U.S. Global Investors

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U.S. Global Investors

• People
• Publicly traded (NASDAQ GROW)
• Based in San Antonio, TX
• Established 1968
• Experienced Portfolio Management Teams with Both
  Academic and Tacit Knowledge
• Specialists in Natural Resources, Hard Assets and
  Emerging Markets
• Process
• Top-Down and Bottom-Up Fundamental Analysis
• Fundamental and Technical Analysis of Country,
  Sector and Currency Trends
• Stock Screens and Valuations
• Quantitative Risk Management

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Investment Professionals

• Jack Dzierwa
• - Joined U.S. Global Investors as global
  strategist and portfolio manager in 2007
• - Performs analysis of individual companies and
  macro-theme development in both the developed
  and emerging markets
• Fluent in 5 languages
• Earned an MBA at the University of Chicago and
  BSc from the London School of Economics

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Investment Models

• Dynamic models
• Directional, responsive and designed to quickly
  generate meaningful discussions and courses of
  action
• Probability based
• Our models include statistical price action and
  probability analysis
• Matrix of Models
• We have created a matrix of connected models that
  analyzes the inter-market relationship

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Government Policy Model Precursor for Change
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E7 and G7 Population vs GDP Inverse
Relationship
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E7 Countries
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G7 Countries
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Monetary Policy
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Monetary Policy
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Demographics is the Key

• Half of the global population (gt3 billion) is
  estimated to live in urban areas
• Projected urban population is larger than the
  entire world population in 1965

Deng Xiaoping
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Total Projected Cumulative Infrastructure
Spending 2005-2030 41 Trillion
Source Booz Allen Hamilton, Global
Infrastructure Partners, World Energy Outlook,
Organisation for Economic Co-operation and
Development (OECD). Boeing, Drewry Shipping
Consultants, U.S. Department of Transportation
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China Dominates Asia ex-Japans Infrastructure
Spending
Morgan Stanley estimates infrastructure spending
in Asia ex-Japan will reach US3.1 trillion over
the next five years (2008-12E), about 6.2 of
GDP. By comparison, annual spending in the US was
just 1.7-2 of GDP over the past 10 years.
E MS estimates Source CEIC, Morgan Stanley
Research
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25-30m People a Year Urbanizing in India and
China from 2000-20
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Chinas Electricity Growth
China added the equivalent capacity of the
entire U.K. power grid in 2005-2007
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The Three Pillars of Growth
Source CEIC
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Oil Consumption Infrastructure Driver?
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Uneven Growth in Infrastructure Spending

• China projected for 36.5 Year-over-Year growth
  in infrastructure spending in 2009, but is
  moderating into 2010

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Macro Trend-Tailwind for Infrastructure Spending
Shanghai, China
Source PIRA
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Gulf Countries Oil Revenue
But the coming oil windfall will likely dwarf
anything we have seen yet. At an oil price of 70
per barrel, new research by the McKinsey Global
Institute finds that Gulf oil export revenues
will likely add up to 6.2 trillion over the next
14 yearsmore than triple the amount they earned
over the past 14 years. At 100 oil, this will
rise to almost 9 trillion.
Based on spot prices. Realized prices may vary
by producer Assumes 50 barrel of oil
Bahrain has negligible net oil supply, but does
get allocated reserves from Saudi Arabias Abu
Saafa offshore field and also purchases
discounted oil from Saudi Arabias Dammam field.
Source Bp World Energy Report Global Insight
Business Monitor International McKinsey Global
Institute Energy Demand Model McKinsey Global
Institute Capital Flows Database McKinsey Global
Institute Analysis
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Global Shift Due to CommoditiesGovernment Wealth
Accounts
Source SWF Institute, International Monetary
Fund, TheAsset.com
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China Is Redefining Urbanization Scale

• From 2005-25, Chinese cities will add more than
  350 million people
• There will be more than 200 Chinese cities with
  more than 1m inhabitants
• There will be up to 50,000 new skyscrapers
• There could be up to 170 new mass transit
  systems
• By 2025, two-thirds of Chinas citizens will live
  in cities

• the population of the entire United States
• in Europe today there are only 35 cities of
  that size
• the equivalent of building ten New Yorks
• in Europe today there are about 70
• thats nearly 1 billion people

Source McKinsey, September 2008
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Auto Sales, BRIC vs U.S.
BRIC Brazil, Russia, India and China
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Future Traffic Growth

• China has just over 50 million automobiles,
  against a population of 1.3 billion.
• U.S. has a population of 300 million, with 248
  million automobiles.
• Chinas total car ownership would rise to 590
  million if per capita rates rise to U.S. levels
• Source Wall Street Journal

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Car Ownership Likely to Rise in Asia . . .

• Less than 5 of the population has a car in
  China versus a 74 penetration in the U.S.
• Much lower penetration in India with lower per
  capita income
• Car penetration shoots up as per capita income
  crosses US3,000

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Generally Comfortable Public Debt Levels

• Japans public debt at around 200 of GDP
• India at 80 and the Philippines at 65 may be
  constrained
• Chinas public debt is low and enjoys high
  national savings

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Asias Regional Stimulus

• In the next five years, there will be 2.5
  trillion infrastructure spending for Asia
  ex-Japan (a 15 CAGR)
• The global downturn impacts current
  infrastructure needs, e.g., power generation and
  ports
• Longer-term needs remain, e.g., road, rail,
  green energy

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Transport Dominates Infrastructure Plans

• Roads and rail comprise almost half of the
  regions infrastructure spending
• Power, together with utilities, account for 35
  of estimated infrastructure spending
• Composition varies by country, e.g., China is
  investing more on rail than roads, but India the
  opposite

Source CLSA Asia-Pacific Markets
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High speed rail network planned and operating
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Geographical distribution of airports
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Long-Term Power Demand Likely to Grow

• Chinas per capita power consumption is only 16
  that of the U.S.
• Indias is only 4 of per capita U.S.
  consumption
• As per capita income rises, power consumption
  is likely to grow

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India Proposed Ultra Mega Power Projects
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Global MegaTrends Fund MEGAX
FUND STRATEGY Infrastructure Picks and Shovels

• The fund seeks to invest in companies that are
  positioned to grow by providing capital goods,
  basic materials, professional services or other
  key inputs to facilitate the design,
  construction, maintenance, financing, or
  servicing of global infrastructure properties.
• In addition to this focus on investments in
  infrastructure, the fund seeks to invest in
  companies that meet suitable measures of return
  on cash flow, growth in revenue, earnings growth
  and return on equity.
• There is no constraint upon the market
  capitalizations that the fund management will
  consider.
• Fund management characterizes its strategy as a
  picks and shovels approach not only investing
  in the underlying infrastructure asset itself,
  but also investing in the companies that help to
  build it or to service it.

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Disclosures
Please consider carefully the funds investment
objectives, risks, charges and expenses. For this
and other important information, obtain a fund
prospectus by visiting www.usfunds.com or by
calling 1-800-US-FUNDS (1-800-873-8637). Read it
carefully before investing. Distributed by U.S.
Global Brokerage, Inc. All opinions expressed
and data provided are subject to change without
notice. Some of these opinions may not be
appropriate to every investor. Foreign and
emerging market investing involves special risks
such as currency fluctuation and less public
disclosure, as well as economic and political
risk. Holdings in the Global MegaTrends Fund
(MEGAX) as of 9/30/09 Rio Tinto (0).