Our Mutual Funds

For the 12-month period through December 31, 2022, the Global Luxury Goods Fund (USLUX) lost 23.85%, underperforming its benchmark, the S&P Composite 1500, which declined 17.80%. 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 energy sector was the best performer and the only sector within the S&P 1500 Index that recorded gains in 2022. Utilities, consumer staples, health care, industrials, materials and financials recorded smaller losses but outperformed the broad S&P 1500, while real estate, information technology, consumer discretionary and telecommunication services underperformed.

Strengths

• The fund’s underweight position in information technology and communication services had the most positive effect on performance relative to the index. The fund did not hold shares of Microsoft, and significantly underweighted it Apple compared to the index. Microsoft stock declined 28.02% while Apple lost 26.4% in 2022.
• The fund’s higher cash position had the second most positive effect on the fund’s performance relative to the index. UXLUX was positioned more defensively in 2022 due to market disruptions after Russia attacked Ukraine in February 2022, leading global markets into an energy crisis, rising cost of production and supply disruptions.
• A standout contributor to fund performance was Nike, maker and distributor of athletic footwear, apparel, equipment and accessory products for men, women and children. Shares of Nike declined 29.04% in 2022; however, the fund purchased Nike shares shortly after its stock bottomed at the end of September. In December, the company reported better-than-expected second quarter financial results.

Weaknesses

• The fund’s overweight position in the consumer staples had the most negative effect on the fund’s performance relative to the index. In particular, the strategy to overweight household/personal care products did not work well. Shares of Estee Lauder declined 32.47%, and Natura & Co. Holding lost 31.01%. The fund overweighted both names against the S&P 1500 Index.
• The fund’s underweight position in the energy sector had the second most negative effect on the fund’s performance relative to the index. USLUX did not have any exposure to energy names, and underweighting the best performing sectors negatively contributed to the fund’s performance against the index. The USLUX model did not allocate any assets from the energy space in the year 2022.
• A notable detractor to fund performance was Tesla, the electric car maker and distributor. Tesla’s shares sold off sharply this year due to weaker demand from China and Elon Musk’s decision to buy social media company Twitter for $44 billion, funding part of the deal by selling Tesla shares. He initially sold $8.5 billion shares in April, another $6.9 billion in August 2022, $3.95 billion in November and $3.6 billion in December, for a total of around $22.9 billion. According to Bloomberg, Tesla’s market cap decreased from $1.093 trillion in December 2021 to $353.51 billion in December 2022.

Opportunities

• The Bank of America Global Research Team believes that the luxury sector presents an attractive buying opportunity. They have identified six prior major pullbacks in the luxury sector over the past 20 years. The most recent pullback has already resulted in a 24% decline for the sector since the beginning of the year and more than 35% since the November peak. In the past, strong pullbacks have often led to a bounce.
• According to a joint forecast by analysts at Bain & Company and Altagamman, the luxury sector will expand at least 3% to 8% in 2023. It is also predicted that the sector will grow further, with Bain forecasting a sales increase of 60% from 2022 to 2030, supported by people becoming wealthier in regions including India, South Korea and Mexico. This may lead to about 10 million new luxury consumers per year.
• China will most likely continue to re-open its economy after almost three years of Covid lockdowns. At the end of 2022, it was announced that China will drop quarantine requirements for all passengers arriving from outside the country starting January 8, 2023. The current policy asks people to quarantine for five days in a hotel and an additional three days at home. Further easing of travel restrictions and removing other Covid-related measures should spur consumer spending.

Threats

• The luxury sector is projected to expand in 2023, but at a slower pace compared to 2022. Consumer spending on luxury items and services could be softer, based on economists’ predictions about an upcoming recession in Europe and the U.S.
• Luxury goods and services recorded price increases in 2022, and the trend may continue in 2023. The prices of “core” handbags from brands such as Chanel and Louis Vuitton have already increased 20% or more in the past two years, and brands are expected to boost prices on those items even further next year — particularly in Europe, where the depressed euro has made luxury goods comparatively cheap. Prices there could rise 15% in 2023, and in the mid-single digits in the U.S. and China, says Citi luxury analyst Thomas Chauvet.
• According to Bloomberg, the second-hand luxury watch market could reach 35 billion Swiss francs by 2030, from 20 billion francs today. This represents an increase of 75%, as reported by Deloitte and based on its consumer and watch brand executives survey. This comes as a wakeup call to luxury watchmakers, as sales in physical stores have seen a decline. This is one reason well-known brands like Richemont purchased Watchfinder & Co. as its secondary market sales channel.

