US Global Investors Inc (GROW) 2011 Q1 法說會逐字稿

Welcome to the US Global Investors Exclusive Webcast -- US Global Investors Earnings Announcement for the First Quarter of Fiscal Year 2011.

Please note that the slides you see on your screen are controlled by the presenters. Also, you may print a PDF of today's slides at any time by clicking on "Download Presentation" in the Resources section in the lower left corner of your screen.

(Operator Instructions.)

We would like to begin by introducing Ryan George, Investor Relations at US Global Investors. Mr. George, please go ahead.

Thank you. Welcome, everyone to our webcast announcing results for the three months ended September 30th, 2010. The presenters for today's program are Frank Holmes, US Global Investor's CEO and Chief Investment Officer, Susan McGee, President and General Counsel and Catherine Rademacher, Chief Financial Officer.

During this webcast, we may make forward-looking statements about our relative business outlook. Any forward-looking statements and all other statements made during this webcast that don't pertain to historical facts are subject to risks and uncertainties that may materially affect actual results.

Please refer to our press release and corresponding Form 10-Q filing for more detail on factors that could cause actual results to differ materially from any described today in forward-looking statements. Any such statements are made as of today, and US Global Investors accepts no obligation to update them in the future.

There will be question-and-answer session as part of today's presentation. To submit a question during the webcast, which you may do at any time, just type your question in the dialogue box at the bottom of the screen and click Submit.

Now, let's go to Frank Holmes, CEO and CIO for a review of the quarter. Frank?

Thank you, Ryan. Well, let's start off with the Page 4 of GROW strengths, the go-to stock for exposure to emerging Markets and Resources. We've seen this as emerging markets have accelerated as the dollar declined in this past quarter. We're debt-free, we have a strong balance sheet [with the reflects] of cost structure. Much more than we can say -- that -- for many of our peer group and the government. We are debt-free.

And we have a monthly dividend and a return on equity discipline. And what we find most fascinating is that the dividend yield is still higher than the 10-year government note. So, this is a huge -- comment on (inaudible) make is the flow of funds have been going into bonds and where you can lock up your money at yields that are the inflationary rate. And I think that this is going to change over the next short period.

Page 5, year-over-year quarter's revenue. As you can see, the revenue increased. Net income slightly declined, and same thing with earnings. And that's just minor for us, because we expanded as the world became extremely negative in sentiment, and we experienced this negatively. We're performing exceptionally well. So, we spent more money in branding, education to the shareholders. And further, we've put -- spent more money on technology preparing for this next leg of what we believe will be growth.

The next visual, a sequential quarter showing you that on the revenue -- the revenue basically reflects changes in the marketplace in the April, May and June quarter. The attack on Wall Street had a big impact on all equity markets around the world, and this showed up in our assets declining, and this showed up in our revenue. However, we've had a rebound, and that's what's positive for us.

The next visual is assets under management. Assets have improved on this quarter [and a quarter-over] basis. This is important to how we're improving. Next page is Page 8. Now, this is what's really significant in the sentiment factor that, when politicians (inaudible) would attack major industries. And we've published this on Frank Talk.

I'm showing, at the end of September, those sectors of the 10 sectors in the S&P 500 most attacked were down the most. And so, negative flows do show up in the marketplace. Confidence in the leadership shows up in the marketplace. And [when ours] is showing up, it's showing that negative flows of investors throughout the whole mutual fund industry, $46 billion less equity markets but $89 billion went to bond funds.

And this is what amazes us is that -- fearfulness is that almost a bubble is being created by so much money going to bonds, which has such low yields. In the next five years, if there's any form of inflation, investors are going to lock up their money at very low yields. And the equities -- with so many equities offering different yields, higher than what you can get on 10 years and five-year notes. It is a shift that's -- we believe that we'll be able to prosper from for our shareholders.

Next visual is the competition. The mutual fund industry and fund groups like ourselves -- we are seeing this competition, this asset growth in the ETF industry, as a percentage of overall sector. We've worked on acquiring some other ETFs. There's some factors in ETF space.

You have first-mover advantage, that's hard to garner. Second, if you're coming out with a similar product -- and the second point is if you're the second or third ETF or gold equity, it's very difficult to get assets. But, what we do know is that our asset management policies and how we look at funds, etc., and look at stocks, we can outperform many of these ETFs. And that is something we've noticed - that most of the money flows into these ETFs, that they in fact -- they're paying at a premium, so their underlying stocks that day and exit, that these stocks traded at bigger discount.

