<PAGE> 1
QUESTIONS?
Call toll free 1-877-833-7113
or your investment representative.
USALLIANZ FUNDS
GROWTH FUND
GLOBAL OPPORTUNITIES FUND
FIXED INCOME FUND
MONEY MARKET FUND
DIVERSIFIED ASSETS FUND
CLASS A SHARES
CLASS B SHARES
CLASS Y SHARES
PROSPECTUS
OCTOBER 27, 1999
THE SECURITIES AND EXCHANGE COMMISSION
HAS NOT APPROVED OR DISAPPROVED THE
SHARES DESCRIBED IN THIS PROSPECTUS OR
DETERMINED WHETHER THIS PROSPECTUS IS
TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C> <C>
RISK/RETURN SUMMARY AND FUND EXPENSES
TRIANGLE
LOGO
Carefully review this 3 Growth Fund
important section, which 5 Global Opportunities Fund
summarizes each fund's 7 Fixed Income Fund
investments, risks, past 10 Money Market Fund
performance and fees. 11 Diversified Assets Fund
13 Fees and Expenses of the Funds
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
TRIANGLE
LOGO
Review this section for 17 Growth Fund
specific information on each 18 Global Opportunities Fund
fund's investment, 20 Fixed Income Fund
strategies and risks. 22 Money Market Fund
23 Diversified Assets Fund
25 Other Considerations
25 Year 2000
FUND MANAGEMENT
TRIANGLE
LOGO
Review this section for 27 The Investment Adviser
details on the people and 27 Portfolio Managers
organizations who oversee 28 Adviser's Prior Performance
the funds. 29 The Administrator and Distributor
SHAREHOLDER INFORMATION
TRIANGLE
LOGO
Review this section for 30 Pricing of Fund Shares
details on how shares are 31 Purchasing Shares
valued, how to purchase, 35 Selling Your Shares
sell and exchange shares, 38 Distribution Arrangements/Sales Charges
related charges and payments 44 Exchanging Your Shares
of dividends and 45 Dividends, Distributions and Taxes
distributions.
BACK COVER
TRIANGLE
LOGO
Where to Learn More About USAllianz Funds
</TABLE>
2
<PAGE> 3
RISK/RETURN SUMMARY AND FUND EXPENSES
[LOGO]
The following is a summary of certain key information about USAllianz Funds
which offers five separate, diversified investment portfolios (collectively,
the "Funds" and each individually, a "Fund"). The "Risk/Return Summary and
Fund Expenses" describe each Fund's objectives, principal investment
strategies, principal investment risks and certain performance information
under "Risk/Return Summary" and the Funds' expenses under "Fund Expenses."
Additional information about the Funds can be found by referring to pages
17-26 further back in the Prospectus. Please be sure to read the more
complete descriptions of the Funds' risks following this summary before you
invest. The Funds are managed by Allianz of America, Inc. (the "Adviser").
GROWTH FUND
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE Long-term growth of capital.
PRINCIPAL INVESTMENT The Fund normally invests at least 80% of its total assets
STRATEGIES in equity securities, which include common stocks, preferred
stocks and convertible securities. The Fund may invest in
both U.S. issuers and foreign issuers whose securities are
U.S. dollar denominated and traded on a U.S. securities
market. Although the Fund invests primarily in equity
securities of larger capitalization companies, the Fund is
not limited to such investments and may invest in companies
with varying market capitalizations.
The Adviser uses a fundamental "bottom-up" approach to
selecting securities for investment. Factors considered
include analysis of an issuer's financial condition,
industry position, management, growth prospects, earnings
estimates and other general economic and market conditions.
Based upon the analysis of such factors, the Adviser selects
those securities which, in the Adviser's judgment, will
outperform the average for companies included in the
Standard and Poor's 500 Composite Stock Price Index (the
"S&P 500(R) Index"). The Adviser will consider selling those
securities when it determines that such securities would no
longer meet its criteria for purchase or when alternative
investments become more attractive.
PRINCIPAL INVESTMENT RISKS The principal risks of investing in the Fund are:
- Market Risk. This is the risk that the value of the Fund's
investments will fluctuate as the stock or bond markets
fluctuate and that prices overall will decline over short
or long-term periods.
- Selection Risk. This is the risk that poor security
selection will cause the Fund to underperform other funds
with similar investment objectives.
- Capitalization Risk. Securities of small and
mid-capitalization companies tend to be more volatile, have
less predictable earnings and are less liquid than those
of large capitalization companies.
- You may lose money by investing in the Fund.
WHO MAY WANT TO INVEST? Consider investing in the Fund if you are:
- Investing for long-term goals, such as retirement
- Seeking to add a growth component to your portfolio
This Fund will not be appropriate for someone:
- Seeking safety of principal
- Investing for the short term or investing emergency
reserves
- Looking primarily for regular income
</TABLE>
3
<PAGE> 4
RISK/RETURN SUMMARY AND FUND EXPENSES
[Logo]
GROWTH FUND
CONTINUED
PERFORMANCE BAR CHART AND TABLE
YEAR-BY-YEAR TOTAL RETURNS AS OF
12/31 FOR CLASS Y SHARES+
<TABLE>
<S> <C>
'1994' -3.22
'1995' 32.93
'1996' 21.5
'1997' 33.03
'1998' 26.35
</TABLE>
+ For the period January 1, 1999 through
September 30, 1999, the aggregate
(non-annualized) total return of the
Commingled Account adjusted for Class Y
shares' expenses was 6.05%.
The returns for Class A and B shares will
be lower than the Class Y shares' returns
shown in the bar chart because fees and
expenses (including sales loads) of the
Class A and B shares are higher.
Past performance is not necessarily an
indication of how the Fund will perform in
the future.
Best quarter: 4th Quarter 1998 25.74%
Worst quarter: 3rd Quarter 1998 -11.91%
AVERAGE ANNUAL TOTAL RETURNS
(for the periods ending
December 31, 1998)
<TABLE>
<CAPTION>
PAST PAST SINCE INCEPTION
YEAR 5 YEARS INCEPTION DATE
<S> <C> <C> <C> <C>
---------------------------------------
CLASS A SHARES
(with maximum sales charge) 20.29% 20.47% 18.14% 4/1/93
---------------------------------------
CLASS B SHARES
(with applicable CDSC) 21.12% 20.03% 17.63% 4/1/93
---------------------------------------
CLASS Y SHARES 26.35% 21.31% 18.88% 4/1/93
---------------------------------------
S&P 500(R) INDEX 28.58% 24.06% 21.74%
-------------------------------------------------------------------------------------
</TABLE>
* The quoted performance of the Fund represents the performance of the
Commingled Account as described above. The Commingled Account was not
registered with the Securities and Exchange Commission under the
Investment Company Act of 1940 and therefore was not subject to the
investment restrictions imposed by law on registered mutual funds. If the
Commingled Account had been registered, the Commingled Account's
performance may have been adversely affected.
PERFORMANCE INFORMATION OF COMMINGLED ACCOUNT
While the Fund only commenced operations as of the date of this Prospectus, it
has adopted the performance of a master trust portfolio ("Commingled Account")
advised by the Adviser, for periods dating back to April 1, 1993, as adjusted to
reflect the full contractual rate of expenses associated with the Fund and its
classes of shares at its inception. The Fund's investment objectives, policies
and strategies are in all material respects equivalent to those employed by the
Adviser in managing the Commingled Account. The assets of the Commingled Account
are being transferred to the Fund.
The bar chart and table provide an indication of the risks of an investment in
the Fund by showing performance of the Commingled Account from year to year and
as compared to a broad-based securities index.* The S&P 500(R) Index in the
table below is an unmanaged index of 500 selected common stocks, most of which
are listed on the New York Stock Exchange.
4
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RISK/RETURN SUMMARY AND FUND EXPENSES
[Logo]
GLOBAL OPPORTUNITIES FUND
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE Long-term growth of capital.
PRINCIPAL INVESTMENT Under normal circumstances, the Fund invests at least 80% of
STRATEGIES its total assets in equity securities of U.S. and foreign
companies. Although the Fund invests primarily in equity
securities of larger capitalization companies, the Fund is
not limited to such investments and may invest in companies
with varying market capitalizations. The Adviser organizes
its research of equity securities into seven internally
defined sectors based on global economic or industry themes.
These sectors include companies in the natural resources,
life style, financial, high technology, telemedia, life
science and transportation businesses. The Fund may be
overweighted or underweighted in a particular sector or
country relative to the Fund's benchmark, the MSCI World
Equity Index. Because the United States currently comprises
approximately 50% of such Index, the Fund will normally
invest approximately the same amount in U.S. securities.
The Adviser uses a fundamental "bottom-up" approach to
selecting securities for investment. Factors considered may
include analysis of an issuer's financial condition,
industry position, management, growth prospects, earnings
estimates and other general economic and market conditions.
Based upon the analysis of such factors, the Adviser selects
investments which, in the Adviser's judgment, will
outperform the average for companies included in the MSCI
World Equity Index.
The Adviser will consider selling securities when the
securities no longer meet the Adviser's criteria for
purchase or when alternative investments become more
attractive.
PRINCIPAL INVESTMENT RISKS The principal risks of investing in the Fund are:
- Market Risk. This is the risk that the value of the Fund's
investments will fluctuate as the stock or bond markets
fluctuate and that prices overall will decline over short
or long-term periods.
- Foreign Risk. This is the risk of investments in issuers
located in foreign countries, which may have greater price
volatility and less liquidity. Investments in foreign
securities also are subject to political, regulatory and
diplomatic risks. Changes in currency rates are an
additional risk of investments in foreign securities.
- Selection Risk. This is the risk that poor security
selection will cause the Fund to underperform other funds
with similar investment objectives.
- You may lose money by investing in the Fund.
</TABLE>
5
<PAGE> 6
RISK/RETURN SUMMARY AND FUND EXPENSES
[Logo]
GLOBAL OPPORTUNITIES FUND
CONTINUED
<TABLE>
<S> <C>
WHO MAY WANT TO INVEST? Consider investing in the Fund if you are an individual:
- Investing for long-term goals, such as retirement
- Seeking to add a global growth component to your portfolio
- Seeking capital appreciation and are willing to accept the
higher volatility associated with investing in foreign
stocks
This Fund will not be appropriate for someone:
- Seeking safety of principal
- Investing for the short-term or investing emergency
reserves
- Looking primarily for regular income
PERFORMANCE INFORMATION This is a new Fund for which performance information is not
yet available.
The net asset value ("NAV") of the Fund will fluctuate with
market conditions.
</TABLE>
6
<PAGE> 7
RISK/RETURN SUMMARY AND FUND EXPENSES
[Logo]
FIXED INCOME FUND
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE To maximize total return with secondary emphasis on income.
PRINCIPAL INVESTMENT The Fund primarily invests in U.S. dollar denominated fixed
STRATEGIES income securities.
The Adviser begins the portfolio management process by
reviewing current economic activity and forecasting how it
may change in the future. The Adviser uses this forecast to
allocate the Fund's assets across different market sectors
and maturities based on its view of the relative value of
each sector or maturity.
The Fund will normally invest in government bonds,
investment grade corporate bonds, mortgage-backed
securities, asset-backed securities and municipal securities
and may invest in non-investment grade corporate bonds but
does not presently intend to do so. Under normal conditions,
the Fund intends to hold securities (other than money market
securities) with maturities between 1 and 30 years with an
average maturity of between 5 and 13 years, when weighted
according to the Fund's holdings. However, securities with
any maturity are eligible for purchase. Individual
securities are bought and sold based on fundamental analysis
of the structural features of specific securities, current
market price and estimated future value, and the credit
quality of its issuer.
