US GLOBAL INVESTORS FUNDS (Form: 485BPOS, Received: 10/01/2008 13:15:27)

U.S. Global Investors, Inc.

/s/ Susan B. McGee

President and General Counsel

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM N-1A


REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933		o
Pre-Effective Amendment No.		o

Post-Effective Amendment No. 100		þ


and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 194

Amendment No. 100		þ

(Check appropriate box or boxes)

U.S. GLOBAL INVESTORS FUNDS

(Exact Name of Registrant as Specified in Charter)

7900 CALLAGHAN ROAD
SAN ANTONIO, TEXAS 78229
(Address of Principal Executive Offices)

(210) 308-1234
Registrant’s Telephone Number, including Area Code

FRANK E. HOLMES, PRESIDENT
U.S. GLOBAL INVESTORS FUNDS
7900 CALLAGHAN ROAD
SAN ANTONIO, TEXAS 78229
(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering:

It is proposed that this filing will become effective (check appropriate box)


	þ		immediately upon filing pursuant to paragraph (b)


	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)


	o		75 days after filing pursuant to paragraph (a)(ii)


	o		on pursuant to paragraph (a)(ii) of rule 485.

If appropriate, check the following box:

this post-effective amendment designates a new effective date for a previously filed post-effective amendment

The Registrant, a Delaware statutory trust, hereby adopts the amended registration statement on Form N-1A of U.S. Global Investors Funds, a Massachusetts business trust, and U.S. Global Accolade Funds, a Massachusetts business trust, as its own for all purposes under the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Company Act of 1940.


Prospectus		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

Equity Funds		All American Equity Fund
		Holmes Growth Fund
		Global MegaTrends Fund


Gold and Natural		Gold and Precious Metals Fund
Resources Funds		World Precious Minerals Fund
		Global Resources Fund


Emerging Markets Funds		Eastern European Fund
		Global Emerging Markets Fund
		China Region Fund

Tax Free Funds		Tax Free Fund
		Near-Term Tax Free Fund

Government Money		U.S. Government Securities Savings Fund
Market Funds		U.S. Treasury Securities Cash Fund


October 1, 2008		[U.S. Global Investors logo to come]

Table Of Contents


Risk/Return Summary			1
Equity Funds			1
Investment Objectives			1
Main Investment Strategies			1
Main Risks			2
Volatility and Performance Information			3
Gold and Natural Resources Funds			7
Investment Objectives			7
Main Investment Strategies			7
Main Risks			8
Volatility and Performance Information			9
Emerging Markets Funds			13
Investment Objectives			13
Main Investment Strategies			13
Main Risks			14
Volatility and Performance Information			15
Tax Free Funds			19
Investment Objectives			19
Main Investment Strategies			19
Main Risks			19
Volatility and Performance Information			19
Government Money Market Funds			22
Investment Objectives			22
Main Investment Strategies			22
Main Risks			22
Volatility and Performance Information			23
Fees and Expenses			25
Investment Objectives, Principal Investment Strategies and Related Risks			28
Equity Funds			28
Gold and Natural Resources Funds			29
Emerging Markets Funds			30
Tax Free Funds			34
Government Money Market Funds			35
Fund Management			36
Common Investment Practices and Related Risks			39
How to Buy Shares			43
How to Sell (Redeem) Shares			46
Exchanging Shares			47
Important Information About Purchases, Redemptions, and Exchanges			48
Funds Reserve Certain Rights			48
Account Minimums			48
Short-Term Trading Fee			49
Net Asset Value (NAV) Calculation			50
Signature Guarantee/Other Documentation			51
Other Information About Your Account			51
Additional Investor Services			52
Distributions and Taxes			53
Financial Highlights			54

Risk/Return Summary

Equity Funds

All American Equity Fund
Holmes Growth Fund
Global MegaTrends Fund

Investment Objectives

The All American Equity Fund (All American Fund), Holmes Growth Fund, and Global MegaTrends Fund seek long-term capital appreciation. The Global MegaTrends Fund’s secondary objective is earning income.

Main Investment Strategies

Under normal market conditions, the All American Fund, when investing in common stock, preferred stock, convertible securities, rights and warrants and depository receipts, will invest substantially all (greater than 80%) of its net assets in securities defined as “all American.”

The All American Fund will consider any of the following companies to be “all American:”


1.		companies offering stock registered on a United States stock exchange;



2.		companies offering stock traded on Nasdaq or the over-the-counter markets;



3.		companies deriving more than 50% of their revenue from operations in the United States;



4.		companies incorporated in the United States; or



5.		companies having their principal place of business or corporate headquarters located in the United States.

Under normal market conditions, the Holmes Growth Fund invests primarily in a diversified portfolio of common stock, preferred stock, convertible securities, rights and warrants and depository receipts. In general, the fund uses a growth-style process to choose companies for investment. A growth company is one that has had superior growth, profitability, and quality relative to companies in the same industry and that is expected to continue such performance. The fund may, from time to time, invest a significant amount of its total assets in one or more of the sectors of the S&P 500 Index. As a result of the Adviser’s earnings growth investment strategy, concentrations in the sectors may rotate depending on the earnings growth of the underlying companies in each sector.

Under normal market conditions, the Global MegaTrends Fund will invest in common stock, preferred stock, convertible securities, rights and warrants and depository receipts of companies of all sizes. The Adviser performs statistical analyses of major economic themes and of monetary and economic trends, and evaluates the financial markets to identify “megatrends” in the global economy. Megatrends are usually defined by sustainable and substantial growth in capital expenditures in any country or sector.

Other megatrends are created by governmental policies for infrastructure or a massive technological breakthrough. The influence of these global megatrends is transforming supply/demand dynamics, global trade and other formerly slow-evolving patterns.

Globalization and the integration of economies through free trade are leading to economic prosperity among more people in further reaches than ever before. This wealth effect, combined with rapid urbanization, is further driving demand for basic services. Governments around the world are being challenged to find ways to stimulate growth, to make way for growth, and to finance growth. Underlying these dynamics is the physical, digital, and intangible set of goods and services which we broadly categorize as “the global infrastructure.” The fund may, from time to time, invest a significant amount of its assets in certain sectors.

The Adviser uses a combination of value- and growth-style for stock selection. The Adviser seeks stocks with sustainable future growth selling at an attractive price relative to the potential growth rate. Among other factors, the Adviser looks for companies that have proven management and sound financial strength whose stock price is low in light of the company’s earnings and cash flow.

Under normal market conditions, the Global MegaTrends Fund will invest at least 40% of its assets in securities of companies that are economically tied to at least three countries other than the U.S. The fund may invest in companies that are domiciled in one country but are economically tied to another country. In determining if a company is economically tied to a country, the Adviser will consider various factors, including where the company’s principal operations are located; the country in which 50% of the company’s revenues or profits are derived from goods produced or sold, investments made, or services performed; where the principal trading market is located; and the country in which the company is legally organized .

The portfolio team for each fund applies a “top-down” and “bottom-up” approach in selecting investments. For more information on the funds’ investment strategies, please see page 28.

The trustees for the funds may change each fund’s objective without shareholder vote. The All American Fund will notify you in writing 60 days before making changes to this policy. The Holmes Growth Fund and Global MegaTrends Fund will notify you in writing 30 days before making changes to this policy. If there is a material change to a fund’s objective or policies, you should consider whether the fund remains an appropriate investment for you.

Main Risks

The funds are designed for long-term investors who are willing to accept the risks of investing in a portfolio with significant stock holdings. The funds are not intended to be a complete investment program, and there is no assurance that their investment objectives can be achieved. Additional risks of the funds are described on page 28 of the prospectus. As with all mutual funds, loss of money is a risk of investing in the funds. An investment in these funds is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

Market Risk

The value of a fund’s shares will go up and down based on the performance of the companies whose securities it owns and other factors affecting the securities market generally.

Portfolio Management Risk

The skill of the Adviser will play a significant role in the funds’ ability to achieve their investment objectives. The Global MegaTrends Fund’s investment results depend on the ability of the Adviser to correctly identify economic megatrends, especially with regard to accurately forecasting the effects of capital expenditures and governmental policies. In addition, the Global MegaTrends Fund’s investment results depend on the Adviser’s ability to combine growth and value investing when selecting stocks, particularly in volatile stock markets. The Adviser could be incorrect in its analysis of industries, companies and the relative attractiveness of growth and value stocks and other matters.

Growth Stock Risk

Because of their perceived growth potential, growth stocks are typically in demand and tend to carry relatively high prices. Growth stocks generally experience share price fluctuations as the market reacts to changing perceptions of the underlying companies’ growth potentials and broader economic activities. If a fund’s growth stock does not produce the predicted earnings growth, its share price may drop, and the fund’s net asset value may decline.

Sector Risk

From time to time, the funds may invest a significant amount of their total assets in certain sectors, which may be subject to specific risks. These risks include governmental regulation of the sector and governmental monetary and fiscal policies which impact interest rates and currencies and affect corporate funding and international trade. Certain sectors may be more vulnerable than others to these factors. In addition, market sentiment and expectations toward a particular sector could affect a company’s market valuations and access to equity funding.

Value Risk

The Global MegaTrends Fund is subject to valuation risk due to the fact that the Adviser’s determination that a stock is undervalued is subjective. The market may not agree and the stock’s price may not rise to what the Adviser believes is its full value. It may even decrease in value. Value stocks may also become unpopular.

Foreign Securities Risk

The funds’ investments in foreign securities are subject to special risks. The funds’ returns and share prices may be affected to a large degree by several factors including fluctuations in currency exchange rates; political, social or economic instability; and less stringent accounting, disclosure, and financial reporting requirements in a particular country. The funds’ share prices will reflect the movements of the different stock markets in which they are invested and the currencies in which their investments are denominated.

Portfolio Turnover Risk

Portfolio turnover for the funds may be over 100%. The length of time a fund has held a particular security is not generally a consideration in investment decisions. It is the policy of each fund to effect portfolio transactions without regard to a holding period if, in the judgment of the portfolio managers, such transactions are advisable. Portfolio turnover generally involves some expense, including brokerage commissions, dealer mark-ups, or other transaction costs on the sale of securities and reinvestment in other securities. Such sales may result in realization of taxable capital gains for shareholders. Portfolio turnover rates for the funds are disclosed in the Financial Highlights section.

Volatility and Performance Information

The following bar charts and tables show the volatility of each fund’s returns, which is one indicator of the risks of investing in the fund. The bar charts show changes in each fund’s returns from year to year during the period indicated. The tables compare each fund’s average annual returns for the last 1-, 5-, and 10-year periods to those of a broad-based securities market index or indexes. How each fund performed in the past, before and after taxes, is not an indication of how it will perform in the future.

Prior to June 1, 2004, the Holmes Growth Fund was managed by Bonnel, Inc., subadviser to the fund since its inception on October 17, 1994. On June 1, 2004, the Adviser began managing the fund with the same investment philosophy that the subadviser employed while using the Adviser’s quantitative modeling resources. Consequently, the fund’s performance prior to June 1, 2004, may have been different if the Adviser had been managing the fund.

On November 27, 2002, the Global MegaTrends Fund changed its investment strategy to focus on large capitalization equities with growth potential at a reasonable price. Previously, the fund had a flexible investment strategy and the ability to invest in growth and value stocks, bonds, and money market instruments. Consequently, the fund’s performance prior to November 27, 2002, may have been different if the current investment strategy had been in place.

Prior to October 1, 2007, the Global MegaTrends Fund was managed by Leeb Capital Management, Inc., the subadviser to the fund since November 16, 1996. On October 1, 2007, the Adviser began managing the fund. Consequently, the fund’s performance prior to October 1, 2007, may have been different if the Adviser had been managing the fund.

All American Fund
Annual Total Returns*


*		As of June 30, 2008, the fund’s year-to-date return was (5.25)%. The Adviser has agreed to limit the fund’s total operating expenses. In the absence of this limitation, the fund’s total returns would have been lower.

		Best quarter shown in the bar chart above: 18.36% in fourth quarter 1998.


		Worst quarter shown in the bar chart above: (19.39)% in third quarter 2002.


Average Annual Total Returns
(for the periods ended December 31, 2007)	1 Year			5 Years			10 Years
*All American Fund Return Before Taxes**		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		18.12	%		13.79	%		3.17	%
S&P 500 Index**		5.49	%		12.82	%		5.91	%


*		The Adviser has agreed to limit the fund’s total operating expenses. In the absence of this limitation, the fund’s 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.

After-tax returns are calculated using highest historical individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts.

Holmes Growth Fund
Annual Total Returns (as of December 31 each year) *



*		As of June 30, 2008, the fund’s year to date return was (5.14)%.


		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		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***		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.

After-tax returns are calculated using the highest historic marginal individual federal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold their fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts.

Global MegaTrends Fund
Annual Total Returns (as of December 31 each year)*


*		As of June 30, 2008, the fund’s year-to-date return was (2.91)%. Effective May 12, 2008, the Adviser has agreed to limit the fund’s total operating expenses. In absence of this limitation, the fund’s 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		17.56	%		15.73	%		5.38	%
S&P 500 Index*		5.49	%		12.82	%		5.91	%
S&P Global Infrastructure Index**		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.

Gold and Natural Resources Funds

Gold and Precious Metals Fund
World Precious Minerals Fund
Global Resources Fund

Investment Objectives

The Gold and Precious Metals Fund, World Precious Minerals Fund, and Global Resources Fund each seek long-term growth of capital plus protection against inflation and monetary instability. The Gold and Precious Metals Fund also pursues current income as a secondary objective.

Main Investment Strategies

Under normal market conditions, the Gold and Precious Metals Fund will invest at least 80% of its net assets in equity securities of companies predominately involved in the mining, fabrication, processing, marketing, or distribution of metals including gold, silver, platinum group, palladium and diamonds. Gold companies include mining companies that exploit gold deposits that are supported by by-products and co-products such as copper, silver, lead and zinc, and also diversified mining companies which produce a meaningful amount of gold. The fund focuses on selecting companies with established producing mines.

Under normal market conditions, the World Precious Minerals Fund will invest at least 80% of its net assets in common stock, preferred stock, convertible securities, rights and warrants, and depository receipts of companies principally engaged in the exploration for, or mining and processing of precious minerals such as gold, silver, platinum group, palladium and diamonds.

Although the fund has greater latitude to invest its assets in different precious minerals, it currently has significant investments in the gold sector. Gold companies include mining companies that exploit gold deposits that are supported by by-products and co-products such as copper, silver, lead and zinc, and also diversified mining companies which produce a meaningful amount of gold. The fund will not be required to invest any minimum amount of the fund’s assets in gold stocks.

The fund will invest in securities of companies with economic ties to countries throughout the world, including the U.S. Under normal conditions, the fund will invest at least 40% of its assets in securities of companies that are economically tied to at least three countries other than the U.S. The fund may invest in companies which may be domiciled in one country but have economic ties to another country. In determining if a company is economically tied to a country, the fund will consider various factors, including where the company’s principal operations are located; where the company’s mining or natural resource reserves are located; the country in which 50% of the company’s revenues or profits are derived from good produced or sold, investments made, or services performed; where the principal trading market is located; and the country in which the company is legally organized.

The fund focuses on selecting junior and intermediate exploration companies from around the world. Junior exploration companies typically have small market capitalization and no source of steady cash flow, and their growth generally comes from a major gold discovery. Therefore, the risk and opportunities are substantially greater than investing in a senior mining company with proven reserves. The volatility of these smaller mining companies is greater than that of senior producers.

Under normal market conditions, the Global Resources Fund normally invests at least 80% of its net assets in the common stock, preferred stock, convertible securities, rights and warrants, and depository receipts of companies within the natural resource sector. Consistent with its investment objective, the fund may invest without limitation in the various industries of the natural resource sector, such as oil, gas, and basic materials.

The Global Resources Fund will invest in securities of companies with economic ties to countries throughout the world, including the U.S. Under normal market conditions, the fund will invest at least 40% of its assets in securities of companies that are economically tied to at least three countries other than the U.S. The fund may invest in companies which may be domiciled in one country but have economic ties to another country. In determining if a company is economically tied to a country, the fund will consider various factors, including where the company’s principal operations are located; where the company’s mining or natural resource reserves are located; the country in which 50% of the company’s revenues or profits are derived from goods produced or sold, investments made, or services performed; where the principal trading market is located; and the country in which the company is legally organized.

All three funds may invest, without limitation, in issuers in any part of the world. The funds’ portfolio teams apply a “top-down” and “bottom-up” approach in selecting investments.

As a strategy to maintain exposure to underlying equity markets while maintaining appropriate cash positions, the Gold and Precious Metals Fund, World Precious Minerals Fund and Global Resources Fund may purchase long-term equity anticipation securities (LEAPS), which are long-term equity options.

For more information on the funds’ investment strategies, please see page 29.

The trustees for the funds may change each fund’s objective without shareholder vote. Each fund will notify you in writing 60 days before making any changes to this policy. If there is a material change to a fund’s objective or policies, you should consider whether the fund remains an appropriate investment for you.

Main Risks

The funds are designed for long-term investors who are willing to accept the risks of investing in a portfolio with significant stock holdings. The funds are not intended to be a complete investment program, and there is no assurance that their investment objectives can be achieved. As with all mutual funds, loss of money is a risk of investing in any of the funds. Additional risks of the funds are described on page 29. An investment in these funds is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

Market Risk

The value of a fund’s shares will go up and down based on the performance of the companies whose securities it owns and other factors affecting the securities market generally.

Foreign Securities Risk

Industry/Concentration Risk

Because the funds concentrate their investments in specific industries, the funds may be subject to greater risks and market fluctuations than a portfolio representing a broader range of industries. The Gold and Precious Metals Fund and World Precious Minerals Fund invest in securities that typically respond to changes in the price of gold. Prices of gold and other precious metals can be influenced by a variety of global economic, financial, and political factors and may fluctuate substantially over short periods of time, and the funds may be more volatile than other types of investments.

Diversification Risk

The funds are non-diversified and may invest a significant portion of their total assets in a small number of companies. This may cause the performance of a fund to be dependent upon the performance of one or more selected companies, which may increase the volatility of the fund.

Price Volatility Risk

The value of a fund’s shares may fluctuate significantly in the short term.

Options Risk

Investing in options, LEAPS, warrants and other instruments with option-type elements (“options”) may increase the volatility and/or transaction expenses of a fund. An option may expire without value, resulting in a loss of a fund’s initial investment and may be less liquid and more volatile than an investment in the underlying securities.

Warrants Risk

The funds may invest in warrants. Warrants are different from options in that they are issued by a company as opposed to a broker and typically have a longer life than an option. When the underlying stock goes above the exercise price of the warrant, the warrant is “in the money.” If the exercise price of the warrant is above the value of the underlying stock it is “out of the money.” “Out of the money” warrants tend to have different price behaviors than “in the money” warrants. As an example, the value of an “out of the money” warrant with a long time to expiration generally declines less than a drop in the underlying stock price because the warrant’s value is primarily derived from its time component.

with prices of the underlying securities, particularly for shorter periods of time, and, therefore, may be considered speculative investments. The key driver to the movements in warrants are the fundamentals of the underlying company. Warrants, unlike options, may allow the holder to vote on certain issues and often are issued with certain anti-dilutive rights. Warrants pay no dividends. If a warrant held by a fund were not exercised by the date of its expiration, the fund would incur a loss in the amount of the cost of the warrant.

Liquidity Risk

The funds may make direct equity investments in securities that are subject to contractual and regulatory restrictions on transfer. These investments may involve a high degree of business and financial risk. Because of the thinly traded markets for these investments, a fund may be unable to liquidate its securities in a timely manner, especially if there is negative news regarding the specific securities or the markets overall. These securities could decline significantly in value before the fund could liquidate these securities. In addition to financial and business risks, issuers whose securities are not listed will not be subject to the same disclosure requirements applicable to issuers whose securities are listed.

Portfolio Turnover Risk

The Global Resources Fund’s portfolio turnover rates vary from year to year according to market conditions and may exceed 100%. The length of time a fund has held a particular security is not generally a consideration in investment decisions. It is the policy of the funds to effect portfolio transactions without regard to a holding period if, in the judgment of the portfolio managers, such transactions are advisable. Portfolio turnover generally involves some expense, including brokerage commissions, dealer mark-ups, or other transaction costs on the sale of securities and reinvestment in other securities. Such sales may result in realization of taxable capital gains for shareholders. Portfolio turnover rates for the funds are disclosed in the Financial Highlights section.

Volatility and Performance Information

The following bar charts and tables show the volatility of each fund’s returns, which is one indicator of the risks of investing in the fund. The bar charts show changes in each fund’s returns from year to year during the period indicated. The tables compare each fund’s average annual returns for the last 1-, 5-, and 10-year periods to those of broad-based securities market indexes. How each fund performed in the past, before and after taxes, is not an indication of how it will perform in the future.

On December 1, 2007, the Gold Shares Fund’s name was changed to the Gold and Precious Metals Fund and the investment strategy was changed. Consequently, the annual returns reflected in the chart below may have been different if the new investment strategy was historically employed by the fund.

Gold and Precious Metals Fund

Annual Total Returns*


*		As of June 30, 2008, the fund’s 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
Gold and Precious Metals Fund Return Before Taxes		16.91	%		29.50	%		12.89	%
Return After Taxes on Distributions		14.46	%		28.82	%		12.59	%
Return After Taxes on Distributions and Sale of Fund Shares		13.91	%		26.37	%		11.56	%
S&P 500 Index*		5.49	%		12.82	%		5.91	%
FTSE Gold Mines Index**		21.05	%		18.27	%		10.82	%
Philadelphia Stock Exchange Gold & Silver Index***		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.

World Precious Minerals Fund

Annual Total Returns*


*		As of June 30, 2008, the fund’s 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
World Precious Minerals Fund Return Before Taxes		23.02	%		36.66	%		15.65	%
Return After Taxes on Distributions		15.79	%		32.47	%		13.73	%
Return After Taxes on Distributions and Sale of Fund Shares		16.45	%		30.47	%		12.93	%
S&P 500 Index*		5.49	%		12.82	%		5.91	%
AMEX Gold Miners Index**		16.86	%		19.57	%		13.32	%
AMEX Gold BUGS Index***		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.

Global Resources Fund

Annual Total Returns*


*		As of June 30, 2008, the fund’s 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
Global Resources Fund Return Before Taxes		39.95	%		45.95	%		18.05	%
Return After Taxes on Distributions		34.32	%		42.17	%		16.27	%
Return After Taxes on Distributions and Sale of Fund Shares		27.74	%		39.62	%		15.33	%
S&P 500 Index*		5.49	%		12.82	%		5.91	%
Morgan Stanley Commodity Related Equity Index**		45.23	%		32.16	%		17.29	%
S&P Energy and Materials Index***		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.

Emerging Markets Funds

Eastern European Fund
Global Emerging Markets Fund
China Region Fund

Investment Objectives

The Eastern European Fund, Global Emerging Markets Fund and China Region Fund seek long-term growth of capital.

The subadviser for the Eastern European Fund and Global Emerging Markets Fund is Charlemagne Capital (IOM) Limited (Subadviser).

Main Investment Strategies

The Eastern European Fund invests, under normal market conditions, at least 80% of its net assets in the common stock, preferred stock, convertible securities, rights and warrants and depository receipts of companies located in the emerging markets of Eastern Europe. In general, Eastern European countries are in the early stages of industrial, economic, or capital market development. Eastern European countries may include countries that were, until recently, governed by communist governments or countries that, for any other reason, have failed to achieve levels of industrial production, market activity, or other measures of economic development typical of the developed European countries. Although the fund may invest in any Eastern European country, it currently focuses its investment in companies located in Russia, Poland, Hungary and Turkey. The Subadviser considers the following countries to be in Eastern Europe: Albania, Armenia, Azerbaijan, Belarus, Bulgaria, Croatia, the Czech Republic, Estonia, FYR Macedonia, Georgia, Hungary, Latvia, Lithuania, Moldova, Poland, Romania, Russia, Slovakia, Slovenia, Turkey and Ukraine.

The fund will consider investments in Eastern Europe to be the following:

securities of issuers that are organized under the laws of any Eastern European country or have a principal office in an Eastern Europe country;

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

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.)

The Global Emerging Markets Fund invests, under normal market conditions, at least 80% of its net assets in equity securities such as common stock, preferred stock, convertible securities, rights and warrants and depositary receipts of companies located in emerging market countries or in companies with a significant business presence in emerging market countries. Emerging market countries are those countries defined as such by the World Bank, the International Finance Corporation, the United Nations or the European Bank for Reconstruction and Development or included in the MSCI Emerging Markets Index.

The fund will consider investments in an emerging market country to be the following:

	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.

Under normal market conditions, the China Region Fund will invest at least 80% of its net assets in common stock, preferred stock, convertible securities, rights and warrants, and depository receipts of companies located in the China region.

The fund will consider investments in the China region to be the following:

(1) securities of issuers organized under the laws of the countries within the China region;

(2) securities of issuers that have at least 50% of their assets in one or more China region countries;

(3) securities of issuers that derive at least 50% of their gross revenues or profits from providing goods or services to or from one or more China region countries; or

(4) securities of issuers that are primarily traded on the China, Taiwan, or Hong Kong exchanges.

The China Region Fund will invest in both new and existing enterprises registered and operating in China and the China region. These will include wholly Chinese-owned enterprises, wholly foreign-owned enterprises, and Sino-foreign joint ventures. While portfolio holdings may be geographically dispersed, the fund anticipates that the trading activities of the fund in People’s Republic of China (PRC) securities will be focused in the authorized China securities market; in particular, the Hong Kong, Shenzhen, and Shanghai stock exchanges. Trading activities of the fund in securities other than PRC securities will be focused on the Taiwan, Korea, Singapore, Malaysia and Indonesia stock exchanges.

The Eastern European Fund and Global Emerging Markets Fund may, from time to time, invest a significant amount of their total assets in certain sectors.

The Subadviser for the Eastern European Fund and Global Emerging Markets Fund applies a bottom-up stock selection process that is based on rigorous in-house research. The Adviser for the China Region Fund applies both a “top-down” macroeconomic analysis using broad economic indicators to identify trends in countries, states, sectors, and industries and a “bottom-up” fundamental analysis with screens to select the leading stocks within this macroeconomic environment.

For more information on the funds’ investment strategies, please see page 31.

Main Risks

The funds are designed for investors who are willing to accept the risks of investing in portfolios with significant stock holdings. The funds are not intended to be a complete investment program, and there is no assurance that their investment objectives can be achieved. As with all mutual funds, loss of money is a risk of investing in any of the funds. Additional risks of the funds are described on page 31. An investment in these funds is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

Given the limited number of issuers in Eastern European countries, along with liquidity and capacity constraints in certain markets, as the asset size of the Eastern European Fund grows it may be more difficult for the Subadviser to locate attractive securities to purchase and the ability of the Subadviser to efficiently trade into or out of particular securities or markets may become more limited.

Diversification Risk

The funds are classified as “non-diversified” funds, and, as such, the funds’ portfolios may include the securities of a smaller total number of issuers than if the funds were classified as “diversified.” Because the funds may invest a greater proportion of their assets in the obligations of a small number of issuers, changes in the financial condition or market assessment of a single issuer may cause greater fluctuation and volatility in the funds’ total returns or asset values than if the funds were required to hold smaller positions of the securities or a larger number of issuers.

Market Risk

The value of a fund’s shares will go up and down based on the performance of the companies whose securities it owns and other factors affecting the securities market generally.

Foreign Securities/Emerging Markets Risk

The funds’ investments in foreign securities are subject to special risks. A fund’s returns and share price may be affected to a large degree by several factors including fluctuations in currency exchange rates; political, social, or economic instability; and less stringent accounting, disclosure, and financial reporting requirements in a particular country. These risks are generally intensified in emerging markets, which include those countries in which the funds primarily invest. Political and economic structures in Eastern European and emerging market countries are in their infancy and developing rapidly, and such countries may lack the political, social, and economic stability characteristic of more developed countries. In addition, Eastern European and emerging market securities markets are substantially smaller, less liquid, and significantly more volatile than securities markets in the U.S. or Western Europe. The funds’ share prices will reflect the movements of the different stock markets in which they are invested and the currencies in which their investments are denominated.

Geographic Concentration Risk

The Eastern European Fund and China Region Fund concentrate their investments in companies located in Eastern Europe and the China region, respectively. Because of this, companies in the funds’ portfolios may react similarly to political, social, and economic developments in any of the Eastern European or China region countries. For example, many companies in the same region may be dependent on related government fiscal policies. Companies may be adversely affected by new or unanticipated legislative changes that could affect the value of such companies and, therefore, a fund’s share price. A fund’s return and share price may be more volatile than those of a less concentrated portfolio.

Sector Risk

From time to time, the funds may invest a significant amount of their total assets in certain sectors, which may be subject to specific risks. These risks include governmental regulation of the sector and governmental monetary and fiscal policies which may negatively affect a particular sector. In addition, governmental policies towards international trade and tariffs may affect particular sectors.

Portfolio Turnover Risk

The funds’ portfolio turnover rates vary from year to year according to market conditions and may exceed 100%. The length of time each fund has held a particular security is not generally a consideration in investment decisions. It is the policy of each fund to effect portfolio transactions without regard to a holding period if, in the judgment of the portfolio managers, such transactions are advisable. Portfolio turnover generally involves some expense, including brokerage commissions, dealer mark-ups, or other transaction costs on the sale of securities and reinvestment in other securities. Such sales may result in realization of taxable capital gains for shareholders. Portfolio turnover rates for the funds are disclosed in the Financial Highlights section.

You should carefully consider your ability to assume these risks before making an investment in a fund. An investment in shares of a fund is not a complete investment program. The funds are speculative and are not appropriate for all investors. You may lose money by investing in a fund.

Volatility and Performance Information

The following bar charts and tables show the volatility of each fund’s returns, which is one indicator of the risks of investing in the fund. The bar charts show changes in each fund’s returns from year to year during the period indicated. The tables compare each fund’s average annual returns for the last 1-, 5-, and 10-year periods or since inception, as applicable, to those of broad-based securities market indexes. How each fund performed in the past, before and after taxes, is not an indication of how it will perform in the future.

Eastern European Fund
Annual Total Returns (as of December 31 each year)*



*		As of June 30, 2008, the fund’s 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
Eastern European Fund Return Before Taxes		32.86	%		43.57	%		22.26	%
Return After Taxes on Distributions		28.93	%		40.49	%		20.94	%
Return After Taxes on Distributions and Sale of Fund Shares		25.43	%		38.18	%		19.88	%
S&P 500 Index*		5.49	%		12.82	%		5.91	%
MSCI Emerging Markets Europe 10/40 Index (Net Total Return)**		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.

After-tax returns are calculated using the highest historic marginal individual federal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts.

Global Emerging Markets Fund
Annual Total Returns (as of December 31 each year)*


*		As of June 30, 2008, the fund’s year-to-date return was (18.28)%. The Adviser has agreed to limit the fund’s total operating expenses. In absence of this limitation, the fund’s 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)
Global Emerging Markets Fund Return Before Taxes		39.35	%		33.38	%
Return After Taxes on Distributions		32.84	%		30.15	%
Return After Taxes on Distributions and Sale of Fund Shares		27.65	%		27.73	%
S&P 500 Index*		5.49	%		9.36	%
MSCI Emerging Markets Net Total Return Index**		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.

After-tax returns are calculated using the highest historic marginal individual federal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts.

China Region Fund
Annual Total Returns*


*		As of June 30, 2008, the fund’s 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
China Region Fund Return Before Taxes		53.29	%		36.44	%		11.75	%
Return After Taxes on Distributions		42.75	%		34.07	%		10.69	%
Return After Taxes on Distributions and Sale of Fund Shares		34.92	%		31.53	%		9.88	%
Hang Seng Composite Index*		44.32	%		32.73	%		n/a
MSCI All Country Far East Free ex Japan Index**		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.

Tax Free Funds

Tax Free Fund
Near-Term Tax Free Fund

Investment Objectives

The two tax free funds seek to provide a high level of current income that is exempt from federal income taxation and to preserve capital.

Main Investment Strategies

Under normal market conditions, each of the tax free funds invests at least 80% of its net assets (plus any borrowings for investment purposes) in investment grade municipal securities whose interest is free from federal income tax, including the federal alternative minimum tax.

The tax free funds differ in the maturity of the debt securities they purchase. While the Tax Free Fund may invest in debt securities of any maturity, the Near-Term Tax Free Fund will maintain a weighted-average portfolio maturity of five years or less.

The funds’ portfolio team applies a two-step approach in choosing investments. It begins by analyzing various macroeconomic factors in an attempt to forecast interest rate movements, and then it positions each fund’s portfolio by selecting investments that it believes will, in the whole, best fit that forecast.

For more information on the funds’ investment strategies, please see page 35.

The trustees for the funds may change each fund’s objective without shareholder vote. The fund will notify you in writing 60 days before making any changes to this policy. If there is a material change to a fund’s objective or policies, you should consider whether the fund remains an appropriate investment for you.

Main Risks

The funds are designed for investors who primarily seek current income that is substantially free from federal taxes. The funds are not intended to be a complete investment program, and there is no assurance that their investment objectives can be achieved. As with all mutual funds, loss of money is a risk of investing in each fund. Additional risks of the funds are described on page 35. An investment in these funds is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

Interest Rate Risk

Because the funds invest primarily in municipal securities, there is a risk that the value of these securities will fall if interest rates rise. Ordinarily, when interest rates go up, municipal security prices fall. The opposite is also true: municipal security prices usually go up when interest rates fall. The longer a fund’s weighted-average maturity, the more sensitive it is to changes in interest rates. Since the Tax Free Fund normally has a longer weighted-average maturity than the Near-Term Tax Free Fund, it is subject to greater interest rate risks.

Call Risk

A municipal security may be prepaid (called) before its maturity. An issuer is more likely to call its securities when interest rates are falling, because the issuer can issue new securities with lower interest payments. If a security is called, a fund may have to replace it with a lower-yielding security.

Credit Risk

There is a possibility that an issuer of a municipal security cannot make timely interest and principal payments on its debt securities. With municipal securities, state, or local law may limit the sources of funds for the payment of principal and interest.

Income Risk

The funds are subject to income risk, which is the risk that a fund’s dividends (income) will decline due to falling interest rates.

Volatility and Performance Information

The following bar charts and tables show the volatility of each fund’s returns, which is one indicator of the risks of investing in the fund. The bar charts show changes in each fund’s returns from year to year during the period indicated. The tables compare each fund’s average annual returns for the last 1-, 5-, and 10-year periods to those of a broad-based securities market index. How each fund performed in the past, before and after taxes, is not an indication of how it will perform in the future.

Tax Free Fund
Annual Total Returns*


*		As of June 30, 2008, the fund’s year-to-date return was 0.32%. The Adviser has agreed to limit the fund’s total operating expenses. In the absence of this limitation, the fund’s 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
*Tax Free Fund Return Before Taxes**		3.33	%		3.28	%		4.14	%
Return After Taxes on Distributions		3.18	%		3.19	%		4.05	%
Return After Taxes on Distributions and Sale of Fund Shares		3.44	%		3.26	%		4.06	%
Lehman 10-Year Municipal Bond Index**		4.29	%		4.31	%		5.21	%


*		The Adviser has agreed to limit the fund’s total operating expenses. In the absence of this limitation, the fund’s 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.

Near-Term Tax Free Fund
Annual Total Returns*


*		As of June 30, 2008, the fund’s year-to-date return was 0.69%. The Adviser has agreed to limit the fund’s total operating expenses. In the absence of this limitation, the fund’s 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
*Near-Term Tax Free Fund Return Before Taxes**		4.53	%		2.68	%		3.66%
Return After Taxes on Distributions		4.36	%		2.59	%		3.56%
Return After Taxes on Distributions and Sale of Fund Shares		4.02	%		2.65	%		3.55%
Lehman 3-Year Municipal Bond Index**		5.00	%		2.67	%		3.99%


*		The Adviser has agreed to limit the fund’s total operating expenses. In the absence of this limitation, the fund’s 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.

Government Money Market Funds

U.S. Government Securities Savings Fund

U.S. Treasury Securities Cash Fund

Investment Objectives

U.S . Government Securities Savings Fund (Government Securities Savings Fund) seeks to achieve a consistently high yield with safety of principal.

U.S . Treasury Securities Cash Fund (Treasury Securities Cash Fund) seeks to obtain a high level of current income while maintaining the highest degree of safety of principal and liquidity.

Main Investment Strategies

Under normal market conditions, the Government Securities Savings Fund invests at least 80% of its net assets in United States Treasury debt securities and obligations of agencies and instrumentalities of the United States, including repurchase agreements collateralized with such securities.

Under normal market conditions, the Treasury Securities Cash Fund invests at least 80% of its net assets in United States Treasury debt securities, including repurchase agreements collateralized with such securities. The income from these obligations may be exempt from state and local income taxes.

The Government Securities Savings Fund is designed to provide a higher yield than the Treasury Securities Cash Fund, but with somewhat less safety of principal and liquidity.

The funds seek to provide a stable net asset value of $1 per share by investing in securities with maturities of 397 days or less, and by maintaining an average maturity of 90 days or less. However, there can be no assurance that they can always do so (each is measured in accordance with Securities and Exchange Commission rules applicable to money market funds).

For more information on the funds’ investment strategies, please see page 36.

Main Risks

The Government Securities Savings Fund invests in various United States government agencies, which while chartered or sponsored by Acts of Congress, are neither issued nor guaranteed by the United States Treasury. Each of these agencies, which include the Federal Home Loan Bank, the Federal Farm Credit Bank, and the Tennessee Valley Authority, is supported by its own credit. However, the Federal Home Loan Bank is also supported by the ability of the United States Treasury to buy up to $4 billion of debt of the agency. Also, the Tennessee Valley Authority has a credit line of $150 million with the United States Treasury.

The funds are designed for investors who primarily seek current income. The funds are not intended to be a complete investment program, and there is no assurance that their investment objectives can be achieved. Additional risks of the funds are described on page 36. An investment in the funds is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the funds seek to preserve the value of your investment at $1 per share, it is possible to lose money by investing in the funds.

Income Risk

The funds are subject to income risk, which is the risk that a fund’s dividends (income) will decline due to falling interest rates.

Volatility and Performance Information

The following bar charts and tables show the volatility of each fund’s returns, which is one indicator of the risks of investing in the fund. The bar charts show changes in each fund’s returns from year to year during the period indicated. The tables compare each fund’s average annual returns for the last 1-, 5-, and 10-year periods. How each fund performed in the past, is not an indication of how it will perform in the future.

Government Securities Savings Fund
Annual Total Returns*


*		As of June 30, 2008, the fund’s year-to-date return was 1.19%. The Adviser has agreed to limit the fund’s total operating expenses. In the absence of this limitation, the fund’s 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.

Government Securities Savings Fund


Average Annual Total Returns (for the periods ended December 31, 2007)	1 Year			5 Years			10 Years
Government Securities Savings Fund*		4.70	%		2.70	%		3.48	%


*		The Adviser has agreed to limit the fund’s total operating expenses. In the absence of this limitation, the fund’s total returns would have been lower.

The 7-day yield on December 31, 2007, was 4.03%. For the fund’s current yield, call 1-800-US-FUNDS.

Treasury Securities Cash Fund
Annual Total Returns*


*		As of June 30, 2008, the fund’s year-to-date return was 0.65%. Effective April 1, 2007, the Adviser has agreed to limit the fund’s total operating expenses. In the absence of this limitation, the fund’s 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
Treasury Securities Cash Fund*		3.96	%		2.11	%		2.76	%


*		The Adviser has agreed to limit the fund’s total operating expenses. In the absence of this limitation, the fund’s total returns would have been lower.

The 7-day yield on December 31, 2007, was 2.62%. For the fund’s current yield, call 1-800-US-FUNDS.

Fees and Expenses

Shareholder Transaction Expenses-Direct Fees

The following table describes the fees and expenses that you may pay if you buy and hold shares of the funds. These fees are paid directly from your investment. If you sell shares and request your money by wire transfer, there is a $10 fee. Your bank may also charge a fee for receiving wires.

Annual Fund Operating Expenses-Indirect Fees

Fund operating expenses are paid out of the funds’ assets and are reflected in the funds’ share price and dividends. These costs are paid indirectly by shareholders. “Other Expenses” include fund expenses such as administrative services, custodian, accounting, and transfer agent fees.

The Adviser has contractually limited total fund operating expenses (exclusive of acquired fund fees and advisory performance fee adjustments) to not exceed 1.75% for the All American Fund, 1.75% for the Holmes Growth Fund, 1.85% for the Global MegaTrends Fund, 1.50% for the Gold and Precious Metals Fund, 1.50% for the World Precious Minerals Fund, 1.50% for Global Resources Fund, 2.25% for the Eastern European Fund, 2.50% for the Global Emerging Markets Fund, 2.00% for the China Region Fund, 0.70% for the Tax Free Fund, 0.45% for the Near-Term Tax Free Fund, 0.45% for the Government Securities Savings Fund, and 1.00% for the Treasury Securities Cash Fund on an annualized basis through September 30, 2009, and until such later date as the Adviser determines.

The Adviser has also voluntarily agreed to waive fees and/or reimburse expenses for the Government Securities Savings Fund and Treasury Securities Cash Fund to the extent necessary to maintain a certain minimum net yield for each such fund, as determined by the Adviser with respect to that fund (Minimum Yield). The Adviser may recapture any fees waived and/or expenses reimbursed within three years after the end of the fiscal year of such waiver and/or reimbursement to the extent that such recapture would not cause the fund’s net yield to fall below the fund’s previously determined Minimum Yield or the expenses to exceed the overall expense ratio limit in effect at the time of the waiver and/or reimbursement. This recapture could negatively affect the fund’s yield and expenses in the future.

Except as noted below, the figures below show operating expenses as a percentage of each fund’s respective net assets during the most recent fiscal year. The most recent fiscal year-end was June 30, 2008, for All American Fund, Gold and Precious Metals Fund, World Precious Minerals Fund, Global Resources Fund, China Region Fund, Tax Free Fund, Near-Term Tax Free Fund, Government Securities Savings Fund and Treasury Securities Cash Fund. The most recent fiscal year-end was October 31, 2007, for Holmes Growth Fund, Global MegaTrends Fund, Eastern European Fund and Global Emerging Markets Fund.

Shareholder Transaction Expenses-Direct Fees (these fees are paid directly from your account)


Sales charge	None
Account closing fee(1)	$	10
Administrative exchange fee	$	5
Small account fee — All funds except money market funds(2)	$	24
Money market funds(3)	$	60
Short-term traders fees(4)
Holmes Growth Fund, Global MegaTrends Fund and Global Resources Fund shares held 30 days or less(5)		0.25	%
Gold and Precious Metals Fund and World Precious Minerals Fund shares held 30 days or less(5)		0.50	%
All American Fund shares held 30 days or less(5)		0.10	%
China Region Fund shares held 180 days or less(5)		1.00	%
Eastern European Fund and Global Emerging Markets Fund shares held 180 days or less(5)		2.00	%

Annual Fund Operating Expenses (paid out of funds’ assets)




													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)

All American Fund		0.80	%		0.25	%		1.25	%		0.01	%		2.31	%		-0.55	%		1.76	%		0.55% - 1.05	%
Holmes Growth Fund		1.00	%		0.25	%		0.66	%		0.01	%		1.92	%		-0.16	%		1.76	%		0.75% - 1.25	%
Global MegaTrends Fund		1.00	%		0.25	%		1.30	%		0.01	%		2.56	%		-0.70	%		1.86	%		0.75% - 1.25	%
Gold and Precious Metals Fund		0.90	%		0.25	%		0.60	%		0.04	%		1.79	%		-0.25	%		1.54	%		0.65% - 1.15	%
World Precious Minerals Fund		0.98	%		0.25	%		0.46	%		0.02	%		1.71	%		-0.19	%		1.52	%		0.73% - 1.23	%
Global Resources Fund		0.90	%		0.25	%		0.42	%		n/a			1.57	%		-0.07	%		1.50	%		0.65% - 1.15	%
Eastern European Fund		1.25	%		0.25	%		0.64	%		n/a			2.14	%		n/a			2.14	%		1.00% - 1.50	%
Global Emerging Markets Fund		1.375	%		0.25	%		1.24	%		0.06	%		2.93	%		-0.37	%		2.56	%		1.125% - 1.625	%
China Region Fund		1.25	%		0.25	%		0.78	%		0.01	%		2.29	%		-0.28	%		2.01	%		1.00 - 1.50	%
Tax Free Fund		0.75	%		n/a			1.17	%		n/a			1.92	%		-1.22	%		0.70	%		n/a
Near-Term Tax Free Fund		0.50	%		n/a			1.37	%		n/a			1.87	%		-1.42	%		0.45	%		n/a
Government Securities Savings Fund		0.44	%		n/a			0.28	%		n/a			0.72	%		-0.27	%		0.45	%		n/a
Treasury Securities Cash Fund		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 fund’s performance over a rolling 12-month period to that of the fund’s designated index. No adjustment is made if the fund’s 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.

Example of Effect of Fund’s Operating Expenses

This hypothetical example is intended to help you compare the cost of investing in the funds with the cost of investing in other mutual funds. It is based on net expenses before giving effect to any performance adjustment. The example assumes that:

	*		You initially invest $10,000.

	*		Your investment has a 5% annual return.

	*		The fund’s operating expenses and returns remain the same.

	*		All dividends and distributions are reinvested.

This example reflects the $10 account-closing fee that you would pay if you redeem all of your shares in a fund. Actual annual returns and fund operating expenses may be greater or less than those provided for in the assumptions.

With these assumptions, you would pay the following expenses if you redeemed all of your shares at the end of the periods shown:


	1 Year		3 Years		5 Years		10 Years
All American Fund*	$	189	$	678	$	1,192	$	2,598
Holmes Growth Fund*		189		598		1,032		2,240
Global MegaTrends Fund*		199		740		1,308		2,853
Gold and Precious Metals Fund*		167		549		956		2,095
World Precious Minerals Fund*		165		530		920		2,014
Global Resources Fund*		163		499		859		1,871
Eastern European Fund*		227		680		1,159		2,482
Global Emerging Markets Fund*		269		882		1,520		3,236
China Region Fund*		214		699		1,210		2,614
Tax Free Fund*		82		494		933		2.154
Near-Term Tax Free Fund*		56		459		888		2,084
Government Securities Savings Fund*		56		213		384		879
Treasury Securities Cash Fund*		112		360		628		1,394


*		The example reflects the effect of the Adviser’s undertaking to limit the expenses of the funds through September 30, 2009.

You would pay the following fees if you did not redeem your shares:


	1 Year		3 Years		5 Years		10 Years
All American Fund*	$	179	$	668	$	1,182	$	2,588
Holmes Growth Fund*		179		588		1,022		2,230
Global MegaTrends Fund*		189		730		1,298		2,843
Gold and Precious Metals Fund*		157		539		946		2,085
World Precious Minerals Fund*		155		520		910		2,004
Global Resources Fund*		153		489		849		1,861
Eastern European Fund*		217		670		1,149		2,472
Global Emerging Markets Fund*		259		872		1,510		3,226
China Region Fund*		204		689		1,200		2,604
Tax Free Fund*		72		484		923		2,144
Near-Term Tax Free Fund*		46		449		878		2,074
Government Securities Savings Fund*		46		203		374		869
Treasury Securities Cash Fund*		102		350		618		1,384


*		The example reflects the effect of the Adviser’s undertaking to limit the expenses of the funds through September 30, 2009.

Investment Objectives, Principal Investment Strategies and Related Risks

Equity Funds

All American Equity Fund

Holmes Growth Fund

Global MegaTrends Fund

This section takes a closer look at the funds’ principal investment strategies and certain risks of investing in the funds.

Investment Processes

For the All American Fund, the Adviser applies both a “top-down” macroeconomic analysis using broad economic indicators to identify trends in countries, states, sectors, and industries and a “bottom-up” fundamental analysis with screens to select the leading stocks within this macroeconomic environment. Once the Adviser puts these two processes together, it can select securities that it believes meet the fund’s investment objective. The Adviser regularly reviews the security selection processes and forecasts to keep current with changing market conditions. The skill of the Adviser will play a significant role in the fund’s ability to achieve its investment objective.

In selecting stocks for the Holmes Growth Fund, the Adviser initially applies a “top-down” analysis of the markets. This means that the Adviser considers the growth potential of the capitalization categories (i.e., small, medium, and large) and industry sectors. The Adviser chooses common stocks within those categories that have the potential for capital appreciation. The Adviser analyzes a company’s capital appreciation potential based on various investment criteria, which may include earnings, strong management, price-to-earnings ratios, debt-to-equity ratios, stock price movement, magnitude of trading volume, and the general growth prospects of the company. The Adviser considers the same criteria when making decisions to sell common stocks held by the fund. The fund may invest in companies of all sizes. The skill of the Adviser will play a significant role in the fund’s ability to achieve its investment objective.

The Adviser’s investment process for the Global MegaTrends Fund is based primarily on macro and micro analysis. From a “top-down” (or macro) perspective, the Adviser studies economic data such as gross domestic product, industrial production, consumer price index as well as government policies to identify “mega trends” or large changes taking place in economies around the world. From a “bottom-up” (or micro) point of view, the Adviser uses fundamental and statistical data such as sales and earnings growth, return on equity and oscillators to assist in the buying and selling of individual stocks. The fund generally will invest in companies of all sizes with growth potential that are dominant in their industry, have quality management, display strong, stable financial health, and are selling at relative discounts to the market, their industry, and their historical price to earnings ratios, cash flow, and other factors. The common stocks of such companies generally are traded on major stock exchanges and have a high degree of liquidity. While the fund is diversified, the Adviser may invest a significant portion of the fund’s assets in the stock of a single company. As a result, a single security’s increase or decrease in value may have a greater impact on the fund’s share price and total return.

Principal Investment Strategies and Related Risks

Under normal market conditions, substantially all (greater than 80%) of the All American Fund’s total assets will be invested in common stock, preferred stock, convertible securities, rights and warrants and depository receipts of “all American” companies.

Under normal market conditions, at least 80% of the Holmes Growth Fund’s total assets will be invested in common stock, preferred stock, convertible securities, rights and warrants and depository receipts. The Holmes Growth Fund may invest up to 25% of its total assets in foreign securities that are not publicly traded in the U.S. The fund may invest in sponsored or unsponsored American Depository Receipts (ADRs), which represent shares of foreign issuers. ADRs are not included in the 25% limit on foreign issuers. As part of its foreign investments, the fund may invest up to 5% of its total assets in emerging markets.

Under normal market conditions, the Global MegaTrends Fund invests substantially all of its assets in common stock, preferred stock, convertible securities, rights and warrants, and depository receipts. Under normal market conditions, the Global MegaTrends Fund invests 40% of its total assets in companies which are foreign or have economic ties to a foreign country.

The main risk is that a fund’s investments may decrease in response to the activities of an individual company or in response to general market, business, and economic conditions. If this occurs, the fund’s share price may also decrease.

Other Types of Investments, Related Risks and Considerations

While not principal strategies, the funds may invest to a limited extent in other types of investments as discussed under “Common Investment Practices and Related Risks” on page 39.

Gold and Natural Resources Funds

Gold and Precious Metals Fund

World Precious Minerals Fund

Global Resources Fund

This section takes a closer look at the funds’ principal investment strategies and certain risks of investing in the funds.

Investment Processes

In selecting investments for the funds, the Adviser applies a “top-down” approach to look for countries with favorable mining laws, a relatively stable currency and liquid securities markets and a “bottom-up” approach to look for companies with robust reserve growth profiles, healthy production, and strong cash flows.

As part of the top-down approach, the Adviser for the Global Resources Fund evaluates the global macro-economic environment, natural resources supply and demand fundamentals, and industry selection. For its bottom-up selection strategy, the Adviser looks at a company’s peer-group rankings with respect to expected future growth in reserves, production and cash flow. Additionally, the Adviser also considers current valuation multiples to earnings and cash flow, current and expected net asset value, balance sheet quality, working capital needs and overall profitability measured by returns on invested capital.

Once the Adviser puts these two processes together, it can select securities that it believes meet each fund’s investment objective. The Adviser regularly reviews its security selection process and its forecast to keep current with changing market conditions. The skill of the Adviser will play a significant role in each fund’s ability to achieve its investment objective.

Principal Investment Strategies and Related Risks

Under normal market conditions, the Gold and Precious Metals Fund will invest at least 80% of its net assets in common stock, preferred stock, convertible securities, rights and warrants, and depository receipts of companies predominately involved in the mining, fabrication, processing, marketing, or distribution of metals including gold, silver, platinum group, palladium and diamonds. Gold companies include mining companies that exploit gold deposits that are supported by by-products and co-products such as copper, silver, lead and zinc, and also diversified mining companies which produce a meaningful amount of gold. The fund focuses on selecting companies with established producing mines. The fund reserves the right to invest up to 20% of its net assets in the securities of companies principally engaged in natural resource operations.

The World Precious Minerals Fund will invest at least 80% of its net assets, during normal market conditions, in common stock, preferred stock, convertible securities, rights and warrants, and depository receipts of companies principally engaged in the exploration for, or mining and processing of precious minerals such as gold, silver, platinum, and diamonds. Although the fund has greater latitude to invest its assets in different precious minerals, it currently has significant investments in the gold sector. The fund will not be required to invest any minimum amount of the fund’s assets in gold stocks.

The funds may invest in junior exploration companies that search for deposits that could create cash flow where intermediate mining companies already have deposits that create a modest cash flow. The funds may also invest in senior mining companies that have large deposits that create a larger stream of cash flow. Typically, junior exploration gold companies produce up to 100,000 ounces of gold or precious metals per year and intermediate companies produce up to a million ounces of gold or precious metals. The price performance of junior exploration companies relates to the success of finding and increasing reserves, thus involving both greater opportunity and risk. Stock price performance of intermediate and senior mining companies that have proven reserves is more strongly influenced by the price of gold. The securities of junior and intermediate exploration gold companies tend to be less liquid and more volatile in price than securities of larger companies.

The Global Resources Fund will invest at least 80% of its net assets, during normal market conditions, in common stock, preferred stock, convertible securities, rights and warrants, and depository receipts of companies within the natural resource sector.

The Global Resources Fund concentrates its investments in the equity securities of multi-capitalization companies within the natural resource sector, which include, among others, the following industries:


Energy Sectors		Basic Materials Sectors
Natural gas		Aluminum
Integrated oil companies		Chemicals
Oil and gas drilling		Diversified metals and coal mining
Oil and gas exploration and production		Gold and precious metals
Oil and gas refining		Iron and steel
Oilfield equipment/services		Paper and forest products
		Uranium

Consistent with its investment objective, the Global Resources Fund may invest without limitation in any sector of the natural resource industry.

The value of the Global Resources Fund’s shares is particularly vulnerable to factors affecting the natural resource industry, such as increasing regulation of the environment by both U.S. and foreign governments. Increased environmental regulations may, among other things, increase compliance costs and affect business opportunities for the companies in which the fund invests. The value is also affected by changing commodity prices, which can be highly volatile and are subject to risks of oversupply and reduced demand.

Because the Global Resources Fund’s portfolio focuses its investments in the natural resource industry, the value of fund shares may rise and fall more than the value of shares of a fund that invests more broadly.

The funds may also invest in long-term equity options called LEAPS. LEAPS allow a fund to imitate a purchase or sale of a stock for a fraction of its price (premium) and hold that option for up to two and a half years before it expires. The underlying stock can be purchased or sold at a predetermined price for the life of the option. LEAPS, therefore, allow a fund to gain exposure to individual securities in the natural resource sector over the long-term while allowing the fund to preserve some cash for large or unexpected redemptions. A fund will not purchase any option if, immediately afterwards, the aggregate market value of all outstanding options purchased by that fund would exceed 5% of that fund’s total assets. Investing in LEAPS and other options may result in a loss of a fund’s initial investment and may be more volatile than a direct investment in the underlying securities. While options may incur higher transaction costs, LEAPS generally have lower transaction expenses considering the longer holding period.

The funds may invest in income and royalty trusts which invest in the natural resource sector. A sustained decline in demand for crude oil, natural gas and refined petroleum products could adversely affect income and royalty trusts’ revenues and cash flows. Factors that could lead to a decrease in market demand include a recession or other adverse economic conditions, an increase in the market price of the underlying commodity, higher taxes or other regulatory actions that increase costs, or a shift in consumer demand for such products. A rising interest rate environment could adversely impact the performance of income and royalty trusts. Rising interest rates could limit the capital appreciation of income and royalty trusts because of the increased availability of alternative investments at competitive yields with income and royalty trusts.

Securities of gold operation companies are affected by the price of gold and other precious metals. The price of gold and other precious metals is affected by several factors including (1) the unpredictable monetary policies and economic and political conditions affecting gold producing countries throughout the world; (2) increased environmental, labor or other costs in mining; and (3) changes in laws relating to mining or gold production or sales. Furthermore, the price of mining stocks tends to increase or decrease with the price of the underlying commodities but is more volatile.

Because each fund invests primarily in common stocks of foreign and domestic companies, the main risk is that the value of the stocks held may decrease in response to general foreign or domestic market, business and economic conditions. If this occurs, the fund’s share price may also decrease.

Other Types of Investments, Related Risks and Considerations

While not principal strategies, the funds may invest to a limited extent in other types of investments such as gold, silver, platinum, palladium bullion, and other types of investments discussed under “Common Investment Practices and Related Risks” on page 39.

Emerging Markets Funds

Eastern European Fund

Global Emerging Markets Fund

China Region Fund

This section takes a closer look at the funds’ principal investment strategies and certain risks of investing in the funds.

Investment Processes

The Subadviser’s bottom-up stock selection process for the Eastern European Fund and the Global Emerging Markets Fund is based on rigorous in-house research.

The Subadviser’s investment decisions for the Eastern European Fund and Global Emerging Markets Fund may be based on various factors, which among the most important, include analysis of the fundamentals of the companies and an assessment of the valuations of the companies. In determining the valuations, five main factors are taken into consideration: (1) the quality of the management companies; (2) sales growth; (3) profits growth; (4) cash flow; and (5) balance sheet strength. The Subadviser considers the same criteria when making decisions to sell assets held by the fund. Additionally, when making decisions to sell, the Subadviser may consider material price changes and superior investment opportunities.

The Adviser for the China Region Fund applies both a “top-down” macroeconomic analysis using broad economic indicators to identify trends in countries, states, sectors, and industries and a “bottom-up” fundamental analysis with screens to select the leading stocks within this macroeconomic environment.

Once the Adviser puts these two processes together, it can select securities that it believes meet each fund’s investment objective. The Adviser regularly reviews the security selection processes and forecasts to keep current with changing market conditions. The skill of the Adviser will play a significant role in each fund’s ability to achieve its investment objective.

Principal Investment Strategies and Related Risks

Under normal market conditions, the Eastern European Fund will invest at least 80% of its net assets in investments in Eastern Europe (as previously defined). The fund will normally invest primarily in common stock, preferred stock, convertible securities, rights and warrants and depository receipts of companies located in Eastern Europe. The fund may invest without limit in any country in Eastern Europe and in any sector within Eastern Europe. The fund currently focuses its investments in companies located in Russia, Poland, Hungary and Turkey. The fund may invest up to 20% of its assets in securities, including debt securities, of governments and companies located anywhere in the world.

Under normal market conditions, the Global Emerging Markets Fund will invest at least 80% of its net assets in equity securities such as common stocks, preferred stock, convertible securities, rights and warrants and depository receipts of companies located in emerging market countries or in companies with a significant business presence in emerging countries. Emerging market countries are those countries defined as such by the World Bank, the International Finance Corporation, the United Nations or the European Bank for Reconstruction and Development or included in the MSCI Emerging Markets Index. The fund may invest without limit in any country that is considered an emerging market country and in any sector within the emerging market countries. The fund may invest up to 20% of its assets in securities, including debt securities, of governments and companies located anywhere in the world.

Under normal market conditions, the China Region Fund will normally invest at least 80% of its net assets in equity securities such as common stocks, preferred stock, convertible securities, rights and warrants and depository receipts of companies located in the China region or in companies with a significant business presence in China region countries. The China Region Fund will invest in both new and existing enterprises registered and operating in China and the China region.

The China Region Fund may invest in options. The fund will not purchase any option if, immediately thereafter, the aggregate market value of all outstanding options purchased by the fund would exceed 5% of the fund’s total assets. Investing in options may result in a loss of the fund’s initial investment and may be more volatile than a direct investment in the underlying security.

Geographic Concentration — Eastern European Fund

Political and economic structures in many Eastern European countries are in their infancy and developing rapidly, and such countries may lack the social, political, and economic stability characteristic of many more developed countries. In addition, unanticipated political or social developments may affect the value of the fund’s investment in Eastern European countries. As a result, the risks normally associated with investing in any foreign country may be heightened in Eastern European countries. For example, the small size and inexperience of the securities markets in Eastern European countries and the limited volume of trading in securities in those markets may make the fund’s investments in such countries illiquid and more volatile than investments in more developed countries and may make obtaining prices on portfolio securities from independent sources more difficult than in other more developed markets. In addition, Eastern European countries have failed in the past to recognize private property rights and at times have nationalized or expropriated the assets of private companies. There may also be little financial or accounting information available with respect to companies located in certain Eastern European countries and it may be difficult, as a result, to assess the value or prospects of an investment in such companies. These factors may make it more difficult for the fund to calculate an accurate net asset value on a daily basis and to respond to significant shareholder redemptions.

In addition to the special risks common to most Eastern European countries described above, each individual Eastern European country also necessarily involves special risks that may be unique to that country. Following is a brief description of special risks that may be incurred when the fund invests in Hungary, Poland, Russia and Turkey, which are the countries in which the fund currently focuses its investment.

HUNGARY. Hungary, formerly governed by a communist regime, tried unsuccessfully to implement market-oriented reforms in 1968. Beginning in 1989, Hungary again undertook transformation to a market-oriented economy. These reforms are still relatively recent and leave many uncertainties regarding economic and legal issues. Privatization in Hungary has been substantial but is not yet complete.

Owners and managers of Hungarian enterprises are often less experienced with market economies than owners and managers of companies in Western European and U.S. markets. The securities markets on which the securities of these companies are traded are in their infancy.

Laws governing taxation, bankruptcy, restrictions on foreign investments and enforcement of judgments are subject to change.

POLAND. Poland began market-oriented reforms in 1981. In late 1989, more comprehensive reforms were enacted. Most small enterprises have been privatized.

Privatization of larger entities has been a slower process, delayed by disputes regarding the compensation of fund managers and the role of investment funds charged with privatizing industry.

A 1991 law permitted the formation of mutual funds in Poland. The Warsaw Stock Exchange also opened in 1991 and has grown dramatically, becoming one of the most liquid markets in Eastern Europe. However, it is still a young market with a capitalization much lower than the capitalization of markets in Western Europe and the U.S.

Legal reforms have been instituted and laws regarding investments are published on a routine basis. However, important court decisions are not always accessible to practitioners. While there are currently no obstacles to foreign ownership of securities and profits may be repatriated, these laws may be changed anytime without notice.

RUSSIA. Russia, as a member of the Soviet Union, began reforms under “perestroika” in 1985. After the collapse of the Soviet Union, Russia accelerated market-oriented reforms. Privatization began in 1992, and economic conditions stabilized. The transition process suffered a major setback in August 1998, when the Russian government defaulted on its ruble-denominated sovereign debt. This action has negatively affected Russian borrowers’ ability to access international capital markets and has had a damaging impact on the Russian economy. Privatization of Russian industry is now largely complete.

There is also speculation that organized crime exerts significant influence on Russian industry. Concentrated ownership and control of Russian companies limits the ability of outsiders to influence corporate governance. Legal reforms to protect stockholders’ rights have been implemented, but stock markets remain under-developed and illiquid.

Privatization of agricultural land has been unsuccessful due to disputes between executive and legislative branches regarding property rights. To date, the Russian government has not authorized any form of property restitution.

Russian industry is in need of restructuring to close outdated facilities and increase investment in technology and management. Financial institutions do not allocate capital in an efficient manner. Bankruptcy laws are restrictive and offer little protection to creditors. Foreign creditors must file insolvency claims through Russian subsidiaries. Bankruptcies remain rare.

The Russian system of taxation deters investment and hinders financial stability by concentrating on the taxation of industry with relatively little emphasis on individual taxation.

TURKEY. Turkey is currently undergoing substantial change in its efforts to join the European Union. The availability of investment opportunities and the ability to liquidate investments profitably may depend on the continued pursuit by government of certain current economic liberalization policies. Political climates may change, sometimes swiftly. There is no assurance that government will continue with such policies in their present form. The fund’s investments may also be subject to risks of expropriation, nationalization or confiscatory taxation.

Investing in equities and fixed income obligations in Turkey involves certain considerations not usually associated with investing in securities in more developed capital markets. The securities market in Turkey is less liquid and more volatile than securities markets in the United States and Western Europe. Consequently, the fund’s investment portfolio may experience greater price volatility and significantly lower liquidity than a portfolio invested in public and private debt and other fixed income obligations of more developed countries.

There may also be less state regulation and supervision of the securities markets, less reliable information available to brokers and investors and enforcement of regulations may be different from those in the United States, Western Europe and other more developed countries. Consequently, there may be less investor protection.

Disclosure, accounting and regulatory standards are in most respects less comprehensive and stringent than in developed markets. In addition, brokerage commissions and other transaction costs and related taxes on securities transactions in Turkey are generally higher than those in more developed markets.

The Czech Republic, Hungary, Poland, Slovakia and Slovenia, together with six other countries, agreed to join the European Union in 2004. This represents the culmination of a ten-year process and will complete the transformation of these former Communist countries into full-fledged market economies. As a consequence, the political, economic and currency risk of investing in these countries may decline materially.

Geographic Concentration — Global Emerging Markets Fund

Political and economic structures in many emerging market countries are in their infancy and developing rapidly, and such countries may lack the social, political, and economic stability characteristic of many more developed countries. In addition, unanticipated political or social developments may affect the value of the fund’s investment in emerging market countries. As a result, the risks normally associated with investing in any foreign country may be heightened in emerging market countries. For example, the small size and inexperience of the securities markets in emerging market countries and the limited volume of trading in securities in those markets may make the fund’s investments in such countries illiquid and more volatile than investments in more developed countries and may make obtaining prices on portfolio securities from independent sources more difficult than in other more developed markets. In addition, emerging market countries have failed in the past to recognize private property rights and at times have nationalized or expropriated the assets of private companies. There may also be little financial or accounting information available with respect to companies located in certain emerging market countries and it may be difficult, as a result, to assess the value or prospects of an investment in such companies.

Many of the countries in which the fund may invest have experienced extremely high rates of inflation. As a consequence, the exchange rates of such countries experienced significant depreciation relative to the U.S. dollar. While the inflation experience of such countries has generally improved significantly in recent times, there can be no assurance that such improvement will be sustained. Consequently, the possibility of significant loss arising from foreign currency depreciation must be considered as a serious risk. In addition to the special risks common to most emerging market countries described above, each individual emerging market country also necessarily involves special risks that may be unique to that country.

Former political regimes in some emerging market countries had centrally planned, socialist economies and authoritarian systems of government. Some of the emerging market countries have undergone substantial political and social transformation. Though the transition from a centrally controlled command system to a market-oriented democratic model has taken place, reforms intended to liberalize prevailing economic structures based on free market principles are still being introduced and therefore political and social disruption may occur as a consequence. All of these factors may adversely affect the overall investment climate and, in particular, investment opportunities for the fund. The consequences, however, are profound, and investors should take into account the unpredictability of their eventual outcome.

Government Relationship Risk-China Region Fund

While companies in China may be subject to limitations on their business relationships under Chinese law, these laws may not be consistent with certain political and security concerns of the U.S. As a result, Chinese companies may have material direct or indirect business relationships with governments that are considered state sponsors of terrorism by the U.S. government, or governments that otherwise have policies in conflict with the U.S. government (an “Adverse Government”). If the China Region Fund invests in companies that have or develop a material business relationship with an Adverse Government, then the fund will be subject to the risk that these companies’ reputation and price in the market will be adversely or negatively affected.

Participatory Notes

The Global Emerging Markets Fund may invest in participatory notes which are derivative securities that are linked to the performance of an underlying foreign security. This type of investment allows the fund to have market exposure to foreign securities without trading directly in the local market.

Other Types of Investments, Related Risks and Considerations

While not principal strategies, the funds may invest to a limited extent in other types of investments as discussed under “Common Investment Practices and Related Risks” on page 40.

Tax Free Funds
Tax Free Fund
Near-Term Tax Free Fund

This section takes a closer look at the funds’ principal investment strategies and certain risks of investing in the funds.

Investment Processes

In selecting investments, the Adviser’s analysis encompasses an interest rate forecast that considers such factors as gross domestic product, current inflation outlook, state tax regulations and rates, geographic regions and the prevailing unemployment rate. After establishing an interest rate outlook, the Adviser applies a process of selecting bonds for the funds’ portfolios. The criteria for this process include yield, maturity, and bond rating. Once the Adviser puts these two processes together, it can select securities that it believes meet each fund’s investment objective. The Adviser regularly reviews its security selection process and its forecast to keep current with changing market conditions. The skill of the Adviser will play a significant role in each fund’s ability to achieve its investment objective.

Principal Investment Strategies and Related Risks

Under normal market conditions, the tax free funds invest primarily in investment grade municipal securities whose interest is free from federal income tax including the federal alternative minimum tax. Municipal securities are issued by state and local governments, their agencies and authorities, as well as by the District of Columbia and U.S. territories and possessions, to borrow money for various public and private projects. These debt securities generally include general obligation bonds, revenue bonds, industrial development bonds, municipal lease obligations, single state bonds and similar instruments.

The issuer’s authority to levy taxes backs general obligation bonds. Since revenue bonds are issued to finance public works such as bridges or tunnels, they are supported by the revenues of the projects. Industrial development bonds are typically issued by municipal issuers on behalf of private companies. Because these bonds are backed only by income from a certain source and may not be an obligation of the issuer itself, they may be less creditworthy than general obligation bonds. Municipal lease obligations generally are issued to finance the purchase of public property. The property is leased to a state or local government and the lease payments are used to pay the interest on the obligations. These differ from other municipal securities because the money to make the lease payments must be set aside each year or the lease can be canceled without penalty. If this happens, investors who own the obligations may not be paid. A single state bond is issued by only one state and is not diversified. If the state that issues the bond has a financial setback, the market value of the bond may fall.

Although the tax free funds try to invest most of their assets in tax free securities, it is possible that up to 20% of their respective assets may be in securities that pay taxable interest. Taxable investments by the funds may generate ordinary income that will be distributed to shareholders as taxable income.

The tax free funds invest only in debt securities that, at the time of acquisition, have one of the four highest ratings by Moody’s Investors Services (Aaa, Aa, A, Baa) or by Standard & Poor’s Corporation (AAA, AA, A, BBB) (or, if not rated by Moody’s or S&P, are determined by the Adviser to be of comparable quality). The tax free funds will not invest more than 10% of their respective total

assets in the fourth rating category. Investments in the fourth category may have speculative characteristics and, therefore, may involve higher risks.

The tax free funds differ in the maturity of the debt securities they purchase. While the Tax Free Fund may have a weighted-average maturity that varies widely, it tends to keep a weighted-average maturity of more than five years. The Near-Term Tax Free Fund will maintain a weighted-average portfolio maturity of five years or less. A weighted-average maturity of a fund is the average of the remaining maturities of all the debt securities the fund owns, with each maturity weighted by the relative value of the security.

The funds are subject to income risk, which is the chance that the funds’ dividends (income) will decline due to falling interest rates. Income risk is generally greater for the Near-Term Tax Free Fund and less for the Tax Free Fund.

There is a possibility that an issuer of any bond could be unable to make interest payments or repay principal. Changes in an issuer’s financial strength or in a security’s credit rating may affect a security’s value.

Fund performance may be affected by political and economic conditions at the state, regional, and federal level. These may include budgetary problems, declines in the tax base and other factors that may cause rating agencies to downgrade the credit ratings on certain issues. As on the state and federal level, events in U.S. Territories where the fund is invested may affect a fund’s investments in that territory and its performance.

A municipal security may be prepaid (called) before its maturity. An issuer is more likely to call its securities when interest rates are falling, because the issuer can issue new securities with lower interest payments. If a security is called, the funds may have to replace it with a lower-yielding security.

Other Types of Investments, Related Risks and Considerations

While not principal strategies, the funds may invest, to a limited extent, in other types of investments as discussed under “Common Investment Practices and Related Risks” on page 40.

For temporary defensive purposes, the funds may invest up to 100% of their assets in liquid, high-grade money market instruments. When a fund is in a defensive investment position, it may not achieve its investment objective.

Government Money Market Funds
U.S. Government Securities Savings Fund
U.S. Treasury Securities Cash Fund

Investment Processes

In selecting investments, the Adviser’s analysis encompasses an interest rate forecast that considers such factors as Gross Domestic Product, current inflation outlook, state tax regulation and rates, and the prevailing unemployment rate. After establishing a reasonable interest rate outlook, the Adviser applies a process of selecting securities for the funds’ portfolios. The criteria for this process include yield, maturity, and security structure. Once the Adviser puts these two processes together, it can select securities that it believes meet each fund’s investment objective. The Adviser regularly reviews its security selection process and its forecast to keep current with changing market conditions. The skill of the Adviser will play a significant role in each fund’s ability to achieve its investment objective.

Principal Investment Strategies and Related Risks

Under federal law, the income received from obligations issued by the United States government and some of its agencies and instrumentalities may be exempt from state and local income taxes. Many states that tax personal income allow mutual funds to pass this tax exemption through to shareholders. To maximize the taxable equivalent yield for shareholders under normal circumstances, the Government Securities Savings Fund will attempt to invest primarily in obligations that qualify for the exemption from state taxation.

The Government Securities Savings Fund may invest in fixed-rate and floating-rate securities issued by the United States Treasury and various United States government agencies, including the Federal Home Loan Bank, the Federal Farm Credit Bank, and the Tennessee Valley Authority. While fixed-rate securities have a set interest rate, floating-rate securities have a variable interest rate that is closely tied to a money-market index such as Treasury Bill rates. Floating rate securities provide holders with protection against rises in interest rates, but typically pay lower yields than fixed-rate securities of the same maturity.

Because the funds may invest substantially all of their assets in short-term debt securities, the main risk is that the funds’ dividends (income) may decline because of falling interest rates.

The funds’ yields will vary as the short-term securities in their portfolios mature and the proceeds are reinvested in securities with different interest rates. Over time, the real value of a fund’s yield may be eroded by inflation.

There is a possibility that an issuer of a security could be unable to make interest payments or repay principal. Changes in an issuer’s financial strength or in a security’s credit rating may affect a security’s value.

Other Types of Investments, Related Risks and Considerations

While not principal strategies, the funds may invest, to a limited extent, in other types of investments as discussed under “Common Investment Practices and Related Risks” on page 40..

Portfolio Holdings

A description of the funds’ policies and procedures with respect to the disclosure of the funds’ portfolio securities is available in the funds’ Statement of Additional Information (SAI) and on the funds’ website (www.usfunds.com).

Fund Management

Investment Adviser

U.S. Global Investors, Inc., 7900 Callaghan Road, San Antonio, Texas 78229, furnishes investment advice and manages the business affairs of U.S. Global Investors Funds (Trust). The Adviser was organized in 1968. Each fund will pay the following percentages of its average net assets to the Adviser for advisory services:


				Base Advisory Fee Range
			Hurdle	With Performance Fee
	Base Advisory Fee	Benchmark	Rate	Adjustment
All American Fund	0.80%	S&P 500 Index	+/- 5%	0.55%-1.05%
Holmes Growth Fund	1.00%	S&P Composite 1500 Index	+/- 5%	0.75%-1.25%
Global MegaTrends Fund	1.00%	S&P 500 Index	+/- 5%	0.75%-1.25%
Gold and Precious Metals Fund	0.90%	FTSE Gold Mines Index	+/- 5%	0.65%-1.15%
World Precious Minerals Fund	1.00%	AMEX Gold Miners Index	+/- 5%	0.75%-1.25%
Global Resources Fund	0.95%	Morgan Stanley Commodity
		Related Equity Index	+/- 5%	0.70%-1.20%
Eastern European Fund	1.25%	MSCI Emerging Markets
		Europe 10/40 Index (Net
		Total Return)	+/- 5%	1.00%-1.50%
Global Emerging Markets Fund	1.375%	MSCI Emerging Markets
		Net Total Return Index	+/- 5%	1.125%-1.625%
China Region Fund	1.25%	Hang Seng Composite Index		1.00%-1.50%
Tax Free Fund	0.75%	n/a		0.75%
Near-Term Tax Free Fund	0.50%	n/a		0.50%
Government Securities Savings Fund	0.50%	n/a		0.50%
Treasury Securities Cash Fund	0.50%	n/a		0.50%

The advisory fees for the Tax Free Fund, Near-Term Tax Free Fund, Government Securities Savings Fund, and Treasury Securities Cash Fund do not have a performance fee adjustment.

A performance fee, or fulcrum fee, is designed to reward the Adviser and Subadviser, as applicable, for fund performance that exceeds a fund’s designated benchmark or penalize the Adviser and Subadviser, as applicable, for fund performance which is lower than a fund’s designated benchmark. A fund’s cumulative performance is compared to that of its designated benchmark over a 12-month rolling period. When the difference between a fund’s performance and the performance of its designated benchmark is less than 5% (this is known as the hurdle rate), there will be no adjustment to the base advisory fee. This is often referred to as the null zone. If a fund’s cumulative performance exceeds by 5% or more (hurdle rate) the performance of its designated benchmark, the base advisory fee will be increased by 0.25%. If a fund’s cumulative performance falls below its designated benchmark by 5% or more, the base advisory fee will be decreased by 0.25%. The chart reflects the minimum and maximum advisory fee applicable to each fund. Certain funds are subject to breakpoints in the advisory fee. Please see the funds’ SAI for more information on the breakpoints.

The performance fee adjustment will be effective October 1, 2009.

The following example illustrates the application of the performance adjustment to the Gold and Precious Metals Fund:

Fund’s

Index’s

performance

For the rolling 12-month

investment

cumulative

relative

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

Based on these assumptions, the Gold and Precious Metals Fund calculates the Adviser’s management fee rate for the month ended December 31 as follows:


	•		The portion of the annual basic fee rate of 0.90% applicable to that month is multiplied by the fund’s 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 fund’s 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.

The Adviser, U.S. Global Brokerage, Inc., or its affiliates (U.S. Global) may pay additional compensation, out of profits derived from the Adviser’s management fee and not as an additional charge to the funds, to certain financial institutions (which may include banks, securities dealers and other industry professionals) for the sale and/or distribution of fund shares or the retention and/or servicing of fund investors and fund shares (“revenue sharing”). These payments are in addition to any distribution or servicing fees payable under a Rule 12b-1 plan of the funds, any record keeping or sub-transfer agency fees payable by the funds, or other fees described in the fee table or elsewhere in the prospectus or SAI. Examples of “revenue sharing” payments include, but are not limited to, payment to financial institutions for “shelf space” or access to a third party platform or fund offering list or other marketing programs, including, but not limited to, inclusion of the funds on preferred or recommended sales lists, mutual fund “supermarket” platforms and other formal sales programs; granting U.S. Global access to the financial institutions sales force; granting U.S. Global access to the financial institution’s conferences and meetings; assistance in training and educating the financial institution’s personnel; and obtaining other forms of marketing support. The level of revenue sharing payments made to financial institutions may be a fixed fee or based upon one or more of the following factors: gross sales, current assets and/or number of accounts of the funds attributable to the financial institution, or other factors as agreed to by U.S. Global and the financial institution or any combination thereof. The amount of these revenue sharing payments is determined at the discretion of U.S. Global from time to time, may be substantial, and may be different for different financial institutions depending upon the services provided by the financial institution. Such payments may provide an incentive for the financial institution to make shares of the funds available to its customers and may allow the funds greater access to the financial institution’s customers.

Subadviser for Eastern European Fund and Global Emerging Markets Fund

Effective January 25, 2002, the Adviser and the Eastern European Fund contracted with Charlemagne Capital (UK) Limited to serve as Subadviser for the Eastern European Fund. Effective January 28, 2005, the Adviser and the Global Emerging Markets Fund contracted with Charlemagne Capital (IOM) Limited to serve as Subadviser for the Global Emerging Markets Fund.

The Subadviser, located at St. Mary’s Court, 20 Hill Street, Douglas, Isle of Man, IM1 1EU, British Isles, manages the composition of the portfolio and furnishes the funds advice and recommendations with respect to their investments and their investment programs and strategies. The Subadviser has delegated certain subadvisory functions to its affiliate, Charlemagne Capital (UK) Limited. Both the Subadviser and Charlemagne Capital (UK) Limited are wholly owned subsidiaries of Charlemagne Capital Limited (CCL). In consideration for such services, the Adviser shares the management fee, including any performance fee adjustment (net of expense

reimbursements and waivers, if any), with the Subadviser. The funds are not responsible for paying any portion of the Subadviser’s fees. The Subadviser has experience managing, and continues to advise, offshore funds, private investment companies, and separate accounts for institutions.

Prior to January 25, 2002, and effective February 28, 1997, the Adviser and the Eastern European Fund contracted with Regent Fund Management Limited Barbados (“Regent”) to serve as subadviser for the fund. Regent was wholly owned by Regent Pacific Group Limited, which was established in 1990. Regent Pacific Group Limited spun off Charlemagne Capital (UK) Limited in the summer of 2000; however, the controlling ownership of Charlemagne Capital (UK) Limited has remained the same. In 2003, Charlemagne Capital Limited, the parent company of Charlemagne Capital (UK) Limited, transferred the subadvisory duties to a wholly-owned subsidiary, Charlemagne Capital (IOM) Limited.

Adviser and Subadviser investment personnel may invest in securities for their own accounts according to codes of ethics that establish procedures for personal investing and restrict certain transactions.

Portfolio Managers

The All American Equity Fund is managed by a team consisting of Mr. Frank Holmes, Mr. Romeo Dator, and Mr. John Derrick. Mr. Holmes is Chief Executive Officer and Chief Investment Officer of the Adviser and has been the majority shareholder of the Adviser since 1989. Mr. Holmes has served as Chief Investment Officer since June of 1999. Mr. Dator has served as research analyst of the Adviser since 2002, and an analyst with USAA from 1999 to 2001. Mr. Derrick has served as portfolio manager of the Adviser since 1999.

The Holmes Growth Fund is managed by a team consisting of Mr. Holmes, Mr. Derrick, and Mr. Dator.

The Global MegaTrends Fund is managed by a team consisting of Mr. Holmes, Mr. Dator, Mr. Derrick, and Mr. Jack Dzierwa. Mr. Dzierwa has served as a global strategist of the Adviser since September 11, 2007, an independent analyst from 2005-2007, a research production manager with ING Financial Markets, London from 2004-2005, a consultant for FEMSA from 2003-2004, and a vice president with Solomon Brothers from 1995-2002.

The Gold and Precious Metals Fund and World Precious Minerals Fund are managed by a team consisting of Mr. Holmes and Mr. Ralph Aldis. Mr. Aldis has served as senior research analyst of the Adviser since 2001.

The Global Resources Fund is managed by a portfolio team consisting of Mr. Holmes, Mr. Brian Hicks, and Mr. Evan Smith. Mr. Hicks has served as research analyst of the Adviser since 2004, an analyst with A.G. Edwards & Company from 2001 to 2004 and a trader with Charles Schwab & Co. from 2000 to 2001. Mr. Smith has served as a research analyst of the Adviser since 2004, and an analyst with Sanders Morris Harris Group from 1998 to 2004.

