USFunds.com • August 28, 2015

Table of ContentsIndex Summary • Domestic Equity Market • Economy and Bond Market • Gold Market

Energy and Natural Resources Market • Emerging Europe • China Region • Leaders and Laggards • Fund Performance Link

China’s Economy Is Undergoing a Huge Transformation ThatNo One’s Talking AboutBy Frank HolmesCEO and Chief Investment OfficerU.S. Global Investors

The photo you see below was snapped recently in Beijing. It might not be that special to some readers, but inmy 25 years of visiting the Chinese capital, I’ve never seen a blue sky because it’s always been blotted out byyellow smog. Beijing is clearly undergoing a transformation right now. This might please proponents of thegreen movement, but it’s ultimately harmful to the health of the manufacturing sector.

On the other hand, blue skies could be ahead for China’s service industries!

Misconception and exaggeration are circling China’s economy right now like a flock of hungry buzzards. If youlisten only to the popular media, you might believe that the Asian giant is teetering on the brink of economicdisaster, with the Shanghai Composite Index’s recent correction and devaluation of the renminbi held up as“proof.”

Don’t get me wrong. These events are indeed significant and have real consequences. They also make for some

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great, sensational headlines, as I discussed earlier this month.

But what gets hardly any coverage is that China’s economy is not weakening so much as it’s changing, likeBeijing’s skies. Take a look at the following two charts, courtesy of BCA Research:

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You can see that the world’s second-largest economy has begun to shift away from manufacturing and moretoward consumption and the service industries. While the country’s purchasing managers’ index (PMI) readinghas been in contraction mode since March of this year, the service industries—which include financial services,insurance, entertainment, tourism and more—are ever-expanding. The problem is that the transformation hasnot been fast enough to offset the massive size of the manufacturing sector.

Just as a refresher, the PMI is forward-looking and

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resets every 30 days. It helps investors manageexpectations. Consider this: The best-performingcountry in our Emerging Europe Fund (EUROX) isthe Czech Republic—which also happens to haveone of the highest PMI readings! Coincidence?

Overseas travel, cinema box office revenue andecommerce in China are all seeing “explosivegrowth,” according to BCA. The country’s once-struggling real estate market is also robust. Thegovernment just relaxed rules to permit moreforeigners to purchase mainland property.

But you’d be hard-pressed to come across any ofthis constructive news because it’s not particularlygood for ratings.

A recent Economist article makes this point veryclear:

The property market matters far more for China’s economy than equities do. Housing and landaccount for the vast majority of collateral in the financial system and play a much bigger role inspurring on growth. Yet the barrage of bearish headlines about share prices hasobscured news of a property rebound. House prices have perked up nationwide for threestraight months. Two months after the stock market first crashed, this upturn continues.

“Commodity Imports Have Actually Been Quite Strong”Again, China’s transformation from a manufacturing-based economy to one that focuses on consumption hasreal consequences, one of the most significant being the softening of global commodity prices. As I told DanielaCambone on this week’s Gold Game Film, gold’s Love Trade has become not a No Trade, but a Slow Trade.We’ve seen demand cool along with a decline in GDP per capita, the PMI readings and China’s M2 moneysupply growth.

Below you can see the relationship between China’s M2 money supply growth and metal prices. Since its peak inlate 2009, money supply growth has been dropping year-over-year, driving down metal prices.

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Money supply growth tends to be a “first mover.” When it has contracted, the PMI has usually followed.Recently, this has hurt economies that depend on China as a net buyer of raw materials, including Brazil, whichsupplies the Asian country with iron ore, soybeans and many other commodities, and Austrailia.

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When M2 money supply growth and the PMIs are rising, commodity prices can also rise. But that’s not what’shappening. It’s important to recognize that when new orders for finished products fall, there’s less consumptionof energy to manufacture and ship. Again, this might make the greenies happy, but it’s ultimately bad formanufacturing.

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I’ve said several times before that China is the 800-pound commodities gorilla, and it continues to be so. Thecountry currently consumes about a quarter of the total global output of gold. For nickel, copper, zinc, tin andsteel, it’s around half of world consumption. For aluminum, it’s more than half.

These are huge figures. But investors should know that Chinese imports of these important metals andmaterials still remain strong. Tom Pugh, a commodities economist at Capital Economics, told the Wall StreetJournal this week that the market has it wrong about China, that the drop in demand has been overstated:

If you look at Chinese commodity imports over the last few months, they’ve actually been quitestrong. A lot of it is just that people thought China would continue to grow at 10 percent a year,ad infinitum, and now people are just realizing that’s not going to happen.

