
High-yield corporate debt securities are often issued as a result of corporate
restructurings - such as leveraged buyouts, mergers, acquisitions, or other
similar events. They also may be issued by less credit worthy or by highly
leveraged companies, which are generally less able than more financially stable
firms to make scheduled payments of interest and principal. These types of
securities are considered speculative by the major rating agencies and rated
lower than Baa by Moody's or lower than BBB by S&P.
Equity Securities such as common stock and preferred stock, represent an equity
or ownership interest in an issuer. Certain types of equity securities, such as
warrants, are sometimes attached to or acquired in connection with high-yield
debt securities. Preferred stocks pay dividends at a specified rate and have
precedence over common stock as to the payment of dividends.
- --------------------------------------------------------------------------------
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. Any of a Fund's holdings could have its credit downgraded or
could default, which could adversely affect the Fund's performance.
[graphic] Interest Rate Changes. Interest rate risk is the risk that bond prices
overall will decline over short or even long periods due to rising interest
rates. Longer-term bonds tend to be more sensitive to interest rates than
short-term bonds. Debt 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 the Fund can adversely affect those securities' yield and price.
[graphic] Prepayment Risk. Many types of debt securities, including high yield
bonds, 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] Credit Risk. Credit risk is the possibility that an issuer will fail
to make timely payments of interest or principal. Some issuers may not make
payments, causing the Fund to incur a loss. Or, an issuer may suffer adverse
changes in its financial condition that could lower the credit quality of a
security, leading to greater volatility in the price of the security and in the
Fund's net asset value. A change in the quality rating of a bond or other
security can also affect the security's liquidity and make it more difficult for
the Fund to sell the security. Lower quality debt securities and comparable
unrated debt securities in which a Fund may invest are more susceptible to these
problems than higher quality obligations.
Because of its investment in junk bonds, the Fund is subject to substantial
credit risk, which is the possibility that a bond issuer will fail to pay
interest and principal in a timely manner. Credit quality in the high-yield bond
market can change suddenly and unexpectedly, and even recently-issued credit
ratings may not fully reflect the actual risks of a particular high-yield bond.
The Fund's Money Manager will not rely solely on ratings issued by established
credit rating agencies, but will utilize these ratings in conjunction with its
own independent and ongoing credit analysis.
[graphic] Lower-Rated Debt Securities. While debt securities rated lower than
BBB by S&P or lower than Baa by Moody's are commonly referred to as "junk bonds"
they generally offer a higher level of current income than investment grade debt
securities. High-yield corporate debt securities are often issued as a result of
corporate restructurings - such as leveraged buyouts, mergers, acquisitions, or
other similar events. They also may be issued by less credit worthy or highly
leveraged firms, which are generally less able than more financially stable
firms to make scheduled payments of interest and principal. Because of their
lower credit quality, high yield corporate debt securities must pay higher rates
of interest to compensate investors for the substantial credit risk they assume.
[graphic] Stock Market Volatility. The value of equity securities fluctuates in
response to issuer, political, market and economic developments.
[graphic] Foreign Exposure. Foreign securities, such as debt securities of
foreign issuers, can involve additional risks relating to political, economic,
or regulatory conditions in foreign countries. All of these factors can make
investing in foreign securities more volatile and less liquid than U.S.
investments.
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE
- --------------------------------------------------------------------------------
Manager and Administrator Accessor Capital Management LP, 1420 Fifth Avenue,
Suite #3600, Seattle, WA 98101.
The Fund is a portfolio of Accessor Funds, Inc. ("Accessor Funds"), a Maryland
corporation. Accessor Capital develops the investment programs for the Fund,
selects the Fund's Money Manager and monitors its performance 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 either directly or through
interaction with the Fund's Money Manager. Mr. Deo is also responsible for
managing the liquidity reserves of the Fund. The Securities and Exchange
Commission has issued an exemptive order that allows Accessor Funds to change
the 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 the
shareholders of the Fund are notified within 60 days of the change.
The Fund pays Accessor Capital an annual management fee for providing management
and administration services equal to 0.36% of the Fund's average daily net
assets. The Fund has also hired Accessor Capital to provide transfer agent,
registrar, dividend disbursing agent and certain other services. 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.
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE
- --------------------------------------------------------------------------------
Money Manager Financial Management Advisors, Inc., 1900 Avenue of the Stars,
Suite 900, Los Angeles, CA 90067
FMA uses a team approach. Kenneth D. Malamed and Steven S. Michaels are
primarily responsible for the day-to-day management of the Fund. Mr. Malamed,
President and Chief Investment Officer, founded FMA in 1985. In 1992, the
assets, operations and client base of FMA were acquired by Wertheim Schroder
Investment Services, Inc. (later renamed Schroder Wertheim Investment Services,
Inc.), where he served as Managing Director, Director of Fixed-Income and
Chairman of the Credit Committee. In November 1995, Mr. Malamed terminated his
association with Schroder Wertheim. In December of 1995 he re-established FMA
and continued on with a portion of the investment advisory business. Mr.
Michaels, Senior Vice President and Managing Director of High Yield Fixed
Income, joined FMA in 1991. He was Senior High Yield Credit Analyst at Schroder
Wertheim Investment Services, Inc. from 1992 to 1995. He continued on with Mr.
Malamed in January 1996 at the re-established FMA.
MONEY MANAGER FEE
For the first five complete calendar quarters of management, FMA will earn a
management fee equal to an annual rate of 0.15% that consists of a basic fee
equal to an annual rate of 0.07% and a portfolio management fee equal to an
annual rate of 0.08%. The management fee is calculated and paid quarterly.
Beginning with the sixth complete calendar quarter of management, FMA 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 the Fund's performance exceeds or trails that of its benchmark index,
the Lehman Brothers U.S. Corporate High Yield Index, during the applicable
measurement period based on the following schedule:
<TABLE>
<CAPTION>
Average Annual Performance Total
Differential vs. Benchmark Annual Annual
Basic Fee Index Performance Fee Fee
--------- ----- --------------- ---
<S> <C> <C> <C>
0.07% <=-1.00% 0.00% 0.07%
>-1.00% and <=-0.50% 0.04% 0.11%
>-0.50% and <= 0.50% 0.08% 0.15%
>0.50% and <=1.00% 0.12% 0.19%
>1.00% and <= 1.50% 0.16% 0.23%
>1.50% and <= 2.00% 0.20% 0.27%
>2.00% 0.22% 0.29%
</TABLE>
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, FMA will receive a performance fee if the
Fund's performance either exceeds the Lehman Brothers U.S. Corporate High Yield
Index, or trails the Lehman Brothers U.S. Corporate High Yield Index by no more
than 1.00%. Under certain circumstances, FMA may receive a performance fee even
if the Fund's total return is negative.
<PAGE>
- --------------------------------------------------------------------------------
PURCHASING FUND SHARES
- --------------------------------------------------------------------------------
WHERE TO PURCHASE
- -----------------
[graphic] Direct. Investors may purchase Advisor Class shares or Investor 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. 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 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: 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 ("NYSE") 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. 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:
[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 described on the account
application.
[graphic] By Telephone. Shareholders with aggregate account balances of at least
$1 million may purchase shares by telephone at 1-800-759-3504. To prevent
unauthorized transactions, Accessor Funds may use reasonable procedures to
verify telephone requests.
[graphic] By Purchases In Kind. Under some circumstances, the Fund may accept
securities as payment for 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 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 may 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 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 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 Shares,
subtracting Fund liabilities attributable to the class, and dividing by the
number of outstanding Shares. The NAV for the equity funds' is calculated each
day that the 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 the Fund may harm performance by
disrupting portfolio management strategies and by increasing expenses. The Fund
may temporarily or permanently terminate the exchange privilege of any investor
who makes more than four exchanges out of the Fund per calendar year. Moreover,
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 of Accessor 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.
- --------------------------------------------------------------------------------
EXCHANGING FUND SHARES
- --------------------------------------------------------------------------------
As a shareholder, you have the privilege of exchanging shares of the Funds for
shares of other Accessor Funds. Shares of the Fund may be exchanged for shares
of any other Accessor Fund on days when the NYSE is open for business, as long
as shareholders meet the normal investment requirements of the other Accessor
Fund. 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 exchanged at the next NAV calculated after Accessor
Capital receives the exchange request in proper form. The Fund may temporarily
or permanently terminate the exchange privilege of any investor who makes more
than four exchanges out of the Fund per calendar year. Shareholders should read
the prospectus of any other Accessor Fund into which they are considering
exchanging.
EXCHANGES THROUGH ACCESSOR FUNDS.
- ---------------------------------
Accessor Funds does not currently charge fees on exchanges. 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 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 Capital 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, Accessor Funds may use reasonable procedures
to verify telephone requests.
Shareholders may request that payment be made by check to the shareholder of
record at the address of record. Such requests must be in writing and signed by
all shareholders of record. 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.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
Shares also may be redeemed through financial intermediaries from whom shares
were purchased. Financial intermediaries may charge a fee for this service.
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 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 will bear the associated
inconveniences, and 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. 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 for the Fund generally on the
last business day of each month, to be payable on the first business day of the
following month, except in December, when for operational convenience the
dividend is declared on the second or third to last business day of the year and
paid the following day. Dividend declarations are posted on our web site, at
www.accessor.com.
[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 shares of a Fund will be automatically
reinvested in additional shares of that Fund unless a shareholder elects to
receive them in cash. Shareholders may alternatively choose to invest dividends
or other distributions in 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 the
Fund 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.
- --------------------------------------------------------------------------------
TAXATION
- --------------------------------------------------------------------------------
The Fund expects to qualify as a regulated investment company under Subchapter M
of the Internal Revenue Code.
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.
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 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>
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN AND ADMINISTRATIVE SERVICES PLAN
- --------------------------------------------------------------------------------
Accessor Funds has adopted a Distribution and Service Plan that allows the
Investor Class Shares of the Fund to pay financial intermediaries for sales and
distribution-related activities and for providing non-distribution related
shareholder services. The fee under the Distribution and Service Plan will not
exceed 0.25% in the aggregate annually of the Investor Class assets.
Accessor Funds has also adopted an Administrative Services Plan which allows the
Investor Class Shares of the Fund to pay financial intermediaries for
non-distribution related administrative services provided to shareholders. The
administrative services fees will not exceed 0.25% annually of the Investor
Class assets.
<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.
Lehman Brothers /1/
U.S. Corporate High Yield Index
The Lehman Brothers U.S. Corporate High Yield Index covers the universe of
fixed-rate, noninvestment grade debt issues rated Ba1 or lower by Moody's
Investor Service ("Moody's"). If no Moody's rating is available, bonds must be
rated BB+ or lower by Standard & Poor's ("S&P"); and if no S&P rating is
available, bonds must be rated below investment grade by Fitch Investor's
Service. A small number of unrated bonds is included in the index; to be
eligible they must have previously held a high yield rating or have been
associated with a high yield issuer, and must trade accordingly. All bonds
included in the High Yield Index must be dollar-denominated and nonconvertable
and have at least one year remaining to maturity and an outstanding par value of
at least $100 million. Yankee and global bonds (SEC registered) or issuers in
non-emerging countries are included as well as issue zeroes and step-up coupon
structures.
- --------
1 The Fund is not sponsored, endorsed, sold or promoted by Lehman Brothers.
<PAGE>
- --------------------------------------------------------------------------------
[Back Cover]
Statement of Additional Information - High Yield Bond Fund. The High Yield Bond
Fund SAI contains more detailed information about the Fund. The SAI is
incorporated by reference into this Prospectus, making it legally part of this
Prospectus.
Contact Accessor Capital at 1-800-759-3504 for shareholder inquiries or to
receive a free copy of the Fund's SAI or visit Accessor Capital's web site at
www.accessor.com.
- --------------------------------------------------------------------------------
Shareholder Reports and other information are available from your financial
intermediary or from
Accessor Capital Management LP
1420 Fifth Street, #3600
Seattle, Washington 98101
800-759-3504
206-224-7420
web site: www.accessor.com
Securities and Exchange Commission
Washington, DC 20549-6009
800-SEC-0330 (Public Reference Section)
web site: www.sec.gov
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.
- --------------------------------------------------------------------------------
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
High Yield Bond Fund
Statement of Additional Information
Dated April 29, 2000
ACCESSOR(R) FUNDS, INC. ("Accessor Funds") is a multi-managed, no-load, open-end
management investment company, known as a mutual fund. Accessor Funds currently
consists of nine diversified investment portfolios (collectively, the "Funds"),
each with its own investment objective and policies. This Statement of
Additional Information refers to the High Yield Bond Fund. The High Yield Bond
Fund seeks high current income by investing primarily in lower-rated, high-yield
corporate debt securities. The Fund offers two classes of shares, the Advisor
Class Shares and the Investor Class Shares, which are offered through one
prospectus dated April 29, 2000. A copy of the Prospectus may be obtained free
of charge by writing to or calling the address or telephone number listed above.
This High Yield Bond Fund Statement of Additional Information is not a
prospectus and should be read in conjunction with the appropriate Prospectus.
THE INFORMATION IN THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT COMPLETE.
THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS STATEMENT OF ADDITIONAL
INFORMATION IS NOT AN OFFER TO SELL THE SECURITIES IN ANY STATE WHERE THE OFFER
OR SALE IS NOT PERMITTED.
<PAGE>
Table of Contents
GENERAL INFORMATION AND HISTORY..............................................
INVESTMENT RESTRICTIONS, POLICIES AND RISK...................................
MANAGEMENT OF THE FUND.......................................................
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES..........................
INVESTMENT ADVISORY AND OTHER SERVICES.......................................
VALUATION....................................................................
PORTFOLIO TRANSACTION POLICIES...............................................
PERFORMANCE INFORMATION......................................................
CODE OF ETHICS...............................................................
TAX INFORMATION..............................................................
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION...............................
APPENDIX A - RATINGS OF FINANCIAL INSTRUMENTS
APPENDIX B - CALCULATION OF PERFORMANCE FEES
<PAGE>
GENERAL INFORMATION AND HISTORY
Accessor Funds was incorporated in Maryland on June 10, 1991. Accessor
Funds is authorized to issue nine billion shares of common stock, $.001 par
value per share, and is currently divided into nine Funds. The 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 Fund, 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 Accessor Funds under certain
circumstances. All shares of the 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 the 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 Fund's shares do not have cumulative voting
rights for the election of Directors. Pursuant to Accessor Funds' 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 Accessor Funds, pursuant to a
Management Agreement with Accessor Funds. Accessor Capital is also Accessor
Funds' transfer agent, registrar, dividend disbursing agent and provides record
keeping, administrative and compliance services pursuant to its Transfer Agency
and Administrative Agreement ("Transfer Agency Agreement") with Accessor Funds.
INVESTMENT RESTRICTIONS, POLICIES AND RISK
The 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 the Fund. As defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act"), a
majority of the outstanding voting securities of the 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. Other policies may be changed without the
approval of shareholders. This section of the Statement of Additional
Information describes the Fund's investment restrictions, and other policies and
restrictions.
INVESTMENT RESTRICTIONS
Fundamental Investment Restrictions
The Fund is subject to the following "fundamental" investment restrictions.
Unless otherwise noted, these restrictions apply at the time an investment is
made. The Fund will not:
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.
2. Issue senior securities, borrow money or pledge its assets, except that
the 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. The Fund
may not purchase interests in 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 Fund 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.
9. Effect short sales (other than short sales against-the-box) or purchase
securities on margin (except that the 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.
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.
Non-Fundamental Investment Restrictions
The following are the Fund's non-fundamental investment restrictions. These
restrictions may be modified or eliminated without shareholder approval.
1. Subject to the limitation on investing not more than 15% of the 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.
2. The Fund's entry into reverse repurchase agreements and dollar rolls,
together with its other borrowings, is limited to 5% of its net assets.
3. The Fund may invest up to 5% of its net assets in publicly traded real
estate investment trusts ("REITs").
4. Not more than 25% of the Fund's net assets (determined at the time of
the short sale) may be subject short sales against-the-box.
5. The Fund may invest up to 5% of its net assets in rights and warrants of
issuers that meet its investment objective and policies. Rights or warrants
acquired as a result of ownership of other instruments shall not be subject to
this limitation.
6. The Fund may invest up to 15% of its net assets in illiquid securities.
7. The Fund may invest up to 5% of its net assets in inverse floaters.
8. The Fund will not invest more than 5% of its net assets in
privately-issued STRIPS.
9. The 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.
10. Consistent with applicable regulatory requirements, the Fund, pursuant
to a securities lending agency agreement between the lending agent and the 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, currently 33-1/3%. The Fund will receive the
collateral in an amount equal to at least 102% (in the case of domestic
securities) or 105% (in the case of foreign securities) of the current market
value of the loaned securities plus accrued interest.
11. The Fund is authorized to invest its cash reserves (funds awaiting
investment in the specific types of securities to be acquired by a Fund or cash
to provide for payment of the Fund's expenses or to permit the Fund to meet
redemption requests). Under normal circumstances, no more than 20% of the Fund's
net assets will be comprised of cash or cash equivalents, as discussed below.
The Fund may hold cash reserves in an unlimited amount or invest in short-term
and money market instruments for temporary defensive purposes when its Money
Manager believes that a more conservative approach is desirable. The Fund also
may create equity or fixed-income exposure for cash reserves through the use of
options or futures contracts in accordance with its investment objective to
minimize the impact of cash balances. This will enable the Fund to hold cash
while receiving a return on the cash that is similar to holding equity or
fixed-income securities. The Fund may invest up to 20% of its net assets in:
(i) Obligations (including certificates of deposit and bankers'
acceptances) maturing in 13 months or less of (a) banks organized under the
laws of the United States or any state thereof (including foreign branches
of such banks) or (b) U.S. branches of foreign banks or (c) foreign banks
and foreign branches thereof; provided that such banks have, at the time of
acquisition by the Fund of such obligations, total assets of not less than
$1 billion or its equivalent. The term "certificates of deposit" includes
both Eurodollar certificates of deposit, for which there is generally a
market, and Eurodollar time deposits, for which there is generally not a
market. "Eurodollars" are dollars deposited in banks outside the United
States; the Fund may invest in Eurodollar instruments of foreign and
domestic banks; and
(ii) Commercial paper, variable amount demand master notes, bills,
notes and other obligations issued by a U.S. company, a foreign company or
a foreign government, its agencies or instrumentalities, maturing in 13
months or less, denominated in U.S. dollars, and of "eligible quality" as
described below. If such obligations are guaranteed or supported by a
letter of credit issued by a bank, such bank (including a foreign bank)
must meet the requirements set forth in paragraph (i) above. If such
obligations are guaranteed or insured by an insurance company or other
non-bank entity, such insurance company or other non-bank entity must
represent a credit of high quality, as determined by the Fund's Money
Manager, under the supervision of Accessor Capital and the Board of
Directors, or Accessor Capital, as applicable.
"Eligible quality," for this purpose, means (i) a security rated (or
issued by an issuer that is rated with respect to a class of short-term
debt obligations, or any security within that class, that is comparable in
priority and security with the security) in the highest short-term rating
category (e.g., A-1/P-1) or one of the two highest long-term rating
categories (e.g., AAA/Aaa or AA/Aa) by at least two major rating agencies
assigning a rating to the security or issuer (or, if only one agency
assigned a rating, that agency) or (ii) an unrated security deemed of
comparable quality by the Fund's Money Manager, if applicable, or Accessor
Capital under the general supervision of the Board of Directors. The
purchase by the Fund of a security of eligible quality that is rated by
only one rating agency or is unrated must be approved or ratified by the
Board of Directors.
In selecting commercial paper and other corporate obligations for
investment by the Fund, Accessor Capital and/or the Money Manager, as
applicable, also considers information concerning the financial history and
condition of the issuer and its revenue and expense prospects. Accessor
Capital monitors, and the Board of Directors reviews on a quarterly basis,
the credit quality of securities purchased for the Fund. If commercial
paper or another corporate obligation held by the Fund is assigned a lower
rating or ceases to be rated, the Money Manager under the supervision of
Accessor Capital and the Board of Directors, or Accessor Capital, as
applicable, will promptly reassess whether that security presents minimal
credit risks and whether the Fund should continue to hold the security in
its portfolio. If a portfolio security no longer presents minimal credit
risks or is in default, the Fund will dispose of the security as soon as
reasonably practicable unless Accessor Capital and the Board of Directors
determine that to do so is not in the best interests of the Fund and its
shareholders. Variable amount demand master notes with demand periods of
greater than seven days will be deemed to be liquid only if they are
determined to be so in compliance with procedures approved by the Board of
Directors.
12. The Fund will not invest in fixed-income securities, including convertible
securities, rated higher than BBB or lower than CCC- by Standard & Poor's
Corporation ("S&P") or higher than Baa or lower than B3 by Moody's Investors
Service, Inc. ("Moody's"), or in unrated securities judged by Accessor Capital
or the Money Manager to be of an equivalent credit quality than those
designations. The Fund will sell securities that do not meet these credit
guidelines it has purchased in a prudent and orderly fashion.
INVESTMENT POLICIES AND RISK CONSIDERATIONS
Asset-Backed Securities. The Fund 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, which means that they
provide investors with payments consisting of both principal and interest as the
loans in the underlying asset pool are paid off by the borrowers, similar to the
mortgage pass-through structures described above or in a pay-through structure
similar to the collateralized mortgage structure.
Duration. Duration is used by the Money Manager of the Fund in security
selection. Duration, which is one of the fundamental tools used by the money
manager in security selection, is a measure of the price sensitivity of a
security or a portfolio 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 one percent with a one percent change in interest
rates. Assumptions generally accepted by the industry concerning the probability
of early payment and other factors may be used in the calculation of duration
for debt securities that contain put or call provisions, sometimes resulting in
a duration different from the stated maturity of the security. With respect to
certain mortgage-backed securities, duration is likely to be substantially less
than the stated maturity of the mortgages in the underlying pools. The maturity
of a security measures only the time until final payment is due and, in the case
of a mortgage-backed security, does not take into account the factors included
in duration.
The Fund's duration directly impacts the degree to which asset values
fluctuate with changes in interest rates. For every one percent change in
interest rate, the Fund's net asset value ("NAV") is expected to change
inversely by approximately one percent for each year of duration. For example, a
one percent increase in interest rate would be expected to cause a fixed-income
portfolio with an average dollar weighted duration of five years, to decrease in
value by approximately five percent (one percent interest rate increase
multiplied by the five year duration).
Foreign Securities. The Fund 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.
Forward Commitments. The 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.
Futures Contracts. The Fund is permitted to enter into financial futures
contracts and related options thereon ("futures contracts") in accordance with
its investment objective. Futures contracts will be limited to hedging
transactions to minimize the impact of cash balances and for return enhancement
and risk management purposes in accordance with regulations of the Commodity
Futures Trading Commission.
A financial futures contract is a contract to buy or sell a specified
quantity of financial instruments such as United States Treasury bonds, notes
and bills, commercial paper, 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 called for cash
settlement. A futures contract is closed out by buying or selling an identical
offsetting contract which cancels the original contract to make or take
delivery. 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, the Fund is required to deposit in a
segregated account with Accessor Funds' 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. 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 the
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 "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, the 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 Fund 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.
Financial futures contracts may be used by the Fund 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 the 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 Fund 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 the Fund to be unable to close out the futures contract and
thereby affecting the Fund's hedging strategy.
Illiquid Securities. Illiquid securities are securities that are 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.
Securities Lending. Consistent with applicable regulatory requirements, the
Fund, pursuant to a securities lending agency agreement between the lending
agent and the 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, currently 33-1/3%. Such loans
must be callable at any time by the Fund and at all times be secured by cash,
U.S. Government securities, irrevocable letters of credit or such other
equivalent collateral that is at least equal to the market value, determined
daily, of the loaned securities. The Fund will receive the collateral in an
amount equal to at least 102% (in the case of domestic securities) or 105% (in
the case of foreign securities) of the current market value of the loaned
securities plus accrued interest. Cash collateral received by the Fund will be
invested in any securities in which the Fund is authorized to invest. 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
credit worthy pursuant to procedures approved by and under the general
supervision of the Board of Directors, as monitored by Accessor Capital and the
lending agent. 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.
Limitations on Futures and Options Transactions. Accessor Funds on behalf
of the 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) The 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 the 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) The 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.
Lower-Rated Debt Securities. Debt securities rated lower than BBB by S&P or
Baa by Moody's are commonly referred to as "junk bonds". Lower rated debt
securities and comparable unrated debt securities have speculative
characteristics and are subject to greater risks than higher rated securities.
These risks include the possibility of default on principal or interest payments
and bankruptcy of the issuer. During periods of deteriorating economic or
financial conditions, the ability of issuers of lower rated debt securities to
service their debt, meet projected goals or obtain additional financing may be
impaired. In addition, the market for lower rated debt securities has in the
past been more volatile and less liquid than the market for higher rated debt
securities. These risks could adversely affect the Fund that invest in these
debts securities.
The widespread expansion of government, consumer and corporate debt within
the economy has made the corporate sector, especially cyclically sensitive
industries, more vulnerable to economic downturns or increased interest rates.
Because lower-rated debt securities involve issuers with weaker credit
fundamentals (such as debt-to-equity ratios, interest charge coverage, earnings
history and the like), an economic downturn, or increases in interest rates,
could severely disrupt the market for lower-rated debt securities and adversely
affect the value of outstanding debt securities and the ability of the issuers
to repay principal and interest.
Lower-rated debt securities possess speculative characteristics and are
subject to greater market fluctuations and risk of lost income and principal
than higher-rated debt securities for a variety of reasons. The markets for and
prices of lower-rated debt securities have been found to be less sensitive to
interest rate changes than higher-rated investments, but more sensitive to
adverse economic changes or individual corporate developments. Also, during an
economic downturn or substantial period of rising interest rates, highly
leveraged issuers may experience financial stress which would adversely affect
their ability to service their principal and interest payment obligations, to
meet projected business goals and to obtain additional financing. If the issuer
of a debt security owned by the Fund defaulted, the Fund could incur additional
expenses in seeking recovery with no guaranty of recovery. In addition, periods
of economic uncertainty and changes can be expected to result in increased
volatility of market prices of lower-rated debt securities and the Fund's NAV.
Lower-rated debt securities also present risks based on payment expectations.
For example, lower-rated debt securities may contain redemption or call
provisions. If an issuer exercises these provisions in a declining interest rate
market, the Fund would have to replace the security with a lower yielding
security, resulting in a decreased return for investors. Conversely, a
lower-rated debt security's value will decrease in a rising interest rate
market, as will the value of the Fund's assets.
In addition, to the extent that there is no established retail secondary
market, there may be thin trading of lower-rated debt securities, and this may
have an impact on the ability to both value accurately lower-rated debt
securities and the Fund's assets, and to dispose of the debt securities. Adverse
publicity and investor perceptions, whether or not based on fundamental
analysis, may decrease the value and liquidity of lower-rated debt securities,
especially in a thinly traded market.
