REGISTRATION NO. 33-61542
REGISTRATION NO. 811-7662
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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. 7
(Check appropriate box or boxes)
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
Post-Effective Amendment No. 7o
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 78229
(Name and Address of Agent for Service)
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Exhibit Index for exhibits filed herewith is at page .....of ....
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)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing purusant to paragraph (a)(i)
[ X] on (February 1, 1997) pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a) of Rule 485
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485.
[ ] If appropriate, check the following box:
This post-effective amendment designates a new effective date for a previously
filed post-effective amendment.
The Registrant hereby declares, pursuant to Rule 24f-2 under the Investment
Company Act of 1940, that an indefinite number of shares of beneficial interest,
no par value, is being registered by this Registration Statement, with respect
to one sub-trust of Registrant, the Bonnel Growth Fund.
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ACCOLADE FUNDS
Bonnel Growth Fund
FORM N-1A
CROSS REFERENCE SHEET
FORM N-1A
PART A CAPTION OR
ITEM NO. LOCATION IN PROSPECTUS
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1 ...................... Cover Page
2 ...................... Summary of Fees and
Expenses
3 ...................... Financial Highlights
(also covered under Item
23 in Part B)
4 ...................... Cover Page; The Trust;
Investment Objectives
and Considerations;
Special Considerations
5 ...................... Management of the Fund
5A ..................... Management's Discussion of Fund
Performance
6 ...................... Cover Page; The Trust;
Dividends and Taxes
7 ...................... How to Purchase Shares; How
Shares Are Valued; Special
Considerations - Servicing Fee
8 ...................... How to Redeem Shares
9 ...................... Management of the Fund--
the Sub-Advisor
CAPTION OR LOCATION
FORM N-1A IN PART B STATEMENT OF
ITEM NO. ADDITIONAL INFORMATION
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10 ...................... Cover Page
11 ...................... Table of Contents
12 ...................... General Information
13 ...................... Investment Objectives
and Policies
14 ...................... Management of
the Trust
15 ...................... Principal Holders of
Securities
16 ...................... Investment Advisory
Services
17 ...................... Portfolio Transactions
18 ...................... General Information
19 ...................... Not Covered in Statement of
Additional Information (Covered under
Item 7 in Part A)
20 ...................... Tax Status
21 ...................... Distribution Plan (also covered under
Item 5 in Part A)
22 ...................... Calculation of Performance Data
23 ...................... Financial Statements
(also covered under Item 3
in Part A)
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PART A -- THE PROSPECTUS
Included herein is the Prospectus for the
Accolade Funds Bonnel Growth Fund
Post-Effective Amendment No. 7
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ACCOLADE FUNDS
BONNEL GROWTH FUND
1-800-4-BONNEL (1-800-426-6635)
(INFORMATION, SHAREHOLDER SERVICES AND REQUESTS)
INTERNET: HTTP://WWW.USFUNDS.COM
PROSPECTUS
February 1, 1997
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.
SHARES OF THE TRUST ARE NOT INSURED, GUARANTEED, SPONSORED, RECOMMENDED OR
APPROVED BY THE UNITED STATES OR ANY AGENCY OR OFFICER THEREOF. Investors are
responsible for determining whether or not an investment in the Fund is
appropriate for their needs. Read and retain this prospectus for future
reference.
A Statement of Additional Information dated February 1, 1997, 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 1-800-4-BONNEL (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.
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TABLE OF CONTENTS
SUMMARY OF FEES AND EXPENSES...................................................4
FINANCIAL HIGHLIGHTS...........................................................5
INVESTMENT OBJECTIVES AND CONSIDERATIONS ......................................6
OTHER INVESTMENT PRACTICES.....................................................7
RISK FACTORS...................................................................8
HOW TO PURCHASE SHARES.........................................................9
HOW TO EXCHANGE SHARES........................................................11
HOW TO REDEEM SHARES..........................................................13
HOW SHARES ARE VALUED.........................................................17
DIVIDENDS AND TAXES...........................................................17
THE TRUST.....................................................................18
MANAGEMENT OF THE FUND........................................................19
DISTRIBUTION EXPENSE PLAN.....................................................21
PERFORMANCE INFORMATION.......................................................21
2
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
Trader's Fee (shares
held less than 30 days).................. 0.25%
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............. 0.58%
Total Fund Operating Expenses............. 1.83%
Except for active ABC Investment Plan(R) accounts, custodial accounts for minors
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.