Reuters took a similar stance this week, reporting that “there were at least 21 commodities that showedincreases in imports greater than 20 percent in July this year, compared to the same month in 2014.”Weakening demand has been caused by a number of reasons, including “structural oversupply” and “the impactof the recent volatility in equity markets.”

But it’s important to keep things in perspective. Compared to past major market crashes, China’s recentcorrection doesn’t appear that bad.

Any bad news in this case can be seen as good news. I think that in the next three months we might see furthermonetary stimulus, following from the currency debasement nearly three weeks ago. We might also see theimplementation of new reforms in order to address the colossal infrastructure programs China has announcedin the last couple of years, the most monumental being the “One Road, One Belt” initiative.

Dividend-Paying Stocks Helped Stanch the LossesAs investors and money managers, it’s crucial that we be cognizant of the changes China is undergoing. Withvolatility high in the Chinese markets right now, we’ve raised the cash level in our China Region Fund(USCOX), and after the dust settles somewhat and the right opportunities arise, we’ll be prepared to deploy thecash. We’re also diversified outside of China.

We managed to slow the losses during the Shanghai correction by being invested in high-quality, dividend-paying stocks.

According to daily data collected since December 2004, the median trailing P/E ratio for the ShanghaiComposite Index constituents currently sits at 48.6 times earnings. If it reverts to the mean, risk is 32 percentto the downside for the index. Currently, the P/E ratio of our China Region Fund constituents sits around 16times. This suggests that USCOX has less downside risk and is cheaper than the Shanghai Composite.

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We seek to take advantage of the trend toward consumption by increasing our exposure to the growing serviceindustries—technology, Internet and ecommerce companies (Tencent is one of our top 10 holdings); financialservices (AIA and Ping An Insurance); and enviornmental services (wastewater treatment services provider CTEnvironmental).

Rising sports participation among white collarworkers in China is very visibile these days. XianLiang, portfolio manager of USCOX, says that hisfriends back in Shanghai share with him, viaWeChat, how they track their daily runs usingmapping apps on their phones.

With that said, an attractive company is AntaSports, an emerging, innovative sportswearfranchise. Fans of the Golden State Warriors mightrecall that guard Klay Thompson endorsed itsproducts earlier this year.

We believe the China region remains one of themost compelling growth stories in the world andcontinues to provide exciting investmentopportunities.

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Index SummaryThe major market indices finished up this week. The Dow Jones Industrial Average rose 1.11 percent.The S&P 500 Stock Index rose 0.91 percent, while the Nasdaq Composite rose 2.60 percent. The Russell2000 small capitalization index was up 0.53 percent this week.

The Hang Seng Composite fell 2.90 percent this week; while Taiwan rose 2.98 percent and the KOSPIrose 3.28 percent.

The 10-year Treasury bond yield rose 14 basis points to 7.12 percent.

All American Equity Fund - GBTFX • Holmes Macro Trends Fund - MEGAX

Domestic Equity Market

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StrengthsEnergy was the best performing sector in the S&P 500 Index during a very volatile week. The sharpdecline and subsequent recovery of crude oil prices, prompted by investors’ concerns over China, causedthe S&P 500 Energy Index to fall 5.18 percent on Monday. The index finished the week up 3.65 percent.

The second estimate for U.S. second-quarter GDP growth positively surprised markets this week.Estimates show the U.S. economy to have expanded by a 3.7 percent annualized rate in the secondquarter, the first estimate was for 2.3 percent.

U.S. durable goods orders during the month of July grew by 2 percent, blowing away estimates for a 0.4percent contraction. This is a positive sign for the momentum behind the U.S. economy.

WeaknessesUtilities were the worst performing sector in the S&P 500 Index this week, as the yield on the U.S.government 10-year note rose 14.6 basis points. The S&P 500 Utilities Index fell 4.35 percent.

This week’s market turmoil highlighted just how fragile investors’ confidence is at the moment. Equitiesin the U.S. may still be seen as inflated and could experience further pull backs.

Inflation expectations remain depressed. The 5-year, 5-year forward breakeven rate of inflation ishovering just around 2 percent. This indicator helps to highlight investors’ concerns over a globalslowdown.

OpportunitiesDespite many citing the sharp rise in the Chicago Board Options Exchange SPX Volatility Index (VIX)this week, a longer-term view shows that the rise was not terribly severe. Volatility was much higherduring the financial crisis as well as the debt ceiling debacle in 2011. Although not a positive sign, thiscould mean the correction was nothing more than a buying opportunity for investors rather than deepfundamental trouble in the global economy.

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Consumer confidence rose sharply for the month of August, which continues to be a tailwind fordiscretionary stocks. The Conference Board Consumer Confidence Index rebounded to 101.5 in Augustfrom 90.9 in July.

