[EXHIBIT NO. III TO COMBINED PROSPECTUS AND PROXY STATEMENT - ADVISORY AGREEMENT
AND ADDENDUM]
ADVISORY AGREEMENT
AGREEMENT made as of the 21st day of September, 1994 between UNITED
SERVICES ADVISORS, INC., a corporation organized under the laws of the State of
Texas and having its principal place of business in San Antonio, Texas (the
"Advisor"), and ACCOLADE FUNDS, a Massachusetts business trust having its
principal place of business in San Antonio, Texas (the "Trust").
WHEREAS, the Trust is engaged in business as an open-end management
investment company and is registered under the Investment Company Act of 1940
(the "1940 Act"); and
WHEREAS, the Advisor is engaged principally in the business of rendering
investment management services and is registered under the Investment Advisors
Act of 1940; and
WHEREAS, the Trust intends to initially offer shares in SIF Government
Money Fund and SIF Government Short-Term Fund [such series (the "Initial Funds")
together with all other series subsequently established by the Trust with
respect to which the Trust desires to retain the Advisor to render investment
advisory services hereunder the Advisor is willing so to do (collectively
referred to as the "Funds")];
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt whereof is hereby
acknowledged, the parties hereto agree as follows:
1. APPOINTMENT OF ADVISOR.
(a) Initial Funds. The Trust hereby appoints the Advisor to act as
Advisor and investment advisor to each of the Initial Funds for
the period and on the terms herein set forth. The Advisor accepts
such appointment and agrees to render the services herein set
forth, for the compensation herein provided.
(b) Additional Funds. In the event that the Trust establishes one or
more series of shares other than the Initial Funds with respect
to which it desires to retain the Advisor to render management
and investment advisory services hereunder, it shall so notify
the Advisor in writing, indicating the advisory fee which will be
payable with respect to the additional series of shares. If the
Advisor is willing to render such services, it shall so notify
the Trust in writing, whereupon such series of shares shall
become a Fund hereunder.
2. DUTIES OF ADVISOR.
The Advisor, at its own expense, shall furnish the following services
and facilities to the Trust:
(a) Investment Program. The Advisor will (i) furnish continuously an
investment program of each Fund, (ii) determine (subject to the
overall supervision and review of the Board of Trustees of the
Trust) what investments shall be purchased, held sold or
exchanged by each Fund and what portion, if any, of the assets of
each Fund shall be held uninvested, and (iii) make changes on
behalf of the Trust in the investments of each Fund. The Advisor
will also manage, supervise and conduct the other affairs and
business of the Trust of each Fund thereof and matters incidental
thereto, subject always to the control of the Board of Trustees
of the Trust and to the provisions of the Declaration of Trust
and By-laws and the 1940 Act.
(b) Office Space and Facilities. The Advisor shall furnish the Trust
office space in the offices of the Advisor, or in such other
place or places as may be agreed upon from time to time, and all
necessary office facilities, simple business equipment, supplies,
utilities, and telephone service for managing the affairs and
investments of the Trust. These services are exclusive of the
necessary services and records of any dividend disbursing agent,
transfer agent, registrar or custodian, and accounting and
bookkeeping services to provided by the Trust's transfer agent,
record keeping service or custodian.
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Exhibit III - Advisory Agreement
Page 1
(c) Personnel. The Advisor shall provide all necessary executive and
clerical personnel for administering the affairs of the Trust,
and shall compensate all personnel, officers and Trustees of the
Trust if such persons are also employees of the Advisor or its
affiliates, except as provided in Paragraph 3(f) hereof.
(d) Distribution Expenses. Except as may be provided in distribution
expense plans as contemplated by Rule 12b-1 under the 1940 Act,
the Advisor shall bear all sales, promotions or distribution
expenses in connection with the distribution of shares of any
Fund and shall be the sole judge of the extent to which sales or
promotion expenses shall be incurred; provided however, that the
Advisor shall not be obligated to pay for any portion of the cost
of prospectuses or periodic reports provided to shareholders.
Expenses incurred in complying with laws regulating the issue or
sale of securities shall not be deemed to be sales, promotion or
distribution expenses.
