REGISTRATION NO. 33-61542
REGISTRATION NO. 811-7662
...............................................................................
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No._____ [ ]
Post-Effective Amendment No. 3 [X]
(Check appropriate box or boxes)
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 [X]
Post-Effective Amendment No._____
ACCOLADE FUNDS
--------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
7900 Callaghan Road
San Antonio, Texas 78229
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(Address of Principal Executive Office)
(210) 308-1234
(Registrant's Telephone Number, including Area Code)
----------------------------------------------------
Frank E. Holmes, President
Accolade Funds
7900 Callaghan Road
San Antonio, Texas 78229
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(Name and Address of Agent for Service)
...............................................................................
Approximate date of proposed public offering:__________________, 1996
It is proposed that this filing will become effective (check appropriate box):
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on (date) pursuant to paragraph (a)(i)
[X] 75 days after filing pursuant to paragraph (a) of Rule 485
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
The Registrant hereby 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.
The Registrant hereby declares, pursuant to Rule 24f-2 under the Investment
Company Act of 1940, that an indefinite number of shares of beneficial interest,
no par value, is being registered by this Registration Statement, with respect
to one sub-trust of Registrant -Leeb Value Fund. The Rule 24f-2 Notice for the
most recent fiscal year, September 30, 1995, was filed on or about November 28,
1995, in respect to another sub-trust of Registrant, the Bonnel Growth Fund.
<PAGE>
ACCOLADE FUNDS
LEEB VALUE FUND
FORM N-1A
CROSS REFERENCE SHEET
PART A
FORM N-1A
ITEM NO. CAPTION OR LOCATION IN PROSPECTUS
- -------- ---------------------------------
1 Cover Page
2 Summary of Fees and Expenses
3 Financial Highlights (also
covered under Item 23 in Part
B)
4 Cover Page; The Trust;
Investment Objectives and
Considerations; Special
Considerations
5 Management of the Fund
5A Management's Discussion of Fund
Performance
6 Cover Page; The Trust;
Dividends and Taxes
7 How to Purchase Shares; How
Shares Are Valued; Special
Considerations - Servicing Fee
8 How to Redeem Shares
9 Management of the Fund--the
Sub-Advisor
<PAGE>
-----------------------------------------
PART A -- THE PROSPECTUS
Included herein is the Prospectus for the
Accolade Funds/Leeb Value Fund
Post-Effective Amendment No. 3
-----------------------------------------
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>
CROSS REFERENCE SHEET
PART B
FORM N-1A CAPTION OR LOCATION IN STATEMENT OF
ITEM NO. ADDITIONAL INFORMATION
-------- ------------------------------------------
10 Cover Page
11 Table of Contents
12 General Information
13 Investment Objectives and Policies
14 Management of the Trust
15 Principal Holders of Securities
16 Investment Advisory Services
17 Portfolio Transactions
18 General Information
19 Not Covered in Statement of Additional
Information (Covered under Item 7 in Part A)
20 Tax Status
21 Distribution Plan (also covered under Item 5 in
Part A)
22 Calculation of Performance Data
23 Financial Statements (also covered under Item 3
in Part A)
-----------------------------------------
PART B -- THE PROSPECTUS
Included herein is the Statement of
Additional Information for the
Accolade Funds/Leeb Value Fund
Post-Effective Amendment No. 3
-----------------------------------------
ACCOLADE FUNDS
Leeb Value Fund
(the "Fund")
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information is not a prospectus but should
be read in conjunction with the Fund's prospectus dated XXXXXXXXXX (the
"Prospectus"), which may be obtained from United Services Advisors, Inc. (the
"Advisor"), P.O. Box 29467, San Antonio, Texas 78229-0467.
The date of this Statement of Additional Information is XXXXXXXXXX.
TABLE OF CONTENTS
-----------------
PAGE
GENERAL INFORMATION............................................................3
INVESTMENT OBJECTIVES AND POLICIES.............................................4
INVESTMENT LIMITATIONS........................................................10
MANAGEMENT OF THE FUND........................................................12
PRINCIPAL HOLDERS OF SECURITIES...............................................16
INVESTMENT ADVISORY SERVICES..................................................16
TRANSFER AGENCY AND OTHER SERVICES............................................18
DISTRIBUTION PLAN.............................................................18
CERTAIN PURCHASES OF SHARES OF THE FUND.......................................19
ADDITIONAL INFORMATION ON REDEMPTIONS.........................................20
CALCULATION OF PERFORMANCE DATA...............................................20
TAX STATUS....................................................................22
CUSTODIAN.....................................................................23
INDEPENDENT ACCOUNTANTS ......................................................24
FINANCIAL STATEMENTS..........................................................24
GENERAL INFORMATION
-------------------
Accolade Funds (the "Trust") is an open-end management investment
company and is a business trust organized under the laws of the Commonwealth of
Massachusetts. The Leeb Value Fund (the "Fund") is a series of the Trust and
represents a separate, diversified portfolio of securities (a "Portfolio").
The assets received by the Trust from the issue or sale of shares of
the Fund, and all income, earnings, profits and proceeds thereof, subject only
to the rights of creditors, are separately allocated to such Fund. They
constitute the underlying assets of each fund, are required to be segregated on
the books of accounts, and are to be charged with the expenses with respect to
such Fund. Any general expenses of the Trust, not readily identifiable as
belonging to a particular Fund, shall be allocated by or under the direction of
the Board of Trustees (the "Board" or "Trustees") in such manner as the Board
determines to be fair and equitable.
Each share of the Fund represents an equal proportionate interest in
the Fund with each other share and is entitled to such dividends and
distributions, out of the income belonging to that Fund, as are declared by the
Board. Upon liquidation of the Trust, shareholders of each fund are entitled to
share pro rata in the net assets belonging to the Fund available for
distribution.
As described under "The Trust" in the Prospectus, the Trust's Master
Trust Agreement provides that no annual or regular meeting of shareholders is
required. However, the Trust has a staggered Board with terms such that at least
25% of the Trustees expire every three years. The Trustees serve in that
capacity for six-year terms. Thus, there will ordinarily be no shareholder
meetings unless otherwise required by the Investment Company Act of 1940.
On any matter submitted to shareholders, the holder of each share is
entitled to one vote per share (with proportionate voting for fractional
shares). On matters affecting any individual fund, a separate vote of that fund
would be required. Shareholders of any fund are not entitled to vote on any
matter which does not affect their fund but which requires a separate vote of
another fund.
Shares do not have cumulative voting rights, which means that in
situations in which shareholders elect Trustees, holders of more than 50% of the
shares voting for the election of Trustees can elect 100% of the Trust's
Trustees, and the holders of less than 50% of the shares voting for the election
of Trustees will not be able to elect any person as a Trustee.
Shares have no preemptive or subscription rights and are fully
transferable. There are no conversion rights.
Under Massachusetts law, the shareholders of the Trust could, under
certain circumstances, be held personally liable for the obligations of the
Trust. However, the Master Trust Agreement disclaims shareholder liability for
acts or obligations of the Trust and requires that notice of such disclaimer be
given in each agreement, obligation or instrument entered into or executed by
the Trust or the Trustees. The Master Trust Agreement provides for
indemnification out of the Trust's property for all losses and expenses of any
shareholder held personally liable for the obligations of the Trust. Thus, the
risk of a shareholder incurring financial loss on account of shareholder
liability is limited to circumstances in which the Trust itself would be unable
to meet its obligations.
INVESTMENT OBJECTIVES AND POLICIES
----------------------------------
The following information supplements the discussion of the Fund's
investment objectives and policies discussed in the Fund's Prospectus.
EQUITY PRICE FLUCTUATION. The Fund invests primarily in equity
securities. Equity securities are subject to price fluctuations depending on a
variety of factors, including market, business, and economic conditions.
