global innovators fund - gafunds.com€¦ · § strong performance from energy in q3 as oil price...
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Forregisteredinvestmentprofessionaluseonly
GlobalInnovatorsFundReviewofthe3rdQuarter2017
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2Contents
§ Introductiontofund§ Marketperformance§ Summaryfundperformance§ Performancedriversandattribution§ Changestoportfolio§ Sectorallocation§ Geographicallocation§ Portfoliotodayandoutlook§ Portfoliocharacteristics§ Marketcommentary
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3Portfoliomanagers
Source: GuinnessAtkinsonAssetManagement
MatthewPage,CFAPortfolioManager
• JoinedGuinnessAtkinsonAssetManagementin2005• PreviouslyworkedforGoldmanSachsasananalystinFixed
IncomeCurrenciesandCommodities(FICC)• GraduatedfromUniversityofOxford,withaMastersdegree
inPhysicsin2004• ManagerofGlobalInnovatorsstrategysince2010
DrIanMortimer,CFAPortfolioManager• JoinedGuinnessAtkinsonAssetManagementin2006• GraduatedfromUniversityofOxford,withaD.Phil.inPhysics
in2006• GraduatedfromUniversityCollegeLondon,Universityof
London,withaMastersdegreeinPhysicsin2003• ManagerofGlobalInnovatorsstrategysince2011
Global Innovators
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
TimGuinness Manager
MatthewPage - - Analyst Manager
IanMortimer - - - - - - Analyst Manager
JoshuaCole - - - - - - - - - - - - - - Analyst
SagarThanki - - - - - - - - - - - - - - Analyst
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4Analystteam
JoshuaColeAnalyst• JoinedGuinnessAtkinsonAssetManagementin2017• PreviouslyworkedatCastleTrust,aspecialistfinance
firmintheCityofLondonasaquantitativeanalyst• GraduatedfromUniversityofBristolin2013witha
Master’sdegreeinMechanicalEngineering.In2016,JoshuapassedLevelIIoftheCFAProgram.
SagarThankiAnalyst• JoinedGuinnessAtkinsonAssetManagementin2017• PreviouslyworkedforBloombergasanequityspecialist,
withinFinancialAnalyticsandSales• GraduatedfromUniversityofCambridge,withaMaster’s
degreeinEconomics,andhassincecompletedLevelIoftheCFAProgram.
Source: GuinnessAtkinsonAssetManagement
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5Whydowelookforinnovativecompanies?
§ Webelieveitisasuperiorwaytoidentifygoodgrowthcompanies
§ Basedonourexperience,traditionalmethodologiesdonotwork
§ Historicgrowthisapoorpredictoroffuturegrowth
§ Analystforecastsofgrowthratesareunreliableatbest
§ Insteadtrytofindcompaniesdoingsomethinginnovative…whichwebelieve,ifsuccessful,shouldleadtohigherreturnoncapitalandhigherprobabilityoffuturegrowth
Source: GuinnessAtkinsonAssetManagement
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6GlobalInnovatorsphilosophy
Conviction
TheFundtypicallyhas30equallyweightedpositions
Wetargetalowturnoverwithaverageof3– 5yearinvestmenthorizon
Innovation
Weuseinnovationasalenstoidentifygoodgrowthcompanies
Webelieveinnovativecompaniesshouldbeabletogenerateahighreturnoncapitalinthefuture
Growth
Welookforcompaniesthatcangrowprofitably-notjustgrowthforgrowth’ssake
Welookforcompanieswithgoodmarginsthatdonotrequiresignificantexternalcapitaltogrow
Quality
Wefocusoncompaniesthatearnareturnoncapitalabovetheircostofcapitalandhavehistoricallygrowntheireconomicprofit
Weavoidhighlyleveragedcompanies
Thefundseeksaconcentratedportfolioofhighquality,innovative,growthcompanies
Source: GuinnessAtkinsonAssetManagement
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7Howdoweassessinnovation:Innovationmatrix
Disruptive Accelerating Continuous
Science/Technology
Scientificbreakthroughleadingtonewtechnologywithsignificantpotential
impact
Rapidimprovements inyoungtechnology
Smallcontinuousadvancesinanestablished
technologythatwillprovideincrementalbenefitstoenduser
Product/Service
Anew product/servicethathasthepotentialtoquicklytakemarketshareand
changethedynamicsofanindustry
Rapidadvancesinadoptionof
product/service
Smalladvancesinproduct/serviceorenduserexperience that
maintainsorgrowsmarketshareorcompetitive
positioning
BusinessModel
Anewrevenue/costmodelortheconfluenceoftechnologiesthathassignificantimpacton
incumbents
Rapidadoptionofbusinessmodelleadstorapid
growthinmarketshare
Continuous evolutionofbusinessmodeltomaintain
competitivestrength
LevelofinnovationKe
ydriverso
finno
vatio
n
Source: GuinnessAtkinsonAssetManagement
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8Howdoweidentifyinnovativecompanies?
