STATEMENT OF ADDITIONAL INFORMATION
U.S. GLOBAL INVESTORS FUNDS
CHINA REGION OPPORTUNITY FUND
(THE "FUND")
This Statement of Additional Information is not a prospectus but should be
read in conjunction with the appropriate Fund prospectus dated November 1, 1996
(the "prospectus"), which may be obtained from U.S. Global Investors, Inc.
(formerly United Services Advisors, Inc.) (the "Advisor"), P.O. Box 29467, San
Antonio, Texas 78229-0467.
The date of this Statement of Additional Information is November 1,
1996, as amended February 24, 1997.
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Statement of Additional Information - China Region Opportunity Fund
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STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
PAGE
GENERAL INFORMATION............................................................3
INVESTMENT OBJECTIVES AND POLICIES.............................................4
Investment Restrictions...................................................4
SPECIAL RISK CONSIDERATIONS....................................................5
PORTFOLIO TRANSACTIONS........................................................10
MANAGEMENT OF THE FUND........................................................10
PRINCIPAL HOLDERS OF SECURITIES...............................................14
INVESTMENT ADVISORY SERVICES..................................................14
TRANSFER AGENCY AND OTHER SERVICES............................................16
ADDITIONAL INFORMATION ON REDEMPTIONS.........................................16
CALCULATION OF PERFORMANCE DATA...............................................17
TAX STATUS....................................................................17
Taxation of the Fund--In General.........................................17
Taxation of the Fund's Investments.......................................18
Taxation of the Shareholder..............................................18
CUSTODIAN.....................................................................19
INDEPENDENT ACCOUNTANT .......................................................19
FINANCIAL STATEMENTS..........................................................19
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GENERAL INFORMATION
U.S. Global Investors Funds (the "Trust") is an open-end management
investment company and is a voluntary association of the type known as a
"business trust" organized under the laws of the Commonwealth of Massachusetts.
The China Region Opportunity Fund (hereinafter sometimes referred to as the
"Fund") is one of several series of the Trust, each of which represents a
separate, diversified portfolio of securities (collectively referred to herein
as the "Portfolios" and individually as a "Portfolio").
The assets received by the Trust from the issue or sale of shares of each
of the funds, and all income, earnings, profits and proceeds thereof, subject
only to the rights of creditors, are separately allocated to such fund. They
constitute the underlying assets of each fund, are required to be segregated on
the books of accounts, and are to be charged with the expenses with respect to
such fund. Any general expenses of the Trust, not readily identifiable as
belonging to a particular fund, will be allocated by or under the direction of
the Board of Trustees in such manner as the Board determines to be fair and
equitable.
Each share of each of the funds represents an equal proportionate interest
in that fund with each other share and is entitled to such dividends and
distributions, out of the income belonging to that fund, as are declared by the
Board. Upon liquidation of the Trust, shareholders of each fund are entitled to
share pro rata in the net assets belonging to the fund available for
distribution.
The Trustees have exclusive power, without the requirement of shareholder
approval, to issue series of shares without par value, each series representing
interests in a separate portfolio, or divide the shares of any portfolio into
classes, each class having such different dividend, liquidation, voting and
other rights as the Trustees may determine, and may establish and designate the
specific classes of shares of each portfolio. Before establishing a new class of
shares in an existing portfolio, the Trustees must determine that the
establishment and designation of separate classes would not adversely affect the
rights of the holders of the initial or previously established and designated
class or classes.
As described under "The Trust" in the prospectus, under the Trust's First
Amended and Restated Master Trust Agreement (the "Master Trust Agreement"), no
annual or regular meeting of shareholders is required. In addition, after the
Trustees were initially elected by the shareholders, the Trustees became a
self-perpetuating body. Thus, there will ordinarily be no shareholder meetings
unless otherwise required by the Investment Company Act of 1940.
On any matter submitted to shareholders, the holder of each share is
entitled to one vote per share (with proportionate voting for fractional
shares). On matters affecting any individual fund, a separate vote of that fund
would be required. Shareholders of any fund are not entitled to vote on any
matter which does not affect their fund but which requires a separate vote of
another fund.
Shares do not have cumulative voting rights, which means that in situations
in which shareholders elect Trustees, holders of more than 50% of the shares
voting for the election of Trustees can elect 100% of the Trust's Trustees, and
the holders of less than 50% of the shares voting for the election of Trustees
will not be able to elect any person as a Trustee.
Shares have no preemptive or subscription rights and are fully
transferable. There are no conversion rights.
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Under Massachusetts law, the shareholders of the Trust could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Master Trust Agreement disclaims shareholder liability for acts or
obligations of the Trust and requires that notice of such disclaimer be given in
each agreement, obligation or instrument entered into or executed by the Trust
or the Trustees. The Master Trust Agreement provides for indemnification out of
the Trust's property for all losses and expenses of any shareholder held
personally liable for the obligations of the Trust. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Trust itself would be unable to meet its
obligations.
INVESTMENT OBJECTIVES AND POLICIES
The following information supplements the discussion of the Fund's
investment objectives and policies discussed in the Fund's prospectus.
INVESTMENT RESTRICTIONS
The Fund will not change any of the following investment restrictions,
without the affirmative vote of a majority of the outstanding voting securities
of the Fund, which, as used herein, means the lesser of (1) 67% of the Fund's
outstanding shares present at a meeting at which more than 50% of the
outstanding shares of the Fund are represented either in person or by proxy, or
(2) more than 50% of the Fund's outstanding shares.
The Fund may not:
(1) Issue senior securities.
(2) Borrow money, except that the Fund may borrow not in excess of 5% of
its total assets from banks as a temporary measure for extraordinary
purposes and may borrow up to 33 1/3% of the amount of its total
assets (reduced by the amount of all liabilities and indebtedness
other than such borrowing) when deemed desirable or appropriate to
effect redemptions. However, the Fund may not purchase additional
securities while borrowing exceeds 5% of the total assets of the Fund.
(3) Underwrite the securities of other issuers.
(4) Invest in real estate.
(5) Engage in the purchase or sale of commodities or commodity futures
contracts, except that the Fund may invest in futures contracts and
options thereon.
(6) Lend its assets, except that the Fund may purchase money market debt
obligations and repurchase agreements secured by money market
obligations, and except for the purchase or acquisition of bonds,
debentures or other debt securities of a type customarily purchased by
institutional investors and except that the Fund may lend portfolio
securities with an aggregate market value of not more than one-third
of the Fund's total net assets. (Accounts receivable for shares
purchased by telephone will not be deemed loans.)
