U S GLOBAL ACCOLADE FUNDS, 485BPOS, 1998-01-29

U S GLOBAL ACCOLADE FUNDS
485BPOS, 1998-01-29

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Post-Effective Amendment No. 13

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

Post-Effective Amendment No. 13

U.S. GLOBAL ACCOLADE FUNDS
(Exact Name of Registrant as Specified in Charter)

7900 CALLAGHAN ROAD
SAN ANTONIO, TEXAS 78229
(Address of Principal Executive Office)

(210) 308-1234
(Registrant's Telephone Number, including Area Code)

FRANK E. HOLMES, PRESIDENT
U.S. GLOBAL ACCOLADE FUNDS
7900 CALLAGHAN ROAD
SAN ANTONIO, TEXAS 78229
(Name and Address of Agent for Service)

Approximate date of proposed public offering:

It is proposed that this filing will become effective (check appropriate box):

/ / immediately upon filing pursuant to paragraph (b) of Rule 485

/ X / on February 2, 1998, pursuant to paragraph (b) of Rule 485

/ / 60 days after filing pursuant to paragraph (a) of Rule 485

/ / On (date), pursuant to paragraph (a) of Rule 485.

Registrant hereby declares, pursuant to Rule 24f-2 under the Investment Company
Act of 1940, an indefinite number of shares of beneficial interest, no par
value, have previously been registered.

<PAGE>

U.S. GLOBAL ACCOLADE FUNDS
FORM N-1A
CROSS REFERENCE SHEET

ITEM
NO. CAPTION OR LOCATION IN PROSPECTUS
- ---- ---------------------------------

1. Cover Page

2. Not Applicable

3. Not Applicable

4. Cover Page; Description of the Funds; The Trust; Special Risks

5. Management of the Funds

6. Cover Page; The Trust; Dividends and Taxes

7. How to Purchase and Sell Shares; Net Asset Value (12b-1 Plan - Management
of the Funds; Distribution Expense Plan)

8. How to Purchase and Sell Shares

9. Not Applicable

10. Cover Page

11. Table of Contents

12. General Information

13. Investment Objectives and Policies

14. Management of the Fund

15. Principal Holders of Securities

16. Investment Advisory Services; Transfer Agency and Other Services

17. Investment Objectives and Policies

18. General Information

19. Additional Information on Redemptions

20. Tax Status

21. Not Applicable

22. Calculation of Performance Data

23. Financial Statements
<PAGE>

.................................. PART A ....................................

================================================================================
BONNEL GROWTH FUND PROSPECTUS
================================================================================

U.S. GLOBAL ACCOLADE FUNDS

BONNEL GROWTH FUND

P.O. BOX 781234
SAN ANTONIO, TEXAS 78278-1234

1-800-US-FUNDS (1-800-873-8637)
(INFORMATION, SHAREHOLDER SERVICES AND REQUESTS)

INTERNET: HTTP://WWW.US-GLOBAL.COM

PROSPECTUS

FEBRUARY 2, 1998

This prospectus presents information that a prospective investor should know
about the Bonnel Growth Fund ("Fund"), a diversified series of U.S. Global
Accolade Funds ("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 February 2, 1998, has been filed
with the Securities and Exchange Commission and is incorporated herein by
reference. The Statement is available free from U.S. Global Accolade Funds upon
request at the address set forth above or by calling 1-800-US-FUNDS
(1-800-873-8637).

SUMMARY OF FEES AND EXPENSES......... 2
FINANCIAL HIGHLIGHTS................. 4
INVESTMENT OBJECTIVES AND
CONSIDERATIONS....................... 5
OTHER INVESTMENT PRACTICES........... 6
RISK FACTORS......................... 9
HOW TO PURCHASE SHARES............... 10
HOW TO EXCHANGE SHARES............... 13
HOW TO REDEEM SHARES................. 15
HOW SHARES ARE VALUED................ 20
DIVIDENDS AND TAXES.................. 21
THE TRUST............................ 22
MANAGEMENT OF THE FUND............... 23
DISTRIBUTION EXPENSE PLAN............ 26
PERFORMANCE INFORMATION.............. 26

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..... $ 5.00
Account Closing Fee (does not
apply to exchanges).......... $ 10.00
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 Service
Fees......................... 0.52%
Total Fund Operating Expenses
(net of waivers and
reimbursements).............. 1.77%

2
<PAGE>
Except for active ABC Investment Plan(R) accounts, custodial accounts for minors
and retirement accounts, if an account balance falls, for any reason other than
market fluctuations, below $5,000 anytime 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 EXPENSES1:

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............................... $ 27
3 years.............................. $ 64
5 years.............................. $ 103
10 years............................. $ 213

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 on 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 that 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. The Fund pays management fees and transfer
agency fees to U.S. Global Investors, Inc. ("Advisor") and its wholly owned
subsidiaries. The Fund paid accounting services fees to the Advisor until
October 31, 1997. Effective November 1, 1997, the Fund pays accounting
services fees to Brown Brothers Harriman & Co. The Advisor pays part of the
management fee to Bonnel, Inc. ("Sub-Advisor") for serving as sub-advisor.
See the MANAGEMENT OF THE FUNDS section for additional information.

3
<PAGE>
FINANCIAL HIGHLIGHTS

Per share data for an outstanding share throughout each period is as
follows:
<TABLE>
<CAPTION>
YEAR ENDED
------------------------------------------
SEPTEMBER 30
OCT. 31 -------------------------------
1997* 1997 1996 1995**
-------- --------- --------- ---------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 21.86 $ 17.15 $ 14.81 $ 10.02
Investment activities
Net investment income (loss) (0.03) (0.21) (0.14) (0.07)
Net realized and unrealized gain
(loss) (2.15) 5.09 3.13 4.91
-------- --------- --------- ---------
Total from investment activities (2.18) 4.88 2.99 4.84
-------- --------- --------- ---------
Distributions
In excess of net investment
income -- -- -- (0.05)
From net realized gains -- (0.17) -- --
In excess of net realized gains -- -- (0.65) --
-------- --------- --------- ---------
Total distributions -- (0.17) (0.65) (0.05)
-------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 19.68 $ 21.86 $ 17.15 $ 14.81
TOTAL RETURN (EXCLUDING ACCOUNT FEES) (9.97%(c) 28.67% 21.27% 48.74%(c)
Ratios to average net assets(a)
Net investment income (1.43)% (1.18)% (1.32)% (1.46)%
Total expenses 1.72% 1.77% 1.83% 2.50%
Expenses reimbursed or offset -- -- -- (0.02)%
Net expenses 1.72% 1.77% 1.83% 2.48%
Average commission rate paid(b) $ 0.0685 $ 0.0685 $ 0.0708 n/a
Portfolio turnover rate 52%(c) 239% 212% 145%(c)
Net assets, end of period (in
thousands) $104,643 $ 117,891 $ 90,696 $ 24,673
</TABLE>
- ------------
* Change in fiscal year end from September 30 to October 31.

** For the period October 17, 1994, effective date of registration and public
offering, through September 30, 1995.

(a) Ratios are annualized for periods of less than one year. Expenses
reimbursed or offset reflect reductions to total expenses, as discussed in
the notes to the financial statements. Such amounts would decrease the net
investment income ratio had such reductions not occurred.

(b) Per portfolio share traded. Required for fiscal years beginning September
1, 1995, or later.

4
<PAGE>
INVESTMENT OBJECTIVES AND CONSIDERATIONS

The investment objective of the Bonnel Growth Fund (the "Fund") is long-term
growth of capital. Current income is not an objective and any income received is
incidental. The Fund seeks this growth by investing primarily in the common
stocks of domestic and foreign issuers. The Fund does not intend to invest in
fixed income securities other than money market instruments and convertible
bonds. There is no assurance that the Fund will achieve its investment
objective. Neither the investment objective nor the investment policy is a
fundamental policy, and the Board of Trustees may change them without
shareholder approval. However, shareholders will be notified in writing at least
30 days before any material change to either the Fund's investment objective or
its investment policy.

Common stocks will be selected that meet certain fundamental and technical
selection standards which, in the Sub-Advisor's opinion, have appreciation
potential. The Fund expects to focus its investments on mid-capitalization
companies with market capitalizations of around $1 billion. However, the Fund is
not limited to mid-capitalization stocks and will also invest in large and small
capitalization companies. Fundamental investment criteria include, but are not
limited to, earnings figures, equity ownership by management, market leadership,
strong management, price to earnings ratios, debt to equity ratios, and the
general growth prospects of the issuer. Common stocks will not be eliminated
simply because they do not pay a current dividend. Technical selection
considerations include, but are not limited to, stock price movement and
magnitude of trading volume. These criteria may lead the Fund to invest more or
less of its assets in specific industries as market conditions change, but the
Fund does not focus its investments in any particular industry. The Fund may
invest in securities traded on domestic or foreign exchanges, quoted on NASDAQ
or traded on the domestic or foreign over-the-counter markets. The Sub-Advisor
is not obligated to conform to any particular fundamental or technical standard
of selection or to the ranking of such standards. Standards of selection and
their ranking will vary according to the Sub-Advisor's judgment.

The Sub-Advisor intends to stay fully invested in such stocks, regardless of the
movement of stock prices generally. Under normal market conditions, the Fund is
required to have at least 80% of the value of its total assets in equity
securities. Of that 80%, no more than 5% may consist of preferred stock or bonds
convertible into common stock. The remainder of the portfolio may be invested in
money market instruments to provide liquidity, purchase portfolio securities,
pay redemptions and meet other demands for cash. When the Sub-Advisor determines
that market conditions warrant, the Fund may invest up to 100% of its assets in
money market instruments for temporary defensive purposes.

5
<PAGE>
The Fund may invest up to 25% of its total assets in common stocks and other
equity securities of foreign issuers, but only if they are listed on a domestic
or foreign exchange, quoted on NASDAQ or traded on the domestic or foreign
over-the-counter market. See RISK FACTORS in this prospectus. As a part of the
25% limitation, no more than 5% of the Fund's net assets will be invested in
securities of issuers domiciled in countries considered by the Advisor to be
emerging markets.

The Fund may invest in sponsored or unsponsored American Depository Receipts
("ADRs") representing shares of foreign issuers. ADRs are typically issued by
a U.S. bank or trust company and evidence ownership of underlying securities
issued by a foreign corporation. Generally, ADRs in registered form are intended
for use in the U.S. securities market, and ADRs in bearer form are intended for
use in securities markets outside the United States. ADRs may not necessarily be
denominated in the same currency as the underlying securities into which they
may be converted. In addition, the issuers of the securities underlying
unsponsored ADRs are not obligated to disclose material information in the
United States; therefore, there may be less information available regarding such
issuers. There may not be a correlation between such information and the market
value of the ADRs. For purposes of the Fund's investment policies, the Fund's
investment in ADRs will be deemed to be investments in the underlying
securities.

OTHER INVESTMENT PRACTICES

As a fundamental policy, which cannot be changed without a vote of shareholders:

(a) the Fund may not invest more than 25% of its total assets in securities
of companies principally engaged in any one industry (other than
obligations issued or guaranteed by the United States Government or any of
its agencies or instrumentalities);

(b) with respect to 75% of its total assets, the Fund will not:
(i) invest more than 5% of the value of its total assets in the securities
of any one issuer (except such limitation will not apply to obligations
issued or guaranteed by the United States Government, its agencies or
instrumentalities); nor (ii) acquire more than 10% of the outstanding
voting securities of any one issuer;

(c) the Fund may lend portfolio securities with an aggregate market value
of not more than one-third of the Fund's total net assets;

(d) the Fund may borrow up to 33 1/3% of the amount of its total assets
(reduced by the amount of all liabilities and indebtedness other than such
borrowings) when deemed desirable or appropriate to effect

6
<PAGE>
redemptions, provided that the Fund will not purchase additional securities
while borrowings exceed 5% of the Fund's total assets.

PORTFOLIO TURNOVER

It is the policy of the Fund to seek long-term growth of capital. The Fund will
effect portfolio transactions without regard to its holding period if, in the
judgment of the Advisor and Sub-Advisor, such transactions are in the best
interests of the Fund. The Fund's historical portfolio turnover ratio is
presented in the FINANCIAL HIGHLIGHTS section of this prospectus. Increased
portfolio turnover may result in higher costs for brokerage commissions, dealer
mark-ups and other transaction costs and may also result in taxable capital
gains. See PORTFOLIO TURNOVER in the Statement of Additional Information.

PORTFOLIO TRANSACTIONS

In executing portfolio transactions and selecting brokers or dealers, the Fund
seeks the best overall terms available. In assessing the terms of a transaction,
consideration may be given to various factors, including the breadth of the
market in the security, the price of the security, the financial condition and
execution capability of the broker or dealer (for a specified transaction and on
a continuing basis), the reasonableness of the commission, if any, and the
brokerage and research services provided. Under the Advisory and Sub-Advisory
agreements, the Advisor and Sub-Advisor are permitted, in certain circumstances,
to pay a higher commission than might otherwise be paid 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 cases, the Board of Trustees will review the
commissions paid by the Fund to determine if the commissions paid over
representative periods are reasonable in relation to the benefits obtained. The
advisory fee of the Advisor would not be reduced because 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.

The Fund executes most of its transactions through a small group of broker-
dealers selected for their ability to provide brokerage and research services.
The Fund may occasionally purchase securities that are not listed on a national
securities exchange or quoted on NASDAQ, but are instead traded in the
over-the-counter market. With respect to transactions executed in the
over-the-counter market, the Fund will usually deal through its selected
broker-dealers and pay a commission on such transactions. The Fund

7
<PAGE>
believes that the execution and brokerage services it receives justify use of
broker-dealers in these over-the-counter transactions. See PORTFOLIO
TRANSACTIONS in the Statement of Additional Information.

LENDING OF PORTFOLIO SECURITIES

The Fund may lend securities to broker-dealers or institutional investors for
their use in connection with short sales, arbitrages and other securities
transactions. The Fund may receive a fee from broker-dealers for lending its
portfolio securities. The Fund will not lend portfolio securities unless the
loan is secured by collateral (consisting of any combination of cash, United
States Government securities or irrevocable letters of credit) in an amount at
least equal (on a daily marked-to-market basis) to the current market value of
the securities loaned. In the event of a bankruptcy or breach of agreement by
the borrower of the securities, the Fund could experience delays and costs in
recovering the securities loaned. The Fund will not enter into securities
lending agreements unless its custodian bank/lending agent will fully indemnify
the Fund against loss due to borrower default. The Fund may not lend securities
with an aggregate market value of more than one-third of the Fund's total net
assets.

REPURCHASE AGREEMENTS

The Fund may invest part 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 before liquidation. To reduce the risk of loss, the Fund will enter
into repurchase agreements only with institutions and dealers which the Board of
Trustees considers creditworthy.

PUT AND CALL OPTIONS

The Fund may purchase or sell call options and may purchase put options on
individual securities and on equity indexes. The Fund will not purchase any
option if, immediately afterwards, the aggregate market value of all outstanding
options purchased and written by the Fund would exceed 5% of

8
<PAGE>
the Fund's total assets. For a more complete discussion, see PUT AND CALL
OPTIONS in the Statement of Additional Information.

RISK FACTORS

EQUITY PRICE FLUCTUATIONS

Equity securities are subject to price fluctuations depending on a variety of
factors including market, business and economic conditions. Investment in growth
stocks can involve special risks. In seeking long term growth of capital, the
Fund may often purchase common stock of small- and medium-size companies which
may be unseasoned, the stock of which often fluctuates in price more than common
stocks of larger, more mature companies such as many of those included in the
Dow Jones Industrial Average. Therefore, an investor should expect that the
share price of the Fund will often be more volatile, in both "up" and "down"
markets, than most of the popular stock averages.

FOREIGN SECURITIES

Investment in foreign securities may involve risks not present in domestic
investment. These include fluctuating exchange rates; the fact that foreign
issuers may be subject to different, and in some cases, less comprehensive
accounting, financial reporting and disclosure standards than are domestic
issuers; the risk of adverse changes in foreign investment or exchange control
regulations; volatile currency markets; expropriation or confiscatory taxation;
political or financial instability; or other developments which can affect
investments. For more detailed information, see FOREIGN SECURITIES in the
Statement of Additional Information.

PUTS AND CALLS

The Fund may purchase or sell call options and may purchase put options on
individual securities and on equity indexes. If the Fund sells a covered call
option and the securities owned by the Fund appreciate above the option's strike
price, the Fund will generally be asked to deliver the security, which will
prevent the Fund from receiving the benefit of any price appreciation above the
strike price. When purchasing call options the Fund will realize a loss equal to
all or a part of the premium paid for the option if the price of the underlying
security decreases or does not increase by more than the premium before the call
option's expiration. When purchasing put options the Fund will realize a loss
equal to all or a part of the premium paid for the option if the price of the
underlying security increases or does not decrease by more than the premium
before the put option's expiration.

9
<PAGE>
HOW TO PURCHASE SHARES

The minimum initial investment for the Fund is $5,000 for regular accounts or
$1,000 for custodial accounts for minors. The minimum subsequent investment is
$50. The minimum initial investment for persons enrolled in the ABC Investment
Plan(R) (Automatically Building Capital) is $1,000, and the minimum subsequent
investment pursuant to such a plan is $100 or more per month per account. No
minimum purchase is required for retirement plan accounts, including IRAs,
administered by the Advisor or its agents and affiliates. Management may waive
the minimum initial or subsequent investment requirement 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, made payable to the Bonnel Growth Fund, to P.O.
Box 781234, San Antonio, Texas 78278-1234.

When making subsequent investments, enclose your check with the return
remittance section of the confirmation statement, or write your name, address
and account number on your check or a separate piece of paper and mail to the
address mentioned above. Do not use the remittance part of your confirmation
statement for a different fund because it is pre-coded. This may cause your
investment to be invested into the wrong fund. If you wish to purchase shares in
more than one fund, send a separate check or money order for each fund. Third
party checks will not be accepted, and the Trust reserves the right to refuse to
accept second party checks.

BY TELEPHONE

Once your account is open, you may make investments by telephone by calling
1-800-US-FUNDS (1-800-873-8637). 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
payment has been received and accepted by the Trust.

BY WIRE

You may make your initial or subsequent investments in U.S. Global Accolade
Funds by wiring funds. To do so, call U.S. Global Accolade Funds at
1-800-US-FUNDS (1-800-873-8637) for a confirmation number and wiring
instructions.

10
<PAGE>
BY ABC INVESTMENT PLANT

The ABC Investment Plan(R) (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 Plan(R) form authorizing U.S. Global Accolade Funds to draw on
your money market or bank account 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 Accolade 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 Plan(R) does not guarantee a profit.
If you sell at the bottom, no system will give you a gain.

You may call 1-800-873-8637 to open a treasury money market fund account or you
could ask 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 anytime by letter received
by U.S. Global Accolade Funds at least two weeks before the change is to become
effective.

ADDITIONAL INFORMATION ABOUT PURCHASES

All purchases of shares are subject to acceptance by the Trust and are not
binding until accepted. U.S. Global Accolade Funds reserves the right to reject
any application or investment. Orders received by the Fund's transfer agent or a
subagent 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. If the NYSE and other financial markets
close earlier, as on the eve of a holiday, orders will become effective earlier
in the day at the close of trading on the NYSE.

If a check is returned unpaid due to nonsufficient funds, stop payment or other
reasons, the Trust will charge $20, and you will be responsible for any loss
incurred by the Trust with respect to canceling the purchase.

To recover any such loss or charge, the Trust reserves the right, without
further notice, to redeem shares of any affiliated funds already owned by

11
<PAGE>
any purchaser whose order is canceled, for whatever reason. Such a purchaser may
be prohibited from placing additional 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" of any
kind. However, investors may purchase and sell shares through registered
broker-dealers who may charge fees for their services.

CHECKS DRAWN ON FOREIGN BANKS. To be received in good order, an investment must
be made in U.S. dollars payable through a bank in the U.S. As an accommodation,
the Fund's transfer agent may accept checks payable in a foreign currency or
drawn on a foreign bank and will attempt to convert such checks into U.S.
dollars and repatriate such amount to the Fund's account in the U.S. Your
investment in the Fund will not be considered to have been received in good
order until your foreign check has been converted into U.S. dollars and is
available to the Fund through a bank in the U.S. Your investment in the Fund may
be delayed until your foreign check has been converted into U.S. dollars and
cleared the normal collection process. Any amounts charged to the Fund for
collection procedures will be deducted from the amount invested.

If the Trust incurs a charge for locating a shareholder without a current
address, such charge will be passed through to the shareholder.

TAX IDENTIFICATION NUMBER

The Fund is required by Federal law to withhold and remit to the United States
Treasury a part of the dividends, capital gain distributions and proceeds of
redemptions paid to any shareholder who fails to furnish the Fund with a correct
taxpayer identification number, who underreports dividend or interest income or
who fails to provide certification of tax identification number. 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, U.S. Global Accolade Funds will send you a
confirmation statement that will be your evidence that you have opened an
account with U.S. Global Accolade Funds. The confirmation statement is
nonnegotiable, so if it is lost or destroyed, you will not be required to buy a

12
<PAGE>
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.

HOW TO EXCHANGE SHARES

You have the privilege of exchanging into any of the other funds in the U.S.
Global Investors family of funds. 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 balancing potential rewards against potential risks. To
achieve higher rewards on your investment, you must be willing to take on higher
risk. If you are most concerned with safety of principal, a lower risk
investment will provide greater stability but with lower potential earnings.
Another strategy for dealing with volatile markets is to use the ABC Investment
Plan(R). The list below is a reward and risk guide to all of the mutual funds in
the U.S. Global Investors family of funds. This guide may help you decide if a
fund is suitable for your investment goals.

HIGH REWARD China Region Opportunity Fund
HIGH RISK 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

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<PAGE>
believed by them to be genuine. The shareholder, because of this policy, will
bear the risk of loss. The Fund and/or its transfer agent will, however, use
reasonable procedures to confirm that telephone instructions are genuine
(including requiring some form of personal identification, providing written
confirmation and tape recording conversations). If either party does not employ
reasonable procedures, it may be liable for losses due to unauthorized or
fraudulent transactions.

BY MAIL

You may direct U.S. Global Accolade Funds in writing to exchange your shares
between identically registered accounts in the U.S. Global Investors family of
funds. The request must be signed exactly as the name appears in the
registration. Before writing, read ADDITIONAL INFORMATION ABOUT EXCHANGES.

ADDITIONAL INFORMATION ABOUT EXCHANGES

(1) A $5 charge will be paid to United Shareholder Services, Inc. ("USSI" or
the "Transfer Agent") for each exchange out of any fund account. Retirement
accounts administered by the Advisor or its agents are charged $5 for each
exchange exceeding three per quarter. 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 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 U.S. Global Accolade
Funds with your tax identification number, certified as required 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 Bonnel Growth Fund of shares held less than 30 days
are subject to a trader's fee. See TRADERS FEE PAID TO FUND.

14
<PAGE>
(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. Requests received in proper
order by the Trust's transfer agent or a subagent before 4:00 p.m. Eastern time,
Monday through Friday exclusive of business holidays, will receive the share
price next computed after receipt of the request.

BY MAIL

A written request for redemption must be in "proper order," which requires the
delivery of the following to the transfer agent:

(1) 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) 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.

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 account ($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 for more information concerning
telephone redemptions and a treasury money market fund prospectus.

SPECIAL REDEMPTION ARRANGEMENTS

15
<PAGE>
established accounts upon telephone instructions. For additional information,
call the Trust at 1-800-873-8637. Telephone redemptions are available for
Chairman's Circle accounts.

SIGNATURE GUARANTEE

Redemptions of more than $15,000 require a signature guarantee. A signature
guarantee is required for all redemptions, regardless of the amount involved, if
(a) proceeds are to be paid to someone other than the registered owner of the
shares or (b) proceeds are to be mailed to an address other than the registered
address of record. When a signature guarantee is required, each signature must
be guaranteed by: (a) a federally insured bank or thrift institution; (b) a
broker or dealer (general securities, municipal, or government) or clearing
agency registered with the U.S. Securities and Exchange Commission that
maintains net capital of at least $100,000; or (c) a national securities
exchange or national securities association. The guarantee must: (i) include the
statement "Signature(s) Guaranteed"; (ii) be signed in the name of the
guarantor by an authorized person, including the person's printed name and
position with the guarantor; and (iii) include a recital that the guarantor is
federally insured, maintains the requisite net capital or is a national
securities exchange or association. Shareholders living abroad may acknowledge
their signatures before a U.S. consular officer. Military personnel may
acknowledge their signatures before officers authorized to take acknowledgments
(e.g., legal officers and adjutants).

REDEMPTION PROCEEDS MAY BE SENT TO YOU:

BY MAIL

If your redemption check is mailed, it is usually mailed within 48 hours;
however, the Fund reserves the right to hold redemption proceeds for up to seven
days. If the shares to be redeemed were purchased by check, the redemption
proceeds will not be mailed until the purchase check has cleared, which may take
up to seven days. You may avoid this requirement by investing by bank wire
(Federal funds). Redemption checks may be delayed if you have changed your
address in the last 30 days. Please notify the Fund promptly in writing, or by
telephone, of any change of address.

BY WIRE

16
<PAGE>
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. A $10 charge will be deducted from redemption proceeds to cover the
wire. International wire charges 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 IRS Form W4-P and a reason for withdrawal as required by the IRS.
Proceeds from the redemption of shares from a retirement account may be subject
to withholding tax.

The Trust has the authority to redeem existing accounts and to refuse a
potential account the privilege of having an account in the Trust if the Trust
reasonably determines that the failure to redeem or prohibit would have a
material adverse consequence to the Trust and its shareholders. No account
closing fee or redemption fee will be charged to investors whose accounts are
closed under this provision.

TRADER'S FEE PAID TO FUND

A trader's fee of 25 basis points or 0.25% of the value of shares redeemed or
exchanged will be assessed to shareholders who redeem or exchange shares of the
Fund held less than thirty (30) calendar days. The trader's fee will be paid to
the Fund to benefit remaining shareholders by protecting them against expenses
due to excessive trading. Excessive short-term trading has an adverse impact on
effective portfolio management as well as on Fund expenses. The Fund has
reserved the right to refuse investments from shareholders who engage in
short-term trading that may be disruptive to the Fund.

ACCOUNT CLOSING FEE

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; the transfer agent 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
involuntarily redeemed accounts.

17
<PAGE>
SMALL ACCOUNTS

Fund accounts which fall, for any reason other than market fluctuations, below
$5,000 anytime during the month will be subject to a monthly small account
charge of $1 which will be payable quarterly. The charge is payable directly to
the Fund's transfer agent which, in turn, will reduce its charges to the Fund by
an equal amount. The purpose of the charge is to allocate the costs of
maintaining shareholder accounts more equally among shareholders.

As a special service for small investors, active ABC Investment Plan(R)
accounts, custodial accounts for minors, and retirement plan accounts
administered by the Advisor or its agents and affiliates will not be subject to
the small account charge.

To reduce Fund expenses, the Trust may redeem all shares in any shareholder
account, other than active ABC Investment Plan(R) accounts, custodial accounts
for minors and retirement plan accounts, if, for a period of more than three
months, the account has a net asset value of $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 give those shareholders an opportunity to
increase their accounts by investing enough assets to bring their accounts up to
the minimum amount within ninety (90) days of the notice. No account closing fee
will be charged to investors whose accounts are closed under this redemption
provision.

CONFIRMATION STATEMENTS

Shareholders will normally receive a confirmation statement after each
transaction (purchase, redemption, dividend, etc.) showing activity in the
account. If you have no transactions, you will receive an annual statement only.

OTHER SERVICES

The Trust offers a number of plans and services to meet the special needs of
certain investors. Plans include:

(1) payroll deduction plans, including military allotments;

(2) custodial accounts for minors;

(3) flexible, systematic withdrawal plans; and

(4) various retirement plans such as IRA, SEP/IRA, 403(b)(7), 401(k) and
employer-adopted defined contribution plans.

18
<PAGE>
There is an annual charge for each retirement plan fund account for which
Security Trust & Financial Company ("ST&FC"), a wholly-owned subsidiary of the
Advisor, acts as custodian. If the administrative charge is not paid separately
before the last business day of a calendar year or before 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-US-FUNDS (1-800-873-8637).

SHAREHOLDER SERVICES

United Shareholder Services, Inc., a wholly owned subsidiary of the Advisor,
acts as transfer and dividend paying agent for all fund accounts. Simply write
or call 1-800-US-FUNDS for prompt service on any questions about your account.

24-HOUR ACCOUNT INFORMATION

Shareholders can access current information 24 hours a day on yields, share
prices, latest dividends, account balances, deposits and redemptions. Just call
1-800-US-FUNDS and press the appropriate codes into your touch-tone phone.

HOW SHARES ARE VALUED

Shares of the Fund are purchased or redeemed, on a continuing basis without a
sales charge, at their next determined net asset value per share. United
Shareholder Services, Inc. calculates the net asset value per share of the Fund.
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 when the
NYSE is closed, by dividing the aggregate net assets of the Fund by the total
number of outstanding shares of the Fund. If 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 (market other
than those in the United States or Canada), either on an exchange or over-
the-counter, is valued at the last reported sales price before the time when
assets are valued. A portfolio security listed or traded in the domestic market
(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

19
<PAGE>
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.

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. If
the price of a portfolio security is determined to be materially different from
its current market value, then such security will be valued at fair value as
determined by Management and approved in good faith by the Board of Trustees.

Debt securities with maturities of 60 days or less at the time of purchase are
valued based on the amortized cost. This involves valuing an instrument at its
cost initially and, thereafter, assuming a constant amortization to maturity of
any discount or premium, regardless of the impact of fluctuating interest rates
on the market value of the instrument.

DIVIDENDS AND TAXES

The Fund intends to qualify as a regulated investment company under Subchapter M
of the Internal Revenue Code of 1986, as amended (the "Code"). By complying
with the applicable provisions of the Code, the Fund will not be subject to
Federal income tax on its net investment income and capital gain net income
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
income dividends in Fund shares, or (3) all capital gain distributions and
income dividends 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. Undeliverable dividend checks returned to
the Fund and dividend checks not cashed after 180 days will automatically be
reinvested at the price of the Fund on the day returned, and the distribution
option will be changed to "reinvest."

20
<PAGE>
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 income dividends and distributes 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. Part 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 shareholders will receive a report of their Federal tax status of
dividends and distributions paid or declared by the Fund during the preceding
calendar year. This statement will also show whether and to what extent
distributions qualify for the 70% dividends received deduction available to
corporations.

This 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

U.S. Global Accolade Funds (the "Trust") is an open-end management investment
company consisting of several separate, diversified portfolios.

Under the Trust's First Amended and Restated Master Trust Agreement, no annual
or regular meeting of shareholders is required, although the Trustees

21
<PAGE>
may authorize special meetings from time to time. The Trustees serve for
six-year terms. No shareholder meeting will ordinarily be held 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, regardless of the relative net asset value of each
portfolio's shares. On matters affecting an individual portfolio, a separate
vote of shareholders 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 Trust's Board of Trustees manages the business affairs of the Trust. The
Trustees establish policies and review and approve contracts and their
continuance. Trustees also elect the officers and select the Trustees to serve
as executive and audit committee members.

SUB-ADVISOR

Effective September 21, 1994, the Advisor and the Trust contracted with Bonnel,
Inc. to serve as Sub-Advisor for the Fund. Mr. Arthur Bonnel formed the
Sub-Advisor, a registered investment advisor. Mr. Bonnel, who serves as the
Fund's portfolio manager, has been managing money since 1970 and was previously
the portfolio manager of a successful mutual fund for more than five years.

The Sub-Advisor, located at P.O. Box 649, Reno, Nevada, manages the composition
of the portfolio and furnishes the Fund advice and recommendations with respect
to its investments and its investment program and strategy, subject to the
general supervision and control of the Advisor and the Trust's Board of
Trustees. The Advisor and Sub-Advisor share the management fee equally, subject
to a minimum sub-advisory fee and various offsetting adjustments. The Fund is
not responsible for paying the Sub-Advisor's fee.

Mr. Bonnel served as the portfolio manager of the MIM Stock Appreciation Fund
from August 1987 through May 1994. On February 28, 1994, that fund had $60.1
million in net assets. However, the MIM Stock Appreciation Fund is no longer in
existence. As portfolio manager of the MIM Stock Appreciation Fund, Mr. Bonnel
had full discretionary authority over the selection of investments for that
fund. Average annual returns for the one-

22
<PAGE>
year, three-year and five-year periods ended February 28, 1994, compared with
the performance of the Standard & Poor's 500 Composite Stock Price Index were:

THE MIM STOCK
APPRECIATION S&P 500
FUND(a)(b) INDEX(c)
-------------------- --------
One Year................................ 21.58% 8.31%
Three Years............................. 20.80 11.61
Five Years.............................. 20.64 13.64
- ------------
(a) Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions and is net of fund expenses.

(b) The expense ratio of the MIM Stock Appreciation Fund from 1988 through 1993
ranged from a high of 3.05% in 1988 to a low of 2.47% in 1993. The
annualized expense ratio of the Bonnel Growth Fund for the fiscal period
ended October 31, 1997, was 1.72%.

(c) The Standard & Poor's 500 Composite Stock Price Index is an unmanaged index
of common stocks generally representative of the United States stock
market. The index is adjusted to reflect reinvestment of dividends.

Historical performance is not an indication of future performance. The MIM Stock
Appreciation Fund was a separate fund, and its historical performance is not
indicative of the potential performance of the Bonnel Growth Fund. Share prices
and investment returns will fluctuate reflecting market conditions and also
changes in company-specific fundamentals of portfolio securities.

Advisor and Sub-Advisor investment personnel may invest in securities for their
own accounts according to a code of ethics that establishes procedures for
personal investing and restricts certain transactions.

In consideration for such services, the Advisor shares the management fee (net
of all expense reimbursements and waivers) with the Sub-Advisor. The Fund is not
responsible for paying any portion of the Sub-Advisor's fees.

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, and 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 and serves as investment advisor to U.S. Global Investors Funds, a family
of mutual funds with approximately $1.4 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

23
<PAGE>
program for the Fund; determines, subject to the overall supervision and review
of the Board of Trustees, what investments should be purchased, sold and held;
and makes changes on behalf of the Trust in the investments of the Fund.

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 also provides the Trust with office space, facilities and business
equipment and provides the services of executive and clerical personnel for
administering the affairs of the Trust. The Advisor pays the expenses of
printing and mailing prospectuses and sales materials used for promotional
purposes.

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, among others, the charges and expenses of any
shareholder servicing agents; custodian fees; legal and auditor expenses;
brokerage commissions for portfolio transactions; the advisory fee;
extraordinary expenses; expenses of shareholders and trustee meetings; expenses
for preparing, printing, and mailing proxy statements, reports and other
communications to shareholders; and expenses of registering and qualifying
shares for sale.

TRANSFER AGENT

The Transfer Agency Agreement with the Trust provides for the Fund to pay USSI,
a wholly owned subsidiary of the Advisor, an annual fee of $23.00 per account
(1/12 of $23.00 monthly). In connection with obtaining/providing administrative
services to the beneficial owners of Fund shares through broker-dealers, banks,
trust companies and similar institutions that provide such services and maintain
an omnibus account with the transfer agent, the Fund will pay to the transfer
agent a monthly fee

24
<PAGE>
equal to one-twelfth ( 1/12) of 12.5 basis points (.00125) of the value of the
shares of the fund held in accounts at the institutions, which payment will not
exceed $1.92 multiplied by the average daily number of accounts holding Fund
shares at the institution. These fees cover the usual transfer agency functions.
In addition, the Fund bears certain other transfer agent expenses such as the
costs of records retention, postage, telephone and line charges (including the
toll-free 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 paid to the transfer
agent. For the fiscal year ending September 30, 1997, and the period ended
October 31, 1997, the Fund paid USSI a total of $222,592 and $20,624,
respectively, for transfer agency, lockbox and printing services.

CUSTODIAN, FUND ACCOUNTANT, ADMINISTRATOR

Brown Brothers Harriman & Co. provides fund accounting and administrative
services to the Fund subject to a minimum annual fee of $40,000. Additionally,
Brown Brothers Harriman & Co. provides custodial services to the Fund.

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 used 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 used to pay for or reimburse such
expenditures provided the total amount expended pursuant to this Plan does not
exceed 0.25% of net assets annually.

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

25
<PAGE>
Fund shareholders. See DISTRIBUTION PLAN in the Statement of Additional
Information.

PERFORMANCE INFORMATION

From time to time, in advertisements or in reports to shareholders or
prospective shareholders, the Fund may compare its performance, either in terms
of its yield, total return or its yield and total return, to that of other
mutual funds with similar investment objectives and to stock or other indices.
Performance comparisons will not be considered as representative of the future
performance of the Fund.

The Fund's average annual total return is computed by determining the average
annual compounded rate of return for a specified period that, if applied to a
hypothetical $1,000 initial investment, would produce the redeemable value of
that investment at the end of the period, assuming reinvestment of all dividends
and distributions and with recognition of all recurring charges. The Fund may
also use 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 (the 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 that month. This income is then "annualized."
That is, the income generated by the investment during the 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. 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 elected by certain shareholders;
e.g., nominal fees like the $5 exchange fee. These fees reduce the actual return
realized by shareholders.

<PAGE>
U.S. GLOBAL ACCOLADE FUNDS

SHARES OF THE FUND ARE SOLD
AT NET ASSET VALUE WITHOUT SALES COMMISSIONS

Bonnel Growth Fund

INVESTMENT ADVISOR
U.S. Global Investors, Inc.
7900 Callaghan Road
San Antonio, Texas 78229

INVESTMENT SUB-ADVISOR
Bonnel, Inc.
P.O. Box 649
Reno, Nevada 89504

TRANSFER AGENT
United Shareholder Services, Inc.
P.O. Box 781234
San Antonio, Texas 78278-1234

CUSTODIAN, FUND ACCOUNTANT AND ADMINISTRATOR
Brown Brothers Harriman & Co.
40 Water Street
Boston, Massachusetts 02109

INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
700 North St. Mary's, Suite 900
San Antonio, Texas 78205

No-Load

Be Sure to Retain This Prospectus.
It Contains Valuable Information.
<PAGE>
================================================================================
MEGATRENDS FUND PROSPECTUS
================================================================================

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.US-GLOBAL.COM

PROSPECTUS
FEBRUARY 2, 1998

This prospectus presents information that a prospective investor should know
about the MegaTrends Fund ("Fund"), a diversified series of U.S. Global
Accolade Funds ("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 February 2, 1998, 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.
<PAGE>
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................ 19
Dividends and Taxes.................. 20
The Trust............................ 21
Management of the Fund............... 21
Distribution Expense Plan............ 25
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..... 0.51%
Total Fund Operating Expenses... 1.76%
Net Fund Operating Expenses..... 1.76%

2
<PAGE>
Except for active ABC Investment Plan(R) accounts, custodial accounts for
minors, and retirement accounts, if an account balance falls, for any reason
other than market fluctuations, below $5,000 at any time during a month, that
account will be subject to a monthly small account charge of $1 which will be
payable quarterly. See "Small Accounts."

A shareholder who requests delivery of redemption proceeds by wire transfer will
be subject to a $10 charge. International wires will be higher.

HYPOTHETICAL EXAMPLE OF EFFECT OF FUND EXPENSES1

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............................... $ 28
3 years.............................. $ 65
5 years.............................. $ 105
10 years............................. $ 217

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. The Fund pays management fees and transfer
agency fees to U.S. Global Investors, Inc. ("Advisor") and its wholly owned
subsidiaries. The Fund paid accounting services fees to the Advisor until
October 31, 1997. Effective November 1, 1997, the Fund pays accounting
services fees to Brown Brothers Harriman & Co. The Advisor pays part of the
management fee to Money Growth Institute, Inc. ("Sub-Advisor") for serving
as sub-advisor. See the MANAGEMENT OF THE FUNDS section for additional
information.

3
<PAGE>
FINANCIAL HIGHLIGHTS

The following information for the fiscal years ended October 31, 1997 and June
30, 1997, has been audited by Price Waterhouse LLP, independent accountants,
whose unqualified report thereon is included in the U.S. GLOBAL ACCOLADE FUNDS
1997 ANNUAL REPORT TO SHAREHOLDERS, which is incorporated by reference into the
STATEMENT OF ADDITIONAL INFORMATION. The following information for the fiscal
periods ended June 30, 1992 through 1996, was audited by Arthur Andersen LLP.
The related financial statements and report of independent accountants for 1996
and prior periods are included in the fund's 1996 ANNUAL REPORT TO SHAREHOLDERS
and are incorporated by reference in the STATEMENT OF ADDITIONAL INFORMATION.
The financial highlights should be read in conjunction with the financial
statements and notes thereto included in the ANNUAL REPORT. In addition to the
data set forth below, further information about the performance of the Fund is
contained in the ANNUAL REPORT and STATEMENT OF ADDITIONAL INFORMATION, 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,
OCT. 31, ----------------------------------------------------------------
1997* 1997** 1996 1995 1994 1993 1992***
-------- --------- --------- --------- --------- --------- ---------
NET ASSET VALUE, BEGINNING OF
<S> <C> <C> <C> <C> <C> <C> <C>
PERIOD............................. $ 13.45 $ 11.27 $ 11.17 $ 10.29 $ 10.84 $ 10.36 $ 10.00
-------- --------- --------- --------- --------- --------- ---------
Investment activities
Net investment income (loss)..... 0.01 0.01 0.17 0.28 0.19 0.15 0.16
Net realized and unrealized gain
(loss)......................... 0.44 2.39 1.72 0.95 (0.35) 0.55 0.51
-------- --------- --------- --------- --------- --------- ---------
Total from investment activities..... 0.45 2.40 1.89 1.23 (0.16) 0.70 0.67
-------- --------- --------- --------- --------- --------- ---------
Distributions
From net investment income....... -- (0.01) (0.17) (0.28) (0.19) (0.15) (0.16)+
From net realized gains.......... -- (0.21) (1.61) -- (0.20) (0.07) (0.15)+
In excess of net realized
gains.......................... -- -- (0.01) (0.07) -- -- --
-------- --------- --------- --------- --------- --------- ---------
Total distributions.................. -- (0.22) (1.79) (0.35) (0.39) (0.22) (0.31)
-------- --------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD....... $ 13.90 $ 13.45 $ 11.27 $ 11.17 $ 10.29 $ 10.84 $ 10.36
======== ========= ========= ========= ========= ========= =========
TOTAL RETURN (EXCLUDING ACCOUNT
FEES).............................. 3.34%(c) 20.72% 17.10% 12.20% (1.50)% 6.79% 7.94%(c)
======== ========= ========= ========= ========= ========= =========
Ratio to average net assets(a)
Net investment income............ 0.23% 0.09% 1.30% 2.36% 1.65% 1.60% 2.21%
Total expenses................... 1.76% 1.97% 2.10% 1.98% 1.81% 1.95% 2.71%
Expenses reimbursed or offset.... -- (0.09)% (0.60)% (0.48)% (0.31)% (0.45)% (1.24)%
Net expenses..................... 1.76% 1.88% 1.50% 1.50% 1.50% 1.50% 1.47%
Average commission rate(b)........... $0.0777 $ 0.0800 n/a n/a n/a n/a n/a
Portfolio turnover rate.............. 13%(c) 62% 115% 163% 143% 83% 75%(c)
Net assets, end of period (in
thousands)......................... $25,492 $ 25,610 $ 27,945 $ 32,976 $ 45,523 $ 58,955 $ 28,340
</TABLE>
- ------------
* Change in fiscal year end from June 30 to October 31.

** Effective November 18, 1996, the Fund changed to a new investment manager.

*** For the period October 21, 1991, effective date of registration and public
offering, through June 30, 1992.

+ 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 $0.11 and $0.08, respectively.

(b) Per portfolio share traded. Required for fiscal years beginning September
1, 1995, or later.

4
<PAGE>
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.

5
<PAGE>
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, substantial free cash flow, 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
<PAGE>
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 agreement to

7
<PAGE>
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 October 31, 1997, June 30, 1997 and
1996, the Fund's portfolio turnover was 13%, 62% 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. 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

8
<PAGE>
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
$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. 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 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.

9
<PAGE>
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 Plan(R) (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 Plan(R) 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 Plan(R) does not guarantee a profit.
If you sell at the bottom, no system will give you a gain.

You may call 1-800-873-8637 to open a treasury money market fund account or you
could inquire at your bank whether it will honor debits through the Automated
Clearing House ("ACH") or, if necessary, preauthorized checks. You may change
the date or amount of your investment or discontinue the Plan any time by letter
received by United 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

10
<PAGE>
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.

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

11
<PAGE>
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.

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
Plan(R). 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.

12
<PAGE>

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.

