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The Global Luxury Goods Fund lost 21.85% in the second quarter of 2022, underperforming its benchmark, the S&P 1500 Composite Index, which lost 16.02%. The fund underperformed its index by 5.83% mostly due to the fund’s overweight position in consumer discretionary and materials. The performance of the US Global Luxury Goods Fund was more aligned with the performance of the S&P Global Luxury Index, which declined by 20.56%, as both focus on high-end products and services. See complete fund performance here.

Performance data quoted represents past 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 underweight position in information technology had the most positive effect on the fund’s performance relative to the index. The fund’s strategy not to own semiconductor and internet software/services worked well. Shares of NVIDA Corporation fell 44.4% in the second quarter and Intel Corporation lost 23.5% of its market shares. Within internet software/services, Meta Platforms lost 27.5%. All names mentioned above were part of the S&P 1500 Index, but the Global Luxury Goods Fund did not hold them, as per the fund’s model.
• The fund’s defensive positioning in the second quarter had positive effect on the fund’s performance. During the quarter, the fund was holding higher cash levels and increased currency hedges. The war in Europe created volatility not only in equites but in currencies as well. The ongoing war between Russia and Ukraine, spiking inflation and a hawkish Federal Reserve bank in the U.S. continued to push the dollar higher, weakening foreign currencies.
• The strongest contributor to fund performance was Coty, a luxury personal care manufacturer and distributor, contributing positive a 0.19% to the fund’s performance. Shares of Coty increased by 11% in the second quarter while the S&P 1500 Index lost 16.02% and the S&P Global Luxury Index declined by 20.56%.

Weaknesses

• The fund’s overweight position in consumer discretionary had the most negative effect on the fund’s performance relative to the S&P 1500 Index. Its overweight position in hotel/resorts/cruise lines hurt the fund’s performance relative to its index. Another Covid outbreak in China, prompting lockdowns, caused the travel industry to suffer a greater loss. Shares of Royal Caribbean declined 58.33%, and the market share of Carnival Cruise Line declined by 30.46%. Moreover, the fund’s overweight position in auto makers and distributors did not work well. Shares of Tesla declined by 37.51% on worries of an economic slowdown and rising cost of production.
• The fund’s overweight position in materials had the second most negative effect on the fund’s performance relative to the index. Its overweight position in gold producers did not prove to work well. The model allocated 10 names at 100 basis points (bp) each; however, precious metals equites corrected in the second quarter. The NYSE Arca Gold Miners Index, which measures the performance of precious metals producers, declined 28.13%.
• The biggest detractor to fund performance was Tesla, contributing a negative 3.13% to the fund’s overall performance. Company shares declined 37.51% in the second quarter after selling off on concerns of plant closures due to an outbreak of Covid in China, expected weaker sales and rising cost of production. The fund’s largest position was Tesla in the second quarter, similar to the S&P Global Luxury Index, which focuses on high-end apparel names and autos.

Outlook

Luxury good equites continued to correct in the second quarter following a selloff in the first three months on the year. Markets continue to expect more tightening monetary policies to follow for central banks to tackle rising global inflation. Moreover, the war in Europe weighed heavily on the confidence of businesses and consumers.

However, according to a recent study, neither inflation nor the war in Ukraine is threatening to take a bite out of the luxury fashion market. The study by Bain & Company consultancy indicated that the global luxury market remains set for growth. The personal luxury goods market may grow to between EUR360-380 billion globally by 2025, supported by strong consumer appetite in China. According to the optimistic scenario, the market could reach a range of EUR320-330 billion by end of this year, up as much as 15% vs. last year. In a slower-pace scenario, the market may reach EUR305-320 billion by year-end, up as much as 10% vs. 2021.

In China, the quarantine period for international travelers was cut to 10 days from three weeks. Hong Kong is debating how to remove some restrictions as well, and possibly will reopen its border with China soon. The reduction in travel restrictions will be positive for the luxury sector and is expected to boost consumer confidence after months of lockdowns in China’s biggest cities.

The S&P 1500 Composite is a broad-based capitalization-weighted index of 1500 U.S. companies and is comprised of the S&P 400, S&P 500, and the S&P 600. The S&P Global Luxury Index measures the performance of 80 companies engaged in the production, distribution, or provision of luxury goods and services drawn from the S&P Global BMI. The NYSE Arca Gold Miners Index is a modified market capitalization weighted index comprised of publicly traded companies involved primarily in the mining for gold and silver.

A basis point, or bp, is a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 1/100th of 1%, or 0.01% (0.0001).

Fund portfolios are actively managed, and holdings may change daily. Holdings are reported as of the most recent quarter-end. Holdings in the Global Luxury Goods Fund as a percentage of net assets as of 6/30/2022: Nvidia Corp. 0.00%, Intel Corp. 0.00%, Meta Platforms Inc. 0.00%, Coty Inc. 2.45%, Royal Caribbean Cruises Ltd. 2.54%, Carnival Corp. 0.00%, Tesla Inc. 6.74%.

Standard Disclosure

Please consider carefully a fund’s investment objectives, risks, charges and expenses. For this and other important information, obtain a fund prospectus by visiting www.usfunds.com or by calling 1-800-US-FUNDS (1-800-873-8637). Read it carefully before investing. Foreside Fund Services, LLC, Distributor. U.S. Global Investors is the investment adviser.

