USFunds.com • February 21, 2014 · The S&P 500 Stock Index dropped 0.13 percent, while the Nasdaq...

Weekly Investor Alert by U.S. Global Investors, Inc.

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USFunds.com • February 21, 2014

Table of ContentsIndex Summary • Domestic Equity Market • Economy and Bond Market • Gold Market

Energy and Natural Resources Market • Emerging Markets • Leaders and Laggards • Fund Performance Link

This week’s podcast recording will be available on Monday. We apologize for any inconvenience.

Going for the GoldBy Frank HolmesCEO and Chief Investment OfficerU.S. Global Investors

Everyone wants the gold. Around the world, athletes train for years to compete for a gold medal. In Hong Kongand China, the Love Trade seeks gold coins, bars and jewelry.

We found out this week the extent that gold issought in the East. For the first time since 1980,Switzerland released monthly gold trade data,providing a more transparent picture of physicalgold flows.

In January alone, the Swiss report showed anincredible 80 percent of gold shipments went toAsia.

Switzerland plays a key role in the gold marketbecause it is home to many big gold refiners, soits report confirms what we’ve been saying aboutgold’s move out of the West to the strong handsof the East.

So even though the gold price fell in 2013, thesmart money tuned into this flow of physical goldthat was moving into the East. Meanwhile,naysayers were distracted by the Fear Trade’sselling out of gold ETFs.

“Gold flooding onto the market as a result [of large-scale ETF selling] was used to feed the voracious appetitefor physical metal among consumers in India, China and numerous Asian and Middle Eastern markets,” saysthe World Gold Council in its latest report. You can see in the chart that gold demand reached record levels inthe jewelry, bar and coin areas of the market last year. In fact, there was a 21 percent increase in demand fromconsumers, which was in contrast to the outflows from gold ETFs, per the WGC.

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Along with this continued demand in January, Daniela Cambone from Kitco and I discussed the factors thatcould drive gold to $1,400 an ounce. Find out what those are now.

Opportunities Found by Rejecting an Old Investing Adage?Following a great 2013, many U.S. stocks (an exception being gold stock indices) likely disappointed investorsin January. For those who follow the investing adage, “as January goes, so goes the year,” the stock market maynot be looking so bright for the rest of 2014.

But research suggests there are opportunities to be found.

“Negative Januarys do have interesting implications” for U.S. stocks, says Brian Belski of BMO Capital Markets.He recently dissected monthly S&P 500 performance, taking a look at the years when the market declines inJanuary.

I think you’ll be surprised at his results.

Going back 24 years, the stocks thatperformed the best in Januarysignificantly lagged for the rest of theyear compared to the stocks that did theworst. See the results below, which showthat the companies in the bottomquartile for January performance rose asignificant 20 percent from Februarythrough December. The stocks that didthe best in January rose only an averageof 12 percent during the rest of thecalendar year.

Belski’s analysis aligns with the recentpoor performance in sectors that wepreviously identified as having strengthover the past several months. Of the 10sectors in the S&P 500, our models haveidentified consumer discretionary,health care and industrials sectors as

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having sustained leadership.

But in January, industrials anddiscretionary stocks were among theworst-performing sectors. Energy andmaterials were also in the bottom half.

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While past performance does not predict future results, BMO’s research suggests stocks in the lagging sectorscould outperform for the rest of 2014. We are especially bullish on those dividend-paying companiesexperiencing robust fundamentals, including strong revenue and earnings growth.

Join us for our live webcast on March 5We’re getting ready for our upcoming webcast on the “5 Reasons the Naysayers are Wrong about the Markets,”happening on March 5. Director of Research John Derrick and resources expert Brian Hicks will join me toshare with you key strategies in following the smart money in gold, resources, emerging markets, the domesticmarket and bonds.

I invite you to register today and join us live. If you want to make sure we cover a specific topic, feel free toemail us today at [email protected].

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Index SummaryMajor market indices finished mixed this week. The Dow Jones Industrial Average fell 0.32 percent.The S&P 500 Stock Index dropped 0.13 percent, while the Nasdaq Composite advanced 0.46 percent.The Russell 2000 small capitalization index rose by 1.34 percent this week.

