Global Energy: Q3 2018 webcast · 2018. 11. 2. · Global Energy: Q3 2018 webcast October, 2018 Tim Guinness (Co-manager) Will Riley, CA (Co- manager) Jonathan Waghorn (Co-manager)

Global Energy: Q3 2018 webcast

October, 2018Tim Guinness (Co-manager)Will Riley, CA (Co-manager)Jonathan Waghorn (Co-manager)

For Registered Investment Professional Use Only

1Energy sector: outlook

• Oil inventories continue to tighten, keeping spot oil prices elevated above $70/bl

• Global oil demand growth for 2018/19 has seen positive revisions, despite EM troubles

• US shale supply growing as expected, though Permian infrastructure constraints have emerged, which will limit growth in 2019

• OPEC now raising production to prevent an oil price spike, in the face of collapse in Venezuelan production and renewal of sanctions against Iran

• Free cashflow generation improving for energy equities, with capital discipline generally being rewarded by the market over growth

• Energy equities ahead of broad market over the last year but lagging oil price – FCF/ROCE improvements imply material upside in the sector, as do oil price valuation sensitivities

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Oil

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Brent oil priceIncentive price for new supplyEstimated demand destruction levelCash cost of marginal current supply

Economics: marginal cost of supply has historically defined prices

• The oil price trades between the cash cost of supply and the price at which demand falls• Marginal cost tends to determine the oil price in the longer term

Economics of crude oil

Source: Bernstein, Guinness Atkinson, Sept 2018

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Brent 5 year forward oil price Brent oil price

$/bl

Spot Brent price

5 year forward Brent price

3Energy equities: longer dated oil prices matter more than spot

Source: Bernstein; Guinness Atkinson (Sept 2018)

• Outperformance from energy equities in Q2 2018 coincided with a rise in 5 year forward oil prices, which is more important than spot. 5 year forward prices still rising

Brent oil prices: spot vs 5 year forward ($/bl)

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018E 2019EOECD demand IEA IEANorth America 25.7 25.8 24.5 25.8 24.5 23.7 24.1 24.0 23.6 24.2 24.2 24.6 24.9 25.1 25.4 35.6Europe 15.6 15.7 15.7 15.6 15.5 14.7 14.7 14.3 13.8 13.6 13.5 13.8 14.0 14.3 14.3 14.3Pacific 8.8 8.9 8.7 8.7 8.3 8.0 8.2 8.2 8.5 8.3 8.1 8.1 8.1 8.1 8.0 8.0Total OECD 50.1 50.4 48.9 50.1 48.3 46.4 47.0 46.5 45.9 46.1 45.8 46.5 47.0 47.4 47.7 47.9Change in OECD demand 0.3 -1.5 1.2 -1.8 -1.9 0.6 -0.5 -0.6 0.2 -0.3 0.7 0.5 0.4 0.3 0.2NON-OECD demandFSU 3.8 3.9 4.0 4.0 4.2 4.0 4.1 4.4 4.6 4.5 4.6 4.6 4.5 4.6 4.7 4.8Europe 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.8 0.8China 6.4 6.7 7.2 7.6 7.7 7.9 8.9 9.3 9.9 10.4 10.8 11.6 12.0 12.6 13.2 13.6India 2.6 2.6 2.7 2.9 3.1 3.2 3.3 3.5 3.7 3.7 3.8 4.2 4.6 4.7 5.0 5.2Other Asia 6.4 6.4 6.6 6.9 6.8 7.1 7.5 7.6 7.6 7.9 8.0 8.2 8.4 8.7 8.8 9.0Latin America 4.9 5.0 5.2 5.3 5.6 5.7 6.1 6.2 6.5 6.6 6.8 6.7 6.4 6.5 6.4 6.5Middle East 5.5 5.9 6.1 6.4 6.7 7.1 7.3 7.5 7.9 8.0 8.4 8.4 8.5 8.5 8.5 8.6Africa 2.8 2.9 2.9 3.3 3.3 3.4 3.5 3.5 3.8 3.8 3.9 4.3 4.3 4.3 4.3 4.4Total Non-OECD 33.1 34.1 35.4 37.1 38.1 39.1 41.4 42.7 44.8 45.6 47.4 48.6 49.4 50.5 51.6 52.8

Change in non-OECD demand 1.0 1.3 1.7 1.0 1.0 2.3 1.3 2.1 0.8 1.8 1.2 0.8 1.1 1.1 1.2

