EMERGING EUROPE FUND(EUROX)

Corporate Overview
• Boutique investment management firm specializing in
commodity-related equity strategies. Offers strategies
focused in gold and precious metals, global natural
resources and emerging markets.
• Originally founded as an investment club in the 1960s.
The company became a registered investment adviser
in 1968 and went on to launch the nation’s first no-load
gold mutual fund in 1974.
• Publicly traded company, listed on Nasdaq under the
symbol GROW.
EMERGING EUROPE FUND (EUROX)
Corporate Overview
• Boutique investment management firm specializing in
actively managed equity and bond strategies. Longstanding
history as experts in gold and precious metals, natural
resources and emerging markets.
• Originally founded as an investment club in the 1960s.
The company became a registered investment adviser
in 1968 and went on to launch the nation’s first no-load
gold mutual fund in 1974.
• Publicly traded company, listed on Nasdaq under the
symbol GROW, based in San Antonio.
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How EUROX is Different
• We look at emerging European countries, including
the Czech Republic, Greece, Hungary, Poland, Russia
and Turkey
• Active money management with hands-on approach
through travel; not tied to benchmark names or weightings
• Regional expertise; Portfolio Manager Tim Steinle has
native ties to Azerbaijan and is a native Russian speaker
• We have over 15 years experience investing in emerging
Europe, as the fund was established in 1997
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Portfolio Management Team
Frank Holmes,
Investment Team Leader
• CEO and CIO
• S elected as 2006 mining
fund manager of the year
by Mining Journal
• 30+ years industry experience
John Derrick,
Portfolio Manager
• J oined U.S. Global Investors
in 1999
• 20 years industry experience
• B A Finance, University of Texas
at Arlington; CFA Charterholder
Tim Steinle,
Portfolio Manager
• Joined U.S. Global Investors in 2008
• 15+ years industry experience
• M
BA Computational Finance,
University of Texas at Austin;
Completed undergraduate studies
in Electrical Engineering, Azeri
Petroleum Institute in Baku;
CFA Charterholder
• N
ative of Baku, Azerbaijan
and fluent in Russian
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Investment Strategy: Top-Down Macro Selection
Macro Indicators
GDP
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PMI
Industrial
Production
Inflation
Government
Policy
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Investment Strategy: Portfolio Construction
Robust Fundamentals
Sector
Leadership
Country
Leadership
Sweet Spot
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Investment Strategy: Top-Down Macro Selection
Global factors
• Emerging European countries have established
export trade to established Europe
• O
pportunity — as the established economies
recover, emerging European economies are
positioned to benefit
• M
ore than 80 percent of Czech and Hungarian
exports go to Western Europe
• A bout 50 percent of Polish and Turkish exports
go to Western Europe
• Emerging European countries are
becoming part of the supply chain
of Western European manufacturing
• O
utsourcing to emerging Europe becomes
attractive with more competitive labor and
production capabilities
• W
estern European goods still highly desirable
in the global economy
These top-down factors impact our decision to overweight or underweight a country, sector or individual stock.
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Investment Strategy: Bottom-Up Stock Selection
Fundamental stock selection factors
• Relative value
• Preference for dividend-paying stocks
• W
ithin mature industries, particularly financials
and telecommunications
• G
reater total return potential in slow
growth environment
• Examine value relative to company peers
• B etter risk-return balance, and align
interests of all investors
• Long-term growth stories
• W
ithin younger industries, particularly
consumer staples and discretionary
• A s GDP per capita rises, living standards
rise and consumption grows
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• Corporate governance
• Transparency
• Fair treatment of minority shareholders
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Investment Strategy: Bottom-Up Stock Selection
Sector-related factors impacting stock selection
• Energy and natural resources
• Banks and financials
• Production growth
• Loan growth
• Reserve growth
• Net interest margins
• Cash flow growth
• Relative valuation
• Corporate execution
• Return on equity
• Consumer staples and discretionary
• Revenue growth
• Same store sales growth
• Margin expansion
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Santorini, Greece
Prague, Czech Republic
Istanbul, Turkey
Krakow, Poland
Budapest, Hungary
Investment Themes for EUROX
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Current Investment Themes for EUROX
Convergence of
European countries
• E merging European countries tied economically to