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.

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 12/31/2022: Microsoft Corp. 0.00%, Apple Inc. 0.00%, Nike Inc. 4.86%, Estee Lauder Companies Inc. 0.00%, Natura & Co. Holding SA 0.00%, Tesla Inc. 3.44%, LVMH Moet Hennessy Louis Vuitton 3.05%, Cie Financiere Richemont SA 3.86%.

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 2/28/2023

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.

Top 10 Equity 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 2/28/2023

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

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.

For the year ended December 31, 2022, the World Precious Minerals Fund fell 33.02%, underperforming its benchmark, the NYSE Arca Gold Miners Index, which declined 8.07% on a total return basis. The S&P/TSX Venture Composite Index, which better reflects the mix of small-cap junior mining companies the fund typically invests in is, declined 39.23% in 2022. 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

• Barksdale Resources Corp. was the largest contributor to fund performance, with excellent new drill results released over the year on its San Javier copper and gold project. By yearend, the company had completed a significant resource estimate where the majority of copper is suitable for the less expensive soluble extraction methods. Barksdale Resources is not a member of the NYSE Arca Gold Miners Index.
• The second most significant contributor in 2022 was Reunion Gold Corp, which won the Mines and Money, London – Outstanding Achievement Award for the discovery of the Oko West project in Guyana, for which the company’s share price rose nearly 180% for the year.
• Being underweight Newmont Mining, the largest member of the NYSE Arca Gold Miners Index, was our best call on relative performance as it significantly underperformed its index peers.

Weaknesses

• Tristar Gold Inc. was our biggest burden in 2022 as it was down greater than 40%, much like many other junior exploration companies that were sold off at the end of the year for tax loss harvesting. Tristar’s project is in Brazil, which has been an active location for acquisitions as companies feel they can do business there.
• Barsele Minerals Corp. was our second-biggest detractor from performance. Its share price languished as its partner Agnico Eagle Mines continued to slow walk the development over the year.
• Arizona Metal Corp was the third-most significant impact to performance as it pulled back about 35% in price over the year. Arizona Sonoran Copper’s exploration project also contains significant zinc and copper, which weakened in price over the course of the year with the rise in interest rates.

Opportunities 

• Mergers and acquisitions will continue into 2023, with numerous senior companies having publicly commented on looking at M&A as part of their growth strategy. Transactions that provide diversification and less risk concentration would garner shareholder support. There may be further consolidation in the streaming space (between the smaller players) as these transactions are done to increase market cap in a business that allows for growth with synergies.
• According to RBC, valuations for junior miners have approached lows not seen since 2015, when gold was $500 an ounce lower, setting the stage for potential deals. The last couple of years with Covid stress on companies’ balance sheet to stay liquid followed by a pulse of inflation, the junior miners and exploration companies are trading at particularly attractive valuations.
• The industrial demand for silver is likely to see continued strong growth with solar power being more cost-effective and less capital-intensive than constructing new coal plants. However, there are few miners of scale that investors can invest in for pure silver exposure. There are a number of junior miners and exploration companies that may be better proxies for playing a run in silver prices.

Threats

• For several years, the window has been shut in terms of access to capital for junior mining companies, particularly when Bitcoin had been a key competitor to gold and other speculative investments. With the collapse of FTX, crypto investors may be more inclined to fall back to traditional precious metal investments as a store of wealth for part of their portfolio, but fund inflows into precious metals funds have remained muted following the FTX collapse.
• With silver’s main source of supply largely being a byproduct of many gold mining operations, it becomes problematic to dramatically increase the supply of silver to meet high solar demand. Protests in Peru, the world’s largest silver producer, has disrupted metal concentrate shipments. The second-largest producer of silver is Mexico, and its Minister of the Environment, María Luisa Albores, on December 7, 2022, stressed that no more concessions will be granted for open-pit mining projects due to the negative impact on the environment and adverse effects on the health of communities living nearby.
• Google searches for “diamonds” in the U.S. appear to have decoupled from their historical trend of sharply rising into the holiday season. This could be indicative of weakening consumer appetite for the stones, as evidenced by the softening of prices across the size spectrum as well as the weaker-than-expected DeBeers site sales.

