<PAGE>
Supplement dated May 22, 1995
to
Prospectus dated February 28, 1995
of
ISI TOTAL RETURN U.S. TREASURY FUND SHARES
(A Class of Total Return U.S. Treasury Fund, Inc.)
The Prospectus dated February 28, 1995 of ISI Total Return U.S. Treasury
Fund Shares (A Class of Total Return U.S. Treasury Fund, Inc.) is hereby amended
and supplemented by the following:
The Section entitled "How to Invest in the Fund - Purchases by Exchange" is
amended and supplemented as follows:
Until February 29, 1996, shareholders of any other mutual fund who have
paid a sales charge on their shares of such funds, and shareholders of any
closed-end fund, may exchange shares of such funds for an equal dollar amount of
Shares by submitting to Armata or a Participating Dealer, the proceeds of the
redemption or sale of shares of such funds, together with evidence of the
payment of a sales charge (for mutual funds only) and the source of such
proceeds. Shares issued pursuant to this offer will not be subject to the sales
charges described above or any other charge.
The Section entitled "General Information - Capital Shares" is amended and
supplemented by the addition of the following language to the end of such
section: Shares of that class are sold through broker-dealers and have similar
12b-1 fees and front-end sales charges as the Shares. Different classes of the
Fund may be offered to certain investors and holders of such shares may be
entitled to certain exchange privileges not offered to Shares. All classes of
the Fund share a common investment objective, portfolio and advisory fee, but
the classes may have different distribution expenses and sales charges and,
accordingly, performance may differ.
<PAGE> 2
ISI TOTAL RETURN U.S. TREASURY FUND SHARES
(A Class of Total Return
U.S. Treasury Fund, Inc.)
717 Fifth Avenue
New York, New York 10022
For information call (800) 955-7175
Total Return U.S. Treasury Fund, Inc. (the "Fund") is designed to provide:
1) A high level of total return with relative stability of principal.
2) High current income, consistent with an investment in securities
issued by the United States Treasury ("U.S. Treasury Securities").
The Fund will invest only in U.S. Treasury Securities and in repurchase
agreements fully collateralized by U.S. Treasury Securities.
Shares of the ISI class of the Fund ("Shares") are available through
Armata Financial Corp. as well as Participating Dealers and Shareholder
Servicing Agents. (See "How to Invest in the Fund.")
This Prospectus sets forth basic information that investors should know
about the Fund prior to investing, and should be retained for future
reference. A Statement of Additional Information dated February 28, 1995, has
been filed with the Securities and Exchange Commission (the "SEC") and is
hereby incorporated by reference. It is available upon request and without
charge by contacting the Fund at the above address or telephone number.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK. THE SHARES ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE
BOARD OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT
IN THE SHARES INVOLVES RISK, INCLUDING
POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is February 28, 1995
<PAGE> 3
1. FEE TABLE
<TABLE>
<CAPTION>
<S> <C>
Shareholder Transaction Expenses:
(as a percentage of offering price)
Maximum Sales Charge Imposed on Purchases .............. 4.45%
Maximum Sales Charge Imposed on Reinvested Dividends ... None
Deferred Sales Charge .................................. None
Annual Fund Operating Expenses:
(as a percentage of average net assets) ...............
Management Fees ........................................ .25%
12b-1 Fees ............................................. .25%
Other Expenses ......................................... .27%
---------
Total Fund Operating Expenses .......................... .77%
</TABLE>
Example:
<TABLE>
<CAPTION>
<S>
You would pay the following expenses on a 1 year 3 years 5 years 10 years
$1,000 investment, assuming (1) 5% annual -------- --------- --------- ----------
return and (2) redemption at the end of <C> <C> <C> <C>
each time period: $52 $68 $86 $139
</TABLE>
The Example should not be considered a representation of future expenses.
Actual expenses may be greater or less than those shown.
The purpose of the foregoing table is to describe the various costs and
expenses that an investor in the Fund will bear directly or indirectly. The
Management Fees paid by the Fund are based in part on the net assets of the
Fund and in part on gross income, which fees are reflected as a percentage of
average net assets. A person who purchases Shares through a financial
institution may be charged separate fees by the financial institution. (For
more complete descriptions of the various costs and expenses, see "How to
Invest in the Fund -- Offering Price", "Investment Advisor", "Administrator"
and "Distributor.") The rules of the SEC require that the maximum sales
charge (in the Shares' case, 4.45% of the offering price) be reflected in the
above table. However, certain investors may qualify for reduced sales
charges. (See "How to Invest in the Fund -- Offering Price.") The Expenses
and Example appearing in the table above are based on the Fund's expenses
(.77%) for the fiscal year ended October 31, 1994, and are based on average
daily net assets of approximately $415 million and a gross income level of
5.75%. Due to the continuous nature of Rule 12b-1 fees, long-term
shareholders of the Fund may pay more than the equivalent of the maximum
front-end sales charges permitted by the Rules of Fair Practice of the
National Association of Securities Dealers, Inc. The foregoing table has not
been audited by Deloitte & Touche LLP, the Fund's independent auditors.
2. FINANCIAL HIGHLIGHTS
The Fund was organized as a corporation under the laws of the State of
Maryland on June 3, 1988 and commenced operations on August 10, 1988. The
financial highlights included in this table are a part of the Fund's
financial statements for the periods indicated and have been audited by
Deloitte & Touche LLP, independent auditors. The financial statements and
related notes for the fiscal year ended October 31, 1994 and the report
thereon of Deloitte & Touche LLP are included in the Statement of Additional
Information. Additional performance information is contained in the Fund's
Annual Report for the fiscal year ended October 31, 1994, which is available
at no cost from the Fund at the address and telephone number noted on the
cover page of this Prospectus.
