As filed with the Securities and Exchange Commission on , 1996
File No. 33-61542 and 811-7662
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[ ] Pre-Effective Amendment No. ...............
[ ] Pre-Effective Amendment No. ...............
(Check appropriate box or boxes)
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(Exact Name of Registrant as Specified in Charter)
ACCOLADE FUNDS/LEEB VALUE FUND
(Registrant's Telephone Number, Including Area Code)
(800) 426-6635
(Address of Principal Executive Offices)
7900 Callaghan Road
San Antonio, Texas 78229
(Name and Address of Agent for Service)
Thomas D. Tays
7900 Callaghan Road
San Antonio, Texas 78229
Approximate Date of Proposed Public Offering: Registrant proposed that this
Registration Statement will become effective pursuant to Rule 488 under the
Securities Act of 1933.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
No filing fee is required under the Securities Act of 1933 because an indefinite
number of shares of beneficial interest, without par value, has previously been
registered pursuant to Rule 24f-2 under the Investment Company Act of 1940, as
amended. The Registrant's Rule 24f-2 Notice for its most recent fiscal year was
filed on November 28, 1995.
Exhibits begin at page .
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<PAGE>
Leeb Value Fund
series of
ACCOLADE FUNDS
Cross Reference Sheet
Items Required by Form N-14
Part A. INFORMATION REQUIRED IN THE PROSPECTUS
ITEM CAPTION LOCATION IN FOLLOWING MATERIAL
----------------------------------- ------------------------------
Item 1. Beginning of Registration Statement COVER PAGE OF REGISTRATION
and Outside Front Cover Page of STATEMENT; FRONT COVER OF
Prospectus PROSPECTUS/PROXY STATEMENT
Item 2. Beginning and Outside Back Cover TABLE OF CONTENTS
Page of Prospectus
Item 3. Fee Table, Synopsis Information and SUMMARY
Risk Factors
Item 4. Information About the Transaction SUMMARY; THE PROPOSED
REORGANIZATION
Item 5. Information About the Registrant COMBINED PROXY STATEMENT AND
PROSPECTUS
Item 6. Information About the Company COVER PAGE; SUMMARY OF THE
Being Acquired PORTFOLIO OF THE LEEB VALUE
FUND; ADDITIONAL INFORMATION
ABOUT THE ACCOLADE FUNDS;
MISCELLANEOUS
Item 7. Voting Information COVER PAGE, NOTICE OF SPECIAL
MEETING OF SHAREHOLDERS;
SUMMARY; ADDITIONAL INFORMATION
RELATING TO VOTING MATTERS
Item 8. Interest of Certain Persons and THE PROPOSED REORGANIZATION
Experts
Item 9. Additional Information Required NOT APPLICABLE
for Reoffering by Persons Deemed
to be Underwriters
Part B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
Item 10. Cover Page COVER PAGE
Item 11. Table of Contents NOT APPLICABLE
Item 12. Additional Information REGISTRANT'S PROSPECTUS,
about the Registrant INCLUDED AS EXHIBIT II
Item 13. Additional Information about NOT APPLICABLE
the Company Being Acquired
Item 14. Financial Statements NOT APPLICABLE
Part C. OTHER INFORMATION
Item 15. Indemnification INCLUDED UNDER ITEM 15 OF
PART C
Item 16. Exhibits INCLUDED AT END OF EDGAR
SUBMISSION
Item 17. Undertakings SIGNATURE PAGE
SIGNATURES SIGNATURE PAGE
<PAGE>
LEEB PERSONAL FINANCE TRUST
LEEB PERSONAL FINANCE FUND
45 Rockefeller Plaza
Suite 2570
New York, New York 10111
___, 1996
Dear Shareholder:
We are pleased to invite you to attend a special meeting (the "Meeting") of
the shareholders of the Leeb Personal Finance Fund ("Personal Finance Fund"), a
series of the Leeb Personal Finance Investment Trust ( "Leeb Trust") to be held
at 7900 Callaghan Road, San Antonio, Texas 78229 on ___, 1996 at 10:00 a.m. The
Meeting has been called to consider, among other things, the approval of an
Agreement and Plan of Reorganization (the "Plan") pursuant to which the Personal
Finance Fund will be reorganized into the Leeb Value Fund ("Value Fund"), a new
series of the Accolade Funds ("Accolade Trust"), a Massachusetts business trust.
The Value Fund will have the same investment objectives and policies as the
Personal Finance Fund. If the Plan is approved by shareholders constituting a
"majority" of outstanding shares (as defined in the Investment Company Act of
1940 ["1940 Act"]), upon consummation of the reorganization, shareholders will
each receive shares of the Value Fund equal in value to the value of their
Personal Finance Fund shares at the time of the reorganization. The Plan
provides for the reorganization to be consummated on or about ___, 1996. You may
continue to purchase and redeem shares until the close of business on ___, 1996
(the business day prior to the reorganization).
Currently Leeb Investment Advisors is the investment adviser of the
Personal Finance Fund. United Services Advisors, Inc. ("USAI") will be the
investment adviser to the Value Fund, and Money Growth Institute, Inc. will be
the sub-adviser responsible for daily management of the investment portfolio.
Mr. Stephen Leeb, president of Leeb Investment Advisors, will continue to serve
as the Value Fund's portfolio manager.
The reorganization will not affect the net asset value of your investment.
On the day of reorganization, your shares of the Personal Finance Fund will be
exchanged, without cost and on a tax-free basis, for shares of equivalent value
of the Value Fund. Approval of the reorganization could result in more efficient
operations and expanded shareholder services.
Shareholders of the Value Fund will enjoy services offered by the United
Services family of funds, including exchange privileges with a number of funds
designed to meet different investment needs.
YOUR BOARD OF TRUSTEES HAS UNANIMOUSLY APPROVED THE REORGANIZATION AND
RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL CONTAINED IN THE COMBINED PROXY
STATEMENT AND PROSPECTUS ATTACHED HERETO.
Please take a moment to review the attached Combined Proxy Statement and
Prospectus. Then sign and return your proxy card in the enclosed postage paid
envelope. Remember to sign and return all proxy cards you receive whether you
are voting for or against the proxy.
We appreciate your commitment to the Leeb Personal Finance Fund, and look
forward to your continuing support as a shareholder.
Yours truly,
Stephen Leeb, President
Leeb Personal Financial Investment Trust
<PAGE>
LEEB PERSONAL FINANCE FUND
COMBINED PROXY STATEMENT AND PROSPECTUS
DATED XXXX, 1996
This combined proxy statement and prospectus includes this cover page, a
Notice of Special Meeting of Shareholders for the Leeb Personal Finance Fund, a
series of the Leeb Personal Finance Investment Trust (the "Personal Finance
Fund"), a proxy statement, a form of proxy and the current prospectus for the
Leeb Value Fund (the "Value Fund"), a newly-established series of Accolade
Funds.
The Value Fund is an open-end diversified investment company. The
investment objective of the Value Fund is the same as that of the Personal
Finance Fund, primarily to seek long-term capital appreciation consistent with
the preservation of capital. Earning current income from dividends, interest and
short-term capital gains is a secondary objective.
The principal executive offices of the Personal Finance Fund are located at
45 Rockefeller Plaza, Suite 2570, New York, NY 10111 (1-800-224-Leeb). The
principal executive offices of the Value Fund are located at 7900 Callaghan
Road, San Antonio, Texas 78229 (1-800-XXX-XXXX).
This combined proxy statement and prospectus sets forth concisely the
information that a shareholder of the Personal Finance Fund should understand
before voting on the proposed reorganization. It should be read and retained for
future reference.
The prospectuses and statements of additional information of both the
Personal Finance Fund and the Value Fund, and the 1995 annual report of the
Personal Finance Fund, including financial statements, are on file with the
Securities and Exchange Commission (the "SEC" or the "Commission"). The Value
Fund's prospectus and statement of additional information (dated XXX, 1996) are
incorporated by reference into this combined proxy statement and prospectus. The
Value Fund's prospectus is included with this document as Exhibit II. The Value
Fund's statement of additional information is available, without charge, by
writing to or calling United Services Advisors, Inc. at the number listed above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE COMMISSION
PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
NOTICE OF SPECIAL MEETING
OF SHAREHOLDERS
OF
LEEB PERSONAL FINANCE INVESTMENT TRUST
LEEB PERSONAL FINANCE FUND
Notice is hereby given that a Special Meeting of Shareholders of Leeb
Personal Finance Trust - Leeb Personal Finance Fund (the "Personal Finance
Fund") will be held in the Board Room of United Services Advisors, Inc. ("USAI"
or the "Advisor"), 7900 Callaghan Road, San Antonio, Texas 78229 on XXXX, 1996
at 9:30 a.m., Central time, for the following purposes:
ITEM 1. To approve or disapprove of a plan of reorganization providing for:
(a) the transfer of all the assets of the Personal Finance Fund to a
newly-created series of Accolade Funds named the Leeb Value Fund (the
"Value Fund") in exchange for shares of the Value Fund;
(b) the pro rata distribution of such Value Fund shares to shareholders of
the Personal Finance Fund; and
(c) the dissolution and deregistration of the Personal Finance Fund as an
investment company.
A vote in favor of Item 1 will be deemed to be a vote to authorize the
Personal Finance Fund, as the sole shareholder of the Value Fund, to:
(a) approve an Advisory Agreement between the Value Fund and the Advisor,
and a Sub-Advisory Agreement among the Fund, the Advisor, and Money
Growth Institute, Inc. (the "Sub-Advisor");
(b) approve the proposed Distribution Plan for the shares of the Value
Fund; and
(c) ratify the selection of Price Waterhouse LLP as independent accountant
of the Value Fund for the current fiscal year.
ITEM 2. To consider and act upon any other matters which may properly come
before this meeting.
By Order of the Board of Trustees
John F. Splain, Secretary
XXX, 1996
<PAGE>
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--YOUR VOTE IS IMPORTANT --
NO MATTER HOW MANY SHARES YOU OWN, PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON
THE ENCLOSED PROXY CARD, DATE AND SIGN IT, AND RETURN IT IN THE ENVELOPE
PROVIDED, WHICH IS ADDRESSED FOR YOUR CONVENIENCE AND NEEDS NO POSTAGE IF MAILED
IN THE UNITED STATES. IN ORDER TO AVOID THE ADDITIONAL EXPENSE OF FURTHER
SOLICITATION, WE ASK YOU TO COOPERATE IN MAILING YOUR PROXY PROMPTLY.
- --------------------------------------------------------------------------------
LEEB PERSONAL FINANCE FUND
A SERIES OF THE
LEEB PERSONAL FINANCE TRUST
SPECIAL MEETING OF SHAREHOLDERS
XXX, 1996
PROXY STATEMENT
The enclosed proxy ("Proxy Statement") is solicited by and on behalf of the
management of Leeb Personal Finance Trust - Leeb Personal Finance Fund (the
"Personal Finance Fund"). In addition to the solicitation of proxies by mail,
officers and employees of the Personal Finance Fund may solicit in person or by
telephone. Persons holding stock as nominees will, upon request, be reimbursed
for their reasonable expenses in sending soliciting materials to their
principals.
Holders of record as of the close of business on XXXX, 1996 are entitled to
vote at the meeting or any adjourned session. As of the record date there were
issued and outstanding approximately XXXXXXX shares of beneficial interest of
the Personal Finance Fund.
Shares represented by a properly executed proxy will be voted in accordance
with the instructions thereon, or if no specification is made, the persons named
as proxies will vote in favor of the proposals set forth in the Notice of
Meeting and Proxy Statement. Proxies may be revoked at any time before they are
exercised by the subsequent execution and submission of a revised proxy, by
written notice of revocation to the Secretary of the Personal Finance Fund, or
by voting in person at the meeting. The business address of the Personal Finance
Fund is 45 Rockefeller Plaza, Suite 2570, New York, New York 10111.
A copy of the Personal Finance Fund's annual report for the fiscal year
ended June 30, 1995, including financial statements, has been mailed to each
shareholder of the Personal Finance Fund as of the record date. This combined
proxy statement and prospectus was mailed to shareholders on or about XXXX,
1996.
ITEM 1 -- APPROVAL OR DISAPPROVAL
OF THE
PROPOSED REORGANIZATION
I. THE PROPOSED REORGANIZATION
1. REASONS FOR THE PROPOSED REORGANIZATION
The Personal Finance Fund is presently managed by Leeb Investment Advisors
("LIA"), a joint venture of PF Funds Group, Inc. (the "Funds Group") and Money
Growth Institute. Historically, the Funds Group has provided marketing and other
services to the Personal Finance Fund, whereas Money Growth Institute, owned and
controlled by Dr. Stephen Leeb, has been responsible for managing the Personal
Finance Fund's portfolio of investments. In XXX 1995, the Funds Group informed
Money Growth Institute that it was seeking to end its provision of marketing and
other services to the Personal Finance Fund. After considering whether it would
be feasible for Money Growth Institute to assume the tasks then performed by the
Fund's Group, Dr. Leeb concluded that it would be advisable to seek a new
partner to provide such marketing and other services to the Personal Finance
Fund. After discussions with a number of possible such ventures, Dr. Leeb
settled on the Advisor.
In order to maximize the benefits to the Personal Finance Fund's current
shareholders, Dr. Leeb and the Advisor proposed to create the Value Fund as a
new member of the United Services family of funds with the same investment
objective and restrictions as the Personal Finance Fund, and to sell the assets
of the Personal Finance Fund to the Value Fund in exchange for shares of the
Value Fund. As a result of this transaction, each shareholder of the Personal
Finance Fund will become a shareholder of the Value Fund, and the Value Fund
will succeed to the assets of the Personal Finance Fund. As a result of the
sub-advisory agreement between the Advisor and Money Growth Institute, Dr. Leeb
will continue to serve as portfolio manager to the Value Fund following the
transactions described herein.
The Value Fund will be a member of the United Services family of funds
whose shareholders enjoy many privileges, including exchange privileges with
other funds in the United Services family of funds. The Advisor can also
contribute marketing, legal, compliance, and administrative support beyond that
contributed by the current advisors to the Leeb Personal Finance Fund. As a
member of the United Services family of funds, the Value Fund may be more
attractive to potential shareholders than the Personal Finance Fund, leading to
an increase in net assets. An increase in net assets will generally benefit
shareholders by decreasing the fund's annual expense ratio.
NO COMMISSIONS, SALES LOADS OR OTHER SIMILAR CHARGES WILL BE INCURRED BY
SHAREHOLDERS IN CONNECTION WITH THE REORGANIZATION.
As a result of the reorganization, an account will be established for each
shareholder in the Value Fund, which will be credited with full and fractional
shares of the Value Fund equal in value to the value of the shares of the
Personal Finance Fund held by the shareholder immediately prior to the
reorganization.
Given this background, the officers and trustees of the Personal Finance
Fund have carefully evaluated the Personal Finance Fund's operational record
since inception, giving careful consideration to the risks and opportunities of
making changes. The officers and trustees have concluded that it would be in the
best interest of the Personal Finance Fund and its shareholders that the assets
of the Personal Finance Fund be acquired by the Value Fund.
2. INVESTMENT OBJECTIVES, RESTRICTIONS, AND RISKS
The investment objectives of both the Personal Finance Fund and the Value
Fund are the same; that is, the primary investment objective of the Fund is to
seek long-term capital appreciation consistent with the preservation of capital.
Earning current income from dividends, interest and short-term capital gains is
a secondary objective.
Because the investment objective and investment restrictions of the Value
Fund are identical to those of the Personal Finance Fund, an investment in the
Value Fund will involve investment risks that are substantially the same as
those of an investment in the Personal Finance Fund. The primary investment
objective of both the Personal Finance Fund and the Value Fund is to seek
long-term capital appreciation consistent with the preservation of capital.
Earning current income from dividends, interest and short-term capital gains is
a secondary objective. Both funds should be viewed essentially as equity funds,
since it is expected that, unless the fund is in a defensive posture, most of
its assets will be held in common stocks most of the time. For a more complete
description of investment risks consult the attached Value Fund prospectus,
Exhibit II.
3. THE AGREEMENT AND PLAN OF REORGANIZATION
The terms and conditions under which the proposed reorganization may be
consummated are set forth in the Agreement and Plan of Reorganization, dated
XXX, 1996, between the Personal Finance Fund and Value Fund (the "Reorganization
Agreement"). The Reorganization Agreement is attached as Exhibit I to this
combined proxy statement and prospectus.
THE CLOSING DATE
The Reorganization Agreement provides that the Value Fund will acquire all
of the assets of the Personal Finance Fund in exchange solely for shares of the
Value Fund to be issued to shareholders of the Personal Finance Fund on XXXX,
1996, or such later date as may be agreed upon by the parties (the "Closing
Date"). Shareholders in the Personal Finance Fund will be issued the same number
of full and fractional shares of the Value Fund as they held of the Personal
Finance Fund as of the close of the New York Stock Exchange on the Closing Date.
Immediately following the Closing Date, the Personal Finance Fund will dissolve
and distribute pro rata to its shareholders of record, as of the close of
business on the Closing Date, the shares of the Value Fund received by the
Personal Finance Fund.
EXPENSES OF THE REORGANIZATION
The Personal Finance Fund and Value Fund will each bear such expenses of
entering into and carrying out the provisions of the Reorganization Agreement as
will be separately incurred by it. Expenses which the Personal Finance Fund will
incur include its proposed liquidation and dissolution; and legal and accounting
fees. It is estimated that these expenses will not exceed $XXXX. The Advisor
will pay the costs of the special meeting; proxy costs (including all costs of
solicitation, printing and mailing of this Proxy Statement).
TAX CONSEQUENCES
Consummation of the proposed reorganization is conditioned upon receipt of
an opinion of Fried, Frank, Harris, Shriver & Jacobson that the acquisition will
qualify as a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended, and that the proposed reorganization will not
result in the recognition of gain or loss for Federal income tax purposes for
either the Personal Finance Fund, the Value Fund or their respective
shareholders. See Section 8(f) of the Reorganization Agreement.
ADDITIONAL INFORMATION CONCERNING THE AGREEMENT AND PLAN OF REORGANIZATION
The Reorganization Agreement provides that the Value Fund will acquire all
of the assets of the Personal Finance Fund in exchange solely for shares of
beneficial interest of the Value Fund on the Closing Date, XXXX, 1996 or such
later date as may be agreed upon by the parties. Shareholders in the Personal
Finance Fund will be issued the same number of full and fractional shares of the
Value Fund as they held of the Personal Finance Fund as of the close of the New
York Stock Exchange on the Closing Date. Personal Finance Fund shareholders will
become shareholders of the Value Fund and will receive the same dollar amount in
the Value Fund's shares as the shareholder had held in the Personal Finance
Fund.
As of the close of business on XXX, 1996, each share of the Personal
Finance Fund would have been valued at $XXXX. The Value Fund is a newly
established series of the Accolade Trust and has engaged in no business
activities prior to this transaction. Value Fund has no issued or outstanding
shares.
Immediately following the Closing Date, the Personal Finance Fund will
dissolve and distribute pro rata to its shareholders of record as of the close
of business on the Closing Date, the shares of the Value Fund received by the
Personal Finance Fund. Such liquidation and distribution will be accomplished by
the establishment of open accounts on the share records of the Value Fund in the
names of such Personal Finance Fund shareholders and representing the respective
pro rata number of shares of the Value Fund due such shareholders. Fractional
shares of the Value Fund will be carried to the third decimal place. As promptly
as practicable after the Closing Date, each holder of any outstanding
certificate or certificates representing shares of the Personal Finance Fund may
surrender the same to United Shareholder Services, Inc., as transfer agent for
the Value Fund, and request in exchange therefore a certificate representing the
number of whole shares of the Value Fund into which shares of the Personal
Finance Fund theretofore represented by the certificate or certificates so
surrendered shall have been converted. However, no fractional share certificates
will be issued. The Value Fund will issue new certificates only upon written
request. Until so surrendered, each outstanding certificate, which, prior to the
Closing Date, represented shares of the Personal Finance Fund shall be deemed
for all purposes to evidence ownership of the number of shares of Value Fund
into which the former shares of the Personal Finance Fund have been converted.
The consummation of the Reorganization Agreement is further subject to the
customary conditions applicable to corporate reorganizations of this type as set
forth in Section 8 of the Reorganization Agreement. Moreover, the Reorganization
Agreement may be terminated and the reorganization abandoned at any time, before
or after consent of the two parties, or by either party if any condition set
forth in Section 8 has not been fulfilled by the other party or waived by the
party entitled to its benefits.
4. SUMMARY OF FUND FEES AND EXPENSES
The following summary is provided to assist you in understanding the various
costs and expenses a shareholder in the Personal Finance Fund or Value Fund
could bear directly or indirectly.
PERSONAL
FINANCE VALUE
FUND FUND
-------- -----
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load .................................. None None
Redemption Fee ...................................... None None
Administrative Exchange Fee ......................... $0 $ 5
Account Closing Fee (does not apply to exchanges) ... $0 $10
Wire Transfer Fee ................................... $8 $10
Trader's Fee (shares held less than 30 days) ........ 0% 0.25%
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees ..................................... 1.00% 1.00%
12b-1 Fees .......................................... 0.00% 0.25%
Other Expenses, including Transfer Agency ........... 0.98% 0.71%
and Accounting Services Fees
Total Fund Operating Expenses ....................... 1.98% 1.96%
Annual fund operating expenses for the Personal Finance Fund are based upon
operating results for the fiscal year ended June 30, 1995, adjusted for waiver
of management fees. After voluntary fee waivers the Personal Finance Fund had
net management fees of 0.52% and total fund operating expenses of 1.50%.
Annual fund operating expenses for the Value Fund are based upon a
restatement of operating results for the Personal Finance Fund's June 30, 1995
fiscal year end. The restatement is an estimate of the results which the
Personal Finance Fund might have achieved had it been operating as a series of
the Accolade Trust with the proposed agreements in place. The Value Fund does
not intend to waive or reduce its total fund operating fees.
5. SHAREHOLDER RIGHTS
The Value Fund is a Massachusetts business trust and the Personal Finance
Fund is an Ohio business trust. Shareholders' rights are determined by their
respective Declarations of Trust, ByLaws and applicable state law. Shares of
both funds are fully paid and nonassessable. Holders thereof have noncumulative
voting rights and equal rights with respect to dividends, assets and
liquidations, but no preemptive rights. Neither fund is required to hold annual
meetings of shareholders.
Under Ohio law, the shareholders of the Leeb Trust are statutorily
protected against personal liability for the obligations of the Leeb Trust.
Under Massachusetts law, the shareholders of the Accolade Trust could, under
certain circumstances, be held personally liable for the obligations of the
Accolade Trust. However, the Master Trust Agreement disclaims shareholder
liability for acts or obligations of the Accolade Trust and requires that notice
of such disclaimer be given in each agreement, obligation or instrument entered
into or executed by the Accolade Trust or the trustees. The Master Trust
Agreement provides for indemnification out of the Accolade Trust's property for
all losses and expenses of any shareholder held personally liable for the
obligations of the Accolade Trust. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is limited to circumstances
in which the Accolade Trust itself would be unable to meet its obligations.
Trustees of the Leeb Trust have unlimited tenure. The Board of Trustees of
the Accolade Trust has staggered terms so that the tenure of at least 25% of the
trustees expire every three years. The Accolade trustees serve in that capacity
for six-year terms. Thus, neither Trust ordinarily will hold shareholder
meetings unless otherwise required by the Investment Company Act of 1940.
Shareholders of the Personal Finance Fund will not be entitled to any
"dissenters rights" under Ohio law since the reorganization is between two
open-end investment companies registered under the Investment Company Act of
1940. However, shareholders who find that the proposed reorganization does not
meet their particular investment needs and objectives may consider two
additional options: (1) exchanging their holdings without sales commissions into
another mutual fund in the United Services family of funds which is better
suited to their goals; or (2) redeeming shares for cash. These options are
available to a Personal Finance Fund shareholder after the reorganization.
Exchanges and redemptions are both taxable events so either action will result
in the realization of a capital gain or capital loss to the shareholder,
depending upon the original cost basis of the shareholder's investment.
6. CAPITALIZATION
The following table shows the capitalization of the Personal Finance Fund
and Value Fund as of XXXX, 1996, and on a pro forma basis as of that date giving
effect to the proposed acquisition of assets at net asset value.
PERSONAL
FINANCE VALUE PRO FORMA
FUND FUND COMBINED
---- ---- --------
Net Assets (000).................... $xxx $xxx $xxx
Net Assets Per Share.............. $xxx $xxx $xxx
Shares Outstanding (000)....... xxx xxx xxx
The relative net asset values do not include the respective expenses of
each fund connected with the reorganization; however, such expenses would not be
expected to cause the net asset value to change by more than $.01 per share for
either fund.
Pro forma financial statements have not been prepared because the Value
Fund has no assets and has not engaged in any operations, other than preparatory
corporate actions such as filing a registration statement and preparing for the
asset transfer with the Personal Finance Fund.
II. ADDITIONAL INFORMATION ON
THE PERSONAL FINANCE FUND
AND THE VALUE FUND
1. BACKGROUND
The Personal Finance Fund made its initial public offering October 21,
1991. The objective in forming the Personal Finance Fund was to provide
investors with an opportunity to have their money managed in conformance with
principals developed by Dr. Stephen Leeb.
The Value Fund was organized in 1996 as a new series of Accolade Funds. The
objective in forming the Value Fund was to combine the marketing, legal,
compliance and administrative expertise of the United Services family of funds
with an opportunity to manage money in conformance with principles developed by
Dr. Stephen Leeb.
2. INVESTMENT OBJECTIVE AND LIMITATIONS
The primary objective of the Personal Finance Fund is to seek long-term
capital appreciation consistent with the preservation of capital. Earning
current income from dividends, interest and short-term capital gains is a
secondary objective. The Fund's investment objectives are fundamental and as
such may not be changed without the affirmative vote of the holders of a
majority of its outstanding shares as defined in the Investment Company Act of
1940.
The Value Fund, which has not yet commenced operations, has investment
objectives identical to those of the Personal Finance Fund. The primary
objective of the Value Fund is to seek long-term capital appreciation consistent
with the preservation of capital. Earning current income from dividends,
interest and short-term capital gains is a secondary objective. See "Investment
Objectives, Investment Policies, and Risk Considerations" in the Value Fund
prospectus.
The Value Fund's investment limitations are identical to the Personal
Finance Fund's investment limitations. The investment limitations for Value Fund
are described in the section entitled "Investment Objectives, Investment
Policies, and Risk Considerations" in the Value Fund's prospectus and in the
section entitled "Investment Limitations" of its statement of additional
information.
3. INVESTMENT ADVISOR AND SUB-ADVISOR
The Personal Finance Fund employs Leeb Investment Advisors ("LIA") to
manage the investment and reinvestment of the assets of the fund and to
continuously review, supervise and administer the Fund's investment program. LIA
discharges its responsibilities subject to the control of the officers and
trustees of the Personal Finance Fund. Dr. Stephen Leeb serves as portfolio
manager of the fund.
The Personal Finance Fund pays LIA a fee at an annual rate of 1% of the
average value of the Fund's daily net assets. For the fiscal year ended June 30,
1995 the Personal Finance Fund paid LIA management fees equal to 0.52% (after
waivers) of the average net assets of the fund.
During the fiscal years ended June 30, 1995, 1994 and 1993, the Personal
Finance Fund paid advisory fees of $245,252; $371,602; and $204,936 net of
voluntary fee waivers.
The Value Fund employs United Services Advisors, Inc. (the "Advisor") to
manage its affairs. The Advisor will contract with Money Growth Institute, Inc.
(the "Sub-Advisor") to manage the Value Fund's investment portfolios subject to
oversight by the Advisor and the Board of Trustees. To date the Accolade Trust
has paid the Advisor $0.00 for its services to the Value Fund; the Accolade
Trust has paid the Advisor for its services to a separate fund in the Accolade
Trust.
The Advisor and Sub-Advisor and the advisory agreements are discussed in
this proxy in the section entitled "Advisory and Sub-Advisory Agreements."
