First Quarter 2018

During the first quarter, the Emerging Europe Fund gained 3.43 percent, while its benchmark, the MSCI Emerging Europe 10/40 Index, appreciated 1.82 percent. See complete fund 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.

Russian and Czech equities outperformed the MSCI Emerging Europe 10/40 Index, while Greek, Turkish, Hungarian and Polish stocks underperformed. On a sector basis, information technology, energy, financials and telecommunication services outperformed, while utilities, materials, industrials, consumer discretionary, real estate, consumer staples and health care underperformed.


  • The fund’s stock selection in Turkey and Greece had the largest positive contributions to the fund’s performance during the quarter.
  • The fund’s stock selection in consumer discretionary had the largest positive contributions to the fund’s performance.
  • Sberbank of Russia made the largest single contribution to the performance of the fund.


  • The fund’s underweight in Russia and overweight in Germany had the largest negative impact to the fund’s performance during the quarter.
  • The fund’s overweight in the energy sector had the largest negative contribution to the fund’s performance this quarter.
  • Polski Koncern Naftowy (PKN Orlen) was the greatest absolute detractor to the fund’s performance during the quarter.


  • The European Central Bank (ECB) has a favorable economic outlook and increased its euro area gross domestic product (GDP) forecast this year to 2.4 percent from 2.3 percent. It also expects inflation to reach 1.7 percent by 2020, well below the bank’s target of 2 percent. However, the latest released ECB minutes showed that bank officials worry about a full-blown trade war with the United States and are therefore concerned with the strength in the euro. Inflation came down during the first quarter and the euro continues to be strong, making for a less forceful case to actually remove stimulus and increase rates.
  • Emerging markets could outperform again in 2018, says Bretton Woods Research. Emerging markets should benefit from the weak U.S. dollar. Exporters of commodities, agriculture products and raw materials should perform well during a period of dollar weakness. Among the research firm’s favorite emerging markets are the Czech Republic, Hungary and Russia.
  • In 2014, Russia needed the oil price to be at $98 per barrel to balance its budget, but in 2018 the oil breakeven cost dropped to $54 per barrel, according to Oleg Kouzmin’s research from Renaissance Capital. Russia’s fight against corruption and implemented tax reforms made it easier for the economy to be less dependent on oil exports. Russia recorded a budget deficit for the past couple of years, but it went into profit in January, running a surplus of RUB 190 billion ($3.4 billion), or 2.8 percent of GDP. With many analysts predicting higher oil prices, Russia’s budget surplus should grow.


  • Standard & Poor’s upgraded Russia’s sovereign debt to investment grade from junk, and now the two rating agencies rank Russia’s sovereign debt at investment grade. Right after the upgrade announcement, many analysts predicted that demand for Russian state bonds will increase as major international funds require two investment grades as a minimum to invest in a country’s financial instruments. However, investors’ appetite for Russian debt may be hampered by new sanctions imposed by the U.S. and Western Europe.
  • A global trade war may spread to Europe, as Trump’s tariffs on Chinese imports may be just the beginning in imposing protectionist measures from other major trade partners. A trade war with the European Union may come eventually as the eurozone generates one of the largest trade surpluses with the U.S. Aside from Germany, the Czech Republic, Hungary and Slovenia are the most open in the world and negatively exposed to trade wars, according to Dan Bucsa, chief economist at UniCredit Bank.
  • A slew of weaker economic data is coming out of the eurozone. Economic confidence continued sliding in March. Optimism slipped in the region’s five biggest economies, taking it to its lowest level in six months. It was the third drop from a 17-year high in December. The Global Manufacturing Purchasing Manager’s Index (PMI) fell from 54.2 to 53.4 in March, while the eurozone PMI declined the most this year among major economies.

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 Purchasing Managers' Index (PMI) is an indicator of the economic health of the manufacturing sector. The PMI is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment.

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 3/31/2018: Sberbank of Russia PJSC 12.25%, Polski Koncern Naftowy ORLEN 1.55%, UniCredit SpA 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 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.

Net Asset Value
as of 10/16/2018

Global Resources Fund PSPFX $5.18 0.07 Gold and Precious Metals Fund USERX $6.97 0.01 World Precious Minerals Fund UNWPX $3.60 0.01 China Region Fund USCOX $8.21 0.14 Emerging Europe Fund EUROX $6.50 0.12 All American Equity Fund GBTFX $25.72 0.39 Holmes Macro Trends Fund MEGAX $18.50 0.39 Near-Term Tax Free Fund NEARX $2.19 No Change U.S. Government Securities Ultra-Short Bond Fund UGSDX $2.00 No Change