U.S. GLOBAL INVESTORS FUNDS
U.S. INCOME FUND
U.S. REAL ESTATE FUND
P.O. BOX 781234
SAN ANTONIO, TEXAS 78278-1234
1-800-873-8637 (1-800-US-FUNDS)
(INFORMATION, SHAREHOLDER SERVICES AND REQUESTS)
INTERNET: HTTP://WWW.USFUNDS.COM
PROSPECTUS
NOVEMBER 1, 1996
AMENDED: MARCH 20, 1997
This prospectus presents information that a prospective investor should
know about the U.S. Income Fund ("Income Fund") and the U.S. Real Estate Fund
("Real Estate Fund"), two no-load mutual funds (the "Fund(s)") of U.S.
Global Investors Funds (the "Trust"). Each Fund has a different investment
objective and is designed to meet different investment needs. SHARES OF THE
TRUST ARE NOT INSURED, GUARANTEED, SPONSORED, RECOMMENDED OR APPROVED BY THE
UNITED STATES OR ANY AGENCY OR OFFICER THEREOF. Investors are responsible for
determining whether or not an investment in the fund is appropriate for their
needs. Read and retain this prospectus for future reference.
A Statement of Additional Information dated November 1, 1996, has been
filed with the Securities and Exchange Commission and is incorporated herein by
reference. This Statement is available free from U.S. Global Investors Funds
upon written request at the address set forth above or by calling
1-800-873-8637.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
PAGE
----
SUMMARY OF FEES AND EXPENSES......... 2
FINANCIAL HIGHLIGHTS................. 4
INVESTMENT OBJECTIVES AND
CONSIDERATIONS..................... 7
U.S. Income Fund................ 7
U.S. Real Estate Fund........... 7
SPECIAL CONSIDERATIONS............... 9
HOW TO PURCHASE SHARES............... 11
HOW TO EXCHANGE SHARES............... 14
HOW TO REDEEM SHARES................. 16
HOW SHARES ARE VALUED................ 20
DIVIDENDS AND TAXES.................. 21
THE TRUST............................ 23
MANAGEMENT OF THE FUNDS.............. 24
PERFORMANCE INFORMATION.............. 26
SUMMARY OF FEES AND EXPENSES
The following summary, which is based on actual expenses and average net
assets for each Fund for the year ended June 30, 1996, is provided to assist you
in understanding the various costs and expenses a shareholder in each respective
Fund could bear directly or indirectly.
REAL
INCOME ESTATE
FUND FUND
------ ------
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load.............. None None
Redemption Fee.................. None None
Trader's Fee (on the redemption
or exchange of shares held
less than 14 days)........... 0.10% 0.10%
Administrative Exchange Fee..... $5 $5
Account Closing Fee (does not
apply to exchanges).......... $10 $10
ANNUAL FUND OPERATING EXPENSES (AS A
PERCENTAGE OF AVERAGE NET
ASSETS)(1)
Management Fees................. 0.75% 0.75%
12b-1 Fees...................... None None
Other Expenses.................. 0.70% 0.82%
Transfer Agency Fees............ 0.38% 0.41%
Accounting Services Fees........ 0.25% 0.28%
Total Fund Operating Expenses (net of
waivers and reimbursements)........ 2.08% 2.26%
2
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Except for active ABC Investment Plan accounts, custodial accounts for
minors and retirement accounts, if an account balance falls, for any reason
other than market fluctuations, below $1,000 at any time during a month, that
account will be subject to a monthly small account charge of $1 which will be
paid quarterly. (See "Small Accounts.")
A shareholder who requests delivery of redemption proceeds by wire transfer
will be subject to a $10 charge. International wires will be higher.
HYPOTHETICAL EXAMPLE OF EFFECT OF FUND EXPENSES(1)
You would pay the following expenses on a $1,000 investment, assuming 5%
annual return and redemption at the end of the period.
INCOME REAL ESTATE
------ -----------
1 year.................................. $ 31 $ 33
3 years................................. 75 81
5 years................................. 122 131
10 years................................ 251 269
Included in these estimates is the account closing fee of $10 for each period.
This fee is a flat charge which does not vary with the size of your investment.
Accordingly, for investments larger than $1,000, your total expenses will be
substantially lower in percentage terms than this illustration implies. The
examples should not be considered a representation of past or future expenses.
Actual expenses may be more or less than those shown.
- --------------------------------------------------------------------------------
(1) Annual Fund Operating Expenses and the Hypothetical Example are based on
each Fund's historical expenses. Management fees, transfer agency fees and
accounting services fees are paid to U.S. Global Investors, Inc. (the
"Advisor") and its wholly owned subsidiary. Please refer to the section
entitled "Management of the Funds" for further information.
3
<PAGE>
FINANCIAL HIGHLIGHTS
U.S. INCOME FUND
The following per share data and ratios for a share of beneficial interest
outstanding throughout each of the five years ended June 30, 1996 have been
audited by Price Waterhouse LLP, the Fund's Independent Accountants. The related
financial statements and the report of Independent Accountants are included in
the Funds' 1996 Annual Report to Shareholders and are incorporated by reference
into the Statement of Additional Information ("SAI"). In addition to the data
set forth below, further information about the performance of the Fund is
contained in the Annual Report to Shareholders and SAI which may be obtained
without charge.