The Value Fund is a member of the United Services family of funds.
Shareholders may exchange Value Fund shares for shares in other funds in the
United Services family of funds. Shareholders are also entitled to a broad range
of other services. See the section entitled "How to Exchange Shares" in the
Value Fund prospectus.
4. TRANSFER AGENT, BOOKKEEPING AND ACCOUNTING, AND ADMINISTRATIVE SERVICES
The Personal Finance Fund has retained MGF Service Corp. ("MGF"), P.O. Box
5354, Cincinnati, Ohio, to serve as its transfer agent, dividend paying agent
and shareholder service agent. MGF receives for its services as transfer agent a
fee payable monthly at an annual rate of $14 per account, provided, however,
that the minimum fee is $1,000 per month.
MGF Service Corp. also provides accounting and pricing services to the
Personal Finance Fund. MGF Service Corp. receives $3,400 per month from the Fund
for calculating daily net asset value per share.
In addition, MGF Service Corp. has been retained to provide administrative
services to the Personal Finance Fund. In this capacity, MGF Service Corp.
supplies executive, administrative and regulatory services, supervises the
preparation of tax returns, and coordinates the preparation of reports to
shareholders and reports to and filings with the Securities and Exchange
Commission and state securities authorities. The Fund pays MGF Service Corp. a
fee for these administrative services at the annual rate of 0.2% of the average
value of its daily net assets up to $100 million; 0.175% of such assets from
$100 million to $200 million; and 0.15% of such assets in excess of $200
million, provided, however, that the minimum fee is $1,000 per month.
The Value Fund has retained United Shareholder Services Inc. ("USSI"), a
wholly-owned subsidiary of the Advisor, to serve as its transfer agent, dividend
paying agent and shareholder service agent. USSI receives for its services as
transfer agent a fee payable monthly at an annual rate of $23 per account, with
no minimum fee.
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.
The Advisor provides administrative services to the Value Fund at no
additional cost.
5. EXPENSE RATIOS
On XXXX, 1996, the Personal Finance Fund had total net assets of
approximately $XX million. For the fiscal year ended June 30, 1995, the Personal
Finance Fund had an expense ratio of 1.98 % of its average net assets prior to
waivers of management fees. The expense ratio for the Value Fund is projected to
be 1.96% of its average net assets, based upon a projection of $40 million in
average net assets.
6. PURCHASE, REDEMPTION AND EXCHANGE PROCEDURES
Purchase and redemption procedures for the Personal Finance Fund and Value
Fund are similar. Shareholders in either fund may purchase or redeem shares at
their net asset value, without sales charge or commission, on any business day
the fund is open. In addition, as members of the United Services family of
funds, Value Fund shareholders enjoy exchange privileges which the shareholders
of the Personal Finance Fund do not have.
The Personal Finance Fund requires an initial investment of at least $2,500
while $5,000 is required for an initial purchase in the Value Fund. The Value
Fund will waive its $5,000 investment minimum for Personal Finance Fund
shareholders owning less than $5,000 of the Personal Finance Fund as of Closing
Date.
7. INCOME, DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
Both the Personal Finance Fund and Value Fund pay income dividends, if any,
semi-annually and pay capital gains, if any, annually. Shareholders may elect to
accept such dividends in additional shares or take them in cash.
8. LITIGATION
The Value Fund is not involved in any litigation.
On May 2, 1995, the Securities and Exchange Commission instituted
administrative proceedings against several parties affiliated with the Personal
Finance Fund, including Dr. Leeb. The order initiating the proceedings alleged
that PF Funds Group, Inc. violated Section 17(a) of the Securities Act of 1933,
Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder,
and Section 34(b) of the Investment Company Act of 1940 and alleged that certain
of the other Respondents caused and willfully aided and abetted such violations.
The order alleged that Respondents carried out a marketing strategy for the
Personal Finance Fund that allegedly defrauded or operated as a potential fraud
of actual and potential Fund investors. The order alleged that this marketing
strategy involved the use of allegedly false advertisements concerning the
Master Key, a market-timing program.
Without admitting or denying any of the SEC's charges, Dr. Leeb and all
other respondents agreed to an Offer and Settlement and to the issuance on
January 16, 1996 of an Order Making Findings and Imposing Remedial Sanctions and
a Cease and Desist Order. The SEC concluded that Dr. Leeb and other parties
failed to adequately review or to take steps to ensure the accuracy of the
advertisements and, accordingly, concluded that Dr. Leeb and others aided and
abetted and caused the violations of Section 17(a)(2) of the Securities Act and
Section 34(b) of the 1940 Act. Dr. Leeb and others were each censured, and each
agreed to pay a $60,000 civil money penalty and to cease and desist from
committing or causing any future violation of Section 17(a)(2) or Section 34(b).
In addition, the parties agreed to implement new procedures to ensure the
accuracy of future advertising. Neither the Personal Finance Fund nor the
Sub-Advisor was a party to the proceeding.
In February, 1995 the Sub-Advisor reached an agreement in principle to
resolve a contemplated administrative proceeding, providing for the Sub-Advisor
and Dr. Leeb, without admitting or denying the allegations of the SEC, to
consent to a cease and desist order concerning alleged violations of certain SEC
record keeping regulations, payment of a fine, a censure of both the Sub-Advisor
and Dr. Leeb, and an undertaking to implement the appropriate steps to correct
these alleged record keeping deficiencies. Such agreement in principle is
subject to acceptance by the SEC in the form of formal order and formal offer of
settlement by the Sub-Advisor and Dr. Leeb.
Three states issued orders against the Sub-Advisor for conducting advisory
business in their states without prior registration as an investment adviser.
The Sub-Advisor agreed to cease and desist such practice, paid fines, and
registered in each state.
9. PORTFOLIO BROKERAGE
A. THE PERSONAL FINANCE FUND
The Personal Finance Fund directs substantially all of its
portfolio transactions through Brimberg & Co., L.P., 540 Madison
Avenue, New York, New York ( the "Underwriter"). The Underwriter
serves as principal underwriter for the Personal Finance Fund and, as
such, is the exclusive agent for the distribution of shares of the
Personal Finance Fund. Although the Underwriter receives no direct
compensation from the Fund for serving as principal underwriter, the
Underwriter executes securities transactions on a "best execution"
basis for the Fund's portfolio securities. Francis A. Mlynarczyk, Jr.,
Executive Vice President of the Fund and Chief Administrative Officer
of the Adviser, is a general partner in the Underwriter. Money Growth
Institute, Inc., a partner in the Adviser, is among the limited
partners in the Underwriter. During the fiscal year ended June 30,
1995, the Personal Finance Fund had a portfolio turnover ratio of
165%.
Consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., and subject to its objective
of seeking best execution of portfolio transactions, the adviser to
the Personal Finance Fund may give consideration to sales of shares of
the Personal Finance Fund as a factor in the selection of brokers and
dealers to execute portfolio transactions of the Personal Finance
Fund. Subject to the requirements of the Investment Company Act of
1940 and procedures adopted by the Board of Trustees, the Personal
Finance Fund may execute portfolio transactions through any broker or
dealer and pay brokerage commissions to a broker which is (i) an
affiliated person of the Personal Finance Fund, or (ii) an affiliated
person of such person, or (iii) an affiliated person of an affiliated
person of the Personal Finance Fund, its adviser, or the Underwriter.
Decisions to buy and sell securities for the Personal Finance
Fund and the placing of the Personal Finance Fund's securities
transactions and negotiation of commission rates, where applicable,
are made by LIA and are subject to review by the Board of Trustees of
the Personal Finance Fund. In the purchase and sale of portfolio
securities, LIA seeks best execution for the Personal Finance Fund,
taking into account such factors as price (including the applicable
brokerage commission or dealer spread), the execution capability,
financial responsibility and responsiveness of the broker or dealer
and the brokerage and research services provided by the broker or
dealer. LIA generally seeks favorable prices and commission rates that
are reasonable in relation to the benefits received. For the fiscal
years ended June 30, 1995, 1994 and 1993, the Personal Finance Fund
paid brokerage commissions of $95,561; $135,045; and $45,696;
respectively.
Generally, the Personal Finance Fund attempts to deal directly
with the dealers who make a market in the securities involved unless
better prices and execution are available elsewhere. Such dealers
usually act as principals for their own account. On occasion,
portfolio securities for the Personal Finance Fund may be purchased
directly from the issuer.
LIA is specifically authorized to select brokers who also provide
brokerage and research services to the Personal Finance Fund and/or
other accounts over which LIA exercises investment discretion and to
pay such brokers a commission in excess of the commission another
broker would charge if LIA determines in good faith that the
commission is reasonable in relation to the value of the brokerage and
research services provided. The determination may be viewed in terms
of a particular transaction or LIA's overall responsibilities with
respect to the Personal Finance Fund and to accounts over which it
exercises investment discretion.
Research services include securities and economic analyses,
reports on issuers' financial conditions and future business
prospects, newsletters and opinions relating to interest trends,
general advice on the relative merits of possible investment
securities for the Personal Finance Fund and statistical services and
information with respect to the availability of securities or
purchasers or sellers of securities. Although this information is
useful to the Personal Finance Fund and LIA, it is not possible to
place a dollar value on it. Research services furnished by brokers
through whom the Fund effects securities transactions may be used by
LIA in servicing all of its accounts, and not all such services may be
used by the Adviser in connection with the Fund.
The Personal Finance Fund has no obligation to deal with any
broker or dealer in the execution of securities transactions. However,
the Underwriter, LIA, and other affiliates of the Personal Finance
Fund, may effect securities transactions which are executed on a
national securities exchange or transactions in the over-the-counter
market conducted on an agency basis. The Personal Finance Fund's
former underwriter, Midwest Group Financial Services, Inc. ("Midwest
Group," formerly Leshner Financial Services, Inc.), may be deemed to
be an affiliate of the Personal Finance Fund by reason of having
certain officers in common.
During the fiscal year ended June 30, 1995, the Personal Finance
Fund paid to the Underwriter brokerage commissions of $94,361 (which
equals 98.7% of the total brokerage commissions paid by the Personal
Finance Fund ) for effecting 99.4% of the Personal Finance Fund's
portfolio transactions involving the payment of brokerage commissions.
During the fiscal years ended June 30, 1994 and 1993, the Personal
Finance Fund paid to the Underwriter brokerage commissions of $135,045
and $40,374, respectively. During the fiscal year ended June 30, 1995,
the Personal Finance Fund paid to Midwest Group Financial Services,
Inc. brokerage commissions of $1,200 (which equals 1.3% of the total
brokerage commissions paid by the Personal Finance Fund) for effecting
0.6% of the Personal Finance Fund's portfolio transactions involving
the payment of brokerage commissions. During the fiscal years ended
June 30, 1994 and 1993, the Personal Finance Fund paid to Midwest
Group Financial Services, Inc. brokerage commissions of $0 and $2,658,
respectively. The Personal Finance Fund will not effect any brokerage
transactions in its portfolio securities with the Underwriter or
Midwest Group Financial Services, Inc. if such transactions would be
unfair or unreasonable to its shareholders. Over-the-counter
transactions will be placed either directly with principal market
makers or with broker-dealers. Although the Personal Finance Fund does
not anticipate any ongoing arrangements with other brokerage firms,
brokerage business may be transacted from time to time with other
firms. Neither the Underwriter nor affiliates of the Personal Finance
Fund, LIA or the Underwriter will receive reciprocal brokerage
business as a result of the brokerage business transacted by the
Personal Finance Fund with other brokers.
B. THE VALUE FUND
In executing portfolio transactions and selecting brokers or
dealers, the Value Fund will seek 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 Value 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 Value Fund places portfolio transactions, the Advisor or
Sub-Advisor may be relieved of expenses which they might overwise
bear.
Decisions to buy and sell securities for the Value Fund and the
placing of the Value Fund's securities transactions and negotiation of
commission rates, where applicable, will be made by the Sub-Advisor
and are subject to review by the Value Fund's Advisor and Board of
Trustees. In the purchase and sale of portfolio securities, the
Sub-Adviser will seek best execution for the Value Fund, taking into
account such factors as price (including the applicable brokerage
commission or dealer spread), the execution capability, financial
responsibility and responsiveness of the broker or dealer and the
brokerage and research services provided by the broker or dealer. The
Sub-Advisor will generally seek favorable prices and commission rates
that are reasonable in relation to the benefits received.
Generally, the Value Fund will attempt to deal directly with the
dealers who make a market in the securities involved unless better
prices and execution are available elsewhere. Such dealers usually act
as principals for their own account. On occasion, portfolio securities
for the Fund may be purchased directly from the issuer.
Research services include securities and economic analyses,
reports on issuers' financial conditions and future business
prospects, newsletters and opinions relating to interest trends,
general advice on the relative merits of possible investment
securities for the Value Fund and statistical services and information
with respect to the availability of securities or purchasers or
sellers of securities. Although this information is useful to the
Value Fund and the Advisor or Sub-Advisor, it may not be possible to
place a dollar value on it. Research services furnished by brokers
through whom the Value Fund effects securities transactions may be
used by the Advisor or Sub-Advisor in servicing all of its accounts
and not all such services may be used by the Advisor or Sub-Advisor in
connection with the Value Fund.
10. PERSONAL FINANCE FUND FINANCIAL HIGHLIGHTS
The following per share data and ratios for a share of beneficial interest
outstanding throughout each fiscal period has been audited by Arthur Andersen
LLP. The related unaudited financial statements are available upon request and
have been incorporated by reference into the statement of additional information
("SAI"). In addition to the data set forth below, further information about the
performance of the Fund is contained in the SAI which may be obtained without
charge.
Per share data for a share outstanding throughout each period is as
follows:
<TABLE>
<CAPTION>
PERIOD ENDED
YEAR ENDED JUNE 30,
----------------------------------- JUNE 30,
1995 1994 1993 1992(A)
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net asset value at beginning of period....................$10.29 $10.84 $10.36 $10.00
------ ------ ------ ------
Income from investment operations:
Net investment income..................................0.28 0.19 0.15 0.16
Net realized and unrealized gains (losses)............0.95 (0.35) 0.55 0.51
on investments
Total from investment operations............................1.23 (0.16) 0.70 0.67
------ ------ ------ ------
Dividends and distributions:
Dividends from net investment income(B)........... ...(0.28) (0.19) (0.15) (0.16)
Distributions from net realized gains(B).............. -- (0.20) (0.07) (0.15)
In excess of net realized gains.......................(0.07) -- -- --
------ ------ ------ ------
Total dividends and distributions..........................(0.35) (0.39) (0.22) (0.31)
------ ------ ------ ------
Net asset value at end of period ....................... $11.17 $10.29 $10.84 $10.36
====== ====== ====== ======
Total return ........................................... 12.20% (1.50%) 6.79% 7.94%(D)
====== ====== ====== ======
Net assets at end of period(000s).....................$32,976.00 $45,523.00 $58,955.00 $28,340.00
========== ========== ========== ==========
Ratio of expenses to average net assets(C)..................1.50% 1.50% 1.50% 1.47%(D)
Ratio of net investment income to average ..................2.36% 1.65% 1.60% 2.21%(D)
net assets
Portfolio turnover rate...................................163.00% 143.00% 83.00% 75.00%(D)
<FN>
(A) Represents the period from the date of public offering (October 21, 1991) through June 30, 1992. No income was earned or
expenses incurred from the start of business through the date of public offering.
(B) For the period ended June 30, 1992, the per share data was calculated using average shares outstanding throughout the period,
whereas for subsequent periods, the per share data was calculated based upon actual distributions. For the period ended June
30, 1992, actual distributions per share from net investment income and from net realized gains from security transactions
amounted to $.11 and $.08, respectively.
(C) Ratios of expenses to average net assets assuming no waiver of fees or reimbursement of expenses by the Adviser was 1.98%,
1.81%, 1.95%, and 2.71%(D) for the periods ended June 30, 1995, 1994, 1993, and 1992, respectively.
(D) Annualized.
</FN>
</TABLE>
11. FINANCIAL STATEMENTS AND EXPERTS
The financial statements of the Personal Finance Fund have been audited by
Arthur Andersen LLP, independent accountant, for the periods indicated in said
firm's reports thereon which are included in the 1995 annual report to
shareholders. Such financial statements have been referred to herein in reliance
on the reports of Arthur Andersen LLP given on the authority of said firm as
experts in auditing and accounting.
12. INFORMATION FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
The Personal Finance Fund and Value Fund are subject to the informational
requirements of the Securities and Exchange Act of 1934 and the Investment
Company Act of 1940, and in accordance therewith, file reports, proxy material
and other information with the Securities and Exchange Commission. Such reports,
proxy material and other information can be inspected and copied at the Public
Reference Room maintained by the Securities and Exchange Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, and copies of such material can be
obtained at prescribed rates from the Public Reference Section of the Securities
and Exchange Commission, Washington, D.C. 20549.
III. ADVISORY AND SUB-ADVISORY AGREEMENTS
1. BACKGROUND
The Accolade Board of Trustees, including a majority of the independent
trustees, has determined that it is in the best interest of shareholders of the
Value Fund to approve advisory and sub-advisory agreements with the Advisor and
Sub-Advisor. Accolade trustees considered the Advisor's and Sub-Advisor's
investment capabilities and performance, marketing, legal, compliance and
administrative support, the amount of the fee relative to similar mutual funds,
and other factors in arriving at their decision. Dr. Stephen Leeb will continue
as the Value Fund's portfolio manager and the Advisor provides substantial
marketing, legal, compliance, and administrative capabilities.
Shareholders of the Personal Finance Fund are being asked to consider and
authorize Personal Finance Fund to approve advisory and sub-advisory agreements
as required by the Investment Company Act of 1940 (the "1940 Act"). If both
agreements are approved by shareholders, effective XXX, 1996 (or as soon as
possible thereafter), the Value Fund will contract with the Advisor and
Sub-Advisor to serve as advisor and sub-advisor for the Value Fund.
If approved by shareholders, the Advisory and Sub-Advisory agreements will
continue for an initial two-year period. The agreements are renewable thereafter
for successive one year periods, only if each renewal is specifically approved
by a vote of the Board of Trustees, including the affirmative vote of a majority
of the trustees who are not parties to the contract or "interested persons" (as
defined in the 1940 Act) of any such party, cast in person at a meeting called
for the purpose of considering such approval. The agreements are automatically
terminated if assigned, and may be terminated without penalty at any time (1)by
vote of the Board of Trustees of the Value Fund upon 60 days' written notice to
the Advisor or Sub-Advisor, (2) by the Advisor upon 60 days' written notice to
the Value Fund and/or Sub-Advisor, or (3) by the Sub-Advisor on 90 days' written
notice to the Value Fund and the Advisor.
2. THE ADVISOR AND ADVISORY AGREEMENT
The Advisor 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 adviser to the United Services Funds, a family
of mutual funds with over $1.3 billion in assets.
The Advisor provides to the Trust, and to the 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 Value 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. The
Advisor will pay the costs of the special meeting and proxy costs (including all
costs of solicitation, printing and mailing of this proxy statement).
Investment decisions for the Value Fund are made independently from those
of other investment companies advised by United Services Advisors, Inc.
The Advisory Agreement with the Trust provides for the Value 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 the Value 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.
It is proposed that United Shareholder Services Inc., a wholly owned
subsidiary of the Advisor, will provide transfer agent and bookkeeping and
accounting services to the Value Fund. See "Management of the Fund" for more
information concerning the Advisor.
In addition to the management fee, under the Advisory Agreement the Value
Fund will continue to pay its own or its portion of each of the following types
of expenses of the Accolade Trust which are properly allocated to such fund: its
taxes (if any); brokerage commissions on portfolio transactions; custodian fees;
extraordinary expenses; expenses of issuance and redemption of shares; charges
of transfer agents and dividend disbursing agents; expenses of shareholders and
trustees' meetings and of preparing, printing and mailing proxy materials;
auditing and legal expenses; certain expenses of registering and qualifying
shares for sale; fees of independent trustees; expenses of attendance by
officers and trustees at professional meetings of the Investment Company
Institute, the 100% No-Load Mutual Fund Council, or similar organizations, and
membership dues of such organizations; costs of typesetting, printing and
mailing the prospectus and periodic reports to current shareholders; fidelity
bond premiums; costs of maintaining the books and records of the Trust; and any
other charges and fees not specifically enumerated.
The Advisory Agreement provides that the Advisor shall reimburse the Value
Fund for expenses of the funds, inclusive of the management fee but exclusive of
interest, taxes, brokerage fees and extraordinary items, which exceed the lowest
expense limitation required by any state in which a fund is then making sales of
its shares or in which its shares are then qualified for sale. The State of
California has the most restrictive expense limitation, which on an annual basis
is currently equal to 2.5% of the first $30 million of net assets of such fund,
2% of the next $70 million of net assets, and 1.5% of the remaining average net
assets. At the end of the fiscal year, if the aggregate annual expenses
chargeable to a fund for that year exceed the amount permissible under the
foregoing limitation, then the Advisor will be required to reimburse the fund.
Such reimbursement will not be recovered by the Advisor in subsequent years. A
copy of the Advisory Agreement is included as Exhibit III.
PRINCIPAL DIRECTORS AND EXECUTIVE OFFICERS OF UNITED SERVICES ADVISORS, INC.
("ADVISOR")
NAME POSITION WITH THE ADVISOR--PRINCIPAL OCCUPATION
- ----------------- ------------------------------------------------------------
Jerold Rubinstein Mr. Rubinstein has been a Director of the Company since
October 1989. Since May 1986 he has served as Chairman of
the Board of Directors and as Chief Executive Officer of DMX
Inc., (formerly International Cablecasting Technologies,
Inc.), a publicly-traded media technology company.
Roy D. Terracina Director of the Company since December 1994. Director of
Security Trust & Financial Company since August 1992. Owner
of Sunshine Consulting, investment firm, since January 1994.
Owner/President of Sterling Foods, Inc., food manufacturer,
from May 1984 to December 1993.
Frank E. Holmes Chairman of the Board of Directors and Chief Executive
Officer of United Services Advisors from October 1989 to
present. Has held and continues to hold various executive
positions with United Services Advisors, Inc. and its
affiliates (including mutual funds) since 1989. Bobby D.
Duncan President of United Services Advisors, Inc. since
September 1995, Chief Operating Officer since 1993, and
Chief Financial Officer since March 1996. Has held and
continues to hold various executive positions with United
Services Advisors, Inc. and its affiliates (including mutual
funds) since 1985.
Victor Flores Vice President, Chief Investment Officer and Director of
United Services Advisors, Inc. since February 1994. Has held
and continues to hold various executive positions with
United Services Advisors, Inc. and its affiliates (including
mutual funds) since January 1988.
The business address of each person above is United Services Advisors, Inc.,
7900 Callaghan, San Antonio, TX 78229.
3. PROPOSED SUB-ADVISOR AND SUB-ADVISORY AGREEMENT
Money Growth Institute, Inc., under an investment sub-advisory agreement
with the Trust dated XXXXX, 1996, furnishes investment advice and serves as
Sub-Advisor for the Value Fund. Dr. Stephen Leeb, president of the Sub-Advisor
and its controlling shareholder, is, and since the Fund's inception on October
21, 1991, has been the Fund's portfolio manager. 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.
In consideration for such services, the Advisor will pay the Sub-Advisor
for one year from the date of the Sub-Advisory Agreement a fee, on an annual
basis, of (1) 1% of Fund assets of $40 million or less, (2) 75 basis points on
assets between $40 and $50 million, and (3) 50 basis points on assets of $50
million and over. After one year, the Sub-Advisor will receive a fee, on an
annual basis, of 50 basis points on all assets. A copy of the Sub-Advisory
Agreement is attached as Exhibit IV.
Prior to the effective date of the current Sub-Advisory, the Personal
Finance Fund compensated LIA, an affiliate of the Sub-Advisor, at an annual rate
of 1% of average net assets. However, through XXX, 1996, LIA agreed to waive a
portion of its advisory fees so as to limit the Personal Finance Fund's total
operating expense ratio to 1.50%.
Dr. Leeb has been engaged in the business of providing investment advisory
and portfolio management services for approximately 19 years. The business
address of the Sub-Advisor is 45 Rockefeller Plaza, Suite 2570, New York, New
York 10111. As the Fund's portfolio manager, Dr. Leeb is primarily responsible
for the day-to-day investment management of the Value Fund. The Sub-Advisor is
an investment advisor with assets under management of approximately $42 million
as of May 1, 1996, apart from the Personal Finance Fund. Dr. Leeb is editor of
Balanced, a highly regarded and award winning investment advisory newsletter,
and THE BIG PICTURE, one of the nation's top market timing newsletters. Author
of the acclaimed book, GETTING IN ON THE GROUND FLOOR, Dr. Leeb accurately
forecast the great bull market of the 1980s and early 1990s. He is also the
author of MARKET TIMING FOR THE NINETIES. He is now at work on the third book
which will examine the investment and economic climate in the nineties and
beyond. Dr. Leeb holds a Bachelor's Degree in Economics from The Wharton School
of Business. He also received an M.A. in Psychology and Math and a Ph.D. in
Psychology from the University of Illinois. Dr. Leeb has been quoted in numerous
financial publications, and he has appeared on Wall Street Week, Nightly
Business Report, CNN and CNBC.
PRINCIPAL DIRECTORS AND EXECUTIVE OFFICERS OF MONEY GROWTH INSTITUTE, INC.
NAME POSITION WITH THE SUB-ADVISOR--PRINCIPAL OCCUPATION
- --------------- ------------------------------------------------------------
STEPHEN L. LEEB Contract Editor of K.C.I. Communications, Inc. since January
1, 1990. President/Director of Money Growth Institute, Inc.
since August 1984. Chief Investment Officer of Leeb
Investment Advisors since April 1991. President/Trustee of
Leeb Personal Finance Investment Trust since August 1991.
President/Director of Leeb Lines, Inc. from May 1979 to May
1995. President/Director of Leeb Research Consultants, Inc.
since June 6, 1994.
DONNA A. LEEB Vice President/Secretary/ Director of Money Growth
Institute, Inc. since August 1984. Vice
President/Secretary/Director of Leeb Research Consultants,
Inc. since June 1994.
TODD P. EHRET Vice President/Compliance Officer of Money Growth Institute,
Inc. since May 1994. Director of Research of K.C.I.
Communications, Inc. from September 1991 to April 1994.
Assistant Portfolio Manager of Leeb Investment Advisors,
L.P. since May 1994. President/Director of Ehret Investment
Advisors since October 1993. Administrative Employee
Registered Representative of Brimberg & Co., L.P. since May
1994.
FRANCIS A. General Partner of Brimberg & Co., L.P. since August 1993.
MLYNARCZYK, JR. Limited Partner of Brimberg & Co., L.P. from January 1992 to
July 1993. Chief Administration Officer of Leeb Investment
Advisors since April 1991. Executive Vice President of Leeb
Personal Finance Investment & Trust since August 1991.
Chairman/President of Prospect Advisors, Inc. since May
1985. Senior Vice President of Brokaw Capital Management,
Inc. from December 1982 to April 1985. General Partner of
President Street Fund, L.P. since October 1988.
The business address of each person above is Money Growth Institute, Inc., 45
Rockefeller Plaza, Suite 2570, New York, New York 10111.
4. PORTFOLIO TRANSACTIONS
The Value Fund's portfolio transactions were previously described in the
section of this proxy statement entitled "Portfolio Brokerage."
IV. DISTRIBUTION PLAN
The Accolade Board of Trustees, including a majority of the independent
trustees, has determined that there is a reasonable likelihood that shareholders
of the Value Fund would benefit by the adoption of a Distribution Plan as
authorized under Rule 12b-1 of the 1940 Act (Exhibit V). The Distribution Plan
would authorize the use of Value Fund assets to assist in the distribution of
its shares. Shareholders may benefit from positive cash flows which may replace
redeemed shares, facilitate portfolio management, and reduce expense ratios
through economies of scale.