The Hang Seng Composite rose 0.59 percent; Taiwan gained 1.04 percent while the KOSPI advanced0.90 percent. The 10-year Treasury bond yield fell one basis point this week to 2.73 percent.

Frank Holmes’ blog is generating some serious buzz. If you’re subscribed to the blog, youknow what we’re talking about. From interviews on news outlets like CNBC to commentary on what’s trulybehind the price of gold that’s shared by Seeking Alpha, you shouldn’t miss out on this blog. So if you’d liketo be part of the group that receives one of the best in the business, sign up for Frank Talk today.

All American Equity Fund - GBTFX • Holmes Macro Trends Fund - ACBGX

Domestic Equity MarketThe S&P 500 Index was virtually unchanged this week. The market bounced around in a narrow range withoutmaking much real progress. Health care led the way on the back of merger and acquisition (M&A) activity whilefinancials trailed as some of the big banks experienced modest declines.

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StrengthsThe health care sector was the leader this week as generic drug maker Actavis agreed to acquire ForestLaboratories. Both stocks rose on the news with Actavis rising 13.8 percent and Forest Labs jumping35.7 percent, posting the best performance in the S&P 500 this week.

The utilities sector was not far behind with strong performances from Ameren and Public ServicesEnterprise. Both companies beat earnings expectations and rose by more than 5 percent for the week.

Nabors Industries rose 21.6 percent this week. The company released quarterly earnings results, whichwere ahead of expectations, and is communicating enhanced visibility for its North American landdrilling business.

WeaknessesThe financials sector underperformed as index heavyweights Bank of America and Citigroup both fell byroughly 2.5 percent.

The consumer staples sector was also a laggard as Coca-Cola fell 4.5 percent and Wal-Mart fell 3.5percent on poor earnings results.

US Steel was the worst performer in the S&P 500 this week, falling 8.19 percent. A U.S. Department ofCommerce ruling on anti-dumping duties for tubular products was a disappointing development fordomestic steel producers.

OpportunitiesThe current macro environment remains positive as economic data is robust enough to give investorsconfidence in an economic recovery, but not so strong as to force the Fed to aggressively change coursein the near term.

Money flows are likely to find their way into domestic U.S. equities and out of bonds and emergingmarkets.

The improving economic situation could possibly drive equity prices well into 2014.

ThreatsA short-term market consolidation period after such strong performance over the past six monthscannot be ruled out.

Higher interest rates are a threat for the whole economy. The Fed must walk a fine line and there is alarge potential for policy error.

A lot of good news potentially is priced into the market and the economy will need to deliver to maintainthe positive momentum in the market.

U.S. Government Securities Ultra-Short Bond Fund - UGSDX • Near-Term Tax Free Fund - NEARX

The Economy and Bond MarketTreasury bond yields were little changed this week. It seemed all the focus was on the Olympics as both stock

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and bond markets ended the holiday-shortened week little changed from the prior week. Economic data wasmixed and inflation data remained benign.

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StrengthsInflation data remains benign with producer prices up 1.2 percent and consumer prices up 1.6 percenton a year-over-year basis.

The Conference Board’s leading index rose 0.3 percent in January, ahead of expectations and pointingto a reasonably good economic outlook.

Japan’s central bank continued to add to its monetary policy accommodation by increasing the loansavailable to commercial banks.

WeaknessesHousing data points were weak, with January housing starts falling 16 percent, existing home salesfalling 5.1 percent and homebuilder sentiment dropping as weather impacted foot traffic.

The HSBC/Markit Flash manufacturing PMI for China fell again in February to 48.3, the second monthin a row indicating contraction.

Factory data was also weak in the U.S. with the Philadelphia Fed manufacturing index falling intonegative territory for the first time since May.

OpportunitiesFed minutes released this week confirmed the market’s thinking that tapering would proceed more orless as planned.

The International Monetary Fund (IMF) released a report this week highlighting the deflation risk inEurope. It is exactly this type of thinking that could spur additional easing policies from the EuropeanCentral Bank.

There are many moving parts to the taper decision and although the Fed began the process, it is verypossible that tapering could be delayed if the economy stumbles.

