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:
[ x ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
U.S. GLOBAL INVESTORS FUNDS - GOLD SHARES FUND
U.S. GLOBAL INVESTORS FUNDS - WORLD GOLD FUND
(Name of Registrant as Specified In Its Charter)
NOT APPLICABLE
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ x ] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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PRELIMINARY NOTICE OF SPECIAL MEETING
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U.S. GLOBAL INVESTORS FUNDS
7900 Callaghan Road
San Antonio, Texas 78229
NOTICE OF SPECIAL JOINT MEETING
OF SHAREHOLDERS OF
U.S. GLOBAL INVESTORS FUNDS
GOLD SHARES FUND
AND
WORLD GOLD FUND
Dear Shareholder:
A special meeting of shareholders of the Gold Shares Fund and World Gold
Fund (the "Funds"), both series of U.S. Global Investors Funds, a Massachusetts
business trust (the "Trust"), will be held at 7900 Callaghan, San Antonio, Texas
78229 on December 17, 1998 at 3:00 p.m., local time, for the following purpose:
1. to change each Fund's classification under the Investment Company Act
of 1940, as amended, (the "1940 Act") from diversified to
non-diversified and to eliminate each Fund's related fundamental
investment restriction.
The Funds' Board of Trustees has concluded that it would be in the best
interests of the Funds and their shareholders to enable each Fund to change its
classification from diversified to non-diversified under the 1940 Act. The
proposed changes are designed to provide the Adviser for each fund with more
flexibility in managing the Fund assets. The proposed change is fully discussed
in the attached proxy statement.
Shareholders of record at the close of business on November 25, 1998 shall
be entitled to notice of and to vote at the meeting or any adjournment thereof.
We hope you will be represented at the meeting. The vote of every
shareholder is important. If you have questions or comments, contact the
undersigned at any time (1-800-873-8637 or 210-308-1234).
Susan B. McGee
Secretary of the Trust
Dated: November 30, 1998
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PRELIMINARY PROXY STATEMENT
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U.S. GLOBAL INVESTORS FUNDS
7900 Callaghan Road
San Antonio, Texas 78229
PROXY STATEMENT FOR SPECIAL JOINT MEETING
OF SHAREHOLDERS OF
U.S. GLOBAL INVESTORS FUNDS
GOLD SHARES FUND
AND
WORLD GOLD FUND
INTRODUCTION
This proxy statement is furnished to shareholders of the Gold Shares Fund
and World Gold Fund (the "Fund[s]"). Each is a series of U.S. Global Investors
Funds, a Massachusetts business trust (the "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 joint meeting of
shareholders to be held in the first floor board room at 7900 Callaghan Road,
San Antonio, Texas 78229 on December 17, 1998 at 3:00 p.m., or at any
adjournments thereof.
This proxy statement and the accompanying proxy were mailed to shareholders
on or about November 30, 1998. Shareholders of record at the close of business
on November 25, 1998 shall be entitled to notice of and to vote at the meeting
or any adjournment thereof.
On November 25, 1998 there were ________ shares of the Gold Shares Fund and
_______ shares of the World Gold Fund outstanding, with each full share
outstanding entitled to one full vote and each fractional share outstanding
entitled to a proportionate share of one vote.
PURPOSE OF THE MEETING
The Board of Trustees has concluded that it would benefit each Fund and its
shareholders to amend the Fund's investment restrictions and fundamental
investment policies to permit each Fund to be classified as non-diversified
under the Investment Company Act of 1940, as amended (the "1940 Act"). The
purpose of this meeting is to consider and vote upon these proposed changes and
to consider and act upon any other matters which may properly come before the
meeting or any adjournments thereof.
All shares represented at the meeting by properly executed proxies will be
voted in accordance with the instructions thereon, if any; and if no
instructions are given, the proxy will be voted for approval of the proposal.
The Board of Trustees does not know of any action to be considered at the
meeting other than Proposal One.
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.
In addition to the solicitation of proxies by mail, officers and employees
of the Trust and U.S. Global Investors, Inc. ("U.S. Global" or the "Advisor"),
without additional compensation, may solicit proxies in person or by telephone
or other means of communication. 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 Funds and will include any reimbursement paid to fiduciaries, brokerage
firms, nominees and custodians for their expenses in forwarding solicitation
material regarding the meeting to beneficial owners.
PRINCIPAL SHAREHOLDERS OF THE FUND
On November 25 , 1998, the officers and Trustees of the Trust owned less
than 1% of the outstanding shares of each Fund. The Trust is aware of the
following persons who owned of record, or beneficially, more than 5% of the
outstanding shares of either Fund on November 25, 1998:
Gold Shares Fund
World Gold Fund
[BROKER] a broker-dealer, and [BROKER], a broker-dealer, have each advised
that no individual client owns more than 5% of either Fund.
