10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

þ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Fiscal Year Ended June 30, 2008

or

o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the transition period from                 to                

Commission File Number 0-13928

U.S. GLOBAL INVESTORS, INC.

Incorporated in the State of Texas

IRS Employer Identification No. 74-1598370

Principal Executive Offices:
7900 Callaghan Road
San Antonio, Texas 78229
Telephone Number: 210-308-1234

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:
Class A common stock
($0.025 par value per share)

Registered: NASDAQ Capital Market

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes o     No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under those Sections.

Yes o     No þ

Indicate by check mark whether the Company (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.      Yes þ     No o

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer þ  Non-accelerated filer o
(Do not check if a smaller reporting company) Smaller reporting company o

Indicate by check mark whether the registrant is a shell company, (as defined in Rule 12b-2 of the Act).

Yes o     No þ

The aggregate market value of the 7,382,729 shares of nonvoting class A common stock held by nonaffiliates of the registrant was $121,741,201, based on the last sale price quoted on NASDAQ (adjusted for the split) as of December 31, 2007, the last business day of the registrant’s most recently completed second fiscal quarter. Registrant’s only voting stock is its class C common stock, par value of $0.025 per share, for which there is no active market. The aggregate value of the 20,767 shares of the class C common stock held by nonaffiliates of the registrant on December 31, 2007 (based on the last sale price of the class C common stock in a private transaction) was $10,383.50. For purposes of this disclosure only, the registrant has assumed that its directors, executive officers, and beneficial owners of 5% or more of the registrant’s common stock are affiliates of the registrant.

On August 22, 2008, there were 13,817,269 shares of Registrant’s class A nonvoting common stock issued and 13,169,461 shares of Registrant’s class A nonvoting common stock issued and outstanding, no shares of Registrant’s class B nonvoting common stock outstanding, and 2,094,279 shares of Registrant’s class C common stock issued and outstanding.

Documents incorporated by reference: None

     Table of Contents

Part I of Annual Report on Form 10-K	1
Item 1. Business	1
Item 1A. Risk Factors	6
Item 1B. Unresolved Staff Comments	8
Item 2. Properties	8
Item 3. Legal Proceedings	8
Item 4. Submission of Matters to a Vote of Security Holders	8
Part II of Annual Report on Form 10-K	9
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities	9
Item 6. Selected Financial Data	12
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 7A. Quantitative and Qualitative Disclosures About Market Risk	24
Item 8. Financial Statements and Supplementary Data	25
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	45
Item 9A. Controls and Procedures	46
Item 9B. Other Information	46
Part III of Annual Report on Form 10-K	47
Item 10. Directors, Executive Officers and Corporate Governance	47
Item 11. Executive Compensation	49
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	57
Item 13. Certain Relationships and Related Transactions, and Director Independence	59
Item 14. Principal Accounting Fees and Services	60
Part IV of Annual Report on Form 10-K	61
Item 15. Exhibits, Financial Statement Schedules	61
Signatures	64
Exhibit 21 — Subsidiaries of the Company, Jurisdiction of Incorporation, and Percentage of Ownership
Exhibit 31.1 — Rule 13a — 14(a) Certifications(under Section 302 of the Sarbanes-Oxley Act of 2002)
Rule 13a — 14(a) Certifications (under Section 302 of the Sarbanes-Oxley Act of 2002)
Exhibit 32.1 — Section 1350 Certifications (under Section 906 of the Sarbanes-Oxley Act of 2002)
Amendment to Line of Credit Note
Code of Ethics
List of Subsidiaries
Rule 13a-14(a) Certifications
Section 1350 Certifications

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Part I of Annual Report on Form 10-K

Item 1. Business

U.S. Global Investors, Inc. (the “Company” or “U.S. Global”) has made forward-looking statements concerning the Company’s performance, financial condition, and operations in this report. The Company from time to time may also make forward-looking statements in its public filings and press releases. Such forward-looking statements are subject to various known and unknown risks and uncertainties and do not guarantee future performance. Actual results could differ materially from those anticipated in such forward-looking statements due to a number of factors, some of which are beyond the Company’s control, including (i) the volatile and competitive nature of the investment management industry, (ii) changes in domestic and foreign economic conditions, (iii) the effect of government regulation on the Company’s business, and (iv) market, credit, and liquidity risks associated with the Company’s investment management activities. Due to such risks, uncertainties, and other factors, the Company cautions each person receiving such forward-looking information not to place undue reliance on such statements. All such forward-looking statements are current only as of the date on which such statements were made.

U.S. Global, a Texas corporation organized in 1968, is a registered investment adviser under the Investment Advisers Act of 1940. The Company and its subsidiaries are principally engaged in the business of providing investment advisory and other services to U.S. Global Investors Funds (“USGIF”) and U.S. Global Accolade Funds (“USGAF”), both Massachusetts business trusts (collectively, the “Trusts” or “Funds”), as well as offshore clients. USGIF and USGAF are investment companies offering shares of nine and four mutual funds, respectively, on a no-load basis.

As part of the mutual fund management business, the Company provides: (1) investment advisory services; (2) transfer agency and record keeping services; (3) mailing services; and (4) distribution services, through its wholly owned broker-dealer, to mutual funds advised by the Company. The fees from investment advisory and transfer agent services, as well as investment income, are the primary sources of the Company’s revenue.

     Lines of Business

     Investment Management Services

Investment Advisory Services. The Company furnishes an investment program for each of the clients it manages and determines, subject to overall supervision by the applicable board of trustees of the clients, the clients’ investments pursuant to advisory agreements (the “Advisory Agreements”). Consistent with the investment restrictions, objectives and policies of the particular client, the portfolio team for each client determines what investments should be purchased, sold and held, and makes changes in the portfolio deemed to be necessary or appropriate. In the Advisory Agreements, the Company is charged with seeking the best overall terms in executing portfolio transactions and selecting brokers or dealers.

The Company also manages, supervises, and conducts certain other affairs of USGIF and USGAF, subject to the control of the Funds’ boards of trustees. It provides office space, facilities, and certain business equipment as well as the services of executive and clerical personnel for administering the affairs of the Funds. U.S. Global and its affiliates compensate all personnel, officers, directors, and interested trustees of the Funds if such persons are also employees of the Company or its affiliates.

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However, the Funds are required to reimburse the Company for a portion of the compensation of the Company’s employees who perform certain state and federal securities law regulatory compliance work on behalf of the Funds based upon an agreed upon allocation of the employee’s compensation or on the time spent on such matters. The Company is responsible for costs associated with marketing Fund shares to the extent not otherwise covered by a distribution plan adopted pursuant to Investment Company Act Rule 12b-1 (“12b-1 Plan”).

As required by the Investment Company Act of 1940, the Advisory Agreements with USGIF and USGAF are subject to annual renewal and are terminable upon 60-day notice. The boards of trustees of USGIF and USGAF will meet to consider renewal of the applicable agreements in February and May 2009, respectively. Management anticipates that these Advisory Agreements will be renewed.

In addition to providing management and transfer agent services to USGIF and USGAF, the Company provides advisory services to three offshore clients.

Net assets under management at June 30, 2008, and 2007, are detailed in the following table.

Assets Under Management (AUM)
			AUM		AUM
			at June 30, 2008		at June 30, 2007
Fund	Ticker	Category	(in thousands)		(in thousands)
U.S. Global Investors Funds
All American Equity	GBTFX	Large cap core	$	26,485	$	23,589
China Region Opportunity	USCOX	China region		81,560		93,787
Global Resources	PSPFX	Natural resources		2,005,399		1,382,845
Gold and Precious Metals	USERX	Gold oriented		258,708		178,488
Near-Term Tax Free	NEARX	Short / intermediate municipal debt		13,584		13,354
Tax Free	USUTX	General municipal debt		18,333		15,899
U.S. Government Securities Savings	UGSXX	U.S. Government money market		445,239		468,777
U.S. Treasury Securities Cash	USTXX	U.S. Government money market		111,914		115,234
World Precious Minerals	UNWPX	Gold and precious minerals		948,348		924,820
U.S. Global Accolade Funds
Eastern European	EUROX	Emerging markets		1,335,768		1,393,152
Global Emerging Markets	GEMFX	Emerging markets		37,743		40,040
Holmes Growth	ACBGX	Mid-cap growth		61,482		63,182
Global MegaTrends	MEGAX	Large-cap growth		47,519		16,197
Total SEC-Registered Funds				5,392,082		4,729,364
Other Advisory Clients				360,763		299,578
Total AUM			$	5,752,845	$	5,028,942

Transfer Agent and Other Services. The Company’s wholly owned subsidiary, United Shareholder Services, Inc. (“USSI”), is a transfer agent registered under the Securities Exchange Act of 1934, providing transfer agency and printing services to investment company clients. The transfer agency utilizes a third-party external system providing the Company’s fund shareholder communication network with computer equipment and software designed to meet the operating requirements of a mutual fund transfer agency.

The transfer agency’s duties encompass, but are not limited to, the following: (1) acting as servicing agent in connection with dividend and distribution functions; (2) performing shareholder account and administrative agent functions in connection with the issuance, transfer and redemption, or repurchase of shares; (3) maintaining such records as are necessary to document transactions in the Funds’ shares;

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(4) acting as servicing agent in connection with mailing of shareholder communications, including reports to shareholders, dividend and distribution notices, and proxy materials for shareholder meetings; and (5) investigating and answering all shareholder account inquiries.

The transfer agency agreements provide that USSI will receive, as compensation for services rendered as transfer agent, certain annual and activity-based fees and will be reimbursed for out-of-pocket expenses. In connection with obtaining/providing administrative services to the beneficial owners of fund shares through institutions that provide such services and maintain an omnibus account with USSI, each fund pays a monthly fee based on the number of accounts or the value of the shares of the fund held in accounts at the institution.

The transfer agency agreements with USGIF and USGAF are subject to renewal on an annual basis and are terminable upon 60-day notice. The boards of trustees of USGIF and USGAF will meet to consider renewal of the applicable agreements in February and May 2009, respectively. Management anticipates that these transfer agency agreements will be renewed.

Brokerage Services. The Company has registered its wholly owned subsidiary, U.S. Global Brokerage, Inc. (“USGB”), with the Financial Industry Regulatory Authority (“FINRA”), formerly known as the National Association of Securities Dealers (“NASD”), the Securities and Exchange Commission (“SEC”), and appropriate state regulatory authorities as a limited-purpose broker-dealer for the purpose of distributing USGIF and USGAF fund shares. USGB is the distributor for USGIF and USGAF fund shares.

Mailing Services. A&B Mailers, Inc., now known as USSI Mailers, was dissolved during fiscal year 2008 and its operation was rolled into USSI. USSI Mailers provides mail-handling services to various entities; its primary customers include the Company in connection with its efforts to promote the funds and the Company’s investment company clients in connection with required mailings.

     Corporate Investments

Investment Activities. In addition to providing management and advisory services, the Company is actively engaged in trading for its own account.

     Employees

As of June 30, 2008, U.S. Global and its subsidiaries employed 84 full-time employees and 9 part-time employees; as of June 30, 2007, it employed 76 full-time employees and 6 part-time employees. The Company considers its relationship with its employees to be good.

     Competition

The mutual fund industry is highly competitive. According to the Investment Company Institute, at the end of 2007 there were approximately 8,000 domestically registered open-end investment companies of varying sizes and investment policies, whose shares are being offered to the public worldwide. Generally, there are two types of mutual funds: “load” and “no-load.” In addition, there are both load and no-load funds that have adopted Rule 12b-1 plans authorizing the payment of distribution costs of the funds out of fund assets. USGAF is a trust with no-load funds that has adopted 12b-1 plans. Load funds are typically sold through or sponsored by brokerage firms, and a sales commission is charged on the amount of the investment. No-load funds, such as the USGIF and USGAF funds, however, may be purchased directly from the particular mutual fund organization or through a distributor, and no sales commissions are charged.

In addition to competition from other mutual fund managers and investment advisers, the Company and the mutual fund industry are in competition with various investment alternatives offered by

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insurance companies, banks, securities broker-dealers, and other financial institutions. Many of these institutions are able to engage in more liberal advertising than mutual funds and may offer accounts at competitive interest rates, which may be insured by federally chartered corporations such as the Federal Deposit Insurance Corporation.

A number of mutual fund groups are significantly larger than the funds managed by U.S. Global, offer a greater variety of investment objectives, and have more experience and greater resources to promote the sale of investments therein. However, the Company believes it has the resources, products, and personnel to compete with these other mutual funds. In particular, the Company is known for its expertise in the gold mining and exploration and natural resources industries. Competition for sales of fund shares is influenced by various factors, including investment objectives and performance, advertising and sales promotional efforts, distribution channels, and the types and quality of services offered to fund shareholders.

Success in the investment advisory and mutual fund share distribution businesses is substantially dependent on each fund’s investment performance, the quality of services provided to shareholders, and the Company’s efforts to market the funds effectively. Sales of fund shares generate management fees (which are based on assets of the funds) and transfer agent fees (which are based on the number of fund accounts and the activity in those accounts). Costs of distribution and compliance continue to put pressure on profit margins for the mutual fund industry.

Furthermore, the Company acts as an investment adviser to three offshore funds. Despite the Company’s expertise in gold mining and exploration and natural resources, the Company faces the same obstacle many advisers face, namely uncovering undervalued investment opportunities as the markets face further uncertainty and increased volatility. In addition, the growing number of alternative investments, especially in specialized areas, has created pressure on the profit margins and increased competition for available investment opportunities.

     Supervision and Regulation

The Company, USSI, USGB, and the investment companies the Company manages and administers operate under certain laws, including federal and state securities laws, governing their organization, registration, operation, legal, financial, and tax status. Among the potential penalties for violation of the laws and regulations applicable to the Company and its subsidiaries are fines, imprisonment, injunctions, revocation of registration, and certain additional administrative sanctions. Any determination that the Company or its management has violated applicable laws and regulations could have a material adverse effect on the business of the Company. Moreover, there is no assurance that changes to existing laws, regulations, or rulings promulgated by governmental entities having jurisdiction over the Company and the funds will not have a material adverse effect on its business. The Company has no control over regulatory rulemaking or the consequences it may have on the mutual fund and investment advisory industry.

Recent and accelerating regulatory pronouncements and oversight have significantly increased the burden of compliance infrastructure with respect to the mutual fund industry and the capital markets. This momentum of new regulations has contributed significantly to the costs of managing and administering mutual funds.

U.S. Global Investors, Inc. is registered as an investment adviser with the SEC. As a registered investment adviser, it is subject to the requirements of the Investment Advisers Act of 1940, as amended, and the SEC’s regulations there under, as well as to examination by the SEC’s staff. The Investment Advisers Act of 1940 imposes substantive regulation on virtually all aspects of our business and relationships with our clients. Applicable requirements relate to, among other things, fiduciary duties to clients, engaging in transactions with clients, maintaining an effective compliance program, conflicts of interest, advertising, recordkeeping, reporting and disclosure requirements. The funds for which the Company acts as the investment adviser are registered with the SEC under the Investment Company Act of 1940, as amended. The Investment Company Act of 1940 imposes additional obligations, including detailed operational requirements for both the funds and their advisers.

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Moreover, an investment adviser’s contract with a registered fund may be terminated by the fund on not more than 60 days’ notice, and is subject to annual renewal by the fund’s board after an initial two-year term. Both the Investment Advisers Act of 1940 and the Investment Company Act 1940 regulate the “assignment” of advisory contracts by the investment adviser. The SEC is authorized to institute proceedings and impose sanctions for violations of the Investment Advisers Act and the Investment Company Act, ranging from fines and censures to termination of an investment adviser’s registration. The failure of the Company, or the funds which the Company advises, to comply with the requirements of the SEC could have a material adverse effect on us.

USGB is subject to regulation by the SEC under the 1934 Act and regulation by FINRA (formerly known as the NASD), a self-regulatory organization composed of other registered broker-dealers. U.S. Global, USSI and USGB are required to keep and maintain certain reports and records, which must be made available to the SEC and FINRA upon request.

     Relationships with Clients

The businesses of the Company are, to a very significant degree, dependent on their associations and contractual relationships with the Funds. In the event the advisory or transfer agent services agreements with USGIF or USGAF are canceled or not renewed pursuant to the terms thereof, the Company would be substantially adversely affected. U.S. Global, USSI, and USGB consider their relationships with the Funds to be good, and they have no reason to believe that their management and service contracts will not be renewed in the future; however, there is no assurance that USGIF and USGAF will choose to continue their relationships with the Company, USSI, or USGB.

In addition, the Company is also dependent on its relationships with its offshore clients. Even though the Company views its relationship with its offshore clients as stable, the Company could be adversely affected if these relationships ended.

     Available Information

Available Information. The Company’s internet website address is www.usfunds.com. Information contained on the Company’s website is not part of this annual report on Form 10-K. The Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed with (or furnished to) the Securities and Exchange Commission are available on the Company’s internet website, free of charge, soon after such material is filed or furnished. (The SEC filings can be found by clicking “About the Advisor” followed by “Financial Reports.”)

The Company also posts its corporate governance guidelines, code of business conduct, code of ethics for chief executive and financial officers, and the charters of the audit and compensation/options committees of its board of directors on the same website (in the “Compliance / Policies” section). The Company’s SEC filings and governance documents are available in print to any stockholder that makes a written request to, Terry Badger, Director of Communications, U.S. Global Investors, Inc., 7900 Callaghan Road, San Antonio, Texas 78229.

The public may read and copy any materials filed by the Company with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a website at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

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Item 1A. Risk Factors

The Company faces a variety of significant and diverse risks, many of which are inherent in the business. Described below are certain risks that could materially affect the Company. Other risks and uncertainties that the Company does not presently consider to be material, or of which the Company is not presently aware, may become important factors that affect it in the future. The occurrence of any of the risks discussed below could materially and adversely affect the business, prospects, financial condition, results of operations or cash flow.

     The investment management business is intensely competitive.

Competition in the investment management business is based on a variety of factors, including:

• Investment performance;

• Investor perception of an investment team’s drive, focus and alignment of interest with them;

• Quality of service provided to, and duration of relationships with, clients and shareholders;

• Business reputation; and

• Level of fees charged for services.

The Company competes with a large number of investment management firms, commercial banks, broker-dealers, insurance companies and other financial institutions. Competitive risk is heightened by the fact that some competitors may invest according to different investment styles or in alternative asset classes which the markets may perceive as more attractive than the Company’s investment approach. If the Company is unable to compete effectively, revenues and earnings may be reduced, and the business could be materially affected.

     A decline in securities markets could lead to a decline in revenues.

Changes in economic or market conditions may adversely affect the profitability, performance of and demand for the Company’s investment products and services. The ability of the Company to compete and grow is dependent on the relative attractiveness of the types of investment products the Company offers and its investment performance and strategies under prevailing market conditions.

     Poor investment performance could lead to a decline in revenues.

Success in the investment management industry is largely dependent on investment performance relative to market conditions and the performance of competing products. Good relative performance generally attracts additional assets under management, resulting in additional revenues. Conversely, poor performance generally results in decreased sales and increased redemptions with a corresponding decrease in revenues. Therefore, poor investment performance relative to the portfolio benchmarks and to competitors could impair the Company’s revenues and growth.

Investment advisory fees are a significant portion of revenue and may be negatively affected by decreases in assets under management.

Changes which may negatively impact assets under management, and thus, the Company’s revenue, profitability and ability to grow include market depreciation, redemptions from shareholder accounts and terminations of client accounts.

The Company’s clients can terminate their agreements with the Company on short notice, which may lead to unexpected declines in revenue and profitability.

The Company’s investment advisory agreements are generally terminable on short notice and subject to annual renewal. The Company’s clients can terminate their relationships with us, or reduce the aggregate amount of assets under management, for a number of reasons, including investment performance, financial market performance, or to shift their funds to competitors who may charge lower advisory fee rates, or for no stated reason. Poor performance relative to that of other investment management firms tend to result in decreased investments in the funds managed by the Company, increased withdrawals from the funds, and the loss of shareholders in the funds. If the Company’s investment advisory agreements are terminated, which may occur in a short time frame, the Company may experience a decline in revenues and profitability.

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Difficult market conditions can adversely affect the Company by reducing the market value of the assets we manage or causing shareholders to make significant redemptions.

The Company would be expected to generate lower revenues in a declining stock market or general economic downturn. Under the Company’s advisory fee arrangements, the fees received are primarily based on the market value of assets under management. Accordingly, a decline in the price of securities held in the funds would be expected to cause revenues and net income to decline, which would result in lower advisory fees; or cause increased shareholder redemptions in favor of investments they perceive as offering greater opportunity or lower risk, which redemptions would also result in lower advisory fees.

Market-specific risks may negatively impact the Company’s earnings.

The Company manages certain funds in the emerging market and natural resource sectors, which are highly cyclical. The investments in the funds are subject to significant loss due to political, economic, and diplomatic developments, currency fluctuations, social instability, and changes in governmental policies. Foreign trading markets, particularly in some emerging market countries, are often smaller, less liquid, less regulated and significantly more volatile than the U.S. and other established markets.

The market price and trading volume of the Company’s class A common stock may be volatile, which could result in rapid and substantial losses for the Company’s stockholders.

The market price of the Company’s class A common stock may be volatile and the trading volume may fluctuate, causing significant price variations to occur. If the market price of the Company’s class A common stock declines significantly, stockholders may be unable to sell their shares at or above their purchase price. The Company cannot assure that the market price of its class A common stock will not fluctuate or decline significantly in the future. Some of the factors that could negatively affect the price of the Company’s class A common stock, or result in fluctuations in price or trading volume include:

• Decreases in assets under management;

• Variations in quarterly and annual operating results;

• Publication of research reports about the Company or the investment management industry;

• Departures of key personnel;

• Adverse market reactions to any indebtedness the Company may incur, acquisitions or disposals the Company may make, or securities the Company may issue in the future;

• Changes in market valuations of similar companies;

• Changes or proposed changes in laws or regulations, or differing interpretations thereof, affecting the business, or enforcement of these laws and regulations, or announcements relating to these matters;

• Adverse publicity about the asset management industry, generally, or individual scandals, specifically; and

• General market and economic conditions.

The market price of the Company’s class A common stock could decline due the large number of shares of the Company’s class C common stock eligible for future sale upon conversion to class A shares.

The market price of the Company’s class A common stock could decline as a result of sales of a large number of shares of class A common stock eligible for future sale upon the conversion of class C shares, or the perception that such sales could occur. These sales, or the possibility that these sales may occur, also might make it more difficult for the Company to raise additional capital by selling equity securities in the future, at a time and price the Company deems appropriate.

Failure to comply with government regulations could result in fines, which could cause the Company’s earnings and stock price to decline.

The Company and its subsidiaries are subject to a variety of federal securities laws and agencies, including, but not limited to, the Investment Advisers Act of 1940, as amended, the Sarbanes-Oxley Act of 2002, the Gramm-Leach-Bliley Act of 1999, the Bank Secrecy Act of 1970, as amended, the USA PATRIOT Act of 2001, the SEC, FINRA and NASDAQ. Moreover, financial reporting requirements, and the processes, controls and procedures that have been put in place to address them, are comprehensive and complex. While management has focused attention and resources on compliance policies and procedures, non-compliance with applicable laws or regulations could result

7

in fines, sanctions or censures which could affect the Company’s reputation, and thus its revenues and earnings.

Increased regulatory and legislative actions and reforms could increase costs and negatively impact the Company’s profitability and future financial results.

During the past seven years, the federal securities laws have been substantially augmented and made significantly more complex by the Sarbanes-Oxley Act of 2002 and USA PATRIOT Act of 2001. With new laws and changes in interpretations and enforcement of existing requirements, the associated time the Company must dedicate to, and related costs the Company must incur in, meeting the regulatory complexities of the business have increased. In order to comply with these new requirements, the Company has had to expend additional time and resources, including substantial efforts to conduct evaluations required to ensure compliance with the Sarbanes-Oxley Act of 2002. Moreover, current and pending regulatory and legislative actions and reforms affecting the mutual fund industry may negatively impact earnings by increasing the Company’s costs of dealing in the financial markets.

The Company intends to pay regular dividends to its stockholders, but the ability to do so is subject to the discretion of the board of directors.

The Company intends to pay cash dividends on a monthly basis, but the board of directors, at its discretion, may decrease the level or frequency of dividends or discontinue payment of dividends entirely based on earnings, operations, capital requirements, general financial condition of the Company, and general business conditions.

The loss of key personnel could negatively affect the Company’s financial performance.

The success of the Company depends on key personnel, including the portfolio managers, analysts and executive officers. Competition for qualified, motivated and skilled personnel in the asset management industry remains significant. As the business grows, the Company will likely need to increase the number of employees. Moreover, in order to retain certain key personnel, the Company may be required to increase compensation to such individuals, resulting in additional expense. The loss of key personnel or the Company’s failure to attract replacement personnel could negatively affect its financial performance.