PRINCIPAL INVESTMENT RISKS The principal risks of investing in the Fund are:
- Interest Rate Risk. This is the risk that changes in
interest rates will affect the value of the Fund's
investments in income-producing or debt securities.
Increases in interest rates may cause the value of the
Fund's investments to decline.
- Yield Curve Risk. This is the risk that changes in the
shape of the yield curve will affect the value of the Fund's
investments in income-producing or debt securities.
- Volatility Risk. This is the risk that the magnitude of
the changes in the shape of the yield curve will affect the
value of the Fund's investments in income-producing or
debt securities.
- Credit Risk. This is the risk that the issuer of a
security will be unable or unwilling to make timely payments
of interest or principal, or to otherwise honor its
obligations.
- Selection Risk. This is the risk that poor security
selection will cause the Fund to underperform other funds
with similar investment objectives.
- Prepayment Risk. The Fund's investments in mortgage-backed
and asset-backed securities are subject to the risk that the
principal amount of the underlying obligation may be
repaid prior to the bond's maturity date. Such repayments
are common when interest rates decline. When such a
repayment occurs, no additional interest will be paid on
the investment. Prepayment exposes the Fund to lower
return upon subsequent reinvestment of the principal.
- You may lose money by investing in the Fund.
</TABLE>
7
<PAGE> 8
RISK/RETURN SUMMARY AND FUND EXPENSES
[LOGO]
FIXED INCOME FUND
CONTINUED
<TABLE>
<S> <C>
WHO MAY WANT TO INVEST? Consider investing in the Fund if you are:
- Seeking to add a monthly income component to your
portfolio
- Willing to accept the risks of price and income
fluctuations
- Wanting to add diversification to a portfolio invested
primarily in stocks
This Fund will not be appropriate for someone:
- Investing emergency reserves
- Seeking a stable share price
</TABLE>
8
<PAGE> 9
RISK/RETURN SUMMARY AND FUND EXPENSES
[LOGO]
FIXED INCOME FUND
CONTINUED
PERFORMANCE BAR CHART AND TABLE
YEAR-BY-YEAR TOTAL RETURNS AS OF
12/31 FOR CLASS Y SHARES+
<TABLE>
<S> <C>
'1994' -3.93
'1995' 19.52
'1996' 2.63
'1997' 9.61
'1998' 8.97
</TABLE>
+ For the period January 1, 1999 through
September 30, 1999, the aggregate
(non-annualized) total return of the
Commingled Account adjusted for Class Y
shares' expenses was -2.64%.
The returns for Class A and B shares will
be lower than the Class Y shares' returns
shown in the bar chart because fees and
expenses (including sales loads) of the
Class A and B shares are higher.
Past performance is not necessarily an
indication of how the Fund will perform in
the future.
Best quarter: 2nd Quarter 1995 6.97%
Worst quarter: 1st Quarter 1994 -3.07%
AVERAGE ANNUAL TOTAL RETURNS
(for the periods ending
December 31, 1998)
<TABLE>
<CAPTION>
PAST PAST SINCE INCEPTION
YEAR 5 YEARS INCEPTION DATE
<S> <C> <C> <C> <C>
------------------------------------------
CLASS A SHARES
(with maximum sales charge) 3.95% 6.07% 6.21 % 4/1/93
------------------------------------------
CLASS B SHARES
(with applicable CDSC) 3.89% 5.86% 5.90 % 4/1/93
------------------------------------------
CLASS Y SHARES 8.97% 7.07% 7.09 % 4/1/93
------------------------------------------
LEHMAN GOVERNMENT/CORPORATE
BOND INDEX 9.47% 7.30% 7.42 %
----------------------------------------------------------------------------------------
</TABLE>
* The quoted performance of the Fund represents the performance of the
Commingled Account as described above. The Commingled Account was not
registered with the Securities and Exchange Commission under the
Investment Company Act of 1940 and therefore was not subject to the
investment restrictions imposed by law on registered mutual funds. If the
Commingled Account had been registered, the Commingled Account's
performance may have been adversely affected.
PERFORMANCE INFORMATION OF COMMINGLED ACCOUNT
While the Fund only commenced operations as of the date of this Prospectus, it
has adopted the performance of a master trust portfolio ("Commingled Account")
advised by the Adviser, for periods dating back to April 1, 1993, as adjusted to
reflect the full contractual rate of expenses associated with the Fund and its
classes of shares at its inception. The Fund's investment objectives, policies
and strategies are in all material respects equivalent to those employed by the
Adviser in managing the Commingled Account. The assets of the Commingled Account
are being transferred to the Fund.
The bar chart and table provide an indication of the risks of an investment in
the Fund by showing performance of the Commingled Account from year to year and
as compared to a broad-based securities index.* The Lehman Government/Corporate
Bond Index in the table below is a widely recognized, unmanaged index comprised
of U.S. government and corporate debt securities and is generally representative
of the bond market as a whole.
9
<PAGE> 10
RISK/RETURN SUMMARY AND FUND EXPENSES
[LOGO]
MONEY MARKET FUND
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE Current income consistent with stability of principal.
PRINCIPAL INVESTMENT The Fund invests primarily in high quality, U.S. dollar
STRATEGIES denominated short-term obligations, including commercial
paper, asset-backed securities, obligations of financial
institutions and other high-quality money market instruments
issued by U.S. and foreign issuers. These securities will be
rated in the two highest short-term rating categories of at
least two rating agencies or will be unrated securities of
comparable quality. The Adviser evaluates investments based
on credit analysis and interest rate outlook.
As a money market fund, the Fund is subject to strict
federal requirements which restrict the Fund's investments
to high-quality securities, limit the average maturity of
the portfolio to 90 days or less and limit the maturity of
any security to no more than 397 days.
PRINCIPAL INVESTMENT RISKS The principal risks of investing in the Fund are:
- Interest Rate Risk. This is the risk that changes in
interest rates will affect the value of the Fund's
investments in income-producing or debt securities.
Increases in interest rates may cause the value of the
Fund's investments to decline.
- Credit Risk. This is the risk that the issuer of a
security will be unable or unwilling to make timely payments
of interest or principal, or to otherwise honor its
obligations.
- An investment in the Fund is not insured or guaranteed by
the Federal Deposit Insurance Corporation or any other
government agency. Although the Fund seeks to preserve the
value of your investment at $1.00 per share, it is
possible to lose money by investing in the Fund.
WHO MAY WANT TO INVEST? Consider investing in the Fund if you:
- Are seeking preservation of capital
- Have a low risk tolerance
The Fund will not be appropriate for anyone:
- Seeking high total returns
- Pursuing a long-term goal or investing for retirement
PERFORMANCE INFORMATION This is a new Fund for which performance information is not
yet available.
The yield of the Fund will fluctuate with market conditions.
</TABLE>
10
<PAGE> 11
RISK/RETURN SUMMARY AND FUND EXPENSES
[Logo]
DIVERSIFIED ASSETS FUND
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE Total return consistent with reduction of long-term
volatility.
PRINCIPAL INVESTMENT The Fund pursues its objective through asset allocation and
STRATEGIES security selection by investing in a diversified portfolio
of bonds, stocks and money market securities of U.S. and
foreign issuers. The Adviser will seek to allocate on
average about 65% of the Fund's total assets to bonds, 25%
to stocks and 10% to money market securities.
- Bonds. The Fund invests in fixed income securities
including (1) government and corporate bonds, (2)
mortgage-backed securities, and (3) asset-backed
securities. The Fund invests primarily in bonds rated
within the four highest long-term or two highest
short-term rating categories or comparable quality unrated
securities. The Fund may invest up to 20% of its total
assets in high yield debt securities although it does not
presently intend to do so. Under normal conditions, the
Fund intends to hold securities (other than money market
securities) with maturities between 1 and 10 years.
However, securities with any maturity are eligible for
purchase. The Adviser begins the portfolio management
process by reviewing current economic activity and
forecasting how it may change in the future. The Adviser
uses this forecast to allocate the Fund's assets across
different market sectors and maturities based on its view
of the relative value of each sector or maturity.
- Stocks. The Fund invests in common stocks, preferred
stocks and convertible securities. The Fund may invest in
both U.S. issuers and foreign issuers whose securities are
U.S. dollar denominated and traded on an U.S. security
market, and invests primarily in equity securities of
larger capitalization companies. The Adviser uses a
"bottom-up" approach to selecting securities for
investment. Based upon the analysis of various factors,
the Adviser selects those securities which, in its
judgment, will outperform the average for the companies
included in the S&P 500(R) Index.
- Money Market Instruments. The Fund will invest in
high-quality, U.S. dollar denominated short-term
obligations, including commercial paper, asset-backed
securities, obligations of financial institutions and
other high-quality money market instruments issued by U.S.
and foreign issuers. These securities will be rated in the
two highest short-term rating categories of at least two
rating agencies or will be unrated securities of
comparable quality.
The Fund seeks to exceed the total return of a blended
benchmark consisting of 65% of the Lehman Intermediate
Government/Corporate Bond Index, 25% of the S&P 500(R) Index
and 10% of the 90-day Treasury Bill. The Fund typically
sells securities when the Adviser determines that such
securities would no longer meet its criteria for purchase or
when alternative investments become more attractive.
</TABLE>
11
<PAGE> 12
RISK/RETURN SUMMARY AND FUND EXPENSES
[LOGO]
DIVERSIFIED ASSETS FUND
CONTINUED
<TABLE>
<S> <C>
PRINCIPAL INVESTMENT RISKS The principal risks of investing in the Fund are:
- Market Risk. This is the risk that the value of the Fund's
investments will fluctuate as the stock or bond markets
fluctuate and that prices overall will decline over short
or long-term periods.
- Selection Risk. This is the risk that poor security
selection will cause the Fund to underperform other funds
with similar investment objectives.
- Capitalization Risk. Securities of small and
mid-capitalization companies tend to be more volatile, have
less predictable earnings and are less liquid than those
of large capitalization companies.
- Yield Curve Risk. This is the risk that changes in the
shape of the yield curve will affect the value of the Fund's
investments in income-producing or debt securities.
- Volatility Risk. This is the risk that the magnitude of
the changes in the shape of the yield curve will affect the
value of the Fund's investments in income-producing or
debt securities.
- Credit Risk. This is the risk that the issuer of a
security will be unable or unwilling to make timely payments
of interest or principal, or to otherwise honor its
obligations.
- Interest Rate Risk. This is the risk that changes in
interest rates will affect the value of the Fund's
investments in income-producing or debt securities.
Increases in interest rates may cause the value of the
Fund's investments to decline.
- You may lose money by investing in the Fund.
WHO MAY WANT TO INVEST? Consider investing in the Fund if you are:
- Investing for long-term goals, such as retirement
- Seeking regular monthly income
- Pursuing a balanced approach to investments in both
growth- and income-producing securities
This Fund will not be appropriate for someone:
- Pursuing an aggressive high growth investment strategy
- Seeking a stable share price
- Investing emergency reserves
PERFORMANCE INFORMATION This is a new Fund for which performance information is not
yet available.
The NAV of the Fund will fluctuate with market conditions.
