[GRAPHIC: UNITED SERVICES FUNDS LOGO UPPER RIGHT CORNER]
SHAREHOLDER REPORT
Published for the shareholders of the United Services Family of Funds
3rd Quarter 1996
- --------------------------------------------------------------------------------
THE PURSUIT OF PERFORMANCE
A MESSAGE FROM THE PRESIDENT
Performance Inspired. Those are the two words which best describe the
employees of U.S. Global Investors. When I took control of this company in 1989,
my mission was to raise standards--from the mail room to the board room. Today
every employee is expected to achieve consistent, superior performance. We
measure this in many ways.
For example, in the mail room we measure how fast account statements are
processed and mailed to you; we monitor telephone calls to evaluate the
responsiveness and efficiency of our investor representatives; we inspect each
and every account transaction to appraise the accuracy of the shareholder
servicing team; we judge the effectiveness of the marketing department by how
well they educate investors of the benefits of our funds; and we evaluate our
money management team based on the consistent performance of our funds.
- --------------------------------------------------------------------------------
[GRAPHIC: METAMORPHOSIS PHOTO OF CYCLISTS, SKATERS, SKIER IN CENTER OF PAGE]
TEAMWORK. COMPETITION. PERFORAMNCE. The investment management business is highly
competitive. We always strive to outperform our competition and deliver
consistent superior performance.
- --------------------------------------------------------------------------------
It's not enough to just measure performance. There must be rewards for
achieving superior performance and repercussions when standards are not met. A
portion of every employee's income at U.S. Global Investors is contingent upon
personal and team performance. If goals are not achieved, then the incentive pay
is not awarded. It's simple. Performance pays.
As a shareholder, your primary concern is your fund performance. That's why
we have continually raised the standards for our investment team. Over the past
few years, we have replaced underperforming fund managers with portfolio
managers who demonstrate the drive and desire to succeed. And we have created
incentives to reward fund managers who achieve superior performance. These
changes are paying off. Morningstar just released quarterly performance reports
indicating we have more 4 and 5 star funds than ever before.
[GRAPHIC: PHOTO OF FRANK HOLMES]
A fund manager has no control over the direction of the financial markets.
A fund's performance will rise and fall with the markets it invests in. The true
test is how a manager's fund performs relative to the other funds in its peer
group. Good managers love to beat their competition.
Fund managers regularly monitor their returns and risk. In the pursuit of
superior performance, it is always important to keep risk in check. Morningstar,
Lipper Analytical Services, Micropal and other information services provide
objective measurements of performance and are the managers' guides for
determining how our funds are positioned against the competition. They also
provide the basis for the fund managers' new performance incentives.
For example, Lipper's top rating of double-plus (++) means a fund has
earned a return in the top 20% of its peer group. A Morningstar 5-star rating
(*****) signifies a risk adjusted return in the top 10% of an investment
category. The more pluses and stars a fund earns, the more bonuses its manager
receives.
We also measure the amount of risk a fund manager takes by using Micropal
to compare our risk-adjusted returns to those of the competition. The optimal
position, of course, is the fund with the lowest risk and the highest return. We
reward managers who successfully position their fund in this way.
The longer a fund retains top ratings, the bigger the bonuses get. That way
we reward not only superior performance, but more importantly, consistent
superior performance.
Anyone can have a bad quarter, but if a fund's performance ranks in the
bottom half of its peer group for two quarters in a row, the portfolio manager
is called on the carpet to meet with me and Victor Flores, our chief investment
officer. We discuss the changes that must be made in order to move the fund up
in the ranks. We must respond quickly because in this competitive world, you
won't tolerate consistent poor performance. Neither will we.
The next time we are participating in an investment conference in your
area, you'll receive an invitation to join us for a shareholder meeting. I
encourage you to join us to meet some of the players on our dynamic team of fund
managers. And I'll tell you more about the changes I'm making on your behalf at
U.S. Global Investors.
We've just added a new service to put you in touch with the fund managers.
Portfolio Direct features interviews with our portfolio managers. Call
1-800-873-8637 and select menu option 6 to listen in.
Thank you for your trust and confidence.
/s/ Frank Holmes
President and CEO
United Services Family of Funds
P.S. We can help you with your holiday gift shopping. A mutual fund account is a
wonderful gift for a child. You can open a UGMA/UTMA account in most of our
funds with just $50. Call 1-800-873-8637 for more information.