Item 1B. Unresolved Staff Comments

None

Item 2. Properties

The Company presently owns and occupies an office building as its headquarters in San Antonio, Texas. The office building is approximately 46,000 square feet on approximately 2.5 acres of land.

Item 3. Legal Proceedings

There are no material legal proceedings in which the Company is involved. There are no material legal proceedings to which any director, officer or affiliate of the Company or any associate of any such director or officer is a party or has a material interest, adverse to the Company or any of its subsidiaries.

Item 4. Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote of security holders during the fourth quarter of the fiscal year ended June 30, 2008.

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Part II of Annual Report on Form 10-K

Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities

     Market Information

The Company has three classes of common equity: class A, class B and class C common stock, par value $0.025 per share.

The Company’s class A common stock is traded over-the-counter and is quoted daily under NASDAQ’s Capital Markets. Trades are reported under the symbol “GROW.”

There is no established public trading market for the Company’s class B and class C common stock.

The Company’s class A and class B common stock have no voting privileges.

The following table sets forth the range of high and low sales prices of “GROW” from NASDAQ for the fiscal years ended June 30, 2008, and 2007. The quotations represent prices between dealers and do not include any retail markup, markdown, or commission.

Sales Price (Restated for Stock Split in March 2007)
	2008				2007
	High ($)		Low ($)		High ($)		Low ($)
First quarter (9/30)		26.33		18.22		17.41		8.77
Second quarter (12/31)		24.50		14.80		36.31		11.28
Third quarter (3/31)		17.95		12.31		34.95		17.49
Fourth quarter (6/30)		20.20		12.41		34.90		19.98

     Holders

On August 22, 2008, there were approximately 192 holders of record of class A common stock, no holders of record of class B common stock, and 53 holders of record of class C common stock.

     Dividends

On March 29, 2007, a two-for-one stock split became effective and shareholders of record were paid a $0.25 per share dividend (post-split). The board then authorized a dividend of $0.01 per share per month beginning in June 2007. The board authorized an increase to $0.02 per share per month beginning in October 2007. The dividend is payable on class A and class C shares. The monthly dividend is authorized through December 2008 and will be considered for continuation at that time by the board. Prior to 2007, the Company had not paid cash dividends on its class C common stock during the previous twenty-two fiscal years and had never paid dividends on its class A common stock.

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Payment of cash dividends is within the discretion of the Company’s board of directors and is dependent on earnings, operations, capital requirements, general financial condition of the Company, and general business conditions.

     Purchases of equity securities by the issuer

The Company may repurchase stock from employees. There were no repurchases of class A, B or class C common stock during the fiscal year ended June 30, 2008.

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     Company Performance Presentation

The following graph compares the cumulative total return for the Company’s class A common stock (GROW) to the cumulative total return for the S&P 500 Index, the Russell 2000 Index and the American Stock Exchange Gold BUGS Index (HUI) for the Company’s last five fiscal years. The graph assumes an investment of $10,000 in the class A common stock and in each index as of June 30, 2003, and that all dividends are reinvested. The historical information included in this graph is not necessarily indicative of future performance and the Company does not make or endorse any predictions as to future stock performance.

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     Item 6. Selected Financial Data

The following selected financial data is qualified by reference to, and should be read in conjunction with, the Company’s Consolidated Financial Statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in this Form 10-K. The selected financial data as of June 30, 2004, through June 30, 2008, and the years then ended, is derived from the Company’s Consolidated Financial Statements, which were audited by BDO Seidman, LLP, independent registered public accountants. Earnings per share have been restated for prior years to reflect the stock split that occurred in March 2007 and for all other information included throughout the document.

Selected	Year ended June 30,
Financial Data	2008			2007			2006		2005			2004
Revenues	$	56,039,247		$	58,603,637		$	44,853,588	$	16,981,339		$	12,983,500
Expenses		39,457,020			37,257,889			28,986,248		14,744,897			10,141,019
Income before income taxes		16,582,227			21,345,748			15,867,340		2,236,442			2,842,481
Income tax expense		5,745,417			7,586,499			5,431,978		789,971			675,839
Net income	$	10,836,810		$	13,759,249		$	10,435,362	$	1,446,471		$	2,166,642
Basic income per share		0.71			0.91			0.69		0.10			0.15
Working capital		35,309,228			27,925,318			18,275,909		7,078,554			5,267,573
Total assets		45,494,619			39,793,113			29,046,853		12,102,515			9,356,596
Dividends per common share		0.21			0.26			—		—			—
Shareholders’ equity		39,233,744			31,095,202			20,543,211		9,903,088			8,485,346
Net cash provided by operations		14,309,886			8,867,278			5,532,505		986,120			2,669,928
Net cash provided by (used in) investing activities		(1,180,602	)		(746,787	)		265,053		(67,634	)		(30,328	)
Net cash provided by (used in) financing activities		(2,848,629	)		(3,322,114	)		444,307		64,016			(970,167	)

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This discussion reviews and analyzes the consolidated results of operations for the past three fiscal years and other factors that may affect future financial performance. This discussion should be read in conjunction with the Consolidated Financial Statements, Notes to the Consolidated Financial Statements, and Selected Financial Data.

     Business Segments

U.S. Global, with principal operations located in San Antonio, Texas, manages two business segments.

First, the Company offers a broad range of investment management products and services to meet the needs of individual and institutional investors, and second, the Company invests for its own account in an effort to add growth and value to its cash position. For more details on the results of our core operations, see Note 14 — Financial Information by Business Segment.

The Company generates substantially all its operating revenues from the investment management of products and services for USGIF, USGAF (collectively, the “Funds”) and three offshore clients. Although the Company generates the majority of its revenues from its investment advisory segment, the Company holds a significant amount of its total assets in investments. As of June 30, 2008, the Company held approximately $8.2 million in investments, comprising 18.1% of its total assets. The following is a brief discussion of the Company’s two business segments.

     Investment Management Products and Services

Investment management revenues are largely dependent on the total value and composition of assets under management. Fluctuations in the markets and investor sentiment directly impact the Funds’ asset levels, thereby affecting income and results of operations. During fiscal year 2008, average assets under management increased 12.2% to $5.437 billion, primarily due to significant increases in the natural resource and foreign equity funds under management through both net inflows and market appreciation.

Average Assets under Management
(Dollars in Millions)
	2008		2007		% Change			2007		2006		% Change
USGIF — Money Market	$	586	$	564		4.0	%	$	564	$	526		7.2	%
USGIF — Other		2,989		2,558		16.8	%		2,558		1,630		56.9	%
USGIF — Total		3,575		3,122		14.5	%		3,122		2,156		44.8	%
USGAF		1,550		1,488		4.2	%		1,488		1,286		15.7	%
Total SEC-Registered Funds		5,125		4,610		11.2	%		4,610		3,442		33.9	%
Other Advisory Clients		312		236		32.2	%		236		61		286.9	%
Average Assets Under Management	$	5,437	$	4,846		12.2	%	$	4,846	$	3,503		38.3	%

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     Investment Activities

Management believes it can more effectively manage the Company’s cash position by maintaining certain types of investments utilized in cash management and continues to believe that such activities are in the best interest of the Company.

The following summarizes the market value, cost and unrealized gain or loss on investments as of June 30, 2008, and June 30, 2007.

								Unrealized holding
								gains on
								available-for-sale
					Unrealized Gain			securities, net of
Securities	Market Value		Cost		(Loss)			tax
Trading 1	$	6,991,843	$	6,275,478	$	716,365			N/A
Available for sale 2		1,246,769		1,739,795		(493,026	)	$	(325,397	)
Total at June 30, 2008	$	8,238,612	$	8,015,273	$	223,339
Trading 1	$	6,334,474	$	5,990,256	$	344,218			N/A
Available for sale 2		856,573		865,152		(8,579	)	$	(5,589	)
Total at June 30, 2007	$	7,191,047	$	6,855,408	$	335,639

1	Unrealized and realized gains and losses on trading securities are included in earnings in the statement of operations.
2	Unrealized gains and losses on available-for-sale securities are excluded from earnings and recorded in other comprehensive income as a separate component of shareholders’ equity until realized.

As of June 30, 2008, and 2007, the Company held approximately $2.4 million and $2.0 million, respectively, in investments other than USGIF, USGAF and offshore clients the Company advises.

Investments in securities classified as trading are reflected as current assets on the consolidated balance sheet at their fair market value. Unrealized holding gains and losses on trading securities are included in earnings in the consolidated statements of operations and comprehensive income. Investments in securities classified as available for sale, which may not be readily marketable, are reflected as non-current assets on the consolidated balance sheet at their fair value. Unrealized holding gains and losses on available-for-sale securities are excluded from earnings and reported in other comprehensive income as a separate component of shareholders’ equity until realized.

Investment income (loss) from the Company’s investments includes:

• realized gains and losses on sales of securities;

• unrealized gains and losses on trading securities;

• realized foreign currency gains and losses;

• other-than-temporary impairments on available-for-sale securities; and

• dividend and interest income.

Investment income can be volatile and may vary depending on market fluctuations, the Company’s ability to participate in investment opportunities, and timing of transactions. A significant portion of the unrealized gains and losses is concentrated in a small number of issuers. For fiscal years 2008, 2007, and 2006, the Company had net realized gains (losses) of approximately $(152,323), $737,000, and $828,000, respectively. The Company expects that gains or losses will continue to fluctuate in the future.

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     Consolidated Results of Operations

The following is a discussion of the consolidated results of operations of the Company and a detailed discussion of the Company’s revenues and expenses.

	2008		2007		% Change			2007		2006		% Change
Net income (in thousands)	$	10,837	$	13,759		(21.2	%)	$	13,759	$	10,435		31.9	%
Net income per share
Basic	$	0.71	$	0.91		(22.0	%)	$	0.91	$	0.69		31.9	%
Diluted	$	0.71	$	0.90		(21.1	%)	$	0.90	$	0.69		30.4	%
Weighted average shares outstanding (in thousands)
Basic		15,247		15,162					15,162		15,032
Diluted		15,275		15,242					15,242		15,146

     Year Ended June 30, 2008, Compared with Year Ended June 30, 2007

The Company posted net after-tax income of $10,836,810 ($0.71 per share) for the year ended June 30, 2008, compared with net after-tax income of $13,759,249 ($0.91 per share) for the year ended June 30, 2007. This 21.2% decrease in profitability is primarily attributable to the following factors:

• Endeavour performance fees decreased by $6.3 million, or 70%, to $2.7 million. This decrease was due primarily to Endeavour’s exposure to junior natural resources stocks, which were adversely impacted by a market environment in which risk aversion increased and access to capital decreased. Other offshore performance fees decreased by approximately $981,000, or 59%, to $694,000. The decrease in performance fees was slightly offset by an offshore management fee increase of $711,000, or 29%, due to higher assets under management. Despite a volatile market, management fees benefited from a higher base level of assets under management from the prior year.

• The Company’s SEC-registered advisory fees increased by $3.1 million, or 9 %, primarily as a result of the positive impact of market gains and shareholder investments in natural resources and foreign equity funds. Offsetting these increases were overall declines in offshore advisory fees of $6.6 million as described above, for a net decrease in advisory fees of $3.5 million, or 7%.

• Transfer agent revenues increased by 12%, or $918,000, primarily as a result of growth in the number of shareholder accounts and a revised transfer agent fee structure, which incorporated transaction- and activity-based fees;

• Platform fees increased by 20%, or $1.5 million, due to increased asset inflows through broker-dealer platforms;

• Driven by strong mutual fund and offshore fund performance, employee compensation expense increased by 8%, or $1.0 million, primarily due to higher salaries and incentive bonuses;

• Consistent with continued growth in the Eastern European Fund, subadvisory fees increased by 3%, or $288,000; and

• General and administrative expenses decreased 9%, or $676,000, primarily as a result of decreased consulting and legal fees.

     Year Ended June 30, 2007, Compared with Year Ended June 30, 2006

The Company posted net after-tax income of $13,759,249 ($0.91 per share) for the year ended June 30, 2007, compared with net after-tax income of $10,435,362 ($0.69 per share) for the year ended June 30, 2006. The increase in profitability in fiscal year 2007 primarily resulted from an increase of $12.4 million in advisory fees and $2.2 million in transfer agent fees. These factors were somewhat offset by an increase of $2.6 million in platform fees, $2.2 million in employee compensation, $2.0 million in general and administrative expenses, and $1.3 million in subadvisory fees.

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     Revenues

(Dollars in Thousands)	2008		2007		% Change			2007		2006		% Change
Investment advisory fees:
USGIF — Money market	$	1,605	$	1,776		(9.6	%)	$	1,776	$	1,687		5.3	%
USGIF — Other		18,754		16,296		15.1	%		16,296		11,068		47.2	%
USGIF — Total		20,359		18,072		12.7	%		18,072		12,755		41.7	%
USGAF		19,159		18,350		4.4	%		18,350		15,767		16.4	%
Total mutual fund advisory fees		39,518		36,422		8.5	%		36,422		28,522
Other advisory fees		6,538		13,095		(50.1	%)		13,095		8,622		51.9	%
Total investment advisory fees		46,056		49,517		(7.0	%)		49,517		37,144		33.3	%
Transfer agent fees		8,455		7,537		12.2	%		7,537		5,332		41.4	%
Investment income		1,447		1,357		6.7	%		1,357		2,203		(38.4	)%
Other revenues		81		193		(58.2	%)		193		175		10.3	%
Total	$	56,039	$	58,604		(4.4	%)	$	58,604	$	44,854		30.7	%

As a percentage of total revenues, SEC-registered mutual fund advisory fees account for 71%, offshore investment advisory fees constitute 12%, transfer agent fees account for 15%, and investment income and miscellaneous income together make up the remaining 2%.

Investment Advisory Fees. Investment advisory fees, the largest component of the Company’s revenues, are derived from two sources: SEC-registered mutual fund advisory fees, which in fiscal 2008 accounted for 86% of the Company’s total advisory fees, and offshore investment advisory fees, which accounted for 14% of total advisory fees.

SEC-registered mutual fund investment advisory fees are calculated as a percentage of average net assets, ranging from 0.375% to 1.375%, and are paid monthly. These advisory fees increased by approximately $3.1 million, or 8.5%, in fiscal 2008 over fiscal 2007. Advisory fees benefited from an increase in assets, particularly in the foreign equity and natural resource funds.

The Company has agreed to waive or reduce its fees and/or pay expenses for several USGIF funds and two USGAF funds, through November 1, 2008, and February 28, 2009, respectively, or such later date as the Company determines for purposes of enhancing the Funds’ competitive market positions. The aggregate amount of fees waived and expenses borne by the Company totaled approximately $1,422,000, $1,178,000, and $1,181,000, in 2008, 2007, and 2006, respectively. The Company expects to continue to waive fees and/or pay for fund expenses if market and economic conditions warrant. However, subject to the Company’s commitment to certain funds with respect to fee waivers and expense limitations, the Company may reduce the amount of Fund expenses it is bearing.

Mutual fund investment advisory fees are also affected by changes in assets under management, which include:

• market appreciation or depreciation;

• the addition of new client accounts;

• client contributions of additional assets to existing accounts;

• withdrawals of assets from and termination of client accounts;

• exchanges of assets between accounts or products with different fee structures; and

• the amount of fees voluntarily reimbursed.

The Boards of Trustees of USGIF and USGAF have called a Special Meeting of Shareholders for September 23, 2008, to consider several proposals, including proposals to approve (i) a new Advisory Agreement for USGIF and USGAF and (ii) a new Distribution Plans for the nine equity USGIF and USGAF Funds under which U.S. Global Brokerage, Inc. would be paid a fee at an annual rate of

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0.25% of the average daily net assets of each Fund. A full discussion of the proposals is set forth in proxy materials filed with the SEC by USGIF and USGAF.

The proposed new Advisory Agreement for the nine equity USGIF and USGAF Funds provides for a base advisory fee that will be adjusted upwards or downwards by 0.25% if there is a performance difference of 5% or more between a Fund’s performance and that of its designated benchmark index over the prior 12 months. With respect to four equity USGIF Funds, the new Advisory Agreement also will increase the base advisory fee and make changes to the advisory fee breakpoints. In addition, if the new Advisory Agreement is approved, administrative services that are part of the current Advisory Agreement will be removed and become the subject of a completely separate Administration Agreement. Under the Administration Agreement, USGIF and USGAF would no longer reimburse the Company for certain legal and administrative services, but instead would pay the Company compensation at an annual rate of 0.08% of the average daily net assets of each Fund for these and other administrative services.

If approved, the Company has agreed to cap the expenses of each Fund for the first year: Going forward, the Company and each Fund’s Board of Trustees would negotiate the amounts of these expense caps annually during the consideration of the renewal of the Advisory Agreement.

The Company provides advisory services for three offshore clients. The company receives a monthly advisory fee and a quarterly or annual performance fee, if any, based on the overall increase in value of net assets, and in the case of one client, based on a percentage of consolidated net income from operations in excess of a predetermined percentage return on equity. Offshore investment advisory fees decreased by $6.6 million, or 50.1 percent, to $6.5 million in fiscal 2008 compared to $13.1 million in fiscal 2007. Due to potential market volatility, performance fees are subject to fluctuation based on factors that may be out of the Company’s control, and are not necessarily predictive of future revenue. For more information, see Item 1A. “Risk Factors” and the section entitled “Revenue Recognition” under Critical Accounting Policies.

Transfer Agent Fees. United Shareholder Services, Inc., a wholly owned subsidiary of the Company, provides transfer agency and printing services for Company clients. The Company receives an annual fee per account as well as transaction- and activity-based fees as compensation for services rendered as transfer agent, and is reimbursed for out-of-pocket expenses associated with processing shareholder information. In addition, the Company collects custodial fees on IRAs and other types of retirement plans invested in USGIF and USGAF. Transfer agent fees are, therefore, significantly affected by the number of client accounts.

The increase in transfer agent fees in fiscal years 2008 and 2007 was primarily a result of an increase in the number of mutual fund shareholder accounts due to improved performance of the natural resource and foreign equity funds and the result of the revised fee structure effective April 1, 2007, which incorporated transaction- and activity-based fees.

Investment Income. Investment income (loss) from the Company’s investments includes:

• realized gains and losses on sales of securities;

• unrealized gains and losses on trading securities;

• realized foreign currency gains and losses;

• other-than-temporary impairments on available-for-sale securities; and

• dividend and interest income.

This source of revenue is dependent on market fluctuations and does not remain at a consistent level. Timing of transactions and the Company’s ability to participate in investment opportunities largely affect this source of revenue.

Investment income increased by $90,000 in fiscal 2008 compared to fiscal 2007. This increase can be attributed primarily to increases in unrealized gains on corporate investments.

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Investment income decreased by $847,000 in fiscal 2007 compared to fiscal 2006. This decrease can be attributed primarily to a $91,000 decrease in realized gains on corporate investments and a $1.4 million decrease in unrealized gains on corporate investments, offset by a $605,000 increase in dividend and interest income.

Included in investment income were other-than-temporary impairments of $0, $0 and $28,655 for the fiscal years ending 2008, 2007 and 2006, respectively.

     Expenses

(Dollars in Thousands)	2008		2007		% Change			2007		2006		% Change
Employee compensation and benefits	$	13,608	$	12,560		8.3	%	$	12,560	$	10,359		21.2	%
Subadvisory fees		9,223		8,935		3.2	%		8,935		7,619		17.3	%
General and administrative		6,805		7,482		(9.0	%)		7,482		5,460		37.0	%
Platform fees		9,049		7,528		20.2	%		7,528		4,882		54.2	%
Advertising		488		509		(4.1	%)		509		513		(0.8	)%
Depreciation		284		244		16.5	%		244		153		59.5	%
Total	$	39,457	$	37,258		5.9	%	$	37,258	$	28,986		28.5	%

Employee Compensation and Benefits. Employee compensation and benefits increased by $1.0 million, or 8.3%, in 2008 and $2.2 million, or 21%, in fiscal 2007, primarily due to incentive bonuses associated with strong mutual fund performance, mutual fund asset growth, strong offshore advisory client performance and increased shareholder accounts.

Subadvisory Fees. Subadvisory fees are calculated as a percentage of average net assets of the two funds that are subadvised by third-party managers. The increases in subadvisory fees of $.3 million and $1.3 million in fiscal years 2008 and 2007, respectively, resulted primarily from growth in assets in the Eastern European Fund. The subadvisory agreement related to the MegaTrends Funds (subsequently renamed the Global MegaTrends Fund) was terminated effective September 30, 2007.

General and Administrative. The decrease in general and administrative expenses of $.7 million, or (9.0%), in fiscal year 2008, resulted primarily from decreased consulting and legal fees. The increase in general and administrative expenses of $2.0 million, or 37%, in fiscal year 2007 is primarily attributable to increased consulting, legal, audit and accounting fees.

Platform Fees. Much of the mutual fund asset growth across all funds has been realized through broker-dealer platforms. These broker-dealers typically charge an asset-based fee for assets held in their platforms. Accordingly, net platform fee expenses have increased by $1.5 million and $2.6 million during fiscal years 2008 and 2007, respectively. The incremental assets received through the broker-dealer platforms are not as profitable as those received from direct shareholder accounts due to margin compression from paying platform fees on those assets.

Advertising. Advertising expense was essentially flat in fiscal 2008 compared to fiscal 2007.

Depreciation. Depreciation expense increased by $40,000 in fiscal year 2008 and $91,000 in fiscal 2007 as a result of a slight increase in capital purchases.

     Income Taxes

The Company and its subsidiaries file a consolidated federal income tax return. Provisions for income taxes include deferred taxes for temporary differences in the basis of assets and liabilities for financial and tax purposes, resulting from the use of the liability method of accounting for income taxes. For federal income tax purposes at June 30, 2008, the Company has no capital loss carryovers.

A valuation allowance is provided when it is more likely than not that some portion of the deferred tax

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amount will not be realized. Management included no valuation allowance at June 30, 2008.

     Off Balance Sheet Arrangements

The Company does not have any off balance sheet arrangements.

     Contractual Obligations

A summary of contractual obligations of the Company as of June 30, 2008, is as follows:

	Payments due by period
			Less than		1 — 3		3 — 5		More than
Contractual Obligations	Total		1 year		Years		years		5 years
Operating Lease Obligations	$	622,892	$	234,717	$	313,061	$	75,114		—
Contractual Obligations		1,320,000		1,255,000		65,000		—		—
Total	$	1,942,892	$	1,489,717	$	378,061	$	75,114		—

Operating leases consist of telephone equipment, printers, and copiers leased from several vendors. Contractual obligations include agreements to fund educational programs and building renovation commitments. Although no additional contracts have been signed at this time, additional improvements may be made over the next 18 to 24 months at a cost of approximately $2 to $4 million. Other contractual obligations not included in this table consist of subadvisory contracts and agreements to waive or reduce advisory fees and/or pay expenses on several funds, which are renewed annually. Future obligations under these agreements are dependent upon future levels of fund assets.

In addition, the board has authorized a monthly dividend of $0.02 per share through December 2008, at which time it will be considered for continuation by the board. Payment of cash dividends is within the discretion of the Company’s board of directors and is dependent on earnings, operations, capital requirements, general financial condition of the Company, and general business conditions. The total amount of cash dividends to be paid to class A and class C shareholders from July 2008 to December 2008 will be approximately $1.8 million.

     Liquidity and Capital Resources

At fiscal year end, the Company had net working capital (current assets minus current liabilities) of approximately $35.3 million and a current ratio (current assets divided by current liabilities) of 6.6 to 1. With approximately $25.1 million in cash and cash equivalents and $8.2 million in marketable securities, the Company has adequate liquidity to meet its current obligations. Total shareholders’ equity was approximately $39.2 million, with cash, cash equivalents, and marketable securities comprising 73.4% of total assets.

The Company has no long-term debt; thus, the Company’s only material commitment going forward is for operating expenses. The Company also has access to a $1 million credit facility, which can be utilized for working capital purposes. The Company’s available working capital and potential cash flow are expected to be sufficient to cover current expenses.

The investment advisory and related contracts between the Company and USGIF and USGAF will expire on March 1, 2009, and June 1, 2009, respectively. Management anticipates that the trustees of both USGIF and USGAF will renew the contracts. With respect to offshore advisory clients, the contracts between the Company and the clients expire periodically and management anticipates that its offshore clients will renew the contracts.

Management believes current cash reserves, financing obtained and/or available, and potential cash flow from operations will be sufficient to meet foreseeable cash needs or capital necessary for the above-mentioned activities and allow the Company to take advantage of investment opportunities whenever available.

