SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No.___ )
Filed by the Registrant [ X ]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant toss.240.14a-11(c) orss.240.14a-12
U.S. GLOBAL INVESTORS FUNDS
-----------------------------
CHINA REGION OPPORTUNITY FUND
ALL AMERICAN EQUITY FUND
REAL ESTATE FUND
EQUITY INCOME FUND
GOLD SHARES FUND
WORLD GOLD FUND
GLOBAL RESOURCES FUND
TAX FREE FUND
NEAR-TERM TAX FREE FUND
U.S. GOVERNMENT SECURITIES SAVINGS FUND
U.S. TREASURY SECURITIES CASH FUND
(Name of Registrant as Specified In Its Charter)
NOT APPLICABLE
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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and 0-11
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applies:
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computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
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[ ] Check box if any part of the fee is offset as provided by
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================================================================================
NOTICE OF MEETING
PROXY STATEMENT
June 26, 2000
Dear Shareholder:
Enclosed is a proxy statement describing important proposals for you to
consider. You are eligible to vote on these proposals because you were a
shareholder of record of one or more of the U.S. Global Investors Funds listed
below on June 19, 2000.
* China Region Opportunity Fund * Global Resources Fund
* All American Equity Fund * Tax Free Fund
* Real Estate Fund * Near-Term Tax Free Fund
* Equity Income Fund * U.S. Government Securities Savings Fund
* Gold Shares Fund * U.S. Treasury Securities Cash Fund
* World Gold Fund
I'm sure you, like most people, lead a busy life and are tempted to put this
proxy aside. Please don't. When shareholders do not vote, the funds incur
additional expenses to pay for follow-up mailings and telephone calls. Please
take a few minutes to review this proxy statement and sign, date, and return the
proxy card in the enclosed postage paid envelope. Or you can vote on the
Internet or by telephone - instruction card enclosed.
It's been twelve years since the last time shareholders of all of the funds were
called together in a shareholder meeting. Since then, the mutual fund industry
and the regulatory environment have changed significantly. Many of the changes
we are proposing are designed to modernize our governing documents and
investment restrictions to reflect these industry and regulatory changes. We
believe that these changes will also permit the funds to operate more
efficiently and to adapt to future industry and regulatory developments without
incurring the cost of another shareholder meeting. These changes are not
expected to affect materially the management of the funds.
THE BOARD OF TRUSTEES HAS UNANIMOUSLY APPROVED THESE PROPOSALS AND RECOMMENDS A
VOTE "FOR" EACH ONE.
If you have any questions regarding the issues to be voted on or need assistance
completing your proxy card, please contact our proxy solicitor, D. F. King &
Co., Inc. (1-800-207-2872, between 9:00 a.m. and 9:00 p.m. Eastern daylight
time, Monday through Friday). If you have account-specific questions, please
call one of our shareholder services representatives (1-800-873-8637 between
7:30 a.m. and 7:00 p.m. Central daylight time, Monday through Friday).
I appreciate your taking the time to consider these important proposals. Thank
you for investing with U.S. Global Investors Funds.
Sincerely,
Frank E. Holmes
President of the Trust
PROXY STATEMENT
JUNE 26, 2000
IMPORTANT VOTING INFORMATION INSIDE! [USGI LOGO]
TABLE OF CONTENTS
PROXY STATEMENT SUMMARY ......................................... 2
NOTICE OF SPECIAL JOINT MEETING OF SHAREHOLDERS OF U.S. .........
GLOBAL INVESTORS FUNDS ........................................ 5
PROXY STATEMENT FOR SPECIAL JOINT MEETING OF SHAREHOLDERS OF
U.S. GLOBAL INVESTORS FUNDS ................................... 7
PROPOSAL ONE - ALL FUNDS - TO ELECT TWO TRUSTEES .............. 10
PROPOSAL TWO - ALL FUNDS - TO RATIFY THE SELECTION OF
INDEPENDENT AUDITORS ........................................ 16
PROPOSAL THREE - ALL FUNDS - TO AUTHORIZE THE TRUSTEES TO
ADOPT AN AMENDED AND RESTATED MASTER TRUST AGREEMENT ........ 17
PROPOSAL FOUR - TO RECLASSIFY OR AMEND CERTAIN FUNDAMENTAL
INVESTMENT RESTRICTIONS ..................................... 19
PROPOSAL 4A - All Funds - To Amend the Senior
Securities Restriction .................................... 20
PROPOSAL 4B - All Funds - To Amend the Underwriting
Restriction ............................................... 21
PROPOSAL 4C - All Funds - To Amend the Borrowing
Restriction ............................................... 22
PROPOSAL 4D - All Funds - To Amend the Real Estate
Restriction ............................................... 23
PROPOSAL 4E - All Funds - To Amend the Commodities
Restriction ............................................... 24
PROPOSAL 4F - All Funds - To Amend the Lending
Restriction ............................................... 25
PROPOSAL 4G - All Funds - To Amend and Reclassify the
Margin Purchase Restriction ............................... 26
PROPOSAL 4H - All Funds - To Amend and Reclassify the
Short Sales Restriction ................................... 27
PROPOSAL 4I - All Funds - To Eliminate the Restriction
on Investing in Restricted Securities ..................... 28
PROPOSAL 4J - Gold Shares Fund - To Eliminate the
Restriction on Investing in Warrants ...................... 29
PROPOSAL 4K - U.S. Treasury Securities Cash Fund and
U.S. Government Securities Savings Fund - To Amend the
Restriction on Industry Concentration ..................... 30
PROPOSAL 4L - All Funds except the Gold Shares, World
Gold and Global Resources Funds - To Eliminate the
Issuer Percentage Restriction ............................. 31
PROPOSAL FIVE - CHINA REGION OPPORTUNITY FUND - TO
RECLASSIFY THE CHINA REGION OPPORTUNITY FUND AS
NONDIVERSIFIED .............................................. 33
PROPOSAL SIX - REAL ESTATE FUND - TO LIQUIDATE THE REAL
ESTATE FUND ................................................. 36
EXHIBIT I - FORM OF AMENDED AND RESTATED MASTER TRUST
AGREEMENT ................................................... 39
PROXY STATEMENT SUMMARY
The following questions and answers provide a brief summary of the proposals to
be considered at the special meeting of shareholders. The information below is
qualified in its entirety by more detailed information contained elsewhere in
this proxy statement. Please read all of the enclosed proxy materials before
voting.
I'M A SMALL INVESTOR. WHY SHOULD I BOTHER TO VOTE?
Your vote makes a difference. If many shareholders just like you fail to vote,
the funds may not receive enough votes to hold the meeting. If this happens,
the trustees will solicit votes again - a costly proposition for the funds.
WHEN WILL THE SPECIAL MEETING BE HELD? WHO IS ELIGIBLE TO VOTE?
The meeting will be held on August 16, 2000, at 10:00 a.m. Central daylight
time, at 7900 Callaghan Road, San Antonio, Texas. This will be a business
meeting only. There will be no presentations about the funds. The record date
for the meeting is the close of business June 19, 2000. Only shareholders who
own shares on the record date are entitled to vote at the meeting.
WHAT AM I BEING ASKED TO VOTE ON?
All shareholders are being asked to vote on four items:
1. Election of two trustees
2. Ratification of the selection of independent auditors
3. Approval of an Amended and Restated Master Trust Agreement
4. Reclassification or amendment of certain investment
restrictions
In addition, shareholders of the China Region Opportunity Fund are being asked
to vote on a proposal to change the fund's classification to "nondiversified,"
and shareholders of the Real Estate Fund are voting on a proposal to liquidate
the fund.
HOW DO THE TRUSTEES RECOMMEND THAT I VOTE ON THESE PROPOSALS?
The trustees unanimously recommend that you vote "FOR" all proposals.
2
WHY ARE THE TRUSTEES PROPOSING TO CHANGE CERTAIN INVESTMENT RESTRICTIONS?
The proposed changes will modernize and standardize the fundamental investment
restrictions for all funds within the U.S. Global Family of Funds. The
trustees believe that, over time, these changes will permit the funds to
operate more efficiently and to adapt to changing regulatory and industry
conditions. For the foreseeable future, the changes are not expected to affect
materially the way in which the funds are managed.
WHEN WILL THE PROPOSED CHANGES TO THE INVESTMENT RESTRICTIONS TAKE EFFECT, IF
APPROVED?
The proposals will take effect on November 1, 2000.
WHO IS ASKING FOR MY VOTE?
Your board of trustees is asking you to sign and return the enclosed proxy
card so your votes can be cast at the meeting. In the event the meeting is
adjourned, these proxies also would be voted at the reconvened meeting.
HOW DO I VOTE MY SHARES?
You do not have to attend the meeting. We've made it easy for you. You can
vote through the Internet, by mail, by phone, or in person.
* To vote through the Internet, follow the enclosed instructions (you will
need the control number that appears on your proxy card).
* To vote by telephone, dial the toll-free number indicated on the enclosed
sheet and follow the instructions that you hear on the phone, or our proxy
solicitor, D.F. King & Co., Inc. can help you (dial 1-800-207-2872).
We encourage you to vote by Internet or telephone, using the control number
that appears on your proxy card. These voting methods will save the funds a
good deal of money because the funds will not have to pay for return-mail
postage.
* To vote by mail, sign and send us the enclosed proxy card in the
envelope provided. Note: If you vote by Internet or telephone,
please do not return your proxy card.
* Or, you can vote in person at the meeting on August 16, 2000.
I PLAN TO VOTE ON THE INTERNET OR TELEPHONE. HOW DOES INTERNET OR TELEPHONE
VOTING WORK?
Just follow the instructions on the enclosed card.
3
I PLAN TO VOTE BY MAIL. HOW SHOULD I SIGN MY PROXY CARD?
If you are an individual account owner, please sign exactly as your name
appears on the proxy card. Either owner of a joint account may sign the proxy
card, but the signer's name must exactly match one that appears on the card.
You should sign proxy cards for other types of accounts in a way that
indicates your authority (for instance, "John Doe, Custodian").
IF I SEND MY PROXY IN NOW, CAN I CHANGE MY VOTE LATER?
A proxy can be revoked at any time by:
* Revoting through the Internet or by telephone,
* Sending us another proxy card,
* Writing to us, or
* Attending the meeting and voting in person. Even if you plan to attend the
meeting and vote in person, we ask that you return the enclosed proxy card.
Doing so will help us ensure that an adequate number of shares are present
at the meeting.
4
NOTICE OF SPECIAL JOINT
MEETING OF SHAREHOLDERS OF
U.S. GLOBAL INVESTORS FUNDS
---------------------
CHINA REGION OPPORTUNITY FUND
ALL AMERICAN EQUITY FUND
REAL ESTATE FUND
EQUITY INCOME FUND
GOLD SHARES FUND
WORLD GOLD FUND
GLOBAL RESOURCES FUND
TAX FREE FUND
NEAR-TERM TAX FREE FUND
U.S. GOVERNMENT SECURITIES SAVINGS FUND
U.S. TREASURY SECURITIES CASH FUND
To the Shareholders of the Funds:
A Special Joint Meeting of Shareholders of the China Region Opportunity Fund,
All American Equity Fund, Real Estate Fund, Equity Income Fund, Gold Shares
Fund, World Gold Fund, Global Resources Fund, Tax Free Fund, Near-Term Tax Free
Fund, U.S. Government Securities Savings Fund, and the U.S. Treasury Securities
Cash Fund (the funds) will be held at 7900 Callaghan, San Antonio, Texas 78229,
on August 16, 2000, at 10:00 a.m., Central daylight time. The purpose of the
meeting is to consider and act on the following proposals and to transact other
business as may properly come before the meeting or any adjournments of the
meeting.
1. To elect two trustees
2. To ratify the selection of Independent Auditors
3. To approve an Amended and Restated Master Trust Agreement
4. To reclassify or amend certain investment restrictions
5. To reclassify the China Region Opportunity Fund as nondiversified
6. To liquidate the Real Estate Fund
The board of trustees has fixed the close of business on June 19, 2000, as the
record date for the determination of the shareholders of each fund entitled to
notice of, and to vote at, the meeting.
Your vote is important - please vote promptly.
5
We urge any shareholder who does not expect to attend the meeting to indicate
voting instructions on the enclosed proxy card, date and sign it, and return it
in the envelope provided, which needs no postage if mailed in the United States
or to vote by Internet or telephone. To avoid unnecessary expense, we ask your
cooperation in mailing your proxy card promptly, no matter how large or small
your holdings may be.
By Order of the Board of Trustees,
Susan B. McGee
Secretary of the Trust
Dated: June 26, 2000
6
PROXY STATEMENT FOR SPECIAL
JOINT MEETING OF SHAREHOLDERS OF
U.S. GLOBAL INVESTORS FUNDS
---------------------
CHINA REGION OPPORTUNITY FUND
ALL AMERICAN EQUITY FUND
REAL ESTATE FUND
EQUITY INCOME FUND
GOLD SHARES FUND
WORLD GOLD FUND
GLOBAL RESOURCES FUND
TAX FREE FUND
NEAR-TERM TAX FREE FUND
U.S. GOVERNMENT SECURITIES SAVINGS FUND
U.S. TREASURY SECURITIES CASH FUND
This proxy statement is furnished to shareholders of all the series of U.S.
Global Investors Funds, a Massachusetts business trust (Trust). This proxy
statement is furnished in connection with the solicitation of proxies by and on
behalf of the board of trustees of the Trust to be used at a special meeting of
shareholders to be held at 7900 Callaghan Road, San Antonio, Texas 78229, on
August 16, 2000, at 10:00 a.m., or at any adjournments thereof.
The purpose of the meeting is set forth in the accompanying Notice. This proxy
statement and the accompanying proxy are expected to be mailed to shareholders
on or about June 26, 2000. Shareholders of record at the close of business on
June 19, 2000, shall be entitled to notice of and to vote at the meeting or any
adjournment thereof.
All shares represented at the meeting by properly executed proxies will be voted
in accordance with the instructions thereon, if any. If no instructions are
given, the proxy will be voted for approval of the proposals. The board of
trustees does not know of any action to be considered at the meeting other than
the proposals, which are discussed below.
The proxy may be revoked at any time before it is exercised by the subsequent
execution and submission of a revised proxy, by written notice of revocation to
the Secretary of the Trust, or by voting in person at the meeting.
The cost of the solicitation of proxies by the board of trustees of the Trust
for this meeting of shareholders will be borne by the Trust and will include any
reimbursement paid to fiduciaries, brokerage firms, nominees, and
7
custodians for their expenses in forwarding solicitation material regarding the
meeting to beneficial owners. D.F. King & Co., Inc. will provide the Trust with
solicitation services that will include soliciting shareholder votes by mail or
telephone and planning the voting process, tabulation and reporting. The
estimated cost of these solicitation services is approximately $160,000. In
addition to the solicitation of proxies by mail, officers and employees of the
Trust and U.S. Global Investors, Inc. (Adviser), without additional
compensation, may solicit proxies in person or by telephone or other means of
communication.
Shares of each fund of the Trust issued and outstanding as of June 19, 2000, are
indicated in the table below. Each full share outstanding is entitled to one
full vote and each fractional share outstanding is entitled to a proportionate
share of one vote.
FUND NO. OF SHARES FUND NO. OF SHARES
- ------------------------- --------------- ------------------------- ---------------
China Region Opportunity All American Equity
Fund 3,513,351.793 Fund 986,280.106
Real Estate Fund 625,081.363 Equity Income Fund 680,779.066
Gold Shares Fund 9,023,093.585 World Gold Fund 8,926,408.979
Global Resources Fund 3,508,204.326 Tax Free Fund 1,621,615.153
Near-Term Tax Free Fund 507,565.020 U.S. Government
U.S. Treasury Securities Securities Savings
Cash Fund 134,925,534.252 Fund 755,512,869.176
VOTE REQUIRED
A plurality of all votes cast at the meeting at which a quorum is present is
sufficient to approve Proposal One (to elect two trustees). Approval of Proposal
Two (to ratify the selection of independent auditors) requires a majority of all
votes cast at the meeting, provided a quorum is present. Approval of Proposal
Three (to adopt an Amended and Restated Master Trust Agreement) requires a
majority of all shares of the Trust outstanding as of the record date. Approval
of each of Proposals 4A-4L (changes to certain investment restrictions)
requires, with respect to each fund voting thereon, a "majority of the
outstanding voting securities" of that fund. Approval of Proposal Five (to
reclassify the China Region Opportunity Fund as nondiversified) requires a
"majority of the outstanding securities" of the China Region Opportunity Fund,
and approval of Proposal Six (to liquidate the Real Estate Fund) requires a
"majority of the outstanding securities" of the Real Estate Fund. For these
purposes, a "majority of the outstanding voting securities" means the
affirmative vote of the lesser of (a) 67% or more of the voting securities
present at the meeting or represented by proxy if the holders of more than 50%
of the outstanding voting securities are present or represented by proxy or (b)
more than 50% of the outstanding voting securities.
8
On Proposals One, Two and Three, all shares of the Trust will vote together as a
single class. On Proposals 4A-4L (changes to certain investment restrictions),
each fund affected by each proposal will vote separately. Only shareholders of
the China Region Opportunity Fund will vote on Proposal Five (to reclassify the
China Region Opportunity Fund as nondiversified), and only shareholders of the
Real Estate Fund will vote on Proposal Six (to liquidate the Real Estate Fund).
A quorum to conduct business consists of a majority of the shares entitled to
vote at a shareholder meeting. A lesser number is sufficient for adjournments.
In tallying shareholder votes, abstentions and "broker non-votes" (i.e. shares
held by brokers or nominees as to which (i) instructions have not been received
from the beneficial owners or persons entitled to vote; and (ii) the broker or
nominee does not have discretionary voting power on a particular matter) will be
counted for purposes of determining whether a quorum is present for convening
the meeting. On Proposal One (to elect two trustees), abstentions and broker
non-votes will have no effect; the two nominees receiving the largest number of
votes will be elected. On Proposal Two (to ratify the selection of independent
auditors), abstentions and broker non-votes will not be counted as "votes cast"
and will have no effect on the result of the vote. On Proposals Three (to adopt
an Amended and Restated Master Trust Agreement), Four (changes to certain
fundamental investment restrictions), Five (to reclassify the China Region
Opportunity Fund as nondiversified), and Six (liquidation of the Real Estate
Fund), abstentions and broker non-votes will have the effect of votes against
the Proposals.