</TABLE>
12
<PAGE> 13
RISK/RETURN SUMMARY AND FUND EXPENSES
[LOGO]
FEES AND EXPENSES OF THE FUNDS
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND
HOLD SHARES OF THE FUNDS.
FEE TABLE
<TABLE>
<CAPTION>
GROWTH FUND GLOBAL OPPORTUNITIES FUND
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR --------------------------- ---------------------------
INVESTMENT) CLASS A CLASS B CLASS Y CLASS A CLASS B CLASS Y
<S> <C> <C> <C> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of offering price) 5.75% None None 5.75% None None
Maximum Deferred Sales Load (as a percentage
of offering price) None 5.00% None None 5.00% None
Maximum Sales Charge (Load) Imposed on
Reinvested Dividends None None None None None None
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management fees .75% .75% .75% .95% .95% .95%
Distribution (12b-1) fees .25% .75% None .25% .75% None
Other expenses .28% .53%(1) .28% 1.80% 2.05%(1) 1.80%
Total Annual Fund Operating Expenses(2) 1.28% 2.03% 1.03% 3.00% 3.75% 2.75%
Fee Waivers and/or Expense Reimbursements(3) None None None 1.15% 1.15% 1.15%
Net Expenses 1.28% 2.03% 1.03% 1.85% 2.60% 1.60%
</TABLE>
(1) Certain Service Organizations may receive fees from a Fund in amounts up
to an annual rate of 0.25% of the daily net asset value of the Fund
shares owned by the shareholders with whom the Service Organization has a
servicing relationship.
(2) Other Expenses and Total Annual Fund Operating Expenses are estimated for
the current fiscal year.
(3) The Adviser has entered into a contractual expense limitation agreement
with USAllianz Funds, pursuant to which, until at least September 30,
2000, (a) the Adviser has agreed to limit each Fund's and each class'
total expenses and (b) the Adviser is entitled to recoup any waived fees
to the extent the actual total operating expenses are less than those
stated above.
13
<PAGE> 14
RISK/RETURN SUMMARY AND FUND EXPENSES
[LOGO]
FEES AND EXPENSES OF THE FUNDS
CONTINUED
FEE TABLE
<TABLE>
<CAPTION>
FIXED INCOME FUND MONEY MARKET FUND
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR --------------------------- ---------------------------
INVESTMENT) CLASS A CLASS B CLASS Y CLASS A CLASS B CLASS Y
<S> <C> <C> <C> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of offering price) 4.75% None None None None None
Maximum Deferred Sales Load (as a percentage
of offering price) None 5.00% None None 5.00% None
Maximum Sales Charge (Load) Imposed on
Reinvested Dividends None None None None None None
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management fees .50% .50% .50% .35% .35% .35%
Distribution (12b-1) fees .25% .75% None .25% .75% None
Other expenses .30% .55%(1) .30% 1.90% 2.15%(1) 1.90%
Total Annual Fund Operating Expenses(2) 1.05% 1.80% .80% 2.50% 3.25% 2.25%
Fee Waivers and/or Expense Reimbursements(3) None None None 1.62% 1.62% 1.62%
Net Expenses 1.05% 1.80% .80% .88% 1.63% .63%
</TABLE>
(1) Certain Service Organizations may receive fees from a Fund in amounts up
to an annual rate of 0.25% of the daily net asset value of the Fund
shares owned by the shareholders with whom the Service Organization has a
servicing relationship.
(2) Other Expenses and Total Annual Fund Operating Expenses are estimated for
the current fiscal year.
(3) The Adviser has entered into a contractual expense limitation agreement
with USAllianz Funds, pursuant to which, until at least September 30,
2000, (a) the Adviser has agreed to limit each Fund's and each class'
total expenses and (b) the Adviser is entitled to recoup any waived fees
to the extent the actual total operating expenses are less than those
stated above.
14
<PAGE> 15
RISK/RETURN SUMMARY AND FUND EXPENSES
[Logo]
FEES AND EXPENSES OF THE FUNDS
CONTINUED
FEE TABLE
<TABLE>
<CAPTION>
DIVERSIFIED ASSETS FUND
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR ---------------------------
INVESTMENT) CLASS A CLASS B CLASS Y
<S> <C> <C> <C> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of offering price) 5.75% None None
Maximum Deferred Sales Load (as a percentage
of offering price) None 5.00% None
Maximum Sales Charge (Load) Imposed on
Reinvested Dividends None None None
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management fees .55% .55% .55%
Distribution (12b-1) fees .25% .75% None
Other expenses 1.94% 2.19%(1) 1.94%
Total Annual Fund Operating Expenses(2) 2.74% 3.49% 2.49%
Fee Waivers and/or Expense Reimbursements(3) 1.54% 1.54% 1.54%
Net Expenses 1.20% 1.95% .95%
</TABLE>
(1) Certain Service Organizations may receive fees from a Fund in amounts up
to an annual rate of 0.25% of the daily net asset value of the Fund
shares owned by the shareholders with whom the Service Organization has a
servicing relationship.
(2) Other Expenses and Total Annual Fund Operating Expenses are estimated for
the current fiscal year.
(3) The Adviser has entered into a contractual expense limitation agreement
with USAllianz Funds, pursuant to which, until at least September 30,
2000, (a) the Adviser has agreed to limit each Fund's and each class'
total expenses and (b) the Adviser is entitled to recoup any waived fees
to the extent the actual total operating expenses are less than those
stated above.
15
<PAGE> 16
RISK/RETURN SUMMARY AND FUND EXPENSES
[Logo]
FEES AND EXPENSES OF THE FUNDS
CONTINUED
EXPENSE EXAMPLE
<TABLE>
<S> <C> <C> <C> <C> <C>
GLOBAL FIXED MONEY DIVERSIFIED
GROWTH OPPORTUNITIES INCOME MARKET ASSETS
FUND FUND FUND FUND FUND
CLASS A
1 YEAR $698 $ 752 $577 $ 90 $ 690
3 YEARS $958 $1,347 $793 $ 624 $1,239
CLASS B
1 YEAR $706 $ 763 $683 $ 666 $ 698
3 YEARS $937 $1,341 $866 $1,149 $1,228
CLASS Y
1 YEAR $105 $ 163 $ 82 $ 64 $ 97
3 YEARS $328 $ 744 $255 $ 202 $ 628
</TABLE>
THIS EXAMPLE IS INTENDED
TO HELP YOU COMPARE THE
COST OF INVESTING IN THE
FUNDS WITH THE COST OF
INVESTING IN OTHER MUTUAL
FUNDS. THE EXAMPLE ASSUMES
THAT YOU INVEST $10,000 IN
THE INDICATED FUND FOR THE
TIME PERIODS INDICATED AND
THEN REDEEM ALL OF YOUR
SHARES AT THE END OF THOSE
PERIODS. THE EXAMPLE ALSO
ASSUMES THAT YOUR
INVESTMENT HAS A 5% RETURN
EACH YEAR AND THAT EACH
FUND'S OPERATING EXPENSES
REMAIN THE SAME. ALTHOUGH
YOUR ACTUAL COSTS MAY BE
HIGHER OR LOWER, BASED ON
THESE ASSUMPTIONS, YOUR
COSTS WOULD BE:
16
<PAGE> 17
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
logo
This section of the Prospectus provides descriptions of the Funds'
objectives, risks, strategies and investments. Other strategies and
investments not described below may be found in the Funds' Statement of
Additional Information ("SAI").
GROWTH FUND
INVESTMENT OBJECTIVE AND PRINCIPAL INVESTMENT STRATEGIES: The Fund's
investment objective is long-term growth of capital, which objective may not
be changed without shareholder approval. In pursuit of its objective, the
Fund normally invests at least 80% of its total assets in equity securities,
which include common stocks, preferred stocks and convertible securities of
U.S. issuers and foreign issuers whose securities are U.S. dollar denominated
and are traded on a U.S. securities market. Although the Fund invests
primarily in equity securities of larger capitalization companies, the Fund
is not limited to such investments and will consider investing in securities
of companies with varying market capitalizations if they otherwise meet the
Adviser's criteria for purchases.
The Adviser uses a fundamental "bottom-up" approach to selecting securities
for investment. Factors considered may include analysis of an issuer's
financial condition, industry position, management, growth prospects,
earnings estimates and other general economic and market conditions. Based
upon the analysis of such factors, the Adviser selects those securities
which, in the Adviser's judgment, will produce a return that exceeds the
average for companies included in the S&P 500(R) Index. (See "Other
Considerations -- Temporary Defensive Positions".)
PRINCIPAL INVESTMENT RISKS: The price per share of the Fund will fluctuate
with changes in value of the investments held by the Fund. You may lose money
by investing in the Fund. The Fund faces the following general risks:
- Market Risk: The values of stocks fluctuate in response to the activities
of individual companies and general stock market and economic conditions.
Stock prices may decline over short or even extended periods. Stocks are
more volatile and riskier than some other forms of investment, such as
short-term, high-grade fixed income securities.
- Selection Risk: Selection risk is the chance that poor security selection
will cause the Fund to underperform other funds with similar investment
objectives.
- Capitalization Risk: To the extent the Fund invests significantly in
small or mid-capitalization companies, it may have capitalization risk.
These companies may present additional risk because they have less
predictable earnings, more volatile share prices and less liquid
securities than large-capitalization companies. These securities may
fluctuate in value more than those of larger, more established companies
and, as a group, may suffer more severe price declines during periods of
generally declining stock prices.
17
<PAGE> 18
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
logo
GLOBAL OPPORTUNITIES FUND
INVESTMENT OBJECTIVE AND PRINCIPAL INVESTMENT STRATEGIES: The Fund's
investment objective is long-term growth of capital, which objective may not
be changed without shareholder approval. In pursuit of its objective, the
Fund normally invests at least 80% of its total assets in equity securities,
which include common stocks, preferred stocks, convertible securities,
warrants and rights of U.S. and foreign issuers. Generally, the companies in
which the Fund invests will be doing business in one of the following seven
industry sectors:
- Natural Resources: Natural resources, energy and construction service
industries, including companies that provide basic resources for
developing and industrialized countries (such as energy resources,
utilities, building materials, forest and paper products, metals and
miscellaneous materials).
- Life Style: Innovative, solution-oriented companies in the consumer goods
industry (such as producers and providers of appliances, household
durable products, household products, recreation and other consumer
goods), food industry (such as beverages, food and tobacco) and companies
engaged in the design, production and/or distribution of goods or
services in the leisure, tourism and merchandising industry.
- Financial: Forward-thinking, solution-driven companies providing
financial-related services (such as banking, insurance and financial
services, as well as real estate, wholesaling and international trade
firms).
- High Technology: Companies that rely extensively on high technology in
their product range, development and/or operations (such as data
processing and reproduction companies, electrical, electronics and
electronic equipment companies).
- Telemedia: Companies engaged in the development, production, sale and/or
distribution of media-related services (such as broadcasting, publishing
and internet companies) and companies committed to the development of new
information technologies, contributing to progress being made in the
development of new communication infrastructures and developing strategic
communication solutions for the global economy.
- Life Science: Global companies that offer innovative health and personal
care services and products (including pharmaceutical and chemical
companies).
- Transportation: Innovative and solution-driven companies engaged in the
business of transportation on either a regional or global basis.