Stock markets can be volatile and share prices can fluctuate in response to sector-related and other risks as described in the fund prospectus.

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor.

Top 10 Equity and Debt Holdings as of 06-30-2022

Industry Breakdown as of 06-30-2022

Regional Breakdown as of 06-30-2022

Growth of $10,000 Over 10 Years as of 06/30/2022

The chart illustrates the performance of a hypothetical $10,000 investment made in the fund during the depicted time frame, compared to its benchmark index. Figures include reinvestment of capital gains and dividends, but the performance does not include the effect of any direct fees described in the fund’s prospectus (e.g., short-term trading fees) which, if applicable, would lower your total returns.

Month End Average Annual Total Returns as of 08/31/2022

Quarter End Average Annual Total Returns as of 06/30/2022

Expense ratio as stated in the most recent prospectus. The Adviser of the Global Luxury Goods has contractually limited, through April 30, 2023 total fund operating expenses (exclusive of acquired fund fees and expenses of 0.00%, extraordinary expenses, taxes, brokerage commissions and interest, and advisory fee performance adjustments 0.13% ) to not exceed 1.80%. Total annual expenses after reimbursement were 1.80%.

The Adviser of the Global Luxury Goods has contractually limited, through April 30, 2023 total fund operating expenses (exclusive of acquired fund fees and expenses of 0.00%, extraordinary expenses, taxes, brokerage commissions and interest, and advisory fee performance adjustments 0.13% ) to not exceed 1.80%. Total annual expenses after reimbursement were 1.80%.

The Adviser of the Emerging Europe Fund has voluntarily limited total fund operating expenses (exclusive of acquired fund fees and expenses of 0.00%, extraordinary expenses, taxes, brokerage commissions and interest, and advisory fee performance adjustments (0.18%) ) to not exceed 2.85%. With the voluntary expense waiver amount of (0.00%), total annual expenses after reimbursement were 2.67%.

The Adviser of the World Precious Minerals Fund has voluntarily limited total fund operating expenses (exclusive of acquired fund fees and expenses of 0.00%, extraordinary expenses, taxes, brokerage commissions and interest, and advisory fee performance adjustments 0.18% ) to not exceed 1.90%. Total annual expenses after reimbursement were 1.75%.

The Adviser of the China Region Fund has voluntarily limited total fund operating expenses (exclusive of acquired fund fees and expenses of 0.00%, extraordinary expenses, taxes, brokerage commissions and interest, and advisory fee performance adjustments (0.16%) ) to not exceed 2.55%. With the voluntary expense waiver amount of (0.75%), total annual expenses after reimbursement were 2.55%.

The Adviser of the Near-Term Tax Free Fund has contractually limited, through April 30, 2023, the total fund operating expenses (exclusive of acquired fund fees and expenses 0.01%, extraordinary expenses, taxes, brokerage commissions and interest) to not exceed 0.45%. Total annual expenses after the waiver of (0.68%) were 0.45%. The fund’s yield calculation is based on the holdings’ yield to maturity for prior 30 days; distribution may differ.

The Adviser of the U.S. Government Securities Ultra-Short Bond Fund has voluntarily limited total fund operating expenses (exclusive of acquired fund fees and expenses, extraordinary expenses, taxes, brokerage commissions and interest) to not exceed 0.45%. With the voluntary expense waiver amount of (0.61%) total annual expenses after reimbursement were 0.45%. U.S. Global Investors, Inc. can modify or terminate the voluntary limit at any time, which may lower a fund’s yield or return. The fund’s yield calculation is based on the holdings’ yield to maturity for prior 30 days; distribution may differ.

The Adviser of the Global Resources Fund has voluntarily limited total fund operating expenses (exclusive of acquired fund fees and expenses of 0.02%, extraordinary expenses, taxes, brokerage commissions and interest, and advisory fee performance adjustments 0.08% ) to not exceed 1.90%. With the voluntary expense waiver amount of (0.00%), Total annual expenses after reimbursement were 1.82%.

U.S. Global Investors, Inc. can modify or terminate the voluntary limits at any time, which may lower a fund’s yield or return.

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 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 at www.usfunds.com or 1-800-US-FUNDS. High double-digit returns are attributable, in part, to unusually favorable market conditions and may not be repeated or consistently achieved in the future.

Top 10 Equity Holdings as of 06-30-2022

Industry Breakdown as of 06-30-2022

Regional Breakdown as of 06-30-2022

Growth of $10,000 Over 10 Years as of 06/30/2022

The chart illustrates the performance of a hypothetical $10,000 investment made in the fund during the depicted time frame, compared to its benchmark index. Figures include reinvestment of capital gains and dividends, but the performance does not include the effect of any direct fees described in the fund’s prospectus (e.g., short-term trading fees) which, if applicable, would lower your total returns.

Month End Average Annual Total Returns as of 08/31/2022

Quarter End Average Annual Total Returns as of 06/30/2022

Expense ratios as stated in the most recent prospectus. The Adviser of the Gold & Precious Metals Fund has voluntarily limited total fund operating expenses (exclusive of acquired fund fees and expenses of 0.00%, extraordinary expenses, taxes, brokerage commissions and interest, and advisory fee performance adjustments 0.23%) to not exceed 1.90%. With the voluntary expense waiver amount of (0.00%), Total annual expenses after reimbursement were 1.59%.

