U.S. GLOBAL ACCOLADE FUNDS
MEGATRENDS FUND
P.O. BOX 781234
SAN ANTONIO, TEXAS 78278-1234
1-800-873-8637 OR 1-800-US-FUNDS
(INFORMATION, SHAREHOLDER SERVICES AND REQUESTS)
INTERNET: HTTP://WWW.USFUNDS.COM
PROSPECTUS
OCTOBER 15, 1996
AMENDED JULY 21, 1997
This prospectus presents information that a prospective investor should
know about the MegaTrends Fund (the "Fund"), a diversified series of U.S.
Global Accolade Funds (the "Trust"). The Trust is an open-end management
investment company. Investors are responsible for determining whether or not an
investment in the fund is appropriate for their needs. Read and retain this
prospectus for future reference.
A Statement of Additional Information dated October 15, 1996, 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 U.S. Global Accolade Funds upon request at the address set forth above or
by calling 1-800-873-8637 or 1-800-US-FUNDS.
THESE SECURITIES HAVE NOT BEEN APPROVED
OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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TABLE OF CONTENTS
PAGE
----
Summary of Fees and Expenses......... 2
Financial Highlights -- MegaTrends
Fund............................... 4
Investment Objectives, Investment
Policies, and Risk
Considerations..................... 5
Other Investment Practices........... 8
How to Purchase Shares............... 9
How to Exchange Shares............... 12
How to Redeem Shares................. 14
How Shares Are Valued................ 18
Dividends and Taxes.................. 19
The Trust............................ 21
Management of the Fund............... 21
Distribution Expense Plan............ 24
Performance Information.............. 25
SUMMARY OF FEES AND EXPENSES
The following summary is provided to assist you in understanding the
various costs and expenses a shareholder in the Fund could bear directly or
indirectly.
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load.............. None
Redemption Fee.................. None
Administrative Exchange Fee..... $ 5
Account Closing Fee (does not
apply to exchanges).......... $10
Trader's Fee (shares held less
than 30 days)................ 0.25%
ANNUAL FUND OPERATING EXPENSES (AS A
PERCENTAGE OF AVERAGE NET
ASSETS)(1)
Management and Administrative
Fees......................... 1.00%
12b-1 Fees...................... 0.25%
Other Expenses, including
Transfer Agency and
Accounting Services Fees..... 0.71%
Total Fund Operating Expenses... 1.96%
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Except for active ABC Investment PlanT accounts, custodial accounts for
minors, and retirement accounts, if an account balance falls, for any reason
other than market fluctuations, below $5,000 at any time during a month, that
account will be subject to a monthly small account charge of $1 which will be
payable quarterly. See "Small Accounts."
A shareholder who requests delivery of redemption proceeds by wire transfer
will be subject to a $10 charge. International wires will be higher.
HYPOTHETICAL EXAMPLE OF EFFECT OF FUND EXPENSES:
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.
- --------------------------------------------------------------------------------
(1) Annual fund operating expenses and the hypothetical example are based on the
fund's historical expenses. Management fees, transfer agency fees, and
accounting services fees are paid to U.S. Global Investors, Inc. (the
"Advisor") and its wholly-owned subsidiaries. The Advisor then pays a portion
of the management fee to Money Growth Institute, Inc. (the "Sub-Advisor") for
serving as sub-advisor. Please refer to the section, "Management of the
Funds," for further information.
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FINANCIAL HIGHLIGHTS -- MEGATRENDS 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 financial statements and the report of Independent Accountants
are included in the Personal Finance Fund's 1996 Annual Report to Shareholders
and are incorporated by reference into the Statement of Additional Information
("SAI"). In addition to the data set forth below, further information about
the performance of the Fund is contained in the Annual Report to Shareholders
and SAI which may be obtained without charge.