Amid the market turmoil this week, the Federal Reserve may reconsider raising interest rates this year.If normalization is postponed, cyclicals should benefit. Some analysts are even expecting the Fed to easeagain.

ThreatsIt would be unwise to ignore the concerns permeating throughout global markets at the moment. Notonly is the China slowdown scare rattling markets, more volatility could occur over the short term.

The ISM manufacturing purchasing managers’ index (PMI) will be released next week and expected tofall slightly. However, the index should remain above the key 50 level.

Despite this week’s recovery, the energy and materials sectors remain considerably volatile anddepressed, as the underlying commodity prices continue on a downtrend.

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U.S. Government Securities Ultra-Short Bond Fund - UGSDX • Near-Term Tax Free Fund - NEARX

The Economy and Bond MarketMarket volatility spiked dramatically early this week as fears about the depth of China's economic downturnescalated. Asian markets were hit the hardest while European shares were also unstable, and Japan's Nikkei225 and U.S. stock indices had six-day stretches of losses before rallying as strong U.S. economic datacountered worries about China's weakness.

The VIX index, which measures U.S. stock market volatility, hit 53 intraday on Monday, then dropped backbelow 27 on Friday. The yield on the 10-year U.S. Treasury note touched 1.9 percent Monday, the lowest sinceApril, then rebounded to settle at 2.18 percent Friday. U.S. West Texas Intermediate and Brent crude oil pricesrecovered from Monday lows near $38 and $42 per barrel, respectively, ending the week close to $45 and $49per barrel.

StrengthsSecond-quarter real GDP growth was revised up to 3.7 percent quarter-over-quarter seasonally adjustedannual rate (QoQ saar) from 2.3 percent QoQ saar in the initial release. This was above the expectedrevision to 3.2 percent QoQ saar and shows above trend growth in the U.S.

Durable goods orders reportedly gained 2.0 percent month-over-month (MoM) in July, significantlyabove the expected 0.4 percent MoM decline. June was revised to 4.1 percent MoM from 3.4 percentMoM initially.

U.S. new home sales rose 5.4 percent in July to a seasonally adjusted annual rate of 507,000 units.Sales were 25.8 percent above on a year-over-year (YoY) basis. The S&P/Case Shiller composite index of20 metropolitan areas increased 5.0 percent in June from a year earlier. The Pending Home Sales Indexincreased 0.5 percent to 110.9, suggesting further housing market improvements.

WeaknessesCore personal consumption expenditures (PCE) inched up 0.1 percent MoM in July, unchanged fromgrowth in the previous month and in-line with expectations. This translates to 1.2 percent YoY in July,down from 1.3 percent YoY in June and below market consensus at 1.3 percent YoY.

Personal spending was reported at 0.3 percent MoM in July, unchanged from the upwardly revised 0.3percent MoM in June (up from 0.2 percent MoM initially) and below expectations of 0.4 percent MoM.

The University of Michigan Sentiment Index declined to 91.9 in the final report for August from 92.9 inthe preliminary report and is still below 93.1 in July. This was below the expected 93.0. The currenteconomic conditions index declined to 105.1 in the final report from 107.1 initially, down from 107.2 inJuly. The consumer expectations index was roughly unchanged, at 83.4 in the final report, down from83.8 in the preliminary report, and down from 84.1 in July.

OpportunitiesWith renewed global deflationary concerns, it will be key to see whether the European Central Bank(ECB) ramps up its quantitative easing program at next Thursday’s meeting.

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Market implied odds of a September rate hike have significantly diminished, but should markets calm,the debate about the timing of the Fed lift-off will again focus more on macro data. The last labor marketreport before the September Federal Open Market Committee (FOMC) meeting will be released onFriday. A continuation of the strength seen in recent reports would favor a September rate hike.

U.S. Manufacturers New Orders will be released Wednesday. Given the one-month trend is above thethree-month trend, odds favor a positive report that would support optimism about the continuing paceof growth.

ThreatsWith China’s manufacturing PMI trending lower, the latest release on Monday could revive marketturmoil. The U.S. ISM Manufacturing Index is released on Tuesday. Since the one-month trend is belowthe three-month trend, a further decline would unsettle the markets.

Given the increase in the trade deficit to $43.8 billion in June from $40.9 billion in May, a furtherincrease in the July report coming out on Thursday would heighten concerns about the detrimentaleffect of the strong dollar on the U.S. economy.

Given the sharp decline in equities, it is tempting to buy into the recent rebound. However, thefundamentals remain deficient. Some value may have been restored to valuations, but one of the mainfactors driving the recent selloff was the contraction in global earnings growth. Only improved growthand profits will produce a sustainable comeback.