(7) Purchase any security on margin, except that it may obtain such
short-term credits as are necessary for clearance of securities
transactions.
(8) Make short sales.
(9) Invest more than 15% of net assets in illiquid securities, including
securities which are subject to legal or contractual restrictions on
resale.
(10) Invest more than 25% of its total assets in securities of companies
principally engaged in any one industry (other than obligations issued
or guaranteed by the U.S. Government or any of its
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agencies or instrumentalities). For purposes of this restriction, a
foreign government is deemed to be an "industry."
(11) (a) Invest more than 5% of the value of its total assets in securities
of any one issuer, except such limitation will not apply to
obligations issued or guaranteed by the United States Government, its
agencies or instrumentalities, or (b) acquire more than 10% of the
voting securities of any one issuer as discussed in the prospectus,
such limitations apply to only 75% of the value of the Fund's total
assets.
SPECIAL RISK CONSIDERATIONS
The following discussion of some of the most significant risks associated
with an investment in the Fund supplements the discussion in the prospectus.
FOREIGN INVESTMENTS: Investing in securities issued by companies whose
principal business activities are outside the United States may involve
significant risks not present in domestic investments. For example, there is
generally less publicly available information about foreign companies,
particularly those not subject to the disclosure and reporting requirements of
the United States securities laws. Foreign issuers are generally not bound by
uniform accounting, auditing and financial reporting requirements and standards
of practice comparable to those applicable to domestic issuers. Investments in
foreign securities also involve the risk of possible adverse changes in
investment or exchange control regulations, expropriation or confiscatory
taxation, limitation of the removal of funds or other assets of the Fund,
political or financial instability or diplomatic and other developments which
could affect such investment. Further, economies of particular countries or
areas of the world may differ favorably or unfavorably from the economy of the
United States. It is anticipated that in most cases the best available market
for foreign securities will be on exchanges or in over-the-counter markets
located outside of the United States. Foreign stock markets, while growing in
volume and sophistication, are generally not as developed as those in the United
States, and such markets may periodically close for extended periods (e.g., two
weeks during the Chinese New Year), affecting the liquidity and pricing of
portfolio securities. Securities of some foreign issuers (particularly those
located in developing countries) may be less liquid and more volatile than
securities of comparable United States companies. In addition, foreign brokerage
commissions are generally higher than commissions on securities traded in the
United States and may be non-negotiable. In general, there is less overall
governmental supervision and regulation of foreign securities markets,
broker-dealers and issuers than in the United States.
CHINA'S LEGAL SYSTEM: China does not have a comprehensive system of laws,
although substantial changes have occurred in this regard in recent years. The
corporate form of organization has only recently been permitted in China. Laws
regarding fiduciary duties of officers and directors and the protection of
shareholders are not well developed. China's judiciary is relatively
inexperienced in enforcing the laws that exist, leading to a higher than usual
degree of uncertainty as to the outcome of any litigation.
TAIWAN INVESTMENT LIMITATIONS: As of the date of this registration
statement, Taiwan limits a foreign institution's investments in Taiwan to no
more than $ 400 million.
FUTURES CONTRACTS: The Fund may sell futures contracts to hedge against a
decline in the market price of securities which it owns or purchase futures
contracts to remain more fully invested (but not to leverage the portfolio) to
defend the portfolio against currency fluctuations. When the Fund purchases or
sells a futures contract, the Fund will be required to deposit an amount of cash
or U.S. Treasury bills equal to approximately 5% of the contract amount
("initial margin") with the broker. The nature of initial margin in futures
transactions
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is different from that of margin in securities transactions in that futures
contract margin does not involve the borrowing of funds by the customer to
finance the transactions. Rather, initial margin is in the nature of a
performance bond or good faith deposit on the contract which is returned to the
Fund upon termination of the futures contract assuming all of the Fund's
contractual obligations have been satisfied. Subsequent payments, called
variation margin, to and from the broker will be made on a daily basis as the
price of the underlying currency, stock or stock index fluctuates making the
futures contract more or less valuable, a process known as "marking-to-market."
For example, when the Fund has sold a currency futures contract and the prices
of the stocks included in the underlying currency have fallen, that position
will have increased in value and the Fund will receive a variation margin
payment from the broker equal to that increase in value. Conversely, when the
Fund has sold a currency futures contract and the prices of the underlying
currency have risen, the position would be less valuable and the Fund would be
required to make a variation margin payment to the broker. At any time prior to
expiration of the futures contract, the Fund may elect to close the position by
taking an opposite position, which will operate to terminate the Fund's position
in the futures contract. A final determination of variation margin is then made,
additional cash is required to be paid by or released to the Fund, and it
realizes a loss or a gain.
There is a risk that futures price movements will not correlate perfectly
with movements in the value of the underlying stock or stock index. For a number
of reasons, the price of the future may move more than or less than the price of
the securities that make up the index. First, all participants in the futures
market are subject to margin deposit and maintenance requirements. Rather than
meeting additional margin deposit requirements, investors may close futures
contracts through offsetting transactions which could distort the normal
relationship between the index and futures markets. Secondly, from the point of
view of speculators, the deposit requirements in the futures market are less
onerous than margin requirements in the stock market. Therefore, increased
participation by speculators in the futures market may also cause temporary
price distortions.
There is a further risk that a liquid secondary trading market may not
exist at all times for these futures contracts, in which event the Fund might be
unable to terminate a futures position at a desired time. Positions in stock
index futures may be closed out only on an exchange or board of trade which
provides a secondary market for such futures. Although the Fund intends to
purchase or sell futures only on exchanges or boards of trade where there
appears to be an active secondary market, there is no assurance that a liquid
secondary market on an exchange or board of trade will exist for any particular
contract or at any particular time. If there is not a liquid secondary market at
a particular time, it may not be possible to close a futures position at such
time, and in the event of adverse price movements, the Fund would continue to be
required to make daily cash payments of variation margin.
OPTIONS: The Fund may sell call options or purchase put options on futures
contracts to hedge against a decline in the market price of securities which it
owns or to defend the portfolio against currency fluctuations. The Fund may also
purchase call options or sell put options on futures contracts to remain more
fully invested until suitable investments can be made in individual equity
securities. Options on futures contracts differ from options on individual
securities in that the exercise of an option on a futures contract does not
involve delivery of an actual underlying security. Options on futures contracts
are settled in cash only. The purchaser of an option receives a cash settlement
amount and the writer of an option is required, in return for the premium
received, to make delivery of a certain amount if the option is exercised. A
position in an option on a futures contract may be offset by either the
purchaser or writer by entering into a closing transaction, or the purchaser may
terminate the option by exercising it or allowing it to expire.
