mazlack@ernie.berkeley.edu (Lawrence J. Mazlack) (03/21/86)
A little while ago, I talked about my problems with a specfic mutual
fund: the "Prospector Fund" from the United Services family of funds.
I brought it up as part of the discussion of damage recovery in case
of trouble - also, as a warning.
I received a bunch of queries about it. Along the way, I promised to
report back when I got some more information from either the fund or
the fund's auditor. Well, I have finally got some information - the
June, 1985 !!! audit report. (An unaudited report for Dec,1985 is also
available - but the June figures are the only complete ones - besides,
there is the question of the fund's previous inaccuracies in its
unaudited reports.)
Fund's N.A.V. value: ------------------------------------- $75,387,390
Items that were previously part of the N.A.V.
That is, items that should not have been, that I paid for,
that I shold not have paid for, that I and the other fund
owners are currently screwed over: ----------------------- $17,050,000
* improper N.A.V. of thinly traded stocks: -- 1,400,000
* over ownership of restricted stock: ------- 2,000,000
* too great a concentration of ownership: -- 12,400,000
(owning to much of a given company,
having a given company being to high
a % of total fund assets)
* improper expenses charged against fund: --- 1,250,000
(booking, accounting, method of
calculation)
These items were discovered by the fund's auditor and the SEC. The fund
tried shifting auditors to hide what was going on. The SEC is currently
working on a settlement.
Another item of debate is what may be a continuing excess of $43,000/month
of management fees currently being paid to the same fund manager.
Well, you say, will insurance cover it. No, the answer is. How much can
I get back you say. Well, the fund manager claims to be only worth
$2,8328,000. He also claims that this is all we can hope to recover -
apparently, we could get it all if we would be satisfied with it.
There is another possibility as well. As United Services uses a single
prospectus for all of its funds, we may be able to collapse them all
together and then distribute the procedes on some basis or other (this,
did in fact, happen to me once before). If this happens, the Prospector
fund holders would win and everyone else would loose. Me, if I held one
of the United Services sub-funds (Gold Shares, US Treasury Securities,
NEW Prospector, Good and Bad Times, Growth, Income, Tax Free, LowCap)
would seriously consider moving my money to a different family of funds
rather than take the risk. (Again, this can only happen because United
Services uses a single prospectus for all of its funds - if it had
used separate prospectuses for each fund, this could not be easily done.)
Lastly, can I sell out now and recover damages later: Probably not -
according to what I have received, any such payments will go to the
fund itself, as an addition to the fund's assets. That means that
existing holders win if there is a damage recovery, people who sell
now win if there isn't.
Larry Mazlack
UUCP {tektronix,dual,sun,ihnp4,decvax}!ucbvax!ucbernie!mazlack
New style mazlack@ernie.berkeley.edu
ARPA | CSNET mazlack%ernie@berkeley.ARPA
BITNET mazlack@ucbernie.BITNET
telephone (415) 528-0496
snail CS Dept, 571 Evans, U. California, Berkeley, CA 94720