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World Precious Minerals Fund - UNWPX • Gold and Precious Metals Fund - USERX

Gold MarketFor the week, spot gold closed at $1,133.55 down $27.40 per ounce, or 2.36 percent. Gold stocks, as measuredby the NYSE Arca Gold Miners Index, lost 7.66 percent. The U.S. Trade-Weighted Dollar Index gained 1.16percent for the week. The S&P/TSX Venture Index rebounded 3.38 percent, where we saw junior preciousmetals miners outperform their senior peers.

Date Event Survey Actual Prior

Aug -25 HK Exports YoY -4.50% -1.60% -3.10%

Aug -25 US New Home Sales 510K 507K 482K

Aug -25 US ConsumerConfidence Index 93.4 101.5 90.9

Aug -26 US Durable GoodsOrders -0.40% 2.00% 3.40%

Aug -27 US GDP AnnualizedQoQ 3.20% 3.70% 2.30%

Aug -27 U.S. Initial JoblessClaims 274K 271K 277K

Aug -28 GE CPI YoY 0.10% 0.20% 0.20%

Aug -31 EC CPI Core YoY 0.90% -- 1.00%

Aug -31 CH Caixin China PMIMfg 47.2 -- 47.1

Sep -1 US ISM Manufacturing 52.5 -- 52.7

Sep -2 US ADP EmploymentChange 200K -- 185K

Sep -3 EC ECB MainRefinancing Rate 0.05% -- 0.05%

Sep -3 US Initial Jobless Claims 275K -- 271K

Sep -4 US Change in NonfarmPayrolls 220K -- 215K

StrengthsPlatinum prices were off 0.14 percent this week, holding in as the best performer of the precious metalsgroup. Gold bullion, though down for the week also saw a pickup in the net long position by the non-commercial, according to data released by the Commodity Futures Trading Commission (CFTC).

Funds backed by gold saw the biggest inflows of assets in seven months on speculation that the U.S.Federal Reserve may hold off on raising interest rates. New York Fed Governor William Dudley said onWednesday that the case for raising rates in September is increasingly doubtful after recent turmoil in

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global stock markets, particularly stemming from fears about weakened Chinese growth. Separately,Minneapolis Fed President Narayana Kocherlakota said he sees ways to lower interest rates further,citing asset-purchase tools.

According to France’s Economy Minister, the country plans to open new mines, including gold mines. Rarely does France make the news concerning gold mining; perhaps this is a sign of a greater interest inhard assets versus currency reserves.

WeaknessesSilver did not fare as well as gold, finishing the week down 4.79 percent. The net long position in silveronly ticked up modestly while total known holdings in silver ETFs actually fell 0.14 percent. Palladiumwas much weaker than platinum, down 2.50 percent and the net long position actually contracted thispast week. Perhaps the markets have seen a near-term peak in car sales.

Gold had the biggest weekly drop in a month after data showed that the U.S. economy grew more thanprevious estimates in the second quarter. Subsequent to the GDP release, traders priced in a 30 percentchance that the Fed will raise rates next month, up from 24 percent a few days prior.

De Beers is set to cut diamond prices by as much as 9 percent after production cuts failed to supportdemand for precious stones. DeBeers, along with other diamond producers, are under pressure to cutsupply and lower prices as traders, cutters and polishers struggle to turn a profit amid a squeeze oncredit and languishing jewelry sales.

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OpportunitiesAccording to Metals Focus, gold output will start declining as soon as next year and production willplunge 18 percent by the end of the decade. Global mine output surged 24 percent in a decade to arecord 3,114 metric tons in 2014, as companies dug more to exploit a 12-year bull market in prices.

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Expect more news next week that could impact gold as the annual retreat at Jackson Hole gets into fullswing. News stories going into the meeting have had a more accommodative slant to them with therecent enhanced market volatility that investors have had to contend with.

In a recent letter to clients, Ray Dalio, the head of Bridgewater, the world’s largest hedge fund, said thatthe likely path for the Federal Reserve is to embark on another round of quantitative easing instead ofthe expected interest rate hikes.

ThreatsMohamed El-Erian has come out with a defense as to why QE4 is not in the cards. First, he said the Fedis now set to normalize monetary policy, not venture deeper into unchartered territory. Second,unconventional policies haven’t proved as effective as expected in stimulating high and sustainablegrowth. Third, the origin of the financial market dislocation is outside the U.S. this time. Last, havingexited the third round of easing in a relatively orderly fashion in October, the Fed would be hesitant toplace itself in the same position again, not only for economic reasons but also because of the politicalrisks involved.

RBC cut its gold forecast for the second half of 2015 to $1,125 per ounce from $1,288 per ounce, citingweakness from the expected Fed rate hike and the Chinese yuan.

