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July 2014

The China Region Fund rose 2.09 percent in July, underperforming its benchmark Hang Seng Composite Index which advanced 6.91 percent for the month. See complete fund performance here.


  • Country allocation to select names in Thailand, Indonesia and the Philippines made stronger contributions to fund performance than those in China and Hong Kong, collectively.  
  • Industry allocation to consumer services, energy and industrials worked best in the fund’s favor relative to the benchmark, compared to areas where the fund was overweight following the proprietary-allocation model.
  • Tencent Holdings Ltd, a China-based integrated Internet software, services and entertainment company, was the top dollar contributor to the fund with an 8.63 percent gain.


  • In terms of industries, technology underperformed the market during the month, while fund exposure to select U.S.-listed names and Taiwanese electronic supply chain providers proved to be detractors to performance.  
  • Utilities exposure was another area of vulnerability in a month of fast and furious rotation from defensive into high-beta cyclical and interest-rate sensitive sectors in the Hong Kong market. This came in response to signs of easing government policy in China.
  • ChinaCache International Holdings Ltd, a provider of Internet content and application delivery services in China, was the worst dollar contributor with a 22.83 percent decline for the month.  


  • August marks the height of earnings season for Chinese technology companies.  Solid growth and robust fundamentals of mobile Internet bellwethers may restart a virtuous cycle of upward earnings revisions from the brokerage community. Growth in this area could also help sustain positive investor sentiment into the public listing of Alibaba Group.
  • Distressed and long-forgotten commodity sectors, such as industrials and precious metals, could benefit from another reflation cycle in China as policymakers refocus on growth for the second half of 2014. This comes after two former national leaders were disciplined on corruption charges by the end of July.
  • Chinese property developers could also continue positive revaluation from depressed levels as easier mortgage lending and looser home-purchase restrictions remind investors of significant price rallies of property stocks in 2009 and 2012. This was a time frame when money supply growth accelerated under similar government policy accommodation.


  • Government policy uncertainty continues to rise in post-election Indonesia, junta-controlled Thailand and inflation-encumbered Philippines. This has strengthened global investing in China and Hong Kong, which threatens regional liquidity rotation in Southeast Asian markets.
  • Growth prospects of China’s mass-consumer sector, such as infant foods and diapers, has significantly diminished due to structural migration to e-commerce and rising competition to name brands.
  • Investor expectations for Macau casino operators could be dampened, due to unexpected declines in mass market segment growth in July.

Past performance does not guarantee future results.

The Hang Seng Composite Index is a market capitalization-weighted index that comprises the top 200 companies listed on Stock Exchange of Hong Kong, based on average market cap for the 12 months.

Fund portfolios are actively managed, and holdings may change daily. Holdings are reported as of the most recent quarter-end. Holdings in the China Region Fund as a percentage of net assets as of 06/30/2014: ChinaCache International Holdings Ltd 0.59%, Tencent Holdings Ltd 4.55%.

Net Asset Value
as of 08/21/2014

Global Resources Fund PSPFX $9.89 -0.01 Gold and Precious Metals Fund USERX $7.33 -0.19 World Precious Minerals Fund UNWPX $6.88 -0.14 China Region Fund USCOX $8.40 -0.09 Emerging Europe Fund EUROX $7.98 0.06 All American Equity Fund GBTFX $33.74 -0.05 Holmes Macro Trends Fund MEGAX $24.36 -0.01 Near-Term Tax Free Fund NEARX $2.26 No Change U.S. Government Securities Ultra-Short Bond Fund UGSDX $2.00 No Change