U.S. Global Investors, Inc. | Family of No-Load Mutual Funds

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Critical Drivers

Take into consideration when making an investment in gold the concept of "Reversion to the Mean." Simply stated, it means that any fluctuating average must continually return, up or down, to its mean. For example, through 1999, the S&P 500 was above its mean, while the price of gold was below its mean. Eventually, the price of gold will move higher as the S&P 500 moves lower, returning each to its respective mean. Should investors consider making the move to gold before it raises to its mean? This concept can be seen in the charts below. These diagrams demonstrate the rotatation between equities and gold, and the significance of Dynamic Asset Allocation as mentioned in the Chairman’s Letter.

The funds may be susceptible to adverse economic, political or regulatory developments due to concentrating in a single theme. The price of gold is subject to substantial price fluctuations over short periods of time and may be affected by unpredicted international monetary and political policies. We suggest investing no more than 3% - 5% of your portfolio in gold or gold stocks.

Foreign and emerging market investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risk.

These indexes are not necessarily representative of the performance of either the Gold Shares Fund or the World Precious Minerals Fund. The Gold Shares Fund's performance for the 1-, 5-, 10-year and since inception periods is 86.57%, -10.52%, -11.76% and -3.18%, respectively, as of 06/30/2002. The World Precious Minerals Fund's performance for the 1-, 5-, 10-year and since inception periods is 97.54%, -7.82%, 1.71% and 1.72, respectively, as of 06/30/2002.

For more information about this fund, including charges and ongoing expenses, please click prospectus. Please read the prospectus carefully before investing.