Second Quarter 2021

The Emerging Europe fund gained 7.89% in the second quarter of 2021, underperforming its benchmark, the Emerging Europe 10/40, which gained 13.69%. See complete fund performance here. Performance data quoted represents past performance, which does not guarantee future results.

The Emerging Europe fund underperformed its index by 5.8%. Equities surged in emerging Europe on news of faster COVID-19 vaccine rollouts and market re-openings. The fund lagged its index mostly due to stock selection in Russia, overweight position in Germany, and underweight Poland.

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, the fund’s overweight position in Sweden and Denmark had the most positive effect on the fund’s performance relative to the index. In Sweden, the strategy to overweight health care supplier Getinge AB worked well. Share gained 37% in the second quarter. In Denmark, the strategy to overweight marine shipping Maersk worked well. Shares gained 27% during the second quarter amid markets re-opening and greater demand for transportation services.
  • On the sector level, the fund’s overweight position in healthcare and underweight information technology had the most positive effect on the fund’s performance relative to the index. In healthcare, no exposure to Hungarian chemical works company Gedeon Richter worked the best. Share declined 7%, while the funds’ index gained 13.69%. In information technology, the strategy to underweight Russian internet software services worked. Shares of Yandex and Group both underperformed and Emerging Europe’s underweight position had a positive effect on fund’s performance against the index.
  • The top three positive contributors to the fund’s performance were as follows:
    • Sberbank, Russia’s largest private bank, contributed a positive 1.3% to the fund’s performance. Shares gained 14.3% supported my strong performance of the broad Russian market. Russia was the second-best performing country among eastern European members, gaining 14.4%. Higher oil prices continued to push Russian equities higher in the second quarter. The United States President, Joe Biden, held a meeting with the President of Russia, Vladimir Putin, while on his first international trip to Europe.
    • TCS, Russian private online bank contributed 1% to the fund’s performance. Shares gained 50% supported by company plans for expansion and technological advances. Small and medium enterprise lending (SME) currently represents just 1% of Tinkoff's loan book and now is ready to start increasing SME lending exposure. Company offers over 30 products for SMEs, including current accounts, deposits, invoicing, software services for optimizing business processes, such as registration of businesses, accounting services, and tools for increasing sales of customers, offline and online acquiring.
    • PGE Polska Groupa Energetycza S.A., a Polish utility, contributed a positive 0.70% to the fund’s performance.  Shares gained more than 44% in the second quarter on news that the Polish government will spin-off coal assets from utilities. This announcement was expected and is very positive for utilities upon completion.


  • On the country level, the fund’s stock selection in Russia and overweight Germany had the most negative effect on the fund’s performance relative to the index. In Russia, the strategy to underweight integrated oil industry did not work. Shares of oil companies gained with higher Brent oil prices. Gazprom gained 27% and the fund’s underweight position had the most negative effect on fund’s performance against the index. In Germany, the overweight strategy in car makers did not work. Share of Volkswagen declined 9% while the broad MSCI Emerging Market Europe Index gained 13.69%. Also, shares of Daimler and BMW underperformed. The global chip shortage is negatively impacting the car industry.
  • On the sector level, the fund’s underweight position in energy and underweight consumer discretionary had the most negative effect on the fund’s performance relative to the index. In energy, underweight position of oil and gas producers in Russia had the most negative effect. In consumer discretionary, overweight position in motor vehicle had the most negative effect.  Both discussed in the sections above.
  • The bottom three negative contributors to the fund’s performance were as follows:
    • Tatneft, Russian oil producer and distributor, contributed a negative 0.42% to the fund’s performance. Share lost 7.7% in the second quarter, underperforming the broad Russian market after company proposed dividends below expectation. The company opted for a smaller dividend despite healthy free cash flow and strong oil price points to company’s concern on tax changes that are being discussed by the Russian Federation. Tatneft’s dividend is below Russian oil and gas sector.
    • KGHM, a Polish copper producer, contributed a negative 0.26% to the fund’s performance. Shares lost 13% as copper prices corrected in the second quarter. China announced a plan to lower metal prices, including copper, and will start selling metal form state stockpiles in effort to bring prices lower.
    • Renault, a European car maker, contributed a negative 0.15% to the fund’s performance.  Shares declined by 9.75%. The global shortage of chips is affecting manufacturing. Renault CEO Luca de Meo said the supply gap for semiconductors in the auto industry will remain for months. Moreover, Nissan announced weaker first quarter earnings and they contributed negative 73 million to Renault’s earnings.


European equities moved higher in the second quarter supported by faster vaccine rollouts and markets re-openings. Europe opened its border for tourists from the United States and Canada, which should bring in more vacationers in the summer and their money. Economic activity should continue to improve in Europe. Manufacturing activity has been strong year-to-year, and data and service activity continue to improve with more COVID-19 restrictions being lifted. Strong rebound in European service sectors (which accounts for 73% of GDP) should drive further recovery. European Central Bank most likely will be slow in reducing and eventually stopping the pandemic bond buying program despite raising inflation. Czech Republic, Hungary, and Poland indicated change in their monetary policies due to inflation spiking above central bank’s target. Russia already hiked rates few times this year and country’s central bank warned that the economy is overheating. Emerging market currencies may benefit from domestic hikes. However, investors must be watching FED’s decision which is crucial to emerging markets (EM) currencies. Higher rates in the United States may strengthen the dollar, putting pressure at developing nations. European equities performance will continue to depend on the pandemic situation.

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 Emerging Markets Index is used to measure the financial performance of companies in fast-growing economies around the world. The index tracks mid-cap and large-cap stocks in 27 countries, dominated by Chinese, Taiwanese, and South Korean companies. Gross domestic product (GDP) is the monetary value of all finished goods and services made within a country during a specific period.

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 6/30/2021: Getinge AB 0.68%, AP Moller – Maersk A/S 0.62%, Gedeon Richter Plc. 0.00%, Yandex NV 0.53%, Group Ltd. 0.00%, Sberbank of Russia PJSC 9.08%, TCS Group Holding PLC 3.07%, PGE Polska Groupa Energetycza S.A. 1.20%, Gazprom PJSC 1.30%, Volkswagen AG 0.53%, Daimler AG 1.12%, Bayerische Motoren Werke AG 1.26%, Tatneft PJSC 8.62%, KGHM Polska Miedz SA 1.75%, Renault SA 1.23%.

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 09/17/2021

Global Resources Fund PSPFX $6.25 -0.08 Gold and Precious Metals Fund USERX $11.49 -0.10 World Precious Minerals Fund UNWPX $4.44 -0.06 China Region Fund USCOX $8.76 0.11 Emerging Europe Fund EUROX $6.85 -0.09 Global Luxury Goods Fund USLUX $23.83 -0.14 Near-Term Tax Free Fund NEARX $2.25 0.01 U.S. Government Securities Ultra-Short Bond Fund UGSDX $1.99 No Change