So, when you took a look at a function of Bloomberg, it's very simple to see in commodities and in specialty ETFs, not the big S&P relative basis, is that investors are back paying much more on fund flows than they are for active money management. And we're happy to say our gold fund has far outperformed the World Precious Minerals, the GDX, which has attracted most of the fund flows as a gold equity ETF. And that's a bigger part. We've outperformed it from the lows up '08, and we've outperformed it last year, and we're outperforming it year-to-date.

So, that lends to the next page of this sentiment factor I was commenting on that was negative, with ETFs, that in the past several months that the ETF flows into commodity-based ETFs has been declining but resources and commodity ETFs and price action have performing. This sort of negative sentiment of not believing it's sustainable is flawed in the marketplace in our opinion for many reasons. At the other presentation, I'll walk through what's taking place outside of America in the demand for commodities and for commodity equities.

Next page is peer group comparisons of assets under management. Our peers -- they've grown faster than us, as you can see from these numbers, and [it's only] because these -- our peers have much bigger bond exposure. When we go back and compare them and/or we have huge ETF as a component so that they will show that asset growth. The biggest thing that we want to focus on and why we spent more money in technology is to make sure that we focus on performance and that we outperform. And then outperformance, for us, is being in the top half of our peers.

And this is quite significant, because we have incentives to outperforming any index over a 12-month period by 5%. There's an additional bonus for us. And many of our funds have shown a dramatic increase in improvement of improving against its benchmark.

Next visual is peer group comparison of earnings. As you can see, the peer's earnings on a year-over-year basis for that -- for those quarters. You've seen the third quarter of '09 versus the third quarter of '10, that there's been a growth where we're declined. I explained that earlier -- that there's -- predominantly because we have spent more money on branding during this past quarter, being contrary to the market where sentiment is so pervasive and negative. We believe that it will turn, and so we take maybe that commitment to it. But, the peers have seemed, in fact, very, very cautious in what they're spending on marketing and also that they've had huge bonds flows.

Next is return equity, a key factor that we like to look at. We're happy, for the past four quarters, the past year, our returns on equity are still higher in over three years. It's modestly with the peers, but the leverage to our balance sheet and income is huge with the emerging markets and resources.

The next visual is peer group comparison on leverage. Risk leverage is not with debt, but with us, as intellectual capital. But, when you just look at the debt -- where -- all the problems we've had with the currencies of the world or you've had it with companies, it's usually mismanagement of debt levels. We're happy to share with you that we have no debt, and major banks are still at huge debt levels, 66%, and our industry peers -- a third of their balance sheet has leverage against it.

Now, I'm going to turn it over to Catherine Rademacher, who's our CFO, to walk through the more fine points in the financial analysis.

Okay, thank you, Frank. Good morning.

Pardon me -- I would like to summarize our results of operations for the quarter ended September 30th. And beginning on Page 16, with revenues, we recorded a total of $8.9 million for the quarter. That's up 11% from the $8 million we reported in the same quarter last year. And the increase in revenue relates primarily to an increase in our higher-margin natural resource fund assets under management, which of course results in higher mutual fund advisory fees.

And moving on to Page 17, our total expenses for the quarter were approximately $6.9 million. That's up 23% from the same quarter last year. And the two items that contributed most to the increase were in G&A. G&A increased by $797,000, or 56%, primarily relating to implementation of a trading system upgrade.

As Frank mentioned earlier, we have increased our investment in technology to be better prepared for future growth. Secondly, advertising, again, as Frank mentioned earlier, that increased by $394,000. That's a result of our increased branding efforts.

And next, we can go to Page 18. That shows net income for the quarter of $1.3 million or $0.08 per share compared to $1.4 million or $0.09 per share in the year-over-year quarter. I just want to note here that, sequentially, our net income for the quarter -- September quarter compared with June, increased by $0.02 per share from $0.06 in June to $0.08 for the September quarter.

And finally, on Page 19, we -- is the balance sheet. Our cash and cash equivalents increased by $367,000 over the prior quarter. We continue to have positive cash flows.

And with that, I'd like to turn it over to our President, Susan McGee.

Good morning. We had a number of significant items during the quarter that I will briefly discuss with you. We've had a -- we've seen a turnaround in the performance of our fund, especially some of our larger emerging markets and natural resources funds.