The Personal Finance Fund is distributed through a broker-dealer who serves
as the fund's primary underwriter. Brimberg & Co., L.P., 540 Madison Avenue, New
York, New York (the "Underwriter"), serves as principal underwriter for the
Personal Finance Fund and, as such, is the exclusive agent for the distribution
of shares of the Personal Finance Fund. Although the Underwriter receives no
direct compensation from the Personal Finance Fund for serving as principal
underwriter, the Underwriter executes securities transactions on a "best
execution" basis for the Personal Finance Fund's portfolio securities. Francis
A. Mlynarczyk, Jr., Executive Vice President of the Personal Finance Fund, is a
general partner in the Underwriter. Money Growth Institute, Inc., a partner in
the Personal Finance Fund's investment adviser, is among the limited partners in
the Underwriter. During the fiscal year ended June 30, 1995, the Personal
Finance Fund paid to the Underwriter brokerage commissions of $94,361.
The Value Fund will be self-distributing and thus will not require the
services of an underwriter. Shareholders are being asked to approve a plan of
distribution authorized under Rule 12b-1 of the Investment Company Act of 1940
which would authorize the use of up to 0.25% of the Value Fund's average net
assets on an annual basis to pay for distributing the Value Fund's shares.
If the Plan of Reorganization is approved by the requisite vote of
shareholders and consummated, the Value Fund will have a Distribution Plan under
Rule 12b-1 of the 1940 Act under which Value Fund assets may be utilized to pay
for or reimburse expenditures in connection with sales and promotional services
related to the distribution of Value Fund shares, including personal services
provided to prospective and existing Value 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 Value Fund, and
travel and out-of-pocket expenses (e.g., copy and long distance telephone
charges) related thereto. Value 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. For more
information see "Distribution Plan" in the Value Fund's statement of additional
information.
V. RATIFICATION OF PRICE WATERHOUSE LLP
AS INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Trustees of the Accolade Funds, including a majority of the
trustees who are not interested persons of the Accolade Funds, is recommending
Price Waterhouse LLP to serve as independent public accountant of the Value Fund
for its next fiscal period, subject to the right of the Value Fund to terminate
such employment immediately without penalty by vote of a majority of the
outstanding voting securities of the Personal Finance Fund at any meeting called
for such purpose.
Price Waterhouse LLP currently serves as independent accountants to all
other funds in the United Services family of funds. The Board of Trustees'
recommendation of Price Waterhouse LLP was based on considerations of
administrative convenience and cost efficiency, and did not involve any dispute
with Arthur Andersen LLP, who serve as independent accountant of the Personal
Finance Fund. The Value Fund's Board of Trustees voted to select Price
Waterhouse LLP to serve as the Value Fund's independent accountants on XXXXX,
1996. The Board's selection is hereby submitted to the shareholders for
ratification.
VOTE REQUIRED
Approval of Item I, including the Agreement and Plan of Reorganization, the
Advisory and Sub-Advisory Agreements, the Distribution Plan, and ratification of
Price Waterhouse LLP as independent accountant requires the affirmative vote of
the holders of a majority of the outstanding voting securities of the Personal
Finance Fund, defined under the 1940 Act as the lesser of (i) a majority of the
outstanding shares of a fund or (ii) 67% or more of the shares of a fund
represented at the Special Meeting if more than 50% of the outstanding shares of
the fund are present or represented by proxy at the Meeting. Abstentions and
proxies with respect to shares held by a broker or other nominee that are not
voted because the nominee lacks discretionary authority to vote the shares will
be treated as follows. With respect to the first alternative (i) broker "non
votes" and "abstentions" will have the effect of "no" votes. With respect to
(ii), broker "non votes" will have no effect and "abstentions" will have the
effect of "no" votes.
In the event that the shareholders of the Personal Finance Fund fail to
approve Item I, the Board of Trustees of the Leeb Trust will consider
alternative dispositions of the Personal Finance Fund's net assets, including
the sale of assets to, or merger with, another investment company.
THE TRUSTEES RECOMMEND APPROVAL OF THE AGREEMENT AND PLAN OF REORGANIZATION
Other Matters
As of XXX, 1996, officers and trustees of the Leeb Trust owned less than 1%
of the total outstanding shares of the Personal Finance Fund and the Leeb Trust
is unaware of any shareholders holding more than 5% of the outstanding shares of
the Personal Finance Fund as of such date..
The Board of Trustees knows of no other business to be brought before the
meeting. However, if any other matters come before the meeting, it is the
intention that proxies which do not contain specific restrictions to the
contrary will be voted on such matters in accordance with the judgment of the
persons named in the enclosed form of proxy.
Further information about Value Fund is contained in the accompanying Value
Fund prospectus (Exhibit II). Shareholders of the Personal Finance Fund are
urged to read this proxy statement and the prospectus carefully prior to
executing and returning their proxies and to retain the prospectus for future
reference.
<PAGE>
FORM OF PROXY
LEEB PERSONAL FINANCE TRUST -- LEEB PERSONAL FINANCE FUND
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
THE UNDERSIGNED HEREBY APPOINTS XXX AND XXX AS PROXIES, EACH WITH POWER TO
APPOINT HIS SUBSTITUTE, AND HEREBY AUTHORIZES THEM TO REPRESENT AND TO VOTE AS
DESIGNATED BELOW, ALL THE SHARES OF LEEB PERSONAL FINANCE TRUST -- LEEB PERSONAL
FINANCE FUND (THE "PERSONAL FINANCE FUND") HELD ON RECORD BY THE UNDERSIGNED ON
XXXX, 1996, AT THE SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON XXXX, 1996, OR
AT ANY ADJOURNMENT THEREOF.
SUMMARY OF PROPOSALS TO VOTE MARK AN X IN THE APPROPRIATE BOX ON THE PROXY CARD
BELOW
By signing and dating the lower portion of this card, you authorize the proxies
to vote each proposal as marked, or, if not marked to vote "FOR" the proposal
and to use their discretion to vote any other matter as may properly come before
the meeting. If you do not intend to personally attend the meeting, please
complete, detach and mail this card at once in the enclosed envelope.
LEEB PERSONAL FINANCE TRUST -- LEEB PERSONAL FINANCE FUND
THIS PROXY MUST BE SIGNED AND DATED ON REVERSE SIDE.
- --------------------------------------------------------------------------------
REVERSE OF FORM OF PROXY
FOR AGAINST ABSTAIN
PROPOSAL 1. To approve of a plan of / / / / / /
reorganization providing for:
(a) the transfer of all the assets of the
Personal Finance Fund to a newly-created
series of Accolade Funds named the Leeb
Value Fund (the "Value Fund") in
exchange for shares of the Value Fund;
(b) the pro rata distribution of such Value
Fund shares to shareholders of the
Personal Finance Fund; and
(c) the dissolution and deregistration of
the Personal Finance Fund as an
investment company.
A vote in favor of Proposal 1 will be
deemed to be a vote to authorize the Personal
Finance Fund, as the sole shareholder of the
Value Fund, to:
(a) approve an Advisory Agreement between
the Value Fund and the Advisor, and a
Sub- Advisory Agreement among the Fund,
the Advisor, and Money Growth Institute,
Inc. (the "Sub-Advisor");
(b) approve the proposed Distribution Plan
for the shares of the Value Fund; and
(c) ratify the selection of Price Waterhouse
LLP as independent accountant of the
Value Fund for the current fiscal year.
PROPOSAL 2. To consider and act upon any / / / / / /
other matters which may properly come before
this meeting.
DATED: -------------------------, 1996
- ------------------------------------------------------------
(Signature)
- ------------------------------------------------------------
(Signature if Held Jointly)
Please sign exactly as your name appears on this proxy card. When signing as
attorney, executor, administrator, trustee or guardian, please give full title
as such. If a corporation, please sign in the full corporate name by president
or other authorized officer. If a partnership, please sign in partnership name
by authorized person.
<PAGE>
EXHIBIT NO. 2 TO COMBINED PROXY
STATEMENT AND PROSPECTUS
-----------------------------------------
ACCOLADE FUNDS
LEEB VALUE FUND
PROSPECTUS
____________, 1996
P.O. Box 781234
San Antonio, Texas 78278-1234
1-800-524-5332 or 1-800-524-LEEB
(Information, Shareholder Services and Requests)
This prospectus presents information that a prospective investor
should know about the Leeb Value Fund (the "Fund"), a diversified series of
Accolade Funds (the "Trust"). The Trust is an open-end management investment
company. Read and retain this prospectus for future reference.
A Statement of Additional Information dated XXXXXXXXXX, has been filed
with the Securities and Exchange Commission and is incorporated herein by
reference. The Statement of Additional Information is available without charge
from Accolade Funds upon request at the address set forth above or by calling
1-800-524-5332 or 1-800-524-LEEB.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
TABLE OF CONTENTS
-----------------
SUMMARY OF FEES AND EXPENSES...................................................4
INVESTMENT OBJECTIVES, INVESTMENT POLICIES, AND RISK CONSIDERATIONS............6
OTHER INVESTMENT PRACTICES.....................................................9
HOW TO PURCHASE SHARES........................................................10
HOW TO EXCHANGE SHARES........................................................13
HOW TO REDEEM SHARES..........................................................14
HOW SHARES ARE VALUED.........................................................19
DIVIDENDS AND TAXES...........................................................19
THE TRUST.....................................................................22
MANAGEMENT OF THE FUND........................................................21
DISTRIBUTION EXPENSE PLAN.....................................................24
PERFORMANCE INFORMATION.......................................................24
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.
<TABLE>
<CAPTION>
<S> <C>
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................................0.71%
Total Fund Operating Expenses................................1.96%
<FN>
(1) Annual Fund Operating Expenses have been restated using the
current fees that would have been applicable had they been in effect
during the previous fiscal year. The Fund's Management and
Administrative Fee rate of 1% is higher than that of most other mutual
funds investing in the domestic market. Management fees are paid to
United Services Advisors, Inc. (the "Advisor") for managing the Fund's
investments and business affairs. The Advisor then pays a portion of
the management fee to Money Growth Institute, Inc. (the "Sub-Advisor")
for serving as Sub-Advisor. See "Management of the Fund." The Fund
incurs other expenses for maintaining shareholder records, furnishing
shareholder statements and reports, and for other services. Transfer
agency and accounting service fees are paid to United Shareholder
Services, Inc. ("USSI" or "Transfer Agent"), a subsidiary of the
Advisor, and are not charged directly to individual shareholder
accounts. The Transfer Agent charges the Fund $23 per shareholder
account per year. The account closing fee and small account charge
will be paid by the shareholder directly to the Transfer Agent which
will, in turn, reduce its charges to the Fund by like amount. Please
refer to the section entitled "Management of the Fund" for further
information.
</FN>
</TABLE>
Except for active ABC Investment Plan(R), UGMA/UTMA and retirement
accounts, if an account balance falls, for any reason other than market
fluctuations, below $5,000 at any time during a month, that account will be
subject to a monthly small account charge of $1 which will be payable quarterly.
See "Small Accounts."
A shareholder who requests delivery of redemption proceeds by wire
transfer will be subject to a $10 charge. International wires will be higher.
HYPOTHETICAL EXAMPLE OF EFFECT OF FUND EXPENSES:
You would pay the following expenses on a $1,000 investment, assuming
a 5% annual return and redemption at the end of each period.
1 year.............................................$ 30
3 years............................................$ 72
5 years............................................$116
10 years............................................$239
The hypothetical example is based upon the Fund's historical expenses
which are expected to decline as the Fund's net assets increase. 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 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
LEEB VALUE FUND
The following per share data and ratios for a share of beneficial
interest outstanding throughout each fiscal period has been audited by Arthur
Andersen LLP. The related unaudited financial statements are available upon
request and have been incorporated by reference into the Statement of Additional
Information ("SAI"). In addition to the data set forth below, further
information about the performance of the Fund is contained in the SAI which may
be obtained without charge.
Per share data for a share outstanding throughout each period is as
follows:
<TABLE>
<CAPTION>
PERIOD ENDED
YEAR ENDED JUNE 30, JUNE 30,
----------------------------------------
1995 1994 1993 1992(A)
-----------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value at beginning of period............... $ 10.29 $ 10.84 $ 10.36 $ 10.00
---------- ---------- --------- ---------
Income from investment operations:
Net investment income .......................... 0.28 0.19 0.15 0.16
Net realized and unrealized gains (losses)
on investments .............................. 0.95 (0.35) 0.55 0.51
---------- ----------- ---------- ----------
Total from investment operations .................... 1.23 (0.16) 0.70 0.67
---------- ----------- ---------- ----------
Dividends and distributions:
Dividends from net investment income(B) ........ (0.28) (0.19) (0.15) (0.16)
Distributions from net realized gains(B) ....... -- (0.20) (0.07) (0.15)
In excess of net realized gains ................ (0.07) -- -- --
----------- ----------- ---------- ----------
Total dividends and distributions ................... (0.35) (0.39) (0.22) (0.31)
----------- ----------- ---------- ----------
Net asset value at end of period .................... $ 11.17 $ 10.29 $ 10.84 $ 10.36
=========== =========== ========== ==========
Total return ........................................ 12.20% (1.50%) 6.79% 7.94%(D)
=========== =========== ========== ==========
Net assets at end of period (000's) ................. $32,976 $45,523 $58,955 $28,340
=========== =========== ========== ==========
Ratio of expenses to average net assets(C) .......... 1.50% 1.50% 1.50% 1.47%(D)
Ratio of net investment income to average
net assets....................................... 2.36% 1.65% 1.60% 2.21%(D)
Portfolio turnover rate ............................. 163% 143% 83% 75%(D)
<FN>
(A) - Represents the period from the date of public offering (October 21, 1991)
through June 30, 1992. No income was earned or expenses incurred from the
start of business through the date of public offering.
(B) - For the period ended June 30, 1992, the per share data was calculated
using average shares outstanding throughout the period, whereas for subse-
quent periods, the per share data was calculated based upon actual distri-
butions. For the period ended June 30, 1992, actual distributions per
share from net investment income and from net realized gains from security
transactions amounted to $.11 and $.08, respectively.
(C) - Ratios of expenses to average net assets assuming no waiver of fees or
reimbursement of expenses by the Advisor was 1.98%, 1.81%, 1.95%, and
2.71%(D) for the periods ended June 30, 1995, 1994, 1993, and 1992,
respectively.
(D) - Annualized.
</FN>
</TABLE>
INVESTMENT OBJECTIVES, INVESTMENT POLICIES, AND RISK
CONSIDERATIONS
Please read the prospectus carefully before you invest. You are
responsible for determining whether the Fund is suitable for your investment
needs.
The primary investment objective of the Fund is to seek long-term
capital appreciation consistent with the preservation of capital. Earning
current income from dividends, interest and short-term capital gains is a
secondary objective. The Fund is not intended to be a complete investment
program, and there is no assurance that its investment objectives can be
achieved. The Fund's investment objectives are fundamental and as such may not
be changed without the affirmative vote of the holders of a majority of its
outstanding shares as defined in the Investment Company Act of 1940. Unless
otherwise indicated, all investment practices and limitations of the Fund are
nonfundamental policies which may be changed by the Board of Trustees without
shareholder approval.
The Fund should be viewed essentially as an equity fund since it is
expected that, unless the Fund is in a defensive posture, the majority of its
assets will be held in common stocks most of the time. The Fund, however, may
from time to time have a significant portion, and possibly all, of its assets in
obligations issued or guaranteed as to principal and interest by the United
States Government, its agencies or instrumentalities ("U.S. Government
obligations" described below) and corporate debt securities of various
maturities. When the Sub-Advisor believes substantial price risks exist for
common stocks because of uncertainties in the investment outlook or when, in the
judgment of the Sub-Advisor, it is otherwise warranted in selling to manage the
Fund's portfolio against the risks of a major stock market decline, the Fund may
temporarily hold, for defensive purposes, all or a portion of its assets in
money market instruments.
Investments in equity and debt securities are subject to inherent
market risks and fluctuations in value due to earnings, economic conditions,
quality ratings and other factors beyond the control of the Sub- Advisor. Debt
securities also are subject to price fluctuations based upon changes in the
level of interest rates, which will generally result in all those securities
changing in price in the same way, i.e., all those securities experiencing
appreciation when interest rates decline and depreciation when interest rates
rise. As a result, the return and net asset value of the Fund will fluctuate.
ASSET ALLOCATION
The Sub-Advisor determines the asset allocation of the Fund's
portfolio primarily upon the basis of market timing techniques developed by Dr.
Stephen Leeb, President and controlling shareholder of the Sub-Advisor, and his
staff. These techniques attempt to identify the degree of risk in holding stocks
versus debt securities and/or versus money market instruments. Dr. Leeb and his
staff have developed models over the years to assist him in assessing risk in
the equity and debt markets. These models emphasize general economic and
monetary factors and, to a lesser extent, trends in the equity and debt markets
themselves.
Investors should be aware that the investment results of the Fund
depend upon the ability of the Sub-Advisor to correctly anticipate the relative
performance and risk of stocks, debt securities and money market instruments.
Historical evidence indicates that correctly timing portfolio allocations among
these asset classes has been an extremely difficult investment strategy to
implement successfully. While Dr. Leeb has substantial experience in applying
market timing techniques, there can be no assurance that the Sub-Advisor will
correctly anticipate relative asset class performance in the future on a
consistent basis. Investment results would suffer, for example, if only a small
portion of the Fund's assets were invested in stocks during a significant stock
market advance or if a major portion were invested in stocks during a major
decline.
STOCK SELECTION
The stock selection approach within the equity sector of the Fund's
portfolio can best be characterized in the vernacular of the investment business
as a "value" orientation. That is, great emphasis is placed on "value"
parameters, such as having a strong balance sheet, and/or having substantial
free cash flow, and/or having a record of rising dividends, and/or having a high
dividend yield. In addition, companies in whose equities the Fund may invest
will predominantly have large capitalizations in terms of total market value.
Usually, but not always, the stocks of such companies are traded on major stock
exchanges. Such stocks are usually very liquid, but there may be periods when a
particular stock or stocks in general become substantially less liquid. Such
periods are usually, but not always, brief, and the Sub-Advisor will seek to
minimize the overall liquidity risk of the Fund's portfolio. In addition, it is
unlikely that the Fund would have more than a token amount of its assets, and in
no case more than five percent (5%) of its net assets, in stocks with market
capitalizations less than $300 million at the time of purchase. The Fund may
invest in foreign companies through the purchase of sponsored American
Depository Receipts, "ADRs" (certificates of ownership issued by an American
bank or trust company as a convenience to investors in lieu of the underlying
shares which it holds in custody), or other securities of foreign issuers that
are publicly traded in the United States. The Fund does not currently intend to
invest more than five percent (5%) of its net assets in American Depository
Receipts and other foreign securities.
GOVERNMENT AND CORPORATE DEBT SECURITIES
When the Fund has a portion of its assets in U.S. Government
obligations or corporate debt securities, the maturities of these securities
will be based in large measure both on the Advisor's perception as to general
risk levels in the debt market versus the equity market, and on the Advisor's
perception of the future trend and term structure of interest rates. Dr. Leeb,
with his staff, has developed models that assist him in assessing risk in the
debt markets and interest rate trends.
U.S. Government obligations include securities which are issued or
guaranteed by the United States Treasury, by various agencies of the United
States Government, and by various instrumentalities which have been established
or sponsored by the United States Government. U.S. Treasury obligations are
backed by the "full faith and credit" of the U.S. Government. U.S. Treasury
obligations include Treasury bills, Treasury notes and Treasury bonds. Agencies
or instrumentalities established by the United States Government include the
Federal Home Loan Bank, the Federal Land Bank, the Government National Mortgage
Association, the Federal National Mortgage Association, the Federal Home Loan
Mortgage Corporation, the Student Loan Marketing.
Association, the Bank for Cooperatives, the Federal Intermediate
Credit Bank, the Federal Financing Bank, the Federal Farm Credit Bank, the
Federal Agricultural Mortgage Corporation, the Resolution Funding Corporation,
the Financing Corporation of America and the Tennessee Valley Authority. Some of
these securities are supported by the full faith and credit of the United States
Government while others are supported only by the credit of the agency or
instrumentality, which may include the right of the issuer to borrow from the
United States Treasury.
The Fund may also purchase corporate debt securities rated "B" or
higher by Standard & Poor's Ratings Group or Moody's Investors Service, Inc.,
although the Fund does not hold, nor intends to invest, more than five percent
(5%) of its net assets in corporate debt securities rated at least "B" but less
than "A" by either of these two rating organizations. Lower-rated debt
securities (commonly called "junk bonds") are often considered to be speculative
and involve greater degrees of risk of default or price changes due to changes
in the issuer's creditworthiness. The Fund may also purchase debt securities on
a when-issued basis, but the Fund does not currently intend to invest more than
five percent (5%) of its net assets in such securities during the coming year.
MONEY MARKET SECURITIES
The money market instruments which the Fund may own from time to time
include U.S. Government obligations having a maturity of less than one year,
commercial paper rated A-1 by Standard & Poor's Ratings Group or Prime-1 by
Moody's Investors Service, Inc., bank debt instruments (certificates of deposit,
time deposits and bankers' acceptances) and other short-term instruments issued
by domestic branches of U.S. financial institutions that are insured by the
Federal Deposit Insurance Corporation and have assets exceeding $10 billion.
The Fund may also 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.
OTHER INVESTMENT PRACTICES
The Fund may make short-term loans of its portfolio securities to
banks, brokers and dealers, although the Fund has no present intention to do so.
The Fund may borrow money from banks or as may be necessary for the
clearance of securities transactions but only for emergency or extraordinary
purposes in an amount not exceeding five percent (5%) of the Fund's total
assets. The Fund's policy on borrowing is a fundamental policy which may not be
changed without the affirmative vote of a majority of its outstanding shares.
PORTFOLIO TURNOVER
The Fund does not intend to use short-term trading as a primary means
of achieving its investment objectives. However, the Fund's rate of portfolio
turnover will depend on market and other conditions, and it will not be a
limiting factor when portfolio changes are deemed necessary or appropriate by
the Sub-Advisor. Although the annual portfolio turnover rate of the Fund cannot
be accurately predicted, it will likely be between 75% and 150%, but may be
either higher or lower. High turnover involves correspondingly greater
commission expenses and transaction costs and increases the possibility that the
Fund would not qualify as a regulated investment company under Subchapter M of
the Internal Revenue Code. The Fund will not qualify as a regulated investment
company if it derives 30% or more of its gross income from gains (without offset
for losses) from the sale or other disposition of securities held for less than
three months. High turnover may result in the Fund recognizing greater amounts
of income and capital gains, which would increase the amount of income and
capital gains which the Fund must distribute to its shareholders in order to
maintain its status as a regulated investment company and to avoid the
imposition of federal income or excise taxes (see "Taxes").
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.
HOW TO PURCHASE SHARES
The minimum initial investment for the Fund is $5,000 for regular
accounts or $1,000 for UGMA/UTMA accounts. The minimum subsequent investment is
$50. The minimum initial investment for persons enrolled in the ABC Investment
Plan(R) is $1,000 and the minimum subsequent investment pursuant to such a plan
is $100 or more per month per account. There is no minimum purchase for
retirement plan accounts, including IRAs, administered by the Advisor or its
agents and affiliates.
YOU MAY INVEST IN THE FOLLOWING WAYS:
BY MAIL
Send your application and check or money order, made payable to the
Leeb Value Fund, to P.O. Box 781234, San Antonio, Texas 78278-1234.
When making subsequent investments, enclose your check with the return
remittance portion of the confirmation of your previous investment or indicate
on your check or a separate piece of paper your name, address and account number
and mail to the address mentioned above. Do not use the remittance portion of
your confirmation statement for a different fund as it is pre-coded. Doing so
may cause your investment to be invested into the wrong fund. If you wish to
purchase shares in more than one fund, send a separate check or money order for
each fund. Third party checks will not be accepted; and the Fund reserves the
right to refuse to accept second party checks.
BY TELEPHONE
Once your account is open, you may make investments by telephone by
calling 1-800-524-5332 or 1-800-524-LEEB. Investments by telephone are not
available in money market funds or any retirement account administered by the
Advisor or its agents. The maximum telephone purchase is ten times the value of
the shares owned, calculated at the last available net asset value. Payment for
shares purchased by telephone is due within seven business days after the date
of the transaction. You cannot exchange shares purchased by telephone until
after the payment has been received and accepted by the Trust.
BY WIRE
You may make your initial or subsequent investments in the Leeb Value
Fund by wiring money. To do so, call the Fund at 1-800-524-5332 or
1-800-524-LEEB for a confirmation number and wiring instructions.
BY ABC INVESTMENT PLAN(R)
The ABC Investment Plan(R) is offered as a special service for small
investors. Once your account is opened with a $1,000 minimum initial investment,
you may make investments automatically by completing the ABC Investment Plan(R)
(Automatically Building Capital Investment Plan) form authorizing the Fund to
draw on your money market or bank account regularly for as little as $100 a
month beginning within 30 days after the account is opened. These small minimums
are a special service bringing investors the benefits of the Fund without
requiring a $5,000 minimum initial investment. You may call United Services
1-800-873-8637 or 1-800-US-Funds to open a treasury money market fund or you
could inquire at your bank whether it will honor debits through the Automated
Clearing House ("ACH") or, if necessary, preauthorized checks. You may change
the date or amount of your investment or discontinue the Plan any time by letter
received by the Fund at least five business days before the change is to become
effective.
ADDITIONAL INFORMATION ABOUT PURCHASES
All purchases of shares are subject to acceptance by the Fund and are
not binding until accepted. The Fund reserves the right to reject any
application or investment. Orders received by the Fund's transfer agent or
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 New York Stock
Exchange ("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 Fund by reason of
such cancellation. If checks are returned unpaid due to insufficient funds, stop
payment or other reasons, the Fund will charge your account $20 and you will be
responsible for any loss incurred by the Fund with respect to canceling the
purchase.
To recover any such loss or charge, the Fund reserves the right,
without further notice, to redeem shares of any affiliated funds already owned
by any purchaser whose order is canceled, for whichever reason, and such a
purchaser may be prohibited from placing further orders unless investments are
accompanied by full payment by wire or cashier's check.
Accolade Funds charges no sales commissions or "loads." However,
investors may purchase and sell shares through registered broker/dealers who may
charge fees for their services.
Investments paid for by checks drawn on foreign banks may be deferred
until such checks have cleared the normal collection process. In such instances,
any amounts charged to the Fund for collection procedures will be deducted from
the amount invested.
If the Fund incurs a charge for locating a shareholder without a
current address, such charge will be passed through to the shareholder.
TAX IDENTIFICATION NUMBER
The Fund is required by Federal law to withhold and remit to the
United States Treasury a portion of the dividends, capital gain distributions
and proceeds of redemptions paid to any shareholder who fails to furnish the
Fund with a correct taxpayer identification number, who underreports dividend or
interest income or who fails to provide certification of a tax identification
number. In order to avoid this withholding requirement, you must certify on your
application, or on a separate Form W-9 supplied by the Transfer Agent, that your
taxpayer identification number is correct and that you are not currently subject
to backup withholding or you are exempt from backup withholding. For
individuals, your taxpayer identification number is your social security number.
Instructions to exchange or transfer shares held in established
accounts will be refused until the certification has been provided. In addition,
the Fund assesses a $50 administrative fee if the taxpayer identification number
is not provided by year-end.
CERTIFICATES
When you open your account, the Fund will send you a confirmation
statement, which will be your evidence that you have opened an account with the
Fund. The confirmation statement is nonnegotiable, so if it is lost or
destroyed, you will not be required to buy a lost instrument bond or be subject
to other expense or trouble, as you would with a negotiable stock certificate.
At your written request, the Fund will issue negotiable stock certificates.
Unless your shares are purchased with wired money, a certificate will not be
issued until 15 days have elapsed from the time of purchase, or the Fund has
satisfactory proof of payment, such as a copy of your 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
offered, affiliated or administered by United Services Advisors, Inc., for a $5
exchange fee. An exchange involves the simultaneous redemption (sale) of shares
of one fund and purchase of shares of another fund at the respective closing net
asset value and is a taxable transaction.
