REGISTRATION NO. 33-61542
REGISTRATION NO. 811-7662
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 2
(Check appropriate box or boxes)
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No.
ACCOLADE FUNDS
(Exact Name of Registrant as Specified in Charter)
7900 Callaghan Road
SAN ANTONIO, TEXAS 78229
(Address of Principal Executive Office)
Registrant's Telephone Number, including Area Code (210) 308-1234
Frank E. Holmes, President
Accolade Funds
7900 Callaghan Road
SAN ANTONIO, TEXAS 78249-3340
(Name and Address of Agent for Service)
Exhibit Index for exhibits filed herewith is at page of .
--- ---
<PAGE>
Approximate date of proposed public offering:
It is proposed that this filing will become effective (check appropriate
box):
/ / immediately upon filing pursuant to paragraph (b) of Rule 485
/X/ on JANUARY 15, 1996 pursuant to paragraph (b) of Rule 485
/ / 60 days after filing pursuant to paragraph (a) of Rule 485
/ / on (DATE), pursuant to paragraph (a) of Rule 485.
Registrant hereby declares, pursuant to Rule 24f-2 under the Investment
Company Act of 1940, an indefinite number of shares of beneficial interest,
no par value, have previously been registered. The Rule 24f-2 Notice for
the most recent fiscal year of Accolade Funds was filed on or about
November 30, 1995.
<PAGE>
ACCOLADE FUNDS
FORM N-1A
CROSS REFERENCE SHEET
FORM N-1A
PART A CAPTION OR
ITEM NO. LOCATION IN PROSPECTUS
1 Cover Page
2 Not Applicable
3 Not Applicable
4 Cover Page; Description
of the Funds; The Trust;
Special Risks
5 Management of the Funds
6 Cover Page; The Trust;
Dividends and Taxes
7 How to Purchase and Sell
Shares; Net Asset
Value
(12b-1 Plan -
Management of the
Funds; Distribution
Expense Plan)
8 How to Purchase and Sell
Shares
9 Not Applicable
FORM N-1A CAPTION OR
PART B LOCATION IN STATEMENT
ITEM NO. OF ADDITIONAL INFORMATION
10 Cover Page
11 Table of Contents
12 General Information
13 Investment Objectives
and Policies
14 Management of
the Fund
15 Principal Holders of
Securities
16 Investment Advisory
Services; Transfer
Agency and Other
Services
17 Investment Objectives
and Policies
18 General Information
19 Additional Information
on Redemptions
20 Tax Status
21 Not Applicable
22 Calculation of
Performance Data
23 Financial Statements
<PAGE>
PART A -- PROSPECTUS
Included herein is Part A for
Accolade Funds
Pre-Effective Amendment No.
Post-Effective Amendment No. 2
<PAGE>
ACCOLADE FUNDS
BONNEL GROWTH FUND
PROSPECTUS
JANUARY 15, 1996
P.O. BOX 781234
SAN ANTONIO, TEXAS 78278-1234
1-800-426-6635
(INFORMATION, SHAREHOLDER SERVICES AND REQUESTS)
This prospectus presents information that a prospective investor should
know about the Bonnel Growth Fund (the "Fund"), a diversified series of Accolade
Funds (the "Trust"). The Trust is an open-end management investment company.
Read and retain this prospectus for future reference.
A Statement of Additional Information dated January 15, 1996, has been
filed with the Securities and Exchange Commission and is incorporated herein by
reference. The Statement is available free from Accolade Funds upon request at
the address set forth above or by calling 1-800-426-6635.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
TABLE OF CONTENTS
SUMMARY OF FEES AND EXPENSES .............................................. 2
INVESTMENT OBJECTIVES AND
CONSIDERATIONS .......................................................... 5
OTHER INVESTMENT PRACTICES ................................................ 6
RISK FACTORS .............................................................. 9
HOW TO PURCHASE SHARES .................................................... 10
HOW TO EXCHANGE SHARES .................................................... 12
HOW TO REDEEM SHARES ...................................................... 13
HOW SHARES ARE VALUED ..................................................... 18
DIVIDENDS AND TAXES ....................................................... 18
THE TRUST ................................................................. 19
MANAGEMENT OF THE FUND .................................................... 20
DISTRIBUTION EXPENSE PLAN ................................................. 23
PERFORMANCE INFORMATION ................................................... 23
SUMMARY OF FEES AND EXPENSES
The following summary is provided to assist you in understanding the
various costs and expenses a shareholder in the Fund could bear directly or
indirectly.
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load.............. None
Redemption Fee.................. None
Administrative Exchange Fee..... $ 5
Account Closing Fee (does not
apply to exchanges).......... $ 10
Short Term Trading Fee (shares
held less than 14 days)...... 0.10%
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET
ASSETS)(1)
Management and Administrative
Fees......................... 1.00%
12b-1 Fees...................... 0.25%
Other Expenses, including
Transfer Agency
and Accounting Services Fees
(net of waivers and
reimbursements).............. 1.25%
Total Fund Operating Expenses
(net of waivers and
reimbursements).............. 2.50%
2
Except for active ABC Investment PlanT, UGMA/UTMA and retirement accounts,
if an account balance falls, for any reason other than market fluctuations,
below $5,000 at any time during a month that account will be subject to a
monthly small account charge of $1 which will be payable quarterly. See "Small
Accounts".
A shareholder who requests delivery of redemption proceeds by wire transfer
will be subject to a $10 charge. International wires will be higher.
HYPOTHETICAL EXAMPLE OF EFFECT OF FUND EXPENSES:(1)
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return and redemption at the end of each period.
1 year............................... $ 35
3 years.............................. $ 88
The Hypothetical Example is based upon the Fund's historical expenses which
are expected to decline as the Fund's net assets increases. In conformance with
SEC regulations, the example is based upon a $1,000 investment; however, the
Fund's minimum investment is $5,000. In practice a $1,000 account would be
assessed a monthly $1.00 small account charge which is not reflected in the
example. See "Small Accounts". Included in these estimates is the account
closing fee of $10 for each period. This fee is a flat charge which does not
vary with the size of your investment. Accordingly, for investments larger than
$1,000, your total expenses will be substantially lower in percentage terms than
the illustration implies. The example should not be considered a representation
of future expenses. Actual expenses may be more or less than those shown.
- ------------------------------------------------------------------------------
(1) Annual Fund Operating Expenses are based on the Fund's historic
expenses. The Fund's Total Operating Expenses ratio of 2.50% is higher than that
of most other mutual funds. Management fees are paid to United Services
Advisors, Inc. (the "Advisor") for managing its investments and business
affairs. The Advisor then pays a portion of the management fee to Bonnel, Inc.
(the "Sub-Advisor") for serving as Sub-Advisor. See "Management of the Fund".
The Fund incurs other expenses for maintaining shareholder records, furnishing
shareholder statements and reports, and for other services. Transfer agency and
accounting service fees are paid to United Shareholder Services, Inc. ("USSI" or
"Transfer Agent"), a subsidiary of the Advisor, and are not charged directly to
individual shareholder accounts. The Transfer Agent charges the Fund $23.00 per
shareholder account per year. The account closing fee, account maintenance fee
and small account charge will be paid by the shareholder directly to the
Transfer Agent which will, in turn, reduce its charges to the Fund by like
amount. Please refer to the section entitled "Management of the Fund" for
further information.
3
During the period from October 17, 1994 (initial public offering) through
September 30, 1995, the Advisor, Sub-Advisor, and their affiliates voluntarily
agreed to waive fees as described in the Financial Highlights and accompanying
footnotes.
FINANCIAL HIGHLIGHTS
BONNEL GROWTH FUND
The following per share data and ratios for a share of beneficial interest
outstanding throughout the period from October 17, 1994 (initial public
offering) through September 30, 1995, have been audited by Price Waterhouse LLP.
The related audited financial statements are available upon request and have
been incorporated by reference into the Statement of Additional Information
("SAI"). In addition to the data set forth below, further information about the
performance of the Fund is contained in the SAI which may be obtained without
charge.
Selected data for a capital share outstanding throughout the period October
17, 1994 (initial public offering) through September 30, 1995, is as follows:
PERIOD ENDED
(A)
------------
Per Share Operating Performance:
Net asset value, beginning of
period............................. $ 10.02
------------
Net investment income(b)........ (.07)
Net realized and unrealized gain
(loss) on investments(c)..... 4.91
------------
Total from investment operations..... 4.84
------------
Less dividends and distributions:
Dividends in excess of net
investment income............ .05
Distributions from net realized
gain......................... --
------------
Total dividends and distributions.... .05
------------
Net asset value, end of period....... $ 14.81
============
Total Investment Return(d)(e):....... 48.74%
Ratios/Supplemental Data:
Net assets, end of period
(in thousands)..................... $ 24,673
Ratio of expenses to average net
assets(f)(g)....................... 2.48%
Ratio of net income to average net
assets(f)(g)....................... -1.46%
Portfolio turnover rate.............. 145%
- ------------
(a) For the period from October 17, 1994 (initial public offering) to
September 30, 1995.
(b) Net of expense reimbursements and fee waivers.
4
(c) Includes the effect of capital share transactions throughout the year.
(d) Total return does not reflect the effect of account fees.
(e) Total investment return is not annualized.
(f) Expense ratio is net of fee waivers. Had such reimbursements not been made,
the annualized expense ratio subject to the most restrictive state
limitations would have been 2.50% and the annualized net investment income
ratio would have been (1.52)%.
(g) Annualized; the ratios are not necessarily indicative of twelve months of
operations.
INVESTMENT OBJECTIVES AND CONSIDERATIONS
Please read the Prospectus carefully before you invest. You are responsible
for determining the suitability of the Fund to meet your long term investment
goals.
The investment objective of the Bonnel Growth Fund (the "Fund") is
long-term growth of capital. Current income is not an objective and any income
received is incidental. The Fund seeks this growth by investing primarily in the
common stocks of domestic and foreign issuers. The Fund does not intend to
invest in fixed income securities other than money market instruments and
convertible bonds. There is no assurance that the Fund will achieve its
investment objective. Neither the investment objective nor the investment policy
are fundamental policies and may be changed by the Board of Trustees without
shareholder approval. However, shareholders will be notified in writing at least
30 days prior to any material change to either the Fund's investment objective
or its investment policy.
Common stocks will be selected that meet certain fundamental and technical
selection standards which, in the Sub-Advisor's opinion, have appreciation
potential. The Fund expects to focus its investments on mid- capitalization
companies with market capitalizations of around $1 billion. However, the Fund is
not limited to mid-capitalization stocks and will also invest in large and small
capitalization companies. Fundamental investment criteria include, but are not
limited to, earnings figures, equity ownership by management, market leadership,
strong management, price to earnings ratios, debt to equity ratios, and the
general growth prospects of the issuer. Common stocks will not be eliminated
simply because they do not pay a current dividend. Technical selection
considerations include, but are not limited to, stock price movement and
magnitude of trading volume. These criteria may lead the Fund to invest more or
less of its assets in specific industries as market conditions change, but the
Fund does not focus its investments in any particular industry. The Fund may
invest in securities traded on domestic or foreign exchanges, quoted on NASDAQ,
or traded on the domestic or foreign over-the-counter markets. The Sub-Advisor
is not obligated to conform to any particular fundamental or technical standard
of
5
selection or to the ranking of such standards. Standards of selection and their
ranking will vary according to the Sub-Advisor's judgment.
The Sub-Advisor intends to stay fully invested in such stocks, regardless
of the movement of stock prices generally. Under normal market conditions, the
Fund is required to have at least 80% of the value of its total assets in equity
securities and of that 80%, no more than 5% may consist of preferred stock or
bonds convertible into common stock. The remainder of the portfolio may be
invested in money market instruments to provide liquidity, purchase portfolio
securities, pay redemptions and meet other demands for cash. When the
Sub-Advisor determines that market conditions warrant, the Fund may invest up to
100% of its assets in money market instruments for temporary defensive purposes.
The Fund may invest up to 25% of its total assets in common stocks and
other equity securities of foreign issuers, but only if they are listed on a
domestic or foreign exchange, quoted on NASDAQ or traded on the domestic or
foreign over-the-counter market. See "Risk Factors" in this prospectus. As a
portion of the 25% limitation, no more than 5% of the Fund's net assets will be
invested in securities of issuers domiciled in countries considered by the
Advisor to be emerging markets.
The Fund may invest in sponsored or unsponsored American Depository
Receipts ("ADRs") representing shares of foreign issuers. ADRs are typically
issued by a U.S. bank or trust company and evidence ownership of underlying
securities issued by a foreign corporation. Generally, ADRs in registered form
are designed for use in the U.S. securities market, and ADRs in bearer form are
designed for use in securities markets outside the United States. ADRs may not
necessarily be denominated in the same currency as the underlying securities
into which they may be converted. In addition, the issuers of the securities
underlying unsponsored ADRs are not obligated to disclose material information
in the United States; and, therefore, there may be less information available
regarding such issuers. There may not be a correlation between such information
and the market value of the ADRs. For purposes of the Fund's investment
policies, the Fund's investment in ADRs will be deemed to be investments in the
underlying securities.