This turnaround in some performance is important because of the performance-based fee structure for the nine equity funds that we implemented last fiscal year. That fee is structured such that if a fund outperforms its benchmark by five or more percentage points over a rolling one-year period, the advisor receives a 25 basis point performance fee. Conversely, if a fund underperforms its benchmark by five or more percentage points, the advisory will forego 25 basis points at its management fee.

Our Gold and Precious Metals fund was raised to a four-star overall rating by Morningstar. Our data shows that 80% of fund flows go to four and five-star funds, so attaining this rating is a very positive development for us.

Additionally, [Vax] Research recently named our Eastern European fund one of the top five European mutual funds to own. [Vax] gave the fund a number one ranking, based on the Company's expectations of the fund's performance relative to its peers.

Also, during the quarter, the Advisor Board of Directors approved payment of a $0.02 per share monthly dividend for the first half calendar quarter of 2010. We've had our stock dividend program in place since June 2007. Each quarter, the dividend policy is reviewed by the Board of Directors, and it determines whether to continue the policy for the next three-month period. A variety of factors go into that decision, including the Company's financial performance, operations and capital requirements.

Thirdly, during the quarter we brought on Keith Carlson to head up our Institutional team. Keith has over 25 years of experience in the mutual fund industry and, most recently, Keith was President and CEO of Van Eck Funds, overseeing the firm's growth and ETS and institutional accounts. We've been building momentum among our institutional client base, and we think adding key expertise will accelerate that process.

During the last quarter, our institutional assets under management grew a little over 6%. As of September 30th, institutional assets at our complex stood at $671 million. The institutional assets coming through the Schwab channel were up 10% during the quarter, and assets through the Fidelity platform were up 8%.

US Global has historically been a retail mutual fund Company, but the institutional gains are important, because these investors tend to control larger pools of assets, and they make their decisions based not only on performance but also on other factors such as investment process, quality of management, etc.

And finally, US Global was just awarded seven STAR awards by the Mutual Fund Educational Alliance. This year's success brings the firm's total to 21 educational awards won since 2007. This year's success brings -- excuse me, we're especially honored to have received the overall award for best communications with a retail audience. We were awarded the Star Award for best retail Web sites.

We see the Web site as a key communications tool with the fund shareholders and GROW shareholders, so we want it to be a user-friendly as possible. Last year, our marketing design and IT teams worked very hard to revamp the Web site, and it's now, I think, quite a bit more visually compelling and easier to navigate than the older site.

One of the things that I'd like to highlight on the Web site is the upper right corner. That's where we have interactive educational content such as quizzes and maps. In the spirit of the election season, we have a matching game to test if you can place the face of a world leader with the correct country. We believe government policies are the precursor to change, especially in the developing world, so knowing and understanding who these leaders are are important to understanding that process.

And as you can see, education plays a big role in our communications with stakeholders. One of the core Company values is to be curious to learn and improve, and we urge our employees and investors to use these tools to explore the world that we invest in.

The next slide shows a couple more of our communication tools. The Weekly Investor Alert and its companion, The Weekly Advisor Alert go out every Friday afternoon to almost 40,000 individual investors, advisors and others who are interested in hearing our investment teams thoughts on markets and our key investment sectors.

Most weeks, there's also a special commentary from Frank, which is republished on many high-traffic investor Web sites also. This holds true for the Frank Talk blog, which is updated almost daily with various educational materials related to our investment sectors.

And now, I'll turn it back to Frank.

Thank you, Susan. What we found is interesting in this past quarter at the negative sentiment is the retail shareholder that is direct with our funds is much more loyal and is with us. However, the redemptions that have taken place have taken place predominantly to retail through these platforms such as Schwab and Fidelity, and it's good to see the institutional getting a traction, because the retail is where we've seen the redemptions.

And this [a lot] has to do with just confidence in the leadership in Washington and sentiment in the marketplace, unemployment numbers. They do drive a lot of that retail excitement compared to 2006, when everyone was so bullish and you could experience days of $50 million coming in. It's interesting to watch this sentiment.

But, what we've got to do is to stay focused on this fund performance. And that's a real key factor. And then, building out the institutional class fund, which we have, the series, and to be catering in marketing to institutions for the future. At the same time, maintain that brand with the retail [following] that we have.

I'm going to talk about opportunities and threats that are in the marketplace and how we look at markets, etc. So, I'd like to hop, quickly, to our investment world, how we look at it. We're big believers that government policy is a precursor to change. Policy is simple. Monetary versus fiscal, interest rates and money supply, tax and spend.