If a quorum is not present at the meeting, or if a quorum is present at the
meeting but sufficient votes to approve one or more of the proposed items are
not received, or if other matters arise requiring shareholder attention, the
persons named as proxy agents may propose one or more adjournments of the
meeting to permit further solicitation of proxies. Any such adjournment will
require the affirmative vote of a majority of those shares present at the
meeting or represented by proxy. When voting on a proposed adjournment, the
persons named as proxy agents will vote FOR the proposed adjournment all shares
that they are entitled to vote with respect to each item, unless directed to
vote AGAINST the item, in which case such shares will be voted AGAINST the
proposed adjournment with respect to that item. A shareholder vote may be taken
on one or more of the items in this Proxy Statement prior to such adjournment if
sufficient votes have been received and it is otherwise appropriate.
9
The following chart illustrates the proposals for which various fund
shareholders may vote.
SHAREHOLDERS OF THESE FUNDS -- -- VOTE FOR THESE PROPOSALS
- ------------------------------ -----------------------------------------------------------------------------------------------------
1 2 3 4A 4B 4C 4D 4E 4F 4G 4H 4I 4J 4K 4L 5 6
- ------------------------------------------------------------------------------------------------------------------------------------
China Region Opportunity Fund X X X X X X X X X X X X X X
All American Equity Fund X X X X X X X X X X X X X
Real Estate Fund X X X X X X X X X X X X X X
Equity Income Fund X X X X X X X X X X X X X
Gold Shares Fund X X X X X X X X X X X X X
World Gold Fund X X X X X X X X X X X X
Global Resources Fund X X X X X X X X X X X X
Tax Free Fund X X X X X X X X X X X X X
Near-Term Tax Free Fund X X X X X X X X X X X X X
U.S. Government Securities
Savings Fund X X X X X X X X X X X X X X
U.S. Treasury Securities Cash
Fund X X X X X X X X X X X X X X
PROPOSAL ONE
(ALL FUNDS)
TO ELECT TWO TRUSTEES
The board of trustees has nominated Mr. Clark R. Mandigo and Mr. W.W.
McAllister, III for election by shareholders as trustees. Messrs. Mandigo and
McAllister are currently trustees of the Trust, having been appointed by the
other trustees to fill vacancies on the board. The board currently consists of
six trustees, which includes five "independent" trustees (trustees that are not
"interested persons" of the Trust or the Adviser). Mr. Mandigo and Mr.
McAllister are each "independent" trustees. All of the current trustees, other
than Messrs. Mandigo and McAllister, have previously been elected by
shareholders. Biographical information about each of the trustees is set forth
below.
Vacancies on the board generally are filled by appointment by the remaining
trustees. However, the Investment Company Act of 1940 provides that trustees may
not fill vacancies unless thereafter at least two-thirds of the trustees will
have been elected by shareholders. To enable the requirement to be met in the
future without the necessity of calling additional shareholder meetings, the
trustees are asking shareholders at this meeting to elect Messrs. Mandigo and
McAllister. If, at any time, less than a majority of the trustees holding office
has been elected by the shareholders, the trustees then in office will promptly
call a shareholders' meeting for the purpose of electing trustees. Otherwise,
there will normally be no meeting of shareholders for the purpose of electing
trustees.
10
The board has approved a policy that would require trustees to retire at age 65.
Additionally, the board approved a waiver of this policy for certain trustees as
follows: John P. Allen will retire during the year in which he reaches age 72,
E. Douglas Hodo and W.C.J. van Rensburg each will retire during the year in
which each individual reaches age 70.
The board of trustees has adopted in principle the recommendations of the
advisory group of the Investment Company Institute relating to the independence
and effectiveness of mutual fund directors. These recommendations enhance the
independence of the board members who are not "interested persons" of the Trust
or the Adviser and reflect "best practices" in the industry for the manner in
which mutual funds are governed.
Set forth below is information concerning the trustees.
TRUSTEE (AGE)
BUSINESS ADDRESS TRUSTEE
POSITION WITH TRUST PRINCIPAL OCCUPATION SINCE
- --------------------------- ------------------------------------- -------
Clark R. Mandigo (57) (1) Business consultant since 1991. From 1998
15050 Jones Maltsberger 1985 to 1991, President, Chief
San Antonio, Texas 78247 Executive Officer, and Director of
Intelogic Trace, Inc., a nationwide
Trustee company which sold, leased and
maintained computers and telecom-
munications systems and equipment.
Prior to 1985, President of BHP
Petroleum (Americas), Ltd., an oil
and gas exploration and development
company. Director of Lone Star
Steakhouse & Saloon, Inc. and Horizon
Organic Holdings, Inc. Formerly a
Director of Datapoint Corporation,
Palmer Wireless, Inc. and Physician
Corporation of America. Trustee of
U.S. Global Accolade Funds since
1993. Trustee for Pauze/Swanson
United Services Funds from November
1993 to February 1996.
- ---------------------------------------------------------------------------
11
TRUSTEE (AGE)
BUSINESS ADDRESS TRUSTEE
POSITION WITH TRUST PRINCIPAL OCCUPATION SINCE
- --------------------------- ------------------------------------- -------
W. W. McAllister, III Director of Texas Capital Banc 1998
(58) (1) Shares, Inc. from 1999 to present.
7550 IH-10 West Chairman of the Board of Texas
Suite 700 Insurance Agency, Inc. from 1981 to
San Antonio, Texas 78229 present. Chairman of the Board of
Bomac Sports Limited d.b.a. SA Sports
Trustee Unlimited from December 1995 to
present. Formerly a director of Alamo
Title Holding Co. and Alamo Title
Insurance of Texas. General Partner
of Bomac Transportation Limited
Company from January 1994 through
August 1995. Consultant to River
Valley Bank from September 1992
through September 1994. President of
San Antonio Savings Association and
its successor companies from 1976 to
1982 and Chairman of the Board from
1982 to 1992.
- ---------------------------------------------------------------------------
John P. Allen (70) (1) President, Rio Cibolo Ranch, Inc. 1973
P.O. Box 160323 President, Paragon Press, Inc.
San Antonio, Texas 78280 President, Deposit Development
Associates.
Trustee
- ---------------------------------------------------------------------------
E. Douglas Hodo (65) (1) Chief Executive Officer of Houston 1981
7702 Fondren Baptist University. Formerly Dean and
Houston, Texas 77074 Professor of Economics and Finance,
College of Business, University of
Trustee Texas at San Antonio.
- ---------------------------------------------------------------------------
W.C.J. van Rensburg Professor of Geological Science and 1978
(61) (1) Petroleum Engineering, University of
6010 Sierra Arbor Court Texas at Austin. Former Associate
Austin, Texas 78759 Director, Bureau of Economic Geology,
University of Texas. Former Chairman,
Trustee Department of Geosciences, West Texas
State University. Former technical
director of South African Minerals
Bureau and British Petroleum
Professor of Energy Economics at the
Ran Afrikaans University,
Johannesburg, South Africa.
- ---------------------------------------------------------------------------
12
TRUSTEE (AGE)
BUSINESS ADDRESS TRUSTEE
POSITION WITH TRUST PRINCIPAL OCCUPATION SINCE
- --------------------------- ------------------------------------- -------
Frank E. Holmes (45) (1) Chairman of the Board of Directors, 1989
Chief Executive Officer and Chief
Trustee Investment Officer of the Adviser.
President Since October 1989 Mr. Holmes has
Chief Executive Officer served and continues to serve in
Chief Investment Officer various positions with the Adviser,
its subsidiaries and the investment
companies it sponsors. Director of
FrancOr Resource Corp. from November
1994 to November 1996. Director of
Adventure Capital Limited from
January 1996 to July 1997 and
Director of Vedron Gold, Inc. from
August 1996 to March 1997. Director
of 71316 Ontario, Inc. since April
1987 and of F. E. Holmes Organiza-
tion, Inc. since July 1978. Director
of Marleau, Lemire Inc. from January
1995 to January 1996. Director of
United Services Canada, Inc. since
February 1995 and Chief Executive
Officer from February to August 1995.
- ---------------------------------------------------------------------------
(1) The trustee is an "independent trustee," i.e. a trustee who is not an
"interested person" of the Trust, as that term is defined in the 1940 Act.
(2) A trustee who is an interested person
The following table sets forth information describing the compensation of each
trustee for his services for the fiscal year ended June 30, 1999.
COMPENSATION TABLE
- ------------------------------------------------------------------------------------------------------------
TRUSTEES
------------------------------------------------------------------------------
JOHN P. E. DOUGLAS FRANK E. CLARK R. W.W. W.C.J.
NAME OF FUND ALLEN HODO (1) HOLMES MANDIGO (2) MCALLISTER, III VAN RENSBURG
- ---------------------------- ------- ---------- -------- ----------- --------------- ------------
All funds of U.S. Global
Investors Funds $25,600 $38,100 $0 $24,475 $24,475 $25,500
Total Compensation from all
funds managed by U.S.
Global Investors, Inc. $25,600 $38,100 $0 $42,575 $24,475 $25,500
<FN>
----------------------
(1) Includes additional compensation received by Dr. Hodo for serving as
Chairman of the Trust and Chairman of the Audit Committee.
(2) Mr. Clark Mandigo was also compensated for serving on the board of
trustees of U.S. Global Accolade Funds.
</FN>
The board has an Audit Committee whose members are Messrs. Mandigo, McAllister,
III, Hodo, Allen and van Rensburg. The Audit Committee is responsible for:
* meeting with the Trust's auditors to review audit procedures and
results for each fund;
13
* considering any matters arising from an audit of a fund to be brought to
the attention of the board as a whole with respect to the Trust's fund
accounting or its internal accounting controls; and
* considering such matters as may from time to time be set forth in a charter
adopted by the board and such committee.
Although the Trust does not have a nominating committee, the selection and
nomination of the trustees who are not interested persons of the Trust are
committed to the discretion of such trustees.
The Trust's board met four times during the fiscal year ended June 30, 1999. The
Audit Committee met two times during the fiscal year ended June 30, 1999. All of
the trustees attended all of the meetings of the board and the Audit Committee
(if a member thereof) during the fiscal year ended June 30, 1999.
In June 1999, in part to compensate Mr. Holmes for becoming the Adviser's chief
investment officer and upon cancellation of Mr. Holmes' warrants and option to
acquire 986,122 shares of class C common stock of the Adviser, the board of the
Adviser (not the Trust) approved the issuance of 1,000,000 shares of class C
common stock of the Adviser (67% of the outstanding shares) to Mr. Holmes to be
vested over a ten-year period beginning with fiscal year 1999, with an annual
compensation value of $50,000.
TRUST OFFICERS. Information about the executive officers of the Trust (except
for Mr. Holmes, which is set forth on page 13) is set forth below.
TRUSTEE (AGE)
BUSINESS ADDRESS TRUSTEE
POSITION WITH TRUST PRINCIPAL OCCUPATION SINCE
- --------------------------- ------------------------------------- -------
Susan B. McGee (41) President and General Counsel of the 1996
7900 Callaghan Road Adviser. Since September 1992, Ms.
San Antonio, Texas 78229 McGee has served and continues to
serve in various positions with the
Executive Vice President, ____
Adviser, its subsidiaries, and the
Secretary, General Counsel investment
companies it sponsors.
- ---------------------------------------------------------------------------
14
TRUSTEE (AGE)
BUSINESS ADDRESS TRUSTEE
POSITION WITH TRUST PRINCIPAL OCCUPATION SINCE
- --------------------------- ------------------------------------- -------
David J. Clark (39) Chief Financial Officer, Chief 1998
7900 Callaghan Road Operating Officer of the Adviser.
San Antonio, Texas 78229 Chief Financial Officer of U.S.
Global Brokerage, Inc., the principal
Treasurer underwriter. Since May 1997, Mr.
Clark has served and continues to
serve in various positions with the
Adviser and the investment companies
it sponsors. Foreign Service Officer
with U.S. Agency for International
Development in the U.S. Embassy,
Bonn, West Germany, from May 1992 to
May 1997. Audit Supervisor for
University of Texas Health Science
Center from April 1991 to April 1992.
Auditor-in-Charge for Texaco, Inc.
from August 1987 to June 1990.
- ---------------------------------------------------------------------------
Elias Suarez (38) Vice President of the Adviser. Since 1997
7900 Callaghan Road March of 1992, Mr. Suarez served and
San Antonio, Texas 78229 continues to serve in various
positions with the Adviser and United
Vice President Shareholder Services, Inc.
- ---------------------------------------------------------------------------
The following chart shows the number of shares of each fund owned beneficially
by each Trustee as of June 19, 2000, as well as the number of shares owned
beneficially by the Trustees and officers as a group. In each case, the amounts
shown are less than 1% of the outstanding shares.
E. OFFICERS
CLARK R. W.W. JOHN P. DOUGLAS W.C.J. VAN FRANK E. AND
MANDIGO MCALLISTER, III ALLEN HODO RENSBERG HOLMES TRUSTEES
---------- --------------- ---------- --------- ---------- ---------- -----------
China Region Opportunity Fund -- -- -- -- -- 402.469 1,877.218
All American Equity Fund -- -- 221.767 -- -- 305.530 1,577.430
Real Estate Fund -- -- -- -- -- -- --
Equity Income Fund -- -- -- -- -- -- 0.001
Gold Shares Fund -- -- 1,452.268 1,628.482 1.479 -- 3,082.229
World Gold Fund -- -- -- 190.537 -- -- 190.538
Global Resources Fund -- -- -- -- -- -- --
Tax Free Fund -- -- -- -- -- 447.221 2,767.072
Near-Term Tax Free Fund -- -- -- -- -- 50.326 50.326
U.S. Government Securities
Savings Fund 78,234.270 10,423.410 31,708.030 6,335.940 -- 41,903.220 206,212.301
U.S. Treasury Securities
Cash Fund -- -- -- -- -- 9,020.520 21,325.810
15
The Trust is aware of the entities shown in the chart below that owned of
record, or beneficially, more than 5% of the outstanding shares of the Trust on
June 19, 2000.
% TYPE OF
NAME/ADDRESS OF OWNER FUND SHARES OWNED OWNERSHIP
- ------------------------- ------------------------- ------------ ----- ---------
Charles Schwab & Gold Shares Fund 708,930.13 8.10 Of Record
Co., Inc. All American Equity Fund 96,242.98 9.77 Of Record
101 Montgomery Street Global Resources Fund 226,779.36 6.47 Of Record
San Francisco, CA 94104 Tax Free Fund 252,483.09 15.61 Of Record
Equity Income Fund 100,116.53 14.71 Of Record
World Gold Fund 1,513,078.07 17.15 Of Record
Real Estate Fund 144,539.83 23.16 Of Record
China Region Opportunity 17.72 Of Record
Fund 624,496.01
Security Trust & Global Resources Fund 189,385.40 5.40 Of Record
Financial Co.
7900 Callaghan Road
San Antonio, TX 78229
National Financial Real Estate Fund 35,234.56 5.65 Of Record
Services Corp.
Church Street Station
P.O. Box 3908
New York, NY 10008-3908
Jareen E. Schmidt, Near-Term Tax Free Fund 30,841.24 6.09 Of Record
Trustee
4413 Cumberland Road
North
Fort Worth, TX 76116
THE BOARD OF TRUSTEES OF THE TRUST UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
FOR APPROVAL OF PROPOSAL ONE.
PROPOSAL TWO
(ALL FUNDS)
TO RATIFY THE SELECTION OF INDEPENDENT AUDITORS
By a unanimous vote of the board of trustees, including those members of the
board who are not interested persons of the Trust, the firm of Arthur Andersen
LLP has been selected as the independent auditors of the Trust. Pursuant to the
Investment Company Act of 1940, such selection is being submitted to
shareholders for ratification.
The board selected Arthur Andersen in August 1999 upon the recommendation of the
Audit Committee of the board following a selection process during which the
Audit Committee reviewed proposals from several large, national accounting firms
with significant investment company experience. The board selected Arthur
Andersen based on its expertise as an auditor of investment companies, the
quality of its audit services, its commitment of experienced audit personnel to
the funds, its tax and international experience in the mutual fund area, its
special expertise and practical experience in working with other mutual funds
that share similar investment policies
16
and strategies as certain of the funds, and its use and commitment of technology
in performing its audit functions.
For each of the funds' fiscal years ended June 30, 1999 and 1998, the firm of
PricewaterhouseCoopers LLP (PWC) served as the independent accountants for the
Trust. PWC declined to stand for re-election after the completion of the most
recent audit. The independent accountants' audit reports for each of the funds
for the fiscal years ended June 30, 1999 and 1998 did not contain any adverse
opinion or disclaimer of opinion, nor were such reports qualified or modified as
to uncertainty, audit scope, or accounting principles. Further, there were no
disagreements between the Trust and the independent accountants on accounting
principals or practices, financial statement disclosures, or audit scope
procedures, which if not resolved to the satisfaction of the independent
accountants would have caused them to make reference to the subject matter of
the disagreements in connection with their reports on the financial statements
for such years.
Arthur Andersen has advised the Trust that to the best of its knowledge and
belief, since the date of the firm's professional engagement to examine the
Trust's financial statements, no Arthur Andersen professional has held any
direct or material indirect interest in any fund inconsistent with the
independence standards pertaining to accountants. Representatives of Arthur
Andersen are not expected to be present at the meeting, but have been given the
opportunity to make a statement if they so desire and will be available by
telephone should any matter arise during the meeting.
THE BOARD OF TRUSTEES OF THE TRUST UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
FOR APPROVAL OF PROPOSAL TWO.