The risks associated with the purchase and sale of options on futures
contracts are generally the same as those relating to options on individual
securities. However, the value of an option on a futures contract depends
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primarily on movements in the value of the currency, stock or the stock index
underlying the futures contract rather than in the price of a single security.
Accordingly, the Fund will realize a gain or loss from purchasing or writing an
option on a futures contract as a result of movements in the related currency or
in the stock market generally, rather than changes in the price for a particular
security. Therefore, successful use of options on futures contracts by the Fund
will depend on the Advisor's ability to predict movements in the direction of
the currency or stock market underlying the futures contract. The ability to
predict these movements requires different skills and techniques than predicting
changes in the value of individual securities.
Because index options are futures contracts settled in cash, the Fund
cannot be assured of covering its potential settlement obligations under call
options it writes on futures contracts by acquiring and holding the underlying
securities. Unless the Fund has cash on hand that is sufficient to cover the
cash settlement amount, it would be required to sell securities owned in order
to satisfy the exercise of the option.
As a non-fundamental policy, the Fund will neither purchase nor write an
options contract 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. In the case of an option that is in-the-money at the time
of the purchase, the in-the-money amount may be excluded in calculating the 5%
limitation.
As a non-fundamental policy, the China Fund will not purchase a futures
contract (except for closing transactions) if, immediately thereafter, the
market value of all open futures contracts is greater than the market value of
the China Fund's cash and cash equivalents (including cash, repurchase
agreements, and high quality fixed income securities with a final maturity of
less than one year)..
SEGREGATED ASSETS AND COVERED POSITIONS
When purchasing or selling a futures contract, purchasing or selling an
uncovered option, or purchasing securities on a when-issued or delayed delivery
basis, the Fund will restrict cash, which may be invested in repurchase
obligations, or liquid securities. When purchasing a futures contract, the
amount of restricted cash or liquid securities, when added to the amount
deposited with the broker as margin, will be at least equal to the notional
value of the futures contract and not less than the market price at which the
futures contract was established. In addition, to prevent leveraging, the Fund
will not purchase a futures contract unless it has cash or cash equivalents
(whether segregated or not) at least equal to the notional value of the futures
contract. The Fund may sell futures either to hedge existing portfolio positions
or to close out long transactions. When purchasing a futures contract, the
amount of restricted cash or liquid securities, when added to the amount
deposited with the broker as margin, will be at least equal to the market value
of the futures contract and not less than the market price at which the futures
contract was established. When selling an uncovered call option, the amount of
restricted cash or liquid securities, when added to the amount deposited with
the broker as margin, will be at least equal to the value of securities
underlying the call option and not less than the strike price of the call
option. When selling an uncovered put option, the amount of restricted cash or
liquid securities, when added to the amount deposited with the broker as margin,
will be at least equal to the value of securities underlying the put option and
not less than the strike price of the put option. When purchasing securities on
a when-issued or delayed delivery basis, the amount of restricted cash or liquid
securities will be at least equal to the Fund's when-issued or delayed delivery
commitments.
The restricted cash or liquid securities will either be identified as
restricted in the Fund's accounting records or be physically segregated in a
separate account at Bankers Trust Company, the Fund's custodian. For the purpose
of determining the adequacy of the liquid securities which have been restricted,
the securities will be valued at market or fair value. If the market or fair
value of such securities declines, additional cash or liquid
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securities will be restricted on a daily basis so that the value of the
restricted cash or liquid securities, when added to the amount deposited with
the broker as margin, equals the amount of such commitments by the Fund.
Fund assets need not be segregated if the Fund "covers" the futures
contract, call option, or put option sold. For example, the Fund could cover a
futures or forward contract which it has sold short by owning the securities or
currency underlying the contract. The Fund may also cover this position by
holding a call option permitting the Fund to purchase the same futures or
forward contract at a price no higher than the price at which the sell position
was established.
The Fund could cover a call option which it has sold by holding the same
currency or security (or, in the case of a stock index, a portfolio of stock
substantially replicating the movement of the index) underlying the call option.
The Fund may also cover by holding a separate call option of the same security
or stock index with a strike price no higher than the strike price of the call
option sold by the Fund. The Fund could cover a call option which it has sold on
a futures contract by entering into a long position in the same futures contract
at a price no higher than the strike price of the call option or by owning the
securities or currency underlying the futures contract. The Fund could also
cover a call option which it has sold by holding a separate call option
permitting it to purchase the same futures contract at a price no higher than
the strike price of the call option sold by the Fund.
FOREIGN CURRENCY TRANSACTIONS: Investments in foreign companies usually
involve use of currencies of foreign countries. The Fund also may hold cash and
cash-equivalent investments in foreign currencies. The value of the Fund's
assets as measured in U.S. dollars will be affected by changes in currency
exchange rates and exchange control regulations. The Fund may, as appropriate
markets are developed, but is not required to, engage in currency transactions
including cash market purchases at the spot rates, forward currency contracts,
exchange listed currency futures, exchange listed and over-the-counter options
on currencies, and currency swaps for two purposes. One purpose is to settle
investment transactions. The other purpose is to try to minimize currency risks.
All currency transactions involve a cost. Although foreign exchange dealers
generally do not charge a fee, they do realize a profit based on the difference
(spread) between the prices at which they are buying and selling various
currencies. Commissions are paid on futures options and swaps transactions, and
options require the payment of a premium to the seller.
A forward contract involves a privately negotiated obligation to purchase
or sell at a price set at the time of the contract with delivery of the currency
generally required at an established future date. A futures contract is a
standardized contract for delivery of foreign currency traded on an organized
exchange that is generally settled in cash. An option gives the right to enter
into a contract. A swap is an agreement based on a nominal amount of money to
exchange the differences between currencies.
The Fund will generally use spot rates or forward contracts to settle a
security transaction or handle dividend and interest collection. When the Fund
enters into a contract for the purchase or sale of a security denominated in a
foreign currency or has been notified of a dividend or interest payment, it may
desire to lock in the price of the security or the amount of the payment in
dollars. By entering into a spot rate or forward contract, the Fund will be able
to protect itself against a possible loss resulting from an adverse change in
the relationship between different currencies from the date the security is
purchased or sold to the date on which payment is made or received or when the
dividend or interest is actually received.
The Fund may use forward or futures contracts, options, or swaps when the
investment manager believes the currency of a particular foreign country may
suffer a substantial decline against another currency. For
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example, it may enter into a currency transaction to sell, for a fixed amount of
dollars, the amount of foreign currency approximating the value of some or all
of the Fund's portfolio securities denominated in such foreign currency. The
precise matching of the securities transactions and the value of securities
involved generally will not be possible. The projection of short-term currency
market movements is extremely difficult and successful execution of a short-term
strategy is highly uncertain.