ThreatsSeveral emerging market countries are raising interest rates at an aggressive pace to either deal with

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inflation or a weak currency. It could be the beginning of a new global interest rate cycle for higherrates.

Trade and/or currency “wars” cannot be ruled out which may cause unintended consequences andvolatility in the financial markets.

Puerto Rico was recently downgraded to “junk” status and it highlights that roughly six years past thefinancial crisis, the fallout continues.

World Precious Minerals Fund - UNWPX • Gold and Precious Metals Fund - USERX

Gold MarketFor the week, spot gold closed at $1,324.10, up $5.41 per ounce, or 0.41 percent. Gold stocks, as measured bythe NYSE Arca Gold Miners Index, rose 1.00 percent. The U.S. Trade-Weighted Dollar Index rose 0.16 percentfor the week.

StrengthsGold rose to a 15-week high as U.S. retail sales and housing starts slumped at the same time as Chinesemanufacturing data fell to its lowest level in seven months. In addition, the political unrest in Ukraineand Thailand boosted gold’s haven premium. On a more positive note, gold demand in Japan jumpedthreefold in 2013 as investors sought refuge from Prime Minister Shinzo Abe’s campaign to stokeinflation. India’s gold demand remained buoyant in 2013, rising 13 percent from 2012 despite thegovernment introducing several restrictions to curb imports. Lastly, JP Morgan raised its outlook ongold, saying prices are likely to hit $1,450 by the end of the year as fundamentals have turned bullish.

A recent report from the Swiss Customs Administration shows the European nation shipped more than80 percent of its gold and silver bullion to Asia last month. The main destinations were Hong Kong,India and Singapore, while the main sources of gold imports were the U.K and the U.S. Despite therecent price recovery in gold, the demand from physical buyers in Asia continues to drive a wave of goldfinding its way from weak hands into strong hands.

Mandalay Resources reported earnings this week, beating consensus expectations. Managementcontinues to deliver in terms of growth and profitability, while returning value to shareholders via anattractive dividend. Similarly, Pan African Resources rose to a 14-month high as pretax profit jumped 30percent in the first half of its financial year. The company said sales in the first half were buoyed as itsBarberton Mines in South Africa increased the amount of gold sold from its newly commissionedTailings Retreatment Project, and its Evander Mines in South Africa became fully integrated into thecompany.

WeaknessesThe two “most accurate” gold forecasters are holding on to their bearish forecasts for 2014 even after themetal posted its best start to a year since 1983, according to a Bloomberg report. The report citesanalysts at Societe General and Westpac Banking as the best forecasters over the past two years;however, what the report fails to convey is the fact that these analysts are permanently bearish on gold,and the 15-month recent downtrend favored their forecasts. Now that the fundamentals have changedand the downtrend has been broken, it would be wise to appraise these forecasts.

Yamana Gold took a $672 million before-tax impairment charge for 2013 as it examined its future cashflows and the intrinsic value of its reserves. The charges include $262 million on exploration propertieswhich highlight the pervasive level of capital misallocation of the past years. In addition, OceanaGold

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posted an unexpected $47.9 million loss on impairment charges to its New Zealand assets in the face ofa lower gold price.

AngloGold Ashanti announced a jump in production and a reduction of costs for the year 2013, butrecognized it still has much to do before it can return to a positive cash flow generation. As a result, thegroup decided against a final dividend for the year. This situation is familiar for other gold producerswho have cut their dividends in the recent quarter; Yamana Gold and Agnico Eagle come to mind.

OpportunitiesUBS boosted its forecast for gold in 2014 citing a change in investors’ attitude toward the yellow metal.According to the bank’s analysts, over the past year gold was either the favorite asset to short or wasignored completely. Recent developments suggest that this is no longer the case and momentum isturning, the analysts added. Moreover, BCA Research published data showing gold mining shares weredown more than 40 percent over the past year. As shown in the chart below, each decline of more than40 percent since 1980 has given way to at least a tradable rally.

