REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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Pre-Effective Amendment No.
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Post-Effective Amendment No. 100
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and/or
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 194
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Amendment No. 100
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þ | immediately upon filing pursuant to paragraph (b) | ||
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o | on , pursuant to paragraph (b) | ||
o | 60 days after filing pursuant to paragraph (a)(i) | ||
o | on November 1, 2007, pursuant to paragraph (a)(i) | ||
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o | 75 days after filing pursuant to paragraph (a)(ii) | ||
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o | on pursuant to paragraph (a)(ii) of rule 485. |
o | this post-effective amendment designates a new effective date for a previously filed post-effective amendment |
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.
U.S. Global Investors Funds
All American Equity Fund
Holmes Growth Fund
Global MegaTrends Fund
Gold and Precious Metals Fund
World Precious Minerals Fund
Global Resources Fund
Eastern European Fund
Global Emerging Markets Fund
China Region Fund
Tax Free Fund
Near-Term Tax Free Fund
U.S. Government Securities Savings Fund
U.S. Treasury Securities Cash Fund
[U.S. Global Investors logo to come]
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1. | companies offering stock registered on a United States stock exchange; | |
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2. | companies offering stock traded on Nasdaq or the over-the-counter markets; | |
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3. | companies deriving more than 50% of their revenue from operations in the United States; | |
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4. | companies incorporated in the United States; or | |
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5. | companies having their principal place of business or corporate headquarters located in the United States. | |
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* | As of June 30, 2008, the funds year-to-date return was (5.25)%. The Adviser has agreed to limit the funds total operating expenses. In the absence of this limitation, the funds total returns would have been lower. | |
Best quarter shown in the bar chart above: 18.36% in fourth quarter 1998. | ||
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Worst quarter shown in the bar chart above: (19.39)% in third quarter 2002. | ||
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Average Annual Total Returns | ||||||||||||
(for the periods ended December 31, 2007) | 1 Year | 5 Years | 10 Years | |||||||||
All American Fund* Return Before Taxes
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27.03 | % | 16.79 | % | 4.47 | % | ||||||
Return After Taxes on Distributions
|
23.20 | % | 15.00 | % | 3.01 | % | ||||||
Return After Taxes on Distributions and Sale of Fund Shares
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18.12 | % | 13.79 | % | 3.17 | % | ||||||
S&P 500 Index**
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5.49 | % | 12.82 | % | 5.91 | % |
* | The Adviser has agreed to limit the funds total operating expenses. In the absence of this limitation, the funds total returns would have been lower. | |
** | The S&P 500 Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies. The returns for the S&P 500 Index reflect no deduction for fees, expenses or taxes. |
4
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* | As of June 30, 2008, the funds year to date return was (5.14)%. | |
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Best quarter shown in the bar chart above: 52.58% in fourth quarter of 1999. | ||
Worst quarter shown in the bar chart above: (23.40)% in first quarter of 2001. |
Average Annual Total Returns | ||||||||||||
(for the periods ended December 31, 2007) | 1 Year | 5 Years | 10 Years | |||||||||
Holmes Growth Fund Return Before Taxes
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30.38 | % | 16.61 | % | 9.20 | % | ||||||
Return After Taxes on Distributions
|
30.38 | % | 16.61 | % | 7.70 | % | ||||||
Return After Taxes on Distributions and Sale of Fund Shares
|
19.75 | % | 14.67 | % | 7.24 | % | ||||||
S&P 500 Index*
|
5.49 | % | 12.82 | % | 5.91 | % | ||||||
S&P Composite 1500 Index**
|
5.54 | % | 13.26 | % | 6.36 | % | ||||||
S&P MidCap 400 Index***
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7.97 | % | 16.18 | % | 11.18 | % |
* | The S&P 500 Index is a widely recognized index of common stock prices of U.S. companies. The returns for the S&P 500 Index reflect no deduction for fees, expenses or taxes. | |
** | The S&P Composite 1500 Index is a broad-based capitalization weighted index of 1500 U.S. companies and is comprised of the S&P 400, S&P 500 and the S&P 600. In the future, this index will be used as the primary benchmark comparison for the fund as the Adviser believes it is more representative of the investments in the fund. The previous benchmark was the S&P MidCap 400 Index. The returns for the S&P 1500 Index reflect no deduction for fees, expenses or taxes. | |
*** | The S&P MidCap 400 Index is a capitalization-weighted index that measures the performance of the mid-range sector of the U.S. stock market. The returns for the S&P MidCap 400 Index reflect no deduction for fees, expenses or taxes. |
5
* | As of June 30, 2008, the funds year-to-date return was (2.91)%. Effective May 12, 2008, the Adviser has agreed to limit the funds total operating expenses. In absence of this limitation, the funds returns would have been lower. | |
Best quarter shown in the bar chart above: 17.73% in fourth quarter of 2003. | ||
Worst quarter shown in the bar chart above: (22.82)% in third quarter of 2001. |
Average Annual Total Returns | ||||||||||||
(for the periods ended December 31, 2007) | 1 Year | 5 Years | 10 Years | |||||||||
Global MegaTrends Fund Return Before Taxes
|
24.54 | % | 17.92 | % | 6.88 | % | ||||||
Return After Taxes on Distributions
|
23.28 | % | 17.24 | % | 5.49 | % | ||||||
Return After Taxes on
Distributions and Sale of Fund Shares
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17.56 | % | 15.73 | % | 5.38 | % | ||||||
S&P 500 Index*
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5.49 | % | 12.82 | % | 5.91 | % | ||||||
S&P Global Infrastructure Index**
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23.19 | % | 29.32 | % | n/a |
* | The S&P 500 Index is a widely recognized index of common stock prices of U.S. companies. The returns for the S&P 500 Index reflect no deduction for fees, expenses or taxes. | |
** | The S&P Global Infrastructure Index provides liquid and tradable exposure to 75 companies from around the world that represent the listed infrastructure universe. The index has balanced weights across three distinct infrastructure clusters: utilities, transportation and energy. The index commenced November 2001. The returns for the S&P Global Infrastructure Index reflect no deduction for fees, expenses or taxes. |
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Table of Contents
Table of Contents
*
As of June 30, 2008, the funds year-to-date return was 6.51%.
Best quarter shown in the bar chart above: 52.41% in first quarter 2002.
Worst quarter shown in the bar chart above: (28.49)% in second quarter 1998.
Average Annual Total Returns (for the
periods ended December 31, 2007)
1 Year
5 Years
10 Years
16.91
%
29.50
%
12.89
%
14.46
%
28.82
%
12.59
%
13.91
%
26.37
%
11.56
%
5.49
%
12.82
%
5.91
%
21.05
%
18.27
%
10.82
%
22.90
%
19.11
%
10.41
%
*
The S&P 500 Index is a widely recognized capitalization-weighted index of 500 common stock
prices in U.S. companies. The returns for the S&P 500 Index reflect no deduction for fees,
expenses or taxes.
**
The FTSE Gold Mines Index encompasses all gold mining companies that have a sustainable and
attributable gold production of at least 300,000 ounces a year and that derive 75% or more of
their revenue from mined gold. These are not total returns. These returns reflect simple
appreciation only and do not show the effect of dividend reinvestment. In the future, this
index will be used as the primary benchmark comparison for this fund as the Adviser believes
it is more representative of the investments in the fund. The previous benchmark was the
Philadelphia Stock Exchange Gold & Silver Index. The returns for the FTSE Gold Mines Index
reflect no deduction for fees, expenses or taxes.
***
The Philadelphia Stock Exchange Gold & Silver Index is a capitalization-weighted index that
includes the leading companies involved in the mining of gold and silver. The returns for the
Philadelphia Stock Exchange Gold & Silver Index reflect no deduction for fees, expenses or
taxes.
Table of Contents
*
As of June 30, 2008, the funds year-to-date return was (3.58)%.
Best quarter shown in the bar chart above: 49.72% in first quarter 2002.
Worst quarter shown in the bar chart above: (22.05)% in second quarter 2004.
Average Annual Total Returns (for the periods ended December 31, 2007)
1 Year
5 Years
10 Years
23.02
%
36.66
%
15.65
%
15.79
%
32.47
%
13.73
%
16.45
%
30.47
%
12.93
%
5.49
%
12.82
%
5.91
%
16.86
%
19.57
%
13.32
%
21.67
%
24.06
%
16.37
%
*
The S&P 500 Index is a widely recognized capitalization-weighted index of 500 common stock
prices in U.S. companies. The returns for the S&P 500 Index reflect no deduction for fees,
expenses or taxes.
**
The AMEX Gold Miners Index is a modified market capitalization-weighted index comprised of
publicly-traded companies involved primarily in the mining for gold and silver. These are not
total returns. These returns reflect simple appreciation only and do not show the effect of
dividend reinvestment. In the future, this index will be used as the primary benchmark
comparison
for this fund as the Adviser believes it is more representative of the investments in the fund.
The previous benchmark was the AMEX Gold BUGS Index. The returns for the AMEX Gold Miners Index
reflect no deduction for fees, expenses or taxes.
***
The AMEX Gold BUGS Index is a modified equal-dollar weighted index of companies involved in
major gold mining that do not hedge their gold production beyond 11/2 years. These are not
total returns. These returns reflect simple appreciation only and do not show the effect of
dividend reinvestment. The returns for the AMEX Gold BUGS Index reflect no deduction for fees,
expenses or taxes.
Table of Contents
*
As of June 30, 2008, the funds year-to-date return was 17.26%.
Best quarter shown in the bar chart above: 35.85% in fourth quarter 2003.
Worst quarter shown in bar chart above: (20.08)% in third quarter 2002.
Average Annual Total Returns (for the periods ended December 31, 2007)
1 Year
5 Years
10 Years
39.95
%
45.95
%
18.05
%
34.32
%
42.17
%
16.27
%
27.74
%
39.62
%
15.33
%
5.49
%
12.82
%
5.91
%
45.23
%
32.16
%
17.29
%
30.90
%
26.48
%
13.33
%
*
The S&P 500 Index is a widely recognized capitalization-weighted index of 500 common stock
prices in U.S. companies. The returns for the S&P 500 Index reflect no deduction for fees,
expenses or taxes.
**
The Morgan Stanley Commodity Related Equity Index is an equal-dollar weighted index based on
shares of widely held companies involved in commodity-related industries such as energy,
non-ferrous metals, agriculture and forest products. In the future, this index will be used as
the primary benchmark comparison for this fund as the Adviser believes it is more
representative of the investments in the fund. The previous benchmark was the S&P Energy and
Materials Index. The returns for the Morgan Stanley Commodity Related Equity Index reflect no
deduction for fees, expenses or taxes.
***
The S&P Energy and Materials Index is a combination of the S&P Energy Index and the S&P
Materials Index calculated on a 70% and 30% weighting, respectively, with monthly rebalancing
of weights. The returns for the S&P Energy and Materials Index reflect no deduction for fees,
expenses or taxes.
Table of Contents
Global Emerging Markets Fund
China Region Fund
1.
securities of issuers that are organized under the laws of any Eastern European country or
have a principal office in an Eastern Europe country;
2.
securities of issuers that derive a majority of their revenues from business in Eastern
European countries, or have a majority of their assets in Eastern European countries; or
3.
securities that are traded principally on a securities exchange in an Eastern European
country. (For this purpose, investment companies that invest principally in securities of
companies located in one or more Eastern European countries will also be considered to be
located in an Eastern European country, as will American Depository Receipts (ADRs) and Global
Depository Receipts (GDRs) with respect to the securities of companies located in Eastern
European countries.)
1.
securities of issuers organized under the laws of any emerging market country or have a
principal office in, an emerging market country;
2.
securities that are traded primarily in an emerging market country;
3.
securities of issuers that have a majority of their assets are in an emerging market
country; or
4.
securities of issuers that derive a majority of their revenues or profits from goods
produced or sold, investments made or services performed in an emerging market country.
Table of Contents
Table of Contents
Table of Contents
Annual Total Returns (as of December 31 each year)*
*
As of June 30, 2008, the funds year-to-date return was (8.74)%.
Best quarter shown in the bar chart above: 33.22% in the third quarter of 2005.
Worst quarter shown in the bar chart above: (26.00)% in the third quarter of 1998.
Average Annual Total Returns (for the periods ended December 31, 2007)
1 Year
5 Years
10 years
32.86
%
43.57
%
22.26
%
28.93
%
40.49
%
20.94
%
25.43
%
38.18
%
19.88
%
5.49
%
12.82
%
5.91
%
34.45
%
45.70
%
n/a
*
The S&P 500 Index is a widely recognized index of common stock prices of U.S. companies. The
returns for the S&P 500 Index reflect no deduction for fees, expenses or taxes.
**
The MSCI Emerging Markets Europe 10/40 Index (Net Total Return) is a free float-adjusted market
capitalization index that is designed to measure equity market performance in the emerging market
countries of Europe (Czech Republic, Hungary, Poland, Russia, and Turkey). The index is calculated
on a net return basis (i.e., reflects the minimum possible dividend reinvestment after deduction of
the maximum rate withholding tax for institutional investors). The index is periodically rebalanced
relative to the constituents weights in the parent index. The index commenced December 1998. The
returns for the MSCI Emerging Markets Europe 10/40 Index (Net Total Return) reflect no deduction
for fees, expenses or taxes, except as noted above.
Table of Contents
Annual Total Returns (as of December 31 each year)*
*
As of June 30, 2008, the funds year-to-date return was (18.28)%. The Adviser has agreed to
limit the funds total operating expenses. In absence of this limitation, the funds total
returns would have been lower.
Best quarter shown in the bar chart above: 20.16% in the fourth quarter of 2006.
Worst quarter shown in the bar chart above: (5.87)% in the second quarter of 2006.
Since
Inception
Average Annual Total Returns (for the periods ending December 31, 2007)
1 Year
(2/24/05)
39.35
%
33.38
%
32.84
%
30.15
%
27.65
%
27.73
%
5.49
%
9.36
%
39.39
%
34.14
%
*
The S&P 500 Index is a widely recognized index of common stock prices of U.S. companies. The
returns for the S&P 500 Index reflect no deduction for fees, expenses or taxes.
**
The MSCI Emerging Markets Net Total Return Index is a free float-adjusted market
capitalization index that is designed to measure equity market performance in emerging market
countries on a net return basis (i.e., reflects the minimum possible dividend reinvestment
after deduction of the maximum rate withholding tax). The returns for the MSCI Emerging
Markets Net Total Return Index reflect no deduction for fees, expenses or taxes, except as
noted above.
Table of Contents
Annual Total Returns*
*
As of June 30, 2008, the funds year to date return was (28.65)%.
Best quarter shown in the bar chart above: 50.81% in the second quarter of 1999.
Worst quarter shown in the bar chart above: (29.36)% in the second quarter of 1998.
Average Annual Total Returns (for the periods ended December 31, 2007)
1 Year
5 Years
10 Years
53.29
%
36.44
%
11.75
%
42.75
%
34.07
%
10.69
%
34.92
%
31.53
%
9.88
%
44.32
%
32.73
%
n/a
33.38
%
26.55
%
9.76
%
*
The Hang Seng Composite Index is a market capitalization-weighted index that comprises the
top 200 companies listed on the Stock Exchange of Hong Kong, based on average market
capitalization for the 12 months. This reflects returns from January 3, 2000. The returns for
the Hang Seng Composite Index reflect no deduction for fees, expenses or taxes.
**
The MSCI All Country Far East Free ex Japan Index is a free float-adjusted market
capitalization-weighted index that is designed to measure the equity market performance of the
Far East, excluding Japan. The index consists of the following developed and emerging market
country indices: China, Hong Kong, Indonesia, Korea, Malaysia, New Zealand, the Philippines,
Singapore, Taiwan and Thailand. These are not total returns. These returns reflect simple
appreciation only and do not show the effect of dividend reinvestment. The returns for the
MSCI All Country Far East Free ex Japan Index reflect no deduction for fees, expenses or
taxes.
Table of Contents
Near-Term Tax Free Fund
Table of Contents
Annual Total Returns*
*
As of June 30, 2008, the funds year-to-date return was 0.32%. The Adviser has agreed to
limit the funds total operating expenses. In the absence of this limitation, the funds total
returns would have been lower.
Best quarter shown in the bar chart above: 4.84% in fourth quarter 2000.
Worst quarter shown in the bar chart above: (3.07)% in second quarter 2004.
Average Annual Total Returns (for the periods ended December 31, 2007)
1 Year
5 Years
10 Years
3.33
%
3.28
%
4.14
%
3.18
%
3.19
%
4.05
%
3.44
%
3.26
%
4.06
%
4.29
%
4.31
%
5.21
%
*
The Adviser has agreed to limit the funds total operating expenses. In the absence of this
limitation, the funds total returns would have been lower.
**
The Lehman Brothers 10-Year Municipal Bond Index is a total return benchmark designed for
long-term municipal assets. The index includes bonds with a minimum credit rating of BAA3, are
issued as part of a deal of at least $50 million, have an amount outstanding of at least $5
million, and have a maturity of 8 to 12 years. The returns for the Lehman Brothers 10-Year
Municipal Bond Index reflect no deduction for fees, expenses or taxes.
Table of Contents
Annual Total Returns*
*
As of June 30, 2008, the funds year-to-date return was 0.69%. The Adviser has agreed to
limit the funds total operating expenses. In the absence of this limitation, the funds total
returns would have been lower.
Best quarter shown in the bar chart above: 3.11% in third quarter 2002.
Worst quarter shown in the bar chart above: (1.57)% in second quarter 2004.
Average Annual Total Returns (for the periods ended December 31, 2007)
1 Year
5 Years
10 Years
4.53
%
2.68
%
3.66%
4.36
%
2.59
%
3.56%
4.02
%
2.65
%
3.55%
5.00
%
2.67
%
3.99%
*
The Adviser has agreed to limit the funds total operating expenses. In the absence of this
limitation, the funds total returns would have been lower.
**
The Lehman Brothers 3-Year Municipal Bond is a total return benchmark designed for municipal
assets. The index includes bonds that have a minimum credit rating of BAA3, are issued as part
of a deal of at least $50 million, have an amount outstanding of at least $5 million, and have
a maturity of two to four years. The returns for the Lehman Brothers 3-Year Municipal Bond
Index reflect no deduction for fees, expenses or taxes.
Table of Contents
Table of Contents
Annual Total Returns*
*
As of June 30, 2008, the funds year-to-date return was 1.19%. The Adviser has agreed to
limit the funds total operating expenses. In the absence of this limitation, the funds total
returns would have been lower.
Best quarter shown in the bar chart above: 1.56% in fourth quarter 2000.
Worst quarter shown in the bar chart above: 0.15% in third quarter 2003.
Average Annual Total Returns (for the periods ended December 31, 2007)
1 Year
5 Years
10 Years
4.70
%
2.70
%
3.48
%
*
The Adviser has agreed to limit the funds total operating expenses. In the absence of this
limitation, the funds total returns would have been lower.
Table of Contents
Annual Total Returns*
*
As of June 30, 2008, the funds year-to-date return was 0.65%. Effective April 1, 2007, the
Adviser has agreed to limit the funds total operating expenses. In the absence of this
limitation, the funds total returns would have been lower.
Best quarter shown in the bar chart above: 1.37% in third quarter 2000.
Worst quarter shown in the bar chart above: 0.02% in third quarter 2003.
Average Annual Total Returns (for the periods ended December 31, 2007)
1 Year
5 Years
10 Years
3.96
%
2.11
%
2.76
%
*
The Adviser has agreed to limit the funds total operating expenses. In the absence of this
limitation, the funds total returns would have been lower.
Table of Contents
None
$
10
$
5
$
24
$
60
0.25
%
0.50
%
0.10
%
1.00
%
2.00
%
Table of Contents
Total
Distribution
Acquired
Annual
Advisory Fee
and Service
Fund Fees
Fund
Range With
Advisory
(12b-1)
Other
and
Operating
Expense
Net
Performance
Fees(6)
Fees(7)
Expenses(8)
Expenses(9)
Expenses
Reimbursements(10)
Expenses
Adjustment (11)
0.80
%
0.25
%
1.25
%
0.01
%
2.31
%
-0.55
%
1.76
%
0.55% - 1.05
%
1.00
%
0.25
%
0.66
%
0.01
%
1.92
%
-0.16
%
1.76
%
0.75% - 1.25
%
1.00
%
0.25
%
1.30
%
0.01
%
2.56
%
-0.70
%
1.86
%
0.75% - 1.25
%
0.90
%
0.25
%
0.60
%
0.04
%
1.79
%
-0.25
%
1.54
%
0.65% - 1.15
%
0.98
%
0.25
%
0.46
%
0.02
%
1.71
%
-0.19
%
1.52
%
0.73% - 1.23
%
0.90
%
0.25
%
0.42
%
n/a
1.57
%
-0.07
%
1.50
%
0.65% - 1.15
%
1.25
%
0.25
%
0.64
%
n/a
2.14
%
n/a
2.14
%
1.00% - 1.50
%
1.375
%
0.25
%
1.24
%
0.06
%
2.93
%
-0.37
%
2.56
%
1.125% - 1.625
%
1.25
%
0.25
%
0.78
%
0.01
%
2.29
%
-0.28
%
2.01
%
1.00 - 1.50
%
0.75
%
n/a
1.17
%
n/a
1.92
%
-1.22
%
0.70
%
n/a
0.50
%
n/a
1.37
%
n/a
1.87
%
-1.42
%
0.45
%
n/a
0.44
%
n/a
0.28
%
n/a
0.72
%
-0.27
%
0.45
%
n/a
0.50
%
n/a
0.65
%
n/a
1.15
%
-0.15
%
1.00
%
n/a
1)
Does not apply to exchanges.
2)
$6 per quarter for account balances less than $5,000. (See Account Balance section
for exemptions and other pertinent information.)
3)
$5 per month for account balances that fall below $1,000 at any time during the month.
(See Account Balance section for exemptions and other pertinent information.)
4)
These fees are applied to the amount of the redemption. A first in, first out
methodology is used to determine whether this fee applies to shares subject to a redemption
request. (See Short-Term Trading Fee section for pertinent information.)
5)
Percentage of value of shares redeemed or exchanged.
6)
Advisory fees have been restated for the investment advisory agreement that went into
effect October 1, 2008.
7)
Distribution and service (12b-1) fees have been restated for the distribution plan that
went into effect October 1, 2008.
8)
Other expenses have been restated for the transfer agent agreement that went into
effect on April 1, 2007, and the administrative services agreement that went into effect
October 1, 2008.
9)
Acquired fund fees and expenses represent fees and expenses incurred indirectly by the
fund as a result of investment in shares of one or more investment companies, including
ETFs.
10)
Contractual waivers through September 30, 2009.
11)
A performance fee adjustment may increase or decrease the advisory fee by +/- 0.25%.
The performance fee adjustment is calculated by comparing a funds performance over a
rolling 12-month period to that of the funds designated index. No adjustment is made if
the funds performance does not over perform or under perform the benchmark by 5% or more
(this is known as the hurdle rate). See page 36 for more information about the
calculation of the performance fee adjustment.
Table of Contents
*
You initially invest $10,000.
*
Your investment has a 5% annual return.
*
The funds operating expenses and returns remain the same.
*
All dividends and distributions are reinvested.
1 Year
3 Years
5 Years
10 Years
$
189
$
678
$
1,192
$
2,598
189
598
1,032
2,240
199
740
1,308
2,853
167
549
956
2,095
165
530
920
2,014
163
499
859
1,871
227
680
1,159
2,482
269
882
1,520
3,236
214
699
1,210
2,614
82
494
933
2.154
56
459
888
2,084
56
213
384
879
112
360
628
1,394
*
The example reflects the effect of the Advisers undertaking to limit the expenses of the
funds through September 30, 2009.
1 Year
3 Years
5 Years
10 Years
$
179
$
668
$
1,182
$
2,588
179
588
1,022
2,230
189
730
1,298
2,843
157
539
946
2,085
155
520
910
2,004
153
489
849
1,861
217
670
1,149
2,472
259
872
1,510
3,226
204
689
1,200
2,604
72
484
923
2,144
46
449
878
2,074
46
203
374
869
102
350
618
1,384
*
The example reflects the effect of the Advisers undertaking to limit the expenses of the
funds through September 30, 2009.
Table of Contents
Table of Contents
Energy Sectors
Basic Materials Sectors
Aluminum
Chemicals
Diversified metals and coal mining
Gold and precious metals
Iron and steel
Paper and forest products
Uranium
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Tax Free Fund
Near-Term Tax Free Fund
Table of Contents
U.S. Government Securities Savings Fund
U.S. Treasury Securities Cash Fund
Table of Contents
Base Advisory Fee Range
Hurdle
With Performance Fee
Base Advisory Fee
Benchmark
Rate
Adjustment
0.80%
S&P 500 Index
+/- 5%
0.55%-1.05%
1.00%
S&P Composite 1500 Index
+/- 5%
0.75%-1.25%
1.00%
S&P 500 Index
+/- 5%
0.75%-1.25%
0.90%
FTSE Gold Mines Index
+/- 5%
0.65%-1.15%
1.00%
AMEX Gold Miners Index
+/- 5%
0.75%-1.25%
0.95%
Morgan Stanley Commodity
Related Equity Index
+/- 5%
0.70%-1.20%
1.25%
MSCI Emerging Markets
Europe 10/40 Index (Net
Total Return)
+/- 5%
1.00%-1.50%
1.375%
MSCI Emerging Markets
Net Total Return Index
+/- 5%
1.125%-1.625%
1.25%
Hang Seng Composite Index
1.00%-1.50%
0.75%
n/a
0.75%
0.50%
n/a
0.50%
0.50%
n/a
0.50%
0.50%
n/a
0.50%
Table of Contents
Funds
Funds
Indexs
performance
For the rolling 12-month
investment
cumulative
relative
period
performance
change
to the Index
$
50.00
$
100.00
$
57.60
$
110.20
+ $7.60
+ $10.20
+
15.20
%
+ 10.20
%
+5.00
%
The portion of the annual basic fee rate of 0.90% applicable to that month is
multiplied by the funds average daily net assets for the month. This results in the
dollar amount of the base fee.
The 0.25% rate (adjusted for the number of days in the month) is multiplied by the
funds average daily net assets for the performance period. This results in the dollar
amount of the performance adjustment.
The dollar amount of the performance adjustment is added to the dollar amount of the
basic fee, producing the adjusted management fee.
Table of Contents
Table of Contents
Table of Contents
*
U.S. government securities, short-term indebtedness, money market instruments, or other
investment grade cash equivalents, each denominated in U.S. dollars, or any other freely
convertible currency; or
*
Repurchase agreements.
Table of Contents
Table of Contents
Table of Contents
Initial
Subsequent
Minimums
Investment
Investment
*
$
5,000
$
50
*
$
1,000
$
50
*
$
100
$
50
*
$
50
$
50
*
None
None
Shareholder Services
U.S. Global Investors Funds
P.O. Box 781234
San Antonio, TX 78278-1234
Shareholder Services
U.S. Global Investors Funds
7900 Callaghan Road
San Antonio, TX 78229
*
Read this prospectus.
*
Fill out the application if you are opening a new account.
*
You will need to specify the type of account you wish to open. When an account is
registered in the names of two people, either person is entitled to redeem any or all
shares in the account. The account application provides that each party to a joint account
will indemnify the fund for actions taken on the instructions of the other party. The fund
will not be responsible for actions taken by either party with respect to this type of
account.
*
Write your check for the amount you want to invest. Make it payable to the fund you are
buying.
*
Shares purchased by check are not available until the tenth business day after the
purchase, or when your check clears if earlier.
*
Send the completed application, any additional documentation required, and your check
in the envelope provided. We do not open accounts with foreign addresses, and we require a
U.S. taxpayer identification number for every account.
*
Federal law requires us to obtain certain information from you, which will be used to
verify your identity before we open your account. If the required information is not
provided on your account application or we are unable to verify this information, we may
not be able to open an account or may close the account at any time. If we close your
account, we will return to you the value of your shares at the next calculated net asset
value (NAV), with no interest.
*
To add to an existing account, be sure to include your account number on your check and
mail it with the investment slip found on your confirmation statement.
Table of Contents
*
For existing accounts, please complete the
Online Purchase Application
, which may be
downloaded from our web site at www.usfunds.com.
*
If you are opening a new account, please complete a new account application, which may
be downloaded from our web site, and complete the section entitled
Online Purchase Option
on the application. Send your application to U.S. Global along with your initial purchase.
*
Once your online purchase privilege is established, you may go to the
Account Access
section of our web site at www.usfunds.com.
*
U.S. Global Investors Funds automatically withdraws monies from your bank account to
settle your transaction.
*
Shares purchased online are not available until the tenth business day after the
purchase or, if later, when your ACH clears.
*
We automatically grant all shareholders telephone exchange privileges unless you
decline them explicitly in writing.
*
If you already have a U.S. Global Investors Funds account, you may purchase additional
shares by telephone order.
*
You must pay for them within seven business days.
*
Telephone purchases are not available for U.S. Global retirement accounts or the money
market funds.
*
Telephone purchase orders may not exceed ten times the value of the collected balance
of all like-registered accounts on the date the order is placed.
*
Call 1-800-US-FUNDS for current wire instructions and a confirmation number.
*
If you are purchasing shares by wire for a new account, you must send a completed
account application prior to wiring your payment. Reference your Social Security number or
call 1-800-US-FUNDS to obtain your new account number to reference on the wire
instructions.
*
A wire purchase will not be considered complete until the wired money is received and
the purchase accepted by the fund.
*
Any delays which may occur in wiring money, including delays which may occur in
processing by the banks, are not the responsibility of the fund or the transfer agent.
*
To purchase more shares automatically each month, fill out
the ABC Investment Plan
®
section of the account application or fill out an ABC Investment Plan
®
form for an existing
account. Attach a voided check to the account application or ABC
Investment Plan
®
form.
*
U.S. Global Investors Funds automatically withdraws monies from your bank account
monthly.
*
Shares purchased through the ABC Investment Plan
®
are not available for redemption
until the tenth business day after the purchase is made, or when your ACH clears, whichever
is earlier.
*
If you set up an investment through the ABC Investment Plan,
®
you should not set up an
automatic withdrawal plan or you will incur short-term trading fees.
Table of Contents
*
See details on the application.
*
You may buy shares of the money market funds through direct deposit. For more
information, call 1-800-US-FUNDS for a direct deposit application.
*
You may buy fund shares through financial intermediaries such as broker/dealers or
banks, who may charge you a fee or have different account minimums, which are not
applicable if you buy shares directly from the funds.
*
A completed and signed application,
*
A check or wire transfer for the full amount, and
*
Reasonable verification of the customers identification.
Table of Contents
*
Send a written request showing your account number and the dollar amount or number of
shares you are redeeming to the address shown under How to Buy Shares.
*
Each registered shareholder must sign the request, with the signature(s) appearing
exactly as it does on your account registration.
*
Redemptions of more than $15,000 require a signature guarantee.
*
A signature guarantee may be required for other circumstances. See
Signature
Guarantee/Other Documentation
.
*
Call 1-800-US-FUNDS for additional requirements.
*
Redemptions of less than $15,000 may be made by telephone. Telephone redemption
privileges are automatically established when you complete your application.
*
Call 1-800-US-FUNDS.
*
If you have an identically registered account in a U.S. Global Investors money market
fund with check writing, you may call the fund and direct an exchange of your fund shares
into your existing money market fund account. You may then write a check against your money
market fund account. Exchanges are subject to a $5.00 exchange fee.
*
For telephone redemptions, see
Signature Guarantee/Other Documentation
for limitations.
*
You may receive payment for redeemed shares via ACH or wire. To elect these services,
send the fund a written request giving your bank information with signature guarantee for
all registered owners. See Signature
Guarantee/Other Documentation
.
*
You will be charged $10 for a wire transfer. International wire charges will be higher.
Table of Contents
*
We will usually send a wire transfer the next business day after receipt of your order.
*
Each account must be registered identically; each must have the same signatures and
addresses.
*
You will be charged $5 by the transfer agent for each exchange out of any fund account.
The funds reserve the right to waive this fee for certain accounts.
*
Retirement accounts administered by the Adviser or its agents may exchange up to three
times per quarter at no charge. Short-term trading fees may apply.
*
You may exchange shares online at www.usfunds.com, by using the automated telephone
system, by speaking to an investment representative, or by mail. Certain restrictions apply
to the automated telephone system. Please call 1-800-US-FUNDS for more details.
*
You are responsible for obtaining and reading the prospectus for the fund into which
you are exchanging.
*
Exchanges result in the sale of one funds shares and the purchase of another funds
shares, which is usually a taxable event to you.
*
Exchanges into any new fund are subject to that funds initial and subsequent
investment minimums.
*
Exchanges out of a fund may be subject to a short-term trading fee. See page
52
for details.
*
An exchange order is effective on any given day when the exchange request is received
by the funds by 4:00 p.m. Eastern time.
*
Exchanges into a money market fund may be delayed until such time as the proceeds from
the sale of the fund out of which you wish to exchange are available to the money market
fund, which could take up to ten business days. In general, the funds
Table of Contents
expect to exercise this right to delay the effectiveness of the purchase only on exchanges of
$50,000 or more. If your purchase will be delayed, you will be notified immediately.
*
To hold redemption proceeds for up to seven days, or longer if permitted by the SEC.
*
To waive investment minimums or account minimum fees.
*
To refuse any application, investment or exchange or to close an account when it is in
the best interest of the fund.
*
To require a signature guarantee or any other documentation.
*
To freeze any account and suspend account services when notice is received that there
is a dispute between registered or beneficial owners, or there is reason to believe a
fraudulent or illegal transaction has or may occur, the shareholder appears to be involved
in suspicious activity or if certain account information matches information on government
lists of known terrorist or other suspicious persons.
*
To prevent automatic purchase and redemption privileges in one account.
*
To place shareholder investments in a U.S. Treasury Securities Cash Fund in the event
that an application or investment is not received in good order.
*
Shareholders whose combined fund assets (excluding the money market funds) in the U.S.
Global complex equal $25,000 or more on the day the fee is assessed. Total assets are
determined by aggregating accounts registered under the same social security number or
taxpayer identification number.
*
ABC Investment Plan
®
accounts.
*
Retirement accounts.
*
Custodial accounts for minors.
Table of Contents
*
It may lower overall fund performance;
*
It may create increased transaction costs to the fund, which are passed along to
long-term shareholders;
*
Frequent redemptions by market timers may increase taxable capital gains; and
*
It may disrupt a portfolio managers ability to effectively manage fund assets.
Table of Contents
Table of Contents
*
Your redemption request exceeds $15,000.
*
You request that payment be made to a name other than the one on your account
registration.
*
You request that payment be mailed to an address other than the one of record with the
fund.
*
You change or add information relating to your designated bank.
*
You have changed your address of record within the last 30 days.
Table of Contents
$
10
$
10
$
10
$
15
$
15
Table of Contents
*
Holmes Growth Fund, Global MegaTrends Fund, Gold and Precious Metals Fund, World
Precious Minerals Fund, Global Resources Fund, Eastern European Fund, Global Emerging
Markets Fund and the China Region Fund-dividends are declared and paid annually, usually in
December.
*
All American Fund-dividends are declared and paid quarterly.
*
Tax Free Fund and Near-Term Tax Free Fund-dividends are declared and paid monthly.
*
Government Securities Fund and Treasury Securities Cash Fund-all net income is
declared and accrued as a daily dividend and paid monthly. Shares of the money market funds
are eligible to receive dividends beginning on the first business day after
the effective date of the purchase. Shares of the money market funds receive dividends on the
day shares are redeemed. However, redemptions by check writing draft do not earn dividends on
the day shares are redeemed.
Table of Contents
Year ended June 30,
2008
2007
2006
2005
2004
$
28.58
$
27.59
$
24.47
$
22.53
$
19.15
(0.15
)
(0.08
)
(0.18
)
(0.02
)
(0.11
)
1.98
4.94
3.89
1.96
3.49
1.83
4.86
3.71
1.94
3.38
(3.01
)
(3.87
)
(0.59
)
(0.13
)
(3.14
)
(3.87
)
(0.59
)
$
27.27
$
28.58
$
27.59
$
24.47
$
22.53
5.99
%
19.59
%
15.25
%
8.61
%
17.65
%
$
26,513
$
23,479
$
21,547
$
19,253
$
19,974
1.98
%
2.01
%
2.20
%
2.44
%
2.31
%
(0.23
)%
(0.26
)%
(0.44
)%
(0.69
)%
(0.56
)%
1.75
%
1.75
%
1.76
%
1.75
%
1.75
%
(0.55
)%
(0.28
)%
(0.67
)%
(0.09
)%
(0.49
)%
225
%
223
%
369
%
262
%
96
%
*
Based on average monthly shares outstanding.
(a)
The per share amount does not round to a full penny.
(b)
Assumes investment at the net asset value at the beginning of the period, reinvestment of all
distributions and a complete redemption of the investment at the net asset value at the end of
the period.
(c)
Expenses reimbursed reflect reductions to total expenses, as discussed in the notes to the
financial statements. These amounts would increase the net investment loss ratio had such
reductions not occurred.
(d)
The net expense ratios shown above reflect expenses after reimbursements but exclude the
effect of reductions to total expenses for any expenses offset. Expense offset arrangements
reduce total expenses, as discussed in the notes to the financial statements. These amounts
would increase the net investment loss ratio, or decrease the net investment income ratio, as
applicable, had such reductions not occurred. The effect of expenses offset are as follows:
Year ended June 30,
2008
2007
2006
2005
2004
(e)
(e)
(0.01
)%
(e)
(e)
(e)
Effect on the expense ratio was not greater than 0.005%.
Table of Contents
Six Months
Ended
April 30,
2008
Year ended October 31,
(unaudited)
2007
2006
2005
2004**
2003
$
24.78
$
18.34
$
16.56
$
14.38
$
13.55
$
11.59
(0.08
)
(0.14
)
(0.14
)
(0.18
)
(0.19
)
(0.14
)
(2.46
)
6.58
1.92
2.36
1.01
2.10
(2.54
)
6.44
1.78
2.18
0.82
1.96
(a)
(a)
(a)
(a)
0.01
(a)
$
22.24
$
24.78
$
18.34
$
16.56
$
14.38
$
13.55
(10.25
)%
35.11
%
10.75
%
15.16
%
6.13
%
16.91
%
$
60,660
$
68,881
$
61,810
$
65,065
$
67,074
$
82,417
1.72
%
1.72
%
1.74
%
1.83
%
1.82
%
1.78
%
(0.70
)%
(0.62
)%
(0.69
)%
(0.98
)%
(1.15
)%
(1.12
)%
56
%
98
%
290
%
268
%
192
%
545
%
*
Based on average monthly shares outstanding.