The Eastern European Fund is managed by a team consisting of Mr. Andrew Wiles, Mr. Stefan Böttcher and Mr. Julian Mayo. Mr. Wiles is an established team member of the Fund who has worked for CCL for ten years and was responsible for publicly listed equity investments in Russia and Eastern/Central Europe. Before joining CCL, he was employed by Buchanan Partners, a London-based global emerging markets hedge fund, where he was responsible for the GDR trading program. Mr. Wiles is an Associate of the UK Society of Investment Professionals. Mr. Böttcher joined the fund’s portfolio management team in 2001. Mr. Böttcher is Director of Portfolio Investments for CCL and is responsible for regional products. Prior to joining CCL, from 1999 to 2001, Mr. Böttcher was Executive Director and Head of Emerging Markets for Schroders. Prior to joining Schroders, Mr. Böttcher was employed at Fleming Investment Management for nine years, the last five of which he served as Head of the Emerging Europe Group. Mr. Mayo joined CCL in August 2003 as a Director of Charlemagne Capital (UK) Limited and a member of the portfolio management team. Mr. Mayo began his investment management career in Hong Kong with Schroders Asia before joining Thornton Management, now Allianz Global Investors.. He then opened Thornton’s Tokyo office in 1987, moving to London in 1991. In 1999 he returned to Asia as Managing Director of Regent Pacific’s Hong Kong office responsible for portfolio management.

The Global Emerging Markets Fund is managed by a team consisting of Mr. Böttcher and Mr. Mayo.

The China Region Fund is managed by a portfolio team consisting of Mr. Holmes and Mr. Dator.

The Tax Free Fund and Near-Term Tax Free Fund are managed by a team consisting of Mr. Holmes and Mr. Derrick.

The SAI provides additional information about the portfolio managers’ compensation, other accounts managed, and ownership of securities in the funds they manage.

Distribution Plan

The U.S. Global Investors Funds have adopted Rule 12b-1 plans for the following funds: All American 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 and China Region Fund. The 12b-1 plan provides a 0.25% to be paid by the funds to the Distributor to pay the Distributor, its affiliates and others for distribution and promotional expenses. Because this fee is continually paid out of each fund’s assets, over time it will increase the cost of your investment and may potentially cost you more than other types of sales charges.

Common Investment Practices and Related Risks

The following investment practices and relates risks apply to the All American Fund, Holmes Growth Fund, Global MegaTrends Fund, Gold and Precious Metals Fund, World Precious Minerals Funds, Global Resources Fund, Eastern European Fund, Global Emerging Markets Fund, and China Region Fund (collectively, Equity Funds), Tax Free Fund, Near-Term Tax Free Fund, Government Securities Savings Fund, and Treasury Securities Cash Fund.

Illiquid and Restricted Securities

Each Equity Fund may invest up to 15% of its net assets (up to 10% in the case of the money market funds) in illiquid securities. Illiquid securities are those securities that cannot be disposed of in seven days or less at approximately the value at which a fund carries them on its balance sheet.

Each Equity Fund may make direct equity investments. These investments may involve a high degree of business and financial risk. Because of the thinly traded markets for these investments, a fund may be unable to liquidate its securities in a timely manner, especially if there is negative news regarding the specific securities or the markets overall. These securities could decline significantly in value before a fund can liquidate these securities. In addition to financial and business risks, issuers whose securities are not listed will not be subject to the same disclosure requirements applicable to issuers whose securities are listed. For additional risks, see “Small Companies.”

Repurchase Agreements

Each fund may enter into repurchase agreements. A repurchase agreement is a transaction in which a fund purchases a security from a commercial bank or recognized securities dealer and has a simultaneous commitment to sell it back at an agreed upon price on an agreed upon date. This date is usually not more than seven days from the date of purchase. The resale price reflects the original purchase price plus an agreed upon market rate of interest, which is unrelated to the coupon rate or maturity of the purchased security.

In effect, a repurchase agreement is a loan by a fund collateralized with securities, usually securities issued by the U.S. Treasury or a government agency. The repurchase agreements entered into by each money market fund are collateralized with cash and securities of the type in which that fund may otherwise invest.

Repurchase agreements carry several risks, including the risk that the counterparty defaults on its obligations. For example, if the seller of the securities underlying a repurchase agreement fails to pay the agreed resale price on the agreed delivery date, a fund may incur costs in disposing of the collateral and may experience losses if there is any delay in its ability to do so.

When-Issued and Delayed-Delivery Securities

Each Equity Fund may purchase securities on a when-issued or delayed-delivery basis. This means the fund purchases securities for delivery at a later date and at a stated price or yield. There is a risk that the market price at the time of delivery may be lower than the agreed upon purchase price. In that case, the fund could suffer an unrealized loss at the time of delivery.

Temporary Investments

The Adviser or Subadviser may take a temporary defensive position when the securities trading markets or the economy are experiencing excessive volatility, a prolonged general decline, or other adverse conditions. Under these circumstances, each fund may invest up to 100% of its assets in:

	*		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.

In addition, the China Region Fund, Eastern European Fund and Global Emerging Markets Fund may invest in money market investments, deposits, or other investment grade short-term investments in a fund’s local region currencies as may be appropriate at the time.

When the funds are in a defensive investment position, they may not achieve their investment objectives.

Borrowing

Each fund may not borrow money except for temporary or emergency purposes in an amount not exceeding 33 1/3% of the fund’s total assets (including the amount borrowed) less liabilities (other than borrowings). To the extent that a fund borrows money before selling securities, the fund may be leveraged. At such times, the fund may appreciate or depreciate more rapidly than an unleveraged portfolio.

Foreign Securities

The Equity Funds may invest in foreign securities and may be subject to greater risks than when investing in U.S. securities. The risks of investing in foreign securities are generally greater when they involve emerging markets. These risks include:

Currency Risk

The value of a foreign security will be affected by the value of the local currency relative to the U.S. dollar.

When a fund sells a foreign denominated security, its value may be worth less in U.S. dollars even if the security increases in value in its home country. U.S. dollar-denominated securities of foreign companies may also be affected by currency risk.

Political, Social, and Economic Risk

Foreign investments may be subject to heightened political, social, and economic risks, particularly in emerging markets, which may have relatively unstable governments, immature economic structures, national policies restricting investments by foreigners, different legal systems, and economies based on only a few industries. In some countries, a risk may exist that the government may take over the assets or operations of a company or that the government may impose taxes or limits on the removal of the fund’s assets from that country.

Regulatory Risk

There may be less government supervision of foreign securities markets. As a result, foreign companies may not be subject to the uniform accounting, auditing and financial reporting standards and practices applicable to domestic companies, and there may be less publicly available information about foreign companies.

Market Risk

Foreign securities markets, particularly those of emerging markets, may be less liquid and more volatile than domestic markets. Certain markets may require payment for securities before delivery and delays may be encountered in settling securities transactions. In some foreign markets, there may not be protection against failure by other parties to complete transactions.

The Equity Funds may invest in sponsored or unsponsored American Depositary Receipts (ADRs) or Global Depositary Receipts (GDRs) representing shares of companies in foreign countries. ADRs are depositary receipts typically issued by a U.S. bank or trust company, which evidence ownership of underlying securities issued by a foreign corporation. Foreign banks or trust companies typically issue GDRs, although U.S. banks or trust companies may issue them also. They evidence ownership of underlying securities issued by a foreign or a United States corporation.

Transaction Costs

Costs of buying, selling, and holding foreign securities, including brokerage, tax, and custody costs, may be higher than the costs involved in domestic transactions.

Convertible Securities

The Equity Funds may invest in lower rated convertible securities. A convertible security is generally a debt obligation or preferred stock that may be converted within a specified period into a certain amount of common stock of the same or a different issuer. As with a typical fixed-income security, a convertible security tends to increase in market value when interest rates decline and decrease in value when interest rates rise. Like a common stock, the value of a convertible security also tends to increase as the market value of the underlying stock rises, and it tends to decrease as the market value of the underlying stock declines. Because its value can be influenced by both interest rate and market movements, a convertible security is not as sensitive to interest rates as a similar fixed-income security, nor is it as sensitive to changes in share price as its underlying stock.

Small Companies

The Equity Funds may invest in small companies for which it is difficult to obtain reliable information and financial data. The securities of these smaller companies may not be readily marketable, making it difficult to dispose of shares when it may otherwise be advisable. In addition, certain issuers in which a fund may invest may face difficulties in obtaining the capital necessary to continue in operation and may become insolvent, which may result in a complete loss of the fund’s investment in such issuers.

Derivative Securities

The Equity Funds may, but are not required to, invest in derivative securities, which include purchasing and selling exchange-listed and over-the-counter put and call options or LEAPS on securities, equity and fixed-income indexes, and other financial instruments. In addition, the Equity Funds may purchase and sell financial futures contracts and options thereon, and enter into various currency transactions such as currency forward contracts, or options on currencies or currency futures. The Equity Funds may, but are not required to, invest in derivative securities for hedging, risk management or portfolio management purposes. Derivative securities may be used to attempt to protect against possible changes in the market value of securities held in, or to be purchased for, the portfolio.

The ability of the Equity Funds to use derivative securities successfully will depend upon the Adviser’s or Subadviser’s ability to predict pertinent market movements, which cannot be assured. Investing in derivative securities will increase transaction expenses and may result in a loss that exceeds the principal invested in the transaction. The Equity Funds will comply with applicable regulatory requirements when investing in derivative securities. For more information on derivative securities and specific fund limitations, see the SAI.

In addition the Equity Funds may invest in warrants. Warrants are different from options in that they are issued by a company as opposed to a broker and typically have a longer life than an option. When the underlying stock goes above the exercise price of the warrant, the warrant is “in the money.” If the exercise price of the warrant is above the value of the underlying stock it is “out of the money.” “Out of the money” warrants tend to have different price behaviors than “in the money warrants.” As an example, the value of an “out of the money” warrant with a long time to expiration generally declines less than a drop in the underlying stock price because the warrant’s value is primarily derived from its time component.

Most warrants are exchange traded. The holder of a warrant has the right, until the warrant expires, to sell an exchange traded warrant or to purchase a given number of shares of a particular issue at a specified price. Such investments can provide a greater potential for profit or loss than an equivalent investment in the underlying security. Prices of warrants do not necessarily move, however, in tandem with prices of the underlying securities, particularly for shorter periods of time, and, therefore, may be considered speculative investments. The key driver to the movements in warrants are the fundamentals of the underlying company. Warrants, unlike options, may allow the holder to vote on certain issues and often are issued with certain anti-dilutive rights. Warrants pay no dividends. If a warrant held by a fund were not exercised by the date of its expiration, a fund would incur a loss in the amount of the cost of the warrant.

Currency Hedging

The Equity Funds may, but are not required to, invest in derivative securities in an attempt to hedge a particular fund’s foreign securities investments back to the U.S. dollars when, in their judgment, currency movements affecting particular investments are likely to harm performance. Possible losses from changes in currency exchange rates are a primary 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 decline 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 fund’s performance even when the Adviser attempts to reduce 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 derivative securities and increased transaction expenses.

Portfolio Turnover

The length of time a fund has held a particular security is not generally a consideration in investment decisions. It is the policy of each fund to effect portfolio transactions without regard to a holding period if, in the judgment of the Adviser or Subadviser, such transactions are advisable. Portfolio turnover generally involves some expense, including brokerage commissions, dealer mark-ups, or other transaction costs on the sale of securities and reinvestment in other securities. Such sales may result in realization of taxable capital gains for shareholders. Portfolio turnover rates for the funds are described in the Financial Highlights section.

Investments in Exchange Traded Funds (ETFs) or Other Investment Companies

The Equity Funds may invest in exchange traded funds (ETFs) or other investment companies, provided the investments in these securities do not exceed 3% of the total voting stock of any such closed-end investment company, do not individually exceed 5% of the total assets of the fund and do not, in total, exceed 10% of the fund’s total assets. If a fund invests in an ETF or other investment company, the fund will pay its proportionate share of expenses of the ETF or other investment company (including management and administrative fees) as well as the fund’s own management and administrative expenses.

Securities Ratings

The Adviser will use the ratings provided by independent rating agencies in evaluating the credit quality of a debt security and in determining whether a security qualifies as eligible for purchase under a fund’s investment policies. If a security is not rated, the Adviser may determine that the security is comparable in quality to a rated security for purposes of determining eligibility. In the event that an agency downgrades the rating of a security below the quality eligible for purchase by a fund, the fund reserves the right to continue holding the security if the Adviser believes such action is in the best interest of shareholders.

How to Buy Shares


			Initial		Subsequent
Minimums			Investment		Investment
	*	Regular accounts	$	5,000	$	50
	*	Regular money market accounts	$	1,000	$	50
	*	ABC Investment Plan ^®	$	100	$	50
	*	Custodial accounts for minors	$	50	$	50
	*	Retirement accounts	None		None

Send New Account Applications to:

Regular Mail
Shareholder Services
U.S. Global Investors Funds
P.O. Box 781234
San Antonio, TX 78278-1234

Overnight Mail
Shareholder Services
U.S. Global Investors Funds
7900 Callaghan Road
San Antonio, TX 78229

By Mail

	*		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.

Online Purchase of Shares

	*		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.

By Telephone

	*		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.

By Wire

	*		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.

By Automatic Investment

	*		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.

See details on the application.

By Direct Deposit

	*		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.

Important Notes About Paying for Your Shares

You may not purchase shares by credit card, credit card convenience check, money order, cashiers check, third-party check, travelers check, “starter” check, post-dated check, instant loan check, or any foreign instruments.

In limited circumstances the transfer agent may determine to accept money orders or cashiers checks.

You may not exchange shares purchased by telephone until the fund has received and accepted payment and has posted it to your account.

The funds will cancel unpaid telephone orders and you will be responsible for any decline in price of the shares. To recover any such loss or charge, the fund or transfer agent reserves the right to redeem shares of any affiliated funds you own, and you could be prohibited from placing further orders unless full payment by wire accompanies the investment request.

If a check or ACH investment is returned unpaid due to insufficient funds, stop payment, or other reasons, the fund will charge you $20, and you will be responsible for any loss incurred by the fund. To recover any such loss or charge, the fund reserves the right to redeem shares of any affiliated funds you own, and you could be prohibited from placing further orders unless full payment by wire accompanies the investment request. Any expenses charged to the funds for collection procedures will be deducted from the amount invested.

Effective Time for Purchase or Redemption Orders

Purchases of shares in the funds require payment by check or wire at the time the order is received except for telephone purchases, which require payment within seven business days after the order is received and accepted.

If you purchase shares by check, you will not receive proceeds of any redemption of shares for ten business days after your check is received by the transfer agent or when your check clears, whichever is earlier. You can exchange into other U.S. Global Investors family of funds at any time. The fund reserves the right to withhold redemption proceeds until your check has cleared.

Orders to purchase, exchange or redeem shares received after 4:00 p.m. Eastern time or the close of the New York Stock Exchange (NYSE), whichever is earlier, will not become effective until the next business day.

Orders received prior to the close of the New York Stock Exchange by a financial intermediary that has been authorized to accept orders on the funds’ behalf will be deemed accepted by a fund the same day and will be executed at that day’s closing share price. Each financial intermediary’s agreement with the funds permits the financial intermediary to transmit orders received by the financial intermediary prior to the close of regular trading on the New York Stock Exchange to the funds after that time and allows those orders to be executed at the closing share price calculated on the day the order was received by the financial intermediary.

An order to establish a new account will become effective, if accepted, at the time the fund next determines its net asset value (NAV) per share after the fund’s transfer agent or sub-agent has received:

	*		A completed and signed application,

	*		A check or wire transfer for the full amount, and

	*		Reasonable verification of the customer’s identification.

If you already have an account with a fund, your order to purchase or redeem shares will become effective when the transfer agent or sub-agent receives your written request or telephone order or, in the case of a purchase into a money market fund, when the transfer agent or sub-agent receives your check or wire transfer. In all cases, the fund reserves the right to reject a purchase order for any reason, and a purchase order will not become effective until accepted.

In all cases, the shares purchased or redeemed will be priced at the NAV per share next determined after the time of effectiveness of your order.

All purchases of shares are subject to acceptance by the funds and are not binding until accepted.

How To Sell (Redeem) Shares

By Mail

	*		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.

By Telephone

	*		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.

By Check

You may write an unlimited number of checks for $500 or more out of your U.S. Government Securities Savings Fund and you may write an unlimited number of checks of any amount out of your U.S. Treasury Securities Cash Fund. All checks are subject to the terms and conditions for check writing of the bank identified on the face of the check. If you purchased shares by check, any check written on your account within ten days of opening the account will not be honored, and you will be charged a $20 fee per check.

By Wire

	*		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.

We will usually send a wire transfer the next business day after receipt of your order.

Important Notes About Redeeming Your Shares

Generally, we will send payment for your redeemed shares to your address of record within two business days after your redemption request has been received and accepted by a fund. Payment will be delayed if records indicate that the address of record has been changed within 30 days of the redemption request. A signature guarantee will be required on the redemption request to send payment immediately in the event of an address change or to send funds to an address other than the one on record.

Proceeds from the redemption of shares purchased by check or ABC Investment Plan ^® may be delayed until full payment for the shares has been received and cleared, which may take up to ten business days from the purchase date.

If you are interested in setting up an automatic recurring payment plan in a money market fund, please call 1-800-US-FUNDS to obtain the appropriate application.

To protect shareholders from the expense burden of excessive trading, certain funds charge a short-term trading fee, which is described in the Fees and Expenses table on page 26 and in the Short-Term Trading Fee section on page 52.

Upon closing your account, you will be charged a $10 account-closing fee.

Since many transactions may be initiated by telephone or electronically, it is important to understand that as long as we take reasonable steps to ensure that an order to purchase or redeem shares is genuine, such as recording calls or requesting personalized security codes, we are not responsible for any losses that may occur. We recommend you verify the accuracy of your confirmation statements immediately after you receive them.

Exchanging Shares

When exchanging shares into other funds in the U.S. Global Investors family of funds:

	*		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 fund’s shares and the purchase of another fund’s shares, which is usually a taxable event to you.

	*		Exchanges into any new fund are subject to that fund’s 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

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.

Important Information About Purchases, Redemptions, and Exchanges

Funds Reserve Certain Rights

	*		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.

Account Minimums

Minimum Balance Fee. If, for any reason, your account balance in an equity or tax free fund is below $5,000, a minimum balance fee of $6 will be deducted from your account. Money market fund accounts will be charged $5 per month if the balance in the account drops below $1,000 at any time during the month.

The funds reserve the right to close your account and send you the proceeds if your balance drops below $5,000 (or $1,000 in a money market fund) any time during the quarter for any reason. You will receive, however, a 30-day written notice before the fund takes any redemption action. During that time, you may buy more shares to bring your account above the minimum. If you do not, the fund may sell your shares at the net asset value on the day the account is closed, and the minimum balance fee will be deducted from the proceeds.

Minimum balance fees and involuntary redemptions do n ot apply to:

	*		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.

Excessive Short-Term Trading

The funds, except the money market funds, are not intended as short-term investment vehicles but are designed for long-term investing. However, some investors may use market timing (also referred to as short-term trading) strategies in an attempt to take an unfair advantage of mutual funds. These investors may trade in and out of strategically targeted mutual funds over a short time period in order to take advantage of the way those funds are managed and/or priced or simply as a trading vehicle that has lower transaction costs.

Mutual fund arbitrage may occur, for example, when a fund has in its portfolio particular holdings, such as foreign or thinly traded securities, that are valued on a basis that does not include the most updated information available. Frequent purchases and redemptions of fund shares may be detrimental to long-term fund investors in numerous ways:

	*		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 manager’s ability to effectively manage fund assets.

The funds’ Board of Trustees has adopted policies and procedures with respect to frequent purchases and redemptions of fund shares by fund shareholders. The policies and procedures are designed to discourage, to the extent possible, frequent purchases and redemptions of fund shares by fund shareholders in all funds except the money market funds. The money market funds are designed for liquidity needs and are not actively monitored for frequent purchases and redemption of fund shares. The funds’ Board of Trustees has determined that it would not be appropriate for the funds to adopt policies and procedures with respect to frequent purchases and redemption of shares of the money market funds. Nevertheless, the money market funds reserve the right to refuse any application, investment or exchange for any reason, including short-term or other abusive trading practices which may disrupt portfolio management strategies and lower overall fund performance.

Short-Term Trading Fee

Redemptions (including exchanges) of shares of (i) Global Resources Fund held 30 days or less will be subject to a redemption fee equal to 0.25% of the amount redeemed, (ii) the Gold and Precious Metals Fund and World Precious Minerals Fund held 30 days or less will be subject to a redemption fee equal to 0.50% of the amount redeemed, (iii) the All American Fund held 30 days or less will be subject to a redemption fee equal to 0.10% of the amount redeemed, (iv) the China Region Fund held 180 days or less will be subject to a redemption fee equal to 1.00% of the amount redeemed, (v) Eastern European Fund and Global Emerging Markets Fund held 180 days or less will be subject to a redemption fee equal to 2.00% of the amount redeemed, and (vi) the Holmes Growth Fund and Global MegaTrends Fund held 30 days or less will be subject to a redemption fee equal to 0.25% of the amount redeemed. All redemption fees will be paid to the fund. The redemption fee is applicable to fund shares purchased either directly or through a financial intermediary, such as a broker-dealer. Transactions through financial intermediaries typically are placed with a fund on an omnibus basis and include both purchase and sale transactions placed on behalf of multiple investors. These purchase and sale transactions are generally netted against one another and placed on an aggregate basis; consequently, the identities of the individuals on whose behalf the transactions are placed generally are not known to a fund. For this reason, each fund has undertaken to notify financial intermediaries of their obligation to assess the redemption fee on customer accounts and to collect and remit the proceeds to the fund. However, there can be no assurance that intermediaries will properly track, calculate or remit the fee in accordance with the fund’s requirements. In addition, the redemption fee may not apply in the following circumstances: (i) redemptions of shares held in certain omnibus accounts, including retirement, pension, profit sharing and other qualified plans, as well as bank or trust company accounts; (ii) redemptions of shares held through firm-sponsored, discretionary asset allocation or wrap programs that utilize a regularly scheduled automatic rebalancing of assets and that the fund determines are not designed to facilitate short-term trading; (iii) redemptions of shares due to the death or disability of a shareholder; (iv) redemptions of shares in connection with required distributions and certain other transactions in an individual retirement account or qualified retirement plan; and (v) redemptions of shares by certain other accounts in the absolute discretion of the fund when a shareholder can demonstrate hardship. The funds reserve the right to modify or eliminate these waivers at any time. In addition to the circumstances noted above, the funds reserve the right to grant additional waivers based on such factors as operational limitations, contractual limitations and further guidance from the SEC or other regulators.

Omnibus Account

The Adviser has implemented procedures to monitor shareholder activity, including activity at the sub-account and account level for omnibus relationships, to identify potential market timers and to determine whether further action is warranted. There can be no assurance that these monitoring activities will successfully detect or prevent all excessive short-term trading.

It may be difficult to identify whether particular orders placed through banks, brokers, investment representatives or other financial intermediaries may be excessive in frequency and/or amount or otherwise potentially disruptive to an affected fund.

Accordingly, the Adviser may consider all the trades placed in a combined order through a financial intermediary on an omnibus basis as a part of a group and such trades may be restricted in whole or in part.

The Adviser will seek the cooperation of broker-dealers and other third-party intermediaries by requesting information from them regarding the identity of investors who are trading in the funds, and by requesting that the intermediary restrict access to a fund by a particular investor.

The Adviser may reject any purchase or exchange from any investor it believes has a history of market timing, or whose trading, in its judgment, has been or may be disruptive to the funds. The Adviser may consider the trading history of accounts under common ownership or control at U.S. Global or at other mutual fund companies to determine whether to restrict future transactions. The delivery of a known market timer’s redemption proceeds may be delayed for up to seven business days or the redemption may be honored with securities rather than cash.

Net Asset Value (NAV) Calculation

The price at which you buy, sell, or exchange fund shares is the NAV. The NAV of a fund is calculated at the close of regular trading of the NYSE, which is usually 4:00 p.m. Eastern time, each day that the NYSE is open. The money market funds are open for business each day that both the NYSE and the Federal Reserve Bank of New York (the Fed) are open. The money market funds reserve the right to open for business on days the NYSE is closed but the Fed is open, and the net asset value such of funds will be determined as of 4:00 p.m. Eastern time. The NAV is determined by adding the value of the fund’s investments, cash and other assets, deducting liabilities, and dividing that value by the total number of fund shares outstanding.

For a purchase, redemption, or exchange of fund shares, your price is the NAV next calculated after your request is received in good order and accepted by the fund, its agent, or designee. To receive a specific day’s price, your request must be received before the close of the NYSE on that day.

When a fund calculates its NAV, it values the securities it holds at market value. Foreign securities are usually valued on the basis of the most recent closing price of the foreign markets on which such securities principally trade. When market quotes are not available or do not fairly represent market value, or if a security’s value has been materially affected by events occurring after the close of a foreign market on which the security principally trades, the securities may be fair valued. Fair value will be determined in good faith using consistently applied procedures that have been approved by the trustees. Money market instruments maturing within 60 days will be valued at amortized cost, which approximates market value. To maintain a constant per share price of $1.00 for money market funds, portfolio investments are valued at amortized cost. Assets and liabilities expressed in foreign currencies are converted into U.S. dollars at the prevailing market rates quoted by one or more banks or dealers at the close of the NYSE.

Certain funds invest in portfolio securities that are primarily listed on foreign exchanges or other markets that trade on weekends and other days when the funds do not price their shares. As a result, the market value of these investments may change on days when you will not be able to purchase or redeem shares.

Use of Fair Value Pricing

When market quotations are readily available for portfolio securities which trade on an exchange or market, the market values used to price these securities will generally be the closing prices of the securities on the exchange or market (whether foreign or domestic) on which the securities principally trade. When market quotations are not readily available or when the Adviser believes that a readily available market quotation is not reliable, fair value pricing procedures will be used to determine the fair valuation. In particular, the funds’ Board has determined to fair value foreign securities when necessary to, among other things, avoid stale prices and make the funds less attractive to short-term trading.

The funds may use a systematic fair valuation model provided by an independent third party to value its foreign securities. When a security is fair valued, there is no guarantee that the security will be sold at the price at which the fund is carrying the security.

While fair value pricing cannot eliminate the possibility of short-term trading, the Adviser and the Board believe it helps protect the interests of the funds.

The Adviser will monitor domestic and foreign markets and news information for any developing events that may have an impact on the valuation of fund securities.

Signature Guarantee/Other Documentation

The funds require signature guarantees to protect you and the funds from attempted fraudulent requests for redeemed shares.

Your redemption request must therefore be in writing and accompanied by a signature guarantee if:

	*		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.

You may obtain a signature guarantee from most banks, credit unions, broker/dealers, savings and loans, and other eligible institutions. You cannot obtain a signature guarantee from a notary public.

The guarantor must use a stamp “SIGNATURE GUARANTEED” and the name of the financial institution. An officer of the institution must sign the guarantee. If residing outside the United States, a Consular’s seal will be accepted in lieu of a signature guarantee. Military personnel may acknowledge their signatures before officers authorized to take acknowledgments, e.g., legal officers and adjutants.

The signature guarantee must appear together with the signature(s) of all registered owner(s) of the redeemed shares on the written redemption request. Each signature must have its own signature guarantee stamp.

Additional documents are required for redemptions by corporations, executors, administrators, trustees, and guardians. For instructions, call 1-800-US-FUNDS.

Business Days

You may purchase, redeem, or exchange shares of the funds on any day the funds are open for business. The funds are open for business on every day the NYSE is open for business. In addition, the funds reserve the right to be open for business on days the NYSE is closed.

Other Information About Your Account

The funds take precautions to ensure that telephone transactions are genuine, including recording the transactions, testing shareholder identity and sending written confirmations to shareholders of record. The funds and its their service providers are not liable for acting upon instructions that they believe to be genuine if these procedures are followed.

Confirmations

After any transaction, you will receive written confirmation including the per-share price and the dollar amount and number of shares bought or redeemed.

Householding

Unless you instruct the funds otherwise, the funds will mail only one prospectus or shareholder reports to your household even if more than one person in your household has an account. If you do not want the mailing of the prospectus and the shareholder reports to be combined with other members of your household, please call 1-800-US-FUNDS.

Purchases Through Broker/Dealers

You may buy fund shares through financial intermediaries such as broker/dealers or banks, which may charge you a fee or have different account minimums, which are not applicable if you buy shares directly from the funds.

Lost Accounts

The transfer agent will consider your account lost if correspondence to your address of record is returned as undeliverable on two consecutive occasions, unless the transfer agent determines your new address. When an account is lost, all distributions on the account will be reinvested in additional fund shares. In addition, the amount of any outstanding checks (unpaid for six months or more) or checks that have been returned by the postal service will be reinvested at the then-current NAV and the checks will be canceled. However, checks will not be reinvested into accounts with a zero balance. Unclaimed accounts may be subject to state escheatment laws, and the fund and the transfer agent will not be liable to the shareholders or their representatives for compliance with those laws in good faith.

Additional Investor Services

Online Services

If you are a shareholder, you may use our website to access your account information 24 hours a day from your personal computer. Our website allows you to view account history, account balances, as well as make purchases and exchanges among your existing accounts. Please visit us online at www.usfunds.com.

Retirement Plans

The funds are offered through a range of retirement plans, including IRAs plans. Each account in a fund will be charged an annual custodial fee as follows:


Regular IRA	$	10
Roth IRA	$	10
Education IRA	$	10
SEP IRA	$	15
SIMPLE IRA	$	15

The funds offer many other services, such as payroll deductions, custodial accounts, and systematic withdrawals.

Please call 1-800-US-FUNDS for more information.

Distributions and Taxes

Unless you elect to have your distributions in cash by check, they will automatically be reinvested in fund shares. The funds generally distribute capital gains, if any, annually in December. The funds generally declare and pay income dividends, if any, as follows:

	*		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.

Dividends and distributions elected to be paid in cash by check will not be sent out unless the total amount of dividends and distributions received exceeds $10.00.

If you elect to receive distributions paid in cash by check and your check is returned undeliverable, your distribution option may be converted to the reinvestment option. You will not receive interest on amounts represented by uncashed distribution checks. We will invest in your account any dividend or other distribution payments returned to us. Dividend and other distribution checks become void six months from the date on the check. The amount of the voided check will be invested in your account at the then-current NAV per share. This may not apply to IRAs.

Taxes to You

Unless you hold your shares in a tax-deferred account, you will generally owe federal income taxes on amounts paid or distributed to you by the funds (other than exempt-interest dividends paid by the Tax Free Fund or Near-Term Tax Free Fund), whether you reinvest the distributions in additional shares or receive them in cash.

Distributions of gains from the sale of assets held by the funds for more than a year generally are taxable to you for federal income tax purposes at the applicable long-term capital gains rate, regardless of how long you have held fund shares. Distributions from other sources, except qualified dividend income, generally are taxed as ordinary income. For taxable years beginning before January 1, 2011, distributions of qualified dividend income generally will be taxable to individuals and other noncorporate shareholders at rates applicable to long-term capital gains, provided certain holding period and other requirements are satisfied. It is not anticipated that the Tax Free Fund, Near-Term Tax Free Fund, Government Securities Savings Fund and Treasury Securities Cash Fund will make distributions that are treated as qualified dividend income. Dividends received by the funds from certain foreign corporations are not expected to qualify for treatment as qualified dividend income.

Dividends declared in October, November or December to shareholders of record as of a date in such month and paid during the following January are treated as if received on December 31 of the calendar year declared. Each year the fund will send you a statement that will detail distributions made to you for that year.

Dividends, interest and some capital gains received by the funds on foreign securities may be subject to foreign withholding or other foreign taxes. If a fund has more than 50% of the value of its total assets at the close of a taxable year consist of stock or securities of foreign corporations, the fund may make an election for the year to pass through such taxes to shareholders as a foreign tax credit. If such an election is not made, any foreign taxes paid or accrued by the fund will represent an expense to the fund. If an election is made, shareholders will generally be able to claim a credit or deduction on their federal income tax returns for, and will be required to treat as part of the amounts distributed to them, their pro rata portion of the taxes paid by the fund to foreign countries with respect to the investment income from such foreign stock or securities. Each fund expects to qualify to make such an election.

If you purchase shares of a fund just before a dividend or distribution, you will pay the full price for the shares and receive a portion of the purchase price back as a taxable distribution. This is referred to as “buying a dividend.”

If you redeem fund shares in a non-retirement account, it is generally considered a taxable event for federal income tax purposes. Depending on the purchase price and the sale price of the shares you redeem, you may have a gain or loss on the transaction. The gain or loss will generally be treated as a long-term capital gain or loss if you held your shares for more than one year. If you held your shares for one year or less, the gain or loss will generally be treated as a short-term capital gain or loss. Short-term capital gain is taxable at ordinary federal income tax rates. Shareholders may be limited in their ability to utilize capital losses. Exchanges are treated as a redemption and purchase for federal income tax purposes. Therefore, you will also have a taxable gain upon exchange if the shares redeemed have gone up in value unless the exchange is between tax-deferred accounts.

Shareholders should consult with their own tax advisors concerning the federal, local and foreign tax consequences of owning fund shares in light of their particular tax situation.

When you open an account, Internal Revenue Service (IRS) regulations require that you provide your taxpayer identification number (TIN), certify that it is correct, and certify that you are not subject to backup withholding under IRS regulations. If you fail to provide your TIN or the proper tax certifications, each fund is required to withhold 28% of all the distributions (including dividends and capital gain distributions) and redemption proceeds paid to you. Each fund is also required to begin backup withholding on your account if the IRS instructs it to do so. Amounts withheld may be applied to your federal income tax liability and you may obtain a refund from the IRS if withholding results in an overpayment of federal income tax for such year.

Financial Highlights

The tables below are intended to show you each fund’s financial performance for the past five years (or since inception, as applicable). Some of the information reflects financial results for a single fund share. The total returns represent the rate that an investor would have earned (or lost) on an investment in each fund. It assumes that all dividends and capital gains have been reinvested.

The information presented below for the six-month period ended April 30, 2008, for certain funds is derived from the funds’ unuaudited financial statements. The information presented below for each of the years or periods in the five-year period ended June 30, 2008, or October 31, 2007, has been audited by KPMG LLP, an independent registered public accounting firm. Their report and each fund’s financial statements are included in the applicable annual report, which is available by request.

All American Equity Fund


	Year ended June 30,
	2008			2007			2006			2005			2004
Net Asset Value, Beginning of Year	$	28.58		$	27.59		$	24.47		$	22.53		$	19.15

Investment activities
Net investment loss		(0.15	)		(0.08	)		(0.18	)		(0.02	)		(0.11	)
Net realized and unrealized gain		1.98			4.94			3.89			1.96			3.49

Total from investment activities		1.83			4.86			3.71			1.94			3.38

Distributions
From net realized gains		(3.01	)		(3.87	)		(0.59	)		—			—
From tax return of capital		(0.13	)		—			—			—			—

Total distributions		(3.14	)		(3.87	)		(0.59	)		—			—

Short-term trading fees* (a)		—			—			—			—			—

Net Asset Value, End of Year	$	27.27		$	28.58		$	27.59		$	24.47		$	22.53

Total return (excluding account fees) (b)		5.99	%		19.59	%		15.25	%		8.61	%		17.65	%
Ratios/Supplemental data
Net assets, end of year (in thousands)	$	26,513		$	23,479		$	21,547		$	19,253		$	19,974
Ratios to average net assets:
Total expenses		1.98	%		2.01	%		2.20	%		2.44	%		2.31	%
Expenses reimbursed (c)		(0.23	)%		(0.26	)%		(0.44	)%		(0.69	)%		(0.56	)%
Net expenses (d)		1.75	%		1.75	%		1.76	%		1.75	%		1.75	%
Net investment loss		(0.55	)%		(0.28	)%		(0.67	)%		(0.09	)%		(0.49	)%
Portfolio turnover rate		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

Ratios to average net assets:

Expenses offset

—

(e)

—

(e)

(0.01

—

(e)

—

(e)



(e)		Effect on the expense ratio was not greater than 0.005%.

Holmes Growth Fund


	Six Months
	Ended
	April 30,
	2008			Year ended October 31,
	(unaudited)			2007			2006			2005			2004**			2003
Net Asset Value, Beginning of Period	$	24.78		$	18.34		$	16.56		$	14.38		$	13.55		$	11.59


Investment activities
Net investment loss		(0.08	)		(0.14	)		(0.14	)		(0.18	)		(0.19	)		(0.14	)
Net realized and unrealized gain (loss)		(2.46	)		6.58			1.92			2.36			1.01			2.10

Total from investment activities		(2.54	)		6.44			1.78			2.18			0.82			1.96

Distributions		—			—			—			—			—			—
Short-term trading fees*		—	(a)		—	(a)		—	(a)		—	(a)		0.01			—	(a)

Net Asset Value, End of Period	$	22.24		$	24.78		$	18.34		$	16.56		$	14.38		$	13.55

Total return (excluding account fees) (b)		(10.25	)%		35.11	%		10.75	%		15.16	%		6.13	%		16.91	%
Ratios/Supplemental data
Net assets, end of period (in thousands)	$	60,660		$	68,881		$	61,810		$	65,065		$	67,074		$	82,417
Ratios to average net assets (c):
Expenses (d)		1.72	%		1.72	%		1.74	%		1.83	%		1.82	%		1.78	%
Net investment loss		(0.70	)%		(0.62	)%		(0.69	)%		(0.98	)%		(1.15	)%		(1.12	)%
Portfolio turnover rate		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

Ratios to average net assets (c):

Expenses offset

—

(e)

—

(e)

(0.01

—

(e)

—

(e)

—

(e)



(e)		Effect on the expense ratio was not greater than 0.005%.

Global MegaTrends Fund


	Six Months
	Ended
	April 30,
	2008			Year ended October 31,
	(unaudited)			2007**			2006			2005			2004			2003
Net Asset Value, Beginning of Period	$	12.75		$	11.07		$	10.30		$	9.20		$	8.25		$	6.62

Investment activities
Net investment loss		(0.02	)		(0.11	)		(0.10	)		(0.14	)		(0.17	)		(0.18	)
Net realized and unrealized gain (loss)		(0.24	)		2.63			1.18			1.24			1.24			1.85

Total from investment activities		(0.26	)		2.52			1.08			1.10			1.07			1.67

Distributions
From net investment income		—			—			—			—			(0.12	)		(0.04	)
From net realized gains		(0.85	)		(0.84	)		(0.31	)		—			—			—

Total distributions		(0.85	)		(0.84	)		(0.31	)		—			(0.12	)		(0.04	)

Short-term trading fees* (a)		—			—			—			—			—			—

Net Asset Value, End of Period	$	11.64		$	12.75		$	11.07		$	10.30		$	9.20		$	8.25

Total return (excluding account fees) (b)		(2.12	)%		24.49	%		10.53	%		11.96	%		13.01	%		25.38	%
Ratios/Supplemental data
Net assets, end of period (in thousands)	$	30,112		$	17,723		$	17,077		$	14,276		$	13,239		$	12,377
Ratios to average net assets (c):
Expenses (d)		2.25	%		2.49	%		2.55	%		2.83	%		2.83	%		3.07	%
Net investment loss		(0.42	)%		(0.93	)%		(0.89	)%		(1.37	)%		(1.77	)%		(2.12	)%
Portfolio turnover rate		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

Ratios to average net assets (c):

Expenses offset

—

(e)

—

(e)

—

(e)

—

(e)

—

(e)

—

(e)



(e)		Effect on the expense ratio was not greater than 0.005%.

Gold and Precious Metals Fund


	Year ended June 30,
	2008			2007			2006			2005			2004
Net Asset Value, Beginning of Year	$	14.99		$	15.48		$	7.67		$	7.00		$	5.18

Investment activities
Net investment income (loss)		(0.08)	*		0.05			(0.01)	*		(0.11	)		(0.10	)
Net realized and unrealized gain (loss)		4.69			(0.56	)		7.88			0.79			1.91

Total from investment activities		4.61			(0.51	)		7.87			0.68			1.81

Distributions from net realized gains		(2.43	)		—			(0.12	)		(0.05	)		(0.03	)
Short-term trading fees*		0.01			0.02			0.06			0.04			0.02

Net Asset Value, End of Year	$	17.18		$	14.99		$	15.48		$	7.67		$	7.00

Total return (excluding account fees) (a)		33.49	%		(3.17	)%		104.15	%		10.19	%		35.57	%
Ratios/Supplemental data
Net assets, end of year (in thousands)	$	259,022		$	178,762		$	208,027		$	63,816		$	66,732
Ratios to average net assets:
Expenses (b)		1.27	%		1.29	%		1.47	%		1.97	%		1.93	%
Net investment income (loss)		(0.41	)%		0.31	%		(0.06	)%		(1.13	)%		(1.45	)%
Portfolio turnover rate		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

Ratios to average net assets:

Expenses offset

—

(c)

(0.01

—

(c)

—

(c)

—

(c)




(c)		Effect on the expense ratio was not greater than 0.005%.

World Precious Minerals Fund


	Year ended June 30,
	2008			2007			2006			2005			2004
Net Asset Value, Beginning of Year	$	28.34		$	28.86		$	15.50		$	13.68		$	9.75

Investment activities
Net investment income (loss)		(0.13)	*		—	*		0.72			(0.22	)		(0.17)	*
Net realized and unrealized gain (loss)		3.70	*		3.02			13.62			2.42			5.85

Total from investment activities		3.57			3.02			14.34			2.20			5.68

Distributions
From net investment income		(3.25	)		(1.52	)		(0.67	)		(0.46	)		(1.86	)
From net realized gains		(3.35	)		(2.04	)		(0.37	)		—			—

Total distributions		(6.60	)		(3.56	)		(1.04	)		(0.46	)		(1.86	)

Short-term trading fees*		0.01			0.02			0.06			0.08			0.11

Net Asset Value, End of Year	$	25.32		$	28.34		$	28.86		$	15.50		$	13.68

Total return (excluding account fees) (a)		14.14	%		11.48	%		96.21	%		16.50	%		57.42	%
Ratios/Supplemental data
Net assets, end of year (in thousands)	$	949,014		$	923,779		$	920,249		$	268,312		$	246,852
Ratios to average net assets:
Expenses (b)		0.97	%		0.99	%		1.13	%		1.48	%		1.47	%
Net investment income (loss)		(0.43	)%		0.06	%		0.05	%		(1.01	)%		(1.15	)%
Portfolio turnover rate		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

Ratios to average net assets:

Expenses offset

—

(c)

—

(c)

—

(c)

—

(c)

—

(c)




(c)		Effect on the expense ratio was not greater than 0.005%.

Global Resources Fund


	Year ended June 30,
	2008			2007			2006			2005			2004
Net Asset Value, Beginning of Year	$	17.70		$	17.22		$	12.67		$	8.39		$	5.14

Investment activities
Net investment income		0.05	*		0.21			0.29			0.25			0.12
Net realized and unrealized gain		5.86	*		2.86			5.63			4.67			3.26

Total from investment activities		5.91			3.07			5.92			4.92			3.38

Distributions
From net investment income		(0.95	)		(0.88	)		(0.32	)		(0.34	)		(0.13	)
From net realized gains		(2.14	)		(1.71	)		(1.05	)		(0.30	)		—

Total distributions		(3.09	)		(2.59	)		(1.37	)		(0.64	)		(0.13	)

Short-term trading fees* (a)		—			—			—			—			—

Net Asset Value, End of Year	$	20.52		$	17.70		$	17.22		$	12.67		$	8.39

Total return (excluding account fees) (b)		37.59	%		20.94	%		48.91	%		60.21	%		65.73	%
Ratios/Supplemental data
Net assets, end of year (in thousands)	$	2,010,581		$	1,383,250		$	1,281,664		$	488,183		$	135,574
Ratios to average net assets:
Expenses (c)		0.88	%		0.95	%		0.96	%		1.30	%		1.54	%
Net investment income		0.28	%		0.74	%		1.07	%		0.91	%		0.74	%
Portfolio turnover rate		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
Ratios to average net assets:
Expenses offset		(0.01	)%		(0.01	)%		(0.01	)%		—	(d)		—	(d)


(d)		Effect on the expense ratio was not greater than 0.005%.

Eastern European Fund


	Six Months
	Ended
	April 30,
	2008*			Year ended October 31,
	(unaudited)			2007*			2006*			2005*			2004*			2003*
Net Asset Value, Beginning of Period	$	19.91		$	15.44		$	12.88		$	9.47		$	6.48		$	14.24

Investment activities
Net investment income (loss)		(0.08	)		(0.10	)		0.13			(0.03)	**		(0.01	)		0.02
Net realized and unrealized gain (loss)		(1.53	)		6.83			3.60			3.81	**		3.31			2.19

Total from investment activities		(1.61	)		6.73			3.73			3.78			3.30			2.21

Distributions
From net investment income		—			(0.29	)		—			(0.09	)		(0.02	)		—
From net realized gains		(3.46	)		(1.98	)		(1.22	)		(0.31	)		(0.35	)		—

Total distributions		(3.46	)		(2.27	)		(1.22	)		(0.40	)		(0.37	)		—

Short-term trading fees**		0.01			0.01			0.05			0.03			0.06			0.03

Net Asset Value, End of Period	$	14.85		$	19.91		$	15.44		$	12.88		$	9.47		$	6.48

Total return (excluding account fees) (a)		(9.66	)%		48.74	%		31.03	%		41.43	%		54.12	%		52.71	%
Ratios/Supplemental data
Net assets, end of period (in thousands)	$	1,302,672		$	1,582,707		$	1,347,149		$	903,855		$	279,545		$	50,948
Ratios to average net assets (b):
Expenses (c)		1.95	%		1.98	%		1.95	%		2.00	%		2.08	%		2.90	%
Net investment income (loss)		(1.03	)%		(0.61	)%		0.71	%		(0.31	)%		(0.23	)%		0.81	%
Portfolio turnover rate		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 fund’s 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
Ratios to average net assets (b):
Expenses offset		(0.01	)%		(0.01	)%		0.01	)%		(0.01	)%		—	(d)		—	(d)
Expenses rebated by subadviser		n/a			n/a			(0.01	)%		(0.02	)%		(0.05	)%		n/a



(d)		Effect on the expense ratio was not greater than 0.005%.

Global Emerging Markets Fund


	Six Months
	Ended
	April 30,
	2008			Year Ended			Year Ended			Period Ended
	(unaudited)			October 31, 2007			October 31, 2006			October 31, 2005(a)
Net Asset Value, Beginning of Period	$	21.88		$	13.93		$	10.65		$	10.00

Investment activities
Net investment income (loss)		(0.10	)		(0.13	)		0.02			0.06
Net realized and unrealized gain (loss)		(3.30	)		9.18			3.50			0.56

Total from investment activities		(3.40	)		9.05			3.52			0.62

Distributions
From net investment income		(0.46	)		—			(0.05	)		—
From net realized gains		(3.11	)		(1.13	)		(0.26	)		—

Total distributions		(3.57	)		(1.13	)		(0.31	)		—

Short-term trading fees*		0.03			0.03			0.07			0.03

Net Asset Value, End of Period	$	14.94		$	21.88		$	13.93		$	10.65

Total return (excluding account fees) (b)		(16.52	)%		69.52	%		34.16	%		6.50	%
Ratios/Supplemental data
Net assets, end of period (in thousands)	$	43,477		$	59,621		$	29,029		$	16,157
Ratios to average net assets (c):
Total expenses		2.61	%		2.75	%		3.07	%		4.16	%
Expenses reimbursed (d)		(0.11	)%		(0.39	)%		(1.05	)%		(2.16	)%
Net expenses (e)		2.50	%		2.36	%		2.02	%		2.00	%
Net investment income (loss)		(1.53	)%		(0.92	)%		0.13	%		1.08	%
Portfolio turnover rate		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 fund’s 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

Period Ended

(unaudited)

October 31, 2007

October 31, 2006

October 31, 2005(a)

Ratios to average net assets (c):

Expenses offset

—

(f)

n/a

Expenses rebated by subadviser

n/a

(0.02

—

(f)



(f)		Effect on the expense ratio was not greater than 0.005%.

China Region Fund


	Year ended June 30,
	2008			2007			2006			2005			2004
Net Asset Value, Beginning of Year	$	12.55		$	8.71		$	6.87		$	5.86		$	4.17

Investment activities
Net investment income (loss)		(0.03	)*		—	*		(0.01	)*		(0.06	)		—	*
Net realized and unrealized gain (loss)		(0.27	)*		3.98	*		2.02			1.22			1.69

Total from investment activities		(0.30	)		3.98			2.01			1.16			1.69

Distributions
From net investment income		(0.10	)		(0.16	)		(0.19	)		(0.16	)		(0.05	)
From net realized gains		(2.93	)		—			—			—			—
From tax return of capital		(0.17	)		—			—			—			—

Total distributions		(3.20	)		(0.16	)		(0.19	)		(0.16	)		(0.05	)

Short-term trading fees*		0.04			0.02			0.02			0.01			0.05

Net Asset Value, End of Year	$	9.09		$	12.55		$	8.72		$	6.87		$	5.86

Total return (excluding account fees) (a)		(8.58	)%		46.34	%		30.03	%		19.98	%		41.63	%
Ratios/Supplemental data
Net assets, end of year (in thousands)	$	81,109		$	93,805		$	67,761		$	30,511		$	35,090
Ratios to average net assets:
Expenses (b)		1.95	%		2.02	%		2.31	%		2.56	%		2.25	%
Net investment income (loss)		(0.26	)%		0.02	%		(0.08	)%		(0.54	)%		0.05	%
Portfolio turnover rate		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

Ratios to average net assets:

Expenses offset

—

(c)

—

(c)

(0.01

—

(c)

—

(c)



(c)		Effect on the expense ratio was not greater than 0.005%.

Tax Free Fund


	Year ended June 30,
	2008			2007			2006			2005			2004
Net Asset Value, Beginning of Year	$	11.98		$	11.98		$	12.33		$	12.08		$	12.65

Investment activities
Net investment income		0.47			0.50			0.52			0.44			0.43
Net realized and unrealized gain (loss)		(0.05	)		—	(a)		(0.36	)		0.25			(0.58	)

Total from investment activities		0.42			0.50			0.16			0.69			(0.15	)

Distributions from net investment income		(0.47	)		(0.50	)		(0.51	)		(0.44	)		(0.42	)

Net Asset Value, End of Year	$	11.93		$	11.98		$	11.98		$	12.33		$	12.08

Total return (excluding account fees) (b)		3.54	%		4.15	%		1.30	%		5.78	%		(1.25	)%
Ratios/Supplemental data
Net assets, end of year (in thousands)	$	18,380		$	15,940		$	14,992		$	22,433		$	28,167
Ratios to average net assets:
Expenses		1.94	%		1.86	%		1.69	%		1.47	%		1.09	%
Expenses reimbursed (c)		(1.24	)%		(1.16	)%		(0.99	)%		(0.77	)%		(0.39	)%
Net expenses (d)		0.70	%		0.70	%		0.70	%		0.70	%		0.70	%
Net investment income		3.91	%		4.09	%		4.01	%		3.50	%		3.22	%
Portfolio turnover rate		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

Ratios to average net assets:

Expenses offset

—

(e)

—

(e)

—

(e)

—

(e)

—

(e)



(e)		Effect on the expense ratio was not greater than 0.005%.

Near-Term Tax Free Fund


	Year ended June 30,
	2008			2007			2006			2005*			2004*
Net Asset Value, Beginning of Year	$	2.12		$	2.12		$	2.17		$	2.17		$	2.23

Investment activities
Net investment income		0.07			0.07			0.07			0.07			0.06
Net realized and unrealized gain (loss)		0.02			—	(a)		(0.05	)		(0.01	)		(0.06	)

Total from investment activities		0.09			0.07			0.02			0.06			0.00

Distributions from net investment income		(0.07	)		(0.07	)		(0.07	)		(0.06	)		(0.06	)

Net Asset Value, End of Year	$	2.14		$	2.12		$	2.12		$	2.17		$	2.17

Total return (excluding account fees) (b)		4.42	%		3.51	%		0.75	%		2.75	%		0.20	%
Ratios/Supplemental data
Net assets, end of year (in thousands)	$	13,603		$	13,383		$	15,830		$	18,706		$	18,673
Ratios to average net assets:
Expenses		1.91	%		1.63	%		1.54	%		1.49	%		1.25	%
Expenses reimbursed ©		(1.46	)%		(1.18	)%		(1.09	)%		(1.04	)%		(0.80	)%
Net expenses (d)		0.45	%		0.45	%		0.45	%		0.45	%		0.45	%
Net investment income		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

Ratios to average net assets:

Expenses offset

—

(e)

—

(e)

—

(e)

—

(e)

—

(e)



(e)		Effect on the expense ratio was not greater than 0.005%.

U.S. Government Securities Savings Fund


	Year ended June 30,
	2008			2007			2006			2005			2004
Net Asset Value, Beginning of Year	$	1.00		$	1.00		$	1.00		$	1.00		$	1.00

Investment activities
Net investment income		0.03			0.05			0.04			0.02			0.01
Net realized and unrealized gain (loss)		—	(a)		—	(a)		—			—			—

Total from investment activities		0.03			0.05			0.04			0.02			0.01

Distributions from net investment income		(0.03	)		(0.05	)		(0.04	)		(0.02	)		(0.01	)

Net Asset Value, End of Year	$	1.00		$	1.00		$	1.00		$	1.00		$	1.00

Total return (excluding account fees) (b)		3.47	%		4.86	%		3.69	%		1.70	%		0.63	%
Ratios/Supplemental data
Net assets, end of year (in thousands)	$	446,208		$	469,095		$	435,417		$	411,979		$	441,722
Ratios to average net assets:
Expenses		0.65	%		0.62	%		0.64	%		0.65	%		0.65	%
Expenses reimbursed (c)		(0.20	)%		(0.17	)%		(0.19	)%		(0.20	)%		(0.20	)%
Net expenses (d)		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

Ratios to average net assets:

Expenses offset

—

(e)

—

(e)

—

(e)

—

(e)

—

(e)



(e)		Effect on the expense ratio was not greater than 0.005%.

U.S. Treasury Securities Cash Fund


	Year ended June 30,
	2008			2007			2006			2005			2004
Net Asset Value, Beginning of Year	$	1.00		$	1.00		$	1.00		$	1.00		$	1.00

Investment activities
Net investment income		0.02			0.04			0.03			0.01			—	(a)
Net realized and unrealized gain		—			—			—			—			—

Total from investment activities		0.02			0.04			0.03			0.01			—	(a)

Distributions from net investment income		(0.02	)		(0.04	)		(0.03	)		(0.01	)		—	(a)

Net Asset Value, End of Year	$	1.00		$	1.00		$	1.00		$	1.00		$	1.00

Total return (excluding account fees) (b)		2.46	%		4.36	%		3.11	%		1.12	%		0.08	%
Ratios/Supplemental data
Net assets, end of year (in thousands)	$	111,955		$	116,012		$	119,028		$	124,058		$	112,575
Ratios to average net assets:
Expenses		1.09	%		0.91	%		0.92	%		0.97	%		1.00	%
Expenses reimbursed (c)		(0.09	)%		(0.02	)%		—			—			—
Net recouped fees (d)		—	(f)		—			0.03	%		—			—
Net expenses (e)		1.00	%		0.89	%		0.95	%		0.97	%		0.96	%
Net investment income		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

Ratios to average net assets:

Expenses offset

—

(f)

—

(f)

—

(f)

—

(f)

—

(f)



(f)		Effect on the expense ratio was not greater than 0.005%.

PRIVACY POLICY

General Policy

U.S. Global Investors, Inc., U.S. Global Investors Funds. United Shareholder Services, Inc., and U.S. Global Brokerage, Inc. have created this privacy policy in order to demonstrate our firm commitment to the privacy of your personal information. These are our information gathering and dissemination practices.

Information Collected and Disclosed

We collect nonpublic personal information about you from the following sources:

*		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.

We do not disclose any nonpublic personal information about you to nonaffiliated parties, except as permitted or required by law. U.S. Global and its affiliates may use this information to service your account or provide you information about products or services that may be of interest to you. We may also disclose all of the information we collect (except for consumer reports), as described above, to companies that perform marketing or other services on our behalf or to other financial institutions with whom we have joint marketing agreements to service or administer your account(s), transaction(s), or request(s).

If you decide to close your account(s) or become an inactive investor we will adhere to the privacy policies and practices as described in this notice.

We restrict access to your nonpublic personal and account information to those employees who need to know that information to provide products or services to you. We maintain physical, electronic and procedural safeguards to guard your nonpublic personal information.

Further, we will properly dispose of consumer report information that may be gathered about you. Steps have been taken to ensure that consumer reports are protected against unauthorized access to or use of the information in connection with its disposal.

Internet Policy

We protect our users’ information. When you submit sensitive information via the website, your information is protected both online and offline with state-of-the-art technology. To access your account online, your computer’s web browser must support this technology. More detailed information is available on our website, www.usfunds.com. If you are just “surfing,” we collect and use IP addresses to analyze trends, administer the site, track user’s movements and gather broad demographic information. IP addresses are not linked to personally identifiable information.

Registration: If you want to buy or trade a mutual fund on our site, you must register by filling out an application form. The form asks for information such as name, e-mail address, address, gender and age. We use this information to send you materials about U.S. Global and products offered through our site, and to contact you when necessary. We are required under federal law to keep records of the information you provide to us.

When you register at our site, U.S. Global uses a cookie (a small data file stored on your computer’s hard drive) to store a unique, random user ID. We do not store passwords or any personal information about you. We use this ID to identify you anonymously in our database and to track information while you are on our site. Cookies also let you enter our site as a registered user without having

to log on each time. You do not need to have cookies turned on to use our site. You can refuse cookies by turning them off in your browser, but if you do, you may not be able to use certain features of our site.

Linked Sites: Our site may contain links to other sites. We are not responsible for the privacy practices of other sites. You should read the privacy statements of each website you visit that collects personally identifiable information. This privacy statement applies only to information we collect on our site.

Children’s Privacy: Our site is not directed at children under the age of 13 and does not knowingly collect personal information from them. If we learn that we have obtained personal information from a child under the age of 13, we will delete that information from our records.

E-mail: E-mail is not a secure means of transmitting sensitive information. We will never ask you to submit your investment or personal information via e-mail.

Changes to Privacy Policy

U.S. Global may occasionally change this privacy policy. If a revision is material, U.S. Global will mail a notice to all current shareholders and will post the revised policy on its website. The changes will take effect as soon as mailed and posted.

Contact Information

If you have a comment, question or request, or if you need to contact us for any other reason, there are four easy ways to do so.

E-mail

You can e-mail the transfer agent for U.S. Global at shsvc@usfunds.com.

Toll-Free Telephone Number

You may call an investor representative at 1-800-US-FUNDS or locally at (210) 308-1222. If you call after normal business hours, please leave a message and your telephone number. An Investor Representative will get back to you as quickly as possible. Normal business hours are Monday through Friday, 7:30 a.m. to 7 p.m. CST.


U.S. Mail		Express Mail Or Package Delivery
U.S. Global Investors		U.S. Global Investors
P.O. Box 781234		7900 Callaghan Road
San Antonio, TX 78278-1234		San Antonio, TX 78229

More information on the funds is available at no charge, upon request:

Annual/Semi-Annual Report

Additional information about the funds’ investments is available in the funds’ annual and semi-annual reports to shareholders, which are available free of charge on the funds’ website at www.usfunds.com. These reports describe the funds’ performance, list holdings, and describe recent market conditions, fund investment strategies, and other factors that had a significant impact on each fund’s performance during the last fiscal year.

Statement of Additional Information (SAI)

More information about the funds, their investment strategies, and related risks is provided in the SAI. The SAI and the funds’ website (www.usfunds.com) include a description of the funds’ policy with respect to the disclosure of portfolio holdings. There can be no guarantee that the funds will achieve their objectives. The current SAI is on file with the SEC and is legally considered a part of this prospectus and is available free of charge on the funds’ website at www.usfunds.com.

To Request Information:


By Phone		1-800-US-FUNDS

By Mail		Shareholder Services
		U.S. Global Investors Funds
		P.O. Box 781234
		San Antonio, TX 78278-1234

By Internet		http://www.usfunds.com

The SEC also maintains a website at http://www.sec.gov that contains the Statement of Additional Information, material incorporated by reference and other information that the funds file electronically with the SEC. You may also visit or call the SEC’s Public Reference Room in Washington, D.C. (1-202-942-8090) or send a request plus a duplicating fee to the SEC, Public Reference Section, Washington, D.C. 20549-0102 or by electronic request at the following e-mail address: publicinfo@sec.gov.



[U.S. Global Investors logo to come]		U.S. GLOBAL INVESTORS FUNDS.
		SEC Investment Company Act File No. 811-01800


[U.S. Global Investors logo to come]		U.S. GLOBAL INVESTORS, INC.
		P.O. Box 781234
		San Antonio, TX 78278-1234

U.S. GLOBAL INVESTORS FUNDS

STATEMENT OF ADDITIONAL INFORMATION


		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 Funds (Trust) is an open-end series investment company. This Statement of Additional Information is not a prospectus. You should read it in conjunction with the prospectus dated October 1, 2008, which you may request from U.S. Global Investors, Inc. (Adviser), 7900 Callaghan Road, San Antonio, Texas 78229, or 1-800-US-FUNDS (1-800-873-8637).

The date of this Statement of Additional Information is October 1, 2008.

TABLE OF CONTENTS


GENERAL INFORMATION			2
FUND POLICIES			3
FUNDAMENTAL INVESTMENT RESTRICTIONS			3
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS			4
VALUATION OF SHARES			4
INVESTMENT STRATEGIES AND RISKS			5
COMMON INVESTMENT STRATEGIES AND RELATED RISKS			13
PORTFOLIO TURNOVER			20
PORTFOLIO HOLDINGS DISCLOSURE POLICY			21
MANAGEMENT OF THE TRUST			22
CODE OF ETHICS			26
PROXY VOTING POLICIES			27
PRINCIPAL HOLDERS OF SECURITIES			82
INVESTMENT ADVISORY AND OTHER SERVICES			83
DISTRIBUTION AGREEMENT AND DISTRIBUTION PLAN			86
PORTFOLIO MANAGERS			89
BROKERAGE ALLOCATION AND OTHER PRACTICES			93
TRADE AGGREGATION AND ALLOCATION PROCEDURES			95
PURCHASE, REDEMPTIONS, AND PRICING OF SHARES			95
FEDERAL INCOME TAXES			97
CUSTODIAN, FUND ACCOUNTANT AND ADMINISTRATOR			103
DISTRIBUTOR			103
FINANCIAL STATEMENTS			103
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS AND LEGAL COUNSEL			103

GENERAL INFORMATION

The U.S. Global Investors Funds and U.S. Global Accolade Funds merged into a Delaware Statutory Trust on October 1, 2008, which is named U.S. Global Investors Funds (Trust). The trust was organized as a Delaware Statutory Trust on July 31, 2008. The Gold and Precious Metals, World Precious Minerals, Global Resources, Eastern European, Global Emerging Markets and China Region Funds are non-diversified series, and each of the other funds is a diversified series of the Trust, an open-end management investment company.

Prior to the merger, U.S. Global Investors Funds, an open-end management investment company, was originally incorporated in Texas in 1969 as United Services Funds, Inc. and was reorganized as a Massachusetts business trust on July 31, 1984. The trust changed its name to U.S. Global Investors Funds on February 24, 1997. The Gold and Precious Metals Fund, the World Precious Minerals, the Global Resources, and the China Region Funds were non-diversified series of the trust, and the All American Equity Fund (the All American Fund), Tax Free Fund, Near-Term Tax Free Fund, U.S. Government Securities Savings Fund and U.S. Treasury Securities Cash Fund were diversified series of the trust. On February 15, 2002, the World Gold Fund changed its name to the World Precious Minerals Fund. On December 1, 2007, the Gold Shares Fund changed its name to the Gold and Precious Metals Fund. On October 1, 2008, the China Region Opportunity Fund changed its name to the China Region Fund.

Prior to the merger, U.S. Global Accolade Funds was an open-end management investment company and a Massachusetts business trust organized on April 16, 1993. The Eastern European Fund and the Global Emerging Markets Fund were non-diversified series of the trust. The Holmes Growth Fund and the Global MegaTrends Fund were diversified series of the trust. The Eastern European Fund commenced operations on March 31, 1997, the Global Emerging Markets Fund commenced operations on February 24, 2005, the Holmes Growth Fund commenced operations on October 17, 1994, and the Global MegaTrends Fund commenced operations on October 21, 1991, and became a series of the trust on November 16, 1996, pursuant to a plan of reorganization. On October 1, 2007, the MegaTrends Fund changed it’s name to the Global MegaTrends Fund.

The trustees shall accept investments in any series of the Trust from such persons and on such terms as they may from time to time authorize. Investments in a series shall be credited to each shareholder’s account in the form of full or fractional shares at a net asset value per share determined after the investment is received; provided, however, that the trustees may, in their sole discretion, (a) fix the net asset value per share of the initial capital contribution or (b) impose a sales charge or other fee in connection with investments in the Trust in such manner and at such time as determined by the trustees. The trustees shall have the right to refuse to accept investments in any series at any time without any cause or reason therefore whatsoever.

All consideration received by the Trust for the issue or sale of shares of a particular series, together with all assets in which such consideration is invested or reinvested, all income, earnings, profits, and proceeds thereof, including any proceeds derived from the sale, exchange or liquidation of such assets, and any funds or payments derived from any reinvestment of such proceeds in whatever form the same may be, shall be held and accounted for separately from the other assets of the Trust and of every other series and may be referred to herein as “assets belonging to” that series. The assets belonging to a particular series shall belong to that Series for all purposes, and to no other series, subject only to the rights of creditors of that series. In addition, any assets, income, earnings, profits or funds, or payments and proceeds with respect thereto, which are not readily identifiable as belonging to any particular Series shall be allocated by the Trustees between and among one or more of the series in such manner as the Trustees, in their sole discretion, deem fair and equitable. Each such allocation shall be conclusive and binding upon the shareholders of all series for all purposes, and such assets, income, earnings, profits or funds, or payments and proceeds with respect thereto shall be assets belonging to that series. The assets belonging to a particular series shall be so recorded upon the books of the Trust, and shall be held by the Trustees in trust for the benefit of the holders of shares of that series. The assets belonging to each particular series shall be charged with the liabilities of that series and all expenses, costs, charges, and reserves attributable to that Series. Any general liabilities, expenses, costs, charges, or reserves of the Trust which are not readily identifiable as belonging to a particular series shall be allocated and charged by the Trustees between or among any one or more of the Series in such manner as the Trustees, in their sole discretion, deem fair and equitable. Each such allocation shall be conclusive and binding upon the shareholders of all series for all purposes.

Without limitation of the foregoing, but subject to the right of the trustees in their discretion to allocate general liabilities, expenses, costs, charges, or reserves as herein provided, the debts, liabilities, obligations, and expenses incurred, contracted for or otherwise existing with respect to a particular series shall be enforceable against the assets of such series and not against the assets of any other series of the assets of the Trust generally. Notice of this contractual limitation on inter-series liabilities may, in the Trustee’s sole discretion, be set forth in the certificate of trust of the Trust (whether originally or by amendment) as filed or to be filed in the Office of the Secretary of State of the State of Delaware pursuant to the Delaware Statutory Trust Act (the Delaware Act), and upon the giving of such notice in the certificate of trust, the statutory provisions of Section 3804 of the Delaware Act relating to limitations on

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liabilities among series (and the statutory effect under Section 3804 of setting forth such notice in the certificate of trust) shall become applicable to the Trust and each series. Any person extending credit to, contracting with or having any claim against any series may look only to the assets of that series to satisfy or enforce any debt, liability, obligation or expense incurred, contracted for or otherwise existing with respect to that series. No shareholder or former shareholder of any series shall have a claim on, or any right to, any assets allocated or belonging to any other series.

Shareholders shall have no preemptive or other right to subscribe to any additional shares or other securities issued by the Trust or the trustees, whether of the same or other series. In addition, shares shall not entitle shareholders to preference, appraisal, conversion or exchange rights (except as specified herein or as specified by the trustees when creating the shares, as in preferred shares).

Each shareholder of the Trust and of each series shall not be personally liable for debts, liabilities, obligations and expenses incurred by, contracted for, or otherwise existing with respect to, the Trust or by or on behalf of any series. The trustees shall have no power to bind any shareholder personally or to call upon any shareholder for the payment of any sum of money or assessment whatsoever other than such as the shareholder may at any time personally agree to pay by way of subscription for any shares or otherwise. Every note, bond, contract or other undertaking issued by or on behalf of the Trust or the trustees relating to the Trust or to a series shall include a recitation limiting the obligation represented thereby to the Trust or to one or more series and its or their assets (but the omission of such a recitation shall not operate to bind any shareholder or trustee of the Trust). Shareholders shall have the same limitation of personal liability as is extended to shareholders of a private corporation for profit incorporated in the State of Delaware. Every written obligation of the Trust or any series shall contain a statement to the effect that such obligation may only be enforced against the assets of the appropriate series or all series; however, the omission of such statement shall not operate to bind or create personal liability for any shareholder or trustee.

Every shareholder, by virtue of having purchased a share, shall become a shareholder and shall be held to have expressly assented and agreed to be bound by the terms of the Agreement and Declaration of Trust.

FUND POLICIES

The following information supplements the discussion of each fund’s policies discussed in the funds’ prospectus.

INVESTMENT RESTRICTIONS. If a percentage investment restriction other than a restriction on borrowing is adhered to at the time of investment, a later increase or decrease in percentage, resulting from a change in values of portfolio securities or amount of net assets, will not be considered a violation of any of the following restrictions.

INDUSTRY CLASSIFICATION. All funds except the Eastern European Fund and Global Emerging Markets Fund will use the Bloomberg Sub-Industry Classifications for industry classification purposes. The Eastern European Fund and the Global Emerging Markets Fund will use the Morgan Stanley Capital International and S&P Global Industry Classification Standard (GICS) to determine industry classifications.

FUNDAMENTAL INVESTMENT RESTRICTIONS

Each fund will not change any of the following investment restrictions without the affirmative vote of a majority of the outstanding voting securities of the fund, which, as used herein, means the lesser of (1) 67% of the fund’s outstanding shares present at a meeting at which more than 50% of the outstanding shares of the fund are represented either in person or by proxy, or (2) more than 50% of the fund’s outstanding shares.

A fund may not:

	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.

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	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 fund’s 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.

The Tax Free Fund and the Near-Term Tax Free Fund will consider industrial revenue bonds where payment of principal and interest is the ultimate responsibility of companies within the same industry as securities from one industry. The China Region Fund will consider a foreign government to be an “industry.”

NON-FUNDAMENTAL INVESTMENT RESTRICTIONS

The following investment restrictions may be changed by the board of trustees without a shareholder vote.

	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 fund’s 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.

VALUATION OF SHARES

An equity security traded on a domestic stock exchange is valued at its last reported sale price on the primary exchange, as deemed appropriate by the Adviser on the valuation date. If there are no sales on the primary exchange that day, an equity security will be valued at the mean between the last bid and ask quotation. If there is no last bid and ask quotation available, the valuation will revert to the last sales price.

A foreign equity security traded on one or more foreign stock exchanges is valued at its last reported sale price, or the official closing price if deemed appropriate by the Adviser, on the primary exchange of its market on the valuation date. If there are no sales on the primary exchange that day, an equity security will be valued at the mean between the last bid and ask quotation.

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Equity securities traded on NASDAQ are valued at the NASDAQ Official Closing Price. If there are no sales that day, such securities will be valued at the mean between the bid and ask quotation, if available. Other over-the-counter securities are valued at the last sale price, if published, or the mean between the last bid and ask quotation, if available.

Municipal debt securities and long-term U.S. Government obligations are each valued by a pricing service that utilizes a matrix pricing system to value such securities.

Debt securities with maturities of sixty days or less at the time of purchase are valued based on amortized cost. This involves valuing a security at its initial cost on the date of purchase, and afterwards, any discount or premium is accreted or amortized at a constant rate until maturity, regardless of the impact of fluctuating interest rates on the market value of the security.

To maintain a constant per share price of $1.00 for the money market funds, portfolio investments are valued at amortized cost.

If market quotations are not readily available, or when the Adviser believes that a readily available market quotation or other valuation produced by the fund’s valuation policies is not reliable, the fund values the assets at fair value using procedures established by the board of trustees. The trustees have delegated pricing authority to the fair valuation committee of the adviser, for certain pricing issues, as defined in the valuation policies.

Calculation of net asset value may not take place at the same time as the determination of the prices of a portfolio used in such calculations. Events affecting the value of securities that occur between the time prices are established and the close of regular trading on the New York Stock Exchange are not reflected in the calculation of net asset value unless the fair valuation committee decides that the event would materially affect the net asset value. If the event would materially affect the fund’s net asset value, the security will be fair valued by the fair valuation committee or, at its discretion, by an independent fair valuation vendor.

Net asset value (NAV) is calculated in U.S. dollars. Assets and liabilities valued in another country are converted to U.S. dollars using the exchange rate in effect at the close of the New York Stock Exchange.

INVESTMENT STRATEGIES AND RISKS

The following information supplements the discussion of each fund’s investment strategies and risks in the prospectus.

HOLMES GROWTH FUND AND GLOBAL MEGATRENDS FUND

REAL ESTATE INVESTMENT TRUSTS (REITS). The funds may invest in real estate investment trusts (REITs), which may subject the fund to many of the same risks related to the direct ownership of real estate. These risks may include declines in the value of real estate, risks related to economic factors, changes in demand for real estate, change in property taxes and property operating expenses, casualty losses, and changes to zoning laws. REITs are also dependent to some degree on the capabilities of the REIT manager. In addition, the failure of a REIT to continue to qualify as a REIT for federal income tax purposes would have an adverse effect upon the value of a portfolio’s investment in that REIT.

GOLD and PRECIOUS METALS FUND, WORLD PRECIOUS MINERALS FUND, AND GLOBAL RESOURCES FUND

The Gold and Precious Metals Fund, World Precious Minerals Fund, and the Global Resources Fund may invest in precious metals such as gold, silver, platinum, and palladium bullion. Because precious metals do not generate investment income, the return from such investments will be derived solely from the gains and losses realized by the funds upon the sale of the precious metals. The funds may also incur storage and other costs relating to their investments in precious metals. Under certain circumstances, these costs may exceed the custodial and brokerage costs associated with investments in portfolio securities. To qualify as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986 as amended (the “Code”), at least ninety percent (90%) of a fund’s gross income for any taxable year must be derived from dividends, interest, gains from the disposition of securities, and income and gains from certain other specified sources and transactions (Gross Income Test). Gains from the disposition of precious metals will not qualify for purposes of satisfying the Gross Income Test. Additionally, to qualify under Subchapter M of the Code, at the close of each quarter of each fund’s taxable year, at least fifty percent (50%) of the value of the fund’s total assets must be represented by cash, Government securities and certain other specified assets (Asset Value Test). Investments in precious metals will not qualify for purposes of satisfying the Asset Value Test. To maintain each fund’s qualification as a regulated investment company under the Code, each fund will establish procedures to monitor its investments in precious metals for purposes of satisfying the Gross Income Test and the Asset Value Test.

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Gold and Precious Minerals Fund

The Gold and Precious Metals Fund intends to concentrate its investments in common stock of companies predominately involved in the mining, fabrication, processing, marketing, or distribution of metals including gold, silver, platinum group, palladium and diamonds. Gold companies include mining companies that exploit gold deposits that are supported by by-products and co-products such as copper, silver, lead and zinc, and also diversified mining companies which produce a meaningful amount of gold. The fund focuses on selecting companies with established producing mines.

World Precious Minerals Fund

The World Precious Minerals Fund intends to concentrate its investments in common stocks of companies principally engaged in the exploration for, mining and processing of, or dealing in precious minerals such as gold, silver, platinum, and diamonds.

The production and marketing of gold may be affected by the actions of the International Monetary Fund and certain governments, or by changes in existing governments. In the current order of magnitude of production of gold bullion, the four largest producers of gold are the Republic of South Africa, the United States, Australia, and Canada. Economic and political conditions prevailing in these countries may have direct effects on the production and marketing of newly-produced gold and sales of central bank gold holdings. In South Africa, the activities of companies engaged in gold mining are subject to the policies adopted by the Ministry of Mines. The Reserve Bank of South Africa, as the sole authorized sales agent for South African gold, has an influence on the price and timing of sales of South African gold. The Gold and Precious Metals Fund may have significant investments in South African issuers. The unsettled political and social conditions in South Africa may have disruptive effects on the market prices of the investments of the Gold and Precious Metals Fund and may impair its ability to hold investments in South African issuers.

Global Resources Fund

The Global Resources Fund intends to concentrate its investments in common stock of companies within the material resources sector such as oil, gas and basic materials.

GOLD and PRECIOUS METALS FUND, WORLD PRECIOUS MINERALS FUND, GLOBAL RESOURCES FUND, EASTERN EUROPEAN FUND, GLOBAL EMERGING MARKETS FUND AND CHINA REGION FUND

NON-DIVERSIFICATION. The funds have elected to be classified as non-diversified series. For a diversified fund, with respect to 75% of its total assets, the securities of any one issuer will not amount to any more than 5% of the value of the fund’s total assets or 10% of the outstanding voting securities of any single issuer. Under certain conditions, a non-diversified fund may invest without limit in the securities of any single issuer, subject to certain limitations of the Code. Each fund will comply with the diversification requirements imposed by the Code for qualification as a regulated investment company. Because the funds may invest a greater proportion of their assets in the securities of a small number of issuers, changes in the financial condition or market assessment of a single issuer may cause greater fluctuation and volatility in the funds’ total returns or asset valuations than if the funds were required to hold smaller positions of the securities of a larger number of issuers.

EASTERN EUROPEAN FUND

GEOGRAPHIC RISK.

The Czech Republic . The Prague Stock Exchange opened in April 1993 with 12 monetary institutions and 5 brokerage firms as its founding shareholders. The trading and information systems are based on a central automated trading system. The market price of securities is set in this automated system once a day, although a number of the largest stocks on the market now trade through a continuous system. Direct trades are concluded between members, recorded in the automated trading system, and settled through the Exchange Register of Securities. Only members of the Prague Stock Exchange can be participants in automated trades in blocks of securities.

Another method of trading is the over-the-counter market, which operates by directly accessing the Securities Centre. The Securities Act allows for off-exchange trading, which primarily benefits the millions of local shareholders who hold shares because of the original privatization of Czech industry.

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Concluded exchange deals are cleared by Securities Register Ltd., an offshoot of the Prague Stock Exchange. All exchange deals between members are guaranteed clearing; a guarantee fund covers the risks and liabilities inherent in exchange trading.

Hungary . In 1995, the Hungarian government implemented a new stabilization program that would privatize state enterprises and state owned banks. Significant privatization in recent years includes oil and gas companies, gas and electricity distribution companies, and partial privatization of telecommunications, commercial banking, and television companies. The Budapest Commodity and Stock Exchange opened in 1864 and became one of the largest markets in Central Europe. After the Second World War, the exchange was closed by the Communists and reopened 42 years later in June 1990. The Budapest Stock Exchange is a two-tier market consisting of listed and traded stocks. The over-the-counter market is not regulated and any public company’s shares can be traded on it.

Poland. The Act establishing the Warsaw Stock Exchange (1991) provided the basic legal framework for securities activities. The Law on Public Trading in Securities and trust funds (1991) regulates the public offerings of securities, the establishment of open-end investment funds and the operations of securities brokers. Polish equities are held on a paperless book-entry system, based on a computerized central depository. For listed securities, it is a requirement that trades take place through the market for the change of ownership to take place.

Russia . Russia does not have a centralized stock exchange, although exchange activity has developed regionally and shares are now traded on exchanges located throughout the country. The majority of stocks in Russia are traded on the over-the-counter market. It is through the over-the-counter market that foreign investors typically participate in the Russian equity market.

One of the largest problems in the equity market continues to be shareholders’ property rights. In Russia, the only proof of ownership of shares is an entry in the shareholders’ register. Despite a presidential decree requiring companies with over 1,000 shareholders to have an independent body to act as their registrar, in practice a company’s register is still susceptible to manipulation by management. To solve this and related problems, the Federal Securities Commission was created. Also, Russian law requires banks and market professionals to acquire a license before handling securities.

Slovenia. The Republic of Slovenia is situated between Italy, Austria and Croatia.

Slovenia’s transition from a socialist regime to a market economy continues to be very successful and the economy is currently enjoying healthy growth and balanced trade.

Slovenia became one of the first candidate countries to finalize negotiations with the EU and obtained full EU membership in 2004. EU membership will improve Slovenia’s risk profile and drive foreign investment which will lead to an increased level of liquidity in the stock market and a rise in company valuations.

CHINA REGION FUND

GEOGRAPHIC RISK

The China Region Fund (China Region Fund) will invest primarily in securities which are listed or otherwise traded by authorized brokers and other entities and will focus its investments on equities and quasi-equity securities. Quasi-equity securities may include, for example: warrants or similar rights or other financial instruments with substantial equity characteristics, such as debt securities convertible into equity securities. Although the China Region Fund expects to invest primarily in listed securities of established companies, it may, subject to local investment limitations, invest in unlisted securities of China companies and companies that have business associations in the China Region, including investments in new and early stage companies. This may include direct equity investments. Such investments may involve a high degree of business and financial risk. Because of the absence of any trading markets for these investments, the China Region Fund may find itself unable to liquidate such securities in a timely fashion, especially in the event of negative news regarding the specific securities or the China markets in general. Such securities could decline significantly in value prior to the China Region Fund’s being able to liquidate such securities. In addition to financial and business risks, issuers whose securities are not listed will not be subject to the same disclosure requirements applicable to issuers whose securities are listed.

The China Region Fund is non-diversified and may invest a significant portion of its assets in a small number of companies. This may cause the performance of the fund to be dependent upon the performance of one or more selected companies, which may increase the volatility of the fund.

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People’s Republic of China . The People’s Bank of China is officially responsible for managing stock markets in the People’s Republic of China (PRC), regulating all trading and settlement and approving all issues of new securities. The Shanghai and Shenzhen Stock Exchanges are highly automated with trading and settlement executed electronically. Considerable autonomy has been given to local offices of the State Commission of Economic System Reform in developing securities markets. They are charged with identifying suitable companies for listing.

There are currently two officially recognized securities exchanges in China — the Shanghai Stock Exchange, which opened in December 1990, and the Shenzhen Stock Exchange, which opened in July 1991. Shares traded on these exchanges are of two types — “A” shares, which can be traded only by Chinese investors and qualified foreign institutional investors, and “B” shares. The “B” share market was, prior to February 19, 2001, restricted to individuals and corporations who were not residents of China. However, on February 19, 2001, the Chinese Securities Regulatory Commission (CSRC) announced that domestic Chinese investors with legal foreign currency accounts might invest in “B” shares as well. The “A” share market is now open to qualified foreign institutional investors. The settlement period for “B” share trades is the same in Shenzhen and Shanghai. Settlements are effected on the third business day after the transaction. As of July 2007, one hundred and forty-three companies were authorized to issue what are called “H” shares, which trade in Hong Kong and may be purchased by anyone.