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Goldman Sachs is of the opinion that mining capital spending continues to decline, with 2015 miningcapex estimates being reduced by 8 percent in the last three months alone. However, the key drivers ofthis reduction appear favorable: young equipment fleets, the winding down of projects and a focus onhigher grade deposits. As a result, we may see higher near-term cash flows and a more disciplinedcapital allocation process.

India, which lost its crown to China last year as the top gold consumer, is likely to cut its import tax ongold before the end of February to 6 or 8 percent from the current 10 percent. The government initiativecomes as pressure on the country’s current account deficit has scaled down, with recent data showing ithas fallen by nearly 50 percent.

ThreatsDespite an apparent lack of inflationary pressure in the U.S., and ongoing disinflationary trends in theeurozone, the continuous commodities index, which tracks commodity baskets, has risen sharply. Manyagricultural commodities have strengthened following poor conditions in several geographies, andenergy prices have increased following colder than usual winter weather. These increases may appeartransitory, but the index shows a very strong correlation with inflation readings and, as such, we couldsee month-over-month inflation readings turn positive over the next couple months.

The Province of Quebec is seeking to preserve head offices in the province, even if that means thwartingbids. On the back of the recent bid for Osisko Mining, Quebec will move to enact legislation that shieldsbusinesses from takeovers by allowing the province to purchase stakes in the ownership of homegrowncompanies. The measures are aimed at preserving head-office jobs that help generate the C$5 billion ineconomic activity.

Although the current strike in the platinum industry is broader than previous events, the metal pricereaction has been relatively muted so far. The strike was preannounced, giving the industry time toprepare, but should the current stalemate continue, some tightness could start to develop.

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Global Resources Fund - PSPFX

Energy and Natural Resources Market

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StrengthsNatural gas futures climbed to a five-year high of $6.40 during Thursday’s trading session after weatherforecasts indicated that temperatures may be lower than normal in the eastern two-thirds of the U.S.heading into the first week of March.

West Texas crude oil capped its sixth-weekly gain to $102 a barrel on strong heating oil demand.

Arabica coffee futures jumped 21 percent this week in New York, extending their year-to-date gain to 56percent due to dry weather conditions in Brazil, which is a leading global exporter of the commodity.

WeaknessesChina Investment Corp. ($600 billion sovereign-wealth fund) is selling energy and commodity holdings,

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attempting to capitalize on recovering economies. According to regulatory filings, a total of $1.5 billionin shares in energy companies have been sold. The fund could also be considering selling stakes in oil-sands projects.

Alcoa announced that it will permanently close its Point Henry aluminum smelter and rolling mills inAustralia, after finding these have no prospects of becoming financially viable. Restructuring-relatedcharges for 2014 with closures are expected between $250-270 million ($0.22-0.25/share) on an after-tax basis.

OpportunitiesRepsol will sign a definitive $5 billion settlement over the seizure of YPF within days, a source involvedin the talks said, ending a two-year bilateral dispute. Argentine President Cristina Fernandeznationalized Repsol's majority stake in YPF in 2012, sparking a freeze on international investment in theprolific Vaca Muerta shale field.

Asia is expected to be the end market for many of the planned global liquefied natural gas (LNG)projects. Projections by Qatargas and Wood Macenzie estimate Asian LNG demand by 2025 at 350million metric tonne per annum (mmtpa), versus180 mmtpa currently. Traditional importers such asKorea and Japan are also expected to grow, but perhaps at a slower rate than in the past.

Using forecast data through March 6, this U.S. winter remains the coldest since 2001 based oncalculations of demand-weighted Heating Degree Days (HDD). Accordingly, it is estimated that theextent of the natural gas storage deficit will be large enough that by the start of next winter, storagelevels may still be some 500 billion cubic feet below average even after assuming some productionincrease. The implication is that U.S. natural gas prices will need to remain high to incentivize utilityswitching to coal well into next winter.

ThreatDespite record production of grains last year, agriculture enters the 2014 growing season with a "prettytight" stock situation, said USDA Chief Economist Joseph Glauber, speaking yesterday at the USDAAgricultural Outlook Forum. "If problems arise this year," he said, referring to a potential productionshortfall due to inclement weather or other exigencies, "we could see price spikes like we did in 2010and 11."