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(1) Annual Fund Operating Expenses are based on the Fund's historical
expenses. Management Fees, Transfer Agency Fees, and Accounting Services Fees
are paid to U.S. Global Investors, Inc. (the "Advisor") and its wholly-owned
subsidiaries. The Advisor then pays a portion of the management fee to Bonnel,
Inc. (the "Sub-Advisor") for serving as Sub-Advisor. Please refer to the section
entitled Management of the Funds" for further information.
3
1 year............................... $ 29
3 years.............................. $ 67
5 years.............................. $108
10 years............................ $219
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.
FINANCIAL HIGHLIGHTS
The following per share data and ratios for a share of beneficial interest
outstanding throughout the period ended September 30, 1995 and the year ended
September 30, 1996, have been audited by Price Waterhouse LLP, the Fund's
Independent Accountants. The related financial statements and the report of
Independent Accountants are included in the Fund's 1996 Annual Report to
Shareholders and are 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 each period is as
follows:
FOR THE YEAR OCT. 17, 1994*
ENDED TO
SEPT. 30, 1996 SEPT. 30, 1995
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Per Share Operating Performance:
Net asset value, beginning of period ........ $ 14.81 $ 10.02
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Net investment loss ......................... (.14) (.07)(A)
Net realized and unrealized gain
on investments .............................. 3.13 4.91
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Total from investment operations ............ 2.99 4.84
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Dividends and distributions:
Dividends in excess of net investment income -- (.05)
Distributions in excess of net realized gains (.65) --
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Total dividends and distributions ........... (.65) (.05)
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Net asset value, end of period .............. $ 17.15 $ 14.81
========== ==========
Total Investment Return (b) ................. 21.27% 48.74%
Ratio/Supplemental Data:
Net assets, end of period (in thousands) .... $90,696 $24,673
Ratio of expenses to average net assets ..... 1.83% 2.48%(c)
Ratio of net income to average net assets ... (1.32)% (1.46)%(c)
Portfolio turnover .......................... 212% 145%
Average commission rate paid ................ $ .07 N/A
See accompanying notes to Financial Statements.
(a) Net of expense reimbursements and fee waivers.
(b) Total return does not reflect the effect of account fees.
(c) Annualized ratio is net of fee waivers. Had such reimbursements not
been made, the annualized expense ratio subject to the most restrictive
state limitation would have been 2.50% and the annualized net
investment income ratio would have been (1.52)%.
*commencement of operations.
4
INVESTMENT OBJECTIVES AND CONSIDERATIONS
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 is a
fundamental policy, and they 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 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; 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.
5
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: (i)
invest more than 5% of the value of its total assets in the securities
of any one issuer (except such limitation will not apply to obligations
issued or guaranteed by the United States Government, its agencies or
instrumentalities); nor (ii) 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. The Fund's historical portfolio turnover ratio is
presented in the "Financial Highlights" section of this prospectus. 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 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.
6
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 justify 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 seller's 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 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
7
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 appreciate 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 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 custodial accounts for minors. The minimum subsequent investment is
$50. The minimum initial investment for persons enrolled in the ABC Investment
Plan(R) (Automatically Building Capital) 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, 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 because 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 Trust reserves the
right to refuse to accept second party checks.
8
BY TELEPHONE
Once your account is open, you may make investments by telephone by calling
1-800-4-BONNEL (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 Accolade Funds by wiring
funds. To do so, call Accolade Funds at 1-800-4-BONNEL (1-800-426-6635) for a
confirmation number and wiring instructions.
BY ABC INVESTMENT PLAN(R)
The ABC Investment Plan(R) (Automatically Building Capital) is offered as a
special service allowing you to build a position in any of the United Services
family of funds over time without trying to outguess the market. Once your
account is open, you may make investments automatically by completing the ABC
Investment Plan(R) form authorizing Accolade Funds to draw on your money market
or bank account monthly for a minimum of $30 a month beginning within thirty
(30) days after the account is opened. These lower minimums are a special
service bringing to small investors the benefits of United Services Funds
without requiring a $1,000 minimum initial investment.