TEST YOUR GLOBAL IQ & WIN A FREE T-SHIRT!
[GRAPHIC: PHOTO OF THE WORLD UPPER RIGHT SIDE OF PAGE]
The first 50 shareholders to correctly answer these global trivia questions will
receive a free t-shirt with the new U.S. Global Investors logo. To test your
global IQ, call an investor representative at 1-800-US-FUNDS, or 1-800-873-8637.
1 If all of the gold ever produced in the history of the world were melted
into a single piece of bullion, how big would that bar be?
2 What country is one of the most wired nations on earth, with more
advanced-telecommunications networks and Internet users per capita than
either the U.S. or Britain?
3 With the greatest population of any country on earth, we believe China will
become the world's largest consumer market. How many cities in China have
more than a million people?
[ ]8 [ ]15 [ ]27 [ ]32
4 What emerging-market country has the highest level of official gold
reserves?
5 What construction project in Asia includes: a six-lane, mile-long tunnel
under a harbor; a 4,500-foot suspension bridge; and reclamation of 4,000
acres of land from the sea?
- --------------------------------------------------------------------------------
The Shareholder Report is published four times a year by the U.S. Family of
Funds as a service to our shareholders. Please send any comments,
suggestions or questions to: Editor, Shareholder Report
United Services Funds P.O. Box 781234 San Antonio, TX 78278-1234
Susan Icke, Editor
Mark Talbot-Kelly, Creative Director
Stephanie Linkous, Associate Editor
Chris Smith, Associate Editor
- --------------------------------------------------------------------------------
SPOTLIGHT ON INVESTMENT IN CHINA
INTERVIEW WITH BIN SHI, PORTFOLIO MANAGER
Bin Shi is a native of China and a graduate of the prestigious Fudan
University in Shanghai. After earning a degree in international finance and
trade, he worked in international banking at the Shanghai Bank of
Communications. As a graduate student at Tulane University, Bin conducted
in-depth analyses of the volatility of the S&P 500. Today he is the portfolio
manager of the China Region Opportunity Fund and the U.S. All American Equity
Fund.
Q: WHY SHOULD AN INVESTOR HAVE A PORTION OF THEIR PORTFOLIO IN THE CHINA REGION
OPPORTUNITY FUND TODAY?
A: Now is the time to invest in China because the market is tremendously
undervalued, and people who don't invest now risk missing all the opportunities
that come with future growth. (1),(2) With Asia the dominant emerging market
economically, politically and culturally, it makes smart business sense to buy
Chinese companies now, before the inevitable tidal wave of foreign investment
drives stock prices higher.
[GRAPHIC: PHOTO OF BIN SHI IN CENTER OF PAGE]
The China Region Opportunity Fund provides two chief benefits to investors
who want to take advantage of growth opportunities in Asia: diversification and
professional management. Investing in foreign markets can offer great rewards,
but it also comes with special risks such as currency fluctuations and the
possibility of illiquid markets. As a professional money manager and an expert
on the Chinese market, I have the knowledge and understanding to make insightful
investment decisions. And because the Fund pools the resources of many
shareholders, I keep the fund diversified among almost a hundred unique
companies that I have spent many months, and in some cases years, carefully
analyzing and/or inspecting first hand.
Q: COULD YOU DESCRIBE YOUR BACKGROUND AND TELL US HOW IT AFFECTS THE INVESTMENT
STRATEGY OF THE FUND?
A: I grew up in Shanghai and went to college at Fudan University. After
college, I worked for one of the largest Chinese commercial banks and then came
to the U.S. to continue my education in finance. I have been working in the
Asian markets for many years, and I have an innate understanding of the culture
and the consumer mindset there. Since I speak the language and have a good
network of contacts in China, I can gather valuable information which is not
available to many other managers, who have to rely solely on analysts' reports.
Q: HOW DO YOU DECIDE WHICH COMPANIES YOU WILL SELECT FOR YOUR FUND? WHAT
CRITERIA MUST THESE COMPANIES AND THEIR MANAGEMENT ADHERE TO?
A: Because China's market economy does not have a significant track record,
it is very important to evaluate each company very thoroughly. The quality of
management is the most important factor in my decision. I look at how well the
management is prepared to succeed in a free market system, how highly they value
technology and how competitive they are globally.
Q: WHICH COMPANIES ARE YOU CURRENTLY LOOKING AT?