Macquarie says the gains in gold are unlikely to be sustained and investors should remain cautious untilthe Fed acts. The company cut its 2016 gold forecast to $1,163 per ounce from $1,363 per ounce.

August 26, 2015Frank Holmes: Gold is NotAlways Linear

August 24, 2015Gold is Not a BadPlace to Be

August 20, 2015Will the Fed Spark aCurrency War?

Global Resources Fund - PSPFX

Energy and Natural Resources Market

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StrengthsOil and gas royalty companies led natural resources sub-industries this week, as crude oil made animpressive comeback after falling below $37 a barrel earlier in the week on global growth concerns. TheYorkville Royalty Oil & Gas Index gained 15 percent on the week.

Oil service and equipment stocks also rebounded on the back of strong crude oil prices, afterovershooting to the downside the week prior. The S&P 500 Oil & Gas Equipment & Services SelectIndustry Index gained 5.4 percent over the prior five days.

Canadian energy stocks finished the week off strong due in part to favorable news from the Albertagovernment concerning the initiation of a panel to review royalty rates for oil and gas production. TheS&P/TSX Capped Energy Index increased 9.4 percent.

WeaknessesGold stocks gave back some gains from last week’s rally following a rebound in the broader equitymarket later in the week. The Philadelphia Gold & Silver Index declined 6.4 percent this week.

Utilities underperformed this week as global equity markets responded positively to dovish commentaryfrom the Federal Reserve. Fed officials indicated that the bank may not be ready to raise interest ratesnext month. The S&P 500 Utility Index fell 4.35 percent during the week.

Iron and steel equities continue to underperform as investors remain fearful of a slowdown in China’sgrowth. The Bloomberg World Iron & Steel Index fell 3.8 percent this week.

OpportunitiesChina’s manufacturing purchasing managers’ index (PMI) for the month of August is scheduled to bereleased next week. Signs of stabilization following the government’s initiation of stimulus policiescould be bullish for commodities.

The release of the U.S. ISM manufacturing figure for August could also positively impact commodities,particularly following this week’s stronger second-quarter GDP revision.

On Monday oil fell nearly two-thirds from last year’s June high to a six-year low of $37.75 a barrel.However, three of the last five quarters have exceeded $160 billion in merger and acquisition activity inthe space, the highest since the bottom for oil in the late 1990s.

Threats

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Crude oil fell below $40 a barrel this week and could fall even further given high inventories andresilient U.S. production. Production remains elevated despite a lower rig count and softer prices.

Concern over China’s slowing growth rate remains high. Commodities and related stocks could continueto be volatile over the short-term.

The Federal Reserve has all but said for certain that it will raise rates this year. This threatens to boostthe U.S. dollar higher, thus pressuring commodity prices.

China Region Fund - USCOX

China RegionStrengths

South Korean equities rallied this week, bouncing sharply after Monday’s selloff. The Korea StockExchange KOSPI Index rose 3.28 percent.

Indonesian stocks outperformed this week, rallying after two sharp declines during the prior weeks. TheJakarta Stock Exchange Composite Index rose 2.54 percent this week.

Taiwan stocks rallied this week, despite a larger-than-expected contraction in year-over-year industrialproduction. The Taiwan Stock Exchange Weighted Index rose 2.98 percent.

WeaknessesChinese markets, both mainland and Hong Kong, got hammered this week as the lack of governmentintervention over the weekend prompted a sharp selloff on Monday. Despite further easing later in theweek, the Shanghai Stock Exchange Composite Index and the Hang Seng Composite Index fell 7.85 and2.90 percent, respectively.

Equities in Singapore fell this week as year-over-year industrial production for the month of July fellmore than expected. The Straits Times Index fell 0.51 percent this week.

Philippine stocks fell this week as second-quarter GDP growth fell slightly short of expectations and thetrade balance contracted sharply for the month of June. The Philippines Stock Exchange PSEi Index fell2.48 percent this week.

OpportunitiesWhile the Chinese central bank delivered twin cuts this week, in interest rate and reserve ratio forbanks, volatility in the Chinese A-Share market is still hovering around decade highs. Indeed, althoughthe Shanghai Composite Index failed to surpass its October 2007 peak in the recent leverage-drivenrally, its volatility has certainly surged to new highs as today’s younger retail investors are moresusceptible to rapid-fire decision making on their smartphones at the same speed as sensationalheadlines go viral.

Given the near-term unsettled market sentiment and subdued industrial activity due to factoryshutdowns in preparation for next week’s military parade in Beijing, holding higher-than-normal cashshould be the most prudent approach.