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 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 at www.usfunds.com or 1-800-US-FUNDS.

The FTSE Gold Mines Index Series encompasses all gold mining companies that have a sustainable and attributable gold production of at least 300,000 ounces a year, and that derive 75% or more of their revenue from mined gold.

The World Precious Minerals Fund had a total negative return of 30.80% in the second quarter of 2022, underperforming its benchmark, the NYSE Arca Gold Miners Index, which delivered a negative return of 28.17%. See complete fund performance here.

Performance data quoted represents past 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 biggest contributor to fund performance was our overweighting in Nano One, K92 Mining and Barksdale Resources. Nano One had an average fund weighting of 7.23% for the quarter, contributing 164 basis points (bp) of relative performanc4e to the fund. Nano One purchased the battery production facilities of Johnson Matthey Plc in Quebec, which immediately gives the company mass production facilities. BASF, the German chemical company, announced a week later it was entering into a joint development agreement on lithium-ion batteries. Lastly, Rio Tinto made a strategic investment in Nano One for US$10 million for a 4.9% stake in the company.

• The second-best contributor to the fund’s performance was overweighting of K92 Mining at 10.00%. The company declined only 17.68% for the quarter, yielding 88 bp of relative performance to the benchmark for the fund. K92 Mining is currently a member of the benchmark and is poised for further production growth, self-funded from current production.
• The third best contributor to fund performance was our overweighting of Barksdale Resources. With an average fund weighting of 1.67% for the quarter, the stock gained 21.04% and contributed 67 bp to the fund. Barksdale released favorable metallurgical results in Sonora, Mexico.

Weaknesses

• The largest detractor from fund performance was our overweight position in Arizona Metals, which fell 41.90% during the quarter. This decline contributed 83 bp to the fund’s overall loss. Arizona Metals share price largely moved lower with the copper price as Chinese Covid lockdowns stalled the movement of labor and goods.

• The second detractor from fund performance was our underweighting of Newmont, which averaged 0.38% of the fund and fell by 24.28% for the quarter, thus impacting the fund by 58 bp. Newmont is the largest member of the benchmark.
• The third largest detractor from fund performance was our underweighting of Franco Nevada, which fell 17.40%. With a zero weighting in the fund and average weighting at 7.88% in the benchmark, Franco Nevado contributed 78bp to the fund’s overall loss.

Outlook

Mergers and acquisition (M&A) activity remained strong during the quarter. Sandstorm Gold agreed to buy Nomad Royalty. This marks what could be the start of consolidation in the junior gold royalty sector. Gold Fields agreed to acquire 100% of Yamana, giving the company greater geographic diversification. On April 25, Kinross announced it sold its 90% stake in the Chirano mine for $225 million to Asante Gold. The $225 million total consideration consists of $115 million cash and $50 million Asante shares upfront, and $60 million in deferred cash over two years. Orla Mining, with a producing mine in Mexico and a development property in Panama, made an offer to purchase Gold Standard Ventures, which has a resource in Nevada. We expect the consolidation theme to continue.

Streaming transactions totaled $1.7 billion in 2021, the strongest year since 2015. The sector has booked $487 million year-to-date compared to $455 million by this time last year. Wheaton Precious Metals has again been the most active with $366 million in streams, followed by Osisko Gold Royalties with $110 million. With elevated costs of capital for the developers, the royalty/streaming companies are a relevant alternative for project financing. While part of the developer strategy is usually to look at value crystallization through being acquired, the mismatch between junior equity valuations and the robust nature of the majors at current metal prices make this dynamic even more poignant.

The NYSE Arca Gold Miners Index is a modified market capitalization weighted index comprised of publicly traded companies involved primarily in the mining for gold and silver.

A basis point, or bp, is a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 1/100th of 1%, or 0.01% (0.0001).

Fund portfolios are actively managed, and holdings may change daily. Holdings are reported as of the most recent quarter-end. Holdings in the World Precious Minerals Fund as a percentage of net assets as of 6/30/2022: Nano One Materials Corp. 9.91%, K92 Mining Inc. 10.31%, Barksdale Resources Corp. 2.39%, Johnson Matthey Plc 0.00%, BASF SE 0.00%, Rio Tinto Plc 0.00%, Arizona Metals Corp. 5.21%, Newmont Corp. 0.00%, Franco-Nevada Corp. 0.00%, Sandstorm Gold Ltd. 0.00%, Nomad Royalty Co. Ltd. 0.61%, Gold Fields Ltd. 0.00%, Yamana Gold Inc. 0.00%, Kinross Gold Corp. 0.00%, Asante Gold Corp. 2.12%, Orla Mining Ltd. 0.00%, Gold Standard Ventures Corp. 0.00%, Wheaton Precious Metals Corp. 0.00%, Osisko Gold Royalties Ltd. 0.00%.

Standard Disclosure

Please consider carefully a fund’s investment objectives, risks, charges and expenses. For this and other important information, obtain a fund prospectus by visiting www.usfunds.com or by calling 1-800-US-FUNDS (1-800-873-8637). Read it carefully before investing. Foreside Fund Services, LLC, Distributor. U.S. Global Investors is the investment adviser.

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor.

