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IMPORTANT ADDITIONAL INFORMATION FOR SHAREHOLDERS OF
UNITED SERVICES FUNDS
CHINA REGION OPPORTUNITY FUND
JULY 29, 1996 SUPPLEMENT TO
PROSPECTUS DATED NOVEMBER 1, 1995
AS SUPPLEMENTED NOVEMBER 3, 1995
SUMMARY OF FEES AND EXPENSES--P. 3, P. 33
The Advisor has guaranteed that Total Fund Operating Expenses (as a percentage
of average net assets) will not exceed 2.25% on an annualized basis through June
30, 1997 and until such later date as the Advisor determines.
HOW TO PURCHASE SHARES--P. 19
All purchases of shares are subject to acceptance by the Trust and are not
binding until accepted. United Services Funds reserves the right to reject any
application or investment. Orders received by the Fund's transfer agent or a
sub-agent before 4:00 p.m., Eastern time, Monday through Friday exclusive of
business holidays, and accepted by the Fund will receive the share price next
computed after receipt of the order.
HOW TO REDEEM SHARES--P. 21
You may redeem any or all of your shares at will. Redemption requests received
in proper order by the Fund's transfer agent or a sub-agent 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.
HOW TO SPEED REDEMPTIONS--P. 21
To redeem your Fund shares by telephone, you may call the Fund and direct an
exchange out of the Fund into an identically registered account in a United
Services treasury money market fund ($1,000 minimum initial investment). You may
then write a check against your treasury money market fund account. See "How to
Exchange Shares" in the prospectus for a description of exchanges, including the
$5 exchange fee. Call 1-800-426-6635 for more information concerning telephone
redemption and a treasury money market fund prospectus.
MANAGEMENT OF THE FUNDS, THE INVESTMENT ADVISOR--P. 33
The Transfer Agency Agreement with the Trust provides for each Fund to pay USSI
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 Trust
shares through broker-dealers, banks, trust companies and similar institutions
which provide such services and maintain an omnibus account with the Transfer
Agent, each Fund shall pay to the Transfer Agent a monthly fee equal to
one-twelfth (1/12) of 12.5 basis points (.00125) of the value of the shares of
the Funds held in accounts at the institutions, which payment shall not exceed
$1.92 multiplied by the average daily number of accounts holding Trust share at
the institution.
INVESTMENT OBJECTIVES AND CONSIDERATIONS--P. 1
Each investor is responsible for determining whether or not an investment in the
Fund is appropriate for his or her needs.
................................................................................
UNITED SERVICES FUNDS
CHINA REGION OPPORTUNITY FUND
P.O. BOX 781234
SAN ANTONIO, TEXAS 78278-1234
1-800-US-FUNDS (1-800-873-8637)
(INFORMATION, SHAREHOLDER SERVICES AND REQUESTS)
PROSPECTUS
NOVEMBER 1, 1995
This prospectus presents information that a prospective investor should
know about the China Region Opportunity Fund (the "Fund"), a fund of United
Services Funds (the "Trust"). The Fund is one of several diversified portfolios
of the Trust, an open-end management investment company.
The objective of the Fund is to achieve capital appreciation by investing
primarily in the China Region. THE FUND INVOLVES SPECULATIVE INVESTMENTS,
SPECIAL RISKS, AND MAY NOT BE APPROPRIATE FOR ALL INVESTORS. (See "Risk Factors
and Special Considerations" at page 12.) Read and retain this prospectus for
future reference.
A Statement of Additional Information dated November 1, 1995 has been filed
with the Securities and Exchange Commission and is incorporated herein by
reference. The Statement is available free from United Services Funds upon
written request at the address set forth above or by calling 1-800-US-FUNDS
(1-800-873-8637).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DIS-
APPROVED BY THE SECURITIES AND EXCHANGE COM-
MISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL
OFFENSE.
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TABLE OF CONTENTS
PAGE
----
Summary of Fees and Expenses......... 2
Financial Highlights................. 4
Investment Objectives and
Considerations..................... 5
Risk Factors and Special
Considerations..................... 12
Additional Investment Practices...... 14
Futures Contracts and Options........ 15
How to Purchase Shares............... 17
How to Exchange Shares............... 20
How to Redeem Shares................. 21
How Shares are Valued................ 26
Dividends and Taxes.................. 27
The Trust............................ 30
Management of the Fund............... 31
Performance Information.............. 34
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 (on the
redemption or exchange of
shares held less than 180
days).. 1%
Administrative Exchange Fee..... $5
Account Closing Fee (does not
apply to exchanges).......... $10
ANNUAL FUND OPERATING EXPENSES (AS A
PERCENTAGE OF AVERAGE NET
ASSETS)(1)
Management Fees (net of waivers
and reimbursements).......... 0.74%(2)
12b-1 Fees...................... None
Other Expenses.................. 0.88%(2)
Transfer Agency Fees............ 0.48%
Accounting Services Fees........ 0.15%
Total Fund Operating Expenses
(net of waivers and
reimbursements).............. 2.25%(2)
Except for active ABC Investment PlanT, Uniform Gift to Minors Act
("UGMA"), Uniform Transfer to Minors Act ("UTMA") and retirement accounts, if an
account balance falls, for any reason other than market fluctuations, below
$1,000 at any time during a month, that account will be subject to a monthly
small account charge of $5. See "Small Accounts" on page 24.
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A shareholder who requests delivery of redemption proceeds by wire transfer
will be subject to a $10 charge. International wires will be charged more.
HYPOTHETICAL EXAMPLE OF EFFECT OF FUND EXPENSES:
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return and redemption at the end of each period.
1 year............................... $ 33
3 years.............................. $ 86
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 this
illustration implies. The examples should not be considered a representation
of past or future expenses. Actual expenses may be more or less than those
shown.
- ------------------------------------------------------------------------------
(1) Management Fees are paid to United Services Advisors, Inc. (the "Advisor")
for managing its investments and business affairs. The Fund incurs other
expenses for maintaining shareholder records, furnishing shareholder statements
and reports and for other services. Transfer agency and accounting services fees
are paid to United Shareholder Services, Inc. ("USSI" or the "Transfer Agent"),
a subsidiary of the Advisor, and are not charged directly to individual
shareholder accounts. The Transfer Agent charges the Fund $23.00 per shareholder
account per year. The account closing fee and small account charge will be paid
by the shareholder directly to the Transfer Agent which will, in turn, reduce
its charges to the Fund by a like amount. Please refer to the section entitled
"Management of the Fund" on page 31 for further information. Please refer to the
section entitled "Performance Information" on page 34 which discusses the impact
of these charges on standard total return and yield.
(2) The Advisor has guaranteed that Total Fund Operating Expenses (as a
percentage of average net assets) will not exceed 2.25% on an annualized basis
through June 30, 1996 and until such later date as the Advisor determines. Based
on actual operating expenses of the Fund for the year ended June 30, 1995 and
subject to expense limitations imposed by the state of California, the
annualized Management, Transfer Agency, Accounting Fees and Other Expenses would
have been 1.00%, 0.48%, 0.15%, and 0.88%, respectively for Total Fund Operating
Expenses of 2.51%, in light of the state of California expense limitation.
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FINANCIAL HIGHLIGHTS
CHINA REGION OPPORTUNITY FUND
The following per share data and ratios for a share of beneficial interest
outstanding throughout the period February 10, 1994, effective date of original
registration statement, to June 30, 1994 and the year ended June 30, 1995 has
been audited by Price Waterhouse LLP, the Fund's Independent Accountants, whose
report therein is included in the Fund's 1995 Annual Report to Shareholders and
are incorporated by reference into the Statement of Additional Information
("SAI"). The Financial Highlights should be read in conjunction with the
financial statements and notes thereto included in the Annual Report. The SAI
and the Annual Report may be obtained without charge.
YEAR ENDED PERIOD ENDED
JUNE 30, JUNE 30,
1995 1994(A)
---------- ------------
Per Share Operating Performance:
Net asset value, beginning of
period....................... $ 7.75 $ 9.92
---------- ------------
Net investment income(b)........ .10 0.04
Net realized and unrealized gain
(loss) on investments(c)..... (1.09) (2.17)
---------- ------------
Total from investment
operations.............. (.99) (2.13)
---------- ------------
Less dividends and
distributions:
Dividends from net investment
income.................... (.09) 0.04
Distributions from net
realized gain............. -- --
---------- ------------
Total dividends and
distributions........... (.09) .04
---------- ------------
Net asset value, end of
period....................... $ 6.67 $ 7.75
========== ============
Total Investment Return(d):.......... (12.79)%(e) (21.48)%*
Ratios/Supplemental Data:
Net assets, end of period (in
thousands)................... $ 19,022 $7,655
Ratio of expenses to average net
assets....................... 1.95%(f) 1.88 %(e)
Ratio of net income to average
net assets................... 1.53%(f) 1.33 %(e)
Portfolio turnover rate......... 53.64% 11.73 %(e)
* Total Investment Return is not annualized.
(FOOTNOTES ON FOLLOWING PAGE)
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(a) For the period from February 10, 1994, effective date of original
registration statement, to June 30, 1994.
(b) Net of expense reimbursements.
(c) Includes the effect of capital share transactions throughout the year.
(d) Total return does not reflect the effect of account fees.
(e) Annualized; the ratios are not necessarily indicated of twelve months of
operations.
(f) Expense ratio is net of expense reimbursement or fee waivers by the Advisor.
Had such reimbursements not been made, the expense ratio subject to the most
restrictive state limitation would have been 2.51% and the net investment
income ratio would have been 0.93%.
INVESTMENT OBJECTIVES AND CONSIDERATIONS
The investment objective of the Fund is to achieve capital appreciation by
investing primarily in business associations in the People's Republic of China
(the "PRC" or "China"), Hong Kong, Taiwan, Korea, Singapore, Thailand and
Malaysia (collectively, the "China Region"). 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 prior to 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.
INVESTMENTS
The Fund will invest in equity securities (listed or traded
over-the-counter) of China Region companies through the Shenzhen Stock Exchange,
the Shanghai Stock Exchange and the Hong Kong Stock Exchange, as well as other
authorized stock exchanges in China. The Fund will also invest in the securities
of companies that have business associations in China which are listed on
authorized stock exchanges in the China Region.
At least 65% of the Fund's assets will be invested in equity securities
issued by China Region companies that (1) are organized under the laws of the
countries within the China Region, or (2) have at least 50% of their assets in
one or more China Region countries or derive at least 50% of their gross
revenues or profits from providing goods or services to or from one or more
China Region countries.
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There are currently two officially recognized securities exchanges in China
- -- the Shanghai Stock Exchange which opened in December 1990 and the Shenzhen
Stock Exchange which opened in July 1991. Shares traded on these Exchanges are
of two types -- "A" shares which can be traded only by Chinese investors and "B"
shares which can be traded only by individuals and corporations not residents of
China. The settlement period for "B" share trades is the same in Shenzhen and
Shanghai. Settlements are effected on the third business day after the
transaction. As of June 1995, seventeen companies were authorized to issue what
are called "H" shares which trade in Hong Kong and may be purchased by anyone.
The Fund will invest in both new and existing enterprises registered and
operating in China. These will include wholly Chinese-owned enterprises, wholly
foreign-owned enterprises and Sino-foreign joint ventures. It is not the
intention of the Fund to limit its investments to Shenzhen and Shanghai alone.
In addition to other provinces and municipalities, investment opportunities will
also be sought in China's five Special Economic Zones (SEZs) and in the Economic
and Technical Development Zones (ETDZs) of the fourteen coastal cities. While
portfolio companies may be geographically dispersed, it is anticipated that the
trading activities of the Fund in PRC securities will be focused in the
authorized China securities markets and, in particular, the Hong Kong, Shenzhen
and Shanghai Stock Exchanges.
The Fund will invest primarily in securities which are listed or otherwise
traded by authorized brokers and other entities and will focus its investments
on equities and quasi-equity securities. Quasi-equity securities may include,
for example: warrants or similar rights, other financial instruments with
substantial equity characteristics, such as debt securities convertible into
equity securities.
Although the Fund expects to invest primarily in listed securities of
established companies, it may, subject to local investment limitations, invest
in unlisted securities of China companies and companies that have business
associations in China, 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 the China markets in general. Such
securities could decline significantly in value prior to the Fund's being able
to liquidate such securities. In addition to financial and business risks,
issues whose securities are not listed will not be subject to the same
disclosure requirements applicable to issuers whose securities are listed.
6
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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 due to other factors which, in
the Advisor's opinion, raise a question concerning the Fund's ability to
liquidate the securities in a timely and orderly fashion without substantial
loss.
ADRS AND GDRS
The Fund may also invest in sponsored or unsponsored American Depository
Receipts ("ADRs") or Global Depository Receipts ("GDRs") representing shares of
companies located in the China Region. ADRs are depository receipts typically
issued by a U.S. bank or trust company which 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.
TEMPORARY DEFENSIVE INVESTMENT
For temporary defensive purposes during periods which, in the Advisor's
opinion, present the Fund with adverse changes in the economic, political or
securities markets of the China Region, 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 the local China Region 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.
7
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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 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.
CLOSED-END INVESTMENT COMPANIES
The Fund may also invest in the securities of closed-end investment
companies with investment policies similar to those of the Fund, provided its
investments in these securities do not exceed 3% of the total voting stock of
any such closed-end investment company and do not, in the aggregate, exceed 10%
of the Fund's total assets. 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.
PORTFOLIO TURNOVER
It is the policy of the Fund to seek capital appreciation. The Fund will
effect portfolio transactions without regard to its holding period if, in the
judgment of the advisor, such transactions are advisable. For the year ended
June 30, 1995, the Fund's portfolio turnover ratio was 53.64%.
SECURITIES MARKETS
CHINA
The People's Bank of China is officially responsible for managing the stock
markets, regulating all trading and settlement and approving all issues of new
securities. The Shanghai and Shenzhen Stock Exchanges are highly automated with
trading and settlement executed electronically.
Considerable autonomy has been given to local offices of the State
Commission of Economic System Reform in developing securities markets. They are
charged with identifying suitable companies for listing based on
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whether the companies have: (1) products which are competitive in world markets,
providing the ability to export and earn foreign currency; (2) strong
management; (3) a successful history over at least five years, with profits in
the last three years; and (4) a clearly defined project requiring foreign
financing to introduce new equipment or technology.
In early 1993 the Securities Regulatory Commission was created which has
many of the attributes of our United States Securities and Exchange Commission.
Another control on the quality of "B" share issues is the requirement of an
audit in accordance with international accounting guidelines.
China passed its first Joint Venture Law in 1979, signaling the opening of
the Chinese economy to the outside world. With the implementation of the "Open
Door" policy in the 1980s, China established a number of special investment
zones which offer a variety of investment incentives to foreign businesses,
including preferential tax treatment. These special investment areas include:
five SEZs (i.e., Shenzhen, Shantou and Zhuhai in Guangdong Province, Xiamen in
Fujian Province and the entire Hainan Province); fourteen coastal cities as
"open zones;" twenty-seven High and New Technology Industrial Development Zones;
and the Pudong New Area in Shanghai. Establishment of these zones and other
economic reform policies have resulted in a steady inflow of foreign investment,
which boosted China's economic growth rate to an average of 10% per annum during
the 1980s.
In 1991, China approved more than 12,000 foreign invested enterprises with
total contractual value of $12 billion, the highest number since the Open Door
Policy started and representing an increase of 46% over 1990. In 1992 approved
foreign investments in China increased dramatically to $58 billion, up 483% from
1991. In 1993 approved foreign investments in China reached $100 billion. While
Hong Kong continues to be the leading source of foreign investment, investments
from Taiwan, South Korea, the United States and Japan have increased
significantly. With recent renewed momentum for further economic reform, foreign
invested enterprises are expected to play an increasingly important role in
China's economy.
Investing in China involves risks and special considerations as discussed
in the prospectus in the section entitled, "Risk Factors and Special
Considerations."
HONG KONG
Sovereignty over Hong Kong will be transferred from Great Britain to the
PRC on July 1, 1997, at which time Hong Kong will become a Special
Administrative Region ("SAR") of the PRC. Under the agreement providing for such
transfer (known as the "Joint Declaration") and the PRC law implementing its
commitments thereunder (the "Basic Law"), the current
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social and economic systems in Hong Kong are to remain unchanged for at least 50
years, and Hong Kong is to enjoy a high degree of autonomy except in foreign and
defense affairs. The SAR will be vested with executive, legislative and judicial
power. Laws currently in force, as they may be amended by the SAR Legislature,
are to remain in force except to the extent they contravene the Basic Law. The
PRC may not levy taxes on the SAR, the Hong Kong dollar is to remain fully
convertible, and Hong Kong is to remain a free port. Under the terms of the
Basic Law, Hong Kong's current social freedoms, including freedoms of speech,
press, assembly, travel, and religion, are not to be affected. It is not clear
how future developments in Hong Kong and China may affect the implementation of
the Basic Law after the transfer of sovereignty in 1997.
It is to be expected that the Hong Kong stock market will remain volatile
in response to prevailing perceptions of political developments in China.
Foreign enterprises are treated virtually the same as domestic enterprises and
there are no restrictions on exchange of foreign currencies or on the
repatriation of profits. Import and export licenses are easy to obtain. There
are no exchange controls, investment restrictions or dividend withholding taxes.
However, currently there are no laws in Hong Kong which specifically protect
foreign investors against expropriation.
Hong Kong's economic and political integration with China will officially
occur in fewer than four years when sovereignty over Hong Kong is transferred to
China on July 1, 1997. Hong Kong's role as the gateway to China for trade is
growing. Hong Kong is China's largest market, as well as its largest supplier.
The Colony is widely acknowledged to account for a significant portion of
foreign investment in China, although it is difficult to determine the portion
of Hong Kong's investments attributable to Hong Kong-based subsidiaries of
foreign multi-national companies.
TAIWAN
The Taiwan Stock Exchange (the "TSE"), the sole stock exchange in Taiwan,
is owned by government-controlled enterprises and private banks. In 1968, the
Securities and Exchange Law was passed and, since that time, the Taiwan
securities market has been regulated by the Taiwan Securities and Exchange
Commission (the "TSEC") which, in turn, is supervised by the Ministry of Finance
(the "MOF"). The Central Bank of China (the "CBC") is also responsible for
supervising certain aspects of the Taiwan securities market.
While, historically, foreign individual investors have not been permitted
to invest directly in securities listed on the TSE, since 1990 certain foreign
institutional investors have been permitted access to the Taiwan securities
market. Currently, foreign institutional investors which meet certain guidelines
promulgated by the TSEC and which are also approved
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by the TSEC, the MOF and the CBC, will be permitted to invest in TSE listed
securities. However, qualifying foreign institutional investors (such as the
Fund) may not own more than 5% of the shares of a company listed on the TSE, and
the total foreign ownership of any listed company may not exceed 10%. In
addition, the Taiwanese government prohibits foreign investment in certain
industries including transportation and energy companies. Furthermore, Taiwan
imposes an overall country limit on investment and requires a long-term
commitment. The Fund's Management believes that over time restrictions on
investments in Taiwan may ease to permit greater and more flexible investment in
Taiwanese securities.
The political reunification of China and Taiwan is a highly problematic
issue that may not be settled in the near future. Taiwan's economic interaction
with China can take place only through indirect channels (generally via Hong
Kong) due to the official prohibitions on direct trade between the PRC and
Taiwan. Nevertheless, in fewer than four years, Taiwan has become a significant
investor in China and China has become one of the largest markets for Taiwanese
goods.
EXCHANGE CONTROL
PRC currency, the Renminbi ("RNB"), is not freely convertible. The exchange
rate of RNB against foreign currencies is regulated and published daily by the
State Administration of Exchange Control ("SAEC"). In 1986, to help solve the
foreign exchange problems of foreign investors, China established Foreign
Exchange Adjustment Centers, commonly referred to as "swap centers," in various
cities. These swap centers provide an official forum where foreign invested
enterprises may, under the supervision and control of SAEC and its branch
offices, engage in mutual adjustment of their foreign exchange surpluses and
shortfalls. More recently, regulations have been relaxed to allow Chinese state
enterprises and individuals to participate in foreign exchange swap
transactions. Trading of RNB and foreign currencies at the swap centers is
conducted at a rate determined by supply and demand rather than at the official
exchange rate. Such market exchange rates can be highly volatile and are subject
to sharp fluctuations depending on market conditions.
The Fund may use official or market rates of exchange in connection with
portfolio transactions and net asset value determinations consistent with
prevailing practices in the relevant markets or locations, except that the Fund
will not use any exchange rate if the effect of such use would be to restrict
repatriation of assets.
No exchange control approval is required for the Fund to acquire "B" shares
listed on stock exchanges. Dividends and/or proceeds from the sale of securities
purchased by the Fund in listed China companies may be
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remitted outside China, subject to payment of any relevant taxes and completion
of the requisite formalities.
Shanghai securities are now being quoted in U.S. dollars and Shenzhen
securities are now being quoted in Hong Kong dollars.
RISK FACTORS AND SPECIAL CONSIDERATIONS
Investing in China, Hong Kong, Taiwan and other China Region countries
involves certain 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 FOLLOWING RISKS BEFORE
MAKING AN INVESTMENT IN THE FUND. AN INVESTMENT IN SHARES OF THE FUND SHOULD BE
CONSIDERED SPECULATIVE AND THUS MAY NOT BE APPROPRIATE FOR ALL INVESTORS. SINCE
AN INVESTMENT IN THE FUND INVOLVES THE RISK OF TOTAL LOSS, AN INVESTMENT IN
SHARES OF THE FUND SHOULD NOT BE CONSIDERED A COMPLETE INVESTMENT PROGRAM. Such
risks include:
(1) the risk that China remains a totalitarian society and changes regarding
foreign investment in China may be imposed without notice. In this event,
the Fund's assets would be exposed to nationalization, expropriation, or
confiscatory taxation;
(2) the fact that China Region securities markets are substantially smaller,
less liquid and more volatile than the securities markets of more
developed nations. Foreigners can only invest in "B" shares, and there
are currently a very limited number of China companies that issue "B"
shares. The relatively small market capitalization and trading volume of
China Region 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. In
particular, China's 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) dependency on exports and corresponding importance of international
trade;
(5) greater price volatility, substantially less liquidity and significantly
smaller market capitalization of securities markets, particularly in
China;
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(6) currency exchange rate fluctuations and the lack of available currency
hedging instruments;
(7) higher rates of inflation;
(8) controls on foreign investment and limitations on repatriation of invested
capital and on the Fund's ability to exchange local currencies for United
States dollars;
(9) greater governmental involvement in and control over the economy;
(10) the risk that the China government may decide not to continue to support
the economic reform programs implemented since 1978 and could return to
the completely centrally planned economy that existed prior to 1978;
(11) the fact that China companies may be smaller, less seasoned and newly
organized;
(12) the difference in, or lack of, auditing and financial reporting standards
which may result in unavailability of material information about issuers,
particularly in China;
(13) the fact that the securities of many companies may trade at prices
substantially above book value, at high price/earnings ratios, or at
prices which do not reflect traditional measures of value;
(14) the fact that statistical information regarding the economy of China may
be inaccurate or not comparable to statistical information regarding the
U.S. or other economies;
(15) less extensive regulation of the securities markets;
(16) certain considerations regarding the maintenance of Fund portfolio
securities and cash with foreign subcustodians and securities
depositories;
(17) the risk that it may be more difficult, or impossible, to obtain and/or
enforce a judgment than in other countries;
(18) the fact that following the establishment of the People's Republic of
China by the Communist Party in 1949, the Chinese government renounced
various debt obligations incurred by China's predecessor governments,
which obligations remain in default, and expropriated assets without
compensation. There can be no assurance that the China government will not
take similar action in the future;
(19) the fact that stock corporations are a relatively new concept in China.
China does not have a well developed, consolidated body of securities laws
or laws governing corporations or joint stock companies. Laws regarding
fiduciary duties of officers and directors and the protection of investors
are in the early stages of development and existing laws do not cover all
contingencies;
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(20) the risk that the Fund may be subject to income or withholding taxes
imposed by China, Hong Kong, Taiwan, 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; or
(21) 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.
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 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 mark-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
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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 upon 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 cash or 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 assets declines, the Fund will place additional liquid assets in the
account on a daily 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.
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
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well developed market for futures contracts and options on equity securities
traded in the China Region and the 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 Advisor expects to use. The 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 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
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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 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.
LIMITATIONS
The Fund will purchase and sell only options that are listed on a
securities exchange. The Fund will not purchase any option if, immediately
thereafter, 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 thereafter, 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.
HOW TO PURCHASE SHARES
The minimum initial investment is $1,000. The minimum subsequent investment
is $50. The minimum initial investment for persons enrolled in an ABC Investment
PlanT is $100 and the minimum subsequent investment pursuant to such a plan is
$30 per month per account. There is no minimum purchase for retirement plan
accounts administered by the Advisor or its agents and a reduced $50 minimum on
initial purchases for custodial accounts for minors.
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YOU MAY INVEST IN THE FOLLOWING WAYS:
BY MAIL
Send your application and check or money order, made payable to the Fund,
to P.O. Box 781234, San Antonio, Texas 78278-1234.
When making subsequent investments, enclose your check with the return
remittance portion of your confirmation statement 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. 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 the
payment has been received and accepted by the Trust.
BY WIRE
You may make your initial or subsequent investments in United Services
Funds by wiring funds. To do so, call United Services Funds for a confirmation
number and wiring instructions.
BY ABC INVESTMENT PLANT
Once your account is open, you may make investments automatically by
completing the ABC Investment PlanT (Automatically Building Capital Investment
Plan) form authorizing United Services Funds to draw on your bank account
regularly for as little as $30 a month beginning within thirty (30) days after
the account is opened. You should 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 Services Funds at
least five business days before the change is to become effective.
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ADDITIONAL INFORMATION ABOUT PURCHASES
All purchases of shares are subject to acceptance by the Trust and are not
binding until accepted. United Services Funds reserves the right to reject any
application or investment. Orders become effective as of 4:00 p.m. Eastern time,
Monday through Friday, exclusive of business holidays. In the event that 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 your telephone order to purchase shares is cancelled 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 Trust by reason of such
cancellation.
If checks are 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 cancelling the purchase.
To recover any such loss or charge, the Trust reserves the right, without
further notice, to redeem shares of any portfolio already owned by any purchaser
whose order is cancelled, for whichever reason, and such a purchaser may be
prohibited from placing further orders unless investments are accompanied by
full payment by wire or cashier's check.
United Services 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.
Investments paid for by checks drawn on foreign banks may be deferred until
such checks have cleared the normal collection process. In such instances, any
amounts charged to the Trust 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 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 tax identification
number. In order to avoid this withholding requirement, you must certify on your
application, or on a separate W-9 Form 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.
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Instructions to exchange or transfer shares held in established accounts
will be refused until the certification has been provided. In addition, the Fund
assesses a $50 administrative fee if the taxpayer identification number is not
provided by year end.
CERTIFICATES
When you open your account, United Services Funds will send you a
confirmation statement, which will be your evidence that you have opened an
account with United Services 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. At your written request, United Services Funds will issue
negotiable stock certificates. Unless your shares are purchased with wired
funds, a certificate will not be issued until 15 days have elapsed from the time
of purchase, or United Services Funds has satisfactory proof of payment, such as
a copy of your cancelled check. Negotiable certificates will not be issued for
fewer than 100 shares.
HOW TO EXCHANGE SHARES
You have the privilege of exchanging into any of the other United Services
Funds which are registered in your state. An exchange involves the simultaneous
redemption (sale) of shares of one fund and purchase of shares of another fund
at the respective closing net asset value and is a taxable transaction.
BY TELEPHONE
You will automatically have the privilege to direct United Services 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, 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
confirmations and tape recording conversations); and if either party does not,
it may be liable for losses due to unauthorized or fraudulent transactions.
BY MAIL
You may direct United Services Funds in writing to exchange your shares
between identically registered accounts. The request must be signed exactly as
the name appears in the registration. (Read "Additional Information About
Exchanges.")
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ADDITIONAL INFORMATION ABOUT EXCHANGES
(1) There is a $5 charge, which is paid to United Shareholder Services, Inc.
("USSI" or the "Transfer Agent"), for each exchange out of any fund
account. Retirement accounts administered by the Advisor or its agents are
charged $5 for each exchange exceeding three per quarter. The exchange fee
is charged to cover administrative costs associated with handling these
exchanges.
(2) Like any other redemption, the Fund reserves the right to hold redemption
proceeds for up to seven days. In such event, the purchase side of the
exchange transaction will also be delayed. You will be notified immediately
if the Fund is exercising said right.
(3) If the shares you wish to exchange are represented by a negotiable stock
certificate, the certificate must be returned before the exchange can be
effected.
