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November 2014

In November, the Near-Term Tax Free Fund rose 0.13 percent, while the benchmark Barclay’s 3-Year Municipal Bond Index rose 0.06 percent. The Barclay’s Municipal Bond Index rose 0.17 percent for the month. The municipal market continued its impressive winning streak, posting positive results every month this year.  See complete fund performance here.

Fixed-income markets rallied in November as European growth remained weak. Deflation fears have remained and even though the European Central Bank (ECB) has taken action in recent months, the perception is that the ECB may not be moving fast enough. With global yields falling, U.S. fixed-income securities look attractive, including municipals.

U.S. economic data has generally been good. Third-quarter real GDP was revised higher by 0.4 percent, bringing the expansion to a healthy 3.9 percent. The employment report also showed consistent, steady gains with 214,000 nonfarm payrolls added in October. Housing indicators were better with building permits, new home sales and existing home sales all rising for the month of October. Manufacturing indicators were more mixed as industrial production in October and factory orders in September declined, while the ISM Manufacturing Index rose to a three-year high in October and remained at a very robust level. Retail sales for October rose 0.3 percent, matching expectations.

The Federal Reserve completed its gradual reduction of its quantitative easing (QE) program at the end of October. The Fed remains committed to an ultra-low Fed Funds rate as long as needed, and with weak economic performance out of Europe along with a strong U.S. dollar acting as a governor on future U.S. growth, the Fed may not be in a position to act as quickly as the market expects. The current consensus forecast is for an interest rate hike in mid-2015.

In specialty-state trading, returns were uniform except for Puerto Rico which outperformed. Puerto Rico has been very choppy lately as it was the worst performer last month. As a group, revenue bonds outperformed general-obligation credits. Within the revenue universe, hospitals and housing-backed bonds outperformed. High-yield or “junk” bonds were strong performers, rising 1.04 percent. Within the investment-grade universe, lower quality outperformed, as AAA-rated credits underperformed BBB-rated bonds by 26 basis points.

Past performance does not guarantee future results.

The Barclays Municipal Bond Index is an unmanaged index representative of the tax-exempt bond market. The Barclays 3-Year Municipal Bond Index is a total return benchmark designed for short-term municipal assets. The index includes bonds with a minimum credit rating BAA3, are issued as part of a deal of at least $50 million, have an amount outstanding of at least $5 million and have a maturity of 2 to 4 years. The ISM manufacturing composite index is a diffusion index calculated from five of the eight sub-components of a monthly survey of purchasing managers at roughly 300 manufacturing firms from 21 industries in all 50 states.

Net Asset Value
as of 01/27/2015

Global Resources Fund PSPFX $6.47 0.02 Gold and Precious Metals Fund USERX $6.14 0.15 World Precious Minerals Fund UNWPX $5.27 0.14 China Region Fund USCOX $8.35 -0.13 Emerging Europe Fund EUROX $6.55 0.02 All American Equity Fund GBTFX $27.47 -0.34 Holmes Macro Trends Fund MEGAX $20.26 -0.16 Near-Term Tax Free Fund NEARX $2.26 No Change China Region Fund USCOX $8.35 -0.13