OTHER INVESTMENT PRACTICES
As a fundamental policy, which cannot be changed without a vote of
shareholders:
(a) the Fund may not invest more than 25% of its total assets in
securities of companies principally engaged in any one industry (other than
obligations issued or guaranteed by the United States Government or any of
its agencies or instrumentalities);
(b) with respect to 75% of its total assets, the Fund will not: (1)
invest more than 5% of the value of its total assets in the securities
6
of any one issuer (except such limitation shall not apply to obligations
issued or guaranteed by the United States Government, its agencies or
instrumentalities); nor (2) acquire more than 10% of the outstanding voting
securities of any one issuer;
(c) the Fund may lend portfolio securities with an aggregate market
value of not more than one-third of the Fund's total net assets;
(d) the Fund may borrow up to 33 1/3% of the amount of its total
assets (reduced by the amount of all liabilities and indebtedness other
than such borrowings) when deemed desirable or appropriate to effect
redemptions, provided, however, that the Fund will not purchase additional
securities while borrowings exceed 5% of the Fund's total assets.
PORTFOLIO TURNOVER
It is the policy of the Fund to seek long-term growth of capital. The Fund
will effect portfolio transactions without regard to its holding period if, in
the judgment of the Advisor and Sub-Advisor, such transactions are in the best
interests of the Fund. For the period October 17, 1994 (initial public offering)
through September 30, 1995, the Fund's portfolio turnover rate was 145%.
Increased portfolio turnover may result in higher costs for brokerage
commissions, dealer mark-ups and other transaction costs and may also result in
taxable capital gains. Certain tax rules may restrict the Fund's ability to
engage in short-term trading if the security has been held for less than three
months. See "Portfolio Turnover" in the Statement of Additional Information.
PORTFOLIO TRANSACTIONS
In executing portfolio transactions and selecting brokers or dealers, the
Fund seeks the best overall terms available. In assessing the terms of a
transaction, consideration may be given to various factors, 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 (for a specified
transaction and on a continuing basis), the reasonableness of the commission, if
any, and the brokerage and research services provided. Under the Advisory and
Sub-Advisory agreements the Advisor and Sub-Advisor are permitted, in certain
circumstances, to pay a higher commission than might otherwise be obtained in
order to acquire brokerage and research services. The Advisor and Sub-Advisor
must determine in good faith, however, that such commission is reasonable in
relation to the value of the brokerage and research services provided -- viewed
in terms of that particular transaction or in terms of all the accounts over
which investment discretion is exercised. In such case, the Board of Trustees
will review the commissions paid by the Fund to determine if the commissions
paid over representative periods of time were reasonable in relation to the
benefits obtained. The advisory fee of the Advisor would not be reduced by
reason of its receipt of
7
such brokerage and research services. To the extent that any research services
of value are provided by broker dealers through or with whom the Fund places
portfolio transactions, the Advisor or Sub-Advisor may be relieved of expenses
which they might otherwise bear.
The Fund executes most of its transactions through a small group of
broker-dealers which have been selected based upon their ability to provide
brokerage and research services. The Fund may, in some instances, purchase
securities that are not listed on a national securities exchange or quoted on
NASDAQ, but rather are traded in the over-the-counter market. With respect to
transactions executed in the over-the-counter market, the Fund will usually deal
through its selected broker-dealer's commission on such transactions. The Fund
believes that the execution and brokerage services which it receives justifies
use of broker-dealers in these over-the-counter transactions. See "Portfolio
Transactions" in the Statement of Additional Information.
LENDING OF PORTFOLIO SECURITIES
The Fund may lend securities to broker/dealers or institutional investors
for their use in connection with short sales, arbitrages and other securities
transactions. The Fund may receive a fee from broker/dealers for lending its
portfolio securities. The Fund will not lend portfolio securities unless the
loan is secured by collateral (consisting of any combination of cash, United
States Government securities or irrevocable letters of credit) in an amount at
least equal (on a daily marked-to-market basis) to the current market value of
the securities loaned. In the event of a bankruptcy or breach of agreement by
the borrower of the securities, the Fund could experience delays and costs in
recovering the securities loaned. The Fund will not enter into securities
lending agreements unless its custodian bank/lending agent will fully indemnify
the Fund against loss due to borrower default. The Fund may not lend securities
with an aggregate market value of more than one-third of the Fund's total net
assets.
REPURCHASE AGREEMENTS
The Fund may invest a portion of its assets in repurchase agreements with
domestic broker/dealers, banks and other financial institutions, provided the
Fund's custodian always has possession of securities serving as collateral or
has evidence of book entry receipt of such securities. In a repurchase
agreement, the Fund purchases securities subject to the sellers agreement to
repurchase such securities at a specified time (normally one day) and price. The
repurchase price reflects an agreed-upon interest rate during the time of
investment. All repurchase agreements must be collateralized by United States
Government or government agency securities, the market values of which equal or
exceed 102% of the principal amount of the repurchase obligation. If an
institution enters an insolvency proceeding, the resulting delay in liquidation
of securities serving as collateral could
8
cause the Fund some loss if the value of the securities declined prior to
liquidation. To minimize the risk of loss, the Fund will enter into repurchase
agreements only with institutions and dealers which the Board of Trustees
considers creditworthy.
PUT AND CALL OPTIONS
The Fund may purchase or sell call options and may purchase put options on
individual securities and on equity indexes. The Fund will not purchase any
option if, immediately thereafter, the aggregate market value of all outstanding
options purchased and written by the Fund would exceed 5% of the Fund's total
assets. For a more complete discussion see, "Put and Call Options" in the
Statement of Additional Information.
RISK FACTORS
EQUITY PRICE FLUCTUATIONS
Equity securities are subject to price fluctuations depending on a variety
of factors, including market, business and economic conditions. Investment in
growth stocks can involve special risks. In seeking long term growth of capital,
the Fund may often purchase common stock of small and medium size companies
which may be unseasoned and which often fluctuate in price more than common
stocks of larger, more mature companies, such as many of those included in the
Dow Jones Industrial Average. Therefore, an investor should expect that the
share price of the Fund will often be more volatile, in both "up" and "down"
markets than most of the popular stock averages.
FOREIGN SECURITIES
Investment in foreign securities may involve risks not present in domestic
investment. These include fluctuating exchange rates; the fact that foreign
issuers may be subject to different, and in some cases, less comprehensive
accounting, financial reporting and disclosure standards than are domestic
issuers; the risk of adverse changes in foreign investment or exchange control
regulations; volatile currency markets; expropriation or confiscatory taxation;
political or financial instability; or other developments which can affect
investments. For more detailed information see, "Foreign Securities" in the
Statement of Additional Information.
PUTS AND CALLS
The Fund may purchase or sell call options and may purchase put options on
individual securities and on equity indexes. If the Fund sells a covered call
option and the securities owned by the Fund appreciates above the option's
strike price, the Fund will generally be called upon to deliver the security,
which will prevent the Fund from receiving the benefit of any price appreciation
above the strike price. When purchasing call options the Fund will realize a
loss equal to all or a portion of the premium paid for the
9
option if the price of the underlying security decreases or does not increase by
more than the premium before the call option's expiration. When purchasing put
options the Fund will realize a loss equal to all or a portion of the premium
paid for the option if the price of the underlying security increases or does
not decrease by more than the premium before the put option's expiration.
HOW TO PURCHASE SHARES
The minimum initial investment for the Fund is $5,000 for regular accounts
or $1,000 for UGMA/UTMA accounts. The minimum subsequent investment is $50. The
minimum initial investment for persons enrolled in the ABC Investment PlanT is
$1,000 and the minimum subsequent investment pursuant to such a plan is $100 or
more per month per account. There is no minimum purchase for retirement plan
accounts, including IRAs, administered by the Advisor or its agents and
affiliates.
YOU MAY INVEST IN THE FOLLOWING WAYS:
BY MAIL
Send your application and check or money order, made payable to the Bonnel
Growth Fund, to P.O. Box 781234, San Antonio, Texas 78278-1234.
When making subsequent investments, enclose your check with the return
remittance portion of the confirmation of your previous investment or indicate
on your check or a separate piece of paper your name, address and account number
and mail to the address mentioned above. Do not use the remittance portion of
your confirmation statement for a different fund as it is pre-coded. This may
cause your investment to be invested into the wrong fund. If you wish to
purchase shares in more than one fund, send a separate check or money order for
each fund. Third party checks will not be accepted; and the Fund reserves the
right to refuse to accept second party checks.
BY TELEPHONE
Once your account is open, you may make investments by telephone by calling
1-800-426-6635. Investments by telephone are not available in money market funds
or any retirement account administered by the Advisor or its agents. The maximum
telephone purchase is ten times the value of the shares owned, calculated at the
last available net asset value. Payment for shares purchased by telephone is due
within seven business days after the date of the transaction. You cannot
exchange shares purchased by telephone until after the payment has been received
and accepted by the Trust.
BY WIRE
You may make your initial or subsequent investments in the Bonnel Growth
Fund by wiring money. To do so, call the Fund at
10
1-800-4-BONNEL or 1-800-426-6635 for a confirmation number and wiring
instructions.
BY ABC INVESTMENT PLANT
The ABC Investment Plan is offered as a special service for small
investors. Once your account is opened with a $1,000 minimum initial investment,
you may make investments automatically by completing the ABC Investment PlanT
(Automatically Building Capital Investment Plan) form. This form authorizes the
Fund to draw on your money market or bank account regularly for as little as
$100 a month beginning within thirty (30) days after the account is opened.
These small minimums are a special service bringing to small investors the
benefits of the Fund without requiring a $5,000 minimum initial investment. You
may call United Services (1-800-US-Funds) to open a treasury money market fund
or you could inquire at your bank whether it will honor debits through the
Automated Clearing House ("ACH") or, if necessary, preauthorized checks. You may
change the date or amount of your investment or discontinue the Plan any time by
letter received by the Fund at least five business days before the change is to
become effective.
ADDITIONAL INFORMATION ABOUT PURCHASES
All purchases of shares are subject to acceptance by the Fund and are not
binding until accepted. The Fund reserves the right to reject any application or
investment. Orders become effective as of 4:00 p.m., Eastern time, Monday
through Friday exclusive of business holidays. In the event that the NYSE and
other financial markets close earlier, as on the eve of a holiday, orders will
become effective earlier in the day at the close of trading on the NYSE.
If your telephone order to purchase shares is cancelled due to nonpayment
or late payment (whether or not your check has been processed by the Fund), you
will be responsible for any loss incurred by the Fund by reason of such
cancellation.
If checks are returned unpaid due to insufficient funds, stop payment or
other reasons, the Fund will charge your account $20 and you will be responsible
for any loss incurred by the Fund with respect to cancelling the purchase.
To recover any such loss or charge, the Fund reserves the right, without
further notice, to redeem shares of any affiliated funds already owned by any
purchaser whose order is cancelled, for whichever reason, and such a purchaser
may be prohibited from placing further orders unless investments are accompanied
by full payment by wire or cashier's check.
Accolade Funds charges no sales commissions or "loads." However, investors
may purchase and sell shares through registered broker/dealers who may charge
fees for their services.
11
Investments paid for by checks drawn on foreign banks may be deferred until
such checks have cleared the normal collection process. In such instances, any
amounts charged to the Fund for collection procedures will be deducted from the
amount invested.
If the Fund incurs a charge for locating a shareholder without a current
address, such charge will be passed through to the shareholder.
TAX IDENTIFICATION NUMBER
The Fund is required by Federal law to withhold and remit to the United
States Treasury a portion of the dividends, capital gain distributions and
proceeds of redemptions paid to any shareholder who fails to furnish the Fund
with a correct taxpayer identification number, who underreports dividend or
interest income or who fails to provide certification of a tax identification
number. In order to avoid this withholding requirement, you must certify on your
application, or on a separate Form W-9 supplied by the Transfer Agent, that your
taxpayer identification number is correct and that you are not currently subject
to backup withholding or you are exempt from backup withholding. For
individuals, your taxpayer identification number is your social security number.
Instructions to exchange or transfer shares held in established accounts
will be refused until the certification has been provided. In addition, the Fund
assesses a $50 administrative fee if the taxpayer identification number is not
provided by year-end.
CERTIFICATES
When you open your account, the Fund will send you a confirmation
statement, which will be your evidence that you have opened an account with the
Fund. The confirmation statement is nonnegotiable, so if it is lost or
destroyed, you will not be required to buy a lost instrument bond or be subject
to other expense or trouble, as you would with a negotiable stock certificate.
At your written request, the Fund will issue negotiable stock certificates.
Unless your shares are purchased with wired money, a certificate will not be
issued until 15 days have elapsed from the time of purchase, or the Fund has
satisfactory proof of payment, such as a copy of your cancelled check.
Negotiable certificates will not be issued for fewer than 100 shares.
HOW TO EXCHANGE SHARES
You have the privilege of exchanging into any of the other funds offered,
affiliated or administered by United Services Advisors, Inc., for a $5 exchange
fee. An exchange involves the simultaneous redemption (sale) of shares of one
fund and purchase of shares of another fund at the respective closing net asset
value and is a taxable transaction.