BY TELEPHONE
You will automatically have the privilege to direct the Fund to
exchange your shares between identically registered accounts by calling toll
free 1-800-524-5332 or 1-800-524-LEEB. In connection with such exchanges neither
the Fund nor the Transfer Agent will be responsible for acting upon any
instructions reasonably believed by them to be genuine. The shareholder, as a
result of this policy, will bear the risk of loss. The Fund and/or its Transfer
Agent will, however, employ reasonable procedures to confirm that instructions
communicated by telephone are genuine (including, requiring some form of
personal identification, providing written confirmation and tape recording
conversations); and if it does not employ reasonable procedures, it may be
liable for losses due to unauthorized or fraudulent transactions.
BY MAIL
You may direct the Fund in writing to exchange your shares. The
request must be signed exactly as the name appears in the registration. (Before
writing, read "Additional Information About Exchanges.")
ADDITIONAL INFORMATION ABOUT EXCHANGES
(1) There is a $5 charge, which is paid to United Shareholder Services, Inc.
("USSI" or the "Transfer Agent") for each exchange out of any Fund account
except that retirement accounts administered by the Advisor or its agents
and affiliates are charged $5 for each exchange exceeding three per
quarter. The exchange fee is charged to cover administrative costs
associated with handling these exchanges.
(2) Like any other redemption, the Fund reserves the right to hold exchange
proceeds for up to seven days. In such event, the purchase side of the
exchange transaction will also be delayed. You will be notified immediately
if the Fund is exercising said right.
(3) If the shares you wish to exchange are represented by a negotiable stock
certificate, the certificate must be returned before the exchange can be
effected.
(4) Shares may not be exchanged unless you have furnished the Fund with your
tax identification number, certified as prescribed by the Internal Revenue
Code and Regulations, and the exchange is to an account with like
registration and tax identification number. (See "Tax Identification
Number.")
(5) The exchange privilege may be terminated at any time. The exchange fee and
other terms of the privilege are subject to change.
HOW TO REDEEM SHARES
You may redeem any or all of your shares at will. The Fund redeems
shares at the net asset value next determined after it has received and accepted
a redemption request in proper order. Redemption requests received in proper
order by the Trust's transfer agent or sub-agent prior to 4:00 p.m., Eastern
time, Monday through Friday, exclusive of business holidays, to be effective
that day, 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 delivery of the following to the Transfer Agent:
(1) a written request for redemption signed by each registered owner exactly as
the shares are registered, the account number and the number of shares or
the dollar amount to be redeemed;
(2) negotiable stock certificates for any shares to be redeemed for which
certificates have been issued;
(3) signature guarantees when required; and,
(4) such additional documents as are customarily required to evidence the
authority of persons effecting redemptions on behalf of corporations,
executors, trustees, and other fiduciaries. Redemptions will not become
effective until all documents, in the form required, have been received by
the Transfer Agent. (Before writing, read "Additional Information About
Redemptions.")
BY TELEPHONE
To redeem your Fund shares by telephone you may call the Fund and
direct an exchange out of the Fund into an identically registered account in a
United Services treasury money market fund ($1,000 minimum initial investment).
You may then write a check against your treasury money market fund account. See
"How to Exchange Shares" for a description of exchanges, including the $5
exchange fee. Call 1-800-524-5332 or 1-800-524-LEEB for more information
concerning telephone redemption and a treasury money market fund prospectus.
Telephone redemptions without opening a treasury money market account
are available for members of the Chairman's Circle. For more information about
the Fund's Chairman's Circle program, call 1-800-524-5332 or 1-800-524-LEEB.
REDEMPTION ARRANGEMENTS BY WIRE TRANSFER
Special arrangements may be made by institutional investors, or on
behalf of accounts established by brokers, advisers, banks or similar
institutions, to have redemption proceeds transferred by wire to pre-established
accounts upon telephone instructions. For further information call the Fund at
1-800- 524-5332 or 1-800-524-LEEB.
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, the
person's printed name and position with guarantor; and (iii) include a
recital that the guarantor is federally insured, maintains the requisite
net capital or is a national securities exchange or association.
Shareholders living abroad may acknowledge their signatures before a
U.S. consular officer. Military personnel may acknowledge their signatures
before officers authorized to take acknowledgments (e.g., legal officers and
adjutants).
REDEMPTION PROCEEDS MAY BE SENT TO YOU:
BY MAIL
If your redemption check is mailed, it is usually mailed within 48
hours; however, the Fund reserves the right to hold redemption proceeds for up
to seven days. If the shares to be redeemed were purchased by check, the
redemption proceeds will not be mailed until the purchase check has cleared,
which may take up to seven days. You may avoid this requirement by investing by
bank wire (Federal funds). Redemption checks may be delayed if you have changed
your address in the last 30 days. Please notify the Fund promptly in writing, or
by telephone, of any change of address.
BY WIRE
You may authorize the Fund to transmit redemption proceeds by wire,
provided you send written wiring instructions with a signature guarantee at the
time of redemption. Proceeds from your redemption will usually be transmitted on
the first business day following the redemption. However, the Fund reserves the
right to hold redemption proceeds for up to seven days. If the shares to be
redeemed were purchased by check, the redemption proceeds will not be mailed or
wired until the purchase check has cleared, which may take up to seven days.
There is a $10 charge to cover the wire, which is deducted from redemption
proceeds. International wires will be higher.
ADDITIONAL INFORMATION ABOUT REDEMPTIONS
The redemption price may be more or less than your cost, depending on
the net asset value of the 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 Fund has the authority to redeem existing accounts and to refuse a
potential account the privilege of having an account in the Fund if the Fund
reasonably determines that the failure to so redeem, or to so prohibit, would
have a material adverse consequence to the Fund and its shareholders. The power
to redeem existing accounts will be exercised in light of the Trustees'
fiduciary duties and in conformance with Massachusetts law. The Fund will not
redeem an existing account solely to prevent the legitimate exercise of a
shareholder's rights. No account closing fee will be charged to investors whose
accounts are closed under this provision.
TRADER'S FEE PAID TO FUND
A trader's fee will be assessed to shareholders who redeem or exchange
shares out of certain equity funds advised or administered by the Advisor when
those shares have been held less than 30 calendar days. This trader's fee will
be paid to the Fund to benefit remaining shareholders by protecting them against
expenses incurred due to excessive trading. 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 30
calendar days. The Fund has reserved the right to refuse investments from
shareholders who engage in excessive trading that may be disruptive to the Fund.
ACCOUNT CLOSING FEE
In order to reduce Fund expenses, an account closing fee of $10 will
be assessed to shareholders who redeem all shares in their Fund account and
direct that redemption proceeds be delivered to them by mail or wire. The charge
is payable directly to the Fund's Transfer Agent which, in turn, will reduce its
charges to the Fund by an equal amount. The purpose of the charge is to allocate
to redeeming shareholders a more equitable portion of the Transfer Agent's fee,
including the cost of tax reporting, which is based upon the number of
shareholder accounts. The account closing fee does not apply to exchanges
between the Fund and affiliated funds nor will it be imposed on any account
which is involuntarily redeemed.
SMALL ACCOUNTS
Fund accounts which fall, for any reason other than market
fluctuations, below $5,000 at any time during the month, will be subject to a
monthly small account charge of $1 which will be payable quarterly. The charge
is payable directly to the Fund's Transfer Agent which, in turn, will reduce its
charges to the Fund by an equal amount. The purpose of the charge is to allocate
the costs of maintaining shareholder accounts more equally among shareholders.
As a special service for small investors, active ABC Investment
Plan(R), UGMA/UTMA accounts with at least $1,000, and retirement plan accounts
administered by the Advisor or its agents and affiliates will not be subject to
the small account charge.
In order to reduce expenses of the Fund, it may redeem all shares in
any shareholder account, other than active ABC Investment Plan(R), UGMA/UTMA and
retirement plan accounts, if, for a period of more than three months, the
account has a net asset value of $2,500 or less and the reduction in value is
not due to market fluctuations. If the Fund elects to close such accounts, it
will notify shareholders whose accounts are below the minimum of its intention
to do so, and will provide those shareholders with an opportunity to increase
their accounts by investing a sufficient amount to bring their accounts up to
the minimum amount within 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 will receive a confirmation statement after each
transaction showing activity in the account. When account activity is produced
solely from dividend reinvestment, confirmation statements will be mailed only
on a semiannual basis.
OTHER SERVICES
The Fund has available a number of plans and services to meet the
special needs of certain investors. Plans available include:
(1) payroll deduction plans, including military allotments;
(2) custodial accounts for minors;
(3) a flexible, systematic withdrawal plan; and,
(4) various retirement plans such as IRA, SEP/IRA, 403(b)(7), 401(k)
and employer-adopted defined contribution plans.
There is an annual charge for each retirement plan fund account with
respect to which Security Trust & Financial Company ("ST&FC"), a wholly-owned
subsidiary of the Advisor, acts as custodian (for example, $10 for IRAs and $15
for SEP/IRAs, 403(b)(7)s, profit sharing and other such accounts). If this
administrative charge is not paid separately prior to the last business day of a
calendar year or prior to a total redemption, it will be deducted from the
shareholder's account.
Application forms and brochures describing these plans and services
can be obtained from the Transfer Agent by calling 1-800-524-5332 or
1-800-524-LEEB.
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 1-800-524-5332 or 1-800-524-LEEB for prompt
service on any questions about your account.
24 HOUR CURRENT INFORMATION
Shareholders can also access 24 hours a day current information on
yields, prices, latest dividends, account balances and deposits and redemptions
for the previous and current months. Just call 1-800- 524-5332 or 1-800-524-LEEB
and press the appropriate codes into your touch-tone phone.
HOW SHARES ARE VALUED
Shares of the Fund are purchased or redeemed, on a continuous basis
without a sales charge, at their next determined net asset value per share. The
net asset value per share of the Fund is calculated separately by USSI. Net
asset value per share is determined and orders become effective as of 4:00 p.m.,
Eastern time, Monday through Friday, exclusive of business holidays on which the
NYSE is closed, by dividing the aggregate net assets of the Fund at market value
by the total number of shares of the Fund outstanding. In the event that the
NYSE and other financial markets close earlier, as on the eve of a holiday, the
net asset value per share will be determined earlier in the day at the close of
trading on the NYSE.
A portfolio security listed or traded on a stock exchange or quoted on
NASDAQ is valued at the last reported sale price prior to the time when assets
are valued. Lacking any sales on that day, the security is valued at the mean
between the last reported bid and ask prices. Over-the-counter portfolio
securities for which market quotations are readily available are to be valued at
the mean between the most recent bid and ask prices as obtained from one or more
dealers that make markets in the securities. Portfolio securities which are
traded both in the over-the-counter market and on a stock exchange are to be
valued according to the broadest and most representative market as determined by
the Advisor. When market quotations are not readily available, or when
restricted securities or other assets are being valued, such assets are valued
at fair value as determined in good faith by or under procedures established by
the Fund's Board of Trustees.
Short-term investments with maturities of 60 days or less at the time
of purchase are valued on the basis of the amortized cost. This involves valuing
an instrument at its cost initially and, thereafter, assuming a constant
amortization to maturity of any discount or premium.
DIVIDENDS AND TAXES
The Fund intends to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). By
complying with the applicable provisions of the Code, a Fund will not be subject
to Federal income tax on its net investment income and capital gain net income
that are distributed to shareholders.
All income dividends and capital gain distributions are normally
reinvested, without charge, in additional full and fractional shares of the
Fund. Alternatively, investors may choose: (1) automatic reinvestment of capital
gain distributions in Fund shares and payment of income dividends in cash; (2)
payment of capital gain distributions in cash and automatic reinvestment of
dividends in Fund shares; or (3) all income dividend and capital gain
distributions paid in cash. The share price of the reinvestment will be the net
asset value of the Fund shares computed at the close of business on the date the
dividend or distribution is paid. Dividend checks returned to the Fund as being
undeliverable and dividend checks not cashed after 180 days will automatically
be reinvested at the price of the Fund on the day returned or on or about the
181st day, and the distribution option will be changed to "reinvest."
At the time of purchase, the share price of the Fund may reflect
undistributed income, capital gain or unrealized appreciation of securities. Any
dividend or capital gain distribution paid to a shareholder shortly after a
purchase of shares will reduce the per share net asset value by the amount of
the distribution. Although in effect a return of capital to the shareholder,
these distributions are fully taxable.
The Fund generally pays dividends, if any, semiannually and pays
capital gains, if any, annually.
The Fund is subject to a nondeductible 4% excise tax calculated as a
percentage of certain undistributed amounts of taxable ordinary income and
capital gains net of capital losses. The Fund intends to make such distributions
as may be necessary to avoid this excise tax.
Dividends from taxable net investment income and distributions of net
short-term capital gains paid by the Fund are taxable to shareholders as
ordinary income, whether received in cash or reinvested in additional shares of
the Fund. A portion of these dividends may qualify for the 70% 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% 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 four separate, diversified portfolios. The Bonnel Growth
Fund and the Leeb Value Fund are the only funds currently offered to the public.
The Trust was formed April 16, 1993, as a "business trust" under the
laws of the Commonwealth of Massachusetts. It is a "series" company which is
authorized to issue shares without par value in separate series. Shares of the
series have been authorized, each of which represents an interest in a separate
portfolio. The Board of Trustees of the Trust has the power to create additional
portfolios at any time without a vote of shareholders of the Trust.
Under the Trust's Master Trust Agreement, no annual or regular meeting
of shareholders is required, although the Trustees may authorize special
meetings from time to time. Under the terms of the Master Trust Agreement, the
Trust has a staggered Board with terms of at least 25% of the Trustees expiring
every three years. The Trustees serve in that capacity for six year terms. Thus,
there will ordinarily be no shareholder meeting unless otherwise required by the
Investment Company Act of 1940 (the "1940 Act"). The Trust will call a meeting
of shareholders for purposes of voting on the question of removal of one or more
Trustees when requested in writing to do so by record holders of not less than
10% of the Trust's outstanding shares, and in connection with such meeting to
comply with the provisions of Section 16(c) of the Investment Company Act of
1940 relating to shareholder communications.
On any matter submitted to shareholders, shares of each portfolio
entitle their holder to one vote per share, irrespective of the relative net
asset values of each portfolio's shares. On matters affecting an individual
portfolio, a separate vote of shareholders of the portfolio is required. Each
portfolio's shares are fully paid and non-assessable by the Trust, have no
preemptive or subscription rights, and are fully transferable, with no
conversion rights.
MANAGEMENT OF THE FUND
TRUSTEES
The business affairs of the Fund are managed by the Trust's Board of
Trustees. The Trustees establish policies, as well as review and approve
contracts and their continuance. The Trustees also elect the officers and select
the Trustees to serve as executive and audit committee members.
THE SUB-ADVISOR
Effective XXXXXXXX, 1996 the Advisor and the Trust contracted with
Money Growth Institute, Inc. (the "Sub-Advisor") to serve as Sub-Advisor for the
Fund. Dr. Stephen Leeb, president of the Sub-Advisor and its controlling
shareholder, is, and since the Fund's inception October 21, 1991, has been the
Fund's portfolio manager. 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.
In consideration for such services, the Advisor will pay the
Sub-Advisor for one year from the date of the Sub-Advisory Agreement a fee, on
an annual basis, of (1) 1% of Fund assets of $40 million or less; (2) 75 basis
points on assets between $40 and $50 million; and, (3) 50 basis points on assets
of $50 million and over. After one year, the Sub-Advisor will receive a fee, on
an annual basis, of 50 basis points on all assets.
Prior to the effective date of the current Sub-Advisory Agreement, the
Fund compensated a different investment advisor at an annual rate of one percent
(1%) of average net assets for its services under a separate agreement. For the
fiscal year ended June 30, 1995, the advisory fee paid to the Advisor was 0.52%
(net of waivers by the Advisor) of the Fund's average net assets.
Dr. Leeb has been engaged in the business of providing investment
advisory and portfolio management services for approximately 19 years. The
business address of the Sub-Advisor is 45 Rockefeller Plaza, Suite 2570, New
York, New York 10111. As the Fund's portfolio manager Dr. Leeb is primarily
responsible for the day-to-day investment management of the Fund. The
Sub-Advisor is an investment adviser with assets under management of
approximately $42 million as of May 1, 1996 apart from the Fund. Dr. Leeb is
editor of Balanced, a highly regarded and award winning investment advisory
newsletter, and The Big Picture, one of the nation's top market timing
newsletters. Author of the acclaimed book Getting In On the Ground Floor, Dr.
Leeb accurately forecast the great bull market of the 1980s and early 1990s. He
is also the author of Market Timing for the Nineties. He is now at work on a
third book which will examine the investment and economic climate in the
nineties and beyond. Dr. Leeb holds a Bachelor's Degree in Economics from The
Wharton School. He also received an M.A. in Psychology and Math and a Ph.D. in
Psychology from the University of Illinois. Dr. Leeb has been quoted in numerous
financial publications, and he has appeared on Wall Street Week, Nightly
Business Report, CNN and CNBC.
In May of 1995 the SEC instituted an administrative proceeding against
Stephen Leeb and several persons or entities who were affiliated with the Leeb
Personal Finance Fund, the predecessor to the Accolade Leeb Value Fund. The
allegations related to certain advertisements for a newsletter edited by Stephen
Leeb. The allegations were that the parties willfully aided and abetted and
caused violations of the Securities & Exchange Act of 1933 and Investment
Company Act of 1940. On January 16, 1996, without admitting or denying any of
the SEC's charges, Stephen Leeb and the other respondents agreed to an offer and
settlement agreement making findings and imposing remedial sanctions and a cease
and desist order. The Leeb Personal Finance Fund was not a part to the
proceeding.
In February, 1995 the Sub-Advisor reached an agreement in principle to
resolve a contemplated administrative proceeding, providing for the Sub-Advisor
and Dr. Leeb, without admitting or denying the allegations of the SEC, to
consent to a cease and desist order concerning alleged violations of certain SEC
record keeping regulations, payment of a fine, a censure of both the Sub-Advisor
and Dr. Leeb, and an undertaking to implement the appropriate steps to correct
these alleged record keeping deficiencies. Such agreement in principle is
subject to acceptance by the SEC in the form of formal order and formal offer of
settlement by the Sub-Advisor and Dr. Leeb.
Three states issued orders against the Sub-Advisor for conducting
advisory business in their states without prior registration as an investment
adviser. The Sub-Advisor agreed to cease and desist such practice, paid fines,
and registered in each state.
THE INVESTMENT ADVISOR
United Services Advisors, Inc., 7900 Callaghan Road, San Antonio,
Texas 78229, under an Investment Advisory Agreement with the Trust dated XXXXX,
1996, furnishes investment advice and is responsible for overall management of
the Trust's business affairs. Frank E. Holmes is Chairman of the Board of
Directors and Chief Executive Officer of the Advisor, as well as President and
Trustee of the Trust. Since October 1989, Mr. Holmes has owned more than 25% of
the voting stock of the Advisor and is its controlling person. The Advisor was
organized in 1968. The Advisor serves as investment advisor to the United
Services Funds, a family of mutual funds with over $1.4 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.
Investment decisions for the Fund are made independently from those of
other investment companies advised by United Services Advisors, 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, trust companies,
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, although
such fees may be account based.
The Transfer Agency Agreement with the Trust provides for the Fund to
pay USSI an annual fee of $23 per account (1/12 of $23 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 shall pay to the Transfer Agent a monthly fee equal
to one-twelfth (1/12) of 12.5 basis points (.00125) of the value of the shares
of the fund held in accounts at the institutions, which payment shall not exceed
$1.92 multiplied by the average daily number of accounts holding Fund shares at
the institutions. These fees cover the usual transfer agency functions. In
addition, the Fund bears certain other Transfer Agent expenses such as the costs
of record retention and postage, plus the telephone and line charges (including
the toll-free 800 service) used by shareholders to contact the Transfer Agent.
Transfer Agent fees and expenses including reimbursed expenses, are reduced by
the amount of small account charges and account closing fees the Transfer Agent
is paid.
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 auditors' expenses;
brokerage commissions for portfolio transactions; the advisory fee;
extraordinary expenses; expenses of shareholders and trustee meetings; expenses
for preparing, printing, and mailing prospectuses, proxy statements, reports and
other communications to shareholders; and expenses of registering and qualifying
shares for sale, among others.
DISTRIBUTION EXPENSE PLAN
Pursuant to Rule 12b-1 under the Investment Company Act of 1940, the
Fund has adopted a distribution expense plan (the "Plan") under which Fund
assets may be utilized to pay for or reimburse expenditures in connection with
sales and promotional services related to the distribution of Fund shares,
including personal services provided to prospective and existing Fund
shareholders, which include the costs of: printing and distribution of
prospectuses and promotional materials; making slides and charts for
presentations; assisting shareholders and prospective investors in understanding
and dealing with the Fund; and travel and out-of-pocket expenses (e.g., copy and
long distance telephone charges) related thereto. Fund assets may be utilized to
pay for or reimburse such expenditures provided the total amount expended
pursuant to this Plan does not exceed 0.25% of net assets on an annual basis.
Under the terms of the Plan the Fund may pay a "servicing fee" of up
to 0.25% of the Fund's average net assets (1/12 of 0.25% monthly) to persons or
institutions for performing certain servicing functions for Fund shareholders.
These fees will be paid periodically and will generally be based on a percentage
of the value of Fund shares held by the institution's clients. The Plan allows
the Fund to pay for or reimburse expenditures in connection with sales and
promotional services related to the distribution of Fund shares, including
personal services provided to prospective and existing Fund shareholders. See
"Distribution Plan" in the Statement of Additional Information.
PERFORMANCE INFORMATION
From time to time, in advertisements or in reports to shareholders or
prospective shareholders, the Fund may compare its performance, either in terms
of its yield, total return or its yield and total return, to that of other
mutual funds with similar investment objectives and to stock or other indices.
For example, the Fund may compare its performance to rankings prepared by Lipper
Analytical Services, Inc. ("Lipper"), a widely recognized independent service
which monitors the performance of mutual funds; to Morningstar's Mutual Fund
Values; to the S&P 500 Index; or to the Consumer Price Index. Performance
information and rankings as reported in Changing Times, Business Week,
Institutional Investor, The Wall Street Journal, Mutual Fund Forecaster, No-Load
Investor, Money Magazine, Forbes, Fortune and Barron's magazine may also be used
in comparing performance of the Fund. Performance comparisons shall not be
considered as representative of the future performance of the Fund.
The Fund's average annual total return is computed by determining the
average annual compounded rate of return for a specified period that, if applied
to a hypothetical $1,000 initial investment, would produce the redeemable value
of that investment at the end of the period, assuming reinvestment of all
dividends and distributions and with recognition of all recurring charges. The
Fund may also utilize a total return for differing periods computed in the same
manner but without annualizing the total return.
The Fund's "yield" refers to the income generated by an investment in
the Fund over a 30 day (or one month) period (which period will be stated in the
advertisement). Yield is computed by dividing the net investment income per
share earned during the most recent calendar month by the maximum offering price
per share on the last day of such month. This income is then "annualized." That
is, the amount of income generated by the investment during that 30 day period
is assumed to be generated each month over a 12 month period and is shown as a
percentage of the investment.
For purposes of the yield calculation, interest income is computed
based on the yield to maturity of each debt obligation and dividend income is
computed based upon the stated dividend rate of each security in the Fund's
portfolio, and all recurring charges are recognized.
The standard total return and yield results do not take into account
recurring and nonrecurring charges for optional services which only certain
shareholders elect and which involve nominal fees such as the $5 fee for
exchanges. These fees have the effect of reducing the actual return realized by
shareholders.
ACCOLADE FUNDS
SHARES OF THE FUND ARE SOLD
AT NET ASSET VALUE WITHOUT SALES COMMISSIONS OR
REDEMPTION FEES
Leeb Value Fund
INVESTMENT ADVISOR
United Services Advisors, Inc.
7900 Callaghan Road
Mailing Address: P.O. Box 29467
San Antonio, Texas 78229-0467
INVESTMENT SUB-ADVISOR
Money Growth Institute, Inc.
45 Rockefeller Plaza, Suite 2570
New York, New York 10111
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 ACCOUNTANT
Price Waterhouse LLP
One Riverwalk Place, Ste. 900
San Antonio, Texas 78205
No Load
Be Sure to Retain This Prospectus;
It Contains Valuable Information
<PAGE>
ITEM 15. 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 judgements, 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 Cover 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 runcible
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 16. EXHIBITS
( 1) Amended and Restated Master Trust Agreement of Registrant*
( 2) By-Laws of Registrant**
( 3) Not applicable
( 4) Agreement and Plan of Reorganization dated XXX, 1996,
included as Exhibit I of the Combined Proxy Statement and
prospectus.*
( 5) Specimen stock certificate of Registrant***
( 6) (a) Amended Investment Advisory Agreement, included as Exhibit
III of the Combined Proxy Statement and Prospectus*
( 6) (b) Sub-Advisory Agreement, included as Exhibit IV of the
Combined Proxy Statement and Prospectus*
( 7) Not applicable
( 8) Not applicable
( 9) Copy of Custodian Agreement with Bankers Trust Company of New
York**
(10) 12b-1 Plan included as Exhibit V of the Combined Proxy
Statement and Prospectus*
(11) Opinion and consent of counsel as to the legality of securities
being registered***
(12) Opinion and consent of counsel as to Federal tax matters***
(13) Not applicable
(14) Consent of independent public accountants, Arthur Andersen***
(15) Not applicable
(16) Not applicable
(17) Not applicable
* Filed herewith.
** Previously filed with the Registrant, Accolade Trust, 33-61542 811-7662
*** To be filed by Pre-Effective Amendment
ITEM 17. UNDERTAKINGS
The undersigned registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as a part of an amendment to
the registration statement and will not be used under the amendment is
effective, and that, in determining any liability under the 1933 Act,
each post-effective amendment shall be deemed to be a new registration
statement for the securities offered therein, and the offering of the
securities at that time shall be deemed to be the initial bona fide
offering of them.
<PAGE>
SIGNATURE PAGE
As required by the Securities Act of 1933, this registration statement has been
signed on behalf of the registrant, in the City of San Antonio and State of
Texas, on the 22nd day of May, 1996.
- --------------------------------------------------------------------------------
Registrant: ACCOLADE FUNDS/LEEB VALUE FUND
- --------------------------------------------------------------------------------
By: /s/ FRANK E. HOLMES
------------------------------------
President
- --------------------------------------------------------------------------------
As required by the Securities Act of 1933, this registration statement has been
signed below by the following persons in the capacities and on the date
indicated:
- --------------------------------------------------------------------------------
SIGNATURE TITLE DATE
/s/ FRANK E. HOLMES
- ---------------------------------- President, CEO, Trustee May 22, 1996
Frank E. Holmes
/s/ RICHARD E. HUGHS
- ---------------------------------- Trustee May 22, 1996
Richard E. Hughs
/s/ CLARK R. MANDIGO
- ---------------------------------- Trustee May 22, 1996
Clark R. Mandigo
<PAGE>
ACCOLADE FUNDS
FIRST AMENDED AND RESTATED
MASTER TRUST AGREEMENT
This AGREEMENT AND DECLARATION OF TRUST (the "Agreement") made at San
Antonio, Texas, the 15th day of April, 1993, by the Trustees named under this
Agreement, and by the holders of shares of beneficial interest to be issued as
provided under this Agreement is hereby amended and restated in its entirety
this 22nd day of May, 1996 in the City of San Antonio in the State of Texas, as
follows:
DECLARATIONS
WHEREAS this Trust has been created to conduct the business of an
investment company; and
WHEREAS this Trust is authorized to issue, in accordance with the
provisions of this Agreement, its shares of beneficial interest in separate
series, with each separate series to be a Sub-Trust described in this Agreement;
WHEREAS the Trustees have agreed to manage the property received by
them as trustees of a Massachusetts business trust in accordance with the
provisions in this Agreement.
NOW, THEREFORE, the Trustees hereby declare that they will hold all
cash, securities and other assets which they may acquire (from time to time) as
Trustees under this Agreement IN TRUST to manage and dispose of the same upon
the following terms and conditions for the benefit of the holders from time to
time of shares of beneficial interest in this Trust or Sub-Trusts created under
this Agreement as hereinafter set forth.