Gold, precious metals, and precious minerals funds may be susceptible to adverse economic, political or regulatory developments due to concentrating in a single theme. The prices of gold, precious metals, and precious minerals are subject to substantial price fluctuations over short periods of time and may be affected by unpredicted international monetary and political policies. We suggest investing no more than 5% to 10% of your portfolio in these sectors.

Top 10 Equity and Debt Holdings as of 06-30-2022

Industry Breakdown as of 06-30-2022

Regional Breakdown as of 06-30-2022

Growth of $10,000 Over 10 Years as of 06/30/2022

The chart illustrates the performance of a hypothetical $10,000 investment made in the fund during the depicted time frame, compared to its benchmark index. Figures include reinvestment of capital gains and dividends, but the performance does not include the effect of any direct fees described in the fund’s prospectus (e.g., short-term trading fees) which, if applicable, would lower your total returns.

Month End Average Annual Total Returns as of 08/31/2022

Quarter End Average Annual Total Returns as of 06/30/2022

Expense ratios as stated in the most recent prospectus. The Adviser of the World Precious Minerals Fund has voluntarily limited total fund operating expenses (exclusive of acquired fund fees and expenses of 0.00%, extraordinary expenses, taxes, brokerage commissions and interest, and advisory fee performance adjustments 0.18%) to not exceed 1.90%. Total annual expenses after reimbursement were 1.75%.

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 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 at www.usfunds.com or 1-800-US-FUNDS.

The NYSE Arca Gold Miners Index is a modified market capitalization weighted index comprised of publicly traded companies involved primarily in the mining for gold and silver. The index benchmark value was 500.0 at the close of trading on December 20, 2002.

The Global Resources Fund had a total negative return of 23.71% in the second quarter of 2022, underperforming its benchmark, the S&P Global Natural Resources Index, which returned -15.71%. See complete fund performance here.

Performance data quoted represents past 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 three best performing commodities were West Texas Intermediate (WTI) crude oil, soybeans and coffee, up 11.23%, 2.64% and 1.95%, respectively. Crude oil was up as much as 25% by early June, but thereafter recession worries over the Fed getting too aggressive with interest rate hikes deflated the market. Soy futures held up for the quarter on tight supplies, while corn and wheat faded from earlier gains. Coffee prices largely traded sideways for the quarter, though certified Arabica coffee stocks are at their lowest level since 2000.
• The fund’s best sector performance, relative to the benchmark, came from its underweight positions in steel and cash, and its overweight position in oil & gas production. In steel, the fund’s weighting was 0.00% versus the benchmark weighting at 12.60%, with an average loss of 23.53%, thus yielding the fund a 106 basis points (bp) positive relative gain. Cash averaged 3.52% versus the benchmark at 0.00%. The extra cash cushioned the downside to the fund by 91 bp. We were nearly double the weight of the benchmark with regards to oil & gas production, with our stock selection down 3.46% vs. the benchmark at -7.66%, yielding us 59 bp of relative performance.
• The fund’s biggest contributor to performance was avoiding Vale, which fell 26.81%. Overweighting Sabine Royalty Trust, up 8.66%, and Occidental Petroleum, up 3.98%, were also constructive to fund performance. With China locked down for much of the past quarter, steel demand was muted, leading to a 10% drop in iron ore futures. Vale averaged a 2.88% weight in the benchmark while its relative contribution to our performance was 39 bp. Sabine Royalty Trust, despite the modest quarterly gain, had a trailing monthly yield of 9.77%. Income from the oil and gas trust continued to garner investor attention as the royalty trust model is less exposed to inflationary costs. The third largest contributor to the fund’s relative performance was Occidental Petroleum. With an average fund weighting of 2.28%, the company contributed 27 bp to our relative performance. Berkshire Hathaway recently acquired a minority stake in the company.

Weaknesses

• The worst performing commodities were tin, aluminum and nickel, off 39.15%, 30.30% and 29.45%, respectively. Tin was hit particularly hard with the China lockdowns as the country is one of the world’s biggest consumers of tin for electronics manufacturing. Aluminum and nickel both fell in value with other metals as markets are factoring in a recession. Nickel went through a tumultuous trading window that froze the 145-year-old London Metals Exchange (LME) for the first time in its history. Chinese metal tycoon Xiang Guangda, which owns a large stake in a low-cost nickel producer, started shorting nickel as it hit a seven-year high at the end of 2021. However, as the Russian invasion into Ukraine proceeded, nickel prices skyrocketed as Russia is a large world supplier of nickel which was now off the market. Traders expected a short squeeze; however, the LME is owned by private interests in China and the LME canceled over $4 billion in trades that stood to profit from the short.
• The worst sector performance, relative to the benchmark, came from our overweighting in other metals/minerals, underweighting international oil and overweighting precious metals. In other metals and minerals, our weighting was 21.53% with our stocks off 37.02% versus the benchmark weight at 8.45%, with its stocks averaged a loss of 34.33%, thus yielding the fund a 340 bp negative relative loss. For international oil, our weighting was 6.00% versus the benchmark at 22.09%, but the underweight detracted 204 bp from our contribution. Instead of having the higher steel weighting, we shifted most of that weight into new battery metals, which we believe have a higher growth trajectory. We doubled our oil & gas exploration exposure, but in hindsight a shift out of the battery metals to conventional energy would have yielded better returns.
• Overweighting Ivanhoe Mines, underweighting Exxon Mobil and overweighting Alcoa were the three worst detractors to fund performance, losing 146 basis points, 80 bp and 72 bp, respectively. Ivanhoe Mines averaged 5.84% of the fund and fell 38.46%. Alcoa, with an average quarterly weighting of 1.70%, fell 49.29% for the quarter. Both companies were impacted by the lockdowns in China and the resultant impact on metal demand. Exxon Mobil averaged 4.59% of the benchmark and rose 4.75% for the quarter.

