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Please note: The Frank Talk articles listed below contain historical material. The data provided was current at the time of publication. For current information regarding any of the funds mentioned in these presentations, please visit the appropriate fund performance page.

4 Areas Revved Up for a Resources Boom
April 1, 2014

He dunks, he scores!Commodity returns vary wildly, as experienced resource investors can attest and our popular periodic table illustrates. This inherent volatility can spell opportunity for the nimble investor who can look past the mainstream headlines to identify hot spots. Our global resources expert, Brian Hicks, CFA, identified four we believe are revved up for a resources boom.

1. Plenty in the Tank for Energy Stocks
Because of the previously low expectations of global growth and oil demand, energy stocks have been shunned by investors and have languished in recent years. In fact, according to Goldman Sachs, oil equities held in the Energy Select Sector SPDR ETF have underperformed the broader market by 32 percent since 2008!

Global energy stocks have also suffered: In a comparison of the price-to-book valuations of the MSCI World Energy Index to that of the MSCI World Index, the ratio is at a level we haven’t seen since the late 1990s and early 2000s. Back then, crude oil plummeted to a very low price of $10 per barrel.

Today, with oil hovering around $100 a barrel and improved economic conditions in the U.S., energy stocks appear to be a tremendous bargain compared to overall stocks. 

Tesla Motors Showing Strong Performance
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When it comes to natural gas, the cold, snowy winter has caused inventories of the commodity to rapidly decline. As the U.S. is experiencing the coldest winter in 13 years – some parts of the country have had the coldest weather in nearly three decades – natural gas inventories have been drawn down to levels we haven’t seen in 10 years.

Still, Old Man Winter hasn’t been persuasive enough for companies to respond with supply.

Based on data from the research firm IHS, 384 gas-directed rigs were online in the lower 48 states to refill storage and meet new demand coming online from the industrial sector in 2013. However, looking ahead over the next few years, the rig count is going to have to rise dramatically “as the gas market tightens in late 2014 and 2015,” which is a tremendous opportunity for investors, says IHS.

Tesla Motors Showing Strong Performance
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Before rig counts can increase, higher natural gas prices are needed to incentivize operators to invest in natural gas. Based on last quarter’s earnings reports, many major producers, such as EOG, Southwestern or Pioneer Natural Resources, are not planning on increasing their natural gas budgets. Bill Thomas, Chairman and CEO of EOG Resources, explained his reasoning that is part of the collective thought process across the industry:

For the sixth year in a row we are not [trying to] grow EOG’s North American natural gas production. This is reflective of our view of low returns on natural gas investments. We won’t drill any dry gas wells in North America during 2014 because we don’t see a change in the gas oversupply picture until the 2017-2018 time frame.”

As we come out of this winter season, the complacency toward adding to rig counts may amplify the deficit in natural gas inventories.

2. U.S. Chemical Industry Has a Competitive Edge

One upside to the low natural gas prices in North America is that it equates to relatively cheap feed stock for U.S. chemical companies. Whether it’s Asia or Europe, gas prices outside of the U.S. tend to be benchmarked to the higher price of crude oil.

Tesla Motors Showing Strong Performance
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Along with the global economic recovery, natural gas is giving the U.S. a competitive advantage. We’re seeing chemical companies coming back to the states, creating jobs, expanding exports out of the U.S., and helping the nation’s current account deficit. 

3. Shipping Companies at a Possible Inflection Point

The prices to ship commodities around the world have been hovering around the lowest we’ve seen in five years. However, demand for shipping is starting to overtake the supply of new ships, which bodes well for shipping companies.

Take a look at the chart showing the Baltic Dry Index over the past five years. The index is made up of various sizes of carriers including the Baltic Capesize, Panamax, Handysize and Supramax indices and measures the price of moving raw materials by sea. Primarily, these vessels transport iron ore and grains, i.e., wheat, corn and soybeans, which are especially vital goods for China.