Total Demand 82.5 83.8 85.1 87.2 86.4 85.5 88.4 89.2 90.7 91.7 93.1 95.1 96.4 97.9 99.3 100.8Change in demand 1.3 1.3 2.1 -0.8 -0.9 2.9 0.8 1.5 1.0 1.4 2.0 1.3 1.5 1.4 1.5

Near term oil demand: world oil demand up 1.4m b/day in 2018

Source: IEA Oil Market Report Sept 2018

• 2018 world oil demand up around 12.1m b/day on pre-recession peak (2007)• Non-OECD demand has grown unchecked for over a decade, not unseated by financial crisis• Estimates for 2018 and 2019 indicate healthy demand growth of 1.4 / 1.5m b/day – mostly non-OECD

Global oil demand (m b/day)

4

Forecasts are inherently limited and cannot be relied upon

Near term oil demand: China oil consumption boosted by SUVs

Source: MS; PJ; July 2018

• China oil consumption boosted by change in consumer behavior in vehicle market

China SUV sales as % of total vehicle sales

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DP (%

) $100 oil in 2014 = 4.3% of GDP$53 oil in 2017 = 2.4% of GDP

$100

$75

$50

Oil price: $70 oil implies spend of 3% of world GDP in 2018

Source Bloomberg LP; Guinness Atkinson, data as of Sept 2018

• We believe Saudi is targeting a price that gives a “reasonable” world oil bill• Ten year average world oil bill is 4.2%, 20yr average is 3.2%, 30yr average is 2.8%• If oil averages $75 it will mean in 2020 the world oil bill is 3.1% of GDP• If oil averages $50 it will mean in 2020 the world oil bill is 2.1% of GDP

The world oil ‘bill’ as a percentage of world GDP

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Oil demand: EV sales growing well from a low base 7

Source : Guinness Atkinson (estimates)

Global EV sales

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EV sales (millions) EV sales as % of total auto sales

• Electric vehicle sales are expected to reach 1.9m units in 2018, up from 1.3m in 2017• EV sales this year will comprise around 2.4% of total passenger vehicle sales


Oil demand: vehicle growth is creating an oil demand shock 8

Source : US DoE (actual), Guinness Atkinson (estimates) as of Sept 2018

• Crude oil is 60% used in transportation and there are limited substitutes currently• We expect the global fleet of ICE vehicles to expand by around 20% over next 10 years

Electric vehicles vs non-electric vehicles

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Electric vehicle population (end of year)

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(million vehicles)

EVs at around 1% of world vehicle fleet in 2020 (15m vehicles vs 1.5m today)

Assumes 1 in 5 cars sold in 2025 is an EV

Assumes 1 in 2 cars sold in 2030 is an EV


Oil demand: what about the rest?

Source : US DoE (actual), Guinness Atkinson (estimates) as of Sept 2018

• Passenger vehicles account for less than 30% of oil demand. Other key sources of demand (heavy transport; petrochemicals) more closely linked to GDP growth

Source of demand %Power 6%Petrochemicals 13%Other industry 11%Cars & light trucks 26%Heavy vehicles 18%Air travel 6%Shipping 6%Rail 1%Other 13%Total 100%

• Global truck fleet rising from 377m in 2015 to 600m in 2030 (approx. 60%)

• Air revenue passenger kms rising from 9trn in 2015 to 15trn in 2030 (approx.70%)

• Seaborne trade rising from 54trn ton miles in 2015 to 90trn ton miles in 2030 (approx.70%)

• Ethylene demand rising from 141m tons to 230m tons in 2030 (approx.65%)

Cars & light trucks 26%

Other 74%

Structure of global oil demand

9


Global oil supply: three main components

Source: IEA; Guinness Atkinson (Sept 2018)

1) Non-OPEC (ex-US onshore): holding up thanks to legacy projects, but facing decline2) OPEC (inc NGLs): low cost production, but in countries struggling to breakeven fiscally3) US onshore: shorter cycle, able to grow at $50/bl

Global oil supply in 2017 (m b/day)

51m b/day 40m b/day 7m

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Non-OPEC (ex-US onshore) OPEC (inc NGLs) US onshore

m b/day

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Non-OPEC oil supply (ex-US): production flat to declining 11

Source : Kessler Energy, Simmons, IEA, Guinness Atkinson, Sept 2018

• Non-OPEC supply (ex-US) project start-ups still strong in 2017/18 then sharp drop in 2019/20, resulting from the oil price fall in 2014 and 2015