Outlook

Natural gas inventories are tight. This, coupled with growing optimism around potentially more supportive domestic policies and long-term demand growth from additional LNG (liquefied natural gas) exports, bodes well for future pricing. Blistering heat in the southern half of the U.S. is poised to boost demand for air conditioning and the power plant fuel. Europe’s transition away from Russian gas adds significant demand to an already tight global LNG market, while existing U.S. export facilities are already running at close to maximum capacity. European natural gas prices have risen since Russia began its war on Ukraine as Moscow’s deep supply cuts reverberate across the region. The cuts have hit some of the biggest consumers in a blow for the region that’s already struggling with surging inflation and meager growth.

Corn futures continued to rise, approaching a record high as war threatens global supplies, boosting demand for U.S. grain. Prices have not touched $8 since September 2012, after devastating drought and heat damaged crops in the U.S. Midwest.

America’s shale oil companies are enjoying a cash bonanza, as soaring oil prices and months of capital restraint transform the fortunes and balance sheets of a sector once notorious for debt-fueled drilling sprees. Operators are expected to rake in about $180 billion of free cash flow—operating income minus capital and maintenance outflows—this year at current crude prices, according to research company Rystad Energy.

The global lithium industry needs as much as $42 billion of investment by the end of the decade in order to meet demand for the crucial battery-making material, with attempts to build supply chains outside of China, subject to much higher costs, according to a data and market-intelligence provider. The sector will require $7 billion of investment each year from now until 2028, Benchmark Mineral Intelligence said in a report. That would help it meet forecast demand of 2.4 million tons a year by 2030, which is four times higher than the 600,000 tons that’s estimated to be produced in 2022.

Global refining utilization rates are increasing to reflect new capacity delays and permanent closures, and there may be further upside risks if China product exports stay low. Refined product demand should remain strong on elevated gas-to-oil switching, recovering jet fuel demand and a rebound in China demand from Covid-led dips in the first half of 2022. Global utilization rates are trending toward the 2015-17 upcycle, but energy costs remain high as well, particularly in Europe, which should support net margins in Asia and the U.S. given their better cost curve positioning. Refined product inventories globally are at seven-year lows, particularly for diesel, and with China exports down 55% year-to-date, all refineries should be running.

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.

A basis point, or bp, is a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 1/100th of 1%, or 0.01% (0.0001).

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 6/30/2022: Sabine Royalty Trust 2.65%, Occidental Petroleum Corp. 2.56%, Vale SA 0.00%, Berkshire Hathaway Inc. 0.00%, Ivanhoe Mines Ltd. 5.01%, Exxon Mobil Corp. 0.00%, Alcoa Corp. 0.40%.

Standard Disclosure

Please consider carefully a fund’s investment objectives, risks, charges and expenses. For this and other important information, obtain a fund prospectus by visiting www.usfunds.com or by calling 1-800-US-FUNDS (1-800-873-8637). Read it carefully before investing. Foreside Fund Services, LLC, Distributor. U.S. Global Investors is the investment adviser.

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor.

Foreign and emerging market investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risk.  Because the Global Resources Fund concentrates its investments in specific industries, the fund may be subject to greater risks and fluctuations than a portfolio representing a broader range of industries.

Top 10 Equity and Debt Holdings as of 06-30-2022

Industry Breakdown as of 06-30-2022

Regional Breakdown as of 06-30-2022

Growth of $10,000 Over 10 Years as of 06/30/2022

The chart illustrates the performance of a hypothetical $10,000 investment made in the fund during the depicted time frame, compared to its benchmark index. Figures include reinvestment of capital gains and dividends, but the performance does not include the effect of any direct fees described in the fund’s prospectus (e.g., short-term trading fees) which, if applicable, would lower your total returns.

Month End Average Annual Total Returns as of 08/31/2022

Quarter End Average Annual Total Returns as of 06/30/2022

The Emerging Europe Fund lost 15.20% in the second quarter of 2022, outperforming its benchmark, the Emerging Europe 10/40, which lost 20.66%. See complete fund performance here.

The Emerging Europe Fund outperformed its index by 5.46%. Eastern European equites continued to trade lower after Russia attacked Ukraine in February. The fund’s defensive positioning and stock selection in Poland had the most positive effect on its performance relative it the index.