ARTICLE I
NAME AND DEFINITIONS
Section 1.1 NAME AND PRINCIPAL OFFICE. This Trust shall be known as
Accolade Funds and the Trustees will conduct the business of the Trust under
that name or any other name or names as they may from time to time determine.
The principal place of business of the Trust shall be 7900 Callaghan Road, San
Antonio, Texas 78229 or at such other location as the Trustees may from time to
time determine.
Section 1.2 DEFINITIONS. Unless otherwise specifically stated, the
following terms shall mean:
(a) "By-Laws" shall mean the By-Laws of the Trust as amended from
time to time.
(b) The "1940 Act" refers to the Investment Company Act of 1940 and
regulations thereunder, all as amended from time to time;
(c) The term "Commission" shall have the meaning given it in the 1940
Act;
(d) "Series" refers to Series of Shares established and designated
under or in accordance with the provisions of Article IV, each of
which Series shall be a Sub-Trust of the Trust;
(e) "Shareholder" means a record owner of Shares;
(f) "Shares" refers to the transferable units of interest into which
the beneficial interest in the Trust and each Sub-Trust of the
Trust (as the context may require) shall be divided from time to
time;
(g) The "Trust" refers to the Accolade Funds business trust
established by this Agreement, as amended from time to time,
inclusive of each and every Sub-Trust established hereunder;
(h) "Agreement" shall mean this Agreement and Declaration of Trust as
amended or restated from time to time; and
(i) "Trustees" refers to the Trustees of the Trust named herein or
elected in accordance with Article III; and
(j) "Class" refers to any class of Shares of any Series or Sub-Trust
established and designated under or in accordance with the
provisions of Article IV.
ARTICLE II
PURPOSE OF TRUST
The purpose of the Trust is to conduct the business of an investment
company, offering Shareholders of the Trust one or more investment programs; and
to engage in any business allowable under applicable law which the Trustees may
deem convenient or proper in furtherance of the Trust's business.
ARTICLE III
THE TRUSTEES
Section 3.1 Appointment, Election, Removal, etc.
(a) TRUSTEES. The Trustees hereof are Richard E. Hughs, 11 Dennin
Drive, Menands, New York 12204; Clark R. Mandigo, 317 Geneseo,
San Antonio, Texas 78209; and, Frank E. Holmes, 7900 Callaghan
Rd., San Antonio, Texas 78229.
(b) NUMBER. The Trustee(s) serving as such, whether named above or
hereafter appointed or elected, have the discretion to increase
or decrease the number of Trustees. No decrease in the number of
Trustees may remove any Trustee from office prior to the
expiration of his term; however, a decrease in the number of
Trustees may coincide with the removal of a Trustee pursuant to
subsection (g) of this Section 3.1.
(c) ELECTION. The Shareholders shall elect the Trustees of the Trust.
Subject to Section 16(a) of the 1940 Act, the Trustees may elect
their own successors and may, pursuant to Section 3.1(e), appoint
Trustees to fill vacancies.
(d) TERM. Whether named above, appointed or elected pursuant to the
terms of this Agreement, a Trustee shall serve as trustee of the
Trust and each Sub-Trust hereunder for a period of six years or
until termination of the Trust or the Trustees' death,
resignation or removal, whichever occurs first. Notwithstanding
the foregoing, the Trustees' terms shall be staggered so that the
terms of at least 25% of the Board of Trustees will expire every
three years. This provision shall not be construed to preclude
re-election of a Trustee whose terms is expiring.
(e) VACANCIES. Any vacancy resulting from death, resignation, removal
or any other means, including without limitation an increase in
the number of trustees by the other trustees, or any anticipated
vacancy may (but need not unless required by the 1940 Act) be
filled by a majority of the remaining Trustees. Subject to the
provisions of Section 16(a) of the 1940 Act, the remaining
Trustees, in their sole discretion, may appoint in writing a
Trustee to fill a vacancy, and this appointment shall become
effective upon the written acceptance of such named person and
his agreement to be bound by the provisions of this Agreement. In
the event of an appointment to fill an anticipated vacancy, the
appointment shall become effective at or after the date the
anticipated vacancy occurs. No further act is necessary for the
Trust estate to vest in the new Trustee once the appointment is
effective.
(f) RESIGNATION. A Trustee may resign as a trustee by delivering to
the Trustees or any Trust officer a signed written document to
that effect. The effective date of such resignation will be the
later of date stated in the document or, the date of delivery of
the document to the Trust at its principal offices.
(g) REMOVAL. Any Trustee may be removed with or without cause at any
time either: (i) by a written document stating the effective date
of the removal and signed by at least two-thirds of the number of
Trustees prior to such removal; or (ii) by at least a two-thirds
vote of the outstanding shares, with such vote cast in person or
by proxy at a meeting called for such purpose; or (iii) by a
written declaration signed by Shareholders owning at least
two-thirds of the outstanding shares and filed with the Trust's
custodian.
(h) EFFECT OF DEATH, RESIGNATION, ETC. The death, resignation,
retirement, removal, or incapacity of one or more of the Trustees
shall not terminate the Trust or any Sub-Trust or revoke or
terminate any existing agency or contract created or entered into
pursuant to the terms of this Agreement.
(i) NO ACCOUNTING. No persons or estate of such person who has ceased
acting as Trustee shall be required to make an accounting to the
Trustees or Shareholders unless required by the 1940 Act or
justified by circumstances calling for removal for cause.
Section 3.2 POWERS. The Trustees may, in accordance with this Trust
Agreement, carry on the business of the Trust and shall have all the powers
necessary to conduct such business to carry out the purpose of the Trust. The
Trustees' powers include, but are not limited to:
adopting By-Laws consistent with the Trust Agreement which specify
procedures for conducting the daily business affairs of the Trust,
including the power to amend and repeal the By-Laws to the extent that
the By-Laws do not reserve that right to the Shareholders;
establish Sub-Trusts, each such Sub-Trust to operate as a separate and
distinct investment medium and with separately defined investment
objectives and policies;
establish, from time to time in accordance with the provisions of
Section 4.1 hereof, classes of Shares of any Series or Sub-Trust or
divide the Shares of any Series or Sub-Trust into classes;
elect and remove officers and appoint and terminate agents and
consultants and hire and terminate employees, any one or more of the
foregoing of whom may be a Trustee, and may provide for the
compensation of all of the foregoing;
appoint from their own number, and terminate, any one or more
committees consisting of two or more Trustees, including without
implied limitation an executive committee, which may, when the Trustees
are not in session and subject to the 1940 Act, exercise some or all of
the power and authority of the Trustees as the Trustees may determine;
employ one or more Advisers, Administrators, Depositories and
Custodians and may authorize any Depository or Custodian to employ
subcustodians or agents and to deposit all or any part of such assets
in a system or systems for the central handling of securities and debt
instruments, retain transfer, dividend, accounting or Shareholder
servicing agents or any of the foregoing, provide for the distribution
of Shares by the Trust through one or more distributors, principal
underwriters or otherwise; and
in general, they may delegate to any officer of the Trust, to any
committee of the Trustees and to any employee, adviser, administrator,
distributor, depository, custodian, transfer and dividend disbursing
agent, or any other agent or consultant of the Trust such authority,
powers, functions and duties as they consider desirable or appropriate
for the conduct of the business and affairs of the Trust, including
authority to act in the name of the Trust and of the Trustees, to sign
documents and to act as attorney-in-fact for the Trustees.
Without limiting the foregoing, the Trustees, on behalf of the Trust,
shall, in accordance with the 1940 Act or other applicable law, have the
authority:
(a) INVESTMENTS. To invest cash and other property, and to hold cash
or other property uninvested without regard to the custom of
investments by trustees;
(b) DISPOSITION OF ASSETS. To sell, exchange, lend, pledge, mortgage,
write options on and lease any or all of the assets of the Trust;
(c) OWNERSHIP POWERS. To vote, or give assent, or exercise any rights
of ownership, with respect to stock or other securities, debt
instruments or property; and to execute and deliver proxies or
powers of attorney to such person or persons as the Trustees
shall deem proper;
(d) SUBSCRIPTION. To exercise powers and rights of subscription which
arise out of ownership of securities or debt instruments;
(e) FORM OF HOLDING. To hold any assets of the Trust in the name of
the Trust, Trustees, Sub-Trust, nominee or otherwise;
(f) REORGANIZATION, ETC. To consent to or participate in any plan for
the reorganization or consolidation of any corporation or issuer
for which a security or debt instrument is or was held in the
Trust;
(g) VOTING TRUSTS, ETC. To join with other holders of any securities
or debt instruments in acting through a committee, depository,
voting trustee or otherwise, and in that connection to deposit
any security or debt instrument with, or transfer any security or
debt instrument to the other holders or a representative thereof
and to delegate to them such power and authority with regard to
any security or debt instrument (whether or not so deposited or
transferred) as the Trustees shall deem proper, and to pay such
portion of the expenses and compensation of such representative
as the Trustees shall deem proper;
(h) COMPROMISE. To compromise or arbitrate claims (or any matter in
controversy) in favor of or against the Trust or any Sub-Trust;
(i) ASSOCIATIONS, ETC. To enter into joint ventures, general or
limited partnerships and any other combinations or associations;
(j) BORROWING AND SECURITY. To borrow funds and to mortgage the
assets of the Trust to secure the obligations arising out of such
borrowing;
(k) GUARANTEES, ETC. To make contracts of guaranty, endorse or
guarantee the payment of any obligations of any person; and to
mortgage and pledge any Trust property to secure any of or all
such obligations;
(l) INSURANCE. To purchase and pay for entirely out of Trust property
such insurance as they may deem necessary or appropriate for the
conduct of the Trust's business including, without limitation,
liability insurance for the benefit of the Shareholders,
Trustees, officers, employees, agents, consultants, investment
advisors, managers, administrators, distributors, principal
underwriters or independent contractors (or any person connected
therewith); and
(m) VOTE REQUIRED, PLACE AND TYPE OF MEETING. Except as otherwise
provided by the 1940 Act or other applicable law, this Agreement
or the By-Laws, any action to be taken by the Trustees on behalf
of the Trust or any Sub-Trust may be taken by a majority of the
Trustees present at a meeting of Trustees (a quorum, consisting
of at least a majority of the Trustees then in office, being
present), within or without Massachusetts, including any meeting
held by means of a conference telephone or other communications
equipment by means of which all persons participating in the
meeting can hear each other at the same time and participation by
such means shall constitute presence in person at a meeting, or
by written consents of a majority of the Trustees then in office
(or such larger or different number as may be required by the
1940 Act or other applicable law); and
(n) DISTRIBUTION PLANS. To adopt on behalf of the Trust or any
Sub-Trust with respect to any class thereof a plan of
distribution and related agreements thereto pursuant to the terms
of Rule 12b-1 and/or other provisions of the 1940 Act and to make
payments from the assets of the Trust or the relevant Sub-Trust
or Sub-Trusts pursuant to said Rule 12b-1 Plan.
Section 3.3 CERTAIN CONTRACTS. The Trustees may from time to time enter
into contracts with any type of organization or individual ("Contracting Party")
to provide services for the Trust. Any delegation of powers by the Trustees
shall not limit the generality of their powers and authority.
The fact that:
(i) any of the Shareholders, Trustees or officers of the Trust
is a shareholder, director, officer, partner, trustee,
employee, manager, adviser, principal underwriter or
distributor or agent of or for any Contracting Party, or of
or for any parent or affiliate of any contracting party or
that the contracting party or any parent or affiliate
thereof is a Shareholder or has an interest in the Trust or
any Sub-Trust, or that
(ii) any Contracting Party may have a contract providing for the
rendering of any similar services to one or more other
corporations, trusts, associations, partnerships, limited
partnerships or other organizations, or have other business
or interests,
shall not affect the validity of any contract for the performance and assumption
of services, duties and responsibilities to, for or of the Trust or any
Sub-Trust and/or the Trustees or disqualify any Shareholder, Trustee or officer
of the Trust from voting upon or executing the same or create any liability or
accountability to the Trust, any Sub-Trust or its Shareholders, provided that in
the case of any relationship or interest referred to in the preceding clause (i)
on the part of any Trustee or officer of the Trust either (x) the material facts
as to such relationship or interest have been disclosed to or are known by the
Trustees not having any such relationship or interest and the contract involved
is approved in good faith by a majority of such Trustees not having any such
relationship or interest (even though such unrelated or disinterested Trustees
are less than a quorum of all of the Trustees), (y) the material facts as to
such relationship or interest and as to the contract have been disclosed to or
are known by the Shareholders entitled to vote thereon and the contract involved
is specifically approved in good faith by vote of the shareholders, or (z) the
specific contract involved is fair to the Trust as of the time it is authorized,
approved or ratified by the Trustees or by the Shareholders.
Section 3.4 TRUST EXPENSES. The Trustees are authorized to incur on
behalf of the Trust expenses which they deem necessary and proper to carry out
the business of the Trust. As an element of expenses, the Trustees are
authorized to determine, establish, and receive reasonable compensation for
their services as Trustees. The Trustees are authorized to pay all expenses from
either principal or income and may allocate expenses among the Sub-Trusts and/or
one or more classes of Shares thereof as the Trustees, in their discretion, deem
necessary and appropriate.
Section 3.5 OWNERSHIP OF ASSETS OF THE TRUST. Title to all of the Trust
assets shall at all times be considered as vested in the Trustees.
ARTICLE IV
SHARES/SUB-TRUSTS
Section 4.1 DESCRIPTION OF SHARES. The beneficial interest in the Trust
shall consist of one class of no-par Shares; however, the Trustees have
authority to divide the class of Shares into Series of Shares each of which
Series of Shares shall be a separate and distinct Sub-Trust of the Trust, as
they deem necessary or desirable. Each Sub-Trust of Shares established will be
deemed to be a separate Trust under Massachusetts General Laws Chapter 182. The
Trustees shall have exclusive powers without Shareholder approval to establish
any Sub-Trust and to determine the relative rights and preferences between the
Shares of the separate Sub-Trusts as to right of redemption and the price, terms
and manner of redemption, special and relative rights as to dividends and other
distributions and on liquidation, sinking or purchase fund provisions,
conversion rights, and conditions under which the several Sub-Trusts shall have
separate voting rights or no voting rights.
In addition, the Trustees shall have exclusive power, without the
requirement of Shareholder approval, to issue classes of Shares of any Sub-Trust
or divide the Shares of any Sub-Trust into classes, each class having such
difference dividend, liquidation, voting and other rights as the Trustees may
determine, and may establish and designate the specific classes of Shares of
each Sub-Trust. The fact that a Sub-Trust shall have initially been established
and designated without any specific establishment or designation or classes
(i.e., that all Shares of such Sub-Trust are initially of a single class), or
that a Sub-Trust shall have more than one established and designated class,
shall not limit the authority of the Trustees to establish and designate
separate classes, or one or more further classes, of said Sub-Trust without
approval of the holders of the initial class thereof, or previously established
and designated class or classes thereof, provided that the establishment and
designation of such further separate classes would not adversely affect the
rights of the holders of the initial or previously established and designated
class or classes.
The number of authorized Shares and the number of Shares of each
Sub-Trust or class thereof that may be issued is unlimited, and the Trustees may
issue Shares of any Sub-Trust or class thereof for such consideration and on
such terms as they may determine (or for no consideration if pursuant to a Share
dividend or split-up), all without action or approval of the Shareholders. All
Shares when so issued on the terms determined by the Trustees shall be fully
paid and non-assessable (but may be subject to mandatory contribution back to
the Trust as provided in subsection (h) of Section 4.4). The Trustees may
classify or reclassify any unissued Shares or any Shares previously issued and
reacquired of any Sub-Trust or class thereof into one or more Sub-Trusts or
classes thereof that may be established and designated from time to time. The
Trustees may hold as treasury Shares, reissue for such consideration and on such
terms as they may determine, or cancel, at their discretion from time to time,
any Shares of any Sub-Trust or class thereof reacquired by the Trust.
The Trustees may, at any time, abolish a Sub-Trust if no Shares of that
Sub-Trust are outstanding.
The Trustees may from time to time close the transfer books or
establish record dates and times for the purposes of determining the holders of
Shares entitled to be treated as such, to the extent provided or referred to in
Section 5.3.
The establishment and designation of any Sub-Trust or of any class of
Shares of any Sub-Trust in addition to those established and designated in
Section 4.2 shall be effective upon the vote of a majority of the then Trustees
setting forth such establishment and designation and the relative rights and
preferences of the Shares of such Sub-Trust or class, or as otherwise provided
in such instrument. At any time that there are no Shares outstanding of any
particular Sub-Trust or class previously established and designated the Trustees
may by vote of a majority of their number (or by an instrument executed by an
officer of the Trust pursuant to the vote of a majority of the Trustees) abolish
that Sub-Trust or class and the establishment and designation thereof. Each vote
referred to in this paragraph shall be implemented by preparation and filing of
an amendment to this Agreement.
Any Trustee, officer or other agent of the Trust, and any organization
in which any such person is interested may acquire, own, hold and dispose of
Shares of any Sub-Trust (including any classes thereof) of the Trust to the same
extent as if such person were not a Trustee, officer or other agent of the
Trust; and the Trust may issue and sell or cause to be issued and sold and may
purchase Shares of any Sub-Trust (including any classes thereof from any such
person or any such organization subject only to the general limitations,
restrictions or other provisions applicable to the sale or purchase of Shares of
such Sub-Trust (including any classes thereof) generally.
Section 4.2 ESTABLISHMENT AND DESIGNATION OF SUB-TRUSTS. Without
limiting the Trustees' authority to establish further Sub-Trusts pursuant to
Section 4.1, the Trustees hereby establish the following sub-trusts: SIF
Government Money Market Fund; SIF Government Short-Term Fund; Bonnel Growth
Fund; and Leeb Value Fund.
Section 4.3 RIGHTS AND PREFERENCES OF SUB-TRUSTS. Unless otherwise
specified by the Trustees, the Sub-Trusts established above and all future
Sub-Trusts or any classes thereof have the following rights and preferences:
(a) ASSETS BELONGING TO SUB-TRUSTS. All consideration received by the
Trust for the issue or sale of Shares of a particular Sub-Trust
or nay classes thereof, all assets in which the consideration is
invested, and proceeds from the sale, exchange or liquidation
thereof, all income earnings, profits and proceeds from those
assets and any items allocated to the Sub-Trust or class thereof
by the Trustees shall be held in trust by the Trustees for the
benefit of the Shareholders of that Sub-Trust or class thereof
shall irrevocably belong to that Sub-Trust (and be allocable to
any classes thereof) and shall be recorded on the books of
account of the Trust as assets belonging to that Sub-Trust. The
Trustees may, in a manner they deem fair and equitable, allocate
among the Sub-Trusts any items which are not readily identifiable
to any one particular Sub-Trust (and allocable to any classes
thereof). Each allocation shall be binding upon the Shareholders
of the Trust.
(b) LIABILITIES BELONGING TO SUB-TRUSTS. The liabilities belonging to
a Sub-Trust shall include all liabilities associated with the
assets of that particular Sub-Trust, all expenses and charges
attributable to that Sub-Trust and any general liabilities which
are not readily identifiable and which the Trustees may allocate
in a manner they deem fair and equitable to that Sub-Trust. In
addition, the liabilities in respect of a particular class of
Shares of a particular Sub-Trust and all expenses, costs, charges
and reserves belonging to that class of Shares, and any general
liabilities, expenses, costs, charges or reserves of that
particular Sub-Trust which are not readily identifiable as
belonging to any particular class of Shares of that Sub-Trust
shall be allocated and charged by the Trustees to and among any
one or more of the classes of Shares of that Sub-Trust
established and designated from time to time in such manner and
on such basis as the Trustees in their sole discretion deem fair
and equitable. Each allocation shall be binding upon the
Shareholders of the Trust. Only the assets of a particular
Sub-Trust (including any classes thereof) may be used to satisfy
a creditor of that Sub-Trust.
(c) DETERMINATION OF TREATMENT AS INCOME AND/OR CAPITAL. Except as
otherwise provided by the 1940 Act, the Trustees shall have full
discretion to determine which items shall be treated as income
and which items as capital; and each such determination and
allocation shall be conclusive and binding upon the Shareholders.
(d) DIVIDENDS. Dividends and distributions on Shares of a particular
Sub-Trust or any class thereof may be paid with such frequency as
the Trustees may determine, which may be daily or otherwise
pursuant to a standing resolution or resolutions adopted only
once or with such frequency as the Trustees may determine, to the
holders of Shares of that Sub-Trust or class, from such of the
income and capital gains, accrued or realized, from the assets
belonging to that Sub-Trust, or in the case of a class, belonging
to that sub-trust and allocable to that class, as the Trustees
may determine, after providing for actual and accrued liabilities
belonging to that Sub-Trust or class. All dividends and
distributions on Shares of a particular Sub-Trust or class
thereof shall be distributed pro rata to the holders of Shares of
that Sub-Trust or class in proportion to the number of Shares of
that Sub-Trust held by such holders at the date and time of
record established for the payment of such dividends or
distributions, except that in connection with any dividend or
distribution program or procedure the Trustees may determine that
no dividend or distribution shall be payable on Shares as to
which the Shareholder's purchase order and/or payment have not
been received by the time or times established by the Trustees
under such program or procedure. Such dividends and distributions
may be made in cash or Shares of that Sub-Trust or class or a
combination thereof as determined by the Trustees or pursuant to
any program that the Trustees may have in effect at the time for
the election by each Shareholder of the mode of the making of
such dividend or distribution to that Shareholder. Any such
dividend or distribution paid in Shares will be paid at the net
asset value thereof as determined in accordance with the
subsection (i) of Section 4.3.
The Trustees shall have full discretion, to the extent not inconsistent
with the 1940 Act, to determine which items shall be treated as income and which
items as capital; and each such determination and allocation shall be conclusive
and binding upon the Shareholders.
(e) LIQUIDATION. A Sub-Trust or any class there may be liquidated
after such liquidation has been authorized by a majority vote of
the Trustees then in office and approved by a majority of the
outstanding voting Shares of that Sub-Trust or in the case of a
class, belonging to that Sub-Trust and allocable to that class,
over the liabilities belonging to that Sub-Trust or class, as
defined in the 1940 Act. The Shareholders of that particular
Sub-Trust or class thereof shall receive the excess of assets in
the Sub-Trust or class thereof over the liabilities in the
Sub-Trust on a pro rata basis.
(f) VOTING. On each matter submitted to a vote of the Shareholders,
each holder of a Share of each Sub-Trust or any class thereof
shall be entitled to one vote for each whole Share and for a
proportionate fractional vote for each fractional Share
outstanding in his name on the books of the Trust and all shares
of each Sub-Trust or class thereof shall vote as a separate
class, except as to voting for Trustees and as otherwise required
by the 1940 Act. As to any matter which does not affect the
interest of a particular Sub-Trust or class thereof, only the
holders of Shares of one or more of the affected Sub-Trusts or
classes thereof shall be entitled to vote.
(g) REDEMPTION BY SHAREHOLDER. Each Shareholder shall have the right
to tender all or part of his shares of the Sub-Trust or any class
thereof for redemption at such times as the By-Laws permit, but
at least once weekly, with the redemption price equal to the net
asset value per Share as defined in this section. The Trust shall
make payment in cash unless in the Trustee's judgment conditions
exist which make payment in cash undesirable, in which case the
Trust may make payment wholly or partly in assets belonging to
the Sub-Trust or class thereof. The Trust may postpone payment of
the redemption price and suspend the Shareholder's right of
redemption in appropriate circumstances, to the extent
permissible under the 1940 Act.
(h) REDEMPTION BY TRUST. The Trustees shall have the right to redeem
the Shares of the Trust and Sub-Trusts or classes thereof at the
same redemption price as if the Shareholder were redeeming the
Shares. A redemption by the Trustees shall occur if: (1) the
Trustees determine in their sole discretion that failure to
redeem the Shares would result in material adverse consequences
to the Shareholders of any of the Sub-Trusts; or (2) the failure
of a Shareholder to maintain a minimum amount as set forth in the
current prospectus of the Trust (Sub-Trust). If the Trustees
exercise their right of redemption, the Shareholder shall have no
further right except to receive payment of the redemption price.
(i) NET ASSET VALUE. The net asset value per Share of any Sub-Trust
shall be (a) in the case of a Sub-Trust whose Shares are not
divided into classes, the quotient obtained by dividing the value
of the net assets of that Sub-Trust (being the value of the
assets belonging to that Sub-Trust less the liabilities belonging
to that Sub-Trust) by the total number of Shares of that
Sub-Trust outstanding, and (b) in the case of a class of Shares
of a Sub-Trust whose Shares are divided into classes, the
quotient obtained by dividing the value of the assets of that
Sub-Trust allocable to such class (less the liabilities belonging
to such class) by the total number of Shares of such class
outstanding. The net asset value shall be computed in accordance
with the 1940 Act and regulations thereunder. In calculating the
net asset value, methods and procedures established by the
Trustees shall be used.
The Trustees may determine to maintain the net asset value per Share of
any Sub-Trust at a designated constant dollar amount and in connection therewith
may adopt procedures not inconsistent with the 1940 Act for the continuing
declarations of income attributable to that Sub-Trust as dividends payable in
additional Shares of that Sub-Trust at the designated constant dollar amount and
for the handling of any losses attributable to that Sub-Trust. Such procedures
may provide that in the event of any loss each Shareholder shall be deemed to
have contributed to the capital of the Trust attributable to that Sub-Trust his
pro rata portion of the total number of Shares required to be canceled in order
to permit the net asset value per Share of that Sub-Trust to be maintained,
after reflecting such loss, at the designated constant dollar amount. Each
Shareholder of the Trust shall be deemed to have agreed, by his investment in
any Sub-Trust with respect to which the Trustees shall have adopted any such
procedure, to make the contribution referred to in the preceding sentence in the
event of any such loss.
(j) TRANSFER. All Shares of each particular Sub-Trust or class
thereof shall be transferable, but transfers of Shares of a
particular Sub-Trust or class thereof will be recorded on the
Share transfer records of the Trust applicable to that Sub-Trust
or class only at such times as Shareholders shall have the right
to require the Trust to redeem Shares of that Sub-Trust or class
and at such other times as may be permitted by the Trustees.
(k) EQUALITY. Except as provided herein or in the instrument
designating and establishing any class of Shares or any
Sub-Trust, all Shares of each particular Sub-Trust or class
thereof shall represent an equal proportionate interest in the
assets belonging to that Sub-Trust, or in the case of a class,
belonging to that Sub-Trust and allocable to that class (subject
to the liabilities belonging to that Sub-Trust or class), and
each Share of any particular Sub-Trust or class shall be equal to
each other Share of that Sub-Trust or class; but the provisions
of this sentence shall not restrict any distinctions permissible
under subsection (d) of this Section 4.3 that may exist with
respect to dividends and distributions on Shares of the same
Sub-Trust or class. The Trustees may from time to time divide or
combine the Shares of any particular Sub-Trust or class into a
greater or lesser number of Shares of that Sub-Trust or class
without thereby changing the proportionate beneficial interest in
the assets of that Sub-Trust or class or in any way affecting the
rights of Shares of any other Sub-Trust or class.
(l) FRACTIONS. A fractional Share of a Sub-Trust or class
proportionately carries all the rights and obligations of a whole
Share of the Sub-Trust or class.
(m) CONVERSION RIGHTS. The Trustees shall have authority to establish
procedures pursuant to which a Shareholder of one Sub-Trust or
class thereof may exchange shares of that Sub-Trust for shares of
another Sub-Trust or class thereof.
(n) CLASS DIFFERENCES. The relative rights and preferences of the
classes of any Sub-Trust may differ in such other respects as the
Trustees may determine to be appropriate in their sole
discretion, provided that such differences are set forth in the
resolutions adopted by the Trustees or the instrument
establishing and designating such classes and executed by a
majority of the Trustees (or by an instrument executed by an
officer of the Trust pursuant to a vote of a majority of the
Trustees).