12
BY TELEPHONE
You will automatically have the privilege to direct the Fund to exchange
your shares between identically registered accounts by calling toll free
1-800-4-BONNEL or 1-800-426-6635. In connection with such exchanges neither the
Fund nor the Transfer Agent will be responsible for acting upon any instructions
reasonably believed by them to be genuine. The shareholder, as a result of this
policy, will bear the risk of loss. The Fund and/or its Transfer Agent will,
however, employ reasonable procedures to confirm that instructions communicated
by telephone are genuine (including, requiring some form of personal
identification, providing written confirmation and tape recording
conversations); and if it does not employ reasonable procedures, it may be
liable for losses due to unauthorized or fraudulent transactions.
BY MAIL
You may direct the Fund in writing to exchange your shares. The request
must be signed exactly as the name appears in the registration. (Before writing,
read "Additional Information About Exchanges.")
ADDITIONAL INFORMATION ABOUT EXCHANGES
(1) There is a $5 charge, which is paid to United Shareholder Services,
Inc. ("USSI" or the "Transfer Agent") for each exchange out of any Fund account
except that retirement accounts administered by the Advisor or its agents and
affiliates are charged $5 for each exchange exceeding three per quarter. The
exchange fee is charged to cover administrative costs associated with handling
these exchanges.
(2) Like any other redemption, the Fund reserves the right to hold exchange
proceeds for up to seven days. In such event, the purchase side of the exchange
transaction will also be delayed. You will be notified immediately if the Fund
is exercising said right.
(3) If the shares you wish to exchange are represented by a negotiable
stock certificate, the certificate must be returned before the exchange can be
effected.
(4) Shares may not be exchanged unless you have furnished the Fund with
your tax identification number, certified as prescribed by the Internal Revenue
Code and Regulations, and the exchange is to an account with like registration
and tax identification number. (See "Tax Identification Number".)
(5) The exchange privilege may be terminated at any time. The exchange fee
and other terms of the privilege are subject to change.
HOW TO REDEEM SHARES
You may redeem any or all of your shares at will. The Fund redeems shares
at the net asset value next determined after it has received and
13
accepted a redemption request in proper order. Redemption requests must be
received prior to 4:00 p.m. Eastern time, Monday through Friday, to be effective
that day.
BY MAIL
A written request for redemption must be in proper order, which requires
delivery of the following to the Transfer Agent:
(1) a written request for redemption signed by each registered owner
exactly as the shares are registered, the account number and the number of
shares or the dollar amount to be redeemed;
(2) negotiable stock certificates for any shares to be redeemed for
which certificates have been issued;
(3) signature guarantees when required; and
(4) such additional documents as are customarily required to evidence
the authority of persons effecting redemptions on behalf of corporations,
executors, trustees, and other fiduciaries. Redemptions will not become
effective until all documents, in the form required, have been received by
the Transfer Agent. (Before writing, read "Additional Information About
Redemptions.")
BY TELEPHONE
To redeem your Fund shares by telephone you may call the Fund and direct an
exchange out of the Fund into an identically registered account in a United
Services treasury money market fund ($1,000 minimum initial investment). You may
then write a check against your treasury money market fund account. See "How to
Exchange Shares" for a description of exchanges including the $5 exchange fee.
Call 1-800-4-BONNEL or 1-800-426-6635 for more information concerning telephone
redemption and a treasury money market fund prospectus.
Telephone redemptions without opening a treasury money market account are
available for VIPs. For more information about the Fund's VIP program call
1-800-4-BONNEL or 1-800-426-6635.
REDEMPTION ARRANGEMENTS BY WIRE TRANSFER
Special arrangements may be made by institutional investors, or on behalf
of accounts established by brokers, advisers, banks or similar institutions, to
have redemption proceeds transferred by wire to pre-established accounts upon
telephone instructions. For further information call the Fund at 1-800-4-BONNEL
or 1-800-426-6635.
SIGNATURE GUARANTEE
Redemptions in excess of $15,000 currently require a signature guarantee. A
signature guarantee is required for all redemptions, regardless of the amount
involved, when the proceeds are to be paid to someone other
14
than the registered owner of the shares to be redeemed, or if proceeds are to be
mailed to an address other than the registered address of record. When a
signature guarantee is required, each signature must be guaranteed by: (a) a
federally insured bank or thrift institution; (b) a broker or dealer (general
securities, municipal, or government) or clearing agency registered with the
U.S. Securities and Exchange Commission that maintains net capital of at least
$100,000; or (c) a national securities exchange or national securities
association. The guarantee must: (i) include the statement "Signature(s)
Guaranteed;" (ii) be signed in the name of the guarantor by an authorized
person, the person's printed name and position with guarantor; and (iii) include
a recital that the guarantor is federally insured, maintains the requisite net
capital or is a national securities exchange or association. Shareholders living
abroad may acknowledge their signatures before a U.S. consular officer. Military
personnel may acknowledge their signatures before officers authorized to take
acknowledgments (e.g., legal officers and adjutants).
REDEMPTION PROCEEDS MAY BE SENT TO YOU:
BY MAIL
If your redemption check is mailed, it is usually mailed within 48 hours;
however, the Fund reserves the right to hold redemption proceeds for up to seven
days. If the shares to be redeemed were purchased by check, the redemption
proceeds will not be mailed until the purchase check has cleared, which may take
up to seven days. You may avoid this requirement by investing by bank wire
(Federal funds). Redemption checks may be delayed if you have changed your
address in the last 30 days. Please notify the Fund promptly in writing, or by
telephone, of any change of address.
BY WIRE
You may authorize the Fund to transmit redemption proceeds by wire,
provided you send written wiring instructions with a signature guarantee at the
time of redemption. Proceeds from your redemption will usually be transmitted on
the first business day following the redemption. However, the Fund reserves the
right to hold redemption proceeds for up to seven days. If the shares to be
redeemed were purchased by check, the redemption proceeds will not be mailed or
wired until the purchase check has cleared, which may take up to seven days.
There is a $10 charge to cover the wire, which is deducted from redemption
proceeds. International wires will be higher.
ADDITIONAL INFORMATION ABOUT REDEMPTIONS
The redemption price may be more or less than your cost, depending on the
net asset value of the Funds portfolio next determined after your request is
received.
A request to redeem shares in an IRA or similar retirement account must be
accompanied by an IRS Form W4-P and a reason for withdrawal as specified by the
IRS. Proceeds from the redemption of shares from a retirement account may be
subject to withholding tax.
15
The Fund has the authority to redeem existing accounts and to refuse a
potential account the privilege of having an account in the Fund if the Fund
reasonably determines that the failure to so redeem, or to so prohibit, would
have a material adverse consequence to the Fund and its shareholders. The power
to redeem existing accounts will be exercised in light of the Trustees'
fiduciary duties and in conformance with Massachusetts law. The Fund will not
redeem an existing account solely to prevent the legitimate exercise of a
shareholder's rights. No account closing fee will be charged to investors whose
accounts are closed under this provision.
SHORT-TERM TRADING FEE FOR THE FUND
A short-term trading fee of ten basis points or 0.10% of the value of
shares redeemed or exchanged will be assessed to shareholders who redeem or
exchange shares of the Fund held less than fourteen (14) calendar days. The
short-term trading fee will be paid to the Fund to protect remaining shareholder
against expenses due to excessive trading. Excessive short-term trading has an
adverse impact on effective portfolio management as well as upon Fund expenses.
The Fund has reserved the right to refuse investments from shareholders who
engage in short-term trading that may be disruptive to the Fund.
ACCOUNT CLOSING FEE
In order to reduce Fund expenses, an account closing fee of $10 will be
assessed to shareholders who redeem all shares in their Fund account and direct
that redemption proceeds be delivered to them by mail or wire. The charge is
payable directly to the Fund's Transfer Agent which, in turn, will reduce its
charges to the Fund by an equal amount. The purpose of the charge is to allocate
to redeeming shareholders a more equitable portion of the Transfer Agent's fee,
including the cost of tax reporting, which is based upon the number of
shareholder accounts. The account closing fee does not apply to exchanges
between the Fund and affiliated funds nor will it be imposed on any account
which is involuntarily redeemed.
SMALL ACCOUNTS
Fund accounts which fall, for any reason other than market fluctuations,
below $5,000 at any time during the month, will be subject to a monthly small
account charge of $1 which will be payable quarterly. The charge is payable
directly to the Fund's Transfer Agent which, in turn, will reduce its charges to
the Fund by an equal amount. The purpose of the charge is to allocate the costs
of maintaining shareholder accounts more equally among shareholders.
As a special service for small investors active ABC Investment PlanT,
UGMA/UTMA accounts with at least $1,000, and retirement plan accounts
administered by the Advisor or its agents and affiliates will not be subject to
the small account charge.
In order to reduce expenses of the Fund, it may redeem all shares in any
shareholder account, other than active ABC Investment PlanT, UGMA/UTMA and
retirement plan accounts, if, for a period of more than
16
three months, the account has a net asset value of $2,500 or less and the
reduction in value is not due to market fluctuations. If the Fund elects to
close such accounts, it will notify shareholders whose accounts are below the
minimum of its intention to do so, and will provide those shareholders with an
opportunity to increase their accounts by investing a sufficient amount to bring
their accounts up to the minimum amount within ninety (90) days of the notice.
No account closing fee will be charged to investors whose accounts are closed
under this redemption provision.
OTHER SERVICES
The Fund has available a number of plans and services to meet the special
needs of certain investors. Plans available include:
(1) payroll deduction plans, including military allotments;
(2) custodial accounts for minors;
(3) a flexible, systematic withdrawal plan; and
(4) various retirement plans such as IRA, SEP/IRA, 403(b)(7), 401(k)
and employer-adopted defined contribution plans.
There is an annual charge for each retirement plan fund account with
respect to which Security Trust & Financial Company ("ST&FC"), a wholly-owned
subsidiary of the Advisor, acts as custodian (for example, $10 for IRAs and $15
for SEP/IRAs, 403(b)(7)s, profit sharing and other such accounts). If this
administrative charge is not paid separately prior to the last business day of a
calendar year or prior to a total redemption, it will be deducted from the
shareholder's account.
Application forms and brochures describing these plans and services can be
obtained from the Transfer Agent by calling 1-800-4-BONNEL or 1-800-426-6635.
SHAREHOLDER SERVICES
United Shareholder Services, Inc. ("USSI"), a wholly-owned subsidiary of
the Advisor, acts as transfer and dividend paying agent for all Fund accounts.
Simply write or call 1-800-4-BONNEL or 1-800-426-6635 for prompt service on any
questions about your account.
24 HOUR CURRENT INFORMATION
Shareholders can also access 24 hours a day current information on yields,
prices, latest dividends, account balances and deposits and redemptions for the
previous and current months. Just call 1-800-4-BONNEL or 1-800-426-6635 and
press the appropriate codes into your touch-tone phone.
17
HOW SHARES ARE VALUED
Shares of the Fund are purchased or redeemed, on a continuous basis without
a sales charge, at their next determined net asset value per share. The net
asset value per share of the Fund is calculated separately by United Shareholder
Services, Inc. Net asset value per share is determined and orders become
effective as of 4:00 p.m., Eastern time, Monday through Friday, exclusive of
business holidays on which the NYSE is closed, by dividing the aggregate net
assets of the Fund at market value by the total number of shares of the Fund
outstanding. In the event that the NYSE and other financial markets close
earlier, as on the eve of a holiday, the net asset value per share will be
determined earlier in the day at the close of trading on the NYSE.
A portfolio security listed or traded on a stock exchange or quoted on
NASDAQ is valued at the last reported sale price prior to the time when assets
are valued. Lacking any sales on that day, the security is valued at the mean
between the last reported bid and ask prices. Over-the-counter portfolio
securities for which market quotations are readily available are to be valued at
the mean between the most recent bid and ask prices as obtained from one or more
dealers that make markets in the securities. Portfolio securities which are
traded both in the over-the-counter market and on a stock exchange are to be
valued according to the broadest and most representative market as determined by
the Advisor. When market quotations are not readily available, or when
restricted securities or other assets are being valued, such assets are valued
at fair value as determined in good faith by or under procedures established by
the Fund's Board of Trustees.
Short-term investments with maturities of 60 days or less at the time of
purchase are valued on the basis of the amortized cost. This involves valuing an
instrument at its cost initially and, thereafter, assuming a constant
amortization to maturity of any discount or premium.
DIVIDENDS AND TAXES
The Fund intends to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). By
complying with the applicable provisions of the Code, a Fund will not be subject
to Federal income tax on its net investment income and capital gain net income
that are distributed to shareholders.
All income dividends and capital gain distributions are normally
reinvested, without charge, in additional full and fractional shares of the
Fund. Alternatively, investors may choose: (1) automatic reinvestment of capital
gain distributions in Fund shares and payment of income dividends in cash; (2)
payment of capital gain distributions in cash and automatic reinvestment of
dividends in Fund shares; or (3) all income dividend and capital gain
distributions paid in cash. The share price of the reinvestment
18
will be the net asset value of the Fund shares computed at the close of business
on the date the dividend or distribution is paid. Dividend checks returned to
the Fund as being undeliverable and dividend checks not cashed after 180 days
will automatically be reinvested at the price of the Fund on the day returned or
on or about the 181st day, and the distribution option will be changed to
"reinvest."
At the time of purchase, the share price of the Fund may reflect
undistributed income, capital gain or unrealized appreciation of securities. Any
dividend or capital gain distribution paid to a shareholder shortly after a
purchase of shares will reduce the per share net asset value by the amount of
the distribution. Although in effect a return of capital to the shareholder,
these distributions are fully taxable.