The China Region Fund will invest in both new and existing enterprises registered and operating in China. These will include wholly Chinese-owned enterprises, wholly foreign-owned enterprises, and Sino-foreign joint ventures. It is not the intention of the China Region Fund to limit its investments to securities listed on the Shenzhen and Shanghai exchanges alone.

Hong Kong. Sovereignty over Hong Kong was transferred from Great Britain to the PRC on July 1, 1997, at which time Hong Kong became a Special Administrative Region (SAR) of the PRC. Under the agreement providing for such transfer (known as the Joint Declaration) and the PRC law implementing its commitments hereunder (Basic Law), the current social and economic systems in Hong Kong are to remain unchanged for at least 50 years, and Hong Kong is to enjoy a high degree of autonomy except in foreign and defense affairs. The SAR will be vested with executive, legislative, and judicial power. Laws currently in force, as they may be amended by the SAR Legislature, are to remain in force except to the extent they contravene the Basic Law. The PRC may not levy taxes on the SAR, the Hong Kong dollar is to remain fully convertible, and Hong Kong is to remain a free port. Under the terms of the Basic Law, Hong Kong’s current social freedoms, including freedoms of speech, press, assembly, travel, and religion, are not to be affected. It is not clear how future developments in Hong Kong and China may affect the implementation of the Basic Law after the transfer of sovereignty in 1997.

It is to be expected that the Hong Kong stock market will remain volatile in response to prevailing perceptions of political developments in China. Foreign enterprises are treated virtually the same as domestic enterprises and there are no restrictions on exchange of foreign currencies or on the repatriation of profits. Import and export licenses are easy to obtain. There are no exchange controls, investment restrictions, or dividend withholding taxes. However, currently there are no laws in Hong Kong that specifically protect foreign investors against expropriation.

Taiwan. The Taiwan Stock Exchange (TSE), the sole stock exchange in Taiwan, is owned by government-controlled enterprises and private banks. In 1968, the Securities and Exchange Law was passed and, since that time, the Taiwan securities market has been regulated by the Taiwan Securities and Exchange Commission (TSEC), which, in turn, is supervised by the Ministry of Finance (MOF). The Central Bank of China (CBC) is also responsible for supervising certain aspects of the Taiwan securities market.

While, historically, foreign individual investors have not been permitted to invest directly in securities listed on the TSE, since 1990 certain foreign institutional investors have been permitted access to the Taiwan securities market. Currently, foreign institutional investors that meet certain guidelines promulgated by the TSEC and which are also approved by the TSEC, the MOF and the CBC, will be permitted to invest in TSE listed securities. However, qualifying foreign institutional investors (such as the China Region Fund) may not own more than 5% of the shares of a company listed on the TSE, and the total foreign ownership of any listed company may not exceed 10%. In addition, the Taiwanese government prohibits foreign investment in certain industries including transportation and energy companies. Furthermore, Taiwan imposes an overall country limit on investment and requires a long-term commitment. Over time, restrictions on investments in Taiwan have begun to ease to permit greater and more flexible investment in Taiwanese securities.

The political reunification of China and Taiwan is a highly problematic issue that may not be settled in the near future. Taiwan’s economic interaction with China can take place only through indirect channels (generally via Hong Kong) due to the official prohibitions on direct trade between the PRC and Taiwan. Nevertheless, Taiwan has become a significant investor in China and China has become one of the largest markets for Taiwanese goods.

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Exchange Control . PRC currency, the Renminbi (RMB), is not freely convertible. The exchange rate of RMB against foreign currencies is regulated and published daily by the State Administration of Exchange Control (SAEC). In 1986, to help solve the foreign exchange problems of foreign investors, China established Foreign Exchange Adjustment Centers, commonly referred to as “swap centers,” in various cities. These swap centers provide an official forum where foreign invested enterprises may, under the supervision and control of SAEC and its branch offices, engage in mutual adjustment of their foreign exchange surpluses and shortfalls. More recently, regulations have been relaxed to allow Chinese state enterprises and individuals to participate in foreign exchange swap transactions. Trading of RMB and foreign currencies at the swap centers is conducted at a rate determined by supply and demand rather than at the official exchange rate. Such market exchange rates can be highly volatile and are subject to sharp fluctuations depending on market conditions.

The China Region Fund may use official or market rates of exchange in connection with portfolio transactions and net asset value determinations consistent with prevailing practices in the relevant markets or locations, except that the China Region Fund will not use any exchange rate if the effect of such use would be to restrict repatriation of assets.

No exchange control approval is required for the China Region Fund to acquire “B” shares listed on stock exchanges. Dividends and/or proceeds from the sale of securities purchased by the China Region Fund in listed China companies may be remitted outside China, subject to payment of any relevant taxes and completion of the requisite formalities.

Shanghai securities are now being quoted in U.S. dollars and Shenzhen securities are now being quoted in Hong Kong dollars.

China and Taiwan joined the World Trade Organization (WTO) as of November 2002. Membership has opened up new channels of trade relations that are overseen by the WTO. This will both open up new trade agreements and provide the proper structure for trade between China and Taiwan and the rest of the WTO membership.

TAX FREE FUND AND NEAR-TERM TAX FREE FUND

The funds invest primarily in municipal bonds. Municipal securities are generally of two principal types — notes and bonds. Municipal notes generally have maturities of one year or less and provide for short-term capital needs. Municipal bonds normally have maturities of more than one year and meet longer-term needs. Municipal bonds are classified into two principal categories — general obligation bonds and revenue bonds. General obligation bonds are backed by the taxing power of the issuer and are considered the safest type of municipal bond. Revenue bonds are backed by the revenues derived from a project or facility.

The tax free funds invest only in debt securities earning one of the four highest ratings by Moody’s Investor’s Services (Moody’s) (Aaa, Aa, A, Baa) or by Standard & Poors Corporation (S&P) (AAA, AA, A, BBB) (or, if not rated by Moody’s or Standard & Poors, as determined by the Adviser to be of comparable quality). Not more than 10% of either of the fund’s total assets will be invested in the fourth rating category. Investments in the fourth category may have speculative characteristics and therefore, may involve higher risks. Investments in the fourth rating category of bonds are generally regarded as having an adequate capacity to pay interest and repay principal. However, these investments may be more susceptible to adverse changes in the economy. Municipal notes (including variable rate demand obligations) must be rated MIG1/VMIG2 or MIG2/VMIG2 by Moody’s or SP-1 or SP-2 by S&P (or if not rated, as determined by the Adviser to be of comparable quality). Tax-exempt commercial paper must be rated P-1 or P-2 by Moody’s or A-1 or A-2 by S&P (or if not rated, as determined by the Adviser to be of comparable quality).

The funds may purchase variable and floating rate obligations from issuers or may acquire participation interest in pools of these obligations from banks or other financial institutions. Variable and floating rate obligations are municipal securities whose interest rates change periodically. They normally have a stated maturity greater than one year, but permit the holder to demand payment of principal and interest anytime or at specified intervals.

The funds may purchase obligations with term puts attached. “Put” bonds are tax-exempt securities that may be sold back to the issuer or a third party at face value before the stated maturity. The put feature may increase the cost of the security, consequently reducing the yield of the security.

The funds may purchase municipal lease obligations or certificates of participation in municipal lease obligations. A municipal lease obligation is not a general obligation of the municipality for which the municipality pledges its taxing power. Ordinarily, a lease obligation will contain a “nonappropriation” clause if the municipality has no obligation to make lease payments in future years unless

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money is appropriated for that purpose annually. Because of the risk of nonappropriation, some lease obligations are issued with third-party credit enhancements, such as insurance or a letter of credit.

Municipal lease obligations are subject to different revenue streams than are those associated with more conventional municipal securities. For this reason, before investing in a municipal lease obligation, the Adviser will consider, among other things, whether (1) the leased property is essential to a governmental function of the municipality, (2) the municipality is prohibited from substituting or purchasing similar equipment if lease payments are not appropriated, and (3) the municipality has maintained good market acceptability for its lease obligations in the past.

The funds may purchase zero-coupon bonds. Zero-coupon bonds are bonds that do not pay interest at regular intervals and are issued at a discount from face value. The discount approximates the total amount of interest the bond will accrue from the date of issuance to maturity. Even though such securities do not pay current interest in cash, a fund is nonetheless required to accrue interest income on these investments and to distribute the interest income at least annually to shareholders. Thus, a fund could be required at times to liquidate other investments to satisfy distribution requirements.

While the funds primarily invest in municipal bonds the income of which is free from federal income taxes, they may also invest in repurchase agreements and other securities that may earn taxable income. Moreover, the funds may sell portfolio securities at a gain, which if held more than a year may be taxed to shareholders as long- term capital gains and if held one year or less may be taxed to shareholders as ordinary income.

Subsequent to a purchase by either fund, an issue of municipal bonds may cease to be rated or its rating may be reduced below the minimum required for purchase by that fund. Neither event will require sale of such municipal bonds by either tax free fund, but the Adviser will consider such event in its determination of whether either fund should continue to hold the municipal bonds. To the extent that the rating given by Moody’s or Standard & Poors for municipal bonds may change as a result of changes in such organizations or their rating systems, the funds will attempt to use comparable ratings as standards for their investments in accordance with their investment policies.

MOODY’S INVESTORS SERVICE, INC. Aaa-the “best quality.” Aa- “high quality by all standards,” but margins of protection or other elements make long-term risks appear somewhat larger than Aaa rated municipal bonds. A- “upper medium grade obligation.” Security for principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment sometime in the future. Baa- “medium grade obligations.” Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and have speculative characteristics as well.

STANDARD & POORS CORPORATION. AAA- “obligation of the highest quality.” AA-issues with investment characteristics “only slightly less marked than those of the prime quality issues.” A- “the third strongest capacity for payment of debt service.” Principal and interest payments on the bonds in this category are considered safe. It differs from the two higher ratings, because with respect to general obligation bonds, there is some weakness, which, under certain adverse circumstances, might impair the ability of the issuer to meet debt obligations at some future date. With respect to revenue bonds, debt service coverage is good but not exceptional, and stability of the pledged revenues could show some variations because of increased competition or economic influences on revenues . BBB- “regarded as having adequate capacity to pay interest and repay principal.” Whereas it normally exhibits adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal.

GENERAL INFORMATION ON MUNICIPAL BONDS. Municipal bonds are generally understood to include debt obligations issued to obtain funds for various public purposes, including the construction of a wide range of public facilities such as airports, bridges, highways, housing, hospitals, mass transportation, schools, streets, and water and sewer works. Municipal bonds may also be issued to refund outstanding obligations. In addition, certain types of private activity bonds are issued by or on behalf of public authorities to obtain funds to provide privately operated hazardous waste-treatment facilities, certain redevelopment projects, airports, docks, and wharves (other than lodging, retail, and office facilities), mass commuting facilities, multifamily residential rental property, sewage and solid waste disposal property, facilities for the furnishing of water, and local furnishing of electric energy or gas or district heating and cooling facilities. Such obligations are considered to be municipal bonds provided that the interest paid thereon qualifies as exempt from Federal income tax, in the opinion of bond counsel, to the issuer. In addition, if the proceeds from private activity bonds are used for the construction, equipment, repair or improvement of privately operated industrial or commercial facilities, the interest paid on such bonds may be exempt from Federal income tax, although current Federal tax laws place substantial limitations on the size of such issues.

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In order to be classified as a “diversified” investment company under the 1940 Act, a mutual fund may not, with respect to 75% of its total assets, invest more than 5% of its total assets in the securities of any one issuer (except U.S. Government obligations) or own more than 10% of the outstanding voting securities of any one issuer. For the purpose of diversification under the 1940 Act, the identification of the issuer of municipal bonds depends on the terms and conditions of the security. When the assets and revenues of an agency, authority, instrumentality, or other political subdivision are separate from those of the government creating the issuing entity and the security is backed only by the assets and revenues of such entity, such entity would be deemed to be the sole issuer. Similarly, in the case of a private activity bond, if that bond is backed only by the assets and revenues of the non-governmental user, then such non-governmental user would be deemed the sole issuer. If, however, in either case the creating government or some other entity guarantees a security, such a guarantee may be considered a separate security and is to be treated as an issue of such government or other entity.

The yields on municipal bonds are dependent on a variety of factors, including general economic and monetary conditions, money market factors, conditions of the municipal bond market, size of a particular offering, maturity of the obligation, and rating of the issue. The imposition of a mutual fund’s management fees, as well as other operating expenses, will have the effect of reducing the yield to investors.

Municipal bonds are also subject to the provisions of bankruptcy, insolvency and other laws affecting the rights and remedies of creditors, such as the Federal Bankruptcy Code and laws, if any, which may be enacted by Congress or state legislatures extending the time for payment of principal or interest, or both, or imposing other constraints upon enforcement of such obligations or upon municipalities by levying taxes. There is also the possibility that, as a result of litigation or other conditions, the power or ability of any one or more issuers to pay, when due, principal and interest on its, or their, municipal bonds may be materially affected. The Tax Reform Act of 1986 enlarged the scope of the alternative minimum tax. As a result, interest on private activity bonds will generally be a preference item for alternative minimum tax purposes.

From time to time, proposals to restrict or eliminate the Federal income tax exemption for interest on municipal bonds have been introduced before Congress. Similar proposals may be introduced in the future. If such a proposal were enacted, the availability of municipal bonds for investment by the tax free funds would be adversely affected. In such event, the tax free funds would re-evaluate their investment objective and policies.

MUNICIPAL NOTES. Municipal notes are generally used to provide for short-term capital needs and generally have maturities of one year or less. Municipal notes include:

	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 issuer’s 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.

VARIABLE RATE DEMAND OBLIGATIONS. Variable rate obligations have a yield that is adjusted periodically based upon changes in the level of prevailing interest rates. Such adjustments are generally made on a daily, weekly, or monthly basis. Variable rate obligations may lessen the capital fluctuations usually inherent in fixed income investments.

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Unlike securities with fixed rate coupons, variable rate instrument coupons are not fixed for the full term of the instrument. Rather, they are adjusted periodically based upon changes in prevailing interest rates. The more frequently such instruments are adjusted, the less such instruments are affected by interest rate changes. The value of a variable rate instrument, however, may fluctuate in response to market factors and changes in the creditworthiness of the issuer. By investing in variable rate obligations the funds seek to take advantage of the normal yield curve pattern that usually results in higher yields on longer-term investments. This policy also means that should interest rates decline, a fund’s yield will decline and that fund and its shareholders will forego the opportunity for capital appreciation of that fund’s investments and of their shares to the extent a portfolio is invested in variable rate obligations. Should interest rates increase, a fund’s yield will increase and that fund and its shareholders will be subject to lessened risks of capital depreciation of its portfolio investments and of their shares to the extent a portfolio is invested in variable rate obligations. There is no limitation on the percentage of a fund’s assets which may be invested in variable rate obligations. For purposes of determining a fund’s weighted average portfolio maturity, the term of a variable rate obligation is defined as the longer of the length of time until the next rate adjustment or the time of demand.

Floating rate demand notes have an interest rate fixed to a known lending rate (such as the prime rate) and are automatically adjusted when the known rate changes. Variable rate demand notes have an interest rate that is adjusted at specified intervals to a known rate. Demand notes provide that the holder may demand payment of the note at its par value plus accrued interest by giving notice to the issuer. To ensure that ability of the issuer to make payment upon such demand, the note may be supported by an unconditional bank letter of credit.

The trustees have approved investments in floating and variable rate demand notes upon the following conditions: the funds have an unconditional right of demand, upon notice to exceed thirty days, against the issuer to receive payment; the Adviser determines the financial condition of the issuer and continues to monitor it in order to be satisfied that the issuer will be able to make payment upon such demand, either from its own resources or through an unqualified commitment from a third party; and the rate of interest payable is calculated to ensure that the market value of such notes will approximate par value on the adjustment dates.

OBLIGATIONS WITH TERM PUTS ATTACHED. The funds may purchase municipal securities together with the right that they may resell the securities to the seller at an agreed-upon price or yield within a specified period prior to the maturity date of the securities. Although it is not a put option in the usual sense, such a right to resell is commonly known as a “put.” The funds may purchase obligations with puts attached from banks and broker-dealers.

The price the funds expect to pay for municipal securities with puts generally is higher than the price which otherwise would be paid for the municipal securities alone. The funds will use puts for liquidity purposes in order to permit them to remain more fully invested in municipal securities than would otherwise be the case by providing a ready market for certain municipal securities in their portfolio at an acceptable price. The put generally is for a shorter term than the maturity of the municipal security and does not restrict in any way the funds’ ability to dispose of (or retain) the municipal security.

In order to ensure that the interest on municipal securities subject to puts is tax-exempt to either fund, each will limit its use of puts in accordance with applicable interpretations and rulings of the Internal Revenue Service.

Since it is difficult to evaluate the likelihood of exercise of the potential benefit of a put, it is expected that puts will be determined to have a “value” of zero, regardless of whether any direct or indirect consideration was paid. Accordingly, puts as separate securities are expected not to affect the calculation of the weighted average portfolio maturity. Where a fund has paid for a put, the cost will be reflected as unrealized depreciation in the underlying security for the period during which the commitment is held, and therefore would reduce any potential gain on the sale of the underlying security by the cost of the put. There is a risk that the seller of the put may not be able to repurchase the security upon exercise of the put by that tax free fund. To minimize such risks, the tax free funds will only purchase obligations with puts attached from sellers whom the Adviser believes to be creditworthy.

U.S. GOVERNMENT SECURITIES SAVINGS FUND AND U.S. TREASURY SECURITIES CASH FUND

The U.S. Treasury Securities Cash Fund and U.S. Government Securities Savings Fund have adopted a fundamental policy requiring use of best efforts to maintain a constant net asset value of $1.00 per share. Shareholders should understand that, while each fund will use its best efforts to attain this objective, there can be no guarantee that it will do so. The U.S. Treasury Securities Cash Fund and U.S. Government Securities Savings Fund value their respective portfolio securities on the basis of the amortized cost method. This requires that those funds maintain a dollar-weighted average portfolio maturity of 90 days or less, generally purchase only instruments having remaining maturities of 397 days or less, and invest only in securities determined by the board of trustees of the Trust to be of high quality with minimal credit risks.

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COMMON INVESTMENT STRATEGIES AND RELATED RISKS

The following investment strategies apply to the All American 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 (collectively, “Equity Funds”), Tax Free Fund, Near-Term Tax Free Fund, U.S. Government Securities Savings Fund, and U.S. Treasury Securities Cash Fund.

MARKET RISK. Investments in equity and debt securities are subject to inherent market risks and fluctuations in value due to earnings, economic conditions, quality ratings and other factors beyond the Adviser’s control. Therefore, the return and net asset value of the funds, except the money market funds, will fluctuate.

FOREIGN SECURITIES. The Equity Funds may invest in foreign securities. Investing in securities issued by companies whose principal business activities are outside the United States may involve significant risks not present in domestic investments. For example, there is generally less publicly available information about foreign companies, particularly those not subject to the disclosure and reporting requirements of the United States securities laws. Foreign issuers are generally not bound by uniform accounting, auditing, and financial reporting requirements and standards of practice comparable to those applicable to domestic issuers. Investments in foreign securities also involve the risk of possible adverse changes in investment or exchange control regulations, expropriation or confiscatory taxation, limitation of the removal of funds or other assets of the fund, political or financial instability or diplomatic and other developments that could affect such investment. In addition, economies of particular countries or areas of the world may differ favorably or unfavorably from the economy of the United States. It is anticipated that in most cases the best available market for foreign securities will be on exchanges or in over-the-counter markets located outside of the United States. Foreign stock markets, while growing in volume and sophistication, are generally not as developed as those in the United States are, and securities of some foreign issuers (particularly those in developing countries) may be less liquid and more volatile than securities of comparable United States companies. In addition, foreign brokerage commissions are generally higher than commissions on securities traded in the United States and may be non-negotiable. In general, there is less overall governmental supervision and regulation of foreign securities markets, broker/dealers, and issuers than in the United States.

AMERICAN DEPOSITORY RECEIPTS (ADRs) AND GLOBAL DEPOSITORY RECEIPTS (GDRs). ADRs are depository receipts typically issued by a U.S. bank or trust company that evidence ownership of underlying securities issued by a foreign corporation. GDRs are typically issued by foreign banks or trust companies, although they also may be issued by U.S. banks or trust companies, and evidence ownership of underlying securities issued by either a foreign or a United States corporation. Generally, depository receipts in registered form are designed for use in the U.S. securities market, and depository receipts in bearer form are designed for use in securities markets outside the United States. Depository receipts may not necessarily be denominated in the same currency as the underlying securities into which they may be converted. In addition, the issuers of the securities underlying unsponsored depository receipts are not obligated to disclose material information in the United States; and, therefore, there may be less information available regarding such issuers and there may not be a correlation between such information and the market value of the depository receipts. For purposes of a fund’s investment policies, all Equity Funds’ investments in depository receipts, except for the Holmes Growth Fund, will be deemed investments in the underlying securities (i.e., investments in foreign issuers). The Holmes Growth Fund’s investment in depository receipts will not be treated as an investment in a foreign issuer.

EMERGING MARKETS. The Equity Funds may invest in countries considered by the Adviser or Subadviser to represent emerging markets. The Adviser or Subadviser determines which countries are emerging market countries by considering various factors, including development of securities laws and market regulation, total number of issuers, total market capitalization, and perceptions of the investment community. Generally, emerging markets are those other than North America, Western Europe, and Japan.

Investing in emerging markets involves risks and special considerations not typically associated with investing in other more established economies or securities markets. Investors should carefully consider their ability to assume the below listed risks before making an investment in a fund. Investing in emerging markets is considered speculative and involves the risk of total loss of investment.

Risks of investing in emerging markets include:

The risk that a fund’s 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 fund’s 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 fund’s 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 shareholder’s 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 fund’s 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 fund’s 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 fund’s 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.

REPURCHASE AGREEMENTS. The funds may invest a portion of their assets in repurchase agreements with United States broker-dealers, banks and other financial institutions, provided the funds’ custodian always has possession of securities serving as collateral or has evidence of book entry receipt of such securities. In a repurchase agreement, a fund purchases securities subject to the seller’s agreement to repurchase such securities at a specified time (normally one day) and price. The repurchase price reflects an agreed upon interest rate during the time of investment. All repurchase agreements must be collateralized with securities (typically United States government or government agency securities), the market values of which equal or exceed 102% of the principal amount of the repurchase obligation. If an institution enters an insolvency proceeding, the resulting delay in liquidation of securities serving as collateral could cause a fund some loss if the value of the securities declined before liquidation. To reduce the risk of loss, funds will enter into repurchase agreements only with institutions and dealers the Adviser considers creditworthy.

SECURITIES LENDING. Each fund may lend its portfolio securities to qualified securities dealers or other institutional investors. Currently, it is not the intention of any fund to lend securities. When lending securities, a fund will receive cash or high-quality securities as collateral for the loan. Each fund, except the government money market funds, may invest cash collateral in repurchase agreements, including repurchase agreements collateralized with non-governmental securities. The government money market funds may invest cash collateral in repurchase agreements collateralized by obligations in which each fund may normally invest. Under the terms of the funds’ current securities lending agreements, the funds’ lending agent has guaranteed performance of the obligation of each borrower and each counterparty to each repurchase agreement in which cash collateral is invested.

A failure by a borrower to return the loaned securities when due could result in a loss to the fund if the value of the collateral is less than the value of the loaned securities at the time of the default. In addition, a fund could incur liability to the borrower if the value of any securities purchased with cash collateral decreases during the term of the loan.

BORROWING. The funds may have to deal with unpredictable cash flows as shareholders purchase and redeem shares. Under adverse conditions, the funds might have to sell portfolio securities to raise cash to pay for redemptions at a time when investment considerations would not favor such sales. In addition, frequent purchases and sales of portfolio securities tend to decrease fund performance by increasing transaction expenses.

Each fund may borrow money to the extent permitted under the 1940 Act. As a nonfundamental policy, a fund may borrow money for temporary or emergency purposes (not for leveraging or investment) in an amount not exceeding 33 1/3% of a fund’s total assets (including the amount borrowed) less liabilities (other than borrowing). Through such borrowings, these funds may avoid selling portfolio securities to raise cash to pay for redemptions at a time when investment considerations would not favor such sales. In addition, the funds’ performance may be improved due to a decrease in the number of portfolio transactions. After borrowing money, if subsequent shareholder purchases do not provide sufficient cash to repay the borrowed monies, a fund will liquidate portfolio securities in an orderly manner to repay the borrowed monies.

To the extent that a fund borrows money before selling securities, the fund would be leveraged such that the fund’s net assets may appreciate or depreciate more than an unleveraged portfolio of similar securities. Since substantially all of a fund’s assets will fluctuate in value and whereas the interest obligations on borrowings may be fixed, the net asset value per share of the fund will

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increase more when the fund’s portfolio assets increase in value and decrease more when the fund’s portfolio assets decrease in value than would otherwise be the case. Moreover, interest costs on borrowings may fluctuate with changing market rates of interest and may partially offset or exceed the returns that the funds earn on portfolio securities. Under adverse conditions, the funds might be forced to sell portfolio securities to meet interest or principal payments at a time when market conditions would not be conducive to favorable selling prices for the securities.

LOWER-RATED SECURITIES. The Equity Funds may invest in lower-rated debt securities (commonly called “junk bonds”), which may be subject to certain risk factors to which other securities are not subject to the same degree. An economic downturn tends to disrupt the market for lower-rated bonds and adversely affect their values. Such an economic downturn may be expected to result in increased price volatility of lower-rated bonds and of the value of a fund’s shares, and an increase in issuers’ defaults on such bonds.

In addition, many issuers of lower-rated bonds are substantially leveraged, which may impair their ability to meet their obligations. In some cases, the securities in which a fund invests are subordinated to the prior payment of senior indebtedness, thus potentially limiting the fund’s ability to recover full principal or to receive payments when senior securities are in default.

The credit rating of a security does not necessarily address its market value risk. In addition, ratings may, from time to time, be changed to reflect developments in the issuer’s financial condition. Lower-rated securities held by a fund have speculative characteristics that are apt to increase in number and significance with each lower rating category.

When the secondary market for lower-rated bonds becomes increasingly illiquid, or in the absence of readily available market quotations for lower-rated bonds, the relative lack of reliable, objective data makes the responsibility of the Trustees to value such securities more difficult, and judgment plays a greater role in the valuation of portfolio securities.

Also, increased illiquidity of the market for lower-rated bonds may affect a fund’s ability to dispose of portfolio securities at a desirable price.

In addition, if a fund experiences unexpected net redemptions, it could be forced to sell all or some of its lower-rated bonds without regard to their investment merits, thereby decreasing the asset base upon which the fund’s expenses can be spread and possibly reducing the fund’s rate of return. Prices of lower-rated bonds have been found to be less sensitive to interest rate changes and more sensitive to adverse economic changes and individual corporate developments than more highly rated investments. Certain laws or regulations may have a material effect on the fund’s investments in lower-rated bonds.

CONVERTIBLE SECURITIES. The Equity Funds may invest in convertible securities, that is, bonds, notes, debentures, preferred stocks and other securities that are convertible into or exchangeable for another security, usually common stock. Convertible debt securities and convertible preferred stocks, until converted, have general characteristics similar to both debt and equity securities. Although to a lesser extent than with debt securities generally, the market value of convertible securities tends to decline as interest rates increase and, conversely, tends to increase as interest rates decline. In addition, because of the conversion or exchange feature, the market value of convertible securities typically increases or declines as the market value of the underlying common stock increases or declines, although usually not to the same extent. Convertible securities generally offer lower yields than non-convertible fixed income securities of similar quality because of their conversion or exchange features. Convertible bonds and convertible preferred stock typically have lower credit ratings than similar non-convertible securities because they are generally subordinated to other similar but non-convertible fixed income securities of the same issuer.

RESTRICTED SECURITIES. From time to time, the Equity Funds may purchase securities that are subject to restrictions on resale. While such purchases may be made at an advantageous price and offer attractive opportunities for investment not otherwise available on the open market, a fund may not have the same freedom to dispose of such securities as in the case of the purchase of securities in the open market or in a public distribution. These securities may often be resold in a liquid dealer or institutional trading market, but the fund may experience delays in its attempts to dispose of such securities. If adverse market conditions develop, the fund may not be able to obtain as favorable a price as that prevailing at the time the decision is made to sell. In any case, where a thin market exists for a particular security, public knowledge of a proposed sale of a large block may depress the market price of such securities.

DERIVATIVE SECURITIES. The Equity Funds may purchase derivative securities. Derivative securities may be used to attempt (1) to protect against possible changes in the market value of securities held in or to be purchased for a fund’s portfolio resulting from securities markets or currency exchange rate fluctuations, (2) to protect a fund’s unrealized gains in the value of its portfolio securities, (3) to facilitate the sale of such securities for investment purposes, (4) to manage the effective maturity or duration of a fund’s portfolio, or (5) to establish a position in the derivatives markets as a temporary substitute for purchasing or selling particular

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securities. The gold and natural resource funds’ and equity funds’ ability to successfully use derivative securities will depend upon the Adviser’s ability to predict pertinent market movements, which cannot be assured. Investing in derivative securities will increase transaction expenses and may result in a loss that exceeds the principal invested in the transactions.

Derivative securities have risk associated with them including possible default by the other party to the transaction, illiquidity and, to the extent the Adviser’s or Subadviser’s view as to certain market movements is incorrect, the risk that the use of such derivative securities could result in losses greater than if they had not been used. Use of put and call options may result in losses to a fund. For example, selling call options may force the sale of portfolio securities at inopportune times or for lower prices than current market values. Selling call options may also limit the amount of appreciation a fund can realize on its investments or cause a fund to hold a security it might otherwise sell. The use of currency transactions can result in a fund incurring losses as a result of a number of factors including the imposition of exchange controls, suspension of settlements, or the inability to deliver or receive a specified currency. The use of options and futures transactions entails certain other risks. In particular, the variable degree of correlation between price movements of futures contracts and price movements in the related portfolio position of a fund creates the possibility that losses on the hedging instrument may be greater than gains in the value of a fund’s position. In addition, futures and options markets may not be liquid in all circumstances and certain over-the-counter options may have no markets. As a result, in certain markets, a fund might not be able to close out a transaction, and substantial losses might be incurred. However, the use of futures and options transactions for hedging should tend to minimize the risk of loss due to a decline in the value of a hedged position. At the same time, they tend to limit any potential gain that might result from an increase in value of such position. Finally, the daily variation margin requirement for futures contracts would create a greater ongoing potential financial risk than would purchases of options, where the exposure is limited to the cost of the initial premium. Losses resulting from the use of derivative securities would reduce net asset value, and possibly income, and such losses can be greater than if the derivative securities had not been used.

The funds’ activities involving derivative securities may be limited by the requirements of Subchapter M of the Code for qualification as a regulated investment company.

SPECIFIC FUND LIMITATIONS ON DERIVATIVE SECURITIES. The All American Fund will limit its investments in derivative securities to purchasing stock index futures contracts or purchasing options thereon, purchasing and selling call options and purchasing put options on stock indexes, selling covered call options on portfolio securities, buying call options on securities the fund intends to purchase, buying put options on portfolio securities, and engaging in closing transactions for an identical option. The underlying value of all futures contracts shares may not exceed 35% of the All American Fund’s total assets. The All American Fund will not borrow money to purchase futures contracts or options.

OPTIONS. All Equity Funds, except the Holmes Growth Fund, may purchase and sell options that are either listed on an exchange or quoted on Nasdaq. The Holmes Growth Fund may only purchase and sell options that are listed on an exchange. A fund will not purchase any option if, immediately thereafter, the aggregate market value of all outstanding options purchased by that fund would exceed 5% of that fund’s total assets.

A put option gives the purchaser of the option, upon payment of a premium, the right to sell, and the issuer of the option the obligation to buy the underlying security, commodity, index, currency or other instrument at the exercise price. For instance, a fund’s purchase of a put option on a security might be designed to protect its holdings in the underlying instrument (or, in some cases, a similar instrument) against a substantial decline in the market value by giving a fund the right to sell such instrument at the option exercise price. A call option, upon payment of a premium, gives the purchaser of the option the right to buy, and the issuer the obligation to sell, the underlying instrument at the exercise price. A fund’s purchase of a call option on a security, financial future, index currency or other instrument might be intended to protect a fund against an increase in the price of the underlying instrument that it intends to purchase in the future by fixing the price at which it may purchase such instrument. An “American style” put or call option may be exercised at any time during the option period while a “European style” put or call option may be exercised only upon expiration or during a fixed period prior thereto.

Exchange listed options are issued by a regulated intermediary such as the Options Clearing Corporation (OCC), which guarantees the performance of the obligations of the parties to such options. Over-the-counter (OTC) options are purchased from or sold to securities dealers, financial institutions or other parties (Counterparty(ies)) through direct bilateral agreement with the Counterparty. In contrast to exchange listed options, which generally have standardized terms and performance mechanics, all the terms of an OTC option are set by negotiation of the parties. Unless the parties provide for it, there is no central clearing or guaranty function in an OTC option.

The funds’ ability to close out their position as a purchaser or seller of a put or call option is dependent, in part, upon the liquidity of the market for that particular option. Exchange listed options, because they are standardized and not subject to Counterparty credit

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risk, are generally more liquid than OTC options. There can be no guarantee that a fund will be able to close out an option position, whether in exchange listed options or OTC options, when desired. An inability to close out its options positions may reduce a fund’s anticipated profits or increase its losses.

If the Counterparty to an OTC option fails to make or take delivery of the security, currency or other instrument underlying an OTC option it has entered into with a fund, or fails to make a cash settlement payment due in accordance with the terms of that option, a fund may lose any premium it paid for the option as well as any anticipated benefit of the transaction. Accordingly, the Adviser must assess the creditworthiness of each such Counterparty or any guarantor or credit enhancement of the Counterparty’s credit to determine the likelihood that the terms of the OTC option will be satisfied.

The funds will realize a loss equal to all or a part of the premium paid for an option if the price of the underlying security, commodity, index, currency or other instrument security decreases or does not increase by more than the premium (in the case of a call option), or if the price of the underlying security, commodity, index, currency or other instrument increases or does not decrease by more than the premium (in the case of a put option).

WRITING OPTIONS ON SECURITES. All Equity Funds except the Eastern European Fund and Global Emerging Markets Fund may write “covered” put and call options. The funds may also enter into transactions to close out an investment in any put or call options. If a fund writes (i.e., sells) a call option, the premium received may serve as a partial hedge, to the extent of the option premium, against a decrease in the value of the underlying securities or instruments in a portfolio, or may increase the fund’s income. If a fund sells (i.e., issues) a put option, the premium that it receives may serve to reduce the cost of purchasing the underlying security, to the extent of the option premium, or may increase a fund’s capital gains. All options sold by a fund must be “covered” (i.e., the fund must either be long when selling a call option or short when selling a put option). The securities or futures contract subject to the calls or puts must meet the asset segregation requirements described below as long as the option is outstanding. Even though a fund will receive the option premium to help protect it against loss or reduce its cost basis, an option sold by a fund exposes the fund during the term of the option to possible loss. When selling a call, a fund is exposed to the loss of opportunity to realize appreciation in the market price of the underlying security or instrument, and the transaction may require the fund to hold a security or instrument that it might otherwise have sold. When selling a put, a fund is exposed to the possibility of being required to pay greater than current market value to purchase the underlying security, and the transaction may require the fund to maintain a short position in a security or instrument it might otherwise not have maintained. The funds will not write any call or put options if, immediately afterwards, the aggregate value of a fund’s securities subject to outstanding “covered” call or put options would exceed 25% of the value of the fund’s total assets.

WARRANTS. The Equity Funds may invest in warrants. Warrants are different from options in that they are issued by a company as opposed to a broker and typically have a longer life than an option. When the underlying stock goes above the exercise price of the warrant the warrant is “in the money.” If the exercise price of the warrant is above the value of the underlying stock it is “out of the money.” “Out of money” warrants tend to have different price behaviors than “in the money” warrants. As an example, the value of an “out of the money” warrant with a long time to expiration generally declines less than a drop in the underlying stock price because the warrant’s value is primarily derived from the time component.

Most warrants are exchange traded. The holder of a warrant has the right, until the warrant expires, to sell an exchange traded warrant or to purchase a given number of shares of a particular issue at a specified price. Such investments can provide a greater potential for profit or loss than an equivalent investment in the underlying security. Prices of warrants do not necessarily move, however, in tandem with prices of the underlying securities particularly for shorter periods of time, and, therefore, may be considered speculative investments. The key driver to the movements in warrants are the fundamentals of the underlying company. Warrants, unlike options, may allow the holder to vote on certain issues and often are issued with certain anti-dilutive rights. Warrants pay no dividends. If a warrant held by a fund were not exercised by the date of its expiration, the fund would incur a loss in the amount of the cost of the warrant

FUTURES CONTRACTS. The Equity Funds may enter into financial futures contracts or purchase or sell put and call options on such futures as a hedge against anticipated interest rate, currency or equity market changes, for duration management and for risk management purposes. Futures are generally bought and sold on the commodities exchange where they are listed with payment of an initial variation margin as described below. The sale of a futures contract creates a firm obligation by a fund, as seller, to deliver to the buyer the specific type of financial instrument called for in the contract at a specific future time for a specified price (or, with respect to index futures and Eurodollar instruments, the net cash amount). Options on futures contracts are similar to options on securities except that an option on a futures contract gives the purchaser the right in return for the premium paid to assume a position in a futures contract and obligates the seller to deliver such position.

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The use by the funds of financial futures and options thereon will in all cases be consistent with applicable regulatory requirements and in particular the rules and regulations of the CFTC and will be entered into only for bona fide hedging, risk management (including duration management) or other portfolio management purposes. Typically, maintaining a futures contract or selling an option thereon requires a fund to deposit with a financial intermediary as security for its obligations an amount of cash or other specified assets (initial margin) that initially is typically 1% to 10% of the face amount of the contract (but may be higher in some circumstances). Additional cash or assets (variation margin) may be required to be deposited thereafter on a daily basis as the marked-to-market value of the contract fluctuates. The purchase of an option on financial futures involves payment of a premium for the option without any further obligation on the part of the purchaser. If a fund exercises an option on a futures contract, it will be obligated to post initial margin (and potentially subsequent variation margin) for the resulting futures position just as it would for any futures position. Futures contracts and options thereon are generally settled by entering into an offsetting transaction, but there can be no assurance that the position can be offset, before settlement, at an advantageous price, nor that delivery will occur.

A fund will not enter into a futures contract or related option (except for closing transactions) if, immediately afterwards, the sum of the amount of its initial margin and premiums on open futures contracts and options thereon would exceed 5% of the fund’s total assets (taken at current value). However, in the case of an option that is in the money at the time of the purchase, the in-the-money amount may be excluded in calculating the 5% limitation. The segregation requirements with respect to futures contracts and options thereon are described below.

FOREIGN CURRENCY TRANSACTIONS. The Equity Funds may engage in currency transactions with Counterparties in an attempt to hedge an investment in an issuer incorporated or operating in a foreign country or in a security denominated in the currency of a foreign country against a devaluation of that country’s currency. Currency transactions include forward currency contracts, exchange listed currency futures, and exchange listed and OTC options on currencies. A fund’s dealing in forward currency contracts and other currency transactions such as futures, options, and options on futures generally will be limited to hedging involving either specific transactions or portfolio positions. Transaction hedging is entering into a currency transaction with respect to specific assets or liabilities of a fund, which will generally arise in connection with the purchase or sale of its portfolio securities or the receipt of income therefrom. Position hedging is entering into a currency transaction with respect to portfolio security positions denominated or generally quoted in that currency.

A fund may cross-hedge currencies by entering into transactions to purchase or sell one or more currencies that are expected to decline in value relative to other currencies in which a fund has (or expects to have) portfolio exposure.

To reduce the effect of currency fluctuations on the value of existing or anticipated holdings or portfolio securities, the gold and natural resource funds and equity funds may engage in proxy hedging. Proxy hedging may be used when the currency to which a fund’s portfolio is exposed is difficult to hedge. Proxy hedging entails entering into a forward contract to sell a currency whose changes in value are generally considered to be linked to a currency in which some or all of a fund’s portfolio securities are, or are expected to be denominated, and to buy U.S. dollars.

To hedge against a devaluation of a foreign currency, a fund may enter into a forward market contract to sell to banks a set amount of such currency at a fixed price and at a fixed time in the future. If, in foreign currency transactions, the foreign currency sold forward by a fund is devalued below the price of the forward market contract and more than any devaluation of the U.S. dollar during the period of the contract, a fund will realize a gain as a result of the currency transaction. In this way, a fund might reduce the impact of any decline in the market value of its foreign investments attributable to devaluation of foreign currencies.

A fund may sell foreign currency forward only as a means of protecting their foreign investments or to hedge in connection with the purchase and sale of foreign securities, and may not otherwise trade in the currencies of foreign countries. Accordingly, a fund may not sell forward the currency of a particular country to an extent greater than the aggregate market value (at the time of making such sale) of the securities held in its portfolio denominated in that particular foreign currency (or issued by companies incorporated or operating in that particular foreign country) plus an amount equal to the value of securities it anticipates purchasing less the value of securities it anticipates selling, denominated in that particular currency.

As a result of hedging through selling foreign currencies forward, in the event of a devaluation, it is possible that the value of a fund’s portfolio would not depreciate as much as the portfolio of a fund holding similar investments that did not sell foreign currencies forward. Even so, the forward market contract is not a perfect hedge against devaluation because the value of a fund’s portfolio securities may decrease more than the amount realized by reason of the foreign currency transaction. To the extent that a fund sells forward currencies that are thereafter revalued upward, the value of that fund’s portfolio would appreciate to a lesser extent than the comparable portfolio of a fund that did not sell those foreign currencies forward. If, in anticipation of a devaluation of a foreign currency, a fund sells the currency forward at a price lower than the price of that currency on the expiration date of the contract, that

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fund will suffer a loss on the contract if the currency is not devalued, during the contract period, below the contract price. Moreover, it will not be possible for a fund to hedge against a devaluation that is so generally anticipated that the fund is not able to contract to sell the currency in the future at a price above the devaluation level it anticipates. It is possible that, under certain circumstances, a fund may have to limit its currency transactions to permit that fund to qualify as a regulated investment company under Subchapter M of the Code. Foreign currency transactions would involve a cost to the funds, which would vary with such factors as the currency involved, the length of the contact period and the market conditions then prevailing.

The funds will not attempt to hedge all their foreign investments by selling foreign currencies forward and will do so only to the extent deemed appropriate by the Adviser.

USE OF SEGREGATED AND OTHER SPECIAL ACCOUNTS. Many derivative securities, in addition to other requirements, require that the gold and natural resource funds and equity funds segregate liquid high grade assets with their custodian to the extent that the fund’s obligations are not otherwise “covered” through ownership of the underlying security, financial instrument or currency. In general, either the full amount of any obligation of a fund to pay or deliver securities or assets must be covered at all times by the securities, instruments or currency required to be delivered, or subject to any regulatory restrictions, an amount of cash or liquid high grade debt securities at least equal to the current amount of the obligation must either be identified as being restricted in a fund’s accounting records or physically segregated in a separate account at that fund’s custodian. The segregated assets cannot be sold or transferred unless equivalent assets are substituted in their place or it is no longer necessary to segregate them. For the purpose of determining the adequacy of the liquid securities that have been restricted, the securities will be valued at market or fair value. If the market or fair value of such securities declines, additional cash or liquid securities will be restricted on a daily basis so that the value of the restricted cash or liquid securities, when added to the amount deposited with the broker as margin, equals the amount of such commitments by a fund.

TEMPORARY DEFENSIVE INVESTMENTS. For temporary defensive purposes during periods that, in the Adviser’s or Subadviser’s opinion, present the funds with adverse changes in the economic, political or securities markets, the funds may seek to protect the capital value of its assets by temporarily investing up to 100% of its assets in: 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. When a fund is in a defensive investment position, it may not achieve its investment objective.

U.S. GOVERNMENT SECURITIES

U.S. Government obligations include securities, which are issued or guaranteed by the United States Treasury, by various agencies of the United States Government, and by various instrumentalities, which have been established or sponsored by the United States Government. U.S. Treasury obligations are backed by the “full faith and credit” of the U.S. Government. U.S. Treasury obligations include Treasury bills, Treasury notes, and Treasury bonds.

Agencies or instrumentalities established by the United States Government include the Federal Home Loan Bank, the Federal Land Bank, the Government National Mortgage Association, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, and the Student Loan Marketing Association. Also included is the Bank for Cooperatives, the Federal Intermediate Credit Bank, the Federal Financing Bank, the Federal Farm Credit Bank, the Federal Agricultural Mortgage Corporation, the Resolution Funding Corporation, the Financing Corporation of America and the Tennessee Valley Authority. Some of these securities are supported by the full faith and credit of the United States Government while others are supported only by the credit of the agency or instrumentality, which may include the right of the issuer to borrow from the United States Treasury. Securities issued by such agencies or instrumentalities are neither insured nor guaranteed by the U.S. Treasury.

PORTFOLIO TURNOVER

The Adviser or Subadviser buys and sells securities for a fund to accomplish the fund’s investment objective. A fund’s investment policy may lead to frequent changes in investments, particularly in periods of rapidly changing markets. A fund’s investments may also be traded to take advantage of perceived short-term disparities in market values. A change in the securities held by a fund is known as “portfolio turnover.”

A fund does not intend to use short-term trading as a primary means of achieving its investment objective. However, the fund’s rate of portfolio turnover will depend on market and other conditions, and it will not be a limiting factor when portfolio changes are deemed necessary or appropriate by the Adviser or Subadviser. High turnover involves correspondingly greater commission expenses and

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transaction costs and increases the possibility that a fund would not qualify as a regulated investment company under Subchapter M of the Code. High turnover may result in a fund recognizing greater amounts of income and capital gains, which would increase the amount of income and capital gains that the fund must distribute to its shareholders in order to maintain its status as a regulated investment company and to avoid the imposition of federal income and excise taxes (see “Federal Income Taxes”).

The portfolio turnover rate for the funds listed below for the fiscal years ended October 31 are as follows:


FUND	2005			2006			2007

Eastern European Fund		95	%		68	%		68	%
Global Emerging Markets Fund		93	%		136	%		125	%
Holmes Growth Fund		268	%		290	%		98	%
Global MegaTrends Fund		54	%		75	%		65	%

The portfolio turnover rate for the funds listed below for the fiscal years ended June 30 are as follows:


FUND	2006			2007			2008

All American Equity Fund		369	%		223	%		225	%
Gold and Precious Metals Fund		78	%		72	%		93	%
World Precious Minerals Fund		66	%		54	%		58	%
Global Resources Fund		157	%		122	%		133	%
China Region Fund		292	%		208	%		208	%
Tax Free Fund		19	%		6	%		11	%
Near-Term Tax Free Fund		33	%		22	%		8	%

PORTFOLIO HOLDINGS DISCLOSURE POLICY

It is the policy of the Trust to protect the confidentiality of all fund holdings and prevent the selective disclosure of nonpublic information about all fund portfolio holdings. The Trust publicly discloses holdings of the funds in accordance with regulatory requirements, such as periodic portfolio disclosure in filings with the Securities and Exchange Commission. Portfolio information is provided to the Trust’s service providers and others who generally need access to such information in the performance of their contractual duties and responsibilities, such as the Trust’s custodians, fund accountants, investment adviser, independent public accountants, attorneys, officers and trustees and each of their respective affiliates and advisers, and are subject to duties of confidentiality, including a duty not to trade on nonpublic information, imposed by law and/or contract.

There are numerous mutual fund evaluation services such as Standard & Poor’s, Morningstar, or Lipper Analytical Services, that regularly analyze the portfolio holdings of mutual funds in order to monitor and report on various attributes including style, capitalization, maturity, yield, beta, etc. These services then distribute the results of their analysis to the public and/or paid subscribers. In order to facilitate the review of the funds by these services, the funds may distribute (or authorize their service providers to distribute) portfolio holdings to such services before its public disclosure is required as discussed above. These service providers must sign a written confidentiality agreement and must not distribute the portfolio holdings or results of the analysis to third parties, other departments, or persons who are likely to use the information for purposes of purchasing or selling the funds before the portfolio holdings or results of the analysis become public information.

The Adviser or Subadviser of the funds may periodically distribute a list of the issuers and securities that are covered by their research department as of a particular date. The list of issuers and securities may represent securities currently held by the funds and securities that may be purchased for the funds. In no case will a list specifically identify an issuer’s securities as either currently held or anticipated to be held by the funds or identify funds’ position sizes.

For press interviews, commentary, or reports on a media that result in immediate public dissemination, such as television or the funds’ and/or Adviser’s website(s), portfolio managers and other senior officers or spokespersons of the funds may disclose or confirm the ownership of any individual portfolio holding position. Once the portfolio holding is disclosed in an interview over such media, that holding will be deemed to be previously publicly disclosed in accordance with these disclosure policies.

Notwithstanding anything herein to the contrary, the funds’ board of trustees and an appropriate officer of the funds and/or Adviser’s legal department, or the funds’ Chief Compliance Officer (“CCO”) may, on a case-by-case basis, impose additional restrictions on the dissemination of portfolio information beyond those found in the Trust’s disclosure policies. (For example, the funds may determine

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to not provide purchase and sale information with respect to Funds that invest in smaller capitalization companies or less liquid securities.)

The board has approved the Trust’s portfolio holdings disclosure policies and procedures and must approve any material change to such policies and procedures. The board oversees the monitoring of the policy, and exceptions to the policy must be approved by the Trust’s CCO. Any violation of the policies and procedures that constitutes a material compliance matter and any waiver or exception to the policies and procedures will be reported to the board.

MANAGEMENT OF THE TRUST

The Trust’s board of trustees manages the business affairs of the Trust. The trustees establish policies and review and approve contracts and their continuance. The Agreement and Declaration of Trust provides that each trustee shall serve as a trustee of the Trust during the lifetime of this Trust and until its termination except as such trustee sooner dies, resigns or is removed. In addition, each trustee who is not an “interested person of the Trust shall be required to retire in accordance with the terms of any retirement policy then in effect that has been approved by a majority vote of all independent trustees. The current retirement policy provides that the retirement age for non-interested trustees is 72 years of age. Trustees also elect the officers and select the trustees to serve as Audit Committee members and Nominating and Governance Committee members. The trustees and officers of the trust and their principal occupations during the past five years are set forth below. Except as otherwise indicated, the business address of each trustee and officer is 7900 Callaghan Road, San Antonio, Texas 78229.

The board has an Audit Committee and a Nominating and Governance Committee. The Audit Committee is responsible for monitoring the funds’ accounting policies, financial reporting and internal control system; monitoring the work of the funds’ independent accountants; and providing an open avenue of communication among the independent accountants, fund management and the board. Members of the Audit Committee are: J. Michael Belz, James F. Gaertner, Clark R. Mandigo, and Joe C. McKinney , all of whom are non-interested trustees. The Audit Committee has had one meeting since the Trust was organized.

The Nominating and Governance Committee is primarily responsible for the identification and recommendation of individuals for board membership and for overseeing the administration of the Trust’s Governance Guidelines. The members of the Nominating and Governance Committee are: J. Michael Belz, James F. Gaertner, Clark R. Mandigo, and Joe C. McKinney, all of whom are non-interested trustees. The Nominating and Governance Committee has had one meeting since the Trust was organized. Pursuant to the Trust’s Nominating and Governance Committee Charter, shareholders may submit recommendations for board candidates by sending a resume of the candidate by U.S. mail or courier service to the Secretary of the Trust for the attention of the Chairman of the Nominating and Governance Committee.

NON-INTERESTED TRUSTEES


				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

J. Michael Belz 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.

James F. Gaertner 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.

Clark R. Mandigo 7900 Callaghan Rd San Antonio, TX 78229 (65)	Trustee	1993 to present	Restaurant operator, business consultant from 1991 to present.	Thirteen	None

Joe C. McKinney 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, Luby’s, Inc. from January 2003 to present.


*		These dates include service for a predecessor trust.

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INTERESTED TRUSTEES


				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

Frank E. Holmes* 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.

OFFICERS


	POSITION(S) HELD	TERM OF OFFICE AND	PRINCIPAL
NAME, ADDRESS, AND	WITH	LENGTH OF TIME	OCCUPATION(S)
AGE	TRUST	SERVED*	DURING PAST 5 YEARS

Frank E. Holmes 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.

Susan B. McGee 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.

Catherine A. Rademacher 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

James L. Love, Jr. 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.

Mark Carter 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.

T. Kelly Niland 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

J. Michael Belz
All American Equity Fund		None
Holmes Growth Fund		$10,001-$50,000
Global MegaTrends Fund		$10,001-$50,000
Gold and Precious Metals Fund		$1-$10,000
World Precious Minerals Fund		$1-$10,000
Global Resources Fund		$1-$10,000
Eastern European Fund		$10,001-$50,000
Global Emerging Markets Fund		$10,001-$50,000
China Region Fund		$1-$10,000
Tax Free Fund		None
Near-Term Tax Free Fund		None
U.S. Government Securities Savings Fund		$1-$10,000
U.S. Treasury Securities Cash Fund		None
Clark Mandigo
All American Equity Fund		None
Holmes Growth Fund		Over $100,000
Global MegaTrends Fund		$10,001-$50,000
Gold and Precious Metals Fund		None
World Precious Minerals Fund		None
Global Resources Fund		None
Eastern European Fund		$50,001-$100,000
Global Emerging Markets Fund		$1-$10,000
China Region Fund		None
Tax Free Fund		None
Near-Term Tax Free Fund		None
U.S. Government Securities Savings Fund		Over $100,000
U.S. Treasury Securities Cash Fund		None
James F. Gaertner
All American Equity Fund		None
Holmes Growth Fund		$10,001-$50,000
Global MegaTrends Fund		None
Gold and Precious Metals Fund		None
World Precious Minerals Fund		$1-$10,000
Global Resources Fund		$10,001-$50,000
Eastern European Fund		None
Global Emerging Markets Fund		None
China Region Fund		$10,001-$50,000
Tax Free Fund		None
Near-Term Tax Free Fund		$10,001-$50,000
U.S. Government Securities Savings Fund		None
U.S. Treasury Securities Cash Fund		None
Joe C. McKinney
All American Equity Fund		None
Holmes Growth Fund		None
Global MegaTrends Fund		None
Gold and Precious Metals Fund		None
World Precious Minerals Fund		None
Global Resources Fund		None
Eastern European Fund		None
Global Emerging Markets Fund		None
China Region Fund		None
Tax Free Fund		None
Near-Term Tax Free Fund		None
U.S. Government Securities Savings Fund		None
U.S. Treasury Securities Cash Fund		None

None of the non-interested trustees, nor their immediate family members, own any shares in the Adviser, U.S. Global Brokerage, Inc. or a person directly or indirectly controlling, controlled by, or under common control with the Adviser or U.S. Global Brokerage, Inc.

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		DOLLAR RANGE
		OF EQUITY SECURITIES
		IN THE FUNDS HELD AS
INTERESTED TRUSTEES		OF 12/31/2007

Frank E. Holmes
All American Equity Fund		None
Holmes Growth Fund		None
Global MegaTrends Fund		None
Gold and Precious Metals Fund		None
World Precious Minerals Fund		$10,001-$50,000
Global Resources Fund		None
Eastern European Fund		None
Global Emerging Markets Fund		None
China Region Fund		$1-$10,000
Tax Free Fund		$50,001-$100,000
Near-Term Tax Free Fund		$50,001-$100,000
U.S. Government Securities Savings Fund		$50,001-$100,000
U.S. Treasury Securities Cash Fund		Over $100,000

The following table provides information on compensation paid by the predecessor trusts, U.S. Global Investors Funds and U.S. Global Accolade Funds, to each of the trustees and the Trust’s Chief Compliance Officer for the fiscal year ended June 30, 2008, and October 31, 2007, respectively. U.S. Global Investors Funds and U.S. Global Accolade Funds merged into the Trust on October 1, 2008, and now are called U.S. Global Investors Funds. As shown in the table, the Trust is not responsible for compensation of the interested trustee of the Trust.


	TOTAL COMPENSATION		TOTAL COMPENSATION FROM
	FROM U.S. GLOBAL		U.S. GLOBAL ACCOLADE FUNDS
NON-INTERESTED TRUSTEES	INVESTORS FUNDS(1)(2)		(1)(2)

J. Michael Belz, Trustee	$	34,125	$	15,750
James F. Gaertner, Trustee	$	42,000		n/a
Clark R. Mandigo, Trustee	$	38,000	$	15,750
Joe C. McKinney, Trustee		n/a		n/a
INTERESTED TRUSTEE
Frank E. Holmes, Trustee, Chief Executive Officer, Chief Investment Officer	$	0	$	0
CHIEF COMPLIANCE OFFICER	$	89,876	$	10,883
James L. Love, Jr.



(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.

CODE OF ETHICS

The Trust, the Adviser, and the Distributor have each adopted a Code of Ethics (the “Code”) in accordance with Rule 17j-1 under the Investment Company Act of 1940 (the “1940 Act”). The Code allows access persons to purchase and sell securities for their own accounts, subject to certain reporting requirements and trading restrictions. The Code prohibits all persons subject to the Code from purchasing or selling any security if such person knows or reasonably should know at the time of the transaction that the security was being purchased or sold or was being considered for such purchase or sale by a fund for a certain prescribed period of time. The foregoing description is qualified in its entirety by the Code, a copy of which has been filed with the Securities and Exchange Commission.

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PROXY VOTING POLICIES

Proxies for each fund’s portfolio securities are voted in accordance with the Adviser’s proxy voting policies and procedures, which are set forth below. Each fund’s proxy voting record, including information regarding how each fund voted proxies relating to portfolio securities held by the fund, for the twelve month period ended June 30, 2008 is available without charge, upon request, by calling 1-800-US-FUNDS, and on the SEC’s website at http://www.sec.gov.

VOTING PROCEDURES

The Trust has retained Risk Metrics Group (“Risk Metrics”), a proxy voting and consulting firm, to receive proxy voting statements, provide information and research, make proxy vote recommendations, and handle the administrative functions associated with the voting of client proxies. The proxy voting guidelines developed by Risk Metrics are set forth in the ISS Governance Services 2008 U.S. Proxy Voting Guidelines Summary and ISS Governance Services 2008 Global Proxy Voting Guidelines Summary.

While Risk Metrics makes the proxy vote recommendations, the Adviser retains the ultimate authority on deciding how to vote. However, in general, it is the Adviser’s policy to vote in accordance with Risk Metric’s recommendations.

Upon receipt of proxy statements on behalf of the Trust, Risk Metrics will notify the Investments Operations Department of the voting deadlines and provide a summary of its vote recommendations and rationale for each proxy. The Investments Operation Department will maintain a log of all shareholder meetings that are scheduled and call a meeting of the Proxy Review Committee on a regular basis to consider the recommendations of Risk Metrics.

The Proxy Review Committee shall consist of the Chief Investment Officer, the Director of Research, and the senior portfolio analysts. In reviewing and evaluating Risk Metrics’ recommendations, the Proxy Review Committee may consider information from other sources, including the recommendation of a portfolio team member and a subadviser as well as the fundamental and statistical models used by the portfolio department when making investment decisions. One of the primary factors the Adviser considers when determining the desirability of investing in a particular company is the quality and depth of that company’s management. Accordingly, the recommendation of management on any issue is a factor that the Adviser considers in determining how proxies should be voted. As a matter of practice, the Adviser will vote in accordance with management’s position. However, each issue is individually evaluated and the Adviser will consider its effect on the investment merits of owning that company’s shares. With respect to international securities, the Adviser is mindful of the varied market practices and environments relating to corporate governance in the local regions. The Adviser’s experience as a money manager enables its analysts to understand the complexities of the regions in which they invest and to skillfully analyze the proxy issues relevant to the regions. The Adviser may decide that it is in its client’s best interest to not vote the shares of foreign companies. Upon direction from the Adviser, Risk Metrics will vote the shares.

CONFLICT OF INTEREST

If the Proxy Review Committee determines that, through reasonable inquiry, an issue raises a potential material conflict of interest, the Proxy Review Committee will follow the recommendations of Risk Metrics except as follows. If the Proxy Review Committee believes that it would be in the best interest of the Trust to vote a proxy other than according to the recommendation of Risk Metrics, the committee shall document in writing the basis supporting its determination. A summary of all such votes shall be presented to the board of trustees at the next regularly scheduled meeting of the board.

2008 ISS GOVERNANCE SERVICES U.S. PROXY VOTING GUIDELINES SUMMARY

The following is a concise summary of the ISS proxy voting policy guidelines for 2008.

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ISS Governance Services
2008 U.S. Proxy Voting Guidelines Summary

Effective for Meetings on or after Feb 1, 2008
Updated Dec 17, 2007

The following is a condensed version of the proxy voting recommendations contained in the ISS Governance Services (“ISS”) Proxy Voting Manual.

1. Operational Items

Adjourn Meeting

Generally vote AGAINST proposals to provide management with the authority to adjourn an annual or special meeting absent compelling reasons to support the proposal.

Vote FOR proposals that relate specifically to soliciting votes for a merger or transaction if supporting that merger or transaction. Vote AGAINST proposals if the wording is too vague or if the proposal includes “other business.”

Amend Quorum Requirements

Vote AGAINST proposals to reduce quorum requirements for shareholder meetings below a majority of the shares outstanding unless there are compelling reasons to support the proposal.

Amend Minor Bylaws

Vote FOR bylaw or charter changes that are of a housekeeping nature (updates or corrections).

Auditor Indemnification and Limitation of Liability

Consider the issue of auditor indemnification and limitation of liability on a CASE-BY-CASE basis. Factors to be assessed include, but are not limited to:

	•		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.

WTHHOLD or vote AGAINST members of an audit committee in situations where 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.

Auditor Ratification

Vote FOR proposals to ratify auditors, unless any of the following apply:

	•		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 company’s 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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Non-audit fees are excessive if:

Non-audit (“other”) fees >audit fees + audit-related fees + tax compliance/preparation fees

Tax compliance and preparation include the preparation of original and amended tax returns, refund claims and tax payment planning. All other services in the tax category, such as tax advice, planning or consulting should be added to “Other” fees. If the breakout of tax fees cannot be determined, add all tax fees to “Other” fees.

In circumstances where “Other” fees include fees related to significant one-time capital structure events: initial public offerings, bankruptcy emergence, and spin-offs; and the company makes public disclosure of the amount and nature of those fees which are an exception to the standard “non-audit fee” category, then such fees may be excluded from the non-audit fees considered in determining the ratio of non-audit to audit/audit-related fees/tax compliance and preparation for purposes of determining whether non-audit fees are excessive. Vote CASE-BY-CASE on shareholder proposals asking companies to prohibit or limit their auditors from engaging in non-audit services.

Vote CASE-BY-CASE on shareholder proposals asking for audit firm rotation, taking into account:

	•		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.

Change Company Name

Vote FOR proposals to change the corporate name.

Change Date, Time, or Location of Annual Meeting

Vote FOR management proposals to change the date, time, and/or location of the annual meeting unless the proposed change is unreasonable.

Vote AGAINST shareholder proposals to change the date, time, and/or location of the annual meeting unless the current scheduling or location is unreasonable.

Transact Other Business

Vote AGAINST proposals to approve other business when it appears as voting item.

2. Board of Directors:

Voting on Director Nominees in Uncontested Elections

Vote on director nominees should be determined on a CASE-BY-CASE basis.


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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Vote AGAINST or WITHHOLD(1) from individual directors who:

	•		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.

Vote AGAINST or WITHHOLD from all nominees of the board of directors, (except from new nominees, who should be considered on a CASE-BY-CASE basis) if:

	•		The company’s 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 company’s 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.

Vote AGAINST or WITHHOLD from Inside Directors and Affiliated Outside Directors (per the Classification of Directors below) when:

	•		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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Vote AGAINST or WITHHOLD from the members of the Audit Committee if:

	•		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.

Vote AGAINST or WITHHOLD from the members of the Compensation Committee if:

	•		There is a negative correlation between the chief executive’s 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.

Vote AGAINST or WITHHOLD from directors, individually or the entire board, for egregious actions or failure to replace management as appropriate.

2008 Classification of Directors

Inside Director (I)

	•		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 company’s voting power (this may be aggregated if voting power is distributed among more than one member of a defined group).

Affiliated Outside Director (AO)

	•		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 CEO’s 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 ).

Independent Outside Director (IO)

•

No material( 10 ) connection to the company other than a board seat.

Footnotes:


(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 company’s initial public offering (IPO).

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(4)		ISS will look at the terms of the interim CEO’s 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 SEC’s 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 recipient’s 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 other’s compensation or similar committees (or, in the absence of such a committee, on the board); or (b) executive officers sitting on each other’s boards and at least one serves on the other’s 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 one’s objectivity in the boardroom in a manner that would have a meaningful impact on an individual’s ability to satisfy requisite fiduciary standards on behalf of shareholders.

Age Limits

Vote AGAINST shareholder or management proposals to limit the tenure of outside directors through mandatory retirement ages.

Board Size

Vote FOR proposals seeking to fix the board size or designate a range for the board size.

Vote AGAINST proposals that give management the ability to alter the size of the board outside of a specified range without shareholder approval.

Classification/Declassification of the Board

Vote AGAINST proposals to classify the board.

Vote FOR proposals to repeal classified boards and to elect all directors annually.

Cumulative Voting

Generally vote AGAINST proposals to eliminate cumulative voting.

Generally vote FOR proposals to restore or provide for cumulative voting unless:

•

The company has proxy access or a similar structure(2) to allow shareholders to nominate directors to the company’s 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 management’s nominees, and their bios are included in management’s 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.

Vote FOR proposals for cumulative voting at controlled companies (insider voting power > 50%).

Director and Officer Indemnification and Liability Protection

Vote CASE-BY-CASE on proposals on director and officer indemnification and liability protection using Delaware law as the standard.

Vote AGAINST proposals to eliminate entirely directors’ and officers’ liability for monetary damages for violating the duty of care.

Vote AGAINST indemnification proposals that would expand coverage beyond just legal expenses to liability for acts, such as negligence, that are more serious violations of fiduciary obligation than mere carelessness.

Vote AGAINST proposals that would expand the scope of indemnification to provide for mandatory indemnification of company officials in connection with acts that previously the company was permitted to provide indemnification for at the discretion of the company’s board (i.e., “permissive indemnification”) but that previously the company was not required to indemnify.

Vote FOR only those proposals providing such expanded coverage in cases when a director’s or officer’s legal defense was unsuccessful if both of the following apply:

	•		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 director’s legal expenses would be covered.

Establish/Amend Nominee Qualifications

Vote CASE-BY-CASE on proposals that establish or amend director qualifications. Votes should be based on how reasonable the criteria are and to what degree they may preclude dissident nominees from joining the board.

Vote AGAINST shareholder proposals requiring two candidates per board seat.

Filling Vacancies/Removal of Directors

Vote AGAINST proposals that provide that directors may be removed only for cause.

Vote FOR proposals to restore shareholders’ ability to remove directors with or without cause.

Vote AGAINST proposals that provide that only continuing directors may elect replacements to fill board vacancies.

Vote FOR proposals that permit shareholders to elect directors to fill board vacancies.

Independent Chair (Separate Chair/CEO)

Generally vote FOR shareholder proposals requiring that the chairman’s position be filled by an independent director, unless there are compelling reasons to recommend against the proposal, such as a counterbalancing governance structure. This should include all the following:

•

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.

Vote FOR the proposal if the company does not provide disclosure with respect to any or all of the bullet points above. If disclosure is provided, evaluate on a CASE-BY-CASE basis.


*		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).

Majority of Independent Directors/Establishment of Committees

Vote FOR shareholder proposals asking that a majority or more of directors be independent unless the board composition already meets the proposed threshold by ISS’ definition of independent outsider. (See Classification of Directors.)

Vote FOR shareholder proposals asking that board audit, compensation, and/or nominating committees be composed exclusively of independent directors if they currently do not meet that standard.

Majority Vote Shareholder Proposals

Generally vote FOR precatory and binding resolutions requesting that the board change the company’s bylaws to stipulate that directors need to be elected with an affirmative majority of votes cast, provided it does not conflict with the state law where the company is incorporated. Binding resolutions need to allow for a carve-out for a plurality vote standard when there are more nominees than board seats.

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Companies are strongly encouraged to also adopt a post-election policy (also know as a director resignation policy) that will provide guidelines so that the company will promptly address the situation of a holdover director.

Office of the Board

Generally vote FOR shareholders proposals requesting that the board establish an Office of the Board of Directors in order to facilitate direct communications between shareholders and non-management directors, unless the company has all of the following:

	•		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.

Open Access

Vote shareholder proposals asking for open or proxy access on a CASE-BY-CASE basis, taking into account:

	•		The ownership threshold proposed in the resolution;

	•		The proponent’s rationale for the proposal at the targeted company in terms of board and director conduct.

Performance Test for Directors

On a CASE-BY-CASE basis, Vote AGAINST or WITHHOLD from directors of Russell 3000 companies that underperformed relative to their industry peers. The criterion used to evaluate such underperformance is a combination of four performance measures:

One measurement is a market-based performance metric and three measurements are tied to the company’s operational performance. The market performance metric in the methodology is five-year Total Shareholder Return (TSR) on a relative basis within each four-digit GICS group. The three operational performance metrics are sales growth, EBITDA growth (or operating income growth for companies in the financial sector), and pre-tax operating Return on Invested Capital (ROIC) (or Return on Average Assets (ROAA) for companies in the financial sector) on a relative basis within each four-digit GICS group. All four metrics will be time-weighted as follows: 40 percent on the trailing 12 month period and 60 percent on the 48 month period prior to the trailing 12 months. This methodology emphasizes the company’s historical performance over a five-year period yet also accounts for near-term changes in a company’s performance.

The table below summarizes the framework:


	Basis of
Metrics	Evaluation	Weighting			2nd Weighting
Operational Performance						50	%
5-year Average pre-tax operating ROIC or ROAA*	Management efficiency in deploying assets		33.3	%
5-year Sales Growth	Top-Line		33.3	%
5-year EBITDA Growth or Operating Income Growth*	Core-earnings		33.3	%
Sub Total			100	%
Stock Performance						50	%
5-year TSR	Market
Total						100	%


*		Metric applies to companies in the financial sector

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Adopt a two-phase approach. In Year 1, the worst performers (bottom 5 percent) within each of the 24 GICS groups receive are noted. In Year 2, consider a vote AGAINST or WITHHOLD votes from director nominees if a company continues to be in the bottom five percent within its GICS group for that respective year and shows no improvement in its most recent trailing 12 months operating and market performance relative to its peers in its GICS group. Take into account various factors including:

•		Year-to-date performance;

•		Situational circumstances;

•		Change in management/board;

•		Overall governance practices.

Stock Ownership Requirements

Generally vote AGAINST shareholder proposals that mandate a minimum amount of stock that directors must own in order to qualify as a director or to remain on the board. While stock ownership on the part of directors is desired, the company should determine the appropriate ownership requirement.

Vote CASE-BY-CASE on shareholder proposals asking that the company adopt a holding or retention period for its executives (for holding stock after the vesting or exercise of equity awards), taking into account any stock ownership requirements or holding period/retention ratio already in place and the actual ownership level of executives.

Term Limits

Vote AGAINST shareholder or management proposals to limit the tenure of outside directors through term limits. However, scrutinize boards where the average tenure of all directors exceeds 15 years for independence from management and for sufficient turnover to ensure that new perspectives are being added to the board.

3. Proxy Contests

Voting for Director Nominees in Contested Elections

Vote CASE-BY-CASE on the election of directors in contested elections, considering the following factors:

	•		Long-term financial performance of the target company relative to its industry;

	•		Management’s 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.

Reimbursing Proxy Solicitation Expenses

Vote CASE-BY-CASE on proposals to reimburse proxy solicitation expenses. When voting in conjunction with support of a dissident slate, vote FOR the reimbursement of all appropriate proxy solicitation expenses associated with the election.

Generally vote FOR shareholder proposals calling for the reimbursement of reasonable costs incurred in connection with nominating one or more candidates in a contested election where the following apply:

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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 dissident’s 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.

Confidential Voting

Vote FOR shareholder proposals requesting that corporations adopt confidential voting, use independent vote tabulators, and use independent inspectors of election, as long as the proposal includes a provision for proxy contests as follows: In the case of a contested election, management should be permitted to request that the dissident group honor its confidential voting policy. If the dissidents agree, the policy remains in place. If the dissidents will not agree, the confidential voting policy is waived.

Vote FOR management proposals to adopt confidential voting.

4. Antitakeover Defenses and Voting Related Issues

Advance Notice Requirements for Shareholder Proposals/Nominations

Vote CASE-BY-CASE on advance notice proposals, supporting those proposals which allow shareholders to submit proposals as close to the meeting date as reasonably possible and within the broadest window possible.

Amend Bylaws without Shareholder Consent

Vote AGAINST proposals giving the board exclusive authority to amend the bylaws.

Vote FOR proposals giving the board the ability to amend the bylaws in addition to shareholders.

Poison Pills

Vote FOR shareholder proposals requesting that the company submit its poison pill to a shareholder vote or redeem it UNLESS the company has: (1) A shareholder approved poison pill in place; or (2) The company has adopted a policy concerning the adoption of a pill in the future specifying that the board will only adopt a shareholder rights plan if either:

	•		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.

Vote FOR shareholder proposals calling for poison pills to be put to a vote within a time period of less than one year after adoption. If the company has no non-shareholder approved poison pill in place and has adopted a policy with the provisions outlined above, vote AGAINST the proposal. If these conditions are not met, vote FOR the proposal, but with the caveat that a vote within 12 months would be considered sufficient.

Vote CASE-by-CASE on management proposals on poison pill ratification, focusing on the features of the shareholder rights plan. Rights plans should contain the following attributes:

	•		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.

Shareholder Ability to Act by Written Consent

Vote AGAINST proposals to restrict or prohibit shareholder ability to take action by written consent.

Vote FOR proposals to allow or make easier shareholder action by written consent.

Shareholder Ability to Call Special Meetings

Vote AGAINST proposals to restrict or prohibit shareholder ability to call special meetings.

Vote FOR proposals that remove restrictions on the right of shareholders to act independently of management.

Supermajority Vote Requirements

Vote AGAINST proposals to require a supermajority shareholder vote.

Vote FOR proposals to lower supermajority vote requirements.

5. Mergers and Corporate Restructurings

Overall Approach

For mergers and acquisitions, review and evaluate the merits and drawbacks of the proposed transaction, balancing various and sometimes countervailing factors including:

	•		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 arm’s-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.

Appraisal Rights

Vote FOR proposals to restore, or provide shareholders with rights of appraisal.

Asset Purchases

Vote CASE-BY-CASE on asset purchase proposals, considering the following factors:

	•		Purchase price;

	•		Fairness opinion;

	•		Financial and strategic benefits;

	•		How the deal was negotiated;

	•		Conflicts of interest;

	•		Other alternatives for the business;

	•		Non-completion risk.

Asset Sales

Vote CASE-BY-CASE on asset sales, considering the following factors:

	•		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.

Bundled Proposals

Vote CASE-BY-CASE on bundled or “conditional” proxy proposals. In the case of items that are conditioned upon each other, examine the benefits and costs of the packaged items. In instances when the joint effect of the conditioned items is not in shareholders’ best interests, vote AGAINST the proposals. If the combined effect is positive, support such proposals.

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Conversion of Securities

Vote CASE-BY-CASE on proposals regarding conversion of securities. When evaluating these proposals the investor should review the dilution to existing shareholders, the conversion price relative to market value, financial issues, control issues, termination penalties, and conflicts of interest.

Vote FOR the conversion if it is expected that the company will be subject to onerous penalties or will be forced to file for bankruptcy if the transaction is not approved.

Corporate Reorganization/Debt Restructuring/Prepackaged Bankruptcy Plans/Reverse Leveraged Buyouts/Wrap Plans

Vote CASE-BY-CASE on proposals to increase common and/or preferred shares and to issue shares as part of a debt restructuring plan, taking into consideration the following:

	•		Dilution to existing shareholders’ position;

	•		Terms of the offer;

	•		Financial issues;

	•		Management’s efforts to pursue other alternatives;

	•		Control issues;

	•		Conflicts of interest.

Vote FOR the debt restructuring if it is expected that the company will file for bankruptcy if the transaction is not approved.

Formation of Holding Company

Vote CASE-BY-CASE on proposals regarding the formation of a holding company, taking into consideration the following:

	•		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.

Absent compelling financial reasons to recommend the transaction, vote AGAINST the formation of a holding company if the transaction would include either of the following:

	•		Increases in common or preferred stock in excess of the allowable maximum (see discussion under “Capital Structure”);

	•		Adverse changes in shareholder rights.

Going Private Transactions (LBOs, Minority Squeezeouts, and Going Dark)

Vote CASE-BY-CASE on going private transactions, taking into account the following:

	•		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.

Vote CASE-BY-CASE on “going dark” transactions, determining whether the transaction enhances shareholder value by taking into consideration:

	•		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.

Joint Ventures

Vote CASE-BY-CASE on proposals to form joint ventures, taking into account the following:

	•		Percentage of assets/business contributed;

	•		Percentage ownership;

	•		Financial and strategic benefits;

	•		Governance structure;

	•		Conflicts of interest;

	•		Other alternatives;

	•		Noncompletion risk.

Liquidations

Vote CASE-BY-CASE on liquidations, taking into account the following:

	•		Management’s efforts to pursue other alternatives;

	•		Appraisal value of assets; and

	•		The compensation plan for executives managing the liquidation.

Vote FOR the liquidation if the company will file for bankruptcy if the proposal is not approved.

Mergers and Acquisitions/ Issuance of Shares to Facilitate Merger or Acquisition

Vote CASE-BY-CASE on mergers and acquisitions, determining whether the transaction enhances shareholder value by giving consideration to items listed under “Mergers and Corporate Restructurings: Overall Approach.”

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Private Placements/Warrants/Convertible Debentures

Vote CASE-BY-CASE on proposals regarding private placements, taking into consideration:

	•		Dilution to existing shareholders’ position;

	•		Terms of the offer;

	•		Financial issues;

	•		Management’s efforts to pursue other alternatives;

	•		Control issues;

	•		Conflicts of interest.

Vote FOR the private placement if it is expected that the company will file for bankruptcy if the transaction is not approved.

Spinoffs

Vote CASE-BY-CASE on spin-offs, considering:

	•		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.

Value Maximization Proposals

Vote CASE-BY-CASE on shareholder proposals seeking to maximize shareholder value by hiring a financial advisor to explore strategic alternatives, selling the company or liquidating the company and distributing the proceeds to shareholders. These proposals should be evaluated based on the following factors:

	•		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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6. State of Incorporation

Control Share Acquisition Provisions

Control share acquisition statutes function by denying shares their voting rights when they contribute to ownership in excess of certain thresholds. Voting rights for those shares exceeding ownership limits may only be restored by approval of either a majority or supermajority of disinterested shares. Thus, control share acquisition statutes effectively require a hostile bidder to put its offer to a shareholder vote or risk voting disenfranchisement if the bidder continues buying up a large block of shares.

Vote FOR proposals to opt out of control share acquisition statutes unless doing so would enable the completion of a takeover that would be detrimental to shareholders.

Vote AGAINST proposals to amend the charter to include control share acquisition provisions.

Vote FOR proposals to restore voting rights to the control shares.

Control Share Cash-Out Provisions

Control share cash-out statutes give dissident shareholders the right to “cash-out” of their position in a company at the expense of the shareholder who has taken a control position. In other words, when an investor crosses a preset threshold level, remaining shareholders are given the right to sell their shares to the acquirer, who must buy them at the highest acquiring price.

Vote FOR proposals to opt out of control share cash-out statutes.

Disgorgement Provisions

Disgorgement provisions require an acquirer or potential acquirer of more than a certain percentage of a company’s stock to disgorge, or pay back, to the company any profits realized from the sale of that company’s stock purchased 24 months before achieving control status. All sales of company stock by the acquirer occurring within a certain period of time (between 18 months and 24 months) prior to the investor’s gaining control status are subject to these recapture-of-profits provisions.

Vote FOR proposals to opt out of state disgorgement provisions.

Fair Price Provisions

Vote CASE-BY-CASE on proposals to adopt fair price provisions (provisions that stipulate that an acquirer must pay the same price to acquire all shares as it paid to acquire the control shares), evaluating factors such as the vote required to approve the proposed acquisition, the vote required to repeal the fair price provision, and the mechanism for determining the fair price.

Generally, vote AGAINST fair price provisions with shareholder vote requirements greater than a majority of disinterested shares.

Freeze-Out Provisions

Vote FOR proposals to opt out of state freeze-out provisions. Freeze-out provisions force an investor who surpasses a certain ownership threshold in a company to wait a specified period of time before gaining control of the company.

Greenmail

Greenmail payments are targeted share repurchases by management of company stock from individuals or groups seeking control of the company. Since only the hostile party receives payment, usually at a substantial premium over the market value of its shares, the practice discriminates against all other shareholders.

Vote FOR proposals to adopt anti-greenmail charter or bylaw amendments or otherwise restrict a company’s ability to make greenmail payments.

Vote CASE-BY-CASE on anti-greenmail proposals when they are bundled with other charter or bylaw amendments.

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Reincorporation Proposals

Vote CASE-BY-CASE on proposals to change a company’s state of incorporation, taking into consideration both financial and corporate governance concerns, including:

	•		The reasons for reincorporating;

	•		A comparison of the governance provisions;

	•		Comparative economic benefits; and

	•		A comparison of the jurisdictional laws.

Vote FOR re-incorporation when the economic factors outweigh any neutral or negative governance changes.

Stakeholder Provisions

Vote AGAINST proposals that ask the board to consider non-shareholder constituencies or other non-financial effects when evaluating a merger or business combination.

State Antitakeover Statutes

Vote CASE-BY-CASE on proposals to opt in or out of state takeover statutes (including control share acquisition statutes, control share cash-out statutes, freeze-out provisions, fair price provisions, stakeholder laws, poison pill endorsements, severance pay and labor contract provisions, anti-greenmail provisions, and disgorgement provisions).

7. Capital Structure

Adjustments to Par Value of Common Stock

Vote FOR management proposals to reduce the par value of common stock.

Common Stock Authorization

Vote CASE-BY-CASE on proposals to increase the number of shares of common stock authorized for issuance using a model developed by ISS.

Vote FOR proposals to approve increases beyond the allowable increase when a company’s shares are in danger of being delisted or if a company’s ability to continue to operate as a going concern is uncertain.

In addition, for capital requests less than or equal to 300 percent of the current authorized shares that marginally fail the calculated allowable cap (i.e., exceed the allowable cap by no more than 5 percent), on a CASE-BY-CASE basis, vote FOR the increase based on the company’s performance and whether the company’s ongoing use of shares has shown prudence. Factors should include, at a minimum, the following:

	•		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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Dual-Class Stock

Vote AGAINST proposals to create a new class of common stock with superior voting rights.

Vote AGAINST proposals at companies with dual-class capital structures to increase the number of authorized shares of the class of stock that has superior voting rights.

Vote FOR proposals to create a new class of nonvoting or sub-voting common stock if:

	•		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.

Issue Stock for Use with Rights Plan

Vote AGAINST proposals that increase authorized common stock for the explicit purpose of implementing a non-shareholder approved shareholder rights plan (poison pill).

