U.S. Global Investors...EM = Emerging Markets. November 2009 09-673 7. Macro Theme-Tailwind for Infrastructure Spending ... Chinese Oil Demand Growth Offsets U.S. Demand Destruction

www.usfunds.com1.800.US.FUNDS

U.S. Global InvestorsSearching for Opportunities, Managing Risk

November 200909-673

What’s Driving Energy?

Frank Holmes,CEO and Chief Investment Officer

Brian Hicks, CFAPortfolio Manager

Evan Smith, CFAPortfolio Manager

www.usfunds.comNovember 2009 09-673 2

Fund Recognition

Winner of 26 Lipper Fund Awards and certificates since 2000

Investment leadership results

in performance


6 Billion People-Tipping Point


Delayed Not Derailed Secular Bull Market in CommoditiesSignificant events for S&P Financials and the VIX

Natural Resources Outlook Webcast

January 2009


Demographics is the Key

Half of the global population (>3 billion) is estimated to live in urban areasProjected urban population is larger than the entire world population in 1965Deng Xiaoping


Demographics is the Key

EM = Emerging Markets


Macro Theme-Tailwind for Infrastructure Spending

Source: PIRA


Macro Trend Tailwind for Investing in Emerging Economies

Source: PIRA

Population


Chindia — Rising Middle Class

Source: PIRA


Infrastructure Spending and Oil Demand March TogetherBarrels of Oil per Day/1000


Developing Nations’ Per Capita Income is at a Level Where Oil Demand Begins to Grow Rapidly


OECD and EM/FSU Oil Demand Growth

OECD= Organization for Economic Co-Operation and Development

EM= Emerging Markets


Oil Consumption per capita:

1 to 25

1 to 16

1 to 15

1 to 2

0.9

U.S.

S. KoreaJapan

Oil Consumption and Industrialization, 1900 to present

Lower U.S. labor costs versus Europe and the U.K. drive American industrialization, enrichment and energy consumption

Lower Japanese labor costs do the same to the U.S.

Lower Korean labor costs do the same to Japan

Oil per capita rises rapidly during early industrialization, then levels to rapid real income growth. Rising world trade actually stimulates the industrialization phase.

China & India

Super Shift – Energy

Source: Dr. Marc Faber

http://www.flags.net/country.php?country=JAPA&section=CURR



Power consumption has been growing faster than the rate of GDP growth.Source: BHPB

Intensity of electricity consumption

Super Shift – Electricity


Long-Term Power Demand Likely to Grow

China’s per capita power consumption is only 16% that of the U.S.

India’s is only 4% of per capita U.S. consumption

As per capita income rises, power consumption likely to grow


Proposed Ultra Mega Power Projects


Government Policy Model —Precursor for Change


E7 and G7 Population vs GDP — Inverse Relationship


Monetary Policy


Monetary Policy


Before the Crisis Money Supply and GDP Expanded Fast Against Limited Oil Supplies


High Correlation of Oil and Money Supply

Government will likely continue to print money, like the bailout of Fannie Mae and Freddie Mac, to support the economy


Increases in Money Supply Translate Into Higher Commodity Prices in the Long-Run


Commodities Respond First to Monetary Policy While Retail Prices are More Sticky


Kuznets Cycle – 20-year Emerging Market Cycle That Drives Commodity Demand

Presidential Election Cycle – 4-Year Cycle

Seasonal Cycle – Commodity and Stock Market Patterns

Cycles – Where Are We on the…


Annual Cyclical Pattern — Oil

Source: U.S. Global Research


Source: U.S. Global Research

Annual Cyclical Pattern – Natural Gas


Oil vs. Dollar

60-day Std Dev Number of Times Up 2 Std Dev Number of Times Down 2 Std Dev Current Move in Std Dev

Oil 18.78% 9 or 1.7% of time 19 or 3.6% of time 0.3

U.S. Dollar 4.51% 13 or 2.5% of time 5 or 1% of time (0.5)

Correlation over 10 years: -80%

Source: Bloomberg, U.S. Global Investors


Household Consumption Contribution to Nominal USD Global GDP Growth: BRIC vs U.S.

BRIC = Brazil, Russia, India and China


Catch-Up Potential — Big Macro Trend

• Poor countries grow faster than rich ones• EM GDP per capita is US$5,000 vs. $40,000 in developed markets

As of Sep 2006. Source: IMF, Merrill Lynch


Oil Consumption Per Day Per Person Vis-à-Vis Per Capita Income


Oil Consumption Per Day Per Person Vis-à-Vis Per Capita Income



Auto Sales, BRIC vs U.S.