FOREIGN INVESTMENTS. Subject to the Fund's investment policies and
quality standards, the Fund may invest in the securities of foreign issuers.
Investing in securities issued by companies whose principal business activities
are outside the United States may involve significant risks not present in
domestic investments. For example, there is generally less publicly available
information about foreign companies, particularly those not subject to the
disclosure and reporting requirements of the United States securities laws.
Foreign issuers are generally not bound by uniform accounting, auditing and
financial reporting standards and requirements of practice comparable to those
applicable to domestic issuers. Investments in foreign securities also involve
the risk of possible adverse changes in investment or exchange control
regulations, expropriation or confiscatory taxation, limitation of the removal
of funds or the assets of the Fund, political or financial instability or
diplomatic and other developments which could affect such investment. Further,
economies of particular countries or areas of the world may differ favorably or
unfavorably from the economy of the United States. It is anticipated that in
most cases the best available market for foreign securities will be on exchanges
or in over-the-counter markets located outside of the United States. Foreign
stock markets, while growing in volume and sophistication, are generally not as
developed as those in the United States, and securities of some foreign issuer
(particularly those located in developing countries) may be less liquid and more
volatile than securities of comparable United States Companies. In addition,
foreign brokerage commissions are generally higher than commissions on
securities traded in the United States and may be non-negotiable. In general,
there is less overall governmental supervision and regulation of foreign
securities markets, broker/dealer, and issuers than in the United States.
WARRANTS AND RIGHTS. Warrants are options to purchase equity securities
at a specified price and are valid for a specific time period. Rights are
similar to warrants, but normally have a short duration and are distributed by
the issuer to its shareholders. The Fund may realize a loss equal to all or a
portion of the price paid for the warrants or rights if the price of the
underlying security decreases or does not increase by more than the amount paid
for the warrants or rights. The Fund may purchase warrants and rights, provided
that the Fund does not invest more than 5% of its net assets at the time of
purchase in warrants and rights other than those that have been acquired in
units or attached to other securities. Of such 5%, no more than 2% of the Fund's
assets at the time of purchase may be invested in warrants which are not listed
on either the New York Stock Exchange or the American Stock Exchange.
QUALITY RATINGS OF CORPORATE BONDS. The ratings of Moody's Investors
Service, Inc. and Standard & Poor's Ratings Group for corporate bonds in which
the Fund may invest are as follows:
Moody's Investors Service, Inc.
- -------------------------------
Aaa - Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A - Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
Baa - Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba - Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B - Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Standard & Poor's Ratings Group
- -------------------------------
AAA - Bonds rated AAA have the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay principal is
extremely strong.
AA - Bonds rated AA have a very strong capacity to pay interest and
repay principal and differ from the highest rated issues only in small degree.
A - Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than bonds in higher rated
categories.
BBB - Bonds rated BBB are regarded as having an adequate capacity to
pay interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal
for bonds in this category than for bonds in higher rated categories.
BB and B - Bonds rated BB and B are regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and B the higher degree of speculation. While such
bonds will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse conditions.
Risk Factors Of Lower-Rated Securities:
- ---------------------------------------
Lower-rated debt securities (commonly called "junk bonds") may be
subject to certain risk factors to which other securities are not subject to the
same degree. An economic downturn tends to disrupt the market for lower-rated
bonds and adversely affect their values. Such an economic downturn may be
expected to result in increased price volatility of lower-rated bonds and of the
value of the Fund's shares, and an increase in issuers' defaults on such bonds.
Also, many issuers of lower-rated bonds are substantially leveraged,
which may impair their ability to meet their obligations. In some cases, the
securities in which the Fund invests are subordinated to the prior payment of
senior indebtedness, thus potentially limiting the Fund's ability to recover
full principal or to receive payments when senior securities are in default.
The credit rating of a security does not necessarily address its market
value risk. Also, ratings may, from time to time, be changed to reflect
developments in the issuer's financial condition. Lower- rated securities held
by the Fund have speculative characteristics which are apt to increase in number
and significance with each lower rating category.
When the secondary market for lower-rated bonds becomes increasingly
illiquid, or in the absence of readily available market quotations for
lower-rated bonds, the relative lack of reliable, objective data makes the
responsibility of the Trustees to value such securities more difficult, and
judgment plays a greater role in the valuation of portfolio securities. Also,
increased illiquidity of the market for lower-rated bonds may affect the Fund's
ability to dispose of portfolio securities at a desirable price.
In addition, if the Fund experiences unexpected net redemptions, it
could be forced to sell all or a portion of its lower-rated bonds without regard
to their investment merits, thereby decreasing the asset base upon which the
Fund's expenses can be spread and possibly reducing the Fund's rate of return.
Also, prices of lower-rated bonds have been found to be less sensitive to
interest rate changes and more sensitive to adverse economic changes and
individual corporate developments than more highly rated investments. Certain
laws or regulations may have a material effect on the Fund's investments in
lower-rated bonds.
COMMERCIAL PAPER AND OTHER MONEY MARKET INSTRUMENTS. Commercial paper
consists of short-term (usually from one to two hundred-seventy days) unsecured
promissory notes issued by corporations in order to finance their current
operations. The Fund will only invest in commercial paper rated A-1 by Standard
& Poor's Ratings Group or Prime-1 by Moody's Investors Service, Inc. or unrated
paper of issuers who have outstanding unsecured debt rated AA or better by
Standard & Poor's or Aa or better by Moody's. Certain notes may have floating or
variable rates. Variable and floating rate notes with a demand notice period
exceeding seven days will be subject to the Fund's restriction on illiquid
investments (see "Investment Limitations") unless, in the judgment of the
Advisor, such note is liquid.
The rating of Prime-1 is the highest commercial paper rating assigned
by Moody's Investors Service, Inc. Among the factors considered by Moody's in
assigning ratings are the following: valuation of the management of the issuer;
economic evaluation of the issuer's industry or industries and an appraisal of
speculative-type risks which may be inherent in certain areas; evaluation of the
issuer's products in relation to competition and customer acceptance; liquidity;
amount and quality of long-term debt; trend of earnings over a period of 10
years; financial strength of the parent company and the relationships which
exist with the issuer; and, recognition by the management of obligations which
may be present or may arise as a result of public interest questions and
preparations to meet such obligations. These factors are all considered in
determining whether the commercial paper is rated Prime-1. Commercial paper
rated A (highest quality) by Standard & Poor's Ratings Group has the following
characteristics: liquidity ratios are adequate to meet cash requirements;
long-term senior debt is rated "A" or better, although in some cases "BBB"
credits may be allowed; the issuer has access to at least two additional
channels of borrowing; basic earnings and cash flow have an upward trend with
allowance made for unusual circumstances; typically, the issuer's industry is
well established and the issuer has a strong position within the industry; and,
the reliability and quality of management are unquestioned. The relative
strength or weakness of the above factors determines whether the issuer's
commercial paper is rated A-1.
The Fund may invest in short-term bank debt instruments such as
certificates of deposit, bankers' acceptances and time deposits issued by
national banks and state banks, trust companies and mutual savings banks, or by
banks or institutions the accounts of which are insured by the Federal Deposit
Insurance Corporation or the Federal Savings and Loan Insurance Corporation. The
Fund will only invest in bankers' acceptances of banks having a short-term
rating of A-1 by Standard & Poor's Ratings Group or Prime-1 by Moody's Investors
Service, Inc. The Fund will not invest in time deposits maturing in more than
seven days if, as a result thereof, more than 10% of the value of its net assets
would be invested in such securities and other illiquid securities.
As described more fully in the Prospectus, the Fund may invest a
portion of its assets in repurchase agreements with domestic broker/dealers,
banks and other financial institutions.