To keep its population of 1.3 billion fed, China needs to import millions of tonnes of wheat, corn, rice and soybeans. As this demand is recognized, shipping companies should benefit.

Tesla Motors Showing Strong Performance
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4. Alternative Energy Could Get You More Green

In China, residents have been dealing with increasing cancer-causing pollutants and vehicle congestion on roads, and public discontent is rising. This winter, as pollution grew to be 10 times higher than the acceptable rate, Beijing University students protested the conditions by putting masks on iconic statues.

The effect that pollution is having on China’s economy benefits certain industries, including renewable energy or clean energy, whether it's solar or wind power

You can see just how dramatic the investment has been over the last five years. Specifically, wind power and solar look especially attractive. Take a look at CLSA data: In 2009, the country had about 0.2 percent of the global market. By 2014, it’s estimated to grow to one-third of the global market.

China isn’t the only country with a growing renewable energy market. With the Fukushima nuclear reactors incident after the massive earthquake in Japan, the solar market is taking off there too. 

 

Tesla Motors Showing Strong Performance
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The Diverse Approach of the Global Resources Fund (PSPFX)
We believe these areas of the market offer the most exciting opportunities today. They have the wind at their back, giving us the confidence to overweight the companies within these areas of the market that are also showing extremely robust fundamentals.

Because of the diversity and volatility of each commodity, we believe investors benefit by holding a diversified selection of commodity stocks actively managed by professionals who understand these specialized assets and the global trends affecting them.

I just flew back from Asia, where I spoke at Robert Friedland’s Asia Mining Club and Mines and Money Hong Kong, with a special stop in Carslbad, CA on my way home to speak at the Investment U Conference. It has been an exhilarating week meeting with global entrepreneurs, mining executives and curious investors. I look forward to sharing their advice and insights with you next week.

p.s. It’s not too late to join me for an investment adventure in Turkey in May. 

Please consider carefully a fund’s investment objectives, risks, charges and expenses. For this and other important 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.

Fund portfolios are actively managed, and holdings may change daily. Holdings are reported as of the most recent quarter-end. Holdings in the Global Resources as a percentage of net assets as of 12/31/13: Energy Select Sector SPDR ETF 0.00%; EOG 0.00%; Pioneer Natural Resources (2.18%); Southwestern 0.00%

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

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. MSCI World Index is a capitalization weighted index that monitors the performance of stocks from around the world. MSCI World Energy Index is an unmanaged index composed of more than 1,400 stocks listed on exchanges in the U.S., Europe, Canada, Australia, New Zealand and the Far East. The MSCI World Energy Index is the Energy sector of the MSCI World Index. The Baltic Dry Freight Index is an economic indicator that portrays an assessed price of moving major raw materials by sea as compiled by the London-based Baltic Exchange.

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This Might be Your Investment Adventure of a Lifetime
March 12, 2014

Did you know that over the past decade, Turkey’s economy has more than tripled? The country is a powerhouse in Europe: It is the largest commercial vehicle producer and the second largest steel manufacturer, according to the Republic of Turkey Prime Ministry.

While Turkey has been struggling lately, as the taper storm hammers the emerging European nation, we believe the latest correction could yield even more upside for investors.

When I visited the country this time last year, I was happy to see that the tacit knowledge learned on Turkish soil supported the explicit knowledge of this emerging country’s growth.

Turkey has a rich, diverse culture that is a blend of Asian, European and Middle Eastern traditions. Istanbul has been transformed into a country of affluence and among the beautiful Ottoman mosques, Byzantine churches, palaces and bazaars are ultra-contemporary art sculptures, shopping malls and lush landscaping.

As investment managers, we put a tremendous value on tacit knowledge because it strengthens our explicit knowledge. As St. Augustine once said, “The world is a book and those who do not travel only read one page.”

Now you have a unique opportunity to gain tacit knowledge by joining me on an investment adventure to this majestic country through Opportunity Travel.