(4) Shares may not be exchanged unless you have furnished United Services
Funds 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" on page 19.)
(5) Exchanges out of United Services Funds' equity funds of shares held less
than 180 days are subject to the redemption fee described on page 24.
(6) The exchange privilege may be terminated at any time. The exchange fee
and other terms of the privilege are subject to change.
HOW TO REDEEM SHARES
You may redeem any or all of your shares at will. The Fund redeems shares
at the net asset value next determined after it has received and accepted a
redemption request in proper order. Redemption requests must be received prior
to 4:00 p.m. Eastern time, Monday through Friday, to be effective that day.
BY MAIL
Your written request for redemption, to be in "proper order," requires
delivery to the Transfer Agent of:
(1) a written request for redemption signed by each registered owner exactly as
the shares are registered, the account number and the number of shares or
the dollar amount to be redeemed;
(2) negotiable stock certificates for any shares to be redeemed for which
certificates have been issued;
(3) signature guarantees when required; and
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(4) such additional documents as are customarily required to evidence the
authority of persons effecting redemptions on behalf of corporations,
executors, trustees, and other fiduciaries. Redemptions will not become
effective until all documents, in the form required, have been received by
the Transfer Agent. (Read "Additional Information About Redemptions" on
page 23.)
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 Trust at
1-800-873-8637.
Telephone redemptions are available for accounts with a balance of at least
$50,000. To establish telephone redemption privileges, call 1-800-873- 8637 for
information.
SIGNATURE GUARANTEE
Redemptions in excess of $15,000 currently require a signature guarantee. A
signature guarantee is required for all redemptions, regardless of the amount
involved, when the proceeds are to be paid to someone other than the registered
owner of the shares to be redeemed or if proceeds are to be mailed to an address
other than the registered address of record. When a signature guarantee is
required, each signature must be guaranteed by: (a) a federally insured bank or
thrift institution; (b) a broker or dealer (general securities, municipal, or
government) or clearing agency registered with the U.S. Securities and Exchange
Commission that maintains net capital of at least $100,000; or (c) a national
securities exchange or national securities association. The guarantee must: (i)
include the statement "Signature(s) Guaranteed"; (ii) be signed in the name of
the guarantor by an authorized person, the person's printed name and position
with guarantor, and (iii) include a recital that the guarantor is federally
insured, maintains the requisite net capital or is a national securities
exchange or association. Shareholders living abroad may acknowledge their
signatures before a U.S. consular officer. Military personnel may acknowledge
their signatures before officers authorized to take acknowledgments (e.g., legal
officers and adjutants).
REDEMPTION PROCEEDS MAY BE SENT TO YOU:
BY MAIL
If your redemption check is mailed, it is usually mailed within 48 hours;
however, the Fund reserves the right to hold redemption proceeds for up to seven
days. If the shares to be redeemed were purchased by check, the
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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 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. There is
a $10 charge to cover the wire, which is deducted from redemption proceeds.
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 an IRS Form W4-P and a reason for withdrawal as specified by the
IRS. Proceeds from the redemption of shares from a retirement account may be
subject to withholding tax.
The 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 so redeem, or to so prohibit, would
have a material adverse consequence to the Trust 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 Trust will not
redeem an existing account solely to prevent the legitimate exercise of a
shareholder's rights.
Although the Fund normally expects to make payments in cash, the Fund
reserves the right, subject to compliance with applicable regulations, to
require shareholders to accept as redemption proceeds securities held in the
Fund's portfolio. The Fund will only exercise this right if it is required under
the Investment Company Act of 1940 to redeem shares and if the Fund is unable to
liquidate securities in its portfolio due to an inability to access the market
in which they trade. In the case it is likely that the shareholder would also be
unable to convert such securities into cash. The shareholder could incur
brokerage or other charges in converting the
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securities to cash. The Fund will at all times endeavor to treat shareholders in
a fair manner and to give each shareholder as much as possible a proportionate
distribution of the various securities held in the Fund. Such may not be
possible in light of laws and restrictions in force in the country or countries
where such shares were issued.
Excessive short-term trading has an adverse impact on effective portfolio
management as well as upon Fund expenses. The Trust has reserved the right to
refuse investments from shareholders who engage in short-term trading.
REDEMPTION FEE
A redemption fee of 1% 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 fee will reduce the proceeds received by the
shareholder and is payable directly to the Fund for the purpose of offsetting
costs associated with short-term trading. This redemption fee will not be
imposed on any accounts which are involuntarily redeemed.
ACCOUNT CLOSING FEE
In order to reduce Fund expenses, an account closing fee of $10 will be
assessed to shareholders who redeem all shares in their Fund account and direct
that redemption proceeds be delivered to them by mail or wire. The charge is
payable directly to the Fund's Transfer Agent which, in turn, will reduce its
charges to the Fund by an equal amount. The purpose of the charge is to allocate
to redeeming shareholders a more equitable portion of the Transfer Agent's fee,
including the cost of tax reporting which is based upon the number of
shareholder accounts. The account closing fee does not apply to exchanges
between the United Service Funds nor will it be imposed on any account
involuntarily redeemed.
SMALL ACCOUNTS
Fund accounts which fall, for any reason other than market fluctuations,
below $1,000 at any time during a month will be subject to a small account
charge of $5 for that month. The charge will first be deducted from dividend and
distribution amounts to be paid during the month. If dividends and distributions
are insufficient, then sufficient shares will be involuntarily redeemed from an
account to make up the difference. 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 equitably among shareholders.
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Active ABC Investment PlanT, UGMA/UTMA and retirement plan accounts
administered by the Advisor or its agents or its affiliates will not be subject
to the small account charge.
In order to reduce expenses of the Fund, the Trust may involuntarily redeem
all shares in any shareholder account, other than active ABC Investment PlanT,
UGMA/UTMA and retirement plan accounts, if, for a period of more than three
months, the account has a net asset value of $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 ninety (90) days of the notice. No
account closing fee or redemption fee will be charged to investors whose
accounts are closed under this redemption provision.
CONFIRMATION STATEMENTS
Shareholders normally will receive a confirmation statement after each
transaction showing activity in the account. However, when account activity is
produced solely from dividend reinvestment, confirmation statements will be
mailed only on a quarterly basis.
OTHER SERVICES
The Trust has available a number of plans and services to meet the special
needs of certain investors. Plans available include:
(1) payroll deduction plans, including military allotments;
(2) custodial accounts for minors;
(3) a flexible, systematic withdrawal plan; and
(4) various retirement plans such as IRA, 403(b)(7), 401(k) and employer-
adopted defined contribution (profit sharing) plans.
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).
There is an annual charge for each retirement plan fund account with
respect to which Security Trust & Financial Company ("ST&FC"), a wholly-owned
subsidiary of the Advisor, acts as custodian (for example, $10 for IRAs and $15
for SEP/IRAs, 403(b)(7)s, profit sharing and other such accounts). If this
administrative charge is not paid separately prior to the last business day of a
calendar year or prior to a total redemption or exchange, it will be deducted
from the shareholder's account.
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SHAREHOLDER SERVICES
United Shareholder Services, Inc. ("USSI" or "Transfer Agent"), 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 CURRENT INFORMATION
Shareholders can also access 24 hours a day current information on yields,
prices, latest dividends, account balances, and deposits and redemptions for the
previous and current months. Just call 1-800-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. The net
asset value per share of the Fund is calculated separately by USSI. Net asset
value per share is determined and orders become effective as of 4:00 p.m.
Eastern time, Monday through Friday, exclusive of business holidays on which the
NYSE is closed, by dividing the aggregate net assets of the Fund by the total
number of shares of the Fund outstanding. In the event that the NYSE and other
financial markets close earlier, as on the eve of a holiday, the net asset value
per share will be determined earlier in the day at the close of trading on the
NYSE.
Valuation shall 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 a stock exchange is valued at the
last sales price as reported by the primary exchange prior to the time when
assets are valued. Securities quoted on NASDAQ are valued at the last reported
sale price prior to the time when assets are valued; and, lacking any sales on
that day, the security is valued at the mean between the last reported bid and
ask prices. Over-the-counter portfolio securities for which market quotations
are readily available are to be valued at the mean between the most recent bid
and ask prices as obtained from one or more dealers that make markets in the
securities. Portfolio securities which are traded both in the over-the-counter
market and on a stock exchange are to be valued according to the broadest and
most representative market as determined by the Fund's subadvisor. Occasionally,
events which affect the value of such securities and such exchange rates may
occur between the times at which they are determined and the close of the New
York Stock Exchange and will, therefore, not be reflected in the computation of
the Fund's net asset value. If events materially affecting the value of such
securities occur during such period, then these securities will be valued at
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fair value as determined by Management and approved in good faith by the Board
of Trustees. 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.
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
UNITED STATES TAXES
The Fund intends to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). By
complying with the applicable provisions of the Code, a Fund will not be subject
to Federal income tax on its net investment income and capital gain net income
that are distributed to shareholders.
All income dividends and capital gain distributions are normally
reinvested, without charge, in additional full and fractional shares of the
Fund. Alternatively, investors may choose: (1) automatic reinvestment of capital
gain distributions in Fund shares and payment of income dividends in cash; (2)
payment of capital gain distributions in cash and automatic reinvestment of
dividends in Fund shares; or (3) all income dividend and capital gain
distributions paid in cash. The share price of the reinvestment will be the net
asset value of the Fund shares computed at the close of business on the date the
dividend or distribution is paid. Dividend checks returned to the Fund as being
undeliverable and dividend checks not cashed after 180 days will automatically
be reinvested at the price of the Fund on the day returned or on or about the
181st day and the distribution option will be changed to "reinvest."
At the time of purchase, the share price of the Fund may reflect
undistributed income, capital 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 quarterly and distributes capital gains
annually.
The Fund is subject to a nondeductible 4 percent excise tax calculated as a
percentage of certain undistributed amounts of taxable ordinary income
27
<PAGE>
and capital gains net of capital losses. The Fund intends to make such
distributions as may be necessary to avoid this excise tax.
Dividends from taxable net investment income and distributions of net
short-term capital gains paid by the Fund are taxable to shareholders as
ordinary income, whether received in cash or reinvested in additional shares of
the Fund. A portion of these dividends may qualify for the 70 percent 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, and 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 percent dividends received deduction
available to corporations.
There is a possibility that China exchange control regulations 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
requirements described above even if the Fund did not receive any income to
distribute.
28
<PAGE>
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 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. Transactions in
forward currency contracts may also result in the loss of the holding period of
underlying securities for purposes of the 30% of gross income test. 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.
FOREIGN TAXES
Income received by the Fund from sources within China 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.
29
<PAGE>
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 consists 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 within 60 days 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 will be subject to an overall limitation which is applied separately to
"passive income," which includes, among other types of income, dividends and
interest.
The foregoing is only a general description of the 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.
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
United Services Funds (the "Trust") is an open-end management investment
company, consisting of numerous separate, diversified portfolios, each of which
has its own investment objectives and policies. The portfolios are designed to
serve a wide range of investor needs.
30
<PAGE>
The Trust was formed on July 31, 1984 as a "business trust" under the laws
of the Commonwealth of Massachusetts. It is a "series" company which is
authorized to issue series of shares without par value, each series representing
interests in a separate portfolio, or divide the shares of any series into
classes. Shares of numerous series have been authorized. The Board of Trustees
of the Trust has the power to create additional series, or divide existing
series into two or more classes, at any time, without a vote of shareholders of
the Trust.
Under the Trust's First Amended and Restated Master Trust Agreement (the
"Master Trust Agreement"), no annual or regular meeting of shareholders is
required, although the Trustees may authorize special meetings from time to
time. Under the terms of the Master Trust Agreement, the Trustees will be a
self-perpetuating body and will continue their positions until they resign, die
or are removed by a written instrument signed by at least two-thirds of the
Trustees, by vote of shareholders holding not less than two-thirds of the shares
then outstanding of the Trust cast at any meeting called for that purpose, or by
a written declaration signed by shareholders holding not less than two-thirds of
the shares then outstanding.
On any matter submitted to shareholders, shares of each portfolio entitle
their holder to one vote per share, irrespective of the relative net asset
values of each portfolio's shares. On matters affecting an individual portfolio,
a separate vote of shareholders of the portfolio is required. Each portfolio's
shares are fully paid and non-assessable by the Trust, have no preemptive or
subscription rights, and are fully transferable, with no conversion rights.
MANAGEMENT OF THE FUND
TRUSTEES
The business affairs of the Fund are managed by the Trust's Board of
Trustees. The Trustees establish policies, as well as review and approve
contracts and their continuance. The Trustees also elect the officers and select
the Trustees to serve as executive and audit committee members.
THE SUBADVISOR
The Advisor and the Trust have contracted with Batterymarch Financial
Management, Inc. (the "Subadvisor") to serve as Subadvisor of the China Region
Opportunity Fund.
The Subadvisor is located at 200 Clarendon Street, Boston, Massachusetts
02116. It is a wholly owned subsidiary of Legg Mason, Inc. which is
headquartered at 111 South Calvert Street, Baltimore, Maryland. Legg Mason is a
publicly held, New York Stock Exchange listed, holding company that provides
securities brokerage, investment advisory, corporate
31
<PAGE>
and public finance, and mortgage banking services to individuals, institutions,
corporations and municipalities through its wholly owned subsidiaries.
In early 1995 the Subadvisor purchased the operating and business assets of
Batterymarch Financial Management ("Batterymarch"), a Massachusetts business
trust, founded in 1969 as an investment management firm specializing in the
management of equity portfolios, that served as the subadvisor since the
inception of the China Region Opportunity Fund. Batterymarch is a global equity
manager dedicated to value-oriented investing with over $5 billion under
management at December 31, 1994, invested in United States, international and
emerging market equity securities.
The Subadvisor manages the composition of the portfolio and furnishes the
Fund advice and recommendations with respect to its investments and its
investment program and strategy, subject to the general supervision and control
of the Advisor and the Trust's Board of Trustees. In connection with providing
such services, the Subadvisor utilizes a team approach, with no person(s)
primarily responsible for making recommendations to the team. As compensation
for its services, the Subadvisor will receive from the Advisor a monthly fee
based upon the monthly average net assets of the Fund. The Fund is not
responsible for the Subadvisor's fee. On an annual basis, the fee will be 1.00%,
with no minimum fee.
THE INVESTMENT ADVISOR
United Services Advisors, Inc., 7900 Callaghan Road, San Antonio, Texas
78229, under an investment advisory agreement with the Trust dated October 26,
1989, furnishes investment advice and is responsible for overall management of
the Trust's business affairs. Frank E. Holmes, Chief Executive Officer and
Chairman of the Board of Directors of the Advisor, as well as President and
Trustee of the Trust, has since October 1989, owned more than 25% of the voting
stock of the Advisor and is its controlling person. The Advisor was organized in
1968.
The Advisor provides to the Trust, and to each of the portfolios within the
Trust, management and investment advisory services. The Advisor furnishes an
investment program for each of the Funds, 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 each of the Funds.
The Advisor provides the Trust with office space, facilities and business
equipment and provides the services of executive and clerical personnel for
administering the affairs of the Trust. The Advisor pays the expense of printing
and mailing prospectuses and sales materials used for promotional purposes.
32
<PAGE>
Notwithstanding the following description of fees and other expenses, the
Advisor has voluntarily guaranteed that Total Fund Operating Expenses (as a
percentage of net assets) for the China Region Opportunity Fund will not exceed
2.25% on an annualized basis through June 30, 1996 and until such later date as
the Advisor determines.
The Advisory Agreement with the Trust provides for the Fund to pay the
Advisor a management fee equal to 1.25% of the Fund's average net assets ( 1/12
of 1.25% monthly). While this management fee is higher than that of most other
mutual funds, it is comparable to management fees charged by other mutual funds
with similar investment policies. For the year ended June 30, 1995, the Fund
paid the Advisor 0.45% of average net assets due to Advisor's guarantee.
The Advisor may, out of profits derived from its management fee, pay
certain financial institutions (which may include banks, securities dealers and
other industry professionals) a "servicing fee" for performing certain
administrative servicing functions for Fund shareholders to the extent these
institutions are allowed to do so by applicable statute, rule or regulation.
These fees will be paid periodically and will generally be based on a percentage
of the value of the institutions' client Fund shares.
The Transfer Agency Agreement with the Trust provides for the Fund to pay
USSI 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 Trust shares through broker-dealers which provide such services and
maintain an omnibus account with the Transfer Agent, the Fund shall pay to the
Transfer Agent a monthly fee equal to one-twelfth ( 1/12) of 12.5 basis points
(.00125) of the value of the shares of the Fund held in accounts at the
broker-dealer, which payment shall not exceed $1.67 multiplied by the average
daily number of accounts holding Trust shares at the broker-dealer. These fees
cover the usual transfer agency functions. In addition, the Fund bears certain
other Transfer Agent expenses such as the costs of record retention and postage,
plus the telephone and line charges (including the toll-free 800 service) used
by shareholders to contact the Transfer Agent. For the year ended June 30, 1995,
the Fund paid USSI a total of $94,011 for the transfer agency, lockbox and
printing fees due USSI.
USSI performs bookkeeping and accounting services, and determines the daily
net asset value for the Fund. Bookkeeping and accounting services are provided
to the Fund for an asset based fee of 0.05% of the first $150 million average
net assets, 0.04% of the next $150 million average net assets, 0.03% of the next
$200 million average net assets, 0.02% of the next $250 million average net
assets and 0.01% of average net assets in excess of $750 million -- subject to
an annual minimum fee of $28,000. For the
33
<PAGE>
year ended June 30, 1995, the Fund paid USSI a total of $28,000 for portfolio
accounting services.
Additionally, the Advisor is reimbursed certain costs for in-house legal
services pertaining to the Fund, which reimbursement is subject to the Advisor's
assumption of expenses for the Fund.
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 shareholder servicing agents,
custodian fees, legal and auditors' expenses, brokerage commissions for
portfolio transactions, the advisory fee, extraordinary expenses, expenses of
shareholder and Trustee meetings, and expenses for preparing, printing, and
mailing proxy statements, reports and other communications to shareholders, and
expenses of registering and qualifying shares for sale, among others.
PERFORMANCE INFORMATION
From time to time, in advertisements or in reports to shareholders or
prospective shareholders, the Fund may compare its performance, either in terms
of its yield, total return or its yield and total return, to that of other
mutual funds with similar investment objectives and to stock or other indices.
For example, the Fund may compare its performance to rankings prepared by Lipper
Analytical Services, Inc. ("Lipper"), a widely recognized independent service
which monitors the performance of mutual funds; to Morningstar's Mutual Fund
Values; to the S&P 500 Index; or to the Consumer Price Index. Performance
information and rankings as reported in Changing Times, Business Week,
Institutional Investor, The Wall Street Journal, Mutual Fund Forecaster, No-Load
Investor, Money Magazine, Forbes, Fortune and Barron's magazines may also be
used in comparing performance of the Fund. Performance comparisons should not be
considered as representative of the future performance of the Fund.
The Fund's average annual total return is computed by determining the
average annual compounded rate of return for a specified period that, if applied
to a hypothetical $1,000 initial investment, would produce the redeemable value
of that investment at the end of the period, assuming reinvestment of all
dividends and distributions and with recognition of all recurring charges. The
Fund may also utilize a total return for differing periods computed in the same
manner but without annualizing the total return.
The Fund's "yield" refers to the income generated by an investment in the
Fund over a 30-day (or one month) period (which period will be stated in the
advertisement). Yield is computed by dividing the net investment income per
share earned during the most recent calendar month by the
34
<PAGE>
maximum offering price per share on the last day of such month. This income is
then "annualized." That is, the amount of income generated by the investment
during that 30-day period is assumed to be generated each month over a 12-month
period and is shown as a percentage of the investment.
For purposes of the yield calculation, interest income is computed based on
the yield to maturity of each debt obligation and dividend income is computed
based upon the stated dividend rate of each security in the Fund's portfolio and
all recurring charges are recognized.
The standard total return and yield results do not take into account
recurring and nonrecurring charges which are billed directly to shareholders.
Such charges include: 1% redemption fee, $5 administrative exchange fee, $10
account closing fee, and $5 per month small account fee. These charges have a
greater proportional impact on smaller accounts than on larger accounts.
Therefore, the effective standard total return and yield results experienced by
any given shareholder may be less than the return or yield advertised due to
these charges.
35
<PAGE>
UNITED SERVICES FUNDS
SHARES OF ALL FUNDS ARE SOLD
AT NET ASSET VALUE WITHOUT SALES COMMISSIONS
OR 12B-1 FEES
China Region Opportunity Fund
INVESTMENT ADVISOR
United Services Advisors, Inc.
7900 Callaghan Road
Mailing Address: P.O. Box 29467
San Antonio, Texas 78229
INVESTMENT SUBADVISOR
Batterymarch Financial Management, Inc.
200 Clarendon Street
Boston, Massachusetts 02116
TRANSFER AGENT
United Shareholder Services, Inc.
P.O. Box 781234
San Antonio, Texas 78278-1234
CUSTODIAN
Bankers Trust Company
16 Wall Street
New York, NY 10005
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
One Riverwalk Place, Ste. 900
San Antonio, Texas 78205
100% No Load
Be Sure to Retain This Prospectus;
It Contains Valuable Information
================================================================================
IMPORTANT ADDITIONAL INFORMATION FOR SHAREHOLDERS OF UNITED SERVICES FUNDS
U.S. GOLD SHARES FUND
U.S. GLOBAL RESOURCES FUND
U.S. WORLD GOLD FUND
JULY 29, 1996 SUPPLEMENT TO
PROSPECTUS DATED NOVEMBER 1, 1995
AS SUPPLEMENTED JUNE 10, 1996
HOW TO PURCHASE SHARES--P. 15
All purchases of shares are subject to acceptance by the Trust and are not
binding until accepted. United Services Funds reserves the right to reject any
application or investment. Orders received by the Fund's transfer agent or a
sub-agent before 4:00 p.m., Eastern time, Monday through Friday exclusive of
business holidays, and accepted by the Fund will receive the share price next
computed after receipt of the order.
HOW TO REDEEM SHARES--P. 18
You may redeem any or all of your shares at will. Redemption requests received
in proper order by the Fund's transfer agent or a sub-agent 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.
HOW TO SPEED REDEMPTIONS--P. 18
To redeem your Fund shares by telephone, you may call the Fund and direct an
exchange out of the Fund into an identically registered account in a United
Services treasury money market fund ($1,000 minimum initial investment). You may
then write a check against your treasury money market fund account. See "How to
Exchange Shares" in the prospectus for a description of exchanges, including the
$5 exchange fee. Call 1-800-426-6635 for more information concerning telephone
redemption and a treasury money market fund prospectus.
MANAGEMENT OF THE FUNDS, THE INVESTMENT ADVISOR--P. 26
The Transfer Agency Agreement with the Trust provides for each Fund to pay USSI
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 Trust
shares through broker-dealers, banks, trust companies and similar institutions
which provide such services and maintain an omnibus account with the Transfer
Agent, each Fund shall pay to the Transfer Agent a monthly fee equal to
one-twelfth (1/12) of 12.5 basis points (.00125) of the value of the shares of
the Funds held in accounts at the institutions, which payment shall not exceed
$1.92 multiplied by the average daily number of accounts holding Trust share at
the institution.
Investment Objectives and Considerations--p. 1
Each investor is responsible for determining whether or not an investment in the
Fund is appropriate for his or her needs.
................................................................................
UNITED SERVICES FUNDS
U.S. GOLD SHARES FUND, U.S. GLOBAL RESOURCES FUND,
U.S. WORLD GOLD FUND
P.O. BOX 781234
SAN ANTONIO, TEXAS 78278-1234
1-800-873-8637 (1-800-US-FUNDS)
(INFORMATION, SHAREHOLDER SERVICES AND REQUESTS)
PROSPECTUS
NOVEMBER 1, 1995
This prospectus presents information that a prospective investor should
know about the U.S. Gold Shares Fund, the U.S. Global Resources Fund and the
U.S. World Gold Fund, three no-load mutual funds (the "Fund(s)") of United
Services Funds (the "Trust"). Each Fund has a different investment objective
and is designed to meet different investment needs. SOME OF THESE FUNDS
INVOLVE SPECIAL RISKS AND ARE HIGHLY SPECULATIVE. EACH OF THE FUNDS MAY INVEST
UP TO 10% OF THE VALUE OF THEIR RESPECTIVE NET ASSETS IN RESTRICTED
SECURITIES. (SEE SPECIAL RISKS ON PAGE 11.) SHARES OF THE TRUST ARE NOT
INSURED, GUARANTEED, SPONSORED, RECOMMENDED OR APPROVED BY THE UNITED STATES
OR ANY AGENCY OR OFFICER THEREOF. Read and retain this prospectus for future
reference.
A Statement of Additional Information dated November 1, 1995, has been
filed with the Securities and Exchange Commission and is incorporated herein
by reference. This Statement is available free from United Services Funds upon
written request at the address set forth above or by calling 1-800-873-8637.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DIS-
APPROVED BY THE SECURITIES AND EXCHANGE COM-
MISSION 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................. 4
INVESTMENT OBJECTIVES AND
CONSIDERATIONS..................... 8
U.S. Gold Shares Fund.............. 8
U.S. Global Resources Fund......... 8
U.S. World Gold Fund............... 9
COMMON INVESTMENT POLICIES........... 10
SPECIAL RISKS........................ 11
HOW TO PURCHASE SHARES............... 14
HOW TO EXCHANGE SHARES............... 17
HOW TO REDEEM SHARES................. 18
HOW SHARES ARE VALUED................ 22
DIVIDENDS AND TAXES.................. 22
THE TRUST............................ 24
MANAGEMENT OF THE FUNDS.............. 25
PERFORMANCE INFORMATION.............. 27
SUMMARY OF FEES AND EXPENSES
The following summary, which is based on actual expenses and average net
assets for each Fund for the year ended June 30, 1995, is provided to assist
you in understanding the various costs and expenses a shareholder in each
respective Fund could bear directly and indirectly.
GOLD GLOBAL WORLD
SHARES RESOURCES GOLD
FUND FUND FUND
----- --------- -----
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load.............. None None None
Redemption Fee.................. None None None
Administrative Exchange Fee..... $5 $5 $5
Short-term Trading Fee (on the
redemption or the exchange of
shares held less than 14
calendar days)............... 0.10% 0.10% 0.10%
Account Closing Fee (does not
apply to exchanges).......... $10 $10 $10
ANNUAL FUND OPERATING EXPENSES (AS A
PERCENTAGE OF AVERAGE NET
ASSETS)(1)
Management Fees................. .73% 1.00% 1.00%
12b-1 Fees...................... None None None
Other Expenses.................. .25% .63% .21%
Transfer Agency Fees............ .40% .73% .29%
Accounting Services Fees........ .04% .13% .05%
Total Fund Operating Expenses........ 1.42% 2.49% 1.55%
2
<PAGE>
A shareholder who requests delivery of redemption proceeds by wire
transfer will be subject to a $10 charge. International wires will be charged
more.
HYPOTHETICAL EXAMPLE OF EFFECT OF FUND EXPENSES:
You would pay the following expenses on a $1,000 investment, assuming 5%
annual return:
GOLD GLOBAL WORLD
SHARES RESOURCES GOLD
FUND FUND FUND
--------- --------- ---------
1 year............................... $ 25 $ 35 $ 26
3 years.............................. 55 88 59
5 years.............................. 88 143 95
10 years............................. 181 293 195
Included in these estimates is the account closing fee of $10 for each period.
This 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 this illustration implies. The
examples should not be considered a representation of past or future expenses.
Actual expenses may be greater or less than those shown.
- ------------------------------------------------------------------------------
(1) Annual Fund Operating Expenses are based on each Fund's historical
expenses. Management fees are paid to United Services Advisors, Inc. (the
"Advisor") for maintaining its investments and business affairs. Each Fund
incurs other expenses for maintaining shareholder records, furnishing
shareholder statements and reports and for other services. Transfer agency and
accounting services fees are paid to United Shareholder Services, Inc. ("USSI"
or the "Transfer Agent"), a subsidiary of the Advisor, and are not charged
directly to individual shareholder accounts. The Transfer Agent charges the
Fund $23.00 per shareholder account per year. The account closing fee will be
paid by the shareholder directly to the Transfer Agent which will, in turn,
reduce its charges to the Fund by a like amount. Please refer to the section
entitled "Management of the Funds" on Page 25 for further information.
3
<PAGE>
FINANCIAL HIGHLIGHTS
U.S. GOLD SHARES FUND
The following per share data and ratios for a share of beneficial
interest outstanding throughout each of the five years ended June 30, 1995
have been audited by Price Waterhouse LLP, the Fund's Independent Accountants.
