Global Emerging Markets Fund

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Fourth Quarter 2011

Strengths

The fund’s exposure to Indonesia, India, Thailand, Turkey and Peru made positive contributions to the performance relative to its benchmark, the MSCI Emerging Markets Index.
Stock selection in the energy and health care sectors helped the fund’s performance.
Top contributors to fund performance in the quarter were TNK-BP Holding, Restoque Comercio et Confeccoes de Roupas, and Credicorp Ltd.

Weaknesses

The fund underperformed its benchmark, the MSCI Emerging Markets Index, in the fourth quarter.
The fund’s defensive position negatively affected fund performance.
The fund’s underweight position in China, Brazil and South Africa had negative contributions to fund performance.
The fund’s exposure to technology companies in Taiwan, luxury goods, and chemical and base metals were detrimental to performance since those subsectors sold off toward the end of the quarter.

Opportunities

With likely sources of funding not being sufficient to cover the size of the European bailout fund, the European Central Bank has no choice but to follow in the footsteps of the U.S. Federal Reserve and to expand its balance sheet.
China and the Association of Southeast Asian Nations (ASEAN) countries have also begun easing monetary cycles in order to defend their economic growth.

Threats

In spite of policy fine-tuning by the Chinese government, China’s GDP growth is expected to continue to slow down in the next couple of quarters.
The property market in China is seeing a drastic drop in transaction volume, but a slow drop in price, making it difficult to predict when or if the government will lift housing curbs.
Fiscal austerity in the eurozone is likely to weaken demand from the Organisation for Economic Co-operation and Development (OECD) countries.

Past performance does not guarantee future results.

The MSCI Emerging Markets Total Net 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.) Holdings in the Global Emerging Markets Fund as a percentage of net assets as of 12/31/2011: TNK-BP Holding 2.85%, Restoque Comercio et Confeccoes de Roupas 1.76%, Credicorp Ltd. 1.97%.

Net Asset Value
as of 02/03/2012

Global Resources Fund
PSPFX $10.26 +0.13
Gold and Precious Metals Fund
USERX $14.05 -0.21
World Precious Minerals Fund
UNWPX $14.94 -0.13
China Region Fund
USCOX $7.76 +0.03
Eastern European Fund
EUROX $9.13 +0.08
Global Emerging Markets Fund
GEMFX $7.60 +0.05
Global MegaTrends Fund
MEGAX $8.22 +0.08
All American Equity Fund
GBTFX $24.12 +0.25
Holmes Growth Fund
ACBGX $18.86 +0.24
Tax Free Fund
USUTX $12.81 -0.03
Near-Term Tax Free Fund
NEARX $2.28 No Change
U.S. Government Securities Savings Fund
UGSXX $1.00 No Change
U.S. Treasury Securities Cash Fund
USTXX $1.00 No Change

Please consider carefully a fund’s investment objectives, risks, charges and expenses. For this and other important information, obtain a fund prospectus by clicking here 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 money market funds, an investment in a money market fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although money market funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in these funds.

Read additional important information.

Tax-exempt income is federal income 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. Each tax free fund may invest up to 20% of its assets in securities that pay taxable interest. Income or fund distributions attributable to capital gains are usually subject to both state and federal income taxes. Bond funds are subject to interest-rate risk; their value declines as interest rates rise. The tax free funds may be exposed to risks related to a concentration of investments in a particular state or geographic area. These investments present risks resulting from changes in economic conditions of the region or issuer.

Gold, precious metals, and precious minerals funds may be susceptible to adverse economic, political or regulatory developments due to concentrating in a single theme. The prices of gold, precious metals, and precious minerals are 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 5% to 10% of your portfolio in these sectors.

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 Eastern European 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.

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.

Morningstar Ratings are based on risk-adjusted return. The Overall Morningstar Rating for a fund is derived from a weighted-average of the performance figures associated with its three-, five- and ten-year (if applicable) Morningstar Rating metrics. Past performance does not guarantee future results. For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating? based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund’s monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.)

Each of the mutual funds or services referred to in the U.S. Global Investors, Inc. website may be offered only to persons in the United States. This website should not be considered a solicitation or offering of any investment product or service to investors residing outside the United States.

Certain materials on the site may contain dated information. The information provided was current at the time of publication. For current information regarding any of the funds mentioned in such materials, please visit the fund performance page.

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

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Global Emerging Markets Fund

Fund Vitals

NAV: $7.60
as of 02/03/2012
Change: 0.05 (0.66)

Ready to Invest?

Share:

Fourth Quarter 2011

Net Asset Value
as of 02/03/2012

Global Emerging Markets Fund

Fund Vitals

NAV: $7.60 as of 02/03/2012 Change: 0.05 (0.66)

Ready to Invest?

Share:

Fourth Quarter 2011

Net Asset Valueas of 02/03/2012

NAV: $7.60
as of 02/03/2012
Change: 0.05 (0.66)

Net Asset Value
as of 02/03/2012