Per share data for an outstanding share throughout each period is as
follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-----------------------------------------------------
1996 1995 1994 1993 1992(1)
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of
period............................. $ 11.17 $ 10.29 $ 10.84 $ 10.36 $ 10.00
--------- --------- --------- --------- ---------
Income from investment operations:
Net investment income............ 0.17 0.28 0.19 0.15 0.16
Net realized and unrealized gains
(losses) on investments........ 1.72 0.95 (0.35) 0.55 0.51
--------- --------- --------- --------- ---------
Total from investment operations..... 1.89 1.23 (0.16) 0.70 0.67
========= ========= ========= ========= =========
Dividends and distributions:
Dividends from net investment
income(2)...................... (0.17) (0.28) (0.19) (0.15) (0.16)
Distributions from net realized
gains(2)....................... (1.61) -- (0.20) (0.07) (0.15)
In excess of net realized
gains.......................... (0.01) (0.07) -- -- --
--------- --------- --------- --------- ---------
Total dividends and distributions.... (1.79) (0.35) (0.39) (0.22) (0.31)
--------- --------- --------- --------- ---------
Net asset value at end of period..... $ 11.27 $ 11.17 $ 10.29 $ 10.84 $ 10.36
========= ========= ========= ========= =========
Total return......................... 17.10% 12.20% (1.50%) 6.79% 7.94%(4)
========= ========= ========= ========= =========
Net assets at end of period
(000's)............................ $ 27,945 $ 32,976 $ 45,523 $ 58,955 $ 28,340
========= ========= ========= ========= =========
Ratio of expenses to average net
assets(3).......................... 1.50% 1.50% 1.50% 1.50% 1.47%(4)
Ratio of net investment income to
average net assets................. 1.30% 2.36% 1.65% 1.60% 2.21%(4)
Portfolio turnover rate.............. 115% 163% 143% 83% 75%(4)
</TABLE>
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(1) 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.
(2) For the period ended June 30, 1992, the per share data was calculated using
average shares outstanding throughout the period, whereas for subsequent
periods, the per share data was calculated based upon actual distributions.
For the period ended June 30, 1992, actual distributions per share from net
investment income and from net realized gains from security transactions
amounted to $.11 and $.08, respectively.
(3) Ratios of expenses to average net assets, assuming no waiver of fees or
reimbursement of expenses by the Advisor, were 2.10%, 1.98%, 1.81%, 1.95%,
and 2.71%(4) for the periods ended June 30, 1996, 1995, 1994, 1993, and
1992, respectively.
(4) Annualized.
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INVESTMENT OBJECTIVES, INVESTMENT POLICIES, AND RISK CONSIDERATIONS
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.
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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.
6
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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, and the Student Loan Marketing Association.
Also included are 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 sellers
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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 the
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. For the fiscal years ended June 30, 1995 and 1996, the Fund's
portfolio turnover was 163% and 115%, respectively. 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").
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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 custodial accounts for minors. The minimum subsequent investment
is $100. The minimum initial investment for persons enrolled in the ABC
Investment PlanT is $1,000 and the minimum subsequent investment pursuant to
such a plan is $100 or more per month per account. There is no minimum purchase
for retirement plan accounts, including IRAs, administered by the Advisor or its
agents and affiliates. Management may waive minimum initial or subsequent
investment requirements for purchases made through qualifying broker-dealers or
certain institutional programs.
YOU MAY INVEST IN THE FOLLOWING WAYS:
BY MAIL
Send your application and check or money order, made payable to the
MegaTrends 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
9
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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
1-800-873-8637 or 1-800-US-FUNDS. 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 MegaTrends Fund
by wiring money. To do so, call the Fund at 1-800-873-8637 or 1-800-US-FUNDS for
a confirmation number and wiring instructions.
BY ABC INVESTMENT PLANT
The ABC Investment PlanT (Automatically Building Capital) is offered as a
special service allowing you to build a position in any of the U.S. Global
Investors family of funds over time without trying to outguess the market. Once
your account is open, you may make investments automatically by completing the
ABC Investment PlanT form authorizing United Shareholder Services, Inc. to draw
on your money market or bank account monthly for a minimum of $100 a month
beginning within thirty (30) days after the account is opened. These lower
minimums are a special service bringing to small investors the benefits of U.S.
Global Investors family of funds without requiring a $5,000 minimum initial
investment.
Your investment dollars will automatically buy more shares when the market
is undervalued and fewer shares when the market is overvalued. By investing an
equal amount at regular periodic intervals, you avoid the extremes in the
market. Of course, using the ABC Investment PlanT does not guarantee a profit.
If you sell at the bottom, no system will give you a gain.
You may call 1-800-873-8637 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
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checks. You may change the date or amount of your investment or discontinue the
Plan any time by letter received by United Shareholder Services, Inc. at least
two weeks before the change is to become effective.