13
<PAGE>
(2) An exchange involves both the redemption of shares out of the Fund and
the purchase of shares in a "Separate Fund." Like any other
purchase, shares of the Separate Fund cannot be purchased by exchange
until all conditions of purchase are met, including investable
proceeds being immediately available. Like any other redemption, the
Fund reserves the right to hold exchange proceeds for up to seven
days. In general, the Fund expects to exercise this right on exchanges
of $50,000 or more. In such event, purchase of the Separate Fund
shares will also be delayed. Separate Fund shares will be priced at
their net asset value at the time of purchase. Redemption proceeds
will not be invested in either fund during this period. 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,

14
<PAGE>
(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.")

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 fund 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

15
<PAGE>
(i) include the statement "Signature(s) Guaranteed";

(ii) be signed in the name of the guarantor by an authorized person,
including the person's printed name and position with the guarantor;
and

(iii) include a recital that the guarantor is federally insured,
maintains the requisite net capital or is a national securities
exchange or association.

Shareholders living abroad may acknowledge their signatures before a U.S.
consular officer. Military personnel may acknowledge their signatures before
officers authorized to take acknowledgments (e.g., legal officers and
adjutants).

REDEMPTION PROCEEDS MAY BE SENT TO YOU:

BY MAIL

If your redemption check is mailed, it is usually mailed within 48 hours;
however, the Fund reserves the right to hold redemption proceeds for up to seven
days. If the shares to be redeemed were purchased by check, the redemption
proceeds will not be mailed until the purchase check has cleared, which may take
up to seven days. You may avoid this requirement by investing by bank wire
(federal funds). Redemption checks may be delayed if you have changed your
address in the last 30 days. Please notify the Fund promptly in writing, or by
telephone, of any change of address.

BY WIRE

You may authorize the Fund to transmit redemption proceeds by wire, provided you
send written wiring instructions with a signature guarantee at the time of
redemption. Proceeds from your redemption will usually be transmitted on the
first business day following the redemption. However, the 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.

16
<PAGE>
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 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 Plan(R) accounts, 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.

17
<PAGE>
In order to reduce expenses of the Fund, the Fund may redeem all shares in any
shareholder account, other than active ABC Investment Plan(R) accounts,
custodial accounts for minors and retirement plan accounts, if, for a period of
more than three months, the account has a net asset value of $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.

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 Brown Brothers Harriman
Co. Net asset value per share is determined and orders become

18
<PAGE>
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 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.

19
<PAGE>
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.

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 reinvested. 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.

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

20
<PAGE>
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

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.

21
<PAGE>
SUB-ADVISOR

Effective November 18, 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.

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 October 31, 1997, the advisory fee paid to the Advisor was
1.00% 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 October 17, 1997. 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

22
<PAGE>
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 predecessor 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 adviser.
The Sub-Advisor agreed to cease and desist such practice, paid fines, and
registered in each state.

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 $1.4
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.

23
<PAGE>
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 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.

TRANSFER AGENT

The Transfer Agency Agreement with the Trust provides for the Fund to pay USSI,
a wholly owned subsidiary of the Advisor, 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, 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. For the fiscal year ending June 30, 1997, and the period ended October
31, 1997, the Fund paid USSI a total of $49,994 and $18,074, respectively, for
transfer agency, lockbox and printing services.

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<PAGE>
CUSTODIAN, FUND ACCOUNTANT, ADMINISTRATOR

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 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.

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<PAGE>
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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<PAGE>
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, FUND ACCOUNTANT AND ADMINISTRATOR
Brown Brothers Harriman & Co.
40 Water Street
Boston, Massachusetts 02109

INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
700 North St. Mary's, Suite 900
San Antonio, Texas 78205

No Load

Be Sure to Retain This Prospectus.
It Contains Valuable Information.

<PAGE>
================================================================================
ADRIAN DAY GLOBAL OPPORTUNITY FUND PROSPECTUS
================================================================================

U.S. GLOBAL ACCOLADE FUNDS

ADRIAN DAY
GLOBAL OPPORTUNITY FUND
P.O. BOX 781234
SAN ANTONIO, TEXAS 78278-1234

1-800-US-FUNDS (1-800-873-8637)
(INFORMATION, SHAREHOLDER SERVICES AND REQUESTS)

INTERNET: HTTP://WWW.US-GLOBAL.COM

PROSPECTUS

FEBRUARY 2, 1998

This prospectus presents information that a prospective investor should know
about the Adrian Day Global Opportunity Fund ("Fund"), a diversified series of
U.S. Global Accolade Funds ("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 February 2, 1998, has been filed
with the Securities and Exchange Commission and is incorporated herein by
reference. The Statement is available free from U.S. Global Accolade Funds by
calling 1-800-US-FUNDS (1-800-873-8637) or writing to the address shown above.

SUMMARY OF FEES AND EXPENSES......... 2
FINANCIAL HIGHLIGHTS................. 3
INVESTMENT OBJECTIVES AND
PRACTICES............................ 4
OTHER INVESTMENT PRACTICES........... 5
RISK FACTORS......................... 8
HOW TO PURCHASE SHARES............... 10
HOW TO EXCHANGE SHARES............... 14
HOW TO REDEEM SHARES................. 15
HOW SHARES ARE VALUED................ 20
DIVIDENDS AND TAXES.................. 21
THE TRUST............................ 22
MANAGEMENT OF THE FUND............... 23
DISTRIBUTION EXPENSE PLAN............ 25
PERFORMANCE INFORMATION.............. 26

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)................. 1.00%
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET
ASSETS)(1)
Management fees................. 1.25%(2)
12b-1 fees...................... 0.25%
Other expenses, including
transfer agency
and accounting services
fees.......................... 4.13%(2)
Total fund operating expenses... 5.63%(2)

Except for active ABC Investment Plan(R) accounts, custodial accounts for minors
and retirement accounts, if an account balance falls, for any reason other than
market fluctuations, below $5,000 anytime 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.

2
<PAGE>
HYPOTHETICAL EXAMPLE OF EFFECT OF FUND EXPENSES1

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............................... $ 66
3 years.............................. $ 177
5 years.............................. $ 287
10 years............................. $ 556

The hypothetical example is based on the Fund's expenses. In conformance with
SEC regulations, the example is based upon a $1,000 investment; however, the
Fund's minimum investment is $5,000. In practice, a $1,000 account would be
assessed a monthly $1.00 small account charge, which is not reflected in the
example. See SMALL ACCOUNTS. Included in these estimates is the account closing
fee of $10 for each period. This fee is a flat charge that does not vary with
the size of your investment. Accordingly, for investments larger than $1,000,
your total expenses will be substantially lower in percentage terms than the
illustration implies. The example should not be considered a representation of
future expenses. Actual expenses may be more or less than those shown.

FINANCIAL HIGHLIGHTS

The following information for the fiscal year ended October 31, 1997, has been
audited by Price Waterhouse LLP, independent accountants, whose unqualified
report thereon is included in the U.S. GLOBAL ACCOLADE FUNDS 1997 ANNUAL REPORT
TO SHAREHOLDERS, which is incorporated by reference into the STATEMENT OF
ADDITIONAL INFORMATION. The financial highlights should be read in conjunction
with the financial statements and notes thereto included in the ANNUAL REPORT.
In addition to the data set forth below, further information about the
performance of the Fund is contained in the ANNUAL REPORT and STATEMENT OF
ADDITIONAL INFORMATION, which may be obtained without charge.
- ------------------------------
(1) Annual fund operating expenses and the hypothetical example are based on
the fund's historical expenses. The fund pays management and transfer
agency fees to U.S. Global Investors, Inc. ("Advisor") and its wholly owned
subsidiaries. The Fund paid accounting services fees to the Advisor until
October 31, 1997. Effective November 1, 1997, the Fund pays accounting
services fees to Brown Brothers Harriman & Co. The Advisor pays part of the
management fee to Global Strategic Management, Inc. ("Sub-Advisor") for
serving as sub- advisor. See the MANAGEMENT OF THE FUNDS section for
additional information.

(2) Management fees, other expenses and total Fund operating expenses have been
restated to reflect expenses the Fund would have incurred absent fee
waivers and expense reimbursements. The Advisor no longer guarantees that
Fund expenses will be limited to 2.50%.

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Per share data for an outstanding share throughout each period is as follows:

YEAR ENDED
OCTOBER 31, 1997*
-----------------
NET ASSET VALUE, BEGINNING OF
PERIOD............................. $ 10.00
-----------------
Investment Activities
Net investment income (loss).... 0.08
Net realized and unrealized gain
(loss)........................ (1.12)
-----------------
Total from investment activities..... (1.04)
Total distributions.................. --
NET ASSET VALUE, END OF PERIOD....... $ 8.96
=================
TOTAL RETURN (excluding account
fees).............................. (10.40)%(b)
Ratios to Average Net assets(a):
Net investment income........... 1.71%
Total expenses.................. 5.63%
Expenses reimbursed or offset... (3.13)%
Net expenses.................... 2.50%
Average commission rate paid......... $0.0119
Portfolio turnover................... 13%(b)
Net assets, end of period (in
thousands)......................... $ 3,426
- ------------
* For the period February 20, 1997, effective date of registration and public
offering, through October 31, 1997.

(a) Ratios are annualized for periods of less than one year. Expenses reimbursed
or offset reflect reductions to total expenses, as discussed in the notes to
the financial statements. Such amounts would decrease the net investment
income ratio had such reductions not occurred.

(b) Not annualized.

INVESTMENT OBJECTIVES AND PRACTICES

The Fund's investment objective is long-term growth of capital. The Fund seeks
to achieve this objective by investing throughout the world in a diversified
portfolio consisting primarily (80% of total assets during normal market
conditions) of marketable common stocks and in securities convertible into
common stocks of global (both international and domestic) blue chip corporations
that the Sub-Advisor believes the market has undervalued.

The Fund is committed to flexible value investing, searching for common stocks
that are selling at substantial discounts to the underlying value of their
assets, earning power, or private market value. Taking a global approach, the
Fund searches for value investments around the world. The Fund seeks first to
build and maintain core investments in the common stock of international blue
chip companies that are well capitalized and well managed and enjoy strong
balance sheets and brand-name recognition in their own markets. The Sub-

4
<PAGE>
Advisor believes such companies are poised to grow and prosper with the
continued development of consumer markets around the world. Supplementing these
core investments, the Fund has the flexibility to purchase a wide variety of
investments that appear to the Sub-Advisor to offer value at any particular
time. The Sub-Advisor searches for a variety of unrecognized contrarian
investments, including at any given time, securities issued by smaller, lesser
known companies, new companies, and companies operating in emerging markets. The
Fund may also invest in debt securities (although income is an incidental
consideration) including high yield or junk bonds, convertible securities, and
commodity-linked securities.

Under normal market conditions the Fund will invest primarily (up to 100% of its
assets) in foreign securities, although investments in United States securities
are permitted and will be emphasized when the Sub-Advisor believes that
opportunities in the United States markets appear more attractive. When deemed
appropriate by the Fund's Sub-Advisor for short-term investment or defensive
purposes, the Fund may hold a portion of its assets (up to 100%) in short-term
debt instruments including commercial paper, certificates of deposit, or
repurchase agreements.

The Fund is not intended to be a complete investment program, and there is no
assurance that its investment objective can be achieved. The Fund's investment
objective is not a fundamental policy and may be changed by the Board of
Trustees without shareholder approval. However, shareholders will be notified in
writing at least thirty days prior to any material change in the Fund's
investment objective. Unless otherwise indicated, all investment practices and
limitations of the Fund are nonfundamental policies that may be changed by the
Board of Trustees without shareholder approval.

OTHER INVESTMENT PRACTICES

As a fundamental policy that cannot be changed without a vote of shareholders:

(b) with respect to 75% of its total assets, the Fund will not: (i) invest
more than 5% of the value of its total assets in the securities of any one
issuer (except such limitation will not apply to obligations issued or
guaranteed by the United States Government, its agencies or
instrumentalities); nor (ii) acquire more than 10% of the outstanding
voting securities of any one issuer;

(c) the Fund may lend portfolio securities with an aggregate market value
of not more than one-third of the Fund's total net assets;

5
<PAGE>
(d) the Fund may borrow up to 33 1/3% of the amount of its total assets
(reduced by the amount of all liabilities and indebtedness other than such
borrowings) when deemed desirable or appropriate to effect redemptions,
provided, however, that the Fund will not purchase additional securities
while borrowings exceed 5% of the Funds total assets.

PORTFOLIO TURNOVER

It is the policy of the Fund to seek long-term growth of capital. The Fund will
effect portfolio transactions without regard to its holding period if, in the
judgment of the Advisor and Sub-Advisor, such transactions are in the best
interests of the Fund. Increased portfolio turnover may result in higher costs
for brokerage commissions, dealer mark-ups and other transaction costs and may
also result in taxable capital gains. The Fund's Portfolio turnover rate is
described in the FINANCIAL HIGHLIGHTS section. See PORTFOLIO TURNOVER in the
Statement of Additional Information.

PORTFOLIO TRANSACTIONS

In executing portfolio transactions and selecting brokers or dealers, the Fund
seeks the best overall terms available. In assessing the terms of a transaction,
consideration may be given to various factors, including the breadth of the
market in the security, the price of the security, the financial condition and
execution capability of the broker or dealer (for a specified transaction and on
a continuing basis), the reasonableness of the commission, if any, and the
brokerage and research services provided. Under the Advisory and Sub-Advisory
agreements, the Advisor and Sub-Advisor are permitted, in certain circumstances,
to pay a higher commission than might otherwise be obtained in order to acquire
brokerage and research services. The Advisor and Sub-Advisor must determine in
good faith, however, that such commission is reasonable in relation to the value
of the brokerage and research services provided -- viewed in terms of that
particular transaction or in terms of all the accounts over which investment
discretion is exercised. In such case, the Board of Trustees will review the
commissions paid by the Fund to determine if the commissions paid over
representative periods of time were reasonable in relation to the benefits
obtained. The advisory fee of the Advisor will 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.

REPURCHASE AGREEMENTS

The Fund may invest a portion of its assets in repurchase agreements with
domestic broker-dealers, banks and other financial institutions, provided the
Fund's custodian always has possession of securities serving as collateral or

6
<PAGE>
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 consider creditworthy.

STRATEGIC TRANSACTIONS

The Fund may, but is not required to, use various other investment strategies as
described below. Such strategies are generally accepted as modern portfolio
management techniques and are regularly used by many mutual funds and other
institutional investors. Techniques and instruments may change over time as new
instruments and strategies are developed or regulatory changes occur.

In the course of pursuing these investment strategies, the Fund may purchase and
sell exchange-listed and over-the-counter put and call options on securities,
equity and fixed-income indices and other financial instruments, financial
futures contracts and options thereon, and may enter into various currency
transactions such as currency forward contracts, currency futures contracts, or
options on currencies or currency futures (collectively, all the above are
called "Strategic Transactions"). The Fund will not sell put options except in
closing transactions.

The Fund may engage in Strategic Transactions for hedging, risk management, or
portfolio management purposes and not for speculation. Strategic Transactions
may be used to attempt to protect against possible changes in the market value
of securities held in, or to be purchased for, the Fund's portfolio. Such
changes may result from securities markets or currency exchange rate
fluctuations. Strategic Transactions may also be used to attempt to protect the
Fund's unrealized gains or prevent losses in the value of its portfolio
securities, or to establish a position using Strategic Transactions as a
temporary substitute for purchasing or selling particular securities. See
INVESTMENT OBJECTIVES AND POLICIES -- RISK CONSIDERATIONS OF THE FUND in the
Statement of Additional Information. The ability of the Fund to use these
Strategic Transactions successfully will depend upon the Sub-Advisor's ability
to predict pertinent market movements, which cannot be assured. The Fund will
comply with applicable regulatory requirements when it engages in Strategic
Transactions.

7
<PAGE>
LENDING OF PORTFOLIO SECURITIES

RISK FACTORS

The Fund is designed for long-term value investors who can accept international
investment risk. The Fund's share price will tend to reflect the movements of
the different securities markets in which it is invested and, unless hedged, the
foreign currencies in which investments are denominated.

Because the Fund's investments will be subject to the market fluctuations and
risks inherent in all investments, there can be no assurance that the Fund's
stated objective will be realized. The Fund's Advisor and Sub-Advisor will seek
to minimize these risks through professional management and investment
diversification. As with any long-term investment, the value of shares when sold
may be higher or lower than when purchased.

MARKET RISK

The Fund may purchase common stock of small and medium size companies which may
be unseasoned and which often fluctuate in price more than common stocks of
larger, more mature companies.

Debt securities, including investment grade and high yield bonds, are also
subject to price fluctuations based on changes in the level of interest rates,
which will generally result in these securities changing in price in the
opposite direction. That is, these securities will experience appreciation when
interest rates decline and will depreciate when interest rates rise.

8
<PAGE>
FOREIGN INVESTMENTS

While investment by the Fund on an international basis will permit shareholders
to participate in economic developments abroad, such investments involve certain
risks not ordinarily associated with investing in securities of United States
issuers. These risks may include political instability of some foreign
governments, fluctuation in foreign exchange rates, the imposition of exchange
control regulations, the possibility of expropriation decrees, more limited
information about foreign issuers, different accounting standards, higher
brokerage costs and foreign withholding taxes. Moreover, foreign securities and
their markets may not be as liquid as U.S. securities and their markets.

To the extent the Fund's investments are denominated in and pay interest or
dividends in foreign currencies, and to the extent that the Fund's currency
exposure is unhedged, the value of their investment by the Fund, as measured in
U.S. dollars, may be affected either favorably or unfavorably by movements in
exchange rates between the dollar and those foreign currencies. For more
detailed information see FOREIGN SECURITIES in the Statement of Additional
Information.

EMERGING MARKETS

The Fund may invest up to 15% of its assets in emerging markets, but not more
than 5% of its assets in any single country considered to be part of the
emerging market. Any company with a market capitalization of $500 million or
more is excluded from the 15% limitation regardless of whether or not it is
incorporated or primarily operates in an emerging market. The risks of investing
in foreign markets are generally intensified for investments in emerging markets
since their economies are generally smaller, less diverse, and less mature, and
their political systems less stable than those in developed countries. A more
complete description of the risks associated with investing in emerging markets
is contained in the Statement of Additional Information.

CURRENCY HEDGING

The Sub-Advisor may engage in Strategic Transactions in an attempt to hedge the
Fund's foreign securities investments back to the U.S. dollar when, in its
judgment, currency movements affecting particular investments are likely to harm
the performance of the Fund. Possible losses from changes in currency exchange
rates are primarily a risk of unhedged investing in foreign securities. While a
security may perform well in a foreign market, if the local currency declines
against the U.S. dollar, gains from the investment can disappear or become
losses. Typically, currency fluctuations are more extreme than stock market
fluctuations. Accordingly, the strength or weakness of the U.S. dollar against
foreign currencies may account for part of the Fund's performance even when the
Sub-Advisor attempts to minimize currency risk through hedging activities. While
currency hedging may reduce portfolio volatility, there are

9
<PAGE>
costs associated with such hedging, including the loss of potential profits,
losses on Strategic Transactions and increased transaction expenses.

LOWER-RATED AND UNRATED DEBT SECURITIES

The Fund may invest up to 15% of its assets in debt securities without regard to
credit rating and may, therefore, invest in instruments that could experience a
default in the payment of principal and interest. The Fund may also purchase
debt securities on which the issuer has defaulted.

Lower-rated or unrated high yield debt securities are commonly known as junk
bonds and are often considered to be of speculative grade. They involve greater
risk of default due to changes in economic conditions, changes in the issuer's
creditworthiness or other circumstances. The market for these securities is
generally more limited and their prices may experience greater volatility than
in the case of debt securities with higher ratings. See the Statement of
Additional Information for a more complete discussion of the risks of investing
in lower-rated and unrated debt securities.

COMMODITY LINKED SECURITIES

The Fund may invest up to 10% of its net assets in structured notes and/or
preferred stock, the value of which is linked to the price of gold or other
commodities. Such structured securities have different characteristics and risks
than other types of securities in which the Fund may invest. For example, not
only the coupon and/or dividend but also the redemption amount may be increased
or decreased depending on the change in the price of the referenced commodity.
See COMMODITY LINKED SECURITIES in the Statement of Additional Information for
further information.

ILLIQUID SECURITIES

Disposition of illiquid securities often takes more time than more liquid
securities, may result in higher selling expenses and may not be able to be made
at desirable prices or at the prices at which such securities have been valued
by the Fund. As a non-fundamental policy, the Fund will not invest more than 15%
of its net assets in illiquid securities.

HOW TO PURCHASE SHARES

The minimum initial investment for the Fund is $5,000 for regular accounts or
$1,000 for custodial accounts for minors. The minimum subsequent investment is
$50. The minimum initial investment for persons enrolled in the ABC(R)
Investment Plan (Automatically Building Capital) is $1,000, and the minimum
subsequent investment pursuant to such a plan is $100 or more per month per
account. No minimum purchase is required for retirement plan accounts, including
IRAs, administered by the Advisor or its agents and affiliates.

10
<PAGE>
Management may waive the minimum initial or subsequent investment requirements
for purchases made through qualifying broker-dealers of certain institutional
programs.

YOU MAY INVEST IN THE FOLLOWING WAYS:

BY MAIL

Send your application and check, made payable to the Adrian Day Global
Opportunity Fund, to P.O. Box 781234, San Antonio, Texas 78278-1234.

BY TELEPHONE

BY WIRE

You may make your initial or subsequent investments in U.S. Global
Accolade Funds by wiring funds. To do so, call U.S. Global Accolade Funds
at 1-800-US-FUNDS (1-800-873-8637) for a confirmation number and wiring
instructions.

BY ABC INVESTMENT PLANT

11
<PAGE>
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 Accolade Funds without requiring a $5,000 minimum initial investment.

ADDITIONAL INFORMATION ABOUT PURCHASES

To recover any such loss or charge, the Trust reserves the right, without
further notice, to redeem shares of any affiliated funds already owned by any
purchaser whose order is canceled, for whatever reason. Such a purchaser may be
prohibited from placing additional orders unless investments are accompanied by
full payment by wire or cashier's check.

12
<PAGE>
CHECKS DRAWN ON FOREIGN BANKS. To be received in good order, an investment must
be made in U.S. dollars payable through a bank in the U.S. As an accommodation,
the Fund's transfer agent may accept checks payable in a foreign currency or
drawn on a foreign bank and will attempt to convert such checks into U.S.
dollars and repatriate such amount to the Fund's account in the U.S. Your
investment in the Fund will not be considered to have been received in good
order until your foreign check has been converted into U.S. dollars and is
available to the Fund through a bank in the U.S. Your investment in the Fund may
be delayed until your foreign check has been converted into U.S. dollars and
cleared the normal collection process. Any amounts charged to the Fund for
collection procedures will be deducted from the amount invested.

If the Trust incurs a charge for locating a shareholder without a current
address, such charge will be passed through to the shareholder.

TAX IDENTIFICATION NUMBER

CONFIRMATION STATEMENTS

When you open your account, U.S. Global Accolade Funds will send you a
confirmation statement, which will be your evidence that you have opened an
account with U.S. Global Accolade Funds. The confirmation statement is
nonnegotiable, so if it is lost or destroyed, you will not be required to buy a
lost instrument bond or be subject to other expense or trouble, as you would
with a negotiable stock certificate. The fund does not issue stock certificates.

13
<PAGE>
HOW TO EXCHANGE SHARES

FUNDS IN THE U.S. GLOBAL INVESTORS FAMILY OF FUNDS

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
(1-800-873-8637).

BY TELEPHONE

You will be able to automatically direct U.S. Global Accolade Funds to exchange
your shares by calling toll free 1-800-US-FUNDS (1-800-873-8637). 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, because of this policy, will bear the risk of loss. The Fund and/or
its transfer agent will, however, use reasonable procedures to confirm that
telephone instructions are genuine (including requiring some form of personal
identification, providing written confirmation and tape recording
conversations). If either party does not employ reasonable procedures, it may be
liable for losses due to unauthorized or fraudulent transactions.

14
<PAGE>
BY MAIL

You may direct U.S. Global Accolade Funds in writing to exchange your shares
between identically registered accounts in the U.S. Global Investors family of
funds. The request must be signed exactly as the name appears in the
registration. (Before writing, read ADDITIONAL INFORMATION ABOUT EXCHANGES.)

ADDITIONAL INFORMATION ABOUT EXCHANGES

(1) 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.

(4) Exchanges out of the Adrian Day Global Opportunity Fund of shares held less
than 30 days are subject to a trader's fee. (See TRADER'S FEE PAID TO FUNDS.)

(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

15
<PAGE>
BY MAIL

A written request for redemption must be in "proper order," which requires the
delivery of the following to the transfer agent:

(1) 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) 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.)

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
treasury money market fund account ($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 for more information concerning telephone redemptions and a
treasury money market fund prospectus.

SPECIAL REDEMPTION ARRANGEMENTS

Institutional investors, brokers, advisers, banks or similar institutions
(whether acting for themselves or on behalf of a client) may make special
arrangements to have redemption proceeds transferred by wire to pre-established
accounts upon telephone instructions. For additional information, call the Trust
at 1-800-873-8637. Telephone redemptions are available for Chairman's Circle
accounts.

SIGNATURE GUARANTEE

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<PAGE>
securities association. The guarantee must: (i) include the statement
"Signature(s) Guaranteed"; (ii) be signed in the name of the guarantor by an
authorized person, including the person's printed name and position with the
guarantor; and (iii) include a recital that the guarantor is federally insured,
maintains the requisite net capital or is a national securities exchange or
association. Shareholders living abroad may acknowledge their signatures before
a U.S. consular officer. Military personnel may acknowledge their signatures
before officers authorized to take acknowledgments (e.g., legal officers and
adjutants).

REDEMPTION PROCEEDS MAY BE SENT TO YOU:

BY MAIL

BY WIRE

You may authorize the Fund to transmit redemption proceeds by wire, provided you
send written wiring instructions with a signature guarantee at the time of
redemption. Proceeds from your redemption will usually be transmitted on the
first business day following the redemption. However, the Trust reserves the
right to hold redemptions for up to seven days. If the shares to be redeemed
were purchased by check, the redemption proceeds will not be mailed or wired
until the purchase check has cleared, which may take up to seven days. A $10.00
charge will be deducted from redemption proceeds to cover the wire.
International wire charges 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.

17
<PAGE>
The Trust has the authority to redeem existing accounts and to refuse a
potential account the privilege of having an account in the Trust if the Trust
reasonably determines that the failure to redeem or prohibit would have a
material adverse consequence for the Trust and its shareholders. No account
closing fee or redemption fee will be charged to investors whose accounts are
closed under this provision.

TRADER'S FEE PAID TO FUND

A trader's fee of 1.00% of the value of shares redeemed or exchanged will be
assessed to shareholders who redeem or exchange shares of the Fund held less
than thirty (30) calendar days. The trader's fee will be paid to the Fund to
benefit remaining shareholders by protecting them against expenses due to
excessive trading. Excessive short-term trading has an adverse impact on
effective portfolio management as well as on Fund expenses. The Fund has
reserved the right to refuse investments from shareholders who engage in short-
term trading that may be disruptive to the Fund.

ACCOUNT CLOSING FEE

SMALL ACCOUNTS

As a special service for small investors, active ABC Investment Plan(R)
accounts, custodial accounts for minors and retirement plan accounts
administered by the Advisor or its agents and affiliates will not be subject to
the small account charge.

To reduce Fund expenses, the Trust may redeem all shares in any shareholder
account, other than active ABC Investment Plan(R) accounts, custodial accounts

18
<PAGE>
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 give those shareholders an opportunity to
increase their accounts by investing enough assets to bring their accounts up to
the minimum amount within ninety (90) days of the notice. No account closing fee
will be charged to investors whose accounts are closed under this redemption
provision.

CONFIRMATION STATEMENTS

OTHER SERVICES

The Trust offers a number of plans and services to meet the special needs of
certain investors. Plans include:

(1) payroll deduction plans, including military allotments;

(2) custodial accounts for minors;

(3) flexible, systematic withdrawal plans; 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 for which
Security Trust & Financial Company ("STFC"), a wholly owned subsidiary of the
Advisor, acts as custodian. If the administrative charge is not paid separately
before the last business day of a calendar year or before 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-US-FUNDS (1-800-873-8637).

SHAREHOLDER SERVICES

19
<PAGE>
24-HOUR ACCOUNT INFORMATION

HOW SHARES ARE VALUED

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 (market other
than those in the United States or Canada), either on an exchange or
over-the-counter, is valued at the last reported sales price before the time
when assets are valued. A portfolio security listed or traded in the domestic
market (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 of the last reported bid and ask prices.

20
<PAGE>
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.

DIVIDENDS AND TAXES

The Fund intends to qualify as a regulated investment company under SubChapter M
of the Internal Revenue Code of 1986, as amended (the "Code"). By complying
with the applicable provisions of the Code, the Fund will not be subject to
Federal income tax on its net investment income and capital gain net income
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
income dividends in Fund shares, or (3) all capital gain distributions and
income dividends 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 recorded. Undeliverable dividend checks returned
to the Fund and dividend checks not cashed after 180 days will automatically be
reinvested at the price of the Fund on the day returned, and the distribution
option will be changed to "reinvest."

At the time of purchase, the share price of the Fund may reflect undistributed
income, capital gains or unrealized appreciation of securities. Any dividend or
capital gain distribution paid to a shareholder shortly after a purchase of
shares will reduce the per share net asset value by the amount of the
distribution. Although in effect a return of capital to the shareholder, these
distributions are fully taxable.

The Fund generally pays dividends and distributes capital gains, if any,
annually.

21
<PAGE>
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.

THE TRUST

U.S. Global Accolade Funds (the "Trust") is an open-end management investment
company consisting of several separate, diversified portfolios.

Under the Trust's First Amended and Restated Master Trust Agreement, no annual
or regular meeting of shareholders is required, although the Trustees may
authorize special meetings from time to time. The Trustees serve six-year terms.
No shareholder meeting will ordinarily be held 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.

22
<PAGE>
On any matter submitted to shareholders, shares of each portfolio entitle their
holder to one vote per share, regardless of the relative net asset value of each
portfolio's shares. On matters affecting an individual portfolio, a separate
vote of shareholders 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

SUB-ADVISOR

Effective December 18, 1996, the Advisor and the Trust contracted with Global
Strategic Management, Inc. (the "Sub-Advisor"), 900 Bestgate Road, Suite 405,
Annapolis, Maryland 21401, to serve as Sub-Advisor for the Fund. Mr. Adrian Day,
president of the Sub-Advisor and its controlling shareholder, is the Fund's
portfolio manager.

Adrian Day has been managing money since the spring of 1991. He is the editor of
the widely acclaimed investment newsletter, ADRIAN DAY'S INVESTMENT ANALYST, and
has been featured in or has written for many prestigious publications and has
been a featured speaker at investment conferences around the world.

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. While the Sub-Advisor does not have
experience managing a mutual fund portfolio, it has experience managing, and
continues to manage, separate accounts for institutions and wealthy individuals.
Investment decisions for the Fund are made independently of investment decisions
made for other clients.

Advisor and Sub-Advisor investment personnel may invest in securities for their
own accounts according to a Code of Ethics that establishes procedures for
personal investing and restricts certain transactions.

In consideration for such services, the Advisor pays the Sub-Advisor a sub-
advisory fee. The Advisor and the Sub-Advisor share the management fee equally,
except that the Sub-Advisor's fee will be subject to downward adjustments as
described in the Statement of Additional Information. The Fund is not
responsible for paying any portion of the Sub-Advisor's fees.

23
<PAGE>
INVESTMENT ADVISOR

The Advisor provides management and investment advisory services to the Trust
and to the Funds in the Trust. It furnishes an investment program for the Fund;
determines, subject to the overall supervision and review of the Board of
Trustees, what investments should be purchased, sold and held; and makes changes
on behalf of the Trust in the investments of the Fund.

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 1.25% of the Fund's average net assets.

The Advisor is reimbursed certain costs for in-house legal services pertaining
to the Fund.

24
<PAGE>
From February 20, 1997 commencement of operations, through October 31, 1997, the
fund paid the Advisor $0.00 for providing investment advice, in addition to
transfer agency, lockbox, printing, and bookkeeping/accounting services. The fee
reflects waivers due to the Advisor's guarantee that the total fund expense for
the Fund (as a percentage of net assets) would not exceed 2.50% annually through
October 31, 1997. The Advisor no longer guarantees that Fund expenses will be
limited to 2.50%.

TRANSFER AGENT

The transfer agency agreement with the Trust provides for the Fund to pay USSI,
a wholly owned subsidiary of the Advisor, an annual fee of $23.00 per account
(1/12 of $23.00 monthly). In connection with obtaining/providing administrative
services to the beneficial owners of Fund shares through broker-dealers, banks,
trust companies and similar institutions that provide such services and maintain
an omnibus account with the transfer agent, the Fund will pay to the transfer
agent a monthly fee equal to one-twelfth ( 1/12) of 12.5 basis points (.00125)
of the value of the shares of the fund held in accounts at the institutions,
which payment will not exceed $1.92 multiplied by the average daily number of
accounts holding Fund shares at the institution. These fees cover the usual
transfer agency functions. In addition, the Fund bears certain other transfer
agent expenses such as the costs of records retention, postage, telephone and
line charges (including the toll-free 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 paid to the transfer agent.

CUSTODIAN, FUND ACCOUNTANT, ADMINISTRATOR

DISTRIBUTION EXPENSE PLAN

25
<PAGE>
Under the terms of the Plan the Fund may pay a servicing fee of up to 0.25% of
the Fund's average net assets ( 1/12 of 0.25% monthly) to persons or
institutions for performing certain servicing functions for Fund shareholders.
These fees will be paid periodically and will generally be based on a percentage
of the value of Fund shares held by the institution's clients. The Plan allows
the Fund to pay for or reimburse expenditures in connection with sales and
promotional services related to the distribution of Fund shares, including
personal services provided to prospective and existing Fund shareholders. See
DISTRIBUTION PLAN in the Statement of Additional Information.

PERFORMANCE INFORMATION

From time to time, in advertisements or in reports to shareholders or
prospective shareholders, the Fund may compare its performance, either in terms
of its yield, total return, or its yield AND total return, to that of other
mutual funds with similar investment objectives and to stock or other indices.
Performance comparisons will not be considered as representative of the future
performance of the Fund.

26
<PAGE>
U.S. GLOBAL ACCOLADE FUNDS

SHARES OF THE FUND ARE SOLD
AT NET ASSET VALUE WITHOUT SALES COMMISSIONS OR
REDEMPTION FEES

Adrian Day Global Opportunity Fund

INVESTMENT ADVISOR
U.S. Global Investors, Inc.
7900 Callaghan Road
San Antonio, Texas 78229

INVESTMENT SUB-ADVISOR
Global Strategic Management, Inc.
900 Bestgate Road, Suite 405
Annapolis, Maryland 21401

TRANSFER AGENT
United Shareholder Services, Inc.
P.O. Box 781234
San Antonio, Texas 78278-1234

CUSTODIAN, FUND ACCOUNTANT, ADMINISTRATOR
Brown Brothers Harriman & Co.
40 Water Street
Boston, Massachusetts 02109

INDEPENDENT ACCOUNTANT
Price Waterhouse LLP
700 North St. Mary's, Suite 900
San Antonio, Texas 78205

No Load

Be Sure to Retain This Prospectus.
It Contains Valuable Information.

<PAGE>
================================================================================
REGENT EASTERN EUROPEAN FUND PROSPECTUS
================================================================================

U.S. GLOBAL ACCOLADE FUNDS
REGENT EASTERN EUROPEAN FUND

P.O. BOX 781234
SAN ANTONIO, TEXAS 78278-1234
1-800-US-FUNDS (1-800-873-8637)
(INFORMATION, SHAREHOLDER SERVICES AND REQUESTS)
INTERNET: HTTP://WWW.US-GLOBAL.COM
PROSPECTUS
FEBRUARY 2, 1998

This prospectus presents information that a prospective investor should know
about the Regent Eastern European Fund (the "Fund"), a diversified series of
U.S. Global Accolade Funds (the "Trust"), formerly Accolade Funds. The Trust
is an open-end management investment company. The Fund's investment objective is
long-term growth of capital. The Fund will invest primarily in companies located
in the emerging markets of Eastern Europe. THE FUND INVOLVES SPECULATIVE
INVESTMENTS AND SPECIAL RISKS, SUCH AS POLITICAL, ECONOMIC AND LEGAL
UNCERTAINTIES, CURRENCY FLUCTUATIONS, PORTFOLIO SETTLEMENT AND CUSTODY RISKS AND
RISKS OF LOSS ARISING OUT OF INADEQUATE SHARE REGISTRATION SYSTEMS. Investors
are responsible for determining whether or not an investment in the Fund is
appropriate for their needs. Read and retain this prospectus for future
reference.

A Statement of Additional Information dated February 2, 1998, has been filed
with the Securities and Exchange Commission and is incorporated herein by
reference. The Statement is available free from U.S. Global Accolade Funds by
calling 1-800-US-FUNDS (1-800-873-8637) or writing to the address shown above.

SUMMARY OF FEES AND EXPENSES......... 2
FINANCIAL HIGHLIGHTS................. 3
INVESTMENT OBJECTIVES AND
PRACTICES............................ 4
SPECIAL RISK CONSIDERATIONS.......... 6
SPECIAL RISKS OF REPRESENTATIVE
EMERGING
MARKETS IN EASTERN EUROPEAN
COUNTRIES.......................... 8
ADDITIONAL INVESTMENT PRACTICES...... 12
FUTURES CONTRACTS AND OPTIONS........ 15
HOW TO PURCHASE SHARES............... 16
HOW TO EXCHANGE SHARES............... 19
HOW TO REDEEM SHARES................. 21
HOW SHARES ARE VALUED................ 26
DIVIDENDS AND TAXES.................. 27
THE TRUST............................ 30
MANAGEMENT OF THE FUND............... 30
DISTRIBUTION EXPENSE PLAN............ 33
PERFORMANCE INFORMATION.............. 34

SUMMARY OF FEES AND EXPENSES

The following summary is provided to help you understand 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 180 days)................ 2.00%
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET
ASSETS)(1)
Management fees................. 1.25%
12b-1 fees...................... 0.25%
Other expenses, including
transfer agency
and accounting services
fees.......................... 3.48%
Total fund operating expenses... 4.98%(2)

Except for active ABC Investment Plan(R) accounts, custodial accounts for minors
and retirement accounts, if an account balance falls, for any reason

2
<PAGE>
other than market fluctuations, below $5,000 anytime during a month, that
account will be subject to a monthly small account charge of $1 that will be
payable quarterly. See SMALL ACCOUNTS.

A shareholder who requests delivery of redemption proceeds by wire transfer will
be subject to a $10 charge. International wires will be higher.

HYPOTHETICAL EXAMPLE OF EFFECT OF FUND EXPENSES(1)

You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return and redemption at the end of each period.

1 year............................... $ 60
3 years.............................. $ 159
5 years.............................. $ 259
10 years............................. $ 508

The hypothetical example is based on the Fund's expenses, which are expected to
decline as net assets increase. In conformance with SEC regulations, the example
is based on a $1,000 investment; however, the Fund's minimum investment is
$5,000. In practice, a $1,000 account would be assessed a monthly $1.00 small
account charge, which is not reflected in the example. See SMALL ACCOUNTS.
Included in these estimates is the account closing fee of $10 for each period.
This fee is a flat charge that does not vary with the size of your investment.
Accordingly, for investments larger than $1,000, your total expenses will be
substantially lower in percentage terms than the illustration implies. The
example should not be considered a representation of future expenses. Actual
expenses may be more or less than those shown.

FINANCIAL HIGHLIGHTS

The following information for the fiscal year ended October 31, 1997, has been
audited by Price Waterhouse LLP, independent accountants, whose unqualified
- -----------------------------
(1) Annual fund operating expenses and the hypothetical example are based on
the Fund's historical expenses. The fund pays management fees and transfer
agency fees to U.S. Global Investors, Inc. ("Advisor") and its wholly owned
subsidiaries. The Fund paid accounting services fees to the Advisor until
October 31, 1997. Effective November 1, 1997, the Fund pays accounting
services fees to Brown Brothers Harriman & Co. The Advisor pays part of the
management fee to Regent Fund Management Limited ("Sub-Advisor") for
serving as sub-advisor. See the MANAGEMENT OF THE FUNDS section for
additional information.

3
<PAGE>
report thereon is included in the U.S. GLOBAL ACCOLADE FUNDS 1997 ANNUAL REPORT
TO SHAREHOLDERS, which is incorporated by reference into the STATEMENT OF
ADDITIONAL INFORMATION. The financial highlights should be read in conjunction
with the financial statements and notes thereto included in the ANNUAL REPORT.
In addition to the data set forth below, further information about the
performance of the Fund is contained in the ANNUAL REPORT and STATEMENT OF
ADDITIONAL INFORMATION, which may be obtained without charge.

Per share data for an outstanding share through each period is as follows:

YEAR ENDED
OCT. 31, 1997*
--------------
NET ASSET VALUE, BEGINNING OF
PERIOD............................. $ 10.00
--------------
Investment activities
Net investment income (loss).... (0.01)
Net realized and unrealized gain
(loss)........................ 1.20
--------------
Total from investment activities..... 1.19
Total distributions.................. --
NET ASSET VALUE, END OF PERIOD....... $ 11.19
==============
TOTAL RETURN (EXCLUDING ACCOUNT
FEES).............................. 11.90%(b)
Ratios to average net assets(a):
Net investment income........... (0.49)%
Total expenses.................. 4.98%
Expenses reimbursed or offset... (1.73)%
Net expenses.................... 3.25%
Average commission rate.............. $ 0.0804
Portfolio turnover rate.............. 11%(b)
Net assets, end of period (in
thousands)......................... $ 8,778
- ------------
* For the period March 31, 1997, effective date of registration and public
offering, through October 31, 1997.

(a) Ratios are annualized for periods of less than one year. Expenses reimbursed
or offset reflect reductions to total expenses, as discussed in the notes to
the financial statements. Such amounts would decrease the net investment
income ratio had such reductions not occurred.

(b) Not Annualized

INVESTMENT OBJECTIVES AND PRACTICES

The Fund is designed for investors who believe that a rigorous program of
investing in securities of companies located in the emerging markets of Eastern
Europe will provide significant opportunities. Please read the prospectus
carefully before you invest. You are responsible for determining the suitability
of the Fund to meet your long-term investment goals.

4
<PAGE>
INVESTMENT OBJECTIVE AND PRINCIPAL INVESTMENT PRACTICES

The Fund's investment objective is long-term growth of capital. The Fund seeks
to achieve this objective by investing primarily in companies located in the
emerging markets of Eastern Europe. Investment in the Fund involves a high
degree of risk, and there can be no assurance that the Fund will achieve its
objective. The Fund's objective is not a fundamental policy and may be changed
by the Board of Trustees without shareholder approval. However, shareholders
will be notified in writing at least 30 days before any material change in the
Fund's objective. The Fund is not intended to be a complete investment program,
and a prospective investor should take into account personal objectives and
other investments when considering the purchase of Fund shares.

The Fund's investment strategies and portfolio investments will differ from
those of most other mutual funds. The Sub-Advisor seeks rigorously to identify
favorable securities, economic and market sectors, and investment opportunities
that other investors and investment advisers may not have identified. When the
Sub-Advisor identities such an investment opportunity, it may devote more of the
Fund's assets to pursuing that opportunity and may select investments for the
Fund that would be inappropriate for less opportunistic mutual funds.

INVESTMENTS

The Fund's investments will normally include common stocks, preferred stocks,
securities convertible into common or preferred stocks, and warrants to purchase
common stocks or preferred stocks.

"Eastern European countries" are countries in and surrounding Europe that in
the opinion of the Sub-Advisor are generally considered to be in the early
stages of industrial, economic, or capital market development. Eastern European
countries may include countries that were until recently governed by communist
governments or countries that, for any other reason, have failed to achieve
levels of industrial production, market activity, or other measures of economic
development typical of the developed European countries. Eastern European
countries might currently include, by way of example, Russia, Poland, the Czech
Republic, the Slovak Republic, and Hungary.

Under normal circumstances, the Fund will invest at least 65% of its assets in
equity securities of companies located in Eastern European countries. The Fund
may invest the remainder of its assets in securities (including debt securities
if the Sub-Advisor believes they offer potential for capital appreciation) of
companies and governments located anywhere in the world if the Sub-Advisor
believes that such investments are consistent with the Fund's investment
objective. The Fund will consider an issuer of securities to be located in an
Eastern European country if (1) it is organized under the laws of any Eastern
European country and has a principal office in an Eastern European country,

5
<PAGE>
(2) it derives 50% or more of its total revenues from business in Eastern
European countries, or (3) its equity securities are traded principally on a
securities exchange in an Eastern European country. For this purpose, investment
companies that invest principally in securities of companies located in one or
more Eastern European countries will also be considered to be located in an
Eastern European country, as will American Depository Receipts (ADRs) and Global
Depository Receipts (GDRs) with respect to the securities of companies located
in Eastern European countries.