topdownfocusonthethemes
bottomupfocusonthemetrics
GlobalInnovatorsUniversecandidatesforinclusioninthe
Source: GuinnessAtkinsonAssetManagement
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Marketperformance- regions
Source: GuinnessAtkinsonAssetManagement,Bloomberg(dataasof09.30.2017)
§ Anotherstrongquarter– MSCIWorldup4.96%(totalreturninUSD)– followingpositiveQ1andQ2§ RegionalquarterlyperformancefollowedYTDtrends;strongmarketsinEurope,Asiaex-Japan,andEM;USlagging
incomparison§ WeakerUSdollarboostedlocalcurrencyreturnsofnon-USmarkets
8.01
%
6.76
%
6.72
%
4.96
%
4.84
%
4.46
%
3.89
%
28.0
8%
26.2
7%
31.1
6%
16.5
3%
15.6
1%
14.4
1%
14.4
0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
MSCI EmergingMarkets
MSCI Europe ex-UK
MSCI AC Asiaex-Japan
MSCI World MSCI UK MSCI US MSCI Japan
Tota
l ret
urn
(USD
)
Regional performance
Quarter YTD
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Marketperformance- sectors
§ StrongperformancefromenergyinQ3asoilprice(WTI)recoveredfrom$46/bbl to$52/bbl.SectorstillinnegativeterritoryYTD,however
§ Consumerstaplesweakestsectorinquarter.‘Defensive’sectorsgenerallyunderperformed§ Yeartodate:InformationTechnologystillsignificantoutperformer
9.28
%
9.06
%
8.50
%
5.60
%
5.48
%
4.96
%
4.01
%
3.42
%
3.23
%
2.52
%
2.11
%
-0.3
3%
-0.8
7%
20.0
9%
27.9
7%
19.5
4%
16.6
5%
16.5
3%
4.75
%
15.2
9%
15.1
0%
19.2
8%
10.4
8%
11.3
7%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
Tota
l ret
urn
(USD
)
MSCI World sector performance
Quarter YTD
Source: GuinnessAtkinsonAssetManagement,Bloomberg(dataasof09.30.2017)
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Marketperformance- styles
§ Growthcontinuedtooutperformedvalue,butenergyrecoveryhelpedboostvalueperformanceinthequarter
§ ValuesignificantlyunderperforminggrowthYTD(delta=8.05%)
§ Smallcapbetterinquarter– potentialoftaxbenefitinUS?
§ YTDmarketcapnotasignificantdriverofperformance
5.28
%
4.96
%
4.65
%
20.6
7%
16.5
3%
12.6
2%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
MSCI World Growth MSCI World Index MSCI World Value
Tota
l ret
urn
(USD
)
MSCI World style performance
Quarter YTD
6.34
%
5.01
%
4.96
%
4.76
%
17.2
1%
16.4
3%
16.5
3%
16.9
5%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
MSCI World Small Cap MSCI World Large Cap MSCI World Index MSCI World Index Mid Cap
Tota
l ret
urn
(USD
)
MSCI World market cap performance
Quarter YTD
Source: GuinnessAtkinsonAssetManagement,Bloomberg(dataasof09.30.2017)
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12Performancevs.benchmark
Performancedataquotedrepresentspastperformanceanddoesnotguaranteefutureresults.Theinvestmentreturnandprincipalvalueofaninvestmentwillfluctuatesothataninvestor'sshares,whenredeemed,maybeworthmoreorlessthantheiroriginalcost.CurrentperformanceoftheFundsmaybelowerorhigherthantheperformancequoted.Totalreturnsreflectafeewaiverineffectandintheabsenceofthiswaiver,thetotal returnswouldbelower.Performancedatadoesnotreflectthe2%redemptionfeeforsharesheldlessthan30daysandifdeductedthefeewouldreducetheperformancequoted.Forperformancecurrenttothemostrecentmonthendpleasevisitwww.gafunds.com/our-funds orcall800-915-6565.