PROPOSAL THREE
(ALL FUNDS)
TO AUTHORIZE THE TRUSTEES TO ADOPT AN AMENDED
AND RESTATED MASTER TRUST AGREEMENT
The board of trustees has approved and recommends that the shareholders of the
Trust authorize them to adopt an Amended and Restated Master Trust Agreement for
the Trust and the funds of the Trust. The Amended and Restated Master Trust
Agreement is substantially the same as the existing Master Trust Agreement
except that it (i) provides the trustees with the ability to terminate the Trust
or its Sub-Trusts or classes without shareholder approval, (ii) changes the
quorum requirements for shareholder meetings, (iii) reflects name changes of the
trustees and funds, and (iv) makes certain other changes to correct and clarify
typographical errors. The Amended and Restated Master Trust Agreement, with all
proposed changes, is included as Exhibit 1 to this proxy statement.
17
TERMINATION OF THE TRUST OR ITS SUB-TRUSTS OR CLASSES. The current Master Trust
Agreement requires shareholder approval in order to terminate the Trust or any
of its Sub-Trusts. The Amended and Restated Master Trust Agreement generally
permits the trustees, subject to applicable federal and state law, to terminate
all or a portion of the Trust or any of its Sub-Trusts or classes without
shareholder approval.
Under certain circumstances, it may not be in the shareholders' interest to
require a shareholder meeting to permit the trustees to terminate a fund or
class. The Amended and Restated Master Trust Agreement broadens the trustees'
authority to terminate a fund to include any fund in the Trust in any
circumstance. For example, a fund may have insufficient assets to invest
effectively or excessively high expense levels due to operational needs. Under
such circumstances, absent viable alternatives, the trustees may determine that
terminating the fund is in the shareholders' interest and the only appropriate
course of action. The process of obtaining shareholder approval of the fund's
termination may, however, make it more difficult to complete the fund's
liquidation and termination and, in general, will increase the costs associated
with the termination. In such a case, it is in the shareholders' interest to
permit fund termination without incurring the costs and delays of a shareholder
meeting. Any exercise of the trustees' increased authority under the Amended and
Restated Master Trust Agreement is also subject to any applicable requirements
of the 1940 Act and Massachusetts law.
QUORUM AND REQUIRED VOTE. The current Master Trust Agreement states that a
quorum for the transaction of business at a shareholders' meeting is a majority
of the shares entitled to vote. The Amended and Restated Master Trust Agreement
reduces this requirement by permitting thirty percent of the shares entitled to
vote to constitute a quorum. By lowering the quorum requirement, it will be
easier to achieve a quorum and will be less costly to solicit votes. In
addition, lowering the quorum is consistent with industry practice as a business
trust.
The proposal to lower the quorum will only affect matters that may be approved
with no more than a quorum of shares being present at a meeting, such as the
election of trustees and the ratification of the selection of auditors.
Substantially all other matters require a higher vote under the terms of the
Amended and Restated Master Trust Agreement or the Investment Company Act of
1940. For such matters, the change in the quorum requirement will have no
effect.
Adoption of the Amended and Restated Master Trust Agreement will not change the
funds' trustees or officers or the investment policies described in the funds'
current prospectuses.
18
OTHER MATTERS. The Amended and Restated Master Trust Agreement includes other
nonmaterial changes. All changes are identified in Exhibit 1.
BOARD CONCLUSION. The board of trustees has concluded that the proposed adoption
of the Amended and Restated Master Trust Agreement is in the best interests of
the Trust's shareholders.
THE BOARD OF TRUSTEES OF THE TRUST UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
FOR APPROVAL OF PROPOSAL THREE.
PROPOSAL FOUR
TO RECLASSIFY OR AMEND CERTAIN
FUNDAMENTAL INVESTMENT RESTRICTIONS
The board of trustees has proposed that shareholders approve the
reclassification or amendment of certain fundamental investment restrictions of
each of the U.S. Global Investors Funds. The proposed changes to the investment
restrictions of each fund are based on recommendations prepared by U.S. Global
Investors, Inc., the funds' adviser, which were reviewed and approved by the
board at a meeting held on May 22, 2000. The board is recommending that
shareholders approve the proposals.
Under the Investment Company Act of 1940, as amended (1940 Act), all investment
policies of a mutual fund must be classified as either "fundamental" or
"nonfundamental." A fundamental policy may not be changed without the approval
of the fund's shareholders; a nonfundamental policy may be changed by the board
without shareholder approval. Under the 1940 Act, only certain policies are
required to be classified as fundamental.
In the past, U.S. Global Investors Funds has adopted certain fundamental
investment restrictions for each fund to reflect regulatory, business or
industry conditions, which in many cases are no longer in effect. The board has
recently reviewed each fund's fundamental investment restrictions and determined
that it would be in the best interests of each fund to eliminate or reclassify
as nonfundamental certain investment restrictions that are not required to be
fundamental under applicable law, and to clarify and to modernize certain
restrictions that are required to be fundamental. The board also analyzed the
various fundamental and nonfundamental investment restrictions of all of the
mutual funds advised by the Adviser, and where practical and appropriate to a
fund's investment objective, proposed to standardize investment restrictions.
The proposed investment restrictions set forth below are expected to become
standard for each of the funds in the U.S. Global Investors Family of Funds.
The board believes that the ability of the Adviser to manage the funds'
portfolios in a changing regulatory or investment environment will be
19
enhanced by approval of these proposals. In addition, the board believes that
approval of these proposals will reduce the need for future shareholder
meetings, thereby reducing the funds' ongoing costs of operation. Furthermore,
it is anticipated that increased standardization will help to promote
operational efficiencies and facilitate monitoring of compliance with
fundamental and nonfundamental investment restrictions.
At the meeting, shareholders of each fund will vote on each of the proposals
separately. Each change to a fund's fundamental investment restriction will
become effective as soon as practicable following approval by shareholders but
in no event prior to November 1, 2000.
Although the proposed changes to each fund's investment restrictions generally
give broader authority to make certain investments or engage in certain
practices than do the current investment restriction of the funds, the Adviser
does not currently intend to change in any material way the principal investment
strategies or operations of any fund.
PROPOSAL 4A
(ALL FUNDS)
TO AMEND THE INVESTMENT RESTRICTION
CONCERNING THE ISSUANCE OF SENIOR SECURITIES
The funds currently have a fundamental investment restriction regarding senior
securities that states:
"A fund may not issue senior securities."
It is proposed that shareholders approve replacing the funds' current investment
restriction with the following fundamental investment restriction governing the
issuance of senior securities:
"A fund may not issue senior securities, except as permitted under the
Investment Company Act of 1940, as amended, and as interpreted or modified by
regulatory authority having jurisdiction from time to time."
The proposed fundamental investment restriction clarifies that the funds may
issue senior securities to the full extent permitted under the 1940 Act.
Although the definition of a "senior security" involves complex statutory and
regulatory concepts, a senior security is generally thought of as an obligation
of a fund that has a claim to the fund's assets or earnings that takes
precedence over the claims of the fund's shareholders. The 1940 Act generally
prohibits mutual funds from issuing any such security; however, mutual funds are
permitted to borrow money from a bank and, to engage in certain types of
transactions that might be considered "senior securities,"
20
provided that certain conditions are met. For example, a transaction that
obligates a fund to pay money at a future date (e.g., the purchase of securities
to be settled on a date that is farther away than the normal settlement period)
may be considered a "senior security." A mutual fund is permitted to enter into
this type of transaction if it maintains a segregated account containing liquid
securities in an amount equal to its obligation to pay cash for the securities
at a future date. Funds would utilize transactions that may be considered
"senior securities" only in accordance with applicable regulatory requirements
under the 1940 Act.
Adoption of the proposed fundamental investment restriction is not expected to
materially affect the operation of the funds. However, adoption of the proposal
will facilitate the Adviser's compliance efforts and will allow the funds to
respond to developments in the mutual fund industry and the law which may make
the use of permissible senior securities advantageous.
THE BOARD OF TRUSTEES OF THE TRUST UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
FOR APPROVAL OF PROPOSAL 4A.
PROPOSAL 4B
(ALL FUNDS)
TO AMEND THE INVESTMENT RESTRICTION
CONCERNING UNDERWRITING
The funds currently have a fundamental investment restriction regarding
underwriting that states:
"A fund may not underwrite securities of other issuers, except for the Gold
Shares Fund, Global Resources Fund and World Gold Fund, to the extent that
these funds may be deemed to act as an underwriter in certain cases when
disposing of restricted securities."
It is proposed that shareholders approve replacing the funds' current
fundamental investment restriction with the following fundamental investment
restriction concerning underwriting:
"A fund may not engage in the business of underwriting securities issued by
other issuers, except to the extent that, in connection with the disposition
of portfolio securities, the fund may be deemed to be an underwriter under the
Securities Act of 1933."
The primary purpose of the proposed amendment is to clarify that a fund is not
prohibited from selling restricted securities if, as a result of the sale, a
fund would be considered an underwriter under federal securities law. It is also
intended to revise the funds' fundamental investment restriction on
21
underwriting so that it conforms to a restriction that is expected to become
standard for all funds managed by the Adviser. While the proposed change will
have no current impact on the funds, adoption of the proposed standardized
fundamental investment restriction will advance the goals of standardization.
THE BOARD OF TRUSTEES OF THE TRUST UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
FOR APPROVAL OF PROPOSAL 4B.
PROPOSAL 4C
(ALL FUNDS)
TO AMEND THE INVESTMENT RESTRICTION
CONCERNING BORROWING
The funds currently have a fundamental investment restriction regarding
borrowing that states:
"A fund may not borrow money, except that (i) a fund may borrow not in excess
of 5% of the total assets of that fund from banks as a temporary measure for
extraordinary purposes, and (ii) the Gold Shares Fund, World Gold Fund, China
Region Opportunity Fund, and All American Equity Fund may borrow money only
for temporary or emergency purposes (not for leveraging or investment),
provided that the amount of such borrowings may not exceed 33 1/3% of a fund's
total assets (including the amount borrowed) less liabilities (other than
borrowings)."
It is proposed that shareholders approve replacing the funds' current
fundamental investment restriction with the following:
"A fund may not borrow money, except as permitted under the 1940 Act, as
amended, and as interpreted or modified by regulatory authority having
jurisdiction, from time to time."
If the proposed change is adopted, the trustees will also adopt the following
nonfundamental investment restriction:
"A fund may not borrow money, except that a fund may borrow money for
temporary or emergency purposes (not for leveraging or investment) in an
amount not exceeding 33 1/3% of a fund's total assets (including the amount
borrowed) less liabilities (other than borrowings)."
The primary purpose of the proposed change to the fundamental investment
restriction concerning borrowing is to permit each fund to borrow to the full
extent permitted by applicable law. The 1940 Act permits a fund to borrow,
provided that the fund maintains at least 300% asset coverage,
22
which means, in effect, that the fund would be permitted to borrow up to an
amount equal to 50% of its total assets. The board believes that the proposed
changes to the funds' fundamental borrowing restrictions will give the Adviser
greater flexibility in managing the liquidity needs of a fund by allowing the
fund to use borrowings to satisfy redemptions or settle securities transactions
to the maximum extent permitted under the 1940 Act. The change is not expected
to materially affect the manner in which any fund is currently managed.
Under the proposed new investment restriction, a fund would be permitted to
borrow for any purpose, which would include borrowing for temporary or emergency
purposes or for portfolio leverage. However, the board has no current intention
of authorizing borrowing for leverage purposes. For this reason, if shareholders
approve the proposed change, the board will adopt the nonfundamental investment
policy set forth above that prohibits borrowing, except for temporary or
emergency purposes. If the board were subsequently to change a fund's
nonfundamental policy to permit borrowing for leverage, such borrowings would
increase the fund's volatility and risk of loss in a declining market. The board
has no current intention of changing any fund's nonfundamental borrowing policy.
THE BOARD OF TRUSTEES OF THE TRUST UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
FOR APPROVAL OF PROPOSAL 4C.
PROPOSAL 4D
(ALL FUNDS)
TO AMEND THE INVESTMENT RESTRICTION
CONCERNING INVESTMENTS IN REAL ESTATE
The funds currently have a fundamental investment restriction regarding real
estate that states:
"A fund may not invest in real estate, except as may be represented by
securities for which there is an established market or, with respect to the
Gold Shares Fund, when such interests are an incidental part of assets
acquired through merger or consolidation, and except that this restriction
shall not prevent the Real Estate Fund from making any investment which is
otherwise consistent with its objectives and policies."
23
Shareholders are being asked to approve the amendment of the above investment
restriction. As proposed, the funds' current fundamental investment restriction
will be replaced by the following fundamental investment restriction that will
govern future purchases and sales of real estate:
"The fund may not purchase or sell real estate, which term does not include
securities of companies which deal in real estate and or mortgages or
investments secured by real estate, or interests therein, except that the fund
reserves freedom of action to hold and to sell real estate acquired as a
result of the fund's ownership of securities."
The primary purpose of the proposed amendment is to clarify the types of
securities in which the fund is authorized to purchase.
The proposed limitation would make it explicit that each of the funds may
acquire a security or other instrument whose payments of interest and principal
may be secured by a mortgage or other right to foreclose on real estate, in the
event of default. Any investments in these securities are, of course, subject to
the fund's investment objective and policies and to other limitations regarding
diversification and concentration. The proposed limitation also specifically
permits the fund to hold real estate acquired as a result of ownership of
securities or other instruments. However, in light of the types of securities in
which the funds regularly invest (other than the Real Estate Fund), the Adviser
considers this to be a remote possibility.
THE BOARD OF TRUSTEES OF THE TRUST UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
FOR APPROVAL OF PROPOSAL 4D.
PROPOSAL 4E
(ALL FUNDS)
TO AMEND THE INVESTMENT RESTRICTION
CONCERNING THE PURCHASE OR SALE OF COMMODITIES
The funds currently have a fundamental investment restriction regarding
purchases or sales of commodities that states:
"A fund may not engage in the purchase or sale of commodities or commodity
futures contracts, except that the Gold Shares Fund and World Gold Fund may
invest not more than 10% of its total assets in gold and gold bullion, and
except that the Gold Shares Fund, World Gold Fund, China Region Opportunity
Fund, and All American Equity Fund may invest in futures contracts, options on
futures contracts, and similar instruments."
24
It is proposed that the above fundamental investment restriction be replaced
with the following fundamental investment restriction:
"The fund may not purchase or sell commodities or commodity contracts, except
the Fund may purchase and sell (i) derivatives (including, but not limited to,
options, futures contracts and options on futures contracts) whose value is
tied to the value of a financial index or a financial instrument or other
asset (including, but not limited to, securities indexes, interest rates,
securities, currencies and physical commodities), and (ii) the Gold Shares
Fund, the World Gold Fund and the Global Resources Fund may purchase precious
metals."
The primary purpose of the proposed amendment is to clarify the types of
commodities the funds may purchase. The funds' current policies prohibit the
purchase or sale of commodities or commodity contracts. These policies contain
exceptions for financial futures contracts and options on such contracts. Under
the proposed policy, each fund, other than the Gold Shares Fund, the World Gold
Fund, and the Global Resources Fund, would be prohibited from purchasing
physical commodities. Currently the Gold Shares Fund and the World Gold Fund are
each permitted to invest up to 10% of its total assets in gold and gold bullion.
Under the new proposed policy, the Gold Shares Fund, the World Gold Fund, and
the Global Resources Fund may be permitted to invest without limit in all types
of precious metals. The Adviser does not currently intend to invest directly in
precious metals for any of these funds. Furthermore, requirements of the
Internal Revenue Code applicable to the funds would significantly limit the
extent to which any fund could invest in previous metals in the future. While
the proposed change will have no current impact on the funds, the adoption of
the proposal will standardize and clarify the investment restriction concerning
commodities for the funds and will provide flexibility to adapt to future
regulatory and tax changes.
THE BOARD OF TRUSTEES OF THE TRUST UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
FOR APPROVAL OF PROPOSAL 4E.
PROPOSAL 4F
(ALL FUNDS)
TO AMEND THE INVESTMENT RESTRICTION
CONCERNING THE LENDING OF ASSETS
The funds currently have a fundamental investment restriction regarding lending
assets that states:
"A fund may not lend its assets, except that any fund may purchase money
market debt obligations and repurchase agreements secured by
25
money market obligations, and except for the purchase or acquisition of bonds,
debentures or other debt securities of a type customarily purchased by
institutional investors and except that any fund may lend portfolio securities
with an aggregate market value of not more than one-third of such fund's total
net assets. (Accounts receivable purchased by telephone shall not be deemed
loans.) The Near-Term Tax Free Fund may not lend its assets, except that
purchases of debt securities in furtherance of investment objectives will not
constitute lending of assets."
It is proposed that shareholders of each fund replace the fund's current
fundamental investment restriction with the following:
"The fund may not make loans except as permitted under the 1940 Act, as
amended, and as interpreted or modified by regulatory authority having
jurisdiction, from time to time."
The proposed amendments to the funds' investment restrictions concerning loans
will not materially affect the operations of any fund. The amendments would
standardize these investment restrictions for all funds, and permit the funds to
lend securities in a manner to the full extent permitted by the applicable law.
Under the 1940 Act, a fund is permitted to lend up to 50% of its assets,
provided the loans are fully collateralized. The proposed change would also
permit each fund, subject to the receipt of any necessary regulatory approval
and board authorization, to enter into lending arrangements under which the
funds advised by U.S. Global Investors, Inc. could, for temporary purposes, lend
money directly to and borrow money directly from each other through a credit
facility. The flexibility provided by this change could possibly reduce the
fund's borrowing costs and enhance its ability to earn higher rates of interests
on short-term lendings in the event that the board determines that such
arrangements are warranted in light of the fund's particular circumstances.
THE BOARD OF TRUSTEES OF THE TRUST UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
FOR APPROVAL OF PROPOSAL 4F.
26
PROPOSAL 4G
(ALL FUNDS)
TO AMEND AND RECLASSIFY THE
INVESTMENT RESTRICTION CONCERNING
MARGIN PURCHASES OF SECURITIES
The funds currently have a fundamental investment restriction regarding margin
purchases of securities that states:
" . . . a fund may not purchase any security on margin, except that it may
obtain such short-term credits as are necessary for clearance of securities
transactions."
