Susan Filyk - IR Frank Holmes - CEO and CIO Susan McGee - President and General Counsel Lisa Callicotte - CFO

Welcome to the U.S. Global Investors webcast; U.S. Global Investors Earnings Announcement for Fiscal Year 2013. Please note that the slides you see on your screen are controlled by the presenters. You may submit questions during the webcast. Simply enter your question in the dialogue box at the bottom of the screen and click "submit". Also, you may download a PDF of today's slides by clicking the resources tab in the top center area of your screen. You can switch back to the presentation slides by clicking the slide tab. We would like to begin by introducing Susan Filyk, Investor Relations at the U.S. Global Investors. Ms. Filyk.

Thank you. Welcome everyone to our webcast announcing results for the fiscal year ended June 30, 2013. The presenters for today’s program are Frank Holmes, U.S. Global Investors’ CEO and Chief Investment Officer; Susan McGee, President and General Counsel, and Lisa Callicotte, Chief Financial Officer. 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 corresponding Form 10-K filings 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. If you have a question for us, you can submit it at anytime during the webcast. Simply type your question in the dialogue box at the bottom of the screen, and click “submit”. If we aren't able to answer your question during the live presentation, we will follow up with you individually. Now let's go to Frank Holmes, CEO and CIO, for an overview of the year. Frank?

Thank you, Susan. Good morning everyone. As we said in the headline, we reported results and it weren’t as pretty and I am going to try to explain what takes place in simple terms. But the company is in a full court press of streamlining cost, and repositioning products and service, and we feel still confident during this trough in the markets that we could continue to pay dividends and buyback our stock as an opportunistic price. But let’s go and take a look at the numbers, we are boutique registered investment advisory specializing in natural resources and emerging markets and we reported a net loss of $0.01 per share on revenue of $18.7 million for the fiscal year ended June 30th. In the fourth quarter of fiscal 2013, the company had a net loss of $450,000 and that works at $0.02 per share. And what's important to recognize is that in that second quarter of this year, but however it’s our last quarter of the year, there was a huge drop in emerging markets, in resources. I am going to highlight that impact and what we are doing to try to respond as quickly and readily as possible. So as I mentioned in the press release, net assets were down and a big decline took place in the second quarter of this year. When you compare the snapshot from the previous year, the decline appears to be approximately $500 million of assets, where we went from having 1.62 billion to 1.16 billion and the bulk of this did take place in this quarter. As we saw the melt down in April, the first decline in bullion and ETF and that triggered gold stocks to decline and that triggered then gold mining companies to have a massive write-offs and also…

Thank you, Frank. Good morning. Now I would like to summarize our result of operations for fiscal year ended June 30, 2013. Beginning on page 39, we recorded total operating revenues of $18.7 million for the year, which is down 22% from $24 million we reported last year. The decrease is primarily due to following reasons. Mutual fund advisory fees declined $2.7 million or 19% under two main components, management fees and performance fees. Management fees decreased $4.8 million due to decrease in assets under the management related to market depreciation and shareholder redemptions, mainly in the natural resources and emerging marketing funds, this was offset by the company paying out $2.1 million less and performance adjustments, in fiscal year 2013 most in 2012. Transfer agency fee revenue decreased $976,000 or 27%, as a result of decline in the number of shareholder accounts and transactions. Distribution fee revenues declined $1.3 million or 31% and admin service fees revenues decline $329,000 or 30% both as a result of lower average assets under management. Moving on page 40, total expenses for the year were $19.1 million and decrease of $2.2 million or 11%. The decrease is primarily for the following reasons. Employee compensation and benefit decreased $671,000 or 7% due to lower performance based fee balances and fewer employees. Platform fees decreased $1.3 million or 33% as a result of lower assets held through the broker dealer platform and advertising decrease $320,000 or 27% as a result of decreased sales and marketing cost. And on page 41, we see our operating results for fiscal year 2013. We had an operating loss of $442,000 in the current year down $3.1 million from prior year. Other income, which is income or loss related to our investment including our equity method investment increased $439,000 compared to prior year. The increase is due to increase investment income related to changes in trading securities and our equity earnings in Galileo. Net loss after taxes for the year is a $194,000 or 1 penny per share compared to $0.10 earnings per share reported last year. Moving on to the balance sheet on page 42, you can see that we still have a high level of cash and cash and securities combined to make up 82% of our total assets. And on page 43, you notice we still have no long term debt and we have a net working capital of $23.3 million, our current ratio of 13.6 to 1. With that, I'd like to turn it over to Susan McGee.