Over 10 days in May, you can explore Europe’s fastest growing economy and learn all about the opportunities Turkey has to offer straight from the experts. See first-hand the breathtaking architecture and experience the rich, diverse culture.

Here’s a glance at the journey you can undertake:

Day Date Features Overnight
1 Mon, May 5 Arrival in Istanbul. Transfer to the hotel. Welcome reception and dinner at the hotel Istanbul
2 Tue, May 6 Full day tour including Bosphorus Bridge, Asian Side, Camlica Hill, Beylerbeyi Palace, back to Old Town, Hippodrome Square, Blue Mosque, St. Sophia Museum and Underground Cistern Istanbul
3 Wed, May 7 Half day meeting at the hotel with lunch. Afternoon visit Topakapi Palace, Grand Bazaar Istanbul
4 Thu, May 8 Half day meeting at the hotel with lunch. Afternoon visit Spice Market and cruise along the Bosphorus. Istanbul
5 Fri, May 9 Visit to a local company in Istanbul Istanbul
6 Sat, May 10 Transfer for the airport for morning flight to Kayseri. Afternoon visit the Underground City of Kaymakli and wine sampling experience Cappadocia
7 Sun, May 11 Visit Goreme Open Air Museum, Natural Citadel of Uchisar, Avanos (pottery making), Zelve, Red Valley, Pigeon and Babacik Valleys. After the dinner, visit "Whirling Dervishes" Ceremony of "Sema" Cappadocia
8 Mon, May 12 Before breakfast, optional "Hot Air Ballooning" excursion. After breakfast, drive to Ankara, visit the Mausoleum of Ataturk and The Museum of Anatolian Civilizations. Transfer to airport for flight to Izmir and to Kusadasi Kusadasi
9 Tue, May 13 Tour of the ancient city of Ephesus, The House of Virgin Marry, the Basilica of St. John, the Museum at Selcuk and Sirince Village Kusadasi
10 Wed, May 14 Visit a Gold Mine. Kusadasi
11 Thu, May 15 Drive Kusadasi / Bodrum. Visit Bodrum Castle, The Underwater Archeology Museum, Mausoleum of Halicarnassus.  Bodrum
12 Fri, May 16 Today we will enjoy a full day cruising by "Gullet" Bodrum
13 Sat, May 17 Transfer to Airport for flight back home or extend your stay to explore more on your own. Departure

If you prefer, there is a shorter version of the trip that takes you to Istanbul only on May 5 through May 10.

Join me on what could be the investment adventure of a lifetime. Space is very limited so you need to act now to claim your seat.

Click here to learn more and reserve your spot now or email our team at editor@usfunds.com.

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Investment Insights from a Road Warrior
January 13, 2014

As part of our investment process, we often take the explicit knowledge learned from our statistical models and overlay them with global travel. It’s easy to get swept up in the bullish or bearish analyst reports, so it helps to expand that knowledge with a first-hand observation of local and geopolitical conditions.

Where-Will-Gold-Head-in-2014Over the next few months, I’ll share insights from the road when I travel more than 20,000 miles to five countries across four continents.

The Vancouver Resource Investment Conference will be my first stop. There I’ll be speaking on a panel alongside resources experts Frank Giustra and Ned Goodman. Frank Giustra is the founder of Lionsgate Entertainment, which is one of the largest independent film companies in the world. He also launched Wheaton River, which was acquired by Goldcorp, and Silver Wheaton.

Ned Goodman, founder, president and CEO of Dundee Capital Markets in Toronto, is widely recognized as one of Canada’s most successful investment counselors. He sold DundeeWealth’s asset management unit to the Bank of Nova Scotia back in 2011 and in a Bloomberg News article, he is even “more bullish on gold now than I’ve ever been,” because he believes, “it’s only a matter of time before currencies lose value and inflation rises.”

These two men have been my mentors for years and I’m excited to be able to exchange ideas with them. For all investors, it’s valuable to stay curious and discover how they’ve succeeded in business and life.