Selected data for a capital share outstanding throughout each year is as
follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
period............................. $ 13.35 12.57 14.06 12.65 11.32 12.23 11.61 9.64
--------- --------- --------- --------- --------- --------- --------- ---------
Net investment income(c)........... .35 .35 .31 .30 .29 .36 .43 .48
Net realized and unrealized gain
(loss) on investments(d).......... 1.84 .79 (1.06) 2.19 1.40 (.62) .61 1.96
--------- --------- --------- --------- --------- --------- --------- ---------
Total from investment operations..... 2.19 1.14 (.75) 2.49 1.69 (.26) 1.04 2.44
--------- --------- --------- --------- --------- --------- --------- ---------
Less dividends and distributions:
Dividends from net investment
income............................ (.35) (.34) (.31) (.27) (.35) (.36) (.42) (.47)
Distributions in excess of net
investment income(e).............. -- -- (.03) -- -- -- -- --
Distributions from net realized
gains............................. (.25) (.02) (.01) (.79) (.01) (.29) -- --
Distributions in excess of realized
gains(e).......................... -- -- (.39) (.02) -- -- -- --
--------- --------- --------- --------- --------- --------- --------- ---------
Total dividends and distributions.... (.60) (.36) (.74) (1.08) (.36) (.65) (.42) (.47)
--------- --------- --------- --------- --------- --------- --------- ---------
Net asset value, end of period....... $ 14.94 13.35 12.57 14.06 12.65 11.32 12.23 11.61
========= ========= ========= ========= ========= ========= ========= =========
Total Investment Return(f)........... 16.60% 9.31 (5.83) 20.68 15.02 (2.07) 8.89 26.02
Ratios/Supplemental Data:
Net assets, end of period (in
thousands)......................... $ 9,698 10,230 11,865 11,009 7,845 7,456 8,137 5,317
Ratio of expenses to average net
assets............................. 2.08 (g) 1.98 1.74 1.83 1.95 2.22 1.94 2.00
Ratio of net income to average net
assets............................. 2.45 (g) 2.59 2.27 2.34 2.47 2.99 3.55 4.61
Portfolio turnover rate.............. 50.89% 7.02 6.91 44.18 76.15 109.85 19.29 17.59
Average Commission Rate Paid(h)...... $ 0.0941 NA NA NA NA NA NA NA
</TABLE>
1988 1987
--------- ---------
Per Share Operating Performance:
Net asset value, beginning of
period............................. 10.50 11.20
--------- ---------
Net investment income(c)........... .63 .63
Net realized and unrealized gain
(loss) on investments(d).......... (.38) (.27)
--------- ---------
Total from investment operations..... .25 .36
--------- ---------
Less dividends and distributions:
Dividends from net investment
income............................ (.76) (.50)
Distributions in excess of net
investment income(e).............. -- --
Distributions from net realized
gains............................. (.35) (.32)
Distributions in excess of realized
gains(e).......................... -- (.24)
--------- ---------
Total dividends and distributions.... (1.11) (1.06)
--------- ---------
Net asset value, end of period....... 9.64 10.50
========= =========
Total Investment Return(f)........... 3.13 3.32
Ratios/Supplemental Data:
Net assets, end of period (in
thousands)......................... 4,450 3,572
Ratio of expenses to average net
assets............................. 1.73 1.60
Ratio of net income to average net
assets............................. 6.19 6.14
Portfolio turnover rate.............. 126.56 173.91
Average Commission Rate Paid(h)...... NA NA
(CONTINUED)
4
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FINANCIAL HIGHLIGHTS
U.S. REAL ESTATE FUND
The following per share data and ratios for a share of beneficial interest
outstanding throughout each of the five years ended June 30, 1996 have been
audited by Price Waterhouse LLP, the Fund's Independent Accountants. The related
financial statements and the report of Independent Accountants are included in
the Funds' 1996 Annual Report to Shareholders and are incorporated by reference
into the Statement of Additional Information ("SAI"). In addition to the data
set forth below, further information about the performance of the Fund is
contained in the Annual Report to Shareholders and SAI which may be obtained
without charge.
Selected data for a capital share outstanding throughout each year is as
follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
period............................. $ 9.80 9.86 10.96 10.17 8.83 8.36 10.20 9.29
--------- --------- --------- --------- --------- --------- --------- ---------
Net investment income(c)........... .42 .23 .22 .17 .29 .24 .30 .38
Net realized and unrealized gain
(loss) on investments(d).......... 1.27 (.13) (1.05) .79 1.38 .47 (1.57) .94
--------- --------- --------- --------- --------- --------- --------- ---------
Total from investment operations..... 1.69 .10 (.83) .96 1.67 .71 (1.27) 1.32
--------- --------- --------- --------- --------- --------- --------- ---------
Less dividends and distributions:
Dividends from net investment
income............................ (.39) (.16) (.22) (.17) (.33) (.24) (.30) (.41)
Distributions in excess of net
investment income(e).............. -- -- (.02) -- -- -- -- --
Distributions from net realized
gains............................. -- -- -- -- -- -- (.27) --
Tax return of capital
distributions(e).................. (.13) -- (.03) -- -- -- -- --
--------- --------- --------- --------- --------- --------- --------- ---------
Total dividends and distributions.... (.52) (.16) (.27) (.17) (.33) (.24) (.57) (.41)
--------- --------- --------- --------- --------- --------- --------- ---------
Net asset value, end of period....... $ 10.97 9.80 9.86 10.96 10.17 8.83 8.36 10.20
========= ========= ========= ========= ========= ========= ========= =========
Total Investment Return(f)........... 17.34% 1.09 (7.70) 9.45 18.70 9.23 (12.60) 14.46
Ratios/supplemental data:
Net assets, end of period (in
thousands)......................... $ 8,220 9,169 14,597 19,780 21,514 6,678 6,016 5,658
Ratio of expenses to average net
assets............................. 2.26 (g) 1.92 1.59 1.40 1.63 2.63 2.51 2.14
Ratio of net income to average net
assets............................. 3.63 (g) 2.22 1.96 1.55 3.17 2.66 3.50 4.70
Portfolio turnover rate.............. 107.59% 48.10 145.33 186.99 102.56 132.53 62.55 87.67
Average commission rate paid (h)..... $ 0.0925 NA NA NA NA NA NA NA
</TABLE>
PERIOD
ENDED(A)
--------
Per Share Operating Performance:
Net asset value, beginning of
period............................. 10.00
--------
Net investment income(c)........... .45
Net realized and unrealized gain
(loss) on investments(d).......... (.78)
--------
Total from investment operations..... (.33)
--------
Less dividends and distributions:
Dividends from net investment
income............................ (.38)
Distributions in excess of net
investment income(e).............. --
Distributions from net realized
gains............................. --
Tax return of capital
distributions(e).................. --
--------
Total dividends and distributions.... (.38)
--------
Net asset value, end of period....... 9.29
========
Total Investment Return(f)........... (2.99)
Ratios/supplemental data:
Net assets, end of period (in
thousands)......................... 3,237
Ratio of expenses to average net
assets............................. --(b)
Ratio of net income to average net
assets............................. 6.76(b)
Portfolio turnover rate.............. 51.01(b)
Average commission rate paid (h)..... NA
(FOOTNOTES ON FOLLOWING PAGE)
5
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(CONTINUED FROM PREVIOUS PAGE)
(a) For the period July 2, 1987 (date of commencement of operations) to
June 30, 1988; (b) Annualized; the ratios are not necessarily indicative of
twelve months of operation; (c) Net of expense reimbursements; (d) Includes the
effect of capital share transactions throughout the year; (e) Distributions in
excess of net investment income and net realized gains and tax returns of
capital are presented in accordance with SOP 93-2, Determination, Disclosure,
and Financial Statement Presentation of Income, Capital Gain, and Return of
Capital Distribution by Investment Companies, which was first implemented by the
Funds in fiscal 1993. Information for prior years has not been restated; (f)
Total return does not reflect the effect of account fees; (g) Expense ratio is
net of expense reimbursements or fee waivers. Had such reimbursements not been
made, the expense ratio subject to the most restrictive state limitation would
have been 2.10% and 2.27% and the net investment income ratio would have been
2.42% and 3.62% for the Income and Real Estate Funds, respectively. (h)
Represents total commissions paid on portfolio securities divided by the total
number of shares purchased or sold on which commissions were charged. This
information was not required prior to 1996.
6
<PAGE>
INVESTMENT OBJECTIVES AND CONSIDERATIONS
U.S. Global Investors Funds (the "Trust") offers investors several growth
and income funds, two of which are included in this prospectus, the Income Fund
and the Real Estate Fund. Each Fund has a different investment objective and is
designed to satisfy different needs. The Income Fund seeks to preserve capital,
consistent with production of current income. Long-term capital appreciation is
a secondary consideration. The Income Fund may invest in a broad range of equity
and debt securities. The Real Estate Fund's principal objective is long-term
capital appreciation; current income is a secondary consideration. The Real
Estate Fund invests primarily in equity securities of companies in the real
estate or real estate related industry.