The Fund may cross-hedge currencies by entering into transactions to
purchase or sell one or more currencies that are expected to decline in value
relative to other currencies in which the Fund has (or expects to have)
portfolio exposure.
The Fund may engage in proxy hedging. Proxy hedging is often used when the
currency to which a fund's portfolio is exposed is difficult to hedge. Proxy
hedging entails entering into a forward contract to sell a currency whose
changes in value are generally considered to be linked to a currency or
currencies in which some or all of the Fund's portfolio securities are or are
expected to be denominated, and simultaneously buy U.S. dollars. The amount of
the contract would not exceed the value of the Fund's securities denominated in
linked securities.
The Fund will not enter into a currency transaction or maintain an exposure
as a result of the transaction when it would obligate the Fund to deliver an
amount of foreign currency in excess of the value of the Fund's portfolio
securities or other assets denominated in that currency. The Fund will designate
cash or securities in an amount equal to the value of the Fund's total assets
committed to consummating the transaction. If the value of the securities
declines, additional cash or securities will be designated on a daily basis so
that the value of the cash or securities will equal the amount of the Fund's
commitment.
On the settlement date of the currency transaction, the Fund may either
sell portfolio securities and make delivery of the foreign currency or retain
the securities and terminate its contractual obligation to deliver the foreign
currency by purchasing an offsetting position. It is impossible to forecast what
the market value of portfolio securities will be on the settlement date of a
currency transaction. Accordingly, it may be necessary for the Fund to buy
additional foreign currency on the spot market (and bear the expense of such
purchase) if the market value of the securities is less than the amount of
foreign currency the Fund is obligated to deliver and a decision is made to sell
the securities and make delivery of the foreign currency. Conversely, it may be
necessary to sell on the spot market some of the foreign currency received on
the sale of the portfolio securities if its market value exceeds the amount of
foreign currency the Fund is obligated to deliver. The Fund will realize gains
or losses on currency transactions.
The Fund may also buy put options and write covered call options on foreign
currencies to try to minimize currency risks. The risk of buying an option is
the loss of premium. The risk of selling (writing) an option is that the
currency option will minimize the currency risk only up to the amount of the
premium, and then only if rates move in the expected direction. If this does not
occur, the option may be exercised and the Fund would be required to buy the
underlying currency at the loss which may not be offset by the amount of the
premium. Through the writing of options on foreign currencies, the Fund may also
be required to forego all or a portion of the benefits which might otherwise
have been obtained from favorable movements on exchange rates. All options
written on foreign currencies will be covered; that is, the Fund will own
securities denominated in the foreign currency, hold cash equal to its
obligations or have contracts that offset the options.
The Fund may construct a synthetic foreign currency investment, sometimes
called a structured note, by (a) purchasing a money market instrument which is a
note denominated in one currency, generally U.S. dollars, and (b) concurrently
entering into a forward contract to deliver a corresponding amount of that
currency in exchange for a different currency on a future date and at a
specified rate of exchange. Because the availability
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of a variety of highly liquid short-term U.S. dollar market instruments, or
notes, a synthetic money market position utilizing such U.S. dollar instruments
may offer greater liquidity than direct investment in foreign currency.
PORTFOLIO TRANSACTIONS
The Advisory Agreement between the Trust and the Advisor requires that the
Advisor, in executing portfolio transactions and selecting brokers or dealers,
seeks the best overall terms available. In assessing the terms of a transaction,
consideration may be given to various factors, including the breadth of the
market in the security, the price of the security, the financial condition and
execution capability of the broker or dealer (for a specified transaction and on
a continuing basis), the reasonableness of the commission, if any, and the
brokerage and research services provided to the Trust and/or other accounts over
which the Advisor or an affiliate of the Advisor exercises investment
discretion. Under the Advisory Agreement, the Advisor is permitted, in certain
circumstances, to pay a higher commission than might otherwise be obtained in
order to acquire brokerage and research services. The Advisor must determine in
good faith, however, that such commission is reasonable in relation to the value
of the brokerage and research services provided -- viewed in terms of that
particular transaction or in terms of all the accounts over which investment
discretion is exercised. In such case, the Board of Trustees will review the
commissions paid by each Fund of the Trust to determine if the commissions paid
over representative periods of time were reasonable in relation to the benefits
obtained. The advisory fee of the Advisor would not be reduced by reason of its
receipt of such brokerage and research services. To the extent that research
services of value are provided by broker-dealers through or with whom the Trust
places portfolio transactions, the Advisor may be relieved of expenses which it
might otherwise bear.
The Trust may, in some instances, purchase securities that are not listed
on a national securities exchange or quoted on NASDAQ, but rather are traded in
the over-the-counter market. When the transactions are executed in the
over-the-counter market, it is intended generally to seek first to deal with the
primary market makers. However, the services of brokers will be utilized if it
is anticipated that the best overall terms can thereby be obtained. The Fund
paid a total of $78,918 in brokerage fees for the year ended June 30, 1996.
MANAGEMENT OF THE FUND
The Trustees and Officers of the Trust and their principal occupations
during the past five years are set forth below. Except as otherwise indicated,
the business address of each is 7900 Callaghan Road, San Antonio, Texas
78229-0467.
NAME AND TRUST
ADDRESS POSITION PRINCIPAL OCCUPATION
- -------------------- ------------ ------------------------------------
John P. Allen Trustee President, Deposit Development
5600 San Pedro Associates Inc., a bank marketing
San Antonio, TX firm. President, Paragon Press.
Partner, Rio Cibolo Ranch, Inc.
William A. Fagan, Jr. Chairman of Chairman of the Board of Trustees
P.O. Box 17903 the Board of since January 1, 1989. Business
San Antonio, TX Trustees consultant since 1976.
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NAME AND TRUST
ADDRESS POSITION PRINCIPAL OCCUPATION
- -------------------- ------------ ------------------------------------
E. Douglas Hodo Trustee Chief Executive Officer of Houston
7706 Fondren Baptist University. Formerly Dean
Houston, TX and Professor of Economics and
Finance, College of Business,
University of Texas at San Antonio.
Charles Z. Mann Trustee Business consultant since January
Turning Point 1, 1993. Chairman, Bermuda Monetary
13 Knapton Estates Authority from 1986 to 1992.
Rd. Executive Vice President of
Smiths, Bermuda International Median Limited, a
HS01 private investment holding company,
from 1979 to 1985 and previously
general manager of Bank of N.T.
