Our Mutual Funds

The Global Luxury Goods Fund lost 2.47% in the third quarter of 2022, outperforming its benchmark, the S&P 1500 Composite Index, which lost 4.76%. The performance of the Global Luxury Goods Fund was more aligned with the performance of the S&P Global Luxury Index, which declined by 3.03%, 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 significant 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 any shares in package software, internet services and semiconductors worked well. Within the package software industry, Microsoft lost 9.12% in the third quarter. Within the internet services group, Alphabet lost 12.22% and shares of NIVIDIA dropped 19.9%. 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 overweight position in consumer discretionary had the second most positive effect on the fund’s performance relative to the index. The strategy to overweight hotels, cruise lines and restaurants proved to work well. Shares of Marriott International gained 3.20% in the third quarter, while the S&P 500 Index declined 4.76%. Within the restaurant group, overweighting Starbucks benefited the fund, as shares gained 10.8% in the third quarter.

• The strongest contributor to fund performance was Tesla, which contributed 1.30% to the fund’s performance. Shares of Tesla increased by 18.17% in the third quarter while the S&P 1500 Index lost 4.76 % and the S&P Global Luxury Index declined by 3.03%. Demand for Tesla cars remained strong despite worsening economic conditions and higher car prices. In the third quarter, Tesla sales in China hit a new monthly record high.

Weaknesses

• The fund’s overweight position in materials had the most negative effect on the fund’s performance relative to the S&P 1500 Index. During the third quarter, the fund held gold producers, per the fund’s model. Gold has usually outperformed during periods of uncertainty and spiking inflation, but these times proved to be different. Shares of Hochschild declined almost 40% in the third quarter, followed by Royal Gold’s loss of 12.14% and Wheaton Precious Metals’ 9.78%. Gold holdings are not part of the S&P 1500 index.

• The fund’s overweight position in consumer staples had the second most negative effect on the fund’s performance relative to the index. Its overweight position in household and personal products did not prove to work well. The model allocated higher weight to Coty Inc., whose shares declined 21.1% during the third quarter. Estee Lauder shares declined 2.27%. Both companies had smaller weightings in the S&P 1500 index.
• The biggest detractor to fund performance was Industria de Diesno Textil, a luxury apparel company best known for its Zara brand. The company contributed a negative 0.81% to the fund’s overall performance. Company shares declined 15.85% in the third quarter on souring consumer sentiment in Europe, which is the company’s largest market.

Outlook

Luxury good equites had a volatile third quarter. In the first few weeks of the quarter, stocks were trying to move higher before reaching their peak mid-August and then recording losses. Stocks finished the quarter with a small loss of 3%. Year-to-date, the luxury sector has lost more than 30% of its market value. The worsening economic conditions in Europe, due to the Russia/Ukraine war and increasing energy prices, are putting pressure on consumers’ buying power. However, we believe that luxury goods are well positioned to withstand further declines.

Luxury giant Louis Vuitton recently posted strong third quarter results, recording revenue of roughly $54.8 billion in the first nine-months of 2022, up 28% compared to the same period last year. The company credited stronger sales due to renewed travel, mostly wealthy Americans traveling to Europe and taking advance of the strong U.S. dollar. Luxury watches have been selling especially well, and the trend may continue as precious watches have been presented as good hedges against inflation.

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 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% versus last year. In a slower-pace scenario, the market may reach EUR305-320 billion by year-end, up as much as 10% vs. 2021.

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 12-30-2022

Industry Breakdown as of 12-30-2022

Regional Breakdown as of 12-30-2022

Growth of $10,000 Over 10 Years as of 12/31/2022

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 12/31/2022

Quarter End Average Annual Total Returns as of 12/31/2022

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.

The World Precious Minerals Fund had a total negative return of 9.89% in the third quarter of 2022, outperforming its benchmark, the NYSE Arca Gold Miners Index, which delivered a negative return of 12.43%. 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 underweighting in Newmont, currency hedges on the Canadian and Australian dollar, and overweight Nano One Materials.  Newmont had an average fund weighting of 1.11% for the quarter versus the benchmark at 24.37%. For the quarter, Newmont fell 28.65%, contributing a net gain of 256 basis points (bps) of relative performance to the fund. Newmont is the largest member of the benchmark.

