Second Quarter 2017

For the quarter ended June 30, 2017, the Global Resources Fund dropped 1.28 percent, roughly in line with the fund's benchmark, the S&P Global Natural Resources Index, which declined 0.93 percent. 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.

Strengths

  • The fund's overweight in renewable energy, agribusiness and junior natural resource stocks, as well as its underweight in industrial metals stocks, had a positive contribution to the fund in excess of its benchmark.
  • The fund had superior stock selection in the oil and gas refining, and paper and forest sectors. This resulted in a positive contribution to the fund in excess of its benchmark.
  • The securities that provided the highest contribution to the fund were Kuraray and SolarEdge Technologies.

Weaknesses

  • The fund's overweight in precious metals and building materials had a negative contribution to the fund relative to its benchmark.
  • The fund had inferior stock selection in fertilizers and chemicals, as well as base metals stocks. This resulted in a negative contribution to the fund relative to its benchmark.
  • The securities that resulted in the largest negative contribution to the fund were Rye Patch Gold, Beach Energy Limited and Mandalay Resources.

Opportunities

  • Commodities are set to rally in the second half, according to a recent Bloomberg story. With the U.S. dollar's decline year-to-date, and trading at levels not seen since before the U.S. election, commodities should be posting strong returns due to their negative correlation to the greenback. However, this year has seen commodity and dollar declines, a rare anomaly for the markets. Bloomberg reports this may be about to change. In the history of the Bloomberg Dollar Spot Index since 2004, the Bloomberg Commodity Index has never been down with the dollar off 6 percent or more on a six-month basis. With the dollar down almost 7 percent in 2017, past movements would suggest the potential for a strong recovery in the Bloomberg Commodity Index for the remainder of the year.
  • China's manufacturing sector expanded for the 11th straight month in June, indicating strength in the world's second-largest economy. The country's manufacturing purchasing managers' index (PMI) came in at 51.7 in June, up from 51.2 in May. Sub-indices for production and new orders came in at 54.4 and 53.1, respectively, up from 53.4 and 52.3 last month, indicating accelerated growth in both supply and demand, according to a news release by Xinhua News Agency.
  • Major diversified miners have risen to two-month highs after Credit Suisse upgraded the sector to "overweight" in its latest update. In the bank's analysis, it concludes that miners offer a higher degree of protection on inflation and higher oil prices than other asset classes, and recommends being overweight the sector based on this risk and reward dynamic.

Threats

  • Bernstein has joined bulge-bracket banks in downgrading its oil price forecast for 2017 and 2018. According to the broker, shale supply is set to outpace any production cuts from the Organization of Petroleum Exporting Countries (OPEC), adding to the overall market imbalance. The broker now expects prices to average $50 in 2017 and 2018, down from $60 and $70 respectively.
  • Saudi Aramco and Abu Dhabi National Oil Company, both state-run, are expected to lower the upcoming official selling prices of their respective crude products in view of recent trades, according to an S&P Platts story. Such pricing decisions usually correspond with weaker import demand out of China, suggesting the market remains oversupplied.
  • OPEC producers are growing crude production despite agreement, warns the International Energy Agency (IEA). Global oil supply rose 720,000 barrels per day in June as Nigeria, Lybia and Saudi Arabia raised output. As a result, compliance with the production agreement has dropped to only 78 percent, after posting 90-plus percent compliance in previous months.

The S&P Global Natural Resources Index includes 90 of the largest publicly-traded companies in natural resources and commodities businesses that meet specific investability requirements, offering investors diversified, liquid and investable equity exposure across 3 primary commodity-related sectors: Agribusiness, Energy, and Metals & Mining.

The U.S. Dollar Index (USDX, DXY) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of U.S. trade partners' currencies.

The Bloomberg Commodity Index (BCOM) is a broadly diversified commodity price index distributed by Bloomberg Indexes.

The Purchasing Manager's Index is an indicator of the economic health of the manufacturing sector. The PMI index is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment.

Fund portfolios are actively managed, and holdings may change daily. Holdings are reported as of the most recent quarter-end. Holdings in the Global Resources Fund as a percentage of net assets as of 6/30/2017: Kuraray Co. Ltd. 1.04%, SolarEdge Technology Group Ltd. 1.01%, Rye Patch Gold Corp. 0.46%, Beach Energy Ltd. 1.12%, Mandalay Resources Corp. 0.27%.

Net Asset Value
as of 10/16/2017

Global Resources Fund PSPFX $5.85 -0.01 Gold and Precious Metals Fund USERX $7.92 -0.15 World Precious Minerals Fund UNWPX $6.43 -0.15 China Region Fund USCOX $11.62 -0.01 Emerging Europe Fund EUROX $7.12 No Change All American Equity Fund GBTFX $24.23 -0.04 Holmes Macro Trends Fund MEGAX $20.70 0.13 Near-Term Tax Free Fund NEARX $2.23 No Change U.S. Government Securities Ultra-Short Bond Fund UGSDX $2.00 No Change