**
Effective June 1, 2004, U.S. Global Investors, Inc. assumed management of the fund from the
former subadviser.
(a)
The per share amount does not round to a full penny.
(b)
Assumes investment at the net asset value at the beginning of the period, reinvestment of all
distributions and a complete redemption of the investment at the net asset value at the end of
the period.
(c)
Ratios are annualized for periods of less than one year.
(d)
The expense ratios shown above exclude the effect of reductions to total expenses for any
expenses offset. Expense offset arrangements reduce total expenses, as discussed in the notes
to the financial statements. These amounts would increase the net investment loss ratio, or
decrease the net investment income ratio, as applicable, had such reductions not occurred. The
effect of expenses offset are as follows:
Six Months
Ended
April 30,
2008
Year ended October 31,
(unaudited)
2007
2006
2005
2004
2003
(e)
(e)
(0.01
)%
(e)
(e)
(e)
(e)
Effect on the expense ratio was not greater than 0.005%.
Table of Contents
Six Months
Ended
April 30,
2008
Year ended October 31,
(unaudited)
2007**
2006
2005
2004
2003
$
12.75
$
11.07
$
10.30
$
9.20
$
8.25
$
6.62
(0.02
)
(0.11
)
(0.10
)
(0.14
)
(0.17
)
(0.18
)
(0.24
)
2.63
1.18
1.24
1.24
1.85
(0.26
)
2.52
1.08
1.10
1.07
1.67
(0.12
)
(0.04
)
(0.85
)
(0.84
)
(0.31
)
(0.85
)
(0.84
)
(0.31
)
(0.12
)
(0.04
)
$
11.64
$
12.75
$
11.07
$
10.30
$
9.20
$
8.25
(2.12
)%
24.49
%
10.53
%
11.96
%
13.01
%
25.38
%
$
30,112
$
17,723
$
17,077
$
14,276
$
13,239
$
12,377
2.25
%
2.49
%
2.55
%
2.83
%
2.83
%
3.07
%
(0.42
)%
(0.93
)%
(0.89
)%
(1.37
)%
(1.77
)%
(2.12
)%
34
%
65
%
75
%
54
%
64
%
96
%
*
Based on average monthly shares outstanding.
**
Effective October 1, 2007, U.S. Global Investors, Inc. assumed management of the fund from
the former subadviser.
(a)
The per share amount does not round to a full penny.
(b)
Assumes investment at the net asset value at the beginning of the period, reinvestment of all
distributions and a complete redemption of the investment at the net asset value at the end of
the period.
(c)
Ratios are annualized for periods of less than one year.
(d)
The expense ratios shown above exclude the effect of reductions to total expenses for any
expenses offset. Expense offset arrangements reduce total expenses, as discussed in the notes
to the financial statements. These amounts would increase the net investment loss ratio, or
decrease the net investment income ratio, as applicable, had such reductions not occurred. The
effect of expenses offset are as follows:
Six Months
Ended
April 30,
2008
Year ended October 31,
(unaudited)
2007
2006
2005
2004
2003
(e)
(e)
(e)
(e)
(e)
(e)
(e)
Effect on the expense ratio was not greater than 0.005%.
Table of Contents
Year ended June 30,
2008
2007
2006
2005
2004
$
14.99
$
15.48
$
7.67
$
7.00
$
5.18
(0.08)
*
0.05
(0.01)
*
(0.11
)
(0.10
)
4.69
(0.56
)
7.88
0.79
1.91
4.61
(0.51
)
7.87
0.68
1.81
(2.43
)
(0.12
)
(0.05
)
(0.03
)
0.01
0.02
0.06
0.04
0.02
$
17.18
$
14.99
$
15.48
$
7.67
$
7.00
33.49
%
(3.17
)%
104.15
%
10.19
%
35.57
%
$
259,022
$
178,762
$
208,027
$
63,816
$
66,732
1.27
%
1.29
%
1.47
%
1.97
%
1.93
%
(0.41
)%
0.31
%
(0.06
)%
(1.13
)%
(1.45
)%
93
%
72
%
78
%
66
%
85
%
*
Based on average monthly shares outstanding.
(a)
Assumes investment at the net asset value at the beginning of the period, reinvestment of all
distributions and a complete redemption of the investment at the net asset value at the end of
the period.
(b)
The expense ratios shown above exclude the effect of reductions to total expenses for any
expenses offset. Expense offset arrangements reduce total expenses, as discussed in the notes
to the financial statements. These amounts would increase the net investment loss ratio, or
decrease the net investment income ratio, as applicable, had such reductions not occurred. The
effect of expenses offset are as follows:
Year ended June 30,
2008
2007
2006
2005
2004
(c)
(0.01
)%
(c)
(c)
(c)
(c)
Effect on the expense ratio was not greater than 0.005%.
Table of Contents
Year ended June 30,
2008
2007
2006
2005
2004
$
28.34
$
28.86
$
15.50
$
13.68
$
9.75
(0.13)
*
*
0.72
(0.22
)
(0.17)
*
3.70
*
3.02
13.62
2.42
5.85
3.57
3.02
14.34
2.20
5.68
(3.25
)
(1.52
)
(0.67
)
(0.46
)
(1.86
)
(3.35
)
(2.04
)
(0.37
)
(6.60
)
(3.56
)
(1.04
)
(0.46
)
(1.86
)
0.01
0.02
0.06
0.08
0.11
$
25.32
$
28.34
$
28.86
$
15.50
$
13.68
14.14
%
11.48
%
96.21
%
16.50
%
57.42
%
$
949,014
$
923,779
$
920,249
$
268,312
$
246,852
0.97
%
0.99
%
1.13
%
1.48
%
1.47
%
(0.43
)%
0.06
%
0.05
%
(1.01
)%
(1.15
)%
58
%
54
%
66
%
55
%
65
%
*
Based on average monthly shares outstanding.
(a)
Assumes investment at the net asset value at the beginning of the period, reinvestment of all
distributions and a complete redemption of the investment at the net asset value at the end of
the period.
(b)
The expense ratios shown above exclude the effect of reductions to total expenses for any
expenses offset. Expense offset arrangements reduce total expenses, as discussed in the notes
to the financial statements. These amounts would increase the net investment loss ratio, or
decrease the net investment income ratio, as applicable, had such reductions not occurred. The
effect of expenses offset are as follows:
Year ended June 30,
2008
2007
2006
2005
2004
(c)
(c)
(c)
(c)
(c)
(c)
Effect on the expense ratio was not greater than 0.005%.
Table of Contents
Year ended June 30,
2008
2007
2006
2005
2004
$
17.70
$
17.22
$
12.67
$
8.39
$
5.14
0.05
*
0.21
0.29
0.25
0.12
5.86
*
2.86
5.63
4.67
3.26
5.91
3.07
5.92
4.92
3.38
(0.95
)
(0.88
)
(0.32
)
(0.34
)
(0.13
)
(2.14
)
(1.71
)
(1.05
)
(0.30
)
(3.09
)
(2.59
)
(1.37
)
(0.64
)
(0.13
)
$
20.52
$
17.70
$
17.22
$
12.67
$
8.39
37.59
%
20.94
%
48.91
%
60.21
%
65.73
%
$
2,010,581
$
1,383,250
$
1,281,664
$
488,183
$
135,574
0.88
%
0.95
%
0.96
%
1.30
%
1.54
%
0.28
%
0.74
%
1.07
%
0.91
%
0.74
%
133
%
122
%
157
%
116
%
140
%
*
Based on average monthly shares outstanding.
(a)
The per share amount does not round to a full penny.
(b)
Assumes investment at the net asset value at the beginning of the period, reinvestment of all
distributions and a complete redemption of the investment at the net asset value at the end of
the period.
(c)
The expense ratios shown above exclude the effect of reductions to total expenses for any
expenses offset. Expense offset arrangements reduce total expenses, as discussed in the notes
to the financial statements. These amounts would increase the net investment loss ratio, or
decrease the net investment income ratio, as applicable, had such reductions not occurred. The
effect of expenses offset are as follows:
Year ended June 30,
2008
2007
2006
2005
2004
(0.01
)%
(0.01
)%
(0.01
)%
(d)
(d)
(d)
Effect on the expense ratio was not greater than 0.005%.
Table of Contents
Six Months
Ended
April 30,
2008*
Year ended October 31,
(unaudited)
2007*
2006*
2005*
2004*
2003*
$
19.91
$
15.44
$
12.88
$
9.47
$
6.48
$
14.24
(0.08
)
(0.10
)
0.13
(0.03)
**
(0.01
)
0.02
(1.53
)
6.83
3.60
3.81
**
3.31
2.19
(1.61
)
6.73
3.73
3.78
3.30
2.21
(0.29
)
(0.09
)
(0.02
)
(3.46
)
(1.98
)
(1.22
)
(0.31
)
(0.35
)
(3.46
)
(2.27
)
(1.22
)
(0.40
)
(0.37
)
0.01
0.01
0.05
0.03
0.06
0.03
$
14.85
$
19.91
$
15.44
$
12.88
$
9.47
$
6.48
(9.66
)%
48.74
%
31.03
%
41.43
%
54.12
%
52.71
%
$
1,302,672
$
1,582,707
$
1,347,149
$
903,855
$
279,545
$
50,948
1.95
%
1.98
%
1.95
%
2.00
%
2.08
%
2.90
%
(1.03
)%
(0.61
)%
0.71
%
(0.31
)%
(0.23
)%
0.81
%
35
%
54
%
68
%
95
%
89
%
109
%
*
The per share amounts shown for the current and prior periods have been adjusted to reflect
the 3-for-1 stock split which was effective on May 27, 2008.
**
Based on average monthly shares outstanding.
(a)
Assumes investment at the net asset value at the beginning of the period, reinvestment of all
distributions and a complete redemption of the investment at the net asset value at the end of
the period.
(b)
Ratios are annualized for periods of less than one year.
(c)
The expense ratios shown above exclude the effect of reductions to total expenses for any
expenses offset and for fees rebated from the Subadviser. Expense offset arrangements reduce
total expenses, as discussed in the notes to the financial statements. Through June 2006, the
Subadviser of the above fund provided advisory services to two closed-end investment companies
that the above fund had invested in. The Subadviser rebated amounts to the above fund
representing the portion of management fees paid by the two investment companies to the
Subadviser based on the above funds investment. Fees rebated by the subadviser also reduce
total expenses. Expense offset arrangements reduce total expenses, as discussed in the notes
to the financial statements. These amounts would increase the net investment loss ratio, or
decrease the net investment income ratio, as applicable, had such reductions not occurred. The
effect of expenses offset and expenses rebated by the Subadviser are as follows:
Six Months
Ended
April 30,
2008
Year ended October 31,
(unaudited)
2007
2006
2005
2004
2003
(0.01
)%
(0.01
)%
0.01
)%
(0.01
)%
(d)
(d)
n/a
n/a
(0.01
)%
(0.02
)%
(0.05
)%
n/a
(d)
Effect on the expense ratio was not greater than 0.005%.
Table of Contents
Six Months
Ended
April 30,
2008
Year Ended
Year Ended
Period Ended
(unaudited)
October 31, 2007
October 31, 2006
October 31, 2005(a)
$
21.88
$
13.93
$
10.65
$
10.00
(0.10
)
(0.13
)
0.02
0.06
(3.30
)
9.18
3.50
0.56
(3.40
)
9.05
3.52
0.62
(0.46
)
(0.05
)
(3.11
)
(1.13
)
(0.26
)
(3.57
)
(1.13
)
(0.31
)
0.03
0.03
0.07
0.03
$
14.94
$
21.88
$
13.93
$
10.65
(16.52
)%
69.52
%
34.16
%
6.50
%
$
43,477
$
59,621
$
29,029
$
16,157
2.61
%
2.75
%
3.07
%
4.16
%
(0.11
)%
(0.39
)%
(1.05
)%
(2.16
)%
2.50
%
2.36
%
2.02
%
2.00
%
(1.53
)%
(0.92
)%
0.13
%
1.08
%
41
%
125
%
136
%
93
%
*
Based on average monthly shares outstanding.
(a)
From February 24, 2005, commencement of operations.
(b)
Total returns for periods less than one year are not annualized. Assumes investment at the
net asset value at the beginning of the period, reinvestment of all distributions and a
complete redemption of the investment at the net asset value at the end of the period.
(c)
Ratios are annualized for periods of less than one year.
(d)
Expenses reimbursed from the Adviser reflect reductions to total expenses, as discussed in
the notes to the financial statements. These amounts would increase the net investment loss
ratio or decrease the net investment income ratio, as applicable, had such reductions not
occurred.
(e)
The expense ratios shown above reflect expenses after reimbursements from the Adviser but
exclude the effect of reductions to total expenses for any expenses offset and for fees
rebated from the Subadviser. Expense offset arrangements reduce total expenses, as discussed
in the notes to the financial statements. Through June 2006, the Subadviser of the above fund
provided advisory services to a closed-end investment company that the above fund had invested
in. The Subadviser rebated amounts to the above fund representing the portion of management
fees paid by the investment company to the Subadviser based on the above funds investment.
Fees rebated by the Subadviser also reduce total expenses. Expense offset arrangements reduce
total expenses, as discussed in the notes to the financial statements. These amounts would
increase the net investment loss ratio, or decrease the net investment income ratio, as
applicable, had such reductions not occurred. The effect of expenses offset and expenses
rebated by the Subadviser are as follows:
(f)
Effect on the expense ratio was not greater than 0.005%.
Table of Contents
Year ended June 30,
2008
2007
2006
2005
2004
$
12.55
$
8.71
$
6.87
$
5.86
$
4.17
(0.03
)*
*
(0.01
)*
(0.06
)
*
(0.27
)*
3.98
*
2.02
1.22
1.69
(0.30
)
3.98
2.01
1.16
1.69
(0.10
)
(0.16
)
(0.19
)
(0.16
)
(0.05
)
(2.93
)
(0.17
)
(3.20
)
(0.16
)
(0.19
)
(0.16
)
(0.05
)
0.04
0.02
0.02
0.01
0.05
$
9.09
$
12.55
$
8.72
$
6.87
$
5.86
(8.58
)%
46.34
%
30.03
%
19.98
%
41.63
%
$
81,109
$
93,805
$
67,761
$
30,511
$
35,090
1.95
%
2.02
%
2.31
%
2.56
%
2.25
%
(0.26
)%
0.02
%
(0.08
)%
(0.54
)%
0.05
%
208
%
208
%
292
%
136
%
126
%
*
Based on average monthly shares outstanding.
(a)
Assumes investment at the net asset value at the beginning of the period, reinvestment of all
distributions and a complete redemption of the investment at the net asset value at the end of
the period.
(b)
The expense ratios shown above exclude the effect of reductions to total expenses for any
expenses offset. Expense offset arrangements reduce total expenses, as discussed in the notes
to the financial statements. These amounts would increase the net investment loss ratio, or
decrease the net investment income ratio, as applicable, had such reductions not occurred. The
effect of expenses offset are as follows:
Year ended June 30,
2008
2007
2006
2005
2004
(c)
(c)
(0.01
)%
(c)
(c)
(c)
Effect on the expense ratio was not greater than 0.005%.
Table of Contents
Year ended June 30,
2008
2007
2006
2005
2004
$
11.98
$
11.98
$
12.33
$
12.08
$
12.65
0.47
0.50
0.52
0.44
0.43
(0.05
)
(a)
(0.36
)
0.25
(0.58
)
0.42
0.50
0.16
0.69
(0.15
)
(0.47
)
(0.50
)
(0.51
)
(0.44
)
(0.42
)
$
11.93
$
11.98
$
11.98
$
12.33
$
12.08
3.54
%
4.15
%
1.30
%
5.78
%
(1.25
)%
$
18,380
$
15,940
$
14,992
$
22,433
$
28,167
1.94
%
1.86
%
1.69
%
1.47
%
1.09
%
(1.24
)%
(1.16
)%
(0.99
)%
(0.77
)%
(0.39
)%
0.70
%
0.70
%
0.70
%
0.70
%
0.70
%
3.91
%
4.09
%
4.01
%
3.50
%
3.22
%
11
%
6
%
19
%
40
%
54
%
(a)
The per share amount does not round to a full penny.
(b)
Assumes investment at the net asset value at the beginning of the period, reinvestment of all
distributions and a complete redemption of the investment at the net asset value at the end of
the period.
(c)
Expenses reimbursed reflect reductions to total expenses, as discussed in the notes to the
financial statements. These amounts would increase the net investment loss ratio had such
reductions not occurred.
(d)
The expense ratios shown above reflect expenses after reimbursements but exclude the effect
of reductions to total expenses for any expenses offset. Expense offset arrangements reduce
total expenses, as discussed in the notes to the financial statements. These amounts would
increase the net investment loss ratio, or decrease the net investment income ratio, as
applicable, had such reductions not occurred. The effect of expenses offset are as follows:
Year ended June 30,
2008
2007
2006
2005
2004
(e)
(e)
(e)
(e)
(e)
(e)
Effect on the expense ratio was not greater than 0.005%.
Table of Contents
Year ended June 30,
2008
2007
2006
2005*
2004*
$
2.12
$
2.12
$
2.17
$
2.17
$
2.23
0.07
0.07
0.07
0.07
0.06
0.02
(a)
(0.05
)
(0.01
)
(0.06
)
0.09
0.07
0.02
0.06
0.00
(0.07
)
(0.07
)
(0.07
)
(0.06
)
(0.06
)
$
2.14
$
2.12
$
2.12
$
2.17
$
2.17
4.42
%
3.51
%
0.75
%
2.75
%
0.20
%
$
13,603
$
13,383
$
15,830
$
18,706
$
18,673
1.91
%
1.63
%
1.54
%
1.49
%
1.25
%
(1.46
)%
(1.18
)%
(1.09
)%
(1.04
)%
(0.80
)%
0.45
%
0.45
%
0.45
%
0.45
%
0.45
%
3.41
%
3.43
%
3.08
%
2.79
%
2.73
%
*
The values shown for Near-Term Tax Free Fund prior periods have been adjusted to reflect the
5-for-1 stock split, which was effective on January 3, 2005.
(a)
The per share amount does not round to a full penny.
(b)
Assumes investment at the net asset value at the beginning of the period, reinvestment of all
distributions and a complete redemption of the investment at the net asset value at the end of
the period.
(c)
Expenses reimbursed reflect reductions to total expenses, as discussed in the notes to the
financial statements. These amounts would increase the net investment loss ratio had such
reductions not occurred.
(d)
The expense ratios shown above reflect expenses after reimbursements but exclude the effect
of reductions to total expenses for any expenses offset. Expense offset arrangements reduce
total expenses, as discussed in the notes to the financial statements. These amounts would
increase the net investment loss ratio, or decrease the net investment income ratio, as
applicable, had such reductions not occurred. The effect of expenses offset are as follows:
Year ended June 30,
2008
2007
2006
2005
2004
(e)
(e)
(e)
(e)
(e)
(e)
Effect on the expense ratio was not greater than 0.005%.
Table of Contents
Year ended June 30,
2008
2007
2006
2005
2004
$
1.00
$
1.00
$
1.00
$
1.00
$
1.00
0.03
0.05
0.04
0.02
0.01
(a)
(a)
0.03
0.05
0.04
0.02
0.01
(0.03
)
(0.05
)
(0.04
)
(0.02
)
(0.01
)
$
1.00
$
1.00
$
1.00
$
1.00
$
1.00
3.47
%
4.86
%
3.69
%
1.70
%
0.63
%
$
446,208
$
469,095
$
435,417
$
411,979
$
441,722
0.65
%
0.62
%
0.64
%
0.65
%
0.65
%
(0.20
)%
(0.17
)%
(0.19
)%
(0.20
)%
(0.20
)%
0.45
%
0.45
%
0.45
%
0.45
%
0.45
%
(a)
The per share amount does not round to a full penny.
(b)
Assumes investment at the net asset value at the beginning of the period, reinvestment of all
distributions and a complete redemption of the investment at the net asset value at the end of
the period.
(c)
Expenses reimbursed reflect reductions to total expenses, as discussed in the notes to the
financial statements. These amounts would increase the net investment loss ratio had such
reductions not occurred.
(d)
The expense ratios shown above reflect expenses after reimbursements but exclude the effect
of reductions to total expenses for any expenses offset. Expense offset arrangements reduce
total expenses, as discussed in the notes to the financial statements. These amounts would
increase the net investment loss ratio, or decrease the net investment income ratio, as
applicable, had such reductions not occurred. The effect of expenses offset are as follows:
Year ended June 30,
2008
2007
2006
2005
2004
(e)
(e)
(e)
(e)
(e)
(e)
Effect on the expense ratio was not greater than 0.005%.
Table of Contents
Year ended June 30,
2008
2007
2006
2005
2004
$
1.00
$
1.00
$
1.00
$
1.00
$
1.00
0.02
0.04
0.03
0.01
(a)
0.02
0.04
0.03
0.01
(a)
(0.02
)
(0.04
)
(0.03
)
(0.01
)
(a)
$
1.00
$
1.00
$
1.00
$
1.00
$
1.00
2.46
%
4.36
%
3.11
%
1.12
%
0.08
%
$
111,955
$
116,012
$
119,028
$
124,058
$
112,575
1.09
%
0.91
%
0.92
%
0.97
%
1.00
%
(0.09
)%
(0.02
)%
(f)
0.03
%
1.00
%
0.89
%
0.95
%
0.97
%
0.96
%
2.43
%
4.27
%
3.06
%
1.11
%
0.07
%
(a)
The per share amount does not round to a full penny.
(b)
Assumes investment at the net asset value at the beginning of the period, reinvestment of all
distributions and a complete redemption of the investment at the net asset value at the end of
the period.
(c)
Expenses reimbursed reflect reductions to total expenses, as discussed in the notes to the
financial statements. These amounts would increase the net investment loss ratio had such
reductions not occurred.
(d)
During the year ended June 30, 2004, the Adviser waived fees and/or reimbursed expenses as a
result of a Minimum Yield Agreement in the amount of $45,136. As allowed by the recapture
provision of this agreement, the Treasury Securities Cash Fund reimbursed the Adviser the
previously waived amount of $45,136 during the year ended June 30, 2006. During the year ended
June 30, 2008, the Adviser waived fees and/or reimbursed expenses under the Minimum Yield
Agreement in the amount of $4,259. The fund reimbursed the Adviser the $4,259 during the year
ended June 30, 2008.
(e)
The expense ratios shown above reflect expenses after reimbursements but exclude the effect
of reductions to total expenses for any expenses offset. Expense offset arrangements reduce
total expenses, as discussed in the notes to the financial statements. These amounts would
increase the net investment loss ratio, or decrease the net investment income ratio, as
applicable, had such reductions not occurred. The effect of expenses offset are as follows:
Year ended June 30,
2008
2007
2006
2005
2004
(f)
(f)
(f)
(f)
(f)
(f)
Effect on the expense ratio was not greater than 0.005%.
Table of Contents
*
Information we receive from you on applications or other forms;
*
Information about your transactions with us;
*
Information gathered from consumer reporting agencies;
*
Information gathered by affiliated companies; and
*
Information gathered through web site usage.
Table of Contents
Express Mail Or Package Delivery
U.S. Global Investors
7900 Callaghan Road
San Antonio, TX 78229
Table of Contents
1-800-US-FUNDS
Shareholder Services
U.S. Global Investors Funds
P.O. Box 781234
San Antonio, TX 78278-1234
http://www.usfunds.com
U.S. GLOBAL INVESTORS FUNDS.
SEC Investment Company Act File No. 811-01800
U.S. GLOBAL INVESTORS, INC.
P.O. Box 781234
San Antonio, TX 78278-1234
Table of Contents
ALL AMERICAN EQUITY FUND
HOLMES GROWTH FUND
GLOBAL MEGATRENDS FUND
GOLD and PRECIOUS METALS FUND
WORLD PRECIOUS MINERALS FUND
GLOBAL RESOURCES FUND
EASTERN EUROPEAN FUND
GLOBAL EMERGING MARKETS FUND
CHINA REGION FUND
TAX FREE FUND
NEAR-TERM TAX FREE FUND
U.S. GOVERNMENT SECURITIES SAVINGS FUND
U.S. TREASURY SECURITIES CASH FUND
Table of Contents
2
3
3
4
4
5
13
20
21
22
26
27
82
83
86
89
93
95
95
97
103
103
103
103
Table of Contents
Page 2 of 103
Table of Contents
1.
Issue senior securities, except as permitted under the 1940 Act, and as interpreted or
modified by regulatory authority having jurisdiction, from time to time.
2.
Borrow money, except as permitted under the 1940 Act, and as interpreted or modified by
regulatory authority having jurisdiction, from time to time.
3.
Engage in the business of underwriting securities issued by other issuers, except to the
extent that, in connection with the disposition of portfolio securities, the fund may be
deemed an underwriter under the Securities Act of 1933.
Page 3 of 103
Table of Contents
4.
Purchase or sell real estate, which term does not include securities of companies which
deal in real estate and/or mortgages or investments secured by real estate, or interests
therein, except that the fund reserves freedom of action to hold and to sell real estate
acquired as a result of the funds ownership of securities.
5.
Purchase or sell commodities or commodity contracts, except a fund may purchase and sell
(i) derivatives (including, but not limited to, options, futures contracts and options on
futures contracts) whose value is tied to the value of a financial index or a financial
instrument or other asset (including, but not limited to, securities indexes, interest
rates, securities, currencies and physical commodities), and (ii) the Gold and Precious
Metals Fund, the World Precious Minerals Fund and the Global Resources Fund may purchase
precious metals. The Global MegaTrends Fund is not prohibited from selling commodities or
commodity contracts.
6.
Make loans except as permitted under the 1940 Act, and as interpreted or modified by
regulatory authority having jurisdiction, from time to time.
7.
Invest more than 25% of its total assets in securities of companies principally engaged
in any one industry (other than obligations issued or guaranteed by the U.S. Government or
any of its agencies or instrumentalities), except that the Gold and Precious Metals Fund
will invest more than 25% of its total assets in securities of companies involved in the
mining, fabrication, processing, marketing or distribution of metals including gold, silver,
platinum group, palladium and diamonds; the Global Resources Fund and the World Precious
Minerals Fund will invest more than 25% of the value of their respective total assets in
securities of companies principally engaged in natural resource operations; and the Tax Free
Fund and the Near-Term Tax Free Fund may invest more than 25% of their total assets in
general obligation bonds, single state bonds, or in securities issued by states or
municipalities in connection with the financing of projects with similar characteristics,
such as hospital revenue bonds, housing revenue bonds, electric power project bonds,
industry revenue bonds of similar type projects.
1.
All funds will not borrow money, except that a fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not exceeding 33 1/3% of
a funds total assets (including the amount borrowed) less liabilities (other than
borrowings).
2.
All funds will not purchase securities on margin or make short sales, except (i) short
sales against the box, (ii) short term credits as are necessary for the clearance of
transactions, and (iii) margin payments in connection with futures contracts and options on
futures contracts shall not constitute purchasing securities on margin or selling securities
short.
3.
The Global MegaTrends Fund will not pledge or hypothecate the assets of the fund.
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1.
Tax Anticipation Notes. Tax anticipation notes are issued to finance working capital
needs of state and local governments. Generally, they are issued in anticipation of various
seasonal tax revenues, such as ad valorem property, income, sales, use and business taxes,
and are payable from these specific future taxes. Tax anticipation notes are usually general
obligations of the issuer. General obligations are secured by the issuers pledge of its
full faith, credit and taxing power for the payment of principal and interest.
2.
Revenue Anticipation Notes. Revenue anticipation notes are issued by state and local
governments or governmental bodies with the expectation that receipt of future revenues,
such as Federal revenue sharing or state aid payments, will be used to repay the notes.
Typically, they also constitute general obligations of the issuer.
3.
Bond Anticipation Notes. Bond anticipation notes are issued to provide interim financing
for state and local governments until long-term financing can be arranged. In most cases,
the long-term bonds then provide the money for the repayment of the notes.
4.
Tax-Exempt Commercial Paper. Tax-exempt commercial paper is a short-term obligation with
a stated maturity of 365 days or less. It is issued and backed by agencies of state and
local governments to finance seasonal working capital needs or as short-term financing in
anticipation of longer-term financing.
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1.
The risk that a funds assets may be exposed to nationalization, expropriation, or
confiscatory taxation.
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2.
The fact that emerging market securities markets are substantially smaller, less liquid
and more volatile than the securities markets of more developed nations. The relatively
small market capitalization and trading volume of emerging market securities may cause the
funds investments to be comparatively less liquid and subject to greater price volatility
than investments in the securities markets of developed nations. Many emerging markets are
in their infancy and have yet to be exposed to a major correction. In the event of such an
occurrence, the absence of various market mechanisms that are inherent in the markets of
more developed nations may lead to turmoil in the market place, as well as the inability of
the fund to liquidate its investments.
3.
Greater social, economic, and political uncertainty (including the risk of war).
4.
Greater price volatility, substantially less liquidity and significantly smaller market
capitalization of securities markets.
5.
Currency exchange rate fluctuations and the lack of available currency hedging
instruments.
6.
Higher rates of inflation.
7.
Controls on foreign investment and limitations on repatriation of invested capital and on
a funds ability to exchange local currencies for U.S. dollars.
8.
Greater governmental involvement in and control over the economy.
9.
The fact that emerging market companies may be smaller, less seasoned, and newly
organized.
10.
The difference in, or lack of, auditing and financial reporting standards, which may
result in unavailability of material information about issuers.
11.
The fact that the securities of many companies may trade at prices substantially above
book value, at high price/earnings ratios, or at prices that do not reflect traditional
measures of value.
12.
The fact that statistical information regarding the economy of many emerging market
countries may be inaccurate or not comparable to statistical information regarding the
United States or other economies.
13.
Less extensive regulation of the securities markets.
14.
Certain considerations, such as currency fluctuations, less public disclosure and
economic and political risk, regarding the maintenance of fund portfolio securities and cash
with foreign sub-custodians and securities depositories.
15.
The risk that it may be more difficult, or impossible, to obtain and/or enforce a
judgment than in other countries.
16.
The risk that a fund may be subject to income or withholding taxes imposed by emerging
market countries or other foreign governments. The funds intend to elect for federal income
tax purposes, when eligible, to pass through to the funds shareholders the amount of
foreign income tax and similar taxes paid by a fund. The foreign taxes passed through to a
shareholder would be included in the shareholders income and may be claimed as a deduction
or credit on their federal income tax return. Other taxes, such as transfer taxes, may be
imposed on a fund, but would not give rise to a credit or be eligible to be passed through
to the shareholders.
17.
The fact that a fund also is permitted to engage in foreign currency hedging transactions
and to enter into stock options on stock index futures transactions, each of which may
involve special risks, although these strategies cannot at the present time be used to a
significant extent by a fund in the markets in which the fund will principally invest.
18.
Enterprises in which a fund invests may be or become subject to unduly burdensome and
restrictive regulation affecting the commercial freedom of the invested company and thereby
diminishing the value of a funds investment in it. Restrictive or over-regulation may be,
therefore, a form of indirect nationalization.
19.
Businesses in emerging markets only have a very recent history of operating within a
market-oriented economy. Overall, relative to companies operating in western economies,
companies in emerging markets are characterized by a lack of (i)
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experienced management, (ii) modern technology, and (iii) a sufficient capital base with which
to develop and expand their operations. It is unclear what will be the effect on companies in
emerging markets, if any, of attempts to move towards a more market-oriented economy.
20.
Investments in equity securities are subject to inherent market risks and fluctuations in
value due to earnings, economic conditions, quality ratings, and other factors beyond the
control of the Adviser or Subadviser. As a result, the return and net asset value of the
funds will fluctuate.
21.
The Adviser or Subadviser may engage in hedging transactions in an attempt to hedge a
funds foreign securities investments back to the U.S. dollar when, in its judgment,
currency movements affecting particular investments are likely to harm the performance of a
fund. Possible losses from changes in currency exchange rates are primarily a risk of
unhedged investing in foreign securities. While a security may perform well in a foreign
market, if the local currency declines against the U.S. dollar, gains from the investment
can disappear or become losses. Typically, currency fluctuations are more extreme than stock
market fluctuations. Accordingly, the strength or weakness of the U.S. dollar against
foreign currencies may account for part of a funds performance even when the Adviser or
Subadviser attempts to minimize currency risk through hedging activities. While currency
hedging may reduce portfolio volatility, there are costs associated with such hedging,
including the loss of potential profits, losses on hedging transactions, and increased
transaction expenses.
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FUND
2005
2006
2007
95
%
68
%
68
%
93
%
136
%
125
%
268
%
290
%
98
%
54
%
75
%
65
%
FUND
2006
2007
2008
369
%
223
%
225
%
78
%
72
%
93
%
66
%
54
%
58
%
157
%
122
%
133
%
292
%
208
%
208
%
19
%
6
%
11
%
33
%
22
%
8
%
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NUMBER OF
TERM OF
PORTFOLIOS
OFFICE AND
IN FUND
POSITION(S)
LENGTH OF
PRINCIPAL
COMPLEX
OTHER
NAME, ADDRESS,
HELD WITH
TIME
OCCUPATION(S)
OVERSEEN
DIRECTORSHIPS
AND AGE
TRUST
SERVED*
DURING PAST 5 YEARS
BY TRUSTEE
HELD BY TRUSTEE
7900 Callaghan Rd
San Antonio, TX
78229 (55)
Trustee
1998 to present
President and Chief
Executive Officer
of Catholic Life
Insurance since
1984.
Thirteen
Director, Broadway
National Bank from
October 2003 to
present.
7900 Callaghan Rd
San Antonio, TX
78229 (65)
Trustee
2002 to present
President, Sam
Houston State
University from
August 2001 to
present.
Thirteen
Chairman of the
Board, Tandy Brands
Accessories, Inc.
from October 1997
to present.
7900 Callaghan Rd
San Antonio, TX
78229 (65)
Trustee
1993 to present
Restaurant
operator, business
consultant from
1991 to present.
Thirteen
None
7900 Callaghan Rd
San Antonio, TX
78229 (61)
Trustee
2008 to present
Vice Chairman.
Broadway National
Bank from October
2002 to present.
Thirteen
Director, Broadway
National Bank from
October 2002 to
present; Director,
USAA Real Estate
Company from
September 2004 to
present; Director,
Lubys, Inc. from
January 2003 to
present.
*
These dates include service for a predecessor trust.
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NUMBER OF
TERM OF
PORTFOLIOS
OFFICE AND
IN FUND
POSITION(S)
LENGTH OF
PRINCIPAL
COMPLEX
OTHER
NAME, ADDRESS,
HELD WITH
TIME
OCCUPATION(S)
OVERSEEN
DIRECTORSHIPS
AND AGE
TRUST
SERVED**
DURING PAST 5 YEARS
BY TRUSTEE
HELD BY TRUSTEE
7900 Callaghan Rd
San Antonio, TX
78229 (53)
Trustee, Chief
Executive Officer,
Chief Investment
Officer, Present
1989 to present
Director, Chief
Executive Officer,
and Chief
Investment Officer
of the Adviser.
Since October 1989,
Mr. Holmes has
served and
continues to serve
in various
positions with the
Adviser, its
subsidiaries, and
the investment
companies it
sponsors.
Thirteen
Chairman of the
Board of Directors
of Endeavour Mining
Capital Corp. from
November 2005 to
present. Director
of 71316 Ontario,
Inc. from April
1987 to present and
of F.E. Holmes
Organization, Inc.
from July 1978 to
present.
*
Mr. Holmes is an interested person of the Trust by virtue of his positions with U.S.
Global Investors, Inc.
**
This date includes service for a predecessor trust.
POSITION(S) HELD
TERM OF OFFICE AND
PRINCIPAL
NAME, ADDRESS, AND
WITH
LENGTH OF TIME
OCCUPATION(S)
AGE
TRUST
SERVED*
DURING PAST 5 YEARS
7900 Callaghan Rd
San Antonio, TX 78229 (53)
President and Chief Executive Officer;
Chief Investment Officer
January 1990 to present;
August 1999 to present
Director, Chief
Executive Officer,
and Chief
Investment Officer
of the Adviser.
Since October 1989,
Mr. Holmes has
served and
continues to serve
in various
positions with the
Adviser, its
subsidiaries, and
the investment
companies it
sponsors.
7900 Callaghan Rd
San Antonio, TX 78229 (49)
Executive Vice President and General
Counsel; Secretary
March 1997 to present;
October 1996 to present
President and
General Counsel of
the Adviser. Since
September 1992, Ms.
McGee has served
and continues to
serve in various
positions with the
Adviser, its
subsidiaries, and
the investment
companies it
sponsors.
7900 Callaghan Rd
San Antonio, TX 78229 (48)
Treasurer
July 2004 to present
Chief Financial
Officer of the
Company since
August 2004.
Controller of the
Adviser from April
2004 until August
2004. Associate
with Resources
Connection from
July 2003 to
February 2004.
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POSITION(S) HELD
TERM OF OFFICE AND
PRINCIPAL
NAME, ADDRESS, AND
WITH
LENGTH OF TIME
OCCUPATION(S)
AGE
TRUST
SERVED*
DURING PAST 5 YEARS
7900 Callaghan Rd
San Antonio, TX 78229 (39)
Chief Compliance Officer
September 2007 to present
Chief Compliance
Officer of Adviser
since September
2007. Executive
Director Executive
Attorney from
January 2003 to
September 2007,
Senior Counsel May
2002 to January
2003 with USAA.
7900 Callaghan Rd.
San Antonio, TX 78229 (40 )
Vice President Shareholder Services
April 2008 to present
Vice President,
Shareholder
Services of the
Adviser since April
2008, Operations
Manager of the
Adviser from April
2007 through March
2008. Invesco AIM
from 2004 through
2007.
7900 Callaghan Rd
San Antonio, TX 78229 (46)
Assistant Treasurer
June 2006 to present
Director of
Portfolio
Administration of
the Adviser since
January 2006. Fund
Accounting Manager
with AIM
Investments from
June 1992 to
January 2006.
*
These dates include service for a predecessor trust.