Your investment dollars will automatically buy more shares when the market is
undervalued and fewer shares when the market is overvalued. By investing an
equal amount at regular, periodic intervals, you avoid the extremes in the
market. Of course, using the ABC Investment Plan(R) does not guarantee a profit.
If you sell at the bottom, no system will give you a gain.
You may call 1-800-426-6635 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
United Services Funds at least two weeks before the change is to become
effective.
ADDITIONAL INFORMATION ABOUT PURCHASES
All purchases of shares are subject to acceptance by the Trust and are not
binding until accepted. Accolade Funds reserves the right to reject any
application or investment. Orders received by the Fund's transfer agent or a
sub-agent before 4:00 p.m. Eastern Time, Monday through Friday exclusive of
business holidays, and accepted by the Fund will receive the share price next
computed after receipt of the order. 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 canceled 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 Trust by reason of such cancellation.
If a check is returned unpaid due to nonsufficient funds, stop payment or other
reasons, the Trust will charge $20 and you will be responsible for any loss
incurred by the Trust with respect to canceling the purchase.
9
To recover any such loss or charge, the Trust reserves the right, without
further notice, to redeem shares of any affiliated funds already owned by any
purchaser whose order is canceled, for whatever 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" of any kind. However,
investors may purchase and sell shares through registered broker-dealers who may
charge fees for their services.
CHECKS DRAWN ON FOREIGN BANKS. To be received in good order, an investment must
be made in U.S. dollars payable through a bank in the U.S. As an accommodation,
the Fund's transfer agent may accept checks payable in a foreign currency or
drawn on a foreign bank and will attempt to convert such checks into U.S.
dollars and repatriate such amount to the Fund's account in the U.S. Your
investment in the Fund will not be considered to have been received in good
order until your foreign check has been converted into U.S. dollars and is
available to the Fund through a bank in the U.S. Your investment in the Fund may
be delayed until your foreign check has been converted into U.S. dollars and
cleared the normal collection process. Any amounts charged to the Fund for
collection procedures will be deducted from the amount invested.
If the Trust 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 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, Accolade Funds will send you a confirmation
statement, which will be your evidence that you have opened an account with
Accolade Funds. 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, Accolade Funds will issue negotiable stock
certificates. Unless your shares are purchased with wired funds, a certificate
will not be issued until 15 days have elapsed from the time of purchase, or
Accolade Funds has satisfactory proof of payment, such as a copy of your
canceled 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 in the United
Services family of funds which are registered in your state. An exchange
involves the 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.
10
FUNDS IN THE UNITED SERVICES FAMILY
Investing involves a trade-off between potential rewards and potential risks. In
order to achieve higher rewards on your investment, you must be willing to take
on higher risk. If you are most concerned with safety of principal, a lower risk
investment will provide greater stability but with lower potential earnings.
Another strategy for dealing with volatile markets is to use the ABC Investment
Plan(R). The list below is a reward and risk guide to all of the mutual funds in
the United Services family of funds. This guide may help you decide if a fund is
suitable for your investment goals.
HIGH REWARD China Region Opportunity Fund
HIGH RISK U.S. Gold Shares Fund
U.S. World Gold Fund
U.S. Global Resources Fund
Bonnel Growth Fund
U.S. Real Estate Fund
MODERATE REWARD U.S. All American Equity Fund
MODERATE RISK U.S. Income Fund
U.S. Tax Free Fund
United Services Near-Term Tax Free Fund
LOW REWARD U.S. Government Securities Savings Fund
LOW RISK U.S. Treasury Securities Cash Fund
If you have additional questions, one of our professional investor
representatives will personally assist you. Call 1-800-4-BONNEL.
BY TELEPHONE
You will automatically have the privilege to direct Accolade Funds to exchange
your shares by calling toll free 1-800-4-BONNEL (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); if either party does not employ reasonable procedures,
it may be liable for losses due to unauthorized or fraudulent transactions.
BY MAIL
You may direct Accolade Funds in writing to exchange your shares between
identically registered accounts in the United Services family of funds. 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. Retirement accounts administered by the Advisor or its
agents are charged $5 for each exchange exceeding three per quarter.