• The second-best contributor to the fund’s performance was our currency hedges of the Canadian and Australian dollar, yielding the fund 161 bps of absolute performance. Approximately half of our largest foreign exchange exposure was protected from the strengthening dollar.
• The third best contributor to fund performance was our overweighting of Nano One. With an average fund weighting of 11.61% for the quarter, the stock gained 1.80% and contributed 135 bps to the fund. Nano One was granted two more patents during the quarter and the news of Rio Tinto, the world’s second largest miner, making a strategic investment into Nano One for exposure to its unique cathode production facilities in North America’s automotive supply chain.

Weaknesses

• The largest detractor from fund performance was our overweight position in Dolly Varden Silver, which fell 40.82% during the quarter. This decline contributed 93 bps to the fund’s overall loss. Exploration and development stocks sold off relentlessly in the third quarter as the Federal Reserve continued its rate hikes and investors became more concerned of a potential recession.
• The second biggest detractor from fund performance was our overweighting of CopperBank, which averaged 0.78% of the fund and fell by 31.65% for the quarter, thus impacting the fund by 71 bps. We exited the position during the quarter with five-to-seven-fold gains as the original purchases were in 2016 to mid- 2019.
• The third largest detractor from fund performance was our 1.33% average weighting of Thesis Gold, which fell 39.87%. Thesis Gold put out several drilling updates during the quarter that were positive on gold grades hit and continues to show growth in the size of deposit. Thesis contributed 56 bp to the fund’s overall loss.

Outlook

In its market commentary on the global metals and mining industry, Stifel highlighted that miners are poised to deliver outsized capital returns to shareholders through dividends and share buybacks over the coming years. While the phase of deleveraging following significant investment in growth over a decade ago is nearing completion, investing in new growth has been a challenge and continues to face obstacles. As a result, dividends and buybacks have become an attractive destination for excess cash sitting idle on the balance sheet. Stifel believes that, while the larger miners are already paying an attractive average dividend yield of 5%, room for higher returns exists in the coming years as buoyant commodity prices and a lack of sizable growth opportunities create an ideal scenario for heightened shareholder returns.

Over the broad market selloff over the last few months, gold has outperformed almost all other asset classes (except for the greenback) as a store of value. Conversely, gold miner equities (as measured by the NYSE Arca Gold Miners Index) have underperformed the underlying commodity by 25%. While a portion of this is due to some margin compression from input cost inflation, they have also underperformed the S&P 500 by 22% where almost all companies in this broad market index have also seen margin pressure from inflation.

According to Canaccord Genuity, with a large valuation gap between the larger and smaller royalty companies, more consolidation can be expected to come with the benefit of better diversification, scale and lower cost of capital.

De Beers and the Government of Botswana have extended their sales agreements on existing terms through 2023. The traditional arrangement has been a 10-year contract; however, negotiations for a new agreement were deferred due to Covid and now extended for 12 months again. De Beers receives 19.2% of profits but is not taxed. It then sells Debswana goods and shares in a mark-up for these which accrues to its trading division. Debswana volumes account for the majority of its trading profits.

Following results for the first half of the year, Gold Fields’ CEO Chris Griffith noted the company is making “encouraging progress” in winning over shareholders on the Yamana acquisition. “I think most of the shareholders are starting to understand the rationale for the deal, the strategy of the company, why Yamana, why the price,” Mr. Griffith told Reuters in an interview. He also reiterated that “Yamana represents the best option to accelerate Gold Fields’ growth strategy and deliver long-term shareholder value. Having explored both organic growth and bolt-on acquisitions, moving to completion stage of the transaction is the best opportunity to accelerate the next phase of the company’s growth in value.”

