"The leading indicator of the future health of the global economy is the global purchasing managers' index (PMI) number. The Global PMI for January turned positive, crossing above the three-month moving average. When such a cross occurs, it has historically signaled a possible uptrend in crude oil, copper and other commodities. The Chinese PMI on the other hand, remains in contraction territory. The Asian giant is responsible for consuming massive amounts of raw materials, so we will be watching closely for an eventual upturn in Chinese manufacturing," says Holmes. "While gold and other commodities have been hit hard by the strong dollar, we are seeing gold perform well in many non-dollar economies, such as Canada, Russia and Brazil," Holmes continues. "Also, we are encouraged by the Trans-Pacific Partnership (TPP). Once in effect, the 12-nation trade pact is expected to eliminate 18,000 global tariffs and deliver unprecedented free and fair global trade among the participating nations."On December 9, 2015, the shareholders of the U.S. Global Investors Funds held a special meeting to vote on the election of new trustees for the funds. This action, which the company endorsed, was approved and is intended to result in the funds becoming part of the family of funds that receive administrative, fund accounting, and/or transfer agency services from Atlantic Fund Services. The primary reason behind this initiative is for the funds to realize operational economies of scale. "Deutsche Bank published research showing an exponential increase in banking sector regulations since the crash in 2008 and 2009. In this environment of slowing global growth, the legal and regulatory costs to restructure and streamline have been an additional headwind," says Holmes. Current projections indicate that the transition will have a positive impact on U.S. Global Investors' future net income and will result in a simplified income statement. Furthermore, this partnership will allow the company to concentrate on its core competencies of money management and marketing/sales activities.
As a result of this change, U.S. Global Investors has effected a related reduction in personnel due to outsourcing of administrative functions and shifting of job functions and responsibilities internally, thereby lowering total employee compensation and benefits expenses. The company will continue to receive administrative services fees at a reduced level. The elimination of 12b-1 fee and shareholder servicing fee revenue will be offset by a reduction in certain platform and other distribution related expenses. U.S. Global Investors is in the process of closing its limited-purpose broker-dealer subsidiary in connection with the transition, which will also result in cost savings. The company has incurred one-time expenses of approximately $290,000 in connection with the regulatory process of the transition, including proxy costs, in the second fiscal quarter."This partnership with Atlantic is a win-win for fund shareholders and GROW shareholders, as it will eliminate many administrative and operational distractions for the company and allow our streamlined team of highly skilled professionals to focus on improving mutual fund performance and building our growth strategy," says Holmes. Growth Strategy to Build Innovative and Dynamic ETF Product Line The U.S. Global Jets ETF (JETS), the company's first ETF product, now has an eight-month track record and reached $52 million in assets at quarter end. JETS was named one of the "Most Popular New ETFs Launched This Year" by ETF Trends. The company intends to expand its ETF product line in 2016 and is looking at opportunities to roll out ETFs in Canada. "U.S. Global is an innovative investment manager with a longstanding history. We will build upon our expertise as active managers in the resource and emerging markets sectors to create robust, rules-based smart-beta ETFs that leverage our knowledge and understanding of the factors that can identify stocks with long-term growth potential," says Holmes. Near-Term Tax Free Fund Completes 21 Consecutive, Positive Years "Out of 31,306 equity and bond mutual funds, only 39 of them have had positive returns for 21 years in a row, and our Near-Term Tax Free Fund (NEARX) is one of the few. This fund has provided investors and financial advisors with steady performance, through bull and bear markets and rising and falling interest rate environments," says Holmes. The fund has earned the coveted 5-star Morningstar rating for the three-year period, and the 4-star Morningstar Overall rating, through December 31, 2015, based on risk-adjusted returns out of 184 funds. The fund also earned the 4-star rating for the 5-year and 10-year periods, out of 169 funds and 118 funds, respectively. The fund was ranked in the Morningstar category of Municipal National Short-Term funds.