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Please refer to “Contractual Obligations” for a discussion on commitments related to the Company’s building renovation.

     Critical Accounting Policies

The discussion and analysis of financial condition and results of operations are based on the Company’s financial statements, which have been prepared in accordance with generally accepted accounting principles in the U.S. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses. Management reviews these estimates on an ongoing basis. Estimates are based on experience and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. While significant accounting policies are described in more detail in Note 2 to the consolidated financial statements, the Company believes the accounting policies that require management to make assumptions and estimates involving significant judgment are those relating to valuation of security investments, income taxes, valuation of stock-based compensation, revenue recognition on advisory contracts, related party transactions and recent accounting pronouncements.

Security Investments. The Company accounts for its investments in securities in accordance with SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities.” In accordance with SFAS No. 115, the Company classifies its investments in equity and debt securities based on intent. Management determines the appropriate classification of securities at the time of purchase and reevaluates such designation as of each reporting period date.

Securities that are purchased and held principally for the purpose of selling in the near term are classified as trading securities and reported at fair value. Unrealized gains and losses on these securities are included in earnings.

Investments in debt securities or mortgage-backed securities that are purchased with the intent and ability to hold until maturity are classified as held-to-maturity and measured at amortized cost. The Company currently has no investments in debt securities or mortgage-backed securities.

Investments classified as neither trading securities nor held-to-maturity securities are classified as available-for-sale securities and reported at fair value. Unrealized gains and losses on these available-for-sale securities are excluded from earnings, reported net of tax as a separate component of shareholders’ equity, and recorded in earnings on the date of sale.

The Company evaluates its investments for other-than-temporary declines in value on a periodic basis. This may exist when the fair value of an investment security has been below the current value for an extended period of time. For available-for-sale securities with declines in value deemed other than temporary, the unrealized loss recorded net of tax in accumulated other comprehensive income is realized as a charge to net income.

The Company records security transactions on trade date. Realized gains or losses from security transactions are calculated on the first-in/first-out cost basis, unless otherwise identifiable, and are recorded in earnings on the date of sale.

Securities traded on a securities exchange are valued at the last sale price. Securities for which over-the-counter market quotations are available, but for which there was no trade on or near the balance sheet date, are valued at the mean price between the last price bid and last price asked. Securities for which quotations are not readily available are valued at management’s estimate of fair value.

Income Taxes. The Company’s annual effective income tax rate is based on the mix of income and losses in its U.S. and non-U.S. entities which are part of the Company’s Consolidated Financial Statements, statutory tax rates, and tax-planning opportunities available to the Company in the various jurisdictions in which it operates. Significant judgment is required in evaluating the Company’s tax positions.

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Tax law requires items to be included in the tax return at different times from when these items are reflected in the Company’s Consolidated Income Statement. As a result, the effective tax rate reflected in the Consolidated Financial Statements is different from the tax rate reported on the Company’s consolidated tax return. Some of these differences are permanent, such as expenses that are not deductible in the tax return, and some differences reverse over time, such as depreciation expense. These timing differences create deferred tax assets and liabilities. Deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and the tax basis of assets and liabilities. In addition, excess tax benefits associated with stock option exercises and vesting of restricted stock also create a difference between the tax rate used in the consolidated tax return and the effective tax rate in our Consolidated Income Statement.

The Company assesses uncertain tax positions in accordance with FIN 48, Accounting for Uncertainty in Income Taxes. Judgment is used to identify, recognize, and measure the amounts to be recorded in the financial statements related to tax positions taken or expected to be taken in a tax return. A liability is recognized to represent the potential future obligation to the taxing authority for the benefit taken in the tax return. These liabilities are adjusted, including any impact of the related interest and penalties, in light of changing facts and circumstances such as the progress of a tax audit. A number of years may elapse before a particular matter for which a reserve has been established is audited and finally resolved. The number of years with open tax audits varies depending on the tax jurisdiction.

Judgment is used in classifying unrecognized tax benefits as either current or noncurrent liabilities in the Company’s Consolidated Balance Sheets. Settlement of any particular issue would usually require the use of cash. A liability associated with unrecognized tax benefits will generally be classified as a noncurrent liability because there will usually be a period of several years between the filing of the tax return and the final resolution of an uncertain tax position with the taxing authority. Favorable resolutions of tax matters for which reserves have been established are recognized as a reduction to income tax expense when the amounts involved become known.

Assessing the future tax consequences of events that have been recognized in the Company’s Consolidated Financial Statements or tax returns requires judgment. Variations in the actual outcome of these future tax consequences could materially impact the Company’s financial position, results of operations, or cash flows.

Stock-Based Compensation. The Company adopted SFAS No. 123 (revised 2004), “Share-Based Payment” (SFAS 123R) on July 1, 2005. Under SFAS No. 123(R), stock-based compensation expense is measured at the grant date based on the fair value of the award, and the cost is recognized as expense ratably over the award’s vesting period. We measured the fair value of stock options granted in fiscal 2006, 2007 and 2008 on the date of grant using a Black-Scholes option-pricing model.

We believe that the estimates related to stock-based compensation expense are critical accounting estimates because the assumptions used could significantly impact the timing and amount of stock-based compensation expense recorded in our Consolidated Financial Statements.

Revenue Recognition on Advisory Contract. The Company provides investment advisory services for EFC. The Company is paid a monthly advisory fee based on the net asset value of the portfolio and an annual performance fee, if any, based on a percentage of consolidated net income from operations in excess of a predetermined percentage return on equity.

EITF Abstract Topic No. D-96, “Accounting for Management Fees Based on a Formula,” identifies two methods by which incentive revenue may be recorded. Under “Method 1,” incentive fees are recorded at the end of the contract year; under “Method 2,” the incentive fees are recorded periodically and calculated as the amount that would be due under the formula at any point in time as if the contract was terminated at that date. Management has chosen the more conservative method (“Method 1”), in which performance fees are recorded annually and is provided for by the contract terms. The Company recorded $2,706,216 in annual performance fees and $2,620,222 in advisory fees for the year ended June 30, 2008.

21

     Related Party Transactions

The Company had $30.9 million and $19.9 million at fair value invested in USGIF, USGAF, and offshore clients the Company advises included in the balance sheet in cash and cash equivalents and trading securities at June 30, 2008, and 2007, respectively. The Company recorded $1,083,081 in dividend income and $508,159 in unrealized gains on its investments in the Funds. Receivables from mutual funds shown on the Consolidated Balance Sheets represent amounts due the Company and its wholly owned subsidiaries for investment advisory fees, transfer agent fees, and out-of-pocket expenses, net of amounts payable to the mutual funds.

The Company provides advisory services for the Meridian Global Gold and Resources Fund Ltd., an offshore fund. The Company receives a monthly advisory fee and a quarterly performance fee, if any, based on the overall increase in value of the net assets in the fund for the quarter. The Company recorded fees totaling $538,375 and $1,690,321 for the years ended June 30, 2008 and 2007, respectively. Frank Holmes, a director and CEO of the Company, is a director of Meridian Global Gold and Resources Fund Ltd., and Meridian Fund Managers Ltd., the manager of the Meridian Global Gold and Resources Fund Ltd.

The Company provides advisory services for the Meridian Global Energy and Resources Fund Ltd., an offshore fund. The Company receives a monthly advisory fee and a quarterly performance fee, if any, based on the overall increase in value of the net assets in the fund for the quarter. The Company recorded fees totaling $659,632 and $222,981 for the years ended June 30, 2008 and 2007, respectively. Mr. Holmes is a director of Meridian Global Energy and Resources Fund Ltd., and Meridian Fund Managers Ltd., the manager of the Meridian Global Energy and Resources Fund Ltd. In addition, the Company has an investment in the Meridian Global Energy and Resources Fund Ltd. with a value of approximately $1,559, 000 at June 30, 2008.

The Company provided advisory services to the U.S. Global Investors Balanced Natural Resources Fund, Ltd., an offshore fund, through November 30, 2007, at which time the fund was liquidated and assets were transferred to the Meridian Global Energy and Resources Fund Ltd. For these services, the Company was paid a monthly advisory fee and a quarterly performance fee, if any. The Company recorded fees totaling $13,329 and $140,717 for the years ended June 30, 2008, and 2007, respectively.

The Company provides investment advisory services to EFC. The Company is paid a monthly advisory fee based on the net asset value of the portfolio and an annual performance fee, if any, based on a percentage of consolidated net income from operations in excess of a predetermined percentage return on equity. For the year ended June 30, 2008, the Company recorded a total of $5,326,438 in advisory fees from Endeavour comprised of $2,706,216 in annual performance fees and $2,620,222 in monthly advisory fees. For the year ended June 30, 2007, the Company recorded a total of $11,041,050 in advisory fees from Endeavour comprised of $8,994,074 in annual performance fees and $2,046,976 in monthly advisory fees. The performance fees for this advisory client are calculated and recorded only once a year in accordance with the terms of the advisory agreement. This and other performance fees may fluctuate significantly from year to year based on factors that may be out of the Company’s control. For more information, see Item 1A. “Risk Factors” and the section entitled “Revenue Recognition” under Critical Accounting Policies. Mr. Holmes is Chairman of the Board of Directors of EFC. In addition, the Company has an investment in EFC at June 30, 2008 with a value of approximately $647,000.

The Company owns a position in Charlemagne Capital Limited at June 30, 2008, valued at $540,641 and recorded as an available-for-sale security. Charlemagne Capital specializes in emerging markets and is the subadviser to the Eastern European Fund and Global Emerging Markets Fund, two series in USGAF.

     Recent Accounting Pronouncements

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS No. 157”). FAS No. 157 establishes a single authoritative definition of fair value, sets out a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. FAS No. 157 applies only to fair value

22

measurements that are already required or permitted by other accounting standards. Accordingly, FAS No. 157 does not require any new fair value measurements. FAS No. 157 is effective for fiscal years beginning after November 15, 2007 and for interim periods within those years; therefore, the Company will adopt SFAS No. 157 in the first quarter of fiscal year 2009. Management is in the process of determining the effect the adoption of SFAS No. 157 will have on the Company’s Consolidated Financial Statements.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities, (including an amendment to FASB Statement 115, Accounting for Certain Investments in Debt and Equity Securities).” SFAS 159 allows entities to voluntarily choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. The amendment to SFAS No. 115 applies to all entities with available-for-sale and trading securities. The election is made on an instrument-by-instrument basis and is irrevocable. Once the election is made for the instrument, all subsequent changes in fair value for that instrument must be reported in earnings. SFAS 159 is effective for fiscal years beginning after November 15, 2007 and for interim periods within those years; therefore, the Company will adopt SFAS No. 159 in the first quarter of fiscal year 2009. Management is currently evaluating the effect the adoption of SFAS No. 159 will have on the Consolidated Financial Statements, if any.

In June 2007, the Emerging Issues Task Force (“EITF”) issued EITF Issue No. 06-11, “Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards,” (“EITF 06-11”). Under the provisions of EITF 06-11, a realized income tax benefit from dividends or dividend equivalents that are charged to retained earnings and are paid to employees for equity classified nonvested equity shares, nonvested equity share units, and outstanding equity share options should be recognized as an increase to additional paid-in capital. The amount recognized in additional paid-in capital for the realized income tax benefit from dividends on those awards should be included in the pool of excess tax benefits available to absorb tax deficiencies on share-based payment awards. EITF 06-11 should be applied prospectively to the income tax benefits that result from dividends on equity-classified employee share-based payment awards that are declared in fiscal years beginning after December 15, 2007, and interim periods within those fiscal years. Management has determined that EITF No. 06-11 has no material impact on the financial statements.

23

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

     Market Risk Disclosures

The Company’s balance sheet includes assets whose fair value is subject to market risks. Due to the Company’s investments in equity securities, equity price fluctuations represent a market risk factor affecting the Company’s consolidated financial position. The carrying values of investments subject to equity price risks are based on quoted market prices or, if not actively traded, management’s estimate of fair value as of the balance sheet date. Market prices fluctuate, and the amount realized in the subsequent sale of an investment may differ significantly from the reported market value. The Company’s investment activities are reviewed and monitored by Company compliance personnel, and various reports are provided to certain investment advisory clients. Written procedures are in place to manage compliance with the code of ethics.

The table below summarizes the Company’s equity price risks as of June 30, 2008, and shows the effects of a hypothetical 25% increase and a 25% decrease in market prices.

				Estimated Fair		Increase (Decrease)
				Value After		in Shareholders’
	Fair Value at June		Hypothetical	Hypothetical Price		Equity, Net
	30, 2008		Percentage Change	Change		of Tax
Trading securities 1	$	6,991,843	25% increase	$	8,739,803	$	1,153,654
			25% decrease	$	5,243,882	$	(1,153,654	)
Available-for-sale 2	$	1,246,769	25% increase	$	1,558,461	$	205,717
			25% decrease	$	935,077	$	(205,717	)

1	Unrealized and realized gains and losses on trading securities are included in earnings in the statement of operations.
2	Unrealized gains and losses on available-for-sale securities are excluded from earnings and recorded in other comprehensive income as a separate component of shareholders’ equity until realized.

The selected hypothetical changes do not reflect what could be considered best- or worst-case scenarios. Results could be significantly different due to both the nature of equity markets and the concentration of the Company’s investment portfolio.

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Item 8. Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firm on Internal Control
Over Financial Reporting

Board of Directors and Stockholders
U.S. Global Investors, Inc.
San Antonio, Texas

We have audited U.S. Global Investors, Inc.’s (the “Company”) internal control over financial reporting as of June 30, 2008, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Item 9A, Management’s Report on Internal Control Over Financial Reporting.” Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2008, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balances sheets of U.S. Global Investors, Inc. as of June 30, 2008 and 2007, and the related consolidated statements of operations and comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended June 30, 2008 and our report dated September 10, 2008, expressed an unqualified opinion thereon.

/s/ BDO Seidman, LLP  

BDO Seidman, LLP 

Dallas, Texas
September 10, 2008

25

Report of Independent Registered Public Accounting Firm on Consolidated
Financial Statements

Board of Directors and Stockholders
U.S. Global Investors, Inc.
San Antonio, Texas

We have audited the accompanying consolidated balance sheets of U.S. Global Investors, Inc. (the “Company”) as of June 30, 2008 and 2007 and the related consolidated statements of operations and comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended June 30, 2008. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. Our audits include examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of U.S. Global Investors, Inc. at June 30, 2008 and 2007, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2008, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of U.S. Global Investors, Inc. internal control over financial reporting as of June 30, 2008, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated September 10, 2008, expressed an unqualified opinion thereon.

/s/ BDO Seidman, LLP  

BDO Seidman, LLP 

Dallas, Texas
September 10, 2008

26

U.S. Global Investors, Inc.
Consolidated Balance Sheets

	June 30,
	2008			2007
Assets
Current Assets
Cash and cash equivalents	$	25,135,075		$	14,854,420
Trading securities, at fair value		6,991,843			6,334,474
Receivables
Mutual funds		5,096,117			4,739,763
Other advisory clients		3,690,400			9,914,773
Employees		6,111			4,638
Other		21,767			7,382
Prepaid expenses		628,790			767,779
Total Current Assets		41,570,103			36,623,229
Net Property and Equipment		2,378,396			2,260,288
Other Assets
Long-term deferred tax asset		299,351			53,023
Investment securities available-for-sale, at fair value		1,246,769			856,573
Total Other Assets		1,546,120			909,596
Total Assets	$	45,494,619		$	39,793,113
Liabilities and Shareholders’ Equity
Current Liabilities
Accounts payable	$	289,364		$	272,564
Accrued compensation and related costs		2,396,881			3,356,488
Deferred tax liability		406,730			338,511
Other accrued expenses		3,167,900			4,730,348
Total Current Liabilities		6,260,875			8,697,911
Commitments and contingencies (refer to Notes 8 and 16)
Shareholders’ Equity
Common stock (class A) — $0.025 par value; nonvoting; authorized 28,000,000 shares; issued, 13,817,269 and 13,620,625 shares at June 30, 2008, and 2007, respectively		345,432			340,516
Common stock (class B) — $0.025 par value; nonvoting; authorized 4,500,000 shares; no shares issued		—			—
Common stock (class C) — $0.025 par value; voting; convertible to class A; authorized 3,500,000 shares; issued, 2,094,279 shares and 2,290,923 shares at June 30, 2008, and 2007, respectively		52,357			57,273
Additional paid-in capital		14,114,178			13,352,728
Treasury stock, class A shares at cost; 656,520 and 672,867 shares at June 30, 2008, and 2007, respectively		(1,562,419	)		(1,640,792	)
Accumulated other comprehensive loss, net of tax		(325,397	)		(5,589	)
Retained earnings		26,609,593			18,991,066
Total Shareholders’ Equity		39,233,744			31,095,202
Total Liabilities and Shareholders’ Equity	$	45,494,619		$	39,793,113

The accompanying notes are an integral part of these financial statements.

27

U.S. Global Investors, Inc.
Consolidated Statements of Operations and Comprehensive Income

	Year Ended June 30,
	2008			2007			2006
Revenue
Mutual fund advisory fees	$	39,518,557		$	36,421,804		$	28,521,601
Other advisory fees		6,537,775			13,095,070			8,621,549
Transfer agent fees		8,454,871			7,537,110			5,332,066
Investment income		1,447,454			1,356,840			2,203,393
Other		80,590			192,813			174,979
		56,039,247			58,603,637			44,853,588
Expenses
Employee compensation and benefits		13,607,601			12,560,108			10,359,365
General and administrative		6,805,085			7,481,344			5,460,442
Subadvisory fees		9,223,309			8,935,075			7,618,466
Platform fees		9,048,571			7,528,302			4,882,144
Advertising		488,217			508,992			513,076
Depreciation		284,237			244,068			152,755
		39,457,020			37,257,889			28,986,248
Income Before Income Taxes		16,582,227			21,345,748			15,867,340
Provision for Income Taxes
Income tax expense		5,745,417			7,586,499			5,431,978
Net Income		10,836,810			13,759,249			10,435,362
Other comprehensive income, net of tax:
Unrealized gains (losses) on available-for-sale securities arising during period		(256,701	)		269,296			(2,473	)
Less: reclassification adjustment for gains included in net income		(63,107	)		(299,144	)		(363,596	)
Comprehensive Income	$	10,517,002		$	13,729,401		$	10,069,293
Basic Net Income per Share	$	0.71		$	0.91		$	0.69
Diluted Net Income per Share	$	0.71		$	0.90		$	0.69
Basic weighted average number of common shares outstanding		15,246,710			15,162,492			15,031,578
Diluted weighted average number of common shares outstanding		15,275,441			15,241,534			15,146,230

The accompanying notes are an integral part of these financial statements.

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U.S. Global Investors, Inc.
Consolidated Statements of Shareholders’ Equity

														Accumulated
	Common		Common			Additional								Other
	Stock		Stock			Paid-in		Retained Earnings			Treasury			Comprehensive
	(class A)		(class C)			Capital		(Deficit)			Stock			Income (Loss)			Total
Balance at June 30, 2005 (12,632,948 shares of class A; 2,993,600 shares of class C)	$	315,824	$	74,840		$	11,008,536	$	(1,235,848	)	$	(650,592	)	$	390,328		$	9,903,088
Purchase of 34,100 shares of Common Stock (class A)		—		—			—		—			(215,196	)		—			(215,196	)
Grants and purchases of 33,962 shares of Common Stock (class A)		—		—			68,868		—			25,977			—			94,845
Exercise of 173,000 options for Common Stock (class A)		4,325		—			560,333		—			—			—			564,658
Recognition of current year portion of deferred compensation		—		—			50,000		—			—			—			50,000
Stock bonuses							40,457					9,481						49,938
FAS 123R compensation expense		—		—			26,585		—			—			—			26,585
Unrealized loss on securities available-for-sale and reclassification (net of tax)		—		—			—		—			—			(366,069	)		(366,069	)
Net Income		—		—			—		10,435,362			—			—			10,435,362
Balance at June 30, 2006 (12,805,948 shares of class A; 2,993,600 shares of class C)		320,149		74,840			11,754,779		9,199,514			(830,330	)		24,259			20,543,211
Purchase of 29,634 shares of Common Stock (class A)		—		—			—		—			(836,710	)		—			(836,710	)
Grants and purchases of 10,881 shares of Common Stock (class A)		—		—			135,128		—			19,096			—			154,224
Exercise of 112,000 options for Common Stock (class A)		2,800		—			961,792		—			—			—			964,592
Conversion of 702,677 shares of class C common stock for class A common stock		17,567		(17,567	)		—		—			—			—			—
Recognition of current year portion of deferred compensation and related tax benefit		—		—			413,479		—			—			—			413,479
Dividends paid		—		—			—		(3,967,697	)		—			—			(3,967,697	)
Stock bonuses							42,305					7,152						49,457
FAS 123R compensation expense		—		—			45,245		—			—			—			45,245
Unrealized loss on securities available-for-sale and reclassification (net of tax)		—		—			—		—			—			(29,848	)		(29,848	)
Net Income		—		—			—		13,759,249			—			—			13,759,249
Balance at June 30, 2007 (13,620,625 shares of class A; 2,290,923 shares of class C)		340,516		57,273			13,352,728		18,991,066			(1,640,792	)		(5,589	)		31,095,202
Grants and purchases of 16,347 shares of Common Stock (class A)		—		—			137,708		—			53,442			—			191,150
Conversion of 196,644 shares of class C common stock for class A common stock		4,916		(4,916	)		—		—			—			—			—
Recognition of current year portion of deferred compensation and related tax benefit		—		—			228,504		—			—			—			228,504
Dividends paid		—		—			—		(3,218,283	)		—			—			(3,218,283	)
Stock bonuses							71,004					24,931						95,935
FAS 123R compensation expense		—		—			324,234		—			—			—			324,234
Unrealized loss on securities available-for-sale and reclassification (net of tax)		—		—			—		—			—			(319,808	)		(319,808	)
Net Income		—		—			—		10,836,810			—			—			10,836,810
Balance at June 30, 2008 (13,817,269 shares of class A; 2,094,279 shares of class C)	$	345,432	$	52,357		$	14,114,178	$	26,609,593		$	(1,562,419	)	$	(325,397	)	$	39,233,744

The accompanying notes are an integral part of these financial statements.

29

U.S. Global Investors, Inc.
Consolidated Statements of Cash Flows

	Year Ended June 30,
	2008			2007			2006
Cash Flow from Operating Activities
Net income	$	10,836,810		$	13,759,249		$	10,435,362
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		284,237			244,068			152,755
Net recognized (gain) loss on securities		152,325			(736,860	)		(827,718	)
Provision for deferred taxes		(13,470	)		184,481			551,815
Deferred compensation		50,000			50,000			50,000
Benefits from tax deduction in excess of stock-based compensation expense		(178,504	)		(1,208,822	)		(404,817	)
SFAS 123R compensation expense		324,234			45,245			26,585
Stock bonuses		95,935			49,457			49,938
Provision for losses on accounts receivable		—			—			(8,988	)
Loss on disposal of equipment		388			—			3,494
Changes in assets and liabilities, impacting cash from operations:
Accounts receivable		5,852,161			(3,183,685	)		(9,154,571	)
Prepaid expenses and other		138,989			(186,966	)		(129,850	)
Trading securities		(906,468	)		(1,392,177	)		(1,741,825	)
Accounts payable and accrued expenses		(2,326,751	)		1,243,288			6,530,325
Total adjustments		3,473,076			(4,891,971	)		(4,902,857	)
Net cash provided by operations		14,309,886			8,867,278			5,532,505
Cash Flow from Investing Activities
Purchase of property and equipment		(402,733	)		(381,467	)		(510,804	)
Purchase of available-for-sale securities		(895,153	)		(2,072,531	)		(8,420	)
Proceeds on sale of available-for-sale securities		117,284			1,707,211			784,277
Net cash (used in) provided by investing activities		(1,180,602	)		(746,787	)		265,053
Cash Flow from Financing Activities
Benefits from tax deduction in excess of stock-based compensation expense		178,504			1,208,822			404,817
Grants, issuance or exercise of stock and options		191,150			273,471			254,686
Treasury stock purchased		—			(836,710	)		(215,196	)
Dividends paid		(3,218,283	)		(3,967,697	)		—
Net cash (used in) provided by financing activities		(2,848,629	)		(3,322,114	)		444,307
Net Increase in Cash and Cash Equivalents		10,280,655			4,798,377			6,241,865
Beginning Cash and Cash Equivalents		14,854,420			10,056,043			3,814,178
Ending Cash and Cash Equivalents	$	25,135,075		$	14,854,420		$	10,056,043
Supplemental Disclosures of Cash Flow Information
Cash paid for interest	$	—		$	425		$	—
Cash paid for income taxes	$	6,950,000		$	7,062,000		$	1,753,000

The accompanying notes are an integral part of these financial statements.