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 12-30-2022

Industry Breakdown as of 12-30-2022

Regional Breakdown as of 12-30-2022

Growth of $10,000 Over 10 Years as of 12/31/2022

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 12/31/2022

Quarter End Average Annual Total Returns as of 12/31/2022

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 return of -1.84% in the third quarter of 2022, outperforming its benchmark, the S&P Global Natural Resources Index, which returned -4.58%. 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 natural gas, corn and uranium, up 22.57%, 9.32% and 9.06%, respectively. International demand for liquified natural gas (LNG) has been extremely strong with Europe and Asia both competing for winter storage since Russia’s invasion of Ukraine. Domestic prices have been held back somewhat with some gas being stranded due to fire damage at an LNG facility in Houston, Texas. The United States Department of Agriculture (USDA) estimate of corn stocks is expected to finish the year at its lowest level in 10 years. Soybeans and wheat could set seven- and nine-year lows in inventories. Uranium is getting more attention in a green tilted nod to the environment, but meeting future demand for cheaper electricity is raising speculative interest in the commodity again.
• The fund’s best sector performance, relative to the benchmark, came from its underweight positions in containers/packaging and overweight oil & gas production. In containers/packaging, the fund’s weighting was 0.00% versus the benchmark weighting at 8.84%, with an average loss of 15.13%, thus yielding the fund a 97 basis points (bps) positive relative gain. Our oil & gas production weighting for the fund is at 10.97% versus the benchmark at 6.08%, and our stocks returned 8.47% versus the sector returning only 2.09%, yielding the fund 82 bps of relative performance.
• The fund’s biggest contributor to performance was Ivanhoe Mines, up 12.63% with an average fund weighting of 5.46%, yielding the fund 89 bps. During the quarter, we also hedged part of our Canadian and Australian dollar exposure and netted 82 bps to the fund. Another non-benchmark company we added in June 2021 was Sabine Royalty Trust, up 20.37% this past quarter, thus making it a top performer in the prior quarter. In the prior quarter, Sabine’s yield was 9.77%. It is still very attractive as its one-year dividend growth rate was 167%, and its current indicated yield is 14.70%.

Weaknesses

• The worst performing commodities were lumber, crude palm oil and tin, off 33.49%, 30.61% and 22.54%, respectively. Rising mortgage rates, being lifted by the Federal Reserve, are impacting housing affordability as buyers get priced out of the market, limiting the demand for lumber. Palm oil has fallen slightly more than crude oil as some countries put export limits on when supplies were tight, exacerbating the problem. Tin continues to suffer from China lockdowns as the country is one of the world’s biggest consumers of tin for electronics manufacturing.
• The worst sector performance, relative to the benchmark, came from our underweighting in integrated oil, underweighting agriculture commodities and overweighting metals and minerals. In integrated oil, our weighting was 6.22% with stocks off 7.07%, thus yielding the fund a 56 bps negative loss. With the measures included in the Inflation Reduction Act (IRA), we have overweighted this sector as there is an incentive to develop domestic supplies on natural resources such as lithium, nickel and copper. The increase in interest rates has slowed this trend, but with climate change being a bigger concern today, we believe these projects are well suited to go forward.
• Underweighting in Exxon Mobil, BP plc Petroleo Brasileiro were the three worst detractors to fund performance, losing 30 bps, 20 bps and 15 bps, respectively. All three companies are part of the integrated oil sector which we underweighted to shift resources to oil & gas production and metal minerals.

Outlook

The IRA includes a new clean hydrogen credit (between $0.60-3.00 per kilogram), depending on the emissions intensity of the hydrogen, and a direct-pay option. The credit support is expected to help accelerate the growth of the clean hydrogen economy, potentially addressing hard-to-decarbonize sectors like transportation, heavy industry, agriculture and power generation. For midstream, opportunities for hydrogen blending and repurposing of natural gas pipelines could start to emerge more meaningfully.