The Fund generally pays dividends, if any, semi-annually and pays capital
gains, if any, annually.
The Fund is subject to a nondeductible four percent (4%) excise tax
calculated as a percentage of certain undistributed amounts of taxable ordinary
income and capital gains net of capital losses. The Fund intends to make such
distributions as may be necessary to avoid this excise tax.
Dividends from taxable net investment income and distributions of net
short-term capital gains paid by the Fund are taxable to shareholders as
ordinary income, whether received in cash or reinvested in additional shares of
the Fund. A portion of these dividends may qualify for the 70 percent dividends
received deduction available to corporations. Distributions of net capital gains
will be taxable to shareholders as long-term capital gains, whether paid in cash
or reinvested in additional shares, regardless of the length of time the
investor has held his shares.
Each January, the Fund will report to its shareholders the Federal tax
status of dividends and distributions paid or declared by the Fund during the
preceding calendar year. This statement will also indicate whether and to what
extent distributions qualify for the 70 percent dividends received deduction
available to corporations.
The foregoing discussion relates only to generally applicable Federal
income tax provisions in effect as of the date of this Prospectus. Shareholders
should consult their tax advisers about the status of distributions from the
Fund in their own states and localities.
THE TRUST
Accolade Funds (the "Trust") is an open-end management investment company
consisting of three separate, diversified portfolios. Only the Bonnel Growth
Fund is currently offered to the public.
The Trust was formed April 16, 1993 as a "business trust" under the laws of
the Commonwealth of Massachusetts. It is a "series" company which is authorized
to issue shares without par value in separate series.
19
Shares of the series have been authorized, each of which represents an interest
in a separate portfolio. The Board of Trustees of the Trust has the power to
create additional portfolios at any time without a vote of shareholders of the
Trust.
Under the Trust's Master Trust Agreement, no annual or regular meeting of
shareholders is required, although the Trustees may authorize special meetings
from time to time. Under the terms of the Master Trust Agreement, the Trust has
a staggered Board with terms of at least 25% of the Trustees expiring every
three years. The Trustees serve in that capacity for six-year terms. Thus there
will ordinarily be no shareholder meeting unless otherwise required by the
Investment Company Act of 1940 (the "1940 Act"). The Trust will call a meeting
of shareholders for purposes of voting on the question of removal of one or more
Trustees when requested in writing to do so by record holders of not less than
10 percent of the Trust's outstanding shares, and in connection with such
meeting to comply with the provisions of Section 16(c) of the Investment Company
Act of 1940 relating to shareholder communications.
On any matter submitted to shareholders, shares of each portfolio entitle
their holder to one vote per share, irrespective of the relative net asset
values of each portfolio's shares. On matters affecting an individual portfolio,
a separate vote of shareholders of the portfolio is required. Each portfolio's
shares are fully paid and non-assessable by the Trust, have no preemptive or
subscription rights, and are fully transferable, with no conversion rights.
MANAGEMENT OF THE FUND
TRUSTEES
The business affairs of the Fund are managed by the Trust's Board of
Trustees. The Trustees establish policies, as well as review and approve
contracts and their continuance. The Trustees also elect the officers and select
the Trustees to serve as executive and audit committee members.
THE SUB-ADVISOR
Effective September 21, 1994, the Advisor and the Trust contracted with
Bonnel, Inc. ("Sub-Advisor") to serve as Sub-Advisor for the Fund. The
Sub-Advisor was formed and registered by Mr. Arthur Bonnel as a registered
investment advisor. Mr. Bonnel, who serves as the Fund's portfolio manager, has
been managing money since 1970, and previously was the portfolio manager of a
successful mutual fund for a period of over 5 years. Past performance does not
guarantee future results.
The Sub-Advisor is located at P.O. Box 649, Reno, Nevada. The Sub-Advisor
manages the composition of the portfolio and furnishes the Fund advice and
recommendations with respect to its investments and its investment program and
strategy, subject to the general supervision and control of
20
the Advisor and the Trust's Board of Trustees. In connection with such services,
the Advisor pays the Sub-Advisor a minimum sub-advisory fee of $150,000 per
year. When the Fund's assets exceed $30 million, the Advisor and the Sub-Advisor
will share the management fee equally; except that the Sub-Advisor's fee will be
subject to downward adjustments for: 1) the Advisor's incurred costs and
expenses of marketing the Fund that exceed the .25% 12b-1 fee charged to the
Fund for such marketing purposes; 2) for any monies previously received as a
result of the minimum sub-advisory fee set forth above that were paid by the
Advisor or the Trust prior to the date that the Securities and Exchange
Commission declared the Fund's registration statement effective; 3) the
unrecovered costs of organizing the Fund up to $40,000 (the Advisor will be
responsible for bearing costs of organization of the Fund in excess of $40,000);
and (4) if a decision is made with respect to placing a cap on expenses, to the
extent that actual expenses of the Fund exceed the cap, and the Advisor is
required to pay or absorb any of the excess expenses, by the amount of the
excess expenses paid or absorbed by the Advisor through such downward
adjustments. The Fund is not responsible for the Sub-Advisor's fee.
THE INVESTMENT ADVISOR
United Services Advisors, Inc., 7900 Callaghan Road, San Antonio, Texas
78229, under an investment advisory agreement with the Trust dated September 21,
1994 furnishes investment advice and is responsible for overall management of
the Trust's business affairs. Frank E. Holmes is Chairman of the Board of
Directors and Chief Executive Officer of the Advisor, as well as President and
Trustee of the Trust. Since October 1989, Mr. Holmes has owned more than 25% of
the voting stock of the Advisor and is its controlling person. The Advisor was
organized in 1968. The Advisor serves as investment advisor to the United
Services Funds, a family of mutual funds with over $1.3 billion in assets.
The Advisor provides to the Trust, and to the Fund in the Trust, management
and investment advisory services. The Advisor furnishes an investment program
for the Fund, determines, subject to the overall supervision and review of the
Board of Trustees of the Trust, what investments should be purchased, sold and
held, and makes changes on behalf of the Trust in the investments of the Fund.
The Advisor provides the Trust with office space, facilities and business
equipment and provides the services of executive and clerical personnel for
administering the affairs of the Trust. The Advisor pays the expense of printing
and mailing prospectuses and sales materials used for promotional purposes.
Investment decisions for the Fund are made independently from those of
other investment companies advised by United Services Advisors, Inc.
21
The Advisory Agreement with the Trust provides for the Fund to pay the
Advisor a flat management fee of 1% of the Fund's average net assets. For the
period from October 17, 1994 (initial public offering) through September 30,
1995, the Fund did not pay the Advisor a management fee due to fee waivers.
The Advisor may, out of profits derived from its management fee, pay
certain financial institutions (which may include banks, securities dealers and
other industry professionals) a "servicing fee" for performing certain
administrative servicing functions for Fund shareholders to the extent these
institutions are allowed to do so by applicable statute, rule or regulation.
These fees will be paid periodically and will generally be based on a percentage
of the value of the institutions' client Fund shares.
The Transfer Agency Agreement with the Trust provides for the Fund to pay
USSI an annual fee of $23.00 per account ( 1/12 of $23.00 monthly). In
connection with obtaining/providing administrative services to the beneficial
owners of Fund shares through broker/dealers which provide such services and
maintain an omnibus account with the Transfer Agent, the Fund shall pay to the
Transfer Agent a monthly fee equal to one-twelfth ( 1/12) of 12.5 basis points
(.00125) of the value of the shares of the fund held in accounts at the
broker/dealer, which payment shall not exceed $1.92 multiplied by the average
daily number of accounts holding Fund shares at the broker/dealer. These fees
cover the usual transfer agency functions. In addition, the Fund bears certain
other Transfer Agent expenses such as the costs of record retention and postage,
plus the telephone and line charges (including the toll-free 800 service) used
by shareholders to contact the Transfer Agent. Transfer Agent fees and expenses,
including reimbursed expenses, are reduced by the amount of small account
charges and account closing fees the Transfer Agent is paid. For the period from
October 17, 1994 (initial public offering) through September 30, 1995, the Fund
paid USSI a total of $20,906 for transfer agency, lockbox and printing fees.
USSI performs bookkeeping and accounting services, and determines the daily
net asset value for the Fund. Bookkeeping and accounting services are provided
to the Fund at an asset based fee of .03% of the first 250 million average net
assets, .02% of the next 250 million average net assets and .01% of average net
assets in excess of 500 million -- subject to an annual minimum fee of $24,000.
For the period from October 17, 1994 (initial public offering) through September
30, 1995, the Fund paid USSI a total of $23,000 for portfolio accounting
services.
Additionally, the Advisor is reimbursed certain costs for in-house legal
services pertaining to the Fund.
The Fund pays all other expenses for its operations and activities. The
expenses borne by the Fund include the charges and expenses of any shareholder
servicing agents; custodian fees; legal and auditors' expenses;
22
brokerage commissions for portfolio transactions; the advisory fee;
extraordinary expenses; expenses of shareholders and trustee meetings; expenses
for preparing, printing, and mailing proxy statements, reports and other
communications to shareholders; and expenses of registering and qualifying
shares for sale, among others.
DISTRIBUTION EXPENSE PLAN
Pursuant to Rule 12b-1 under the Investment Company Act of 1940, the Fund
has adopted a distribution expense plan (the "Plan") under which Fund assets may
be utilized to pay for or reimburse expenditures in connection with sales and
promotional services related to the distribution of Fund shares, including
personal services provided to prospective and existing Fund shareholders, which
include the costs of: printing and distribution of prospectuses and promotional
materials; making slides and charts for presentations; assisting shareholders
and prospective investors in understanding and dealing with the Fund; and travel
and out-of-pocket expenses (e.g. copy and long distance telephone charges)
related thereto. Fund assets may be utilized to pay for or reimburse such
expenditures provided the total amount expended pursuant to this Plan does not
exceed 0.25% of net assets on an annual basis.
Under the terms of the Plan the Fund may pay a "servicing fee" of up to
0.25% of the Fund's average net assets ( 1/12 of 0.25% monthly) to persons or
institutions for performing certain servicing functions for Fund shareholders.
These fees will be paid periodically and will generally be based on a percentage
of the value of Fund shares held by the institution's clients. The Plan allows
the Fund to pay for or reimburse expenditures in connection with sales and
promotional services related to the distribution of Fund shares, including
personal services provided to prospective and existing Fund shareholders. See
"Distribution Plan" in the Statement of Additional Information.
PERFORMANCE INFORMATION
From time to time, in advertisements or in reports to shareholders or
prospective shareholders, the Fund may compare its performance, either in terms
of its yield, total return or its yield and total return, to that of other
mutual funds with similar investment objectives and to stock or other indices.
For example, the Fund may compare its performance to rankings prepared by Lipper
Analytical Services, Inc. ("Lipper"), a widely recognized independent service
which monitors the performance of mutual funds; to Morningstar's Mutual Fund
Values; to the S&P 500 Index; or to the Consumer Price Index. Performance
information and rankings as reported in Changing Times, Business Week,
Institutional Investor, The Wall Street Journal, Mutual Fund Forecaster, No-Load
Investor, Money Magazine, Forbes, Fortune and Barron's magazine may also be used
in comparing performance of the Fund. Performance comparisons shall not be
considered as representative of the future performance of the Fund.
23
The Fund's average annual total return is computed by determining the
average annual compounded rate of return for a specified period that, if applied
to a hypothetical $1,000 initial investment, would produce the redeemable value
of that investment at the end of the period, assuming reinvestment of all
dividends and distributions and with recognition of all recurring charges. The
Fund may also utilize a total return for differing periods computed in the same
manner but without annualizing the total return.
The Fund's "yield" refers to the income generated by an investment in the
Fund over a 30-day (or one month) period (which period will be stated in the
advertisement). Yield is computed by dividing the net investment income per
share earned during the most recent calendar month by the maximum offering price
per share on the last day of such month. This income is then "annualized." That
is, the amount of income generated by the investment during that 30-day period
is assumed to be generated each month over a 12-month period and is shown as a
percentage of the investment.
For purposes of the yield calculation, interest income is computed based on
the yield to maturity of each debt obligation and dividend income is computed
based upon the stated dividend rate of each security in the Fund's portfolio,
and all recurring charges are recognized.
The standard total return and yield results do not take into account
recurring and nonrecurring charges for optional services which only certain
shareholders elect and which involve nominal fees such as the $5 fee for
exchanges. These fees have the effect of reducing the actual return realized by
shareholders.
24
ACCOLADE FUNDS
SHARES OF THE FUND ARE SOLD
AT NET ASSET VALUE WITHOUT SALES COMMISSIONS OR
REDEMPTION FEES
Bonnel Growth Fund
INVESTMENT ADVISOR
United Services Advisors, Inc.
7900 Callaghan Road
Mailing Address: P.O. Box 29467
San Antonio, Texas 78229-0467
INVESTMENT SUB-ADVISOR
Bonnel, Inc.
P.O. Box 649
Reno, Nevada 89504
TRANSFER AGENT
United Shareholder Services, Inc.