Performance data quoted represents past 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

• On the country level, the fund’s stock selection in Poland had the most positive effect on the fund’s performance relative to the index. The fund benefited from not owning shares of CD Projekt, a Polish video game developer whose shares declined almost 50% in the second quarter. In addition, in Poland, underweighting KGHM Polska Miedz, a copper and silver producer, benefited the fund’s performance relative to the index. KGHM shares declined 18% with the broad correction in the metals and mining industry. Finally, the fund’s defensive positioning, in particular its higher cash levels and currency hedges, protected the fund’s assets from a sharper decline.
• On the sector level, the fund’s underweight in information technology and good stock selection in energy had the most positive effect on the fund’s performance relative to the index. In information technology, the fund benefited from having no exposure to CD Projekt. In energy, stock selection in integrated oil, in particular overweighting shares of OMV Petrom, a Romanian oil and gas producer and distributor, had the most positive effect on its performance against the index. Market value of OMV Petrom increased by 5% in the quarter and it is not part of the MSCI Emerging Europe 10/40 index.

The top three positive contributors to the fund’s performance were as follows:

• Currency hedges contributed a positive 1.26% to the fund’s performance. Due to tightening monetary policy in the United States, the dollar strengthened, pushing emerging market currencies lower. EUROX was protecting its exposure to the euro, Turkish lira and Polish zloty during the time of uncertainty and increased volatility due to the war between Russia and Ukraine.
• Higher cash levels contributed a positive 0.98% to the fund’s performance. EUROX was holding even higher cash levels in the first quarter after it disposed of all Russian shares. Most of the cash from the sales of Russian holdings was re-allocated in the second quarter into central emerging Europe (ex. Russia). Nevertheless, in the second quarter, the cash level was higher than normal due to the ongoing war in Europe.
• PGE Polska contributed a positive 0.15% to the fund’s performance. Shares gained 8% as energy prices rose sharply in Europe after the war in Eastern Europe erupted in February.

Weaknesses

• On the country level, the fund’s stock selection in Turkey and the Czech Republic had the most negative effect on the fund’s performance relative to the index. In Turkey, the fund’s underweight position in Turkish regional banks did not work well during the second quarter. Shares of Garanti BBVA gained 8.7% during the quarter and yet the fund had no exposure to it. In the Czech Republic, underweighting the electric utility company CEZ has the most negative effect on the fund’s performance relative to its index. Shares of CEZ gained 6.5% during the quarter, supported by higher energy prices in Europe. CEZ also benefited from operating nuclear plants, and the company is looking forward to building another nuclear project.
• On the sector level, the fund’s underweight position in consumer staples and overweight position in consumer discretionary had the most negative effect on the fund’s performance relative to the index. In consumer staples, the strategy to underweight Polish and Turkish retail stores contributed to the fund’s underperformance against the index. Shares of grocer Dino Polska declined 13.4% in the second quarter, while Turkish retailer BIM Birlesik Magazalar lost 14.6. In consumer discretionary, the fund’s lack of exposure to Turkish home furnishing company Turkiye Sise de Cam Fabrikalari and underweighting of Greek gaming stock Greek Organization of Football Prognostics (OPAP) had the most negative effect on the fund’s performance relative to its index. Shares of Turkiye Sise de Cam Fabrikalari gained 26.6% and the price of OPAP declined by 2.8%, beating the MSCI EM Europe 10/40 Index.

The bottom three negative contributors to the fund’s performance were all eastern European banks. The war in Europe, rising energy prices, spiking inflation and deteriorating outlook for economic growth in the region pushed the financial sector lower.

• OTP Bank, a Hungarian bank, contributed a negative 2.32% to the fund’s performance.
• Powszechna Kasa Oszczednosci Bank Polski, a Polish bank, contributed a negative 1.69% to the fund’s performance.
• Bank Polska Kasa Opieki, another Polish bank, contributed a negative 1.33% to the fund’s performance.

Outlook

In the second quarter, the war in Europe continued to drag Eastern European equites lower. Russia attacked Ukraine at the end of February, and fighting still continues throughout the country with heavy military operations on the eastern side of Ukraine. Russia is preparing to hold a referendum in Eastern Ukraine on joining Russia in the near future. The West has imposed sanctions on Russia, but so far, they have not succeeded in changing Putin’s mind.

Russia is an energy powerhouse and is benefiting from spiking energy prices in Europe. The European Commission proposed banning Russian oil and petroleum imports in a move that aims to punish the Kremlin for the invasion of Ukraine. The ban will phase in over the next six months, and it will take full effect by the end of the year. Despite aggressive moves by the West to punish Russia, the ruble continues to appreciate against the dollar, reaching levels last seen in 2015. At the same time, Bloomberg reported that Russia missed a coupon interest payment, technically defaulting on foreign debt for the first time since 1918.

The war in Europe will have global ramifications. Europe will see more negative impact than the rest of the world. Growth in Europe will be weaker, and inflation will be higher, but the impact will vary by country. Countries with strong economic links with Russia will suffer more than those that did not rely on trade with Russia.

The MSCI Emerging Markets Europe 10/40 Index is a free float-adjusted market capitalization index that is designed to measure equity performance in the emerging market countries of Europe (Czech Republic, Greece, Hungary, Poland, Russia and Turkey). The index is calculated on a net return basis (i.e., reflects the minimum possible dividend reinvestment after deduction of the maximum rate withholding tax). The index is periodically rebalanced relative to the constituents’ weights in the parent index.