The exchange fee is charged to cover administrative costs associated
with handling these exchanges.
11
(2) An exchange involves both the redemption of shares out of the Fund
and the purchase of shares in a "Separate Fund." Like any other
purchase, shares of the Separate Fund cannot be purchased by exchange
until all conditions of purchase are met, including investable proceeds
being immediately available. Like any other redemption, the Fund
reserves the right to hold exchange proceeds for up to seven days. In
general, the Fund expects to exercise this right on exchanges of
$50,000 or more. In such event, purchase of the Separate Fund shares
will also be delayed. Separate Fund shares will be priced at their net
asset value at the time of purchase. Redemption proceeds will not be
invested in either fund during this period. In all cases Fund shares
will be redeemed immediately, however Separate Fund shares will not be
purchased until investable proceeds are available. You will be notified
immediately if the purchase will be delayed.
(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 Accolade
Funds 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) Exchanges out of the Bonnel Growth Fund of shares held less than
30 days are subject to a trader's fee. (See "Trader's Fee Paid to
Funds.")
(6) 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. Requests received in proper
order by the Trust's transfer agent or a sub-agent before 4:00 p.m. Eastern
Time, Monday through Friday exclusive of business holidays, will receive the
share price next computed after receipt of the request.
BY MAIL
A written request for redemption must be in "proper order," which requires the
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.")
12
HOW TO EXPEDITE REDEMPTIONS
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 1-800-426-6635 for more information concerning telephone redemption and a
treasury money market fund prospectus.
SPECIAL REDEMPTION ARRANGEMENTS
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 Trust at
1-800-426-6635. Telephone redemptions are available for Chairman's Circle
accounts.
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 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, including the person's printed name and
position with the 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 Trust reserves the
right to hold redemptions 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 wire charges will be higher.
13
ADDITIONAL INFORMATION ABOUT REDEMPTIONS
The redemption price may be more or less than your cost, depending on the net
asset value of the Fund's 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.
The Trust has the authority to redeem existing accounts and to refuse a
potential account the privilege of having an account in the Trust if the Trust
reasonably determines that the failure to so redeem, or to so prohibit, would
have a material adverse consequence to the Trust and its shareholders. No
account closing fee or redemption fee will be charged to investors whose
accounts are closed under this provision.
TRADER'S FEE PAID TO FUND
A trader's fee of 25 basis points or 0.25% of the value of shares redeemed or
exchanged will be assessed to shareholders who redeem or exchange shares of the
Fund held less than thirty (30) calendar days. The trader's fee will be paid to
the Fund to benefit remaining shareholders by protecting them against expenses
due to excessive trading. Excessive short-term trading has an adverse impact on
effective portfolio management as well as on 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 funds in the United Services family of funds nor does it apply to
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 Plan(R)
accounts, custodial accounts for minors, 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, the Trust may redeem all shares in any
shareholder account, other than active ABC Investment Plan(R) accounts,
custodial accounts for minors and retirement plan accounts, if, for a period of
more than three months, the account has a net asset value of $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
14
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.
CONFIRMATION STATEMENTS
Shareholders normally will receive a confirmation statement after each
transaction (purchase, redemption, dividend, etc.) showing activity in the
account. If you have no transactions, you will receive an annual statement only.
OTHER SERVICES
The Trust 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.
Application forms and brochures describing these plans and services can be
obtained from the Transfer Agent by calling 1-800-4-BONNEL (1-800-426-6635).
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.
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 for prompt service on any questions about
your account.
24-HOUR ACCOUNT INFORMATION
Shareholders can also access 24 hours a day current information on yields, share
prices, latest dividends, account balances, deposits and redemptions. Just call
1-800-4-BONNEL and press the appropriate codes into your touch-tone phone.
HOW SHARES ARE VALUED
Shares of the Fund are purchased or redeemed, on a continuing 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.
15
Eastern Time, Monday through Friday, exclusive of business holidays on which the
NYSE is closed, by dividing the aggregate net assets of the Fund 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.
Valuation will be calculated in U.S. dollars. Securities quoted in other
currencies will be converted to U.S. dollars using the exchange rate then in
effect in the principal market in which the relevant securities are traded. A
portfolio security listed or traded on an international market, either on an
exchange or over-the-counter, is valued at the last reported sales price prior
to the time when assets are valued. A portfolio security listed or traded in the
domestic market, either on an exchange or over-the-counter, is valued at the
latest 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.