Section 4.4 OWNERSHIP OF SHARES. The ownership of Shares shall be
recorded on the books of the Trust or of a transfer or similar agent for the
Trust, which books shall be maintained separately for the Shares of each
Sub-Trust and each class thereof. No certificates certifying the ownership of
Shares need be issued except as the Trustees determine. The Trustees may
establish such rules as they consider appropriate for the issuance of Share
certificates, use of facsimile signatures, transfer of Shares and similar
matters. The record books of the Trust shall be conclusive as to who are the
Shareholders and as to the number of Shares of each Sub-Trust and class thereof
held from time to time by each such Shareholder.
Section 4.5 INVESTMENTS IN THE TRUST. The Trustees shall have authority
to establish procedures and policies with respect to acceptance or rejection of
investments in the Trust and Sub-Trusts and to authorize other persons to accept
and reject orders for the purchase of Shares in accordance therewith.
Section 4.6 NO PREEMPTIVE RIGHTS. The Shares of the Trust or
Sub-Trusts have no preemptive rights.
Section 4.7 STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY.
Shares shall be deemed to be personal property giving only the rights provided
in this instrument. Every Shareholder, by virtue of having become a Shareholder,
shall be held to have expressly assented and agreed to the terms hereof and to
have become a party hereto. The death of a Shareholder during the continuance of
the Trust shall not operate to terminate the Trust or any Sub-Trust thereof nor
entitle the representative of any deceased Shareholder to an accounting or to
take any action in court or elsewhere against the Trust or the Trustees, but
only to the rights of said decedent under this Trust. Ownership of Shares shall
not entitle the Shareholder to any title in or to the whole or any part of the
Trust property or right to call for a partition or division of the same or for
an accounting, nor shall the ownership of Shares constitute the Shareholders
partners. Neither the Trust nor the Trustees, nor any officer, employee or agent
of the Trust shall have any power to bind personally any Shareholder, nor,
except as specifically provided herein, to call upon any Shareholder for the
payment of any sum of money or assessment whatsoever other than such as the
Shareholder may at any time personally agree to pay.
ARTICLE V
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 5.1 Voting Powers. The Shareholders shall only vote in the
following instances:
( i) election or removal of Trustees as provided herein;
( ii) approval of a contract for which the 1940 Act requires
Shareholder approval;
(iii) termination or reorganization of the Trust or any Sub-Trust
if required by Section 7.2;
( iv) amendment of the Trust Agreement if required by Section 7.3;
( v) determination of whether a derivative or class action
suit should be brought or pursued on behalf of the Trust or
Sub-Trust or class thereof as would the stockholders of a
Massachusetts business corporation, provided that the
Shareholders of one Sub-Trust or class thereof may not vote
on an action on behalf of another Sub-Trust or class thereof
or one of its Shareholders; and
( vi) such additional matters relating to the Trust as may be
required by the 1940 Act, this Agreement, the ByLaws or any
registration of the Trust with the Commission (or any
successor agency) or any state, or as the Trustees may
consider necessary or desirable.
There shall be no cumulative voting in Trustee elections.
Shares may be voted by proxy or in person. Shares held in the name of
two or more persons may be voted by proxy executed by one of the named persons
unless the Trust is notified to the contrary by written instructions, prior to
the execution of the proxy. A proxy purporting to be executed by or on behalf of
a Shareholder shall be presumed valid unless challenged at or prior to its
exercise and the burden of proving invalidity shall be on the challenger.
Until Shares are issued the Trustees may take any action required by
law, this Agreement or the By-Laws to be taken by Shareholders.
Proxies may be given orally or in writing or pursuant to any
computerized or mechanical data gathering process specifically approved by the
Trustees.
Section 5.2 MEETINGS AND NOTICE. No annual or regular meeting of
Shareholders is required; however, the Trustees may call meetings to take action
on matters which require Shareholder vote and for other matters which the
Trustees determine Shareholder vote is necessary or desirable.
The Trustees shall give Shareholders written notice of any Shareholder
meeting by mailing such notice, postage prepaid, at least seven days before the
meeting date to each Shareholder at the Shareholder's address as it appears on
the records of the Trust. The notice shall state the purpose of the meeting.
Upon written request of Shareholders holding 10% or more of the then
outstanding Shares, the Trustees shall call a meeting to vote upon the removal
of a Trustee. If the Trustees do not call a Shareholder meeting within 30 days
after receipt of the written request, Shareholders holding 10% or more the then
outstanding Shares may call a meeting for that purpose giving notice and
following the procedures governing Trustee-called meetings, set forth in this
Agreement.
No notice is required for adjourned sessions which are held within a
reasonable time after the original meeting.
Section 5.3 RECORD DATES. For the purpose of determining Shareholders
entitled to vote or act at a meeting, to participate in a dividend or
distribution, or for the purpose of any other action, the Trustees may close the
transfer books for a period not exceeding 30 days (except at or in connection
with the termination of the Trust) as the Trustees may determine. Alternatively,
without closing the transfer books, the Trustees may fix a date and time not
more than 60 days prior to the date of any meeting of Shareholders or other
action as the date and time of record for the determination of Shareholders
entitled to vote at such meeting or to be treated as Shareholders of record for
purposes of such other action, and any Shareholder who was a Shareholder at the
date and time so fixed shall be entitled to vote at such meeting or any
adjournment thereof or to be treated as a Shareholder of record for purposes of
such other action, even though he has since that date and time disposed of his
Shares; and, no person becoming a Shareholder after that date and time shall be
so entitled to vote at such meeting or any adjournment thereof or to be treated
as a Shareholder of record for purposes of such other action.
Section 5.4 QUORUM AND REQUIRED VOTE. A quorum to conduct business
shall consist of a majority of the Shares entitled to vote at a Shareholder's
meeting. A lesser number is sufficient for adjournments.
Unless otherwise required by applicable law or this Agreement a
majority of the voted Shares at a meeting at which a quorum is present shall be
sufficient to transact business, and Trustees shall be elected by a plurality.
Section 5.5 ACTION BY WRITTEN CONSENT. Unless otherwise required by
applicable law, Shareholders may take action without a meeting if a majority of
the Shareholders entitled to vote on the action (or such greater percentage as
may be required by applicable law for such action) consent in writing to such
action and their consents are filed with the records of the Shareholder
meetings. Written Consents shall be treated as votes taken at a Shareholder
meeting.
Section 5.6 INSPECTION OF RECORDS. Shareholders may inspect the Trust's
records to the same extent permitted by Massachusetts Business Corporation Law
to the stockholders of a Massachusetts business corporation.
Section 5.7 ADDITIONAL PROVISIONS. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters not
inconsistent with the provisions hereof.
Section 5.8 SHAREHOLDER COMMUNICATIONS. Whenever ten or more
Shareholders of record have been such for a least six months preceding the date
of application, and who hold in the aggregate either Shares having a net asset
value of at least $25,000 or at least 1% of the outstanding Shares, whichever is
less, shall apply to the Trustees in writing, stating that they wish to
communicate with other Shareholders with a view to obtaining signatures to a
request for a Shareholder meeting and accompanied by a form of communication and
request which they wish to transmit, the Trustees shall within five business
days after receipt of such application either (1) afford to such applicants
access to a list of the names and addresses of all Shareholders as recorded on
the books of the Trust or Sub-Trust, as applicable; or (2) inform such
applicants as to the approximate number of Shareholders of record, and the
approximate cost of mailing to them the proposed communication and form of
request.
If the Trustees elect to follow the course specified in paragraph (2)
above the Trustees, upon the written request of such applicants, accompanied by
a tender of the material to be mailed and of the reasonable expenses of mailing,
shall, with reasonable promptness, mail such material to all Shareholders of
record at their addresses as recorded on the books, unless within five business
days after such tender the Trustees shall mail to such applicants and file with
the Commission, together with a copy of the material to be mailed, a written
statement signed by at least a majority of the Trustees to the effect that in
their opinion either such material contains untrue statements of fact or omits
to state facts necessary to make the statements contained therein not
misleading, or would be in such violation of applicable law, and specifying the
basis of such opinion. The Trustees shall thereafter comply with the
requirements of the 1940 Act.
ARTICLE VI
LIMITATION OF LIABILITY; INDEMNIFICATION
Section 6.1 TRUSTEES, SHAREHOLDERS, ETC. NOT PERSONALLY LIABLE,
NOTICE. All persons extending credit to, contracting with or having any claim
against the Trust shall look only to the assets of the Sub-Trust with which such
person dealt for payment under such credit, contract or claim; and neither the
Shareholders of any Sub-Trust nor the Trustees, nor any of the Trust's officers,
employees or agents, whether past, present or future, nor any other Sub-Trust
shall be personally liable therefor. Every note, bond, contract, instrument,
certificate or undertaking and every other act or thing whatsoever executed or
done by or on behalf of the Trust, any Sub-Trust or the Trustees or any of them
in connection with the Trust shall be conclusively deemed to have been executed
or done only by or for the Trust (or the Sub-Trust) or the Trustees and not
personally. Nothing in this Agreement shall protect any Trustee or officer
against any liability to the Trust or the Shareholders to which such Trustee or
officer would otherwise be subject by reason of wilful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
the office of Trustee or of such officer.
Section 6.2 NOTICE FOR CONTRACTS. Every contract, instrument,
certificate or undertaking made or issued by the Trustees or by any officers or
officer shall give notice (a) that this Agreement is on file with the Secretary
of the Commonwealth of Massachusetts, (b) that the document was executed or made
on behalf of the Trust or by them as Trustees or as officers and not by them
individually, and (c) that the obligations of such instrument are not binding
upon any of them or the Shareholders individually, but are binding only upon the
assets and property of the Trust, or the particular Sub-Trust in question, as
the case may be. Omission of such notice shall not operate to bind any Trustee,
officer or Shareholder individually.
Section 6.3 TRUSTEE'S GOOD FAITH ACTION; EXPERT ADVICE; NO BOND. The
exercise by the Trustees of their powers and discretion hereunder shall be
binding upon everyone interested. A Trustee shall be liable for his own wilful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee, and for nothing else, and
shall not be liable for errors of judgment or mistakes of fact or law. Subject
to the foregoing, (a) the Trustees shall not be responsible or liable in any
event for any neglect or wrongdoing of any officer, agent, employee, consultant,
adviser, administrator, distributor or principal underwriter, custodian or
transfer, dividend disbursing, Shareholder servicing or accounting agent of the
Trust, nor shall any Trustee be responsible for the act or omission of any other
Trustee; (b) the Trustees may take advice of counsel or other experts with
respect to the meaning and operation of this Agreement and their duties as
Trustees, and shall be under no liability for any act or omission in accordance
with such advice or for failing to follow such advice; and (c) in discharging
their duties, the Trustees, when acting in good faith, shall be entitled to rely
upon the books of account of the Trust and upon written reports made to the
Trustees by any officer appointed by them, any independent public accountant,
and (with respect to the subject matter of the contract involved) any officer,
partner or responsible employee of a contracting party appointed by the Trustees
pursuant to Section 3.3. The Trustees, as such, shall not be required to give
any bond or other security for the performance of their duties.
Section 6.4 INDEMNIFICATION OF SHAREHOLDERS. In case any Shareholder
(or former Shareholder) of any Sub-Trust of the Trust shall be charged or held
to be personally liable for any obligation or liability of the Trust solely by
reason of being or having been a Shareholder and not because of such
Shareholder's acts or omissions or for some other reason, said Sub-Trust (upon
proper and timely request by the Shareholder) shall assume the defense against
such charge and satisfy any judgment thereon, and the Shareholder or former
Shareholder (or his heirs, executors, administrators or other legal
representatives or in the case of a corporation or other entity, its corporate
or other general successor) shall be entitled out of the assets of said
Sub-Trust estate to be held harmless from and indemnified against all loss and
expense arising from such liability.
Section 6.5 INDEMNIFICATION OF TRUSTEES, OFFICERS, ETC. The Trust
shall indemnify (from the assets of the Sub-Trust or class thereof or Sub-Trusts
or classes thereof in question) each of its Trustees and officers (including
persons who serve at the Trust's request as directors, officers or trustees of
another organization in which the Trust has any interest as a shareholder,
creditor or otherwise [hereinafter referred to as a "Covered Person"]) against
all liabilities, including but not limited to amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and expenses, including
reasonable accountants' and counsel fees, incurred by any 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 in one of the manners described below,
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 due to Disabling Conduct 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 a majority of a quorum of Trustees who are neither "interested
persons" of the Trust as defined in section 2(a)(19) of the 1940 Act nor parties
to the proceeding, or (b) an independent legal counsel in a written opinion.
Expenses, including accountants' and counsel fees so incurred by any such
Covered Person (but excluding amounts paid in satisfaction of judgements, in
compromise or as fines or penalties), may be paid from time to time in advance
of the final disposition of any such action, suit or proceeding, provided that
the Covered Person shall have undertaken to repay the amounts so paid to the
Sub-Trust in question if it is ultimately determined that indemnification of
such expenses is not authorized under this Article VI and (i) the Covered Person
shall have provided security for such undertaking, (ii) the Trust shall be
insured against losses arising by reason of any lawful advances, or (iii) a
majority of a quorum of the disinterested Trustees who are not a party to the
proceeding, or an independent legal counsel in a written opinion, shall have
determined, based on a review of readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe the Covered Party
ultimately will be found entitled to indemnification.
Section 6.6 COMPROMISE PAYMENT. Any compromise settlement shall be
indemnified only if approved: (a) by a majority of the disinterested Trustees
not a party to the proceeding; or (b) by a written opinion of an independent
legal counsel. If payment has been made pursuant to (a) or (b) and the recipient
is subsequently found to have engaged in bad faith, wilful misfeasance, gross
negligence or reckless disregard of duty, the Trust may recover such payment.
Section 6.7 INDEMNIFICATION NOT EXCLUSIVE, ETC. The right of
indemnification provided by this Article VI shall not be exclusive of or affect
any other rights to which any covered person may be entitled. The
indemnification shall inure to the benefit of such person's heirs, executors and
administrators. Nothing contained in this article shall affect any rights to
indemnification to which personnel of the Trust, other than Trustees and
officers, and other persons may be entitled by contract or otherwise under law,
nor the power of the Trust to purchase and maintain liability insurance on
behalf of any such person.
Section 6.8 LIABILITY OF THIRD PERSONS DEALING WITH TRUSTEES. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the Trust or upon
its order.
ARTICLE VII
MISCELLANEOUS
Section 7.1 DURATION AND TERMINATION OF TRUST. This Trust shall
continue for an unlimited period. The Trust may be terminated at any time by a
majority vote of the Trustees then in office and approved by a majority vote of
the outstanding voting shares as defined in 1940 Act, Shares of each Sub-Trust
or each class thereof voting separately by Sub-Trust or class thereof.
No modification of any Sub-Trust or class shall terminate the Trust.
In the event of termination, the Trustees shall pay all due and
anticipated expenses, and then liquidate the assets in a manner the Trustees
deem appropriate and distribute the proceeds according to the provisions of this
Agreement.
Section 7.2 REORGANIZATION. The Trustees may sell, convey, merge and
transfer the assets of the Trust, or the assets belonging to any one or more
Sub-Trusts, to another trust, partnership, association or corporation organized
under the laws of any state of the United States, or to the Trust to be held as
assets belonging to another Sub-Trust of the Trust, in exchange for cash, shares
or other securities (including, in the case of a transfer to another Sub-Trust
of the Trust, Shares of such other Sub-Trust) with such transfer either (1)
being made subject to, or with the assumption by the transferee of, the
liabilities belonging to each Sub-Trust the assets of which are so transferred,
or (2) not being made subject to, or not with the assumption of, such
liabilities; provided, however, that no assets belonging to any particular
Sub-Trust shall be so transferred unless the terms of such transfer shall have
first been approved at a meeting called for the purpose by the affirmation vote
of the holders of a majority of the outstanding voting Shares, as defined in the
1940 Act, of that Sub-Trust. Following such transfer, the Trustees shall
distribute such cash, shares or other securities (giving due effect to the
assets and liabilities belonging to and any other differences among the various
Sub-Trusts and classes the assets belonging to which have been so transferred)
among the Shareholders of the Sub-Trust the assets belonging to which have been
so transferred; and if all of the assets of the Trust have been so transferred,
the Trust shall be terminated.
The Trust, or any one or more Sub-Trusts, may, either as the successor,
survivor, or non-survivor, (1) consolidate with one or more other trusts,
partnerships, associations or corporations organized under the laws of the
Commonwealth of Massachusetts or any other state of the United States, to form a
new consolidated trust, partnership, association or corporation under the laws
of which any one of the constituent entities is organized, or (2) merge into one
or more other trusts, partnerships, associations or corporations organized under
the laws of the Commonwealth of Massachusetts or any other state of the United
States, or have one or more such trusts, partnerships, associations or
corporations merged into it, any such consolidation or merger to be upon such
terms and conditions as are specified in an agreement and plan of reorganization
entered into by the Trust, or one or more Sub-Trusts as the case may be, in
connection therewith. The terms "merge" or "merger" as used herein shall also
include the purchase or acquisition of any assets of any other trust,
partnership, association or corporation which is an investment company organized
under the laws of the Commonwealth of Massachusetts or any other state of the
United States. Any such consolidation or merger shall require the affirmative
vote of the holders of a majority of the outstanding voting Shares, as defined
in the 1940 Act, of each Sub-Trust affected thereby.
Section 7.3 AMENDMENTS. All rights granted to the Shareholders under
this Agreement are granted subject to the reservation of the right to amend this
Agreement as herein provided, except that no amendment shall repeal the
limitations on personal liability of any Shareholder or Trustee or repeal the
prohibition of assessment upon the Shareholders without the express consent of
each Shareholder or Trustee involved. Subject to the foregoing, the provisions
of this Agreement (whether or not related to the rights of Shareholders) may be
amended at any time, so long as such amendment does not adversely affect the
rights of any Shareholder with respect to which such amendment is or purports to
be applicable and so long as such amendment is not in contravention of
applicable law, including the 1940 Act, by an instrument in writing signed by a
majority of the then Trustees (or by an officer of the Trust pursuant to the
vote of a majority of such Trustees). Any amendment to this Agreement that
adversely affects the rights of Shareholders may be adopted at any time by an
instrument in writing signed by a majority of the then Trustees (or by an
officer of the Trust pursuant to a vote of a majority of such Trustees) when
authorized to do so by the vote in accordance with subsection (e) of Section 4.2
of Shareholders holding a majority of the Shares entitled to vote. Subject to
the foregoing, any such amendment shall be effective as provided in the
instrument containing the terms of such amendment or, if there is no provision
therein with respect to effectiveness, upon the execution of such instrument and
of a certificate (which may be a part of such instrument) executed by a trustee
or officer of the Trust to the effect that such amendment has been duly adopted.
Section 7.4 FILING OF COPIES; REFERENCES; HEADINGS. This Agreement and
all amendments shall be maintained in Trust offices for Shareholder inspection.
A copy of this Agreement and all amendments shall be filed with the
appropriate governmental offices as required, including the Secretary of the
Commonwealth of Massachusetts and the Boston City Clerk. Failure to make any
such filing shall not impair the effectiveness of this instrument or any such
amendment.
Anyone dealing with the Trust may rely on a certificate by an officer
of the Trust as to whether or not any such amendments have been made, as to the
identities of the Trustees and officers, and as to any matters in connection
with the Trust hereunder; and, with the same effect as if it were the original,
may rely on a copy certified by an officer of the Trust to be a copy of this
instrument or of any such amendments. In this instrument and in any such
amendment, references to this instrument, and all expressions like "herein",
"hereof" and "hereunder" shall be deemed to refer to this instrument as a whole
as the same may be amended or affected by any such amendments.
As used in this Agreement the masculine gender shall include the
feminine and neuter genders. Headings are used for reference only and shall not
affect the meaning or construction of this Agreement. Headings are placed herein
for convenience of reference only and shall not be taken as a part hereof or
control or affect the meaning, construction or effect of this instrument. This
instrument may be executed in any number of counterparts each of which shall be
deemed an original.
Any reference to this document shall include all amendments.
Section 7.5 APPLICABLE LAW. This Agreement is made in The Commonwealth
of Massachusetts, and it is created under and is to be governed by and construed
and administered according to the laws of said Commonwealth, including the
Massachusetts Business Corporation Law as the same may be amended from time to
time, to which reference is made with the intention that matters not
specifically covered herein or as to which an ambiguity may exist shall be
resolved as if the Trust were a business corporation organized in Massachusetts,
but the reference to said Business Corporation Law is not intended to give the
Trust, the Trustees, the Shareholders or any other person any right, power,
authority or responsibility available only to or in connection with an entity
organized in corporate form. The Trust shall be of the type referred to in
Section 1 of Chapter 182 of the Massachusetts General Laws and of the type
commonly called a Massachusetts business trust, and without limiting the
provisions hereof, the Trust may exercise all powers which are ordinarily
exercised by such a trust.
Section 7.6 RESIDENT AGENT. Mr. Edward S. Brewer, Jr., 101 Federal
Street, 22nd Floor, Boston, Massachusetts for the purposes of complying with the
laws of The Commonwealth of Massachusetts is hereby appointed as resident agent
for the Trust within the Commonwealth of Massachusetts; and hereby is designated
as its attorney in the Commonwealth of Massachusetts upon whom may be served any
notice, process or pleading in any action or proceeding against the Trust. and
the undersigned does hereby consent that any such action or proceeding against
the Trust may be commenced in any court of competent jurisdiction and proper
venue within the State so designated by services of process upon said resident
agent with the same effect as if the Trust had been served lawfully with
process. It is requested that a copy of any notice, process or pleadings served
be mailed to Accolade Funds at 7900 Callaghan Road, San Antonio, Texas 78229.
IN WITNESS WHEREOF, the undersigned have hereunto set their hand and
seals for themselves and their assigns, as of the date and year first above
written.
/s/ Richard E. Hughs
--------------------------
RICHARD E. HUGHS
/s/ Clark R. Mandigo
--------------------------
CLARK R. MANDIGO
/s/ Frank E. Holmes
--------------------------
FRANK E. HOLMES
STATE OF TEXAS )
)ss
COUNTY OF BEXAR )
Then personally appeared the above-named acknowledged the foregoing
instrument to be their free act and deed, before me, this 22nd day of May 1996.
/s/ Kathleen L. Eicher
-----------------------------
Notary Public
S E A L My commission expires 01/11/00
EXHIBIT NO. 1 TO COMBINED PROXY
STATEMENT AND PROSPECTUS
-----------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made as of
the ___ day of May, 1996, by and among the Leeb Personal Finance Investment
Trust, an Ohio business trust (the "Leeb Trust"), with its principal place of
business at 45 Rockefeller Plaza, Suite 2570, New York, NY 10111 for itself and
on behalf of its authorized series, the Leeb Personal Finance Fund (the
"Personal Finance Fund"), and the Accolade Funds, a Massachusetts business trust
(the "Accolade Trust"), with its principal place of business at 7900 Callaghan
Road, San Antonio, Texas 78229, for itself and on behalf of its
newly-established series the Leeb Value Fund (the "Value Fund").
PLAN OF REORGANIZATION
The reorganization (hereinafter referred to as the "Plan of
Reorganization") will consist of (i) the acquisition by the Value Fund of
substantially all of the property, assets and goodwill of the Personal Finance
Fund in exchange solely for shares of beneficial interest in the Value Fund,
(ii) the distribution of such shares of the Value Fund shares to the
stockholders of the Personal Finance Fund according to their respective
interests, and (iii) the dissolution of the Personal Finance Fund as soon as
practicable after the closing provided for in Section 3, all upon and subject to
the terms and conditions of the Agreement hereinafter set forth.
A special meeting of the shareholders of the Personal Finance Fund (the
"Meeting") will be called for the purposes of (i) considering adoption of this
Agreement and Plan of Reorganization (the "Agreement"); (ii) considering a
proposal to authorize the Personal Finance Fund, as the sole shareholder of the
Value Fund immediately prior to the reorganization contemplated by this
Agreement, to: (a) approve the proposed Investment Advisory and Sub-Advisory
Agreements, (b) approve the proposed Plan of Distribution under Rule 12b-1 of
the Investment Company Act of 1940, (c) ratify the selection of Price Waterhouse
LLP as the Value Fund's independent accountant for the current fiscal year, and
(d) provide such other approval or ratification as may be necessary to
consummate the transactions contemplated herein; and (iii) considering any other
business as may properly come before the Meeting. The agenda for such Meeting
may include such other proposals as the Board of Trustees of the Leeb Fund may
deem appropriate.
AGREEMENT
In order to consummate the Plan of Reorganization and in consideration
of the premises and of the covenants and agreements hereinafter set forth, the
parties hereto covenant and agree as follows:
1. SALE AND TRANSFER OF ASSETS, LIQUIDATION AND DISSOLUTION OF THE
PERSONAL FINANCE FUND
a. The Personal Finance Fund agrees that it will convey, transfer and
deliver to Value Fund at the closing provided for in Section 3 (hereinafter
called the "Closing") all of its then existing assets free and clear of all
liens, encumbrances and claims whatsoever, except for cash or bank deposits in
an amount necessary to pay: (i) its costs and expenses of carrying out this
Agreement,(including but not limited to any income dividend payable prior to the
Closing Date, and expenses of its liquidation and dissolution contemplated
hereunder); (ii) to discharge its unpaid liabilities on its books at the Closing
Date; and (iii) to pay such contingent liabilities as its Trustees shall
reasonably deem to exist against the Personal Finance Fund, if any, at the
Closing Date, for which contingent and other appropriate liability reserves
shall be established on the Personal Finance Fund's books. Any unspent portion
of such funds retained shall be delivered to the Value Fund upon dissolution of
the Personal Finance Fund.
b. Subject to the terms and conditions of this Agreement and in
reliance on the representations and warranties of the Personal Finance Fund
herein contained, and in consideration of such sale, conveyance, transfer and
delivery, Value Fund agrees at the Closing to deliver to the Personal Finance
Fund the number of shares of beneficial interest of the Value Fund determined as
set forth in Section 2 hereof.
c. Immediately following the Closing Date, the Personal Finance Fund
will liquidate and distribute pro-rata to its shareholders of record as of the
close of business on the Closing Date, the shares of beneficial interest of the
Value Fund received by the Personal Finance Fund pursuant to this Section 1.
Such liquidation and distribution will be accompanied by the establishment of
open accounts on the share records of Value Fund in the names of such
shareholders of the Personal Finance Fund representing the respective pro rata
number of Value Fund shares due such shareholders. Fractional shares of the
Personal Finance Fund's shares of beneficial interest will be carried to the
third decimal place. As promptly as practicable after the Closing Date, each
holder of any outstanding certificate or certificates theretofore representing
shares of beneficial interest of the Personal Finance Fund may surrender the
same to a transfer agent designated by Value Fund and request in exchange a
certificate or certificates representing the number of whole and fractional
shares of beneficial interest of Value Fund into which the shares of the
Personal Finance Fund theretofore represented by the certificate or certificates
so surrendered shall have been converted. Certificates for fractional shares of
Value Fund will not be issued, however, but shall continue to be carried for the
open account of such shareholder. Until so surrendered, each outstanding
certificate which, prior to the Closing Date, represented shares of beneficial
interest of the Personal Finance Fund shall be deemed for all corporate purposes
to evidence ownership of the number of shares of beneficial interest of the
Value Fund into which the shares of beneficial interest of the Personal Finance
Fund (which, prior to the Closing Date, were represented thereby) have been so
converted.
d. As promptly as practicable after the liquidation of the Personal
Finance Fund as aforesaid, the Personal Finance Fund shall be dissolved pursuant
to the provisions of the General Laws of the State of Ohio and its legal
existence shall be terminated as provided therein.
