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www.usfunds.com 1.800.US.FUNDS
U.S. Global Investors Searching for Opportunities, Managing Risk
November 4, 2010 10-706
Frank E. Holmes CEO and CIO
Susan McGee President and General Counsel
Catherine Rademacher CFO
Ryan George Investor Relations
GROW Earnings Q1 2011
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Today’s Presenters
Frank Holmes Susan McGee Catherine Rademacher Ryan George
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Forward-Looking Statements
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During 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.
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GROW Strengths
“Go-to” stock for exposure to emerging markets and resources
Debt-free, strong balance sheet with a reflexive cost structure
Monthly dividend and return on equity discipline
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2009 2010
Revenue $8.0M $8.9M
Net Income $1.4M $1.3M
EPS (diluted) $0.09 $0.08
Quarter ended September 30*
Financial Snapshots
* unaudited
YoY Quarters
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June 30, 2010 September 30, 2010
Revenue $8.6M $8.9M
Net Income $1.0M $1.3M
EPS (diluted) $0.06 $0.08
Quarter ended*
Financial Snapshots
Sequential Quarters
* unaudited
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Assets Under Management
(Quarter-end average, in billions)
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Negative Flows for Equity Funds from July to September
Equity Funds
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$46 billion
Bond Funds
$89 billion
Source: Investment Company Institute
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Competition Asset Growth in ETF Industry
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Negative Sentiment Even Toward Commodity ETFs
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Calendar 3Q09 vs. 3Q10
U.S. Global Investors (GROW) 4%
Industry Peers* 18%
* Median AUM growth from latest quarterly results filed by Affiliated Managers, Alliance Bernstein, BlackRock, Calamos Asset Mgmt, Cohen & Steers, Federated Investors, Franklin Resources, Invesco, Janus Capital Group, Legg Mason, Pzena Investment Mgmt, T. Rowe Price and Waddell & Reed.
Peer Comparison – AUM Growth
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Net Income EPS U.S. Global Investors
(GROW) -9% -11%
Industry Peers** 32% 27%
** Median based latest quarterly results filed by Affiliated Managers, Alliance Bernstein, BlackRock, Calamos Asset Mgmt, Cohen & Steers, Federated Investors, Franklin Resources, Invesco, Janus Capital Group, Pzena Investment Mgmt, T. Rowe Price and Waddell & Reed.
Peer Comparison – Earnings
Calendar 3Q09 vs. 3Q10
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1-Year 3-Year CAGR**
U.S. Global Investors (GROW) 14% 12%
Industry Peers* 10% 13%
* Latest quarterly results filed by Affiliated Managers, Alliance Bernstein, BlackRock, Calamos Asset Mgmt, Cohen & Steers, Federated Investors, Franklin Resources, Invesco, Janus Capital Group, Legg Mason, Pzena Investment Mgmt, T. Rowe Price and Waddell & Reed.
** Compounded Annual Growth Rate Trailing twelve months, quarter ending September 30, 2010
Source: Bloomberg
Peer Comparison – Return on Equity
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LT debt to total capital (average)
GROW 0%
Industry Peers* 31%
Major Banks** 66%
* Latest quarterly results filed by Affiliated Managers, Alliance Bernstein, BlackRock, Calamos Asset Mgmt, Cohen & Steers, Federated Investors, Franklin Resources, Invesco, Janus Capital Group, Legg Mason, Pzena Investment Mgmt, T. Rowe Price and Waddell & Reed.
** Latest quarterly results filed by: Bank of America, Citigroup, JP Morgan, Wells Fargo, U.S. Bancorp, Morgan Stanley, Goldman Sachs.
Source: Baseline, latest available figures
Peer Comparison – Risk Leverage for Financials
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Income Statement – Financial Analysis
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Catherine Rademacher CFO
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Income Statement
unaudited
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Income Statement
unaudited
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Income Statement
unaudited
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Balance Sheets
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Balance Sheets
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Significant Events
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Susan McGee President and General Counsel
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Significant Events During the Quarter
Fund Performance Updates – Morningstar
GROW Dividends
Institutional Update
MFEA Awards
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Fund Recognition: Gold and Precious Metals Fund
Gold and Precious Metals Fund: Morningstar Overall, 3- and 5-year Ratings™. Among 71, 71, 60, and 38 Equity Precious Metals funds, the Gold and Precious Metals Fund earned 4 stars, 4 stars, 4 stars and 3 stars for the overall, 3-, 5- and 10-year periods ending 9/30/10.
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Fund Recognition: Eastern European Fund
The Eastern European Fund (EUROX) was named one of five top European Mutual Funds to own by Zacks.com. Zacks gave the fund a “Zacks #1 Rank” based on its expectations of the fund’s performance relative to its peers.
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MFEA Awards-Brand Recognition
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New Developments on Our Website
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Take this quiz and more at
www.usfunds.com
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Educational Philosophy
“Curious to learn and improve” is a core company value that extends to our investor communications.