We take the G-7, and we compare it to the E-7. And the E-7, for us, are the seven most populated countries in the world on the next visual. And it's really important just to grasp the significance and how profound this is, because the world's population is going through a huge shift, and 50% of the world's population are in the E-7 countries.

And when you take a look at the E-20 countries, they basically have $5.3 trillion US dollars on their balance sheets, China with the half of it. And what are they doing with that money? They're building infrastructure. They're also -- as the rising incomes in many of these countries, there is an emotional attachment to giving gold. I'm going to comment on that.

And we're seeing this -- our analyst just came back from India, and he was just -- his family -- he grew up there. He was saying that he was shocked, in the past three years, to see the developments taking place in the rural area of India, how people can get to the cities now, and the mandate, only six months ago, that every child had to basically get a basic education.

If you remember, the -- Scotland did this during the Industrial Revolution. Was the first country to do this in Europe. And now, all of a sudden, India is going to be unleashing 400 million kids that all, too, want to become a millionaire like the Slumdog Millionaire movie. So, we think these are really important factors when you compare the E-7 to the G-7, and our fund group is well positioned in that space.

And looking at the next visual is when you take a look at the debt levels, when you take a look at the G-20 countries, 120% of their balance sheet, as a country, is leveraged versus the emerging countries. It's only 40% leveraged, so there's capacity for them to build out and basically create the American dream. And you're seeing this happen at a rapid rate with 40% of the world's population fast-tracking.

And what does that do? Oil demand. Next visual is giving you an idea that demand is growing. One of our big and best-performing stocks that really got clobbered in '08, as many hedge funds had big positions in the similar stocks we like for growth metrics during the Lehman crisis, they basically were forced to liquidate billions of dollars across the space and resource the emerging markets in, especially, the smaller cap space.

And some of these companies has just got clobbered. They went from $12 to $2, but they delivered on the fundamental growth of their commitments to growth in their countries. And in particular, Pacific Rubiales was a big holding we had. It was a big win. We came in at pennies and went to $12, went to $2, and now it's over $32. And this is what we've basically held on to and keep that position. And that's [helpful] -- the resources, this year-to-date, to be the top of the pack.

And when you compare many of our funds with that crisis in '08, that lull, our funds are doing spectacularly well relative to their peers. And I'm happy to share with you that Pacific Rubiales was sharing with us that Chinese and Indian trading companies were paying a premium to buy their oil. In fact, 60% of their oil was being bought by Chinese and Indian companies.

This just lends well with this whole thesis of oil demand will remain strong in the emerging countries. And what you see in the next visual is the Chinese crude oil imports. And we find there's just a propensity, any time it drops for a quarter on a relative basis, everyone gets all over -- "It's all over in China. The world's coming to an end. China's going to stop buying."

But, when you take a look at -- you get these platforms, these higher highs each year. And we don't think that's going away, especially when you take a look at what the policies are now in China for domestic growth. The next five-year program in China is to increase consumer consumption. And the next visual is showing you that China's metal demand has been stabilizing. But, to me, what's important is you look X China, and you can see the world is growing.

So, there's the need for these metals -- and copper's a key factor -- in looking at that. And when cars turn in sales -- you see GM doing so well, but take a look at their sales at a Brazil and China, and guess what? Iron ore, zinc, all these basic commodities, they're not finding them. The supply is not keeping up with the global growth in demand that's necessary.

The next visual is showing you China's industrial move inland, which is very important, and we're starting to see that the growth in the -- showing in a previous visual. Louis Vuitton is now opening up in interior areas because this is where they're trying to grow. They're putting up tax-free zones so that it's not just along the border.

And the new speed trains -- speed trains that go 200 miles an hour. I mean, unbelievable. And totally internet. So, just think of the headaches of flying today and turning off your computer where you can sit on a train, and we could go from San Antonio to Houston in an hour and be able to be functional and our computer's all the way there.

This is what China's doing to build out. And the next wave, we believe, you're going to see in India. But, that's going to take five years for India to get at that level, but it's important to see that there is leadership, and it is in the emerging countries.

Russia gets a lot of negatively, but there's been lots of growth in Russia. It's far outperformed the S&P, and I think that's what you see in this visual here. It's not just commodities, even though their economy's so dominated with commodities, but the retail, the restaurants, the banking, they've also been growing at a very rapid rate.