The related financial statements and the report of Independent Accountants are
included in the Fund's 1995 Annual Report to Shareholders and are incorporated
by reference into the Statement of Additional Information ("SAI"). In addition
to the data set forth below, further information about the performance of the
Fund is contained in the Annual Report to Shareholders and SAI which may be
obtained without charge.
Selected data for a capital share outstanding throughout each year is as
follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period .......$ 2.48 2.49 2.21 3.57 3.82 3.77 3.74 6.32 3.32 5.33
--------- ------- ------- ------- ------ ------ ------ ----- ------ --------
Net investment income(c) ................. .06 .07 .04 .07 .10 .16 .20 .30 .33 .30
Net realized and unrealized gain
(loss) on investments(d) ................ (.33) (.02) .29 (1.35) (.25) .08 .04 (2.48) 3.02 (2.05)
--------- ------- ------- ------- ------ ------ ------ ----- ------ --------
Total from investment operations ........... (.27) .05 .33 (1.28) (.15) .24 .24 (2.18) 3.35 (1.75
========= ======= ======= ======= ====== ====== ====== ===== ====== ========
Less dividends and distributions:
Dividends from net investment income ..... (.06) (.06) (.04) (.08) (.10) (.19) (.21) (.40) (.35) (.26)
Distributions in excess of net investment
income(e) ............................... (.01) -- (.01) -- -- -- -- -- -- --
Distributions from net realized gains .... -- -- -- -- -- -- -- -- -- --
-------- ------- ------- -------- ------- ------- ------- ----- ------ -------
Total dividends and distributions .......... (.07) (.06) (.05) (.08) (.10) (.19) (.21) (.40) (.35) (.26)
======== ======= ======= ======= ======= ======= ======= ====== ====== =======
Net asset value, end of period ............. $ 2.14 2.48 2.49 2.21 3.57 3.82 3.77 3.74 6.32 3.32
======== ======= ======= ======= ======= ======= ======= ====== ====== =======
Total Investment Return(f).................. (11.21)% 1.85 16.70 (36.45) (3.77) 5.51 7.03 (36.44) 105.96 (33.81)
Ratios/Supplemental Data:
Net assets, end of period (in thousands) ... $211,171 263,827 299,808 187,937 343,148 295,108 239,111 238,051 407,603 214,690
Ratio of expenses to average net assets .... 1.42%(g) 1.46 1.88 1.54 1.54 1.46 1.54 1.31 1.32 1.27
======== ======= ======= ======= ======= ======= ======= ======= ======= =======
Ratio of net income to average net assets .. 2.47(g) 2.61 2.58 2.52 2.71 3.80 5.46 5.10 6.45 6.90
======== ======= ======= ======= ======= ======= ======= ======= ======= =======
Portfolio turnover rate .................... 32.75% 29.40 19.93 24.69 48.94 13.13 7.49 18.05 23.75 13.88
======== ======= ======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
(CONTINUED)
4
<PAGE>
FINANCIAL HIGHLIGHTS
U.S. GLOBAL RESOURCES FUND
The following per share data and ratios for a share of beneficial
interest outstanding throughout each of the five years ended June 30, 1995
have been audited by Price Waterhouse LLP, the Fund's Independent Accountants.
The related financial statements and the report of Independent Accountants are
included in the Fund's 1995 Annual Report to Shareholders and are incorporated
by reference into the Statement of Additional Information ("SAI"). In addition
to the data set forth below, further information about the performance of the
Fund is contained in the Annual Report to Shareholders and SAI which may be
obtained without charge.
Selected data for a capital share outstanding throughout each year is as
follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period...... $ 5.74 $ 6.10 5.78 5.76 6.31 7.07 7.67 11.00 5.29 5.38
------- -------- ------- ------ ------ ----- ------ ------ ----- -----
Net investment income(c)................ (.03) (.02) .01 .00 .03 .12 .13 .14 (.19) .00
Net realized and unrealized gain
(loss) on investments(d)............... .36 (.18) .35 .25 (.12) .02 (.33) (2.77) 5.90 (.09)
------- -------- ------- ------ ------ ------ ------ ------ ------ ------
Total from investment operations.......... .33 (.20) .36 .25 (.09) .14 (.20) (2.63) 5.71 (.09)
======= ======= ======= ====== ====== ====== ====== ====== ====== =====
Less dividends and distributions:
Dividends from net investment income.... -- -- (.01) (.07) (.04) (.50) -- -- -- --
Distributions in excess of net
investment income(e)................... -- (.01) (.03) -- -- -- -- -- -- --
Distributions from net realized gains... -- (.15) -- (.16) (.42) (.40) (.40) (.70) -- --
Distributions in excess of net
realized gain(e)....................... (.31) -- -- -- --
Total dividends and distributions......... (.31) (.16) (.04) (.23) (.46) (.90) (.40) (.70) -- --
======= ======== ====== ====== ====== ====== ====== ====== ====== ======
Net asset value, end of period........... $ 5.76 $ 5.74 6.10 5.78 5.76 6.31 7.07 7.67 11.00 5.29
======= ======== ====== ====== ====== ====== ====== ====== ====== ======
Total Investment Return(f)............... 5.94% (3.73)% 6.46 4.31 (1.26) (.47) (2.36) (24.01) 107.55 (1.84)
Ratios/Supplemental Data:
Net assets, end of period (in thousands). $21,452 $21,620 23,939 25,384 28,157 31,694 31,694 37,064 44,930 76,157
Ratio of expenses to average net assets.. 2.49%(g) 2.43 2.46 2.33 2.43 2.10 2.04 (.49) 2.90 1.89
======= ======= ====== ====== ====== ====== ====== ====== ====== ======
Ratio of net income to average net assets.(0.60)%(g) (.34) .17 .61 .58 1.37 1.78 1.78 (1.64) (.45)
======= ======== ====== ====== ====== ====== ====== ====== ====== ======
Portfolio turnover rate.............. 50.24% 57.74 119.69 55.07 81.80 70.22 21.31 26.78 7.98 83.49
======= ======== ====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
(CONTINUED)
5
<PAGE>
FINANCIAL HIGHLIGHTS
U.S. WORLD GOLD FUND
The following per share data and ratios for a share of beneficial
interest outstanding throughout each of the five years ended June 30, 1995
have been audited by Price Waterhouse LLP, the Fund's Independent Accountants.
The related financial statements and the report of Independent Accountants are
included in the Fund's 1995 Annual Report to Shareholders and are incorporated
by reference into the Statement of Additional Information ("SAI"). In addition
to the data set forth below, further information about the performance of the
Fund is contained in the Annual Report to Shareholders and SAI which may be
obtained without charge.
Selected data for a capital share outstanding throughout each year is as
follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
------------------------------------------------------------------------------- PERIOD
1995 1994 1993 1992 1991 1990 1989 1988 1987 ENDED(A)
-------- ------- ------ ------ ------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period .....$ 15.63 14.59 9.51 10.04 10.77 11.57 14.03 20.47 9.61 10.00
--------- ------- ------- ------ ------ ------ ------ ------ ------ -------
Net investment income(c) ............... (.12) (.09) (.12) (.13) (.10) (.04) .02 .00 .00 .00
Net realized and unrealized gain (loss)
on investments(d) ..................... .33 1.13 5.20 (.40) (.63) (.66) (2.48) (4.14) 11.06 (.39)
-------- ------- ------- ------ ------ ------ ------ ------ ------ -------
Total from investment operations ......... .21 1.04 5.08 (.53) (.73) (.70) (2.46) (4.14) 11.06 (.39)
======== ======= ======= ====== ====== ====== ====== ====== ====== =======
Less dividends and distributions:
Dividends from net investment income ... -- -- -- -- -- (.10) -- -- -- --
Distributions in excess of net
investment income(e) .................. (.03) -- -- -- -- -- -- -- -- --
Distributions from net realized gains .. -- -- -- -- -- -- -- (2.30) (.20) --
======== ======= ======= ====== ====== ====== ====== ====== ====== =======
Total dividends and distributions ........ (.03) -- -- -- -- (.10) -- (2.30) (.20) --
======== ======= ======= ====== ====== ====== ====== ====== ====== =======
Net asset value, end of period ...........$15.81 $ 15.63 14.59 9.51 10.04 10.77 11.57 14.03 20.47 9.61
======== ======= ======= ====== ====== ====== ====== ====== ====== =======
Total Investment Return(f) ............... 1.36% 7.13 53.58 (5.37) (7.03) (7.02) (16.42) (21.29) 116.80 (6.66)
Ratios/Supplemental Data:
Net assets, end of period (in
thousands) .............................$181,473 202,819 109,805 57,942 65,423 72,626 85,119 104,273 126,839 27,332
Ratio of expenses to average net assets .. 1.55%(g) 1.53 2.00 2.20 2.22 1.95 2.00 1.47 1.47 1.51(b)
======== ======= ======= ====== ====== ====== ====== ====== ====== =======
Ratio of net income to average net assets (.66)%(g) 0.66 (1.15) (1.18) (.95) (.24) .13 .04 (.05) .01(b)
======== ======= ======= ====== ====== ====== ====== ====== ====== =======
Portfolio turnover rate .................. 28.02% 19.65 26.05 47.28 44.46 25.52 20.02 39.20 43.66 31.42(b)
======== ======= ======= ====== ====== ====== ====== ====== ====== =======
</TABLE>
(FOOTNOTES ON FOLLOWING PAGE)
6
<PAGE>
(CONTINUED FROM PREVIOUS PAGE)
(a) For the period from November 29, 1985 (date of commencement of
operations) to June 30, 1986; (b) Annualized; the ratios are not necessarily
indicative of twelve months of operations; (c) Net of expense reimbursements;
(d) Includes the effect of capital share transactions throughout the year; (e)
Distributions in excess of net investment income and net realized gains and
tax returns of capital are presented in accordance with SOP 93-2,
Determination, Disclosure, and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distribution by Investment Companies,
which was first implemented by the Funds in fiscal 1993. Information for prior
years has not been restated; (f) Total return does not reflect the effect of
account fees; (g) Expense ratio is net of expense reimbursements or fee
waivers by the Advisor. Had such reimbursements not been made, the expense
ratio subject to the most restrictive state limitation would have been 1.47%,
2.51% and 1.58%, and the net investment income ratio would have been 2.43%,
(0.62)% and (0.69)% for the Gold Shares, Global Resources and World Gold
Funds, respectively.
7
<PAGE>
INVESTMENT OBJECTIVES AND CONSIDERATIONS
United Services Funds (the "Trust") offers investors three natural
resources funds: the U.S. Gold Shares Fund ("Gold Shares Fund"), U.S. Global
Resources Fund ("Global Resources Fund") and U.S. World Gold Fund ("World Gold
Fund"). Each Fund has a principal objective of long-term growth of capital as
well as protection against inflation and monetary instability. The Gold Shares
Fund has a secondary objective of current income. The Gold Shares Fund invests
a substantial portion of its assets in issuers located in the Republic of
South Africa, and while the World Gold Fund may invest in South African
issuers, typically it does not. The Gold Shares Fund and the World Gold Fund
invest primarily in gold-related issuers; the Global Resources Fund may
diversify its investments substantially among all natural resources.
U.S. GOLD SHARES FUND
The primary investment objective of the Gold Shares Fund is to seek
long-term growth of capital as well as protection against inflation and
monetary instability. Current income is a secondary objective.
The Gold Shares Fund concentrates its investments in common stocks of
companies involved in exploration for, mining of, processing of, or dealing in
gold with emphasis on stocks of foreign companies. Normally, at least 65% of
the Gold Shares Fund's total net assets will be invested in securities of
companies involved in gold operations. The Gold Shares Fund may also invest in
the securities of issuers engaged in operations related to silver and other
precious metals and may be subject to risks not present with other mutual
funds. See "Special Risks."
The Advisor believes that, over the long term, the value of gold and
other precious metals will increase and the value of securities of companies
involved in gold operations will also increase.
The Gold Shares Fund may invest 10% of the value of its net assets in
securities which are subject to legal or contractual restrictions on resale
and may also invest in warrants. See "Special Risks."
U.S. GLOBAL RESOURCES FUND
The principal objective of the Global Resources Fund is to provide
long-term growth of capital as well as protection against inflation and
monetary instability. Current income is not a consideration.
The Global Resources Fund concentrates its investments in the equity
securities of large capitalization companies primarily engaged in the
exploration, mining, processing, fabrication and distribution of natural
resources of any kind, including timber, hydrocarbons, minerals and metals
such as platinum, uranium, strategic metals, gold, silver, diamonds, coal, oil
and phosphates. Consistent with its investment objectives, the Global
Resources
8
<PAGE>
Fund may diversify its investments substantially among all natural resources.
The Global Resources Fund may invest in small issuers and may also invest up
to 5% of its total net assets in warrants.
The Global Resources Fund may invest in issuers located in any part of
the world. There is no limit on the Global Resources Fund's investment in the
securities of foreign issuers. The Global Resources Fund is highly
speculative. See "Special Risks."
U.S. WORLD GOLD FUND
The principal objective of the World Gold Fund is to provide long-term
growth of capital as well as protection against inflation and monetary
instability. Current income is not a consideration.
The World Gold Fund concentrates its investments in the equity securities
of companies primarily engaged in the exploration, mining, processing,
fabrication and distribution of gold or other metals, such as silver,
platinum, uranium, strategic metals, and natural resources such as diamonds,
coal, oil and phosphates.
The World Gold Fund seeks to achieve this investment objective by
investing at least 25% of its total assets in the securities of companies
principally engaged in natural resource operations. Under normal
circumstances, at least 65% of its total net assets will be invested in the
securities of companies involved in the exploration for, mining and processing
of, or dealing in, gold.
The World Gold Fund may invest in issuers located in any part of the
world. There is no limit on the World Gold Fund's investment in securities of
foreign issuers. The World Gold Fund may also invest up to 5% of its total net
assets in warrants. The World Gold Fund is highly speculative. The World Gold
Fund may invest in small issuers. See "Special Risks."
9
<PAGE>
COMMON INVESTMENT POLICIES
DEFENSIVE INVESTMENT STRATEGY
Each Fund can be temporarily invested, without limitation, other than its
investment restrictions, in short-term money market instruments, if in the
opinion of the Advisor, market conditions warrant.
ILLIQUID SECURITIES
Subject to any other investment restrictions, each Fund's investments in
illiquid securities (which includes securities without readily available
market quotations, repurchase agreements with maturities in excess of seven
days, and restricted securities) is limited, in the aggregate, to 10% of total
net assets.
PUT AND CALL OPTIONS
SELLING (OR WRITING) COVERED CALL OPTIONS. Each 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,
referred to as the strike price. If the price of the hedged security should
fall or remain below the strike price, the Fund will not be called upon 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 option's 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. Each Fund may purchase call options on securities
which each Fund intends to purchase to take advantage of anticipated positive
movements in the prices of these securities. Each 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 portion of the
premium paid for the option if the price of the underlying security decreases
or does not increase by more than the premium.
BUYING PUT OPTIONS. Each Fund may purchase put options on portfolio
securities to hedge against adverse movements in the prices of these
securities. Each Fund may also purchase put options on securities the Fund
does not currently hold if the Fund anticipates that the price of such
securities may decrease during the option period. A put option gives the buyer
of the option, upon payment of a premium, the right to sell a security
10
<PAGE>
to the writer of the option on or before a fixed date at a predetermined
price. Each 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 in
excess of the premium paid. Each Fund will realize a loss equal to all or a
portion 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. Each 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
transactions 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 upon the relative amount of the premiums paid or
received for the original option and the closing transaction. Each Fund may
sell (or write) put options solely for the purpose of entering into closing
sale transactions.
INDEX OPTIONS. Each Fund may purchase and sell call options and purchase
put options on stock indices in order 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. Each Fund may purchase and sell only call options that are
listed on a securities exchange. Each Fund may also purchase put options that
are listed and traded on securities exchanges or quoted on NASDAQ. Not more
than 2% of each Fund's total net assets may be invested in premiums on put
options, and not more than 25% of the Fund's total net assets may be subject
to put options. A Fund will not purchase any option if, immediately
thereafter, the aggregate market value of all outstanding options purchased
and written by the Fund would exceed 5% of the Fund's total assets. A Fund
will not write any call option if, immediately thereafter, the aggregate value
of the Fund's securities subject to outstanding call options would exceed 25%
of the value of each Fund's total assets.
GOLD AND GOLD BULLION
The Gold Shares Fund and the World Gold Fund may invest up to 10% of each
Fund's respective total net assets in gold or gold bullion.
SPECIAL RISKS
GOLD AND SILVER SECURITIES
Investment in gold and silver securities presents risks because the price
of gold and silver has fluctuated substantially over short periods of time.
11
<PAGE>
Prices may be affected by unpredictable international monetary and political
policies, such as currency devaluations or revaluations, economic and social
conditions within an individual country, trade imbalances or trade or currency
restrictions between countries. The price of gold and silver mining shares
frequently fluctuates even more dramatically than the price of gold and
silver. THE GOLD SHARES FUND HAS SIGNIFICANT INVESTMENTS IN SOUTH AFRICAN
ISSUERS. THE UNSTABLE POLITICAL AND SOCIAL CONDITIONS IN SOUTH AFRICA AND THE
UNSETTLED POLITICAL CONDITIONS PREVAILING IN NEIGHBORING COUNTRIES MAY HAVE
DISRUPTIVE EFFECTS ON THE MARKET PRICES OF THE INVESTMENTS OF THE GOLD SHARES
FUND AND MAY IMPAIR ITS ABILITY TO HOLD INVESTMENTS IN SOUTH AFRICAN ISSUERS.
GOLD AND GOLD BULLION
Because gold and gold bullion do not generate investment income, the
return to the Gold Shares Fund or the World Gold Fund from such investments
will be derived solely from the gains and losses realized by the Fund upon the
sale of the gold and gold bullion. Each Fund may also incur storage and other
costs relating to its investments in gold and gold bullion. Under certain
circumstances, these costs may exceed the custodial and brokerage costs
associated with investments in portfolio securities.
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; expropriation or confiscatory taxation;
political or financial instability; or other developments which can affect
investments. All of the Funds may invest in the securities of foreign issuers
that are listed on a domestic or foreign exchange, quoted on NASDAQ, or traded
in the domestic or foreign over-the-counter market.
INVESTMENT IN SMALL ISSUERS
The Global Resources Fund and the World Gold Fund may invest in small
companies for which it is difficult to obtain reliable information and
financial data. The securities of these smaller companies may not be readily
marketable, making it difficult to dispose of shares when it may otherwise be
advisable. In addition, certain issuers in which a Fund may invest may face
difficulties in obtaining the capital necessary to continue in operation and
may become insolvent, which may result in a complete loss of the Fund's
investment in such issuers.
RESTRICTED SECURITIES
Investment in restricted securities, that is, securities which are
subject to legal or contractual restrictions on resale, may present certain
risks due to
12
<PAGE>
the difficulty a Fund may have in disposing of such securities at a specified
time. The disposition of these securities may be restricted under Federal
securities laws, and, as a result, a Fund may either be unable to dispose of
such investments or be forced to dispose of them at less than their fair
value. A Fund may be subject to time delays and incur costs or losses as a
result of having to hold the restricted securities in its portfolio for a
longer period than intended.
BORROWING
As a fundamental policy, each Fund may borrow from a bank up to a limit
of 5% of the total assets of that Fund as a temporary measure (for emergency
purposes). Such borrowings may be deemed desirable or appropriate to meet
redemption requests or other temporary demands for cash. For example, rather
than incurring the trading costs associated with liquidating portfolio
securities to raise cash to pay for shareholder redemptions, the Fund may
temporarily borrow cash from a bank and, if subsequent shareholder purchases
do not provide the cash to cover the redemptions, liquidate portfolio
securities in an orderly manner to repay the borrowed cash. To the extent that
a Fund borrows money prior to selling securities, the Fund would be leveraged
such that the Fund's net assets may appreciate or depreciate in value more
than an unleveraged portfolio of similar securities. In addition, to protect
shareholders under such circumstances, the Funds have imposed a short-term
trading fee.
LENDING OF PORTFOLIO SECURITIES
Each Fund may lend securities to broker-dealers or institutional
investors for their use in connection with short sales, arbitrages and other
securities transactions. A 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 mark-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, a Fund could experience delays and costs in
recovering the securities loaned. A 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. A Fund may not lend
securities with an aggregate market value of more than one-third of the Fund's
total net assets.
REPURCHASE AGREEMENTS
Each 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 has evidence of book entry receipt of such securities. In a repurchase
agreement, a Fund purchases securities subject to the seller's agreement to
repurchase such securities at a specified time (normally one
13
<PAGE>
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, a Fund will enter into repurchase
agreements only with institutions and dealers which the Board of Trustees
considers creditworthy.
The Global Resources Fund and the World Gold Fund may invest up to 10% of
their respective total net assets in repurchase agreements of more than seven
days maturity.
SPECIAL LIMITATIONS
The investment objective of each Fund may not be changed without the vote
of a majority of that Fund's outstanding voting securities.
Each Fund may: (1) borrow up to 5% of the total assets of that Fund as a
temporary measure (for extraordinary purposes); (2) invest up to 5% of the
value of the total assets of that Fund in securities of any one issuer (except
such limitation does not apply to obligations issued or guaranteed by the U.S.
Government, its agencies and/or instrumentalities); (3) not acquire more than
10% of the voting securities of any one issuer; (4) lend portfolio securities
with an aggregate market value of not more than one-third of such Fund's total
net assets; and (5) invest up to 5% of the total net assets in securities of
companies (including predecessors) that have been in continuous operation for
less than three years.
HOW TO PURCHASE SHARES
The minimum initial investment is $1,000. The minimum subsequent
investment is $50. The minimum initial investment for persons enrolled in ABC
Investment PlanT is $100 and the minimum subsequent investment pursuant to
such a plan is $30 per month per account. There is no minimum purchase for
retirement plan accounts administered by the Advisor or its agents and a
reduced $50 minimum on initial purchases for custodial accounts for minors.
YOU MAY INVEST IN THE FOLLOWING WAYS:
BY MAIL
Send your application and check or money order, made payable to the
respective 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
14
<PAGE>
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. 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 (7) 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 United Services
Funds by wiring funds. To do so, call United Services Funds for a confirmation
number and wiring instructions.
BY ABC INVESTMENT PLANT
Once your account is open, you may make investments automatically by
completing the ABC Investment PlanT (Automatically Building Capital Investment
Plan) form authorizing United Services Funds to draw on your bank account
regularly for as little as $30 a month beginning within thirty (30) days after
the account is opened. You should 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 Services Funds at
least five business days before the change is to become effective.
ADDITIONAL INFORMATION ABOUT PURCHASES
All purchases of shares are subject to acceptance by the Trust and are
not binding until accepted. United Services Funds reserves the right to reject
any application or investment. Orders become effective as of 4:00 p.m. Eastern
time, Monday through Friday, exclusive of business holidays. Orders to
purchase shares of U.S. Gold Shares Fund will not be accepted after 3:00 p.m.
Eastern time. In the event that 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.
15
<PAGE>
If your telephone order to purchase shares is cancelled 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 Trust by reason of such
cancellation.
If checks are 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 cancelling the purchase.
To recover any such loss or charge, the Trust reserves the right, without
further notice, to redeem shares of any fund already owned by any purchaser
whose order is cancelled, for whichever reason, and such a purchaser may be
prohibited from placing further investments unless the investments are
accompanied by full payment by wire or cashier's check.
United Services Funds charges no sales commissions or "loads" of any
kind. However, investors may purchase and sell shares through registered
broker-dealers who may charge for their services.
Investments paid for by checks drawn on foreign banks may be deferred
until such checks have cleared the normal collection process. In such
instances, any amounts charged to the Trust 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
Each 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 tax identification
number. In order to avoid this withholding requirement, you must certify on
your application, or on a separate W-9 Form 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
Funds assess a $50 administrative fee if the taxpayer identification number is
not provided by year end.
CERTIFICATES
When you open your account, United Services Funds will send you a
confirmation statement, which will be your evidence that you have opened an
account with United Services Funds. The confirmation statement is non-
negotiable, so if it is lost or destroyed, you will not be required to buy a
lost
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instrument bond or be subject to other expense or trouble, as you would with a
negotiable stock certificate. At your written request, United Services Funds
will issue negotiable stock certificates. Unless your shares are purchased
with wired funds, a certificate will not be issued until 15 days have elapsed
from the time of purchase, or United Services Funds has satisfactory proof of
payment, such as a copy of your cancelled check. Negotiable certificates will
not be issued for fewer than 100 shares.
HOW TO EXCHANGE SHARES
You have the privilege of exchanging into any of the other United
Services Funds which are registered in your state. An exchange involves the
simultaneous redemption (sale) of shares of one fund and purchase of shares of
another fund at the respective closing net asset value and is a taxable
transaction.
BY TELEPHONE
You will automatically have the privilege to direct United Services Funds
to exchange your shares by calling toll free 1-800-US-FUNDS
(1-800-873-8637). Orders to exchange shares of U.S. Gold Shares Fund will not
be accepted after 3:00 p.m. Eastern time or at such earlier time in the day as
the net asset value per share is determined. 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. Each 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 either party does not employ
reasonable procedures, it may be liable for losses due to unauthorized or
fraudulent transactions.
BY MAIL
You may direct United Services Funds in writing to exchange your shares
between identically registered accounts. The request must be signed exactly as
the name appears in the registration. (Before writing, read "Additional
Information About Exchanges.")
ADDITIONAL INFORMATION ABOUT EXCHANGES
(1) There is a $5 charge, which is paid to United Shareholder Services,
("USSI" or the "Transfer Agent"), for each exchange transaction out of any
fund account. Retirement accounts administered by the Advisor or its agents
are charged $5 for each exchange exceeding three per quarter. The exchange fee
is charged to cover administrative costs associated with handling these
exchanges.
(2) Like any other redemption, the Fund reserves the right to hold
redemption proceeds for up to seven days. In such event, the purchase side
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of the exchange transaction will also be delayed. You will be notified
immediately if the Fund is exercising said right.
(3) If the shares you wish to exchange are represented by a negotiable
stock certificate, the certificate must be returned before the exchange can be
effected.
(4) Shares may not be exchanged unless you have furnished United Services
Funds 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 described at page 16.
(5) Exchanges out of the United Services Funds' equity funds of shares
held less than 14 days are subject to a short-term trading fee described at
page 20.
(6) The exchange privilege may be terminated at any time. The exchange
fee and other terms of the privilege are subject to change.
HOW TO REDEEM SHARES
You may redeem any or all of your shares at will. United Services Funds
redeems shares at the net asset value next determined after it has received
and accepted a redemption request in proper order.
BY MAIL
A written request for redemption must be in "proper order," which
requires delivery of the following to the Transfer Agent:
(1) a written request for redemption signed by each registered owner
exactly as the shares are registered, the account number and the number of
shares or the dollar amount to be redeemed;
(2) negotiable stock certificates for any shares to be redeemed for which
certificates have been issued;
(3) signature guarantees when required; and
(4) such additional documents as are customarily required to evidence the
authority of persons effecting redemptions on behalf of corporations,
executors, trustees, and other fiduciaries. Redemptions will not become
effective until all documents, in the form required, have been received by the
Transfer Agent. (Before writing, read "Additional Information About
Redemptions.")
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 preestablished accounts
upon telephone instructions. For further information call the Trust at
1-800-873-8637.
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Telephone redemptions are available for accounts with a balance of at
least $50,000. To establish telephone redemption privileges, call 1-800-873-
8637 for information.
SIGNATURE GUARANTEE
Redemptions in excess of $15,000 require a signature guarantee. A
signature guarantee is required for all redemptions, regardless of the amount
involved, when the proceeds are to be paid to someone other than the
registered owner of the shares to be redeemed or if proceeds are to be mailed
to an address other than the registered address of record. When a signature
guarantee is required, each signature must be guaranteed by: (a) a federally
insured bank or thrift institution; (b) a broker or dealer (general
securities, municipal, or government) or clearing agency registered with the
U.S. Securities and Exchange Commission that maintains net capital of at least
$100,000; or (c) a national securities exchange or national securities
association. The guarantee must: (i) include the statement "Signature(s)
Guaranteed"; (ii) be signed in the name of the guarantor by an authorized
person, the person's printed name and position with guarantor; and (iii)
include a recital that the guarantor is federally insured, maintains the
requisite net capital or is a national securities exchange or association.
Shareholders living abroad may acknowledge their signatures before a U.S.
consular officer. Military personnel may acknowledge their signatures before
officers authorized to take acknowledgments (e.g., legal officers and
adjutants).
REDEMPTION PROCEEDS MAY BE SENT TO YOU:
BY MAIL
If your redemption check is mailed, it is usually mailed within 48 hours;
however, the Fund reserves the right to hold redemption proceeds for up to
seven days. If the shares to be redeemed were purchased by check, the
redemption proceeds will not be mailed until the purchase check has cleared.