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.

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 12/30/2022: Barksdale Resources Corp. 3.11%, Reunion Gold Corp. 2.26%, Newmont Corp. 1.72%, TriStar Gold Inc. 4.85%, Barsele Minerals Corp. 2.75%, Agnico Eagle Mines Ltd. 0.00%, Arizona Metals Corp. 5.81%, Arizona Sonoran Copper Co. Inc. 0.26%,

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 02/28/2023

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.

For the year ended December 31, 2022, the Global Resources Fund lost 12.10%, underperforming the fund’s benchmark, the S&P Global Natural Resources Index (Net Total Return), which gained 9.59%. The Global Resources Fund invests in exploration and development companies and the junior mining and energy sector, unlike our benchmark, which is principally invested in large capitalization natural resources companies with established revenue streams; as a result, there can be timing swings where money flows first to the most liquid names before investors go down market.  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 strongest commodities for the year were lithium carbonate, nickel and soybean, up 92%, 51% and 26%, respectively. Lithium and nickel are both leveraged to the rollout of the electric vehicle industry for use in batteries. Soybean prices hit a 10-year high in the first half of the year on global supply concerns but have since backed off the peaks with improved supplies.
• The three best sector calls for the fund were an overweight position in oil & gas energy trusts, underweight position in containers and packaging and overweight in gold and precious metals. We emphasized high dividend-paying trusts to take advantage of high cash payouts from oil and gas sales. We avoided any exposure to containers and packaging where only one stock made a single-digit gain out of the 12 in the group. We had a double sector weight on precious metals and delivered a positive return for the year while our benchmark names achieved double-digit losses.
• The three best dollar performing stock decisions were Filo Mining, Sabine Royalty Trust and Black Stone Minerals. Filo Mining continued to release further impressive drill results from their copper discovery in Chile to the point where BHP Group Ltd. bought a 5% stake in the company in March 2022. Both Sabine Royalty Trust and Black Stone Minerals benefited from the elevated oil and gas prices.

Weaknesses

• The three weakest commodities for the year were lumber, Powder River Basin coal and tin. Lumber prices slid more than 60% with the strong interest rate hiking cycle that raised mortgage rates beyond what households could afford. Steam coal prices from the Powder River Basin tumbled almost 50% as energy markets became better supplied logistically in 2022. The tin market spiked in 2021 with the chip shortage and Covid lockdowns, but they have since fallen back with those issues largely behind.
• The fund’s worst-performing sectors were our overweight positions in metals/minerals, overweight electrical products and underweight integrated oil stocks. The rising interest rate environment put the breaks on copper prices that had been hovering in the range of $4.25 to $4.50 a pound for much of the first half of the year only to slide 30% from June to mid-July. In the electrical products category, graphene producer NanoXplore Inc. was the largest detractor to performance. We were underweight in international oils but overweight in oil & gas energy trusts, which paid monthly dividends, offset two-thirds of losses from being underweight international oil companies.

Opportunities

• Conor Sen, a Bloomberg Opinion columnist, penned a recent story on the emerging Battery Belt that is taking shape in America with the rise in electrification of the auto industry. Interestingly, this new economic model won’t require a college degree as the ultimate qualification for these new jobs. Because of new batteries needed, the scale for these new plants is considerable, and this has favored the Southern U.S. to some extent with wide open tracts of land still available near major population centers. Five multi-billion-dollar battery plants have been announced in Georgia and South Carolina. Ohia and Indiana also have projects in the works. Senator Joe Manchin also secured Form Energy, an energy storage company backed by Bill Gates, to build a $760 factory in West Virginia. All of these plants have incentives to fill their supply chains through domestic production of the battery metals first in the U.S. or through our trading partners.
• For the first time ever, green hydrogen is starting to compete on pure economics; in fact, it’s become a lower-cost alternative. This is still a nascent market, but green hydrogen is making headway around the world, and Europe is where the adoption curve is seeing the most potent boost.
• According to J.P Morgan, commodities are on pace to deliver a second consecutive year of double-digit returns. As global growth slows in 2023, but commodity supply remains constrained and critically low inventories persist, commodity prices may stay elevated despite a decline in economic activity. As in 2022, they are most constructive on energy, but unlike 2021, returns will be driven by oil. Meanwhile, U.S. natural gas prices are forecasted to decline 40% by yearend 2023.