Next visual that really impacts us is gold. We keep hearing there's a bubble in gold, and I want to show you with this large visual that if you look at the gold in the 1971 to 1982 peak, it goes logarithmic, it goes exponential, and then it crashes. NASDAQ went exponential from 1990 to 2002. As you can see, that period peaked in 2000. Gold -- if we overlay that, we're far from going exponential.

So, I'm a big believer that in looking at fund flow in additional. What's really shocked us are -- in September is commodities did so well that there was net redemptions in all resource funds, even though this is one of the best asset classes on this pervasive negativity of just being focused only on what's taken place in America. But, institutions have seen a lot of directions, and their investment committee's putting money in emerging countries. So, we're seeing growth in emerging countries, and it's predominantly, right now, coming from institutions.

The next visual is gold. It's performed well with low volatility over the past 10 years. This is what many [quants] and asset allocators look at. And what's important here is that gold now has less volatility than the S&P 500, and it shows prudent for central banks to own gold.

We're seeing new central banks like Bangladesh, the emerging countries that are committed to social investing, whereas European banks are into social welfare spending. It's very different for the sellers of the gold and those committed to investing and building out their economies, our buyers of gold for their foreign reserves, and this is setting a new tune for gold.

Next visual is showing that whenever you have low real interest rates, historically, it's field gold and silver. And silver seems to have a greater beta to gold. And silver's -- is -- [regarding] the loss of interest, recently [spot rate] $0.5 billion for silver. And what's interesting -- it was predominantly retail that went into that or is -- more sophisticated hedge funds, as I was told, but the general overall institutional still hasn't bought into that particular silver as a commodity.

And what happens when they do? There's a copper commodity coming out, there's already a shortfall looking at demand supply factors of 100, 400,000 tons. We could have 500,000 tons shortfall in copper. There's an aluminum ETF coming out. The aluminum market's now just turned.

So, with that -- as more money is going into the basic commodities, then the leverage is with the stocks. And that's what we focus on. And then, selecting those stocks, which have the greatest revenue potential per share with the rising commodity as the wind behind them as a -- wind hits their sail.

Looking at the next visual, Why More Investors like Gold, you can see it's a gross financial liability as a percentage of GDP. Japan has the highest, but what's most interesting about Japan is that Japan does its own funding internally. Most of their debt is done with its own high savings rate. Unlike in the US, most of the debt is from foreigners. In particular, emerging countries, which are showing great growth.

And you can see here that China is -- still has, as a percentage of their economy, a very low debt as a percentage of GDP which gives them lots of flexibility. What we're seeing in China is interesting is money supply. As monetary is slowing, but in the US, monetary is expanding. Fiscal policy always open-ended in China, whereas fiscal policy is pretty well contained in America.

So, these two big GDPs are important, because they're counter to each other, but overall, it looks like we're going to have sustainable economic growth around the world. And we think it's important, when you look at the presidential election cycle, that usually in the second term of a President's term, it's usually the best time for stocks in the U.S.

And usually, there's lots of focus on job creation. And I think that this is another backdrop so we get the US caught up and focused in infrastructure spending and money committed and actually going to infrastructure spending. Coupled with what's taking place in the markets, we're going to have a very, very strong resource cycle.

Now, this impacts -- and the next visual is showing that gold is rising in many currencies. Why is that? I've commented on this for many years now that gold can rise in a deflationary cycle. Most of these countries are operating interest rates below the inflationary rate. And whenever you have interest rates below the inflationary rate, gold rise in that country's currency.

If those countries have big deficit spending and they have negative real interest rates, gold performs very well in those countries' currencies. So that's what this visual is helpful in showing you. The next is the seasonality. The bit money in the stock markets understanding the S curve. In the '90s, it was infrastructure. It was government policies that changed the telecom, changed the financial sector, and you had this huge unleashing along with the Internet, and you had government policies for Y2K concerns, so there's overspending in technology.

All these factors lend to a huge S curve. And so, if you were [long] technology in the '90s, you did spectacularly well. It's now -- in the past decade is emerging markets and seeing the growth in resources that needs -- that's necessary for the growth. Well, within this huge 20-year super S cycle, we like to call it, there are many one-year cycles with commodities. And gold is a classic -- I published -- in this last year, I published on this year in August, Get Ready for Gold, and it usually has a big run. It's already had a big run. Had a modest correction, and usually, it runs to higher highs at year-end.

And this is driven -- and the next visual's showing you is the seasons of religious giving. A lot of gold demand is out of the heart. And then, there's the -- what they call the price-takers and the price-makers are -- the investors are betting of gold as a protection against currency devaluations. But, what's important right now is that you have both.