2
<PAGE> 4
(For a Share outstanding throughout each period)
<TABLE>
<CAPTION>
August 10, 1988
(commencement of
For the Year Ended October 31, operations)
----------------------------------------------------------------------------- through
1994 1993 1992 1991 1990 1989 October 31, 1988
---------- ---------- ---------- ---------- ---------- ---------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value at beginning
of period ................. $ 11.35 $ 10.47 $ 10.41 $ 9.76 $ 10.55 $ 10.24 $ 10.00
--------- --------- -------- --------- --------- --------- ---------
Income from Investment
Operations:
Net investment income 0.51 0.62 0.76 0.70 0.73 0.71 0.10
Net realized and unrealized
gain/(loss) on
investments ............. (1.16) 1.12 0.05 0.79 (0.60) 0.44 0.21
--------- --------- -------- --------- --------- --------- ---------
Total from Investment
Operations .............. (0.65) 1.74 0.81 1.49 0.13 1.15 0.31
Less Distributions:
Dividends from net
investment income and
short-term gains ....... (1.20) (0.79) (0.70) (0.84) (0.92) (0.84) (0.07)
Distributions from net
realized long-term gains (0.28) (0.07) (0.05) -- -- -- --
--------- --------- -------- --------- --------- --------- ---------
Total Distributions ....... (1.48) (0.86) (0.75) (0.84) (0.92) (0.84) (0.07)
--------- --------- -------- --------- --------- --------- ---------
Net asset value at end of
period .................. $ 9.22 $ 11.35 $ 10.47 $ 10.41 $ 9.76 $ 10.55 $ 10.24
========= ========= ======== ========= ========= ========== =========
Total Return* (6.22) 17.33% 8.96% 15.89% 1.43% 11.87% 3.10%
Ratios to Average Net
Assets:
Expenses .................. 0.77% 0.77% 0.77% 0.87% 0.89% 0.97% 1.12%(1)
Net investment income ..... 4.98% 5.21% 5.65% 6.88% 7.40% 7.51% 5.80%(1)
Supplemental Data:
Net assets at end of
period:
ISI Class Shares ......... $200,309 $232,103 $207,518 $168,128 $131,872 $ 89,943 $22,597
Flag Investors Class A
Shares .................... $175,149 $224,790 $250,210 $237,688 $198,556 $135,523 $55,757
Portfolio turnover rate ... 68% 249% 191% 141% 79% 184% 72%
</TABLE>
- ------
* Total return represents aggregate total return for the periods indicated
and does not reflect any applicable sales charges.
(1) Annualized.
3
<PAGE> 5
3. INVESTMENT PROGRAM
INVESTMENT OBJECTIVES, POLICIES AND
RISK CONSIDERATIONS
The Fund's investment objective is to seek a high level of total return, with
relative stability of principal, and, secondarily, to seek a high level of
current income consistent with an investment in U.S. Treasury Securities. The
Fund will invest only in U.S. Treasury Securities and in repurchase
agreements fully collateralized by U.S. Treasury Securities. U.S. Treasury
Securities include Treasury bills, Treasury notes, Treasury bonds and
Separate Trading of Registered Interest and Principal of Securities
("STRIPS"). All such obligations are direct obligations of the United States
Government and are supported by the full faith and credit of the United
States. STRIPS are U.S. Treasury Securities which do not pay interest
currently, but which are purchased at a discount and are payable in full at
maturity. The value of STRIPS may be subject to greater market fluctuations
from changing interest rates prior to maturity than the value of other U.S.
Treasury Securities of comparable maturities that bear interest currently.
The Fund's investment objective may be changed only by the affirmative vote
of a majority of the outstanding shares of all classes of the Fund.
The Fund may enter into forward commitments for the purchase of U.S. Treasury
Securities and, as noted, may enter into repurchase agreements collateralized
by U.S. Treasury Securities with commercial banks and registered
broker-dealers. These investment practices, which may involve certain special
risks, are described below.
SELECTION OF INVESTMENTS
The Fund's investment advisor is International Strategy and Investment Inc.
("ISI" or the "Advisor" -- see "Investment Advisor"). ISI buys and sells
securities for the Fund's portfolio with a view toward, first, a high level
of total return with relative stability of principal and, second, high
current income. Therefore, in addition to yield, the potential for capital
gains and appreciation resulting from possible changes in interest rates will
be a consideration in selecting investments. ISI will be free to take full
advantage of the entire range of maturities offered by U.S. Treasury
Securities and may adjust the average maturity of the Fund's portfolio from
time to time, depending on its assessment of the relative yields available on
securities of different maturities and its expectations of future changes in
interest rates. Thus, at certain times the average maturity of the portfolio
may be relatively short (from under one year to five years, for example) and
at other times may be relatively long (over 10 years, for example). In
determining which direction interest rates are likely to move, the Advisor
relies on the economic analysis made by its chairman, Edward S. Hyman. There
can be no assurance that such economic analysis will accurately predict
interest rate trends or that the portfolio strategies based on Mr. Hyman's
economic analysis will be effective.
SPECIAL RISK CONSIDERATIONS
U.S. Treasury Securities are considered among the safest of fixed-income
investments. Because of this added safety, the yields available from U.S.
Treasury Securities are generally lower than the yields available from
corporate debt securities. As with other debt securities, the value of U.S.
Treasury Securities changes as interest rates fluctuate. Changes in the value
of portfolio securities will not affect interest income from those securities
but will be reflected in the Fund's net asset value. Thus, a decrease in
interest rates will generally result in an increase in the value of the
Shares. Conversely, during periods of rising interest rates, the value of the
Shares will generally decline. The magnitude of these fluctuations will
generally be greater at times when the Fund's average maturity is longer.
Repurchase agreements collateralized by U.S. Treasury Securities may involve
credit and other risks more fully described below. There can be no assurance
that the Fund's investment objective will be met.
REPURCHASE AGREEMENTS
The Fund may agree to purchase U.S. Treasury Securities from financial
institutions, such as banks and broker-dealers, subject to the seller's
agreement to repurchase the securities at an established time and price. The
Fund will enter into repurchase agreements only with banks and broker-dealers
that have been determined to be creditworthy by the Fund's Board of Directors
under criteria established with the assistance of the Advisor. Default by the
seller may, however, expose the Fund to possible loss because of adverse
market action or delay in connection with the disposition of the underlying
obligations. In addition, if bankruptcy proceedings are commenced with
respect to the seller of the security, the Fund may be delayed or limited in
its ability to sell the collateral.
4
<PAGE> 6
PURCHASE OF WHEN-ISSUED SECURITIES
From time to time, in the ordinary course of business, the Fund may make
purchases of U.S. Treasury Securities, at the current market value of the
securities, on a when-issued basis. When such transactions are negotiated,
the yield to maturity is fixed. The coupon interest rate on such U.S.
Treasury Securities is fixed at the next succeeding U.S. Treasury auction
date thereby determining the price to be paid by the Fund. Delivery and
payment will take place after the date of the auction. A segregated account
of the Fund, consisting of cash, cash equivalents or U.S. Treasury Securities
equal at all times to the amount of the when-issued commitments will be
established and maintained by the Fund at the Fund's custodian. Additional
cash or U.S. Treasury Securities will be added to the account when necessary.