JPMorgan Commodities Research has provided thoughts on the Inflation Reduction Act. Analysts say that of the $739 billion total package, $369 billion will be spent on “energy security and climate change” programs. This includes tax credits for purchasing electric vehicles (EVs) and incentivizing domestic production of battery metals. The group views this as incrementally positive for producers of battery metals (cobalt, lithium and nickel) including Glencore, Anglo American, Rio Tinto, BHP, First Quantum, Antofagasta and Lundin. However, a faster-than-expected move towards EV adoption could be negative for the outlook for platinum group metal (PGM) demand.

Natural gas futures in the U.S. jumped to a new 14-year high as European prices surged on Russia’s move to shut a major pipeline, stoking speculation that demand for American exports of the heating and power-plant fuel will soar. In Europe, benchmark gas futures rose as much as 20%, driving electricity prices to fresh records.

The U.S. became the world’s largest LNG exporter in the first half of 2022, according to the Energy Information Administration (EIA). Exports averaged 11.2 billion cubic feet per day (Bcf/d), up 12% from the second half of 2021. LNG cost inflation appears under-reported by market players. There could potentially be 20-30% cost inflation for projects, or over $800-per-ton construction costs. With many LNG prices still in the $2.00-$2.25 per million British thermal until (MMbtu) range despite these emerging pressures, returns for projects could be eroded.

U.S. refineries ran at very high utilization rates during the summer (nationally, 94% through the first three weeks of August). On the East Coast, utilization was 97.6% in the prior week after averaging 99.4% during the first two weeks of August. Five and a half million barrels per day (mb/d) of refining capacity is due to close over the 2019-2023 period. In addition, 2.2 mb/d of refinery nameplate capacity is functionally irrelevant, primarily in Venezuela, Mexico and Nigeria. Lastly, 1 mb/d of refining capacity in Russia and China remains offline, with no obvious catalyst nor incentive to restart. With oil demand normalized outside of China, refining run rates in swing refining regions are pushing to new all-time highs.

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 12-30-2022

Industry Breakdown as of 12-30-2022

Regional Breakdown as of 12-30-2022

Growth of $10,000 Over 10 Years as of 12/31/2022

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 12/31/2022

Quarter End Average Annual Total Returns as of 12/31/2022

The China Region Fund lost 20.1% in the third quarter of 2022, outperforming its benchmark, the Hang Seng Composite, which fell 22.67%. 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 a./n 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 Hong Kong had the most positive effect on the fund’s performance relative to the index. In particular, the strategy to overweight coal producers worked well. Shares of Yankuang Energy gained 29%, and the fund had a significantly higher allocation to it than the index. Coal prices remained at elevated level after Russia attacked Ukraine in February, disrupting global energy supplies. In addition, higher cash levels protected the fund from recoding higher losses.
• On the industry level, the fund’s overweight position in energy minerals and consumer non-durables had the most positive effect on the fund’s performance relative to the index. In energy minerals, the fund’s higher exposure to coal producer Yankuang proved to be right. In consumer non-durables, owning more shares of China Resources Beer Corporation worked well. Shares lost 6%, outperforming the index on a relative basis, which lost 22.67%.
• The top three positive contributors were as follows:

• Yankuang Energy contributed a positive 0.87% to the fund’s performance. Shares gained 29% in the third quarter. The company benefited from higher coal prices.
• PetroChina, a subsidy of state-owned National Petroleum, contributed a positive 0.24% to the fund’s performance. Shares gained 9.6% in the third quarter, supported by rising oil and gas prices.
• Global Unichip, a Taiwanese chipmaker, contributed a positive 0.19% to the fund’s performance. Shares gained 14.68% in the third quarter, supported by strong quarterly results. Semiconductor stocks have been watched closely after the U.S. administration reported new restrictions on exports of chips to China made with U.S. technology.

Weaknesses

• On the country level, the fund’s exposure to the U.S. had the most negative effect on the fund’s performance relative to the index. The strategy to hold Chinese ADRs (American depository receipts) and call options on technology names worked well in the second quarter but not in the third quarter, as China experienced a new wave of Covid infections, prompting Beijing to lock down cities and restrict people’s movement.
• On the industry level, the fund’s position in technology had the most negative effect to the fund’s performance. The fund’s strategy to obtain more exposure to the technology sector though call options did not work.
• The three greatest negative contributors were all technology names. The second quarter outperformance in technology proved to be short lived as China once again imposed more Covid restrictions in the third quarter following its rigorous zero-Covid policy. Technology stocks sold off on worries of upcoming new regulations on exports of semiconductors.