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 Board of
Trustees.
Portfolio securities which are traded on more than one market are valued
according to the broadest and most representative market. Prices used to value
portfolio securities are monitored to ensure that they represent current market
values. If the price of a portfolio security is determined to be materially
different from its current market value, then such security will be valued at
fair value as determined by Management and approved in good faith by the Board
of Trustees.
Debt securities 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, regardless of the impact of fluctuating
interest rates on the market value of the instrument.
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, the 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 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 as undeliverable to
the Fund 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 gains 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.
16
The Fund generally pays dividends quarterly and distributes capital gains, if
any, annually.
The Fund is subject to a nondeductible 4 percent 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 a number of separate, diversified portfolios.
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.
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 First Amended and Restated 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.
17
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 more than five 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 the Advisor and the
Trust's Board of Trustees. The Advisor and Sub-Advisor share the management fee
equally, subject to a minimum sub-advisory fee and various offsetting
adjustments. The Fund is not responsible for paying the Sub-Advisor's fee.
Mr. Bonnel served as the portfolio manager of the MIM Stock Appreciation Fund
from August, 1987, through May, 1994. The MIM Stock Appreciation Fund is no
longer in existence. On February 28, 1993, that fund had $60.1 million in net
assets. As portfolio manager of the MIM Stock Appreciation Fund, Mr. Bonnel had
full discretionary authority over the selection of investments for that fund.
Average annual returns for the one-year, three-year, and five-year periods ended
February 28, 1994, compared with the performance of the Standard & Poor's 500
Composite Stock Price Index were:
THE MIM STOCK S&P 500
APPRECIATION FUND (A)(B) INDEX (C)
------------------------ ---------
One Year 21.58 8.31
Three Years 20.80 11.61
Five Years 20.64 13.64
(a) Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions and is net of fund
expenses.
19
(b) The expense ratio of the MIM Stock Appreciation Fund for the years
1988 through 1993 ranged from a high of 3.05 in 1988 to a low of 2.47
in 1993. The expense ratio of the Bonnel Growth Fund for the year ended
September 30, 1996 was 1.83%.
(c) The Standard & Poor's 500 Composite Stock Price Index is an
unmanaged index of common stocks that is considered to be generally
representative of the United States stock market. The
Index is adjusted to reflect reinvestment of dividends.
Historical performance is not an indication of future performance. The MIM Stock
Appreciation Fund was a separate fund, and its historical performance is not
indicative of the potential performance of the Bonnel Growth Fund. Share prices
and investment returns will fluctuate reflecting market conditions, as well as
changes in company-specific fundamentals of portfolio securities.
THE INVESTMENT ADVISOR
U.S. Global Investors, 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 United Services Funds, a
family of mutual funds with more than $1.5 billion in assets.
The Advisor provides to the Trust, and to the Funds 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 U.S. Global Investors, Inc.
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.
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, banks, trust companies and similar institutions
which provide such services and maintain an omnibus account with the Transfer
Agent, the Fund will 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 institutions, which payment will not exceed
$1.92 multiplied by the average
20
daily number of accounts holding Fund shares at the institution. 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,
as well as 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.
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 0.03% of the first 250 million average net
assets, 0.02% of the next 250 million average net assets and 0.01% of average
net assets in excess of 500 million -- subject to an annual minimum fee of
$24,000.
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 auditor expenses; 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.
Performance comparisons will not be considered as representative of the future
performance of the Fund.
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
21
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.
22
ACCOLADE FUNDS
SHARES OF THE FUND ARE SOLD
AT NET ASSET VALUE
WITHOUT SALES COMMISSIONS
OR REDEMPTION FEES
BONNEL GROWTH FUND
INVESTMENT ADVISOR
U.S. Global Investors, 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
100% No-Load
Be Sure to Retain This Prospectus.
It Contains Valuable Information.
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PART B -- STATEMENT OF ADDITIONAL INFORMATION
Included herein is the Statement of Additional Information
for the
Accolade Funds Bonnel Growth Fund
Post-Effective Amendment No. 7
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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 February 1, 1997 (the
"Prospectus"), which may be obtained from U.S. Global Investors, Inc. (the
"Advisor"), P.O. Box 29467, San Antonio, Texas 78229-0467.
