u.s. global investors · the baltic dry freight index is an economic indicator that portrays an...

www.usfunds.com

U.S. Global InvestorsSearching for Opportunities, Managing Risk

Frank E. HolmesCEO and CIO

Susan McGeePresident and General Counsel

Catherine RademacherCFO

Terry BadgerDirector of Communications February 6, 2009

09-093

GROW 2Q09 Earnings

2www.usfunds.com 02/2009 09-093

Today’s Presenters

Frank Holmes Susan McGee Catherine Rademacher Terry Badger


Forward-Looking StatementsDuring 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 the 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 U.S. Global Investors accepts no obligation to update them in the future.


Strengths and Weaknesses

GROW is debt-free and has a strong balance sheet

No toxic derivatives in funds

Significant corporate events to position company for better markets

But company and funds both negatively impacted by massive global deleveraging


$0.16$(0.11)EPS (diluted)

$2.5M$(1.7M)Net Income

$13.9M$2.8MRevenue

20072008

Quarter ended December 31

Financial Snapshots


Assets Under Management

(Average in billions)


-29%Industry Peers*

-65%U.S. Global Investors (GROW)

Calendar 4Q08 vs. 4Q07

* Latest quarterly results filed by Affiliated Managers, Alliance Bernstein, BlackRock, CalamosAsset Mgmt, Cohen & Steers, Federated Investors, Franklin Resources, Invesco, Janus Capital Group, Legg Mason, Pzena Investment Mgmt, T. Rowe Price and Waddell & Reed.

Source: Bloomberg

AUM Growth


-198%-196%Industry Peers*

-169%-168%U.S. Global Investors (GROW)

EPSNet Income


Source: Bloomberg

Earnings

Calendar 4Q08 vs 4Q07


20%19%Industry Peers*

38%7%U.S. Global Investors (GROW)

3-Year CAGR**1-Year


** Compounded Annual Growth RateTrailing twelve months, quarter ending December 31, 2008

Source: Bloomberg

Return on Equity


70%Major Banks**

30%Industry Peers*

0%GROW

LT debt to total capital (average)


** Major banks: Bank of America, Citigroup, JP Morgan, Wells Fargo, U.S. Bancorp, Morgan Stanley, Goldman Sachs.

Source: Baseline, latest available figures

Leverage for Financials


GROW vs. Financial ETFs


Significant Event: Trust Merger

Combining two fund trusts into one trust for efficiencyUpdating management fees on some fundsPerformance fees to align interestsNew distribution plan


Significant Event: Subadvisory Changes

Assumed day-to-day management of Eastern European Fund and Global Emerging Markets Fund

Ended advisory relationship with Endeavour Financial


Income Statement


Balance Sheets


Key Sectors in 2009


Our Strategy for Enduring a Credit Crisis

Goal: Stabilize volatility of funds

Reasons: Massive headwinds from billions of dollars of hedge fund redemptionsGovernment response has yet to generate sustained confidence in the planCredit contraction has gone global

Tactics: Raise cash levels, utilize covered writing until our proprietary macro indicators turn positive


Navigating the Turmoil

Frequent communication with shareholders about markets and factors affecting the funds

Loyal shareholders – voted for new contract during volatile market

Higher cash positions to help manage extreme volatility


U.S. Recessions


Fiscal Stimulus Around the World


U.S. Money Supply and Nominal GDP


U.S. Money Supply

Source: U.S. Global Research


China’s Money Supply

Source: U.S. Global Research


Composition of China’s Fiscal Stimulus


China’s Infrastructure Spending

Morgan Stanley estimates infrastructure spending in Asia ex-Japan will reach US$3.1 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


Demographics is the Key

• Half of the global population (>3 billion) is estimated to live in urban areas• Projected urban population is larger than the entire world population in 1965


Rapid Urbanization in China & India


China is Redefining Urbanization Scale

Source: McKinsey, September 2008

From 2005-25, Chinese cities will add more than 350 million people…

There will be more than 200 Chinese cities with more than 1 million 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 China’s 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

… that’s nearly 1 billion people


Infrastructure Boost

Source: Federal Transportation and Infrastructure Committee


New Emphasis on U.S. Infrastructure

“We will build the roads and bridges, the electric grids and digital lines that feed our commerce and bind us together.”

— President Obama, Inaugural Speech


Obama Stimulus Plan


U.S. Infrastructure Spending


Oil Consumption — Infrastructure Driver?


Emerging Markets are Still Growing


Total Non-OPEC Oil Supply Growth


OPEC Spare Capacity on the Rise Near-Term


Gold and Silver Bullish Sentiment


Gold is moneySafe Haven during deflation and inflationNew buyers are generalists

Gold’s Broadened Appeal


Rising Interest in Gold as a Store of Value


Rotation of Commodities

Source: Steele and U.S. Global Research


Please consider carefully the fund’s 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.

The Eastern European Fund invests more than 25% of its investments in companies principally engaged in the oil & gasor banking industries. In particular, the fund will invest at least 25% of its total assets in the following industries: energy equipment and services; oil, gas and consumable fuels; and commercial banking. However, the fund will not invest more than 50% of its total assets in any one of those industries. The risk of concentrating investments in this group of industrieswill make the fund more susceptible to risk in these industries than funds which do not concentrate their investments in an industry and may make the fund’s performance more volatile.

Disclosures


Foreign and emerging market investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risk. By investing in a specific geographic region, a regional fund’s returns and share price may be more volatile than those of a less concentrated portfolio. Gold funds may be susceptible to adverse economic, political or regulatory developments due to concentrating in a single theme. The price of gold is 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 gold or gold stocks.

The Baltic Dry Freight Index is an economic indicator that portrays an assessed price of moving major raw materials by sea as compiled by the London-based Baltic Exchange.

There were no clients of U.S. Global Investors which held any of the securities mentioned in this presentation as of 12/31/08. 09-094

Disclosures

u.s. global investors · the baltic dry freight index is an economic indicator that portrays an...

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