February 19, 2014This CommonMisconception about ChinaMay Be Hurting YourPortfolio

February 19,2014These GoldCharts WillMake YourHeart Beat

Faster

February 12, 2014This Commodity was theDecade’s WorstPerformer, but Led in2013

China Region Fund - USCOX • Emerging Europe Fund - EUROX

Emerging Markets

StrengthsPolish January industrial output rose 4.1 percent from the previous year, above the 3.5 percent medianestimate. Manufacturing rose 5.9 percent and output in the water supply and waste management sectorgrew 4.8 percent. In addition, the Polish Purchasing Managers’ Index (PMI) surged to a three-year highof 55.4 in January, despite similar data in the eurozone posting a tick down.

The Brazilian real advanced the most among emerging market currencies as Brazil reported higher-than-forecast foreign investment a day after the government pledged to reduce spending. The

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government announced that it would cut this year’s fiscal budget, allowing Brazil to meet a primarysurplus target of 1.9 percent of gross domestic product. According to analyst commentaries, improvedfiscal management will help slow inflation and allow the central bank to limit further increases inborrowing costs.

The Philippines’ overseas workers remittance in December rose by a higher-than-expected 9.1 percentyear-over-year to a record $2.16 billion, the fastest pace in a year. According to World Bank estimates,remittances still accounted for around 10 percent of the country’s GDP in 2013.

WeaknessesThis was another fund outflow week in the emerging market space as investors pulled $1.56 billion thisweek. This marks the record 17th straight week of outflows in dedicated emerging markets funds, withcumulative outflows reaching $38 billion, or 4.9 percent of assets. On the positive side, the magnitude ofoutflows has reduced compared with the recent average outflow of $5.2 billion per week. At the countrylevel, Poland, Mexico and Russia reported the largest outflows relative to assets.

European stocks weakened as disappointing manufacturing and services data in the eurozone added toconcerns of a stagnant recovery. The PMI for manufacturing in the euro-area slipped to 53 from 54 inJanuary. Economists had predicted a reading of 54. The reading suggests that the region’s recovery isstruggling to gather pace, and puts pressure on the European Central Bank to loosen its policy further.

The Flash HSBC China PMI declined to a worse-than-expected 48.3 in February, a second month ofcontraction and the lowest reading in seven months. While seasonal distortion by the Chinese New Yearcannot be ruled out, there is no sign of a fundamental relaxation in the monetary policy stance.

Opportunities

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Facebook’s recent $19 billion acquisition of WhatsApp might trigger a revaluation opportunity in themarketplace for Tencent’s QQ and WeChat social messaging apps. According to CICC, mobile QQ andWeChat may realize around $2.5 billion in revenue for 2014, or up to 25 times larger than WhatsApp’smonetization potential this year.

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Goldman Sachs reports that online advertising continues to flourish in Russia and offers opportunitiesin the current context. Goldman forecasts secular themes in both information technology andadvertising to remain in place, with online advertising offering a bright spot of the market growth. Asthe chart above shows, online advertising in Russia is expected to grow into a $3 billion market by 2015,comprising more than 30 percent of total ad budgets.

The Economist Intelligence Unit praised the Pacific Alliance trade agreement between Peru, Chile,Colombia and Mexico. The four Latin American nations recently decided to eliminate 92 percent oftrade tariffs in order to facilitate exports and migration between them. The Economist stressed theagreement would create many business opportunities and increase competitiveness of member nations,which will allow them to enter the Asian market as a bloc.

Threats

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Deutsche Bank initiated coverage on Tinkoff Credit Systems with a Sell rating as it expects the fastearnings growth of recent years to be curtailed by spiraling bad loans. The concerns relate to adeteriorating market outlook and discomfort with asset quality. On a separate commentary, GoldmanSachs notes that Russian consumer debt relative to wages is at a record high, having troughed in 2010before rising gradually to mid-2013. As a result, loan growth has slowed and will likely continue to

http://www.usfunds.com/media/images/investor-alert/_2014/2014-02-21/EMRG-Online-Advertising-Bright-Spot-for-Russian-Markets-02212014-LG.gifhttp://www.usfunds.com/media/images/investor-alert/_2014/2014-02-21/EMRG-Online-Advertising-Bright-Spot-for-Russian-Markets-02212014-LG.gifhttp://www.usfunds.com/media/images/investor-alert/_2014/2014-02-21/EMRG-Consumer-Debt-At-Record-High-in-Russia-02212014-LG.gifhttp://www.usfunds.com/media/images/investor-alert/_2014/2014-02-21/EMRG-Consumer-Debt-At-Record-High-in-Russia-02212014-LG.gif



decline as bad loan portfolios surge.