A: I have a close eye on Shanghai Petrochemical. It is the largest maker of
integrated petrochemical products in China. Since supply cannot meet demand, the
petrochemical products market is a seller's market. Shanghai Petrochemical is
the largest player in the market and has the support of several favorable
government policies and the backing to become one of the premier global
competitors in the future. It recently completed an equity offering that will
allow it to expand into even more profitable products. I don't think the stock
is trading at the valuation it deserves.
Shanghai Dazhong Taxi is another strong company. It is predominantly a taxi
operator in Shanghai but has expanded to operate in other cities. I believe the
management behind this company is very shrewd. They used the strong cash flow
from their taxi operations to expand into other businesses, such as automobile
insurance and long distance passenger transportation. With the rising need for
auto insurance, I see this company as an indirect play on the booming insurance
industry in China. This is the type of company that can be a strong conglomerate
in the future. It is currently very undervalued at 12 times earnings.
Q: HOW WILL THE HANDOVER OF HONG KONG TO CHINA AFFECT THE CHINESE MARKET?
A: I think the handover has already been discounted by the market, so I
don't think it will be followed by a precipitous drop. In fact, my long-term
outlook on the market is very bullish. Earnings reports for Chinese companies
have been much stronger across the board lately, and a relaxed credit
environment in 1997 will be good for China. I firmly believe that right now the
Chinese market is a steal for the smart investor.
THE BULL MARKET CHARGES ON
BONNEL GROWTH FUND
The bull market has carried the Dow to new highs above the 6000 mark after
dipping to 5347 in July. With a remarkably steady economy and a stable interest
rate environment, the Bonnel Growth Fund has again produced excellent returns
for shareholders. (1)
The Fund's portfolio holds a high weighting in technology, retail and
health care because we have found outstanding earnings growth potential among
the companies in these sectors. With the help of top performers such as Iomega,
Sears and Merck, the Fund achieved total returns of 36.25% for the year ended
10/10/96.
We have also found opportunities for growth outside of these main sectors.
Though grocery store chains are considered stodgy investments, the Fund's stake
in Safeway appreciated 35% before we decided to take profits and sell our
holdings. In coming quarters, we will continue to seek out the best
opportunities for growth, wherever they may be.
[GRAPHIC: PHOTO OF PROSPECTUS WRAPS FOR BONNEL GROWTH FUND, GOLD & NATURAL
RESOURCES FUNDS AND UNITED SERVICES EQUITY FUNDS IN CENTER OF PAGE.]
U.S. WORLD GOLD FUND
Strong investor interest and a buoyant market for acquisitions continued to
fuel the superior performance of North American and Australian gold stocks. The
U.S. World Gold Fund has been on a tear this year and has total returns for the
last 12 months of 33.76% (as of 10/10/96). (1) The 20% correction in the Toronto
Gold and Silver Index which began in June was over in mid-July, and since then a
number of stocks have more than made up the ground they lost.
The smaller companies have performed particularly well because of their
ability to raise money easily for exploration and because a number of senior
companies need to make acquisitions in order to maintain or increase their
production levels. The potential for world-class discoveries--and world-class
profits--became clear when Barrick Gold acquired Arequipa Resources for $750
million. Arequipa has proved that small companies exploring for gold in the
emerging markets--in this case, Peru--can and do find world class deposits, and
when they do, their share prices rise to reward their stockholders. We will
continue to position the Fund for maximum growth of capital by investing in
stocks like these.
- ----------
Of course, not all the securities held by the Funds performed as well as those
cited here. Average annual total returns for the U.S. World Gold Fund are:
29.18% year-to-date and 33.76%, 13.72%, 18.19% and 6.88% over the 1-, 3-, 5- and
10-year periods as of 10/10/96. Average annual total returns for the Bonnel
Growth Fund are: 25.16% year-to-date, 36.25% over the 1-year period and 35.87%
since inception (10/17/94) as of 10/10/96. Investment returns and principal
value will fluctuate. You may have a gain or a loss when you sell shares. Past
performance is no guarantee of future results.
U.S. GOLD SHARES FUND
During the third quarter, weakness in the price of gold, ongoing labor
difficulties and poor performance in dollar terms hurt South African gold mining
companies. Once more the price of bullion has fallen towards $380 per ounce, a
level considered critical by many analysts. While physical demand continues to
absorb supply at that level, investors are puzzled that gold has not performed
well after starting the year so strongly. A possible sale by the International
Monetary Fund of some of its gold holdings has depressed the market, though the
proposed sale, which would increase the global supply of gold by only 1%
annually for the next five years, will not affect the market in any significant
way.