BRIC = Brazil, Russia, India and China


Car Ownership Rising 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 US$3,000


Huge Pent-Up Demand for Automotive Transportation in the Developing World

BYD (Build Your Dreams) president Wang Chuanfu sits inside the BYD E6 Electric Car during the North American International Auto Show in Detroit, Michigan January 12, 2009. Source: REUTERS/Mark Blinch


China Passenger Car Sales Year-over-Year Growth Sharp Rebound YTD


$800 Billion in Asia’s Regional Stimulus

In the next five years, we expect $2.5 trillion infrastructure spending for Asia ex-Japan (a 15% CAGR)The global downturn impacts current infrastructure needs, e.g., power generation and portsLonger-term needs remain, e.g., road, rail, green energy


China: New Renminbi Bank Lending


Uneven Growth in Infrastructure Spending

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


China Crude Oil Net Imports


Chinese Oil Demand Growth Offsets U.S. Demand Destruction


China + U.S. Oil Demand Back to July 2008 Levels — Chimerica


China Asphalt Apparent Demand

Zhanxi bridge highway, Beijing China


China’s Overseas Oil and Gas Activity Rebounds

Source: PIRA


Historical ‘Macro Trend’ Since 1935


Massive Bifurcation in Market Started Oct ‘07


Emerging Markets are Driving Oil Demand


Geopolitical Threats to Oil Supply

Mahmoud Ahmadinejad, President of Iran


Longer-Term, Rising F&D Costs Render Higher Prices

F+D= Findings + Development


Long-Term Oil Prices Aligned with Fundamentals


U.S. Consumer Spending on Gasoline


WTI Oil Rising by More than 100% Year-over-Year is a Reliable Indicator of the Onset of U.S. Recession


High Unemployment and Spare Capacity Suggest Core Inflation will Remain Muted


EM-Led Recovery will Bring Higher Oil Prices, Suggesting Rising Headline Inflation


Is The Distillate Inventory Cycle About to Turn?


Improving Refining Business Prospects Should Boost Integrated Energy Stocks


Seasonal Patterns: Returns Strongest in December through May in 16 of 19 Years


Seasonal Cycle: Unusually Predictable


Become a Fan of U.S. Global

Check Out the U.S. Global Fan Page on Facebook @ www.facebook.com/usfunds


Follow U.S. Global on Twitter

Real-Time Updates on Market Events @ twitter.com/usfunds


Frank Holmes’ CEO Blog “Frank Talk”

Frank Talk offers insight into market events and discusses global investing topics like gold,

commodities, infrastructure and emerging markets. Read what’s on Frank’s mind @

www.usfunds.com/investor-resources/frank-talk/


Sign Up to Receive the Weekly Investor Alert

Each week our investment team analyzes key events in global markets. U.S. Global’s Weekly Investor Alert is delivered to your

inbox each Friday evening. Subscribe to this free market newsletter @ www.usfunds.com/investor-resources/investor-alert/


Check Out the New usfunds.com

We’ve recently redesigned our Web site and added some new features. Visit

www.usfunds.com to see the new look!


Disclosures

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.Foreign and emerging market investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risk. Because the Global Resources Fund concentrates its investments in a specific industry, the fund may be subject to greater risks and fluctuations than a portfolio representing a broader range of industries. The S&P 500 Financials Index is a capitalization-weighted index. The index was developed with a base level of 10 for the 1941-43 base period. The S&P Volatility Index (VIX) shows the market's 30-day volatility, and is a widely used measure of market risk. The S&P GSCI Spot index tracks the price of the nearby futures contracts for a basket of commodities. The Consumer Price Index (CPI) is one of the most widely recognized price measures for tracking the price of a market basket of goods and services purchased by individuals. The weights of components are based on consumer spending patterns. Standard deviation is a measure of the dispersion of a set of data from its mean. The more spread apart the data, the higher the deviation. Standard deviation is also known as historical volatility. The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies. The Reuters/Jefferies CRB Index is an unweighted geometric average of commodity price levels relative to the base year average price. Beta is a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. S&P Oil & Gas Refining and Marketing Index tracks the market performance of downstream oil and gas companies. Holdings in the Global Resources Fund as a percentage of net assets as of 9/30/09: Exxon Mobile 0.00%, Burlington Northern 0.00%, Pacific Rubiales 3.51%, Chevron 3.67%, Kinross 0.00%, Petrobras 0.00%. Alpha is a measure of performance on a risk-adjusted basis. Alpha takes the volatility (price risk) of a mutual fund and compares its risk-adjusted performance to a benchmark index. The excess return of the fund relative to the return of the benchmark index is a fund's alpha. Although Lipper makes reasonable efforts to ensure the accuracy and reliability of the data contained herein, the accuracy is not guaranteed by Lipper. Users acknowledge that they have not relied upon any warranty, condition, guarantee, or representation made by Lipper. Any use of the data for analyzing, managing, or trading financial instruments is at the user's own risk. This is not an offer to buy or sell securities.

Documents

U.S. Global Investors...EM = Emerging Markets. November 2009 09-673 7. Macro Theme-Tailwind for Infrastructure Spending ... Chinese Oil Demand Growth Offsets U.S. Demand Destruction