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    Notes to Consolidated Financial Statements

Note 1. Organization

U.S. Global serves as investment adviser and transfer agent to USGIF and USGAF, both Massachusetts business trusts that are no-load, open-end investment companies offering shares in numerous mutual funds to the investing public. The Company also provides transfer agency functions to USGIF and USGAF. For these services, the Company receives fees from USGIF and USGAF. The Company also provides advisory services to several offshore clients.

U.S. Global formed the following companies to provide supplementary services to USGIF and USGAF: United Shareholder Services, Inc. (“USSI”), A&B Mailers, Inc. (“A&B”), and U.S. Global Brokerage, Inc. (“USGB”). As of December 31, 2007, A&B was dissolved as a corporation. Subsequent to the dissolution, effective January 1, 2008, a new department was formed within USSI consisting of the same employees performing the same functions as A&B prior to its dissolution. All assets and liabilities that were previously held in A&B were transferred at cost to USSI. There was no accounting impact, no personnel changes, and no accounting changes other than reconfiguring certain internal reports.

The Company formed two subsidiaries utilized primarily for corporate investment purposes: U.S. Global Investors (Guernsey) Limited (“USGG”), incorporated in Guernsey, and U.S. Global Investors (Bermuda) Limited (“USBERM”) incorporated in Bermuda on June 15, 2005.

     Note 2. Significant Accounting Policies

Principles of Consolidation. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries: USSI, USGG, USBERM, and USGB.

All significant intercompany balances and transactions have been eliminated in consolidation. Certain amounts have been reclassified for comparative purposes.

Share and per share data presented for all periods reflect the effect of the two-for-one stock split which was effective March 29, 2007, unless otherwise indicated.

Cash and Cash Equivalents. Cash and cash equivalents include highly liquid investments with original maturities of three months or less.

Security Investments. The Company accounts for its investments in securities in accordance with Statement of Financial Accounting Standards No. 115, “Accounting for Certain Investments in Debt and Equity Securities” (SFAS 115). In accordance with SFAS 115, the Company classifies its investments in equity and debt securities based on intent. Management determines the appropriate classification of securities at the time of purchase and reevaluates such designation as of each reporting period date.

Securities that are purchased and held principally for the purpose of selling in the near term are classified as trading securities and reported at fair value. Unrealized gains and losses on these securities are included in earnings.

Investments in debt securities that are purchased with the intent and ability to hold until maturity are classified as held-to-maturity and measured at amortized cost. The Company currently has no investments in debt securities.

Investments classified as neither trading securities nor held-to-maturity securities are classified as available-for-sale securities and reported at fair value. Unrealized gains and losses on these available-for-sale securities are excluded from earnings, reported net of tax as a separate component of shareholders’ equity, and recorded in earnings on the date of sale.

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The Company evaluates its investments for other-than-temporary decline in value on a periodic basis. This may exist when the fair value of an investment security has been below the current value for an extended period of time. For available-for-sale securities with declines in value deemed other than temporary, the unrealized loss recorded net of tax in accumulated other comprehensive income is realized as a charge to net income.

The Company records security transactions on trade date. Realized gains (losses) from security transactions are calculated on the first-in/first-out cost basis, unless otherwise identifiable, and are recorded in earnings on the date of sale.

Advisory Receivables. Advisory receivables consist primarily of monthly investment advisory and transfer agent fees owed to the Company by USGIF and USGAF as well as receivables related to offshore investment advisory fees. In addition, mutual fund receivables include amounts reimbursed to the Company for certain advertising and distribution expenses incurred on behalf of USGAF in accordance with Rule 12b-1of the Investment Company Act of 1940.

Property and Equipment. Fixed assets are recorded at cost. Depreciation for fixed assets is recorded using the straight-line method over the estimated useful life of each asset as follows: furniture and equipment are depreciated over 3 to 10 years, and the building and related improvements are depreciated over 32 to 40 years.

Treasury Stock. Treasury stock purchases are accounted for under the cost method. The subsequent issuances of these shares are accounted for based on their weighted-average cost basis.

Stock-Based Compensation. The Company accounts for stock-based compensation in accordance with SFAS No. 123 (revised 2004), “Share-Based Payment” (SFAS 123R). Under this application, the Company is required to record compensation expense for all awards granted after the date of adoption and for the unvested portion of previously granted awards that remain outstanding at the date of adoption.

Income Taxes. The Company and its subsidiaries file a consolidated federal income tax return. Provisions for income taxes include deferred taxes for temporary differences in the bases of assets and liabilities for financial and tax purposes resulting from the use of the liability method of accounting for income taxes. The liability method requires that deferred tax assets be reduced by a valuation allowance in cases where it is more likely than not that the deferred tax assets will not be realized.

In June 2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 is an interpretation of SFAS No. 109, “Accounting for Income Taxes,” and it seeks to reduce the diversity in practice associated with certain aspects of measurement and accounting for income taxes and requires expanded disclosure with respect to uncertainty in income taxes. FIN 48 is effective for fiscal years beginning after December 15, 2006. Accordingly, the Company adopted FIN 48 on July 1, 2007. There were no transactions recorded as a result of adopting FIN 48 for the year ended June 30, 2008. The Company’s policy is to recognize interest and penalties related to uncertain tax positions in income tax expense. As of June 30, 2008, the Company did not have any accrued interest or penalties related to uncertain tax positions. The tax years from 2004 through 2007 remain open to examination by the tax jurisdictions to which the Company is subject.

Revenue Recognition. The Company earns substantially all of its revenues from investment advisory and transfer agency services. Mutual fund investment advisory fees, calculated as a percentage of assets under management, are recorded as revenue as services are performed. Advisory client contracts provide for monthly management fees, in addition to a quarterly or annual performance fees. Transfer agency fees are calculated using a charge based upon the number of shareholder accounts serviced as well as transaction and activity-based fees. Revenue shown on the Consolidated Statements of Operations and Comprehensive Income are net of any fee waivers.

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The Company provides investment advisory services for Endeavour Financial Corporation (“EFC”). The Company is paid a monthly advisory fee based on the net asset value of the portfolio, and an annual performance fee, if any, based on a percentage of consolidated net income from operations in excess of a predetermined percentage return on equity.

EITF Abstract Topic No. D-96, “Accounting for Management Fees Based on a Formula,” identifies two methods by which incentive revenue may be recorded. Under “Method 1,” incentive fees are recorded at the end of the contract year; under “Method 2,” the incentive fees are recorded periodically and calculated as the amount that would be due under the formula at any point in time as if the contract was terminated at that date. Management has chosen the more conservative method (“Method 1”), in which performance fees are recorded annually based on the contract terms. The Company recorded $5,326,438 in annual performance fees and $2,620,222 in advisory fees related to the EFC contract for the year ended June 30, 2008. The Company recorded $8,994,074 in annual performance fees and $2,046,976 in advisory fees related to the EFC contract for the year ended June 30, 2007. The Company recorded $6,611,582 in annual performance fees and $337,455 in advisory fees related to the EFC contract for the year ended June 30, 2006.

Dividends and Interest. Dividends are recorded on the ex-dividend date, and interest income is recorded on an accrual basis. Both dividends and interest income are included in investment income.

Advertising Costs. The Company expenses advertising costs as they are incurred. Certain sales materials, which are considered tangible assets, are capitalized and then expensed during the period in which they are distributed. At June 30, 2008, 2007, and 2006, the Company had capitalized sales materials of approximately $35,000, $31,000, and $59,000, respectively. Net advertising expenditures were approximately $488,000, $509,000, and $513,000 during fiscal 2008, 2007, and 2006, respectively.

Foreign Currency Transactions. Transactions between the Company and foreign entities are converted to U.S. dollars using the exchange rate on the date of the transactions. Security investments valued in foreign currencies are translated to U.S. dollars using the applicable exchange rate as of the reporting date. Realized foreign currency gains and losses are immaterial and are therefore included as a component of investment income.

Fair Value of Financial Instruments. The financial instruments of the Company are reported on the consolidated balance sheet at market or fair values, or at carrying amounts that approximate fair values because of the short maturity of the instruments.

Use of Estimates. The preparation of financial statements in conformity with generally accepted accounting principles requires the Company to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates.

Earnings Per Share. The Company computes and presents earnings per share in accordance with SFAS No. 128, “Earnings Per Share.” Basic earnings per share (“EPS”) excludes dilution and is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution of EPS that could occur if options to issue common stock were exercised. The Company has two classes of common stock with outstanding shares. Both classes share equally in dividend and liquidation preferences. Per share amounts for fiscal 2007 and 2006 have been restated to reflect the Company’s two-for-one stock split effective March 29, 2007.

     Recent Accounting Pronouncements

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS No. 157”). FAS No. 157 establishes a single authoritative definition of fair value, sets out a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. FAS No. 157 applies only to fair value

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measurements that are already required or permitted by other accounting standards. Accordingly, FAS No. 157 does not require any new fair value measurements. FAS No. 157 is effective for fiscal years beginning after November 15, 2007 and for interim periods within those years; therefore, the Company will adopt SFAS No. 157 in the first quarter of fiscal year 2009. Management is in the process of determining the effect the adoption of SFAS No. 157 will have on the Company’s Consolidated Financial Statements.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities, (including an amendment to FASB Statement 115, Accounting for Certain Investments in Debt and Equity Securities).” SFAS 159 allows entities to voluntarily choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. The amendment to SFAS No. 115 applies to all entities with available-for-sale and trading securities. The election is made on an instrument-by-instrument basis and is irrevocable. Once the election is made for the instrument, all subsequent changes in fair value for that instrument must be reported in earnings. SFAS 159 is effective for fiscal years beginning after November 15, 2007 and for interim periods within those years; therefore, the Company will adopt SFAS No. 159 in the first quarter of fiscal year 2009. Management is currently evaluating the effect the adoption of SFAS No. 159 will have on the Consolidated Financial Statements, if any.

In June 2007, the Emerging Issues Task Force (“EITF”) issued EITF Issue No. 06-11, “Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards,” (“EITF 06-11”). Under the provisions of EITF 06-11, a realized income tax benefit from dividends or dividend equivalents that are charged to retained earnings and are paid to employees for equity classified nonvested equity shares, nonvested equity share units, and outstanding equity share options should be recognized as an increase to additional paid-in capital. The amount recognized in additional paid-in capital for the realized income tax benefit from dividends on those awards should be included in the pool of excess tax benefits available to absorb tax deficiencies on share-based payment awards. EITF 06-11 should be applied prospectively to the income tax benefits that result from dividends on equity-classified employee share-based payment awards that are declared in fiscal years beginning after December 15, 2007, and interim periods within those fiscal years. Management has determined that EITF No. 06-11 has no material impact on the financial statements.

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     Note 3. Investments

As of June 30, 2008, the Company held investments with a fair value of $8.2 million and a cost basis of $8.0 million. The fair value of these investments is approximately 18.1 percent of the Company’s total assets.

The following table summarizes investment activity over the last three fiscal years:

	Year Ended June 30,
	2008			2007			2006
Realized gains (losses) on sale of trading securities	$	(249,099	)	$	282,473		$	305,469
Trading securities, at cost		6,275,478			5,990,256			4,011,961
Trading securities, at fair value 1		6,991,843			6,334,474			4,659,824
Net change in unrealized gains (losses) on trading securities (included in earnings) 2		372,147			(303,645	)		1,076,034
Available-for-sale securities, at cost		1,739,795			865,152			45,444
Available-for-sale securities, at fair value 1		1,246,769			856,573			82,202
Gross realized gains on sale of available-for-sale securities		96,774			455,990			582,475
Gross realized losses on sale of available-for-sale securities		—			(1,603	)		(31,572	)
Gross unrealized losses recorded in shareholders’ equity		(514,795	)		(79,731	)		(3,137	)
Gross unrealized gains recorded in shareholders’ equity		21,769			71,151			39,896
Losses on available-for-sale securities deemed to have other-than-temporary declines in value		—			—			(28,655	)

1	These categories of securities are comprised primarily of equity investments, including those investments discussed in Note 15 regarding related party transactions.
2	Total gross unrealized gains on trading securities recorded in fiscal 2008 are comprised primarily of the unrealized gains on the Meridian Global Energy & Resources Fund, which makes up $513,486 of the $372,147 of the recorded gain. The unrealized gain from the Meridian Global Energy & Resources Fund was partially offset by unrealized losses of $164,111 in the Global Emerging Markets Fund.

The following table summarizes equity investments that are in an unrealized loss position at each balance sheet date, categorized by how long they have been in a continuous loss position. These investments do not include trading securities or those available-for-sale securities with declines in value deemed other than temporary as their unrealized losses are recognized in earnings.

	Less Than 12 Months				12 Months or Greater				Total
Fiscal Year	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
2008	$	687,405	$	144,729	$	449,643	$	370,066	$	1,137,048	$	514,795
2007	$	739,977	$	79,731	$	0	$	0	$	739,977	$	79,731

The aggregate gross unrealized loss of $514,795 and $79,731 at June 30, 2008, and 2007, respectively, was primarily related to investments in two companies that specialize in emerging markets. There are many risks associated with an investment of this type including general market risk and emerging markets risk. Many of the investments included above are early-stage or start-up businesses whose fair values fluctuate.

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     Note 4. Investment Management, Transfer Agent, and Other Fees

The Company serves as investment adviser to USGIF and USGAF and receives a fee based on a specified percentage of net assets under management. Two of the four funds within USGAF are sub-advised by a third-party manager, who is in turn compensated out of the investment advisory fees received by the Company. The Company also serves as transfer agent to USGIF and USGAF and receives fees based on the number of shareholder accounts as well as transaction- and activity-based fees. Additionally, the Company provides in-house legal services to USGIF and USGAF for which it is reimbursed and receives certain miscellaneous fees directly from USGAF and USGIF shareholders. Fees for providing investment management and transfer agent services to USGIF and USGAF continue to be the Company’s primary revenue source.

The Company has voluntarily waived or reduced its advisory fees and/or has agreed to pay expenses on several USGIF funds and two USGAF funds through November 1, 2008, and February 28, 2009, respectively, or such later date as the Company determines in order to maintain competitive yields and to allow assets to grow. The aggregate fees waived and expenses borne by the Company were $1,422,000, $1,178,000, and $1,181,000, in 2008, 2007, and 2006, respectively.

The investment advisory and related contracts between the Company and USGIF and USGAF will expire on March 1, 2009, and June 1, 2009, respectively. Management anticipates the boards of both USGIF and USGAF will renew the contracts.

The Boards of Trustees of USGIF and USGAF have called a Special Meeting of Shareholders for September 23, 2008, to consider several proposals, including proposals to approve (i) a new Advisory Agreement for the USGIF and USGAF funds and (ii) a new Distribution Plan for the nine equity USGIF and USGAF funds under which U.S. Global Brokerage, Inc. would be paid a fee at an annual rate of 0.25% of the average daily net assets of each fund. A full discussion of the proposals is set forth in proxy materials filed with the SEC by USGIF and USGAF.

The proposed new Advisory Agreement for the nine equity USGIF and USGAF funds provides for a base advisory fee that will be adjusted upwards or downwards by 0.25% if there is a performance difference of 5% or more between a fund’s performance and that of its designated benchmark index over the prior 12 months. With respect to four equity USGIF funds, the new Advisory Agreement also will increase the base advisory fee and make changes to the advisory fee breakpoints. In addition, if the new Advisory Agreement is approved, administrative services that are part of the current Advisory Agreement will be removed and become the subject of a completely separate Administration Agreement. Under the Administration Agreement, the USGIF and USGAF funds would no longer reimburse the Company for certain legal and administrative services, but instead would pay the Company compensation at an annual rate of 0.08% of the average daily net assets of each fund for these and other administrative services.

If approved, the Company has agreed to cap the expenses of each fund for the first year. Going forward, the Company and each fund’s Board of Trustees would negotiate the amounts of these expense caps annually during the consideration of the renewal of the Advisory Agreement.

The Company provides advisory services to various offshore clients. The Company generally receives a monthly advisory fee and a quarterly or annual performance fee, if any, based on an agreed-upon performance measurement. The contracts between the Company and the offshore clients expire periodically, and management anticipates that its offshore clients will renew the contracts.

The Company receives additional revenue from several sources including custodial fee revenues, revenues from miscellaneous transfer agency activities including lockbox functions, mailroom operations, as well as investment income.

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     Note 5. Property and Equipment

Property and equipment are composed of the following:

	June 30,
	2008			2007
Building and land	$	2,663,644		$	2,574,530
Furniture, equipment, and other		2,032,062			1,831,531
		4,695,706			4,406,061
Accumulated depreciation		(2,317,310	)		(2,145,773	)
Net property and equipment	$	2,378,396		$	2,260,288

Depreciation expense totaled $284,237, $244,068, and $152,755 in 2008, 2007, and 2006, respectively.

     Note 6. Other Accrued Expenses

Other accrued expenses consist of the following:

	June 30,
	2008		2007
Platform fees	$	1,275,189	$	1,054,870
Taxes payable		726,277		2,188,521
Subadvisory fees		716,032		695,509
Legal, professional, and consulting fees		254,121		277,398
Vendors payable		189,026		506,473
Other		7,255		7,577
Total other accrued expenses	$	3,167,900	$	4,730,348

     Note 7. Borrowings

As of June 30, 2008, the Company has no long-term liabilities.

The Company has access to a $1 million credit facility with a one-year maturity for working capital purposes. The credit agreement was renewed effective January 18, 2008, and requires the Company to maintain certain quarterly financial covenants to access the line of credit. The amended credit agreement will expire on February 1, 2009, and the Company intends to renew annually. The Company has been in compliance with all financial covenants during the fiscal year. As of June 30, 2008, the credit facility remains unutilized by the Company.

     Note 8. Lease Commitments

The Company has operating leases for computers and equipment that expire from fiscal years 2009 through 2013. Lease expenses totaled $372,021, $249,233, and $416,491 in fiscal years 2008, 2007, and 2006, respectively. Future minimum lease payments required under these leases are as follows:

Fiscal Year	Amount
2009	$	234,717
2010		227,622
2011		85,439
2012		42,922
2013		32,192
Total	$	622,892

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     Note 9. Benefit Plans

The Company offers a savings and investment plan qualified under Section 401(k) of the Internal Revenue Code covering substantially all employees. In connection with this 401(k) plan, participants can voluntarily contribute a portion of their compensation, up to certain limitations, to this plan, and the Company will match 100% of participants’ contributions up to the first 3% of compensation, and 50% of the next 2% of compensation. The Company has recorded expenses related to the 401(k) plan for contributions of $240,347, $148,165, and $73,166 for fiscal years 2008, 2007, and 2006, respectively.

The 401(k) plan allows for a discretionary profit sharing contribution by the Company, as authorized by the board of directors. The Company made profit sharing contributions of $400,000, $369,000, and $220,000 for fiscal years 2008, 2007 and 2006, respectively.

The Company has continued the program pursuant to which it offers employees, including its executive officers, an opportunity to participate in savings programs using mutual funds managed by the Company, which a majority of employees have accepted. Employees may contribute to an IRA, and the Company matches these contributions on a limited basis. Similarly, certain employees may contribute to the Tax Free Fund, and the Company will match these contributions on a limited basis. A similar savings plan utilizing UGMA accounts is offered to employees to save for the education of their minor relatives. The Company match, reflected in base salary expense, aggregated in all programs to $76,522, $72,923, and $61,061 in fiscal years 2008, 2007, and 2006, respectively.

The Company has a program whereby eligible employees can purchase treasury shares, at market price, and the Company will match their contribution up to 3% of gross salary. During fiscal years 2008, 2007, and 2006, employees purchased 11,147, 8,981, and 6,441 shares of treasury stock from the Company, respectively. Pursuant to a plan that commenced in January 2007, the Company grants shares of class A common stock to its non-employee directors on a periodic basis. Effective March 2008, the frequency of shares granted changed from 100 shares per quarter to 100 shares per month.

Additionally, the Company self-funds its employee health care plan. The Company has obtained reinsurance with both a specific and an aggregate stop-loss in the event of catastrophic claims. The Company has accrued an amount representing the Company’s estimate of claims incurred but not paid at June 30, 2008.

     Note 10. Shareholders’ Equity

The board authorized an increase in dividends from $0.01 per share per month to $0.02 beginning in October 2007. The monthly dividend is authorized through December 2008 and will be considered for continuation at that time by the board. Payment of cash dividends is within the discretion of the Company’s board of directors and is dependent on earnings, operations, capital requirements, general financial condition of the Company, and general business conditions. On a per share basis, the holders of the class C common stock and the nonvoting class A common stock participate equally in dividends as declared by the Company’s board of directors.

During fiscal year 1999, the board of directors of the Company approved the issuance of 2,000,000 shares of class C common stock to Frank Holmes in exchange for services and cancellation of the option to purchase 800,000 shares of class C common stock held by Mr. Holmes and the cancellation of warrants to purchase 1,172,244 shares of class C common stock held by Mr. Holmes and F.E. Holmes Organization, Inc. The 2,000,000 shares vested over a ten-year period beginning July 1, 1998, and were fully vested on June 30, 2008 and were valued at $0.50 initially ($0.25 post-split) per share for compensation expense purposes. The agreement was executed on August 10, 1999. For tax return purposes, the 200,000 shares that vested on June 30, 2008, were valued at $2.56 per share, which incorporated factors including the ability to convert to class A shares (under the 2007 amendment to the Company’s Articles of Incorporation), the loss of voting rights if converted to class A, and holding period and liquidity restrictions.

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The Statement of Cash Flows includes a benefit in fiscal 2008 from the tax deduction in excess of stock-based compensation expense of $178,504, which related to the value of these 200,000 shares that vested during fiscal 2008.

During the fiscal years ended June 30, 2008, the Company did not purchase any of its class A common stock. During fiscal years 2007 and 2006 the Company purchased 29,634, and 34,100 shares, respectively, of its class A common stock at an average price of $28.23, and $6.31, per share, respectively.

During the year ended June 30, 2008, the Company granted 6,700 shares of class A common stock to certain employees at a weighted average fair value on grant date of $13.85. During the year ended June 30, 2007, the Company granted 2,800 shares of class A common stock to employees at a weighted average fair value on grant date of $24.94. During the year ended June 30, 2006, the Company granted 8,200 shares of class A common stock to employees at a weighted average fair value on grant date of $6.09.

In March 2007 an amendment to the Articles of Incorporation was approved by the Board of Directors which, among other things, allowed shareholders of class C shares to convert to class A. During fiscal years 2008 and 2007, 196,644 and 702,677 shares, respectively, were converted from class C to class A.

In November 1989, the board of directors adopted the 1989 Non-Qualified Stock Option Plan (“1989 Plan”), amended in December 1991, which provides for the granting of options to purchase 1,600,000 shares of the Company’s class A common stock to directors, officers, and employees of the Company and its subsidiaries. Options issued under the 1989 Plan vest six months from the grant date or 20 percent on the first, second, third, fourth, and fifth anniversaries of the grant date. As of June 30, 2008, there were no options outstanding under the 1989 Plan.

In April 1997, the board of directors adopted the 1997 Non-Qualified Stock Option Plan (“1997 Plan”), which provides for the granting of stock appreciation rights (SARs) and/or options to purchase 400,000 shares of the Company’s class A common stock to directors, officers, and employees of the Company and its subsidiaries. In February 2006, an option for 10,000 shares was granted at an exercise price of $7.69 per share and vesting of 50 percent on the first and second anniversary dates. During the fiscal year ended June 30, 2007, three options for a total of 23,000 shares were granted with 50 percent vesting on the first and second anniversary dates. During the fiscal year ended June 30, 2008, three options for a total of 20,300 shares were granted. Of the 20,300 shares granted in fiscal 2008, 10,000 options will vest over two years, with 50 percent vesting on the first and second anniversary dates, and 10,300 options will vest over five years, with 20 percent vesting on each of the first through fifth anniversary dates.

Options issued under the 1989 Plan and the 1997 Plan expire ten years after issuance. It is the Company’s policy to issue class A common stock upon exercise of stock options.

The estimated fair value of options granted is amortized to expense over the options’ vesting period. The fair value of these options is estimated at the date of the grant using a Black-Scholes option pricing model with the following assumptions for options granted in fiscal 2008, 2007, and 2006, respectively: expected volatility factors based on historical volatility of 55.0%, 88.0%, and 84.0%, risk-free interest rates of 5.0%, 4.6% and 4.2%, and an expected life of 10, 10 and 10 years. During fiscal 2008, options for 20,300 shares were granted with a fair value, net of tax, of $155,637. During fiscal 2007, options for 23,000 shares were granted with a fair value, net of tax, of $310,127. During fiscal 2006, an option for 10,000 shares was granted with a fair value, net of tax, of $43,400.