ADDITIONAL INFORMATION ABOUT PURCHASES
All purchases of shares are subject to acceptance by the 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 whatever reason, and such a purchaser may
be prohibited from placing further orders unless investments are accompanied by
full payment by wire or cashier's check.
U.S. Global 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.
CHECKS DRAWN ON FOREIGN BANKS. To be received in good order, an investment
must be made in U.S. dollars payable through a bank in the United States. As an
accommodation, the Funds' Transfer Agent may accept checks payable in a foreign
currency or drawn on a foreign bank and will attempt to convert such checks into
U.S. dollars and repatriate such amount to the Funds account in the United
States. Your investment in the Fund will not be considered to have been received
in good order until your foreign check has been converted into U.S. dollars and
is available to the Fund through a bank in the United States. Your investment in
the Fund may be delayed until your foreign check has been converted into U.S.
dollars and cleared the normal collection process. Any amounts charged to the
Fund for collection procedures will be deducted from the amount invested.
If the Fund incurs a charge for locating a shareholder without a current
address, such charge will be passed through to the shareholder.
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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.
CONFIRMATION STATEMENTS
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.
The Fund does not issue stock certificates.
You normally will receive a confirmation statement after each transaction
(purchase, redemption, dividend, etc.) showing activity in the account. If you
have no transactions, you will receive an annual statement only.
HOW TO EXCHANGE SHARES
You have the privilege of exchanging into any other fund in the U.S. Global
Investors family of funds which is registered in your state. An exchange
involves the redemption (sale) of shares of one fund and purchase of shares of
another fund at the respective closing net asset value and is a taxable
transaction.
FUNDS IN THE U.S. GLOBAL INVESTORS FAMILY OF FUNDS
Investing involves a tradeoff between potential rewards and potential
risks. In order to achieve higher rewards on your investment, you must be
willing to take on higher risk. If you are most concerned with safety of
principal, a lower risk investment will provide greater stability but with lower
potential earnings. Another strategy for dealing with volatile markets is to use
the ABC Investment PlanT. The list below is a reward and risk guide to all of
the mutual funds in the U.S. Global Investors family of funds. This guide may
help you decide if a fund is suitable for your investment goals.
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HIGH REWARD China Region Opportunity Fund
HIGH RISK Regent Eastern European Fund
U.S. Gold Shares Fund
U.S. World Gold Fund
U.S. Global Resources Fund
Adrian Day Global Opportunity Fund
Bonnel Growth Fund
MODERATE REWARD U.S. Real Estate Fund
MODERATE RISK U.S. All American Equity Fund
MegaTrends Fund
U.S. Income Fund
U.S. Tax Free Fund
United Services Near-Term Tax Free Fund
LOW REWARD U.S. Government Securities Savings Fund
LOW RISK U.S. Treasury Securities Cash Fund
If you have additional questions, one of our professional investor
representatives will personally assist you. Call 1-800-US-FUNDS.
BY TELEPHONE
You will automatically have the privilege to direct the Fund to exchange
your shares between identically registered accounts by calling toll-free
1-800-873-8637 or 1-800-US-FUNDS. 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) A $5 charge will be paid to United Shareholder Services, Inc. for each
exchange out of any fund account. Retirement accounts administered by the
Advisor or its agents are charged $5 for each exchange exceeding three per
quarter. Exchange fees cover administrative costs associated with handling these
exchanges.
(2) An exchange involves both the redemption of shares out of the Fund and
the purchase of shares in a "Separate Fund." Like any other purchase, shares
of the Separate Fund cannot be purchased by exchange
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until all conditions of purchase are met, including investable proceeds being
immediately available. Like any other redemption, the Fund reserves the right to
hold exchange proceeds for up to seven days. In general, the Fund expects to
exercise this right on exchanges of $50,000 or more. In such event, purchase of
the Separate Fund shares will also be delayed. Separate Fund shares will be
priced at their net asset value at the time of purchase. Redemption proceeds
will not be invested in either fund during this period. Fund shares will always
be redeemed immediately; however, Separate Fund shares will not be purchased
until investable proceeds are available. You will be notified immediately if the
purchase will be delayed.
(3) 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.")
(4) Exchanges out of the MegaTrends Fund of shares held less than 30 days
are subject to a trader's fee. The applicable trader's fee is described under
"Trader's Fee Paid to the Fund."
