Third Quarter 2016

The China Region Fund gained 10.34 percent in the third quarter of 2016, underperforming its benchmark, the Hang Seng Composite Index, which rose 12.30 percent during the same period. See complete fund performance.

Past performance does not guarantee future results. Current performance may be higher or lower than the performance data quoted. The principal value and investment return of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost.


  • Within the greater China region, the fund’s country allocation to Hong Kong provided the largest positive contribution to return. 
  • The consumer goods sector constituted the fund’s strongest sector contribution relative to the benchmark, followed by the fund’s allocation to industrials.
  • The dominant individual equity contributor for the China Region Fund during the third quarter period was Chinese automobile and component producer Geely Automobile Holdings, which rose 65.16 percent during that time.


  • Aside from U.S.-denominated cash, South Korean equity exposure constituted the weakest country allocation for the fund within the third quarter of 2016.
  • The largest detraction with respect to sector allocation in the China Region Fund for the third quarter came from financials, which constitutes a significant weighting in the benchmark Hang Seng Composite Index. A rapid post-Brexit recovery of global shares--and especially of heavyweight HSBC--with relative underperformance of some of the fund’s brokerage holdings collectively led to what essentially equals the overall underperformance of the fund for the quarter.  In short, poor relative performance of some individual equities exacerbated underperformance caused in part by an already-underweighted sector that performed well relative to the broader index.
  • As an example, and to award the unfortunate title of worst stock in the fund for the third quarter, consider GF Securities, which fell 6.82 percent in the third quarter.


  • Despite the Chinese authorities’ initial lowering of expectations for 2016 gross domestic product growth rate to a range of 6.5-7.0 percent for 2016, and despite lowered initial second-quarter expectations for a decline to a 6.6 percent print from a 6.7 percent first-quarter print, Chinese GDP has remained steady for the entire year, coming in for Q3 at a consistent 6.7 percent. The Chinese government continues to reiterate its focus upon growth-oriented policies, even as purchasing manager’s index (PMI) levels remain encouraging.
  • Indonesia continues on its promising path as Prime Minster Joko Widodo executes his course of reform.  Indonesia recently concluded the first stage of the Tax Amnesty Scheme (TAS) for repatriating offshore and undeclared assets as “JokoWi’s” Indonesia seeks both to bring in tax revenue and prepare Indonesia ahead of a 2018 implementation of the Automatic Exchange of Information banking secrecy laws. The TAS has thus far netted about 100 trillion rupiahs in additional revenue, helping (as planned) to plug a budgetary shortfall and a focus on infrastructure development for the island-nation.
  • China’s renminbi, also known as the yuan, achieved historic status in the International Monetary Fund’s special drawing rights (SDR) basket of currencies, taking a place alongside the U.S. dollar, the euro, the Japanese yen and the British pound. Even as the yuan has weakened following its inclusion in the basket, the increasing internationalization of the yuan remains a major opportunity for the region.


  • Samsung Electronics’ ongoing Galaxy Note 7 issues may continue to spell trouble and cost the South Korean behemoth market share as lawsuits are reportedly being filed daily.
  • The potentially outsized significance for the region of near-term U.S. monetary policy (and to lesser degrees, Japanese, Chinese and European policies) continues to loom as something of a wildcard, particularly as a tiresome and blustery U.S. election race, finally winds down.
  • Tough-talking Philippine President Rodrigo Duterte, the former Davao City mayor and populist politician, is responsible for a string of inflammatory and potentially destabilizing comments regarding his nation’s political alliances and future. While Duterte seems intent on cozying up to China--understandable and perhaps expected to some degree--he nonetheless has lambasted and insulted some of his closest allies, including the U.S. and U.N., while telling U.S. President Barack Obama that he can "go to hell.” Names may not hurt, but economic sticks or military stones could, and so once again, investors are monitoring Duterte’s Philippines carefully for further signs of what he actually intends.

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.

The Chinese Manufacturing PMI is a composite indicator designed to provide an overall view of activity in the manufacturing sector and acts as an leading indicator for the whole economy. When the PMI is below 50.0 this indicates that the manufacturing economy is declining and a value above 50.0 indicates an expansion of the manufacturing economy.

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 9/30/2016: Geely Automotive Holdings Ltd. 4.26%, GF Securities Co. Ltd. 2.91%, Samsung Electronics Co. Ltd. 0.00%, HSBC Holdings Corp. 0.59%.

Net Asset Value
as of 01/17/2017

Global Resources Fund PSPFX $5.59 0.05 Gold and Precious Metals Fund USERX $8.08 0.23 World Precious Minerals Fund UNWPX $7.14 0.19 China Region Fund USCOX $7.62 No Change Emerging Europe Fund EUROX $6.00 No Change All American Equity Fund GBTFX $23.66 -0.06 Holmes Macro Trends Fund MEGAX $18.69 -0.08 Near-Term Tax Free Fund NEARX $2.22 No Change U.S. Government Securities Ultra-Short Bond Fund UGSDX $2.00 No Change