Threats

• China Metals Group commented that China’s solar equipment sales are too dependent on overseas buyers taking 80% of sales. To make its solar cells, China imports more than 90% of its high purity quartz, according to Bloomberg. China dominates global supply chains in the silicon-based solar industry, while China Metals suggest its supply chains should be focused on domestic sources and uses. Perhaps China believes all the solar cells it can make are needed domestically for its energy transition.
• Chilean copper production was down 5.5% in November year over year, and it has been on a structural downtrend since 2018, against a structural uptrend of China refined production (i.e., China demand for copper continues to rise). Chile produces 30% of the world’s copper, of which a material amount goes to China for smelting/refining and in-China usage.
• According to J.P Morgan, despite the positive move in nickel price recently, its underweight stance on nickel remains firm, and it urges investors to sell into strength. The bank says its core thesis is: (1) nickel to edge lower next year due to higher-than-anticipated supply from Indonesia and weaker demand; and (2) the cost structure for nickel to possibly be structurally higher due to higher energy costs and potential levies coming from Indonesia, lowering profitability despite higher nickel prices.

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

Fund portfolios are actively managed, and holdings may change daily. Holdings are reported as of the most recent quarter-end. Holdings in the Global Resources Fund as a percentage of net assets as of 12/30/2022: Filo Mining Corp. 9.66%, Sabine Royalty Trust 4.11%, Black Stone Minerals LP 2.60%, BHP Group Ltd. 0.00%, NanoXplore Inc. 1.92%, China Metals Group 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.

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 02/28/2023

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

For the year ended December 31, 2022, the China Region Fund lost 26.16%, underperforming its benchmark, the Hang Seng Composite Index (HSCI), which declined by 15.18% over the same period. 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.

Thailand, Indonesia, India, Malaysia and the Philippines outperformed the HSCI benchmark. The Shanghai Stock Exchange (China mainland), Taiwan and South Korea underperformed the HSCI benchmark.

On the sector basis, energy, financial, materials, health care, communication services, real estate and utilities outperformed, while consumer staples, industrials, consumer discretionary and information technology underperformed.

Strengths

• The fund’s defensive positioning (higher cash level and exposure to Aris Gold notes) had the most positive impact on the fund’s performance relative to its benchmark.
• The fund’s stock selection in the heath technology sector had the most positive effect on the fund’s performance relative to its benchmark. Shares of Sino Biopharmaceutical gained 12.92%; the company had a smaller weighting in the HSCI index.
• Call options on the Invesco China Technology ETF (CQQQ) and HSBC Bank made the largest positive contributions to the performance of the fund. It was a volatile year, and the strategy to increase the fund’s exposure to technology names by purchasing call options on CQQQ worked well.

Weaknesses

• The fund’s overweight position in Taiwan and stock selection in Hong Kong had the most negative impact on the fund’s performance relative to its benchmark. The Taiwanese Stock Exchange, which is heavily invested in semiconductor and technology stocks, corrected 26.9% in 2022. Taiwan is not a member of the fund’s index.
• The fund’s stock selection in the electronic technology economic sector had the most negative effect on the fund’s performance relative to its benchmark. Shares of SK Hynix declined 42.60%, and Nanya Technology Corporation lost 27.03%. Both names were not members of the HSCI index.
• SK Hynix, a South Korean semiconductor producer, was the single worst contributor to the performance of USCOX. Shares lost 45.48% in 2022, and the company was not part of the HSCI index. Most Taiwanese and South Korean semiconductor stocks gave up 2021 gains in 2022.

Opportunities

• The MSCI Asia Pacific Index recorded strong returns at the beginning of the year in 2023, appreciating more than 20% since the most recent low that took place in October of 2022. Technically, a bull market starts when stocks gain more than 20% from the recent low. After a bigger selloff in 2022, Asian stocks are expected to bounce back in 2023, supported by the Chinese government’s decision to remove its zero-Covid policy sooner than expected.
• China dropped quarantine requirements for all passengers arriving from outside the country starting January 8, 2023. Prior travel policy asked people to quarantine for five days in a hotel and an additional three days at home. Further easing of Covid-related measures and travel restrictions will allow the Chinese economy to grow at a faster pace.
• Many Taiwanese and South Korean semiconductor stocks may have seen a bottom in 2022. At the beginning of January, Taiwan Semiconductor (TSMC), the world’s largest chipmaker, reported stronger sales in the fourth quarter, but the company announced spending in 2023 as it expects sales weakness ahead. However, TSMC indicated that the second quarter could be the revenue bottom of the year.