Despite the fact that most of the South African mines reported strong
earnings in the third quarter, the weakness of the rand in U.S. dollar terms
actually eroded the value of those stocks. International investors have eschewed
the South African gold stocks in favor of international companies with better
exploration potential, such as those in Australia and North America. Although
relations between management and unions have improved, unrest among unions has
slowed operations at some mines. While mining companies have begun to establish
more productive work practices, progress has been slow.
We will position the Fund for growth of capital by investing in senior
mining companies with proven reserves and strong earnings. (1) While many such
producers are in South Africa, we are evaluating attractive investment
opportunities in the rest of the world.
FIXED INCOME FUNDS
United Services' bond and money market funds have performed very well
overall in the past quarter. (1) Morningstar has awarded a 5-star rating to the
United Services Near-Term Tax Free Fund and a 4-star rating to the U.S. Tax Free
Fund for performance over the past three years.(3) The U.S. Government
Securities Savings Fund earned Lipper's #1 ranking in its class for the
five-year period ended 9/30/96.(4)
Speculation throughout the quarter on the movement of interest rates has
driven the bond and money markets, which have been wary of an interest rate
hike. Third quarter reports of growing employment sparked concerns that the
Federal Reserve might raise rates to counter inflation, even though the consumer
price index and the producer price index remain subdued. Although the Fed took
no action at its August and September meetings, we anticipate a rate increase of
0.25% after the presidential election.
U.S. ALL AMERICAN EQUITY FUND
Increasing employment figures, strong inflows into mutual funds and the
decision by the Federal Reserve not to raise interest rates helped the stock
market and the U.S. All American Equity Fund perform well in the third
quarter.(1) As stock prices have risen, we have bought stocks when we believe
them to be cheap based on fundamentals and we have sold others when they seemed
expensive in order to maximize returns.
The correction in July presented an excellent buying opportunity for
the Fund. Technology stocks in particular suffered a sharp dip after
disappointing reports on earnings confirmed fears of a general slowdown in the
sector. Bullish on the market, we decided to buy stocks when they reached lower
prices, and now many of our acquisitions have appreciated considerably during
the market's rebound over the past two months.
Oil stocks also enjoyed great gains during the quarter. We are very
positive on the long term prospects for oil companies, but decided to take
profits on some of our oil holdings when those stocks became overpriced.
CHINA REGION OPPORTUNITY FUND
The Chinese government has finally begun a much-awaited program of
easing credit. During the second quarter, the Central Bank of China cut interest
rates by 1.2%. The cut was the second this year and was larger than most
analysts had expected. It indicates the government's desire to jump-start the
economy. This will be very good for the Chinese stock market and will also
support Hong Kong stocks, which prosper when trade with Chinese companies
increases.(1)
Chinese stocks also stand to benefit by the slowly warming relations
between China and the U.S. and by a decline in the amount of negative media
coverage about China. The fact that Chinese B shares are trading at a steep
discount to the A shares of the same companies is indicative of the recovery
potential for this market.
When a correction in the B share market began, we took profits in some
of our holdings. Now we are poised to buy our favorite B shares when they reach
bargain levels. Over the long term, we anticipate a high rate of economic growth
will drive Chinese stocks up, carrying the China Region Opportunity Fund with
them.
U.S. GLOBAL RESOURCES FUND
We believe the natural resources sector has been in a slump for the last
ten years and is on the cusp of an unprecedented boom. The rebuilding of the
former Soviet Union and the continued growth of the southeast Asian region are
fuelling an intense increase in worldwide consumption of resources. The U.S.
Global Resources Fund is taking an international position to benefit from this
growth.(1) We are also investing in dynamic small and midsize companies with a
proven ability to find more reserves. These companies do not require an increase
in commodities prices to succeed: they rely on their own skill and expertise in
finding more of the resources they sell to consumers throughout the world.
With 55% of assets invested in oil and gas stocks, the Fund has boomed in
the third quarter as a result of the rise in the price of oil. Higher oil prices
created a bullish sentiment throughout the energy sector, and increasing demand
for petroleum came at a time when stockpiles were critically low. The market had
expected the price to stay flat or even decline after the United Nations
approved oil sales from Iraq. However, the U.N. rescinded approval after the
Iraqis attacked Iranian and Kurdish forces in Iraq's northern territories. The
consequent restriction on world oil supply increased the perceived tightness in
the market and drove oil prices higher.