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
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 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.
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ADDITIONAL INFORMATION ABOUT REDEMPTIONS
The redemption price may be more or less than your cost, depending on the
net asset value of the Fund's portfolio next determined after your request is
received.
A request to redeem shares in an IRA or similar retirement account must
be accompanied by an IRS Form W4-P and a reason for withdrawal as specified by
the IRS. Proceeds from the redemption of shares from a retirement account may
be subject to withholding tax.
The 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 so redeem, or to so prohibit, would
have a material adverse consequence to the Trust and its shareholders. No
account closing fee will be charged to investors whose accounts are closed
under this provision.
Excessive short-term trading has an adverse impact on effective portfolio
management as well as upon Fund expenses. The Trust has reserved the right to
refuse investments from shareholders who engage in short-term trading.
SHORT-TERM TRADING FEE
A short-term trading fee of ten basis points or .10% of the value of
shares redeemed or exchanged will be assessed to shareholders who redeem or
exchange shares of certain United Services Funds' equity funds (U.S. Gold
Shares Fund, U.S. World Gold Fund, U.S. Global Resources Fund, U.S. Income
Fund, U.S. All American Equity Fund, and U.S. Real Estate Fund) held less than
fourteen (14) calendar days. A fee of 1% of the value of shares redeemed or
exchanged will be assessed to shareholders who redeem or exchange shares of
the China Region Opportunity Fund held less than 180 calendar days.
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 directed to them by mail or wire. The
charge is payable directly to the Fund's Transfer Agent which, in turn, will
reduce its charge to the Fund by an equal amount. The purpose of the charge is
to allocate to the redeeming shareholders a more equitable portion of the
Transfer Agent's fee, including the cost of tax reporting, which is based upon
the number of shareholder accounts. The account closing fee does not apply to
exchanges between the funds of United Services Funds. This fee will not be
imposed on any account which is involuntarily redeemed.
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SMALL ACCOUNTS
In order to reduce expenses of the Fund, the Trust may redeem all shares
in any shareholder account, other than active ABC Investment PlansT, UGMA/UTMA
and retirement plan accounts, if, for any period of more than three months,
the account has a net value of $500 or less and the reduction in value is not
due to market fluctuation. 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 ninety (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 Trust has available a number of plans and services to meet the
special needs of certain investors. Plans available include:
(1) payroll deduction plans, including military allotments;
(2) custodial accounts for minors;
(3) a flexible, systematic withdrawal plan; and
(4) various retirement plans such as IRA, SEP/IRA, 403(b)(7), 401(k) and
employer-adopted defined contribution plans.
Application forms and brochures describing these plans and services can
be obtained from the Transfer Agent 1-800-US-FUNDS (1-800-873-8637).
There is an annual charge for each retirement plan fund account with
respect to which Security Trust & Financial Company ("ST&FC"), a wholly-owned
subsidiary of the Advisor, acts as custodian (for example, $10 for IRAs and
$15 for SEP/IRAs, 403(b)(7)s, profit sharing and other such accounts). If this
administrative charge is not paid separately prior to the last business day of
a calendar year or prior to a total redemption, it will be deducted from the
shareholder's account.
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 question about
your account.
24 HOUR CURRENT INFORMATION
Shareholders can also access 24 hours a day current information on
yields, prices, latest dividends, account balances, and deposits and
redemptions for the previous and current months. Just call 1-800-US-FUNDS and
press the appropriate codes into your touch-tone phone.
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HOW SHARES ARE VALUED
Shares of each Fund are purchased or redeemed, on a continuing basis
without a sales charge, at their next determined net asset value per share.
The net asset value per share of each Fund is calculated separately by United
Shareholder Services, Inc. Net asset value per share is determined and orders
become effective as of 4:00 p.m. Eastern time, Monday through Friday,
exclusive of business holidays on which the NYSE is closed, by dividing the
aggregate net assets of each Fund by the total number of shares of that Fund
outstanding. In the event that the NYSE and other financial markets close
earlier, as on the eve of a holiday, the net asset value per share will be
determined earlier in the day at the close of trading on the NYSE.
A portfolio security listed or traded on a stock exchange or quoted on
NASDAQ is valued at the last reported sale price prior to the time when assets
are valued. Lacking any sales on that day, the security is valued at the mean
between the last reported bid and ask prices. Over-the-counter portfolio
securities for which market quotations are readily available are valued at the
mean between the most recent bid and ask prices as obtained from one or more
dealers that make markets in the securities. Portfolio securities which are
traded both in the over-the-counter market and on a stock exchange are valued
according to the broadest and most representative market as determined by the
Advisor. When market quotations are not readily available, or when restricted
securities or other assets are being valued, such assets are valued at fair
value as determined in good faith by or under procedures established by the
Board of Trustees.
Debt securities with maturities of 60 days or less at the time of
purchase are valued on the basis of the amortized cost. This involves valuing
an instrument at its cost initially and, thereafter, assuming a constant
amortization to maturity of any discount or premium, regardless of the impact
of fluctuating interest rates on the market value of the instrument.
DIVIDENDS AND TAXES
Each 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
Funds. 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 reinvest
ment of dividends in Fund shares; or (3) all income dividend and
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<PAGE>
capital gain distributions paid in cash. The share price of the reinvestment
will be the net asset value of the Fund shares computed at the close of
business on the date the dividend or distribution is paid. Dividend checks
returned to the Funds as being undeliverable and dividend checks not cashed
after 180 days will automatically be reinvested at the price of the Fund on
the day returned or on or about the 181st day, and the distribution option
will be changed to "reinvest."
At the time of purchase, the share price of a 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 dividend and distributions are fully taxable.
The Global Resources Fund and the World Gold Fund generally pay dividends
once each year (usually in December). The Gold Shares Fund generally pays
dividends twice each year (usually in June and December) and pays capital gain
distributions annually in December.
Each Fund is subject to a nondeductible 4 percent excise tax calculated
as a percentage of certain undistributed amounts of taxable ordinary income
and capital gain net of capital losses. The Funds intend 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 gain paid by each Fund are taxable to shareholders as
ordinary income, whether received in cash or reinvested in additional shares
of a Fund. A portion of these dividends may qualify for the 70 percent
dividends received deduction available to corporations. Distributions of net
capital gain will be taxable to shareholders as long-term capital gain,
whether paid in cash or reinvested in additional shares, and regardless of the
length of time the investor has held his shares.
Each January, each 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 percent dividends received deduction
available to corporations.
Each of the Funds may be subject to foreign withholding or other taxes.
If more than 50 percent in value of a Fund's total assets at the close of any
taxable year consists of securities of foreign corporations, the Fund may file
an election with the Internal Revenue Service (the "Foreign Election") that
would permit shareholders to take a credit (or a deduction) for foreign taxes
paid by the Fund. If the Foreign Election is made, shareholders would include
in their gross income both dividends received from the Fund and foreign
withholding taxes paid by the Fund. Shareholders of the Fund would be entitled
to treat the foreign taxes withheld as a credit against their United States
Federal income taxes, subject to the
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limitations set forth in the Code with respect to the foreign tax credit
generally. Alternatively, shareholders could, if to their advantage, treat the
foreign taxes withheld as a deduction from gross income in computing taxable
income rather than as a tax credit. Each Fund that qualifies will make the
Foreign Election and will advise its shareholders annually of their share of
the amount of foreign taxes paid by the Fund.
The foregoing discussion relates only to generally applicable Federal
income tax provisions in effect as of the date of this prospectus. Therefore,
shareholders should consult their tax advisers about the status of
distributions from the Funds in their own states and localities.
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 requirements described above even if the Fund did not
receive any income to distribute.
THE TRUST
United Services Funds (the "Trust") is an open-end management investment
company, consisting of numerous separate, diversified portfolios each of which
has its own investment objectives and policies. The portfolios are designed to
serve a wide range of investor needs.
The Trust was formed July 31, 1984 as a "business trust" under the laws
of the Commonwealth of Massachusetts. It is a "series" company which is
authorized to issue series of shares without par value, each series
representing interests in a separate portfolio, or divide the shares of any
series into classes. Shares of numerous series have been authorized. The Board
of Trustees of the Trust has the power to create additional series, or divide
existing series into two or more classes, at any time, without a vote of
shareholders of the Trust.
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Under the Trust's First Amended and Restated Master Trust Agreement (the
"Master Trust Agreement"), no annual or regular meeting of shareholders is
required, although the Trustees may authorize special meetings from time to
time. Under the terms of the Master Trust Agreement, the Trustees will be a
self-perpetuating body and will continue their positions until they resign,
die or are removed by a written instrument signed by a least two-thirds of the
Trustees, by vote of shareholders holding not less than two-thirds of the
shares then outstanding of the Trust cast at any meeting called for that
purpose, or by a written declaration signed by shareholders holding not less
than two-thirds of the shares then outstanding.
On any matter submitted to shareholders, shares of each portfolio entitle
their holder to one vote per share, irrespective of the relative net asset
values of the portfolio's shares. On matters affecting an individual
portfolio, a separate vote of shareholders of the portfolio is required. Each
portfolio's shares are fully paid and non-assessable by the Trust, have no
preemptive or subscription rights, and are fully transferable, with no
conversion rights.
MANAGEMENT OF THE FUNDS
TRUSTEES
The business affairs of each Fund are managed by the Trust's Board of
Trustees. The Trustees establish policies, as well as review and approve
contracts and their continuance. The Trustees also elect the officers and
select the Trustees to serve as executive and audit committee members.
THE INVESTMENT ADVISOR
United Services Advisors, Inc., 7900 Callaghan Road, San Antonio, Texas
78229, under an investment advisory agreement with the Trust dated October 26,
1989, furnishes investment advice and is responsible for overall management of
the Trust's business affairs. Frank E. Holmes, Chief Executive Officer and
Chairman of the Board of Directors of the Advisor, as well as President and a
Trustee of the Trust, owns more than 25% of the voting stock of the Advisor
and is its controlling person. The Advisor was organized in 1968.
The Advisor provides to the Trust, and to each of the portfolios within
the Trust, management and investment advisory services. The Advisor furnishes
an investment program for each of the Funds, 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 each of the Funds. Victor Flores, Executive
Vice President and Chief Investment Officer of the Advisor, is responsible for
the day-to-day management of the Gold Shares and World Gold Funds' portfolios.
Mr. Flores has been a portfolio manager since December 1989. Prior thereto he
was an Investment Analyst for the
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<PAGE>
Advisor. Ralph P. Aldis is the portfolio manager for the Global Resources
Fund. He has been the Advisor's director of research from April 1989 to
present and has been a portfolio manager since November 1991. Prior thereto
Mr. Aldis was a research analyst for a consulting firm specializing in energy
economics.
The Advisor provides the Trust with office space, facilities and business
equipment and provides the services of executive and clerical personnel for
administering the affairs of the Trust. The Advisor pays the expense of
printing and mailing prospectuses and sales materials used for promotional
purposes.
The Advisory Agreement with the Trust provides for each Fund to pay the
Advisor a management fee based upon the average net assets of that Fund
separately. The fee for managing each of the Gold Shares Fund, Global
Resources Fund, and World Gold Fund for the fiscal period ended June 30, 1995,
was .73%, 1.00%, and 1.00%, respectively, of average net assets. The fee
charged the Global Resources Fund and the World Gold Fund is higher than that
charged by most other investment companies.
The Advisor may, out of profits derived from its management fee, pay
certain financial institutions (which may include banks, securities dealers
and other industry professionals) a "servicing fee" for performing certain
administrative servicing functions for Fund shareholders to the extent these
institutions are allowed to do so by applicable statute, rule or regulation.
These fees will be paid periodically and will generally be based on a
percentage of the value of the institutions' client Fund shares.
The Transfer Agency Agreement with the Trust provides for each Fund to
pay USSI 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 Trust shares through broker-dealers which provide such services and
maintain an omnibus account with the Transfer Agent, each Fund shall pay to
the Transfer Agent a monthly fee equal to one-twelfth ( 1/12) of 12.5 basis
points (.00125) of the value of the shares of the Funds held in accounts at
the broker-dealer, which payment shall not exceed $1.67 multiplied by the
average daily number of accounts holding Trust shares at the broker-dealer.
These fees cover the usual transfer agency functions. In addition, the Funds
bear certain other Transfer Agent expenses such as the costs of record
retention and postage, plus the telephone and line charges (including the
toll-free 800 service) used by shareholders to contact the Transfer Agent. For
the fiscal period ended June 30, 1995, the Gold Shares Fund, the Global
Resources Fund and the World Gold Fund paid a total of $1,108,574, $160,150
and $580,284, respectively, for transfer agency, lock box and printing
services.
USSI performs bookkeeping and accounting services, and determines the
daily net asset value for each of the Funds. Bookkeeping and accounting
services are provided to the Funds for an asset based fee of 0.05% of the
first $150 million average net assets, 0.04% of the next $150 million
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<PAGE>
average net assets, 0.03% of the next $200 million average net assets, 0.02%
of the next $250 million average net assets and 0.01% of average net assets in
excess of $750 million -- subject to an annual minimum fee of $28,000 per
Fund. USSI received $122,481, $28,000, and $91,031 for the Gold Shares Fund,
Global Resources Fund and World Gold Fund, respectively, for the year ended
June 30, 1995.
Additionally, the Advisor is reimbursed certain costs for in-house legal
services pertaining to each Fund.
The Trust pays all other expenses for its operations and activities. Each
Fund of the Trust pays its allocable portion of these expenses. The expenses
borne by the Trust include the charges and expenses of any shareholder
servicing agents, custodian fees, legal and auditors' expenses, brokerage
commissions for portfolio transactions, the advisory fee, extraordinary
expenses, expenses of shareholder 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, among others.
PERFORMANCE INFORMATION
From time to time, in advertisements or in reports to shareholders or
prospective shareholders, each Fund may compare its performance, in terms of
its total return, to that of other mutual funds with similar investment
objectives and to stock or other indices. For example, one of the Trust's
equity funds may compare its performance to rankings prepared by Lipper
Analytical Services, Inc. ("Lipper"), a widely recognized independent service
which monitors the performance of mutual funds; to the Standard & Poor's 500
Composite Stock Price Index ("S&P 500"), an index of unmanaged groups of
common stock; to Morningstar's Mutual Fund Values; or to the Consumer Price
Index. Performance information and rankings as reported in Changing Times,
Business Week, Institutional Investor, The Wall Street Journal, Mutual Fund
Forecaster, No-Load Investor, Money Magazine, Forbes, Fortune, Investors Daily
and Barron's magazine may also be used in comparing performance of each Fund.
Performance comparisons should not be considered as representative of the
future performance of any Fund.
A 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. Each Fund may also utilize a total return for differing
periods computed in the same manner but without annualizing the total return.
The standard total return 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.
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UNITED SERVICES FUNDS
SHARES OF THE FUNDS ARE SOLD
AT NET ASSET VALUE WITHOUT
SALES COMMISSIONS,
REDEMPTION FEES OR 12B-1 FEES
U.S. Gold Shares Fund
U.S. Global Resources Fund
U.S. World Gold Fund
INVESTMENT ADVISOR
United Services Advisors, Inc.
7900 Callaghan Road
Mailing Address: P.O. Box 29467
San Antonio, Texas 78229
TRANSFER AGENT
United Shareholder Services, Inc.
P.O. Box 781234
San Antonio, Texas 78278-1234
CUSTODIAN
Bankers Trust Company
16 Wall Street
New York, New York 10005
LEGAL COUNSEL
Goodwin, Procter & Hoar
Exchange Place
Boston, MA 02109
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
One Riverwalk Place, Ste. 900
San Antonio, Texas 78205
100% No Load
Be Sure to Retain This Prospectus;
It Contains Valuable Information.
================================================================================
IMPORTANT ADDITIONAL INFORMATION FOR SHAREHOLDERS OF
UNITED SERVICES FUNDS
U.S. INCOME FUND
U.S. REAL ESTATE FUND
JULY 29, 1996 SUPPLEMENT TO
PROSPECTUS DATED NOVEMBER 1, 1995
HOW TO PURCHASE SHARES--P. 14
All purchases of shares are subject to acceptance by the Trust and are not
binding until accepted. United Services Funds reserves the right to reject any
application or investment. Orders received by the Fund's transfer agent or a
sub-agent before 4:00 p.m., Eastern time, Monday through Friday exclusive of
business holidays, and accepted by the Fund will receive the share price next
computed after receipt of the order.
HOW TO REDEEM SHARES--P. 17
You may redeem any or all of your shares at will. Redemption requests received
in proper order by the Fund's transfer agent or a sub-agent 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.
HOW TO SPEED REDEMPTIONS--P.17
To redeem your Fund shares by telephone, you may call the Fund and direct an
exchange out of the Fund into an identically registered account in a United
Services treasury money market fund ($1,000 minimum initial investment). You may
then write a check against your treasury money market fund account. See "How to
Exchange Shares" in the prospectus for a description of exchanges, including the
$5 exchange fee. Call 1-800-426-6635 for more information concerning telephone
redemption and a treasury money market fund prospectus.
MANAGEMENT OF THE FUND, THE INVESTMENT ADVISOR--P. 25
The Transfer Agency Agreement with the Trust provides for each Fund to pay USSI
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 Trust
shares through broker-dealers, banks, trust companies and similar institutions
which provide such services and maintain an omnibus account with the Transfer
Agent, each Fund shall pay to the Transfer Agent a monthly fee equal to
one-twelfth (1/12) of 12.5 basis points (.00125) of the value of the shares of
the Funds held in accounts at the institutions, which payment shall not exceed
$1.92 multiplied by the average daily number of accounts holding Trust share at
the institution.
INVESTMENT OBJECTIVES AND CONSIDERATIONS--P. 1
Each investor is responsible for determining whether or not an investment in the
Fund is appropriate for his or her needs.
SHORT-TERM TRADING FEE--P. 19 (DELETE THIS PARAGRAPH AND INSERT THE FOLLOWING)
Trader's Fee Paid to the Fund
A Trader's fee of 10 basis points or 0.10% of the value of shares redeemed or
exchanged will be assessed to shareholders who redeem or exchange shares of the
Fund held less than fourteen (14) 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 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.
................................................................................
UNITED SERVICES FUNDS
U.S. INCOME FUND
U.S. REAL ESTATE FUND
P.O. BOX 781234
SAN ANTONIO, TEXAS 78278-1234
1-800-873-8637 (1-800-US-FUNDS)
(INFORMATION, SHAREHOLDER SERVICES AND REQUESTS)
PROSPECTUS
NOVEMBER 1, 1995
This prospectus presents information that a prospective investor should
know about the the U.S. Income Fund ("Income Fund"), and the U.S. Real Estate
Fund ("Real Estate Fund"), two no-load mutual funds (the "Fund(s)") of United
Services Funds (the "Trust"). Each Fund has a different investment objective and
is designed to meet different investment needs. SHARES OF THE TRUST ARE NOT
INSURED, GUARANTEED, SPONSORED, RECOMMENDED OR APPROVED BY THE UNITED STATES OR
ANY AGENCY OR OFFICER THEREOF. Read and retain this prospectus for future
reference.
A Statement of Additional Information dated November 1, 1995 has been filed
with the Securities and Exchange Commission and is incorporated herein by
reference. This Statement is available free from United Services Funds upon
written request at the address set forth above or by calling 1-800-873-8637.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DIS-
APPROVED BY THE SECURITIES AND EXCHANGE COM-
MISSION 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................. 5
Investment Objectives and
Considerations
U.S. Income Fund................ 8
U.S. Real Estate Fund........... 8
Special Considerations............... 10
How to Purchase Shares............... 13
How to Exchange Shares............... 16
How to Redeem Shares................. 17
How Shares are Valued................ 21
Dividends and Taxes.................. 22
The Trust............................ 23
Management of the Funds.............. 24
Performance Information.............. 26
SUMMARY OF FEES AND EXPENSES
The following summary, which is based on actual expenses and average net
assets for each Fund for the year ended June 30, 1995, is provided to assist you
in understanding the various costs and expenses a shareholder in each respective
Fund could bear directly or indirectly.
REAL
INCOME ESTATE
FUND FUND
------ ------
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load.............. None None
Redemption Fee.................. None None
Short-term Trading Fee (on the
redemption or exchange of
shares held less than 14
days)........................ 0.10% 0.10%
Administrative Exchange Fee..... $ 5 $ 5
Account Closing Fee (does not
apply to exchanges).......... $10 $10
ANNUAL FUND OPERATING EXPENSES (AS A
PERCENTAGE OF AVERAGE NET
ASSETS)(1)
Management Fees................. 0.75% 0.75%
12b-1 Fees...................... None None
Other Expenses.................. 0.61% 0.58%
Transfer Agency Fees............ 0.40% 0.38%
Accounting Services Fees........ 0.22% 0.21%
Total Fund Operating Expenses
(net of waivers and
reimbursements).............. 1.98% 1.92%
2
<PAGE>
Except for active ABC Investment PlanT, UGMA/UTMA and retirement accounts,
if an account balance falls, for any reason other than market fluctuations,
below $1,000 at any time during a month, that account will be subject to a
monthly small account charge of $1 which will be paid quarterly.
See "Small Accounts" on page 20.
A shareholder who requests delivery of redemption proceeds by wire transfer
will be subject to a $10 charge. International wires will be higher.
HYPOTHETICAL EXAMPLE OF EFFECT OF FUND EXPENSES
You would pay the following expenses on a $1,000 investment, assuming 5%
annual return and redemption at the end of the period.
INCOME REAL ESTATE
------ -----------
1 year.............................. $ 30 $ 30
3 years............................. 72 70
5 years............................. 117 114
10 years............................. 241 235
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 this
illustration implies. The examples should not be considered a representation
of past or future expenses. Actual expenses may be more or less than those
shown.
- ------------------------------------------------------------------------------
(1) Annual fund operating expenses are based on each Fund's historical expenses.
Management fees are paid to United Services Advisors, Inc. (the "Advisor") for
managing its investments and business affairs. Each Fund incurs other expenses
for maintaining shareholder records, furnishing shareholder statements and
reports, and for other services. Transfer agency and accounting services fees
are paid to United Shareholder Services, Inc. ("USSI" or the "Transfer Agent"),
a wholly-owned subsidiary of the Advisor, and are not charged directly to
individual shareholder accounts. The Transfer Agent charges the Fund $23.00 per
shareholder account per year. The account closing fee and small account charge
are paid by the shareholder directly to the Transfer Agent which will, in turn,
reduce its charges to the Fund by an equal amount. Please refer to the section
entitled "Management of the Funds" on Page 24 for further information.
3
<PAGE>
[This page intentionally left blank]
4
<PAGE>
FINANCIAL HIGHLIGHTS
U.S. INCOME FUND
The following per share data and ratios for a share of beneficial interest
outstanding throughout each of the five years ended June 30, 1995 have been
audited by Price Waterhouse LLP, the Fund's Independent Accountants. The related
financial statements and the report of Independent Accountants are included in
the Funds' 1995 Annual Report to Shareholders and are incorporated by reference
into the Statement of Additional Information ("SAI"). In addition to the data
set forth below, further information about the performance of the Fund is
contained in the Annual Report to Shareholders and SAI which may be obtained
without charge.
Selected data for a capital share outstanding throughout each year is as
follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
---------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period ........$ 12.57 14.06 12.65 11.32 12.23 11.61 9.64 10.50 11.20 10.42
------- ----- ----- ----- ------ ----- ----- ----- ----- -----
Net investment income(c) .................. .35 .31 .30 .29 .36 .43 .48 .63 .63 .34
Net realized and unrealized gain
(loss) on investments(d) ................. .79 (1.06) 2.19 1.40 (.62) .61 1.96 (.38) (.27) .89
------- ----- ----- ----- ------ ----- ----- ----- ----- -----
Total from investment operations ............ 1.14 (.75) 2.49 1.69 (.26) 1.04 2.44 .25 .36 1.23
------- ----- ----- ----- ------ ----- ----- ----- ----- -----
Less dividends and distributions:
Dividends from net investment income ...... (.34) (.31) (.27) (.35) (.36) (.42) (.47) (.76) (.50) (.38)
Distributions in excess of net
investment income(e) .................... -- (.03) -- -- -- -- -- -- -- --
Distributions from net realized gains ..... (.02) (.01) (.79) (.01) (.29) -- -- (.35) (.32) (.07)
Distributions in excess of realized
gains(e) ............................... -- (.39) (.02) -- -- -- -- -- -- --
Distributions from paid in capital ........ -- -- -- -- -- -- -- -- (.24) --
------- ----- ----- ----- ------ ----- ----- ----- ----- -----
Total dividends and distributions ........... (.36) (.74) (1.08) (.36) (.65) (.42) (.47) (1.11) (1.06) (.45)
======= ===== ===== ===== ====== ===== ===== ===== ====== ======
Net asset value, end of period ..............$ 13.35 12.57 14.06 12.65 11.32 12.23 11.61 9.64 10.50 11.20
======= ===== ===== ===== ====== ===== ===== ===== ====== ======
Total Investment Return(f) .................. 9.31% (5.83) 20.68 15.02 (2.07) 8.89 26.02 3.13 3.32 12.09
Ratios/Supplemental Data:
Net assets, end of period (in thousands) ....$10,230 11,865 11,009 7,845 7,456 8,137 5,317 4,450 3,572 2,920
Ratio of expenses to average net assets ..... 1.98%(g) 1.74 1.83 1.95 2.22 1.94 2.00 1.73 1.60 1.63
======= ===== ===== ===== ====== ===== ===== ===== ====== ======
Ratio of net income to average net assets ... 2.59%(g) 2.27 2.34 2.47 2.99 3.55 4.61 6.19 6.14 3.27
======= ===== ===== ===== ====== ===== ===== ===== ====== ======
Portfolio turnover rate ..................... 7.02% 6.91 44.18 76.15 109.85 19.29 17.59 126.56 173.91 178.58
======= ===== ===== ===== ====== ===== ===== ===== ====== ======
</TABLE>
(CONTINUED)
5
<PAGE>
FINANCIAL HIGHLIGHTS
U.S. REAL ESTATE FUND
The following per share data and ratios for a share of beneficial interest
outstanding throughout the period ended June 30, 1988 and each of the five years
ended June 30, 1995 have been audited by Price Waterhouse LLP, the Fund's
Independent Accountants. The related financial statements and the report of
Independent Accountants are included in the Funds' 1995 Annual Report to
Shareholders and are incorporated by reference into the Statement of Additional
Information ("SAI"). In addition to the data set forth below, further
information about the performance of the Fund is contained in the Annual Report
to Shareholders and SAI which may be obtained without charge.
Selected data for a capital share outstanding throughout each year is as
follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------------------------------------------------- PERIOD
1995 1994 1993 1992 1991 1990 1989 ENDED(A)
--------- --------- --------- --------- --------- --------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period............ $ 9.86 10.96 10.17 8.83 8.36 10.20 9.29 10.00
--------- --------- --------- --------- --------- --------- -------
Net investment income(c)...................... .23 .22 .17 .29 .24 .30 .38 .45
Net realized and unrealized gain (loss) on
investments(d)............................... (.13) (1.05) .79 1.38 .47 (1.57) .94 (.78)
--------- --------- --------- --------- --------- --------- -------
Total from investment operations................ .10 (.83) .96 1.67 .71 (1.27) 1.32 (.33)
--------- --------- --------- --------- --------- --------- -------
Less dividends and distributions:
Dividends from net investment income.......... (.16) (.22) (.17) (.33) (.24) (.30) (.41) (.38)
Distributions in excess of net investment
income(e)................................... -- (.02) -- -- -- -- -- --
Distributions from net realized gains......... -- -- -- -- -- (.27) -- --
Tax return of capital distributions(e)........ -- (.03) -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- -------
Total dividends and distributions............... (.16) (.27) (.17) (.33) (.24) (.57) (.41) (.38)
========= ========= ========= ========= ========= ========= =======
Net asset value, end of period.................. $ 9.80 9.86 10.96 10.17 8.83 8.36 10.20 9.29
========= ========= ========= ========= ========= ========= =======
Total Investment Return(f)...................... 1.09% (7.70) 9.45 18.70 9.23 (12.60) 14.46 (2.99)
Ratios/supplemental data:
Net assets, end of period (in thousands)........ $ 9,169 14,597 19,780 21,514 6,678 6,016 5,658 3,237
Ratio of expenses to average net assets......... 1.92(g) 1.59 1.40 1.63 2.63 2.51 2.14 --(b)
========= = ======== ======== ========= ========= ========= =======
Ratio of net income to average net assets....... 2.22(g) 1.96 1.55 3.17 2.66 3.50 4.70 6.76(b)
========= ========= ========= ========= ========= ========= =======
Portfolio turnover rate......................... 48.10% 145.33 186.99 102.56 132.53 62.55 87.67 51.01(b)
========= ========= ========= ========= ========= ========= ======= =====
</TABLE>
(FOOTNOTES ON FOLLOWING PAGE)
6
<PAGE>
(CONTINUED FROM PREVIOUS PAGE)
(a) For the period July 2, 1987 (date of commencement of operations) to June 30,
1988; (b) Annualized; the ratios are not necessarily indicative of twelve months
of operation; (c) Net of expense reimbursements; (d) Includes the effect of
capital share transactions throughout the year; (e) Distributions in excess of
net investment income and net realized gains and tax returns of capital are
presented in accordance with SOP 93-2, Determination, Disclosure, and Financial
Statement Presentation of Income, Capital Gain, and Return of Capital
Distribution by Investment Companies, which was first implemented by the Funds
in fiscal 1993. Information for prior years has not been restated; (f) Total
return does not reflect the effect of account fees; (g) Expense ratio is net of
expense reimbursements or fee waivers. Had such reimbursements not been made,
the expense ratio subject to the most restrictive state limitation would have
been 2.01% and 1.95% and the net investment income ratio would have been 2.55%
and 2.20% for the Income and Real Estate Funds, respectively.