Russian stocks dropped as Gazprom fell on concern that Ukraine’s deadly clashes may disrupt gassupplies to Europe, which comprise about a quarter of the region’s demand and are largely dependenton free transit through Ukraine. As the political instability worsened, investors questioned thecompany’s ability to deliver on its contracts to Europe.

Anti-government protesters’ recent efforts in Thailand to discredit the Yingluck Shinawatraadministration with its own supporters highlights lingering political uncertainty with no quick end to theongoing standoff.

Leaders and LaggardsThe tables show the weekly, monthly and quarterly performance statistics of major equity and commoditymarket benchmarks of our family of funds.

Weekly Performance

Index CloseWeekly

Change($)Weekly

Change(%)

Natural Gas Futures 6.21 +1.00 +19.10%

S&P/TSX Canadian Gold Index 204.82 +4.03 +2.01%

Oil Futures 102.28 +1.98 +1.97%

Russell 2000 1,164.63 +15.42 +1.34%

Korean KOSPI Index 1,957.83 +17.55 +0.90%

XAU 102.88 +0.89 +0.87%

Hang Seng Composite Index 3,140.35 +18.35 +0.59%

Nasdaq 4,263.41 +19.39 +0.46%

S&P Energy 629.81 +2.70 +0.43%

Gold Futures 1,323.50 +4.90 +0.37%

S&P Basic Materials 291.53 +0.84 +0.29%

S&P 500 1,836.25 -2.38 -0.13%

DJIA 16,103.30 -51.09 -0.32%

10-Yr Treasury Bond 2.73 -0.01 -0.40%

Monthly Performance

Index CloseMonthly

Change($)Monthly

Change(%)



XAU 102.88 +9.31 +9.95%

Oil Futures 102.28 +7.29 +7.67%

Gold Futures 1,323.50 +81.50 +6.56%

Nasdaq 4,263.41 +37.65 +0.89%

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Korean KOSPI Index 1,957.83 -6.06 -0.31%

S&P 500 1,836.25 -7.55 -0.41%

Russell 2000 1,164.63 -11.09 -0.94%

S&P Energy 629.81 -8.03 -1.26%

DJIA 16,103.30 -311.14 -1.90%

10-Yr Treasury Bond 2.73 -0.10 -3.43%

Hang Seng Composite Index 3,140.35 -332.01 -14.83%

Quarterly Performance

Index CloseQuarterly

Change($)Quarterly

Change(%)



XAU 102.88 +16.51 +19.12%

Oil Futures 102.28 +7.44 +7.84%

Nasdaq 4,263.41 +271.76 +6.81%

Gold Futures 1,323.50 +78.10 +6.27%


Russell 2000 1,164.63 +39.71 +3.53%

S&P 500 1,836.25 +31.49 +1.74%

DJIA 16,103.30 +38.53 +0.24%

10-Yr Treasury Bond 2.73 -0.01 -0.40%

Korean KOSPI Index 1,957.83 -48.40 -2.41%

S&P Energy 629.81 -15.90 -2.46%

Hang Seng Composite Index 3,140.35 -158.16 -4.79%

Please consider carefully a fund’s investment objectives, risks, charges and expenses. For this and otherimportant information, obtain a fund prospectus by visiting www.usfunds.com or by calling 1-800-US-FUNDS (1-800-873-8637). Read it carefully before investing. Distributed by U.S. Global Brokerage, Inc.

With respect to the Fidelity Institutional Money Market Treasury Portfolio, which is distributed by Fidelity DistributorsCorporation, an investment in a money market fund is neither insured nor guaranteed by the Federal Deposit InsuranceCorporation or any other government agency. Although money market funds seek to preserve the value of yourinvestment at $1.00 per share, it is possible to lose money by investing in the fund.