U.S. INCOME FUND
To diversify the holdings of the U.S. Income Fund and to enhance
total-return potential, we are increasing the Fund's exposure to dividend-paying
companies outside the utility sector.(1) Usually safe, steady performers,
utilities have been out of favor in this bull market. We will continue, however,
to hold utilities stocks which show a high potential for growth and a strong
record of paying generous dividends.
Continuing industry deregulation is leading to increasing competition, so
we are also focusing on those companies with the strongest competitive position
within their sector. Merger and acquisition activity has intensified, providing
excellent opportunities for the Fund.
U.S. REAL ESTATE FUND
As the Dow climbs past 6000, investors wary of paying a premium for stocks
should look at the growth and income potential of the U.S. Real Estate Fund.(1)
The moderate, steady growth of the economy has been very positive for real
estate this quarter. We see the economy slowing in the coming year, however, and
are positioning the Fund in companies with longer lease terms. These companies
have leases written during periods of higher prices and for longer terms, so
their revenues should remain strong whether the economy slows or not.
SHAREHOLDER BULLETIN BOARD
SPOTLIGHT ON OUR TEAM
[GRAPHIC: PHOTO OF JOHANNA THORNBLAD AND STEPHANIE LINKOUS]
When a mutual fund makes waves, the media notices, and investors learn more
about opportunities for meeting their financial objectives. Several funds in the
U.S. Family of Funds have made big waves this year, and thanks to their
performance and assistance from our Public Relations Department, the Funds have
been heralded in many financial publications including: The Wall Street Journal,
Investor's Business Daily, Business Week, Mutual Funds Magazine, Kiplinger's and
others.
Johanna Thornblad and Stephanie Linkous, our communications specialists,
bring our portfolio managers out of the investment research center and into the
spotlight of the international media so that you can learn more about their
strategies for meeting your financial objectives. Over the last four years,
Johanna has built up an extensive network of media contacts by spending nearly
half her time travelling from our office in San Antonio to the financial centers
of the world, including New York, London, Hong Kong and Paris.
Johanna is a native of Sweden, where she studied economics before
graduating from Kent State University on a basketball scholarship. Stephanie
holds a degree in journalism and has studied at Oxford and at the University of
Salamanca in Spain. After graduation, she worked at Burson Marstellar, the
world's largest public relations firm, where she advocated ratification of the
North American Free Trade Agreement on behalf of the government of Mexico.
COME MEET U.S.
GLOBAL INVESTORS, INC.,
[GRAPHIC: PHOTO OF "JOIN US IN IN PERSON AT THE
SAN FRANCISCO" BROCHURE] UPCOMING WESTERN
INVESTMENT IN MINING
CONFERENCE IN SAN
FRANCISCO, CALIFORNIA,
ON DECEMBER 8-9,
1996, AND THE ISI
FLORIDA MONEY SHOW
CONFERENCE IN
ORLANDO, FLORIDA,
FEBRUARY 5-8, 1997.
DID YOU KNOW...?
- -- It's easy and free to pay your bills directly from your money market
account with our Automatic Recurring Payment Plan. Call an investor
representative at 1-800-US-FUNDS to learn how you can pay your monthly
bills automatically.
- -- The dividend income on our money market funds compounds daily, which makes
more money for you.
- -- You can have fast access to your paycheck, social security check or
military payroll check by using Direct Deposit into your account.
- -- You can establish a Systematic Exchange Plan to automatically transfer
money between any of your accounts within the U.S. Family of Funds. There
is no exchange fee for this service.
- -- We've made it easier to change the address on any of your accounts or order
new checks for your money market account. Simply give us a call.
- -- You can access your account 24 hours a day and the call is free from
anywhere in America. Call 1-800-873-8637 for your account balance, closing
share prices, market updates and more.
- -- You can find us on the Web at http:// www.usfunds.com. Check out our home
page and discover all the resources we've made available on-line. You can
also E-mail us your questions or comments anytime at [email protected].
THE RIGHT TIME TO INVEST IS NOW
By investing the same dollar amount each month, you can avoid the emotionally
difficult decision of when to invest in the market. Our ABC Investment Plan(R)
makes investing easy and affordable by debiting a fixed monthly amount from your
checking account and depositing it into your U.S. Funds account.5 You can also
use the Systematic Exchange Plan to make free monthly exchanges from a money
market fund to any of our other funds.