7
<PAGE>
INVESTMENT OBJECTIVES AND CONSIDERATIONS
United Services Funds (the "Trust") offers investors several growth and
income funds, two of which are included in this prospectus, the Income Fund and
the Real Estate Fund. Each Fund has a different investment objective and is
designed to satisfy different needs. The Income Fund seeks to preserve capital,
consistent with production of current income. Long-term capital appreciation is
a secondary consideration. The Income Fund may invest in a broad range of equity
and debt securities. The Real Estate Fund's principal objective is long-term
capital appreciation; current income is a secondary consideration. The Real
Estate Fund invests primarily in equity securities of companies in the real
estate or real estate related industry.
U.S. INCOME FUND
The investment objectives of the Income Fund are preservation of capital
and, consistent with that objective, production of current income. Long-term
capital appreciation is a secondary consideration.
The Income Fund will invest in the following types of securities: common
stocks, including, but not limited to, shares of beneficial interest of real
estate investment trusts; corporate bonds; senior securities convertible into
common stocks (convertible preferred stocks and convertible bonds or
debentures); United States Treasury bills; United States Treasury bonds; and
obligations issued, guaranteed or otherwise backed by United States Government
agencies and instrumentalities. The Fund may also invest in the securities of
foreign issuers which are listed on domestic national securities exchanges,
quoted on NASDAQ, or traded in the domestic over-the-counter market. The Fund
purchases only those preferred stocks, bonds and debentures that, in the opinion
of the Advisor, meet a credit standard which is consistent with the objective of
preservation of capital. The distribution of investments between different types
of securities is governed by an investment policy, which can be changed by the
Board of Trustees, that at least 80% of the Income Fund's total net assets will
be invested in income-producing securities. The common stocks in which the
Income Fund ordinarily invests are those of issuers with a long-established
record of paying cash dividends, such as companies that provide essentials, such
as electricity, gas and telephone services. Investments will be diversified
among a variety of industries to limit risk; however, up to 10% of the total net
assets of the Income Fund may be invested in securities that are not readily
marketable. To increase current income, the Income Fund may write (sell) covered
call options on common stocks in its portfolio.
8
<PAGE>
U.S. REAL ESTATE FUND
The primary investment objective of the Real Estate Fund is long-term
capital appreciation. Current income is a secondary consideration. The Fund will
seek to achieve its objectives by investing primarily in equity securities of
companies in the real estate or real estate related industry.
The Fund will invest not less than 65% of its total assets in common and
preferred stocks of companies listed on national securities exchanges or NASDAQ
which have at least 50% of the value of their assets in, or which derive at
least 50% of their revenues from, the ownership, construction, management or
sale of residential, commercial or industrial real estate. Such stocks may
include publicly traded or listed equity real estate investment trusts which own
properties and mortgage real estate investment trusts which make short-term
construction and development mortgage loans or which invest in long-term
mortgages or mortgage pools. The Fund may also invest up to 35% of total net
assets in real estate or real estate related securities of foreign issuers
listed on domestic or foreign exchanges, quoted on NASDAQ, or traded in the
domestic over-the-counter market.
The Fund may also invest in equity, debt, or convertible securities of
issuers whose products and services are related to the real estate industry such
as manufacturers and distributors of building supplies and financial
institutions which issue or service mortgages. In addition, the Fund may, from
time to time, seek investment in the securities of companies unrelated to the
real estate industry but which have significant real estate holdings believed to
be undervalued relative to the price of the companies' securities.
There may be periods when investments in such securities should be reduced
due to unusual or adverse economic conditions. Thus the Real Estate Fund may
temporarily invest, without limitation other than the Real Estate Fund's
investment restrictions, in short-term money market instruments if, in the
opinion of the Advisor, market conditions warrant. The Fund may invest more than
25% of its total assets in any one sector of the real estate or real estate
related industries. See "Special Risks" in the Statement of Additional
Information.
The Real Estate Fund may be subject to the risks associated with the direct
ownership of real estate because of its policy of concentration in the
securities of companies which own, construct, manage or sell residential,
commercial or industrial real estate. Additional risks include declines in the
value of real estate, risks related to general and local economic conditions,
overbuilding and increased competition, increases in property taxes and
operating expenses, changes in zoning laws, casualty or condemnation losses,
limitations on rents, changes in neighborhood values, the appeal of properties
to tenants, and increase in interest rates. The value of securities
9
<PAGE>
of companies which serve the real estate industry may also be affected by such
risks.
SPECIAL CONSIDERATIONS
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, expropriation or confiscatory taxation; political or financial
instability; or other developments which can affect investments. The Income Fund
and the Real Estate Fund may invest in the securities of foreign issuers that
are listed on a domestic exchange, quoted on NASDAQ, or traded in the domestic
over-the-counter market. The Real Estate Fund may also invest in securities of
foreign issuers that are listed on foreign securities exchanges.
PORTFOLIO TURNOVER
Each Fund's total portfolio turnover rate is shown in the "Financial
Highlights Table" on pages 5 and 6 of this prospectus. A Fund's annual rate of
portfolio turnover may vary widely from year to year depending on market
conditions and prospects and may be higher than those of other mutual funds with
similar investment objectives to each Fund. High portfolio turnover in any given
year indicates a substantial amount of short-term trading, which may result in
payment by the Funds of above-average amounts of brokerage commissions and could
result in the payment by shareholders of above-average amounts of taxes on
realized investment gain. Any short-term gain realized on securities will be
taxed to shareholders as ordinary income. See "Dividends and Taxes" on page 22.
LENDING OF PORTFOLIO SECURITIES
Each Fund may lend securities to broker-dealers or institutional investors
for their use in connection with short sales, arbitrages and other securities
transactions. A 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 mark-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, a Fund could experience delays and costs in
recovering the securities loaned. A 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. A Fund may not
10
<PAGE>
lend securities with an aggregate market value of more than one-third of the
Fund's total net assets.
REPURCHASE AGREEMENTS
Each 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, a 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, a
Fund will enter into repurchase agreements only with institutions and dealers
which the Board of Trustees considers creditworthy.
PUT AND CALL OPTIONS
SELLING (OR WRITING) COVERED CALL OPTIONS. Each 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, referred to as the
strike price. If the price of the hedged security should fall or remain below
the strike price, the Fund will not be called upon 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 option's 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. Each Fund may purchase call options on securities
which each Fund intends to purchase to take advantage of anticipated positive
movements in the prices of these securities. Each 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
11
<PAGE>
portion of the premium paid for the option if the price of the underlying
security decreases or does not increase by more than the premium.
BUYING PUT OPTIONS. Each 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. A 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 in excess of the premium paid. A Fund will realize a loss equal to all or
a portion 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. Each 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 upon the relative amount of the premiums paid or received for the
original option and the closing transaction. A Fund may sell (or write) put
options solely for the purpose of entering into closing sale transactions.
INDEX OPTIONS. Each Fund may purchase and sell call options and purchase
put options on stock indices in order to manage cash flow, reduce equity
exposure, or 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. Each Fund will purchase and sell only options that are listed
on a securities exchange or quoted on NASDAQ. A Fund will not purchase any
option if, immediately thereafter, the aggregate market value of all outstanding
options purchased and written by the Fund would exceed 5% of the Fund's total
assets. A Fund will not write any call option if, immediately thereafter, 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.
SPECIAL LIMITATIONS
The investment objectives of the Income and Real Estate Funds may not be
changed without the vote of a majority of the Fund's outstanding voting
securities.
12
<PAGE>
Each Fund may: (1) borrow up to 5% of the total assets of that Fund as a
temporary measure (for extraordinary purposes); (2) invest up to 5% of the value
of the total assets of that Fund in securities of any one issuer (except such
limitation does not apply to obligations issued or guaranteed by the U.S.
Government, its agencies and/or instrumentalities); (3) not acquire more than
10% of the voting securities of any one issuer; (4) lend portfolio securities
with an aggregate market value of not more than one-third of such Fund's total
net assets; and (5) with respect to the Real Estate Fund, invest up to 5% of the
total assets in securities of companies (including predecessors) that have been
in continuous operation for less than three years (except such limitation shall
not apply to securities of real estate investment trusts).
HOW TO PURCHASE SHARES
The minimum initial investment is $1,000. The minimum subsequent investment
is $50. The minimum initial investment for persons enrolled in an ABC Investment
PlanT is $100 and the minimum subsequent investment pursuant to such a plan is
$30 or more per month per account. There is no minimum purchase for retirement
plan accounts administered by the Advisor or its agents and a reduced $50
minimum on initial purchases for custodial accounts for minors.
YOU MAY INVEST IN THE FOLLOWING WAYS:
BY MAIL
Send your application and check or money order, made payable to the
respective 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. 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
1-800-873-8637. 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
13
<PAGE>
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 United Services
Funds by wiring funds. To do so, call United Services Funds for a confirmation
number and wiring instructions.
BY ABC INVESTMENT PLANT
Once your account is open, you may make investments automatically by
completing the ABC Investment PlanT (Automatically Building Capital Investment
Plan) form authorizing United Services Funds to draw on your bank account
regularly for as little as $30 a month, beginning within thirty (30) days after
the account is opened. You should 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 Services Funds at
least five business days before the change is to become effective.
ADDITIONAL INFORMATION ABOUT PURCHASES
All purchases of shares are subject to acceptance by the Trust and are not
binding until accepted. United Services Funds reserves the right to reject any
application or investment. Orders become effective as of 4:00 p.m. Eastern time,
Monday through Friday, exclusive of business holidays. In the event that 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.
United Services 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.
If your telephone order to purchase shares is cancelled 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 Trust by reason of such
cancellation.
If checks are 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 cancelling the purchase.
To recover any such loss or charge, the Trust reserves the right, without
further notice, to redeem shares of any fund already owned by any
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purchaser whose order is cancelled, for whichever reason, and such a purchaser
may be prohibited from placing further orders unless investments are accompanied
by full payment by wire or cashier's check.
Investments paid for by checks drawn on foreign banks may be deferred until
such checks have cleared the normal collection process. In such instances, any
amounts charged to the Trust 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
Each 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 tax identification
number. In order to avoid this withholding requirement, you must certify on your
application, or on a separate W-9 Form supplied by the Transfer Agent, that your
taxpayer identification number is correct and that you are not currently subject
to backup withholding or you are exempt from backup withholding. For
individuals, your taxpayer identification number is your social security number.
Instructions to exchange or transfer shares held in established accounts
will be refused until the certification has been provided. In addition, the Fund
assesses a $50 administrative fee if the taxpayer identification number is not
provided by year end.
CERTIFICATES
When you open your account, United Services Funds will send you a
confirmation statement, which will be your evidence that you have opened an
account with United Services Funds. The confirmation statement is
non-negotiable, so if it is lost or destroyed, you will not be required to buy a
lost instrument bond or be subject to other expense or trouble, as you would
with a negotiable stock certificate. At your written request, United Services
Funds will issue negotiable stock certificates. Unless your shares are purchased
with wired funds, a certificate will not be issued until 15 days have elapsed
from the time of purchase, or United Services Funds has satisfactory proof of
payment, such as a copy of your cancelled check. Negotiable certificates will
not be issued for fewer than 100 shares.
15
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HOW TO EXCHANGE SHARES
You have the privilege of exchanging into any of the United Services Funds
or affiliated funds which are registered in your state. An exchange involves the
simultaneous redemption (sale) of shares of one fund and purchase of shares of
another fund at their respective closing net asset value and is a taxable
transaction.
BY TELEPHONE
You will automatically have the privilege to direct United Services 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, as a result of this policy, will bear the risk of
loss. Each 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 either party does not
employ reasonable procedures, it may be liable for losses due to unauthorized or
fraudulent transactions.
BY MAIL
You may direct United Services Funds in writing to exchange your shares
between identically registered accounts. The request must be signed exactly as
the name appears in the registration. (Before writing, read "Additional
Information About Exchanges.")
ADDITIONAL INFORMATION ABOUT EXCHANGES
(1) There is a $5 charge, which is paid to United Shareholder Services,
Inc. (the "Transfer Agent" or "USSI"), for each exchange transaction out of any
fund account. Retirement accounts administered by the Advisor or its agents are
charged $5 for each exchange exceeding three per quarter. The exchange fee is
charged to cover administrative costs associated with handling these exchanges.
(2) Like any other redemption, the Fund reserves the right to hold
redemption proceeds for up to seven days. In such event, the purchase side of
the exchange transaction will also be delayed. You will be notified immediately
if the Fund is exercising said right.
(3) If the shares you wish to exchange are represented by a negotiable
stock certificate, the certificate must be returned before the exchange can be
effected.
(4) Shares may not be exchanged unless you have furnished United Services
Funds with your tax identification number, certified as prescribed
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<PAGE>
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," page 15.)
(5) Exchanges out of United Services Funds' equity funds of shares held
less than 14 days are subject to a short-term trading fee described at page 19.
(6) The exchange privilege may be terminated at any time. The exchange
fee and other terms of the privilege are subject to change.
HOW TO REDEEM SHARES
You may redeem any or all of your shares at will. United Services Funds
redeems shares at the net asset value next determined after it has received and
accepted a redemption request in proper order. Redemption requests must be
received prior to 4:00 p.m. Eastern time, Monday through Friday, to be effective
that day.
BY MAIL
A written request for redemption must be in "proper order," which requires
delivery of the following to the Transfer Agent:
(1) a written request for redemption signed by each registered owner
exactly as the shares are registered, the account number and the number of
shares or the dollar amount to be redeemed;
(2) negotiable stock certificates for any shares to be redeemed for
which certificates have been issued;
(3) signature guarantees when required; and
(4) such additional documents as are customarily required to evidence
the authority of persons effecting redemptions on behalf of corporations,
executors, trustees, and other fiduciaries. Redemptions will not become
effective until all documents in the form required have been received by the
Transfer Agent. (Before writing, read "Additional Information About
Redemptions.")
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 Trust at
1-800-873-8637.
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Telephone redemptions are available for accounts with a balance of at least
$50,000. To establish telephone redemption privileges, call 1-800-873-8637 for
information.
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 paid to someone other than the registered owner
of shares to be redeemed or if proceeds are to be mailed to an address other
than the registered address of record. When a signature guarantee is required,
each signature must be guaranteed by: (a) a federally insured bank or thrift
institution; (b) a broker or dealer (general securities, municipal, or
government) or clearing agency registered with the U.S. Securities and Exchange
Commission that maintains net capital of at least $100,000; or (c) a national
securities exchange or national securities association. The guarantee must: (i)
include the statement "Signature(s) Guaranteed"; (ii) be signed in the name of
the guarantor by an authorized person, the person's printed name and position
with guarantor; and (iii) include a recital that the guarantor is federally
insured, maintains the requisite net capital or is a national securities
exchange or association. Shareholders living abroad may acknowledge their
signatures before a U.S. consular officer. Military personnel may acknowledge
their signatures before officers authorized to take acknowledgments (e.g., legal
officers and adjutants).
REDEMPTION PROCEEDS MAY BE SENT TO YOU:
BY MAIL
If your redemption check is mailed, it is usually mailed within 48 hours;
however, the Fund reserves the right to hold redemption proceeds for up to seven
days. If the shares to be redeemed were purchased by check, the redemption
proceeds will not be mailed until the purchase check has cleared, which may take
up to seven days. You may avoid this requirement by investing by bank wire
(Federal funds). Redemption checks may be delayed if you have changed your
address in the last 30 days. Please notify the Fund promptly in writing, or by
telephone, of any change of address.
BY WIRE
You may authorize the Fund to transmit redemption proceeds by wire,
provided you send written wiring instructions with a signature guarantee at the
time of redemption. Proceeds from your redemption will usually be transmitted on
the first business day following the redemption. However, the 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
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<PAGE>
will not be wired until the purchase check has cleared, which may take up to
seven days. There is a $10 charge to cover the wire, which is deducted from
redemption proceeds. International wires will be higher.
ADDITIONAL INFORMATION ABOUT REDEMPTIONS
The redemption price may be more or less than your cost, depending on the
net asset value of the Fund's portfolio next determined after your request is
received.
A request to redeem shares in an IRA or similar retirement account must be
accompanied by an IRS Form W4-P and a reason for withdrawal as specified by the
IRS. Proceeds from the redemption of shares from a retirement account may be
subject to withholding tax.
The 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 so redeem, or to so 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.
Excessive short-term trading has an adverse impact on effective portfolio
management as well as upon Fund expenses. The Trust has reserved the right to
refuse investments from shareholders who engage in short-term trading.
SHORT-TERM TRADING FEE
A short-term trading fee of ten basis points or 0.10% of the value of
shares redeemed or exchanged will be assessed to shareholders who redeem or
exchange shares of certain United Services Funds' equity funds (U.S. Gold Shares
Fund, U.S. World Gold Fund, U.S. Global Resources Fund, U.S. Income Fund, U.S.
All American Equity Fund, and U.S. Real Estate Fund) held less than fourteen
(14) calendar days. A fee of 1% of the value of shares redeemed or exchanged
will be assessed to shareholders who redeem or exchange shares of the China
Region Opportunity Fund held less than 180 days.
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
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upon the number of shareholder accounts. The account closing fee does not apply
to exchanges between the United Services Funds' funds nor will it be imposed on
any account which is involuntarily redeemed.
SMALL ACCOUNTS
Fund accounts which fall, for any reason other than market fluctuations,
below $1,000 at any time during a 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.
Active ABC Investment PlanT, UGMA/UTMA, and retirement plan fund accounts
administered by the Advisor or its agents or affiliates will not be subject to
the small account charge.
In order to reduce expenses of the Fund, the Trust may redeem all of the
shares in any shareholder account, other than active ABC Investment PlanT,
UGMA/UTMA, and retirement plan accounts, if, for a period of more than three
months, the account has a net asset value of $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 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 normally will receive a confirmation statement after each
transaction showing activity in the account. However, when account activity is
produced solely from dividend reinvestment, confirmation statements will be
mailed quarterly for the Income Fund and semi-annually for the Real Estate Fund.
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OTHER SERVICES
The Trust has available a number of plans and services to meet the special
needs of certain investors. Plans available include:
(1) payroll deduction plans, including military allotments;
(2) custodial accounts for minors;
(3) a flexible, systematic withdrawal plan; and
(4) various retirement plans such as IRA, SEP/IRA, 403(b)(7), 401(k) and
employer-adopted defined contribution plans.
Application forms and brochures describing these plans and services can be
obtained from the Transfer Agent at 1-800-US-FUNDS (1-800-873-8637).
There is an annual charge for each retirement plan fund account with
respect to which Security Trust & Financial Company ("ST&FC"), a wholly-owned
subsidiary of the Advisor, acts as custodian (for example, $10 for IRAs and $15
for SEP/IRAs, 403(b)(7)s, profit sharing and other such accounts). If this
administrative charge is not paid separately prior to the last business day of a
calendar year or prior to a total redemption or exchange, it will be deducted
from the shareholder's account.
SHAREHOLDER SERVICES
United Shareholder Services, Inc. ("USSI"), a wholly-owned subsidiary of
the Advisor, acts as transfer and dividend paying agent for all fund accounts.
Simply write or call 1-800-US-FUNDS for prompt service on any questions about
your account.
24 HOUR CURRENT INFORMATION
Shareholders can also access 24 hours a day current information on yields,
prices, latest dividends, account balances, and deposits and redemptions for the
previous and current months. Just call 1-800-US-FUNDS and press the appropriate
codes into your touch-tone phone.
HOW SHARES ARE VALUED
Shares of each Fund are purchased or redeemed, on a continuing basis
without a sales charge, at their next determined net asset value per share. The
net asset value per share of each Fund is calculated separately by United
Shareholder Services, Inc. Net asset value per share is determined 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
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of a holiday, the net asset value per share will be determined earlier in the
day at the close of trading on the NYSE.
A portfolio security listed or traded on a stock exchange or quoted on
NASDAQ is valued at the last reported sale price prior to the time when assets
are valued. Lacking any sales on that day, the security is valued at the mean
between the last reported bid and ask prices. Over-the-counter portfolio
securities for which market quotations are readily available are valued at the
mean between the most recent bid and ask prices as obtained from one or more
dealers that make markets in the securities. Portfolio securities which are
traded both in the over-the-counter market and on a stock exchange are valued
according to the broadest and most representative market as determined by the
Advisor. When market quotations are not readily available, or when restricted
securities or other assets are being valued, such assets are valued at fair
value as determined in good faith by or under procedures established by the
Board of Trustees.
Debt securities with maturities of 60 days or less at the time of purchase
are valued on the basis of the amortized cost. This involves valuing an
instrument at its cost initially and, thereafter, assuming a constant
amortization to maturity of any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the instrument. The corporate
bonds held by the Income Fund are valued by the Transfer Agent based on an
independent pricing service.
DIVIDENDS AND TAXES
Each Fund intends to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). By
complying with the applicable provisions of the Code, a Fund will not be subject
to Federal income tax on its net investment income and capital gain net income
that are distributed to shareholders.
All income dividends and capital gain distributions are normally
reinvested, without charge, in additional full and fractional shares of the
Fund. Alternatively, investors may choose: (1) automatic reinvestment of capital
gain distributions in Fund shares and payment of income dividends in cash; (2)
payment of capital gain distributions in cash and automatic reinvestment of
dividends in Fund shares; or (3) all income dividend and capital gain
distributions paid in cash. The share price of the reinvestment will be the net
asset value of the Fund shares computed at the close of business on the date the
dividend or distribution is paid. Dividend checks returned to the Fund as being
undeliverable and dividend checks not cashed after 180 days will automatically
be reinvested at the price of the Fund on the day returned or on or about the
181st day, and the distribution option will be changed to reinvest.
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At the time of purchase, the share price of a 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 dividends and distributions are fully taxable.
The Income Fund generally pays dividends quarterly (usually in March, June,
September and December). The Real Estate Fund generally pays dividends twice
each year (usually in June and December). Capital gains, if any, will be
distributed annually in December.
Each Fund is subject to a nondeductible 4 percent excise tax calculated as
a percentage of certain undistributed amounts of taxable ordinary income and
capital gains net of capital losses. The Funds intend 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 each Fund are taxable to shareholders as
ordinary income, whether received in cash or reinvested in additional shares of
a Fund. A portion of these dividends may qualify for the 70 percent 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, and regardless of the length of time the
investor has held his shares.
Each January, each 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 percent 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. Therefore,
shareholders should consult their tax advisers about the status of distributions
from the Funds in their own states and localities.
THE TRUST
United Services Funds (the "Trust") is an open-end management investment
company, consisting of numerous separate, diversified portfolios each of which
has its own investment objectives and policies. The portfolios are designed to
serve a wide range of investor needs.
The Trust was formed July 31, 1984 as a "business trust" under the laws of
the Commonwealth of Massachusetts. It is a "series" company which is authorized
to issue series of shares without par value, each series representing interests
in a separate portfolio, or divide the shares of any
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series into classes. Shares of numerous series have been authorized. The Board
of Trustees of the Trust has the power to create additional series, or divide
existing series into two or more classes, at any time, without a vote of
shareholders of the Trust.
Under the Trust's First Amended and Restated Master Trust Agreement (the
"Master Trust Agreement"), no annual or regular meeting of shareholders is
required, although the Trustees may authorize Special Meetings from time to
time. Under the terms of the Master Trust Agreement, the Trustees will be a
self-perpetuating body and will continue their positions until they resign, die
or are removed by a written instrument signed by at least two-thirds of the
Trustees, by vote of shareholders holding not less than two-thirds of the shares
then outstanding of the Trust cast at any meeting called for that purpose, or by
a written declaration signed by shareholders holding not less than two-thirds of
the shares then outstanding.
On any matter submitted to shareholders, shares of each portfolio entitle
their holder to one vote per share, irrespective of the relative net asset
values of each portfolio's shares. On matters affecting an individual portfolio,
a separate vote of shareholders of the portfolio is required. Each portfolio's
shares are fully paid and non-assessable by the Trust, have no preemptive or
subscription rights, and are fully transferable, with no conversion rights.
MANAGEMENT OF THE FUNDS
TRUSTEES
The business affairs of each Fund are managed by the Trust's Board of
Trustees. The Trustees establish policies, as well as review and approve
contracts and their continuance. The Trustees also elect the officers and select
the Trustees to serve as executive and audit committee members.
THE INVESTMENT ADVISOR
United Services Advisors, Inc., 7900 Callaghan Road, San Antonio, Texas
78229, under an investment advisory agreement with the Trust dated October 26,
1989, furnishes investment advice and is responsible for overall management of
the Trust's business affairs. Frank E. Holmes is Chief Executive Officer and
Chairman of the Board of Directors of the Advisor, as well as President and a
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 provides to the Trust, and to each of the funds within the
Trust, management and investment advisory services. The Advisor furnishes an
investment program for each of the funds, determines, subject
24
<PAGE>
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 each of the funds.
The Advisor utilizes a team approach to manage the assets of the U.S.
Income Fund. The team meets regularly to review portfolio holdings and to
discuss purchase and sale activity. Ralph Aldis has been appointed team leader
for the Fund. Mr. Aldis has been the Advisor's director of research from April
1989 to present and has been a portfolio manager since November 1991. The
Advisor also utilizes a team approach to manage the assets of the U.S. Real
Estate Fund. The team meets regularly to review portfolio holdings and to
discuss purchase and sale activity. Timothy Reynolds has been appointed team
leader for the Fund. Mr. Reynolds joined the Advisor as a senior research
analyst in June, 1995. He was employed by another investment advisory firm with
responsibilities involving management of a real estate investment trust and debt
securities for the two years prior to joining the Advisor. Prior to June, 1993
Mr. Reynolds was completing an MBA program and, prior thereto, was employed as a
financial analyst for large consumer products companies.
The Advisor provides the Trust with office space, facilities and business
equipment and provides the services of executive and clerical personnel for
administering the affairs of the Trust. The Advisor pays the expense of printing
and mailing prospectuses and sales materials used for promotional purposes.
The Advisory Agreement with the Trust provides for each Fund to pay the
Advisor a management fee based upon the average net assets of that Fund
separately. The fee for managing each of the Income Fund and the Real Estate
Fund for the fiscal period ended June 30, 1995 was 0.75% of average net assets.
The Advisor may, out of profits derived from its management fee, pay
certain financial institutions (which may include banks, securities dealers and
other industry professionals) a "servicing fee" for performing certain
administrative servicing functions for 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 Transfer Agency Agreement with the Trust provides for each Fund to pay
USSI 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 Trust shares through broker-dealers which provide such services and
maintain an omnibus account with the Transfer Agent, each Fund shall pay to the
Transfer Agent a monthly fee equal to one-twelfth ( 1/12) of 12.5 basis points
(.00125) of the value of the shares of the Funds held in accounts at the
broker-dealer, which payment shall not
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exceed $1.67 multiplied by the average daily number of accounts holding Trust
shares at the broker-dealer. These fees cover the usual transfer agency
functions. In addition, the Funds bear certain other Transfer Agent expenses
such as the costs of record retention and postage, plus the telephone and line
charges (including the toll-free 800 service) used by shareholders to contact
the Transfer Agent. For the fiscal period ended June 30, 1995, the Income and
Real Estate Funds paid USSI a total of $43,400 and $44,241, respectively for the
transfer agency, lockbox and printing fees due USSI. Transfer Agent fees,
including reimbursed expenses, are reduced by the amount of small account
charges, account maintenance fees and account closing fees the Transfer Agent is
paid.