The Fund will not invest more than 15% of its net assets in illiquid securities.
Securities may be illiquid because they are unlisted, subject to contractual or
legal restrictions on resale or subject to other factors which, in the Sub-
Advisor's opinion, raise a question concerning the Fund's ability to liquidate
the securities in a timely and orderly fashion without substantial loss.

The Fund may invest up to 10% of its total assets in the securities of
investment companies with investment policies similar to those of the Fund,
provided its investments in these securities do not exceed limitations imposed
by the Investment Company Act of 1940 in effect at the time of purchase. The
Fund will indirectly bear its proportionate share of any management fees paid by
investment companies in which it invests in addition to the advisory fee paid by
the Fund.

TEMPORARY DEFENSIVE INVESTMENT

For temporary defensive purposes during periods that, in the Sub-Advisor's
opinion, present the Fund with adverse changes in the economics, politics or
securities markets of Eastern European countries, the Fund may seek to protect
the capital value of the Fund's assets by temporarily investing up to 100% of
its assets in:

(1) money market instruments, deposits or such other investment grade short-
term investments in local Eastern European country currencies as are considered
appropriate at the time;

(2) U.S. Government bills, short-term indebtedness, money market instruments,
or other investment grade cash equivalents, each denominated in U.S. dollars or
any other freely convertible currency; or

(3) repurchase agreements as described herein.

SPECIAL RISK CONSIDERATIONS

Investments by the Fund in securities of companies in Eastern European countries
may provide the potential for above-average capital appreciation, but are
subject to special risks. The Fund is designed for long-term investors who can
accept the special risks of investing in Eastern European countries not
typically associated with investing in other more established economies or

6
<PAGE>
securities markets. Investors should carefully consider their ability to assume
these risks before making an investment in the Fund. An investment in shares of
the Fund should not be considered a complete investment program. It should be
considered speculative and thus may not be appropriate for all investors.

RISKS IN EASTERN EUROPEAN COUNTRIES

Political and economic structures in many Eastern European countries are in
their infancy and developing rapidly, and such countries may lack the social,
political and economic stability characteristic of many more developed
countries. Eastern European countries have in the past failed to recognize
private property rights and have at times nationalized or expropriated the
assets of private companies. As a result, the risks normally associated with
investing in any foreign country may be heightened in Eastern European
countries. In addition, unanticipated political or social developments may
affect the value of the Fund's investment in Eastern European countries. The
small size and inexperience of the securities markets in Eastern European
countries and the limited volume of trading in securities in those markets may
make the Fund's investments in such countries illiquid and more volatile than
investments in more developed countries. There may be little financial or
accounting information available with respect to companies located in certain
Eastern European countries, and it may be difficult as a result to assess the
value or prospects of an investment in such companies.

Investments in foreign securities, whether in emerging or more developed
countries, are subject to risks and uncertainties not typically associated with
investments in domestic securities. These risks and uncertainties include
currency exchange rates and exchange control regulations, less publicly
available information, different accounting and reporting standards, less liquid
markets, more volatile markets, higher brokerage commissions and other fees,
possibility of nationalization or expropriation, confiscatory taxation,
political instability, and less protection provided by the judicial system.

Eastern European securities markets are substantially smaller, less liquid and
significantly more volatile than the securities markets in the United States or
Western Europe. Because the markets are smaller and less liquid, obtaining
prices on portfolio securities from independent sources may be more difficult
than in other more developed markets. These factors may make it more difficult
for the Fund to calculate an accurate net asset value on a daily basis and to
respond to significant shareholder redemptions.

Many of the countries in which the Fund will invest experienced extremely high
rates of inflation, particularly between 1990 and 1996 when central planning was
first being replaced by the capitalist free market system. As a consequence, the
exchange rates of such countries experienced very significant depreciation
relative to the U.S. dollar. While the inflation experience of such countries
has generally improved significantly in recent times, there can be no

7
<PAGE>
assurance that such improvement will be sustained. Consequently the possibility
of significant loss arising from foreign currency depreciation must be
considered as a serious risk.

Investments in European countries may include the securities of both large and
small companies. Small companies may offer greater opportunities for capital
appreciation than larger companies, but investments in small companies may
involve certain special risks. Small companies may have limited product lines,
markets, or financial resources and may be dependent on a limited management
group. Securities issued by small companies may trade less frequently and in
smaller volume than more widely held securities issued by large companies. The
values of securities issued by small companies may fluctuate more sharply than
those issued by larger companies, and the Fund may experience some difficulty in
establishing or closing out positions in small company securities at prevailing
prices.

Although the Fund expects to invest primarily in securities of established
companies, it may, subject to local investment limitations, invest in companies
that have business associations in Eastern European countries, including
investments in new and early stage companies. This may include direct equity
investments. Such investments may involve a high degree of business and
financial risk. Because of the absence of any trading markets for these
investments, the Fund may find itself unable to liquidate such securities in a
timely fashion, especially in the event of negative news regarding the specific
securities or Eastern European markets in general. Such securities could decline
significantly in value prior to the Fund being able to liquidate such
securities.

For more information concerning the special risks of investing in the Fund, see
the Statement of Additional Information.

SPECIAL RISKS OF REPRESENTATIVE EMERGING MARKETS
IN EASTERN EUROPEAN COUNTRIES

The Fund may invest in any Eastern European country. In addition to the special
risks common to most Eastern European countries described above, each individual
Eastern European country also necessarily involves special risks which may be
unique to that country. Following is a brief description of special risks which
may be incurred when the Fund invests in Russia, Poland, the Czech Republic, the
Slovak Republic and Hungary.

RUSSIA

Russia began reforms under "perestroika" as a member of the Soviet Union in
1985. After the collapse of the Soviet Union, Russia accelerated market-oriented
reforms. Privatization began in 1992 and economic conditions have begun to
stabilize.

8
<PAGE>
Privatization of Russian industry through voucher systems has been substantial.
The government has also instituted a controversial loan-for-share program to
raise much needed cash. Banks now control many major Russian enterprises as a
result of this program. There is also speculation that organized crime exerts
significant influence on Russian industry. Concentrated ownership and control of
Russian companies limits the ability of outsiders to influence corporate
governance. Legal reforms to protect stockholders' rights have been implemented,
but stock markets remain underdeveloped and illiquid.

Privatization of agricultural land has been unsuccessful due to disputes between
executive and legislative branches regarding property rights. To date, the
Russian government has not authorized any form of property restitution.

Russian industry is in need of restructuring to close out-dated facilities and
increase investment in technology and management. Financial institutions do not
allocate capital in an efficient manner. Bankruptcy laws are restrictive and
offer little protection to creditors. Foreign creditors must file insolvency
claims through Russian subsidiaries. Bankruptcies remain rare.

The Russian system of taxation deters investment and hinders financial stability
by concentrating on the taxation of industry with relatively little emphasis on
individual taxation. Additionally, the energy sector bears a relatively small
tax burden. Proposals for a new tax system exist, but the impact of a new tax
scheme remains uncertain.

Russia does not have a centralized stock exchange, although exchange activity
has developed regionally and shares are now traded on exchanges located
throughout the country. The majority of stocks in Russia are traded on the over-
the-counter market. It is through the over-the-counter market that foreign
investors typically participate in the Russian equity market.

The largest problem in the equity market continues to be shareholders' property
rights. In Russia the only proof of ownership of shares is an entry in the
shareholders' register. Despite a presidential decree requiring companies with
over 1,000 shareholders to have an independent body to act as its registrar, in
practice a company's register is still susceptible to manipulation by
management. To solve this and related problems, the Federal Securities
Commission was created. Also, Russian law requires banks and market
professionals to acquire a licence before handling securities.

POLAND

Poland began market-oriented reforms in 1981. In late 1989, more comprehensive
reforms were enacted. Most small enterprise has been privatized. Privatization
of larger entities has been a slower process, delayed by disputes regarding the
compensation of fund managers and the role of investment funds charged with
privatizing industry.

9
<PAGE>
Barriers to trade were significantly reduced in 1990, but many have since been
reinstituted. The banking system has been reformed to increase capitalization,
but continues to under-perform. Bank privatization has occurred at a slower pace
than expected.

A 1991 law permitted the formation of mutual funds in Poland. The Warsaw Stock
Exchange also opened in 1991 and has grown dramatically, becoming one of the
most liquid markets in Eastern Europe. However, it is a young market with a
capitalization much lower than the capitalization of markets in Western Europe
and America.

Legal reforms have been instituted and laws regarding investments are published
on a routine basis. However, important court decisions are not always accessible
to practitioners. While there are currently no obstacles to foreign ownership of
securities and profits may be repatriated, these laws may be changed anytime
without notice.

The Warsaw Stock Exchange reopened in 1991. The Act establishing the Warsaw
Stock Exchange (1991) provided the basic legal framework for securities
activities. The Law on Public Trading in Securities and Trust Funds (1991)
regulates the public offerings of securities, the establishment of open-ended
investment funds and the operations of securities brokers. Polish equities are
held on a paperless book-entry system, based on a computerized central
depository. For listed securities it is a requirement that trades take place
through the market for the change of ownership to take place.

THE CZECH REPUBLIC

The Czech Republic was formerly governed by a communist regime. In 1989, a
market-oriented reform process began. The market-oriented economy in the Czech
Republic is young and still evolving. These reforms leave many uncertainties
regarding market and legal issues.

The Czech Republic has instituted substantial privatization since 1992, when the
first wave of privatization began. Information suggests that dominant or
majority shareholders now control many of the larger privatized companies, and
that further restructuring is likely. Members of management and owners of these
companies are often less experienced than managers and owners of companies in
Western European and American markets. Additionally, securities markets on which
the securities of these companies are traded are in their infancy.

The legal system of the Czech Republic is still evolving. Bankruptcy laws have
been liberalized, giving creditors more power to force bankruptcies. The number
of bankruptcies, while still relatively low, is increasing each year. Laws
regulating direct and indirect foreign investment, as well as repatriation of
profits and income, exist and are subject to change at any time. Tax laws

10
<PAGE>
include provisions for both value-added taxes and income taxes. Courts of law
are expected to, but may not, enforce the legal rights of private parties.

The Prague Stock Exchange opened in April 1993 with 12 monetary institutes and
five brokerage firms as its founding shareholders. The trading and information
systems are based on a central automated trading system. The market price of all
securities is set in this automated system once a day. Direct trades are
concluded between members, recorded in the automated trading system and settled
through the Exchange Register of Securities. Only members of the Prague Stock
Exchange can be participants in automated trades in blocks of securities.

Another method of trading is the over-the-counter market which operates by
directly accessing the Securities Centre. The Securities Act allows for off-
exchange trading, which primarily benefits the millions of local shareholders
who hold shares as a result of the original privatization of Czech industry.

Concluded exchange deals are cleared by Securities Register Ltd., an offshoot of
the Prague Stock Exchange. All exchange deals between members are guaranteed
clearing; a guarantee fund covers the risks and liabilities inherent in exchange
trading.

THE SLOVAK REPUBLIC

The Slovak Republic was formerly governed by a communist regime. In 1989, a
market-oriented reform process began. The market-oriented economy in the Slovak
Republic is young and still evolving. These reforms leave many uncertainties
regarding economic and legal issues.

The Slovak Republic's path toward privatization differs from the path of the
Czech Republic. The Slovak government has issued bonds which can be held until
maturity, sold immediately, or redeemed for shares of stock in companies being
privatized. This method of privatization creates uncertainty about future
restructuring which may occur as bonds are sold and/or converted.

Owners and managers of Slovak enterprises are often less experienced with market
economies than owners and managers of companies in Western European and American
markets. The securities markets on which the securities of these companies are
traded are also in their infancy.

Laws regarding bankruptcy, taxation and foreign ownership of Slovak enterprises
are evolving and may be changed dramatically at any time. Import and export
regulations are minimal.

The Bratislava Stock Exchange and the RM-system (an over-the-counter exchange)
began operations during the first half of 1993. The RM-system trades in all
companies distributed under the voucher privatization scheme as well as newly
established companies. Foreigners are free to participate in the

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<PAGE>
market for shares; profit repatriation is subject to payment of income taxes on
capital gains.

From the beginning the Slovak Republic's markets were fragmented and have lacked
liquidity. Over 80 percent of all trades were executed outside of the Bratislava
Stock Exchange and RM-system. With the adoption of the new capital markets
legislation, more than 70 percent of all trades have been executed on the
Bratislava Stock Exchange or the RM-system. Parliament has adopted amendments to
the Securities Law which provide for the establishment of an independent
regulatory body to protect investors' rights; it centralizes trading on the
official market with the requirement that all trades be registered, published
and completed at prices posted on the Bratislava Stock Exchange, thus promoting
greater transparency. The revised law also increases the minimum capital
requirements for brokers.

HUNGARY

Hungary was formerly governed by a communist regime and tried unsuccessfully to
implement market-oriented reforms in 1968. Beginning in 1989, Hungary again
undertook transformation to a market-oriented economy. These reforms are still
relatively recent and leave many uncertainties regarding economic and legal
issues.

Privatization in Hungary has been substantial but is not yet complete. It is
unclear whether a consolidation of ownership has occurred or will occur as a
result of privatization.

Owners and managers of Hungarian enterprises are often less experienced with
market economies than owners and managers of companies in Western European and
American markets. The securities markets on which the securities of these
companies are traded are in their infancy.

Laws governing taxation, bankruptcy, restrictions on foreign investments, and
enforcement of judgments are subject to change.

The Budapest Commodity and Stock Exchange opened in 1864 and became one of the
largest markets in Central Europe. After the Second World War, the exchange was
closed down by the Communists and reopened 42 years later in June 1990. The
Budapest Stock Exchange is a two tier market consisting of listed and traded
stocks. The over-the-counter market is not regulated and any public company's
shares can be traded on it.

ADDITIONAL INVESTMENT PRACTICES

BORROWING

As a fundamental policy which cannot be changed without a vote by shareholders,
the Fund may borrow from a bank, up to a limit of 5% of its total assets for

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temporary or emergency purposes; and it may borrow up to 33 1/3% of its total
assets (reduced by the amount of all liabilities and indebtedness other than
such borrowings) when deemed desirable or appropriate to meet redemption
requests. Such borrowing is intended only as a temporary solution until
securities can be sold in an orderly fashion. To the extent that the Fund
borrows money prior to selling securities, the Fund may be leveraged. At such
times, the Fund may appreciate or depreciate in value more rapidly than an
unleveraged portfolio. The Fund will repay any money borrowed in excess of 5% of
the value of its total assets prior to purchasing additional portfolio
securities.

LENDING OF PORTFOLIO SECURITIES

The Fund may lend securities to broker-dealers or institutional investors for
their use in connection with short sales, arbitrages and other securities
transactions. This is a fundamental policy which cannot be changed without a
vote by shareholders. The Fund will not lend portfolio securities unless the
loan is secured by collateral (consisting of any combination of cash, United
States Government securities or irrevocable letters of credit) in an amount at
least equal (on a daily marked-to-market basis) to the current market value of
the securities loaned. In the event of a bankruptcy or breach of agreement by
the borrower of the securities, the Fund could experience delays and costs in
recovering the securities loaned. The Fund will not enter into securities
lending agreements unless its custodian bank/lending agent will fully indemnify
the Fund against loss due to borrower default. The Fund may not lend securities
with an aggregate market value of more than one-third of the Fund's total net
assets.

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES

The Fund may purchase securities on a when-issued or delayed delivery basis.
Securities purchased on a when-issued or delayed delivery basis are purchased
for delivery beyond the normal settlement date at a stated price and yield. No
income accrues to the purchaser of a security on a when-issued or delayed
delivery basis prior to delivery. Such securities are recorded as an asset and
are subject to changes in value based on changes in the general level of
interest rates. Purchasing a security on a when-issued or delayed delivery basis
can involve a risk that the market price at the time of delivery may be lower
than the agreed upon purchase price, in which case there could be an unrealized
loss at the time of delivery. The Fund will only make commitments to purchase
securities on a when-issued or delayed delivery basis with the intention of
actually acquiring the securities, but may sell them before the settlement date
if it is deemed advisable. The Fund will restrict liquid securities in an amount
at least equal in value to the Fund's commitments to purchase securities on a
when-issued or delayed delivery basis. If the value of these restricted assets
declines, the Fund will place additional liquid assets in the account on a daily

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<PAGE>
basis so that the value of the assets in the account is equal to the amount of
such commitments.

PORTFOLIO CONCENTRATION

As a fundamental policy which cannot be changed without a vote of shareholders,
the Fund will not invest more than 25% of its total assets in securities issued
by any single industry or government (other than obligations issued or
guaranteed by the United States Government or any of its agencies or
instrumentalities).

PORTFOLIO DIVERSIFICATION

The Fund will not purchase the securities of any one issuer (other than
obligations issued or guaranteed by the United States Government or any of its
agencies or instrumentalities) if, with respect to 75% of its total assets and
as a result of such purchase, (a) more than 5% of the total assets of the Fund
(taken at current value) would be invested in the securities of such issuer, or
(b) the Fund would hold more than 10% of the outstanding voting securities of
such issuer.

PORTFOLIO TURNOVER

It is the investment objective of the Fund to seek long-term growth of capital.
The Fund will effect portfolio transactions without regard to its holding period
if, in the judgment of the Advisor and Sub-Advisor, such transactions are in the
best interests of the Fund. Increased portfolio turnover may result in higher
costs for brokerage commissions, dealer mark-ups and other transaction costs and
may also result in taxable capital gains. The Fund's portfolio turnover rate is
described in the FINANCIAL HIGHLIGHTS section. See PORTFOLIO TURNOVER in the
Statement of Additional Information.

REPURCHASE AGREEMENTS

The Fund may invest a portion of its assets in repurchase agreements with United
States 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

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<PAGE>
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.

FUTURES CONTRACTS AND OPTIONS

For hedging purposes only, the Fund may sell financial futures contracts, sell
call options and purchase put options. Currently there is not a well developed
market for futures contracts and options on equity securities traded in Eastern
Europe, and the Sub-Advisor does not expect to make extensive use of such
futures contracts and options until a liquid market develops. However, there are
well developed markets for futures contracts and options on foreign currencies
which the Sub-Advisor expects to use. The Sub-Advisor is not obligated to make
use of either futures contracts or options. See FOREIGN CURRENCY TRANSACTIONS in
the Statement of Additional Information.

FUTURES CONTRACTS

The Fund may sell financial futures contracts to hedge its portfolio against a
decline in the market price of securities which it owns or to defend the
portfolio against currency fluctuations. A financial futures contract is an
agreement between two parties to buy or sell a specified security at a set price
on a set future date. An index futures contract is an agreement to take or make
delivery of an amount of cash based on the difference between the value of the
index at the beginning and at the end of the contract period. A futures contract
on a foreign currency is an agreement to buy or sell a specified amount of a
currency for a set price on a set future date.

When the Fund enters into a futures contract, it must make an initial deposit,
known as "initial margin," as a partial guarantee of its performance under the
contract. As the value of the security, index or currency fluctuates, either
party to the contract is required to make additional margin payments, known as
"variation margin," to cover any additional obligation it may have under the
contract. In addition, when the Fund enters into a futures contract, it will
segregate assets or "cover" its position in accordance with applicable law.
See SEGREGATED ASSETS AND COVERED PORTFOLIOS in the Statement of Additional
Information.

SELLING (OR WRITING) COVERED CALL OPTIONS

The Fund may sell (or write) covered call options on individual portfolio
securities or on futures contracts (described above). A call option gives the
buyer of the option, upon payment of a premium, the right to call upon the
writer to deliver a security on or before a fixed date at a predetermined price,
referred to as the "strike price." If the price of the hedged security or
futures contract should fall or remain below the strike price, the Fund will not
be called upon to deliver the security or make a cash payment and the Fund will
retain

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<PAGE>
the premium received for the option as additional income. This additional income
may offset any decline in the value of the security or futures contract up to
the amount of premium received. If the price of the hedged security or futures
contract rises or remains above the strike price of the option, the Fund will
generally be called upon to deliver the security or make a cash payment. This
will prevent the Fund from benefiting from any gain on the security or futures
contract. See SEGREGATED ASSETS AND COVERED POSITIONS in the Statement of
Additional Information.

BUYING PUT OPTIONS

The Fund may purchase put options on individual portfolio securities or on
futures contracts (described above). A put option gives the buyer of the option,
upon payment of a premium, the right to sell a security or futures contract to
the writer of the option on or before a fixed date at a predetermined price. The
Fund will realize a gain from the exercise of a put option if, during the option
period, the price of the security or futures contract declines by an amount in
excess of the premium paid. The Fund will realize a loss equal to all or a
portion of the premium paid for the option if the price of the security or
futures contract increases or does not decrease by more than the premium.

CLOSING TRANSACTIONS

The Fund may dispose of an option written by the Fund by entering into a
"closing purchase transaction" for an identical option and may dispose of an
option purchased by the Fund by entering into a "closing sale transaction" for
an identical option. In each case, the closing transaction will have the effect
of terminating the rights of the option holder and the obligations of the option
purchaser and will result in a gain or loss to the Fund based on the relative
amount of the premiums paid or received for the original option and the closing
transaction. The Fund may sell (or write) put options solely for the purpose of
entering into closing sale transactions.

HOW TO PURCHASE SHARES

The minimum initial investment for the Fund is $5,000 for regular accounts or
$1,000 for custodial accounts for minors. The minimum subsequent investment is
$50. The minimum initial investment for persons enrolled in the ABC Investment
Plan (Automatically Building Capital) is $1,000, and the minimum subsequent
investment pursuant to the Plan is $100 or more per month per account. No
minimum purchase is required 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.

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<PAGE>
YOU MAY INVEST IN THE FOLLOWING WAYS:

BY MAIL

Send your application and check, made payable to the Regent Eastern European
Fund, to P.O. Box 781234, San Antonio, Texas 78278-1234.

BY TELEPHONE

BY WIRE

You may make your initial or subsequent investments in the Regent Eastern
European Fund by wiring funds. To do so, call the Fund at 1-800-US-FUNDS
(1-800-873-8637) for a confirmation number and wiring instructions.

BY ABC INVESTMENT PLANT

Your investment dollars will automatically buy more shares when the market is
undervalued and fewer shares when the market is overvalued. By investing an

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<PAGE>
equal amount at regular, periodic intervals, you avoid the extremes in the
market. Of course, using the ABC Investment Plan(R) does not guarantee a profit.
If you sell at the bottom, no system will give you a gain.

ADDITIONAL INFORMATION ABOUT PURCHASES

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<PAGE>
is available to the Fund through a bank in the U.S. Your investment in the Fund
may be delayed until your foreign check has been converted into U.S. dollars and
cleared the normal collection process. Any amounts charged to the Fund for
collection procedures will be deducted from the amount invested.

If the Trust incurs a charge for locating a shareholder without a current
address, such charge will be passed through to the shareholder.

TAX IDENTIFICATION NUMBER

CONFIRMATION STATEMENTS

HOW TO EXCHANGE SHARES

You have the privilege of exchanging into any of the other funds 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 balancing potential rewards against potential risks. To
achieve higher rewards on your investment, you must be willing to take on

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<PAGE>
higher risk. If you are most concerned with safety of principal, a lower risk
investment will provide greater stability but with lower potential earnings.
Another strategy for dealing with volatile markets is to use the ABC Investment
Plan(R). The list below is a reward and risk guide to all of the mutual funds in
the U.S. Global Investors family of funds. This guide may help you decide if a
fund is suitable for your investment goals.

If you have additional questions, one of our professional investor
representatives will personally assist you. Call 1-800-US-FUNDS.

BY TELEPHONE

You will be able to automatically direct U.S. Global Accolade Funds to exchange
your shares by calling toll free 1-800-US-FUNDS (1-800-873-8637). In connection
with such exchanges, neither the Fund nor the transfer agent will be responsible
for acting on any instructions reasonably believed by them to be genuine. The
shareholder, because of this policy, will bear the risk of loss. The Fund and/or
its transfer agent will, however, use reasonable procedures to confirm that
telephone instructions are genuine (including requiring some form of personal
identification, providing written confirmation and tape recording
conversations). If either party does not employ reasonable procedures, it may be
liable for losses due to unauthorized or fraudulent transactions.

BY MAIL

You may direct U.S. Global Accolade Funds in writing to exchange your shares
between identically registered accounts in the U.S. Global Investors family of
funds. The request must be signed exactly as the name appears in the
registration. (Before writing, read ADDITIONAL INFORMATION ABOUT EXCHANGES.)

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<PAGE>
ADDITIONAL INFORMATION ABOUT EXCHANGES

(1) A $5 charge will be paid to United Shareholder Services, Inc. ("USSI")
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.

(4) Exchanges out of the Regent Eastern European Fund of shares held less than
180 days are subject to a trader's fee. (See TRADER'S FEE PAID TO 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

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<PAGE>
BY MAIL

A written request for redemption must be in "proper order," which requires the
delivery of the following to the transfer agent:

(1) 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) 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.)

HOW TO EXPEDITE REDEMPTIONS

SPECIAL REDEMPTION ARRANGEMENTS

Institutional investors, brokers, advisers, banks or similar institutions
(whether acting for themselves or on behalf of a client) may make special
arrangements to have redemption proceeds transferred by wire to pre-established
accounts upon telephone instructions. For additional information, call
1-800-873-8637. Telephone redemptions are available for Chairman's Circle
accounts.

SIGNATURE GUARANTEE

Redemptions of more than $15,000 require a signature guarantee. A signature
guarantee is required for all redemptions, regardless of the amount involved,
if: (a) proceeds are to be paid to someone other than the registered owner of
the shares; or (b) 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

22
<PAGE>
securities association. The guarantee must: (a) include the statement
"Signature(s) Guaranteed"; (b) be signed in the name of the guarantor by an
authorized person, including the person's printed name and position with the
guarantor; and (c) 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

BY WIRE

You may authorize the Fund to transmit redemption proceeds by wire, provided you
send written wiring instructions with a signature guarantee at the time of
redemption. Proceeds from your redemption will usually be transmitted on the
first business day following the redemption. However, the Trust reserves the
right to hold redemptions for up to seven days. If the shares to be redeemed
were purchased by check, the redemption proceeds will not be mailed or wired
until the purchase check has cleared, which may take up to seven days. A $10.00
charge will be deducted from redemption proceeds to cover the wire.
International wire charges 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.

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<PAGE>
The Trust has the authority to redeem existing accounts and to refuse a
potential account the privilege of having an account in the Trust if the Trust
reasonably determines that the failure to redeem or prohibit would have a
material adverse consequence for the Trust and its shareholders. No account
closing fee or redemption fee will be charged to investors whose accounts are
closed under this provision.

TRADER'S FEE PAID TO THE FUND

A trader's fee of 2.00% of the value of shares redeemed or exchanged will be
assessed to shareholders who redeem or exchange shares of the Fund held less
than 180 calendar days. The trader's fee will be paid to the Fund to benefit
remaining shareholders by protecting them against expenses due to excessive
trading. Excessive short-term trading has an adverse impact on effective
portfolio management as well as on Fund expenses. The Fund has reserved the
right to refuse investments from shareholders who engage in short-term trading
that may be disruptive to the Fund.

ACCOUNT CLOSING FEE

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; the transfer agent 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 on 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 account that
is involuntarily redeemed.

SMALL ACCOUNTS

Fund accounts that fall, for any reason other than market fluctuations, below
$5,000 anytime 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.

To reduce Fund expenses, the Trust may redeem all shares in any shareholder
account, other than active ABC Investment Plan(R) accounts, custodial accounts

24
<PAGE>
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 give those shareholders an opportunity to
increase their accounts by investing enough assets to bring their accounts up to
the minimum amount within ninety (90) days of the notice. No account closing fee
will be charged to investors whose accounts are closed under this redemption
provision.

CONFIRMATION STATEMENTS

OTHER SERVICES

The Trust offers a number of plans and services to meet the special needs of
certain investors. Plans include:

(1) payroll deduction plans, including military allotments;

(2) custodial accounts for minors;

(3) flexible, systematic withdrawal plans; and

(4) various retirement plans such as IRA, SEP/IRA, 403(b)(7), 401(k) and
employer-adopted defined contribution plans.

SHAREHOLDER SERVICES

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<PAGE>
24-HOUR ACCOUNT INFORMATION

HOW SHARES ARE VALUED

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 on an exchange or
over-the-counter, is valued at the last reported sales price before the time
when assets 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 shall 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
shall 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) shall, after full deliberation,
have authority to determine fair value in conformance with the Fair Value
Memorandum, or shall call for an immediate meeting of the Audit Committee to
determine fair value.

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<PAGE>
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.

DIVIDENDS AND TAXES

UNITED STATES TAXES

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<PAGE>
The Fund generally pays income dividends, if any, and distributes capital gains,
if any, annually.

There is a possibility that exchange control regulations imposed by Eastern
European countries in which the Fund invests may restrict or limit the ability
of the Fund to distribute net investment income or the proceeds from the sale of
its investments to its shareholders. Any such restrictions or limitations could
impact the Fund's ability to meet the distribution requirements described above.

If the Fund owns shares in a foreign corporation that constitutes a "passive
foreign investment company" for U.S. Federal income tax purposes and the Fund
does not elect to treat the foreign corporation as a "qualified electing fund"
within the meaning of the Code, the Fund may be subject to U.S. Federal income
tax on a portion of any "excess distribution" it receives from the foreign
corporation or any gain it derives from the disposition of such shares, even if
such income is distributed as a taxable dividend by the Fund to its U.S.
shareholders. The Fund may also be subject to additional tax in the nature of an
interest charge with respect to deferred taxes arising from such distributions
or gains. Any tax paid by the Fund as a result of its ownership of shares in a
"passive foreign investment company" will not give rise to any deduction or
credit to the Fund or any shareholder. If the Fund owns shares in a "passive
foreign investment company" and the Fund does elect to treat the foreign
corporation as a "qualified electing fund" under the Code, the Fund may be
required to include in its income each year a portion of the ordinary income and
net capital gains of the foreign corporation, even if this income is not
distributed to the Fund. Any such income would be subject to the distribution

28
<PAGE>
requirements described above even if the Fund did not receive any income to
distribute.

FOREIGN TAXES

Income received by the Fund from sources within Regent Eastern European Fund
countries and any other countries in which the issuers of securities purchased
by the Fund are located may be subject to withholding and other taxes imposed by
such countries. To take advantage of tax treaties, the Fund may purchase and
hold securities through a wholly owned Cyprus subsidiary.

If the Fund is liable for foreign income and withholding taxes that can be
treated as income taxes under U.S. Federal income tax principles, the Fund
expects to meet the requirements of the Code for "passing-through" to its
shareholders such foreign taxes paid, but there can be no assurance that the
Fund will be able to do so. Under the Code, if more than 50% of the value of the
Fund's total assets at the close of its taxable year consist of stocks or
securities of foreign corporations, the Fund will be eligible for, and intends
to file, an election with the Internal Revenue Service to "pass-through" to
the Fund's shareholders the amount of such foreign income and withholding taxes
paid by the Fund. Pursuant to this election a shareholder will be required to:
(1) include in gross income (in addition to taxable dividends actually received)
his pro rata share of such foreign taxes paid by the Fund, (2) treat his pro
rata share of such foreign taxes as having been paid by him, and (3) either
deduct his pro rata share of such foreign taxes in computing his taxable income
or use it as a foreign tax credit against his U.S. Federal income taxes. No
deduction for such foreign taxes may be claimed by a shareholder who does not
itemize deductions. Each shareholder will be notified after the close of the
Fund's taxable year whether the foreign taxes paid by the Fund will
"pass-through" for that year and, if so, such notification will designate (a)
the shareholder's portion of the foreign taxes paid to each such country, and
(b) the portion of dividends that represents income derived from sources within
each such country.

The amount of foreign taxes for which a shareholder may claim a credit in any
year may be subject to an overall limitation applied separately to "passive
income," which includes, among other types of income, dividends and interest.

The foregoing is only a general description of foreign tax credit under current
law. Because applicability of the credit depends on the particular circumstances
of each shareholder, shareholders are advised to consult their own tax advisers.

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<PAGE>
THE TRUST

U.S. Global Accolade Funds (the "Trust") is an open-end management investment
company consisting of several separate, diversified portfolios.

Under the Trust's First Amended and Restated Master Trust Agreement, no annual
or regular meeting of shareholders is required, although the Trustees may
authorize special meetings from time to time. The Trustees serve for six-year
terms. No shareholder meeting will ordinarily be held 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.

MANAGEMENT OF THE FUND

TRUSTEES

SUB-ADVISOR

Effective February 28, 1997, the Advisor and the Trust contracted with Regent
Fund Management Limited ("Sub-Advisor"), International Trading Centre,
Warrens, St. Michael, Barbados to serve as Sub-Advisor for the Fund, managing
the Fund's investments subject to the overall supervision of the Advisor and the
Trustees of the Fund and in accordance with the terms of the Sub-Advisory
Agreement.

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<PAGE>
The Sub-Advisor was incorporated in British Virgin Islands on June 30, 1988, and
its domicile was changed to Barbados on April 5, 1994. The Sub-Advisor is wholly
owned by Regent Pacific Group Limited ("Regent Pacific") which was established
in 1990 and is a holding company of a financial services group with operations
in Hong Kong, London, Moscow, Kiev and Warsaw and with associations with
financial investment companies in certain other countries. Regent Pacific
manages and advises in respect of assets in excess of $1.7 billion on behalf of
clients.

The Sub-Advisor utilizes a team approach to manage the assets of the Fund. The
team meets regularly to review portfolio holdings and to discuss purchase and
sale activity. Dominic Bokor-Ingram has been appointed team leader for the Fund.
Mr. Bokor-Ingram started his career in 1989 as a stockbroker at Olliff &
Partners where he was involved with investment trust and closed-end fund
research and sales. He then joined Buchanan Partners, an investment management
company, in 1992 as a founding member of Buchanan Securities where he
specialized in closed-end funds and emerging markets securities, again in a fund
research and sales capacity. From 1993 to 1995 he was a member of the emerging
markets team, where he specialized in the emerging markets of Eastern and
Southern Europe. In 1995 he left Buchanan to establish, with a number of
ex-Buchanan colleagues, Regent Kingpin Capital Management where he was a
director and shareholder and was responsible for fund management in emerging
markets in Europe, Russia and the former Soviet Republics. Since early 1997,
Regent Kingpin Capital Management is wholly owned by Regent Pacific, and Mr.
Bokor-Ingram is now employed by Regent Fund Management (UK) Ltd. He is also a
director of the Czech Value Fund. Mr. Bokor-Ingram received his BA (Hons) in
Economics and Statistics from Exeter University.

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. While the Sub-Advisor does not have
previous experience managing a U.S. registered mutual fund portfolio, it has
experience, and continues to manage offshore funds, private investment
companies, and separate accounts for institutions and high net worth
individuals. Investment decisions for the Fund are made independently of
investment decisions made for other clients.

In consideration for such services, the Advisor shares the management fee with
the Sub-Advisor. The Fund is not responsible for paying any portion of the
Sub-Advisor's fees.

31
<PAGE>
The Sub-Advisor may retain its broker-dealer affiliate to execute a portion of
the Fund's portfolio transactions, provided the Fund receives brokerage services
and commission rates comparable to those of other broker-dealers.

INVESTMENT ADVISOR

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 1.25% of the Fund's average net assets.

The Advisor also 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. It pays the expenses of printing and
mailing prospectuses and sales materials used for promotional purposes.

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. 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, among others, 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

32
<PAGE>
shareholders and trustee meetings; expenses for preparing, printing, and mailing
proxy statements, reports and other communications to shareholders; and expenses
of registering and qualifying shares for sale.

TRANSFER AGENT

From March 31, 1997, commencement of operations, through October 31, 1997, the
fund paid the Advisor $0.00 for providing investment advice, in addition to
transfer agency, lockbox, printing, and bookkeeping/accounting services. The fee
reflects waivers due to the Advisor's guarantee that the total fund operating
expense for the Fund (as a percentage of net assets) would not exceed 3.25%
annually through October 31, 1997. The Advisor no longer guarantees that Fund
expenses will be limited to 3.25%.

The transfer agency agreement with the Trust provides for the Fund to pay USSI,
a wholly owned subsidiary of the Advisor, an annual fee of $23.00 per account
( 1/12of $23.00 monthly). In connection with obtaining/providing administrative
services to the beneficial owners of Fund shares through broker-dealers, banks,
trust companies and similar institutions that provide such services and maintain
an omnibus account with the transfer agent, the Fund will pay to the transfer
agent a monthly fee equal to one-twelfth ( 1/12) of 12.5 basis points (.00125)
of the value of the shares of the fund held in accounts at the institutions,
which payment will not exceed $1.92 multiplied by the average daily number of
accounts holding Fund shares at the institution. These fees cover the usual
transfer agency functions. In addition, the Fund bears certain other transfer
agent expenses such as the costs of records retention, postage, telephone and
line charges (including the toll-free 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 paid to the transfer agent.

CUSTODIAN, FUND ACCOUNTANT, ADMINISTRATOR

DISTRIBUTION EXPENSE PLAN

33
<PAGE>
reimburse such expenditures provided the total amount expended pursuant to this
Plan does not exceed 0.25% of net assets annually.

PERFORMANCE INFORMATION

From time to time, in advertisements or in reports to shareholders or
prospective shareholders, the Fund may compare its performance, either in terms
of its yield, total return, or its yield and total return, to that of other
mutual funds with similar investment objectives and to stock or other indices.
Performance comparisons will not be considered as representative of the future
performance of the Fund.

For purposes of the yield calculation, interest income is computed based on the
yield to maturity of each debt obligation. Dividend income is computed based on
the stated dividend rate of each security in the Fund's portfolio, and all
recurring charges are recognized.

34
<PAGE>
U.S. GLOBAL ACCOLADE FUNDS

SHARES OF THE FUND ARE SOLD
AT NET ASSET VALUE WITHOUT SALES COMMISSIONS

Regent Eastern European Fund

INVESTMENT ADVISOR
U.S. Global Investors, Inc.
7900 Callaghan Road
Mailing Address: P.O. Box 781234
San Antonio, Texas 78278-1234

SUB-ADVISOR
Regent Fund Management Limited
International Trading Centre
Warrens, St. Michael
Barbados

TRANSFER AGENT
United Shareholder Services, Inc.
P.O. Box 781234
San Antonio, Texas 78278-1234

CUSTODIAN, FUND ACCOUNTANT, ADMINISTRATOR
Brown Brothers Harriman & Co.
40 Water Street
Boston, Massachusetts 02109

INDEPENDENT ACCOUNTANT
Price Waterhouse LLP
700 North St. Mary's Street, Suite 900
San Antonio, Texas 78205

No Load

Be Sure to Retain This Prospectus;
It Contains Valuable Information.
<PAGE>

.................................. PART B ....................................

================================================================================
BONNEL GROWTH FUND STATEMENT OF ADDITIONAL INFORMATION
================================================================================

U.S. GLOBAL ACCOLADE FUNDS

BONNEL GROWTH FUND
STATEMENT OF ADDITIONAL INFORMATION

This Statement of Additional Information is not a prospectus. It should be read
WITH the prospectus ("Prospectus") dated February 2, 1998, which may be obtained
from U.S. Global Investors, Inc. ("Adviser"), P.O. Box 29467, San Antonio, Texas
78229-0467 or 1-800-US-FUNDS (1-800-873-8637).

This date of this Statement of Additional Information is February 2, 1998.

Statement of Additional Information - Bonnel Growth Fund
Page 1
<PAGE>

TABLE OF CONTENTS

PAGE

GENERAL INFORMATION.........................................................3

INVESTMENT OBJECTIVES AND POLICIES..........................................3

RISK FACTORS................................................................5

PUT AND CALL OPTIONS........................................................5

PORTFOLIO TURNOVER..........................................................6

PORTFOLIO TRANSACTIONS......................................................6

MANAGEMENT OF THE FUND......................................................6

PRINCIPAL HOLDERS OF SECURITIES.............................................8

INVESTMENT ADVISORY SERVICES................................................8

TRANSFER AGENCY AND OTHER SERVICES..........................................9

DISTRIBUTION PLAN..........................................................10

CERTAIN PURCHASES OF SHARES OF THE FUND....................................10

ADDITIONAL INFORMATION ON REDEMPTIONS......................................11

CALCULATION OF PERFORMANCE DATA............................................11

TAX STATUS.................................................................12

CUSTODIAN, FUND ACCOUNTANT AND ADMINISTRATOR...............................13

INDEPENDENT ACCOUNTANTS ...................................................13

FINANCIAL STATEMENTS.......................................................13

Statement of Additional Information - Bonnel Growth Fund
Page 2
<PAGE>

GENERAL INFORMATION

U.S. Global Accolade Funds ("Trust") is an open-end management investment
company and a business trust organized under the laws of the Commonwealth of
Massachusetts. There are several series within the Trust, each of which
represents a separate diversified portfolio of securities ("portfolio").

The assets received by the Trust from the issue or sale of shares of the fund
and all income, earnings, profits and proceeds, subject only to the rights of
creditors, are separately allocated to the appropriate fund in the Trust. They
constitute the underlying assets of the fund, are required to be segregated on
the books of accounts and are to be charged with the expenses with respect to
such fund. Any general expenses of the Trust not readily identifiable as
belonging to a particular fund will be allocated as directed by the Board of
Trustees in the manner 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 that does not
affect their 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 because of shareholder liability is limited
to circumstances in which the Trust itself would be unable to meet its
obligations.

INVESTMENT OBJECTIVES AND POLICIES

The following information supplements the discussion of the fund's investment
objectives and policies discussed in the fund's prospectus.

INVESTMENT RESTRICTIONS. Neither the investment objective nor the investment
policy of Bonnel Growth Fund is a fundamental policy, and they may be changed by
the Board of Trustees without shareholder approval. The shareholders will be
notified in writing at least 30 days prior to any material change to either the
fund's investment objective or its investment policy.

Under normal market conditions, the fund will have at least 80% of the value of
its total assets in common stocks and securities convertible into common stocks.
The remainder of the portfolio may be invested in money market instruments; for
temporary defensive purposes, the fund may invest up to 100% of its assets in
money market instruments. The fund may invest in common stocks and other equity
securities of foreign issuers but only if they are listed on a domestic or
foreign exchange, quoted on NASDAQ or traded on the domestic or foreign
over-the-counter market. No more than 25% of the value of the fund's total net
assets will be invested in such foreign securities.

Statement of Additional Information - Bonnel Growth Fund
Page 3
<PAGE>

Bonnel Growth Fund will not change any of the following investment restrictions,
without the affirmative vote of a majority of the outstanding voting securities
of the fund, which, as used herein, means the lesser of (1) 67% of that fund's
outstanding shares present at a meeting at which more than 50% of the
outstanding shares of that fund are represented either in person or by proxy, or
(2) more than 50% of that fund's outstanding shares.

THE FUND MAY NOT:

1. Issue senior securities.

2. Borrow money, except that the fund may not borrow more than 5% of its total
assets from banks as a temporary measure for extraordinary purposes, and
may borrow up to 331/3% of the amount of its total assets (reduced by the
amount of all liabilities and indebtedness other than such borrowing) when
deemed desirable or appropriate to effect redemptions, provided, however,
that the fund will not purchase additional securities while borrowings
exceed 5% of the total assets of the fund.

3. Underwrite the securities of other issuers.

4. Invest in real estate.

5. Engage in the purchase or sale of commodities or commodity futures
contracts, except that the fund may invest in futures contracts and options
thereon on equity securities indexes in conformance with rules and
regulations issued by the Securities and Exchange Commission.

6. Lend its assets, except that the fund may purchase money market debt
obligations and repurchase agreements secured by money market obligations,
and except for the purchase or acquisition of bonds, debentures or other
debt securities of a type customarily purchased by institutional investors
and except that any fund may lend portfolio securities with an aggregate
market value of not more than one-third of such fund's total net assets.
(Accounts receivable for shares purchased by telephone will not be deemed
loans.)

7. Purchase any security on margin, except that it may obtain such short-term
credits as are necessary for clearance of securities transactions.

8. Make short sales.

9. Invest more than 15% of its total assets in illiquid securities, including
securities that are subject to legal or contractual restrictions on resale.

10. Invest more than 25% of its total assets in securities of companies
principally engaged in any one industry. For the purposes of determining
industry concentration, the fund relies on the Standard Industrial
Classification as complied by Standard & Poor's Compustat Services, Inc. as
in effect from time to time.