Options. The Fund's may purchase put and call options and write (sell)
"covered" put and "covered" call options. The Fund may purchase and write
options on U.S. Government securities. The Fund may write covered put and call
options to generate additional income through the receipt of premiums, may
purchase put options in an effort to protect the value of securities in their
portfolios against a decline in market value and purchase call options in an
effort to protect against an increase in the price of securities they intend to
purchase. All options on U.S. Government securities purchased or sold by the
Fund will be traded on U.S. securities exchanges or will result from separate,
privately negotiated transactions with a primary government securities dealer
recognized by the Board of Governors of the Federal Reserve System.
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 Accessor Funds' 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
the 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 the Fund
deposits with Accessor Funds' 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 Fund 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 Fund. 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 Fund would lose the premium
paid for the option as well as any anticipated benefit of the transaction.
Consequently, the Fund 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 staff of 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 Fund 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 Fund
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. The 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 clearing
house, such as The Options Clearing Corporation, an institution created to
interpose itself between buyers and sellers of options in the United States.
Technically, the clearing house 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 Fund 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 Fund intend to purchase and sell only those options which are
cleared by clearing houses whose facilities are considered to be adequate to
handle the volume of options transactions.
Privately-Issued STRIP Securities. The Fund 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.
Repurchase Agreements. A repurchase agreement is an agreement under which
the Fund purchases a fixed-income security, generally a security issued by the
U.S. Government or an agency thereof, a banker's acceptance or a certificate of
deposit, from a commercial bank, or broker or dealer, and simultaneously agrees
to sell the security back to the original seller at an agreed upon price and
date (normally, the next business day). The securities purchased by the Fund
will have a total value in excess of the value of the repurchase agreement and
will be held by Fifth Third Bank, the Fund' custodian (the "Custodian"), either
physically or in a book-entry system, until repurchased. Repurchase agreements
will at all times be fully collateralized by U.S. Government securities or other
collateral, such as cash, in an amount at least equal to the repurchase price,
including accrued interest earned on the underlying securities, 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 party
agreeing to repurchase should default and if the value of the collateral
securing the repurchase agreements declines below the repurchase price, the Fund
may incur a loss. 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
counterparty to the repurchase agreement becomes bankrupt or otherwise fails to
deliver securities. Repurchase agreements assist the Fund in being invested
fully while retaining "overnight" flexibility in pursuit of investments of a
longer-term nature. The Fund will limit repurchase agreement transactions to
counterparties who meet creditworthiness standards approved by the Board of
Directors, which include 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. See "Investment Restrictions, Policies and Risk
Considerations - Illiquid Securities."
Reverse Repurchase Agreements and Dollar Rolls. The Fund may enter into
reverse repurchase agreements. A reverse repurchase agreement has the
characteristics of borrowing and is a transaction whereby the Fund sells and
simultaneously agrees to repurchase 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 the right to receive interest and principal payments. At
the agreed upon future date, the Fund repurchases the security by paying an
agreed upon purchase price plus interest. The Fund may also enter into dollar
rolls in which the Fund 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 Fund forego principal and interest paid on the securities. The
Fund 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 the 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 having an
aggregate value, measured on a daily basis, at least equal in value to the
repurchase price including any accrued interest. 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 counterparty to a reverse
repurchase agreement files for bankruptcy or becomes insolvent, 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 Fund for purposes of the percentage limitations applicable to borrowings.
Rights and Warrants. 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. 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."
Rule 144A Securities. The Fund may purchase securities that are not
registered under the Securities Act, but that can be sold to "qualified
institutional buyers" in accordance with Rule 144A under the Securities Act
("Rule 144A Securities"). Rule 144A securities may involve a high degree of
business and financial risk and may result in substantial losses. These
securities may be less liquid than publicly traded securities, and the Fund may
take longer to liquidate these positions than would be the case for publicly
traded securities. Although these securities may be resold in privately
negotiated transactions, the price realized from these sales could be less than
those originally paid by the Fund. Further, companies whose securities are not
publicly traded may not be subject to the disclosure and other investor
protection requirements that would be applicable if their securities were
publicly traded.
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 Fund, however, could affect adversely the marketability of such Funds'
securities and, consequently, the Fund might be unable to dispose of such
securities promptly or at favorable prices.
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).
Short Sales Against-the-Box. Short sales against-the-box are short sales of
securities that the Fund owns or has the right to obtain (equivalent in kind and
amount to the securities sold short). The Fund may make such sales or maintain a
short position, provided that at all times when a short position is open, the
Fund sets aside in a segregated custodial account while the short sales remains
outstanding 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.
Special Risks of Hedging and Income Enhancement Strategies. Participation
in the options or futures markets and in currency exchange transactions involves
investment risks and transaction costs to which the Fund would not be subject
absent the use of these strategies. If the Money Manager's predictions of
movements in the direction of the securities, foreign currency and interest rate
markets are inaccurate, the adverse consequences to the Fund may leave the Fund
in a worse position than if such strategies were not used. Risks inherent in the
use of options, foreign currency and futures contracts and options on futures
contracts include: (1) dependence on the Money Manager's ability to predict
correctly movements in the direction of interest rates, securities prices and
currency markets; (2) imperfect correlation between the price of options and
futures contracts and options thereon and movements in the prices of the
securities being hedged; (3) the fact that skills needed to use these strategies
are different from those needed to select portfolio securities; (4) the possible
absence of a liquid secondary market for any particular instrument at any time;
(5) the possible need to raise additional initial margin; (6) in the case of
futures, the need to meet daily margin in cash; and (7) the possible need to
defer closing out certain hedged positions to avoid adverse tax consequences.
Temporary Defensive Policies. If, in the opinion of Accessor Capital and/or
the Money Manager, as applicable, market or economic conditions warrant, the
Fund may adopt a temporary defensive strategy. During these conditions, the Fund
may invest in short-term or money market instruments.
Corporate Obligations. Corporate debt obligations include (i) corporate
debt securities, including bonds, debentures, and notes; (ii) commercial paper
(including variable-amount master demand notes); (iii) repurchase agreements
involving investment-grade debt obligations; and (iv) convertible
securities-debt obligations of corporations convertible into or exchangeable for
equity securities.
U.S. Government Securities. U.S. Government obligations 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). In the case of securities not backed by the full faith and
credit of the United States, the Fund must look principally to the agency
issuing or guaranteeing the obligation for ultimate repayment and may not be
able to assert a claim against the United States if the agency or
instrumentality does not meet its commitments. 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 Fund may purchase U.S. Government obligations on a forward commitment
basis.
Zero-Coupon Securities. A zero-coupon security has no cash-coupon payments.
Instead, the issuer sells the security at a substantial discount from its
maturity value. The interest equivalent received by the investor from holding
this security to maturity is the difference between the maturity value and the
purchase price. Zero-coupon securities are more volatile than cash pay
securities. The Fund accrues income on these securities prior to the receipt of
cash payments. The Fund intends to distribute substantially all of its income to
its shareholders to qualify for pass-through treatment under the tax laws and
may, therefore, need to use its cash reserves to satisfy distribution
requirements.
MANAGEMENT OF THE FUNDS
The Board of Directors is responsible for overseeing generally the
operation of Accessor Funds. The officers are responsible for the day-to-day
management and administration of Accessor Funds' operations.
<TABLE>
<CAPTION>
Name and Position with Principal Occupations
Address Age Accessor Funds During Past Five Years
<S> <C> <C> <C> <C>
* J. Anthony Whatley, III** 57 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.
George G. Cobean, III 62 Director Partner, Martinson, Cobean &
1607 South 341st Place Associates, P.S. (certified public
Federal Way, WA accountants) since 1973.
Geoffrey C. Cross 60 Director President, Geoffrey C. Cross P.S.,
252 Broadway Inc., (general practice of law) since
Tacoma, WA 1970.
Ravindra A. Deo 37 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
and Accounting Officer Officer, Accessor Capital Management
L.P. since January 1992.
Linda V. Whatley** 42 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.
Robert J. Harper 56 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.
Christine J. Stansbery 48 Secretary Secretary, Northwest Advisers, Inc.
1420 Fifth Avenue since May, 1999; Assistant Vice
Seattle, WA President-Compliance since January
1997, Regulatory Manager from March 1996
to December 1996, Legal Assistant from
March 1993 to March 1996 at Accessor
Capital Management LP
</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 Accessor Funds to
the Directors during the fiscal year ended December 31, 1999:
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 Accessor Funds Retirement
<S> <C> <C> <C> <C>
J. Anthony Whatley III None None None None
George G. Cobean III None None
Geoffrey C. Cross None None
</TABLE>
Directors who are not "interested persons" of Accessor Funds are paid fees
of $3,000 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 Accessor Funds so request, they will be deemed to
have resigned from the Board of Directors at the same time their employment with
Accessor Capital terminates. Accessor Fund's officers and employees are paid by
Accessor Capital and receive no compensation from Accessor Funds.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of _______, 2000, Accessor Capital owned all of the outstanding shares
of each class.
INVESTMENT ADVISORY AND OTHER SERVICES
SERVICE PROVIDERS
The Fund's day-to-day operations are performed by separate business
organizations under contract to Accessor Funds. The principal service providers
are:
Manager, Administrator, Transfer Agent, Accessor Capital Management LP
Registrar and Dividend Disbursing Agent
Custodian and Fund Accounting Agent Fifth Third Bank
Money Manager Financial Management Advisors, Inc.
Manager, Administrator, Transfer Agent, Registrar and Dividend Disbursing
Agent. Accessor Capital is the manager and administrator of Accessor Funds,
pursuant to a Management Agreement with Accessor Funds. Accessor Capital
provides or oversees the provision of all general management, administration,
investment advisory and portfolio management services for Accessor Funds.
Accessor Capital provides Accessor Funds with office space and equipment, and
the personnel necessary to operate and administer the Fund's business and to
supervise the provision of services by third parties such as the Money Manager
and Fifth Third Bank that serves as the Custodian and Fund Accounting Agent.
Accessor Capital also develops the investment programs for the Fund, 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 Fund and assets
invested in the Fund' 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 Accessor Funds and provides certain
administrative and compliance services to Accessor Funds.
Under the Management Agreement, Accessor Capital has agreed not to withdraw
from Accessor Funds the use of Accessor Funds' name. In addition, Accessor
Capital may not grant the use of a name similar to that of Accessor Funds to
another investment company or business enterprise without, among other things,
first obtaining the approval of Accessor Funds' shareholders.
A Management Agreement providing for payment to Accessor Capital by
Accessor Funds of a management fee was approved by the Board of Directors
including all of the Directors who are not "interested persons" of Accessor
Funds and who have no direct or indirect financial interest in the Management
Agreement on June 17, 1992 and amended on February 15, 2000, to include the
Fund. The Management Agreement was approved by the sole shareholder of the Fund
on _______, 2000.
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 Fund pays Accessor Capital a fee equal at an
annual rate equivalent to 0.36% of the Fund's average daily net assets pursuant
to a Management Agreement between Accessor Capital and Accessor Funds.
Accessor Capital provides transfer agent, registrar and dividend disbursing
agent services to the Fund pursuant to a Transfer Agency Agreement between
Accessor Capital and Accessor Funds. Sub-transfer agent and compliance services
previously provided by Accessor Capital under the Sub-Administration Agreement
are provided to the Fund 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 the Fund of
Accessor Funds, and (ii) a transaction fee of $0.50 per transaction. Accessor
Capital is also reimbursed by Accessor Funds 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.
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
Fund' assets since October, 1996, and through an agreement between Fifth Third
and Accessor Funds 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 the Fund and is authorized to deposit securities
in securities depositories or to use the services of sub-custodians. Fifth Third
is paid by the Fund an annual fee and also is reimbursed by Accessor Funds for
certain out-of-pocket expenses including postage, taxes, wires, stationery and
telephone. Fifth Third acts as Custodian for investors of the Fund with respect
to the individual retirement accounts ("IRA Accounts"). Fifth Third also
provides basic recordkeeping required by each of the Fund for regulatory and
financial reporting purposes. Fifth Third is paid by the Fund an annual fee plus
specified transactions costs per Fund for these services, and is reimbursed by
Accessor Funds for certain out-of-pocket expenses including postage, taxes,
wires, stationery and telephone.
Independent Auditors. ____________________________, Two World Financial
Center, New York, New York, 10281, serves as the Fund's independent auditor and
in that capacity audits the Fund' annual financial statements.
Fund Counsel. Kirkpatrick & Lockhart LLP, 75 State Street, Boston,
Massachusetts 02109.
A Money Manager Agreement among Accessor Capital, Accessor Funds on behalf
of the Fund and FMA, effective May 1, 2000, 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
Accessor Funds and who have no direct or indirect interest in the Money Manager
Agreement, on February 4, 2000. The Money Manager has no affiliation with or
relationship to Accessor Funds or Accessor Capital other than as discretionary
manager for the Fund's assets. The Money Manager Agreement following the initial
two year period will be reviewed annually by the Board of Directors.
The Money Manager of the Fund, Financial Management Advisers, Inc., is a
California corporation, founded in 1985. FMA is a registered investment adviser
with the Securities and Exchange Commission and has filed the appropriate Notice
with the State of California. FMA is owned 94% by Kenneth and Sandra Malamed and
6% owned by employees of FMA. FMA's high yield fixed income investment strategy
seeks as its primary objective high current yield by investing primarily in
lower-ranked, high-yield corporate debt securities, commonly referred to as
"junk bonds". Because FMA views high-yield bonds as "stocks with a coupon",
FMA's high yield investment analysis combines input from both the equity and
fixed income sections. FMA looks at fundamental research prepared by its team of
fixed income and equity analysts, spreadsheets on company specifics prepared by
FMA and information from other available sources. In addition, the Fund will be
diversified across industries. FMA begins its investment process with a
traditional top-down approach, using a team approach. On a monthly basis, FMA
determines what it believes to be the main drivers of the economy, and
consequently, which sectors o the economy should be weighted more heavily in the
Fund. FMA then compares the sector allocations of the Fund to the Lehman
Brothers U.S. Corporate High Yield Index to determine whether the Fund is
consistent with FMA's investment policy and what sectors should be targeted for
new research. In selecting individual issues, FMA emphasizes industry position,
cash flow characteristics, asset protection, liquidity, management quality and
covenants. FMA also considers the enterprise value compared with the total debt
burden. Assets under management as of 12/31 approximately $1.6 billion
Money Manager Fee. The fees paid to the Money Manager of the Fund are paid
pursuant to a Money Manager Agreement among Accessor Funds on behalf of the
Fund, Accessor Capital and the Money Manager. The fees are based on a percentage
of the assets of the Fund and the performance of the Fund compared to a
benchmark index after a specific number of complete calendar quarters of
management by the Money Manager. The Fund seeks to invest so that its investment
performance equals or exceeds the total return performance of a relevant index
(the "Benchmark Index" set forth below. See Appendix A of the Prospectus for a
description of the Benchmark Index.
For the first five complete calendar quarters managed by a Money Manager of
the Fund will pay its 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 its
respective Money Manager Agreements.
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 a percentage
of the assets of the Fund and the performance of the Fund compared to a
benchmark index pursuant to 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 Annualized Total
Basic Performance Differential Performance Annualized
Fund Fee vs. The Applicable Index Fee Fee
---- --- ------------------------ --- ---
<S> <C> <C> <C> <C>
High Yield Bond 0.07% >2.00% 0.22% 0.29%
>1.50% and <= 2.00% 0.20% 0.27%
>1.00% and <= 1.50% 0.16% 0.23%
>0.50% and <=1.00% 0.12% 0.19%
>-0.50% and <= 0.50% 0.08% 0.15%
>-1.00% and <=-0.50% 0.04% 0.11%
<=-1.00% 0% 0.07%
</TABLE>
The fee based on annualized performance will be adjusted each quarter and paid
monthly based on the annualized investment performance of the Money Manager
relative to the annualized investment performance of the Lehman Brothers U.S.
Corporate High Yield Index, its benchmark index, 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 the Fund, it uses the same
benchmark indices that the Money Manager would use. A description of the
benchmark index is contained in Appendix A of the Prospectus. As long as the
Fund's performance either exceeds the index, or trails the index by no more than
1.00%, a Performance Fee will be paid to the applicable Money Manager.
From the sixth to the 14th calendar quarter of investment operations, the Money
Manager's performance differential versus the benchmark 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, the 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. The 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%, the 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 the Money Manager to receive the maximum performance fee.)
Because the maximum Performance Fee for the Fund applies whenever a Money
Manager's performance exceeds the index by 2.00% or more, the Money Manager for
the 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.
FUND EXPENSES
The Fund pays all of its 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
Fund Accounting agent; (d) expenses of obtaining quotations for calculating the
value of the Fund' assets; (e) expenses of obtaining Fund activity reports and
analyses for the Fund; (f) expenses of maintaining the Fund's tax records; (g)
salaries and other compensation of any of Accessor Funds' 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 Fund; (i)
brokerage fees and commissions in connection with the purchase and sale of
portfolio securities for the Fund; (j) costs, including the interest expense, of
borrowing money; (k) costs and/or fees incident to meetings of the Fund, the
preparation and mailings of prospectus and reports of the Fund to their
shareholders, the filing of reports with regulatory bodies, the maintenance of
Accessor Funds' 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 Fund' shares for sale; (m) costs
of printing stock certificates representing shares of the Fund; (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 Accessor
Funds 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
and 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 Accessor Funds' 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 the
Fund's assets. The Fund are also responsible for paying a management fee to
Accessor Capital. Additionally, the Fund 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/or 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 Fund 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 Accessor Funds, including a majority of the
non-interested Directors (as defined in the Investment Company Act), voted in
person at the Board meeting on February 15, 2000, to adopt an Amended Rule 18f-3
Plan (the "Amended Multi-Class Plan") pursuant to Rule 18f-3 under the
Investment Company Act. The Directors determined that the Amended Multi-Class
Plan is in the best interests of each class individually and Accessor Funds as a
whole.
Under the Amended Multi-Class Plan, shares of each class of the Fund
represents 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 Amended Multi-Class Plan, Accessor Funds, on behalf of
the Fund's Investor Class Shares, has adopted a Distribution and Service Plan
and an Administrative Services Plan, each as described below. Pursuant to the
appropriate plan, Accessor Funds 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 and
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 Accessor Funds
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 Amended Multi-Class Plan, Accessor Funds has not
adopted a Distribution and Service Plan or Administrative Services Plan for the
Advisor Class Shares. Advisor Class Shares shall be offered by Accessor Funds at
NAV with no distribution, shareholder or administrative service fees paid by the
Advisor Class Shares of the Funds. Advisor Class Shares are offered directly
from Accessor Funds 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. Accessor Funds, 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 and Service Plan. Accessor Funds has adopted a Distribution
and Service Plan (the "Distribution and Service Plan") under Rule 12b-1 ("Rule
12b-1") of the Investment Company Act with respect to the Investor Class Shares
of the Fund. Under the terms of the Distribution and Service Plan, Accessor
Funds is permitted, out of the assets attributable to the Investor Class Shares
of the 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 distribution services, including
but 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 Accessor Funds
to prospective holders of Investor Class Shares; (d) costs involved in
preparing, printing and distributing sales literature pertaining to Accessor
Funds and (e) costs involved in obtaining whatever information, analyses and
reports with respect to marketing and promotional activities that Accessor Funds
may, from time to time, deem advisable (the "Distribution Services"). Pursuant
to the Distribution and Service Plan, the Fund may also make payments to Service
Organizations who provide non-distribution related services, including but not
limited to: personal and/or account maintenance services. Such services may
include some or all of the following: (i) shareholder liaison services; (ii)
providing information periodically to Clients showing their positions in
Investor 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 Accessor Funds may
reasonably request to the extent the Service Organizations are permitted to do
so under applicable statutes, rules and regulations.
Subject to the limitations of applicable law and regulations, including
rules of NASD, the payments made directly to third parties for such distribution
and service related costs or expenses, shall be up to but not exceed 0.25% of
the average daily net assets of the Funds attributable to the Investor Class
Shares. In the event the Distribution and Service 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 Accessor Funds
under the Distribution and Service Plan may also enter into an Administrative
Services Agreement with regard to its Investor Class Shares, which will not be
subject to the terms of the Distribution and Service Plan.
The Distribution and Service Plan may be terminated with respect to
Accessor Funds 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 and Service Plan (the "Qualified Directors") or by the vote of a
majority of the outstanding voting securities of the relevant class of Accessor
Funds. Any change in the Distribution and Service Plan that would materially
increase the cost to the class of shares of Accessor Funds to which the
Distribution Service Plan relates requires approval of the affected class of
shareholders of Accessor Funds. The Distribution and Service Plan requires the
Board to review and approve the Distribution and Service Plan annually and, at
least quarterly, to receive and review written reports of the amounts expended
under the Distribution and Service Plan and the purposes for which such
expenditures were made. The Distribution and Service Plan may be terminated at
any time upon a vote of the Qualified Directors.
Administrative Services Plan. Accessor Funds has adopted an Administrative
Services Plan whereby Accessor Funds is authorized to enter into Administrative
Service Agreements on behalf of the Investor Class Shares of the Fund (the
"Agreements"), the form of which has been approved by the Board of Directors of
Accessor Funds (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. The 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")
attributable to the Investor Class Shares. Provided, however, that no Fund shall
directly or indirectly pay any distribution related amounts that will be
allocated under Accessor Funds' Distribution and Service 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 Accessor Funds, 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 the 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 and Service Plan and the
Administrative Services Plan will provide benefits to Accessor Funds. 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 and Service 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
Accessor Funds and (ii) those Directors who are not "interested persons" of
Accessor Funds (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 and Distribution and Service 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 and Service Plan provides that expenses payable under the
plan shall be accrued and paid monthly, subject to the 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 or service related expenses.
VALUATION
The NAV 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 2000 will be New Year's Day, Martin Luther King
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
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 trading of portfolio securities on foreign exchanges on such days may
significantly increase or decrease the NAV of the Fund's shares when the
shareholder is not able to purchase or redeem Fund shares.
The Fund's liabilities are allocated among its classes. The total of such
liabilities allocated to a class plus that classes distribution and/or servicing
fees and any other expenses specially allocated to that class are then deducted
from the classes 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 classes "NAV" 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 NAV per share of the Investor Class Shares
of the Fund may be lower than the per share NAV of the Advisor Class Shares as a
result of the daily expense accruals of the administrative services and
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.
FUND TRANSACTION POLICIES
Generally, securities are purchased for the Fund (for investment income
and/or capital appreciation and not for short-term trading profits. However, the
Fund may dispose of securities without regard to the time they have been held
when such action, for defensive or other purposes, appears advisable to the
Money Manager.
If the 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 the 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 Agreement
provides, 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 Fund. 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 Agreement
authorizes Accessor Capital and the Money Manager, 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 Fund. 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
Accessor Funds. 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 Manager 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 Manager through brokerage commissions
generated by transactions of the Fund, while the portions of the costs
attributable to non-research usage of such products or services is paid by
Accessor Capital or the Money Manager 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 Manager
allocation of the costs of such benefits and services between those that
primarily benefit Accessor Capital or the Money Manager and those that primarily
benefit Accessor Funds.
As a general matter, the 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 Accessor Funds, Accessor Capital, when
exercising investment discretion, and the Money Manager may enter into
transactions giving rise to brokerage commissions with brokers who provide
brokerage, research or other services to Accessor Funds 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
Accessor Funds determines that the commission cost is reasonable in relation to
the total quality and reliability of the brokerage and research services made
available to Accessor Funds, or to Accessor Capital for the benefit of Accessor
Funds 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 the Fund, direct all or a portion of the Fund's
transactions to brokers who pay a portion of that Fund's expenses.
Accessor Capital does not expect the Fund ordinarily to effect a
significant portion of the Fund' total brokerage business with brokers
affiliated with Accessor Capital or the Money Manager. 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 Manager, 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
Fund 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 Fund. Certain services received by Accessor Capital or
Money Manager attributable to a particular transaction may benefit one or more
other accounts for which investment discretion is exercised by the Money
Manager, or the Fund other than that for which the particular portfolio
transaction was effected. The fees of the Money Manager are not reduced by
reason of their receipt of such brokerage and research services.
Fixed-Income Funds generally do not pay brokerage commissions.
CALCULATION OF FUND PERFORMANCE
Information about the Fund's performance is based on that Fund's record to
a recent date and is not intended to indicate future performance. From time to
time, the yield and total return for each class of shares of the Fund may be
included in advertisements or reports to shareholders or prospective investors.
Quotations of yield for the Fund or class will be based on the investment income
per share (as defined by the SEC) during a particular 30-day (or one-month)
period (including dividends and interest), less expenses accrued during the
period ("net investment income"), and will be computed by dividing net
investment income by the maximum public offering price per share on the last day
of the period.
The total return of the Fund may be included in advertisements or other
written material. When the Fund's total return is advertised, it will be
calculated for the past year, the past five years, and the past ten years (or if
the Fund has been offered for a period shorter than one, five or ten years, that
period will be substituted) since the establishment of the Fund. Any fees
charged by Service Organizations directly to their customers in connection with
investments in the Fund are not reflected in the Fund's total return and such
fees, if charged, will reduce the actual return received by customers on their
investment.
The Fund may advertise their performance in terms of total return, which is
computed by finding the compounded rates of return over a period that would
equate the initial amount invested to the ending redeemable value. The
calculation assumes that all dividends and distributions are reinvested on the
reinvestment dates during the relevant time period and accounts for all
recurring fees. The Fund may also include in advertisements data comparing
performance with the performance of published editorial comments and performance
rankings compiled by independent organizations (such as Lipper Analytical
Services, Inc. or Morningstar, Inc.) or entities or organizations which track
the performance of investment companies or investment advisers and publications
that monitor the performance of mutual funds (such as Barron's, Business Week,
Financial Times, Forbes, Fortune, Inc., Institutional Investor, Investor's
Business Daily, Money, Morningstar, Inc., Mutual Fund Magazine, Smart Money and
The Wall Street Journal). Performance information may be quoted numerically or
may be presented in a table, graph or other illustration. In addition, Fund
performance may be compared to well-known unmanaged indices of market
performance or other appropriate indices of investment securities or with data
developed by Accessor Funds or Accessor Capital derived from such indices.
Unmanaged indices (i.e., other than Lipper) generally do not reflect deductions
for administrative and management costs and expenses. Fund performance may also
be compared, on a relative basis, to other Funds of Accessor Funds. This
relative comparison, which may be based upon historical Fund performance, may be
presented numerically, graphically or in text. Fund performance may also be
combined or blended with other Accessor Funds, and that combined or blended
performance may be compared to the same Benchmark Indices to which individual
Funds are compared. In addition, Accessor Funds may from time to time compare
the expense ratio of the Fund to that of investment companies with similar
objectives and policies, based on data generated by Lipper or similar investment
services that monitor mutual funds.
In reports or other communications to investors or in advertising, the Fund
may discuss relevant economic and market conditions affecting Accessor Funds. In
addition, Accessor Funds, Accessor Capital and the Money Manager may render
updates of Fund investment activity, which may include, among other things,
discussion or quantitative statistical or comparative analysis of portfolio
composition and significant portfolio holdings including analysis of holdings by
sector, industry, country or geographic region, credit quality and other
characteristics. Accessor Funds may also describe the general biography, work
experience and/or investment philosophy or style of the Money Manager of the
Accessor Funds and may include quotations attributable to the Money Manager
describing approaches taken in managing each Accessor Funds' investments,
research methodology underlying stock selection or each Accessor Funds'
investment objective. The Accessor Funds may also discuss measures of risk,
including those based on statistical or econometric analyses, the continuum of
risk and return relating to different investments and the potential impact of
foreign stocks on a portfolio otherwise composed of domestic securities.