• Call options of the Invesco China Technology ETF (CQQQ) contributed a negative 1.41% to the fund’s performance. Shares declined 28% in the third quarter.
• Tencent Holdings contributed a negative 1.25% to the fund’s performance. Shares declined 25.49% in the third quarter on weaker sales.
• Alibaba contributed a negative 1.10% to the fund’s performance. Shares declined 29.64% in the third quarter. Chinses technology stocks were indirectly affected by the U.S. preventing semiconductor technology to be exported to China as many Chinese companies, Alibaba included, rely on U.S. chip technology to run and support their e-commerce, gaming and internet search business platforms.

Outlook

Investor optimism emerged in the middle of the year after the Chinese government announced an end to lockdowns, but it proved to be short lived as China’s zero-Covid policy brought back lockdowns and new restrictions in the third quarter.

Chinse President Xi Jinping is set to be reelected as head of the Communist Party in China, during the 20th Congress of the Chinese Communist Party (CCP) set to begin on October 16. The president will continue his current agenda of promoting national unity, economic stability, working toward supporting the commonwealth and making further plans for his country to overtake the U.S. as the biggest economy in the world. However, China’s 5% gross domestic product (GDP) growth rate is out of reach now due to the lasting impact of the zero-Covid policy, demographic challenges and lower investment because of a shrinking real estate sector. It was previously estimated that China could be able to overtake the U.S. as the largest economy by 2028, but now it is widely believed that it will not happen until the mid-2030s.

With the reelection of Xi, there is also the growing threat that China may want to bring Taiwan closer to home. Taiwan is a global producer of semiconductors, and if China invades Taiwan, it will cause a material disruption in the global chip industry. The Taiwan Semiconductor Manufacturing Corporation produces more than half of the world’s advanced semiconductors and 90% of the most advanced chips that are used to power Apple, Qualcomm and Android phones. Semiconductor equites in Taiwan and South Korea have been correcting year-to-date, mostly due to weakening demand for electronic products and new regulations. The latest restrictive U.S. rule will allow the Unites States to block the sale of foreign-made chips, made with American technology, to China. Further semi weakness could continue, mostly impacting South Korea and Taiwan, markets heavily exposed to the industry.

We expect the Chinese government to be more willing to review its zero-Covid policy after the Chinese Communist Party (CCP) meeting ends. China has already allowed Hong Kong to ease some of the world’s strictest Covid entry protocols, eliminating hotel quarantine requirements for inbound international travels.

The future performance of Chinese equities will very much depend on the outcome of the 20th Congress of the Chinese Communist Party meeting and its willingness to reopen its market. Nevertheless, Chinese equites are in oversold territory and so a bounce is expected. As of end of September, the Shanghai Stock Exchange was down 27.9% year-to-date.

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. A basis point is one hundredth of one percent, used chiefly in expressing differences of interest rates. The Philadelphia Semiconductor Index, or SOX, is an index with capitalization weight. The index is made up of 30 semiconductor companies.

A call option is a contract to buy assets at an agreed price on or before a particular date. The term American depository receipt (ADP) refers to a negotiable certificate issued by a U.S. depository bank representing a specific number of shares of a foreign company’s stock.

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 6/30/2022: HSBC US 12/16/22 0.54%, China Resources Holdings Co. Ltd. 0.00%, Daqo New Energy Corp. 2.97%, CQQQ US 09/16/22 0.44%, Orient Overseas International Ltd. 0.00%, ASPEED Technology Inc. 1.48%, Nanya Technology Corp. 2.62%, SK Hynix Inc. 4.40%.

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. 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.