While the Fund will purchase securities on a when-issued basis only with the
intention of acquiring the securities, the Fund may sell the securities
before the settlement date if it is deemed advisable to limit the effects of
adverse market action. The securities so purchased or sold are subject to
market fluctuation and no interest accrues to the purchaser during this
period. At the time of delivery of the securities, their value may be more or
less than the purchase or sale price. The Fund will invest no more than 40%
of its net assets at any time in U.S. Treasury Securities purchased on a
when-issued basis.
The Fund's annual portfolio turnover rate (the lesser of the value of the
purchases or sales for the year divided by the average monthly market value
of the portfolio during the year, excluding securities with maturities of one
year or less) may vary from year to year, as well as within a year, depending
on market conditions. For the fiscal years ended October 31, 1994 and October
31, 1993, the Fund's portfolio turnover rate was 68% and 249%, respectively.
The Fund anticipates that its annual portfolio turnover rate will not exceed
200% in the fiscal year ending October 31, 1995. A high level of portfolio
turnover may generate relatively high transaction costs and may increase the
amount of taxes payable by the Fund's shareholders. (See "Dividends and
Taxes.")
4. INVESTMENT RESTRICTIONS
The Fund's investment program is subject to a number of restrictions which
reflect both self-imposed standards and federal and state regulatory
limitations.
1) As a matter of fundamental policy, the Fund will not borrow money except
as a temporary measure for extraordinary or emergency purposes and then
only from banks and in an amount not exceeding 10% of the value of the
total assets of the Fund at the time of such borrowing, provided that,
while borrowings by the Fund equalling 5% or more of the Fund's total
assets are outstanding, the Fund will not purchase securities for
investment. This restriction may not be changed without the affirmative
vote of a majority of the outstanding shares of the Fund.
2) Additionally, the Fund will not invest more than 10% of the value of its
net assets in repurchase agreements with remaining maturities in excess of
seven days and other illiquid securities. This restriction may be changed
by a majority of the Board of Directors.
The Fund is subject to further investment restrictions that are set forth in
the Statement of Additional Information.
5. HOW TO INVEST IN THE FUND
Shares may be purchased from Armata Financial Corp. ("Armata"), P.O. Box 515,
Baltimore, Maryland 21203, through any securities dealer which has entered
into a dealer agreement with Armata ("Participating Dealers") or through any
financial institution which has entered into a shareholder servicing
agreement with the Fund ("Shareholder Servicing Agents"). Shares may also be
purchased directly from the Fund by completing the Application Form attached
to this Prospectus and returning it, together with payment of the purchase
price, to the Fund at the address shown on the Application Form. As used
herein, the "Fund" refers to Total Return U.S. Treasury Fund, Inc., whereas
references to the "Shares" shall mean shares of the Fund's ISI Total Return
U.S. Treasury Fund Shares which is a class of shares of the Fund.
The minimum initial investment is $5,000, except that the minimum initial
investment for qualified retirement plans and IRA's is $1,000 and the minimum
initial investment for participants in the Fund's Automatic Investing Plan is
$250. Each subsequent investment must be at least $250, except that the
minimum subsequent investment for participants in the Fund's Automatic
Investing Plan is $100 for monthly investments and $250 for quarterly
investments. (See "Purchases Through Automatic Investing Plan" below.) The
Fund reserves the right to suspend the sale of Shares at any time at the
discretion of Armata. Orders for purchases of Shares are accepted on any day
on which the New York Stock Exchange is open for business ("Business Day").
5
<PAGE> 7
Purchase orders for Shares will be executed at a per Share purchase price equal
to the net asset value next determined after receipt of the purchase order plus
any applicable front-end sales charge (the "Offering Price") on the date such
net asset value is determined (the "Purchase Date"). Purchases made directly
from the Fund must be accompanied by payment of the purchase price. Purchases
made through Armata or a Participating Dealer or Shareholder Servicing Agent
must be in accordance with such entity's payment procedures. Armata may, in its
sole discretion, refuse to accept any purchase order.
The net asset value per Share is determined once daily as of the close of the
New York Stock Exchange, which is ordinarily 4:00 p.m. (Eastern Time), on
each Business Day. Net asset value per share of a class is calculated by
valuing all assets held by the Fund, deducting liabilities attributable to
all shares and any liabilities attributable to the Shares, and dividing the
resulting amount by the number of then outstanding Shares. Securities are
valued on the basis of their last sale price (or in the absence of recorded
sales, at the average of readily available closing bid and asked prices).
Securities or other assets for which market quotations are not readily
available are valued at their fair value as determined in good faith by the
Advisor under procedures established from time to time and monitored by the
Directors. Debt obligations with maturities of 60 days or less are valued at
amortized cost, which constitutes fair value as determined by the Directors.
OFFERING PRICE
Shares may be purchased from Armata, Participating Dealers or Shareholder
Servicing Agents at the Offering Price, which includes a sales charge which
is calculated as a percentage of the Offering Price and decreases as the
amount of purchase increases as shown below.
<TABLE>
<CAPTION>
Sales Sales
Charge as Charge as Dealer
Percentage Percentage Retention
of of Net as Percentage
Offering Amount of Offering
Amount of Purchase Price Invested Price*
------------------ --------- ---------- -------------
<S> <C> <C> <C>
Less than $ 50,000 4.45% 4.66% 4.00%
$50,000 - $ 99,999 3.50% 3.63% 3.00%
$100,000 - $ 249,999 2.50% 2.56% 2.00%
$250,000 - $ 499,999 2.00% 2.04% 1.50%
$500,000 - $ 999,999 1.50% 1.52% 1.25%
$1,000,000 - $1,999,999 0.75% 0.76% 0.75%
$2,000,000 - $2,999,999 0.50% 0.50% 0.50%
$3,000,000 and over None None None
</TABLE>
- ------
* Armata may from time to time reallow to Participating Dealers up to 100% of
the sales charge included in the Offering Price of Shares.
A shareholder who purchases additional Shares may obtain reduced sales
charges as set forth in the table above through a right of accumulation. In
addition, an investor may obtain reduced sales charges as set forth above
through a right of accumulation of purchases of Shares and purchases of
shares of other mutual funds in the ISI family of funds. The applicable sales
charge will be determined based on the total of (a) the investor's current
purchase plus (b) an amount equal to the then current net asset value or
cost, whichever is higher, of all Shares and of all shares of such other
mutual funds in the ISI family of funds held by the shareholder. To obtain a
reduced sales charge through a right of accumulation, the shareholder must
provide Armata, either directly or through his Participating Dealer or
Shareholder Servicing Agent, as applicable, with sufficient information to
verify that he has such a right. The right of accumulation may be amended or
terminated at any time as to subsequent purchases. The term "purchase" refers
to an individual purchase by a single purchaser, or to concurrent purchases
which will be aggregated by a purchaser, the purchaser's spouse and their
children under the age of 21 years purchasing Shares for their own account.