CALCULATION OF FUND PERFORMANCE INFORMATION
Yield and Total Return Quotations. The Fund computes its 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 Fund, 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 the
Fund are reinvested at the price stated in the Prospectus on the reinvestment
dates during the period, and includes all recurring fees.
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.
Current distribution information for the Investor Class Shares of the Fund
will be based on distributions for a specified period (i.e., total dividends
from net investment income), divided by the NAV 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
the 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
Accessor Funds, on behalf of the Fund, has adopted a Code of Ethics, which
establishes standards by which certain covered persons of Accessor Funds must
abide relating to personal securities trading conduct. Under the Code of Ethics,
covered persons (who include, among others, directors and officers of Accessor
Funds and employees of Accessor Funds and Accessor Capital), are generally
prohibited from engaging in personal securities transactions with certain
exceptions as set forth in the Code of Ethics. 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
Accessor Funds before their own.
TAX INFORMATION
TAXATION OF THE FUND -- GENERAL
The 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 the
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, the 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 the 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.
The 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 the 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. The 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 the 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 the 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 the 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 NAV 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. Therefore, prior to purchasing shares of the 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 the 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 the 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 the 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
the Fund may invest may be subject to section 1256 of the Code ("section 1256
contracts"). Any section 1256 contracts the 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 the 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 the Fund recognizes,
without in either case increasing the cash available to the Fund. The 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 the Fund
may constitute a "straddle." Straddles are subject to certain rules that may
affect the amount, character and timing of the 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 the 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 the 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 the 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 the 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 the 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 the 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
The 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, the
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 the 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 the 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.
The 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 the
Fund's adjusted basis therein as of the end of that year. Pursuant to the
election, the 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). The 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 the
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 the 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, the 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 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 Fund.
STATE AND LOCAL TAXES
Depending on the extent of the 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 the 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 the Fund.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Advisor Class Shares of the Fund may be purchased directly from the Fund
with no sales charge or commission. Investors may also purchase Advisor Class
Shares or Investor Class Shares of the Fund from intermediaries, such as a
broker-dealer, bank or other financial institutions. 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 Fund. Shares of the Fund will be sold at the NAV 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. NAV 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 Fund 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 Fund 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 Fund 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 Fund. These financial
intermediaries are authorized to designate their agents and affiliates to
receive these orders, and the 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.
The Fund reserves the right to suspend the offering of shares for a period
of time. The Fund 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 the Fund. The Fund
also reserves the right to refuse exchange purchases by any person or group if,
in Accessor Capital's judgment, the 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 the Fund in accordance with their agreements with clients
or customers.
For non-distribution related administration, subaccounting, transfer agency
and/or other services, the Fund may pay Service Organizations and certain record
keeping organizations with whom it has entered into agreements pursuant to the
Distribution and Service 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
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 Fund may accept certain types of securities in lieu of wired funds as
consideration for Fund shares. Under no circumstances will the 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 the Fund's shares will be
valued in the same manner as the Fund's portfolio securities in connection with
its determination of NAV. A transfer of securities to the 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 the Fund's shares should consult their
tax advisers as to the federal, state and local tax consequences of such
transfers.
Telephone Transactions. A shareholder of Accessor Funds with an aggregate
account balance of $1 million or more may request purchases, redemptions or
exchanges of shares of the Fund by telephone at the appropriate toll free number
provided in this Prospectus. It may be difficult to implement redemptions or
exchanges by telephone in times of drastic economic or market changes. In an
effort to prevent unauthorized or fraudulent redemption or exchange requests by
telephone, Accessor Funds employs reasonable procedures specified by the Board
of Directors to confirm that such instructions are genuine. Telephone
transaction procedures include the following measures: requiring the appropriate
telephone transaction election be made on the telephone transaction
authorization form sent to shareholders upon request; requiring the caller to
provide the names of the account owners, the account owner's social security
number or tax identification number and name of Fund, all of which must match
Accessor Funds' records; requiring that a service representative of Accessor
Capital, acting as Transfer Agent, complete a telephone transaction form listing
all of the above caller identification information; requiring that redemption
proceeds be sent by wire only to the owners of record at the bank account of
record or by check to the address of record; sending a written confirmation for
each telephone transaction to the owners of record at the address of record
within five (5) business days of the call; and maintaining tapes of telephone
transactions for six months, if Accessor Funds elects to record shareholder
telephone transactions.
For accounts held of record by a broker-dealer, trustee, custodian or an
attorney-in-fact (under a power of attorney), additional documentation or
information regarding the scope of a caller's authority is required. Finally,
for telephone transactions in accounts held jointly, additional information
regarding other account holders is required. Accessor Funds may implement other
procedures from time to time. If reasonable procedures are not implemented,
Accessor Funds may be liable for any loss due to unauthorized or fraudulent
transactions. In all other cases, neither Accessor Funds, the Fund nor Accessor
Capital will be responsible for authenticity of redemption or exchange
instructions received by telephone.
Market Timing Policy. The Fund is intended to be long-term investment vehicle
and are not designed to provide investors with a means of speculation on
short-term market movements. A pattern of frequent purchases and exchanges can
be disruptive to efficient portfolio management and, consequently, can be
detrimental to the Fund's performance and to its shareholders. Accordingly, if
the Fund's management determines that an investor is engaged in excessive
trading, the Fund, with or without prior notice, may temporarily or permanently
terminate the availability of Fund exchanges, or reject in whole or part any
purchase or exchange request, with respect to such investor's account. Such
investors also may be barred from purchasing other Funds in the Accessor Family
of Funds. Generally, an investor who makes more than four exchanges out of the
Fund during any calendar month or who makes exchanges that appear to coincide
with an active market-timing strategy may be deemed to be engaged in excessive
trading. Accounts under common ownership or control will be considered as one
account for purposes of determining a pattern of excessive trading. In addition,
the Fund may refuse or restrict purchase or exchange requests by any person or
group if, in the judgment of the Fund's management, the Fund would be unable to
invest the money effectively in accordance with its investment objective and
policies or could otherwise be adversely affected or if the Fund receives or
anticipates receiving simultaneous orders that may significantly affect the Fund
(e.g., amounts equal to $250,000). If an exchange request is refused, the Fund
will take no other action with respect to the shares until it receives further
instructions from the investor. The Fund may delay forwarding redemption
proceeds for up to seven days if the investor redeeming shares is engaged in
excessive trading or if the amount of the redemption request otherwise would be
disruptive to efficient portfolio management or would adversely affect the Fund.
The Fund' policy on excessive trading applies to investors who invest in the
Fund directly or through financial intermediaries, but does not apply to a
Systematic Withdrawal Plan described in the Fund' Prospectus.
During times of drastic economic or market conditions, the Fund may suspend
exchange privileges temporarily without notice and treat exchange requests based
on their separate components - redemption orders with a simultaneous request to
purchase the other Fund's shares. In such a case, the redemption request would
be processed at the Fund's next determined NAV but the purchase order would be
effective only at the NAV next determined after the Fund being purchased
receives the proceeds of the redemption, which may result in the purchase being
delayed.
<PAGE>
APPENDIX A
RATINGS OF DEBT INSTRUMENTS
Corporate Bond Ratings
Moody's Investors Service ("Moody's")
Baa - Bonds which are rated Baa are considered as medium-grade obligations
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba - Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate, and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of inter-est and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing. Note: Moody's applies numerical modifiers 1, 2, and 3
in each generic rating classification from Aa through Caa. The modifier 1
indicates that the obligation ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates a ranking in the lower end of that generic rating category.
Standard & Poor's Corporation ("S&P")
BBB
An obligor rated 'BBB' has ADEQUATE capacity to meet its financial commitments.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial commitments.
Obligors rated 'BB', 'B', 'CCC', and 'CC' are regarded as having significant
speculative characteristics. 'BB' indicates the least degree of speculation and
'CC' the highest. While such obligors will likely have some quality and
protective characteristics, these may be outweighed by large uncertainties or
major exposures to adverse conditions.
BB
An obligor rated 'BB' is LESS VULNERABLE in the near term than other lower-rated
obligors. However, it faces major ongoing uncertainties and exposure to adverse
business, financial, or economic conditions which could lead to the obligor's
inadequate capacity to meet its financial commitments.
B
An obligor rated 'B' is MORE VULNERABLE than the obligors rated 'BB', but the
obligor currently has the capacity to meet its financial commitments. Adverse
business, financial, or economic conditions will likely impair the obligor's
capacity or willingness to meet its financial commitments.
CCC
An obligor rated 'CCC' is CURRENTLY VULNERABLE, and is dependent upon favorable
business, financial, and economic conditions to meet its financial commitments.
CC
An obligor rated 'CC' is CURRENTLY HIGHLY-VULNERABLE.
Plus (+) or minus (-):
Ratings from 'AA' to 'CCC' may be modified by the addition of a plus or minus
sign to show relative standing within the major rating categories.
R
An obligor rated 'R' is under regulatory supervision owing to its financial
condition. During the pendency of the regulatory supervision the regulators may
have the power to favor one class of obligations over others or pay some
obligations and not others. Please see Standard & Poor's issue credit ratings
for a more detailed description of the effects of regulatory supervision on
specific issues or classes of obligations.
SD and D
An obligor rated 'SD' (Selective Default) or 'D' has failed to pay one or more
of its financial obligations (rated or unrated) when it came due. A 'D' rating
is assigned when Standard & Poor's believes that the default will be a general
default and that the obligor will fail to pay all or substantially all of its
obligations as they come due. An 'SD' rating is assigned when Standard & Poor's
believes that the obligor has selectively defaulted on a specific issue or class
of obligations but it will continue to meet its payment obligations on other
issues or classes of obligations in a timely manner. Please see Standard &
Poor's issue credit ratings for a more detailed description of the effects of a
default on specific issues or classes of obligations.
N.R.
An issuer designated N.R. is not rated.
Public Information Ratings
Ratings with a 'pi' subscript are based on an analysis of an issuer's published
financial information, as well as additional information in the public domain.
They do not, however, reflect in-depth meetings with an issuer's management and
are therefore based on less comprehensive information than ratings without a
'pi' subscript. Ratings with a 'pi' subscript are reviewed annually based on a
new year's financial statements, but may be reviewed on an interim basis if a
major event that may affect an issuer's credit quality occurs. Ratings with a
'pi' subscript are not modified with '+' or '-' designations. Outlooks are not
be provided for ratings with a 'pi' subscript, nor are they subject to potential
Credit Watch listings.
<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 Fund' 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 the Fund's shareholders.
For purposes of calculating the performance differential versus the
applicable index, the investment performance of the 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 the 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 the 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>
[FRONT COVER]
[GRAPHIC] Advisor Class Shares
ACCESSOR(R)FUNDS, INC. Prospectus April 29, 2000
Equity Funds
Growth Fund
Value Fund
Small to Mid Cap Fund
International Equity Fund
Fixed-Income Funds
Intermediate Fixed-Income Fund
Short-Intermediate Fixed-Income Fund
Mortgage Securities Fund
U.S. Government Money Fund
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]
<PAGE>
THE ACCESSOR FUNDS
o A family of nine mutual funds (each a "Fund"), each with two classes of
shares (this prospectus includes eight of the nine mutual funds and does
not include the High Yield Bond Fund.
o A variety of fixed income and equity mutual funds. This Prospectus
describes the Advisor Class Shares of the Funds.
o Designed to help investors realize the benefits of asset allocation and
diversification.
o Managed and administered by Accessor Capital Management LP ("Accessor
Capital").
o 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, diversification 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.
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
THE FUNDS
Fund Summaries......................................................
Performance.........................................................
Equity Funds' Expenses..............................................
Fixed-Income Funds' Expenses........................................
Equity Funds' Objectives and Strategies.............................
Equity Funds' Principal Securities and Risks........................
Fixed-Income Funds' Objectives and Strategies.......................
Fixed-Income Funds' Principal Securities and Risks..................
Management, Organization and Capital Structure......................
SHAREHOLDER INFORMATION
Purchasing Fund Shares..............................................
Exchanging Fund Shares..............................................
Redeeming Fund Shares...............................................
Dividends and Distributions.........................................
Valuation of Securities.............................................
Taxation............................................................
Financial Highlights................................................
APPENDIX A
Description of Fund Indices.........................................
<PAGE>
THIS PAGE LEFT INTENTIONALLY BLANK
<PAGE>
- --------------------------------------------------------------------------------
Help Box: Accessor Funds domestic equity funds are designed so that investments
in the S&P 500 Index are covered equally by investments in the Accessor Growth
and Accessor Value Funds and the Accessor Small to Mid Cap Fund is
designed to invest in stocks outside the S&P 500 Index.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GRAPHIC GROWTH FUND
Summary
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND 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
Chicago Equity Partners ("Chicago Equity Partners"), the Fund's Money Manager,
believes will outperform peer companies. While maintaining an overall risk level
similar to that of the benchmark. The Money Manager attempts to exceed the
performance of the S&P 500/BARRA Growth Index over a cycle of five years.
Chicago Equity Partners uses a disciplined structured investment approach and
quantitative analytical techniques designed to identify stocks with the highest
probability of outperforming their peers coupled with a portfolio construction
process designed to keep the overall portfolio risk characteristics similar to
that of the benchmark.
- --------------------------------------------------------------------------------
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 AND 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.
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND 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. The Fund will maintain an average
market capitalization similar to the average market capitalization of the
Wilshire 4500 Index, and will attempt to have a roughly similar distribution of
stocks by market capitalization as the Wilshire 4500 Index.
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.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
GRAPHIC INTERNATIONAL EQUITY FUND
Summary
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND 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 and 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.
- --------------------------------------------------------------------------------
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 AND 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 the Fund's 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.
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.
- --------------------------------------------------------------------------------
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 AND 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 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.
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.
- --------------------------------------------------------------------------------
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 AND 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. The market value of mortgage
related securities can and will fluctuate as interest rates and market
conditions change. Fixed-rate mortgage decline in value during periods of rising
interest rates.
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.
- --------------------------------------------------------------------------------
GRAPHIC U.S. GOVERNMENT MONEY FUND
Summary
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND 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 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 12/31/99
[Data Points] Life of
1 Yr 5 Yr Fund*
1993 14.21 ---- ---- -------
1994 3.99 Fund
1995 34.32 S&P 500/BARRA
1996 19.83 Growth Index(1)
1997 33.24 *8/24/92 inception date
1998 46.65 **Index measured from 9/1/92
1999
As of 12/31 each year
Best Quarter
Worst Quarter
- --------------------------------------------------------------------------------
(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 12/31/99
[Data Points]
Life of
1993 14.69 1 Yr 5 Yr Fund*
1994 -1.93 ---- ---- -----
1995 33.25 Fund
1996 23.94 S&P500/BARRA
1997 32.94 Value Index(1)
1998 12.89 *8/24/92 inception date
1999
As of 12/31 each year **Index measured from 9/1/92
Best Quarter
Worst Quarter
- --------------------------------------------------------------------------------
(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
- --------------------- Average Annual Total Return
AS OF 12/31/99
[Bar Chart] Year-by-Year Life of
Total Return 1 Yr 5 Yr Fund*
------------ ---- ---- -----
[Data Points] Fund
Wilsire 4500
1993 14.39 Index(1)
1994 -4.07 Small to Mid
1995 31.98 Cap Composite
1996 24.85 Index(2)
1997 36.14
1998 15.98 *8/24/92 inception date
1999 **Index measured from 9/1/92
As of 12/31 each year
Best Quarter
Average Annual Total Return Worst Quarter
As of 12/31/99
- --------------------------------------------------------------------------------
(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 12/31/99
1995 7.63 Life of
1996 13.78 1 Yr Fund*
1997 10.96 ---- -----
1998 16.07
1999 Fund
As of 12/31 each year MSCI EAFE + EMF Index(1)
International Composite
Index(2)
*10/3/94 inception date
**Index measured from 11/1/94
Best Quarter
Worst Quarter
- --------------------------------------------------------------------------------
(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 12/31/99
[Data Points] Life of
1 Yr 5 Yr Fund*
1993 9.53 ---- ---- -----
1994 -5.24 Fund
1995 18.26 Lehman Govt/
1996 2.56 Corp Index(1)
1997 8.62 *6/15/92 inception date
1998 8.38 **Index measured from 7/1/92
1999
As of 12/31 each year
Best Quarter
Worst Quarter
- --------------------------------------------------------------------------------
(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 12/31/99
[Data Points] Life of
1993 5.63 1 Yr 5 Yr Fund*
1994 -1.42 ---- ---- -----
1995 11.42 Fund
1996 3.63 Lehman Govt/
1997 6.33 Corp1-5 Index(1)
1998 6.87 * 5/18/92 inception date
1999 **Index measured from 6/1/92
As of 12/31 each year
Best Quarter
Worst Quarter
- --------------------------------------------------------------------------------
(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 12/31/99
[Data Points] Life of
1 Yr 5 Yrs Fund*
1993 7.26 ---- ----- -----
1994 -1.65 Fund
1995 16.03 Lehman Mortgage-Backed
1996 4.95 Securities Index(1)
1997 9.53 *5/18/92 inception date
1998 6.43 **Index measured from 6/1/92
1999
As of 12/31 each year Best Quarter
Worst Quarter
- --------------------------------------------------------------------------------
(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 12/31/99
[Data Points] Life of
1 Yr 5 Yr Fund*
1993 2.81 ---- ---- -----
1994 3.70 Fund
1995 5.33 Salomon Brothers
1996 4.78 U.S. 3 Mo.
1997 5.07 T-bill Index
1998 5.00 * 4/9/92 inception date
1999
As of 12/31 each year **Index measured from 5/1/92
Best Quarter
Worst Quarter
- --------------------------------------------------------------------------------
(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 12/31/99 WAS ____.
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 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.__% 0.__% ____% ____%
Distribution & Service Fee None None None None
Other Expenses 0.__% 0.__% 0.__% 0.__%
---- ---- ---- ----
Total Annual Fund Operating Expenses ____ ____ ____ ____
==== ==== ==== ====
- ----------------------------------------------------------------------------------------------------------------
</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
VALUE
SMALL TO MID CAP
INTERNATIONAL EQUITY
================================================================================
<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.__% 0.__% 0.__% 0.__%
Distribution & Service Fee None None None None
Other Expenses 0.__ 0.__ 0.__ 0.__
---- ---- ---- ----
Total Annual Fund Operating Expenses 0.__ 0.__ 0.__ 0.__
==== ==== ==== ====
- -----------------------------------------------------------------------------------------------------------
</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
SHORT-INTERMEDIATE FIXED-INCOME
MORTGAGE SECURITIES
U.S. GOVERNMENT MONEY
================================================================================
<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. The Fund will maintain an average market
capitalization similar to the average market capitalization of the Wilshire 4500
Index, and will attempt to have a roughly similar distribution of stocks by
market capitalization as the Wilshire 4500 Index. Generally, small
capitalization issuers are issuers that have a capitalization of $1 billion or
less at the time of investment and medium capitalization issuers have a
capitalization ranging from $1 billion to $10 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
- ------------------------
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. Securities that are
subject to an initial public offering may trade at a premium in the secondary
markets. However, there is no guarantee that a Fund will have the ability to
participate in such offerings on an ongoing basis.
[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.
<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.
[graphic]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 Corporation ("S&P"), or by Moody's Investors Service, Inc. ("Moody's")
at the time of purchase. The Fund may invest up to 20% of the net assets of the
Fund in securities rated BBB by S&P or Baa by Moody's and up to 6% of the net
assets of the Fund in securities rated BB by S&P or Ba by Moody's. The Money
Manager may also invest in debt securities not rated by S&P or Moody's if the
Money Manager or Accessor Capital determines the securities to be of comparable
quality to rated securities 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 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 Fund may purchase lower
quality debt securities when the Money Manager views the issuer's credit as
stable or improving, and the difference in the yield offered by investment grade
and below investment grade securities is large enough to compensate for the
increased risks associated with investing in lower rated securities. 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 debt securities
with durations between one and five years and rated A or higher by Standard &
Poor's Corporation ("S&P"), or by Moody's Investors Service, Inc. ("Moody's") at
the time of purchase. The Fund may invest up to 20% of the net assets of the
Fund in securities rated BBB by S&P or Baa by Moody's and up to 6% of the net
assets of the Fund in securities rated BB by S&P or Ba by Moody's. The Money
Manager may also invest in debt securities not rated by S&P or Moody's if the
Money Manager or Accessor Capital determines the securities to be of comparable
quality to rated securities 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 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 Fund may purchase lower quality
debt securities when the Money Manager views the issuer's credit as stable or
improving, and the difference in the yield offered by investment grade and below
investment grade securities is large enough to compensate for the increased
risks associated with investing in lower rated securities. The Money Manager
will attempt to exceed the total return performance of the LBGC1-5 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.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
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 SECURITIES
- --------------------
[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.
- --------------------------------------------------------------------------------
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. When interest rates fall, the U.S. Government Money
Fund's yield will generally fall as well.
[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 Risk. Credit risk is the possibility that an issuer will fail to
make timely payments of interest or principal. Some issuers may not make
payments on debt securities held by a Fund, causing a loss. Or, an issuer may
suffer adverse changes in its financial condition that could lower the credit
quality of a security, leading to greater volatility in the price of the
security and in shares of a Fund. A change in the quality rating of a bond or
other security can also affect the security's liquidity and make it more
difficult for a Fund to sell. Lower quality debt securities and comparable
unrated debt securities in which a Fund may invest are more susceptible to these
problems than higher quality obligations.
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 creditworthiness. Repurchase agreements are
corporate debt but are 102% collateralized by agency and/or government debt
obligations.
[graphic]Lower Rated Debt Securities. Debt securities rated lower than BBB or
lower than Baa by Moody's are commonly referred to as "junk bonds". Lower rated
debt securities and comparable unrated debt securities have speculative
characteristics and are subject to greater risks that higher rated securities.
These risks include the possibility of default on principal or interest payments
and bankruptcy of the issuer. During periods of deteriorating economic or
financial conditions, the ability of issuers of lower rated debt securities to
service their debt, meet projected goals or obtain additional financing may be
impaired. In addition, the market for lower rated debt securities has in the
past been more volatile and less liquid than the market for higher rated debt
securities. These risks could adversely affect the Funds that invest in these
debts securities.
[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.
<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 1999 (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 1999
- --------------------------------------------------------------------------------
Growth %
Value %
Small to Mid Cap %
International Equity %
Intermediate Fixed-Income %
Short-Intermediate Fixed-Income %
Mortgage Securities %
U.S. Government Money Fund: %
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE
- --------------------------------------------------------------------------------
GROWTH FUND
- -----------
Money Manager Chicago Equity Partners, 231 South LaSalle Street, Suite 413,
Chicago, IL 60697
Chicago Equity Partners utilizes a team approach to managing portfolios. David
Johnson is the Senior Portfolio manager responsible for the day to day
management of the Fund. David has been with Chicago Equity Partners and its
predecessors for over 23 years.
For the first five calendar quarters of management of the Growth Fund by Chicago
Equity Partners, they will earn a management fee of 0.20% that consists of a
basic fee of 0.10% and a portfolio management fee of 0.10%.
Prior to Chicago Equity Partners, Geewax, Terker & Company was the money manager
of the Growth Fund. The former money manager managed the Fund from July 27, 1997
until April 28, 2000. Geewax Terker earned a management fee calculated and paid
quarterly that consisted of a basic fee and a performance fee. This is the same
fee structure that Chicago Equity Partners will earn once they have completed
five complete calendar quarters. Beginning with the sixth calendar quarter of
management by Chicago Equity Partners, the basic fee will be 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 through the 13th calendar
quarter of Chicago Equity Partners management of the Growth Fund, the applicable
measurement period will be the entire period since the commencement of their
management of the Growth Fund with the exception of the quarter immediately
preceding the date of calculation.
Commencing with the 14th quarter of Chicago Equity Partners' 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, Chicago Equity Partners 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, Chicago Equity Partners 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.
- --------------------------------------------------------------------------------
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.
On August 19, 1999, the Board of Directors of Accessor Funds, amended the Money
Manager Agreement with Nicholas-Applegate, to change the schedule of fees
payable to the Money Manager, effective September 1, 1999. Prior to the change,
the Money Manager received a basic fee at the annual rate of 0.20% the
International Equity Fund's average daily net assets; there was no limit on the
maximum amount of the basic fee. After the change, the basic fee was limited to
a maximum fee of $400,000 annually. In substance, when the International Equity
Fund's assets exceed $200,000,000, the basic fee is never more than $400,000
annually.
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 up to a maximum of
$400,000 annualized. 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:
Average Annual Performance Total
Differential vs. Annual Annual
Benchmark Index Performance Fee Fee
- --------------- --------------- ---
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%
Example: If Nicholas-Applegate is outperforming the Index by more than 4% per
year, then the following table shows the annualized total fee at various asset
levels:
Asset Level New Total Annual Fee Old Total Annual Fee
$150 million 0.20% + 0.40% = 0.60% 0.20% + 0.40% = 0.60%
$200 million $400,000 (or 0.20%) + 0.40% = 0.60% 0.20% + 0.40% = 0.60%
$250 million $400,000 (or 0.16%) + 0.40% = 0.56% 0.20% + 0.40% = 0.60%
$300 million $400,000 (or 0.13%) + 0.40% = 0.53% 0.20% + 0.40% = 0.60%
$350 million $400,000 (or 0.11%) + 0.40% = 0.51% 0.20% + 0.40% = 0.60%
$400 million $400,000 (or 0.10%) + 0.40% = 0.50% 0.20% + 0.40% = 0.60%
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.
- --------------------------------------------------------------------------------
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 on 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. Prior to
that, 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.
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%
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.
- --------------------------------------------------------------------------------
MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE
- --------------------------------------------------------------------------------
U.S. Government Money Fund
Manager Accessor Capital Management LP, 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. A Fund
may temporarily or permanently terminate the exchange privilege of any investor
who makes more than four exchanges out of the Fund per calendar year. Moreover,
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 on days when the NYSE is open for business, as long as
shareholders meet the normal investment requirements of the other Fund. 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 exchanged at the next NAV calculated after Accessor Capital
receives the exchange request in proper form. The Fund may temporarily or
permanently terminate the exchange privilege of any investor who makes more than
four exchanges out of the Fund per calendar year. 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 and signed by
all shareholders of record. 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.
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
*Except, that in December the dividend is declared on the second or third to
last business day and paid the next day for operational convenience.