TheAdviserhascontractuallyagreedtoreimburseexpenses(excludingAcquiredFundFeesandExpenses,interest,taxes,dividendsonshortpositionandextraordinaryexpenses)inordertolimittheTotalAnnualOperatingExpensesforInstitutionalSharesandfortheInvestorClassto0.99%and1.24%respectivelythroughJune30,2018
PerformancedatashownforGlobalInnovators,InstitutionalClass(GINNX),priortoitslaunchdateon12.31.2015,usesperformancedatafromtheGlobalInnovators,InvestorClass(IWIRX).
Source: GuinnessAtkinsonAssetManagement,Bloomberg
1Investorclass Ticker:IWIRX Inception12.15.1998 Expenseratioasof5/3/17*1.24%(net);1.35%(gross)
2Institutionalclass Ticker:GINNX Inception12.31.2015 Expenseratioasof5/3/17*0.99%(net);1.38%(gross)
asof09.30.2017(inUSD)
YTD 1year 3yearsannualized
5yearsannualized
10yearsannualized
Sinceinceptionannualized
GlobalInnovators,InvestorClass1 26.82% 29.58% 11.50% 17.88% 8.49% 8.00%
GlobalInnovators,InstitutionalClass2 27.04% 29.88% 11.67% 17.98% 8.54% 8.03%
MSCIWorldIndex 16.53% 18.85% 8.34% 11.65% 4.86% 5.78%
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13Fundperformance
Source: GuinnessAtkinsonAssetManagement,Bloomberg(dataasof09.30.2017)
Performancedataquotedrepresentspastperformanceanddoesnotguaranteefutureresults.Theinvestmentreturnandprincipalvalueofaninvestmentwillfluctuatesothataninvestor'sshares,whenredeemed,maybeworthmoreorlessthantheiroriginalcost.CurrentperformanceoftheFundsmaybe lowerorhigherthantheperformancequoted.Totalreturnsreflectafeewaiverineffectandintheabsenceofthiswaiver,thetotalreturnswouldbelower.Performancedatadoesnotreflectthe2%redemptionfeeforsharesheldlessthan30daysandifdeductedthefeewouldreducetheperformancequoted.Forperformancecurrenttothemostrecentmonthendpleasevisitwww.gafunds.com/our-funds orcall800-915-6565.
10.8
9%
11.8
2% 18.7
6%
21.1
7%
-45.
42%
45.2
0%
17.0
0%
-6.5
1%
19.9
1%
45.2
9%
12.5
5%
-3.0
4%
9.51
%
26.8
2%
15.2
8%
10.0
8% 20.7
0%
9.66
%
-40.
30%
30.8
7%
12.4
1%
-4.9
9%
16.5
6% 27.4
3%
5.58
%
-0.2
8%
8.19
% 16.5
3%
-50%-40%-30%-20%-10%
0%10%20%30%40%50%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD 2017
Guinness Atkinson Global Innovators MSCI World Index
-50%
0%
50%
100%
150%
200%
250%
300%
350%
Total return (USD)
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14Performanceattributioncommentary
§ Overweightinformationtechnologyandunderweightconsumerstapleswerethelargestcontributorstopositiveperformanceintermsofassetallocationrelativetothebenchmarkinthequarter
§ Underweightmaterialandenergysectorswasasmalldragonperformanceoverthequarter
§ Stockselectionwaspositiveacrossallsectorsinthequarter
§ Notablestockselectionperformanceaddedsignificantlytoperformanceinthequarter
§ Informationtechnology AACTech,AppliedMaterials,Nvidia,Paypal,Infineon§ Industrials Boeing,Schneider,Roper§ Consumerdiscretionary NewOrientalEducation,Continental
Source: GuinnessAtkinsonAssetManagement,Bloomberg(dataasof09.30.2017)
Fund holdings are subject to change.
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15Notableperformancedriversinquarter
§ AACTechnologyupstronglyafterbeatingearnings.Themanufacturerofacousticcomponentsforsmartphones,hasseenaboostinsalesandreportedimproveddiversificationacrossproductlinesalongsideachievingahighgrossprofitmarginofover40%.