HOW TO SAVE $10
If you make a contribution to your IRA this year of $2,000, we will waive the
annual custodial fee of $10. Otherwise, the custodial fee will be deducted from
IRA accounts on December 31. If you prefer to send a check for your custodial
fee, we must receive it before December 31.
PROTECTING YOUR INVESTMENT
We are committed to providing your investments with the highest level of
security possible. When you request a redemption or a change of registration, we
may require a signature guarantee for your protection. Please read the
prospectus or call an investor representative to determine if your situation
requires a signature guarantee.
EXPERT MARKET INSIGHTS
CHINA: GROWTH YOU CAN SEE AND FEEL
WILLIAM E. DONOGHUE
Last fall I had the unique opportunity to visit Beijing, Tianjin, Shanghai and
Hong Kong on an Investment Seminars, Inc., China Boom cruise. What an
eye-opener!
In Shanghai, on a spit of land opposite the Bund, that European-style downtown
thoroughfare you see on movies and newsreels, China's businesses are building no
less than eighty skyscrapers. In Tianjin, the closest seaport to Beijing, we
viewed mud flats that were being transformed into a city complete with
factories, apartments and office buildings. Hong Kong, already bustling with
commerce, continues to build and expand. Finally, the southern province of
Guangdong, is busy building a thriving economy already the equal, in size, of
the economy of France.
[GRAPHIC: PHOTO OF SKISCRAPERS IN CHINA]
Half of all Asians are under the age of 25. This has the potential to unleash an
exciting economic boom not unlike that which took hold in the U.S. after World
War II.
The turnover (not a takeover) of Hong Kong to mainland China will be a catalyst
for growth. Hong Kong has the sophisticated financial markets and business
practices, as well as the hungry consumers, that China needs. It's an exciting
prospect for the Chinese people.
Investing in China has its challenges: unseasoned financial markets,
inexperienced investors and a lack of the accounting and legal standards and
precedents that Westerners are used to relying upon. China has the corner on the
investment opportunity of a lifetime and must learn quickly. After all, China is
rushing headlong into the 21st century without ever fully participating in the
20th. They have a lot of catching up to do.
One of China's greatest assets is the extensive, well-financed and
highly-skilled entrepreneurial network of overseas Chinese who, loyal to their
new homes, have a distinct cultural advantage in capitalizing on China's needs.
Those needs are the simple kind which American investors understand: basic
infrastructure, office buildings, supermarkets, shopping centers, apartment
buildings and factories. Concrete is becoming the equivalent of "Chinese Gold."
Managers that run Southeast Asian portfolios tell me they have learned more
about concrete then they ever wanted to know, a revealing insight.
[GRAPHIC: PHOTO OF WILLIAM E. DONOGHUE]
As the skeptical Western institutional investors discover viable investments in
China and overenthusiastic Chinese leaders restrain their tendency to meddle
with Hong Kong's free-market economy, China and, indeed, Southeast Asia will
begin to realize the claim to being the investment opportunity of a lifetime. It
will be pioneering investment managers such as those at United Services who will
gain experience in China and who will provide investors real entree to the
Chinese market, which is ultimately won by credible commitment as much as
investment brilliance.
Western investors must keep in mind, however, that the realization of the profit
potential in China will result from the perception of investment value by Asian
investors, who dominate the Southeast Asian financial markets, not the
perception of relative Johnny-come-lately Western investors. This is Asia's
investment opportunity. You would be wise to join them and profit.
Profitable Chinese investment performance is, as it has always been, for the
patient and I expect to be among those successful investors.
- --------------------------------------------------------------------------------
A skilled money manager with nearly $200 million under management, Mr.
Donoghue is the author of eight "how to" investment books including the New York
Times best-seller, "William E. Donoghue's Complete Money Market Guide." He has
appeared as a guest on countless radio and television shows and as a featured
speaker at investment conferences across the nation.
The opinions expressed in this column are Mr. Donoghue's and not
necessarily those of U.S. Global Investors, Inc.
DONOGHUE'S WEALTHLETTER ON BUILDING, KEEPING AND ENJOYING WEALTH is offering a
FREE sample issue to shareholders of the U.S. Family of Funds. Call
1-800-873-8637 to order your copy now.