After Vancouver, I’ll head north to Whistler, British Columbia to attend CIBC’s Institutional Investor Conference. Next, I’ll thaw out in Los Angeles at a global leadership conference for CEOs, getting ideas and sharing experiences with business leaders.

In February, I’ll fly to Cape Town, South Africa to speak at the 2014 Mining Indaba. This conference brings together national mining ministers and government leaders from all over Africa, as well as hundreds of mining services executives interested in African mining. While on the continent, I plan to visit a few companies that the funds own, kicking the huge tires of mining trucks and getting my boots dirty out in the field.

Then I’ll head to Hong Kong for the Mines and Money conference where I’ll be a keynote speaker and I’ll wrap up my global travels with an “adventure investing” trip to Turkey where investors are invited to come along to explore this dynamic economy that offers great growth potential. If you’d like to learn more about this opportunity, feel free to email us at editor@usfunds.com.

Over the next several months, make sure you are following U.S. Global on Twitter, Facebook or LinkedIn as this resourceful road warrior will be sharing insights on the latest on sentiment and science of resources and world markets.

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. By clicking the links above, you will be directed to third-party websites. U.S. Global Investors does not endorse all information supplied by these websites and is not responsible for their content.

The following securities mentioned were held by one or more of U.S. Global Investors Funds as of 12/31/13: Goldcorp, Silver Wheaton

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2013: Looking Back at the Year of the Bull
December 31, 2013

I’ve often said that trying to stop a bull market has risks. It was certainly precarious to think this year’s run would end anytime soon.

By December 27, the S&P 500 Index climbed an astounding 31.86 percent in 2013. We’re also pleased that shareholders in U.S. Global Investors’ All American Equity Fund (GBTFX) and Holmes Macro Trends Fund were along for the ride and more this year, as both funds outperformed their respective benchmarks. Check out their performance here.

Will stocks continue to climb in 2014? Odds are “very good,” finds BCA Research. According to historical data going back to 1870, there were 30 times when annual returns in domestic stocks climbed more than 25 percent. Of these, 23 experienced an additional increase, resulting in a mean of 12 percent, says BCA.

Thinking back to January 2013, investors had a very different frame of mind. While we recently talked about the year’s biggest stories in U.S. energy and gold, we want recap our popular commentaries focused on the domestic market.

Dow to 14,000 … And Beyond? (February 5, 2013)
After January saw the best month in two decades for U.S. stocks, I wrote how sentiment was slowly improving as many uncertainties had been removed from the market. I gave three reasons to stay positive on equities:

  1. U.S. businesses and households were deleveraging
  2. New home sales were expected to increase
  3. Inflation was low

Read the article.

Dow, Now and Then (March 12, 2013)
It wasn’t long before the Dow was hitting highs, yet with elevated unemployment, dysfunction in Washington and ongoing negative news about the U.S. economy, we noted that investors weren’t celebrating. There were plenty of reasons for that: In an infographic that was retweeted by Jim Cramer, we visually compared the Dow, then and now.

The Dow Then and Now

Don’t Sell in May: Here are Reasons to Extend Your Stay (May 6, 2013)
By the end of April, we noted that formerly weaker areas of the market were gaining strength. From April 24 through May 3, health care, consumer staples, utilities and telecommunications sectors lagged, while energy, industrial and materials stocks were nearly the best performing areas of the market.

This turned out to be a significant inflection point in the market, with cyclical stocks gaining strength over the next several months. Read the article here.

In Recent Days, U.S. Energy, Industrials, Materials Stocks Catch Up
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Don’t Miss This Golden Cross in Resources (November 4, 2013)
While investors were focused on the strengthening U.S. market, we noted improving indicators in other areas, including resources, Europe, and emerging markets. Notably, the global synchronized easing continued to take place along with improving purchasing manager’s index (PMI) number in many countries. Historically these factors bode well for commodities and commodity stocks. Read how you can “count on” PMIs here.

While many of these areas of the market were not as widely popular as U.S. stocks, we believed investors could benefit from being contrarian. Read the article now.