Preemptive Rights

Vote CASE-BY-CASE on shareholder proposals that seek preemptive rights, taking into consideration: the size of a company, the characteristics of its shareholder base, and the liquidity of the stock.

Preferred Stock

Vote AGAINST proposals authorizing the creation of new classes of preferred stock with unspecified voting, conversion, dividend distribution, and other rights (“blank check” preferred stock).

Vote FOR proposals to create “declawed” blank check preferred stock (stock that cannot be used as a takeover defense).

Vote FOR proposals to authorize preferred stock in cases where the company specifies the voting, dividend, conversion, and other rights of such stock and the terms of the preferred stock appear reasonable.

Vote AGAINST proposals to increase the number of blank check preferred stock authorized for issuance when no shares have been issued or reserved for a specific purpose.

Vote CASE-BY-CASE on proposals to increase the number of blank check preferred shares after analyzing the number of preferred shares available for issue given a company’s industry and performance in terms of shareholder returns.

Recapitalization

Vote CASE-BY-CASE on recapitalizations (reclassifications of securities), taking into account the following:

	•		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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Reverse Stock Splits

Vote FOR management proposals to implement a reverse stock split when the number of authorized shares will be proportionately reduced.

Vote FOR management proposals to implement a reverse stock split to avoid delisting.

Vote CASE-BY-CASE on proposals to implement a reverse stock split that do not proportionately reduce the number of shares authorized for issue based on the allowable increased calculated using the Capital Structure model.

Share Repurchase Programs

Vote FOR management proposals to institute open-market share repurchase plans in which all shareholders may participate on equal terms.

Stock Distributions: Splits and Dividends

Vote FOR management proposals to increase the common share authorization for a stock split or share dividend, provided that the increase in authorized shares would not result in an excessive number of shares available for issuance as determined using a model developed by ISS.

Tracking Stock

Vote CASE-BY-CASE on the creation of tracking stock, weighing the strategic value of the transaction against such factors as:

	•		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.

8. Executive and Director Compensation

Equity Compensation Plans

Vote CASE-BY-CASE on equity-based compensation plans. Vote AGAINST the equity plan if any of the following factors apply:

	•		The total cost of the company’s 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 company’s performance;

	•		The company’s 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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Each of these factors is described below:

Cost of Equity Plans

Generally, vote AGAINST equity plans if the cost is unreasonable. For non-employee director plans, vote FOR the plan if certain factors are met (see Director Compensation section).

The cost of the equity plans is expressed as Shareholder Value Transfer (SVT), which is measured using a binomial option pricing model that assesses the amount of shareholders’ equity flowing out of the company to employees and directors. SVT is expressed as both a dollar amount and as a percentage of market value, and includes the new shares proposed, shares available under existing plans, and shares granted but unexercised. All award types are valued. For omnibus plans, unless limitations are placed on the most expensive types of awards (for example, full value awards), the assumption is made that all awards to be granted will be the most expensive types. See discussion of specific types of awards.

The Shareholder Value Transfer is reasonable if it falls below the company-specific allowable cap. The allowable cap is determined as follows: The top quartile performers in each industry group (using the Global Industry Classification Standard GICS) are identified. Benchmark SVT levels for each industry are established based on these top performers’ historic SVT. Regression analyses are run on each industry group to identify the variables most strongly correlated to SVT. The benchmark industry SVT level is then adjusted upwards or downwards for the specific company by plugging the company-specific performance measures, size and cash compensation into the industry cap equations to arrive at the company’s allowable cap.

Repricing Provisions

Vote AGAINST plans that expressly permit the repricing of underwater stock options without prior shareholder approval, even if the cost of the plan is reasonable. Also, vote AGAINST OR WITHHOLD from members of the Compensation Committee who approved and/or implemented an option exchange program by repricing and buying out underwater options for stock, cash or other consideration or canceling underwater options and regranting options with a lower exercise price without prior shareholder approval, even if such repricings are allowed in their equity plan.

Vote AGAINST plans if the company has a history of repricing options without shareholder approval, and the applicable listing standards would not preclude them from doing so.

Pay-for-Performance Disconnect

Generally vote AGAINST plans in which:

	•		There is a disconnect between the CEO’s 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.

Performance decreases are based on negative one- and three-year total shareholder returns. CEO pay increases are based on the CEO’s total direct compensation (salary, cash bonus, value of non-equity incentive payouts, present value of stock options, face value of restricted stock, target value of performance-based awards, change in pension value and nonqualified deferred compensation earnings, and all other compensation) increasing over the previous year.

Vote AGAINST or WITHHOLD votes from the Compensation Committee members when the company has a pay-for-performance disconnect.

On a CASE-BY-CASE basis, vote for equity plans and FOR compensation committee members with a pay-for-performance disconnect if compensation committee members can present strong and compelling evidence of improved committee performance.

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This evidence must go beyond the usual compensation committee report disclosure. This additional evidence necessary includes all of the following:

•

The compensation committee has reviewed all components of the CEO’s 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 company’s nonqualified deferred compensation program;

	—		Actual projected payment obligations under the company’s 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 repetition of the compensation committee report does not meet ISS’ requirement of compelling and strong evidence of improved disclosure. The level of transparency and disclosure is at the highest level where shareholders can understand the mechanics of the annual cash bonus and/or long-term incentive cash plan based on the additional disclosure.

•

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 company’s underlying performance.

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The level of transparency and disclosure is at the highest level where shareholders can understand the mechanics of the performance-based equity awards based on the additional disclosure.

•

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 company’s financial measures.

Three-Year Burn Rate/Burn Rate Commitment

Generally vote AGAINST plans if the company’s most recent three-year burn rate exceeds one standard deviation in excess of the industry mean (per the following Burn Rate Table) and is over 2 percent of common shares outstanding. The three-year burn rate policy does not apply to non-employee director plans unless outside directors receive a significant portion of shares each year.

The annual burn rate is calculated as follows:

Annual Burn rate = (# of options granted + # of full value shares awarded * Multiplier) / Weighted Average common shares outstanding)

However, vote FOR equity plans if the company fails this burn rate test but the company commits in a public filing to a three-year average burn rate equal to its GICS group burn rate mean plus one standard deviation (or 2%, whichever is greater), assuming all other conditions for voting FOR the plan have been met.

If a company fails to fulfill its burn rate commitment, vote AGAINST or WITHHOLD from the compensation committee.

2008 Burn Rate Table


			Russell 3000									Non-Russell 3000
						Standard									Standard
GICS		Description	Mean			Deviation			Mean+STDEV			Mean			Deviation			Mean+STDEV
	1010	Energy		1.71	%		1.39	%		3.09	%		2.12	%		2.31	%		4.43	%
	1510	Materials		1.16	%		0.77	%		1.93	%		2.23	%		2.26	%		4.49	%
	2010	Capital Goods		1.51	%		1.04	%		2.55	%		2.36	%		2.03	%		4.39	%
	2020	Commercial Services & Supplies		2.35	%		1.70	%		4.05	%		2.20	%		2.03	%		4.23	%
	2030	Transportation		1.59	%		1.22	%		2.80	%		2.02	%		2.08	%		4.10	%
	2510	Automobiles & Components		1.89	%		1.10	%		2.99	%		1.73	%		2.05	%		3.78	%
	2520	Consumer Durables & Apparel		2.02	%		1.31	%		3.33	%		2.10	%		1.94	%		4.04	%
	2530	Hotels Restaurants & Leisure		2.15	%		1.18	%		3.33	%		2.32	%		1.93	%		4.25	%
	2540	Media		1.92	%		1.35	%		3.27	%		3.33	%		2.60	%		5.93	%
	2550	Retailing		1.86	%		1.04	%		2.90	%		3.15	%		2.65	%		5.80	%
	3010, 3020, 3030	Food & Staples Retailing		1.69	%		1.23	%		2.92	%		1.82	%		2.03	%		3.85	%
	3510	Health Care Equipment & Services		2.90	%		1.67	%		4.57	%		3.75	%		2.65	%		6.40	%
	3520	Pharmaceuticals & Biotechnology		3.30	%		1.66	%		4.96	%		4.92	%		3.77	%		8.69	%
	4010	Banks		1.27	%		0.88	%		2.15	%		1.07	%		1.12	%		2.19	%
	4020	Diversified Financials		2.45	%		2.07	%		4.52	%		4.41	%		5.31	%		9.71	%
	4030	Insurance		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	Real Estate		1.04	%		0.81	%		1.85	%		0.80	%		1.21	%		2.02	%
	4510	Software & Services		3.81	%		2.30	%		6.11	%		5.46	%		3.81	%		9.27	%
	4520	Technology Hardware & Equipment		3.07	%		1.74	%		4.80	%		3.43	%		2.40	%		5.83	%
	4530	Semiconductors & Semiconductor Equipment		3.78	%		1.81	%		5.59	%		4.51	%		2.30	%		6.81	%
	5010	Telecommunication Services		1.57	%		1.23	%		2.80	%		2.69	%		2.41	%		5.10	%
	5510	Utilities		0.72	%		0.50	%		1.22	%		0.59	%		0.66	%		1.25	%

For companies that grant both full value awards and stock options to their employees, apply a premium on full value awards for the past three fiscal years. The guideline for applying the premium is as follows:


Annual Stock Price Volatility		Multiplier
54.6% and higher		1 full-value award will count as 1.5 option shares
36.1% or higher and less than 54.6%		1 full-value award will count as 2.0 option shares
24.9% or higher and less than 36.1%		1 full-value award will count as 2.5 option shares
16.5% or higher and less than 24.9%		1 full-value award will count as 3.0 option shares
7.9% or higher and less than 16.5%		1 full-value award will count as 3.5 option shares
Less than 7.9%		1 full-value award will count as 4.0 option shares

Poor Pay Practices

Vote AGAINST or WITHHOLD from compensation committee members, CEO, and potentially the entire board, if the company has poor compensation practices. Vote AGAINST equity plans if the plan is a vehicle for poor compensation practices.

The following practices, while not exhaustive, are examples of poor compensation practices that may warrant voting against or withholding votes:

•

Egregious employment contracts:

Contracts containing multi-year guarantees for salary increases, bonuses, and equity compensation;

•

Excessive perks:

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:

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 executive’s 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:

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.

Specific Treatment of Certain Award Types in Equity Plan Evaluations:

Dividend Equivalent Rights

Options that have Dividend Equivalent Rights (DERs) associated with them will have a higher calculated award value than those without DERs under the binomial model, based on the value of these dividend streams. The higher value will be applied to new shares, shares available under existing plans, and shares awarded but not exercised per the plan specifications. DERS transfer more shareholder equity to employees and non-employee directors and this cost should be captured.

Liberal Share Recycling Provisions

Under net share counting provisions, shares tendered by an option holder to pay for the exercise of an option, shares withheld for taxes or shares repurchased by the company on the open market can be recycled back into the equity plan for awarding again. All awards with such provisions should be valued as full-value awards. Stock-settled stock appreciation rights (SSARs) will also be considered as full-value awards if a company counts only the net shares issued to employees towards their plan reserve.

Option Overhang Cost

Companies with sustained positive stock performance and high overhang cost (the overhang alone exceeds the allowable cap) attributable to in-the-money options outstanding in excess of six years may warrant a carve-out of these options from the overhang as long as the dilution attributable to the new share request is reasonable and the company exhibits sound compensation practices. Consider, on a CASE-BY-CASE basis, a carve-out of a portion of cost attributable to overhang, considering the following criteria:

•

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 company’s 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 company’s 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 company’s unadjusted (options and full-value awards accounted on a one-for-one basis) three-year average burn rate by the most recent fiscal year’s weighted average shares outstanding (as used in the company’s calculation of basic EPS) and divide the sum of the new share request and all available shares under the company’s 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.

Other Compensation Proposals and Policies

401(k) Employee Benefit Plans

Vote FOR proposals to implement a 401(k) savings plan for employees.

Advisory Vote on Executive Compensation (Say-on-Pay) Management Proposals

Vote CASE-BY-CASE on management proposals for an advisory vote on executive compensation. Vote AGAINST these resolutions in cases where boards have failed to demonstrate good stewardship of investors’ interests regarding executive compensation practices. The following principles and factors should be considered:

1. The following five global principles apply to all markets:

	•		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.

2. For U.S. companies, vote CASE-BY-CASE considering the following factors in the context of each company’s specific circumstances and the board’s disclosed rationale for its practices:

Relative Considerations:

	•		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).

Design Considerations:

	•		Balance of fixed versus performance-driven pay;

	•		Assessment of excessive practices with respect to perks, severance packages, supplemental executive pension plans, and burn rates.

Communication Considerations:

	•		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 board’s responsiveness to investor input and engagement on compensation issues (e.g., in responding to majority-supported shareholder proposals on executive pay topics).

Director Compensation

Vote CASE-BY-CASE on compensation plans for non-employee directors, based on the cost of the plans against the company’s allowable cap.

On occasion, director stock plans that set aside a relatively small number of shares when combined with employee or executive stock compensation plans will exceed the allowable cap. Vote for the plan if ALL of the following qualitative factors in the board’s compensation are met and disclosed in the proxy statement:

	•		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.

Director Retirement Plans

Vote AGAINST retirement plans for non-employee directors.

Vote FOR shareholder proposals to eliminate retirement plans for non-employee directors.

Employee Stock Ownership Plans (ESOPs)

Vote FOR proposals to implement an ESOP or increase authorized shares for existing ESOPs, unless the number of shares allocated to the ESOP is excessive (more than five percent of outstanding shares).

Employee Stock Purchase Plans- Qualified Plans

Vote CASE-BY-CASE on qualified employee stock purchase plans. Vote FOR employee stock purchase plans where all of the following apply:

	•		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.

Vote AGAINST qualified employee stock purchase plans where any of the following apply:

	•		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.

Employee Stock Purchase Plans- Non-Qualified Plans

Vote CASE-by-CASE on nonqualified employee stock purchase plans. Vote FOR nonqualified employee stock purchase plans with all the following features:

	•		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 employee’s 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.

Vote AGAINST nonqualified employee stock purchase plans when any of the plan features do not meet the above criteria. If the company matching contribution exceeds 25 percent of employee’s contribution, evaluate the cost of the plan against its allowable cap.

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Incentive Bonus Plans and Tax Deductibility Proposals (OBRA-Related Compensation Proposals)

Vote FOR proposals that simply amend shareholder-approved compensation plans to include administrative features or place a cap on the annual grants any one participant may receive to comply with the provisions of Section 162(m) of the Internal Revenue Code.

Vote FOR proposals to add performance goals to existing compensation plans to comply with the provisions of Section 162(m) unless they are clearly inappropriate.

Vote CASE-BY-CASE on amendments to existing plans to increase shares reserved and to qualify for favorable tax treatment under the provisions of Section 162(m) as long as the plan does not exceed the allowable cap and the plan does not violate any of the supplemental policies.

Generally vote FOR cash or cash and stock bonus plans that are submitted to shareholders for the purpose of exempting compensation from taxes under the provisions of Section 162(m) if no increase in shares is requested.

Options Backdating

In cases where a company has practiced options backdating, vote AGAINST or WITHHOLD on a CASE-BY-CASE basis from the members of the compensation committee, depending on the severity of the practices and the subsequent corrective actions on the part of the board. Vote AGAINST or WITHHOLD from the compensation committee members who oversaw the questionable options grant practices or from current compensation committee members who fail to respond to the issue proactively, depending on several factors, including, but not limited to:

	•		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.

Option Exchange Programs/Repricing Options

Vote CASE-by-CASE on management proposals seeking approval to exchange/reprice options taking into consideration:

	•		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 management’s 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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If the surrendered options are added back to the equity plans for re-issuance, then also take into consideration the company’s three-year average burn rate.

In addition to the above considerations, evaluate the intent, rationale, and timing of the repricing proposal. The proposal should clearly articulate why the board is choosing to conduct an exchange program at this point in time. Repricing underwater options after a recent precipitous drop in the company’s stock price demonstrates poor timing. Repricing after a recent decline in stock price triggers additional scrutiny and a potential AGAINST vote on the proposal. At a minimum, the decline should not have happened within the past year. Also, consider the terms of the surrendered options, such as the grant date, exercise price and vesting schedule. Grant dates of surrendered options should be far enough back (two to three years) so as not to suggest that repricings are being done to take advantage of short-term downward price movements. Similarly, the exercise price of surrendered options should be above the 52-week high for the stock price.

Vote FOR shareholder proposals to put option repricings to a shareholder vote.

Stock Plans in Lieu of Cash

Vote CASE-by-CASE on plans that provide participants with the option of taking all or a portion of their cash compensation in the form of stock.

Vote FOR non-employee director-only equity plans that provide a dollar-for-dollar cash-for-stock exchange.

Vote CASE-by-CASE on plans which do not provide a dollar-for-dollar cash for stock exchange. In cases where the exchange is not dollar-for-dollar, the request for new or additional shares for such equity program will be considered using the binomial option pricing model. In an effort to capture the total cost of total compensation, ISS will not make any adjustments to carve out the in-lieu-of cash compensation.

Transfer Programs of Stock Options

One-time Transfers : Vote AGAINST or WITHHOLD from compensation committee members if they fail to submit one-time transfers to shareholders for approval.

Vote CASE-BY-CASE on one-time transfers. Vote FOR if:

	•		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.

Additionally, management should provide a clear explanation of why options are being transferred and whether the events leading up to the decline in stock price were beyond management’s control. A review of the company’s historic stock price volatility should indicate if the options are likely to be back “in-the-money” over the near term. Ongoing TSO program: Vote against equity plan proposals if the details of ongoing TSO programs are not provided to shareholders. Since TSOs will be one of the award types under a stock plan, the ongoing TSO program, structure and mechanics must be disclosed to shareholders. The specific criteria to be considered in evaluating these proposals include, but not limited, to the following:

	•		Eligibility;

	•		Vesting;

	•		Bid-price;

	•		Term of options;

	•		Transfer value to third-party financial institution, employees and the company.

Amendments to existing plans that allow for introduction of transferability of stock options should make clear that only options granted post-amendment shall be transferable.

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Shareholder Proposals on Compensation

Advisory Vote on Executive Compensation (Say-on-Pay)

Generally, vote FOR shareholder proposals that call for non-binding shareholder ratification of the compensation of the Named Executive Officers and the accompanying narrative disclosure of material factors provided to understand the Summary Compensation Table.

Compensation Consultants- Disclosure of Board or Company’s Utilization

Generally vote FOR shareholder proposals seeking disclosure regarding the Company, Board, or Compensation Committee’s use of compensation consultants, such as company name, business relationship(s) and fees paid.

Disclosure/Setting Levels or Types of Compensation for Executives and Directors

Generally, vote FOR shareholder proposals seeking additional disclosure of executive and director pay information, provided the information requested is relevant to shareholders’ needs, would not put the company at a competitive disadvantage relative to its industry, and is not unduly burdensome to the company.

Vote AGAINST shareholder proposals seeking to set absolute levels on compensation or otherwise dictate the amount or form of compensation.

Vote AGAINST shareholder proposals requiring director fees be paid in stock only.

Vote CASE-BY-CASE on all other shareholder proposals regarding executive and director pay, taking into account company performance, pay level versus peers, pay level versus industry, and long-term corporate outlook.

Pay for Superior Performance

Generally vote FOR shareholder proposals based on a case-by-case analysis that requests the board establish a pay-for-superior performance standard in the company’s executive compensation plan for senior executives. The proposal has the following principles:

	•		Sets compensation targets for the Plan’s annual and long-term incentive pay components at or below the peer group median;

	•		Delivers a majority of the Plan’s 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 company’s peer companies;

	•		Limits payment under the annual and performance-vested long-term incentive components of the plan to when the company’s performance on its selected financial performance metrics exceeds peer group median performance.

Consider the following factors in evaluating this proposal:

	•		What aspects of the company’s 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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Performance-Based Awards

Vote CASE-BY-CASE on shareholder proposal requesting that a significant amount of future long-term incentive compensation awarded to senior executives shall be performance-based and requesting that the board adopt and disclose challenging performance metrics to shareholders, based on the following analytical steps:

	•		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 company’s performance-based equity program. If the bar set for the performance-based program is too low based on the company’s 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 program’s 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.

In general, vote FOR the shareholder proposal if the company does not meet both of the above two steps.

Pension Plan Income Accounting

Generally vote FOR shareholder proposals to exclude pension plan income in the calculation of earnings used in determining executive bonuses/compensation.

Pre-Arranged Trading Plans (10b5-1 Plans)

Generally vote FOR shareholder proposals calling for certain principles regarding the use of prearranged trading plans (10b5-1 plans) for executives. These principles include:

	•		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.

Recoup Bonuses

Vote on a CASE-BY-CASE on proposals to recoup unearned incentive bonuses or other incentive payments made to senior executives if it is later determined that fraud, misconduct, or negligence significantly contributed to a restatement of financial results that led to the awarding of unearned incentive compensation, taking into consideration:

	•		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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Severance Agreements for Executives/Golden Parachutes

Vote FOR shareholder proposals requiring that golden parachutes or executive severance agreements be submitted for shareholder ratification, unless the proposal requires shareholder approval prior to entering into employment contracts.

Vote on a CASE-BY-CASE basis on proposals to ratify or cancel golden parachutes. An acceptable parachute should include, but is not limited to, the following:

	•		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.

Share Buyback Holding Periods

Generally vote AGAINST shareholder proposals prohibiting executives from selling shares of company stock during periods in which the company has announced that it may or will be repurchasing shares of its stock. Vote FOR the proposal when there is a pattern of abuse by executives exercising options or selling shares during periods of share buybacks.

Stock Ownership or Holding Period Guidelines

Generally vote AGAINST shareholder proposals that mandate a minimum amount of stock that directors must own in order to qualify as a director or to remain on the board. While ISS favors stock ownership on the part of directors, the company should determine the appropriate ownership requirement.

Vote CASE-BY-CASE on shareholder proposals asking companies to adopt holding period or retention ratios for their executives, taking into account:

•

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 proponent’s suggested holding period/retention ratio or the company’s own stock ownership or retention requirements.

Supplemental Executive Retirement Plans (SERPs)

Generally vote FOR shareholder proposals requesting to put extraordinary benefits contained in SERP agreements to a shareholder vote unless the company’s executive pension plans do not contain excessive benefits beyond what is offered under employee-wide plans.

Generally vote FOR shareholder proposals requesting to limit the executive benefits provided under the company’s supplemental executive retirement plan (SERP) by limiting covered compensation to a senior executive’s annual salary and excluding of all incentive or bonus pay from the plan’s definition of covered compensation used to establish such benefits.

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Tax Gross-Up Proposals

Generally vote FOR proposals calling for companies to adopt a policy of not providing tax gross-up payments to executives, except in situations where gross-ups are provided pursuant to a plan, policy, or arrangement applicable to management employees of the company, such as a relocation or expatriate tax equalization policy.

9. Corporate Social Responsibility (CSR) Issues

Animal Welfare

Animal Testing

Generally vote AGAINST proposals to phase out the use of animals in product testing unless:

	•		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.

Animal Welfare Policies

Generally vote FOR proposals seeking a report on the company’s animal welfare standards unless:

	•		The company has already published a set of animal welfare standards and monitors compliance;

	•		The company’s standards are comparable to or better than those of peer firms; and

	•		There are no recent, significant fines or litigation related to the company’s treatment of animals.

Controlled Atmosphere Killing (CAK)

Generally vote AGAINST proposals requesting the implementation of CAK methods at company and/or supplier operations unless such methods are required by legislation or generally accepted as the industry standard. Vote CASE-BY-CASE on proposals requesting a report on the feasibility of implementing CAK methods, considering the availability of existing research conducted by the company or industry groups on this topic and any fines or litigation related to current animal processing procedures at the company.

Consumer Issues

Genetically Modified Ingredients

Generally, vote AGAINST proposals asking restaurants and food retail companies to voluntarily label genetically engineered (GE) ingredients in their products or alternatively to provide interim labeling and eventually eliminate GE ingredients due to the costs and feasibility of labeling and/or phasing out the use of GE ingredients. Vote CASE-BY CASE on proposals asking food supply and genetic research companies to voluntarily label genetically engineered (GE) ingredients in their products or alternatively to provide interim labeling and eventually eliminate GE ingredients due to the costs and feasibility of labeling and/or phasing out the use of GE ingredients.

Vote CASE-BY-CASE on proposals asking for a report on the feasibility of labeling products containing GE ingredients taking into account:

	•		The relevance of the proposal in terms of the company’s business and the proportion of it affected by the resolution;

	•		The quality of the company’s disclosure on GE product labeling and related voluntary initiatives and how this disclosure compares with peer company disclosure;

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	•		Company’s 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.

Generally vote AGAINST proposals seeking a report on the health and environmental effects of genetically modified organisms (GMOs). Health studies of this sort are better undertaken by regulators and the scientific community.

Generally vote AGAINST proposals to completely phase out GE ingredients from the company’s products or proposals asking for reports outlining the steps necessary to eliminate GE ingredients from the company’s products. Such resolutions presuppose that there are proven health risks to GE ingredients (an issue better left to federal regulators) that outweigh the economic benefits derived from biotechnology.

Consumer Lending

Vote CASE-BY CASE on requests for reports on the company’s lending guidelines and procedures, including the establishment of a board committee for oversight, taking into account:

	•		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.

Pharmaceutical Pricing

Generally vote AGAINST proposals requesting that companies implement specific price restraints on pharmaceutical products unless the company fails to adhere to legislative guidelines or industry norms in its product pricing.

Vote CASE-BY-CASE on proposals requesting that the company evaluate their product pricing considering:

	•		The existing level of disclosure on pricing policies;

	•		Deviation from established industry pricing norms;

	•		The company’s existing initiatives to provide its products to needy consumers;

	•		Whether the proposal focuses on specific products or geographic regions.

Pharmaceutical Product Reimportation

Generally vote FOR proposals requesting that companies report on the financial and legal impact of their policies regarding prescription drug reimportation unless such information is already publicly disclosed.

Generally vote AGAINST proposals requesting that companies adopt specific policies to encourage or constrain prescription drug reimportation.

Product Safety and Toxic Materials

Generally vote FOR proposals requesting the company to report on its policies, initiatives/procedures, and oversight mechanisms related to toxic materials and/or product safety in its supply chain, unless:

•

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.

Vote CASE-BY-CASE on resolutions requesting that companies develop a feasibility assessment to phase-out of certain toxic chemicals and/or evaluate and disclose the potential financial and legal risks associated with utilizing certain chemicals, considering:

	•		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.

Generally vote AGAINST resolutions requiring that a company reformulate its products.

Tobacco

Most tobacco-related proposals should be evaluated on a CASE-BY-CASE basis, taking into account the following factors:

Advertising to youth:

	•		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.

Cease production of tobacco-related products or avoid selling products to tobacco companies:

	•		The percentage of the company’s business affected;

	•		The economic loss of eliminating the business versus any potential tobacco-related liabilities.

Investment in tobacco-related stocks or businesses:

Vote AGAINST proposals prohibiting investment in tobacco equities. Such decisions are better left to portfolio managers.

Second-hand smoke:

	•		Whether the company complies with all local ordinances and regulations;

	•		The degree that voluntary restrictions beyond those mandated by law might hurt the company’s competitiveness;

	•		The risk of any health-related liabilities.

Spin-off tobacco-related businesses:

	•		The percentage of the company’s business affected;

	•		The feasibility of a spin-off;

	•		Potential future liabilities related to the company’s tobacco business.

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Stronger product warnings:

Vote AGAINST proposals seeking stronger product warnings. Such decisions are better left to public health authorities.

Diversity

Board Diversity

Generally vote FOR reports on the company’s efforts to diversify the board, unless:

	•		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.

Generally vote AGAINST proposals that would call for the adoption of specific committee charter language regarding diversity initiatives unless the company fails to publicly disclose existing equal opportunity or non-discrimination policies.

Vote CASE-BY-CASE on proposals asking the company to increase the representation of women and minorities on the board, taking into account:

	•		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.

Equality of Opportunity and Glass Ceiling

Generally vote FOR reports outlining the company’s equal opportunity initiatives unless all of the following apply:

	•		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.

Generally vote FOR requests for reports outlining the company’s progress towards the Glass Ceiling Commission’s business recommendations, unless:

	•		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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Vote CASE-BY-CASE on proposals requesting disclosure of a company’s EEO1 data or the composition of the company’s workforce considering:

	•		Existing disclosure on the company’s diversity initiatives and policies;

	•		Any recent, significant violations or litigation related to discrimination at the company.

Generally vote AGAINST proposals seeking information on the diversity efforts of suppliers and service providers, which can pose a significant cost and administration burden on the company.

Sexual Orientation and Domestic Partner Benefits

Generally, vote FOR proposals seeking to amend a company’s EEO statement in order to prohibit discrimination based on sexual orientation, unless the change would result in excessive costs for the company.

Generally vote AGAINST proposals to extend company benefits to, or eliminate benefits from domestic partners. Benefits decisions should be left to the discretion of the company.

Climate Change and the Environment

Climate Change

In general, vote FOR resolutions requesting that a company disclose information on the impact of climate change on the company’s operations unless:

	•		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 company’s 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 company’s environmental performance.

Concentrated Area Feeding Operations (CAFO)

Generally vote FOR resolutions requesting that companies report to shareholders on the risks and liabilities associated with CAFOs unless:

	•		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.

Energy Efficiency

Vote CASE-BY-CASE on proposals requesting a company report on its energy efficiency policies, considering:

	•		The current level of disclosure related to energy efficiency policies, initiatives, and performance measures;

	•		The company’s level of participation in voluntary energy efficiency programs and initiatives;

	•		The company’s compliance with applicable legislation and/or regulations regarding energy efficiency; and

	•		The company’s energy efficiency policies and initiatives relative to industry peers.

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Facility Safety (Nuclear and Chemical Plant Safety)

Vote CASE-BY-CASE on resolutions requesting that companies report on risks associated with their operations and/or facilities, considering:

	•		The company’s 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 company’s operations and/or facilities.

General Environmental Reporting

Generally vote FOR requests for reports disclosing the company’s environmental policies unless it already has well-documented environmental management systems that are available to the public.

Greenhouse Gas Emissions

Generally vote FOR proposals requesting a report on greenhouse gas emissions from company operations and/or products unless this information is already publicly disclosed or such factors are not integral to the company’s line of business.

Generally vote AGAINST proposals that call for reduction in greenhouse gas emissions by specified amounts or within a restrictive time frame unless the company lags industry standards and has been the subject of recent, significant fines or litigation resulting from greenhouse gas emissions.

Operations in Protected Areas

Generally vote FOR requests for reports outlining potential environmental damage from operations in protected regions unless:

	•		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.

Recycling

Vote CASE-BY-CASE on proposals to adopt a comprehensive recycling strategy, taking into account:

	•		The nature of the company’s 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.

Renewable Energy

In general, vote FOR requests for reports on the feasibility of developing renewable energy sources unless the report is duplicative of existing disclosure or irrelevant to the company’s line of business.

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Generally vote AGAINST proposals requesting that the company invest in renewable energy sources. Such decisions are best left to management’s evaluation of the feasibility and financial impact that such programs may have on the company.

General Corporate Issues

Charitable Contributions

Vote AGAINST proposals restricting the company from making charitable contributions. Charitable contributions are generally useful for assisting worthwhile causes and for creating goodwill in the community. In the absence of bad faith, self-dealing, or gross negligence, management should determine which contributions are in the best interests of the company.

CSR Compensation-Related Proposals

Vote CASE-BY-CASE on proposals to review ways of linking executive compensation to social factors, such as corporate downsizings, customer or employee satisfaction, community involvement, human rights, environmental performance, predatory lending, and executive/employee pay disparities. Such resolutions should be evaluated in the context of:

	•		The relevance of the issue to be linked to pay;

	•		The degree that social performance is already included in the company’s 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.

Generally vote AGAINST proposals calling for an analysis of the pay disparity between corporate executives and other employees as such comparisons may be arbitrary in nature and/or provide information of limited value to shareholders.

HIV/AIDS

Vote CASE-BY-CASE on requests for reports outlining the impact of the health pandemic (HIV/AIDS, malaria and tuberculosis) on the company’s Sub-Saharan operations and how the company is responding to it, taking into account:

	•		The nature and size of the company’s operations in Sub-Saharan Africa and the number of local employees;

	•		The company’s existing healthcare policies, including benefits and healthcare access for local workers; and

	•		Company donations to healthcare providers operating in the region.

Vote AGAINST proposals asking companies to establish, implement, and report on a standard of response to the HIV/AIDS, TB, and malaria health pandemic in Africa and other developing countries, unless the company has significant operations in these markets and has failed to adopt policies and/or procedures to address these issues comparable to those of industry peers.

Lobbying Expenditures/Initiatives

Vote CASE-BY-CASE on proposals requesting information on a company’s lobbying initiatives, considering any significant controversy or litigation surrounding a company’s public policy activities, the current level of disclosure on lobbying strategy, and the impact that the policy issue may have on the company’s business operations.

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Political Contributions and Trade Associations Spending

Generally vote AGAINST proposals asking the company to affirm political nonpartisanship in the workplace so long as:

	•		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.

Vote AGAINST proposals to publish in newspapers and public media the company’s political contributions as such publications could present significant cost to the company without providing commensurate value to shareholders.

Vote CASE-BY-CASE on proposals to improve the disclosure of a company’s political contributions and trade association spending considering:

	•		Recent significant controversy or litigation related to the company’s 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.

Vote AGAINST proposals barring the company from making political contributions. Businesses are affected by legislation at the federal, state, and local level and barring contributions can put the company at a competitive disadvantage.

Vote AGAINST proposals asking for a list of company executives, directors, consultants, legal counsels, lobbyists, or investment bankers that have prior government service and whether such service had a bearing on the business of the company. Such a list would be burdensome to prepare without providing any meaningful information to shareholders.

International Issues, Labor Issues, and Human Rights

China Principles

Vote AGAINST proposals to implement the China Principles unless:

	•		There are serious controversies surrounding the company’s China operations; and

	•		The company does not have a code of conduct with standards similar to those promulgated by the International Labor Organization (ILO).

Codes of Conduct

Vote CASE-BY-CASE on proposals to implement certain human rights standards and policies at company facilities. In evaluating these proposals, the following should be considered:

	•		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 company’s 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 company’s international factories.

Community Impact Assessments

Vote CASE-BY-CASE on requests for reports outlining the potential community impact of company operations in specific regions considering:

	•		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 company’s operations in question, including the management of relevant community and stakeholder relations;

	•		The nature, purpose, and scope of the company’s operations in the specific region(s); and,

	•		The degree to which company policies and procedures are consistent with industry norms.

Foreign Military Sales/Offsets

Vote AGAINST reports on foreign military sales or offsets. Such disclosures may involve sensitive and confidential information. Moreover, companies must comply with government controls and reporting on foreign military sales.

Internet Privacy and Censorship

Vote CASE-BY-CASE on resolutions requesting the disclosure and implementation of Internet privacy and censorship policies and procedures considering:

	•		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 company’s international human rights policies and procedures.

MacBride Principles

Vote CASE-BY-CASE on proposals to endorse or increase activity on the MacBride Principles, taking into account:

	•		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 company’s 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.

Nuclear and Depleted Uranium Weapons

Vote AGAINST proposals asking a company to cease production or report on the risks associated with the use of depleted uranium munitions or nuclear weapons components and delivery systems, including disengaging from current and proposed contracts. Such contracts are monitored by government agencies, serve multiple military and non-military uses, and withdrawal from these contracts could have a negative impact on the company’s business.

Operations in High Risk Markets

Vote CASE-BY-CASE on requests for review and a report outlining the company’s potential financial and reputation risks associated with operations in “high-risk” markets, such as a terrorism-sponsoring state or otherwise, taking into account:

	•		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.

Outsourcing/Offshoring

Vote CASE-BY-CASE on proposals calling for companies to report on the risks associated with outsourcing, considering:

	•		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.

Vendor Standards

Generally vote FOR reports outlining vendor standards compliance unless any of the following apply:

	•		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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Sustainability

Sustainability Reporting

Generally vote FOR proposals requesting the company to report on policies and initiatives related to social, economic, and environmental sustainability, unless:

	•		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.

10. Mutual Fund Proxies

Election of Directors

Vote CASE-BY-CASE on the election of directors and trustees, following the same guidelines for uncontested directors for public company shareholder meetings. However, mutual fund boards do not usually have compensation committees, so do not withhold for the lack of this committee.

Converting Closed-end Fund to Open-end Fund

Vote CASE-BY-CASE on conversion proposals, considering the following factors:

	•		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.

Proxy Contests

Vote CASE-BY-CASE on proxy contests, considering the following factors:

	•		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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Investment Advisory Agreements

Vote CASE-BY-CASE on investment advisory agreements, considering the following factors:

	•		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).

Approving New Classes or Series of Shares

Vote FOR the establishment of new classes or series of shares.

Preferred Stock Proposals

Vote CASE-BY-CASE on the authorization for or increase in preferred shares, considering the following factors:

	•		Stated specific financing purpose;

	•		Possible dilution for common shares;

	•		Whether the shares can be used for antitakeover purposes.

1940 Act Policies

Vote CASE-BY-CASE on policies under the Investment Advisor Act of 1940, considering the following factors:

	•		Potential competitiveness;

	•		Regulatory developments;

	•		Current and potential returns; and

	•		Current and potential risk.

Generally vote FOR these amendments as long as the proposed changes do not fundamentally alter the investment focus of the fund and do comply with the current SEC interpretation.

Changing a Fundamental Restriction to a Nonfundamental Restriction

Vote CASE-BY-CASE on proposals to change a fundamental restriction to a non-fundamental restriction, considering the following factors:

	•		The fund’s 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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Change Fundamental Investment Objective to Nonfundamental

Vote AGAINST proposals to change a fund’s fundamental investment objective to non-fundamental.

Name Change Proposals

Vote CASE-BY-CASE on name change proposals, considering the following factors:

	•		Political/economic changes in the target market;

	•		Consolidation in the target market; and

	•		Current asset composition.

Change in Fund’s Subclassification

Vote CASE-BY-CASE on changes in a fund’s sub-classification, considering the following factors:

	•		Potential competitiveness;

	•		Current and potential returns;

	•		Risk of concentration;

	•		Consolidation in target industry.

Disposition of Assets/Termination/Liquidation

Vote CASE-BY-CASE on proposals to dispose of assets, to terminate or liquidate, considering the following factors:

	•		Strategies employed to salvage the company;

	•		The fund’s past performance;

	•		The terms of the liquidation.

Changes to the Charter Document

Vote CASE-BY-CASE on changes to the charter document, considering the following factors:

	•		The degree of change implied by the proposal;

	•		The efficiencies that could result;

	•		The state of incorporation;

	•		Regulatory standards and implications.

Vote AGAINST any of the following changes:

	•		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 fund’s 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 fund’s 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.

Changing the Domicile of a Fund

Vote CASE-BY-CASE on re-incorporations, considering the following factors:

	•		Regulations of both states;

	•		Required fundamental policies of both states;

	•		The increased flexibility available.

Authorizing the Board to Hire and Terminate Subadvisors Without Shareholder Approval

Vote AGAINST proposals authorizing the board to hire/terminate subadvisors without shareholder approval.

Distribution Agreements

Vote CASE-BY-CASE on distribution agreement proposals, considering the following factors:

	•		Fees charged to comparably sized funds with similar objectives;

	•		The proposed distributor’s reputation and past performance;

	•		The competitiveness of the fund in the industry;

	•		The terms of the agreement.

Master-Feeder Structure

Vote FOR the establishment of a master-feeder structure.

Mergers

Vote CASE-BY-CASE on merger proposals, considering the following factors:

	•		Resulting fee structure;

	•		Performance of both funds;

	•		Continuity of management personnel;

	•		Changes in corporate governance and their impact on shareholder rights.

Shareholder Proposals for Mutual Funds

Establish Director Ownership Requirement

Generally vote AGAINST shareholder proposals that mandate a specific minimum amount of stock that directors must own in order to qualify as a director or to remain on the board.

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Reimburse Shareholder for Expenses Incurred

Vote CASE-BY-CASE on shareholder proposals to reimburse proxy solicitation expenses. When supporting the dissidents, vote FOR the reimbursement of the proxy solicitation expenses.

Terminate the Investment Advisor

Vote CASE-BY-CASE on proposals to terminate the investment advisor, considering the following factors:

	•		Performance of the fund’s Net Asset Value (NAV);

	•		The fund’s history of shareholder relations;

	•		The performance of other funds under the advisor’s management.

ISS Governance Services
2008 International Proxy Voting Guidelines Summary

Effective for Meetings on or after Feb 1, 2008
Updated Dec 17, 2007

The following is a condensed version of the general policies for voting non-U.S. proxies contained in the ISS Governance Services (“ISS”) Proxy Voting Manual. In addition, ISS has country- and market-specific policies, which are not captured below.

1. Operational Items

Financial Results/Director and Auditor Reports

Vote FOR approval of financial statements and director and auditor reports, unless:

	•		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.

Appointment of Auditors and Auditor Fees

Vote FOR the reelection of auditors and proposals authorizing the board to fix auditor fees, unless:

	•		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.

Vote AGAINST the appointment of external auditors if they have previously served the company in an executive capacity or can otherwise be considered affiliated with the company.

Appointment of Internal Statutory Auditors

Vote FOR the appointment or reelection of statutory auditors, unless:

	•		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.

Allocation of Income

Vote FOR approval of the allocation of income, unless:

	•		The dividend payout ratio has been consistently below 30 percent without adequate explanation; or

	•		The payout is excessive given the company’s financial position.

Stock (Scrip) Dividend Alternative

Vote FOR most stock (scrip) dividend proposals.

Vote AGAINST proposals that do not allow for a cash option unless management demonstrates that the cash option is harmful to shareholder value.

Amendments to Articles of Association

Vote amendments to the articles of association on a CASE-BY-CASE basis.

Change in Company Fiscal Term

Vote FOR resolutions to change a company’s fiscal term unless a company’s motivation for the change is to postpone its AGM.

Lower Disclosure Threshold for Stock Ownership

Vote AGAINST resolutions to lower the stock ownership disclosure threshold below 5 percent unless specific reasons exist to implement a lower threshold.

Amend Quorum Requirements

Vote proposals to amend quorum requirements for shareholder meetings on a CASE-BY-CASE basis.

Transact Other Business

Vote AGAINST other business when it appears as a voting item.

2. Board of Directors

Director Elections

Vote FOR management nominees in the election of directors, unless:

	•		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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Vote FOR individual nominees unless there are specific concerns about the individual, such as criminal wrongdoing or breach of fiduciary responsibilities.

Vote AGAINST shareholder nominees unless they demonstrate a clear ability to contribute positively to board deliberations.

Vote AGAINST individual directors if repeated absences at board meetings have not been explained (in countries where this information is disclosed).

Vote FOR employee and/or labor representatives if they sit on either the audit or compensation committee and are required by law to be on those committees. Vote AGAINST employee and/or labor representatives if they sit on either the audit or compensation committee, if they are not required to be on those committees.

Please see the International Classification of Directors on the following page.

ISS Classification of Directors — International Policy 2008

Executive Director

	•		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.

Non-Independent Non-Executive Director (NED)

	•		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;

• Beneficial owner (direct or indirect) of at least 10% of the company’s stock, either in economic terms or in voting rights (this may be aggregated if voting power is distributed among more than one member of a defined group, e.g., family members who beneficially own less than 10% individually, but collectively own more than 10%), unless market best practice dictates a lower ownership and/or disclosure threshold (and in other special market-specific circumstances);

•

Government representative;

• Currently provides (or a relative[1] provides) professional services[2] to the company, to an affiliate of the company, or to an individual officer of the company or of one of its affiliates in excess of $10,000 per year;

• Represents customer, supplier, creditor, banker, or other entity with which company maintains transactional/commercial relationship (unless company discloses information to apply a materiality test[3]);

	•		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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• Years of service is generally not a determining factor unless it is recommended best practice in a market and/or in extreme circumstances, in which case it may be considered.[4]

Independent NED

•

No material[5] connection, either directly or indirectly, to the company other than a board seat.

Employee Representative

• Represents employees or employee shareholders of the company (classified as “employee representative” but considered a non-independent NED).

Footnotes:


[1]		“Relative” follows the U.S. SEC’s 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 recipient’s 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 one’s objectivity in the boardroom in a manner that would have a meaningful impact on an individual’s ability to satisfy requisite fiduciary standards on behalf of shareholders.

Director Compensation

Vote FOR proposals to award cash fees to non-executive directors unless the amounts are excessive relative to other companies in the country or industry.

Vote non-executive director compensation proposals that include both cash and share-based components on a CASE-BY-CASE basis.

Vote proposals that bundle compensation for both non-executive and executive directors into a single resolution on a CASE-BY-CASE basis.

Vote AGAINST proposals to introduce retirement benefits for non-executive directors.

Discharge of Board and Management

Vote FOR discharge of the board and management, unless:

	•		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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Vote AGAINST proposals to remove approval of discharge of board and management from the agenda.

Director, Officer, and Auditor Indemnification and Liability Provisions

Vote proposals seeking indemnification and liability protection for directors and officers on a CASE-BY-CASE basis.

Vote AGAINST proposals to indemnify auditors.

Board Structure

Vote FOR proposals to fix board size.

Vote AGAINST the introduction of classified boards and mandatory retirement ages for directors.

Vote AGAINST proposals to alter board structure or size in the context of a fight for control of the company or the board.

3. Capital Structure

Share Issuance Requests

General Issuances:

Vote FOR issuance requests with preemptive rights to a maximum of 100 percent over currently issued capital.

Vote FOR issuance requests without preemptive rights to a maximum of 20 percent of currently issued capital.

Specific Issuances:

Vote on a CASE-BY-CASE basis on all requests, with or without preemptive rights.

Increases in Authorized Capital

Vote FOR non-specific proposals to increase authorized capital up to 100 percent over the current authorization unless the increase would leave the company with less than 30 percent of its new authorization outstanding.

Vote FOR specific proposals to increase authorized capital to any amount, unless:

	•		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.

Vote AGAINST proposals to adopt unlimited capital authorizations.

Reduction of Capital

Vote FOR proposals to reduce capital for routine accounting purposes unless the terms are unfavorable to shareholders.

Vote proposals to reduce capital in connection with corporate restructuring on a CASE-BY-CASE basis.

Capital Structures

Vote FOR resolutions that seek to maintain or convert to a one-share, one-vote capital structure.

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Vote AGAINST requests for the creation or continuation of dual-class capital structures or the creation of new or additional supervoting shares.

Preferred Stock

Vote FOR the creation of a new class of preferred stock or for issuances of preferred stock up to 50 percent of issued capital unless the terms of the preferred stock would adversely affect the rights of existing shareholders.

Vote FOR the creation/issuance of convertible preferred stock as long as the maximum number of common shares that could be issued upon conversion meets ISS’ guidelines on equity issuance requests.

Vote AGAINST the creation of a new class of preference shares that would carry superior voting rights to the common shares.

Vote AGAINST the creation of blank check preferred stock unless the board clearly states that the authorization will not be used to thwart a takeover bid.

Vote proposals to increase blank check preferred authorizations on a CASE-BY-CASE basis.

Debt Issuance Requests

Vote non-convertible debt issuance requests on a CASE-BY-CASE basis, with or without preemptive rights.

Vote FOR the creation/issuance of convertible debt instruments as long as the maximum number of common shares that could be issued upon conversion meets ISS’ guidelines on equity issuance requests.

Vote FOR proposals to restructure existing debt arrangements unless the terms of the restructuring would adversely affect the rights of shareholders.

Pledging of Assets for Debt

Vote proposals to approve the pledging of assets for debt on a CASE-BY-CASE basis.

Increase in Borrowing Powers

Vote proposals to approve increases in a company’s borrowing powers on a CASE-BY-CASE basis.

Share Repurchase Plans

Vote FOR share repurchase plans, unless:

	•		Clear evidence of past abuse of the authority is available; or

	•		The plan contains no safeguards against selective buybacks.

Reissuance of Shares Repurchased

Vote FOR requests to reissue any repurchased shares unless there is clear evidence of abuse of this authority in the past.

Capitalization of Reserves for Bonus Issues/Increase in Par Value

Vote FOR requests to capitalize reserves for bonus issues of shares or to increase par value.

4. Other

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Reorganizations/Restructurings

Vote reorganizations and restructurings on a CASE-BY-CASE basis.

Mergers and Acquisitions

Vote CASE-BY-CASE on mergers and acquisitions taking into account the following:

For every M&A analysis, ISS reviews publicly available information as of the date of the report and evaluates the merits and drawbacks of the proposed transaction, balancing various and sometimes countervailing factors including:

	•		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.

Vote AGAINST if the companies do not provide sufficient information upon request to make an informed voting decision.

Mandatory Takeover Bid Waivers

Vote proposals to waive mandatory takeover bid requirements on a CASE-BY-CASE basis.

Reincorporation Proposals

Vote reincorporation proposals on a CASE-BY-CASE basis.

Expansion of Business Activities

Vote FOR resolutions to expand business activities unless the new business takes the company into risky areas.

Related-Party Transactions

Vote related-party transactions on a CASE-BY-CASE basis.

Compensation Plans

Vote compensation plans on a CASE-BY-CASE basis.

Antitakeover Mechanisms

Vote AGAINST all antitakeover proposals unless they are structured in such a way that they give shareholders the ultimate decision on any proposal or offer.

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Shareholder Proposals

Vote all shareholder proposals on a CASE-BY-CASE basis.

Vote FOR proposals that would improve the company’s corporate governance or business profile at a reasonable cost.

Vote AGAINST proposals that limit the company’s business activities or capabilities or result in significant costs being incurred with little or no benefit.

PRINCIPAL HOLDERS OF SECURITIES

As of September 2, 2008, the officers and trustees of the Trust, as a group, owned less than 1% of the outstanding shares of each fund. The funds are aware of the following entities or persons who owned more than 5% of the outstanding shares of the fund as of September 2, 2008..


		PERCENTAGE			TYPE OF
FUND	SHAREHOLDERS	OWNED			OWNERSHIP
All American Equity Fund	Customers of Charles Schwab & Company, Inc.(1)		6.33	%	Beneficial
	Customers of National Financial Services Corp.(2)		5.66	%	Beneficial

China Region Fund	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

Eastern European Fund	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

Global Emerging Markets Fund	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

Global MegaTrends Fund	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

Global Resources Fund	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

Gold and Precious Metals Fund Shares	Customers of Charles Schwab & Company, Inc. (1)		33.92	%	Beneficial
	Customers of National Financial Services Corp. (2)		24.14	%	Beneficial

Holmes Growth Fund	Customers of Charles Schwab & Company, Inc. (1)		6.22	%	Beneficial

Near-Term Tax Free Fund	U.S. Global Investors, Inc.		10.48	%	Record
	Jean Rogers-Winchell		6.69	%	Record

Tax Free Fund	D. Joseph Dennis		7.02	%	Record
	U.S. Global Investors, Inc.		8.38	%	Record
	Frata L.L.C.		12.81	%	Record

World Precious Minerals Fund	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.

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INVESTMENT ADVISORY AND OTHER SERVICES

The investment adviser to the funds is U.S. Global Investors, Inc. (Adviser), a Texas corporation, pursuant to an advisory agreement dated as of October 1, 2008, Frank E. Holmes, Chief Executive Officer and a Director of the Adviser, as well as a Trustee, President and Chief Executive Officer of the Trust, beneficially owns more than 25% of the outstanding voting stock of the Adviser and may be deemed to be a controlling person of the Adviser.

Prior to the merger, the funds listed below paid the following management fees (net of expenses paid by the Adviser or fee waivers) for the last three fiscal years ended June 30, 2008:


FUND	2006		2007		2008

Gold and Precious Metals Fund	$	878,795	$	1,672,967	$	1,629,448
World Precious Minerals Fund	$	3,737,516	$	6,130,468	$	6,254,087
Global Resources Fund	$	5,819,998	$	7,387,016	$	9,303,615
China Region Fund	$	565,352	$	997,748	$	1,431,338
All American Equity Fund	$	65,912	$	107,349	$	137,008
Tax Free Fund	$	0	$	0	$	0
Near-Term Tax Free Fund	$	0	$	0	$	0
U. S. Government Securities Savings Fund	$	1,067,038	$	1,205,557	$	1,115,479
U.S. Treasury Securities Cash Fund	$	575,002	$	570,814	$	489,483

Prior to the merger, the funds listed below paid the following management fees (net of expenses paid by the Adviser or fee waivers) for the last three fiscal years ended October 31, 2007:


Fund	2005			2006			2007

Eastern European Fund	$	7,681,196		$	17,019,935	**	$	17,816,543
Global Emerging Markets Fund	$	0	*	$	87,692	**	$	396,485
Holmes Growth Fund	$	674,846		$	664,825		$	630,258
Global MegaTrends Fund	$	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.

Prior to October 1, 2007, Leeb Capital Management, Inc. provided subadvisory services to the Global MegaTrends Fund. On October 1, 2007, the Adviser assumed management of the fund.

For the last three fiscal years ended October 31, 2007, the Adviser paid the Subadvisers the following subadvisory fees (net of any participation in expense reimbursement and fee waivers):


FUND	2005			2006		2007

Eastern European Fund	$	3,840,598		$	8,509,968	$	8,908,301
Global Emerging Markets Fund	$	0	*	$	47,832	$	216,264
Global MegaTrends Fund	$	69,538		$	83,275	$	73,771


*		The Global Emerging Markets Fund commenced operations on February 24, 2005.

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The Trust pays the Adviser a separate management fee for each fund in the Trust. The Adviser’s fee may be reduced if the assets of certain funds reach a certain level and this reduction is reflected in the Advisory Fee Schedule below. In addition, the Advisory fee for certain funds may be adjusted up or down by 0.25% based upon the fund’s performance relative to the cumulative performance of its benchmark index and hurdle rate as reflected in the Performance Fee Schedule below. The Advisory fee is paid monthly.

BASE ADVISORY FEE SCHEDULE


NAME OF FUND		ANNUAL PERCENTAGE OF AVERAGE DAILY NET ASSETS
All American Equity Fund		0.80%≤$500,000,000; 0.75%> $500,000,000
Holmes Growth Fund		1.00%
Global MegaTrends Fund		1.00%
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
Eastern European Fund		1.25%
Global Emerging Markets Fund		1.375%
China Region Fund		1.25%
Tax Free Fund		0.75%≤$250,000,000; 0.70%>$250,000,000
Near-Term Tax Free Fund		0.50%
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 Adviser has contractually limited total fund operating expenses (exclusive of acquired fund fees and expenses and advisory fee performance adjustments, if any) to not exceed 1.75% for the All American Fund, 1.75% for the Holmes Growth Fund, 1.85% for the Global MegaTrends Fund, 1.50% for the Gold and Precious Metals Fund, 1.50% for the World Precious Minerals Fund, 1.50% for Global Resources Fund, 2.25% for the Eastern European Fund, 2.50% for the Global Emerging Markets Fund, 2.00% for the China Region Fund, 0.70% for the Tax Free Fund, 0.45% for the Near-Term Tax Free Fund, 0.45% for the U.S. Government Securities Savings Fund, and 1.00% for the U.S. Treasury Securities Cash Fund on an annualized basis through September 30, 2009, and until such later date as the Adviser determines.

The base advisory fee for the funds listed above may be adjusted up or down by 0.25% based upon the fund’s performance relative to the cumulative performance of its benchmark index and hurdle rate. The chart below reflects each fund’s base advisory fee, its relative benchmark, and hurdle rate.

PERFORMANCE FEE SCHEDULE


				Base Advisory Fee
				Range with
	Base Advisory		Hurdle	Performance Fee
	Fee	Benchmark	Rate	Adjustment
All American Equity Fund	0.80%	S&P 500 Index	+/- 5%	0.55%-1.05%
Holmes Growth Fund	1.00%	S&P Composite 1500 Index	+/- 5%	0.75%-1.25%
Global MegaTrends Fund	1.00%	S&P 500 Index	+/- 5%	0.75%-1.25%
Gold and Precious Metals Fund	0.90%	FTSE Gold Mines Index	+/- 5%	0.65%-1.15%
World Precious Minerals Fund	1.00%	AMEX Gold Miners Index	+/- 5%	0.75%-1.25%
Global Resources Fund	0.95%	Morgan Stanley Commodity Related Equity Index	+/- 5%	0.70%-1.20%
Eastern European Fund	1.25%	MSCI Emerging Markets Europe 10/40 Index (Net Total Return)	+/- 5%	1.00%-1.50%
Global Emerging Markets Fund	1.375%	MSCI Emerging Markets Net Total Return Index	+/- 5%	1.125%-1.625%
China Region Fund	1.25%	Hang Seng Composite Index		1.00%-1.50%
Tax Free Fund	0.75%	n/a		0.75%
Near-Term Tax Free Fund	0.50%	n/a		0.50%
U.S. Government Securities Savings Fund	0.50%	n/a		0.50%
U.S. Treasury Securities Cash Fund	0.50%	n/a		0.50%

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The advisory fees for the Tax Free Fund, Near-Term Tax Free Fund, U.S. Government Securities Savings Fund, and U.S. Treasury Securities Cash Fund do not have a performance fee adjustment.

A performance fee, or fulcrum fee, is designed to reward the Adviser and Subadviser for fund performance that exceeds a fund’s designated benchmark or penalize the Adviser and Subadviser, as applicable, for fund performance which is lower than a fund’s designated benchmark. A fund’s cumulative performance is compared to that of its designated benchmark over a rolling 12-month period. When the difference between a fund’s performance and the performance of its designated benchmark is less than 5% (this is known as the hurdle rate) there will be no adjustment to the base advisory fee. This is often referred to as the null zone. If a fund’s cumulative performance exceeds by 5% or more (hurdle rate) the performance of its designated benchmark, the base advisory fee will be increased by 0.25%. If a fund’s cumulative performance falls below its designated benchmark by 5% or more, the base advisory fee will be decreased by 0.25%. The chart reflects the minimum and maximum advisory fee applicable to each fund. Certain funds are subject to breakpoints in the base advisory fee as noted in the Base Advisory Fee Schedule section.

The performance fee adjustment will be effective October 1, 2009.

The investment advisory agreement will continue in effect from year to year with respect to a fund only if the agreement is approved at least annually both (i) by a vote of a majority of the outstanding voting securities of such fund (as defined in the 1940 Act) or by the board of trustees of the Trust, and (ii) by a vote of a majority of the trustees who are not parties to the advisory agreement or “interested persons” of any party thereto (the “Independent Trustees”), cast in person at a meeting called for the purpose of voting on such approval.

The advisory agreement may be terminated on 60 days written notice by either party and will terminate automatically if it is assigned.

The Adviser may, out of profits derived from its management fee, pay certain financial institutions (which may include banks, securities dealers and other industry professionals) a “servicing fee” and other non-cash compensation for performing certain administrative servicing functions for fund shareholders to the extent these institutions are allowed to do so by applicable statute, rule or regulation. These payments and compensation are in addition to the fees paid by the funds. These fees will be paid periodically and will generally be based on a percentage of the value of the institutions’ client fund shares. Additional cash payments may be made by the Adviser or Distributor to intermediaries that provide marketing support and/or access to sales meetings, sales representatives and management representatives of the intermediaries.

From time to time, the Adviser or U.S. Global Brokerage, Inc. may also pay non-cash compensation to the sales representatives of intermediaries in the form of (i) occasional gifts; (ii) occasional meals, tickets or other entertainment; and/or (iii) sponsorship support of regional or national events of intermediaries.

In addition to advising client accounts, the Adviser and the Subadviser may invest in securities for their own accounts. The Adviser and Subadviser have adopted policies and procedures intended to minimize or avoid potential conflicts with their clients when trading for their own accounts. The investment objectives and strategies of the Adviser and Subadviser are different from those of their clients, emphasizing venture capital investing, private placement arbitrage, and speculative short-term trading. The Adviser uses a diversified approach to venture capital investing. Investments typically involve early-stage businesses seeking initial financing as well as more mature businesses in need of capital for expansion, acquisitions, management buyouts, or recapitalization. Overall, the Adviser invests in start-up companies in the natural resources or technology fields.

ADMINISTRATIVE SERVICES AGREEMENT

Under a separate written agreement, the Adviser provides day-to-day administrative services to the Trust including preparing compliance materials pursuant to Rule 38a-1 of the 1940 Act to improve overall compliance by the Trust and its various agents; arranging for the preparation and filing for the Trust of all required tax returns; preparing and filing the periodic updating of the Trust’s prospectus and statement of additional information; preparing and filing, or overseeing 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

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24f-2 under the 1940 Act; and preparing and filing any regulatory reports as required by any regulatory agency. Monthly, the Adviser receives an administrative fee from the funds for these services that is calculated at an average annual rate of 0.08% on the monthly average net asset of each fund.

The Trust pays all other expenses for its operations and activities. Each of the funds of the Trust pays its allocable portion of these expenses. The expenses borne by the Trust include the charges and expenses of any transfer agents and dividend disbursing agents, custodian fees, legal and auditors’ expenses, bookkeeping and accounting expenses, brokerage commissions for portfolio transactions, taxes, if any, the advisory fee, extraordinary expenses, expenses of issuing and redeeming shares, expenses of shareholder and trustee meetings, and expenses of preparing, printing and mailing proxy statements, reports and other communications to shareholders, expenses of registering and qualifying shares for sale, fees of trustees who are not “interested persons” of the Adviser, expenses of attendance by officers and trustees at professional meetings of the Investment Company Institute, the Mutual Fund Education Alliance or similar organizations, and membership or organization dues of such organizations, expenses of preparing and setting in type the prospectus and periodic reports and expenses of mailing them to current shareholders, fidelity bond premiums, cost of maintaining the books and records of the Trust, and any other charges and fees not specified.

DISTRIBUTION AGREEMENT AND DISTRIBUTION PLAN

U.S. Global Brokerage, Inc., 7900 Callaghan Road, San Antonio, Texas 78229, a subsidiary of the Adviser (U.S. Global Brokerage), is the principal underwriter and agent for distribution of the funds’ shares. U.S. Global Brokerage is obligated to use all reasonable efforts, consistent with its other business, to secure purchasers for the funds’ shares, which are offered on a continuous basis.

U.S. Global Brokerage markets the fund and distributes each fund’s shares pursuant to a distribution agreement between the Trust and U.S. Global Brokerage (Distribution Agreement). Under the Distribution Agreement, U.S. Global Brokerage may enter into agreements with selling brokers, financial planners and other financial representatives for the sale of the funds’ shares. Following such sales, a fund will receive the net asset value per share. Pursuant to the Distribution Agreement, the Trust is responsible for the payment of all fees and expenses (i) in connection with the preparation, setting in type and filing of any registration statement, Prospectus and Statement of Additional Information under the 1933 Act and amendments for the issue of its shares, (ii) in connection with the registration and qualification of shares for sale in the various states in which the officers of the Trust shall determine to be advisable (including registering the Trust as a broker or dealer or any officers of the Trust as agent or salesperson in any state); (iii) of preparing, setting in type, printing and mailing any report or other communication to shareholders of the Trust in their capacity as such, and (iv) of preparing, setting in type, printing and mailing Prospectuses, SAIs and any supplements thereto sent to existing shareholders.

The Equity Funds have adopted a Distribution Plan pursuant to Rule 12b-1 of the 1940 Act (Distribution Plan). The Distribution Plan allows the funds to pay for expenditures in connection with sales and promotional services related to the distribution of fund shares, including personal services provided to prospective and existing fund shareholders, and includes the costs of: printing and distribution of prospectuses and promotional materials, making slides and charts for presentations, assisting shareholders and prospective investors in understanding and dealing with the funds, and travel and out-of-pocket expenses (e.g., copy and long distance telephone charges) related thereto and fees paid to financial service firms related to the distribution of fund shares. Pursuant to the Distribution Plan, the Adviser is paid for certain sales related compensation bonuses paid by the Adviser to its employees for sales of fund shares. The Adviser pays a higher bonus to its employees for sales of the Holmes Growth Fund and the Global MegaTrends Fund. Notwithstanding the above and subject to and calculated in accordance with the Rules of Fair Practice of the NASD, if during any annual period the total of (i) the compensation payable to the distributor and (ii) amounts payable under the Trust’s Distribution Plan exceeds 0.25% of a fund’s average daily net assets, the distributor will rebate that portion of its fee necessary to result in the total of (i) and (ii) above not exceeding 0.25% of the fund’s average daily net assets. The payment of compensation is authorized pursuant to the Trust’s Distribution Plan adopted pursuant to Rule 12b-1 under the 1940 Act and is contingent upon the continued effectiveness of the Trust’s Distribution Plan.

The payment of compensation is authorized pursuant to the Distribution Plan and is contingent upon the continued effectiveness of the Distribution Plan. Expenses that the funds incur pursuant to the Distribution Plan are reviewed quarterly by the board of trustees. The Distribution Plan is reviewed annually by the board of trustees as a whole, and the trustees who are not “interested persons” as that term is defined in the 1940 Act and who have no direct or indirect financial interest in the operation of the Distribution Plan (Qualified Trustees). In their review of the Distribution Plan, the board of trustees, as a whole, and the Qualified Trustees determine whether, in their reasonable business judgment and considering their fiduciary duties, there is a reasonable likelihood that the Distribution Plan will benefit the funds and their shareholders. The Distribution Plan may be terminated with respect to a fund at any time by vote of a majority of the Qualified Trustees, or by a majority vote of the outstanding voting securities of the fund.

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The Distribution Agreement and Distribution Plan continue in effect from year to year, provided continuance is approved at least annually by either (i) the vote of a majority of the trustees of the Trust, or by the vote of a majority of the outstanding voting securities of the Trust, and (ii) the vote of a majority of the Qualified Trustees of the Trust; however, the Distribution Agreement may be terminated at any time by vote of a majority of the Qualified Trustees, or by vote of a majority of the outstanding voting securities of the Trust, on not more than sixty (60) day written notice by the Trust. For these purposes, the term “vote of a majority of the outstanding voting securities” is deemed to have the meaning specified in the 1940 Act and the rules enacted hereunder.

U.S. Global Brokerage, the principal underwriter for distribution of the funds’ shares, and its affiliated persons, including Frank Holmes, a trustee of the Trust, have a direct or indirect financial interest in the operation of the funds’ Distribution Plan and related Distribution Agreement.

Prior to October 1, 2008 the following funds had adopted a Rule 12b-1 plan. Expenses in connection with the Distribution Plan paid in the fiscal period ended October 31, 2007, are set forth in the table below.


	ADVERTISING		PROSPECTUS				COMPENSATION		TRAVEL AND		POSTAGE		COMPENSATION
	&		PRINTING &		DISTRIBUTION		TO		PROMOTION		&		TO SALES
FUND	LITERATURE		MAILING		FEES		BROKER/DEALERS		EXPENSES		MAILING		PERSONNEL

Eastern European Fund	$	46,570	$	13,055	$	6,000	$	2,688,631	$	19,246	$	1,511	$	112,391

Global Emerging Markets Fund	$	48,843	$	1,304	$	0	$	45,425	$	18,642	$	2,073	$	9,648

Holmes Growth Fund	$	32,577	$	2,677	$	6,000	$	17,601	$	17,454	$	267	$	1,553

Global MegaTrends Fund	$	30,617	$	2,327	$	0	$	3,770	$	15,792	$	240	$	282

TRANSFER AGENCY AGREEMENT

The transfer agency agreement with the Trust provides for each fund to pay United Shareholder Services, Inc. (USSI) the following: an annual fee of $10,509.32 per fund and $15.11 per account for the All American Fund, the Holmes Growth Fund, the Global MegaTrends Fund, the Gold and Precious Metals Fund, the World Precious Minerals Fund, the Global Resources Fund, the Eastern European Fund, the Global Emerging Markets Fund, the China Region Fund; $15.13 per account for the Tax Free Fund and the Near-Term Tax Free Fund; and $21.20 per account for the U.S. Government Securities Savings Fund and the U.S. Treasury Securities Cash Fund. In addition, the funds will bear transaction-related expenses, other miscellaneous expenses, and out-of-pocket expenses. In connection with obtaining and/or providing administrative services to the beneficial owners of Trust shares through broker-dealers, banks, trust companies and similar institutions which provide such services ,the Trust has adopted a Shareholder Services Plan. The Shareholder Services Plan provides that each fund shall pay a monthly fee equal to one-twelfth (1/12) of 20 basis points (.0020) of the value of the shares of the funds held in accounts at the institutions. These fees cover the usual transfer agency functions.

For the last three fiscal years ended June 30, 2008, the following funds paid the amounts below for transfer agency fees and expenses (net of expenses paid by the Adviser or voluntary fee waivers):


FUND	2006*		2007*		2008

Gold and Precious Metals Fund	$	321,201	$	481,212	$	455,397
World Precious Minerals Fund	$	676,923	$	1,607,756	$	1,612,020
Global Resources Fund	$	1,453,247	$	2,268,892	$	2,687,220
China Region Fund	$	119,779	$	211,900	$	302,494
All American Fund	$	82,269	$	89,222	$	114,632
Tax Free Fund	$	0	$	0	$	0
Near-Term Tax Free Fund	$	0	$	0	$	0
U.S. Government Securities Savings Fund	$	353,547	$	398,563	$	525,735
U.S. Treasury Securities Cash Fund	$	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.

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For the last three fiscal years ended October 31, 2007, the following funds paid the transfer agency fees and expenses below:


FUND	2005			2006		2007

Eastern European Fund	$	830,175		$	1,874,094	$	1,986,175
Global Emerging Markets Fund	$	0	*	$	53,633	$	95,664
Holmes Growth Fund	$	144,475		$	119,670	$	117,656
Global MegaTrends Fund	$	27,262		$	31,730	$	42,746


*		The Global Emerging Markets Fund commenced operations on February 24, 2005, and all fees were waived for 2005.

ACCOUNTING AND CUSTODY AGREEMENT

Brown Brothers Harriman & Co., an independent service provider, provides the funds with bookkeeping, accounting, and custody services and determines the daily net asset value for each of the funds.

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PORTFOLIO MANAGERS

COMPENSATION FOR FRANK HOLMES, JOHN DERRICK, RALPH ALDIS, BRIAN HICKS, EVAN SMITH, ROMEO DATOR, AND JACK DZIERWA

The Adviser seeks to maintain a compensation program that is competitively positioned to attract and retain high-caliber portfolio managers. Compensation for the portfolio managers consists of the following:

BASE SALARY. Each portfolio manager is paid a base salary that is competitive in light of the portfolio manager’s experience and responsibilities.

MONTHLY AND QUARTERLY BONUS. The bonus is primarily driven by asset growth and performance of the fund. A bonus is awarded only if the fund performance is within certain percentiles of each fund’s Lipper peer group or is awarded certain rankings by third-party ranking services. The following is the Lipper peer group for each of the funds: China Region Fund — Lipper China Region Funds; All American Equity Fund-Lipper Large-Cap Core Funds; Gold and Precious Metals Fund-Lipper Gold Oriented Funds; World Precious Minerals Fund-Lipper Gold Oriented Funds; Global Resources Fund-Lipper Natural Resources Fund; Tax Free Fund-Lipper General Municipal Debt Funds; Near-Term Tax Free Fund-Lipper Short-Intermediate Municipal Debt Funds: Government Securities Savings Fund -Lipper U.S. Government Money Market Funds; Treasury Securities Cash Fund-Lipper U.S. Treasury Money Markets Funds. The portfolio managers serving on investment teams providing advisory services to accounts with performance-based fees are given bonuses if the account exceeds certain sector-specific benchmarks.

The portfolio managers are provided benefits packages including life insurance, health insurance and a company 401(k) plan comparable to that received by other company employees.

Frank Holmes receives the above compensation package and in addition receives an annual bonus based upon the Adviser’s operational earnings, an annual bonus based upon the performance of the Adviser’s own investment account, and a quarterly or annual performance fee bonus for the management of the three offshore accounts.

The Adviser manages three other accounts that pay a performance-based fee which could result in a higher fee than the management of the funds. The payment of a higher fee may create an incentive to give preferential treatment to the performance fee accounts. The Adviser has adopted trade allocation procedures designed to address this potential conflict.

COMPENSATION FOR ANDREW WILES, STEFAN B ö TTCHER, AND JULIAN MAYO

The Subadviser seeks to maintain a compensation program that is competitively positioned to attract and retain high-caliber portfolio managers. Compensation for the portfolio managers consists of the following:

BASE SALARY. Each portfolio manager is paid by the Subadviser a base salary that is competitive in light of the portfolio manager’s experience and responsibilities.

PERFORMANCE FEES/BONUS. The portfolio managers are provided benefits packages including performance fees/bonus. The bonus is discretionary and is linked to various factors, including the profitability of the group as a whole, the performance of funds managed by the particular manager, the performance of stock ideas generated by that manager and a subjective assessment of the manager’s contribution to the overall success of the group.

The Subadviser provides investment advisory services to multiple investment funds. The Subadviser recognizes that in its performance of investment advisory activities for multiple clients that there are inherent conflicts of interest. The Subadviser has identified that conflicts of interest may exist with respect to managing multiple clients where the Subadviser is paid a performance fee or higher fee for its services by a client. The payment of a higher fee may create an incentive for the portfolio manager to give the client preferential treatment. The Subadviser has adopted an allocation and aggregation policy designed to address this potential conflict. The policy provides that the portfolio manager must allocate investments fairly and that customer orders must be allocated in full before any proprietary orders are filled.

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PORTFOLIO MANAGER: FRANK E. HOLMES

OTHER MANAGED ACCOUNTS AS OF 06/30/2008


	NUMBER				NUMBER OF		TOTAL ASSETS OF
	OF				PERFORMANCE FEE		PERFORMANCE FEE
TYPE OF ACCOUNT	ACCOUNTS		TOTAL ASSETS		ACCOUNTS		ACCOUNTS

Registered investment companies		1	$	1,482,513,124		0	$	0

Pooled investment vehicles		3	$	360,763,376		3	$	360,763,376

Other accounts		1	$	8,238,612		1	$	8,238,612

Mr. Holmes also manages the Adviser’s own investment account and earns a bonus based on the performance of the investments. The payment of a bonus may create an incentive to give preferential treatment to the Adviser’s own account. The Adviser has adopted trade allocation procedures and a code of ethics designed to address this potential conflict.

OWNERSHIP OF SECURITIES


	DOLLAR RANGE OF EQUITY SECURITIES IN THE
NAME OF FUND	FUND HELD AS OF 06/30/2008

All American Equity Fund	$	10,001-$50,000
Holmes Growth Fund	$	10,001-$50,000
Global MegaTrends Fund	$	10,001-$50,000
Gold and Precious Metals Fund	$	10,001-$50,000
World Precious Minerals Fund	$	10,001-$50,000
Gold and Precious Minerals Fund	$	10,001-$50,000
Global Resources Fund	$	10,001-$50,000
China Region Fund	$	10,001-$50,000
Tax Free Fund	$	50,001-$100,000
Near-Term Tax Free Fund	$	100,001-$500,000

PORTFOLIO MANAGER: JOHN DERRICK AS OF 06/30/2008

OTHER MANAGED ACCOUNTS


	NUMBER				NUMBER OF		TOTAL ASSETS OF
	OF				PERFORMANCE FEE		PERFORMANCE FEE
TYPE OF ACCOUNT	ACCOUNTS		TOTAL ASSETS		ACCOUNTS		ACCOUNTS

Registered investment companies		1	$	1,482,513,124		0	$	0

Pooled investment vehicles		0	$	0		0	$	0

Other accounts		1	$	360,763,376		1	$	360,763,376

OWNERSHIP OF SECURITIES


	DOLLAR RANGE OF EQUITY SECURITIES IN THE
NAME OF FUND	FUND HELD AS OF 06/30/2008

All American Equity Fund	$	50,001-$100,000
Holmes Growth Fund	$	100,001-$500,000
Global MegaTrends Fund	$	10,001-$50,000
Tax Free Fund	$	10,001-$50,000
Near-Term Tax Free Fund	$	10,001-$50,000

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PORTFOLIO MANAGER: ROMEO DATOR AS OF 06/30/2008

OTHER MANAGED ACCOUNTS


	NUMBER				NUMBER OF		TOTAL ASSETS OF
	OF				PERFORMANCE FEE		PERFORMANCE FEE
TYPE OF ACCOUNT	ACCOUNTS		TOTAL ASSETS		ACCOUNTS		ACCOUNTS

Registered investment companies		1	$	1,482,513,124		0	$	0

Pooled investment vehicles		0	$	0		0	$	0

Other accounts		1	$	360,763,376		1	$	360,763,376

OWNERSHIP OF SECURITIES


	DOLLAR RANGE OF EQUITY SECURITIES IN THE
NAME OF FUND	FUND HELD AS OF 06/30/2008

All American Equity Fund	$	50,001-$100,000

Global MegaTrends Fund	$	0-$10,000
Holmes Growth Fund	$	10,001-$50,000
China Region Fund	$	10,001-$50,000

PORTFOLIO MANAGER: JACK DZIERWA

OTHER MANAGED ACCOUNTS AS OF 06/30/2008


	NUMBER				NUMBER OF		TOTAL ASSETS OF
	OF				PERFORMANCE FEE		PERFORMANCE FEE
TYPE OF ACCOUNT	ACCOUNTS		TOTAL ASSETS		ACCOUNTS		ACCOUNTS

Registered investment companies		1	$	1,482,513,124		0	$	0

Pooled investment vehicles		0	$	0		0	$	0

Other accounts		0	$	0		0	$	0

OWNERSHIP OF SECURITIES


	DOLLAR RANGE OF EQUITY SECURITIES IN THE
NAME OF FUND	FUND HELD AS OF 06/30/2008

Global MegaTrends Fund	$	0-$10,000

PORTFOLIO MANAGER: BRIAN HICKS

OTHER MANAGED ACCOUNTS AS OF 06/30/2008


	NUMBER				NUMBER OF		TOTAL ASSETS OF
	OF				PERFORMANCE FEE		PERFORMANCE FEE
TYPE OF ACCOUNT	ACCOUNTS		TOTAL ASSETS		ACCOUNTS		ACCOUNTS

Registered investment companies		1	$	1,482,513,124		0	$	0

Pooled investment vehicles		0	$	0		0	$	0

Other accounts		1	$	360,763,376		1	$	360,763,376

OWNERSHIP OF SECURITIES


	DOLLAR RANGE OF EQUITY SECURITIES IN THE
NAME OF FUND	FUND HELD AS OF 06/30/2008

Global Resources Fund	$	100,001-$500,000

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PORTFOLIO MANAGER: EVAN SMITH

OTHER MANAGED ACCOUNTS AS OF 06/30/2008


	NUMBER				NUMBER OF		TOTAL ASSETS OF
	OF				PERFORMANCE FEE		PERFORMANCE FEE
TYPE OF ACCOUNT	ACCOUNTS		TOTAL ASSETS		ACCOUNTS		ACCOUNTS

Registered investment companies		1	$	1,482,513,124		0	$	0

Pooled investment vehicles		0	$	0		0	$	0

Other accounts		0	$	360,763,376		1	$	360,763,376

OWNERSHIP OF SECURITIES


	DOLLAR RANGE OF EQUITY SECURITIES IN THE
NAME OF FUND	FUND HELD AS OF 06/30/2008

Global Resources Fund	$	100,001-$500,000

PORTFOLIO MANAGER: RALPH ALDIS

OTHER MANAGED ACCOUNTS AS OF 06/30/2008


	NUMBER				NUMBER OF		TOTAL ASSETS OF
	OF				PERFORMANCE FEE		PERFORMANCE FEE
TYPE OF ACCOUNT	ACCOUNTS		TOTAL ASSETS		ACCOUNTS		ACCOUNTS

Registered investment companies		1	$	1,482,513,124		0	$	0

Pooled investment vehicles		0	$	0		0	$	0

Other accounts		0	$	0		0	$	0

OWNERSHIP OF SECURITIES


	DOLLAR RANGE OF EQUITY SECURITIES IN THE
NAME OF FUND	FUND HELD AS OF 06/30/2008

Gold and Precious Metals Fund	$	50,001-$100,000
World Precious Minerals Fund	$	100,001-$500,000

PORTFOLIO MANAGER: ANDREW WILES

OTHER MANAGED ACCOUNTS AS OF 10/31/2007


	NUMBER				NUMBER OF		TOTAL ASSETS OF
	OF				PERFORMANCE FEE		PERFORMANCE FEE
TYPE OF ACCOUNT	ACCOUNTS		TOTAL ASSETS		ACCOUNTS		ACCOUNTS

Registered investment companies		1	$	1,584,113,213		0	$	0

Pooled investment vehicles		10	$	1,803,000,000		10	$	1,803,000,000

Other accounts		0	$	0		0	$	0

OWNERSHIP OF SECURITIES


		DOLLAR RANGE OF EQUITY SECURITIES IN THE FUND
NAME OF FUND		HELD AS OF 10/31/2007

Eastern European Fund		None

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PORTFOLIO MANAGER: STEFAN B ö TTCHER

OTHER MANAGED ACCOUNTS AS OF 10/31/2007


	NUMBER				NUMBER OF		TOTAL ASSETS OF
	OF				PERFORMANCE FEE		PERFORMANCE FEE
TYPE OF ACCOUNT	ACCOUNTS		TOTAL ASSETS		ACCOUNTS		ACCOUNTS

Registered investment companies		2	$	1,643,559,187		0	$	0

Pooled investment vehicles		15	$	2,925,000,000		15	$	2,925,000,000

Other accounts		0	$	0		0	$	0

OWNERSHIP OF SECURITIES


		DOLLAR RANGE OF EQUITY SECURITIES IN THE FUND
NAME OF FUND		HELD AS OF 10/31/2007

Eastern European Fund		None
Global Emerging Markets Fund		None

PORTFOLIO MANAGER: JULIAN MAYO

OTHER MANAGED ACCOUNTS AS OF 10/31/2007


	NUMBER				NUMBER OF		TOTAL ASSETS OF
	OF				PERFORMANCE FEE		PERFORMANCE FEE
TYPE OF ACCOUNT	ACCOUNTS		TOTAL ASSETS		ACCOUNTS		ACCOUNTS

Registered investment companies		2	$	1,643,559,187		0	$	0

Pooled investment vehicles		0	$	0		0	$	0

Other accounts		0	$	0		0	$	0

OWNERSHIP OF SECURITIES


		DOLLAR RANGE OF EQUITY SECURITIES IN THE FUND
NAME OF FUND		HELD AS OF 10/31/2007

Eastern European Fund		None
Global Emerging Markets Fund		None

BROKERAGE ALLOCATION AND OTHER PRACTICES

Decisions to buy and sell securities for the funds and placing the funds’ securities transactions and negotiation of commission rates, where applicable are made by the Adviser, or Subadviser for the Eastern European Fund and Global Emerging Markets Fund, and are subject to review by the board of trustees. The Adviser or Subadviser seeks best execution for a fund taking into account various factors, 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 (for a specified transaction and on a continuing basis), the reasonableness of the commission, if any, and the brokerage and research services provided to the Trust and/or other accounts over which the Adviser or an affiliate of the Adviser exercises investment discretion. The Adviser or Subadviser are permitted, in certain circumstances, to pay a higher commission than might otherwise be obtained in order to acquire brokerage and research services. The Adviser or Subadviser must determine in good faith, however, that such commission is reasonable in relation to the value of the brokerage and research services provided — viewed in terms of that particular transaction or in terms of all the accounts over which investment discretion is exercised. In such case, the board of trustees will review the commissions paid by each fund of the Trust to determine if the commissions paid over representative periods of time were reasonable in relation to the benefits obtained. The advisory fee of the Adviser will not be reduced due to its receipt of such brokerage and research services. To the extent that research services of value are provided by broker/dealers through or with whom the Trust places portfolio transactions the Adviser may be relieved of expenses which it might otherwise bear. Research

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services and products may be useful to the Adviser or Subadviser in providing investment advice to other clients they advise. Thus, there may be no correlation between the amount of brokerage commissions generated by a particular fund or client and the indirect benefits received by that fund or client.