Holdings may change daily. Holdings are reported as of the most recent quarter-end. Holdings are reported as of the most recent quarter-end. Holdings in the Emerging Europe Fund as a percentage of net assets as of 6/30/2022: CD Projekt SA 0.00%, KGHM Polska Miedz SA 0.00%, OMV AG 0.24%, PGE Polska Grupa Energetyczna SA 2.18%, Turkiye Garanti Bankasi AS 0.00%, CEZ AS 4.50%, Dino Polska AS 0.00%, BIM Birlesik Magazalar AS 0.00%, Turkiye Sise de Cam Fabrikalari AS 0.00%, Greek Organization of Football Prognostics SA 0.00%, OTP Bank Nyrt 6.57%, Powszechna Kasa Oszczednosci Bank Polski SA 4.12%, Bank Polska Kasa Opieki SA 3.38%.

Standard Disclosure

Please consider carefully a fund’s investment objectives, risks, charges and expenses. For this and other important information, obtain a fund prospectus by visiting www.usfunds.com or by calling 1-800-US-FUNDS (1-800-873-8637). Read it carefully before investing. Foreside Fund Services, LLC, Distributor. U.S. Global Investors is the investment adviser.

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor.

Foreign and emerging market investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risk. By investing in a specific geographic region, a regional fund’s returns and share price may be more volatile than those of a less concentrated portfolio. The Emerging Europe Fund invests more than 25% of its investments in companies principally engaged in the oil & gas or banking industries.  The risk of concentrating investments in this group of industries will make the fund more susceptible to risk in these industries than funds which do not concentrate their investments in an industry and may make the fund’s performance more volatile.

Top 10 Equity and Debt Holdings as of 06-30-2022

Industry Breakdown as of 06-30-2022

Regional Breakdown as of 06-30-2022

Growth of $10,000 Over 10 Years as of 06/30/2022

The chart illustrates the performance of a hypothetical $10,000 investment made in the fund during the depicted time frame, compared to its benchmark index. Figures include reinvestment of capital gains and dividends, but the performance does not include the effect of any direct fees described in the fund’s prospectus (e.g., short-term trading fees) which, if applicable, would lower your total returns.

Month End Average Annual Total Returns as of 08/31/2022

Quarter End Average Annual Total Returns as of 06/30/2022

Expense ratio as stated in the most recent prospectus. The Adviser of the Emerging Europe Fund has voluntarily limited total fund operating expenses (exclusive of acquired fund fees and expenses of 0.00%, extraordinary expenses, taxes, brokerage commissions and interest, and advisory fee performance adjustments (0.18%) ) to not exceed 2.85%. With the voluntary expense waiver amount of (0.00%), total annual expenses after reimbursement were 2.67%.

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 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 at www.usfunds.com or 1-800-US-FUNDS.

The MSCI Emerging Markets Europe 10/40 Index (Net Total Return) is a free float-adjusted market capitalization index that is designed to measure equity performance in the emerging market countries of Europe (Czech Republic, Hungary, Poland, Russia, and Turkey). The index is calculated on a net return basis (i.e., reflects the minimum possible dividend reinvestment after deduction of the maximum rate withholding tax). The index is periodically rebalanced relative to the constituents’ weights in the parent index.

The Near-Term Tax Free Fund had a total negative return of 0.76% in the second quarter of 2022, underperforming its benchmark, the Bloomberg Barclays Municipal Bond 3-Year Index, which returned 0.11%. See complete fund performance here.

Performance data quoted represents past 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.

Rising interest rates led to three straight months of declines in the municipal bond market in the first quarter. Of the 32 basis points (bp) of underperformance, 12 bp is attributed to the expense ratio, with the remaining underperformance coming from maturities greater than five years.

Strengths

• The fund’s allocation to maturities less than five years saw the greatest gains for the fund.
• The fund’s allocation to New Mexico, Colorado and Louisiana bonds were the most positive contributor to performance.
• The three strongest sectors to deliver positive performance in the quarter were utilities, airports and facility bonds, respectively.

Weaknesses

• The fund’s allocation to maturities greater than five years saw the most weakness for the fund.
• The fund’s allocation to Texas, Idaho and South Caroline bonds was the most negative contributor to performance.
• School districts, general obligation bonds and water issuers were the three leading sectors for losses.

Outlook

The yield on the 10-year yield on the municipal rate curve ended the quarter at 2.55%, 42 bp higher than the prior quarter close. The five-year Treasury moved up 23 bp, and the three-year climbed 20 bp. Year-year paper rose just 10 bp in yield for the quarter, so long rates continued to climb faster in the municipal market. Municipal issuance of debt has now picked back up as investors are looking for other alternatives to equities. We continue to favor shorter-dated paper for any new investments. School districts and general obligation bonds appear to be favored less as airports and facility bonds did well with lockdowns ending.

The Barclays 3-Year Municipal Bond Index is a total return benchmark designed for short-term municipal assets. The index includes bonds with a minimum credit rating BAA3, are issued as part of a deal of at least $50 million, have an amount outstanding of at least $5 million and have a maturity of 2 to 4 years.

A basis point, or bp, is a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 1/100th of 1%, or 0.01% (0.0001).

Standard Disclosure

Please consider carefully a fund’s investment objectives, risks, charges and expenses. For this and other important information, obtain a fund prospectus by calling 1-800-US-FUNDS (1-800-873-8637). Read it carefully before investing. Foreside Fund Services, LLC, Distributor. U.S. Global Investors is the investment adviser.

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor.