USSI performs bookkeeping and accounting services, and determines the daily
net asset value for each of the Funds. With regard to the Income Fund and Real
Estate Fund, bookkeeping and accounting services are provided to each Fund for
an asset based fee of 0.03% of the first $250 million average net assets, 0.02%
of the next $250 million average net assets and 0.01% of average net assets in
excess of $500 million -- subject to an annual minimum fee of $24,000 per Fund.
USSI received fees of $24,000 each for the Income Fund and Real Estate Fund for
the year ended June 30, 1995.
Additionally, the Advisor is reimbursed certain costs for in-house legal
services pertaining to each Fund.
The Trust pays all other expenses for its operations and activities. Each
Fund pays its allocable portion of these expenses. The expenses borne by the
Trust include the charges and expenses of any shareholder servicing agents,
custodian fees, legal and auditors' expenses, brokerage commissions for
portfolio transactions, the advisory fee, extraordinary expenses, expenses of
shareholder 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, among others.
PERFORMANCE INFORMATION
From time to time, in advertisements or in reports to shareholders or
prospective shareholders, each Fund may compare its performance, either in terms
of its yield, total return or its yield and total return, to that of other
mutual funds with similar investment objectives and to stock or other indices.
For example, a Fund may compare its performance to rankings prepared by Lipper
Analytical Services, Inc. ("Lipper"), a widely recognized independent service
which monitors the performance of mutual funds; to Morningstar's Mutual Fund
Values; to the Standard & Poor's 500 Composite Stock Price Index ("S&P 500"), an
index of unmanaged groups of common stock; to the Morgan Stanley Capital
International Index
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European (Free) Portion; to the FT-SE Eurotrack 200 Index; or to the Consumer
Price Index. Performance information and rankings as reported in Changing Times,
Business Week, Institutional Investor, the Wall Street Journal, Mutual Fund
Forecaster, No-Load Investor, Money Magazine, Forbes, Fortune, Investors Daily
and Barron's magazine may also be used in comparing performance of each Fund.
Performance comparisons should not be considered as representative of the future
performance of any Fund.
A 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. A Fund may also
utilize a total return for differing periods computed in the same manner but
without annualizing the total return.
A 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 or 30-day period by the
maximum offering price per share on the last day of such period. This income is
then "annualized." That is, the amount of income generated by the investment
during that period is assumed to be generated each month over a 12-month period
and is shown as a percentage of the investment.
For purposes of the yield calculation, interest income is computed based on
the yield to maturity of each debt obligation and dividend income is computed
based upon the stated dividend rate of each security in the Fund's portfolio,
and all recurring charges are recognized.
The standard total return and yield results do not take into account
recurring and nonrecurring charges for optional services which only certain
shareholders elect and which involve nominal fees such as the $5 fee for
exchanges.
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UNITED SERVICES FUNDS
SHARES OF THE FUNDS ARE SOLD
AT NET ASSET VALUE WITHOUT SALES COMMISSIONS,
REDEMPTION FEES OR 12B-1 FEES
U.S. Income Fund
U.S. Real Estate Fund
INVESTMENT ADVISOR
United Services Advisors, Inc.
7900 Callaghan Road
Mailing Address: P.O. Box 29467
San Antonio, Texas 78229-0467
TRANSFER AGENT
United Shareholder Services, Inc.
P.O. Box 781234
San Antonio, Texas 78278-1234
CUSTODIAN
Bankers Trust Company
16 Wall Street
New York, NY 10005
LEGAL COUNSEL
Goodwin, Procter & Hoar
Exchange Place
Boston, MA 02109
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
One Riverwalk Place, Ste. 900
San Antonio, Texas 78205
100% No Load
Be Sure to Retain This Prospectus;
It Contains Valuable Information.
================================================================================
IMPORTANT ADDITIONAL INFORMATION FOR SHAREHOLDERS OF
UNITED SERVICES FUNDS
UNITED SERVICES INTERMEDIATE TREASURY FUND
JULY 29, 1996 SUPPLEMENT TO
PROSPECTUS DATED NOVEMBER 1, 1995
SUMMARY OF FEES AND EXPENSES--P. 2, P. 3, P. 20
The Advisor has guaranteed that Total Fund Operating Expenses of the Fund (as a
percentage of net assets) will not exceed 0.40% on an annualized basis through
June 30, 1997 or until such later date as the Advisor determines.
HOW TO PURCHASE SHARES--P. 9
All purchases of shares are subject to acceptance by the Trust and are not
binding until accepted. United Services Funds reserves the right to reject any
application or investment. Orders received by the Fund's transfer agent or a
sub-agent before 4:00 p.m., Eastern time, Monday through Friday exclusive of
business holidays, and accepted by the Fund will receive the share price next
computed after receipt of the order.
HOW TO REDEEM SHARES--P. 12
You may redeem any or all of your shares at will. Redemption requests received
in proper order by the Fund's transfer agent or a sub-agent 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.
HOW TO SPEED REDEMPTIONS--P. 12
To redeem your Fund shares by telephone, you may call the Fund and direct an
exchange out of the Fund into an identically registered account in a United
Services treasury money market fund ($1,000 minimum initial investment). You may
then write a check against your treasury money market fund account. See "How to
Exchange Shares" in the prospectus for a description of exchanges, including the
$5 exchange fee. Call 1-800-426-6635 for more information concerning telephone
redemption and a treasury money market fund prospectus.
MANAGEMENT OF THE FUNDS, THE INVESTMENT ADVISOR--P. 20
The Transfer Agency Agreement with the Trust provides for each Fund to pay USSI
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 Trust
shares through broker-dealers, banks, trust companies and similar institutions
which provide such services and maintain an omnibus account with the Transfer
Agent, each Fund shall pay to the Transfer Agent a monthly fee equal to
one-twelfth (1/12) of 12.5 basis points (.00125) of the value of the shares of
the Funds held in accounts at the institutions, which payment shall not exceed
$1.92 multiplied by the average daily number of accounts holding Trust share at
the institution.
INVESTMENT OBJECTIVES AND CONSIDERATIONS--P. 1
Each investor is responsible for determining whether or not an investment in the
Fund is appropriate for his or her needs.
................................................................................
UNITED SERVICES FUNDS
UNITED SERVICES INTERMEDIATE TREASURY FUND
P.O. BOX 781234
SAN ANTONIO, TEXAS 78278-1234
1-800-873-8637 (1-800-US-FUNDS)
(INFORMATION, SHAREHOLDER SERVICES AND REQUESTS)
UNITED SERVICES INTERMEDIATE TREASURY FUND-A MUTUAL FUND DESIGNED
TO PROVIDE A HIGH CURRENT RETURN AND PRESERVATION OF CAPITAL BY
INVESTING IN UNITED STATES TREASURY SECURITIES.
PROSPECTUS
NOVEMBER 1, 1995
This prospectus presents information that a prospective investor should
know before investing in the United Services Intermediate Treasury Fund (the
"Fund"), a no-load mutual fund of United Services Funds (the "Trust"). Read
and retain this prospectus for future reference.
A Statement of Additional Information dated November 1, 1995, has been
filed with the Securities and Exchange Commission and is incorporated herein
by reference. This Statement is available free from United Services Funds upon
written request at the address set forth above or by calling 1-800-873-8637.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DIS-
APPROVED BY THE SECURITIES AND EXCHANGE COM-
MISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COM-
MISSION OR ANY STATE SECURITIES COMMIS-
SION 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................. 4
INVESTMENT OBJECTIVES AND
CONSIDERATIONS....................... 6
HOW TO PURCHASE SHARES............... 8
HOW TO EXCHANGE SHARES............... 11
HOW TO REDEEM SHARES................. 12
HOW SHARES ARE VALUED................ 17
DIVIDENDS AND TAXES.................. 17
THE TRUST............................ 19
MANAGEMENT OF THE FUND............... 19
PERFORMANCE INFORMATION.............. 21
SUMMARY OF FEES AND EXPENSES
The following summary, which is based on the Advisor's voluntary
agreement to cap expenses at 0.40% until June 30, 1996 or until such later
date as the Advisor determines, is provided to assist you in understanding the
various costs and expenses a shareholder in the Fund could bear directly and
indirectly.
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load............................................... None
Redemption Fee................................................... None
Administrative Exchange Fee...................................... $ 5
Account Closing Fee (does not apply to exchanges)................ $10
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET
ASSETS)(1)
Management Fees (net of waivers and
reimbursements)............................................... 0.00%(2)
12b-1 Fees....................................................... None
Other Expenses, including Transfer Agency and Accounting Services
Fees.......................................................... 0.40%
Total Fund Operating Expenses (net of waivers and
reimbursements)............................................... 0.40%(2)
Except for active ABC Investment PlanT, UGMA/UTMA and retirement
accounts, if an account balance falls, for any reason other than market
fluctuations, below $1,000 at any time during a month, that account will be
subject to a small account charge of $5 for that month. See "Small Accounts"
on page 15.
A Shareholder who requests delivery of redemption proceeds by wire will
be subject to a $10 charge. International wires will be charged more.
2
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HYPOTHETICAL EXAMPLE OF EFFECT OF FUND EXPENSES:
You would pay the following expenses on a $1,000 investment, assuming 5%
annual return:
1 year............................... $ 14
3 years.............................. $ 63
5 years.............................. $ 114
10 years............................. $ 254
Included in these estimates is the account closing fee of $10 for each period.
This 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 this illustration implies. The
examples should not be considered a representation of past or future expenses.
Actual expenses may be more or less than those shown.
- ------------------------------------------------------------------------------
(1) Annual Fund Operating Expenses are based on the Fund's historical
expenses. Management fees are paid to United Services Advisors, Inc. (the
"Advisor") for managing its investments and business affairs. The Fund incurs
other expenses for maintaining shareholder records, furnishing shareholder
statements and reports, and for other services. Transfer agency and accounting
services fees are paid to United Shareholder Services, Inc. ("USSI" or the
"Transfer Agent"), a subsidiary of the Advisor, and are not charged directly
to individual shareholder accounts. The Transfer Agent charges the Fund $23.00
per shareholder account per year. The account closing fee and small account
charge will be paid by the shareholder directly to the Transfer Agent which
will, in turn, reduce its charges to the Fund by a like amount. Please refer
to the section entitled "Management of the Fund" on page 19 for further
information.
(2) The Advisor has guaranteed that Total Fund Operating Expenses of the Fund
(as a percentage of net assets) will not exceed 0.40% on an annualized basis
through June 30, 1996 or until such later date as the Advisor determines.
Based on actual operating expenses of the Fund for the year ended June 30,
1995, Management Fees, Other Expenses, Transfer Agency Fees, Accounting
Service Fees and Total Operating Expenses would have been 0.50%, 0.94%, 0.22%,
0.59% and 2.25%, respectively, in the absence of fee waivers and expense
reimbursements by the Advisor.
3
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FINANCIAL HIGHLIGHTS
UNITED SERVICES INTERMEDIATE TREASURY
The following per share data and ratios for a share of beneficial
interest outstanding throughout the period ended June 30, 1992 and the three
years ended June 30, 1995 have been audited by Price Waterhouse LLP, the
Fund's Independent Accountants. The related financial statements and the
report of Independent Accountants are included in the Fund's 1995 Annual
Report to Shareholders and are incorporated by reference into the Statement of
Additional Information ("SAI"). In addition to the data set forth below,
further information about the performance of the Fund is contained in the
Annual Report to Shareholders and SAI which may be obtained without charge.
Selected data for a capital share outstanding throughout each year is as
follows:
YEAR ENDED JUNE 30,
------------------------------ PERIOD
1995 1994 1993 ENDED(A)
--------- -------- --------- --------
Per Share Operating Performance:
Net asset value, beginning of
period............................. $ 10.16 11.21 10.26 $10.00
--------- -------- --------- --------
Net investment income(c)........ .66 .64 .60 .05
Net realized and unrealized gain
(loss) on investments(d)...... .27 (.91) .90 .26
--------- -------- --------- --------
Total from investment
operations.................... .93 (.27) 1.50 .31
--------- -------- --------- --------
Less dividends and
distributions:
Dividends from net investment
income..................... (.62) (.64) (.49) (.05)
Distributions in excess of net
investment income(e)....... -- (.12) (.02) --
Distributions from net
realized gain.............. -- -- (.04) --
Tax return of capital
distributions(e)........... -- (.02) -- --
--------- -------- --------- --------
Total dividends and
distributions................. (.62) (.78) (.55) (.05)
--------- -------- --------- --------
Net asset value, end of
period........................ $ 10.47 10.16 11.21 $10.26
========= ======== ========= ========
Total Investment Return(f)...... 9.62% (2.68) 14.96 22.94
Ratios/Supplemental Data:
Net assets, end of period (in
thousands).................... $ 4,580 4,340 4,581 $1,078
Ratio of expenses to average net
assets........................ .20(g) -- .64 .66(b)
Ratio of net income to average
net assets.................... 6.49(g) 5.99 5.44 6.14(b)
Portfolio turnover rate......... 152.39% 92.50 206.56 553.92(b)
(FOOTNOTES ON FOLLOWING PAGE)
4
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(CONTINUED FROM PREVIOUS PAGE)
(a) For the period from May 8, 1992 (date of commencement of operations) to
June 30, 1992.
(b) Annualized; the ratios are not necessarily indicative of twelve months of
operation.
(c) Net of expense reimbursements.
(d) Includes the effect of capital share transactions throughout the year.
(e) Distributions in excess of net investment income and net realized gains
and tax returns of capital are presented in accordance with SOP 93-2,
Determination, Disclosure, and Financial Statement Presentation of
Income, Capital Gain, and Return of Capital Distribution by Investments
Companies which was first implemented by the Funds in fiscal 1993.
Information for prior years has not been restated.
(f) Total return does not reflect the effect of account fees.
(g) Expense ratio is net of expense reimbursement and fee waivers by the
Advisor. Had such reimbursements been made, the expense ratio subject to
the most restrictive state limitation would have been 2.25% and the net
investment income ratio would have been 4.43%.
5
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INVESTMENT OBJECTIVES AND CONSIDERATIONS
United Services Funds (the "Trust") is an open-end management investment
company managed by United Services Advisors, Inc. (the "Advisor"). United
Services Intermediate Treasury Fund (the "Fund") is a sub-trust or series of
the Trust.
The Fund's investment objective is to seek high current income and
preservation of capital by investing in United States Treasury securities. The
Fund will invest 100% of its portfolio in United States Treasury securities
and will invest at least 65% of its portfolio in United States Treasury
securities that have a remaining maturity from one to ten years. The weighted
average maturity of the portfolio will range between three and ten years.
The Fund's Advisor will actively manage the portfolio in an effort to
obtain high current income derived primarily from interest on Treasury
securities. The Fund will maintain a flexible policy of investing in
securities of different maturities, and the Fund's weighted average maturity
will change in response to actual and/or perceived changes in interest rates.
United States Treasury securities differ only in their interest rates and
maturities at time of issuance. Maturities upon issuance, for example, are:
United States Treasury bills, one year or less; United States Treasury notes,
one to ten years; and United States Treasury bonds, generally greater than ten
years.
United States Treasury securities are, in the Advisor's opinion, the
safest securities in the world and are backed by the "full faith and credit"
pledge of the United States Treasury. Of course, like any other debt
securities, the market value of United States Treasury securities is subject
to fluctuation when interest rates change. Generally, as prevailing interest
rates decline the value of such securities will increase, and as prevailing
interest rates increase, the value of such securities will decline. Further,
securities in which the Fund invests may not earn as high a level of current
income as longer term or lower quality securities which generally have less
liquidity, greater market risk, and more fluctuation in market value.
STATE TAXATION
Under Federal law, income derived from obligations issued by the United
States Government is exempt from state income tax. All states that tax
personal income permit mutual funds to pass through this tax exemption to
shareholders provided applicable diversification/threshold limits and
reporting requirements are satisfied. To maximize the tax-effective yield for
shareholders, the Fund will invest only in obligations that qualify for the
exemption from taxation.
6
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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 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 mark-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.
SPECIAL LIMITATIONS
The investment objective of the Fund is not a fundamental policy and may
be changed by the Board of Trustees without shareholder approval, provided
that the change is permitted without shareholder approval under the laws of
all states in which the Fund's shares are offered. If there is a change in
investment objective, shareholders should consider whether the Fund remains an
appropriate investment in light of their then current financial position and
needs.
The following policies of the Fund are fundamental and may not be changed
by the Board of Trustees without shareholder approval: (1) the Fund may borrow
up to 33 1/3% of the total assets of that Fund as a temporary measure (for
extraordinary purposes) although the Fund may not purchase additional
securities during such time as its borrowings exceeds 5% of total assets; (2)
the Fund may lend portfolio securities with an aggregate market value of not
more than one-third of its total net assets; and (3) with respect to 75% of
its total assets, the Fund may invest up to 5% of the value of its total
assets in the securities of any one issuer (except such limitation does not
apply to obligations issued or guaranteed by the United States Government or
its agencies or instrumentalities).
The Fund may not invest more than 10% of its total net assets in illiquid
securities, including securities that are not readily marketable.
In the event of a major disruption in the currency or money markets,
which in the Advisor's opinion might seriously adversely affect the Fund's
assets or share price, the Advisor may place some or all of the Fund's assets
in repurchase agreements secured by United States Treasury securities and/or
cash. In such event the Fund's custodian always has possession of securities
serving as collateral or has evidence of book entry receipt of such
7
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securities. In a repurchase agreement, a 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 Fund repurchase agreements
must be collateralized by United States Treasury securities, the market values
of which equal or exceed 102% of the principal amount of the repurchase
obligation. If an institution enters into 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 domestic broker-dealers, banks and other financial
institutions which the Board of Trustees considers creditworthy.
HOW TO PURCHASE SHARES
The minimum initial investment is $1,000. The minimum subsequent
investment is $50. The minimum initial investment for persons enrolled in an
ABC Investment PlanT is $100 and the minimum subsequent investment pursuant to
such a plan is $30 per month per account. There is no minimum purchase for
retirement plan accounts administered by the Advisor or its agents and a
reduced $50 minimum on initial purchases for custodial accounts for minors.
YOU MAY INVEST IN THE FOLLOWING WAYS:
BY MAIL
Send your application and check or money order, made payable to the 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. 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 for money market funds or any retirement account
8
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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 United Services
Funds by wiring funds. To do so, call United Services Funds at
1-800-US-FUNDS (1-800-873-8637) for a confirmation number and wiring
instructions.
BY ABC INVESTMENT PLANT
Once your account is open, you may make investments automatically by
completing the ABC Investment PlanT (Automatically Building Capital Investment
Plan) form authorizing United Services Funds to draw on your bank account
regularly for as little as $30 a month beginning within thirty (30) days after
the account is opened. You should 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 at any time by letter received by United Services Funds
at least five business days before the change is to become effective.
ADDITIONAL INFORMATION ABOUT PURCHASES
All purchases of shares are subject to acceptance by the Trust and are
not binding until accepted. United Services Funds reserves the right to reject
any application or investment. Orders become effective as of 4:00 p.m. Eastern
time, Monday through Friday, exclusive of business holidays. In the event that
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 your telephone order to purchase shares is cancelled due to nonpayment
(whether or not your check has been processed by the Fund), you will be
responsible for any loss incurred by the Trust by reason of such cancellation.
If checks are 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 cancelling the purchase.
To recover any such loss or charge, the Trust reserves the right, without
further notice, to redeem shares of any fund already owned by any
9
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purchaser whose order is canceled, for whichever reason, and such a purchaser
may be prohibited from placing further orders unless investments are
accompanied by full payment by wire or cashier's check.
United Services 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.
Investments paid for by checks drawn on foreign banks may be deferred
until such checks have cleared the normal collection process. In such
instances, any amount charged to the Trust 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 portion of the dividends, capital gains 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. In order to avoid this withholding requirement, you must certify on
your application, or on separate W-9 Form supplied by the Transfer Agent, that
your taxpayer identification number is correct and that you are not currently
subject to backup withholding or you are exempt from backup withholding. For
individuals, your taxpayer identification number is your social security
number.
Instructions to exchange or transfer shares held in established accounts
will be refused until the certification has been provided. In addition, the
Fund assesses a $50 administrative fee if the taxpayer identification number
is not provided by year end.
CERTIFICATES
When you open your account, United Services Funds will send you a
confirmation statement which will be your evidence that you have opened an
account with United Services 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. At your written request, United Services
Funds will issue negotiable stock certificates. Unless your shares are
purchased with wired funds, a certificate will not be issued until 15 days
have elapsed from the time of purchase, or United Services Funds has
satisfactory proof of payment, such as a copy of your cancelled check.
Negotiable certificates will not be issued for fewer than 100 shares.
10
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HOW TO EXCHANGE SHARES
You have the privilege of exchanging into any of the other United
Services Funds or affiliated funds which are registered in your state. An
exchange involves the simultaneous redemption (sale) of shares of one fund and
purchase of shares of another fund at the respective closing net asset value
and is a taxable transaction.
BY TELEPHONE
You will automatically have the privilege to direct United Services 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, 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 either party does not employ reasonable procedures, it
may be liable for losses due to unauthorized or fraudulent transactions.
BY MAIL
You may direct United Services Funds in writing to exchange your shares
between identically registered accounts. The request must be signed exactly as
the name appears in the registration. (Before writing, read "Additional
Information About Exchanges.")
ADDITIONAL INFORMATION ABOUT EXCHANGES
(1) There is a $5 charge, which is paid to United Shareholder Services,
Inc. (the "Transfer Agent" or "USSI"), for each exchange transaction out of
any fund account. Retirement accounts administered by the Advisor or its
agents are charged $5 for each exchange in excess of three per quarter. The
exchange fee is charged to cover administrative costs associated with handling
these exchanges.
(2) Like any other redemption, the Fund reserves the right to hold
exchange proceeds for up to seven days. In such event, the purchase of the
exchange transaction will also be delayed. You will be notified immediately if
the Fund is exercising said right.
(3) If the shares you wish to exchange are represented by a negotiable
stock certificate, the certificate must be returned before the exchange can be
effected.
11
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(4) Shares may not be exchanged unless you have furnished United Services
Funds 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," page 10.)
(5) Exchanges out of United Services Funds' equity funds of shares held
less than 14 days are subject to a short-term trading fee described on page
14.
(6) The exchange privilege may be terminated at any time. The exchange
fee and other terms of the privilege are subject to change.
(7) The Fund will not permit shareholders to exchange into any fund
unless that fund is registered in the state of that shareholder's residence.
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 must be received prior
to 4:00 p.m. Eastern time, Monday through Friday, to be effective that day.
BY MAIL
A written request for redemption must be in "proper order," which
requires delivery of the following to the Transfer Agent:
(1) a written request for redemption signed by each registered owner
exactly as the shares are registered, the account number and the number of
shares or the dollar amount to be redeemed.
(2) negotiable stock certificates for any shares to be redeemed for which
certificates have been issued.
(3) signature guarantees when required.
(4) such additional documents as are customarily required to evidence the
authority of persons effecting redemptions on behalf of corporations,
executors, trustees and other fiduciaries. Redemptions will not become
effective until all documents in the form required have been received by the
Transfer Agent. (Before writing, read "Additional Information About
Redemptions.")
12
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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 Trust at
1-800-US-FUNDS (1-800-873-8637).
Telephone redemptions are available for accounts with a balance of at
least $50,000. To establish telephone redemption privileges, call 1-800-873-
8637 for information.
SIGNATURE GUARANTEE
Redemptions in excess of $15,000 currently require a signature guarantee.
A signature guarantee is required for all redemptions, regardless of the
amount involved, when the proceeds are to be paid to someone other than the
registered owner of the shares to be redeemed or if proceeds are to be mailed
to an address other than the registered address of record. When a signature
guarantee is required, each signature must be guaranteed by: (a) a federally
insured bank or thrift institution; (b) a broker or dealer (general
securities, municipal, or government) or clearing agency registered with the
U.S. Securities and Exchange Commission that maintains net capital of at least
$100,000; or (c) a national securities exchange or national securities
association. The guarantee must: (i) include the statement "Signature(s)
Guaranteed"; (ii) be signed in the name of the guarantor by an authorized
person, the person's printed name and position with guarantor; and (iii)
include a recital that the guarantor is federally insured, maintains the
requisite net capital or is a national securities exchange or association.
Shareholders living abroad may acknowledge their signatures before a U.S.
consular officer. Military personnel may acknowledge their signatures before
officers authorized to take acknowledgments (e.g., legal officers and
adjutants).
REDEMPTION PROCEEDS MAY BE SENT TO YOU:
BY MAIL
If your redemption check is mailed, it is usually mailed within 48 hours
of receipt of the redemption request; 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. 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.
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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 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 wire charges will be higer.
ADDITIONAL INFORMATION ABOUT REDEMPTIONS
The redemption price may be more or less than your cost, depending on the
net asset value of the Fund's portfolio next determined after your request is
received.
A request to redeem shares in an IRA or similar retirement account must
be accompanied by an IRS Form W4-P and a reason for withdrawal as specified by
the IRS. Proceeds from the redemption of shares from a retirement account may
be subject to withholding tax.
The 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 so redeem, or to so 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.
Excessive short-term trading has an adverse impact on effective portfolio
management as well as upon Fund expenses. The Trust has reserved the right to
refuse investments from shareholders who engage in short-term trading.
SHORT-TERM TRADING FEE
A short-term trading fee of ten basis points or 0.10% of the value of
shares redeemed or exchanged will be assessed to shareholders who redeem or
exchange shares of certain United Services Funds' equity funds (U.S. Gold
Shares Fund, U.S. World Gold Fund, U.S. Global Resources Fund, U.S. Income
Fund, U.S. All American Equity Fund, and U.S. Real Estate Fund) held less than
fourteen (14) calendar days. This fee is payable directly to the Fund for the
purpose of offsetting costs associated with short-term trading. A fee of 1% of
the value of shares redeemed or exchanged will be assessed to shareholders who
redeem or exchange shares of the China Region Opportunity Fund held less than
180 calendar days.
14
<PAGE>
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 directed to them by mail or wire. The
charge is payable directly to the Fund's Transfer Agent which, in turn, will
reduce its charge to the Fund by an equal amount. The account closing fee does
not apply to exchanges between the United Services Funds' funds nor does it
apply to accounts which are involuntarily redeemed.
The purpose of the charge is to allocate to redeeming shareholders a more
equitable portion of the Transfer Agent's fee which is based upon the number
of shareholder accounts. When a shareholder closes an account, the Fund must
continue to carry the account on its books, maintain the account records and
complete year-end tax reporting. With no assets, the account cannot pay its
own expenses and imposes an unfair burden on remaining shareholders.
SMALL ACCOUNTS
Fund accounts which fall, for any reason other than market fluctuations,
below $1,000 at any time during a month will be subject to a small account
charge of $5 for that month. 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 cost of maintaining
shareholder accounts more equally among shareholders.
Active ABC Investment PlanT, UGMA/UTMA and retirement plan accounts
administered by the Advisor or its agents or affiliates will not be subject to
the $5 monthly small account charge.
In order to reduce expenses of the Fund, the Trust may redeem all of the
shares in any shareholder account, other than an active ABC Investment PlanT,
IRA or other tax-deferred retirement plan, if, for a period of more than three
months, the account has a net asset value of $500 or less and the reduction in
value is not due to market action. 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 ninety (90) days of the notice. No
account closing fee will be charged to investors whose accounts are closed
under this redemption provision.
15
<PAGE>
CONFIRMATION STATEMENTS
Shareholders normally will receive a confirmation statement after each
transaction showing activity in the account. However, when account activity is
produced solely from dividend reinvestment, confirmation statements will be
mailed only on a monthly basis.
OTHER SERVICES
The Trust has available a number of plans and services to meet the
special needs of certain investors. Plans available include:
(1) payroll deduction plans, including military allotments;
(2) custodial accounts for minors;
(3) a flexible, systematic withdrawal plan; and
(4) various retirement plans such as IRA, SEP/IRA, 403(b)(7), 401(k) and
employer-adopted defined benefit and defined contribution plans.
There is an annual charge for each retirement plan fund account with
respect to which Security Trust & Financial Company ("ST&FC"), a wholly-owned
subsidiary of the Advisor, acts as custodian (for example, $10 for IRAs and
$15 for SEP/IRAs, 403(b)(7)s, profit sharing and other such accounts). If this
administrative charge is not paid separately prior to the last business day of
a calendar year or prior to a total redemption, it will be deducted from the
shareholder's account.
Application forms and brochures describing these plans and services can
be obtained from the Transfer Agent 1-800-US-FUNDS (1-800-873-8637).
SHAREHOLDER SERVICES
United Shareholder Services, Inc. ("USSI"), a wholly-owned subsidiary of
the Advisor, acts as transfer and dividend-paying agent for all fund accounts.
