Global Innovators Fund Innovators Fund. 2. nd. ... Samsung Electronics Co Ltd Technology Hardware & Equipmen 158.9 GB 3.1% 8.7 7.7 ... Consumer Durables & Apparel 2.8%

Investing in Human Progress

Global Innovators Fund2nd Quarter 2015

2

Global Equity Manager

Part of the Guinness Group of investment strategies

Founded in 2002

$1.1bn AUM (Guinness Group assets as of 6/30/2015)

Headquartered in London and California

19 employees including 8 investment professionals

100% employee-owned (all investment managers own equity in business)

Long only investment strategies include Global Equity, Energy and Asia

Who we are

Source: Guinness Atkinson Asset Management

3Global Innovators strategy


Global multi-cap growth strategy with a value discipline

• Quality growth companies at attractive valuations• Highly disciplined, systematic approach• Mid-large cap bias• Focussed portfolio of best ideas• High active share• Buy and hold – low turnover

Inception on December 15, 1998 (run in its current form since 2003)

$247M AUM in strategy (as of 6/30/2015)

Benchmark MSCI WorldNumber of positions 30Position size 3-4%Market cap range > $0.5bnMax industry weight 30%Av. holding period 3-5 yearsCash range 1-3%

4

Matthew Page, CFA• Co-manager of strategy since 2010, previously analyst on strategy from 2005• Joined Guinness Asset Management in September 2005• CFA Charterholder• Previous to Guinness Atkinson, worked for Goldman Sachs as an analyst in Fixed

Income Currencies and Commodities (FICC)• Graduated from University of Oxford, with a Masters degree in Physics in 2004

Dr Ian Mortimer, CFA• Co-manager of strategy since 2010• Joined Guinness Asset Management in December 2006• CFA Charterholder• Graduated from University of Oxford, with a D.Phil. in Physics in 2006• Graduated from University College London, University of London, with a First Class

Honors Masters degree in Physics in 2003

Fund manager biographies


5

We believe return on capital is the best identifier of ‘quality’ businesses

1. Persistently above average return on capital over an entire cycle• Established competitive advantage• High probability of continued above average return on capital (‘good companies stay good’)

2. Improving return on capital profile• Potential to achieve above average return on capital in the future• Significant opportunities to reinvest cash flow in high return projects

We believe quality companies that can demonstrate some element of innovation through their business model, or their products, or through technological advances have the best chance of defending their superior return on capital

We believe buying companies at attractive valuations significantly increases their investment return potential over the long term and provides a useful margin of safety to mitigate unforeseen risks

Investment philosophy


6Investment process: systematic, repeatable, robust

Improving return on capital profile businesses

Persistently high return on capital businesses

PrioritisationBusiness strength, Valuation, Growth

Portfolio additionAt least 50% upside on 3 year view, better

risk/return than a current holding

Fundamental analysisProprietary modelling, Assessment of return potential, Risk analysis,

Competitive advantage, Market sentiment

WatchlistLike the business, don’t like the

valuation

RejectWeak business, poor allocator of

capital, industry in decline


7Investment process: prioritising companies for further due diligence


5yr average CFROI* > cost of capital

Year-on-year improvements in CFROI* over last 3 years

Market expectation of continued strong CFROI in future

Business strength

Market implied value < intrinsic value

Multiples:- discount vs peers

- greater than 1s.d. vs company 10yr average

- discount vs broad market

Valuation

Above average earnings growth

Profitable growth

Growth

• CFROI = Cash Flow Return On Investment (our preferred metric for return on capital)• Standard Deviation (s.d.) is is a statistical measurement that sheds light on historical volatility by measuring the degree to

which quarterly returns vary from the mean returns over a specified time period.

Earnings growth is not representative of the Fund’s future performance

We screen our investment universe bi-monthly to highlight companies that have the characteristics we seek

8Investment process: fundamental analysis

Highly systematic and repeatable process - look at all companies in the same way Understand what levers the company is using to create economic profit, and

whether this is sustainable / achievable


9

Prospect for return from cash-flow growth• Higher than average return on capital or prospect of achieving it• Confidence that earnings can grow – revenue growth, margin

expansion• Consider full spectrum of growth companies to identify best

opportunities

Prospect for return from re-rating• Company out of favour or irrational hype has abated• Multiple (P/E, EV/EBITDA) discount to peers, or market, or

company history• Avoid story stocks, don’t pay up for expected future growth

Recognise markets can be irrational over short term• Do not know when market will re-value company• Buy and hold• Use any short term movements to trim/top-up position

What we are looking for when we buy a new company for the fund


Business value creation

Return from re-rating

>50% upside to current

valuation over 3 years

+

=

Price-to-earnings ratio, or P/E ratio, is an equity valuation multiple. It is defined as market price per share divided by annual earnings per share.

Enterprise Multiple or (EV/EBITDA) is a ratio used to determine the value of a company.