11. With respect to 75% of its total assets the fund will not: (a) invest more
than 5% of the value of its total assets in securities of any one issuer,
except such limitation will not apply to obligations issued or guaranteed
by the United States Government, its agencies or instrumentalities, or (b)
acquire more than 10% of the voting securities of any one issuer.

12. Invest more than 10% of its total net assets in open-end investment
companies. To the extent that the fund will invest in open-end investment
companies, the fund's advisor and sub-advisor will waive a proportional
amount of their management fees.

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.

Statement of Additional Information - Bonnel Growth Fund
Page 4
<PAGE>

RISK FACTORS

The following are among the most significant risks associated with an investment
in the fund.

EQUITY PRICE FLUCTUATION. Equity securities are subject to price fluctuations
depending on a variety of factors, including market, business, and economic
conditions.

FOREIGN INVESTMENTS. Investing in securities issued by companies whose principal
business activities are outside the United States may involve significant risks
not present in domestic investments. For example, there is generally less
publicly available information about foreign companies, particularly those not
subject to the disclosure and reporting requirements of the United States
securities laws. Foreign issuers are generally not bound by uniform accounting,
auditing, and financial reporting requirements and standards of practice
comparable to those applicable to domestic issuers. Investments in foreign
securities also involve the risk of possible adverse changes in investment or
exchange control regulations, expropriation or confiscatory taxation, limitation
of the removal of funds or other assets of the fund, political or financial
instability or diplomatic and other developments which could affect such
investment. In addition, 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 the United
States. Foreign stock markets, while growing in volume and sophistication, are
generally not as developed as those in the United States, and securities of some
foreign issuers (particularly those 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. Overall, there
is less overall governmental supervision and regulation of foreign securities
markets, broker-dealer, and issuers than in the United States.

The fund may invest up to 5% of its total assets in countries considered by the
Adviser to represent emerging markets. The Adviser decides by considering
various factors, including development of securities laws and market regulation,
total number of issuers, total market capitalization, and perceptions of the
investment community. Currently, the Adviser considers the following countries
to be among the emerging markets: Malaysia, Mexico, Hong Kong, Greece, Portugal,
Turkey, Argentina, Brazil, Indonesia, Philippines, Singapore, Thailand, and
China.

PUT AND CALL OPTIONS

SELLING (OR WRITING) COVERED CALL OPTIONS. The fund may sell (or write) covered
call options on portfolio securities to hedge against adverse movements in the
prices of these securities. A call option gives the buyer of the option, upon
payment of a premium, the right to call upon the writer to deliver a security on
or before a fixed date at a predetermined price, called the strike price. If the
price of the hedged security falls or remains below the strike price, the fund
will not be asked to deliver the security; and the fund will retain the premium
received for the option as additional income, offsetting all or part of any
decline in the value of the security. The hedge provided by writing covered call
options is limited to a price decline in the security of no more than the option
premium received by the fund for writing the option. If the security owned by
the fund appreciates above the options strike price, the fund will generally be
called upon to deliver the security, which will prevent the fund from receiving
the benefit of any price appreciation above the strike price.

BUYING CALL OPTIONS. The fund may establish an anticipatory hedge by purchasing
call options on securities that the fund intends to purchase to take advantage
of anticipated positive movements in the prices of these securities. When
establishing an anticipatory hedge, the fund will deposit cash or cash
equivalents into a segregated account equal to the call option's exercise price.
The fund will realize a gain from the exercise of a call option if, during the
option period, the price of the underlying security to be purchased increases by
more than the amount of the premium paid. A fund will realize a loss equal to
all or a part of the premium paid for the option if the price of the underlying
security decreases or does not increase by more than the premium.

PUT OPTIONS. The fund may purchase put options on portfolio securities to hedge
against adverse movements in the prices of these securities. A put option gives
the buyer of the option, upon payment of a premium, the right to sell a security
to the writer of the option on or before a fixed date at a predetermined price.
The fund will realize a gain from the exercise of a put option if, during the
option period, the price of the security declines by an amount greater than the
premium paid. The fund

Statement of Additional Information - Bonnel Growth Fund
Page 5
<PAGE>

will realize a loss equal to all or a part of the premium paid for the option if
the price of the security increases or does not decrease by more than the
premium.

CLOSING TRANSACTIONS. The fund may dispose of an option written by the fund by
entering into a "closing purchase transaction" for an identical option and may
dispose of an option purchased by the fund by entering into a "closing sale
transaction" for an identical option. In each case, the closing transaction will
terminate the rights of the option holder and the obligations of the option
purchaser and will result in a gain or loss to the fund based upon the relative
amount of the premiums paid or received for the original option and the closing
transaction. The fund may sell (or write) put options solely for the purpose of
entering into closing sale transactions.

INDEX OPTIONS. The fund may purchase and sell call options and purchase put
options on stock indices to manage cash flow, reduce equity exposure, or to
remain fully invested in equity securities. Options on securities indices are
similar to options on a security except that, upon the exercise of an option on
a securities index, settlement is made in cash rather than in specific
securities.

LIMITATIONS. The fund will purchase and sell only options listed on a securities
exchange. The fund will not purchase any option if, immediately afterwards, the
aggregate market value of all outstanding options purchased and written by the
fund would exceed 5% of the fund's total assets. The fund will not write any
call options if, immediately afterwards, the aggregate value of the fund's
securities subject to outstanding call options would exceed 25% of the value of
the fund's total assets.

PORTFOLIO TURNOVER

The fund's management buys and sell securities for the fund to accomplish
investment objectives. The fund's investment policy may lead to frequent changes
in investments, particularly in periods of rapidly fluctuating interest rates.
The fund's investments may also be traded to take advantage of perceived
short-term disparities in market values.

A change in the securities held by the fund is known as "portfolio turnover."
High portfolio turnover may cause the fund to pay higher transaction expenses,
including more commissions and markups, and may also result in quicker
recognition of capital gains, resulting in more capital gains distributions that
may be taxable to shareholders. Any short-term gain realized on securities will
be taxed to shareholders as ordinary income. See TAX STATUS.

PORTFOLIO TRANSACTIONS

For the fiscal periods shown below, the fund paid brokerage fees as follows:

FISCAL PERIOD BROKERAGE FEES
------------------------------------------ --------------
October 1 through October 31, 1997 $169,743
Year ended September 30, 1997 $778,403
Year ended September 30, 1996 $613,522
October 17, 1994 (initial public offering)
through September 30, 1995 $99,587

For a fuller discussion of the fund's portfolio trading practices see PORTFOLIO
TRANSACTIONS in the prospectus.

MANAGEMENT OF THE FUND

The Trustees and officers of the Trust and their principal occupations during
the past five years are set forth below. Except as otherwise indicated, the
business address of each is 7900 Callaghan Road, San Antonio, Texas 78229.

Statement of Additional Information - Bonnel Growth Fund
Page 6
<PAGE>

NAME AND ADDRESS TRUST POSITION PRINCIPAL OCCUPATION
- ------------------- -------------- -----------------------------------------
Richard E. Hughs Trustee Professor at the School of Business of
11 Dennin Drive the State University of New York at
Menands, NY 12204 Albany from 1990 to present; Dean, School
of Business 1990-1994; Director of the
Institute for the Advancement of Health
Care Management, 1994 - present.
Corporate Vice President, Sierra Pacific
Resources, Reno, NV, 1985-1990. Dean and
Professor, College of Business
Administration, University of Nevada,
Reno, 1977-1985. Associate Dean, Stern
School of Business, New York University,
New York City, 1970-1977.

Clark R. Mandigo Trustee Business consultant since 1991. From 1985
1250 N.E. Loop 410 to 1991, President, Chief Executive
Suite 900 Officer, and Director of Intelogic Trace,
San Antonio, Texas Inc., a nationwide company which sells,
78209 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 and
President, Chief Executive Officer of the Adviser.
Chief Since October 1989 Mr. Holmes has served
Executive and continues to serve in various
Officer positions with the Adviser, its
subsidiaries and the investment companies
it sponsors. Director of Franc-Or
Resource Corp. from November 1994 to
November 1996. Director of Adventure
Capital Limited from January 1996 to July
1997 and Director of Vedron Gold, Inc.
from August 1996 to March 1997. Director
of 71316 Ontario, Inc. since April 1987
and of F. E. Holmes Organization, Inc.
since July 1978. Director of Marleau,
Lemire Inc. from January 1995 to January
1996. Director of United Services Canada,
Inc. since February 1995 and Chief
Executive Officer from February to August
1995.

Susan B. McGee Executive Vice Executive Vice President, Corporate
President, Secretary and General Counsel of the
Secretary, Adviser. Since September 1992 Ms. McGee
General has served and continues to serve in
Counsel various positions with the Adviser, its
subsidiaries, and the investment
companies it sponsors. Before September
1992 Ms. McGee was a student at St.
Mary's Law School.

David J. Clark Treasurer Chief Financial Officer, Chief Operating
Officer of the Adviser. Since May 1997
Mr. Clark has served and continues to
serve in various positions with the
Adviser and the investment companies it
sponsors. Foreign Service Officer with
U.S. Agency for International Development
in the U.S. Embassy, Bonn, West Germany
from May 1992 to May 1997. Audit
Supervisor for University of Texas Health
Science Center from April 1991 to April
1992. Auditor-in-Charge for Texaco, Inc.
from August 1987 to June 1990.

- ------------------------------------
(1) This Trustee may be deemed an "interested person" of the Trust as defined
in the Investment Company Act of 1940.

Statement of Additional Information - Bonnel Growth Fund
Page 7

<PAGE>

PRINCIPAL HOLDERS OF SECURITIES

As of January 21, 1998, the officers and Trustees of the Trust, as a group,
owned less than 1% of the outstanding shares of the fund. The fund is aware of
the following person(s) owning of record, or beneficially, more than 5% of the
outstanding shares of the fund as of January 21, 1998.

NAME & ADDRESS OF OWNER % OWNED TYPE OF OWNERSHIP
-------------------------- ------- -----------------
Charles Schwab & Co., Inc. 11.83% Record(1)
101 Montgomery Street
San Francisco, CA 94104

(1) Charles Schwab & Co, Inc., broker-dealer, has
advised that no individual client owns more than 5%
of the Fund.

INVESTMENT ADVISORY SERVICES

The investment adviser to the funds is U.S. Global Investors, Inc., a Texas
corporation, pursuant to an advisory agreement dated September 21, 1994. Frank
E. Holmes, Chief Executive Officer and a Director of the Adviser, and Trustee,
President and Chief Executive Officer of the Trust, beneficially owns more than
25% of the outstanding voting stock of the Adviser and may be deemed to be a
controlling person of the Adviser.

In addition to the services described in the fund's prospectus, the Adviser 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
Adviser or its affiliates, except that the Trust will reimburse the Adviser for
a part of the compensation of the Adviser's employees who perform certain legal
services for the Trust, including state securities law regulatory compliance
work, based upon the time spent on such matters for the Trust.

The Trust pays all other expenses for its operations and activities. The fund
pays its allocable portion of these expenses. The expenses borne by the Trust
include the charges and expenses of any transfer agents and dividend disbursing
agents, custodian fees, legal and auditing expenses, bookkeeping and accounting
expenses, brokerage commissions for portfolio transactions, taxes, if any, the
advisory fee, extraordinary expenses, expenses of issuing and redeeming shares,
expenses of shareholder and Trustee meetings, expenses 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 Adviser, 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, typesetting and
mailing prospectuses and periodic reports to current shareholders, fidelity bond
premiums, cost of maintaining the books and records of the Trust, and any other
charges and fees not specified.

The Trust and the Adviser, in connection with the fund, have entered into a
sub-advisory agreement with Bonnel, Inc. ("Sub- Adviser"). In connection with
such services, the Adviser pays the Sub-Adviser a minimum sub-advisory fee of
$150,000 per year. When the fund's assets exceed $30 million, the Adviser and
the Sub-Adviser will share the management fee equally; except that the
Sub-Adviser's fee will be subject to downward adjustments for: 1) the Adviser's
incurred costs and expenses of marketing the fund that exceed the 0.25% 12b-1
fee charged to the fund for such marketing purposes; 2) for any monies
previously received as a result of the minimum sub-advisory fee set forth above
and paid by the Adviser or the Trust before the Securities and Exchange
Commission declared the fund's registration statement effective; 3) the
unrecovered costs of organizing the fund up to $40,000 (the Adviser will be
responsible for bearing costs of organization of the fund greater than $40,000);
and (4) if a decision is made with respect to placing a cap on expenses, to the
extent that actual expenses of the fund exceed the cap, and the Adviser is
required to pay or absorb any of the excess expenses, by the amount of the
excess expenses paid or absorbed by the Adviser through such downward
adjustments. The fund is not responsible for the Sub-Adviser's fee.

Statement of Additional Information - Bonnel Growth Fund
Page 7
<PAGE>

The Adviser 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 Adviser's opinion, such laws should not preclude a
bank from performing shareholder administrative and servicing functions as
contemplated herein.

The Advisory Agreement was approved by the Board of Trustees of the Trust
(including a majority of the "disinterested Trustees") with respect to the fund
and will be submitted for approval by shareholders of the fund at the initial
meeting of shareholders. The Advisory Agreement provides that it will continue
initially for two years, and from year to year thereafter, with respect to each
fund, as long as it is approved at least annually by (i) a vote of a majority of
the outstanding voting securities of such fund (as defined in the Investment
Company Act of 1940 ["Act"]) or by the Board of Trustees of the Trust, and (ii)
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-day written notice by either party and will
terminate automatically if it is assigned.

The Adviser provides investment advice to a variety of clients, including other
mutual funds. Investment decisions for each client are made with a view to
achieving their respective investment objectives. Investment decisions are the
product of many factors in addition to basic suitability for the particular
client involved. Thus, a particular security may be bought or sold for certain
clients even though it could have been bought or sold for other clients at the
same time. Likewise, a particular security may be bought for one or more clients
when one or more other clients are selling the security. In some instances, one
client may sell a particular security to another client. It also sometimes
happens that two or more clients simultaneously purchase or sell the same
security, in which event each day's transactions in such security are, as far as
possible, averaged as to price and allocated between such clients in a way that
in the Adviser'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 Adviser employs professional staffs of portfolio
managers who draw upon a variety of resources, for research information for the
clients.

In addition to advising client accounts, the Adviser invests in securities for
its own account. The Adviser has adopted policies and procedures intended to
minimize or avoid potential conflicts with its clients when trading for its own
account. The Adviser's investment objective and strategies are different from
those of its clients, emphasizing venture capital investing, private placement
arbitrage, and speculative short-term trading. The Adviser uses 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 Adviser invests in start-up companies in the
natural resources or technology fields.

TRANSFER AGENCY AND OTHER SERVICES

In addition to the services performed for the funds and the Trust under the
Advisory Agreement, the Adviser, through its subsidiary United Shareholder
Services, Inc. ("USSI"), provides transfer agent services pursuant to the
Transfer Agency Agreement as described in the fund's prospectus under MANAGEMENT
OF THE FUND--THE INVESTMENT ADVISER. Also, lockbox and statement printing
services are provided by USSI. For the year ended September 30, 1997, and the
period from October 1 through October 31, 1997, the fund paid USSI a total of
$222,592 and $20,624, respectively, for transfer agency, lockbox, and printing
fees. The Board of Trustees recently approved the Transfer Agency and related
agreements through March 8, 1998.

USSI maintained the books and records of the Trust and of each fund of the Trust
until November 1, 1997, at which time Brown Brothers Harriman and Co. assumed
such responsibility. Daily net asset value is calculated as described in the
fund's prospectus under MANAGEMENT OF THE FUND--THE INVESTMENT ADVISER. For the
year ended September 30, 1997, and the period from October 1 through October 31,
1997, the fund paid USSI a total of $59,632 and $6,011, respectively, for
portfolio accounting services.

Statement of Additional Information - Bonnel Growth Fund
Page 8
<PAGE>

A&B Mailers, Inc., a corporation wholly owned by the Adviser, provides the Trust
with certain mail handling services. The charges for such services have been
negotiated by the Audit Committee and A&B Mailers, Inc. Each service is priced
separately.

DISTRIBUTION PLAN

As described under SERVICE FEE in the prospectus, in September 1994, the fund
adopted a Distribution Plan pursuant to Rule 12b-1 of the 1940 Act
("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 annually. For the year ended September 30, 1997, and
the period from October 1 through October 31, 1997, the fund paid a total of
$242,710 and $25,913, respectively, in distribution fees. Distribution expenses
paid by the Adviser or other third parties in prior periods that exceeded 0.25%
of net assets may be paid by the fund with distribution expenses accrued
pursuant to the 12b-1 Distribution Plan in the current or future periods if the
0.25% limitation is never exceeded.

Expenses that the fund incurs pursuant to the Distribution Plan are reviewed
quarterly by the Board of Trustees. The Distribution Plan is reviewed annually
by the Board of Trustees as a whole, and the Trustees who are not "interested
persons" as that term is defined in the 1940 Act and who have no direct or
indirect financial interest in the operation of the Distribution Plan
("Qualified Trustees"). In their review of the Distribution Plan the Board of
Trustees, as a whole, and the Qualified Trustees determine whether, in their
reasonable business judgment and considering their fiduciary duties under state
law and under Section 36(a) and (b) of the 1940 Act, there is reasonable
likelihood that the Distribution Plan will benefit the fund and its
shareholders. The Distribution Plan may be terminated anytime by a majority vote
of the Qualified Trustees, or by a majority vote 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 it
attracts more shareholders.

CERTAIN PURCHASES OF SHARES OF THE FUND

Shares of the fund are continuously offered by the Trust at their net asset
value next determined after an order is accepted. The methods available for
purchasing shares of the fund are described in the Prospectus. In addition,
shares of the fund may be purchased using stock, so long as the securities
delivered to the Trust meet the investment objectives and concentration policies
of the fund and are otherwise acceptable to the Adviser, 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 restricted in any way as to resale or be otherwise illiquid;

2. securities of the same issuer must already exist in the fund's portfolio;

3. the securities must have a value that is readily ascertainable (and not
established only by evaluation procedures) as evidenced by a listing on the
AMEX, the NYSE, or NASDAQ;

4. any securities so acquired by any fund will not comprise more than 5% of
that fund's net assets at the time of such exchange;

Statement of Additional Information - Bonnel Growth Fund
Page 9
<PAGE>

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) a list to the Trust with a full and exact description
of all of the securities he or she proposes to deliver. The Trust will advise
him or her as to those securities 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 is 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 practicable for the Trust to dispose of securities owned
by it or to determine fairly the value of its assets; or (3) as the SEC may
otherwise permit.

CALCULATION OF PERFORMANCE DATA

TOTAL RETURN: The fund may advertise performance in terms of average annual
total return for 1-, 5- and 10-year periods, or for such lesser periods as the
fund has been in existence. Average annual total return is computed by finding
the average annual compounded rates of return over the periods that would equate
the initial amount invested to the ending redeemable value, according to the
following formula:

n
P(1+T) = 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 that (a) all charges are deducted from the initial
$1,000 payment, (b) all dividends and distributions by the fund are reinvested
at the price stated in the prospectus on the reinvestment dates during the
period and (c) all recurring fees charged to all shareholder accounts are
included.

Statement of Additional Information - Bonnel Growth Fund
Page 10
<PAGE>

The average annual total return for the fund follows:

AVERAGE ANNUAL
FISCAL PERIOD TOTAL RETURN
------------------------------------------ --------------
October 1 through October 31, 1997 (09.97)%
Year ended September 30, 1997 28.67%
Year ended September 30, 1996 21.27%
October 17, 1994 (initial public offering)
through September 30, 1995 48.74% *
-------------
* Not annualized

NONSTANDARDIZED TOTAL RETURN. The fund may provide the above described standard
total return results for a period that ends not earlier than the most recent
calendar quarter end and begins either twelve months before or at the time of
commencement of the fund's operations. In addition, the fund may provide
nonstandardized total return results for differing periods, such as for the most
recent six months. Such nonstandardized total return is computed as otherwise
described under TOTAL RETURN except that no annualization is made.

EFFECT OF FEE WAIVER AND EXPENSE REIMBURSEMENT. From October 17, 1994 (initial
public offering), through September 30, 1995, the fund's expense ratio was
2.48%. If the Adviser had not subsidized the fund's expenses, the expense ratio
subject to the most restrictive state limitation would have been 2.50%. Because
its expenses were subsidized, the fund's investment performance, including
annual compound rate of return, was improved. The Adviser is not obligated to
continue subsidizing the fund's expenses in the future.

TAX STATUS

TAXATION OF THE FUND--IN GENERAL. As stated in its Prospectus, the fund intends
to qualify as a "regulated investment company" under Subchapter M of the
Internal Revenue Code of 1986, as amended ("Code"). Accordingly, the fund will
not be liable for Federal income taxes on its taxable net investment income and
capital gain net income distributed to shareholders if 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 ("90% test"); and (b) 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
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 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 paid to
shareholders of record in such a month, will be deemed to have been received
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

Statement of Additional Information - Bonnel Growth Fund
Page 11
<PAGE>

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 before a distribution. The price of shares purchased then includes
the amount of any forthcoming distribution. Investors purchasing the fund's
shares immediately before a distribution may receive a return of investment upon
distribution that will nevertheless be taxable to them.

A shareholder of the fund should be aware that a redemption of shares (including
any exchange into other funds offered, affiliated or administered by U.S. Global
Investors, Inc.) is a taxable event and, accordingly, a capital gain or loss may
be recognized. If a shareholder of the fund receives a distribution taxable as
long-term capital gain with respect to shares of the fund and redeems or
exchanges shares before he has held them for more than six months, any loss on
the redemption or exchange (not otherwise disallowed as attributable to an
exempt-interest dividend) will be treated as long-term capital loss to the
extent of the long-term capital gain recognized.

CUSTODIAN, FUND ACCOUNTANT AND ADMINISTRATOR

Beginning November 1997 Brown Brothers Harriman & Co. began serving as
custodian, fund accountant and administrator for all funds of the Trust. With
respect to the funds owning foreign securities, Brown Brothers Harriman & Co.
may hold securities outside the United States pursuant to sub-custody
arrangements separately approved by the Trust. Prior to November, Bankers Trust
Company provided custody services and USSI provided fund accounting and
administrative services. Services with respect to retirement accounts will be
provided by Security Trust and Financial Company of San Antonio, Texas, a wholly
owned subsidiary of the Adviser.

INDEPENDENT ACCOUNTANTS

Price Waterhouse LLP, 700 North St. Mary's, San Antonio, Texas 78205 is the
independent accountant for the Trust.

FINANCIAL STATEMENTS

The financial statements for the years ended October 31, 1997, and September 30,
1997, are hereby incorporated by reference from the U.S. GLOBAL ACCOLADE FUNDS
1997 ANNUAL REPORT TO SHAREHOLDERS of that date that accompanies this Statement
of Additional Information. If not included, the Trust will promptly provide a
copy, free of charge, upon request to: U.S. Global Investors, Inc., P.O. Box
29467, San Antonio, Texas 78229-0467, 1-800-873-8637 or (210) 308-1234.

Statement of Additional Information - Bonnel Growth Fund
Page 12
<PAGE>

================================================================================
MEGATRENDS FUND STATEMENT OF ADDITIONAL INFORMATION
================================================================================

U.S. GLOBAL ACCOLADE FUNDS

MEGATRENDS FUND
STATEMENT OF ADDITIONAL INFORMATION

This Statement of Additional Information is not a prospectus. You should read it
in conjunction with the prospectus dated February 2, 1998 ("Prospectus"). You
may request a prospectus from U. S. Global Investors, Inc. ("Adviser"), 7900
Callaghan Road, San Antonio, Texas 78229, by calling 1-800-US-FUNDS
(1-800-873-8637).

The date of this Statement of Additional Information is February 2, 1998.

Statement of Additional Information - MegaTrends Fund
Page 1
<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

TABLE OF CONTENTS

PAGE

GENERAL INFORMATION.........................................................3

INVESTMENT OBJECTIVES AND POLICIES..........................................3

INVESTMENT LIMITATIONS......................................................8

MANAGEMENT OF THE FUND......................................................9

PRINCIPAL HOLDERS OF SECURITIES............................................10

INVESTMENT ADVISORY SERVICES...............................................11

TRANSFER AGENCY AND OTHER SERVICES.........................................12

DISTRIBUTION PLAN..........................................................12

CERTAIN PURCHASES OF SHARES OF THE FUND....................................13

ADDITIONAL INFORMATION ON REDEMPTIONS......................................14

CALCULATION OF PERFORMANCE DATA............................................14

TAX STATUS.................................................................15

CUSTODIAN, FUND ACCOUNTANT AND ADMINISTRATOR...............................16

INDEPENDENT ACCOUNTANTS....................................................16

FINANCIAL STATEMENTS.......................................................16

Statement of Additional Information - MegaTrends Fund
Page 2
<PAGE>

GENERAL INFORMATION

U.S. Global Accolade Funds ("Trust") is an open-end management investment
company and is a business trust organized under the laws of the Commonwealth of
Massachusetts. The MegaTrends Fund ("Fund") is a series of the Trust and
represents a separate, diversified portfolio of securities ("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 to the rights of
creditors only, 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, will be allocated by or under the direction of the Board of
Trustees ("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 in THE TRUST section in the Prospectus, the Trust's master trust
agreement provides that no annual or regular meeting of shareholders is
required. 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 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

Statement of Additional Information - MegaTrends Fund
Page 3
<PAGE>

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 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 is 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.

Statement of Additional Information - MegaTrends Fund
Page 4
<PAGE>

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 Adviser,
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;

Statement of Additional Information - MegaTrends Fund
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<PAGE>

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 take 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 Adviser or Sub-Adviser 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

Statement of Additional Information - MegaTrends Fund
Page 6
<PAGE>

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 Adviser or any
affiliated person of the Fund or an affiliated person of the Adviser 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 periods shown below, the fund's portfolio turnover rate was:

FISCAL PERIOD PORTFOLIO TURNOVER
-------------------------------- ------------------
July 1 through October 31, 1997 13%
Year ended June 30, 1997 62%
Year ended June 30, 1996 115%

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 section.

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. ("Sub-Adviser") and are subject to
review by the Fund's Adviser and Board of Trustees of the Fund. In the purchase
and sale of portfolio securities, the Sub-Adviser 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-Adviser generally
seeks favorable prices and commission rates that are reasonable in relation to
the benefits received.

For the fiscal periods shown below, the fund paid brokerage fees as follows:

FISCAL PERIOD PORTFOLIO TURNOVER
-------------------------------- ------------------
July 1 through October 31, 1997 $18,872
Year ended June 30, 1997 $97,945
Year ended June 30, 1996 $120,408
Year ended June 30, 1995 $94,361

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Page 7
<PAGE>

The Fund has no obligation to deal with any broker or dealer in the execution of
securities transactions. Affiliates of the Fund or of the Sub-Adviser may effect
securities transactions which are executed on a national securities exchange or
transactions in the over-the-counter market conducted on an agency basis. The
Sub-Adviser owns a limited partnership interest in Brimberg & Co., L.P.
("Brimberg"), a registered broker-dealer.

During the fiscal periods shown below, the Fund paid Brimberg Brokerage
commissions as follows:

FISCAL PERIOD BROKERAGE FEES PERCENTAGE
-------------------------------- -------------- ----------
July 1 through October 31, 1997 $16,152 86%
Year ended June 30, 1997 $97,945 100%
Year ended June 30, 1996 $120,408 100%
Year ended June 30, 1995 $94,361 100%

Because commissions received from the Fund are excluded when calculating the
Sub-Adviser's profits as a Brimberg limited partner, the Sub-Adviser does not
receive material benefits from Brimberg's brokerage services to the Fund. The
Fund will not effect any brokerage transactions in its portfolio securities with
an affiliated broker if such transactions would be unfair or unreasonable to its
shareholders.

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 Adviser and Sub-Adviser are specifically authorized to select brokers who
also provide brokerage and research services to the Fund and/or other accounts
over which the Adviser or Sub-Adviser exercises investment discretion and to pay
such brokers a commission in excess of the commission another broker would
charge if the Adviser or Sub-Adviser 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 Adviser's or Sub-Adviser'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 Adviser or
Sub-Adviser, 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 Adviser or Sub-Adviser in servicing all of its accounts and not
all such services may be used by the Adviser or Sub-Adviser in connection with
the Fund.

INVESTMENT LIMITATIONS

The MegaTrends 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.

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Page 8
<PAGE>

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.

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.

Statement of Additional Information - MegaTrends Fund
Page 9
<PAGE>

- ------------------------------------
(1) This Trustee may be deemed an "interested person" of the Trust as defined
in the Investment Company Act of 1940.

PRINCIPAL HOLDERS OF SECURITIES

As of January 21, 1998, the officers and Trustees of the Trust, as a group,
owned less than 1% of the outstanding shares of the fund. The Sub-Advisor owned
approximately 1.64% of the outstanding shares of the Fund. The fund is aware of
no person(s) owning of record, or beneficially, more than 5% of the outstanding
shares of the fund as of January 21, 1998.

Statement of Additional Information - MegaTrends Fund
Page 10
<PAGE>

INVESTMENT ADVISORY SERVICES

The investment Adviser to U.S. Global Accolade Funds is U.S. Global Investors,
Inc., a Texas corporation, pursuant to an advisory agreement dated September 21,
1994, and amended November 15, 1996. Frank E. Holmes, Chief Executive Officer
and a Director of the Adviser, as well as Trustee, President and Chief Executive
Officer of the Trust, beneficially owns more than 25% of the outstanding voting
stock of the Adviser and may be deemed to be a controlling person of the
Adviser.

In addition to the services described in the Fund's Prospectus, the Adviser 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
Adviser or its affiliates, except that the Trust will reimburse the Adviser for
a portion of the compensation of the Adviser'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,
expenses 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 Adviser,
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, cost of 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 Adviser, in connection with the Fund, have entered into a
sub-advisory agreement with another firm as discussed in the Prospectus. The
Sub-Adviser's compensation is set forth in the Prospectus and is paid by the
Adviser. The Fund is not responsible for the Sub-Adviser's fee.

The Adviser 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 Adviser's opinion, such laws should not preclude a
bank from performing shareholder administrative and servicing functions as
contemplated herein.

The advisory agreement was approved by the Board of Trustees of the Trust
(including a majority of the "disinterested Trustees") with respect to the Fund
and was approved by shareholders of the Fund on November 15, 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
("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 Adviser and the Sub-Adviser provide investment advice to a variety of
clients, including other mutual funds. Investment decisions for each client are
made with a view to achieving their respective investment objectives. Investment
decisions are the product of many factors in addition to basic suitability for
the particular client involved. Thus, a particular security may be bought or
sold for certain clients even though it could have been bought or sold for other
clients at the same time. Likewise, a particular security may be bought for one
or more clients when one or more other clients are selling the security. In some
instances, one client may sell a particular security to another client. It also
sometimes happens that two or more clients simultaneously purchase or sell the
same security, in which event each day's transactions in such security are,
insofar as possible, averaged as to price and allocated between such clients in
a manner which in the Adviser's or Sub-Adviser's opinion is equitable to each
and in accordance with the amount being purchased or sold by each. There may be
circumstances

Statement of Additional Information - MegaTrends Fund
Page 11
<PAGE>

when purchases or sales of portfolio securities for one or more clients will
have an adverse effect on other clients. The Adviser 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 Adviser invests in securities for
its own account. The Adviser has adopted policies and procedures intended to
minimize or avoid potential conflicts with its clients when trading for its own
account. The Adviser'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 Adviser utilizes a diversified approach
to venture capital investing. Investments typically involve early-stage
businesses seeking initial financing as well as more mature businesses needing
capital for expansion, acquisitions, management buyouts, or recapitalizations.
In general, the Adviser invests in start-up companies in the natural resources
or technology fields.

The Fund pays the adviser a management fee based on varying percentages of
average net assets. For the fiscal periods shown below, the Fund paid the
Adviser the following advisory fees (net of expenses paid by the adviser or
voluntary fee waivers):

FISCAL PERIOD MANAGEMENT FEE FEES WAIVED
-------------------------------- -------------- -----------
July 1 through October 31, 1997 $88,031 0
Year ended June 30, 1997 * $232,398 ($20,988)
Year ended June 30, 1996 * $127,519 ($177,359)
Year ended June 30, 1995 * $204,936 ($190,271)

* Prior to November 18, 1996, the fund was advised by another investment
adviser. The prior adviser waived fees as noted in the table. The current
adviser has not waived management fees.

TRANSFER AGENCY AND OTHER SERVICES

In addition to the services performed for the Fund and the Trust under the
advisory agreement, the Adviser, 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 ADVISER. Also, lockbox
and statement printing services are provided by USSI. For the year ended June
30, 1997, and the period from July 1 through October 31, 1997, the fund paid
USSI a total of $49,994 and $18,074, respectively, for transfer agency, lockbox,
and printing fees. The Board of Trustees recently approved the transfer agency
agreement and related agreements through March 8, 1998.

Effective November 1, 1997, Brown Brothers Harriman & Co. 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.

A & B Mailers, Inc., a corporation wholly owned by the Adviser, 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 in the SERVICE FEE section in the Prospectus, on May 22, 1996, the
Fund adopted a Distribution Plan pursuant to Rule 12b-1 of the 1940 Act
("Distribution Plan"). The Distribution Plan allows the Fund to pay for or
reimburse expenditures in connection with sales and promotional services related
to the distribution of Fund shares, including personal services provided to
prospective and existing Fund shareholders, which includes the costs of printing
and distribution of prospectuses and promotional materials, making slides and
charts for presentations, assisting shareholders and prospective investors in
understanding and dealing with the Fund, and travel and out-of-pocket expenses
(E.G., copy and long distance telephone charges) related thereto.

The total amount expended pursuant to the Distribution Plan may not exceed 0.25%
of the Fund's net assets on an annual basis. For the year ended June 30, 1997,
and the period from July 1 through October 31, 1997, the fund paid USSI a total

Statement of Additional Information - MegaTrends Fund
Page 12
<PAGE>

of $38,207 and $22,610, respectively, in distribution fees. Distribution
expenses paid by the Adviser 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 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 Adviser, 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 will not comprise more than 5% of
that fund's net assets at the time of such exchange;

5. no over-the-counter securities will be accepted unless the principal
over-the-counter market is in the United States; and,

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

Statement of Additional Information - MegaTrends Fund
Page 13
<PAGE>

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:

n
P(1+T) = ERV

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 October 31,
1997, are as follows:

1 year..........................................19.1%
5 years.........................................12.4%
Since Inception (October 21, 1991)..............10.5%

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 in the TOTAL RETURN section 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:

Statement of Additional Information - MegaTrends Fund
Page 14
<PAGE>

A-B 6
YIELD = 2[(---}+1) -1]
CD

Where: A = dividends and interest earned during the period

B = expenses accrued for the period (net of
reimbursement)

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 1/365 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 October 1997 was ( 0.18)%.

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 ("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 ("90% test"); and (b) 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 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

Statement of Additional Information - MegaTrends Fund
Page 15
<PAGE>

investors purchasing the Fund's shares immediately prior to a distribution may
receive a return of investment upon distribution which will nevertheless be
taxable to them.

A shareholder of the Fund should be aware that a redemption of shares (including
any exchange into other funds offered, affiliated or administered by U.S. Global
Investors, Inc.) is a taxable event and, accordingly, a capital gain or loss may
be recognized. If a shareholder of the Fund receives a distribution taxable as
mid-term or long-term capital gain, as applicable, 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 mid-term or
long-term capital loss to the extent of the mid-term or long-term capital gain,
as applicable, recognized.

CUSTODIAN, FUND ACCOUNTANT AND ADMINISTRATOR

Beginning November 1997 Brown Brothers Harriman & Co. began serving as
custodian, fund accountant and administrator for all Funds of the Trust. With
respect to the Funds owning foreign securities, Brown Brothers Harriman & Co.
may hold securities outside the United States pursuant to sub-custody
arrangements separately approved by the Trust. Prior to November, Bankers Trust
Company provided custody services and USSI provided fund accounting and
administrative services. 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 Adviser.

INDEPENDENT ACCOUNTANTS

Price Waterhouse LLP, 700 North St. Mary's, Suite 900, San Antonio, Texas 78205,
are the independent accountants for the Trust.

FINANCIAL STATEMENTS

The financial statements for the fiscal years ended October 31, 1997, and June
30, 1997, have been audited by Price Waterhouse LLP and are incorporated by
reference from the U.S. GLOBAL ACCOLADE FUNDS 1997 ANNUAL REPORT TO
SHAREHOLDERS, which has been delivered with the Statement of Additional
Information unless previously provided, in which event the Trust will promptly
provide another copy free of charge, upon request to: U.S. Global Investors,
Inc., 7900 Callaghan Road, San Antonio, Texas 78229, 1-800-873-8637 or (210)
308-1234. The financial highlights for the fiscal periods ended June 30, 1992
through 1996, have been audited by Arthur Andersen LLP. The related financial
statements and report of independent accountants for 1996 and prior periods are
included in the Fund's 1996 ANNUAL REPORT TO SHAREHOLDERS and are incorporated
by reference into the Statement of Additional Information.

Statement of Additional Information - MegaTrends Fund
Page 16
<PAGE>

================================================================================
ADRIAN DAY GLOBAL OPPORTUNITY FUND STATEMENT OF ADDITIONAL INFORMATION
================================================================================

U.S. GLOBAL ACCOLADE FUNDS

ADRIAN DAY GLOBAL OPPORTUNITY FUND
STATEMENT OF ADDITIONAL INFORMATION

This Statement of Additional Information is not a prospectus. You should read it
in conjunction with the prospectus ("Prospectus") dated February 2, 1998, which
you may request from U. S. Global Investors, Inc. ("Adviser"), 7900 Callaghan
Road, San Antonio, Texas 78229 or 1-800-US-FUNDS (1-800-873-8637).

The date of this Statement of Additional Information is February 2, 1998.

Statement of Additional Information - Adrian Day Global Opportunity Fund
Page 1
<PAGE>

TABLE OF CONTENTS

PAGE

GENERAL INFORMATION.........................................................3

INVESTMENT OBJECTIVES AND POLICIES..........................................3

RISK FACTORS................................................................4

STRATEGIC TRANSACTIONS......................................................8

PORTFOLIO TURNOVER.........................................................11

MANAGEMENT OF THE FUND.....................................................11

PRINCIPAL HOLDERS OF SECURITIES............................................12

INVESTMENT ADVISORY SERVICES...............................................13

TRANSFER AGENCY AND OTHER SERVICES.........................................14

DISTRIBUTION PLAN..........................................................15

CERTAIN PURCHASES OF SHARES OF THE FUND....................................15

ADDITIONAL INFORMATION ON REDEMPTIONS......................................16

CALCULATION OF PERFORMANCE DATA............................................16

TAX STATUS.................................................................17

CUSTODIAN, FUND ACCOUNTANT AND ADMINISTRATOR...............................18

INDEPENDENT ACCOUNTANTS ...................................................18

FINANCIAL STATEMENTS.......................................................18

Statement of Additional Information - Adrian Day Global Opportunity Fund
Page 2
<PAGE>

GENERAL INFORMATION

U.S. Global Accolade Funds ("Trust") is an open-end management investment
company and is a business trust organized under the laws of the Commonwealth of
Massachusetts. There are several series within the Trust, each of which
represents a separate diversified portfolio of securities ("Portfolio"). This
Statement of Additional Information ("SAI") presents important information
concerning the Adrian Day Global Opportunity Fund ("Fund") and should be read in
conjunction with the prospectus.

The assets received by the Trust from the issue or sale of shares of the Fund,
and all income, earnings, profits and proceeds thereof, subject only to the
rights of creditors, are separately allocated to such Fund. They constitute the
underlying assets of each fund, are required to be segregated on the books of
accounts, and are to be charged with the expenses with respect to such fund. Any
general expenses of the Trust, not readily identifiable as belonging to a
particular fund, shall be allocated by or under the direction of the Board of
Trustees in such manner as the Board determines to be fair and equitable.

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. Thus, there will ordinarily be no shareholder meetings unless
otherwise required by the Investment Company Act of 1940. The Trustees serve for
six-year terms.

Shares have no preemptive or subscription rights and are fully transferable.
There are no conversion rights.

INVESTMENT OBJECTIVES AND POLICIES

The following information supplements the discussion of the Fund's investment
objectives and policies discussed in the Fund's prospectus.

INVESTMENT RESTRICTIONS. If a percentage investment 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.

FUNDAMENTAL INVESTMENT RESTRICTIONS

The Fund will not change any of the following investment restrictions, without
the affirmative vote of a majority of the outstanding voting securities of the
Fund, which, as used herein, means the lesser of (1) 67% of that Fund's
outstanding shares present at a meeting at which more than 50% of the
outstanding shares of that Fund are represented either in person or by proxy, or
(2) more than 50% of that Fund's outstanding shares.

Statement of Additional Information - Adrian Day Global Opportunity Fund
Page 3
<PAGE>

The Fund may not:

(1) Issue senior securities.

(2) Borrow money, except that the Fund may borrow not in excess of 5% of its
total assets from banks as a temporary measure for extraordinary purposes,
may borrow up to 331/3% of the amount of its total assets (reduced by the
amount of all liabilities and indebtedness other than such borrowing) when
deemed desirable or appropriate to effect redemptions, provided, however,
that the Fund will not purchase additional securities while borrowings
exceed 5% of the total assets of the Fund.

(3) Underwrite the securities of other issuers.

(4) Invest in real estate.

(5) Engage in the purchase or sale of commodities or commodity futures
contracts, except that the Fund may invest in futures contracts, forward
contracts, options, and other derivative investments in conformance with
policies disclosed in the Fund's then current prospectus and/or Statement
of Additional Information.

(6) Lend its assets, except that the Fund may purchase money market debt
obligations and repurchase agreements secured by money market obligations,
and except for the purchase or acquisition of bonds, debentures or other
debt securities of a type customarily purchased by institutional investors
and except that any Fund may lend portfolio securities with an aggregate
market value of not more than one-third of such Fund's total net assets.
(Accounts receivable for shares purchased by telephone shall not be deemed
loans.)

(7) Purchase any security on margin, except that it may obtain such short-term
credits as are necessary for clearance of securities transactions.

(8) Sell short more than 5% of its total assets.

(9) Invest more than 25% of its total assets in securities of companies
principally engaged in any one industry. For the purposes of determining
industry concentration, the Fund relies on the Standard Industrial
Classification as complied by Standard & Poor's Compustat Services, Inc.
as in effect from time to time.

(10) With respect to 75% of its total assets the Fund will not: (a) Invest more
than 5% of the value of its total assets in securities of any one issuer,
except such limitation shall not apply to obligations issued or guaranteed
by the United States ("U.S.") Government, its agencies or
instrumentalities, or (b) acquire more than 10% of the voting securities
of any one issuer.

(11) Invest more than 10% of its total net assets in open-end investment
companies. To the extent that the Fund shall invest in open-end investment
companies, the Fund's Adviser and Sub-Adviser shall waive a proportional
amount of their management fee.

RISK FACTORS

The following information supplements the discussion of the Fund's risk factors
discussed in the Fund's prospectus. The following are among the most significant
risks associated with an investment in the Fund.

EQUITY PRICE FLUCTUATION. Equity securities are subject to price fluctuations
depending on a variety of factors, including market, business, and economic
conditions.

Statement of Additional Information - Adrian Day Global Opportunity Fund
Page 4
<PAGE>

confiscatory taxation, limitation of the removal of funds or other assets of the
Fund, political or financial instability or diplomatic and other developments
that could affect such investment. In addition, economies of particular
countries or areas of the world may differ favorably or unfavorably from the
economy of the United States. It is anticipated that in most cases the best
available market for foreign securities will be on exchanges or in
over-the-counter markets located outside of the United States. Foreign stock
markets, while growing in volume and sophistication, are generally not as
developed as those in the United States, and securities of some foreign issuers
(particularly those 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-dealers, and issuers than in the United States.

EMERGING MARKETS. The Fund may invest up to 20% of its total assets in countries
considered by the Sub-Adviser to represent emerging markets. However, the Fund
may not invest more than 5% of its total assets in any single emerging market
country. The Sub-Adviser determines which countries are emerging market
countries by considering various factors, including development of securities
laws and market regulation, total number of issuers, total market
capitalization, and perceptions of the investment community. Generally, emerging
markets are those other than North America, Western Europe, and Japan. For
example, the Sub-Adviser currently considers the following countries to be among
the emerging markets in which it might invest: Argentina, Brazil, China,
Columbia, Czech Republic, Indonesia, Peru, Philippines, Thailand, Turkey and
Zimbabwe.