Page 1
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THE ADVISOR. 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 advisor to the Funds and its relationship
to the Funds is discussed more fully in the prospectus and Statement of
Additional Information for the Funds.
THE 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. The relationship of U.S. Global Brokerage to the
Funds is discussed more fully in the prospectus and Statement of Additional
Information for the Funds.
PROPOSAL ONE
NON-DIVERSIFIED STATUS
DIVERSIFICATION. Under the 1940 Act, every registered management investment
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, each Fund is classified as "diversified" under the 1940 Act. As
a diversified company, each Fund is required to comply with the following
requirement (commonly referred to as 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
in respect of any one issuer of an amount not greater in value than 5%
of the value of the total assets of the Fund and to not more than 10%
of the outstanding voting securities of such issuer.
In substance, the Diversification Requirement prevents a 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.
Consistent with the Diversification Requirement, the Trust has adopted the
following fundamental investment restriction (the "Investment Restriction") for
each Fund:
neither Fund will (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. (These limitations as to the Gold
Shares Fund...apply to only 75% of the value of its gross assets.)
As with the Diversification Requirement, the Investment Restriction for
each Fund may not be changed without shareholder approval. With respect to the
Gold Shares Fund, the Investment Restriction is substantially the same as the
Diversification Requirement. With respect to the World Gold Fund, the Investment
Restriction is more restrictive than the Diversification Requirement because the
Investment Restriction applies to 100% of the Fund's assets (whereas the
Diversification Requirement applies only with respect to 75% of the Fund's
assets).
If Proposal One is approved with respect to a Fund, the Fund will no longer
be subject to the Diversification Requirement or the Investment Restriction.
Accordingly, the Fund will be allowed to invest, without limitation, in the
securities of any single issuer.
RATIONALE FOR THE CHANGE. In a volatile and bearish market, which has
existed in gold for approximately 18 months, investors typically seek out large
capitalization mining companies which tend to be more liquid. Moreover, in the
precious metals sector, industry consolidation has sharply reduced the number of
liquid, senior mining companies available for investment. The effect of
consolidation is illustrated by the market capitalization weightings of
companies in the Toronto Stock Exchange Gold and Precious Minerals Index ("TSE
Index"). The TSE Index contains 31 companies, yet derives 39% of its value from
one stock, Barrick Gold Corporation. Consolidation in the industry has
substantially reduced the number of suitable investments for the Funds involving
more liquid senior mining companies. Furthermore, compliance with the
Diversification Requirement and the Investment Restriction has limited the
extent to which each Fund may invest in these remaining suitable investments.
Management believes that these factors have adversely affected the
performance of each Fund relative to other non-diversified funds that invest in
this sector. In general, the more liquid senior mining companies have
outperformed the less liquid junior mining companies. For example the TSE Index,
which is heavily weighted with the leading mining companies, has outperformed
the majority of gold oriented mutual funds tracked by Lipper Analytical Services
for recent one-year, three-year and five-year periods ended September 30, 1998.
Management believes that, in appropriate market conditions, each Fund will
benefit from being able to maximize its exposure to the leading companies in the
TSE Index. The proposed change in the classification of each Fund to
"non-diversified" and the elimination of the Investment Restriction will permit
the Funds to make such investments.
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RISK. If a Fund becomes non-diversified, Fund portfolios 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 total
return or asset valuation than if the Fund were required to hold the securities
of a larger number of issuers. However, the Advisor believes that the added
flexibility to invest in more liquid senior mining companies as a result of the
Fund becoming non-diversified will offset the risks and could enhance
performance of the Fund.
DIVERSIFICATION FOR TAX PURPOSES. Although each Fund seeks non-diversified
status within the meaning of the 1940 Act, each 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, each Fund must satisfy
separate diversification requirements of the Internal Revenue Code. In general,
as of the close of any calendar quarter a RIC may not have more than 25% of the
value of its assets invested in the securities of any single issuer. In
addition, with respect to 50% of its total assets, as of the close of any
calendar quarter a RIC may not have more than 5% of its total assets invested in
the securities of any single issuer. Compliance with these tax diversification
requirements may limit, from time to time, the extent to which each Fund may be
able to pursue a non-diversified investment strategy.
BOARD CONSIDERATION. At a meeting of the Board of Trustees held on August
17, 1998 the Advisor recommended that the Board take action to change the
classification of each Fund to "non-diversified" under the 1940 Act and
eliminate the Investment Restriction. The Trustees considered a variety of
factors, including the information described above, and concluded that the
proposed changes would be in the best interests of each Fund and its
shareholders.
THE BOARD OF TRUSTEES OF THE TRUST UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS OF
THE FUNDS VOTE FOR APPROVAL OF PROPOSAL ONE.