Although the Fund invests primarily in larger capitalization companies, the
Fund is not limited to such investments and will consider investing in
securities of companies with varying market capitalizations if they otherwise
meet the Adviser's criteria for purchases. Similarly, while companies whose
principal trading markets are developed or industrialized countries are
likely to be the Fund's principal investments, the Fund is not limited to
such investments and will consider investing in securities of companies
trading in emerging or developing markets. The Fund may invest more than 25%
of its total assets in a single country.
18
<PAGE> 19
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
logo
GLOBAL OPPORTUNITIES FUND
CONTINUED
The Adviser uses its own research, as well as input from its affiliates
around the world and other third parties to identify attractive companies
meeting the above sector descriptions. The Adviser then uses a fundamental
"bottom-up" approach to selecting securities for investment. Factors
considered may include analysis of an issuer's financial condition, industry
position, management, growth prospects, earnings estimates and other general
economic and market conditions. Based upon the analysis of such factors, the
Adviser selects those securities which, in the Adviser's judgment, will
produce a return that exceeds the average for companies included in the MSCI
World Equity Index. The Fund may be overweighted or underweighted in a
particular sector or country relative to the MSCI World Equity Index based
upon the Adviser's judgment as to the relative prospects for investments in
particular sectors and countries.
The Adviser does not intend to invest in markets where property rights are
not defined and supported by adequate legal infrastructure. The Fund may
trade forward foreign currency contracts to hedge currency fluctuations of
underlying security positions when it is believed that a foreign currency may
suffer a decline against the U.S. dollar.
(See "Other Considerations -- Temporary Defensive Positions".)
PRINCIPAL INVESTMENT RISKS: The price per share of the Fund will fluctuate
with changes in value of the investments held by the Fund. You may lose money
by investing in the Fund. The Fund faces the following general risks:
- Market Risk: The values of stocks fluctuate in response to the activities
of individual companies and general stock market and economic conditions.
Stock prices may decline over short or even extended periods. Stocks are
more volatile and riskier than some other forms of investment, such as
short-term, high-grade fixed income securities.
- Foreign Risk: Foreign investments may be riskier than U.S. investments.
Such risks include, but are not limited to:
- lack of, or less stringent, uniform accounting, auditing and financial
reporting standards
- changes in currency rates
- nationalization, confiscation, difficulties enforcing contracts, or
foreign withholding/taxes
- political instability and diplomatic developments that could adversely
affect the Fund's investments
- less government oversight of foreign stock exchanges, brokers and
listed companies
- less liquidity due to lower trading volumes of foreign markets which
may increase price volatility
- foreign trading practices (including higher trading commissions,
higher custodial charges and delayed settlements)
- less publicly available information about foreign companies
- negative effect on the value of the Fund's investments due to
fluctuations in the exchange rates between the U.S. dollar and foreign
currencies
- Selection Risk: Selection risk is the chance that poor security selection
will cause the Fund to underperform other funds with similar investment
objectives.
19
<PAGE> 20
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
logo
FIXED INCOME FUND
INVESTMENT OBJECTIVE AND PRINCIPAL INVESTMENT STRATEGIES: The Fund's
investment objective is to maximize total return with secondary emphasis on
income, which objective may not be changed without shareholder approval.
In pursuit of its objective, the Fund normally invests at least 80% of its
total assets in fixed income securities rated within the four highest rating
categories by a primary credit rating agency or, if unrated, which are
determined by the Adviser to be of comparable quality. Fixed income
securities include U.S. Government securities, corporate debt securities,
U.S. dollar denominated securities of foreign issuers (including corporate
debt securities, certificates of deposit and bankers' acceptances issued by
foreign banks, and obligations of foreign governments or their subdivisions,
agencies and instrumentalities, international agencies and supranational
entities), zero coupon and pay-in-kind securities, asset-backed securities,
mortgage-backed securities (including stripped mortgage-backed securities)
and taxable and tax-exempt municipal securities.
Although it does not presently intend to do so, the Fund also may invest up
to 20% of its total assets in high yield securities (debt securities
determined by a primary credit rating agency to have a lower probability of
being paid and have a credit rating lower than BBB by Standard & Poor's or
Baa by Moody's Investor Services, Inc. or, if unrated, which are deemed of
comparable quality by the Adviser).
The Adviser begins the portfolio management process by reviewing current
economic activity and forecasting how it may change in the future. The
Adviser uses this forecast to allocate the Fund's assets across different
market sectors and maturities based on its view of the relative value of each
sector or maturity. The Adviser analyzes the risk profile of the Fund's
benchmark, the Lehman Government/ Corporate Bond Index, then adjusts the
portfolio's risk relative to the benchmark to enhance long-term returns.
Specific securities are included in the portfolio based on a fundamental
analysis of the securities' cash flow risk and/or credit fundamentals.
Under normal conditions, the Fund intends to hold securities (other than
money market securities) with maturities primarily between 1 and 30 years
with an average maturity of between 5 and 13 years, when weighted according
to the Fund's holdings. However, securities with any maturity are eligible
for purchase. The Adviser may sell a security if its fundamental qualities
deteriorate or to take advantage of more attractive investment opportunities.
(See "Other Considerations -- Temporary Defensive Positions".)
PRINCIPAL INVESTMENT RISKS: The price per share of the Fund will fluctuate
with changes in value of the investments held by the Fund. You may lose money
by investing in the Fund. The Fund faces the following general risks:
- Interest Rate Risk: Interest rate risk is the chance that the value of
the bonds the Fund holds will decline due to rising interest rates. When
interest rates rise, the price of most bonds goes down. When interest
rates go down, bond prices go up. The price of a bond is also affected by
its maturity. Bonds with longer maturities generally have greater
sensitivity to changes in interest rates.
20
<PAGE> 21
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
logo
FIXED INCOME FUND
CONTINUED
- Credit Risk: Credit risk is the chance that a bond issuer will fail to
repay interest and principal in a timely manner, reducing the Fund's
return. Also, an issuer may suffer adverse changes in financial condition
that could lower the credit quality of a security, leading to greater
volatility in the price of the security and the Fund's shares. A change in
the quality rating of a bond can affect the bond's liquidity and make it
more difficult for the Fund to sell. Because of their more precarious
financial position, issuers of high yield bonds may be more vulnerable to
changes in the economy or to interest rate changes that might affect their
ability to repay debt.
- Prepayment Risk: The Fund's investments in mortgage-backed and
asset-backed securities are subject to the risk that the principal amount
of the underlying obligation may be repaid prior to the bond's maturity
date. Such repayments are common when interest rates decline. When such a
repayment occurs, no additional interest will be paid on the investment.
Prepayment exposes the Fund to lower return upon subsequent reinvestment
of the principal.
- Income Risk: Income risk is the chance that falling interest rates will
cause the Fund's income to decline. Income risk is generally higher for
short-term bonds.
- Selection Risk: Selection risk is the chance that poor security selection
will cause the Fund to underperform other funds with similar investment
objectives.
- Yield Curve Risk: This is the risk that changes in the shape of the yield
curve will affect the value of the Fund's investments in income-producing
or debt securities.
- Volatility Risk: This is the risk that the magnitude of the changes in
the shape of the yield curve will affect the value of the Fund's
investments in income-producing or debt securities.
ADDITIONAL RISKS:
- Asset-backed securities involve the risk that such securities may not
have the benefit of a complete security interest in the related
collateral.
- The Fund has authority to invest up to 20% of its assets in high yield,
high risk debt securities. These lower quality securities have
speculative characteristics and are more volatile and are more subject to
credit risk than investment grade securities. High yield securities tend
to be more susceptible to high interest rates and to real or perceived
adverse economic and competitive industry conditions.
21
<PAGE> 22
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
logo
MONEY MARKET FUND
INVESTMENT OBJECTIVE AND PRINCIPAL INVESTMENT STRATEGIES: The Fund's
investment objective is current income consistent with stability of
principal, which objective may not be changed without shareholder approval.
The Fund invests substantially all (but not less than 80%) of its total
assets in a diversified and liquid portfolio of high quality money market
investments, including:
- U.S. Government securities;
- Certificates of deposits, time deposits, bankers' acceptances and other
short-term instruments issued by U.S. or foreign banks;
- U.S. and foreign commercial paper and other short-term corporate debt
obligations, including those with floating rate or variable rates of
interest;
- Obligations issued or guaranteed by one or more foreign governments or
their agencies, including supranational entities;
- Loan participation interests;
- Asset backed securities; and
- Repurchase agreements collateralized by the types of securities described
above.
The Fund is required to invest at least 95% of its assets in the securities
of issuers with the highest credit rating, with the remainder invested in
securities with the second-highest credit rating. The Fund is subject to
certain federal requirements which include the following:
- maintain an average dollar-weighted portfolio maturity of 90 days or less
- buy individual securities that have remaining maturities of 397 days or
less
- invest only in high-quality, dollar denominated, short-term obligations.
(See "Other Considerations -- Temporary Defensive Positions".)
PRINCIPAL INVESTMENT RISKS: The Fund is not guaranteed to maintain a constant
net asset value of $1.00 per share, and it is possible to lose money by
investing in the Fund.
- Interest Rate Risk: This is the risk that changes in interest rates will
affect the value of the Fund's investments in income-producing or debt
securities. Increases in interest rates may cause the value of the Fund's
investments to decline.
- Credit Risk: Although credit risk is very low because the Fund only
invests in high quality obligations, if an issuer fails to pay interest
or repay principal, the value of your investment could decline.
22
<PAGE> 23
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
logo
DIVERSIFIED ASSETS FUND
INVESTMENT OBJECTIVE AND PRINCIPAL INVESTMENT STRATEGIES: The Fund's
investment objective is total return consistent with reduction of long-term
volatility, which objective may not be changed without shareholder approval.
While the Fund normally invests approximately 65% of its total assets in
fixed income securities (which include investment grade corporate bonds and
U.S. Government securities), 25% in equity securities and 10% in money market
securities, the mix may vary within ranges of 50-70% for fixed income
securities, 20-40% for stocks and 5-15% for money market securities.
The Adviser uses a portfolio management team approach. In making asset
allocation decisions, the portfolio management team evaluates forecasts for
inflation, interest rates and long-term corporate earnings growth. The team
then examines the potential effect of these factors on each asset group over
a one-to-three-year time period and compares its risk analysis to a weighted
index of 65% of the Lehman Intermediate Government/Corporate Bond Index, 25%
of the S&P 500(R) Index, and 10% of the 90-day Treasury Bill. The team then
selects securities based on a bottom-up analysis in accordance with the
following criteria:
- Bonds. The Fund invests in fixed income securities including (1)
government and corporate bonds, (2) mortgage-backed securities (including
stripped mortgage-backed securities) and (3) asset-backed securities. The
Fund invests primarily in bonds rated within the four highest long-term
or two highest short-term rating categories or comparable quality unrated
securities. The Fund may invest up to 20% of its total assets in high
yield debt securities although it does not presently intend to do so.
Under normal conditions, the Fund intends to hold debt securities (other
than money market securities) with maturities between 1 and 10 years.
However, securities with any maturity are eligible for purchase. The
Adviser begins the portfolio management process by reviewing current
economic activity and forecasting how it may change in the future. The
Adviser uses this forecast to allocate the Fund's assets across different
market sectors and maturities based on its view of the relative value of
each sector or maturity.
- Stocks. The Fund invests in common stocks, preferred stocks and
convertible securities. The Fund may invest in both U.S. issuers and
foreign issuers whose securities are U.S. dollar denominated and traded
on a U.S. security market, and invests primarily in equity securities of
larger capitalization companies. The Adviser uses a "bottom-up" approach
to selecting securities for investment. Based upon the analysis of
various factors, the Adviser selects those securities which, in its
judgment, will outperform the average for the companies included in the
S&P 500(R) Index.
