First Quarter 2017

For the quarter, the Barclays U.S. Treasury Bills 6-9 Months Index returned 0.10 percent, while the U.S. Government Securities Ultra-Short Bond Fund returned 0.13 percent. See complete fund performance here.

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.

The first quarter was, for the most part, a continuation of the themes that were set in motion after November’s elections in the United States. Intermediate-term yields were rather volatile during the quarter, with the 10-year U.S. Treasury touching 2.62 percent in early March before settling back down to 2.40 percent at the end of the period, slightly lower than where it began. On the short end of the yield curve, the Federal Reserve raised the federal funds rate in March, with the current target of 0.75 to 1.00 percent, and suggested two more rate hikes are likely this year. The Fed’s March rate rise marks a notable departure from the extremely slow pace of U.S. monetary policy normalization. A plunge in commodity prices, the U.K.’s Brexit vote and concerns over a surging dollar frustrated the Fed's planned pace of tightening in 2015 and 2016. In both years, markets were initially expecting four rate increases of 0.25 percent apiece. The Fed managed to deliver only one hike in both years – at the end-of-year December meeting. Many investors are adopting skeptical stance as markets still underprice the odds of more Fed rate hikes compared with the median path illustrated in the Fed’s statement of economic projections.

Given the macro picture, there is greater risk of the Fed being forced to raise rates more slowly than it would like than of the Fed surprising the markets by hiking rates more aggressively. If the Fed continues to raise rates, this dynamic will likely restore yields on cash and other low-risk assets. This should eventually curb the appetite for higher-yielding, higher-risk fixed income. It could be a rocky transition given lofty valuations in many of these sectors. The Fed appears aware of this risk, and therefore is proceeding cautiously and gradually.

The Barclays U.S. Treasury Bills 6-9 Months Total Return Index tracks the performance of U.S. Treasury Bills with a maturity of six to nine months.

Net Asset Value
as of 06/26/2017

Global Resources Fund PSPFX $5.31 -0.01 Gold and Precious Metals Fund USERX $7.29 -0.03 World Precious Minerals Fund UNWPX $6.22 -0.04 China Region Fund USCOX $9.49 0.10 Emerging Europe Fund EUROX $6.26 0.03 All American Equity Fund GBTFX $24.39 0.06 Holmes Macro Trends Fund MEGAX $19.82 0.01 Near-Term Tax Free Fund NEARX $2.23 No Change U.S. Government Securities Ultra-Short Bond Fund UGSDX $2.00 No Change