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Stock option transactions under the various employee stock option plans for the past three fiscal years are summarized below:

			Weighted		Weighted Average
			Average		Remaining
			Exercise		Contractual		Aggregate Intrinsic
	Shares		Price		Life in Yrs		Value (net of tax)
Outstanding June 30, 2005		329,000	$	1.06
Granted		10,000	$	7.69
Canceled		20,000	$	1.00
Exercised		173,000	$	1.10
Outstanding June 30, 2006		146,000	$	1.47
Granted		23,000	$	24.74
Canceled		—		—
Exercised		112,000	$	1.06
Outstanding June 30, 2007		57,000	$	11.65
Granted		20,300	$	19.30
Canceled		—
Exercised		—
Outstanding June 30, 2008		77,300	$	13.66		5.33	$	537,484

As of June 30, 2008, 2007, and 2006 exercisable employee stock options totaled 45,500, 29,000, and 116,000 shares and had weighted average exercise prices of $8.34, $1.95, and $0.90 per share, respectively.

Class A common stock options outstanding and exercisable under the employee stock option plans at June 30, 2008, were as follows:

	Options Outstanding							Options Exercisable
						Weighted				Weighted
	Date of			Remaining		Average				Average
	Option	Number		Life in		Exercise		Number		Option
	Grant	Outstanding		Years		Price ($)		Exercisable		Price ($)
1997 Plan Class A	12/03/99		24,000		1.42		.75		24,000		.75
	2/24/06		10,000		7.65		7.69		10,000		7.69
	6/20/07		23,000		8.97		24.74		11,500		24.74
	10/3/07		20,000		9.26		19.36		—		19.36
	11/27/07		300		9.41		15.59		—		15.59
			77,300		5.33		13.66		45,500		8.34

     Note 11. Income Taxes

The current deferred tax liability primarily consists of temporary differences in the deductibility of prepaid expenses and accrued liabilities, as well as unrealized gains on trading securities. The long-term deferred tax liability is composed primarily of unrealized gains on available-for-sale securities.

A valuation allowance is provided when it is more likely than not that some portion of the deferred tax amount will not be realized. No valuation allowance was included at June 30, 2008, 2007, or 2006, respectively.

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The reconciliation of income tax computed at the U.S. federal statutory rates to income tax expense is:

	Year Ended June 30,
	2008			% of Pretax			2007		% of Pretax			2006			% of Pretax
Tax expense at statutory rate	$	5,770,222			34.8	%	$	7,439,441		34.9	%	$	5,479,589			34.5	%
Other		(24,805	)		0.2	%		147,058		0.7	%		(47,611	)		(0.3	)%
	$	5,745,417			34.6	%	$	7,586,499		35.5	%	$	5,431,978			34.2	%

Components of total tax expense (benefit) are as follows:

	Year Ended June 30,
	2008			2007		2006
Current tax expense	$	5,758,887		$	7,386,637	$	4,875,027
Deferred tax expense (benefit)		(13,470	)		199,862		556,951
Total tax expense	$	5,745,417		$	7,586,499	$	5,431,978

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company’s deferred assets and liabilities using the effective statutory tax rate (34.8% for 2008 and 34.9% for 2007) are as follows:

	Year Ended June 30,
	2008			2007
Book/tax differences in the balance sheet
Trading securities	$	(249,278	)	$	(119,967	)
Prepaid expenses		(210,899	)		(236,289	)
Accumulated depreciation		(43,589	)		(37,599	)
Accrued expenses		53,447			17,744
FAS 123R compensation expense		112,826			15,769
Available-for-sale securities		230,114			74,854
Net deferred tax liability	$	(107,379	)	$	(285,488	)

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Note 12. Earnings Per Share

The following table sets forth the computation for basic and diluted earnings per share (EPS):

	Year Ended June 30,
	2008		2007		2006
Basic and diluted net income	$	10,836,810	$	13,759,249	$	10,435,362
Weighted average number of outstanding shares
Basic		15,246,710		15,162,492		15,031,578
Effect of dilutive securities
Employee stock options		28,731		79,042		114,652
Diluted		15,275,441		15,241,534		15,146,230
Earnings per share
Basic	$	0.71	$	0.91	$	0.69
Diluted	$	0.71	$	0.90	$	0.69

Share information has been restated for all periods presented in the table to reflect the two-for-one stock split effectuated on March 29, 2007. The diluted EPS calculation excludes the effect of stock options when their exercise prices exceed the average market price for the period. For the years ended June 30, 2008, 2007, and 2006, employee stock options for 20,300, 23,000, and 10,000 shares, respectively, were excluded from diluted EPS. The Company did not repurchase any shares of its class A common stock from employees during fiscal 2008. Upon repurchase, these shares are classified as treasury shares and are deducted from outstanding shares in the earnings per share calculation.

Note 13. Comprehensive Income

The Company has disclosed the components of comprehensive income in the consolidated statements of operations and comprehensive income.

	Before-Tax			Tax			Net-of-Tax
	Amount			Effect			Amount
June 30, 2006
Change in unrealized losses on available-for-sale securities	$	(3,746	)	$	1,273		$	(2,473	)
Less: reclassification adjustment for gains included in net income		(550,903	)		187,307			(363,596	)
Other comprehensive income	$	(554,649	)	$	188,580		$	(366,069	)
June 30, 2007
Change in unrealized losses on available-for-sale securities	$	409,050		$	(139,754	)	$	269,296
Less: reclassification adjustment for gains included in net income		(454,388	)		155,244			(299,144	)
Other comprehensive income	$	(45,338	)	$	15,490		$	(29,848	)
June 30, 2008
Change in unrealized losses on available-for-sale securities	$	(388,831	)	$	132,130		$	(256,701	)
Less: reclassification adjustment for gains included in net income		(95,617	)		32,510			(63,107	)
Other comprehensive income	$	(484,448	)	$	164,640		$	(319,808	)

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Note 14. Financial Information by Business Segment

The Company operates principally in two business segments: providing investment management services to the funds it manages, and investing for its own account in an effort to add growth and value to its cash position. The following schedule details total revenues and income by business segment:

	Investment
	Management		Corporate
	Services		Investments		Consolidated
Year ended June 30, 2006
Net revenues	$	42,959,530	$	1,894,058	$	44,853,588
Net income before income taxes		13,997,166		1,870,174		15,867,340
Depreciation		152,755		—		152,755
Interest expense		—		—		—
Capital expenditures		510,804		—		510,804
Year ended June 30, 2007
Net revenues	$	58,162,933	$	440,704	$	58,603,637
Net income before income taxes		20,919,336		426,412		21,345,748
Depreciation		244,068		—		244,068
Interest expense		425		—		425
Capital expenditures		381,467		—		381,467
Gross identifiable assets at June 30, 2007		32,826,085		7,252,516		40,078,601
Deferred tax liability						(285,488	)
Consolidated total assets at June 30, 2007					$	39,793,113
Year ended June 30, 2008
Net revenues	$	55,830,808	$	208,439	$	56,039,247
Net income before income taxes		16,694,399		187,828		16,582,227
Depreciation		284,237		—		284,237
Capital expenditures		402,733		—		402,733
Gross identifiable assets at June 30, 2008		37,337,368		8,264,630		45,601,998
Deferred tax liability						(107,379	)
Consolidated total assets at June 30, 2008					$	45,494,619

Note 15. Related Party Transactions

The Company had $30.9 million and $19.9 million at fair value invested in USGIF, USGAF, and offshore funds the Company advises included in the balance sheet in cash and cash equivalents and trading securities at June 30, 2008, and 2007, respectively. The Company recorded $1,083,081 in dividend income and $508,159 in unrealized gains on its investments in the funds. Receivables from mutual funds shown on the Consolidated Balance Sheets represent amounts due the Company and its wholly owned subsidiaries for investment advisory fees, transfer agent fees, and out-of-pocket expenses, net of amounts payable to the mutual funds.

The Company provides advisory services for the Meridian Global Gold and Resources Fund Ltd., an offshore fund. The Company receives a monthly advisory fee and a quarterly performance fee, if any, based on the overall increase in value of the net assets in the fund for the quarter. The Company recorded fees totaling $538,375 and $1,690,321 for the years ended June 30, 2008, and 2007, respectively. Frank Holmes, a director and CEO of the Company, is a director of Meridian Global Gold and Resources Fund Ltd., and Meridian Fund Managers Ltd., the manager of the Meridian Global Gold and Resources Fund Ltd.

The Company provides advisory services for the Meridian Global Energy and Resources Fund Ltd., an offshore fund. The Company receives a monthly advisory fee and a quarterly performance fee, if any,

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based on the overall increase in value of the net assets in the fund for the quarter. The Company recorded fees totaling $659,632 and $222,981 for the years ended June 30, 2008, and 2007, respectively. Mr. Holmes is a director of Meridian Global Energy and Resources Fund Ltd., and Meridian Fund Managers Ltd., the manager of the fund. In addition, the Company has an investment in the fund at June 30, 2008, with an estimated fair value of approximately $1,559,000.

The Company provided advisory services to the U.S. Global Investors Balanced Natural Resources Fund, Ltd., an offshore fund, through November 30, 2007, at which time the fund was liquidated and assets were transferred to the Meridian Global Energy and Resources Fund Ltd. For these services, the Company was paid a monthly advisory fee and a quarterly performance fee, if any. The Company recorded fees totaling $13,329 and $140,717 for the years ended June 30, 2008, and 2007, respectively.

The Company provides investment advisory services to EFC. The Company is paid a monthly advisory fee based on the net asset value of the portfolio and an annual performance fee, if any, based on a percentage of consolidated net income from operations in excess of a predetermined percentage return on equity. The Company recorded a total of $5,326,438 in advisory fees from Endeavour comprised of $2,706,216 in annual performance fees and $2,620,222 in monthly advisory fees for the year ended June 30, 2008. The Company recorded a total of $11,041,050 in advisory fees from Endeavour comprised of $8,994,074 in annual performance fees and $2,046,976 in monthly advisory fees for the year ended June 30, 2007. The performance fees for this advisory client are calculated and recorded only once a year based on the contract terms in accordance with the terms of the advisory agreement. This and other performance fees may fluctuate significantly from year to year based on factors that may be out of the Company’s control. For more information, see Item 1A. “Risk Factors” and the section entitled “Revenue Recognition” under Critical Accounting Policies. Mr. Holmes is Chairman of the Board of Directors of EFC In addition, the Company has an investment in the fund at June 30, 2008, with a fair value of approximately $647,000.

The Company also owns a position in Charlemagne Capital Limited at June 30, 2008, with an estimated fair value of approximately $541,000, recorded as an available-for-sale security. Charlemagne Capital (IOM) Limited, a wholly-owned subsidiary of Charlemagne Capital Limited, specializes in emerging markets and is the subadviser to the Eastern European Fund and Global Emerging Markets Fund, two series in USGAF.

Note 16. Contingencies and Commitments

The Company continuously reviews all investor, employee and vendor complaints, and pending or threatened litigation. The likelihood that a loss contingency exists is evaluated under the criteria of SFAS No. 5, “Accounting for Contingencies,” through consultation with legal counsel, and a loss contingency is recorded if the contingency is probable and reasonably estimable at the date of the financial statements.

During the normal course of business, the Company may be subject to claims, legal proceedings, and other contingencies. These matters are subject to various uncertainties, and it is possible that some of these matters may be resolved unfavorably. The Company establishes accruals for matters for which the outcome is probable and can be reasonably estimated. Management believes that any liability in excess of these accruals upon the ultimate resolution of these matters will not have a material adverse effect on the consolidated financial statements of the Company.

The Company has certain contractual obligations which consist of agreements to contribute to various educational programs. These obligations total approximately $623,000 for fiscal years 2008 through 2013.

The Company has also committed approximately $1.2 million in building renovations to be performed over the next few months. Although no additional contracts have been signed at this time, additional improvements may be made over the next 18 to 24 months at a cost of approximately $2 to $4 million.

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Note 17. Selected Quarterly Financial Data (Unaudited)

Note that some rows may not add to the correct annual total due to rounding.

Fiscal 2008	1st Quarter		2nd Quarter		3rd Quarter		4th Quarter
(in thousands except per share figures)
Revenues	$	12,951	$	13,864	$	12,265	$	16,959
Expenses		9,321		10,158		9,134		10,848
Income Before Income Taxes		3,630		3,706		3,135		6,111
Net Income		2,409		2,465		2,123		3,841
Earnings per Share:
Basic	$	0.16	$	0.16	$	0.14	$	0.25
Diluted	$	0.16	$	0.16	$	0.14	$	0.25

Fiscal 2007	1st Quarter		2nd Quarter		3rd Quarter		4th Quarter
(in thousands except per share figures)
Revenues	$	11,908	$	12,418	$	12,444	$	21,833
Expenses		8,195		8,651		8,707		11,705
Income Before Income Taxes		3,713		3,767		3,737		10,128
Net Income		2,480		2,461		2,412		6,406
Earnings per Share:
Basic	$	0.16	$	0.16	$	0.16	$	0.42
Diluted	$	0.16	$	0.16	$	0.16	$	0.42

Fiscal 2006	1st Quarter		2nd Quarter		3rd Quarter		4th Quarter
(in thousands except per share figures)
Revenues	$	6,575	$	7,761	$	11,557	$	18,961
Expenses		4,859		6,048		7,459		10,620
Income Before Income Taxes		1,716		1,713		4,098		8,341
Net Income		1,095		1,168		2,550		5,622
Earnings per Share:
Basic	$	0.07	$	0.08	$	0.17	$	0.37
Diluted	$	0.07	$	0.08	$	0.17	$	0.37

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

There were no changes in or disagreements with accountants on accounting and financial disclosure during the two most recent fiscal years.

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Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. An evaluation was conducted under the supervision and with the participation of the Company’s management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of June 30, 2008. Based on that evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2008 to ensure that information required to be disclosed in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules.

Management’s Report on Internal Control over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined by Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of June 30, 2008. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework. Based on our assessment, management believes that, as of June 30, 2008, we have maintained effective internal control over financial reporting.

The effectiveness of our internal control over financial reporting as of June 30, 2008 has been audited by BDO Seidman, LLP, the independent registered public accounting firm who also audited our consolidated financial statements. Their report appears on page 26.

Changes in Internal Control over Financial Reporting. There have not been any changes in our internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) of the Securities Exchange Act of 1934) during the year ended June 30, 2008 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

Inherent Limitation of the Effectiveness of Internal Control. A control system, no matter how well conceived, implemented and operated, can provide only reasonable, not absolute, assurance that the objectives of the internal control system are met. Because of such inherent limitations, no evaluation of controls can provide absolute assurance that all control issues, if any, within a company or any division of a company have been detected.

Item 9B. Other Information

None.

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Part III of Annual Report on Form 10-K

Item 10. Directors, Executive Officers and Corporate Governance

The directors and executive officers of the Company are as follows:

Name	Age		Position
Frank E. Holmes		53	Director of the Company and Chief Executive Officer of the Company since October 1989, and Chief Investment Officer since June 1999. Since October 1989, Mr. Holmes has served and continues to serve in various positions with the Company, its subsidiaries, and the investment companies it sponsors. Mr. Holmes has served as Trustee of U.S. Global Investors Funds since August 1989 and Trustee of U.S. Global Accolade Funds since April 1993. Mr. Holmes has also served as Director of Meridian Fund Managers Ltd. since November 2003, Director of Meridian Global Gold & Resources Fund Ltd. since December 2003, Director of Meridian Global Energy & Resources Fund Ltd. since April 2006 and Chairman of Endeavour Financial Corp. since October 2005. Mr. Holmes has served as Director of 71316 Ontario, Inc. since April 1987 and Director, President, and Secretary of F.E. Holmes Organization, Inc. since July 1978. Mr. Holmes served as Director of Franc-Or Resources Corporation from June 2000 to November 2003 and Chairman and Director of Fortress IT Corp (formerly Consolidated Fortress) from November 2000 to November 2003.
Jerold H. Rubinstein		70	Chairman of the Board of Directors since February 2006 and Director of the Company since October 1989. Board member and Chairman of the Audit Committee of CKR since June 2006. Chief Executive Officer and founder of Music Imaging & Media, Inc. from July 2002 to present.
Roy D. Terracina		62	Director of the Company since December 1994 and Vice Chairman of the Board of Directors since May 1997. Owner of Sunshine Ventures, Inc., an investment company, since January 1994.
Thomas F. Lydon, Jr.		48	Director of the Company since June 1997. Chairman of the Board and President of Global Trends Investments since April 1996. Member of the Advisory Board of Rydex Series Trust since January 1999.
Susan B. McGee		49	President of the Company since February 1998, General Counsel since March 1997. Since September 1992, Ms. McGee has served and continues to serve in various positions with the Company, its subsidiaries, and the investment companies it sponsors.
Catherine A. Rademacher		48	Chief Financial Officer of the Company since August 2004. Controller of the Company from April 2004 until August 2004. Associate with Resources Connection from July 2003 to February 2004.

None of the directors or executive officers of the Company has a family relationship with any of the other directors or executive officers.

The members of the board of directors are elected for one-year terms or until their successors are elected and qualified. The board of directors appoints the executive officers of the Company. The Company’s Compensation Committee assists the board of directors in carrying out its responsibilities

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with respect to (a) employee qualified benefit plans and employee programs, (b) executive compensation programs, (c) stock option plans, and (d) director compensation programs, and consists of Messrs. Lydon, Rubinstein, and Terracina. The Company’s Audit Committee consists of Messrs. Lydon, Rubinstein, and Terracina. The board of directors has determined that a member of the Audit Committee, namely Roy D. Terracina, is an “audit committee financial expert” and is “independent” (as defined by the SEC). The Company does not have a Nominating Committee.

Code of Ethics for Senior Financial Officers

The Company has adopted a Code of Ethics for Senior Financial Officers that applies to the Company’s principal executive officer and principal financial officer. This code charges these individuals with responsibilities regarding honest and ethical conduct, the preparation and quality of the disclosures in documents and reports the Company files with the SEC, and compliance with applicable laws, rules and regulations.

Compliance with Section 16(a) of the 1934 Act

Section 16(a) of the 1934 Act requires directors and officers of the Company, and persons who own more than 10% of the Company’s class A common stock, to file with the SEC initial reports of ownership and reports of changes in ownership of the stock. Directors, officers and more than 10% shareholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file.

To the Company’s knowledge, based solely on a review of the copies of such reports furnished to the Company and written representations that no other reports were required. All Section 16(a) filing requirements applicable to its directors, officers and more than 10% beneficial owners were met during the year ended June 30, 2008.

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Item 11. Executive Compensation

Compensation Discussion and Analysis

Overview

The following section provides a discussion and analysis of the basis for the compensation awarded to the CEO, the CFO and our other most highly compensated executive officer of the Company (“Named Executive Officers” or “NEOs”), as well as our directors in fiscal 2008. We provide investment advisory and other services to our clients. Our long-term success depends on our ability to provide superior investment returns and outstanding client service. As such, one of our greatest assets is the collective skill, experience and efforts of our employees. To achieve success, we must be able to attract, retain and motivate professionals within all levels of our Company who are committed to our core values.

We place great significance on our values of performance, teamwork, initiative, responsiveness, focused work ethic and intellectual curiosity. We believe that adherence to these core values will contribute to the long-term success of the Company and our shareholders.

We compete for talent with a large number of investment management and financial services companies, many of which have significantly larger market capitalization than we do. Our relatively small size within the industry, geographic location and lean executive management team provides unique challenges.

Setting Executive Compensation

The Compensation Committee of our board of directors is responsible for reviewing and approving corporate goals and objectives relevant to the Chief Executive Officer and Chief Investment Officer (“CEO”), Frank Holmes; evaluating the CEO’s performance in light of those goals and objectives; and determining and approving the CEO’s compensation level based on this evaluation. In addition, the committee is responsible for reviewing and approving compensation recommended by Mr. Holmes for our other executive officers. The board appointed Messrs. Lydon, Terracina, and Rubinstein as members of the Compensation Committee. Mr. Lydon serves as the chairman of the Compensation Committee. There are no Compensation Committee interlocks to report. The Compensation Committee has a charter that is available for review on our website at http://www.usfunds.com. (The Compensation Committee Charter can be found by clicking “About the Advisor” followed by “Company Information” then “Compliance/Policies.”)

The individuals listed below are the chief executive officer and chief financial officer, plus our other most highly compensated NEO in fiscal 2008.

Name	Title
Frank E. Holmes	Chief Executive Officer and Chief Investment Officer
Catherine A. Rademacher	Chief Financial Officer
Susan B. McGee	President and General Counsel

In establishing total annual compensation for Mr. Holmes, the Compensation Committee considers a number of factors. For assistance in determining the appropriate factors to consider, the Compensation Committee consulted in 2005 with Moss Adams LLP, an executive compensation consulting firm. Importantly, the Compensation Committee considers the various functions Mr. Holmes assumes, including the dual role of CEO and Chief Investment Officer (“CIO”). In addition, the Compensation Committee considers various measures of company performance, including profitability and total shareholder return. The Compensation Committee also reviews Mr. Holmes’ performance in managing our corporate investments, in overseeing the management of our client portfolios and the results of our operational earnings.

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In addition to his base salary, Mr. Holmes receives a bonus based on operational earnings, which are substantially derived from assets under management, in the amount of 10% of our operational earnings, if any, and capped at $500,000, as computed for financial reporting purposes in accordance with U.S. generally accepted accounting principles (before consideration of this fee).

Mr. Holmes also receives a bonus when our investment team meets their goal of being in the top half of their peer group. The bonus is based on fund performance bonuses paid to the investment team and is in recognition of Mr. Holmes’ creation and oversight of the investment processes and strategy.

In addition, Mr. Holmes receives 10% of offshore fund performance fees in recognition of attracting and managing offshore client accounts, and 10% of realized gains on investments, offset by realized losses and other-than-temporary write-downs, in recognition of his expertise in managing the investments of the company.

The committee has delegated to Mr. Holmes the responsibility for reviewing the performance of, and recommending the compensation levels for, our other NEOs. The committee does not use rigid formulas with respect to the compensation of NEOs. Mr. Holmes makes a recommendation based on the achievement of qualitative goals that apply to all employees, quantitative goals that apply to an executive officer’s specific job responsibilities, and other accomplishments, such as expansion in functional responsibility. In forming his recommendations, Mr. Holmes also considers the responsibilities and workload of the executive officer; the explicit and tacit knowledge required to perform these responsibilities, including any professional designations; the profitability of the company; and the cost of living in San Antonio, Texas.

Objectives

Our executive compensation programs are designed to:

• attract and retain key executives,

• align executive performance with our long-term interests and those of our shareholders, and

• link executive pay with performance.

Elements of Executive Compensation

The committee reviews and approves all components of executive officer compensation. The principal elements of executive compensation, other than Mr. Holmes, are:

• base salary,

• performance-based cash and stock bonuses,

• long-term incentive awards, and

• other compensation and benefits.

Base Salary

Base salaries for NEOs are reviewed annually by the Compensation Committee. Generally, the salaries of NEOs are occasionally adjusted to recognize expansion of an individual’s role, outstanding and sustained performance, or to bring the officer’s pay into alignment with the market. We did not use any benchmarking studies in fiscal 2008 to obtain market information. In addition, the Compensation Committee did not consider the equity ownership of the Company by Mr. Holmes when setting his compensation. Nor did the committee aim for a specific relationship between Mr. Holmes and the other executive officers. Base salaries paid to NEOs during the fiscal year are shown in the Summary Compensation Table.

Performance-Based Cash and Stock Bonuses

Executive officers, except Mr. Holmes, participate in a team performance pay program based on each employee’s annual salary to recognize monthly completion of departmental goals. Additionally, key executive officers are compensated based on individual performance pay arrangements. Discretionary cash or stock bonuses are awarded from time to time for such things as completion of critical projects or outstanding performance. During fiscal 2008, stock bonuses totaling $13,900 were awarded to NEOs, which were distributed in fiscal 2009.

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Mr. Holmes considers a matrix of factors in reviewing the performance of, and compensation for, the chief financial officer, Catherine Rademacher. Mr. Holmes considers such thing as responsibilities, productivity, results of the Company’s actual versus targeted goals, hours of work, profitability of the Company, timely and accurate financial regulatory filings, unqualified Sarbanes-Oxley and audit results, and the cost of living in San Antonio.