§ Boeing reportedstrongsecond-quarterresultsandboosteditscoreearningspershareforecastforthefullyear,withthenewguidanceexceedingthehighestanalystestimate.Eventhoughsaleswerelowerthanexpected,thesharesrosestrongly.Theprofitabilityofits787Dreamlinercontributedtostrongcashflow.
§ NewOrientalEducation,aprivateeducationproviderinChina,madeearlygainsinJulyoffthebackofapositiveresearchnoteandpositivesentiment.Laterinthemonththecompanyreportedfourth-quarterearnings,beatingtheaverageanalystearningsestimateby4%.
§ AppliedMaterials,thesemiconductorequipmentmanufacturer,inSeptemberannouncedanew$3bnsharerepurchaseplanandoutlineditsgrowthplanthrough2020,whichwaspositivelyreceivedbythemarket.
§ Nvidia continuedtorallyduetoitsexposuretoseveralofthefastestgrowthsecularendmarkets,whichreceivedpositivenewsthroughoutthequarter
§ CatcherTechnology,manufacturerofaluminum andmagnesiumcasings,sufferedwithotherApplesuppliersinSeptemberaspreviouslyhighexpectationsturnedtodoubtsoverwhetherdemandwouldmeetmarketexpectationsforthelatestiPhonerelease.Catcherhadrisen84%(totalreturninUSD)inthefirst8monthsof2017.
§ Nikeweakenedafteritreporteditsslowestquarterlysalesgrowthsince2010.But,morepositively,Nikehasbeenattemptingtocut outthemiddlemanandselldirecttocustomers.Itreportedwebstoresalesincreasingby19%,whileitsretailshopsincreasedlikeforlikesalesby5%.
Top5performingstocks Bottom5performingstocksTotalreturn
(inUSD)Totalreturn
(inUSD)
AACTechnologies 34.74% CatcherTechnologies -19.62%Boeing 29.33% Nike -11.82%AppliedMaterials 26.38% Shire -7.56%NewOrientalEducation 25.88% Qualcomm -4.70%Nvidia 23.77% Comcast -1.13%
Source: GuinnessAtkinsonAssetManagement,Bloomberg(dataasof09.30.2017)Fund holdings are subject to change.
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Changesmadeinthequarter
§ BuyFacebook§ Purchasedontheprospectofcontinuedstrongearningsgrowthwhichwebelievethemarketisnotappreciating§ Upsidepotentialintheaveragerevenueperuser(ARPU)growthintheUS,asFacebookstillaccountsforarelativelysmallpercentage
ofthetotalrevenuespendperperson§ UsergrowthcouldaccelerateinAsia(especiallyinIndia)andsignificantearningspotentialinFacebook’sunmonetizedappssuchas
WhatsAppandMessenger
§ BuyContinental§ Traditionallyknownasatiremanufacturerbuttodayoverhalfitsrevenuecomesfromautomotivesystems,whichcoverarangeof
innovativetechnologies§ Wellpositionedtotakeadvantageofashifttowardssmarterandconnectedcarsandautonomousdriving§ Stableandhighcashflowreturnoninvestment,lowdebt,marginswhicharehigherthanitspeers,andbelowaveragemultiple
§ SellGilead§ HeldinthefundsinceOctober2010.Oneofourmostsuccessfulholdingsrisingalmost400%overourholdingperiod,inatimethe
market“only”ralliedaround100%(totalreturninUSD).§ HaddonewellfromitsinnovativeHepatitisCandHIVdrugs,butwaslosingmarketshareduetocompetition§ Revenuesandearningsslowedsignificantly,andrecentrallyafter$11bnpurchaseofKitePharmagaveopportunetimetoexit
§ SellQualcomm§ HeldintheGlobalInnovatorsFundsinceOctober2013§ SalesmaybeimpactedbylawsuitsagainstitsroyaltymodelfromApple§ Alsofacesrevenuepressuresassmartphoneshipmentsslowandpricesforitschipsdropamidrisingcompetition.Alsoseeingmorein-
housechipsfromthemajorsmartphonemanufacturerswhichcouldimpactsalessignificantly
Buys SellsFacebook GileadSciencesContinental Qualcomm
Source: GuinnessAtkinsonAssetManagement,Bloomberg(dataasof09.30.2017)Fund holdings are subject to change.