U.S. INCOME FUND
The investment objectives of the Income Fund are preservation of capital
and, consistent with that objective, production of current income. Long-term
capital appreciation is a secondary consideration.
The Income Fund will invest in the following types of securities: common
stocks, including, but not limited to, shares of beneficial interest of real
estate investment trusts; corporate bonds; senior securities convertible into
common stocks (convertible preferred stocks and convertible bonds or
debentures); United States Treasury bills; United States Treasury bonds; and
obligations issued, guaranteed or otherwise backed by United States Government
agencies and instrumentalities. The Fund may also invest in the securities of
foreign issuers which are listed on domestic national securities exchanges,
quoted on NASDAQ, or traded in the domestic over-the-counter market. The Fund
purchases only those preferred stocks, bonds and debentures that, in the opinion
of the Advisor, meet a credit standard which is consistent with the objective of
preservation of capital. The distribution of investments between different types
of securities is governed by an investment policy, which can be changed by the
Board of Trustees, that at least 80% of the Income Fund's total net assets will
be invested in income-producing securities. The common stocks in which the
Income Fund ordinarily invests are those of issuers with a long-established
record of paying cash dividends, such as companies that provide essentials, such
as electricity, gas and telephone services. Investments will be diversified
among a variety of industries to limit risk; however, up to 10% of the total net
assets of the Income Fund may be invested in securities that are not readily
marketable. To increase current income, the Income Fund may write (sell) covered
call options on common stocks in its portfolio.
U.S. REAL ESTATE FUND
The primary investment objective of the Real Estate Fund is long-term
capital appreciation. Current income is a secondary consideration. The Fund will
seek to achieve its objectives by investing primarily in equity securities of
companies in the real estate or real estate related industry.
The Fund will invest not less than 65% of its total assets in common and
preferred stocks of companies listed on national securities exchanges or NASDAQ
which have at least 50% of the value of their assets in, or which derive at
least 50% of their revenues from, the ownership, construction, management or
sale of residential, commercial or industrial real estate. Such stocks may
include publicly traded or listed equity real estate investment trusts which own
properties and mortgage real estate investment trusts which make short-term
construction and development mortgage loans or which invest in long-term
mortgages or mortgage pools. The Fund may also invest up to 35% of total net
assets in real estate or real estate related securities of foreign issuers
listed on domestic or foreign exchanges, quoted on NASDAQ, or traded in the
domestic over-the-counter market.
The Fund may also invest in equity, debt, or convertible securities of
issuers whose products and services are related to the real estate industry such
as manufacturers and distributors of building supplies and financial
institutions which issue or service mortgages. In addition, the Fund may, from
time to time, seek investment in the securities of companies
7
<PAGE>
unrelated to the real estate industry but which have significant real estate
holdings believed to be undervalued relative to the price of the
companies'securities.
There may be periods when investments in such securities should be reduced
due to unusual or adverse economic conditions. Thus, the Real Estate Fund may
temporarily invest, without limitation other than the Real Estate Fund's
investment restrictions, in short-term money market instruments if, in the
opinion of the Advisor, market conditions warrant. The Fund may invest more than
25% of its total assets in any one sector of the real estate or real estate
related industries. See "Special Risks" in the Statement of Additional
Information.
The Real Estate Fund may be subject to the risks associated with the direct
ownership of real estate because of its policy of concentration in the
securities of companies which own, construct, manage or sell residential,
commercial or industrial real estate. Additional risks include declines in the
value of real estate, risks related to general and local economic conditions,
overbuilding and increased competition, increases in property taxes and
operating expenses, changes in zoning laws, casualty or condemnation losses,
limitations on rents, changes in neighborhood values, the appeal of properties
to tenants, and increase in interest rates. The value of securities of companies
which serve the real estate industry may also be affected by such risks.
SPECIAL CONSIDERATIONS
FOREIGN SECURITIES
Investment in foreign securities may involve risks not present in domestic
investment. These include fluctuating exchange rates; the fact that foreign
issuers may be subject to different, and in some cases, less comprehensive
accounting, financial reporting and disclosure standards than are domestic
issuers; the risk of adverse changes in foreign investment or exchange control
regulations, expropriation or confiscatory taxation; political or financial
instability; or other developments which can affect investments. The Income Fund
and the Real Estate Fund may invest in the securities of foreign issuers that
are listed on a domestic exchange, quoted on NASDAQ, or traded in the domestic
over-the-counter market. The Real Estate Fund may also invest in securities of
foreign issuers that are listed on foreign securities exchanges.
PORTFOLIO TURNOVER
Each Fund's total portfolio turnover rate is shown in the "Financial
Highlights Table." A Fund's annual rate of portfolio turnover may vary widely
from year to year depending on market conditions and prospects and may be higher
than those of other mutual funds with similar investment objectives to each
Fund. High portfolio turnover in any given year indicates a substantial amount
of short-term trading, which may result in payment by the Funds of above-average
amounts of brokerage commissions and could result in the payment by shareholders
of above-average amounts of taxes on realized investment gain. Any short-term
gain realized on securities will be taxed to shareholders as ordinary income.
See "Dividends and Taxes."
LENDING OF PORTFOLIO SECURITIES
Each Fund may lend securities to broker-dealers or institutional investors
for their use in connection with short sales, arbitrages and other securities
transactions. A Fund will not lend portfolio securities unless the loan is
secured by collateral (consisting of any combination of cash, United States
Government securities or irrevocable letters of credit) in an amount at least
equal (on a daily mark-to-market basis) to the current market value of the
securities loaned. In the event of a bankruptcy or breach of agreement by the
borrower of the securities, a Fund could experience delays and costs in
recovering the securities loaned. A Fund will not enter into securities lending
agreements unless its custodian bank/lending agent will fully indemnify the Fund
against loss due to borrower default. A Fund may not lend securities with an
aggregate market value of more than one-third of the Fund's total net assets.
8
<PAGE>
REPURCHASE AGREEMENTS
Each Fund may invest a portion of its assets in repurchase agreements with
United States broker-dealers, banks and other financial institutions, provided
the Fund's custodian always has possession of securities serving as collateral
or has evidence of book entry receipt of such securities. In a repurchase
agreement, a Fund purchases securities subject to the seller's agreement to
repurchase such securities at a specified time (normally one day) and price. The
repurchase price reflects an agreed-upon interest rate during the time of
investment. All repurchase agreements must be collateralized by United States
Government or government agency securities the market values of which equal or
exceed 102% of the principal amount of the repurchase obligation. If an
institution enters an insolvency proceeding, the resulting delay in liquidation
of securities serving as collateral could cause the Fund some loss if the value
of the securities declined prior to liquidation. To minimize the risk of loss, a
Fund will enter into repurchase agreements only with institutions and dealers
which the Board of Trustees considers creditworthy.