In reviewing the performance of and compensation for the president and general counsel, Susan McGee, Mr. Holmes considers a matrix of factors including responsibilities, productivity, hours of work, profitability of the Company, timely and accurate regulatory filings, completion of regulatory examinations, and the cost of living in San Antonio. In addition to her base salary, Ms. McGee, is paid a monthly bonus based on new assets flowing through institutional accounts in recognition of her leadership and strategic guidance of the institutional sales department. Along with other senior management in the marketing and sales departments, Ms. McGee receives a monthly bonus for new accounts for her key role in supervisory responsibilities. Occasionally, Ms. McGee receives discretionary bonuses for special projects such as completion of regulatory exams or managing significant new business relationships.

Long-Term Incentive Awards

Long-term incentive awards include stock options and restricted shares. We have utilized option grants to induce qualified individuals to join us, thereby providing the individual with an opportunity to benefit if we have significant growth. Similarly, options have been utilized to reward existing employees, including NEOs, for long and faithful service and to encourage them to stay with us. The Compensation Committee administers the stock option plans. Although the Company has no written policy for allocating between cash and equity, or current and long-term compensation for the CEO and other NEOs, the weighting has generally been in the range of less than 5 percent long-term compensation in the form of options or stock awards, with the remaining compensation in cash.

In August 1999, the board of directors approved the issuance of 1,000,000 pre-split shares of class C common stock to Mr. Holmes in recognition of his expanded duties as CIO and in exchange for cancellation of options and warrants held by Mr. Holmes. The shares vested over a ten-year period beginning with fiscal year 1998, and fully vested on June 30, 2008.

Stock Option Plans

In November 1989 the board of directors adopted the 1989 Non-Qualified Stock Option Plan (1989 Plan) which provides for the granting of options to purchase shares of our class A common stock to directors, officers and employees. On December 6, 1991, shareholders approved and amended the 1989 Plan to provide provisions to cause the plan and future grants under the plan to qualify under 1934 Act Rule 16b-3. The 1989 Plan is administered by the Compensation Committee consisting of three outside members of the board of directors. The maximum number of shares of class A common stock initially approved for issuance under the 1989 Plan is 1,600,000 shares. During the fiscal year ended June 30, 2008, there were no grants. As of June 30, 2008, under this amended plan, 1,733,400 options had been granted, 883,000 options had been exercised, 850,400 options had expired, no options remained outstanding, and 717,000 options are available for grant. All options referenced reflect the 2-for-1 split in March 2007.

In April 1997, the board of directors adopted the 1997 Non-Qualified Stock Option Plan (1997 Plan), which shareholders approved on April 25, 1997. It provides for the granting of stock appreciation rights (SARs) and/or options to purchase shares of our class A common stock to directors, officers, and employees. The 1997 Plan expressly requires that all grants under the plan qualify under 1934 Act Rule 16b-3. The 1997 Plan is administered by the Compensation Committee consisting of three outside members of the board of directors. The maximum number of shares of class A common stock initially approved for issuance under the 1997 Plan is 400,000 shares. During the fiscal year ended June 30, 2008, three options for a total of 20,300 shares were granted. As of June 30, 2008, 574,300 options had been granted, 233,000 shares had been exercised, 264,000 options had expired, 77,300 options remained outstanding, and 89,700 options are available for grant. All options referenced reflect the 2-for-1 split in March 2007.

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Other Compensation and Benefits

Health, Welfare and Retirement Benefits

Health, welfare and retirement benefits are designed to provide a safety net of protection for employees in the event of illness, disability or death, and to provide employees an opportunity to accumulate retirement savings.

We offer a range of health and welfare benefits to substantially all employees, including the NEOs. These benefits include medical, dental, vision, prescription drug, short-term disability, group life and accidental death insurance, tuition reimbursement, and a free health club membership.

401(k) Plan

We offer a 401(k) plan covering substantially all employees, including NEOs. Participants may contribute, on a pretax basis, their base salary and cash incentive compensation, up to a limit imposed by the Internal Revenue Code, which is $15,500 in calendar year 2008. An additional “catch-up” pretax contribution of up to $5,000 is allowed for employees over 50. We automatically match 100 percent of the first 3 percent of participating employees’ contributions and 50 percent of the next 2 percent of participating employees’ contributions. We contribute to participants’ accounts at the same time that the employee’s pay deferral is made. Employees are immediately vested in both their 401(k) salary deferral contribution and the matched contributions. Participants in our 401(k) plan may allocate some or all of their contributions to a separate designated Roth account, commonly known as a Roth 401(k).

Profit Sharing

The 401(k) plan allows for us to make a discretionary profit sharing contribution, as authorized by the board of directors. Factors that are considered by the board include earnings, cash flows, capital requirements and the general financial condition of the Company. No specific performance thresholds or goals are required by the board to authorize a profit sharing contribution. Profit sharing contributions of $400,000, and $369,000 were made in fiscal years 2008 and 2007, respectively. Profit sharing contributions were made to our NEOs totaling $52,425 in fiscal 2008.

Savings Plans

We also have a program pursuant to which we offer employees an opportunity to participate in savings programs using managed investment companies. Employee contributions to an Individual Retirement Account are matched to a maximum of $100 per month for certain management-level employees, including NEOs, and a maximum of $30 for all other employees. Similarly, certain management-level employees, including NEOs, may contribute to the Tax Free Fund and we will match these contributions up to a maximum of $90 per month. A similar savings plan utilizing UGMA accounts is offered to all employees to save for the education of minor relatives and is matched at a maximum of $15 per month per child.

Employee Stock Purchase Plan

We also have a program whereby eligible employees can purchase treasury shares, at market price, and we will automatically match their contribution up to 3% of gross salary. During fiscal years 2008, 2007, and 2006, employees purchased 11,147, 8,981, and 6,441 shares of treasury stock from us, respectively. The purchase price used is the closing stock price on the last business day of each month. We do not restrict the ability of our employees or directors to hedge their position in our shares. In addition, neither the board nor NEOs are required to own or purchase a certain number of shares.

The Summary Compensation Table includes the matched contributions to the plans described above for each NEO.

Perquisites and Other Benefits

We provide certain perquisites that the committee believes are reasonable and consistent with our overall compensation program to a limited number of officers. The perquisites consist of such things as club memberships for business entertainment purposes and policies for long-term disability and life

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insurance. The Summary Compensation Table shows the value of perquisites provided to NEOs in fiscal year 2008 in the “All Other Compensation” column.

Employment Agreements, Termination and Change-in Control Arrangements

We do not have any employment agreements, termination agreements, or change-in control agreements with any of our executive officers.

Compliance with Section 162(m)

Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to public corporations for compensation greater than $1 million paid during any fiscal year to our CEO and our four other most highly compensated executive officers. However, the statute exempts qualifying performance-based compensation from the deduction limit if certain requirements are met. The Compensation Committee plans to review this matter as appropriate and take action as may be necessary to preserve the deductibility of compensation payments to the extent reasonably practical and consistent with our objectives.

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     Compensation of Named Executive Officers

The following table sets forth for the fiscal year ended June 30, 2008, the compensation reportable for the NEOs, as determined by SEC rules. Columns were omitted if they were not applicable.

Summary Compensation Table
									Non-Equity
									Incentive Plan
Name and Principle							Stock Awards		Compensation		All Other			Total
Position	Year		Salary ($)		Bonus ($)		($)1		($)2		Compensation ($)			($)
Frank E. Holmes		2007		421,788		9,700		50,000		1,856,760		148,373			2,486,621
Chief Executive Officer		2008		421,800		9,900		50,000		1,169,863		182,822	3		1,834,385
Chief Investment Officer
Catherine A. Rademacher		2007		96,003		104,940		11,300		—		31,065			243,308
Chief Financial Officer		2008		96,002		54,540		6,935		—		34,708	4		192,185
Susan B. McGee		2007		176,547		221,060		22,985		276,114		66,771			763,477
President		2008		256,893		85,200		6,935		240,365		110,202	5		699,595
General Counsel

1	Stock awards consist of restricted stock in the case of Mr. Holmes and grants of stock awards for the other NEOs as indicated. During fiscal year 1999, the board of directors granted Mr. Holmes 1,000,000 pre-split shares of class C common stock to be vested, in equal parts, over a ten-year period beginning July 1, 1998. The final 200,000 shares were fully vested on June 30, 2008.
2	Amounts consist of cash incentive compensation awards earned for services rendered in fiscal 2008. The amounts were paid pursuant to the senior executive bonus programs.
3	Represents amounts paid by us on behalf of Mr. Holmes as follows: (i) $47,500 in trustee fees, (ii) $31,633 in matched contributions, (iii) $63,790 in insurance, (iv) $17,475 in profit sharing contributions, (v) $5,950 in club memberships, and (vi) $16,474 in miscellaneous items.
4	Represents amounts paid by us on behalf of Ms. Rademacher as follows: (i) $17,475 in profit sharing contributions, (ii) $13,858 in matched contributions, and (iii) $3,375 in miscellaneous items.
5	Represents amounts paid us on behalf of Ms. McGee as follows: (i) $24,885 in matched contributions, (ii) $17,475 in profit sharing contributions, (iii) $45,842 in insurance, (iv) $15,175 in club memberships, and (v) $6,825 in miscellaneous items.

The following table supplements the disclosure in the Summary Compensation Table with respect to stock awards made to the named executive officer in the last fiscal year. Columns were omitted if they were not applicable.

Grants of Plan-Based Awards
				All Other Stock		Grant Date Fair
				Awards: Number of		Value of Stock and		Grant Date Fair
				Shares of Stock or		Option Awards (per		Value of Stock and
Name	Grant Date			Units		share)		Option Awards
Frank E. Holmes		—			—		—		—
Catherine A. Rademacher		7/18/2008	1		500	$	13.90	$	6,950
Susan B. McGee		7/18/2008	1		500	$	13.90	$	6,950

¹ These shares were granted in fiscal 2009 for services rendered in fiscal 2008.

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The following table sets forth certain information concerning all exercises of stock options and vesting of restricted stock for each named executive officer during the fiscal year ended June 30, 2008.

Option Exercises and Stock Vested
	Option Awards				Stock Awards
	Number of Shares
	Acquired on		Value Realized on		Number of Shares		Value Realized on
Name	Exercise		Exercise		Acquired on Vesting		Vesting 1
Frank E. Holmes		—		—		200,000	$	512,000
Catherine A. Rademacher		—		—		—		—
Susan B. McGee		—		—		—		—

¹ The value realized equals the valuation of class C common stock on the vesting date, multiplied by the number of shares that vested.

The Outstanding Equity Awards at Fiscal Year-End, Pension Benefits and Nonqualified Deferred Compensation Tables were omitted because they were not applicable.

     Compensation of Directors

The compensation of directors is subject to a minimum of $6,000 in any quarter paid in arrears. We may grant non-employee directors options under our 1989 and 1997 Stock Option Plans. Directors are reimbursed for reasonable travel expenses incurred in attending the meetings held by the board of directors. Mr. Rubinstein serves as the chairman of the board. Director compensation for the fiscal year ended June 30, 2008, is detailed in the table below. Columns that were not applicable were omitted.

Director Compensation
	Fees Earned or Paid
Name	in Cash1		Stock Awards2		Total
Jerold H. Rubinstein	$	87,000	$	13,022	$	100,022
Roy D. Terracina	$	27,000	$	13,022	$	40,022
Thomas F. Lydon, Jr.	$	24,000	$	13,022	$	37,022

1

Includes certain fees earned in fiscal 2008 but paid in 2009. The difference in fees earned was primarily due to Mr. Rubinstein receiving an additional $5,000 per month for added responsibilities as chairman.

2

Amounts shown represent expense recognized in the consolidated financial statements for stock awards granted to non-employee directors in fiscal 2008. These shares were granted pursuant to a plan that commenced in January 2007 to grant 100 shares of class A common stock to each non-employee director per quarter. Subsequently, in March 2008, the frequency of shares granted changed from 100 shares per quarter to 100 shares per month.

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     Compensation Committee Report on Executive Compensation

The Compensation Committee is composed entirely of independent directors in accordance with the listing standards of the NASDAQ Stock Market. The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management. Based upon this review and discussion, the committee has recommended to the board that the Compensation Discussion and Analysis section be included in this annual report.

Respectfully,

Members of the Compensation Committee

Thomas F. Lydon, Jr., Chairman
Jerold H. Rubinstein
Roy D. Terracina

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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

     Security Ownership of Certain Beneficial Owners

     Class C Common Stock (Voting Stock)

On August 22, 2008, there were 2,094,279 shares of the Company’s class C common stock outstanding. The following table sets forth, as of such date, information regarding the beneficial ownership of the Company’s class C common stock by each person known by the Company to own 5% or more of the outstanding shares of class C common stock.

	Class C Common
	Shares
	Beneficially			Percent of
Name and Address of Beneficial Owner	Owned			Class (%)
Frank E. Holmes		2,074,560	1		99.06	%
7900 Callaghan Road
San Antonio, TX 78229

¹ Includes 2,000,000 shares of class C common stock issued to Mr. Holmes that were fully vested on June 30, 2008 and 74,560 shares owned directly by Mr. Holmes.

     Class A Common Stock (Nonvoting Stock)

On August 22, 2008, there were 13,169,461 shares of the Company’s class A common stock issued and outstanding. The following table sets forth, as of such date, information regarding the beneficial ownership of the Company’s class A common stock by each person known by the Company to own 5% or more of the outstanding shares of class A common stock.

	Class A Common
	Shares
	Beneficially			Percent of
Name and Address of Beneficial Owner	Owned			Class (%)
Kinetics Asset Management — Sleepy Hollow, NY 1		2,719,370	1		20.65	%
Royce & Associates, LLC — New York, NY 2		1,678,400	2		12.75	%
Hodges Capital Management — Dallas, TX 3		1,050,421	3		7.98	%

1	Information is from Schedule 13F for the period ending June 30, 2008, filed with the SEC on August 6, 2008.
2	Information is from Schedule 13F for the period ending June 30, 2008, filed with the SEC on August 11, 2008.
3	Information is from Schedule 13F for the period ending June 30, 2008, filed with the SEC on August 5, 2008.

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     Security Ownership of Management

The following table sets forth, as of August 22, 2008, information regarding the beneficial ownership of the Company’s class A and class C common stock by each director and named executive officer and by all directors and executive officers as a group. Except as otherwise indicated in the notes below, each person owns directly the number of shares indicated in the table and has sole voting power and investment power with respect to all such shares.

	Class C						Class A
	Common Stock						Common Stock
	Number						Number
	of						of
Beneficial Owner	Shares			%			Shares		%
Frank E. Holmes, CEO, Director		2,074,560	1		99.06	%		218,741		1.66	%
Catherine A. Rademacher, CFO		—			—			14,071		0.11	%
Susan B. McGee, President, General Counsel		—			—			71,470		0.54	%
Jerold H. Rubinstein, Director		—			—			1,400		0.01	%
Roy D. Terracina, Director		—			—			35,400		0.27	%
Thomas F. Lydon, Jr., Director		—			—			1,400		0.01	%
All directors and executive officers as a group (six persons)		2,074,560			99.06	%		342,482		2.60	%

¹ Includes 2,000,000 shares of class C common stock issued to Mr. Holmes that were fully vested on June 30, 2008, and 74,560 shares owned directly by Mr. Holmes.

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     Equity Compensation Plan Information

					Number of
					securities
					remaining available
	Number of				for future issuance
	securities to be				under equity
	issued upon		Weighted-average		compensation plans
	exercise of		exercise price of		(excluding
	outstanding		outstanding		securities
	options,		options, warrants		reflected in column
	warrants and rights		and rights		(a))
Plan Category	(a)		(b)		(c)
Equity compensation plans approved by security holders		N/A		N/A		N/A
Equity compensation plans not approved by security holders
1989 Stock Option Plan 1		—		—		717,000
1997 Non-Qualified Stock Option Plan 2		77,300	$	13.66		89,700
Employee Stock Purchase Plan 3		N/A		N/A		23,763
Total		77,300				830,463

1	Stock options under this plan may be granted to directors, officers, and employees of the Company from authorized but unissued shares or treasury shares.
2	Stock options under this plan may be granted to directors, executives, and key salaried employees of the Company from authorized but unissued shares or treasury shares. The term of the option periods must be less than ten years.
3	The Company has adopted a stock purchase plan to provide eligible employees of the Company an opportunity to purchase common stock of the Company. There are 150,000 authorized shares of treasury stock reserved for issuance under the plan. The Company contributes on behalf of each participant an amount equal to lesser of (i) the aggregate amount of the participant’s payroll deductions for the purchase period, or (ii) 3% of the participant’s base compensation during the purchase period.

Item 13. Certain Relationships and Related Transactions, and Director Independence

U.S. Global is invested in several of the mutual funds it manages. There is incorporated in this Item 13 those items appearing under Note 15 to the Consolidated Financial Statements and filed as a part of this report.

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Item 14. Principal Accounting Fees and Services

The following table represents fees for professional audit services for the audit of the Company’s annual financial statements for the fiscal years ended June 30, 2008, and 2007, respectively, rendered by BDO Seidman, LLP.

	Fiscal year ended June 30,
	2008		2007
Audit fees 1	$	399,280	$	444,868
Audit-related fees 2		18,270		10,670
Tax fees 3		23,861		24,065
All other fees		—		—
Total fees	$	441,411	$	479,603

1	Audit fees consist of fees for professional services rendered by the principal accountant for the audit of the Company’s annual financial statements and internal control report and review of the financial statements included in the Company’s Form 10-Q and for services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements.
2	Audit-related fees consist primarily of fees for assurance and related services by the accountant that are reasonably related to the performance of the audit or review of the Company’s financial statements.
3	Tax fees include the preparation of federal and state tax returns as well as tax planning and consultation on new tax legislation, regulations, rulings, and developments.

     Audit Committee Pre-Approval Policies

The Audit Committee has established pre-approval policies pursuant to which all audit and auditor- provided non-audit engagement fees and terms must be approved. Pre-approval is generally provided and is detailed as to the particular service or category of services. The Audit Committee is also responsible for considering, to the extent applicable, whether the independent auditors’ provision of other non-audit services to the Company is compatible with maintaining the independence of the independent auditors.

All services provided by BDO Seidman, LLP in the fiscal years ended June 30, 2008, and 2007 were pre-approved by the Audit Committee.

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Part IV of Annual Report on Form 10-K

Item 15. Exhibits, Financial Statement Schedules

(a) The following documents are filed as part of this report:

     1. Financial Statements

     The Consolidated Financial Statements including:

• Management’s Annual Report on Internal Control Over Financial Reporting

• Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting

• Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements

• Consolidated Balance Sheets as of June 30, 2008 and 2007

• Consolidated Statements of Operations and Comprehensive Income for the three years ended June 30, 2008

• Consolidated Statements of Shareholders’ Equity for the three years ended June 30, 2008

• Consolidated Statements of Cash Flows for the three years ended June 30, 2008

• Notes to Consolidated Financial Statements

     2. Financial Statement Schedules

     None.

     3. Exhibits

3.1	Fourth Restated and Amended Articles of Incorporation of Company, incorporated by reference to the Company’s Form 10-Q for the quarterly report ended March 31, 2007 (EDGAR Accession Number 000095134-07-010817).
3.2	Amended and Restated By-Laws of Company, incorporated by reference to Exhibit 3.02 of the Company’s Form 8-K filed on November 8, 2006, (EDGAR Accession Number 0000754811-06-000076).
10.1	Advisory Agreement dated October 27, 1989, by and between Company and United Services Funds, incorporated by reference to Exhibit (4)(b) of the Company’s Form 10-K for fiscal year ended June 30, 1990 (EDGAR Accession No. 0000101507-99-000019).
10.2	Advisory Agreement dated September 21, 1994, by and between Company and Accolade Funds, incorporated by reference to Exhibit 10.2 of Company’s Form 10-K for fiscal year ended June 30, 1995 (EDGAR Accession Number 0000754811-95-000002).
10.3	United Services Advisors, Inc. 1985 Incentive Stock Option Plan as amended November 1989 and December 1991, incorporated by reference to Exhibit 4(b) of the Company’s Registration Statement No. 33-3012, Post-Effective Amendment No. 2, filed on Form S-8 with the Commission on April 23, 1997 (EDGAR Accession No. 0000754811-97-000004).
10.4	United Services Advisors, Inc. 1989 Non-Qualified Stock Option Plan, incorporated by reference to Exhibit 4(a) of the Company’s Registration Statement No. 33-3012, Post-Effective Amendment No. 2, filed on Form S-8 with the Commission on April 23, 1997 (EDGAR Accession No. 0000754811-97-000004).

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10.5	U.S. Global Investors, Inc. 1997 Non-Qualified Stock Option Plan, incorporated by reference to Exhibit 4 of the Company’s Registration Statement No. 333-25699 filed on Form S-8 with the Commission on April 23, 1997 (EDGAR Accession No. 0000754811-97-000003).
10.6	Custodian Agreement dated November 1, 1997, between U.S. Global Investors Funds and Brown Brothers Harriman & Co. incorporated by reference to Post-Effective Amendment No. 82 to Registration Statement on Form N-1A dated September 2, 1998 (EDGAR Accession No. 0000101507-98-000031).
10.7	Amendment dated June 30, 2001, to Custodian Agreement dated November 1, 1997, between U.S. Global Investors Funds and Brown Brothers Harriman & Co., incorporated by reference to Annual Report on Form 10-K for fiscal year ended June 30, 2001 (EDGAR Accession No. 0000754811-01-500016).
10.8	Amendment dated February 21, 2001, to Appendix B of the Custodian Agreement dated November 1, 1997, between U.S. Global Investors Funds and Brown Brothers Harriman & Co., incorporated by reference to Annual Report on Form 10-K for fiscal year ended June 30, 2001 (EDGAR Accession No. 0000754811-01-500016).
10.9	Amendment dated April 23, 2006 to Custodian Agreement dated November 1, 1997, between U.S. Global Investors and Brown Brothers Harriman & Co., incorporated by reference to Exhibit 10.17 to the Company’s Form 8-K filed on November 12, 2006 (EDGAR Accession No. 0000950134-06-017619).
10.10	Custodian Agreement dated November 1, 1997, between U.S. Global Accolade Funds and Brown Brothers Harriman & Co. incorporated by reference to Post-Effective Amendment No. 13 to Registration Statement on Form N-1A dated January 29, 1998 (EDGAR Accession No. 0000902042-98-000006).
10.11	Amendment dated May 14, 1999, to Custodian Agreement dated November 1, 1997, between U.S. Global Accolade Funds and Brown Brothers Harriman & Co. incorporated by reference to Post-Effective Amendment No. 16 to Registration Statement on Form N-1A dated February 29, 1999 (EDGAR Accession No. 0000902042-99-000004).
10.12	Amendment dated June 30, 2001, to Custodian Agreement dated November 1, 1997, between U.S. Global Accolade Funds and Brown Brothers Harriman & Co., incorporated by reference to Annual Report on Form 10-K for fiscal year ended June 30, 2001 (EDGAR Accession No. 0000754811-01-500016).
10.13	Amendment dated March 21, 2002 to Appendix A of the Custodian Agreement dated November 1, 1997, between U.S. Global Accolade Funds and Brown Brothers Harriman & Co., incorporated by reference to Annual Report on Form 10-K for fiscal year ended June 30, 2001 (EDGAR Accession No. 0000754811-01-500016).
10.14	Amendment dated September 30, 2004 to Custodian Agreement dated November 1, 1997, between U.S. Global Accolade Funds and Brown Brothers Harriman & Co., incorporated by reference to Post-Effective Amendment No. 26 to Registration Statement on Form N1-A dated January 20, 2005 (EDGAR Accession No. 902042-05-000004).
10.15	Amendment dated April 23, 2006 to Custodian Agreement dated November 1, 1997, between U.S. Global Accolade Funds and Brown Brothers Harriman & Co., incorporated by reference to Exhibit 10.23 to the Company’s Form 8-K filed on November 12, 2006 (EDGAR Accession No. 0000950134-06-017619).
10.16	Amendment dated February 16, 2001, to Appendix B of the Custodian Agreement dated November 1, 1997, between U.S. Global Accolade Funds and Brown Brothers Harriman & Co. incorporated by reference to Post- Effective Amendment No. 18 to Registration Statement on Form N-1A dated February 28, 2001 (EDGAR Accession No. 0000902042-01-500005).
10.17	Distribution Agreement by and between U.S. Global Brokerage, Inc. and U.S. Global Accolade Funds dated September 3, 1998, incorporated by reference to Exhibit 10.12 of Company’s Form 10-K for fiscal year ended June 30, 1998 (EDGAR Accession Number 0000754811-98-000009).
10.18	Distribution Agreement by and between U.S. Global Brokerage, Inc. and U.S. Global Investors Funds dated September 3, 1998, incorporated by reference to Exhibit 10.13 of Company’s Form 10-K for fiscal year ended June 30, 1998 (EDGAR Accession Number 0000754811-98-000009).