Butterfield & Son, Ltd., a
Bermuda-based bank. Currently a
Director of Bermuda Electric Light
Company, Ltd.; Overseas Imports,
Ltd.; Tyndall International
(Bermuda) Ltd.; Old Court
International Reserves Ltd.; XL
Investments Limited, Glaxo
(Bermuda) Limited.
W.C.J. van Rensburg Trustee Professor of Geological Science and
6010 Sierra Arbor Petroleum Engineering, University
Court of Texas at Austin. Former
Austin, TX Associate Director, Bureau of
Economic Geology, University of
Texas. Former Chairman, Department
of Geosciences, West Texas State
University. Former technical
director of South African Minerals
Bureau and British Petroleum
Professor of Energy Economics at
the Ran Afrikaans University,
Johannesburg, South Africa.
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NAME AND TRUST
ADDRESS POSITION PRINCIPAL OCCUPATION
- -------------------- ------------ ------------------------------------
Frank E. Holmes* Trustee, Chairman of the Board of Directors,
President and and Chief Executive Officer of the
Chief Advisor since October 27, 1989.
Executive President from October 1989 to
Officer September 1995. Director of
Security Trust & Financial Company
("ST&FC"), a wholly-owned subsidiary
of Advisor, since November 1991.
President, Chief Executive Officer
and Trustee of Accolade Funds, a
Massachusetts business trust
consisting of no-load mutual funds,
since April 1993. Director of U.S.
Advisors (Guernsey) Limited, a
wholly-owned subsidiary of the
Advisor, and of the Guernsey Funds
managed by that Company since August
1993. Director of Marleau, Lemire
Inc. from January 1995 to December
1995. Director of Franc-Or Resources
Corp since November 1994. Director
of United Services Canada, Inc.
(formerly United Services Advisors
Wealth Management Corp.) since
February 1995 and Chief Executive
Officer from February to August
1995. Trustee of Pauze/Swanson
United Services Funds from November
1993 to February 1996. Independent
business consultant and financial
adviser from July 1978 to October
1989. From July 1978 to October
1989, held various positions with
Merit Investment Corporation, a
Canadian investment dealer,
including the latest position as
Executive Vice President-Corporate
Finance. Formerly a member of the
Toronto Stock Exchange Listing
Committee, Registered Portfolio
Manager with the Toronto Stock
Exchange, and former President and
Chairman of the Toronto Society of
Investment Dealers Association.
Formerly a Director of Merit
Investment Corporation.
-----------------------------------
* This Trustee may be deemed an
"interested person" of the Trust as
defined in the Investment Company
Act of 1940.
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Statement of Additional Information - China Region Opportunity Fund
Page 12
12
<PAGE>
NAME AND TRUST
ADDRESS POSITION PRINCIPAL OCCUPATION
- -------------------- ------------ ------------------------------------
Bobby D. Duncan Executive President of the Advisor since
Vice September 1995 and Chief Financial
President, Officer since August 1996.
Chief Executive Vice President and Chief
Operating Financial Officer of the Advisor
Officer, from October 27, 1989 to September
Chief 1995. Chief Operating Officer since
Financial November 1, 1993. President, Chief
Officer Executive Officer, Chief Operating
Officer, Chief Financial Officer and
Treasurer of the Advisor from
January 1, 1989 to October 27, 1989.
Prior to January 1990 held various
positions with the Trust, including
Executive Vice President, Treasurer,
Chief Operating Officer and Chief
Financial Officer. Served as sole
Director and Chief Executive Officer
of USSI from September 1988 to
November 1989. Director of A&B
Mailers, Inc. since February 1988
and Chairman since July 1991. Chief
Executive Officer, President, Chief
Operating Officer, Chief Financial
Officer, and a Director of USSI.
Director of the Advisor since 1986.
President of ST&FC since January
1996. Director, Executive Vice
President, and Chief Financial
Officer of ST&FC from November 1991
to March 1994. Executive Vice
President, Chief Financial Officer
of Accolade Funds since April 1993.
Vice President, Chief Financial
Officer, and Trustee of
Pauze/Swanson United Services Funds
from November 1, 1993 to February
1996. President, Chief Executive
Officer and Trustee of United
Services Insurance Fund since July
22, 1994. Director and Chief
Financial Officer of United Services
Canada Inc. (formerly United
Services Advisors Wealth Management
Corp.) since February 1995.
Victor Flores Executive Executive Vice President, Chief
Vice Investment Officer of the Funds
President, since February 1994. Portfolio
Chief Manager U.S. Gold Shares Fund since
Investment November 1992 and U.S. World Gold
Officer Fund since January 1990. Portfolio
Manager, U.S. Global Resources
Fund, from January 1990 to November
1992. Vice President, Chief
Investment Officer and Director of
U.S. Global Investors, Inc.
(formerly United Services Advisors,
Inc.) since February 1994. Formerly
Vice President, Portfolio Manager
of U.S. Global Investors, Inc.(July
1993-February 1994). Served as
Resource Analyst for U.S. Global
Investors Funds and U.S. Global
Investors, Inc. from January 1988
to December 1989.
Susan B. McGee Vice Vice President and Secretary of the
President, Trust from September 1995. Vice
Secretary President and Secretary of the
Advisor since September 1995. Vice
President and Secretary of USSI
since September 1995. Vice President
and Assistant Secretary of Accolade
Funds since September 1995. Vice
President-Operations, Secretary and
Associate Counsel of ST&FC since
September 1992 to present; Vice
President-Operations of ST&FC from
May 1993 to December 1994. Associate
Counsel from August 1994 to present.
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Statement of Additional Information - China Region Opportunity Fund
Page 13
13
<PAGE>
NAME AND TRUST
ADDRESS POSITION PRINCIPAL OCCUPATION
- -------------------- ------------ ------------------------------------
Thomas D. Tays Vice Vice President - Special Counsel,
President, Securities Specialist, Director of
Securities Compliance, Assistant Secretary of
Specialist, the Advisor from September 1995 to
Director of present; Associate Counsel,
Compliance Assistant Secretary of the Advisor
from September 1993 to September
1995. Vice President, Securities
Specialist, Director of Compliance
and Assistant Secretary of USF
since September 1995. Vice
President and Secretary of Accolade
Funds since September 1995, was
Assistant Secretary from September
1994 to September 1995. Vice
President, Secretary of United
Services Insurance Funds from June
1994 to present. Private practice
of law from 1990 to August 1993.