[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 ________________________________, 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
1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 21.57 $ 19.51 $ 17.99 $ 14.37
INVESTMENT OPERATIONS:
Net investment income (loss) 0.04 0.13 0.19 0.15
Net realized and unrealized gain
on investments 9.91 6.31 3.35 4.76
Total from investment operations 9.95 6.44 3.54 4.91
DISTRIBUTIONS:
Distributions from net investment income -0.03 -0.13 -0.19 -0.15
Distributions from capital gains -2.61 -4.25 -1.83 -1.14
Total distributions -2.64 -4.38 -2.02 -1.29
- ----------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $ 28.88 $ 21.57 $ 19.51 $ 17.99
- ----------------------------------------------------------------------------------------------------------
Total return (1) 46.65% 33.24% 19.83% 34.32%
- ----------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $157,799 $87,907 $60,586 $48,532
- ----------------------------------------------------------------------------------------------------------
Ratios of expenses to average net assets:
After Accessor Capital fee waivers 0.92% 0.93% 1.13% 1.26%
Before Accessor Capital fee waivers 0.92 0.93 1.13 1.26
Ratio of net investment income (loss)
to average net assets
After Accessor Capital fee waivers 0.16 0.56 0.97 0.97
Before Accessor Capital fee waivers 0.16 0.56 0.97 0.97
Portfolio turnover rate 112.42 131.75 81.79 99.73
</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 _____________________, 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
1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 20.88 $ 17.75 $ 15.91 $ 13.01
INVESTMENT OPERATIONS:
Net investment income 0.24 0.26 0.24 0.33
Net realized and unrealized gain
(loss) on investments 2.45 5.54 3.51 3.96
Total from investment operations 2.69 5.80 3.75 4.29
DISTRIBUTIONS:
Distributions from net investment income -0.24 -0.26 -0.24 -0.33
Distributions from capital gains -2.12 -2.41 -1.67 -1.06
Distributions in excess of capital gains -0.17 0.00 0.00 0.00
Total distributions -2.53 -2.67 -1.91 -1.39
- ----------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $ 21.04 $ 20.88 $ 17.75 $ 15.91
- ----------------------------------------------------------------------------------------------------------
Total return (1) 12.89% 32.94% 23.94% 33.25%
- ----------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $114,728 $81,127 $36,367 $ 24,915
- ----------------------------------------------------------------------------------------------------------
Ratios of expenses to average net assets:
After Accessor Capital fee waivers 1.03% 1.05% 1.21% 1.40%
Before Accessor Capital fee waivers 1.03 1.05 1.21 1.40
Ratio of net investment income to
average net assets:
After Accessor Capital fee waivers 1.06 1.32 1.43 2.18
Before Accessor Capital fee waivers 1.06 1.32 1.43 2.18
Portfolio turnover rate 104.85 68.14 93.54 100.88
</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 _____________________, 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
1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 21.82 $ 18.82 $ 17.60 $ 14.08
INVESTMENT OPERATIONS:
Net investment income (loss) -0.05 0.00 0.07 0.06
Net realized and unrealized gain
(loss) on investments 3.50 6.75 4.22 4.42
Total from investment operations 3.45 6.75 4.29 4.48
DISTRIBUTIONS:
Distributions from net investment income 0.00 0.00 -0.07 -0.06
Distributions from capital gains -1.74 -3.73 -3.00 -0.90
Distribution in excess of net investment income 0.00 -0.02 0.00 0.00
Return of capital distributions 0.00 0.00 0.00 0.00
Total distributions -1.74 -3.75 -3.07 -0.96
- ----------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $ 23.53 $ 21.82 $ 18.82 $ 17.60
- ----------------------------------------------------------------------------------------------------------
Total return (1) 15.98% 36.14% 24.85% 31.98%
- ----------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $260,792 $125,221 $65,479 $49,803
- ----------------------------------------------------------------------------------------------------------
Ratios of expenses to average net assets:
After Accessor Capital fee waivers 1.22% 1.15% 1.17% 1.31%
Before Accessor Capital fee waivers 1.22 1.15 1.17 1.31
Ratio of net investment income
to average net assets
After Accessor Capital fee waivers -0.22 0.00 0.37 0.41
Before Accessor Capital fee waivers -0.22 0.00 0.37 0.41
Portfolio turnover rate 110.07 129.98 113.44 84.26
</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
- --------------------------------------------------------------------------------
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 _____________________, 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
1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 14.83 $ 13.83 $ 12.55 $ 11.67
INVESTMENT OPERATIONS:
Net investment income (loss) -0.03 -0.02 -0.06 0.05
Net realized and unrealized gain
(loss) on investments 2.41 1.54 1.80 0.83
Total from investment operations 2.38 1.52 1.74 0.88
DISTRIBUTIONS:
Distributions from capital gains -0.31 -0.50 -0.44 0.00
Distributions in excess of capital gains 0.00 -0.02 -0.02 0.00
Total distributions -0.31 -0.52 -0.46 0.00
- ----------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $ 16.90 $ 14.83 $ 13.83 $ 12.55
- ----------------------------------------------------------------------------------------------------------
Total return (1) 16.07% 10.96% 13.78% 7.63%
- ----------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $149,391 $151,441 $73,019 $39,102
- ----------------------------------------------------------------------------------------------------------
Ratios of expenses to average net assets:
After Accessor Capital fee waivers 1.59% 1.55% 1.52% 1.83%
Before Accessor Capital fee waivers 1.59 1.55 1.52 1.93
Ratio of net investment income
(loss) to average net assets
After Accessor Capital fee waivers -0.24 -0.20 -0.26 0.10
Before Accessor Capital fee waivers -0.24 -0.20 -0.26 0.00
Portfolio turnover rate 196.37 196.66 157.66 84.85
</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
- --------------------------------------------------------------------------------
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 _____________________, 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
1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 12.19 $ 11.90 $ 12.29 $ 11.04
INVESTMENT OPERATIONS:
Net investment income 0.67 0.71 0.67 0.71
Net realized and unrealized gain
(loss) on investments 0.32 0.29 -0.39 1.25
Total from investment operations 0.99 1.00 0.28 1.96
DISTRIBUTIONS:
Distributions from net investment income -0.67 -0.71 -0.67 -0.71
Distributions from capital gains -0.04 0.00 0.00 0.00
Total distributions -0.71 -0.71 -0.67 -0.71
- ----------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $ 12.47 $ 12.19 $ 11.90 $ 12.29
- ----------------------------------------------------------------------------------------------------------
Total return (1) 8.38% 8.62% 2.56% 18.26%
- ----------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $48,489 $55,197 $52,248 $36,878
- ----------------------------------------------------------------------------------------------------------
Ratios of expenses to average net assets:
After Accessor Capital fee waivers 0.79% 0.84% 0.88% 0.96%
Before Accessor Capital fee waivers 0.79 0.84 0.88 0.96
Ratio of net investment income to
average net assets
After Accessor Capital fee waivers 5.46 5.88 5.79 6.07
Before Accessor Capital fee waivers 5.46 5.88 5.79 6.07
Portfolio turnover rate 113.00 84.35 94.69 187.62
</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 _____________________, 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
1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 12.27 $ 12.16 $ 12.32 $ 11.62
INVESTMENT OPERATIONS:
Net investment income 0.68 0.64 0.59 0.60
Net realized and unrealized gain
(loss) on investments 0.14 0.11 -0.16 0.70
Total from investment operations 0.82 0.75 0.43 1.30
DISTRIBUTIONS:
Distributions from net investment income -0.63 -0.64 -0.59 -0.60
Distributions from capital gains -0.13 0.00 0.00 0.00
Total distributions -0.76 -0.64 -0.59 -0.60
- ----------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $ 12.33 $ 12.27 $ 12.16 $ 12.32
- ----------------------------------------------------------------------------------------------------------
Total return (1) 6.87% 6.33% 3.63% 11.42%
- ----------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 42,454 $40,942 $36,701 $35,272
- ----------------------------------------------------------------------------------------------------------
Ratios of expenses to average net assets:
After Accessor Capital fee waivers 0.82% 0.86% 0.93% 0.94%
Before Accessor Capital fee waivers 0.82 0.86 0.93 0.94
Ratio of net investment income to
average net assets
After Accessor Capital fee waivers 5.12 5.20 4.89 4.99
Before Accessor Capital fee waivers 5.12 5.20 4.89 4.99
Portfolio turnover rate 69.64 53.30 31.12 41.93
</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 _____________________, 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
1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 12.60 $ 12.23 $ 12.38 $ 11.36
INVESTMENT OPERATIONS:
Net investment income 0.70 0.72 0.73 0.76
Net realized and unrealized gain
(loss) on investments 0.09 0.42 -0.15 1.02
Total from investment operations 0.79 1.14 0.58 1.78
DISTRIBUTIONS:
Distributions from net investment income -0.70 -0.72 -0.73 -0.76
Distributions from capital gains -0.10 -0.05 0.00 0.00
Total distributions -0.80 -0.77 -0.73 -0.76
- ----------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $ 12.59 $ 12.60 $ 12.23 $ 12.38
- ----------------------------------------------------------------------------------------------------------
Total return (1) 6.43% 9.53% 4.95% 16.03%
- ----------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $128,788 $109,747 $73,862 $49,830
- ----------------------------------------------------------------------------------------------------------
Ratios of expenses to average net assets:
After Accessor Capital fee waivers 0.88% 0.84% 0.95% 1.03%
Before Accessor Capital fee waivers 0.88 0.84 0.95 1.03
Ratio of net investment income to
average net assets:
After Accessor Capital fee waivers 5.59 5.93 6.08 6.41
Before Accessor Capital fee waivers 5.59 5.93 6.08 6.41
Portfolio turnover rate 278.18 211.66 356.23 422.56
</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 _____________________, 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
1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
INVESTMENT OPERATIONS:
Net investment income 0.05 0.05 0.05 0.05
DISTRIBUTIONS:
Distributions from net investment income -0.05 -0.05 -0.05 -0.05
- ----------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------------------------------------
Total return (1) 5.00% 5.07% 4.78% 5.33%
- ----------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $153,148 $50,910 $61,672 $41,882
- ----------------------------------------------------------------------------------------------------------
Ratios of expenses to average net assets:
After Accessor Capital fee waivers 0.53% 0.54% 0.59% 0.53%
Before Accessor Capital fee waivers 0.53 0.54 0.59 0.78
Ratio of net investment income to
average net assets
After Accessor Capital fee waivers 4.83 4.96 4.73 5.14
Before Accessor Capital fee waivers 4.83 4.96 4.73 4.89
</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/1/
UPDATE NUMBERS
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 exchange listed companies. The S&P membership currently consists of 459
NYSE, 39 NASDAQ and 2 AMEX traded companies.
Component stocks are chosen solely with the aim of achieving a distribution by
broad industry groupings for market size, liquidity and 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.
S&P500/BARRA Growth Index
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, ___ there were 378 companies in the Value Index and 122
companies in the Growth Index.
- --------
1 "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.
Wilshire 4500 Index: /2/
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.
- ----------
2 "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: /3/
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, ___, 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 0.83%, 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, ____, the current value of the MSCI EAFE +
EMF Index was 180.3.
- ----------
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. 4 The
Intermediate Fixed-Income Fund, Short-Intermediate Fixed-Income Fund
and Mortgage Securities Fund are not sponsored, endorsed, sold or
promoted by Lehman Brothers.
<PAGE>
Lehman Brothers /4/
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 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 issued. 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 have at least one year to maturity and an
outstanding par value of at least $100 million for U.S. Government issues and
$25 million for all others. 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 foreign targeted issues) and
the Agency Bond Index (all publicly issued debt of U.S. Government agencies and
quasi-federal corporations, and corporate debt 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 all fixed-rate securities
backed by mortgage pools of the Government National Mortgage Association (GNMA),
Federal Home Loan Mortgage Corporation (FHLMC) and Federal National Mortgage
Association (FNMA).
- ----------
4 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>
[Back Cover]
Shareholder Reports. Accessor Funds publishes Annual and Semi-Annual Reports,
which contain information about each Fund's recent performance, including:
[graphic] Management's discussion about recent market conditions, economic
trends and Fund strategies that affected their performance over the
recent period
[graphic] Fund performance data and financial statements
[graphic] Fund holdings
Statement of Additional Information. 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.
A free copy of Accessor Funds's Annual Report, Semi-Annual Report and SAI are
available by contacting Accessor Capital at 1-800-759-3504 or by visiting
Accessor Capital's web site at www.accessor.com.
- --------------------------------------------------------------------------------
Shareholder Reports, SAIs and other information are available from your
financial intermediary or from
Accessor Capital Management LP
1420 Fifth Street, #3600
Seattle, Washington 98101
800-759-3504
206-224-7420
web site: www.accessor.com
Securities and Exchange Commission
Washington, DC 20549-6009
800-SEC-0330 (Public Reference Section)
web site: www.sec.gov
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.
- --------------------------------------------------------------------------------
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 April 29, 2000
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
[graphic]A family of nine mutual funds (each a "Fund"), each with two classes of
shares (this prospectus includes eight of the nine mutual funds and does not
include the High Yield Bond Fund).
[graphic]A variety of equity and fixed-income mutual funds. This Prospectus
describes the Investor Class Shares of the Funds.
[graphic]Designed to help investors realize the benefits of asset allocation and
diversification.
[graphic]Managed and administered by Accessor Capital Management LP ("Accessor
Capital").
[graphic] 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, diversification 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.
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
THE FUNDS
Fund Summaries............................................
Performance...............................................
Equity Funds' Expenses....................................
Fixed-Income Funds' Expenses..............................
Equity Funds' Objectives and Strategies...................
Equity Funds' Principal Securities and Risks..............
Fixed-Income Funds' Objectives and Strategies.............
Fixed-Income Funds' Principal Securities and Risks........
Management, Organization and Capital Structure............
SHAREHOLDER INFORMATION
Purchasing Fund Shares....................................
Exchanging Fund Shares....................................
Redeeming Fund Shares.....................................
Dividends and Distributions...............................
Valuation of Securities...................................
Taxation..................................................
Financial Highlights......................................
APPENDIX A
Description of Fund Indices...............................
<PAGE>
THIS PAGE LEFT INTENTIONALLY BLANK
<PAGE>
- --------------------------------------------------------------------------------
Help Box: Accessor Funds domestic equity funds are designed so that investments
in the S&P 500 Index are covered equally by investments in the Accessor Growth
and Accessor Value Funds and the Accessor Small to Mid Cap Fund is designed to
invest in stocks outside the S&P 500 Index.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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
Chicago Equity Partners ("Chicago Equity Partners"), the Fund's Money Manager,
believes will outperform peer companies. While maintaining an overall risk level
similar to that of the benchmark. The Money Manager attempts to exceed the
performance of the S&P 500/BARRA Growth Index over a cycle of five years.
Chicago Equity Partners uses a disciplined structured investment approach and
quantitative analytical techniques designed to identify stocks with the highest
probability of outperforming their peers coupled with a portfolio construction
process designed to keep the overall portfolio risk characteristics similar to
that of the benchmark.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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. The Fund will maintain an average
market capitalization similar to the average market capitalization of the
Wilshire 4500 Index, and will attempt to have a roughly similar distribution of
stocks by market capitalization as the Wilshire 4500 Index.
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.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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.
[graphic] Foreign Exposure. Foreign securities, such as debt securities of
foreign issuers, can involve additional risks relating to political, economic,
or regulatory conditions in foreign countries. All of these factors can make
investing in foreign securities more volatile and less liquid than U.S.
investments.
- --------------------------------------------------------------------------------
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.
[graphic] Foreign Exposure. Foreign securities, such as debt securities of
foreign issuers, can involve additional risks relating to political, economic,
or regulatory conditions in foreign countries. All of these factors can make
investing in foreign securities more volatile and less liquid than U.S.
investments.
- --------------------------------------------------------------------------------
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:
[GRAPHIC] controlled duration;
[GRAPHIC] relative value sector rotation and security selection;
[GRAPHIC] rigorous quantitative analysis to security valuation; and
[GRAPHIC] 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.
- --------------------------------------------------------------------------------
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 12/31/99
[Data Points] Life of
1 Yr 5 Yr Fund*
1993 14.21 ---- ---- -------
1994 3.99 Fund
1995 34.32 S&P 500/BARRA
1996 19.83 Growth Index(1)
1997 33.24 *8/24/92 inception date
1998 46.65 **Index measured from 9/1/92
1999
As of 12/31 each year
Best Quarter
Worst Quarter
- --------------------------------------------------------------------------------
(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 12/31/99
[Data Points]
Life of
1993 14.69 1 Yr 5 Yr Fund*
1994 -1.93 ---- ---- -----
1995 33.25 Fund
1996 23.94 S&P500/BARRA
1997 32.94 Value Index(1)
1998 12.89 *8/24/92 inception date
1999
As of 12/31 each year **Index measured from 9/1/92
Best Quarter
Worst Quarter
- --------------------------------------------------------------------------------
(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
- --------------------- Average Annual Total Return
AS OF 12/31/99
[Bar Chart] Year-by-Year Life of
Total Return 1 Yr 5 Yr Fund*
------------ ---- ---- -----
[Data Points] Fund
Wilsire 4500
1993 14.39 Index(1)
1994 -4.07 Small to Mid
1995 31.98 Cap Composite
1996 24.85 Index(2)
1997 36.14
1998 15.98 *8/24/92 inception date
1999 **Index measured from 9/1/92
As of 12/31 each year
Best Quarter
Average Annual Total Return Worst Quarter
As of 12/31/99
- --------------------------------------------------------------------------------
(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 12/31/99
1995 7.63 Life of
1996 13.78 1 Yr Fund*
1997 10.96 ---- -----
1998 16.07
1999 Fund
As of 12/31 each year MSCI EAFE + EMF Index(1)
International Composite
Index(2)
*10/3/94 inception date
**Index measured from 11/1/94
Best Quarter
Worst Quarter
- --------------------------------------------------------------------------------
(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 12/31/99
[Data Points] Life of
1 Yr 5 Yr Fund*
1993 9.53 ---- ---- -----
1994 -5.24 Fund
1995 18.26 Lehman Govt/
1996 2.56 Corp Index(1)
1997 8.62 *6/15/92 inception date
1998 8.38 **Index measured from 7/1/92
1999
As of 12/31 each year
Best Quarter
Worst Quarter
- --------------------------------------------------------------------------------
(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 12/31/99
[Data Points] Life of
1993 5.63 1 Yr 5 Yr Fund*
1994 -1.42 ---- ---- -----
1995 11.42 Fund
1996 3.63 Lehman Govt/
1997 6.33 Corp1-5 Index(1)
1998 6.87 * 5/18/92 inception date
1999 **Index measured from 6/1/92
As of 12/31 each year
Best Quarter
Worst Quarter
- --------------------------------------------------------------------------------
(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 12/31/99
[Data Points] Life of
1 Yr 5 Yrs Fund*
1993 7.26 ---- ----- -----
1994 -1.65 Fund
1995 16.03 Lehman Mortgage-Backed
1996 4.95 Securities Index(1)
1997 9.53 *5/18/92 inception date
1998 6.43 **Index measured from 6/1/92
1999
As of 12/31 each year Best Quarter
Worst Quarter
- --------------------------------------------------------------------------------
(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 12/31/99
[Data Points] Life of
1 Yr 5 Yr Fund*
1993 2.81 ---- ---- -----
1994 3.70 Fund
1995 5.33 Salomon Brothers
1996 4.78 U.S. 3 Mo.
1997 5.07 T-bill Index
1998 5.00 * 4/9/92 inception date
1999
As of 12/31 each year **Index measured from 5/1/92
Best Quarter
Worst Quarter
- --------------------------------------------------------------------------------
(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 12/31/99 WAS ____.
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.__% 0.__% ____% ____%
Distribution & Service Fees(5) 0.25 0.25 0.25 0.25
Other Expenses ____ ____ ____ ____
Administrative Services Fees(6) 0.25 0.25 0.25 0.25
Total Other Expenses 0.__% 0.__% 0.__% 0.__%
---- ---- ---- ----
Total Annual Fund Operating Expenses ____ ____ ____ ____
==== ==== ==== ====
- ----------------------------------------------------------------------------------------------------------------
</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 fee paid pursuant to the Rule 12b-1 Distribution and Service Plan may
not exceed 0.25% of the annual net assets attributable to the 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 attributable 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
Value
Small to Mid Cap
International Equity
================================================================================
<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.__% 0.__% 0.__% 0.__%
Distribution & Service Fees(5) 0.25 0.25 0.25 0.25
Other Expenses ____ ____ ____ ____
Administrative Services Fees(6) 0.25 0.25 0.25 0.25
Total Other Expenses 0.__% 0.__% 0.__% 0.__%
---- ---- ---- ----
Total Annual Fund Operating Expenses 0.__ 0.__ 0.__ 0.__
==== ==== ==== ====
- -----------------------------------------------------------------------------------------------------------
</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 fee paid pursuant to the Rule 12b-1 Distribution and Service Plan may
not exceed 0.25% of the annual net assets attributable to the 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 attributable 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
Short-Intermediate Fixed-Income
Mortgage Securities
U.S. Government Money
================================================================================
<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.
- --------------------------------------------------------------------------------
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. The Fund will maintain an average market
capitalization similar to the average market capitalization of the Wilshire 4500
Index, and will attempt to have a roughly similar distribution of stocks by
market capitalization as the Wilshire 4500 Index. Generally, small
capitalization issuers are issuers that have a capitalization of $1 billion or
less at the time of investment and medium capitalization issuers have a
capitalization ranging from $1 billion to $10 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.
- --------------------------------------------------------------------------------
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
- ------------------------
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. Securities that are
subject to an initial public offering may trade at a premium in the secondary
markets. However, there is no guarantee that a Fund will have the ability to
participate in such offerings on an ongoing basis.
[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.
- --------------------------------------------------------------------------------
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.
[GRAPHIC]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.
- --------------------------------------------------------------------------------
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 Corporation ("S&P"), or by Moody's Investors Service, Inc. ("Moody's")
at the time of purchase. The Fund may invest up to 20% of the net assets of the
Fund in securities rated BBB by S&P or Baa by Moody's and up to 6% of the net
assets of the Fund in securities rated BB by S&P or Ba by Moody's. The Money
Manager may also invest in debt securities not rated by S&P or Moody's if the
Money Manager or Accessor Capital determines the securities to be of comparable
quality to rated securities 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 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 Fund may purchase lower
quality debt securities when the Money Manager views the issuer's credit as
stable or improving, and the difference in the yield offered by investment grade
and below investment grade securities is large enough to compensate for the
increased risks associated with investing in lower rated securities. 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
debt securities with durations between one and five years and rated A or higher
by Standard & Poor's Corporation ("S&P"), or by Moody's Investors Service, Inc.
("Moody's") at the time of purchase. The Fund may invest up to 20% of the net
assets of the Fund in securities rated BBB by S&P or Baa by Moody's and up to 6%
of the net assets of the Fund in securities rated BB by S&P or Ba by Moody's.
The Money Manager may also invest in debt securities not rated by S&P or Moody's
if the Money Manager or Accessor Capital determines the securities to be of
comparable quality to rated securities 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 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 Fund may purchase lower
quality debt securities when the Money Manager views the issuer's credit as
stable or improving, and the difference in the yield offered by investment grade
and below investment grade securities is large enough to compensate for the
increased risks associated with investing in lower rated securities. The Money
Manager will attempt to exceed the total return performance of the LBGC1-5
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.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
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 SECURITIES
- --------------------
[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.
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. When interest rates fall, the U.S. Government Money
Fund's yield will generally fall as well.
[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 Risk. Credit risk is the possibility that an issuer will fail to
make timely payments of interest or principal. Some issuers may not make
payments on debt securities held by a Fund, causing a loss. Or, an issuer may
suffer adverse changes in its financial condition that could lower the credit
quality of a security, leading to greater volatility in the price of the
security and in shares of a Fund. A change in the quality rating of a bond or
other security can also affect the security's liquidity and make it more
difficult for a Fund to sell. Lower quality debt securities and comparable
unrated debt securities in which a Fund may invest are more susceptible to these
problems than higher quality obligations.
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 creditworthiness. Repurchase agreements are
corporate debt but are 102% collateralized by agency and/or government debt
obligations.
[graphic]Lower Rated Debt Securities. Debt securities rated lower than BBB or
lower than Baa by Moody's are commonly referred to as "junk bonds". Lower rated
debt securities and comparable unrated debt securities have speculative
characteristics and are subject to greater risks that higher rated securities.
These risks include the possibility of default on principal or interest payments
and bankruptcy of the issuer. During periods of deteriorating economic or
financial conditions, the ability of issuers of lower rated debt securities to
service their debt, meet projected goals or obtain additional financing may be
impaired. In addition, the market for lower rated debt securities has in the
past been more volatile and less liquid than the market for higher rated debt
securities. These risks could adversely affect the Funds that invest in these
debts securities.
[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.
<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 1999 (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 1999
- --------------------------------------------------------------------------------
Growth %
Value %
Small to Mid Cap %
International Equity %
Intermediate Fixed-Income %
Short-Intermediate Fixed-Income %
Mortgage Securities %
U.S. Government Money Fund: %
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE
- --------------------------------------------------------------------------------
GROWTH FUND
- -----------
Money Manager Chicago Equity Partners, 231 South LaSalle Street, Suite 413,
Chicago, IL 60697
Chicago Equity Partners utilizes a team approach to managing portfolios. David
Johnson is the Senior Portfolio manager responsible for the day to day
management of the Fund. David has been with Chicago Equity Partners and its
predecessors for over 23 years.
For the first five calendar quarters of management of the Growth Fund by Chicago
Equity Partners, they will earn a management fee of 0.20% that consists of a
basic fee of 0.10% and a portfolio management fee of 0.10%.
Prior to Chicago Equity Partners, Geewax, Terker & Company was the money manager
of the Growth Fund. The former money manager managed the Fund from July 27, 1997
until April 28, 2000. Geewax Terker earned a management fee calculated and paid
quarterly that consisted of a basic fee and a performance fee. This is the same
fee structure that Chicago Equity Partners will earn once they have completed
five complete calendar quarters. Beginning with the sixth calendar quarter of
management by Chicago Equity Partners, the basic fee will be 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 through the 13th calendar
quarter of Chicago Equity Partners management of the Growth Fund, the applicable
measurement period will be the entire period since the commencement of their
management of the Growth Fund with the exception of the quarter immediately
preceding the date of calculation.
Commencing with the 14th quarter of Chicago Equity Partners' 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, Chicago Equity Partners 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, Chicago Equity Partners 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.
- --------------------------------------------------------------------------------
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.
On August 19, 1999, the Board of Directors of Accessor Funds, amended the Money
Manager Agreement with Nicholas-Applegate, to change the schedule of fees
payable to the Money Manager, effective September 1, 1999. Prior to the change,
the Money Manager received a basic fee at the annual rate of 0.20% the
International Equity Fund's average daily net assets; there was no limit on the
maximum amount of the basic fee. After the change, the basic fee was limited to
a maximum fee of $400,000 annually. In substance, when the International Equity
Fund's assets exceed $200,000,000, the basic fee is never more than $400,000
annually.