2. EXCHANGE RATIO
a. The value of the Personal Finance Fund's assets to be acquired by the
Value Fund hereunder shall be the net asset value computed as of the close of
business (close of the New York Stock Exchange) on the Closing Date, using the
valuation procedures set forth in the Value Fund's registration statement under
the Securities Act of 1933.
b. The total net assets of the Personal Finance Fund determined under (a)
shall be divided by the number of shares of its outstanding shares of beneficial
interest, to determine the Personal Finance Fund's net asset value per share as
of the close of business on the Closing Date.
c. The net asset value of an Value Fund share of beneficial interest
shall be determined to the nearest full cent as of the close of business on the
Closing Date, using the valuation as set forth in Value Fund's registration
statement under the Securities Act of 1933.
d. The net asset value per share for the Personal Finance Fund as
determined in (b) shall then be divided by the Value Fund net asset value per
share as determined in (c) to determine the exchange ratio.
3. CLOSING AND CLOSING DATE
The Closing shall be _______, or such later date as the parties may
mutually agree. The Closing shall take place at the principal office of Value
Fund, at 4:30 p.m., E.S.T. The Personal Finance Fund shall, on or before the
Closing of its assets, deliver to Bankers Trust, as Custodian for Value Fund,
all of its assets. The Personal Finance Fund shall deliver at the Closing a list
of names and addresses of the shareholders of the Personal Finance Fund and the
number of shares owned by each such shareholder, indicating thereon which such
shares are represented by outstanding certificates and which by open accounts,
all as of the close of business on the Closing Date, certified by its transfer
agent. Value Fund shall issue and deliver a certificate or certificates
evidencing the shares of the Value Fund's shares of beneficial interest to be
delivered at the Closing to said transfer agent registered in such manner as the
Personal Finance Fund may request, or provide evidence satisfactory to the
Personal Finance Fund that such shares of the Value Fund's shares of beneficial
interest have been registered in an open account on the books of the Value Fund
in such manner as the Personal Finance Fund may reasonably request. Simultaneous
with the Closing, the parties shall cause the filing of Articles of Transfer
with respect to the sale and transfer of assets contemplated hereunder with the
Department of Assessments and Taxation of the State of Ohio.
4. REPRESENTATIONS AND WARRANTIES BY THE PERSONAL FINANCE FUND
The Personal Finance Fund represents and warrants that:
a. The Personal Finance Fund is a series of shares of an Ohio business
trust duly organized, validly existing and in good standing under the laws of
the State of Ohio and has all power and authority to conduct its business as
such business is now being conducted;
b. The Personal Finance Fund has a duly authorized capital consisting of
unlimited shares of beneficial interest of which approximately _____ shares were
issued and outstanding on the date hereof. All of its presently outstanding
shares are validly issued, fully paid and non-assessable by it;
c. The Personal Finance Fund is duly registered as a diversified,
open-end management company under the Investment Company Act of 1940;
d. There has been mailed to each shareholder of record of the Personal
Finance Fund entitled to vote at the meeting of shareholders, at which action
this Agreement is to be considered, a combined proxy statement and prospectus
which complies in all material respects with the applicable provisions of the
Federal securities laws and the rules and regulations thereunder;
e. The financial statements appearing in the Personal Finance Fund's
annual report for the year ended June 30, 1995, audited by Arthur Andersen LLP,
a copy of which has been delivered to Value Fund, and similar unaudited
financial statements and other financial data as of December 31, 1995, and for
the period then ended, which have been delivered to the Value Fund by the
principal financial officer of the Personal Finance Fund, fairly present the
financial position of the Personal Finance Fund as of the respective dates
indicated, and the results of its operations and changes in net assets for the
respective periods indicated, in conformity with generally accepted accounting
principles applied on a consistent basis.
From the date of the most recent report referred to above, there has not
been any material adverse change in the Personal Finance Fund's financial
condition, assets, liabilities or business other than changes occurring in the
ordinary course of business or as a result of this transaction. For the purposes
of this paragraph, a decline in net assets of the Personal Finance Fund shall
not constitute a material adverse change.
f. The Personal Finance Fund has no material contracts or other
commitments (other than this Agreement) which will be terminated with liability
to the Personal Finance Fund prior to Closing, except contracts entered into in
the ordinary course of its business and this Agreement.
5. REPRESENTATIONS AND WARRANTIES BY THE VALUE FUND
Value Fund represents and warrants that:
a. Value Fund is a Massachusetts business trust duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts and has all power and authority to conduct its business as such
business is presently being conducted;
b. Value Fund has duly authorized capital consisting of unlimited shares
of beneficial interest. On the date of this Agreement, Value Fund had issued and
outstanding approximately __________ shares of beneficial interest. All of its
presently outstanding shares are validly issued, fully paid and non-assessable
by it;
c. Value Fund is duly registered as a diversified, open-end investment
company under the Investment Company Act of 1940 and is authorized to offer and
sell shares of beneficial interest in its two series;
d. Value Fund will file with the United States Securities and Exchange
Commission a Registration Statement on Form N-14 (the "Registration Statement")
under the Securities Act of 1933 relating to the Value Fund's shares of
beneficial interest issuable hereunder. Appropriate portions of such
Registration Statement after effectiveness will be delivered to shareholders of
the Personal Finance Fund as proxy materials in connection with the solicitation
of proxies approving the proposed transaction, and other portions will be
available upon request by shareholders. The Registration Statement will note, on
its facing page, that the securities proposed to be distributed thereunder have
previously been registered in accordance with Rule 24f-2 under the Investment
Company Act of 1940. At the time such Registration Statement becomes effective,
it (i) will comply in all material respects with the provisions of the
Securities Act of 1933 and the rules and regulations promulgated thereunder, and
(ii) will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and at the time the Registration Statement becomes
effective, at the time of the Personal Finance Fund's shareholders' meeting and
at the Closing Date, the prospectus included therein will not contain an untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading;
e. the shares of beneficial interest of Value Fund are duly qualified for
offering to the public in all states of the United States, and there are a
sufficient number or value of shares of each share so qualified and a sufficient
number of shares registered under the Securities Act of 1933, pursuant to the
Investment Company Act of 1940 Rule 24f-2, to permit the transfers contemplated
by this Agreement to be consummated.
From the date of the most recent report referred to above, there has not
been any material adverse change in the Value Fund's financial condition,
assets, liabilities or business other than changes occurring in the ordinary
course of business or as a result of this transaction. For the purposes of this
paragraph a decline in net assets of the Value Fund shall not constitute a
material adverse change.
6. REPRESENTATIONS AND WARRANTIES BY PERSONAL FINANCE FUND AND VALUE FUND
The Personal Finance Fund and Value Fund each represent and warrant to
the other that:
a. The statement of assets and liabilities to be furnished by it as of
the close of business on the Closing Date for the purpose of determining the
number of shares of Value Fund shares of beneficial interest to be issued
pursuant to Section 1 of this Agreement will accurately reflect its net assets
and outstanding shares of beneficial interest as of such date in conformity with
generally accepted accounting principles applied on a consistent basis;
b. On the Closing Date it will have good and marketable title to all of
the securities and other assets shown on the statement of assets and liabilities
referred to in (a) above free and clear of all liens or encumbrances of any
nature whatever except such imperfections of title or encumbrances as do not
materially detract from the value or use of the assets subject thereto, or
materially affect title thereto;
c. There is no material suit, action or legal or administrative
proceeding pending or threatened against it, other than as disclosed in the
Combined Proxy Statement and prospectus prepared in connection with the meeting
at which action on this Agreement will be taken;
d. By Closing Date, all of its Federal and other tax returns and reports
required by law to be filed shall have been filed, and all Federal and other
taxes shown due on said returns shall have been paid;
e. The execution, delivery and performance of this Agreement will have
been duly authorized prior to the Closing Date by all necessary corporate action
on the part of each Corporation and this Agreement constitutes the valid and
binding obligation of each Corporation enforceable in accordance with its terms;
and
f. The party is not, and the execution, delivery and performance of this
Agreement will not result, in material violation of the party's Declaration of
Trust or By-laws or of any agreement, indenture, instrument, contract, lease or
other undertaking to which the party is a party or is bound.
7. COVENANTS OF THE PERSONAL FINANCE FUND AND THE VALUE FUND
a. The Personal Finance Fund and Value Fund each covenant to operate its
business in the ordinary course between the date hereof and the Closing Date.
b. The Personal Finance Fund undertakes that it will not acquire the
Value Fund shares for the purpose of making any distribution thereof other than
to its own shareholders.
c. The Personal Finance Fund undertakes that it will at its own expense
prepare and file with the Securities and Exchange Commission a Report on Form
N-SAR pursuant to the requirements of the Investment Company Act of 1940 for the
period ___________ through the Closing Date.
8. CONDITIONS PRECEDENT TO BE FULFILLED BY PERSONAL FINANCE FUND AND
VALUE FUND
The obligations of each of the parties to effectuate the Plan of
Reorganization hereunder shall be subject to the following conditions:
a. The representations and warranties of each Party contained herein
shall be true as of and at the Closing Date with the same effect as though made
at such date; each Party shall have performed all obligations required by this
Agreement to be performed by it prior to the Closing Date; and each Party shall
have delivered to it a certificate dated as of the Closing Date and signed by
its Chairman of the Board or President and by its Secretary or Assistant
Secretary to the foregoing effect;
b. Each Party shall have delivered a certified copy of the resolutions
approving this Agreement adopted by at least a majority vote of its Trustees,
including a majority of its Trustees who are not "interested persons" as defined
in the Investment Company Act of 1940;
c. The Securities and Exchange Commission shall not have issued an
unfavorable advisory report under Section 25(b) of the Investment Company Act of
1940 nor instituted any proceeding seeking to enjoin consummation of the
reorganization under Section 25(c) of the Investment Company Act of 1940;
d. The holders of at least a majority of the outstanding shares of
beneficial interest of the Personal Finance Fund shall have voted in favor of
the adoption of this Agreement and the reorganization contemplated hereby at an
annual or special meeting;
e. The Personal Finance Fund shall have declared a distribution or
distributions prior to the Closing Date which, together with all previous
distributions, shall have the effect of distributing to its shareholders all of
its net investment income since the close of its last fiscal year; and
f. The Accolade Trust shall have received the opinion of legal counsel
for the Accolade Trust, dated as of the date of the Closing and addressed to the
Trust, to the effect that:
(i) provided the acquisition is carried out in accordance with the
applicable laws of Massachusetts, the acquisition by the Value
Fund of substantially all of the assets of the Personal Finance
Fund as provided for herein in exchange for Value Fund shares will
qualify as a reorganization within the meaning of Section
368(a)(1)(C) of the Code, and Value Fund will each be a party to
the respective reorganization within the meaning of Section 368(b)
of the Code; for purposes of this opinion, "substantially all"
means at least 70% of the fair market of the gross assets and at
least 90% of the fair market value of the net assets;
(ii) no gain or loss will be recognized by the Personal Finance Fund
upon the transfer of substantially all of its assets to the Value
Fund in exchange solely for voting shares of the Value Fund (Code
Section 361(a));
(iii) no gain or loss will be recognized by the Value Fund upon the
receipt of substantially all of the assets of the Personal Finance
Fund in exchange solely for voting shares of Value Fund [Code
Section 1032(a)];
(iv) the basis of the assets of the Personal Finance Fund received by
the Value Fund will be the same as the basis of such assets to the
Personal Finance Fund immediately prior to the exchange [Code
Section 362(b)];
(v) the holding period of the assets of the Personal Finance Fund
received by the Value Fund will include the period during which
such assets were held by the Personal Finance Fund [Code Section
1223(2)];
(vi) no gain or loss will be recognized to the shareholders of the
Personal Finance Fund upon the exchange of their shares in the
Personal Finance Fund for voting shares of the Value Fund
(including fractional shares to which they may be entitled) [Code
Section 354(a)(1)];
(vii) the basis of the Value Fund voting shares received by the Personal
Finance Fund shareholders (including fractional shares to which
they may be entitled) will be the same as the basis of the shares
of the Personal Finance Fund surrendered in exchange therefor
[Code Section 358(a)(1)];
(viii) the holding period of the Value Fund voting shares received by the
Personal Finance Fund shareholders (including fractional shares to
which they may be entitled) will include the holding period of
Personal Finance Fund shares surrendered in exchange therefor,
provided that Personal Finance Fund shares were held as a capital
asset on the date of the exchange [Code Section 1223(1)];
(ix) pursuant to Section 381(a) of the Code and Treasury Regulation
Section 1.381-1(a), the Value Fund will succeed to and take into
account as of the date of the proposed transfer [as defined in
Treasury Regulation (S) 1.381 (b)-1(b)] the items of described in
Section 381(c) of the Code, including any "pro-change capital
loss" of the Personal Finance Fund within the meaning of Treasury
Regulation (S) 1.383-1(c)(2), subject to the conditions and
limitations specified in Sections 381(b) and (c), 382, 383 and 384
of the Code; and
(x) where a dissenting shareholder of the Personal Finance Fund
receives cash solely in exchange for his or her share, such cash
will be treated as having been received by the shareholder as a
distribution in redemption of his or her share subject to the
provisions and limitations of Section 302 of the Code.
In rendering such opinion, such legal counsel may rely on an opinion of
Ohio and/or Massachusetts counsel reasonably acceptable to the Accolade Trust
with respect to matters of Ohio and/or Massachusetts law, and on certificates of
officers or Trustees of the Accolade Trust and/or Leeb Trust, in each case
reasonably acceptable to the Accolade Trust.
9. BROKERAGE FEES AND EXPENSES
a. The Personal Finance Fund and the Value Fund each represent and
warrant to the other that there are no brokers' or finders' fees payable in
connection with the transactions provided for herein.
The Personal Finance Fund and the Value Fund shall each bear such expenses
of entering into and carrying out the provisions of this Agreement as have been
separately incurred by it. No Party shall pay expense s, if any, of its
shareholders arising out of the reorganization.
10. TERMINATION WAIVER ORDER
a. Anything contained in this Agreement to the contrary notwithstanding,
this Agreement may be terminated and the reorganization abandoned at any time
whether before or after adoption hereof by the shareholders of the Personal
Finance Fund prior to the Closing Date:
(i) by mutual consent of the Parties;
(ii) by either of the Parties if any condition set forth in Section 8
hereof has not been fulfilled or waived by it;
b. An election by a Party to terminate this Agreement and abandon the
reorganization shall be exercised by its Board of Trustees;
c. In the event of termination of this Agreement pursuant to the
provisions hereof, the same shall become void and have no effect without any
liability on the part of either of the Parties or persons who are its trustees,
officers or shareholders in respect of this Agreement, provided that this
provision shall not protect any trustee or officer of either of the Parties
against any liability to such Party or its shareholders to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office;
d. At any time prior to the filing of the Articles of Transfer with the
States of Ohio and Massachusetts, any of the terms or conditions of this
Agreement may be waived by the Party entitled to the benefit thereof by action
taken by its Board of Trustees, or its Chairman of the Board, if, in the
judgment of the Board of Trustees or Chairman of the Board taking such action,
such waiver will not have material adverse effect on the benefits intended under
this Agreement to the shareholders of the Party on behalf of which such action
is taken;
e. The respective representations and warranties of the Parties contained
in Sections 4 through 7 hereof shall expire with, and be terminated by, the
reorganization contemplated by this Agreement, and neither the respective
Parties nor any of their trustees shall be under any liability with respect to
any such representations or warranties after the Closing Date. This provision
shall not protect any trustee or officer of a business trust against any
liability to such business trust or to its shareholders to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office; and
f. If any order or orders of the Securities and Exchange Commission with
respect to this Agreement shall impose any terms or conditions which are
acceptable to both the Personal Finance Fund and the Acquiring Fund, such terms
and conditions shall be binding as if a part of this Agreement without further
vote or approval of the shareholders of the Personal Finance Fund, unless such
terms and conditions shall result in a change in the method of computing the
number of shares of Value Fund to be issued to the Personal Finance Fund, in
which event, unless such terms and conditions shall have been included in the
Combined Proxy Statement and prospectus solicitation materials furnished to the
shareholders of the Personal Finance Fund prior to the meeting at which the
transactions contemplated by this Agreement shall have been approved, this
Agreement shall not be consummated and shall terminate unless the Personal
Finance Fund shall promptly call a Special Meeting of Shareholders at which
conditions so imposed shall be submitted for approval.
11. ENTIRE AGREEMENT AND AMENDMENTS
This Agreement embodies the entire agreement between the Parties and
there are no agreements, understandings, restrictions or warranties among the
Parties other than those set forth herein or herein provided for.
12. COUNTERPARTS
This Agreement may be executed in any number of counterparts each of
which shall be deemed to be an original but all such counterparts together shall
constitute but one instrument.
13. NOTICES
Any notice, report or demand required or permitted by any provision of this
Agreement shall be in writing and shall be deemed to have been given if
delivered or mailed, first class postage postpaid, addressed to the Personal
Finance Fund at 45 Rockefeller Plaza, Suite 2570, New York, New York 10111, or
the Value Fund, at P. O. Box 781234, San Antonio, Texas 78278-1234.
IN WITNESS WHEREOF, each of the Parties has caused this Agreement and
Plan of Reorganization to be executed on its behalf by its President or a Vice
President and its seal to be affixed hereto and attested by its Secretary or
Assistant Secretary, all as of the day and year first above written.
Attest: LEEB PERSONAL FINANCE TRUST
/S/ TODD P. EHRET By: /s/ STEPHEN LEEB
- -------------------------------------- -----------------------------------
Secretary President
(SEAL)
Attest: ACCOLADE FUNDS
/s/ THOMAS TAYS By: /s/ FRANK HOLMES
- ------------------------------------- -----------------------------------
Secretary President
(SEAL)
EXHIBIT NO. 3 TO COMBINED PROXY
STATEMENT AND PROSPECTUS
-----------------------------------------
ADVISORY AGREEMENT
AGREEMENT made as of the 21st day of September, 1994 between UNITED
SERVICES ADVISORS, INC., a corporation organized under the laws of the State of
Texas and having its principal place of business in San Antonio, Texas (the
"Advisor"), and ACCOLADE FUNDS, a Massachusetts business trust having its
principal place of business in San Antonio, Texas (the "Trust").
WHEREAS, the Trust is engaged in business as an open-end management
investment company and is registered under the Investment Company Act of 1940
(the "1940 Act"); and
WHEREAS, the Advisor is engaged principally in the business of
rendering investment management services and is registered under the Investment
Advisors Act of 1940; and
WHEREAS, the Trust intends to initially offer shares in SIF Government
Money Fund and SIF Government Short-Term Fund [such series (the "Initial Funds")
together with all other series subsequently established by the Trust with
respect to which the Trust desires to retain the Advisor to render investment
advisory services hereunder the Advisor is willing so to do (collectively
referred to as the "Funds")];
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt whereof is
hereby acknowledged, the parties hereto agree as follows:
1. APPOINTMENT OF ADVISOR.
(a) Initial Funds. The Trust hereby appoints the Advisor to act
as Advisor and investment advisor to each of the Initial
Funds for the period and on the terms herein set forth. The
Advisor accepts such appointment and agrees to render the
services herein set forth, for the compensation herein
provided.
(b) Additional Funds. In the event that the Trust establishes
one or more series of shares other than the Initial Funds
with respect to which it desires to retain the Advisor to
render management and investment advisory services
hereunder, it shall so notify the Advisor in writing,
indicating the advisory fee which will be payable with
respect to the additional series of shares. If the Advisor
is willing to render such services, it shall so notify the
Trust in writing, whereupon such series of shares shall
become a Fund hereunder.
2. DUTIES OF ADVISOR.
The Advisor, at its own expense, shall furnish the following services
and facilities to the Trust:
(a) Investment Program. The Advisor will (i) furnish
continuously an investment program of each Fund, (ii)
determine (subject to the overall supervision and review of
the Board of Trustees of the Trust) what investments shall
be purchased, held sold or exchanged by each Fund and what
portion, if any, of the assets of each Fund shall be held
uninvested, and (iii) make changes on behalf of the Trust in
the investments of each Fund. The Advisor will also manage,
supervise and conduct the other affairs and business of the
Trust of each Fund thereof and matters incidental thereto,
subject always to the control of the Board of Trustees of
the Trust and to the provisions of the Declaration of Trust
and By-laws and the 1940 Act.
(b) Office Space and Facilities. The Advisor shall furnish the
Trust office space in the offices of the Advisor, or in such
other place or places as may be agreed upon from time to
time, and all necessary office facilities, simple business
equipment, supplies, utilities, and telephone service for
managing the affairs and investments of the Trust. These
services are exclusive of the necessary services and records
of any dividend disbursing agent, transfer agent, registrar
or custodian, and accounting and bookkeeping services to
provided by the Trust's transfer agent, record keeping
service or custodian.
(c) Personnel. The Advisor shall provide all necessary executive
and clerical personnel for administering the affairs of the
Trust, and shall compensate all personnel, officers and
Trustees of the Trust if such persons are also employees of
the Advisor or its affiliates, except as provided in
Paragraph 3(f) hereof.
(d) Distribution Expenses. Except as may be provided in
distribution expense plans as contemplated by Rule 12b-1
under the 1940 Act, the Advisor shall bear all sales,
promotions or distribution expenses in connection with the
distribution of shares of any Fund and shall be the sole
judge of the extent to which sales or promotion expenses
shall be incurred; provided however, that the Advisor shall
not be obligated to pay for any portion of the cost of
prospectuses or periodic reports provided to shareholders.
Expenses incurred in complying with laws regulating the
issue or sale of securities shall not be deemed to be sales,
promotion or distribution expenses.
(e) Portfolio Transactions. The Advisor shall place all orders
for the purchase and sale of portfolio securities for the
account of each Fund with brokers or dealers selected by the
Advisor, although the Trust will pay the actual brokerage
commissions on portfolio transactions in accordance with
Paragraph 3(c). In executing portfolio transactions and
selecting brokers or dealers, the Advisor will use its best
efforts to seek on behalf of the Trust or any Fund thereof
the best overall terms available. In assessing the best
overall terms available for any transaction, the Advisor
shall consider all factors it deems relevant, including the
breadth of the market in the security, the price of the
security, the financial condition and execution capability
of the broker or dealer, and the reasonableness of the
commission, if any (for the specific transaction and on a
continuing basis). In evaluating the best overall terms
available, and in selecting the broker or dealer to execute
a particular transaction, the Advisor may also consider the
brokerage and research services (as those terms are defined
in Section 28(e) of the Securities Exchange Act of 1934)
provided to any Fund and/or other accounts over which the
Advisor or an affiliate of the Advisor exercises investment
discretion. The Advisor is authorized to pay to a broker or
dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for any
fund which is in excess of the amount of commission another
broker or dealer would have charged for effecting that
transaction if, but only if, the Advisor determines in good
faith that such commission was reasonable in relation to the
value of the brokerage and research services provided by
such broker or dealer, viewed in terms of that particular
transaction or in terms of all of the accounts over which
investment discretion is so exercised.
3. ALLOCATION OF EXPENSES.
Except for the services and facilities to be provided by the Advisor
as set forth in Paragraph 2 above, the Trust assumes and shall pay all
expenses for all other Trust operations and activities and shall
reimburse the Advisor for any such expenses incurred by the Advisor.
The expenses to be borne by the Trust shall include, without
limitation:
(a) The charges and expenses of any registrar, stock transfer or
dividend disbursing agent, custodian, or depository
appointed by the Trust for the safekeeping of its cash,
portfolio securities and other property;
(b) The charges and expenses of auditors;
(c) Brokerage commissions for transactions in the portfolio
securities of the Trust;
(d) All taxes, including issuance and transfer taxes, and
corporate fees payable by the Trust to Federal, state or
other governmental agencies;
(e) The cost of stock certificates (if any) representing shares
of the Trust;
(f) Expenses involved in registering and maintaining
registrations of the Trust and of its shares with the
Securities and Exchange Commission and various states and
other jurisdictions, including reimbursement of actual
expenses incurred by the Advisor in performing such
functions for the Trust, and including compensation of
persons who are Advisor employees in proportion to the
relative time spent on such matters;
(g) All expenses of shareholders' and Trustees' meetings,
including meetings of committees, and of preparing, printing
and mailing proxy statements, quarterly reports, semi-annual
reports, annual reports and other communications to
shareholders;
(h) All expenses of preparing and setting in type prospectuses,
and expenses of printing and mailing the same to
shareholders [but not expenses of printing and mailing of
prospectuses and literature used for promotional purposes in
accordance with Paragraph 2(d) above];
(i) Compensation and travel expenses of Trustees who are not
"interest persons" within the meaning of the 1940 Act;
(j) The expense of furnishing, or causing to be furnished, to
each shareholder a statement of his account, including the
expense of mailing;
(k) Charges and expenses of legal counsel and internal
audit/compliance personnel in connection with matters
relating to the Trust, including, without limitations, legal
services rendered in connection with the Trust's corporate
and financial structure and relations with its shareholders,
issuance of Trust shares, and registration and qualification
of securities under Federal, state and other laws;
(l) The expenses of attendance at professional meetings of
organizations such as the Investment Company Institute, the
No Load Mutual Fund Association, or Commerce Clearing House
by officers and Trustees of the Trust, and the membership or
association dues of such organizations;
(m) The cost and expense of maintaining the books and records of
the Trust, including general ledger accounting;
(n) The expense of obtaining and maintaining a fidelity bond as
required by Section 17(g) of the 1940 Act;
(o) Interest payable on Trust borrowings; and
(p) Postage.
4. ADVISORY FEE.
(a) For the services and facilities to be provided to each of
the Funds by the Advisor as provided in Paragraph 2 hereof,
the Trust shall pay the Advisor a monthly fee with respect
to each of the Funds as soon as practical after the last day
of each calendar month, which fee shall be paid at the rate
set forth below based upon the Monthly Average Net Assets
[as defined in subparagraph (c) below] of such Fund for such
calendar month:
ADVISORY FEE SCHEDULE
---------------------
MONTHLY
FEE RATE
--------
Bonnel Growth Fund 1/12 of 1.00%
(b) In the case of termination of this Agreement with respect to
any Fund during any calendar month, the fee with respect to
such Fund for that month shall be reduced proportionately
based upon the number of calendar days during which it is in
effect and the fee shall be computed upon the average net
assets of such Fund for the business days which it is so in
effect.
(c) The "Monthly Average Net Assets" of any Fund of the Trust
for any calendar month shall be equal to the quotient
produced by dividing (i) the sum of the net assets of such
Fund, determined in accordance with procedures established
from time to time by or under the direction of the Board of
Trustees of the Trust in accordance with the Declaration of
Trust of the Trust, as of the close of business on each day
during such month that such Fund was open for business, by
(ii) the number of such days.
5. EXPENSE LIMITATION.
The Advisor agrees that for any fiscal year of the Trust during which
the total of all expenses of the Trust (including investment advisory
fees under this agreement, but excluding interest, portfolio brokerage
commissions and expenses, taxes and extraordinary items) exceeds the
lowest expense limitation imposed in any state in which the Trust is
then making sales of its shares or in which its shares are then
qualified for sale, the Advisor will reimburse the Trust for such
expenses not otherwise excluded from reimbursement by this Paragraph 5
to the extent that they exceed such expense limitation.
6. TRUST TRANSACTIONS.
The Advisor agrees that neither it nor any of its officers or
Directors will take any long or short term position in the shares of
the Trust; provided, however, that such prohibition:
(a) shall not prevent the Advisor from purchasing shares of the
Trust if orders to purchase such shares are placed upon the
receipt by the Advisor of purchase orders for such shares
and are not in excess of such purchase orders received by
the Advisor; and
(b) shall not prevent the purchase of shares of the Trust by any
of the persons above described for their account and for
investment at the price at which such shares are available
to the public at the time of purchase or as part of the
initial capital of the Trust.
7. RELATIONS WITH TRUST.
Subject to and in accordance with the Declaration of Trust and By-laws
of the Trust and the Articles of Incorporation and By-laws of the
Advisor, respectively, it is understood that Trustees, officers, agents
and shareholders of the Trust are or may be interested in the Advisor
(or any successor thereof) as directors, officers, or otherwise; that
directors, officers, agents and shareholders of the Advisor are or may
be interested in the Trust as Trustees, officers, shareholders, or
otherwise; that the Advisor (or any such successor) is or may be
interested in the Trust as a shareholder or otherwise; and that the
effect of any such adverse interests shall be governed by said
Declaration of Trust, Articles of Incorporation and By-laws.