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Following the Bank of Thailand’s decision to permit certain investors to invest in foreign assets, the Thaibaht fell to a six-year low. The country’s weaker currency should benefit Thai exporters.

Given the recent market turmoil, a stronger case can now be made for the Federal Reserve to delay ratehikes until December or until next year. Doing so would be beneficial for emerging markets.

ThreatsMalaysia’s foreign exchange reserve fell below $100 billion (USD) in July for the first time since August2010. With a slumping local currency, accelerating capital outflow, growing fiscal pressure and aboveall, a real threat of crude oil declining further, the net energy-exporting country is vulnerable forsustained underperformance within emerging Asia.

China’s manufacturing purchasing managers’ index (PMI) will be released next week and is expected tofall from 50 to 49.7 percent. With a reading below 50 signaling a contraction, markets could take a diveif the forecasts prove to be accurate.

South Korean data for year-over-year growth in exports in August, as well as industrial production forthe month of July, will be released next week. Both sets of data are expected to decline.

Emerging Europe Fund - EUROX

Emerging EuropeStrengths

Russia was the best performer among the Emerging Europe countries this week, gaining 9 percent. Thesuperior performance of Russian stocks was supported by a strong rebound in Brent oil along with astrengthening ruble.

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The Russian ruble was the strongest currency among the Emerging Europe countries this week, gaining6.3 percent. The currency rallied after crude prices rose from Monday’s six-year low and concerns easedover a slowdown in China.

Energy was the best performing sector this week supported by crude oil appreciating 17.45 percent.

WeaknessesHungary was the weakest performing country this week. Second-quarter GDP came in at 2.7 percentversus the prior 3.5 percent. Hungary’s central bank lefts its main interest rate unchanged at 1.35percent. This low rate should help to stimulate the economy’s growth.

The Hungarian forint was the weakest currency this week, losing 1.8 percent.

In a risk-on week, the healthcare sector was the worst performing sector.

OpportunitiesA September rate hike by the Federal Reserve may not materialize anymore following the selloff inglobal stock markets. Emerging Europe will benefit if the Fed keeps interest rates at the current lowerlevel as investors pile into more risky assets.

The Czech Republic, Hungary and Poland may be the best places to “hide,” assuming tough marketconditions continue. Since April 28, when the MSCI Emerging Markets Index peaked, the CzechRepublic has been the best performing market followed by Hungary and Poland. Central Europe is notdependent on commodities or China, and since it’s a net importer of crude oil, this area benefits fromcheap oil prices.

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Russia’s central bank pledged to help cover foreign debt this week. Central Bank Governor ElviraNabiullina will renew the 12-month loan program in order to help borrowers with $61 billion of externaldebt payments over the next four months.

ThreatsAccording to the Russian Ministry of Economic Development, if oil trades at $40 per barrel and thedollar is trading more than RUB75, Russia will find itself in recession until 2017 and Russian residentswill experience a collapse in real income.

Polish bonds outperformed all major emerging markets in the aftermath of China’s yuan devaluation;however, political risk still exists in Poland. Parliamentary elections will take place later this year. Theopposition Law & Justice party, the party currently leading opinion polls, plans to tax bank assets andincrease social spending, putting pressure on economic growth.

It seems there is still no political visibility in Turkey. A snap election is set to take place November 1,and the Turkish lira remains vulnerable to the possible worsening of global sentiment.

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Leaders and LaggardsWeekly Performance

Index CloseWeekly

Change($)Weekly

Change(%)

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DJIA 16,643.01 +183.26 +1.11%

S&P 500 1,988.87 +17.98 +0.91%

S&P Energy 479.16 +16.87 +3.65%

S&P Basic Materials 273.04 +2.36 +0.87%

Nasdaq 4,828.33 +122.29 +2.60%

Russell 2000 1,162.91 +6.13 +0.53%

Hang Seng Composite Index 2,957.09 -88.24 -2.90%

Korean KOSPI Index 1,937.67 +61.60 +3.28%

S&P/TSX Canadian Gold Index 130.15 -9.63 -6.89%

XAU 48.82 -3.35 -6.42%

Gold Futures 1,133.10 -26.50 -2.29%

Oil Futures 45.31 +4.86 +12.01%

Natural Gas Futures 2.72 +0.05 +1.72%

10-Yr Treasury Bond 2.18 +0.15 +7.12%

Monthly Performance

Index CloseMonthly

Change($)Monthly

Change(%)