An investor may also obtain the reduced sales charges shown above by
executing a written Letter of Intent, which states the investor's intention
to invest not less than $50,000 within a 13-month period in Shares. Each
purchase of Shares under a Letter of Intent will be made at the Offering
Price applicable at the time of such purchase to the full amount indicated on
the Letter of Intent. A Letter of Intent is not a binding obligation upon the
investor to purchase the full amount indicated. The minimum initial
investment under a Letter of Intent is 5% of the full amount. Shares
purchased with the first 5% of the full amount will be held in escrow (while
remaining registered in the name of the investor) to secure payment of the
higher sales charge applicable to the Shares actually purchased if the full
amount indicated is not invested. Such escrowed Shares will be involuntarily
redeemed to pay the additional sales charge, if necessary. When the full
amount indicated has been purchased, the escrowed Shares will be released. An
investor who wishes to enter into a Letter of Intent in conjunction with an
investment in Shares may do so by completing the appropriate section of the
Application Form attached to this Prospectus.
6
<PAGE> 8
The Fund may sell Shares at net asset value (without sales charge) to the
following: (i) banks, bank trust departments, registered investment advisory
companies, financial planners and broker-dealers purchasing Shares on behalf of
their fiduciary and advisory clients, provided such clients have paid an account
management fee for these services; (ii) investors who have redeemed Shares, or
shares of any other mutual fund in the ISI family of funds that have similar
sales charges, in an amount that is not more than the total redemption proceeds,
provided that the purchase is within six months after the redemption and the
amount of the purchase is at least $5,000; and (iii) current or retired
Directors of the Fund, directors and employees (and their immediate families) of
ISI, the Fund's administrator and their respective affiliates, and employees of
Participating Dealers. In addition, investors who have redeemed shares of funds
in the ISI family of funds that have lower sales charges may purchase Shares at
net asset value in an amount that is not more than the total redemption
proceeds, provided that they held the shares of such funds for more than 24
months prior to the redemption, the purchase is within six months after the
redemption and the amount of the purchase is at least $5,000.
PURCHASES BY EXCHANGE
As permitted pursuant to any rule, regulation or order promulgated by the
SEC, shareholders of other mutual funds in the ISI family of funds that have
similar sales charges may exchange their shares of those funds for an equal
dollar amount of Shares. Shares issued pursuant to this offer will not be
subject to the sales charges described above or any other charge. In
addition, shareholders of funds in the ISI family of funds that have lower
sales charges may exchange into other funds in the family upon payment of the
difference in sales charges, except that the exchange will be made at net
asset value if the shares have been held for at least 24 months. The net
asset value of shares purchased and redeemed in an exchange request received
on a Business Day will be determined on the same day, provided that the
exchange request is received prior to 4:00 p.m. (Eastern Time). Exchange
requests received after 4:00 p.m. (Eastern Time) will be effected on the next
Business Day.
The exchange privilege may be exercised only in those states where the class
of shares of such other funds may legally be sold. Investors should receive
and read the applicable prospectus prior to tendering shares for exchange.
The Fund may modify or terminate these offers of exchange at any time and
will provide shareholders with 60 days' written notice prior to any such
modification or termination. The exchange privilege with respect to other ISI
funds may also be exercised by telephone. (See "Telephone Transactions"
below.)
PURCHASES THROUGH AUTOMATIC INVESTING PLAN
Shareholders may purchase Shares regularly by means of an Automatic Investing
Plan with a pre-authorized check drawn on their checking accounts. Under this
plan, the shareholder may elect to have a specified amount invested monthly
or quarterly in Shares. The minimum initial investment is $250. Each
subsequent investment must be at least $100 for monthly investments and $250
for quarterly investments. The amount specified by the shareholder will be
withdrawn from the shareholder's checking account using the pre-authorized
check. This amount will be invested in Shares at the applicable Offering
Price determined on the date the amount is available for investment.
Participation in the Automatic Investing Plan may be discontinued by either
the Fund or the shareholder upon 30 days' prior written notice to the other
party. A shareholder who wishes to enroll in the Automatic Investing Plan may
do so by completing the appropriate section of the Application Form attached
to this Prospectus.
6. HOW TO REDEEM SHARES
Shareholders may redeem all or part of their investment on any Business Day
by transmitting a redemption order through Armata, or a Participating Dealer,
a Shareholder Servicing Agent or by regular or express mail to the Fund's
transfer agent (the "Transfer Agent"). Shareholders may also redeem Shares by
telephone (in amounts up to $50,000). (See "Telephone Transactions" below.) A
redemption order is effected at the net asset value per Share next determined
after receipt of the order (or, if stock certificates have been issued for
the Shares to be redeemed, after the tender of the stock certificates for
redemption). Redemption orders received after 4:00 p.m. (Eastern Time) will
be effected at the net asset value next determined on the following Business
Day. Payment for redeemed Shares will be made by check and will be mailed
within seven days after receipt of a duly authorized telephone redemption
request or of a redemption order fully completed and, as applicable,
accompanied by the documents described below:
7
<PAGE> 9
1) A letter of instructions, specifying the shareholder's account number with
Armata or a Participating Dealer, if applicable, and the number of Shares
or dollar amount to be redeemed, signed by all owners of the Shares in the
exact names in which their account is maintained;
2) For redemptions in excess of $50,000, a guarantee of the signature of each
registered owner by a member of the Federal Deposit Insurance Corporation,
a trust company, broker, dealer, credit union (if authorized under state
law), securities exchange or association, clearing agency, or savings
association;
3) If Shares are held in certificate form, stock certificates either properly
endorsed or accompanied by a duly executed stock power for Shares to be
redeemed; and
4) Any additional documents required for redemption by corporations,
partnerships, trusts or fiduciaries.
Dividends payable up to the date of redemption of Shares will be paid on the
next dividend payable date. If all of the Shares in a shareholder's account
have been redeemed on a dividend payable date, the dividend will be remitted
by check to the shareholder.
The Fund has the power under its Articles of Incorporation to redeem
shareholder accounts amounting to less than $500 upon 60 days' notice.