Thank you, Lisa and good morning. For the next few minutes I'd like to highlight, just a few key points with you today. As you know one of our value at the U.S. Global is to be performance and results oriented. And we're pleased to say that our funds continue to deliver some long term solid results to shareholders. The next few slides will highlight these (inaudible) since 2000, our funds have received 29 Lipper Performance Awards, certificates and top rankings, and as of June 30, we had two funds, the Global Resources Fund and The Emerging Europe Fund, we're in the top 12% of the entire mutual fund universe for the 10-year period. Two additional funds hold the top Lipper Leader Rating. The Global Emerging Market Fund ranked at five for tax efficiency for the three and five year and overall time period. The Near-Term Tax Free Fund rates at five for preservation and tax efficiency for the three, five and 10-year and overall time period. Funds that rate at five by the Lipper Leader Rating System are in the top 20% of the category. And as you can see on the next slide, four of our funds had an overall rating of three or four stars according to Morningstar. We believe that this outstanding historical performance has helped U.S. Global attract attention from many investment advisory firms looking for companies that have experienced in our niche market. We have one new strategic relationship that I am pleased to share with you and that is with Transamerica, which added the global resources fund with premier provider lift. This lift is used on more than 1,000 registered reps at Transamerica. U.S. Global Fund is the only resources fund offering on the firms’ lift and we believe that this will offer…

Thank you, Susan and thank you Lisa. Slide 54, is to manage our expectations and we always try to help investors anticipate before you participate, before you go buy growth stock recognize it has tremendous volatility, it has investors are looking at gold and investors looking at emerging markets as indirect way of playing it, people look at our capacity and our ability as a brand and what we have done. So we have value investors, growth investors, gold investors. So you will see that they come and go with different reasons et cetera, and it just adds that volatility. Because when you look at gold stocks, you can see that this plus or minus 35% is the annual volatility, that means 70% of the time is the non-event for gold stocks to go plus or minus 35%, oil to go plus or minus 35%, emerging markets to go plus or minus 30%, and the S&P is 17%. Interesting now bullion is less than all of them. However, the most volatile of them all is U.S. Global Investors, and that’s another reason why in our model to buyback stock it has been on down days because of this excessive volatility and to be able to catch that opportunity as we basically approached our price to book value. Now I would like to go on to the next visual to try to put, this is another a way of looking at volatility to anticipate or [precipitate] how often in the course of over a 20 day rolling period has GROW gone plus 10% or down 10%. So it is just happened 50% of the time. It can be tremendously volatile, and that’s another reason why we have bought and have a model and my self included that I would buy stock…

Thank you, Frank. We have time for a few questions. (Operator Instructions) I will start with two questions for Susan McGee. First one, if you liquidate the treasury cash funds and change the strategy of the government security savings funds will you still have the money market fund available for U.S. Global shareholder?

Yes we will be offering a third party money market fund as an exchange vehicle for our funds shareholders and we expect all these transactions -- the two, our two money market fund transactions to be completed in December and at that point that their party money market fund will be available.

I think it was importance of third party money fund will also make it easy for investors just like today to switch into our funds because the relationship is with U.S. Bancorp.

Thank you. And you mentioned the fund restructuring taking place at the end of the year when will (inaudible) TA change take place?

We are expecting that conversion to be completed also by December.

Thank you. The next question is for Lisa when do you expect the cost savings and increase in administrative fee revenue to take effect?

The initiatives related to the admin fee won't be fully implemented until December 2013. We think that there will be a positive effect beginning calendar year 2014.

Thank you. The next question is for Frank, with regard to fund flows in Canada have those mirrored the fund flow in the U.S. and how it has impacted Galileo's fund?

I think it's -- and looking at Galileo's five star fund; it’s been much more stable on a relative basis of money jumping and jumping out. It is the trepidation of fear takes place in America does have an impact in Canada, and so the fund flows slowed down, and looking at and talking to Michael Waring, did not experience a huge redemption that's taken place in the asset management business here in U.S. and initially not go some of the other large asset management companies that share with me that, their bond fund flows which have been huge for the past five years and four years particular have come to a halt, and now they're experiencing net redemptions since May, June and July and August, and it's spread the fear of rising interest rates, interesting enough his line up is not experienced that.

Thank you. Thank you for the questions. This concludes U.S. Global Investors earning webcast for the fiscal year of 2013. This presentation will be available for replay on our website at usfunds.com. Thank you all for your participation today.

Thank you, ladies and gentlemen. These conclude today’s conference. Thank you for participating. You may now disconnect.