Investing in emerging markets involves risks and special considerations not
typically associated with investing in other more established economies or
securities markets. Investors should carefully consider their ability to assume
the below listed risks before making an investment in the Fund. Investing in
emerging markets is considered speculative and involves the risk of total loss.

Risks of investing in emerging markets include:

(1) the risk that the Fund's assets may be exposed to nationalization,
expropriation, or confiscatory taxation;

(2) the fact that emerging market securities markets are substantially
smaller, less liquid and more volatile than the securities markets of more
developed nations. The relatively small market capitalization and trading
volume of emerging market securities may cause the Fund's investments to
be comparatively less liquid and subject to greater price volatility than
investments in the securities markets of developed nations. Many emerging
markets are in their infancy and have yet to be exposed to a major
correction. In the event of such an occurrence, the absence of various
market mechanisms that are inherent in the markets of more developed
nations may lead to turmoil in the market place, as well as the inability
of the Fund to liquidate its investments;

(3) greater social, economic and political uncertainty (including the risk of
war);

(4) greater price volatility, substantially less liquidity and significantly
smaller market capitalization of securities markets;

(5) currency exchange rate fluctuations and the lack of available currency
hedging instruments;

(6) higher rates of inflation;

(7) controls on foreign investment and limitations on repatriation of invested
capital and on the Fund's ability to exchange local currencies for U.S.
dollars;

(8) greater governmental involvement in and control over the economy;

(9) the fact that emerging market companies may be smaller, less seasoned and
newly organized;

(10) the difference in, or lack of, auditing and financial reporting standards
which may result in unavailability of material information about issuers;

(11) the fact that the securities of many companies may trade at prices
substantially above book value, at high price/earnings ratios, or at
prices that do not reflect traditional measures of value;

Statement of Additional Information - Adrian Day Global Opportunity Fund
Page 5
<PAGE>

(12) the fact that statistical information regarding the economy of many
emerging market countries may be inaccurate or not comparable to
statistical information regarding the United States or other economies;

(13) less extensive regulation of the securities markets;

(14) certain considerations regarding the maintenance of Fund portfolio
securities and cash with foreign sub-custodians and securities
depositories;

(15) the risk that it may be more difficult, or impossible, to obtain and/or
enforce a judgment than in other countries;

(16) the risk that the Fund may be subject to income or withholding taxes
imposed by emerging market counties or other foreign governments. The Fund
intends to elect, when eligible, to "pass through" to the Fund's
shareholders the amount of foreign income tax and similar taxes paid by
the Fund. The foreign taxes passed through to a shareholder would be
included in the shareholder's income and may be claimed as a deduction or
credit. Other taxes, such as transfer taxes, may be imposed on the Fund,
but would not give rise to a credit or be eligible to be passed through to
the shareholders;

(17) the fact that the Fund also is permitted to engage in foreign currency
hedging transactions and to enter into stock options on stock index
futures transactions, each of which may involve special risks, although
these strategies cannot at the present time be used to a significant
extent by the Fund in the markets in which the Fund will principally
invest;

(18) enterprises in which the Fund invests may be or become subject to unduly
burdensome and restrictive regulation affecting the commercial freedom of
the invested company and thereby diminishing the value of the Fund's
investment in it. Restrictive or over-regulation may, therefore, be a form
of indirect nationalization;

(19) businesses in emerging markets only have a very recent history of
operating within a market-oriented economy. Overall, relative to companies
operating in western economies, companies in emerging markets are
characterized by a lack of (i) experienced management, (ii) modern
technology and (iii) a sufficient capital base with which to develop and
expand their operations. It is unclear what will be the effect on
companies in emerging markets, if any, of attempts to move towards a more
market-oriented economy;

(20) investments in equity 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 Adviser or
Sub-Adviser. As a result, the return and net asset value of the Fund will
fluctuate;

(21) the Sub-Adviser may engage in hedging transactions in an attempt to hedge
the Fund's foreign securities investments back to the U.S. dollar when, in
its judgment, currency movements affecting particular investments are
likely to harm the performance of the Fund. Possible losses from changes
in currency exchange rates are primarily a risk of unhedged investing in
foreign securities. While a security may perform well in a foreign market,
if the local currency declines against the U.S. dollar, gains from the
investment can disappear or become losses. Typically, currency
fluctuations are more extreme than stock market fluctuations. Accordingly,
the strength or weakness of the U.S. dollar against foreign currencies may
account for part of the Fund's performance even when the Sub-Adviser
attempts to minimize currency risk through hedging activities. While
currency hedging may reduce portfolio volatility, there are costs
associated with such hedging, including the loss of potential profits,
losses on hedging transactions, and increased transaction expenses; and

(22) disposition of illiquid securities often takes more time than for more
liquid securities, may result in higher selling expenses and may not be
able to be made at desirable prices or at the prices at which such
securities have been valued by the Fund. As a non-fundamental policy the
Fund will not invest more than 15% of its net assets in illiquid
securities.

LOWER-RATED AND UNRATED DEBT SECURITIES. The Fund may invest up to 15% of its
total assets in debt rated less than investment grade (or unrated) by Standard &
Poor's Corporation (Chicago), Moody's Investors Service (New York), Duff &
Phelps (Chicago), Fitch Investors Service (New York), Thomson Bankwatch (New
York), Canadian Bond Rating Service (Montreal), Dominion Bond Rating Service
(Toronto), IBCA (London), The Japan Bond Research Institute (Tokyo), Japan
Credit Rating Agency (Tokyo), Nippon Investors Service (Tokyo), or S&P-ADEF
(Paris). In calculating the 15% limitation, a debt security will be considered
investment grade if any one of the above listed credit rating agencies rates the
security as investment grade.

Statement of Additional Information - Adrian Day Global Opportunity Fund
Page 6
<PAGE>

Overall, the market for lower-rated or unrated bonds may be thinner and less
active, such bonds may be less liquid and their market prices may fluctuate more
than those of higher-rated bonds, particularly in times of economic change and
market stress. In addition, because the market for lower-rated or unrated
corporate debt securities has in recent years experienced a dramatic increase in
the large-scale use of such securities to fund highly leveraged corporate
acquisitions and restructuring, past experience may not provide an accurate
indication of the future performance of that market or of the frequency of
default, especially during periods of economic recession. Reliable objective
pricing data for lower-rated or unrated bonds may tend to be more limited; in
that event, valuation of such securities in the Fund's portfolio may be more
difficult and will require greater reliance on judgment.

Since the risk of default is generally higher among lower-rated or unrated
bonds, the Sub-Adviser's research and analysis are especially important in the
selection of such bonds, which are often described as "high yield bonds" because
of their generally higher yields and referred to figuratively as "junk bonds"
because of their greater risks.

In selecting lower-rated bonds for investment by the Fund, the Sub-Adviser does
not rely exclusively on ratings, which in any event evaluate only the safety of
principal and interest, not market value risk, and which, additionally, may not
accurately reflect an issuer's current financial condition. The Fund does not
have any minimum rating criteria for its investments in bonds. Through portfolio
diversification, good credit analysis and attention to current developments and
trends in interest rates and economic conditions, investment risk can be
reduced, although there is no assurance that losses will not occur.

ZERO COUPON SECURITIES. The Fund may invest in zero coupon securities that pay
no cash income and are sold at substantial discounts from their value at
maturity. When held from issuance to maturity, their entire income, consisting
of accretion of discount, comes from the difference between the issue price and
their value at maturity. Zero coupon securities are subject to greater market
value fluctuations from changing interest rates than debt obligations of
comparable maturities that make current cash distributions of interest.

RESTRICTED SECURITIES. The Fund may, from time to time, purchase securities that
are subject to restrictions on resale. While such purchases may be made at an
advantageous price and offer attractive opportunities for investment not
otherwise available on the open market, the Fund may not have the same freedom
to dispose of such securities as in the case of the purchase of securities in
the open market or in a public distribution. These securities may often be
resold in a liquid dealer or institutional trading market, but the Fund may
experience delays in its attempts to dispose of such securities. If adverse
market conditions develop, the Fund may not be able to obtain as favorable a
price as that prevailing at the time the decision is made to sell. In any case,
where a thin market exists for a particular security, public knowledge of a
proposed sale of a large block may depress the market price of such securities.

COMMODITY LINKED SECURITIES. The Fund may invest in structured notes and/or
preferred stock, the value of which is linked to the price of a referenced
commodity. Structured notes and/or preferred stock differ from other types of
securities in which the Fund may invest in several respects. For example, not
only the coupon but also the redemption amount at maturity may be increased or
decreased depending on the change in the price of the referenced commodity.
Investment in commodity linked securities involves certain risks. In addition to
the credit risk of the security's issuer and the normal risks of price changes
in response to changes in interest rates, the redemption amount may decrease as
a result of changes in the price of the referenced commodity. Further, in
certain cases the coupon and/or dividend may be reduced to zero, and any
additional decline in the value of the security may then reduce the redemption
amount payable on maturity. Finally, commodity linked securities may be more
volatile than the price of the referenced commodity.

CONVERTIBLE SECURITIES. The Fund may invest in convertible securities, that is,
bonds, notes, debentures, preferred stocks and other securities that are
convertible into or exchangeable for another security, usually common stock.
Convertible debt securities and convertible preferred stocks, until converted,
have general characteristics similar to both debt and equity securities.
Although to a lesser extent than with debt securities generally, the market
value of convertible securities tends to decline as interest rates increase and,
conversely, tends to increase as interest rates decline. In addition, because of
the conversion or exchange feature, the market value of convertible securities
typically increases or declines as the market value of the underlying common
stock increases or declines, although usually not to the same extent.
Convertible securities generally offer lower yields than non-convertible fixed
income securities of similar quality because of their conversion or exchange
features. Convertible bonds and convertible preferred stock typically have lower
credit ratings than similar non-convertible securities because they are
generally subordinated to other similar but non-convertible fixed income
securities of the same issuer.

Statement of Additional Information - Adrian Day Global Opportunity Fund
Page 7
<PAGE>

OTHER RIGHTS TO ACQUIRE SECURITIES. The Fund may also invest in other rights to
acquire securities, such as options and warrants. These securities represent the
right to acquire a fixed or variable amount of a particular issue of securities
at a fixed or formula price either during specified periods or only immediately
before termination. These securities are generally exercisable at premiums above
the value of the underlying securities at the time the right is issued. These
rights are more volatile than the underlying stock and will result in a total
loss of the Fund's investment if they expire without being exercised because the
value of the underlying security does not exceed the exercise price of the
right.

STRATEGIC TRANSACTIONS

The Fund may purchase and sell exchange-listed and over-the-counter put and call
options on securities, equity and fixed-income indices and other financial
instruments, purchase and sell financial futures contracts and options thereon,
and enter into various currency transactions such as currency forward contracts,
currency futures contracts, options on currencies or currency futures
(collectively, all the above are called "Strategic Transactions"). The Fund may
engage in Strategic Transactions for hedging, risk management, or portfolio
management purposes, but not for speculation, and it will comply with applicable
regulatory requirements when implementing these strategies, techniques and
instruments.

Strategic Transactions may be used to attempt (1) to protect against possible
changes in the market value of securities held in or to be purchased for the
Fund's portfolio resulting from securities markets or currency exchange rate
fluctuations, (2) to protect the Fund's unrealized gains in the value of its
portfolio securities, (3) to facilitate the sale of such securities for
investment purposes, (4) to manage the effective maturity or duration of the
Fund's portfolio, or (5) to establish a position in the derivatives markets as a
temporary substitute for purchasing or selling particular securities. The Fund's
ability to successfully use these Strategic Transactions will depend upon the
Sub-Adviser's ability to predict pertinent market movements, and cannot be
assured. Engaging in Strategic Transactions will increase transaction expenses
and may result in a loss that exceeds the principal invested in the
transactions.

Strategic Transactions have risk associated with them including possible default
by the other party to the transaction, illiquidity and, to the extent the
Sub-Adviser's view as to certain market movements is incorrect, the risk that
the use of such Strategic Transactions could result in losses greater than if
they had not been used. Use of put and call options may result in losses to the
Fund. For example, selling call options may force the sale of portfolio
securities at inopportune times or for lower prices than current market values.
Selling call options may also limit the amount of appreciation the Fund can
realize on its investments or cause the Fund to hold a security it might
otherwise sell. The use of currency transactions can result in the Fund
incurring losses as a result of a number of factors including the imposition of
exchange controls, suspension of settlements, or the inability to deliver or
receive a specified currency. The use of options and futures transactions
entails certain other risks. In particular, the variable degree of correlation
between price movements of futures contracts and price movements in the related
portfolio position of the Fund creates the possibility that losses on the
hedging instrument may be greater than gains in the value of the Fund's
position. In addition, futures and option markets may not be liquid in all
circumstances and certain over-the-counter options may have no markets. As a
result, in certain markets, the Fund might not be able to close out a
transaction, and substantial losses might be incurred. However, the use of
futures and options transactions for hedging should tend to minimize the risk of
loss due to a decline in the value of a hedged position. At the same time they
tend to limit any potential gain that might result from an increase in value of
such position. Finally, the daily variation margin requirement for futures
contracts would create a greater on going potential financial risk than would
purchases of options, where the exposure is limited to the cost of the initial
premium. Losses resulting from the use of Strategic Transactions would reduce
net asset value, and possibly income, and such losses can be greater than if the
Strategic Transactions had not been used.

The Fund's activities involving Strategic Transactions may be limited by the
requirements of Subchapter M of the Internal Revenue Code for qualification as a
regulated investment company.

PUT AND CALL OPTIONS. The Fund may purchase and sell (issue) both put and call
options. The Fund may also enter into transactions to close out its investment
in any put or call options.

A put option gives the purchaser of the option, upon payment of a premium, the
right to sell, and the issuer of the option the obligation to buy the underlying
security, commodity, index, currency or other instrument at the exercise price.
For instance, the Fund's purchase of a put option on a security might be
designed to protect its holdings in the underlying instrument (or, in some
cases, a similar instrument) against a substantial decline in the market value
by giving the Fund the right to sell such instrument at the option exercise
price. A call option, upon payment of a premium, gives the purchaser of the
option the right

Statement of Additional Information - Adrian Day Global Opportunity Fund
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<PAGE>

to buy, and the issuer the obligation to sell, the underling instrument at the
exercise price. The Fund's purchase of a call option on a security, financial
future, index currency or other instrument might be intended to protect the Fund
against an increase in the price of the underlying instrument that it intends to
purchase in the future by fixing the price at which it may purchase such
instrument. An "American style" put or call option may be exercised at any time
during the option period while a "European style" put or call option may be
exercised only upon expiration or during a fixed period prior thereto.

The Fund is authorized to purchase and sell both exchange listed options and
over-the-counter options ("OTC options"). Exchange listed options are issued by
a regulated intermediary such as the Options Clearing Corporation ("OCC"), which
guarantees the performance of the obligations of the parties to such options.
OTC options are purchased from or sold to securities dealers, financial
institutions or other parties ["Counterparty(ies)"] through direct bilateral
agreement with the Counterparty. In contrast to exchange listed options, which
generally have standardized terms and performance mechanics, all the terms of an
OTC option are set by negotiation of the parties. Unless the parties provide for
it, there is no central clearing or guaranty function in an OTC option.

The Fund's ability to close out its position as a purchaser or seller of a put
or call option is dependent, in part, upon the liquidity of the market for that
particular option. Exchange listed options, because they are standardized and
not subject to Counterparty credit risk, are generally more liquid than OTC
options. There can be no guarantee that the Fund will be able to close out an
option position, whether in exchange listed options or OTC options, when
desired. An inability to close out its options positions may reduce the Fund's
anticipated profits or increase its losses.

If the Counterparty to an OTC option fails to make or take delivery of the
security, currency or other instrument underlying an OTC option it has entered
into with the Fund, or fails to make a cash settlement payment due in accordance
with the terms of that option, the Fund may lose any premium it paid for the
option as well as any anticipated benefit of the transaction. Accordingly, the
Sub-Adviser must assess the creditworthiness of each such Counterparty or any
guarantor or credit enhancement of the Counterparty's credit to determine the
likelihood that the terms of the OTC option will be satisfied.

The Fund will realize a loss equal to all or a part of the premium paid for an
option if the price of the underlying security, commodity, index, currency or
other instrument security decreases or does not increase by more than the
premium (in the case of a call option), or if the price of the underlying
security, commodity, index, currency or other instrument increases or does not
decrease by more than the premium (in the case of a put option). The Fund will
not purchase any option if, immediately thereafter, the aggregate market value
of all outstanding options purchased by the Fund would exceed 5% of the Fund's
total assets.

If the Fund sells (i.e., issues) a call option, the premium that it receives may
serve as a partial hedge, to the extent of the option premium, against a
decrease in the value of the underlying securities or instruments in its
portfolio, or may increase the Fund's income. If the Fund sells (i.e., issues) a
put option, the premium that it receives may serve to reduce the cost of
purchasing the underlying security, to the extent of the option premium, or may
increase the Fund's capital gains. All options sold by the Fund must be
"covered" (i.e., the Fund must either be long (when selling a call option) or
short (when selling a put option), the securities or futures contract subject to
the calls or must meet the asset segregation requirements described below as
long as the option is outstanding. Even though the Fund will receive the option
premium to help protect it against loss or reduce its cost basis, an option sold
by the Fund exposes the Fund during the term of the option to possible loss.
When selling a call, the Fund is exposed to the loss of opportunity to realize
appreciation in the market price of the underlying security or instrument, and
the transaction may require the Fund to hold a security or instrument that it
might otherwise have sold. When selling a put, the Fund is exposed to the
possibility of being required to pay greater than current market value to
purchase the underlying security, and the transaction may require the Fund to
maintain a short position in a security or instrument it might otherwise not
have maintained. The Fund will not write any call or put options if, immediately
afterwards, the aggregate value of the Fund's securities subject to outstanding
call or put options would exceed 25% of the value of the Fund's total assets.

FUTURES CONTRACTS. The Fund may enter into financial futures contracts or
purchase or sell put and call options on such futures as a hedge against
anticipated interest rate, currency or equity market changes, for duration
management and for risk management purposes. Futures are generally bought and
sold on the commodities exchange where they are listed with payment of an
initial variation margin as described below. The sale of a futures contract
creates a firm obligation by the Fund, as seller, to deliver to the buyer the
specific type of financial instrument called for in the contract at a specific
future time for a specified price (or, with respect to index futures and
Eurodollar instruments, the net cash amount). Options on futures contracts are
similar to options on securities except that an option on a futures contract
gives the purchaser the right in return for the premium paid to assume a
position in a futures contract and obligates the seller to deliver such
position.

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<PAGE>

The Fund's use of financial futures and options thereon will in all cases be
consistent with applicable regulatory requirements and in particular the rules
and regulations of the CFTC and will be entered into only for bonafide hedging,
risk management (including duration management) or other portfolio management
purposes. Typically, maintaining a futures contract or selling an option thereon
requires the Fund to deposit with a financial intermediary as security for its
obligations an amount of cash or other specified assets (initial margin) that
initially is typically 1% to 10% of the face amount of the contract (but may be
higher in some circumstances). Additional cash or assets (variation margin) may
be required to be deposited thereafter on a daily basis as the marked-to-market
value of the contract fluctuates. The purchase of an option on financial futures
involves payment of a premium for the option without any further obligation on
the part of the purchaser. If the Fund exercises an option on a futures
contract, it will be obligated to post initial margin (and potentially
subsequent variation margin) for the resulting futures position just as it would
for any futures position. Futures contracts and options thereon are generally
settled by entering into an offsetting transaction, but there can be no
assurance that the position can be offset, before settlement, at an advantageous
price, nor that delivery will occur.

The Fund will not enter into a futures contract or related option (except for
closing transactions) if, immediately afterwards, the sum of the amount of its
initial margin and premiums on open futures contracts and options thereon would
exceed 5% of the Fund's total assets (taken at current value). However, in the
case of an option that is in-the-money at the time of the purchase, the
in-the-money amount may be excluded in calculating the 5% limitation. The
segregation requirements with respect to futures contracts and options thereon
are described below.

FOREIGN CURRENCY TRANSACTIONS. The Fund may engage in currency transactions with
Counterparties in an attempt to hedge an investment in an issuer incorporated or
operating in a foreign country or in a security denominated in the currency of a
foreign country against a devaluation of that country's currency. Currency
transactions include forward currency contracts, exchange listed currency
futures, and exchange listed and OTC options on currencies. The Fund's dealing
in forward currency contracts and other currency transactions such as futures,
options, and options on futures generally will be limited to hedging involving
either specific transactions or portfolio positions. Transaction hedging is
entering into a currency transaction with respect to specific assets or
liabilities of the Fund, which will generally arise in connection with the
purchase or sale of its portfolio securities or the receipt of income therefrom.
Position hedging is entering into a currency transaction with respect to
portfolio security positions denominated or generally quoted in that currency.

The Fund may cross-hedge currencies by entering into transactions to purchase or
sell one or more currencies that are expected to decline in value relative to
other currencies in which the Fund has (or expects to have) portfolio exposure.

To reduce the effect of currency fluctuations on the value of existing or
anticipated holdings or portfolio securities, the Fund may engage in proxy
hedging. Proxy hedging may be used when the currency to which the Fund's
portfolio is exposed is difficult to hedge. Proxy hedging entails entering into
a forward contract to sell a currency whose changes in value are generally
considered to be linked to a currency in which some or all of the Fund's
portfolio securities are, or are expected to be denominated, and to buy U.S.
dollars.

To hedge against a devaluation of a foreign currency, the Fund may enter into a
forward market contract to sell to banks a set amount of such currency at a
fixed price and at a fixed time in the future. If, in foreign currency
transactions, the foreign currency sold forward by the Fund is devalued below
the price of the forward market contract and more than any devaluation of the
U.S. dollar during the period of the contract, the Fund will realize a gain as a
result of the currency transaction. In this way, the Fund might reduce the
impact of any decline in the market value of its foreign investments
attributable to devaluation of foreign currencies.

The Fund may sell foreign currency forward only as a means of protecting its
foreign investments or to hedge in connection with the purchase and sale of
foreign securities, and may not otherwise trade in the currencies of foreign
countries. Accordingly, the Fund may not sell forward the currency of a
particular country to an extent greater than the aggregate market value (at the
time of making such sale) of the securities held in its portfolio denominated in
that particular foreign currency (or issued by companies incorporated or
operating in that particular foreign country) plus an amount equal to the value
of securities it anticipates purchasing less the value of securities it
anticipates selling, denominated in that particular currency.

As a result of hedging through selling foreign currencies forward, in the event
of a devaluation, it is possible that the value of the Fund's portfolio would
not depreciate as much as the portfolio of a fund holding similar investments
that did not sell foreign currencies forward. Even so, the forward market
contract is not a perfect hedge against devaluation because the value of the
Fund's portfolio securities may decrease more than the amount realized by reason
of the foreign currency transaction. To the extent that the Fund sells forward
currencies that are thereafter revalued upward, the value of the Fund's
portfolio

Statement of Additional Information - Adrian Day Global Opportunity Fund
Page 10
<PAGE>

would appreciate to a lesser extent than the comparable portfolio of a fund that
did not sell those foreign currencies forward. If, in anticipation of a
devaluation of a foreign currency, the Fund sells the currency forward at a
price lower than the price of that currency on the expiration date of the
contract, the Fund will suffer a loss on the contract if the currency is not
devalued, during the contract period, below the contract price. Moreover, it
will not be possible for the Fund to hedge against a devaluation that is so
generally anticipated that the Fund is not able to contract to sell the currency
in the future at a price above the devaluation level it anticipates. It is
possible that, under certain circumstances, the Fund may have to limit its
currency transactions to permit the Fund to qualify as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended ("Code"). Foreign
currency transactions would involve a cost to the Fund, which would vary with
such factors as the currency involved, the length of the contact period and the
market conditions then prevailing.

The Fund will not attempt to hedge all its foreign investments by selling
foreign currencies forward and will do so only to the extent deemed appropriate
by the Sub-Adviser.

USE OF SEGREGATED AND OTHER SPECIAL ACCOUNTS. Many Strategic Transactions, in
addition to other requirements, require that the Fund segregate with its
custodian cash or liquid securities (regardless of type) having an aggregate
value, measured on a daily basis, at least equal to the amount of the
obligations requiring segregation to the extent that the obligations are not
otherwise covered through ownership of the underlying security, financial
instrument or currency. In general, the full amount of any obligation of the
Fund to pay or deliver securities or assets must be covered at all times by (1)
the securities, instruments or currency required to be delivered, or (2) subject
to any regulatory restrictions, an amount of cash or liquid securities at least
equal to the current amount of the obligation must either be identified as
restricted in the Fund's accounting records or be physically segregated in a
separate account at the Fund's custodian. The segregated assets cannot be sold
or transferred unless equivalent assets are substituted in their place or it is
no longer necessary to segregate them. For determining the adequacy of the
liquid securities that have been restricted, the securities will be valued at
market or fair value. If the market or fair value of such securities declines,
additional cash or liquid securities will be restricted on a daily basis so that
the value of the restricted cash or liquid securities, when added to the amount
deposited with the broker as margin, equals the amount of such commitments by
the Fund.

PORTFOLIO TURNOVER

The Fund's management buys and sell securities for the Fund to accomplish
investment objectives. The Fund's investment policy may lead to frequent changes
in investments, particularly in periods of rapidly changing markets. 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."
From February 20, 1997, commencement of operations, through October 31, 1997,
the Fund's portfolio turnover was 13%. 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 that may be taxable to shareholders. Any short
term gain realized on securities will be taxed to shareholders as ordinary
income. See TAX STATUS.

Purchases and sales of securities on behalf of the Fund are executed by
broker-dealers selected by the Sub-Adviser. Broker- dealers are selected on the
basis of their ability to obtain the best price and execution for the Fund's
transactions, recognizing brokerage, research and other services provided to the
Fund and to the Sub-Adviser. The Sub-Adviser may also consider sales of shares
of the Fund as a factor in the selection of broker-dealers. The Fund paid a
total of $17,110 in brokerage fees for the period from February 20, 1997,
commencement of operations, through October 31, 1997.

MANAGEMENT OF THE FUND

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Page 11
<PAGE>

- ------------------------------------
(1) This Trustee may be deemed an "interested person" of the Trust as defined
in the Investment Company Act of 1940.

PRINCIPAL HOLDERS OF SECURITIES

As of January 21, 1998, the officers and Trustees of the Fund, as a group, owned
less than 1% of the outstanding shares of the Fund. The Fund is aware of the
following persons who owned of record, or beneficially, more than 5% of the
outstanding shares of the Fund at January 21, 1998:

Statement of Additional Information - Adrian Day Global Opportunity Fund
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<PAGE>

NAME AND ADDRESS OF OWNER % OWNED TYPE OF OWNERSHIP
--------------------------------- ------- -----------------
Global Strategic Management, Inc. 13.92% Beneficial
Annapolis, Maryland (the Sub-
Advisor)

Security Trust & Financial Co. 12.81% Record (1)
San Antonio, Texas

(1) Security Trust & Financial Co. has advised that no individual
client owns more than 5% of the Fund.

INVESTMENT ADVISORY SERVICES

U. S. Global Investors, Inc., a Texas corporation, serves as investment adviser
to the Fund pursuant to an advisory agreement dated September 21, 1994. Frank E.
Holmes, President and a Director of the Adviser, 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 Adviser and may be deemed to be a controlling
person of the Adviser.

In addition to the services described in the Fund's prospectus, the Adviser
provides the Trust with office space, facilities and simple business equipment,
and provides the services of executive and clerical personnel for administering
the affairs of the Trust. It compensates all personnel, officers and trustees of
the Trust, if such persons are employees of the Adviser or its affiliates,
except that the Trust reimburses the Adviser for part of the compensation of the
Adviser's employees who perform certain legal services for the Trust. The Trust
also pays for state securities law regulatory compliance. The Trust paid the
Adviser $0.00 for the period from February 27, 1997 through October 31, 1997.
This amount reflects fee waivers which reduced advisory fees by $23,137.

The Trust and the Adviser, in connection with the Fund, have entered into a
sub-advisory agreement with another firm as discussed in the Prospectus. The
Adviser pays the Sub-Adviser a sub-advisory fee equal to one-half of the
management fee. The Fund will not be responsible for the Sub-Adviser's fee.

In consideration for such services, the Adviser pays the Sub-Adviser a
sub-advisory fee. The Adviser and the Sub-Adviser share the management fee
equally, except that the Sub-Adviser's fee will be subject to downward
adjustments for: (1) the Adviser's incurred costs and expenses of marketing the
Fund that exceed the 0.25% 12b-1 fee charged to the Fund for such marketing
purposes; (2) any monies advanced by the Adviser on behalf of the Sub-Adviser;
(3) the unrecovered costs of organizing the Fund up to $40,000 (the Adviser will
be responsible for bearing costs of organization of the Fund in excess of
$40,000); and (4) if a decision is made with respect to placing a cap on
expenses, to the extent that actual expenses of the Fund exceed the cap, and the
Adviser is required to pay or absorb any of the excess expenses, by the amount
of the excess expenses paid or absorbed by the Adviser through such downward
adjustments. To the extent that the Sub-Adviser has advanced monies to the
Adviser to pay for Fund distribution or organizational expenses, such advances
shall serve to offset the reductions enumerated above. The Fund is not
responsible for paying any part of the Sub-Adviser's fees.

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,
expenses 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 Adviser,
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, typesetting and mailing prospectuses and periodic reports
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.

Statement of Additional Information - Adrian Day Global Opportunity Fund
Page 13
<PAGE>

The Trust and the Adviser, in connection with the Fund, have entered into a
sub-advisory agreement with another firm as discussed in the prospectus. The
Sub-Adviser's compensation is discussed in the prospectus and is paid by the
Adviser. The Fund will not be responsible for the Sub-Adviser's fee.

The Adviser 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 Adviser's opinion, such laws should not preclude a
bank from performing shareholder administrative and servicing functions as
contemplated herein.

The advisory agreement was approved by the Board of Trustees of the Trust
(including a majority of the "disinterested Trustees") with respect to the Fund
and will be submitted for approval by shareholders of the Fund at the initial
meeting of shareholders. The advisory agreement provides that it will continue
initially for two years, and from year to year thereafter, with respect to each
fund, as long as it is approved at least annually by (i) a vote of a majority of
the outstanding voting securities of such fund [as defined in the Investment
Company Act of 1940 ("Act")] or the Board of Trustees of the Trust, and (ii) 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-day written notice by either party and will terminate
automatically if it is assigned.

Both the Adviser and Sub-Adviser provide investment advise to a variety of
clients (the Adviser also provides investment advice to 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, as far as possible, averaged
as to price and allocated between such clients in a manner which, in the
Adviser's or Sub-Adviser'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 Adviser and Sub-Adviser employ professional
staffs of portfolio managers who draw upon a variety of resources for research
information for the clients.

In addition to advising client accounts, the Adviser invests in securities for
its own account. The Adviser has adopted policies and procedures intended to
minimize or avoid potential conflicts with its clients when trading for its own
account. The Adviser's investment objective and strategies are different from
those of its clients, emphasizing venture capital investing, private placement
arbitrage, and speculative short-term trading. The Adviser uses 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 recapitalization.
Overall, the Adviser invests in start-up companies in the natural resources or
technology fields.

TRANSFER AGENCY AND OTHER SERVICES

In addition to the services performed for the Funds and the Trust under the
advisory agreement, the Adviser, through its subsidiary USSI, provides transfer
agent services pursuant to the advisory agreement as described in the Fund's
prospectus under MANAGEMENT OF THE FUND--THE INVESTMENT ADVISER. In addition,
lockbox and statement printing services are provided by USSI. From February 20,
1997, commencement of operations, through October 31, 1997, the fund paid USSI a
total of $0 for transfer agency, lockbox, and printing fees. The Board of
Trustees recently approved the Transfer Agency and related agreements through
March 8, 1998.

USSI maintained the books and records of the Trust and of each fund of the Trust
until November 1, 1997, at which time Brown Brothers Harriman and Co. assumed
such responsibility. Daily net asset value is calculated as described in the
fund's prospectus under MANAGEMENT OF THE FUND--THE INVESTMENT ADVISER. From
February 20, 1997, commencement of operations, through October 31, 1997, the
fund paid USSI a total of $0 for portfolio accounting services net of fee
waivers.

Statement of Additional Information - Adrian Day Global Opportunity Fund
Page 14
<PAGE>

A & B Mailers, Inc., a corporation wholly owned by the Adviser, provides the
Trust with certain mail handling services. The charges for such services have
been negotiated by the Audit Committee of the Trust and A & B Mailers, Inc. Each
service is priced separately.

DISTRIBUTION PLAN

As described under SERVICE FEE in the prospectus, the Fund has adopted a
distribution plan pursuant to Rule 12b-1 of the 1940 Act ("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, and 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 annually. For the period from February 20, 1997,
commencement of operations, through October 31, 1997, the Fund incurred a total
of $4,614 in distribution fees. The majority of these fees were used to pay for
printing and mailing of prospectuses. Distribution expenses paid by the Adviser
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 the Fund incurs pursuant to the distribution plan are reviewed
quarterly by the Board of Trustees. The distribution plan is reviewed annually
by the Board of Trustees as a whole, and the Trustees who are not "interested
persons" as that term is defined in the 1940 Act and who have no direct or
indirect financial interest in the operation of the distribution plan
("Qualified Trustees"). In their review of the distribution plan, the Board as a
whole and the Qualified Trustees separately determine whether, in their
reasonable business judgment and considering their fiduciary duties under state
law and 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 it
attracts more shareholders.

CERTAIN PURCHASES OF SHARES OF THE FUND

Shares of the Fund are continuously offered by the Trust at their net asset
value next determined after an order is accepted. The methods available for
purchasing shares of the Fund are described in the Prospectus. In addition,
shares of the Fund may be purchased using stock, so long as the securities
delivered to the Trust meet the investment objectives and concentration policies
of the Fund, and are otherwise acceptable to the Adviser, 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 that is readily ascertainable (and not
established only by evaluation procedures) as evidenced by a listing on
the AMEX, the NYSE, or NASDAQ;

(4) any securities so acquired by any fund shall not comprise over 5% of that
fund's net assets at the time of such exchange;

Statement of Additional Information - Adrian Day Global Opportunity Fund
Page 15
<PAGE>

(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.

An investor who wishes to make an "in kind" purchase should furnish a list
(either in writing or by telephone) to the Trust with a full and exact
description of all of the securities he or she proposes to deliver. The Trust
will advise him or her as to those securities 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 is 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

REDEMPTION IN KIND. The Trust reserves the right to redeem shares of the Fund in
cash or in kind. However, the Trust has elected to be governed by Rule 18f-1
under the Investment Company Act of 1940, pursuant to which the Trust is
obligated to redeem shares of the Fund solely in cash up to the lesser of
$250,000 or one percent of the net asset value of the Fund during any 90-day
period for any one shareholder. Any shareholder of the Fund receiving a
redemption in kind would then have to pay brokerage fees to convert his Fund
investment into cash. All redemptions in kind will be made in marketable
securities of the Fund.

CALCULATION OF PERFORMANCE DATA

n
P(1+T) = ERV

Statement of Additional Information - Adrian Day Global Opportunity Fund
Page 16
<PAGE>

The calculation assumes that (1) all charges are deducted from the initial
$1,000 payment, (2) all dividends and distributions by the Fund are reinvested
at the price stated in the prospectus on the reinvestment dates during the
period and (3) all recurring fees charged to all shareholder accounts are
included.

The average annual total return for the Fund for the period from February 20,
1997 (commencement of operations), through October 31, 1997, was (10.40)%. This
number has not been annualized.

NONSTANDARDIZED TOTAL RETURN. The Fund may provide the above described standard
total return results for a period that ends not earlier than the most recent
calendar quarter end and 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.

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 ("Code"). Accordingly, the Fund will
not be liable for Federal income taxes on its taxable net investment income and
capital gain net income distributed to shareholders if the Fund distributes at
least 90% of its net investment income and net short-term capital gain for the
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 part (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 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 paid 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 then includes the amount of any forthcoming distribution. Those
investors purchasing the Fund's shares immediately before a distribution may
receive a return of investment upon distribution, which will nevertheless be
taxable to them.

Statement of Additional Information - Adrian Day Global Opportunity Fund
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<PAGE>

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, FUND ACCOUNTANT AND ADMINISTRATOR

INDEPENDENT ACCOUNTANTS

Price Waterhouse LLP, 700 North St. Mary's, San Antonio, Texas 78205, is the
independent accountant for the Trust.

FINANCIAL STATEMENTS

The financial statements for the year ended October 31, 1997, are hereby
incorporated by reference from the U.S. GLOBAL ACCOLADE FUNDS 1997 ANNUAL REPORT
TO SHAREHOLDERS of that date that accompanies this Statement of Additional
Information. If not included, the Trust will promptly provide a copy, free of
charge, upon request to: U.S. Global Investors, Inc., P.O. Box 29467, San
Antonio, Texas 78229-0467, 1-800-873-8637 or (210) 308-1234.

Statement of Additional Information - Adrian Day Global Opportunity Fund
Page 18
<PAGE>

================================================================================
REGENT EASTERN EUROPEAN FUND STATEMENT OF ADDITIONAL INFORMATION
================================================================================

U.S. GLOBAL ACCOLADE FUNDS

REGENT EASTERN EUROPEAN FUND
STATEMENT OF ADDITIONAL INFORMATION

The date of this Statement of Additional Information is February 2, 1998.
<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

TABLE OF CONTENTS

PAGE

GENERAL INFORMATION.........................................................3

INVESTMENT OBJECTIVES AND POLICIES..........................................3

RISK FACTORS................................................................4

PORTFOLIO TRANSACTIONS.....................................................12

MANAGEMENT OF THE FUND.....................................................12

PRINCIPAL HOLDERS OF SECURITIES............................................13

INVESTMENT ADVISORY SERVICES...............................................14

TRANSFER AGENCY AND OTHER SERVICES.........................................15

DISTRIBUTION PLAN..........................................................15

CERTAIN PURCHASES OF SHARES OF THE FUND....................................16

ADDITIONAL INFORMATION ON REDEMPTIONS......................................17

CALCULATION OF PERFORMANCE DATA............................................17

TAX STATUS.................................................................18

CUSTODIAN, FUND ACCOUNTANT AND ADMINISTRATOR...............................18

INDEPENDENT ACCOUNTANTS ...................................................19

FINANCIAL STATEMENTS.......................................................19

Statement of Additional Information - Regent Eastern European Fund
Page 2
<PAGE>

GENERAL INFORMATION

U.S. Global Accolade Funds ("Trust") is an open-end management investment
company and is a business trust organized under the laws of the Commonwealth of
Massachusetts. There are several series within the Trust, each of which
represents a separate diversified portfolio of securities ("Portfolio"). This
Statement of Additional Information ("SAI") presents important information
concerning the Regent Eastern European Fund ("Fund") and should be read in
conjunction with the Prospectus.

The assets received by the Trust from the issue or sale of shares of the Fund
and all income, earnings, profits and proceeds thereof, subject only to the
rights of creditors, are separately allocated to such Fund. They constitute the
underlying assets of the Fund, are required to be segregated on the books of
accounts, and are to be charged with the expenses with respect to such fund. Any
general expenses of the Trust, not readily identifiable as belonging to a
particular fund, will be allocated by or under the direction of the Board of
Trustees in such manner as the Board determines to be fair and equitable.

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. The Trustees serve 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 that does not
affect their fund.

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.

FUNDAMENTAL INVESTMENT RESTRICTIONS. The Fund will not change any of the
following investment restrictions without the affirmative vote of a majority of
the outstanding voting securities of the Fund, which, as used herein, means the
lesser of: (1) 67% of that Fund's outstanding shares present at a meeting at
which more than 50% of the outstanding shares of that Fund are represented
either in person or by proxy, or (2) more than 50% of that Fund's outstanding
shares.

Statement of Additional Information - Regent Eastern European Fund
Page 3
<PAGE>

The Fund may not:

(1) Issue senior securities.

(2) Borrow money, except that the Fund may borrow not in excess of 5% of its
total assets from banks as a temporary measure for extraordinary purposes,
may borrow up to 331/3% of the amount of its total assets (reduced by the
amount of all liabilities and indebtedness other than such borrowing) when
deemed desirable or appropriate to effect redemptions provided, however,
that the Fund will not purchase additional securities while borrowings
exceed 5% of the total assets of the Fund.

(3) Underwrite the securities of other issuers.

(4) Invest in real estate.

(5) Engage in the purchase or sale of commodities or commodity futures
contracts, except that the Fund may invest in futures contracts, forward
contracts, options, and other derivative investments in conformance with
policies disclosed in the Fund's then current Prospectus and/or Statement
of Additional Information.

(7) Purchase any security on margin, except that it may obtain such short-term
credits as are necessary for clearance of securities transactions.

(8) Sell short more than 5% of its total assets.

(10) With respect to 75% of its total assets, the Fund will not: (a) invest more
than 5% of the value of its total assets in securities of any one issuer,
except such limitation shall not apply to obligations issued or guaranteed
by the United States ("U.S.") Government, its agencies or
instrumentalities; or (b) acquire more than 10% of the voting securities of
any one issuer.

(11) Invest more than 10% of its total net assets in investment companies. To
the extent that the Fund shall invest in open-end investment companies, the
Fund's Adviser and Sub-Adviser shall waive a proportional amount of their
management fee.

RISK FACTORS

The following information supplements the discussion of the Fund's risk factors
discussed in the Fund's Prospectus. The following are among the most significant
risks associated with an investment in the Fund.

EQUITY PRICE FLUCTUATION. Equity securities are subject to price fluctuations
depending on a variety of factors, including market, business, and economic
conditions.

Statement of Additional Information - Regent Eastern European Fund
Page 4
<PAGE>

securities also involve the risk of possible adverse changes in investment or
exchange control regulations, foreign exchange rates, expropriation or
confiscatory taxation, limitation of the removal of funds or other assets of the
Fund, political or financial instability or diplomatic and other developments
that could affect such investment. In addition, economies of particular
countries or areas of the world may differ favorably or unfavorably from the
economy of the United States. It is anticipated that in most cases the best
available market for foreign securities will be on exchanges or in
over-the-counter markets located outside of the United States. Foreign stock
markets, while growing in volume and sophistication, are generally not as
developed as those in the United States, and securities of some foreign issuers
(particularly those located in developing countries) may be less liquid and more
volatile than securities of comparable United States companies. In addition,
foreign brokerage commissions are generally higher than commissions on
securities traded in the United States and may be non-negotiable. In general,
there is less overall governmental supervision and regulation of foreign
securities markets, broker-dealers, and issuers than in the United States.

EMERGING MARKETS. Investing in emerging markets involves risks and special
considerations not typically associated with investing in other more established
economies or securities markets. Investors should carefully consider their
ability to assume the risks listed below before making an investment in the
Fund. Investing in emerging markets is considered speculative and involves the
risk of total loss. Because the Fund's investments will be subject to the market
fluctuations and risks inherent in all investments, there can be no assurance
that the Fund's stated objective will be realized. The Fund's Adviser and
Sub-Adviser will seek to minimize these risks through professional management
and investment diversification. As with any long-term investment, the value of
shares when sold may be higher or lower than when purchased.