SYSTEMATIC WITHDRAWAL PLAN
Shareholders who hold Shares having a value of $10,000 or more may arrange to
have a portion of their Shares redeemed monthly or quarterly under the Fund's
Systematic Withdrawal Plan. Such payments are drawn from income dividends,
and, to the extent necessary, from Share redemptions (which would be a return
of principal and, if reflecting a gain, would be taxable). If redemptions
continue, a shareholder's account may eventually be exhausted. Because Share
purchases include a sales charge that will not be recovered at the time of
redemption, a shareholder should not have a withdrawal plan in effect at the
same time he is making recurring purchases of Shares. A shareholder who
wishes to enroll in the Systematic Withdrawal Plan may do so by completing
the appropriate section of the Application Form attached to this Prospectus.
7. TELEPHONE TRANSACTIONS
Shareholders may exercise the exchange privilege with respect to other ISI
funds, or redeem Shares (in amounts up to $50,000), by notifying the Transfer
Agent by telephone at (800) 882-8585 on any Business Day between the hours of
8:30 a.m. and 5:30 p.m. (Eastern Time) or by regular or express mail at its
address listed under "Custodian, Transfer Agent, Accounting Services."
Telephone transaction privileges are automatic. Shareholders may specifically
request that no telephone redemptions or exchanges be accepted for their
accounts. This election may be made on the Application Form or at any time
thereafter by completing and returning appropriate documentation supplied by
the Transfer Agent.
A telephone exchange or redemption placed by 4:00 p.m. (Eastern Time) or the
close of the New York Stock Exchange, whichever is earlier, is effective that
day. Telephone orders placed after 4:00 p.m. (Eastern Time) will be effected
at the net asset value as determined on the next Business Day. The Fund and
the Transfer Agent will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. These procedures include
requiring the investor to provide certain personal identification information
at the time an account is opened and prior to effecting each transaction
requested by telephone. In addition, all telephone transaction requests will
be recorded and investors may be required to provide additional telecopied
written instructions of such transaction requests. The Fund or the Transfer
Agent may be liable for any losses due to unauthorized or fraudulent
telephone instructions if either of them does not employ these procedures.
Neither the Fund nor the Transfer Agent will be responsible for any loss,
liability, cost or expense for following instructions received by telephone
that either of them reasonably believes to be genuine. During periods of
extreme economic or market changes, shareholders may experience difficulty in
effecting telephone transactions. In such event, requests should be made by
regular or express mail. Shares held in certificate form may not be exchanged
or redeemed by telephone. (See "How to Invest in the Fund -- Purchases by
Exchange" and "How to Redeem Shares.")
8
<PAGE> 10
8. DIVIDENDS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
The Fund's policy is to distribute to shareholders substantially all of its
taxable net investment income (including net short-term capital gains) in the
form of monthly dividends. The Fund may distribute to shareholders any net
capital gains (net long-term capital gains less net short-term capital
losses) on an annual basis or, alternatively, may elect to retain net capital
gains and pay tax thereon.
Unless the shareholder elects otherwise, all income dividends (consisting of
dividend and interest income and the excess, if any, of net short-term
capital gains over net long-term capital losses) and net capital gains
distributions, if any, will be reinvested in additional Shares at the then
net asset value per Share on the payment date. Shareholders may elect to have
income dividends or capital gains distributions paid in cash. Shareholders
wishing to change their election must give written notice to the Transfer
Agent (see "Custodian, Transfer Agent, Accounting Services") either directly
or through their Participating Dealer or Shareholder Servicing Agent, at
least five days before the next date on which dividends or distributions will
be paid.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS
The following is only a general summary of certain tax considerations
affecting the Fund and the shareholders. No attempt is made to present a
detailed explanation of the tax treatment of the Fund or the shareholders,
and the discussion here is not intended as a substitute for careful tax
planning.
The following summary is based on current tax laws and regulations, which may
be changed by legislative, judicial, or administrative action. The Statement
of Additional Information sets forth further information regarding taxes.
The Fund has been and expects to be taxed as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended. So long
as the Fund qualifies for this tax treatment, it will be relieved of federal
income tax on amounts distributed to shareholders, but shareholders, unless
otherwise exempt, will generally pay income or capital gains taxes on the
amounts so distributed. Reinvested dividends will be taxed as if they had
been distributed on the reinvestment date.
Distributions from the Fund out of net capital gains (net long-term capital
gains less net short-term capital losses), if any, are treated by the
shareholders as long-term capital gains. All other income distributions are
taxed to the shareholders as ordinary income, whether received in cash or in
additional shares. Fund distributions generally will not be eligible for the
corporate dividends received deduction.
Ordinarily, shareholders will include all dividends declared by the Fund as
income in the year of payment. However, dividends declared payable to
shareholders of record in December of one year, but paid in January of the
following year, will be deemed for tax purposes to have been received by the
shareholders and paid by the Fund in the year in which the dividends were
declared.
The Fund intends to make sufficient distributions of its ordinary income and
capital gain net income prior to the end of each calendar year to avoid
liability for federal excise tax.
Shareholders will be advised annually as to the federal income tax
consequences of distributions made during the year. Shareholders are urged to
consult with their tax advisors concerning the application of state and local
taxes to investments in the Fund, which may differ from the federal income
tax consequences described above. For example, under certain specified
circumstances, state income tax laws may exempt from taxation distributions
of a regulated investment company to the extent that such distributions are
derived from interest on federal obligations. Shareholders are urged to
consult with their tax advisors regarding whether, and under what conditions
such exemption is available.
9. MANAGEMENT OF THE FUND
The overall business affairs of the Fund are managed by its Board of
Directors. The Board approves all significant agreements between the Fund and
persons or companies furnishing services to the Fund, including the Fund's
agreements with its investment advisor, distributor, administrator, custodian
and transfer agent. The day-to-day operations of the Fund are delegated to
the Fund's officers, to Armata as distributor of the Shares, to the Advisor
and to the Fund's administrator. Three directors and all of the officers of
the Fund are officers or employees of Armata, ISI or the Fund's
administrator. The other Directors of the Fund have no affiliation with
Armata, ISI or the Fund's administrator.