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not beappropriate to every investor.

Foreign and emerging market investing involves special risks such as currency fluctuation and less public disclosure, aswell as economic and political risk. By investing in a specific geographic region, a regional fund’s returns and share pricemay be more volatile than those of a less concentrated portfolio.

The Emerging Europe Fund invests more than 25 percent of its investments in companies principally engaged in the oil &gas or banking industries. The risk of concentrating investments in this group of industries will make the fund moresusceptible to risk in these industries than funds which do not concentrate their investments in an industry and may makethe fund’s performance more volatile.

Because the Global Resources Fund concentrates its investments in a specific industry, the fund may be subject togreater risks and fluctuations than a portfolio representing a broader range of industries.

Gold, precious metals, and precious minerals funds may be susceptible to adverse economic, political or regulatorydevelopments due to concentrating in a single theme. The prices of gold, precious metals, and precious minerals aresubject to substantial price fluctuations over short periods of time and may be affected by unpredicted internationalmonetary and political policies. We suggest investing no more than 5 percent to 10 percent of your portfolio in thesesectors.

Bond funds are subject to interest-rate risk; their value declines as interest rates rise. Tax-exempt income is federalincome tax free. A portion of this income may be subject to state and local income taxes, and if applicable, may subject



certain investors to the Alternative Minimum Tax as well. The Near-Term Tax Free Fund may invest up to 20 percent ofits assets in securities that pay taxable interest. Income or fund distributions attributable to capital gains are usuallysubject to both state and federal income taxes. The Near-Term Tax Free Fund may be exposed to risks related to aconcentration of investments in a particular state or geographic area. These investments present risks resulting fromchanges in economic conditions of the region or issuer.

Investing in real estate securities involves risks including the potential loss of principal resulting from changes in propertyvalue, interest rates, taxes and changes in regulatory requirements.

Past performance does not guarantee future results.

Some link(s) above may be directed to a third-party website(s). U.S. Global Investors does not endorse all informationsupplied by this/these website(s) and is not responsible for its/their content.

These market comments were compiled using Bloomberg and Reuters financial news.

Holdings as a percentage of net assets as of 12/31/13:Actavis plc: 0.0%Forest Laboratories, Inc.: Holmes Macro Trends Fund, 0.50%Ameren Corp.: 0.0%Public Services Enterprise Group, Inc.: 0.0%Nabors Industries Ltd: 0.0%Bank of America Corp.: All American Equity Fund, 3.00%; Holmes Macro Trends Fund, 2.09%Citigroup, Inc.: Holmes Macro Trends Fund, 0.28%The Coca-Cola Co.: All American Equity Fund, 0.94%Wal-Mart Stores, Inc.: 0.0%US Steel: Global Resources Fund, 0.56%Mandalay Resources Corp.: Global Resources Fund, 0.97%; Gold and Precious Metals Fund, 1.79%; World PreciousMinerals Fund, 1.36%Pan African Resources plc: Gold and Precious Metals Fund, 0.95%; World Precious Minerals Fund, 1.01%Yamana Gold, Inc.: Gold and Precious Metals Fund, 2.40%; World Precious Minerals Fund, 1.02%OceanaGold Corp: Gold and Precious Metals Fund, 2.07%; World Precious Minerals Fund, 1.32%AngloGold Ashanti Ltd: Gold and Precious Metals Fund, 0.04%; World Precious Minerals Fund, 0.04%Agnico Eagle Mines Ltd: Gold and Precious Metals Fund, 1.56%; World Precious Minerals Fund, 1.57%Osisko Mining Corp.: Gold and Precious Metals Fund, 2.76%; World Precious Minerals Fund, 1.00%Alcoa, Inc.: Global Resources Fund, 1.12%Respol S.A.: 0.0%YPF S.A.: 0.0%Facebook, Inc.: All American Equity Fund, 1.17%; Holmes Macro Trends Fund, 0.88%Tencent Holdings Ltd: China Region Fund, 4.03%LinkedIn Corp.: 0.0%Twitter, Inc.: 0.0%SINA Corp.: 0.0%Tinkoff Credit Systems: 0.0%Gazprom: Emerging Europe Fund, 4.22%

*The above-mentioned indices are not total returns. These returns reflect simple appreciation only and do not reflectdividend reinvestment.