Kevin C. White Chief Chief Accounting Officer of the
Accounting Advisor from October 1996 to
Officer present. Chief Accounting Officer
of USF from October 1996 to present.
Principal Accounting Officer of
Accolade Funds from September 1996
to present. Employee of the Advisor
from November 1995 to present.
Closing Manager for World Savings
and Loan from January 1995 to
November 1995. Controller of
Swearingen Aircraft from December
1991 to January 1995. Financial
Analyst for Fox Photo from February
1991 to December 1991.
PRINCIPAL HOLDERS OF SECURITIES
As of August 26, 1996, the officers and trustees of the Fund, as a group,
owned less then 1% of the outstanding shares of the Fund. The Fund is aware of
the following person who owned of record, or beneficially, more than 5% of the
outstanding shares of the Fund at August 26, 1996:
NAME AND ADDRESS TYPE OF
OF OWNER % OWNED OWNERSHIP
- ---------------------------- ------- ---------
Charles Schwab & Co., Inc. 27.43% Record(1)
San Francisco, CA 94104-4175
- ------------------------------------
(1) Charles Schwab & Co., Inc., a broker-dealer, has advised that no individual
client owns more than 5% of the Fund.
INVESTMENT ADVISORY SERVICES
The investment adviser to the Funds is U.S. Global Investors, Inc.
(formerly United Services Advisors, Inc.) (the "Advisor"), a Texas corporation,
pursuant to an Advisory Agreement dated October 27, 1989. Frank E. Holmes, Chief
Executive Officer and Director of the Advisor, as well as a Trustee, President
and Chief
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Statement of Additional Information - China Region Opportunity Fund
Page 14
14
<PAGE>
Executive Officer of the Trust, beneficially owns more than 25% of the
outstanding voting stock of the Advisor and may be deemed to be a controlling
person of the Advisor.
In addition to the services described in the Fund's prospectus, the Advisor
will provide the Trust with office space, facilities and simple business
equipment, and will provide the services of executive and clerical personnel for
administering the affairs of the Trust. It will compensate all personnel,
officers and Trustees of the Trust if such persons are employees of the Advisor
or its affiliates, except that the Trust will reimburse the Advisor for a
portion of the compensation of the Advisor's employees who perform certain legal
services for the Trust, including state securities law regulatory compliance
work, based upon the time spent on such matters for the Trust. The Advisor pays
the expense of printing and mailing prospectuses and sales materials used for
promotional purposes.
The Trust pays all other expenses for its operations and activities. Each
of the funds of the Trust pays its allocable portion of these expenses. The
expenses borne by the Trust include the charges and expenses of any transfer
agents and dividend disbursing agents, custodian fees, legal and auditors'
expenses, bookkeeping and accounting expenses, brokerage commissions for
portfolio transactions, taxes, if any, the advisory fee, extraordinary expenses,
expenses of issuing and redeeming shares, expenses of shareholder and trustee
meetings, the expenses of preparing, printing and mailing proxy statements,
reports and other communications to shareholders, expenses of registering and
qualifying shares for sale, fees of Trustees who are not "interested persons" of
the Advisor, expenses of attendance by officers and Trustees at professional
meetings of the Investment Company Institute, the No-Load Mutual Fund
Association or similar organizations, and membership or organizational dues of
such organizations, expenses of preparing and setting in type prospectuses and
periodic reports and expenses of mailing them to current shareholders, cost of
fidelity bond premiums, cost of maintaining the books and records of the Trust,
and any other charges and fees not specifically enumerated.
For the services and facilities provided to the Fund by the Advisor, the
Fund may pay to the Advisor a monthly fee at the rate of 1/12 of 1.25% based
upon the monthly average net assets of the Fund for such calendar month. The
Advisor has voluntarily agreed to bear certain Fund expenses. See the prospectus
section - "The Investment Advisor."
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 Glass-Steagall Act
prohibits banks from engaging in the business of underwriting, selling or
distributing securities. However, in the Advisor's opinion, such laws should not
preclude a bank from performing shareholder administrative and servicing
functions as contemplated herein.
The securities laws of certain states in which shares of the Trust may,
from time to time, be qualified for sale require that the investment adviser
reimburse the Trust for any excess of the Fund's expenses over prescribed
percentages of the Fund's average net assets. Thus, the Advisor's compensation
under the agreements is subject to reduction in any fiscal year to the extent
that total expenses of the Fund for such year (including an investment adviser's
compensation but exclusive of taxes, brokerage commissions, extraordinary
expenses, and other permissible expenses) exceed the most restrictive applicable
expense limitation prescribed by any state in which the Trust's shares are
qualified for sale. The Advisor may obtain waivers of these state expense
limitations from time to time. Such limitation is currently 2.5% of the first
$30 million of average net assets, 2% of the next $70 million of average net
assets and 1.5% of the remaining average net assets.
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Statement of Additional Information - China Region Opportunity Fund
Page 15
15
<PAGE>
The Board of Trustees of the Trust (including a majority of the
"disinterested Trustees") recently approved continuation of the Advisory
Agreement through October 1996. The Advisory Agreement provides that it will
continue initially for two years, and from year to year thereafter, with respect
to each Fund, as long as it is approved at least annually both (I) by a vote of
a majority of the outstanding voting securities of such Fund (as defined in the
Investment Company Act of 1940) or by the Board of Trustees of the Trust, and
(ii) by a vote of a majority of the Trustees who are not parties to the Advisory
Agreement or "interested persons" of any party thereto, cast in person at a
meeting called for the purpose of voting on such approval. The Advisory
Agreement may be terminated on 60 days' written notice by either party and will
terminate automatically if it is assigned.
The Trust pays the Advisor a separate management fee for each Portfolio in
the Trust. Such fee is based on varying percentages of average net assets. For
the three fiscal periods ended June 30, 1994, June 30, 1995 and June 30, 1996,
the Trust incurred advisory fees (net of expenses paid by the Advisor or
voluntary fee waivers) of, $5,021,807 $5,233,507 and $5,216,589, respectively.
TRANSFER AGENCY AND OTHER SERVICES
In addition to the services performed for the funds and the Trust under the
Advisory Agreement, the Advisor, through its subsidiary USSI, provides transfer
agent and dividend disbursement agent services pursuant to the Transfer Agency
Agreement as described in the Fund's prospectus under "Management of the Fund --
The Investment Advisor." In addition, lockbox and statement printing services
are provided by USSI. The Board of Trustees approved the Transfer Agency and
related agreements through October 31, 1996. For the three fiscal years ended
June 30, 1994, 1995, and 1996, the Trust paid USSI total transfer agency,
lockbox and printing fees of $2,313,933, $2,557,846, and $2,707,293
respectively.