If the proposal is approved, the current fundamental investment restriction will
be replaced with a nonfundamental investment restriction that could be changed
without a shareholder vote. The proposed nonfundamental investment restriction
is as follows:
"A fund may not purchase securities on margin, except that the fund may obtain
such short-term credits as are necessary for the clearance of transactions,
and provided that margin payments in connection with futures contracts and
options on futures contracts shall not constitute purchasing securities on
margin."
Margin purchases involve the purchase of securities with money borrowed from a
broker. "Margin" is the cash or eligible securities that the borrower places
with a broker as collateral against the loan. The current fundamental investment
restriction prohibits a fund from purchasing securities on margin, except to
obtain such short-term credits as may be necessary for the clearance of
transactions. Mutual funds are generally prohibited from entering into most
types of margin purchases. However, policies of the SEC allow mutual funds to
make initial and variation margin payments in connection with the purchase and
sale of futures contracts and options on futures contracts. The proposed
nonfundamental investment restriction would parallel the SEC's policies.
Although reclassification of the funds' fundamental investment restriction on
margin purchases to nonfundamental is unlikely to materially affect any fund's
investment techniques at this time, in the event of a change in federal
regulatory requirements, the funds will be able to alter their investment
practices without the delay and expense of a shareholder vote.
THE BOARD OF TRUSTEES OF THE TRUST UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
FOR APPROVAL OF PROPOSAL 4G.
27
PROPOSAL 4H
(ALL FUNDS)
TO AMEND AND RECLASSIFY THE INVESTMENT
RESTRICTION CONCERNING SHORT SALES
Each fund is currently subject to a fundamental investment restriction that
provides that a fund may not make short sales.
If the proposal is approved, the current fundamental investment restriction will
be replaced with a nonfundamental investment restriction which could be changed
without a shareholder vote. The proposed nonfundamental investment restriction
is as follows:
"A fund may not sell securities short, unless it owns or has the right to
obtain securities equivalent in kind and amount to the securities sold short,
and provided that transactions in futures contracts and options are not deemed
to constitute selling securities short."
In a short sale, an investor sells a borrowed security and has a corresponding
obligation to the lender to return the identical security. In an investment
technique known as a short sale "against the box," an investor sells short while
owning the same securities in the same amount, or having the right to obtain
equivalent securities. The investor could have the right to obtain equivalent
securities, for example, through its ownership of warrants, options, or
convertible bonds.
The Adviser recognizes that short sales may not be appropriate for all of the
funds. If the proposal is approved, the Adviser and the board will determine the
appropriateness of short sales on a fund-by-fund basis. Appropriate disclosure
of this practice will also be included in such fund's prospectus and/or
statement of additional information.
THE BOARD OF TRUSTEES OF THE TRUST UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
FOR APPROVAL OF PROPOSAL 4H.
PROPOSAL 4I
(ALL FUNDS)
TO ELIMINATE THE INVESTMENT RESTRICTION
CONCERNING RESTRICTED SECURITIES
The funds currently have a fundamental investment restriction regarding
restricted securities that states:
"A fund may not invest in securities that are subject to legal or contractual
restrictions on resale (restricted securities), except that (i) the China
Region Opportunity Fund may invest up to 15% of net assets in illiquid
securities, including securities which are subject to
28
legal or contractual restrictions on resale, and (ii) the Gold Shares Fund,
the Global Resources Fund and the World Gold Fund may invest up to 10% of the
value of their respective net assets in such restricted securities. Any such
investments in restricted securities by the Gold Shares Fund will be in
companies that have been in existence for two consecutive years or more,
including operation of predecessors, and that have not defaulted in the
payment of any debt within such two years."
It is proposed that shareholders approve the elimination of the above investment
restriction. Current law permits a nonmoney market fund to invest up to 15% of
its net assets and a money market fund to invest up to 10% of its net assets in
illiquid securities, including restricted securities. The board believes that
elimination of the above investment restriction will benefit the funds by
allowing the Adviser greater investment flexibility. The restriction applicable
under current law will remain applicable to the funds whether or not it is
recited as a fundamental investment restriction. As a result, elimination of the
above investment restriction is not expected to have any material impact on the
funds' investment practices, except to the extent that regulatory requirements
may change in the future. The Gold Shares Fund's investment restriction
concerning investments in securities of issuers with less than two years of
continuous operations was originally adopted in response to state "Blue Sky"
requirements in connection with the registration of shares of the fund for sale.
These requirements are no longer applicable to the fund and the 1940 Act does
not contain a similar restriction. The board does not believe that a blanket
prohibition against these types of investments is in the best interest of the
fund.
THE BOARD OF TRUSTEES OF THE TRUST UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
FOR APPROVAL OF PROPOSAL 4I.
PROPOSAL 4J
(GOLD SHARES FUND)
TO ELIMINATE THE INVESTMENT RESTRICTION
CONCERNING INVESTMENTS IN WARRANTS
The Gold Shares Fund currently has the following fundamental investment
restriction regarding investing in warrants:
"The Gold Shares Fund may not invest more than 2% of the value of its assets
in marketable warrants."
29
It is proposed that shareholders approve the elimination of the above
fundamental investment restriction. This investment restriction was originally
adopted in response to state "Blue Sky" requirements. These requirements are no
longer applicable to the fund and the 1940 Act does not contain a similar
restriction. The Adviser and the board do not believe that a blanket prohibition
against these types of investments is in the best interests of the fund.
The proposed elimination of the investment restriction will not materially
affect the operations of the fund. This would allow the fund greater investment
flexibility and would allow the fund to respond more quickly to market
developments without the delay or expense of a shareholder vote.
No other fund of U.S. Global Investors Fund is currently subject to this
investment restriction.
THE BOARD OF TRUSTEES OF THE TRUST UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
FOR APPROVAL OF PROPOSAL 4J.
PROPOSAL 4K
(U.S. TREASURY SECURITIES CASH FUND AND
U.S. GOVERNMENT SECURITIES SAVINGS FUND)
TO AMEND THE INVESTMENT RESTRICTION
CONCERNING INDUSTRY CONCENTRATION
The U.S. Treasury Securities Cash Fund and the U.S. Government Securities
Savings Fund currently have a fundamental investment restriction concerning
industry concentration that prohibits each fund from investing more than 25% of
its total assets in securities of companies principally engaged in any one
industry (other than obligations issued or guaranteed by the U.S. Government or
any of its agencies or instrumentalities). In addition, each fund has the
following additional investment restriction concerning industry concentration
(Additional Concentration Restriction) as described below.
The U.S. Treasury Securities Cash Fund has the following Additional
Concentration Restriction:
"The U.S. Treasury Securities Cash Fund will invest exclusively in short-term
debt obligations of the United States Treasury which are protected by the full
faith and credit of the United States Government, and including repurchase
agreements collateralized by such Government obligations."
30
The U.S. Government Securities Savings Fund has the following Additional
Concentration Restriction:
"The U.S. Government Securities Savings Fund will invest exclusively in
short-term obligations of the U.S. Government and its agencies and
instrumentalities."
It is proposed that shareholders approve the elimination of the Additional
Concentration Restrictions. The staff of the Securities and Exchange Commission
has stated, in accordance with the 1940 Act, that if a mutual fund's name
implies that it will invest primarily in a particular type of security, the fund
must have an investment policy requiring that, under normal circumstances, at
least 65% of its assets will be invested in the indicated security. The
Additional Concentration Restriction limits the Adviser's management policies in
these two funds by requiring the funds to invest exclusively in their
respective, named securities (i.e., the U.S. Treasury Securities Cash Fund must
invest exclusively in short-term debt obligations of the United States Treasury,
and the U.S. Government Securities Savings Fund must invest exclusively in
short-term obligations of the United States Government and its agencies and
instrumentalities). The proposed elimination of the Additional Concentration
Restriction would benefit the funds by allowing the Adviser greater investment
flexibility. In addition, the elimination of the Additional Concentration
Restriction will clarify that the funds may participate in securities lending
arrangements in which security loans are collateralized with high quality
obligations in which the funds may not normally invest. However, the funds will
still be required to follow all current limitations imposed under the 1940 Act
along with the investment policies outlined in the funds' current prospectus.
The funds' investment policies as stated in their current prospectus are the
following:
"The U.S. Treasury Securities Cash Fund invests at least 65% of its total
assets in United States Treasury debt securities, which are protected by the
"full faith and credit" of the United States Government. The fund also invests
in repurchase agreements collateralized with such obligations.
The U.S. Government Securities Savings Fund invests at least 65% of its total
assets in United States Treasury debt securities, which are protected by the
"full faith and credit" of the United States Government, and obligations of
agencies and instrumentalities of the United States. The fund may also invest
in repurchase agreements collateralized with such obligations."
31
The elimination of the Additional Concentration Restriction will not materially
affect the investment strategies of the funds. However, the elimination will
allow the Adviser to manage the funds with more flexibility and to take
advantage of other investment opportunities as permitted by the funds'
prospectus and the 1940 Act.
THE BOARD OF TRUSTEES OF THE TRUST UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
FOR APPROVAL OF PROPOSAL 4K.
PROPOSAL 4L
(ALL FUNDS EXCEPT THE GOLD SHARES,
WORLD GOLD AND GLOBAL RESOURCES FUNDS)
TO ELIMINATE THE ISSUER PERCENTAGE
RESTRICTION REGARDING INVESTMENTS
The funds currently have the following restriction (Issuer Percentage
Restriction) regarding the extent to which a fund may invest in any single
issuer:
"A fund may not (a) invest more than 5% of the value of its total assets in
securities of any one issuer, except such limitation shall not apply to
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, or (b) acquire more than 10% of the voting securities of
any one issuer. These limitations as to the Near-Term Tax Free Fund and China
Region Opportunity Fund apply to only 75% of the value of their respective
gross assets."
In substance, the Issuer Percentage Restriction limits a fund's investments in
the securities of any single issuer to 5% of the fund's assets and 10% of the
issuer's outstanding voting stock. For the Near-Term Tax Free Fund and the China
Region Opportunity Fund, the limitations of the Issuer Percentage Restriction
only apply to 75% of the fund's assets.
In addition to being subject to the Issuer Percentage Restriction, each fund has
elected to be classified as a "diversified company" under the 1940 Act. As a
"diversified company," at least 75% of the value of the fund's total assets must
be represented by cash and cash items, U.S. Government Securities, securities of
other investment companies, and other securities limited with respect to any one
issuer to an amount not greater in value than 5% of the value of the fund's
total assets and not more than 10% of the outstanding voting securities of such
issuer (the Diversification Requirement). As with the Issuer Percentage
Restriction, the Diversification Requirement has the effect, with respect to 75%
of the fund's assets, of limiting investments by the fund in the securities of
any single issuer to 5% of the fund's assets and 10% of the issuer's outstanding
voting stock. A
32
fund may not change its classification as a diversified company without
shareholder approval.
The board believes that it would be in the best interests of shareholders of
each fund to eliminate the Issuer Percentage Restriction. For the Near-Term Tax
Free Fund and the China Region Opportunity Fund, the Issuer Percentage
Restriction duplicates the Diversification Requirement with no additional
benefit to shareholders. Furthermore, the Issuer Percentage Restriction may
limit the ability of these funds to adapt to regulatory changes should the
Diversification Requirement under the 1940 Act change in the future. By
eliminating the issuer Percentage Restriction at this time, the funds would be
able to respond to changes in the Diversification Requirement in the future
without the delay or expense of a shareholder meeting. For each of the other
funds, the Issuer Percentage Restriction creates an investment limitation that
is more restrictive than the Diversification Restriction, because it applies to
100% of the fund's assets. By eliminating the Issuer Percentage Restriction,
each of these funds will have the flexibility to invest a larger portion of its
assets in any single issuer when the Adviser deems an investment opportunity
attractive.
If the Issuer Percentage Restriction is eliminated for a fund, the fund will
continue to be subject to the limitations of the Diversification Requirement.
For this reason, approval of Proposal 4L is not expected to affect materially
the operations of any fund.
THE BOARD OF TRUSTEES OF THE TRUST UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
FOR APPROVAL OF PROPOSAL 4L.
PROPOSAL FIVE
(CHINA REGION OPPORTUNITY FUND)
TO RECLASSIFY THE CHINA REGION OPPORTUNITY FUND AS NONDIVERSIFIED
DIVERSIFICATION. Under the 1940 Act, every registered investment management
company is required to be classified as either "diversified" or
"non-diversified." An investment company that is classified as diversified may
not change its classification without shareholder approval.
Currently, the China Region Opportunity Fund is classified as "diversified"
under the 1940 Act. As a diversified company, the fund is required to comply
with the following requirement (the Diversification Requirement):
. . . at least 75% of the value of the fund's total assets must be represented
by cash and cash items, U.S. Government securities, securities of other
investment companies, and other securities limited with respect to any one
issuer to an amount not greater in value than
33
5% of the value of the total assets of the fund and to not more than 10% of
the outstanding voting securities of such issuers.
In substance, the Diversification Requirement prevents the fund (with respect to
75% of its total assets) from investing more than 5% of its total assets in the
securities of a single issuer or holding more than 10% of the voting securities
of a single issuer.
In addition to the fund's diversification classification, the fund is subject to
a fundamental investment restriction (Issuer Percentage Restriction), which
provides that, with respect to 75% of the fund's total assets:
. . . the fund will not (a) invest more than 5% of its total assets in
securities of any one issuer, except such limitation shall not apply to
obligations issued or guaranteed by the United States Government, its agencies
or instrumentalities or (b) acquire more than 10% of the voting securities in
any one issuer.
As with the Diversification Requirement, the Issuer Percentage Restriction for
the fund may not be changed without shareholder approval.
If Proposal Five is approved, the fund will no longer be subject to the
Diversification Requirement and, in turn, the fund's Issuer Percentage
Restriction will also be eliminated. Accordingly, the fund will be allowed to
invest, without limitation, in the securities of any single issuer, subject to
certain limitations of the Internal Revenue Code, as described more fully below.
RATIONALE FOR THE CHANGE. The fund's objective is long-term capital appreciation
and, consistent with its objective and investment strategy, the fund invests
primarily in equity securities issued by China region companies. However,
because of the Diversification Requirement and the Issuer Percentage
Restriction, with respect to 75% of the fund's assets, the fund currently may
not invest more that 5% of its assets in any single company within the China
region or any other region.
The Adviser believes that, over the long term, it can maximize growth of capital
by employing a flexible strategy of underweighting and overweighting holdings
relative to an appropriate benchmark index of the China region, such as the Hang
Seng 100. The Hang Seng 100 is a market capitalization weighted index
representing mid- to large-cap companies in Hong Kong. Currently, the top five
companies of the Hang Seng 100 represent approximately 60% of the index with
several securities comprising more than 5% each. For example, China Telecom and
HSBC both represent about 20% of the index. Hutchinson Whampoa represents
another 11% and C&W HKTel and Cheung Kong account for more than 5%
34
each. In order for the fund to maintain a portfolio concentration relative to
its benchmark index, the Diversification Restriction and the Issuer Percentage
Restriction must be eliminated.
In addition, foreign investors in the People's Republic of China are limited to
investing in the "B-Shares" class of issuers. Currently there are two B-share
securities markets consisting of 54 individual securities with a total market
cap of only $2 billion. This market has a very limited number of B-share
securities available to foreign investors as compared to the S&P 500 Index and
other United States indexes. To take advantage of investment opportunities in
China's B-shares market, the fund must pursue an investment strategy that is
more flexible than allowed by the Diversification Requirement and Issuer
Percentage Restriction.
The board of trustees believes that it is in the best interests of the fund and
its shareholders to align the fund's portfolio with the performance and risk
parameters of the Hang Seng 100 Index and China's B-share market. Removing the
Diversification Restriction and the Issuer Percentage Restriction will allow the
fund to pursue this investment strategy.
RISK. If a fund becomes nondiversified, the fund's portfolio may include the
securities of a smaller total number of issuers than if the fund were
diversified. Changes in the financial condition or market assessment of a single
issuer may, therefore, cause greater fluctuation and volatility in the fund's
total return or asset valuation than if the fund were required to hold the
securities of a larger number of issuers. The fund is particularly vulnerable to
risks specific to investing in foreign securities. These risks include currency
fluctuation and less public disclosure, as well as economic and political risk.
DIVERSIFICATION FOR TAX PURPOSES. Although the fund seeks nondiversified status
within the meaning of the 1940 Act, the fund intends to continue to qualify as a
"regulated investment company" (commonly referred to as a "RIC") for federal
income tax purposes. To qualify as a RIC, the fund must satisfy the
diversification requirements of the Internal Revenue Code. These requirements
include a 50% test and a 25% test. The 50% test requires that, at the end of
each quarter of the taxable year, at least 50% of the value of the RIC's total
assets must be represented by cash and cash items, U.S. Government securities,
securities of other RICs, and other securities. For this purpose, "other
securities" does not include investments in the securities of any one issuer
that represent more than 5% of the value of the investment company's total
assets or more than 10% of the issuer's outstanding voting securities. The 25%
test requires that, at the end of each quarter of its taxable year, not more
than 25% of a RIC's total assets may be invested in the securities of any one
issuer, except for the securities of
35
the U.S. Government or other RICs. Compliance with these tax diversification
requirements may limit, from time to time, the extent to which the fund may be
able to pursue a nondiversified investment strategy.
BOARD CONSIDERATION. At a meeting of the board of trustees held on May 22, 2000,
the Adviser recommended that the board take action to change the classification
of the fund to "nondiversified" under the 1940 Act and eliminate the Issuer
Percentage Restriction. The trustees considered a variety of factors, including
the information described above, and concluded that the proposed change would be
in the best interests of the fund and its shareholders.
THE BOARD OF TRUSTEES OF THE TRUST UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
FOR APPROVAL OF PROPOSAL FIVE.