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10.19	Line of Credit Note dated June 3, 2005, between the Company and JP Morgan Chase Bank N.A., incorporated by reference to Exhibit 10.10 of the Company’s Form 10-K for fiscal year ended June 30, 2006 (EDGAR Accession No. 0000950134-06-017619).
10.20	Amendment dated February 1, 2007, to Line of Credit Note dated June 3, 2005, by and between the Company and JP Morgan Chase Bank N.A., incorporated by reference to Annual Report on Form 10-K for fiscal year ended June 30, 2007 (EDGAR Accession No. 0000950134-07-019889).
10.21	Amendment dated January 18, 2008, to Line of Credit Note dated June 3, 2005, by and between the Company and JP Morgan Chase Bank N.A., included herein.
10.22	Sub-Advisory Agreement by and between U.S. Global Accolade Funds, Eastern European Fund and Charlemagne Capital (IOM) Limited, dated August 31, 2006, incorporated by reference to Post Effective Amendment 37 and Sub-Advisory Agreement by and between U.S. Global Accolade Funds/Global Emerging Markets Fund and Charlemagne Capital (IOM) Limited, dated August 31, 2006, incorporated by reference to Post Effective Amendment 37, dated December 29, 2006, (EDGAR Accession No. 000902042-07-000004).
10.23	Transfer Agency Agreement Dated April 1, 2007, by and between United Shareholder Services, Inc. and U.S. Global Accolade Funds, incorporated by reference to Annual Report on Form 10-K for fiscal year ended June 30, 2007 (EDGAR Accession No. 0000950134-07-019889).
10.24	Transfer Agency Agreement Dated April 1, 2007, by and between United Shareholder Services, Inc. and U.S. Global Investors Funds, incorporated by reference to Post-Effective Amendment No. 96 to Registration Statement on Form N-1A dated September 4, 2007 (EDGAR Accession No. 0001068800-07-001420).
14.01	Code of Ethics for Principal Executive and Senior Financial Officers, adopted December 15, 2003, incorporated by reference to Annual Report on Form 10-K for fiscal year ended June 30, 2004 (EDGAR Accession Number 0000950134-04-014177).
14.02	Code of Ethics, adopted June 28, 1989, and amended June 3, 2008, included herein.
21	List of Subsidiaries of the Company, included herein.
24	Power of Attorney, incorporated by reference to Annual Report on Form 10-K for fiscal year ended June 30, 2001 (EDGAR Accession No. 0000754811-01-500016).
31.1	Rule 13a-14(a) Certifications (under Section 302 of the Sarbanes-Oxley Act of 2002), included herein.
32.1	Section 1350 Certifications (under Section 906 of the Sarbanes-Oxley Act of 2002), included herein.

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Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	U.S. Global Investors, Inc.
	By:	/s/ Frank E. Holmes
		Frank E. Holmes
Date: September 11, 2008		Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Capacity in which signed	Date
/s/ Frank E. Holmes
Frank E. Holmes	Chief Executive Officer Chief Investment Officer Director	September 11, 2008
* /s/ Thomas F. Lydon, Jr.
Thomas F. Lydon, Jr.	Director	September 11, 2008
* /s/ Jerold H. Rubinstein
Jerold H. Rubinstein	Chairman, Board of Directors	September 11, 2008
* /s/ Roy D. Terracina
Roy D. Terracina	Director	September 11, 2008
/s/ Catherine A. Rademacher		September 11, 2008
Catherine A. Rademacher	Chief Financial Officer
*BY: /s/ Susan B. McGee
Susan B. McGee Attorney-in-Fact under Power of Attorney dated September 26, 2001		September 11, 2008

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EX-10.21

Exhibit 10.21

CHASE Note Modification Agreement

This agreement is dated as of January 18, 2008 (the “Agreement Date”), by and between U.S. Global Investors, Inc. (the “Borrower”) and JPMorgan Chase Bank, N.A. (the “Bank”). The provisions of this agreement are effective on the date that this agreement has been executed by all of the signers and delivered to the Bank (the “Effective Date”).

WHEREAS, the Borrower executed a Line of Credit Note as evidence of indebtedness in the original face amount of One Million and 00/100 Dollars ($1,000,000.00), dated June 3, 2005 owing by the Borrower to the Bank, as same may have been amended or modified from time to time (the “Note”), which Note has at all times been, and is now, continuously and without interruption outstanding in favor of the Bank; and,

WHEREAS, the Borrower has requested and the Bank has agreed that the Note be modified to the limited extent as hereinafter set forth;

NOW THEREFORE, in mutual consideration of the agreements contained herein and for other good and valuable consideration, the parties agree as follows:

1. ACCURACY OF RECITALS. The Borrower acknowledges the accuracy of the Recitals stated above.

2. MODIFICATION OF NOTE.

          2.1 From and after the Effective Date, the provision in the Note captioned “Promise to Pay” is hereby amended as follows: The date on which the entire balance of unpaid principal plus accrued interest shall be due and payable immediately is hereby changed from February 1, 2008 to February 1, 2009.

          2.2 Each of the Related Documents is modified to provide that it shall be a default or an event of default thereunder if the Borrower shall fail to comply with any of the covenants of the Borrower herein or if any representation or warranty by the Borrower herein or by any guarantor in any Related Documents is materially incomplete, incorrect, or misleading as of the date hereof. As used in this agreement, the “Related Documents” shall include the Note and all loan agreements, credit agreements, reimbursement agreements, security agreements, mortgages, deeds of trust, pledge agreements, assignments, guaranties, or any other instrument or document executed in connection with the Note or in connection with any other obligations of the Borrower to the Bank.

          2.3 Each reference in the Related Documents to any of the Related Documents shall be a reference to such document as modified herein.

3. RATIFICATION OF RELATED DOCUMENTS AND COLLATERAL. The Related Documents are ratified and reaffirmed by the Borrower and shall remain in full force and effect as they may be modified herein. All real or personal property described as security in the Related Documents shall remain as security for the Note and the obligations of the Borrower in the Related Documents.

4. BORROWER REPRESENTATIONS AND WARRANTIES. The Borrower represents and warrants to the Bank that each of the following representations and warranties made in the Note and Related Documents are true and will remain true until maturity of the Note, termination of the other Related Documents and payment and performance in full of all liabilities, obligations and debt evidenced by the Note and other Related Documents:

          4.1 No default or event of default under any of the Related Documents as modified hereby, nor any event, that, with the giving of notice or the passage of time or both, would be a default or an event of default under the Related Documents as modified herein has occurred and is continuing.

          4.2 There has been no material adverse change in the business, assets, affairs, prospects or financial condition of the Borrower or any Guarantor or any subsidiary of the Borrower.

          4.3 Each and all representations and warranties of the Borrower in the Related Documents are accurate on the date hereof.

          4.4 To the best of its knowledge, the Borrower has no claims, counterclaims, defenses, or setoffs with respect to the loan evidenced by the Note or with respect to the Related Documents as modified herein.

          4.5 The Note and the Related Documents as modified herein are the legal, valid, and binding obligations of the Borrower, enforceable against the Borrower in accordance with their terms.

          4.6 The Borrower, other than any Borrower who is a natural person, is validly existing under the laws of the State of its formation or organization. The Borrower has the requisite power and authority to execute and deliver this agreement and to perform the obligations described in the Related Documents as modified herein. The execution and delivery of this agreement and the performance of the obligations described in the Related Documents as modified herein have been duly authorized by all requisite action by or on behalf of the Borrower. This agreement has been duly executed and delivered by or on behalf of the Borrower.

5. BORROWER COVENANTS. The Borrower covenants with the Bank:

          5.1 The Borrower shall execute, deliver, and provide to the Bank such additional agreements, documents, and instruments as reasonably required by the Bank to effectuate the intent of this agreement.

          5.2 The Borrower fully, finally, and forever releases and discharges the Bank and its successors, assigns, directors, officers, employees, agents, and representatives from any and all causes of action, claims, debts, demands, and liabilities, of whatever kind or nature, in law or equity, of the Borrower, whether now known or unknown to the Borrower, (i) in respect of the loan evidenced by the Note and the Related Documents, or of the actions or omissions of the Bank in any manner related to the loan evidenced by the Note or the Related Documents and (ii) arising from events occurring prior to the date of this agreement (“Claims”);

          5.3 The Borrower shall pay to the Bank:

               5.3.1 All the internal and external costs and expenses incurred (or charged by internal allocation) by the Bank in connection with this agreement (including, without limitation, inside and outside attorneys, appraisal, appraisal review, processing, title, filing, and recording costs, expenses, and fees).

6. EXECUTION AND DELIVERY OF AGREEMENT BY THE BANK. The Bank shall not be bound by this agreement until (i) the Bank has executed this agreement and (ii) the Borrower performed all of the obligations of the Borrower under this agreement to be performed contemporaneously with the execution and delivery of this agreement.

7. INTEGRATION, ENTIRE AGREEMENT, CHANGE, DISCHARGE, TERMINATION, OR WAIVER. The Note and the Related Documents as modified herein contain the complete understanding and agreement of the Borrower and the Bank in respect of the loan and supersede all prior representations, warranties, agreements, arrangements, understandings, and negotiations. No provision of the Note or the Related Documents as modified herein may be changed, discharged, supplemented, terminated, or waived except in a writing signed by the party against whom it is being enforced.

8. GOVERNING LAW AND VENUE. This agreement shall be governed by and construed in accordance with the laws of the State of Texas (without giving effect to its laws of conflicts). The Borrower agrees that any legal action or proceeding with respect to any of its obligations under the Note or this agreement may be brought by the Bank in any state or federal court located in the State of Texas, as the Bank in its sole discretion may elect. By the execution and delivery of this agreement, the Borrower submits to and accepts, for itself and in respect of its property, generally and unconditionally, the non-exclusive jurisdiction of those courts. The Borrower waives any claim that the State of Texas is not a convenient forum or the proper venue for any such suit, action or proceeding. This agreement binds the Borrower and its successors, and benefits the Bank, its successors and assigns. The Borrower shall not, however, have the right to assign the Borrower’s rights under this agreement or any interest therein, without the prior written consent of the Bank.

9. COUNTERPART EXECUTION. This agreement may be executed in multiple counterparts, each of which, when so executed, shall be deemed an original, but all such counterparts, taken together, shall constitute one and the same agreement.

10. NOT A NOVATION. This agreement is a modification only and not a novation. In addition to all amounts hereafter due under the Note and the Related Documents as they may be modified herein, all accrued interest evidenced by the Note being modified by this agreement and all accrued amounts due and payable under the Related Documents shall continue to be due and payable until paid. Except for the above-quoted modification(s), the Note, any Related Documents, and all the terms and conditions thereof, shall be and remain in full force and effect with the changes herein deemed to be incorporated therein. This agreement is to be considered attached to the Note and made a part thereof. This agreement shall not release or affect the liability of any guarantor, surety or endorser of the Note or release any owner of collateral securing the Note. The validity, priority and enforceability of the Note shall not be impaired hereby. References to the Related Documents and to other agreements shall not affect or impair the absolute and unconditional obligation of the Borrower to pay the principal and interest on the Note when due. The Bank reserves all rights against all parties to the Note.

     THIS AGREEMENT AND THE OTHER RELATED DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

     THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

	Borrower:
Address: 7900 Callaghan Road                San Antonio, TX 78229	U.S. Global Investors, Inc.
	By:	/s/ Frank E. Holmes
		Frank E. Holmes                             Chief Executive Officer
		Printed Name                                                 Title
		Date Signed: 2-27-08
BANK’S ACCEPTANCE
The foregoing agreement is hereby agreed to and acknowledged.
	Bank: JPMorgan Chase Bank, N.A.
	By:	/s/ John L. Dockendorf II
		John L. Dockendorf II,                        Vice President
		Printed Name                                                 Title
		Date Signed: 2/28/08

EX-14.02

Exhibit 14.02

Code of Ethics
Adopted by
U.S. Global Investors, Inc.
U.S. Global Brokerage, Inc.

Effective June 28, 1989
As Amended November 13, 1989
As Amended May 17, 1993
As Amended February 14, 1994
As Amended December 5, 1994
As Amended March 1, 1996
As Amended May 24, 1996
As Amended June 2, 1997
As Amended October 29, 1997
As Amended December 12, 1997
As Amended December 3, 1999
As Amended December 9, 2004
As Amended March 23, 2005
As Amended March 1, 2008
As Amended May 13, 2008
As Amended June 3, 2008

TABLE OF CONTENTS

		Page
1.	INTRODUCTION AND OVERVIEW		1
2.	COVERED PERSONS		2
3.	RESTRICTIONS ON PERSONAL INVESTING ACTIVITIES		2
4.	PRE-CLEARANCE OF TRANSACTIONS		4
5.	REPORTING REQUIREMENTS		5
6.	RESTRICTIONS ON OTHER ACTIVITIES		9
7.	ADMINISTRATION OF THE CODE OF ETHICS		10
APPENDIX A	Definitions
APPENDIX B	Quarterly Certification of Partially Covered Independent Directors

1.	INTRODUCTION AND OVERVIEW
	For the definition of bolded terms used throughout this Code of Ethics, see Appendix A.

1.1. Statement of General Principles

The mission of U.S. Global Investors, Inc. (“USGI”) is to maximize the growth, protection, and service of our clients’ wealth with the highest ethical standards. This Code of Ethics (the “Code”) is intended to help ensure that our professional and personal conduct preserves our reputation for high standards of ethics and integrity.

The purposes of this Code are to:

(a) prohibit fraudulent, deceptive, or manipulative acts in connection with your Personal Securities Transactions in:

a.	Reportable U.S. Global Funds,
b.	USGI Stock, and
c.	Covered Securities held or to be acquired by the U.S. Global Funds or other clients of USGI (“Other USGI-Managed Accounts”), and

(b) avoid conflicts of interest so that the best interests of investors in the U.S. Global Funds and Other USGI-Managed Accounts will be served.

You must agree:

(a)	to place the interests of U.S. Global Fund shareholders and Other USGI-Managed Accounts above your own personal interests;
(b)	to refrain, in the conduct of all of your personal affairs, from taking any inappropriate advantage of your roles and responsibilities with USGI, U.S. Global Brokerage, Inc. (“USGB”), the U.S. Global Funds, and the Other USGI-Managed Accounts;
(c)	to comply with the Federal Securities Laws; and
(d)	to conduct all Personal Securities Transactions so as to fully comply with the provisions of this Code in order to avoid any actual or even apparent conflict or claim of a conflict of interest or abuse of your roles and responsibilities with USGI, USGB, the U.S. Global Funds, and Other USGI-Managed Accounts.

This Code is just one element of our program to avoid conflicts of interest and ensure that the duties we owe to our clients remain our foremost priority. In addition to this Code, you may be subject to other USGI policies such as, among others, USGI’s Protection of Material, Nonpublic Information Policy, USGI’s Code of Business Conduct, and the U.S. Global Funds’ Policies and Procedures on Disclosure of Portfolio Holdings.

1.2.

Adoption of the Code of Ethics

This Code has been adopted for USGI and USGB in accordance with Rule 204A-1 under the Investment Advisers Act of 1940, as amended, and Rule 17j-1 under the Investment Company Act

of 1940, as amended. Each rule requires, at a minimum, that USGI and USGB adopt a code of ethics that sets forth standards of conduct, requires compliance with the Federal Securities Laws, and addresses personal trading by certain personnel.

2.	COVERED PERSONS
	Persons covered by this Code are called Covered Persons, and include any officer, director (other than a Partially Covered Independent Director), or employee of USGI or USGB, and any other person designated by the Chief Compliance Officer.

Certain Covered Persons are also categorized as Covered Independent Directors or as Investment Personnel, which includes, among others, any Portfolio Manager, investment analyst, trader, or any USGI officer, director, employee, or consultant who, in connection with his or her regular functions or duties, makes or participates in making recommendations on behalf of USGI regarding the purchase or sale of specific securities by the U.S. Global Funds or Other USGI-Managed Accounts, and any other person designated by the Chief Compliance Officer.

Independent directors of USGI who are not involved in the day-to-day operations of USGI or the portfolio management of USGI’s client portfolios generally are not considered Covered Persons under the Code of Ethics and, therefore, are required only to provide the quarterly certification in Appendix B and to comply with the provisions of this Code of Ethics dealing with personal transactions in USGI Stock. These directors are called Partially Covered Independent Directors. If an independent director of USGI cannot make the certifications set forth in Appendix B, then such independent director will be deemed a Covered Independent Director and is subject to all the provisions of this Code that apply to Covered Persons, unless otherwise specifically indicated herein.

Be aware that some provisions of this Code apply indirectly to other persons, such as relatives, significant others, or advisers, if they own or manage securities in which a Covered Person has a Beneficial Ownership interest. For example, if you are a Covered Person, the Code’s investment restrictions and reporting requirements apply both to you, and to securities or accounts owned by a relative who lives in your home or whom you support, or by a non-relative who shares significant financial arrangements with you, or managed by an adviser for you or a close relative.

For the purposes of this Code, USGI and any Independent Subadvisers shall be treated as separate unrelated entities and shall not be required to coordinate their efforts with respect to any pre-clearance requirements.

3.	RESTRICTIONS ON PERSONAL INVESTING ACTIVITIES
	Covered Persons, other than Investment Personnel, may purchase or sell, in accordance with the provisions of this Code, Covered Securities, USGI Stock, and Reportable U.S. Global Funds.
	Covered Persons, other than the Covered Independent Directors and USGI for its own account, are prohibited from having margin accounts, trading options, or purchasing or selling HOLDRS.
	Investment Personnel are prohibited from purchasing Covered Securities, except Investment Personnel may purchase and sell USGI Stock, Reportable U.S. Global Funds, and Excepted Securities (e.g., open-end mutual funds, other than exchange-traded funds). In addition, Investment Personnel, in accordance with the provisions of this Code, may engage in Excepted Transactions (e.g., transactions over which you have no influence or control) and sell Covered Securities that you already hold or later acquire in an Excepted Transaction.

	In the future, USGI and USGB may decide to lift the prohibition on the purchase of Covered Securities by Investment Personnel.
3.1.	Reportable U.S. Global Funds
	All Covered Persons must always conduct their personal investing activities in Reportable U.S. Global Funds in which they have any direct or indirect Beneficial Ownership lawfully, properly, and responsibly, and are encouraged to adopt long-term investment strategies in Reportable U.S. Global Funds that are consistent with their financial resources and objectives.
	Excessive Trading in Reportable U.S. Global Funds by Covered Persons is prohibited. Any Covered Person who is identified as having engaged in Excessive Trading in Reportable U.S. Global Funds will be sanctioned as set forth in Section 7.4, unless you can demonstrate to the Review Committee in writing that a bona fide and sufficient personal or family economic hardship exists warranting the gravity of an exception.
3.2.	Initial Public Offerings
	No Covered Person, other than the Covered Independent Directors or USGI for its own accounts, shall effect or be permitted to effect the purchase of a security from the issuer, or any member of the underwriting syndicate or selling group, in and during the course of any Initial Public Offering by or on behalf of the issuer of such security. The Covered Independent Directors and USGI must pre-clear their transactions in Initial Public Offerings in accordance with Section 4.
3.3.	Limited Offering Transaction
	No Covered Person may purchase a security in a Limited Offering transaction (e.g., private placements, private investment partnerships, and other private interests) without obtaining the advance written approval of the Chief Compliance Officer. In determining whether or not to grant approval of participation in a Limited Offering, the Chief Compliance Officer will consider, among any other pertinent factors:

(a)	whether the investment opportunity is available to, and should be reserved solely for, the U.S. Global Funds or Other USGI-Managed Accounts; and
(b)	whether the opportunity is or seems to have been made available to the Covered Person due to or by virtue of the position which he or she holds with USGI or USGB.

In adopting this Code, USGI acknowledges its responsibility to monitor activities of the firm and those of its Covered Persons to ensure that investment decisions on behalf of the U.S. Global Funds and/or Other USGI-Managed Accounts relating to any Limited Offering transaction with respect to which a Covered Person has obtained pre-acquisition approval will be subject to independent review by senior USGI Investment Personnel having no personal interest in the issuer or any of its securities.

3.4. “Black-Out” Trading Restrictions

Two-Day Restriction: A Covered Person (except for the Covered Independent Directors) may not effect a Personal Securities Transaction in a Covered Security if (i) a U.S. Global Fund or Other USGI-Managed Account purchased or sold the same Covered Security or Equivalent Covered Security one trading day earlier or (ii) the Covered Person has actual knowledge regarding whether the same Covered Security or Equivalent Covered Security is being

	considered for purchase or sale on the current or next trading day by a U.S. Global Fund or Other USGI-Managed Account.
	14-Day Restriction: Investment Personnel may not dispose of a Covered Security within seven calendar days before, or seven calendar days after, the trade date of a purchase or sale of the same Covered Security or any Equivalent Covered Security by or on behalf of any U.S. Global Fund or any Other USGI-Managed Account.
	In the event that a Personal Securities Transaction is effected in contravention of either of the two foregoing restrictions, the Covered Person involved shall, as soon as practicable after becoming aware of the violative nature of his or her Personal Securities Transaction (irrespective of any pre-execution clearance which may have been previously granted for the transaction), promptly (i) advise the Chief Compliance Officer of the violation and (ii) comply with whatever directions, by way of disgorgement, which the Chief Compliance Officer may issue in order for the violation to be fully and adequately rectified.
3.5.	Short-Term Matched Profit Restriction on Covered Securities Transactions

Covered Persons, subject to the exceptions noted immediately below, shall not engage in any Short-Term Matched Profit Transaction within the meaning of this Code. This prohibition is intended to apply to all instances of short-term (i.e., 60 calendar days or less) purchase and sale or sale and purchase transactions or security “short-selling.”

The Chief Compliance Officer may, and is hereby granted authority to determine, in his or her discretion, to except a given personal securities transaction from the prohibition established by the foregoing sub-paragraph in cases where:

(a)

the transaction, and any earlier Personal Securities Transaction with which it may be matched over the most recent 60 calendar days, do not appear to evidence actual abuse of a conflict of interest with any U.S. Global Fund or Other USGI-Managed Account (as, for example, where the Covered Security or Securities involved have not recently been held, traded, or actively considered for investment or trading by such accounts); and

(b)

the Covered Person can demonstrate that a bona fide and sufficient personal or family economic hardship exists warranting the granting of such an exception.

	Exceptions will be granted only upon meritorious circumstances and, if granted, will be promptly reported, in writing, to the Review Committee.
3.6.	Prohibition on Trading on Material, Nonpublic Information

	All Covered Persons must comply with USGI’s Protection of Material, Nonpublic Information Policy, which, among other things, prohibits trading in any Covered Security at any time that a Covered Person is in possession of material, nonpublic information about the issuer of such security.
3.7.	Limitations on Trading In USGI Stock

3.7.1. Limitations on Purchases of USGI Stock

	Covered Persons and Partially Covered Independent Directors with access to financial data regarding USGI may only trade in USGI Stock, subject to pre-clearance as provided below in Section 4, during the period from the third trading day after USGI publicly announces its quarterly earnings until 15 calendar days before the end of a quarter (unless USGI management has implemented a trading blackout in USGI Stock due to a material corporate event or other such circumstances). The Chief Compliance Officer may allow written exceptions to this prohibition for good cause.
3.7.2.	Prohibitions on Purchases of USGI Stock
	Covered Persons and Partially Covered Independent Directors may not engage in transactions in USGI Stock that are speculative in nature. These transactions include, but are not limited to: (i) the writing of a call option or the purchase of a put option if the amount of securities underlying the option exceed the amount of securities you otherwise own; (ii) short sales (i.e., selling borrowed securities); and (iii) transacting in the securities of any entity with which USGI is discussing business matters.

4. PRE-CLEARANCE OF TRANSACTIONS

4.1	Pre-Clearance Process
	Covered Persons (except the Covered Independent Directors for transactions that do not involve USGI Stock or are not Initial Public Offerings or Limited Offerings) are required, prior to the execution of any Personal Securities Transaction in USGI Stock or a Covered Security, including any voluntary contribution or adjustment to an Automatic Investment Plan, Dividend Reinvestment Plan, Employee Stock Option Plan, or Employee Stock Purchase Plan, or other similar stock plan in which they will have any direct or indirect Beneficial Ownership, to seek and obtain the express approval of the Chief Compliance Officer by completing a Request to Pre-Clear Form (attached as Appendix B) and submitting it to the Chief Compliance Officer.
	If approval of a transaction is granted, the approval is good until the end of the trading day (generally 3 p.m. CT). If the authorized transaction is not executed within this time period, you must complete a new Request to Pre-Clear Form if you still wish to execute the transaction.
4.2.	Effect of Pre-Execution Clearance of Personal Covered Securities Transactions
	Approval of a request for pre-execution clearance shall not operate as a waiver, satisfaction or presumption of satisfaction of any other provision of this Code, but only as evidence of good faith on your part, which may be considered by the Review Committee should a violation of any other provision of this Code be determined to have occurred.

