Global Resources Fund

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July 2010

For the month of July, the Global Resources Fund underperformed both the S&P 500 Index and the Morgan Stanley Commodity-Related Index, as concerns over a sovereign debt crisis in Europe and China economic deceleration eased. The fund’s relative overweight in gold and gold equities was a drag on performance for the month. After reaching a record high of $1,255 per ounce in June, gold bullion declined 4.93 percent in July to close at $1,181 per ounce. The Philadelphia Gold & Silver Index (XAU Index) fell 4.45 percent due to profit taking and less safe-haven buying but our conviction in the precious metals asset class remains strong.

Strengths

Mitsui O.S.K. Lines Ltd., the operator of the world’s largest merchant fleet, raised its full-year profit forecast as demand for transporting goods between Asia, the U.S. and Europe rebounded.
China’s crude oil imports reached a monthly record of 22.3 million metric tons in June, equivalent to a daily import volume of 5.4 million barrels per day.
Consumer demand for gold in Saudi Arabia grew 35 percent from a year ago in the first quarter to 21.1 metric tons, according to the World Gold Council.

Weaknesses

The price of iron ore delivered to China fell to its lowest level this year as steel production has slowed. The price for iron ore dropped to $118 per metric ton.
Norway's oil production fell to a preliminary 1.52 million barrels per day on average in June from an actual production of 1.85 million in May, according to the Norwegian Petroleum Directorate. Gas production fell to a preliminary 8.5 billion standard cubic meters (Bcm) in June from 9 Bcm in May. Statoil is the largest oil and gas producer on the Norwegian continental shelf.

Opportunities

According to the International Energy Agency (IEA), China consumed more energy than any other country last year, totaling 2,252 million tons of oil equivalent. However on a per capita basis, the U.S. still uses more energy than China and is less efficient than Europe. China's thermal coal imports for 2010 are expected to reach 105-115 million tons.
State-run explorer Oil India has set aside $2 billion for overseas acquisitions. Bigger rival Oil & Natural Gas Corporation has spearheaded India's hunt for foreign petroleum assets, often competing with Chinese companies, but smaller players such as Oil India and refiners like Indian Oil Corporation are also scouting for assets, Reuters reported.
Indian power utility NTPC is looking to buy coal mines outside India to ensure supply. The company’s chairman said it will use part of its $3 billion cash reserve and will take on debt to acquire assets in Australia, Indonesia and Mozambique to import as much as 10 million metric tons per year.

Threats

According to Bloomberg, Codelco, the world’s biggest copper producer, suggested that copper demand in China is likely to decline in the second half of the year due to government actions to tighten lending and control inflation.
Government sources said Russia may raise its mineral extraction tax on natural gas 10-15 percent from January 1, 2011, the first increase since 2005.
China, the world’s largest rare-earths producer, cut export quotas for the minerals by 72 percent for the second half of 2010, raising the possibility of a trade dispute with the U.S. Shipments will be capped at 7,976 metric tons, down from 28,417 tons for the same period a year ago, according to data from the Ministry of Commerce.

Past performance does not guarantee future results.

The Morgan Stanley Commodity Related Index (CRX) is an equal-dollar weighted index of 20 stocks involved in commodity related industries such as energy, non-ferrous metals, agriculture, and forest products. The index was developed with a base value of 200 as of March 15, 1996. The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies. The Philadelphia Stock Exchange Gold and Silver Index (XAU) is a capitalization-weighted index that includes the leading companies involved in the mining of gold and silver. Holdings in the Global Resources Fund as a percentage of net assets as of 6/30/10: Mitsui O.S.K. Lines Ltd. 0.00%, Statoil 0.00%, Oil & Natural Gas Corp. 0.00%, Indian Oil Corp. 0.00%, NTPC 0.00%.

Net Asset Value
as of 09/02/2010

Global Resources Fund
PSPFX $8.72 +0.08
Gold and Precious Metals Fund
USERX $17.25 +0.18
World Precious Minerals Fund
UNWPX $19.21 +0.13
China Region Fund
USCOX $8.50 No Change
Eastern European Fund
EUROX $9.05 +0.03
Global Emerging Markets Fund
GEMFX $8.15 +0.01
Global MegaTrends Fund
MEGAX $7.67 +0.03
All American Equity Fund
GBTFX $19.86 +0.15
Holmes Growth Fund
ACBGX $15.79 +0.19
Tax Free Fund
USUTX $12.61 No Change
Near-Term Tax Free Fund
NEARX $2.27 No Change
U.S. Government Securities Savings Fund
UGSXX $1.00 No Change
U.S. Treasury Securities Cash Fund
USTXX $1.00 No Change

Please consider carefully a fund’s investment objectives, risks, charges and expenses. For this and other important information, obtain a fund prospectus by clicking here or by calling 1-800-US-FUNDS (1-800-873-8637). Read it carefully before investing. Distributed by U.S. Global Brokerage, Inc. With respect to the money market funds, an investment in a money market fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although money market funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in these funds.

Read additional important information.

Tax-exempt income is federal income tax free. A portion of this income may be subject to state and local income taxes, and if applicable, may subject certain investors to the Alternative Minimum Tax as well. Each tax free fund may invest up to 20% of its assets in securities that pay taxable interest. Income or fund distributions attributable to capital gains are usually subject to both state and federal income taxes. Bond funds are subject to interest-rate risk; their value declines as interest rates rise. The tax free funds may be exposed to risks related to a concentration of investments in a particular state or geographic area. These investments present risks resulting from changes in economic conditions of the region or issuer.

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.

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 Rating? 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.)

Each of the mutual funds or services referred to in the U.S. Global Investors, Inc. website may be offered only to persons in the United States. This website should not be considered a solicitation or offering of any investment product or service to investors residing outside the United States.

Certain materials on the site may contain dated information. The information provided was current at the time of publication. For current information regarding any of the funds mentioned in such materials, please visit the fund performance page.

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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Global Resources Fund

Fund Vitals

NAV: $8.72
as of 09/02/2010
Change: 0.08 (0.92)

Ready to Invest?

July 2010

Net Asset Value
as of 09/02/2010

Global Resources Fund

Fund Vitals

NAV: $8.72 as of 09/02/2010 Change: 0.08 (0.92)

Ready to Invest?

July 2010

Net Asset Valueas of 09/02/2010

NAV: $8.72
as of 09/02/2010
Change: 0.08 (0.92)

Net Asset Value
as of 09/02/2010