USSI also maintains the books and records of the Trust and of each Fund of
the Trust and calculates their daily net asset value as described in the Fund's
prospectus under "Management of the Fund -- The Investment Advisor." Total
reimbursements and fees for such services for the fiscal years ending June 30,
1994, 1995, and 1996 were $354,278, $502,944, and $499,465 respectively.
A & B Mailers, Inc., a wholly-owned subsidiary of the Advisor, provides the
Trust with certain mail handling services. The charges for such services are
compared to bids from competitive services on a periodic basis by the Board of
Trustees. Each service is priced separately.
ADDITIONAL INFORMATION ON REDEMPTIONS
SUSPENSION OF REDEMPTION PRIVILEGES: The Trust may suspend redemption
privileges or postpone the date of payment for up to seven days, but cannot do
so for more than seven days after the redemption order is received except during
any period (1) when the NYSE is closed, other than customary weekend and holiday
closings, or trading on the Exchange is restricted as determined by the
Securities and Exchange Commission ("SEC"), (2) when an emergency exists, as
defined by the SEC, which makes it not reasonably practicable for the Trust to
dispose of securities owned by it or fairly to determine the value of its
assets, or (3) as the SEC may otherwise permit.
- --------------------------------------------------------------------------------
Statement of Additional Information - China Region Opportunity Fund
Page 16
16
<PAGE>
CALCULATION OF PERFORMANCE DATA
TOTAL RETURN
The Fund may advertise performance in terms of average annual total return
for 1-, 5- and 10-year periods, or for such lesser periods as the Fund has been
in existence. Average annual total return is computed by finding the average
annual compounded rates of return over the periods that would equate the initial
amount invested to the ending redeemable value, according to the following
formula:
P(1 + T)n = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the 1-, 5- or 10-
year periods at the end of the year or period.
The calculation assumes all charges are deducted from the initial $1,000
payment and assumes all dividends and distributions by the Fund are reinvested
at the price stated in the prospectus on the reinvestment dates during the
period, and includes all recurring fees that are charged to all shareholder
accounts.
The rate of return for the Fund for the year ended June 30, 1996, was
(2.07%).
NONSTANDARDIZED TOTAL RETURN
The Fund may provide the above described standard total return results for
a period which ends as of not earlier than the most recent calendar quarter end
and which begins either twelve months before or at the time of commencement of
the Fund's operations. In addition, the Fund may provide nonstandardized total
return results for differing periods, such as for the most recent six months.
Such nonstandardized total return is computed as otherwise described under
"Total Return" except that no annualization is made.
EFFECT OF FEE WAIVER AND EXPENSE REIMBURSEMENT
All calculations of performance data in this section reflect the Advisor's
fee waivers or reimbursement of a portion of the Fund's expenses, as the case
may be. See "Management of The Fund(s)" in the prospectus.
TAX STATUS
TAXATION OF THE FUND--IN GENERAL
As stated in its prospectus, the Fund intends to qualify as a "regulated
investment company" under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). Accordingly, the Fund will not be liable for Federal
income taxes on its taxable net investment income and capital gain net income
that are distributed to shareholders, provided that the Fund distributes at
least 90% of its net investment income and net short-term capital gain for the
taxable year.
- --------------------------------------------------------------------------------
Statement of Additional Information - China Region Opportunity Fund
Page 17
17
<PAGE>
To qualify as a regulated investment company, the Fund must, among other
things, (a) derive in each taxable year at least 90% of its gross income from
dividends, interest, payments with respect to securities loans, gains from the
sale or other disposition of stock, securities or foreign currencies, or other
income derived with respect to its business of investing in such stock,
securities or currencies (the "90% test"); (b) derive in each taxable year less
than 30% of its gross income from the sale or other disposition of stock or
securities held less than three months (the "30% test"), and (c) satisfy certain
diversification requirements at the close of each quarter of the Fund's taxable
year.
The Code imposes a non-deductible 4% excise tax on a regulated investment
company that fails to distribute, during each calendar year, an amount equal to
the sum of (1) at least 98% of its ordinary income for the calendar year, (2) at
least 98% of its capital gain net income for the twelve-month period ending on
October 31 of the calendar year and (3) any portion of the respective balance of
ordinary income or capital gain net income of the prior year that was not
previously distributed. The Fund intends to make such distributions as are
necessary to avoid imposition of this excise tax.
TAXATION OF THE FUND'S INVESTMENTS
The Fund's ability to make certain investments may be limited by provisions
of the Code that require inclusion of certain unrealized gains or losses in the
Fund's income for purposes of the 90% test, the 30% test and the distribution
requirements of the Code, and by provisions of the Code that characterize
certain income or loss as ordinary income or loss rather than capital gain or
loss. Such recognition, characterization and timing rules generally apply to
investments in certain forward currency contracts, foreign currencies and debt
securities denominated in foreign currencies.
TAXATION OF THE SHAREHOLDER
Taxable distributions generally are included in a shareholder's gross
income for the taxable year in which they are received. However, dividends
declared in October, November or December and made payable to shareholders of
record in such a month will be deemed to have been received on December 31 if a
Fund pays the dividends during the following January.
Distributions by the Fund will result in a reduction in the fair market
value of the Fund's shares. Should a distribution reduce the fair market value
below a shareholder's cost basis, such distribution nevertheless would be
taxable to the shareholder as ordinary income or long-term capital gain, even
though, from an investment standpoint, it may constitute a partial return of
capital. In particular, investors should be careful to consider the tax
implications of buying shares of the Fund just prior to a distribution. The
price of such shares purchased at that time includes the amount of any
forthcoming distribution. Those investors purchasing the Fund's shares just
prior to a distribution may receive a return of investment upon distribution
which will nevertheless be taxable to them.
A shareholder of the Fund should be aware that a redemption of shares
(including any exchange into another United Services Fund) is a taxable event
and, accordingly, a capital gain or loss may be recognized. If a shareholder of
the Fund receives a distribution taxable as long-term capital gain with respect
to shares of the Fund and redeems or exchanges shares before he has held them
for more than six months, any loss on the redemption or exchange (not otherwise
disallowed as attributable to an exempt-interest dividend) will be treated as
long-term capital loss to the extent of any long-term capital gain recognized.
- --------------------------------------------------------------------------------
Statement of Additional Information - China Region Opportunity Fund
Page 18
18
<PAGE>
OTHER TAX CONSIDERATIONS
Distributions to shareholders may be subject to additional state, local and
non-U.S. taxes, depending on each shareholder's particular tax situation.