The date of this Statement of Additional Information is February 1, 1997.
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
PAGE
GENERAL INFORMATION...........................................................4
INVESTMENT OBJECTIVES AND POLICIES............................................5
RISK FACTORS..................................................................6
PUT AND CALL OPTIONS..........................................................7
PORTFOLIO TURNOVER............................................................8
MANAGEMENT OF THE FUND........................................................8
INVESTMENT ADVISORY SERVICES.................................................11
TRANSFER AGENCY AND OTHER SERVICES...........................................13
DISTRIBUTION PLAN............................................................13
CERTAIN PURCHASES OF SHARES OF THE FUND......................................14
ADDITIONAL INFORMATION ON REDEMPTIONS........................................15
CALCULATION OF PERFORMANCE DATA..............................................15
TAX STATUS...................................................................16
INDEPENDENT ACCOUNTANTS .....................................................17
FINANCIAL STATEMENTS.........................................................17
2
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.
There are numerous series within the Trust, each of which represents a separate
diversified portfolio of securities (a "portfolio"). This Statement of
Additional Information ("SAI") presents important information concerning the
Bonnel Growth Fund ("Fund") and should be read in conjunction with the Fund's
prospectus.
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 the 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, will 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.
3
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
is a fundamental policy, and they 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 will 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; 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 will not be deemed loans.)
4
(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 will 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 will invest
in open-end investment companies, the Fund's advisor and
sub-advisor will waive a proportional amount of their
management fee.
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.
5
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.
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.
The 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.
6
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." 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 year ended September 30, 1996, and the period beginning October 17,
1994, (initial public offering) and ending September 30, 1995, the Fund paid
brokerage fees of $613,522 and $99,587, respectively. 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
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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.
7
Clark R. Mandigo Trustee Business consultant since 1991. From 1985
1250 N.E. Loop 410 to 1991, President, Chief Executive
Suite 900 Officer, and Director of Intelogic Trace,
San Antonio, Texas 78209 Inc., a nationwide company which sells,
leases and maintains computers and
telecommunications systems and equipment.
Prior to 1985, President of BHP Petroleum
(Americas), Ltd., an oil and gas
exploration and development company.
Director of Palmer Wireless, Inc., Lone
Star Steakhouse & Saloon, Inc. and
Physician Corporation of America.
Formerly a Director of Datapoint
Corporation. Trustee for Pauze/Swanson
United Services Funds from November 1993
to February 1996.
Frank E. Holmes1 Trustee, Chairman of the Board of Directors and
President, Chief Executive Officer of the Advisor
Chief since October 1989. President of the
Executive Advisor from October 1989 to September
Officer (1) 1995. Trustee, President and Chief
Executive Officer of United Services
Funds "USF") since October 1989. Chairman
and 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 the Advisor, and of the
Guernsey Funds managed by that Company
since August 1993. Trustee of
Pauze/Swanson United Services Funds from
November 1993 to February 1996. Director
of Franc-Or Resource Corp. from November
1994 to November 1996. 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.
----------------------
(1) This Trustee may be deemed an
"interested person" of the Trust as 8
defined in the Investment Company Act of
1940.
Bobby D. Duncan Executive President of the Advisor since September
Vice 1995 and Chief Financial Officer since
President, March 1996. Executive Vice President and
Chief Chief Financial Officer of the Advisor
Operating from October 1989 to September 1995.
Officer Chief Operating Officer since November
1993. Director of the Advisor since July
1986. 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 Chief Executive
Officer of USSI since 1993.Chief
Executive Officer, President, Chief
Operating Officer, Chief Financial
Officer, and Director of USSI. Director
of A&B Mailers, Inc., a wholly-owned
subsidiary of the Advisor, since February
1988 and Chairman since July 1991.
Executive Vice President, Chief Financial
Officer and Director of ST&FC from
November 1991 to March 1994. President,
Chief Executive Officer, and Director of
STFC since January 1996. Vice President
and Trustee of Pauze/Swanson United
Services Funds from September 1995 to
February 1996 and held various positions
prior to such date. President, Chief
Executive Officer, and Trustee of United
Services Insurance Funds since July 1994.