The company's Gold and Precious Metals Fund (USERX) has also performed well, earning the 4-star Morningstar Overall rating through December 31, 2015, based on risk-adjusted returns out of 72 funds in the Equity Precious Metals funds category.Share Repurchase Program, Continued Strong Balance Sheet, and Monthly Dividends The company continued repurchasing outstanding stock in the second fiscal quarter totaling 60,207 class A shares using cash of $81,000. The company uses an algorithm to purchase shares on down days, following the rules and regulations that restrict the amounts and times when shares can be purchased on any given day, such as at the opening of the day and in the last half-hour of trading. The share repurchase plan was renewed for calendar year 2016 but may be suspended or discontinued at any time. As of December 31, 2015, the company had net working capital of approximately $17.2 million. Cash and cash equivalents totaled $3.6 million and marketable securities totaled $17.2 million as of the end of the quarter. In addition, the company has had no long-term debt since 2004 and owns its headquarters building. The company has also continued to pay monthly dividends for more than eight years. A monthly dividend of $0.0025 per share is authorized through March 31, 2016, and will be reviewed by the board quarterly. Earnings Webcast Information The company has scheduled a webcast for 7:30 a.m. Central time on Tuesday, February 16, 2016, to discuss the company's key financial results for the quarter. Frank Holmes will be accompanied on the webcast by Susan McGee, president and general counsel, and Lisa Callicotte, chief financial officer. Click here to register for the earnings webcast or visit www.usfunds.com for more information. Selected financial data (unaudited) (dollars in thousands, except per share data):
|Three months ended|
|Total Other Income||(271)||53|
|Loss Before Income Taxes||(2,187)||(784)|
|Tax Expense (Benefit)||--||3|
|Income (Loss) from Continuing Operations||(2,187)||(787)|
|Loss on Discontinued Operations (net of tax)||(25)||(54)|
|Less: Net Income Attributable to Non-Controlling Interest||--||1|
|Net Loss Attributable to U.S. Global Investors||$(2,212)||$(842)|
|Loss per share (basic and diluted)||$(0.14)||$(0.05)|
|Avg. common shares outstanding (basic)||15,300,421||15,409,292|
|Avg. common shares outstanding (diluted)||15,300,421||15,409,292|
|Avg. assets under management (millions)||$708||$927|
Please consider carefully a fund's investment objectives, risks, charges and expenses. For this and other important information, obtain a fund prospectus by clicking here 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, Inc. is the investment adviser.
|Total Annualized Returns as of 12/31/15|
|One-Year||Five-Year||Ten-Year||Gross Expense Ratio||Expense Cap|
|Near-Term Tax Free Fund||1.45%||2.34%||3.03%||1.08%||0.45%|
|Gold and Precious Metals Fund||-4.78%||-21.57%||-2.91%||1.97%||1.90%|
Bond funds are subject to interest-rate risk; their value declines as interest rates rise. Though the Near-Term Tax Free Fund seeks minimal fluctuations in share price, it is subject to the risk that the credit quality of a portfolio holding could decline, as well as risk related to changes in the economic conditions of a state, region or issuer. These risks could cause the fund's share price to decline. Tax-exempt income is federal income tax free. A portion of this income may be subject to state and local taxes and at times the alternative minimum tax. The Near-Term Tax Free Fund may invest up to 20% of its assets in securities that pay taxable interest. Income or fund distributions attributable to capital gains are usually subject to both state and federal income taxes.Gold, precious metals, and precious minerals funds may be susceptible to adverse economic, political or regulatory developments due to concentrating in a single theme. The prices of gold, precious metals, and precious minerals are subject to substantial price fluctuations over short periods of time and may be affected by unpredicted international monetary and political policies. We suggest investing no more than 5% to 10% of your portfolio in these sectors. A photo accompanying this release is available at: http://www.globenewswire.com/newsroom/prs/?pkgid=38936
CONTACT: Lisa Aston Public Relations 210.348.2609 email@example.com