PROPOSAL SIX
(REAL ESTATE FUND)
TO LIQUIDATE THE REAL ESTATE FUND
As of May 31, 2000, the Real Estate Fund has total net assets of approximately
$5,197,406 and has not attracted the shareholder following that was originally
anticipated. Despite the Adviser's and Sub-Adviser's continued efforts to
improve the performance of the fund and the marketing strategy to increase the
fund's assets, the Adviser believes that there is no reasonable prospect for
increased investor interest in the foreseeable future. The fund's small asset
base results in a high per-share expense ratio for the fund, which adversely
affects the fund's performance. In addition, the size of the fund impairs the
ability of the fund to participate in many attractive investments. For these
reasons, the Adviser determined that the continued operation of the fund would
not be in the best interests of shareholders, and at a meeting of the board of
trustees held on May 22, 2000, the Adviser recommended that the trustees
consider liquidating the fund. The trustees considered such information as they
deemed reasonably necessary to evaluate the Adviser's recommendation and
considered other options to liquidating the fund, such as merging with another
fund. Based on this information, the trustees determined that it would be in the
best interests of shareholders to liquidate the fund, and they voted unanimously
to recommend that shareholders approve a proposal to liquidate the fund.
If shareholders approve liquidation, the fund's assets will be sold in an
orderly manner as soon as practicable following shareholder approval. After
payment of expenses, including the expenses of liquidation, if any, the
remaining cash and other assets will thereafter be distributed to shareholders.
Each share of the fund will entitle the holder to receive its pro rata
36
share of any cash or other assets distributed. For tax purposes, a shareholder
will recognize gain or loss on the liquidating distribution equal to the
difference between (i) the amount of the liquidating distribution and (ii) the
shareholder's adjusted tax basis in shares of the fund. Such gain or loss will
be treated as a long-term or short-term capital gain or loss depending on the
period of time the shares were held prior to the liquidation. Distributions on
shares held for more than one year will result in a long-term capital gain or
loss, and distributions on shares held for one year or less will result in a
short-term capital gain or loss. Liquidating distributions received by an
Individual Retirement Account or qualified retirement plan will ordinarily not
be subject to taxation. All shareholders are urged to seek independent advice
regarding the possible federal income tax consequences of the proposed
liquidation as applied to the shareholder's own special circumstances.
It should be noted that the Amended and Restricted Master Trust Agreement being
submitted to shareholders under Proposal 3 would permit the trustees to
liquidate a fund without shareholder approval. If shareholders of the Real
Estate Fund do not approve liquidation of the fund but shareholders of the Trust
approve Proposal 3, the board may still proceed to liquidate the Real Estate
Fund under the authority of the new Amended and Restated Master Trust Agreement.
THE BOARD OF TRUSTEES OF THE TRUST UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
FOR APPROVAL OF PROPOSAL SIX.
OTHER MATTERS
No business other than the matters set forth in this proxy statement is expected
to come before the meeting, but should any other matters requiring a vote of
shareholders arise, including a question of adjourning the meeting, the persons
named in the accompanying proxy will vote thereon according to their best
judgment in the interests of the funds.
37
THE FUNDS' ANNUAL AND SEMI-ANNUAL REPORT IS AVAILABLE AT NO CHARGE. YOU MAY
REQUEST ONE --
BY PHONE 1-800-US-FUNDS
BY MAIL Shareholder Services
U.S. Global Investors Funds
P.O. Box 781234
San Antonio, TX 78278-1234
ACTIVITIES AND MANAGEMENT OF U.S. GLOBAL INVESTORS, INC.
ADVISER. U.S. Global Investors, Inc. is a Texas corporation with its principal
executive offices located at 7900 Callaghan Road, San Antonio, Texas 78229. U.S.
Global is the investment adviser to the funds.
SUB-ADVISER. Effective June 15, 2000, the sub-adviser, Goodman & Company N.Y.
Ltd., 40 King Street West, Toronto, Ontario MSH 4A9, Canada resigned as
sub-adviser to the Real Estate Fund. Currently, U.S. Global Investors, Inc. is
responsible for the day-to-day management of the fund.
PRINCIPAL UNDERWRITER. U.S. Global Brokerage, Inc. (U.S. Global Brokerage), a
wholly owned subsidiary of U.S. Global, is a Texas corporation with its
principal executive offices at 7900 Callaghan Road, San Antonio, Texas, 78229.
U.S. Global Brokerage is the principal underwriter and distributor of the U.S.
Global Investors Funds.
SUBMISSION OF SHAREHOLDER PROPOSALS
Since the funds do not hold annual shareholders meetings, the anticipated date
of the next special shareholders meeting (if any) cannot be provided.
The foregoing notice and proxy statement are sent by order of the board of
trustees.
Susan B. McGee
Secretary of the Trust
Dated: June 26, 2000
38
- --------------------------------------------------------------------------------
EXHIBIT I
FORM OF AMENDED AND RESTATED MASTER TRUST AGREEMENT
Deletions are shown with the following attributes: Strikeout. Deleted text is
---------
shown as full text.
Insertions are shown with the following attributes: Double Underline,
================
U.S. GLOBAL INVESTORS FUNDS
SECOND AMENDED AND RESTATED
MASTER TRUST AGREEMENT
AGREEMENT AND DECLARATION OF TRUST (the Agreement) made at Boston,
Massachusetts the 31st day of July, 1984 by the Trustees hereunder, and by the
holders of shares of beneficial interest to be issued hereunder, is hereby
amended and restated in its entirety this ___ day of __________ in the City of
San Antonio in the State of Texas, as follows:
WITNESSETH
WHEREAS this Trust has been formed to carry on the business of an investment
company; and
WHEREAS the Trustees have agreed to manage all property coming into their
hands as trustees of a Massachusetts business trust in accordance with the
provisions hereinafter set forth;
NOW, THEREFORE, the Trustees hereby declare that they will hold all cash,
securities and other assets which they may from time to time acquire in any
manner as Trustees hereunder IN TRUST to manage and dispose of the same upon the
following terms and conditions for the benefit of the holders from time to time
of shares of beneficial interest in this Trust or Sub-Trusts created hereunder
as hereinafter set forth.
ARTICLE I - NAME AND DEFINITIONS
Section 1. 1 Name and Principal Office . This Trust shall be known as U.S.
Global Investors Funds and the Trustees shall conduct the business of the Trust
under that name or any other name or names as they may from time to time
determine. The principal office of the Trust shall be located at 7900 Callaghan
Road, San Antonio, Texas or at such other location as the Trustees may from time
to time determine.
Section 1.2 Definitions . Whenever used herein, unless otherwise required by
the context or specifically provided:
(a) The Trust refers to the Massachusetts business trust established by
this Agreement, as amended from time to time, inclusive of each and every
Sub-Trust established hereunder;
(b)Trustees refers to the Trustees of the Trust and of each Sub-Trust
hereunder named herein or elected in accordance with Article III;
(c) Shares refers to the transferable units of interest into which the
beneficial interest in the Trust and each Sub-Trust of the Trust and/or any
class of any Sub-Trust (as the context may require) shall be divided from time
to time;
(d) Series refers to Series of Shares established and designated under or
in accordance with the provisions of Article IV, each of which Series shall be a
Sub-Trust of the Trust;
(e) Shareholder means a record owner of Shares;
(f) The 1940 Act refers to the Investment Company Act of 1940 and the
Rules and Regulations thereunder, all as amended from time to time;
(g) The term Commission shall have the meaning given it in the 1940 Act;
(h) Declaration of Trust shall mean this Agreement as amended or restated
from time to time;
(i) By-Laws shall mean the By-Laws of the Trust as amended from time to
time; and
(j) "Class" refers to any class of Shares of any Series or Sub-Trust
established and designated under or in accordance with the provisions of Article
IV.
ARTICLE 11 - PURPOSE OF TRUST
The purpose of the Trust is to operate as an investment company and to offer
Shareholders of the Trust and each Sub-Trust of the Trust one or more investment
programs primarily in securities and debt instruments. The Trust shall also have
the power to invest in precious metals, bullion and gold coins.
ARTICLE III - THE TRUSTEES
SECTION 3. 1 NUMBER, DESIGNATION, ELECTION, TERM, ETC .
(a) TRUSTEES . The Trustees hereof are John P. Allen, P.O. Box 160323, San
Antonio, Texas; E. Douglas Hodo, 7706 Fondren, Houston, Texas; Frank E. Holmes,
7900 Callaghan Road, San Antonio, Texas; W.C.J. van Rensburg, 6010 Sierra Arbor
Court, Austin, Texas; W.W. McAllister, III, 7550 1H-10 West, Suite 700, San
Antonio, Texas; Clark R. Mandigo, 15050 Jones Maltsberger, San Antonio, Texas.
(b) NUMBER . The Trustee(s) serving as such, whether named above or
hereafter becoming a Trustee, may increase or decrease the number of Trustees to
a number other than the number theretofore determined. No decrease in the number
of Trustees shall have the effect of removing any Trustee from office prior to
the expiration of his term, but the number of Trustees may be decreased in
conjunction with the removal of a Trustee pursuant to subsection (e) of this
Section 3.1.
(c) ELECTION AND TERM. The Trustees shall be elected by Shareholders of
the Trust. Each Trustee, whether named above or hereafter becoming a Trustee,
shall serve as a Trustee of the Trust and of each Sub-Trust hereunder during the
lifetime of this Trust and until its termination as hereinafter provided except
as such Trustee sooner dies, resigns or is removed. Subject to Section 16(a) of
the 1940 Act, the Trustees may elect their own successors and may, pursuant to
Section 3.1 (f) hereof, appoint Trustees to fill vacancies.
(d) RESIGNATION AND RETIREMENT . Any Trustee may resign his trust or
retire as a Trustee, by written instrument signed by him and delivered to the
other Trustees or to any officer of the Trust, and such resignation or
retirement shall take effect upon such delivery or upon such later date as is
specified in such instrument and shall be effective as to the Trust and each
Sub-Trust hereunder.
(e) REMOVAL . Any Trustee may be removed with or without cause at any
time: (i) by written instrument, signed by at least two-thirds of the number of
Trustees prior to such removal, specifying the date upon which such removal
shall become effective; or (ii) by vote of Shareholders holding not less than
two-thirds of the Shares then outstanding, cast in person or by proxy at any
meeting called for the purpose; or (iii) by a written declaration signed by
Shareholders holding not less than two-thirds of the Shares then outstanding and
filed with the Trust's Custodian. Any such removal shall be effective as to the
Trust and each Sub-Trust hereunder.
(f) VACANCIES . Any vacancy or anticipated vacancy resulting from any
reason, including without limitation the death, resignation, retirement, removal
or incapacity of any of the Trustees, or resulting from an increase in the
number of Trustees by the other Trustees may (but need not unless required by
the 1940 Act) be filled either by a majority of the remaining Trustees, subject
to the provisions of Section 16(a) of the 1940 Act, through the appointment in
writing of such other person as such remaining Trustees in their discretion
shall determine and such appointment shall be effective upon the written
acceptance of the person named therein to serve as a Trustee and agreement by
such person to be bound by the provisions of this Declaration of Trust, except
that any such appointment in anticipation of a vacancy to occur by reason of
retirement, resignation, or increase in number of Trustees to be effective at a
later date shall become effective only at or after the effective date of said
retirement, resignation, or increase in number of Trustees. As soon as any
Trustee so appointed shall have accepted such appointment and shall have agreed
in writing to be bound by this Declaration of Trust and the appointment is
effective, the Trust estate shall vest in the new Trustee, together with the
continuing Trustees, without any further act or conveyance.
(g) EFFECT OF DEATH, RESIGNATION, ETC . The death, resignation,
retirement, removal, or incapacity of the Trustees, or any one of them, shall
not operate to annul or terminate the Trust or any Sub-Trust hereunder or to
revoke or terminate any existing agency or contract created or entered into
pursuant to the terms of this Declaration of Trust.
(h) NO ACCOUNTING . Except to the extent required by the 1940 Act or under
circumstances which would justify his removal for cause, no person ceasing to be
a Trustee as a result of his death, resignation, retirement, removal or
incapacity (nor the estate of any such person) shall be required to make an
accounting to the Shareholders or remaining Trustees upon such cessation.
Section 3.2 Powers of Trustees . Subject to the provisions of this
Declaration of Trust, the business of the Trust shall be managed by the
Trustees, and they shall have all powers necessary or convenient to carry out
that responsibility and the purpose of the Trust. Without limiting the
foregoing, the Trustees may adopt By-Laws not inconsistent with this Declaration
of Trust providing for the conduct of the business and affairs of the Trust and
may amend and repeal them to the extent that such By-Laws do not reserve that
right to the Shareholders; they may from time to time in accordance with the
provisions of Section 4.1 hereof establish Sub-Trusts, each such Sub-Trust to
cooperate as a separate and distinct investment medium and with separately
defined investment objectives and policies and distinct investment purpose; they
may from time to time in accordance with the provisions of Section 4.1 hereof
establish classes of Shares of any Series or Sub-Trust or divide the Shares of
any Series or Sub-Trust into classes; they may as they consider appropriate
elect and remove officers and appoint and terminate agents and consultants and
hire and terminate employees, any one or more of the foregoing of whom may be a
Trustee, and may provide for the compensation of all of the foregoing; they may
appoint from their own number, and terminate any one or more committees
consisting of two or more Trustees, including without implied limitation an
executive committee, which may, when the Trustees are not in session and subject
to the 1940 Act, exercise some or all of the power and authority of the Trustees
as the Trustees may determine; in accordance with Section 3.3 they may employ
one or more Advisers, Administrators, Depositories and Custodians and may
authorize any Depository or Custodian to employ subcustodians or agents and to
deposit all or any part of such assets in a system or systems for the central
handling of securities and debt instruments, retain transfer, dividend,
accounting or Shareholder servicing agents or any of the foregoing, provide for
the distribution of Shares by the Trust through one or more distributors,
principal underwriters or otherwise, set record dates or times for the
determination of Shareholders or various of them with respect to various
matters; they may compensate or provide for the compensation of the Trustees,
officers, advisers, administrators, custodians, other agents, consultants and
employees of the Trust or the Trustees on such terms as they deem appropriate;
and in general they may delegate to any officer of the Trust, to any committee
of the Trustees and to any employee, adviser, administrator, distributor,
depository, custodian, transfer and dividend disbursing agent, or any other
agent or consultant of the Trust such authority, powers, functions and duties as
they consider desirable or appropriate for the conduct of the business and
affairs of the Trust, including without implied limitation the power and
authority to act in the name of the Trust and of the Trustees, to sign documents
and to act as attorney-in-fact for the Trustees.
Without limiting the foregoing and to the extent not inconsistent with the
1940 Act or other applicable law, the Trustees shall have power and authority
for and on behalf of the Trust and each separate Sub-Trust established
hereunder:
(a) Investments . To invest and reinvest cash and other property, and to
hold cash or other property uninvested without in any event being bound or
limited by any present or future law or custom in regard to investments by
trustees;
(b) Disposition of Assets . To sell, exchange, lend, pledge, mortgage,
hypothecate, write options on and lease any or all of the assets of the Trust;
(c) Ownership Powers . To vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities, debt instruments or
property; and to execute and deliver proxies or powers of attorney to such
person or persons as the Trustees shall deem proper, granting to such person or
persons such power and discretion with relation to securities, debt instruments
or property as the Trustees shall deem proper;
(d) Subscription . To exercise powers and rights of subscription or
otherwise which in any manner arise out of ownership of securities or debt
instruments;
(e) Form of Holding . To hold any security, debt instrument or property in
a form not indicating any trust, whether in bearer, unregistered or other
negotiable form, or in the name of the Trustees or of the Trust or of any
Sub-Trust or in the name of a custodian, subcustodian or other depositary or a
nominee or nominees or otherwise;
(f) Reorganization, etc . To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or issuer, any
security or debt instrument of which is or was held in the Trust; to consent to
any contract, lease, mortgage, purchase or sale of property by such corporation
or issuer, and to pay calls or subscriptions with respect to any security or
debt instrument held in the Trust;
(g) Voting Trusts, etc . To join with other holders of any securities or
debt instruments in acting through a committee, depositary, voting trustee or
otherwise, and in that connection to deposit any security or debt instrument
with, or transfer any security or debt instrument to, any such committee,
depositary or trustee, and to delegate to them such power and authority with
relation to any security or debt instrument (whether or not so deposited or
transferred) as the Trustees shall deem proper, and to agree to pay, and to pay,
such portion of the expenses and compensation of such committee, depositary or
trustee as the Trustees shall deem proper;
(h) Compromise . To compromise, arbitrate or otherwise adjust claims in
favor of or against the Trust or any Sub-Trust or any matter in controversy,
including but not limited to claims for taxes;
(i) Partnerships, etc . To enter into joint ventures, general or limited
partnerships and any other combinations or associations;
(j) Borrowing and Security . To borrow funds and to mortgage and pledge
the assets of the Trust or any part thereof to secure obligations arising in
connection with such borrowing;
(k) Guarantees, etc . To endorse or guarantee the payment of any notes or
other obligations of any person; to make contracts of guaranty or suretyship, or
otherwise assume liability for payment thereof; and to mortgage and pledge the
Trust property or any part thereof to secure any of or all such obligations;
(1) Insurance . To purchase and pay for entirely out of Trust property
such insurance as they may deem necessary or appropriate for the conduct of the
business, including, without limitation, insurance policies insuring the assets
of the Trust and payment of distributions and principal on its portfolio
investments, and insurance policies insuring the Shareholders, Trustees,
officers, employees, agents, consultants, investment advisers, managers,
administrators, distributors, principal underwriters, or independent
contractors, or any thereof (or any person connected therewith), of the Trust
individually against all claims and liabilities of every nature arising by
reason of holding, being or having held any such office or position, or by
reason of any action alleged to have been taken or omitted by any such person in
any such capacity, including any action taken or omitted that may be determined
to constitute negligence, whether or not the Trust would have the power to
indemnify such person against such liability;
(m) Pensions, etc . To pay pensions for faithful service, as deemed
appropriate by the Trustees, and to adopt, establish and carry out pension,
profit-sharing, share bonus, share purchase, savings, thrift and other
retirement, incentive and benefit plans, trust and provisions, including the
purchasing of life insurance and annuity contracts as a means of providing such
retirement and other benefits, for any or all of the Trustees, officers,
employees and agents of the Trust; and
(n) Distribution Plans . To adopt on behalf of the Trust or any Sub-Trust
with respect to any class thereof a plan of distribution and related agreements
thereto pursuant to the terms of Rule 12b-1 of the 1940 Act and to make payments
from the assets of the Trust or the relevant Sub-Trust or Sub-Trusts pursuant to
said Rule 12b-1 Plan.