• There is typically a 3-4 year time lag between project sanction and project start up

Major non-OPEC (ex-US) project start-up schedule

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Non-OPEC (ex-US) supply: 2013-2022


Non-OPEC oil supply (ex-US): growth regions disappointing 12

Source : Simmons (Sept 2018)

Brazil: actual oil supply growth vs IEA forecast


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US onshore oil production

US onshore oil production (LH axis)

US onshore oil production (year-on-year change, RH axis)

'000s b/day '000s b/day

Non-OPEC oil supply: US onshore supply at new high in Q3 2018 13

Source: EIA (oil production to July 2018); Bloomberg (oil rig count)

US onshore oil production (actual and year-on-year change)

• US onshore shale supply up by 1.5m b/day year-on-year• US production profile proving lumpy, depending on timing of well completions

Non-OPEC oil supply: US onshore production by basin 14

Source: Heikkinen; Guinness Atkinson

US onshore oil production by basin

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000s b/day

• US shale growth since 2014 dominated by the Permian basin• Shale supply grew by 1.2m b/day (Q4 to Q4) in 2017; we expect similar in 2018

Year Annual growth (Q4 to Q4)

000s b/day2011 5882012 8752013 8662014 1,6322015 432016 -4292017 1,199

2018 (est) 1,125


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WTI oil price Permian oil price Brent oil price

$/bl

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WTI

Permian

Non-OPEC supply: Permian differentials have widened significantly 15

Source: Bloomberg; Guinness Atkinson

• Rapid oil production growth in the Permian is causing infrastructure constraints• The price of Permian oil (WTI Midland) has fallen relative to WTI oil

• New pipelines will be required to export the extra oil and gas from the region• Constraints will continue through the remainder of 2018 and much of 2019

Brent vs WTI vs WTI Midland (Permian) oil prices

Non-OPEC oil supply: US shale treadmill challenge grows 16

Source: Goldman Sachs, as of June 2018

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New production required to keep overall US shale production flat (m b/day)


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OPEC oil supply: OPEC adjusting to Venezuela/Iran shortfalls

Source: Bloomberg, Sept 2018; green dot indicates Jan 2017 quota change

• Ex Nigeria & Libya, OPEC cut in 2017 by 1.2m b/day • ‘Core’ OPEC now raising production again, to combat Venezuela/Iran shortfalls

OPEC oil production (ex Nigeria/Libya)

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1.2m b/day quota cut

Further decline from Venezuela of 0.5m b/day

OPEC oil supply: sharp deterioration from Venezuela

Source: Bloomberg, Sept 2018; green dot indicates Jan 2017 quota change

• Venezuela currently producing around 1.3m b/day, well below 1.97m b/day quota• Deteriorating infrastructure, weak reservoir management and US sanctions contributing to decline• US refiners increasingly rejecting Venezuelan crude for quality problems

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Venezuela oil production

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OPEC oil supply: Iranian exports falling ahead of sanctions

Source: Bloomberg, Simmons Sept 2018; green dot indicates Jan 2017 quota change. Import volumes by country represent average from Nov 2017 – April 2018

• During the 2012-16 sanction period, Iranian oil exports fell by 1m b/day• Ahead of the November 2018 sanctions renewal deadline, exports have already fallen by 0.5m b/day • US placing heavy pressure on Europe/Asian importers to reduce Iranian oil purchases to zero

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Iranian oil production

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Iranian oil exports: main customers

OPEC oil supply: capacity to grow longer term is limited

Source: Bloomberg, Simmons Sept 2018; green dot indicates Jan 2017 quota change. Import volumes by country represent average from Nov 2017 – April 2018

• Average major OPEC project start-ups from 2014 to 2019 average around 1m b/day • In 2020, start-ups fall away to virtually zero• OPEC production capacity has recently been downgraded by 1.7m b/day

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Major OPEC project start-ups OPEC capacity forecast (per the IEA)

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2017 2018 2019 2020 2021 2022 2023

2017 forecast 2018 forecast

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Oil supply/demand: OECD inventories normalizing

OECD oil inventories (million bbls)

Source: IEA Oil Market Report (Aug 2018); Guinness Atkinson

• In 2017, inventory levels started to tighten thanks to OPEC cuts, accelerating in 2H 2017• Declines have persisted in 2018, bringing inventories closer to the normalized range

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Natural gas: summary views

• The gap between US and international gas prices widened in 2017• US continues to see high levels of new supply, economic at $3/mcf, from the Marcellus• New US LNG export facilities starting up over next three years, with major wave in 2019

Global natural gas prices (US$/mcf)

Source: Bloomberg, Guinness Atkinson (data as of Sept 2018)

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Indicative fund contribution, per position, Q3 2018

Source: Guinness Atkinson, Bloomberg, data as of end Sept 2018;

Past performance should not be taken as an indicator of future performance. The value of this investment and any income arising from it can fall as well as rise as a result of market and currency fluctuations as well as other factors.