(e) Portfolio Transactions. The Advisor shall place all orders for
the purchase and sale of portfolio securities for the account of
each Fund with brokers or dealers selected by the Advisor,
although the Trust will pay the actual brokerage commissions on
portfolio transactions in accordance with Paragraph 3(c). In
executing portfolio transactions and selecting brokers or
dealers, the Advisor will use its best efforts to seek on behalf
of the Trust or any Fund thereof the best overall terms
available. In assessing the best overall terms available for any
transaction, the Advisor shall consider all factors it deems
relevant, including the breadth of the market in the security,
the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the
commission, if any (for the specific transaction and on a
continuing basis). In evaluating the best overall terms
available, and in selecting the broker or dealer to execute a
particular transaction, the Advisor may also consider the
brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934) provided to
any Fund and/or other accounts over which the Advisor or an
affiliate of the Advisor exercises investment discretion. The
Advisor is authorized to pay to a broker or dealer who provides
such brokerage and research services a commission for executing a
portfolio transaction for any fund which is in excess of the
amount of commission another broker or dealer would have charged
for effecting that transaction if, but only if, the Advisor
determines in good faith that such commission was reasonable in
relation to the value of the brokerage and research services
provided by such broker or dealer, viewed in terms of that
particular transaction or in terms of all of the accounts over
which investment discretion is so exercised.
3. ALLOCATION OF EXPENSES.
Except for the services and facilities to be provided by the Advisor
as set forth in Paragraph 2 above, the Trust assumes and shall pay all
expenses for all other Trust operations and activities and shall
reimburse the Advisor for any such expenses incurred by the Advisor.
The expenses to be borne by the Trust shall include, without
limitation:
(a) The charges and expenses of any registrar, stock transfer or
dividend disbursing agent, custodian, or depository appointed by
the Trust for the safekeeping of its cash, portfolio securities
and other property;
(b) The charges and expenses of auditors;
(c) Brokerage commissions for transactions in the portfolio
securities of the Trust;
(d) All taxes, including issuance and transfer taxes, and corporate
fees payable by the Trust to Federal, state or other governmental
agencies;
(e) The cost of stock certificates (if any) representing shares of
the Trust;
(f) Expenses involved in registering and maintaining registrations of
the Trust and of its shares with the Securities and Exchange
Commission and various states and other jurisdictions,
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including reimbursement of actual expenses incurred by the
Advisor in performing such functions for the Trust, and including
compensation of persons who are Advisor employees in proportion
to the relative time spent on such matters;
(g) All expenses of shareholders' and Trustees' meetings, including
meetings of committees, and of preparing, printing and mailing
proxy statements, quarterly reports, semi-annual reports, annual
reports and other communications to shareholders;
(h) All expenses of preparing and setting in type prospectuses, and
expenses of printing and mailing the same to shareholders [but
not expenses of printing and mailing of prospectuses and
literature used for promotional purposes in accordance with
Paragraph 2(d) above];
(i) Compensation and travel expenses of Trustees who are not
"interest persons" within the meaning of the 1940 Act;
(j) The expense of furnishing, or causing to be furnished, to each
shareholder a statement of his account, including the expense of
mailing;
(k) Charges and expenses of legal counsel and internal
audit/compliance personnel in connection with matters relating to
the Trust, including, without limitations, legal services
rendered in connection with the Trust's corporate and financial
structure and relations with its shareholders, issuance of Trust
shares, and registration and qualification of securities under
Federal, state and other laws;
(l) The expenses of attendance at professional meetings of
organizations such as the Investment Company Institute, the No
Load Mutual Fund Association, or Commerce Clearing House by
officers and Trustees of the Trust, and the membership or
association dues of such organizations;
(m) The cost and expense of maintaining the books and records of the
Trust, including general ledger accounting;
(n) The expense of obtaining and maintaining a fidelity bond as
required by Section 17(g) of the 1940 Act;
(o) Interest payable on Trust borrowings; and
(p) Postage.
4. ADVISORY FEE.
(a) For the services and facilities to be provided to each of the
Funds by the Advisor as provided in Paragraph 2 hereof, the Trust
shall pay the Advisor a monthly fee with respect to each of the
Funds as soon as practical after the last day of each calendar
month, which fee shall be paid at the rate set forth below based
upon the Monthly Average Net Assets [as defined in subparagraph
(c) below] of such Fund for such calendar month:
ADVISORY FEE SCHEDULE
---------------------
MONTHLY
FEE RATE
--------
Bonnel Growth Fund 1/12 of 1.00%
(b) In the case of termination of this Agreement with respect to any
Fund during any calendar month, the fee with respect to such Fund
for that month shall be
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Exhibit III - Advisory Agreement
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reduced proportionately based upon the number of calendar days
during which it is in effect and the fee shall be computed upon
the average net assets of such Fund for the business days which
it is so in effect.