9
<PAGE> 11
The Fund's Directors and officers are as follows:
*Edward S. Hyman Chairman and Director
*Richard T. Hale Vice Chairman and Director
*W. James Price Vice Chairman and Director
James J. Cunnane Director
N. Bruce Hannay Director
John F. Kroeger Director
Louis E. Levy Director
Eugene J. McDonald Director
Harry Woolf Director
R. Alan Medaugh President
Edward J. Veilleux Vice President
Gary V. Fearnow Vice President
Nancy Lazar Vice President
Brian C. Nelson Vice President and Secretary
Kathleen Simonson Vice President
Diana M. Ellis Treasurer
Carrie L. Butler Assistant Vice President
Laurie D. DePrine Assistant Secretary
- ------
*Messrs. Hyman, Hale and Price are "interested persons" of the Fund within
the meaning of Section 2(a)(19) under the Investment Company Act of 1940, as
amended (the "1940 Act").
10. INVESTMENT ADVISOR
ISI, a registered investment advisor, serves as investment advisor to the
Fund pursuant to an investment advisory agreement dated as of April 1, 1991
(the "Investment Advisory Agreement"). ISI employs Messrs. Edward S. Hyman
and R. Alan Medaugh. Due to their stock ownership, Messrs. Hyman and Medaugh
may be deemed to be controlling persons of ISI. As of December 31, 1994, the
Advisor had approximately $1 billion under management. In addition, the
Advisor publishes a variety of economic research reports including "Weekly
Economic Data" which follows the trends that may determine the direction of
interest rates. The Advisor also acts as investment advisor to Managed
Municipal Fund, Inc. and North American Government Bond Fund, Inc., open-end
investment companies with approximately $200 million in net assets as of
December 31, 1994.
Pursuant to the terms of the Investment Advisory Agreement, as compensation
for its services for the fiscal year ended October 31, 1994, the Advisor
received an annual fee equal to .25% of the Fund's average daily net assets.
The Advisor's fee is based in part upon a varying percentage of the Fund's
average daily net assets and in part upon a percentage (1.5%) of the Fund's
gross income.
The address of the Advisor is 717 Fifth Avenue, New York, New York 10022,
telephone (800) 955-7175.
PORTFOLIO MANAGERS
Edward S. Hyman, Chairman of the Fund and ISI, and R. Alan Medaugh, President
of the Fund and ISI, have shared direct portfolio management responsibility
for the Fund since its inception. Mr. Hyman is responsible for developing the
economic analysis upon which the Fund's selection of investments is based.
(See "Investment Program.") Before joining ISI, Mr. Hyman was a vice chairman
and member of the Board of C.J. Lawrence Inc. and prior thereto, an economic
consultant at Data Resources. He writes two international economic reports:
Weekly International Highlights and the monthly International Economic
Review. He also writes three weekly domestic reports: Weekly Economic Data,
Weekly Money Report and Economic Estimates. Mr. Hyman also writes a monthly
domestic report, The Month's Best Charts. In addition, he and his staff
compile a Daily Economic Fax. These international and domestic reports are
sent to ISI's private institutional clients in the United States and
overseas. The periodical Institutional Investor, which rates analysts and
economists on an annual basis, has rated Mr. Hyman as its "first team"
economist, which is its highest rating, in each of the last fifteen years.
10
<PAGE> 12
Mr. Medaugh is responsible for day-to-day portfolio management. Prior to
joining ISI, Mr. Medaugh was Managing Director of C.J. Lawrence Fixed Income
Management and prior thereto Senior Vice President and bond portfolio manager
at Fiduciary Trust International. While at Fiduciary Trust International, Mr.
Medaugh led their Fixed-Income Department which managed $5 billion of
international fixed income portfolios for institutional clients. Mr. Medaugh
also had prior experience as a bond portfolio manager at both Putnam
Management Company and Fidelity Management and Research.
11. ADMINISTRATOR
Investment Company Capital Corp. ("ICC") 135 East Baltimore Street,
Baltimore, Maryland 21202, provides administration services to the Fund. ICC
is a wholly-owned subsidiary of Alex. Brown and an affiliate of Armata.
ICC supervises the day-to-day operations of the Fund, including the
preparation of registration statements, proxy materials, shareholder reports,
compliance with all requirements of securities laws in the states in which
the Shares are distributed and oversight of the relationship between the Fund
and its other service providers. As compensation for these services for the
period from January 1, 1994 through October 31, 1994, ICC received an annualized
fee equal to .11% of the Fund's average daily net assets. ICC's fee is based in
part upon a varying percentage of the Fund's average daily net assets and in
part upon a percentage (.50%) of the Fund's gross income. Prior to January 1,
1994, Alex. Brown provided these services to the Fund and, for the period from
November 1, 1993 through December 31, 1993, received an annualized fee equal to
.11% of the Fund's average daily net assets.
ICC also serves as the Fund's transfer and dividend disbursing agent and
provides accounting services to the Fund. (See "Custodian, Transfer Agent,
Accounting Services.")
12. DISTRIBUTOR
Armata Financial Corp. acts as distributor of the Shares pursuant to a
Distribution Agreement and related Plan of Distribution (the "Plan") adopted
pursuant to Rule 12b-1 under the 1940 Act. Armata is a broker-dealer that was
formed in 1983 and is an affiliate of ICC. As compensation for its service
for the fiscal year ended October 31, 1994, Armata received a fee equal to
.25% of the Shares' average daily net assets. Armata expects to allocate on a
proportional basis most of its annual distribution fee to its investment
representatives or up to all of its fee to Participating Dealers as
compensation for their ongoing shareholder services, including processing
purchase and redemption requests and responding to shareholder inquiries.
In addition, the Fund may enter into Shareholder Servicing Agreements with
certain financial institutions, such as banks, to act as Shareholder
Servicing Agents, pursuant to which Armata may allocate a portion of its
distribution fee as compensation for such financial institutions' ongoing
shareholder services. Such financial institutions may impose separate fees in
connection with these services and investors should review this Prospectus in
conjunction with any such institution's fee schedule. Amounts allocated to
Participating Dealers and Shareholder Servicing Agents may not exceed amounts
payable to Armata under the Plan.
Payments under the Plan are made as described above regardless of Armata's
actual cost of providing distribution services and may be used to pay
Armata's overhead expenses. If the cost of providing distribution services to
the Fund in connection with the sale of the Shares is less than .25% of the
average daily net assets invested in Shares for any period, Armata may retain
the unexpended portion of the distribution fee. Armata or its associated
persons will from time to time and from its own resources pay or allow
additional discounts or promotional incentives in the form of cash or other
compensation (including merchandise or travel), to Participating Dealers.