Positive Real Interest Rates Could Be a Headwind for Gold

As we wrap up the year, the benchmark 10-year Treasury note’s yield rose above 3 percent, touching the highest level in more than two years. An increase in bond yields can be both good and bad. According to ISI, a bad increase in bond yields is related to tapering concerns. A good increase in bond yields is related to the economy strengthening. “The two are intertwined, so it’s difficult to know which is dominating. However, judging by the S&P, a Good Increase currently has the upper hand,” says ISI. Our focus on global PMI numbers as early indicators of economic strengthening relates to this view.

The “good increase” in Treasury yields means a return to a positive real interest rate environment which is, historically, a headwind for gold prices.

What do you think will be the biggest stories in the new year? We’d like to know your predictions, questions and resolutions for 2014. Email us at editor@usfunds.com

We wish you a joyous, healthy and prosperous New Year!

Surprise Chart
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Please consider carefully a fund’s investment objectives, risks, charges and expenses. For this and other important 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.

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

The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies. The Dow Jones Industrial Average is a price-weighted average of 30 blue chip stocks that are generally leaders in their industry. The Purchasing Manager’s Index is an indicator of the economic health of the manufacturing sector. The PMI index is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment.

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A Surprising Way to Participate in Today’s Tech Boom
December 23, 2013

If I asked you to name the biggest online shopping day of the year, what would you guess? Black Friday? Cyber Monday? Free Shipping Day in mid-December?

Guess again.

Even though Cyber Monday sales were spectacular this year, as online sales surged 20 percent and beat Black Friday receipts, the day didn’t top November 11, Singles’ Day in China. Singles’ Day is a day of celebration for people who are single and has become popular among the young in China.

China saw so many online purchases on this day that sales exceeded Black Friday and Cyber Monday online purchases in the U.S. In fact, sales on Singles’ Day were nearly double that on Black Friday and Cyber Monday. According to BCA Research, transactions processed through Alibaba totaled $5.75 billion on 11/11. Online sales on Black Friday and Cyber Monday together were only about $3 billion.

Emerging Market Cheap Stocks Cheapeast Since Asian Crisis of 1997-98
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Online transactions have grown so quickly in China over the past few years, the country may have surpassed the U.S. in becoming the largest e-commerce market in the world. The spectacular growth also “defies the widely held consensus of China’s perceived ‘weak’ consumption,” says BCA.

The Asian country has become one of the best consumption stories out there, and looking over the next few years, local technology companies are almost certain to benefit.

So while many U.S. investors are getting excited about the growing number of initial public offerings in the tech sector, they would be remiss if they didn’t look beyond Silicon Valley.

After all, the world has drastically changed since the last tech boom. Back then, China’s share of world GDP growth was in the single digits; now its share is close to 20 percent. Former state-run economies, such as China and Russia, are embracing an entrepreneurial spirit and markets are continuing to open up.

We’re especially excited about the opportunities that will likely develop from China’s removal of the hukou system that determines residency status and urbanization trends. In addition, as China changes its one-child policy, Internet companies may likely see an even larger increase of users in the years ahead.

Do They “Google” in China?
Americans may “Google” for directions, recipes or stock prices, post to Twitter, and shop online at Amazon or eBay, but outside the U.S., different tech leaders are finding lucrative and innovative ways to shape online experiences, grow revenue, and gain market share.

Baidu, for example, is the search engine leader in China with an 81 percent market share, significantly overshadowing Google, which has only a 12 percent revenue share, according to CLSA. The research firm anticipates Baidu will “sustain 35-40 percent revenue growth,” due to its monetization in search advertising, mobile games and mobile videos.

Competition is heating up though. When U.S. Global analyst Xian Liang visited his family in Shanghai this year, he noticed the Internet search page automatically populated to Qihoo (pronounced “chee-hoo”). Qihoo, which has only about 15 to 20 percent traffic share in China right now, bundles its own search engine along with its Internet security software. After installing the anti-virus software, the search engine becomes the default. The company is using this strategy to gain market share against heavy competitors such as Baidu and Google.