Except as otherwise provided by the 1940 Act or other applicable law, this
Declaration of Trust or the By-Laws, any action to be taken by the Trustees on
behalf of the Trust or any Sub-Trust may be taken by a majority of the Trustees
present at a meeting of Trustees (a quorum, consisting of at least a majority of
the Trustees then in office, being present), within or without Massachusetts,
including any meeting held by means of a conference telephone or other
communications equipment by means of which all persons participating in the
meeting can hear each other at the same time and participation by such means
shall constitute presence in person at a meeting, or by written consents of a
majority of the Trustees then in office (or such larger or different number as
may be required by the 1940 Act or other applicable law).
Section 3.3 Certain Contracts . Subject to compliance with the provisions of
the 1940 Act, but notwithstanding any limitations of present and future law or
custom in regard to delegation of powers by trustees generally, the Trustees
may, at any time and from time to time and without limiting the generality of
their powers and authority otherwise set forth herein, enter into one or more
contracts with any one or more corporations, trusts, associations, partnerships,
limited partnerships, other type of organizations, or individuals ("Contracting
Party"), to provide for the performance and assumption of some or all of the
following services, duties and responsibilities to, for or on behalf of the
Trust and/or any Sub-Trust, and/or the Trustees, and to provide for the
performance and assumption of such other services, duties and responsibilities
in addition to those set forth below as the Trustees may determine appropriate:
(a) Advisory . Subject to the general supervision of the Trustees and in
conformity with the stated policy of the Trustees with respect to the
investments of the Trust or of the assets belonging to any Sub-Trust of the
Trust (as that phrase is defined in subsection (a) of Section 4.3), to manage
such investments and assets, make investment decisions with respect thereto, and
to place purchase and sale orders for portfolio transactions relating to such
investments and assets;
(b) Administration . Subject to the general supervision of the Trustees
and in conformity with any policies of the Trustees with respect to the
operations of the Trust and each Sub-Trust (including any classes thereof), to
supervise all or any part of the operations of the Trust and each Sub-Trust, and
to provide all or any part of the administrative and clerical personnel, office
space and office equipment and services appropriate for the efficient
administration and operations of the Trust and each Sub-Trust;
(c) Distribution . To distribute the Shares of the Trust and each
Sub-Trust (including any classes thereof), to be principal underwriter of such
Shares, and/or to act as agent of the Trust and each Sub-Trust in the sale of
Shares and the acceptance or rejection of orders for the purchase of Shares;
(d) Custodian and Depository . To act as depository for and to maintain
custody of the property of the Trust and each Sub-Trust and accounting records
in connection therewith;
(e) Transfer and Dividend Disbursing Agency . To maintain records of the
ownership of outstanding Shares, the issuance and redemption and the transfer
thereof, and to disburse any dividends declared by the Trustees and in
accordance with the policies of the Trustees and/or the instructions of any
particular Shareholder to reinvest any such dividends;
(f) Shareholder Servicing . To provide service with respect to the
relationship of the Trust and its Shareholders, records with respect to
Shareholders and their Shares, and similar matters; and
(g) Accounting . To handle all or any part of the accounting
responsibilities, whether with respect to the Trust's properties, Shareholders
or otherwise.
The same person may be the Contracting Party for some or all of the services,
duties and responsibilities to, for and of the Trust and/or the Trustees, and
the contracts with respect thereto may contain such terms interpretive of or in
addition to the delineation of the services, duties and responsibilities
provided for, including provisions that are not inconsistent with the 1940 Act
relating to the standard of duty of and the rights to indemnification of the
Contracting Party and others, as the Trustees may determine. Nothing herein
shall preclude, prevent or limit the Trust or a Contracting Party from entering
into sub-contractual arrangements relative to any of the matters referred to in
Sections 3.3(a) through (g) hereof.
The fact that:
(i) any of the Shareholders, Trustees or officers of the Trust is a
shareholder, director, officer, partner, trustee, employee, manager, adviser,
principal underwriter or distributor or agent of or for any Contracting
Party, or of or for any parent or affiliate of any Contracting Party or that
the Contracting Party or any parent or affiliate thereof is a Shareholder or
has an interest in the Trust or any Sub-Trust, or that
(ii) any Contracting Party may have a contrast providing for the rendering
of any similar services to one or more other corporations, trusts,
associations, partnerships, limited partnerships or other organizations, or
have other business or interests,
shall not affect the validity of any contract for the performance and assumption
of services, duties and responsibilities to, for or of the Trust or any
Sub-Trust and/or the Trustees or disqualify any Shareholder, Trustee or officer
of the Trust from voting upon or executing the same or create any liability or
accountability to the Trust, any Sub-Trust or its Shareholders, provided that in
the case of any relationship on interest referred to in the preceding clause (i)
on the part of any Trustee or officer of the Trust either (x) the material facts
as to such relationship or interest have been disclosed to or are known by the
Trustees not having any such relationship or interest and the contract involved
is approved in good faith by a majority of such Trustees not having any such
relationship or interest (even though such unrelated or disinterested Trustees
are less than a quorum of all of the Trustees), (y) the material facts as to
such relationship or interest and as to the contract have been disclosed to or
are known by the Shareholders entitled to vote thereon and the contract involved
is specifically approved in good faith by vote of the Shareholders, or (z) the
specific contract involved is fair to the Trust as of the time it is authorized,
approved or ratified by the Trustees or by the Shareholders.
Section 3.4 Payment of Trust Expenses and Compensation of Trustees . The
Trustees are authorized to pay or to cause to be paid out of the principal or
income of the Trust or any Sub-Trust, or partly out of principal and partly out
of income, and to charge or allocate the same to, between or among such one or
more of the Sub-Trusts and/or one or more classes of Shares thereof that may be
established and designated pursuant to Article IV, as the Trustees deem fair,
all expenses, fees, charges, taxes and liabilities incurred or arising in
connection with the Trust, any Sub-Trust and/or any class of Shares thereof, or
in connection with the management thereof, including, but not limited to, the
Trustees' compensation and such expenses and charges for the services of the
Trust's officers, employees, investment adviser, administrator, distributor,
principal underwriter, auditor, counsel, depository, custodian, transfer agent,
dividend disbursing agent, accounting agent, Shareholder servicing agent, and
such other agents, consultants, and independent contractors and such other
expenses and charges as the Trustees may deem necessary or proper to incur.
Without limiting the generality of any other provision hereof, the Trustees
shall be entitled to reasonable compensation from the Trust for their services
as Trustees and may fix the amount of such compensation.
Section 3.5 Ownership of Assets of the Trust . Title to all of the assets of
the Trust shall at all times be considered as vested in the Trustees.
ARTICLE IV - SHARES
Section 4.1 Description of Shares . The beneficial interest in the Trust
shall be divided into Shares, all without par value, but the Trustees shall have
the authority from time to time to divide the Shares into two or more Series of
Shares, (each of which Series of Shares shall be a separate and distinct
Sub-Trust of the Trust, including without limitation those Sub-Trusts
specifically established and designated in Section 4.2), as they deem necessary
or desirable. Each Sub-Trust established hereunder shall be deemed to be a
separate trust under Massachusetts General Laws Chapter 182. The Trustees shall
have exclusive power without the requirement of shareholder approval to
establish and designate such separate and distinct Sub-Trusts, and to fix and
determine the relative rights and preferences as between the shares of the
separate Sub-Trusts as to right of redemption and the price, terms and manner of
redemption, special and relative rights as to dividends and other distributions
and on liquidation, sinking or purchase fund provisions, conversion rights, and
conditions under which the several Sub-Trusts shall have separate voting rights
or no voting rights.
In addition, the Trustees shall have exclusive power, without the requirement
of Shareholder' approval, to issue classes of Shares of any Sub-Trust or divide
the Shares of any Sub-Trust into classes, each class having such different
dividend, liquidation, voting and other rights as the Trustees may determine,
and may establish and designate the specific classes of Shares of each
Sub-Trust. The fact that a Sub-Trust shall have initially been established and
designated without any specific establishment or designation of classes (i.e.,
that all Shares of such Sub-Trust are initially of a single class), or that a
Sub-Trust shall have more than one established and designated class, shall not
limit the authority of the Trustees to establish and designate separate classes,
or one or more further classes, of said Sub-Trust without approval of the
holders of the initial class thereof, or previously established and designated
class or classes thereof, provided that the establishment and designation of
such further separate classes would not adversely affect the rights of the
holders of the initial or previously established and designated class or
classes.
The number of authorized Shares and the number of Shares of each Sub-Trust or
class thereof that may be issued is unlimited, and the Trustees may issue Shares
of any Sub-Trust or class thereof for such consideration and on such terms as
they may determine (or for no consideration if pursuant to a Share dividend or
split-up), all without action or approval of the Shareholders. All Shares when
so issued on the terms determined by the Trustees shall be fully paid and
non-assessable (but may be subject to mandatory contribution back to the Trust
as provided in Subsection (h) of Section 4.3). The Trustees may classify or
reclassify any unissued Shares or any Shares previously issued and reacquired of
any Sub-Trust or class thereof into one or more Sub-Trusts or classes thereof
that may be established and designated from time to time. The Trustees may hold
as treasury Shares, reissue for such consideration and on such terms as they may
determine, or cancel, at their discretion from time to time, any Shares of any
Sub-Trust or class thereof reacquired by the Trust.
The Trustees may from time to time close the transfer books or establish
record dates and times for the purposes of determining the holders of Shares
entitled to be treated as such, to the extent provided or referred to or Section
5.3.
The establishment and designation of any Sub-Trust or of any class of Shares
of any Sub-Trust in addition to those established and designated in Section 4.2
shall be effective upon the execution by a majority of the then Trustees of an
instrument setting forth such establishment and designation and the relative
rights and preferences of the Shares of such Sub-Trust or class, or as otherwise
provided in such instrument. At any time that there are no Shares outstanding of
any particular Sub-Trust or class previously established and designated the
Trustees may by an instrument executed by a majority of their number (or by an
instrument executed by an officer of the Trust pursuant to the vote of a
majority of the Trustees) abolish that Sub-Trust or class and the establishment
and designation thereof. Each instrument referred to in this paragraph shall
have the status of an amendment to this Declaration of Trust.
Any Trustee, officer or other agent of the Trust, and any Organization in
which any such person is interested may acquire, own, hold and dispose of Shares
of any Sub-Trust (including any classes thereof) of the Trust to the same extent
as if such person were not a Trustee, officer or other agent of the Trust; and
the Trust may issue and sell or cause to be issued and sold and may purchase
Shares of any Sub-Trust (including any classes thereof) from any such person or
any such organization subject only to the general limitations, restrictions or
other provisions applicable to the sale or purchase of Shares of such Sub-Trust
(including any classes thereof) generally.
Section 4.2 ESTABLISHMENT AND DESIGNATION OF SUB-TRUSTS AND CLASSES. Without
limiting the authority of the Trustees set forth in Section 4.1 to establish and
designate any further Sub-Trusts, the Trustees hereby establish and designate
eleven Sub-Trusts: Gold Shares Fund, Global Resources Fund, World Gold Fund,
U.S. Treasury Securities Cash Fund, All American Equity Fund, Equity Income
Fund, Tax Free Fund, U.S. Government Securities Savings Fund, Real Estate Fund,
Near-Term Tax Free Fund, and China Region Opportunity Fund. Each such Sub-Trust
shall consist of one class of Shares.
Section 4.3 Rights and Preferences of Sub-Trusts. The Shares of each such
Sub-Trust and class thereof and any Shares of any further Sub-Trusts or classes
thereof that may from time to time be established and designated by the Trustees
shall (unless the Trustees otherwise determine with respect to some further
Sub-Trust or class thereof at the time of establishing and designating the same)
have the following relative rights and preferences:
(a) ASSETS BELONGING TO SUB-TRUSTS. All consideration received by the
Trust for the issue or sale of Shares of a particular Sub-Trust or any classes
thereof, together with all assets in which such consideration is invested or
reinvested, all income, earnings, profits, and proceeds thereof, including any
proceeds derived from the sale, exchange or liquidation of such assets, and any
funds or payments derived from any reinvestment of such proceeds in whatever
form the same may be, shall be held by the Trustees in trust for the benefit of
the holders of Shares of that Sub-Trust or class thereof and shall irrevocably
belong to that Sub-Trust (and be allocable to any classes thereof) for all
purposes, and shall be so recorded upon the books of account of the Trust. Such
consideration, assets, income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation of such
assets, and any funds or payments derived from any reinvestment of such
proceeds, in whatever form the same may be, together with any General Items
allocated to that Sub-Trust as provided in the following sentence, are herein
referred to as "assets belonging to" that Sub-Trust (and allocable to any
classes thereof). In the event that there are any assets, income, earnings,
profits, and proceeds thereof, funds, or payments which are not readily
identifiable as belonging to any particular Sub-Trust (collectively "General
Items"), the Trustees shall allocate such General Items to and among any one or
more of the Sub-Trusts established and designated from time to time in such
manner and on such basis as they, in their sole discretion, deem fair and
equitable; and any General Items so allocated to a particular Sub-Trust shall
belong to that Sub-Trust (and be allocable to any classes thereof). Each such
allocation by the Trustees shall be conclusive and binding upon the Shareholders
of all Sub-Trusts (including any classes thereof) for all purposes.
(b) LIABILITIES BELONGING TO SUB-TRUSTS. The assets belonging to each
particular Sub-Trust shall be charged with the liabilities in respect of that
Sub-Trust and all expenses, costs, charges and reserves attributable to that
Sub-Trust, and any general liabilities, expenses, costs, charges or reserves of
the Trust which are not readily identifiable as belonging to any particular
Sub-Trust shall be allocated and charged by the Trustees to and among any one or
more of the Sub-Trusts established and designated from time to time in such
manner and on such basis as the Trustees in their sole discretion deem fair and
equitable. In addition, the liabilities in respect of a particular class of
Shares of a particular Sub-Trust and all expenses, costs, charges and reserves
belonging to that class of Shares, and any general liabilities, expenses, costs,
charges or reserves of that particular Sub-Trust which are not readily
identifiable as belonging to any particular class of Shares of that Sub-Trust
shall be allocated and charged by the Trustees to and among any one or more of
the classes of Shares of that Sub-Trust established and designated from time to
time in such manner and on such basis as the Trustees in their sole discretion
deem fair and equitable. The liabilities, expenses, costs, charges and reserves
allocated and so charged to a Sub-Trust or class thereof are herein referred to
as "liabilities belonging to" that Sub-Trust or class thereof. Each allocation
of liabilities, expenses, costs, charges and reserves by the Trustees shall be
conclusive and binding upon the Shareholders of all Sub-Trusts (including any
classes thereof) for all purposes. Any creditor of any Sub-Trust may look only
to the assets of that Sub-Trust to satisfy such creditor's debt.
(c) DIVIDENDS. Dividends and distributions on Shares of a particular
Sub-Trust or any class thereofmay be paid with such frequency as the Trustees
may determine, which may be daily or otherwise pursuant to a standing resolution
or resolutions adopted only once or with such frequency as the Trustees may
determine, to the holders of Shares of that Sub-Trust or class, from such of the
income and capital gains, accrued or realized, from the assets belonging to that
Sub-Trust, or in the case of a class, belonging to that Sub-Trust and allocable
to that class, as the Trustees may determine, after providing for actual and
accrued liabilities belonging to that Sub-Trust or class. All dividends and
distributions on Shares of a particular Sub-Trust or class thereof shall be
distributed pro rata to the holders of Shares of that Sub-Trust or class in
proportion to the number of Shares of that Sub-Trust or class held by such
holders at the date and time of record established for the payment of such
dividends or distributions, except that in connection with any dividend or
distribution program or procedure the Trustees may determine that no dividend or
distribution shall be payable on Shares as to which the Shareholder's purchase
order and/or payment have not been received by the time or times established by
the Trustees under such program or procedure. Such dividends and distributions
may be made in cash or Shares of that Sub-Trust or class or a combination
thereof as determined by the Trustees or pursuant to any program that the
Trustees may have in effect at the time for the election by each Shareholder of
the mode of the making of such dividend or distribution to that Shareholder. Any
such dividend or distribution paid in Shares will be paid at the net asset value
thereof as determined in accordance with subsection (i) of Section 4.3.
(d) Determination of Treatment as Income and/or Capital. The Trustees
shall have full discretion, to the extent not inconsistent with the 1940 Act, to
determine which items shall be treated as income and which items as capital; and
each such determination and allocation shall be conclusive and binding upon the
Shareholders.
(e) LIQUIDATION. In the event of the liquidation or dissolution of the
Trust, any Sub-Trust or class thereof the Shareholders of each Sub-Trust or any
class thereof that has been established and designated shall be entitled to
receive, when and as declared by the Trustees, the excess of the assets
belonging to that Sub-Trust, or in the case of a class, belonging to that
Sub-Trust and allocable to that class, over the liabilities belonging to that
Sub-Trust or class. Upon the liquidation or dissolution of the Trust or any
Sub-Trust or class the Trustees shall make provisions for the payment of all
outstanding obligations, taxes and other liabilities, accrued or contingent, of
the Trust or that Sub-Trust or class. The assets so distributable to the
Shareholders of any particular Sub-Trust or class thereof shall be distributed
among such Shareholders in proportion to the relative net asset value, as
defined in Section 4.3(i), of such Shares. The liquidation or dissolution of any
particular Sub-Trust or class thereof may be authorized by vote of a majority of
the Trustees then in office without the approval of the Shareholders of the
Trust or that Sub-Trust or class thereof.
