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
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Rule 14a-6(e)(2))
[x] 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 - GLOBAL RESOURCES 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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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
Global Resources Fund
Dear Shareholder:
A special meeting of shareholders of the Global Resources Fund (the "Fund"), a
series of U.S. Global Investors Funds, a Massachusetts business trust (the
"Trust"), will be held at 7900 Callaghan, San Antonio, Texas 78229, on April 23,
1999, at 3:00 p.m., local time, for the following purposes:
1. to change the Fund's classification under the Investment Company Act
of 1940, as amended, (the "1940 Act") from diversified to non-diversified
and to eliminate the Fund's related fundamental investment restriction.
2. to transact such other business as may properly come before the meeting
or any adjournment thereof.
The Fund's Board of Trustees has concluded that it would be in the best
interests of the Fund and its shareholders to enable the Fund to change its
classification from diversified to non-diversified under the 1940 Act. The
proposed change is designed to provide the Adviser for the fund with more
flexibility in managing the Fund's assets. The proposed change is fully
discussed in the attached proxy statement.
Shareholders of record at the close of business on March 22, 1999, 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: March 29, 1999
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PROXY STATEMENT
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U.S. GLOBAL INVESTORS FUNDS
7900 Callaghan Road
San Antonio, Texas 78229
PROXY STATEMENT FOR SPECIAL MEETING
OF SHAREHOLDERS OF
U.S. GLOBAL INVESTORS FUNDS
GLOBAL RESOURCES FUND
INTRODUCTION
This proxy statement is furnished to shareholders of the Global Resources Fund
(the "Fund"), 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 meeting of shareholders to be held in the first floor
board room at 7900 Callaghan Road, San Antonio, Texas 78229, on April 23, 1999,
at 3:00 p.m. local time, or at any adjournments thereof.
This proxy statement and the accompanying proxy were mailed to shareholders on
or about March 29, 1999. Shareholders of record at the close of business on
March 22, 1999, shall be entitled to notice of and to vote at the meeting or any
adjournment thereof.
On March 22, 1999, there were 4,263,726.878 shares of the Global Resources 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 the Fund and its
shareholders to amend the Fund's investment restrictions and fundamental
investment policies to permit the 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 the proposed change and to consider
and act upon any other matters that 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 received, 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, which is 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.
In addition to the solicitation of proxies by mail or by any other means of
communication, officers and employees of the Trust and U.S. Global Investors,
Inc. ("U.S. Global" or the "Adviser"), 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 Fund 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 March 22, 1999, the officers and Trustees of the Trust owned less than 1% of
the outstanding shares of the Fund. Charles Schwab & Co., Inc. held 298,365.170
or 7% of the Fund as record holder and not as beneficial owner. No other
shareholders held more than 5% on that date.
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THE 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 Fund, and its relationship
to the Fund is discussed more fully in the prospectus and Statement of
Additional Information for the Fund.
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 Fund is
discussed more fully in the prospectus and Statement of Additional Information
for the Fund.
PROPOSAL ONE
NON-DIVERSIFIED STATUS
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 Fund is classified as "diversified" under the 1940 Act. As a
diversified company, the 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 with respect to any one issuer to 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 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.
The Fund's current fundamental investment restriction in the prospectus (the
"Investment Restriction"), which applies to 100% of the Fund's total assets,
reads as follows:
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 Investment Restriction for the Fund
may not be changed without shareholder approval. The Investment Restriction is
more restrictive than the Diversification Requirement because the Investment
Restriction applies to 100% of the Fund's assets, whereas, as stated above, the
Diversification Requirement applies only to 75% of the Fund's assets.
If Proposal One is approved, 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, subject to certain limitations of the Internal Revenue Code, as
described more fully below.
RATIONALE FOR THE CHANGE. The Global Resources Fund seeks to achieve its
objective of long-term growth of capital and protection against inflation and
monetary instability by concentrating its investments in companies in the
natural resources industry. The natural resources industry consists of companies
engaged in the exploration, mining, processing, fabrication, and distribution of
natural resources of all kinds, including timber, hydrocarbons, minerals, and
metals. Consistent with its objective and concentration policy, the Fund may
invest without limitation in any sector of the natural resources industry.