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 up to a maximum of
$400,000 annualized. 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:
Average Annual Performance Total
Differential vs. Annual Annual
Benchmark Index Performance Fee Fee
- --------------- --------------- ---
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%
Example: If Nicholas-Applegate is outperforming the Index by more than 4% per
year, then the following table shows the annualized total fee at various asset
levels:
Asset Level New Total Annual Fee Old Total Annual Fee
$150 million 0.20% + 0.40% = 0.60% 0.20% + 0.40% = 0.60%
$200 million $400,000 (or 0.20%) + 0.40% = 0.60% 0.20% + 0.40% = 0.60%
$250 million $400,000 (or 0.16%) + 0.40% = 0.56% 0.20% + 0.40% = 0.60%
$300 million $400,000 (or 0.13%) + 0.40% = 0.53% 0.20% + 0.40% = 0.60%
$350 million $400,000 (or 0.11%) + 0.40% = 0.51% 0.20% + 0.40% = 0.60%
$400 million $400,000 (or 0.10%) + 0.40% = 0.50% 0.20% + 0.40% = 0.60%
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.
- --------------------------------------------------------------------------------
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 on 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. Prior to
that, 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.
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%
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.
- --------------------------------------------------------------------------------
MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE
- --------------------------------------------------------------------------------
U.S. Government Money Fund
Manager Accessor Capital Management LP, 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. A Fund
may temporarily or permanently terminate the exchange privilege of any investor
who makes more than four exchanges out of the Fund per calendar year. Moreover,
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 on days when the NYSE is open for business, as long as
shareholders meet the normal investment requirements of the other Fund. 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 exchanged at the next NAV calculated after Accessor Capital
receives the exchange request in proper form. The Fund may temporarily or
permanently terminate the exchange privilege of any investor who makes more than
four exchanges out of the Fund per calendar year. 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 and signed by
all shareholders of record. 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.
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
*Except, that in December the dividend is declared on the second or third to
last business day and paid the next day for operational convenience.
[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.
<PAGE>
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN AND ADMINISTRATIVE SERVICES PLAN
- --------------------------------------------------------------------------------
Accessor Funds has adopted a Distribution and Service Plan that allows
the Investor Class Shares of the Fund to pay financial intermediaries for sales
and distribution-related activities and for providing non-distribution related
shareholder services. The fee under the Distribution and Service Plan will not
exceed 0.25% in the aggregate annually of the Investor Class assets.
Accessor Funds has also adopted an Administrative Services Plan which
allows the Investor Class Shares of the Fund to pay financial intermediaries for
non-distribution related administrative services provided to shareholders. The
administrative services fees will not exceed 0.25% annually of the Investor
Class assets.
<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 ____________________,
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 INVESTOR CLASS
1999 1998 1997 1996 1995 1999 1998(1)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 21.57 $ 19.51 $ 17.99 $ 14.37 $ $ 26.38
INVESTMENT OPERATIONS:
Net investment income (loss) 0.04 0.13 0.19 0.15 -0.05
Net realized and unrealized gain
on investments 9.91 6.31 3.35 4.76 4.52
Total from investment operations 9.95 6.44 3.54 4.91 4.47
DISTRIBUTIONS:
Distributions from net investment income -0.03 -0.13 -0.19 -0.15 0.00
Distributions from capital gains -2.61 -4.25 -1.83 -1.14 -2.03
Total distributions -2.64 -4.38 -2.02 -1.29 -2.03
- ------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $ 28.88 $ 21.57 $ 19.51 $ 17.99 $ $ 28.82
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (2) 46.65% 33.24% 19.83% 34.32% % 16.96%
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $157,799 $87,907 $60,586 $48,532 $ $22,077
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios of expenses to average net assets:
After Accessor Capital fee waivers 0.92% 0.93% 1.13% 1.26% % 1.41%*
Before Accessor Capital fee waivers 0.92 0.93 1.13 1.26 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 -0.40 *
Before Accessor Capital fee waivers 0.16 0.56 0.97 0.97 -0.40 *
Portfolio turnover rate 112.42 131.75 81.79 99.73 112.42
</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 ____________________,
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 INVESTOR CLASS
1999 1998 1997 1996 1995 1999 1998(1)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 20.88 $ 17.75 $ 15.91 $ 13.01 $ $ 23.41
INVESTMENT OPERATIONS:
Net investment income 0.24 0.26 0.24 0.33 0.05
Net realized and unrealized gain
(loss) on investments 2.45 5.54 3.51 3.96 -0.31
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 -0.06
Distributions from capital gains -2.12 -2.41 -1.67 -1.06 -1.90
Distributions in excess of capital gains -0.17 0.00 0.00 0.00 -0.15
Total distributions -2.53 -2.67 -1.91 -1.39 -2.11
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $ 21.04 $ 20.88 $ 17.75 $ 15.91 $ $ 21.04
- ---------------------------------------------------------------------------------------------------------------------------------
Total return (2) 12.89% 32.94% 23.94% 33.25% % -1.09%
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $114,728 $81,127 $36,367 $ 24,915 $ $12,987
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios of expenses to average net assets:
After Accessor Capital fee waivers 1.03% 1.05% 1.21% 1.40% % 1.55%*
Before Accessor Capital fee waivers 1.03 1.05 1.21 1.40 1.55 *
Ratio of net investment income to
average net assets:
After Accessor Capital fee waivers 1.06 1.32 1.43 2.18 0.44 *
Before Accessor Capital fee waivers 1.06 1.32 1.43 2.18 0.44 *
Portfolio turnover rate 104.85 68.14 93.54 100.88 104.85
</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 ____________________,
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 INVESTOR CLASS
1999 1998 1997 1996 1995 1999 1998(1)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 21.82 $ 18.82 $ 17.60 $ 14.08 $ $ 24.44
INVESTMENT OPERATIONS:
Net investment income (loss) -0.05 0.00 0.07 0.06 -0.09
Net realized and unrealized gain
(loss) on investments 3.50 6.75 4.22 4.42 0.86
Total from investment operations 3.45 6.75 4.29 4.48 0.77
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 -1.74
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 0.00
Total distributions -1.74 -3.75 -3.07 -0.96 -1.74
- -------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $ 23.53 $ 21.82 $ 18.82 $ 17.60 $ $ 23.47
- -------------------------------------------------------------------------------------------------------------------------------
Total return (2) 15.98% 36.14% 24.85% 31.98% % 3.32%
- -------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $260,792 $125,221 $65,479 $49,803 $2 $19,367
- -------------------------------------------------------------------------------------------------------------------------------
Ratios of expenses to average net assets:
After Accessor Capital fee waivers 1.22% 1.15% 1.17% 1.31% % 1.77%*
Before Accessor Capital fee waivers 1.22 1.15 1.17 1.31 1.77 *
Ratio of net investment income
to average net assets
After Accessor Capital fee waivers -0.22 0.00 0.37 0.41 -0.84 *
Before Accessor Capital fee waivers -0.22 0.00 0.37 0.41 -0.84 *
Portfolio turnover rate 110.07 129.98 113.44 84.26 110.07
</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 ____________________,
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 INVESTOR CLASS
1999 1998 1997 1996 1995 1999 1998(1)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 14.83 $ 13.83 $ 12.55 $ 11.67 $ $ 17.88
INVESTMENT OPERATIONS:
Net investment income (loss) -0.03 -0.02 -0.06 0.05 -0.06
Net realized and unrealized gain
(loss) on investments 2.41 1.54 1.80 0.83 -0.66
Total from investment operations 2.38 1.52 1.74 0.88 -0.72
DISTRIBUTIONS:
Distributions from capital gains -0.31 -0.50 -0.44 0.00 -0.31
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 -0.31
- -------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $ 16.90 $ 14.83 $ 13.83 $ 12.55 $ $ 16.85
- -------------------------------------------------------------------------------------------------------------------------------
Total return (2) 16.07% 10.96% 13.78% 7.63% % -4.01%
- -------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $149,391 $151,441 $73,019 $39,102 $ $18,963
- -------------------------------------------------------------------------------------------------------------------------------
Ratios of expenses to average net assets:
After Accessor Capital fee waivers 1.59% 1.55% 1.52% 1.83% % 2.05%*
Before Accessor Capital fee waivers 1.59 1.55 1.52 1.93 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 -0.68 *
Before Accessor Capital fee waivers -0.24 -0.20 -0.26 0.00 -0.68 *
Portfolio turnover rate 196.37 196.66 157.66 84.85 196.37
</TABLE>
- ----------
(1) Class commenced operations on July 06, 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
- --------------------------------------------------------------------------------
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 ____________________,
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 INVESTOR CLASS
1999 1998 1997 1996 1995 1999 1998(1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 12.19 $ 11.90 $ 12.29 $ 11.04 $ $12.29
INVESTMENT OPERATIONS:
Net investment income 0.67 0.71 0.67 0.71 0.28
Net realized and unrealized gain
(loss) on investments 0.32 0.29 -0.39 1.25 0.24
Total from investment operations 0.99 1.00 0.28 1.96 0.52
DISTRIBUTIONS:
Distributions from net investment income -0.67 -0.71 -0.67 -0.71 -0.30
Distributions from capital gains -0.04 0.00 0.00 0.00 -0.04
Total distributions -0.71 -0.71 -0.67 -0.71 -0.34
- ------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $ 12.47 $ 12.19 $ 11.90 $ 12.29 $ $12.47
- ------------------------------------------------------------------------------------------------------------------------------
Total return (2) 8.38% 8.62% 2.56% 18.26% % 4.29%
- ------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $48,489 $55,197 $52,248 $36,878 $ $9,146
- ------------------------------------------------------------------------------------------------------------------------------
Ratios of expenses to average net assets:
After Accessor Capital fee waivers 0.79% 0.84% 0.88% 0.96% % 1.27%*
Before Accessor Capital fee waivers 0.79 0.84 0.88 0.96 1.27 *
Ratio of net investment income to
average net assets
After Accessor Capital fee waivers 5.46 5.88 5.79 6.07 4.75 *
Before Accessor Capital fee waivers 5.46 5.88 5.79 6.07 4.75 *
Portfolio turnover rate 113.00 84.35 94.69 187.62 113.00
</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 ____________________,
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 INVESTOR CLASS
1999 1998 1997 1996 1995 1999 1998(1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 12.27 $ 12.16 $ 12.32 $ 11.62 $ $12.32
INVESTMENT OPERATIONS:
Net investment income 0.68 0.64 0.59 0.60 0.27
Net realized and unrealized gain
(loss) on investments 0.14 0.11 -0.16 0.70 0.17
Total from investment operations 0.82 0.75 0.43 1.30 0.44
DISTRIBUTIONS:
Distributions from net investment income -0.63 -0.64 -0.59 -0.60 -0.30
Distributions from capital gains -0.13 0.00 0.00 0.00 -0.13
Total distributions -0.76 -0.64 -0.59 -0.60 -0.43
- ------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $ 12.33 $ 12.27 $ 12.16 $ 12.32 $12.33
- ------------------------------------------------------------------------------------------------------------------------------
Total return (2) 6.87% 6.33% 3.63% 11.42% % 3.55%
- ------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 42,454 $40,942 $36,701 $35,272 $ $6,255
- ------------------------------------------------------------------------------------------------------------------------------
Ratios of expenses to average net assets:
After Accessor Capital fee waivers 0.82% 0.86% 0.93% 0.94% % 1.31%*
Before Accessor Capital fee waivers 0.82 0.86 0.93 0.94 1.31 *
Ratio of net investment income to
average net assets
After Accessor Capital fee waivers 5.12 5.20 4.89 4.99 4.57 *
Before Accessor Capital fee waivers 5.12 5.20 4.89 4.99 4.57 *
Portfolio turnover rate 69.64 53.30 31.12 41.93 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 ____________________,
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 INVESTOR CLASS
1999 1998 1997 1996 1995 1999 1998(1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 12.60 $ 12.23 $ 12.38 $ 11.36 $ $ 12.67
INVESTMENT OPERATIONS:
Net investment income 0.70 0.72 0.73 0.76 0.31
Net realized and unrealized gain
(loss) on investments 0.09 0.42 -0.15 1.02 0.01
Total from investment operations 0.79 1.14 0.58 1.78 0.32
DISTRIBUTIONS:
Distributions from net investment income -0.70 -0.72 -0.73 -0.76 -0.33
Distributions from capital gains -0.10 -0.05 0.00 0.00 -0.07
Total distributions -0.80 -0.77 -0.73 -0.76 -0.40
- ------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $ 12.59 $ 12.60 $ 12.23 $ 12.38 $ $ 12.59
- ------------------------------------------------------------------------------------------------------------------------------
Total return (2) 6.43% 9.53% 4.95% 16.03% % 2.46%
- ------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $128,788 $109,747 $73,862 $49,830 $ $17,369
- ------------------------------------------------------------------------------------------------------------------------------
Ratios of expenses to average net assets:
After Accessor Capital fee waivers 0.88% 0.84% 0.95% 1.03% % 1.41%*
Before Accessor Capital fee waivers 0.88 0.84 0.95 1.03 1.41 *
Ratio of net investment income to
average net assets:
After Accessor Capital fee waivers 5.59 5.93 6.08 6.41 5.09 *
Before Accessor Capital fee waivers 5.59 5.93 6.08 6.41 5.09 *
Portfolio turnover rate 278.18 211.66 356.23 422.56 278.18
</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 ____________________,
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 INVESTOR CLASS
1999 1998 1997 1996 1995 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <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 0.02
DISTRIBUTIONS:
Distributions from net investment income -0.05 -0.05 -0.05 -0.05 -0.02
- ------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ $ 1.00
- ------------------------------------------------------------------------------------------------------------------------------
Total return (2) 5.00% 5.07% 4.78% 5.33% % 1.83%
- ------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $153,148 $50,910 $61,672 $41,882 $ $5,071
- ------------------------------------------------------------------------------------------------------------------------------
Ratios of expenses to average net assets:
After Accessor Capital fee waivers 0.53% 0.54% 0.59% 0.53% % 1.03%*
Before Accessor Capital fee waivers 0.53 0.54 0.59 0.78 1.03 *
Ratio of net investment income to
average net assets
After Accessor Capital fee waivers 4.83 4.96 4.73 5.14 4.40 *
Before Accessor Capital fee waivers 4.83 4.96 4.73 4.89 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/1/
UPDATE NUMBERS
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 exchange listed companies. The S&P membership currently consists of 459
NYSE, 39 NASDAQ and 2 AMEX traded companies.
Component stocks are chosen solely with the aim of achieving a distribution by
broad industry groupings for market size, liquidity and 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.
S&P500/BARRA Growth Index
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, ____ there were 378 companies in the Value Index and 122
companies in the Growth Index.
- --------
1 "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.
Wilshire 4500 Index: /2/
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.
- ----------
2 "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: /3/
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, ____, 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 0.83%, 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, ____, the current value of the MSCI EAFE +
EMF Index was 180.3.
- ----------
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. 4 The
Intermediate Fixed-Income Fund, Short-Intermediate Fixed-Income Fund
and Mortgage Securities Fund are not sponsored, endorsed, sold or
promoted by Lehman Brothers.
<PAGE>
Lehman Brothers /4/
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 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 issued. 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 have at least one year to maturity and an
outstanding par value of at least $100 million for U.S. Government issues and
$25 million for all others. 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 foreign targeted issues) and
the Agency Bond Index (all publicly issued debt of U.S. Government agencies and
quasi-federal corporations, and corporate debt 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 all fixed-rate securities
backed by mortgage pools of the Government National Mortgage Association (GNMA),
Federal Home Loan Mortgage Corporation (FHLMC) and Federal National Mortgage
Association (FNMA).
- ----------
4 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>
[Back Cover]
Shareholder Reports. Accessor Funds publishes Annual and Semi-Annual Reports,
which contain information about each Fund's recent performance, including:
o Management's discussion about recent market conditions, economic
trends and Fund strategies that affected their performance over the
recent period
o Fund performance data and financial statements
o Fund holdings
Statement of Additional Information. 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.
A free copy of Accessor Funds's Annual Report, Semi-Annual Report and SAI are
available by contacting Accessor Capital at 1-800-759-3504 or by visiting
Accessor Capital's web site at www.accessor.com.
- --------------------------------------------------------------------------------
Shareholder Reports, SAIs and other information are available from your
financial intermediary or from
Accessor Capital Management LP
1420 Fifth Street, #3600
Seattle, Washington 98101
800-759-3504
206-224-7420
web site: www.accessor.com
Securities and Exchange Commission
Washington, DC 20549-6009
800-SEC-0330 (Public Reference Section)
web site: www.sec.gov
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.
- --------------------------------------------------------------------------------
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 April 29, 2000
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 12/31/99
DATA POINTS 1 Year 5 Years Life of
1993 2.81 Fund*
1994 3.70 U.S. Government
1995 5.33 Money Fund
1996 4.78 Salomon
1997 5.07 Brothers 3 mo.
1998 5.00 T-bill Index(1)
1999
As of 12/31 each year * 4/9/92 inception date
**Index measured from 5/1/92
Best Quarter:
Worst Quarter:
- --------------------------------------------------------------------------------
(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
12/31/99 was ____%. 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 and Service Fees None
Total Other Expenses %
----
Total Annual Fund Operating Expenses %
====
- ----------
(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
<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.
- --------------------------------------------------------------------------------
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 1999.
<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 a Fund may harm performance by
disrupting portfolio management strategies and by increasing expenses. A Fund
may temporarily or permanently terminate the exchange privilege of any investor
who makes more than four exchanges out of the Fund per calendar year. Moreover,
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 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
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 ______________, 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
1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
INVESTMENT OPERATIONS:
Net investment income 0.05 0.05 0.05 0.05
DISTRIBUTIONS:
Distributions from net investment income -0.05 -0.05 -0.05 -0.05
- ----------------------------------------------------------------------------------------------------------
Net Asset Value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------------------------------------
Total return (1) 5.00% 5.07% 4.78% 5.33%
- ----------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $153,148 $50,910 $61,672 $41,882
- ----------------------------------------------------------------------------------------------------------
Ratios of expenses to average net assets:
After Accessor Capital fee waivers 0.53% 0.54% 0.59% 0.53%
Before Accessor Capital fee waivers 0.53 0.54 0.59 0.78
Ratio of net investment income to
average net assets
After Accessor Capital fee waivers 4.83 4.96 4.73 5.14
Before Accessor Capital fee waivers 4.83 4.96 4.73 4.89
</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 April 29, 2000
ACCESSOR(R) FUNDS, INC. ("Accessor Funds") is a multi-managed, no-load,
open-end management investment company, known as a mutual fund. Accessor Funds
currently consists of nine diversified investment portfolios (individually, a
"Fund" and collectively, the "Funds"), each with its own investment objective
and policies. This Statement of Additional Information concerns eight of the
Funds: the Growth, Value, Small to Mid Cap Funds (the "Domestic Equity Funds")
and International Equity Fund (collectively with the Domestic Equity Funds, the
"Equity Funds") and the Intermediate Fixed-Income, Short-Intermediate
Fixed-Income and Mortgage Securities Funds (the "Bond Funds") and U.S.
Government Money Fund (collectively with the Bond 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 April 29, 2000 (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, 1999 is incorporated by reference into this Statement of
Additional Information. For a free copy of the Annual Report, call
1-800-759-3504.
Accessor Funds currently includes the following Funds:
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 -- 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 -- 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 Accessor Funds' 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.
<PAGE>
Table of Contents
GENERAL INFORMATION AND HISTORY................................................4
INVESTMENT RESTRICTIONS, POLICIES AND RISK.....................................4
MANAGEMENT OF THE FUNDS.......................................................37
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES...........................39
INVESTMENT ADVISORY AND OTHER SERVICES........................................43
VALUATION.....................................................................58
PORTFOLIO TRANSACTION POLICIES................................................59
PERFORMANCE INFORMATION.......................................................62
CODE OF ETHICS................................................................66
TAX INFORMATION...............................................................66
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION................................71
FINANCIAL STATEMENTS..........................................................73
APPENDIX A ...................................................................
APPENDIX B....................................................................
<PAGE>
GENERAL INFORMATION AND HISTORY
Accessor Funds was incorporated in Maryland on June 10, 1991. Accessor
Funds 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 Accessor Funds, 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 Accessor Funds 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 Accessor Funds' 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 Accessor Funds, pursuant to a
Management Agreement with Accessor Funds. Accessor Capital is also Accessor
Funds' transfer agent, registrar, dividend disbursing agent and provides record
keeping, administrative and compliance services pursuant to its Transfer Agency
and Administrative Agreement ("Transfer Agency Agreement") with Accessor Funds.
INVESTMENT RESTRICTIONS, POLICIES AND RISK
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. Other policies may be changed without the
approval of shareholders. This section of the Statement of Additional
Information describes the Funds' investment restrictions, and other policies and
restrictions.
INVESTMENT RESTRICTIONS
Fundamental 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--Securities Lending."
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.
Non-Fundamental Investment Restrictions
The following are each Fund's non-fundamental investment restrictions.
These restrictions may be modified or eliminated without shareholder approval.
1. 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).
2. Each Fund's entry into reverse repurchase agreements and dollar rolls,
together with its other borrowings, is limited to 5% of its net assets.
3. Each Fund may invest up to 5% of its net assets in publicly traded real
estate investment trusts ("REITs").
4. Not more than 25% of a Fund's net assets (determined at the time of the
short sale) may be subject short sales against-the-box.
5. Each Fund (except for the U.S. Government Money Fund) may invest up to
5% of its net assets in rights and warrants of issuers that meet its investment
objective and policies. Rights or warrants acquired as a result of ownership of
other instruments shall not be subject to this limitation.
6. Each Fund may invest up to 15% of its net assets in illiquid securities;
provided, however, the U.S. Government Money Fund may invest up to 10% of its
net assets in illiquid securities.
7. 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.
8. The Bond Funds and the International Fund may invest up to 5% of their
net assets in inverse floaters.
9. No Fund will invest more than 5% of its net assets in privately-issued
STRIPS.
10. 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.
11. Consistent with applicable regulatory requirements, each Fund, pursuant
to a securities lending agency agreement between the lending agent and the 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, currently 33-1/3%. The Fund will receive the
collateral in an amount equal to at least 102% (in the case of domestic
securities) or 105% (in the case of foreign securities) of the current market
value of the loaned securities plus accrued interest.
12. The U. S. Government Money Fund utilizes the amortized cost method of
valuation in accordance with regulations issued by the Securities and Exchange
Commission (the "SEC"). Accordingly, the U. S. Government Money Fund will limit
its Fund investments to those instruments with a maturity of 397 days or less,
and which are issued by the U.S. Government, its agencies and instrumentalities.
13. Each Fund (other than the U.S. Government Money Fund) is authorized to
invest its cash reserves (funds awaiting investment in the specific types of
securities to be acquired by a Fund or cash to provide for payment of the Fund's
expenses or to permit the Fund to meet redemption requests). Under normal
circumstances, no more than 20% of a Fund's net assets will be comprised of cash
or cash equivalents, as discussed below. Each Fund may hold cash reserves in an
unlimited amount or invest in short-term and money market instruments for
temporary defensive purposes when its Money Manager believes that a more
conservative approach is desirable. The Fund's (other than the U.S. Government
Money Fund) also may create equity or fixed-income exposure for cash reserves
through the use of options or futures contracts in accordance with their
investment objectives to minimize the impact of cash balances. This will enable
the Funds to hold cash while receiving a return on the cash that is similar to
holding equity or fixed-income securities. Each Fund (other than the U. S.
Government Money Fund) may invest up to 20% of its net assets in:
(i) Obligations (including certificates of deposit and bankers'
acceptances) maturing in 13 months or less of (a) banks organized under the
laws of the United States or any state thereof (including foreign branches
of such banks) or (b) U.S. branches of foreign banks or (c) foreign banks
and foreign branches thereof; provided that such banks have, at the time of
acquisition by the Fund of such obligations, total assets of not less than
$1 billion or its equivalent. The term "certificates of deposit" includes
both Eurodollar certificates of deposit, for which there is generally a
market, and Eurodollar time deposits, for which there is generally not a
market. "Eurodollars" are dollars deposited in banks outside the United
States; the Funds may invest in Eurodollar instruments of foreign and
domestic banks; and
(ii) Commercial paper, variable amount demand master notes, bills,
notes and other obligations issued by a U.S. company, a foreign company or
a foreign government, its agencies or instrumentalities, maturing in 13
months or less, denominated in U.S. dollars, and of "eligible quality" as
described below. If such obligations are guaranteed or supported by a
letter of credit issued by a bank, such bank (including a foreign bank)
must meet the requirements set forth in paragraph (i) above. If such
obligations are guaranteed or insured by an insurance company or other
non-bank entity, such insurance company or other non-bank entity must
represent a credit of high quality, as determined by the Fund's Money
Manager, under the supervision of Accessor Capital and the Board of
Directors, or Accessor Capital, as applicable.
"Eligible quality," for this purpose, means (i) a security rated (or
issued by an issuer that is rated with respect to a class of short-term
debt obligations, or any security within that class, that is comparable in
priority and security with the security) in the highest short-term rating
category (e.g., A-1/P-1) or one of the two highest long-term rating
categories (e.g., AAA/Aaa or AA/Aa) by at least two major rating agencies
assigning a rating to the security or issuer (or, if only one agency
assigned a rating, that agency) or (ii) an unrated security deemed of
comparable quality by the Fund's Money Manager, if applicable, or Accessor
Capital under the general supervision of the Board of Directors. The
purchase by the Fund of a security of eligible quality that is rated by
only one rating agency or is unrated must be approved or ratified by the
Board of Directors.
In selecting commercial paper and other corporate obligations for
investment by a Fund, Accessor Capital and/or the Money Manager, as
applicable, also considers information concerning the financial history and
condition of the issuer and its revenue and expense prospects. Accessor
Capital monitors, and the Board of Directors reviews on a quarterly basis,
the credit quality of securities purchased for the Fund. If commercial
paper or another corporate obligation held by a Fund is assigned a lower
rating or ceases to be rated, the Money Manager under the supervision of
Accessor Capital and the Board of Directors, or Accessor Capital, as
applicable, will promptly reassess whether that security presents minimal
credit risks and whether the Fund should continue to hold the security in
its portfolio. If a portfolio security no longer presents minimal credit
risks or is in default, the Fund will dispose of the security as soon as
reasonably practicable unless Accessor Capital and the Board of Directors
determine that to do so is not in the best interests of the Fund and its
shareholders. Variable amount demand master notes with demand periods of
greater than seven days will be deemed to be liquid only if they are
determined to be so in compliance with procedures approved by the Board of
Directors.
14. The Growth, Value, Small to Mid Cap, International Equity, Mortgage
Securities, and U.S. Government Money Funds will not invest in fixed-income
securities, including convertible securities, rated less than A by Standard &
Poor's Corporation ("S&P") or Moody's Investors Service, Inc. ("Moody's"), or in
unrated securities judged by Accessor Capital or a Money Manager to be of a
lesser credit quality than those designations. The Funds will sell securities
that they have purchased in a prudent and orderly fashion when ratings drop
below these minimum ratings.
15. The Intermediate Fixed-Income Fund, Short-Intermediate Fixed-Income
Fund will not invest more than 20% of the assets of these Funds in securities
rated BBB by S&P or Baa Moody's or determined to be of equivalent quality by the
Money Manager or Accessor Capital at the time of purchase or more than 6% of the
assets of these Funds in securities rated BB by S&P or Ba Moody's or determined
to be of equivalent quality by the Money Manager or Accessor Capital at the time
of purchase.