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DOLLAR RANGE
OF EQUITY SECURITIES
IN THE FUNDS HELD AS
NON-INTERESTED TRUSTEES
OF 12/31/2007
None
$10,001-$50,000
$10,001-$50,000
$1-$10,000
$1-$10,000
$1-$10,000
$10,001-$50,000
$10,001-$50,000
$1-$10,000
None
None
$1-$10,000
None
None
Over $100,000
$10,001-$50,000
None
None
None
$50,001-$100,000
$1-$10,000
None
None
None
Over $100,000
None
None
$10,001-$50,000
None
None
$1-$10,000
$10,001-$50,000
None
None
$10,001-$50,000
None
$10,001-$50,000
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
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DOLLAR RANGE
OF EQUITY SECURITIES
IN THE FUNDS HELD AS
INTERESTED TRUSTEES
OF 12/31/2007
None
None
None
None
$10,001-$50,000
None
None
None
$1-$10,000
$50,001-$100,000
$50,001-$100,000
$50,001-$100,000
Over $100,000
TOTAL COMPENSATION
TOTAL COMPENSATION FROM
FROM U.S. GLOBAL
U.S. GLOBAL ACCOLADE FUNDS
NON-INTERESTED TRUSTEES
INVESTORS FUNDS(1)(2)
(1)(2)
$
34,125
$
15,750
$
42,000
n/a
$
38,000
$
15,750
n/a
n/a
$
0
$
0
$
89,876
$
10,883
(1)
On June 30, 2008 there were thirteen funds in the complex. Messrs. Belz, Holmes and Mandigo
serve on boards for all thirteen funds. Effective October 1, 2008, Mr. Gaertner serves on the
board for all thirteen funds; prior to that, he served on the board for nine funds. Mr.
McKinney began serving on the board October 1, 2008.
(2)
The U.S. Global Investors Funds do not provide any pension or retirement benefit for the
trustees.
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2008 U.S. Proxy Voting Guidelines Summary
Updated Dec 17, 2007
The terms of the auditor agreement- the degree to which these agreements impact
shareholders rights;
Motivation and rationale for establishing the agreements;
Quality of disclosure; and
Historical practices in the audit area.
An auditor has a financial interest in or association with the company, and is therefore
not independent;
There is reason to believe that the independent auditor has rendered an opinion which is
neither accurate nor indicative of the companys financial position;
Poor accounting practices are identified that rise to a serious level of concern, such
as: fraud; misapplication of GAAP; and material weaknesses identified in Section 404
disclosures; or
Fees for non-audit services (Other fees) are excessive.
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The tenure of the audit firm;
The length of rotation specified in the proposal;
Any significant audit-related issues at the company;
The number of Audit Committee meetings held each year;
The number of financial experts serving on the committee; and
Whether the company has a periodic renewal process where the auditor is evaluated for
both audit quality and competitive price.
1
In general, companies with a plurality vote standard use Withhold as the valid contrary
vote option in director elections; companies with a majority vote standard use Against.
However, it will vary by company and the proxy must be checked to determine the valid contrary
vote option for the particular company.
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Attend less than 75 percent of the board and committee meetings without a valid excuse
(such as illness, service to the nation, work on behalf of the company);
Sit on more than six public company boards;
Are CEOs of public companies who sit on the boards of more than two public companies
besides their own- withhold only at their outside boards.
The companys proxy indicates that not all directors attended 75% of the aggregate of
their board and committee meetings, but fails to provide the required disclosure of the
names of the directors involved. If this information cannot be obtained, vote
against/withhold from all incumbent directors;
The companys poison pill has a dead-hand or modified dead-hand feature. Vote
against/withhold every year until this feature is removed;
The board adopts or renews a poison pill without shareholder approval, does not commit to
putting it to shareholder vote within 12 months of adoption (or in the case of an newly
public company, does not commit to put the pill to a shareholder vote within 12 months
following the IPO), or reneges on a commitment to put the pill to a vote, and has not yet
received a withhold/against recommendation for this issue;
The board failed to act on a shareholder proposal that received approval by a majority of
the shares outstanding the previous year (a management proposal with other than a FOR
recommendation by management will not be considered as sufficient action taken);
The board failed to act on a shareholder proposal that received approval of the majority
of shares cast for the previous two consecutive years (a management proposal with other than
a FOR recommendation by management will not be considered as sufficient action taken);
The board failed to act on takeover offers where the majority of the shareholders
tendered their shares;
At the previous board election, any director received more than 50 percent
withhold/against votes of the shares cast and the company has failed to address the
underlying issue(s) that caused the high withhold/against vote;
The company is a Russell 3000 company that underperformed its industry group (GICS group)
under the criteria discussed in the section Performance Test for Directors;
The board is classified, and a continuing director responsible for a problematic
governance issue at the board/committee level that would warrant a withhold/against vote
recommendation is not up for election- any or all appropriate nominees (except new) may be
held accountable.
The inside or affiliated outside director serves on any of the three key committees:
audit, compensation, or nominating;
The company lacks an audit, compensation, or nominating committee so that the full board
functions as that committee;
The company lacks a formal nominating committee, even if board attests that the
independent directors fulfill the functions of such a committee;
The full board is less than majority independent.
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The non audit fees paid to the auditor are excessive (see discussion under Auditor
Ratification);
Poor accounting practices are identified which rise to a level of serious concern, such
as: fraud; misapplication of GAAP; and material weaknesses identified in Section 404
disclosures; or
There is persuasive evidence that the audit committee entered into an inappropriate
indemnification agreement with its auditor that limits the ability of the company, or its
shareholders, to pursue legitimate legal recourse against the audit firm.
There is a negative correlation between the chief executives pay and company performance
(see discussion under Equity Compensation Plans);
The company reprices underwater options for stock, cash or other consideration without
prior shareholder approval, even if allowed in their equity plan;
The company fails to submit one-time transfers of stock options to a shareholder vote;
The company fails to fulfill the terms of a burn rate commitment they made to
shareholders;
The company has backdated options (see Options Backdating policy);
The company has poor compensation practices (see Poor Pay Practices policy). Poor pay
practices may warrant withholding votes from the CEO and potentially the entire board as
well.
Employee of the company or one of its affiliates(
1
);
Non-employee officer of the company if among the five most highly paid individuals
(excluding interim CEO);
Listed as a Section 16 officer(
2
);
Current interim CEO;
Beneficial owner of more than 50 percent of the companys voting power (this may be
aggregated if voting power is distributed among more than one member of a defined group).
Board attestation that an outside director is not independent;
Former CEO of the company(
3
);
Former CEO of an acquired company within the past five years;
Former interim CEO if the service was longer than 18 months. If the service was between
twelve and eighteen months an assessment of the interim CEOs employment agreement will be
made; (
4
)
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Former executive(
2
) of the company, an affiliate or an acquired firm within the past five
years;
Executive(
2
) of a former parent or predecessor firm at the time the company was sold or
split off from the parent/predecessor within the past five years;
Executive(
2
), former executive, general or limited partner of a joint venture or
partnership with the company;
Relative(
5
) of a current Section 16 officer of company or its affiliates;
Relative(
5
) of a current employee of company or its affiliates where additional factors
raise concern (which may include, but are not limited to, the following: a director related
to numerous employees; the company or its affiliates employ relatives of numerous board
members; or a non-Section 16 officer in a key strategic role);
Relative(
5)
of former Section 16 officer, of company or its affiliate within the last
five years;
Currently provides (or a relative(
5
) provides) professional services(
6
) to the company,
to an affiliate of the company or an individual officer of the company or one of its
affiliates in excess of $10,000 per year;
Employed by (or a relative(
5
) is employed by) a significant customer or supplier(
7
);
Has (or a relative(
5
has) any transactional relationship with the company or its
affiliates excluding investments in the company through a private placement; (
7
)
Any material financial tie or other related party transactional relationship to the
company;
Party to a voting agreement to vote in line with management on proposals being brought to
shareholder vote;
Has (or a relative(
5
) has) an interlocking relationship as defined by the SEC involving
members of the board of directors or its Compensation and Stock Option Committee; (
8
)
Founder (
9
) of the company but not currently an employee;
Is (or a relative(
5
) is) a trustee, director or employee of a charitable or non-profit
organization that receives grants or endowments (
7)
from the company or its affiliates(
1
).
No material(
10
) connection to the company other than a board seat.
(1)
Affiliate includes a subsidiary, sibling company, or parent company. ISS uses 50 percent
control ownership by the parent company as the standard for applying its affiliate
designation.
(2)
Executives (officers subject to Section 16 of the Securities and Exchange Act of 1934)
include the chief executive, operating, financial, legal, technology, and accounting officers
of a company (including the president, treasurer, secretary, controller, or any vice president
in charge of a principal business unit, division or policy function). A non-employee director
serving as an officer due to statutory requirements (e.g. corporate secretary) will be
classified as an Affiliated Outsider. If the company provides additional disclosure that the
director is not receiving additional compensation for serving in that capacity, then the
director will be classified as an Independent Outsider.
(3)
Includes any former CEO of the company prior to the companys initial public offering (IPO).
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(4)
ISS will look at the terms of the interim CEOs employment contract to determine if it
contains severance pay, long-term health and pension benefits or other such standard
provisions typically contained in contracts of permanent, non-temporary CEOs. ISS will also
consider if a formal search process was underway for a full-time CEO at the time.
(5)
Relative follows the SECs new definition of immediate family members which covers
spouses, parents, children, step-parents, step-children, siblings, in-laws, and any person
(other than a tenant or employee) sharing the household of any director, nominee for director,
executive officer, or significant shareholder of the company.
(6)
Professional services can be characterized as advisory in nature and generally include the
following: investment banking / financial advisory services; commercial banking (beyond
deposit services); investment services; insurance services; accounting/audit services;
consulting services; marketing services; and legal services. The case of participation in a
banking syndicate by a non-lead bank should be considered a transaction (and hence subject to
the associated materiality test) rather than a professional relationship.
(7)
If the company makes or receives annual payments exceeding the greater of $200,000 or 5
percent of the recipients gross revenues. (The recipient is the party receiving the financial
proceeds from the transaction).
(8)
Interlocks include: (a) executive officers serving as directors on each others compensation
or similar committees (or, in the absence of such a committee, on the board); or (b) executive
officers sitting on each others boards and at least one serves on the others compensation or
similar committees (or, in the absence of such a committee, on the board).
(9)
The operating involvement of the Founder with the company will be considered. Little to no
operating involvement may cause ISS to deem the Founder as an independent outsider.
(10)
For purposes of ISS director independence classification, material will be defined as a
standard of relationship (financial, personal or otherwise) that a reasonable person might
conclude could potentially influence ones objectivity in the boardroom in a manner that would
have a meaningful impact on an individuals ability to satisfy requisite fiduciary standards
on behalf of shareholders.
The company has proxy access or a similar structure(2) to allow shareholders to nominate
directors to the companys ballot; and
(2)
Similar structure would be a structure that allows shareholders to nominate candidates who
the company will include on the management ballot IN ADDITION TO managements nominees, and
their bios are included in managements proxy.
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The company has adopted a majority vote standard, with a carve-out for plurality voting
in situations where there are more nominees than seats, and a director resignation policy to
address failed elections.
If the director was found to have acted in good faith and in a manner that he reasonably
believed was in the best interests of the company; and
If only the directors legal expenses would be covered.
Designated lead director, elected by and from the independent board members with clearly
delineated and comprehensive duties. (The role may alternatively reside with a presiding
director, vice chairman, or rotating lead director; however the director must serve a
minimum of one year in order to qualify as a lead director.) The duties should include, but
are not limited to, the following:
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o
presides at all meetings of the board at which the chairman is not present,
including executive sessions of the independent directors;
o
serves as liaison between the chairman and the independent directors;
o
approves information sent to the board;
o
approves meeting agendas for the board;
o
approves meeting schedules to assure that there is sufficient time for discussion of all agenda items;
o
has the authority to call meetings of the independent directors;
o
if requested by major shareholders, ensures that he is available for consultation and direct communication;
The company publicly discloses a comparison of the duties of its independent lead director and its chairman;
The company publicly discloses a sufficient explanation of why it chooses not to give the
position of chairman to the independent lead director, and instead combine the chairman and
CEO positions;
Two-thirds independent board;
All independent key committees;
Established governance guidelines;
The company should not have underperformed both its peers and index on the basis of both
one-year and three-year total shareholder returns*, unless there has been a change in the
Chairman/CEO position within that time; and
The company does not have any problematic governance issues.
*
The industry peer group used for this evaluation is the average of the 12 companies in the
same 6-digit GICS group that are closest in revenue to the company. To fail, the company must
under-perform its index and industry group on all 4 measures (1 and 3 year on industry peers
and index).
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Established a communication structure that goes beyond the exchange requirements to
facilitate the exchange of information between shareholders and members of the board;
Effectively disclosed information with respect to this structure to its shareholders;
Company has not ignored majority-supported shareholder proposals or a majority withhold
vote on a director nominee; and
The company has an independent chairman or a lead/presiding director, according to ISS
definition. This individual must be made available for periodic consultation and direct
communication with major shareholders.
The ownership threshold proposed in the resolution;
The proponents rationale for the proposal at the targeted company in terms of board and
director conduct.
Basis of
Metrics
Evaluation
Weighting
2nd Weighting
50
%
Management efficiency in deploying assets
33.3
%
Top-Line
33.3
%
Core-earnings
33.3
%
100
%
50
%
Market
100
%
*
Metric applies to companies in the financial sector
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Year-to-date performance;
Situational circumstances;
Change in management/board;
Overall governance practices.
Long-term financial performance of the target company relative to its industry;
Managements track record;
Background to the proxy contest;
Qualifications of director nominees (both slates);
Strategic plan of dissident slate and quality of critique against management;
Likelihood that the proposed goals and objectives can be achieved (both slates);
Stock ownership positions.
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The election of fewer than 50% of the directors to be elected is contested in the
election;
One or more of the dissidents candidates is elected;
Shareholders are not permitted to cumulate their votes for directors; and
The election occurred, and the expenses were incurred, after the adoption of this bylaw.
Shareholders have approved the adoption of the plan; or
The board, in its exercise of its fiduciary responsibilities, determines that it is in
the best interest of shareholders under the circumstances to adopt a pill without the delay
in adoption that would result from seeking stockholder approval (i.e., the fiduciary out
provision). A poison pill adopted under this fiduciary out will be put to a shareholder
ratification vote within 12 months of adoption or expire. If the pill is not approved by a
majority of the votes cast on this issue, the plan will immediately terminate.
No lower than a 20% trigger, flip-in or flip-over;
A term of no more than three years;
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No dead-hand, slow-hand, no-hand or similar feature that limits the ability of a future
board to redeem the pill;
Shareholder redemption feature (qualifying offer clause); if the board refuses to redeem
the pill 90 days after a qualifying offer is announced, 10 percent of the shares may call a
special meeting or seek a written consent to vote on rescinding the pill.
Valuation
- Is the value to be received by the target shareholders (or paid by the
acquirer) reasonable? While the fairness opinion may provide an initial starting point for
assessing valuation reasonableness, emphasis is placed on the offer premium, market reaction
and strategic rationale.
Market reaction
- How has the market responded to the proposed deal? A negative market
reaction should cause closer scrutiny of a deal.
Strategic rationale
- Does the deal make sense strategically? From where is the value
derived? Cost and revenue synergies should not be overly aggressive or optimistic, but
reasonably achievable. Management should also have a favorable track record of successful
integration of historical acquisitions.
Negotiations and process
- Were the terms of the transaction negotiated at arms-length?
Was the process fair and equitable? A fair process helps to ensure the best price for
shareholders. Significant negotiation wins can also signify the deal makers competency.
The comprehensiveness of the sales process (e.g., full auction, partial auction, no auction)
can also affect shareholder value.
Conflicts of interest
- Are insiders benefiting from the transaction disproportionately
and inappropriately as compared to non-insider shareholders? As the result of potential
conflicts, the directors and officers of the company may be more likely to vote to approve a
merger than if they did not hold these interests. Consider whether these interests may have
influenced these directors and officers to support or recommend the merger. The CIC figure
presented in the ISS Transaction Summary section of this report is an aggregate figure
that can in certain cases be a misleading indicator of the true value transfer from
shareholders to insiders. Where such figure appears to be excessive, analyze the underlying
assumptions to determine whether a potential conflict exists.
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Governance
- Will the combined company have a better or worse governance profile than the
current governance profiles of the respective parties to the transaction? If the governance
profile is to change for the worse, the burden is on the company to prove that other issues
(such as valuation) outweigh any deterioration in governance.
Purchase price;
Fairness opinion;
Financial and strategic benefits;
How the deal was negotiated;
Conflicts of interest;
Other alternatives for the business;
Non-completion risk.
Impact on the balance sheet/working capital;
Potential elimination of diseconomies;
Anticipated financial and operating benefits;
Anticipated use of funds;
Value received for the asset;
Fairness opinion;
How the deal was negotiated;
Conflicts of interest.
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Dilution to existing shareholders position;
Terms of the offer;
Financial issues;
Managements efforts to pursue other alternatives;
Control issues;
Conflicts of interest.
The reasons for the change;
Any financial or tax benefits;
Regulatory benefits;
Increases in capital structure;
Changes to the articles of incorporation or bylaws of the company.
Increases in common or preferred stock in excess of the allowable maximum (see discussion
under Capital Structure);
Adverse changes in shareholder rights.
Offer price/premium;
Fairness opinion;
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How the deal was negotiated;
Conflicts of interest;
Other alternatives/offers considered; and
Non-completion risk.
Whether the company has attained benefits from being publicly-traded (examination of
trading volume, liquidity, and market research of the stock);
Cash-out value;
Whether the interests of continuing and cashed-out shareholders are balanced; and
The market reaction to public announcement of transaction.
Percentage of assets/business contributed;
Percentage ownership;
Financial and strategic benefits;
Governance structure;
Conflicts of interest;
Other alternatives;
Noncompletion risk.
Managements efforts to pursue other alternatives;
Appraisal value of assets; and
The compensation plan for executives managing the liquidation.
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Dilution to existing shareholders position;
Terms of the offer;
Financial issues;
Managements efforts to pursue other alternatives;
Control issues;
Conflicts of interest.
Tax and regulatory advantages;
Planned use of the sale proceeds;
Valuation of spinoff;
Fairness opinion;
Benefits to the parent company;
Conflicts of interest;
Managerial incentives;
Corporate governance changes;
Changes in the capital structure.
Prolonged poor performance with no turnaround in sight;
Signs of entrenched board and management;
Strategic plan in place for improving value;
Likelihood of receiving reasonable value in a sale or dissolution; and
Whether company is actively exploring its strategic options, including retaining a
financial advisor.
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The reasons for reincorporating;
A comparison of the governance provisions;
Comparative economic benefits; and
A comparison of the jurisdictional laws.
Rationale;
Good performance with respect to peers and index on a five-year total shareholder return
basis;
Absence of non-shareholder approved poison pill;
Reasonable equity compensation burn rate;
No non-shareholder approved pay plans; and
Absence of egregious equity compensation practices.
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It is intended for financing purposes with minimal or no dilution to current
shareholders;
It is not designed to preserve the voting power of an insider or significant shareholder.
More simplified capital structure;
Enhanced liquidity;
Fairness of conversion terms;
Impact on voting power and dividends;
Reasons for the reclassification;
Conflicts of interest; and
Other alternatives considered.
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Adverse governance changes;
Excessive increases in authorized capital stock;
Unfair method of distribution;
Diminution of voting rights;
Adverse conversion features;
Negative impact on stock option plans; and
Alternatives such as spin-off.
The total cost of the companys equity plans is unreasonable;
The plan expressly permits the repricing of stock options without prior shareholder
approval;
There is a disconnect between CEO pay and the companys performance;
The companys three year burn rate exceeds the greater of 2% and the mean plus one
standard deviation of its industry group; or
The plan is a vehicle for poor pay practices.
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There is a disconnect between the CEOs pay and company performance (an increase in pay
and a decrease in performance);
The main source of the pay increase (over half) is equity-based; and
The CEO is a participant of the equity proposal.
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The compensation committee has reviewed all components of the CEOs compensation,
including the following:
Base salary, bonus, long-term incentives;
Accumulative realized and unrealized stock option and restricted stock gains;
Dollar value of perquisites and other personal benefits to the CEO and the total cost to the company;
Earnings and accumulated payment obligations under the companys nonqualified deferred compensation program;
Actual projected payment obligations under the companys supplemental executive retirement plan (SERPs).
A tally sheet with all the above components should be disclosed for the following termination scenarios:
Payment if termination occurs within 12 months: $
;
Payment if not for cause termination occurs within 12 months: $
;
Payment if change of control termination occurs within 12 months: $
.
The compensation committee is committed to providing additional information on the named
executives annual cash bonus program and/or long-term incentive cash plan for the current
fiscal year. The compensation committee will provide full disclosure of the qualitative and
quantitative performance criteria and hurdle rates used to determine the payouts of the cash
program. From this disclosure, shareholders will know the minimum level of performance
required for any cash bonus to be delivered, as well as the maximum cash bonus payable for
superior performance.
The compensation committee is committed to granting a substantial portion of
performance-based equity awards to the named executive officers. A substantial portion of
performance-based awards would be at least 50 percent of the shares awarded to each of the
named executive officers. Performance-based equity awards are earned or paid out based on
the achievement of company performance targets. The company will disclose the details of the
performance criteria (e.g., return on equity) and the hurdle rates (e.g., 15 percent)
associated with the performance targets. From this disclosure, shareholders will know the
minimum level of performance required for any equity grants to be made. The
performance-based equity awards do not refer to non-qualified stock options(3) or
performance-accelerated grants.(4) Instead, performance-based equity awards are
performance-contingent grants where the individual will not receive the equity grant by not
meeting the target performance and vice versa.
(3)
Non-qualified stock options are not performance-based awards unless the grant or the vesting
of the stock options is tied to the achievement of a pre-determined and disclosed performance
measure. A rising stock market will generally increase share prices of all companies, despite
of the companys underlying performance.
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The compensation committee has the sole authority to hire and fire outside compensation
consultants. The role of the outside compensation consultant is to assist the compensation
committee to analyze executive pay packages or contracts and understand the companys
financial measures.
Russell 3000
Non-Russell 3000
Standard
Standard
GICS
Description
Mean
Deviation
Mean+STDEV
Mean
Deviation
Mean+STDEV
1010
1.71
%
1.39
%
3.09
%
2.12
%
2.31
%
4.43
%
1510
1.16
%
0.77
%
1.93
%
2.23
%
2.26
%
4.49
%
2010
1.51
%
1.04
%
2.55
%
2.36
%
2.03
%
4.39
%
2020
2.35
%
1.70
%
4.05
%
2.20
%
2.03
%
4.23
%
2030
1.59
%
1.22
%
2.80
%
2.02
%
2.08
%
4.10
%
2510
1.89
%
1.10
%
2.99
%
1.73
%
2.05
%
3.78
%
2520
2.02
%
1.31
%
3.33
%
2.10
%
1.94
%
4.04
%
2530
2.15
%
1.18
%
3.33
%
2.32
%
1.93
%
4.25
%
2540
1.92
%
1.35
%
3.27
%
3.33
%
2.60
%
5.93
%
2550
1.86
%
1.04
%
2.90
%
3.15
%
2.65
%
5.80
%
3010, 3020,
3030
1.69
%
1.23
%
2.92
%
1.82
%
2.03
%
3.85
%
3510
2.90
%
1.67
%
4.57
%
3.75
%
2.65
%
6.40
%
3520
3.30
%
1.66
%
4.96
%
4.92
%
3.77
%
8.69
%
4010
1.27
%
0.88
%
2.15
%
1.07
%
1.12
%
2.19
%
4020
2.45
%
2.07
%
4.52
%
4.41
%
5.31
%
9.71
%
4030
1.21
%
0.93
%
2.14
%
2.07
%
2.28
%
4.35
%
(4)
Performance-accelerated grants are awards that vest earlier based on the achievement of a
specified measure. However, these grants will ultimately vest over time even without the
attainment of the goal(s).
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Russell 3000
Non-Russell 3000
Standard
Standard
GICS
Description
Mean
Deviation
Mean+STDEV
Mean
Deviation
Mean+STDEV
4040
1.04
%
0.81
%
1.85
%
0.80
%
1.21
%
2.02
%
4510
3.81
%
2.30
%
6.11
%
5.46
%
3.81
%
9.27
%
4520
3.07
%
1.74
%
4.80
%
3.43
%
2.40
%
5.83
%
4530
3.78
%
1.81
%
5.59
%
4.51
%
2.30
%
6.81
%
5010
1.57
%
1.23
%
2.80
%
2.69
%
2.41
%
5.10
%
5510
0.72
%
0.50
%
1.22
%
0.59
%
0.66
%
1.25
%
Annual Stock Price Volatility
Multiplier
1 full-value award will count as 1.5 option shares
1 full-value award will count as 2.0 option shares
1 full-value award will count as 2.5 option shares
1 full-value award will count as 3.0 option shares
1 full-value award will count as 3.5 option shares
1 full-value award will count as 4.0 option shares
Egregious employment contracts:
Ø
Contracts containing multi-year guarantees for salary increases, bonuses, and equity compensation;
Excessive perks:
Ø
Overly generous cost and/or reimbursement of taxes for personal use of corporate
aircraft, personal security systems maintenance and/or installation, car allowances,
and/or other excessive arrangements relative to base salary;
Abnormally large bonus payouts without justifiable performance linkage or proper
disclosure:
Ø
Performance metrics that are changed, canceled, or replaced during the performance
period without adequate explanation of the action and the link to performance;
Egregious pension/SERP (supplemental executive retirement plan) payouts:
Ø
Inclusion of additional years of service not worked that result in significant payouts
Ø
Inclusion of performance-based equity awards in the pension calculation;
New CEO with overly generous new hire package:
Ø
Excessive make whole provisions;
Ø
Any of the poor pay practices listed in this policy;
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Excessive severance and/or change-in-control provisions:
Ø
Inclusion of excessive change-in-control or severance payments, especially those with
a multiple in excess of 3X cash pay;
Ø
Severance paid for a performance termination, (i.e., due to the executives failure
to perform job functions at the appropriate level);
Ø
Change-in-control payouts without loss of job or substantial diminution of job duties
(single-triggered);
Ø
Perquisites for former executives such as car allowances, personal use of corporate
aircraft, or other inappropriate arrangements;
Poor disclosure practices:
Ø
Unclear explanation of how the CEO is involved in the pay setting process;
Ø
Retrospective performance targets and methodology not discussed;
Ø
Methodology for benchmarking practices and/or peer group not disclosed and explained;
Internal Pay Disparity:
Ø
Excessive differential between CEO total pay and that of next highest-paid named executive officer (NEO);
Options backdating (covered in a separate policy);
Other excessive compensation payouts or poor pay practices at the company.
Performance:
Companies with sustained positive stock performance will merit greater
scrutiny. Five-year total shareholder return (TSR), year-over-year performance, and peer
performance could play a significant role in this determination.
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Overhang Disclosure
: Assess whether optionees have held in-the-money options for a
prolonged period (thus reflecting their confidence in the prospects of the company). Note
that this assessment would require additional disclosure regarding a companys overhang.
Specifically, the following disclosure would be required:
o
The number of in-the-money options outstanding in excess of six or more years
with a corresponding weighted average exercise price and weighted average contractual
remaining term;
o
The number of all options outstanding less than six years and underwater
options outstanding in excess of six years with a corresponding weighted average
exercise price and weighted average contractual remaining term;
o
The general vesting provisions of option grants; and
o
The distribution of outstanding option grants with respect to the named executive officers;
Dilution
: Calculate the expected duration of the new share request in addition to all
shares currently available for grant under the equity compensation program, based on the
companys three-year average burn rate (or a burn-rate commitment that the company makes for
future years). The expected duration will be calculated by multiplying the companys
unadjusted (options and full-value awards accounted on a one-for-one basis) three-year
average burn rate by the most recent fiscal years weighted average shares outstanding (as
used in the companys calculation of basic EPS) and divide the sum of the new share request
and all available shares under the companys equity compensation program by the product. For
example, an expected duration in excess of five years could be considered problematic; and
Compensation Practices
: An evaluation of overall practices could include: (1) stock
option repricing provisions, (2) high concentration ratios (of grants to top executives), or
(3) additional practices outlined in the Poor Pay Practices policy.
Maintain appropriate pay-for-performance alignment with emphasis on long-term shareholder
value: This principle encompasses overall executive pay practices, which must be designed to
attract, retain, and appropriately motivate the key employees who drive shareholder value
creation over the long term. It will take into consideration, among other factors: the
linkage between pay and performance; the mix between fixed and variable pay; performance
goals; and equity-based plan costs;
Avoid arrangements that risk pay for failure: This principle addresses the use and
appropriateness of long or indefinite contracts, excessive severance packages, and
guaranteed compensation;
Maintain an independent and effective compensation committee: This principle promotes
oversight of executive pay programs by directors with appropriate skills, knowledge,
experience, and a sound process for compensation decision-making (e.g., including access to
independent expertise and advice when needed);
Provide shareholders with clear, comprehensive compensation disclosures: This principle
underscores the importance of informative and timely disclosures that enable shareholders to
evaluate executive pay practices fully and fairly;
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Avoid inappropriate pay to non-executive directors: This principle recognizes the
interests of shareholders in ensuring that compensation to outside directors does not
compromise their independence and ability to make appropriate judgments in overseeing
managers pay and performance. At the market level, it may incorporate a variety of
generally accepted best practices.
Assessment of performance metrics relative to business strategy, as discussed and
explained in the CD&A;
Evaluation of peer groups used to set target pay or award opportunities;
Alignment of company performance and executive pay trends over time (e.g., performance
down: pay down);
Assessment of disparity between total pay of the CEO and other Named Executive Officers
(NEOs).
Balance of fixed versus performance-driven pay;
Assessment of excessive practices with respect to perks, severance packages, supplemental
executive pension plans, and burn rates.
Evaluation of information and board rationale provided in CD&A about how compensation is
determined (e.g., why certain elements and pay targets are used, and specific incentive plan
goals, especially retrospective goals);
Assessment of boards responsiveness to investor input and engagement on compensation
issues (e.g., in responding to majority-supported shareholder proposals on executive pay
topics).
Director stock ownership guidelines with a minimum of three times the annual cash
retainer.
Vesting schedule or mandatory holding/deferral period:
A minimum vesting of three years for stock options or restricted stock; or
Deferred stock payable at the end of a three-year deferral period.
Mix between cash and equity:
A balanced mix of cash and equity, for example 40% cash/60% equity or 50% cash/50% equity; or
If the mix is heavier on the equity component, the vesting schedule or deferral
period should be more stringent, with the lesser of five years or the term of
directorship.
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No retirement/benefits and perquisites provided to non-employee directors; and
Detailed disclosure provided on cash and equity compensation delivered to each
non-employee director for the most recent fiscal year in a table. The column headers for the
table may include the following: name of each non-employee director, annual retainer, board
meeting fees, committee retainer, committee-meeting fees, and equity grants.
Purchase price is at least 85 percent of fair market value;
Offering period is 27 months or less; and
The number of shares allocated to the plan is ten percent or less of the outstanding
shares.
Purchase price is less than 85 percent of fair market value; or
Offering period is greater than 27 months; or
The number of shares allocated to the plan is more than ten percent of the
outstanding shares.
Broad-based participation (i.e., all employees of the company with the exclusion of
individuals with 5 percent or more of beneficial ownership of the company);
Limits on employee contribution, which may be a fixed dollar amount or expressed as a
percent of base salary;
Company matching contribution up to 25 percent of employees contribution, which is
effectively a discount of 20 percent from market value;
No discount on the stock price on the date of purchase since there is a company
matching contribution.
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Reason and motive for the options backdating issue, such as inadvertent vs.
deliberate grant date changes;
Length of time of options backdating;
Size of restatement due to options backdating;
Corrective actions taken by the board or compensation committee, such as canceling or
repricing backdated options, or recoupment of option gains on backdated grants;
Adoption of a grant policy that prohibits backdating, and creation of a fixed grant
schedule or window period for equity grants going forward.
Historic trading patterns-the stock price should not be so volatile that the options
are likely to be back in-the-money over the near term;
Rationale for the re-pricing-was the stock price decline beyond managements control?
Is this a value-for-value exchange?
Are surrendered stock options added back to the plan reserve?
Option vesting-does the new option vest immediately or is there a black-out period?
Term of the option-the term should remain the same as that of the replaced option;
Exercise price-should be set at fair market or a premium to market;
Participants-executive officers and directors should be excluded.
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Executive officers and non-employee directors are excluded from participating;
Stock options are purchased by third-party financial institutions at a discount to
their fair value using option pricing models such as Black-Scholes or a Binomial Option
Valuation or other appropriate financial models;
There is a two-year minimum holding period for sale proceeds (cash or stock) for all
participants.
Eligibility;
Vesting;
Bid-price;
Term of options;
Transfer value to third-party financial institution, employees and the company.
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Sets compensation targets for the Plans annual and long-term incentive pay
components at or below the peer group median;
Delivers a majority of the Plans target long-term compensation through
performance-vested, not simply time-vested, equity awards;
Provides the strategic rationale and relative weightings of the financial and
non-financial performance metrics or criteria used in the annual and performance-vested
long-term incentive components of the plan;
Establishes performance targets for each plan financial metric relative to the
performance of the companys peer companies;
Limits payment under the annual and performance-vested long-term incentive components
of the plan to when the companys performance on its selected financial performance
metrics exceeds peer group median performance.
What aspects of the companys annual and long-term equity incentive programs are
performance driven?
If the annual and long-term equity incentive programs are performance driven, are the
performance criteria and hurdle rates disclosed to shareholders or are they benchmarked
against a disclosed peer group?
Can shareholders assess the correlation between pay and performance based on the
current disclosure?
What type of industry and stage of business cycle does the company belong to?
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First, vote FOR shareholder proposals advocating the use of performance-based equity
awards, such as performance contingent options or restricted stock, indexed options or
premium-priced options, unless the proposal is overly restrictive or if the company has
demonstrated that it is using a substantial portion of performance-based awards for its
top executives. Standard stock options and performance-accelerated awards do not meet the
criteria to be considered as performance-based awards. Further, premium-priced options
should have a premium of at least 25 percent and higher to be considered performance-based
awards.
Second, assess the rigor of the companys performance-based equity program. If the
bar set for the performance-based program is too low based on the companys historical or
peer group comparison, generally vote FOR the proposal. Furthermore, if target performance
results in an above target payout, vote FOR the shareholder proposal due to programs poor
design. If the company does not disclose the performance metric of the performance-based
equity program, vote FOR the shareholder proposal regardless of the outcome of the first
step to the test.
Adoption, amendment, or termination of a 10b5-1 Plan must be disclosed within two
business days in a Form 8-K;
Amendment or early termination of a 10b5-1 Plan is allowed only under extraordinary
circumstances, as determined by the board;
Ninety days must elapse between adoption or amendment of a 10b5-1 Plan and initial
trading under the plan;
Reports on Form 4 must identify transactions made pursuant to a 10b5-1 Plan;
An executive may not trade in company stock outside the 10b5-1 Plan.
Trades under a 10b5-1 Plan must be handled by a broker who does not handle other
securities transactions for the executive.
If the company has adopted a formal recoupment bonus policy; or
If the company has chronic restatement history or material financial problems.
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The triggering mechanism should be beyond the control of management;
The amount should not exceed three times base amount (defined as the average annual
taxable W-2 compensation during the five years prior to the year in which the change of
control occurs;
Change-in-control payments should be double-triggered, i.e., (1) after a change in
control has taken place, and (2) termination of the executive as a result of the change in
control. Change in control is defined as a change in the company ownership structure.
Whether the company has any holding period, retention ratio, or officer ownership
requirements in place. These should consist of:
o
Rigorous stock ownership guidelines, or
o
A short-term holding period requirement (six months to one year) coupled with a
significant long-term ownership requirement, or
o
A meaningful retention ratio,
Actual officer stock ownership and the degree to which it meets or exceeds the
proponents suggested holding period/retention ratio or the companys own stock ownership
or retention requirements.
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The company is conducting animal testing programs that are unnecessary or not
required by regulation;
The company is conducting animal testing when suitable alternatives are accepted and
used at peer firms;
The company has been the subject of recent, significant controversy related to its
testing programs.
The company has already published a set of animal welfare standards and monitors
compliance;
The companys standards are comparable to or better than those of peer firms; and
There are no recent, significant fines or litigation related to the companys
treatment of animals.
The relevance of the proposal in terms of the companys business and the proportion
of it affected by the resolution;
The quality of the companys disclosure on GE product labeling and related voluntary
initiatives and how this disclosure compares with peer company disclosure;
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Companys current disclosure on the feasibility of GE product labeling, including
information on the related costs;
Any voluntary labeling initiatives undertaken or considered by the company.
Whether the company has adequately disclosed mechanisms in place to prevent abusive
lending practices;
Whether the company has adequately disclosed the financial risks of the lending
products in question;
Whether the company has been subject to violations of lending laws or serious lending
controversies;
Peer companies policies to prevent abusive lending practices.
The existing level of disclosure on pricing policies;
Deviation from established industry pricing norms;
The companys existing initiatives to provide its products to needy consumers;
Whether the proposal focuses on specific products or geographic regions.
The company already discloses similar information through existing reports or
policies such as a Supplier Code of Conduct and/or a sustainability report;
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The company has formally committed to the implementation of a toxic materials and/or
product safety and supply chain reporting and monitoring program based on industry norms
or similar standards within a specified time frame; and
The company has not been recently involved in relevant significant controversies or
violations.
Current regulations in the markets in which the company operates;
Recent significant controversy, litigation, or fines stemming from toxic chemicals or
ingredients at the company; and
The current level of disclosure on this topic.
Whether the company complies with federal, state, and local laws on the marketing of
tobacco or if it has been fined for violations;
Whether the company has gone as far as peers in restricting advertising;
Whether the company entered into the Master Settlement Agreement, which restricts
marketing of tobacco to youth;
Whether restrictions on marketing to youth extend to foreign countries.
The percentage of the companys business affected;
The economic loss of eliminating the business versus any potential tobacco-related
liabilities.
Whether the company complies with all local ordinances and regulations;
The degree that voluntary restrictions beyond those mandated by law might hurt the
companys competitiveness;
The risk of any health-related liabilities.
The percentage of the companys business affected;
The feasibility of a spin-off;
Potential future liabilities related to the companys tobacco business.
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The board composition is reasonably inclusive in relation to companies of similar
size and business; or
The board already reports on its nominating procedures and diversity initiatives.