(5) The exchange privilege may be canceled anytime. 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) signature guarantees when required; and,
(3) 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.")
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HOW TO EXPEDITE REDEMPTIONS
To redeem your Fund shares by telephone, you may call the Fund and direct
an exchange out of the Fund into an identically registered account in a U.S.
Global Investors 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 1-800-873-8637 or 1-800-US-FUNDS 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 1-800-873-8637 or 1-800-US-FUNDS.
SPECIAL REDEMPTION ARRANGEMENTS
Special arrangements may be made by institutional investors, or on behalf
of accounts established by brokers, advisers, banks or similar institutions, to
have redemption proceeds transferred by wire to pre-established accounts upon
telephone instructions. For further information, call the Fund at 1-800-873-8637
or 1-800-US-FUNDS.
SIGNATURE GUARANTEE
Redemptions in excess of $15,000 currently require a signature guarantee. A
signature guarantee is required for all redemptions, regardless of the amount
involved, when the proceeds are to be paid to someone other than the registered
owner of the shares to be redeemed, or if proceeds are to be mailed to an
address other than the registered address of record.
When a signature guarantee is required, each signature must be guaranteed
by:
(a) a federally insured bank or thrift institution;
(b) a broker or dealer (general securities, municipal, or government) or
clearing agency registered with the U.S. Securities and Exchange
Commission that maintains net capital of at least $100,000; or
(c) a national securities exchange or national securities association. The
guarantee must:
(i) include the statement "Signature(s) Guaranteed";
(ii) be signed in the name of the guarantor by an authorized person,
including the person's printed name and position with the
guarantor; and
(iii)include a recital that the guarantor is federally insured,
maintains the requisite net capital or is a national securities
exchange or association.
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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.
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TRADER'S FEE PAID TO FUND
A trader's fee of 25 basis points or 0.25% of the value of shares redeemed
or exchanged will be assessed to shareholders who redeem or exchange shares of
the Fund held less than thirty (30) days. The trader's fee will be paid to the
Fund to benefit remaining shareholders by protecting them against expenses due
to excessive trading. Excessive short-term trading has an adverse impact on
effective portfolio management as well as upon Fund expenses. The Fund has
reserved the right to refuse investments from shareholders who engage in
short-term trading that may be disruptive to the Fund.
ACCOUNT CLOSING FEE
In order to reduce Fund expenses, an account closing fee of $10 will be
assessed to shareholders who redeem all shares in their Fund account and direct
that redemption proceeds be delivered to them by mail or wire. The charge is
payable directly to the Fund's Transfer Agent which, in turn, will reduce its
charges to the Fund by an equal amount. The purpose of the charge is to allocate
to redeeming shareholders a more equitable portion of the Transfer Agent's fee,
including the cost of tax reporting, which is based upon the number of
shareholder accounts. Account closing fees do not apply to exchanges between the
funds in the U.S. Global Investors family of funds nor do they apply to any
involuntarily redeemed account.
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, active ABC Investment PlanTaccounts, custodial
accounts for minors 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, the Fund may redeem all shares in
any shareholder account, other than active ABC Investment PlanT accounts,
custodial accounts for minors and retirement plan accounts, if, for a period of
more than three months, the account has a net asset value of $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
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within 90 days of the notice. No account closing fee will be charged to
investors whose accounts are closed under this redemption provision.
OTHER SERVICES
The Fund has a number of plans and services available 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, a wholly-owned subsidiary
of the Advisor, acts as custodian. 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 1-800-873-8637 or 1-800-US-FUNDS.
24-HOUR ACCOUNT INFORMATION
Shareholders can also access current information 24 hours a day on yields,
share prices, latest dividends, account balances, deposits and redemptions. Just
call 1-800-873-8637 or 1-800-US-FUNDS and press the appropriate codes into your
touch-tone phone.
HOW SHARES ARE VALUED
Shares of each Fund are purchased or redeemed, on a continuing basis
without a sales charge, at their next determined net asset value per share. The
net asset value per share of each Fund is calculated separately by United
Shareholder Services, Inc. Net asset value per share is determined and orders
become effective as of 4:00 p.m. Eastern Time, Monday through Friday, exclusive
of business holidays on which the NYSE is closed, by dividing the aggregate net
assets of each Fund by the total number of shares of that Fund outstanding. In
the event that the NYSE and other financial markets close earlier as on the eve
of a holiday, the net asset value per share will be determined earlier in the
day at the close of trading on the NYSE.