The Trust may, in some instances, purchase securities that are not listed on a national securities exchange or quoted on Nasdaq, but rather are traded in the over-the-counter market. When the transactions are executed in the over-the-counter market, the funds generally intend to deal with the primary market makers. However, the services of brokers will be utilized if it is anticipated that the best overall terms can thereby be obtained. Purchases of newly issued securities for the Tax Free Fund and Near-Term Tax Free Fund usually are placed with those dealers from which it appears that the best price or execution will be obtained. Those dealers may be acting as either agents or principals.

The brokerage fees paid by the following funds for the three fiscal periods ended June 30 were as follows:


	2006		2007		2008
Gold and Precious Metals Fund	$	476,628	$	650,857	$	768,724
World Precious Minerals Fund	$	2,414,117	$	2,627,005	$	3,211,890
Global Resources Fund	$	5,363,523	$	5,451,211	$	6,397,597
China Region Fund	$	1,093,844	$	1,100,286	$	1,110,378
All American Equity Fund	$	196,526	$	121,230	$	130,392

The brokerage fees paid by the following funds for the three fiscal periods ended October 31 were as follows:


	2005			2006		2007
Eastern European Fund	$	3,889,222		$	3,365,731	$	2,912,357
Global Emerging Markets Fund	$	93,347	*	$	214,987	$	215,849
Holmes Growth Fund	$	545,473		$	578,760	$	194,642
Global MegaTrends Fund	$	18,304		$	22,744	$	21,547

During the fiscal year ended June 30, 2008, the following funds paid approximately $ 221,184 in brokerage commissions to firms that provided research services. These trades involved approximately $236,331,913 in principal value. The brokerage fees paid in this manner for each fund were as follows:


	COMMISSIONS		PRINCIPAL VALUE
Gold and Precious Metals Fund	$	4,083	$	1,738,451
World Precious Minerals Fund	$	20,642	$	10,703,409
Global Resources Fund	$	193,909	$	221,761,509
China Region Fund	$	2,150	$	1,840,287
All American Equity Fund	$	400	$	288,256
Total	$	221,184	$	236,331,913



During the year ended October 31, 2007, the following funds paid approximately $6,842 in brokerage commissions to firms that provided research services to the Adviser. These trades involved approximately $2,715,959 in principal value. The brokerage fees paid in this manner for each fund were as follows:



	COMMISSIONS		PRINCIPAL VALUE
Eastern European Fund	$	0	$	0
Global Emerging Markets Fund	$	0	$	0
Holmes Growth Fund	$	5,592	$	1,636,231
Global MegaTrends Fund	$	1,250	$	1,079,728

Total	$	6,842	$	2,715,959

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TRADE AGGREGATION AND ALLOCATION PROCEDURES

The Adviser has adopted Trade Aggregation and Allocation Procedures (the “Procedures”) under which the Adviser may aggregate client (including the Funds) purchase or sale orders and may also aggregate orders for the Adviser’s own account to achieve more efficient execution, lower per share brokerage costs, and in the aggregate, better prices. The Adviser’s Procedures are designed to ensure that each of the Adviser’s clients is treated in a fair and equitable manner over time by not intentionally favoring one client over another. Among other things, the Procedures require the Adviser to: (i) aggregate client orders only when consistent with the Adviser’s duty of best execution and with the client’s investment objectives, account guidelines and other objective criteria, (ii) specify in advance the client accounts that will participate in the aggregated transaction, (iii) specify the relevant allocation method with respect to the aggregated order, and (iv) allocate on a pro rata basis the price and per share commission and transaction costs to each client participating in the aggregated transaction. The Adviser does not receive additional compensation or remuneration solely as a result of a trade aggregation or allocation. Trades will be aggregated when in the best interest of and overall fairness to each client. The Procedures also provide that the Adviser will monitor to ensure that no client is disadvantaged as a result of aggregated transactions over time.

Investments in private placements of limited size are not subject to the aggregation policy described above, and priority may be given to accounts managed by the investment personnel generating the investment idea pursuant the Procedures. However, the Procedures are designed to monitor allocations of limited investment opportunities to ensure that such opportunities are allocated in a fair and equitable manner over time. In addition, the Funds’ ability to participate in certain private placements could be limited as a result of direct or indirect relationships of the Adviser or its principals with other clients or potential portfolio companies.

PURCHASE, REDEMPTION, AND PRICING OF SHARES

The following information supplements the discussion of how to buy fund shares as discussed in the prospectus.

Shares of each fund are continuously offered by the Trust at their net asset value next determined after an order is accepted. The methods available for purchasing shares of the fund are described in the Prospectus. In addition, shares of the fund may be purchased using securities, so long as the securities delivered to the Trust meet the investment objectives and concentration policies of the fund and are otherwise acceptable to the Adviser, which reserves the right to reject all or any part of the securities offered in exchange for shares of the fund. On any such “in kind” purchase, the following conditions will apply:

	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 fund’s 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 fund’s 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.

The Trust believes that this ability to purchase shares of the fund using securities provides a means by which holders of certain securities may obtain diversification and continuous professional management of their investments without the expense of selling those securities in the public market.

An investor who wishes to make an “in kind” purchase should furnish a list (either in writing or by telephone) to the Trust with a full and exact description of all of the securities he or she proposes to deliver. The Trust will advise him or her as to those securities it is prepared to accept and will provide the investor with the necessary forms to be completed and signed by the investor. The investor should then send the securities, in proper form for transfer, with the necessary forms to the Trust and certify that there are no legal or contractual restrictions on the free transfer and sale of the securities. The securities will be valued as of the close of business on the day of receipt by the Trust in the same manner as portfolio securities of the fund are valued. See the section entitled Net Asset Value in the prospectus. The number of shares of the fund, having a net asset value as of the close of business on the day of receipt equal to the value of the securities delivered by the investor, will be issued to the investor, less applicable stock transfer taxes, if any.

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The exchange of securities by the investor pursuant to this offer is a taxable transaction and may result in a gain or loss for Federal income tax purposes. Each investor should consult his or her tax adviser to determine the tax consequences under Federal and state law of making such an “in kind” purchase.

ADDITIONAL INFORMATION ON REDEMPTIONS

WIRE REDEMPTIONS — TREASURY SECURITIES CASH FUND AND GOVERNMENT SECURITIES SAVINGS FUND ONLY. When shares of the Treasury Securities Cash Fund and Government Securities Savings Fund are redeemed by wire, proceeds will normally be wired on the next business day after receipt of the telephone instruction. To place a request for a wire redemption, the shareholder may instruct USSI by telephone (if this option was elected on the application accompanying the prospectus and bank wire instructions are established), or by mailing instructions with a signature guarantee to U.S. Global Investors Funds, P.O. Box 781234, San Antonio, Texas 78278-1234. A bank processing fee for each bank wire will be charged to the shareholder’s account. The shareholder may change the account that has been designated to receive amounts withdrawn under this procedure at any time by writing to USSI with signature(s) guaranteed as described in the prospectus. Further documentation will be required to change the designated account when shares are held by a corporation or other organization, fiduciary or institutional investor.

CHECK REDEMPTIONS — TREASURY SECURITIES CASH FUND AND GOVERNMENT SECURITIES SAVINGS FUND ONLY. Upon receipt of a completed application indicating election of the check-writing feature, shareholders will be provided with a free supply of temporary checks. A shareholder may order additional checks for a nominal charge.

The check writing withdrawal procedure enables a shareholder to receive dividends declared on the shares to be redeemed until the check is processed. If a check for the balance of the account is presented for payment, the dividends will close out and generate a dividend check and close the account. If there are not sufficient shares to cover a check, the check will be returned to the payee and marked “insufficient funds.” Checks written against shares which have been in the account less than 10 business days and were purchased by check or ACH will be returned as uncollected funds. A shareholder may avoid this 10-business-day requirement by purchasing by bank wire.

The Trust reserves the right to terminate generally, or alter generally, the check writing service or to impose a service charge upon 30 days’ prior notice to shareholders.

REDEMPTION IN KIND. The Declaration of Trust permits the right to redeem funds shares in cash or in kind. However, the Holmes Growth Fund, the Global MegaTrends Fund, the Gold and Precious Minerals Fund, the Eastern European Fund, the Global Emerging Markets Fund and the China Region Fund have elected to be governed by Rule 18f-1 under the Investment Company Act of 1940, pursuant to which the Trust is obligated to redeem shares of these funds solely in cash up to the lesser of $250,000 or one percent of the net asset value of the Trust during any 90-day period for any one shareholder. Any shareholder of these funds receiving a redemption in kind would then have to pay brokerage fees in order to convert the investment into cash. All redemptions in kind will be made in marketable securities of the particular fund. Redemptions in kind are taxable for federal income tax purposes in the same manner as when sales proceeds are paid in cash.

SUSPENSION OF REDEMPTION PRIVILEGES. The Trust may not suspend redemption privileges, or postpone the date of payment for more than seven days after the redemption order is received, except during any period (1) when the NYSE is closed, other than customary weekend and holiday closings, or trading on the NYSE is restricted as determined by the Securities and Exchange Commission (SEC), (2) when an emergency exists, as defined by the SEC, which makes it not reasonably practicable for the Trust to dispose of securities owned by it or fairly to determine the value of its assets, or (3) as the SEC may otherwise permit.

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FEDERAL INCOME TAXES

TAXATION OF THE FUNDS — IN GENERAL

Each fund has elected and intends to continue to qualify as a “regulated investment company” under Subchapter M of the Code. Accordingly, no fund will be liable for Federal income taxes on its taxable net investment income and capital gain net income that are distributed to shareholders, provided that a fund distributes each taxable year at least the sum of (i) 90% of the fund’s investment company taxable income (which includes, among other items, dividends, interest, the excess of any net short-term capital gain over net long-term capital loss and other taxable income, other than any net long-term capital gain, reduced by deductible expenses) determined without regard to the deduction for dividends paid and (ii) 90% of a fund’s net tax-exempt interest (the excess of its gross tax-exempt interest over certain disallowed deductions). Each fund intends to distribute substantially all of such income each year. A fund will be subject to Federal income tax at regular corporate rates on any taxable income or gains that it does not distribute to its shareholders.

To qualify as a regulated investment company, each fund must, among other things: (a) derive in each taxable year at least 90% of its gross income from dividends, interest, payments with respect to securities loans, gains from the sale or other disposition of stock, securities or foreign currencies, or other income derived with respect to its business of investing in such stock, securities or currencies and net income derived from interests in qualified publicly traded partnerships (“90% test”); and (b) satisfy certain diversification requirements at the close of each quarter of the fund’s taxable year. Furthermore, in order to be entitled to pay tax-exempt interest income dividends to shareholders, the Tax Free Fund and Near-Term Tax Free Fund must satisfy the requirement that, at the close of each quarter of its taxable year, at least 50% of the value of its total assets consists of state, local and other obligations the interest of which is exempt from Federal income tax under section 103(a) of the Code. The Tax Free and Near-Term Tax Free Funds intend to satisfy this requirement.

The Code imposes a non-deductible 4% excise tax on a regulated investment company that fails to distribute during each calendar year an amount equal to at least the sum of (1) at least 98% of its ordinary income for the calendar year, (2) at least 98% of its capital gain net income for the twelve-month period ending on October 31 of the calendar year and (3) any portion not taxable to the fund of the respective balance from the preceding calendar year. Because the excise tax is based upon undistributed taxable income, it will not apply to tax-exempt income received by the Tax Free and Near-Term Tax Free Funds. The funds intend to make such distributions as are necessary to avoid imposition of this excise tax.

A possibility exists that exchange control regulations imposed by foreign governments may restrict or limit the ability of a fund to distribute net investment income or the proceeds from the sale of its investments to its shareholders.

TAXATION OF THE FUNDS’ INVESTMENTS

Securities sold during a period may generate gains or losses based on the cost at which they were purchased. Net realized capital losses, for federal income tax purposes, may be carried forward to offset current or future capital gains until expiration. The loss carryforward and related expiration dates for each fund listed below, as of June 30, 2008, are as follows:


	LOSS		EXPIRATION
FUND	CARRYFORWARDS		DATE
Gold and Precious Metals Fund		—		—
World Precious Minerals Fund		—		—
Global Resources Fund		—		—
China Region Fund		—		—
All American Equity Fund		—		—
Tax Free Fund	$	746,353		2009-2013
Near-Term Tax Free Fund	$	347,325		2009-2016
U.S. Government Securities Savings Fund		—		—
U.S. Treasury Securities Cash Fund	$	285		2011

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	POST
	OCTOBER 31, 2007,
FUND	CAPITAL LOSS DEFERRAL

China Region Fund	$	6,289,649

All American Equity Fund	$	65,365

Tax Free Fund	$	44,644

Near-Term Tax Free Fund	$	112

The amounts above, in accordance with federal income tax rules, are deemed to have occurred on July 1, 2008.

A fund’s ability to make certain investments may be limited by provisions of the Code that require inclusion of certain unrealized gains or losses in the fund’s income for purposes of the 90% test and the distribution requirements of the Code, and by provisions of the Code that characterize certain income or loss as ordinary income or loss rather than capital gain or loss. Such recognition, characterization, and timing rules generally apply to investments in certain forward currency contracts, foreign currencies and debt securities denominated in foreign currencies.

The loss carryforward and related expiration dates for each fund listed below, as of October 31, 2007, are as follows:


	LOSS		EXPIRATION
FUND	CARRYFORWARDS		DATE
Eastern European Fund		—		–
Global Emerging Markets Fund		—		–
Holmes Growth Fund	$	25,332,928		2009-2010
Global MegaTrends Fund		—		–

For Federal income tax purposes, debt securities purchased by a fund may be treated as having original issue discount. Original issue discount can generally be defined as the excess of the stated redemption price at maturity of a debt obligation over the issue price. Original issue discount is treated as interest earned by the fund for Federal income tax purposes, whether or not any income is actually received, and therefore, is subject to the distribution requirements of the Code. Because a fund will not receive a cash payment of interest, in order to satisfy the distribution requirements, a fund may have to sell other securities at a time when it might otherwise have continued to hold them. Original issue discount with respect to tax-exempt obligations generally will be excluded from a fund’s taxable income, although such discount will be included in gross income for purposes of the 90% test described above. Original issue discount is accrued and added to the adjusted tax basis of the securities for purposes of determining gain or loss upon sale or at maturity. Generally, the amount of original issue discount is determined based on a constant yield to maturity, which takes into account the compounding of accrued interest. Under section 1286 of the Code, an investment in a stripped bond or stripped coupon will result in original issue discount. In addition, to the extent that a fund holds zero coupon or deferred interest bonds in its portfolio, or bonds paying interest in the form of additional debt obligations, the fund would recognize income currently under the original issue discount rules even though the fund received no cash payment of interest, and would need to raise cash to satisfy the obligations to distribute such income to shareholders from sales of portfolio securities.

Debt securities may be purchased by a fund at a discount that exceeds the original issue price plus previously accrued original issue discount remaining on the securities, if any, at the time a fund purchases the securities. This discount represents market discount for federal income tax purposes. To the extent that a fund purchases debt securities (including tax exempt bonds) at a market discount, the accounting accretion of such discount may generate taxable income for the fund and its shareholders. In the case of any debt security having a fixed maturity date of more than one year from the date of issue and having market discount, the gain realized on disposition will generally be treated as taxable interest income to the extent it does not exceed the accrued market discount on the security (unless the fund elects to include such accrued market discount in income in the tax year to which it is attributable). Generally, market discount is accrued on a daily basis.

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A fund whose portfolio is subject to the market discount rules may be required to defer the deduction of part or all of any direct interest expense incurred to purchase or carry any debt security (other than a tax exempt obligation) having market discount, unless the fund makes the election to include market discount in income currently.

The funds may purchase debt securities at a premium, i.e., at a purchase price in excess of face amount. With respect to tax-exempt securities, the premium must be amortized to the maturity date but no deduction is allowed for the premium amortization. Instead, the amortized bond premium will reduce the fund’s adjusted tax basis in the securities. For taxable securities, the premium may be amortized if the fund so elects. The amortized premium on taxable securities is allowed as a deduction, and reduces the fund’s basis in the securities, and generally, must be amortized under a constant yield method.

If a fund owns shares in a foreign corporation that is a “passive foreign investment company” for U.S. Federal income tax purposes and that fund does not elect alternative tax treatment, that fund may be subject to U.S. Federal income tax on part of any “excess distribution it receives from the foreign corporation or any gain it derives from the disposition of such shares, even if the fund distributes such income as a taxable dividend to its U.S. shareholders. The fund may also be subject to additional tax similar to an interest charge with respect to deferred taxes arising from such distributions or gains. Any tax paid by the fund because of its ownership of shares in a “passive foreign investment company” will not lead to any deduction or credit to the fund or any shareholder. Rather than being taxed on passive foreign investment company income as discussed above, a fund may be eligible to elect alternative tax treatment. If the fund elects to treat the foreign corporation as a “qualified electing fund” under the Code, the fund may be required to include its share of the passive foreign investment company’s ordinary income and net capital gains in its income each year, even if this income is not distributed to the fund. Any such income would be subject to the distribution requirements described above even if the fund did not receive any income to distribute.

In addition, another election may be available that would involve marking-to-market the fund’s shares in a passive foreign investment company at the end of each taxable year (and on certain other dates prescribed in the Code), with the result that unrealized gains are treated as though they were realized. If this election is available and is made, Federal income tax at the fund level under the passive foreign investment company rules would generally be eliminated, but the fund could, in limited circumstances, incur nondeductible interest charges. A fund’s intention to qualify annually as a regulated investment company may limit its options with respect to shares in a passive foreign investment company.

A fund’s transactions, if any, in forward contracts, options, futures contracts and hedged investments may be subject to special provisions of the Code that, among other things, may affect the character of gain and loss realized by the fund (i.e., may affect whether gain or loss is ordinary or capital), accelerate recognition of income to the fund, defer the fund’s losses, and affect whether capital gain and loss is characterized as long-term or short-term. These rules could therefore affect the character, amount and timing of distributions to shareholders. These provisions also may require a fund to mark-to-market certain types of positions (i.e., treat them as if they were closed out), which may cause the fund to recognize income without receiving cash with which to make distributions in amounts necessary to satisfy the distribution requirements for avoiding income and excise taxes.

If an option which a fund has written expires on its stipulated expiration date, the fund recognizes a short-term capital gain. If a fund enters into a closing purchase transaction with respect to an option which the fund has written, the fund realizes a short-term capital gain (or loss if the cost of the closing transaction exceeds the premium received when the option was sold) without regard to any unrealized gain or loss on the underlying security. If a call option which a fund has written is exercised, the fund realizes a capital gain or loss from the sale of the underlying security and the proceeds from such sale are increased by the premium originally received.

If an option which a fund has purchased expires on the stipulated expiration date, the fund realizes a short-term or long-term capital loss for Federal income tax purposes in the amount of the cost of the option. If a fund exercises a put option, it realizes a capital gain or loss (long-term or short-term, depending on the holding period of the underlying security) from the sale of the underlying security and the proceeds from such sale are decreased by the premium originally paid.

The amount of any realized gain or loss on closing out options on certain stock indices will result in a capital gain or loss for Federal income tax purposes. Such options held by a fund at the end of each fiscal year on a broad-based stock index generally are treated under the Code as “Section 1256 contracts” and will be required to be “marked-to-market” for Federal income tax purposes. Sixty percent of any net gain or loss recognized on such deemed sales or on any actual sales will be treated as long-term capital gain or loss, and the remainder will be treated as short-term capital gain or loss (“60/40 gain or loss”). Certain other options, futures contracts and options on futures contracts utilized by a fund may also be Section 1256 contracts. Any gains or losses on these Section 1256 contracts held by a fund at the end of each taxable year (and on October 31 of each year for purposes of the 4% excise tax) are “marked-to-

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market” with the result that unrealized gains or losses are treated as though they were realized and the resulting gain or loss is treated as a 60/40 gain or loss.

If a fund invests in certain pay-in-kind securities, zero coupon securities, deferred interest securities or, in general, any other securities with original issue discount (or with market discount if the fund elects to include market discount in income currently), the fund must accrue income on such investments for each taxable year, which generally will be prior to the receipt of the corresponding cash payments. However, a fund must distribute to shareholders, at least annually, all or substantially all of its investment company taxable income (determined without regard to the deduction for dividends paid), including such accrued income, to avoid federal income and excise taxes. Therefore, a fund may have to dispose of its portfolio securities under disadvantageous circumstances to generate cash, or may have to leverage itself by borrowing the cash, to satisfy these distribution requirements.

A fund may acquire market discount bonds. A market discount bond is a security acquired in the secondary market at a price below its redemption value (or its adjusted issue price if it is also an original issue discount bond). If a fund invests in a market discount bond, it will be required to treat any gain recognized on the disposition of such market discount bond as ordinary income (instead of capital gain) to the extent of the accrued market discount, unless the fund elects to include the market discount in income as it accrues.

A fund’s investment in lower-rated or unrated debt securities may present issues for the fund if the issuers of these securities default on their obligations because the federal income tax consequences to a holder of such securities are not certain

Under the Internal Revenue Code, gains or losses attributable to fluctuations in exchange rates which occur between the time a fund accrues income or other receivables or accrues expenses or other liabilities denominated in a foreign currency and the time the fund actually collects such receivable or pays such liabilities generally are treated as ordinary income or loss. Similarly, on disposition of securities denominated in a foreign currency, gains or losses attributable to fluctuations in the value of the foreign currency between the date of acquisition of the security or contract and the date of disposition also may be treated as ordinary gain or loss. These gains and losses, referred to as “Section 988 gains or losses,” may increase or decrease the amount of a fund’s investment company taxable income to be distributed to its shareholders as ordinary income, rather than increasing or decreasing the amount of the fund’s net capital gain. Certain gains or losses with respect to forward foreign currency contracts, over-the-counter options on foreign currencies and certain options traded on foreign exchanges may also be treated as Section 988 gains or losses.

The funds may invest in REITs that hold residual interests in real estate mortgage investment conduits (REMICs). Under a notice issued by the Internal Revenue Service, a portion of a fund’s income from a REIT that is attributable to the REIT’s residual interest in a REMIC (referred to in the Internal Revenue Code as an “excess inclusion”) will be subject to federal income tax in all events. The notice provides that excess inclusion income of a regulated investment company, such as a fund, will be allocated to shareholders of the regulated investment company in proportion to the dividends received by such shareholders, with the same consequences as if the shareholders held the related REMIC residual interest directly. In general, excess inclusion income allocated to shareholders (a) cannot be offset by net operating losses (subject to a limited exception for certain thrift institutions), (b) will constitute unrelated business taxable income to entities (including a qualified pension plan, an individual retirement account, a 401(k) plan, a Keogh plan or other tax-exempt entity) subject to tax on unrelated business income, thereby potentially requiring such an entity that is allocated excess inclusion income, and otherwise might not be required to file a federal income tax return, to file a tax return and pay tax on such income, and (c) in the case of a foreign shareholder, will not qualify for any reduction in U.S. federal withholding tax. In addition, if at any time during any taxable year a “disqualified organization” (as defined in the Internal Revenue Code) is a record holder of a share in a regulated investment company, then the regulated investment company will be subject to a tax equal to that portion of its excess inclusion income for the taxable year that is allocable

TAXATION OF THE SHAREHOLDER

Shareholders will be subject to Federal income taxes on distributions made by a fund (other than distributions of exempt-interest dividends paid by the Tax Free Fund or Near-Term Tax Free Fund), whether received in cash or additional shares of the fund. Distributions of net investment income (including any net short-term capital gain in excess of any net long-term capital loss), other than “qualified dividend income,” if any, will be taxable to shareholders as ordinary income. For taxable years beginning prior to January 1, 2011, distributions of “qualified dividend income,” as such term is defined in section 1(h)(11) of the Code (generally dividends received from U.S. domestic corporations and qualified foreign corporations), by a fund to its noncorporate shareholders generally will be taxed at the Federal income tax rates applicable to net capital gain, provided certain holding period and other requirements described below are satisfied. Distributions of net capital gain (the excess of net long-term capital gains over net short-term capital losses), if any, will be taxable to noncorporate shareholders at a maximum Federal income tax rate of 15%, without regard to how long a shareholder has held shares of the fund. Unless extended by future legislation, the 15% Federal income tax rate on net

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capital gain will expire for taxable years beginning after 2010 and will be replaced by a maximum Federal income tax rate on net capital gains of 20%. Corporate shareholders are taxed on net capital gain at the same Federal income tax rates applicable to ordinary income. Dividends paid by a fund may qualify in part for the 70% dividends received deduction available to corporate shareholders, provided that certain holding period and other requirements under the Code are satisfied. Generally, however, dividends received on stocks of foreign issuers that are held by a fund are not eligible for the dividends received deduction when distributed to the fund’s corporate shareholders. Since none of the net investment income of the Tax Free Fund, Near-Term Tax Free Fund, U.S. Treasury Securities Cash Fund or U.S. Government Securities Savings Fund is expected to arise from dividends on common or preferred stock, none of the funds’ distributions are expected to be treated as qualified dividend income or qualify for the 70% corporate dividends received deduction.

To be eligible for treatment as qualified dividend income, shareholders generally must hold their shares for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date. In order for dividends received by a fund’s shareholders to be treated as qualified dividend income, the fund must also meet holding period and other requirements with respect to such dividend paying stocks it owns. A dividend will not be treated as qualified dividend income at the fund level if the dividend is received with respect to any share of stock held for 60 days or fewer during the 121-day period beginning on the date which is 60 days before the date on which such share becomes ex-dividend with respect to such dividend (or, in the case of certain preferred stock, 90 days or fewer during the 181-day period beginning 90 days before such date). In addition to the above holding period requirements, a dividend will not be treated as qualified dividend income (at either the fund or shareholder level), (1) to the extent that the recipient is under an obligation (whether pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property, (2) if the recipient elects to have the dividend income treated as investment income for purposes of the limitation on deductibility of investment interest, or (3) if the dividend is received from a foreign corporation that is (a) not eligible for the benefits of a comprehensive income tax treaty with the United States (with the exception of stock of a foreign corporation that is readily tradeable on an established securities market in the United States) or (b) treated as a passive foreign investment company.

As discussed above, the Tax Free Fund and Near-Term Tax Free Fund intend to satisfy the requirements in order to pay exempt-interest dividends. If the Tax Free Fund and Near- Term Tax Free Fund satisfy the requirements, to the extent that the Tax Free Fund’s and Near-Term Tax Free Fund’s dividends distributed to shareholders are derived from interest income exempt from Federal income tax under section 103(a) of the Code and are designated as “exempt-interest dividends” by the funds, they will be excludable from a shareholder’s gross income for Federal income tax purposes. Shareholders who are recipients of social security benefits should be aware that exempt-interest dividends receive from the funds are includable in their “modified adjusted gross income” for purposes of determining the amount of such social security benefits, if any, that are required to be included in their gross income.

All distributions of investment income during the year will have the same percentage designated as tax-exempt. This method is called the “average annual method.” Since the Tax Free Fund and Near-Term Tax Free Fund invest primarily in tax-exempt securities, the percentage is expected to be substantially the same as the amount actually earned during any particular distribution period.

Taxable distributions generally are included in a shareholder’s gross income for the taxable year in which they are received. However, dividends declared in October, November or December and made payable to shareholders of record in such a month will be deemed to have been received on December 31, if a fund pays the dividends during the following January.

Distributions by a fund, other than the Treasury Securities Cash Fund and the Government Securities Savings Fund, will result in a reduction in the net asset value of fund shares. Should a distribution reduce the net asset value below a shareholder’s cost basis, such distribution nevertheless may be taxable to the shareholder as ordinary income or long-term capital gain, even though, from an investment standpoint, it may constitute a partial return of capital. In particular, investors should be careful to consider the tax implications of buying shares of such funds just prior to a distribution. The price of such shares purchased at that time includes the amount of any forthcoming distribution. Those investors purchasing the fund shares just before a distribution may receive a return of investment upon distribution that will nevertheless be taxable to them.

All distributions of investment income during the year will have the same percentage designated as tax exempt. This method is called the “average annual method.” Since the Tax Free Fund and the Near-Term Tax Free Fund invest primarily in tax-exempt securities, the percentage is expected to be substantially the same as the amount actually earned during any particular distribution period.

A shareholder of a fund should be aware that a redemption of shares (including any exchange into another U.S. Global Investors fund) is a taxable event and, accordingly, a capital gain or loss may be recognized. The gain or loss will generally be long term if the shares were held more than one year and short term if the shares were held less than one year. It is unlikely that shareholder will recognize a gain or loss on redemptions or exchanges of shares the Treasury Securities Cash Fund or Government Securities Savings Fund since

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each seeks to maintain a stable share price. If a shareholder of the Tax Free Fund or the Near-Term Tax Free Fund receives an exempt-interest dividend with respect to any share and such share has been held for six months or less, any loss on the redemption or exchange will be disallowed to the extent of such exempt-interest dividend. Similarly, if a shareholder of a fund receives a distribution taxable as long-term capital gain with respect to shares of the fund and redeems or exchanges shares before he has held them for more than six months, any loss on the redemption or exchange (not otherwise disallowed as attributable to an exempt-interest dividend) will be treated as long-term capital loss to the extent of the long-term capital gain recognized.

The Tax Free Fund and the Near-Term Tax Free Fund may invest in private activity bonds. Interest on private activity bonds is generally subject to the Federal alternative minimum tax (AMT), although the interest continues to be excludable from gross income for other purposes. AMT is a supplemental tax designed to ensure that taxpayers pay at least a minimum amount of tax on their income, even if they make substantial use of certain tax deductions and exclusions (referred to as “tax preference items”). Interest from private activity bonds is one of the tax preference items that is added into income from other sources for purposes of determining whether a taxpayer is subject to the AMT and the amount of any tax to be paid. Prospective investors should consult their own tax advisors with respect to the possible application of the AMT to their tax situation.

Opinions relating to the validity of tax-exempt securities and the exemption of interest thereon from Federal income tax are rendered by recognized bond counsel to the issuers. Neither the Adviser’s nor the Trust’s counsel makes any review of proceedings relating to the issuance of tax-exempt securities or the basis of such opinions.

Interest on indebtedness incurred by shareholders to purchase or carry shares of the Tax Free Fund or Near-Term Tax Free Fund will generally not be deductible for Federal income tax purposes. Under rules issued by the Internal Revenue Service to determine when borrowed funds are used for the purpose of purchasing or carrying particular assets, the purchase of shares may be considered to have been made with borrowed funds even though the borrowed funds are not directly traceable to the purchase of shares.

Each fund is required in certain circumstances to withhold Federal income tax (“backup withholding”) at a current rate of 28% on reportable payments, including dividends, capital gain distributions and the proceeds of sales or other dispositions of the fund’s shares, paid to certain shareholders who do not furnish the fund with their correct social security number or other taxpayer identification number and certain other certifications, or who are otherwise subject to backup withholding. Backup withholding is not an additional tax. Any amounts withheld from payments made to a shareholder may be refunded or credited against such shareholder’s U.S. Federal income tax liability, if any, provided that the required information is timely furnished to the Internal Revenue Service.

CURRENCY FLUCTUATIONS — “SECTION 988” GAINS OR LOSSES

Under the Code, gains or losses attributable to fluctuations in exchange rates that occur between the time a fund accrues interest or other receivables, or accrues expenses or other liabilities denominated in a foreign currency and the time a fund actually collects such receivables or pays such liabilities are generally treated as ordinary income or ordinary loss. Similarly, gains or losses from the disposition of foreign currencies or from the disposition of debt securities denominated in a foreign currency attributable to fluctuations in the value of the foreign currency between the date of acquisition of the currency or security and the date of disposition also are treated as ordinary gain or loss. These gains or losses, referred to under the Code as “section 988” gains or losses, increase or decrease the amount of a fund’s net investment income (which includes, among other things, dividends, interest and net short-term capital gains in excess of net long-term capital losses, net of expenses) available to be distributed to its shareholders as ordinary income, rather than increasing or decreasing the amount of the fund’s net capital gain. If section 988 losses exceed such other net investment income during a taxable year, any distributions made by the fund could be recharacterized as a return of capital to shareholders, rather than as an ordinary dividend, reducing each shareholder’s basis in his fund shares. To the extent that such distributions exceed such shareholder’s basis, they will be treated as a gain from the sale of shares. Certain gains or losses with respect to forward foreign currency contracts, over-the-counter options on foreign currencies and certain options traded on foreign exchanges will also be treated as section 988 gains or losses.

Forward currency contracts and certain options entered into by the fund may create “straddles” for U.S. Federal income tax purposes and this may affect the character of gains or losses realized by the fund on forward currency contracts or on the underlying securities and cause losses to be deferred. Transactions in forward currency contracts may also result in the loss of the holding period of underlying securities for purposes of the 30% of gross income test. The fund may also be required to “mark-to-market” certain positions in its portfolio (i.e., treat them as if they were sold at year end). This could cause the fund to recognize income without having the cash to meet the distribution requirements.

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FOREIGN TAXES

Income received by a fund from sources within any countries outside the United States in which the issuers of securities purchased by the fund are located may be subject to withholding and other taxes imposed by such countries.

Under the Code, if more than 50% of the value of a fund’s total assets at the close of its taxable year consists of stocks or securities of foreign corporations, the fund will be eligible for, and intends to file, an election with the Internal Revenue Service to “pass-through” to the fund’s shareholders the amount of such foreign income and withholding taxes paid by the fund. Pursuant to this election a shareholder will be required to: (1) include in gross income (in addition to taxable dividends actually received) his pro rata share of such foreign taxes paid by the fund; (2) treat his pro rata share of such foreign taxes as having been paid by him; and (3) either deduct his pro rata share of such foreign taxes in computing his taxable income or use it as a foreign tax credit against his U.S. Federal income taxes. No deduction for such foreign taxes may be claimed by a shareholder who does not itemize deductions. Each shareholder will be notified within 60 days after the close of the fund’s taxable year whether the foreign taxes paid by the fund will “pass-through” for that year and, if so, such notification will include the shareholder’s proportionate share of foreign source income and foreign taxes paid.

The amount of foreign taxes for which a shareholder may claim a credit in any year will be subject to an overall limitation that is applied separately to “passive income,” which includes, among other types of income, dividends, and interest.

The foregoing is only a general description of the foreign tax credit under current law. Because applicability of the credit depends on the particular circumstances of each shareholder, shareholders are advised to consult their own tax advisors.

The foregoing discussion relates only to generally applicable federal income tax provisions in effect as of the date of the prospectus and statement of additional information. Shareholders should consult their tax advisors about the status of distributions from the fund in their own states and localities.

CUSTODIAN, FUND ACCOUNTANT, AND ADMINISTRATOR

Brown Brothers Harriman & Co. serves as custodian, fund accountant, and administrator for all funds of the Trust described in this Statement of Additional Information. With respect to the funds that own foreign securities, Brown Brothers Harriman & Co. may hold securities of the funds outside the United States pursuant to sub-custody arrangements separately approved by the Trust.

DISTRIBUTOR

U.S. Global Brokerage, Inc., 7900 Callaghan Road, San Antonio, Texas 78229, is the exclusive agent for distribution of shares of the funds. The distributor is obligated to sell the shares of the funds on a best-efforts basis only against purchase orders for the shares. Shares of the funds are offered on a continuous basis.

FINANCIAL STATEMENTS

The financial statements for those funds with the fiscal year ended June 30, 2008, are hereby incorporated by reference from the funds’ 2008 Annual Report to Shareholders dated June 30, 2008. The financial statements for those funds with the fiscal year ended October 31, 2007, are hereby incorporated by reference from the funds’ 2007 Annual Report to Shareholders dated October 31 2007, and the funds’ Semi-Annual Report dated April 30, 2008. A copy of the financial statement will be provided, free of charge, upon request to U.S. Global Investors, Inc., P.O. Box 781234, San Antonio, Texas 78278-1234, 1-800-873-8637 or 210-308-1234.

INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS AND LEGAL COUNSEL

KPMG LLP, 99 High Street, Boston, Massachusetts 02110, serves as independent registered public accountants for the Trust. The independent registered public accountants audit and report on the funds’ annual financial statements, review certain regulatory reports and the funds’ federal income tax returns, and may perform other professional accounting, auditing, tax, and advisory services to the extent approved by the Audit Committee of the Trust. Vedder Price P.C., 222 North LaSalle Street, Chicago, Illinois, 60601, serves as legal counsel to the Trust and to the independent trustees of the Trust.

Statement of Additional Information — U.S. Global Investors Funds

Page 103 of 103

PART C: OTHER INFORMATION

Item 23. Exhibits

The following exhibits are incorporated by reference to the previously filed documents indicated below, except as noted.


(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.

2. Administrative Agreement with U.S. Global Investors, Inc., dated October 1, 2008, included herein.

3. Subadvisory Agreement among Registrant, U.S. Global Investors, Inc. and Charlemagne Capital (IOM) Limited on behalf of the Eastern European Fund, dated October 1, 2008, included herein.

4. Subadvisory Agreement among Registrant, U.S. Global Investors, Inc. and Charlemagne Capital (IOM) Limited on behalf of the Global Emerging Markets Fund, dated October 1, 2008, included herein.


(e)

1. Shareholder Servicing Agreement, dated July 31,2008, included herein.

2. Specimen Dealer Agreement between principal underwriter and brokers, incorporated by reference to Post-Effective Amendment No. 97 filed September 4, 2007 (EDGAR Accession No. 0000950134-07-020797


(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)..

2. Amendment dated June 30, 2001, to Custodian Agreement dated November 1, 1997, between Registrant and Brown Brothers Harriman & Co., incorporated by reference to Annual Report on Form 10-K filed September 28, 2001 (EDGAR Accession No. 0000754811-01-500016).

3. Appendix A to Custodian Agreement dated November 1, 1997, between Registrant and Brown Brothers Harriman & Co., incorporated by reference to Annual Report on Form 10-K filed September 28, 2001 (EDGAR Accession No. 0000754811-01-500016).

4. Amendment dated February 21, 2001, to Appendix B of the Custodian Agreement dated November 1, 1997, between Registrant and Brown Brothers Harriman & Co., incorporated by reference to Annual Report on Form 10-K filed September 28, 2001 (EDGAR Accession No. 0000754811-01-500016).

5. Amendment dated April 23, 2006, to Custodian Agreement dated November 1, 1997, between Registrant and Brown Brothers Harriman & Co., incorporated by reference to Post-Effective Amendment No. 95 filed October 31, 2006 (EDGAR Accession No. 0000101507-06-000020).

6. Amendment dated October 1, 2008, to Custodian Agreement dated November 1, 1997 between Registrant and Brown Brothers Harriman & Co., included herein.


(h)		1. Transfer Agency Agreement, dated July 31, 2008, between Registrant and United Shareholder Services, Inc., included herein.

2. Expense Cap Agreement, dated October 1, 2008, included herein.

3. Expense Waiver and Reimbursement Agreement, dated March 20, 2008, for U.S. Treasury Securities Cash Fund and U.S. Government Securities Savings Fund, 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.

Page 1 of 6


(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. Registrant’s 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) Limited’s Code of Ethics dated November 1, 2007, included herein.

Item 24. Persons Controlled by or under Common Control with Registrant

Information pertaining to persons controlled by or under common control with Registrant is incorporated by reference to the Statement of Additional Information contained in Part B of this Registration Statement at the section entitled “Principal Holders of Securities.”

Item 25. Indemnification

Under the Registrant’s Agreement and Declaration of Trust, Article IX :

Section 9.02 Indemnification of trustees, officers and employees.

(a) Subject to the exceptions and limitations contained in paragraph (b) below: (i) every person who is, or has been, a trustee or an officer, or employee of the Trust (“Covered Person”) shall be indemnified by the Trust or the appropriate series (out of assets belonging to that series) to the fullest extent permitted by law against liability and against all expenses reasonably incurred or paid by him in connection with any claim, action, suit, or proceeding in which he becomes involved as a party or otherwise by virtue of his being or having been a Covered Person and against amounts paid or incurred by him in the settlement thereof (ii) as used herein the words “claim,” “action,” “suit,” or “proceeding” shall apply to all claims, actions, suits, or proceedings (civil, criminal, administrative, or other, including appeals), actual or threatened, while in office or thereafter, and the words “liability” and “expenses” shall include, without limitation, attorneys’ fees, costs, judgments, amounts paid in settlement, fines, penalties, and other liabilities.

b) No indemnification shall be provided hereunder to a Covered Person:(i) who shall have been finally adjudicated by a court or body before which the proceeding was brought (A) to be liable to the Trust or its shareholders by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his office or (B) not to have acted in good faith in the reasonable belief that his action was in the best interest of the Trust; or (ii)in the event of a settlement not involving a final adjudication (as provided for in paragraph (b)(i)), unless there has been a determination that such trustee or officer did not engage in willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his office:(A)by the court or other body approving the settlement;(B)by at least a majority of those trustees who neither are interested persons of the Trust nor are parties to the matter based upon a review of readily available facts (as opposed to a full trial-type inquiry); or(C)by written opinion of independent legal counsel based upon a review of readily available facts (as opposed to a full trial-type inquiry).

(c) The rights of indemnification herein provided may be insured against by policies maintained by the Trust, shall be severable, shall not be exclusive of or affect any other rights to which any Covered Person may now or hereafter be entitled, shall continue as to a person who has ceased to be a Covered Person and shall inure to the benefit of the heirs, executors, and administrators of such a person. Nothing contained herein shall affect any rights to indemnification to which Trust personnel, other than Covered Persons, and other persons may be entitled by contract or otherwise under law.

Page 2 of 6

if it ultimately is determined that he is not entitled to indemnification under this Section ; provided, however, that either (a) such Covered Person shall have provided appropriate security for such undertaking, (b) the Trust is insured against losses arising out of any such advance payments, or (c) either a majority of the trustees who are neither interested persons of the Trust nor parties to the matter, or independent legal counsel in a written opinion, shall have determined, based upon a review of readily-available facts (as opposed to a full trial-type inquiry or investigation), that there is a reason to believe that such Covered Person will be found entitled to indemnification under this Section

Section 9.03 . Indemnification of shareholders . In case any shareholder or former shareholder of any series shall be held to be personally liable solely by reason of his being or having been a shareholder of such series and not because of his acts or omissions or for some other reason, the shareholder or former shareholder (or his heirs, executors, administrators, or other legal representatives, or, in the case of a corporation or other entity, its corporate or other general successor) shall be entitled, out of the assets belonging to the applicable series, to be held harmless from and indemnified against all loss and expense arising from such liability. The Trust, on behalf of the affected series, shall assume, upon request by the shareholder, the defense of any claim made against the shareholder for any act or obligation of the series and satisfy any judgment thereon from the assets of the series.

Item 26. Business and Other Connections of Investment Adviser

Information pertaining to business and other connections of Registrant’s investment adviser is incorporated by reference to the Prospectus and Statement of Additional Information contained in Parts A and B of this Registration Statement at the sections entitled “Fund Management” in the Prospectus and “Investment Advisory Services” in the Statement of Additional Information.

Item 27. Principal Underwriters


	(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
Susan Filyk	Director, President	None
7900 Callaghan Road
San Antonio, TX 78229

Catherine A. Rademacher	Chief Financial Officer	Treasurer
7900 Callaghan Road
San Antonio, TX 78229

Sheila A. Matthys	Secretary	Assistant Secretary
7900 Callaghan Road
San Antonio, TX 78229

(c)

Not applicable.

Item 28. Location of Accounts and Records

All accounts and records maintained by the registrant are kept at the registrant’s office located at 7900 Callaghan Road, San Antonio, Texas. All accounts and records maintained by Brown Brothers Harriman & Co. as custodian, fund accountant, and administrator for U.S. Global Investors Funds are maintained at 40 Water Street, Boston, Massachusetts 02109.

Item 29. Management Services

Not applicable.

Page 3 of 6

Item 30. Undertakings

Not applicable.

Page 4 of 6

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements for effectiveness of this Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and that it has duly caused this Amendment to the Registration Statement on Form N-1A to be signed on its behalf by the undersigned, thereto duly authorized in the city of San Antonio, State of Texas, on this 1st day of October, 2008.


	U.S. GLOBAL INVESTORS FUNDS
	By:	/s/ Frank E. Holmes
		Frank E. Holmes
		President, Chief Executive Officer, President

Pursuant to the requirements of the Securities Act of 1933, this Amendment to the Registration Statement has been signed below by the following persons in the capacities and on the dates indicated:


Signature	Title	Date
* /s/ James F. Gaertner James F. Gaertner	Trustee	October 1, 2008

* /s/ J. Michael Belz J. Michael Belz	Trustee	October 1, 2008

/s/ Frank E. Holmes Frank E. Holmes	Trustee, President, Chief Executive Officer	October 1, 2008

* /s/ Clark R. Mandigo Clark R. Mandigo	Trustee	October 1, 2008

*/s/ Joe C. McKinney Joe C. McKinney	Trustee	October 1, 2008

*/s/ Catherine A. Rademacher Catherine A. Rademacher	Treasurer	October 1, 2008




*BY:		/s/ Susan B. McGee

		Susan B. McGee
		Attorney-in-Fact under Power of Attorney Dated
		August 26, 2008

Page 5 of 6

EXHIBIT INDEX


Exhibit
No.		Description of Exhibit
(a)		Agreement and Declaration of Trust
(b)		By-laws
(d) 1		Advisory Agreement with U.S. Global Investors, Inc
(d) 2		Administrative Services Agreement
(d) 3		Subadvisory Agreement for Eastern European Fund
(d) 4		Subadvisory Agreement for Global Emerging Markets Fund
(e) 1		Shareholder Servicing Agreement
(g) 6		Amendment to Custodian Agreement
(h) 1		Transfer Agency Agreement
(h) 2		Adviser Expense Cap Agreement
(h) 3		Adviser Expense Waiver and Reimbursement Agreement for U.S. Treasury Securities Cash Fund and U.S. Government Securities Savings Fund
(i)		Opinion of Counsel
(j)		Consent of independent registered public accounting firm, KPMG LLP
(m) 1		Rule 12b-1 Plan
(m) 2		Distribution Agreement
(o)		Power of Attorney
(p) 1		Code of Ethics for U.S. Global Investors Funds
(p) 2		Code of Ethics for U.S. Global Investors, Inc.
(p) 3		Code of Ethics for Charlemagne Capital (IOM) Limited’s Code of Ethics dated November 1, 2007

Page 6 of 6

Exhibit (a)

U.S. GLOBAL INVESTORS FUNDS

AGREEMENT AND DECLARATION OF TRUST

DATED July 31, 2008

TABLE OF CONTENTS


	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

-i-

TABLE OF CONTENTS
(continued)


	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

-ii-

TABLE OF CONTENTS
(continued)


	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

-iii-

U.S. GLOBAL INVESTORS FUNDS

Dated July 31, 2008

This AGREEMENT AND DECLARATION OF TRUST (hereinafter “Trust Instrument”) is made July 31, 2008 (together with all other persons from time to time duly elected, qualified and serving as Trustees in accordance with Article III hereof, the “Trustees”).

WHEREAS, the Trustees desire to establish a statutory trust for the investment and reinvestment of funds contributed thereto by investors;

NOW, THEREFORE, the Trustees declare that all money and property contributed to the trust hereunder shall be held and managed in trust under this Trust Instrument as herein set forth below.

ARTICLE I

NAME, FORMATION AND DEFINITIONS

Section 1.01 . Name . The name of the trust created hereby is the “U.S. Global Investors Funds,” and the Trustees shall conduct the business of the Trust (as defined below) under that name or any other name or names as they may from time to time determine in their discretion. Any name change shall become effective on the execution by a majority of the Trustees of an instrument setting forth the new name and the filing of a certificate of amendment pursuant to Section 3810(b)(1) of the Delaware Act. Any such instrument shall not require the approval of the Shareholders but shall have the status of an amendment to this Trust Instrument.

Section 1.02 . Formation of the Trust . The Trust was formed by the Trustee or Trustees filing the Trust’s certificate of trust with the office of the Secretary of State of the State of Delaware in accordance with Section 3810 of the Delaware Act. It is the intention of the parties hereto that the Trust created thereby and governed hereby constitutes a statutory trust under the Delaware Act and that this Trust Instrument constitutes its governing instrument.

Section 1.03 . Definitions . Wherever used herein, unless otherwise required by the context or specifically provided:

(a) The term “By-Laws” means the By-Laws referred to in Article IV, Section 4.01(e) hereof, as from time to time amended;

(b) The term “Commission” has the meaning given it in the 1940 Act (as defined below). The terms “Affiliated Person,” “Assignment,” “Interested Person,” and “Principal Underwriter” shall have the meanings given them in the 1940 Act, as modified by or interpreted by any applicable order or orders of the Commission or any rules or regulations adopted by or interpretive releases of the Commission thereunder;

(d) The term “Custodian” means any party furnishing services to the Trust pursuant to any agreement described in Article VI, Section 6.03;

(e) The term “Delaware Act” refers to Chapter 38 of Title 12 of the Delaware Code entitled “Treatment of Delaware Statutory Trusts,” as it may be amended from time to time;

(f) The term “Majority Shareholder Vote” means “the vote of a majority of the outstanding Voting Securities” as defined in Section 2(a)(42) of the 1940 Act;

(g) The term “Net Asset Value” means the net asset value of each Series (as defined below) of the Trust determined in the manner provided in Article VIII, Section 8.03 hereof;

(h) The term “Outstanding Shares” means those Shares (as defined below) shown from time to time in the books of the Trust or its transfer agent as then issued and outstanding, but shall not include Shares which have been redeemed or repurchased by the Trust and which are at the time held in the treasury of the Trust;

(i) The term “Series” means a series of Shares of the Trust established in accordance with the provisions of Article II, Section 2.05 hereof;

(j) The term “Shareholder” means a record owner of Outstanding Shares of the Trust;

(k) The term “Shares” means the equal proportionate transferable units of beneficial interest into which the beneficial interest of each Series of the Trust or class thereof shall be divided and may include fractions of Shares as well as whole Shares;

(l) “Tax Code” means the Internal Revenue Code of 1986, as amended from time to time, and any successor statute;

(m) The term “Trust” refers to the U.S. Global Investors Funds and all Series of the U.S. Global Investors Funds, and reference to the Trust, when applicable to one or more Series of the Trust, shall refer to any such Series;

(n) The term “Trustee” or “Trustees” means the person or persons who has or have signed this Trust Instrument, so long as he, she or they shall continue in office in accordance with the terms hereof, and all other persons who may from time to time be duly qualified and serving as Trustees in accordance with the provisions of Article III hereof, and reference herein to a Trustee or to the Trustees shall refer to the individual Trustees in their capacity as Trustees hereunder;

(o) The term “Trust Property” means any and all property, real or personal, tangible or intangible, which is owned or held by or for the account of one or more of the Trust or any Series, or the Trustees on behalf of the Trust or any Series; and

(p) The term “1940 Act” refers to the Investment Company Act of 1940, as amended from time to time.

ARTICLE II

BENEFICIAL INTEREST

Section 2.01 . Shares of Beneficial Ownership Interest . The beneficial interest in the Trust shall be divided into such transferable Shares of one or more separate and distinct Series or classes of a Series as the Trustees shall from time to time create and establish. The number of Shares of each Series, and class thereof, authorized hereunder is unlimited. Each Share shall have no par value. All Shares issued hereunder, including, without limitation, Shares issued in connection with a dividend in Shares or a split or reverse split of Shares, shall be fully paid and nonassessable.

Section 2.02 . Issuance of Shares . The Trustees in their discretion may, from time to time, without a vote of the Shareholders, issue Shares, in addition to the then-issued and outstanding Shares and Shares held in the treasury, to such party or parties and for such amount and type of consideration, subject to applicable law, including cash or securities, at such time or times and on such terms as the Trustees may deem appropriate, and may in such manner acquire other assets (including the acquisition of assets subject to, and in connection with, the assumption of liabilities) and businesses. In connection with any issuance of Shares, the Trustees may issue fractional Shares and Shares held in the treasury. The Trustees from time to time may divide or combine the Shares into a greater or lesser number without thereby changing the proportionate beneficial interests in the Trust. Contributions to the Trust may be accepted for, and Shares shall be redeemed as, whole Shares and/or 1/1,000th of a Share or integral multiples thereof.

Section 2.03 . Ownership and Transfer of Shares . The Trust or a transfer agent for the Trust shall maintain a register containing the names and addresses of the Shareholders of each Series and class thereof, the number of Shares of each Series and class held by such Shareholders, and a record of all Share transfers. The register shall be conclusive as to the identity of Shareholders of record and the number of Shares held by them from time to time. The Trustees may authorize the issuance of certificates representing Shares and adopt rules governing their use. The Trustees may make rules governing the transfer of Shares, whether or not represented by certificates. Except as otherwise provided by the Trustees, Shares shall be transferable on the books of the Trust only by the holder of record thereof or by his duly authorized agent upon delivery to the Trustees or the Trust’s transfer agent of a duly executed instrument of transfer, together with a Share certificate if one is outstanding, and such evidence of the genuineness of each such execution and authorization and of such other matters as may be required by the Trustees. Upon such delivery, and subject to any further requirements specified by the Trustees or contained in

the By-Laws, the transfer shall be recorded on the books of the Trust. Until a transfer is so recorded, the Shareholder of record of Shares shall be deemed to be the holder of such Shares for all purposes hereunder and neither the Trustees nor the Trust, nor any transfer agent or registrar or any officer, employee or agent of the Trust, shall be affected by any notice of a proposed transfer.

Section 2.04 . Treasury Shares . Shares held in the treasury shall, until reissued pursuant to Section 2.02 hereof, not confer any voting rights on the Trustees, nor shall such Shares be entitled to any dividends or other distributions declared with respect to the Shares.

Section 2.05 . Establishment of Series . The Trust created hereby shall consist of one or more Series, and separate and distinct records shall be maintained by the Trust of each Series and the assets associated with any such Series shall be held and accounted for separately from the assets of the Trust or any other Series. The Trustees shall have full power and authority, in their sole discretion, and without obtaining any prior authorization or vote of the Shareholders of any Series of the Trust, to establish and designate and to change in any manner such Series of Shares or any classes of initial or additional Series and to fix such preferences, voting powers, rights and privileges of such Series or classes thereof as the Trustees may from time to time determine, to divide and combine the Shares or any Series or classes thereof into a greater or lesser number, to classify or reclassify any issued Shares or any Series or classes thereof into one or more Series or classes of Shares, to abolish any one or more Series or classes of Shares or to take such other action with respect to the Shares as the Trustees may deem desirable. The establishment and designation of any Series shall be effective upon the adoption of a resolution by a majority of the Trustees setting forth such establishment and designation and the relative rights and preferences of the Shares of such Series. A Series may issue any number of Shares and need not issue Shares.

All references to Shares in this Trust Instrument shall be deemed to be Shares of any or all Series, or classes thereof, as the context may require. All provisions herein relating to the Trust shall apply equally to each Series of the Trust, and each class thereof, except as the context otherwise requires.

Each Share of a Series of the Trust shall represent an equal beneficial interest in the net assets of such Series. Each holder of Shares of a Series shall be entitled to receive his pro rata share of distributions of income and capital gains, if any, made with respect to such Series. Upon redemption of his Shares, such Shareholder shall be paid solely out of the funds and property of such Series of the Trust.

Section 2.06 . Investment in the Trust . The Trustees shall accept investments in any Series of the Trust from such persons and on such terms as they may from time to time authorize. At the Trustees’ discretion, such investments, subject to applicable law, may be in the form of cash or securities in which the affected Series is authorized to invest, valued as provided in Article VIII, Section 8.03 hereof. Investments in a Series shall be credited to each Shareholder’s account in the form of full or fractional Shares at a Net Asset Value per Share determined after the investment is received; provided, however, that the Trustees may, in their sole discretion, (a) fix

the Net Asset Value per Share of the initial capital contribution or (b) impose a sales charge or other fee in connection with investments in the Trust in such manner and at such time as determined by the Trustees. The Trustees shall have the right to refuse to accept investments in any Series at any time without any cause or reason therefor whatsoever.

Section 2.07 . Assets and Liabilities of Series . All consideration received by the Trust for the issue or sale of Shares of a particular Series, together with all assets in which such consideration is invested or reinvested, all income, earnings, profits, and proceeds thereof, including any proceeds derived from the sale, exchange or liquidation of such assets, and any funds or payments derived from any reinvestment of such proceeds in whatever form the same may be, shall be held and accounted for separately from the other assets of the Trust and of every other Series and may be referred to herein as “assets belonging to” that Series. The assets belonging to a particular Series shall belong to that Series for all purposes, and to no other Series, subject only to the rights of creditors of that Series. In addition, any assets, income, earnings, profits or funds, or payments and proceeds with respect thereto, which are not readily identifiable as belonging to any particular Series shall be allocated by the Trustees between and among one or more of the Series in such manner as the Trustees, in their sole discretion, deem fair and equitable. Each such allocation shall be conclusive and binding upon the Shareholders of all Series for all purposes, and such assets, income, earnings, profits or funds, or payments and proceeds with respect thereto shall be assets belonging to that Series. The assets belonging to a particular Series shall be so recorded upon the books of the Trust, and shall be held by the Trustees in trust for the benefit of the holders of Shares of that Series. The assets belonging to each particular Series shall be charged with the liabilities of that Series and all expenses, costs, charges, and reserves attributable to that Series. Any general liabilities, expenses, costs, charges, or reserves of the Trust which are not readily identifiable as belonging to a particular Series shall be allocated and charged by the Trustees between or among any one or more of the Series in such manner as the Trustees, in their sole discretion, deem fair and equitable. Each such allocation shall be conclusive and binding upon the Shareholders of all Series for all purposes.

Without limitation of the foregoing provisions of this Section 2.07, but subject to the right of the Trustees in their discretion to allocate general liabilities, expenses, costs, charges, or reserves as herein provided, the debts, liabilities, obligations, and expenses incurred, contracted for or otherwise existing with respect to a particular Series shall be enforceable against the assets of such Series and not against the assets of any other Series or the assets of the Trust generally. Notice of this contractual limitation on inter-Series liabilities may, in the Trustee’s sole discretion, be set forth in the certificate of trust of the Trust (whether originally or by amendment) as filed or to be filed in the Office of the Secretary of State of the State of Delaware pursuant to the Delaware Act, and upon the giving of such notice in the certificate of trust, the statutory provisions of Section 3804 of the Delaware Act relating to limitations on liabilities among Series (and the statutory effect under Section 3804 of setting forth such notice in the certificate of trust) shall become applicable to the Trust and each Series. Any person extending credit to, contracting with or having any claim against any Series may look only to the assets of that Series to satisfy or enforce any debt, liability, obligation or expense incurred, contracted for or otherwise existing with respect to that Series. No Shareholder or former

Shareholder of any Series shall have a claim on, or any right to, any assets allocated or belonging to any other Series.

Section 2.08 . No Preemptive or Other Rights . Shareholders shall have no preemptive or other right to subscribe to any additional Shares or other securities issued by the Trust or the Trustees, whether of the same or other Series. In addition, Shares shall not entitle Shareholders to preference, appraisal, conversion or exchange rights (except as specified herein or as specified by the Trustees when creating the Shares, as in preferred shares).

Section 2.09 . Personal Liability of Shareholders . Each Shareholder of the Trust and of each Series shall not be personally liable for debts, liabilities, obligations and expenses incurred by, contracted for, or otherwise existing with respect to, the Trust or by or on behalf of any Series. The Trustees shall have no power to bind any Shareholder personally or to call upon any Shareholder for the payment of any sum of money or assessment whatsoever other than such as the Shareholder may at any time personally agree to pay by way of subscription for any Shares or otherwise. Every note, bond, contract or other undertaking issued by or on behalf of the Trust or the Trustees relating to the Trust or to a Series shall include a recitation limiting the obligation represented thereby to the Trust or to one or more Series and its or their assets (but the omission of such a recitation shall not operate to bind any Shareholder or Trustee of the Trust). Shareholders shall have the same limitation of personal liability as is extended to shareholders of a private corporation for profit incorporated in the State of Delaware. Every written obligation of the Trust or any Series shall contain a statement to the effect that such obligation may only be enforced against the assets of the appropriate Series or all Series; however, the omission of such statement shall not operate to bind or create personal liability for any Shareholder or Trustee.

Section 2.10 . Assent to Trust Instrument . Every Shareholder, by virtue of having purchased a Share, shall become a Shareholder and shall be held to have expressly assented and agreed to be bound by the terms hereof.

ARTICLE III

THE TRUSTEES

Section 3.01 . Management of the Trust . The Trustees shall have exclusive and absolute control over the Trust Property and over the business of the Trust to the same extent as if the Trustees were the sole owners of the Trust Property and business in their own right, but with such powers of delegation as may be permitted by this Trust Instrument. The Trustees shall have the power to conduct the business of the Trust and carry on its operations in any and all of its branches and maintain offices both within and without the State of Delaware, in any and all states of the United States of America, in the District of Columbia, in any and all commonwealths, territories, dependencies, colonies, or possessions of the United States of America, and in any foreign jurisdiction and to do all such other things and execute all such instruments as they deem necessary, proper or desirable in order to promote the interests of the Trust although such things are not herein specifically mentioned. Any determination as to what is in the interests of the

Trust made by the Trustees in good faith shall be conclusive. In construing the provisions of this Trust Instrument, the presumption shall be in favor of a grant of power to the Trustees.

The enumeration of any specific power in this Trust Instrument shall not be construed as limiting the aforesaid power. The powers of the Trustees may be exercised without order of or resort to any court.

Except for the Trustees named herein or appointed to fill vacancies pursuant to Section 3.04 of this Article III, the Trustees shall be elected by the Shareholders owning of record a plurality of the Shares voting at a meeting of Shareholders. Such a meeting shall be held on a date fixed by the Trustees. In the event that less than a majority of the Trustees holding office have been elected by Shareholders, the Trustees then in office will call a Shareholders’ meeting for the election of Trustees.

Section 3.02 . Initial Trustees . Prior to a public offering of Shares, there may be a sole initial Trustee. The initial Trustee shall be the person named herein. Thereafter, the number of Trustees (other than the initial Trustees) shall be fixed from time to time by a majority of the Trustees, subject to Section 3.06 of this Article III. On a date fixed by the Trustees, the Shareholders shall elect additional Trustees subject to Section 3.06 of this Article III.

Section 3.03 . Term of Office of Trustees . Each Trustee shall hold office for life, or until his successor is elected, or until the Trust’s termination as herein provided, except that: (a) any Trustee may resign his or her position as Trustee by written instrument signed by him and delivered to the other Trustees, which shall take effect upon such delivery or upon such later date as is specified therein; (b) any Trustee may be removed at any time by a vote of at least two-thirds of the number of Trustees prior to such removal, specifying the date when such removal shall become effective; (c) any Trustee who dies, becomes physically or mentally incapacitated by reason of disease or otherwise, or is otherwise unable to serve, may be retired by written instrument signed by a majority of the other Trustees, specifying the date of his retirement; (d) any Trustee who has attained a mandatory retirement age or term limit established pursuant to, or is otherwise required to retire in accordance with, any written policy adopted from time to time by the Trustees, shall automatically and without action of such Trustee or the remaining Trustees, be deemed to have retired in accordance with the terms of such policy, effective as of the date determined in accordance with such policy; and (e) a Trustee may be removed at any meeting of the Shareholders of the Trust by a vote of Shareholders owning at least a majority of the outstanding Shares, cast in person or by proxy at a meeting called for that purpose.

Section 3.04 . Vacancies and Appointment of Trustees . Any vacancy or anticipated vacancy caused by any reason, including but not limited to, in the case of declination to serve, death, resignation, retirement, removal, physical or mental incapacity by reason of disease or otherwise, or a Trustee is otherwise unable to serve, or an increase in the number of Trustees, a vacancy shall occur. Whenever a vacancy in the Board of Trustees shall occur, the other Trustees shall have all the powers hereunder and the certificate of the other Trustees of such vacancy shall be conclusive. In the case of an existing vacancy, the remaining Trustees shall fill such vacancy by appointing such other person as they in their discretion shall see fit consistent with the

limitations under the 1940 Act. Such appointment shall be evidenced by a written instrument signed by a majority of the Trustees in office or by resolution of the Trustees, duly adopted, which shall be recorded in the minutes of a meeting of the Trustees, whereupon the appointment shall take effect. The Trustees may leave a vacancy unfilled or may reduce the number of Trustees, provided that the reduction does not result in less than the minimum number provided by Section 3.06 of this Article III.

An appointment of a Trustee may be made by the Trustees then in office in anticipation of a vacancy to occur by reason of retirement, resignation or increase in number of Trustees effective at a later date, provided that said appointment shall become effective only at or after the effective date of said retirement, resignation or increase in number of Trustees. As soon as any Trustee appointed pursuant to this Section 3.04 shall have accepted such appointment, the trust estate shall vest in the new Trustee, together with the continuing Trustees, without any further act or conveyance, and he shall be deemed a Trustee hereunder. The power to appoint a Trustee pursuant to this Section 3.04 is subject to the provisions of Section 16(a) of the 1940 Act.

Section 3.05 . Temporary Absence of Trustee . Any Trustee may, by power of attorney, delegate his power for a period not exceeding six (6) months at any one time to any other Trustee or Trustees, provided that in no case shall less than two (2) Trustees personally exercise the other powers hereunder except as herein otherwise expressly provided. Until a vacancy among the Trustees is filled, or while any Trustee is absent pursuant to this Section 3.05, the remaining Trustees shall have all powers hereunder, except as otherwise expressly provided herein.

Section 3.06 . Number of Trustees . The number of Trustees shall be set initially at one (1), and thereafter shall be such number as shall be fixed from time to time by a majority of the Trustees, provided, however, that the number of Trustees shall in no event be more than fifteen (15) or less than three (3) and shall comply with the requirements of the 1940 Act and other applicable laws. No reduction of the number of Trustees shall have the effect of removing a Trustee prior to the expiration of his term.

Section 3.07 . Effect of Vacancy of a Trustee . Any vacancy for any reason, including but not limited to the declination to serve, death, resignation, retirement, removal, incapacity or inability of the Trustees, or any one of them, shall not operate to terminate the Trust, annul this Trust Instrument or revoke any existing agency created pursuant to the terms of this Trust Instrument.

Section 3.08 . Ownership of Assets of the Trust . The assets of the Trust and of each Series shall be held separate and apart from any assets now or hereafter held in any capacity other than as Trustee hereunder by the Trustees or any successor Trustees. Legal title in and beneficial ownership of all of the assets of the Trust and the right to conduct any business shall at all times be considered as vested in the Trustees on behalf of the Trust, except that the Trustees may cause legal title to any Trust Property to be held by, or in the name of, the Trust, or in the name of any person as nominee (including a Custodian). No Shareholder shall be deemed to have a severable ownership in any individual asset of the Trust or of any Series or any right of partition or possession thereof, but each Shareholder shall have, except as otherwise provided for herein, a

proportionate undivided beneficial interest in the Trust or Series. The Shares shall be personal property giving only the rights specifically set forth in this Trust Instrument. The Trust, or at the determination of the Trustees one or more of the Trustees or a nominee acting for and on behalf of the Trust, shall be deemed to hold legal title and beneficial ownership of any income earned on securities of the Trust issued by any business entities formed, organized, or existing under the laws of any jurisdiction, including the laws of any foreign country. Upon the resignation or removal of a Trustee, or his otherwise ceasing to be a Trustee, he shall automatically cease to have any right, title or interest in any of the Trust property, and the right, title and interest of such Trustee in the Trust property shall vest automatically in the remaining Trustees. To the extent permitted by law, such vesting and cessation of title shall be effective whether or not conveying documents have been executed and delivered. Upon the incapacity or death of any Trustee, his legal representative shall execute and deliver on his behalf such documents as the remaining Trustees shall require as provided in the preceding sentence.

Section 3.09 . Compensation . The Trustees as such shall be entitled to reasonable compensation from the Trust, and they may periodically fix the amount of such compensation. Nothing herein shall in any way prevent the employment of any Trustee for advisory, management, legal, accounting, investment banking or other services and payment for the same by the Trust.

ARTICLE IV

POWERS OF THE TRUSTEES

Section 4.01 . Powers . The Trustees in all instances shall act as principals, and are and shall be free from the control of the Shareholders. The Trustees shall have exclusive and absolute control over the Trust Property and over the business of the Trust to the same extent as if the Trustees were the sole owners of the Trust Property and business in their own right, but with such powers of delegation as may be permitted by this Trust Instrument. The Trustees shall have full power and authority to do any and all acts and to make and execute any and all contracts and instruments that they may consider necessary or appropriate in connection with the management of the Trust. The Trustees shall not in any way be bound or limited by present or future laws or customs in regard to trust investments, but shall have full authority and power to make any and all investments which they, in their sole discretion, shall deem proper to accomplish the purpose of this Trust without recourse to any court or other authority. Subject to any applicable express limitation in this Trust Instrument or the By-Laws of the Trust, the Trustees shall have power and authority:

(a) To invest and reinvest cash and other property, and to hold cash or other property uninvested, without in any event being bound or limited by any present or future law or custom in regard to investments by trustees, and to sell, exchange, lend, pledge, mortgage, hypothecate, write options on and lease any or all the assets of the Trust; to invest in obligations and securities of any kind, and without regard to whether they may mature before the possible termination of the Trust; and to invest all or any part of its cash and other property in, or to purchase, securities issued by an investment company registered under the 1940 Act or series thereof, subject to the provisions of the 1940 Act;

(b) To operate as and carry on the business of an investment company registered under the 1940 Act, and exercise all of the powers necessary and appropriate to the conduct of such operations;

(c) To borrow money and in this connection issue notes or other evidence of indebtedness; to secure borrowings by mortgaging, pledging or otherwise subjecting as security the Trust Property; to endorse, guarantee, or undertake the performance of an obligation or engagement of any other person and to lend Trust Property;

(d) To provide for the distribution of interests of the Trust either through a principal underwriter (as defined in Section 29(a)(29) of the 1940 Act) in the manner hereinafter provided for or by the Trust itself, or both, or otherwise pursuant to a plan of distribution of any kind;

(e) To adopt By-Laws not inconsistent with this Trust Instrument providing for the conduct of the business of the Trust and to amend and repeal them to the extent that they do not reserve that right to the Shareholders; such By-Laws shall be deemed incorporated and included in this Trust Instrument;

(f) To elect and remove such officers and appoint and terminate such agents as they consider appropriate, any one or more of the foregoing of whom may be a Trustee, and may provide for the compensation of all of the foregoing;

(g) To employ one or more banks, trust companies or companies that are members of a national securities exchange or such other entities as the Commission may permit as custodians of any assets of the Trust subject to any conditions set forth in this Trust Instrument or in the By-Laws;

(h) To retain one or more transfer agents and shareholder servicing agents, or both;

(i) To set record dates in the manner provided herein or in the By-Laws;

(j) To delegate such authority as they consider desirable to any officers of the Trust and to any investment adviser, manager, Custodian, underwriter or other agent or independent contractor;

(k) To sell or exchange any or all of the assets of the Trust, subject to the provisions of Article X, Section 10.04(b) hereof;

(l) To vote or give assent, or exercise any rights of ownership, with respect to stock or other securities or property; and to execute and deliver powers of attorney and proxies to such person or persons as the Trustee shall deem proper, granting to such person or persons such power and discretion with relation to securities or property as the Trustees shall deem proper;

(m) To exercise powers and rights of subscription or otherwise which in any manner arise out of ownership of securities;

(n) To hold any security or property (i) in a form not indicating any trust, whether in bearer, book entry, unregistered or other negotiable form; or (ii) either in the name of the Trust or in the name of a Custodian or a nominee or nominees subject in either case to proper safeguards according to the usual practice of Delaware business or statutory trusts or investment companies;

(o) To establish separate and distinct Series with separately defined investment objectives and policies and distinct investment purposes in accordance with the provisions of Article II hereof and to establish classes of such Series having relative rights, powers and duties as they may provide consistent with applicable law;

(p) To the full extent permitted by Section 3804(a) of the Delaware Act, to allocate assets, liabilities and expenses of the Trust to a particular Series or to apportion the same between or among two or more Series, provided that any liabilities or expenses incurred by a particular Series shall be payable solely out of the assets belonging to that Series as provided for in Article II hereof;

(q) To consent to or participate in any plan for the reorganization, consolidation or merger of any corporation or concern, any security of which is or was held in the Trust; to consent to any contract, lease, mortgage, purchase, or sale of property by such corporation or concern, and to pay calls or subscriptions with respect to any security held in the Trust;

(r) To litigate, compromise, arbitrate, or otherwise adjust claims in favor of or against the Trust or any matter in controversy including, but not limited to, claims for taxes;

(s) To make distributions of income and of capital gains to Shareholders in the manner hereinafter provided;

(t) To establish, from time to time, a minimum investment for Shareholders in the Trust or in one or more Series or class, and to require the redemption of the Shares of any Shareholder whose investment is less than such minimum upon giving notice to such Shareholder;

(u) To establish one or more committees, to delegate any of the powers of the Trustees to said committees and to adopt a committee charter providing for such responsibilities, membership (including Trustees, officers or other agents of the Trust therein) and any other characteristics of said committees as the Trustees may deem proper. Notwithstanding the provisions of this Article IV, and in addition to such provisions or any other provision of this Trust Instrument or of the By-Laws, the Trustees may by resolution appoint a committee consisting of less than the whole number of Trustees then in office, which committee may be

empowered to act for and bind the Trustees and the Trust, as if the acts of such committee were the acts of all the Trustees then in office, with respect to the institution, prosecution, dismissal, settlement, review or investigation of any action, suit or proceeding which shall be pending or threatened to be brought before any court, administrative agency or other adjudicatory body;

(v) To interpret the investment policies, practices or limitations of any Series;

(w) To establish a registered office and have a registered agent in the State of Delaware;

(x) In general, to carry on any other business in connection with or incidental to any of the foregoing powers, to do everything necessary, suitable, or proper for the accomplishment of any purpose or the attainment of any object or the furtherance of any power hereinbefore set forth, either alone or in association with others, and to do every other act or thing incidental or appurtenant to or growing out of or connected with the aforesaid business or purposes, objects or powers.

The foregoing clauses shall be construed both as objects and power, and the foregoing enumeration of specific powers shall not be held to limit or restrict in any manner the general powers of the Trustees. Any action by one or more of the Trustees in their capacity as such hereunder shall be deemed an action on behalf of the Trust or the applicable Series, and not an action in an individual capacity.

The Trustees shall not be limited to investing in obligations maturing before the possible termination of the Trust.

No one dealing with the Trustees shall be under any obligation to make any inquiry concerning the authority of the Trustees, or to see to the application of any payments made or property transferred to the Trustees or upon their order.

Section 4.02 . Issuance and Repurchase of Shares . The Trustees shall have the power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold, resell, reissue, dispose of, suspend or terminate purchases and sales and otherwise deal in Shares and, subject to the provisions set forth in Article II and Article VIII, to apply to any such repurchase, redemption, retirement, cancellation, or acquisition of Shares any funds or property of the Trust, or the particular Series of the Trust, with respect to which such Shares are issued.

Section 4.03 . Trustees and Officers as Shareholders . Any Trustee, officer, or agent of the Trust may acquire, own, and dispose of Shares to the same extent as if he were not a Trustee, officer, or agent; and the Trustees may issue and sell or cause to be issued and sold Shares and to buy such Shares from any such person or any firm or company in which he is interested, subject only to the general limitations herein contained as to the sale and purchase of such Shares; and all subject to any restrictions which may be contained in the By-Laws.

Section 4.04 . Action by the Trustees . The Trustees shall act by majority vote at a meeting duly called (including at a telephonic meeting, unless the 1940 Act requires that a particular action be taken only at a meeting at which the Trustees are present in person) at which a quorum is present or by written consent of a majority of the Trustees (or such greater number as may be required by applicable law) without a meeting. At any meeting of the Trustees, a majority of the Trustees shall constitute a quorum. Meetings of the Trustees may be called orally or in writing by the Chairman (as defined below) or by any two (2) other Trustees. Notice of the time, date and place of all meetings of the Trustees shall be given by the party calling the meeting to each Trustee by telephone, facsimile or other electronic mechanism sent to his home or business address at least twenty-four (24) hours in advance of the meeting or by written notice mailed to his home or business address at least seventy-two (72) hours in advance of the meeting. Notice need not be given to any Trustee who attends the meeting without objecting to the lack of notice or who executes a written waiver of notice with respect to the meeting. Any meeting conducted by telephone shall be deemed to take place at the principal office of the Trust, as determined by the By-Laws or by the Trustees. Subject to the requirements of the 1940 Act, the Trustees by majority vote may delegate to any one or more of their number their authority to approve particular matters or take particular actions on behalf of the Trust.

Written consents or waivers of the Trustees may be executed in one or more counterparts. Execution of a written consent or waiver and delivery thereof to the Trust may be accomplished by facsimile or other similar electronic mechanism. Written consents must be filed with the records of the meetings of the Trustees.

Any committee of the Trustees, including an executive committee, if any, may act with or without a meeting. A quorum for all meetings of any such committee shall be one-third of the members thereof. Unless provided otherwise in this Trust Instrument, any action of any such committee may be taken at a meeting by vote of a majority of the members present (a quorum being present) or without a meeting by written consent of all of the members.

With respect to actions of the Trustees and any committee of the Trustees, Trustees who are Interested Persons in any action to be taken may be counted for quorum purposes under this Section and shall be entitled to vote to the extent not prohibited by the 1940 Act. For any committee of the Trustees composed of one Trustee, a quorum shall be one.

Section 4.05 . Chairman of the Trustees . The Trustees shall appoint one of their number to be Chairman of the Board of Trustees (the “Chairman”). The Chairman shall preside at all meetings of the Trustees, shall be responsible for the execution of policies established by the Trustees and the administration of the Trust, and may be (but is not required to be) the chief executive, financial, and/or accounting officer of the Trust.

Section 4.06 . Principal Transactions . Except to the extent prohibited by applicable law, the Trustees, on behalf of the Trust, may, in a manner consistent with applicable legal requirements, buy any securities from or sell any securities to, or lend any assets of the Trust to, any Trustee or officer of the Trust or any firm of which any such Trustee or officer is a member acting as principal, or have any such dealings with any investment adviser, distributor or transfer agent for

the Trust or with any Interested Person of such person; and the Trust may employ any such person, or firm or company in which such person is an Interested Person, as broker, legal counsel, registrar, investment adviser, distributor, transfer agent, dividend disbursing agent, or Custodian, or in any other capacity upon customary terms.

ARTICLE V

EXPENSES OF THE TRUST

Section 5.01 . Payment of Expenses by the Trust . Subject to the provisions of Article II, Section 2.07 hereof, the Trust or a particular Series shall pay, or shall reimburse the Trustees from the assets belonging to all Series or the appropriate Series, for their expenses (or the expenses of a class of such Series) and disbursements, including, without limitation, fees and expenses of Trustees, interest expenses, taxes, fees and commissions of every kind, expenses of pricing Trust portfolio securities, expenses of issue, repurchase and redemption of shares, including expenses attributable to a program of periodic repurchases or redemptions, expenses of registering and qualifying the Trust and its Shares under federal and state laws and regulations or under the laws of any foreign jurisdiction, charges of third parties, including investment advisers, managers, custodians, transfer agents, portfolio accounting and/or pricing agents, and registrars, expenses of preparing and setting up in type prospectuses and statements of additional information and other related Trust documents, expenses of printing and distributing prospectuses sent to existing Shareholders, auditing and legal expenses, reports to Shareholders, expenses of meetings of Shareholders and proxy solicitations therefor, insurance expenses, association membership dues and for such non-recurring items as may arise, including litigation to which the Trust (or a Trustee acting as such) is a party, and for all losses and liabilities incurred by them in administering the Trust, and for the payment of such expenses, disbursements, losses and liabilities the Trustees shall have a lien on the assets belonging to the appropriate Series, on the assets of each such Series, prior to any rights or interests of the Shareholders thereto. This Section 5.01 shall not preclude the Trust from directly paying any of the aforementioned fees and expenses.

Section 5.02 . Payment of Expenses by Shareholders . The Trustees shall have the power, as frequently as they may determine, to cause each Shareholder, or each Shareholder of any particular Series, to pay directly, in advance or arrears, for charges of the Trust’s Custodian or transfer, shareholder servicing or similar agent, an amount fixed from time to time by the Trustees, by setting off such charges due from such Shareholder from declared but unpaid dividends owed such Shareholder and/or by reducing the number of Shares in the account of such Shareholder by that number of full and/or fractional Shares which represents the outstanding amount of such charges due from such Shareholder.

ARTICLE VI

CONTRACTS WITH SERVICE PROVIDERS

Section 6.01 . Investment Advisory Contracts . The Trustees may, in their discretion, from time to time, enter into an investment advisory or management contract or contracts with respect to the Trust or any Series; provided, however, that the initial approval and entering into of such contract or contracts shall be subject to a Majority Shareholder Vote, if required by the 1940 Act. Notwithstanding any other provision of this Trust Instrument, the Trustees may authorize any investment adviser (subject to such general or specific instructions as the Trustees from time to time may adopt) to effect purchases, sales or exchanges of portfolio securities, other investment instruments of the Trust, or other Trust Property on behalf of the Trustees, or may authorize any officer, agent, or Trustee to effect such purchases, sales, or exchanges pursuant to recommendations of the investment adviser (and all without further action by the Trustees). Any such purchases, sales, and exchanges shall be deemed to have been authorized by all of the Trustees.

The Trustees may authorize, subject to applicable requirements of the 1940 Act, including those relating to Shareholder approval, the investment adviser to employ, from time to time, one or more sub-advisers to perform such of the acts and services of the investment adviser, and upon such terms and conditions, as may be agreed upon between the investment adviser and sub-adviser. Any reference in this Trust Instrument to the investment adviser shall be deemed to include such sub-advisers, unless the context otherwise requires.

Section 6.02 . Distribution Contracts . The Trustees may in their discretion from time to time enter into an exclusive or nonexclusive underwriting contract or contracts providing for the sale of Shares, whereby the Trust may either agree to sell Shares to the other party to the contract or appoint such other party its sales agent for such Shares. In either case, the contract shall be on such terms and conditions, if any, as may be prescribed in the By-Laws, and such further terms and conditions as the Trustees may in their discretion determine not inconsistent with the provisions of this Article VI or of the By-Laws; and such contract may also provide for the repurchase or sale of Shares by such other party as principal or as agent of the Trust. The Trustees may adopt a plan or plans of distribution with respect to Shares of any Series or class and enter into any related agreements, whereby the Series or class finances directly or indirectly any activity that is primarily intended to result in sales of its Shares, subject to applicable rules and regulations.

Section 6.03 . Custody Agreements . The Trustees shall at all times place and maintain the securities and similar investments of the Trust and of each Series in custody meeting the requirements of Section 17(f) of the 1940 Act and the rules thereunder. The Trustees, on behalf of the Trust or any Series, may enter into an agreement with a Custodian on terms and conditions acceptable to the Trustees providing for the Custodian, among other things, to: (a) hold the securities and other assets of the Trust and deliver the same upon written order or oral order confirmed in writing; (b) receive any moneys due to the Trust and deposit the same in its own banking department or elsewhere as the Trustees may direct; (c) disburse such funds upon orders or vouchers; and (d) employ one or more sub-custodians to perform such of the acts and services of the Custodian subject to the approval of the Trustees.