P.O. Box 781234
San Antonio, Texas 78278-1234
CUSTODIAN
Bankers Trust Company
16 Wall Street
New York, New York 10005
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
One Riverwalk Place, Ste. 900
San Antonio, Texas 78205
No-Load
Be Sure to Retain This Prospectus;
It Contains Valuable Information
<PAGE>
PART B -- STATEMENT OF ADDITIONAL INFORMATION
Included herein is Part B for
Accolade Funds
Pre-Effective Amendment No.
Post-Effective Amendment No. 2
<PAGE>
ACCOLADE FUNDS
BONNEL GROWTH FUND
(THE "FUND")
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information is not a prospectus but should be
read in conjunction with the Fund's prospectus dated January 15, 1996 (the
"Prospectus"), which may be obtained from United Services Advisors, Inc. (the
"Advisor"), P.O. Box 29467, San Antonio, Texas 78229-0467.
The date of this Statement of Additional Information is January 15, 1996.
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
PAGE
GENERAL INFORMATION..........................................................3
INVESTMENT OBJECTIVES AND POLICIES...........................................3
RISK FACTORS.................................................................6
PUT AND CALL OPTIONS.........................................................6
PORTFOLIO TURNOVER...........................................................7
MANAGEMENT OF THE FUND.......................................................8
PRINCIPAL HOLDERS OF SECURITIES.............................................10
INVESTMENT ADVISORY SERVICES................................................10
TRANSFER AGENCY AND OTHER SERVICES..........................................12
DISTRIBUTION PLAN...........................................................12
CERTAIN PURCHASES OF SHARES OF THE FUND.....................................13
ADDITIONAL INFORMATION ON REDEMPTIONS.......................................13
CALCULATION OF PERFORMANCE DATA.............................................14
TAX STATUS..................................................................15
CUSTODIAN ..................................................................15
INDEPENDENT ACCOUNTANTS ....................................................15
FINANCIAL STATEMENTS........................................................16
<PAGE>
GENERAL INFORMATION
Accolade Funds (the "Trust") is an open-end management investment company
and is a business trust organized under the laws of the Commonwealth of
Massachusetts. The Bonnel Growth Fund (the "Fund") is a series of the Trust and
represents a separate, diversified of securities (a "Portfolio").
The assets received by the Trust from the issue or sale of shares of the
Fund, and all income, earnings, profits and proceeds thereof, subject only to
the rights of creditors, are separately allocated to such Fund. They constitute
the underlying assets of each fund, are required to be segregated on the books
of accounts, and are to be charged with the expenses with respect to such Fund.
Any general expenses of the Trust, not readily identifiable as belonging to a
particular Fund, shall be allocated by or under the direction of the Board of
Trustees in such manner as the Board determines to be fair and equitable.
Each share of the Fund represents an equal proportionate interest in the
Fund with each other share and is entitled to such dividends and distributions,
out of the income belonging to that Fund, as are declared by the Board. Upon
liquidation of the Trust, shareholders of each fund are entitled to share pro
rata in the net assets belonging to the Fund available for distribution.
As described under "The Trust" in the prospectus, the Trust's Master Trust
Agreement provides that no annual or regular meeting of shareholders is
required. However, the Trust has a staggered Board with terms such that at least
25% of the Trustees expire every three years. The Trustees serve in that
capacity for six year terms. Thus, there will ordinarily be no shareholder
meetings unless otherwise required by the Investment Company Act of 1940.
On any matter submitted to shareholders, the holder of each share is
entitled to one vote per share (with proportionate voting for fractional
shares). On matters affecting any individual fund, a separate vote of that fund
would be required. Shareholders of any fund are not entitled to vote on any
matter which does not affect their fund but which requires a separate vote of
another fund.
Shares do not have cumulative voting rights, which means that in situations
in which shareholders elect Trustees, holders of more than 50% of the shares
voting for the election of Trustees can elect 100% of the Trust's Trustees, and
the holders of less than 50% of the shares voting for the election of Trustees
will not be able to elect any person as a Trustee.
Shares have no preemptive or subscription rights and are fully
transferable. There are no conversion rights.
Under Massachusetts law, the shareholders of the Trust could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Master Trust Agreement disclaims shareholder liability for acts or
obligations of the Trust and requires that notice of such disclaimer be given in
each agreement, obligation or instrument entered into or executed by the Trust
or the Trustees. The Master Trust Agreement provides for indemnification out of
the Trust's property for all losses and expenses of any shareholder held
personally liable for the obligations of the Trust. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Trust itself would be unable to meet its
obligations.
INVESTMENT OBJECTIVES AND POLICIES
The following information supplements the discussion of the Fund's
investment objectives and policies discussed in the Fund's prospectus.
INVESTMENT RESTRICTIONS
Neither the investment objective nor the investment policy of Bonnel Growth
Fund are fundamental policies and may be changed by the Board of Trustees
without shareholder approval. The shareholders will be notified in writing at
least 30 days prior to any material change to either the Fund's investment
objective or its investment policy.
Under normal market conditions, the Fund shall have at least 80% of the
value of its total assets in common stocks and securities convertible into
common stocks. The remainder of the portfolio may be invested in money market
instruments; and, for temporary defensive purposes the Fund may invest up to
100% of its assets in money market instruments. The Fund may invest in common
stocks and other equity securities of foreign issuers but only if they are
listed on a domestic or foreign exchange, quoted on NASDAQ or traded on the
domestic or foreign over-the-counter market. No more than 25% of the value of
the Fund's total net assets will be invested in such foreign securities.
Bonnel Growth Fund will not change any of the following investment
restrictions, without the affirmative vote of a majority of the outstanding
voting securities of the Fund, which, as used herein, means the lesser of (1)
67% of that Fund's outstanding shares present at a meeting at which more than
50% of the outstanding shares of that Fund are represented either in person or
by proxy, or (2) more than 50% of that Fund's outstanding shares.
THE FUND MAY NOT:
(1) Issue senior securities.
(2) Borrow money, except that the Fund may borrow not in excess of
5% of its total assets from banks as a temporary measure for
extraordinary purposes, may borrow up to 33 1/3% of the amount of its
total assets (reduced by the amount of all liabilities and
indebtedness other than such borrowing) when deemed desirable or
appropriate to effect redemptions, provided, however, that the Fund
will not purchase additional securities while borrowings exceed 5% of
the total assets of the Fund.
(3) Underwrite the securities of other issuers.
(4) Invest in real estate.
(5) Engage in the purchase or sale of commodities or commodity futures
contracts, except that the Fund may invest in futures contracts and
options thereon on equity securities indexes in conformance with rules
and regulations issued by the Securities and Exchange Commission.
(6) Lend its assets, except that the Fund may purchase money market debt
obligations and repurchase agreements secured by money market
obligations, and except for the purchase or acquisition of bonds,
debentures or other debt securities of a type customarily purchased by
institutional investors and except that any Fund may lend portfolio
securities with an aggregate market value of not more than one-third
of such Fund's total net assets. (Accounts receivable for shares
purchased by telephone shall not be deemed loans.)
(7) Purchase any security on margin, except that it may obtain such
short-term credits as are necessary for clearance of securities
transactions.
(8) Make short sales.
(9) Invest more than 15% of its total assets in illiquid securities,
including securities which are subject to legal or contractual
restrictions on resale.
(10) Invest more than 25% of its total assets in securities of companies
principally engaged in any one industry. For the purposes of
determining industry concentration, the Fund relies on the Standard
Industrial Classification as complied by Standard & Poor's Compustat
Services, Inc. as in effect from time to time.
(11) With respect to 75% of its total assets the Fund will not: (a) Invest
more than 5% of the value of its total assets in securities of any one
issuer, except such limitation shall not apply to obligations issued
or guaranteed by the United States Government, its agencies or
instrumentalities, or (b) acquire more than 10% of the voting
securities of any one issuer.
(12) Invest more than 10% of its total net assets in open-end investment
companies. To the extent that the Fund shall invest in open-end
investment companies, the Fund's advisor and sub-advisor shall waive a
proportional amount of their management fee.
The following investment restrictions may be changed by the Board of
Trustees without a shareholder vote.
THE FUND MAY NOT:
(13) Invest in companies for the purpose of exercising control or
management.
(14) Invest more than 5% of its total assets in securities of companies
(including predecessors) that have been in continuous operation for
less than 3 years.
(15) Hypothecate, pledge, or mortgage any of its assets, except to secure
loans as a temporary measure for extraordinary purposes and except as
may be required to collateralize letters of credit to secure state
surety bonds.
(16) Participate on a joint or joint and several basis in any trading
account (except for a joint securities trading account with other
Funds managed by the Advisor for repurchase agreements permitted by
the Securities and Exchange Commission pursuant to an exemptive
order).
(17) Invest more than 10% of its total net assets in securities that do not
have readily available market quotations or are otherwise not readily
marketable.
(18) Invest in oil, gas, or other mineral exploration or development
programs, but this shall not prevent the Fund from purchasing
securities of companies in the oil, gas or mineral business if such
purchase is otherwise consistent with the Fund's investment objectives
and policies. The Fund is prohibited from any investment in oil, gas,
and other mineral leases.
(19) Invest more than 5% of total net assets in securities convertible into
common stock, including warrants, convertible bonds, and convertible
preferred stocks.
(20) Purchase or sell real property (including limited partnership
interests, but excluding readily marketable interests in real estate
investment trusts or readily marketable securities of companies which
invest in real estate). Nor may the Fund invest in securities of real
estate investment trust if by reason thereof the value of its
aggregate investment in such securities would exceed 10% of its total
assets.
(21) Invest more than 10% of its net assets in securities of unseasoned
issuers (defined as an issuer, which at the time the Fund purchases
the securities, has been in operation for less than 3 years, including
the period of operation of any predecessor or unconditional guarantor
of such issuer) and illiquid securities (defined as a security that
cannot be sold in the ordinary course of business within seven days at
approximately the value at which the Fund has valued the security),
provided that, within the 10% limitation, it will not invest more than
10% of its total assets in securities of issuers that are restricted
from being sold to the public without registration under the
Securities Act of 1933, excluding restricted securities eligible for
resale pursuant to rule 144A under the Securities Act of 1933 that
have been determined to be liquid by the Fund's Board of Trustees
based upon the trading markets for the securities.
(22) Invest in the securities of any issuer if the officers, directors, or
trustees of the Fund, the Advisor or Sub- Advisor owning beneficially
more than one-half of one percent of the securities of the issuer
together own beneficially more than five percent of the securities of
that issuer.
(23) Invest in the securities of other investment companies, except by
purchase on the open market where no commission or profit to a sponsor
or dealer results from the purchase other than the customary broker's
commission, or except when the purchase is part of a plan of merger,
consolidation, reorganization, or acquisition.
(24) Invest more than 5% of total net assets in warrants (which are valued
at the lower of cost or market). Included within that amount
investments in warrants not listed on the New York or American Stock
Exchange may not exceed 2% of the Fund's total net assets. For
purposes of this limitation, warrants acquired by the Fund in units or
attached to securities may be deemed to be without value.
If a percentage restriction is adhered to at the time of investment, a
later increase or decrease in percentage, resulting from a change in values of
portfolio securities or amount of net assets, will not be considered a violation
of any of the foregoing restrictions.
RISK FACTORS
The following are among the most significant risks associated with an
investment in the Fund.
EQUITY PRICE FLUCTUATION. Equity securities are subject to price fluctuations
depending on a variety of factors, including market, business, and economic
conditions.
FOREIGN INVESTMENTS. Investing in securities issued by companies whose principal
business activities are outside the United States may involve significant risks
not present in domestic investments. For example, there is generally less
publicly available information about foreign companies, particularly those not
subject to the disclosure and reporting requirements of the United States
securities laws. Foreign issuers are generally not bound by uniform accounting,
auditing, and financial reporting requirements and standards of practice
comparable to those applicable to domestic issuers. Investments in foreign
securities also involve the risk of possible adverse changes in investment or
exchange control regulations, expropriation or confiscatory taxation, limitation
of the removal of funds or other assets of the Fund, political or financial
instability or diplomatic and other developments which could affect such
investment. Further, economies of particular countries or areas of the world may
differ favorably or unfavorably from the economy of the United States. It is
anticipated that in most cases the best available market for foreign securities
will be on exchanges or in over-the-counter markets located outside of the
United States. Foreign stock markets, while growing in volume and
sophistication, are generally not as developed as those in the United States,
and securities of some foreign issuers (particularly those located in developing
countries) may be less liquid and more volatile than securities of comparable
United States companies. In addition, foreign brokerage commissions are
generally higher than commissions on securities traded in the United States and
may be non-negotiable. In general, there is less overall governmental
supervision and regulation of foreign securities markets, broker/dealer, and
issuers than in the United States.
The Fund may invest up to 5% of its total assets in countries considered by
the Advisor to represent emerging markets. The Advisor makes its determination
by considering various factors, including development of securities laws and
market regulation, total number of issuers, total market capitalization, and
perceptions of the investment community. Currently, the Advisor considers the
following countries to be among the emerging markets: Malaysia, Mexico, Hong
Kong, Greece, Portugal, Turkey, Argentina, Brazil, Indonesia, Malaysia,
Philippines, Singapore, Thailand, and China.