DJIA 16,643.01 -1,108.38 -6.24%

S&P 500 1,988.87 -119.70 -5.68%

S&P Energy 479.16 -45.84 -8.73%

S&P Basic Materials 273.04 -14.64 -5.09%

Nasdaq 4,828.33 -283.41 -5.54%

Russell 2000 1,162.91 -66.69 -5.42%

Hang Seng Composite Index 2,957.09 -389.59 -11.64%

Korean KOSPI Index 1,937.67 -99.95 -4.91%

S&P/TSX Canadian Gold Index 130.15 +7.52 +6.13%

XAU 48.82 +0.45 +0.93%

Gold Futures 1,133.10 +39.80 +3.64%

Oil Futures 45.31 -3.48 -7.13%

Natural Gas Futures 2.72 -0.16 -5.68%

10-Yr Treasury Bond 2.18 -0.11 -4.59%

Quarterly Performance

Index CloseQuarterly

Change($)Quarterly

Change(%)

DJIA 16,643.01 -1,367.67 -7.59%

S&P 500 1,988.87 -118.52 -5.62%

S&P Energy 479.16 -92.25 -16.14%

S&P Basic Materials 273.04 -43.68 -13.79%

Nasdaq 4,828.33 -241.70 -4.77%

Russell 2000 1,162.91 -83.62 -6.71%

Hang Seng Composite Index 2,957.09 -914.05 -23.61%

Korean KOSPI Index 1,937.67 -177.13 -8.38%

S&P/TSX Canadian Gold Index 130.15 -35.27 -21.32%

XAU 48.82 -20.88 -29.96%

Gold Futures 1,133.10 -58.60 -4.92%

Oil Futures 45.31 -14.99 -24.86%

Natural Gas Futures 2.72 +0.08 +3.03%

10-Yr Treasury Bond 2.18 +0.06 +2.83%

Please consider carefully a fund’s investment objectives, risks, charges and expenses. For this and otherimportant 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. Distributed by U.S. Global Brokerage, Inc.

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

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

Foreign and emerging market investing involves special risks such as currency fluctuation and less public disclosure, aswell as economic and political risk. By investing in a specific geographic region, a regional fund’s returns and share pricemay be more volatile than those of a less concentrated portfolio.

The Emerging Europe Fund invests more than 25 percent 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 moresusceptible to risk in these industries than funds which do not concentrate their investments in an industry and may makethe fund’s performance more volatile.

Because the Global Resources Fund concentrates its investments in a specific industry, the fund may be subject togreater risks and fluctuations than a portfolio representing a broader range of industries.

Gold, precious metals, and precious minerals funds may be susceptible to adverse economic, political or regulatorydevelopments due to concentrating in a single theme. The prices of gold, precious metals, and precious minerals aresubject to substantial price fluctuations over short periods of time and may be affected by unpredicted internationalmonetary and political policies. We suggest investing no more than 5 percent to 10 percent of your portfolio in thesesectors.

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

Investing in real estate securities involves risks including the potential loss of principal resulting from changes in propertyvalue, interest rates, taxes and changes in regulatory requirements.

Past performance does not guarantee future results.

Some link(s) above may be directed to a third-party website(s). U.S. Global Investors does not endorse all informationsupplied by this/these website(s) and is not responsible for its/their content.

These market comments were compiled using Bloomberg and Reuters financial news.

Fund portfolios are actively managed, and holdings may change daily. Holdings are reported as of the most recentquarter-end. Holdings as a percentage of net assets as of 6/30/2015:

Tencent Holdings Ltd: China Region Fund, 6.52%AIA Group Ltd: China Region Fund, 1.92%Ping An Insurance Group Co.: China Region Fund, 3.28%CT Environmental Group Ltd: China Region Fund, 0.52%ANTA Sports Products Ltd: China Region Fund, 0.57%

*The above-mentioned indices are not total returns. These returns reflect simple appreciation only and do not reflectdividend reinvestment.

The Dow Jones Industrial Average is a price-weighted average of 30 blue chip stocks that are generally leaders in theirindustry.The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S.companies.The Nasdaq Composite Index is a capitalization-weighted index of all Nasdaq National Market and SmallCap stocks.The Russell 2000 Index® is a U.S. equity index measuring the performance of the 2,000 smallest companies in theRussell 3000®, a widely recognized small-cap index.The Hang Seng Composite Index is a market capitalization-weighted index that comprises the top 200 companies listedon Stock Exchange of Hong Kong, based on average market cap for the 12 months.