INVESTMENT POLICIES AND RISK CONSIDERATIONS
Asset-Backed Securities. The 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, which means that they
provide investors with payments consisting of both principal and interest as the
loans in the underlying asset pool are paid off by the borrowers, similar to the
mortgage pass-through structures described above or in a pay-through structure
similar to the collateralized mortgage structure.
Collateralized Mortgage Obligations ("CMOs") and Real Estate Mortgage
Investment Conduits ("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.
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.
Duration. Duration is used by the Money Managers of the Bond Funds in
security selection. Duration, which is one of the fundamental tools used by
money managers in security selection, is a measure of the price sensitivity of a
security or a portfolio 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 one percent with a one percent change in interest
rates. Assumptions generally accepted by the industry concerning the probability
of early payment and other factors may be used in the calculation of duration
for debt securities that contain put or call provisions, sometimes resulting in
a duration different from the stated maturity of the security. With respect to
certain mortgage-backed securities, duration is likely to be substantially less
than the stated maturity of the mortgages in the underlying pools. The maturity
of a security measures only the time until final payment is due and, in the case
of a mortgage-backed security, does not take into account the factors included
in duration.
A Fund's duration directly impacts the degree to which asset values
fluctuate with changes in interest rates. For every one percent change in
interest rate, a Fund's net asset value (the "NAV") is expected to change
inversely by approximately one percent for each year of duration. For example, a
one percent increase in interest rate would be expected to cause a fixed-income
portfolio with an average dollar weighted duration of five years, to decrease in
value by approximately five percent (one percent interest rate increase
multiplied by the five year duration).
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").
The International Fund may enter into forward foreign currency exchange
contracts for hedging purposes. 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. A forward contract generally has no deposit requirements and no
commissions are charged for such trades.
The International Fund may enter into forward contracts when the Money
Manager determines that the best interests of the International Fund will be
served, such as circumstances to protect its value against a decline in exchange
rates, or to protect against a rise in exchange rates for securities it intends
to purchase, but it will not use such contracts for speculation. The
International Fund may not use forward contracts to generate income, although
the use of such contracts may incidentally generate income. 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.
There is no limitation on the value of forward contracts into which the
International Fund may enter. When effecting forward foreign currency contracts,
cash or liquid assets of the International Fund of a dollar amount having an
aggregate value, measured on a daily basis, at least sufficient to make payment
for the portfolio securities to be purchased will be segregated on the
International Fund's records at the trade date and maintained until the
transaction is settled.
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. 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.
Foreign Securities. The Funds (with the exception of the Mortgage
Securities Fund and the U.S. Government Fund) 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.
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.
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. The International Fund also may purchase and write
futures contracts on foreign currencies. Futures contracts will be limited to
hedging transactions to minimize the impact of cash balances and for return
enhancement and risk management purposes in accordance with regulations of the
Commodity Futures Trading Commission.
A financial futures contract is a contract to buy or sell a specified
quantity of financial instruments such as United States Treasury bonds, notes
and bills, commercial paper, 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 called for cash
settlement. A futures contract is closed out by buying or selling an identical
offsetting contract which cancels the original contract to make or take
delivery. 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 Accessor Funds' 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. 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 (other that the U.S. Government Money Fund) 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.
Illiquid Securities. Illiquid securities are securities that are 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.
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 NAV per
share.
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.
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.
Securities Lending. Consistent with applicable regulatory requirements,
each Fund, pursuant to a securities lending agency agreement between the lending
agent and the 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, currently 33-1/3%. Such loans
must be callable at any time by the Fund and at all times be secured by cash,
U.S. Government securities, irrevocable letters of credit or such other
equivalent collateral that is at least equal to the market value, determined
daily, of the loaned securities. The Fund will receive the collateral in an
amount equal to at least 102% (in the case of domestic securities) or 105% (in
the case of foreign securities) of the current market value of the loaned
securities plus accrued interest. Cash collateral received by the Fund will be
invested in any securities in which the Fund is authorized to invest. 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 and under the general
supervision of the Board of Directors, as monitored by Accessor Capital and the
lending agent. 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.
Limitations on Futures and Options Transactions. Accessor Funds 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.
Lower-Rated Debt Securities. Debt securities rated lower than BBB by S&P or
Baa by Moody's are commonly referred to as "junk bonds". Lower rated debt
securities and comparable unrated debt securities have speculative
characteristics and are subject to greater risks than higher rated securities.
These risks include the possibility of default on principal or interest payments
and bankruptcy of the issuer. During periods of deteriorating economic or
financial conditions, the ability of issuers of lower rated debt securities to
service their debt, meet projected goals or obtain additional financing may be
impaired. In addition, the market for lower rated debt securities has in the
past been more volatile and less liquid than the market for higher rated debt
securities. These risks could adversely affect the Funds that invest in these
debts securities.
The widespread expansion of government, consumer and corporate debt within
the economy has made the corporate sector, especially cyclically sensitive
industries, more vulnerable to economic downturns or increased interest rates.
Because lower-rated debt securities involve issuers with weaker credit
fundamentals (such as debt-to-equity ratios, interest charge coverage, earnings
history and the like), an economic downturn, or increases in interest rates,
could severely disrupt the market for lower-rated debt securities and adversely
affect the value of outstanding debt securities and the ability of the issuers
to repay principal and interest.
Lower-rated debt securities possess speculative characteristics and are
subject to greater market fluctuations and risk of lost income and principal
than higher-rated debt securities for a variety of reasons. The markets for and
prices of lower-rated debt securities have been found to be less sensitive to
interest rate changes than higher-rated investments, but more sensitive to
adverse economic changes or individual corporate developments. Also, during an
economic downturn or substantial period of rising interest rates, highly
leveraged issuers may experience financial stress which would adversely affect
their ability to service their principal and interest payment obligations, to
meet projected business goals and to obtain additional financing. If the issuer
of a debt security owned by a Fund defaulted, the Fund could incur additional
expenses in seeking recovery with no guaranty of recovery. In addition, periods
of economic uncertainty and changes can be expected to result in increased
volatility of market prices of lower-rated debt securities and a Fund's NAV.
Lower-rated debt securities also present risks based on payment expectations.
For example, lower-rated debt securities may contain redemption or call
provisions. If an issuer exercises these provisions in a declining interest rate
market, a Fund would have to replace the security with a lower yielding
security, resulting in a decreased return for investors. Conversely, a
lower-rated debt security's value will decrease in a rising interest rate
market, as will the value of a Fund's assets.
In addition, to the extent that there is no established retail secondary
market, there may be thin trading of lower-rated debt securities, and this may
have an impact on the ability to both value accurately lower-rated debt
securities and a Fund's assets, and to dispose of the debt securities. Adverse
publicity and investor perceptions, whether or not based on fundamental
analysis, may decrease the value and liquidity of lower-rated debt securities,
especially in a thinly traded market.
Mortgage-Related Securities. Mortgage loans made by banks, savings and loan
institutions and other lenders are often assembled into pools, the interests in
which are issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. Interests in such pools are called "mortgage-related
securities" or "mortgage-backed securities." Most mortgage-related securities
are pass-through securities, which means that they provide investors with
payments consisting of both principal and interest as mortgages in the
underlying mortgage pool are paid off by the borrower. 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). GNMA creates mortgage-related securities from pools of
Government-guaranteed or insured (Federal Housing Authority or Veterans
Administration) mortgages originated by mortgage bankers, commercial banks and
savings and loan associations. FNMA and FHLMC issue mortgage-related securities
from pools of conventional and federally insured or guaranteed residential
mortgages obtained from various entities, including savings and loan
associations, savings banks, commercial banks, credit unions and mortgage
bankers. The mortgage-related securities either issued or guaranteed by GNMA,
FHLMC or FNMA ("Certificates") are called pass-through Certificates because a
pro rata share of both regular interest and principal payments (less GNMA's,
FHLMC's or FNMA's fees and any applicable loan servicing fees), as well as
unscheduled early prepayments on the underlying mortgage pool, are passed
through monthly to the holder of the Certificate (i.e., the Fund).
The principal and interest on GNMA securities are guaranteed by GNMA and
backed by the full faith and credit of the U.S. Government. FNMA guarantees full
and timely payment of all interest and principal, while FHLMC guarantees timely
payment of interest and ultimate collection of principal. Mortgage-related
securities from FNMA and FHLMC are not backed by the full faith and credit of
the United States; however, in the Fund's opinion, their close relationship with
the U.S. Government makes them high quality securities with minimal credit
risks. The yields provided by these mortgage-related securities have
historically exceeded the yields on other types of U.S. Government securities
with comparable maturities; however, these securities generally have the
potential for greater fluctuations in yields as their prices will not generally
fluctuate as much as more traditional fixed-rate debt securities.
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.
The Bond Funds may invest in pass-through mortgage-related securities, such
as fixed-rate mortgage-related securities ("FRMs") and adjustable rate
mortgage-related securities ("ARMs"), which are collateralized by fixed rate
mortgages and adjustable rate mortgages, respectively. ARMs have a specified
maturity date and amortize principal much in the fashion of a fixed-rate
mortgage. As a result, in periods of declining interest rates there is a
reasonable likelihood that ARMs will behave like FRMs in that current levels of
prepayments of principal on the underlying mortgages could accelerate. One
difference between ARMs and FRMs is that, for certain types of ARMs, the rate of
amortization of principal, as well as interest payments, can and does change in
accordance with movements in a particular, pre-specified, published interest
rate index. The amount of interest due to an ARM security holder is calculated
by adding a specified additional amount, the "margin," to the index, subject to
limitations or "caps" on the maximum and minimum interest that is charged to the
mortgagor during the life of the mortgage or to maximum and minimum changes to
that interest rate during a given period.
In addition to GNMA, FNMA or FHLMC Certificates, through which the holder
receives a share of all interest and principal payments from the mortgages
underlying the Certificate, the Bond Funds also may invest in pass-through
mortgage-related securities where all interest payments go to one class of
holders ("Interest Only Securities" or "IOs") and all principal payments go to a
second class of holders ("Principal Only Securities" or "POs"). These securities
are commonly referred to as mortgage-backed security strips or MBS strips.
Stripped mortgage-related securities have greater market volatility than other
types of mortgage-related securities in which the Bond Funds may invest. The
yields to maturity on IOs and POs are sensitive to the rate of principal
payments (including prepayments) on the related underlying mortgage assets and
principal payments may have a material effect on yield to maturity. If the
underlying mortgage assets experience greater than anticipated prepayments of
principal, a Fund may not fully recoup its initial investment in IOs.
Conversely, if the underlying mortgage assets experience less than anticipated
prepayments of principal, the yield on POs could be materially adversely
affected. The Bond Funds will treat IOs and POs as illiquid securities except
for (i) IOs and POs 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 these 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 NAV per share.
Municipal Securities. The Funds may invest up to 5% of their net assets in
fixed-income securities issued by states, counties and other local governmental
jurisdictions, including agencies of such governmental jurisdictions, within the
United States.
Options. The Funds' (other than the U.S. Government Money Fund) may
purchase put and call options and write (sell) "covered" put and "covered" call
options. The Domestic Equity Funds may purchase and write options on stocks and
stock indices. These options may be traded on national securities exchanges or
in the OTC market. Options on a stock index are similar to options on stocks
except that there is no transfer of a security and settlement is in cash. The
Domestic Equity Funds may write covered put and call options to generate
additional income through the receipt of premiums, purchase put options in an
effort to protect the value of a security that it owns against a decline in
market value and purchase call options in an effort to protect against an
increase in the price of securities it intends to purchase. The International
Fund may purchase and write options on currencies. Currency options may be
either listed on an exchange or traded OTC. Options on currencies are similar to
options on stocks except that there is no transfer of a security and settlement
is in cash. The International Fund may write covered put and call options on
currencies to generate additional income through the receipt of premiums,
purchase put options in an effort to protect the value of a currency that it
owns against a decline in value and purchase call options in an effort to
protect against an increase in the price of currencies it intends to purchase.
The currency options are traded on national currency exchanges, the OTC market
and by large international banks. The International Fund may trade options on
international stocks or international stock indices in a manner similar to that
described above. The Bond Funds may purchase and write options on U.S.
Government securities. The Bond Funds may write covered put and call options to
generate additional income through the receipt of premiums, may purchase put
options in an effort to protect the value of securities in their portfolios
against a decline in market value and purchase call options in an effort to
protect against an increase in the price of securities they intend to purchase.
All options on U.S. Government securities purchased or sold by the Bond Funds
will be traded on U.S. securities exchanges or will result from separate,
privately negotiated transactions with a primary government securities dealer
recognized by the Board of Governors of the Federal Reserve System.
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 Accessor Funds' 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 Accessor Funds' 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 staff of 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.
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.
Real Estate-Related Securities. 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.
Repurchase Agreements. A repurchase agreement is an agreement under which a
Fund purchases a fixed-income security, generally a security issued by the U.S.
Government or an agency thereof, a banker's acceptance or a certificate of
deposit, from a commercial bank, or broker or dealer, and simultaneously agrees
to sell the security back to the original seller at an agreed upon price and
date (normally, the next business day). The securities purchased by the Fund
will have a total value in excess of the value of the repurchase agreement and
will be held by Fifth Third Bank, the Funds' custodian (the "Custodian"), either
physically or in a book-entry system, until repurchased. Repurchase agreements
will at all times be fully collateralized by U.S. Government securities or other
collateral, such as cash, in an amount at least equal to the repurchase pirce,
including accrued interest earned on the underlying securities, 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 party
agreeing to repurchase should default and if the value of the collateral
securing the repurchase agreements declines below the repurchase price, the Fund
may incur a loss. 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
counterparty to the repurchase agreement becomes bankrupt or otherwise fails to
deliver securities. 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 agreement transactions to
counterparties who meet creditworthiness standards approved by the Board of
Directors, which include 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. See "Investment Restrictions, Policies and Risk
Considerations - Illiquid Securities."
Reverse Repurchase Agreements and Dollar Rolls. Each Fund may enter into
reverse repurchase agreements. A reverse repurchase agreement has the
characteristics of borrowing and is a transaction whereby a Fund sells and
simultaneously agrees to repurchase 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 the right to receive interest and principal payments. At
the agreed upon future date, the Fund repurchases the security by paying an
agreed upon purchase price plus interest. 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 having an
aggregate value, measured on a daily basis, at least equal in value to the
repurchase price including any accrued interest. 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 counterparty to a reverse
repurchase agreement files for bankruptcy or becomes insolvent, 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.
Rights and Warrants. 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. 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."
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.
Rule 144A Securities. Each Fund may purchase securities that are not
registered under the Securities Act, but that can be sold to "qualified
institutional buyers" in accordance with Rule 144A under the Securities Act
("Rule 144A Securities"). In addition to an adequate trading market, the Board
will also consider factors such as trading activity, availability of reliable
price information and other relevant information in determining whether a Rule
144A Security is liquid. This investment practice could have the effect of
increasing the level of illiquidity in the Funds to the extent that qualified
institutional buyers become uninterested for a time in purchasing Rule 144A
Securities. The Board will carefully monitor any investments by the Fund in Rule
144A Securities.
Rule 144A securities may involve a high degree of business and financial
risk and may result in substantial losses. These securities may be less liquid
than publicly traded securities, and a Fund may take longer to liquidate these
positions than would be the case for publicly traded securities. Although these
securities may be resold in privately negotiated transactions, the price
realized from these sales could be less than those originally paid by a Fund.
Further, companies whose securities are not publicly traded may not be subject
to the disclosure and other investor protection requirements that would be
applicable if their securities were publicly traded.
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.
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).
Short Sales Against-the-Box. Short sales against-the-box are short sales of
securities that a Fund owns or has the right to obtain (equivalent in kind and
amount to the securities sold short). 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 sets aside in a segregated
custodial account while the short sales remains outstanding 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.
Special Risks of Hedging and Income Enhancement Strategies. Participation
in the options or futures markets and in currency exchange transactions involves
investment risks and transaction costs to which a Fund would not be subject
absent the use of these strategies. If the Money Manager's predictions of
movements in the direction of the securities, foreign currency and interest rate
markets are inaccurate, the adverse consequences to the Fund may leave the Fund
in a worse position than if such strategies were not used. Risks inherent in the
use of options, foreign currency and futures contracts and options on futures
contracts include: (1) dependence on the Money Manager's ability to predict
correctly movements in the direction of interest rates, securities prices and
currency markets; (2) imperfect correlation between the price of options and
futures contracts and options thereon and movements in the prices of the
securities being hedged; (3) the fact that skills needed to use these strategies
are different from those needed to select portfolio securities; (4) the possible
absence of a liquid secondary market for any particular instrument at any time;
(5) the possible need to raise additional initial margin; (6) in the case of
futures, the need to meet daily margin in cash; and (7) the possible need to
defer closing out certain hedged positions to avoid adverse tax consequences.
Temporary Defensive Policies. If, in the opinion of Accessor Capital and/or
the Money Manager, as applicable, market or economic conditions warrant, the
Funds may adopt a temporary defensive strategy.
During these times, the average dollar weighted duration of the
Intermediate Fixed-Income Fund may fall below three years, or rise to as high as
fifteen years and the Short-Intermediate Fixed-Income Fund may fall below one
year, or rise to as high as fifteen years. In such event, the Funds will be
subject to greater or less risk depending on whether average dollar weighted
duration is increased or decreased. At any time that these Funds' average dollar
weighted duration is increased, the Funds are subject to greater risk, since at
higher durations a Fund's asset value is more significantly impacted by changes
in prevailing interest rates than at lower durations. Likewise, when the Fund's
average dollar weighted duration is decreased, the Fund is subject to less risk,
since at lower durations a Fund's asset value is less significantly impacted by
changes in prevailing interest rates than at higher durations. When Accessor
Capital and/or the Money Manager determines that a temporary defensive strategy
is no longer needed, investments will be reallocated to return the Funds to
their designated average dollar weighted duration.
Corporate Obligations. Corporate debt obligations include (i) corporate
debt securities, including bonds, debentures, and notes; (ii) commercial paper
(including variable-amount master demand notes); (iii) repurchase agreements
involving investment-grade debt obligations; and (iv) convertible
securities-debt obligations of corporations convertible into or exchangeable for
equity securities.
U.S. Government Securities. U.S. Government obligations 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). In the case of securities not backed by the full faith and
credit of the United States, the Fund must look principally to the agency
issuing or guaranteeing the obligation for ultimate repayment and may not be
able to assert a claim against the United States if the agency or
instrumentality does not meet its commitments. 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.
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.
Zero-Coupon Securities. A zero-coupon security has no cash-coupon payments.
Instead, the issuer sells the security at a substantial discount from its
maturity value. The interest equivalent received by the investor from holding
this security to maturity is the difference between the maturity value and the
purchase price. Zero-coupon securities are more volatile than cash pay
securities. The Fund accrues income on these securities prior to the receipt of
cash payments. The Fund intends to distribute substantially all of its income to
its shareholders to qualify for pass-through treatment under the tax laws and
may, therefore, need to use its cash reserves to satisfy distribution
requirements.
MANAGEMENT OF THE FUNDS
The Board of Directors is responsible for overseeing generally the
operation of Accessor Funds. The officers are responsible for the day-to-day
management and administration of Accessor Funds' operations.
<TABLE>
<CAPTION>
Name and Position with Principal Occupations
Address Age Accessor Funds During Past Five Years
<S> <C> <C> <C> <C>
* J. Anthony Whatley, III** 57 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.
George G. Cobean, III 62 Director Partner, Martinson, Cobean &
1607 South 341st Place Associates, P.S. (certified public
Federal Way, WA accountants) since 1973.
Geoffrey C. Cross 60 Director President, Geoffrey C. Cross P.S.,
252 Broadway Inc., (general practice of law) since
Tacoma, WA 1970.
Ravindra A. Deo 37 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
and Accounting Officer Officer, Accessor Capital Management
L.P. since January 1992.
Linda V. Whatley** 42 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.
Robert J. Harper 56 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.
Christine J. Stansbery 48 Secretary Secretary, Northwest Advisers, Inc.
1420 Fifth Avenue since May, 1999; Assistant Vice
Seattle, WA President-Compliance since January
1997, Regulatory Manager from March 1996
to December 1996, Legal Assistant from
March 1993 to March 1996 at Accessor
Capital Management LP
</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 Accessor Funds to
the Directors during the fiscal year ended December 31, 1999:
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 Accessor Funds Retirement
<S> <C> <C> <C> <C>
J. Anthony Whatley III None None None None
George G. Cobean III None None
Geoffrey C. Cross None None
</TABLE>
Directors who are not "interested persons" of Accessor Funds are paid fees
of $3,000 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 Accessor Funds so request, they will be deemed to
have resigned from the Board of Directors at the same time their employment with
Accessor Capital terminates. Accessor Fund's officers and employees are paid by
Accessor Capital and receive no compensation from Accessor Funds.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of ____________, 2000, 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
Advisor Class Investor Class
Beneficial Owner Beneficial Owner
================================================================================
Value Fund
Advisor Class Investor Class
Beneficial Owner Beneficial Owner
================================================================================
Small to Mid Cap Fund
Advisor Class Investor Class
Beneficial Owner Beneficial Owner
================================================================================
International Equity Fund
Advisor Class Investor Class
Beneficial Owner Beneficial Owner
================================================================================
Intermediate Fixed-Income Fund
Advisor Class Investor Class
Beneficial Owner Beneficial Owner
================================================================================
Short-Intermediate Fixed-Income Fund
Advisor Class Investor Class
Beneficial Owner Beneficial Owner
================================================================================
Mortgage Securities Fund
Advisor Class Investor Class
Beneficial Owner Beneficial Owner
================================================================================
US Government Money Fund
Advisor Class Investor Class
Beneficial Owner Beneficial Owner
================================================================================
As of ____________, 2000, none of Accessor the Directors and officers of
Accessor Funds, Capital as a group, beneficially owned more than 1% Management
of the shares of each Fund. L. P.
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
Accessor Funds 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 NAV 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 Accessor Funds. The principal service providers
are:
Manager, Administrator, Transfer Agent, Accessor Capital Management LP
Registrar and Dividend Disbursing Agent
Custodian and Fund Accounting Agent Fifth Third Bank
Money Managers Six professional discretionary
investment management organizations
and Accessor Capital Management LP
Manager, Administrator, Transfer Agent, Registrar and Dividend Disbursing
Agent. Accessor Capital is the manager and administrator of Accessor Funds,
pursuant to a Management Agreement with Accessor Funds. Accessor Capital
provides or oversees the provision of all general management, administration,
investment advisory and portfolio management services for Accessor Funds.
Accessor Capital provides Accessor Funds with office space and equipment, and
the personnel necessary to operate and administer each Fund's 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 Accessor Funds and provides certain
administrative and compliance services to Accessor Funds.
Under the Management Agreement, Accessor Capital has agreed not to withdraw
from Accessor Funds the use of Accessor Funds' name. In addition, Accessor
Capital may not grant the use of a name similar to that of Accessor Funds to
another investment company or business enterprise without, among other things,
first obtaining the approval of Accessor Funds' 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 Accessor Funds and who have no
direct or indirect financial interest in the Management Agreement on June 17,
1992, by the shareholders of the Growth Fund, Value Fund (formerly referred to
as Value and Income Portfolio), Small to Mid Cap Fund (formerly referred to as
the Small Cap Portfolio) and International Equity Fund on June 17, 1992, and by
the shareholders of the Short-Intermediate Fixed-Income Fund, Intermediate
Fixed-Income Fund, Mortgage Securities Fund and U.S. Government Money Fund on
August 3, 1992. The Management Agreement has been renewed by the Board of
Directors including all of the Directors who are not "interested persons" of
Accessor Funds and who have no direct or indirect financial interest in the
Management Agreement each year, most recently on May 28, 1997, May 20, 1998 and
May __, 1999.
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 Accessor Funds, pursuant to a Management
Agreement between Accessor Capital and Accessor Funds. 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 Equity 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:
Fund 1997 1998 1999
---- ---- ---- ----
Growth $367,893 $549,085
Value $278,827 $517,550
Small to Mid Cap $692,048 $1,212,941
International Equity $649,695 $923,305
Intermediate Fixed-Income $177,340 $188,648
Short-Intermediate Fixed-Income $145,308 $169,201
Mortgage Securities $326,347 $490,887
U.S. Government Money $139,972 $175,047
Accessor Capital provides transfer agent, registrar and dividend disbursing
agent services to each Fund pursuant to a Transfer Agency Agreement between
Accessor Capital and Accessor Funds. 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 Accessor Funds, and (ii) a transaction fee of $0.50 per transaction. Accessor
Capital is also reimbursed by Accessor Funds 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
Fund 1997 1998* 1999
---- ---- ---- ----
Growth $102,701 $165,221
Value $78,723 $152,446
Small to Mid Cap $142,852 $266,187
International Equity $145,429 $218,581
Intermediate Fixed-Income $62,731 $69,981
Short-Intermediate Fixed-Income $51,705 $62,513
Mortgage Securities $113,090 $179,824
U.S. Government Money $69,929 $91,888
-------------------
*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 Accessor Funds 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 Accessor Funds 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 Accessor Funds for certain out-of-pocket expenses including postage, taxes,
wires, stationery and telephone.
Independent Auditors. ____________________, 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, 75 State Street, Boston,
Massachusetts 02109.
Money Managers. Currently, Accessor Capital invests all of the assets of
the U.S. Government Money Fund. Each other Fund of Accessor Funds 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 Accessor Funds 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 "Fund
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 Accessor Funds 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.
An Amended Agreement was approved by the Board of Directors on August 19, 1999,
effective September 1, 1999.
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 Accessor Funds
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 Accessor Funds 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 Accessor Funds 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 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 Accessor Funds 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 Money Manager Agreement for the Growth Fund was approved
by the Board of Directors on September 8, 1999.
On February 4, 2000, the Board of Directors approved a new Money Manager
Agreement, effective May 1, 2000, for the Growth Fund in connection with a
change in Money Manager to Chicago Equity Partners Corporation at a special
meeting of the Board of Directors called for that purpose, including all the
Directors who are not "interested persons" of Accessor Funds and who have no
direct or indirect interest in the Money Manager Agreement. 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
Accessor Funds, 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 Accessor Funds 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:
[Graphic] Chicago Equity Partners Corporation ("Chicago Equity Partners"), a
Delaware Corporation and wholly owned subsidiary of Bank of America, is
the Money Manager for the Growth Portfolio. The Money Manager expects to
maintain a well-diversified portfolio of stocks in the Growth Portfolio,
holding market representation in all major economic sectors. Chicago Equity
Partners uses a disciplined, structured investment process to identify
stocks that have a higher probability of outperforming peer companies.
These stocks tend to have strong earnings growth and trade at reasonable
multiple as compared to their peers. Once the highest ranked stocks are
identified, Chicago Equity Partners builds portfolios that resemble the
benchmark in terms of major risk components like industry and sector weight
and market capitalization. As of December 31, 1999, Chicago Equity Partners
managed assets of approximately $9.9 billion. Until April 28, 2000, Geewax,
Terker & Company ("Geewax Terker"), a Pennsylvania general partnership
whose general partners are John J. Geewax and Bruce Terker, was the Money
Manager for the Growth Fund.