PUT AND CALL OPTIONS
SELLING (OR WRITING) COVERED CALL OPTIONS. The Fund may sell (or write)
covered call options on portfolio securities to hedge against adverse movements
in the prices of these securities. A call option gives the buyer of the option,
upon payment of a premium, the right to call upon the writer to deliver a
security on or before a fixed date at a predetermined price, referred to as the
strike price. If the price of the hedged security should fall or remain below
the strike price, the Fund will not be called upon to deliver the security and
the Fund will retain the premium received for the option as additional income,
offsetting all or part of any decline in the value of the security. The hedge
provided by writing covered call options is limited to a price decline in the
security of no more than the option premium received by the Fund for writing the
option. If the security owned by the Fund appreciates above the options strike
price, the Fund will generally be called upon to deliver the security, which
will prevent the Fund from receiving the benefit of any price appreciation above
the strike price.
BUYING CALL OPTIONS. The Fund may establish an anticipatory hedge by
purchasing call options on securities which the Fund intends to purchase to take
advantage of anticipated positive movements in the prices of these securities.
When establishing an anticipatory hedge, the Fund will deposit cash or cash
equivalents into a segregated account equal to the call option's exercise price.
The Fund will realize a gain from the exercise of a call option if, during the
option period, the price of the underlying security to be purchased increases by
more than the amount of the premium paid. A Fund will realize a loss equal to
all or a portion of the premium paid for the option if the price of the
underlying security decreases or does not increase by more than the premium.
BUYING PUT OPTIONS. The Fund may purchase put options on portfolio
securities to hedge against adverse movements in the prices of these securities.
A put option gives the buyer of the option, upon payment of a premium, the right
to sell a security to the writer of the option on or before a fixed date at a
predetermined price. A fund will realize a gain from the exercise of a put
option if, during the option period, the price of the security declines by an
amount in excess of the premium paid. The Fund will realize a loss equal to all
or a portion of the premium paid for the option if the price of the security
increases or does not decrease by more than the premium.
CLOSING TRANSACTIONS. The Fund may dispose of an option written by the
Fund by entering into a "closing purchase transaction" for an identical option
and may dispose of an option purchased by the Fund by entering into a "closing
sale transaction" for an identical option. In each case, the closing transaction
will have the effect of terminating the rights of the option holder and the
obligations of the option purchaser and will result in a gain or loss to the
Fund based upon the relative amount of the premiums paid or received for the
original option and the closing transaction. The Fund may sell (or write) put
options solely for the purpose of entering into closing sale transactions.
INDEX OPTIONS. The Fund may purchase and sell call options and purchase
put options on stock indices in order to manage cash flow, reduce equity
exposure, or to remain fully invested in equity securities. Options on
securities indices are similar to options on a security except that, upon the
exercise of an option on a securities index, settlement is made in cash rather
than in specific securities.
LIMITATIONS. The Fund will purchase and sell only options that are
listed on a securities exchange. The Fund will not purchase any option if,
immediately thereafter, the aggregate market value of all outstanding options
purchased and written by the Fund would exceed 5% of the Fund's total assets.
The Fund will not write any call options if, immediately thereafter, the
aggregate value of the Fund's securities subject to outstanding call options
would exceed 25% of the value of the Fund's total assets.
PORTFOLIO TURNOVER
The Fund's Management buys and sell securities for the Fund to accomplish
investment objectives. The Fund's investment policy may lead to frequent changes
in investments, particularly in periods of rapidly fluctuating interest rates.
The Fund's investments may also be traded to take advantage of perceived
short-term disparities in market values.
A change in the securities held by the Fund is known as "portfolio
turnover." For the period October 17, 1994 (initial public offering) through
September 30, 1995, the Fund's portfolio turnover rate was 145%. A high
portfolio turnover rate may cause the Fund to pay higher transaction expenses,
including more commissions and markups, and also result in quicker recognition
of capital gains, resulting in more capital gain distributions which may be
taxable to shareholders. Any short term gain realized on securities will be
taxed to shareholders as ordinary income. See "Tax Status."
PORTFOLIO TRANSACTIONS
For the period October 17, 1994 (initial public offering) through September
30,1995, the Fund paid brokerage fees of $99,587. For a fuller discussion of the
Fund's portfolio trading practices see "Portfolio Transactions" in the
prospectus.
MANAGEMENT OF THE FUND
The Trustees and Officers of the Trust and their principal occupations
during the past five years are set forth below. Except as otherwise indicated,
the business address of each is 7900 Callaghan Road, San Antonio, Texas 78229.
TRUST
NAME AND ADDRESS POSITION PRINCIPAL OCCUPATION
FRANK E. HOLMES** Trustee Chairman of the Board of Directors and
President, Chief Executive Officer of the Advisor
Chief Executive since October 1989. President of the
Officer Advisor from October 1989 to September
1995. Trustee, President, and Chief
Executive Officer of United Services
Funds ("USF") since October 1989.
Director of Security Trust & Financial
Company ("ST&FC"), a wholly-owned
subsidiary of Advisor, since November
1991. Director of U.S. Advisors
(Guernsey) Limited, a wholly-owned
subsidiary of Advisor, and of the
Guernsey Funds managed by that Company
since August 1993. Trustee of
Pauze/Swanson United Services Funds
since November 1993. Director of
Franc-Or Resource Corp. since November
1994. Director of Marleau, Lemire Inc.
from January 1995 to December 1995.
Director of United Services Advisors
Canada, Inc. since February 1995, and
Chief Executive Officer from February
1995 to August 1995. Independent
business consultant and financial
adviser from July 1978 to October 1989.
From July 1978 to October 1989, held
various positions with Merit Investment
Corporation, a Canadian investment
dealer, including the latest position as
Executive Vice President-Corporate
Finance. Formerly a member of the
Toronto Stock Exchange Listing
Committee, Registered Portfolio Manager
with the Toronto Stock Exchange, and
former President and Chairman of the
Toronto Society of Investment Dealers
Association. Formerly a Director of
Merit Investment Corporation.
** This Trustee may be deemed an "interested person" of the Trust as defined in
the Investment Company Act of 1940.
THOMAS D. TAYS Vice President Vice President and Secretary of the
and Trust since September 1995. Vice
Secretary of the President and Special Counsel of United
Trust Services Advisors, Inc. since September
1995. Associate Counsel of United
Services Advisors, Inc. since September
1993. Attorney in private practice from
April 1990 through September 1993.
General Counsel of James Baker &
Company, a broker-dealer and investment
adviser from June 1984 through April
1990.
SUSAN B. MCGEE Vice President, Vice President and Assistant Secretary
Assistant of the Trust since September 1995. Vice
Secretary President and Secretary of the Advisor
since September 1995. Vice President and
Secretary of USSI since September 1995.
Vice President and Secretary of USF
since September 1995. Vice
President-Operations of ST&FC from May
1993 to December 1994. Secretary of
ST&FC since September 1992. Associate
Counsel since August 1994.
RICHARD E. HUGHS Trustee Professor at the School of Business of
11 Dennin Drive the State University of New York at
Menands, NY 12204 Albany from 1990 to present; Dean,
School of Business 1990-1994; Director
of the Institute for the Advancement of
Health Care Management, 1994 - present.
Corporate Vice President, Sierra Pacific
Resources, Reno, NV, 1985-1990. Dean and
Professor, College of Business
Administration, University of Nevada,
Reno, 1977-1985. Associate Dean, Stern
School of Business, New York University,
New York City, 1970-1977.
CLARK R. MANDIGO Trustee Business consultant since 1991. From
1250 N.E. Loop 410 1985 to 1991, President, Chief Executive
Suite 900 Officer, and Director of Intelogic
San Antonio, Texas Trace, Inc., a nationwide company which
78209 sells, leases and maintains computers
and telecommunications systems and
equipment. Prior to 1985, President BHP
Petroleum (Americas), Ltd., an oil and
gas exploration and development company.
Director Datapoint Corporation, Lone
Star Steakhouse & Saloon, Inc. and
Physician Corporation of America.
Trustee for Pauze/Swanson United
Services Funds since November 1993.
BOBBY D. DUNCAN Executive Vice President of the Advisor since September
President, Chief 1995. Executive Vice President and Chief
Financial Financial Officer of the Advisor from
Officer, October 1989 to September 1995. Chief
Chief Operating Operating Officer since November 1993.
Officer Executive Vice President of USF since
October 1989 and Chief Operating Officer
since September 1993. Chief Financial
Officer of USF from October 1989 to
September 1995. President, Chief
Executive Officer, Chief Operating
Officer, Chief Financial Officer and
Treasurer of the Advisor from January
1989 to October 1989. Prior to January
1990, held various positions with USF,
including Executive Vice President,
Treasurer, Chief Operating Officer, and
Chief Financial Officer. Served as sole
Director and Chief Executive Officer of
United Shareholder Services Inc.
("USSI"), a transfer agent wholly-owned
by the Advisor, from September 1988 to
November 1989. Director of USSI from
November 1989 to November 1993. Sole
Director, President, and CEO of USSI
since 1993. Director of A&B Mailers,
Inc., a wholly-owned subsidiary of the
Advisor, since February 1988 and
Chairman since July 1991. Chief
Executive Officer, President, Chief
Operating Officer, Chief Financial
Officer, and Director of USSI. Director
of the Advisor since July 1986. Director
and Executive Vice President, Chief
Financial Officer of ST&FC from November
1991 to March 1994. Vice President,
Chief Financial Officer and Trustee of
Pauze/Swanson United Services Funds
since November 1993. President, CEO, and
Trustee of United Services Insurance
Funds since July 1994. Director and
Chief Financial Officer of United
Services Advisors Canada Inc. since
February 1995.
TERESA G. ROWAN Vice President, Vice President, Fund Accounting of the
Treasurer, and Advisor since February 1995. Vice
Chief Accounting President and Chief Accounting Officer
Officer of USF since March 1995. Chief Financial
Officer of USF since September 1995.
Controller and Treasurer of USF from
March 1995 to September 1995. Vice
President, Mutual Fund Accounting of
USSI since March 13, 1995. Vice
President, Chief Accounting Officer, and
Treasurer of Pauze/Swanson United
Services Funds since March 8, 1995.
Employee of the Advisor from September
1985 to February 1995. Auditor with
Price Waterhouse from September 1985 to
October 1986.
PRINCIPAL HOLDERS OF SECURITIES
As of December 29, 1995 the officers and Trustees of the Trust, as a group,
owned less than 1% of the outstanding shares of the Fund. The Fund is aware of
the following person(s) owning of record, or beneficially, more than 5% of the
outstanding shares of the Fund as of December 29, 1995.
NAME AND ADDRESS TYPE OF
FUND OF OWNER % OWNED OWNERSHIP
- ---- -------- ------- ---------
BONNEL GROWTH FUND Charles Schwab & Co. Inc. 8.39% Record
101 Montgomery Street
San Francisco, California
94104
INVESTMENT ADVISORY SERVICES
The investment adviser to the Funds is United Services Advisors, Inc. (the
"Advisor"), a Texas corporation, pursuant to an advisory agreement dated
September 21, 1994. Frank E. Holmes, President and a Director of the Advisor, as
well as a Trustee, President and Chief Executive Officer of the Trust,
beneficially owns more than 25% of the outstanding voting stock of the Advisor
and may be deemed to be a controlling person of the Advisor.
In addition to the services described in the Fund's prospectus, the Advisor
will provide the Trust with office space, facilities and simple business
equipment, and will provide the services of executive and clerical personnel for
administering the affairs of the Trust. It will compensate all personnel,
Officers, and Trustees of the Trust, if such persons are employees of the
Advisor or its affiliates, except that the Trust will reimburse the Advisor for
a portion of the compensation of the Advisor's employees who perform certain
legal services for the Trust, including state securities law regulatory
compliance work, based upon the time spent on such matters for the Trust.
The Trust pays all other expenses for its operations and activities. Each
of the funds of the Trust pays its allocable portion of these expenses. The
expenses borne by the Trust include the charges and expenses of any transfer
agents and dividend disbursing agents, custodian fees, legal and auditing
expenses, bookkeeping and accounting expenses, brokerage commissions for
portfolio transactions, taxes, if any, the advisory fee, extraordinary expenses,
expenses of issuing and redeeming shares, expenses of shareholder and trustee
meetings, and of preparing, printing and mailing proxy statements, reports and
other communications to shareholders, expenses of registering and qualifying
shares for sale, fees of Trustees who are not "interested persons" of the
Advisor, expenses of attendance by Officers and Trustees at professional
meetings of the Investment Company Institute, the No-Load Mutual Fund
Association or similar organizations, and membership or organization dues of
such organizations, expenses of preparing and setting in type prospectuses and
periodic reports and expenses of mailing them to current shareholders, fidelity
bond premiums, cost of maintaining the books, and records of the Trust, and any
other charges and fees not specifically enumerated.
The Trust and the Advisor, in connection with the Fund, have entered into a
sub-advisory agreement with another firm as discussed in the prospectus. The
Sub-Advisor's compensation is set forth in the prospectus and is paid by the
Advisor. The Fund will not be responsible for the Sub-Advisor's fee.
The Advisor may, out of profits derived from its management fee, pay
certain financial institutions (which may include banks, securities dealers, and
other industry professionals) a "servicing fee" for performing certain
administrative servicing functions for Fund shareholders to the extent these
institutions are allowed to do so by applicable statute, rule or regulation.