(c) The "Monthly Average Net Assets" of any Fund of the Trust for any
calendar month shall be equal to the quotient produced by
dividing (i) the sum of the net assets of such Fund, determined
in accordance with procedures established from time to time by or
under the direction of the Board of Trustees of the Trust in
accordance with the Declaration of Trust of the Trust, as of the
close of business on each day during such month that such Fund
was open for business, by (ii) the number of such days.
5. EXPENSE LIMITATION.
The Advisor agrees that for any fiscal year of the Trust during which the
total of all expenses of the Trust (including investment advisory fees
under this agreement, but excluding interest, portfolio brokerage
commissions and expenses, taxes and extraordinary items) exceeds the lowest
expense limitation imposed in any state in which the Trust is then making
sales of its shares or in which its shares are then qualified for sale, the
Advisor will reimburse the Trust for such expenses not otherwise excluded
from reimbursement by this Paragraph 5 to the extent that they exceed such
expense limitation.
6. TRUST TRANSACTIONS.
The Advisor agrees that neither it nor any of its officers or Directors
will take any long or short term position in the shares of the Trust;
provided, however, that such prohibition:
(a) shall not prevent the Advisor from purchasing shares of the Trust
if orders to purchase such shares are placed upon the receipt by
the Advisor of purchase orders for such shares and are not in
excess of such purchase orders received by the Advisor; and
(b) shall not prevent the purchase of shares of the Trust by any of
the persons above described for their account and for investment
at the price at which such shares are available to the public at
the time of purchase or as part of the initial capital of the
Trust.
7. RELATIONS WITH TRUST.
Subject to and in accordance with the Declaration of Trust and By-laws of
the Trust and the Articles of Incorporation and By-laws of the Advisor,
respectively, it is understood that Trustees, officers, agents and
shareholders of the Trust are or may be interested in the Advisor (or any
successor thereof) as directors, officers, or otherwise; that directors,
officers, agents and shareholders of the Advisor are or may be interested
in the Trust as Trustees, officers, shareholders, or otherwise; that the
Advisor (or any such successor) is or may be interested in the Trust as a
shareholder or otherwise; and that the effect of any such adverse interests
shall be governed by said Declaration of Trust, Articles of Incorporation
and By-laws.
8. LIABILITY OF ADVISOR AND OFFICERS AND TRUSTEES OF THE TRUST.
No provision of this Agreement shall be deemed to protect the Advisor
against any liability to the Trust or its shareholders to which it might
otherwise be subject by reason of any willful misfeasance, bad faith or
gross negligence in the performance of its duties or the reckless disregard
of its obligations and duties under this Agreement. Nor shall any provision
hereof be deemed to protect any Trustee or officer of the Trust against any
such liability to which he might otherwise be subject by reason of any
willful misfeasance, bad faith or gross negligence in the performance of
his duties or the reckless disregard of his obligations and duties. If any
provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall
not be affected thereby.
9. DURATION AND TERMINATION OF THIS AGREEMENTS.
(a) Duration. This Agreement shall become effective with respect to
each Initial Fund on the date hereof and, with respect to any
additional Fund, on the date of receipt by the Trust of notice
from the Advisor in accordance with Paragraph 1(b) hereof that
the Manager is willing
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Exhibit III - Advisory Agreement
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to serve as Advisor with respect to such Fund. Unless terminated
as herein provided, this Agreement shall remain in full force and
effect until September 21, 1995 with respect to the Initial Funds
and, with respect to each additional Fund, until one year
following the date on which such Fund becomes a Fund hereunder,
and shall continue in full force and effect for period on one
year thereafter with respect to each Fund so long as such
continuance with respect to any such Fund is approved at least
annually (i) by either the Trustees of the Trust or by vote of a
majority of the outstanding voting shares (as defined in the 0000
Xxx) of such Fund, and (ii) in either event by the vote of a
majority of the Trustees of the Trust who are not parties to this
Agreement or "interested persons" (as defined in the 0000 Xxx) of
any such party, cast in person at a meeting called for the
purpose of voting on such approval.
