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Please note: The Frank Talk articles listed below contain historical material. The data provided was current at the time of publication. For current information regarding any of the funds mentioned in these presentations, please visit the appropriate fund performance page.

Where a Resources Manager is Uncovering a Sweet Find
June 18, 2013
Cocoa Pod Sierra Leone

After traveling nearly 6,000 miles by plane, helicopter and jeep, Evan Smith, portfolio manager at U.S. Global, is walking along a dirt path in Kenema past dilapidated shops covered with rusted, corrugated metal. He can hardly believe he has arrived at his destination. Surrounded by hundreds of miles of forest and savannah, it's tough to imagine an agricultural diamond-in-the-rough nearby.

Kenema is in Sierra Leone, a country in the Western part of sub-Saharan Africa with 5.6 million people recovering from a decade-long civil war that ended 11 years ago. Today, the rural people, mostly farmers and fishermen, are peaceful and friendly, says Evan, who explored the opportunity for the Global Resources Fund (PSPFX).

To get here, Evan flew from San Antonio, Texas to the largest city in Sierra Leone, Freetown, making stops in New York City, Ghana and Liberia. Then he boarded a four-person helicopter to fly east 150 miles, enduring heart-pounding drops and lifts between clouds and mountains before safely arriving at a cocoa plantation development.

Evan Smith Kenema  Sierra Leone

The heart of Africa has been beating strong in recent years due to elevated commodity prices and resilient domestic demand, despite the global economic slowdown. Among the sub-Saharan African countries, Sierra Leone was the fastest growing country last year, according to the World Bank. Its economy experienced growth that is as rare today as Fancy Red diamonds. GDP increased a whopping 18 percent.

Non-profit organizations are taking note of the country’s progress. The Freedom House recently categorized Sierra Leone as a free country, which is unusual in sub-Saharan Africa. Among 50 countries and 900 million people, only 13 percent of people are considered free under the organization’s definition.

Sierra Leone is also becoming more attractive for business. In the World Bank’s Doing Business 2013 report, the country ranked 140, up from 148. One of its main findings this year is that “among the 50 economies with the biggest improvements since 2005, the largest share—a third—are in sub-Saharan Africa.”

Looking ahead, these countries are expected to be among the fastest growing economies in the world. The International Monetary Fund estimates that out of the top 20 countries with the highest projected compound annual growth rate from 2013 through 2017, 10 are in this area of the world.

This is the growth Agriterra is looking to capture in its development of a cocoa plantation that Evan traveled across the Atlantic Ocean to check out. Agriterra is a London-based company that invests in African agricultural businesses to serve the fast-growing economies of frontier markets, such as Mozambique and Sierra Leone.

When Evan toured the grounds, he snapped pictures of the initial stages of development, as the company nurtures 250,000 seedlings in a technically advanced and irrigated nursery. Each cocoa sprout is planted in its own bag, under a canopy of screens which provides just the right amount of light. An irrigation system nourishes the plants, delivering the perfect amount of water and fertilizer.

Agriterras Cocoa Nursery
Cocoa Bean Plants Kenema

After a few months, the seedlings will be mature enough to be transplanted to an area that provides the right amount of shade. You can see a three-meter grid of stakes designating where each plant will go in this photo below.

You may not think about where your Godiva chocolate originates, but the areas are limited. Cocoa grows best along the equator belt between the Tropic of Cancer and Tropic of Capricorn. Tropical conditions of plentiful rain and high humidity are ideal and “shading is indispensable in a cocoa tree's early years,” says the International Cocoa Organization (ICC).  

While Sierra Leone is geographically situated along this band, it isn’t among the largest cocoa-producing countries. Most of the world’s chocolate originates from beans grown in Côte d'Ivoire, Ghana and Indonesia. Cocoa has traditionally been raised on small, individually owned farms, many of which have aging plants and therefore, lower yields. But with Agriterra’s advanced applications and solid operations, the development seems to be off to a sweet start.

So why is an oil and materials manager getting his boots dirty in Sierra Leone? The cocoa plantation is only one example of a company producing a commodity that we believe will be sought by the world’s growing middle class population. As more and more people reach this status, consumption of discretionary items, including chocolate, should increase.

Rather than limit the fund to energy and materials stocks, the portfolio managers take a multi-faceted approach, looking at 10 industries. By including companies such as grain processors, plantations and ranch lands, and agriculture companies, such as chemical and fertilizer stocks, we believe the fund can enhance returns with less volatility.