These fees will be paid periodically and will generally be based on a percentage
of the value of the institutions' client Fund shares. The Glass-Steagall Act
prohibits banks from engaging in the business of underwriting, selling or
distributing securities. However, in the Advisor's opinion, such laws should not
preclude a bank from performing shareholder administrative and servicing
functions as contemplated herein.
The securities laws of certain states in which shares of the Trust may,
from time to time, be qualified for sale require that the Advisor reimburse the
Trust for any excess of the Fund's expenses over prescribed percentages of the
Fund's average net assets. Thus, the Advisor's compensation (and the Advisor's
payments to the Sub-Advisor) under the Advisory Agreement is subject to
reduction in any fiscal year to the extent that total expenses of the Fund for
such year (including the Advisor's compensation but exclusive of taxes,
brokerage commission, extraordinary expenses, and other permissible expenses)
exceed the most restrictive applicable expense limitation prescribed by any
state in which the Fund's shares are qualified for sale. The Advisor may obtain
waivers of these state expense limitations from time to time. Such limitation is
currently 2.5% of the first $30 million of average net assets, 2% of the next
$70 million of average net assets and 1.5% of the remaining average net assets.
The Advisory Agreement was approved by the Board of Trustees of the Trust
(including a majority of the "disinterested Trustees") with respect to the Fund
and will be submitted for approval by shareholders of the Fund at the initial
meeting of shareholders. The Advisory Agreement provides that it will continue
initially for two years, and from year to year thereafter, with respect to each
fund, as long as it is approved at least annually both (i) by a vote of a
majority of the outstanding voting securities of such fund (as defined in the
Investment Company Act of 1940 [the "Act"]) or by the Board of Trustees of the
Trust, and (ii) by a vote of a majority of the Trustees who are not parties to
the Advisory Agreement or "interested persons" of any party thereto cast in
person at a meeting called for the purpose of voting on such approval. The
Advisory Agreement may be terminated on 60 days' written notice by either party
and will terminate automatically if it is assigned.
The Advisor provides investment advice to a variety of clients, including
other mutual funds. Investment decisions for each client are made with a view to
achieving their respective investment objectives. Investment decisions are the
product of many factors in addition to basic suitability for the particular
client involved. Thus, a particular security may be bought or sold for certain
clients even though it could have been bought or sold for other clients at the
same time. Likewise, a particular security may be bought for one or more clients
when one or more other clients are selling the security. In some instances, one
client may sell a particular security to another client. It also sometimes
happens that two or more clients simultaneously purchase or sell the same
security, in which event each day's transactions in such security are, insofar
as possible, averaged as to price and allocated between such clients in a manner
which in the Advisor's opinion is equitable to each and in accordance with the
amount being purchased or sold by each. There may be circumstances when
purchases or sales of portfolio securities for one or more clients will have an
adverse effect on other clients. The Advisor employs professional staffs of
portfolio managers who draw upon a variety of resources, for research
information for the clients.
In addition to advising client accounts, the Advisor invests in securities
for its own account. The Advisor has adopted policies and procedures intended to
minimize or avoid potential conflicts with its clients when trading for its own
account. The Advisor's investment objective and strategies are not the same as
its clients, emphasizing venture capital investing, private placement arbitrage,
and speculative short term trading. The Advisor utilizes a diversified approach
to venture capital investing. Investments typically involve early-stage
businesses seeking initial financing as well as more mature businesses in need
of capital for expansion, acquisitions, management buyouts, or
recapitalizations. In general, the Advisor invests in start-up companies in the
natural resources or technology fields.
TRANSFER AGENCY AND OTHER SERVICES
In addition to the services performed for the Funds and the Trust under the
Advisory Agreement, the Advisor, through its subsidiary USSI, provides transfer
agent and dividend disbursement agent services pursuant to the Transfer Agency
Agreement as described in the Fund's prospectus under "Management of the Fund --
The Investment Advisor." In addition, lockbox and statement printing services
are provided by USSI. The Board of Trustees recently approved the Transfer
Agency and related agreements through September 21, 1996.
USSI also maintains the books and records of the Trust and of each fund of
the Trust and calculates their daily net asset value as described in the Fund's
prospectus under "Management of the Funds -- The Investment Advisor."
A & B Mailers, Inc., a corporation wholly owned by the Advisor, provides
the Trust with certain mail handling services. The charges for such services
have been negotiated by the Audit Committee and A & B Mailers, Inc. Each service
is priced separately.
DISTRIBUTION PLAN
As described under "Service Fee" in the prospectus, in September 1994, the
Fund adopted a Distribution Plan pursuant to Rule 12b-1 of the 1940 Act (the
"Distribution Plan"). The Distribution Plan allows the Fund to pay for or
reimburse expenditures in connection with sales and promotional services related
to the distribution of Fund shares, including personal services provided to
prospective and existing Fund shareholders, which includes the costs of:
printing and distribution of prospectuses and promotional materials, making
slides and charts for presentations, assisting shareholders and prospective
investors in understanding and dealing with the Fund, and travel and
out-of-pocket expenses (e.g., copy and long distance telephone charges) related
thereto.
The total amount expended pursuant to the Distribution Plan may not exceed
0.25% of the Fund's net assets on an annual basis. For the period form October
17, 1994 (initial public offering) through September 30, 1995, the Fund paid a
total of $21,821 in distribution fees. No excess distribution expenses shall be
carried over from one year to be reimbursed in future years.
Expenses which the Fund incurs pursuant to the Distribution Plan are
reviewed quarterly by the Board of Trustees. On an annual basis the Distribution
Plan is reviewed by the Board of Trustees as a whole, and the Trustees who are
not "interested persons" as that term is defined in the 1940 Act and who have no
direct or indirect financial interest in the operation of the Distribution Plan
("Qualified Trustees"). In their review of the Distribution Plan the Board of
Trustees, as a whole, and the Qualified Trustees determine whether, in their
reasonable business judgment and in light of their fiduciary duties under state
law and under Section 36(a) and (b) of the 1940 Act that there is a reasonable
likelihood that the Distribution Plan will benefit the Fund and its
shareholders. The Distribution Plan may be terminated at any time by vote of a
majority of the Qualified Trustees, or by vote of a majority of the outstanding
voting securities of the Fund.
The Fund is unaware of any Trustee or any interested person of the Fund who
had a direct or indirect financial interest in the operations of the
Distribution Plan.
The Fund expects that the Distribution Plan will be used primarily to pay a
"service fee" to persons who provide personal services to prospective and
existing Fund shareholders. Shareholders of the Fund will benefit from these
personal services and the Fund expects to benefit from economies of scale as
more shareholders are attracted to the Fund.
CERTAIN PURCHASES OF SHARES OF THE FUND
Shares of the Fund are continuously offered by the Trust at their net asset
value next determined after an order is accepted. The methods available for
purchasing shares of the Fund are described in the Prospectus. In addition,
shares of the Fund may be purchased using stock, so long as the securities
delivered to the Trust meet the investment objectives and concentration policies
of the Fund, and are otherwise acceptable to the Advisor, which reserves the
right to reject all or any part of the securities offered in exchange for shares
of the Fund. On any such "in kind" purchase, the following conditions will
apply:
(1) the securities offered by the investor in exchange for shares of the
Fund must not be in any way restricted as to resale or otherwise be
illiquid;
(2) securities of the same issuer must already exist in the Fund's
portfolio;
(3) the securities must have a value which is readily ascertainable (and
not established only by evaluation procedures) as evidenced by a
listing on the AMEX, the NYSE, or NASDAQ;
(4) any securities so acquired by any fund shall not comprise over 5% of
that fund's net assets at the time of such exchange;
(5) no over-the-counter securities will be accepted unless the principal
over-the-counter market is in the United States; and,
(6) the securities are acquired for investment and not for resale.
The Trust believes that this ability to purchase shares of the Fund using
securities provides a means by which holders of certain securities may obtain
diversification and continuous professional management of their investments
without the expense of selling those securities in the public market.
An investor who wishes to make an "in kind" purchase should furnish (either
in writing or by telephone) to the Trust a list with a full and exact
description of all of the securities which he or she proposes to deliver. The
Trust will advise him or her as to those securities which it is prepared to
accept and will provide the investor with the necessary forms to be completed
and signed by the investor. The investor should then send the securities, in
proper form for transfer, with the necessary forms to the Trust and certify that
there are no legal or contractual restrictions on the free transfer and sale of
the securities. The securities will be valued as of the close of business on the
day of receipt by the Trust in the same manner as portfolio securities of the
Fund are valued. See the section entitled "How Shares Are Valued" in the
prospectus. The number of shares of the Fund, having a net asset value as of the
close of business on the day of receipt equal to the value of the securities
delivered by the investor, will be issued to the investor, less applicable stock
transfer taxes, if any.
The exchange of securities by the investor pursuant to this offer will
constitute a taxable transaction and may result in a gain or loss for Federal
income tax purposes. Each investor should consult his or her tax adviser to
determine the tax consequences under Federal and state law of making such an "in
kind" purchase.
ADDITIONAL INFORMATION ON REDEMPTIONS
SUSPENSION OF REDEMPTION PRIVILEGES. The Trust may suspend redemption
privileges or postpone the date of payment for up to seven days, but cannot do
so for more than seven days after the redemption order is received except during
any period (1) when the NYSE is closed, other than customary weekend and holiday
closings, or trading on the Exchange is restricted as determined by the
Securities and Exchange Commission ("SEC"); (2) when an emergency exists, as
defined by the SEC, which makes it not reasonably practicable for the Trust to
dispose of securities owned by it or fairly to determine the value of its
assets; or, (3) as the SEC may otherwise permit.
CALCULATION OF PERFORMANCE DATA
TOTAL RETURN
The Fund may advertise performance in terms of average annual total return
for 1-, 5- and 10-year periods, or for such lesser periods as the Fund has been
in existence. Average annual total return is computed by finding the average
annual compounded rates of return over the periods 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 hypotheti-
cal $1,000 payment made at the beginning
of the 1-, 5- or 10-year periods at
the end of the year or period.
The calculation assumes all charges are deducted from the initial $1,000
payment and assumes all dividends and distributions by the Fund are reinvested
at the price stated in the prospectus on the reinvestment dates during the
period, and includes all recurring fees that are charged to all shareholder
accounts.
The average annual Total Return for the Fund for the period from October
17, 1994 (initial public offering) through September 30, 1995 was 48.74%. (This
number is not annualized.)
NONSTANDARDIZED TOTAL RETURN
The Fund may provide the above described standard total return results for
a period which ends as of not earlier than the most recent calendar quarter end
and which begins either twelve months before or at the time of commencement of
the Fund's operations. In addition, the Fund may provide nonstandardized total
return results for differing periods, such as for the most recent six months.
Such nonstandardized total return is computed as otherwise described under
"Total Return" except that no annualization is made.
EFFECT OF FEE WAIVER AND EXPENSE REIMBURSEMENT
During the period from October 17, 1995 (initial public offering) through
September 30, 1995, the Fund's expense ratio was 2.48%. If the Advisor had not
subsidized the Fund's expenses, the expense ratio subject to the most
restrictive state limitation would have been 2.50%. Because its expenses were
subsidized, the Fund's investment performance, including annual compound rate of
return, was improved. The Advisor is not obligated to continue subsidizing the
Fund's expenses in the future.
TAX STATUS
TAXATION OF THE FUND -- IN GENERAL
As stated in its Prospectus, the Fund intends to qualify as a "regulated
investment company" under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). Accordingly, the Fund will not be liable for Federal
income taxes on its taxable net investment income and capital gain net income
that are distributed to shareholders, provided that the Fund distributes at
least 90% of its net investment income and net short-term capital gain for the
taxable year.
To qualify as a regulated investment company, the Fund must, among other
things, (a) derive in each taxable year at least 90% of its gross income from
dividends, interest, payments with respect to securities loans, gains from the
sale or other disposition of stock, securities or foreign currencies, or other
income derived with respect to its business of investing in such stock,
securities or currencies (the "90% test"); (b) derive in each taxable year less
than 30% of its gross income from the sale or other disposition of stock or
securities held less than three months (the "30% test"); and, (c) satisfy
certain diversification requirements at the close of each quarter of the Fund's
taxable year.
The Code imposes a non-deductible 4% excise tax on a regulated investment
company that fails to distribute during each calendar year an amount equal to
the sum of (1) at least 98% of its ordinary income for the calendar year, (2) at
least 98% of its capital gain net income for the twelve-month period ending on
October 31 of the calendar year and (3) any portion (not taxable to the Fund) of
the respective balance from the preceding calendar year. The Fund intends to
make such distributions as are necessary to avoid imposition of this excise tax.
TAXATION OF THE FUND'S INVESTMENTS
The Fund's ability to make certain investments may be limited by provisions
of the Code that require inclusion of certain unrealized gains or losses in the
Fund's income for purposes of the 90% test, the 30% test, and the distribution
requirements of the Code, and by provisions of the Code that characterize
certain income or loss as ordinary income or loss rather than capital gain or
loss. Such recognition, characterization and timing rules generally apply to
investments in certain forward currency contracts, foreign currencies and debt
securities denominated in foreign currencies.
TAXATION OF THE SHAREHOLDER
Taxable distributions generally are included in a shareholder's gross
income for the taxable year in which they are received. However, dividends
declared in October, November, or December and made payable to shareholders of
record in such a month, will be deemed to have been received on December 31, if
a Fund pays the dividends during the following January.