Threats

• China’s recent steps to reopen its economy were welcomed by investors. Equites moved higher after years of a strict zero-Covid policy depressed the economy and hindered consumer sentiment. While the reopening should lead to normalization of economic conditions, many predict that the relaxed Covid restrictions will cause the medical system to overheat, and as many as 2 million people may die in China. Covid infections also may increase around the world with China passengers spreading the sickness. Shortly after travel restrictions were lifted in China at the end of 2022, Milan, Italy’s airport reported that 50% of passengers arriving from China had tested positive for Covid.
• At the end of 2022, China once again staged its largest military drills around Taiwan since House Speaker Nancy Pelosi’s visit in August. China’s military maneuvers were in response to the U.S.’s provocations after Congress authorized increased funding for weapons assistance to Taiwan, according to FactSet. Chinese President Xi remains a close ally of President Vladmir Putin despite heavy sanctions imposed on Russia after its attack on Ukraine. China may not be willing to take back Taiwan, especially with Russian forces unsuccessfully trying to grab land from Ukraine since February 2022, but the threat of growing geopolitical tensions exists.
• We believe the Chinese property market may stabilize in 2023 thanks to the government’s support and the lifting of strict anti-Covid policies, but it won’t be as hot as before. Property sales are expected to slip by a median of 8% in 2023, a Reuters survey of eight economists and analysts showed, compared to a slump of around 25% in 2022. Economic activity, household income and consumer confidence are seen rebounding in the second half.

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 MSCI AC Asia Pacific Index is a free-float weighted equity index. It was developed with a base value of 100 as of December 31, 1987.

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 12/31/2022: Aris Mining Corp. 0.00%, Sino Biopharmaceutical Ltd. 4.62%, Invesco China Technology ETF 0.73%, HSBC Holdings plc 0.00%, SK Hynix Inc. 0.00%, Nanya Technology Corp. 0.00%, Taiwan Semiconductor Manufacturing Co. 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.

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 02/28/2023

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.

For the year ended December 31, 2022, the Emerging Europe Fund lost 39.84%, while the benchmark MSCI Emerging Markets Europe 10/40 Index (Net Total Return) fell 67.62%. 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.

On the country level, Turkey recorded strong gains following smaller gains in Greece. Russian equities sold off sharply. Equites in Poland, the Czech Republic and Hungary all dropped; they were most negatively affected by the war in Ukraine.

On the sector level, industrials and health care were the best performers, while consumer discretionary, consumer staples, utilities, communication services, materials, financials and energy underperformed.

Strengths

• The fund’s underweight position in Russia and overweight Western Europe had the most positive impact on the fund’s performance relative to its benchmark. On the day of Russia’s invasion of Ukraine, the decision was made to sell next to all Russian assets on expectations of tough sanctions and the potential removal of Russian securities from the MSCI Emerging Market Index. EUROX outperformed its index mostly because Russian assets were sold before the Moscow Stock Exchange was halted for trading. The fund recorded a loss in 2022, but it was not as great as the index, which removed all Russian holdings shortly after Russia’s invasion, pricing them at zero.
• The fund’s underweight position in the energy sector had the most negative effect on the fund’s performance relative to its benchmark. Shares of Russian energy companies sold off sharply after sanctions were imposed on the country, limiting oil and gas exports to Europe.
• Turk Hava Yollari, a Turkish airline, made the single largest contribution to the performance of the fund. Turkish airlines strengthened their positions in 2022, as passengers preferred to travel with Turkish air transportation due to operational problems faced by European airlines.

Weaknesses

• The fund’s underweight position in Turkey had the most negative impact on the fund’s performance relative to its benchmark. Turkish equites outperformed in 2022 due to strong retail sales and the government’s actions to spur consumer spending.
• The fund’s overweight position in materials had the most negative effect on the fund’s performance relative to its benchmark.
• Lukoil, the Russian oil company, was the single worst contributor to the performance of the fund. The company lost most of its value after sanctions were imposed on Russia’s oil and gas industry. In the early days of Russia’s aggression, it seemed as if the oil and gas industry was spared from being sanctioned, but this changed quickly. Lukoil was one of the last Russian positions to be sold out of the fund, recording larger losses.