- Money Market Instruments. The Fund will invest in high-quality, U.S.
dollar denominated short-term obligations, including commercial paper,
asset-backed securities, obligations of financial institutions and other
high-quality money market instruments issued by U.S. and foreign issuers.
These securities will be rated in one of the two highest short-term
rating categories of at least two rating agencies or will be unrated
securities of comparable quality.
(See "Other Considerations -- Temporary Defensive Positions".)
23
<PAGE> 24
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
logo
DIVERSIFIED ASSETS FUND
CONTINUED
PRINCIPAL INVESTMENT RISKS: The price per share of the Fund will fluctuate
with changes in value of the investments held by the Fund. You may lose money
by investing in the Fund. The Fund faces the following general risks:
- Market Risk: The values of stocks fluctuate in response to the activities
of individual companies and general stock market and economic conditions.
Stock prices may decline over short or even extended periods. Stocks are
more volatile and riskier than some other forms of investment, such as
short-term, high-grade fixed income securities.
- Interest Rate Risk: Interest rate risk is the chance that the value of
the bonds the Fund holds will decline due to rising interest rates. When
interest rates rise, the price of most bonds goes down. When interest
rates go down, bond prices go up. The price of a bond is also affected by
its maturity. Bonds with longer maturities generally have greater
sensitivity to changes in interest rates.
- Credit Risk: Credit risk is the chance that a bond issuer will fail to
repay interest and principal in a timely manner, reducing the Fund's
return. Credit risk is somewhat minimized by the Fund's policy of
investing primarily in bonds rated within the four highest long-term or
two highest short-term rating categories or comparable quality unrated
securities and through adequate diversification among issuers and
industries.
- Selection Risk: Selection risk is the chance that poor security selection
will cause the Fund to underperform other funds with similar investment
objectives.
- Capitalization Risk: Securities of small and mid-capitalization companies
tend to be more volatile, have less predictable earnings and are less
liquid than those of large capitalization companies.
- Yield Curve Risk: This is the risk that changes in the shape of the yield
curve will affect the value of the Fund's investments in income-producing
or debt securities.
- Volatility Risk: This is the risk that the magnitude of the changes in
the shape of the yield curve will affect the value of the Fund's
investments in income-producing or debt securities.
24
<PAGE> 25
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
logo
OTHER CONSIDERATIONS
TEMPORARY DEFENSIVE POSITIONS: In order to meet liquidity needs or for
temporary defensive purposes, each Fund may hold investments, including
uninvested cash reserves, that are not part of its main investment strategy.
Each of the Growth Fund, Global Opportunities Fund, Diversified Assets Fund
and Fixed Income Fund (the "Non-Money Market Funds") may invest up to 100% of
its assets in money market instruments, including short-term debt securities
issued by the U.S. Government and its agencies and instrumentalities,
domestic bank obligations, commercial paper or in repurchase agreements
secured by bank instruments (with regard to the Global Opportunities Fund,
such investment may include those of foreign governments and companies). In
addition, each Non-Money Market Fund may hold equity securities which in the
Adviser's opinion are more conservative than the types of securities in which
the Fund typically invests. To the extent the Funds are engaged in temporary
or defensive investments, a Fund will not be pursuing its investment
objective.
PORTFOLIO TURNOVER: While the Funds do not engage in short-term trading, in
some cases in response to market conditions, a Fund's portfolio turnover may
exceed 100%. A higher rate of portfolio turnover increases brokerage and
other expenses, which must be borne by the Fund and its shareholders and may
adversely affect the Fund's performance. High portfolio turnover also may
result in the realization of substantial net short-term capital gains, which
are taxable as ordinary income when distributed to shareholders.
YEAR 2000
Like other funds and business organizations around the world, the Funds could
be adversely affected if the computer systems used by the Adviser and other
service providers do not properly process and calculate date-related
information for the year 2000 and beyond.
The Funds have been assured that the Adviser and other service providers
(i.e., Administrator, Transfer Agent, Fund Accounting Agent, Custodian and
Distributor) have developed and are implementing clearly defined and
documented plans intended to minimize risks to services critical to the
Funds' operations associated with Year 2000 issues. Internal efforts include
a commitment to dedicate adequate staff and funding to identify and remedy
Year 2000 issues, and specific actions such as inventorying software systems,
determining inventory items that may not function properly after December 31,
1999, reprogramming or replacing such systems, and retesting for Year 2000
readiness. The Funds' Adviser and service providers are likewise seeking
assurances from their respective vendors and suppliers that such entities are
addressing any Year 2000 issues, and each provider intends to engage, where
appropriate, in private and industry or "streetwide" interface testing of
systems for Year 2000 readiness.
25
<PAGE> 26
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
logo
YEAR 2000
CONTINUED
In the event that any systems upon which the Funds are dependent are not Year
2000 compliant by December 31, 1999, administrative errors and account
maintenance failures would likely occur. While the ultimate costs or
consequences of incomplete or untimely resolution of Year 2000 issues by the
Adviser or the Funds' service providers cannot be accurately assessed at this
time, the Funds currently have no reason to believe that the Year 2000 plans
of the Adviser and other service providers will not be completed by December
31, 1999, or that the anticipated costs associated with full implementation
of their plans will have a material adverse impact on either their business
operations or financial condition or those of the Funds. The Funds and the
Adviser will continue to closely monitor developments relating to this issue,
including development by the Adviser and other service providers of
contingency plans for providing back-up computer services in the event of a
systems failure or the inability of any provider to achieve Year 2000
readiness. Separately, the Adviser will monitor potential investment risk
related to Year 2000 issues.
In addition, Year 2000 issues may adversely affect companies in which the
Funds invest where, for example, such companies incur substantial costs to
address Year 2000 issues or suffer losses caused by the failure to adequately
or timely do so. This risk may be greater for those Funds which invest in the
securities of foreign issuers.
26
<PAGE> 27
FUND MANAGEMENT
[LOGO]
THE INVESTMENT ADVISER
Allianz of America, Inc. (the "Adviser") is the adviser for the Funds. The
Adviser, a registered investment adviser, was established in 1976 and as of
December 31, 1998 managed more than $21 billion in fixed income, equity and
real estate investments. The Adviser is a subsidiary of Allianz AG Holding
("Allianz AG"), one of the world's largest insurance and financial services
companies. Allianz AG is headquartered in Munich, Germany and has operations
in 68 countries. In North America, Allianz AG owns and operates Fireman's
Fund Insurance Company, Allianz Life Insurance Company of North America,
Jefferson Insurance Company, Allianz Insurance Company, Allianz Canada, and
Allianz Mexico. Through its portfolio management team, the Adviser makes the
day-to-day investment decisions and continuously reviews, supervises and
administers the Funds' investment programs.
For these advisory services, each Fund pays the Adviser a fee at the annual
rate shown below:
<TABLE>
<CAPTION>
PERCENTAGE OF AVERAGE
NET ASSETS
---------------------
<S> <C>
Growth Fund .75%
Global Opportunities Fund .95%
Fixed Income Fund .50%
Money Market Fund .35%
Diversified Assets Fund .55%
</TABLE>
Ordinarily, the Adviser may voluntarily waive a portion of its advisory fee
and/or reimburse expenses incurred by the Funds, and such waiver and/or
reimbursements may be discontinued at any time. The Adviser has entered into
a contractual expense limitation agreement with the Trust, pursuant to which,
until at least September 30, 2000 (a) the Adviser has agreed to limit each
Fund's and each class' total expenses and (b) the Adviser is entitled to
recoup any waived fees to the extent the actual total operating expenses are
less than those stated in this Prospectus.
PORTFOLIO MANAGERS
The Adviser has several portfolio managers committed to the day-to-day
management of the Funds. Each portfolio manager uses a team approach to the
investment management of the Non-Money Market Funds and relies on analysis,
research and other information furnished by the team's experienced investment
professionals.
Fixed Income Investments: Gary Brown is responsible for the team of highly
trained investment professionals who manage the assets of the Fixed Income
Fund. He is also responsible for the fixed income investments of the
Diversified Assets Fund and for the Money Market Fund. He is Senior Managing
Director, Fixed Income of the Adviser and has twenty-four years of investment
experience. Mr. Brown is currently responsible for directing the management
of the Adviser's fixed income investments. He has been with the Adviser since
1991, after serving as Managing Director at CIGNA Investments from 1986 to
1991, with responsibility for CIGNA's public taxable and tax-exempt bond
portfolios, as well as four fixed income mutual funds and institutional
client portfolios. His investment experience has covered all fixed income
securities, including governments, corporates, mortgages, high yield,
convertibles and various derivative products. Mr. Brown was a Vice President
with CIGNA from 1982 to 1986, managing public and private fixed income
investments for the insurance company
27
<PAGE> 28
FUND MANAGEMENT
[LOGO]
PORTFOLIO MANAGERS
CONTINUED
portfolios, responsible for asset and liability management and CIGNA's
convertible securities portfolio. Prior to joining CIGNA, he managed public
bond and private placement investments for INA Capital Advisors, Inc from
1979 to 1982, and was an investment analyst with The Penn Mutual Life
Insurance Company from 1975 to 1979. Mr. Brown received a B.S. and an M.B.A.
from Drexel University.
Equity Investments: Ronald M. Clark, Senior Managing Director, is responsible
for the day-to-day management of the Growth Fund and the Global Opportunities
Fund and is also responsible for the equity investments of the Diversified
Assets Fund. Mr. Clark is also responsible for directing the management of
all equity investments of the Adviser and has twenty-nine years of investment
experience. He began his career in 1972 at Mutual of New York as an
investment analyst, and shortly thereafter joined its subsidiary, North
American Life and Casualty, which was later renamed Allianz Life Insurance
Company of North America, where he was Chief Investment Officer from 1973 to
1980. Since 1980, Mr. Clark has been with the Adviser. In addition to equity
investments, his responsibilities include membership on the Investment Policy
Committee of Allianz worldwide and the Finance Committee of the Adviser. In
addition, he provides senior level oversight of real estate investments and
holding company corporate finance activities. He is a graduate of the
University of Wisconsin, with an undergraduate degree in Industrial
Engineering, and masters in Finance and Real Estate.
The SAI has more detailed information about the Adviser and other service
providers.
ADVISER'S PRIOR PERFORMANCE
Both the Money Market Fund and the Diversified Assets Fund are substantially
similar to other pooled accounts advised by the Adviser. The performance
information shown below is the performance of unregistered master trust
portfolios managed by the Adviser for tax-exempt investors. Each master trust
portfolio has investment objectives, policies, styles and strategies
substantially similar to ones that will be employed by the corresponding
Fund. Each master trust portfolio is not subject to the diversification
requirements, specific tax restrictions and investment limitations imposed on
the Funds by the Investment Company Act of 1940 and Subchapter M of the
Internal Revenue Code. Consequently, the
28
<PAGE> 29
FUND MANAGEMENT
[LOGO]
ADVISER'S PRIOR PERFORMANCE
CONTINUED
performance of each master trust portfolio may have been adversely affected if
it had been regulated as an investment company under the federal securities
laws. Although this performance reflects the fees and expenses of the master
trust portfolios, this performance HAS NOT BEEN adjusted to reflect the fees and
expenses which will apply to the Funds. Had such performance been adjusted for
such fees and expenses, the performance results would have been lower. The
information does not represent the Funds' performance, as each is newly
organized and has no performance record of its own, nor is it indicative of the
Funds' future performance. The performance was calculated in accordance with
recommended standards of the Association for Investment Management and Research
(AIMR), retroactively applied to all time periods. Investment results were not
calculated pursuant to the methodology established by the Securities and
Exchange Commission that will be used to calculate the Funds' performance
results.