Q3 2018 indicative contribution

23

• Q3 2018 Fund performance (USD) +0.5%

vs MSCI World Energy Index (USD) +0.8%

• Stronger performers in Q3 2018:

• Emerging market large cap producers

• US refining

• European integrateds

• Weaker performers in Q3 2018:

• US focused E&Ps

• Large diversified service companies

-0.50 0.00 0.50 1.00

GAZPROM PAO -SPON ADR

CNOOC LTD

CONOCOPHILLIPS

HELIX ENERGY/UNIT CORP

PETROCHINA CO LTD-H

TOTAL SA

EQUINOR ASA

RESEARCH PORTFOLIO/OTHER

ENI SPA

VALERO ENERGY CORP

APACHE CORP

BP PLC

JA SOLAR/SUNPOWER

MSCI WORLD ENRGY INDEX

GUINNESS GLOBAL ENERGY FUND

SOCO/TULLOW

ROYAL DUTCH SHELL PLC-A SHS

QEP RESOURCES/OASIS

OMV AG

OCCIDENTAL PETROLEUM CORP

IMPERIAL OIL LTD

CHEVRON CORP

SUNCOR ENERGY INC

NEWFIELD EXPLORATION CO

ANADARKO PETROLEUM CORP

SCHLUMBERGER LTD

ENBRIDGE INC

DEVON ENERGY CORP

CANADIAN NATURAL RESOURCES

HALLIBURTON CO

NOBLE ENERGY INC

Contribution to return (percent) Holdings are subject to change

Energy equities: relative price to book at extreme

Source: Guinness Atkinson, Oct 2018

• The energy sector (at 0.51x the S&P500) is trading >2 standard deviations below its long run average; similar conditions in 1986 and 1998 were good buying opportunities

Energy companies: historic price to book valuation relative to S&P 500

Total return from 30 June 1986 1 yr 2yrs 3yrs 5yrsEnergy basket* 74.7% 50.5% 83.2% 117.0%S&P 500 21.2% 9.0% 26.8% 48.0%Outperformance (%) 53.5% 41.5% 56.4% 69.0%*Equally w eighted basket of Exxon, Chevron, Hess, Occidental, Murphy, BP, Marathon and Conocophillips

Total return from 15 Dec 1998 1 yr 2yrs 3yrs 5yrsMSCI World Energy Index 26.6% 25.8% 16.8% 39.5%S&P 500 23.1% 15.6% 0.2% -0.8%Outperformance (%) 3.5% 10.2% 16.6% 40.3%

24

0.3x

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65 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16

Energy Companies:Historical Price-to-Book Valuation Relative to S&P 500

P/B ratio (energy relative to S&P 500)

+1 SD

-1 SD

P/B ratio (energy relative to S&P 500)

+1 SD

-1 SD

For illustrative purposes only

Guinness Atkinson Energy Fund: ROCE expected to rise from trough level

• The combination of lower oil prices and legacy higher cost structures leave ROCE depressed• We expect reported ROCE to improve as a result of

• External factors: improvements in oil and natural gas prices• Internal factors: Cost deflation, efficiency improvements and M&A activity

ROCE of current Guinness Asset Mgmt./Guinness Atkinson Energy portfolio

25

Source: Bloomberg, Company Data and includes analysis of all ‘full position’ holdings (for which 1998-2016 data is available) in the Guinness Asset Management/Guinness Atkinson Energy fund as of December 31 2017. Data as of October 2018

ROCE vs P/B multiple for Guinness Asset Mgmt./ Guinness Atkinson Energy portfolio

• A return to 10-12% ROCE would imply P/B ratio for portfolio in 2019 rising from 1.5x to 2.0x (+35%)


Guinness Atkinson Energy Fund: FCF improvement not fully valued

• FCF (cashflow from operations less CAPEX) return was essentially zero between 2012 and 2016, but has now returned to, and will exceed, the longer-term average, as companies have adjusted