Opportunities

• Emerging markets are expected to post solid growth in 2023, according to Société Générale. We may see a significant differential between emerging market (EM) and developed market (DM) performance. The 2021-22 period saw a differential north of 2 percentage points to the advantage of better developed market economic performance. The situation may now reverse, with a projected 3.8% growth in emerging markets contrasting with 1.2% growth in the developed world, SocGen’s cross-assets team write in their year-ahead EM Outlook 2023 report.
• The war in Europe, higher rates, a spike in energy prices and slowing global demand all pushed European equities to a record low versus the U.S. Europe could experience a deeper recession in 2023, but we believe a lot of the negative data is already priced in. Meanwhile, the United States has more room for correction. Barclays’ research team believes that equity outflows in Europe look exaggerated, while the U.S. looks more vulnerable to capitulation risk.
• Goldman Sachs no longer forecasts a eurozone recession in 2023 after its economy proved more resilient at the end of 2022. Natural gas prices fell sharply, and China removed Covid-19 restrictions sooner than anticipated. The energy crisis in Europe, triggered by the war between Russian and Ukraine, presented a challenge, but with winter halfway over and warmer weather approaching, Europe has so far avoided a gas shortage.

Threats

• The war in Ukraine, which started at the end of February 2022, may last for years to come as both sides are not willing to come to a compromise. At year-end, the Russian president visited neighboring country Belarus, raising worries that a new ground offensive could aim again at Kyiv, a mere 55 miles from the border. The Iskander tactical missile system and S-400 air defense system that Russia has deployed to Belarus are fully prepared to perform their intended tasks, according to senior Belarusian defense ministry officials.
• Russia is tying its relationship with Iran. Russian and Iranian space corporations have signed memorandums on provision of launch services. In December 2022, Iranian Minister of Information and Communications Technology Issa Zarepour said that the country would put into orbit at least two domestically produced satellites, Nahid-1 and Nahid-2, by Spring 2023. Nahid-2 is considered an important advancement in Iran’s orbital spacecraft production. Until the war in Ukraine, Iran was the most sanctioned country in the world, according to Castellum, which tracks sanctions. Russia now holds that record.
• Political tensions in Turkey may rise in the country during 2023 as presidential elections are scheduled for June. At the end of 2022, a court in Turkey convicted Istanbul’s mayor, the most popular political figure who could challenge President Recep Erdogan, of insulting election officials back in 2019, sentencing him to almost three years in prison. Poland too may see increased activity in politics as the country’s parliamentary elections are scheduled to take place in the fall. It looks as if the current populist Law & Justice Party is set to win, but it may not be able to form the new government.

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. The MSCI Em (Emerging Markets) Index is a free-float weighted equity index that captures large and mid-cap representation across Emerging Markets (EM) countries. The index covers approximately 85% of the free float-adjusted market capitalization in each country.

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 12/31/2022: Turk Hava Yollari AO 2.71%, Lukoil PJSC 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.

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 02/28/2022

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 U.S. Government Securities Ultra-Short Bond Fund returned negative 1.66% for the year ended December 31, 2022, underperforming its benchmark, the Barclays U.S. Treasury Bills 6-9 Months Total Return Index, which returned 0.15%. The Lipper Short U.S. Treasury Funds Average return for the peer group was negative 1.95%, which the fund outperformed for the year. The zero- to one-year tranche had slightly positive returns, but the main source of underperformance came from one- to three-year maturities while three- to five-year maturities lost some ground too. 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.

Current Outlook

The outlook is that the Fed will slow down its interest rate hikes to just 25 basis points as the central bank assesses the impact of the prior rate hikes in 2022. Inflation has shown some signs of cooling, but new job growth still remains strong. The yield curve remains inverted. The market has taken a more optimistic view than the Fed and is expecting the bank will have to start cutting interest rates late in 2023. The Fed’s tone is more bearish, keeping rates up high enough to tame inflation. With the U.S. moving forward with transforming its auto industry from internal combustion engines to electrically powered engines using an array of batteries, building solar and wind energy infrastructure, and constructing a national charging system, it will be difficult to drive inflation back down to a 2% target.

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 2/28/2023

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.