PUT AND CALL OPTIONS
SELLING (OR WRITING) COVERED CALL OPTIONS. Each Fund may sell (or write)
covered call options on portfolio securities to hedge against adverse movements
in the prices of these securities. A call option gives the buyer of the option,
upon payment of a premium, the right to call upon the writer to deliver a
security on or before a fixed date at a predetermined price, referred to as the
strike price. If the price of the hedged security should fall or remain below
the strike price, the Fund will not be called upon to deliver the security, and
the Fund will retain the premium received for the option as additional income,
offsetting all or part of any decline in the value of the security. The hedge
provided by writing covered call options is limited to a price decline in the
security of no more than the option premium received by the Fund for writing the
option. If the security owned by the Fund appreciates above the option's strike
price, the Fund will generally be called upon to deliver the security, which
will prevent the Fund from receiving the benefit of any price appreciation above
the strike price.
BUYING CALL OPTIONS. Each Fund may purchase call options on securities
movements in the prices of these securities. Each Fund will realize a gain from
the exercise of a call option if, during the option period, the price of the
underlying security to be purchased increases by more than the amount of the
premium paid. A Fund will realize a loss equal to all or a portion of the
premium paid for the option if the price of the underlying security decreases or
does not increase by more than the premium.
BUYING PUT OPTIONS. Each Fund may purchase put options on portfolio
securities to hedge against adverse movements in the prices of these securities.
A put option gives the buyer of the option, upon payment of a premium, the right
to sell a security to the writer of the option on or before a fixed date at a
predetermined price. A Fund will realize a gain from the exercise of a put
option if, during the option period, the price of the security declines by an
amount in excess of the premium paid. A Fund will realize a loss equal to all or
a portion of the premium paid for the option if the price of the security
increases or does not decrease by more than the premium.
CLOSING TRANSACTIONS. Each Fund may dispose of an option written by the
Fund by entering into a "closing purchase transaction" for an identical option
and may dispose of an option purchased by the Fund by entering into a "closing
sale transaction" for an identical option. In each case, the closing
transaction will have the effect of terminating the rights of the option holder
and the obligations of the option purchaser and will result in a gain or loss to
the Fund based upon the relative amount of the premiums paid or received for the
original option and the closing transaction. A Fund may sell (or write) put
options solely for the purpose of entering into closing sale transactions.
INDEX OPTIONS. Each Fund may purchase and sell call options and purchase
put options on stock indices in order to manage cash flow, reduce equity
exposure, or remain fully invested in equity securities. Options on securities
indices are similar to options on a security except that, upon the exercise of
an option on a securities index, settlement is made in cash rather than in
specific securities.
9
<PAGE>
SPECIAL LIMITATIONS
The investment objectives of the Income and Real Estate Funds may not be
changed without the vote of a majority of the Fund's outstanding voting
securities.
Each Fund may: (1) borrow up to 5% of the total assets of that Fund as a
temporary measure (for extraordinary purposes); (2) invest up to 5% of the value
of the total assets of that Fund in securities of any one issuer (except such
limitation does not apply to obligations issued or guaranteed by the U.S.
Government, its agencies and/or instrumentalities); (3) not acquire more than
10% of the voting securities of any one issuer; and (4) lend portfolio
securities with an aggregate market value of not more than one-third of such
Fund's total net assets.
HOW TO PURCHASE SHARES
The minimum initial investment is $1,000 for regular accounts or $50 for
custodial accounts for minors. The minimum subsequent investment is $50. The
minimum initial investment for persons enrolled in the ABC Investment Plan is
$100, and the minimum subsequent investment pursuant to such a plan is $30 or
more per month per account. There is no minimum purchase for retirement plan
accounts, including IRAs, administered by the Advisor or its agents and
affiliates. Management may waive minimum initial or subsequent investment
requirements for purchases made through qualifying broker-dealers or certain
institutional programs.
YOU MAY INVEST IN THE FOLLOWING WAYS:
BY MAIL
Send your application and check or money order, made payable to the
respective Fund, to P.O. Box 781234, San Antonio, Texas 78278-1234.
When making subsequent investments, enclose your check with the return
remittance portion of the confirmation of your previous investment or indicate
on your check or a separate piece of paper your name, address and account number
and mail to the address mentioned above. Do not use the remittance portion of
your confirmation statement for a different fund as it is pre-coded. This may
cause your investment to be invested into the wrong fund. If you wish to
purchase shares in more than one fund, send a separate check or money order for
each fund. Third party checks will not be accepted; and the Trust reserves the
right to refuse to accept second party checks.
BY TELEPHONE
Once your account is open, you may make investments by telephone by calling
1-800-873-8637. Investments by telephone are not available in money market funds
or any retirement account administered by the Advisor or its agents. The maximum
telephone purchase is ten times the value of the shares owned, calculated at the
last available net asset value. Payment for shares purchased by telephone is due
within seven business days after the date of the transaction. You cannot
exchange shares purchased by telephone until after the payment has been received
and accepted by the Trust.
BY WIRE
You may make your initial or subsequent investments in U.S. Global
Investors Funds by wiring funds. To do so, call 1-800-873-8637 for a
confirmation number and wiring instructions.
BY ABC INVESTMENT PLANT
The ABC Investment PlanT (Automatically Building Capital) is offered as a
special service allowing you to build a position in any of the U.S. Global
Investors family of funds over time without trying to outguess the market. Once
your account is open, you may make investments automatically by completing the
ABC Investment PlanT form authorizing U.S. Global Investors Funds to draw on
your money market or bank account monthly for a minimum of $30 a month
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<PAGE>
beginning within thirty (30) days after the account is opened. These lower
minimums are a special service bringing to small investors the benefits of U.S.
Global Investors Funds without requiring a $1,000 minimum initial investment.
Your investment dollars will automatically buy more shares when the market
is undervalued and fewer shares when the market is overvalued. By investing an
equal amount at regular, periodic intervals, you avoid the extremes in the
market. Of course, using the ABC Investment PlanT does not guarantee a profit.
If you sell at the bottom, no system will give you a gain.
You may call 1-800-873-8637 to open a treasury money market fund or inquire
at your bank whether it will honor debits through the Automated Clearing House
("ACH") or, if necessary, preauthorized checks. You may change the date or
amount of your investment or discontinue the Plan any time by letter received by
U.S. Global Investors Funds at least two weeks before the change is to become
effective.
ADDITIONAL INFORMATION ABOUT PURCHASES
All purchases of shares are subject to acceptance by the Trust and are not
binding until accepted. U.S. Global Investors Funds reserves the right to reject
any application or investment. Orders received by the Funds' transfer agent or a
sub-agent before 4:00 p.m. Eastern Time, Monday through Friday exclusive of
business holidays, and accepted by the Funds will receive the share price next
computed after receipt of the order. In the event that the NYSE and other
financial markets close earlier, as on the eve of a holiday, orders will become
effective earlier in the day at the close of trading on the NYSE.
U.S. Global Investors Funds charges no sales commissions or "loads" of
any kind. However, investors may purchase and sell shares through registered
broker-dealers who may charge fees for their services.
If your telephone order to purchase shares is canceled due to nonpayment or
late payment (whether or not your check has been processed by the Fund), you
will be responsible for any loss incurred by the Trust by reason of such
cancellation.
If a check is returned unpaid due to nonsufficient funds, stop payment or
other reasons, the Trust will charge $20 and you will be responsible for any
loss incurred by the Trust with respect to cancelling the purchase.