The Taiwan Stock Exchange Index is a capitalization-weighted index of all listed common shares traded on the TaiwanStock Exchange.The Korea Stock Price Index is a capitalization-weighted index of all common shares and preferred shares on the KoreanStock Exchanges. The Philadelphia Stock Exchange Gold and Silver Index (XAU) is a capitalization-weighted index that includes the leadingcompanies involved in the mining of gold and silver. The U.S. Trade Weighted Dollar Index provides a general indication of the international value of the U.S. dollar.The S&P/TSX Canadian Gold Capped Sector Index is a modified capitalization-weighted index, whose equity weights arecapped 25 percent and index constituents are derived from a subset stock pool of S&P/TSX Composite Index stocks.The S&P 500 Energy Index is a capitalization-weighted index that tracks the companies in the energy sector as a subsetof the S&P 500.The S&P 500 Materials Index is a capitalization-weighted index that tracks the companies in the material sector as asubset of the S&P 500.The S&P 500 Financials Index is a capitalization-weighted index. The index was developed with a base level of 10 for the1941-43 base period.The S&P 500 Industrials Index is a Materials Index is a capitalization-weighted index that tracks the companies in theindustrial sector as a subset of the S&P 500.The S&P 500 Consumer Discretionary Index is a capitalization-weighted index that tracks the companies in the consumerdiscretionary sector as a subset of the S&P 500.The S&P 500 Information Technology Index is a capitalization-weighted index that tracks the companies in theinformation technology sector as a subset of the S&P 500.The S&P 500 Consumer Staples Index is a Materials Index is a capitalization-weighted index that tracks the companies inthe consumer staples sector as a subset of the S&P 500.The S&P 500 Utilities Index is a capitalization-weighted index that tracks the companies in the utilities sector as a subsetof the S&P 500.The S&P 500 Healthcare Index is a capitalization-weighted index that tracks the companies in the healthcare sector as asubset of the S&P 500.The S&P 500 Telecom Index is a Materials Index is a capitalization-weighted index that tracks the companies in thetelecom sector as a subset of the S&P 500.The NYSE Arca Gold Miners Index is a modified market capitalization weighted index comprised of publicly tradedcompanies involved primarily in the mining for gold and silver. The Consumer Price Index (CPI) is one of the most widely recognized price measures for tracking the price of a marketbasket of goods and services purchased by individuals. The weights of components are based on consumer spendingpatterns.The Purchasing Manager’s Index is an indicator of the economic health of the manufacturing sector. The PMI index isbased on five major indicators: new orders, inventory levels, production, supplier deliveries and the employmentenvironment.The Shanghai Composite Index (SSE) is an index of all stocks that trade on the Shanghai Stock Exchange.M2 Money Supply is a broad measure of money supply that includes M1 in addition to all time-related deposits, savingsdeposits, and non-institutional money-market funds.The London Metals Exchange Index (LMEX) is an index on the six designated LME primary metals contracts denominatedin US dollars. Weightings of the six metals are derived from global production volume and trade liquidity averaged overthe preceding five-year period. The index value is calculated as the sum of the prices for the three qualifying monthsmultiplies by the corresponding weights, multiplied by a constant.The Chicago Board Options Exchange (CBOE) Volatility Index (VIX) shows the market's expectation of 30-day volatility.The Consumer Confidence Index (CCI) is an indicator which measures consumer confidence in the economy.The NIKKEI 225 Index is a price-weighted index of 225 top-rated Japanese companies listed in the First Section of theTokyo Stock Exchange.The S&P/Case-Shiller Index tracks changes in home prices throughout the United States by following price movements inthe value of homes in 20 major metropolitan areas.The National Association of Realtors Index of pending home sales tracks signed real estate contracts for existing single-family homes, condos and co-ops that have not yet closed. As such, it is a leading indicator for existing home sales.The University of Michigan Consumer Sentiment Index is comprised of measures of attitudes toward personal finances,general business conditions, and market conditions or prices.The Yorkville Royalty Trust Oil & Gas Index is a market capitalization weighted index consisting of the entire universe ofroyalty trusts involved in a balance of oil and natural gas production.The S&P 1500 Supercomposite Oil & Gas Equipment & Services Index is a capitalization-weighted index comprised ofstocks whose primary function is equipment and services for natural gas and oil resources.The S&P/TSX Capped Energy Index is a constrained market capitalization-weighted index that consists of Canadianenergy sector companies listed on the Toronto Stock Exchange. The Bloomberg World Iron & Steel Index is a capitalization-weighted index of the leading iron/steel stocks in the world.The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equitymarket performance in the global emerging markets.The Jakarta Stock Price Index is a modified capitalization-weighted index of all stocks listed on the regular board of theIndonesia Stock Exchange.The TWSE, or TAIEX, Index is a capitalization-weighted index of all listed common shares traded on the Taiwan StockExchange.The Straits Times Index is a modified market capitalization-weighted index comprised of the most heavily weighted andactive stocks traded on the Stock Exchange of Singapore.

The Philippine Stock Exchange PSEi Index is composed of stocks representative of the industrial, properties, services,holding firms, financial and mining & oil sectors of the Philippines Stock Exchange.

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