Risks of investing in emerging markets include:

(1) the risk that the Fund's assets may be exposed to nationalization,
expropriation, or confiscatory taxation;

(2) the fact that emerging market securities markets are substantially smaller,
less liquid and more volatile than the securities markets of more developed
nations The relatively small market capitalization and trading volume of
emerging market securities may cause the Fund's investments to be
comparatively less liquid and subject to greater price volatility than
investments in the securities markets of developed nations. Many emerging
markets are in their infancy and have yet to be exposed to a major
correction. In the event of such an occurrence, the absence of various
market mechanisms, which are inherent in the markets of more developed
nations, may lead to turmoil in the market place, as well as the inability
of the Fund to liquidate its investments;

(3) greater social, economic and political uncertainty (including the risk of
war);

(4) greater price volatility, substantially less liquidity and significantly
smaller market capitalization of securities markets;

(5) currency exchange rate fluctuations and the lack of available currency
hedging instruments;

(6) higher rates of inflation;

(7) controls on foreign investment and limitations on repatriation of invested
capital and on the Fund's ability to exchange local currencies for U.S.
dollars;

(8) greater governmental involvement in and control over the economy;

(9) the fact that emerging market companies may be smaller, less seasoned and
newly organized;

(10) the difference in, or lack of, auditing and financial reporting standards
that may result in unavailability of material information about issuers;

(11) the fact that the securities of many companies may trade at prices
substantially above book value, at high price/earnings ratios, or at prices
that do not reflect traditional measures of value;

Statement of Additional Information - Regent Eastern European Fund
Page 5
<PAGE>

(13) less extensive regulation of the securities markets;

(14) certain considerations regarding the maintenance of Fund portfolio
securities and cash with foreign sub-custodians and securities
depositories;

(15) the risk that it may be more difficult, or impossible, to obtain and/or
enforce a judgment than in other countries;

(16) the risk that the Fund may be subject to income, capital gains or
withholding taxes imposed by emerging market countries or other foreign
governments. The Fund intends to elect, when eligible, to "pass through" to
the Fund's shareholders the amount of foreign income tax and similar taxes
paid by the Fund. The foreign taxes passed through to a shareholder would
be included in the shareholder's income and may be claimed as a deduction
or credit. Other taxes, such as transfer taxes, may be imposed on the Fund,
but would not give rise to a credit or be eligible to be passed through to
the shareholders;

(18) the risk that enterprises in which the Fund invests may be or become
subject to unduly burdensome and restrictive regulation affecting the
commercial freedom of the invested company and thereby diminishing the
value of the Fund's investment in it. Restrictive or over regulation may
therefore be a form of indirect nationalization;

(19) the risk that businesses in emerging markets have only a very recent
history of operating within a market-oriented economy. In general, relative
to companies operating in western economies, companies in emerging markets
are characterized by a lack of (i) experienced management, (ii) modern
technology and (iii) sufficient capital base with which to develop and
expand their operations. It is unclear what will be the effect on companies
in emerging markets, if any, of attempts to move towards a more
market-oriented economy;

(20) the fact that investments in equity 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
Adviser or Sub-Adviser. As a result, the return and net asset value of the
Fund will fluctuate;

(21) the fact that the Sub-Adviser may engage in hedging transactions in an
attempt to hedge the Fund's foreign securities investments back to the U.S.
dollar when, in its judgment, currency movements affecting particular
investments are likely to harm the performance of the Fund. Possible losses
from changes in currency exchange rates are primarily a risk of unhedged
investing in foreign securities. While a security may perform well in a
foreign market, if the local currency declines against the U.S. dollar,
gains from the investment can disappear or become losses. Typically,
currency fluctuations are more extreme than stock market fluctuations.
Accordingly, the strength or weakness of the U.S. dollar against foreign
currencies may account for part of the Fund's performance even when the
Sub-Adviser attempts to minimize currency risk through hedging activities.
While currency hedging may reduce portfolio volatility, there are costs
associated with such hedging, including the loss of potential profits,
losses on hedging transactions, and increased transaction expenses; and

LOWER-RATED AND UNRATED DEBT SECURITIES. The Fund may invest up to 5% of its
total assets in debt rated less than investment grade (or unrated) by Standard &
Poor's Corporation (Chicago), Moody's Investors Service (New York), Duff &
Phelps (Chicago), Fitch Investors Service (New York), Thomson Bankwatch (New
York), Canadian Bond Rating Service (Montreal), Dominion Bond Rating Service
(Toronto), IBCA (London), The Japan Bond Research Institute (Tokyo), Japan
Credit Rating Agency (Tokyo), Nippon Investors Service (Tokyo), or S&P-ADEF
(Paris). In calculating the 5% limitation, a debt security will be considered
investment grade if any one of the above listed credit rating agencies rates the
security as investment grade.

Statement of Additional Information - Regent Eastern European Fund
Page 6
<PAGE>

stress. In addition, because the market for lower-rated or unrated corporate
debt securities has in recent years experienced a dramatic increase in the
large-scale use of such securities to fund highly leveraged corporate
acquisitions and restructuring, past experience may not provide an accurate
indication of the future performance of that market or of the frequency of
default, especially during periods of economic recession. Reliable objective
pricing data for lower-rated or unrated bonds may tend to be more limited; in
that event, valuation of such securities in the Fund's portfolio may be more
difficult and will require greater reliance on judgment.

In selecting lower-rated bonds for investment by the Fund, the Sub-Adviser does
not rely exclusively on ratings, which in any event evaluate only the safety of
principal and interest, not market value risk, and which furthermore, may not
accurately reflect an issuer's current financial condition. The Fund does not
have any minimum rating criteria for its investments in bonds. Through portfolio
diversification, good credit analysis and attention to current developments and
trends in interest rates and economic conditions, investment risk can be
reduced, although there is no assurance that losses will not occur.

OTHER RIGHTS TO ACQUIRE SECURITIES. The Fund may also invest in other rights to
acquire securities, such as options and warrants. These securities represent the
right to acquire a fixed or variable amount of a particular issue of securities
at a fixed or formula price either during specified periods or only immediately
before termination. These securities are generally exercisable at premiums above
the value of the underlying securities at the time the right is issued. These
rights are more volatile than the underling stock and will result in a total
loss of the Fund's investment if they expire without being exercised because the
value of the underlying security does not exceed the exercise price of the
right.

STRATEGIC TRANSACTIONS

Statement of Additional Information - Regent Eastern European Fund
Page 7
<PAGE>

The Fund's activities involving Strategic Transactions may be limited by the
requirements of Subchapter M of the Internal Revenue Code for qualification as a
regulated investment company.

ADRS AND GDRS. The Fund may invest in sponsored or unsponsored American
Depository Receipts ("ADRs") or Global Depository Receipts ("GDRs") representing
shares of companies located in the Eastern Europe region. ADRs are depository
receipts typically issued by a U.S. bank or trust company that evidence
ownership of underlying securities issued by a foreign corporation. GDRs are
typically issued by foreign banks or trust companies, although they also may be
issued by U.S. banks or trust companies, and evidence ownership of underlying
securities issued by either a foreign or a United States corporation. Generally,
depository receipts in registered form are designed for use in the U.S.
securities market, and depository receipts in bearer form are designed for use
in securities markets outside the United States. Depository receipts may not
necessarily be denominated in the same currency as the underlying securities
into which they may be converted. In addition, the issuers of the securities
underlying unsponsored depository receipts are not obligated to disclose
material information in the United States; and, therefore, there may be less
information available regarding such issuers and there may not be a correlation
between such information and the market value of the depository receipts. For
purposes of the Fund's investment policies, the Fund's investments in depository
receipts will be deemed to be investments in the underlying securities.

FUTURES CONTRACTS. The Fund may sell futures contracts to hedge against a
decline in the market price of securities it owns or to defend the portfolio
against currency fluctuations. When the Fund establishes a short position by
selling a futures contract, the Fund will be required to deposit with the broker
an amount of cash or U.S. Treasury bills equal to approximately 5% of the
contract amount ("initial margin"). The nature of initial margin in futures
transactions is different from that of margin in securities transactions in that
futures contract margin does not involve the borrowing of funds by the customer
to finance the transactions. Rather, initial margin is in the nature of a
performance bond or good faith deposit on the contract is returned to the Fund
upon termination of the futures contract assuming all the Fund's contractual
obligations have been satisfied. Subsequent payments, called variation margin,
to and from the broker will be made on a daily basis as the price of the
underlying currency or stock index fluctuates making a short position in the
futures contract more or less valuable, a process known as "marking-to-market."
For example, when the Fund has sold a currency futures contract and the prices
of the stocks included in the underlying currency has fallen, that position will
have increased in value and the Fund will

Statement of Additional Information - Regent Eastern European Fund
Page 8
<PAGE>

receive from the broker a variation margin payment equal to that increase in
value. Conversely, when the Fund has sold a currency futures contract and the
prices of the underlying currency has risen, the position would be less valuable
and the Fund would be required to make a variation margin payment to the broker.
At any time before expiration of the futures contract, the Fund may elect to
close the position by taking an opposite position, which will operate to
terminate the Fund's position in the futures contract. A final determination of
variation margin is then made, additional cash is required to be paid by or
released to the Fund, and it realizes a loss or a gain.

There is a risk that futures contract price movements will not correlate
perfectly with movements in the value of the underlying stock index. For a
number of reasons the price of the stock index future may move more than or less
than the price of the securities that make up the index. First, all participants
in the futures market are subject to margin deposit and maintenance
requirements. Rather than meeting additional margin deposit requirements,
investors may close futures contracts through offsetting transactions that could
distort the normal relationship between the index and futures markets. Secondly,
from the point of view of speculators, the deposit requirements in the futures
market are less onerous than margin requirements in the stock market. Therefore,
increased participation by speculators in the futures market may also cause
temporary price distortions.

There is an additional risk that a liquid secondary trading market may not exist
at all times for these futures contracts, in which event the Fund might be
unable to terminate a futures position at a desired time. Positions in stock
index futures may be closed out only on an exchange or board of trade that
provides a secondary market for such futures. Although the Fund intends to
purchase futures only on exchanges or boards of trade where there appears to be
an active secondary market, there is no assurance that a liquid secondary market
on an exchange or board of trade will exist for any particular contract or at
any particular time. If there is not a liquid secondary market at a particular
time, it may not be possible to close a futures position at such time, and in
the event of adverse price movements, the Fund would continue to be required to
make daily cash payments of variation margin.

OPTIONS. The Fund may sell call options or purchase put options on futures
contracts to hedge against a decline in the market price of securities that it
owns or to defend the portfolio against currency fluctuations. Options on
futures contracts differ from options on individual securities in that the
exercise of an option on a futures contract does not involve delivery of an
actual underlying security. Options on futures contracts are settled in cash
only. The purchaser of an option receives a cash settlement amount and the
writer of an option is required, in return for the premium received, to make
delivery of a certain amount if the option is exercised. A position in an option
on a futures contract may be offset by either the purchaser or writer by
entering into a closing transaction, or the purchaser may terminate the option
by exercising it or allowing it to expire.

The risks associated with the purchase and sale of options on futures contracts
are generally the same as those relating to options on individual securities.
However, the value of an option on a futures contract depends primarily on
movements in the value of the currency or the stock index underlying the futures
contract rather than in the price of a single security. Accordingly, the Fund
will realize a gain or loss from purchasing or writing an option on a futures
contract as a result of movements in the related currency or in the stock market
generally rather than changes in the price for a particular security. Therefore,
successful use of options on futures contracts by the Fund will depend on the
Adviser's ability to predict movements in the direction of the currency or stock
market underlying the futures contract. The ability to predict these movements
requires different skills and techniques than predicting changes in the value of
individual securities.

Because index options are settled in cash, the Fund cannot be assured of
covering its potential settlement obligations under call options it writes on
futures contracts by acquiring and holding the underlying securities. Unless the
Fund has cash on hand that is sufficient to cover the cash settlement amount, it
would be required to sell securities owned in order to satisfy the exercise of
the option.

As a non-fundamental policy the Fund will not invest more than 5% of its total
net assets in options.

SEGREGATED ASSETS AND COVERED POSITIONS. When purchasing a stock index futures
contract, selling an uncovered call option, or purchasing securities on a
when-issued or delayed delivery basis, the Fund will restrict cash that may be
invested in repurchase obligations or liquid securities. When purchasing a stock
index futures contract, the amount of restricted cash or liquid securities, when
added to the amount deposited with the broker as margin, will be at least equal
to the market value of the futures contract and not less than the market price
at which the futures contract was established. When selling an uncovered call
option, the amount of restricted cash or liquid securities, when added to the
amount deposited with the broker as margin, will be at least equal to the value
of securities underlying the call option and not less than the strike price of
the

Statement of Additional Information - Regent Eastern European Fund
Page 9
<PAGE>

call option. When purchasing securities on a when-issued or delayed delivery
basis, the amount of restricted cash or liquid securities will be at least equal
to the Fund's when-issued or delayed delivery commitments.

The restricted cash or liquid securities will either be identified as being
restricted in the Fund's accounting records or physically segregated in a
separate account at Brown Brothers Harriman & Co., the Fund's custodian. For the
purpose of determining the adequacy of the liquid securities that have been
restricted, the securities will be valued at market or fair value. If the market
or fair value of such securities declines, additional cash or liquid securities
will be restricted on a daily basis so that the value of the restricted cash or
liquid securities, when added to the amount deposited with the broker as margin,
equals the amount of such commitments by the Fund.

Many strategic transactions, such as futures contracts and options, in addition
to other requirements, require that the Fund segregate with its custodian cash
or liquid securities (regardless of type) having an aggregate value, measured on
a daily basis, at least equal to the amount of the obligations requiring
segregation to the extent that the obligations are not otherwise covered through
ownership of the underlying security, financial instrument or currency. In
general, the full amount of any obligation of the Fund to pay or deliver
securities or assets must be covered at all times by (1) the securities,
instruments or currency required to be delivered, or (2) subject to any
regulatory restrictions, an amount of cash or liquid securities at least equal
to the current amount of the obligation must either be identified as restricted
in the Fund's accounting records or be physically segregated in a separate
account at the Fund's custodian. The segregated assets cannot be sold or
transferred unless equivalent assets are substituted in their place or it is no
longer necessary to segregate them. For determining the adequacy of the liquid
securities that have been restricted, the securities will be valued at market or
fair value. If the market or fair value of such securities declines, additional
cash or liquid securities will be restricted on a daily basis so that the value
of the restricted cash or liquid securities, when added to the amount deposited
with the broker as margin, equals the amount of such commitments by the Fund.

The Fund could cover a call option that it has sold by holding the same currency
or security (or, in the case of a stock index, a portfolio of stock
substantially replicating the movement of the index) underlying the call option.
The Fund may also cover by holding a separate call option of the same security
or stock index with a strike price no higher than the strike price of the call
option sold by the Fund. The Fund could cover a call option that it has sold on
a futures contract by entering into a long position in the same futures contract
at a price no higher than the strike price of the call option or by owning the
securities or currency underlying the futures contract. The Fund could also
cover a call option that it has sold by holding a separate call option
permitting it to purchase the same futures contract at a price no higher than
the strike price of the call option sold by the Fund.

FOREIGN CURRENCY TRANSACTIONS. Investments in foreign companies usually involve
use of currencies of foreign countries. The Fund also may hold cash and
cash-equivalent investments in foreign currencies. The value of the Fund's
assets as measured in U.S. dollars will be affected by changes in currency
exchange rates and exchange control regulations. The Fund may, as appropriate
markets are developed, but is not required to, engage in currency transactions
including cash market purchases at the spot rates, forward currency contracts,
exchange listed currency futures, exchange listed and over-the-counter options
on currencies, and currency swaps for two purposes. One purpose is to settle
investment transactions. The other purpose is to try to minimize currency risks.

All currency transactions involve a cost. Although foreign exchange dealers
generally do not charge a fee, they do realize a profit based on the difference
(spread) between the prices at which they are buying and selling various
currencies. Commissions are paid on futures options and swaps transactions, and
options require the payment of a premium to the seller.

A forward contract involves a privately negotiated obligation to purchase or
sell at a price set at the time of the contract with delivery of the currency
generally required at an established future date. A futures contract is a
standardized contract for delivery of foreign currency traded on an organized
exchange that is generally settled in cash. An option gives the right to enter
into a contract. A swap is an agreement based on a nominal amount of money to
exchange the differences between currencies.

The Fund will generally use spot rates or forward contracts to settle a security
transaction or handle dividend and interest collection. When the Fund enters
into a contract for the purchase or sale of a security denominated in a foreign
currency or has been notified of a dividend or interest payment, it may desire
to lock in the price of the security or the amount of the payment in dollars. By
entering into a spot rate or forward contract, the Fund will be able to protect
itself against a possible

Statement of Additional Information - Regent Eastern European Fund
Page 10
<PAGE>

loss resulting from an adverse change in the relationship between different
currencies from the date the security is purchased or sold to the date on which
payment is made or received or when the dividend or interest is actually
received.

The Fund may use forward or futures contracts, options, or swaps when the
investment manager believes the currency of a particular foreign country may
suffer a substantial decline against another currency. For example, it may enter
into a currency transaction to sell, for a fixed amount of dollars, the amount
of foreign currency approximating the value of some or all of the Fund's
portfolio securities denominated in such foreign currency. The precise matching
of the securities transactions and the value of securities involved generally
will not be possible. The projection of short-term currency market movements is
extremely difficult and successful execution of a short-term strategy is highly
uncertain.

The Fund may engage in proxy hedging. Proxy hedging is often used when the
currency to which a fund's portfolio is exposed is difficult to hedge. Proxy
hedging entails entering into a forward contract to sell a currency whose
changes in value are generally considered to be linked to a currency or
currencies in which some or all of the Fund's portfolio securities are or are
expected to be denominated, and simultaneously buy U.S. dollars. The amount of
the contract would not exceed the value of the Fund's securities denominated in
linked securities.

The Fund will not enter into a currency transaction or maintain an exposure as a
result of the transaction when it would obligate the Fund to deliver an amount
of foreign currency in excess of the value of the Fund's portfolio securities or
other assets denominated in that currency. The Fund will designate cash or
securities in an amount equal to the value of the Fund's total assets committed
to consummating the transaction. If the value of the securities declines,
additional cash or securities will be designated on a daily basis so that the
value of the cash or securities will equal the amount of the Fund's commitment.

On the settlement date of the currency transaction, the Fund may either sell
portfolio securities and make delivery of the foreign currency or retain the
securities and terminate its contractual obligation to deliver the foreign
currency by purchasing an offsetting position. It is impossible to forecast what
the market value of portfolio securities will be on the settlement date of a
currency transaction. Accordingly, it may be necessary for the Fund to buy
additional foreign currency on the spot market (and bear the expense of such
purchase) if the market value of the securities are less than the amount of
foreign currency the Fund is obligated to deliver and a decision is made to sell
the securities and make delivery of the foreign currency. Conversely, it may be
necessary to sell on the spot market some of the foreign currency received on
the sale of the portfolio securities if its market value exceeds the amount of
foreign currency the Fund is obligated to deliver. The Fund will realize gains
or losses on currency transactions.

The Fund may also buy put options and write covered call options on foreign
currencies to try to minimize currency risks. The risk of buying an option is
the loss of premium. The risk of selling (writing) an option is that the
currency option will minimize the currency risk only up to the amount of the
premium, and then only if rates move in the expected direction. If this does not
occur, the option may be exercised and the Fund would be required to buy the
underlying currency at the loss that may not be offset by the amount of the
premium. Through the writing of options on foreign currencies, the Fund may also
be required to forego all or part of the benefits that might otherwise have been
obtained from favorable movements on exchange rates. All options written on
foreign currencies will be covered; that is, the Fund will own securities
denominated in the foreign currency, hold cash equal to its obligations or have
contracts that offset the options.

The Fund may construct a synthetic foreign currency investment, sometimes called
a structured note, by (a) purchasing a money market instrument that is a note
denominated in one currency, generally U.S. dollars, and (b) concurrently
entering into a forward contract to deliver a corresponding amount of that
currency in exchange for a different currency on a future date and at a
specified rate of exchange. Because the availability of a variety of highly
liquid short-term U.S. dollar market instruments, or notes, a synthetic money
market position utilizing such U.S. dollar instruments may offer greater
liquidity than direct investment in foreign currency.

CURRENCY FLUCTUATIONS--"SECTION 988" GAINS OR LOSSES. Under the Code, gains or
losses attributable to fluctuations in exchange rates which occur between the
time the Fund accrues interest or other receivables, or accrues expenses or
other liabilities denominated in a foreign currency and the time the Fund
actually collects such receivables or pays such liabilities are treated as
ordinary income or ordinary loss. Similarly, gains or losses from the
disposition of foreign currencies or from the disposition of debt securities
denominated in a foreign currency attributable to fluctuations in the value of
the foreign

Statement of Additional Information - Regent Eastern European Fund
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<PAGE>

currency between the date of acquisition of the currency or security and the
date of disposition also are treated as ordinary gain or loss. These gains or
losses, referred to under the Code as "section 988" gains or losses, increase or
decrease the amount of the Fund's net investment income (which includes, among
other things, dividends, interest and net short-term capital gains in excess of
net long-term capital losses, net of expenses) available to be distributed to
its shareholders as ordinary income, rather than increasing or decreasing the
amount of the Fund's net capital gain. If section 988 losses exceed such other
net investment income during a taxable year, any distributions made by the Fund
could be recharacterized as a return of capital to shareholders, rather than as
an ordinary dividend, reducing each shareholder's basis in his Fund shares. To
the extent that such distributions exceed such shareholder's basis, they will be
treated as a gain from the sale of shares. As discussed below, certain gains or
losses with respect to forward foreign currency contracts, over-the-counter
options or foreign currencies and certain options graded on foreign exchanges
will also be treated as section 988 gains or losses.

Forward currency contracts and certain options entered into by the Fund may
create "straddles" for U.S. Federal income tax purposes and this may affect the
character of gains or losses realized by the Fund on forward currency contracts
or on the underlying securities and cause losses to be deferred. The Fund may
also be required to "mark-to-market" certain positions in its portfolio (i.e.,
treat them as if they were sold at year end). This could cause the Fund to
recognize income without having the cash to meet the distribution requirements.

PORTFOLIO TRANSACTIONS

The Sub-Adviser may use research services provided by and place agency
transactions with Regent European Securities, an affiliated broker-dealer of the
Sub-Adviser, if the commissions are fair, reasonable and comparable to
commissions charged by non-affiliated, qualified brokerage firms for similar
services. Regent European Securities was established in 1995 as a specialist
broker-dealer in the Russian securities market and has since developed into a
significant participant in the growing Russian market. For the period from March
31, 1997, commencement of operations, through October 31, 1997, the Fund paid no
commissions to Regent European Securities out of total commissions of $22,365.

The Fund's management buys and sells securities for the Fund to accomplish its
investment objectives. The Fund's investment policy may lead to frequent changes
in investments, particularly in periods of rapidly changing markets. The Fund's
investments may also be traded to take advantage of perceived short-term
disparities in market values.

A change in the securities held by the Fund is known as "portfolio turnover." A
high portfolio turnover rate may cause the Fund to pay higher transaction
expenses, including more commissions and markups, and also result in quicker
recognition of capital gains, resulting in more capital gain distributions that
may be taxable to shareholders. Any short term gain realized on securities will
be taxed to shareholders as ordinary income. See TAX STATUS.

MANAGEMENT OF THE FUND

Statement of Additional Information - Regent Eastern European Fund
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<PAGE>

NAME AND ADDRESS TRUST POSITION PRINCIPAL OCCUPATION
- ------------------- -------------- -----------------------------------------
Clark R. Mandigo Trustee Business consultant since 1991. From 1985
1250 N.E. Loop 410 to 1991, President, Chief Executive
Suite 900 Officer, and Director of Intelogic Trace,
San Antonio, Texas Inc., a nationwide company which sells,
78209 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.

- ------------------------------------
(1) This Trustee may be deemed an "interested person" of the Trust as defined
in the Investment Company Act of 1940.

PRINCIPAL HOLDERS OF SECURITIES

As of January 21, 1998, the officers and trustees of the Fund, as a group, owned
less then 1% of the outstanding shares of the Fund. The Fund is aware of the
following persons who owned of record, or beneficially, more than 5% of the
outstanding shares of the fund at January 21, 1998:

NAME & ADDRESS OF OWNER % OWNED TYPE OF OWNERSHIP
------------------------- ------- -----------------
Charles Schwab & Co., Inc. 11.54% Record(1)
San Francisco, CA 94104

Statement of Additional Information - Regent Eastern European Fund
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<PAGE>

NAME & ADDRESS OF OWNER % OWNED TYPE OF OWNERSHIP
------------------------- ------- -----------------
Donaldson, Lufkin & Jenrette 5.11% Record (1)
Jersey City, New Jersey

(1) Donaldson, Lufkin & Jenrette and Stenand Fordham and
Charles Schwab & Co, Inc., broker-dealers, have
advised that no individual client owns more than 5%
of the Fund.

INVESTMENT ADVISORY SERVICES

The investment adviser to the Fund is U. S. Global Investors, Inc., a Texas
corporation, pursuant to an advisory agreement dated September 21, 1994. Frank
E. Holmes, Chief Executive Officer and a Director of the Adviser, 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 Adviser and may be deemed
to be a controlling person of the Adviser.

In addition to the services described in the Fund's Prospectus, the Adviser 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
Adviser or its affiliates, except that the Trust will reimburse the Adviser for
part of the compensation of the Adviser'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 Adviser,
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, typesetting and mailing prospectuses and periodic reports
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 Sub-Adviser's compensation is set forth in the Prospectus and is paid by the
Adviser.

The Adviser 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 limits banks in
engaging in the business of underwriting, selling or distributing securities.
However, in the Adviser's opinion, such laws should not preclude a bank from
performing shareholder administrative and servicing functions as contemplated
herein.

The advisory agreement was approved by the Board of Trustees of the Trust
(including a majority of the "disinterested Trustees") with respect to the Fund
and was approved by shareholders of the Fund at the initial meeting of
shareholders. The advisory agreement provides that it will continue initially
for two years, and from year to year thereafter, with respect to each fund, as
long as it is approved at least annually both (i) by a vote of a majority of the
outstanding voting securities of such fund [as defined in the Investment Company
Act of 1940 ("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

Statement of Additional Information - Regent Eastern European Fund
Page 14
<PAGE>

in person at a meeting called for the purpose of voting on such approval. Thea
advisory agreement may be terminated on 60 days' written notice by either party
and will terminate automatically if it is assigned.

Both the Adviser and Sub-Adviser provide investment advice to a variety of
clients . Both the Adviser and the Sub-Adviser also provide investment advice to
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, as far as
possible, averaged as to price and allocated between such clients in a manner
which, in the Adviser's or Sub-Adviser'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 Adviser and
Sub-Adviser employ professional staffs of portfolio managers who draw upon a
variety of resources for research information for the clients.

In addition to advising client accounts, the Adviser and Sub-Adviser invest in
securities for their own accounts. The Adviser and Sub-Adviser have adopted
policies and procedures intended to minimize or avoid potential conflicts with
their clients when trading for their own accounts. The investment objectives and
strategies of the Adviser and Sub-Adviser are different from those of their
clients, emphasizing venture capital investing, private placement arbitrage and
speculative short-term trading. The Adviser uses 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 recapitalization. Overall,
the Adviser invests in start-up companies in the natural resources or technology
fields.

The Fund pays the Adviser a management fee based on varying percentages of
average net assets. For the period from March 31, 1997, commencement of
operations, through October 31, 1997, the Fund paid $0 in management fees .

TRANSFER AGENCY AND OTHER SERVICES

In addition to the services performed for the Funds and the Trust under the
advisory agreement, the Adviser, through its subsidiary USSI, provides transfer
agent and dividend disbursement agent services pursuant to the transfer agency
agreement as described in the Fund's Prospectus under MANAGEMENT OF THE
FUND--THE INVESTMENT ADVISER. In addition, lockbox and statement printing
services are provided by USSI. For the year ended October 31, 1997, the fund
paid USSI a total of $0 for transfer agency, lockbox, and printing fees. The
Board of Trustees recently approved the transfer agency and related agreements
through March 8, 1998.

USSI maintained the books and records of the Trust and of each fund of the Trust
until November 1, 1997, at which time Brown Brothers Harriman and Co. assumed
such responsibility. Daily net asset value is calculated as described in the
fund's prospectus under MANAGEMENT OF THE FUND--THE INVESTMENT ADVISER. For the
year ended October 31, 1997, the fund paid USSI a total of $0 for portfolio
accounting services.

A & B Mailers, Inc., a corporation wholly owned by the Adviser, provides the
Trust with certain mail handling services. The charges for such services have
been negotiated by the Audit Committee of the Trust and A & B Mailers, Inc. Each
service is priced separately.

DISTRIBUTION PLAN

As described under DISTRIBUTION EXPENSE PLAN in the Prospectus, the Fund has
adopted a Distribution Plan pursuant to Rule 12b-1 of the 1940 Act
("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, and includes the costs of: printing
and distribution of prospectuses and promotional materials, making slides and
charts for presentations, assisting shareholders and prospective investors in

Statement of Additional Information - Regent Eastern European Fund
Page 15
<PAGE>

understanding and dealing with the Fund, and travel and out-of-pocket expenses
(e.g., copy and long distance telephone charges) related thereto.

The total amount expended pursuant to the Distribution Plan may not exceed 0.25%
of the Fund's net assets on an annual basis. For the period from March 31, 1997,
commencement of operations, through October 31, 1997, the Fund paid a total of
$6,003 in distribution fees. The majority of these fees were used to pay for
printing and mailing of prospectuses. Distribution expenses paid by the Adviser
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 that the Fund incurs pursuant to the distribution plan are reviewed
quarterly by the Board of Trustees. The distribution plan is reviewed annually
by the Board of Trustees as a whole, and the Trustees who are not "interested
persons" as that term is defined in the 1940 Act and who have no direct or
indirect financial interest in the operation of the Distribution plan
("Qualified Trustees"). In their review of the Distribution plan the Board of
Trustees, as a whole, and the Qualified Trustees determine whether, in their
reasonable business judgment and considering 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 a majority vote 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 it
attracts more shareholders.

CERTAIN PURCHASES OF SHARES OF THE FUND

Shares of the Fund are continuously offered by the Trust at their net asset
value next determined after an order is accepted. The methods available for
purchasing shares of the Fund are described in the Prospectus. In addition,
shares of the Fund may be purchased using stock, so long as the securities
delivered to the Trust meet the investment objectives and concentration policies
of the Fund, and are otherwise acceptable to the Adviser, 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 that is readily ascertainable (and not
established only by evaluation procedures) as evidenced by a listing on the
AMEX, the NYSE, or NASDAQ;

(4) any securities so acquired by any fund shall not comprise over 5% of the
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.

Statement of Additional Information - Regent Eastern European Fund
Page 16
<PAGE>

An investor who wishes to make an "in kind" purchase should furnish a list
(either in writing or by telephone) to the Trust with a full and exact
description of all of the securities he or she proposes to deliver. The Trust
will advise him or her as to those securities 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
costs or taxes, if any.

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, that makes it not practicable for the Trust to dispose of securities owned
by it or to determine fairly the value of its assets; or (3) as the SEC may
otherwise permit.

REDEMPTION IN KIND. The Trust reserves the right to redeem shares of the Fund in
cash or in kind. However, the Trust has elected to be governed by Rule 18f-1
under the Investment Company Act of 1940, pursuant to which the Trust is
obligated to redeem shares of the Fund solely in cash up to the lesser of
$250,000 or one percent of the net asset value of the Fund during any 90-day
period for any one shareholder. Any shareholder of the Fund receiving a
redemption in kind would then have to pay brokerage fees in order to convert his
Fund investment into cash. All redemptions in kind will be made in marketable
securities of the Fund.

CALCULATION OF PERFORMANCE DATA

The calculation assumes that (1) all charges are deducted from the initial
$1,000 payment, (2) all dividends and distributions by the Fund are reinvested
at the price stated in the prospectus on the reinvestment dates during the
period, and (3) all recurring fees charged to all shareholder accounts are
included.

The average annual total return for the fund for the period from March 31, 1997
(commencement of operations), through October 31, 1997, was 11.90%. This number
has not been annualized.

Statement of Additional Information - Regent Eastern European Fund
Page 17
<PAGE>

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.

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 ("Code"). Accordingly, the Fund will
not be liable for Federal income taxes on its taxable net investment income and
capital gain net income distributed to shareholders if 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:
(1) 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 ("90% test"); and (2) 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 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 paid 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 before a distribution. The price of such shares
purchased then includes the amount of any forthcoming distribution. Investors
purchasing the Fund's shares immediately before a distribution may receive a
return of investment upon distribution that will nevertheless be taxable to
them.

A shareholder of the Fund should be aware that a redemption of shares (including
any exchange into other funds offered, affiliated or administered by U. S.
Global Investors, Inc.) is a taxable event and, accordingly, a capital gain or
loss may be recognized. If a shareholder of the Fund receives a distribution
taxable as long-term capital gain with respect to shares of the Fund and redeems
or exchanges shares before he has held them for more than six months, any loss
on the redemption or exchange (not otherwise disallowed as attributable to an
exempt-interest dividend) will be treated as long-term capital loss to the
extent of the long-term capital gain recognized.

CUSTODIAN, FUND ACCOUNTANT AND ADMINISTRATOR

Statement of Additional Information - Regent Eastern European Fund
Page 18
<PAGE>

securities outside the United States pursuant to sub-custody arrangements
separately approved by the Trust. Prior to November, Bankers Trust Company
provided custody services and USSI provided fund accounting and administrative
services. Services with respect to retirement accounts will be provided by
Security Trust and Financial Company of San Antonio, Texas, a wholly owned
subsidiary of the Adviser.

INDEPENDENT ACCOUNTANTS

Price Waterhouse LLP, 700 North St. Mary's, San Antonio, Texas 78205, is the
independent accountant for the Trust.

FINANCIAL STATEMENTS

Statement of Additional Information - Regent Eastern European Fund
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<PAGE>

.................................. PART C ....................................

PART C. OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS

(a) FINANCIAL STATEMENTS

(1) The Financial Statements for the period ended October 31, 1997, of
U.S. Global Accolade Funds are incorporated by reference from the U.S.
GLOBAL ACCOLADE FUNDS ANNUAL REPORT, dated October 31, 1997

(b) EXHIBITS

Exhibit
Number Description of Exhibit
- ------- ----------------------------------------------------------------------

(1) (a) First Amended and Restated Master Trust Agreement, dated May 22, 1996,
incorporated by reference to Post-Effective Amendment No. 5 dated May
28, 1996 (EDGAR Accession No. 0000902042-96-000046).

(b) Amendment No. 1, dated November 20, 1996, to the First Amended and
Restated Master Trust Agreement, dated May 22, 1996, incorporated by
reference to Post-Effective Amendment No. 11 dated August 22, 1997
(EDGAR Accession No. 0000902042-97- 000051).

(c) Amendment No. 2, dated February 21, 1997, to the First Amended and
Restated Master Trust Agreement, dated May 22, 1996, incorporated by
reference to Post-Effective Amendment No. 11 dated August 22, 1997
(EDGAR Accession No. 0000902042-97- 000051).

(d) Amendment No. 3, dated April 10, 1997, to the First Amended and
Restated Master Trust Agreement, dated May 22, 1996, incorporated by
reference to Post-Effective Amendment No. 11 dated August 22, 1997
(EDGAR Accession No. 0000902042-97-000051).

(2)** By-laws of U.S. Global Accolade Funds, incorporated by reference to
initial registration dated April 15, 1993.

(3) Not applicable

(4) Not applicable

(5) (a) Advisory Agreement between U.S. Global Investors, Inc. and U.S. Global
Accolade Funds dated September 21, 1994, incorporated by reference to
Post-Effective Amendment No. 5 dated May 28, 1996 (EDGAR Accession
No.0000902042-96-000046).

(b) Sub-Advisory Agreement among U.S. Global Accolade Funds, U.S. Global
Investors, Inc. and Bonnel, Inc. dated September 21, 1994,
incorporated by reference to Pre-Effective Amendment No. 3 dated
October 17, 1994 (EDGAR Accession No. 754811-95-000002).

(c) Amendment dated May 22, 1996, to Advisory Agreement between U.S.
Global Accolade Funds and U.S. Global Investors, Inc. to add
MegaTrends Fund incorporated by reference to Post-Effective Amendment
No. 5 dated May 28, 1996 (EDGAR Accession No.0000902042-96-000046).

(d) Sub-Advisory Agreement among U.S. Global Accolade Funds, U.S. Global
Investors, Inc. and Money Growth Institute, Inc. incorporated by
reference to Post-Effective Amendment No. 5 dated May 28, 1996 (EDGAR
Accession No. 0000902042-96-000046).

(e) Amendment dated February 19, 1997, to Advisory Agreement between U.S.
Global Accolade Funds and U.S. Global Investors, Inc. to add Adrian
Day Global Opportunity Fund incorporated by reference to
Post-Effective Amendment No. 8 dated December 6, 1996 (EDGAR Accession
No. 0000902042-96-000082).

(f) Sub-Advisory Agreement dated December 18, 1996, among U.S. Global
Accolade Funds, U.S. Global Investors, Inc. and Global Strategic
Management, Inc. incorporated by reference to Post-Effective Amendment
No. 8 dated December 6, 1996 (EDGAR Accession No.
0000902042-96-000082).

(g) Amendment dated February 28, 1997, to Advisory Agreement between U.S.
Global Accolade Funds and U.S. Global Investors, Inc. to add Regent
Eastern European Fund incorporated by reference to Post-Effective
Amendment No. 9 dated December 24, 1996 (EDGAR Accession No.
0000902042-96-000083).

(h) Sub-Advisory Agreement dated February 28, 1997, among U.S. Global
Accolade Funds, U.S. Global Investors, Inc. and Regent Fund Management
Limited incorporated by reference to Post-Effective Amendment No. 9
dated December 24, 1996 (EDGAR Accession No. 0000902042-96-000083).

( 6) Not applicable

( 7) Not applicable

( 8)(a)* Custodian Agreement dated November 1, 1998, between U.S. Global
Accolade Funds and Brown Brothers Harriman & Co. of Massachusetts.

( 9)(a) Transfer Agent Agreement between United Shareholder Services, Inc. and
U.S. Global Accolade Funds dated September 21, 1994, incorporated by
reference to Pre-Effective Amendment No. 3 dated October 17, 1994
(EDGAR Accession No. 754811-95-000002).

(b) Lockbox Service Agreement between United Shareholder Services, Inc.
and U.S. Global Accolade Funds dated September 21, 1994, incorporated
by reference to Pre-Effective Amendment No. 3 dated October 17, 1994
(EDGAR Accession No. 754811-95-000002).

(c) Printing Agreement between United Shareholder Services, Inc. and U.S.
Global Accolade Funds dated September 21, 1994, incorporated by
reference to Pre-Effective Amendment No. 3 dated October 17, 1994
(EDGAR Accession No. 754811-95-000002).

(d) Amendment dated May 22, 1996, to Transfer Agent Agreement between
United Shareholder Services, Inc. and U.S. Global Accolade Funds to
add MegaTrends Fund to the Agreement, incorporated by reference to
Post-Effective Amendment No. 5 dated May 28, 1996 (EDGAR Accession No.
0000902042-96-000046).

(e) Amendment dated February 18, 1997, to the Transfer Agent Agreement
between United Shareholder Services, Inc. and U.S. Global Accolade
Funds to add Adrian Day Global Opportunity Fund incorporated by
reference to Post-Effective Amendment No. 8 dated December 6, 1996
(EDGAR Accession No. 0000902042-96-000082).

(f) Amendment dated February 19, 1997, to the Printing Agreement between
United Shareholder Services, Inc. and U.S. Global Accolade Funds to
add MegaTrends Fund and Adrian Day Global Opportunity Fund
incorporated by reference to Post-Effective Amendment No. 8 dated
December 6, 1996 (EDGAR Accession No. 0000902042-96- 000082).

(g) Amendment dated February 19, 1997, to the Lockbox Service Agreement
between United Shareholder Services, Inc. and U.S. Global Accolade
Funds to add MegaTrends fund and Adrian Day Global Opportunity Fund
incorporated by reference to Post-Effective Amendment No. 8 dated
December 6, 1996 (EDGAR Accession No. 0000902042-96- 000082).

(h) Amendment dated February 28, 1997, to the Transfer Agent Agreement
between United Shareholder Services, Inc. and U.S. Global Accolade
Funds to add Regent Eastern European Fund to the Agreement
incorporated by reference to Post-Effective Amendment No. 9 dated
December 24, 1996 (EDGAR Accession No. 0000902042-96-000083).

(i) Amendment dated February 28, 1997, to the Printing Agreement between
United Shareholder Services, Inc. and U.S. Global Accolade Funds to
add Regent Eastern European Fund to the Agreement incorporated by
reference to Post-Effective Amendment No. 9 dated December 24, 1996
(EDGAR Accession No. 0000902042-96-000083).

(j) Amendment dated February 28, 1997, to the Lockbox Service Agreement
between United Shareholder Services, Inc. and U.S. Global Accolade
Funds to add Regent Eastern European Fund to the Agreement
incorporated by reference to Post-Effective Amendment No. 9 dated
December 24, 1996 (EDGAR Accession No. 0000902042-96-000083).

(10)(a)* Opinion and consent of Susan B. McGee, Esq., counsel to the
registrant, dated January 23, 1998.

(11)(a)* Consent of independent accountant, Arthur Andersen LLP, dated January
27, 1998, with respect to MegaTrends Fund.

(b)* Consent of independent accountant, Price Waterhouse LLP, dated January
27, 1998, with respect to Bonnel Growth Fund, MegaTrends Fund, Adrian
Day Global Opportunity Fund and Regent Eastern European Fund.

(c) Power of Attorney incorporated by reference to Post-Effective
Amendment No. 2 dated January 15, 1996 (EDGAR Accession No.
0000902042-96-000003).

(12) Not applicable

(13) Not applicable

(14) Not applicable

(15)(a)** U.S. Global Accolade Funds/Bonnel Growth Fund Distribution Plan
pursuant to Rule 12b- 1 approved September 21, 1994, incorporated by
reference to Pre-Effective Amendment No. 2 dated May 11, 1994.

(b) U.S. Global Accolade Funds/MegaTrends Fund Distribution Plan pursuant
to Rule 12b-1 approved May 22, 1996, incorporated by reference to
Post-Effective Amendment No. 5 dated May 28, 1996 (EDGAR Accession No.
0000902042-96-000046).

(c) U.S. Global Accolade Funds/Adrian Day Global Opportunity Fund
Distribution Plan pursuant to Rule 12b-1 approved December 18, 1996,
incorporated by reference to Post- Effective Amendment No. 8 dated
December 6, 1996 (EDGAR Accession No. 0000902042-96-000082).

(d) U.S. Global Accolade Funds/Regent Eastern European Fund Distribution
Plan pursuant to Rule 12b-1 approved February 28, 1997, incorporated
by reference to Post-Effective Amendment No. 9 dated December 24, 1996
(EDGAR Accession No. 0000902042-96- 000083).

(16)(a) Schedule for computation of each performance quotation provided in the
Registration Statement in response to Item 22 incorporated by
reference to initial registration statement dated April 15, 1993.

* Included herein.
** Included for purposes of entering document into EDGAR database.

ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT

Information pertaining to persons controlled by or under common control with
registrant is incorporated by reference to the Statement of Additional
Information contained in Part B of this Registration Statement at the section
entitled "Principal Holders of Securities."

ITEM 26. NUMBER OF HOLDERS OF SECURITIES

The number of record holders, as of January 27, 1998, of each class of
securities of the registrant.

TITLE OF CLASS NUMBER OF RECORD HOLDERS
---------------------------------- ------------------------
Bonnel Growth Fund 6,259
MegaTrends Fund 1,737
Adrian Day Global Opportunity Fund 419
Regent Eastern European Fund 1,115

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 ADVISER

Information pertaining to business and other connections of registrant's
investment adviser is incorporated by reference to the Prospectus and Statement
of Additional Information contained in Parts A and B of this Registration
Statement at the sections entitled "Management of the Funds" in the Prospectus
and "Investment Advisory Services" in the Statement of Additional Information.

ITEM 29. PRINCIPAL UNDERWRITERS

The registrant is currently comprised of four no-load funds. It acts as
distributor of its own shares.

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS

All accounts and records maintained by the registrant are kept at the
registrant's office located at 7900 Callaghan Road, San Antonio, Texas. All
accounts and records maintained by Brown Brothers Harriman & Co. as custodian
for U.S. Global Accolade Funds are maintained at 40 Water Street, Boston,
Massachusetts 02109.

ITEM 31. Not applicable

ITEM 32. Not applicable

<PAGE>

SIGNATURE PAGE

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the registrant certifies that it meets all of the
requirements for effectiveness of this Post-Effective Amendment to its
Registration Statement filed under Rule 485(b) of the Securities Act of 1933 and
that it has duly caused this Amendment to the Registration Statement on Form
N-1A to be signed on its behalf by the undersigned, thereunto duly authorized in
the city of San Antonio, State of Texas, on this 28th day of January, 1998.

U.S. GLOBAL ACCOLADE FUNDS

By: * /s/ Frank E. Holmes
--------------------------
FRANK E. HOLMES
President
Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:

SIGNATURE TITLE DATE
- ------------------------- ----------------------- ----------------

* /s/ Frank E. Holmes President January 28, 1998
- ------------------------- Chief-Executive-Officer
FRANK E. HOLMES Trustee

* /s/ Clark R. Mandigo Trustee January 28, 1998
- -------------------------
CLARK R. MANDIGO

* /s/ Richard E. Hughs Trustee January 28, 1998
- -------------------------
RICHARD E. HUGHS

/s/ Susan B. McGee Executive Vice President January 28, 1998
- ------------------------- Secretary
SUSAN B. MC GEE

* BY: /s/ Susan B. McGee Executive Vice President Januaray 28, 1998
- ------------------------- Secretary
SUSAN B. MC GEE Power of Attorney

BY-LAWS

ACCOLADE FUNDS

ARTICLE 1

AGREEMENT AND DECLARATION
OF TRUST AND PRINCIPAL OFFICES

1.1 AGREEMENT AND DECLARATION OF TRUST. These By-Laws shall be subject
to the Agreement and Declaration of Trust, as from time to time in effect (the
"Declaration of Trust"), of Accolade Funds, a Massachusetts business trust
established by the Declaration of Trust (the "Trust").