Top 10 Equity and Debt Holdings as of 12-30-2022

Industry Breakdown as of 12-30-2022

Regional Breakdown as of 12-30-2022

Growth of $10,000 Over 10 Years as of 12/31/2022

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 12/31/2022

Quarter End Average Annual Total Returns as of 12/31/2022

Expense ratios as stated in the most recent prospectus. 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%.

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 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 Emerging Europe Fund lost 10.08% in the third quarter of 2022, outperforming its benchmark, the Emerging Europe 10/40, which lost 12.41%. See complete fund performance here.

The Emerging Europe Fund outperformed its index by 2.33%. Eastern European equites continued to trade lower after Russia attacked Ukraine in February. The fund’s defensive positioning helped to beat the index. In particular, currency hedges and a higher cash level had the most positive effect on its performance relative to 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 underweight position in the Czech Republic had the most positive effect on the fund’s performance relative to the index. Shares of utility company CEZ declined 14% in the third quarter on worries that the government might tax profitable companies to subsidize electricity and natural gas bills without increasing its fiscal deficit. However, 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 position in energy and overweight industrials had the most positive effect on the fund’s performance relative to the index. In energy, the fund benefited from having smaller exposure to Polish refinery Polski Koncern Naftowy. In industrials, the fund mostly benefited from holding Turkish airline Turk Hava Yollari (Turkish Airlines) and Turkish KOC Holdings.
• The top three positive contributors to the fund’s performance were as follows:

• Currency hedges contributed a positive 3.1% to the fund’s performance. Due to tightening monetary policy in the United States, the dollar strengthened, pushing emerging market currencies lower. EUROX has been protecting its exposure to the euro, Turkish lira, Polish zloty and Hungarian forint during the time of uncertainty and increased volatility due to the ongoing war between Russia and Ukraine.
• Turk Hava Yallari contributed a positive 0.7% to the fund’s performance. Shares gained 36%, supported by a recovery in travel. The airline flew 53.9 million passengers in the first nine months of the year, representing only a 4.5% decline in passengers compared to pre-pandemic levels. Turk Hava Yallri benefits from its location as many travelers use Istanbul Airport as a transit point. Turkish Airlines has been named the best airline in Europe.
• Turkiye Is Bankasi Anonim Sirketi contributed a positive 0.4% to the fund’s performance. It has been a volatile quarter for Turkish equities and in particular for banks. Is Bankasi shares gained more than 160% in less than three months, peaking on September 12, and finishing the full three-month period up 54%. Domestic retail buying spurred the shares appreciation. The country has recorded small inflows from foreign investors as the Turkish economy is still fragile battling high inflation and a large budget deficit.

Weaknesses

• On the country level, the fund’s underweight position in Turkey 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 third quarter. Shares of Is Bankasi gained 55% and Akbank shares surged 27% during the third quarter, and the fund had smaller exposures to them.
• On the sector level, the fund’s underweight position in financials and its stock selection in utilities had the most negative effect on the fund’s performance relative to the index. In financials, the strategy to underweight Turkish regional banks contributed to the fund’s underperformance against the index. In utilities, overweighting Polish utilities Enea and PGE Polska Groupa Energetyczna had the greatest negative effect on the fund’s performance relative to its index. Shares of Enea declined 42.4%, and the price of PGE dropped by 46.4%. Like those in the Czech Republic and Hungary, the Polish government is planning to impose taxes on utilities and other sectors to help consumers cope with high energy prices.
• The three greatest negative contributors to the fund’s performance were equities listed on Poland’s Warsaw Stock Exchange. Like neighbors Czech Republic and Hungary, Poland has been discussing a windfall tax on the energy and financials sectors, soaring investors’ sentiment, and pushing equites lower.

• PGE Polska Grupa Energetyczna, a Polish utility, contributed a negative 1.32% to the fund’s performance.
• Polski Koncern Naftowy, a Polish refinery, contributed a negative 1.20% to the fund’s performance.
• Powszechne Zaklady Upezpieczen, a Polish insurance company, contributed a negative 1.19% to the fund’s performance.

