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March 2015

During the month of March, the Global Resources Fund fell 7.17 percent, while the S&P Global Natural Resources Index fell 6.60 percent. See complete fund performance here.

Strengths

  • The fund’s overweight position in oil refining and underweight position in integrated oil and gas stocks positively contributed to the fund’s performance this quarter.
  • Superior stock selection in base metal stocks had a positive contribution to the fund this quarter. Alcoa Inc. and Freeport-McMoRan, Inc. were accretive to portfolio returns.
  • California Resources Corp., Tesoro Corporation, and Total S.A. had the highest positive contribution to the fund’s returns in the period.

Weaknesses

  • The fund’s overweight in oil and gas producer stocks and underweight in fertilizers and chemicals stocks negatively contributed to the fund’s performance this month.
  • Stock selection in forest and paper stocks as well as packaging stocks had a negative contribution to the fund’s performance this month.
  • Atlas Development & Support Services Ltd. and TransGlobe Energy Corporation were the largest negative contributors to the fund’s performance in the fourth quarter.

Opportunities

  • Since the beginning of this year, and following the 60-percent decline in oil prices, inflows into U.S. and European-listed crude oil exchange-traded products (ETPs) have surged. According to recent data, assets under management (AUM) of U.S.-listed oil ETPs have more than doubled from $2.25 billion at the end of last year to $5.1 billion as of April 2015. In Europe, AUM in oil ETPs has risen by a similar magnitude in percentage terms, from just under $1 billion to $2.5 billion over the same period.

  • The global environment has all but fully evolved into an easing one. Multiple countries have cut interest rates or stimulated their economies through other means over the past few months, leading to a more synchronized growth strategy. If successful, these government policies should aid commodity demand.
  • The Baker Hughes United States crude oil rig count has declined to 734. With the rig count continuing to fall, it is only a matter of time before crude oil begins its steady rise.

Threats

  • The U.S. dollar may continue to build upon this year’s gains as there are $9 trillion of U.S. bonds held by sovereign and corporate borrows, a large portion of which will need to be repaid over the coming years.  Moreover, many central banks are re-accumulating their dollar reserves after the dollar’s share of foreign reserves declined to a record low of 60 percent in 2011.
  • The Iran framework deal creates more uncertainty surrounding the global supply of crude oil and, if not offset by production cuts elsewhere, could cause oil prices to retreat.
  • China's petroleum demand growth will slow down, as China transitions toward a slower economy, but crude oil imports will continue to grow, said Chen Bo, president of China International United Petroleum and Chemicals Co. Ltd., a member of Sinopec.  China's annual growth of petroleum consumption demand is estimated to decline to 2 percent per year between 2015 and 2020 and 1 percent per year between 2020 and 2030, Chen said at a recent China-Russia Oil and Gas conference.

Performance data quoted above is historical. Past performance is no guarantee of future results. Results reflect the reinvestment of dividends and other earnings. For a portion of periods, the fund had expense limitations, without which returns would have been lower. 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. Performance does not include the effect of any direct fees described in the fund’s prospectus (e.g., short-term trading fees of 0.05%) which, if applicable, would lower your total returns. Performance quoted for periods of one year or less is cumulative and not annualized. Obtain performance data current to the most recent month-end here or 1-800-US-FUNDS.

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.

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 3/31/2015: Atlas Development & Support Services Ltd. 2.58%, Alcoa Inc. 0.00%, Freeport-McMoRan Inc. 0.00%, California Resources Corp. 0.00%, Tesoro Corp. 0.38%, TransGlobe Energy Corporation 0.00%, Baker Hughes Inc. 0.23%, China International United Petroleum and Chemicals Co. Ltd. 0.00%, Sinopec 0.00%, Total S.A. 2.99%.

Net Asset Value
as of 05/22/2015

Global Resources Fund PSPFX $6.09 -0.05 Gold and Precious Metals Fund USERX $5.90 No Change World Precious Minerals Fund UNWPX $4.88 -0.01 China Region Fund USCOX $9.97 0.10 Emerging Europe Fund EUROX $6.82 -0.05 All American Equity Fund GBTFX $28.66 -0.06 Holmes Macro Trends Fund MEGAX $21.20 -0.01 Near-Term Tax Free Fund NEARX $2.24 No Change China Region Fund USCOX $9.97 0.10