Any approval of this Agreement by the holders of a majority of
the outstanding shares (as defined in the 0000 Xxx) of any Fund
shall be effective to continue this Agreement with respect to any
such Fund notwithstanding (i) that this Agreement has not been
approved by the holders of a majority of the outstanding shares
of any other Fund affected thereby, and (ii) that this Agreement
has not been approved by the vote of a majority of the
outstanding shares of the Trust, unless approval shall be
required by any other applicable law or otherwise.
(b) Termination. This Agreement may be terminated at any time,
without payment of any penalty, by vote of the Trustees of the
Trust or by vote of a majority of the outstanding shares (as
defined in the 1940 Act), or by the Advisor on sixty (60) days'
written notice to the other party.
(c) Automatic Termination. This Agreement shall automatically and
immediately terminate in the event of its assignment.
10. SERVICES NOT EXCLUSIVE.
The services of the Advisor to the Trust hereunder are not to be deemed
exclusive, and the Advisor shall be free to render similar services to
others so long as its services hereunder are not impaired thereby.
11. LIMITATION OF LIABILITY.
(a) THE TRUST The term "Accolade Funds" means and refers to the
Trustees from time to time serving under the Master Trust
Agreement of the Trust dated April 15, 1993, as the same may
subsequently thereto have been, or subsequently hereto be
amended. It is expressly agreed that the obligations of the Trust
hereunder shall not be binding upon any of the Trustees,
shareholders, nominees, officers, agents or employees of the
Trust, personally, but bind only the assets and property of the
Trust, as provided in the Master Trust Agreement of the Trust.
The execution and delivery of this Agreement have been authorized
by the Trustees and shareholders of the Trust and signed by an
authorized officer of the Trust, acting as such, and neither such
authorization by such Trustees and shareholders nor such
execution and delivery by such officer shall be deemed to have
been made by any of them individually or to impose any liability
on any of them personally, but shall bind only the assets and
property of the Trust as provided in its Master Trust Agreement.
(b) THE ADVISOR It is expressly agreed that the oblations of the
Advisor hereunder shall not be binding upon any of the
shareholders, nominees, officers, agents or employees of the
Advisor, personally, but bind only the assets and property of the
Advisor, respectively. The execution and delivery of the
Agreement have been authorized by the directors and officers of
the Advisor and signed by an authorized officer of the Advisor,
acting as such, and neither such authorization by such directors
and officers nor such execution and delivery by such officer
shall be deemed to have been made by any of them individually or
to impose any liability on any of them personally, but shall bind
only the assets and property of the Advisor, respectively. This
limitation of liability shall not be deemed to protect the
shareholders, nominees, officers, agents or employees of the
Advisor against any liability to the Trust or its shareholders to
which they might otherwise be subject by reason of any willful
misfeasance, bad faith or gross negligence in the performance of
their duties or the reckless disregard of their obligations and
duties under this Agreement.
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Exhibit III - Advisory Agreement
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
ACCOLADE FUNDS UNITED SERVICES ADVISORS, INC.
By ---------------------- By -------------------------
Executive Vice President Executive Vice President
Attest: Attest:
-------------------------- -----------------------------
Secretary Secretary
================================================================================
ADDENDUM TO ADVISORY AGREEMENT
......................., 1996
U.S. Global Investors, Inc.
0000 Xxxxxxxxx Xxxx
Xxx Xxxxxxx, Xxxxx 00000
Gentlemen:
Pursuant to Section 1(b) of the Advisory Agreement dated September 21, 1994
between Accolade Funds (the "Trust") and United Services Advisors, Inc. (the
"Advisor"), please be advised that the Trust has established one new series of
its shares, namely, the MegaTrends Fund, and please be further advised that the
Trust desires to retain the Advisor to render management and investment advisory
services under the Advisory Agreement to this Fund at the fees stated below:
MEGATRENDS FUND
Monthly Average Net Assets 1/12 of 1.00%
Please state below whether you are willing to render such services at the fees
stated above.
ACCOLADE FUNDS
Attest: By:
-------------------------------- ------------------------------
Secretary Executive Vice President
Date:
-----------------------------------
We are willing to render management and investment advisory services to the
MegaTrends Fund at the fee stated above.
U.S. GLOBAL INVESTORS, INC.
Attest: By:
------------------------------- --------------------------------
Secretary President
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Exhibit III - Advisory Agreement
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