MASTER TRUST PORTFOLIO ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
MASTER TRUST PORTFOLIO 1992 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C> <C>
------------------------------------------------------
MONEY MARKET 4.26% 3.54% 3.98% 6.10% 5.50% 5.67% 5.49%
------------------------------------------------------
DIVERSIFIED ASSETS 4.19% 5.49% -1.65% 20.66% 10.36% 15.91% 13.82%
--------------------------------------------------------------------------------------
</TABLE>
MASTER TRUST PORTFOLIO
AVERAGE ANNUAL RATES OF RETURN FOR PERIODS ENDING
DECEMBER 31, 1998
The table below provides an indication of the risks of an investment in the
Funds by showing performance of the master trust portfolios, as described
above, as compared to a broad-based securities index and in the case of the
diversified assets master trust portfolio, additionally to an index created
by the Adviser.
<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR 5 YEARS INCEPTION DATE
<S> <C> <C> <C> <C>
---------------------------------------
MONEY MARKET MASTER TRUST PORTFOLIO 5.49% 5.35% 4.93% 1/1/92*
---------------------------------------
3 MONTH TREASURY BILL 5.06% 5.11% 4.61%
-------------------------------------------------------------------------------------
DIVERSIFIED ASSETS MASTER TRUST PORTFOLIO 13.82% 11.56% 9.59% 1/1/92*
---------------------------------------
LEHMAN INTERMEDIATE GOVERNMENT/ CORPORATE
BOND INDEX 8.42% 6.59% 6.99%
---------------------------------------
DIVERSIFIED ASSETS INDEX** 13.36% 10.78% 9.91%
-------------------------------------------------------------------------------------
*Commencement of Operations
**An index created by the Adviser consisting of several securities market indices
including 65% of the Lehman Intermediate Government/Corporate Bond Index, 25% of
the S&P 500(R) Index and 10% of the 90-day Treasury Bill.
</TABLE>
THE ADMINISTRATOR AND DISTRIBUTOR
BISYS Fund Services Ohio, Inc. ("BISYS"), whose address is 3435 Stelzer Road,
Columbus, Ohio 43219-3035, serves as the Funds' administrator, transfer agent
and fund accountant. Administrative services of BISYS include providing
office space, equipment and clerical personnel to the Funds and supervising
custodial, auditing, valuation, bookkeeping, legal and dividend disbursing
services.
BISYS Fund Services Limited Partnership serves as the distributor of the
Funds' shares (the "Distributor"). The Distributor may provide financial
assistance in connection with pre-approved seminars, conferences and
advertising to the extent permitted by applicable state or self-regulatory
agencies, such as the National Association of Securities Dealers.
29
<PAGE> 30
SHAREHOLDER INFORMATION
[Logo]
PRICING OF FUND SHARES
---------------------------
HOW NET ASSET VALUE IS
CALCULATED
NAV is calculated by adding
the total value of a Fund's
investments and other
assets, subtracting its
liabilities and then
dividing that figure by the
number of outstanding
shares of the Fund:
NAV =
Total Assets - Liabilities
--------------------------
Number of Shares
Outstanding
NAV is calculated
separately for each Class.
---------------------------
MONEY MARKET FUND
The Money Market Fund's NAV, the offering
price, is expected to be constant at $1.00 per
share although this value is not guaranteed.
The NAV is determined each day at 1:00 p.m.
Eastern time, on days the New York Stock
Exchange (the "NYSE") is open. The Money
Market Fund values its securities at their
amortized cost. The amortized cost method
values a portfolio security initially at its
cost on the date of the purchase and
thereafter assuming a constant amortization to
maturity of the difference between the
principal amount due at maturity and initial
cost.
OTHER FUNDS
Per share NAV for each Fund, other than the
Money Market Fund, is determined and its
shares are priced at the close of regular
trading on the NYSE, normally at 4:00 p.m.
Eastern time, on days the NYSE is open.
Your order for purchase, sale or exchange of
shares is priced at the next NAV calculated
after your order is received in proper form by
the Fund less any applicable sales charge (as
noted in the section on "Distribution
Arrangements/Sales Charges") on any day that
both the NYSE and the Funds' custodian are
open for business. This is what is known as
the offering price. For example: If you place
a purchase order to buy shares of the Fund, it
must be received by 4:00 p.m. Eastern time in
order to receive the NAV calculated at 4:00
p.m. Eastern time. If your order is received
after 4:00 p.m. Eastern time, you will receive
the NAV calculated on the next day at 4:00
p.m. Eastern time.
The securities (other than short-term debt
securities) of the Funds, except the Money
Market Fund, are generally valued at current
market prices. If market quotations are not
available, prices will be based on fair value
as determined in good faith by or at the
direction of the Funds' Trustees.
After the pricing of a foreign security has
been established, if an event occurs which
would likely cause the value to change, the
value of the foreign security may be priced at
fair value as determined in good faith by or
at the direction of the Fund's Trustees. The
effect of using fair value pricing is that the
Fund's NAV will be subject to the judgment of
the Board of Trustees or its designees instead
of being determined by the market. In
addition, the foreign securities acquired by a
Fund may be valued in foreign markets on days
when the Fund's NAV is not calculated. In such
cases, the NAV of a Fund may be significantly
affected on days when investors cannot buy or
sell shares.
30
<PAGE> 31
SHAREHOLDER INFORMATION
[Logo]
PURCHASING SHARES
<TABLE>
<CAPTION>
MINIMUM MINIMUM
INITIAL SUBSEQUENT
ACCOUNT TYPE INVESTMENT INVESTMENT
<S> <C> <C>
CLASS A, B OR Y
Regular (non-retirement) $ 500 $ 50
Retirement (IRA) $ 250 $ 250
Automatic Investment Plan $ 250 $ 50
</TABLE>
- All purchases must be in U.S. dollars.
- A fee will be charged for any checks that
do not clear.
- Third-party checks are not accepted.
A Fund may waive its minimum purchase
requirement and the Distributor may reject
a purchase order if it considers it in the
best interest of the Fund and its
shareholders.
You may purchase shares
of the Funds through the
Distributor or through
banks, brokers and other
investment
representatives, which
may charge additional
fees and may require
higher minimum
investments or impose
other limitations on
buying and selling
shares. If you purchase
shares through an
investment
representative, that
party is responsible for
transmitting orders by
close of business and
may have an earlier
cut-off time for
purchase and sale
requests. Consult your
investment
representative or
institution for specific
information.
-----------------------------------------------------------------------------
AVOID 31% TAX WITHHOLDING
Each Fund is required to withhold 31% of taxable dividends, capital gains
distributions and redemptions paid to shareholders who have not provided the
Fund with their certified taxpayer identification number in compliance with
IRS rules. To avoid this, make sure you provide your correct Tax
Identification Number (Social Security Number for most investors) on your
account application.
-----------------------------------------------------------------------------
31
<PAGE> 32
SHAREHOLDER INFORMATION
[Logo]
PURCHASING SHARES
CONTINUED
INSTRUCTIONS FOR OPENING OR
ADDING TO AN ACCOUNT
BY REGULAR MAIL OR EXPRESS MAIL
If purchasing through your financial adviser or broker, simply tell your
advisor or broker that you wish to purchase shares of the Funds and he or she
will take care of the necessary documentation. For all other purchases,
follow the instructions below.
All investments made by regular mail or express delivery, whether initial or
subsequent, should be sent:
BY REGULAR MAIL:
USAllianz Funds
P.O. Box 182248
Columbus, OH 43218-2248
BY EXPRESS MAIL:
USAllianz Funds
3435 Stelzer Road
Columbus, OH 43219
For Initial Investment:
1. Carefully read and complete the application. Establishing your account
privileges now saves you the inconvenience of having to add them later.
2. Make check, bank draft or money order payable to "USAllianz Funds." Also
include the name of the appropriate Fund(s) on the check.
3. Mail or deliver application and payment to the address above.
For Subsequent Investment:
1. Use the investment slip attached to your
account statement. Or, if unavailable,
provide the following information:
- Fund name
- Share class
- Amount invested
- Account name and account number
2. Mail or deliver investment slip and payment
to the address above.
ELECTRONIC PURCHASES
Your bank must participate in the Automated Clearing House (ACH) and must be
a U.S. Bank. Your bank or broker may charge for this service.
Establish electronic purchase option on your account application or call toll
free 1-877-833-7113. Your account can generally be set up for electronic
purchases within 15 days.
Call toll free 1-877-833-7113 to arrange a transfer from your bank account.
ELECTRONIC VS. WIRE
TRANSFER
Wire transfers allow
financial institutions to
send funds to each other,
almost instantaneously.
With an electronic
purchase or sale, the
transaction is made
through the Automated
Clearing House (ACH) and
may take up to 8 days to
clear.
32
<PAGE> 33
SHAREHOLDER INFORMATION
[Logo]
PURCHASING SHARES
CONTINUED
BY WIRE TRANSFER
Note: Your bank may charge a wire transfer fee.
For initial investment:
Fax the completed application, along with a request for a confirmation number
to 1-877-833-7113 (toll free). Follow the instructions below after receiving
your confirmation number.
For initial and subsequent investments:
Instruct your bank to wire transfer your investment to:
- Huntington National Bank
- Routing Number: ABA #044000024
- A/C #01899622559
- Include:
- Your name
- Your confirmation number
After instructing your bank to wire the funds, call toll free 1-877-833-7113
to advise us of the amount being transferred and the name of your bank.
-----------------------------------------------------------------------------
You can also add to your account by using the convenient options described
below. Each Fund reserves the right to change or eliminate these privileges
at any time with 60 days' notice.
-----------------------------------------------------------------------------
AUTOMATIC INVESTMENT PLAN
You can make automatic investments in the Funds from your bank account,
through payroll deduction or from your federal employment, Social Security or
other regular government checks. Automatic investments can be as little as
$50 per month, once you've invested the $250 minimum required to open the
account.
To invest regularly from your bank account:
Complete the automatic investment plan portion on your account application.
Make sure you:
- Note your bank name, address and account number
- Note the amount you wish to invest automatically (minimum $50)
- Attach a voided personal check.
To invest regularly from your paycheck or government check: Call toll free
1-877-833-7113 for an enrollment form.
33
<PAGE> 34
SHAREHOLDER INFORMATION
[Logo]
PURCHASING SHARES
CONTINUED
DIRECTED DIVIDEND OPTION
By selecting the appropriate box in the account application, you can elect to
receive your distributions in cash (check) or have distributions (capital
gains and dividends) reinvested in another Fund without a sales charge. You
must maintain the minimum balance in each Fund into which you plan to
reinvest dividends or the reinvestment will be suspended and your dividends
paid to you in cash. Each Fund may modify or terminate this reinvestment
option without notice. In the event a Fund modifies this reinvestment option
in a manner which makes it unavailable to you, or terminates it entirely, you
would receive all distributions in cash (check). You can change or terminate
your participation in the reinvestment option at any time.
-----------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS
All dividends and distributions will be automatically reinvested unless you
request otherwise. There are no sales charges for reinvested distributions.
