U.S. Global Investors reorganize MegaTrends Fund into the Holmes Growth Fund

TheShadow

http://www.sec.gov/Archives/edgar/data/101507/000110465913073363/a13-21580_2497.htm

497 1 a13-21580_2497.htm 497

U.S. GLOBAL INVESTORS FUNDS

Holmes Growth Fund

MegaTrends Fund

Investor Class Shares

SUPPLEMENT DATED OCTOBER 1, 2013

TO THE PROSPECTUS AND SUMMARY PROSPECTUS DATED MAY 1, 2013



On September 30, 2013, the Board of Trustees (the “Board”) of the MegaTrends Fund and the Holmes Growth Fund approved an Agreement and Plan of Reorganization (the “Plan”) to reorganize the MegaTrends Fund into the Holmes Growth Fund. If certain conditions required by the Plan are satisfied, the reorganization is expected to occur on or about December 20, 2013.



The Board also approved proposals to change the Holmes Growth Fund’s name to the Holmes Macro Trends Fund and to remove the prospectus language which states that the fund’s “emphasis is on small- and mid-sized companies.” These changes would occur in connection with the reorganization on or about December 20, 2013.

The Plan provides for the transfer of all of the assets and liabilities of the MegaTrends Fund solely in exchange for shares of the Holmes Macro Trends Fund. The Holmes Macro Trends Fund shares received by the MegaTrends Fund would then be distributed to shareholders of the MegaTrends Fund as part of the MegaTrends Fund’s liquidation provided for in the Plan, and shareholders of the MegaTrends Fund would become shareholders of the Holmes Macro Trends Fund. The reorganization is expected to be effected on a tax-free basis, which means that no gain or loss will be recognized by either fund or their shareholders directly as a result of the reorganization.

Before the reorganization, shareholders of the MegaTrends Fund will receive an information statement that will, among other things, describe the terms of the Plan and compare the investment objectives, investment strategies and policies, portfolio managers and investment advisory fees of the MegaTrends Fund and Holmes Macro Trends Fund. The information statement also will describe the performance and accounting survivor analysis, the tax impact of the transaction, and the brokerage and other costs associated with the reorganization.

BobC

None of this is surprising. U.S. Global specializes in niche products, and their long-term records are fair to very good. CEO Frank Holmes cut his teeth in Canada's natural resources and gold markets and is a truly smart guy. When Art Bonnell left MIM Stock Appreciation Fund back in the 1990's, he connected with U.S. Global, and the Bonnell Growth Fund was born. It had some great numbers until the tech blowup, and never really got back on track. Art retired in 2004 or so, Holmes took over the fund and changed the name. Assets have never grown and are essentially the same as they were in 2008.

Megatrends is having a good 2013. We used the fund as a global infrastructure play a few years back, but the management team changed its philosophy and investment style 2-3 times in a 2-year period, and we left.

I wish the folks at U.S. Global success with this change/merger. They are really good people. But being niche players for the most part, they are subject to the ebb and flow of commodities, resources, energy, and metals around the world. When these sectors are in favor, U.S. Global is right near the top in those classes. But being a mostly retail investor company, they have seen huge inflows and outflows of dollars depending on those sectors' performances.