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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
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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
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
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
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 Deng Xiaoping
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
China Dominates Asia ex-Japan’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
25-30m People a Year Urbanizing in India and China from 2000-20
China’s Electricity Growth China added the equivalent capacity of the entire U.K. power grid in 2005-2007
The Three Pillars of Growth Source: CEIC
Uneven Growth in Infrastructure Spending • China projected for 36.5% Year-over-Year growth in infrastructure spending in 2009, but is moderating into 2010
Macro Trend-Tailwind for Infrastructure Spending Shanghai, China Source: PIRA
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 years—more 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 Arabia’s Abu Saafa offshore field and also purchases discounted oil from Saudi Arabia’s 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
Global Shift Due to CommoditiesGovernment Wealth Accounts Source: SWF Institute, International Monetary Fund, TheAsset.com
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 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 Source: McKinsey, September 2008
Auto Sales, BRIC vs U.S. BRIC = Brazil, Russia, India and China
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. • China’s total car ownership would rise to 590 million if per capita rates rise to U.S. levels Source: Wall Street Journal
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 US$3,000
Generally Comfortable Public Debt Levels • Japan’s public debt at around 200% of GDP • India at 80% and the Philippines at 65% may be constrained • China’s public debt is low and enjoys high national savings
Asia’s 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
Transport Dominates Infrastructure Plans • Roads and rail comprise almost half of the region’s 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
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 is likely to grow
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.
Thank you! Please visit us at: Facebook: www.facebook.com/usfunds Twitter: www.twitter.com/usfunds Frank Talk: www.usfunds.com Advisor Alert: www.usfunds.com/advisors
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. Holdings in the Global MegaTrends Fund (MEGAX) as of 9/30/09: Rio Tinto (0%).