We strive to educate investors about the world we invest in.
The focus of our website is to create an engaging, educational experience.
Our communications have won multiple awards from the Mutual Fund Education Alliance—best shareholder magazine, electronic newsletter, blog and website.
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Investor Alert and Frank Talk
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Opportunities in Gold and Emerging Markets
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Government Policy Model — Precursor for Change
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E7 and G7 Population vs GDP
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Less Debt in Emerging Economies
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Emerging Market Oil Demand Growth Rates
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China Crude Oil Imports
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China’s Metals Demand Stabilizing
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China’s Industry Moving Inland
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Russia Real Annual Growth Rates, 2010 est. – 2015 est.
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No Bubble in Gold
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Source: Dundee Wealth Economics
Is Gold in a Bubble?
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Gold Has Performed Well, With Low Volatility Over Past 10 Yrs
Gold returns have substantially outperformed equities on a 3yr, 5yr and 10yr horizon (based on data in table below – see note for source).
Historically, the volatility of gold returns has been lower than S&P 500 volatility.
Gold has had a zero to modestly negative correlation to equities, providing strong portfolio diversification benefits.
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Source: etf Securities. All returns, correlations and volatility are based on actual index data or underlying commodity prices excluding fees. Returns are in USD, dates are from December 31, 1999 (10 Yrs), 2004 (5 Yrs), 2006 (3 Yrs), 2008 (1Yr) to December 31, 2009. Correlations and volatility are correlation or annual volatility of daily returns over period from December 31, 1999 to December 31, 2009.
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Low Real Interest Rates Historically Fuel Gold & Silver
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Why More Investors Like Gold
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Gold Rises in Many Currencies
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Gold Seasonality
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Holidays Drive Gold Demand
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Anticipate Before You Participate
View the presentation “Anticipate Before You Participate” at www.usfunds.com/investor-resources/publications/research
Rolling 1 Year
U.S. Global Investors (GROW) 114.1% NYSE Arca Gold BUGS Index (HUI) 41.4%
Crude Oil 37.4%
MSCI Emerging Markets (MXEF) 33.5%
S&P 500 Index (SPX) 19.6%
Gold Bullion 14.8%
12-month rolling volatility of price action over 10 year period
Standard Deviation (as of 9/30/10) based on 10-Year Data
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Come Visit Us at…
Facebook: www.facebook.com/usfunds
Twitter: www.twitter.com/usfunds
Frank Talk: www.usfunds.com
Investor Alert: www.usfunds.com
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Disclosures
Please consider carefully a 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.
Gold, precious metals, and precious minerals funds may be susceptible to adverse economic, political or regulatory developments due to concentrating in a single theme. The prices of gold, precious metals, and precious minerals are 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 these sectors.
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.
The Eastern European Fund invests more than 25% of its investments in companies principally engaged in the oil & gas or banking industries. The risk of concentrating investments in this group of industries will 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.
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.
All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor.
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Disclosures Advanced G-20 economies references members of the G-20 whose economies are considered by the IMF to be developed. This includes Canada, United States, Austria, Belgium, France, Greece, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, United Kingdom, Australia, Japan and Korea. Emerging G-20 economies references members of the G-20 whose economies are considered by the IMF to be emerging. This includes Brazil, India, Indonesia, Hungary, Russia and Saudi Arabia. The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets. The NYSE Arca Gold BUGS (Basket of Unhedged Gold Stocks) Index (HUI) is a modified equal dollar weighted index of companies involved in gold mining. The HUI Index was designed to provide significant exposure to near term movements in gold prices by including companies that do not hedge their gold production beyond 1.5 years. The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies.
As of 9/30/10, the Eastern European Fund earned a Zacks Rank of 1 for the 1-year, 3-year, 5-year and 10-year periods, out of 23 European Mutual Funds. Zacks ranks funds on a scale from 1 to 5 with 1 being the best funds to own and 5 being the worst. Zacks’ Rank is based on an exclusive process created by the Zacks Quantitative Research Department, evaluating the average Zacks Rank for the stocks owned by the fund. The individual stock ranking is based on earnings estimate revisions, and encompasses four primary inputs: Agreement, Magnitude, Upside and Surprise.
Morningstar Ratings are based on risk-adjusted return. The Overall Morningstar Rating for a fund is derived from a weighted-average of the performance figures associated with its three-, five- and ten-year (if applicable) Morningstar Rating metrics. Past performance does not guarantee future results. For each fund with at least a three-year history, Morningstar calculates a Morningstar Ratingä based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund’s monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.)
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Disclosures Beta is a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. Holdings in the Gold and Precious Metals Fund, Eastern European Fund, Global Resources Fund and China Region Fund as a percentage of net assets as of 9/30/10: Pacific Rubiales (Global Resources Fund 4.31%), General Motors 0.00%.