ARTICLE 2

MEETINGS OF TRUSTEES

2.1 REGULAR MEETINGS. Regular meetings of the Trustees may be held
without call or notice at such places and at such times as the Trustees may from
time to time determine, provided that notice of the first regular meeting
following any such determination shall be given to absent Trustees.

2.2 SPECIAL MEETINGS. Special meetings of the Trustees may be held at
any time and at any place designated in the call of the meeting when called by
the Chairman of the Trustees, the President or the Treasurer or by two or more
Trustees, sufficient notice thereof being given to each Trustee by the Secretary
or an Assistant Secretary or by the Trustees calling the meeting.

2.3 NOTICE. It shall be sufficient notice to a Trustee of a special
meeting to send notice by mail at least forty-eight hours or by telegram at
least twenty-four hours before the meeting addressed to the Trustee at his or
her usual or last known business or residence address or to give notice to him
or her in person or by telephone at least twenty-four hours before the meeting.
Notice of a meeting need not be given to any Trustee if a written waiver of
notice, executed by him or her before or after the meeting, is filed with the
records of the meeting, or to any Trustee who attends the meeting without
protesting prior thereto or at its commencement the lack of notice to him or
her. Neither notice of a meeting nor a waiver of a notice need specify the
purposes of the meeting.

2.4 QUORUM. At any meeting of the Trustees a majority of the Trustees
then in office shall constitute a quorum. Any meeting may be adjourned from time
to time by a majority of the votes cast upon the question, whether or not a
quorum is present, and the meeting may be held as adjourned without further
notice.

2.5 PARTICIPATION BY TELEPHONE. One or more of the Trustees or of any
committee of the Trustees may participate in a meeting thereof by means of a
conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time. Participation
by such means shall constitute presence in person at a meeting.

ARTICLE 3

OFFICERS

3.1 ENUMERATION; QUALIFICATION. The officers of the Trust shall be a
Chairman of the Trustees, a President, a Treasurer, a Secretary and such other
officers, including Vice Presidents, if any, as the Trustees from time to time
may in their discretion elect. The Trust may also have such agents as the
Trustees from time to time may in their discretion appoint. The Chairman of the
Trustees shall be a Trustee and may but need not be a

<PAGE>

shareholder; and any other officer may be but need not be a Trustee or
shareholder. Any two or more offices may be held by the same person.

3.2 ELECTION. The Chairman of the Trustees, the President, the Treasurer
and the Secretary shall be elected annually by the Trustees at a meeting held
within the first four months of the Trust's fiscal year. The meeting at which
the officers are elected shall be known as the annual meeting of Trustees. Other
officers, if any, may be elected or appointed by the Trustees at said meeting or
at any other time. Vacancies in any office may be filled at any time.

3.3 TENURE. The Chairman of the Trustees, the President, the Treasurer
and the Secretary shall hold office until the next annual meeting of the
Trustees and until their respective successors are chosen and qualified, or in
each case until he or she sooner dies, resigns, is removed or becomes
disqualified. Each other officer shall hold office and each agent shall retain
authority at the pleasure of the Trustees.

3.4 POWERS. Subject to the other provisions of these By-Laws, each
officer shall have, in addition to the duties and powers herein and in the
Declaration of Trust set forth, such duties and powers as are commonly incident
to the office occupied by him or her as if the Trust were organized as a
Massachusetts business corporation and such other duties and powers as the
Trustees may from time to time designate.

3.5. CHAIRMAN; PRESIDENT. Unless the Trustees otherwise provide, the
Chairman of the Trustees, or, if there is none, or in the absence of the
Chairman, the President shall preside at all meetings of the shareholders and of
the Trustees. The President shall be the chief executive officer.

3.6 VICE PRESIDENT. The Vice President, or if there be more than one
Vice President, the Vice Presidents in the order determined by the Trustees (or
if there be no such determination, then in order of their election) shall in the
absence of the President or in the event of his inability or refusal to act,
perform the duties of the President, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the President. The Vice
Presidents shall perform such other duties and have such other powers as the
Board of Trustees may from time to time prescribe.

3.7 TREASURER. The Treasurer shall be the chief accounting officer of
the Trust, and shall, subject to the provisions of the Declaration of Trust and
to any arrangement made by the Trustees with a custodian, investment adviser or
manager, or transfer, shareholder servicing or similar agent, be in charge of
the valuable papers, books of account and accounting records of the Trust, and
shall have such other duties and powers as may be designated from time to time
by the Trustees or by the President.

3.8 ASSISTANT TREASURER. The Assistant Treasurer, or if there shall be
more than one, the Assistant Treasurers in the order determined by the Trustees
(or if there be no such determination, then in the order of their election),
shall, in the absence of the Treasurer or in the event of his inability or
refusal to act, perform the duties and exercise the powers of the Treasurer and
shall perform such other duties and have such other powers as the Board of
Trustees may from time to time prescribe.

3.9 SECRETARY. The Secretary shall record all proceedings of the
shareholders and the Trustees in books to be kept therefor, which books or a
copy thereof shall be kept at the principal office of the Trust. In the absence
of the Secretary from any meeting of the shareholders or Trustees, an assistant
secretary, or if there be none or if he or she is absent, a temporary secretary
chosen at such meeting shall record the proceedings thereof in the aforesaid
books.

3.10 ASSISTANT SECRETARY. The Assistant Secretary, or if there be more
than one, the Assistant Secretaries in the order determined by the Trustees (or
if there be no determination, then in the order of their election), shall, in
the absence of the Secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the Secretary and shall perform
such other duties and have such other powers as the Board of Trustees may from
time to time prescribe.

3.11 RESIGNATIONS AND REMOVALS. Any Trustee or officer may resign at any
time by written instrument signed by him or her and delivered to the Chairman,
the President or the Secretary or to a meeting of the Trustees.

2
<PAGE>

Such resignation shall be effective upon receipt unless specified to be
effective at some other time. The Trustees may remove any officer elected by
them with or without cause. Except to the extent expressly provided in a written
agreement with the Trust, no Trustee or officer resigning and no officer removed
shall have any right to any compensation for any period following his or her
resignation or removal, or any right to damages on account of such removal.

ARTICLE 4

COMMITTEES

4.1 GENERAL. The Trustees, by vote of a majority of the Trustees then in
office, may elect from their number an Executive Committee or other committees
and may delegate thereto some or all of their powers except those which by law,
by the Declaration of Trust, or by these By-Laws may not be delegated. Except as
the Trustees may otherwise determine, any such committee may make rules for the
conduct of its business, but unless otherwise provided by the Trustees or in
such rules, its business shall be conducted so far as possible in the same
manner as is provided by these By-Laws for the Trustees themselves. All members
of such committees shall hold such offices at the pleasure of the Trustees. The
Trustees may abolish any such committee at any time. Any committee to which the
Trustees delegate any of their powers or duties shall keep records of its
meetings and shall report its action to the Trustees. The Trustees shall have
power to rescind any action of any committee, but no such rescission shall have
retroactive effect.

ARTICLE 5

REPORTS

5.1 GENERAL. The Trustees and officers shall render reports at the time
and in the manner required by the Declaration of Trust or any applicable law.
Officers and Committees shall render such additional reports as they may deem
desirable or as may from time to time be required by the Trustees.

ARTICLE 6

FISCAL YEAR

6.1 GENERAL. The fiscal year of the Trust shall be fixed by resolution
of the Trustees.

ARTICLE 7

SEAL

7.1 GENERAL. The seal of the Trust shall consist of a flat-faced die
with the word Massachusetts, together with the name of the Trust and the year of
its organization cut or engraved thereon, but, unless otherwise required by the
Trustees, the seal shall not be necessary to be placed on, and its absence shall
not impair the validity of, any document, instrument or other paper executed and
delivered by or on behalf of the Trust.

ARTICLE 8

EXECUTION OF PAPERS

8.1 GENERAL. Except as the Trustees may generally or in particular cases
authorize the execution thereof in some other manner, all deeds, leases,
contracts, notes and other obligations made by the Trustees shall be signed by
the President, any Vice President, or by the Treasurer and need not bear the
seal of the Trust.

3
<PAGE>

ARTICLE 9

ISSUANCE OF SHARE CERTIFICATES

9.1 SHARE CERTIFICATES. In lieu of issuing certificates for shares, the
Trustees or the transfer agent may either issue receipts therefor or may keep
accounts upon the books of the Trust for the record holders of such shares, who
shall in either case be deemed, for all purposes hereunder, to be the holders of
certificates for such shares as if they had accepted such certificates and shall
be held to have expressly assented and agreed to the terms hereof.

The Trustees may at any time authorize the issuance of share
certificates either in limited cases or to all shareholders. In that event, a
shareholder may receive a certificate stating the number of shares owned by him,
in such form as shall be prescribed from time to time by the Trustees. Such
certificate shall be signed by the president or a vice president and by the
treasurer or assistant treasurer. Such signatures may be facsimiles if the
certificate is signed by a transfer agent, or by a registrar, other than a
Trustees, officer or employee of the Trust. In case any officer who has signed
or whose facsimile signature has been placed on such certificate shall cease to
be such officer before such certificate is issued, it may be issued by the Trust
with the same effect as if he were such officer at the time of its issue.

9.2 LOSS OF CERTIFICATES. In case of the alleged loss or destruction or
the mutilation of a share certificate, a duplicate certificate may be issued in
place thereof, upon such terms as the Trustees shall prescribe.

9.3 ISSUANCE OF NEW CERTIFICATE TO PLEDGEE. A pledgee of shares
transferred as collateral security shall be entitled to a new certificate if the
instrument of transfer substantially describes the debt or duty that is intended
to be secured thereby. Such new certificate shall express on its face that it is
held as collateral security, and the name of the pledgor shall be stated
thereon, who alone shall be liable as a shareholder, and entitled to vote
thereon.

9.4 DISCONTINUANCE OF ISSUANCE OF CERTIFICATES. The Trustees may at any
time discontinue the issuance of share certificates and may, by written notice
to each shareholder, require the surrender of shares certificates to the Trust
for cancellation. Such surrender and cancellation shall not affect the ownership
of shares of the Trust.

ARTICLE 10

DEALINGS WITH TRUSTEES AND OFFICERS

10.1 GENERAL. Any Trustee, officer or other agent of the Trust may
acquire, own and dispose of shares of the Trust to the same extent as if he were
not a Trustee, officer or agent; and the Trustees may accept subscriptions to
shares or repurchase shares from any firm or company in which any Trustees,
officer or other agent of the Trust may have an interest.

ARTICLES 11

AMENDMENTS TO THE BY-LAWS

11.1 GENERAL These By-Laws may be amended or repealed, in whole or in
part, by a majority of the Trustees then in office at any meeting of the
Trustees, or by one or more writings signed by such a majority.

The foregoing By-Laws were adopted by the Board of Trustees on April
16, 1993. Amended to reflect the name change from Sophisticated Investors' Funds
to Accolade Funds on September 30, 1994.

/s/ Charles W. Lutter, Jr.
---------------------------------------------
Charles W. Lutter, Jr. Secretary of the Trust

CUSTODIAN AGREEMENT

AGREEMENT made as of this first day of November 1997 between U.S.
GLOBAL ACCOLADE FUNDS (the "Fund") on behalf of each of the portfolios listed on
Appendix C hereto as the same may be amended from time to time (each a "Fund"
and collectively the "Funds"), and BROWN BROTHERS HARRIMAN & CO. (the
"Custodian").

WITNESSETH

WHEREAS the Fund is organized as a Massachusetts Business Trust with
one or more series of shares, and is an open-end management investment company
registered with the Securities and Exchange Commission.

WHEREAS each Fund represents an interest in a separate portfolio of
cash, securities and other assets (all references to a "Fund" or the "Funds"
shall be deemed to include each portfolio within the Fund as the context may
make appropriate).

WHEREAS the Fund wishes to employ the Custodian and the Custodian has
agreed to provide custodial, banking and related services to the Fund in
accordance with the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the Fund and the Custodian agree as follows:

<PAGE>

1. APPOINTMENT OF CUSTODIAN. Upon the terms and conditions set forth in this
Agreement, the Fund hereby appoints the Custodian as a custodian, and the
Custodian hereby accepts such appointment. The Fund shall deliver or shall cause
to be delivered to the Custodian cash, securities and other property
("Property") owned by the Fund from time to time during the term of this
Agreement. The Custodian shall be under no obligation to request or to require
that any or all Property of the Fund be delivered to it, and the Custodian shall
have no responsibility with respect to any Property not delivered to it.

The Fund may in the future authorize the establishment of separate accounts
which hold Property of the Fund and with respect to which a certain investment
adviser or manager will be authorized to act and give instructions to the
Custodian (an "Investment Adviser"). The Fund shall notify the Custodian in
writing by a Proper Instruction (as defined in Section 2(xvii) of this Agreement
of such authorization, whereupon the Custodian may accept and act on Proper
Instructions it reasonably believes to be sent by such Investment Adviser.

2. DEFINITIONS.

In this Agreement, the following words shall, unless the context otherwise
requires, have the following meanings:

(i) "1940 Act" - the Investment Company Act of 1940, as amended, and the
rules and regulations thereunder.

(ii) "Advances" - shall have the meaning ascribed to it in Section 11
hereof.

(iii)"Agency Accounts" - shall have the meaning ascribed to it in Section 5
hereof.

(iv) "Agent" - shall have the meaning ascribed to it in Section 7 hereof.

(v) "BBH Accounts" - shall have the meaning ascribed to it in Section 5
hereof.

<PAGE>

(vi) "Book-Entry Agent" - shall have the meaning ascribed to it in Section
4.1(b) hereof.

(vii)"Derivative Instruments and Commodities" - any form of risk transfer
contract in which a gain or loss is recognized from fluctuations in
market price levels or rates, indexes or benchmarks, and which
includes without limitation futures, forwards, options, swaps, forward
rate and forward exchange contracts, leverage- or commodity-related
similar contracts and any other risk transfer contract whether traded
on or off an exchange.

(viii) "Electronic Instructions" - shall have the meaning ascribed to it in
Section 8.3 hereof.

(ix) "Electronic Reports" - shall have the meaning ascribed to it in
Section 8.3 hereof.

(x) "Force Majeure" - shall have the meaning ascribed to it in Section
10.4 hereof.

(xi) "Investments" - assets of the Fund, other than Property held by the
Custodian, a Subcustodian or a Securities Depository, but which the
Custodian may note on its records as being assets of the Fund
including without limitation Derivative Instruments and Commodities.

(xii)"Investment Adviser" - shall have the meaning ascribed to it in
Section 1 hereof.

(xiii) "Liability" - shall have the meaning ascribed to it in Section 11
hereof.

(xiv)"Margin Account" - shall have the meaning ascribed to it in Section
4.2(d) hereof.

(xv) "Margin Agreement" - shall have the meaning ascribed to it in Section
4.2(d) hereof.

(xvi)"Omnibus Accounts" - accounts established in the name of the Custodian
on behalf of its customers in which assets on deposit with the
Custodian by one or several customers may be deposited. Omnibus
Accounts may be established for the purpose of holding cash or
securities.

<PAGE>

(xvii) "Proper Instructions" - any direction to take or not to take action
in respect of Property (including cash) or Investments which the
Custodian reasonably believes to be sent by an authorized person and
to be genuine. Proper Instructions may be sent via the media set forth
in Section 6 hereof or as otherwise agreed between the Custodian and
the Fund.

(xviii) "Property" - shall have the meaning ascribed to it in Section 1
hereof.

(xix)"Securities Accounts" - shall have the meaning ascribed to it in
Section 4 hereof.

(xx) "Securities Depository" - a generally recognized book-entry system or
a clearing agency which acts as a securities depository in any country
in which securities are maintained under this Agreement and with which
the Custodian or a Subcustodian may maintain securities or other
Property owned by or held on behalf of the Fund, pursuant to the
provisions hereof, including Euroclear and Cedel.

(xxi)"Segregated Accounts" - shall have the meaning ascribed to it in
Section 4.2(d) hereof.

(xxii) "Subcustodian" - shall mean any subcustodian appointed pursuant to
Section 7 of this Agreement.

(xxiii) "Voluntary Corporate Actions" - corporate actions (as further
described in Section 4.3) in respect of portfolio securities of the
Fund which require an investment decision.

3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE FUND. The Fund represents
and warrants that the execution, delivery and performance by the Fund of this
Agreement are within the Fund's corporate, trust or other constitutive powers,
have been duly authorized by all necessary corporate, trust or other appropriate
action under its constitutive documents, and do not contravene or constitute a
default under any provision

<PAGE>

of applicable law or regulation or of the constitutive documents of the Fund or
of any agreement, judgment, injunction, order, decree or other instrument
binding upon the Fund. The Fund agrees to inform the Custodian reasonably
promptly if any statement set forth in this Section 3 or elsewhere made by the
Fund in this Agreement ceases to be true and correct. The Fund shall safeguard
and shall solely be responsible for the safekeeping of any testkeys,
identification codes, other security devices or statements of account with which
the Custodian provides it. If and when applicable, the Fund shall execute any
reasonably requisite license agreement or sublicense agreement governing its use
of any electronic instruction system proprietary to the Custodian or an
affiliate of the Custodian or proprietary to a third party which has licensed
such system to the Custodian or an affiliate of the Custodian.

4. SECURITIES ACCOUNT. The Fund hereby authorizes the Custodian to open and
maintain, with itself or with Subcustodians, securities accounts (the
"Securities Account") and authorizes the Custodian to deposit or record, as the
case may be, in such Securities Account the Fund's Property delivered to and
accepted by the Custodian, or such other Investments as the Fund requests the
Custodian to record by notation only. The Custodian shall keep safely all
Property delivered to it. In the event of a loss of a security for which the
Custodian would be liable under the provisions of this Agreement, the Custodian
shall be responsible for either replacing the security or for reimbursing the
Fund the value of the security as of the date that a claim is made by the Fund
upon the Custodian for such reimbursement. The Securities Account shall be
maintained in the manner and on the terms set forth below. (All references in
this Section to the Custodian shall include a Subcustodian, Securities
Depository or any agent of the Custodian.)

4.1 MANNER OF HOLDING OR RECORDING SECURITIES AND OTHER INVESTMENTS

<PAGE>

(a) SECURITIES REPRESENTED BY PHYSICAL CERTIFICATES - Securities
represented by share certificates or other instruments may be held in
registered or bearer form (i) in the Custodian's vault, (ii) in the vault
of a Subcustodian or other Agent (as defined in Section 7 of the Agreement)
of the Custodian, (iii) in an account maintained by the Custodian or a
Subcustodian at a Securities Depository, or (iv) in accordance with
customary market practice (x) in the country in which settlement is to
occur or (y) for the particular security in respect of which settlement is
instructed.

Securities held at a Subcustodian will be held subject to the terms of
the Subcustodian Agreement in effect between the Custodian and the
Subcustodian and may be held in Omnibus Accounts.

Securities held in a Securities Depository will be held subject to the
agreement, rules, statement of terms and conditions or other document or
conditions effective between the Securities Depository and the Custodian or
the Subcustodian. Such securities shall be held (i) in an account which
contains only assets of the Custodian held as custodian or otherwise on
behalf of others if such account is maintained by the Custodian with a
Securities Depository (unless market practice or Securities Depository
rules and regulations require the Custodian also to hold its own assets in
such account), or (ii) in an account which contains only assets of the
Subcustodian or other Agent held as custodian or otherwise on behalf of
others if such account is maintained by the Subcustodian or other Agent
with a Securities Depository (unless market practice or Securities
Depository rules and regulations require a Subcustodian also to hold its
own assets in such account).

Registered securities of the Fund may be registered in the name of the
Custodian, the Fund or a nominee of either of them and may be held in any

<PAGE>

manner set forth above, with or without any indication of fiduciary
capacity, provided that securities are held in an account of the Custodian
or a Subcustodian containing only assets of the Fund or only assets held by
the Custodian or a Subcustodian as custodian for its customers or are
otherwise held on behalf of others.

(b) SECURITIES REPRESENTED BY BOOK-ENTRY - Securities represented by
book-entry on the books of the issuer, a registrar, a clearing agency or
other agent of the issuer (a "Book-Entry Agent") may be so held in an
account of the Custodian or a Subcustodian or other Agent maintained with
such Book- Entry Agent provided such account contains only assets of the
Fund or only assets held as custodian for customers or are otherwise held
on behalf of others.

(c) OTHER INVESTMENTS - At the specific request of the Fund, the
Custodian may note on its records investments owned by the Fund that are
not represented by physical securities or by book-entry, including without
limitation derivative instruments and commodities. The Fund acknowledges
that such notation is for recordkeeping purposes only, that the Custodian
may not be able to exercise control over such investments and that such
investments may represent contractual rights of the Fund which the
Custodian cannot enforce. The Fund shall be responsible for requesting that
any statements applicable to such investments, including brokerage
statements, be sent to the Custodian.

4.2 POWERS AND DUTIES OF THE CUSTODIAN WITH RESPECT TO THE SECURITIES
ACCOUNT - The Custodian shall have the following powers and duties with respect
to the Securities Account:

(a) PURCHASES - Upon receipt of Proper Instructions, insofar as funds
are available or as funds are otherwise provided by the Custodian at its
discretion

<PAGE>

pursuant to Section 11 hereof for the purpose, to pay for and receive
securities purchased for the account of the Fund, payment being made upon
receipt of the securities by the Custodian or a Subcustodian, either
directly or through a Securities Depository or clearing corporation of a
securities exchange of which the Custodian or a Subcustodian is a member
(and in accordance with the rules of such Securities Depositories or other
U.S. or foreign clearing agencies), or if such settlement is not
practicable or prevalent in the applicable market, otherwise in accordance
with Applicable Law or regulation or generally accepted trade practice in
the applicable local market. Notwithstanding this section, the Custodian
may use any settlement mechanisms required by the terms of the instrument
representing the security or the terms of Proper Instructions.

(b) SALES - Upon receipt of Proper Instructions, to make delivery of
securities which have been sold for the account of the Fund against payment
therefor in cash, by check or by bank wire transfer or by other credit to
the account of the Custodian or Subcustodian, either directly or through a
Securities Depository or clearing corporation of a securities exchange of
which the Custodian or a Subcustodian is a member (and in accordance with
the rules of such Securities Depositories or other U.S. or foreign clearing
agencies), or if such settlement is not practicable or prevalent in the
applicable market, otherwise in accordance with Applicable Law or
regulation or generally accepted trade practice in the applicable local
market. Notwithstanding this section, the Custodian may use any settlement
mechanisms required by the terms of the instrument representing the
security, or the terms of Proper Instructions.

(c) OTHER TRANSFERS - To deliver Property of the Fund to a
Subcustodian, another custodian or another third party as necessary to
effect transactions authorized by Proper Instructions, and upon receipt of
Proper

<PAGE>

Instructions, to make such other disposition of Property of the Fund in a
manner other than or for purposes other than as enumerated elsewhere in
this Agreement, provided that the instructions relating to such disposition
shall state the amount of Property to be delivered and the name of the
person or persons to whom delivery is to be made.

(d) FUTURES; OPTIONS; SEGREGATED ACCOUNTS - Upon the receipt of Proper
Instructions and the execution of any agreements relating to margin in
respect of a Derivative Instrument or Commodity ("Margin Agreements"), to
establish and maintain on its books a segregated account or accounts for
and on behalf of the Fund, into which account or accounts may be
transferred cash and/or securities of the Fund in accordance with the terms
of such Margin Agreements and any Proper Instructions ("Segregated
Accounts").

Upon receipt of Proper Instructions or upon receipt of instructions
given pursuant to any Margin Agreement, or pursuant to the terms of such
Agreement, the Custodian shall (i) receive and retain, to the extent the
same are provided to the Custodian, confirmations or other documents
evidencing the purchase or sale of such Derivative Instruments or
Commodities by the Fund; (ii) deposit and maintain, pursuant to a Margin
Agreement, and segregate, either physically or by book-entry on the
Custodian's books or in a Securities Depository, for the benefit of any
futures commission merchant ("Margin Account"), or pay pursuant to Proper
Instructions to such broker, dealer or futures commission merchant, such
securities, cash or other assets as are designated by the Fund as initial,
maintenance or variation "margin" deposits or other collateral intended to
secure the Fund's performance of its obligations under the terms of any
Derivative Instrument or Commodity, in accordance with the provisions of
any Margin Agreement relating thereto; (iii) to deliver, in accordance with
Proper Instructions

<PAGE>

to a broker dealer appointed by the Fund for purposes of margin
requirements in conformity with Rule 17f-6; and (iv) otherwise pay, release
and/or transfer securities, cash or other assets into or out of such Margin
Accounts only in accordance with the provisions of any such Margin
Agreement. The Custodian shall not be responsible for the any broker to
whom assets are delivered pursuant to this Section, sufficiency of assets
held in any segregated account established in compliance with applicable
margin maintenance requirements or for the performance of the other terms
of any agreement relating to a Derivative Instrument or Commodity.

Notwithstanding anything in this Agreement to the contrary, the Fund
agrees that the Custodian's responsibility for any Derivative Instruments
and Commodities shall be limited to the exercise of reasonable care with
respect to any confirmations or other documents evidencing the purchase or
sale of such Derivative Instrument by the Fund which the Custodian
receives.

(e) STOCK LENDING - Upon receipt of Proper Instructions, to deliver
securities of the Fund, in connection with loans of securities by the Fund,
to the borrower thereof, including (if specifically indicated by Proper
Instruction, which may be a standing instructions) delivery prior to
receipt of the collateral, if any, for such borrowing.

(f) NON-DISCRETIONARY DETAILS - Without the necessity of express
authorization from the Fund, (1) to attend to all nondiscretionary details
in connection with the sale, exchange, substitution, purchase, transfer or
other dealings with securities, cash or other Property of the Fund held by
the Custodian except as otherwise directed from time to time by the
Directors or Trustees of the Fund, and (2) to make payments to itself or
others for minor expenses of handling

<PAGE>

securities or other similar items relating to the Custodian's duties under
this Agreement, provided that all such payments shall be accounted for to
the Fund.

4.3 CORPORATE ACTIONS - Unless the Custodian receives timely Proper
Instructions to the contrary, the Custodian will perform or will cause the
Subcustodian to perform the following:

(i) exchange securities held by it for the account of the Fund for
other securities in connection with any reorganization, recapitalization,
split-up of shares, change of par value, conversion or other event relating
to the securities or the issuer of such securities, and shall deposit any
such securities in accordance with the terms of any reorganization or
protective plan;

(ii) surrender securities in temporary form for definitive securities;
surrender securities for transfer into the name of the Custodian, the Fund
or a nominee of either of them, as permitted by Section 4.1(a); and
surrender securities for a different number of certificates or instruments
representing the same number of shares or same principal amount of
indebtedness;

(iii) deliver warrants, puts, calls, rights or similar securities to
the issuer or trustee thereof, or to the agent of such issuer or trustee,
for the purpose of exercise or sale, and deposit securities upon
invitations for tenders thereof;

(iv) take all necessary action to comply with the terms of all
mandatory or compulsory exchanges, calls, tenders, redemptions, or similar
rights of security ownership, and promptly notify the Fund of such action,
and collect all stock dividends, rights and other items of like nature;

(v) collect amounts due and payable to the Fund with respect to
portfolio securities of the Fund, and promptly credit to the account of the
Fund all income and other payments relating to portfolio securities and
other assets held by

<PAGE>

the Custodian hereunder upon Custodian's receipt of such income or payments
or as otherwise agreed in writing by the Custodian and the Fund, provided
that the Custodian shall not be responsible for the collection of amounts
due and payable with respect to portfolio securities that are in default;

(vi) endorse and deliver any instruments required to effect collection
of any amount due and payable to the Fund with respect to securities;
execute ownership and other certificates and affidavits on the Fund's
behalf for all federal, state and foreign tax purposes in connection with
receipt of income, capital gains or other payments with respect to
portfolio securities and other assets of the Fund, or in connection with
the purchase, sale or transfer of such securities or other assets; and file
any certificates or other affidavits for the refund or reclaim of foreign
taxes paid;

(vii) deliver to the Fund all forms of proxies, all notices of
meetings, and any other notices or announcements affecting or relating to
securities owned by the Fund that are received by the Custodian, any
Subcustodian, or any nominee of either of them, and, upon receipt of Proper
Instructions, the Custodian shall execute and deliver, or cause such
Subcustodian or nominee to execute and deliver, such proxies or other
authorizations as may be required. Except as directed pursuant to Proper
Instructions, neither the Custodian nor any Subcustodian or nominee shall
vote upon any such securities, or execute any proxy to vote thereon, or
give any consent or take any other action with respect thereto.

In fulfilling the duties set forth above, the Custodian shall be
responsible for promptly sending to the Fund all information pertaining to the
relevant terms of a corporate action which it in fact receives, provided that
the Custodian shall not be

<PAGE>

responsible for incorrect information it receives, or information it has not
received but should have received, from industry-accepted third-party securities
information vendors.

Notwithstanding any provision of this Agreement to the contrary, with
respect to portfolio securities registered in so-called street name, the
Custodian shall use reasonable efforts to collect cash or share entitlements due
and payable to the Fund but shall not be responsible for its inability to
collect such cash or share entitlements.

The Custodian shall only be responsible for acting on the Proper
Instructions of the Fund in respect of any corporate action that includes the
requirement of an election between two or more substantive alternatives (a
"Voluntary Corporate Action") provided the Custodian has received a Proper
Instruction requesting such action a reasonable time prior to expiration of the
time within which action in respect of such Voluntary Corporate Action may be
taken, in order to ensure that Custodian has sufficient time to take such
action. The deadline for the acceptance of such instruction may be set forth by
the Custodian in its communication of the terms of such action to the Fund and
shall take into consideration delays which occur due to (i) the involvement of a
Subcustodian, Securities Depository or other intermediary; (ii) differences in
time zones; or (iii) other factors particular to a given market, exchange or
issuer.

Any advance credit of cash or shares by the Custodian or a Subcustodian
expected to be received as a result of any corporate event shall be subject to
actual collection and may, when the Custodian deems such collection unlikely, be
reversed by the Custodian upon written notice to the Fund. As used herein, an
"advance credit of cash or shares" shall mean any credit of cash or shares to
any account maintained hereunder prior to actual receipt and collection of such
cash or shares in anticipation of a distribution expected to be received in the
future.

5. CASH ACCOUNTS.

13
<PAGE>

5.1 OPENING AND MAINTAINING CASH ACCOUNTS - Subject to the terms and
conditions set forth in this Section 5, the Fund hereby authorizes the Custodian
to open and maintain, with itself or with Subcustodians, cash accounts in United
States Dollars and in such other currencies as the Fund shall from time to time
request or as are in the Custodian's discretion required in order for the
Custodian to carry out the terms of this Agreement. The Custodian shall make
payments from or deposits to any of said accounts upon its receipt of Proper
Instructions from the Fund providing sufficient details to effect such
transaction.

Cash accounts opened on the books of the Custodian ("BBH Accounts") shall
be opened in the name of the Fund. Subject always to the provisions of Section
10 hereof, the Custodian shall be liable for repayment of any and all deposits
carried on its books as principal, whether denominated in United States Dollars
or in other currencies.

Cash accounts opened on the books of Subcustodians appointed pursuant to
Section 7 hereof may be opened in the name of the Fund or the Custodian or in
the name of the Custodian for its customers generally ("Agency Accounts"). Such
deposits shall be treated as portfolio securities, and accordingly the Custodian
shall be responsible for the exercise of reasonable care in respect of the
administration of such Agency Accounts but shall not be liable for their
repayment in the event the Subcustodian fails to make repayment (including in
the event of the Subcustodian's bankruptcy or insolvency). Both BBH Accounts and
Agency Accounts shall be subject to the provisions of Sections 9 and 10 of this
Agreement.

The Fund bears all risks of holding or transacting in any currency. Any
credit made to any Agency or BBH Account shall be provisional and may be
reversed by the Custodian in the event such payment is not actually collected.

The Custodian shall not be liable for any loss or damage arising from the
applicability of any law or regulation now or hereafter in effect, or from the
occurrence of

14
<PAGE>

any event, which may delay or affect the transferability, convertibility or
availability of any currency in the country (i) in which such BBH or Agency
Accounts are maintained or (ii) in which such currency is issued, and in no
event shall the Custodian be obligated to make payment of a deposit denominated
in a currency during the period during which its transferability, convertibility
or availability has been affected by any such law, regulation or event. Without
limiting the generality of the foregoing, neither the Custodian nor any
Subcustodian shall be required to repay any deposit made at a foreign branch of
either the Custodian or Subcustodian if such branch cannot repay the deposit due
to (i) an act of war, insurrection or civil strife; or (ii) an action by a
foreign government or instrumentality, whether de jure or de facto, in the
country in which the branch is located preventing such repayment, unless the
Custodian or such Subcustodian expressly agrees in writing to repay the deposit
under such circumstances.

All currency transactions in any account opened pursuant to this Agreement
are subject to exchange control regulations of the United States and of the
country where such currency is the lawful currency or where the account is
maintained. Any taxes, costs, charges or fees imposed on the convertibility of a
currency held by the Fund shall be for the account of the Fund.

5.2 FOREIGN EXCHANGE TRANSACTIONS The Custodian shall, pursuant to Proper
Instructions, settle foreign exchange transactions (including contracts,
futures, options and options on futures) on behalf and for the account of the
Fund with such currency brokers or banking institutions, including
Subcustodians, as the Fund may direct pursuant to Proper Instructions. The
Custodian shall be responsible for the transmission of cash and instructions to
and from the currency broker or banking institution with which the contract or
option is made and the safekeeping of all certificates and other documents and
agreements evidencing or relating to such foreign exchange transactions as the
Custodian

15
<PAGE>

may receive. In connection with such transactions, the Custodian is authorized
to make free outgoing payments of cash in the form of U. S. Dollars or foreign
currency without receiving confirmation of a foreign exchange contract or option
or confirmation that the countervalue currency completing the foreign exchange
contract has been delivered or received or that the option has been delivered or
received. The Fund accepts full responsibility for its use of third-party
foreign exchange dealers and for execution of said foreign exchange contracts
and options and understands that the Fund shall be responsible for any and all
costs and interest charges which may be incurred by the Fund or the Custodian as
a result of the failure or delay of third parties to deliver foreign exchange.

Foreign exchange transactions (including without limitation contracts,
futures, options, and options on futures), other than those executed with the
Custodian as principal, but including those executed with Subcustodians, shall
be deemed to be portfolio securities of the Fund and accordingly the Custodian
shall only be responsible for delivering or receiving currency on behalf of the
Fund in respect of such contracts pursuant to Proper Instructions subject to the
fourth paragraph of this Section 5.2.. The Custodian shall not be responsible
for the failure of any counterparty in such agency transaction to perform its
obligations thereunder.

Alternatively, such transactions may be undertaken by the Custodian as
principal, if instructed by the Fund and accepted by the Custodian by Proper
Instruction, which may be a standing instruction.

The obligations of the Custodian in respect of all foreign exchange
transactions shall be contingent on the free, unencumbered transferability of
the currency transacted on the actual settlement date of the transaction.

5.3 DELAYS - In the event a delay is caused by the negligence or willful
misconduct of the Custodian in carrying out a Proper Instruction to transfer
cash in connection with any transaction referred to in Section 5.1 or 5.2 above,
the Custodian

16
<PAGE>

shall be liable to the Fund for interest to be calculated at the rate
customarily paid by the Custodian on overnight deposits at the time the delay
occurs for the period from the day when the transfer should have been effected
until the day it is in fact effected and any other direct damages (if any). The
Custodian shall not be liable for delays in carrying out such instructions to
transfer cash which are not due to the Custodian's own negligence or willful
misconduct.

6. PROPER INSTRUCTIONS. Proper Instructions shall include, in the following
order of the preferred method of giving such instructions, authenticated
electromechanical communications including direct electronic transmissions,
authenticated SWIFT and tested telex, including Electronic Instructions as
described in Section 8.3,; a written request signed by two or more authorized
persons as set forth below; telefax transmissions; and oral instructions,
including telephone instructions. Proper Instructions may also include such
other methods of communicating Proper Instructions as the parties hereto may
from time to time agree. Each of the first four methods of communicating Proper
Instructions is described and defined below and may from time to time be
described and defined in written operating memoranda between the Custodian and
the Fund. The Custodian is hereby authorized to act on instructions sent via any
of the foregoing methods from any director, employee or officer of the Fund or
from the Investment Adviser or other agent of the Fund as the Fund shall from
time to time instruct.

Authenticated electro-mechanical communications shall include
communications effected directly between electromechanical or electronic devices
or

17
<PAGE>

systems, including authenticated SWIFT and tested telex transmissions, and other
forms of communications involving or between such electro-mechanical or
electronic devices or systems as the parties may from time to time agree upon in
writing. In the event media other than tested telex transmissions are agreed
upon, the Custodian may in its discretion require that the Fund, its Investment
Adviser or other agent and the Custodian enter into certain operating memoranda
which shall set forth the media through which such Proper Instructions shall be
transmitted and the data which must be included in such Proper Instructions in
order for such instructions to be complete. Once such operating memoranda shall
have been instituted, the Fund, its Investment Adviser or other Agent shall be
responsible for sending instructions which meet the requirements set forth in
such operating memoranda and the Custodian shall only be responsible for acting
on instructions which meet such requirements. The Custodian shall not be liable
for damages of any kind, including direct or consequential losses resulting from
technological or equipment failures or communications system failures of any
kind in respect of instructions sent or attempted to be sent via
electromechanical communications provided that such failure is not caused by the
Custodian through negligence with respect to the operation of its proprietary
systems.

A written request signed by two or more authorized persons shall include a
written request, direction, instruction or certification signed or initialed on
behalf of the Fund by two or more persons as the Directors or Trustees of the
Fund shall have from time to time authorized, or by such other written procedure
as the Custodian and the Fund shall from time to time agree in writing. Those
persons authorized to give Proper Instructions may be identified by the
Directors or Trustees by name, title or position (including any of its
directors, employees or agents or any investment manager or adviser or person or
entity with similar responsibilities which is authorized to give Proper
Instructions on behalf of the Fund to the Custodian) and will include at least
one officer empowered by the Directors or Trustees to name other individuals or
entities who are authorized to give Proper Instructions on behalf of the Fund.

18
<PAGE>

Telephonic or other oral instructions or instructions given by telefax
transmission may be given by any one of the persons referred to in the preceding
paragraph and will be considered Proper Instructions if the Custodian reasonably
believes them to have been given by a person authorized to give such
instructions with respect to the transaction involved.

With respect to telefax transmissions, the Fund and the Custodian hereby
acknowledge that receipt of legible instructions cannot be assured, and that the
Custodian cannot verify that authorized signatures on telefax instructions are
original or properly affixed. The Custodian shall take reasonable steps to
clarify instructions if it becomes aware of inaccuracies, incompleteness or
similar difficulties, but otherwise it shall not be responsible for losses or
expenses incurred through actions taken in reasonable reliance on inaccurately
stated, illegible or unauthorized telefax instructions.

Oral instructions will be confirmed by authenticated electro-mechanical
communications or written instructions in the manner set forth above, but the
lack of such confirmation shall in no way affect any action taken by the
Custodian in reliance upon such oral instructionsprior to receipt of written
confirmation. The Fund hereby authorizes the Custodian to tape record any and
all telephonic or other oral instructions given to the Custodian by or on behalf
of the Fund (including any of its Directors, Trustees, employees or agents or
any Investment Adviser or person or entity with similar responsibilities which
is authorized to give Proper Instructions on behalf of the Fund to the
Custodian).

Proper Instructions may relate to specific transactions or to types or
classes of transactions, and may be in the form of standing instructions which
are Proper Instructions.

Provided that the Custodian gives the Fund prompt notice of its intention
not to act where it would be reasonable not to act, the Custodian shall not be
responsible for its

19
<PAGE>

failure to act on any instruction received from the Fund which the Custodian
reasonably and in good faith believes does not meet the requirements set forth
herein.

7. AUTHORITY TO APPOINT SUBCUSTODIANS AND AGENTS AND TO UTILIZE SECURITIES
DEPOSITORIES. Subject to the provisions hereinafter set forth in this Section 7,
the Fund hereby authorizes the Custodian to utilize Securities Depositories to
act on behalf of the Fund and to appoint from time to time and to utilize
Subcustodians.

The Custodian may deposit and/or maintain Property of the Fund in any non-
U.S. Securities Depository provided such Securities Depository meets the
requirements of an "eligible foreign custodian" under Rule 17f-5 promulgated
under the 1940 Act, or any successor rule or regulation ("Rule 17f-5") or which
by order of the Securities and Exchange Commission is exempted therefrom. The
Custodian may deposit and/or maintain, either directly or through one or more
agents appointed by the Custodian, Property of the Fund in any Securities
Depository in the United States, including The Depository Trust Company,
provided such Depository meets applicable requirements of the Federal Reserve
Bank or of the Securities and Exchange Commission. Notwithstanding anything in
this Agreement to the contrary, any Property held in a Securities Depository,
whether or not the Custodian is a direct participant or member, will be held
subject to the rules, regulations, operating memoranda or other conditions of
participation in such Securities Depository.

The Custodian may, at any time and from time to time, appoint any bank as
defined in Section 2(a)(5) of the 1940 Act meeting the requirements of a
custodian under Section 17(f) of the 1940 Act and the rules and regulations
thereunder, to act on behalf of the Fund as a subcustodian for purposes of
holding Property of the Fund in the United States. Additionally, the Custodian
may, at any time and from time to time, appoint (i)

20
<PAGE>

any bank, trust company or other entity meeting the requirements of an "eligible
foreign custodian" under Rule 17f-5 or which by order of the Securities and
Exchange Commission is exempted therefrom, or (ii) any bank as defined in
Section 2(a)(5) of the 1940 Act meeting the requirements of a custodian under
Section 17(f) of the 1940 Act and the rules and regulations thereunder, to act
on behalf of the Fund as a subcustodian for purposes of holding Property of the
Fund outside the United States. Any bank, trust company or other entity
appointed pursuant to the foregoing provisions shall be a Subcustodian.Unless
and except to the extent that review of certain matters concerning the
appointment of Subcustodians shall have been delegated to the Custodian pursuant
to the succeeding paragraph, the Custodian shall, prior to the appointment of
any Subcustodian for purposes of holding Property of the Fund outside the United
States, to obtain written confirmation of the approval of the Board of Trustees
or Directors of the Fund with respect to: (a) the identity of a Subcustodian,
(b) the country or countries in which, and the Securities Depositories, if any,
through which, any proposed Subcustodian is authorized to hold Investments of
the Fund, and (c) the Subcustodian agreement which shall govern such
appointment. Each such duly approved country, Subcustodian and Securities
Depository shall be listed on Appendix A attached hereto as the same may from
time to time be amended. The Custodian may, at any time in its discretion,
remove any Subcustodian that has been appointed as such but will promptly notify
the Fund of any such action.

From time to time, the Custodian may offer and the Fund may accept, that
the Custodian perform certain reviews of Subcustodians and of Subcustodian
Contracts as delegate of the Fund's Board. In such event, the Custodian's duties
and obligations with respect to

21
<PAGE>

this delegated review will be performed in accordance with the terms of the
separate delegation agreement between the Fund and the Custodian.

The Fund shall be responsible for informing the Custodian sufficiently in
advance of a proposed investment which is to be held in a country in which no
Subcustodian is authorized to act in order that the Custodian shall have
sufficient time to establish a subcustodial arrangement in accordance herewith.
In the event that the Fund shall invest in a Security or other asset to be held
in a country in which no Subcustodian is authorized to act, the Custodian shall
promptly notify the Fund in writing by such means as the Custodian and the Fund
have regularly established for such communication, that no Subcustodian is
approved or available with respect to such Security or other asset. Upon receipt
of Proper instructions, the Custodian is authorized to appoint any person
designated by the Fund in such instruction to hold such security or other asset.
In the absence of such Proper Instruction, the Security may be left at its
settlement location or moved to another agent for purposes of safekeeping,
provided that the Custodian shall only be responsible for the safekeeping agent
under such circumstances to the extent that it can recover from such agent.

With respect to securities and funds held by a Subcustodian, either
directly or indirectly (including by a Securities Depository or clearing
agency), notwithstanding any provisions of this Agreement to the contrary,
payment for securities purchased and delivery of securities sold may be made
prior to receipt of securities or payment, respectively, and securities or
payment may be received in a form, in accordance with (i) governmental
regulations, (ii) rules of Securities Depositories and clearing agencies, (iii)
generally accepted trade practice in the applicable local market, (iv) the terms
of the instrument representing the security, or (v) the terms of Proper
Instructions.