The degree of board diversity;
Comparison with peer companies;
Established process for improving board diversity;
Existence of independent nominating committee;
Use of outside search firm;
History of EEO violations.
The company has well-documented equal opportunity programs;
The company already publicly reports on its diversity initiatives and/or provides
data on its workforce diversity; and
The company has no recent EEO-related violations or litigation.
The composition of senior management and the board is fairly inclusive;
The company has well-documented programs addressing diversity initiatives and
leadership development;
The company already publicly reports on its company-wide affirmative-action
initiatives and provides data on its workforce diversity; and
The company has had no recent, significant EEO-related violations or litigation.
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Existing disclosure on the companys diversity initiatives and policies;
Any recent, significant violations or litigation related to discrimination at the
company.
The company already provides current, publicly-available information on the perceived
impact that climate change may have on the company as well as associated policies and
procedures to address such risks and/or opportunities;
The companys level of disclosure is comparable to or better than information
provided by industry peers; and
There are no significant fines, penalties, or litigation associated with the
companys environmental performance.
The company has publicly disclosed guidelines for its corporate and contract farming
operations, including compliance monitoring; or
The company does not directly source from CAFOs.
The current level of disclosure related to energy efficiency policies, initiatives,
and performance measures;
The companys level of participation in voluntary energy efficiency programs and
initiatives;
The companys compliance with applicable legislation and/or regulations regarding
energy efficiency; and
The companys energy efficiency policies and initiatives relative to industry peers.
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The companys compliance with applicable regulations and guidelines;
The level of existing disclosure related to security and safety policies, procedures,
and compliance monitoring; and,
The existence of recent, significant violations, fines, or controversy related to the
safety and security of the companys operations and/or facilities.
Operations in the specified regions are not permitted by current laws or regulations;
The company does not currently have operations or plans to develop operations in
these protected regions; or,
The company provides disclosure on its operations and environmental policies in these
regions comparable to industry peers.
The nature of the companys business and the percentage affected;
The extent that peer companies are recycling;
The timetable prescribed by the proposal;
The costs and methods of implementation;
Whether the company has a poor environmental track record, such as violations of
applicable regulations.
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The relevance of the issue to be linked to pay;
The degree that social performance is already included in the companys pay structure
and disclosed;
The degree that social performance is used by peer companies in setting pay;
Violations or complaints filed against the company relating to the particular social
performance measure;
Artificial limits sought by the proposal, such as freezing or capping executive pay;
Independence of the compensation committee;
Current company pay levels.
The nature and size of the companys operations in Sub-Saharan Africa and the number
of local employees;
The companys existing healthcare policies, including benefits and healthcare access
for local workers; and
Company donations to healthcare providers operating in the region.
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The company is in compliance with laws governing corporate political activities; and
The company has procedures in place to ensure that employee contributions to
company-sponsored political action committees (PACs) are strictly voluntary and not
coercive.
Recent significant controversy or litigation related to the companys political
contributions or governmental affairs; and
The public availability of a company policy on political contributions and trade
association spending including information on the types of organizations supported, the
business rationale for supporting these organizations, and the oversight and compliance
procedures related to such expenditures of corporate assets.
There are serious controversies surrounding the companys China operations; and
The company does not have a code of conduct with standards similar to those
promulgated by the International Labor Organization (ILO).
The degree to which existing human rights policies and practices are disclosed;
Whether or not existing policies are consistent with internationally recognized labor
standards;
Whether company facilities are monitored and how;
Company participation in fair labor organizations or other internationally recognized
human rights initiatives;
The companys primary business model and methods of operation;
Proportion of business conducted in markets known to have higher risk of workplace
labor right abuse;
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Whether the company has been recently involved in significant labor and human rights
controversies or violations;
Peer company standards and practices; and
Union presence in companys international factories.
Current disclosure of applicable risk assessment report(s) and risk management
procedures;
The impact of regulatory non-compliance, litigation, remediation, or reputational
loss that may be associated with failure to manage the companys operations in question,
including the management of relevant community and stakeholder relations;
The nature, purpose, and scope of the companys operations in the specific region(s);
and,
The degree to which company policies and procedures are consistent with industry
norms.
The level of disclosure of policies and procedures relating to privacy, freedom of
speech, Internet censorship, and government monitoring of the Internet;
Engagement in dialogue with governments and/or relevant groups with respect to the
Internet and the free flow of information;
The scope of business involvement and of investment in markets that maintain
government censorship or monitoring of the Internet;
The market-specific laws or regulations applicable to Internet censorship or
monitoring that may be imposed on the company; and,
The level of controversy or litigation related to the companys international human
rights policies and procedures.
Company compliance with or violations of the Fair Employment Act of 1989;
Company antidiscrimination policies that already exceed the legal requirements;
The cost and feasibility of adopting all nine principles;
The cost of duplicating efforts to follow two sets of standards (Fair Employment and
the
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MacBride Principles);
The potential for charges of reverse discrimination;
The potential that any company sales or contracts in the rest of the United Kingdom
could be negatively impacted;
The level of the companys investment in Northern Ireland;
The number of company employees in Northern Ireland;
The degree that industry peers have adopted the MacBride Principles; and
Applicable state and municipal laws that limit contracts with companies that have not
adopted the MacBride Principles.
The nature, purpose, and scope of the operations and business involved that could be
affected by social or political disruption;
Current disclosure of applicable risk assessment(s) and risk management procedures;
Compliance with U.S. sanctions and laws;
Consideration of other international policies, standards, and laws; and
Whether the company has been recently involved in significant controversies or
violations in high-risk markets.
Risks associated with certain international markets;
The utility of such a report to shareholders;
The existence of a publicly available code of corporate conduct that applies to
international operations.
The company does not operate in countries with significant human rights violations;
The company has no recent human rights controversies or violations; or
The company already publicly discloses information on its vendor standards policies
and compliance mechanisms.
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The company already discloses similar information through existing reports or
policies such as an Environment, Health, and Safety (EHS) report; a comprehensive Code of
Corporate Conduct; and/or a Diversity Report; or
The company has formally committed to the implementation of a reporting program based
on Global Reporting Initiative (GRI) guidelines or a similar standard within a specified
time frame.
Past performance as a closed-end fund;
Market in which the fund invests;
Measures taken by the board to address the discount; and
Past shareholder activism, board activity, and votes on related proposals.
Past performance relative to its peers;
Market in which fund invests;
Measures taken by the board to address the issues;
Past shareholder activism, board activity, and votes on related proposals;
Strategy of the incumbents versus the dissidents;
Independence of directors;
Experience and skills of director candidates;
Governance profile of the company;
Evidence of management entrenchment.
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Proposed and current fee schedules;
Fund category/investment objective;
Performance benchmarks;
Share price performance as compared with peers;
Resulting fees relative to peers;
Assignments (where the advisor undergoes a change of control).
Stated specific financing purpose;
Possible dilution for common shares;
Whether the shares can be used for antitakeover purposes.
Potential competitiveness;
Regulatory developments;
Current and potential returns; and
Current and potential risk.
The funds target investments;
The reasons given by the fund for the change; and
The projected impact of the change on the portfolio.
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Political/economic changes in the target market;
Consolidation in the target market; and
Current asset composition.
Potential competitiveness;
Current and potential returns;
Risk of concentration;
Consolidation in target industry.
Strategies employed to salvage the company;
The funds past performance;
The terms of the liquidation.
The degree of change implied by the proposal;
The efficiencies that could result;
The state of incorporation;
Regulatory standards and implications.
Removal of shareholder approval requirement to reorganize or terminate the trust or
any of its series;
Removal of shareholder approval requirement for amendments to the new declaration of
trust;
Removal of shareholder approval requirement to amend the funds management contract,
allowing the contract to be modified by the investment manager and the trust management,
as permitted by the 1940 Act;
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Allow the trustees to impose other fees in addition to sales charges on investment in
a fund, such as deferred sales charges and redemption fees that may be imposed upon
redemption of a funds shares;
Removal of shareholder approval requirement to engage in and terminate subadvisory
arrangements;
Removal of shareholder approval requirement to change the domicile of the fund.
Regulations of both states;
Required fundamental policies of both states;
The increased flexibility available.
Fees charged to comparably sized funds with similar objectives;
The proposed distributors reputation and past performance;
The competitiveness of the fund in the industry;
The terms of the agreement.
Resulting fee structure;
Performance of both funds;
Continuity of management personnel;
Changes in corporate governance and their impact on shareholder rights.
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Performance of the funds Net Asset Value (NAV);
The funds history of shareholder relations;
The performance of other funds under the advisors management.
2008 International Proxy Voting Guidelines Summary
Updated Dec 17, 2007
There are concerns about the accounts presented or audit procedures used; or
The company is not responsive to shareholder questions about specific items that
should be publicly disclosed.
There are serious concerns about the accounts presented or the audit procedures used;
The auditors are being changed without explanation; or
Non-audit-related fees are substantial or are routinely in excess of standard annual
audit-related fees.
There are serious concerns about the statutory reports presented or the audit
procedures used;
Questions exist concerning any of the statutory auditors being appointed; or
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The auditors have previously served the company in an executive capacity or can
otherwise be considered affiliated with the company.
The dividend payout ratio has been consistently below 30 percent without adequate
explanation; or
The payout is excessive given the companys financial position.
Adequate disclosure has not been provided in a timely manner;
There are clear concerns over questionable finances or restatements;
There have been questionable transactions with conflicts of interest;
There are any records of abuses against minority shareholder interests; or
The board fails to meet minimum corporate governance standards.
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Employee or executive of the company;
Any director who is classified as a non-executive, but receives salary, fees, bonus,
and/or other benefits that are in line with the highest-paid executives of the company.
Any director who is attested by the board to be a non-independent NED;
Any director specifically designated as a representative of a significant shareholder
of the company;
Any director who is also an employee or executive of a significant shareholder of the
company;
Government representative;
Any director who has conflicting or cross-directorships with executive directors or
the chairman of the company;
Relative[1] of a current employee of the company or its affiliates;
Relative[1] of a former executive of the company or its affiliates;
A new appointee elected other than by a formal process through the General Meeting
(such as a contractual appointment by a substantial shareholder);
Founder/co-founder/member of founding family but not currently an employee;
Former executive (5 year cooling off period);
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No material[5] connection, either directly or indirectly, to the company other than a
board seat.
[1]
Relative follows the U.S. SECs definition of immediate family members which covers
spouses, parents, children, stepparents, step-children, siblings, in-laws, and any person
(other than a tenant or employee) sharing the household of any director, nominee for director,
executive officer, or significant shareholder of the company.
[2]
Professional services can be characterized as advisory in nature and generally include the
following: investment banking/financial advisory services; commercial banking (beyond deposit
services); investment services; insurance services; accounting/audit services; consulting
services; marketing services; and legal services. The case of participation in a banking
syndicate by a non-lead bank should be considered a transaction (and hence subject to the
associated materiality test) rather than a professional relationship.
[3]
If the company makes or receives annual payments exceeding the greater of $200,000 or five
percent of the recipients gross revenues (the recipient is the party receiving the financial
proceeds from the transaction).
[4]
For example, in continental Europe, directors with a tenure exceeding 12 years will be
considered non-independent. In the United Kingdom and Ireland, directors with a tenure
exceeding nine years will be considered non-independent, unless the company provides
sufficient and clear justification that the director is independent despite his long tenure.
[5]
For purposes of ISS director independence classification, material will be defined as a
standard of relationship financial, personal or otherwise) that a reasonable person might
conclude could potentially influence ones objectivity in the boardroom in a manner that would
have a meaningful impact on an individuals ability to satisfy requisite fiduciary standards
on behalf of shareholders.
There are serious questions about actions of the board or management for the year in
question; or
Legal action is being taken against the board by other shareholders.
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The specific purpose of the increase (such as a share-based acquisition or merger)
does not meet ISS guidelines for the purpose being proposed; or
The increase would leave the company with less than 30 percent of its new
authorization outstanding after adjusting for all proposed issuances.
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Clear evidence of past abuse of the authority is available; or
The plan contains no safeguards against selective buybacks.
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Valuation Is the value to be received by the target shareholders (or paid by the
acquirer) reasonable? While the fairness opinion may provide an initial starting point for
assessing valuation reasonableness, ISS places emphasis on the offer premium, market
reaction, and strategic rationale.
Market reaction How has the market responded to the proposed deal? A negative
market reaction will cause ISS to scrutinize a deal more closely.
Strategic rationale Does the deal make sense strategically? From where is the value
derived? Cost and revenue synergies should not be overly aggressive or optimistic, but
reasonably achievable. Management should also have a favorable track record of successful
integration of historical acquisitions.
Conflicts of interest Are insiders benefiting from the transaction
disproportionately and inappropriately as compared to non-insider shareholders? ISS will
consider whether any special interests may have influenced these directors and officers to
support or recommend the merger.
Governance Will the combined company have a better or worse governance profile than
the current governance profiles of the respective parties to the transaction? If the
governance profile is to change for the worse, the burden is on the company to prove that
other issues (such as valuation) outweigh any deterioration in governance.
Table of Contents
PERCENTAGE
TYPE OF
FUND
SHAREHOLDERS
OWNED
OWNERSHIP
Customers of Charles Schwab & Company, Inc.(1)
6.33
%
Beneficial
Customers of National Financial Services Corp.(2)
5.66
%
Beneficial
Customers of Charles Schwab & Company, Inc.(1)
14.93
%
Beneficial
Customers of National Financial Services Corp.(2)
15.35
%
Beneficial
Customers of Ameritrade, Inc. (3)
6.63
%
Beneficial
Customers of Charles Schwab & Company, Inc. (1)
36.46
%
Beneficial
Customers of National Financial Services Corp. (2)
29.12
%
Beneficial
Customers of Ameritrade, Inc. (3)
6.94
%
Beneficial
Customers of Charles Schwab & Company, Inc. (1)
16.86
%
Beneficial
Customers of National Financial Services Corp. (2)
13.20
%
Beneficial
Customers of Ameritrade, Inc. (3)
6.03
%
Beneficial
Customers of Charles Schwab & Company, Inc. (1)
38.04
%
Beneficial
Customers of National Financial Services Corp. (2)
7.14
%
Beneficial
Peoples Bank National Association
8.00
%
Record
Customers of Charles Schwab & Company, Inc. (1)
33.92
%
Beneficial
Customers of National Financial Services Corp. (2)
24.14
%
Beneficial
Customers of Ameritrade, Inc. (3)
7.95
%
Beneficial
Customers of Charles Schwab & Company, Inc. (1)
33.92
%
Beneficial
Customers of National Financial Services Corp. (2)
24.14
%
Beneficial
Customers of Charles Schwab & Company, Inc. (1)
6.22
%
Beneficial
U.S. Global Investors, Inc.
10.48
%
Record
Jean Rogers-Winchell
6.69
%
Record
D. Joseph Dennis
7.02
%
Record
U.S. Global Investors, Inc.
8.38
%
Record
Frata L.L.C.
12.81
%
Record
Customers of Charles Schwab & Company, Inc. (1)
27.19
%
Beneficial
Customers of National Financial Services Corp. (2)
22.22
%
Beneficial
Customers of Ameritrade, Inc. (3)
5.95
%
Beneficial
(1)
Charles Schwab & Company, Inc., a broker/dealer located at 101 Montgomery Street, San
Francisco, CA 94104-4122, has advised that no individual clients owns more than 5% of the
fund.
(2)
National Financial Services Corp., a broker/dealer located at Church Street Station, New
York, NY 10008-3908, has advised that no individual client owns more than 5% of the fund.
(3)
Ameritrade, Inc., a broker/dealer located at P.O. Box 2226, Omaha, NE 68103-226, has advised
that no individual client owns more than 5% of the fund.
Table of Contents
FUND
2006
2007
2008
$
878,795
$
1,672,967
$
1,629,448
$
3,737,516
$
6,130,468
$
6,254,087
$
5,819,998
$
7,387,016
$
9,303,615
$
565,352
$
997,748
$
1,431,338
$
65,912
$
107,349
$
137,008
$
0
$
0
$
0
$
0
$
0
$
0
$
1,067,038
$
1,205,557
$
1,115,479
$
575,002
$
570,814
$
489,483
Fund
2005
2006
2007
$
7,681,196
$
17,019,935
**
$
17,816,543
$
0
*
$
87,692
**
$
396,485
$
674,846
$
664,825
$
630,258
$
139,076
$
166,549
$
163,258
*
The Global Emerging Markets Fund commenced operations on February 24, 2005.
**
Does not include the effect of rebates by the Subadviser of $103,369 and $4,945 to the
Eastern European Fund and Global Emerging Markets Fund, respectively, representing the portion
of the management fees paid to the Subadviser by closed-end investment companies in which the
funds had invested and the Subadviser had provided advisory services.
FUND
2005
2006
2007
$
3,840,598
$
8,509,968
$
8,908,301
$
0
*
$
47,832
$
216,264
$
69,538
$
83,275
$
73,771
*
The Global Emerging Markets Fund commenced operations on February 24, 2005.
Table of Contents
ANNUAL PERCENTAGE OF AVERAGE DAILY NET ASSETS
0.80%≤$500,000,000; 0.75%> $500,000,000
1.00%
1.00%
0.90% %≤$500,000,000; 0.85%> $500,000,000
1.00%%≤$500,000,000; 0.95% $500,000,001 - $1,000,000,000; 0.90%>1,000,000,000
0.95%≤$500,000,000; 0.90% $500,000,001 - $1,000,000,000; 0.85%>1,000,000,000
1.25%
1.375%
1.25%
0.75%≤$250,000,000; 0.70%>$250,000,000
0.50%
0.50%≤$250,000,000; 0.375%>$250,000,000
0.50%≤$250,000,000; 0.375%>$250,000,000
Base Advisory Fee
Range with
Base Advisory
Hurdle
Performance Fee
Fee
Benchmark
Rate
Adjustment
0.80%
S&P 500 Index
+/- 5%
0.55%-1.05%
1.00%
S&P Composite 1500 Index
+/- 5%
0.75%-1.25%
1.00%
S&P 500 Index
+/- 5%
0.75%-1.25%
0.90%
FTSE Gold Mines Index
+/- 5%
0.65%-1.15%
1.00%
AMEX Gold Miners Index
+/- 5%
0.75%-1.25%
0.95%
Morgan Stanley Commodity
Related Equity Index
+/- 5%
0.70%-1.20%
1.25%
MSCI Emerging Markets
Europe 10/40
Index (Net Total Return)
+/- 5%
1.00%-1.50%
1.375%
MSCI Emerging Markets
Net Total Return
Index
+/- 5%
1.125%-1.625%
1.25%
Hang Seng Composite Index
1.00%-1.50%
0.75%
n/a
0.75%
0.50%
n/a
0.50%
0.50%
n/a
0.50%
0.50%
n/a
0.50%
Table of Contents
Table of Contents
Table of Contents
ADVERTISING
PROSPECTUS
COMPENSATION
TRAVEL AND
POSTAGE
COMPENSATION
&
PRINTING &
DISTRIBUTION
TO
PROMOTION
&
TO SALES
FUND
LITERATURE
MAILING
FEES
BROKER/DEALERS
EXPENSES
MAILING
PERSONNEL
$
46,570
$
13,055
$
6,000
$
2,688,631
$
19,246
$
1,511
$
112,391
$
48,843
$
1,304
$
0
$
45,425
$
18,642
$
2,073
$
9,648
$
32,577
$
2,677
$
6,000
$
17,601
$
17,454
$
267
$
1,553
$
30,617
$
2,327
$
0
$
3,770
$
15,792
$
240
$
282
FUND
2006*
2007*
2008
$
321,201
$
481,212
$
455,397
$
676,923
$
1,607,756
$
1,612,020
$
1,453,247
$
2,268,892
$
2,687,220
$
119,779
$
211,900
$
302,494
$
82,269
$
89,222
$
114,632
$
0
$
0
$
0
$
0
$
0
$
0
$
353,547
$
398,563
$
525,735
$
177,725
$
234,371
$
414,961
*
Note that transfer agency fees and expenses through March 2007 were paid in accordance with a
previous agreement with USSI.
Table of Contents
FUND
2005
2006
2007
$
830,175
$
1,874,094
$
1,986,175
$
0
*
$
53,633
$
95,664
$
144,475
$
119,670
$
117,656
$
27,262
$
31,730
$
42,746
*
The Global Emerging Markets Fund commenced operations on February 24, 2005, and all fees were
waived for 2005.
Table of Contents
Table of Contents
NUMBER
NUMBER OF
TOTAL ASSETS OF
OF
PERFORMANCE FEE
PERFORMANCE FEE
ACCOUNTS
TOTAL ASSETS
ACCOUNTS
ACCOUNTS
1
$
1,482,513,124
0
$
0
3
$
360,763,376
3
$
360,763,376
1
$
8,238,612
1
$
8,238,612
DOLLAR RANGE OF EQUITY SECURITIES IN THE
NAME OF FUND
FUND HELD AS OF 06/30/2008
$
10,001-$50,000
$
10,001-$50,000
$
10,001-$50,000
$
10,001-$50,000
$
10,001-$50,000
$
10,001-$50,000
$
10,001-$50,000
$
10,001-$50,000
$
50,001-$100,000
$
100,001-$500,000
NUMBER
NUMBER OF
TOTAL ASSETS OF
OF
PERFORMANCE FEE
PERFORMANCE FEE
ACCOUNTS
TOTAL ASSETS
ACCOUNTS
ACCOUNTS
1
$
1,482,513,124
0
$
0
0
$
0
0
$
0
1
$
360,763,376
1
$
360,763,376
DOLLAR RANGE OF EQUITY SECURITIES IN THE
NAME OF FUND
FUND HELD AS OF 06/30/2008
$
50,001-$100,000
$
100,001-$500,000
$
10,001-$50,000
$
10,001-$50,000
$
10,001-$50,000
Table of Contents
NUMBER
NUMBER OF
TOTAL ASSETS OF
OF
PERFORMANCE FEE
PERFORMANCE FEE
ACCOUNTS
TOTAL ASSETS
ACCOUNTS
ACCOUNTS
1
$
1,482,513,124
0
$
0
0
$
0
0
$
0
1
$
360,763,376
1
$
360,763,376
DOLLAR RANGE OF EQUITY SECURITIES IN THE
NAME OF FUND
FUND HELD AS OF 06/30/2008
$
50,001-$100,000
$
0-$10,000
$
10,001-$50,000
$
10,001-$50,000
NUMBER
NUMBER OF
TOTAL ASSETS OF
OF
PERFORMANCE FEE
PERFORMANCE FEE
ACCOUNTS
TOTAL ASSETS
ACCOUNTS
ACCOUNTS
1
$
1,482,513,124
0
$
0
0
$
0
0
$
0
0
$
0
0
$
0
DOLLAR RANGE OF EQUITY SECURITIES IN THE
NAME OF FUND
FUND HELD AS OF 06/30/2008
$
0-$10,000
NUMBER
NUMBER OF
TOTAL ASSETS OF
OF
PERFORMANCE FEE
PERFORMANCE FEE
TYPE OF ACCOUNT
ACCOUNTS
TOTAL ASSETS
ACCOUNTS
ACCOUNTS
1
$
1,482,513,124
0
$
0
0
$
0
0
$
0
1
$
360,763,376
1
$
360,763,376
DOLLAR RANGE OF EQUITY SECURITIES IN THE
NAME OF FUND
FUND HELD AS OF 06/30/2008
$
100,001-$500,000
Table of Contents
NUMBER
NUMBER OF
TOTAL ASSETS OF
OF
PERFORMANCE FEE
PERFORMANCE FEE
ACCOUNTS
TOTAL ASSETS
ACCOUNTS
ACCOUNTS
1
$
1,482,513,124
0
$
0
0
$
0
0
$
0
0
$
360,763,376
1
$
360,763,376
DOLLAR RANGE OF EQUITY SECURITIES IN THE
NAME OF FUND
FUND HELD AS OF 06/30/2008
$
100,001-$500,000
NUMBER
NUMBER OF
TOTAL ASSETS OF
OF
PERFORMANCE FEE
PERFORMANCE FEE
ACCOUNTS
TOTAL ASSETS
ACCOUNTS
ACCOUNTS
1
$
1,482,513,124
0
$
0
0
$
0
0
$
0
0
$
0
0
$
0
DOLLAR RANGE OF EQUITY SECURITIES IN THE
NAME OF FUND
FUND HELD AS OF 06/30/2008
$
50,001-$100,000
$
100,001-$500,000
NUMBER
NUMBER OF
TOTAL ASSETS OF
OF
PERFORMANCE FEE
PERFORMANCE FEE
ACCOUNTS
TOTAL ASSETS
ACCOUNTS
ACCOUNTS
1
$
1,584,113,213
0
$
0
10
$
1,803,000,000
10
$
1,803,000,000
0
$
0
0
$
0
DOLLAR RANGE OF EQUITY SECURITIES IN THE FUND
NAME OF FUND
HELD AS OF 10/31/2007
None
Table of Contents
NUMBER
NUMBER OF
TOTAL ASSETS OF
OF
PERFORMANCE FEE
PERFORMANCE FEE
ACCOUNTS
TOTAL ASSETS
ACCOUNTS
ACCOUNTS
2
$
1,643,559,187
0
$
0
15
$
2,925,000,000
15
$
2,925,000,000
0
$
0
0
$
0
DOLLAR RANGE OF EQUITY SECURITIES IN THE FUND
NAME OF FUND
HELD AS OF 10/31/2007
None
None
NUMBER
NUMBER OF
TOTAL ASSETS OF
OF
PERFORMANCE FEE
PERFORMANCE FEE
ACCOUNTS
TOTAL ASSETS
ACCOUNTS
ACCOUNTS
2
$
1,643,559,187
0
$
0
0
$
0
0
$
0
0
$
0
0
$
0
DOLLAR RANGE OF EQUITY SECURITIES IN THE FUND
NAME OF FUND
HELD AS OF 10/31/2007
None
None
Table of Contents
2006
2007
2008
$
476,628
$
650,857
$
768,724
$
2,414,117
$
2,627,005
$
3,211,890
$
5,363,523
$
5,451,211
$
6,397,597
$
1,093,844
$
1,100,286
$
1,110,378
$
196,526
$
121,230
$
130,392
2005
2006
2007
$
3,889,222
$
3,365,731
$
2,912,357
$
93,347
*
$
214,987
$
215,849
$
545,473
$
578,760
$
194,642
$
18,304
$
22,744
$
21,547
Table of Contents
1.
The securities offered by the investor in exchange for shares of the fund must not be
in any way restricted as to resale or otherwise be illiquid.
2.
Securities of the same issuer must already exist in the funds portfolio.
3.
The securities must have a value that is readily ascertainable (and not established
only by evaluation procedures) as evidenced by a listing on the NYSE, or Nasdaq-AMEX.
4.
Any securities so acquired by the fund shall not comprise over 5% of the funds net
assets at the time of such exchange.
5.
No over-the-counter securities will be accepted unless the principal over-the-counter
market is in the United States.
6.
The securities are acquired for investment and not for resale.
Table of Contents
Table of Contents
LOSS
EXPIRATION
FUND
CARRYFORWARDS
DATE
$
746,353
2009-2013
$
347,325
2009-2016
$
285
2011
Table of Contents
POST
OCTOBER 31, 2007,
FUND
CAPITAL LOSS DEFERRAL
$
6,289,649
$
65,365
$
44,644
$
112
LOSS
EXPIRATION
FUND
CARRYFORWARDS
DATE
$
25,332,928
2009-2010
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
(a)
Agreement and Declaration of Trust, dated July 31, 2008, included herein.
(b)
By-laws, dated July 31, 2008, included herein.
(c)
Instruments Defining Rights of Security Holders. Not applicable.
(d)
1. Advisory Agreement with U.S. Global Investors, Inc., dated October 1, 2008
included herein.
(e)
(f)
Bonus or Profit Sharing Contracts. Not applicable.
(g)
1. Custodian Agreement, dated November 1, 1997, between Registrant and Brown
Brothers Harriman & Co., incorporated by reference to Post-Effective Amendment No. 82
filed September 2, 1998 (EDGAR Accession No. 0000101507-98-000031)..
(h)
1. Transfer Agency Agreement, dated July 31, 2008, between Registrant and United
Shareholder Services, Inc., included herein.
(i)
Opinion of Counsel, included herein.
(j)
Consent of independent registered public accounting firm, KPMG LLP, included herein.
(k)
Omitted Financial Statements. Not applicable.
(l)
Initial Capital Agreements. Not applicable.
Table of Contents
(m)
1. Rule 12b-1 Plan, dated October 1, 2008, included herein.
2.
Distribution Agreement, dated October 1, 2008, included herein
(n)
Rule 18f-3 Plan. Not applicable.
(o)
Power of Attorney, dated August 26, 2008, included herein.
(p)
1. Registrants Code of Ethics, effective October 1, 2008, included herein.
2.
U.S. Global Investors, Inc. Code of Ethics dated August 20, 2008, included herein.
3.
Charlemagne Capital (IOM) Limiteds Code of Ethics dated November 1, 2007, included
herein.
Table of Contents
(a)
U.S. Global Brokerage, Inc., a wholly owned subsidiary of U.S. Global Investors,
Inc., is registered as a limited-purpose broker/dealer for the purpose of distributing
U.S. Global Investors Funds, effective October 1, 2008..
(b)
The following table lists, for each director and officer of U.S. Global Brokerage,
Inc., the information indicated.
Name and Principal
Positions and Offices
Positions and Offices
Business Address
with Underwriter
with Registrant
Director, President
None
Chief Financial Officer
Treasurer
Secretary
Assistant Secretary
(c)
Not applicable.
Table of Contents
Table of Contents
U.S. GLOBAL INVESTORS FUNDS
By:
/s/ Frank E. Holmes
Frank E. Holmes
President, Chief Executive Officer, President
Signature
Title
Date
Trustee
October 1, 2008
Trustee
October 1, 2008
Trustee, President, Chief
Executive Officer
October 1, 2008
Trustee
October 1, 2008
Trustee
October 1, 2008
Treasurer
October 1, 2008
/s/ Susan B. McGee
Susan B. McGee
Attorney-in-Fact under Power of Attorney Dated
August 26, 2008
Table of Contents
Exhibit
No.
Description of Exhibit
Agreement and Declaration of Trust
By-laws
Advisory Agreement with U.S. Global Investors, Inc
Administrative Services Agreement
Subadvisory Agreement for Eastern European Fund
Subadvisory Agreement for Global Emerging Markets Fund
Shareholder Servicing Agreement
Amendment to Custodian Agreement
Transfer Agency Agreement
Adviser Expense Cap Agreement
Adviser Expense Waiver and Reimbursement Agreement for U.S. Treasury Securities Cash Fund and U.S.
Government Securities Savings Fund
Opinion of Counsel
Consent of independent registered public accounting firm, KPMG LLP
Rule 12b-1 Plan
Distribution Agreement
Power of Attorney
Code of Ethics for U.S. Global Investors Funds
Code of Ethics for U.S. Global Investors, Inc.
Code of Ethics for Charlemagne Capital (IOM) Limiteds Code of Ethics dated November 1, 2007
Page | ||||
|
||||
ARTICLE I NAME, FORMATION AND DEFINITIONS
|
1 | |||
Section 1.01. Name
|
1 | |||
Section 1.02. Formation of the Trust
|
1 | |||
Section 1.03. Definitions
|
1 | |||
|
||||
ARTICLE II BENEFICIAL INTEREST
|
3 | |||
Section 2.01. Shares of Beneficial Ownership Interest
|
3 | |||
Section 2.02. Issuance of Shares
|
3 | |||
Section 2.03. Ownership and Transfer of Shares
|
3 | |||
Section 2.04. Treasury Shares
|
4 | |||
Section 2.05. Establishment of Series
|
4 | |||
Section 2.06. Investment in the Trust
|
4 | |||
Section 2.07. Assets and Liabilities of Series
|
5 | |||
Section 2.08. No Preemptive or Other Rights
|
6 | |||
Section 2.09. Personal Liability of Shareholders
|
6 | |||
Section 2.10. Assent to Trust Instrument
|
6 | |||
|
||||
ARTICLE III THE TRUSTEES
|
6 | |||
Section 3.01. Management of the Trust
|
6 | |||
Section 3.02. Initial Trustees
|
7 | |||
Section 3.03. Term of Office of Trustees
|
7 | |||
Section 3.04. Vacancies and Appointment of Trustees
|
7 | |||
Section 3.05. Temporary Absence of Trustee
|
8 | |||
Section 3.06. Number of Trustees
|
8 | |||
Section 3.07. Effect of Vacancy of a Trustee
|
8 | |||
Section 3.08. Ownership of Assets of the Trust
|
8 | |||
Section 3.09. Compensation
|
9 | |||
|
||||
ARTICLE IV POWERS OF THE TRUSTEES
|
9 | |||
Section 4.01. Powers
|
9 | |||
Section 4.02. Issuance and Repurchase of Shares
|
12 | |||
Section 4.03. Trustees and Officers as Shareholders
|
12 | |||
Section 4.04. Action by the Trustees
|
13 |
Page | ||||
Section 4.05. Chairman of the Trustees
|
13 | |||
Section 4.06. Principal Transactions
|
13 | |||
|
||||
ARTICLE V EXPENSES OF THE TRUST
|
14 | |||
Section 5.01. Payment of Expenses by the Trust
|
14 | |||
Section 5.02. Payment of Expenses by Shareholders
|
14 | |||
|
||||
ARTICLE VI CONTRACTS WITH SERVICE PROVIDERS
|
15 | |||
Section 6.01. Investment Advisory Contracts
|
15 | |||
Section 6.02. Distribution Contracts
|
15 | |||
Section 6.03. Custody Agreements
|
16 | |||
Section 6.04. Administration Agreement
|
16 | |||
Section 6.05. Other Contracts
|
16 | |||
Section 6.06. Parties to Contracts with Service Providers
|
16 | |||
Section 6.06. Provisions and Amendments
|
17 | |||
|
||||
ARTICLE VII SHAREHOLDERS VOTING POWERS AND MEETINGS
|
17 | |||
Section 7.01. Voting Powers
|
17 | |||
Section 7.02. Meetings of the Shareholders
|
18 | |||
Section 7.03. Quorum and Required Vote
|
18 | |||
ARTICLE VIII DISTRIBUTIONS AND REDEMPTIONS
|
19 | |||
Section 8.01. Distributions
|
19 | |||
Section 8.02. Redemptions and Repurchases
|
19 | |||
Section 8.03. Determination of Net Asset Value
|
21 | |||
Section 8.04. Suspension of the Right of Redemption
|
21 | |||
|
||||
ARTICLE IX LIMITATION OF LIABILITY AND INDEMNIFICATION
|
21 | |||
Section 9.01. Limitation of Liability
|
21 | |||
Section 9.02. Indemnification
|
22 | |||
Section 9.03. Indemnification of Shareholders
|
23 | |||
Section 9.04. No Bond Required of Trustees
|
23 | |||
Section 9.05. No Duty of Investigation; Notice in Trust Instruments, Etc.
|
23 | |||
Section 9.06. Reliance on Experts, Etc.
|
24 | |||
ARTICLE X MISCELLANEOUS
|
24 |
Page | ||||
Section 10.01. Trust Not a Partnership
|
24 | |||
Section 10.02. Trustee Action
|
24 | |||
Section 10.03. Establishment of Record Dates
|
25 | |||
Section 10.04. Termination of Trust
|
25 | |||
Section 10.05. Reorganization
|
26 | |||
Section 10.06. Filing of Copies; References; Headings
|
27 | |||
Section 10.07. Applicable Law
|
27 | |||
Section 10.08. Amendments
|
28 | |||
Section 10.09. Derivative Actions
|
28 | |||
Section 10.10. Fiscal Year
|
28 | |||
Section 10.11. Provisions in Conflict with Law
|
28 |
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
|
|
|||
|
as Trustee and not individually |
29
1
2
3
4
5
6
7
8
9
10
- 1 -
- 2 -
- 3 -
- 4 -
- 5 -
- 6 -
- 7 -
- 8 -
U.S. Global Investors Funds
, on behalf of each Fund
listed on Schedule A |
||||
By: | /s/ Frank E. Holmes | |||
Name: | Frank E. Holmes | |||
Title: | President | |||
U.S. Global Investors, Inc.
|
||||
By: | /s/ Susan B. McGee | |||
Name: | Susan B. McGee | |||
Title: | President |
- 9 -
Fund | Annual Basic Fee Rate | |||
China Region Fund*
|
1.25 | % | ||
All American Equity Fund*
|
0.80 | % | ||
Gold and Precious Metals Fund*
|
0.90 | % | ||
World Precious Minerals Fund*
|
1.00 | % | ||
Global Resources Fund*
|
0.95 | % | ||
Eastern European Fund*
|
1.25 | % | ||
Global Emerging Markets Fund*
|
1.375 | % | ||
Holmes Growth Fund*
|
1.00 | % | ||
Global MegaTrends Fund*
|
1.00 | % | ||
Tax Free Fund
|
0.75 | % | ||
Near-Term Tax Free Fund
|
0.50 | % | ||
U.S. Government Securities Savings Fund
|
0.50 | % | ||
U.S. Treasury Securities Cash Fund
|
0.50 | % |
Fund | Advisory Fee | Assets Under Management | ||||||
All American Equity Fund
|
0.80 | % | < $500,000,000 | |||||
|
0.75 | % | > $500,000,000 | |||||
Gold and Precious Metals Fund
|
0.90 | % | < $500,000,000 | |||||
|
0.85 | % | > $500,000,000 | |||||
World Precious Minerals Fund
|
1.00 | % | < $500,000,000 | |||||
|
0.95 | % | $500,000,001 - $1,000,000,000 | |||||
|
0.90 | % | > $1,000,000,000 | |||||
Global Resources Fund
|
0.95 | % | < $500,000,000 | |||||
|
0.90 | % | $500,000,001 - $1,000,000,000 | |||||
|
0.85 | % | > $1,000,000,000 |
A-1
Fund | Advisory Fee | Assets Under Management | ||||||
Tax Free Fund
|
0.75 | % | < $250,000,000 | |||||
|
0.50 | % | >$250,000,000 | |||||
U.S. Government Securities Savings Fund
|
0.50 | % | < $250,000,000 | |||||
|
0.375 | % | >$250,000,000 | |||||
U.S.