Shareholders subject to tax in certain states may be exempt from state income
tax on distributions made by the Fund to the extent such distributions are
derived from interest on direct obligations of the United States Government.
Shareholders are advised to consult their own tax advisers with respect to the
particular tax consequences to them of an investment in shares of the Fund.
CUSTODIAN
Bankers Trust Company acts as custodian for the Fund and, pursuant to
sub-custodian agreements, the Fund will maintain its foreign securities and cash
in the custody of certain eligible non-United States banks and securities
depositories. Services with respect to the retirement accounts will be provided
by Security Trust and Financial Company of San Antonio, Texas, a wholly-owned
subsidiary of the Advisor.
INDEPENDENT ACCOUNTANT
Price Waterhouse LLP, One Riverwalk Place, Ste. 900, San Antonio, Texas
78205 serves as the independent accountants for the Trust.
FINANCIAL STATEMENTS
The Fund was established on October 20, 1993. The audited financial
statement for the year ended June 30, 1996 is herein incorporated by reference
from the Annual Report to Shareholders of that date which has been delivered
with this Statement of Additional Information [unless previously provided, in
which event the Trust will promptly provide another copy, free of charge, upon
request to: U.S. Global Investors, Inc., P.O. Box 29467, San Antonio, Texas
78229-0467, 1-800-873-8637 or (210) 308-1234].
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Statement of Additional Information - China Region Opportunity Fund
Page 19
19
<PAGE>
U.S. GLOBAL INVESTORS FUNDS
CHINA REGION OPPORTUNITY FUND
FEBRUARY 24, 1997, SUPPLEMENT TO
PROSPECTUS DATED NOVEMBER 1, 1996
NAME CHANGE
To symbolize more exactly our funds' participation in worldwide economies,
United Services Funds has changed its name to U.S. GLOBAL INVESTORS FUNDS.
We will continue our tradition of excellent service and maximum earnings for our
shareholders. THE FUNDS THEMSELVES WILL NOT CHANGE INVESTMENT OBJECTIVES,
PORTFOLIO MANAGERS OR NAME -- the trust's name, however, now illustrates our
best qualities and potential for profit.
FUTURES CONTRACTS AND OPTIONS--PAGE 16
On occasion the U.S. Global Investors Funds-China Region Opportunity Fund
("China Fund") attracts significant shareholder purchases. When this happens,
the China Fund may temporarily experience large uninvested cash balances. When
the Advisor anticipates a rising market, the China Fund may establish "Bull
Hedges" (also called "Anticipatory Hedges") to remain more fully invested until
the Fund can make suitable investments in individual equity securities. These
transactions may include purchasing financial futures contracts, purchasing call
options and selling put options. The Fund will invest in such instruments only
for hedging purposes.
20
<PAGE>
U.S. GLOBAL INVESTORS FUNDS
U.S. INCOME FUND
U.S. REAL ESTATE FUND
FEBRUARY 24, 1997, SUPPLEMENT TO
PROSPECTUS DATED NOVEMBER 1, 1996
NAME CHANGE
To symbolize more exactly our funds' participation in worldwide economies,
United Services Funds has changed its name to U.S. GLOBAL INVESTORS FUNDS.
We will continue our tradition of excellent service and maximum earnings for our
shareholders. THE FUNDS THEMSELVES WILL NOT CHANGE INVESTMENT OBJECTIVES,
PORTFOLIO MANAGERS OR NAME -- the name of the trust, however, now illustrates
our best qualities and potential for profit.
21
<PAGE>
U.S. GLOBAL INVESTORS FUNDS
U.S. GOLD SHARES FUND
U.S. GLOBAL RESOURCES FUND
U.S. WORLD GOLD FUND
FEBRUARY 24, 1997, SUPPLEMENT TO
PROSPECTUS DATED NOVEMBER 1, 1996
NAME CHANGE
To symbolize more exactly our funds' participation in worldwide economies,
United Services Funds has changed its name to U.S. GLOBAL INVESTORS FUNDS.
We will continue our tradition of excellent service and maximum earnings for our
shareholders. THE FUNDS THEMSELVES WILL NOT CHANGE INVESTMENT OBJECTIVES,
PORTFOLIO MANAGERS OR NAME -- the name of the trust, however, now illustrates
our best qualities and potential for profit.
22
<PAGE>
U.S. GLOBAL INVESTORS FUNDS
U.S. TREASURY SECURITIES CASH FUND
U.S. GOVERNMENT SECURITIES SAVINGS FUND
FEBRUARY 24, 1997, SUPPLEMENT TO
PROSPECTUS DATED NOVEMBER 1, 1996
NAME CHANGE
To symbolize more exactly our funds' participation in worldwide economies,
United Services Funds has changed its name to U.S. GLOBAL INVESTORS FUNDS.
We will continue our tradition of excellent service and maximum earnings for our
shareholders. THE FUNDS THEMSELVES WILL NOT CHANGE INVESTMENT OBJECTIVES,
PORTFOLIO MANAGERS OR NAME -- the name of the trust, however, now illustrates
our best qualities and potential for profit.
23
<PAGE>
U.S. GLOBAL INVESTORS FUNDS
U.S. TAX FREE FUND
UNITED SERVICES NEAR-TERM TAX FREE FUND
FEBRUARY 24, 1997, SUPPLEMENT TO
PROSPECTUS DATED NOVEMBER 1, 1996
NAME CHANGE
To symbolize more exactly our funds' participation in worldwide economies,
United Services Funds has changed its name to U.S. GLOBAL INVESTORS FUNDS.
We will continue our tradition of excellent service and maximum earnings for our
shareholders. THE FUNDS THEMSELVES WILL NOT CHANGE INVESTMENT OBJECTIVES,
PORTFOLIO MANAGERS OR NAME -- the name of the trust, however, now illustrates
our best qualities and potential for profit.
24
<PAGE>
U.S. GLOBAL INVESTORS FUNDS
U.S. ALL AMERICAN EQUITY FUND
FEBRUARY 24, 1997, SUPPLEMENT TO
PROSPECTUS DATED NOVEMBER 1, 1996
NAME CHANGE
To symbolize more exactly our funds' participation in worldwide economies,
United Services Funds has changed its name to U.S. GLOBAL INVESTORS FUNDS.
We will continue our tradition of excellent service and maximum earnings for our
shareholders. THE FUNDS THEMSELVES WILL NOT CHANGE INVESTMENT OBJECTIVES,
PORTFOLIO MANAGERS OR NAME -- the name of the trust, however, now illustrates
our best qualities and potential for profit.
25
<PAGE>