11
<PAGE> 13
13. CUSTODIAN, TRANSFER AGENT, ACCOUNTING SERVICES
PNC Bank, National Association ("PNC Bank"), a national banking association
with offices at Airport Business Park, 200 Stevens Drive, Lester,
Pennsylvania 19113, acts as custodian of the Fund's assets. Investment
Company Capital Corp., 135 East Baltimore Street, Baltimore, Maryland 21202
(telephone: (800) 882-8585), is the Fund's transfer and dividend disbursing
agent and provides accounting services to the Fund. As compensation for
providing accounting services to the Fund for the period from January 1, 1994
through October 31, 1994, ICC received an annualized fee equal to .025% of
the Fund's average daily net assets. (See the Statement of Additional
Information.) Prior to January 1, 1994, Alex. Brown provided accounting
services to the Fund and, for the period from November 1, 1993 through
December 31, 1993, received an annualized fee equal to .025% of the Fund's
average daily net assets. ICC also serves as the Fund's administrator.
14. PERFORMANCE INFORMATION
From time to time, the Fund may quote total return and yield data in
advertisements or in reports to shareholders. Both total return and yield
data will be computed according to the standardized calculations required by
the SEC to provide consistency and comparability in investment company
advertising.
The yield of the Fund will be determined by dividing the net investment
income earned by the Fund during a 30 day period by the maximum offering
price per Share on the last day of the period and annualizing the result on a
semi-annual basis.
Advertisements or reports citing performance data will show the average
annual total return, net of the Fund's sales charge, over one, five and ten
year periods or, if such periods have not yet elapsed, shorter periods
corresponding to the life of the Fund. Such return quotations will be
computed by finding average annual compounded rates of return over such periods
that would equate an assumed initial investment of $1,000 to the ending
redeemable value, net of all sales loads and other fees, according to the
required standardized calculation. The Fund's total return for a given period
is based upon changes in the Fund's net asset value and the Fund's yield for
the period. If the Fund compares its performance to other funds or to
relevant indices, the Fund's performance will be stated in the same terms in
which such comparative data and indices are stated, which is normally total
return rather than yield. For these purposes, the performance of the Fund, as
well as the performance of such investment companies or indices, may not
reflect sales charges, which, if reflected, would reduce performance results.
The performance of the Fund may be compared to data prepared by Lipper
Analytical Services, Inc., CDA Investment Technologies, Inc. and Morningstar
Inc., independent services which monitor the performance of mutual funds. The
performance of the Fund may also be compared to the Shearson Lehman
Government Corporate Bond Index (or any of its sub-indices), the Consumer
Price Index, Ryan U.S. Treasury Index, the return on 90 day U.S. Treasury
bills, the Standard & Poor's 500 Stock Index and the Dow Jones Industrial
Average. The Fund may also use total return performance data as reported in
the following national financial and industry publications that monitor the
performance of mutual funds: Money Magazine, Forbes, Business Week, Barron's,
Investor's Daily, IBC/Donoghue's Money Fund Report and The Wall Street
Journal.
12
<PAGE> 14
Yield quotations and performance comparisons may be useful as a basis for
comparing the Fund with other investment alternatives. However, shareholders
should realize that the Fund's current yield will fluctuate from time to time
and is not necessarily representative of the Fund's future performance. Yield
and performance data should also be considered in light of the risks
associated with the Fund's investment objective and policies.
15. GENERAL INFORMATION
CAPITAL SHARES
The Fund was incorporated under the laws of the State of Maryland on June 3,
1988, and is authorized to issue 100 million shares of capital stock with a
par value of $.001 per share. Shares of the Fund have equal rights with
respect to voting. Voting rights are not cumulative, so the holders of more
than 50% of the outstanding shares voting together for election of Directors
may elect all the members of the Board of Directors of the Fund. The fiscal
year end of the Fund is October 31. In the event of liquidation or
dissolution of the Fund, each share is entitled to its portion of the Fund's
assets after all debts and expenses have been paid. The Board of Directors of
the Fund is authorized to establish additional "series" of shares of capital
stock, each of which would evidence interests in a separate portfolio of
securities, and separate classes of each series of the Fund. The Board has no
present intention of establishing any additional series of the Fund but the
Fund does have another class of shares in addition to the shares offered
hereby, "Flag Investors Total Return U.S. Treasury Fund Class A Shares."
ANNUAL MEETINGS
The Fund does not expect to hold annual meetings of shareholders but special
meetings of shareholders will be held under certain circumstances.
Shareholders of the Fund reserve the right, under certain circumstances, to
request that a meeting of shareholders be held for the purpose of considering
the removal of a Director from office, and if such a request is made, the
Fund will assist with shareholder communications in connection with the
meeting.
REPORTS
The Fund furnishes shareholders with quarterly reports containing information
about the Fund and its operations, including a list of investments held in
the Fund's portfolio. The annual financial statements are audited by the
Fund's independent auditors, Deloitte & Touche LLP.
SHAREHOLDER INQUIRIES
Shareholders with inquiries concerning their Shares should contact the
Transfer Agent at (800) 882-8585, Armata, ISI, a Participating Dealer or
Shareholder Servicing Agent, as appropriate.
13
<PAGE> 15
ISI TOTAL RETURN U.S. TREASURY FUND SHARES
NEW ACCOUNT APPLICATION
===============================================================================
Make check payable to "ISI Total Return U.S. Treasury Fund Shares" and mail
with this application to:
ISI Mutual Funds
P.O. Box 419426
Kansas City, MO 64141-6426
For assistance in completing this form, please call the Transfer Agent at
(800) 882-8585.
To open an IRA account, call ISI at (800) 955-7175 to request an application.
The minimum initial purchase is $5,000, except that the minimum initial
purchase for qualified retirement plans or IRA's is $1,000 and the minimum
initial purchase for participants in the Fund's Automatic Investing Plan is
$250. Each subsequent purchase requires a $250 minimum, except that the
minimum subsequent purchase under the Fund's Automatic Investing Plan is $100
for monthly purchases and $250 for quarterly purchases. The Fund reserves the
right not to accept checks for more than $50,000 that are not certified or
bank checks.
===============================================================================
Your Account Registration (Please Print)
---------------------------------
Existing Account No., If any
Individual or Joint Tenant
- -----------------------------------------------------------------------------
First Name Initial Last Name
- -----------------------------------------------------------------------------
Social Security Number
- -----------------------------------------------------------------------------
Joint Tenant Initial Last Name
- -----------------------------------------------------------------------------
Social Security Number
Corporations, Trusts, Partnerships, etc.