22
<PAGE>

In the event the Custodian receives a claim from a Subcustodian under the
indemnification provisions of any subcustodian agreement, the Custodian shall
promptly give written notice to the Fund of such claim. No more than thirty days
after written notice to the Fund of the Custodian's intention to make such
payment, the Fund will reimburse the Custodian the amount of such payment except
in respect of any negligence or misconduct of the Custodian or any Subcustodian.

The Custodian may at any time or times in its discretion appoint (and may
at any time remove) any other bank or trust company as its agent (an "Agent") to
carry out such of the provisions of this Agreement as the Custodian may from
time to time direct, provided, however, that the appointment of such Agent shall
not relieve the Custodian of any of its responsibilities under this Agreement.
The Custodian shall be responsible for the actions of any Agent other than a
Subcustodian as if it performed such action itself. The responsibility of the
Custodian for any Subcustodian shall be determined in accordance with the
provisions of Section 9.

8. REPORTING; RECORDS. The Custodian shall have and perform the following duties
with respect to recordkeeping. Any records prepared and maintained for the Fund
hereunder shall be the property of the Fund

8.1 REPORTS AND RECORDS8. - The Custodian shall create, maintain and retain
such records relating to its activities and obligations under this Agreement as
will enable the Custodian to comply with its obligations hereunder and as are
customarily maintained by a professional custodian to assist the Fund in
compliance with the 1940 Act and rules and regulations promulgated thereunder.
The Custodian shall also prepare such periodic reports as the parties may agree
from time to time.

23
<PAGE>

8.2 ACCESS TO RECORDS8. - The books and records maintained by the Custodian
pursuant to this Agreement and information relative to insurance coverage and
fidelity bonds maintained by the Custodian in connection with this Agreement
shall at reasonable times during the Custodian's regular business hours be open
to inspections and audit by the auditors and by employees and agents of the Fund
provided that all such individuals shall observe all security requirements of
the Custodian applicable to its own employees having access to similar records
and such rules as may be reasonably imposed by the Custodian.

8.3 ELECTRONIC RECORDS AND COMMUNICATIONS8. - The Custodian may make any of
its records available to the Fund or its Investment Adviser via electronic
reporting which may include without limitation on-line software systems
("Electronic Reports"). The Fund understands that such Electronic Reports may
include data provided to the Custodian by outside sources which may not have
been independently verified by the Custodian and is subject to change.
Accordingly, the Custodian shall not be liable for inaccuracies, errors or
incomplete information furnished by such sources.

The Custodian may also make available to the Fund or its Investment Adviser
certain software to be used to initiate payment and securities transfer
instructions, affirm brokerage transactions reported through the Institutional
Delivery System or initiate other transaction instructions for the Custodian's
processing ("Electronic Instructions").

The Fund agrees that it shall be responsible for protecting and maintaining
the confidentiality and security of any codes assigned in respect of the Fund's
or its Investment Adviser's access to such Electronic Reports or Electronic
Instructions and that any instructions received through such system using the
client code assigned to the Fund shall be deemed to have originated from or on
behalf of the Fund and to be Proper Instructions.

24
<PAGE>

The Custodian shall not be responsible for information added to, changed or
omitted by electronic programming malfunction, unauthorized access or other
failure of such systems unless such actions are the direct result of the
Custodian's negligence, bad faith or willful malfeasance. In the event of any
such malfunction, unauthorized access or other failure, the Custodian shall, at
no additional expense to the Fund, take reasonable steps to minimize service
interruptions.

8.4 REVIEW OF RECORDS8. - The Fund agrees to examine all records as to the
execution of Proper Instructions and as to the Fund's assets and to promptly
upon receipt thereof and to notify the Custodian promptly of any discrepancy or
error therein. The Fund acknowledges that its failure to perform such
examination and notification promptly may materially contribute to losses of the
Fund arising from an act or omission of the Custodian and may materially affect
the Custodian's ability to mitigate the impacts thereof.

8.5 APPOINTMENT AS RECORDKEEPING AND NET ASSET VALUE CALCULATION AGENT The
Custodian is hereby appointed recordkeeping and net asset value calculation
agent responsible for creating, maintaining and retaining such records relating
to its obligations under this Agreement as are required under the 1940 Act
(including Section 31 thereof and Rules 31a-1 and 31a-2 thereunder). All such
records will be the property of the FundThe Custodian shall compute and
determine the net asset value per share of the Fund as of the close of regular
business on the New York Stock Exchange on each day on which such Exchange is
open, unless otherwise directed by Proper Instructions. Such computation and
determination shall be made in accordance with (1) the provisions of the Fund's
Declaration of Trust or Certificate of Incorporation and ByLaws (or comparable
documents), as they may from time to time be amended and delivered to the
Custodian, (2) the votes of the Board of Trustees or Directors of the Fund at
the time in force and

25
<PAGE>

applicable, as they may from time to time be delivered to the Custodian, (3) the
Fund's current prospectus and statement of additional information, and (4)
Proper Instructions. On each day that the Custodian shall compute the net asset
value per share of the Fund, the Custodian shall provide the Investment Adviser
with written reports which the Investment Adviser will use to verify that
portfolio transactions have been recorded in accordance with the Fund's
instructions and are reconciled with the Fund's trading records.

In computing the net asset value, the Custodian may rely upon any
information furnished by Proper Instructions, including without limitation any
information (1) as to accrual of liabilities of the Fund and as to liabilities
of the Fund not appearing on the books of account kept by the Custodian, (2) as
to the existence, status and proper treatment of reserves, if any, authorized by
the Fund, (3) as to the sources of quotations to be used in computing the net
asset value, including those listed in Appendix B, (4) as to the fair value to
be assigned to any securities or other property for which price quotations are
not readily available, and (5) as to the sources of information with respect to
"corporate actions" affecting portfolio securities of the Fund, including (but
not limited to) those listed in Appendix B. (Information as to "corporate
actions" shall include information as to dividends, distributions, stock splits,
stock dividends, rights offerings, conversions, exchanges, recapitalizations,
mergers, redemptions, calls, maturity dates and similar transactions, including
the ex- and record dates and the amounts or other terms thereof.) The Fund may
instruct the Custodian to utilize a particular source for the valuation of a
specific Security or other Property and the Custodian shall be protected in
utilizing the valuation provided by such source without further inquiry (save
for its usual and customary automated review of price disparities) in order to
effect calculation of the Fund's net asset value. Notwithstanding anything in
this Agreement to the contrary, provided the Custodian shall perform its duties
under Section 8.6(3) with reasonable care

26
<PAGE>

and diligence, the Custodian shall not be responsible for the failure of the
Fund or the Investment Adviser to provide the Custodian with Proper Instructions
regarding liabilities which ought to be included in the calculation of the
Fund's net asset value.

In like manner, the Custodian shall compute and determine the net asset
value as of such other times as the Board of Trustees or Directors of the Fund
from time to time may reasonably request.

The Custodian shall be held to the exercise of reasonable care and
diligence in computing and determining net asset value as provided in this
Section 8.5. The parties hereto acknowledge, however, that the Custodian's
causing an error or delay in the determination of net asset value may, but does
not in and of itself, constitute negligence, gross negligence or willful
misconduct, for which causes, but not for others, the Custodian would be
responsible hereunder. The Fund acknowledges that the accounts and records of
the Fund will be subject to periodic audit in accordance with the requirements
of the 1940 Act and generally accepted auditing standards. The Fund acknowledges
that it will promptly inform the Custodian as to any exceptions reported in such
audit and further acknowledges that the failure to procure reasonable audit may
affect the ability of the Custodian to mitigate any loss to the Fund or may
result in further loss or damage to the Fund. The Custodian's liability for any
such negligence or reckless or willful misconduct which results in an error in
determination of such net asset value shall be limited exclusively to the
direct, out-of-pocket loss the Fund or anyshareholder or former shareholder
shall actually incur (measured generally by application of the difference
between the actual and erroneous computed price to the particular circumstances
surrounding the alleged loss and any expenses the Fund shall incur in connection
with correcting the records of the Fund affected by such error (including
charges made by the Fund's registrar and transfer agent for making such
corrections) or communicating with shareholders or former shareholders of the
Fund affected by such error or reasonable

27
<PAGE>

costs of responding to or defending against any inquiry or proceeding with
respect to such error initiated by the Securities Exchange Commission or other
regulatory or self-regulatory body.

Without limiting the foregoing, the Custodian shall not be held accountable
or liable to the Fund, any shareholder or former shareholder thereof or any
other person for any delays or losses, damages or expenses any of them may
suffer or incur resulting from (1) the Custodian's failure to receive timely and
suitable notification concerning quotations or corporate actions relating to or
affecting portfolio securities of the Fund or (2) any errors in the computation
of the net asset value based upon or arising out of quotations or information as
to corporate actions if received by the Custodian either (i) from a source which
the Custodian was authorized pursuant to the third paragraph of this Section 8.5
to rely upon, (ii) from a source which in the Custodian's reasonable judgment
was as reliable a source for such quotations or information as the sources
authorized pursuant to that third paragraph, or (iii) relevant information known
to the Fund or the Investment Adviser which would impact the calculation of net
asset value but which is not communicated by the Fund or the Investment Adviser
to the Custodian.

In the event of any error or delay in the determination of such net asset
value for which the Custodian may be liable, the Fund and the Custodian will
consult and make good faith efforts to reach agreement on what actions should be
taken in order to mitigate any loss suffered by the Fund or its present or
former shareholders, in order that the Custodian's exposure to liability shall
be reduced to the extent possible after taking into account all relevant factors
and alternatives. Subject to due consideration for the magnitude of the loss,
the distribution of benefits among shareholders and the nature of such
shareholders such actions might include the Fund or the Custodian taking
reasonable steps to collect from any shareholder or former shareholder who has
received any overpayment upon redemption of shares such overpaid amount or to
collect from any

28
<PAGE>

shareholder who has underpaid upon a purchase of shares the amount of such
underpayment or to reduce the number of shares issued to such shareholder. It is
understood that in attempting to reach agreement on the actions to be taken or
the amount of the loss which should appropriately be borne by the Custodian, the
Fund and the Custodian will consider such relevant factors as the amount of the
loss involved, the Fund's desire to avoid loss of shareholder good will, the
fact that other persons or entities could have been reasonably expected to have
detected the error sooner than the time it was actually discovered, the
appropriateness of limiting or eliminating the benefit which shareholders or
former shareholders might have obtained by reason of the error, and the
possibility that other parties providing services to the Fund might be induced
to absorb a portion of the loss incurred.

8.6 APPOINTMENT AS ADMINISTRATOR - The Custodian is hereby appointed
administrator of the Fund with responsibility for performing the services set
forth in this Section 8.6 subject to the supervision and direction of the
Trustees of the Fund. In performing its duties and obligations hereunder, the
Custodian will act in accordance with the Fund's Articles of Incorporation or
Declaration of Trust, By-laws (or comparable documents) and Prospectus and
Statement of Additional Information and with the Proper Instructions of its
Trustees, Treasurer and any other person reasonably believed by the Custodian to
be authorized to act on behalf of the Fund. It is agreed and understood,
however, that the Custodian shall not be responsible for compliance of a Fund's
investments with any applicable documents, laws or regulations, or for losses,
costs or expenses arising out of the Fund's failure to comply with said
documents, laws or regulations or the Fund's failure or inability to correct any
non-compliance therewith and shall be protected in acting on any direction from
the Fund's Investment Adviser, Trustees, Treasurer and any other person
reasonably believed by the Custodian to be authorized to act on behalf of the
Fund.

29
<PAGE>

(1) SHAREHOLDER REPORTS. The Custodian shall accumulate information for
and, subject to approval by the Fund's Treasurer, prepare reports to the Fund's
shareholders of record as set forth in Rule 30d-1 of the 1940 Act or as agreed
upon in writing from time to time between the parties hereto.

(2) REPORTS TO THE SECURITIES AND EXCHANGE COMMISSION. The Custodian shall
prepare and submit for the Fund's review the Securities and Exchange
Commission's Form N-SAR and Rule 24f-2 Notice. Upon acceptance of these reports
by the Fund, the Custodian shall file such reports with the Securities and
Exchange Commission.

(3) EXPENSE ADMINISTRATION. The Custodian shall consult with the Fund's
Treasurer on financial matters relating to the Fund including without limitation
dividend distributions, ____ administration of Fund expenses, ____ including
reconciliations, accruals and payment of expenses, as shall from time to time be
agreed upon by the parties.

(4) COMPLIANCE SUPPORT. The Custodian shall assist the Investment Adviser
for the Fund , at the Adviser's request, in monitoring and developing compliance
procedures for the Fund which will include, among other matters, procedures to
assist the Adviser in monitoring compliance with the Fund's investment
objectives, policies and restrictions, tax matters and applicable laws and
regulations and performing certain monthly compliance tests, to the extent
relevant information is available to the Custodian in the performance of its
functions as the Fund's net asset value calculation agent.

(5) TRUSTEE REPORTS. The Custodian shall assist the Fund's Treasurer in the
preparation of quarterly reporting to the Fund's Trustees as required by
applicable Rules under the 1940 Act and as agreed between the Custodian and the
Fund from time to time.

(6) FIDELITY BOND COVERAGE. The Custodian shall report monthly to the
Fund's Treasurer on compliance of the Fund's fidelity bond coverage with Rule
17g-1 of the 1940 Act.

30
<PAGE>

(7) PERFORMANCE INFORMATION. At the Fund's request, the Custodian shall
assist the Trustees in preparing the Fund's performance analysis reports
(including yield and total return information) calculated in accordance with
applicable U.S. securities laws and in reporting to external databases such
information as may reasonably be requested;

(8) TAX REPORTING. In consultation with the Trustees and independent
accountants, the Custodian shall prepare for review and signature by the Fund,
and after such review and signature, file in a timely manner with appropriate
federal, state and local tax authorities, such federal, state and local tax
returns as shall be required of the Fund, and shall prepare and mail to each
Fund shareholder appearing on its records, a Form 1099 for each tax year of the
Fund. In preparing such returns and schedules, the Custodian shall be entitled
to rely in good faith upon information furnished to it by the Fund and upon the
advice of independent accountants, which may be auditors for the Fund, as to any
matter, including, without limitation, the determination of those states in
which filings are required, the determination of which filings are required and
the correct timing thereof, and the characterization of any assets of the Fund,
or any income or loss by the Fund, availability of any credits, including any
credits for foreign taxes paid, and notwithstanding any provision in this
Agreement to the contrary, the Custodian shall be without liability to the Fund
for any such good faith reliance.

(9) BLUE SKY COMPLIANCE. The Custodian shall select and monitor an
independent service supplier to provide for reasonable and necessary monitoring
of compliance with the securities regulations of the fifty states of the United
States on such terms as the Fund may direct, or in the absence of such
direction, as the Custodian shall reasonably deem appropriate, provided however,
that such arrangement shall require that such service supplier act with
reasonable care in the discharge of its duties. The Custodian shall deliver to
the Fund, or cause to be delivered to the Fund, regular reports and advices with
respect to blue sky compliance and shall be responsible to use reasonable
efforts to enforce the terms of the contract with the service provider on the

31
<PAGE>

Fund's behalf. The Fund shall be responsible to provide copies of its prospectus
and other relevant documents and information relating to the Fund as may be
reasonably required for the performance of state securities law compliance.

(10) OTHER ASSISTANCE. The Custodian shall consult with and assist the
Fund's Treasurer, officers and Investment Adviser in such other matters as the
Fund and the Custodian shall from time to time agree.

Notwithstanding any other provision of this Agreement, the Custodian shall
in no event be liable or responsible to the Fund, any present or former
shareholder of the Fund or any other person for any error or delay which
continued after the issue date of an audit performed by the certified public
accountants employed by the Fund (or other date of written notice of such error
made by such auditor to the Fund) if the Fund or its auditors fail to promptly
inform the Custodian of such error or delay. It is also agreed that, in the
event of an act, omission, error or delay which leads to losses, costs or
expenses for which the Custodian may be liable, the Fund and the Custodian will
consult and make good faith efforts to reach agreement on what actions should be
taken in order to mitigate any loss suffered by the Fund or its present or
former shareholders, in order that the Custodian's exposure to liability shall
be reduced to the extent possible after taking into account all relevant factors
and alternatives. It is understood that in attempting to reach agreement on the
actions to be taken or the amount of the loss which should appropriately be
borne by the Custodian, the Fund and the Custodian will consider such relevant
factors as the amount of the loss involved, the Fund's desire to avoid loss of
shareholder good will, the fact that other persons or entities could have been
reasonably expected to have detected the error sooner than the time it was
actually discovered (with due consideration of the number and nature of affected
shareholders) the appropriateness of limiting or eliminating the benefit which
shareholders or former shareholders might have obtained

32
<PAGE>

by reason of the error, and the possibility that other parties providing
services to the Fund might be induced to absorb a portion of the loss incurred.

9. RESPONSIBILITY OF CUSTODIAN. In carrying out the provisions of this
Agreement, the Custodian shall be held to the exercise of reasonable care,
provided that the Custodian shall not thereby be required to take any action
which is in contravention of any law, rule or regulation or any order of any
court of competent jurisdiction. As used in this Agreement, "reasonable care"
shall mean the level of care which a professional custodian providing custody
services to institutional investors would provide in light of the circumstances
and events which reasonably influence its performance in the market where the
securities are held or the transaction is effected, including without limitation
local market practices relating to securities settlement and safekeeping, and
"negligence" shall mean the failure to exercise reasonable care as herein
defined. The Custodian shall, subject to the provisions set forth in Sections 9
and 10 hereof, be responsible to the Fund for any direct loss or damage which
the Fund incurs by reason of the Custodian's negligence, bad faith or willful
malfeasance.

With respect to securities and funds held by a Subcustodian, either
directly or indirectly (including by a Securities Depository or foreign clearing
agency), including demand deposits, currencies or other deposits and foreign
exchange contracts as referred to herein, the Custodian shall be liable to the
Fund as if it performed the act or omission of the Subcustodian itself, but
subject to the terms of the subcustodian agreement and to the local practices
and conditions prevailing in the market where the act or omission occurred.

With respect to the securities, cash and other Property of the Fund held by
a Securities Depository utilized by the Custodian or any Subcustodian or any
agent of the Custodian, the Custodian shall not be liable for the acts and
omissions of such Securities

33
<PAGE>

Depository unless and only to the extent that such Securities Depository is
liable to the Custodian and the Custodian recovers from such Securities
Depository, provided always that the Custodian shall be liable to the Fund only
for any direct loss or damage to the Fund resulting from use of the Securities
Depository if caused by the negligence, bad faith or willful malfeasance of the
Custodian.

The Fund agrees to indemnify and hold harmless the Custodian and its
nominees from all claims and liabilities (including counsel fees) incurred or
assessed against it or its nominees in connection with the performance of this
Agreement, except such as may arise from its or its nominees negligent or bad
faith.. Without limiting the foregoing indemnification obligation of the Fund,
the Fund agrees to indemnify the Custodian and any nominee in whose name
portfolio securities or other property of the Fund is registered against any
liability the Custodian or such nominee may incur by reason of taxes assessed to
the Custodian or such nominee or other costs, liability or expense incurred by
the Custodian or such nominee resulting directly or indirectly from the fact
that portfolio securities or other property of the Fund is registered in the
name of the Custodian or such nominee; provided that in no such event shall such
indemnity apply to income, franchise or similar tax imposed upon the business of
such persons conducted in the performance of the terms of this Agreement.

10. LIMITATIONS TO CUSTODIAN'S RESPONSIBILITY.

10.1 LIABILITY IN GENERAL - Except as otherwise provided in this Agreement,
the Custodian shall be responsible for loss or damage which the Fund may incur
by reason of the Custodian's negligence, bad faith or willful malfeasance,
PROVIDED ALWAYS that such loss or damage shall be limited to direct damages
incurred by the Fund, and PROVIDED FURTHER that the Custodian shall in no event
be liable for indirect or consequential damages

34
<PAGE>

or for loss of goodwill, even if the Custodian has been advised of the
likelihood of such loss or damage and regardless of the form of action. Upon the
occurrence of any event that causes or may cause any loss to the Fund, the
Custodian shall, upon becoming aware of such event use its reasonable efforts
consistent with the applicable subcustodian agreement to cause any Subcustodian
to use all commercially reasonable efforts and to take any reasonably available
steps under the circumstances to mitigate the effects of such event and to avoid
continuing harm to the Fund.

10.2 LIABILITY OF THE CUSTODIAN WITH RESPECT TO PROPER INSTRUCTIONS;
EVIDENCE OF AUTHORITY; ETC. - The Custodian shall not be liable for, and shall
be indemnified by the Fund for losses or damages incurred or assessed against
the Custodian as a result of, any action taken or omitted in reliance upon
Proper Instructions or upon any other written notice, request, direction,
instruction, certificate or other instrument believed by it to be genuine.

The Custodian shall be entitled, at the expense of the Fund, to receive and
act upon advice of (a) counsel for the Fund or (b) such other counsel as the
Fund and the Custodian may agree upon, with respect to all matters and shall be
entitled to reasonable reliance on advice of other counsel. The Custodian shall
be without liability for any action taken or omitted in good faith pursuant to
such advice; provided however, the Custodian shall exercise reasonable care in
the conduct of actions or omissions taken pursuant to such advice.

10.3 TITLE TO SECURITIES, FRAUDULENT SECURITIES10.3 TITLE TO SECURITIES,
FRAUDULENT SECURITIES - So long as and to the extent that it is in the exercise
of reasonable care, the Custodian shall not be responsible for the title,
validity or genuineness of any Property or evidence of title thereto received by
it or delivered by it pursuant to this Agreement.

10.4 FORCE MAJEURE - Notwithstanding any other provision contained herein,
the Custodian shall not be liable for any action taken, or for any failure to
take any action

35
<PAGE>

required to be taken hereunder, or otherwise for its failure to fulfill its
obligations hereunder (including without limitation the failure to receive or
deliver securities or the failure to receive or make any payment) in the event
and to the extent that the taking of such action or such failure arises out of
or is caused by civil commotion, act of God, accident, fire, water damage,
explosion, mechanical breakdown, (provided that the Custodian shall use
reasonable care with respect to the selection, operation and backup of computer
systems under its control) computer or system failure or other equipment
failure, malfunction or failure caused by computer virus, failure or
malfunctioning of any communications medium for whatever reason, interruption
(whether partial or total) of power supplies or other utility service, strike or
other stoppage (whether partial or total) of labor, market conditions which
prevent the orderly execution of securities transactions or affect the value of
Property, any law, decree, regulation or order of any government or governmental
body, de facto or de jure (including any court or tribunal), rules or
regulations of any Securities Depository or clearing agency or any other cause
whatsoever (whether similar or dissimilar to the foregoing) beyond its control
or the control of its Subcustodian or other agent (collectively, "Force
Majeure").

10.5 SOVEREIGN RISK10.5 SOVEREIGN RISK - Without limiting the generality of
the foregoing Section 10.4, the Custodian shall not be liable for any losses
resulting from a Sovereign Risk. As used herein, a Sovereign Risk shall mean any
act of war, terrorism, riot, insurrection or civil commotion; the imposition of
exchange control restrictions; confiscation, expropriation or nationalization of
any property including without limitation cash, cash equivalents, securities or
the assets of any issuer of securities by any governmental or quasi-governmental
authority (including without limitation those authorities which are judicial,
legislative, executive, military or religious in nature), whether de facto or de
jure; currency devaluation or revaluation; the imposition of taxes, levies or
other charges affecting the Fund's property, or any other political risk
(whether similar or dissimilar to

36
<PAGE>

the foregoing) incurred in respect of the country in which the issuer of such
securities is organized or in which such securities are held or such payments
are held or effected.

10.6 CURRENCY RISKS10. - The Fund bears all risks of holding or transacting
in any currency. Without limiting the generality of the foregoing, the Fund
bears all risks that rules or procedures imposed by Securities Depositories,
exchange controls, asset freezes or other laws or regulations shall prohibit or
impose burdens on or costs relating to the transfer by or for the account of the
Fund of securities, cash or currency held outside the United States or
denominated in a currency other than U. S. dollars or on the conversion of any
currency so held. The Custodian shall in no event be obligated to substitute
another currency (including U.S. dollars) for a currency whose transferability,
convertibility or availability has been affected by any such law, regulation,
rule or procedure.

10.7 INVESTMENT RISKS NOT ASSUMED BY CUSTODIAN10. - The Custodian shall
have no liability in respect of any loss or damage suffered by the Fund, insofar
as such loss or damage arises from commercial or other investment risks inherent
in investing in capital markets or in holding securities in a particular
jurisdiction or country including without limitation: (i) political, legal,
economic, settlement and custody infrastructure, exchange rate and currency
risks; (ii) investment and repatriation restrictions; (iii) the Fund's or
Custodian's inability to protect and enforce any local legal rights including
rights of title and beneficial ownership; (iv) corruption and crime in the local
market; (v) unreliable information which emanates from the local market; (vi)
volatility of banking and financial systems and infrastructure; (vii) bankruptcy
and insolvency risks of any and all local banking agents, counterparties to cash
and securities transactions or registrars or transfer agents; (viii) risk of
issuer insolvency or default; and (ix) market conditions which prevent the
orderly execution of transactions or the value of assets.

37
<PAGE>

10.8 INVESTMENT LIMITATIONS - In performing its duties generally, and more
particularly in connection with the purchase, sale and exchange of securities
made by or for the Fund, the Custodian may assume unless and until notified in
writing to the contrary that Proper Instructions received by it are not in
conflict with or in any way contrary to any provisions of the Fund's Declaration
of Trust or Certificate of Incorporation or By-Laws (or comparable documents) or
votes or proceedings of the shareholders or Trustees or Directors of the Fund.
The Custodian shall in no event be liable to the Fund and shall be indemnified
by the Fund for any violation which occurs in the course of carrying out
instructions given by the Fund or any Investment Adviser of any investment
limitations to which the Fund is subject or other limitations with respect to
the Fund's powers to make expenditures, encumber securities, borrow or take
similar actions affecting the Fund.

10.9 FOREIGN OWNERSHIP LIMITATIONS - The Fund shall be responsible for
monitoring foreign ownership limitations in any markets in which it invests.

10.10 RESTRICTED SECURITIES - The Custodian shall only be responsible for
notifying the Fund of any restrictions on the transfer of securities held in the
Securities Account of which the Custodian is in fact aware, provided that the
Custodian has not negligently dealt with information that should have made it
aware of such restrictions. In no event shall the Custodian be responsible for
the inability of a Fund to sell or transfer restricted securities or for delays
incurred in the sale or transfer of restricted securities if such inability or
delay is the result of the terms of the security itself, actions of the issuer,
its counsel or other representative (including without limitation its
registrar), or limitations due to laws, regulations or other applicable rules.
The Custodian shall only be responsible for transmitting information to the Fund
as to those corporate actions in respect of restricted securities which it in
fact receives.

38
<PAGE>

10.11 MARKET INFORMATION - The Custodian may in its discretion make market
information available to the Fund. This service is for informational purposes
only and is not to be construed as a recommendation to buy or sell a particular
security, to invest or not to invest in a particular country, or to take any
action whatsoever. Although information reported therein is believed to be
accurate, the Custodian does not represent or warrant its accuracy or
completeness. The Fund accordingly acknowledges that the Custodian provides
market information on a best efforts basis and recognizes its responsibility to
consult with its own independent sources before making any investment or other
decisions.

11. ADVANCES AND SECURITY FOR ADVANCES. 11. ADVANCES AND SECURITY FOR ADVANCES.
If, for any reason in the conduct of its safekeeping duties pursuant to Section
5 or its administration of the Fund's assets pursuant to Section 6, the
Custodian or any Subcustodian advances moneys to facilitate settlement or
otherwise for benefit of the Fund (whether or not any Principal or Agency
Account shall be overdrawn either during, or at the end of, any Business Day),
the Fund hereby does: (a) acknowledge that the Fund shall have no right or title
to any Investments purchased with such Advance save a right to receive such
Investments upon: (i) the debit of the Principal or Agency Account; or, (ii) if
such debit would produce an overdraft in such account, other reimbursement of
the associated Advance; (b) grant to the Custodian a security interest in all
Investments; and, (c) agree that the Custodian may secure the resulting Advance
by perfecting a security interest in all Investments, in each case under
Applicable Law. Neither the Custodian nor any Subcustodian shall be obligated to
advance moneys to the Fund, and in the event that such Advance occurs, any

39
<PAGE>

transaction giving rise to an Advance shall be for the account and risk of the
Fund and shall not be deemed to be a transaction undertaken by the Custodian for
its own account and risk. If such Advance shall have been made by a Subcustodian
or any other person, the Custodian may assign the security interest granted
hereby to such Subcustodian or other person. If the Fund shall fail to repay the
principal balance of an Advance, and accrued and unpaid interest thereon, when
due, the Custodian or its assignee, as the case may be, shall be entitled to
utilize the available cash balance in any Agency or Principal Account and to
dispose of any Property to the extent necessary to recover payment of all
principal of, and interest on, such Advance in full. In the event that the
Custodian shall determine to dispose of Property in accordance with the terms of
this Section, it shall first give 48 hours notice of such disposition to the
Fund. Any such notice shall indicate the Property proposed to be disposed. The
Fund may in the interim designate other Property of equal value and similar
liquidity for disposition. Any security interest in Property taken hereunder
shall be treated as financial assets credited to securities accounts under
Articles 8 and 9 of the Uniform Commercial Code (1997). Accordingly, the
Custodian shall have the rights and benefits of a secured creditor that is a
securities intermediary under such Articles 8 and 9. In the event that any
separate financing agreement shall be entered into between the Custodian and the
Fund, the terms of such separate agreement shall control the security for
borrowings of the Fund.

Deposits for each separate Fund respectively maintained in Agency Accounts
and BBH Accounts (including all accounts denominated in any currency) shall
collectively

40
<PAGE>

constitute a single and indivisible current account with respect to the Fund's
obligations to the Custodian or any Subcustodian hereunder. Accordingly,
balances in all such Agency and BBH Accounts shall at all times be available for
satisfaction of the Fund's obligations under this Agreement to the Custodian or
any of its Subcustodians or agents including without limitation any Advances
incurred pursuant to this Section.

12. COMPENSATION. The Fund shall pay the Custodian a custody fee based on such
fee schedule as may from time to time be agreed upon in writing by the Custodian
and the Fund. Such fee, together with all out-of-pocket expenses for which the
Custodian is to be reimbursed, shall be billed to the Fund and be paid by cash
or wire transfer to the Custodian.

13. TERMINATION. This Agreement shall continue in full force and effect until
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid, to the other party, such termination to take effect not sooner
than ninety (90) days after the date of such delivery or mailing. In the event
of termination the Custodian shall be entitled to receive, prior to delivery of
the securities, cash and other Property held by it, payment of all accrued fees
and unreimbursed expenses and all Advances and Liabilities, upon receipt by the
Fund of a statement setting forth such fees, expenses, Advances and Liabilities.
Notwithstanding the foregoing, the parties agree that neither party shall
terminate this Agreement with effective date of termination before October 31,
2000 except in the case of: (1) breach of this Agreement by the other party; (2)
material and identifiable change in the business situation or policy of the Fund
or of the

41
<PAGE>

Custodian; or, (3) Regulatory or other legal process being initiated against the
other party that would be prejudicial to the continuance of the Agreement.

In the event of the appointment of a successor custodian, it is agreed that
the cash, securities and other Property owned by the Fund and held by the
Custodian or any Subcustodian shall be delivered to the successor custodian, and
the Custodian agrees to cooperate with the Fund in execution of documents and
performance of other actions necessary or desirable in order to substitute the
successor custodian for the Custodian under this Agreement.

14. MISCELLANEOUS. The following miscellaneous provisions shall govern the
relationship between the parties --

14. 1. EXECUTION OF DOCUMENTS, ETC. - (a) Actions by the Trustee. Upon
request, the Fund shall execute and deliver to the Custodian such proxies,
powers of attorney or other instruments as may be reasonable and necessary
or desirable in connection with the performance by the Custodian or any
Subcustodian of their respective obligations to the Fund under this
Agreement or any applicable subcustodian agreement with respect to the
Fund.

14.2. ENTIRE AGREEMENT - This Agreement constitutes the entire
understanding and agreement of the Fund, on the one hand, and the
Custodian, on the other, with respect to the subject matter hereof and
accordingly, supersedes as of the effective date of this Agreement any
custodian agreement or other oral or written agreements heretofore in
effect between the Fund and the Custodian with respect to custody of the
Fund's Property.

14.3. WAIVERS AND AMENDMENTS. - No provision of this Agreement may be
waived, amended or terminated except by a statement in writing signed by
the party

42
<PAGE>

against which enforcement of such waiver, amendment or termination is
sought; PROVIDED HOWEVER any appendix or addendum to this Agreement may be
added or amended from time to time by the Fund's execution and delivery to
the Custodian of such additional or amended appendix or addendum, in which
case the terms thereof shall take effect immediately upon execution by the
Custodian or otherwise as set forth in this Agreement.

14.4. INTERPRETATION. - In connection with the operation of this
Agreement, the Custodian and the Fund may agree in writing from time to
time on such provisions interpretative of or in addition to the provisions
of this Agreement with respect to the Fund as may be consistent with the
general tenor of this Agreement. No interpretative or additional provisions
made as provided in the preceding sentence shall be deemed to be an
amendment of this Agreement.

14.5. CAPTIONS. - Headings contained in this Agreement, which are
included as convenient references only, shall have no bearing upon the
interpretation of the terms of the Agreement or the obligations of the
parties hereto.

14.6. GOVERNING LAW. - The provisions of this Agreement shall be
construed in accordance with and governed by the laws of the Commonwealth
of Massachusetts without giving effect to principles of conflicts of law.
The parties hereto irrevocably consent to the exclusive jurisdiction of the
federal district court sitting in Boston in the Commonwealth of
Massachusetts.

14.7 NOTICES. - Except in the case of Proper Instructions, notices and
other writings contemplated by this Agreement shall be delivered by hand or
by facsimile transmission (provided that in the case of delivery by
facsimile transmission, such notice or other writing shall also be mailed
postage prepaid) to the parties at the following addresses:

(a) If to the Fund:

U.S. Global Investors, Inc.
7900 Callaghan Road
P.O. Box 29467
San Antonio, Texas 78229-0467

43
<PAGE>

Attn: Thomas D. Tays

Vice President and Special Counsel

Telephone: 210-308-1234
Fax: 210-308-1230

(b) If to the Custodian:

Brown Brothers Harriman & Co.
40 Water Street
Boston, Massachusetts 02109

Attn: Manager, Securities Department

Telephone: (617) 742-1818
Telefax: (617) 772-2263

or to such other address as the Fund or the Custodian may have designated
in writing to the other.

14.8. ASSIGNMENT. - This Agreement shall be binding on and shall inure
to the benefit of the Fund and the Custodian and their respective
successors and assigns, provided that neither the Custodian nor the Fund
may assign this Agreement or any of its rights or obligations hereunder
without the prior written consent of the other party.

14.9. COUNTERPARTS. - This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original. This Agreement
shall become effective when one or more counterparts have been signed and
delivered by the Fund and the Custodian.

14.10. CONFIDENTIALITY; SURVIVAL OF OBLIGATIONS. - Except as required
by applicable law or regulation, he parties hereto agree that each shall
treat confidentially the terms

44
<PAGE>

and conditions of this Agreement and all information provided by each party
to the other regarding its business and operations. All confidential
information provided by a party hereto shall be used by any other party
hereto solely for the purpose of rendering or obtaining services pursuant
to this Agreement and, except as may be required in carrying out this
Agreement, shall not be disclosed to any third party without the prior
consent of such providing party. The foregoing shall not be applicable to
any information that is publicly available when provided or thereafter
becomes publicly available other than through a breach of this Agreement,
or that is required to be disclosed by or to any bank examiner of the
Custodian or any Subcustodian, any regulatory authority, any auditor of the
parties hereto, or by judicial or administrative process or otherwise by
applicable law or regulation. The provisions of this Agreement and any
other rights or obligations incurred or accrued by any party hereto prior
to termination of this Agreement shall survive any termination of this
Agreement.

14.11 The Custodian agrees that claims made against each Fund
respectively under this Agreement shall be satisfied only from assets of
such Fund, and not from the assets of any separate Fund held hereunder;
that any person executing this Agreement has executed it on behalf of the
Fund and not individually, and that the obligations of the Fund arising out
of this Agreement are not binding upon such person or the Fund's
shareholders individually, but binding upon the Property and other assets
of the Fund; that no shareholders, trustees directors or officers of the
Fund may be held personally liable or responsible for any obligations of
the Fund arising out of this Agreement.

45
<PAGE>

IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed in its name and behalf on the day and year first above written.

U.S. GLOBAL ACCOLADE FUNDS BROWN BROTHERS
HARRIMAN & CO.

By /s/ Susan B. McGee By /s/ Douglas A. Donahue

------------------------- ----------------------
Name: Susan B. McGee Name: Douglas A. Donahue
Title: Executive Vice President Title: Partner

46
<PAGE>

APPENDIX B

U.S. GLOBAL ACCOLADE FUNDS

AGREEMENT DATED AS OF 11/1/1997

PRICING SOURCES

THE FOLLOWING AUTHORIZED SOURCES MAY BE UTILIZED BY THE CUSTODIAN FOR PRICING
AND FOREIGN EXCHANGE QUOTATIONS, CORPORATE ACTION, DIVIDENDS AND RIGHTS

OFFERINGS:

AUTHORIZED SOURCES

BLOOMBERG

EXTEL (LONDON)

FUND MANAGERS

INTERACTIVE DATA CORPORATION

REPUTABLE BROKERS

REUTERS

SUBCUSTODIAN BANKS

THE CUSTODIAN

TELEKURS

VALORINFORM (GENEVA)

REPUTABLE FINANCIAL PUBLICATIONS

STOCK EXCHANGES

FINANCIAL INFORMATION INC. CARD

JJ KENNY

FRI CORPORATION

47
<PAGE>

SCHEDULE C

U.S. GLOBAL ACCOLADE FUNDS AGREEMENT

DATED AS OF 11/1/97

BONNEL GROWTH FUND

MEGATRENDS FUND

ADRIAN DAY GLOBAL OPPORTUNITY FUND

REGENT EASTERN EUROPEAN FUND

[U.S. GLOBAL INVESTORS, INC. LOGO]

January 23, 1998

U.S. Global Accolade Funds
7900 Callaghan Road
San Antonio, Texas 78229

Ladies and Gentlemen:

I hereby consent to the incorporation by reference in Post-Effective Amendment
No. 13 ("Amendment") to Registration Statement 2-35439 on Form N-1A
("Registration Statement") of U.S. Global Accolade Funds ("Trust") of my opinion
with respect to the legality of the shares of the Trust representing interests
in the Bonnel Growth Fund, MegaTrends Fund, Adrian Day Global Opportunity Fund
and Regent Eastern European Fund, assuming that all of the shares are sold,
issued and paid for in accordance with the terms of the Trusts' prospectuses and
Statements of Additional Information as contained in this Registration Statement
on Form N1-A.

I am licensed to practice law in the State of Texas and not in any other
jurisdiction. I do not claim special expertise in the laws of any other
jurisdiction.

I hereby consent to the use of this opinion as an exhibit to this Registration
Statement filed under Part C. I further consent to reference in the prospectus
of the Trust to the fact that this opinion concerning the legality of the issue
has been rendered by me.

Sincerely,

/s/ Susan B. McGee

Susan B. McGee
Executive Vice President, Secretary

SBM:kle

7900 Callaghan Road
........................
MAIL ADDRESS:
P.O. Box 781234
San Antonio, Texas
78278-1234
........................
Tel 210-308-1234
........................
1-800-US-FUNDS
........................
Fax 210-308-1223
........................
email [email protected]

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation by
reference in U.S. Global Accolade Funds' Registration Statement on Form N-1A,
Post-Effective Amendment No. 13 (the "Registration Statement"), of our report
dated July 19, 1996 included in the June 30, 1996 Annual Report of The Leeb
Personal Finance Fund of the Leeb Personal Finance Investment Trust, and to all
references to our Firm included in this Registration Statement.

Cincinnati, Ohio
January 27, 1998 ARTHUR ANDERSEN LLP

700 N. St. Mary's, Suite 900 Telephone 210 226 7700
San Antonio, TX 78205 Facsimile 210 226 7412

PRICE WATERHOUSE LLP [GRAPHIC: PRICE WATERHOUSE LOGO]

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

We hereby consent to the incorporation by reference in the Prospectus and
Statements of Additional Information constituting parts of this Post-Effective
Amendment No. 13 to the Registration Statement on Form N-1A (the "Registration
Statement") of our report dated December 17, 1997, relating to the financial
statements and financial highlights appearing in the October 31, 1997 Annual
Report of Bonnel Growth Fund, MegaTrends Fund, Adrian Day Global Opportunity
Fund and Regent Eastern European Fund, comprising the separate funds of U.S.
Global Accolade Funds, which are also incorporated by reference into the
Registration Statement. We also consent to the references to us under the
headings "Financial Highlights" and "Independent Accountants" in the
Prospectuses for the above Funds and under the headings "Independent
Accountants" in the Statements of Additional Information for the above funds and
"Financial Statements" in the Statement of Additional Information for MegaTrends
Fund.

/s/ Price Waterhouse LLP

PRICE WATERHOUSE LLP
San Antonio, Texas
January 27, 1998

PLAN PURSUANT TO RULE 12B-1

Adopted September 21, 1994

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. Bonnel Growth 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. United Services Advisors, Inc., as the sole shareholder of the Fund,
has approved the Plan.

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 on September 21,
1994 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

1 of 2

<PAGE>

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;

(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.

2 of 2

<ARTICLE> 6
<LEGEND>
This financial data schedule contains summary financial information extracted
from the Annual Report to Shareholders for the fiscal year ended October 31,
1997, and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<SERIES>
<NUMBER> 1
<NAME> BONNEL GROWTH FUND
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> OCT-1-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 98218
<INVESTMENTS-AT-VALUE> 104411
<RECEIVABLES> 5638
<ASSETS-OTHER> 8
<OTHER-ITEMS-ASSETS> 3
<TOTAL-ASSETS> 110060
<PAYABLE-FOR-SECURITIES> 5114
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 303
<TOTAL-LIABILITIES> 5417
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 78715
<SHARES-COMMON-STOCK> 5316
<SHARES-COMMON-PRIOR> 5393
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 19735
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6193
<NET-ASSETS> 104643
<DIVIDEND-INCOME> 23
<INTEREST-INCOME> 5
<OTHER-INCOME> 0
<EXPENSES-NET> 164
<NET-INVESTMENT-INCOME> (136)
<REALIZED-GAINS-CURRENT> 5716
<APPREC-INCREASE-CURRENT> (17312)
<NET-CHANGE-FROM-OPS> (11732)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 266
<NUMBER-OF-SHARES-REDEEMED> 343
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (13248)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 14155
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 95
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 165
<AVERAGE-NET-ASSETS> 114252
<PER-SHARE-NAV-BEGIN> 21.86
<PER-SHARE-NII> (.03)
<PER-SHARE-GAIN-APPREC> (2.15)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 19.68
<EXPENSE-RATIO> 1.72
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> JUL-1-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 21416
<INVESTMENTS-AT-VALUE> 26147
<RECEIVABLES> 73
<ASSETS-OTHER> 1
<OTHER-ITEMS-ASSETS> 1
<TOTAL-ASSETS> 26222
<PAYABLE-FOR-SECURITIES> 690
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 40
<TOTAL-LIABILITIES> 730
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 17172
<SHARES-COMMON-STOCK> 1834
<SHARES-COMMON-PRIOR> 1904
<ACCUMULATED-NII-CURRENT> 20
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3569
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4731
<NET-ASSETS> 25492
<DIVIDEND-INCOME> 111
<INTEREST-INCOME> 65
<OTHER-INCOME> 0
<EXPENSES-NET> 156
<NET-INVESTMENT-INCOME> 20
<REALIZED-GAINS-CURRENT> 968
<APPREC-INCREASE-CURRENT> (131)
<NET-CHANGE-FROM-OPS> 857
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 97
<NUMBER-OF-SHARES-REDEEMED> 166
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (118)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 2601
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 88
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 156
<AVERAGE-NET-ASSETS> 26417
<PER-SHARE-NAV-BEGIN> 13.45
<PER-SHARE-NII> .01
<PER-SHARE-GAIN-APPREC> .44
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.90
<EXPENSE-RATIO> 1.76
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> FEB-20-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 3897
<INVESTMENTS-AT-VALUE> 3556
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