Director and Chief Financial Officer of
United Services Advisors Canada Inc.
since February 1995.
Susan B. McGee Vice Vice President and Assistant Secretary of
President, the Trust since September 1995. Vice
Assistant President and Secretary of the Advisor
Secretary since September 1995. Associate Counsel
since August 1994. 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.
Vice President, In-house Counsel and
Secretary of ST&FC since September 1992.
9
Kevin C. White Principal Chief Accounting Officer of the Advisor
Accounting from October 1996 to present. Chief
Officer Accounting Officer of USF from October
1996 to present. Principal Accounting
Officer of Accolade Funds from September
1996 to present. Employee of the Advisor
from November 1995 to present. Closing
Manager for World Savings and Loan from
January 1995 to November 1995. Controller
of Swearingen Aircraft from December 1991
to January 1995. Financial Analyst for
Fox Photo from February 1991 to December
1991.
Thomas D. Tays Vice President, Vice President - Special Counsel,
Secretary Securities Specialist, Director of
Compliance and Assistant Secretary of the
Advisor from September 1995 to present
and held various positions of the Advisor
prior to such date. Vice President,
Securities Specialist, Director of
Compliance and Assistant Secretary of USF
since September 1995. Vice President and
Secretary of United Services Insurance
Funds from June 1994 to present.
Secretary of Pauze/Swanson United
Services Funds from November 1993 to
February 1996. 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.
PRINCIPAL HOLDERS OF SECURITIES
As of November 20, 1996, 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 November 20, 1996.
NAME AND ADDRESS TYPE OF
FUND OF OWNER % OWNED OWNERSHIP
- ------------------ ------------------------------- ------- ---------
BONNEL GROWTH FUND Charles Schwab & Co. Inc. 15.73% Record
101 Montgomery Street
San Francisco, California 94104
INVESTMENT ADVISORY SERVICES
The investment adviser to the Funds is U.S. Global Investors, Inc. (the
"Advisor"), a Texas corporation, pursuant to an advisory agreement dated
September 21, 1994. Frank E. Holmes, Chief Executive Officer and a Directors 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.
10
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. The Fund
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 Bonnel, Inc. 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 0.25% 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 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 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
11
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. For the year ended September 30, 1996, the Fund paid USSI
a total of $124,307 for transfer agency, lockbox, and printing fees.
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." For the
year ended September 30, 1996, the Fund paid USSI a total of $24,271 for
portfolio accounting services.
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
12
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 year ended September 30,
1996, the Fund paid a total of $140,059 in distribution fees. All except a small
portion of fees were spent printing prospectuses, paying out of pocket travel
expenses, sales literature, advertising and postage to promote shares of the
Fund to the public. Distribution expenses paid by the Advisor or other third
parties in prior periods that exceeded 0.25% of net assets may be paid by the
Fund with distribution expenses accrued pursuant to the 12b-1 Distribution Plan
in the current or future periods, so long as the 0.25% limitation is never
exceeded.
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 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 will not comprise more
than 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,
13
(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
14
ERV = ending redeemable value of a
hypothetical $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 year ended September 30,
1996, and for the period from October 17, 1994, (initial public offering)
through September 30, 1995, was 21.27% and 48.74% (this number is not
annualized), respectively.
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, 1994 (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 31st of the
15
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 31st, 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 U.S. Global
Investors, 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.
16
FINANCIAL STATEMENTS
The financial statements for the year ended September 30, 1996, 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: U.S. Global Investors, Inc., P.O. Box 29467,
San Antonio, Texas 78229-0467, 1-800- 426-6635 or (210) 308-1234.
17
- --------------------------------------------------------------------------------
PART C -- OTHER INFORMATION
Included herein is Part C for
Accolade Funds
Post-Effective Amendment No. 7
- --------------------------------------------------------------------------------
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS
(1) The Financial Statements for the year ended September 30,
1996, of Accolade Funds, as examined by Price Waterhouse
LLP, are incorporated by reference from the Annual Report
to Shareholders of Accolade Funds (Bonnel Growth Fund) of
that date.