The Dow Jones Industrial Average is a price-weighted average of 30 blue chip stocks that are generally leaders in theirindustry.The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S.companies.The Nasdaq Composite Index is a capitalization-weighted index of all Nasdaq National Market and SmallCap stocks.The Russell 2000 Index® is a U.S. equity index measuring the performance of the 2,000 smallest companies in theRussell 3000®, a widely recognized small-cap index.The Hang Seng Composite Index is a market capitalization-weighted index that comprises the top 200 companies listedon Stock Exchange of Hong Kong, based on average market cap for the 12 months.The Taiwan Stock Exchange Index is a capitalization-weighted index of all listed common shares traded on the TaiwanStock Exchange.The Korea Stock Price Index is a capitalization-weighted index of all common shares and preferred shares on the KoreanStock Exchanges. The Philadelphia Stock Exchange Gold and Silver Index (XAU) is a capitalization-weighted index that includes the leadingcompanies involved in the mining of gold and silver. The U.S. Trade Weighted Dollar Index provides a general indication of the international value of the U.S. dollar.The S&P/TSX Canadian Gold Capped Sector Index is a modified capitalization-weighted index, whose equity weights arecapped 25 percent and index constituents are derived from a subset stock pool of S&P/TSX Composite Index stocks.The S&P 500 Energy Index is a capitalization-weighted index that tracks the companies in the energy sector as a subsetof the S&P 500.The S&P 500 Materials Index is a capitalization-weighted index that tracks the companies in the material sector as asubset of the S&P 500.



The S&P 500 Financials Index is a capitalization-weighted index. The index was developed with a base level of 10 for the1941-43 base period.The S&P 500 Industrials Index is a Materials Index is a capitalization-weighted index that tracks the companies in theindustrial sector as a subset of the S&P 500.The S&P 500 Consumer Discretionary Index is a capitalization-weighted index that tracks the companies in the consumerdiscretionary sector as a subset of the S&P 500.The S&P 500 Information Technology Index is a capitalization-weighted index that tracks the companies in theinformation technology sector as a subset of the S&P 500.The S&P 500 Consumer Staples Index is a Materials Index is a capitalization-weighted index that tracks the companies inthe consumer staples sector as a subset of the S&P 500.The S&P 500 Utilities Index is a capitalization-weighted index that tracks the companies in the utilities sector as a subsetof the S&P 500.The S&P 500 Healthcare Index is a capitalization-weighted index that tracks the companies in the healthcare sector as asubset of the S&P 500.The S&P 500 Telecom Index is a Materials Index is a capitalization-weighted index that tracks the companies in thetelecom sector as a subset of the S&P 500.The NYSE Arca Gold Miners Index is a modified market capitalization weighted index comprised of publicly tradedcompanies involved primarily in the mining for gold and silver. The Consumer Price Index (CPI) is one of the most widely recognized price measures for tracking the price of a marketbasket of goods and services purchased by individuals. The weights of components are based on consumer spendingpatterns.The Conference Board index of leading economic indicators is an index published monthly by the Conference Board usedto predict the direction of the economy's movements in the months to come. The index is made up of 10 economiccomponents, whose changes tend to precede changes in the overall economy.The Purchasing Manager’s Index is an indicator of the economic health of the manufacturing sector. The PMI index isbased on five major indicators: new orders, inventory levels, production, supplier deliveries and the employmentenvironment.The Philadelphia Federal Index is a regional federal-reserve-bank index measuring changes in business growth. Theindex is constructed from a survey of participants who voluntarily answer questions regarding the direction of change intheir overall business activities. The survey is a measure of regional manufacturing growth. When the index is above 0 itindicates factory-sector growth, and when below 0 indicates contraction. Also known as the "Business Outlook Survey."

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USFunds.com • February 21, 2014 · The S&P 500 Stock Index dropped 0.13 percent, while the Nasdaq...

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