REQUIRED VOTE
Shareholders of each Fund will vote separately as a class with respect to
Proposal One and approval of the Proposal for one Fund is not dependent upon
approval of the Proposal for the other Fund. Approval of Proposal One for a Fund
requires the affirmative vote of the holders of a "majority of the outstanding
voting securities" of the Fund, as defined under the 1940 Act, which means the
lesser of (1) a majority of the outstanding shares of the Fund or (2) 67% or
more of the shares of the Fund represented at the special meeting if more than
50% of the outstanding shares of the Fund are present or represented by proxy at
the meeting. Abstentions and proxies with respect to shares held by a broker or
other nominees that are not voted because the nominee lacks discretionary
authority to vote the shares (referred to as "broker non-votes") will have the
effect of "no" votes.
If at the announced time of the meeting insufficient votes have been
received to approve the proposal, the meeting may be adjourned to one or more
later dates to allow time to solicit additional proxies sufficient to approve
the proposal.
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.
The foregoing notice and proxy statement are sent by order of the Board of
Trustees.
Susan B. McGee
Secretary of the Trust
Dated: November 30, 1998
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PRELIMINARY FORM OF PROXY -- GOLD SHARES FUND
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PROXY
U.S. GLOBAL INVESTORS FUNDS - GOLD SHARES FUND
7900 CALLAGHAN ROAD
SAN ANTONIO, TEXAS 78229
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned hereby appoints Susan B. McGee and Mark A. Brown, proxies
with full power of substitution to act for and vote on behalf of the undersigned
all shares of the U.S. Global Investors Funds Gold Shares Fund (the "Fund")
which the undersigned would be entitled to vote if personally present at the
special meeting of the shareholders of the Fund to be held on December 17, 1998.
The undersigned hereby acknowledges receipt of the Notice of Special
Meeting of Shareholders and Proxy Statement furnished in connection with the
meeting and hereby instructs said proxies to vote said shares as indicated
hereon. The proxies present and acting at the meeting in person or by substitute
shall have and may exercise all of the power and authority of said proxies
hereunder. The undersigned hereby revokes any proxy previously given.
IF A CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED AS INDICATED. IF NO
CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED FOR PROPOSAL ONE. In their
discretion, the proxies are authorized to vote upon such business as may
properly come before the meeting. The Board of Trustees recommends a vote FOR
Proposal One.
This proxy may be revoked at any time prior to the exercise of the powers
conferred by the proxy.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
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PROXY -- U.S. GLOBAL INVESTORS FUNDS-GOLD SHARES FUND
FOR AGAINST ABSTAIN
1. PROPOSAL ONE: to change the Fund's classification [ ] [ ] [ ]
under the Investment Company Act of 1940, as
amended, from diversified to non-diversified and
to eliminate the Fund's related fundamental
investment restriction.
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(SIGNATURE) (DATE)
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(SIGNATURE IF HELD JOINTLY) Please sign
exactly as your name appears on this
proxy card. When signing as attorney,
executor, administrator, trustee or
guardian, give full title as such. 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.
<PAGE>
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PRELIMINARY FORM OF PROXY -- WORLD GOLD FUND
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PROXY
U.S. GLOBAL INVESTORS FUNDS - WORLD GOLD FUND
7900 CALLAGHAN ROAD
SAN ANTONIO, TEXAS 78229
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned hereby appoints Susan B. McGee and Mark A. Brown, proxies
with full power of substitution to act for and vote on behalf of the undersigned
all shares of the U.S. Global Investors Funds World Gold Fund (the "Fund") which
the undersigned would be entitled to vote if personally present at the special
meeting of the shareholders of the Fund to be held on December 17, 1998.
The undersigned hereby acknowledges receipt of the Notice of Special
Meeting of Shareholders and Proxy Statement furnished in connection with the
meeting and hereby instructs said proxies to vote said shares as indicated
hereon. The proxies present and acting at the meeting in person or by substitute
shall have and may exercise all of the power and authority of said proxies
hereunder. The undersigned hereby revokes any proxy previously given.
IF A CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED AS INDICATED. IF NO
CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED FOR PROPOSAL ONE. In their
discretion, the proxies are authorized to vote upon such business as may
properly come before the meeting. The Board of Trustees recommends a vote FOR
Proposal One.
This proxy may be revoked at any time prior to the exercise of the powers
conferred by the proxy.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
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PROXY -- U.S. GLOBAL INVESTORS FUNDS-WORLD GOLD FUND
FOR AGAINST ABSTAIN
1. PROPOSAL ONE: to change the Fund's classification [ ] [ ] [ ]
under the Investment Company Act of 1940, as
amended, from diversified to non-diversified and
to eliminate the Fund's related fundamental
investment restriction.
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(SIGNATURE) (DATE)
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(SIGNATURE IF HELD JOINTLY) Please sign
exactly as your name appears on this
proxy card. When signing as attorney,
executor, administrator, trustee or
guardian, give full title as such. 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.