With the Federal Reserve coming out with a $600 million quantitative easing, this drives the price-takers and the price-makers showing up at the gold window at the same time. And this is what creates these surges. But, right now, we've just finished Ramadan, then you get the gold correction, which we did, which was modest. And now, this Friday is the Season of Lights. If -- the Christmas time of lights of giving in India, the Diwali season, and then we're going to have our Christmas and then we're going to have Chinese New Year. And these are all important backdrops to demand.

And the next visual is anticipate before you participate. It's so important that investments are recognized. US Global, GROW as a public Company, is extremely volatile. As you can see that -- the emerging markets jumped 33%, weekend rise, 114%. If they could correct 33%, which is a non-event in the past 10 years over any 12-month period, we can give up 50%. It just seems that that's how the stock trades relative to the emerging markets because our revenue line is very tied to the growth and the needs of the emerging markets and the performance of those asset classes along with the resources.

And the next visual is the turnover. Please come visit us on Facebook, Twitter, our Frank Talk, Investor Alert. Please subscribe to Investor Alert. You can keep in touch with what we're thinking, feeling.

And now, I'm going to turn it over to Ryan as we're going to try to answer some of the Q&A. And I invite Susan and Catherine to feel -- to jump in. I'll try to answer the questions. And any additional things that you may want to add to answer these questions, please feel free.

Thank you, Frank. Now, we'll take some questions. To ask a question, please type your question in the dialogue box at the bottom of the screen and click submit. The first question is the expense related to the trading system upgrade. We had a question whether this is an ongoing expense or if this is a one-time expense.

Well, the bulk of the learning curve is in the -- in this past quarter, and that's the big one-time expense. There'll be a modest increase overall for this technology licensing fee, but we believe it'll be beneficial for scalability in the operations. Susan, do you have any comments on that?

No, but just to reiterate, it was a one-time fee to upgrade our trading portfolio management systems.

Yes, our next question -- Frank, you spoke quite a bit about China. We had a question on how reliable are the financial statements prepared by the Chinese companies? And do they have an equivalent of the SEC there?

They have an equivalent to the SEC, and it's very -- it's a very different. The quality of disclosure's improved dramatically. The accountability is improved dramatically. Saying hi now has a complete listings of the Hong Kong exchange, so -- and many of their companies are ADRs in the US, so they have to comply under those us standards.

And the other thing to remember is they don't create these broad-based rules like Sarbanes-Oxley. If there's a fraud committed, they just shoot you. Next? Read it.

We also had a question regarding expenses. This was the -- wondering if the -- we talked about increased advertising -- if we had seen any payoffs from the increased advertisings.

It's interesting. It's a great question. It's something we're always tracking and monitoring. And we believe that it was important to show that confidence of what's taking place and explaining what the markets are. And we've got traction, and we're getting positive flows. Our flows have turned as the markets turn in this past couple of months. We're really happy to see that transition take place.

The retail customer coming through these platforms -- we don't see -- even the fund's performing a great surge like we did, say, in '06, but we feel that the wind is at our back now, not in our face.

Okay. That looks like that's all the questions. Do you all have anything else you'd like to add?

I'd just add that when we look at assets levels where they are and the revenue, we're basically going through where we were peaking back in April before the attack on Wall Street took place. And so, I think, from that end, we're in a very, very healthy position in emerging markets.

The (inaudible) are going to have a good run to year-end, and there's tremendous rotation in these different assets classes. And we're really happy to see that the China fund is -- improved its performance dramatically. I think on the -- it's outperforming, Susan, over the past year by 1,200 basis points, its benchmark. So, that's a big transition.

We've redone and thought through our models, the macro models, as the world's adjusted and changed, and we feel that that has really helped, overall, the fund performance across the board. Our relationship with Charlemagne -- it's changed. We still are using them, but we're doing much more of the lion's share of the management of decisions. And also, the economics is much greater and what we're doing with that, but we still think that they're a great Company for their intellectual capital what they have. But, we're taking ownership, we're taking leadership and taking responsibility, and we feel very good about that.

Thank you, Frank. Thanks for the questions. This concludes the U.S. Global Investors earnings webcast for the first quarter of fiscal year 2011. This presentation will be available for replay on our Web site www.usfunds.com. Thank you all for your participation today. Thank you.

Thank you, ladies and gentlemen. This concludes today's webinar. Thank you for participating. You may all disconnect.