The Trust also may employ such Custodian as its agent to (a) keep the books and accounts of the Trust or of any Series or class and furnish clerical and accounting services; and (b) compute, if authorized to do so by the Trustees, the Net Asset Value of any Series, or class thereof, in accordance with the provisions hereof; all upon such basis of compensation as may be agreed upon between the Trustees and the Custodian.

Section 6.04 . Administration Agreement . The Trustees may in their discretion from time to time enter into an administration agreement or, if the Trustees establish multiple Series or classes, separate administration agreements with respect to each Series or class, whereby the other party to such agreement shall undertake to manage the business affairs of the Trust or of a Series or class thereof of the Trust and furnish the Trust or a Series or a class thereof with office facilities, and shall be responsible for the ordinary clerical, bookkeeping and recordkeeping services at such office facilities, and other facilities and services, if any, and all upon such terms and conditions as the Trustees may in their discretion determine.

Section 6.05 . Other Contracts . The Trustees, on behalf of the Trust or any Series or class, may enter into one or more transfer agency agreements, Shareholder service agreements, management contracts, or other similar agreement with any party or parties on terms and conditions acceptable to the Trustees.

Section 6.06 . Parties to Contracts with Service Providers . Any contract of the character described in Sections 6.01, 6.02, 6.03, 6.04 and 6.05 of this Article VI may be entered into with any corporation, firm, partnership, trust, or association, although one or more of the Trustees or officers of the Trust may be an officer, director, trustee, shareholder, or member of such other party to the contract, and no such contract shall be invalidated or rendered void or voidable by reason of the existence of any such relationship. No person holding such relationship shall be disqualified from voting on or executing the same in his capacity as Shareholder and/or Trustee, nor shall any person holding such relationship be liable merely by reason of such relationship for any loss or expense to the Trust under or by reason of said contract or accountable for any profit realized directly or indirectly therefrom, provided that the contract when entered into was not inconsistent with the provisions of this Article VI or of the By-Laws. The same person (including a firm, corporation, partnership, trust or association) may be the other party to contracts entered into pursuant to Sections 6.01, 6.02, 6.03, and 6.04 of this Article VI, and any

individual may be financially interested or otherwise affiliated with persons who are parties to any or all of the contracts mentioned in this Section 6.05.

Section 6.06 . Provisions and Amendments . Any contract entered into pursuant to Sections 6.01 or 6.02 of this Article VI shall be consistent with and subject to the requirements of Section 15 of the 1940 Act or other applicable Act of Congress hereafter enacted with respect to its continuance in effect, its termination, and the method of authorization and approval of such contract or renewal thereof. No amendments to any contract, entered into pursuant to Section 6.01 of this Article VI shall be effective unless assented to in a manner consistent with the requirements of said Section 15, as modified by any applicable rule, regulation or order of the Commission.

ARTICLE VII

SHAREHOLDERS’ VOTING POWERS AND MEETINGS

Section 7.01 . Voting Powers . The Shareholders shall have power to vote only (a) for the election of Trustees as provided in Article III, Sections 3.01 and 3.02 hereof, (b) for the removal of Trustees as provided in Article III, Section 3.03(d) hereof, (c) with respect to any investment advisory or management contract as provided in Article VI, Sections 6.01 and 6.06 hereof, (d) the amendment of this Trust Instrument to the extent provided in Article X, Section 8, (e) any termination of the Trust as provided by Article X, Section 4, and (f) with respect to such additional matters relating to the Trust as may be required by law, by this Trust Instrument, or the By-Laws or any registration of the Trust with the Commission or any State, or as the Trustees may consider necessary or desirable.

On any matter submitted to a vote of the Shareholders, all Shares shall be voted separately by individual Series or class, except: (a) when required by the 1940 Act, Shares shall be voted in the aggregate and not by individual Series or class; and (b) when the Trustees have determined that the matter affects the interests of more than one Series or class, then the Shareholders of all such affected Series or class shall be entitled to vote thereon. The Trustees also may determine that a matter affects only the interests of one (1) or more classes of a Series, in which case any such matter shall be voted on by such class or classes. Each whole share shall be entitled to one (1) vote as to any matter on which it is entitled to vote, and each fractional Share shall be entitled to a proportionate fractional vote. There shall be no cumulative voting in the election of Trustees. Shares may be voted in person or by proxy or in any manner provided for in the By-Laws. A proxy may be given in writing. The By-Laws may provide that proxies may also, or may instead, be given by any electronic or telecommunications device or in any other manner. Notwithstanding anything else herein or in the By-Laws, in the event a proposal by anyone other than the officers or Trustees of the Trust is submitted to a vote of the Shareholders of one or more Series of the Trust, or in the event of any proxy contest or proxy solicitation or proposal in opposition to any proposal by the officers or Trustees of the Trust, Shares may be voted only in person or by written proxy. Until Shares are issued, the Trustees may exercise all rights of Shareholders and may take any action required or permitted by law,

this Trust Instrument or any of the By-Laws of the Trust to be taken by Shareholders. Meetings of Shareholders shall be called and notice thereof and record dates therefor shall be given and set as provided in the Trust Instrument and the By-Laws.

Section 7.02 . Meetings of the Shareholders . Shareholders’ meetings shall be held at such time and place as the Trustees designate. Special meetings of the Shareholders of any Series or class may be called by the Trustees on the written request of Shareholders owning at least ten percent (10%) of the Outstanding Shares of such Series or class entitled to vote. Shareholders shall be entitled to at least fifteen (15) days’ notice of any meeting, given as determined by the Trustees.

Section 7.03 . Quorum and Required Vote . One-third of Shares entitled to vote in person or by proxy shall be a quorum for the transaction of business at a Shareholders’ meeting, except that where any provision of law or of this Trust Instrument permits or requests that holders of any Series shall vote as a Series (or that holders of a class shall vote as a class), then one-third of the aggregate number of Shares of that Series (or that class) entitled to vote shall be necessary to constitute a quorum for the transactions of business by that Series (or that class). Any lesser number shall be sufficient for adjournments. Any adjourned session or sessions may be held, within a reasonable time after the date set for the original meeting, without the necessity of further notice. Except when a larger vote is required by law or by any provision of this Trust Instrument or the By-Laws, a majority of the Shares voted in person or by proxy shall decide any questions and a plurality shall elect a Trustee, provided that where any provision of law or of this Trust Instrument permits or requires that the holders of any Series shall vote as a Series (or that the holders of any class shall vote as a class), then a majority of the Shares present in person or by proxy of that Series or, if required by law, subject to a Majority Shareholder Vote of that Series (or class), voted on the matter in person or by proxy shall decide the matter insofar as that Series (or class) is concerned. Shareholders may act by unanimous written consent. Actions taken by Series (or class) may be consented to unanimously in writing by Shareholders of that Series (or class).

ARTICLE VIII

DISTRIBUTIONS AND REDEMPTIONS

Section 8.01 . Distributions .

(a) The Trustees from time to time may declare and pay dividends or other distributions with respect to any Series. No dividend or distribution, including, without limitation, any distribution paid upon termination of the Trust or of any Series (or class) with respect to, nor any redemption or repurchase of, the Shares of any Series (or class) shall be effected by the Trust other than from the assets held with respect to such Series, nor shall any Shareholder of any particular Series otherwise have any right or claim against the assets held with respect to any other Series except to the extent that such Shareholder has such a right or claim hereunder as a Shareholder of such other Series. The Trustees shall have full discretion to determine which items shall be treated as income and which items as capital; and each such determination and allocation shall be conclusive and binding upon the Shareholders. The amount of such dividends or distributions and the payment of them and whether they are in cash or any other Trust Property shall be wholly in the discretion of the Trustees.

(b) Dividends and other distributions may be paid or made to the Shareholders of record at the time of declaring a dividend or other distribution or among the Shareholders of record at such other date or time or dates or times as the Trustees shall determine, which dividends or distributions, at the election of the Trustees, may be paid pursuant to a standing resolution or resolutions adopted only once or with such frequency as the Trustees may determine. The Trustees may adopt and offer to Shareholders such dividend reinvestment plans, cash dividend payout plans, or related plans as the Trustees shall deem appropriate.

(c) Anything in this Trust Instrument to the contrary notwithstanding, the Trustees at any time may declare and distribute a stock dividend pro rata among the Shareholders of a particular Series, or class thereof, as of the record date of that Series fixed as provided in paragraph (b) of this Section 8.01.

Section 8.02 . Redemptions and Repurchases . Any holder of Shares of the Trust may, by presentation of a written request, together with his or her certificates, if any, for such Shares, in proper form for transfer, at the office of the Trust, the adviser, the underwriter or the distributors, or at a principal office of a transfer or shareholder services agent appointed by the Trust (as the Trustees may determine), or in accordance with such other procedures for redemption as the Trustees may from time to time authorize, redeem his or her Shares in accordance with the provisions of this Section 8.02 for the net asset value thereof determined and computed in accordance with the By-Laws, less any redemption charge the Trustees may establish or any contingent deferred sales charge to which redemption of such Shares may be subject. Upon receipt of such written request for redemption of Shares by the Trust, the adviser, the underwriter or the distributor, or the Trust’s transfer or shareholder services agent, the Trust shall purchase such Shares and shall pay therefore the net asset value thereof next determined after such receipt or the net asset value thereof determined as of such other time fixed by the Trustees, as may be

permitted or required by the 1940 Act in each instance, less any applicable redemption charge or contingent deferred sales charge. Notwithstanding anything to the contrary, the Trust, in the discretion of the Board of Trustees, may pay all or any portion of the repurchase price in securities or other property (or any combination of securities, other property and cash) of equivalent value. To the extent permitted by law, the Trustees may retain the proceeds of any redemption of Shares required by them for payment of amounts due and owing by a Shareholder to the Trust or any Series or class or any governmental authority. The Trustees may also postpone payment of the redemption price and may suspend the right of the Shareholders to require any Series or class to redeem Shares during any period of time when and to the extent permissible under the 1940 Act.

The obligation of the Trust to redeem its Shares as set forth in this Section 8.02 shall be subject to the condition that, during any time of emergency, as hereinafter defined, such obligation may be suspended by the Trust by or under authority of the Trustees for such period or periods during such time of emergency as shall be determined by or under authority of the Trustees as provided by Section 8.04. If there is such a suspension, any Shareholder may withdraw any demand for redemption and any tender of Shares which has been received by the Trust during any such period and any tender of Shares the applicable net asset value of which would but for such suspension be calculated as of a time during such period. Upon such withdrawal, the Trust shall return to the Shareholder the certificates therefore, if any. Shareholders who do not so withdraw any such demand shall receive payment based on the net asset value next determined after the termination of such suspension. For the purposes of any such suspension “time of emergency” shall mean, either with respect to all Shares or any series of Shares, as appropriate, any period during which:

(a) the New York Stock Exchange is closed other than for customary weekend and holiday closings; or

(b) the Trustees or authorized officers of the Trust shall have determined, in compliance with any applicable rules and regulations or orders of the Commission, either that trading on the New York Stock Exchange is restricted, or that an emergency exists as a result of which (i) disposal by the Trust of securities owned by it is not reasonably practicable or (ii) it is not reasonably practicable for the Trust fairly to determine the current value of the net assets of the Trust or of a series; or

The Trust may purchase, repurchase or redeem Shares in accordance with such other methods, upon such other terms and subject to such other conditions as the Trustees may from time to time authorize at a price not exceeding the net asset value of such Shares in effect when the purchase or repurchase or any contract to purchase or repurchase is made. The Trustees may require Shareholders to redeem Shares for any reason under terms set by the Trustees, including, but not limited to, the failure of a Shareholder to supply a taxpayer identification number if

required to do so, or to have the minimum investment required, or to pay when due for the purchase of Shares issued to him.

Section 8.03 . Determination of Net Asset Value . The Trustees shall cause the Net Asset Value per Share of each Series and class to be determined from time to time in a manner consistent with applicable laws and regulations. The Trustees may delegate the power and duty to determine the Net Asset Value per Share to one or more Trustees or officers of the Trust or to a Custodian, depository, or other agent appointed for such purpose. The Net Asset Value per Share shall be determined separately for each Series and class at times the Trustees prescribe, or, in the absence of action by the Trustees, as of the close of regular trading on the New York Stock Exchange on each day for all or part of which such exchange is open for unrestricted trading.

Section 8.04 . Suspension of the Right of Redemption . The Trustees may declare a suspension of the right of redemption or postpone the date of payment as permitted under the 1940 Act. Such suspension shall take effect at such time as the Trustees shall specify but not later than the close of business on the business day next following the declaration of suspension, and thereafter there shall be no right of redemption or payment until the Trustees shall declare the suspension at an end. In the case of a suspension of the right of redemption, a Shareholder may either withdraw his request for redemption or receive payment based on the Net Asset Value per Share next determined after the termination of the suspension.

ARTICLE IX

LIMITATION OF LIABILITY AND INDEMNIFICATION

Section 9.01 . Limitation of Liability . All persons contracting with or having any claim against the Trust or a particular Series shall look only to the assets of all Series or such particular Series, respectively, for payment under such contract or claim; and neither the Trustees nor, when acting in such capacity, any of the Trust’s officers, employees or agents, whether past, present or future, shall be personally liable therefor. Every written instrument or obligation on behalf of the Trust or any Series shall contain a statement to the foregoing effect, but the absence of such statement shall not operate to make any Trustee or officer of the Trust liable thereunder. Provided they have exercised reasonable care and have acted under the reasonable belief that their actions are in the best interest of the Trust, the Trustees and officers of the Trust shall not be responsible or liable for any act or omission, or for neglect or wrongdoing by them or any officer, agent, employee, investment adviser or independent contractor of the Trust, but nothing contained in this Trust Instrument or in the Delaware Act shall protect any Trustee or officer of the Trust against liability to the Trust or to Shareholders to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office.

Section 9.02 . Indemnification .

(a) Subject to the exceptions and limitations contained in paragraph (b) below:

(i) every person who is, or has been, a Trustee or an officer, or employee of the Trust (“Covered Person”) shall be indemnified by the Trust or the appropriate Series (out of assets belonging to that Series) to the fullest extent permitted by law against liability and against all expenses reasonably incurred or paid by him in connection with any claim, action, suit, or proceeding in which he becomes involved as a party or otherwise by virtue of his being or having been a Covered Person and against amounts paid or incurred by him in the settlement thereof.

(ii) as used herein the words “claim,” “action,” “suit,” or “proceeding” shall apply to all claims, actions, suits, or proceedings (civil, criminal, administrative, or other, including appeals), actual or threatened, while in office or thereafter, and the words “liability” and “expenses” shall include, without limitation, attorneys’ fees, costs, judgments, amounts paid in settlement, fines, penalties, and other liabilities.

(b) No indemnification shall be provided hereunder to a Covered Person:

(i) who shall have been finally adjudicated by a court or body before which the proceeding was brought (A) to be liable to the Trust or its Shareholders by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his office or (B) not to have acted in good faith in the reasonable belief that his action was in the best interest of the Trust; or

(ii) in the event of a settlement not involving a final adjudication (as provided for in paragraph (b)(i)), unless there has been a determination that such Trustee or officer did not engage in willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his office:

(A) by the court or other body approving the settlement;

(B) by at least a majority of those Trustees who neither are Interested Persons of the Trust nor are parties to the matter based upon a review of readily available facts (as opposed to a full trial-type inquiry); or

(C) by written opinion of independent legal counsel based upon a review of readily available facts (as opposed to a full trial-type inquiry).

(d) To the maximum extent permitted by applicable law, expenses in connection with the preparation and presentation of a defense to any claim, action, suit, or proceeding of the character described in paragraph (a) of this Section 9.02 may be paid by the Trust or Series from time to time prior to final disposition thereof upon receipt of any undertaking by or on behalf of such Covered Person that such amount will be paid over by him to the Trust or Series if it ultimately is determined that he is not entitled to indemnification under this Section 9.02; provided, however, that either (a) such Covered Person shall have provided appropriate security for such undertaking, (b) the Trust is insured against losses arising out of any such advance payments, or (c) either a majority of the Trustees who are neither Interested Persons of the Trust nor parties to the matter, or independent legal counsel in a written opinion, shall have determined, based upon a review of readily-available facts (as opposed to a full trial-type inquiry or investigation), that there is a reason to believe that such Covered Person will be found entitled to indemnification under this Section 9.02.

Section 9.03 . Indemnification of Shareholders . In case any Shareholder or former Shareholder of any Series shall be held to be personally liable solely by reason of his being or having been a Shareholder of such Series and not because of his acts or omissions or for some other reason, the Shareholder or former Shareholder (or his heirs, executors, administrators, or other legal representatives, or, in the case of a corporation or other entity, its corporate or other general successor) shall be entitled, out of the assets belonging to the applicable Series, to be held harmless from and indemnified against all loss and expense arising from such liability. The Trust, on behalf of the affected Series, shall assume, upon request by the Shareholder, the defense of any claim made against the Shareholder for any act or obligation of the Series and satisfy any judgment thereon from the assets of the Series.

Section 9.04 . No Bond Required of Trustees . No Trustee shall be obligated to give any bond or other security for the performance of any of his duties hereunder.

Section 9.05 . No Duty of Investigation; Notice in Trust Instruments, Etc . No purchaser, lender, transfer agent or other person dealing with the Trustees or any officer, employee or agent of the Trust or a Series thereof shall be bound to make any inquiry concerning the validity of any transaction purporting to be made by the Trustees or by said officer, employee or agent or be liable for the application of money or property paid, loaned, or delivered to or on the order of the Trustees or of said officer, employee or agent. Every obligation, contract, instrument, certificate, Share, other security of the Trust or a Series thereof or undertaking, and every other act or thing whatsoever executed in connection with the Trust shall be conclusively presumed to have been executed or done by the executors thereof only in their capacity as Trustees under this Trust

Instrument or in their capacity as officers, employees or agents of the Trust or a Series thereof. Every written obligation, contract, instrument, certificate, Share, other security of the Trust or a Series thereof or undertaking made or issued by the Trustees may recite that the same is executed or made by them not individually, but as Trustees under the Trust Instrument, and that the obligations of the Trust or a Series thereof under any such instrument are not binding upon any of the Trustees or Shareholders individually, but bind only the Trust Property or the Trust Property of the applicable Series, and may contain any further recital which they may deem appropriate, but the omission of such recital shall not operate to bind the Trustees individually. The Trustees shall at all times maintain insurance for the protection of the Trust Property or the Trust Property of the applicable Series, its Shareholders, Trustees, officers, employees and agents in such amount as the Trustees shall deem adequate to cover possible tort liability, and such other insurance as the Trustees in their sole judgment shall deem advisable.

Section 9.06 . Reliance on Experts, Etc . Each Trustee, officer or employee of the Trust or a Series thereof shall, in the performance of his duties, powers and discretions hereunder, be fully and completely justified and protected with regard to any act or any failure to act resulting from reliance in good faith upon the books of account or other records of the Trust or a Series thereof, upon an opinion of counsel, or upon reports made to the Trust or a Series thereof by any of its officers or employees or by the investment adviser, the administrator, the distributor, transfer agent, selected dealers, accountants, appraisers or other experts or consultants selected with reasonable care by the Trustees, officers or employees of the Trust, regardless of whether such counsel or expert may also be a Trustee.

ARTICLE X

MISCELLANEOUS

Section 10.01 . Trust Not a Partnership . It is hereby expressly declared that a trust and not a partnership is created hereby. No Trustee hereunder shall have any power to bind personally either the Trust’s officers or any Shareholder. All persons extending credit to, contracting with, or having any claim against the Trust or the Trustees shall look only to the assets of the appropriate Series, or, if the Trustees shall have yet to have established the Series, the Trust for payment under such credit, contract, or claim; and neither the Shareholders nor the Trustees, nor any of their agents, whether past, present, or future, shall be personally liable therefor. Nothing in this Trust Instrument shall protect a Trustee against any liability to which the Trustee otherwise would be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of the office of Trustee hereunder.

Section 10.02 . Trustee Action . The exercise by the Trustees of their powers and discretions hereunder in good faith and with reasonable care under the circumstances then prevailing shall be binding upon everyone interested. Subject to the provisions of Article IX hereof and to Section 10.01 of this Article X, the Trustees shall not be liable for errors of judgment or mistakes of fact or law.

Section 10.03 . Establishment of Record Dates . For the purpose of determining the Shareholders of any Series (or class) who are entitled to receive payment of any dividend or of any other distribution, the Trustees may from time to time fix a date, which shall be before the date for the payment of such dividend or such other payment, as the record date for determining the Shareholders of such Series (or class) having the right to receive such dividend or distribution. Without fixing a record date, the Trustees may for distribution purposes close the register or transfer books for one or more Series (or classes) at any time prior to the payment of a distribution. Nothing in this Section shall be construed as precluding the Trustees from setting different record dates for different Series (or classes). The Trustees may fix in advance a date, to be determined by the Trustees and no later than that permitted by applicable law, before the date of any Shareholders’ meeting, or the date for the payment of any dividends or other distributions, or the date for the allotment of rights, or the date when any change or conversion or exchange of Shares shall go into effect as a record date for the determination of the Shareholders entitled to notice of, and to vote at, any such meeting, or entitled to receive payment of such dividend or other distribution, or to receive any such allotment of rights, or to exercise such rights in respect of any such change, conversion or exchange of Shares.

Section 10.04 . Termination of Trust .

(a) This Trust shall continue without limitation of time but subject to the provisions of paragraph (b) of this Section 10.04.

(b) The Trustees, subject to a Majority Shareholder Vote of each Series affected by the matter, or, if applicable, to a Majority Shareholder Vote of the Trust, and subject to a vote of a majority of the Trustees, may:

(i) sell and convey all or substantially all of the assets of the Trust or any affected Series to another trust, partnership, association, or corporation, or to a separate series of shares thereof, organized under the laws of any state, which trust, partnership, association, or corporation is an open-end management investment company as defined in the 1940 Act, or is a series thereof, for adequate consideration which may include the assumption of all outstanding obligations, taxes, and other liabilities, accrued or contingent, of the Trust or any affected Series, and which may include shares of beneficial interest, stock, or other ownership interests of such trust, partnership, association, or corporation or of a series thereof; or

(ii) at any time, sell and convert into money all of the assets of the Trust or any affected series.

Upon making reasonable provision, in the determination of the Trustees, for the payment of all such liabilities in either (i) or (ii) of this Section 10.04(b), by such assumption or otherwise, the Trustees shall distribute the remaining proceeds or assets (as the case may be) of each Series (or class) ratably among the holders of Shares of that Series then outstanding.

(c) The Trustees may take any of the actions specified in Sections 10.04(b)(i) and (ii) above without obtaining the approval of shareholders if a majority of the Trustees determines that the continuation of the Trust or Series (or class) is not in the best interests of the Trust, such Series (or class), or their respective Shareholders as a result of factors or events adversely affecting the ability of the Trust or such Series (or class) to conduct its business and operations in an economically viable manner. Such factors and events may include the inability of the Trust or a Series (or class) to maintain its assets at an appropriate size, changes in laws or regulations governing the Trust or the Series (or class) or affecting assets of the type in which the Trust or Series (or class) invests, or economic developments or trends having a significant adverse impact on the business or operations of the Trust or such Series (or class).

(d) Upon completion of the distribution of the remaining proceeds or the remaining assets as provided in paragraph (b) of this Section 10.04, the Trust or any affected Series shall terminate and the Trustees and the Trust shall be discharged of any and all further liabilities and duties hereunder and the right, title, and interest of all parties with respect to the Trust or Series shall be canceled and discharged.

Upon termination of the Trust, following completion of winding up of the Trust’s business, the Trustees shall cause a certificate of cancellation of the Trust’s certificate of trust to be filed in accordance with the Delaware Act, which certificate of cancellation may be signed by any one Trustee.

Section 10.05 . Reorganization .

(a) Notwithstanding anything else herein but subject to applicable federal and state law, the Trustees may, without any Shareholder vote or approval, (a) cause the Trust to merge or consolidate with or into, or be reorganized as, another trust, or a corporation, partnership, limited liability company, association, or other organization, organized under the laws of Delaware or any other jurisdiction, or a segregated portfolio of assets (“series”) of any of the foregoing (each, as used in this paragraph, an “Entity”), if the surviving or resulting Entity is the Trust or another open-end management investment company, within the meaning of the 1940 Act, that will succeed to or assume the Trust’s registration under the 1940 Act, (b) cause any Series to merge or consolidate with or into, or be reorganized as, a newly organized Entity in a transaction or series of transactions intended to qualify as a reorganization under section 368(a)(1)(F) of the Tax Code or a successor provision, (c) cause the Trust to incorporate under the laws of Delaware or any other jurisdiction, and/or (d) cause to be organized, or assist in organizing, an Entity to acquire all or part of the Trust Property or of the Assets belonging to a Series or to carry on any business in which the Trust directly or indirectly has any interest and to sell, convey, and transfer all or part of the Trust Property or of the Assets belonging to a Series to any such Entity in exchange for shares or other equity securities thereof or otherwise and to lend money to, subscribe for the shares or other equity securities of, and enter into any contracts with any such Entity; provided that the Trustees shall provide written notice to affected Shareholders of any transaction whereby the Trust sells, conveys, or otherwise transfers all or part of the Trust Property or of the Assets belonging to any Series to another Entity or the Trust or any Series merges or consolidates with or into, or is reorganized as, another Entity. The transactions

described in this Section 10.05 may be effected through share-for-share exchanges, transfers or sale of assets, shareholder in-kind redemptions and purchases, exchange offers, or any other method the Trustees approve.

(b) Any agreement of merger or consolidation or certificate of merger may be signed by a majority of the Trustees, and facsimile signatures conveyed by electronic or telecommunication means shall be valid. Pursuant to and in accordance with Section 3815(f) of the Delaware Act, an agreement of merger or consolidation approved by the Trustees in accordance with this Section 10.05 may affect any amendment to this Trust Instrument or affect the adoption of a new trust instrument of the Trust if it is the surviving or resulting trust in the merger or consolidation.

Section 10.06 . Filing of Copies; References; Headings . The original or a copy of this Trust Instrument and the original or a copy of each amendment hereof or Trust Instrument supplemental hereto shall be kept at the office of the Trust, where it may be inspected by any Shareholder. Anyone dealing with the Trust may rely on a certificate by an officer or Trustee of the Trust as to whether or not any such amendments or supplements have been made and as to any matters in connection with the Trust hereunder, and, with the same effect as if it were the original, may rely on a copy certified by an officer or Trustee of the Trust to be a copy of this Trust Instrument or of any such amendment or supplemental Trust Instrument, and references to this Trust Instrument, and all expressions such as or similar to “herein,” “hereof,” and “hereunder” shall be deemed to refer to this Trust Instrument as amended or affected by any such supplemental Trust Instrument. All expressions such as or similar to “his,” “he,” and “him” shall be deemed to include the feminine and neuter, as well as masculine, genders. Headings are placed herein for convenience of reference only and, in case of any conflict, the text of this Trust Instrument, rather than the headings, shall control. This Trust Instrument may be executed in any number of counterparts each of which shall be deemed an original.

Section 10.07 . Applicable Law . The trust set forth in this instrument is made in the State of Delaware, and the Trust and this Trust Instrument, and the rights and obligations of the Trustees and Shareholders hereunder, are to be governed by and construed and administered according to the Delaware Act and the laws of said State; provided, however, that there shall not be applicable to the Trust, the Trustee or this Trust Instrument (a) the provisions of Section 3540 of Title 12 of the Delaware Code or (b) any provisions of the laws (statutory or common) of the State of Delaware (other than the Delaware Act) pertaining to trusts which relate to or regulate (i) the filing with any court or governmental body or agency of trustee accounts or schedules of trustee fees and charges, (ii) affirmative requirements to post bonds for trustees, officers, agents, or employees of a trust, (iii) the necessity for obtaining court or other governmental approval concerning the acquisition, holding, or disposition of real or personal property, (iv) fees or other sums payable to trustees, officers, agents, or employees of a trust, (v) the allocation of receipts and expenditures to income and principal, (vi) restrictions or limitations on the permissible nature, amount, or concentration of trust investments or requirements relating to the titling, storage, or other manner of holding of trust assets, or (vii) the establishment of fiduciary or other standards or responsibilities or limitations on the acts or powers of trustees, which are inconsistent with the limitations or liabilities or authorities and powers of the Trustees set forth

or referenced in this Trust Instrument. The Trust shall be of the type commonly called a “Delaware statutory trust,” and, without limiting the provisions hereof, the Trust may exercise all powers or privileges afforded to trusts or actions that may be engaged in by trusts under the Delaware Act, and the absence of a specific reference herein to any such power, privilege, or action shall not imply that the Trust may not exercise such power or privilege or take such actions.

Section 10.08 . Amendments . Except as specifically provided herein, the Trustees, without Shareholder vote, may amend or otherwise supplement this Trust Instrument by making an amendment, a Trust Instrument supplemental hereto, or an amended and restated trust instrument. Shareholders shall have the right to vote (i) on any amendment which would affect their right to vote granted in Section 7.01 of Article VII hereof, (ii) on any amendment to this Section 10.08, (iii) on any amendment as may be required by law or by the Trust’s registration statement filed with the Commission, and (iv) on any amendment submitted to the Shareholders by the Trustees. Any amendment required or permitted to be submitted to Shareholders which, as the Trustees determine, shall affect the Shareholders of one or more Series shall be authorized by vote of the Shareholders of each Series affected and no vote of Shareholders of a Series not affected shall be required. Notwithstanding anything else herein, any amendment to Article IX hereof shall not limit the rights to indemnification or insurance provided therein with respect to action or omission of Covered Persons prior to such amendment.

Section 10.09 . Derivative Actions . In addition to the requirements set forth in Section 3816 of the Delaware Act, a Shareholder may bring a derivative action on behalf of the Trust only if the following conditions are met:

(a) Shareholders eligible to bring such derivative action under the Delaware Act who hold at least 10% of the Outstanding Shares of the Trust, or 10% of the Outstanding Shares of the Series or class to which such action relates, shall join in the request for the Trustees to commence such action; and

(b) The Trustees must be afforded a reasonable amount of time to consider such Shareholder request and to investigate the basis of such claim. The Trustees shall be entitled to retain counsel or other advisers in considering the merits of the request and shall require an undertaking by the Shareholders making such request to reimburse the Trust for the expense of any such advisers in the event that the Trustees determine not to bring such action.

Section 10.10 . Fiscal Year . The fiscal year of each Series shall end on a specified date as set forth in the By-Laws, provided, however, that the Trustees, without Shareholder approval, may change the fiscal year of the Trust.

Section 10.11 . Provisions in Conflict with Law . The provisions of this Trust Instrument are severable, and if the Trustees shall determine, with the advice of counsel, that any of such provisions is in conflict with the 1940 Act, with the regulated investment company provisions of the Tax Code or with other applicable laws and regulations, the conflicting provision shall be deemed never to have constituted a part of this Trust Instrument; provided, however, that such

determination shall not affect any of the remaining provisions of this Trust Instrument or render invalid or improper any action taken or omitted prior to such determination. If any provision of this Trust Instrument shall be held invalid or improper, unenforceability shall attach only to such provision in such jurisdiction and shall not in any manner affect such provisions in any other jurisdiction or any other provision of this Trust Instrument in any jurisdiction.

IN WITNESS WHEREOF, the undersigned, being the initial Trustee of the Trust, has executed this instrument the 31st day of July, 2008.


		Frank E. Holmes
		as Trustee and not individually

Exhibit (b)

BY-LAWS
OF
U.S. GLOBAL INVESTORS FUNDS

July 31, 2008

These By-Laws of U.S. Global Investors Funds (the “Trust”), a Delaware statutory trust, are made and adopted pursuant to Article IV, Section 4.01(e) of the Agreement and Declaration of Trust, dated July 31, 2008 and are subject to the Agreement and Declaration of Trust, as from time to time amended, supplemented, or restated. Capitalized terms used herein which are defined in the Agreement and Declaration of Trust are used as therein defined.

ARTICLE I
PRINCIPAL OFFICE

The principal office of the Trust shall be located in San Antonio, Texas or such other location as the Trustees, from time to time, may determine. The Trust may establish and maintain such other offices and places of business as the Trustees, from time to time, may determine.

ARTICLE II
TRUSTEES

Section 1 . Management of the Trust; General . The business and affairs of the Trust shall be managed by, or under the direction of, the Trustees, and the Trustees shall have all powers necessary and desirable to carry out their responsibilities, so far as such powers are not inconsistent with the laws of the State of Delaware, the Agreement and Declaration of Trust, or these By-Laws.

Section 2 . Executive and Other Committees . The Trustees may elect from their own number an executive committee, which shall have any or all of the powers of the Trustees while the Trustees are not in session. The Trustees also may elect from their own number other committees from time to time. The number composing such committees and the powers conferred upon the same are to be determined by a vote of a majority of the Trustees. All members of such committees shall hold such offices at the pleasure of the Trustees. The Trustees may abolish any such committee at any time. Any committee to which the Trustees delegate any of their powers or duties shall keep records of its meetings and shall report its actions to the Trustees. The Trustees shall have the power to rescind any action of any committee, but no such rescission shall have a retroactive effect.

Section 3 . Chairman of the Trustees . In accordance with Section 4.05 of the Agreement and Declaration of Trust, the Trustees shall elect a Chairman from among the Trustees. The

Chairman shall preside at meetings of the Shareholders and of the Trustees, and he shall have such other powers and duties as may be prescribed by the Trustees. The Chairman shall in the absence or disability of the President exercise the powers and perform the duties of the President. The Chairman may be removed from office, whenever in the judgment of the Trustees the best interest of the Trust will be served thereby, by the vote of the majority of the Trustees given at any regular or special meeting of the Trustees.

Section 4 . Compensation . Each Trustee, each committee member, and the Chairman of the Trustees may receive such compensation for his services and reimbursement for his expenses as may be fixed from time to time by resolution of the Trustees.

ARTICLE III
OFFICERS AND THEIR ELECTION

Section 1 . Executive Officers . The executive officers of the Trust shall be a President, a Secretary and a Chief Financial Officer or Treasurer. If the Trustees shall elect one or more Executive Vice Presidents or Vice Presidents, each such Executive Vice President and Vice President shall be an executive officer. No executive officer need be a Trustee. A Chairman elected pursuant to Article II, Section 3 of these By-Laws may also be an executive officer. Any two or more executive offices, except those of President and Vice President, may be held by the same person. A person holding more than one office may not act in more than one capacity to execute, acknowledge or verify on behalf of the Trust an instrument required by law to be executed, acknowledged and verified by more than one officer. The executive officers of the Trust shall be elected at each annual meeting of Trustees.

Section 2 . Other Officers and Agents . The Trustees may also elect one or more Assistant Chief Financial Officers, Vice Presidents, Assistant Secretaries and Assistant Treasurers, and such other officers and agents as the Trustees shall at any time and from time to time deem to be advisable. The President may also appoint, rename, or fix the duties, compensations or terms of office of one or more Assistant Vice Presidents, Assistant Secretaries and Assistant Treasurers as may be necessary or appropriate to facilitate management of the Trust’s affairs.

Section 3 . Election and Tenure . At the initial organization meeting and thereafter at each annual meeting of the Trustees, the Trustees shall elect the President, Secretary, Chief Accounting Officer, Chief Financial Officer or Treasurer, Chief Compliance Officer and such other officers as the Trustees shall deem necessary or appropriate in order to carry out the business of the Trust. Such officers shall hold office until the next annual meeting of the Trustees and until their successors have been duly elected and qualified. The Trustees may fill any vacancy in office or add any additional officers at any time.

Section 4 . Resignation . Any officer of the Trust may resign, notwithstanding Section 3.3 of these By-Laws, by filing a written resignation with the President, the Trustees, or the Secretary,

which resignation shall take effect on being so filed or at such later date as may be therein specified.

Section 5 . President . The President shall be the chief executive officer of the Trust and, subject to the direction of the Trustees, shall have general administration of the business and policies of the Trust. Except as the Trustees otherwise may order, the President shall have the power to grant, issue, execute, or sign such powers of attorney, proxies, agreements, or other documents as may be deemed advisable or necessary in the furtherance of the interest of the Trust or any Series thereof. He also shall have the power to employ attorneys, accountants, and other advisers, agents and counsel for the Trust. The President shall perform such duties additional to all of the foregoing as the Trustees from time to time may designate.

Section 6 . Treasurer . The Treasurer shall be the chief financial officer of the Trust. He shall undertake the general supervision of the monies, funds, securities, notes receivable and other valuable papers and documents of the Trust, and shall have and exercise under the supervision of the Trustees and of the President all powers and duties normally incident to the office. He shall deliver all funds and securities of the Trust which may come into his hands to such company as the Trustees shall employ as Custodian in accordance with the Agreement and Declaration of Trust and applicable provisions of law. He shall make annual reports regarding the business and condition of the Trust, which reports shall be preserved in Trust records, and he shall furnish such other reports regarding the business and condition of the Trust as the Trustees from time to time may require. The Treasurer shall perform such additional duties as the Trustees from time to time may designate.

Section 7 . Secretary . The Secretary shall record and keep the minutes of the meetings and proceedings and any written consents evidencing actions of the Trustees, the Shareholders and any committees of the Trustees in one or more books provided for that purpose. He shall have the custody of the corporate records and the seal of the Trust and, when authorized by the Trustees, cause the seal of the Trust to be affixed to any document requiring it. The Secretary shall perform such additional duties as commonly incident to the office of secretary in a statutory trust or business corporation organized under the laws of the State of Delaware and, in general, perform such additional duties as the Trustees from time to time may designate.

Section 8 . Vice President . Any Vice President of the Trust shall perform such duties as the Trustees or the President from time to time may designate. At the request of, or in the absence or disability of the President, the Vice President (or, if there are two (2) or more Vice Presidents, then the senior of the Vice Presidents present and able to act) may perform all the duties of the President and, when so acting, shall have all the powers of and be subject to all the restrictions upon the President. Subject to the direction of the President, each Vice President shall have the power in the name and on behalf of the Trust to grant, issue, execute or sign such powers of attorney, proxies, agreements or other documents as may be deemed advisable or necessary in the furtherance of the interest of the Trust or any Series thereof.

Section 9 . Assistant Treasurer . Any Assistant Treasurer of the Trust shall perform such duties as the Trustees or the Treasurer from time to time may designate, and, in the absence of the Treasurer, the senior Assistant Treasurer, present and able to act, may perform all the duties of the Treasurer.

Section 10 . Assistant Secretary . Any Assistant Secretary of the Trust shall perform such duties as the Trustees or the Secretary from time to time may designate, and, in the absence of the Secretary, the senior Assistant Secretary, present and able to act, may perform all the duties of the Secretary.

Section 11 . Chief Compliance Officer . The Board of Trustees, including a majority of the Independent Trustees, shall be responsible for appointing a Chief Compliance Officer, in accordance with the requirements of Rule 38a-1 of the Investment Company Act of 1940 (“the 1940 Act”).

Section 12 . Subordinate Officers . The Trustees from time to time may appoint such other officers or agents as the Trustees may deem advisable, each of whom shall have such title, hold office for such period, have such authority, and perform such duties as the Trustees may determine. The Trustees from time to time may delegate to one (1) or more officers or committees of Trustees the power to appoint any such subordinate officers or agents and to prescribe their respective terms of office, authorities, and duties.

Section 13 . Surety Bonds . The Trustees may require any officer or agent of the Trust to execute a bond (including, without limitation, any bond required by the 1940 Act and the rules and regulations of the U.S. Securities and Exchange Commission (“Commission”)) to the Trust in such sum and with such surety or sureties as the Trustees may determine, conditioned upon the faithful performance of such officer’s or agent’s duties to the Trust including responsibility for negligence and for the accounting of any of the Trust’s property, funds, or securities that may come into such officer’s or agent’s hands.

Section 14 . Removal . Any officer of the Trust may be removed from office whenever a majority of the Trustees believe it would be in the Trust’s best interests to do so. This provision shall not prevent the making of a contract of employment for a definite term with any officer and shall have no effect upon any cause of action which any officer may have as a result of removal in breach of contract of employment. In addition, any officer or agent appointed in accordance with the provisions of Section 12 hereof may be removed, either with or without cause, by any officer upon whom such power of removal shall have been conferred by the Trustees.

Section 15 . Remuneration . The salaries or other compensation, if any, of the officers of the Trust shall be fixed from time to time by resolution of the Trustees.

ARTICLE IV
SHAREHOLDERS’ MEETING

Section 1 . Chairman . The Chairman shall act as chairman at all meetings of the Shareholders, or the Trustees present at each meeting may elect a temporary chairman for the meeting, who may be a Trustee.

Section 2 . Special Meetings . A special meeting of the Shareholders shall be called by the Secretary whenever (i) ordered by the Chairman, the Trustees or the President or (ii) subject to Section 4.3 of these By-Laws, requested in writing by the holder or holders of at least 1/3 of the Outstanding Shares entitled to vote. If the meeting is a meeting of the Shareholders of one (1) or more Series or classes of Shares, but not a meeting of all Shareholders of the Trust, then only special meetings of the Shareholders of such one (1) or more Series or classes shall be called and only the Shareholders of such one (1) or more Series or classes shall be entitled to notice of and to vote at such meeting. The record date for determining the Shareholders entitled to notice of and to vote at such meeting shall be established as set forth in the Agreement and Declaration of Trust.

Section 3 . Notices . Except as above provided, notices of any meeting of the Shareholders shall be given by the Secretary by delivering, by any method permitted by applicable law and approved by the Trustees, or mailing, postage prepaid, to each Shareholder entitled to vote at said meeting, written or printed notification of such meeting at least fifteen (15) days before the meeting, to such address as may be registered with the Trust by the Shareholder. Notice of any Shareholder meeting need not be given to any Shareholder if a written waiver of notice, executed before or after such meeting, is filed with the record of such meeting, or to any Shareholder who shall attend such meeting in person or by proxy. Notice of adjournment of a Shareholders’ meeting to another time or place need not be given, if such time and place are announced at the meeting, reasonable notice is given to persons present at the meeting, and the adjourned meeting is held within a reasonable time after the date set for the original meeting.

Section 4 . Voting . Subject to the provisions of the Agreement and Declaration of Trust, Shareholders entitled to vote may vote either in person or by proxy, provided that an instrument authorizing such proxy to act is either (i) executed by the Shareholder in writing and dated not more than eleven (11) months before the meeting, unless this instrument specifically provides for a longer period or (ii) an electronic, telephonic, computerized, or other alternative to execution of a written instrument authorizing the proxy to act is received no more than eleven (11) months before the meeting. However, in the event a proposal by anyone other than the officers or Trustees of the Trust is submitted to a vote of the Shareholders of one (1) or more Series or of the Trust, or in the event of any proxy contest or proxy solicitation or proposal in opposition to any proposal by the officers or Trustees of the Trust, Shares may be voted only in person or by written proxy. Proxies shall be delivered to the Secretary of the Trust or other persons responsible for recording the proceedings before being voted. A proxy with respect to Shares held in the name of two (2) or more persons shall be valid if executed by one (1) of them unless at or prior to exercise of such proxy the Trust receives specific written notice to the contrary from any one (1) of them. Unless otherwise specifically limited by their terms, proxies shall

entitle the holder thereof to vote at any adjournment of a meeting. A proxy purporting to be exercised by or on behalf of a Shareholder shall be deemed valid unless challenged at or prior to its exercise and the burden or providing invalidity shall rest on the challenger. At all meetings of the Shareholders, unless the voting is conducted by inspectors, all questions relating to the qualifications of voters, the validity of proxies, and the acceptance or rejection of votes shall be decided by the Chairman of the meeting.

Section 5 . Fixing Record Dates . For the purpose of determining the Shareholders who are entitled to notice of or to vote or act at a meeting, including any adjournment thereof, the Trustees may from time to time fix a record date in the manner provided in Article X, Section 10.03 of the Agreement and Declaration of Trust. If the Trustees do not, prior to any meeting of the Shareholders, so fix a record date, then the record date for determining Shareholders entitled to notice of or to vote at the meeting of Shareholders shall be the later of (i) the close of business on the day on which the notice of meeting is first mailed to any Shareholder, or (ii) the thirtieth day before the meeting.

Section 6 . Inspectors of Election . In advance of any meeting of Shareholders, the Trustees may appoint Inspectors of Election to act at the meeting or any adjournment thereof. If Inspectors of Election are not appointed in advance by the Trustees, the chairman of any meeting of the Shareholders may, and on request of any Shareholder or his proxy shall, appoint one or more Inspectors of Election of the meeting. In case any person appointed as Inspector of Election fails to appear or fails or refuses to act, the vacancy may be filled by appointment made by the Trustees in advance of the convening of the meeting by the person acting as chairman. The Inspectors of Election shall determine the Interests owned by Shareholders, the Interests represented at the meeting, the existence of a quorum, all matters related to the giving and voting of the proxies and the authenticity, validity and effect of proxies. The Inspectors of Election shall receive votes, ballots or consents, shall hear and determine all challenges and questions in any way arising in connection with a right to vote, shall count and tabulate all votes or consents, determine the results, and do such other acts as may be proper to conduct the election or vote with fairness to all Shareholders. The number of Inspectors of Election shall be either one (1) or three (3). If there is more than one Inspector of Election, the decision, act or certificate of a majority is effective in all respects as the decision, act or certificate of all Inspectors of Election. On request of the chairman, if any, of the meeting, or of any Shareholder or his proxy, the Inspectors of Election shall make a report in writing of any challenge, question or matter determined by them and shall execute a certificate of any facts found by them.

Section 7 . Place of Meeting . All special meetings of the Shareholders shall be held at the principal place of business of the Trust or at such other place in the United States as the Trustees may designate.

Section 8 . Action Without a Meeting . Any action to be taken by Shareholders may be taken without a meeting if all Shareholders entitled to vote on the matter consent to the action in writing and the written consents are filed with the records of meetings of Shareholders of the

Trust. Such consent shall be treated for all purposes as a vote at a meeting of the Shareholders held at the principal place of business of the Trust.

Section 9 . Records at Shareholders’ Meetings; Inspection of Records . At each meeting of the Shareholders, there shall be made available for inspection the minutes of the previous meeting of Shareholders and a list of the Shareholders, certified to be true and correct by the Secretary or other proper agent of the Trust, as of the record date of the meeting. Such list of Shareholders shall contain the names of all Shareholders in alphabetical order and the addresses and Interests owned by each such Shareholder. Shareholders shall have such other rights and procedures of inspection of the books and records of the Trust as are granted to shareholders of a Delaware business corporation.

ARTICLE V
SHARES OF BENEFICIAL INTEREST

Section 1 . Beneficial Interest . The beneficial interest in the Trust at all times shall be divided into such transferable Shares of one (1) or more separate and distinct Series, or classes thereof, as the Trustees from time to time shall create and establish. The number of Shares is unlimited, and each Share of each Series or class thereof shall be without par value and shall represent an equal proportionate interest with each other Share in the Series, none having priority or preference over another, except to the extent that such priorities or preferences are established with respect to one (1) or more classes of shares consistent with applicable law and any rule or order of the Commission.

Section 2 . Transfer of Shares . The Shares of the Trust shall be transferable, so as to affect the rights of the Trust, only by transfer recorded on the books of the Trust, in person or by attorney. The Trust, or its transfer agents, shall be authorized to refuse any transfer unless and until presentation of such evidence as may be reasonably required to show that the requested transfer is proper.

Section 3 . Equitable Interest Not Recognized . The Trust shall be entitled to treat the holder of record of any Share or Shares of beneficial interest as the holder in fact thereof, and shall not be bound to recognize any equitable or other claim or interest in such Share or Shares on the part of any other person except as otherwise may be expressly provided by law.

Section 4 . Share Certificate . In lieu of issuing certificates for Shares, the Trustees or the transfer or shareholder services agent, or any such person authorized by the Trustees, either may issue receipts therefor or may keep accounts upon the books of the Trust for the record holders of such Shares, who in either case shall be deemed, for all purposes hereunder, to be holders of certificates for such Shares as if they had accepted such certificates and shall be held to have expressly assented and agreed to the terms hereof.

ARTICLE VI

OWNERSHIP OF ASSETS OF THE TRUST

The Trustees, acting for and on behalf of the Trust, shall be deemed to hold legal and beneficial ownership of any income earned on securities held by the Trust issued by any business entity formed, organized or existing under the laws of any jurisdiction other than a state, commonwealth, possession, territory or colony of the United States or the laws of the United States.

ARTICLE VII
DEPOSITORIES

The funds of the Trust shall be deposited in such custodians as the Trustees shall designate and shall be drawn out on checks, drafts or other orders assigned by such officer, officers agent or agents (including any adviser, administrator or manager), as the Trustees may from time to time authorize.

ARTICLE VIII
SIGNATURES

All contracts and other instruments shall be executed on behalf of the Trust by such officer, officers, agent or agents, as provided in these By-Laws or as the Trustees may from time to time by resolution provide.

ARTICLE IX
INSPECTION OF BOOKS

The Trustees from time to time shall determine whether and to what extent, at what times and places, and under what conditions and regulations the accounts and books of the Trust or any of them shall be open to the inspection of the Shareholders; and no Shareholder shall have any right to inspect any account, book or document of the Trust except as conferred by law or otherwise by the Trustees or by resolution of the Shareholders.

ARTICLE X
INSURANCE OF OFFICERS, TRUSTEES, AND EMPLOYEES

The Trust may purchase and maintain insurance on behalf of any Covered Person or employee of the Trust, including any Covered Person or employee of the Trust who is or was serving at the request of the Trust as a Trustee, officer, or employee of a corporation, partnership, association, joint venture, trust, or other enterprise, against any liability asserted against him and incurred by him in any such capacity or arising out of his status as such, whether or not the Trustees would have the power to indemnify him against such liability. No Covered Person shall be held to any personal liability, nor shall resort be had to their private property for the satisfaction of any obligation or claim or otherwise in connection with the affairs of the Trust;

provided that nothing contained in the Agreement and Declaration of Trust or the By-Laws shall protect a Covered Person against any liability to the Trust or its Shareholders to which he otherwise would be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his office.

ARTICLE XI
SEAL

The seal of the Trust shall be circular in form and bear the inscription:

U.S. GLOBAL INVESTORS FUNDS
THE STATE OF DELAWARE

The form of the seal shall be subject to alteration by the Trustees and the seal may be used by causing the seal or a facsimile to be impressed, affixed, printed or otherwise reproduced.

Any officer or Trustee of the Trust, or agent of the Trust acting in such capacity, shall have the authority to affix the seal of the Trust to any document, instrument, or other paper executed and delivered by or on behalf of the Trust; however, unless otherwise required by the Trustees, it shall not be necessary to place the seal on, and the seal’s absence shall not impair the validity of, any document, instrument, or other paper executed by or on behalf of the Trust.

ARTICLE XII
FISCAL YEAR

The fiscal year of each Series of the Trust shall end on such date as the Trustees from time to time shall determine.

ARTICLE XIII
AMENDMENTS

In accordance with Article IV, Section 4.01(e) of the Agreement and Declaration of Trust, the Trustees shall have the power to alter, amend of repeal these By-Laws or adopt new By-Laws at any time. Action by the Trustees with respect to the By-Laws shall be taken by an affirmative vote of a majority of the Trustees. The Trustees shall in no event adopt By-Laws which are in conflict with the Agreement and Declaration of Trust, and any apparent inconsistency shall be construed in favor of the related provisions in the Agreement and Declaration of Trust.

ARTICLE XIV
REPORT TO SHAREHOLDERS

The Trustees, at least semi-annually, shall submit to the Shareholders a written financial report of the Trust, including financial statements which shall be certified at least annually by independent public accountants.

ARTICLE XV
HEADINGS

Headings are placed in these By-Laws for convenience of reference only, and, in case of any conflict, the text of these By-Laws rather than the headings shall control.

Exhibit (d)1

INVESTMENT ADVISORY AGREEMENT

INVESTMENT ADVISORY AGREEMENT (the “Agreement”) made as of this 1st day of October, 2008 by and between the U.S. Global Investors Funds (the “Trust”), a Delaware statutory trust registered as an investment company under the Investment Company Act of 1940, as amended (the “1940 Act”), and U.S. Global Investors, Inc. (the “Adviser”), a Texas corporation with its principal place of business in San Antonio, Texas.

W I T N E S S E T H

WHEREAS, the Board of Trustees (the “Board”) of the Trust has selected the Adviser to act as investment adviser to the Trust on behalf of the series set forth on Schedule A to this Agreement (each, a “Fund” and, collectively, the “Funds”), as such Schedule may be amended from time to time upon mutual agreement of the parties, and to provide certain related services, as more fully set forth below, and to perform such services under the terms and conditions hereinafter set forth;

NOW, THEREFORE, in consideration of the mutual covenants and benefits set forth herein, the Trust and the Adviser do hereby agree as follows:

1. The Adviser’s Services.

(a) Discretionary Investment Advisory Services . The Adviser shall act as investment adviser with respect to the Funds. In such capacity, the Adviser shall, subject to the supervision of the Board, regularly provide the Funds with investment research, advice and supervision and shall furnish continuously an investment program for the Funds, consistent with the respective investment objectives and policies of each Fund. The Adviser shall determine, from time to time, what securities shall be purchased for the Funds, what securities shall be held or sold by the Funds and what portion of the Funds’ assets shall be held uninvested in cash, subject always to the provisions of the Trust’s Agreement and Declaration of Trust, By-Laws and its registration statement on Form N-1A (the “Registration Statement”) under the 1940 Act, and under the Securities Act of 1933, as amended (the “1933 Act”), covering Fund shares, as filed with the U.S. Securities and Exchange Commission (the “Commission”), and to the investment objectives, policies and restrictions of the Funds, as each of the same shall be from time to time in effect. To carry out such obligations, the Adviser shall exercise full discretion and act for the Funds in the same manner and with the same force and effect as the Funds themselves might or could do with respect to purchases, sales or other transactions (including any purchases or sales arising in connection with rights offerings or other corporate event), as well as with respect to all other such things necessary or incidental to the furtherance or conduct of such purchases, sales or other transactions. No reference in this Agreement to the Adviser having full discretionary authority over each Fund’s investments shall in any way limit the right of the Board, in its sole discretion, to establish or revise policies in connection with the management of a Fund’s assets or to otherwise exercise its right to control the overall management of a Fund.

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(b) Management Services . The Adviser shall perform (or arrange for the performance by its affiliates of) the management services necessary for the operation of the Funds. The Adviser shall, subject to the supervision of the Board, perform various services for the Funds, including but not limited to: (i) providing the Funds with investment research, advice and supervision; (ii) furnishing continuously an investment program for the Funds, consistent with the respective investment objectives and policies of each Fund; (iii) placing orders for the purchase and sale of portfolio securities for the account of each Fund with brokers or dealers selected by the Adviser; (iv) preparing and submitting reports and meeting materials to the Board; (v) coordinating with the Funds’ service providers to assist with the preparation of all general shareholder communications, including shareholder reports; (vi) conducting shareholder relations; and (vii) investigating the development of and developing and implementing, if appropriate, management services designed to enhance the value or convenience of the Funds as an investment vehicle.

(c) Compliance . The Adviser agrees to comply with the requirements of the 1940 Act, the Investment Advisers Act of 1940, as amended (the “Advisers Act”), the 1933 Act, the Securities Exchange Act of 1934, as amended (the “1934 Act”), the Commodity Exchange Act and the respective rules and regulations thereunder, as applicable, as well as with all other applicable federal and state laws, rules, regulations and case law that relate to the services and relationships described hereunder and to the conduct of its business as a registered investment adviser. The Adviser also agrees to comply with the objectives, policies and restrictions set forth in the Registration Statement, as amended or supplemented, of the Funds, and with any policies, guidelines, instructions and procedures approved by the Board and provided to the Adviser. In selecting each Fund’s portfolio securities and performing the Adviser’s obligations hereunder, the Adviser shall cause the Fund to comply with the diversification and source of income requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), for qualification as a regulated investment company. The Adviser shall maintain compliance procedures that it believes are reasonably designed to prevent violation of the Federal Securities Laws. No supervisory activity undertaken by the Board shall limit the Adviser’s full responsibility for any of the foregoing.

(d) Recordkeeping . The Adviser agrees to preserve any Trust records that it creates or possesses that are required to be maintained under the 1940 Act and the rules thereunder for the periods prescribed by Rule 31a-2 under the 1940 Act. In compliance with the requirements of Rule 31a-3 under the 1940 Act, the Adviser agrees that all such records are the property of the Trust and will surrender promptly to the Trust any of such records upon the Trust’s request.

(e) Proxy Voting . The Board has the authority to determine how proxies with respect to securities that are held by the Funds shall be voted, and the Board has initially determined to delegate the authority and responsibility to vote proxies for the Fund’s securities to a proxy voting agent, subject to the ongoing duty of the Adviser to monitor proxy voting issues and provide any recommendations to the Board on any particular proxy vote consistent with their investment management and fiduciary duties the Adviser. The Adviser

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shall carry out such responsibility in accordance with any instructions that the Board shall provide from time to time.

2. Information and Reporting. The Adviser shall provide the Trust and its respective officers with such periodic reports concerning the obligations the Adviser has assumed under this Agreement as the Trust may from time to time reasonably request.

(a) Notification of Breach / Compliance Reports . The Adviser shall notify the Trust’s Chief Compliance Officer immediately upon detection of (i) any material failure to manage any Fund in accordance with its investment objectives and policies or any applicable law, or (ii) any material breach of any of the Funds’ or the Adviser’s policies, guidelines or procedures.

(b) Board and Filings Information . The Adviser will also provide the Trust with any information reasonably requested regarding its management of the Funds’ assets required for any meeting of the Board, or for any shareholder report on Form N-CSR, Form N-Q, Form N-PX, Form N-SAR, Registration Statement or any amendment thereto, proxy statement, or prospectus supplement to be filed by the Trust with the Commission. The Adviser will make its officers and employees available to meet with the Board from time to time on due notice to review its investment management services to the Funds in light of current and prospective economic and market conditions and shall furnish to the Board such information as may reasonably be necessary in order for the Board to evaluate this Agreement or any proposed amendments thereto.

(c) Transaction Information . The Adviser shall furnish to the Trust such information concerning portfolio transactions as may be necessary to enable the Trust or its designated agent to perform such compliance testing on the Funds and the Adviser’s services as the Trust may, in its sole discretion, determine to be appropriate. The provision of such information by the Adviser to the Trust or its designated agent in no way relieves the Adviser of its own responsibilities under this Agreement.

3. Brokerage.

(a) Placement of Orders . The Adviser shall place all orders for the purchase and sale of portfolio securities for the Funds’ account with brokers or dealers selected by the Adviser, which may include brokers or dealers affiliated with the Adviser. The Adviser shall use its best efforts to seek, on behalf of the Trust or any Fund, the best overall terms available. In selecting brokers or dealers qualified to execute a particular transaction, brokers or dealers may be selected who also provide brokerage and research services (as those terms are defined in Section 28(e) of the 1934 Act) to the Funds and/or the other accounts over which the Adviser or its affiliates exercise investment discretion. The Adviser is authorized to pay a broker or dealer who provides such brokerage and research services a commission for executing a portfolio transaction for the Funds which is in excess of the amount of commission another broker or dealer would have charged for effecting that transaction if the Adviser determines in good faith that such amount of commission is reasonable in relation to the value of the brokerage and research services provided by such broker or dealer. This determination may be viewed in terms of either

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that particular transaction or the overall responsibilities which the Adviser and its affiliates have with respect to accounts over which they exercise investment discretion. The Board shall periodically review the commissions paid by the Funds to determine if the commissions paid over representative periods of time were reasonable in relation to the benefits to the Funds.

(b) Aggregated Transactions . On occasions when the Adviser deems the purchase or sale of a security to be in the best interest of a Fund as well as other clients of the Adviser or for the Adviser’s proprietary account, the Adviser may, to the extent permitted by applicable law and regulations, aggregate the order for securities to be sold or purchased. In such event, the Adviser will allocate securities so purchased or sold, as well as the expenses incurred in the transaction, in the manner the Adviser reasonably considers to be equitable and consistent with its fiduciary obligations to the Fund and to such other clients under the circumstances, and in a manner that is consistent with the Adviser’s policies and procedures.

(c) Affiliated Brokers . The Adviser or any of its affiliates may act as broker in connection with the purchase or sale of securities or other investments for a Fund, subject to: (i) the requirement that the Adviser seek to obtain best execution and price within the policy guidelines determined by the Board and set forth in the Trust’s current Registration Statement; (ii) the provisions of the 1940 Act; (iii) the provisions of the Advisers Act; (iv) the provisions of the 1934 Act; and (v) other provisions of applicable law. These brokerage services are not within the scope of the duties of the Adviser under this Agreement. Subject to the requirements of applicable law and any procedures adopted by the Board, the Adviser or its affiliates may receive brokerage commissions, fees or other remuneration from a Fund for these services in addition to the Adviser’s fees for services under this Agreement.

4. Custody. Nothing in this Agreement shall permit the Adviser to take or receive physical possession of cash, securities or other investments of a Fund.

5. Allocation of Charges and Expenses. The Adviser generally will bear its own costs of providing services hereunder, except that from time to time certain research expenses may be partially borne by portfolio companies or prospective portfolio companies visited by the Adviser. Except for the services to be provided by the Adviser as set forth in Paragraphs 1(a) and 1(b) or as set forth herein, the Trust assumes and shall pay all expenses for all other Trust operations and activities and shall reimburse the Adviser for any such expenses incurred by the Adviser. The expenses of the Trust shall include, without limitation:

(a) the charges and expenses of any registrar, stock transfer or dividend disbursing agent, custodian, or depository appointed by the Trust for the safekeeping of its cash, portfolio securities and other property;

(b) the charges and expenses of the Trust’s independent auditors;

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(d) all taxes, including issuance and transfer taxes, and corporate fees payable by the Trust to Federal, state or other governmental agencies;

(e) the cost of stock certificates (if any) representing shares of the Trust;

(f) expenses involved in registering and maintaining registrations of the Trust and of its shares with the Commission and various states and other jurisdictions;

(g) all expenses of shareholders’ and Trustees’ meetings, including meetings of committees, and of preparing, printing and mailing proxy statements and solicitations of proxies, quarterly reports, semi-annual reports, annual reports and other communications to shareholders;

(h) all expenses of preparing and setting in type, prospectuses, and expenses of printing and mailing the same to shareholders (but not expenses of printing and mailing of prospectuses and literature used for promotional purposes);

(i) compensation and travel expenses of Trustees who are not “interested persons” within the meaning of the 1940 Act (“Independent Trustees”);

(j) the expenses of furnishing or causing to be furnished, to each shareholder an account statement, including the expense of mailing such statements;

(k) charges and expenses of legal counsel in connection with matters relating to the Trust, including, without limitation, legal services rendered by counsel to the Trust’s Independent Trustees, or the services of other legal counsel retained by the Trust’s Independent Trustees.

(l) the expenses of attendance at professional meetings of organizations such as the Investment Company Institute, the Mutual Fund Director’s Forum, or other similar organizations by officers and Trustees of the Trust, and the membership or association dues of such organizations;

(m) the cost and expense of maintaining the books and records of the Trust, including general ledger accounting;

(n) the expense of obtaining and maintaining fidelity bond as required by Section 17(g) of the 1940 Act and the expense of maintaining director’s and officer’s insurance for the Trust and the Trustees and officers of the Trust;

(o) interest payable on Trust borrowings;

(p) postage; and

(q) such non-recurring or extraordinary expenses as they may arise, including those relating to actions, suits or proceedings to which the Trust is a party and the legal obligation which the Trust may have to indemnify the Trust’s Trustees and officers with respect thereto.

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6. The Name “U.S. Global Investors, Inc.”. The Adviser grants to the Trust a license to use the names “U.S. Global Investors, Inc., U.S. Global Investors or U.S. Global” (each a “Name”) as part of the name of any Fund. The foregoing authorization by the Adviser to the Trust to use the Name as part of the name of any Fund is not exclusive of the right of the Adviser itself to use, or to authorize others to use, the Name; the Trust acknowledges and agrees that, as between the Trust and the Adviser, the Adviser has the right to use, or authorize others to use, the Name. The Trust shall: (i) only use the Name in a manner consistent with uses approved by the Adviser; (ii) use its best efforts to maintain the quality of the services offered using the Name; and (iii) adhere to such other specific quality control standards as the Adviser may from time to time promulgate. At the request of the Adviser, the Trust will (i) submit to Adviser representative samples of any promotional materials using the Name, and (ii) change the name of any Fund within three months of its receipt of the Adviser’s request, or such other shorter time period as may be required under the terms of a settlement agreement or court order, so as to eliminate all reference to the Name and will not thereafter transact any business using the Name in the name of any Fund; provided, however, that the Trust may continue to use beyond such date any supplies of prospectuses, marketing materials and similar documents that the Trust had on the date of such name change in quantities not exceeding those historically produced and used in connection with such Fund.

7. Adviser’s Compensation. The Funds shall pay to the Adviser, as compensation for the Adviser’s services hereunder, a monthly fee with respect to each Fund as soon as practicable after the last day of each calendar month, determined based on the annual rates described in Schedule A that is attached hereto and made a part hereof.

The method for determining net assets of a Fund for purposes hereof shall be the same as the method for determining net assets for purposes of establishing the offering and redemption prices of Fund shares as described in the Fund’s Registration Statement. In the event of termination of this Agreement with respect to any Fund during any calendar month, the fee with respect to such Fund 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 such Fund for the calendar days during which it is so in effect.

8. Independent Contractor. In the performance of its duties hereunder, the Adviser is and shall be an independent contractor and, unless otherwise expressly provided herein or otherwise authorized in writing, shall have no authority to act for or represent the Trust or any Fund in any way or otherwise be deemed to be an agent of the Trust or any Fund. If any occasion should arise in which the Adviser gives any advice to its clients concerning the shares of a Fund, the Adviser will act solely as investment counsel for such clients and not in any way on behalf of the Fund.

9. Assignment and Amendments. This Agreement shall automatically terminate, without the payment of any penalty, in the event of its assignment (as defined by the 1940 Act and the rules thereunder).

This Agreement may not be added to or changed orally and may not be modified or rescinded except by a writing signed by the parties hereto and in accordance with the 1940 Act, when applicable.

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10. Duration and Termination. This Agreement shall become effective as of the date executed and shall remain in full force and effect continually thereafter, subject to renewal as provided in Paragraph 10(b) hereof and unless terminated automatically as set forth in Paragraph 9 hereof or until terminated as follows:

(a) Either party hereto may, at any time on sixty (60) days’ prior written notice to the other, terminate this Agreement, without payment of any penalty. With respect to a Fund, termination may be authorized by action of its Board or by a vote of a majority of the outstanding voting securities of the Fund; or

(b) This Agreement shall automatically terminate one year from the date of its execution unless its renewal is specifically approved at least annually thereafter, as prescribed by Section 15 of the 1940 Act and the rules thereunder, with respect to a Fund by (i) a majority vote of the Trustees, including a majority vote of such Trustees who are not interested persons of the Trust or the Adviser, at a meeting called for the purpose of voting on such approval, or (ii) the vote of a majority of the outstanding voting securities of the Fund; provided, however, that if the continuance of this Agreement is submitted to the shareholders of the Fund for their approval and such shareholders fail to approve such continuance of this Agreement as provided herein, the Adviser may continue to serve hereunder as to the Fund in a manner consistent with the 1940 Act and the rules and regulations thereunder. The requirement that the renewal of this Agreement be “specifically approved at least annually” shall be construed in a manner consistent with the 1940 Act, the rules and regulations thereunder, and any applicable Commission or Commission staff guidance or interpretation.

11. Confidentiality. Subject to the duties of the Adviser and the Trust to comply with the applicable law, including any demand of any regulatory or taxing authority having jurisdiction, the parties hereto shall treat as confidential all information pertaining to the Funds and the Trust and the actions of the Adviser and the Funds in respect thereof.

12. Certain Definitions. For the purposes of this Agreement:

(a) “Affirmative vote of a majority of the outstanding voting securities of the Fund” shall have the meaning as set forth in the 1940 Act, subject, however, to such exemptions as may be granted by the Commission under the 1940 Act or any interpretations of the Commission staff.

(b) “Interested persons” and “Assignment” shall have their respective meanings as set forth in the 1940 Act, subject, however, to such exemptions as may be granted by the Commission under the 1940 Act or any interpretations of the Commission staff.

13. Relations with the Trust . It is understood that the Trustees, officers and shareholders of the Trust are or may be or become interested in the Adviser as directors, officers or otherwise and that directors, officers and stockholders of the Adviser are or may be or become similarly interested in the Fund, and that the Adviser may be or become interested in the Fund as a shareholder or otherwise.

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14. Enforceability. Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms or provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction.

15. Limitation of Liability. The Adviser is expressly put on notice of the limitation of liability as set forth in the Trust’s Agreement and Declaration of Trust, and agrees that the obligations assumed by the Funds pursuant to this Agreement shall be limited in all cases to each Fund and each Fund’s respective assets, and the Adviser shall not seek satisfaction of any such obligation from shareholders or any shareholder of the Funds. In addition, the Adviser shall not seek satisfaction of any such obligations from the Trustees of the Trust or any individual Trustee. The Adviser understands that the rights and obligations of any Fund under the Trust’s Agreement and Declaration of Trust are separate and distinct from those of any of and all other Funds.

16. Limitation of Liability of the Adviser and Indemnification. The Adviser shall exercise its best judgment in rendering the services under this Agreement. The Adviser shall not be liable for any error of judgment or mistake of law or for any loss suffered by a Fund or a Fund’s shareholders in connection with the matters to which this Agreement relates, provided that nothing herein shall be deemed to protect or purport to protect the Adviser against any liability to a Fund or to its shareholders to which the Adviser would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence on its part in the performance of its duties or by reason of the Adviser’s reckless disregard of its obligations and duties under this Agreement. The Trust shall indemnify and hold harmless the Adviser and its affiliated and controlling persons (as those terms are defined in Section 2(a)(3) of the 1940 Act and Section 15 of the 1933 Act, respectively) against any and all losses, claims, damages, liabilities or litigation (including reasonable legal and other expenses) by reason of or arising out of any error of judgment or mistake of law or for any loss suffered by a Fund or the Funds’ shareholders in connection with the matters to which this Agreement relates, provided that the Adviser’s actions or omissions do not rise to the level of willful misfeasance, bad faith, gross negligence or reckless disregard of its obligations and duties under this Agreement. The Adviser shall indemnify and hold harmless the Trust, including the Funds, and its affiliated and controlling persons (as defined above) against any and all losses, claims, damages, liabilities or litigation (including reasonable legal and other expenses) by reason of or arising out of the Adviser’s willful misfeasance, bad faith or gross negligence on its part in the performance of its duties or by reason of the Adviser’s reckless disregard of its obligations and duties under this Agreement. It is expressly agreed that the obligations of the Adviser hereunder shall not be binding upon any shareholders, nominees, officers, agents or employees of the Adviser personally, but bind only the assets and property of the Adviser, respectively.

17. Non-Exclusive Services . The services of the Adviser to the Trust are not to be deemed exclusive, the Adviser being free to render services to others and engage in other activities, provided, however, that such other services and activities do not, during the term of this Agreement, interfere, in a material manner, with the Adviser’s ability to meet all of its obligations with respect to rendering services to the Trust hereunder.

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18. Governing Law. This Agreement shall be governed by and construed in accordance with the substantive laws of the State of Delaware, without giving effect to the choice of laws provisions thereof. If any provision of this agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby.

19. Paragraph Headings. The headings of paragraphs contained in this Agreement are provided for convenience only, form no part of this Agreement and shall not affect its construction.

20. Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have caused this instrument to be signed on their behalf by their duly authorized officers as of the date first above written.


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

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SCHEDULE A
to the
INVESTMENT ADVISORY AGREEMENT
dated October 1, 2008 between
U.S. Global Investors Funds
and
U.S. Global Investors, Inc.

The Trust will pay to the Adviser as compensation for the Adviser’s services rendered, a monthly fee, based on the Monthly Average Net Assets (as defined below) of the respective Fund in accordance with the following fee schedule:


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	%

The “Monthly Average Net Assets” of any Fund of the Trust for any calendar month shall be equal to the quotient produced by dividing (i) the sum of the net assets of such 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 Declaration of Trust of the Trust, for each calendar day of such month, by (ii) the number of such days.

† The Funds are subject to the following breakpoints:


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 Fund’s average daily net assets and a performance adjustment (the “Performance Adjustment”) as discussed below.

A. Calculating the Performance Adjustment .

The performance adjustment shall be calculated monthly by:

	(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.

B. Computing the Performance Difference .

The Performance Difference is calculated monthly, and is determined by measuring the percentage difference between the performance of one share of a Fund and the performance of the Index over the most recent 12-month period. The performance of one share of the Fund shall be measured by computing the percentage difference, carried to five decimal places, between the net asset value as of the last business day of the period selected for comparison and the net asset value of such share as of the last business day of the prior period, adjusted for dividends or capital gain distributions treated as reinvested immediately. The performance of the Index will be established by measuring the percentage difference, carried to five decimal places, between the beginning and ending values of the Index for the comparison period, with dividends or capital gain distributions on the securities that comprise the Index being treated as reinvested immediately.

A-2

C. Determining the Performance Adjustment .

For a 5.00% in Performance Difference, the Adviser’s fee will be adjusted upwards or downwards by 0.25%.

D. Performance Adjustment Example .

The following example illustrates the application of the Performance Adjustment to the Gold and Precious Metals Fund:

Fund’s

Index’s

Fund’s

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

Based on these assumptions, the Gold and Precious Metals Fund calculates the Adviser’s management fee rate for the month-ended December 31 as follows:

	•		The portion of the annual basic fee rate of 0.90% applicable to that month is multiplied by the Fund’s 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 Fund’s 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.

E. Performance Periods .

For the period from October 1, 2008 through September 30, 2009, the Adviser will be paid at the Basic Fee Rate, without regard to any Performance Adjustment. For the month ending October 31, 2009, the Adviser will begin applying the Performance Adjustment as described herein, based upon the performance of the Fund relative to the performance of the Index during the 12-month period from October 1, 2008 through September 30, 2009. The 12-month comparison period will roll over with each succeeding month, so that it will always equal 12 months, ending with the month for which the performance incentive adjustment is being computed.

A-3

F. Changes to the “Index” .

The following indices have been initially designated as the indices to be used for purposes of determining the Performance Adjustment for the following Funds.


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

From time to time, to the extent permitted by the 1940 Act, the Trustees may, by a vote of the Trustees of the Trust voting in person, including a majority of the Trustees who are not parties to this Agreement or “interested persons” (as defined in the 1940 Act) of any such parties, determine that another securities index is a more appropriate benchmark than an Index for purposes of evaluating the performance of a Fund. After ten days’ written notice to the Adviser, a different index (the “Successor Index”) may be substituted for an Index in prospectively calculating the Performance Adjustment. However, the calculation of that portion of the Performance Adjustment attributable to any portion of the performance period prior to the adoption of the Successor Index will still be based upon the Fund’s performance compared to the Index.

A-4

Exhibit (d)2

ADMINISTRATIVE SERVICES AGREEMENT

AGREEMENT, dated as of October 1, 2008, among U.S. Global Investors Funds, a Delaware statutory trust (the “Trust”), on its own behalf and on behalf of each of the Funds listed on Appendix A to this Agreement (each a “Fund” and together, the “Funds”), and U.S. Global Investors, Inc., a Texas corporation, and any successor thereto (the “Administrator”), effective with respect to each Fund as of the date set out with respect to such Fund on Appendix A to this Agreement, as may be amended from time to time.

WHEREAS, the Trust is engaged in business as an open-end investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”); and

WHEREAS, the Trust desires to retain the Administrator and its permitted designees to provide certain administrative services (the “Services”) to the Trust and the Funds on the terms set out in this Agreement, and the Administrator and its designees are willing to provide the Services to the Trust and each Fund on the terms set out in this Agreement.

NOW, THEREFORE, in consideration of the premises and the covenants contained in this Agreement, the Trust, each Fund, and the Administrator agree as follows:

1. Appointment . The Trust appoints the Administrator to provide the Services set out in Appendix B to this Agreement for the benefit of the Trust and the Funds. The Administrator accepts its appointment and agrees to provide the Services for the compensation set out in this Agreement.

2. Fees .

(a) For all Services provided under this Agreement, the Administrator will be compensated as set out on Appendix C.

(b) The Administrator may from time to time agree not to impose all or a portion of its fee otherwise payable under this Agreement and/or undertake to pay or reimburse the Trust for all or a portion of its expenses not otherwise required to be paid by or reimbursed by the Administrator. Unless otherwise agreed, any fee reduction or undertaking may be discontinued or modified by the Administrator at any time. The Administrator reserves the right to recoup any waived fees or expenses payable under this Agreement for a period of up to three years from the date of the waiver of such fees and expenses.

(c) For the month and year in which this Agreement becomes effective or terminates, there will be an appropriate pro ration of any fee based on the number of days that the Agreement is in effect during such month and year, respectively.

(d) The Administrator will not be required to pay expenses of any activity which is primarily intended to result in the sale of shares of a Fund if and to the extent that such expenses are required to be borne by a principal underwriter which acts as the distributor of a Fund’s

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shares pursuant to an underwriting agreement which provides that the underwriter shall assume some or all of such expenses.

3. Expenses .

(a) Except as otherwise provided in this Agreement, the Administrator will pay all costs it incurs in connection with the performance of its duties under this Agreement. The Administrator will pay the compensation and expenses of all of its personnel and will make available, without expense to the Trust, the services of its officers and employees as may duly be elected officers or Trustees of the Trust, subject to their individual consent to serve and to any limitations imposed by law. Nothing in this Paragraph 3 shall preclude or prevent the Trust from paying expenses not enumerated in Subparagraph (b) below, including but not limited to expenses incurred in the course of the Administrator providing additional services to the Trust that are not currently contemplated by this Agreement.

(b) The Administrator will not be required to pay any expenses of the Trust other than those specifically allocated to the Administrator in this Agreement. In particular, but without limiting the generality of the previous sentence, the Administrator will not be required to pay the following Trust expenses: The expenses of the Trust shall include, without limitation:

(i) the charges and expenses of any registrar, stock transfer or dividend disbursing agent, custodian, or depository appointed by the Trust for the safekeeping of its cash, portfolio securities and other property;

(ii) the charges and expenses of the Trust’s independent auditors;

(iii) brokerage commissions and other costs in connection with transactions in the portfolio securities of the Trust;

(iv) all taxes, including issuance and transfer taxes, and corporate fees payable by the Trust to Federal, state or other governmental agencies;

(v) the cost of stock certificates (if any) representing shares of the Trust;

(vi) expenses involved in registering and maintaining registrations of the Trust and of its shares with the U.S. Securities and Exchange Commission and various states and other jurisdictions;

(vii) all expenses of shareholders’ and Trustees’ meetings, including meetings of committees, and of preparing, printing and mailing proxy statements and solicitations of proxies, quarterly reports, semi-annual reports, annual reports and other communications to shareholders;

(viii) all expenses of preparing and setting in type, prospectuses, and expenses of printing and mailing the same to shareholders (but not expenses of printing and mailing of prospectuses and literature used for promotional purposes);

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(ix) compensation and travel expenses of Trustees who are not “interested persons” within the meaning of the 1940 Act (“Independent Trustees”);

(x) the expenses of furnishing or causing to be furnished, to each shareholder an account statement, including the expense of mailing such statements;

(xi) charges and expenses of legal counsel in connection with matters relating to the Trust, including, without limitation, legal services rendered by counsel to the Trust’s Independent Trustees, or the services of other legal counsel retained by the Trust’s Independent Trustees;

(xii) the expenses of attendance at professional meetings of organizations such as the Investment Company Institute, the Mutual Fund Director’s Forum, or other similar organizations by officers and Trustees of the Trust, and the membership or association dues of such organizations;

(xiii) the cost and expense of maintaining the books and records of the Trust, including general ledger accounting;

(xiv) the expense of obtaining and maintaining fidelity bond as required by Section 17(g) of the 1940 Act and the expense of maintaining director’s and officer’s insurance for the Trust and the Trustees and officers of the Trust;

(xv) interest payable on Trust borrowings;

(xvi) postage; and

(xvii) such non-recurring or extraordinary expenses as they may arise, including those relating to actions, suits or proceedings to which the Trust is a party and the legal obligation which the Trust may have to indemnify the Trust’s Trustees and officers with respect thereto.

4. Delegation .

(a) The Administrator, upon prior notice to the Trust and in compliance with applicable law, may delegate any of the Services, or adjust any prior delegation, to any other person or persons that the Administrator controls, is controlled by, or is under common control with, or to specified employees of any such persons, to the extent permitted by applicable law.

(b) Subject to prior approval of a majority of the members of the Trust’s Board of Trustees (the “Board”), including a majority of the Trustees who are not “interested persons,” and, to the extent required by applicable law, by the shareholders of a Fund, the Administrator, upon prior consent of the Trust and in compliance with applicable law, may delegate or outsource any of the Services, or adjust any prior delegation or outsourcing, to any other person or persons unaffiliated with the Administrator or to specified employees of any such persons, to the extent permitted by applicable law.

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(c) Notwithstanding any delegation under clauses (a) or (b) of this Section 4, the Administrator will continue to supervise the Services provided by such persons or employees and any delegation will not relieve the Administrator of any of its obligations under this Agreement.

5. Compliance with Rule 38a-1 . The Administrator shall maintain policies and procedures relating to the services it provides pursuant to this Agreement that are reasonably designed to prevent violations of the federal securities laws, and shall employ personnel to administer the policies and procedures who have the requisite level of skill and competence required to effectively discharge its responsibilities. The Administrator also shall provide the Trust’s chief compliance officer with periodic reports regarding its compliance with the federal securities laws, and shall promptly provide special reports in the event of any material violation of the federal securities laws.

6. Books and Records . The Administrator will maintain the books and records with respect to each Fund relating to the Services it provides pursuant to this Agreement and as are required pursuant to the 1940 Act and the rules thereunder. In compliance with the requirements of Rule 31a-3 under the 1940 Act, the Administrator hereby agrees that all records which it maintains for each Fund are the property of such Fund and further agrees to surrender promptly to a Fund any of such records upon the Fund’s request. The Administrator further agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the foregoing records required to be maintained by Rule 31a-1 under the 1940 Act.

7. Reports to Administrator . Each Fund shall furnish or otherwise make available to the Administrator such copies of that Fund’s prospectus, statement of additional information, financial statements, proxy statements, reports, and other information relating to its business and affairs as the Administrator may, at any time or from time to time, reasonably require in order to discharge its obligations under this Agreement.

8. Reports to Each Fund . The Administrator shall prepare and furnish to each Fund such reports, statistical data and other information in such form and at such intervals as such Fund may reasonably request.

9. Independent Contractor . In the performance of its duties hereunder, the Administrator is and shall be an independent contractor and, unless otherwise expressly provided herein or otherwise authorized in writing, shall have no authority to act for or represent the Trust or any Fund in any way or otherwise be deemed to be an agent of the Trust or any Fund.

10. Confidentiality . Subject to the duties of the Administrator and the Trust to comply with the applicable law, including any demand of any regulatory or taxing authority having jurisdiction, the parties hereto shall treat as confidential all information pertaining to a Fund and the Trust and the actions of the Adviser and the Funds in respect thereof.