Outlook

In the third quarter, emerging Europe equites continued to underperform due to the ongoing war between Russia and Ukraine and the worsening energy crisis in Europe. Russia attacked Ukraine at the end of February and the fighting continues. In the third quarter, a highly questionable referendum was held in the four occupied regions of Ukraine, resulting in merging the territory with Russia. Fighting has escalated past the annexation as Ukrainian President Volodymyr Zelensky has called to retake all lost territory to Russia, including Crimea, which was seized in 2014. Shortly after the annexation, which took place on the last day of September, the Kerch Bridge, spanning 12 miles and connecting mainland Russia with Crimea, partially collapsed due to an explosion. Russian President Vladimir Putin called it a terrorist attack and in response sent missiles and drones on more than a dozen cities throughout Ukraine, attacking civilians. More recently, reports have emerged that Russia is shifting its military personnel to Belarus, suggesting a new wave of ground combat could fallow. It is highly unlikely that the war will end soon, but if for some reason President Putin leaves his post, the war could be over, and markets may rally.

The war in Europe has created an energy crisis throughout the region as many countries in Europe depended on oil and gas exports from Russia. Due to imposed sanctions on Russia, Europe has a shortage of fuel. At the end of September 2022, leaders from Poland, Norway and Denmark celebrated the opening of a new pipeline that would carry gas from Norway to Poland via Denmark. Like many other countries in central emerging Europe, Poland has become dependent on gas imports from Russia, and the Polish government for years has worked on diversifying the county’s gas imports by opening liquified natural gas (LNG) ports on the Baltic Sea and starting construction on the Baltic pipeline. The country has been cut off from Russian gas since April but should not face a gas shortage in the winter. On June 3, the European Union (EU) adopted a sixth package of sanctions, including a partial embargo on Russian oil. These sanctions ban seaborne imports of Russian crude oil as of December 5, 2022, and petroleum product imports as of February 5, 2023. Hungary, which gets around 65% of its oil and 85% of its gas from Russia, was excluded from the oil embargo and will continue to receive Russian oil by the Druzhba pipeline.

As a result of spiking energy prices, many European countries have implemented taxes on profitable companies to support straggling consumers. Greece, Hungary, Italy, Romania, Spain and the United Kingdom have implemented a windfall tax. The Czech Republic and Poland have published proposals to enact a windfall tax, and Spain published a proposal to enact a second windfall tax because the first one was diluted by a series of exclusions that left many energy providers out of its scope. Belgium, Finland, Germany, Ireland, the Netherlands and Slovakia have either officially announced or shown intentions to implement their own windfall taxes. For now, France is the only country that has voted down a windfall tax proposal.

Turkish equites experienced a volatile quarter and may continue to record large gains and large losses. The Turkish economy is unstable with a large budget deficit and inflation running at 80% on a year-over-year basis. The Turkish lira stabilized but continues to slowly depreciate against the dollar as President Recep Erdogan is trying to cut rates during a time of unprecedent high inflation. Lacking better options, domestic investors started to buy equites, which pushed the Istanbul Stock Exchange higher, but without foreign investors, support for the rally is not sustainable.

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 12-30-2022

Industry Breakdown as of 12-30-2022

Regional Breakdown as of 12-30-2022

Growth of $10,000 Over 10 Years as of 12/31/2022

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 12/31/2022

Quarter End Average Annual Total Returns as of 12/31/2022

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 1.72% in the third quarter of 2022, outperforming its benchmark, the Bloomberg Barclays Municipal Bond 3-Year Index, which posted a negative return of 1.98%. 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.

Municipal bond returns started the quarter by climbing to nearly 1.50% by the beginning of August. In hindsight, the July rate hike didn’t trigger a reaction to the downside, but it seemed to cap the upside from there. During the second half of August, returns began to fall with the price of bonds slipping back to where we nearly started the quarter. With inflationary data running hot and employment strong going into the September 21 Federal Reserve meeting municipal bonds sold off hard in the last two weeks of September.