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Portfolioallocation:sector
§ SaleofGileadreducedhealthcare;saleofQualcommreducedIT§ PurchaseofFacebookincreasedIT;purchaseofContinentalincreasedconsumerdiscretionary
§ Overallthefundmaintainsahigherweightingrelativetotheindexininformationtechnologyandindustrials§ Thelargestunderweightsinthefundaretofinancialsandconsumerstaples
§ Thefundmaintainsazeroweightingtotelcos,utilities,realestate,materials,andconsumerstaples
Source: GuinnessAtkinsonAssetManagement,Bloomberg(dataasof09.30.2017)
-40% -20% 0% 20% 40%
Cash
ConsumerStaples
Materials
TelecommunicationServices
Utilities
RealEstate
Energy
Financials
HealthCare
ConsumerDiscretionary
Industrials
InformationTechnology
Over/underweights0% 10% 20% 30% 40% 50% 60%
Cash
ConsumerStaples
Materials
TelecommunicationServices
Utilities
RealEstate
Energy
Financials
HealthCare
ConsumerDiscretionary
Industrials
InformationTechnology
FundallocationvsMSCIWorldIndex
Fund
Index
Sector holdings are subject to change.
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Portfolioallocation:geography(bydomicile)
§ FundequalweightinUS§ FundunderweightEuropebyc.9%§ Benchmark(MSCIWorld)doesnotincludeemergingmarkets.Fundhasc.12%exposuretothisregion§ ThefundcontinuestoholdonlyonecompanyinJapanandisthusunderweightthisregionbyc.5%
Source: GuinnessAtkinsonAssetManagement,Bloomberg(dataasof09.30.2017)
0% 10% 20% 30% 40% 50% 60% 70%
Cash
AsiaPacific(exJapan)
Other
MiddleEast
Japan
Emergingmarkets
Europe
NorthAmerica
FundallocationvsMSCIWorldIndex
Fund
Index
-15% -10% -5% 0% 5% 10% 15%
Cash
AsiaPacific(exJapan)
Other
MiddleEast
Japan
Emergingmarkets
Europe
NorthAmerica
Over/underweights
Sector holdings are subject to change.
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19Geographicexposure
Source: GuinnessAtkinsonAssetManagement(dataasof09.30.2017)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Bydomicile Bysales
Other/undefined
LatinAmerica
Africa/ME
Asia-Pacific
UK
Europeex-UK
NorthAmerica
Sector holdings are subject to change.
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20
PE PE
17Y 18Y
ContinentalAG Automobiles&Components 50.6 DE 3.6% 13.4 12.1BoeingCo/The CapitalGoods 154.3 US 3.9% 25.3 23.3EatonCorpPLC CapitalGoods 35.1 US 3.3% 16.7 15.1FANUCCorp CapitalGoods 45.6 JP 3.4% 37.0 29.3RoperTechnologiesInc CapitalGoods 25.6 US 3.5% 26.2 24.6SchneiderElectricSE CapitalGoods 51.6 FR 3.2% 18.5 16.8SiemensAG CapitalGoods 119.6 DE 3.3% 15.2 14.9NIKEInc ConsumerDurables&Apparel 83.5 US 3.2% 21.5 22.2NewOrientalEducation&TechnologyGroupInc ConsumerServices 14.8 CN 3.5% 47.7 37.2IntercontinentalExchangeInc DiversifiedFinancials 40.6 US 3.5% 23.4 20.4WisdomTreeInvestmentsInc DiversifiedFinancials 1.5 US 3.1% 39.2 29.7SchlumbergerLtd Energy 93.3 US 3.2% 46.5 30.4DanaherCorp HealthCareEquipment&Servic 60.2 US 3.4% 21.7 20.0ComcastCorp Media 173.3 US 3.0% 18.9 17.2ShirePLC Pharmaceuticals,Biotechnology 47.3 US 3.3% 10.2 9.4AppliedMaterialsInc Semiconductors&Semiconductor 58.3 US 3.6% 16.1 14.2InfineonTechnologiesAG Semiconductors&Semiconductor 29.2 DE 3.5% 24.6 22.0IntelCorp Semiconductors&Semiconductor 185.8 US 3.3% 12.7 12.2NVIDIACorp Semiconductors&Semiconductor 