11. Non-Exclusive Services . The services of the Administrator to the Trust are not to be deemed exclusive, the Administrator being free to render services to others and engage in other activities, provided, however, that such other services and activities do not, during the term

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of this Agreement, interfere, in a material manner, with the Administrator’s ability to meet all of its obligations with respect to rendering services to the Trust hereunder.

12. Effect of Agreement . Nothing herein contained shall be deemed to require the Trust or any Fund to take any action contrary to the Agreement and Declaration of Trust or By-laws of the Trust or any applicable law, regulation or order to which it is subject or by which it is bound, or to relieve or deprive the Trustees of their responsibility for and control of the conduct of the business and affairs of the Fund or Trust.

13. Limitation of Liability and Indemnification. The Administrator shall exercise its best judgment in rendering the services under this Agreement. The Administrator shall not be liable for any error of judgment or mistake of law or for any loss suffered by a Fund or a Fund’s shareholders in connection with the matters to which this Agreement relates, provided that nothing herein shall be deemed to protect or purport to protect the Administrator against any liability to a Fund or to its shareholders to which the Administrator would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence on its part in the performance of its duties or by reason of the Administrator’s reckless disregard of its obligations and duties under this Agreement. The Trust shall indemnify and hold harmless the Administrator and its affiliated and controlling persons (as those terms are defined in Section 2(a)(3) of the 1940 Act and Section 15 of the 1933 Act, respectively) against any and all losses, claims, damages, liabilities or litigation (including reasonable legal and other expenses) by reason of or arising out of any error of judgment or mistake of law or for any loss suffered by a Fund or a Fund’s shareholders in connection with the matters to which this Agreement relates, provided that the Administrator’s actions or omissions do not rise to the level of willful misfeasance, bad faith, gross negligence or reckless disregard of its obligations and duties under this Agreement. The Administrator shall indemnify and hold harmless the Trust, including its series, and its affiliated and controlling persons (as defined above) against any and all losses, claims, damages, liabilities or litigation (including reasonable legal and other expenses) by reason of or arising out of the Administrator’s willful misfeasance, bad faith or gross negligence on its part in the performance of its duties or by reason of the Administrator’s reckless disregard of its obligations and duties under this Agreement. It is expressly agreed that the obligations of the Administrator hereunder shall not be binding upon any shareholders, nominees, officers, agents or employees of the Administrator personally, but bind only the assets and property of the Administrator, respectively.

14. Trust and Shareholder Liability . The Administrator is hereby expressly put on notice of the limitation of shareholder liability as set forth in the Agreement and Declaration of Trust of the Trust and agrees that obligations assumed by the Trust and/or a Fund pursuant to this Agreement shall be limited in all cases to that Trust and/or the Fund and its assets, and if the liability relates to one or more Funds, the obligations hereunder shall be limited to the respective assets of such Fund or Funds. The Administrator further agrees that they shall not seek satisfaction of any such obligation from the shareholders or any individual shareholder of a Fund, nor from the Trustees, any individual Trustee of the Trust or any of the Trust’s officers, employees or agents, whether past, present or future shall be personally liable therefor.

15. Force Majeure . The Administrator shall not be liable for delays or errors occurring by reason of circumstances beyond its control, including but not limited to acts of civil

- 5 -

or military authority, national emergencies, work stoppages, fire, flood, catastrophe, acts of God, insurrection, war, riot, or failure of communication or power supply. In the event of equipment breakdowns beyond its control, the Administrator shall take reasonable steps to minimize service interruptions but shall have no liability with respect thereto.

16. Duration and Termination . This Agreement shall become effective as of the date written above with respect to the Trust, and with respect to each Fund as indicated in Schedule A and shall remain in full force and effect until one year after the date written above. Thereafter, if not terminated, this Agreement shall continue automatically for successive terms of one year, subject to annual renewal as provided in Section 16(a) hereof and unless terminated as set forth in Sections 16(b) and (c) hereof:

(a) The Agreement shall be approved annually with respect to a Fund (1) by a vote of a majority of the Trust’s Board who are not “interested persons” of the Trust or (2) by a vote of a “majority of the outstanding voting securities” of the Fund.

(b) Either party hereto may, at any time on sixty (60) days’ prior written notice to the other, terminate this Agreement with respect to a Fund or the Trust as a whole, without payment of any penalty. With respect to a Fund, termination may be authorized by action of the Board of the Trust or by a vote of a majority of the outstanding voting securities of the Fund.

(c) Either party hereto may terminate this Agreement with respect to a Fund or the Trust as a whole, upon a material breach of the other party with respect to that party’s obligations under this Agreement. The party in material breach of this Agreement will be permitted a period of no more than sixty (60) days’ to remedy the breach. Failure to remedy such breach will result in termination of this Agreement without payment of any penalty by the non-breaching party.

In the event of termination of this Agreement for any reason, the Administrator shall, immediately upon notice of termination or on such later date as may be specified in such notice, cease all activity on behalf of the Trust and each Fund and, with respect to any of its assets, except as otherwise required by any fiduciary duties of the Administrator under applicable law. In addition, the Administrator shall deliver the all books and records to the Trust by such means and in accordance with such schedule as the Trust shall direct and shall otherwise cooperate, as reasonably directed by the Trust, in the transition of administrative duties to any successor of the Administrator.

17. Amendments . No provision of this Agreement may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought, and no material amendment of this Agreement as to a the Trust or a Fund shall be effective until approved by the Board.

18. Definitions . As used in this Agreement, the terms “majority of the outstanding voting securities,” “interested person,” and “affiliated person” shall have the same meanings as such terms have in the 1940 Act.

- 6 -

19. Interpretation of Terms . Any question of interpretation of any term or provision of this Agreement having a counterpart in or otherwise derived from a term or provision of the 1940 Act shall be resolved by reference to such term or provision of the 1940 Act and to interpretation thereof, if any, by the United States courts or, in the absence of any controlling decision of any such court, by rules, regulations or orders of the SEC validly issued pursuant to the 1940 Act. Where the effect of a requirement of the 1940 Act reflected in any provision of this Agreement is altered by a rule, regulation or order of the SEC, whether of special or general application, such provision shall be deemed to incorporate the effect of such rule, regulation or order.

20. Entire Agreement . This Agreement embodies the entire agreement and understanding between the parties hereto, and supersedes all prior agreements and understandings relating to the subject matter hereof.

21. Notices . All notices required to be given pursuant to this Agreement shall be delivered or mailed to the last known business address of the Trust (attn: [Secretary]) or the Administrator (attn: [President]) (or to such other address or contact as shall be designated by the Trust or the Administrator in a written notice to the other party) in person or by registered or certified mail or a private mail or delivery service providing the sender with notice of receipt. Notice shall be deemed given on the date delivered or mailed in accordance with this Paragraph 20.

22. Governing Law . This Agreement shall be construed in accordance with the laws of the State of Delaware without giving effect to the conflicts of laws principles thereof, and in accordance with the 1940 Act. To the extent that the applicable laws of the State of Delaware conflict with the applicable provisions of the 1940 Act, the latter shall control.

23. Severability . If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors.

24. Paragraph Headings . The headings of paragraphs contained in this Agreement are provided for convenience only, form no part of this Agreement and shall not affect its construction.

25. Counterparts . This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed by their respective officers thereunto duly authorized, as of the day and year first above written.


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

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APPENDIX A

The following Funds of the Trust are subject to this Agreement as of the date indicated below:


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

APPENDIX B

ADMINISTRATIVE SERVICES

The following Services, as may be amended, are to be provided under this Agreement:

Subject to the oversight and control of the Board, the Administrator will manage, supervise and conduct all business and affairs of the Trust in connection with its operation as an open-end investment company, other than those governed by the Investment Advisory Agreement or otherwise provided by other parties, including without limitation:

	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 Trust’s 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 Trust’s 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 Fund’s Rule 12b-1 expenses and prepare related reports;

	12.		administer the implementation and required distribution of the Trust’s privacy policy as required under regulation S-P;

	13.		monitor the Trust’s compliance with its registration statement;

	14.		monitor the Trust’s 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 Fund’s operations and consulting with each Fund’s independent accountants, legal counsel and each Fund’s other agents as necessary in connection therewith;

	21.		establish and monitor each Fund’s operating expense budgets;

	22.		review each Fund’s 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 Fund’s 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 Fund’s 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 Fund’s business. Any additional, non-reoccurring services will be negotiated separately. The Trust, subject to the Board approval, will pay the Administrator’s fees and expenses for any non-reoccurring services.

B-4

APPENDIX C

FEE SCHEDULE

The Trust will pay to the Administrator as compensation for the Administrator’s services rendered, a monthly fee, based on the Monthly Average Net Assets (defined below) of the respective Fund in accordance with the following fee schedule:


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	%

The “Monthly Average Net Assets” of any Fund of the Trust for any calendar month shall be equal to the quotient produced by dividing (i) the sum of the net assets of such Fund for each calendar day of such month, by (ii) the number of such days.

The value of the net assets of each Fund will always be determined pursuant to the applicable provisions of the Trust’s Declaration, as amended from time-to-time and the registration statement.

Fees and expenses for Non-Recurring Services will be negotiated and quoted separately.

The Administrator shall be reimbursed for certain out-of-pocket expenses, including but not limited to: (i) postage, stationery (including FedEx or other shipping fees); (ii) computer programming relating to services provided to the Trust that have been approved by the Board prior to implementation; (iii) EDGAR filing costs; (iv) record retention relating to the Trust; (v) federal and state regulatory filing fees; (vi) expenses incurred for Board meetings (e.g. catering services, entertainment, or off-site meeting rentals); (vii) such non-recurring or extraordinary expenses that have been approved by the Board of the Trust prior to implementation; and (viii) special reports prepared by the Administrator at the request of the Trust or Board.

C-1

Exhibit (d)3

Subadvisory Agreement

Agreement made as of October 1, 2008, between U.S. Global Investors, Inc. , a corporation organized under the laws of the State of Texas (“Adviser”), U.S. Global investors Funds , a Delaware statutory trust having its principal place of business in San Antonio, Texas (“Trust”), on behalf of the Eastern european Fund (“Fund”), a series of shares of the Trust, and Charlemagne Capital (IOM) Limited (“Subadviser”), a corporation organized under the laws of the Isle of Man.

Whereas , the Adviser is engaged in the business of rendering investment management services to the Trust; and

Whereas , the Trust is an open-end management investment company and is so registered under the Investment Company Act of 1940 (“1940 Act”); and

Whereas , the Trust is operated as a “series company” within the meaning of Rule 18f-2 under the 1940 Act and has separate series of shares of beneficial interest, one of which series is the Fund.

Now, Therefore, Witnesseth : That it is hereby agreed between the parties hereto as follows:

	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 Trust’s agent and attorney-in-fact with full power and authority for the Trust and on the Trust’s 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 Fund’s 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 Trust’s 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 Trust’s 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

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			Trust or the Adviser may reasonably request. The Subadviser will also inform the Trust’s 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 Trust’s 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:

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	(i)		The Trust’s 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 Trust’s 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 Trust’s 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 Trust’s 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 Fund’s 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.

During the term of this Agreement, the Adviser shall not use or implement any amendment or supplement that relates to or affects the obligations of the Subadviser hereunder if the Subadviser reasonably objects in writing within five business days after delivery thereof (or such shorter period of time as the Adviser shall specify upon delivery, if such shorter period of time is reasonable under the circumstances).

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 Subadviser’s 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.

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	(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 Fund’s 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

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			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

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eastern european Fund
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			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 Subadviser’s 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.

In Witness Whereof , the Adviser, the Trust, and the Subadviser have caused this Agreement to be executed on the day and year first above written.

Subadvisory Agreement — Charlemagne Capital (IOM) Limited
eastern european Fund
Page 7 of 7

Exhibit (d)4

Subadvisory Agreement

Agreement made as of October 1, 2008, between U.S. Global Investors, Inc. , a corporation organized under the laws of the State of Texas (“Adviser”), U.S. Global investors Funds , a Delaware statutory trust having its principal place of business in San Antonio, Texas (“Trust”), on behalf of the Global Emerging Markets Fund (“Fund”), a series of shares of the Trust, and Charlemagne Capital (IOM) Limited (“Subadviser”), a corporation organized under the laws of the Isle of Man.

Whereas , the Adviser is engaged in the business of rendering investment management services to the Trust; and

Whereas , the Trust is an open-end management investment company and is so registered under the Investment Company Act of 1940 (“1940 Act”); and

Now, Therefore, Witnesseth : That it is hereby agreed between the parties hereto as follows:

	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 Trust’s agent and attorney-in-fact with full power and authority for the Trust and on the Trust’s behalf to buy, sell, and otherwise deal in securities and contracts relating to same for the Fund.

Duties of Subadviser

(a)

Subadvisory Agreement — Charlemagne Capital (IOM) Limited
Global Emerging Markets Fund
Page 2 of 7

			Trust or the Adviser may reasonably request. The Subadviser will also inform the Trust’s 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 Trust’s 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:

Subadvisory Agreement — Charlemagne Capital (IOM) Limited
Global Emerging Markets Fund
Page 3 of 7

	(i)		The Trust’s 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 Trust’s 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 Trust’s 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 Trust’s 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 Fund’s 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.

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 Subadviser’s 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.

Subadvisory Agreement — Charlemagne Capital (IOM) Limited
Global Emerging Markets Fund
Page 4 of 7

	(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 Fund’s 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

Subadvisory Agreement — Charlemagne Capital (IOM) Limited
Global Emerging Markets Fund
Page 5 of 7

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.

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

Subadvisory Agreement — Charlemagne Capital (IOM) Limited
Global Emerging Markets Fund
Page 6 of 7

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 Subadviser’s 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.

In Witness Whereof , the Adviser, the Trust, and the Subadviser have caused this Agreement to be executed on the day and year first above written.

Subadvisory Agreement — Charlemagne Capital (IOM) Limited
Global Emerging Markets Fund
Page 7 of 7

Exhibit (e)1

U.S. GLOBAL INVESTORS FUNDS

SHAREHOLDER SERVICES PLAN

WHEREAS , U.S. Global Investors Funds (the “Trust”) is engaged in business as an open-end investment company registered under the Investment Company Act of 1940 (the “1940 Act”) and the Trust desires to compensate Service Providers who provide, the services described herein to clients (the “Clients”) who from time to time beneficially own shares of beneficial interest (the “Shares”) of any fund of the Trust listed on Schedule A to this Shareholder Services Plan (each a “Fund,” and collectively, the “Funds”); and

WHEREAS , the Trustees of the Trust have determined, in the exercise of reasonable business judgment and in light of their fiduciary duties, that there is a reasonable likelihood that the following Shareholder Services Plan (the “Plan”) will benefit the Funds of the Trust and the Clients of the Shares of such Funds; and

WHEREAS , the Trustees of the Trust adopt the Plan under which Service Providers will provide to Clients some or all of the shareholder services stated in Section 2 herein;

NOW, THEREFORE , the Trustees of the Trust hereby adopt this Plan.

Section 1 . The Trust has adopted this Plan to enable the Trust to directly or indirectly bear expenses relating to the provision of certain shareholder services to certain Funds of the Trust listed in Schedule A.

Section 2 . The Trust will pay Service Providers a fee, up to the amount specified in Schedule A to this Plan, with respect to the average daily net asset value of shares owned of record or beneficially by clients with whom the service provider has a service relationship for shareholder services. Services this fee may be paid for include, but are not limited to, (i) maintaining accounts relating to Clients that invest in Shares; (ii) arranging for bank wires; (iii) responding to Client inquiries relating to the services performed by Service Providers; (iv) responding to inquiries from Clients concerning their investment in Shares; (v) assisting Clients in changing dividend options, account designations and addresses; (vi) providing information periodically to Clients showing their position in Shares; (vii) forwarding shareholder communications from the Funds such as proxies, shareholder reports, annual reports, and dividend distribution and tax notices to Clients; (viii) processing purchase, exchange and redemption requests from Clients and placing orders with the Funds or its service providers; (ix) providing sub-accounting with respect to Shares beneficially owned by Clients; and (x) processing dividend payments from the Funds on behalf of Clients. Service Providers may also use this fee for payments to financial institutions and intermediaries such as banks, savings and loan associations, insurance companies and investment counselors, broker-dealers, mutual fund supermarkets and the Service Providers’ affiliates and subsidiaries as compensation for such services as are described herein.

Page 1 of 4

Section 3 . This Plan shall not take effect with respect to any Fund until it has been approved together with any related agreements, by votes of the majority of both (i) the Trustees of the Trust and (ii) the Qualified Trustees (as defined in Section 8 herein), at a meeting of the Board of Trustees.

Section 4 . This Plan shall continue, unless terminated as hereinafter provided, in effect for a period of more than one year after it takes effect only for so long as such continuance is specifically approved at least annually in the manner provided in Section 3 herein for the approval of this Plan.

Section 5 . During the existence of this Plan, the Trust shall require U.S. Global Brokerage, Inc. (the “Distributor”) or any person authorized to direct the disposition of monies paid or payable by the Trust pursuant to this Plan or any related agreement shall provide to the Trustees of the Trust, at least quarterly, a written report of the amounts so expended and the purposes for which such expenditures were made with respect to each Fund, and shall furnish the Board of Trustees of the Trust with such other information as the Board of Trustees may reasonably request in connection with payments made under the Plan.

Section 6 . This Plan may be terminated at any time, with respect to Shares of any Fund listed in Schedule A, without payment of any penalty, at any time by the vote of a majority of the Qualified Trustees as defined in Section 8 herein.

Section 7 . All agreements with any person relating to the implementation of this Plan shall be in writing, and any agreement related to this Plan shall provide (a) that such agreement may be terminated at any time, without payment of any penalty, by the vote of a majority of the Qualified Trustees (as defined in Section 8 herein), on not more than 60 days written notice to any other party to the agreement.

Section 8 . As used in this Plan, (a) the term “Qualified Trustees” shall mean those Trustees of the Trust who are not interested persons of the Trust, and have no direct or indirect financial interest in the operation of this Plan or any agreements related to it, and (b) the terms “assignment” and “interested person” shall have the respective meanings specified in the 1940 Act and the rules and regulations thereunder, subject to such exemptions as may be granted by the U.S. Securities and Exchange Commission.

Section 9 . While this Plan is in effect, the selection and nomination of those Trustees who are not interested persons of the Trust within the meaning of Section 2(a)(19) of the 1940 Act shall be committed to the discretion of the Trustees then in office who are not interested persons of the Trust.

Section 10 . This Plan shall not obligate the Trust or any other party to enter into an agreement with any particular person.

Section 11 . This Plan may be amended at any time by the Board of Trustees, provided that any material amendment of this Plan shall be effective only upon approval in the manner provided in Section 3 herein.

Page 2 of 4

Section 12 . Consistent with the limitation of shareholder and Trustee liability as set forth in the Trust’s Agreement and Declaration of Trust, any obligations assumed by the Trust or a Fund thereof pursuant to this Plan and any agreements related to this Plan shall be limited in all cases to the proportionate ownership of the affected Fund and its assets, and shall not constitute obligations of any shareholder of any other Fund of the Trust or of any Trustee or officer of the Trust.

Section 13 . If any provision of this Plan shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of the Plan shall not be affected thereby.

Dated: July 31, 2008

Page 3 of 4

SCHEDULE A


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		0.20	%
U.S. Treasury Securities Cash Fund		0.20	%

Page 4 of 4

Exhibit (g) 6

AMENDMENT TO THE CUSTODIAN AGREEMENT

AMENDMENT entered into as of this 1st day of October, 2008 to the Custodian Agreement between U.S. GLOBAL INVESTORS FUNDS, a statutory trust organized under the laws of the state of Delaware (the “Trust” ) on behalf of each of the portfolios listed on Appendix A of the Custodian Agreement (each a “Fund and collectively the “Funds”) and BROWN BROTHERS HARRIMAN & CO. (the “Custodian” ) dated as of November 1, 1997 (the “Agreement”).

The Trust and the Custodian agree that paragraph 1 of the Recital Section of the Custodian Agreement is hereby amended as follows:

“WHEREAS the Trust is a statutory trust organized under the laws of the State of Delaware and registered with the Commission under the Investment Company Act of 1940.”

IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first set forth above.

The undersigned acknowledges that (I/we) have received a copy of this document


BROWN BROTHERS HARRIMAN & CO.		U.S. GLOBAL INVESTORS FUNDS

By: /s/ James R. Kent		By: /s/ Frank E. Holmes

Name:	James R. Kent	Name:	Frank E. Holmes
Title:	Managing Director	Title:	President and Chief Executive Officer
Date:	October 1, 2008	Date:	October 1, 2008

Appendix A
Dated October 1, 2008
to the Custodian Agreement
between

U.S. GLOBAL INVESTORS FUNDS
and
BROWN BROTHERS HARRIMAN & CO.
Dated November 1, 1997

Following is a list of Funds for which the Custodian shall serve as Custodian pursuant to the terms of the Custodian Agreement:

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

Exhibit (h)1

Transfer Agency Agreement

This Agreement is made as of the 31st day of July 2008 by and between U.S. Global Investors Funds, Delaware statutory trust organized under the laws of the State of Delaware, having its principal office and place of business at 7900 Callaghan Road, San Antonio, Texas 78229 (hereinafter referred to as the “Trust”), and United Shareholder Services, Inc., a Texas corporation authorized to do business at 7900 Callaghan Road, San Antonio, Texas 78229 (hereinafter referred to as the “Transfer Agent”).

Witnesseth:

That for and in consideration of the mutual promises hereinafter set forth, the Trust on behalf of each Fund and the Transfer Agent agree as follows:

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 Fund’s Shares under the Securities Act of 1933, as amended;

- 1 -

U.S. Global Investors Funds
Transfer Agency Agreement
Dated July 31, 2008

	(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 Agent’s 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 Agent’s 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

- 2 -

U.S. Global Investors Funds
Transfer Agency Agreement
Dated July 31, 2008

			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 Fund’s 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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U.S. Global Investors Funds
Transfer Agency Agreement
Dated July 31, 2008

	(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 successor’s responsibilities. Additionally, the Transfer Agent reserves the right to charge for any other reasonable and customary expenses associated with such termination.

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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U.S. Global Investors Funds
Transfer Agency Agreement
Dated July 31, 2008

(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.

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.

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 Trust’s 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 Agent’s 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 Trust’s responsibilities.

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U.S. Global Investors Funds
Transfer Agency Agreement
Dated July 31, 2008

	(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 Trust’s 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 Trust’s anti-money laundering (“AML”) compliance program. The Transfer Agent will carryout the Trust’s AML Compliance Program in accordance with the Trust’s 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 Agent’s 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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U.S. Global Investors Funds
Transfer Agency Agreement
Dated July 31, 2008

	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 Agent’s services hereunder shall not relieve the Trust of its responsibilities for assuring such compliance or the Board of Trustee’s 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 shareholder’s 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 shareholder’s representative or executor) to conduct a more in-depth search in order to locate the lost shareholder before the shareholder’s 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 shareholder’s 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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U.S. Global Investors Funds
Transfer Agency Agreement
Dated July 31, 2008

			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 Trust’s 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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U.S. Global Investors Funds
Transfer Agency Agreement
Dated July 31, 2008

	(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 Trust’s 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 Agent’s 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 party’s 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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U.S. Global Investors Funds
Transfer Agency Agreement
Dated July 31, 2008

			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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U.S. Global Investors Funds
Transfer Agency Agreement
Dated July 31, 2008

	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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U.S. Global Investors Funds
Transfer Agency Agreement
Dated July 31, 2008

	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 Trust’s blank checks, records, and other data and the Transfer Agent’s 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 Agent’s 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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U.S. Global Investors Funds
Transfer Agency Agreement
Dated July 31, 2008

			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

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U.S. Global Investors Funds
Transfer Agency Agreement
Dated July 31, 2008

			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
Transfer Agency Agreement
Dated July 31, 2008

In Witness Whereof , the parties hereto have caused this Agreement to be executed by their respective officers thereunder duly authorized and their respective seals to be hereunto affixed, as of the day and year first above written.


				U.S. Global Investors Funds

Attest:
By: /s/ Sheila A. Matthys				By: /s/ Frank E. Holmes 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

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U.S. Global Investors Funds
Transfer Agency Agreement
Dated July 31, 2008

Fee Schedule
to the
Transfer Agency and Services Agreement
between
U.S. Global Investors Funds (the “Trust”) and
United Shareholder Services, Inc. (the “Transfer Agent”)

Annual Fee


$	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


Activity Charges
Shareholder & Intermediary Servicing
Transactions		2.00 / 1st 25,000; $0.75 thereafter
Correspondence or email		$4.00 / item
Shareholder Telephone Calls		$2.50 / call
Telephone System		$0.35 / call received
Lost Shareholder Searches		$6.00 / account
Escheatment Filings		(included in lost shareholder costs)
ACH Shareholder Services
$125.00 month per fund
$0.50 per ACH or IDR (Check Imaging) per item

Physical Certificate Processing — Services to handle processing of physical certified shares for a fund family.


		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

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U.S. Global Investors Funds
Transfer Agency Agreement
Dated July 31, 2008


		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

Out-of-Pocket Expenses, including but not limited to:

Telephone — toll free lines
Telephone — long distance calls
Sales tax paid for data processing, services, and etc.
Retention of records
Postage
Microfilm/fiche/CD/other electronic media records
Programming/enhancements
Special reports
Disaster recovery site — including equipment, hardware, and other customary items
Stationery/envelopes
Confirmations
Monthly statements
Quarterly statements
Annual statements
Transcripts
NSCC charges
Proxies
Freight
Computer, printer, devices hardware/configuration and maintenance contracts,
Telecommunications hardware/configuration and maintenance contracts
Network hardware/configuration and maintenance contracts
Data warehousing, access, security, storage, recording, retrieval, reproduction
Support, consulting, management
Regulatory searches — OFAC, FinCEN, etc.

- 17 -

U.S. Global Investors Funds
Transfer Agency Agreement
Dated July 31, 2008

All other out-of-pocket expenses incurred on the Fund’s behalf, in addition to the following:

These fees are subject to change as determined by the provider.

TA2000
Database — Databases built to store various shareholder transactions and master file history

$0.106 per open account

Short-Term Trader — Software application used to track and/or assess transaction (redemption) fees determined to be short-term trades.


		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

Excessive Trader — Software application used to track the number of trades (exchanges or redemptions) that meet fund criteria.


		Set up per fund		$1,500
		Per account, per year		$0.12

Disaster Recovery Fee — This fee supports four-hour recovery and is a pro-rata portion of the service provider cost for the service.


		Per open account, per year		$0.20

NSCC Communication Charge — This fee is pro-rata portion of service to support circuits and equipment to connect to the DTCC, and maintenance and support of the NSCC interfaces.


		Per CUSIP, per month		$105.093

Average Cost Tracking — This fee allows the system to track shareholder financial transactions and provide average cost basis information.


		Per account, per year		$0.25

Average Cost Holding Period Identification — This fee is based on the history records kept, see Average Cost Tracking.


		Per thousand history records		$3.50

- 18 -

U.S. Global Investors Funds
Transfer Agency Agreement
Dated July 31, 2008

Web Site
Out-of-Pocket Charges

These fees are subject to change as determined by the provider.

Fan Web Services — These fees provide shareholders access to accounts via the internet.


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

Data Processing & Telecommunication
Out-of-Pocket Charges

Support of electronic communications such as: data processing, data and voice recordings, data warehousing, data security, data access, data feeds, data recovery, statement and tax data, email, voicemail, printers, hardware, software, maintenance, support, consulting, storage, and lease or license fees of said charges, and etc.

For example:

3rd party data feeds; web feeds; data processing and communications equipment, software, and maintenance, communication circuits, telephone lines, modems, etc. (including hardware, software, maintenance, management, support, etc.); Desktops (PC),Servers, Printers, Scanners, and Other Devices, Etc. (including hardware, software, maintenance, management, support, etc.); and Data Warehousing, Data Security, Data Access, Recording Devices, Email, Voice, devices, etc.)

Billed at cost.

- 19 -

U.S. Global Investors Funds
Transfer Agency Agreement
Dated July 31, 2008

Computer/Technical Personnel
Out-of-Pocket Charges

These fees are subject to change.


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
Out-of-Pocket Charges

These fees are subject to change.


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 -

U.S. Global Investors Funds
Transfer Agency Agreement
Dated July 31, 2008

Mutual Fund Services
Out-of-Pocket Expense Items


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 -

U.S. Global Investors Funds
Transfer Agency Agreement
Dated July 31, 2008

APPENDIX A

to the
Transfer Agency and Services Agreement
between
U.S. Global Investors Funds (the “Trust”) and
United Shareholder Services, Inc. (the “Transfer Agent”)

Dated as of July 31, 2008

Authorized Persons

I, Frank E. Holmes, President, and I, Susan B. McGee, Secretary, of U.S. Global Investors Funds, a Delaware statutory trust (the “Trust”), do hereby certify that:

The Board of Trustees of the Trust has duly authorized the following individuals in conformity with the Trust’s Declaration of Trust and By-Laws to give Oral Instructions and Written Instructions on behalf of the Trust, and the signatures set forth opposite their respective names are their true and correct signatures:


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 -

U.S. Global Investors Funds
Transfer Agency Agreement
Dated July 31, 2008

APPENDIX B
to the
Transfer Agency and Services Agreement
between
U.S. Global Investors Funds (the “Trust”) and
United Shareholder Services, Inc. (the “Transfer Agent”)

Dated as of July 31, 2008

Duties of the Transfer Agent

The following is a general description of the transfer agency services the Transfer Agent shall provide to each Fund.

	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 Shareholder’s 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 Trust’s 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.

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 -

U.S. Global Investors Funds
Transfer Agency Agreement
Dated July 31, 2008

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 Fund’s Shares, determined in accordance with the Trust’s 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.

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 Trust’s 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 -

U.S. Global Investors Funds
Transfer Agency Agreement
Dated July 31, 2008

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 Trust’s 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 -

U.S. Global Investors Funds
Transfer Agency Agreement
Dated July 31, 2008

			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 Trust’s 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 shareholder’s 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 Trust’s 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 Fund’s current prospectus.

	M.		Commission Payments . The Transfer Agent will calculate and process all commission payments in accordance with each Fund’s 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 -

U.S. Global Investors Funds
Transfer Agency Agreement
Dated July 31, 2008

	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 Trust’s demand, turn over to the Trust and cease to retain in the Transfer Agent’s 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 Trust’s authorization.

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 -

U.S. Global Investors Funds
Transfer Agency Agreement
Dated July 31, 2008

APPENDIX C
to the
Transfer Agency and Services Agreement
between
U.S. Global Investors Funds (the “Trust”) and
United Shareholder Services, Inc. (the “Transfer Agent”)

Dated as of July 31, 2008

AML DELEGATION

Delegation.

			Subject to the terms and conditions set forth in this Agreement, the Trust hereby delegates to the Transfer Agent those aspects of the Trust’s 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 -

U.S. Global Investors Funds
Transfer Agency Agreement
Dated July 31, 2008

		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 -

U.S. Global Investors Funds
Transfer Agency Agreement
Dated July 31, 2008

APPENDIX D
to the
Transfer Agency and Services Agreement
between
U.S. Global Investors Funds (the “Trust”) and
United Shareholder Services, Inc. (the “Transfer Agent”)

Dated as of July 31, 2008

Funds of the Trust

Eastern European Fund
Global Emerging Markets Fund
Holmes Growth Fund
Global MegaTrends Fund
U.S. Treasury Securities Cash
U.S. Government Securities Savings Fund
Near-Term Tax Free Fund
Tax Free Fund
All American Equity Fund
China Region Fund
Global Resources Fund
World Precious Minerals Fund
Gold and Precious Metals Fund

- 30 -

Exhibit (h)2

October 1, 2008

U.S. Global Investors Funds
7900 Callaghan Road
San Antonio, TX 78229

Re: Fund Expense Caps

This is to confirm and acknowledge that U.S. Global Investors, Inc. hereby agrees to limit total operating expenses of each of the funds listed below to not exceed the percentage of average net assets set forth below on an annualized basis through September 30, 2009.


	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

Exhibit (h)3

U.S. GLOBAL INVESTORS FUNDS
U.S. TREASURY SECURITIES CASH FUND
U.S. GOVERNMENT SECURITIES SAVINGS FUND

EXPENSE WAIVER AND REIMBURSEMENT AGREEMENT

AGREEMENT made as of March 20, 2008, by and among each of U.S. Global Investors Funds, a Massachusetts business trust (the Trust), on behalf of its portfolios, the U.S. Treasury Securities Cash Fund and the U.S. Government Securities Savings Fund (each a Fund and, collectively, the Funds), and U.S. Global Investors, Inc., a Texas corporation (USGI).

WHEREAS, USGI has entered into a certain investment advisory agreement with the Trust, pursuant to which USGI provides investment advisory services to each Fund, and for which it is compensated based on the average daily net assets of each Fund; and

WHEREAS, United Shareholder Services, Inc. (“USSI”), an affiliate of USGI, has entered into a transfer agency agreement with the Trust, pursuant to which USSI provides transfer agency services to each Fund, and for which it is compensated based on the number of accounts in each Fund; and

WHEREAS, U.S. Global Brokerage, Inc. (“USGBI”), an affiliate of USGI, has entered into a distribution agreement with each Trust, pursuant to which USGBI provides distribution services to each Fund, and for which it does not receive compensation; and

WHEREAS, USGI has previously and separately agreed to waive fees and/or reimburse expenses as necessary to prevent the overall expense ratios of the U.S. Government Securities Savings Fund and the U.S. Treasury Securities Cash Fund from exceeding certain amounts through November 30, 2008, (the OER Limits); and

WHEREAS, USGI and its affiliates may reduce, or further reduce, as the case may be, all or a portion of their fees and/or reimburse expenses of one or more Funds (to the extent permitted by the Internal Revenue Code of 1986, as amended) to the extent necessary to maintain a certain minimum net yield for each such Fund, as determined by USGI with respect to that Fund (the Minimum Yield);

NOW THEREFORE, the parties, on their own behalf and on behalf of their affiliates, hereto agree as follows:

Fund’s 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 Fund’s net yield to fall below the Fund’s 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.

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 Fund’s obligation to reimburse USGI for any fee waivers and/or expense reimbursements made during the term of this Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of date first above written.


U.S. Global Investors, Inc.

/s/ Susan B. McGee
By: Susan B. McGee
Title: President

U.S. Global Investors Funds

/s/ Frank E. Holmes
By: Frank E. Holmes
Title: President

Exhibit (i)

September 29, 2008

U.S. Global Investors Funds
7900 Callaghan Road
San Antonio, Texas 78229

Ladies and Gentlemen:

We have acted as counsel to U.S. Global Investors Funds, a Delaware statutory trust (the “Trust”), in connection with the filing with the Securities and Exchange Commission (“SEC”) of Post-Effective Amendment No. 100 under the Securities Act of 1933, as amended (the “1933 Act”), to the Trust’s Registration Statement on Form N-1A (the “Post-Effective Amendment”), registering an indefinite number of units of beneficial interest, no par value (“Shares”), in each of 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, Global MegaTrends Fund, Tax Free Fund, Near-Term Tax Free Fund, U.S. Government Securities Savings Fund and U.S. Treasury Securities Cash Fund, each a series of the Trust.

You have requested our opinion as to the matters set forth below in connection with the filing of the Post-Effective Amendment. In connection with rendering that opinion, we have examined the Post-Effective Amendment, the Certificate of Trust of the Trust, the Trust’s Agreement and Declaration of Trust, the Trust’s By-Laws, the actions of the Trustees of the Trust that authorize the approval of the foregoing documents, securities matters and the issuance of the Shares, and such other documents as we, in our professional opinion, have deemed necessary or appropriate as a basis for the opinion set forth below. In examining the documents referred to above, we have assumed the genuineness of all signatures, the legal capacity of all natural persons, the authenticity of documents purporting to be originals and the conformity to originals of all documents submitted to us as copies. As to questions of fact material to our opinion, we have relied (without investigation or independent confirmation) upon the representations contained in the above-described documents and on certificates and other communications from public officials and officers and Trustees of the Trust.

Our opinion, as set forth herein, is based on the facts in existence and the laws in effect on the date hereof and is limited to the federal laws of the United States of America and the Delaware Statutory Trust Act. We express no opinion with respect to any other laws.

U.S. Global Investors Funds
September 29, 2008
Page 2

Based upon and subject to the foregoing and the qualifications set forth below, we are of the opinion that (a) the Shares to be issued pursuant to the Post-Effective Amendment have been duly authorized for issuance by the Trust; and (b) when issued and paid for upon the terms provided in the Post-Effective Amendment, subject to compliance with the 1933 Act, the Investment Company Act of 1940, as amended, and applicable state laws regulating the offer and sale of securities, the Shares to be issued pursuant to the Post-Effective Amendment will be validly issued, fully paid and non-assessable.

This opinion is rendered solely for your use in connection with the filing of the Post-Effective Amendment. We hereby consent to the filing of this opinion with the SEC in connection with the Post-Effective Amendment. In giving our consent we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the 1933 Act or the rules and regulations of the SEC thereunder. The opinions expressed herein are matters of professional judgment and are not a guarantee of result.


	Very truly yours,
	/s/ Vedder Price P.C.
	VEDDER PRICE P.C.

RMH/DAS

Exhibit (j)

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Trustees and Shareholders
of U.S. Global Investors Funds

We consent to the use of our report dated August 27, 2008 for U.S. Treasury Securities Cash Fund, U.S. Government Securities Savings Fund, Near-Term Tax Free Fund, Tax Free Fund, All American Equity Fund, China Region Opportunity Fund, Global Resources Fund, World Precious Minerals Fund and Gold and Precious Metals Fund, each a series of U.S. Global Investors Funds (Trust), and our report dated December 18, 2007 for Eastern European Fund, Global Emerging Markets Fund, Holmes Growth Fund and Global MegaTrends Fund, each a series of U.S. Global Accolade Funds (Trust), incorporated herein by reference and to the references to our firm under the captions “FINANCIAL HIGHLIGHTS” in the prospectus and “INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS AND LEGAL COUNSEL” in the Statement of Additional Information.

Boston, Massachusetts
October 1, 2008

Exhibit (m)1

U.S. GLOBAL INVESTORS FUNDS
DISTRIBUTION PLAN PURSUANT TO RULE 12b-1

Adopted October 1, 2008

WHEREAS, U.S. GLOBAL INVESTORS FUNDS, a statutory trust organized under the laws of the State of Delaware (the “Trust”) is engaged in business as an open-end management investment company and is registered as such under the Investment Company Act of 1940, as amended (the “Act”).

WHEREAS, the Trust employs U.S. Global Brokerage, Inc. (the “Distributor”) as distributor of the securities of which it is the issuer.

WHEREAS, the Trust operates as a “series company” within the meaning of Rule 18f-2 under the Act and is authorized to issue shares of beneficial interest in various series, which are listed on Schedule A hereto (collectively the “Funds”), which Schedule may be amended to add or remove series.

WHEREAS, the Trust and the Distributor have entered into a Distribution Agreement pursuant to which the Trust has employed the Distributor in such capacity during the continuous offering of shares of the Funds;

WHEREAS, the Trustees, including the Trustees who are not interested persons of the Trust (as defined in the Act) and who have no direct or indirect financial interest in the operation of this Plan and any agreements relating to it (the “Independent Trustees”), having determined, in the exercise of reasonable business judgment and in light of their fiduciary duties under state law and under Section 36(a) and (b) of the Act, that there is a reasonable likelihood that this Plan will benefit each Fund and its shareholders, have approved the Plan by votes cast in person at a meeting called for the purpose of voting on this Plan and agreements related thereto.

NOW, THEREFORE, the Trust hereby adopts on behalf of the Funds, and the Distributor hereby agrees to the terms of the Plan, in accordance with Rule 12b-1 under the Act, on the following terms and conditions:

1. SERVICES. The Trust has entered into a Distribution Agreement on behalf of the Funds with the Distributor, under which the Distributor uses all reasonable efforts, consistent with its other business, to secure purchasers of each Fund’s shares of beneficial interest (the “Shares”). Such efforts may include, but neither are required to include nor are limited to, the following: (1) formulation and implementation of marketing and promotional activities, such as mail promotions and television, radio, newspaper, magazine and other mass media advertising; (2) preparation, printing and distribution of sales literature; (3) preparation, printing and distribution of prospectuses of the Funds and reports to recipients other than the existing shareholders of the Funds; (4) obtaining such information, analyses and reports with respect to marketing and promotional activities as the Distributor may, from time to time, deem advisable; (5) making

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payments to securities dealers and others engaged in the sale of Shares or who engage in shareholder support services (“Investment Professionals”); and (6) providing training, marketing and support to such dealers with respect to the sale of Shares.

2. DISTRIBUTION FEES. In consideration for the services provided and the expenses incurred by the Distributor pursuant to the Distribution Agreement and Paragraph 1 hereof, all with respect to the Funds set forth on Schedule A hereto, each Fund shall pay to the Distributor a fee at the annual rate of 0.25% of the average daily net assets of each Fund. Such fee shall be calculated and accrued daily and paid monthly or at such intervals as the Board of Trustees (the “Board”) shall determine, subject to any applicable restriction imposed by rules of the National Association of Securities Dealers, Inc. The Distributor may use all or any portion of the distribution fee received pursuant to the Plan to compensate Investment Professionals who have engaged in the sale of the Funds or in shareholder support services with respect to the Funds pursuant to agreements with the Distributor, or to pay any of the expenses associated with other activities authorized under paragraph 1 hereof.

3. REVENUE SHARING. Each Fund presently pays, and will continue to pay, an advisory fee to U.S. Global Investors, Inc. (the “Adviser”) pursuant to an investment advisory agreement between the Trust and the Adviser. It is recognized that the Adviser may use its advisory fee revenue, as well as its past profits or its resources from any other source, to make payment to the Distributor with respect to any expenses incurred in connection with the distribution of the Funds, including the activities referred to in Paragraph 1 hereof. To the extent that the payment of advisory fees by the Fund to the Adviser should be deemed to be indirect financing of any activity primarily intended to result in the sale of shares of the Funds within the meaning of Rule 12b-1, then such payment shall be deemed to be authorized by this Plan.

4. TERM AND TERMINATION.

(a) INITIAL TERM. This Plan shall become effective upon the approval by a vote of a majority of the Trustees of the Trust, including a majority of the Independent Trustees, cast in person at a meeting called for the purpose of voting on this Plan.

(b) CONTINUATION OF THE PLAN. This Plan and any related agreements shall continue in full force and effect for so long as such continuance is specifically approved at least annually by a vote of a majority of the Independent Trustees, cast in person at a meeting called for the purpose of voting on this Plan.

(c) TERMINATION OF THE PLAN. This Plan may be terminated with respect to a Fund at any time by vote of a majority of the Trustees, including a majority of the Independent Trustees, or by vote of a majority of the outstanding voting securities of such Fund.

5. AMENDMENTS. This Plan may be amended at any time by the Board, provided that (a) any amendment to materially increase the fee provided for in Paragraph 2 hereof with respect to a Fund shall be effective only upon approval by a vote of a majority of the outstanding voting securities of such Fund and (b) any material amendment of this Plan shall be effective only upon approval in the manner provided in the Paragraph 4(a) hereof.

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6. QUARTERLY REPORTS. The Distributor shall provide to the Board and the Board shall review, at least quarterly, a written report of the amounts accrued and the amounts expended under this Plan, along with the purposes for which such expenditures were made.

7. RECORDKEEPING. The Trust shall preserve copies of this Plan and any related agreements and all reports made pursuant to Paragraph 6 hereof, for a period of not less than six years from the date of this Plan, the agreements or such report, as the case may be; the first two years in an easily accessible place.

8. LIMITATION OF LIABILITY. The Distributor is expressly put on notice of the limitation of liability as set forth in the Trust’s Agreement and Declaration of Trust, and agrees that the obligations assumed by the Funds pursuant to this Agreement shall be limited in all cases to each Fund and each Fund’s respective assets, and the Distributor shall not seek satisfaction of any such obligation from shareholders or any shareholder of the Funds. In addition, the Distributor shall not seek satisfaction of any such obligations from the Trustees of the Trust or any individual Trustee. The Distributor understands that the rights and obligations of any Fund under the Trust’s Agreement and Declaration of Trust are separate and distinct from those of any of and all other Funds.

9. GOVERNANCE STANDARDS. So long as this plan is in effect, the Board shall satisfy the fund governance standards as defined in Rule 0-1(a)(7) under the Act.

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SCHEDULE A

List of Funds

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Exhibit (m)2

U.S. Global Investors Funds
DISTRIBUTION AGREEMENT

AGREEMENT made as of the 1 ^st day of October, 2008, between U.S. Global Investors Funds, a Delaware statutory trust (the “Trust”), having its principal place of business in San Antonio, Texas and U.S. Global Brokerage, Inc. a corporation organized under the laws of the State of Texas (the “Distributor”), having its principal place of business in San Antonio, Texas.

WHEREAS, the Trust is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company and is authorized (i) to issue shares of beneficial interest in separate series, with the shares of each such series representing the interests in a separate portfolio of securities and other assets, and (ii) to divide such shares of beneficial interest of each such series into two or more classes; and

WHEREAS, the Trust wishes to employ the services of the Distributor with respect to the distribution of shares of beneficial interest of the Trust (“Shares”) and classes thereof representing interests in each portfolio series thereof identified from time to time on Schedule A hereto (each such portfolio series being referred to herein as a “Fund”); and

WHEREAS, the Distributor wishes to provide distribution services to the Trust with respect to the Shares.

NOW, THEREFORE, in consideration of the mutual promises and undertakings herein contained, the parties agree as follows:

1. SALE OF SHARES BY THE DISTRIBUTOR. The Trust grants to the Distributor the right to sell Shares during the term of this Agreement and subject to the registration requirements of the Securities Act of 1933, as amended (the “1933 Act”), and of the laws governing the sale of securities in the various states (“Blue Sky Laws”), under the following terms and conditions: the Distributor (i) shall have the right to sell, as agent and on behalf of the Trust, Shares authorized for issue and registered under the 1933 Act; and (ii) may sell such Shares only in compliance with the terms set forth in the Trust’s currently effective registration statement, as may be in effect from time to time, and any further limitations the Board of Trustees of the Trust may impose. The Distributor may enter into selling agreements with selected dealers and others for the sale of Shares and will act only on the Trust’s behalf as principal in entering into such selling agreements.

2. SALE OF SHARES BY THE TRUST. The rights granted to the Distributor shall be nonexclusive in that the Trust reserves the right to sell its shares to investors on applications received and accepted by the Trust. The Trust also reserves the right to issue Shares in connection with (i) the merger or consolidation of the assets of, or acquisition by the Trust through purchase or otherwise, with any other investment company, trust or personal holding company; (ii) a pro rata distribution directly to the holders of Shares in the nature of a stock

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dividend or split-up; and (iii) as otherwise may be provided in the then current registration statement of the Trust.

3. PUBLIC OFFERING PRICE. Except as otherwise noted in the Trust’s current prospectus (the “Prospectus”) or Statement of Additional Information (the “SAI”), all Shares sold by the Distributor or the Trust will be sold at the public offering price plus any applicable sales charge described therein. The public offering price for all accepted subscriptions will be the net asset value per share, determined in the manner described in the Trust’s then current Prospectus and SAI with respect to the applicable Fund. The Trust shall in all cases receive the net asset value per Share on all sales. If a sales charge is in effect, the Distributor shall be entitled to retain the applicable sales charges, if any, subject to any reallowance obligations of the Distributor as set forth in any selling agreements with selected dealers and others for the sale of Shares and/or as set forth in the Prospectus and/or SAI of the Trust with respect to Shares, in accordance with Section 22 of the 1940 Act and rules thereunder.

4. SUSPENSION OF SALES. If and whenever the determination of net asset value is suspended and until such suspension is terminated, no further orders for Shares shall be processed by the Distributor, except such unconditional orders placed with the Distributor before it had knowledge of the suspension. In addition, the Trust reserves the right to suspend sales of Shares and the Distributor’s authority to process orders for Shares if, in the judgment of the Trust, it is in the best interest of the Trust to do so. Suspension will continue for such period as may be determined by the Trust. In addition, the Trust and Distributor reserve the right to reject any purchase order.

5. SOLICITATION OF SALES. In consideration of these rights granted to the Distributor, the Distributor agrees to use all reasonable efforts, consistent with its other business, to secure purchasers for Shares of the Trust. This shall not prevent the Distributor from entering into like arrangements (including arrangements involving the payment of underwriting commissions) with other issuers. This does not obligate the Distributor to register as a broker-dealer under the Blue Sky Laws of any jurisdiction in which it is not now registered or to maintain registration in any jurisdiction in which it is now registered. The Distributor may also enter into dealer or similar agreements with qualified intermediaries it may select for the performance of distribution services and shareholder services, provided that the Board of Trustees shall approve the form of dealer agreement and shall evidence such approval by filing said form of dealer agreement and amendments thereto as an exhibit to its currently effective registration statement under the 1933 Act. The Distributor will not direct remuneration from commissions paid by the Trust for portfolio securities transactions to a broker or dealer for promoting or selling Shares.

6. AUTHORIZED REPRESENTATIONS. The Distributor is not authorized by the Trust to give any information or to make any representations other than those contained in the appropriate registration statements, Prospectuses or SAIs filed with the U.S. Securities and Exchange Commission under the 1933 Act (as those registration statements, Prospectuses and SAIs may be amended from time to time), or contained in shareholder reports or other material that may be prepared by or on behalf of the Trust for the Distributor’s use. This shall not be construed to prevent the Distributor from preparing and distributing, in compliance with

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applicable laws and regulations, sales literature or other material as it may deem appropriate. Distributor will furnish or cause to be furnished copies of such sales literature or other material to the Trust. Distributor agrees to take appropriate action to cease using such sales literature or other material to which the Trust reasonably objects as promptly as practicable after receipt of the objection. Distributor further agrees that, in connection with the offer and sale of Shares, Distributor shall comply with all applicable securities laws of the United States and each state thereof in which Shares are offered and/or sold (including without limitation, the maintenance of effective federal and state broker-dealer registrations, as required) and the rules and regulations of the NASD.

7. PORTFOLIO SECURITIES. Portfolio securities may be bought or sold by or through the Distributor and the Distributor may participate directly or indirectly in brokerage commissions or “spreads” for transactions in portfolio securities of the Funds.

8. REGISTRATION OF SHARES. The Trust agrees that it will use its best efforts to register Shares under the Blue Sky laws of any state as well as under the 1933 Act (subject to the necessary approval, if any, of its shareholders) and to qualify and maintain the registration and qualification of an unlimited number of shares under the 1933 Act so that there will be available for sale the number of Sales the Distributor may reasonably be expected to sell. Distributor shall furnish such information and other materials relating to its affairs and activities as shall be required by the Trust in connection with such registration and qualification. The Distributor agrees that it will not offer or sell Shares in any jurisdiction unless the offer or sale of Shares has been so qualified or registered or is otherwise exempt from such registration or qualification. The Trust shall furnish to the Distributor copies of all information, financial statements and other papers which the Distributor may reasonably request for use in connection with the distribution of Shares of each Fund.

9. EXPENSES, COMPENSATION AND REIMBURSEMENT.

(a) The Trust shall pay all fees and expenses (i) in connection with the preparation, setting in type and filing of any registration statement, Prospectus and Statement of Additional Information under the 1933 Act and amendments for the issue of its shares, (ii) in connection with the registration and qualification of shares for sale in the various states in which the officers of the Trust shall determine to be advisable (including registering the Trust as a broker or dealer or any officers of the Trust as agent or salesperson in any state), (iii) of preparing, setting in type, printing and mailing any report or other communication to shareholders of the Trust in their capacity as such, and (iv) of preparing, setting in type, printing and mailing Prospectuses, SAIs and any supplements thereto sent to existing shareholders.

(b) Compensation. For the distribution support services provided by the Distributor pursuant to the terms of this Agreement, the Trust shall, pursuant to the Distribution Plan adopted pursuant to Rule 12b-1 under the 1940 Act (the “Distribution Plan”), pay the Distributor at the rate and under the terms and conditions set forth in the Distribution Plan, as such Distribution Plan may be amended from time to time, and subject to any further limitations on such fees as the Board of Trustees of the Trust may impose. All rights of compensation under this Agreement for services performed by the Distributor as of the termination date shall survive

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the termination of this Agreement. Subject to and calculated in accordance with the Rules of Fair Practice of the NASD, if during any annual period the total of (i) the compensation payable to the Distributor and (ii) amounts payable under the Trust’s Distribution Plan exceeds 0.25% of a Fund’s average daily net assets, the Distributor will rebate that portion of its fee necessary to result in the total of (i) and (ii) above not exceeding 0.25% of the Fund’s average daily net assets. The payment of compensation is authorized pursuant to the Trust’s Distribution Plan adopted pursuant to Rule 12b-1 under the 1940 Act and is contingent upon the continued effectiveness of the Trust’s Distribution Plan.

(c) Revenue Sharing. As provided in the Distribution Plan adopted by the Trust, it is recognized by the Trust that the Adviser or its affiliates may make payments to the Distributor with respect to any expenses incurred in the distribution of Shares, such payments payable from the past profits or other resources of the Adviser or its affiliates including advisory fees paid to it by the Trust.

10. INDEMNIFICATION.

(a) The Trust agrees to indemnify and hold harmless the Distributor and each of its directors and officers and each person, if any, who controls the Distributor within the meaning of Section 15 of the 1933 Act against any loss, liability, claim, damage or expense (including the reasonable cost of investigating or defending any alleged loss, liability, claim, damage or expense and reasonable counsel fees incurred in connection therewith) arising out of or based upon: (i) any violation of the Trust’s representations or covenants herein contained; (ii) any wrongful act of the Trust or any of its representatives (other than the Distributor or any of its employees or representatives (regardless of the capacity in which such employee or representative is acting) or any other person for whose acts the Distributor is responsible or is alleged to be responsible (including any selected dealer or person through whom sales are made pursuant to an agreement with the Distributor)); or (iii) any untrue statement of a material fact contained in a registration statement, Prospectus, SAI or shareholder reports or other information filed or made public by the Trust (as from time to time amended) of any Fund or any omission to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading under the 1933 Act, or any other statute or common law, except to the extent the statement or omission was made in reliance upon, and in conformity with, information furnished to the Trust by or on behalf of the Distributor. In no case (i) is the indemnity by the Trust in favor of the Distributor or any person indemnified to be deemed to protect the Distributor or any person against any liability to the Trust or its security holders to which the Distributor or such person would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties or by reason of its reckless disregard of its obligations and duties under this agreement, or (ii) is the Trust to be liable under its indemnity agreements contained in this paragraph with respect to any claim made against the Distributor or any person indemnified unless the Distributor or person, as the case may be, shall have notified the Trust in writing of the claim within a reasonable time after the summons or other first written notification giving information of the nature of the claim shall have been served upon the Distributor or any such person or after the Distributor or such person shall have received notice of service on any designated agent. However, failure to notify the Trust of any claim shall not relieve the Trust from any liability which it may have to the Distributor or any person against

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whom such action is brought other than on account of its indemnity agreement contained in this Paragraph 10(a). The Trust shall be entitled to participate at its own expense in the defense, or, if it so elects, to assume the defense of any suit brought to enforce any claims, but if the Trust elects to assume the defense, the defense shall be conducted by counsel chosen by it and satisfactory to the Distributor, or person or persons, defendant or defendants in the suit. In the event the Trust elects to assume the defense of any suit and retain counsel, the Distributor, officers or directors or controlling person(s) or defendant(s) in the suit shall bear the fees and expenses of any additional counsel retained by them. If the Trust does not elect to assume the defense of any suit, it will reimburse the Distributor, officers or directors or controlling person(s) or defendant(s) in the suit for the reasonable fees and expenses of any counsel retained by them. The Trust agrees to notify the Distributor promptly of the commencement of any litigation or proceedings against it or any of its officers or Trustees in connection with the issuance or sale of any of the Shares.

(b) The Distributor agrees to indemnify and hold harmless the Trust and each of its Trustees and officers and each person, if any, who controls the Trust within the meaning of Section 15 of the 1933 Act, against any loss, liability, claim, damage or expense (including the reasonable cost of investigating or defending any alleged loss, liability, claim, damage or expense and reasonable counsel fees incurred in connection therewith) arising out of or based upon: (i) any violation of the Distributor’s representations or covenants herein contained; (ii) any wrongful act of the Distributor or any of its employees or representatives or any other person for whose acts the Distributor is responsible or is alleged to be responsible (including any selected dealer or person through whom sales are made pursuant to an agreement with the Distributor); or (iii) any untrue statement of a material fact contained in a registration statement, Prospectus, SAI or shareholder reports or other information filed or made public by the Trust (as from time to time amended) or any omission to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading, but only if the statement or omission was made in reliance upon, and in conformity with, information furnished to the Trust by or on behalf of the Distributor. In no case (x) is the indemnity by the Distributor in favor of the Trust or any person indemnified to be deemed to protect the Trust or any person against any liability to the Distributor or its security holders to which the Trust or such person would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties or by reason of its reckless disregard of its obligations and duties under this agreement, or (y) is the Distributor to be liable under its indemnity agreements contained in this paragraph with respect to any claim made against the Trust or any person indemnified unless the Trust or person, as the case may be, shall have notified the Distributor in writing of the claim within a reasonable time after the summons or other first written notification giving information of the nature of the claim shall have been served upon the Trust or any such person or after the Trust or such person shall have received notice of service on any designated agent. However, failure to notify the Distributor of any claim shall not relieve the Distributor from any liability which it may have to the Trust or any person against whom such action is brought other than on account of its indemnity agreement contained in this Paragraph 10(b). The Distributor shall be entitled to participate at its own expense in the defense, or, if it so elects, to assume the defense of any suit brought to enforce any claims, but if the Distributor elects to assume the defense, the defense shall be conducted by counsel chosen by it and satisfactory to the Trust, or person or persons, defendant or defendants in the suit. In the event the Distributor elects to assume the defense of

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any suit and retain counsel, the Trust, officers or Trustees or controlling person(s) or defendant(s) in the suit shall bear the fees and expenses of any additional counsel retained by them. If the Distributor does not elect to assume the defense of any suit, it will reimburse the Trust, officers or Trustees or controlling person(s) or defendant(s) in the suit for the reasonable fees and expenses of any counsel retained by them. The Distributor agrees to notify the Trust promptly of the commencement of any litigation or proceedings against it or any of its officers or directors in connection with the issuance or sale of any of the Shares.

11. CODE OF ETHICS. The Distributor has adopted a written code of ethics that complies with the requirements of Rule 17j-1 under the 1940 Act and will provide the Fund with a copy of such code of ethics and all subsequent modifications, together with evidence of its adoption. At least annually, the Distributor will provide the Fund with a report which (i) summarizes existing procedures for compliance with the code and any changes in the procedures made during the past year, (ii) describes any issues arising under the code since the last report to the Board of Trustees, including any material violations of the code and any sanctions imposed in response to the material violations, and (iii) identifies any recommended changes in existing restrictions or procedures based upon experience with the code, evolving industry practice, or developments in applicable laws or regulations. The Distributor will also certify, at least annually, that the Distributor has adopted procedures reasonably necessary to prevent “Access Persons” as defined in the code and Rule 17j-1 from violating the code.

12. CONFIDENTIALITY. The Distributor agrees to treat confidentially and as proprietary information of the Trust, all records and other information relative to the Trust and its prior, present or potential shareholders, and not to use such records and information for any purpose other than performance of its responsibilities and duties hereunder, except when requested by the Trust or when requested to divulge such information by duly constituted authorities, after prior notification to and approval in writing by the Trust. Such approval shall not be unreasonably withheld and may not be withheld where the Distributor may be exposed to civil or criminal contempt proceedings for failure to comply.

13. EFFECTIVENESS, TERMINATION, ETC. This Agreement shall become effective as follows: (i) with respect to the Shares of each Fund identified on Schedule A hereto as of the date hereof, and (ii) with respect to the Shares of any Fund added to Schedule A hereto, subsequent hereto, as of the date Schedule A is amended to add such Fund. Unless terminated as provided herein, the Agreement shall continue in force for one (1) year from the date of its execution and thereafter from year to year, provided continuance is approved at least annually by either (i) the vote of a majority of the Trustees of the Trust, or by the vote of a majority of the outstanding voting securities of the Trust, and (ii) the vote of a majority of those Trustees of the Trust who are not interested persons of the Trust and who are not parties to this Agreement or interested persons of any party, cast in person at a meeting called for the purpose of voting on the approval. This Agreement shall automatically terminate in the event of its assignment. In addition to termination by failure to approve continuance or by assignment, this Agreement may at any time be terminated without the payment of any penalty with respect to any Fund or class

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of Shares thereof by vote of a majority of the Trustees of the Trust who are not interested persons of the Trust, or by vote of a majority of the outstanding voting securities of the Fund or class of shares thereof, on not more than sixty (60) days’ written notice by the Trust. This Agreement may be terminated by the Distributor upon not less than sixty (60) days’ prior written notice to the Trust. As used in this Paragraph 13, the terms “vote of a majority of the outstanding voting securities,” “assignment” and “interested person” shall have the respective meanings specified in the 1940 Act and the rules enacted thereunder as now in effect or as hereafter amended.

14. NOTICE. Any notice under this Agreement shall be given in writing addressed and hand delivered or sent by registered or certified mail, postage prepaid, to the other party to this Agreement at its principal place of business.

15. SEVERABILITY. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby.

16. GOVERNING LAW. This Agreement shall be construed in accordance with the laws of the State of Delaware, without giving effect to the choice of laws provision thereof.

17. LIMITATION OF LIABILITY. The Distributor is expressly put on notice of the limitation of liability as set forth in the Trust’s Agreement and Declaration of Trust, and agrees that the obligations assumed by the Fund pursuant to this Agreement shall be limited in all cases to each Fund and each Fund’s respective assets, and the Distributor shall not seek satisfaction of any such obligation from shareholders or any shareholder of the Funds. In addition, the Distributor shall not seek satisfaction of any such obligations from the Trustees of the Trust or any individual Trustee. The Distributor understands that the rights and obligations of any Fund under Trust’s Agreement and Declaration of Trust are separate and distinct from those of any of and all other Funds.

18. AML AND PRIVACY. The Distributor represents that it is in compliance in all material respects, and will continue to so comply, with all applicable laws and regulations relating to guarding against terrorism and money laundering, and the Distributor agrees to comply with the Trust’s anti-money laundering program to the extent applicable. The Distributor also agrees to comply with the Trust’s privacy policies with respect to all information obtained pursuant to this Agreement. It is acknowledged and agreed that other service providers to the Trust perform anti-money laundering services and reviews for the Trust, and that the Distributor receives little, if any, information concerning Fund shareholders.

19. MARKET TIMING. From time to time, the Trust may implement policies, procedures or charges in an effort to avoid the potential adverse affects on the Funds of short-term trading by market timers. The Distributor agrees to cooperate in good faith with the Trust in the implementation of (i) any such policies, procedures or charges, and (ii) the imposition and payment over to the Trust of redemption fees specified in the Trust’s registration statement.

20. MISCELLANEOUS. Each party agrees to perform such further acts and execute such further documents as are necessary to effectuate the purposes hereof. The captions in this

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Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. This Agreement may be executed in two counterparts, each of which taken together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.

U.S. GLOBAL INVESTORS FUNDS U.S. GLOBAL BROKERAGE, INC.


By:	/s/ Frank E. Holmes Frank E. Holmes	By:	/s/ Susan K. Filyk Susan K. Filyk
	President and Chief Executive		President
	Officer

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SCHEDULE A

U.S. Global Investors Funds

Funds

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
Global MegaTrends Fund
Tax Free Fund
Near-Term Tax Free Fund
U.S. Government Securities Savings Fund
U.S. Treasury Securities Cash Fund

Dated: October 1, 2008

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Exhibit o

POWER OF ATTORNEY

We the undersigned officers and trustees of U.S. Global Investors Funds (Trust), do hereby severally constitute and appoint Frank E. Holmes and Susan B. McGee, and each of them acting singularly, as our true and lawful attorneys, with full powers to them and each of them to sign for us, in our names in the capacities indicated below, any Post-Effective Amendment to the Registration Statement of the Trust on Form N-1A to be filed with the Securities and Exchange Commission and to take such further action in respect thereto as they, in their sole discretion, deem necessary to enable the Trust to comply with the provisions of the Securities Act of 1933, as amended, and the Investment Company Act of 1940, as amended, and all requirements and regulations of the Securities and Exchange Commission, hereby ratifying and confirming our signatures as they may be signed by our said attorneys to any and all documents related to said Amendment to the Registration Statement.

IN WITNESS WHEREOF , we have hereunto set our hands on the dates indicated below.


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

Exhibit (p)1

CODE OF ETHICS
ADOPTED BY
U.S. GLOBAL INVESTORS FUNDS

Effective July 31, 2008

Each U.S. Global Fund adopts this Code of Ethics pursuant to Rule 17j-1 under the Investment Company Act of 1940, as amended (the “1940 Act”), with respect to certain types of personal securities transactions for the purpose of establishing reporting requirements and enforcement procedures with respect to such transactions. This Code and the reports required under it are promulgated to assure there are no violations of Rule 17j-1(b).

I. DEFINITIONS .

1. “Access Person” shall have the same meaning as that set forth in Rule 17j-1(a)(1) under the 1940 Act.

2. “Adviser” shall mean U.S. Global Investors, Inc.

3. “Beneficial Ownership” shall be interpreted in the same manner as it would be in determining whether a person is subject to the provisions of Section 16 of the Securities Exchange Act of 1934 and the rules and regulations thereunder, except that the determination of direct or indirect beneficial ownership shall apply to all securities that an Independent Trustee has or acquires.

4. “Considered for purchase or sale” shall mean a security that is being considered for purchase or sale by a Fund when an investment professional of the Adviser or a Subadviser has recommended that the Fund purchase or sell the Security.

5. “Control” shall have the same meaning as that set forth in Section 2(a)(9) of the 1940 Act. Generally, it means the power to exercise a controlling influence over the management or policies of a company, unless such power is solely the result of an official position with such company.

6. “Distributor” shall mean U.S. Global Brokerage, Inc.

7. “Fund” shall mean each registered investment company (and series thereof) advised by the Adviser.

8. “Interested Person” shall have the meaning as contained in Section 2(a)(19) of the 1940 Act.

9. “Independent Trustee” shall mean any trustee of a Fund who is not an Interested Person of the Fund.

10. “Purchase” or “sale” of a security includes, among other things, the writing of an option to purchase or sell a security.

11. “Security” shall have the same meaning as that set forth in Section 2(a)(36) of the 1940 Act (generally, all securities) except that it shall not include securities issued by the Government of the United States or an agency or instrumentality thereof (including all short-term debt securities that are government securities within the meaning of Section 2(a)(16) of the 1940 Act), bankers acceptances, bank certificates of deposit, commercial paper and shares of registered open-end investment companies. The term security includes any separate security that

is convertible into, exchangeable for or which carries a right to purchase a security and, for purposes of this Code, any shares of an exchange-traded fund.

12. “Subadviser” shall mean any entity that is a party to or enters into an agreement with the Adviser and/or a Fund pursuant to which such entity provides investment advisory services to the Fund.

13. “Third-Party Officer” shall mean any officer of a Fund who is not an employee of the Adviser, the Distributor, or a Subadviser.


II.		CODE PROVISIONS APPLICABLE ONLY TO INTERESTED PERSONS OF THE FUNDS.

Any Access Person of a Fund who is also an Access Person of the Adviser, the Distributor, or a Subadviser shall not be subject to this Code, so long as such Access Person is subject to a code of ethics duly adopted by the relevant Adviser, Distributor, or Subadviser relating to personal securities transactions by such Access Person (each, a “Third-Party Code”), provided that such Third-Party Code complies with the requirements of Rule 17j-1 and has been approved by the Board of Trustees of the Fund.


III.		CODE PROVISIONS APPLICABLE TO THE INDEPENDENT TRUSTEES AND THIRD-PARTY OFFICERS OF THE FUNDS.

1. General Fiduciary Principles . The following fiduciary principles are the policy of the Funds and it is the duty of the Independent Trustees and Third-Party Officers:

(a) To place the interests of the Funds first at all times;

(b) To conduct all personal securities transactions in such manner as to avoid any actual or potential conflict of interest or abuse of their position of trust and responsibility; and

(c) To avoid taking any inappropriate advantage of their positions or the information they acquire to the detriment of the Funds.

2. Fraudulent Practices . Pursuant to Rule 17j-1(b), persons covered by this Code shall not, in connection with the direct or indirect purchase or sale of a Security held or to be acquired by a Fund:

(a) Employ any device, scheme or artifice to defraud a Fund;

(b) Make any untrue statement of a material fact to a Fund or omit to state a material fact necessary in order to make the statements made to a Fund, in light of the circumstances under which they are made, not misleading;

(c) Engage in any act, practice or course of business that operates or would operate as a fraud or deceit on the Fund; or

(d) Engage in any manipulative practice with respect to a Fund.

3. Prohibited Purchases and Sales . No Independent Trustee or Third-Party Officer of a Fund shall knowingly effect the purchase or sale of any Security on any day during which that Security is being purchased or sold by the Fund or is being considered for purchase or sale by a Fund.

4. Exempted Transactions . The prohibitions of Section III.3 of this Code shall not apply to:

(a) Purchases or sales effected in any account over which the Independent Trustee or Third-Party Officer has no direct or indirect influence or control;

(b) Purchases or sales that are nonvolitional on the part of the Independent Trustee or Third-Party Officer of the Fund;

(d) Purchases effected upon the exercise of rights issued by an issuer pro rata to all holders of a class of its securities, to the extent such rights were acquired from such issuer, and sales of such rights so acquired;

(e) Sales of securities held in a margin account to the extent necessary in order to meet margin requirements;

(f) Purchases or sales other than those exempted in (a) through (e) above that: (i) will not cause the Independent Trustee or Third-Party Officer to gain improperly a personal profit as a result of his relationship with the Fund, or (ii) are only remotely potentially harmful to a Fund because the proposed transaction would be unlikely to affect a highly institutional market, or (iii) because of the circumstances of the proposed transaction, are not related economically to the Securities purchased or sold or to be purchased or sold by the Fund, and which, in each case, the Chief Compliance Officer of the Fund has previously approved, which approval shall be confirmed in writing.

5. Reporting by Independent Trustees .

(a) Whether or not one of the exemptions listed in Section III.4 hereof applies, each Independent Trustee of a Fund shall file with the Chief Compliance Officer of the Fund a written report containing the information described in Section III.5(b) of this Code with respect to each transaction in any Security in which such Independent Trustee has, or by reason of such transaction acquires, any direct or indirect beneficial ownership, if such Independent Trustee, at the time he entered into that transaction, knew or, in the ordinary course of fulfilling his official duties as a trustee of the Fund should have known, that during the 15-day period immediately preceding or after the date of that transaction:

(i) Such Security was or is to be purchased or sold by the Fund, or

(ii) Such Security was or is being considered for purchase or sale by the Fund; provided, however, that such Independent Trustee shall not be required to make a report with respect to any transaction effected for any account over which he does not have any direct or indirect influence or control. Each such report shall be deemed to be filed with the Fund for purposes of this Code, and may contain a statement that the report shall not be construed as an admission by the Independent Trustee that he has any direct or indirect Beneficial Ownership in the Security to which the report relates;

(b) Such report shall be made not later than 30 days after the end of the calendar quarter in which the transaction to which the report relates was effected, and shall contain the following information:

(i) The date of the transaction, the title of and the number of shares, and the principal amount of each Security involved;

(ii) The nature of the transaction (i.e., purchase, sale or any other type of acquisition or disposition);

(iii) The price at which the transaction was effected; and

(iv) The name of the broker, dealer, or bank with or through whom the transaction was effected.

Any report concerning a purchase or sale prohibited under Section III.3 hereof with respect to which the Independent Trustee relies upon one of the exemptions provided in Section III.4 shall contain a brief statement of the exemption relied upon and the circumstances of the transaction.

6. Reporting by Third-Party Officers .

(a) Each Third-Party Officer shall (i) instruct the broker/dealer executing any personal securities transaction to send a duplicate confirmation statement of the transaction containing the information specified in Rule 17j-1(d)(1)(ii) to the Chief Compliance Officer and file a quarterly affirmation with the Chief Compliance Officer stating that this was done; and (ii) file with the Chief Compliance Officer a securities transaction report for each transaction in any Security in which such officer has participated. This report must be filed within 30 days after the end of each calendar quarter.

(b) Within 10 days of becoming an officer of the Funds, such officer must complete an initial holdings report containing the information specified in Rule 17j-1(d)(1)(i).

7. Review . The Chief Compliance Officer of the Fund shall review or supervise the review of the personal securities transactions reported pursuant to Sections III.5 and III.6. . As part of that review, each such reported securities transaction shall be compared against completed and contemplated portfolio transactions of the Funds to determine whether a violation

of this Code may have occurred. The Chief Compliance Officer of the Funds shall evaluate whether a material violation of this Code has occurred, taking into account all the exemptions provided under Section III.4. Before making any determination that a violation has occurred, the Chief Compliance Officer shall give the person involved an opportunity to supply additional information regarding the transaction in question and shall consult with counsel for the Independent Trustee or Third-Party Officer whose transaction is in question.

8. Sanctions . If the Chief Compliance Officer determines that a material violation of this Code has occurred, the Chief Compliance Officer shall provide a written report of his or her determination to the Board of Trustees for such further action and sanctions as the Board deems appropriate.


IV.		MISCELLANEOUS PROVISIONS.

1. Amendment or Revision of Third-Party Code . Any material amendment or material revision of a Third-Party Code shall be furnished to the Independent Trustees of the Funds for consideration no later than six months after the adoption of the material amendment or material revision.

2. Records . Each Fund shall maintain records in the manner and to the extent set forth below, which records may be maintained on microfilm under the conditions described in Rule 31a-2(f)(1) under the 1940 Act and shall be available for examination by representatives of the Securities and Exchange Commission:

(a) A copy of this Code and any other code that is, or at any time within the past five years has been, in effect shall be preserved in an easily accessible place;

(b) 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;

(c) A copy of each report made by an officer or trustee pursuant to this Code shall be preserved for a period of not less than five years from the end of the fiscal year in which it is made, the first two years in an easily accessible place; and

(d) A list of all persons who are, or within the past five years have been, required to make reports pursuant to this Code shall be maintained in an easily accessible place.

3. Confidentiality . All reports of securities transactions and any other information filed with the Fund or furnished to any person pursuant to this Code shall be treated as confidential, but are subject to review as provided herein and by representatives of the Securities and Exchange Commission.

4. Interpretation of Provisions . The trustees of the Funds may adopt from time to time such interpretation of this Code as they deem appropriate.

5. Effect of Violation of This Code . In adopting Rule 17j-1, the Securities and Exchange Commission specifically noted in Investment Company Act Release No. 11421 that a

violation of any provision of a particular code of ethics, such as this Code, would not be considered a per se unlawful act prohibited by the general antifraud provisions of the Rule. In adopting this Code of Ethics, it is not intended that a violation of this Code is or should be considered to be a violation of Rule 17j-1.

Exhibit (p)2

Code of Ethics
Adopted by
U.S. Global Investors, Inc.
U.S. Global Brokerage, Inc.

Effective June 28, 1989
As Amended November 13, 1989
As Amended May 17, 1993
As Amended February 14, 1994
As Amended December 5, 1994
As Amended March 1, 1996
As Amended May 24, 1996
As Amended June 2, 1997
As Amended October 29, 1997
As Amended December 12, 1997
As Amended December 3, 1999
As Amended December 9, 2004
As Amended March 23, 2005
As Amended March 1, 2008
As Amended May 13, 2008
As Amended June 3, 2008
As Amended August 20, 2008

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TABLE OF CONTENTS


		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

APPENDIX A	Definitions
APPENDIX B	Quarterly Certification of Partially Covered Independent Directors

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1. INTRODUCTION AND OVERVIEW

For the definition of bolded terms used throughout this Code of Ethics, see Appendix A.

1.1. Statement of General Principles

The mission of U.S. Global Investors, Inc. (“USGI”) is to maximize the growth, protection, and service of our clients’ wealth with the highest ethical standards. This Code of Ethics (the “Code”) is intended to help ensure that our professional and personal conduct preserves our reputation for high standards of ethics and integrity.

The purposes of this Code are to:

(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.

You must agree:

	(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.

This Code is just one element of our program to avoid conflicts of interest and ensure that the duties we owe to our clients remain our foremost priority. In addition to this Code, you may be subject to other USGI policies such as, among others, USGI’s Protection of Material, Nonpublic Information Policy, USGI’s Code of Business Conduct, and the U.S. Global Funds’ Policies and Procedures on Disclosure of Portfolio Holdings.

1.2. Adoption of the Code of Ethics

This Code has been adopted for USGI and USGB in accordance with Rule 204A-1 under the Investment Advisers Act of 1940, as amended, and Rule 17j-1 under the Investment Company Act of 1940, as amended. Each rule

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requires, at a minimum, that USGI and USGB adopt a code of ethics that sets forth standards of conduct, requires compliance with the Federal Securities Laws , and addresses personal trading by certain personnel.

2. COVERED PERSONS

Persons covered by this Code are called Covered Persons, and include any officer, director (other than a Partially Covered Independent Director ), or employee of USGI or USGB, and any other person designated by the Chief Compliance Officer .

Certain Covered Persons are also categorized as Covered Independent Directors or as Investment Personnel , which includes, among others, any Portfolio Manager , investment analyst, trader, or any USGI officer, director, employee, or consultant who, in connection with his or her regular functions or duties, makes or participates in making recommendations on behalf of USGI regarding the purchase or sale of specific securities by the U.S. Global Funds or Other USGI-Managed Accounts, and any other person designated by the Chief Compliance Officer .

Independent directors of USGI who are not involved in the day-to-day operations of USGI or the portfolio management of USGI’s client portfolios generally are not considered Covered Persons under the Code of Ethics and, therefore, are required only to provide the quarterly certification in Appendix B and to comply with the provisions of this Code of Ethics dealing with personal transactions in USGI Stock . These directors are called Partially Covered Independent Directors . If an independent director of USGI cannot make the certifications set forth in Appendix B, then such independent director will be deemed a Covered Independent Director and is subject to all the provisions of this Code that apply to Covered Persons , unless otherwise specifically indicated herein.

Be aware that some provisions of this Code apply indirectly to other persons, such as relatives, significant others, or advisers, if they own or manage securities in which a Covered Person has a Beneficial Ownership interest. For example, if you are a Covered Person , the Code’s investment restrictions and reporting requirements apply both to you, and to securities or accounts owned by a relative who lives in your home or whom you support, or by a non-relative who shares significant financial arrangements with you, or managed by an adviser for you or a close relative.

For the purposes of this Code, USGI and any Independent Subadvisers shall be treated as separate unrelated entities and shall not be required to coordinate their efforts with respect to any pre-clearance requirements.

3. RESTRICTIONS ON PERSONAL INVESTING ACTIVITIES

Covered Persons , other than Investment Personnel , may purchase or sell, in accordance with the provisions of this Code, Covered Securities , USGI Stock , and Reportable U.S. Global Funds .

Covered Persons , other than the Covered Independent Directors and USGI for its own account, are prohibited from having margin accounts, trading options, or purchasing or selling HOLDRS.

Investment Personnel are prohibited from purchasing Covered Securities , except Investment Personnel may purchase and sell USGI Stock , Reportable U.S. Global Funds , and Excepted Securities (e.g., open-end mutual funds, other than exchange-traded funds). In addition, Investment Personnel , in accordance with the provisions of this Code, may engage in Excepted Transactions (e.g., transactions over which you have no influence or control) and sell Covered Securities that you already hold or later acquire in an Excepted Transaction .

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In the future, USGI and USGB may decide to lift the prohibition on the purchase of Covered Securities by Investment Personnel .

3.1. Reportable U.S. Global Funds

All Covered Persons must always conduct their personal investing activities in Reportable U.S. Global Funds in which they have any direct or indirect Beneficial Ownership lawfully, properly, and responsibly, and are encouraged to adopt long-term investment strategies in Reportable U.S. Global Funds that are consistent with their financial resources and objectives.

Excessive Trading in Reportable U.S. Global Funds by Covered Persons is prohibited. Any Covered Person who is identified as having engaged in Excessive Trading in Reportable U.S. Global Funds will be sanctioned as set forth in Section 7.4, unless you can demonstrate to the Review Committee in writing that a bona fide and sufficient personal or family economic hardship exists warranting the gravity of an exception.

3.2. Initial Public Offerings

No Covered Person , other than the Covered Independent Directors or USGI for its own accounts, shall effect or be permitted to effect the purchase of a security from the issuer, or any member of the underwriting syndicate or selling group, in and during the course of any Initial Public Offering by or on behalf of the issuer of such security. The Covered Independent Directors and USGI must pre-clear their transactions in Initial Public Offerings in accordance with Section 4.

3.3. Limited Offering Transaction

No Covered Person may purchase a security in a Limited Offering transaction (e.g., private placements, private investment partnerships, and other private interests) without obtaining the advance written approval of the Chief Compliance Officer . In determining whether or not to grant approval of participation in a Limited Offering , the Chief Compliance Officer will consider, among any other pertinent factors:

	(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.

In adopting this Code, USGI acknowledges its responsibility to monitor activities of the firm and those of its Covered Persons to ensure that investment decisions on behalf of the U.S. Global Funds and/or Other USGI-Managed Accounts relating to any Limited Offering transaction with respect to which a Covered Person has obtained pre-acquisition approval will be subject to independent review by senior USGI Investment Personnel having no personal interest in the issuer or any of its securities.

3.4. “Black-Out” Trading Restrictions

Two-Day Restriction: A Covered Person (except for the Covered Independent Directors ) may not effect a Personal Securities Transaction in a Covered Security if (i) a U.S. Global Fund or Other USGI-Managed Account purchased or sold the same Covered Security or Equivalent Covered Security one trading day earlier or (ii) the Covered Person has actual knowledge regarding whether the same Covered Security or Equivalent Covered Security is being considered for purchase or sale on the current or next trading day by a U.S. Global Fund

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or Other USGI-Managed Account.

14-Day Restriction: Investment Personnel may not dispose of a Covered Security within seven calendar days before, or seven calendar days after, the trade date of a purchase or sale of the same Covered Security or any Equivalent Covered Security by or on behalf of any U.S. Global Fund or any Other USGI-Managed Account.

The foregoing Two- and 14-Day Restrictions shall not apply to any Personal Securities Transaction , or series of related transactions within the prior 30 days, amounting to $10,000 or less in the aggregate, only if such Personal Securities Transaction involves the common stock or an Equivalent Covered Security of an issuer with a market capitalization over $5 billion; provided, however, that Investment Personnel may not dispose of a Covered Security on the same day of a purchase or sale of the same Covered Security or any Equivalent Covered Security by or on behalf of any U.S. Global Fund or any Other USGI-Managed Account if such person knows, or should have known, about such purchase or sale.

In the event that a Personal Securities Transaction is effected in contravention of either of the two foregoing restrictions, the Covered Person involved shall, as soon as practicable after becoming aware of the violative nature of his or her Personal Securities Transaction (irrespective of any pre-execution clearance which may have been previously granted for the transaction), promptly (i) advise the Chief Compliance Officer of the violation and (ii) comply with whatever directions, by way of disgorgement, which the Chief Compliance Officer may issue in order for the violation to be fully and adequately rectified.