[Graphic] 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, 1999, Martingale
managed assets of approximately $ billion.
[Graphic] 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 SEC 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, 1999, Symphony
Inc. managed assets of approximately $ billion and Symphony LLC managed
assets of approximately $ million.
[Graphic] 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, 1999, Nicholas-Applegate managed
assets of approximately $ billion.
[Graphic] 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, 1999, of approximately $ billion.
[Graphic] Cypress Asset Management ("Cypress"), a California corporation and
registered investment advisor with the SEC 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,
1999, Cypress managed assets of approximately $ 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 1997 1998 1999
---- ------------- ---- ---- ----
<S> <C> <C> <C> <C>
Growth/1/ Geewax, Terker $84,965 $244,362
State Street $72,872 N/A
Value Martingale $180,881 $367,420
Small to Mid Cap Symphony $369,071 $758,733
International Equity Nicholas-Applegate $660,458 $1,007,245
Intermediate Fixed-Income/2/ Cypress N/A $6,298
Smith Barney $73,891 $27,434
Short-Intermediate Fixed-Income/3/ Cypress N/A $5,494
Bankers Trust $60,545 $22,094
Mortgage Securities BlackRock $188,413 $313,614
U.S. Government Money Accessor Capital/4/ $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 Accessor Funds on behalf of the
individual Fund, Accessor Capital and the Money Manager. The fees are based on a
percentage of the assets of the Fund and the performance of the Fund compared to
a benchmark index after a specific number of complete calendar quarters of
management by the Money Manager. Each Fund seeks to invest so that its
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 Growth
Fund whose Money Manager commenced operations on May 1, 2000, the Money Managers
for the Value, Small to Mid Cap, International Equity, Intermediate
Fixed-Income, Short-Intermediate Fixed-Income 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 Growth Fund, will earn the an annual
fee of 0.20%, which includes a 0.10% Basic Fee and a 0.10% Fund Management Fee.
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 a percentage
of the assets of the Fund and the performance of the Fund compared to a
benchmark index pursuant to 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%/1/ =>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%)/2/
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>
- ----------
/1/ The basic fee is equal to an annual rate of 0.20% of the International
Equity Fund's average daily net assets up to a maximum of $400,000
annualized.
/2/ 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 Mid Cap Wilshire 4500
International Equity 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 Mid Cap and Bond Funds applies whenever a Money
Manager's performance exceeds the index by 2.00% (3.00% for Small to Mid Cap) 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 SEC,
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.
Money Manager Fees - International Equity Fund. On August 19, 1999, the
Board of Directors of Accessor Funds, amended the Money Manager Agreement with
Nicholas-Applegate, to change the schedule of fees payable to the Money Manager,
effective September 1, 1999. Prior to the change, the Money Manager received a
basic fee at the annual rate of 0.20% the International Equity Fund's average
daily net assets; there was no limit on the maximum amount of the basic fee.
After the change, the basic fee was limited to a maximum fee of $400,000
annually. In substance, when the International Equity Fund's assets exceed
$200,000,000, the basic fee is never more than $400,000 annually.
FUND EXPENSES
Each Fund pay all of its 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 Fund Accounting agent; (d) expenses of obtaining quotations
for calculating the value of the Funds' 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 Accessor
Funds' 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 Accessor Funds' 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 Accessor Funds 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 and 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 Accessor Funds' 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, the
Funds 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/or
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
On February 19, 1998, the Board of Directors of Accessor Funds, adopted a
Rule 18f-3 Plan and established two classes of shares for the Funds, the Advisor
Class and the Investor Class. The initial shares of Accessor Funds were
redesignated as Advisor Class Shares. The Board of Directors of Accessor Funds,
including a majority of the non-interested Directors (as defined in the
Investment Company Act), voted in person at the Board meeting on February 15,
2000, to adopt an Amended Rule 18f-3 Plan (the "Amended Multi-Class Plan")
pursuant to Rule 18f-3 under the Investment Company Act. The Directors
determined that the Amended Multi-Class Plan is in the best interests of each
class individually and Accessor Funds as a whole.
Under the Amended 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 Amended Multi-Class Plan, Accessor Funds, on behalf of
each Fund's Investor Class Shares, has adopted a Distribution and Service Plan
and an Administrative Services Plan, each as described below. Pursuant to the
appropriate plan, Accessor Funds 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 and
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 Accessor Funds
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 Amended Multi-Class Plan, Accessor Funds has not
adopted a Distribution and Service Plan or Administrative Services Plan for the
Advisor Class Shares. Advisor Class Shares shall be offered by Accessor Funds at
NAV with no distribution, shareholder or administrative service fees paid by the
Advisor Class Shares of the Funds. Advisor Class Shares are offered directly
from Accessor Funds 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. Accessor Funds, 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 and Service Plan. Accessor Funds has adopted a Distribution
and Service Plan (the "Distribution and Service 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 and Service Plan, Accessor
Funds 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 distribution services, including
but 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 Accessor Funds
to prospective holders of Investor Class Shares; (d) costs involved in
preparing, printing and distributing sales literature pertaining to Accessor
Funds and (e) costs involved in obtaining whatever information, analyses and
reports with respect to marketing and promotional activities that Accessor Funds
may, from time to time, deem advisable (the "Distribution Services"). Pursuant
to the Distribution and Service Plan, each Fund may also make payments to
Service Organizations who provide non-distribution related services, including
but not limited to: personal and/or account maintenance services. Such services
may include some or all of the following: (i) shareholder liaison services; (ii)
providing information periodically to Clients showing their positions in
Investor 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 Accessor Funds may
reasonably request to the extent the Service Organizations are permitted to do
so under applicable statutes, rules and regulations.
Subject to the limitations of applicable law and regulations, including
rules of NASD, the payments made directly to third parties for such distribution
and service related costs or expenses, shall be up to but not exceed 0.25% of
the average daily net assets of the Funds attributable to the Investor Class
Shares. In the event the Distribution and Service 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 Accessor Funds
under the Distribution and Service Plan may also enter into an Administrative
Services Agreement with regard to its Investor Class Shares, which will not be
subject to the terms of the Distribution and Service Plan.
The Distribution and Service Plan may be terminated with respect to
Accessor Funds 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 and Service Plan (the "Qualified Directors") or by the vote of a
majority of the outstanding voting securities of the relevant class of Accessor
Funds. Any change in the Distribution and Service Plan that would materially
increase the cost to the class of shares of Accessor Funds to which the
Distribution Service Plan relates requires approval of the affected class of
shareholders of Accessor Funds. The Distribution and Service Plan requires the
Board to review and approve the Distribution and Service Plan annually and, at
least quarterly, to receive and review written reports of the amounts expended
under the Distribution and Service Plan and the purposes for which such
expenditures were made. The Distribution and Service Plan may be terminated at
any time upon a vote of the Qualified Directors.
Administrative Services Plan. Accessor Funds has adopted an Administrative
Services Plan whereby Accessor Funds 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
Accessor Funds (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 Accessor Funds' Distribution and Service
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
Accessor Funds, 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 and Service Plan and the
Administrative Services Plan will provide benefits to Accessor Funds. 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 and Service 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
Accessor Funds and (ii) those Directors who are not "interested persons" of
Accessor Funds (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 and Distribution and Service 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 and Service Plan provides that expenses payable under the
plan shall be accrued and paid monthly, subject to the 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 or service related expenses. .
VALUATION
The NAV 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 2000 will be New Year's Day, Martin Luther King
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
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 NAV 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 classes distribution and/or servicing
fees and any other expenses specially allocated to that class are then deducted
from the classes 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 classes "NAV" 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 NAV of the Investor Class Shares
of the Funds may be lower than the per share NAV 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.
FUND 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
Accessor Funds. 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 Accessor Funds.
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 Accessor Funds, 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 Accessor Funds 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
Accessor Funds determines that the commission cost is reasonable in relation to
the total quality and reliability of the brokerage and research services made
available to Accessor Funds, or to Accessor Capital for the benefit of Accessor
Funds 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 generally do not pay brokerage commissions.
BROKERAGE COMMISSIONS PAID BY EQUITY FUNDS
FOR THE FISCAL YEAR ENDED DECEMBER 31
Fund 1997 1998 1999
---- ---- ---- ----
Growth $149,706/1/ $135,787
Value $119,157/2/ $328,259/3/
Small to Mid Cap $239,300 $385,130
International $1,465,433/4/ $1,602,429/5/
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 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.
5 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.
CALCULATION OF FUND PERFORMANCE
Information about a Fund's performance is based on that Fund's (or its
predecessor's) record to a recent date and is not intended to indicate future
performance. From time to time, the yield and total return for each class of
shares of the Funds may be included in advertisements or reports to shareholders
or prospective investors. Quotations of yield for a Fund or class will be based
on the investment income per share (as defined by the SEC) during a particular
30-day (or one-month) period (including dividends and interest), less expenses
accrued during the period ("net investment income"), and will be computed by
dividing net investment income by the maximum public offering price per share on
the last day of the period.
The total return of the Funds may be included in advertisements or other
written material. When a Fund's total return is advertised, it will be
calculated for the past year, the past five years, and the past ten years (or if
the Fund has been offered for a period shorter than one, five or ten years, that
period will be substituted) since the establishment of the Fund. Any fees
charged by Service Organizations directly to their customers in connection with
investments in the Funds are not reflected in the Fund's total return and such
fees, if charged, will reduce the actual return received by customers on their
investment.
The Funds may advertise their performance in terms of total return, which
is computed by finding the compounded rates of return over a period that would
equate the initial amount invested to the ending redeemable value. The
calculation assumes that all dividends and distributions are reinvested on the
reinvestment dates during the relevant time period and accounts for all
recurring fees. The Funds may also include in advertisements data comparing
performance with the performance of published editorial comments and performance
rankings compiled by independent organizations (such as Lipper Analytical
Services, Inc. or Morningstar, Inc.) or entities or organizations which track
the performance of investment companies or investment advisers and publications
that monitor the performance of mutual funds (such as Barron's, Business Week,
Financial Times, Forbes, Fortune, Inc., Institutional Investor, Investor's
Business Daily, Money, Morningstar, Inc., Mutual Fund Magazine, Smart Money and
The Wall Street Journal). Performance information may be quoted numerically or
may be presented in a table, graph or other illustration. In addition, Fund
performance may be compared to well-known unmanaged indices of market
performance or other appropriate indices of investment securities or with data
developed by Accessor Funds or Accessor Capital derived from such indices.
Unmanaged indices (i.e., other than Lipper) generally do not reflect deductions
for administrative and management costs and expenses. Fund performance may also
be compared, on a relative basis, to other Funds of Accessor Funds. This
relative comparison, which may be based upon historical Fund performance, may be
presented numerically, graphically or in text. Fund performance may also be
combined or blended with other Accessor Funds, and that combined or blended
performance may be compared to the same Benchmark Indices to which individual
Funds are compared. In addition, Accessor Funds may from time to time compare
the expense ratio of the Funds to that of investment companies with similar
objectives and policies, based on data generated by Lipper or similar investment
services that monitor mutual funds.
In reports or other communications to investors or in advertising, the
Funds may discuss relevant economic and market conditions affecting Accessor
Funds. In addition, Accessor Funds, Accessor Capital and the Money Managers may
render updates of Fund investment activity, which may include, among other
things, discussion or quantitative statistical or comparative analysis of
portfolio composition and significant portfolio holdings including analysis of
holdings by sector, industry, country or geographic region, credit quality and
other characteristics. Accessor Funds may also describe the general biography,
work experience and/or investment philosophy or style of the Money Managers of
the Accessor Funds and may include quotations attributable to the Money Managers
describing approaches taken in managing each Accessor Funds' investments,
research methodology underlying stock selection or each Accessor Funds'
investment objective. The Accessor Funds may also discuss measures of risk,
including those based on statistical or econometric analyses, the continuum of
risk and return relating to different investments and the potential impact of
foreign stocks on a portfolio otherwise composed of domestic securities.
CALCULATION OF FUND 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, 1999, calculated using the above method,
are set forth in the tables below:
Advisor Class
Fund 1 Year 5 Years Life of Fund*
---- ------ ------- ------------
Growth
Value
Small to Mid Cap
International Equity
Intermediate Fixed-Income
Short-Intermediate Fixed-Income
Mortgage Securities
-------
*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 1 Year Life of Fund**
---- ------ --------------
Growth
Value
Small to Mid Cap
International
Intermediate Fixed-Income
Short-Intermediate Fixed-Income
Mortgage Securities
--------
**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, 1999, are as follows:
Advisor Class
Fund 30 Day Yield
Intermediate Fixed-Income
Short-Intermediate Fixed-Income
Mortgage Securities
Investor Class
Fund 30 Day Yield
Intermediate Fixed-Income
Short-Intermediate Fixed-Income
Mortgage Securities
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, 1999
are as follows:
Advisor Class
7-day Compounded
Annualized Yield Effective Yield
Investor Class
7-day Compounded
Annualized Yield Effective Yield
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 NAV 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
Accessor Funds, on behalf of the Funds, has adopted a Code of Ethics, which
establishes standards by which certain covered persons of Accessor Funds must
abide relating to personal securities trading conduct. Under the Code of Ethics,
covered persons (who include, among others, directors and officers of Accessor
Funds and employees of Accessor Funds and Accessor Capital), are generally
prohibited from engaging in personal securities transactions with certain
exceptions as set forth in the Code of Ethics. 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
Accessor Funds 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 NAV 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
Advisor Class Shares of the Funds may be purchased directly from the Funds
with no sales charge or commission. Investors may also purchase Advisor Class
Shares or Investor Class Shares of the Funds from intermediaries, such as a
broker-dealer, bank or other financial institutions. 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 NAV 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. NAV 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 Fund 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 Fund 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 Distribution and Service 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 Fund 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 Fund 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 NAV. 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.
Telephone Transactions. A shareholder of Accessor Funds with an aggregate
account balance of $1 million or more may request purchases, redemptions or
exchanges of shares of a Fund by telephone at the appropriate toll free number
provided in this Prospectus. It may be difficult to implement redemptions or
exchanges by telephone in times of drastic economic or market changes. In an
effort to prevent unauthorized or fraudulent redemption or exchange requests by
telephone, Accessor Funds employs reasonable procedures specified by the Board
of Directors to confirm that such instructions are genuine. Telephone
transaction procedures include the following measures: requiring the appropriate
telephone transaction election be made on the telephone transaction
authorization form sent to shareholders upon request; requiring the caller to
provide the names of the account owners, the account owner's social security
number or tax identification number and name of Fund, all of which must match
Accessor Funds' records; requiring that a service representative of Accessor
Capital, acting as Transfer Agent, complete a telephone transaction form listing
all of the above caller identification information; requiring that redemption
proceeds be sent by wire only to the owners of record at the bank account of
record or by check to the address of record; sending a written confirmation for
each telephone transaction to the owners of record at the address of record
within five (5) business days of the call; and maintaining tapes of telephone
transactions for six months, if Accessor Funds elects to record shareholder
telephone transactions.
For accounts held of record by a broker-dealer, trustee, custodian or an
attorney-in-fact (under a power of attorney), additional documentation or
information regarding the scope of a caller's authority is required. Finally,
for telephone transactions in accounts held jointly, additional information
regarding other account holders is required. Accessor Funds may implement other
procedures from time to time. If reasonable procedures are not implemented,
Accessor Funds may be liable for any loss due to unauthorized or fraudulent
transactions. In all other cases, neither Accessor Funds, the Fund nor Accessor
Capital will be responsible for authenticity of redemption or exchange
instructions received by telephone.
Market Timing Policy. The Funds are intended to be long-term investment
vehicles and are not designed to provide investors with a means of speculation
on short-term market movements. A pattern of frequent purchases and exchanges
can be disruptive to efficient portfolio management and, consequently, can be
detrimental to a Fund's performance and to its shareholders. Accordingly, if a
Fund's management determines that an investor is engaged in excessive trading,
the Fund, with or without prior notice, may temporarily or permanently terminate
the availability of Fund exchanges, or reject in whole or part any purchase or
exchange request, with respect to such investor's account. Such investors also
may be barred from purchasing other Funds in the Accessor Family of Funds.
Generally, an investor who makes more than four exchanges out of a Fund during
any calendar month or who makes exchanges that appear to coincide with an active
market-timing strategy may be deemed to be engaged in excessive trading.
Accounts under common ownership or control will be considered as one account for
purposes of determining a pattern of excessive trading. In addition, a Fund may
refuse or restrict purchase or exchange requests by any person or group if, in
the judgment of the Fund's management, the Fund would be unable to invest the
money effectively in accordance with its investment objective and policies or
could otherwise be adversely affected or if the Fund receives or anticipates
receiving simultaneous orders that may significantly affect the Fund (e.g.,
amounts equal to $250,000). If an exchange request is refused, the Fund will
take no other action with respect to the shares until it receives further
instructions from the investor. A Fund may delay forwarding redemption proceeds
for up to seven days if the investor redeeming shares is engaged in excessive
trading or if the amount of the redemption request otherwise would be disruptive
to efficient portfolio management or would adversely affect the Fund. The Funds'
policy on excessive trading applies to investors who invest in a Fund directly
or through financial intermediaries, but does not apply to a Systematic
Withdrawal Plan described in the Funds' Prospectus.
During times of drastic economic or market conditions, the Fund may suspend
exchange privileges temporarily without notice and treat exchange requests based
on their separate components - redemption orders with a simultaneous request to
purchase the other Fund's shares. In such a case, the redemption request would
be processed at the Fund's next determined NAV but the purchase order would be
effective only at the NAV next determined after the Fund being purchased
receives the proceeds of the redemption, which may result in the purchase being
delayed.
FINANCIAL STATEMENTS
Accessor Funds' audited financial statements for the fiscal year ended
December 31, 1999, are contained in the Annual Report to Shareholders for the
fiscal year ended December 31, 1999, 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.
Baa - Bonds which are rated Baa are considered as medium-grade obligations
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba - Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate, and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of inter-est and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing. Note: Moody's applies numerical modifiers 1, 2, and 3
in each generic rating classification from Aa through Caa. The modifier 1
indicates that the obligation ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates a ranking in the lower end of that generic rating category.
Standard & Poor's Corporation ("S&P")
AAA
An obligor rated 'AAA' has EXTREMELY STRONG capacity to meet its financial
commitments. 'AAA' is the highest Issuer Credit Rating assigned by Standard &
Poor's.
AA
An obligor rated 'AA' has VERY STRONG capacity to meet its financial
commitments. It differs from the highest rated obligors only in small degree.
A
An obligor rated 'A' has STRONG capacity to meet its financial commitments but
is somewhat more susceptible to the adverse effects of changes in circumstances
and economic conditions than obligors in higher-rated categories.
BBB
An obligor rated 'BBB' has ADEQUATE capacity to meet its financial commitments.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial commitments.
Obligors rated 'BB', 'B', 'CCC', and 'CC' are regarded as having significant
speculative characteristics. 'BB' indicates the least degree of speculation and
'CC' the highest. While such obligors will likely have some quality and
protective characteristics, these may be outweighed by large uncertainties or
major exposures to adverse conditions.
BB
An obligor rated 'BB' is LESS VULNERABLE in the near term than other lower-rated
obligors. However, it faces major ongoing uncertainties and exposure to adverse
business, financial, or economic conditions which could lead to the obligor's
inadequate capacity to meet its financial commitments.
B
An obligor rated 'B' is MORE VULNERABLE than the obligors rated 'BB', but the
obligor currently has the capacity to meet its financial commitments. Adverse
business, financial, or economic conditions will likely impair the obligor's
capacity or willingness to meet its financial commitments.
CCC
An obligor rated 'CCC' is CURRENTLY VULNERABLE, and is dependent upon favorable
business, financial, and economic conditions to meet its financial commitments.
CC
An obligor rated 'CC' is CURRENTLY HIGHLY-VULNERABLE.
Plus (+) or minus (-):
Ratings from 'AA' to 'CCC' may be modified by the addition of a plus or minus
sign to show relative standing within the major rating categories.
R
An obligor rated 'R' is under regulatory supervision owing to its financial
condition. During the pendency of the regulatory supervision the regulators may
have the power to favor one class of obligations over others or pay some
obligations and not others. Please see Standard & Poor's issue credit ratings
for a more detailed description of the effects of regulatory supervision on
specific issues or classes of obligations.
SD and D
An obligor rated 'SD' (Selective Default) or 'D' has failed to pay one or more
of its financial obligations (rated or unrated) when it came due. A 'D' rating
is assigned when Standard & Poor's believes that the default will be a general
default and that the obligor will fail to pay all or substantially all of its
obligations as they come due. An 'SD' rating is assigned when Standard & Poor's
believes that the obligor has selectively defaulted on a specific issue or class
of obligations but it will continue to meet its payment obligations on other
issues or classes of obligations in a timely manner. Please see Standard &
Poor's issue credit ratings for a more detailed description of the effects of a
default on specific issues or classes of obligations.
N.R.
An issuer designated N.R. is not rated.
Public Information Ratings
Ratings with a 'pi' subscript are based on an analysis of an issuer's published
financial information, as well as additional information in the public domain.
They do not, however, reflect in-depth meetings with an issuer's management and
are therefore based on less comprehensive information than ratings without a
'pi' subscript. Ratings with a 'pi' subscript are reviewed annually based on a
new year's financial statements, but may be reviewed on an interim basis if a
major event that may affect an issuer's credit quality occurs. Ratings with a
'pi' subscript are not modified with '+' or '-' designations. Outlooks are not
be provided for ratings with a 'pi' subscript, nor are they subject to potential
Credit Watch listings.
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.
[bullet] Amortization schedule (the larger the final maturity relative to
other maturities, the more likely it will be treated as a note).
[bullet] 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>
PART C
OTHER INFORMATION
Item 23 Exhibits
(a)(1) Restated Articles of Incorporation of Accessor Funds, Inc.,
("Registrant") August 19, 1999 are filed herein as Exhibit No.
(a)(1).
(a)(2) Amendment to Articles of Incorporation dated February 4, 2000
is filed herein as Exhibit No. (a)(2).
(b) By-Laws of the Registrant, as Amended, are incorporated by
reference to Exhibit No. (2) to Post-Effective Amendment No. 15
to the Registration Statement on Form N-1A filed May 1, 1999
(File No. 33-41245).
(c) Not applicable.
(d)(1) Management Agreement with Bennington Capital Management L.P.
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 Management Agreement between the Registrant
and Bennington Capital Management L. P., dated May 24, 1994.
Incorporated by reference to Exhibit (5)(c)(1) of Post-Effective
Amendment No. 6 to the Registration Statement on Form N-1A filed
on July 7, 1994 (File No. 33-41245).
(d)(3) Money Manager Agreement among the Registrant on behalf of Value
Fund, 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)(4) 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)(5) Revised Money Manager Agreement among the Registrant on behalf
of Growth Fund, Bennington Capital Management and Geewax, Terker
& Company effective September 8, 1999, is filed herein as Exhibit
(d)(1).
(d)(6) Revised Money Manager Agreement among the Registrant on behalf
of International Equity Fund, Bennington Capital Management L. P.
and Nicholas-Applegate Capital Management filed herein as Exhibit
(d)(2).
(d)(7) 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)(8) Money Manager Agreement among the Registrant on behalf of
Intermediate Fixed-Income Fund, Bennington Capital Management
L.P. and Cypress Asset Management is incorporated by reference to
Exhibit (d)(6) to Post-Effective Amendment No. 15 to the
Registration Statement on Form N-1A filed May 1, 1999 (File No.
33-41245).
(d)(9) Money Manager Agreement among the Registrant on behalf of
Short-Intermediate Fixed-Income Fund, Bennington Capital
Management L.P. and Cypress Asset Management is incorporated by
reference to Exhibit (d)(7) to Post-Effective Amendment No. 15 to
the Registration Statement on Form N-1A filed May 1, 1999 (File
No. 33-41245).
(d)(10) Form of Money Manager Agreement among the Registrant on behalf
of High Yield Bond Fund, Accessor Capital Management LP and
Financial Management Advisers, Inc. is filed herein as Exhibit
(d)(3).
(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)(D) 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) Not Applicable.
(j) Not applicable.
(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 incorporated by
reference as Exhibit No. (o)(1) to Post-Effective Amendment No.
15 to the Registration Statement on Form N-1A filed May 1, 1999
(File No. 33-41245).
(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 14th day of February, 2000.
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. 16 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 2/14/00
- ------------------------- ------
J. Anthony Whatley III President, Principal
Executive Officer
and Director
/s/George G. Cobean III 2/14/00
- ------------------------- ------
George G. Cobean III Director
/s/Geoffrey C. Cross 2/14/00
- ------------------------- ------
Geoffrey C. Cross Director
/s/Ravindra A. Deo 2/14/00
- ------------------------- ------
Ravindra A. Deo Principal Financial
and Accounting Officer
<PAGE>
Exhibit (a)(1)
RESTATED ARTICLES OF INCORPORATION OF
ACCESSOR FUNDS, INC.
Made, this 19th day of August, 1999 by each of the Directors whose
signature is affixed hereto.
WHEREAS, the corporation was initially formed on June 10, 1991 by Karin
Jagel Flynn, the initial incorporator, who, being at least eighteen years of
age, under and by virtue of the General Laws of the State of Maryland
authorizing the formation of corporations, formed the corporation.
WHEREAS, the Directors desire unanimously to restate the current
Articles of Incorporation and incorporate duly adopted amendments;
WHEREAS, the Board of Directors unanimously approved the amending and
restating of these Articles of Incorporation at a meeting on May 7, 1999, duly
called for such purpose.
NOW, THEREFORE, the Directors declare that all money and property
contributed hereto shall be held and managed in trust under these Restated
Articles of Incorporation as herein set forth below.
ARTICLE I.
The name of the corporation (hereinafter called the "Corporation") is
Accessor Funds, Inc.
ARTICLE II.
Purposes
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 now or hereinafter 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 the manner in which action may be taken by the Board
of Directors or stockholders shall cease to be in effect.
<PAGE>
ARTICLE III.
Address
The name of the Corporation's resident agent, and 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, 300 E. Lombard Street,
Baltimore, Maryland 21202. The Corporation's current principal place of business
is c/o CT Corporation System, 300 E. Lombard Street, Baltimore, Maryland 21202.
ARTICLE IV.
Common Stock
Section 1. The total number of shares of capital stock which the
Corporation has authority to issue is 8,000,000,000 shares of the par value of
$.001 per share, having an aggregate par value of $8,000,000. The capital stock
is initially classified into eleven series, which are designated as follows:
Number of
Series Authorized Shares
Equity Market Fund 0
Growth Fund 1,000,000,000
Value Fund 1,000,000,000
Small to Mid Cap Fund 1,000,000,000
International Equity Fund 1,000,000,000
Intermediate Fixed-Income Fund 1,000,000,000
Short-Intermediate Fixed-Income Fund 1,000,000,000
Mortgage Securities Fund 1,000,000,000
U.S. Government Money Fund 1,000,000,000
International Fixed-Income Fund 0
Municipal Intermediate Fixed-Income Fund 0
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
or more respects the designations, conversion or other rights, restrictions,
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 designated by the Board of Directors, particular additional classes
or series of capital stock may relate to separate portfolios of investments.