To recover any such loss or charge, the Trust reserves the right, without
further notice, to redeem shares of any affiliated funds already owned by any
purchaser whose order is canceled, for whatever reason, and such a purchaser may
be prohibited from placing further orders unless investments are accompanied by
full payment by wire or cashier's check.
CHECKS DRAWN ON FOREIGN BANKS. To be received in good order, an investment
must be made in U.S. dollars payable through a bank in the U.S. As an
accommodation, the Funds' transfer agent may accept checks payable in a foreign
currency or drawn on a foreign bank and will attempt to convert such checks into
U.S. dollars and repatriate such amount to the Fund's account in the U.S. Your
investment in the Fund will not be considered to have been received in good
order until your foreign check has been converted into U.S. dollars and is
available to the Funds through a bank in the U.S. Your investment in the Fund
may be delayed until your foreign check has been converted into U.S. dollars and
cleared the normal collection process. Any amounts charged to the Fund for
collection procedures will be deducted from the amount invested.
If the Trust incurs a charge for locating a shareholder without a current
address, such charge will be passed through to the shareholder.
TAX IDENTIFICATION NUMBER
Each Fund is required by Federal law to withhold and remit to the United
States Treasury a portion of the dividends, capital gain distributions and
proceeds of redemptions paid to any shareholder who fails to furnish the Fund
with a correct taxpayer identification number, who underreports dividend or
interest income or who fails to provide certification of tax identification
number. In order to avoid this withholding requirement, you must certify on your
application, or on a
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separate W-9 Form supplied by the Transfer Agent, that your taxpayer
identification number is correct and that you are not currently subject to
backup withholding or you are exempt from backup withholding. For individuals,
your taxpayer identification number is your social security number.
Instructions to exchange or transfer shares held in established accounts
will be refused until the certification has been provided. In addition, the Fund
assesses a $50 administrative fee if the taxpayer identification number is not
provided by year end.
CONFIRMATION STATEMENTS
When you open your account, U.S. Global Investors Funds will send you a
confirmation statement, which will be your evidence that you have opened an
account. The confirmation statement is non-negotiable, so if it is lost or
destroyed, you will not be required to buy a lost instrument bond or be subject
to other expense or trouble, as you would with a negotiable stock certificate.
The fund does not issue certificates.
HOW TO EXCHANGE SHARES
You have the privilege of exchanging into any of the other funds in the
U.S. Global Investors family of funds which are registered in your state. An
exchange involves the redemption (sale) of shares of one fund and purchase of
shares of another fund at the respective closing net asset value and is a
taxable transaction.
FUNDS IN THE U.S. GLOBAL INVESTORS FAMILY OF FUNDS
Investing involves a trade-off between potential rewards and potential
risks. In order to achieve higher rewards on your investment, you must be
willing to take on higher risk. If you are most concerned with safety of
principal, a lower risk investment will provide greater stability but with lower
potential earnings. Another strategy for dealing with volatile markets is to use
the ABC Investment PlanT. The list below is a reward and risk guide to all of
the mutual funds in the U.S. Global Investors family of funds. This guide may
help you decide if a fund is suitable for your investment goals.
HIGH REWARD China Region Opportunity Fund
HIGH RISK Regent Eastern European Fund
U.S. Gold Shares Fund
U.S. World Gold Fund
U.S. Global Resources Fund
Adrian Day Global Opportunity Fund
Bonnel Growth Fund
MODERATE REWARD U.S. Real Estate Fund
MODERATE RISK U.S. All American Equity Fund
MegaTrends Fund
U.S. Income Fund
U.S. Tax Free Fund
United Services Near-Term Tax Free
Fund
LOW REWARD U.S. Government Securities Savings
Fund
LOW RISK U.S. Treasury Securities Cash Fund
If you have additional questions, one of our professional investor
representatives will personally assist you. Call 1-800-US-FUNDS.
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BY TELEPHONE
You will automatically have the privilege to direct U.S. Global Investors
Funds to exchange your shares by calling toll free 1-800-US-FUNDS
(1-800-873-8637). In connection with such exchanges, neither the Fund nor the
Transfer Agent will be responsible for acting upon any instructions reasonably
believed by them to be genuine. The shareholder, as a result of this policy,
will bear the risk of loss. Each Fund and/or its Transfer Agent will, however,
employ reasonable procedures to confirm that instructions communicated by
telephone are genuine (including requiring some form of personal identification,
providing written confirmation and tape recording conversations); and if either
party does not employ reasonable procedures, it may be liable for losses due to
unauthorized or fraudulent transactions.
BY MAIL
You may direct U.S. Global Investors Funds in writing to exchange your
shares between identically registered accounts in the U.S. Global Investors
family of funds. The request must be signed exactly as the name appears in the
registration. (Before writing, read "Additional Information About Exchanges.")
ADDITIONAL INFORMATION ABOUT EXCHANGES
(1) There is a $5 charge that is paid to United Shareholder Services, Inc.
(the "Transfer Agent" or "USSI"), for each exchange transaction out of any
fund account. Retirement accounts administered by the Advisor or its agents are
charged $5 for each exchange exceeding three per quarter. The exchange fee is
charged to cover administrative costs associated with handling these exchanges.
(2) An exchange involves both the redemption of shares out of the Fund and
the purchase of shares in a "Separate Fund." Like any other purchase, shares
of the Separate Fund cannot be purchased by exchange until all conditions of
purchase are met, including investable proceeds being immediately available.
Like any other redemption, the Fund reserves the right to hold exchange proceeds
for up to seven days. In general, the Fund expects to exercise this right on
exchanges of $50,000 or more. In such event, purchase of the Separate Fund
shares will also be delayed. Separate Fund shares will be priced at their net
asset value at the time of purchase. Redemption proceeds will not be invested in
either fund during this period. In all cases Fund shares will be redeemed
immediately, however Separate Fund shares will not be purchased until investable
proceeds are available. You will be notified immediately if the purchase will be
delayed.
(3) Shares may not be exchanged unless you have furnished U.S. Global
Investors Funds with your tax identification number, certified as prescribed by
the Internal Revenue Code and Regulations, and the exchange is to an account
with like registration and tax identification number. (See "Tax Identification
Number.")
(4) Exchanges out of U.S. Global Investors Funds equity funds of shares
held less than 14 days are subject to a trader's fee. (See "Trader's Fee Paid
to Fund.")
(5) The exchange privilege may be terminated at any time. The exchange fee
and other terms of the privilege are subject to change.
HOW TO REDEEM SHARES
You may redeem any or all of your shares at will. Redemption requests
received in proper order by the Fund's transfer agent or a sub-agent before 4:00
p.m. Eastern Time, Monday through Friday exclusive of business holidays will
receive the share price next computed after receipt of the request.
BY MAIL
A written request for redemption must be in "proper order," which
requires delivery of the following to the Transfer Agent:
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(1) a written request for redemption signed by each registered owner
exactly as the shares are registered, the account number and the number of
shares or the dollar amount to be redeemed;
(2) negotiable stock certificates for any shares to be redeemed for which
certificates have been issued;
(3) signature guarantees when required; and
(4) such additional documents as are customarily required to evidence the
authority of persons effecting redemptions on behalf of corporations, executors,
trustees, and other fiduciaries. Redemptions will not become effective until all
documents in the form required have been received by the Transfer Agent. (Before
writing, read "Additional Information About Redemptions.")