Distributions by the Fund will result in a reduction in the fair market
value of the Fund's shares. Should a distribution reduce the fair market value
below a shareholder's cost basis, such distribution nevertheless would be
taxable to the shareholder as ordinary income or long-term capital gain, even
though, from an investment standpoint, it may constitute a partial return of
capital. In particular, investors should be careful to consider the tax
implications of buying shares of the Fund just prior to a distribution. The
price of such shares purchased at that time includes the amount of any
forthcoming distribution. Those investors purchasing the Fund's shares
immediately prior to a distribution may receive a return of investment upon
distribution which will nevertheless be taxable to them.
A shareholder of the Fund should be aware that a redemption of shares
(including any exchange into other funds offered, affiliated or administered by
United Services Advisors, Inc.) is a taxable event and, accordingly, a capital
gain or loss may be recognized. If a shareholder of the Fund receives a
distribution taxable as long-term capital gain with respect to shares of the
Fund and redeems or exchanges shares before he has held them for more than six
months, any loss on the redemption or exchange (not otherwise disallowed as
attributable to an exempt-interest dividend) will be treated as long-term
capital loss to the extent of the long-term capital gain recognized.
CUSTODIAN
Bankers Trust Company acts as Custodian for the Fund. Services with respect
to the retirement accounts will be provided by Security Trust and Financial
Company of San Antonio, Texas, a wholly-owned subsidiary of the Advisor.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, One Riverwalk Place, San Antonio, Texas 78205 is the
independent accountant for the Trust.
FINANCIAL STATEMENTS
The financial statements for the period from October 17, 1994 (initial
public offering) through September 30, 1995, are hereby incorporated by
reference from the Annual Report to Shareholders of that date which has been
delivered with the Statement of Additional Information [unless previously
provided, in which event the Trust will promptly provide another copy free of
charge, upon request to: United Services Advisors, Inc., P.O. Box 29467, San
Antonio, Texas 78229- 0467, 1-800-426-6635 or (210) 308-1234].
<PAGE>
PART C -- OTHER INFORMATION
Included herein is Part C for
Accolade Funds
Pre-Effective Amendment No.
Post-Effective Amendment No. 2
<PAGE>
ACCOLADE FUNDS
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS
(1) The audited financial highlights for the period from October 17, 1994
(initial public offering) through September 30, 1995, are found in
part A.
(2) The audited financial statements for the period from October 17, 1994
(initial public offering) through September 30, 1995 are found in part
B.
(b) EXHIBITS
EXHIBIT NO. DESCRIPTION OF EXHIBIT
(1) (a) Declaration of Trust, Master Trust Agreement (incorporated
by reference to initial registration dated April 15,
1993).
(1) (b) Amendment No. 1, dated April 26, 1994 to Master Trust
Agreement, dated April 15, 1993 (incorporated by reference
to Pre-Effective Amendment No. 1 to the Registration
Statement, dated May 11, 1994).
(1) (c) Amendment No. 2, dated October 3, 1994 to Master Trust
Agreement, dated April 15, 1993 (incorporated by reference
to Pre-Effective Amendment No. 3 to the Registration
Statement, dated October 17, 1994).
(2) By-laws of Accolade Funds (incorporated by reference to
initial registration dated April 15, 1993).
(3) Not Applicable
(4) Specimen certificate (incorporated by reference to
Post-Effective Amendment No. 1 tot eh Registrations
Statement, dated March 20, 1995).
(5) (a) Advisory Agreement between Accolade Funds and United
Services Advisors, Inc., dated September 21, 1994
(incorporated by reference to Pre-Effective Amendment No.
3 to the Registration Statement, dated October 17, 1994).
(b) Sub-Advisory Agreement between Accolade Funds, United
Services Advisors, Inc. and Bonnel, Inc., dated September
21, 1994 (incorporated by reference to Pre-Effective
Amendment No. 3 to the Registration Statement, dated
October 17, 1994).
(6) Not Applicable
(7) Not Applicable
(8) Custodian Agreement between Accolade Funds and Bankers
Trust Company of New York (incorporated by reference to
Pre-Effective Amendment No. 3 to the Registration
Statement, dated October 17, 1994).
(9) (a) Transfer Agency Agreement between United Shareholder
Services, Inc. and Accolade Funds, dated September 21,
1994 (incorporated by reference to Pre- Effective
Amendment No. 3 to the Registration Statement, dated
October 17, 1994).
(9) (b) Bookkeeping and Accounting Agreement between United
Shareholder Services, Inc. and Accolade Funds, dated
September 21, 1994 (incorporated by reference to
Pre-Effective Amendment No. 3 to the Registration
Statement, dated October 17, 1994).
(9) (c) Lockbox Service Agreement between United Shareholder
Services, Inc. and Accolade Funds, dated September 21,
1994 (incorporated by reference to Pre- Effective
Amendment No. 3 to the Registration Statement, dated
October 17, 1994).
(9) (d) Printing Agreement Agreement between United Shareholder
Services, Inc. and Accolade Funds, dated September 21,
1994 (incorporated by reference to Pre- Effective
Amendment No. 3 to the Registration Statement, dated
October 17, 1994).
(10) Opinion and consent of Thomas D. Tays, Esq. counsel to the
Registrant (incorporated by reference to Pre-Effective
Amendment No. 3 to the Registration Statement, dated
October 17, 1994).
(11) (a)* Consent of Independent Accountants, Price Waterhouse LLP.
(b) Power of Attorney (incorporated by reference to
Pre-Effective Amendment No. 3 to the Registration
Statement, dated October 17, 1994).
(c)* Power of Attorney.
(12) Not Applicable
(13) Not Applicable
(14) Not Applicable
(15) Accolade Funds/Bonnel Growth Fund, Plan Pursuant to Rule
12b-1, approved September 21, 1994 (incorporated by
reference to Pre-Effective Amendment No. 2 to the
Registration Statement, dated May 11, 1994).
(16) Schedule for computation of each performance quotation
provided in response to Item 22 (incorporated by reference
to initial registration statement dated April 15, 1993).
* Filed Herewith
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Information pertaining to persons controlled by or under common control
with Registrant is incorporated by reference to the Prospectus contained in
Part A of this Registration Statement at the Section entitled "Management
of the Funds" and to the Statement of Additional Information contained in
Part B of this Registration Statement at the section entitled "Principal
Holders of Securities."
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
The number of record holders, as of DECEMBER 29, 1995 of each class of
securities of the Registrant:
Bonnel Growth Fund: 2,789
ITEM 27. INDEMNIFICATION
Under Article VI of the Registrant's Master Trust Agreement, each of its
Trustees and officers or person serving in such capacity with another
entity at the request of the Registrant (a "Covered Person") shall be
indemnified (from the assets of the Sub-Trust or Sub-Trusts in question)
against all liabilities, including, but not limited to, amounts paid in
satisfaction of judgments, in compromises or as fines or penalties, and
expenses, including reasonable legal and accounting fees, incurred by the
Covered Person in connection with the defense or disposition of any action,
suit or other proceeding, whether civil or criminal before any court or
administrative or legislative body, in which such Covered Person may be or
may have been involved as a party or otherwise or with which such person
may be or may have been threatened, while in office or thereafter, by
reason of being or having been such a Trustee or officer, director or
trustee, except with respect to any matter as to which it has been
determined that such Covered Person (i) did not act in good faith in the
reasonable belief that such Covered Person's action was in or not opposed
to the best interests of the Trust or (ii) had acted with wilful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of such Covered Person's office (either and
both of the conduct described in (i) and (ii) being referred to hereafter
as "Disabling Conduct"). A determination that the Covered Person is not
entitled to indemnification may be made by (i) a final decision on the
merits by a court or other body before whom the proceeding was brought that
the person to be indemnified was not liable by reason of Disabling Conduct,
(ii) dismissal of a court action or an administrative proceeding against a
Covered Person for insufficiency of evidence of Disabling Conduct, or (iii)
a reasonable determination, based upon a review of the facts, that the
indemnitee was not liable by reason of Disabling Conduct by (a) a vote of
the majority of a quorum of Trustees who are neither "interested persons"
of the Trust as defined in Section 1(a)(19) of the 1940 Act nor parties to
the proceeding, or (b) as independent legal counsel in a written opinion.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR
Information pertaining to business and other connections of Registrant's
investment advisor is incorporated by reference to the Prospectus and
Statement of Additional Information contained in Parts A and B of this
Registration Statement at the sections entitled "Management of the Fund" in
the Prospectus and "Management of the Fund" and "Investment Advisory
Services" in the Statement of Additional Information.
ITEM 29. PRINCIPAL UNDERWRITERS
None. The Registrant is currently comprised of a single no-load fund which
acts as distributor of its own shares.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All accounts and records maintained by the Registrant are kept at the
Registrant's office located at 7900 Callaghan Road, San Antonio, Texas
78229. All accounts and records maintained by Bankers Trust Company as
custodian for Accolade Funds are maintained at 16 Wall Street, New York,
New York 10005.
ITEM 31. NOT APPLICABLE
ITEM 32. UNDERTAKINGS
Registrant undertakes to call a meeting of shareholders for purposes of
voting upon the question of removal of one or more trustees when requested
in writing to do so by the holders of at least 10% of the Trust's
outstanding record shares, and in connection with such meeting to comply
with the provisions of Section 16(c) of the Investment Company Act of 1940
relating to shareholder communications.
<PAGE>
SIGNATURE PAGE
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Post-Effective Amendment to its
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and that it has duly caused this Amendment to the Registration Statement on Form
N-1A to be signed on its behalf by the undersigned, thereunto duly authorized in
the city of San Antonio, State of Texas, on this 10th day of January, 1996.
ACCOLADE FUNDS
By: /S/ FRANK E. HOLMES
--------------------------
Frank E. Holmes, President
Date: JANUARY 10, 1996
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated:
SIGNATURE TITLE DATE
/S/ FRANK E. HOLMES President January 10, 1996
- ----------------------------- Chief Executive Officer
Frank E. Holmes Trustee
/S/ RICHARD E. HUGHS Trustee January 10, 1996
- -----------------------------
Richard E. Hughs
/S/ CLARK R MANDIGO Trustee January 10, 1996
- -----------------------------
Clark R. Mandigo
/S/ BOBBY D. DUNCAN Executive Vice President January 10, 1996
- ----------------------------- Chief Operating Officer
Bobby D. Duncan Chief Financial Officer
/S/ TERESA G. ROWAN Vice President January 10, 1996
- ----------------------------- Chief Accounting Officer
Teresa G. Rowan Treasurer
/S/ THOMAS D. TAYS Attorney-In-Fact January 10, 1996
- -----------------------------
Thomas D. Tays
<PAGE>
EXHIBIT INDEX
SEQUENTIALLY
EXHIBIT NO. DESCRIPTION OF EXHIBIT NUMBERED PAGES
---------- ---------------------- --------------
(15) Consent of Independent Accountants,
Price Waterhouse LLP
(24) Power of Attorney
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Statement of
Additional Information constituting part of this Post-Effective Amendment No. 2
to the registration statement on Form N-1A (the "Registration Statement") of our
report dated November 20, 1995, relating to the financial statements and
financial highlights appearing in the September 30, 1995 Annual Report to
Shareholders of Bonnel Growth Fund, which is also incorporated by reference into
the Registration Statement. We also consent to the references to us under the
headings "Financial Highlights" and "Independent Accountants" in the Prospectus
and under the heading "Independent Accountants" in the Statement of Additional
Information.
/s/ Karl Gebert
PRICE WATERHOUSE LLP
San Antonio, Texas
January 11, 1996
POWER OF ATTORNEY
We the undersigned officers and Trustees of Accolade Funds (the "Trust"),
do hereby severally constitute and appoint Bobby D. Duncan, Frank E. Holmes,
Susan B. McGee, and Thomas D. Tays, and each of them acting singularly, as our
true and lawful attorneys, with full powers to them and each of them to sign for
us, in our names in the capacities indicated below, any Amendment to the
Registration Statement of the Trust on Form N-1A to be filed with the Securities
and Exchange Commission and to take such further action in respect thereto as
they, in their sole discretion, deem necessary to enable the Trust to comply
with the provisions of the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, and all requirements and regulations
of the Securities and Exchange Commission, hereby ratifying and confirming our
signatures as they may be signed by our said attorneys to any and all documents
related to said amendment to the Registration Statement.
IN WITNESS WHEREOF, we have hereunto set our hands on the dates indicated
below.
SIGNATURE TITLE DATE
- --------- ----- ----
/S/ FRANK E. HOLMES President, Chief January 10, 1996
- ------------------------
Frank E. Holmes Executive Officer, Trustee
/S/ CLARK R. MANDIGO Trustee January 10, 1996
- ------------------------
Clark R. Mandigo
/S/ RICHARD E. HUGHS Trustee January 10, 1996
- ------------------------
Richard E. Hughs
/S/ BOBBY D. DUNCAN Executive Vice President, January 10, 1996
- ------------------------
Bobby D. Duncan Chief Operating Officer and
Chief Financial Officer
/S/ TERESA G. ROWAN Vice President January 10, 1996
- ------------------------
Teresa G. Rowan Chief Accounting Officer,
Treasurer