117.3 US 3.5% 60.8 44.3AlphabetInc Software&Services 690.3 US 3.2% 24.9 20.7CheckPointSoftwareTechnologiesLtd Software&Services 19.4 IL 3.4% 22.0 20.2CognizantTechnologySolutionsCorp Software&Services 43.7 US 3.3% 19.6 16.7FacebookInc Software&Services 506.3 US 3.3% 28.8 24.4PayPalHoldingsInc Software&Services 81.5 US 3.8% 34.8 28.9SAPSE Software&Services 137.3 DE 3.2% 22.2 20.3AACTechnologiesHoldingsInc TechnologyHardware&Equipmen 22.3 CN 3.0% 25.1 19.8CatcherTechnologyCoLtd TechnologyHardware&Equipmen 8.0 TW 2.6% 10.0 8.1CiscoSystemsInc TechnologyHardware&Equipmen 165.9 US 3.4% 14.1 13.8SamsungElectronicsCoLtd TechnologyHardware&Equipmen 310.9 KR 3.4% 8.9 7.7VeriFoneSystemsInc TechnologyHardware&Equipmen 2.3 US 3.1% 15.6 12.9
Averagemkt.cap 112.5 Totalportfolio 19.6 17.3Medianmkt.cap 55.0 Y-o-Ygrowth 13%
MSCIWorldIndex 17.9 16.3Fundpremium/(discount) 9.6% 5.8%
NameCountryofdomicile
%NAVMkt.capIndustry
Portfolioprofile
Source: GuinnessAtkinsonAssetManagement,Bloomberg(dataasof9.30.2017)Fundholdingsaresubjecttochange.Forecastsareinherentlylimitedandcannotbereliedupon.
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21Portfolioallocationbyestimatedfuturelongtermgrowthrate
Portfoliotoday
Rangelast
10years
10–20%growth
20%+growth
33% 20-50%
60% 30-65%
7% 0-20%
0–10%growth
Source: GuinnessAtkinsonAssetManagementestimates(asof09.30.2017)
EstimatesareusedareusedbyGuinnessAtkinsontohelpallocatetheportfolio,andmaynotbeindicativeoftheFund'sperformance.
Allocation
Thementionofanyindividualsecuritiesshouldneitherconstitutenorbeconstruedasarecommendationtopurchaseorsellsuch securities,andtheinformationprovidedregardingsuchindividualsecuritiesisnotasufficientbasisuponwhichtomakeaninvestmentdecision.
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22Portfoliostatistics– arewedoingwhatwesaywewilldo?
Source:GuinnessAtkinsonAssetManagement,Bloomberg,CSHOLT(dataasof9.30.2017)
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance of the Funds may be lower or higher than the performance quoted. Total returns reflect a fee waiver in effect and in the absence of this waiver, the total returns would be lower. Performance data does not reflect the 2% redemption fee for shares held less than 30 days and if deducted the fee would reduce the performance quoted. For performance current to the most recent month end please visit www.gafunds.com/our-funds or call 800-915-6565.
Fund MSCIWorld
Annual i sed3yrsa les growth
11% 4%
Earnings growth
13% 9%
FCFyield 4.7% 4.8%
PE(2017) 19.6 17.9
ConvictionInnovation Quality Growth
Pos i tions 30
Top10%NAVBottom10%NAV
36%30%
Activeshare 94%
Fund MSCIWorld
R&D/Sa les 7.9% 5.8%
CAPEX/Sa les 6.6% 8.6%
Fund MSCIWorld
CFROI(2016) 18% 11%
Netdebt/equity
-7% 74%
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23Marketcommentary– areITstocksexpensive?
§ Not expensive relative to S&P500
Source: GuinnessAtkinsonAssetManagement(dataasof09.30.2017)
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24Marketcommentary– areITstocksexpensive?
§ Cheap relative to historic average
Source: GuinnessAtkinsonAssetManagement(dataasof09.30.2017)
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25Marketcommentary– areITstocksexpensive?