10Example investment: Danaher

• Purchased in October 2010, still held

• Persistent high return on capital company

• Moderate asset growth to ensure investments only in high return projects

• Highly cash generative-5.0

0.0

5.0

10.0

15.0

20.0

25.0

30.0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Danaher

CFROI Asset growth Discount rate

• More moderate growth company

• Require greater multiple re-rating to achieve > 50% upside over 3 years

• Might expect shareholder returns (dividend, buybacks) to also contribute to overall total return

9%

6%1% 16%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Business valuecreation

Multiple re-rating Shareholderreturns

Normailsed totalreturn

Drivers of total return

Source: Guinness Atkinson Asset Management, Credit Suisse HOLT

11Example investment: Netflix

0.0

5.0

10.0

15.0

20.0

25.0

30.0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Netflix

CFROI Asset growth Discount rate

15%

2%

0%

17%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Business valuecreation

Multiple re-rating Shareholderreturns

Normailsed totalreturn

Drivers of total return

• Purchased in June 2007, sold March 2011

• Improving return on capital business

• High asset growth to take advantage of large opportunity of high return projects

• Use cash flow to reinvest and grow business

• High growth company

• > 50% upside over 3 years driven by business value creation, rather than a big re-rating in the multiple

• Expect little/nothing from shareholder returns

Source: Guinness Atkinson Asset Management, Credit Suisse HOLT

12Portfolio construction and risk controls

Holdings 30 companies in portfolio: one in, one out Equally weighted (3-4% position size only)

Diversified globally and across industries Maximum 30% in any one industry

Benchmark aware, rather than benchmark driven Regularly assess concentration risks in portfolio versus

the currently macro environment

Diversification

Common sense

Presenter

Presentation Notes

S:\GAM\Dublin Global Equity Income Fund\Fund Analysis\Portfolio Analysis

13

Portfolio today

Range last

10years

0 – 10% growth

10 – 20% growth

20% + growth

48% 20 - 50%

49% 30 - 60%

3% 0 - 20%

Portfolio allocation by long term growth rate

Source: Guinness Atkinson Asset Management estimates, 6/30/2015

14Portfolio profile

Source: Guinness Atkinson Asset Management, Bloomberg, 6/30/2015

PE PE

15Y 16Y

Boeing Co/The Capital Goods 101.4 US 3.2% 16.3 14.9Danaher Corp Capital Goods 62.9 US 3.4% 20.1 18.4L-3 Communications Holdings Inc Capital Goods 10.0 US 3.1% 15.1 13.6Roper Technologies Inc Capital Goods 17.7 US 3.5% 25.1 23.0Schneider Electric SE Capital Goods 41.1 FR 2.9% 14.8 13.5Ultra Electronics Holdings PLC Capital Goods 1.9 GB 3.7% 14.5 13.7Li & Fung Ltd Consumer Durables & Apparel 6.5 HK 2.9% 13.9 12.2H&R Block Inc Consumer Services 8.7 US 3.1% 17.1 14.9Capital One Financial Corp Diversified Financials 48.6 US 3.8% 11.4 10.8Intercontinental Exchange Inc Diversified Financials 25.4 US 3.3% 19.2 16.4State Street Corp Diversified Financials 31.8 US 3.5% 14.8 13.2TD Ameritrade Holding Corp Diversified Financials 20.2 US 3.4% 24.7 20.3BP PLC Energy 122.0 US 3.5% 16.2 13.4Schlumberger Ltd Energy 108.5 US 3.6% 24.8 22.5Comcast Corp Media 159.0 US 3.6% 18.2 16.0Gannett Co Inc Media 1.5 US 0.7% 6.7 7.1TEGNA Inc Media 7.3 US 3.1% 15.2 11.7Gilead Sciences Inc Pharmaceuticals, Biotechnology 170.1 US 4.0% 10.9 10.6Applied Materials Inc Semiconductors & Semiconductor 23.7 US 2.8% 15.7 12.9Intel Corp Semiconductors & Semiconductor 142.5 US 3.4% 13.6 12.4NVIDIA Corp Semiconductors & Semiconductor 10.6 US 3.0% 14.9 17.7Taiwan Semiconductor Manufacturing Co Ltd Semiconductors & Semiconductor 118.1 US 3.1% 11.8 11.8Check Point Software Technologies Ltd Software & Services 14.5 US 3.3% 19.9 17.8eBay Inc Software & Services 77.5 US 3.5% 19.4 17.8Oracle Corp Software & Services 176.5 US 3.1% 14.1 14.6PTC Inc Software & Services 4.5 US 3.9% 18.3 16.7Xerox Corp Software & Services 11.6 US 2.8% 11.0 9.9Cisco Systems Inc Technology Hardware & Equipmen 141.5 US 3.4% 12.7 12.1Lenovo Group Ltd Technology Hardware & Equipmen 13.7 HK 3.3% 16.7 13.1QUALCOMM Inc Technology Hardware & Equipmen 104.2 US 3.1% 13.1 12.2Samsung Electronics Co Ltd Technology Hardware & Equipmen 158.9 GB 3.1% 8.7 7.7

Average mkt. cap 65.7 Total portfolio 15.1 13.7Median mkt. cap 31.8 Y-o-Y growth 9.9%