Bond funds are subject to interest-rate risk; their value declines as interest rates rise. Though the Near-Term Tax Free Fund seeks minimal fluctuations in share price, it is subject to the risk that the credit quality of a portfolio holding could decline, as well as risk related to changes in the economic conditions of a state, region or issuer. These risks could cause the fund’s share price to decline. Tax-exempt income is federal income tax free. A portion of this income may be subject to state and local taxes and at times the alternative minimum tax. The Near-Term Tax Free Fund may invest up to 20 percent of its assets in securities that pay taxable interest. Income or fund distributions attributable to capital gains are usually subject to both state and federal income taxes.

Top 10 Holdings as of 06-30-2022

Industry Breakdown as of 06-30-2022

Top 5 States as of 06-30-2022

Growth of $10,000 Over 10 Years as of 06/30/2022

The chart illustrates the performance of a hypothetical $10,000 investment made in the fund during the depicted time frame, compared to its benchmark index. Figures include reinvestment of capital gains and dividends, but the performance does not include the effect of any direct fees described in the fund’s prospectus (e.g., short-term trading fees) which, if applicable, would lower your total returns.

Month End Average Annual Total Returns as of 08/31/2022

Quarter End Average Annual Total Returns as of 06/30/2022

Expense ratios as stated in the most recent prospectus. The Adviser of the Near-Term Tax Free Fund has contractually limited, through April 30, 2023, the total fund operating expenses (exclusive of acquired fund fees and expenses 0.01%, extraordinary expenses, taxes, brokerage commissions and interest) to not exceed 0.45%. Total annual expenses after the waiver of (0.68%) were 0.45%. The fund’s yield calculation is based on the holdings’ yield to maturity for prior 30 days; distribution may differ.

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 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 at www.usfunds.com or 1-800-US-FUNDS.

The Barclay 3-Year Municipal Bond Index is a total return benchmark designed for long-term municipal assets. The index includes bonds with a minimum credit rating BAA3, are issued as part of a deal of at least $50 million, have an amount outstanding of at least $5 million and have a maturity of 8 to 12 years.

The U.S. Government Securities Ultra-Short Bond Fund had a total return of 0.01% in the second quarter of 2022, outperforming its benchmark, the Bloomberg Barclays US Treasury Bills 6-9 Months Index, which returned negative 0.21%. See complete fund performance here.

Performance data quoted represents past 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.

The main source of outperformance came from allocations to bonds with maturities between zero and one year, as they outperformed the benchmark. Our longer-dated notes were also less impacted by headline inflation numbers that touched 40-year highs. The most aggressive losses were in one- to three-year maturities. This has the Federal Reserve shifting gears to more aggressive rate hikes in the past quarter.

Outlook

The yield on the 10-year Treasury, a bellwether used in the fixed-income markets, ended the quarter at 3.02%, 68 basis points (bp) higher than the prior quarter close, but the five-year Treasury moved up 58 bp and the three-year rose 50 bp. This past quarter, yields rose more evenly across the yield curve, perhaps reflecting the loss of shock from the previous quarter of raising rates, when the shorter end of the curve saw the biggest gaps up in yield. The tone of the Fed is certainly more forceful on bringing down inflation as quickly as possible, which might mean another 150 points rise in rates. The Fed has a significant amount of uncertainty to deal with in keeping economic growth intact and getting inflation under control. With the Russian invasion of Ukraine persisting, supply chains around the world have been disrupted and inflation is likely to remain elevated for longer.

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. Gross domestic product is the total value of goods produced and services provided in a country for one year. The personal consumption expenditures index reflects changes in the prices of goods and services purchased by consumers in the U.S.

A basis point, or bp, is a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 1/100th of 1%, or 0.01% (0.0001).

Standard Disclosure

Please consider carefully a fund’s investment objectives, risks, charges and expenses. For this and other important information, obtain a fund prospectus by visiting www.usfunds.com or by calling 1-800-US-FUNDS (1-800-873-8637). Read it carefully before investing. Foreside Fund Services, LLC, Distributor. U.S. Global Investors is the investment adviser.

Bond funds are subject to interest-rate risk; their value declines as interest rates rise.

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor.

Issuer Breakdown as of 06-30-2022

U.S. Government Securities Ultra-Short Bond Fund
Growth of $10,000 Over 10 Years as of 06/30/2022

The chart illustrates the performance of a hypothetical $10,000 investment made in the fund during the depicted time frame, compared to its benchmark index. Figures include reinvestment of capital gains and dividends, but the performance does not include the effect of any direct fees described in the fund’s prospectus (e.g., short-term trading fees) which, if applicable, would lower your total returns.

Month End Average Annual Total Returns as of 08/31/2022

Quarter End Average Annual Total Returns as of 06/30/2022

Expense ratios as stated in the most recent prospectus. The Adviser of the U.S. Government Securities Ultra-Short Bond Fund has voluntarily limited total fund operating expenses (exclusive of acquired fund fees and expenses, extraordinary expenses, taxes, brokerage commissions and interest) to not exceed 0.45%. With the voluntary expense waiver amount of (0.61%) total annual expenses after reimbursement were 0.45%. U.S. Global Investors, Inc. can modify or terminate the voluntary limit at any time, which may lower a fund’s yield or return. The fund’s yield calculation is based on the holdings’ yield to maturity for prior 30 days; distribution may differ.

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 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 at www.usfunds.com or 1-800-US-FUNDS.