That’s why we keep our eyes open and boots on the ground because you never know where in the world you’ll find a sweet or savory opportunity.

Thanks to Evan Smith, who contributed to this commentary.

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.

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.

Holdings in the Global Resources Fund as a percentage of net assets as of 3/31/13: Agriterra Ltd 0.57%

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100 Innovative Ways World Cities Are Improving Our Urban Landscape
August 3, 2012

Infrastructure 100KPMG recently published Infrastructure 100: World Cities Edition which showcases the greatest infrastructure projects around the globe. The 100-page publication covers nearly every continent with projects in developed markets including Canada, the U.S., the U.K. and Australia to those in emerging markets such as Brazil, India, Mexico and Turkey.

The focus of the report is to highlight education, health, recycling, waste management, and water solutions to promote better urban living. About half of the world’s population is living in a city someplace on the globe and this number is only set to rise. However, the challenges that cities face are not insurmountable: “All around the world, we see inspirational and innovative examples of projects that are sure to transform not only the urban setting, but also the way the world’s urban population interact with their infrastructure, their governments, their cities and the environment,” says KPMG.

The report highlights too many projects to list here, including the infrastructure for the World Cup and the Olympics that is transforming Brazil, the Sino-Singapore Tianjin Eco City that is collaboratively being developed by China and Singapore, and the Kartal Pendik Project in Turkey.

Download your copy of the report now.

By clicking the link above, you will be directed to a third-party website. U.S. Global Investors does not endorse all information supplied by this website and is not responsible for its content.

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Capturing the Making of a Bridge
July 26, 2012

Shareholder ReportThe bridge at Hoover Dam is a fantastic example of breathtaking infrastructure built in the U.S. Linking Phoenix and Las Vegas, a 2,000 foot long bridge now arches over the Colorado River, shaving as much as two hours off a driver’s commute between the cities.

Nearly halfway completed in this photo, it’s the first concrete-steel composite arch bridge built in the U.S., named after decorated Korean War veteran and governor of Nevada Mike O’Callaghan, and Pat Tillman, who gave up a multi-million dollar football career to enlist in the U.S. Army and fight in Afghanistan where he was killed by friendly fire.

Construction for the $114 million arch began in 2005 as part of the Hoover Dam Bypass Project and was open for traffic on October 19, 2010. The photographer of the image is Jamey Stillings from Santa Fe, who was in between assignments when he took a road trip to capture Lake Mead’s mineral deposits. Heading home, Hoover Dam’s infrastructure caught his eye and compelled him to return to the area by helicopter and car to photograph the infrastructure and surrounding area. The New York Times Magazine featured an incredible slideshow showing the tremendous scale of Stillings’ project.

See the Slideshow.

According to an article in The New York Times about Stillings, his passion was fueled by “the wider historical significance of the construction. The Empire State Building, the Eiffel Tower, the Hoover Dam—the imagery their births created is burned into the collective memory.”

We believe the bridge underscores the ongoing need for natural resources. You’ll find more awe-inspiring stories like this one in the latest Shareholder Report, as we cover what you need, what you want and how much it will cost.

Click on the link below to see the online version now. If you’d like to read it in print, call us at 1-800-873-8637 or email at editor@usfunds.com.

Download the Report

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor.

By clicking the link(s) above, you will be directed to a third-party website(s). U.S. Global Investors does not endorse all information supplied by this/these website(s) and is not responsible for its/their content.

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Full Steam Ahead for China Rails
March 16, 2012

China’s economic engines of growth have begun to accelerate again, but you wouldn’t know it by looking at the chart below. After approvals for new railroad projects spiked to a five-year high in the third quarter of 2010, the number of new plans slowed, then completely halted throughout 2011, decreasing 89 percent by value, says J.P. Morgan.

There were multiple reasons for the slowdown in railroad construction, says BCA. A bullet train crash caused heightened concern for safety last summer. Also, the government intentionally delayed projects as it pulled the brakes to decelerate growth and curb inflation.

Since China received signs of slowing inflation over the past few months, it can now shift its attention toward growth. Recent policies are sending a “full steam ahead” message to railway investment. According to J.P. Morgan, in December and January, China announced tax benefits on interest income for railway bondholders, issued bonds for railway projects, and injected cash into the two largest train makers. This concerted effort should help the country meet its long-term goal to connect 100 percent of cities with a network of high-speed rail.