MSCI World Index 17.2 15.3Fund premium / (discount) -12.2% -10.5%

Name Country of listing % NAVMkt. capIndustry

15Portfolio characteristics


Industry breakdown % NAV Market cap. ($bn) breakdown % NAV Country breakdown % NAV

Capital Goods 19.3% <1 0.0% US 75.6%Software & Services 16.2% 1 to 5 8.1% UK 7.0%Diversified Financials 13.6% 5 to 10 11.9% Hong Kong 6.0%Technology Hardware & Equipmen 12.5% 10 to 20 15.5% Taiwan 3.1%Semiconductors & Semiconductor 12.0% 20 to 50 19.2% Korea 3.0%Media 7.2% 50 to 100 9.8% France 2.9%Energy 6.9% >100 33.0% Cash 2.5%Pharmaceuticals, Biotechnology 3.9% Cash 2.5% 100.0%Consumer Services 3.0% 100.0%Consumer Durables & Apparel 2.8%Cash 2.5%

100.0%

NAV = Net Asset Value

16Monitoring: sell discipline

Deterioration in business quality

1. Return on capital profile deteriorates

2. Balance sheet becomes stretched

Valuation 3. Company no longer offering compelling upside / valuation becomes too rich

Growth opportunity 4. Lack of profitable growth opportunities in the future

Investment thesis/superior

alternative

5. Original reason for purchase no longer holds

6. New idea more compelling


17Portfolio turnover – last 5 years

Low portfolio turnover – typically between 15% and 25% per year

Buys Sells

2010

2011

2012

2013

2014


18Performance vs. benchmark

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. Expense ratio 1.26%

As at 6/30/15 in USD YTD 1 YR 3 YRS(ann)

5 YRS(ann)

10 YRS(ann)

Since Inception (12/15/98)

Global Innovators Fund -0.24% 1.73% 21.1% 18.78% 10.75% 6.81%

MSCI World Index 2.97% 2.06% 14.99% 13.68% 7.09% 5.39%

Source: Guinness Atkinson Asset Management, Bloomberg

19Fund performance


Performance data quoted represents past performance and does not guarantee future results

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD

10.9

%

11.8

%

18.8

%

21.2

%

-45.

4%

45.2

%

17.0

%

-6.5

%

19.9

%

45.3

%

12.6

%

-0.2

%

15.5

%

10.2

% 20.9

%

9.8%

-40.

2%

30.9

%

12.5

%

-4.9

%

16.7

% 27.5

%

5.6%

3.0%

-50%-40%-30%-20%-10%

0%10%20%30%40%50%

Guinness Atkinson Global Innovators MSCI World Index

-50%

0%

50%

100%

150%

200%

250%Total return (USD)

20Appendix 1: People


21

Tim Guinness, CIO• Tim is the lead manager for the Guinness Atkinson Global Energy Fund and has served as CIO since the

firm's founding in 2002. From 1999 to November 2002, he was Joint Chairman of Guinness Flight Global Asset Management Limited and Chief Executive Officer from 1997 to 1999. While at Guinness Flight (which ultimately merged with Investec Asset Management in 1998), Tim was a founding portfolio manager of the Global Equity Fund, which was established in 1985. Tim read engineering at Cambridge University and, upon graduation in 1968, completed a Master's Degree in Management Science at the Sloan School M.I.T. in the United States.

Jim Atkinson, CEO and Chief Compliance Officer• Jim founded Guinness Atkinson Asset Management with Tim Guinness in 2002 and is the president of

Guinness Atkinson Funds. From 1993 to 2000, Jim was the managing director of Guinness Flight Global Asset Management, which merged with Investec in 1998. Prior to 1993, he was senior vice president of Huntington Advisors, a mutual fund manager specializing in foreign currency money funds. In addition, Jim has served as the president of Max Funds and as the Principal at a mutual fund marketing research and consultancy firm. Jim graduated from the University of California, Los Angeles with a degree in History and emphasis in History of Science & Technology. While at UCLA, he served as President of the UCLA Debate Team.

Appendix 2: Company bios


22

This information is authorized for use when preceded or accompanied by a prospectus for the Guinness Atkinson Funds. The prospectus contains more complete information including investment objectives, risks, fees and expenses related to an ongoing investment in the Fund. Please read it carefully before investing.

Diversification does not assure a profit or protect against loss in a declining market

Mutual fund investing involves risk and loss of principal is possible. Investments in foreign securities involve greater volatility, political, economic and currency risks and differences in accounting methods. The Fund also invests in smaller companies, which will involve additional risks such as limited liquidity and greater volatility. The Fund is non-diversified meaning its assets may be concentrated in fewer individual holdings than diversified funds. Therefore, the Fund is more exposed to individual stock volatility than diversified funds.

Fund holdings and/or sector allocations are subject to change at any time and are not recommendations to buy or sell any security

Distributed by Quasar Distributors, LLC

Disclosure

Documents

Global Innovators Fund Innovators Fund. 2. nd. ... Samsung Electronics Co Ltd Technology Hardware & Equipmen 158.9 GB 3.1% 8.7 7.7 ... Consumer Durables & Apparel 2.8%