WHEN-ISSUED SECURITIES. The Fund will only make commitments to
purchase securities on a when-issued basis with the intention of actually
acquiring the securities. In addition, the Fund may purchase securities on a
when-issued basis only if delivery and payment for the securities takes place
within 120 days after the date of the transaction. In connection with these
investments, the Fund will direct the custodian to place cash, U.S. Government
obligations or high-grade debt instruments in a segregated account in an amount
sufficient to make payment for the securities to be purchased. When a segregated
account is maintained because the Fund purchases securities on a when-issued
basis, the assets deposited in the segregated account will be valued daily at
market for the purpose of determining the adequacy of the securities in the
account. If the market value of such securities declines, additional cash or
securities will be placed in the account on a daily basis so that the market
value of the account will equal the amount of the Fund's commitments to purchase
securities on a when-issued basis. To the extent funds are in a segregated
account, they will not be available for new investment or to meet redemptions.
Securities purchased on a when-issued basis and the securities held in the
Fund's portfolio are subject to changes in market value based upon changes in
the level of interest rates (which will generally result in all of those
securities changing in value in the same way, i.e., all those securities
experiencing appreciation when interest rates decline and depreciation when
interest rates rise). Therefore, if in order to achieve higher returns, the Fund
remains substantially fully invested at the same time that it has purchased
securities on a when-issued basis, there will be a possibility that the market
value of the Fund's assets will experience greater fluctuation. The purchase of
securities on a when-issued basis may involve a risk of loss if the
broker-dealer selling the securities fails to deliver after the value of the
securities has risen.
When the time comes for the Fund to make payment for securities
purchased on a when-issued basis, the Fund will do so by using then available
cash flow, by sale of the securities held in the segregated account, by sale of
other securities or, although it would not normally expect to do so, by
directing the sale of the securities purchased on a when-issued basis themselves
(which may have a market value greater or less than the Fund's payment
obligation). Although the Fund will only make commitments to purchase securities
on a when-issued basis with the intention of actually acquiring the securities,
the Fund may sell these securities before the settlement date if it is deemed
advisable by the Advisor or Sub-Advisor as a matter of investment strategy.
LOANS OF PORTFOLIO SECURITIES. The Fund may make short-term loans of
its portfolio securities to banks, brokers and dealers. Lending portfolio
securities exposes the Fund to the risk that the borrower may fail to return the
loaned securities or may not be able to provide additional collateral or that
the Fund may experience delays in recovery of the loaned securities or loss of
rights in the collateral if the borrower fails financially. To minimize these
risks, the borrower must agree to maintain collateral marked to market daily, in
the form of cash or U.S. Government obligations, with the Fund's custodian in an
amount at least equal to the market value of the loaned securities. It is the
Fund's policy, which may not be changed without the affirmative vote of a
majority of its outstanding shares, that such loans will not be made if as a
result the aggregate of all outstanding loans exceeds 25% of the value of the
Fund's total assets.
Under applicable regulatory requirements (which are subject to
change), the loan collateral must, on each business day, at least equal the
value of the loaned securities. To be acceptable as collateral, letters of
credit must obligate a bank to pay amounts demanded by the Fund if the demand
meets the terms of the letter. Such terms and the issuing bank must be
satisfactory to the Fund. The Fund receives amounts equal to the dividends or
interest on loaned securities and also receives one or more of (a) negotiated
loan fees, (b) interest on securities used as collateral, or (c) interest on
short-term debt securities purchased with such collateral; either type of
interest may be shared with the borrower. The Fund may also pay fees to placing
brokers as well as custodian and administrative fees in connection with loans.
Fees may only be paid to a placing broker provided that the Trustees determine
that the fee paid to the placing broker is reasonable and based solely upon
services rendered, that the Trustees separately consider the propriety of any
fee shared by the placing broker with the borrower, and that the fees are not
used to compensate the Advisor or any affiliated person of the Fund or an
affiliated person of the Advisor or other affiliated person. The terms of the
Fund's loans must meet applicable tests under the Internal Revenue Code and
permit the Fund to reacquire loaned securities on five days' notice or in time
to vote on any important matter.
PORTFOLIO TURNOVER. The Fund's management buys and sells securities for
the Fund to accomplish investment objectives. The Fund's investment policy may
lead to frequent changes in investments, particularly in periods of rapidly
fluctuating interest rates. The Fund's investments may also be traded to take
advantage of perceived short-term disparities in market values.
A change in the securities held by the Fund is known as "portfolio
turnover." For the fiscal years ended June 30, 1995 and 1994, the Fund's
portfolio turnover rate was 163% and 143%, respectively. A high portfolio
turnover rate may cause the Fund to pay higher transaction expenses, including
more commissions and markups, and also result in quicker recognition of capital
gains, resulting in more capital gain distributions which may be taxable to
shareholders. Any short-term gain realized on securities will be taxed to
shareholders as ordinary income. See "Tax Status."
PORTFOLIO TRANSACTIONS. Decisions to buy and sell securities for the
Fund and the placing of the Fund's securities transactions and negotiation of
commission rates, where applicable, are made by Money Growth Institute, Inc.
(the "Sub-Advisor") and are subject to review by the Fund's Advisor and Board of
Trustees of the Fund. In the purchase and sale of portfolio securities, the
Sub-Advisor seeks best execution for the 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 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 Fund paid brokerage commissions of
$95,561, $135,045 and $45,696, respectively.
Generally, the 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 Fund may be purchased
directly from the issuer.
The Advisor and Sub-Advisor are specifically authorized to select
brokers who also provide brokerage and research services to the Fund and/or
other accounts over which the Advisor or Sub-Advisor exercises investment
discretion and to pay such brokers a commission in excess of the commission
another broker would charge if the Advisor or Sub-Advisor 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 the Advisor's or Sub-Advisor's overall
responsibilities with respect to the Fund and to accounts over which they
exercise 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 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 Fund and the
Advisor or Sub-Advisor, 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 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 Fund.
INVESTMENT LIMITATIONS
----------------------
The Leeb Value Fund will not change any of the following investment
restrictions without the affirmative vote of a majority of the outstanding
voting securities of the Fund, which, as used herein, means the lesser of (1)
67% of the Fund's outstanding shares present at a meeting at which more than 50%
of the outstanding shares of the Fund are represented either in person or by
proxy, or (2) more than 50% of the Fund's outstanding shares.
THE FUND MAY NOT:
1. Invest in securities of any one issuer if immediately after
and as a result of such investment more than 5% of the total
assets of the Fund, at market value, would be invested in the
securities of such issuer. This restriction does not apply to
investments in securities of the United States Government, its
agencies or instrumentalities.
2. Purchase more than 10% of the outstanding voting securities,
or any class of securities, of any one issuer. This
restriction does not apply to investments in securities of the
United States Government, its agencies or instrumentalities.
3. Invest more than 25% of its total assets in the securities of
issuers in any particular industry. This restriction does not
apply to investments in securities of the United States
Government, its agencies or instrumentalities.
4. Purchase securities of other investment companies, except in
connection with a merger, consolidation, acquisition or
reorganization.
5. Purchase or sell commodities or real estate. However, the Fund
may invest in publicly traded securities secured by real
estate or issued by companies which invest in real estate or
real estate interests.
6. Purchase securities on margin, make short sales of securities
or maintain a short position, except that the Fund may obtain
such short-term credit as may be necessary for the clearance
of purchases and sales of portfolio securities. This
restriction on short sales does not apply to short sales
"against the box" (i.e., when the Fund owns or is long on the
securities sold short).