Treasury Securities Cash Fund
|
0.50 | % | < $250,000,000 | |||||
|
0.375 | % | >$250,000,000 |
* | The management fee with respect to the China Region Fund, All American Equity Fund, Gold and Precious Metals Fund, World Precious Minerals Fund, Global Resources Fund, Eastern European Fund, Global Emerging Markets Fund, Holmes Growth Fund, and Global MegaTrends Fund (the Funds) is comprised of a basic fee (the Basic Fee) at the annual rate detailed above of the Funds average daily net assets and a performance adjustment (the Performance Adjustment) as discussed below. |
(i) | Determining the difference in performance (the Performance Difference) between a Fund and its respective underlying index (the Index), as described in paragraph B; | ||
(ii) | Using the Performance Difference calculated under paragraph B to determine the performance adjustment ( the Performance Adjustment), as illustrated in paragraph D; and | ||
(iii) | Adding the Performance Adjustment to the Basic Fee to determine the management fee for the applicable month. |
A-2
Funds | Indexs | Funds | ||||||||||
For the rolling 12-month | investment | cumulative | performance relative | |||||||||
performance period | performance | change | to the Index | |||||||||
January 1
|
$ | 50.00 | 100.00 | |||||||||
December 31
|
$ | 57.60 | 110.20 | |||||||||
Absolute change
|
+ $7.60 | + $10.20 | ||||||||||
Actual change
|
+ 15.20 | % | + 10.20 | % | +5.00 | % |
| The portion of the annual basic fee rate of 0.90% applicable to that month is multiplied by the Funds average daily net assets for the month. This results in the dollar amount of the basic fee. | ||
| The 0.25% rate (adjusted for the number of days in the month) is multiplied by the Funds average daily net assets for the performance period. This results in the dollar amount of the performance adjustment. | ||
| The dollar amount of the performance adjustment is added to the dollar amount of the basic fee, producing the adjusted management fee. |
A-3
Fund | Index | |
China Region Fund
|
Hang Seng Composite Index | |
All American Equity Fund
|
S&P 500 Index | |
Gold and Precious Metals Fund
|
FTSE Gold Mines Index | |
World Precious Minerals Fund
|
AMEX Gold Miners Index | |
Global Resources Fund
|
Morgan Stanley Commodity Related Equity Index | |
Eastern European Fund
|
Morgan Stanley Capital International Emerging Markets Europe 10/40 Index (Net Total Return) | |
Global Emerging Markets Fund
|
Morgan Stanley Capital International Emerging Markets Free Total Net Return Index | |
Holmes Growth Fund
|
S&P 500 Index | |
Global MegaTrends Fund
|
S&P 500 Index |
A-4
- 1 -
- 2 -
- 3 -
- 4 -
- 5 -
- 6 -
- 7 -
U.S. GLOBAL INVESTORS FUNDS | U.S. GLOBAL INVESTORS, INC. | |||||||||
|
||||||||||
By:
|
/s/ Frank E. Holmes
|
By: |
/s/ Susan B. McGee
|
|||||||
Name & Title: Frank E. Holmes | Name & Title: Susan B. McGee | |||||||||
President and Chief Executive Officer | President and General Counsel | |||||||||
|
|
- 8 -
Name of Fund | Effective Date of Agreement | |
China Region Fund
|
October 1, 2008 | |
All American Equity Fund
|
October 1, 2008 | |
Gold and Precious Metals Fund
|
October 1, 2008 | |
World Precious Minerals Fund
|
October 1, 2008 | |
Global Resources Fund
|
October 1, 2008 | |
Tax Free Fund
|
October 1, 2008 | |
Near-Term Tax Free Fund
|
October 1, 2008 | |
U.S. Government Securities Savings Fund
|
October 1, 2008 | |
U.S. Treasury Securities Cash Fund
|
October 1, 2008 | |
Eastern European Fund
|
October 1, 2008 | |
Global Emerging Markets Fund
|
October 1, 2008 | |
Holmes Growth Fund
|
October 1, 2008 | |
Global MegaTrends Fund
|
October 1, 2008 |
A-1
1. | provide the Trust with personnel as are reasonably necessary to perform the Services; | ||
2. | prepare, distribute and utilize comprehensive compliance materials pursuant to Rule 38a-1 of the 1940 Act, including compliance manuals and checklists, develop and/or assist in developing compliance guidelines and procedures to improve overall compliance by the Trust and its various agents; | ||
3. | monitor overall compliance with Rule 38a-1 by the Trust and its various agents including coordination, preparation and submission of reports required by Rule 38-1 of the 1940 Act; | ||
4. | subject to supervision of the Board, propose and carry out policies directed at operational problem inquiry and resolution concerning actual or potential compliance violations, valuation of complex securities, securities trading in problematic markets or correction of pricing errors; | ||
5. | arrange for the preparation and filing for the Trust of all required tax returns; | ||
6. | prepare and submit reports and meeting materials to the board of trustees and to existing shareholders; | ||
7. | prepare and file the periodic updating of the Trusts prospectus and statement of additional information; | ||
8. | prepare and file, or oversee the preparation and filing of, any currently required or to be required reports filed with the Securities and Exchange Commission and other regulatory and self-regulatory authorities including, but not limited to, preliminary and definitive proxy materials, post-effective amendments to the Registration Statement, semi-annual reports on Form N-SAR, Form N-CSR, Form N-Q, Form N-PX, and notices pursuant to Rule 24f-2 under the 1940 Act; and | ||
9. | prepare and file any regulatory reports as required by any regulatory agency; |
B-1
10. | perform certain regulatory and corporate governance duties including: |
(a) | oversee the maintenance by the Funds custodian of certain books and records of the Funds as required under Rule 31a-1(b) of the 1940 Act; | ||
(b) | maintain a general corporate calendar for the Trust and, with respect to each Fund, create and maintain all records required by Section 31 of the 1940 Act and Rules 31a-1 and 31a-2 thereunder, except those records that are maintained by the Funds investment adviser, sub-adviser (if applicable), transfer agent, distributor and custodian; | ||
(c) | prepare, update and maintain copies of documents, such as charter documents, by-laws and foreign qualification filings; | ||
(d) | prepare agenda and background materials for Board meetings, including reoccurring reports on Fund compliance; make presentations where appropriate, prepare minutes and follow-up on matters raised at Board meetings; | ||
(e) | organize, attend and prepare minutes of shareholder meetings; | ||
(f) | review and monitor the fidelity bond and errors and omissions insurance coverage and the submission of any related regulatory filings; | ||
(g) | maintain continuing awareness of significant emerging regulatory and legislative developments that may affect the Funds, update the Board and the investment adviser on those developments and provide related planning assistance where requested or appropriate; and | ||
(h) | assist the Trust in the handling of routine regulatory examinations and work closely with the Trusts legal counsel in response to any non-routine regulatory matters; |
11. | oversee and coordinate certain operational matters including: |
(a) | the determination and publication of the net asset value of each Fund in accordance with the valuation procedures and policies adopted from time to time by the Board; | ||
(b) | accounting for dividends and interest received and distributions made by the Funds; | ||
(c) | calculate, submit for review by officers of the Trust, and arrange for the payment of fees to the Funds investment adviser, sub-adviser, transfer agent, distributor and custodian; and |
B-2
(d) | arrange for and monitor, if directed by the appropriate officers of the Trust Parties, the payment each Funds Rule 12b-1 expenses and prepare related reports; |
12. | administer the implementation and required distribution of the Trusts privacy policy as required under regulation S-P; | ||
13. | monitor the Trusts compliance with its registration statement; | ||
14. | monitor the Trusts compliance with the Internal Revenue Code, and the regulations promulgated thereunder; | ||
15. | provide the Trust with adequate office space and all necessary office equipment and services, including but not limited to telephone service, heat, utilities, stationary supplies and similar items; | ||
16. | supervise, negotiate contractual arrangements with (to the extent appropriate) and monitor the performance of, incumbent third party accounting agents, custodians, depositories, transfer agents, pricing agents, independent accountants and auditors, attorneys, printers, insurers and other persons in any capacity deemed to be necessary or desirable to Trust or Fund operations; | ||
17. | oversee the tabulation of proxies; | ||
18. | monitor the valuation of portfolio securities and monitor compliance with Board-approved valuation procedures; | ||
19. | assist in establishing the accounting and tax policies of each Fund; | ||
20. | assist in the resolution of accounting issues that may arise with respect to each Funds operations and consulting with each Funds independent accountants, legal counsel and each Funds other agents as necessary in connection therewith; | ||
21. | establish and monitor each Funds operating expense budgets; | ||
22. | review each Funds bills, as appropriate, and process the payment of bills that have been approved by an authorized person of the applicable Fund; | ||
23. | assist each Fund in determining the amount of dividends and distributions available to be paid by each Fund to its shareholders, prepare and arrange for the printing of dividend notices to shareholders, and provide the transfer agent and the custodian with the information that is required for those parties to effect the payment of dividends and distributions; |
B-3
24. | provide to the Board periodic and special reports as the Board may reasonably request, including but not limited to reports concerning the services of the administrator, custodian, shareholder service and transfer agents; | ||
25. | provide assistance with investor and public relations matters; | ||
26. | oversee required documentation and filings with the applicable state securities administrators at the specific direction of the Funds and in accordance with the securities laws of each jurisdiction in which Fund shares are to be offered or sold pursuant to instructions given to the Administrator by the Funds. Such filings include, but are not limited to: |
(a) | a Funds initial notices, the prospectus(es) and statement(s) of additional information and any amendments or supplements thereto where required; | ||
(b) | renewals and amendments to registration statements where required; | ||
(c) | a Funds sales reports where required; | ||
(d) | payment at the expense of the Funds of all Fund notice filing fees; | ||
(e) | annual reports and proxy statements where required; and | ||
(f) | such additional services as the Administrator and the Funds may agree upon in writing; and |
27. | otherwise assist the Trust as it may reasonably request in the conduct of each Funds business. Any additional, non-reoccurring services will be negotiated separately. The Trust, subject to the Board approval, will pay the Administrators fees and expenses for any non-reoccurring services. |
B-4
Name of Fund | Annual Fee Rate | |||
China Region Fund
|
0.08 | % | ||
All American Equity Fund
|
0.08 | % | ||
Gold and Precious Metals Fund
|
0.08 | % | ||
World Precious Minerals Fund
|
0.08 | % | ||
Eastern European Fund
|
0.08 | % | ||
Global Emerging Markets Fund
|
0.08 | % | ||
Holmes Growth Fund
|
0.08 | % | ||
Global MegaTrends Fund
|
0.08 | % | ||
Global Resources Fund
|
0.08 | % | ||
Tax Free Fund
|
0.08 | % | ||
Near-Term Tax Free Fund
|
0.08 | % | ||
U.S. Government Securities Savings Fund
|
0.08 | % | ||
U.S. Treasury Securities Cash Fund
|
0.08 | % |
C-1
1. | Appointment of Subadviser | ||
The Subadviser is hereby appointed to provide investment advisory services to the Fund for the period and on the terms herein set forth. The Subadviser accepts such appointment and agrees to render the services herein set forth, for the compensation herein provided. To enable the Subadviser to exercise fully its discretion and authority as provided in this Section 1, the Trust hereby constitutes and appoints the Subadviser as the Trusts agent and attorney-in-fact with full power and authority for the Trust and on the Trusts behalf to buy, sell, and otherwise deal in securities and contracts relating to same for the Fund. | |||
2. | Duties of Subadviser |
(a) | The Subadviser is hereby authorized and directed and hereby agrees, subject to the stated investment objectives and policies of the Fund as set forth in the Funds Prospectus (as defined below) and subject to the supervision of the Adviser and the Board of Trustees of the Trust, (i) to develop, recommend and implement such investment program and strategy for the Fund as may from time to time under the circumstances appear most appropriate to the achievement of the investment objective of the Fund as stated in the aforesaid Prospectus, (ii) to provide research and analysis relative to the investment program and investments of the Fund, (iii) to determine which securities should be purchased and sold and what portion of the assets of the Fund should be held in cash or cash equivalents, and (iv) to monitor on a continuing basis the performance of the portfolio securities of the Fund. The Subadviser will advise the Trusts custodian and the Adviser on a prompt basis of each purchase and sale of a portfolio security specifying the name of the issuer, the description and amount or number of shares of the security purchased, the market price, commission and gross or net price, trade date, settlement date and identity of the effecting broker or dealer; and will review the accuracy of the pricing of portfolio securities in accordance with Trust procedures. From time to time, as the Trustees of the Trust or the Adviser may reasonably request, the Subadviser will furnish to the Trusts officers and to each of its Trustees reports on portfolio transactions and reports on issues of securities held in the portfolio, all in such detail as the |
Trust or the Adviser may reasonably request. The Subadviser will also inform the Trusts officers and Trustees on a current basis of changes in investment strategy or tactics. The Subadviser will make its officers and employees available to meet with the Trusts officers and Trustees on due notice to review the investments and investment program of the Fund in the light of current and prospective economic and market conditions. | |||
The Subadviser shall place all orders for the purchase and sale of portfolio securities for the account of the Fund with brokers or dealers selected by the Subadviser, although the Trust will pay the actual brokerage commissions and any transfer taxes with respect to transactions in the portfolio securities of the Trust. The Subadviser is authorized to submit any such order collectively with orders on behalf of other accounts under its management, provided that the Subadviser shall have determined that such action is in the best interest of the Fund and is in accordance with applicable law, including, without limitation, Rule 17d-1 under the 1940 Act. In executing portfolio transactions and selecting brokers or dealers, the Subadviser will use its best efforts to seek on behalf of the Fund the best overall terms available. In assessing the best overall terms available for any transaction, the Subadviser shall consider all factors it deems relevant, including the breadth of the market in the security, the price of the security, the financial condition and execution capability of the broker or dealer, and the reasonableness of the commission, if any (for the specific transaction and on a continuing basis). In evaluating the best overall terms available, and in selecting the broker or dealer to execute a particular transaction, the Subadviser may also consider the brokerage and research services [as those terms are defined in Section 28(e) of the Securities Exchange Act of 1934] provided to the Fund and/or other accounts over which the Subadviser or an affiliate of the Subadviser exercises investment discretion. The Subadviser is authorized to pay to a broker or dealer who provides such brokerage and research services a commission for executing a portfolio transaction for the Fund which is in excess of the amount of commission another broker or dealer would have charged for effecting that transaction if, but only if, the Subadviser determines in good faith that such commission was reasonable in relation to the value of the brokerage and research services provided by such broker or dealer, viewed in terms of that particular transaction or in terms of all of the accounts over which investment discretion is so exercised. An affiliated person of the Subadviser may provide brokerage services to the Fund provided that the Subadviser shall have determined that such action is consistent with its obligation to seek the best overall terms available and is in accordance with applicable law, including, without limitation, Section 17(e) of the 1940 Act. The foregoing shall not be deemed to authorize an affiliated person of the Subadviser to enter into transactions with the Fund as principal. | |||
In the performance of its duties hereunder, the Subadviser is and shall be an independent contractor and unless otherwise expressly provided or authorized shall have no authority to act for or represent the Trust in any way or otherwise be deemed to be an agent of the Trust or of the Adviser. | |||
(b) | Delivery of Documents . The Adviser will furnish upon request or has previously furnished the Subadviser with true copies of each of the following: |
(i) | The Trusts Agreement and Declaration of Trust and all amendments thereto (such Agreement and Declaration of Trust, as presently in effect and as it shall from time to time be amended, is herein called the Trust Agreement); | ||
(ii) | The Trusts By-Laws and amendments thereto (such By-Laws, as presently in effect and as it shall from time to time be amended, are herein called the By-Laws); | ||
(iii) | Resolutions of the Trusts Board of Trustees authorizing the appointment of the Adviser and Subadviser and approving the Advisory Agreement and this Agreement; | ||
(iv) | The most recent Post-Effective Amendment to the Trusts Registration Statement on Form N-1A under the Securities Act of 1933 as amended (1933 Act) and the 1940 Act as filed with the Securities and Exchange Commission; | ||
(v) | The Funds most recent prospectus (such prospectus, as presently in effect and all amendments and supplements thereto being referred to herein as the Prospectus); and | ||
(vi) | All resolutions of the Board of Trustees of the Trust pertaining to the management of the assets of the Fund. |
3. | Advisory Fee |
(a) | For the services to be provided to the Fund by the Subadviser as provided in Paragraph 2 hereof, the Adviser will pay the Subadviser in accordance with the following: |
(i) | The Fund will pay to the Adviser a one and one quarter percent (1.25%) annual management fee. | ||
The Adviser will pay to the Subadviser fifty percent (50%) of the management fee received net of all waivers and reimbursements. | |||
The Adviser will increase or decrease the subadvisory fee by 50% of the performance fee adjustment, if any, as that fee is defined in Schedule A of the Investment Advisory Agreement between U.S. Global Investors, Inc. and U.S. Global Investors Funds, dated October 1, 2008 (Advisory Agreement). | |||
(ii) | The Fund is not responsible for paying any portion of the Subadvisers fees. | ||
(iii) | The fee is payable in monthly installments in arrears. The Management Fee means the management fee paid by the Trust to the Adviser under the Advisory Agreement between the Trust and the Adviser with respect to the management of the Fund. |
(b) | In the case of termination of the Agreement during any calendar month, the fee with respect to that month shall be reduced proportionately based upon the number of calendar days during which it is in effect and the fee shall be computed upon the average net assets of the Fund for the days during which it is so in effect. | ||
(c) | The Monthly Average Net Assets of the Fund for any calendar month shall be equal to the quotient produced by dividing (i) the sum of the net assets of the Fund, determined in accordance with procedures established from time to time by or under the direction of the Board of Trustees of the Trust in accordance with the Trust Agreement, for each calendar day of such month, by (ii) the number of such days. |
4. | Expenses | ||
During the term of this Agreement, the Subadviser will bear all expenses incurred by it in the performance of its duties hereunder. | |||
5. | Fund Transactions | ||
The Subadviser agrees that neither it nor any of its employees, officers, or directors will take any short-term position in the shares of the Fund for trading purposes provided, however, that such prohibition shall not prevent the purchase of shares of the Fund by any of the persons above described for their account and for investment at the price at which such shares are available to the public at the time of purchase. | |||
6. | Representation A nd Warranty | ||
The Subadviser hereby represents and warrants to the Adviser that it is duly registered as an investment adviser, or is exempt from registration, under the Investment Advisers Act of 1940, as amended, and that it shall maintain such registration or exemption at all times during which this Agreement is in effect. | |||
7. | Liability of Subadviser | ||
In the performance of its duties under this Agreement, the Subadviser shall act in conformity with and in compliance with the requirements of the 1940 Act and all other applicable U.S. Federal and state laws and regulations and shall not cause the Fund to take any action that would require the Fund or any affiliated person thereof to register as a commodity pool operator under the terms of the U.S. Commodity Exchange Act, as amended (it being understood by the Subadviser that a notice of eligibility may be filed on behalf of the Trust pursuant to Rule 4.5 promulgated under said Act). The Subadviser shall be responsible for maintaining such procedures as may be reasonably necessary to ensure that the investment and reinvestment of the Funds assets are made in compliance with its investment objectives and policies and with all applicable statutes and regulations and that the Fund qualifies as a regulated investment company under Subchapter M of the Internal Revenue Code. No provision of this Agreement shall be deemed to protect the Subadviser against any liability to the Trust or its shareholders to which it might otherwise be subject by reason of any willful misfeasance, bad faith, or gross negligence in |
the performance of its duties or the reckless disregard of its obligations and duties under this Agreement. | |||
8. | Reports | ||
The Subadviser shall render to the Board of Trustees of the Trust such periodic and special reports as the Board of Trustees may reasonably request with respect to matters relating to duties of the Subadviser set forth herein. | |||
9. | Duration A nd Termination of This Agreement |
(a) | Duration . With respect to the Trust, this Agreement shall become effective upon the date hereof and shall continue in full force and effect through September 30, 2009, and from year to year thereafter so long as such continuance is approved at least annually (i) by either the Trustees of the Trust or by vote of a majority of the outstanding voting securities (as defined in the 1940 Act) of the Fund, and (ii) in either event by the vote of a majority of the Trustees of the Trust who are not parties to this Agreement or interested persons (as defined in the 1940 Act) of any such party, cast in person at a meeting called for the purpose of voting on such approval. | ||
(b) | Termination . With respect to the Trust, this Agreement may be terminated at any time, without payment of any penalty (i) by vote of the Trustees of the Trust or by vote of a majority of the outstanding voting securities of the Fund (as defined in the 1940 Act) on sixty (60) days written notice to the other parties, (ii) by the Adviser on sixty (60) days written notice to the other parties or, (iii) by the Subadviser on ninety (90) days written notice to the other parties. | ||
(c) | Automatic Termination . With respect to the Trust, this Agreement shall automatically and immediately terminate in the event of its assignment or upon expiration of the Advisory Agreement now or hereafter in effect between the Adviser and the Trust with respect to the Fund. |
10. | Services Not Exclusive | ||
The services of the Subadviser of the Fund hereunder are not to be deemed exclusive, and the Subadviser shall be free to render similar services to others. | |||
11. | Limitation of liability | ||
It is expressly agreed that the obligations of the Adviser and Subadviser hereunder shall not be binding upon any of the shareholders, nominees, officers, agents, or employees of the Adviser or Subadviser, personally, but bind only the assets and property of the Adviser and Subadviser, respectively. The execution and delivery of the Agreement have been authorized by the directors and officers of the Adviser and Subadviser and signed by an authorized officer of the Adviser and Subadviser, acting as such, and neither such authorization by such directors and officers nor such execution and delivery by such officer shall be deemed to have been made by any of them individually or to impose any liability on any of them personally, but shall bind only the assets |
and property of the Adviser and Subadviser, respectively. This limitation of liability shall not be deemed to protect the shareholders, nominees, officers, agents, or employees of the Adviser and Subadviser against any liability to the Trust or its shareholders to which they might otherwise be subject by reason of any willful misfeasance, bad faith, or gross negligence in the performance of their duties or the reckless disregard of their obligations and duties under this Agreement | |||
12. | Miscellaneous . |
(a) | Notice . Any notice under this Agreement shall be in writing, addressed and delivered or mailed, postage prepaid, to the other parties at such address as such other parties may designate in writing for the receipt of such notices. | ||
(b) | Severability . If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule, or otherwise, the remainder shall not be thereby affected. | ||
(c) | Applicable Law . This Agreement shall be construed in accordance with and governed by the laws of the State of Texas. | ||
(d) | This Agreement constitutes the entire agreement of the parties and supersedes all prior or contemporaneous written or oral negotiations, correspondence, agreements, and understandings, regarding the subject matter hereof. |
13. | Standard of Care | ||
To the extent permitted under applicable law (including section 36 of the 1940 Act), the Subadviser will not be liable to the Trust or the Adviser for any losses incurred by the Trust, the Fund or the Adviser that arise out of or are in any way connected with any recommendation or other act or failure to act of the Subadviser under this Agreement, including, but not limited to, any error in judgment with respect to the Fund, so long as such recommendation or other act or failure to act does not constitute a breach of the Subadvisers fiduciary duty to the Trust, the Fund, or the Adviser. Anything in this section 13 or otherwise in this Agreement to the contrary notwithstanding, however, nothing herein shall constitute a waiver or limitation of any rights that the Trust, the Adviser, or the Fund may have under any Federal or state securities laws. |
U.S. Global Investors, Inc. | ||||||
|
||||||
|
By: |
/s/ Susan B. McGee
|
||||
|
Title: | President and General Counsel |
U.S. Global Investors Funds | ||||||
|
||||||
|
By: |
/s/ Frank E. Holmes
|
||||
|
Title: | President and Chief Executive Officer |
Charlemagne Capital (IOM) Limited | ||||||
|
||||||
|
By: |
/s/ Anderson Whamond
|
||||
|
Title: | Managing Director |
1. | Appointment of Subadviser | ||
The Subadviser is hereby appointed to provide investment advisory services to the Fund for the period and on the terms herein set forth. The Subadviser accepts such appointment and agrees to render the services herein set forth, for the compensation herein provided. To enable the Subadviser to exercise fully its discretion and authority as provided in this Section 1, the Trust hereby constitutes and appoints the Subadviser as the Trusts agent and attorney-in-fact with full power and authority for the Trust and on the Trusts behalf to buy, sell, and otherwise deal in securities and contracts relating to same for the Fund. |
2. | Duties of Subadviser |
(a) | The Subadviser is hereby authorized and directed and hereby agrees, subject to the stated investment objectives and policies of the Fund as set forth in the Funds Prospectus (as defined below) and subject to the supervision of the Adviser and the Board of Trustees of the Trust, (i) to develop, recommend and implement such investment program and strategy for the Fund as may from time to time under the circumstances appear most appropriate to the achievement of the investment objective of the Fund as stated in the aforesaid Prospectus, (ii) to provide research and analysis relative to the investment program and investments of the Fund, (iii) to determine which securities should be purchased and sold and what portion of the assets of the Fund should be held in cash or cash equivalents, and (iv) to monitor on a continuing basis the performance of the portfolio securities of the Fund. The Subadviser will advise the Trusts custodian and the Adviser on a prompt basis of each purchase and sale of a portfolio security specifying the name of the issuer, the description and amount or number of shares of the security purchased, the market price, commission and gross or net price, trade date, settlement date and identity of the effecting broker or dealer; and will review the accuracy of the pricing of portfolio securities in accordance with Trust procedures. From time to time, as the Trustees of the Trust or the Adviser may reasonably request, the Subadviser will furnish to the Trusts officers and to each of its Trustees reports on portfolio transactions and reports on issues of securities held in the portfolio, all in such detail as the |
Trust or the Adviser may reasonably request. The Subadviser will also inform the Trusts officers and Trustees on a current basis of changes in investment strategy or tactics. The Subadviser will make its officers and employees available to meet with the Trusts officers and Trustees on due notice to review the investments and investment program of the Fund in the light of current and prospective economic and market conditions. | |||
The Subadviser shall place all orders for the purchase and sale of portfolio securities for the account of the Fund with brokers or dealers selected by the Subadviser, although the Trust will pay the actual brokerage commissions and any transfer taxes with respect to transactions in the portfolio securities of the Trust. The Subadviser is authorized to submit any such order collectively with orders on behalf of other accounts under its management, provided that the Subadviser shall have determined that such action is in the best interest of the Fund and is in accordance with applicable law, including, without limitation, Rule 17d-1 under the 1940 Act. In executing portfolio transactions and selecting brokers or dealers, the Subadviser will use its best efforts to seek on behalf of the Fund the best overall terms available. In assessing the best overall terms available for any transaction, the Subadviser shall consider all factors it deems relevant, including the breadth of the market in the security, the price of the security, the financial condition and execution capability of the broker or dealer, and the reasonableness of the commission, if any (for the specific transaction and on a continuing basis). In evaluating the best overall terms available, and in selecting the broker or dealer to execute a particular transaction, the Subadviser may also consider the brokerage and research services [as those terms are defined in Section 28(e) of the Securities Exchange Act of 1934] provided to the Fund and/or other accounts over which the Subadviser or an affiliate of the Subadviser exercises investment discretion. The Subadviser is authorized to pay to a broker or dealer who provides such brokerage and research services a commission for executing a portfolio transaction for the Fund which is in excess of the amount of commission another broker or dealer would have charged for effecting that transaction if, but only if, the Subadviser determines in good faith that such commission was reasonable in relation to the value of the brokerage and research services provided by such broker or dealer, viewed in terms of that particular transaction or in terms of all of the accounts over which investment discretion is so exercised. An affiliated person of the Subadviser may provide brokerage services to the Fund provided that the Subadviser shall have determined that such action is consistent with its obligation to seek the best overall terms available and is in accordance with applicable law, including, without limitation, Section 17(e) of the 1940 Act. The foregoing shall not be deemed to authorize an affiliated person of the Subadviser to enter into transactions with the Fund as principal. | |||
In the performance of its duties hereunder, the Subadviser is and shall be an independent contractor and unless otherwise expressly provided or authorized shall have no authority to act for or represent the Trust in any way or otherwise be deemed to be an agent of the Trust or of the Adviser. | |||
(b) | Delivery of Documents . The Adviser will furnish upon request or has previously furnished the Subadviser with true copies of each of the following: |
(i) | The Trusts Agreement and Declaration of Trust and all amendments thereto (such Agreement and Declaration of Trust, as presently in effect and as it shall from time to time be amended, is herein called the Trust Agreement); | ||
(ii) | The Trusts By-Laws and amendments thereto (such By-Laws, as presently in effect and as it shall from time to time be amended, are herein called the By-Laws); | ||
(iii) | Resolutions of the Trusts Board of Trustees authorizing the appointment of the Adviser and Subadviser and approving the Advisory Agreement and this Agreement; | ||
(iv) | The most recent Post-Effective Amendment to the Trusts Registration Statement on Form N-1A under the Securities Act of 1933 as amended (1933 Act) and the 1940 Act as filed with the Securities and Exchange Commission; | ||
(v) | The Funds most recent prospectus (such prospectus, as presently in effect and all amendments and supplements thereto being referred to herein as the Prospectus); and | ||
(vi) | All resolutions of the Board of Trustees of the Trust pertaining to the management of the assets of the Fund. |
3. | Advisory Fee |
(a) | For the services to be provided to the Fund by the Subadviser as provided in Paragraph 2 hereof, the Adviser will pay the Subadviser in accordance with the following: |
(i) | The Fund will pay to the Adviser a 1.375% annual management fee. | ||
The Adviser will retain 0.625% of the management fee and pay to the Subadviser 0.750% (less a pro rata portion of fees reimbursed and waived). | |||
The Adviser will increase or decrease the subadvisory fee by 50% of the performance fee adjustment, if any, as that fee is defined in Schedule A of the Investment Advisory Agreement between U.S. Global Investors, Inc. and U.S. Global Investors Funds, dated October 1, 2008 (Advisory Agreement). | |||
(ii) | The Fund is not responsible for paying any portion of the Subadvisers fees. | ||
(iii) | The fee is payable in monthly installments in arrears. The Management Fee means the management fee paid by the Trust to the Adviser under the Advisory Agreement between the Trust and the Adviser with respect to the management of the Fund. |
(b) | In the case of termination of the Agreement during any calendar month, the fee with respect to that month shall be reduced proportionately based upon the number of calendar days during which it is in effect and the fee shall be computed upon the average net assets of the Fund for the days during which it is so in effect. | ||
(c) | The Monthly Average Net Assets of the Fund for any calendar month shall be equal to the quotient produced by dividing (i) the sum of the net assets of the Fund, determined in accordance with procedures established from time to time by or under the direction of the Board of Trustees of the Trust in accordance with the Trust Agreement, for each calendar day of such month, by (ii) the number of such days. |
4. | Expenses | ||
During the term of this Agreement, the Subadviser will bear all expenses incurred by it in the performance of its duties hereunder. |
5. | Fund Transactions | ||
The Subadviser agrees that neither it nor any of its employees, officers, or directors will take any short-term position in the shares of the Fund for trading purposes provided, however, that such prohibition shall not prevent the purchase of shares of the Fund by any of the persons above described for their account and for investment at the price at which such shares are available to the public at the time of purchase. |
6. | Representation A nd Warranty | ||
The Subadviser hereby represents and warrants to the Adviser that it is duly registered as an investment adviser, or is exempt from registration, under the Investment Advisers Act of 1940, as amended, and that it shall maintain such registration or exemption at all times during which this Agreement is in effect. |
7. | Liability of Subadviser | ||
In the performance of its duties under this Agreement, the Subadviser shall act in conformity with and in compliance with the requirements of the 1940 Act and all other applicable U.S. Federal and state laws and regulations and shall not cause the Fund to take any action that would require the Fund or any affiliated person thereof to register as a commodity pool operator under the terms of the U.S. Commodity Exchange Act, as amended (it being understood by the Subadviser that a notice of eligibility may be filed on behalf of the Trust pursuant to Rule 4.5 promulgated under said Act). The Subadviser shall be responsible for maintaining such procedures as may be reasonably necessary to ensure that the investment and reinvestment of the Funds assets are made in compliance with its investment objectives and policies and with all applicable statutes and regulations and that the Fund qualifies as a regulated investment company under Subchapter M of the Internal Revenue Code. No provision of this Agreement shall be deemed to protect the Subadviser against any liability to the Trust or its shareholders to which it might otherwise be subject by reason of any willful misfeasance, bad faith, or gross negligence in |
the performance of its duties or the reckless disregard of its obligations and duties under this Agreement. |
8. | Reports | ||
The Subadviser shall render to the Board of Trustees of the Trust such periodic and special reports as the Board of Trustees may reasonably request with respect to matters relating to duties of the Subadviser set forth herein. |
9. | Duration A nd Termination of This Agreement |
(a) | Duration . With respect to the Trust, this Agreement shall become effective upon the date hereof and shall continue in full force and effect through September 30, 2009, and from year to year thereafter so long as such continuance is approved at least annually (i) by either the Trustees of the Trust or by vote of a majority of the outstanding voting securities (as defined in the 1940 Act) of the Fund, and (ii) in either event by the vote of a majority of the Trustees of the Trust who are not parties to this Agreement or interested persons (as defined in the 1940 Act) of any such party, cast in person at a meeting called for the purpose of voting on such approval. | ||
(b) | Termination . With respect to the Trust, this Agreement may be terminated at any time, without payment of any penalty (i) by vote of the Trustees of the Trust or by vote of a majority of the outstanding voting securities of the Fund (as defined in the 1940 Act) on sixty (60) days written notice to the other parties, (ii) by the Adviser on sixty (60) days written notice to the other parties or, (iii) by the Subadviser on ninety (90) days written notice to the other parties. | ||
(c) | Automatic Termination . With respect to the Trust, this Agreement shall automatically and immediately terminate in the event of its assignment or upon expiration of the Advisory Agreement now or hereafter in effect between the Adviser and the Trust with respect to the Fund. |
10. | Services Not Exclusive | ||
The services of the Subadviser of the Fund hereunder are not to be deemed exclusive, and the Subadviser shall be free to render similar services to others. |
11. | Limitation of liability | ||
It is expressly agreed that the obligations of the Adviser and Subadviser hereunder shall not be binding upon any of the shareholders, nominees, officers, agents, or employees of the Adviser or Subadviser, personally, but bind only the assets and property of the Adviser and Subadviser, respectively. The execution and delivery of the Agreement have been authorized by the directors and officers of the Adviser and Subadviser and signed by an authorized officer of the Adviser and Subadviser, acting as such, and neither such authorization by such directors and officers nor such execution and delivery by such officer shall be deemed to have been made by any of them individually or to impose any liability on any of them personally, but shall bind only the assets |
and property of the Adviser and Subadviser, respectively. This limitation of liability shall not be deemed to protect the shareholders, nominees, officers, agents, or employees of the Adviser and Subadviser against any liability to the Trust or its shareholders to which they might otherwise be subject by reason of any willful misfeasance, bad faith, or gross negligence in the performance of their duties or the reckless disregard of their obligations and duties under this Agreement |
12. | Miscellaneous . |
(a) | Notice . Any notice under this Agreement shall be in writing, addressed and delivered or mailed, postage prepaid, to the other parties at such address as such other parties may designate in writing for the receipt of such notices. | ||
(b) | Severability . If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule, or otherwise, the remainder shall not be thereby affected. | ||
(c) | Applicable Law . This Agreement shall be construed in accordance with and governed by the laws of the State of Texas. | ||
(d) | This Agreement constitutes the entire agreement of the parties and supersedes all prior or contemporaneous written or oral negotiations, correspondence, agreements, and understandings, regarding the subject matter hereof. |
13. | Standard of Care | ||
To the extent permitted under applicable law (including section 36 of the 1940 Act), the Subadviser will not be liable to the Trust or the Adviser for any losses incurred by the Trust, the Fund or the Adviser that arise out of or are in any way connected with any recommendation or other act or failure to act of the Subadviser under this Agreement, including, but not limited to, any error in judgment with respect to the Fund, so long as such recommendation or other act or failure to act does not constitute a breach of the Subadvisers fiduciary duty to the Trust, the Fund, or the Adviser. Anything in this section 13 or otherwise in this Agreement to the contrary notwithstanding, however, nothing herein shall constitute a waiver or limitation of any rights that the Trust, the Adviser, or the Fund may have under any Federal or state securities laws. |
U.S. Global Investors, Inc. | ||||||
|
||||||
|
By: |
/s/ Susan B. McGee
|
||||
|
||||||
|
Title: | President and General Counsel |
U.S. Global Investors Funds | ||||||
|
||||||
|
By: /s/ Frank E. Holmes
|
|||||
|
||||||
|
Title: | President and Chief Executive Officer |
Charlemagne Capital (IOM) Limited | ||||||
|
||||||
|
By: /s/ Anderson Whamond
|
|||||
|
||||||
|
Title: | Managing Director |
Page 1 of 4
Page 2 of 4
Page 3 of 4
Fund | Fee | |||
China Region Fund
|
0.20 | % | ||
All American Equity Fund
|
0.20 | % | ||