(f) VOTING. On each matter submitted to a vote of the Shareholders, each
holder of a Share of each Sub-Trust shall be entitled to one vote for each whole
Share and for a proportionate fractional vote for each fractional Share standing
in his name on the books of the Trust and all shares of each Sub-Trust or class
thereof shall vote as a separate class, except as to voting for Trustees and as
otherwise required by the 1940 Act. As to any matter which does not affect the
interest of a particular Sub-Trust or class thereof, only the holders of Shares
of one or more of the affected Sub-Trusts or classes thereof shall be entitled
to vote.
(g) REDEMPTION BY SHAREHOLDER. Each holder of Shares of a particular
Sub-Trust or any class thereof shall have the right at such times as may be
permitted by the Trust, but no less frequently than once each week, to require
the Trust to redeem all or any part of his Shares of that Sub-Trust or class
thereof at a redemption price equal to the net asset value per Share of that
Sub-Trust or class thereof next determined in accordance with subsection (i) of
this Section 4.3 after the Shares are properly tendered for redemption. Payment
of the redemption price shall be in cash; provided, however, that if the
Trustees determine, which determination shall be conclusive, that conditions
exist which make payment wholly in cash unwise or undesirable, the Trust may
make payment wholly or partly in securities or other assets belonging to the
Sub-Trust of which the Shares being redeemed are part at the value of such
securities or assets used in such determination of net asset value.
Notwithstanding the foregoing, the Trust may postpone payment of the
redemption price and may suspend the right of the holders of Shares of any
Sub-Trust or class thereof to require the Trust to redeem Shares of that
Sub-Trust during any period or at any time when and to the extent permissible
under the 1940 Act.
(h) REDEMPTION BY TRUST. Each Share of each Sub-Trust or class thereof
that has been established and designated is subject to redemption by the Trust
at the redemption price which would be applicable if such Share was then being
redeemed by the Shareholder pursuant to subsection (g) of this Section 4.3: (a)
at any time, if the Trustees determine in their sole discretion that failure to
so redeem may have materially adverse consequences to the holders of the Shares
of the Trust or any Sub-Trust thereof or class thereof, or (b) upon such other
conditions as may from time to time be determined by the Trustees and set forth
in the then current Prospectus of the Trust with respect to maintenance of
Shareholder accounts of a minimum amount. Upon such redemption the holders of
the Shares so redeemed shall have no further right with respect thereto other
than to receive payment of such redemption price.
(i) NET ASSET VALUE. The net asset value per Share of any Sub-Trust shall
be (a) in the case of a Sub-Trust whose Shares are not divided into classes, the
quotient obtained by dividing the value of the net assets of that Sub-Trust
(being the value of the assets belonging to that Sub-Trust less the liabilities
belonging to that Sub-Trust) by the total number of Shares of that Sub-Trust
outstanding, and (b) in the case of a class of Shares of a Sub-Trust whose
Shares are divided into classes, the quotient obtained by dividing the value of
the assets of that Sub-Trust allocable to such class (less the liabilities
belonging to such class) by the total number of Shares of such class
outstanding; all determined in accordance with the methods and procedures,
including without limitation those with respect to rounding, established by the
Trustees from time to time.
The Trustees may determine to maintain the net asset value per Share of any
Sub-Trust at a designated constant dollar amount and in connection therewith may
adopt procedures not inconsistent with the 1940 Act for the continuing
declarations of income attributable to that Sub-Trust as dividends payable in
additional Shares of that Sub-Trust at the designated constant dollar amount and
for the handling of any losses attributable to that Sub-Trust. Such procedures
may provide that in the event of any loss each Shareholder shall be deemed to
have contributed to the capital of the Trust attributable to that Sub-Trust his
pro rata portion of the total number of Shares required to be canceled in order
to permit the net asset value per Share of that Sub-Trust to be maintained,
after reflecting such loss, at the designated constant dollar amount. Each
Shareholder of the Trust shall be deemed to have agreed, by his investment in
any Sub-Trust with respect to which the Trustees shall have adopted any such
procedure, to make the contribution referred to in the preceding sentence in the
event of any such loss.
(j) TRANSFER. All Shares of each particular Sub-Trust or class thereof
shall be transferable, but transfers of Shares of a particular Sub-Trust or
class thereof will be recorded on the Share transfer records of the Trust
applicable to that Sub-Trust or class only at such times as Shareholders shall
have the right to require the Trust to redeem Shares of that Sub-Trust or class
and at such other times as may be permitted by the Trustees.
(k) EQUALITY. Except as provided herein or in the instrument designating
and establishing any class of Shares or any Sub-Trust, all Shares of each
particular Sub-Trust or class thereof shall represent an equal proportionate
interest in the assets belonging to that Sub-Trust, or in the case of a class,
belonging to that Sub-Trust and allocable to that class (subject to the
liabilities belonging to that Sub-Trust or class), and each Share of any
particular Sub-Trust or class shall be equal to each other Share of that
Sub-Trust or class; but the provisions of this sentence shall not restrict any
distinctions permissible under Subsection (a) of this Section 4.3 that may exist
with respect to dividends and distributions on Shares of the same Sub-Trust or
class. The Trustees may from time to time divide or combine the Shares of any
particular Sub-Trust or class into a greater or lesser number of Shares of that
Sub-Trust or class without thereby changing the proportionate beneficial
interest in the assets belonging to that Sub-Trust or class or in any way
affecting the rights of Shares of any other Sub-Trust or class.
(l) FRACTIONS. Any fractional Share of any Sub-Trust or class, if any such
fractional Share is outstanding, shall carry proportionately all the rights and
obligations of a whole Share of that Sub-Trust or class, including rights and
obligations with respect to voting, receipt of dividends and distributions,
redemption of Shares, and liquidation of the Trust.
(m) CONVERSION RIGHTS. Subject to compliance with the requirements of the
1940 Act, the Trustees shall have the authority to provide that holders of
Shares of any Sub-Trust or class thereof shall have the right to convert said
Shares into Shares of one or more other Sub-Trust or class thereof in accordance
with such requirements and procedures as may be established by the Trustees.
(n) CLASS DIFFERENCES. The relative rights and preferences of the classes
of any Sub-Trust may differ in such other respects as the Trustees may determine
to be appropriate in their sole discretion, provided that such differences are
set forth in the resolutions adopted by the Trustees or the instrument
establishing and designating such classes and executed by a majority of the
Trustees (or by an instrument executed by an officer of the Trust pursuant to a
vote of a majority of the Trustees).
Section 4.4 OWNERSHIP OF SHARES. The ownership of Shares shall be recorded on
the books of the Trust or of a transfer or similar agent for the Trust, which
bocks shall be maintained separately for the Shares of each Sub-Trust and each
class thereof that has been established and designated. No certificates
certifying the ownership of Shares need be issued except as the Trustees may
otherwise determine from time to time. The Trustees may make such rules as they
consider appropriate for the assurance of Shares certificates, the use of
facsimile signatures, the transfer of Shares and similar matters. The record
books of the Trust as kept by the Trust or any transfer or similar agent, as the
case may be, shall be conclusive as to who are the Shareholders and as to the
number of Shares of each Sub-Trust and class thereof held from time to time by
each such Shareholder.
Section 4.5 INVESTMENTS IN THE TRUST. The Trustees may accept investments in
the Trust and each Sub-Trust thereof from such persons and on such terms and for
such consideration, not inconsistent with the provisions of the 1940 Act, as
they from time to time authorize. The Trustees may authorize any distributor,
principal underwriter, custodian, transfer agent or other person to accept
orders for the purchase of Shares that conform to such authorized terms and to
reject any purchase orders for Shares whether or not conforming to such
authorized terms.
Section 4.6 NO PRE-EMPTIVE RIGHTS. Shareholders shall have no pre-emptive or
other right to subscribe to any additional Shares or other securities issued by
the Trust.
Section 4.7 STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY. Shares
shall be deemed to the personal property giving only the rights provided in this
instrument. Every Shareholder by virtue of having become a Shareholder shall be
held to have expressly assented and agreed to the terms hereof and to have
become a party hereto. The death of a Shareholder during the continuance of the
Trust shall not operate to terminate the Trust or any Sub-Trust thereof nor
entitle the representative of any deceased Shareholder to an accounting or to
take any action in court or elsewhere against the Trust or the Trustees, but
only to the rights of said decedent under this Trust. Ownership of Shares shall
not entitle the Shareholder to any title in or to the whole or any part of the
Trust property or right to call for a partition or division of the same or for
an accounting, nor shall the ownership of Shares constitute the Shareholders
partners. Neither the Trust nor the Trustees, nor any officer, employee or agent
of the Trust shall have any power to bind personally any Shareholder, nor except
as specifically provided herein to call upon any Shareholder for the payment of
any sum of money or assessment whatsoever other than such as the Shareholder may
at any time personally agree to pay.
ARTICLE V - SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 5.1 VOTING POWERS. The Shareholders shall have power to vote only (i)
for the election or removal of Trustees as provided in Section 3.1, (ii) with
respect to any contract with a Contracting Party as provided in Section 3.3 as
to which Shareholder approval is required by the 1940 Act, (iii) with respect to
any reorganization of the Trust or any Sub-Trust to the extent and as provided
in Sections 7.2, (iv) with respect to any amendment of this Declaration of Trust
to the extent and as provided in Section 7.3, (v) to the same extent as the
stockholders of a Massachusetts business corporation as to whether or not a
court action, proceeding or claim should or should not be brought or maintained
derivatively or as a class action on behalf of the Trust or any Sub-Trust
thereof or the Shareholders, (provided, however, that a shareholder of a
particular Sub-Trust shall not be entitled to a derivative or class action on
behalf of any other Sub-Trust (or shareholder of any other Sub-Trust) of the
Trust) and (vi) with respect to such additional matters relating to the Trust as
may be required by the 1940 Act, this Declaration of Trust, the By-Laws or any
registration of the Trust with the Commission (or any successor agency) or any
state, or as the Trustees may consider necessary or desirable. There shall be no
cumulative voting in the election of Trustees. Shares may be voted in person or
by proxy. Proxies may be given orally or in writing or pursuant to any
computerized or mechanical data gathering process approved by the Trustees. A
proxy with respect to Shares held in the name of two or more persons shall be
valid if executed by any one of them unless at or prior to exercise of the proxy
the Trust receives a specific written notice to the contrary from any one of
them. A proxy purporting to be executed by or on behalf of a Shareholder shall
be deemed valid unless challenged at or prior to its exercise and the burden of
proving invalidity shall rest on the challenger. Until Shares are issued, the
Trustees may exercise all rights of Shareholders and may take any action
required by law, this Declaration of Trust or the By-Laws to be taken by
Shareholders.
Section 5.2 MEETINGS. No annual or regular meeting of Shareholders is
required. Special meetings of Shareholders may be called by the Trustees from
time to time for the purpose of taking action upon any matter requiring the vote
or authority of the Shareholders as herein provided or upon any other matter
deemed by the Trustees to be necessary or desirable. Written notice of any
meeting of Shareholders shall be given or caused to be given by the Trustees by
mailing such notice at least seven days before such meeting, postage prepaid,
stating the time, place and purpose of the meeting, to each Shareholder at the
Shareholder's address as it appears on the records of the Trust. The Trustees
shall promptly call and give notice of a meeting of Shareholders for the purpose
of voting upon removal of any Trustee of the Trust when requested to do so in
writing by Shareholders holding not less than 10% of the Shares then
outstanding. If the Trustees shall fail to call or give notice of any meeting of
Shareholders for a period of 30 days after written application by Shareholders
holding at least 10% of the Shares then outstanding requesting a meeting be
called for a purpose requiring action by the Shareholders as provided herein or
in the By-Laws, then Shareholders holding at least 10% of the Shares then
outstanding may call and give notice of such meeting, and thereupon the meeting
shall be held in the manner provided for herein in case of call thereof by the
Trustees.
Section 5.3 RECORD DATES. For the purpose of determining the Shareholders who
are entitled to vote or act at any meeting or any adjournment thereof, or who
are entitled to participate in any dividend or distribution, or for the purpose
of any other action, the Trustees may from time to time close the transfer books
for such period, not exceeding 30 days (except at or in connection with the
termination of the Trust), as the Trustees may determine or without closing the
transfer books the Trustees may fix a date and time not more than 60 days prior
to the date of any meeting of Shareholders or other action as the date and time
of record for the determination of Shareholders entitled to vote at such meeting
or any adjournment thereof or to be treated as Shareholders of record for
purposes of such other action, and any Shareholder who was a Shareholder at the
date and time so fixed shall be entitled to vote at such meeting or any
adjournment thereof or to be treated as a Shareholder of record for purposes of
such other action, even though he has since that date and time disposed of his
Shares, and no Shareholder becoming such after that date and time shall be so
entitled to vote at such meeting or any adjournment thereof or to be treated as
a Shareholder of record for purposes of such other action.
Section 5.4 QUORUM AND REQUIRED VOTE. Thirty percent (30%) of the Shares
entitled to vote shall be a quorum for the transaction of business at a
Shareholders' meeting, but any lesser number shall be sufficient for
adjournments. Any adjourned session or sessions may be held, within a reasonable
time after the date set for the original meeting without the necessity of
further notice. A majority of the Shares voted, at a meeting of which a quorum
is present, shall decide any questions and a plurality shall elect a Trustee,
except when a different vote is required or permitted by any provision of the
1940 Act or other applicable law or by this Declaration of Trust or the By-Laws.
Section 5.5 ACTION BY WRITTEN CONSENT. Subject to the provisions of the 1940
Act and other applicable law, any action taken by Shareholders may be taken
without a meeting if a majority of Shareholders entitled to vote on the matter
(or such larger proportion thereof as shall be required by the 1940 Act or by
any express provision of this Declaration of Trust or the By-Laws) consent to
the action in writing and such written consents are filed with the records of
the meetings of Shareholders. Such consent shall be treated for all purposes as
a vote taken at a meeting of Shareholders.
Section 5.6 INSPECTION OF RECORDS. The records of the Trust shall be open to
inspection by Shareholders to the same extent as is permitted stockholders of a
Massachusetts business corporation under the Massachusetts Business Corporation
Law.
Section 5.7 ADDITIONAL PROVISIONS. The By-Laws may include farther provisions
for Shareholders' votes and meetings and related matters not inconsistent with
the provisions hereof.
Section 5.8 SHAREHOLDER COMMUNICATIONS. Whenever ten or more Shareholders of
record have been such for at least six months preceding the date of application,
and who hold in the aggregate either Shares having a net asset value of at least
$25,000 or at least 1 % of the outstanding Shares, whichever is less, shall
apply to the Trustees in writing, stating that they wish to communicate with
other Shareholders with a view to obtaining signatures to a request for a
Shareholder meeting and accompanied by a form of communication and request which
they wish to transmit, the Trustees shall within five business days after
receipt of such application either (1) afford to such applicants access to a
list of the names and addresses of all Shareholders as recorded on the books of
the Trust or Sub-Trust, as applicable; or (2) inform such applicants as to the
approximate number of Shareholders of record, and the approximate cost of
mailing to them the proposed communication and form of request.
If the Trustees elect to follow the course specified in clause (2)) of this
Section 5.8, the Trustees, upon the written request of such applicants,
accompanied by a tender of the material to be mailed and of the reasonable
expenses of mailing, shall, with reasonable promptness, mail such material to
all Shareholders of record at their addresses as recorded on the books, unless
within five business days after such tender the Trustees shall mail to such
applicants and file with the Commission, together with a copy of the material to
be mailed, a written statement signed by at least a majority of the Trustees to
the effect that in their opinion either such material contains untrue statements
of fact or omits to state facts necessary to make the statements contained
therein not misleading, or would be in such violation of applicable law, and
specifying the basis of such opinion. The Trustees shall thereafter comply with
the requirements of the 1940 Act.
ARTICLE VI - LIMITATION OF LIABILITY: INDEMNIFICATION
Section 6.1 TRUSTEES, SHAREHOLDERS, ETC. NOT PERSONALLY LIABLE: NOTICE. All
persons extending credit to, contracting with or having any claim against the
Trust shall look only to the assets of the Sub-Trust with which such person
dealt for payment under such credit, contract or claim; and neither the
Shareholders of any Sub-Trust nor the Trustees, nor any of the Trust's officers,
employees or agents, whether past, present or future, nor any other Sub-Trust
shall be personally liable therefor. Every note, bond, contract, instrument,
certificate or undertaking and every other act or thing whatsoever executed or
done by or on behalf of the Trust, any Sub-Trust or the Trustees or any of them
in connection with the Trust shall be conclusively deemed to have been executed
or done only by or for the Trust (or the Sub-Trust) or the Trustees and not
personally. Nothing in this Declaration of Trust shall protect any Trustee or
officer against any liability to the Trust or the Shareholders to which such
Trustee or officer would otherwise be subject by reason of wilful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee or of such officer.
Section 6.2 NOTICE FOR CONTRACTS. Every note, bond, contract, instrument,
certificate or undertaking made or issued by the Trustees or by any officers or
officer shall give notice that this Declaration of Trust is on file with the
Secretary of The Commonwealth of Massachusetts and shall recite to the effect
that the same was executed - or made by or on behalf of the Trust or by them as
Trustees or Trustee or as officers or officer and not individually and that the
obligations of such instrument are not binding upon any of them or the
Shareholders individually but are binding only upon the assets and property of
the Trust, or the particular Sub-Trust in question, as the case may be, but the
omission thereof shall not operate to bind any Trustees or Trustee or officers
or officer or Shareholders or Shareholder individually.
Section 6.3 TRUSTEE'S GOOD FAITH ACTION: EXPERT ADVICE: NO BOND OR SURETY.