7. Lend money, except by engaging in repurchase agreements or by
purchasing publicly distributed or privately placed debt
obligations in which the Fund may invest consistent with its
investment objectives and policies. The Fund may make loans of
its portfolio securities in an aggregate amount not exceeding
25% of its total assets, provided that such loans are
collateralized by cash or cash equivalents or U.S. Government
obligations in an amount equal to the market value of the
securities loaned, marked to market on a daily basis.
8. Borrow money, except for i) temporary bank borrowings not in
excess of 5% of the value of the Fund's total assets for
emergency or extraordinary purposes, or ii) short-term credits
not in excess of 5% of the value of the Fund's total assets as
may be necessary for the clearance of securities transactions.
9. Issue senior securities as defined in the Investment Company
Act of 1940, as amended, or mortgage, pledge, hypothecate or
in any way transfer as security for indebtedness any
securities owned or held by the Fund except as may be
necessary in connection with borrowings described in (8)
above, and then not exceeding 10% of the Fund's total assets,
taken at the lesser of cost or market value.
10. Underwrite securities of other issuers except to the extent
the Fund may be deemed an underwriter under the Securities Act
of 1933, as amended, in selling portfolio securities.
11. Invest more than 10% of its net assets in securities which are
illiquid.
12. Invest in oil, gas or other mineral leases.
13. Invest more than 5% of its net assets in warrants and will not
invest more than 2% of its net assets in warrants which are
not listed on the New York or American Stock Exchange. This
restriction does not apply to investment in warrants acquired
in units or attached to securities.
The following investment restrictions may be changed by the Board of
Trustees without a shareholder vote.
The Fund may not:
1) Pledge, mortgage or hypothecate the assets of the Fund.
2) Engage in short sales of securities except for "against the
box" as described in investment limitation 6.
3) Loan its portfolio securities.
If a percentage restriction is adhered to at the time of investment, a
later increase or decrease in percentage, resulting from a change in values of
portfolio securities or amount of net assets, will not be considered a violation
of any of the foregoing restrictions.
MANAGEMENT OF THE FUND
----------------------
The Trustees and Officers of the Trust and their principal occupations
during the past five years are set forth below. Except as otherwise indicated,
the business address of each is 7900 Callaghan Road, San Antonio, Texas 78229.
NAME AND ADDRESS Trust Position Principal Occupation
- ---------------- -------------- --------------------
RICHARD E. HUGHS Trustee Professor at the School of Business
11 Dennin Drive of the State University of New York
Menards, NY 12204 at Albany from 1990 to present; Dean,
School of Business 1990-1994;
Director of the Institute for the
Advancement of Health Care
Management, 1994 - present. Corporate
Vice President, Sierra Pacific
Resources, Reno, NV, 1985-1990. Dean
and Professor, College of Business
Administration, University of Nevada,
Reno, 1977-1985. Associate Dean,
Stern School of Business, New York
University, New York City, 1970-1977.
CLARK R. MANDIGO Trustee Business consultant since 1991. From
1250 N.E. Loop 410 1985 to 1991, President, Chief
Suite 900 Executive Officer, and Director of
San Antonio, Texas Intelogic Trace, Inc., a nationwide
78209 company which sells, leases and
maintains computers and
telecommunications systems and
equipment. Prior to 1985, President
of BHP Petroleum (Americas), Ltd., an
oil and gas exploration and
development company. Director of
Palmer Wireless, Inc., Lone Star
Steakhouse & Saloon, Inc. and
Physician Corporation of America.
Formerly a Director of Datapoint
Corporation. Trustee for
Pauze/Swanson United Services Funds
from November 1993 to February 1996.
FRANK E. HOLMES (1) Trustee, Chairman of the Board of Directors
President, Chief and Chief Executive Officer of the
Executive Advisor since October 1989.
Officer President of the Advisor from October
1989 to September 1995. Trustee,
President, and Chief Executive
Officer of United Services Funds
("USF") since October 1989. Chairman
and Director of Security Trust &
Financial Company ("ST&FC"), a
wholly-owned subsidiary of Advisor,
since November 1991. Director of U.S.
Advisors (Guernsey) Limited, a
wholly-owned subsidiary of the
Advisor, and of the Guernsey Funds
managed by that Company since August
1993. Trustee of Pauze/Swanson United
Services Funds from November 1993 to
February 1996. Director of Franc-Or
Resource Corp. since November 1994.
Director of Marleau, Lemire Inc. from
January 1995 to December 1995.
Director of United Services Advisors
Canada, Inc. since February 1995, and
Chief Executive Officer from February
1995 to August 1995. Independent
business consultant and financial
adviser from July 1978 to October
1989. From July 1978 to October 1989,
held various positions with Merit
Investment Corporation, a Canadian
investment dealer, including the
latest position as Executive Vice
President-Corporate Finance. Formerly
a member of the Toronto Stock
Exchange Listing Committee,
Registered Portfolio Manager with the
Toronto Stock Exchange, and former
President and Chairman of the Toronto
Society of Investment Dealers
Association. Formerly a Director of
Merit Investment Corporation.
- --------
(1)This Trustee may be deemed an "interested person" of the Trust as
defined in the Investment Company Act of 1940.
BOBBY D. DUNCAN Executive Vice President of the Advisor since
President, September 1995 and Chief Financial
Chief Operating Officer since March 1996. Executive
Officer Vice President and Chief Financial
Officer of the Advisor from October
1989 to September 1995. Chief
Operating Officer since November
1993. Executive Vice President of USF
since October 1989 and Chief
Operating Officer since September
1993. Chief Financial Officer of USF
from October 1989 to September 1995.
President, Chief Executive Officer,
Chief Operating Officer, Chief
Financial Officer and Treasurer of
the Advisor from January 1989 to
October 1989. Prior to January 1990,
held various positions with USF,
including Executive Vice President,
Treasurer, Chief Operating Officer,
and Chief Financial Officer. Served
as sole Director and Chief Executive
Officer of United Shareholder
Services, Inc. ("USSI"), a transfer
agent wholly-owned by the Advisor,
from September 1988 to November 1989.
Director of USSI from November 1989
to November 1993. Sole Director,
President, and Chief Executive
Officer of USSI since 1993. Director
of A&B Mailers, Inc., a wholly-owned
subsidiary of the Advisor, since
February 1988 and Chairman since July
1991. Chief Executive Officer,
President, Chief Operating Officer,
Chief Financial Officer, and Director
of USSI. Director of the Advisor
since July 1986. Executive Vice
President, Chief Financial Officer
and Director of ST&FC from November
1991 to March 1994. President, Chief
Executive Officer, and Director of
STFC since January 1996. Vice
President and Trustee of
Pauze/Swanson United Services Funds
from September 1995 to February 1996
and held various positions prior to
such date. President, Chief Executive
Officer, and Trustee of United
Services Insurance Funds since July
1994. Director and Chief Financial
Officer of United Services Advisors
Canada Inc. since February 1995.
SUSAN B. MCGEE Vice President, Vice President and Assistant
Assistant Secretary of the Trust since
Secretary September 1995. Vice President and
Secretary of the Advisor since
September 1995. Associate Counsel
since August 1994. Vice President and
Secretary of USSI since September
1995. Vice President and Secretary of
USF since September 1995. Vice
President-Operations of ST&FC from
May 1993 to December 1994. Vice
President, In- house Counsel and
Secretary of ST&FC since September
1992.
TERESA G. ROWAN Vice President, Vice President, Fund Accounting of
Treasurer, Chief the Advisor since March 1995. Vice
Financial President and Chief Accounting
Officer, Officer of USF since March 1995.
Chief Chief Financial Officer of USF since
Accounting September 1995. Controller and
Officer Treasurer of USF from March 1995 to
September 1995. Vice President,
Mutual Fund Accounting of USSI since
March 1995. Vice President, Chief
Accounting Officer, and Treasurer of
Pauze/Swanson United Services Funds
from March 1995 to February 1996.