HOW TO EXPEDITE REDEMPTIONS
To redeem your Fund shares by telephone, you may call the Fund and direct
an exchange out of the Fund into an identically registered account in a U.S.
Global Investors treasury money market fund ($1,000 minimum initial investment).
You may then write a check against your treasury money market fund account. See
"How to Exchange Shares" for a description of exchanges, including the $5
exchange fee. Call 1-800-873-8637 for more information concerning telephone
redemption and a treasury money market fund prospectus.
SPECIAL REDEMPTION ARRANGEMENTS
Special arrangements may be made by institutional investors or on behalf of
accounts established by brokers, advisers, banks or similar institutions to have
redemption proceeds transferred by wire to pre-established accounts upon
telephone instructions. For further information call the Trust at
1-800-873-8637. Telephone redemptions are available for Chairman's Circle
accounts.
SIGNATURE GUARANTEE
Redemptions in excess of $15,000 currently require a signature guarantee. A
signature guarantee is required for all redemptions, regardless of the amount
involved, when the proceeds are paid to someone other than the registered owner
of shares to be redeemed or if proceeds are to be mailed to an address other
than the registered address of record. When a signature guarantee is required,
each signature must be guaranteed by: (a) a federally insured bank or thrift
institution; (b) a broker or dealer (general securities, municipal, or
government) or clearing agency registered with the U.S. Securities and Exchange
Commission that maintains net capital of at least $100,000; or (c) a national
securities exchange or national securities association. The guarantee must: (i)
include the statement "Signature(s) Guaranteed"; (ii) be signed in the name of
the guarantor by an authorized person, including the person's printed name and
position with guarantor; and (iii) include a recital that the guarantor is
federally insured, maintains the requisite net capital or is a national
securities exchange or association. Shareholders living abroad may acknowledge
their signatures before a U.S. consular officer. Military personnel may
acknowledge their signatures before officers authorized to take acknowledgments
(e.g., legal officers and adjutants).
REDEMPTION PROCEEDS MAY BE SENT TO YOU:
BY MAIL
If your redemption check is mailed, it is usually mailed within 48 hours;
however, the Fund reserves the right to hold redemption proceeds for up to seven
days. If the shares to be redeemed were purchased by check, the redemption
proceeds will not be mailed until the purchase check has cleared, which may take
up to seven days. You may avoid this requirement by investing by bank wire
(Federal funds). Redemption checks may be delayed if you have changed your
address in the last 30 days. Please notify the Fund promptly in writing, or by
telephone, of any change of address.
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BY WIRE
You may authorize the Fund to transmit redemption proceeds by wire,
provided you send written wiring instructions with a signature guarantee at the
time of redemption. Proceeds from your redemption will usually be transmitted on
the first business day following the redemption. However, the Trust reserves the
right to hold redemptions for up to seven days. If the shares to be redeemed
were purchased by check, the redemption proceeds will not be wired until the
purchase check has cleared, which may take up to seven days. There is a $10
charge to cover the wire, which is deducted from redemption proceeds.
International wires will be higher.
ADDITIONAL INFORMATION ABOUT REDEMPTIONS
The redemption price may be more or less than your cost, depending on the
net asset value of the Fund's portfolio next determined after your request is
received.
A request to redeem shares in an IRA or similar retirement account must be
accompanied by an IRS Form W4-P and a reason for withdrawal as specified by the
IRS. Proceeds from the redemption of shares from a retirement account may be
subject to withholding tax.
The Trust has the authority to redeem existing accounts and to refuse a
potential account the privilege of having an account in the Trust if the Trust
reasonably determines that the failure to so redeem, or to so prohibit, would
have a material adverse consequence to the Trust and its shareholders. No
account closing fee or redemption fee will be charged to investors whose
accounts are closed under this provision.
TRADER'S FEE PAID TO THE FUND
A Trader's fee of 10 basis points or 0.10% of the value of shares redeemed
or exchanged will be assessed to shareholders who redeem or exchange shares of
the Fund held less than fourteen (14) calendar days. The Trader's Fee will be
paid to the Fund to benefit remaining shareholders by protecting them against
expenses due to excessive trading. Excessive short-term trading has an adverse
impact on effective portfolio management as well as upon Fund expenses. The Fund
has reserved the right to refuse investments from shareholders who engage in
short-term trading that may be disruptive to the Fund.
ACCOUNT CLOSING FEE
In order to reduce Fund expenses an account closing fee of $10 will be
assessed to shareholders who redeem all shares in their Fund account and direct
that redemption proceeds be delivered to them by mail or wire. The charge is
payable directly to the Fund's Transfer Agent which, in turn, will reduce its
charges to the Fund by an equal amount. The purpose of the charge is to allocate
to redeeming shareholders a more equitable portion of the Transfer Agent's fee,
including the cost of tax reporting, which is based upon the number of
shareholder accounts. The account closing fee does not apply to exchanges
between the funds in U.S. Global Investors family of funds nor will it be
imposed on any account which is involuntarily redeemed.
SMALL ACCOUNTS
Fund accounts which fall, for any reason other than market fluctuations,
below $1,000 at any time during a month will be subject to a monthly small
account charge of $1 which will be payable quarterly. The charge is payable
directly to the Fund's Transfer Agent which, in turn, will reduce its charges to
the Fund by an equal amount. The purpose of the charge is to allocate the costs
of maintaining shareholder accounts more equally among shareholders.
As a special service for small investors, active ABC Investment PlanT
accounts, custodial accounts for minors, and retirement plan accounts
administered by the Advisor or its agents and affiliates will not be subject to
the small account charge.
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In order to reduce expenses of the Fund, the Trust may redeem all of the
shares in any shareholder account, other than active ABC Investment PlanT
accounts, custodial accounts for minors and retirement plan accounts, if, for a
period of more than three months, the account has a net asset value of $500 or
less and the reduction in value is not due to market fluctuations. If the Fund
elects to close such accounts, it will notify shareholders whose accounts are
below the minimum of its intention to do so, and will provide those shareholders
with an opportunity to increase their accounts by investing a sufficient amount
to bring their accounts up to the minimum amount within ninety (90) days of the
notice. No account closing fee will be charged to investors whose accounts are
closed under this redemption provision.
CONFIRMATION STATEMENTS
Shareholders normally will receive a confirmation statement after each
transaction (purchase, redemption, dividend, etc.) showing activity in the
account. If you have no transactions, you will receive an annual statement only.
OTHER SERVICES
The Trust has available a number of plans and services to meet the special
needs of certain investors. Plans available include:
(1) payroll deduction plans, including military allotments;
(2) custodial accounts for minors;
(3) a flexible, systematic withdrawal plan; and
(4) various retirement plans such as IRA, SEP/IRA, 403(b)(7), 401(k) and
employer-adopted defined contribution plans.
Application forms and brochures describing these plans and services may be
obtained from the Transfer Agent at 1-800-US-FUNDS (1-800-873-8637).