Valuation will be calculated in U.S. Dollars. Securities quoted in other
currencies will be converted to U.S. dollars using the exchange rate then in
effect in the principal market in which the relevant securities are traded. A
portfolio security listed or traded on an international market (a market other
than those in the United States or Canada), either an exchange or over-the-
counter, is valued at the last reported sales price before the time when assets
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are valued. A portfolio security listed or traded in the domestic market (a
market in the United States or Canada), either on an exchange or over-the-
counter, is valued at the latest reported sale price before the time when assets
are valued. Lacking any sales on that day, the security is valued at the mean
between the last reported bid and ask prices.
When market quotations are not readily available, or when restricted
securities or other assets are being valued, such assets are valued at fair
value as determined in good faith by or under procedures established by the
Board of Trustees. These procedures provide, in part, that the Advisor will
produce a written "Fair Value Memorandum" stating its methodology and rationale
for determining fair value for such assets. A copy of the Fair Value Memorandum
will be delivered to the Chairman of the Audit Committee (or any Independent
Trustee if the Chairman of the Audit Committee is unavailable). The Chairman of
the Audit Committee (or Independent Trustee) will, after full deliberation, have
authority to determine fair value in conformance with the Fair Value Memorandum
or to call for an immediate meeting of the Audit Committee to establish fair
market value.
Portfolio securities traded on more than one market are valued according to
the broadest and most representative market. Prices used to value portfolio
securities are monitored to ensure that they represent current market values.
The calculation of net asset value may not take place contemporaneously with the
determination of the prices of portfolio securities used in such calculations.
Events affecting the values of portfolio securities that occur between the time
prices are determined and the close of the New York Stock Exchange will not be
reflected in the Fund's calculation of net asset value unless the Fund's Board
of Trustees deems that the particular event would materially affect the net
asset value, in which case an adjustment will be made. If the price of a
portfolio security is determined to be materially different from its current
market value, such security will be valued at fair value as determined by
management and approved in good faith by the Board of Trustees.
Debt securities with maturities of 60 days or less at the time of purchase
are valued on the basis of the amortized cost. This involves valuing an
instrument at its cost initially and, thereafter, assuming a constant
amortization to maturity of any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the instrument.
DIVIDENDS AND TAXES
The Fund intends to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). By
complying with the applicable provisions of the Code, 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.
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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
income dividends in Fund shares; or (3) all income dividend and capital gain
distributions recorded. 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
undeliverable and dividend checks not cashed after 180 days will automatically
be reinvested at the price of the Fund on the day returned 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.
Mutual funds are potentially 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.
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THE TRUST
U.S. Global Accolade Funds is an open-end management investment company
consisting of several separate, diversified portfolios.
The Trust was formed April 16, 1993, as a business trust under the laws of
the Commonwealth of Massachusetts. It is a series company authorized to issue
shares without par value in separate series. Shares of the series have been
authorized; shares of each series represent an interest in a separate portfolio.
The Board of Trustees has the power to create additional portfolios anytime
without a vote of shareholders of the Trust. Trustees serve six-year terms. No
shareholder meeting will ordinarily be held unless otherwise required by the
Investment Company Act of 1940. The Trust will call a meeting of shareholders to
vote 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 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 the portfolio entitle
their holder to one vote per share, irrespective of the relative net asset value
of the portfolio's shares. On matters affecting an individual portfolio, a
separate vote of shareholders of the portfolio is required. The 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 November 15, 1996, the Advisor and the Trust contracted with
Money Growth Institute, Inc. 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. Investment decisions for the
funds are made independently from those of other investment companies advised by
U.S. Global Investors, Inc. Advisor and Sub-Advisor investment personnel may
invest in securities for their own accounts pursuant to a Code of Ethics that
establishes procedures for personal investing and restricts certain
transactions.
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In consideration for such services, the Advisor will pay the Sub-Advisor a
fee, on an annual basis, from 50 basis points (0.50%) to 1% of Fund assets based
on the assets of the Fund.
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, 1996, the advisory fee paid to the Advisor was 0.42%
(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 since the late 1970s. 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, apart from the Fund, of approximately $40
million as of June 30, 1996. Dr. Leeb is the 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. The 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.