Employee of the Advisor from October
1986 to February 1995. Auditor with
Price Waterhouse from September 1985
to October 1986.
THOMAS D. TAYS Vice President, Vice President - Special Counsel,
Secretary Securities Specialist, Director of
Compliance and Assistant Secretary of
the Advisor from September 1995 to
present and held various positions of
the Advisor prior to such date. Vice
President, Securities Specialist,
Director of Compliance and Assistant
Secretary of USF since September
1995. Vice President and Secretary of
United Services Insurance Funds from
June 1994 to present. Secretary of
Pauze/Swanson United Services Funds
from November 1993 to February 1996.
Attorney in private practice from
April 1990 through September 1993.
General Counsel of James Baker &
Company, a broker-dealer and
investment adviser from June 1984
through April 1990.
PRINCIPAL HOLDERS OF SECURITIES
-------------------------------
As of XXXXXXXX the Officers and Trustees of the Trust, as a group,
owned less than 1% of the outstanding shares of the Fund.
INVESTMENT ADVISORY SERVICES
----------------------------
The investment adviser to Accolade Funds is United Services Advisors,
Inc. (the "Advisor"), a Texas corporation, pursuant to an advisory agreement
dated XXXXXXXXX and amended ________, 1996. Frank E. Holmes, Chief Executive
Officer and a Director of the Advisor, as well as a Trustee, President and Chief
Executive Officer of the Trust, beneficially owns more than 25% of the
outstanding voting stock of the Advisor and may be deemed to be a controlling
person of the Advisor.
In addition to the services described in the Fund's Prospectus, the
Advisor will provide the Trust with office space, facilities and simple business
equipment, and will provide the services of executive and clerical personnel for
administering the affairs of the Trust. It will compensate all personnel,
Officers, and Trustees of the Trust, if such persons are employees of the
Advisor or its affiliates, except that the Trust will reimburse the Advisor for
a portion of the compensation of the Advisor's employees who perform certain
legal services for the Trust, including state securities law regulatory
compliance work, based upon the time spent on such matters for the Trust.
The Trust pays all other expenses for its operations and activities.
Each of the funds of the Trust pays its allocable portion of these expenses. The
expenses borne by the Trust include the charges and expenses of any transfer
agents and dividend disbursing agents, custodian fees, legal and auditing
expenses, bookkeeping and accounting expenses, brokerage commissions for
portfolio transactions, taxes, if any, the advisory fee, extraordinary expenses,
expenses of issuing and redeeming shares, expenses of shareholder and trustee
meetings, and of preparing, printing and mailing proxy statements, reports and
other communications to shareholders, expenses of registering and qualifying
shares for sale, fees of Trustees who are not "interested persons" of the
Advisor, expenses of attendance by Officers and Trustees at professional
meetings of the Investment Company Institute, the No-Load Mutual Fund
Association or similar organizations, and membership or organization dues of
such organizations, expenses of preparing and setting in type Prospectuses and
periodic reports and expenses of mailing them to current shareholders, fidelity
bond premiums, cost of maintaining the books, and records of the Trust, and any
other charges and fees not specifically enumerated.
The Trust and the Advisor, in connection with the Fund, have entered
into a sub-advisory agreement with another firm as discussed in the Prospectus.
The Sub-Advisor's compensation is set forth in the Prospectus and is paid by the
Advisor. The Fund is not responsible for the Sub-Advisor's fee.
The Advisor may, out of profits derived from its management fee, pay
certain financial institutions (which may include banks, securities dealers, and
other industry professionals) a "servicing fee" for performing certain
administrative servicing functions for Fund shareholders to the extent these
institutions are allowed to do so by applicable statute, rule or regulation.
These fees will be paid periodically and will generally be based on a percentage
of the value of the institutions' client Fund shares. The Glass-Steagall Act
prohibits banks from engaging in the business of underwriting, selling or
distributing securities. However, in the Advisor's opinion, such laws should not
preclude a bank from performing shareholder administrative and servicing
functions as contemplated herein.
The securities laws of certain states in which shares of the Trust may,
from time to time, be qualified for sale require that the Advisor reimburse the
Trust for any excess of the Fund's expenses over prescribed percentages of the
Fund's average net assets to the extent of the Advisor's and Sub- Advisor's
compensation. Thus, the Advisor's compensation (and the Advisor's payments to
the Sub- Advisor) under the Advisory Agreement is subject to reduction in any
fiscal year to the extent that total expenses of the Fund for such year
(including the Advisor's compensation but exclusive of taxes, brokerage
commission, extraordinary expenses, and other permissible expenses) exceed the
most restrictive applicable expense limitation prescribed by any state in which
the Fund's shares are qualified for sale. The Advisor may obtain waivers of
these state expense limitations from time to time. Such limitation is currently
2.5% of the first $30 million of average net assets, 2% of the next $70 million
of average net assets and 1.5% of the remaining average net assets.
The Advisory Agreement was approved by the Board of Trustees of the
Trust (including a majority of the "disinterested Trustees") with respect to the
Fund and was approved by shareholders of the Fund on XXXXX, 1996. The Advisory
Agreement provides that it will continue initially for two years, and from year
to year thereafter, with respect to each fund, as long as it is approved at
least annually both (i) by a vote of a majority of the outstanding voting
securities of such fund (as defined in the Investment Company Act of 1940 [the
"Act"]) or by the Board of Trustees of the Trust, and (ii) by a vote of a
majority of the Trustees who are not parties to the Advisory Agreement or
"interested persons" of any party thereto cast in person at a meeting called for
the purpose of voting on such approval. The Advisory Agreement may be terminated
on 60 days' written notice by either party and will terminate automatically if
it is assigned.
The Advisor and the Sub-Advisor provide investment advise to a variety
of clients, including other mutual funds. Investment decisions for each client
are made with a view to achieving their respective investment objectives.
Investment decisions are the product of many factors in addition to basic
suitability for the particular client involved. Thus, a particular security may
be bought or sold for certain clients even though it could have been bought or
sold for other clients at the same time. Likewise, a particular security may be
bought for one or more clients when one or more other clients are selling the
security. In some instances, one client may sell a particular security to
another client. It also sometimes happens that two or more clients
simultaneously purchase or sell the same security, in which event each day's
transactions in such security are, insofar as possible, averaged as to price and
allocated between such clients in a manner which in the Advisor's or
Sub-Advisor's opinion is equitable to each and in accordance with the amount
being purchased or sold by each. There may be circumstances when purchases or
sales of portfolio securities for one or more clients will have an adverse
effect on other clients. The Advisor employs a professional staff of portfolio
managers who draw upon a variety of resources for research information for the
clients.
In addition to advising client accounts, the Advisor invests in
securities for its own account. The Advisor has adopted policies and procedures
intended to minimize or avoid potential conflicts with its clients when trading
for its own account. The Advisor's investment objective and strategies are not
the same as its clients, emphasizing venture capital investing, private
placement arbitrage, and speculative short-term trading. The Advisor utilizes a
diversified approach to venture capital investing. Investments typically involve
early-stage businesses seeking initial financing as well as more mature
businesses in need of capital for expansion, acquisitions, management buyouts,
or recapitalizations. In general, the Advisor invests in start-up companies in
the natural resources or technology fields.
TRANSFER AGENCY AND OTHER SERVICES
----------------------------------
In addition to the services performed for the Fund and the Trust under
the Advisory Agreement, the Advisor, through its subsidiary United Shareholder
Services, Inc ("USSI"), provides transfer agent and dividend disbursement agent
services pursuant to the Transfer Agency Agreement as described in the Fund's
Prospectus under "Management of the Fund -- The Investment Advisor." In
addition, lockbox and statement printing services are provided by USSI. The
Board of Trustees recently approved the Transfer Agency and related agreements
through XXXXXXXXX.