- --------------------------------------------------------------------------------
DISCOVER HOW TO SAVE UP TO $22,500
RETIREMENT TIPS AND TAX SAVINGS
LISA KOTTLER
RETIREMENT SPECIALIST
VICE PRESIDENT
SECURITY TRUST & FINANCIAL CO.
[GRAPHIC: PHOTO OF LISA KOTTLER]
Attention small-business owners and self-employed individuals! Would you like to
learn how to shelter up to $22,500 a year?
Maybe you also want to provide a retirement program to attract and retain
quality employees. With one flexible program, you can accomplish both--you can
secure retirement benefits for yourself and your employees, while giving your
business a tax break.
More and more small businesses are discovering that a Simplified Employee
Pension Plan (SEP-IRA) is an excellent way to provide these important benefits.
In fact, it may be one of the simplest, easiest and most cost-effective ways for
business owners and self-employed individuals to set up a retirement plan.
WHAT IS A SEP-IRA?
A Simplified Employee Pension Plan is a retirement plan available to
self-employed persons, partnerships and small business owners. Under a SEP
arrangement, tax deductible contributions are made to individual retirement
accounts (IRAs) set up for each eligible employee. You can make tax deductible
contributions up to 15% of compensation or $22,500, whichever is less. Your
contributions are completely flexible--you are never required to make a SEP
contribution. Each year you can review and adjust your contributions, reducing
them during less profitable times and increasing them when business is thriving.
WHO IS ELIGIBLE FOR A SEP-IRA?
Virtually anyone with self-employed income is eligible for a SEP-IRA:
For example, if you are a:
- -- full-time self-employed professional, such as: attorney, doctor, architect,
artist or realtor
- -- part-time self-employed professional, such as: freelancer or consultant
- -- small business owner who wishes to provide a retirement plan to attract and
retain quality employees.
HOW DO YOU BENEFIT FROM A SEP-IRA?
A SEP-IRA is one of the most flexible retirement plans available. Not only is
the amount of your contribution flexible, but so is the timing of your
contribution. You have until your tax filing date (including extensions) to make
your tax deductible contribution. Plus, a SEP-IRA allows small business owners
and self-employed individuals to save in several ways:
SAVE ON CURRENT TAXES. Make tax-deductible contributions up to 15% of
compensation or $22,500, whichever is less. Can you think of another way to
shelter up to $22,500?
SAVE MORE MONEY. All earnings in your SEP-IRA grow tax deferred, so your nest
egg is sheltered from taxes until you withdraw it at retirement. Tax deferral
allows your retirement wealth to accumulate more quickly than a taxable
investment.
SAVE TIME. A SEP-IRA is simple to establish and maintain since there is little
paperwork associated with these plans.
Plus, a retirement plan can help you recruit, retain, motivate and reward
dedicated employees who will enable your business to compete even more
effectively in today's marketplace. If you are a small business owner or
self-employed, a SEP-IRA may be the ideal solution to your retirement planning.
Being self-employed or running a small business takes drive and dedication. We
realize how busy you are and would like to offer you an easy way to save on
taxes while you save for your retirement.
- --------------------------------------------------------------------------------
Self employed?
CALL
1-800-US-FUNDS [GRAPHIC: SECURITY TRUST AND FINANCIAL COMPANY LOGO]
today for your
free SEP-IRA
investment guide.
- --------------------------------------------------------------------------------
- ----------
Shareholder Report Notes (1)For a free Fact Kit containing more complete
information, including charges and expenses, call 1-800-US-FUNDS. Read the
prospectus carefully before investing. "U.S." stands for United Services. The
Funds are not backed by the U.S. government (2) The advisor's opinion does not
guarantee a profit.(3) As of 9/30/96, Morningstar awarded the United Services
Near-Term Tax Free Fund 4, 5 and 4 stars for the 1-, 3- and 5-year periods and
gave the U.S. Tax Free Fund 4, 4, 3 and 2 stars for the 1-, 3-, 5- and 10-year
periods (out of 1745, 1013, 561 and 221 municipal bond funds, respectively). (4)
Lipper Analytical Services ranked the U.S. Government Securities Savings Fund #5
and #1 for the 1- and 5-year periods ended 9/30/96 (out of 112 and 71 government
money market funds, respectively). (5) Using the ABC Investment Plan(R) does not
guarantee a profit. If you sell at the bottom, no system will give you a gain.