There is an annual charge for each retirement plan fund account with
respect to which Security Trust & Financial Company ("ST&FC"), a wholly-owned
subsidiary of the Advisor, acts as custodian. If this administrative charge is
not paid separately prior to the last business day of a calendar year or prior
to a total redemption or exchange, it will be deducted from the shareholder's
account.
SHAREHOLDER SERVICES
United Shareholder Services, Inc. ("USSI"), a wholly-owned
subsidiary of the Advisor, acts as transfer and dividend paying agent for all
fund accounts. Simply write or call 1-800-US-FUNDS for prompt service on any
questions about your account.
24-HOUR ACCOUNT INFORMATION
Shareholders can also access 24 hours a day current information on yields,
share prices, latest dividends, account balances, deposits and redemptions. Just
call 1-800-US-FUNDS and press the appropriate codes into your touch-tone phone.
HOW SHARES ARE VALUED
Shares of each Fund are purchased or redeemed, on a continuing basis
without a sales charge, at their next determined net asset value per share. The
net asset value per share of each Fund is calculated separately by United
Shareholder Services, Inc. Net asset value per share is determined as of 4:00
p.m. Eastern Time, Monday through Friday, exclusive of business holidays on
which the NYSE is closed, by dividing the aggregate net assets of each Fund by
the
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total number of shares of that Fund outstanding. In the event that the NYSE and
other financial markets close earlier as on the eve of a holiday, the net asset
value per share will be determined earlier in the day at the close of trading on
the NYSE.
Valuation will be calculated in U.S. dollars. Securities quoted in other
currencies will be converted to U.S. dollars using the exchange rate then in
effect in the principal market in which the relevant securities are traded. A
portfolio security listed or traded on an international market (a market other
than those in the United States or Canada), either on an exchange or
over-the-counter, is valued at the last reported sales price before the time
when assets are valued. A portfolio security listed or traded in the domestic
market (a market in the United States or Canada), either on an exchange or over-
the-counter, is valued at the latest reported sale price before the time when
assets are valued. Lacking any sales on that day, the security is valued at the
mean between the last reported bid and ask prices.
When market quotations are not readily available, or when restricted
securities or other assets are being valued, such assets are valued at fair
value as determined in good faith by or under procedures established by the
Board of Trustees.
Portfolio securities which are traded on more than one market are valued
according to the broadest and most representative market. Prices used to value
portfolio securities are monitored to ensure that they represent current market
values. If the price of a portfolio security is determined to be materially
different from its current market value, then such security will be valued at
fair value as determined by Management and approved in good faith by the Board
of Trustees.
Debt securities with maturities of 60 days or less at the time of purchase
are valued on the basis of the amortized cost. This involves valuing an
instrument at its cost initially and, thereafter, assuming a constant
amortization to maturity of any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the instrument. The corporate
bonds held by the Income Fund are valued by the Transfer Agent based on an
independent pricing service.
DIVIDENDS AND TAXES
Each Fund intends to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). By
complying with the applicable provisions of the Code, a Fund will not be subject
to Federal income tax on its net investment income and capital gain net income
that are distributed to shareholders.
All income dividends and capital gain distributions are normally
reinvested, without charge, in additional full and fractional shares of the
Fund. Alternatively, investors may choose: (1) automatic reinvestment of capital
gain distributions in Fund shares and payment of income dividends in cash; (2)
payment of capital gain distributions in cash and automatic reinvestment of
income dividends in Fund shares; or (3) all income dividend and capital gain
distributions paid in cash. The share price of the reinvestment will be the net
asset value of the Fund shares computed at the close of business on the date the
dividend or distribution is paid. Dividend checks returned to the Fund as being
undeliverable and dividend checks not cashed after 180 days will automatically
be reinvested at the price of the Fund on the day returned, and the distribution
option will be changed to reinvest.
At the time of purchase, the share price of a Fund may reflect
undistributed income, capital gains or unrealized appreciation of securities.
Any dividend or capital gain distribution paid to a shareholder shortly after a
purchase of shares will reduce the per share net asset value by the amount of
the distribution. Although in effect a return of capital to the shareholder,
these dividends and distributions are fully taxable.
The Income Fund generally pays dividends quarterly (usually in March, June,
September and December). The Real Estate Fund generally pays dividends twice
each year (usually in June and December). Capital gains, if any, will be
distributed annually in December.
Mutual Funds are potentially subject to a nondeductible 4 percent excise
tax calculated as a percentage of certain undistributed amounts of taxable
ordinary income and capital gains net of capital losses. The Funds intend to
make such distributions as may be necessary to avoid this excise tax.
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Dividends from taxable net investment income and distributions of net
short-term capital gains paid by each Fund are taxable to shareholders as
ordinary income, whether received in cash or reinvested in additional shares of
a Fund. A portion of these dividends may qualify for the 70 percent dividends
received deduction available to corporations. Distributions of net capital gains
will be taxable to shareholders as long-term capital gains, whether paid in cash
or reinvested in additional shares, and regardless of the length of time the
investor has held his shares.
Each January, each Fund will report to its shareholders the Federal tax
status of dividends and distributions paid or declared by the Fund during the
preceding calendar year. This statement will also indicate whether and to what
extent distributions qualify for the 70 percent dividends received deduction
available to corporations.
The foregoing discussion relates only to generally applicable Federal
income tax provisions in effect as of the date of this prospectus. Therefore,
shareholders should consult their tax advisers about the status of distributions
from the Funds in their own states and localities.
THE TRUST
U.S. Global Investors Funds (the "Trust") is an open-end management
investment company, consisting of numerous separate, diversified portfolios each
of which has its own investment objectives and policies. The portfolios are
designed to serve a wide range of investor needs.
The Trust was formed July 31, 1984, as a business trust under the laws of
the Commonwealth of Massachusetts. It is a series company which is authorized to
issue series of shares without par value, each series representing interests in
a separate portfolio, or divide the shares of any series into classes. Shares of
numerous series have been authorized. The Board of Trustees of the Trust has the
power to create additional series, or divide existing series into two or more
classes, at any time, without a vote of shareholders of the Trust.
Under the Trust's First Amended and Restated Master Trust Agreement (the
"Master Trust Agreement"), no annual or regular meeting of shareholders is
required, although the Trustees may authorize special meetings from time to
time. Under the terms of the Master Trust Agreement, the Trustees will be a
self-perpetuating body and will continue their positions until they resign, die
or are removed by a written instrument signed by at least two-thirds of the
Trustees, by vote of shareholders holding not less than two-thirds of the shares
then outstanding of the Trust cast at any meeting called for that purpose, or by
a written declaration signed by shareholders holding not less than two-thirds of
the shares then outstanding.
On any matter submitted to shareholders, shares of each portfolio entitle
their holder to one vote per share, irrespective of the relative net asset value
of each portfolio's shares. On matters affecting an individual portfolio, a
separate vote of shareholders of the portfolio is required. Each portfolio's
shares are fully paid and non-assessable by the Trust, have no preemptive or
subscription rights, and are fully transferable, with no conversion rights.
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MANAGEMENT OF THE FUNDS
TRUSTEES
The business affairs of each Fund are managed by the Trust's Board of
Trustees. The Trustees establish policies, as well as review and approve
contracts and their continuance. The Trustees also elect the officers and select
the Trustees to serve as executive and audit committee members.