8. LIABILITY OF ADVISOR AND OFFICERS AND TRUSTEES OF THE TRUST.
No provision of this Agreement shall be deemed to protect the Advisor
against any liability to the Trust or its shareholders to which it
might otherwise be subject by reason of any willful misfeasance, bad
faith or gross negligence in the performance of its duties or the
reckless disregard of its obligations and duties under this Agreement.
Nor shall any provision hereof be deemed to protect any Trustee or
officer of the Trust against any such liability to which he might
otherwise be subject by reason of any willful misfeasance, bad faith or
gross negligence in the performance of his duties or the reckless
disregard of his obligations and duties. If any provision of this
Agreement shall be held or made invalid by a court decision, statute,
rule or otherwise, the remainder of this Agreement shall not be
affected thereby.
9. DURATION AND TERMINATION OF THIS AGREEMENTS.
(a) Duration. This Agreement shall become effective with respect
to each Initial Fund on the date hereof and, with respect to
any additional Fund, on the date of receipt by the Trust of
notice from the Advisor in accordance with Paragraph 1(b)
hereof that the Manager is willing to serve as Advisor with
respect to such Fund. Unless terminated as herein provided,
this Agreement shall remain in full force and effect until
September 21, 1995 with respect to the Initial Funds and,
with respect to each additional Fund, until one year
following the date on which such Fund becomes a Fund
hereunder, and shall continue in full force and effect for
period on one year thereafter with respect to each Fund so
long as such continuance with respect to any such Fund is
approved at least annually (i) by either the Trustees of the
Trust or by vote of a majority of the outstanding voting
shares (as defined in the 1940 Act) of such Fund, and (ii)
in either event by the vote of a majority of the Trustees of
the Trust who are not parties to this Agreement or
"interested persons" (as defined in the 1940 Act) of any
such party, cast in person at a meeting called for the
purpose of voting on such approval.
Any approval of this Agreement by the holders of a majority
of the outstanding shares (as defined in the 1940 Act) of
any Fund shall be effective to continue this Agreement with
respect to any such Fund notwithstanding (i) that this
Agreement has not been approved by the holders of a majority
of the outstanding shares of any other Fund affected
thereby, and (ii) that this Agreement has not been approved
by the vote of a majority of the outstanding shares of the
Trust, unless approval shall be required by any other
applicable law or otherwise.
(b) Termination. This Agreement may be terminated at any time,
without payment of any penalty, by vote of the Trustees of
the Trust or by vote of a majority of the outstanding shares
(as defined in the 1940 Act), or by the Advisor on sixty
(60) days' written notice to the other party.
(c) Automatic Termination. This Agreement shall automatically
and immediately terminate in the event of its assignment.
10. SERVICES NOT EXCLUSIVE.
The services of the Advisor to the Trust hereunder are not to be deemed
exclusive, and the Advisor shall be free to render similar services to
others so long as its services hereunder are not impaired thereby.
11. LIMITATION OF LIABILITY.
(a) THE TRUST The term "Accolade Funds" means and refers to the
Trustees from time to time serving under the Master Trust
Agreement of the Trust dated April 15, 1993, as the same may
subsequently thereto have been, or subsequently hereto be
amended. It is expressly agreed that the obligations of the
Trust hereunder shall not be binding upon any of the
Trustees, shareholders, nominees, officers, agents or
employees of the Trust, personally, but bind only the assets
and property of the Trust, as provided in the Master Trust
Agreement of the Trust. The execution and delivery of this
Agreement have been authorized by the Trustees and
shareholders of the Trust and signed by an authorized
officer of the Trust, acting as such, and neither such
authorization by such Trustees and shareholders nor such
execution and delivery by such officer shall be deemed to
have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the
assets and property of the Trust as provided in its Master
Trust Agreement.
(b) THE ADVISOR It is expressly agreed that the oblations of the
Advisor hereunder shall not be binding upon any of the
shareholders, nominees, officers, agents or employees of the
Advisor, personally, but bind only the assets and property
of the Advisor, respectively. The execution and delivery of
the Agreement have been authorized by the directors and
officers of the Advisor and signed by an authorized officer
of the Advisor, acting as such, and neither such
authorization by such directors and officers nor such
execution and delivery by such officer shall be deemed to
have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the
assets and property of the Advisor, respectively. This
limitation of liability shall not be deemed to protect the
shareholders, nominees, officers, agents or employees of the
Advisor against any liability to the Trust or its
shareholders to which they might otherwise be subject by
reason of any willful misfeasance, bad faith or gross
negligence in the performance of their duties or the
reckless disregard of their obligations and duties under
this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
ACCOLADE FUNDS UNITED SERVICES ADVISORS, INC.
/s/Bobby D. Duncan /s/Bobby D. Duncan
By ---------------------- By -------------------------
Executive Vice President Executive Vice President
Attest: Attest:
/s/Charles W. Lutter, Jr. /s/Charles W. Lutter, Jr.
- -------------------------- -----------------------------
Secretary Secretary
THIS ITEM WAS DELETED FROM THE AGREEMENT AS IT DOES NOT RELATE
10. NAME OF TRUST.
It is understood that the name "United Services", and any logo
associated with that name, is the valuable property of United Services
Advisors, Inc., and that the Trust has the right to include "United
Services" as a part of its name only so long as this Agreement shall
continue. Upon termination of this Agreement the Trust shall forthwith
cease to use the United Services name and logos and shall submit to its
shareholders an amendment to its Declaration of Trust to change the
Trust's name.
Secretary
ADDENDUM
May XXX, 1996
United Services Advisors, Inc.
7900 Callaghan Road
San Antonio, Texas 78229
Gentlemen:
Pursuant to Section 1(b) of the Advisory Agreement dated September 21, 1994
between Accolade Funds (the "Trust") and United Services Advisors, Inc. (The
"Advisor"), please be advised that the Trust has established one new series of
its shares, namely, the Leeb Value Fund, and please be further advised that the
Trust desires to retain the Advisor to render management and investment advisory
services under the Advisory Agreement to this Fund at the fees stated below:
LEEB VALUE FUND
Monthly Average Net Assets 1/12 of 1.00%
Please state below whether you are willing to render such services at the fees
stated above.
ACCOLADE FUNDS
Attest: By:
-------------------------------- ------------------------------
Secretary Executive Vice President
Date:
-----------------------------------
We are willing to render management and investment advisory services to the Leeb
Value Fund at the fee stated above.
UNITED SERVICES ADVISORS, INC.
Attest: By:
------------------------------- --------------------------------
Secretary President
EXHIBIT NO. 4 TO COMBINED PROXY
STATEMENT AND PROSPECTUS
-----------------------------------------
SUB-ADVISORY AGREEMENT
AGREEMENT made as of the _____ day of ____________, 1996 among UNITED
SERVICES ADVISORS, INC., a corporation organized under the laws of the State of
Texas (the "Advisor"), ACCOLADE FUNDS, a Massachusetts business trust having its
principal place of business in San Antonio, Texas (the "Trust"), on behalf of
the Leeb Value Fund (the "Fund"), a series of shares of the Trust, and MONEY
GROWTH INSTITUTE, INC., a corporation organized under the laws of the State of
New York (the "Sub-Advisor"), of New York, New York.
WHEREAS, the Advisor is engaged in the business of rendering
investment management services to the Trust; and
WHEREAS, the Trust is an open-end management investment company and is
so registered under the Investment Company Act of 1940 (the "1940 Act"); and
WHEREAS, the Trust is operated as a "series company" within the meaning
of Rule 18f-2 under the 1940 Act and has four separate series of shares of
beneficial interest, one of which series is the Fund.
NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the
parties hereto as follows:
1. APPOINTMENT OF SUB-ADVISOR.
The Sub-Advisor is hereby appointed to provide investment advisory
services to the Fund for the period and on the terms herein set
forth. The Sub-Advisor accepts such appointment and agrees to
render the services herein set forth, for the compensation herein
provided. To enable Sub-Advisor to exercise fully its discretion
and authority as provided in this Section 1, the Trust hereby
constitutes and appoints Sub-Advisor as the Trust's agent and
attorney-in-fact with full power and authority for the Trust and on
the Trust's behalf to buy, sell and otherwise deal in securities
and contracts relating to same for the Fund.
2. DUTIES OF SUB-ADVISOR.
(a) The Sub-Advisor is hereby authorized and directed and hereby
agrees, subject to the stated investment objective and
policies of the Fund as set forth in the Fund's Prospectus (as
defined below) and subject to the supervision of the Advisor
and the Board of Trustees of the Trust, (i) to develop,
recommend and implement such investment program and strategy
for the Fund as may from time to time in the circumstances
appear most appropriate to the achievement of the investment
objective of the Fund as stated in the aforesaid Prospectus,
(ii) to provide research and analysis relative to the
investment program and investments of the Fund, (iii) to
determine what securities should be purchased and sold and
what portion of the assets of the Fund should be held in cash
or cash equivalents and (iv) to monitor on a continuing basis
the performance of the portfolio securities of the Fund. The
Sub-Advisor will advise the Trust's custodian and the Advisor
on a prompt basis of each purchase and sale of a portfolio
security specifying the name of the issuer, the description
and amount or number of shares of the security purchased, the
market price, commission and gross or net price, trade date,
settlement date and identity of the effecting broker or
dealer; and will review the accuracy of the pricing of
portfolio securities in accordance with Trust procedures. From
time to time, as the Trustees of the Trust or the Advisor may
reasonably request, the Sub-Advisor will furnish to the
Trust's officers and to each of its Trustees reports on
portfolio transactions and reports on issues of securities
held in the portfolio, all in such detail as the Trust or the
Advisor may reasonably request. The Sub-Advisor will also
inform the Trust's officers and Trustees on a current basis of
changes in investment strategy or tactics. The Sub-Advisor
will make its officers and employees available to meet with
the Trust's officers and Trustees on due notice to review the
investments and investment program of the Fund in the light of
current and prospective economic and market conditions.
The Sub-Advisor shall place all orders for the purchase and
sale of portfolio securities for the account of the Fund with
brokers or dealers selected by the Sub-Advisor, although the
Trust will pay the actual brokerage commissions and any
transfer taxes with respect to transactions in the portfolio
securities of the Trust. The Sub-Advisor is authorized to
submit any such order collectively with orders on behalf of
other accounts under its management, provided that the
Sub-Advisor shall have determined that such action is in the
best interest of the Fund and is in accordance with applicable
law, including, without limitation, Rule 17d-1 under the 1940
Act. In executing portfolio transactions and selecting brokers
or dealers, the Sub-Advisor will use its best efforts to seek
on behalf of the Fund the best overall terms available. In
assessing the best overall terms available for any
transaction, the Sub-Advisor shall consider all factors it
deems relevant, including the breadth of the market in the
security, the price of the security, the financial condition
and execution capability of the broker or dealer, and the
reasonableness of the commission, if any (for the specific
transaction and on a continuing basis). In evaluating the best
overall terms available, and in selecting the broker or dealer
to execute a particular transaction, the Sub-Advisor may also
consider the brokerage and research services (as those terms
defined in Section 28(e) of the Securities Exchange Act of
1934) provided to the Fund and/or other accounts over which
the Sub-Advisor or an affiliate of the Sub-Advisor exercises
investment discretion. The Sub-Advisor is authorized to pay to
a broker or dealer who provides such brokerage and research
services a commission for executing a portfolio transaction
for the Fund which is in excess of the amount of commission
another broker or dealer would have charged for effecting that
transaction if, but only if, the Sub-Advisor determines in
good faith that such commission was reasonable in relation to
the value of the brokerage and research services provided by
such broker or dealer, viewed in terms of that particular
transaction or in terms of all of the accounts over which
investment discretion is so exercised. An affiliated person of
the Sub-Advisor may provide brokerage services to the Fund
provided that the Sub-Advisor shall have determined that such
action is consistent with its obligation to seek the best
overall terms available and is in accordance with applicable
law, including, without limitation, Section 17(e) of the 1940
Act. The foregoing shall not be deemed to authorize an
affiliated person of the Sub-Advisor to enter into
transactions with the Fund as principal.
In the performance of its duties hereunder, the Sub-Advisor is
and shall be an independent contractor and unless otherwise
expressly provided or authorized shall have no authority to
act for or represent the Trust in any way or otherwise be
deemed to be an agent of the Trust or of the Advisor.
(b) Delivery of Documents. The Advisor will furnish upon request
or has furnished the Sub-Advisor with true copies of each of
the following:
(i) The Trust's Master Trust Agreement dated April 15, 1993
as filed with the Secretary of State of the
Commonwealth of Massachusetts and all amendments
thereto (such Master Trust Agreement, as presently in
effect and as it shall from time to time be amended, is
herein called the "Master Trust Agreement");
(ii) The Trust's By-Laws and amendments thereto (such
By-Laws, as presently in effect and as it shall from
time to time be amended, is herein called the
"By-Laws);
(iii) Resolutions of the Trust's Board of Trustees
authorizing the appointment of the Advisor and
Sub-Advisor and approving the Advisory Agreement and
this Agreement;
(iv) The most recent Post-Effective Amendment to the Trust's
Registration Statement on Form N-1A under the
Securities Act of 1933 as amended ("1933 Act") and the
1940 Act as filed with the Securities and Exchange
Commission;
(v) The Fund's most recent prospectus (such prospectus, as
presently in effect and all amendments and supplements
thereto being referred to herein as the "Prospectus");
and
(vi) All resolutions of the Board of Trustees of the Trust
pertaining to the management of the assets of the Fund.
During the term of this Agreement the Advisor shall not use or
implement any amendment or supplement that relates to or
affects the obligations of the Sub-Advisor hereunder if the
Sub-Advisor reasonably objects in writing within five business
days after delivery thereof (or such shorter period of time as
the Advisor shall specify upon delivery, if such shorter
period of time is reasonable under the circumstances).
3. ADVISORY FEE.
(a) For the services to be provided to the Fund by the Sub-Advisor
as provided in Paragraph 2 hereof, the Advisor will pay the
Sub-Advisor in accordance with the following:
(i) Subject to shareholder approval the initial term of
the advisory agreement will be for two years and, the
Fund will pay a one percent management fee to the
Advisor;
(ii) The Advisor will pay to the Sub-Advisor the one
percent management fee received net of all mutually
agreed upon fee waivers, expense caps and
reimbursements and reimbursements required by
applicable law for one year from the anniversary date
of the Sub-Advisory Agreement provided assets of the
Fund are equal to or less than $40 million. On assets
exceeding $40 million, but less than $50 million, the
Advisor will pay to the Sub-Advisor 75 percent of the
management fee received net of all applicable fee
waivers, expense caps and reimbursements for one year
from the anniversary date of the Sub-Advisory
Agreement. On assets equaling or exceeding $50
million, the Advisor will pay to the Sub-Advisor 50
percent of the management fee received net of all
applicable fee waivers, expense caps and
reimbursements for one year from the anniversary date
of the Sub-Advisory Agreement.
(iii) After the first anniversary of the Sub-Advisory
Agreement, the Advisor will pay to the Sub-Advisor 50
percent of the management fee received net of all
mutually agreed upon applicable fee waivers, expense
caps and reimbursements and reimbursements required by
applicable law.
(iv) Further, the Advisor and the Sub-Advisor will share
expenses associated with marketing the Fund's shares
equally to the extent such marketing expenses shall
exceed and 12b-1 plan expenditures by the Fund. The
Sub-Advisor shall have the right to pre-approve any
such marketing expenditures which exceed 12b-1 plan
expenditures by $5,000 in any given month. This clause
will be renegotiated one year from the anniversary
date of the Sub-Advisory Agreement.
The fee is payable in monthly installments in arrears.
The "Management Fee" means the management fee paid by
the Trust to the Advisor under the Advisory Agreement,
dated as of ______________, 1996, between the Trust
and the Advisor with respect to the management of the
Fund.
(b) In the case of termination of the Agreement during any
calendar month, the fee with respect to that month shall be
reduced proportionately based upon the number of calendar days
during which it is in effect and the fee shall be computed
upon the average net assets of the Fund for the days during
which it is so in effect.
(c) The "Monthly Average Net Assets" of the Fund for any calendar
month shall be equal to the quotient produced by dividing (i)
the sum of the net assets of the Fund, determined in
accordance with procedures established from time to time by or
under the direction of the Board of Trustees of the Trust in
accordance with the Master Trust Agreement, as of the close of
business on each day during such month that the Fund was open
for business, by (ii) the number of such days.
4. EXPENSES.
During the term of this Agreement, the Sub-Advisor will bear all
expenses incurred by it in the performance of its duties
hereunder.
5. FUND TRANSACTIONS.
The Sub-Advisor agrees that neither it nor any of its employees,
officers or directors will take any long or short term position in
the shares of the Fund or portfolio securities of the Fund for
trading purposes; provided, however, that such prohibition shall
not prevent the purchase of shares of the Fund by any of the
persons above described for their account and for investment at
the price at which such shares are available to the public at the
time of purchase.
6. REPRESENTATION AND WARRANTY.
The Sub-Advisor hereby represents and warrants to the Advisor that
it is duly registered as an investment Advisor, or is exempt from
registration, under the Investment Advisor's Act of 1940, as
amended, and that it shall maintain such registration or exemption
at all times during which this Agreement is in effect.
7. LIABILITY OF SUB-ADVISOR.
In the performance of its duties under this Agreement, the
Sub-Advisor shall act in conformity with and in compliance with
the requirements of the 1940 Act and all other applicable U.S.
Federal and state laws and regulations and shall not cause the
Fund to take any action that would require the Fund or any
affiliated person thereof to register as a commodity pool operator
under the terms of the U.S. Commodity Exchange Act, as amended (it
being understood by the Sub-Advisor that a notice of eligibility
may be filed on behalf of the Trust pursuant to Rule 4.5
promulgated under said Act). The Sub-Advisor shall be responsible
for maintaining such procedures as may be reasonably necessary to
ensure that the investment and reinvestment of the Fund's assets
are made in compliance with its investment objectives and policies
and with all applicable statues and regulations and that the Fund
qualifies as a regulated investment company under Subchapter M of
the Internal Revenue Code. No provision of this Agreement shall be
deemed to protect the Sub-Advisor against any liability to the
Trust or its shareholders to which it might otherwise be subject
by reason of any willful misfeasance, bad faith or gross
negligence in the performance of its duties or the reckless
disregard of its obligations and duties under this Agreement.
8. REPORTS.
The Sub-Advisor shall render to the Board of Trustees of the Trust
such periodic and special reports as the Board of Trustees may
reasonably request with respect to matters relating to duties of
the Sub-Advisor set forth herein.
9. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) Duration. With respect to the Trust, this Agreement shall
become effective upon the date hereof and shall continue in
full force and effect for two years from the date of
shareholder approval and from year to year thereafter so long
as such continuance is approved at least annually (i) by
either the Trustees of the Trust or by vote of a majority of
the outstanding voting securities (as defined in the 1940
Act) of the Fund, and (ii) in either event by the vote of a
majority of the Trustees of the Trust who are not parties to
this Agreement or "interested persons" (as defined in the
1940 Act) of any such party, cast in person at a meeting
called for the purpose of voting on such approval.
(b) Termination. With respect to the Trust, this Agreement may be
terminated at any time, without payment of any penalty (i) by
vote of the Trustees of the Trust or by vote of a majority of
the outstanding voting securities of the Fund (as defined in
the 1940 Act) on sixty (60) days' written notice to the other
parties, (ii) by the Advisor on sixty (60) days' written
notice to the other parties or (iii) by the Sub-Advisor on
ninety (90) days' written notice to the other parties.
(c) Automatic Termination. With respect to the Trust, this
Agreement shall automatically and immediately terminate in
the event of its assignment or upon expiration of the
Advisory Agreement now or hereafter in effect between the
Advisor and the Trust with respect to the Fund.
10. SERVICES NOT EXCLUSIVE.
The services of the Sub-Advisor of the Fund hereunder are not to
be deemed exclusive, and the Sub-Advisor shall be free to render
similar services to others.
11. LIMITATION OF LIABILITY.
(a) THE TRUST The term "Accolade Funds" means and refers to the
Trustees from time to time serving under the Master Trust
Agreement. It is expressly agreed that the obligations of the
Trust hereunder shall not be binding upon any of the
Trustees, shareholders, nominees, officers, agents or
employees of the Trust, personally, but bind only the assets
and property of the Trust, as provided in the Master Trust
Agreement. The execution and delivery of the Agreement have
been authorized by the Trustees and shareholders of the Trust
and signed by an authorized officer of the Trust, acting as
such, and neither such authorization by such Trustees and
shareholders nor such execution and delivery by such officer
shall be deemed to have been made by any of them individually
or to impose any liability on any of them personally, but
shall bind only the assets and property of the Trust as
provided in its Master Trust Agreement.
(b) THE ADVISOR AND SUB-ADVISOR It is expressly agreed that the
oblations of the Advisor and Sub-Advisor hereunder shall not
be binding upon any of the shareholders, nominees, officers,
agents or employees of the Advisor or Sub-Advisor,
personally, but bind only the assets and property of the
Advisor and Sub-Advisor, respectively. The execution and
delivery of the Agreement have been authorized by the
directors and officers of the Advisor and Sub-Advisor and
signed by an authorized officer of the Advisor and
Sub-Advisor, acting as such, and neither such authorization
by such directors and officers nor such execution and
delivery by such officer shall be deemed to have been made by
any of them individually or to impose any liability on any of
them personally, but shall bind only the assets and property
of the Advisor and Sub-Advisor, respectively. This limitation
of liability shall not be deemed to protect the shareholders,
nominees, officers, agents or employees of the Advisor and
Sub-Advisor against any liability to the Trust or its
shareholders to which they might otherwise be subject by
reason of any willful misfeasance, bad faith or gross
negligence in the performance of their duties or the reckless
disregard of their obligations and duties under this
Agreement.
12. MISCELLANEOUS.
(a) Notice. Any notice under this Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the
other parties at such address as such other parties may
designate in writing for the receipt of such notices.
(b) Severability. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule or
otherwise, the remainder shall not be thereby affected.
(c) Applicable Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of
Texas.
(d) This Agreement constitutes the entire agreement of the
parties and supersedes all prior or contemporaneous written
or oral negotiations, correspondence, agreements and
understandings, regarding the subject matter hereof.
13. STANDARD OF CARE.
To the extent permitted under applicable law (including section 36
of the 1940 Act), the Sub-Advisor will not be liable to the Trust
or the Advisor for any losses incurred by the Trust, the Fund or
the Advisor that arise out of or are in any way connected with any
recommendation or other act or failure to act of the Sub-Advisor
under this Agreement, including, but not limited to, any error in
judgment with respect to the Fund, so long as such recommendation
or other act or failure to act does not constitute a breach of the
Sub-Advisor's fiduciary duty to the Trust, the Fund or the
Advisor. Anything in this section 13 or otherwise in this
Agreement to the contrary notwithstanding, however, nothing herein
shall constitute a waiver or limitation of any rights that the
Trust, the Advisor or the Fund may have under any Federal or state
securities laws.
IN WITNESS WHEREOF, the Advisor, the Trust and the Sub-Advisor have caused this
Agreement to be executed on the day and year first above written.
UNITED SERVICES ADVISORS, INC.
By:
---------------------------
ACCOLADE FUNDS
By:
---------------------------
MONEY GROWTH INSTITUTE, INC.
By:
---------------------------
EXHIBIT NO. 5 TO COMBINED PROXY
STATEMENT AND PROSPECTUS
-----------------------------------------
PLAN PURSUANT TO RULE 12b-1
for
LEEB VALUE FUND
Adopted ___________, 1996
RECITALS
1. ACCOLADE FUNDS, an unincorporated business trust organized under the
laws of the Commonwealth of Massachusetts (the "Trust") is engaged in business
as an open-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "Act").
2. The Trust operates as a "series company" within the meaning of Rule
18f-2 under the Act and is authorized to issue shares of beneficial interest in
various series or sub-trusts (collectively the "Funds").
3. Funds of the Trust may utilize Fund assets to pay for, or reimburse
payment for, sales or promotional services or activities that have been or will
be provided in connection with distribution of shares of the Funds if such
payments are made pursuant to a Plan adopted and continued in accordance with
Rule 12b-1 under the Act.
4. Leeb Value Fund, a series of the Trust (the "Fund") by virtue of
such arrangement may be deemed to act as a distributor of its shares as provided
in Rule 12b-1 under the Act and desires to adopt a Plan pursuant to such Rule
(the "Plan").
5. The Trustees as a whole, and the Trustees who are not interested
persons of the Trust (as defined in the Act) and who have no direct or indirect
financial interest in the operation of this Plan and any agreements relating to
it (the "Qualified Trustees"), having determined, in the exercise of reasonable
business judgment and in light of their fiduciary duties under state law and
under Section 36(a) and (b) of the Act, that there is a reasonable likelihood
that this Plan will benefit the Fund and its shareholders, have approved the
Plan by votes cast in person at a meeting called for the purpose of voting on
this Plan and agreements related thereto.
6. Shareholder approval of the Plan was initially obtained in
connection with action taken pursuant to a registration statement on Form N-14
on ___________, 1996.
PLAN PROVISIONS
SECTION 1. EXPENDITURES
(a) PURPOSES. 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.
(b) AMOUNTS. 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,
provided the total amount expended pursuant to this Plan does not
exceed 0.25% of net assets on an annual basis.
SECTION 2. TERM AND TERMINATION
(a) INITIAL TERM. This Plan shall become effective upon effective
registration of the Fund and shall continue in effect for a
period of one year thereafter unless terminated or otherwise
continued or discontinued as provided in this Plan.
(b) CONTINUATION OF THE PLAN. The Plan and any related agreements
shall continue in effect for periods of one year thereafter for
so long as such continuance is specifically approved at least
annually by votes of a majority of both (a) the Trustees of the
Trust and (b) the Qualified Trustees, cast in person at a meeting
called for the purpose of voting on this Plan and such related
agreements.
(c) TERMINATION OF THE PLAN. This 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.
SECTION 3. AMENDMENTS
This Plan may not be amended to increase materially the amount of
distribution expenditures provided for in Section 1 hereof unless such amendment
is approved by a vote of the majority of the outstanding voting securities of
the Fund, and no material amendment to the Plan shall be made unless approved in
the manner provided for annual renewal in Section 2(b) hereof.
SECTION 4. INDEPENDENT TRUSTEES
While this Plan is in effect with respect to the Fund, the selection
and nomination of Trustees who are not interested persons of the Trust (as
defined in the Act) shall be committed to the discretion of the Trustees who are
not interested persons.
SECTION 5. QUARTERLY REPORTS
The Treasurer of the Trust shall provide to the Trustees and the
Trustees shall review, at least quarterly, a written report of the amounts
accrued and the amounts expended under this Plan for distribution, along with
the purposes for which such expenditures were made.
SECTION 6. RECORDKEEPING
The Trust shall preserve copies of this Plan and any related agreements
and all reports made pursuant to Section 5 hereof, for a period of not less than
six years from the date of this Plan, the agreements or such report, as the case
may be, the first two years in an easily accessible place.
SECTION 7. AGREEMENTS RELATED TO THIS PLAN
Agreements with persons providing distribution services to be paid for
or reimbursed under this Plan shall provide that:
(a) the agreement will continue in effect for a period of one year
and will continue thereafter only if specifically approved by
vote of a majority of the Trustees of the Trust;
(b) the agreement may be terminated at any time, without payment of
any penalty, by vote of a majority of (i) the Qualified Trustees
or (ii) the outstanding voting securities of the Fund, on not
more than sixty (60) days' written notice to any other party to
the agreement;
(c) the agreement will terminate automatically in the event of an
assignment;
(d) in the event the agreement is terminated or otherwise
discontinued, no further payments or reimbursements will be made
by the Fund after the effective date of such action; and
(e) payments and/or reimbursements may only be made for the specific
sales or promotional services or activities identified in Section
1 of this Plan and must be made on or before the last day of the
one year period commencing on the last day of the calendar
quarter during which the service or activity was performed.
