Third Quarter 2016

During the third quarter, the Emerging Europe Fund gained 3.57 percent while its benchmark, the MSCI Emerging Europe 10/40 Index, appreciated 4.51 percent. See complete fund performance here.    

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.

Russian, Hungarian, Czech Republic and Greek equities outperformed the MSCI Emerging Europe Index, while Polish and Turkish bourses underperformed. On a sector basis, materials, consumer discretionary, staples and financials outperformed, while real estate, health care, energy, utilities, telecommunication services and industrials underperformed.


  • The fund's stock selection in Poland and Turkey, as well as overweight in Austria, had the largest positive contributions to the fund's performance this quarter.
  • The fund's stock selection in the energy sector had the largest positive contribution to the fund's performance this quarter.
  • Lukoil, a Russian oil and gas company, made the largest single contribution to the performance of the fund.


  • The fund's cash position had the largest negative contribution to the fund this quarter.
  • The fund's underweight in the consumer staples sector had the largest negative contribution to the fund this quarter.
  • The Direxion Daily Russia Bear 3X ETF (RUSS) was the greatest absolute detractor to the fund's performance during the quarter.


  • OPEC's decision to cut production to 32.5 million barrels per day is the first reduction since 2008. The details of which country is going to cut and by how much will be negotiated at the November 30 meeting. Russia, which gets most of its budget revenue from the sale of oil and gas, should benefit from higher oil prices.
  • FTSE Russell put Romania on its watch list for a potential upgrade to the status of emerging markets in the short or medium term. According to the London-based index provider, Romania met all criteria necessary to be promoted to a superior category back in March, with the exception of the liquidity criterion. Romania's inclusion on FTSE Russell's watch list is a result of improving capital markets, and it presents opportunity for future money flow.
  • The International Monetary Fund (IMF) released its global economic forecasts and sees Brazil, Greece and Russia as the best recovery markets in the next year. The IMF also points out that emerging markets growth has finally rebounded in 2016 after six years of declining growth versus developed markets.

Developed Emerging Markets GDP Growth Year Over Year Growth Differential
click to enlarge


  • The Turkish president continues to consolidate power into his hands after the failed coup attempt that took place on July 15. Purges of Turkey's institutions continue, which so far have included the military, police, media and education. The country's state of emergency was extended by another three months. Moody's joined Standard & Poor's in cutting the nation's credit rating to junk. Two out of three leading investment agencies now have below-investment-grade ratings on Turkey's creditworthiness.
  • The U.K. Conservative Party named Theresa May as the new prime minister. She plans to formally notify Brussels of the country's intention to leave the European Union by the end of March 2017. Once Article 50 is triggered, a two-year negotiation process will start. The U.K. intends to take full control of its immigration policies after the exit, but according to the EU, countries that want to have full access to the bloc's internal market must accept EU workers and EU rules. Britain sends 44 percent of its exports to the EU, while the U.K. takes only 16 percent of EU exports.
  • At its last meeting, the European Central bank left main refinancing interest rates at 0 percent, the deposit rate at minus 0.4 percent and asset purchases at 80 billion euros ($90 billion) a month. No additional stimulus was provided to revive the eurozone economy.


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, Greece, Hungary, Poland, Russia, and Turkey). The index is calculated on a net return basis (i.e., reflects the minimum possible dividend reinvestment after deduction of the maximum rate withholding tax). The index is periodically rebalanced relative to the constituents' weights in the parent index.

Holdings may change daily. Holdings are reported as of the most recent quarter-end. Holdings are reported as of the most recent quarter-end. Holdings in the Emerging Europe Fund as a percentage of net assets as of 9/30/2016: Lukoi PJSC 7.84%, Direxion Daily Russia Bull 3x ETF 1.58%.

Net Asset Value
as of 01/17/2017

Global Resources Fund PSPFX $5.59 0.05 Gold and Precious Metals Fund USERX $8.08 0.23 World Precious Minerals Fund UNWPX $7.14 0.19 China Region Fund USCOX $7.62 No Change Emerging Europe Fund EUROX $6.00 No Change All American Equity Fund GBTFX $23.66 -0.06 Holmes Macro Trends Fund MEGAX $18.69 -0.08 Near-Term Tax Free Fund NEARX $2.22 No Change U.S. Government Securities Ultra-Short Bond Fund UGSDX $2.00 No Change