Simply write or call 1-800-US-FUNDS (1-800-873-8637) for prompt service on any
questions about your account.
24 HOUR CURRENT INFORMATION
Shareholders can also access 24 hours a day current information on
yields, prices, latest dividends, account balances, and deposits and
redemptions for the previous and current months. Just call 1-800-US-FUNDS and
press the appropraite codes into your touch-tone phone.
16
<PAGE>
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.
The net asset value per share is calculated by United Shareholder Services,
Inc. Net asset value per share is determined Monday through Friday, and orders
become effective as of 4:00 p.m. Eastern time, exclusive of business holidays
on which the NYSE is closed, by dividing the aggregate fair value of the
Fund's assets, less liabilities, by the total number of shares 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.
The value of the Fund's assets is determined in accordance with certain
procedures and policies established by the Board of Trustees. All securities
(except securities with less than 60 days to maturity and repurchase
agreements) held by the Fund are valued based on an independent pricing
service, and in the event such service is not available, at the mean between
the most recent bid and ask prices as obtained from one or more dealers that
make markets in the securities. Debt securities with maturities of 60 days or
less at the time of purchase ordinarily 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. If the Advisor determines that amortized cost does
not reflect the fair value of a security, the Board may select an alternative
method of valuing the security.
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 that are distributed to shareholders.
All income dividends and capital gain distributions are normally
reinvested, without charge, in additional full and fractional shares of the
Fund. Alternatively, investors may choose: (1) automatic reinvestment of
capital gain distributions in Fund shares and payment of income dividends in
cash; (2) payment of capital gain distributions in cash and automatic
reinvestment of dividends in Fund shares; or (3) all income dividend and
capital gain distributions paid in cash. The share price of the reinvestment
will be the net asset value of the Fund shares computed at the close of
business on the date the dividend or distribution is paid. Dividend checks
returned to the Fund as being undeliverable and dividend checks not cashed
after 180 days will automatically be reinvested at the price of the Fund on
17
<PAGE>
the day returned or on the 181st day, and the distribution option will be
changed to "reinvest."
At the time of purchase the share price of a Fund may reflect
undistributed income, capital gains or unrealized appreciation of securities.
Any dividend or capital gains 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 capital gain distributions are fully taxable.
The Fund generally pays dividends monthly and distributes capital gains,
if any, annually in December.
The Fund is subject to a non-deductible 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. None of the dividends paid by the Fund is expected to 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, and regardless
of the length of time the investor has held his shares.
Under Federal law, the income derived from obligations issued by the
United States Government and certain of its agencies and instrumentalities is
exempt from state income taxes. All states that tax personal income permit
mutual funds to pass through this tax exemption to shareholders provided
applicable diversification/threshold limits and reporting requirements are
satisfied.
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.
The foregoing discussion relates only to generally applicable Federal
income tax provisions in effect as of the date of this prospectus. Therefore,
shareholders should consult their tax advisers about the status of
distributions from the Fund in their own states and localities. To assist in
this regard, each January the Fund will provide shareholders with a breakdown
of Fund assets and income from the year.
18
<PAGE>
THE TRUST
United Services Funds is an open-end management investment company,
consisting of numerous separate, diversified portfolios, each of which has its
own investment objectives and policies. The portfolios are designed to serve a
wide range of investor needs.
The Trust was formed July 31, 1984 as a "business trust" under the laws
of the Commonwealth of Massachusetts. It is a "series" company which is
authorized to issue series of shares without par value, each series
representing interests in a separate portfolio, or divide the shares of any
series into classes. Shares of numerous series have been authorized. The Board
of Trustees of the Trust has the power to create additional series, or divide
existing series into two or more classes, at any time, without a vote of
shareholders of the Trust.
Under the Trust's First Amended and Restated Master Trust Agreement (the
"Master Trust Agreement"), no annual or regular meeting of shareholders is
required, although the Trustees may authorize special meetings from time to
time. Under the terms of the Master Trust Agreement, the Trustees will be a
self-perpetuating body and will continue their positions until they resign,
die or are removed by a written instrument signed by at least two-thirds of
the Trustees, by vote of shareholders holding not less than two-thirds of the
shares then outstanding of the Trust cast at any meeting called for that
purpose, or by a written declaration signed by shareholders holding not less
than two-thirds of the shares then outstanding.
On any matter submitted to shareholders, shares of each portfolio entitle
their holder to one vote per share, irrespective of the relative net asset
values of each portfolio's shares. On matters affecting an individual
portfolio, a separate vote of shareholders of the portfolio is required. Each
portfolio's shares are fully paid and non-assessable by the Trust, have no
preemptive or subscription rights, and are fully transferable, with no
conversion rights.
MANAGEMENT OF THE FUND
TRUSTEES
The business affairs of the Fund are managed by the Trust's Board of
Trustees. The Trustees establish policies, as well as review and approve
contracts and their continuance. The Trustees also elect the officers and
select the Trustees to serve as executive and audit committee members.
THE INVESTMENT ADVISOR
United Services Advisors, Inc. (the "Advisor"), 7900 Callaghan Road, San
Antonio, Texas 78229, under an investment advisory agreement
19
<PAGE>
with the Trust dated October 26, 1989, furnishes investment advice and is
responsible for overall management of the Trust's business affairs. Frank E.
Holmes is Chief Executive Officer and Chairman of the Board of Directors of
the Advisor, as well as President and a 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 provides to the Trust, and to each of the portfolios within
the Trust, management and investment advisory services. The Advisor furnishes
an investment program for the Fund, determines, subject to the overall
supervision and review of the Board of Trustees of the Trust, what investments
should be purchased, sold and held, and makes changes on behalf of the Trust
in the investments of the Fund. The Advisor utilizes a team approach to manage
the assets of the Fund. The team meets regularly to review portfolio holdings
and to discuss purhcase and sale activity. The team adjusts holdings in the
Fund's portfolio as it deems appropriate in pursuit of the Fund's investment
objectives.
The Advisor provides the Trust with office space, facilities and business
equipment and provides the services of executive and clerical personnel for
administering the affairs of the Trust. The Advisor pays the expense of
printing and mailing prospectuses and sales materials used for promotional
purposes.
THE ADVISOR HAS GUARANTEED THAT TOTAL FUND OPERATING EXPENSES (AS A
PERCENTAGE OF NET ASSETS) WILL NOT EXCEED 0.40% ON AN ANNUALIZED BASIS THROUGH
JUNE 30, 1996 OR UNTIL SUCH LATER DATE AS THE ADVISOR DETERMINES.
The Advisory Agreement with the Trust provides for the Fund to pay the
Advisor an annual management fee equal to 0.50% of the Fund's average net
assets ( 1/12 of 0.50% monthly). The fee paid to the Advisor for managing the
Fund for the fiscal year ended June 30, 1995 was 0.00% of average net assets
due to Advisor waivers.
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 institution's client Fund shares.
The Transfer Agency Agreement with the Trust provides for the Fund to pay
USSI 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 Trust shares through broker-dealers which provide such services and
maintain an omnibus account with the Transfer Agent, each
20
<PAGE>
Fund shall pay to the Transfer Agent a monthly fee equal to one-twelfth
( 1/12) of 12.5 basis points (.00125) of the value of the shares of the Funds
held in accounts at the broker-dealer, which payment shall not exceed $1.67
multiplied by the average daily number of accounts holding Trust shares at the
broker-dealer. These fees cover the usual transfer agency functions. In
addition, the Fund bears certain other transfer agent expenses such as the
costs of record retention and postage, plus the telephone and line charges
(including the toll-free 800 service) used by shareholders to contact the
Transfer Agent. For the fiscal period ended, June 30, 1995, the Fund paid a
total of $0.00 for transfer agency, lockbox and printing services. Transfer
Agent fees and expenses, including reimbursed expenses, are reduced by the
amount of small account charges and account closing fees the Transfer Agent is
paid.
USSI performs bookkeeping and accounting services, and determines the
daily net asset value for the Fund. Bookkeeping and accounting services are
provided to the Fund for an asset based fee of 0.04% of the first $200 million
average net assets, 0.03% of the next $200 million average net assets, 0.02%
of the next $350 million average net assets and 0.01% of average net assets in
excess of $750 million -- subject to an annual minimum fee of $26,000. USSI
received fees of $0.00 for the Intermediate Treasury Fund for the year ended
June 30, 1995.
Additionally, the Advisor is reimbursed certain costs for in-house legal
services pertaining to the Fund.
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 shareholder servicing agents,
custodian fees, legal and auditors' expenses, brokerage commissions for
portfolio transactions, the advisory fee, extraordinary expenses, expenses of
shareholder 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, among others.
PERFORMANCE INFORMATION
From time to time, in advertisements or in reports to shareholders or
prospective shareholders, the Fund may compare its performance, either in
terms of its yield, total return or its yield and total return, to that of
other mutual funds with similar investment objectives and to stock or other
indices. For example, the Fund may compare its performance to rankings
prepared by Lipper Analytical Services, Inc. ("Lipper"), a widely recognized
independent service which monitors the performance of mutual funds; to
Morningstar's Mutual Fund Values; to Moody's Bond Survey Bond Index; or to the
Consumer Price Index. Performance information and
21
<PAGE>
rankings as reported in Changing Times, Business Week, Institutional Investor,
the Wall Street Journal, Mutual Fund Forecaster, No-Load Investor, Money
Magazine, Forbes, Fortune, Investor's Daily and Barron's magazine may also be
used in comparing performance of the Fund. Performance comparisons shall not
be considered as representative of the future performance of the Fund.
The Fund's average annual total return is computed by determining the
average annual compounded rate of return for a specified period that, if
applied to a hypothetical $1,000 initial investment, would produce the
redeemable value of that investment at the end of the period, assuming
reinvestment of all dividends and distributions and with recognition of all
recurring charges. The Fund may also utilize a total return for differing
periods computed in the same manner but without annualizing the total return.
The Fund's "yield" refers to the income generated by an investment in the
Fund over a 30-day (or one month) period (which period will be stated in the
advertisement). Yield is computed by dividing the net investment income per
share earned during the most recent calendar month by the maximum offering
price per share on the last day of such month. This income is then
"annualized". That is, the amount of income generated by the investment during
that 30-day period is assumed to be generated each month over a 12-month
period and is shown as a percentage of the investment.
For purposes of the yield calculation, interest income is computed based
on the yield to maturity of each debt obligation and dividend income is
computed based upon the stated dividend rate of each security in the Fund's
portfolio and all recurring charges are recognized.
The Fund may also utilize tax equivalent yields computed in the same
manner with adjustments for a stated income tax rate.
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.
22
<PAGE>
UNITED SERVICES FUNDS
SHARES OF THE FUND ARE SOLD AT NET ASSET VALUE
WITHOUT SALES COMMISSIONS,
REDEMPTION FEES OR 12B-1 FEES
United Services Intermediate Treasury Fund
INVESTMENT ADVISOR
United Services Advisors, Inc.
7900 Callaghan Road
Mailing Address: P.O. Box 29467
San Antonio, Texas 78229
TRANSFER AGENT
United Shareholder Services, Inc.
P.O. Box 781234
San Antonio, Texas 78278-1234
CUSTODIAN
Bankers Trust Company
16 Wall Street
New York, New York 10005
LEGAL COUNSEL
Goodwin, Procter & Hoar
Exchange Place
Boston, MA 02109
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
One Riverwalk Place, Ste. 900
San Antonio, TX 78205
100% No Load
Be Sure to Retain This Prospectus;
It Contains Valuable Information.
================================================================================
IMPORTANT ADDITIONAL INFORMATION FOR SHAREHOLDERS OF
UNITED SERVICES FUNDS
U.S. TAX FREE FUND
UNITED SERVICES NEAR-TERM TAX FREE FUND
JULY 29, 1996 SUPPLEMENT TO
PROSPECTUS DATED NOVEMBER 1, 1995
SUMMARY OF FEES AND EXPENSES--P. 2, P. 3, P. 23
The Advisor has guaranteed that Total Fund Operating Expenses of the Tax Free
Fund and the Near-Term Tax Free Fund (as a percentage of net assets) will not
exceed 0.40% for each fund on an annualized basis through June 30, 1997 or until
such later date as the Advisor determines.
HOW TO PURCHASE SHARES--P. 13
All purchases of shares are subject to acceptance by the Trust and are not
binding until accepted. United Services Funds reserves the right to reject any
application or investment. Orders received by the Fund's transfer agent or a
sub-agent before 4:00 p.m., Eastern time, Monday through Friday exclusive of
business holidays, and accepted by the Fund will receive the share price next
computed after receipt of the order.
HOW TO REDEEM SHARES--P. 16
You may redeem any or all of your shares at will. Redemption requests received
in proper order by the Fund's transfer agent or a sub-agent 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.
HOW TO SPEED REDEMPTIONS--P.16
To redeem your Fund shares by telephone, you may call the Fund and direct an
exchange out of the Fund into an identically registered account in a United
Services treasury money market fund ($1,000 minimum initial investment). You may
then write a check against your treasury money market fund account. See "How to
Exchange Shares" in the prospectus for a description of exchanges, including the
$5 exchange fee. Call 1-800-426-6635 for more information concerning telephone
redemption and a treasury money market fund prospectus.
MANAGEMENT OF THE FUNDS, THE INVESTMENT ADVISOR--P. 23
The Transfer Agency Agreement with the Trust provides for each Fund to pay USSI
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 Trust
shares through broker-dealers, banks, trust companies and similar institutions
which provide such services and maintain an omnibus account with the Transfer
Agent, each Fund shall pay to the Transfer Agent a monthly fee equal to
one-twelfth (1/12) of 12.5 basis points (.00125) of the value of the shares of
the Funds held in accounts at the institutions, which payment shall not exceed
$1.92 multiplied by the average daily number of accounts holding Trust share at
the institution.
INVESTMENT OBJECTIVES AND CONSIDERATIONS--P. 1
Each investor is responsible for determining whether or not an investment in the
Fund is appropriate for his or her needs.
................................................................................
UNITED SERVICES FUNDS
U.S. TAX FREE FUND
UNITED SERVICES NEAR-TERM TAX FREE FUND
P.O. BOX 781234
SAN ANTONIO, TEXAS 78278-1234
1-800-873-8637 (1-800-US-FUNDS)
(INFORMATION, SHAREHOLDER SERVICES AND REQUESTS)
PROSPECTUS
NOVEMBER 1, 1995
This prospectus presents information that a prospective investor should
know about the U.S. Tax Free Fund (the "Tax Free Fund") and United Services
Near-Term Tax Free Fund (the "Near-Term Tax Free Fund"), two no-load mutual
funds (the "Fund(s)") of United Services Funds (the "Trust"). The investment
objectives of the Funds are to provide a high level of current income that is
exempt from Federal income taxation and to preserve capital. SHARES OF THE TRUST
ARE NOT INSURED, GUARANTEED, SPONSORED, RECOMMENDED OR APPROVED BY THE UNITED
STATES OR ANY AGENCY OR OFFICER THEREOF. Read and retain this prospectus for
future reference.
A Statement of Additional Information dated November 1, 1995 has been filed
with the Securities and Exchange Commission and is incorporated herein by
reference. This Statement is available free from United Services Funds upon
written request at the address set forth above or by calling 1-800-873-8637.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DIS-
APPROVED BY THE SECURITIES AND EXCHANGE COM-
MISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COM-
MISSION OR ANY STATE SECURITIES COMMIS-
SION 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................. 5
Investment Objectives and
Considerations
Tax Free Fund................... 8
Near_Term Tax Free Fund......... 8
Common Practices................ 8
Municipal Securities................. 9
Special Considerations............... 11
How to Purchase Shares............... 12
How to Exchange Shares............... 15
How to Redeem Shares................. 16
How Shares Are Valued................ 20
Dividends and Taxes.................. 20
The Trust............................ 22
Management of the Funds.............. 22
Performance Information.............. 25
SUMMARY OF FEES AND EXPENSES
The following summary, which is based on the Advisor's voluntary agreement
to cap expenses at 0.40% for the U.S. Tax Free Fund and at 0.70% for the United
Services Near-Term Tax Free Fund until June 30, 1996 and until such later date
as the Advisor determines, is provided to assist you in understanding the
various costs and expenses a shareholder in each respective Fund could bear
directly and indirectly.
TAX NEAR-TERM
FREE TAX FREE
FUND FUND
---- ---------
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load.............. None None
Redemption Fee.................. None None
Administrative Exchange Fee..... $ 5 $ 5
Account Closing Fee (does not
apply to exchanges).......... $10 $10
ANNUAL FUND OPERATING EXPENSES (AS A
PERCENTAGE OF AVERAGE NET
ASSETS)(1)
Management Fees (net of waivers
and reimbursements).......... 0.00%(2) 0.00%(3)
12b-1 Fees...................... None None
Other Expenses, including
Transfer Agency and
Accounting Services Fees..... 0.40%(2) 0.70%(3)
Total Fund Operating Expenses
(net of waivers and
reimbursements).............. 0.40%(2) 0.70%(3)
2
<PAGE>
Except for active ABC Investment Plan,T UGMA/UTMA and retirement accounts,
if an account balance falls, for any reason other than market fluctuations,
below $1,000 at any time during a month, that account will be subject to a small
account charge of $5 for that month. See "Small Accounts" at page 18.
A shareholder who requests delivery of redemption proceeds by wire transfer
will be subject to a $10 charge. International wires will be charged more.
HYPOTHETICAL EXAMPLE OF EFFECT OF FUND EXPENSES
You would pay the following expenses on a $1,000 investment, assuming 5%
annual return:
TAX FREE NEAR-TERM TAX
FUND FREE FUND
-------- -------------
1 year............................... $ 14 $ 17
3 years.............................. $ 46 $ 52
5 years.............................. $ 81 $ 89
10 years............................. $179 $ 194
Included in these estimates is the account closing fee of $10 for each period.
This 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 this illustration implies. The
examples should not be considered a representation of past or future expenses.
Actual expenses may be more or less than those shown.
- ------------------------------------------------------------------------------
(1) Annual Fund Operating Expenses are based on each Fund's historical expenses.
Management fees are paid to United Services Advisors, Inc. (the "Advisor") for
managing its investments and business affairs. Each Fund incurs other expenses
for maintaining shareholder records, furnishing shareholder statements and
reports, and for other services. Transfer agency and accounting services fees
are paid to United Shareholder Services, Inc. ("USSI" or the "Transfer Agent"),
a subsidiary of the Advisor, and are not charged directly to individual
shareholder accounts. The Transfer Agent charges the Funds $23.00 per
shareholder account per year. The account closing fee and small account charge
will be paid by the shareholder directly to the Transfer Agent which will, in
turn, reduce its charges to the Funds by a like amount. Please refer to the
section entitled "Management of the Funds" on page 22 for further information.
(2) The Advisor has guaranteed that Total Fund Operating Expenses for the Tax
Free Fund (as a percentage of net assets) will not exceed 0.40% on an annualized
basis through June 30, 1996 and until such later date as the
3
<PAGE>
Advisor determines. Based on actual operating expenses of the Fund for the year
ended June 30, 1995, Management Fees, Other Expenses, Transfer Agency Fees,
Accounting Services Fees and Total Fund Operating Expenses would be 0.75%,
0.43%, 0.16%, 0.15% and 1.49%, respectively, in the absence of the fee
waiver and expense reimbursement by the Advisor.
(3) The Advisor has guaranteed that Total Fund Operating Expenses of the
Near-Term Tax Free Fund (as a percentage of average net assets) will not exceed
0.70% on an annualized basis through June 30, 1996 and until such later date as
Advisor determines. Based on actual operating expenses of the Fund for the year
ended June 30, 1995, Management Fees, Other Expenses, Transfer Agency Fees,
Accounting Services Fees and Total Fund Operating Expenses would be 0.50%,
0.71%, 0.11%, 0.30%, and 1.62%, respectively, in the absence of the fee waiver
and expense reimbursement by the Advisor.
4
<PAGE>
FINANCIAL HIGHLIGHTS
U.S. TAX FREE FUND
The following per share data and ratios for a share of beneficial interest
outstanding throughout each of the five years ended June 30, 1995 have been
audited by Price Waterhouse LLP, the Fund's Independent Accountants. The related
financial statements and the report of Independent Accountants are included in
the Fund's 1995 Annual Report to Shareholders and are incorporated by reference
into the Statement of Additional Information ("SAI"). In addition to the data
set forth below, further information about the performance of the Fund is
contained in the Annual Report to Shareholders and SAI which may be obtained
without charge.
Selected data for a capital share outstanding throughout each year is as
follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-----------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
------- ------- ------- ------ ----- ----- ------ ------ ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period........... $ 11.40 12.16 11.69 11.31 11.11 11.27 10.75 10.98 11.15 10.48
------- ------- ------- ------ ----- ----- ------ ------ ----- -----
Net investment income(c)..................... .64 .67 .66 .62 .58 .62 .69 .85 .63 .84
Net realized and unrealized gain (loss) on
investments(d).............................. .18 (.56) .47 .59 .20 (.15) .51 .02 (.02) .64
------- ------- ------- ------ ----- ----- ------ ------ ----- -----
Total from investment operations............... .82 .11 1.13 1.21 .78 .47 1.20 .87 .61 1.48
======= ======= ======= ====== ===== ===== ====== ====== ===== =====
Less dividends and distributions:
Dividends from net investment income......... -- -- -- -- -- -- -- (1.10) (.66) (.81)
_ tax exempt............................... (.62) (.59) (.63) (.62) (.58) (.57) (.64) -- -- --
_ taxable.................................. (.02) (.09) -- -- -- (0.6) (0.4) -- -- --
Distributions in excess of net investment
income(e).................................. (.03) (.06) -- -- -- -- -- -- -- --
Distributions from net realized gain......... -- (.06) (.03) (.21) -- -- -- -- (.12) --
Distributions in excess of realized
gains(e)................................... -- (.07) -- -- -- -- -- -- -- --
------- ------- ------- ------ ----- ----- ------ ------ ----- -----
Total dividends and distributions.............. (.67) (.87) (.66) (.83) (.58) (.63) (.68) (1.10) (.78) (.81)
======= ======= ======= ====== ===== ===== ====== ====== ===== =====
Net asset value, end of period................. $ 11.55 11.40 12.16 11.69 11.31 11.11 11.27 10.75 10.98 11.15
======= ======= ======= ====== ===== ===== ====== ====== ===== =====
Total Investment Return(f)..................... 7.51% 0.75 9.97% 11.02 7.19 4.31 11.48 8.69 5.21 14.87
Ratios/Supplemental Data:
Net assets, end of period (in thousands)....... $18,613 $18,656 $17,192 7,790 7,236 7,787 10,365 7,749 7,470 2,272
Ratio of expenses to average net assets........ .22%(g) -- .32%(f) 1.27% 1.93 1.61 1.23 -- (.05) .38
======= ======= ======= ====== ===== ===== ====== ====== ===== =====
Ratio of net income to average net assets...... 5.62%(g) 5.68 5.48%(f) 5.38% 5.09 5.64 6.38 7.60 6.99 8.57
======= ======= ======= ====== ===== ===== ====== ====== ===== =====
Portfolio turnover rate........................ 21.52% 50.87 93.96% 70.23% 54.49 82.34 110.45 121.21 37.23 50.74
======= ======= ======= ====== ===== ===== ====== ====== ===== =====
</TABLE>
5
FINANCIAL HIGHLIGHTS
UNITED SERVICES NEAR-TERM TAX FREE FUND
The following per share data and ratios for a share of beneficial interest
outstanding throughout the seven-month period ended June 30, 1991 and each of
the four years ended June 30, 1995 have been audited by Price Waterhouse LLP,
the Fund's Independent Accountants. The related financial statements and the
report of Independent Accountants are included in the Fund's 1995 Annual Report
to Shareholders and are incorporated by reference into the Statement of
Additional Information ("SAI"). In addition to the data set forth below, further
information about the performance of the Fund is contained in the Annual Report
to Shareholders and SAI which may be obtained without charge.
Selected data for a capital share outstanding throughout each year is as
follows:
<TABLE>
<CAPTION>
PERIOD
YEAR ENDED JUNE 30, ENDING
------------------------------------------ ------
1995 1994 1993 1992 (a)
--------- --------- --------- --------- -----
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
period............................. $ 10.39 10.74 10.42 9.88 10.00
--------- --------- --------- --------- ------
Net investment income(c)......... .45 .43 .61 .62 .27
Net realized and unrealized gain
(loss) on investments(d)...... .06 (.21) .31 .56 (.12)
--------- --------- --------- --------- -----
Total from investment operations..... .51 .22 .92 1.18 .15
--------- --------- --------- --------- -----
Less dividends and distributions:
Dividends from net investment
income:
-- tax exempt.................... (.43) (.35) (.59) (.62) (.22)
-- taxable....................... -- (.09) -- -- (.05)
Distributions in excess of net
investment income(e).......... -- (.07) -- -- --
Distributions from net realized
gain.......................... -- -- (.01) (.02) --
Distributions in excess of
realized gains(e)............. -- (.06) -- -- --
--------- --------- --------- --------- -----
Total dividends and distributions.... (.43) (.57) (.60) (.64) (.27)
--------- --------- --------- --------- -----
Net asset value, end of period....... $ 10.47 10.39 10.74 10.42 9.88
========= ========= ========= ========= =====
Total Investment Return(f)........... 5.02% 2.03 9.10 12.25 2.66
Ratios/Supplemental Data:
Net assets, end of period (in
thousands)......................... $ 7,128 9,190 1,775 1,309 592
Ratio of expenses to average net
assets............................. .20%(g) -- -- - --(b)
Ratio of net income to average net
assets............................. 4.25%(g) 4.34 5.73 6.30 6.07(b)
Portfolio turnover rate.............. 52.63% 69.13 139.56 45.13 42.09(b)
</TABLE>
(FOOTNOTES ON FOLLOWING PAGE)
6
(CONTINUED FROM PREVIOUS PAGE)
(a) For the period from December 1, 1990 (date of commencement of operations) to
June 30, 1991; (b) Annualized; the ratios are not necessarily indicative of
twelve months of operations; (c) Net of expense reimbursements; (d) Includes the
effect of capital share transactions throughout the year; (e) Distributions in
excess of net investment income and net realized gains and tax returns of
capital are presented in accordance with SOP 93-2, Determination, Disclosure,
and Financial Statement Presentation of Income, Capital Gain, and Return of
Capital Distribution by Investment Companies, which was first implemented by the
Funds in fiscal 1993. Information for prior years has not been restated; (f)
Total return does not reflect the effect of account fees; (g) Expense ratio is
net of expense reimbursements or fee waivers. Had such reimbursements not been
made, the expense ratio subject to the most restrictive state limitation would
have been 1.49% and 1.62%, and the net investment income ratio would have been
4.35% and 2.83% for the Tax Free and Near-Term Tax Free Funds, respectively.
7
<PAGE>
INVESTMENT OBJECTIVES AND CONSIDERATIONS
The investment objectives of the Tax Free Fund and the Near-Term Tax Free
Fund are to provide a high level of current income that is exempt from Federal
income taxation and to preserve capital.
TAX FREE FUND
To maintain a high level of current income, the Tax Free Fund invests in
securities with varying periods of maturity. During periods of high or
accelerating inflation and/or interest rates, the Tax Free Fund will seek to
invest in securities with relatively short maturities. During periods when
inflation and/or interest rates are level or subsiding, the Fund will generally
seek to invest in securities with relatively longer maturities as is deemed
appropriate in the opinion of the Advisor.
NEAR-TERM TAX FREE FUND
The Near-Term Tax Free Fund will maintain an average weighted portfolio
maturity of five years or less. In appropriate circumstances, the Fund may give
effect to call, put and demand features in computing the Fund's average weighted
portfolio maturity.
COMMON POLICIES
The Funds invest primarily in securities, the interest from which is exempt
from Federal income taxation -- debt obligations issued by or on behalf of
states, territories and possessions of the United States and the District of
Columbia and their political subdivisions, agencies and instrumentalities, or
multi-state agencies or authorities ("Municipal Securities").
The Funds invest only in debt securities which are rated one of the four
highest ratings by Moody's Investor's Services (Aaa, Aa, A, Baa) or by Standard
& Poor's Corporation (AAA, AA, A, BBB). Not more than 10% of a Fund's total net
assets will be invested in the fourth rated category. Investments in the fourth
category may have speculative characteristics and therefore, may involve higher
risks. Investments in the fourth rated category of bonds are generally regarded
as having an adequate capacity to pay interest and repay principal. However,
these investments may be more susceptible to adverse changes in the economy.
Municipal notes (including variable rate demand obligations) must be rated
MIG1/VMIG2 or MIG2/VMIG2 by Moody's or SP-1 or SP-2 by S&P. Tax exempt
commercial paper must be rated P-1 or P-2 by Moody's or A-1 or A-2 by S&P.