USSI also maintains the books and records of the Trust and of each fund
of the Trust and calculates their daily net asset value as described in the
Fund's Prospectus under "Management of the Funds -- The Investment Advisor."
A & B Mailers, Inc., a corporation wholly owned by the Advisor,
provides the Trust with certain mail handling services. The charges for such
services have been negotiated by the Audit Committee and A & B Mailers, Inc.
Each service is priced separately.
DISTRIBUTION PLAN
-----------------
As described under "Service Fee" in the Prospectus, in XXXXXX 1996 ,
the Fund adopted a Distribution Plan pursuant to Rule 12b-1 of the 1940 Act (the
"Distribution Plan"). The Distribution Plan allows the Fund to pay for or
reimburse expenditures in connection with sales and promotional services related
to the distribution of Fund shares, including personal services provided to
prospective and existing Fund shareholders, which includes the costs of printing
and distribution of prospectuses and promotional materials, making slides and
charts for presentations, assisting shareholders and prospective investors in
understanding and dealing with the Fund, and travel and out-of-pocket expenses
(e.g., copy and long distance telephone charges) related thereto.
The total amount expended pursuant to the Distribution Plan may not
exceed 0.25% of the Fund's net assets on an annual basis. Distribution expenses
paid by the Advisor or other third parties in prior periods that exceeded 0.25%
of net assets may be paid by the Fund with distribution expenses accrued
pursuant to the 12b-1 plan in the current or future periods, so long as the
0.25% limitation is never exceeded.
Expenses which the Fund incurs pursuant to the Distribution Plan are
reviewed quarterly by the Board of Trustees. On an annual basis the Distribution
Plan is reviewed by the Board of Trustees as a whole, and by the Trustees who
are not "interested persons" as that term is defined in the 1940 Act and who
have no direct or indirect financial interest in the operation of the
Distribution Plan ("Qualified Trustees"). In their review of the Distribution
Plan the Board of Trustees, as a whole, and the Qualified Trustees determine
whether, in their reasonable business judgment and in light of their fiduciary
duties under state law and under Section 36(a) and (b) of the 1940 Act, there is
a reasonable likelihood that the Distribution Plan will benefit the Fund and its
shareholders. The Distribution Plan may be terminated at any time by vote of a
majority of the Qualified Trustees, or by vote of a majority of the outstanding
voting securities of the Fund.
The Fund is unaware of any Trustee or any interested person of the Fund
who had a direct or indirect financial interest in the operations of the
Distribution Plan.
The Fund expects that the Distribution Plan will be used primarily to
pay a "service fee" to persons who provide personal services to prospective and
existing Fund shareholders. Shareholders of the Fund will benefit from these
personal services and the Fund expects to benefit from economies of scale as
more shareholders are attracted to the Fund.
CERTAIN PURCHASES OF SHARES OF THE FUND
---------------------------------------
Shares of the Fund are continuously offered by the Trust at their net
asset value next determined after an order is accepted. The methods available
for purchasing shares of the Fund are described in the Prospectus. In addition,
shares of the Fund may be purchased using stock, as long as the securities
delivered to the Trust meet the investment objectives and concentration policies
of the Fund, and are otherwise acceptable to the Advisor, which reserves the
right to reject all or any part of the securities offered in exchange for shares
of the Fund. On any such "in kind" purchase, the following conditions will
apply:
(1) the securities offered by the investor in exchange for shares
of the Fund must not be in any way restricted as to resale or
otherwise be illiquid;
(2) securities of the same issuer must already exist in the Fund's
portfolio;
(3) the securities must have a value which is readily
ascertainable (and not established only by evaluation
procedures) as evidenced by a listing on the American Stock
Exchange ("AMEX"), the New York Stock Exchange ("NYSE"), or
National Association of Securities Dealers Automated Quotation
System ("NASDAQ");
(4) any securities so acquired by the fund shall not comprise over
5% of that fund's net assets at the time of such exchange;
(5) no over-the-counter securities will be accepted unless the
principal over-the-counter market is in the United States;
and,
(6) the securities are acquired for investment and not for resale.
The Trust believes that this ability to purchase shares of the Fund
using securities provides a means by which holders of certain securities may
obtain diversification and continuous professional management of their
investments without the expense of selling those securities in the public
market.
An investor who wishes to make an "in kind" purchase should furnish
(either in writing or by telephone) to the Trust a list with a full and exact
description of all of the securities which he or she proposes to deliver. The
Trust will advise him or her as to those securities which it is prepared to
accept and will provide the investor with the necessary forms to be completed
and signed by the investor. The investor should then send the securities, in
proper form for transfer, with the necessary forms to the Trust and certify that
there are no legal or contractual restrictions on the free transfer and sale of
the securities. The securities will be valued as of the close of business on the
day of receipt by the Trust in the same manner as portfolio securities of the
Fund are valued. See the section entitled "How Shares Are Valued" in the
Prospectus. The number of shares of the Fund, having a net asset value as of the
close of business on the day of receipt equal to the value of the securities
delivered by the investor, will be issued to the investor, less applicable stock
transfer taxes, if any.
The exchange of securities by the investor pursuant to this offer will
constitute a taxable transaction and may result in a gain or loss for Federal
income tax purposes. Each investor should consult his or her tax adviser to
determine the tax consequences under Federal and state law of making such an "in
kind" purchase.
ADDITIONAL INFORMATION ON REDEMPTIONS
-------------------------------------
SUSPENSION OF REDEMPTION PRIVILEGES. The Trust may suspend redemption
privileges or postpone the date of payment for up to seven days, but cannot do
so for more than seven days after the redemption order is received except during
any period (1) when the NYSE is closed, other than customary weekend and holiday
closings, or trading on the Exchange is restricted as determined by the
Securities and Exchange Commission ("SEC"); (2) when an emergency exists, as
defined by the SEC, which makes it not reasonably practicable for the Trust to
dispose of securities owned by it or to fairly determine the value of its
assets; or, (3) as the SEC may otherwise permit.
CALCULATION OF PERFORMANCE DATA
-------------------------------
The performance quotations described below are based on historical
earnings and are not intended to indicate future performance.
Total Return
- ------------
The Fund may advertise performance in terms of average annual total
return for 1-, 5- and 10-year periods, or for such lesser periods as the Fund
has been in existence. Average annual total return is computed by finding the
average annual compounded rates of return over the periods that would equate the
initial amount invested to the ending redeemable value, according to the
following formula:
P(1 + T)n = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the 1-, 5- or
10-year periods at the end of the year or period.
The calculation assumes all charges are deducted from the initial
$1,000 payment and assumes all dividends and distributions by the Fund are
reinvested at the price stated in the Prospectus on the reinvestment dates
during the period, and includes all recurring fees that are charged to all
shareholder accounts.
The average annual Total Return for the Fund for the periods ended June
30, 1995 are as follows:
1 year......................................12.20%
Since Inception (October 21, 1991)............6.12%
Nonstandardized Total Return
- ----------------------------
The Fund may provide the above described standard total return results
for a period which ends as of not earlier than the most recent calendar quarter
end and which begins either twelve months before or at the time of commencement
of the Fund's operations. In addition, the Fund may provide nonstandardized
total return results for differing periods, such as for the most recent six
months. Such nonstandardized total return is computed as otherwise described
under "Total Return" except that no annualization is made.
Securities and Exchange Commission Thirty Day Yield
- ---------------------------------------------------
From time to time, the Fund may advertise its yield. A yield quotation
is based on a 30-day (or one month) period and is computed by dividing the net
investment income per share earned during the period by the maximum offering
price per share on the last day of the period, according to the following
formula:
Yield = 2[(a-b/cd + 1)6 - 1]
Where:
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the period that
were entitled to receive dividends
d = the maximum offering price per share on the last day of the period.