Dividends are higher for Class Y shares than for Class A and B shares,
because Class Y shares have lower distribution expenses. Capital gains are
distributed at least annually.
DISTRIBUTIONS ARE MADE ON A PER SHARE BASIS REGARDLESS OF HOW LONG YOU'VE
OWNED YOUR SHARES. THEREFORE, IF YOU INVEST SHORTLY BEFORE THE DISTRIBUTION
DATE, SOME OF YOUR INVESTMENT MAY BE RETURNED TO YOU IN THE FORM OF A
DISTRIBUTION.
-----------------------------------------------------------------------------
34
<PAGE> 35
SHAREHOLDER INFORMATION
[LOGO]
SELLING YOUR SHARES
You may sell your shares
at any time. Your sales
price will be the next NAV
after your sell order is
received by the Fund, its
transfer agent or your
investment representative.
Normally you will receive
your proceeds within a
week after your request is received. See section on "General Policies on
Selling Shares" below.
CONTINGENT DEFERRED SALES CHARGE
When you sell Class B shares, you will be charged a fee for any shares that
have not been held for a sufficient length of time. These fees will be
deducted from the money paid to you. See the section on "Distribution
Arrangements/Sales Charges" below for details.
INSTRUCTIONS FOR SELLING SHARES
If selling your shares through your financial adviser or broker, ask him or
her for redemption procedures. Your adviser and/or broker may have
transaction minimums and/or transaction times which will affect your
redemption. For all other sales transactions, follow the instructions below.
<TABLE>
<S> <C>
BY TELEPHONE 1. Call toll free 1-877-833-7113 with instructions as to
(unless you have declined telephone how you wish to receive your funds (mail, wire, electronic
sales privileges) transfer). (See "General Policies on Selling
Shares -- Verifying Telephone Redemptions" below.)
BY MAIL 1. Call toll free 1-877-833-7113 to request redemption
(See "General Policies on Selling forms or write a letter of instruction indicating:
Your Shares -- Redemptions in - your Fund and account number
Writing Required" below.) - amount you wish to redeem
- address where your check should be sent
- account owner signature
2. Mail to: USAllianz Funds, P.O. Box 182248, Columbus, OH
43218-2248
BY OVERNIGHT SERVICE See "By mail" instruction 1 above.
(See "General Policies on Selling
Shares -- Redemptions in Writing 2. Send to: USAllianz Funds, c/o BISYS Fund Services
Required" below.) Attn: T.A. Operations, 3435 Stelzer Road, Columbus, OH
43219
WIRE TRANSFER Call toll free 1-877-833-7113 to request a wire transfer.
You must indicate this option on
your application. If you call by 4 p.m. Eastern time, your payment will
normally be wired to your bank on the next business day.
Note: Your financial institution
may also charge a separate fee.
ELECTRONIC REDEMPTIONS Call toll free 1-877-833-7113 to request an electronic
Your bank must participate in the redemption.
Automated Clearing House (ACH) and
must be a U.S. bank. If you call by 4 p.m. Eastern time, the NAV of your shares
will normally be determined on the same day and the
Your bank may charge for this proceeds credited within 8 days.
service.
</TABLE>
WITHDRAWING MONEY FROM YOUR FUND INVESTMENT
As a mutual fund shareholder, you are
technically selling shares when you request
a withdrawal in cash. This is also known as
redeeming shares or a redemption of shares.
35
<PAGE> 36
SHAREHOLDER INFORMATION
[Logo]
SELLING YOUR SHARES
CONTINUED
SYSTEMATIC WITHDRAWAL PLAN
You can receive automatic payments from your account on a monthly, quarterly,
semi-annual or annual basis. The minimum withdrawal is $50. To activate this
feature:
- Make sure you've checked the appropriate box on the account application. Or
call toll free 1-877-833-7113.
- Include a voided personal check.
- Your account must have a value of $10,000 or more to start withdrawals.
- If the value of your account falls below $500, you may be asked to add
sufficient funds to bring the account back to $500, or the Fund may close
your account and mail the proceeds to you.
REDEMPTION BY CHECK WRITING -- MONEY MARKET FUND
You may write an unlimited number of checks a month in amounts of $250 or
more on your account in the Money Market Fund. To obtain checks, complete the
signature card section of the account application or contact the Fund to
obtain a signature card. Dividends and distributions will continue to be paid
up to the day the check is presented for payment. The check writing feature
may be modified or terminated upon 30 days' written notice. You must maintain
the minimum required account balance of $500 and you may not close your Money
Market Fund account by writing a check.
GENERAL POLICIES ON SELLING SHARES
REDEMPTIONS IN WRITING REQUIRED
You must request redemption in writing in the following situations:
1. Redemptions from Individual Retirement Accounts ("IRAs").
2. Redemption requests requiring a signature guarantee, which include each of
the following:
- Redemptions over $50,000
- Your account registration or the name(s) in your account has changed
within the last 15 days
- The check is not being mailed to the address on your account
- The check is not being made payable to the owner of the account
- The redemption proceeds are being transferred to another Fund account
with a different registration.
A signature guarantee can be obtained from a financial institution, such as
a bank, broker-dealer or credit union, or from members of the STAMP
(Securities Transfer Agents Medallion Program), MSP (New York Stock
Exchange Medallion Signature Program) or SEMP (Stock Exchanges Medallion
Program). Members are subject to dollar limitations which must be
considered when requesting their guarantee. The Transfer Agent may reject
any signature guarantee if it believes the transaction would otherwise be
improper.
36
<PAGE> 37
SHAREHOLDER INFORMATION
[Logo]
SELLING YOUR SHARES
CONTINUED
GENERAL POLICIES ON SELLING SHARES
VERIFYING TELEPHONE REDEMPTIONS
The Funds make every effort to insure that telephone redemptions are only
made by authorized shareholders. All telephone calls are recorded for your
protection and you will be asked for information to verify your identity.
Given these precautions, unless you have specifically indicated on your
account application that you do not want the telephone redemption feature,
you may be responsible for any fraudulent telephone orders. If appropriate
precautions have not been taken, the Transfer Agent may be liable for losses
due to unauthorized transactions.
REDEMPTIONS WITHIN 15 DAYS OF INITIAL INVESTMENT
When you have made your initial investment by check, payment of your
redemption proceeds will be delayed until the Transfer Agent is satisfied
that the check has cleared (which may take up to 15 business days). You can
avoid this delay by purchasing shares with a certified check or federal funds
wire.
REFUSAL OF REDEMPTION REQUEST
Payment for shares may be delayed under extraordinary circumstances or as
permitted by the Securities and Exchange Commission in order to protect
remaining shareholders. If you experience difficulty making a telephone
redemption during periods of drastic economic or market change, you can send
the Funds your request by regular or express mail.
REDEMPTION IN KIND
Each Fund reserves the right to make payment in securities rather than cash,
known as "redemption in kind." This could occur under extraordinary
circumstances, such as a very large redemption that could affect Fund
operations (for example, more than 1% of the Fund's net assets). If the Fund
deems it advisable for the benefit of all shareholders, redemption in kind
will consist of securities equal in market value to your shares. When you
convert these securities to cash, you will pay brokerage charges.
CLOSING OF SMALL ACCOUNTS
If your account falls below $500 (not as a result of market action), the Fund
may ask you to increase your balance. If it is still below $500 after 60
days, the Fund may close your account and send you the proceeds at the
current NAV.
UNDELIVERABLE REDEMPTION CHECKS
For any shareholder who chooses to receive distributions in cash: If
distribution checks (1) are returned and marked as "undeliverable" or (2)
remain uncashed for 6 months, your account will be changed automatically so
that all future distributions are reinvested in your account. Checks that
remain uncashed for 6 months will be canceled and the money reinvested in the
appropriate Fund at its current NAV.
37
<PAGE> 38
SHAREHOLDER INFORMATION
[Logo]
DISTRIBUTION ARRANGEMENTS/SALES CHARGES
This section describes the sales charges and fees you will pay as an investor
in different share classes offered by the Funds and ways to qualify for
reduced sales charges.
<TABLE>
<S> <C> <C>
CLASS A CLASS B
Sales Charge (Load) Front-end sales charge (not No front-end sales charge. A
applicable to money market funds); contingent deferred sales charge
reduced sales charges available. (CDSC) may be imposed on shares
redeemed within 6 years after
purchase; shares automatically
convert to Class A shares after 8
years. Maximum initial investment
is $250,000.
Distribution (12b-1) and Service Subject to annual distribution fee Subject to annual distribution and
Fee of up to 0.25% of the Fund's shareholder servicing fees of up
assets. to 1.00% of the Fund's assets.
Fund Expenses Lower annual expenses than Class B Higher annual expenses than Class
shares. A shares.
</TABLE>
There is also a Class Y open to:
- Investors for whom the Adviser and its affiliates manage separate
accounts in a fiduciary, advisory, custodial (other than retirement
accounts), agency or similar capacity
- Participants in 401(k) or 403(b) retirement plans
- Trustees of the Funds and employees and family members of the Adviser and
its affiliates.
Class Y shares are not subject to any sales charges or 12b-1 distribution
fees.
38
<PAGE> 39
SHAREHOLDER INFORMATION
logo
DISTRIBUTION ARRANGEMENTS/SALES CHARGES
CONTINUED
CALCULATION OF SALES CHARGES
CLASS A SHARES
Class A shares are sold at their public offering price. This price includes
the initial sales charge. Therefore, part of the money you invest will be
used to pay the sales charge. The remainder is invested in shares. The sales
charge decreases with larger purchases. There is no sales charge on
reinvested dividends and distributions.
The current sales charge rates are as follows:
FOR THE FIXED INCOME FUND
<TABLE>
<S> <C> <C>
SALES CHARGE SALES CHARGE
AS A % OF AS A % OF
YOUR INVESTMENT OFFERING PRICE YOUR INVESTMENT
Up to $49,999 4.75% 4.99%
$50,000 up to $75,000 4.50% 4.71%
$75,001 up to $100,000 3.50% 3.63%
$100,001 up to $250,000 3.25% 3.36%
$250,001 up to $500,000 2.50% 2.56%
$500,001 up to $1,000,000 2.00% 2.04%
$1,000,001 and above(1) 0.00% 0.00%
</TABLE>
FOR THE GROWTH FUND, GLOBAL OPPORTUNITIES FUND AND DIVERSIFIED ASSETS FUND
<TABLE>
<S> <C> <C>
SALES CHARGE SALES CHARGE
AS A % OF AS A % OF
YOUR INVESTMENT OFFERING PRICE YOUR INVESTMENT
Up to $49,999 5.75% 6.10%
$50,000 up to $75,000 4.75% 4.99%
$75,001 up to $100,000 4.50% 4.71%
$100,001 up to $250,000 3.00% 3.09%
$250,001 up to $500,000 2.50% 2.56%
$500,001 up to $1,000,000 2.00% 2.04%
$1,000,001 and above(1) 0.00% 0.00%
</TABLE>
(1) There is no initial sales charge on purchases of $1 million or more.
However, a contingent deferred sales charge (CDSC) of up to 1.00% of the
purchase price will be charged to the shareholder if shares are redeemed
in the first year after purchase. This charge will be based on the lower
of your cost for the shares or their NAV at the time of redemption. There
will be no CDSC on reinvested distributions.