3.5. Short-Term Matched Profit Restriction on Covered Securities Transactions

Covered Persons , subject to the exceptions noted immediately below, shall not engage in any Short-Term Matched Profit Transaction within the meaning of this Code. This prohibition is intended to apply to all instances of short-term (i.e., 60 calendar days or less) purchase and sale or sale and purchase transactions or security “short-selling.”

The Chief Compliance Officer may, and is hereby granted authority to determine, in his or her discretion, to except a given personal securities transaction from the prohibition established by the foregoing sub-paragraph in cases where:

	(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.

Exceptions will be granted only upon meritorious circumstances and, if granted, will be promptly reported, in writing, to the Review Committee .

3.6. Prohibition on Trading on Material, Nonpublic Information

All Covered Persons must comply with USGI’s Protection of Material, Nonpublic Information Policy, which, among other things, prohibits trading in any Covered Security at any time that a Covered Person is in possession of material, nonpublic information about the issuer of such security.

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3.7. Limitations on Trading In USGI Stock

3.7.1. Limitations on Purchases of USGI Stock

Covered Persons and Partially Covered Independent Directors with access to financial data regarding USGI may only trade in USGI Stock, subject to pre-clearance as provided below in Section 4, during the period commencing 24 hours after USGI publicly announces its quarterly earnings until 15 calendar days before the end of a quarter (unless USGI management has implemented a trading blackout in USGI Stock due to a material corporate event or other such circumstances). The Chief Compliance Officer may allow written exceptions to this prohibition for good cause.

3.7.2. Prohibitions on Purchases of USGI Stock

Covered Persons and Partially Covered Independent Directors may not engage in transactions in USGI Stock that are speculative in nature. These transactions include, but are not limited to: (i) the writing of a call option or the purchase of a put option if the amount of securities underlying the option exceed the amount of securities you otherwise own; (ii) short sales (i.e., selling borrowed securities); and (iii) transacting in the securities of any entity with which USGI is discussing business matters.

4. PRE-CLEARANCE OF TRANSACTIONS

4.1 Pre-Clearance Process

Covered Persons (except the Covered Independent Directors for transactions that do not involve USGI Stock or are not Initial Public Offerings or Limited Offerings ) are required, prior to the execution of any Personal Securities Transaction in USGI Stock or a Covered Security , including any voluntary contribution or adjustment to an Automatic Investment Plan, Dividend Reinvestment Plan, Employee Stock Option Plan, or Employee Stock Purchase Plan, or other similar stock plan in which they will have any direct or indirect Beneficial Ownership , to seek and obtain the express approval of the Chief Compliance Officer by completing a Request to Pre-Clear Form (attached as Appendix B) and submitting it to the Chief Compliance Officer .

If approval of a transaction is granted, the approval is good until the end of the trading day (generally 3 p.m. CT). If the authorized transaction is not executed within this time period, you must complete a new Request to Pre-Clear Form if you still wish to execute the transaction.

4.2. Effect of Pre-Execution Clearance of Personal Covered Securities Transactions

Approval of a request for pre-execution clearance shall not operate as a waiver, satisfaction or presumption of satisfaction of any other provision of this Code, but only as evidence of good faith on your part, which may be considered by the Review Committee should a violation of any other provision of this Code be determined to have occurred.

5. REPORTING REQUIREMENTS

5.1. Acknowledgement Form

All Covered Persons must complete and return to the Chief Compliance Officer an executed Acknowledgement Certification to the Code no later than 10 calendar days after becoming a Covered Person . Each Covered Person

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must also certify annually to compliance with the Code by completing and returning an Acknowledgement Certification to the Chief Compliance Officer no later than February 1.

5.2. Initial Holdings Reports

Covered Persons , no later than 10 days after a person is designated as such, must provide and certify the following personal holdings information (which must be current as of a date no more than 45 days prior to the date the person becomes a 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 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 .

5.3. Account Confirmations and Statements

Covered Persons are required to ensure that the office of the Chief Compliance Officer is furnished duplicate copies of the following account documents:

	(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.

Such copies shall be provided to the Chief Compliance Officer at the time that the Covered Person receives his or her copies from the broker, dealer, bank, or transfer agent.

5.4. Quarterly Transaction Reports

Covered Persons shall submit on a calendar quarterly basis, a Quarterly Securities Transaction Report of all personal securities transactions. The quarterly report must also include any voluntary contribution or adjustment to Automatic Investment Plans, Dividend Reinvestment Plans, Employee Stock Option Plans, Employee Stock Purchase Plans, or similar stock compensation plans. Such quarterly report shall be submitted to the Chief Compliance Officer no later than 30 calendar days after the end of each calendar quarter.

The quarterly report should not include any transactions in U.S. Global money market funds or Excepted Securities , or any Excepted Transactions (as defined in Appendix A). The certification of the quarterly report is

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required regardless of whether or not the Covered Person had any securities transactions activity during the quarter.

Each quarterly report may contain a statement that the report shall not be construed as an admission by the Covered Person that he or she has any direct or indirect Beneficial Ownership in any security to which the report relates.

Officers, directors, and employees of USGI are not required to report transactions effected for USGI’s own accounts. USGI’s Chief Financial Officer shall cause USGI to provide the Chief Compliance Officer with duplicate confirmations as provided above in Section 5.3.

The Quarterly Securities Transaction Report must contain the following information relating to the most recent calendar quarter:

	(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.

With respect to any new account established by a Covered Person in which any Covered Securities, USGI Stock, or Reportable U.S. Global Funds were held during the quarter for the direct or indirect benefit of the Covered Person :

	(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 .

5.5. Annual Holdings Reports

Covered Persons must provide and certify annually the following personal holdings information (which information must be current as of a date no more than 45 days before the report is submitted):

	(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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5.6. Other Reporting and Disclosure Requirements

Covered Persons are required, upon first becoming a Covered Person to review the Code, complete a quiz about the Code, and furnish a disclosure and identification of all securities accounts with brokers, dealers, banks, and transfer agents in which the Covered Person currently has any direct or indirect Beneficial Ownership interest.

5.7. Newly Opened Securities Accounts

Covered Persons must notify the Chief Compliance Officer of any new securities accounts within 15 days of the account being opened. In addition, all Covered Persons must notify the Chief Compliance Officer of any new Reportable U.S. Global Fund accounts within 15 days of the account being opened.

5.8. Exemption to Reporting Requirements

A person need not make an initial, quarterly or annual report under this section with respect to transactions effected for, and Covered Securities or Reportable U.S. Global Funds held in, any account over which the person had no direct influence or control.

Furthermore, quarterly transaction reports need not be filed for any transaction effected in a Non-Discretionary Account if the Chief Compliance Officer , after a thorough review, is satisfied that the Covered Person truly has no discretion over the account. In making requests for quarterly transaction report exemptions, Covered Persons will be required to furnish whatever information is called for by the Chief Compliance Officer .

5.9. Additional Reporting Requirements Concerning USGI Stock

	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 Insider’s responsibility, not USGI’s.

	•		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 Insider’s 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.

6. RESTRICTIONS ON OTHER ACTIVITIES

6.1. Policy on Gifts, Gratuities, Favors, and Other Benefits

Gifts, gratuities, favors, or other benefits (“Gifts”) may be given or accepted only if they are in accordance with generally accepted business practices and do not raise any question of impropriety. A question of impropriety may be raised if a Gift influences or gives the appearance of influencing the recipient.

On occasion, you may be offered Gifts from clients, brokers, vendors, or other persons not affiliated with USGI or USGB who may be in a position to do business with USGI or USGB. You may not accept extraordinary or extravagant gifts. You may accept gifts of a nominal value (i.e., no more than $100 annually from one person), customary business meals and entertainment if both you and the giver are present (e.g., sporting events), and promotional items (e.g., pens or mugs). If you are licensed and registered with the Financial Industry Regulatory Authority (“FINRA”), you also are subject to those provisions of the NASD Conduct Rules relating to the receipt of Gifts.

You may not solicit Gifts.

You may not give a Gift that has a fair market value greater than $100 per year to persons associated with securities or financial organizations, exchanges, member firms, commodity firms, news media, or clients of USGI or USGB. You may provide reasonable entertainment to these persons if both you and the recipient are present. Please do not give or receive gifts or entertainment that would be embarrassing to you, USGI, or USGB if made public.

6.2. Policy on Service as a Director of a Public Company

6.2.1. Prohibition against Serving as a Director of a Public Company

No Covered Person except the Covered Independent Directors and the Chief Executive Officer (“CEO”) shall serve on the board of directors of a publicly traded company (“Public Company”) (other than USGI, its subsidiaries and affiliates, including investment companies).

6.2.2. Pre-Approval for CEO to Serve as Director

If the CEO intends to serve as a director of a Public Company (or if he serves as a director for a private company that proposes to become public), he shall first notify the boards of directors of USGI and the board of trustees of each investment company registered under the 1940 Act for which USGI serves as investment

Page 9 of 18

adviser. Each Board shall be given an opportunity to ask questions and discuss the CEO’s proposed service as a director.

6.2.3. Trading Restrictions While Serving as Director

When the CEO serves on the board of directors of a Public Company, he (trading for his own account) and USGI (trading for its own accounts or on behalf of the U.S. Global Funds or Other USGI-Managed Accounts) are prohibited from trading in the securities of the Public Company (except during the “Trading Window”) for as long as the CEO serves as a director and continuing until the Public Company issues a Form 10-K, 10-Q, or otherwise makes a public announcement which discloses any material nonpublic information which the CEO may possess. The Trading Window begins on the third trading day after the Public Company issues a Form 10-K, 10-Q, or otherwise makes a public announcement that discloses any material nonpublic information the CEO may possess and continues for a period of 30 days after publication. If the Public Company has an insider trading policy that is in whole or in part more restrictive than this Code, the more restrictive provision shall apply to the CEO or USGI.

6.2.4. Pre-Clearance Requirement

The CEO (trading for his own account) and USGI (trading for its own accounts or on behalf of the U.S. Global Funds or Other USGI-Managed Accounts) may trade in the securities of the Public Company during the “Trading Window” after the CEO pre-clears the transactions with the Chief Compliance Officer .

7. ADMINISTRATION OF THE CODE OF ETHICS

7.1. Review by Chief Compliance Officer

The Chief Compliance Officer shall regularly review or supervise the review of the Personal Securities Transactions that are subject to this Code. The Compliance Department will provide a quarterly report of his or her review to the Review Committee .

7.2. Review Committee

If the Chief Compliance Officer determines that a violation may have occurred, he or she shall promptly submit the pertinent information about the transaction to the Review Committee , which shall evaluate whether a violation of this Code has occurred and whether the violation was material, taking into account all facts and circumstances. Before determining that a violation has occurred, the Review Committee shall give the person involved an opportunity to supply additional information about the transaction in question.

7.3. Imposition of Sanctions

If the Review Committee determines that a violation of this Code has occurred, the CEO shall provide a written report of the Review Committee’s determination and sanctions to USGI’s Board of Directors for such further action and sanctions as the Board deems appropriate. In the event the violation involves the CEO, the USGI Director serving on the Review Committee shall issue the report. The Review Committee may impose such sanctions as it deems appropriate, including, without limitation, a letter of censure or suspension, termination of employment or personal trading privileges. All material violations and any sanctions imposed with respect thereto shall be reported to the Board of Directors of USGI and the Board of Directors/Trustees of any client which has been directly affected by the violation.

Page 10 of 18

7.4. Sanction Guidelines

Outlined below are the guidelines for the sanctions that may be imposed on Covered Persons who fail to comply with the Code:

	•		First violation — A written or verbal reprimand may be given to the person and a copy or record will be put in the person’s personnel file. The written or verbal reprimand will reinforce the person’s 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 person’s personal trading file maintained by USGI.

7.5. Exemptions from the Code

The Review Committee may exempt any transaction or class of transactions from this Code if it finds that the exemption is consistent with the intent and purposes of the Advisers Act and the 1940 Act. The exemption shall be in writing and signed by each member of the Review Committee . No member of the Review Committee shall participate in any discussion or decision involving a potential exemption from this Code for a transaction in which the member has any direct or indirect beneficial interest.

7.6. Records

The Chief Compliance Officer shall ensure that the following records are maintained: (i) a copy of this Code and any amendment thereto that is or at any time within the past five years has been in effect; (ii) a record of any violation of this Code, or any amendment thereof, and any action taken as a result of such violation; (iii) files for personal securities transaction confirmations and account statements, all reports and pre-clearance requests submitted by Covered Persons pursuant to the Code and any action taken thereon; (iv) a list of all persons who are, or have been, required to submit reports pursuant to the Code; (v) a copy of each report created under this Code; and (vi) records relating to violations under the Code and any sanctions imposed. Such records shall be maintained in accordance with and for the time periods required under the 1940 Act and the Advisers Act.

7.7. Amendments

The directors of USGI may from time to time amend this Code and adopt interpretations of this Code as they deem appropriate. The Board of Directors/Trustees of any Client that previously has received a copy of this Code immediately shall be provided with a copy of the Code as amended.

7.8. Questions

Every Covered Person must read and retain this Code and should consult the Chief Compliance Officer about any question arising under this Code.

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APPENDIX A

DEFINITIONS

As used within this Code, the following terms have the following meanings:

Defined Persons

Covered Person means: (i) any officer, director (other than Partially Covered Independent Directors) , or employee of USGI or USGB; (ii) USGI itself when trading for any of its own accounts; and (iii) any other person designated by the Chief Compliance Officer .

Investment Personnel means (i) any Portfolio Manager or any USGI officer, director, employee, or consultant who, in connection with his or her regular functions or duties, makes or participates in making recommendations on behalf of USGI regarding the purchase or sale of specific securities by the U.S. Global Funds or Other USGI-Managed Accounts and (ii) all other employees or consultants that are part of USGI’s Investments department, including investment analysts, traders, and the administrative assistants of those persons identified in subsection (i).

Covered Independent Director means any director of USGI who is not Investment Personnel or an employee of USGI, or an affiliate thereof, but who cannot make the certifications set forth in Appendix B.

Partially Covered Independent Director means any director of USGI who is not Investment Personnel or an employee of USGI, or an affiliate thereof, and who can make the certifications set forth in Appendix B.

Independent Subadviser means any subadviser with which USGI has contracted to manage the investment portfolios of one or more clients and which the Review Committee has designated as independent. Independence is a question of fact. Factors include, but are not limited to, performance of securities research, analysis, selection, and trading conducted independently and separately from USGI. The fact that USGI or any of its affiliates provide advisory and/or administrative services for a U.S. Global Fund or Other USGI-Managed Account advised by a subadviser will not by itself prevent the subadviser from being independent.

Portfolio Manager means any Covered Person who, with respect to any U.S. Global Fund or Other USGI-Managed Account, has or shares with any other person the primary responsibility for the day-to-day management of the investment portfolio of such U.S. Global Fund or Other USGI-Managed Account.

Defined Securities and Accounts

Covered Security encompasses each of the following (but not an Excepted Security, a Reportable U.S. Global Fund , or USGI Stock each of which is separately defined below):

	•		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.

Equivalent Covered Security means, with respect to another security (the “reference security”), any security of the same class as the reference security, as well as any option (including puts as well as calls), warrant, convertible security, subscription or stock appreciation right, or other right or privilege on, for or with respect to the reference security.

Excepted Security means any security issued by the Government of the United States, bankers’ acceptance, bank certificate of deposit, commercial paper, share of any open-end money market fund, or share of any other registered open-end investment company (other than a Reportable U.S. Global Fund or an exchange-traded fund). In accordance with interpretations of the SEC :

	(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 obligation’s 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.

Non-Discretionary Account means any account over which a Covered Person has given full investment discretion to a third party, retaining no ability to influence specific trades.

Other USGI-Managed Account means any person (besides the U.S. Global Funds ) who has a current advisory agreement with USGI. Other USGI-Managed Account shall include any partnership or limited liability company of which USGI, or an affiliate thereof, is a general partner or managing member.

Reportable U.S. Global Funds means any U.S. Global Fund , other than U.S. Global money market funds.

USGI Stock means securities issued by USGI.

U.S. Global Funds means each and all of the following registered investment companies currently advised by USGI, together with any series or portfolio thereof:

	•		U.S. Global Accolade Funds

	•		U.S. Global Investors Funds

Defined Transactions

Excessive Trading is defined as either (i) transactions in a Reportable U.S. Global Fund (other than the U.S. Government Securities Savings Fund or the U.S. Treasury Securities Cash Fund) that violate any short-term trading restriction described in each Reportable U.S. Global Fund’s prospectus or (ii) a transaction in a Reportable U.S. Global Fund (other than the U.S. Government Securities Savings Fund or the U.S. Treasury Securities Cash Fund)

Page 13 of 18

which, when matched (on either a purchase-and-sale, or sale-and-purchase, basis) with any other such transaction (other than a transaction made pursuant to an automatic dividend reinvestment or automatic investment plan) by or on behalf of the same person in the same Reportable U.S. Global Fund (other than the U.S. Government Securities Savings Fund or the U.S. Treasury Securities Cash Fund) occurring within thirty (30) calendar days before or after the subject transaction, regardless of whether such transactions occur across multiple accounts in the same Reportable U.S. Global Fund .

Initial Public Offering means an offering of securities registered under the Securities Act of 1933, the issuer of which, immediately before the registration, was not subject to the reporting requirements of Sections 13 or 15(d) of the Exchange Act, or a similar initial offering of securities under the laws of a foreign country.

Limited Offering means an offering that is exempt from registration under state securities laws and under the Securities Act of 1933, such as transactions by an issuer not involving a public offering or sales of securities to accredited investors, or sales of securities to a limited number of investors or in limited dollar amounts, or a similar offering of securities under the laws of a foreign country.

Personal Securities Transaction means the execution, either directly or indirectly, of any “purchase or sale of a security.”

Purchase Or Sale Of A Covered Security shall include any bargain, contract or other arrangement including the writing of an option to purchase or sell a Covered Security , by which a person (other than a U.S. Global Fund or Other USGI-Managed Account) purchases, buys or otherwise acquires, or sells or otherwise disposes of, a security in which he or she currently has or thereby acquires any direct or indirect Beneficial Ownership interest.

Excepted Transaction means any transaction excepted from the definition of Purchase Or Sale Of A Covered Security by this Code and includes any purchase or sale of a security:

	(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.

Beneficial Ownership is interpreted in the same manner as it would be under Rule 16a-1(a)(2) under the Exchange Act, as amended, in determining whether a person is subject to the provisions of Section 16 except that the determination of direct or indirect Beneficial Ownership shall apply to all securities which a Covered Person has or acquires. For example, in addition to a person’s own accounts, the term Beneficial Ownership encompasses securities held in the name of a spouse or equivalent domestic partnership, minor children, a relative sharing your home, or certain trusts under which you or a related party is a beneficiary, or held under other arrangements indicating a share of financial interests.

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Specific examples of the types of accounts over which a Covered Person generally is deemed to have Beneficial Ownership include the following:

	(a)		The person’s spouse, minor children, or any other relatives sharing the person’s 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.

Short-Term Matched Profit Transaction means the combination of any “personal securities transaction” (the subject transaction) in a Covered Security which, when matched (on either a purchase-and-sale, or sale-and-purchase, basis) with any other such transaction by or on behalf of the same person in the same (or any “equivalent”) Covered Security or Equivalent Covered Security occurring within sixty (60) calendar days before or after the subject transaction, results in actual trading profit for the person.

Other Definitions

Chief Compliance Officer means the officer of USGI designated by vote of USGI’s Board of Directors to receive reports and take certain actions as provided in this Code.

Federal Securities Laws means the Securities Act of 1933, the Exchange Act, the Sarbanes-Oxley Act of 2002, the Investment Company Act of 1940, the Investment Advisers Act of 1940, Title V of the Gramm-Leach-Bliley Act, any rules adopted by the SEC under any of these statutes, the Bank Secrecy Act as it applies to funds and investment advisers, and any rules adopted thereunder by the SEC or the Department of the Treasury.

Review Committee means the USGI committee which consists of USGI’s Chief Executive Officer/Chief Investment Officer, President/General Counsel, and Chief Compliance Officer . Should the committee meet to discuss a transaction involving a USGI proprietary account or a transaction involving any of the committee members, a USGI Director, as nominated by the Board of Directors, will take the place of that committee member.

SEC means the Securities and Exchange Commission.

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APPENDIX B

Quarterly Certification

In my capacity as Director of U.S. Global Investors, Inc. (“USGI”), I hereby certify that during the previous calendar quarter:

	•		I did not have access to or knowledge of nonpublic information regarding any USGI client’s 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.

Director

Date

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Exhibit (p)3

CHARLEMAGNE CAPITAL (IOM) LIMITED

COMPLIANCE & OPERATING PROCEDURES

(Updated 1/11/07)

INVESTMENT BUSINESS

CONTENTS


GLOSSARY		3
INTRODUCTION		4

SECTION 1

1.	LICENCE CONDITIONS OF CCIOM	5
2.	COMPLIANCE ARRANGEMENTS	5
3.	TRAINING & COMPETENCE	6
	Staff Training Policy	8
4.	EMPLOYEE DUTIES AND RESPONSIBILITIES	8
	Service as a Director	8
	Four Eyes Control	8
5.	HANDLING CUSTOMER COMPLAINTS (COB 6.8)	8
6.	RULE BREACHES	9
7.	PERSONAL ACCOUNT DEALING	10
8.	INDUCEMENTS FSC (COB 2.5)	11
9.	RECORD KEEPING (COB 8)	12
10.	SECURITY	12
	Visitors	12
	Access to Computer Systems	12
	Confidential Papers	12
11.	E-MAIL POLICY — USAGE	12
12.	DATA PROTECTION	13
	Provisions in Relation To Employment	13
	Companies Act (Various)	14
	Client Data	14
	Privacy Policy and Privacy Notes	13
	Disposal of Client Data	13
	Provisions in Relation to the Processing of Data	13
13.	ELECTRONIC TRANSACTIONS ACT 2000	14
14.	NOTE PAPER AND BUSINESS CARDS	14
15.	CLIENTS MONEY (CM 1.2)	14
	Custody	14
16.	CUSTOMER AGREEMENTS (COB 5.1)	15
17.	GENERAL MARKETING RESTRICTIONS	15
18.	ANTI-MONEY LAUNDERING (COB 6.1, SECTION 9 IBA)	16
	Action To Be Taken On Suspicion of Money-Laundering	16
	Awareness of and training of staff	17
	Money laundering Reporting Officer	17
19.	CUSTOMER IDENTITY CHECKING REQUIREMENTS	17
20.	DISCLOSURES	18
	Form ADV	18
	The Brochure Rule	18
	Disclosure of Financial and Disciplinary Information	19
	Client Reporting	19
21.	INVESTMENT ADVISORY CONTRACTS	19
22.	VALUATION	20
23.	INVESTMENT ADVISORY FEES	20
24.	PROXY VOTING POLICY AND PROCEDURES	20
25.	BUSINESS CONTINUITY AND DISASTER RECOVERY PLAN	20

SECTION 2


1.	SEPARATION OF DUTIES	22
2.	NEW BUSINESS	22
3.	DEALING PROCESS (COB 2)	22
4.	PROPRIETARY TRANSACTIONS	23
5.	INSIDER DEALING	24
6.	FAIRNESS AND RESEARCH ANALYSIS (COB 2.13)	25
7.	SOFT COMMISSION	25
8.	CONFLICTS OF INTEREST (COB 2.14)	27
9.	CHURNING (COB 2.7)	28
10.	CUSTOMER ORDER PRIORITY	28
11.	BEST EXECUTION (COB 3.3)	28
12.	TIMELY EXECUTION (COB 3.2)	29
13.	AGGREGATION AND ALLOCATION (COB 2.11, 3.3)	29
14.	NON-MARKET PRICE TRANSACTIONS	30
15.	TRANSACTION RECORD KEEPING (COB 8)	31
16.	RESOLUTION OF BUSINESS ERRORS	31
17.	DISCLOSURE OF DEALINGS AND HOLDINGS	32
18.	NEW COUNTERPARTIES	32
19.	COUNTERPARTY RISK	32
20.	FOREIGN MARKETS	33
21.	MONITORING OF FAILING TRADES	33
22.	CORPORATE ACTIONS	33

SECTION 3


APPENDIX 1	RULE BREACH FORM	35
APPENDIX 2	PA DEALING DECLARATION	36
APPENDIX 3	PA DEALING APPROVAL FORM	37
APPENDIX 4	RECORD OF GIFTS AND BENEFITS (“GIFTS”)	38
APPENDIX 5	DEALING/BUSINESS ERROR FORM	39
APPENDIX 6	FCU DISCLOSURE FORM	40
APPENDIX 7	CODE OF ETHICS	41

GLOSSARY


*the“Adviser”		CCIOM or CCUK
Act		Financial Services and Markets Act 2000
Advisers Act		Investment Advisers Act of 1940
Advisory Clients		US client funds or potential or existing underlying US investors
AIMA		Alternative Investment Management Association
CCIOM		Charlemagne Capital (IOM) Limited
CCL		Charlemagne Capital Limited
CCUK		Charlemagne Capital (UK) Limited
CF		Controlled Function
CJA		Criminal Justice Act 1993
CLIENTS		References to “clients” are to our Customers
CM		Clients Money Regulatory Code
CMC		Clients Money Code
CO		Compliance Officer
COB		Conduct of Business Regulatory Code/ Conduct of Business section of the FSA handbook.
COBRC		Conduct of Business Regulatory Code
CODES		Regulatory Codes issued by the Financial Supervision Commission
Common Platform		A Common Platform firm is a firm that is subject to the Capital Requirements Directive and the Markets in Financial Instruments Directive
CUSTOMER		References to “Customers” are to the Fund(s) and not to the underlying investors in the Funds.
DISP		Dispute Resolution section of the FSA handbook
FATF		Financial Action Task Force
“Funds”		Various client funds or managed accounts of the Charlemagne Capital Group
FRCR		Financial Resources and Compliance Reporting Regulatory Code
FSA		Financial Services Authority
FSC		Isle of Man Financial Supervision Commission
FUNDS		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		Investment Business Act 1991-93
“Investors”		References are to Investors or potential investors in the client funds
IOM FCU		Isle of Man Financial Crimes Unit
MiFID		Markets in Financial Instrument Directive
MLRO		Money Laundering Reporting Officer
PEV		Private Equity Vehicle/s
SEC		Unites States Securities and Exchange Commission
SUP		Supervision section of the FSA handbook
SYSC		FSA Senior Management Arrangement, Systems & Controls
T & C		Training & Competence section of the FSA handbook
The “Group”		Charlemagne Capital group of companies
UCIS		Unregulated Collective Investment Schemes

INTRODUCTION

Charlemagne Capital (IOM) Limited (“CCIOM”) is licensed to conduct investment business in the Isle of Man under the Investment Business Act 1991-93 (the “Act”) by the Isle of Man Financial Supervision Commission (“FSC”). We are obliged to maintain compliance procedures in writing with a view to ensuring that officers and staff are aware of and are able to comply with their obligations under this Act and to ensure that suitable records are maintained regarding the conduct of the Firm’s business and it’s compliance with the Act.

Alongside certain headings you will find there is a reference to the relevant Code within the FSC Handbook or applicable legislation including a hyperlink below the heading. This is provided in order to facilitate a more detailed examination of information in the particular area should it be required. There is therefore little excuse for error. At all times, an employee in any doubt about the application of a particular Code should refer to the Compliance Officer, part of whose role is to help in such situations . Should you feel the need, you can reference different areas on screen within the FSC Handbook maintained on the FSC’s web site ( http://www.fsc.gov.im/ ).

Please note:

CCIOM is also licensed by the IOM FSC for Corporate Service Provider Business.

CCIOM is also registered as an investment adviser in the United States with the Securities and Exchange Commission (the “SEC”) under Section 203(c) of the Investment Advisers Act of 1940, as amended (the “Advisers Act”) and although the FSC is our lead regulator we must not lose sight of our obligations under our SEC registration. Information about the SEC and the Advisers Act is available at http://www.sec.gov. Throughout this document there will be information detailing such legislation which must be equally adhered to. This information will be marked * accordingly, for ease of reference.

NB: Unless otherwise noted, the provisions of the Advisers Act referred to in these Compliance and Operating Procedures apply only to U.S. Clients.

Information is included within this document regarding certain activities undertaken by CCUK and certain rules and procedures of which CCUK must adhere to and due to the links between the business activities of CCIOM and CCUK, CCIOM has adopted these. In respect of MiFID, CCIOM presently falls outside MiFID but it is considered prudent to adopt certain aspects of MiFID and we need to ensure CCIOM does meet certain MiFID requirements.

*This document sets forth CCIOM’s compliance policies and procedures for purposes of Rule 206(4)-7 under the Advisers Act. CCIOM will review this document and all related policies and procedures at least annually and upon the occurrence of: (i) any significant compliance event; (ii) any meaningful change in CCIOM’s business arrangements; or (iii) any applicable regulatory developments. The purpose of the annual review will be to evaluate the adequacy of these policies and procedures and the effectiveness of their implementation.

*CCIOM has appointed a Compliance Officer who is responsible for administering its compliance policies and procedures. The Compliance Officer is a person who is (i) competent and knowledgeable regarding the Advisers Act, (ii) empowered with full responsibility and authority to develop and enforce appropriate policies and procedures, which may be accomplished by the Compliance Officer herself or through her delegates, (iii) identified in CCIOM’s Form ADV, and iv) has been properly designated. The Compliance Officer will ensure that the annual review is conducted and necessary changes are implemented. The Compliance Officer will also make interim changes as appropriate. The Compliance Officer will document the annual review.

SECTION 1

LICENCE CONDITIONS OF CCIOM (Section 3(4) IBA)

INFORMATION LINK: ONGOING REGULATORY REQUIREMENTS FOR INVESTMENT BUSINESSES Licence Conditions

CCIOM is a Category 3 (B) licenceholder with the conditions applying that CCIOM is permitted to conduct Investment Business activities pursuant to 16(d) (only) of the FSC Financial Resources and Compliance Reporting Regulatory Code (“FRCRRC”) issued under Section 6 of the Investment Business Act 1991 (“IBA”). It is important that licenceholders such as CCIOM appreciate the significance of the difference between licence conditions and the Codes. Whatever the category of licence, conducting business in contravention of licence conditions risks criminal prosecution and/or civil action at the suit of anyone who suffers loss. The FSC has therefore sought to place the weight of regulation upon the observance by licenceholders of regulatory codes.

Regulatory Codes (Section 6 IBA)

Section 6 of the IBA empowers the FSC to issue regulatory codes (“the Codes”). These Codes set the standards of good practice and behaviour applying to each licenceholder. Should a licenceholder breach any of the Codes, the FSC is empowered to take enforcement action. This action will be graded, dependent upon the seriousness of the breach.

Where a licenceholder acts outside the scope of its licence category, whether inadvertently or not, the FSC will expect it to abide by the requirements of any relevant code. The Codes, applicable to CCIOM include the following:-

Click on the following headings/hyperlinks for further information:

Regulatory Codes (“the Codes”)

Financial Resources and Compliance Reporting

Clients’ Money

Clients’ Investments

Conduct of Business

Audit Requirements

General Requirements

Advertising

COMPLIANCE ARRANGEMENTS (COB 6.7)

INFORMATION LINK: General Requirements/ Compliance Procedures

The Compliance Officer and Compliance Department provides:

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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 firm’s 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;

•		Procedures for the maintenance of detailed record keeping;

•		Where required, assistance on compliance matters from external advisors.

* Advisers Act Rule 206(4)-7:

*The role of the Compliance Officer is to oversee our compliance arrangements, to advise and assist staff as necessary, to arrange compliance training as necessary and to ensure, by a process of formal and informal monitoring, the enforcement of the FSC and SEC’s rules and regulations and our internal procedures. Any violation of these Compliance and Operating Procedures must be promptly reported to the Compliance Officer. The Compliance Officer shall document in writing any report of a violation of these Compliance and Operating Procedures. In support of the Compliance Officer, the board has undertaken to maintain the following compliance arrangements and in doing so we require the support of each and every member of staff:

Risk Control

*Advisers Act Rule 206(4)-7:

CCIOM also has arrangements, processes and mechanisms in place to manage our risks. We are required to monitor the following:

•		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.

Internal Governance

CCIOM and CCUK management have produced a Statement of Internal Governance acknowledging our obligations surrounding key organisational, personnel, investment and regulatory control systems we are required to have in place to meet these obligations, see Attachment 1 (Statement of Internal Governance).

TRAINING & COMPETENCE

INFORMATION LINK: Conduct of Business

CCIOM is required to establish procedures to ensure that:

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.

General Training and Competence Requirements

Recruitment:

When recruiting, a licenceholder should demonstrate that consideration has been given to how the applicant’s knowledge and skills meet the knowledge and skills required for the role and that reasonable steps have been taken to obtain sufficient information about the applicant’s relevant experience, qualifications and training.

Maintaining Competence:

A licenceholder should have appropriate arrangements in place to ensure that an employee who has been assessed as competent remains so. Where roles change or grow in scope, or a person changes their role, any additional competence requirements should also be considered prior to the change taking place. It is recommended that a licenceholder should, at appropriate intervals,

determine individual staff training needs and organise appropriate training to address these needs; and ensure that training is relevant, timely, planned, appropriately structured and evaluated. In the case of a new employee or an employee new to an activity or role, the licenceholder should assess training requirements and ensure that: training takes into account the knowledge and skills necessary to fulfil the role; training is effective and up to date; training takes into account changes in the market, products, legislation and regulation; methods of meeting training needs are appropriate to the activity and to the employee’s circumstances and role (and the development of that role, if appropriate).

Supervision of Staff:

Where a person is working towards attaining a level of competence, they should be supervised by a competent person until they can demonstrate the appropriate level of competence. It is CCIOM’s responsibility to ensure that such arrangements are in place and working successfully.

Record Keeping:

CCIOM maintains appropriate training records for each individual. These should be retained for at least 3 years from the date of the training, and should note how the relevant training relates to and supports the individual’s role. The FSC may review training records during supervisory visits to assess the licenceholder’s systems and to review how the licenceholder ensures that its staff are competent and remain competent for their roles.

Levels of Competence:

Certain roles are important to the regulatory framework because they involve control functions (for example Directors, “4-Eyes”, Managers, Compliance Officers, Money Laundering Reporting Officers). Persons fulfilling these roles should be able to demonstrate that they have the core competencies required to carry out the function in an appropriate manner.

Individuals undertaking certain key roles are required to demonstrate to the FSC that they have the necessary competence to undertake that role as part of the FSC’s ‘Fit and Proper’ criteria. Employees who will be undertaking key roles will be required to complete personal and bankers questionnaires for onward submission by the Compliance Department to the FSC.

Ongoing Training and Continuous Professional Development (“CPD”)

Such training and CPD should be relevant to the role and take account of new developments (for example, new products / change to tax structures/ new regulatory requirements etc). Internal and on-the-job training can be counted towards the CPD quota if its relevance can be demonstrated as can Involvement in an industry. If an individual holds a highly technical role or one in which there are frequent changes (for example, changes to applicable legislation or practice), the Licenceholder should ensure that the individual undergoes sufficient additional training to continue to meet specific job requirements.

With regard to the above requirements a log is maintained for staff recording their training, experience and qualifications and the categories of tasks which they are competent to conduct. A record of relevant qualifications of all staff is kept by Compliance. Ongoing competence is monitored via records held for FSC approved key personnel/managers. Training needs are assessed and addressed as and when required for all staff and annual reviews are undertaken by line managers whose responsibility it is to ensure relevant staff remain competent for the role.

Supervision:

Where a person is working towards a level of competence they should be supervised by a competent person.

“Grandfathering” may be considered for persons who have 5 years or more experience in a similar role at a senior level. Before allowing Grandfathering, the FSC may seek additional reassurance to ascertain whether the person is suitable to carry out the function. Factors that may be considered by the FSC include the depth of experience and competence.

Staff Training Policy

Study Leave:

Study leave may be granted if:

•		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.

Examinations:

•		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.

Training Courses/Seminars:

•		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.

EMPLOYEE DUTIES AND RESPONSIBILITIES

Service as a Director

INFORMATION LINK: Guidance Notes on the responsibilities and duties of directors under the laws of the Isle of Man

No employee shall serve on the Board of Directors of a publicly-traded company (other than Charlemagne Capital Limited (“CCL”), its subsidiaries and affiliates, including investment companies advised by CCL) without prior written approval of CCIOM’s Managing Director or CCL’s CEO, based upon a determination that the board service would be consistent with the interests of Clients and that adequate procedures exist to ensure isolation from those making investment decisions. If an employee serves as a director of a private company which proposes to become publicly traded, the employee must seek written approval of CCIOM’s Managing Director or CCL’s CEO, to continue to serve as a director, or resign based upon a determination that the board service would be consistent with the interests of Clients and that adequate procedures exist to ensure isolation from those making investment decisions.

Four Eyes Control

INFORMATION LINK Appendix C6

•

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 CCIOM’s Investment Business Licence are Rebecca Taylor and Malcolm Sargeant.

HANDLING CUSTOMER COMPLAINTS (COB 6.8) Conduct of Business

In accordance with the FSC Conduct of Business Regulatory Code it is required that CCIOM have a formal Internal Complaints Procedure and maintain records of all complaints received, our reply and any further correspondence, the manner in which they are resolved and any remedial action taken.

As a matter of good business practice and management, we have general complaint handling procedures to enable the fair, prompt and effective handling of complaints. All relevant employees must be aware of these procedures, which are stated below, and must act in accordance with them.

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 Group’s 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.

As a licensed institution CCIOM will do their best to make sure that enquiries or complaints are dealt with promptly and efficiently.

The FSC does not have a role to arbitrate in a dispute between a client or investor and licence-holder, or to recommend or enforce any compensation award. Normally such disputes are of a commercial or service nature, and it is for the parties concerned to resolve between themselves. In circumstances whereby issues can not be resolved, the Isle of Man has introduced a Financial Services Ombudsman scheme. Further details on this can be sought from the Isle of Man Government Office of Fair Trading and any complainant dissatisfied with the resolution of any issue should be made aware of this service.

Additionally, any complaint can be referred to the FSC once the usual complaint procedure has been exhausted.

ANY COMPLAINTS RECEIVED IN RELATION TO MARKETING ACTIVITIES WILL BE THE RESPONSIBILITY OF CCUK BUT ANY RECEIVED IN RELATION TO INVESTMENT WILL BE THE RESPONSIBILITY OF CCIOM.

RULE BREACHES

*Advisers Act Rule 204A -1 and Rule 206(4)-7

•

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 Group’s Chief Operating Officer.

•

All breaches must be logged and filed appropriately.

SHOULD ANY EMPLOYEE BECOME AWARE OF ANY MATTER ABOUT WHICH HE BELIEVES THE FSC OR SEC MIGHT REASONABLY WISH TO BE NOTIFIED, THAT MATTER MUST IMMEDIATELY BE REPORTED TO THE COMPLIANCE OFFICER OR, IN HIS/HER ABSENCE, TO A DIRECTOR.

PERSONAL ACCOUNT DEALING

Personal transactions

It is integral to our culture that we prevent our personnel and those of firms to whom services have been outsourced (if this was applicable to CCUK) undertaking personal transactions that may give rise to a conflict of interest, insider dealing or a breach of confidentiality by virtue of an activity carried out on our behalf for client funds, including information relating to pending client fund orders. The following procedures, which combine the FSA requirements with our own internal procedures, must be followed to the letter.

* As described below, additional personal transaction related requirements are set forth in the Code of Ethics, which is attached hereto as Appendix 7 .

•

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.

* Additional Personal Account Dealing Procedures

(relating to the Investment Company Act of 1940 (the “1940 Act”)(Rule 17j-1) and the Advisers Act (Rule 204A-1))

All employees are subject to the Code of Ethics, which is attached as Appendix 7. The Compliance Officer shall ensure that CCIOM’s Form ADV describes the Code in Schedule F of Part II and offers to provide a copy of the Code to any client or prospective client upon request.

(It is to be noted that any transaction via EBT/Sanne Trust will not require pre-approval unless there is potential for a conflict of interest e.g. investments also held by client funds or investments in CCL.)

Dealing in CCL Shares:

There are certain parameters employees are expected to follow regarding dealing in CCL shares.

CCL shares are like any other shares in that the above pre-clearance rules apply. However, CCL differs from other companies in that employees may come in to contact with potentially price sensitive information, at least to some degree. As a result of that, we have to observe “closed” periods when we cannot deal. Normally these cover a period immediately prior to the announcement of results but could be announced at any time if the board thinks that there is sufficient unpublished and material information not in the public domain.

Nevertheless, because of the risk that the company might be accused of allowing staff to deal on short term considerations, a minimum holding period is imposed on CCL stock of three months before permission will be given for the stock to be sold again. For example, if you were given permission to buy and did so 30 May, then you would not be given permission to sell until after 30 August. If this was within a closed period, you would actually be unable to deal until after the end of the closed period. For the avoidance of doubt, where shares have been purchased on more than one occasion, it is the latest date which will be used to measure the three month period. Similarly, it is not expected that any employee will be given permission to buy shares if they have sold any within the past three months.

Dealing in AIM Listed managed companies:

•

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.

INDUCEMENTS FSC (COB 2.5)

INFORMATION LINK Conduct of Business

The making or receiving of gifts or entertainment to or from any party the size or importance of which could be held to be an inducement or to influence our or the other party’s judgement in the placing of business or the taking on of Clients is prohibited. If you have any doubts about the propriety of giving or receiving a particular gift or entertainment you should consult the Compliance Officer. A gift register is maintained recording where this process has been undertaken. Staff will be asked at the end of each quarter to notify Compliance if it is the case that an individual has actually received a gift of this nature.

•

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.

•

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).

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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.

RECORD KEEPING (COB 8)

•

Note that there are prescriptive record keeping requirements under the FSC’s 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

Visitors

Employees are responsible for their visitors. Under no circumstances should visitors be allowed to enter or use CCIOM’s office unattended. All visitors are expected to sign in and out.

Access to Computer Systems

Strict precautions are necessary to protect the integrity of the company’s computer systems and the information stored. Employees are therefore required to observe strictly any instructions and procedures relating to access to computer systems which may be issued to them. An employee who has been allocated a password which permits access to any of these systems must not divulge that password to another employee nor should an employee use another employee’s password.

Confidential Papers

Always lock away confidential papers at night and take appropriate security precautions when leaving your desk unattended during the day.

11.

E-MAIL POLICY — USAGE

•

Personal e-mails should be kept to a minimum.

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The content of e-mails should always be appropriate, should not be illegal, obscene, defamatory, sexually or racially offensive or contain confidential material.

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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.

12. DATA PROTECTION

*Privacy Policy and Privacy Notices

We are committed to protecting the confidentiality and security of consumer, customer and form customer information that we collect and will disclose such information only in accordance with Regulation S-P (17 CFR Part 248.30)), or other applicable law or regulation. Under Regulation S-P, we must provide an initial privacy notice to our customers at the time the advisory relationship is established and annually thereafter and provide an initial privacy notice to its “consumers” before it discloses non-public personal information.

Consumers. A “consumer” is an individual who obtains from an adviser financial products that are to be used primarily for personal, family or household purposes, such as one-time investment advice. We must provide an initial privacy notice to its consumers before we disclose the consumer’s non public personal information to a non affiliated third party (other than as necessary to process consumer transactions). We are not required to send a privacy notice to consumers if we disclose non public information about its consumers to third parties only pursuant to certain exceptions. We may satisfy the initial notice requirement by sending a “short form” notice that explains how the consumer may obtain the adviser’s privacy notice.

Customers. A “customer” is a consumer who uses the product or service of the Adviser on an on-going basis (such as receiving continuous investment advice). We must provide an initial privacy notice when CCUK establishes the customer relationship (such as when an investor enters into an advisory contract) and annually thereafter.

The initial and annual privacy notices must contain the following information:

•		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.

The initial privacy notice will be delivered with Part II of CCIOM’s/CCUK’s Form ADV, the investment advisory agreement for separate accounts or subscription agreement for private investment vehicle investors that is given to customers at the start of the advisory relationship.

A copy of our Privacy Notice (or policy on data, security and integrity) is detailed in Attachment 5. As reflected in our Privacy Notice, we have adopted policies that address the administrative, technical and physical safeguards for the protection of customer records and information. The policies are based upon a risk assessment of internal and external risks to the security, confidentiality and integrity of customer information. We have taken reasonable steps to ensure that our service providers maintain sufficient customer information safeguards. For example, all contracts with service providers require their assurance that they have implemented and will maintain customer information safeguards.

(e)

*Disposal of Client Fund Data

We will take reasonable measures to protect against unauthorized access to or use of client data in connection with its disposal.

(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);

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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.

Companies Act (Various)

Employees must be aware that information as to shareholders of any company is confidential information. Any information held on CCIOM’s database must be protected. Security measures i.e the inclusion of (a) password protection, (b) authorised usage, (c) set procedures for export to laptops etc must be adhered to at all times. It is incumbent upon CCIOM to ensure that only authorised users have access to client information, contacts etc.

Client Data

It is likely that from time to time authorised employees may store certain Client Database information. This information must be used strictly for CCIOM or CCL Group business only. All authorised employees must ensure that they are fully aware of the terms and conditions of their employment contract regarding Client Data. If in any doubt the Compliance Officer must be contacted.

13.

ELECTRONIC TRANSACTIONS ACT 2000

INFORMATION LINK http:// www.dms.dpc.vic.gov.au/sb/2000_Act/A00695.html

Whilst this legislation permits the use of scanned documents to be considered as the originals in legal proceedings, this remains untested in court. It is therefore company policy to retain hard copies of any agreements entered into albeit that these copies be retained offsite.

14.

NOTE PAPER, BUSINESS CARDS AND ADVERTISEMENTS

All business letters, business cards, advertisements and any other publication or stationery where the company’s name appears must indicate clearly that the company is “Licensed by the Isle of Man Financial Supervision Commission for Investment and Corporate Service Provider business”.

Any stationery must be proof read by the Compliance Department before printing.

15.

CLIENTS MONEY (CM 1.2)

INFORMATION LINK Clients’ Money

One of the main purposes of this code and the Regulations is to provide for the protection of clients’ money in the event of the insolvency of the licenceholder, i.e., to ensure that a liquidator is unable to claim clients’ monies as part of the general assets of the licenceholder. Thus, a fundamental requirement is that clients’ money should at all times be held in segregated and properly designated accounts on trust for the investor. The FSC requires bankers to provide confirmation that monies held in such accounts are not subject to any charge or lien, right of set-off, etc.

CCIOM will not accept Client’s money or assets belonging to Clients. If anyone with whom CCIOM has business dealings sends money or any other asset to us, it should be returned with an explanation that CCIOM is not authorised to accept Client’s money. Any such incident should be referred immediately to the Compliance Officer or in his absence a director.

Custody

INFORMATION LINK Clients’ Investments

It is not the Company’s policy to provide, appoint or recommend custodial services for its Clients. Custodians are chosen by the Clients and named in the Client Customer Agreement. The Custodian or its designate holds all Client assets.

* CCIOM must ensure that all such Custodians are Eligible Custodians as defined in the Clients’ Investments Regulatory Code and if CCIOM has or is deemed to have direct or indirect control over client assets, and, accordingly, has custody of client assets, client securities and funds must be held by “qualified custodians” as defined in Rule 206(4)-2, and CCIOM must comply with the other requirements of the rule. (Advisers Act Rule 206(4)-2). Examples of circumstances in which CCIOM will have custody of client assets include (i) if CCIOM calculates its advisory fee, bills the custodian and the custodian automatically deducts fees from client accounts (through arrangements with clients and the qualified custodian), (ii) if CCIOM or an affiliate is a general partner of a limited partnership or managing member of a limited liability company, or holds a comparable position for another type of pooled investment vehicle (each, a “Pool”), and (iii) if CCIOM or an affiliate is a trustee of a trust for the benefit of a client. If personnel of CCIOM inadvertently receive securities or funds from a client, such personnel should advise the Compliance Officer and return the securities or funds to the client promptly, which in any event must be within 3 business days of receipt.

If CCIOM has custody of client assets within the meaning of Advisers Act Rule 206(4)-2, in addition to ensuring that client assets are maintained with a qualified custodian, either CCIOM or the custodian must send quarterly statements to the client identifying all assets and reflecting all transactions in the account during the quarter, including the deduction of fees. There are exceptions from certain reporting provisions of Advisers Act Rule 206(4)-2, if the client is a Pool that provides audited financial statements to its investors that have been prepared in accordance with U.S. generally accepted accounting principles within 120 days after the end of the Pool’s fiscal year. There are other exceptions from the Rule that may apply. The Compliance Officer will be responsible for monitoring client arrangements to determine whether CCIOM has custody of client assets and for compliance with the SEC Rule if necessary.

If CCIOM or an affiliate is a trustee of a trust for the benefit of a client, the person or persons so appointed will notify the Compliance Officer to ensure compliance with applicable rules. (Advisers Act Rule 206(4)-2).

Only persons authorised to trade for a client’s account may do so. The Compliance Officer will monitor client accounts to ensure that only authorised persons trade for client accounts.

16.

CUSTOMER AGREEMENTS (COB 5.1)

(Also see Sub-section 21 below)

•

It is a requirement of the FSC that a written agreement which sets out the basis on which the Firm’s 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 FSC’s 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

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 CCUK’s 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 staff’s 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 CCIOM’s Form ADV or otherwise. In addition, the solicitor must provide a written disclosure statement to potential clients describing the solicitor’s 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 CCIOM’s 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

Senior management must take reasonable care to establish and maintain systems and controls for compliance with its regulatory obligations and to counter the risk that it might be used to further financial crime.

•

The officers and employees of CCIOM will be diligent in ensuring that the source of Client’s 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.

Action To Be Taken On Suspicion of Money-Laundering

•

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.

Money laundering covers more than the depositing of the proceeds of drug trafficking; it also covers any money or financial asset or financial transaction originating from any criminal activity. Please note that failure to report the suspicion of money laundering will be considered as a breach of the Firms compliance procedures. Staff will note that there is a clause in their employment contract which permits dismissal by the Firm if such a breach is determined.

Awareness of and training of staff

Employees must be made aware of and receive regular training at least once in every 12 month period about their own responsibilities, the identity and role of the MLRO, the law relating to money laundering and the potential consequences for any breach on a continuing basis. This training for example, may consist of external/internal presentations, organised external courses, online training.

Training records should include when anti money laundering training was given, details of training provided and confirmation of training actually being undertaken/received e.g. staff sign-off, certification etc.

Money laundering Reporting Officer

Responsibilities of the MLRO:

•		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.

It should be noted that aspects of the anti money laundering Rules and regulations place specific responsibilities on individuals, as well as on CCIOM. It is therefore vital that all employees are fully familiar with the detail of our procedures and the application of these to their specific activities. In this regard, you should each have a detailed knowledge of those aspects of the procedures applicable to your area of work.

19.

CUSTOMER IDENTITY CHECKING REQUIREMENTS — KYC (COB 6.1)

Who is Our Client?

•

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.

•

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.

As investors in the Funds are clients of the Funds, the identification requirements are not applicable directly to us. The responsibility of identifying these investors falls with the Registrar. For the purposes of activities undertaken by CCUK, in the case of other Customers, the requirements are as follows:

(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 client’s 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

Evidence of identity requirements do not apply if:

•

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 client’s identity.

Go to website for relevant countries: http://www1.oecd.org/fatf/NCCT_en.htm

20.

DISCLOSURES

* Form ADV

CCIOM must complete and maintain an accurate Uniform Application for Investment Adviser Registration (“Form ADV”). Form ADV consists of Parts 1 and II and a series of Schedules. CCIOM has filed Part 1 of its Form ADV (“Part 1”) with the SEC via the Investment Adviser Registration Depository (“IARD”), and maintains a copy of Part II of Form ADV (“Part II”) in CCIOM’s files. (SEC Rule 203-1). CCIOM is responsible for maintaining the accuracy of the information in its Form ADV. CCIOM is required to amend its Form ADV at least annually, within 90 days of its fiscal year end, and more often as required by the instructions to the Form ADV. (Advisers Act Rule 204-1).

* The Brochure Rule

CCIOM is required to furnish to each of its advisory clients and prospective advisory clients (including investors in private investment vehicles), a written disclosure statement (the “Brochure”). This obligation may be satisfied by delivering either (i) a current copy of Part II or (ii) a written document containing at least the information required by Part II. CCIOM has the option of delivering the Brochure to an advisory client or prospective advisory client either (a) not less than forty-eight (48) hours prior to entering into1 any written or oral investment advisory contract with such client or prospective client or (b) at the time of entering into any such contract, if the advisory client has a right to terminate the contract without penalty within five (5) business days after entering into the contract. (Advisers Act Rule 204-3).

CCIOM also is required, on an annual basis and without charge, to deliver or offer in writing to deliver, to each of its advisory clients, an updated and revised Brochure. (SEC Rule 204-3). The timing of the offer or delivery is not, however, dictated by the Advisers Act or by the anniversary dates of each advisory contract. If CCIOM receives a written request for the Brochure from any advisory client, CCIOM must mail or otherwise deliver the Brochure to the requesting advisory client within seven (7) days of the request.

* Disclosure of Financial and Disciplinary Information

CCIOM is obligated to disclose to clients all material facts with respect to (i) a financial condition of CCIOM that is reasonably likely to impair the ability of CCIOM to meet contractual commitments to clients; or (ii) a legal or disciplinary event that is material to an evaluation of CCIOM’s integrity or ability to meet contractual commitments to clients. (Advisers Act Rule 206(4)-4). Each of the foregoing events is referred as a “Disclosure Event”.

Senior management and other employees have an obligation to inform the Compliance Officer of the occurrence of a Disclosure Event or any other event that might require disclosure to clients or disclosure on Form ADV.

If a Disclosure Event or other disclosable event is reported to the Compliance Officer, the Compliance Officer will prepare the necessary disclosure and ensure that it is appropriately disseminated.

* Client Reporting

CCIOM’s policies regarding the periodic statements and/or reports that will be delivered to CCIOM’s clients (including clients that are investors in private investment funds) are set forth in Item 11 of Part II. The Compliance Officer will ensure that these reports are sent to clients in accordance with such policies.

21.

INVESTMENT ADVISORY CONTRACTS

The Compliance Officer must review each advisory contract entered into with clients (“Advisory Contract”). The Compliance Officer must also review the form of Advisory Contract (if any) entered into with pooled investment vehicles managed by CCIOM or its affiliates. CCIOM employees will provide the Compliance Officer with a copy of each new Advisory Contract prior to execution.

* Before an Advisory Contract is executed on behalf of CCIOM, the Compliance Officer will confirm that the contract includes the following provisions and an assignment clause providing that CCIOM may not “assign” the agreement without the client’s consent. (Advisers Act Section 205(a)(2)). Among other things, the Advisory Contract should:

•		set forth CCIOM’s authority (discretionary or non-discretionary) over the client’s account;

•		describe the duties to be performed by CCIOM;

•		identify the client’s 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.

•		specify CCIOM’s compensation and the manner of payment;

•		include provisions for terminating the contract; and

•		contain the client’s acknowledgement of receipt of Part II unless another written acknowledgement of receipt previously has been signed by the client.

Whenever the client’s investment objectives, guidelines or restrictions or any other term of an Advisory Contract has changed, the Advisory Contract should be amended to reflect the changes.

The Compliance Officer will also confirm that the advisory contract does not contain any of the following terms:

•		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

Client account assets must be valued for all purposes in accordance with CCIOM’s procedures regarding valuation set forth as Attachment 7 (Statement of Procedures for the Valuation of Portfolio Securities ) .If an employee believes that the existing valuation procedures do not provide for an accurate valuation of a particular asset or class of assets in a client’s account, he or she must report this matter immediately to the Compliance Officer.

23.

* INVESTMENT ADVISORY FEES

Investment advisory fees should be accurately described in the Form ADV and documented in each client’s written contract. Any changes to fee arrangements with a client should be in writing.

The bills and invoices of CCIOM to clients should be reviewed to ensure that all advisory fees are properly calculated.

Performance-based compensation is only permitted in accordance with the Advisers Act and the applicable rules. (Advisers Act Section 205; Advisers Act Rule 205-3). All such arrangements must be reviewed by the Compliance Officer.

Special requirements may apply to prepaid advisory fees and such arrangements must be reviewed by the Compliance Officer.

24.

* PROXY VOTING POLICY AND PROCEDURES

If CCIOM exercises voting authority with respect to client securities, CCIOM is required to adopt and implement written policies and procedures that are reasonably designed to ensure that CCIOM votes client securities in a manner consistent with the best interests of such client. (Advisers Act Rule 206(4)-6). The SEC has indicated that a discretionary investment manager is required to exercise voting authority with respect to client securities, even if the investment advisory agreement is silent on this point, unless the client has specifically retained voting authority.

CCIOM’s proxy voting policy and procedures is set forth as Attachment 8 (Proxy Voting Policy and Procedures).

However, with regard to US Global Accolade Funds (Eastern European Fund and Global Emerging Markets Fund), a third party, ISS, are hired to vote any proxies received by the funds, and the voting policy adopted by the funds’ board does not give U.S. Global Investors, Inc. (the adviser) the ability to override ISS’ voting recommendations.

25.

BUSINESS CONTINUITY AND DISASTER RECOVERY PLAN

The Adviser is committed to providing for its business continuity and disaster recovery in light of the occurrence of any natural or unnatural event that might cause a significant business disruption.

CCIOM’s Business Continuity and Disaster Recovery Plan can be obtained from the Compliance Officer.

SECTION 2

INFORMATION LINK Conduct of Business

(RELEVANT TO DEALING AND SETTLEMENT PERSONNEL)

SEPARATION OF DUTIES

Employees authorised to deal on behalf of the funds must not be responsible for the settlement of that deal. This includes processing of the trade electronically as well as instructions to Custodians. To assist in this the order process is designed to have two distinct and separate front office and back office functions. The dealers alone are able to input executed orders, allocations and executions. The information input by them is visible to the Settlement Area but on a strictly “read only” basis.

NEW BUSINESS (COB 2.3)

CCIOM will take all steps to ensure the Client (Fund) is informed of the investments undertaken on its behalf and that there is no misleading misrepresentation. No employee of CCIOM is permitted to approach a prospective Client on behalf of CCIOM or to solicit new business for the firm in any way. Nor is any employee authorised to issue any advertisement or solicitation for business on behalf of CCIOM. Any approach to a new Client will be made by CCUK.

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

(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

No order shall be placed or transaction executed unless details within the Orders Database have been completed and checked by the portfolio adviser and approval gained by the Investment Manager.

(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.

(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,

			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 Company’s proprietary account, namely Charlemagne Capital (Investments) Limited (“Proprietary Transactions”) may only be carried out following the express authorisation in writing of CCIOM’s 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 CCIOM’s 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 fund’s 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

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.

Front Running (COB 2.10)

•		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

Isle of Man legislation is covered by the Insider Dealing Act 1998 of which employees must make themselves familiar with. Please click on hyperlink to view the document: Compliance\Public\ACTS\Insider Dealing Act 1998.pdf . Should you have any problems opening this document please ask for a hard copy from the Compliance Officer.

* CCIOM is also subject to Section 204A of the Advisers Act. Section 204A requires an investment adviser to establish, maintain and enforce written policies and procedures reasonably designed to prevent the misuse of material, non-public information by the adviser or any person associated with the adviser. The policies and procedures must include procedures designed to detect and prevent mutual fund portfolio managers from using material, non-public information about fund portfolios (e.g., portfolio holdings and valuations) to trade fund shares and to prevent the distribution of confidential portfolio holdings information.

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 Group’s 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.

*Initial and Annual Certifications

Upon commencing employment and annually thereafter, each employee must certify that he/she has read and understands our insider trading policies and procedures.

Employees should be aware that any contravention of the Insider Dealing legislation may result in summary dismissal without notice or compensation.

FAIRNESS AND RESEARCH ANALYSIS (COB 2.13)

CCIOM should not deal for:-

•		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

NB: THE GROUP DOES NOT PRESENTLY UNDERTAKE ANY SOFT COMMISSIONING PROCESSES.

Determination of What Goods and Services can be paid for With Dealing Commission

Should we ever take the decision to undertake soft commissioning processes the following will apply:

It needs to be determined if any goods and services that are obtained under any soft commission arrangements or bundled brokerage are now excluded given the rule changes. To achieve this, we need to be certain that we have fully documented the goods and services that we receive under any soft commission arrangements. For any bundled brokerage, we need to obtain confirmation as to what goods and services are provided. For each good and service currently paid for from commission when dealing in shares and linked investments, we need to allocate each under the heading of either ‘execution’ or ‘research’.

To demonstrate that we have given considered our obligations, it would be prudent to document why we believe that the goods and services we intend to pay for out of commission are allowable under the FSA rules to which CCUK must abide by. Board approval would add weight to this process.

* Section 28(e) of the U.S. Securities Exchange Act of 1934 (“Exchange Act”) provides a safe harbour to an adviser exercising investment discretion over an account, which insulates the adviser from state and federal breach of fiduciary duty claims solely because the adviser causes client account to “pay up” – pay more than the lowest available commission for executing a securities trade in return for research or brokerage services and products. The adviser may “pay up” through its soft dollar arrangements or directed brokerage arrangements.

We are required to (i) adopt procedures to ensure that such arrangements comply with our fiduciary duties and applicable regulatory requirements and (ii) disclose the existence of the arrangements and our procedures for ensuring compliance with our fiduciary duties and regulatory requirements.

Disclosure

Prior Disclosure

In order to produce a generic prior disclosure statement we would need to:

(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

Periodic Disclosure

In order to produce the fund specific periodic disclosure we would need to:

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.

The FSA’s Guidance on the Scope of ‘Execution’ and Research

Execution:

The rules define ‘execution’ as consisting of services provided by a broker or other execution venue that meet two criteria:

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.

The FSA has provided the following examples of what do not come within the definition of ‘execution’:

•		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

Research

The rules clarify that the term ‘research services’ for the purposes of these rules is not the same as the definition of ‘investment research’ in the Glossary, although there is a certain degree of overlap. The rules do not specify in what form research needs to be given, as long as it meets the following criteria:

•		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.

CONFLICTS OF INTEREST (COB 2.14) and *Advisers Act Section 206 )

Where the Company has a material interest, not previously disclosed, in a transaction to be effected for a Client, or a relationship which gives rise to a conflict of interest in relation to such a transaction, the Portfolio Adviser must not knowingly advise on or deal in or exercise discretion, in relation to that transaction unless reasonable steps have been taken to ensure that such conflict situation is disclosed to the Client and that the Client is treated fairly. Where a Portfolio Adviser becomes aware of any material interest which conflicts with his duty to the Client he should notify the Compliance Officer. CCIOM must at no time place its interests above those of its Client’s. A firm may manage a conflict of interest by one or more of the following steps:

•		disclosure of an interest to a Customer;

•		relying on a policy of independence;

•		chinese walls, or

•		declining to act for a Customer.

If a firm relies on a policy of independence, that policy should;

•		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.

The arrangements to manage potential conflicts of interest include:

•		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.

We have developed a written conflicts of interest policy, as detailed within Attachment 2 (Conflicts of Interest Policy).

Where we choose to use Chinese walls to withhold or not use information held by one part of the business, these arrangements must be documented and independently monitored to maintain evidence of their effectiveness.

These arrangements may be a proper control and defence against the risk of market abuse if appropriately controlled. Where we are involved in offerings of securities to the market place alongside managing client fund assets we should agree with the client funds in writing how potential conflicts in allocation of transaction between ourselves and between different types of client funds will be handled.

Side Letters

Side letters are agreements that provide for special arrangements between the client fund(s) and client investors of the fund which contain provisions additional to those in the standard offering documents issued to investors in general. Side letters present possible conflicts with respect to an investment manager’s fiduciary duty to its investors.

The main conflict of interest with side letters is the potential for one or more investors to be advantaged over other investors by terms within their side letters. For example, the preferential early exit of one investor may reduce the portfolio liquidity, which might make withdrawals unavailable to other investors. Subsequently it may be the case that other investors are actually disadvantaged. Consideration should be given to whether the nature and scope of the provisions are consistent with treating all investors fairly.

We are required to disclose the existence of side letters which contain ‘material terms’, and the nature of such terms, where the firm is a party to the side letter. We are not required to disclose the existence of side letters which contain no material terms. Our Form ADV will disclose that the funds that we manage we may enter into side letters with certain investors in the fund. Such disclosure will include a description of the conflicts of interest resulting from side letter arrangements.

A material term is defined in the AIMA guidance as:

“ Any term the effect of which might reasonably be expected to be to provide an investor with more favourable treatment than other holders of the same class of share or interest which enhances that investor’s ability either (i) to redeem shares or interests of that class or (ii) to make a determination as to whether to redeem shares or interests of that class, and which in either case might, therefore, reasonably be expected to put holder of shares or interests of that class who are in the same position at a material disadvantage in connection with the existence of their redemption rights ”.

Examples of material terms would include preferential redemption rights, ‘key man’ provisions, redemption ‘gate’ waivers and portfolio transparency rights.

Disclosure should be made to existing and prospective investors. If required, we will disclose all side letters and side letter arrangements through regular investor reports and newsletters addressed to all investors and registered shareholders. Compliance will ensure that all new side letters do not conflict with the prior arrangements, including the fund’s organisational documents, offering documents and previous side letters. Side letters should be approved by the Group’s Chief Operating Officer with all disclosures logged.

CHURNING (COB 2.7)

There must be no discretionary transactions undertaken for any Customer, if the dealing would not be regarded to be in the Customer’s best interests, both when viewed in isolation and when viewed in the context of earlier transactions. A firm should not enter into transactions for a Customer with unnecessary frequency.

10.

CUSTOMER ORDER PRIORITY

A firm must execute Customer orders and own account orders fairly and in due turn.

11.

BEST EXECUTION

When we provide portfolio management or advisory services, we should act in accordance with the best interests of our client funds when placing orders with intermediaries (such as brokers) for execution of deals on behalf of our client funds. If our services are limited to reception and transmission of orders to intermediaries we are required to act in accordance with the best interests of our client funds when transmitting orders for execution. Where instead we execute orders directly with the market we must take all reasonable steps to obtain the best possible result for client funds.

Together these are our Best Execution obligations that will apply in different ways depending on how we trade.

* The SEC believes that an investment adviser owes a fiduciary duty to its clients to obtain best execution of their transactions. An adviser generally must execute securities transactions for clients in such a manner that the client’s total cost or proceeds in each transaction is the most favourable under the circumstances. In seeking best execution, the SEC believes an adviser should consider the full range of a broker’s services, including the value of research provided and execution capability, commission rate, financial responsibility and responsiveness.

Best Execution applies to all financial instrument types, but the execution factors should be applied as appropriate to different instruments depending on the relative importance of the factors. e.g. OTC financial instruments have unique contractual relationships tailored to the circumstances of our client funds and so may not be comparable for best execution purposes with transactions involving traded securities. The principal factors are:

•		Price

•		Costs

•		Speed

•		Liquidity

•		Settlement

•		Client Objectives

•		Order size / nature

•		Venue

When executing an order on behalf of a client fund, we take into account the relative importance of the execution factors against the characteristics of the order; relevant financial instruments, and the execution venues or intermediaries to which that order can be directed.

To meet our Best Execution obligations we have put in place a policy, as detailed within Attachment 6 (Best Execution Policy) that takes into account relevance and importance of the execution factors to our investment services. We evaluate the execution arrangements of any intermediaries we use and monitor the effectiveness of the policy and, in particular, the execution quality of our intermediaries. We review annually (or as a result of significant changes in our arrangements or within markets) our execution policy and order execution arrangements. We must demonstrate to client funds, at their request, that we have executed orders in accordance with our execution policy.

12.

TIMELY EXECUTION (COB 3.2)

Once a decision has been made to effect a transaction for a Customer, the transaction must be effected as soon as reasonably practicable. Where there is any undue delay in placing an order, the reason for the delay must be documented. Traders should ensure they act promptly in accordance with instructions. If discretion has been given as to timing, this should be used in an alert and sensible way.

13.

AGGREGATION AND ALLOCATION (COB 2.11, 3.3)

We have in place a written policy on the allocation of aggregated client fund orders which is consistently applied. The policy includes how the volume and price of orders determines allocations, the definition of “prompt allocation” and the treatment of partial executions. We will not carry out an order or a transaction for own account in aggregation with another client fund order unless the aggregation of orders and transactions will not disadvantage any client fund (or such potential disadvantage has been disclosed to each client fund. Where an aggregated client fund order is partially executed, the fund is allocated in priority to ourselves, unless due to the combination it has resulted in advantageous terms. We have strict policies to prevent inappropriate reallocation.

The firm must have in place a written policy on allocation that is consistently applied.

•		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)

•		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.

The firm must have in place a written policy on allocation that is consistently applied, these procedures will be found in CCIOM’s Dealing Procedures. These policies must be disclosed in CCIOM’s Form ADV.

14.

NON-MARKET PRICE TRANSACTIONS

A firm must not enter into a non-market price transaction for a Customer, unless it has taken reasonable steps to ensure that the Customer is not entering into the transaction for an improper purpose. This does not apply to a non-market price transaction if it is subject to the rules of a recognised investment exchange.

A non-market price transaction is a transaction where:

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.

Certain transactions undertaken at non-market rates or prices are not non-market price transactions. Examples are:

Certain circumstances may result in a transaction being undertaken at a price other than the market price, which are not non-market price transactions. Examples are:

•		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 question of whether a transaction is a non-market price transaction is to be judged as at the time it is affected and not with hindsight.

Examples of improper purposes for transactions include:

•		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.

It is a requirement that we must have a procedure in place to be implemented before committing to a non-market price transaction, this being that the Portfolio Adviser will always give a rationale within the recommendation to the Trader in support of the purchasing or selling of a security which is priced at either 5% greater or less than the bid offer spread.

15.

TRANSACTION RECORD KEEPING (COB 8) (and *Advisers Act Rule 204-2)

There must be full transparency of all trades and the existence of a full, uninterrupted audit trail. The audit trail provides the necessary information to enable scrutiny of transactions. A clear and comprehensive audit trail is therefore essential.

The audit trail has the following major components:

•		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

When an error is made in respect of a client, CCIOM or CCUK (“Charlemagne”) acting either as Investment Manager, Sub-Investment Manager or Sub-Advisor will use its reasonable endeavours to break or otherwise correct the trade in accordance with the following principles.

Error Correction Procedure:

When an error is discovered which may be attributable to Charlemagne it shall be dealt with in accordance with the following principles:

•		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 group’s insurers on the day the error is discovered.

NB: The importance of ensuring a full audit trail for all transactions is essential. Careful consideration of each stage of the audit trail should go a long way towards ensuring that your transactions stand up to the closest scrutiny. Always ensure that for any transaction anomaly, whether delay of execution, deal amendment, change in allocation or any other matter not immediately obvious and demonstrable, explanatory details are recorded on the deal instruction form.

17.

DISCLOSURE OF DEALINGS AND HOLDINGS

(Also see Sub-section 23 below)

In order to meet global disclosure requirements with regard to ownership in companies held by client funds, the Compliance Department reviews a daily report which highlights stock holdings (held jointly by client funds) greater than 2%. This is the trigger for any company/stock exchange/regulatory authority reporting to be made e.g. UK at 3%, India at 5%, Turkey at 5% etc. Additionally, the daily report is continually monitored to ensure that ongoing reporting requirements are met once threshold limits are exceeded.

18.

NEW COUNTERPARTIES

Before any employee of the company deals with a new counterparty, whether on behalf of a client (“fund”), the following steps must be observed.

On determining that a counterparty should be used the officer/employee should email the counterparty’s contact point and address to the Compliance Officer.

The Compliance Department will submit a “Due Diligence Questionnaire” to the counterparty as well as request a copy of their Audited Accounts and a copy of their Terms and Conditions of business. Because of the nature of the market the Compliance Officer may authorise the use of a counterparty prior to receipt of this information, at his discretion. However, the Compliance Officer should obtain as much information about a counterparty as he can from the dealers and Portfolio Advisers. The Compliance Officer is permitted at any time to prevent use of a counterparty if he feels CCIOM is at risk in doing so.

The above details concerning a counterparty should be held in an individual counterparty information file, together with any other information relevant to the counterparty risk to CCIOM. This will be reviewed regularly.

19.

COUNTERPARTY RISK

When CCIOM is placing orders on behalf of a Client it is important that we are aware of the financial standing and integrity of the broker or counterparty through whom we are transacting the business. This is particularly important for us in view of the undeveloped nature of many of the markets we operate in. We will, unless our agreement with the Client directs otherwise, enter into transactions with counterparties in such cases as may be usual for the market or size of transaction concerned, notwithstanding that the compensation arrangements available in the event of default of such counterparty may be less favourable than those obtained in other markets or for other sizes of transactions, or that there may be no such arrangements. If we are obliged to provide “Best Execution” for a Client, however, the compensation arrangement may need to be taken into account when selecting counterparties or markets and in making such choices we must in any event ensure that we employ all reasonable care and skill.

It is one of our main responsibilities to minimise the risk for Clients. The nature of the markets we deal in imposes a higher degree of risk than is the case in developed markets. It is most important therefore that all employees who are in contact with brokers, dealers, banks and other agents with whom CCIOM or any other relevant CCL Group entity may deal use particular care in choosing counterparties with a view to minimising our Clients’ risk. There is no insurance cover available for risks of this nature and in line with the practice of other investment managers we do not accept the risk of counterparty default. In certain circumstances, however, and where the Client requests us to take such action, we would pursue appropriate legal remedies on behalf of the Client.

No trading is to be undertaken with any broker not included within CCIOM’s Approved Broker List. Approval must be obtained from Compliance who will undertake the relevant due diligence checks upon request to use a new broker.

20.

FOREIGN MARKETS

The majority of the CCL Group’s business will be executed in foreign markets. Employees should be familiar not only with the relevant UK/IOM law alluded to above but also with the dealing regulations and practice of any market in which CCIOM or relevant CCL Group entity is active. CCIOM will conduct itself in accordance with these rules.

There is a paucity of published information in many undeveloped markets. That and their illiquidity can make them more prone to manipulation than developed markets. This makes it particularly important that all CCIOM’s or CCUK’s investment recommendations and decisions are founded on diligent research. It is important that any employee acting in an analytical capacity maintains full records of the research leading up to a decision or recommendation. It is on that research alone that our judgements can be based.

21.

MONITORING OF FAILING TRADES

Arrangements are made with all Custodians to receive on a daily basis information regarding failed trades. This should provide information of what trades are failing and why.

Upon receipt of this information, any counterparties involved must be contacted, and the problem investigated. All failing trades should be reviewed on a daily basis and a copy of the information should be entered in the daily O/S Trade Report which is made available to Portfolio Advisers and the Compliance Department.

If the trade remains unsettled beyond a week, the custodian should be chased/liaised with until the issue is resolved. If it is the case that the trade has still not settled after 30 days the Compliance Officer must be informed as to action taken to resolve.

22.

CORPORATE ACTIONS

Custodians provide regular information of any Corporate Actions including Dividends, Capital Changes etc. All information regarding any Corporate Actions must be retained on file. Portfolio Advisers should be informed of any Corporate Actions as soon as the information is available, even if it is unconfirmed.

23.

Reporting to the SEC

Based on our beneficial ownership of securities, we may be required to make certain filings with the SEC.

Schedule 13D/G

If, at the end of any calendar year, we are the beneficial owner of 5% or more of any class of U.S. registered equity securities of any issuer, we must file a Schedule 13G with the SEC and send a copy of the Schedule 13G to the issuer and the principal exchange on which the securities are traded. For purposes of this requirement, we will be deemed to be a “beneficial owner” of securities when we, directly or indirectly, have or share voting or investment power, including the power to vote or dispose or to direct the voting disposition of the securities. If a Schedule 13G is required to be filed, it must be filed within 45 days of the calendar year-end. More frequent reporting will be required if we are the beneficial owner of 10% or more of any class of equity securities of any one issuer, and in such circumstances, the requirements of Section 16 of the Exchange Act may apply.

We may become ineligible to file on the short-form Schedule 13G – and, instead, be required to file the more detailed Schedule 13D – under certain circumstances, including

when our securities holdings are held for the purpose of changing or influencing control over the issuer of the securities.

For reporting purposes, on a monthly basis, the Compliance Officer will identify our securities holdings in excess of 5% and 10% beneficial ownership limitations.

Form 13F

If we exercise investment discretion with respect to accounts holding in the aggregate more than $100 million of exchange-traded or NASDAQ-quoted equity securities on the last trading day of any calendar month of any calendar year, we must file a Form 13F with the SEC:

	•		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.

For reporting purposes, on a quarterly basis, the Compliance Officer will identify our equity holdings.

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.

SECTION 3

Appendix 1

RULE BREACH FORM

Date breach occurred:

Date breach identified:

Nature of breach (including details of how the breach was identified):

Action taken to rectify the breach:

Action taken to avoid recurrence of the breach:

I confirm that all relevant details of the breach are recorded herein, that the breach has been rectified and that, to the best of my knowledge all reasonable steps have been taken to prevent recurrence of the breach.

Signed:

Date:

Reviewed by Compliance:

Appendix 2

PA DEALING DECLARATION

I agree that:

(Name of stockbroker/s)


1.

2.

3.

4.

5.

will forward a copy of the confirmation of each transaction undertaken by me or a connected party to the Compliance Officer of Charlemagne Capital (IOM) Limited/Charlemagne Capital (UK) Limited.

I also permit the Compliance Officer to reconcile her/his records of transactions with those of the stockbroker when necessary.

I have submitted a record of relevant personal holdings as required to the Compliance Officer.

If it is the case that I presently undertake no personal account dealing, should I ever do so, I will inform the compliance function and agree to the above.


Signed:


Print name:


Date:

Appendix 3

PA DEALING APPROVAL FORM


To:		Compliance


From:



Date and Time:

Permission is requested for the following personal account transaction(s):

Dealing

Stock /

Purchase /

Approx Cash

Quantity

Counterparty

Date

Instrument

Sale

Consideration


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).



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 FSA’s market abuse regime or insider dealing laws in the UK or any other country.



Signed:



Approval has been granted and is valid for 24 hours (unless otherwise specified below) from approval. Any changes to this request will need to be re-approved.


Approved by:



Date:

Appendix 4

RECORD OF GIFTS AND BENEFITS (“GIFTS”)


Is the gift being offered or received?



Name of employee offering or receiving the gift:



Gift offered to/received from (name of counterparty/client etc):



Nature of gift:



Reason for gift:



Approximate value:



Any other relevant information:


Signature:



Date:

Appendix 5

DEALING/BUSINESS ERROR FORM


Date error occurred:



Date error identified:



Nature of error (including any details of clients involved and any profit/loss)





Action taken to rectify error including details of any additional procedures implemented to mitigate a future occurrence of this nature.



Signed:



Date:



Reviewed/Received by Compliance:

Appendix 6

+++ 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

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/C’S - 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

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

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 D—4 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

ISLE OF MAN FINANCIAL CRIME UNIT Your Ref No: DISCLOSURE FORM D — 6 REASONS FOR SUSPICION FORM D-6 REASONS FOR DISCLOSURE

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 D—4 INDIVIDUAL PERSON Beneficiary or PLEASE COMPLETE A FORM D—4 INDIVIDUAL PERSON Beneficiaries: Assets: Where are assets held: FORM D-5 TRUST DISCLOSURE

Appendix 7

CODE OF ETHICS

General

Our business must be conducted at all times in accordance with the FSA Principles and the fiduciary obligations identified in Rule 204A -1 under the Advisers Act and Rule 17j-1 under the Investment Company Act of 1940. As a condition of employment, we expect our employees to adhere to such principles and obligations.

All employees are required to read this Code and will be asked to certify in writing annually that they have read and, if applicable, will follow the policies and procedures set forth herein. Employees are required to promptly report any violation of these policies or securities law to the Compliance Officer, and any breach may result in disciplinary action which, in severe cases, may be grounds for summary dismissal.

CCIOM acts as Sub-Adviser to various US client funds, appointed to provide certain investment advisory services (further delegated to CCUK) and is registered with the US SEC as an investment adviser and as such must adhere to certain regulations contained within the Investment Company Act of 1940 (17j-1) and Advisers Act (204A-1). You may click on this website to view the full regulations: http://www.sec.gov/about/laws/iaa40.pdf and http://www.sec.gov/about/laws/ica40.pdf

Certain personnel of CCUK and CCIOM (collectively, the “Adviser”) are subject to the following policies and procedures, which are in addition to the general principles described above. The Compliance Officer will identify such persons and will inform such persons of such duty.

Reporting

Initial Holdings Report:

Access Persons (defined within the 1940 Act as (i) any partner, officer, director, or employee of the Adviser, or other person who provides investment advice on behalf of the Adviser and is subject to the supervision and control of the Adviser and (ii) who has access to non-public information regarding any clients’ purchase or sale of securities, or non-public information regarding portfolio holdings of any reportable fund, e.g., a registered investment company managed by the Adviser, or who is involved in making securities recommendations to clients (or who has access to such recommendations that are non-public)) must submit to the Compliance Department a list detailing the name, number of shares and principal amount of all securities owned by him/her and any securities account he or she maintains with a broker, dealer or bank within 10 days of becoming an Access Person. The information in the report must be current as of a date no more than 45 days of submission.

Annual Holdings Report:

Access Persons must submit annually to the Compliance Department a list disclosing the name, number of shares and principal amount of all securities owned and any securities account the Access Person maintains with a broker, dealer or bank. The information in the annual report must be current as of a date within 45 days of submission.

Quarterly Transaction Reports:

Access Persons must file a quarterly report within 30 days after the end of each quarter with the Compliance Department reporting personal securities transactions, including the date of the transaction, the name and number of shares, the principal amount of the securities involved, the nature of the transaction, the price at which the transaction was effected and the broker, dealer or bank with or through whom the transaction was effected. In addition to the information required previously, if the Access Person establishes a securities account during the quarterly period, the quarterly report must also disclose the name of the broker, dealer or bank with whom the account is established and the date the account is established.

The Compliance Officer will review all Quarterly Transaction and Initial and Annual Holdings Reports.

Preclearance

General

The Adviser’s general preclearance requirements are described under “Personnel – Personal Transactions.

Pre-approval of Investment in IPO’s and Private Placements:

Access Persons must obtain prior approval from the Compliance Officer or CEO before acquiring any beneficial ownership in an IPO or private placement.

Recordkeeping

The Compliance Officer shall maintain records in the manner and extent set forth below, and these records shall be available for examination by representatives of the SEC.

	•		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.

Board Approval and Reporting

The Board of Directors/Trustees of any registered investment company advised or sub-advised by the Adviser must approve this Code and any material amendments to this Code. The Compliance Officer will prepare annually a written report that describes any issues arising under the Code since the last report, including information about material violations of the Code and sanctions imposed in response to such violations. The report must include discussion of whether any waivers that might be considered important by the Board were granted during the period. The report must also certify that the Adviser has adopted procedures reasonably necessary to prevent Access Persons from violating the Code.

Waiver

The Compliance Officer has the authority to grant written waivers of the provisions of this Code in appropriate circumstances. However, the Adviser expects that waivers will be granted only in rare

instances and some provisions of this Code that are prescribed by SEC rules cannot be waived. These provisions include, but are not limited to, the requirements that Access Persons file reports and obtain pre-approval of investments in IPOs and private placements.