When purchasing goods online, most residents of China head to Alibaba, which processes about 80 percent of China’s total online retail businesses. It has a unique model with Amazon- and eBay-like features and hosts sites for small businesses. Its volume of sales is so massive, Alibaba may overtake Wal-Mart as the world’s largest retail network by 2016, according to CNBC.

As an “undisputed market leader,” Alibaba enjoys revenues that are growing 60 to 70 percent year-over-year, says CLSA. Yahoo! has benefited from its 24 percent stake in Alibaba, and next year, investors could get in on the action if the company goes public.

Michael Ding, portfolio manager of the China Region Fund (USCOX), likes Tencent Holdings, whose subsidiaries provide mass media, Internet and phone services, social media and online advertising. According to CLSA, Tencent is “best positioned for mobile,” due to its app called WeChat.

Users of Tencent’s phone applications may not be all too familiar with an app called SnapChat, but they are feverishly downloading a new app called WeChat. WeChat is a mobile social networking application that allows real time multi-party voice messaging and location sharing, boasting 236 million monthly active users.

Tech in Asia reported that Tencent is now set to open a WeChat office in the Philippines, saying that WeChat “became the most downloaded free app” in the country since June.

Emerging Market Cheap Stocks Cheapeast Since Asian Crisis of 1997-98
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Exploring Russia 2.0
Another area of the emerging world benefiting from the growing wealth of the consumer is Russia. In our recent webcast, Tim Steinle, portfolio manager of the Emerging Europe Fund, talked about investing in “Russia 2.0” companies. Whereas familiar Russian companies, such as Gazprom and Lukoil, tend to be large and state-owned, we prefer dynamic, independent, shareholder-driven companies.

For example, Mail.Ru is an Internet company focused on social networks and gaming.  Yandex is the dominant Internet portal in Russia in direct competition with Google.ru, the Russian operation of Google. Both companies have been outstanding performers compared to overall Russian stocks in 2013.

To learn more about why we find Russia 2.0 exciting, you can listen to the on-demand webcast here.

Wishing You a Happy Holiday!
During this holiday season, we would like to wish you and your family peace, joy and lots of laughter. We hope the new year brings you health, wealth and happiness.

Please consider carefully a fund’s investment objectives, risks, charges and expenses. For this and other important 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.

Foreign and emerging market investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risk. By investing in a specific geographic region, a regional fund’s returns and share price may be more volatile than those of a less concentrated portfolio. The Emerging Europe Fund invests more than 25% 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 more susceptible to risk in these industries than funds which do not concentrate their investments in an industry and may make the fund’s performance more volatile.

Holdings in the funds mentioned as a percentage of net assets as of 9/30/13: Amazon 0.0%, Baidu 0.0%, eBay 0.0%, Google 0.0%, Gazprom (Emerging Europe Fund 4.05%), Lukoil (Emerging Europe Fund 4.75%), Mail.Ru (Emerging Europe Fund 2.89%), Qihoo (China Region Fund 3.01%), Tencent (China Region Fund 3.51%), Twitter 0.0%, Wal-Mart 0.0%, Yandex (Emerging Europe Fund 1.95%), Yahoo! 0.0%

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Net Asset Value
as of 09/25/2017

Global Resources Fund PSPFX $5.78 -0.04 Gold and Precious Metals Fund USERX $8.02 0.06 World Precious Minerals Fund UNWPX $6.69 0.06 China Region Fund USCOX $10.96 -0.46 Emerging Europe Fund EUROX $6.94 -0.06 All American Equity Fund GBTFX $24.34 0.10 Holmes Macro Trends Fund MEGAX $19.99 0.03 Near-Term Tax Free Fund NEARX $2.23 No Change U.S. Government Securities Ultra-Short Bond Fund UGSDX $2.00 No Change