The exercise by the Trustees of their powers and discretions hereunder shall be
binding upon everyone interested. A Trustee shall be liable for his own wilful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee, and for nothing else, and
shall not be liable for errors of judgment or mistakes of fact or law. Subject
to the foregoing, (a) the Trustees shall not be responsible or liable in any
event for any neglect or wrongdoing of any officer, agent, employee, consultant,
adviser, administrator, distributor or principal underwriter, custodian or
transfer, dividend disbursing, Shareholder servicing or accounting agent of the
Trust, nor shall any Trustee be responsible for the act or omission of any other
Trustee; (b) the Trustees may take advice of counsel or other experts with
respect to the meaning and operation of this Declaration of Trust and their
duties as Trustees, and shall be under no liability for any act or omission in
accordance with such advice or for failing to follow such advice; and (c) in
discharging their duties, the Trustees, when acting in good faith, shall be
entitled to rely upon the books of account of the Trust and upon written reports
made to the Trustees by any officer appointed by them, any independent public
accountant, and (with respect to the subject matter of the contract involved)
any officer, partner or responsible employee of a Contracting Party appointed by
the Trustees pursuant to Section 3.3. The Trustees as such shall not be required
to give any bond or surety or any other security for the performance of their
duties.
Section 6.4 INDEMNIFICATION OF SHAREHOLDERS. In case any Shareholder (or
former Shareholder) of any Sub-Trust of the Trust shall be charged or held to be
personally liable for any obligation or liability of the Trust solely by reason
of being or having been a Shareholder and not because of such Shareholder's acts
or omissions or for some other reason, said Sub-Trust (upon proper and timely
request by the Shareholder) shall assume the defense against such charge and
satisfy any judgment thereon, and the Shareholder or former Shareholder (or his
heirs, executors, administrators or other legal representatives or in the case
of a corporation or other entity, its corporate or other general successor)
shall be entitled out of the assets of said Sub-Trust estate to be held harmless
from and indemnified against all loss and expense arising from such liability.
Section 6.5 INDEMNIFICATION OF TRUSTEES, OFFICERS, ETC. The Trust shall
indemnify (from the assets of the Sub-Trust or Sub-Trusts in question) each of
its Trustees and officers (including persons who serve at the Trust's request as
directors, officers or trustees of another organization in which the Trust has
any interest as a shareholder, creditor or otherwise [hereinafter referred to as
a "Covered Person"]) against all liabilities, including but not limited to
amounts paid in satisfaction of judgments, in compromise or as fines and
penalties, and expenses, including reasonable accountants' and counsel fees,
incurred by any Covered Person in connection with the defense or disposition of
any action, suit or other proceeding, whether civil or criminal, before any
court or administrative or legislative body, in which such Covered Person may be
or may have been involved as a party or otherwise or with which such person may
be or may have been threatened, while in office or thereafter, by reason of
being or having been such a Trustee or officer, director or trustee, except with
respect to any matter as to which it has been determined in one of the manners
described below, that such Covered Person (i) did not act in good faith in the
reasonable belief that such Covered Person's action was in or not opposed to the
best interests of the Trust or (ii) had acted with wilful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of such Covered Person's office (either and both of the conduct
described in (i) and (ii) being referred to hereafter as "Disabling Conduct"). A
determination that the Covered Person is entitled to indemnification, despite
allegations of Disabling Conduct, may be made by (i) a final decision on the
merits by a court or other body before whom the proceeding was brought that the
person to be indemnified was not liable by reason of Disabling Conduct, (ii)
dismissal of a court action or an administrative proceeding against a Covered
Person for insufficiency of evidence of Disabling Conduct, or (iii) a reasonable
determination, based upon a review of the facts, that the indemnitee was not
liable by reason of Disabling Conduct by (a) a vote of a majority of a quorum of
Trustees who are neither "interested persons" of the Trust as defined in section
2(a)(19) of the 1940 Act nor parties to the proceeding, or (b) an independent
legal counsel in a written opinion. Expenses, including accountants' and counsel
fees so incurred by any such Covered Person (but excluding amounts paid in
satisfaction of judgments, in compromise or as fines or penalties), may be paid
from time to time in advance of the final disposition of any such action, suit
or proceeding, provided that the Covered Person shall have undertaken to repay
the amounts so paid to the Sub-Trust in question if it is ultimately determined
that indemnification of such expenses is not authorized under this Article VI
and (i) the Covered Person shall have provided security for such undertaking,
(ii) the Trust shall be insured against losses arising by reason of any lawful
advances, or (iii) a majority of a quorum of the disinterested Trustees who are
not a party to the proceeding, or an independent legal counsel in a written
opinion, shall have determined, based on a review of readily available facts (as
opposed to a full trial-type inquiry), that there is reason to believe that the
Covered Party ultimately will be found entitled to indemnification.
Section 6.6 COMPROMISE PAYMENT. As to any matter disposed of by a compromise
payment by any such Covered Person referred to in Section 6.5, pursuant to a
consent decree or otherwise, no such indemnification either for said payment or
for any other expenses shall be provided unless such indemnification shall be
approved (a) by a majority of the disinterested Trustees who are not a party to
the proceeding or (b) by an independent legal counsel in a written opinion.
Approval by the Trustees pursuant to clause (a) or by independent legal counsel
pursuant to clause (b) shall not prevent the recovery from any Covered Person of
any amount paid to such Covered Person in accordance with any of such clauses as
indemnification if such Covered Person is subsequently adjudicated by a court of
competent jurisdiction not to have acted in good faith in the reasonable belief
that such Covered Person's action was in or not opposed to the best interests of
the Trust or to have been liable to the Trust or its Shareholders by reason of
wilful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of such Covered Person's office.
Section 6.7 INDEMNIFICATION NOT EXCLUSIVE, ETC. The right of indemnification
provided by this Article VI shall not be exclusive of or affect any other rights
to which any such Covered Person may be entitled. As used. in this Article VI,
"Covered Person" shall include such person's heirs, executors and
administrators, an "interested Covered Person" is one against whom the action,
suit or other proceeding in question or another action, suit or other proceeding
on the same or similar grounds is then or has been pending or threatened, and a
"disinterested" person is a person against whom none of such actions, suits or
other proceedings or another action, suit or other proceeding on the same or
similar grounds is then or has been pending or threatened. Nothing contained in
this article shall affect any rights to indemnification to which personnel of
the Trust, other than Trustees and officers, and other persons may be entitled
by contract or otherwise under law, nor the power of the Trust to purchase and
maintain liability insurance on behalf of any such person.
Section 6.7 LIABILITY OF THIRD PERSONS DEALING WITH TRUSTEES. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the Trust or upon
its order.
ARTICLE VII - MISCELLANEOUS
Section 7.1 DURATION AND TERMINATION OF TRUST. Unless terminated as provided
herein, the Trust shall continue without limitation of time and, without
limiting the generality of the foregoing, no change, alteration or modification
with respect to any Sub-Trust or class thereof shall operate to terminate the
Trust. The Trust, any Sub-Trust or class thereof may be terminated at any time
by a majority of the Trustees then in office, provided that (1) the distribution
of any remaining proceeds or assets of the Trust, any Sub-Trust or class
thereof, as the case may be, pursuant to Section 4.3(e), has been completed or
(2) no shares of the Trust, such Sub-Trust or class thereof, as the case may be,
are then outstanding.
Section 7.2 REORGANIZATION. The Trustees may sell, convey, merge and transfer
the assets of the Trust, or the assets belonging to any one or more Sub-Trusts,
to another trust, partnership, association or corporation organized under the
laws of any state of the United States, or to the Trust to be held as assets
belonging to another Sub-Trust of the Trust, in exchange for cash, shares or
other securities (including, in the case of a transfer to another Sub-Trust of
the Trust, Shares of such other Sub-Trust or class thereof) with such transfer
either (1) being made subject to, or with the assumption by the transferee of,
the liabilities belonging to each Sub-Trust the assets of which are so
transferred, or (2) not being made subject to, or not with the assumption of,
such liabilities; provided, however, that no assets belonging to any particular
Sub-Trust shall be so transferred unless the terms of such transfer shall have
first been approved at a meeting called for the purpose by the affirmative vote
of the holders of a majority of the outstanding voting Shares, as defined in the
1940 Act, of that Sub-Trust. Following such transfer, the Trustees shall
distribute such cash, shares or other securities (giving due effect to the
assets and liabilities belonging to and any other difference among the various
Sub-Trusts and classes the assets belonging to which have been so transferred)
among the Shareholders of the Sub-Trust the assets belonging to which have been
so transferred; and if all of the assets of the Trust have been so transferred,
the Trust shall be terminated.
The Trust, or any one or more Sub-Trusts, may, either as the successor,
survivor, or nonsurvivor, (1) consolidate with one or more other trusts,
partnerships, associations or corporations organized under the laws of the
Commonwealth of Massachusetts or any other state of the United States, to form a
new consolidated trust, partnership, association or corporation under the laws
of which any one of the constituent entities is organized, or (2) merge into one
or more other trusts, partnerships, associations or corporations organized under
the laws of the Commonwealth of Massachusetts or any other state of the United
States, or have one or more such trusts, partnerships, associations or
corporations merged into it, any such consolidation or merger to be upon such
terms and conditions as are specified in an agreement and plan of reorganization
entered into by the Trust, or one or more Sub-Trusts as the case may be, in
connection therewith. The terms "merge" or "merger" as used herein shall also
include the purchase or acquisition of any assets of any other trust,
partnership, association or corporation which is an investment company organized
under the laws of the Commonwealth of Massachusetts or any other state of the
United States. Any such consolidation or merger shall require the affirmative
vote of the holders of a majority of the outstanding voting Shares, as defined
in the 1940 Act, of each Sub-Trust affected thereby.
Section 7.3 AMENDMENTS. All rights granted to the Shareholders under this
Declaration of Trust are granted subject to the reservation of the right to
amend this Declaration of Trust as herein provided, except that no amendment
shall repeal the limitations on personal liability of any Shareholder or Trustee
or repeal the prohibition of assessment upon the Shareholders without the
express consent of each Shareholder or Trustee involved. Subject to the
foregoing, the provisions of this Declaration of Trust (whether or not related
to the rights of Shareholders) may be amended at any time, so long as such
amendment does not adversely affect the rights of any Shareholder with respect
to which such amendment is or purports to be applicable and so long as such
amendment is not in contravention of applicable law, including the 1940 Act, by
an instrument in writing signed by a majority of the then Trustees (or by an
officer of the Trust pursuant to the vote of a majority of such Trustees). Any
amendment to this Declaration of Trust that adversely affects the rights of
Shareholders may be adopted at any time by an instrument in writing signed by a
majority of the then Trustees (or by an officer of the Trust pursuant to a vote
of a majority of such Trustees) when authorized to do so by the vote in
accordance with Subsection (f) of Section 4.3 of Shareholders holding a majority
of the Shares entitled to vote. Subject to the foregoing, any such amendment
shall be effective as provided in the instrument containing the terms of such
amendment or, if there is no provision therein with respect to effectiveness,
upon the execution of such instrument and of a certificate (which may be a part
of such instrument) executed by a Trustee or officer of the Trust to the effect
that such amendment has been duly adopted.
Section 7.4 FILING OF COPIES: REFERENCES, HEADINGS. The original or a copy of
this instrument and of each amendment hereto shall be kept at the office of the
Trust where it may be inspected by any Shareholder. A copy of this instrument
and of each amendment hereto shall be filed by the Trust with the Secretary of
The Commonwealth of Massachusetts and with the Boston City Clerk, as well as any
other governmental office where such filing may from time to time be required,
but the failure to make any such filing shall not impair the effectiveness of
this instrument or any such amendment. Anyone dealing with the Trust may rely on
a certificate by an officer of the Trust as to whether or not any such
amendments have been made, as to the identities of the Trustees and officers,
and as to any matters in connection with the Trust hereunder and, with the same
effect as if it were the original, may rely on a copy certified by an officer of
the Trust to be a copy of this instrument or of any such amendments. In this
instrument and in any such amendment, references to this instrument, and all
expressions like "herein", "hereof' and hereunder" shall be deemed to refer to
this instrument as a whole as the same may be amended or affected by any such
amendments. The masculine gender shall include the feminine and neuter genders.
Headings are placed herein for convenience of reference only and shall not be
taken as a part hereof or control or affect the meaning, construction or effect
of this instrument. This instrument may be executed in any number of
counterparts each of which shall be deemed an original.
Section 7.5 APPLICABLE LAW. This Declaration of Trust is made in The
Commonwealth of Massachusetts, and it is created under and is to be governed by
and construed and administered according to the laws of said Commonwealth,
including the Massachusetts Business Corporation Law as the same may be amended
from time to time, to which reference is made with the intention that matters
not specifically covered herein or as to which an ambiguity may exist shall be
resolved as if the Trust were a business corporation organized in Massachusetts,
but the reference to said Business Corporation Law is not intended to give the
Trust, the Trustees, the Shareholders or any other person any right, power,
authority or responsibility available only to or in connection with an entity
organized in corporate form. The Trust shall be of the type referred to in
Section 1 of Chapter 182 of the Massachusetts General Laws and of the type
commonly called a Massachusetts business trust, and without limiting the
provisions hereof, the Trust may exercise all cowers which are ordinarily
exercised by such a trust.
Section 7.6 RESIDENT AGENT. Edward T. O'Dell, Jr., Goodwin, Procter & Hoar,
Exchange Place, Boston, Massachusetts is hereby designated as the resident agent
of the Trust in Massachusetts.
IN WITNESS WHEREOF, the undersigned have hereunto set their hand and seals
for themselves and their assigns, as of the day and year first above written.
- ------------------------------------ ---------------------------------------
John A. Allen E. Douglas Hodo
- ------------------------------------ ---------------------------------------
Frank E. Holmes Clark R. Mandigo
- ------------------------------------ ---------------------------------------
Walter W. McAllister, III W.C.J. van Rensburg
================================================================================
FORM OF PROXY
VOTE BY TOUCH-TONE PHONE OR THE INTERNET
CALL TOLL-FREE: 1-888-221-0697 OR VISIT WWW.USFUNDS.COM
SEE THE ENCLOSED INSERT FOR FURTHER INSTRUCTIONS ON VOTING BY PHONE OR INTERNET
Control Number: 000 000 000 000 00 Please fold and detach card at
perforation before mailing
Fund name prints here
U.S. GLOBAL INVESTORS FUND
This proxy is solicited on behalf of the Board of Trustees
The undersigned, revoking previous proxies, hereby appoint(s) Douglas E.
Hodo and Frank E. Holmes, attorneys, with full power of substitution, to vote
all shares of the fund(s) indicated above that the undersigned is entitled to
vote at the Special Joint Meeting of the Shareholders of the fund(s) to be held
on August 16, 2000, and at any adjournments thereof. This proxy shall be voted
on the proposals described in the Proxy Statement. Receipt of the Notice of
Special Joint Meeting of Shareholders and accompanying Proxy Statement is hereby
acknowledged. If a choice is specified, this proxy will be voted as indicated.
IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED FOR THE PROPOSALS. As to any
other matter, said attorneys shall vote in accordance with their best judgment.
This proxy may be revoked at any time prior to the exercise of the powers
conferred by the proxy.
NOTE: Please sign exactly as your name
appears on this proxy card. When signing
as attorney, executor, administrator,
trustee or guardian, give full title. If
a corporation, sign in the full
corporate name by president or other
authorized officer. If a partnership,
sign in partnership name by authorized
person.
Date , 2000
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SIGNATURE(S) IF HELD JOINTLY
Please vote by filling in the appropriate boxes below.
Please fold and detach card at perforation before mailing.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR ALL OF THE PROPOSALS.
If you wish to vote FOR ALL of the [ ] FOR ALL
proposals as recommended by the board
of trustees and do not want to check
all of the "For" boxes below, you may
check the box at the right instead.
Proposals
ALL FUNDS VOTE ON 1-3.
1. TO ELECT THE NOMINEES SPECIFIED BELOW
AS TRUSTEES
(01) Clark R. Mandigo [ ] FOR all nominees listed (except
(02) W.W. McAllister, III as marked to the contrary at
the left)
To withhold authority to vote for any [ ] WITHHOLD authority to vote for
individual nominee(s), write the all nominees
name(s) of the nominee(s) on this
line: --------------------------------
2. TO RATIFY THE SELECTION OF [ ] FOR [ ] AGAINST [ ] ABSTAIN
INDEPENDENT AUDITORS
3. TO AUTHORIZE THE TRUSTEES TO ADOPT AN [ ] FOR [ ] AGAINST [ ] ABSTAIN
AMENDED AND RESTATED MASTER TRUST
AGREEMENT
4. TO RECLASSIFY OR AMEND CERTAIN
INVESTMENT RESTRICTIONS
ALL FUNDS VOTE ON 4A - 4I
4A. Issuance of senior securities [ ] FOR [ ] AGAINST [ ] ABSTAIN
4B. Underwriting [ ] FOR [ ] AGAINST [ ] ABSTAIN
4C. Borrowing [ ] FOR [ ] AGAINST [ ] ABSTAIN
4D. Investments in real estate [ ] FOR [ ] AGAINST [ ] ABSTAIN
4E. Purchase or sale of commodities [ ] FOR [ ] AGAINST [ ] ABSTAIN
4F. Lending of assets [ ] FOR [ ] AGAINST [ ] ABSTAIN
4G. Margin purchases of securities [ ] FOR [ ] AGAINST [ ] ABSTAIN
4H. Engaging in short sales [ ] FOR [ ] AGAINST [ ] ABSTAIN
4I. Investments in restricted securities [ ] FOR [ ] AGAINST [ ] ABSTAIN
4J. GOLD SHARES FUND ONLY: Investments in [ ] FOR [ ] AGAINST [ ] ABSTAIN
warrants
4K. U.S. TREASURY SECURITIES CASH FUND [ ] FOR [ ] AGAINST [ ] ABSTAIN
and U.S. GOVERNMENT SECURITIES
SAVINGS FUND ONLY: Industry
concentration
4L. All FUNDS except GOLD SHARES FUND, [ ] FOR [ ] AGAINST [ ] ABSTAIN
WORLD GOLD FUND, and GLOBAL RESOURCES
FUND: Issuer percentage restriction
5. CHINA REGION OPPORTUNITY FUND ONLY: [ ] FOR [ ] AGAINST [ ] ABSTAIN
TO reclassify the China Region
Opportunity Fund as nondiversified
6. REAL ESTATE FUND ONLY: To liquidate [ ] FOR [ ] AGAINST [ ] ABSTAIN
the Real Estate Fund