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 such class or series, and the bearing of expenses 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 by that class 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 this 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 to
redemption 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 shares 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
authorize 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 subsections (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 purposes 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 retired 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 dividends 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 regulations promulgated
thereunder, 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 in 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 to 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
Corporation, holders of shares of capital stock of each series 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 the event 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
the 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 series 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 number of directors of the Corporation shall be three, and the
names of those who shall act as such are as follows:
J. Anthony Whatley III
George G. Cobean, III
Geoffrey C. Cross
The By-Laws of the Corporation provide that the Board of Directors 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 or
served 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 enterprise" 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 Restated 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 purpose, 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 the 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, the 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 Sections 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 Restated 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
Restated Articles of Incorporation are subject to the provisions of this Article
VIII.
I, J. Anthony Whatley III, President and Principal Executive Officer, hereby
acknowledge on behalf of Accessor Funds, Inc. that the foregoing Restated
Articles of Incorporation are the corporate act of said corporation under the
penalties of perjury.
/s/J. Anthony Whatley III
-------------------------------------
J. Anthony Whatley III
President and Principal Executive Officer
Attest: /s/Christine J. Stansbery
-----------------------------------
Christine J. Stansbery, Secretary
<PAGE>
Exhibit (a)(2)
ARTICLES OF AMENDMENT SUPPLEMENTARY
TO ARTICLES OF INCORPORATION OF
ACCESSOR FUNDS, INC.
Pursuant to Sections 2-105(c), 2-605(a)(4) and 2-607 of the Maryland
General Corporation Law, Accessor Funds, Inc. (the "Corporation"), a Maryland
Corporation, incorporated on June 10, 1991, having its principal office in
Maryland in Baltimore, Maryland, hereby adopts the following Articles of
Amendment to the Corporation's Articles of Incorporation:
FIRST: As provided in Article IV, Section I of the Corporation's
Articles of Incorporation, the Corporation currently has authority to issue
8,000,000,000 shares of stock, par value $.001 per share, having an aggregate
par value of $8,000,000, classified into the following series:
Number of Authorized
Series Shares
Equity Market Fund 0
Growth Fund 1,000,000,000
Value Fund 1,000,000,000
Small to Mid Cap Fund 1,000,000,000
International Equity Fund 1,000,000,000
Intermediate Fixed-Income Fund 1,000,000,000
Short-Intermediate Fixed-Income Fund 1,000,000,000
Mortgage Securities Fund 1,000,000,000
U.S. Government Money Fund 1,000,000,000
International Fixed-Income Fund 0
Municipal Intermediate Fixed-Income Fund 0
SECOND: The Corporation's board of directors unanimously agreed by
resolution adopted on February 4, 2000, to amend Article IV, Section 1 of the
Articles of Incorporation to read as follows:
The total number of shares of capital stock that the Corporation has
authority to issue is 9,000,000,000 shares with a par value of $.001 per share,
having an aggregate par value of $9,000,000. The capital stock is classified
into nine series, which are designated as follows:
<PAGE>
Number of Authorized
Series Shares
Growth Fund 1,000,000,000
Value Fund 1,000,000,000
Small to Mid Cap Fund 1,000,000,000
International Equity Fund 1,000,000,000
Intermediate Fixed-Income Fund 1,000,000,000
Short-Intermediate Fixed-Income Fund 1,000,000,000
High Yield Bond Fund 1,000,000,000
Mortgage Securities Fund 1,000,000,000
U.S. Government Money Fund 1,000,000,000
THIRD: The amendments contained herein were approved by a majority of
the Board, and are limited to changes permitted by Section 2-105(c) and
2-605(a)(4) of the Maryland General Corporation Law to be made without action by
the stockholders of the Corporation. The total number of shares of capital stock
that the Corporation has authority to issue has been decreased by the Board in
accordance with Section 2-105(c) of the Maryland General Corporation Law.
FOURTH: The Corporation is registered with the Securities and Exchange
Commission as an open-end investment company under the Investment Company Act of
1940, as amended.
IN WITNESS WHEREOF, the undersigned hereby executes these Articles of
Amendment on behalf of the Corporation, acknowledging it to be the act of the
Corporation, and further states under the penalties of perjury that, to the best
of his or her knowledge, information and belief, the matters and facts set forth
herein are true in all material respects.
Dated: ____________, 2000 ACCESSOR FUNDS, INC.
By: _________________________
Name: J. Anthony Whatley, III
Title: President
Attest:_________________________
Name: Christine J. Stansbery
Title: Secretary
<PAGE>
Exhibit (d)(1)
MONEY MANAGER AGREEMENT
Effective Date: September 8, 1999
Termination Date: Two years
after Effective Date
Fund and Account:
Approximately 90% of the
Growth Fund
Geewax, Terker & Company
99 Starr Street
Phoenixville, PA 19460
Re: Accessor Funds, Inc. Money Manager Agreement
Gentlemen:
Accessor Funds, Inc., a Maryland corporation ("Accessor Funds"), 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.
Accessor Funds issues shares in separate diversified portfolios, each with a
different investment objective and policies.
Accessor Capital Management LP (formerly Bennington Capital Management
L.P.), a Washington limited partnership (the "Manager") acts as the manager and
administrator of Accessor Funds 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 Accessor Funds. The Manager is responsible for the day-to-day
management and administration of Accessor Funds 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 Accessor Funds
(the "Board").
1. Appointment as a Money Manager. The Manager and Accessor Funds hereby
appoint and employ Geewax, Terker & Company, a Pennsylvania general partnership
(the "Money Manager"), as a discretionary money manager to Accessor Funds'
Growth Fund, on the terms and conditions set forth herein. The Manager
determines from time to time that portion of the assets of the Growth Fund that
are to be assigned to the Money Manager (the "Account"). The Account and those
assets of the Growth Fund managed by the Manager or another money manager as
determined by the Manager are referred to as the "Fund".
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. Fund Management Services of the Money Manager. The Money Manager is
hereby employed and authorized to select portfolio securities for investment by
the Fund, 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 Fund furnished pursuant to paragraph 4, and
instructions from the Manager; and the Money Manager shall maintain on behalf of
Accessor Funds 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 Accessor Funds' 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 Accessor Funds 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. Accessor Funds
shall provide the Money Manager with a statement of the investment objectives
and policies of the Fund and any specific investment restrictions applicable
thereto as established by Accessor Funds, including those set forth in its
Prospectus as amended from time to time. Accessor Funds retains the right, on
reasonable prior written notice to the Money Manager from Accessor Funds 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 Accessor Funds, 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 Accessor Funds' custodian (the "Custodian"), or such
depositary or agents as may be designated by the Custodian, as custodian for
Accessor Funds, 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 Fund placed by it with broker/dealers at the time and
in the manner and as set forth in Exhibit A hereto. Accessor Funds shall issue
to the Custodian such instructions as may be appropriate in connection with the
settlement of any transaction initiated by the Money Manager. Accessor Funds
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 Accessor Funds. 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 Accessor Funds, 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 Accessor Funds, as to which the
Money Manager exercises investment discretion, notwithstanding that
Accessor Funds may not be the direct or exclusive beneficiary of any such
services or that another broker/dealer may be willing to charge Accessor
Funds a lower commission on the particular transaction.
B. Accessor Funds 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 Accessor Funds or its Manager, or as to which an ongoing
relationship will be of value to Accessor Funds with respect to the Fund,
which services and relationship may, but need not, be of direct benefit to
the Fund 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) Accessor Funds determines that the commission cost is
reasonable in relation to the total quality and reliability of the
brokerage and research services made available to Accessor Funds, or to the
Manager for the benefit of its clients for which it exercises investment
discretion, notwithstanding that the Fund may not be the direct or
exclusive beneficiary of any such service or that another broker/dealer may
be willing to charge Accessor Funds 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. Accessor Funds agrees that it will provide the Money Manager with a
list of broker/dealers which are "affiliated persons" of Accessor Funds 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 Accessor Funds or of any money manager for Accessor Funds without the
prior written approval of Accessor Funds.
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 Fund's shareholders.
8. Reports to the Money Manager. Accessor Funds and the Manager shall
furnish or otherwise make available to the Money Manager such information
relating to the business affairs of Accessor Funds, including periodic reports
concerning the Fund, 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 Accessor Funds 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 Fund 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. Accessor Funds
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, Accessor Funds
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 Fund and any specific investment restrictions applicable thereto.
Accessor Funds 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 Fund 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 Accessor Funds, 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 Accessor Funds 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 Accessor Funds 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
Accessor Funds 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 Fund and
the actions of each money manager, the Manager and Accessor Funds 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. Accessor Funds 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
Accessor Funds 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, Accessor Funds 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 Accessor Funds 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 Accessor Funds 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.
Accessor Funds 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. Accessor Funds 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 Fund, and
such other information as is necessary for the Money Manager to carry out
its obligations under this Agreement.
C. The organization of Accessor Funds and the conduct of the business
of the Fund as contemplated by this Agreement, materially complies, and
shall at all times materially comply, with the requirements imposed upon
Accessor Funds 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 Accessor Funds.
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 Accessor Funds, 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
Accessor Funds and will be surrendered to Accessor Funds 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 Accessor Funds a copy of the code of ethics and evidence of
its adoption, and will make such reports to Accessor Funds 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 Accessor Funds 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
Fund 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 Fund 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
Accessor Funds) 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 Fund 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.
BY: /s/J. Anthony Whatley III
J. Anthony Whatley, III
President and Principal Executive Officer
DATE: 9/8/99
ACCESSOR CAPITAL
MANAGEMENT LP
By Bennington Management Associates, Inc.
Its Managing General Partner
BY: /s/J. Anthony Whatley III
J. Anthony Whatley, III
President
DATE: 9/8/99
Accepted and agreed to:
GEEWAX, TERKER & COMPANY
By: /s/John J. Geewax
Name: John J. Geewax
Title: Partner
DATE: 9/8/99
<PAGE>
EXHIBITS: A. Operational Procedures (including Schedules 1 and 2).
B. Recordkeeping Requirements.
C. Fee Schedule.
D. Benchmark Index.
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 Accessor Funds.
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 Fund of Accessor Funds 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)
When opening accounts with brokers for Accessor Funds, 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 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 Accessor Funds, or the Money Manager
may use an equivalent form acceptable to Fifth Third and Accessor Funds.
<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 Tim Maul 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 Fund
The following individuals are authorized to execute and report trade
instructions on behalf of the Growth Fund. 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]
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 (Accessor 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 Accessor Funds (except that no
such fees shall be paid to the Manager as to any portion of the Fund for which
it acts as money manager). For purposes of calculating the Money Manager's fees,
commencement of investment operations for the Account shall be considered to be
July 21, 1997:
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 Accessor Funds' Custodian,
Accounting Agent and Transfer Agent, fees of accountants, legal fees and
expenses allocable to the Fund 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, Accessor Funds will pay the Money Manager on a
monthly basis at the following annual fee rates, applied to the average daily
net assets of the Fund.
Basic Fee Fund Management Fee Total
--------- ------------------- -----
0.10% 0.10% 0.20%
Commencing with the sixth calendar quarter of management by the Money
Manager for the Account, Accessor Funds will pay the Money Manager based on the
schedule below as applied to the average daily net assets of the Fund.
<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>
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,
Accessor Funds, 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 8, 1999)
Fund Index
Growth S&P/BARRA Growth Index
<PAGE>
Exhibit (d)(2)
AMENDED
MONEY MANAGER AGREEMENT
Effective Date: September 1, 1999
Termination Date: Two years
after Effective Date
Fund and Account:
Approximately 90% of the
International Equity FUND
Nicholas-Applegate Capital Management
600 West Broadway, 29th Floor
San Diego, CA 92101
Re: Accessor Funds, Inc. Money Manager Agreement
Ladies and Gentlemen:
Accessor Funds, Inc., a Maryland corporation ("Accessor Funds"), 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.
Accessor Funds issues shares in separate diversified portfolios, each with a
different investment objective and policies.
Accessor Capital Management L P (formerly Bennington Capital Management
L.P.), a Washington limited partnership (the "Manager") acts as the manager and
administrator of Accessor Funds 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 Accessor Funds. The Manager is responsible for the day-to-day
management and administration of Accessor Funds 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 Accessor Funds
(the "Board").
1. Appointment as a Money Manager. The Manager and Accessor Funds hereby
appoint and employ Nicholas-Applegate Capital Management, a California Limited
Partnership (the "Money Manager"), as a discretionary money manager to Accessor
Funds' International Equity Fund, on the terms and conditions set forth herein.
The Manager determines from time to time that portion of the assets of the
International Equity Fund that are to be assigned to the Money Manager (the
"Account"). The Account and those assets of the International Equity Fund
managed by the Manager or another money manager as determined by the Manager are
referred to as the "Fund".
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. Fund Management Services of the Money Manager. The Money Manager is
hereby employed and authorized to select portfolio securities for investment by
the Fund, 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 Fund 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 Accessor Funds 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 Accessor Funds and any specific investment restrictions applicable
thereto as established by Accessor Funds, including those set forth in its
Prospectus as amended from time to time. Accessor Funds retains the right, on
reasonable prior written notice to the Money Manager from Accessor Funds 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 Accessor Funds, 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 Accessor Funds' 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 Fund placed by it with broker/dealers at the time and in the manner and as
set forth in Exhibit A hereto. Accessor Funds shall issue to the Custodian such
instructions as may be appropriate in connection with the settlement of any
transaction initiated by the Money Manager. Accessor Funds 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 brokers/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 Accessor Funds. 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 Accessor
Funds, so long as Money Manager believes in good faith, based upon its
knowledge of the capabilities of the firm selected, that the broker or
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 Accessor Funds,
as to which the Money Manager exercises investment discretion,
notwithstanding that Accessor Funds may not be the direct or exclusive
beneficiary of any such services or that another broker/dealer may be
willing to charge Accessor Funds a lower commission on the particular
transaction.
B. Accessor Funds 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 Accessor Funds or its
Manager, or as to which an ongoing relationship will be of value to
Accessor Funds with respect to the Fund, which services and relationship
may, but need not, be of direct benefit to the Fund 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)
Accessor Funds determines that the commission cost is reasonable in
relation to the total quality and reliability of the brokerage and
research services made available to Accessor Funds, or to the Manager
for the benefit of its clients for which it exercises investment
discretion, notwithstanding that the Fund may not be the direct or
exclusive beneficiary of any such service or that another broker/dealer
may be willing to charge Accessor Funds 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. Accessor Funds agrees that it will provide the Money Manager
with a list of broker/dealers which are "affiliated persons" of Accessor
Funds 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 Accessor Funds or of any money manager for Accessor Funds unless
it is in accordance with the procedures of Accessor Funds.
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 Fund's shareholders.
8. Reports to the Money Manager. Accessor Funds 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 Fund, 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 Accessor Funds 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 Fund'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. Accessor Funds
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, Accessor Funds
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 Fund and any specific investment restrictions applicable thereto.
Accessor Funds 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 Fund 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 Accessor Funds, 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 Accessor Funds 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
Accessor Funds 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 Fund and
the actions of each money manager, the Manager and Accessor Funds 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. Accessor Funds 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 Accessor Funds 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 Accessor Funds 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. Accessor Funds 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 Fund, and
such other information as is necessary for the Money Manager to carry out
its obligations under this Agreement.
C. The organization of Accessor Funds and the conduct of the business
of the Fund as contemplated by this Agreement, materially complies, and
shall at all times materially comply, with the requirements imposed upon
Accessor Funds 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").
D. The Manager has received and reviewed Money Manager's Form ADV,
Part II, more than 48 hours prior to entering into this Agreement.
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 Accessor Funds of any changes in the
general partner(s) 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
Fund 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 Fund 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 Fund 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:
ACCESSOR CAPITAL MANAGEMENT LP
By Bennington Management Associates, Inc.
Its Managing General Partner
BY: /s/J. Anthony Whatley III
J. Anthony Whatley, III
President
DATE:
Accepted and agreed to:
Nicholas-Applegate Capital Management
A California Limited Partnership
BY:
Title
DATE:
<PAGE>
EXHIBITS: A. Operational Procedures (including Schedules 1, 2 and 3).
B. Recordkeeping Requirements.
C. Fee Schedule.
D. Benchmark Index.
7
<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. - INTERNATIONAL EQUITY FUND
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 number for
Customer Acct Number 010033141330 Fifth Third's.
II. FEDERAL RESERVE WIRE TRANSFERS
ABA #042000314
FOR FURTHER CREDIT TO: #010033141330
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 Intl Equity Portfolio, FFC: Accessor Intl
A/C 010033141330 Equity Portfolio, A/C
010033141330
IV. PTC ELIGIBLE SECURITIES (i.e. GNMAs)
A/C FIFTH
F/A/O Accessor International Equity Portfolio
A/C # 010033141330
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 Accessor Funds 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 Accessor
Funds (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 Accessor Funds.
(ii) The supplying of services or benefits by brokers or dealers
to:
(a) Accessor Funds,
(b) The Manager (Accessor 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
Accessor Funds. (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 Accessor Funds (except that no such
fees shall be paid to the Manager as to Accounts 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 Accessor Fund's Custodian,
Accounting Agent and Transfer Agent, fees of accountants, legal fees and
expenses allocable to the Fund 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 purposes of calculating the Money Manager's fees, management of the
Account by the Money Manager be considered to be commencement of investment
operations of the International Equity Fund on October 3, 1994. For the first
five complete calendar quarters of management of the Account by the Money
Manager, Accessor Funds paid the Money Manager on a quarterly basis at the
following annual fee rates, applied to the average daily net assets of the
Account.
Basic Fee Portfolio Management Fee Total
--------- ------------------------ -----
0.20% 0.20% 0.40%
Commencing with the sixth calendar quarter of management by the Money
Manager for the Account, Accessor Funds will pay the Money Manager based on the
schedule below as applied to the average daily net assets.
The Basic Fee shall be equal to an annual rate of 0.20% of the Fund's average
daily net assets, up to a maximum of $400,000 annualized. In addition to the
Basic Fee, the Money Manager shall earn a performance fee as follows:
Average Annual Performance
Differential vs. Annual
Benchmark Index Performance Fee
- --------------- ---------------
Greater Than or Equal to 4.00% 0.40%
Greater Than or Equal to 2.00% and Less Than 4.00% 0.30%
Greater Than or Equal to 0.00% and Less Than 2.00% 0.20%
Greater Than or Equal to -2.00% and Less Than 0.00% 0.10%
Less Than -2.00% 0.00%
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, Accessor Funds,
Manager and 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.
Accessor Funds and Manager acknowledge that the use of a performance fee
may result in a higher degree of risk with respect to the Account than the use
of base fees.
<PAGE>
EXHIBIT D
BENCHMARK INDEX
(September 1, 1999)
Fund Index
International Equity MSCI EAFE + EMF Index
<PAGE>
Exhibit (d)(3)
FORM OF
MONEY MANAGER AGREEMENT
Effective Date: May 1, 2000
Termination Date: Two years
after Effective Date
Fund and Account:
Approximately 90% of the
High Yield Bond fund
Financial Management Advisors, Inc.
1900 Avenue of the Stars
Suite 900
Los Angeles, CA 90067
Re: Accessor Funds, Inc. Money Manager Agreement
Ladies and Gentlemen:
Accessor Funds, Inc., a Maryland corporation ("Accessor Funds"), 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.
Accessor Funds issues shares in separate diversified portfolios, each with a
different investment objective and policies.
Accessor Capital Management L P, a Washington limited partnership (the
"Manager") acts as the manager and administrator of Accessor Funds 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 Accessor Funds. The Manager
is responsible for the day-to-day management and administration of Accessor
Funds 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 Accessor Funds (the "Board").
1. Appointment as a Money Manager. The Manager and Accessor Funds hereby
appoint and employ Financial Management Advisors, Inc., a ______________
corporation (the "Money Manager"), as a discretionary money manager to Accessor
Funds' High Yield Bond Fund (the "Fund"), on the terms and conditions set forth
herein. The Manager determines from time to time that portion of the assets of
the Fund that are to be assigned to the Money Manager (the "Account"). The
Account and those assets of the Fund managed by the Manager or another money
manager as determined by the Manager are referred to as the "Fund".
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. Fund Management Services of the Money Manager. The Money Manager is
hereby employed and authorized to select portfolio securities for investment by
the Fund, 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 Fund 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 Accessor Funds 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 Accessor Funds and any specific investment restrictions applicable
thereto as established by Accessor Funds, including those set forth in its
Prospectus as amended from time to time. Accessor Funds retains the right, on
reasonable prior written notice to the Money Manager from Accessor Funds 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 Accessor Funds, 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 Accessor Funds' 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 Fund placed by it with broker/dealers at the time and in the manner and as
set forth in Exhibit A hereto. Accessor Funds shall issue to the Custodian such
instructions as may be appropriate in connection with the settlement of any
transaction initiated by the Money Manager. Accessor Funds 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 brokers/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 Accessor Funds. 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 Accessor Funds, so long as Money
Manager believes in good faith, based upon its knowledge of the
capabilities of the firm selected, that the broker or 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 Accessor Funds, as to which the
Money Manager exercises investment discretion, notwithstanding that
Accessor Funds may not be the direct or exclusive beneficiary of any such
services or that another broker/dealer may be willing to charge Accessor
Funds a lower commission on the particular transaction.
B. Accessor Funds 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 Accessor Funds or its Manager, or as to which an ongoing
relationship will be of value to Accessor Funds with respect to the Fund,
which services and relationship may, but need not, be of direct benefit to
the Fund 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) Accessor Funds determines that the commission cost is
reasonable in relation to the total quality and reliability of the
brokerage and research services made available to Accessor Funds, or to the
Manager for the benefit of its clients for which it exercises investment
discretion, notwithstanding that the Fund may not be the direct or
exclusive beneficiary of any such service or that another broker/dealer may
be willing to charge Accessor Funds 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. Accessor Funds agrees that it will provide the Money Manager with a
list of broker/dealers which are "affiliated persons" of Accessor Funds 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 Accessor Funds or of any money manager for Accessor Funds unless it is
in accordance with the procedures of Accessor Funds.
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 Fund's shareholders.
8. Reports to the Money Manager. Accessor Funds 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 Fund, 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 Accessor Funds 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 Fund'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. Accessor Funds
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, Accessor Funds
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 Fund and any specific investment restrictions applicable thereto.
Accessor Funds 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 Fund 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 Accessor Funds, 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 Accessor Funds 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
Accessor Funds 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 Fund and
the actions of each money manager, the Manager and Accessor Funds 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. Accessor Funds 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 Accessor Funds 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 Accessor Funds 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. Accessor Funds 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 Fund, and
such other information as is necessary for the Money Manager to carry out
its obligations under this Agreement.
C. The organization of Accessor Funds and the conduct of the business
of the Fund as contemplated by this Agreement, materially complies, and
shall at all times materially comply, with the requirements imposed upon
Accessor Funds 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").
D. The Manager has received and reviewed Money Manager's Form ADV,
Part II, more than 48 hours prior to entering into this Agreement.
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 Accessor Funds of any changes in the
general partner(s) 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
Fund 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 Fund 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 Fund 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:
J. Anthony Whatley, III
President and Principal Executive Officer
DATE:
ACCESSOR CAPITAL MANAGEMENT LP
By Bennington Management Associates, Inc.
Its Managing General Partner
BY:
J. Anthony Whatley, III
President
DATE:
Accepted and agreed to:
FINANCIAL MANAGEMENT ADVISORS, INC.
BY:
Name:
Title
DATE:
<PAGE>
EXHIBITS: A. Operational Procedures (including Schedules 1, 2 and 3).
B. Recordkeeping Requirements.
C. Fee Schedule.
D. Benchmark Index.
<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. - HIGH YIELD BOND FUND
I. DTC ELIGIBLE SECURITIES
II. FEDERAL RESERVE WIRE TRANSFERS
III. FEDERAL RESERVE ELIGIBLE SECURITIES: REPURCHASE AGREEMENTS:
------------------------------------ ----------------------
IV. PTC ELIGIBLE SECURITIES (i.e. GNMAs)
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. - High Yield Corporate Bond Fund
Re: Persons Authorized to Execute Trades For High Yield Bond Fund
The following individuals are authorized to execute and report trade
instructions on behalf of the Fund. 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 Accessor Funds 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 Accessor
Funds (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 Accessor Funds.
(ii) The supplying of services or benefits by brokers or dealers to:
(a) Accessor Funds,
(b) The Manager (Accessor 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 Accessor Funds. (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 Accessor Funds (except that no such
fees shall be paid to the Manager as to Accounts 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 Accessor Fund's Custodian,
Accounting Agent and Transfer Agent, fees of accountants, legal fees and
expenses allocable to the Fund 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 investment operations for the
Account, Accessor Funds will pay the Money Manager on a quarterly basis at the
following annual fee rates, applied to the average daily net assets of the
Account.
Basic Fee Portfolio Management Fee Total
--------- ------------------------ -----
0.07% 0.08% 0.15%
Commencing with the sixth calendar quarter of investment operations for
the Account, Accessor Funds will pay the Money Manager based on the schedule
below as applied to the average daily net assets.
<TABLE>
<CAPTION>
Average Annual Performance Total
Differential vs. Benchmark Annual Annual
Basic Fee Index Performance Fee Fee
--------- ----- --------------- ---
<S> <C> <C> <C>
0.07% <=-1.00% 0.00% 0.07%
>-1.00% and <=-0.50% 0.04% 0.11%
>-0.50% and <= 0.50% 0.08% 0.15%
>0.50% and <=1.00% 0.12% 0.19%
>1.00% and <= 1.50% 0.16% 0.23%
>1.50% and <= 2.00% 0.20% 0.27%
>2.00% 0.22% 0.29%
</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 investment
operations 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 investment operations, 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,
Accessor Funds, Manager and 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.
Accessor Funds and Manager acknowledge that the use of a performance fee
may result in a higher degree of risk with respect to the Account than the use
of base fees.
<PAGE>
Exhibit D
BENCHMARK INDEX
May 1, 2000
Fund Index
High Yield Bond Fund Lehman Brothers High Yield Index
<PAGE>
<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
</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
</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
</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
</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
</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
</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
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 08
<NAME> U.S. GOVERNMENT MONEY FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 157,474,336
<INVESTMENTS-AT-VALUE> 157,474,336
<RECEIVABLES> 1,406,140
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 158,880,476
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 661,330
<TOTAL-LIABILITIES> 661,330
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 158,221,520
<SHARES-COMMON-STOCK> 158,221,750
<SHARES-COMMON-PRIOR> 50,915,165
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2,374)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 158,219,146
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,762,484
<OTHER-INCOME> 0
<EXPENSES-NET> 382,599
<NET-INVESTMENT-INCOME> 3,379,885
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 3,382,547
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3,379,880)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 276,126,292
<NUMBER-OF-SHARES-REDEEMED> (168,971,567)
<SHARES-REINVESTED> 151,860
<NET-CHANGE-IN-ASSETS> 107,309,253
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (4,849)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 175,048
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 382,599
<AVERAGE-NET-ASSETS> 73,075,366
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.05)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .53
</TABLE>