(b) EXHIBITS
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
(1) (a) First Amended and Restated Master Trust Agreement, dated
May 22, 1996, incorporated by reference to Post-
Effective Amendment No. 5 dated May 23, 1996, to
Registration Statement.
(2) By-laws, 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 to the Registration
Statement dated March 20, 1995).
(5) (a) Advisory Agreement between United Services Advisors, 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).
(b) Sub-Advisory Agreement among 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.
(c) Amendment to Advisory Agreement between Accolade Funds
and United Services Advisors, Inc. dated 1996
incorporated by reference to Post-Effective Amendment No.
5 dated May 28, 1996 to the Registration Statement.
(d) Sub-Advisory Agreement among Accolade Funds, United
Services Advisors, Inc. and Money Growth Institute, Inc.
incorporated by reference to Post-Effective Amendment No.
5 dated May 23, 1996 to the Registration Statement.
(6) Not Applicable
(7) Not Applicable
(8) (a) 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.
(b) Letter agreement with Custodian, Bankers Trust Company of
New York, adding MegaTrends Fund incorporated by
reference to Post-Effective Statement Amendment No. 6
dated October 10, 1996.
(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.
(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).
(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.
(d) Printing 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.
(e) Letter agreement between United Shareholder Services,
Inc. and Accolade Funds adding MegaTrends Fund to the
Transfer Agent Agreement, dated May 22, 1996, and
incorporated by reference to Post-Effective Amendment No.
5 dated May 28, 1996.
(10) (a) 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 Accountant, Price Waterhouse LLP,
filed herein.
(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 incorporated by reference to
Post-Effective Amendment No. 2 to the Registration
Statement, dated January 15, 1996.
(d) Power of Attorney incorporated by reference to
Poste-Effective Amendment No. 6 to Registration Statement
dated Octobeer 10, 1996.
(12) Not Applicable
(13) Not Applicable
(14) Not Applicable
(15) (a) 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.
(b) Accolade Funds/MegaTrends Fund Plan Pursuanct to Rule
12b-1, approved May 22, 1996 and incorporated by
reference to Post-Effective Amendment No. 5 dated May 28,
1996 to the Registration Statement.
(16) Schedule for computation of each performance quotation
provided in the Registration Statement in response to
Item 22 incorporated by reference to initial registration
statement dated April 15, 1993.
* Filed Herein
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 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 November 26, 1996 of each class of
securities of the Registrant.
NUMBER OF
TITLE OF CLASS RECORD HOLDERS
------------------- --------------
Bonnel Growth Fund 6158
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 adviser 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 Funds" in the Prospectus and "Investment Advisory
Services" in the Statement of Additional Information.
ITEM 29. PRINCIPAL UNDERWRITERS
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.
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. NOT APPLICABLE
- --------------------------------------------------------------------------------
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION OF EXHIBIT
(11) Consent of Independent Accountant, Price Waterhouse LLP
- --------------------------------------------------------------------------------
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(a) 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 26th of November, 1996.
ACCOLADE FUNDS
By: * /s/ Frank E. Holmes
-----------------------------------------------
FRANK E. HOLMES, President, Chief Executive Officer
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 November 26, 1996
- --------------------- Chief Executive Officer
FRANK E. HOLMES Trustee
* /s/ Clark R. Mandigo Trustee November 26, 1996
- ---------------------- Audit Committee
CLARK R. MANDIGO
* /s/ Richard E. Hughs Trustee November 26, 1996
- ---------------------- Audit Committee
RICHARD E. HUGHS
* /s/ Bobby D. Duncan Executive Vice President November 26, 1996
- --------------------- Chief Operating Officer
BOBBY D. DUNCAN
* /s/ Kevin C. White Principal Accounting Officer November 26, 1996
- --------------------
KEVIN C. WHITE
/s/ Thomas D. Tays Vice President November 26, 1996
- ------------------- Secretary
THOMAS D. TAYS
* BY: /s/ Thomas D. Tays Vice President November 26, 1996
- ------------------------ Secretary
THOMAS D. TAYS 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. 7
to the registration statement on Form N-1A (the "Registration Statement") of our
report dated November 18, 1996, relating to the financial statements and
financial highlights appearing in the September 30, 1996 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/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
San Antonio, Texas
November 26, 1996