Dr. Leeb and the Sub-Advisor have recently consented to, without admitting
or denying any of the charges, two SEC orders. The order dated January 16, 1996,
related to certain advertisements for a newsletter edited by Dr. Leeb. Dr. Leeb
was neither the owner nor the publisher of the newsletter. The order dated July
14, 1995, related to certain record keeping requirements and requirements
governing client solicitations. Considered jointly, the orders allege that Dr.
Leeb and other respondents willfully violated, or aided and abetted violations
of various provisions of the Securities Act of 1933, the Securities Exchange Act
of 1934, the Investment Company Act of 1940, and the Advisers Act of 1940. Dr.
Leeb and the other respondents agreed to certain remedial sanctions including
censures, cease and desist orders, payment of civil money penalties, and the
implementation of certain procedures to ensure their compliance with the federal
securities laws. Neither the MegaTrends Fund nor the Leeb Personal Finance Fund
was a party to either proceeding.
Three states issued orders against the Sub-Advisor for conducting advisory
business in their states without prior registration as an investment
22
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adviser. The Sub-Advisor agreed to cease and desist such practice, paid fines,
and registered in each state.
THE INVESTMENT ADVISOR
U.S. Global Investors, Inc., 7900 Callaghan Road, San Antonio, Texas 78229,
under an Investment Advisory Agreement with the Trust dated September 21, 1994,
furnishes investment advice and is responsible for overall management of the
Trust's business affairs. Frank E. Holmes is Chairman of the Board of Directors
and Chief Executive Officer of the Advisor, as well as President and Trustee of
the Trust. Since October 1989, Mr. Holmes has owned more than 25% of the voting
stock of the Advisor and is its controlling person. The Advisor was organized in
1968. The Advisor serves as investment advisor to U.S. Global Investors Funds
and U.S. Global Accolade Funds, a family of mutual funds with approximately $1.5
billion in assets.
The Advisor provides management and investment advisory services to the
Trust and to the funds in the Trust. 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 U.S. Global Investors, Inc.
The Advisory Agreement with the Trust provides for the Fund to pay the
Advisor a flat management fee of 1% of the Fund's average net assets.
The Advisor may, out of profits derived from its management fee, pay
certain financial institutions (which may include banks, 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 and/or providing administrative services to the beneficial owners of
Fund shares through broker/dealers, banks, trust companies and similar
institutions which provide such services and maintain an omnibus account with
the Transfer Agent, the Fund will pay to the Transfer Agent a monthly fee equal
to one-twelfth ( 1/12) of 12.5 basis points (.00125) of the value of the shares
of the fund held in accounts at the institutions,
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which payment will 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, as well as the
telephone and line charges (including the toll-free 800 service) used by
shareholders to contact the Transfer Agent. Transfer Agent fees and expenses
including reimbursed expenses, are reduced by the amount of small account
charges and account closing fees the Transfer Agent is paid.
The transfer agent performs bookkeeping and accounting services and
determines the daily net asset value for the Fund for a fee based upon assets
and subject to an annual minimum fee of $35,000.
The Advisor is reimbursed certain costs for in-house legal services
pertaining to the Fund.
The Fund pays all other expenses for its operations and activities. The
expenses borne by the Fund include the charges and expenses of any shareholder
servicing agents; custodian fees; legal and auditor expenses; brokerage
commissions for portfolio transactions; the advisory fee; extraordinary
expenses; expenses of shareholders and trustee meetings; expenses for preparing,
printing, and mailing 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
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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 as
reported in various periodicals. Performance comparisons should 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 Funds 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.
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U.S. GLOBAL ACCOLADE FUNDS
SHARES OF THE FUND ARE SOLD AT NET ASSET
VALUE WITHOUT SALES COMMISSIONS
OR REDEMPTION FEES
MegaTrends Fund
INVESTMENT ADVISOR
U.S. Global Investors, Inc.
7900 Callaghan Road
San Antonio, Texas 78229
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
LEGAL COUNSEL
Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street, Suite 2600
Chicago, Illinois 60601
INDEPENDENT ACCOUNTANT
Price Waterhouse LLP
One Riverwalk Place, Suite 900
San Antonio, Texas 78205
No Load
Be Sure to Retain This Prospectus.
It Contains Valuable Information.