• This is not reflected in the long-term relationship between FCF return and P/B• A return to the long term correlation would imply P/B ratio for portfolio in 2019 rising from 1.5x to

2.2x (up over 40%)

FCF return of current Guinness Asset Mgmt./ Guinness Atkinson Energy portfolio

Source: Bloomberg, Company Data and includes analysis of all ‘full position’ holdings (for which 1998-2017 data is available) in the Guinness Asset Management/Guinness Atkinson Energy fund as of December 31 2017. Data as of October 2018

FCF return of current Guinness Asset Mgmt./ Guinness Atkinson Energy portfolio

26


Energy equities: super-major FCF generation improving

• Super-major oil and gas companies are emerging from a period in which dividend was being paid by debt to a period where they will have the ability to raise dividends by up to 40% (at $60 Brent)

Source: Guinness Atkinson (October 2018)

Super-majors have the scope to increase distributions by about 50% in 2019/2020 (at $60 Brent / $58 WTI)

• Exxon; Chevron; BP; Royal Dutch Shell; Total

27

Super-majors operating cash flow versus capex and dividends

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CAPEX Dividends Cashflow from operations

$m


Energy equities: other large-cap FCF generation improving more

• Other large cap oil and gas companies also emerging from a period in which dividend was being paid by debt to one of expanding FCF – greater scope to expand dividends than majors (at $60 Brent)

Source: Guinness Atkinson (October 2018)

Other large caps have the scope to increase distributions by about 100% in 2019/2020 (at $60 Brent / $58 WTI)

• Statoil; ENI; OMV; Conocophillips; Occidental; Suncor; CNOOC; Imperial Oil; Canadian Natural Resources

28

Other large caps operating cash flow versus capex and dividends

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29Fund positioning: key themes in the fund for 2018

Source: Guinness Atkinson, at end Sept 2018

Theme Example holdings

1 Expanding free cashflow yields from large-cap oil & gas 29.3%

2 North American shale oil & gas growth 26.9%

3 Growing return on capital from oil & gas majors 18.4%

4 Emerging market natural gas demand growth 10.8%

5 Strong refining margins resulting from global GDP growth 7.1%

6 Deleveraging balance sheets 2.6%

7 Growth in global solar market 0.4%

8 Other (incl cash) 4.5%

100.0%

Weighting (%)

Top 10 holdings as of 09/30/2018: 1. Gazprom 4.22% 2. CNOOC Ltd 4.06% 3. Apache Corp 4.05% 4. Equinor ASA 3.94% 5. Petrochina Co Ltd 3.80% 6. Conocophillips 3.76% 7. BP PLC 3.74% 8. Royal Dutch Shell PLC 3.73% 9. Total SA 3.66% 10. Imperial Oil Ltd 3.63%

30Fund valuation: sensitivities to oil prices

Source: Guinness Atkinson, Oct 2018

Upside/downside for Guinness Atkinson energy portfolio (2 year view)

• Energy equities are back to the lows seen in early 2016• There is 30%+ upside should ROCE and free cash flow normalize and be priced in• Energy look to be about fair value if oil remains mid $50/bl range forever• Energy equities look about 25+% cheap if oil $60/bl (WTI/Brent) is priced in

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Fund and index performance, as of Sept 30, 2018 31

Expense ratio: 1.62% (gross); 1.45% (net) *Periods over 1 year are annualized returns

Performance data quoted represents past performance; past performance 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 fund may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling 800-915-6566 and/or visiting www.gafunds.com

The Advisor has contractually agreed to reimburse expenses (excluding Acquired Fund Fees and Expenses, interest, taxes, dividends on short positions and extraordinary expenses) in order to limit the Fund's Total Annual Operating Expenses to 1.45% through June 30, 2019. To the extent that the Advisor absorbs expenses to satisfy this cap, it may recoup a portion or all of such amounts absorbed at any time within three fiscal years after the fiscal year in which such amounts were absorbed, subject to the expense cap in place at the time recoupment is sought, which cannot exceed the expense

Source: Bloomberg

Q3 2018 1 Year 5 Years* Since Inception(June 30, 2004)*

Global Energy Fund 0.71 18.62 -2.61 7.31

MSCI World Energy Index (Net Return)

0.78 14.60 0.80 6.23

S&P 500 7.71 17.90 13.95 9.04

cap at the time of the waiver. The expense limitation agreement may be terminated by the Board of the Fund at any time without penalty upon 60 days' notice.