The Funds attempt to maintain a geographical diversity among the securities
in the portfolio which could reflect the varying sizes of the economies of
various geographical areas.
8
<PAGE>
Although the Funds are invested primarily in securities which are exempt
from Federal income taxation, the Funds are authorized to invest, on a temporary
basis, up to 20% of its total net assets in U.S. Treasury securities or
repurchase agreements collateralized by U.S. Government securities whose market
values equal or exceed 102% of the principal amount of the repurchase
obligation. Such investments may be made in anticipation of redemptions, pending
investment of proceeds from subscriptions for Fund shares or from sale of
portfolio securities, or because of market conditions. Interest income from such
investments may be taxable to shareholders as ordinary income under Federal
income tax laws.
More than 25% of each Fund's total assets may be invested in any sector of
the municipal securities market, such as general obligation bonds, hospital
revenue bonds, housing revenue bonds or electric power project revenue bonds. It
is possible that an economic, business or political development or other change
affecting a bond in a sector may also affect other bonds in the same sector.
Securities of the type to be included in each Fund's portfolio are
inversely affected by changes in interest rate levels. The per share net asset
value of each Fund will fluctuate with changes in the market value of these
securities.
MUNICIPAL SECURITIES
Municipal securities are generally of two principal types, "notes" and
"bonds." Municipal notes generally have maturities of one year or less and
provide for short-term capital needs. Municipal bonds normally have maturities
of more than one year, and meet longer-term needs. Municipal bonds are
classified into two principal categories -- general obligation bonds and revenue
bonds. General obligation bonds are backed by the taxing power of the issuer and
are considered the safest type of municipal bond. Revenue bonds are backed by
the revenues derived from a project or facility.
VARIABLE RATE SECURITIES
Each Fund may purchase variable and floating rate obligations from issuers
or may acquire participation interest in pools of these obligations from banks
or other financial institutions. Variable and floating rate obligations are
municipal securities whose interest rates change periodically. They normally
have a stated maturity in excess of one year, but permit the holder to demand
payment of principal and interest at any time or at specified intervals.
9
<PAGE>
WHEN-ISSUED OR FIRM COMMITMENT SECURITIES
Each Fund may purchase and sell securities on a "when-issued" or "firm
commitment" basis, subject to certain limitations and requirements. See
"When-Issued and Firm Commitment Securities" in the Statement of Additional
Information. Under these arrangements, the securities' price and yield are fixed
on the date of the commitment, but the payment and delivery are scheduled for a
future time, normally 15 to 45 days after the date of the buyer's purchase
commitment. During the period after the commitment and prior to the payment and
delivery, the value of a when-issued security may fluctuate. The Funds will
receive no interest on the security during this period.
"PUT" BONDS
Each Fund may acquire obligations with term puts attached. "Put" bonds are
tax exempt securities which may be sold back to the issuer or a third party at
face value after some period of time prior to the stated maturity. The put
feature may increase the cost of the security to the Fund, thereby reducing the
yield of the security.
MUNICIPAL LEASE OBLIGATIONS
Each Fund may purchase municipal lease obligations or certificates of
participation in municipal lease obligations. A municipal lease obligation does
not constitute a general obligation of the municipality for which the
municipality's taxing power is pledged. Ordinarily, a lease obligation will
contain a "non-appropriation" clause which provides that the municipality has no
obligation to make lease payments in future years unless money is appropriated
for such purpose on a yearly basis. Because of the risk of non- appropriation,
some lease obligations are issued with third-party credit enhancements, such as
insurance or a letter of credit. Municipal lease obligations are a relatively
new type of financing that has not yet developed the depth of marketability
associated with more conventional municipal securities. For these reasons,
before investing in a municipal lease obligation, the Advisor will consider,
among other things, whether (1) the leased property is essential to a
governmental function of the municipality, (2) the municipality is prohibited
from substituting or purchasing similar equipment if lease payments are not
appropriated, and (3) the municipality has maintained good market acceptability
for its lease obligations in the past.
10
<PAGE>
SPECIAL CONSIDERATIONS
LENDING OF PORTFOLIO SECURITIES
Each Fund may lend securities to broker-dealers or institutional investors
for their use in connection with short sales, arbitrages and other securities
transactions. A 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 mark-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, a Fund could experience delays and costs in
recovering the securities loaned. A 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. Each Fund may not lend securities with an
aggregate market value of more than one-third of the respective Fund's total net
assets.
REPURCHASE AGREEMENTS
Each 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
has evidence of book entry receipt of such securities. In a repurchase
agreement, a 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 at least 102% by
United States Government or government agency securities. 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.
SPECIAL LIMITATIONS
The investment objective of each Fund may not be changed without the vote
of a majority of the Fund's outstanding voting securities.
The following policies of the Funds are fundamental and may not be changed
by the Board of Trustees without shareholder approval: (1) each Fund may borrow
up to 5% of its total assets as a temporary measure (for extraordinary
purposes); (2) with respect to 75% of the Near-Term Tax Free Fund assets and all
Tax Free Fund assets, the Funds may invest up to 5% of the value of their total
assets in securities of any one issuer (except such limitation does not apply to
obligations issued or guaranteed by the United
11
<PAGE>
States Government, its agencies and/or instrumentalities); and (3) each Fund may
lend portfolio securities with an aggregate market value of not more than
one-third of its respective total net assets.
Each Fund may invest more than 25% of its respective total assets in
general obligation bonds or in securities issued by states or municipalities in
connection with the financing of projects with similar characteristics, such as
hospital revenue bonds, housing revenue bonds or electric power project revenue
bonds. However, a Fund may not invest more than 25% of its total assets in
industrial revenue bonds which are based, directly or indirectly, on the credit
of private entities of any one industry.
It is each Fund's policy to invest, under normal market conditions, at
least 80% of its total net assets in securities the interest from which is
excluded from gross income for Federal tax purposes; and, with regard to the
Near-Term Tax Free Fund, the policy is fundamental.
HOW TO PURCHASE SHARES
The minimum initial investment is $1,000. The minimum subsequent investment
is $50. The minimum initial investment for persons enrolled in an ABC Investment
PlanT is $100 and the minimum subsequent investment pursuant to such a plan is
$30 per month per account. There is no minimum purchase for retirement plan
accounts administered by the Advisor or its agents and a reduced $50 minimum on
initial purchases for custodial accounts for minors.
YOU MAY INVEST IN THE FOLLOWING WAYS:
BY MAIL
Send your application and check or money order, made payable to the
respective 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. 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.
12
<PAGE>
BY TELEPHONE
Once your account is open, you may make investments by telephone by calling
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 the payment has been received
and accepted by the Trust.
BY WIRE
You may make your initial or subsequent investments in United Services
Funds by wiring funds. To do so, call United Services Funds for a confirmation
number and wiring instructions.
BY ABC INVESTMENT PLANT
Once your account is open, you may make investments automatically by
completing the ABC Investment PlanT (Automatically Building Capital Investment
Plan) form authorizing United Services Funds to draw on your bank account
regularly by check for as little as $30 a month beginning within thirty (30)
days after the account is open. You should 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 Services Funds at
least five business days before the change is to become effective.
ADDITIONAL INFORMATION ABOUT PURCHASES
All purchases of shares are subject to acceptance by the Trust and are not
binding until accepted. United Services Funds reserves the right to reject any
application or investment. Orders become effective as of 4:00 p.m. Eastern time,
Monday through Friday, exclusive of business holidays. In the event that 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 your telephone order to purchase shares is cancelled 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 Trust by reason of such
cancellation.
If checks are 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 in respect to cancelling the purchase.
13
<PAGE>
To recover any such loss or charge, the Trust reserves the right, without
further notice, to redeem shares of any fund already owned by any purchaser
whose order is cancelled, for whichever reason, and such a purchaser may be
prohibited from placing further investments unless they are accompanied by full
payment by wire or cashier's check.
United Service 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.
Investments paid for by checks drawn on foreign banks will be deferred
until such checks have cleared the normal collection process. In such instances,
any amounts charged to the Trust 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
Each 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 tax identification
number. In order to avoid this withholding requirement, you must certify on your
application, or on a separate W-9 Form 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, each
Fund assesses a $50 administrative fee if the taxpayer identification number is
not provided by year end.
CERTIFICATES
When you open your account, United Services Funds will send you a
confirmation statement, which will be your evidence that you have opened an
account with United Services Funds. The confirmation statement is
non-negotiable, so if it is lost or destroyed, you will not be required to buy a
lost instrument bond or be subject to other expense or trouble, as you would
with a negotiable stock certificate. At your written request, United Services
Funds will issue negotiable stock certificates. Unless your shares are purchased
with wired funds, a certificate will not be issued until 15 days have elapsed
from the time of purchase, or United Services Funds has
14
<PAGE>
satisfactory proof of payment, such as a copy of your cancelled check.
Negotiable certificates will not be issued for fewer than 100 shares.
HOW TO EXCHANGE SHARES
You have the privilege of exchanging into any of the United Services Funds
or affiliated funds which are registered in your state. An exchange involves the
simultaneous redemption of shares of one fund and purchase of shares of another
fund at the respective closing net asset value and is a taxable transaction.
BY TELEPHONE
You will automatically have the privilege to direct United Services 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, as a result of this policy, will bear the risk of
loss. Each 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 either party does not
employ reasonable procedures, it may be liable for losses due to unauthorized or
fraudulent transactions.
BY MAIL
You may direct United Services Funds in writing to exchange your shares
between identically registered accounts. The request must be signed exactly as
the name appears in the registration. (Before writing, read "Additional
Information About Exchanges.")
ADDITONAL INFORMATION ABOUT EXCHANGES
(1) There is a $5 charge, which is paid to United Shareholder Services,
Inc. ("USSI" or "Transfer Agent"), for each exchange transaction out of any fund
account. Retirement accounts administered by the Advisor or its agents are
charged $5 for each exchange exceeding three per quarter. The exchange fee is
charged to cover administrative costs associated with handling these exchanges.
(2) Like any other redemption, the Fund reserves the right to hold
redemption proceeds for up to seven days. In such event, the purchase of the
exchange transaction will also be delayed. You will be notified immediately if
the Fund is exercising said right.
(3) If the shares you wish to exchange are represented by a negotiable
stock certificate, the certificate must be returned before the exchange can be
effected.
(4) Shares may not be exchanged unless you have furnished United Services
Funds with your tax identification number, certified as prescribed
15
<PAGE>
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," page 14.)
(5) Exchanges out of United Services Funds' equity funds of shares held
less than 14 days are subject to a short-term trading fee, described at page 18.
(6) The exchange privilege may be terminated at any time. The exchange
fee and other terms of the privilege are subject to change.
HOW TO REDEEM SHARES
You may redeem any or all of your shares at will. United Services Funds
redeems shares at the net asset value next determined after it has received and
accepted a redemption request in proper order. Redemption requests must be
received prior to 4:00 p.m. Eastern time, Monday through Friday, to be effective
that day.
BY MAIL
A written request for redemption must be in "proper order," which requires
the delivery of the following to the Transfer Agent:
(1) a written request for redemption signed by each registered owner
exactly as the shares are registered, the account number and the number of
shares or the dollar amount to be redeemed;
(2) negotiable stock certificates for any shares to be redeemed for which
certificates have been issued;
(3) signature guarantees when required; and
(4) such additional documents as are customarily required to evidence the
authority of persons effecting redemptions on behalf of corporations,
executors, trustees, and other fiduciaries. Redemptions will not become
effective until all documents in the form required have been received by the
Transfer Agent. (Before writing, read "Additional Information About
Redemptions.")
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 Trust at
1-800-873-8637.
Telephone redemptions are available for accounts with a balance of at least
$50,000. To establish telephone redemption privileges, call 1-800-873- 8637 for
information.
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
16
<PAGE>
than the registered owner of the shares to be redeemed or if proceeds are to be
mailed to an address other than the registered address of record. When a
signature guarantee is required, each signature must be guaranteed by: (a) a
federally insured bank or thrift institution; (b) a broker or dealer (general
securities, municipal, or government) or clearing agency registered with the
U.S. Securities and Exchange Commission that maintains net capital of at least
$100,000; or (c) a national securities exchange or national securities
association. The guarantee must: (i) include the statement "Signature(s)
Guaranteed"; (ii) be signed in the name of the guarantor by an authorized
person, the person's printed name and position with guarantor; and (iii) include
a recital that the guarantor is federally insured, maintains the requisite net
capital or is a national securities exchange or association. Shareholders living
abroad may acknowledge their signatures before a U.S. consular officer. Military
personnel may acknowledge their signatures before officers authorized to take
acknowledgments (e.g., legal officers and adjutants).
REDEMPTION PROCEEDS MAY BE SENT TO YOU:
BY MAIL
If your redemption check is mailed, it is usually mailed within 48 hours;
however, the Funds reserve 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. 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 Funds 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 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
17
<PAGE>
specified 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 so redeem, or to so 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.
Excessive short-term trading has an adverse impact on effective portfolio
management as well as upon Fund expenses. The Trust has reserved the right to
refuse investments from shareholders who engage in short-term trading.
SHORT-TERM TRADING FEE
A short-term trading fee of ten basis points or 0.10% of the value of
shares redeemed or exchanged will be assessed to shareholders who redeem or
exchange shares of United Services Funds' equity funds (U.S. Gold Shares Fund,
U.S. World Gold Fund, U.S. Global Resources Fund, U.S. Income Fund, U.S. All
American Equity Fund, and U.S. Real Estate Fund) held less than fourteen (14)
calendar days. A fee of 1% of the value of shares redeemed or exchanged will be
assessed to shareholders who redeem or exchange shares of the China Region
Opportunity Fund held less than 180 calendar days.
ACCOUNT CLOSING FEE
In order to reduce Fund expenses, an account closing fee of $10 will be
assessed to shareholders who redeem all shares in their Fund account and direct
that redemption proceeds be delivered to them by mail or wire. The charge is
payable directly to the Fund's Transfer Agent which, in turn, will reduce its
charges to the Fund by an equal amount. The purpose of the charge is to allocate
to redeeming shareholders a more equitable portion of the Transfer Agent's fee,
including the cost of tax reporting, which is based upon the number of
shareholder accounts. The account closing fee does not apply to exchanges
between the funds of United Services Funds nor does it apply to accounts which
are involuntarily redeemed.
SMALL ACCOUNTS
Fund accounts which fall, for any reason other than market fluctuations,
below $1,000 at any time during a month will be subject to a small account
charge of $5 for that month which, with respect to certain small accounts, could
be in excess of fund distributions. 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 cost of maintaining
shareholder accounts more equally among shareholders.
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Active ABC Investment PlanT, UGMA/UTMA, and retirement plan accounts
administered by the Advisor or its agents or affiliates will not be subject to
the small account charge.
In order to reduce expenses of the Fund, the Trust may redeem all of the
shares in any shareholder account, other than active ABC Investment PlanT,
UGMA/UTMA and retirement plan accounts, if, for a period of more than three
months, the account has a net asset value of $500 or less and the reduction in
value is not due to market action. 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 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 normally will receive a confirmation statement after each
transaction showing activity in the account. However, when account activity is
produced solely from dividend reinvestment, confirmation statements will be
mailed only on a monthly basis.
OTHER SERVICES
The Trust has available a number of plans and services to meet the special
needs of certain investors. Plans available include:
(1) payroll deduction plans, including military allotments;
(2) custodial accounts for minors;
(3) a flexible, systematic withdrawal plan; and
(4) various retirement plans such as IRA, SEP/IRA, 403(b)(7), 401(k) and
employer-adopted defined contribution plans.
Application forms and brochures describing these plans and services may be
obtained from the Transfer Agent by calling 1-800-US-FUNDS (1-800-873-8637).
There is an annual charge for each retirement plan fund account with
respect to which Security Trust & Financial Company ("ST&FC"), a wholly-owned
subsidiary of the Advisor, acts as custodian (for example, $10 for IRAs and $15
for SEP/IRAs, 403(b)(7)s, profit sharing and other such accounts). If this
administrative charge is not paid separately prior to the last business day of
the calendar year or prior to a total redemption or exchange, it will be
deducted from the shareholder's account.
SHAREHOLDER SERVICES
United Shareholder Services, Inc. ("USSI" or "Transfer Agent"), 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.
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24 HOUR CURRENT INFORMATION
Shareholders can also access 24 hours a day current information on yields,
prices, dividends, account balances and deposits and redemptions for the
previous and current months. Just call 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 the Fund is calculated by United Shareholder
Services, Inc. Net asset value per share is determined Monday through Friday, as
of 4:00 p.m. Eastern time, exclusive of business holidays on which the NYSE is
closed, by dividing the aggregate net assets of the Fund by the total number of
shares 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.
All securities (except United States Government securities and repurchase
agreements) held by each Fund are valued based on an independent pricing service
and, in the event such service is not available or if the Board of Trustees
deems it to be advisable, at the mean between the most recent bid and ask prices
as obtained from one or more dealers that make markets in the securities. 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
Each 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 net capital gains that
are distributed to shareholders.
All income dividends and capital gain distributions are normally
reinvested, without charge, in additional full and fractional shares of each
Fund. Alternatively, investors may choose: (1) automatic reinvestment of capital
gain distributions in Fund shares and payment of income dividends in cash; (2)
payment of capital gain distributions in cash and automatic reinvestment of
dividends in Fund shares; or (3) all income dividend and capital gain
distributions paid in cash. The share price of the reinvestment will be the net
asset value of the Fund shares computed at the close of business on the date the
dividend or distribution is paid. Dividend checks returned to the Fund as being
undeliverable and dividend checks not cashed
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after 180 days will automatically be reinvested at the price of the Fund on the
day returned or on or about the 181st day and the distribution option will be
changed to "reinvest,"
At the time of purchase, the share price of each 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 capital gain distributions are fully taxable.
Each Fund generally pays dividends monthly and capital gain distributions,
if any, annually in December.
Distribution by the Fund of net tax exempt interest income will be excluded
from a shareholder's gross income for Federal income tax purposes. Dividends
from taxable net investment income and distributions of net short-term capital
gains are taxable as ordinary income, whether received in cash or reinvested in
additional shares.
Distributions of net capital gains are taxable as long-term capital gains
whether received in cash or reinvested in additional shares, and regardless of
the length of time the investor has held his shares of the Fund. However, it is
expected that any taxable income will be insubstantial in relation to the tax
exempt interest income generated by the Fund.
Tax exempt interest from "private activity" bonds (for example, industrial
development revenue bonds) issued after August 7, 1986 is considered a tax
preference item for purposes of the alternative minimum tax. For corporations,
all tax exempt interest will be considered in calculating the alternative
minimum tax as part of the book income or adjusted current earnings adjustments.
The exemption of interest income for Federal income tax purposes does not
necessarily result in exemption under the income or other tax laws of any state
or local taxing authority. The foregoing discussion relates only to generally
applicable Federal income tax provisions in effect as of the date of this
prospectus. Therefore, shareholders should consult their tax advisers about the
status of distributions from the Fund in their own states and localities.
Each January, each 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, including the portion of the dividends constituting
interest on "private activity" bonds, and the percentage and source, on a
state-by-state basis, of interest income earned on tax exempt securities held by
the Fund during the preceding year.
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THE TRUST
THE TRUST
United Services Funds (the "Trust") is an open-end management investment
company, consisting of numerous separate, diversified portfolios each of which
has its own investment objectives and policies. The portfolios are designed to
serve a wide range of investor needs.
The Trust was formed July 31, 1984 as a "business trust" under the laws of
the Commonwealth of Massachusetts. It is a "series" company which is authorized
to issue series of shares without par value, each series representing interests
in a separate portfolio, or divide the shares of any series into classes. Shares
of numerous series have been authorized. The Board of Trustees of the Trust has
the power to create additional series, or divide existing series into two or
more classes, at any time, without a vote of shareholders of the Trust.
Under the Trust's First Amended and Restated Master Trust Agreement (the
"Master Trust Agreement"), no annual or regular meeting of shareholders is
required, although the Trustees may authorize special meetings from time to
time. Under the terms of the Master Trust Agreement, the Trustees will be a
self-perpetuating body and will continue their positions until they resign, die
or are removed by a written instrument signed by at least two-thirds of the
Trustees, by vote of shareholders holding not less than two-thirds of the shares
then outstanding of the Trust cast at any meeting called for that purpose, or by
a written declaration signed by shareholders holding not less than two-thirds of
the shares then outstanding.
On any matter submitted to shareholders, shares of each portfolio entitle
their holder to one vote per share, irrespective of the relative net asset
values of each portfolio's shares. On matters affecting an individual portfolio,
a separate vote of shareholders of the portfolio is required. Each portfolio's
shares are fully paid and non-assessable by the Trust, have no preemptive or
subscription rights, and are fully transferable, with no conversion rights.
MANAGEMENT OF THE FUNDS
TRUSTEES
The business affairs of the Funds are managed by the Trust's Board of
Trustees. The Trustees establish policies, as well as review and approve
contracts and their continuance. The Trustees also elect the officers and select
the Trustees to serve as executive and audit committee members.
THE INVESTMENT ADVISOR
United Services Advisors, Inc., 7900 Callaghan Road, San Antonio, Texas
78229, under an investment advisory agreement with the Trust dated October 26,
1989, furnishes investment advice and is responsible for overall management of
the Trust's business affairs. Frank E. Holmes, Chief Executive Officer and
Chairman of the Board of Directors of the Advisor, as well as President and a
Trustee of the Trust has, since October 1989, owned
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more than 25% of the voting stock of the Advisor and is its controlling
person. The Advisor was organized in 1968.
The Advisor provides to the Trust, and to each of the portfolios within the
Trust, management and investment advisory services. The Advisor furnishes an
investment program for each of the funds, 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 each of the funds. The Advisor utilizes a team approach to
manage the assets of the Funds. The team meets regularly to review portfolio
holdings and to discuss purchase and sale activity. Creston King has been
appointed team leader for the Funds. Mr. King has been the Advisor's assistant
portfolio manager for fixed income funds since September 1993. Prior to joining
the Advisor Mr. King worked in the brokerage industry for over 5 years.
The Advisor provides the Trust with office space, facilities and business
equipment and provides the services of executive and clerical personnel for
administering the affairs of the Trust. The Advisor pays the expense of printing
and mailing prospectuses and sales materials used for promotional purposes.
WITH RESPECT TO THE TAX FREE FUND AND NOTWITHSTANDING THE FOLLOWING
DESCRIPTION OF FEES AND OTHER EXPENSES, THE ADVISOR HAS GUARANTEED THAT TOTAL
FUND OPERATING EXPENSES, (AS A PERCENTAGE OF NET ASSETS) WILL NOT EXCEED 0.40%
ON AN ANNUALIZED BASIS THROUGH JUNE 30, 1996 AND UNTIL SUCH LATER DATE AS THE
ADVISOR DETERMINES.
WITH RESPECT TO THE NEAR-TERM TAX FREE FUND AND NOTWITHSTANDING THE
FOLLOWING DESCRIPTION OF FEES AND OTHER EXPENSES, THE ADVISOR HAS GUARANTEED
THAT TOTAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS) WILL NOT
EXCEED 0.70% ON AN ANNUALIZED BASIS THROUGH JUNE 30, 1996, AND UNTIL SUCH LATER
DATE AS THE ADVISOR DETERMINES.
With regard to the Tax Free Fund, the Advisory Agreement with the Trust
provides for the Fund to pay the Advisor a management fee equal to 0.75% of the
first $250 million average net assets and 0.50% of average net assets in excess
of $250 million. The fee paid to the Advisor for managing the U.S. Tax Free Fund
for the fiscal period ended June 30, 1995 was 0.00% of average net assets due to
Advisor guarantees.
With regard to the Near-Term Tax Free Fund, the Advisory Agreement with the
Trust provides for the Fund to pay the Advisor a management fee equal to 0.50%
of the Fund's average net assets ( 1/12 of 0.50% monthly). The fee paid to the
Advisor for managing the Near-Term Tax Free Fund for the fiscal period ended
June 30, 1995 was 0.00% of average net assets due to Advisor guarantees.
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.
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These fees will be paid periodically and will generally be based on a percentage
of the value of the institutions' client Fund shares.
The Transfer Agency Agreement with the Trust provides for each Fund to pay
USSI 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 Trust shares through broker-dealers which provide such services and
maintain an omnibus account with the Transfer Agent, each Fund shall pay to the
Transfer Agent a monthly fee equal to one-twelfth ( 1/12) of 12.5 basis points
(.00125) of the value of the shares of the Funds held in accounts at the
broker-dealer, which payment shall not exceed $1.67 multiplied by the average
daily number of accounts holding Trust shares at the broker-dealer. These fees
cover the usual transfer agency functions. In addition, each Fund bears certain
other Transfer Agent expenses such as the costs of record retention and postage,
plus the telephone and line charges (including the toll-free 800 service) used
by shareholders to contact the Transfer Agent. For the fiscal period ended June
30, 1995, the Tax Free Fund and Near-Term Tax Free Funds paid USSI a total of
$0.00 and $0.00, respectively, for the transfer agency, lockbox and printing
fees due USSI. Transfer Agent fees, including reimbursed expenses, are reduced
by the amount of small account charges and account closing fees the Transfer
Agent is paid.
USSI performs bookkeeping and accounting services, and determines the daily
net asset value for each of the Funds. Bookkeeping and accounting services are
provided to the Funds for an asset based fee of 0.04% of the first $200 million
average net assets, 0.03% of the next $200 million average net assets, 0.02% of
the next $350 million average net assets and 0.01% of average net assets in
excess of $750 million -- subject to an annual minimum fee of $26,000 per Fund.
Prior to November 1, 1993, the services were provided to the Trust at a fixed
annual fee of $525,000 allocated to the Trust's numerous funds as determined by
the Board of Trustees. USSI received fees of $0.00 and $0.00 for the U.S. Tax
Free Fund and Near-Term Tax Free Fund, respectively for the year ended June 30,
1995.
Additionally, the Advisor is reimbursed certain costs for in_house legal
services pertaining to each Fund, which reimbursement is subject to the
Advisor's assumption of expenses for each Fund.
The Trust pays all other expenses for its operations and activities. Each
Fund pays its allocable portion of these expenses. The expenses borne by the
Trust include the charges and expenses of any shareholder servicing agents,
custodian fees, legal and auditors' expenses, brokerage commissions for
portfolio transactions, the advisory fee, extraordinary expenses, expenses of
shareholders and trustee meetings, expenses for preparing, printing and mailing
proxy statements, reports and other communications to shareholders, and expenses
of registering and qualifying shares for sale, among others.
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PERFORMANCE INFORMATION
From time to time, in advertisements or in reports to shareholders or
prospective shareholders, each Fund may compare its performance, either in terms
of its yield, total return or its yield and total return, to that of other
mutual funds with similar investment objectives and to stock or other indices.
For example, a Fund may compare its performance to rankings prepared by Lipper
Analytical Services, Inc. ("Lipper"), a widely recognized independent service
which monitors the performance of mutual funds; to Morningstar's Mutual Fund
Values; to the Consumer Price Index; to Moody's Bond Survey Bond Index; to
Shearson Lehman Municipal Bond Index; and to the mortgage trade and other
publications. Performance information and rankings as reported in Changing
Times, Business Week, Institutional Investor, the Wall Street Journal, Mutual
Fund Forecaster, No-Load Investor, Money Magazine, Forbes, Fortune, Investor's
Daily and Barron's magazine may also be used in comparing performance of each
Fund. Performance comparisons should not be considered as representative of the
future performance of each Fund.
Each 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.
Each 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 maturity of an obligation with a call
provision is the next call date on which the obligation reasonably may be
expected to be called or, if none, the stated maturity.
Each Fund may also utilize tax equivalent yields computed in the same
manner, with adjustment for a stated income tax rate.
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.
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UNITED SERVICES FUNDS
SHARES OF THE FUNDS ARE SOLD AT NET ASSET
VALUE WITHOUT SALES COMMISSIONS,
REDEMPTION FEES OR 12B-1 FEES
U.S. TAX FREE FUND
UNITED SERVICES NEAR-TERM TAX FREE FUND
INVESTMENT ADVISOR
United Services Advisors, Inc.
7900 Callaghan Road
Mailing Address: P.O. Box 29467
San Antonio, Texas 78229
TRANSFER AGENT
United Shareholder Services, Inc.
P.O. Box 781234
San Antonio, Texas 78278-1234
CUSTODIAN
Bankers Trust Company
16 Wall Street
New York, NY 10005
LEGAL COUNSEL
Goodwin, Procter & Hoar
Exchange Place
Boston, MA 02109
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
One Riverwalk Place, Ste. 900
San Antonio, Texas 78205
100% No Load
Be Sure to Retain This Prospectus;
It Contains Valuable Information.