Solely for the purpose of computing yield, dividend income is recognized by
accruing 1/360 of the stated dividend rate of the security each day that the
Fund owns the security. Generally, interest earned (for the purpose of "a"
above) on debt obligations is computed by reference to the yield to maturity of
each obligation held based on the market value of the obligation (including
actual accrued interest) at the close of business day prior to the start of the
30-day (or one month) period for which yield is being calculated, or, with
respect to obligations purchased during the month, the purchase price (plus
actual accrued interest). The yield of the Fund for June 1995 was 1.73%.
Effect of Fee Waiver and Expense Reimbursement
- ----------------------------------------------
From inception through June 30, 1995, the Fund's expense have been
subsidized such that its expense ratio has not exceeded 1.50% on a fiscal year
bases. If the Fund's expenses had not been subsidized, the expense ratio subject
to the most restrictive state limitation would have been 2.50%. Because its
expenses were subsidized, the Fund's investment performance, including annual
compound rate of return, was improved.
TAX STATUS
----------
Taxation of the Fund -- In General
- ----------------------------------
As stated in its Prospectus, the Fund intends to qualify as a
"regulated investment company" under Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Code"). Accordingly, the Fund will not be liable for
Federal income taxes on its taxable net investment income and capital gain net
income that are distributed to shareholders, provided that the Fund distributes
at least 90% of its net investment income and net short-term capital gain for
the taxable year.
To qualify as a regulated investment company, the Fund must, among
other things, (a) derive in each taxable year at least 90% of its gross income
from dividends, interest, payments with respect to securities loans, gains from
the sale or other disposition of stock, securities or foreign currencies, or
other income derived with respect to its business of investing in such stock,
securities or currencies (the "90% test"); (b) derive in each taxable year less
than 30% of its gross income from the sale or other disposition of stock or
securities held less than three months (the "30% test"); and, (c) satisfy
certain diversification requirements at the close of each quarter of the Fund's
taxable year.
The Code imposes a non-deductible 4% excise tax on a regulated
investment company that fails to distribute during each calendar year an amount
equal to the sum of (1) at least 98% of its ordinary income for the calendar
year, (2) at least 98% of its capital gain net income for the twelve-month
period ending on October 31 of the calendar year and (3) any portion (not
taxable to the Fund) of the respective balance from the preceding calendar year.
The Fund intends to make such distributions as are necessary to avoid imposition
of this excise tax.
Taxation of the Fund's Investments
- ----------------------------------
The Fund's ability to make certain investments may be limited by
provisions of the Code that require inclusion of certain unrealized gains or
losses in the Fund's income for purposes of the 90% test, the 30% test, and the
distribution requirements of the Code, and by provisions of the Code that
characterize certain income or loss as ordinary income or loss rather than
capital gain or loss. Such recognition, characterization and timing rules
generally apply to investments in certain forward currency contracts, foreign
currencies and debt securities denominated in foreign currencies.
Taxation of the Shareholder
- ---------------------------
Taxable distributions generally are included in a shareholder's gross
income for the taxable year in which they are received. However, dividends
declared in October, November, or December and made payable to shareholders of
record in such a month, will be deemed to have been received on December 31, if
a Fund pays the dividends during the following January.
Distributions by the Fund will result in a reduction in the fair market
value of the Fund's shares. Should a distribution reduce the fair market value
below a shareholder's cost basis, such distribution nevertheless would be
taxable to the shareholder as ordinary income or long-term capital gain, even
though, from an investment standpoint, it may constitute a partial return of
capital. In particular, investors should be careful to consider the tax
implications of buying shares of the Fund just prior to a distribution. The
price of such shares purchased at that time includes the amount of any
forthcoming distribution. Those investors purchasing the Fund's shares
immediately prior to a distribution may receive a return of investment upon
distribution which will nevertheless be taxable to them.
A shareholder of the Fund should be aware that a redemption of shares
(including any exchange into other funds offered, affiliated or administered by
United Services Advisors, Inc.) is a taxable event and, accordingly, a capital
gain or loss may be recognized. If a shareholder of the Fund receives a
distribution taxable as long-term capital gain with respect to shares of the
Fund and redeems or exchanges shares before he has held them for more than six
months, any loss on the redemption or exchange (not otherwise disallowed as
attributable to an exempt-interest dividend) will be treated as long-term
capital loss to the extent of the long-term capital gain recognized.
CUSTODIAN
Bankers Trust Company acts as custodian for the Fund. Services with
respect to the retirement accounts will be provided by Security Trust and
Financial Company of San Antonio, Texas, a wholly-owned subsidiary of the
Advisor.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, One Riverwalk Place, San Antonio, Texas 78205 is
the independent accountant for the Trust.
FINANCIAL STATEMENTS
The financial statements for the fiscal year ended June 30, 1995, as
audited by Arthur Andersen LLP, are hereby incorporated by reference from the
Annual Report to Shareholders of that date which has been delivered with the
Statement of Additional Information [unless previously provided, in which event
the Trust will promptly provide another copy free of charge, upon request to:
United Services Advisors, Inc., P.O. Box 29467, San Antonio, Texas 78229-0467,
1-800-524-LEEB or (210) 308-1234].
<PAGE>
--------------------------------
PART C -- OTHER INFORMATION
Included herein is Part C for
Accolade Funds
Leeb Value Fund
Pre-Effective Amendment No.____
Post-Effective Amendment No. 3
--------------------------------
ACCOLADE FUNDS
--------------
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS
(1) The audited financial highlights for the period from June
30, 1991 through June 30, 1995 has been audited by Arthur
Andersen LLP.
(2) The audited financial statements for the period from June
30, 1995 are found in part B.
(b) EXHIBITS
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
( 1)* Amended and Restated Master Trust Agreement
( 2) By-laws of Accolade Funds (incorporated by
reference to initial registration dated April 15,
1993).
( 3) Not Applicable
( 4) Specimen certificate for Accolade Funds (incorporated
by reference to Post-Effective Amendment No. 1 to the
Registration Statement, dated March 20, 1995).
( 5) (a) Advisory Agreement between Accolade Funds and United
Services Advisors, Inc., dated September 21, 1994
(incorporated by reference to Pre-Effective Amendment
No. 3 to the Registration Statement, dated October 17,
1994).
(b) Sub-Advisory Agreement between Accolade Funds, United
Services Advisors, Inc. and Bonnel, Inc., dated
September 21, 1994 (incorporated by reference to Pre-
Effective Amendment No. 3 to the Registration
Statement, dated October 17, 1994).
(c)* Amendment to Advisory Agreement between Accolade Funds
and United Services Advisors, Inc., dated May 22,
1996.
(d)* Sub-Advisory Agreement among Accolade Funds, United
Services Advisors, Inc. and Money Growth Institute,
Inc.
( 6) Not Applicable
( 7) Not Applicable
( 8) (a) Custodian Agreement between Accolade Funds and Bankers
Trust Company of New York (incorporated by reference
to Pre-Effective Amendment No. 3 to the Registration
Statement, dated October 17, 1994).
(b)**Letter agreement with Custodian, Bankers Trust
Company of New York, adding Leeb Value Fund.
( 9) (a) Transfer Agency Agreement between United Shareholder
Services, Inc. and Accolade Funds, dated September 21,
1994 (incorporated by reference to Pre-Effective
Amendment No. 3 to the Registration Statement, dated
October 17, 1994).
(b) Bookkeeping and Accounting Agreement between United
Shareholder Services, Inc. and Accolade Funds, dated
September 21, 1994 (incorporated by reference to Pre-
Effective Amendment No. 3 to the Registration
Statement, dated October 17, 1994).