Gold and Precious Metals Fund
|
0.20 | % | ||
World Precious Minerals Fund
|
0.20 | % | ||
Global Resources Fund
|
0.20 | % | ||
Eastern European Fund
|
0.20 | % | ||
Global Emerging Markets Fund
|
0.20 | % | ||
Holmes Growth Fund
|
0.20 | % | ||
Global MegaTrends Fund
|
0.20 | % | ||
Tax Free Fund
|
0.20 | % | ||
Near-Term Tax Free Fund
|
0.20 | % | ||
U.S. Government Securities Savings Fund
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0.20 | % | ||
U.S. Treasury Securities Cash Fund
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0.20 | % |
Page 4 of 4
BROWN BROTHERS HARRIMAN & CO. | U.S. GLOBAL INVESTORS FUNDS | |||||
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By: /s/ James R. Kent
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By: /s/ Frank E. Holmes | |||||
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Name:
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James R. Kent | Name: | Frank E. Holmes | |||
Title:
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Managing Director | Title: |
President and Chief
Executive Officer |
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Date:
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October 1, 2008 | Date: | October 1, 2008 |
1. | China Region Fund | |
2. | All American Equity Fund | |
3. | Gold and Precious Metals Fund | |
4. | World Precious Minerals Fund | |
5. | Global Resources Fund | |
6. | Tax Free Fund | |
7. | Near-Term Tax Free Fund | |
8. | U.S. Government Securities Savings Fund | |
9. | U.S. Treasury Securities Cash Fund | |
10. | Eastern European Fund | |
11. | Global Emerging Markets Fund | |
12. | Holmes Growth Fund | |
13. | Global MegaTrends Fund |
1. | Definitions . Whenever used in this Agreement, the following words and phrases, unless the context otherwise requires, shall have the following meanings: |
(a) | Authorized Person includes the President, any Vice President, the Secretary, Treasurer, the persons listed in Appendix A hereto, as such Appendix may be amended from time to time, or any other person, whether or not the person is an Officer or employee of the Trust, duly authorized to give Oral Instructions and Written Instructions on behalf of the Trust as indicated in a certification pursuant to Section 7(d) or 7(e) hereof as the Transfer Agent may receive from time to time; | ||
(b) | By-Laws means the By-Laws that are currently effect for the Trust, as such may be amended from time to time. | ||
(c) | Certificate means any notice, instruction, or other instrument in writing, authorized or required by this Agreement to be given to the Transfer Agent, which the Transfer Agent actually receives and which any two Officers of the Trust have signed on its behalf; | ||
(d) | Commission has the meaning given it in the 1940 Act; | ||
(e) | Custodian refers to the custodian of all of the securities and other moneys the Trust owns; | ||
(f) | Declaration of Trust means the Agreement and Declaration of Trust of the Trust, as it is amended from time to time; | ||
(g) | Fund means each series of Shares established and designated under or in accordance with the provisions of the Declaration of Trust, as listed in Appendix D, which Appendix may be amended from time to time; | ||
(h) | Officer means the President, Vice President, Secretary, and Treasurer; | ||
(i) | Oral Instructions means instructions orally communicated to and actually received by the Transfer Agent from an Authorized Person or from a person the Transfer Agent reasonably believes to be an Authorized Person; | ||
(j) | Prospectus means the most current effective prospectus relating to the particular Funds Shares under the Securities Act of 1933, as amended; |
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(k) | Shares refers to the transferable units of interest into which the beneficial interest in the Trust or any Fund of the Trust (as the context may require) shall be divided from time to time; | ||
(l) | Shareholder means a record owner of Shares; | ||
(m) | Trust refers to the Delaware statutory trust established under the Declaration of Trust; | ||
(n) | Trustees or Board of Trustees refers to the duly elected Trustees of the Trust; | ||
(o) | Written Instruction means a written communication the Transfer Agent actually receives from an Authorized Person or from a person the Transfer Agent reasonably believes to be an Authorized Person by telex or any other system whereby the receiver of a communication is able to verify through codes or otherwise with a reasonable degree of certainty the authenticity of the sender of the communication; and | ||
(p) | The 1940 Act refers to the Investment Company Act of 1940, as amended and the regulations thereunder. |
2. | Representation Of Transfer Agent . The Transfer Agent does hereby represent and warrant to the Trust that (a) it is duly registered as a transfer agent as provided in Section 17A(c) of the Securities Exchange Act of 1934, as amended; (b) it is duly organized and existing and in good standing under the laws of the state of Texas; (c) that it is empowered under applicable laws and by its organizational documents and By-laws to enter into and perform this agreement; that all necessary filings with the states will have been made and will be current during the term of this Agreement; (d) no legal or administrative proceedings have been instituted or threatened that would impair the Transfer Agents ability to perform its duties and obligations under this Agreement; (e) the various procedures and systems which the Transfer Agent has implemented with regard to safekeeping of the blank checks, records, and other data of the Trust from loss or damage attributable to fire, theft or any other cause and the Transfer Agents records, data, equipment, facilities and other property used in the performance of its obligations hereunder are reasonably designed to ensure such safekeeping and the Transfer Agent will make such changes thereto from time to time as are reasonably required for the secure performance of its obligations hereunder; (f) it has adopted policies and procedures that are reasonably designed to prevent violation of the federal securities laws with respect to the services to be provided to the Funds under this Agreement; and (g) this Agreement, when executed and delivered, will constitute a legal, valid and binding obligation of the Transfer Agent, enforceable against the Transfer Agent in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors and secured parties. | ||
3. | Representations Of The Trust . The Trust represents to the Transfer Agent that, as of the date hereof, all outstanding Shares are validly issued, fully paid, and non-assessable by the Trust. The Trust may hereafter issue an unlimited number of Shares of each Fund presently existing or hereafter created. When Shares are hereafter issued in accordance with the terms of the |
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Prospectus, the Shares shall be validly issued, fully paid, and non-assessable by the Trust. The Trust represents that it is validly existing under the laws of the State of Delaware; that it is empowered under applicable laws and by its Declaration of Trust and By-laws to enter into and perform this Agreement; that it is registered under the 1940 Act; that a registration statement on Form N-1A has been filed and will be effective during the term of this Agreement; that all necessary filings with the states (including all registration or filing fees) will have been made and will be current during the term of this Agreement; and that no legal or administrative proceedings have been instituted or threatened that would impair the Funds ability to perform its duties and obligations under this Agreement . | |||
4. | Appointment Of The Transfer Agent . The Trust hereby appoints and constitutes the Transfer Agent as transfer agent for all of the Shares of each Fund of the Trust in existence as of the date hereof, and as shareholder-servicing agent for the Trust and the Transfer Agent accepts these appointments and agrees to perform the duties in accordance with the terms of the Agreement. In addition to the services and duties of the Transfer Agent, the Transfer Agent agrees to perform all services usually and customarily performed by a Transfer Agent, services incidental to the performance of the services enumerated herein and such additional services as agreed upon by the Transfer Agent and Trust in writing from time to time. | ||
5. | Compensation . |
(a) | Each Fund will compensate the Transfer Agent for the services set forth on Exhibit B rendered under this Agreement in accordance with the fees set forth in the Fee Schedule annexed hereto and incorporated herein for the existing Funds, except as provided in paragraph 5(e) of this Agreement. The Fee Schedule may be amended upon mutual agreement of the parties and by executing a later dated Fee Schedule. The Transfer Agent shall also be compensated for reasonable and customary out-of-pocket disbursements (including, but not limited to, telephone toll-free lines, call transfers, mailing, sorting and postage, stationery, envelopes, development and programming, service/data conversion, telecommunication charges and equipment maintenance, 22c-2 connectivity charges, special reports, record retention, literature fulfillment kits, microfilm, microfiche, proxies, proxy services, lost shareholder search, escheatment services and reporting, disaster recovery charges, ACH fees, new and existing shareholder database searches, Fed wire charges, NSCC charges, delivery charges, and all other out-of-pocket expenses as are reasonably incurred by the Transfer Agent in performing its duties hereunder. The Transfer Agent shall be entitled to bill these expenses separately. No Fund shall be liable for any expenses, debts, or obligations arising under this Agreement of any other Fund. | ||
(b) | The parties will agree upon the compensation for acting as Transfer Agent for any Fund hereafter designated and established at the time that the Transfer Agent commences serving as transfer agent for that Fund, and this Agreement shall be reflected in a Fee Schedule for that Fund, dated and signed by an authorized officer of each party, to be attached to this Agreement. |
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(c) | Any compensation to be paid under this Agreement may be adjusted by attaching to this Agreement a revised Fee Schedule, approved by the Board of Trustees and dated and signed by an Officer of each party. | ||
(d) | The Transfer Agent will bill the Trust for each Fund as soon as practicable after the end of each calendar month, and the billings will be detailed in accordance with the Fee Schedule for each Fund. The Trust promptly will pay the amount of the bill to the Transfer Agent. If fees begin to accrue in the middle of a month or if this Agreement terminates before the end of any month, all fees for the period from that date to the end of that month or from the beginning of that month to the date of termination, as the case may be, shall be prorated according to the proportion that the period bears to the full month in which the effectiveness or termination occurs. Upon the termination of this Agreement with respect to a Fund, the Fund shall pay to the Transfer Agent such compensation as shall be payable prior to the effective date of termination. | ||
(e) | If this Agreement is terminated by the Trust, the Trust shall be responsible for all reasonable and customary out-of-pocket expenses or costs associated with the movement of records and materials to the successor transfer agent and providing assistance to any successor person in the establishment of the accounts and records necessary to carry out the successors responsibilities. Additionally, the Transfer Agent reserves the right to charge for any other reasonable and customary expenses associated with such termination. |
6. | Documents . In connection with the appointment of the Transfer Agent, the Trust shall, on or before the date this Agreement goes into effect, provide copies of the following documents to the Transfer Agent: |
(a) | A copy of the Declaration of Trust as then in effect; | ||
(b) | A copy of the By-laws of the Trust, as then in effect; | ||
(c) | A copy of the resolution of the Trustees authorizing this Agreement; | ||
(d) | If applicable, a specimen of the certificate for Shares of each Fund of the Trust in the form the Trustees approved, with a certificate of the Secretary of the Trust as to this approval; | ||
(e) | All account application forms and other documents relating to Shareholder accounts or relating to any plan, program or service the Trust offers; | ||
(f) | If applicable, a list of Shareholders of the existing Funds with the name, address, and tax identification number of each Shareholder, and the number of Shares of the existing Funds each Shareholder holds, certificate numbers and denominations (if any certificates have been issued), lists of any accounts against which stops have been placed, together with the reasons for the stops, and the number of Shares the Funds redeemed; and |
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(g) | A copy of the opinion of counsel for the Trust on the validity of the Shares and the status of the shares under the Securities Act of 1933, amended. |
7. | Further Documentation . The Trust will also furnish to the Transfer Agent from time to time the following documents, and shall promptly furnish the Transfer Agent with all amendments of or supplements to the following: |
(a) | Each resolution of the Trustees authorizing the original issue of Shares or establishing a new Fund; | ||
(b) | Each Registration Statement filed with the Commission, and all amendments and orders pertaining to the Registration Statement, in effect for the sale of Shares of the Trust; | ||
(c) | A copy of each amendment to the Declaration of Trust by the By-laws of the Trust; | ||
(d) | Copies of each vote of the Trustees designating Authorized Persons to give instructions to the Transfer Agent; | ||
(e) | Certificates as to any change in an Officer or Trustee of the Trust; | ||
(f) | Specimens of all new certificates for Shares, accompanied by the Trustees resolutions approving these forms; | ||
(g) | Any relevant procedures adopted by the Trust with respect to the Funds; and | ||
(h) | Any other certificates, documents, or opinions as the Transfer Agent and the Trust may mutually deem necessary or appropriate for the Transfer Agent in the proper performance of its duties. |
8. | Duties Of The Transfer Agent . |
(a) | The Transfer Agent shall be responsible for administering and/or performing transfer agent functions, for acting as service agent in connection with dividend and distribution functions, and for performing shareholder account administrative agent functions in connection with the issuance, transfer, and redemption or repurchase (including coordination with the Custodian) of the Trusts Shares. The details of the operating standards and procedures to be followed shall be determined from time to time as the Transfer Agent and the Trust agree. | ||
(b) | The Board of Trustees has, in connection with its review of each service providers policies and procedures under Rule 38a-1 under the 1940 Act, has reviewed a summary of the Transfer Agents policies and procedures (collectively, the Procedures). Further, in connection with this review, the Board has determined that the Procedures are reasonably designed to prevent violation of the federal securities laws. It is contemplated that these Procedures will be amended from time to time by the parties as additional regulations are adopted and/or regulatory guidance is provided relating to the Trusts responsibilities. |
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(c) | The Transfer Agent will provide the services listed in Appendix B and Appendix C subject to the control, direction, and supervision of the Board of Trustees and its designated agents and in compliance with the purchase, sale, and exchange provisions of the Trusts prospectus and statement of additional information as in effect from time to time. | ||
(d) | The Trust hereby delegates to the Transfer Agent and the Transfer Agent accepts such delegation of the implementation and operation of the Trusts anti-money laundering (AML) compliance program. The Transfer Agent will carryout the Trusts AML Compliance Program in accordance with the Trusts International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001 Policies and Procedures and Customer Identification Program, as such policies and procedures may be amended from time to time by the Board of Trustees. Except with respect to the Transfer Agents duties as set forth in Appendix C and except as otherwise specifically provided herein, the Trust assumes all responsibility for ensuring that the Trust complies with all applicable requirements of the Securities Act, the 1940 Act, the USA PATRIOT Act of 2001 (USA PATRIOT Act) and any other laws, rules and regulations of governmental authorities with jurisdiction over the Trust. | ||
(e) | The Transfer Agent shall record the issuance of shares pursuant to Rule 17Ad-10(e) of the 1934 Act and maintain a record of the total number of Shares of each Fund which are authorized, based upon data the Trust provides to it, and issued and outstanding. The Transfer Agent shall provide the Trust and its agent for preparing and making blue sky filings with the states on a regular basis with the total number of Shares of each Fund which are authorized and issued and outstanding and shall have no obligation, when recording the issuance of Shares, to monitor the issuance of such Shares or to take cognizance of any laws relating to the issue or sale of such Shares, which functions shall be the sole responsibility of the Trust. | ||
(f) | The Transfer Agent shall create and maintain all records required by applicable laws, rules, and regulations, including but not limited to records required by Section 31(a) of the 1940 Act and the rules thereunder, as they may be amended from time to time, pertaining to the various functions the Transfer Agent performs and which are not otherwise created and maintained by another party pursuant to contract with the Trust. All such records shall be the property of the Trust at all times and shall be available for its inspection and use. When applicable, the Transfer Agent shall maintain these records for the periods and in the places required by Rule 31a-2 under the 1940 Act. The retention of such records shall be at the expense of the Trust. The Transfer Agent shall make available during regular business hours all record and other data created and maintained pursuant to this Agreement for the reasonable audit and inspection by the Trust, any person the Trust retains, or any regulatory agency having authority over the Trust at reasonable times. | ||
(g) | In addition to the duties set forth herein or as otherwise listed in Appendix B and Appendix C, the Transfer Agent shall perform other duties and functions and shall be paid for these services as the Transfer Agent and the Trust may from time to time agree in writing. |
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9. | Responsibilities Retained by the Trust . The Trust has and retains primary responsibility for all compliance matters relating to the Fund, including, but not limited to, compliance with the 1940 Act, the Internal Revenue Code of 1986, the Sarbanes-Oxley Act of 2002, the USA Patriot Act, including suspicious activity reporting, OFAC reporting, Rule 22c-2 under the 1940 Act, and the policies and limitations of the Fund relating to its portfolio investments as set forth in its Prospectus and Statement of Additional Information. Transfer Agents services hereunder shall not relieve the Trust of its responsibilities for assuring such compliance or the Board of Trustees oversight responsibility with respect thereto. | ||
10. | Lost Shareholder Due Diligence Searches and Servicing . The Trust hereby acknowledges that the Transfer Agent may, at its discretion, perform searches using an outside vendor database, or arrange with outside vendors to conduct lost shareholder searches, as and to the extent required by Rule 17Ad-17 under the Securities Exchange Act of 1934, as amended. Outside vendor costs associated with such searches which will be passed through to the Trust as an out-of-pocket expense. If the Transfer Agent conducts the search, the Transfer Agent will charge for its services per the Fee Schedule, in addition to the outside vendor costs associated with such searches which will be passed through to the Trust as an out-of-pocket expense. | ||
If a shareholder remains lost and the shareholders account is unresolved after completion of the mandatory Rule 17Ad-17 search, the Trust hereby authorizes a vendor to enter, at its discretion, into fee sharing arrangements with the lost shareholder (or such lost shareholders representative or executor) to conduct a more in-depth search in order to locate the lost shareholder before the shareholders assets escheat to the applicable state. The Trust hereby acknowledges that the Transfer Agent is not a party to these arrangements and does not receive any revenue sharing or other fees relating to these arrangements. Furthermore, the Trust hereby acknowledges that vendor may receive up to 35% of the lost shareholders assets as compensation for its efforts in locating the lost shareholder. | |||
11. | Escheatment of Lost Shareholder Accounts . The Trust hereby acknowledges that the Transfer Agent may, at its discretion, perform escheatment services using outside vendor services, or arrange with outside vendors to perform escheatment services as and to the extent required by applicable state law. Outside vendor costs associated with such services will be passed through to the Trust as an out-of-pocket expense. If the Transfer Agent provides the escheatment services, the Transfer Agent will charge for its services per the Fee Schedule, in addition to the outside vendor costs associated with such services which will be passed through to the Trust as an out-of-pocket expense. | ||
12. | Right To Seek Assurances . The Transfer Agent reserves the right to refuse to transfer or redeem Shares until it is satisfied that the requested transfer or redemption is legally authorized, and it shall incur no liability for the refusal, in good faith, to make transfers or redemptions that the Transfer Agent, in its judgment, deems improper or unauthorized, or until it is satisfied that there is no basis for any claim adverse to the transfer or redemption. The Transfer Agent may, in effecting transfers, rely upon the provisions of the Uniform Act for the Simplification of Fiduciary Security Transfers or the Uniform Commercial Code, as these may be amended from |
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time to time, which in the opinion of legal counsel for the Trust or of its own legal counsel, protect it in not requiring certain documents in connection with the transfer or redemption of Shares of any Fund. The Trust shall indemnify the Transfer Agent for any act it does or omits to do in reliance upon these laws or opinions of counsel of the Trust or its own counsel. | |||
13. | Reliance By Transfer Agent; Instructions . |
(a) | The Transfer Agent shall be protected in acting upon any paper or document it believes to be genuine and to have been signed by an Authorized Person and shall not be held to have any notice of any change of authority of any person until receipt of written certification thereof from the Trust. It shall also be protected in processing Share certificates that it reasonably believes to bear the proper manual or facsimile signatures. | ||
(b) | At any time, the Transfer Agent may apply to any Authorized Person of the Trust for Written Instructions, and at the expense of the Trust, may seek advice from legal counsel for the Trust or its own legal counsel, for any matter arising in connection with this Agreement, and it shall not be liable for any action it takes or does not take or suffers in good faith in accordance with these Written Instructions or with the opinion of counsel. In addition, the Transfer Agent, its officers, agents, or employees shall accept instructions or requests from any person representing or acting on behalf of the Trust only if the Transfer Agent, its officers, agents, or employees knows the representative to be an Authorized Person. The Transfer Agent shall have no duty or obligation to inquire into, nor shall the Transfer Agent be responsible for, the legality of any act it does upon the request or direction of Authorized Persons of the Trust. | ||
(c) | Notwithstanding any of the foregoing provisions of this Agreement, the Transfer Agent shall be under no duty or obligation to inquire into, and shall not be liable for: (i) the legality of the issue or sale of any Shares of the Trust, or the sufficiency of the amount to be received therefore; (ii) the legality of the redemption of any Shares of the Trust, or the propriety of the amount to be paid therefore; (iii) the legality of the Trusts declaration of any dividend, or the legality of the issue of any Shares of the Trust in payment of any stock dividend; or (iv) the legality of any recapitalization or readjustment of the Shares of the Trust. |
14. | Standard Of Care And Indemnification . The Transfer Agent shall not be responsible for, and the Trust shall indemnify and hold the Transfer Agent harmless from and against, any and all losses, damages, costs, charges, reasonable counsel fees (including the defense of any law suit in which the Transfer Agent or affiliate is a named party), payments, expenses and liability arising out of or attributable to: |
(a) | All actions of the Transfer Agent or its agents or subcontractors required to be taken pursuant to this Agreement, provided that such actions are taken in good faith and without negligence, reckless disregard or willful misconduct; | ||
(b) | The lack of good faith, negligence or willful misconduct of the Trust; |
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(c) | The reliance upon, and any subsequent use of or action taken or omitted, by the Transfer Agent, or its agents or subcontractors on: (i) any information, records, documents, data, stock certificates or services, which are received by the Transfer Agent or its agents or subcontractors by machine readable input, facsimile, CRT data entry, electronic instructions or other similar means authorized by the Trust, and which have been prepared, maintained or performed by the Trust or any other person or firm on behalf of the Trust; (ii) any instructions or requests of the Trust or any of its officers; (iii) any instructions or opinions of legal counsel to the Trust with respect to any matter arising in connection with the services to be performed by the Transfer Agent under this Agreement which are provided to the Transfer Agent after consultation with such legal counsel; or (iv) any paper or document, reasonably believed to be genuine, authentic, or signed by the proper person or persons; | ||
(d) | The offer or sale of Shares in violation of federal or state securities laws or regulations requiring that such Shares be registered or in violation of any stop order or other determination or ruling by any federal or any state agency with respect to the offer or sale of such Shares; | ||
(e) | The processing of any checks or wires, including without limitation for deposit into the Trusts demand deposit account maintained by the Transfer Agent; or | ||
(f) | The breach of any representation or warranty set forth in Section 3 above. | ||
The Trust shall not be responsible for, and the Transfer Agent shall indemnify and hold the Trust, its Board, officers, employees and agents, harmless from and against any losses, damages, costs, charges, reasonable counsel fees, payments, expenses and liability arising directly out of or attributable to any action or failure of the Transfer Agent to act as a result of the Transfer Agents lack of good faith, negligence or willful misconduct in the performance of its services hereunder or the breach of any representation or warranty set forth in Section 2 above. | |||
In order that the indemnification provisions contained in this Section 11 shall apply, upon the assertion of an indemnification claim, the party seeking the indemnification shall promptly notify the other party of such assertion, and shall keep the other party advised with respect to all developments concerning such claim. The Trust shall have the option to participate with the Transfer Agent in the defense of such claim or to defend against said claim in its own name or that of the Transfer Agent. The party seeking indemnification shall in no case confess any claim or make any compromise in any case in which the other party may be required to indemnify it except with the indemnifying partys written consent, which consent shall not be unreasonably withheld. | |||
Notwithstanding the above, the Transfer Agent reserves the right to reprocess and correct administrative errors at its own expense. |
15. | Taxes. The Transfer Agent shall not be liable for any taxes, assessments or governmental charges that may be levied or assessed on any basis whatsoever in connection with the Trust or |
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any shareholder or any purchase of shares, excluding taxes assessed against the Transfer Agent for compensation received by it under this Agreement. | |||
16. | Data Necessary to Perform Services . Trust or its agent shall furnish to Transfer Agent the data necessary to perform the services described herein at such times and in such form as mutually agreed upon by the parties. | ||
17. | Consequential Damages . No party to this Agreement shall be liable to the other party for special, indirect or consequential damages under any provision of this Agreement or for any special, indirect or consequential damages arising out of any act or failure to act hereunder. | ||
18. | Proprietary Information; Confidentiality . The Trust acknowledges that the databases, computer programs, screen formats, report formats, interactive design techniques, and documentation manuals maintained by the Transfer Agent on databases under the control and ownership of the Transfer Agent or a third party constitute copyrighted, trade secret, or other proprietary information (collectively, Proprietary Information) of substantial value to the Transfer Agent or the third party. The Trust agrees to treat all Proprietary Information as proprietary to the Transfer Agent and further agrees that it shall not divulge any Proprietary Information to any person or organization except as may be provided under this Agreement. | ||
The Transfer Agent acknowledges that the shareholder lists and all information related to shareholders of the Funds that is furnished to the Transfer Agent by the Funds or a shareholder in connection with this Agreement shall constitute proprietary information of substantial value to the Fund. The Transfer Agent agrees on behalf of itself and its employees to treat confidentially all records and other information relative to the Trust and its shareholders received by the Transfer Agent in connection with this Agreement, including any non-public personal information as defined by Regulation S-P, and that it shall not use or disclose any such information except for the purpose of carrying out the terms of this Agreement; provided, however, that the Transfer Agent may disclose such information as required by law or in connection with any requested disclosure to a regulatory authority with appropriate jurisdiction after prior notification to, and approval of the Trust. | |||
Upon termination of this Agreement, each party shall return to the other party all copies of confidential or Proprietary Information received from such other party hereunder, other than materials or information required to be retained by such party under applicable laws or regulations. Each party hereby agrees to dispose of any consumer report information, as such term is defined in Regulation S-P. | |||
19. | Affiliation Between Trust And Transfer Agent . It is understood that the Trustees, officers, employees, agents, and Shareholders of the Trust are or may be interested in the Transfer Agent as directors, officers, employees, agents, stockholders, or otherwise, and that the directors, officers, employees, agents, or stockholders of the Transfer Agent may be interested in the Trust as Trustees, officers, employees, agents, Shareholders, or otherwise. The fact that the officers, Trustees, employees, agents, or Shareholders of the Trust are or may be affiliated persons (as defined in the 1940 Act) of the Transfer Agent shall not affect the validity of this Agreement. |
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20. | Limitation Of Liability Of Trustees . The Transfer Agent acknowledges that the Funds obligations hereunder are binding only on the assets and property belonging to the Funds. It is expressly agreed that obligations of the Trust hereunder shall not be binding upon any Trustee, Shareholder, nominees, officers, agents, or employees of the Trust, personally, but bind only the assets and property of the Trust, as provided in the Declaration of Trust. The execution and delivery of this Agreement have been authorized by the Trustees and signed by an authorized officer of the Trust, acting as such, and neither this authorization nor this execution and delivery shall be deemed to have been made by any of them individually or to impose any liability on any of them personally, but shall bind only the assets and property of the Trust as provided in the Declaration of Trust. | ||
21. | Services Not Exclusive . The services of the Transfer Agent rendered to the Trust hereunder are not to be deemed to be exclusive. The Transfer Agent is free to render such services to others and to have other businesses and interests. | ||
22. | Term . |
(a) | This Agreement shall become effective on the date hereof (the Effective Date) and shall continue so long as the continuance is specifically approved at least annually by either a majority of the Trustees or the vote of a majority of the outstanding voting securities (as defined in the 1940 Act). | ||
Any approval of this Agreement by the holders of a majority of the outstanding shares (as defined in the 1940 Act) of any Fund shall be effective to continue this Agreement for any Fund notwithstanding: (i) that this Agreement has not been approved by the holders of a majority of the outstanding shares of any other Fund affected thereby, and (ii) that this Agreement has not been approved by the vote of a majority of the outstanding shares of the Trust, unless this approval shall be required by any other applicable law or otherwise. | |||
(b) | This Agreement may be terminated at any time without payment of any penalty by vote of the Trustees of the Trust or by the Transfer Agent on sixty (60) day written notice to the other party. In the event the Trust gives notice, notice shall be accompanied by a resolution of the Board of Trustees, certified by the Secretary, electing to terminate this Agreement and designating a successor transfer agent. |
23. | Entire Agreement . This Agreement constitutes the entire agreement between the parties hereto and supersedes all prior agreements, understandings and arrangements with respect to the subject matter hereof. | ||
24. | Amendment . This Agreement may not be amended or modified in any manner except by a written agreement executed by both parties with the formality of this Agreement and authorized or approved by a resolution of the Board of Trustees. |
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25. | Subcontracting . The Trust agrees that the Transfer Agent may, in its discretion, subcontract for certain of the services to be provided hereunder. The Transfer Agent shall be liable for the actions taken by its agents as if they were performed by the Transfer Agent. | ||
26. | Security . The Transfer Agent represents and warrants that, to the best of its knowledge, the various procedures and systems which the Transfer Agent has implemented for safeguarding from loss or damage attributable to fire, theft, or any other cause (including provision for twenty-four hours a day restricted access) the Trusts blank checks, records, and other data and the Transfer Agents records, data, equipment, facilities, and other property used in the performance of its obligations hereunder are adequate and that it will make changes therein from time to time as in its judgment are required for the secure performance of its obligations hereunder. The parties shall periodically review these systems and procedures. | ||
27. | Additional Funds . In the event that the Board of Trustees establishes one or more series of Shares, in addition to those listed on the attached Appendix D, with respect to which it desires to have the Transfer Agent render services as transfer agent under the terms hereof, it shall so notify the Transfer Agent and such series of Shares shall become a Fund hereunder upon an amendment to Appendix D hereto. In the event that new affiliated funds and their portfolios become parties to this Agreement, the fees and expenses set forth in the Fee Schedule shall apply to such funds for their applicable initial term or renewal term, provided that the requirements of such funds and portfolios are generally consistent with the services then being provided by the Transfer Agent under this Agreement to the Fund. | ||
28. | Force Majeure . In the event either party is unable to perform its obligations under the terms of this Agreement because of acts of God, acts of war or terrorism, strikes, equipment or transmission failure or damage reasonably beyond its control, or other causes reasonably beyond its control, such party shall not be liable for damages to the other for any damages resulting from such failure to perform or otherwise from such causes; provided, however, that this provision shall not imply that the Transfer Agent is excused from maintaining reasonable business continuity plans to address potential service outages. | ||
In the event of a mechanical breakdown or failure of communication or power supplies beyond its control, the Transfer Agent shall take all reasonable steps to minimize service interruptions for any period that such interruption continues. Transfer Agent will make every reasonable effort to restore any lost or damaged data and correct any errors resulting from such a breakdown. Transfer Agent agrees that it shall, at all times, have reasonable contingency plans with appropriate parties, making reasonable provision for emergency use of electrical data processing equipment to the extent appropriate equipment is available. Representatives of the Trust shall be entitled to inspect Transfer Agents premises and operating capabilities at any time during regular business hours of Transfer Agent, upon reasonable notice to Transfer Agent. Moreover, Transfer Agent shall provide the Trust, at such times as the Trust may reasonably require, copies of reports rendered by independent accountants on the internal controls and procedures of Transfer Agent relating to the services provided by Transfer Agent under this Agreement. |
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The Trust shall be responsible for all costs and expenses due to events that require the Transfer Agent to invoke emergency contingency plans due to mechanical breakdowns, failure of communication or power supplies beyond its reasonable control, or other events beyond its reasonable control where the Transfer Agent cannot perform its duties as defined in this Agreement. This includes, but is not limited to, use of appropriate parties to perform those customary Transfer Agent services and duties defined herein, including but not limited to out of pocket expenses. The Trustees authorize the Transfer Agent to, on behalf of the Trust, contract with appropriate parties to provide such duties and services. The Trust acknowledges that the costs and expenses may be higher or lower than the Trust or Fund current costs and expenses under the terms of this Agreement. | |||
29. | Notices. Any notice or other instrument in writing, authorized or required by this Agreement to be given to the Trust or the Transfer Agent, shall be sufficiently given if addressed to that party and mailed or delivered to it at its office set forth below or at another place as it may from time to time designate in writing. |
To the Trust:
|
To the Transfer Agent: | |
U.S. Global Investors Funds
|
United Shareholder Services, Inc. | |
7900 Callaghan Road
|
7900 Callaghan Road | |
San Antonio, Texas 78229
|
San Antonio, Texas 78229 | |
Attention: President
|
Attention: President |
30. | Assignment; Third Party Beneficiaries. Neither party may assign this Agreement nor any rights or obligations hereunder without the written consent of the other party. Any attempt to do so in violation of this provision shall be void. Unless specifically stated to the contrary in any written consent to an assignment, no assignment will release or discharge the assignor from any duty or responsibility under this Agreement. For avoidance of doubt, a transaction involving a merger or sale of substantially all of the assets of a Fund shall not require the written consent of the Transfer Agent. Except as explicitly stated elsewhere in this Agreement, nothing under this Agreement shall be construed to give any rights or benefits in this Agreement to anyone other than the Transfer agent and the Fund, and the duties and responsibilities undertaken pursuant to this Agreement shall be for the sole and exclusive benefit of the Transfer Agent and the Fund. This Agreement shall inure to the benefit of and be binding upon the parties and their permitted successors and assigns. | ||
31. | Governing Law. This Agreement shall be construed in accordance with the laws of the State of Texas. | ||
32. | Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original; but the counterparts shall, together, constitute only one instrument. | ||
33. | Severability. If any term or condition of this Agreement shall be invalid or unenforceable to any extent or in any application, then the remainder of this Agreement (including the term or condition to the extent possible) shall not be affected thereby, and each and every term and |
- 13 -
condition of this Agreement shall be valid and enforceable to the fullest extent and in the broadest application permitted by law. | |||
34. | Waiver. The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver nor shall it deprive the party of the right thereafter to insist upon strict adherence to that term or any term of this Agreement. Any waiver must be in writing signed by the waiving party. | ||
35. | Headings. All Section headings contained in this Agreement are for convenience of reference only, do not form a part of this Agreement and will not affect in any way the meaning or interpretation of this Agreement. Words used herein, regardless of the number and gender specifically used, will be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine, or neuter, as the contract requires. |
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|
U.S. Global Investors Funds | |||||
|
||||||
Attest:
|
||||||
By: /s/ Sheila A. Matthys
|
By: /s/ Frank E. Holmes
|
|||||
|
President and Chief Executive Officer | |||||
|
||||||
S E A L
|
||||||
|
||||||
|
United Shareholder Services, Inc. | |||||
|
||||||
Attest:
|
||||||
By: /s/ Sheila A. Matthys
|
By: /s/ Mark Carter | |||||
|
|
|||||
|
Mark Carter | |||||
|
President | |||||
|
||||||
S E A L
|
- 15 -
$ | 15.112 |
per open account Equity
|
||||
$ | 15.132 |
per open account Income
|
||||
$ | 21.204 |
per open account Money Market
|
||||
$ | 0.061 |
per fiduciary account
|
||||
$ | 0.015 |
per withholding account
|
||||
$ | 2. 051 |
per closed account
|
||||
|
||||||
$ | 10,509.32 |
per fund/year
|
||||
$ | 13,500.00 |
per fund complex - email services
|
|
Set up | $750 per fund group | ||
|
Certificate Transaction | $10.00 each |
Mailing Operations | ||||
Materials
Warehousing Monthly Base Fee
|
$1,200.00 | |||
Operations
Base Fee Monthly Base Fee
|
$3,900.00 | |||
Handling Charges
|
||||
Daily, Monthly, Quarterly Statements
|
$0.08 per mailed package
|
|||
Tax Forms
|
$0.08 per mailed package
|
|||
Other Required Regulatory Mailings
|
$0.08 per mailed package
|
|||
Printing
|
$0.21 per image
|
- 16 -
New Account Kits (prospectus, etc.)