However, because of the Diversification Requirement and the Investment
Restriction,
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the Fund currently may not invest more than 5% of its assets in any single
company within the natural resources industry or any sector of the industry.
The Adviser believes that, over the long term, it can maximize growth of capital
by employing a flexible strategy of under-weighting and over-weighting holdings
relative to an appropriate benchmark index of the natural resources industry,
such as the Dow Jones basic Materials and Energy Index (the "DJBM&E Index"). The
DJBM&E Index is a market capitalization weighted index consisting of
approximately 100 stocks. Currently, oil-related companies represent
approximately 70% of the DJBM&E Index. Furthermore, several individual
securities, including Exxon, Mobil, BP Amoco, and Chevron, each comprise more
than 5% of the DJBM&E Index. For this reason, the Adviser cannot employ the
proposed investment strategy unless the Fund eliminates the Diversification
Restriction and the Investment Restriction.
The Adviser also believes that greater exposure to individual securities within
the natural resources industry is consistent with the long-term trend of
consolidation that has been taking place in various sectors of the natural
resources industry in recent years. For example, in the oil sector of the
industry, a merger is currently pending between Exxon and Mobil that will result
in the third largest company in the United States. Similarly, in recent years,
British Petroleum and Amoco have merged to form BP Amoco, and Total S.A. of
France has purchased Petrofina of Belgium. Even greater consolidation has been
taking place in the gold mining sector of the natural resources industry. For
example, industry consolidation has sharply reduced the number of liquid, senior
mining companies available for investment in the precious metals sector. 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. The Adviser believes that
consolidation within these various sectors of the natural resources industry can
be expected to continue in future years.
The Adviser believes that it would be in the best interest of the Fund and its
shareholders to structure the Fund's portfolio to reflect the performance and
risk parameters of various sectors of the natural resources industry, as
reflected by the DJBM&E Index or another appropriate benchmark. The elimination
of the Diversification Restriction and the Investment Restriction is necessary
to pursue this investment strategy.
RISK. If a Fund becomes non-diversified, 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 Global Resources Fund is
particularly vulnerable to risks specific to companies in the natural resources
industry. These risks include broad price fluctuations during periods of
economic or financial instability.
DIVERSIFICATION FOR TAX PURPOSES. Although the Fund seeks non-diversified 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% 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 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
non-diversified investment strategy.
BOARD CONSIDERATION. At a meeting of the Board of Trustees held on February 19,
1999, the Adviser recommended that the Board take action to change the classifi-
cation of the Fund to "non-diversified" under the 1940 Act and eliminate the
Investment Restriction that applies the diversification requirement to 100%
of the fund's assets. The
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Trustees considered a variety of factors, including the information described
above, and concluded that the proposed change would be in the best interest of
the Fund and its shareholders.
THE BOARD OF TRUSTEES OF THE TRUST UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS OF
THE FUND VOTE FOR APPROVAL OF PROPOSAL ONE.
REQUIRED VOTE
Approval of Proposal One for the 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. It
is anticipated that the persons designated as proxies will vote proxies in favor
of such a motion to adjourn the meeting to a later date if believed to be in the
best interest of shareholders.
SUBMISSION OF SHAREHOLDER PROPOSALS
Since the Fund does not hold annual shareholders' meetings, the anticipated date
of the next special shareholders' meeting (if any) cannot be provided.
Shareholders will be provided reasonable prior notice of the next special
meeting of shareholders.
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 Fund.
The foregoing notice and proxy statement are sent by order of the Board of
Trustees.
Susan B. McGee
Secretary of the Trust
Dated: March 29, 1999
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FORM OF PROXY
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PROXY
U.S. GLOBAL INVESTORS FUNDS - GLOBAL RESOURCES 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 Anthony A. Rabago, proxies
with full power of substitution to act for and vote on behalf of the undersigned
all shares of the Global Resources Fund (the "Fund"), a series of U.S. Global
Investors Funds, 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
April 23, 1999.
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 FOR AGAINST ABSTAIN
-- GLOBAL RESOURCES FUND
1. 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.
2. Transact such other business as may properly [ ] [ ] [ ]
come before the meeting or any adjournment
thereof.
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(SIGNATURE) (DATE)
-----------------------------------
(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.