http://www.gafunds.com/

Fund characteristics 32

Single sector Companies engaged in the production and distribution of energy (oil, natural gas, coal, alternative energy, nuclear and utilities)

High conviction Equally weighted, concentrated portfolio (30 positions)

Unconstrained No reference to index

Global Diversified globally

Investment type Listed equities (long-only)

Investmentobjective

Long-term capital appreciation

33Fund manager biographies

Timothy Guinness• Executive Chairman and Chief Investment Officer of Guinness Atkinson Asset

Management • Portfolio manager of the Investec Global Energy Fund from November 1998 to

February 2008• Co-founder of Guinness Flight Global Asset Management and, after its acquisition

by Investec, chairman of Investec Asset Management until March 2003• Graduated from Cambridge University in 1968 with a degree in Engineering. After

obtaining an MBA at MIT, worked for 10 years as a corporate financier

Will Riley CA• Joined Guinness Atkinson Asset Management in 2007 • Company valuation expert for PricewaterhouseCoopers 2000-2007• Qualified as a Chartered Accountant in 2003• Graduated from Cambridge University with a Masters degree in Geography in 1999

Jonathan Waghorn• Joined Guinness Atkinson Asset Management in 2013• Co-portfolio manager of the Investec Global Energy Fund from February 2008 to

May 2012• Co-head of energy equity research at Goldman Sachs from 2000-2008• Drilling engineer in Dutch North Sea for Shell

Contact details 34

Corporate Office (California)

Aya Aboul Hosn [email protected] 1-626-628-2753

225 Lake AvenueSuite 216PasadenaCalifornia 91101

Investment management team (London)

Tim Guinness [email protected] +44 (0) 20 7222 7978

Will Riley [email protected] +44 (0) 20 7222 3451

Jonathan Waghorn [email protected] +44 (0) 20 7222 3457

14 Queen Anne’s GateLondonSW1H 9AA

For your protection, calls to these numbers may be recorded

Guinness Atkinson Asset Management

• Guinness Atkinson Asset Management: founded in 2003, along with UK sister firm Guinness Asset Management

• Four core areas of expertise: Global Equities, Energy, Asia & Financials

• Guinness Atkinson Group AUM (at Sept 30, 2018): $1.8bn

• Group staff of 30, including 14 investment professionals

• Company is 100% owned by employees

35

AUM = assets under management

36Disclosure

Opinions expressed are subject to change, are not guarantee and should not be considered investment advice.

The Fund’s holdings, industry sector weightings and geographic weightings may change at any time due to on-going portfolio management. References to specific investments and weightings should not be construed as a recommendation by the Fund or Guinness Atkinson Asset Management, Inc. to buy or sell the securities. Current and future portfolio holdings are subject to risk. References to other mutual funds should not be interpreted as an offer of these securities.

Mutual fund investing involves risk and loss of principal is possible. The Fund invests in foreign securities which will involve greater volatility, political, economic and currency risks and differences in accounting methods. The Fund is non-diversified meaning it concentrates its assets in fewer individual holdings than a diversified fund. Therefore, the Fund is more exposed to individual stock volatility than a diversified fund. The Fund also invests in smaller companies, which involve additional risks such as limited liquidity and greater volatility. The Fund’s focus on the energy sector to the exclusion of other sectors exposes the Fund to greater market risk and potential monetary losses than if the Fund’s assets were diversified among various sectors. The decline in the prices of energy (oil, gas, electricity) or alternative energy supplies would likely have a negative effect on the funds holdings.

While the fund is no-load, management and other expenses still apply. Please refer to the prospectus for further details.

The Fund’s investment objectives, risks, charges and expenses must be considered carefully before investing. The statutory and summary prospectus contains this and other important information about the investment company, and it may be obtained by calling 800-915-6566 or visiting gafunds.com. Please read it carefully before investing.

You cannot invest directly in an index.

Fund holdings & sector allocations are subject to change and are not recommendations to buy or sell any security.

Diversification does not assure a profit nor protect against a loss in a declining market.

For Institutional Use Only. Not for use with the retail public. Distributed by Foreside Fund Services, LLC

Documents

Global Energy: Q3 2018 webcast · 2018. 11. 2. · Global Energy: Q3 2018 webcast October, 2018 Tim Guinness (Co-manager) Will Riley, CA (Co- manager) Jonathan Waghorn (Co-manager)