|
$3.00 per mailed package |
Non-NSCC Accounts | ||||
Anti-Money Laundering
|
||||
Base Fee
|
||||
0 - 999 accounts
|
$1,000 per fund, per year | |||
1,000 - 4,999 accounts
|
$2,000 per fund, per year | |||
5,000 - 9,999 accounts
|
$3,500 per fund, per year | |||
10,000 - +accounts
|
$6,500 per fund, per year | |||
|
||||
Name Search
|
$1.00 per legal owner | |||
Name Search
|
$1.00 per authorized trader | |||
|
||||
NSCC Account Monitoring Charges | ||||
Redemption Fee
|
$2.00 per account, per year | |||
Excessive Trader
|
$2.00 per account, per year |
- 17 -
90 days or less
|
$0.061 per open account | |||
91 - 180 days
|
$0.123 per open account | |||
181 - 270 days
|
$0.184 per open account |
Set up per fund
|
$1,500 | |||
Per account, per year
|
$0.12 |
Per open account, per year
|
$0.20 |
Per CUSIP, per month
|
$105.093 |
Per account, per year
|
$0.25 |
Per thousand history records
|
$3.50 |
- 18 -
Set up Fees | ||||
Initial Web Site
|
N/A already established | |||
Each Additional Web Site
|
$5,000 | |||
Each Plan Sponsor Web Site
|
$10,000 | |||
|
||||
Monthly Base Access and Support Charge | $3,000 per month | |||
|
||||
Transaction Fees | ||||
Inquiry
|
$0.15 per event | |||
Maintenance
|
$0.25 per event | |||
Financial
|
$0.50 per event |
- 19 -
Computer/Technical Personnel
|
||
Business Analyst Tester
|
||
Dedicated
|
$102,000 per year | |
Hourly
|
$81.00 per hour | |
|
||
COBOL Programmer
|
||
Dedicated
|
$163,000 per year | |
Hourly
|
$135.00 per hour | |
|
||
Workstation Programmer
|
||
Dedicated
|
$199,000 per year | |
Hourly
|
$163.00 per hour | |
|
||
Web Programmer
|
||
Dedicated
|
$235,000 per year | |
Hourly
|
$194.00 per hour | |
|
||
Other Technical
|
Billed as incurred |
NSCC Interfaces
|
||
Set Up
|
||
Fund/SERV, Networking
|
N/A | |
|
||
ACATS, Exchanges *
|
$5,000 set-up (one time) | |
DCCS, TORA Commission Settlement *
|
$5,000 set-up (one time) | |
* 3rd party estimate
|
||
Processing Fee Types, for example
|
||
Fund/SERV
|
Determined by the DTCC | |
Networking
|
Determined by the DTCC | |
CPU Access
|
Determined by the DTCC | |
Fund/SERV Transactions
|
Determined by the DTCC | |
Networking per item
|
Determined by the DTCC | |
Additional as Determined by the DTCC
|
- 20 -
Forms Costs
|
||
Statement Paper
|
At cost | |
#9, #10 Envelopes
|
At cost | |
Check/Statement Paper
|
At cost | |
Certificate
|
At cost | |
Fulfillment Envelope
|
At cost | |
Presort
|
At cost | |
Printing & Mail Costs *
|
||
Postage
|
At cost | |
Statement, Images
|
At cost |
- 21 -
Name | Position | Signature | ||
|
||||
Frank E. Holmes
|
President
Chief Executive Officer |
/s/ Frank E. Holmes | ||
|
||||
|
||||
Susan B. McGee
|
Executive Vice President
Secretary |
/s/ Susan B. McGee | ||
|
- 22 -
A. | Shareholder Record Keeping . Maintain shareholder and stock transfer records as required by the rules of the Securities and Exchange Commission, including records for each shareholder showing: (i) name, address, appropriate tax certification, and tax identifying number; (ii) number of shares of each Fund, portfolio, or class; (iii) historical information including, but not limited to, dividends paid, date and price of all transactions including individual purchases and redemptions, based upon appropriate supporting documents; (iv) any capital gain or dividend reinvestment order, application, specific address, payment and processing instructions and correspondence relating to the current maintenance of the account; (v) any stop or restraining order placed against a Shareholders account; (vi) certificate numbers, denominations, and the name of the holder of record for any Shareholders holding certificates; (vii) any information required in order for the Transfer Agent to perform the calculations this Agreement contemplates or requires; and (viii) any other information and data as applicable law may require. | ||
B. | Share Issuance . Record the issuance of Shares of each Fund. Except as specifically agreed in writing between the Transfer Agent and the Trust, the Transfer Agent shall have no obligation when countersigning and issuing and/or crediting Shares to take cognizance of any other laws relating to the issue and sale of Shares except insofar as policies and procedures of the Stock Transfer Association recognize these laws. | ||
C. | Purchase, Exchange, Transfer, and Redemption Orders . Process all orders for the purchase, exchange, transfer, and redemption of shares of the Trust in accordance with the Trusts current prospectus and customary transfer agency policies and procedures, including electronic transmissions which the Trust acknowledges it has authorized, or in accordance with any instructions of the Trust or its agents which the Transfer Agent reasonably believes to be authorized. |
1. | Purchases . Upon the sale of any Shares of a Fund, the Trust shall transmit, or cause to be transmitted, the following information to the Transfer Agent via a mutually acceptable means of communication, specifying: (i) the name of the Fund whose Shares were sold; (ii) the number of Shares sold, trade date, and price; (iii) the amount of money to be delivered to the |
- 23 -
Custodian for the sale of the Shares and specifically allocated to the Fund; and (iv) in the case of a new account, a new account application or sufficient information to establish an account. |
(a) | The Transfer Agent will, upon its receipt of a check or other payment it identifies as an investment in Shares of a Fund and drawn or endorsed to the Transfer Agent as agent for, or identified as being for the account of, a Fund, promptly deposit the check or other payment to the appropriate account and make such postings as are necessary to reflect the investment. The Transfer Agent will notify the Trust, or its designee, and the Custodian of all purchases and related account adjustments. | ||
(b) | Under procedures as the Trust and Transfer Agent establish, the Transfer Agent shall issue to the purchaser or his authorized agent the Shares he is entitled to receive, based on the appropriate net asset value of the Funds Shares, determined in accordance with the Trusts pricing procedures, as approved by the Board of Trustees. In issuing Shares to a purchaser or his authorized agent, the Transfer Agent shall be entitled to rely upon the latest directions, if any, the Transfer Agent previously received from the purchaser or his authorized agent concerning the delivery of the Shares. | ||
(c) | The Transfer Agent shall not be required to issue any Shares of the Trust when it has received a Written Instruction from the Trust or written notification from any appropriate Federal or state authority that the sale of the Shares of the Fund in question has been suspended or discontinued, and the Transfer Agent shall be entitled to rely upon the Written Instruction or written notification. | ||
(d) | Upon the issuance of any Shares of any Fund in accordance with the foregoing provision of this Section, the Transfer Agent shall not be responsible for the payment of any original issue or other taxes the Trust is required to pay in connection with the issuance. | ||
(e) | The Transfer Agent may establish additional policies and practices governing the transfer or registration of Shares as it may deem advisable and consistent with those transfer agents generally adopt. |
2. | Exchanges, Transfers, and Redemptions . The Transfer Agent is authorized to review and process transfers of Shares of each Fund, exchanges between Funds on the records of the Funds the Transfer Agent maintains, exchanges between the Trust and other funds as the Trusts prospectus may permit, and redemptions of Shares of a Fund. If Shares to be transferred, exchanged, or redeemed are represented by outstanding certificates, the Transfer Agent will, upon surrender to it of the certificates in proper form for transfer, and upon cancellation thereof, in the case of exchanges and transfers, countersign and issue new certificates for a like number of Shares and deliver the same or, in the case of a redemption, cause redemption proceeds to be paid to the shareholder. If the Shares to be exchanged, transferred, or redeemed are not represented by outstanding certificates, the Transfer Agent will, upon receipt of an order therefore by or on behalf of the registered holder thereof in proper form, credit the same to the transferee on its books or process the redemption request. If Shares are to be exchanged for shares of another fund, the Transfer Agent will process the |
- 24 -
exchange in the same manner as a redemption of sale of Shares, except that it may in its discretion waive requirements for information and documentation. |
D. | Shareholder Communications . The Transfer Agent will transmit all communications by the Trust to its shareholders promptly following the Trusts delivery to the Transfer Agent of the material to be transmitted by mail, telephone, courier service, or electronically. | ||
E. | Proxy Materials . In connection with special meetings of Shareholders, the Transfer Agent will prepare Shareholder lists, assist with the mailing or transmission of proxy materials, process and tabulate returned proxy cards, report on proxies voted prior to meetings, act as teller at meetings, and certify Shares voted at meetings. | ||
F. | Returned Checks . If any check or other order for the transfer of money is returned unpaid for any reason, the Transfer Agent will take any steps as it may, in its discretion, deem appropriate to protect the Trust from financial loss or as the Trust or its designee may instruct, and notify the Fund of the steps taken. If the Transfer Agent adheres to standard procedures, as the Trust and Transfer Agent agree upon from time to time, regarding purchases and redemptions of shares, the Transfer Agent shall not be liable for any loss the Fund suffers as a result of returned or unpaid purchase or redemption transactions. Legal or other expenses incurred to collect amounts owed to a Fund as a consequence of returned or unpaid purchase or redemption transaction shall be an expense of that Fund. A Fund may, at its option, purchase insurance to reduce its potential losses from collection activities. | ||
G. | Shareholder and Broker-Dealer Correspondence . The Transfer Agent will investigate all Shareholder inquiries relating to Shareholder accounts and will answer all correspondence from Shareholders, securities brokers, and others relating to its duties hereunder and other correspondence as may from time to time be mutually agreed upon between the Transfer Agent and the Trust. | ||
H. | Tax Reporting . The Transfer Agent shall file appropriate information returns concerning the payment of dividends and capital gain distributions with the proper Federal, State and local authorities as the Trust is required by law to file and shall withhold any sums required to be withheld by applicable law. | ||
I. | Dividend Disbursing . The Transfer Agent will prepare and mail checks, place wire transfers, or credit income and capital gain payments to shareholders. The Trust will advise the Transfer Agent of the declaration of any dividend or distribution and the record and payable date thereof at least five (5) days prior to the record date. The Trust shall furnish to the Transfer Agent a resolution of the Board of Trustees of the Trust certified by the Secretary: (i) authorizing the declaration of dividends on a specified period basis and authorizing the Transfer Agent to rely on Oral Instructions or a Certificate specifying the date of the declaration of the dividend or distribution, the date of payment thereof, the record date as of which Shareholders entitled to payment shall be determined and the amount payable per share to Shareholders of record as of that date and the total amount payable to the Transfer Agent of the Trust on the payment date; or (ii) setting forth the date of the declaration of any dividend or distribution by a Fund, the date of |
- 25 -
payment thereof, the record date as of which Shareholders entitled to payment shall be determined, and the amount payable per share to the Shareholders of record as of that date and the total amount payable to the Transfer Agent on the payment date. | |||
The Transfer Agent will, on or before the payment date of any dividend or distribution, notify the Trusts Custodian of the estimated amount required to pay any portion of the dividend or distribution payable in cash, and on or before the payment date of the distribution, the Trust will instruct its Custodian to make available to the Transfer Agent sufficient funds for the cash amount to be paid out. If the Transfer Agent does not receive from the Custodian sufficient cash to pay all shareholders of the Trust as of the record date, the Transfer Agent shall, upon notifying the Trust, withhold payment to all Shareholders of record as of the record date until it receives sufficient cash for this purpose. | |||
If a shareholder is entitled to receive additional shares by virtue of any distribution or dividend, appropriate credits will be made to each shareholders account. The Transfer Agent will calculate, prepare, and mail checks to, or (where appropriate) credit the dividend or distribution to the account of, Fund Shareholders, and maintain and safeguard all underlying records. The Transfer Agent will replace lost checks at its discretion and in conformity with regular business practices. The Transfer Agent will maintain all records necessary to reflect the crediting of dividends that are reinvested in Shares of the Trust, including without limitation daily dividends. The Transfer Agent shall not be liable for any improper payments made in accordance with a resolution of the Board of Trustees of the Trust. | |||
J. | Escheatment . The Transfer Agent shall provide escheatment services abandoned accounts and returned checks under applicable law and report such actions to the Trust. | ||
K. | Telephone Services . The Transfer Agent will provide staff coverage, training, and supervision in connection with the Trusts telephone line for shareholder inquiries, and will respond to inquiries concerning shareholder records, transactions the Transfer Agent processes, procedures to effect the shareholder records, and inquiries of a general nature relative to shareholder services. | ||
L. | 12b-1 . The Transfer Agent will calculate and process, or will cause to be processed, all 12b-1 payments in accordance with each Funds current prospectus. | ||
M. | Commission Payments . The Transfer Agent will calculate and process all commission payments in accordance with each Funds current prospectus. | ||
N. | Requests for Information . The Transfer Agent will provide all required information in a timely fashion in support of regulatory filings. | ||
O. | SAS 70 . The Transfer Agent will make available to the Trust any independent auditor reports in compliance with SAS 70, if applicable. |
- 26 -
P. | Regulatory Changes . The Transfer Agent will assist with the analysis and implementation of any changes required by regulatory bodies. | ||
Q. | The Transfer Agent will: |
1. | Provide office facilities for the provision of the services contemplated herein (which may be in the offices of the Transfer Agent or its corporate affiliate); | ||
2. | Provide or otherwise obtain personnel sufficient for provision of the services contemplated herein; | ||
3. | Furnish equipment and other materials necessary or desirable for provision of the services contemplated herein; and | ||
4. | Keep records relating to the services provided hereunder in the form and manner as the Transfer Agent may deem appropriate or advisable. To the extent required by Section 31 of the 1940 Act and the rules thereunder, the Transfer Agent agrees that all records it prepares or maintains relating to the services provided hereunder are the property of the Funds and will be preserved for the periods prescribed under Rule 31a-2 under the 1940 Act, maintained at the Funds expense, and made available in accordance with Section 31 and the rules thereunder. The Transfer Agent will make available during regular business hours all records and other data created and maintained pursuant to this Agreement for reasonable audit and inspection by the Trust, or any person the Trust retains. Upon reasonable notice by the Trust, the Transfer Agent shall make available during regular business hours its facilities and premises employed in connection with its performance of this Agreement for reasonable visitation by the Trust or any person the Trust retains. The Transfer Agent may, at its option at any time, and shall forthwith upon the Trusts demand, turn over to the Trust and cease to retain in the Transfer Agents files, records and documents it created and maintained in performance of its services or for its protection. At the end of the six-year retention period, these records and documents either will be turned over to the Trust, or destroyed in accordance with the Trusts authorization. |
R. | The Transfer Agent shall furnish the Trust any state notice filing reports, any periodic and special reports as the Trust may reasonably request, and other information, including Shareholder lists and statistical information concerning accounts, as the Trust and the Transfer Agent may agree upon. |
- 27 -
1. | Delegation. |
Subject to the terms and conditions set forth in this Agreement, the Trust hereby delegates to the Transfer Agent those aspects of the Trusts Anti-Money Laundering Program (the AML Program) that are required to implement the International Money Laundering Abatement and Anti-Terrorist Financing Act Of 2001 Policies and Procedures and Customer Identification Program, as such policies and procedures may be amended from time to time (the Delegated Duties). The Delegated Duties may be further amended, from time to time, by mutual agreement of the Trust and the Transfer Agent upon the execution by such parties of a revised Appendix C bearing a later date than the date hereof. | |||
1.2 | The Transfer Agent agrees to perform such Delegated Duties, with respect to the Fund shareholders for which the Transfer Agent maintains the applicable shareholder information, subject to and in accordance with the terms and conditions of this Agreement. |
2. | Consent to Examination. In connection with the performance by the Transfer Agent of the Delegated Duties, the Transfer Agent understands and acknowledges that the Trust remains responsible for assuring compliance with the USA PATRIOT Act of 2001 (USA PATRIOT Act) and the laws implementing the USA PATRIOT Act and that the records the Transfer Agent maintains for the Trust relating to the AML Program may be subject, from time to time, to examination and/or inspection by federal regulators in order that the regulators may evaluate such compliance. The Transfer Agent hereby consents to such examination and/or inspection and agrees to cooperate with such federal regulators in connection with their review. For purposes of such examination and/or inspection, the Transfer Agent will use its best efforts to make available, during normal business hours and on reasonable notice, all required records and information for review by such regulators. | |
3. | Limitation on Delegation. The Trust acknowledges and agrees that in accepting the delegation hereunder, the Transfer Agent is agreeing to perform only the Delegated Duties, as may be amended from time to time, and is not undertaking and shall not be responsible for any other aspect of the AML Program or for the overall compliance by the Trust with the USA PATRIOT |
- 28 -
Act or for any other matters that have not been delegated hereunder. Additionally, the parties acknowledge and agree that the Transfer Agent shall only be responsible for performing the Delegated Duties with respect to the accounts for which the Transfer Agent maintains the applicable shareholder information. | ||
4. | AML Reporting to the Trust |
4.1 | On a quarterly basis, the Transfer Agent shall provide a report to the Trust on its performance of the AML Delegated Duties, among other compliance items, which report shall include information regarding the number of: (i) potential incidents involving cash and cash equivalents or unusual or suspicious activity, (ii) any required reports or forms that have been filed on behalf of the Fund, (iii) outstanding customer verification items, (iv) potential and confirmed matches against the known offender and OFAC databases and (v) potential and confirmed matches in connection with FinCen requests. Notwithstanding anything in this Section 4.1(a) to the contrary, the Transfer Agent reserves the right to amend and update the form of its AML reporting from time to time to comply with new or amended requirements of applicable law. | ||
4.2 | At least annually, the Transfer Agent, in conjunction with the internal auditor of U.S. Global Investors, Inc., will arrange for an audit of the AML services it provides to its clients on an organization-wide basis, as required by applicable regulation. The Transfer Agent will provide the Board of Trustees with the results of the audit and testing, including any material deficiencies or weaknesses identified and any remedial steps that will be taken or have been taken by the Transfer Agent to address such material deficiencies or weaknesses. | ||
4.3 | On a periodic basis, but no less frequently than annually, the Transfer Agent will provide the Trust with a written certification that, among other things, it has implemented its AML Program and has performed the Delegated Duties. |
- 29 -
- 30 -
Percentage of | ||||
Fund | Average Net Assets | |||
All American Equity Fund
|
1.75 | % | ||
China Region Fund
|
2.00 | % | ||
Eastern European Fund
|
2.25 | % | ||
Global Emerging Markets Fund
|
2.50 | % | ||
Global MegaTrends Fund
|
1.85 | % | ||
Global Resources Fund
|
1.50 | % | ||
Gold and Precious Metals Fund
|
1.50 | % | ||
U.S. Government Securities Savings Fund
|
0.45 | % | ||
Holmes Growth Fund
|
1.75 | % | ||
Near-Term Tax Free Fund
|
0.45 | % | ||
Tax Free Fund
|
0.70 | % | ||
U.S. Treasury Securities Cash Fund
|
1.00 | % | ||
World Precious Minerals Fund
|
1.50 | % |
Sincerely,
|
||
|
||
/s/ Frank E. Holmes
|
||
|
||
Frank E. Holmes
|
||
Chief Executive Officer
|
1. | Funds Agreement to Reimburse Fees and Expenses. Each Fund hereby agrees to reimburse USGI for any fee waivers and/or expense reimbursements borne in excess of waivers that are necessary to comply with any OER Limit in effect at the time of such waivers, provided that: (a) a Fund is not obligated to reimburse any such fee waivers and/or expense reimbursements more than three years after the end of the fiscal year in which the fee waivers and/or expense reimbursement were borne by USGI; and (b) a Fund will not pay |
reimbursements to USGI to the extent such payments would cause the Funds net yield to fall below the Funds previously determined Minimum Yield or the expenses to exceed the OER Limits in effect at the time of the waiver/ reimbursement. The Board of Trustees shall review quarterly any reimbursements paid to USGI with respect to any Fund in such quarter to confirm compliance with the conditions stated above. |
2. | Duration. This Agreement shall be effective through the first anniversary of the date first above written, and shall be renewable at the end of that one-year period for additional periods upon the written agreement of the parties hereto. The expiration of this Agreement will not affect a Funds obligation to reimburse USGI for any fee waivers and/or expense reimbursements made during the term of this Agreement. |
U.S. Global Investors, Inc.
|
||
/s/ Susan B. McGee
|
||
|
||
Title: President
|
||
|
||
U.S. Global Investors Funds
|
||
/s/ Frank E. Holmes
|
||
|
||
Title: President
|
Very truly yours,
|
||||
/s/ Vedder Price P.C. | ||||
VEDDER PRICE P.C. | ||||
- 1 -
- 2 -
- 3 -
- 4 -
- 1 -
- 2 -
- 3 -
- 4 -
- 5 -
- 6 -
- 7 -
By:
|
/s/ Frank E. Holmes
|
By: |
/s/ Susan K. Filyk
|
|||||||
|
President and Chief Executive | President | ||||||||
|
Officer |
- 8 -
- 9 -
Signature | Title | Date | ||
|
||||
/s/ Frank E. Holmes
|
||||
Frank E. Holmes
|
Trustee President | August 26, 2008 | ||
|
||||
/s/ J. Michael Belz
|
||||
J. Michael Belz
|
Trustee | August 26, 2008 | ||
|
||||
/s/ James F. Gaertner
|
||||
James F. Gaertner
|
Trustee | August 26, 2008 | ||
|
||||
/s/ Clark R. Mandigo
|
||||
Clark R. Mandigo
|
Trustee | August 26, 2008 | ||
|
||||
/s/ Joe C. McKinney
|
||||
Joe C. McKinney
|
Trustee | August 26, 2008 | ||
|
||||
/s/ Catherina A. Rademacher
|
||||
Catherine A. Rademacher
|
Treasurer | August 26, 2008 | ||
|
||||
/s/ Susan B. McGee
|
||||
Susan B. McGee
|
Executive Vice President,
Secretary, General Counsel |
August 26, 2008 |
II. | CODE PROVISIONS APPLICABLE ONLY TO INTERESTED PERSONS OF THE FUNDS. |
III. | CODE PROVISIONS APPLICABLE TO THE INDEPENDENT TRUSTEES AND THIRD-PARTY OFFICERS OF THE FUNDS. |
2
3
4
IV. | MISCELLANEOUS PROVISIONS. |
5
6
Page i of 18
Page | ||||||
1.
|
INTRODUCTION AND OVERVIEW | 1 | ||||
|
||||||
2.
|
COVERED PERSONS | 2 | ||||
|
||||||
3.
|
RESTRICTIONS ON PERSONAL INVESTING ACTIVITIES | 2 | ||||
|
||||||
4.
|
PRE-CLEARANCE OF TRANSACTIONS | 4 | ||||
|
||||||
5.
|
REPORTING REQUIREMENTS | 5 | ||||
|
||||||
6.
|
RESTRICTIONS ON OTHER ACTIVITIES | 9 | ||||
|
||||||
7.
|
ADMINISTRATION OF THE CODE OF ETHICS | 10 | ||||
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APPENDIX A
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Definitions | |||||
APPENDIX B
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Quarterly Certification of Partially Covered Independent Directors |
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(a) | prohibit fraudulent, deceptive, or manipulative acts in connection with your Personal Securities Transactions in: |
a. | Reportable U.S. Global Funds , | ||
b. | USGI Stock , and | ||
c. | Covered Securities held or to be acquired by the U.S. Global Funds or other clients of USGI (Other USGI-Managed Accounts), and |
(b) | avoid conflicts of interest so that the best interests of investors in the U.S. Global Funds and Other USGI-Managed Accounts will be served. |
(a) | to place the interests of U.S. Global Fund shareholders and Other USGI-Managed Accounts above your own personal interests; | ||
(b) | to refrain, in the conduct of all of your personal affairs, from taking any inappropriate advantage of your roles and responsibilities with USGI, U.S. Global Brokerage, Inc. (USGB), the U.S. Global Funds, and the Other USGI-Managed Accounts; | ||
(c) | to comply with the Federal Securities Laws ; and | ||
(d) | to conduct all Personal Securities Transactions so as to fully comply with the provisions of this Code in order to avoid any actual or even apparent conflict or claim of a conflict of interest or abuse of your roles and responsibilities with USGI, USGB, the U.S. Global Funds, and Other USGI-Managed Accounts. |
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(a) | whether the investment opportunity is available to, and should be reserved solely for, the U.S. Global Funds or Other USGI-Managed Accounts; and | ||
(b) | whether the opportunity is or seems to have been made available to the Covered Person due to or by virtue of the position which he or she holds with USGI or USGB. |
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(a) | the transaction, and any earlier Personal Securities Transaction with which it may be matched over the most recent 60 calendar days, do not appear to evidence actual abuse of a conflict of interest with any U.S. Global Fund or Other USGI-Managed Account (as, for example, where the Covered Security or Securities involved have not recently been held, traded, or actively considered for investment or trading by such accounts); and | ||
(b) | the Covered Person can demonstrate that a bona fide and sufficient personal or family economic hardship exists warranting the granting of such an exception. |
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(a) | the title and type of security, and as applicable the exchange ticker symbol or CUSIP number, number of shares and principal amount of USGI Stock , each Covered Security , and each Reportable U.S. Global Fund in which the Covered Person had any direct or indirect Beneficial Ownership when the person became a Covered Person ; | ||
(b) | the name of any broker, dealer, bank, or transfer agent with whom the Covered Person maintains an account in which any securities (including Excepted Securities ) are held for the direct or indirect benefit of the Covered Person as of the date the person became a Covered Person ; and | ||
(c) | the date that the report is submitted by the Covered Person . |
(a) | confirmations issued by brokers, dealers, banks, or transfer agents upon the execution of all Personal Securities Transactions in USGI Stock , any Covered Security , or any Reportable U.S. Global Fund in which the Covered Person had, at the time of the transaction, or by reason of the transaction acquired, any direct or indirect Beneficial Ownership interest in the USGI Stock , Covered Security , or Reportable U.S. Global Fund which was the subject of the transaction; and | ||
(b) | any regular periodic or other statements reflecting Personal Securities Transaction activity in USGI Stock , any Covered Security , or any Reportable U.S. Global Fund within any account with a broker, dealer, bank, or transfer agent in which the Covered Person has any direct or indirect Beneficial Ownership interest. |
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(a) | The date of the transaction, the title of and, as applicable, the exchange ticker symbol or CUSIP number, number of shares, interest rate and maturity date, and the principal amount of each security involved; | ||
(b) | The nature of the transaction (i.e., purchase, sale or any other type of acquisition or disposition); | ||
(c) | The price at which the transaction was effected; | ||
(d) | The name of the broker, dealer, bank, or transfer agent with or through whom the transaction was effected; and | ||
(e) | The date the Covered Person submits the report. |
(a) | the name of the broker, dealer, bank, or transfer agent with whom the Covered Person established the account; | ||
(b) | the date the account was established; and | ||
(c) | the date that the report was submitted by the Covered Person . |
(a) | the title and type of security, and as applicable the exchange ticker symbol or CUSIP number, number of shares and principal amount of each Covered Security, USGI Stock, and Reportable U.S. Global Fund in which the Covered Person had any direct or indirect Beneficial Ownership ; | ||
(b) | The name of any broker, dealer or bank with whom the Covered Person maintains an account in which any securities are held for the direct or indirect benefit of the Covered Person ; and | ||
(c) | the date that the report is submitted by the Covered Person . |
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5.9.1. | Insider Reporting Liability . Any Covered Person or Partially Covered Independent Director who is the beneficial owner of more than 10 percent of any class of USGI Stock registered under Section 12 of the Securities Exchange Act of 1934 (the Exchange Act) and each Executive Officer and Director of USGI (Insiders) are subject to the provisions of Section 16(b) of the Exchange Act. | ||
5.9.2. | SEC Reporting . Insiders must file certain reports with the SEC and the New York Stock Exchange concerning their holdings, and any changes thereto, of USGI Stock or options to purchase USGI Stock . If Insiders fail to file a report, USGI must disclose the failure in the proxy statement it annually distributes to shareholders, the Insider and USGI could suffer penalties as a result. Please note that under these regulations, the reporting obligation is ultimately the Insiders responsibility, not USGIs. |
| Form 3 . The initial ownership report by an Insider is required to be filed on Form 3. This report must be filed within 10 days after a person becomes an Insider (i.e., is elected as a director or appointed as an executive officer) to report all current holdings of USGI Stock . | ||
| Form 4 . Any change in the Insiders ownership of USGI Stock must be reported on Form 4 unless the Insider is eligible for deferred reporting on year-end Form 5. The Form 4 must be filed electronically before the end of the second business day following the day on which a transaction resulting in a change in Beneficial Ownership has been executed. | ||
| Form 5 . Any transaction or holding that is exempt from reporting on Form 4, such as small purchases of stock or gifts may be reported electronically on a deferred basis on Form 5 within 45 |
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calendar days after the end of the calendar year in which the transaction occurred. No Form 5 is necessary if all transactions and holdings were previously reported on Form 4. |
5.9.3. | Liability for Short-Swing Profits . Under the U.S. securities laws, profit realized by certain officers, as well as directors and 10% stockholders of a company (including USGI) as a result of a purchase and sale (or sale and purchase) of USGI Stock within a period of less than six months must be returned to USGI or its designated payee upon request. Profit is measured by matching the highest sale price with the lowest purchase price within six months. The grant and exercise of options, although reportable under Section 16(b), are exempt from short-swing profit liability. You are subject to potential short swing profit liability for so long as you are subject to Section 16(a) reporting requirements, which could continue for a period of time after you cease to be a director or officer. |
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| First violation A written or verbal reprimand may be given to the person and a copy or record will be put in the persons personnel file. The written or verbal reprimand will reinforce the persons responsibilities under the Code, educate the person on the severity of personal trading violations, and inform the person of the possible penalties for future violations. | ||
| Second violation The Review Committee will impose such sanctions as it deems appropriate, including without limitation, a letter of censure, fines, withholding of bonus payments, or suspension of personal trading privileges for up to 60 days. | ||
| Third violation The Review Committee will impose such sanctions as it deems appropriate, including without limitation, a letter of censure, fines, withholding of bonus payments, or suspension or termination of personal trading privileges or employment. | ||
| In addition to the above disciplinary sanctions, such persons may be required to disgorge any profits realized in connection with such violation. All disgorgement proceeds collected will be donated to a charitable organization selected by the Review Committee . The Review Committee may determine to impose any sanctions, including termination, immediately and without notice if it determines that the severity of any violation or violations warrants such action. All sanctions imposed will be documented in such persons personal trading file maintained by USGI. |
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| any note, stock, treasury stock, shares of a closed-end fund, shares of an exchange-traded fund, interests in a 529 plan, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights; | ||
| any put, call, straddle, option, or privilege on any security (including a certificate of deposit) or on any group or index of securities (including any interest therein or based on the value thereof); | ||
| any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign |
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currency; or | |||
| in general, any interest or instrument commonly known as a security, or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing. |
(i) | security issued by the Government of the United States shall NOT be deemed to include any indirect obligations of the Government of the United States (so-called agency obligations) with a remaining maturity in excess of 397 calendar days (e.g., FNMA and FHLMC), but shall be deemed to include any obligations directly issued or guaranteed by the Government of the United States, irrespective of the obligations initial or remaining maturity (e.g., U.S. Treasury and GNMA); and | ||
(ii) | certain so-called money-market instruments, including conventional repurchase agreements, U.S. Government agency obligations and obligations issued or guaranteed by foreign governments maturing within 397 calendar days from date of purchase, are also deemed to be excepted securities. |
| U.S. Global Accolade Funds | ||
| U.S. Global Investors Funds |
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(a) | involving a security or securities account over which a person has no direct or indirect influence or control; | ||
(b) | which is non-volitional on the part of the person by or for whom the transaction is effected; | ||
(c) | which is effected pursuant to an automatic dividend reinvestment plan; or | ||
(d) | involving either: |
a. | the purchase of a security effected upon the exercise of one or more rights issued by an issuer pro rata to all holders of a class of its securities, if and only to the extent to which such rights were acquired directly from such issuer; or | ||
b. | the sale of any such rights so acquired. |
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(a) | The persons spouse, minor children, or any other relatives sharing the persons household; | ||
(b) | A trust in which the person has a beneficial interest, unless such person has no direct or indirect control over the trust; | ||
(c) | A trust as to which the person is a trustee; | ||
(d) | A revocable trust as to which the person is a settlor; | ||
(e) | A corporation of which the person is an officer, director or 10% or greater stockholder; or | ||
(f) | A partnership of which the person is a partner (including most investment clubs) unless the person has no direct or indirect control over the partnership. |
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| I did not have access to or knowledge of nonpublic information regarding any USGI clients purchase or sale of securities or the portfolio holdings of mutual funds affiliated with USGI; | ||
| I neither was involved in making securities recommendations to USGI clients nor did I have access to any such nonpublic recommendations; and | ||
| I engaged in and reported any personal securities transactions in USGI stock in accordance with the applicable provisions of the USGI Code of Ethics. |
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1.
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SEPARATION OF DUTIES | 22 | |
2.
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NEW BUSINESS | 22 | |
3.
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DEALING PROCESS (COB 2) | 22 | |
4.
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PROPRIETARY TRANSACTIONS | 23 | |
5.
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INSIDER DEALING | 24 | |
6.
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FAIRNESS AND RESEARCH ANALYSIS (COB 2.13) | 25 | |
7.
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SOFT COMMISSION | 25 | |
8.
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CONFLICTS OF INTEREST (COB 2.14) | 27 | |
9.
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CHURNING (COB 2.7) | 28 | |
10.
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CUSTOMER ORDER PRIORITY | 28 | |
11.
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BEST EXECUTION (COB 3.3) | 28 | |
12.
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TIMELY EXECUTION (COB 3.2) | 29 | |
13.
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AGGREGATION AND ALLOCATION (COB 2.11, 3.3) | 29 | |
14.
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NON-MARKET PRICE TRANSACTIONS | 30 | |
15.
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TRANSACTION RECORD KEEPING (COB 8) | 31 | |
16.
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RESOLUTION OF BUSINESS ERRORS | 31 | |
17.
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DISCLOSURE OF DEALINGS AND HOLDINGS | 32 | |
18.
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NEW COUNTERPARTIES | 32 | |
19.
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COUNTERPARTY RISK | 32 | |
20.
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FOREIGN MARKETS | 33 | |
21.
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MONITORING OF FAILING TRADES | 33 | |
22.