- -----------------------------------------------------------------------------
Name of Corporation, Trust or Partnership
- -----------------------------------------------------------------------------
Tax ID Number
- -----------------------------------------------------------------------------
Name of Trustees (If to be included in the Registration)
Gifts to Minors
- -----------------------------------------------------------------------------
Custodian's Name (only one allowed by law)
- -----------------------------------------------------------------------------
Minor's Name (only one)
- -----------------------------------------------------------------------------
Social Security Number of Minor
under the Uniform Gifts to Minors Act
---------------------------
State of Residence
Your Mailing Address
- -----------------------------------------------------------------------------
Street
- -----------------------------------------------------------------------------
City State Zip
( )
- -----------------------------------------------------------------------------
Daytime Phone
===============================================================================
Statement of Intention (Optional)
/ / I agree to the Letter of Intent and Escrow Agreement set forth in the
accompanying prospectus. I intend to invest over a 13-month period in shares
of ISI Total Return U.S. Treasury Fund Shares in an aggregate amount at least
equal to:
$50,000 $100,000 $250,000 $500,000 $1,000,000
- ----- ----- ----- ----- -----
$2,000,000 $3,000,000
- ----- -----
<PAGE> 16
===============================================================================
Right of Accumulation (Optional)
/ / I already own shares of the Fund(s) set forth below to be applied for a
reduced sales charge. List the Account numbers of other Funds that you or
your immediate family (spouse and children under 21) already own that qualify
for reduced sales charges.
Fund Name Account No. Owner's Name Relationship
--------- ----------- ------------ ------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
<PAGE> 17
Distribution Options
Please check appropriate boxes. There is no sales charge for reinvested
dividends. If none of the options are elected, all distributions will be
reinvested.
Income Dividends Capital Gains
/ / Reinvested in additional shares / / Reinvested in additional shares
/ / Paid in Cash / / Paid in Cash
===============================================================================
Automatic Investing Plan (Optional)
/ / I authorize you as Agent for the Automatic Investing Plan to
automatically invest $ for me, on a monthly or quarterly basis, on or
about the 20th of each month or if quarterly, the 20th of January, April,
July and October, and to draw a bank draft in payment of the investment
against my checking account. (Bank drafts may be drawn on commercial banks
only.)
Minimum Initial Investment: $250
Subsequent Investments (check one): Please attach a voided check.
/ / Monthly ($100 minimum)
/ / Quarterly ($250 minimum)
- -----------------------------------------------------------------------------
Bank Name
- -----------------------------------------------------------------------------
Existing ISI Total Return U.S. Treasury Fund Account No., if any
- -----------------------------------------------------------------------------
Depositor's Signature Date
- -----------------------------------------------------------------------------
Depositor's Signature Date
(if joint acct., both must sign)
===============================================================================
Systematic Withdrawal Plan (Optional)
/ / Beginning the month of , 19 , please send me checks on a
monthly or quarterly basis, as indicated below, in the amount of $ ,
from shares that I own, payable to the account registration address as shown
above. (Participation requires minimum account value of $10,000.)
Frequency (check one):
/ / Monthly
/ / Quarterly (January, April, July and October)
===============================================================================
Telephone Transactions
I understand that I will automatically have telephone redemption privileges
(for amounts up to $50,000) and telephone exchange privileges (with respect
to other ISI Funds) unless I mark one or both of the boxes below.
No, I/We do not want
/ / Telephone redemption privileges
/ / Telephone exchange privileges
Redemptions effected by telephone will be mailed to the address of record. If
you would prefer redemptions mailed to a pre-designated bank account, please
provide the following information:
Bank: Bank Account No:
--------------------------- ---------------------
Address: Bank Account Name:
--------------------------- ---------------------
---------------------------
===============================================================================
Signature and Taxpayer Certification
I have received a copy of the Fund's prospectus dated February 28, 1995.
Under penalties of perjury, I certify (1) that the number shown on this form
is my correct taxpayer identification number and (2) that I am not subject to
backup withholding as a result of a failure to report all interest or
dividends, or the Internal Revenue Service has notified me that I am no
longer subject to backup withholding. (Strike out the language in (2) if it
is not correct.)
If a non-resident alien, please indicate country of residence:
---------------
I acknowledge that the telephone redemption and exchange privileges are
automatic and will be effected as described in the Fund's current prospectus
(see "Telephone Transactions"). I also acknowledge that I may bear the risk
of loss in the event of fraudulent use of such privileges. If I do not want
telephone redemption or exchange privileges, I have so indicated on this
Application.
- -----------------------------------------------------------------------------
Signature Date
- -----------------------------------------------------------------------------
Signature Date
(if joint acct., both must sign)
<PAGE> 18
===============================================================================
For Dealer Use Only
Dealer's Name: Dealer Code:
-------------------------- ---------------------
Dealer's Address: Branch Code:
-------------------------- ---------------------
--------------------------
Representative: Rep. No.
-------------------------- ---------------------
<PAGE> 19
ISI
TOTAL RETURN
U.S. TREASURY
FUND SHARES
(A Class of Total Return
U.S. Treasury Fund, Inc.)
No person has been authorized to give any information or to make
representations not contained in this Prospectus in connection with any
offering made by this Prospectus and, if given or made, such information must
not be relied upon as having been authorized by the Fund or Armata. This
Prospectus does not constitute an offering by the Fund or Armata in any
jurisdiction in which such offering may not lawfully be made.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Fee Table .................... 2
2. Financial Highlights ......... 2
3. Investment Program ........... 4
4. Investment Restrictions ...... 5
5. How to Invest in the Fund .... 5
6. How to Redeem Shares ......... 7
7. Telephone Transactions ....... 8
8. Dividends and Taxes .......... 9
9. Management of the Fund ....... 9
10. Investment Advisor ........... 10
11. Administrator ................ 11
12. Distributor .................. 11
13. Custodian, Transfer Agent,
Accounting Services ........... 12
14. Performance Information ...... 12
15. General Information .......... 13
</TABLE>
<PAGE> 20
ISI
INTERNATIONAL STRATEGY AND INVESTMENT
ISI
TOTAL RETURN
U.S. TREASURY
FUND SHARES
(A Class of Total Return
U.S. Treasury Fund, Inc.)
An open-end mutual fund seeking a high level of total return, with
relative stability of principal and, secondarily, high current income
consistent with an investment in securities issued by the United States
Treasury ("U.S. Treasury Securities"). The Fund will invest only in U.S.
Treasury Securities and in repurchase agreements fully collateralized by U.S.
Treasury Securities.
FEBRUARY 28, 1995
PROSPECTUS