§ But worth noting that larger IT companies are generating the best margins
Source: GuinnessAtkinsonAssetManagement(dataasof09.30.2017)
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26
*TheAdvisorhascontractuallyagreedtoreimburseexpenses(excludingAcquiredFundFeesandExpenses,interest,taxes,dividendsonshortpositionandextraordinaryexpenses)inordertolimittheTotalAnnualOperatingExpensesforInstitutionalSharesand forInvestorClassto0.99%and1.24%respectivelythroughJune30,2018.TotheextentthattheAdvisorabsorbsexpensestosatisfythiscap,itmayrecoupaportionorallofsuchamountsabsorbedatanytimewithinthreefiscalyearsafterthefiscalyearinwhichsuchamountswereabsorbed,subjecttotheexpensecapinplaceatthetimerecoupmentissought,whichcannotexceedtheexpensecapatthetimeofwaiver.TheexpenselimitationagreementmaybeterminatedbytheBoardoftheFundatanytimewithoutpenaltyupon60days’ notice.
TheFund’sinvestmentobjectives,risks,chargesandexpensesmustbeconsideredcarefullybeforeinvesting.Thestatutoryandsummaryprospectuscontainsthisandotherimportantinformationabouttheinvestmentcompany,anditmaybeobtainedbycalling800-915-6566orvisitinggafunds.com.Pleasereaditcarefullybeforeinvesting.
Diversificationdoesnotassureaprofitorprotectagainstlossinadecliningmarket
Mutualfundinvestinginvolvesriskandlossofprincipalispossible.Investmentsinforeignsecuritiesinvolvegreatervolatility,political,economicandcurrencyrisksanddifferencesinaccountingmethods.TheFundalsoinvestsinsmallercompanies,whichwillinvolveadditionalriskssuchaslimitedliquidityandgreatervolatility.TheFundisnon-diversifiedmeaningitsassetsmaybeconcentratedinfewerindividualholdingsthandiversifiedfunds.Therefore,theFundismoreexposedtoindividualstockvolatilitythandiversifiedfunds.
Opinionsexpressedaresubjecttochangeandshouldnotbeconsideredinvestmentadvice.
Cashflowisthetotalamountofmoneybeingtransferredintoandoutofabusiness.
Fundholdingsandsectorallocationsaresubjecttochangeandarenotrecommendationstobuyorsellanysecurity.
PricetoEarningsRatio(P/E)isAvaluationratioofacompany'scurrentsharepricecomparedtoitsper-shareearnings.
ReturnonCapitalis areturnfromaninvestmentthatisnotconsideredincome.
Disclosure
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27Disclosure
Marketcapitalization(cap)iscalculatedbymultiplyingacompany'ssharesoutstandingbythecurrentmarketpriceofoneshare.Theinvestmentcommunityusesthisfiguretodetermineacompany'ssize,asopposedtosalesortotalassetfigures.
TheMSCIWorldIndexisafreefloat-adjustedmarketcapitalizationweightedindexthatisdesignedtomeasuretheequitymarketperformanceofdevelopedmarkets.
TheMSCIEuropeexUKIndexcaptureslargeandmidcaprepresentationacross14DevelopedMarkets(DM)countriesinEurope.Theindexcoversapproximately85%ofthefreefloat-adjustedmarketcapitalization acrossEuropeanDevelopedMarkets excludingtheUK.
TheMSCIACAsiaex-JapanIndexcaptureslargeandmidcaprepresentationacross2of3DevelopedMarkets(DM)countries*(excludingJapan)and9EmergingMarkets(EM)countriesinAsia.Theindexcoversapproximately85%ofthefreefloatadjustedmarketcapitalizationineachcountry.
TheMSCIEmergingMarketsIndexcaptureslargeandmidcaprepresentationacross24EmergingMarkets(EM)countries.With 845constituents,theindexcoversapproximately85%ofthefreefloat-adjustedmarketcapitalizationineachcountry.
TheMSCI JapanIndexisdesignedtomeasuretheperformanceofthelargeandmidcapsegmentsoftheJapanesemarket.With320constituents,theindexcoversapproximately85%ofthefreefloat-adjustedmarketcapitalizationinJapan.
TheMSCIUKIndexisdesignedtomeasuretheperformanceofthelargeandmidcapsegmentsoftheUKmarket.With109constituents,theindexcoversapproximately85%ofthefreefloat-adjustedmarketcapitalizationintheUK.
TheMSCIUSIndexisdesignedtomeasuretheperformanceofthelargeandmidcapsegmentsoftheUSmarket.With635constituents,theindexcoversapproximately85%ofthefreefloat-adjustedmarketcapitalizationintheUS.Markets excludingtheUK.
Onecannotinvestdirectlyinanindex.
DistributedbyForesideFundServices,LLC