established European countries, through export trade
and development funding
• Integration process underway, as emerging countries
attempting to meet EU standards, such as living
standards, GDP, environmental standards, regulatory
standards, infrastructure
• E merging consumer trends with rising income: Consumer
staples and discretionary sectors are biggest beneficiaries
www.usfunds.com | First Quarter 2014
Turkey offers a great
growth story
• Young, growing demographic
• Fiscal and monetary policies geared toward growth
• Entrepreneurial mindset and pro-business policies
• Exports to Europe and Middle East
• G
overnment policy determined to achieve investment
grade; would lower borrowing costs, both government
and corporate, and would attract foreign investment
• Banking regulation strengthened, and banks well capitalized
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Emerging Europe Fund Portfolio Characteristics
Regional Breakdown
Turkey
Russia
Poland
Greece
Austria
Italy
France
Hungary
Germany
Kazakhstan
Romania
Czech Republic
Others
Cash and Equivalents
22.55%
14.46%
11.66%
11.18%
7.10%
5.12%
4.10%
3.25%
2.36%
1.93%
1.60%
1.57%
4.95%
8.29%
As of March 31, 2014
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Emerging Europe Fund Portfolio Characteristics
Industry Breakdown
■
■
■
■
■
■
■
■
■
■
Financials
Consumer Discretionary
Telecommunication Services
Energy
Materials
Industrials
Utilities
Health Care
Consumer Staples
Cash and Equivalents
39.67%
12.05%
11.70%
9.72%
8.86%
3.55%
2.78%
1.92%
1.57%
8.29%
As of March 31, 2014
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Emerging Europe Fund Portfolio Characteristics
Top 10 Holdings
Market Capitalization Breakdown
Erste Group Bank AG
MMC Norilsk Nickel OJSC
Turkcell Iletisim Hizmetleri AS
5.76%
4.17%
3.74%
Large Cap (over $10 Billion)
Mid Cap ($1 – $10 Billion)
Small Cap (under $1 Billion)
Powszechna Kasa Oszczednosci
Bank Polski SA
3.63%
Average Weighted
Market Capitalization
Lukoil OAO
Tofas Turk Otomobil Fabrikasi AS
Genel Energy Plc
Powszechny Zaklad Ubezpieczen SA
UniCredit SpA
Turkiye Garanti Bankasi AS
3.62%
3.00%
2.99%
2.68%
2.59%
2.58%
Percentage of total net assets
in top 20 holdings
57.18%
Total number of holdings
Total Net Assets
P/E Ratio
51.06%
45.65%
3.29%
$14.69 Billion
55
$105.90 Million
10.43
As of March 31, 2014
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Fund Performance
Average Annual
As of 03/31/14
1-year
3-year
5-year
10-year
Since
Inception
Gross
Expense Ratio
Emerging Europe Fund (EUROX)
-9.38%
-10.30%
11.80%
4.17%
8.78%*
2.13%
Expense ratio as stated in the most recent prospectus. 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 beeen 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 (e.g., short-term trading
fees of 0.05%) 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. *Inception 3/31/1997.
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Performance and Results Oriented
Investment leadership results in performance
Winner of 29 Lipper performance awards, certificates and top rankings since 2000
(4 of the U.S. Global Investors Funds received Lipper performance awards from 2005 to 2008. 6 of the U.S. Global Investors Funds
received certificates from 2000 to 2007, and 2 of the U.S. Global Investors Funds received top rankings from 2009 to 2010. During
the years mentioned, there were 13 U.S. Global Investors Funds, while currently the fund family consists of 9 funds.)
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Focus on Education
Best Overall Advisor
and Best Overall Retail
Communications
MFEA
www.usfunds.com | First Quarter 2014
2013 Mutual Fund
Education Alliance
STAR Awards
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Contact Us
It’s easy to begin investing directly with U.S. Global Investors.
You can apply online, print an application and mail it to us, or request
that an investment kit be sent to you.
First, please be sure to review our prospectus.
For more information, please contact us:
Financial Advisors
Individual Investors
1-800-873-3639
[email protected]
1-800-386-3847
[email protected]
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Disclosures
Please consider carefully the 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. Distributed by U.S. Global Brokerage, Inc.
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.
Although Lipper makes reasonable efforts to ensure the accuracy and reliability of the data contained herein, the accuracy is not guaranteed by Lipper. Users acknowledge that they have not relied upon any warranty, condition,
guarantee, or representation made by Lipper. Any use of the data for analyzing, managing, or trading financial instruments is at the user’s own risk. This is not an offer to buy or sell securities.
The Purchasing Manager’s Index is an indicator of the economic health of the manufacturing sector. The PMI index is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment
environment. 14-255
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