Municipal bonds recorded their worst performance in September, post-the global financial crisis, as large mutual funds demanded liquidity as shareholders fled. Hurricane Ian crossed central Florida in late September and did substantial damage to parts of the state.  Port St. Lucie, one of the costal cities in Florida, where the fund owns some bonds, escaped any major damage to the city.

Strengths

• The fund’s allocation to maturities of 0-1-year had slightly positive returns, with 10+ year bonds and 1- to 3-year maturities being the second and third least negative returns.
• The fund’s allocation to Missouri, Ohio and Virginia bonds were the most positive contributors to performance.
• The three strongest sectors to deliver positive performance in the quarter were utilities, facility bonds, and airports, respectively.

Weaknesses

• The fund’s allocation to maturities of 7-10 years were the costliest, while 3- to 5-year and 5- to 7-year maturities rounded out the three bottom performing tiers.
• The fund’s allocation to Texas, California and New York bonds was the most negative contributor to performance, as they are the largest issuers of municipal debt and widely held.
• General obligation bonds, school districts 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 3.25%, 50 basis points (bp) higher than the prior quarter close. The five-year municipal bond moved up 87 bps, and the three-year climbed 100 bps. One-year paper rose 140 bps in yield for the quarter, so short-term rates climbed much faster in the municipal market in the past quarter. Analysts’ expectations have another 150 bps anticipated before the Fed moderates its rate hike, thus we continue to reposition the fund to shorter dated maturities in essential service revenue bonds and high-quality state local issuers. The outlook for municipal debt may not be bleak, as Blackrock recently noted municipal debt has only experienced negative total returns just four times over the past 30 years with an average loss of -3.06%, However, post those returns, municipal bonds on average produced total returns of 12.77%.

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 12-30-2022

Industry Breakdown as of 12-30-2022

Top 5 States as of 12-30-2022

Growth of $10,000 Over 10 Years as of 12/31/2022

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 12/31/2022

Quarter End Average Annual Total Returns as of 12/31/2022

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 0.81% in the third quarter of 2022, underperforming its benchmark, the Bloomberg Barclays US Treasury Bills 6-9 Months Index, which returned negative 0.02%. 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 & Weaknesses

Of the three issuers, Federal Farm Credit Bank (FFCB), Federal Home Loan Bank (FHLB), and U.S. Treasury Notes (UST), only the FFCB notes yielded positive returns for the quarter. The USTs had the biggest offsetting of our returns. All of the FFCB notes are less than one year in maturity.

The FHLB notes have maturities spread evenly between 9 months to 24 months. The prior portfolio manager extended the maturities to pick up additional yield in the UST market with maturities between 8 months to 24 months. In the last two weeks of September, bonds experienced their strongest sell-off since the global financial crisis with the market rapidly factoring the Federal Reserve to remain aggressive on rate hikes with still stronger-than-expected readings on economic indicators.

Outlook

The yield on the 10-year Treasury, a bellwether used in the fixed-income markets, ended the quarter at 3.83%, 82 basis points (bps) higher than the prior quarter close, the five-year note closed at 4.09%, up 105 bps, the three-year closed at 4.29%, up 128 bps, and the one-year closed at 3.99%, up 121 bps. This past quarter, the yield curve became even more inverted, and that trend is continuing into the fourth quarter.

The tone of the Fed is certainly sterner on bringing down inflation as quickly as possible without a path deviation. Analyst consensus is another 150-points rise in rates anticipated shorter term. The Fed has a significant amount of uncertainty to deal with in keeping economic growth intact and getting inflation under control without making a policy mistake. The UST curve continues to remain inverted and looking forward, we do not expect that to change over the coming quarter with additional interest rate hikes expected. The most attractive yields for reinvesting in are the new issues of FFCB and FHLB one-year notes, both yielding 20 to 30 bps higher than UST.  We anticipate continuing to shorten overall maturities.

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 12-30-2022

U.S. Government Securities Ultra-Short Bond Fund
Growth of $10,000 Over 10 Years as of 12/31/2022

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 12/31/2022

Quarter End Average Annual Total Returns as of 12/31/2022

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.