39
<PAGE> 40
SHAREHOLDER INFORMATION
logo
DISTRIBUTION ARRANGEMENTS/SALES CHARGES
CONTINUED
CONTINGENT DEFERRED SALES CHARGE
CLASS B AND CLASS Y SHARES
Class B and Y shares are offered at
NAV, without any up-front sales
charge. Therefore, all the money
you invest is used to purchase
shares. However, if you sell your
Class B shares of a Fund before the
sixth anniversary of purchase, you
will have to pay a contingent
deferred sales charge at the time
of redemption. The CDSC will be
based upon the lower of the NAV at
the time of purchase or the NAV at
the time of redemption according to
the schedule below. There is no
CDSC on reinvested dividends or
distributions. Unlike Class B
shares, you may sell your Class Y
shares without incurring a CDSC.
<TABLE>
<CAPTION>
CDSC AS A % OF DOLLAR
AMOUNT SUBJECT TO
YEARS SINCE PURCHASE CHARGE
<S> <C>
0-1 5.0%
1-2 4.0%
2-3 3.0%
3-4 3.0%
4-5 2.0%
5-6 1.0%
more than 6 None
</TABLE>
If you sell some but not all of your Class B shares, certain shares not
subject to the CDSC (i.e., shares purchased with reinvested dividends) will
be redeemed first, followed by shares subject to the lowest CDSC (typically
shares held for the longest time).
CONVERSION FEATURE -- CLASS B SHARES
- Class B shares automatically convert to Class A shares of the same Fund
after 8 years from the end of the month of purchase.
- After conversion, your shares will be subject to the lower distribution and
shareholder servicing fees charged on Class A shares, which will increase
your investment return compared to the Class B shares.
- You will not pay any sales charge or fees when your shares convert, nor
will the transaction be subject to any tax.
- If you purchased Class B shares of one Fund which you exchanged for Class B
shares of another Fund, your holding period will be calculated from the
time of your original purchase of Class B shares. The dollar value of Class
A shares you receive will equal the dollar value of the Class B shares
converted.
40
<PAGE> 41
SHAREHOLDER INFORMATION
[logo]
DISTRIBUTION ARRANGEMENTS/SALES CHARGES
CONTINUED
SALES CHARGE REDUCTIONS
Reduced sales charges for Class A shares are available to shareholders with
investments of $50,000 or more. In addition, you may qualify for reduced
sales charges under the following circumstances:
- Letter of Intent. You inform a Fund in writing that you intend to
purchase enough shares over a 13-month period to qualify for a reduced
sales charge. You must include a minimum of 5% of the total amount you
intend to purchase with your letter of intent. Shares purchased under the
non-binding letter of intent will be held in escrow until the total
investment has been completed. In the event the letter of intent is not
completed, sufficient escrowed shares will be redeemed to pay any
applicable front-end sales charges.
- Rights of Accumulation. When the value of shares you already own plus the
amount you intend to invest reaches the amount needed to qualify for
reduced sales charges, your added investment will qualify for the reduced
sales charge.
- Combination Privilege. Combine accounts of multiple Funds (excluding the
Money Market Fund) or accounts of immediate family household members
(spouse and children under 21) to achieve reduced sales charges.
SALES CHARGE WAIVERS
CLASS A SHARES
The following qualify for waivers of sales charges:
- Shares purchased by investment representatives through fee-based
investment products or accounts.
- Proceeds from redemptions from another mutual fund complex within 90 days
after redemption, if you paid a front-end sales charge for those shares.
- Proceeds from the redemption of Class Y shares.
- Reinvestment of distributions from a deferred compensation plan, agency,
trust or custody account that was maintained by the Adviser or its
affiliates or invested in any USAllianz Fund.
- Shares purchased by any organization, or its employees, that provides
services to the Funds; retired Fund trustees; dealers who have an
agreement with the Distributor; and any trade organization to which the
Adviser or the Administrator belongs.
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SHAREHOLDER INFORMATION
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DISTRIBUTION ARRANGEMENTS/SALES CHARGES
CONTINUED
REINSTATEMENT PRIVILEGE
If you have sold Class A or Class B shares and decide to reinvest in the same
Fund within a 90-day period, you will not be charged the applicable sales
load on amounts up to the value of the shares you sold. You must provide a
written reinstatement request and payment within 90 days of the date your
instructions to sell were processed.
CLASS B SHARES
The CDSC will be waived under certain circumstances, including the following:
- Distributions from retirement plans if the distributions are made
following the death or disability of shareholders or plan participants.
- Redemptions from accounts other than retirement accounts following the
death or disability of the shareholder.
- Returns of excess contributions to retirement plans.
- Distributions of less than 12% of the annual account value under a
systematic withdrawal plan.
- Shares issued in a plan of reorganization sponsored by the Adviser, or
shares redeemed involuntarily in a similar situation.
DISTRIBUTION (12b-1) FEES -- CLASS A AND CLASS B SHARES
12b-1 fees compensate the Distributor and other dealers and investment
representatives for services and expenses relating to the sale and
distribution of the Funds' shares. 12b-1 fees are paid from Fund assets on an
ongoing basis. Over time these fees will increase the cost of your investment
and may cost you more than paying other types of sales charges.
The 12b-1 fees vary by share class as follows:
- Class A shares pay a 12b-1 fee of up to .25% of the average daily net
assets of a Fund.
- Class B shares pay a 12b-1 fee of up to .75% of the average daily net
assets of the applicable Fund. This will cause expenses for Class B
shares to be higher and dividends to be lower than for Class A shares.
The higher 12b-1 fee on Class B shares, together with the CDSC, help the
Distributor sell Class B shares without an "up-front" sales charge. In
particular, these fees help to defray the Distributor's costs of advancing
brokerage commissions to investment representatives.
Over time holders of Class B shares may pay more than the equivalent of the
maximum permitted front-end sales charge because 12b-1 distribution and
service fees are paid out of the Fund's assets on an ongoing basis.
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SHAREHOLDER INFORMATION
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DISTRIBUTION ARRANGEMENTS/SALES CHARGES
CONTINUED
SHAREHOLDER SERVICE FEES
Various banks, trust companies, broker-dealers (other than the Distributor)
and other financial organizations ("Service Organization") may provide
certain shareholder services for their customers who invest in the Funds'
Class B shares, through accounts maintained at that Service Organization.
Each Fund, under shareholder servicing agreements with the Service
Organization, will pay the Service Organization a fee at an annual rate of up
to .25% of the Fund's average daily net assets for these services, which
include:
- receiving and processing shareholder orders
- maintaining retirement plan accounts
- answering questions and handling correspondence for customer accounts
- acting as the sole shareholder of record for customer accounts
- issuing shareholder reports and transaction confirmations
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SHAREHOLDER INFORMATION
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EXCHANGING YOUR SHARES
You can exchange your shares
in one Fund for shares of the
same class of another
USAllianz Fund, usually
without paying additional
sales charges (see "Notes on
Exchanges" below). No
transaction fees are charged
for exchanges.
You must meet the minimum
investment requirements and
shares must be eligible for
sale in the state for the
Fund into which you are
exchanging. Exchanges from
one Fund to another are
taxable.
AUTOMATIC EXCHANGES
You can use the Money Market
Fund's automatic exchange
feature to purchase shares of
the other Funds at regular
intervals through regular,
automatic redemptions from
the Money Market Fund. To
participate in the automatic
exchange:
- Complete the appropriate
section of the account
application.
- Keep a minimum of $5,000
in the Money Market Fund
and $1,000 in the Fund
whose shares you are
buying.
To change the automatic exchange instructions or to discontinue the feature,
you must send a written request to USAllianz Funds, P.O. Box 182248,
Columbus, Ohio 43218-2248.
NOTES ON EXCHANGES
When exchanging from a Fund that has no sales charge or a lower sales charge
to a Fund with a higher sales charge, you will pay the difference.
The registration and tax identification numbers of the two accounts must be
identical.
The exchange privilege (including automatic exchanges) may be changed or
eliminated at any time upon a 60-day notice to shareholders.
INSTRUCTIONS FOR EXCHANGING SHARES
Exchanges may be made by sending a
written request to USAllianz Funds,
P.O. Box 182248, Columbus OH
43218-2248, or by calling toll free
1-877-833-7113. Please provide the
following information:
- Your name and telephone number
- The exact name on your account
and account number
- Taxpayer identification number
(usually your Social Security
number)
- Dollar value or number of shares
to be exchanged
- The name of the Fund from which
the exchange is to be made
- The name of the Fund into which
the exchange is being made
See "Selling Your Shares" above for
important information about
telephone transactions.
To prevent disruption in the
management of the Funds, due to
market timing strategies, exchange
activity may be limited to 5
exchanges within a one-year period
or 3 exchanges within a calendar
quarter.
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SHAREHOLDER INFORMATION
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DIVIDENDS, DISTRIBUTIONS AND TAXES
Any income a Fund receives is paid out, less expenses, in the form of
dividends to its shareholders. Shares begin accruing dividends on the day
they are purchased. Income dividends on the Growth Fund and Global
Opportunities Fund are usually paid semiannually. Income dividends on the
Money Market Fund, Diversified Assets Fund and Fixed Income Fund are usually
paid monthly. Capital gains for all Funds are distributed at least annually.
An exchange of shares is considered a sale, and any related gains may be
subject to applicable taxes.
Dividends generally are taxable as ordinary income. Taxes on capital gains by
the Funds will vary with the length of time the Fund has held the
security -- not how long you have invested in the Fund.
The Global Opportunities Fund may incur foreign income taxes in connection
with some of its investments. Certain of these taxes may be credited to
shareholders.
Dividends are taxable in the year in which they are declared, even if they
are paid and appear on your account statement the following year. Dividends
and distributions are treated in the same manner for federal income tax
purposes whether you receive them in cash or in additional shares.
You will be notified in January each year about the federal tax status of
distributions made by a Fund. Depending on your residence for tax purposes,
distributions also may be subject to state and local taxes, including
withholding taxes.
Foreign shareholders may be subject to special withholding requirements.
There is a penalty on certain pre-retirement distributions from retirement
accounts. Consult your tax adviser about the federal, state and local tax
consequences in your particular circumstances.
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For more information about the Funds, the following documents are available free
upon request:
ANNUAL/SEMI-ANNUAL REPORTS (REPORTS):
Each Fund's annual and semi-annual reports to shareholders contain additional
information about the Fund's investments. In the annual report, you will find a
discussion of the market conditions and investment strategies that significantly
affected each Fund's performance during its last fiscal year. As of the date of
this Prospectus, the Funds have not yet issued any Reports.
STATEMENT OF ADDITIONAL INFORMATION (SAI):
The SAI provides more detailed information about the Funds, including their
respective operations and investment policies. It is incorporated by reference
and is legally considered a part of this Prospectus.
You can get free copies of Reports and the SAI, or request other information and
discuss your questions about the USAllianz Funds by contacting a broker or bank
that sells the Funds. Or contact the Funds at:
USALLIANZ FUNDS
3435 STELZER ROAD
COLUMBUS, OHIO 43219
TELEPHONE: 1-877-833-7113
E-MAIL:
[email protected]
INTERNET:
http://www.usallianzfunds.com
You can review the Funds' Reports and the SAI at the Public Reference Room of
the Securities and Exchange Commission in Washington, D.C. Call 1-800-SEC-0330
for information on the operation of the Public Reference Room. This information
is also available on the SEC's internet site at http://www.sec.gov.
Investment Company Act file no. 811-9489.