THE INVESTMENT ADVISOR
U.S. Global Investors, Inc., 7900 Callaghan Road, San Antonio, Texas 78229,
under an investment advisory agreement with the Trust dated October 26, 1989,
furnishes investment advice and is responsible for overall management of the
Trust's business affairs. Frank E. Holmes is Chief Executive Officer and
Chairman of the Board of Directors of the Advisor, as well as President and a
Trustee of the Trust. Since October 1989, Mr. Holmes has owned more than 25% of
the voting stock of the Advisor and is its controlling person. The Advisor was
organized in 1968.
The Advisor provides to the Trust, and to each of the funds within the
Trust, management and investment advisory services. The Advisor furnishes an
investment program for each of the funds, determines, subject to the overall
supervision and review of the Board of Trustees of the Trust, what investments
should be purchased, sold and held, and makes changes on behalf of the Trust in
the investments of each of the funds.
Investment decisions for the funds are made independently from those of
other investment companies advised by U.S. Global Investors, Inc.
Advisor investment personnel may invest in securities for their own
accounts pursuant to a code of ethics that establishes procedures for personal
investing and restricts certain transactions.
The Advisor utilizes a team approach to manage the assets of the U.S.
Income and the U.S. Real Estate Funds. The teams meet regularly to review
portfolio holdings and to discuss purchase and sale activity. Timothy Reynolds
has been team leader for the Real Estate Fund since January 1996 and has been
team leader of the Income Fund since August 1996. Mr. Reynolds, a Certified
Financial Analyst, joined the Advisor as a senior research analyst in June 1995.
He was employed by another investment advisory firm with responsibilities
involving management of a real estate investment trust and debt securities for
the two years prior to joining the Advisor. Prior to June 1993 Mr. Reynolds was
completing an MBA program and, prior thereto, was employed as a financial
analyst for large consumer products companies.
The Advisor provides the Trust with office space, facilities and business
equipment and provides the services of executive and clerical personnel for
administering the affairs of the Trust. The Advisor pays the expense of printing
and mailing prospectuses and sales materials used for promotional purposes.
The Advisory Agreement with the Trust provides for each Fund to pay the
Advisor a management fee based upon the average net assets of that Fund
separately. The fee for managing each of the Income Fund and the Real Estate
Fund for the fiscal period ended June 30, 1996 was 0.75% of average net assets.
The Advisor may, out of profits derived from its management fee, pay
certain financial institutions (which may include banks, securities dealers and
other industry professionals) a servicing fee for performing certain
administrative servicing functions for Fund shareholders to the extent these
institutions are allowed to do so by applicable statute, rule or regulation.
These fees will be paid periodically and will generally be based on a percentage
of the value of the institutions' client Fund shares.
The Transfer Agency Agreement with the Trust provides for each Fund to pay
USSI an annual fee of $23.00 per account ( 1/12 of $23.00 monthly). In
connection with obtaining and/or providing administrative services to the
beneficial owners of Trust shares through broker-dealers, banks, trust companies
and similar institutions which provide such services and maintain an omnibus
account with the Transfer Agent, each Fund shall pay to the Transfer Agent a
monthly fee equal
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to one-twelfth ( 1/12) of 12.5 basis points (.00125) of the value of the shares
of the Funds held in accounts at the institutions, which payment shall not
exceed $1.92 multiplied by the average daily number of accounts holding Trust
shares at the institution. These fees cover the usual transfer agency functions.
In addition, the Funds bear certain other Transfer Agent expenses such as the
costs of record retention and postage, plus the telephone and line charges
(including the toll-free 800 service) used by shareholders to contact the
Transfer Agent. For the fiscal period ended June 30, 1996, the Income and Real
Estate Funds paid to USSI a total of $38,228 and $35,728, respectively for the
transfer agency, lockbox and printing fees. Transfer Agent fees, including
reimbursed expenses, are reduced by the amount of small account charges, account
maintenance fees and account closing fees the Transfer Agent is paid.
The transfer agent performs bookkeeping and accounting services and
determines the daily net asset value for the Fund for a fee based upon assets
and subject to an annual minimum fee of $35,000.
Additionally, the Advisor is reimbursed certain costs for in-house legal
services pertaining to each Fund.
The Trust pays all other expenses for its operations and activities. Each
Fund pays its allocable portion of these expenses. The expenses borne by the
Trust include the charges and expenses of any shareholder servicing agents,
custodian fees, legal and auditors' expenses, brokerage commissions for
portfolio transactions, the advisory fee, extraordinary expenses, expenses of
shareholder and trustee meetings, expenses for preparing, printing and mailing
proxy statements, reports and other communications to shareholders, and expenses
of registering and qualifying shares for sale, among others.
PERFORMANCE INFORMATION
From time to time, in advertisements or in reports to shareholders or
prospective shareholders, the Fund may compare its performance, either in terms
of its yield, total return or its yield and total return, to that of other
mutual funds with similar investment objectives and to stock or other indices as
reported in various periodicals. Performance comparisons should not be
considered as representative of the future performance of the Fund.
A Fund's average annual total return is computed by determining the average
annual compounded rate of return for a specified period that, if applied to a
hypothetical $1,000 initial investment, would produce the redeemable value of
that investment at the end of the period, assuming reinvestment of all dividends
and distributions and with recognition of all recurring charges. A Fund may also
utilize a total return for differing periods computed in the same manner but
without annualizing the total return.
A Fund's "yield" refers to the income generated by an investment in the
Fund over a 30-day (or one month) period (which period will be stated in the
advertisement). Yield is computed by dividing the net investment income per
share earned during the most recent calendar month or 30-day period by the
maximum offering price per share on the last day of such period. This income is
then "annualized." That is, the amount of income generated by the investment
during that period is assumed to be generated each month over a 12-month period
and is shown as a percentage of the investment.
For purposes of the yield calculation, interest income is computed based on
the yield to maturity of each debt obligation and dividend income is computed
based upon the stated dividend rate of each security in the Fund's portfolio,
and all recurring charges are recognized.
The standard total return and yield results do not take into account
recurring and nonrecurring charges for optional services which only certain
shareholders elect and which involve nominal fees such as the $5 fee for
exchanges.
20
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U.S. GLOBAL INVESTORS FUNDS
SHARES OF THE FUNDS ARE SOLD
AT NET ASSET VALUE WITHOUT
SALES COMMISSIONS
OR 12B-1 FEES
U.S. Income Fund
U.S. Real Estate Fund
INVESTMENT ADVISOR
U.S. Global Investors, Inc.
7900 Callaghan Road
Mailing Address: P.O. Box 781234
San Antonio, Texas 78278-1234
TRANSFER AGENT
United Shareholder Services, Inc.
P.O. Box 781234
San Antonio, Texas 78278-1234
CUSTODIAN
Bankers Trust Company
16 Wall Street
New York, NY 10005
LEGAL COUNSEL
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
One Riverwalk Place, Suite 900
San Antonio, Texas 78205
100% No Load
Be Sure to Retain This Prospectus;
It Contains Valuable Information.