(c) Lockbox Service Agreement between United Shareholder
Services, Inc. and Accolade Funds, dated September 21,
1994 (incorporated by reference to Pre-Effective
Amendment No. 3 to the Registration Statement, dated
October 17, 1994).
(d) Printing Agreement between United Shareholder
Services, Inc. and Accolade Funds, dated September 21,
1994 (incorporated by reference to Pre-Effective
Amendment No. 3 to the Registration Statement, dated
October 17, 1994).
(e)* Letter agreement between United Shareholder Services,
Inc. and Accolade Funds adding Leeb Value Fund to the
Transfer Agent Agreement, dated May 22, 1996.
(10) (a)**Opinion and consent of counsel to the Registrant
(11) (a)**Consent of Independent Accountant, Arthur Andersen
LLP with respect to the Leeb Value Fund.
(b) Power of Attorney (incorporated by reference to
Pre-Effective Amendment No. 3 to the Registration
Statement, dated October 17, 1994).
(c) Power of Attorney incorporated by reference to
Post-Effective Amendment No. 2 to the Registration
Statement, dated January 15, 1996.
(12) Not Applicable
(13) Not Applicable
(14) Not Applicable
(15) (a) Accolade Funds/Bonnel Growth Fund Plan Pursuant to
Rule 12b-1, approved September 21, 1994 (incorporated
by reference to Pre-Effective Amendment No. 2 to the
Registration Statement, dated May 11, 1994).
(b)* Accolade Funds/Leeb Value Fund Plan Pursuant to Rule
12b-1, approved May 22, 1996.
(16) (a) Schedule for computation of each performance quotation
provided in response to Item 22 (incorporated by
reference to initial registration statement dated
April 15, 1993).
* Filed Herewith
** To Be Filed By Amendment
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Information pertaining to persons controlled by or under common control
with Registrant is incorporated by reference to the Prospectus
contained in Part A of this Registration Statement at the Section
entitled "Management of the Funds" and to the Statement of Additional
Information contained in Part B of this Registration Statement at the
section entitled "Principal Holders of Securities."
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
The number of record holders, as of April 30, 1996 of each class of
securities of the Registrant:
Bonnel Growth Fund: 4,148
Leeb Value Fund: 0
ITEM 27. INDEMNIFICATION
Under Article VI of the Registrant's Master Trust Agreement, each of
its Trustees and officers or person serving in such capacity with
another entity at the request of the Registrant (a "Covered Person")
shall be indemnified (from the assets of the Sub-Trust or Sub-Trusts in
question) against all liabilities, including, but not limited to,
amounts paid in satisfaction of judgments, in compromises or as fines
or penalties, and expenses, including reasonable legal and accounting
fees, incurred by the Covered Person in connection with the defense or
disposition of any action, suit or other proceeding, whether civil or
criminal before any court or administrative or legislative body, in
which such Covered Person may be or may have been involved as a party
or otherwise or with which such person may be or may have been
threatened, while in office or thereafter, by reason of being or having
been such a Trustee or officer, director or trustee, except with
respect to any matter as to which it has been determined that such
Covered Person (i) did not act in good faith in the reasonable belief
that such Covered Person's action was in or not opposed to the best
interests of the Trust or (ii) had acted with wilful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in
the conduct of such Covered Person's office (either and both of the
conduct described in (i) and (ii) being referred to hereafter as
"Disabling Conduct"). A determination that the Covered Person is not
entitled to indemnification may be made by (i) a final decision on the
merits by a court or other body before whom the proceeding was brought
that the person to be indemnified was not liable by reason of Disabling
Conduct, (ii) dismissal of a court action or an administrative
proceeding against a Covered Person for insufficiency of evidence of
Disabling Conduct, or (iii) a reasonable determination, based upon a
review of the facts, that the indemnitee was not liable by reason of
Disabling Conduct by (a) a vote of the majority of a quorum of Trustees
who are neither "interested persons" of the Trust as defined in Section
1(a)(19) of the 1940 Act nor parties to the proceeding, or (b) as
independent legal counsel in a written opinion.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR
Information pertaining to business and other connections of
Registrant's investment advisor is incorporated by reference to the
Prospectus and Statement of Additional Information contained in Parts A
and B of this Registration Statement at the sections entitled
"Management of the Fund" in the Prospectus and "Management of the Fund"
and "Investment Advisory Services" in the Statement of Additional
Information.
ITEM 29. PRINCIPAL UNDERWRITERS
None. The Registrant is currently comprised of no-load funds which acts
as distributor of their own shares.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All accounts and records maintained by the Registrant are kept at the
Registrant's office located at 7900 Callaghan Road, San Antonio, Texas
78229. All accounts and records maintained by Bankers Trust Company as
custodian for Accolade Funds are maintained at 16 Wall Street, New
York, New York 10005.
ITEM 31. NOT APPLICABLE
ITEM 32. UNDERTAKINGS
Registrant undertakes to call a meeting of shareholders for purposes of
voting upon the question of removal of one or more trustees when
requested in writing to do so by the holders of at least 10% of the
Trust's outstanding record shares, and in connection with such meeting
to comply with the provisions of Section 16(c) of the Investment
Company Act of 1940 relating to shareholder communications.
<PAGE>
EXHIBIT INDEX
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EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
1 (d) Amendment to the Master Trust Agreement
5 (c) Advisory Agreement Amendment
(d) Sub-Advisory Agreement among Accolade Funds, United Services
Advisors, Inc. and Money Growth Institute, Inc.
9 (e) Transfer Agent Letter Agreement
15 (b) Rule 12b-1 Plan for Accolade Funds/Leeb Value Fund
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
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 22, 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: /s/Thomas D. Tay By: /s/Bobby D. Duncan
-------------------------------- ------------------------------
Secretary Executive Vice President
Date: May 22, 1996
-----------------------------------
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: /s/Susan B. McGee By: /s/Bobby D. Duncan
------------------------------- --------------------------------
Secretary President
SUB-ADVISORY AGREEMENT
AGREEMENT made as of the 22nd day of May, 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:
---------------------------
ACCOLADE FUNDS
Bonnel Growth Fund
Leeb Value Fund
7900 Callaghan Road
Mail Address: P. O. Box 781234, San Antonio, TX 78278-1234
Tel:(210) 308-1234 - 1-800-4-BONNEL
Fax: (210) 308-1220 - E-mail: [email protected]
May 22, 1996
United Shareholder Services, Inc.
7900 Callaghan Road
San Antonio, TX 78229
Gentlemen:
Pursuant to Section 1(b) of the Transfer Agency Agreement dated
September 21, 1994, between Accolade Fund (the "Trust") and United Shareholder
Services, Inc. (the "Transfer Agent"), please be advised that the Trust has
established a new series of its shares, namely the Leeb Value Fund, and be
further advised that the Trust desires to retain the Transfer Agent to render
services under the Transfer Agency Agreement to this Fund at the fee stated in
Amendment No. 1 to the fee schedule of the Transfer Agency Agreement.
Please state below whether you are willing to render such services at
the fee stated above.
ACCOLADE FUNDS
Attest: /s/Thomas D. Tays By: /s/Frank E. Holmes
------------------------------- ------------------------------
Thomas D. Tays, Secretary Frank E. Holmes, President
Date: May 22, 1996
--------------
We are willing to render services to the Leeb Value Fund at the fee
stated above.
UNITED SHAREHOLDER SERVICES, INC.
Attest: /s/Susan B. McGee By: /s/Bobby D. Duncan
----------------------------- ----------------------------
Susan B. McGee, Secretary Bobby D. Duncan, President
Date: May 22, 1996
--------------
PLAN PURSUANT TO RULE 12b-1
for
LEEB VALUE FUND
Adopted May 22, 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.