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CORPORATE ACTIONS | 33 |
APPENDIX 1
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RULE BREACH FORM | 35 | |
APPENDIX 2
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PA DEALING DECLARATION | 36 | |
APPENDIX 3
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PA DEALING APPROVAL FORM | 37 | |
APPENDIX 4
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RECORD OF GIFTS AND BENEFITS (GIFTS) | 38 | |
APPENDIX 5
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DEALING/BUSINESS ERROR FORM | 39 | |
APPENDIX 6
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FCU DISCLOSURE FORM | 40 | |
APPENDIX 7
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CODE OF ETHICS | 41 |
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*theAdviser
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CCIOM or CCUK | |
Act
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Financial Services and Markets Act 2000 | |
Advisers Act
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Investment Advisers Act of 1940 | |
Advisory Clients
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US client funds or potential or existing underlying US investors | |
AIMA
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Alternative Investment Management Association | |
CCIOM
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Charlemagne Capital (IOM) Limited | |
CCL
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Charlemagne Capital Limited | |
CCUK
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Charlemagne Capital (UK) Limited | |
CF
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Controlled Function | |
CJA
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Criminal Justice Act 1993 | |
CLIENTS
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References to clients are to our Customers | |
CM
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Clients Money Regulatory Code | |
CMC
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Clients Money Code | |
CO
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Compliance Officer | |
COB
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Conduct of Business Regulatory Code/ Conduct of Business section of the FSA handbook. | |
COBRC
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Conduct of Business Regulatory Code | |
CODES
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Regulatory Codes issued by the Financial Supervision Commission | |
Common Platform
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A Common Platform firm is a firm that is subject to the Capital Requirements Directive and the Markets in Financial Instruments Directive | |
CUSTOMER
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References to Customers are to the Fund(s) and not to the underlying investors in the Funds. | |
DISP
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Dispute Resolution section of the FSA handbook | |
FATF
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Financial Action Task Force | |
Funds
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Various client funds or managed accounts of the Charlemagne Capital Group | |
FRCR
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Financial Resources and Compliance Reporting Regulatory Code | |
FSA
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Financial Services Authority | |
FSC
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Isle of Man Financial Supervision Commission | |
FUNDS
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The various funds under the management of the Charlemagne Capital Group of companies. It shall also be taken to include funds managed by third parties where CCUK/CCIOM has an advisory relationship akin to management e.g. USGI | |
IBA
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Investment Business Act 1991-93 | |
Investors
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References are to Investors or potential investors in the client funds | |
IOM FCU
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Isle of Man Financial Crimes Unit | |
MiFID
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Markets in Financial Instrument Directive | |
MLRO
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Money Laundering Reporting Officer | |
PEV
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Private Equity Vehicle/s | |
SEC
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Unites States Securities and Exchange Commission | |
SUP
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Supervision section of the FSA handbook | |
SYSC
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FSA Senior Management Arrangement, Systems & Controls | |
T & C
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Training & Competence section of the FSA handbook | |
The Group
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Charlemagne Capital group of companies | |
UCIS
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Unregulated Collective Investment Schemes |
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1. | LICENCE CONDITIONS OF CCIOM (Section 3(4) IBA) |
2. | COMPLIANCE ARRANGEMENTS (COB 6.7) |
| A policy of comprehensive and regular compliance monitoring; monitoring on a regular basis to assess the adequacy and effectiveness of the measures and procedures put in place to manage our compliance obligations; |
| Takes action to address any deficiencies in the firms compliance with its obligations; |
| Independently raises awareness to management and the Board on any deficiencies so that appropriate and timely action is taken by the Board to meet our Statement of Internal Governance; |
| Arrange compliance training as necessary; a programme of induction and compliance update training where required. | |
| A commitment to high standards of business ethics and practice; | |
| Written up to date compliance and operating procedures; | |
| Strict financial accounting and operational controls; | |
| Regular compliance reporting to the board; |
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| Procedures for the maintenance of detailed record keeping; | |
| Where required, assistance on compliance matters from external advisors. |
| The adequacy and effectiveness of our risk management policies and procedures; | |
| Compliance with our arrangements, processes and mechanisms in place to manage our risks; and | |
| The adequacy and effectiveness of the measures we have taken to address any deficiencies in those policies, procedures, arrangements, processes and mechanisms. This includes the impact of failures by our personnel to comply with our arrangements or processes and mechanisms or follow such policies and procedures. |
3. | TRAINING & COMPETENCE |
1. | staff are competent to perform their role; | |
2. | staff remain competent for the work they do; | |
3. | staff are appropriately supervised; | |
4. | competence is regularly reviewed; and | |
5. | the level of competence is appropriate to the nature of the business. |
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| the exam is imminent (i.e within 2 weeks) | |
| it is something of benefit to CCL (i.e. it is vocational qualification) | |
| the person studying takes days which fit in with workflow/colleagues and makes sure line manager(s) are kept informed. |
| Course material may be paid for by the Company initially at the discretion of a director. | |
| The Company may pay for examinations, at the discretion of a director | |
| Any extra costs incurred i.e. charge for examination being rescheduled will be paid for by the individual. |
| All costs incurred may be paid for by the company with prior approval. | |
| Courses/Seminars attended without prior approval will not be paid for and the individual will not be reimbursed at a later date. |
4. | EMPLOYEE DUTIES AND RESPONSIBILITIES |
| The code lays down several fundamental requirements, perhaps the most important of which is the requirement for the business of licenceholders within categories 2 to 4 to be conducted on a day-to-day basis by at least 2 individuals (the four-eyes principle). The FSC must be satisfied that the individuals proposed to fulfil the four-eyes requirement are competent and that they are people of integrity. |
| The concept of four-eyes control seeks to prevent the day-to-day management of a licenceholder and its affairs being carried on under the influence of a dominant individual, whether that person is an owner, controller or a director. |
| The Four Eyes in respect of CCIOMs Investment Business Licence are Rebecca Taylor and Malcolm Sargeant. |
5. | HANDLING CUSTOMER COMPLAINTS (COB 6.8) Conduct of Business |
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a. | All oral or written expressions of dissatisfaction, no matter how trivial, about any person employed by the Company or any aspect of our activities must be reported to Compliance. | |
b. | The Compliance Officer in conjunction with the Groups Chief Operating Officer shall promptly determine the appropriate action, if any, for dealing with the complaint. It is good practice that all complaints, unless deemed trivial be logged. Any relevant correspondence should be kept with the Complaints log on the Complaints File. | |
c. | The decision will be taken as to whether a complaint is of such significance that it warrants immediate reporting to the Board. In any event, all logged complaints should be reported to the Board in writing via the standard compliance reporting process. | |
d. | Notwithstanding the above, any complaint not resolved within 2 months from the date of receipt, must be reported to the Board. | |
e. | If after a viable response has been sent to a complainant or potential complainant in efforts to resolve the issue and no further correspondence is received within 2 months post initial response being sent, the matter will be considered resolved and therefore the issue closed on file. |
6. | RULE BREACHES |
| Immediately on becoming aware of a breach, or of any alleged breach, no matter how trivial, it must be reported to the Compliance Department. |
| The Compliance Department is responsible for prompt resolution of the breach and for ensuring receipt of details which should be provided, recorded on a Breach Form (see Appendix 1 ). |
| Consideration will be given to the causes of the breach and to whether there are ways in which procedures could be improved or strengthened in order to prevent recurrence of the breach. |
| It will be for the Compliance Officer in conjunction with management, to decide the seriousness of any particular breach and whether it is of a magnitude or nature which requires reporting to the FSC. |
| Should any employee become aware of any matter about which he believes the FSC might reasonably wish to be notified, that matter must immediately be reported to the Compliance Officer or, in their absence, the Groups Chief Operating Officer. |
| All breaches must be logged and filed appropriately. |
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7. | PERSONAL ACCOUNT DEALING |
| The prior consent of the Compliance Officer, Group, CCIOM or CCUK (as relevant) director is required for all personal transactions except for investment in UCITS schemes and other EEA schemes with a similar level of risk spreading (where we are not involved in its management), personal transactions effected under a discretionary portfolio management service, where there is no prior communication to the manager and personal transactions in life policies. |
| Prior consent must be sought using the PA Dealing Approval Form (see Appendix 3 ) which must be signed by both the employee seeking approval and the Compliance Officer / Director approving the transaction. We keep a record of each personal transaction notified to us whether or not approved. |
| These obligations apply in relation to a single personal transaction, or the commencement of successive approved personal transactions, that are carried out by the same person. If the instructions for successive personal transactions are changed a new approval will be required. |
| An approval to transact granted as above will be valid for 24 hours only after which it will lapse and a further request should be made for approval. |
| Once a transaction is approved and executed, a copy of the PA Dealing Notification Form and a copy of the contract note must be provided to Compliance as soon as reasonably practicable. |
| Modifications to the above requirements and restrictions may be allowed under exceptional circumstance on a case-by-case basis but only where there would be no possible conflict with the interests of the client funds. |
| For the avoidance of doubt, the above procedures apply in relation to transactions in all forms of designated investment as defined in the FSA Handbook. |
| Employees must be aware that if an employee is precluded from entering into a transaction for his own account he must not (except in the proper course of his employment): Procure any other person to enter into such a transaction, or communicate any information or opinion to another person if he knows or ought to know, that the person will, as a result, enter into such a transaction, or counsel or procure some other person to do so. |
| All personnel must submit an itemised disclosure of all personal securities held on commencement of employment. All personnel are also required to complete a Personal Account Dealing Declaration form ( Appendix 2 ) which permits the Compliance Department to reconcile records held with the designated broker at any stage. |
| The Compliance Department review all personal account dealing as each personal account dealing form is submitted to them, the results of such reviews are summarised in a report. |
| Employees purchasing or trading in stocks also held by client fund/s is not encouraged. An employee must not purchase or sell stock also held by any of the funds ahead of any transactions to be carried on the funds behalf. Clear time separation must be apparent (at least one day) and each situation will be assessed carefully on a case by case basis. |
| Exceptions to the above requirements and restrictions may be granted under exceptional circumstance on a case-by-case basis but only where there would be no possible conflict with the interests of the Funds. |
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| Dealing is restricted by AIM rules in the 2 month period before financial results are announced. |
| At all other times, because the NAV is published monthly and this is price sensitive information, no personal dealing will be approved in the two weeks in each month before the announcement of the monthly NAV; this means that dealing will always be restricted to the 2 weeks following the announcement of the NAV, when permission should be sought in accordance with the usual procedures. |
8. | INDUCEMENTS FSC (COB 2.5) |
| As a general rule we should be modest in our entertaining and not give or receive gifts except for souvenirs of small value. |
| We must never allow any broker or counterparty to assist financially in the resolution of any Dealing/Business Error unless the error was clearly their responsibility. |
| We must follow the inducements policy set out below. |
| The Compliance Officer must be notified of any offer, suggestion, arrangement or other matter or proposal put to you by any person whom you feel is or may be an inducement or which may be or may be viewed or construed as an inducement. |
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| Inducements/Gifts shall be taken to mean gifts, entertainment and other forms of benefit or potential inducement. |
| Personal gifts and other benefits should only be offered or accepted where they are clearly reasonable in the circumstances. |
| There should be an existing relationship between CCIOM and any person offering or receiving a gift. |
| Notwithstanding the above, all gifts offered by CCIOM employees must be approved by a director. |
| All gifts in excess £100 offered or received by any one person must be recorded on a Gifts Form (see Appendix 4). |
| Any gift received by any single person which is, or appears to be, of a value in excess of £250 must, where possible, be pre-approved by a director. Otherwise, such gifts must be immediately reported to a director. |
9. | RECORD KEEPING (COB 8) |
| Note that there are prescriptive record keeping requirements under the FSCs Codes and Advisers Act Rule 204-2 whereby we must maintain detailed, signed and dated records of such things as organisation charts and employee responsibilities, management accounts, dealing/trading, valuations, reconciliations, correspondence and compliance records. All these details will be suitably filed. |
| The Compliance Officer shall be responsible for the CCIOM record keeping policy and procedures and his approval is required before any files or records, including computer records, are destroyed. As a general rule, all company and client records will be kept for a minimum of 6 years, see Attachment 4 (*Also, in accordance with Rule 204-2 under the Advisers Act) |
10. | SECURITY |
11. | E-MAIL POLICY USAGE |
| Personal e-mails should be kept to a minimum. |
| The content of e-mails should always be appropriate, should not be illegal, obscene, defamatory, sexually or racially offensive or contain confidential material. |
| Copies of incoming and outgoing work related messages should be maintained on disk and archived regularly. As an alternative in certain circumstances, in hard copy form. |
| Staff should be vigilant of unexpected documents because of the risk of viruses. The IT department should be contacted in such cases. |
| Charlemagne reserves the right to monitor employees e-mail to ensure compliance of procedures. |
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| categories of non public personal information collected by us; | |
| categories of non public personal information disclosed by us; | |
| categories of affiliates and non affiliates to whom we disclose the non public personal information; | |
| categories of non public personal information about former customers disclosed by us and the categories of affiliates and non affiliates to whom it is disclosed; | |
| if non public personal information is disclosed to third parties, an explanation of the right to opt-out of such disclosure; and | |
| a general description of our policies and practices with respect to protecting the confidentiality and security of non public personal information. |
(e) | *Disposal of Client Fund Data |
(f) | Provisions in Relation to the Processing of Data |
| The employee must have given explicit consent to the data being processed and have been given a description of the use to which it is being put; |
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| The prepared form of the data and to whom it is being disclosed should be made available on request. A fee can be charged in order to make this available (up to £10); |
| An employee can make a written request to the employer asking not to process personal data if it is felt it will cause damage or distress. The employer must respond within 21 days that he has complied or given reasons as to why such a request is unjustified; The employee has a right to compensation in relation to inaccurate or unauthorised data which has caused damage distress. |
13. | ELECTRONIC TRANSACTIONS ACT 2000 |
14. | NOTE PAPER, BUSINESS CARDS AND ADVERTISEMENTS |
15. | CLIENTS MONEY (CM 1.2) |
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16. | CUSTOMER AGREEMENTS (COB 5.1) |
| It is a requirement of the FSC that a written agreement which sets out the basis on which the Firms services are provided should be entered into for each Client. Before we commence business with any Client we must ensure that such an agreement has been provided and that it incorporates the FSC requirements. |
| The Clients of CCIOM are the Funds, not the underlying investors of the Funds. The Funds should be deemed expert in their field. They are non-private Clients fully conversant with the risks involved. The services provided are an investment advisory service and settlement provision. |
| CCIOM either acts as the Investment Manager or Sub-Investment Manager to our Client Funds. |
| It is the Investment Management Agreement and Prospectus which includes the FSCs requirements concerning the provision of information relating to the service provided to the Fund whether between CCL or CCIOM and the Fund with the sub-Investment Management Agreements between CCL and CCIOM when necessary. |
17. | GENERAL MARKETING RESTRICTIONS; USE OF SOLICITORS AND MARKETERS |
| The marketing and financial promotions rules and procedures apply only to persons authorised by CCUK to communicate with potential investors. |
| CCIOM is only permitted to market to an entity which holds an Investment Business Licence as granted under Section 3 of the Investment Business Act (IBA) 91-93 or such other class of permitted person pursuant to Section 5 of the IBA or to persons whose ordinary business is involved in the acquisition and disposal of property of the same kind as the property or a |
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substantial part of the property to which the scheme relates (the word property is undefined although it has been defined by an officer of the FSC to mean assets). |
| All requests for information, whether received by telephone, email or in writing should be referred to CCUKs Marketing Department. |
| * Before CCIOM enters into any arrangement where it will pay a cash fee, directly or indirectly, to a solicitor or marketing agent for referring new clients to CCIOM, the Compliance Officer must review the arrangement and ensure that it complies with applicable rules. (Advisers Act 206(4)-3). It is the SEC staffs view that the conditions of Advisers Act Rule 206(4)-3 must be met with respect to solicitation arrangements for investors in a private pooled vehicle. |
| * All solicitation and marketing arrangements with third parties must be in writing and disclosed to clients in CCIOMs Form ADV or otherwise. In addition, the solicitor must provide a written disclosure statement to potential clients describing the solicitors compensation arrangements with CCIOM. An acknowledgment from the client that it has received such disclosure must be maintained by CCIOM. (Advisers Act Rule 206(4)-3). |
| * The Advisers Act regulates the CCIOMs advertising practices and sets forth a general prohibition preventing CCIOM from, directly or indirectly, publishing, circulating, or distributing any advertisement that contains any untrue statement of a material fact or that is otherwise false or misleading. (Advisers Act Rule 206(4)-1). |
| * An advertisement is defined to include any notice, circular, letter or other written communication addressed to more than one person or any notice or announcement in any publication or by radio or television that offers any analysis, report, or publication regarding securities, any graph, chart, formula or other device for making securities decisions, or any other investment advisory services regarding securities. This broad definition generally encompasses seminar and telephone scripts, any form letter and the written material in booklets used by advisers for presentations to prospective clients. (Advisers Act Rule 206(4)-1(b)). |
| * While all advertisements are to be brought to the attention of the Compliance Officer, special areas of concern in advertisements include: (i) testimonials of any kind; (ii) use of performance information, (iii) selective disclosure of recommendations or portfolio holdings, including past specific recommendations; (iv) the offer of a free service, report or analysis; (v) use of the term investment counsel; (vi) reference to any recommendation or approval by the SEC of the Adviser; and (vii) reference to any device, formula, chart or graph that may assist someone in making investment decisions. In addition, except in limited circumstances, all past performance must be presented net of all fees and expenses. |
18 | ANTI-MONEY LAUNDERING (COB 6.1, SECTION 9 IBA) | |
http://www.gov.im/fsc/handbooks/guides/aml/?guide=aml |
| The officers and employees of CCIOM will be diligent in ensuring that the source of Clients Funds is known and that we comply in full with the Money Laundering Regulations of the Isle of Man. |
| Since 1996 it has been an offence on the Isle of Man to fail to disclose knowledge or suspicion of drug money laundering. As of 1 st July 1998 the Criminal Justice (Money Laundering Offences) Act 1998 extended this. The offence of failing to disclose is now extended to terrorism. The 1998 Act is aimed solely at identifying the laundering of criminal proceeds. The 1998 Act does not make it an offence to fail to disclose on all crimes but does make it an offence to assist another to Retain the Benefit of Criminal Conduct. Defences to money laundering offences are provided when a disclosure is made. Further development of the procedures required to ensure money laundering prevention has been encapsulated in the Anti-Money Laundering Code of 1998, the amended code of 99 and New Criminal Justice Act of 2000 and tighter FATF recommendations in the light of the terrorism attack on the World Trade Centre of 11 September 2001. |
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| The CCIOM Money Laundering Reporting Officer (MLRO) is the Compliance Officer and in his absence a fellow director will act on his behalf in conjunction with the Compliance Department. If you have suspicions of money laundering as a result of drug trafficking, terrorism or criminal conduct the Financial Disclosure form (Appendix 6) should be completed and submitted to the MLRO/Compliance Department. |
| If at any time an employee has reason to believe that an investor is being used for or is involved in Money Laundering activities, the procedures outlined below should be followed closely. |
| Under no circumstances should the fact that you suspect money laundering be conveyed to the other party; this could be construed as giving assistance to the suspect in itself a criminal offence. |
| Complete the conversation in a normal and friendly way. |
| If you are suspicious, report your suspicions immediately to the MLRO and follow the instructions in relation to that person with respect to any further contacts with the suspect. The MLRO will then decide whether to make a report to the Isle of Man Constabulary. He will be responsible for all further action. |
| Receiving internal reports of suspected money laundering from within the firm; | |
| Reporting to IOM FCU/NCIS if UK; | |
| Obtaining and using national and international findings; |
| Overseeing adequate arrangements within the firm for money laundering awareness and training, and |
| Making annual reports to senior management about money laundering compliance. |
19. | CUSTOMER IDENTITY CHECKING REQUIREMENTS KYC (COB 6.1) |
| The Clients of CCIOM are the Funds with whom we enter into investment management/ advisory agreements. It is incumbent on us to identify the controllers of these funds i.e directors. CCIOM therefore undertakes to prove the identity of the person both as body corporate and underlying individual directors. |
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| All fund directors are identified by obtaining certified copies of their passports, this identity is verified by obtaining a utility bill with the addresses of their main residence. There may be occasions when a utility bill is unavailable at which time an alternative item will be requested as listed in the Anti Money Laundering Guidance Notes. The necessary identification and verification documents will be certified at the time of inspection. Mobile phone bills, healthcare membership statements, TV Licence letter, Club Memberships etc are not suitable for verifying the identity of individuals. The necessary identification and verification documents will be certified at the time of inspection. |
| The identity of the fund is determined by obtaining a certified copy of the Memorandum and Articles of Association and a copy of the Certificate of Incorporation. |
| The beneficial owners of the funds for which we undertake investment advice are the underlying shareholders. CCIOM is reliant in the checks undertaken by the registrar on behalf of the fund in relation to the identity of the investor and also of the adherence of the Financial Action Task Force (FATF) principles of the introducer of such business. CCIOM along with any other applicable CCL Group entity has agreed to assist the registrar in this process. |
(a) | Identification of the Client Segregated Accounts |
| We should not carry out relevant regulated activities for a client unless we have taken reasonable steps to check the clients identity. |
| No investment agreement will be entered into unless the client is able to provide adequate documented evidence of identity. The Compliance Officer will determine, in accordance with the Rules, what constitutes adequate evidence of his/its identity and his ruling on such matters shall be final. |
| If detailed evidence of identity cannot be obtained, we may consider each potential client relationship on a case-by -case basis in conjunction with the MLRO. Note that where the client appears to be acting on behalf of another, there is an obligation to obtain sufficient evidence of both their identities. |
(b) | Exceptions |
| The client is a credit institution or financial institution covered by the Money Laundering Directive (i.e. authorised in EU or equivalent countries): |
| The client is introduced by a UK, EU or equivalent credit or financial institution that has confirmed that it has verified the clients identity. |
20. | DISCLOSURES |
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21. | INVESTMENT ADVISORY CONTRACTS |
| set forth CCIOMs authority (discretionary or non-discretionary) over the clients account; | |
| describe the duties to be performed by CCIOM; | |
| identify the clients investment objective, guidelines and any account restrictions; |
1 | The term entering into in reference to an investment advisory contract is defined in Advisers Act Rule 204-3 to exclude an extension or renewal without material change of any advisory contract that is in effect immediately prior to such extension or renewal. |
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| specify CCIOMs compensation and the manner of payment; | |
| include provisions for terminating the contract; and | |
| contain the clients acknowledgement of receipt of Part II unless another written acknowledgement of receipt previously has been signed by the client. |
| Limitation of Liability (Hedge Clauses) An Advisory Contract may not require that the client waive any rights against CCIOM that the client has under the federal securities laws. | |
| Termination Penalties An Advisory Contract may not impose a penalty on the client for terminating the contract or the services of CCIOM. |
22. | VALUATION |
23. | * INVESTMENT ADVISORY FEES |
24. | * PROXY VOTING POLICY AND PROCEDURES |
25. | BUSINESS CONTINUITY AND DISASTER RECOVERY PLAN |
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1. | SEPARATION OF DUTIES |
2. | NEW BUSINESS (COB 2.3) |
1. | DEALING PROCESS (COB 2) | |
INFORMATION
Compliance\Public\CCUK Manuals\CCUK COMPLIANCE AND OPERATING PROCEDURES.doc
INFORMATION LINK: Compliance\Public\CCIOM Manuals\DEALING PROCEDURES.doc INFORMATION LINK Compliance\Public\CCIOM Manuals\SETTLEMENT PROCEDURES.doc |
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(a) | Deal Initiation | |
(i) | Only portfolio advisers registered with the FSA as Approved Persons or approved as undertaking a Management Function by the FSC have any authority to recommend the implementation of an investment decision. | |
(ii) | Prior to the implementation of any investment decision recommendation by a portfolio adviser, the Settlements Department initiate an automated check within the Orders Database which requires checking by the portfolio adviser to ensure the transaction will not breach any client (or internally imposed) investment restrictions. | |
(b) | Deal Execution |
(i) | Best Execution Rules apply at all time. (Also see Sub-section 11 below) | |
(ii) | Any relevant dealing instructions or limitations, such as a price limit, must be recorded within the Orders Database. | |
(iii) |
After execution, all remaining fields within the Orders Database must be completed.
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(c) | Deal Allocation | |
(i) | Excepting in the case of (ii) below, all actual allocations must be made on the exact same basis as the intended allocation recorded initially. | |
(ii) | Any completed orders (e.g. illiquid stock) where the amount of stock received is too small to be allocated pro rata will be allocated on a demonstrably fair basis and the trader must record the basis of the allocation within the Orders Database as per written procedures. | |
(d) | Investment Restrictions |
(i) | When buying up to the investment restriction limit, portfolio advisers can recommend up to within 20 basis points of the restriction but no further for given restrictions e.g. up to 19.8% for 20% and for the 5/40 rule take the sum of securities above 5% to 39.8%. | ||
| Funds generally do not invest in any other Group managed funds unless this is permitted by the relevant funds investment objectives and restrictions. If so permitted, |
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all reasonable steps must be made to ensure that there is no double charging of management fees. Initial charges of the underlying fund must be waived. With the express approval of the independent directors of the relevant fund(s), a structuring fee may be levied. | |||
| All transactions must be undertaken in accordance with the applicable investment objectives and restrictions. The management must comply with any other limitations set out in the investment management agreement or, if relevant, which is contained in the relevant explanatory memorandum (prospectus) and company Memorandum and Articles of Association. | ||
| If a potential investment restriction breach is detected prior to the trade, under no circumstances must the trade be executed but neither should the order be cancelled or altered without the express recommendation of a portfolio adviser. The portfolio adviser must be contacted who in turn will send recommendation of actions to be taken. | ||
| If anyone becomes aware of any breach of the provisions of the above it must be reported immediately to the Compliance Officer. | ||
| A file note of the breach, the proposed resolution and details of the resolution as actually implemented must be recorded in the Breaches Register. | ||
| If a fund investment restriction is breached on no account must a course of action finally be determined by any person other than the Managing Director of CCIOM/Compliance Officer in conjunction with the relevant portfolio adviser. If none of these are available a decision can not be made until one of them is contactable. It is important that the monitoring of investment restrictions and the time limit for corrections is demonstrated. In the case of a passive breach, unless a good reason can be established, the manager must sell down within three months. After three months, the passive breach will be come an active breach. Any bona fide breach should be rectified immediately. | ||
| If a fund is selling to another fund also managed by the Group then evidence of a fair price for both parties should be proven. This is ensured by obtaining independent valuation and documenting this as well as referring to independent directors for their approval relating to the acceptability of the trade. |
4. | PROPRIETARY TRANSACTIONS (COB 2) | |
| Transactions in respect of the Companys proprietary account, namely Charlemagne Capital (Investments) Limited (Proprietary Transactions) may only be carried out following the express authorisation in writing of CCIOMs Managing Director. Investment by the company or any of its affiliates in Group Funds, whether by way of subscription on the launch of a new fund or by purchase or CCIOMs Managing Director may, only approve sale through a market maker, on a case-by-case basis. All proprietary transactions are subject to the investment guidelines determined by the Directors. | |
| Proprietary Transactions may be carried out in respect of any securities which are (or will be) held by any of the funds, subject in all cases to transactions in respect of the funds taking priority. The overriding principle is to ensure that the funds are treated fairly in the circumstances appropriate to the relevant stock and the relevant market. In particular, if orders for the funds and Proprietary Transactions are filled by near simultaneous orders, the funds transactions must take priority and, if the orders are filled at different prices, the better prices should be allocated to the funds. Priority of allocation shall always be given to the funds when the near simultaneous orders are not completed in full. | |
| Proprietary Transactions may not be carried out ahead of any transactions to be carried out in respect of the funds. Where the Company or any of its affiliates and a fund has co-invested in the same stock, the Company or its affiliate will only dispose of its proprietary holdings following, or together with, the fund disposing of its holdings, unless the relevant Portfolio Adviser has determined not to sell the relevant stock at the same time. | |
| * Under Advisers Act Section 206(3), CCIOM (or any of its affiliates) may not, directly or indirectly, (i) while acting as principal for its own account, knowingly sell any security to, or purchase any security from, an advisory client or (ii) while acting as broker for a person other than such client, knowingly effect any sale or purchase of any security for the account of an advisory client without , in each case, disclosing to such client in writing, prior to the completion of such transaction, the capacity in which CCIOM is acting, and obtaining the |
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consent of the advisory client to the transaction. Blanket consents (prior consent obtained to cover a category of transactions) are not sufficient for this purpose. |
| CCIOM should not enter into an investment transaction ahead of a client, if that client ought to have priority. | |
| The fund should at no time be put at a disadvantage to own account or balance sheet orders. There may be times the purchase of a stock is of advantage to both parties indeed the combined order may obtain a better price. This is acceptable if the advantage to the client can be proved. Portfolio Advisers should make written comment concerning the benefit in this case. | |
5. | INSIDER DEALING |
1. | If you are in any doubt whether a particular transaction would be prohibited, you should consult the Compliance Officer. | |
2. | You should not agree to become an insider or be given information which is required to be published or would routinely be published and is not yet published [not yet published information] in relation to the securities of any firm without the prior approval of the Compliance Officer or the Groups Chief Operating Officer. | |
3. | You should be aware that you may be made an insider at company or broker meetings or in conversations with the same and if it is the case that you do not wish to be restricted from dealing in the relevant shares, you should make the other party aware that you do not want to be given inside information. | |
4. | If you do become an insider it would be expected that the broker or company request you sign a non disclosure agreement/confidentiality agreement, on doing so please provide to Compliance. | |
5. | No employee may deal, either for a client or a personal account, in any security about which we have inside information. The security will be added to the list of restricted securities. | |
6. | No employee may reveal any inside information held by CCIOM or CCUK to any third party unless it is proper and necessary to do so. | |
7. | If you believe that you may be made an insider or be given not yet published information at firm or broker meetings or in conversations with the same, you should make the other party aware that you do not want to be given the information. | |
8. | You may not deal, either for a client, yourself or a family member in any investment about which we have inside information or not yet published information. | |
9. | You may not reveal any inside information or not yet published information held by us to any third party unless it is proper and necessary to do so. | |
10. | As a portfolio adviser you must not recommend trades on the market or make statements for the purpose of manipulating or misleading the market. | |
11. | If you have any suspicions of parties acting committing market abuse, you must report this immediately to the Compliance Officer. See below for further information. |
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6. | FAIRNESS AND RESEARCH ANALYSIS (COB 2.13) |
| itself or a connected client ahead of the distribution of its own or its associates research or analysis and with advance knowledge of anything that might possibly be price sensitive in it; or | |
| distribute research or analysis containing recommendations from which CCIOM expects to benefit is disclosed; or | |
| otherwise behave unfairly in the way in which it acts upon its research or analysis. | |
7. | SOFT COMMISSION |
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(i) | Prepare a statement of the goods and services you obtain in the execution and the research components of the commission charge, together with details of the providers, and why we need to purchase these goods and services; and | |
(ii) | Decide if details of how we manage transaction costs should be included and if so, prepare a policy statement; and |
i. | Determine the commission split between execution and research for each counterparty; | |
ii. | Check that our current commission data capture process provides the fund specific information on commissions paid and if not, rectify this; and | |
iii. | Determine the details from the Level Two Pension Fund Disclosure Code that should be included if we have client funds classified as private customers; (we do not) and | |
iv. | Decide on a standard issue date or dates for the periodic disclosure. Note that we cannot provide fund specific information until we have provided a fund with a copy of our prior disclosure statement. |
i. | they are demonstrably linked to the arranging and conclusion of a specific transaction (or series of related transactions); and | |
ii. | they arise between the point at which the investment manager makes an investment decision and the point at which the transaction is concluded. |
| Raw data feeds i.e. price feeds or historical price data that have not been analysed or manipulated to reach meaningful conclusions | |
| Post trade analytics, such as software used to analyse execution quality | |
| Services relating to the valuation or performance measurement of portfolios | |
| Computer hardware | |
| Dedicated telephone lines | |
| Seminar fees | |
| Subscriptions for publications | |
| Travel, accommodation or entertainment costs | |
| Office administrative computer software, such as word processing or accounting programmes | |
| Membership fees to professional associations | |
| Purchase or rental of standard office equipment or ancillary facilities | |
| Employees salaries | |
| Direct money payments | |
| Publicly available information | |
| Custody services relating to investments for clients other than those incidental to the execution of trades |
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| it represents original thought; | |
| it does not merely state what is commonplace or self-evident; and | |
| it involves analysis or manipulation of data to reach meaningful conclusions. |
8. | CONFLICTS OF INTEREST (COB 2.14) and *Advisers Act Section 206 ) |
| disclosure of an interest to a Customer; | |
| relying on a policy of independence; | |
| chinese walls, or | |
| declining to act for a Customer. |
| require employees to disregard any material interest or conflict of interest when dealing for Customers, and | |
| be recorded in writing by the firm and made known to relevant employees. | |
Conflicts of interest are situations where: | ||
| We are likely to make a financial gain, or avoid a financial loss, at the expense of a client fund; | |
| We have an interest distinct from the client funds, in the outcome of a transaction undertaken on clients behalf; | |
| We have a financial interest or other incentive in favouring one client fund over another; | |
| We carry on the same business as the client fund; or | |
| We receive a payment or other form of inducement from someone other than the client fund other than a contractually agreed commission or standard fee. |
| Chinese walls; | |
| Segregation of functions; | |
| Independent supervision; | |
| Removal of direct remuneration incentives; | |
| Avoiding inappropriate influence being brought to bear in the way clients are treated; | |
| Operation of dual controls; and | |
| Policies in relation to employees personal interests in investments i.e. PA Dealing Rules. |
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9. | CHURNING (COB 2.7) |
10. | CUSTOMER ORDER PRIORITY |
11. | BEST EXECUTION |
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| Price | |
| Costs | |
| Speed | |
| Liquidity | |
| Settlement | |
| Client Objectives | |
| Order size / nature | |
| Venue |
12. | TIMELY EXECUTION (COB 3.2) |
13. | AGGREGATION AND ALLOCATION (COB 2.11, 3.3) |
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|
In relation to purchasing a security across a number of client funds allocation must be
calculated according to the order size (pro-rata). However, should the trade value fall below
US$50,000, with the exception of those clients listed below (smaller client funds) whereby
trade value falling below US$20,000 would apply, then the stock would not be allocated to
that particular fund. The amount outstanding would be allocated either pro rata amongst other
funds, or allocated to one fund only using the random allocation system:
(As at 17.1.08 CC LATAM CCRF/CCRVF/NOM GEM/OFI/TOWER/MAGCHN) |
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| Where orders have been aggregated they must be promptly allocated. To allocate promptly, the allocation should be completed at time of execution. | |
| All transactions in a series of transactions, all of which are executed within the one business day, may be treated as having been executed at the time of the last transaction, so long as a record of the time that each individual transaction was executed is made. | |
| An allocation of an aggregated order may be revised if an error in either the intended or actual allocation is discovered and a record of the reason for re-allocation is made within one business day of the error being discovered. |
14. | NON-MARKET PRICE TRANSACTIONS |
1. | the dealing rate or price paid by the firm or its client differs from the prevailing market rate or price to a material extent, or | |
2. | the firm or its client otherwise gives more or less value than it receives in return. |
| the transaction is not for a marketable amount; | |
| an order has been carried out over a period of time; | |
| a transaction is executed outside normal market hours; | |
| a transaction is executed in illiquid markets, and | |
| a transaction has a non-standard settlement period. |
| the perpetration of a fraud; | |
| the disguising or concealment of the nature of a transaction or of profits, losses or cash flows; | |
| transactions, which amount to market abuse; | |
| vulnerable transactions under the Insolvency Act 1986, and | |
| window dressing, in particular around the year end, to disguise the true position of the person concerned. |
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15. | TRANSACTION RECORD KEEPING (COB 8) (and *Advisers Act Rule 204-2) |
| The name of the Portfolio Adviser recommending the deal | |
| The name of the person executing the deal | |
| The time of the decision to deal; | |
| The intended basis of allocation; | |
| The time the order was first placed in the market; | |
| The time of execution; | |
| The actual basis of allocation; | |
| The time of allocation (booking); and | |
| The times and details of any amendments or cancellation. |
16. | RESOLUTION OF BUSINESS/DEALING ERRORS |
| Upon discovery, errors are to be reported immediately to the Compliance Officer and Anderson Whamond. After a thorough investigation of the facts surrounding the circumstances leading to the error, they will determine any remedial action that is required to be taken. | |
| Trading errors (other than a trade misallocation) discovered on the trade date or thereafter will normally be broken where possible. Where a trade misallocation is discovered, it will normally be resolved by a reallocation amongst client funds to rectify the position. | |
| After a complete investigation and evaluation of the circumstances surrounding an error, the Compliance Officer and Anderson Whamond have discretion to resolve a particular error in a manner other than specified as in these procedures. Errors resolution should be dealt with on a case-by-case basis. In any event, an explanatory note (Dealing/Business Error Form, Appendix 5) will be prepared and submitted to the Compliance Officer. | |
| Charlemagne has undertaken due diligence to establish market practice in terms of a compensation policy. In light of this due diligence Charlemagne intends to adopt the following compensation policy. In the cases of all errors where any loss to a client is 0.5% or less of NAV, it is unlikely that the client will voluntarily be offered any compensation unless Charlemagne believes that any member of its staff has acted wilfully to cause loss to the client. | |
| In circumstances where it is believed that a claim is likely to be made at some point in the future against Charlemagne, then Charlemagne will endeavour to inform the groups insurers on the day the error is discovered. |
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17. |
DISCLOSURE OF DEALINGS AND HOLDINGS
(Also see Sub-section 23 below) |
18. | NEW COUNTERPARTIES |
19. | COUNTERPARTY RISK |
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20. | FOREIGN MARKETS |
21. | MONITORING OF FAILING TRADES |
22. | CORPORATE ACTIONS |
23. | Reporting to the SEC |
1. | Schedule 13D/G |
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2. | Form 13F |
| within 45 days after the last day of such calendar year; and | ||
| within 45 days after the last day of each of the first three calendar quarters of the subsequent calendar year. |
24. | OTHER APPLICABLE POLICIES AND PROCEDURES | |
As noted above, we act as sub-adviser for investment companies registered under the Investment Company Act of 1940 (Registered Funds). In connection with providing advisory services to the Registered Funds, we are subject to the compliance policies and procedures of the Registered Funds to the extent such policies govern the services we provide to the Funds. For example, we are subject to the Registered Funds policies concerning the use of its affiliated broker-dealers (e.g., Rule 17e-1 policies). We are required to make ourselves familiar with these documents and changes to these documents provided thereafter. |
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I
confirm that I know of no reason why the above transactions should
conflict with any duty owed to
any client or with the best interests of any client (please provide confirmation from relevant
portfolio adviser if potential or existing client investment).
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I
confirm that I have considered carefully whether any information I
have as to any of the
above securities might be considered to be price sensitive
information and I am confident that
the above transaction(s) would not breach any of the provisions of
the FSAs market abuse regime
or insider dealing laws in the UK or any other country.
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Approval has been granted and is valid for 24 hours (unless otherwise specified below) from
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Is the gift being offered or received?
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Date error occurred:
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Action taken to rectify error including details of any additional procedures
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+++ ISLE OF MAN FINANCIAL CRIME UNIT DISCLOSURE Completed forms should be returned to: The Isle of Man Constabulary Financial Crime Unit, PO Box 51, Douglas, ISLE OF MAN IM99 2TD Telephone: 686000 Facsimile: 686039 E-mail: fcu@gov.im DISCLOSING PARTY Your Ref No: Date of Disclosure: Subject of this Disclosure: State the name only of the lead company or individual(s) to whom the report refers. Full details will be given later Full Legal Name of Disclosing Party: Sort Code (if applicable): Full Postal Address (for return correspondence): Point of contact for this disclosure: Main Telephone Number: Direct Dial Number: Fax Number: E-mail address: Have you made a previous disclosure on this person or entity? YES / NO If YES, please quote our previous reference number: (Top right hand corner of our acknowledgement letter) FORM D-1, DISCLOSURE COVER SHEET |
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ISLE OF MAN FINANCIAL CRIME UNIT Your Ref No: DISCLOSURE FORM D 2 SUPPORTING INFORMATION (Please tick, circle or otherwise highlight the appropriate number) Disclosure made under: 1. Drug Trafficking Act 1996 (Drugs) 2. Criminal Justice Act, 1990, as amended (All Crimes) 3. Anti-Terrorism and Crime Act 2003 Please specify your main type of business: (N.B. Numbers 8 to 13 are deliberately omitted). 1 ACCOUNTANT 15 PRIVATE BANK 2 BUILDING SOCIETY 16 RETAIL / OFFSHORE BANK 3 C.S.P. 17 STOCK BROKER 4 FINANCIAL ADVISOR 18 TRUST COMPANY 5 INVESTMENT / FUND MANAGER 19 OTHER (Please specify) 6 LAWYERS 7 LIFE ASSURANCE / INSURANCE COMPANY 20 MONEY SERVICES BUSINESS 14 POST OFFICE 21 ON LINE GAMING OPERATION Generally speaking, which of the following have contributed to giving you grounds for suspicion? (Choose as many categories as you wish) 1 CASH PURCHASE HIGH VALUE GOODS 14 SERVICE OF RESTRAINT ORDER 2 EVIDENCE OF FORGED DOCUMENTATION 15 SUSPECTED FRAUD/FALSE ACCOUNTING 3 FOREIGN AUTHORITY ENQUIRY 16 TRANSACTION OR A/C OPERATION NOT AS EXPECTED 4 HIGH RISK JURISDICTION 17 TRANSITORY A/CS - IMMEDIATE LAYERING 5 HIGH RISK NATURE OF SOURCE OF FUNDS 18 UNABLE TO CONFIRM IDENTIFICATION OR SATISFY KYC 6 LOCAL POLICE OR REGULATOR ENQUIRY 19 UNUSUAL FOREX TRANSACTIONS 7 MEDIA / PUBLICITY 20 PUBLIC SECTOR CORRUPTION 8 U.K. POLICE OR REGULATOR ENQUIRY 21 POLITICALLY EXPOSED PERSON 9 NON CLEARANCE OF DEPOSITS 22 COMPLICATED CORPORATE / TRUST STRUCTURES 10 POLICY PURCHASE / SURRENDER 23 SIZE OF INVESTMENT OR DEPOSIT INCONSISTENT WITH OCC UPATION OR INCOME 11 CASH DEPOSITS/WITHDRAWALS 24 UNSATISFACTORY EXPLANATION FOR SOURCE OF FUNDS 12 SERVICE OF POLICE POWERS & 25 MONEY LAUNDERING PROCEDURES ORDER 13 SERVICE OF PRODUCTION ORDER Was the subject: 1 An existing customer or client prior to December 1998 2 Has become a new customer or client since December 1998 Current business status: 1 Relationship continued 4 New business declined 2 Relationship Closed 5 Application Pending 3 New business accepted If the transaction has involved the physical deposit or withdrawal of CASH: What currency was used What was the value of the transaction Where did the deposit or withdrawal take place? Where does the subject of this disclosure reside: 1 Isle of Man 2 United Kingdom 3 European Union 4 Other FORM D-2, DISCLOSURE SUPPORTING INFORMATION |
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ISLE OF MAN FINANCIAL CRIME UNIT Your Ref No: DISCLOSURE FORM D 4 INDIVIDUAL PERSON MAIN SUBJECT ASSOCIATED SUBJECT REASON FOR ASSOCIATION: BENEFICIAL OWNER ACCOUNT HOLDER DIRECTOR POLICY HOLDER SECRETARY ADVOCATE / SOLICITOR / ATTORNEY SHAREHOLDER APPOINTED POWER OF ATTORNEY C.S.P. TRUSTEE INTRODUCER / INTERMEDIARY TRUST SETTLOR AGENT TRUST BENEFICIARY OTHER (please specify: ___ Surname: Title: All Forenames: Date of Birth: Gender: Male Female Not Known Place of Birth: Nationality: Other names or Aliases: Occupation: (If known) Employer: (If known) Identification (Passport, Country ID card etc. Please provide the country of issue, the serial number, the date & place of details: issue, the date of expiry. Photocopies are an acceptable way of providing this info.) Photocopy attached? YES / NO Home Address: (Please include Post Code where known) Other Address: (Business, employer, etc. Please specify. Please include Post Code where known) Any other useful personal information: FORM D-4 PERSON DISCLOSURE |
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Your Ref No: ISLE OF MAN FINANCIAL CRIME UNIT DISCLOSURE FORM D 3 COMPANY Company Name: Date & Place of Incorporation: Company VAT Number: Number: Registered Office Address: Postal or Correspondence Address: Name & Address of C.S.P. (if applicable) : Beneficial Owner: PLEASE COMPLETE A FORM D4 INDIVIDUAL PERSON Please note for Shareholders, Directors and Secretary: If employees of a local C.S.P. give name and company only. If a company, give name, place of incorporation and registered number. If another individual, give as much detail as possible. Consider using a Form D-4. Shareholder(s): Director(s): Secretary: Bankers: FORM D-3 COMPANY DISCLOSURE |
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ISLE OF MAN FINANCIAL CRIME UNIT Your Ref No: DISCLOSURE FORM D 6 REASONS FOR SUSPICION FORM D-6 REASONS FOR DISCLOSURE |
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ISLE OF MAN FINANCIAL CRIME UNIT Your Ref No: DISCLOSURE FORM D 5 TRUST Name: Date Established: Jurisdiction: Type: Trustee(s): Settlor(s): PLEASE COMPLETE A FORM D4 INDIVIDUAL PERSON Beneficiary or PLEASE COMPLETE A FORM D4 INDIVIDUAL PERSON Beneficiaries: Assets: Where are assets held: FORM D-5 TRUST DISCLOSURE |
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| A copy of this Code which is, or at any time within the past five years has been, in effect shall be preserved in an easily accessible place; | ||
| A record of any violation of this Code and of any action taken as a result of such violation shall be preserved in an easily accessible place for a period of not less than five years following the end of the fiscal year in which the violation occurs, the first two years in an appropriate office of the Adviser; | ||
| A copy of all written acknowledgements of the receipt of the Code and any amendments thereto for each employee (currently, or within the past five years) | ||
| A copy of each report (initial, annual and quarterly) made pursuant to this Code by an Access Person shall be preserved for a period of not less than five years from the end of the fiscal year in which the last entry was made on such record, the first two years in an appropriate office of the Adviser; | ||
| A list of all persons who are required, or within the past five years have been required, to make reports under the Code (i.e., Access Persons) and those persons who are responsible for reviewing such reports pursuant to this Code (i.e., compliance officers) shall be maintained in an easily accessible place; | ||
| A copy of all personal trading request and authorization forms; | ||
| A record of any decision and supporting reasons for approving the acquisition of securities by an Access Person; and | ||
| A record of persons responsible for reviewing reports and a copy of reports provided pursuant to the Code. |
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