China's High Speed Rail Network Should Connect 100 Percent of Cities by 2019

Over the past two decades, China’s railway system has come a long way very quickly, with track length increasing 50 percent since 1995. Demand has increased at a faster rate, though, as “passengers travelling on the country’s railway system per year doubled during the same period, while railway freight increased by 150 percent,” says BCA.

And, on a per capita basis, China’s rail length is much lower than most major economies, according to BCA Research. When you compare the total length of railways in developed and emerging markets, Australia has the most rail per capital, with 1.77 kilometers of railway per 1,000 persons; Brazil has considerably less, with only 0.15 kilometers of rail track per 1,000. However, as you can see below, China lands in last place for the total length of railway per capita.

China Rail Lengths; total and per 1000 persons

Although China has been busy constructing its railways over the past few years, this comparison shows that this infrastructure buildout has been more of a “catch-up process,” rather than an “overshoot,” says BCA.

New! Webcast on China

Learn more about China and what’s expected throughout 2012 by joining CLSA’s Andy Rothman and me for a webcast on April 5.  Register today for Hard or Soft Landing in China? Navigating China’s Transition to a Consumer-Driven Economy. 

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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Chart of the Week: The World’s Infrastructure Plans
March 14, 2012

Demand for access to basic needs, an emerging middle class and a never-ending use of global resources—these are the primary drivers of major infrastructure projects over the next several years, says GE.

In its Investor Meeting last week, the firm highlighted a few macro slides on world growth. One slide pins major global infrastructure plans totaling $4 trillion over the next 2 to 20 years.

$4T Infrastructure Fundings Globally

Emerging markets across Africa, Asia, the Middle East and South America are overwhelmingly the ones pulling out their checkbooks. A number of projects are expected in Brazil, including the PAC 2 investment program totaling $872 billion, Petrobras Oil & Gas project of $225 billion, and the infrastructure spending for the World Cup and Olympics expected to cost $668 billion. Brazil’s PAC 2 will mostly be spent on energy and the remainder on subsidized housing, urbanization, sanitation and electricity distribution, says Financial Times.

India and Russia also have tremendous infrastructure plans, as each country is expected to be a half of a trillion dollars. China’s 12th Five-Year Plan is expected to spend $840 billion on the power industry and another $180 billion on health care.

In GE’s presentation, the president & CEO of Global Growth & Operations, John Rice, says many of these countries’ governments face extraordinary pressure “to increase standards of living and reduce the wealth disparity.” Of the world’s population of 7 billion, GE says 1.5 billion have no access to basic needs, such as health care, electricity and water. In addition, in the next 20 years, another 3 billion people will be added to the middle class, according to GE. That equates to 150 million people each year who will have the means and “the same kind of demands in terms of basic living conditions and infrastructure” available in the U.S., says Rice.

This trend is what I refer to as the American Dream Trade. When the boomers were babies, President Dwight D. Eisenhower signed the 1956 Federal-Aid Highway Act. The “great road program” was said to be the most intense road construction period in U.S. history, altering where Americans chose to live, vacation and work. A 62-day trip in 1919 from Washington D.C. to San Francisco was reduced to two days due to the U.S. interstate system. This helped sustain a more than tenfold increase in the U.S. GDP, according to the U.S. Department of Transportation.

A pursuit of the American Dream from the U.S.’s emerging middle class led to the success of many well-known U.S. companies. Restaurants including McDonald’s and Dairy Queen and automobile manufacturers Ford and GM prospered following this infrastructure spend.

The infrastructure plans taking place across emerging markets emulate a 1950s America. As these governments help their residents pursue the American Dream of better homes, health care and quality of life, I believe the companies with a strong footprint in these growing markets stand to benefit.

See GE’s presentation slideshow here.

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor.

By clicking the link above, you will be directed to a third-party website. U.S. Global Investors does not endorse all information supplied by this website and is not responsible for its content.

The following security mentioned was held by one or more of U.S. Global Investors Fund as of 12/31/11: General Electric.

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Net Asset Value
as of 09/25/2017

Global Resources Fund PSPFX $5.78 -0.04 Gold and Precious Metals Fund USERX $8.02 0.06 World Precious Minerals Fund UNWPX $6.69 0.06 China Region Fund USCOX $10.96 -0.46 Emerging Europe Fund EUROX $6.94 -0.06 All American Equity Fund GBTFX $24.34 0.10 Holmes Macro Trends Fund MEGAX $19.99 0.03 Near-Term Tax Free Fund NEARX $2.23 No Change U.S. Government Securities Ultra-Short Bond Fund UGSDX $2.00 No Change