5. REPORTING REQUIREMENTS

5.1.	Acknowledgement Form
	All Covered Persons must complete and return to the Chief Compliance Officer an executed Acknowledgement Certification to the Code no later than 10 calendar days after becoming a Covered Person. Each Covered Person must also certify annually to compliance with the Code by completing and returning an Acknowledgement Certification to the Chief Compliance Officer no later than February 1.

5.2.	Initial Holdings Reports
	Covered Persons, no later than 10 days after a person is designated as such, must provide and certify the following personal holdings information (which must be current as of a date no more than 45 days prior to the date the person becomes a Covered Person):

(a)	the title and type of security, and as applicable the exchange ticker symbol or CUSIP number, number of shares and principal amount of USGI Stock, each Covered Security, and each Reportable U.S. Global Fund in which the Covered Person had any direct or indirect Beneficial Ownership when the person became a Covered Person;
(b)	the name of any broker, dealer, bank, or transfer agent with whom the Covered Person maintains an account in which any securities (including Excepted Securities) are held for the direct or indirect benefit of the Covered Person as of the date the person became a Covered Person; and
(c)	the date that the report is submitted by the Covered Person.

5.3.	Account Confirmations and Statements
	Covered Persons are required to ensure that the office of the Chief Compliance Officer is furnished duplicate copies of the following account documents:

(a)

confirmations issued by brokers, dealers, banks, or transfer agents upon the execution of all Personal Securities Transactions in USGI Stock, any Covered Security, or any Reportable U.S. Global Fund in which the Covered Person had, at the time of the transaction, or by reason of the transaction acquired, any direct or indirect Beneficial Ownership interest in the USGI Stock, Covered Security, or Reportable U.S. Global Fund which was the subject of the transaction; and

(b)

any regular periodic or other statements reflecting Personal Securities Transaction activity in USGI Stock, any Covered Security, or any Reportable U.S. Global Fund within any account with a broker, dealer, bank, or transfer agent in which the Covered Person has any direct or indirect Beneficial Ownership interest.

	Such copies shall be provided to the Chief Compliance Officer at the time that the Covered Person receives his or her copies from the broker, dealer, bank, or transfer agent.
5.4.	Quarterly Transaction Reports

Covered Persons shall submit on a calendar quarterly basis, a Quarterly Securities Transaction Report (attached as Appendix C) of all personal securities transactions. The quarterly report must also include any voluntary contribution or adjustment to Automatic Investment Plans, Dividend Reinvestment Plans, Employee Stock Option Plans, Employee Stock Purchase Plans, or similar stock compensation plans. Such quarterly report shall be submitted to the Chief Compliance Officer no later than 30 calendar days after the end of each calendar quarter.

The quarterly report should not include any transactions in U.S. Global money market funds or Excepted Securities, or any Excepted Transactions (as defined in Appendix A). The certification of the quarterly report is required regardless of whether or not the Covered Person had any securities transactions activity during the quarter.

Each quarterly report may contain a statement that the report shall not be construed as an admission by the Covered Person that he or she has any direct or indirect Beneficial Ownership in any security to which the report relates.

Officers, directors, and employees of USGI are not required to report transactions effected for USGI’s own accounts. USGI’s Chief Financial Officer shall cause USGI to provide the Chief Compliance Officer with duplicate confirmations as provided above in Section 5.3.

The Quarterly Securities Transaction Report must contain the following information relating to the most recent calendar quarter:

(a)	The date of the transaction, the title of and, as applicable, the exchange ticker symbol or CUSIP number, number of shares, interest rate and maturity date, and the principal amount of each security involved;
(b)	The nature of the transaction (i.e., purchase, sale or any other type of acquisition or disposition);
(c)	The price at which the transaction was effected;
(d)	The name of the broker, dealer, bank, or transfer agent with or through whom the transaction was effected; and
(e)	The date the Covered Person submits the report.

With respect to any new account established by a Covered Person in which any Covered Securities, USGI Stock, or Reportable U.S. Global Funds were held during the quarter for the direct or indirect benefit of the Covered Person:

(a)	the name of the broker, dealer, bank, or transfer agent with whom the Covered Person established the account;
(b)	the date the account was established; and
(c)	the date that the report was submitted by the Covered Person.

5.5. Annual Holdings Reports

Covered Persons must provide and certify annually the following personal holdings information (which information must be current as of a date no more than 45 days before the report is submitted):

(a)	the title and type of security, and as applicable the exchange ticker symbol or CUSIP number, number of shares and principal amount of each Covered Security, USGI Stock, and Reportable U.S. Global Fund in which the Covered Person had any direct or indirect Beneficial Ownership;
(b)	The name of any broker, dealer or bank with whom the Covered Person maintains an account in which any securities are held for the direct or indirect benefit of the Covered Person; and
(c)	the date that the report is submitted by the Covered Person.

5.6. Other Reporting and Disclosure Requirements

	Covered Persons are required, upon first becoming a Covered Person to review the Code, complete a quiz about the Code, and furnish a disclosure and identification of all securities accounts with brokers, dealers, banks, and transfer agents in which the Covered Person currently has any direct or indirect Beneficial Ownership interest.
5.7.	Newly Opened Securities Accounts

	Covered Persons must notify the Chief Compliance Officer of any new securities accounts within 15 days of the account being opened. In addition, all Covered Persons must notify the Chief Compliance Officer of any new Reportable U.S. Global Fund accounts within 15 days of the account being opened.
5.8.	Exemption to Reporting Requirements

	A person need not make an initial, quarterly or annual report under this section with respect to transactions effected for, and Covered Securities or Reportable U.S. Global Funds held in, any account over which the person had no direct influence or control.
	Furthermore, quarterly transaction reports need not be filed for any transaction effected in a Non-Discretionary Account if the Chief Compliance Officer, after a thorough review, is satisfied that the Covered Person truly has no discretion over the account. In making requests for quarterly transaction report exemptions, Covered Persons will be required to furnish whatever information is called for by the Chief Compliance Officer.
5.9.	Additional Reporting Requirements Concerning USGI Stock

5.9.1.

Insider Reporting Liability. Any Covered Person or Partially Covered Independent Director who is the beneficial owner of more than 10 percent of any class of USGI Stock registered under Section 12 of the Securities Exchange Act of 1934 (the “Exchange Act”) and each Executive Officer and Director of USGI (“Insiders”) are subject to the provisions of Section 16(b) of the Exchange Act.

5.9.2.

SEC Reporting. Insiders must file certain reports with the SEC and the New York Stock Exchange concerning their holdings, and any changes thereto, of USGI Stock or options to purchase USGI Stock. If Insiders fail to file a report, USGI must disclose the failure in the proxy statement it annually distributes to shareholders, the Insider and USGI could suffer penalties as a result. Please note that under these regulations, the reporting obligation is ultimately the Insider’s responsibility, not USGI’s.

• Form 3. The initial ownership report by an Insider is required to be filed on Form 3. This report must be filed within 10 days after a person becomes an Insider (i.e., is elected as a director or appointed as an executive officer) to report all current holdings of USGI Stock.

• Form 4. Any change in the Insider’s ownership of USGI Stock must be reported on Form 4 unless the Insider is eligible for deferred reporting on year-end Form 5. The Form 4 must be filed electronically before the end of the second business day following the day on which a transaction resulting in a change in Beneficial Ownership has been executed.

• Form 5. Any transaction or holding that is exempt from reporting on Form 4, such as small purchases of stock or gifts may be reported electronically on a deferred basis on Form 5 within 45 calendar days after the end of the calendar year in which the transaction occurred. No Form 5 is necessary if all transactions and holdings were previously reported on Form 4.

5.9.3. Liability for Short-Swing Profits. Under the U.S. securities laws, profit realized by certain officers, as well as directors and 10% stockholders of a company (including USGI) as a result of a purchase and sale (or sale and purchase) of USGI Stock within a period of less than six months must be returned to USGI or its designated payee upon request. Profit is measured by matching the highest sale price with the lowest purchase price within six months. The grant and exercise of options, although reportable under Section 16(b), are exempt from short-swing profit liability. You are subject to potential short swing profit liability for so long as you are subject to Section 16(a) reporting requirements, which could continue for a period of time after you cease to be a director or officer.

6. RESTRICTIONS ON OTHER ACTIVITIES

6.1.	Policy on Gifts, Gratuities, Favors, and Other Benefits
	Gifts, gratuities, favors, or other benefits (“Gifts”) may be given or accepted only if they are in accordance with generally accepted business practices and do not raise any question of impropriety. A question of impropriety may be raised if a Gift influences or gives the appearance of influencing the recipient.
	On occasion, you may be offered Gifts from clients, brokers, vendors, or other persons not affiliated with USGI or USGB who may be in a position to do business with USGI or USGB. You may not accept extraordinary or extravagant gifts. You may accept gifts of a nominal value (i.e., no more than $100 annually from one person), customary business meals and entertainment if both you and the giver are present (e.g., sporting events), and promotional items (e.g., pens or mugs). If you are licensed and registered with the Financial Industry Regulatory Authority (“FINRA”), you also are subject to those provisions of the NASD Conduct Rules relating to the receipt of Gifts.
	You may not solicit Gifts.
	You may not give a Gift that has a fair market value greater than $100 per year to persons associated with securities or financial organizations, exchanges, member firms, commodity firms, news media, or clients of USGI or USGB. You may provide reasonable entertainment to these persons if both you and the recipient are present. Please do not give or receive gifts or entertainment that would be embarrassing to you, USGI, or USGB if made public.
6.2.	Policy on Service as a Director of a Public Company

6.2.1.	Prohibition against Serving as a Director of a Public Company
	No Covered Person except the Covered Independent Directors and the Chief Executive Officer (“CEO”) shall serve on the board of directors of a publicly traded company (“Public Company”) (other than USGI, its subsidiaries and affiliates, including investment companies).

6.2.2.	Pre-Approval for CEO to Serve as Director
	If the CEO intends to serve as a director of a Public Company (or if he serves as a director for a private company that proposes to become public), he shall first notify the boards of directors of USGI and the board of trustees of each investment company registered under the 1940 Act for which USGI serves as investment adviser. Each Board shall be given an opportunity to ask questions and discuss the CEO’s proposed service as a director.
6.2.3.	Trading Restrictions While Serving as Director
	When the CEO serves on the board of directors of a Public Company, he (trading for his own account) and USGI (trading for its own accounts or on behalf of the U.S. Global Funds or Other USGI-Managed Accounts) are prohibited from trading in the securities of the Public Company (except during the “Trading Window”) for as long as the CEO serves as a director and continuing until the Public Company issues a Form 10-K, 10-Q, or otherwise makes a public announcement which discloses any material nonpublic information which the CEO may possess. The Trading Window begins on the third trading day after the Public Company issues a Form 10-K, 10-Q, or otherwise makes a public announcement that discloses any material nonpublic information the CEO may possess and continues for a period of 30 days after publication. If the Public Company has an insider trading policy that is in whole or in part more restrictive than this Code, the more restrictive provision shall apply to the CEO or USGI.
6.2.4.	Pre-Clearance Requirement
	The CEO (trading for his own account) and USGI (trading for its own accounts or on behalf of the U.S. Global Funds or Other USGI-Managed Accounts) may trade in the securities of the Public Company during the “Trading Window” after the CEO pre-clears the transactions with the Chief Compliance Officer.

7. ADMINISTRATION OF THE CODE OF ETHICS

7.1.	Review by Chief Compliance Officer
	The Chief Compliance Officer shall regularly review or supervise the review of the Personal Securities Transactions that are subject to this Code. The Compliance Department will provide a quarterly report of his or her review to the Review Committee.
7.2.	Review Committee
	If the Chief Compliance Officer determines that a violation may have occurred, he or she shall promptly submit the pertinent information about the transaction to the Review Committee, which shall evaluate whether a violation of this Code has occurred and whether the violation was material, taking into account all facts and circumstances. Before determining that a violation has occurred, the Review Committee shall give the person involved an opportunity to supply additional information about the transaction in question.
7.3.	Imposition of Sanctions
	If the Review Committee determines that a violation of this Code has occurred, the CEO shall provide a written report of the Review Committee’s determination and sanctions to USGI’s Board

	of Directors for such further action and sanctions as the Board deems appropriate. In the event the violation involves the CEO, the USGI Director serving on the Review Committee shall issue the report. The Review Committee may impose such sanctions as it deems appropriate, including, without limitation, a letter of censure or suspension, termination of employment or personal trading privileges. All material violations and any sanctions imposed with respect thereto shall be reported to the Board of Directors of USGI and the Board of Directors/Trustees of any client which has been directly affected by the violation.
7.4.	Sanction Guidelines
	Outlined below are the guidelines for the sanctions that may be imposed on Covered Persons who fail to comply with the Code:

• First violation — A written or verbal reprimand may be given to the person and a copy or record will be put in the person’s personnel file. The written or verbal reprimand will reinforce the person’s responsibilities under the Code, educate the person on the severity of personal trading violations, and inform the person of the possible penalties for future violations.

• Second violation — The Review Committee will impose such sanctions as it deems appropriate, including without limitation, a letter of censure, fines, withholding of bonus payments, or suspension of personal trading privileges for up to 60 days.

• Third violation — The Review Committee will impose such sanctions as it deems appropriate, including without limitation, a letter of censure, fines, withholding of bonus payments, or suspension or termination of personal trading privileges or employment.

• In addition to the above disciplinary sanctions, such persons may be required to disgorge any profits realized in connection with such violation. All disgorgement proceeds collected will be donated to a charitable organization selected by the Review Committee. The Review Committee may determine to impose any sanctions, including termination, immediately and without notice if it determines that the severity of any violation or violations warrants such action. All sanctions imposed will be documented in such person’s personal trading file maintained by USGI.

7.5.	Exemptions from the Code
	The Review Committee may exempt any transaction or class of transactions from this Code if it finds that the exemption is consistent with the intent and purposes of the Advisers Act and the 1940 Act. The exemption shall be in writing and signed by each member of the Review Committee. No member of the Review Committee shall participate in any discussion or decision involving a potential exemption from this Code for a transaction in which the member has any direct or indirect beneficial interest.
7.6.	Records
	The Chief Compliance Officer shall ensure that the following records are maintained: (i) a copy of this Code and any amendment thereto that is or at any time within the past five years has been in effect; (ii) a record of any violation of this Code, or any amendment thereof, and any action taken as a result of such violation; (iii) files for personal securities transaction confirmations and account statements, all reports and pre-clearance requests submitted by Covered Persons pursuant to the Code and any action taken thereon; (iv) a list of all persons who are, or have been, required to submit reports pursuant to the Code; (v) a copy of each report created under this Code; and (vi) records relating to violations

	under the Code and any sanctions imposed. Such records shall be maintained in accordance with and for the time periods required under the 1940 Act and the Advisers Act.
7.7.	Amendments
	The directors of USGI may from time to time amend this Code and adopt interpretations of this Code as they deem appropriate. The Board of Directors/Trustees of any Client that previously has received a copy of this Code immediately shall be provided with a copy of the Code as amended.
7.8.	Questions
	Every Covered Person must read and retain this Code and should consult the Chief Compliance Officer about any question arising under this Code.

APPENDIX A

DEFINITIONS

As used within this Code, the following terms have the following meanings:

     Defined Persons

Covered Person means: (i) any officer, director (other than Partially Covered Independent Directors), or employee of USGI or USGB; (ii) USGI itself when trading for any of its own accounts; and (iii) any other person designated by the Chief Compliance Officer.

Investment Personnel means (i) any Portfolio Manager or any USGI officer, director, employee, or consultant who, in connection with his or her regular functions or duties, makes or participates in making recommendations on behalf of USGI regarding the purchase or sale of specific securities by the U.S. Global Funds or Other USGI-Managed Accounts and (ii) all other employees or consultants that are part of USGI’s Investments department, including investment analysts, traders, and the administrative assistants of those persons identified in subsection (i).

Covered Independent Director means any director of USGI who is not Investment Personnel or an employee of USGI, or an affiliate thereof, but who cannot make the certifications set forth in Appendix B.

Partially Covered Independent Director means any director of USGI who is not Investment Personnel or an employee of USGI, or an affiliate thereof, and who can make the certifications set forth in Appendix B.

Independent Subadviser means any subadviser with which USGI has contracted to manage the investment portfolios of one or more clients and which the Review Committee has designated as independent. Independence is a question of fact. Factors include, but are not limited to, performance of securities research, analysis, selection, and trading conducted independently and separately from USGI. The fact that USGI or any of its affiliates provide advisory and/or administrative services for a U.S. Global Fund or Other USGI-Managed Account advised by a subadviser will not by itself prevent the subadviser from being independent.

Portfolio Manager means any Covered Person who, with respect to any U.S. Global Fund or Other USGI-Managed Account, has or shares with any other person the primary responsibility for the day-to-day management of the investment portfolio of such U.S. Global Fund or Other USGI-Managed Account.

     Defined Securities and Accounts

Covered Security encompasses each of the following (but not an Excepted Security, a Reportable U.S. Global Fund, or USGI Stock each of which is separately defined below):

• any note, stock, treasury stock, shares of a closed-end fund, shares of an exchange-traded fund, interests in a 529 plan, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights;

• any put, call, straddle, option, or privilege on any security (including a certificate of deposit) or on any group or index of securities (including any interest therein or based on the value thereof);

• any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency; or

• in general, any interest or instrument commonly known as a “security,” or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing.

Equivalent Covered Security means, with respect to another security (the “reference security”), any security of the same class as the reference security, as well as any option (including puts as well as calls), warrant, convertible security, subscription or stock appreciation right, or other right or privilege on, for or with respect to the reference security.

Excepted Security means any security issued by the Government of the United States, bankers’ acceptance, bank certificate of deposit, commercial paper, share of any open-end money market fund, or share of any other registered open-end investment company (other than a Reportable U.S. Global Fund or an exchange-traded fund). In accordance with interpretations of the SEC:

(i)

“security issued by the Government of the United States” shall NOT be deemed to include any indirect obligations of the Government of the United States (so-called “agency” obligations) with a remaining maturity in excess of 397 calendar days (e.g., FNMA and FHLMC), but shall be deemed to include any obligations directly issued or guaranteed by the Government of the United States, irrespective of the obligation’s initial or remaining maturity (e.g., U.S. Treasury and GNMA); and

(ii)

certain so-called “money-market instruments,” including conventional repurchase agreements, U.S. Government agency obligations and obligations issued or guaranteed by foreign governments maturing within 397 calendar days from date of purchase, are also deemed to be excepted securities.

Non-Discretionary Account means any account over which a Covered Person has given full investment discretion to a third party, retaining no ability to influence specific trades.

Other USGI-Managed Account means any person (besides the U.S. Global Funds) who has a current advisory agreement with USGI. Other USGI-Managed Account shall include any partnership or limited liability company of which USGI, or an affiliate thereof, is a general partner or managing member.

Reportable U.S. Global Funds means any U.S. Global Fund, other than U.S. Global money market funds.

USGI Stock means securities issued by USGI.

U.S. Global Funds means each and all of the following registered investment companies currently advised by USGI, together with any series or portfolio thereof:

• U.S. Global Accolade Funds

• U.S. Global Investors Funds

     Defined Transactions

Excessive Trading is defined as either (i) transactions in a Reportable U.S. Global Fund (other than the U.S. Government Securities Savings Fund or the U.S. Treasury Securities Cash Fund) that violate any short-term trading restriction described in each Reportable U.S. Global Fund’s

prospectus or (ii) a transaction in a Reportable U.S. Global Fund (other than the U.S. Government Securities Savings Fund or the U.S. Treasury Securities Cash Fund) which, when matched (on either a purchase-and-sale, or sale-and-purchase, basis) with any other such transaction (other than a transaction made pursuant to an automatic dividend reinvestment or automatic investment plan) by or on behalf of the same person in the same Reportable U.S. Global Fund (other than the U.S. Government Securities Savings Fund or the U.S. Treasury Securities Cash Fund) occurring within thirty (30) calendar days before or after the subject transaction, regardless of whether such transactions occur across multiple accounts in the same Reportable U.S. Global Fund.

Initial Public Offering means an offering of securities registered under the Securities Act of 1933, the issuer of which, immediately before the registration, was not subject to the reporting requirements of Sections 13 or 15(d) of the Exchange Act, or a similar initial offering of securities under the laws of a foreign country.

Limited Offering means an offering that is exempt from registration under state securities laws and under the Securities Act of 1933, such as transactions by an issuer not involving a public offering or sales of securities to accredited investors, or sales of securities to a limited number of investors or in limited dollar amounts, or a similar offering of securities under the laws of a foreign country.

Personal Securities Transaction means the execution, either directly or indirectly, of any “purchase or sale of a security.”

Purchase Or Sale Of A Covered Security shall include any bargain, contract or other arrangement including the writing of an option to purchase or sell a Covered Security, by which a person (other than a U.S. Global Fund or Other USGI-Managed Account) purchases, buys or otherwise acquires, or sells or otherwise disposes of, a security in which he or she currently has or thereby acquires any direct or indirect Beneficial Ownership interest.

Excepted Transaction means any transaction excepted from the definition of Purchase Or Sale Of A Covered Security by this Code and includes any purchase or sale of a security:

(a) involving a security or securities account over which a person has no direct or indirect influence or control;

(b) which is non-volitional on the part of the person by or for whom the transaction is effected;

(c) which is effected pursuant to an automatic dividend reinvestment plan; or

(d) involving either:

a.	the purchase of a security effected upon the exercise of one or more rights issued by an issuer pro rata to all holders of a class of its securities, if and only to the extent to which such rights were acquired directly from such issuer; or
b.	the sale of any such rights so acquired.

Beneficial Ownership is interpreted in the same manner as it would be under Rule 16a-1(a)(2) under the Exchange Act, as amended, in determining whether a person is subject to the provisions of Section 16 except that the determination of direct or indirect Beneficial Ownership shall apply to all securities which a Covered Person has or acquires. For example, in addition to a person’s

own accounts, the term Beneficial Ownership encompasses securities held in the name of a spouse or equivalent domestic partnership, minor children, a relative sharing your home, or certain trusts under which you or a related party is a beneficiary, or held under other arrangements indicating a share of financial interests.

Specific examples of the types of accounts over which a Covered Person generally is deemed to have Beneficial Ownership include the following:

(a) The person’s spouse, minor children, or any other relatives sharing the person’s household;

(b) A trust in which the person has a beneficial interest, unless such person has no direct or indirect control over the trust;

(c) A trust as to which the person is a trustee;

(d) A revocable trust as to which the person is a settlor;

(e) A corporation of which the person is an officer, director or 10% or greater stockholder; or

(f) A partnership of which the person is a partner (including most investment clubs) unless the person has no direct or indirect control over the partnership.

Short-Term Matched Profit Transaction means the combination of any “personal securities transaction” (the subject transaction) in a Covered Security which, when matched (on either a purchase-and-sale, or sale-and-purchase, basis) with any other such transaction by or on behalf of the same person in the same (or any “equivalent”) Covered Security or Equivalent Covered Security occurring within sixty (60) calendar days before or after the subject transaction, results in actual trading profit for the person.

      Other Definitions

Chief Compliance Officer means the officer of USGI designated by vote of USGI’s Board of Directors to receive reports and take certain actions as provided in this Code.

Federal Securities Laws means the Securities Act of 1933, the Exchange Act, the Sarbanes-Oxley Act of 2002, the Investment Company Act of 1940, the Investment Advisers Act of 1940, Title V of the Gramm-Leach-Bliley Act, any rules adopted by the SEC under any of these statutes, the Bank Secrecy Act as it applies to funds and investment advisers, and any rules adopted thereunder by the SEC or the Department of the Treasury.

Review Committee means the USGI committee which consists of USGI’s Chief Executive Officer/Chief Investment Officer, President/General Counsel, and Chief Compliance Officer. Should the committee meet to discuss a transaction involving a USGI proprietary account or a transaction involving any of the committee members, a USGI Director, as nominated by the Board of Directors, will take the place of that committee member.

SEC means the Securities and Exchange Commission.

APPENDIX B

Quarterly Certification

     In my capacity as Director of U.S. Global Investors, Inc. (“USGI”), I hereby certify that during the previous calendar quarter:

• I did not have access to or knowledge of nonpublic information regarding any USGI client’s purchase or sale of securities or the portfolio holdings of mutual funds affiliated with USGI;

• I neither was involved in making securities recommendations to USGI clients nor did I have access to any such nonpublic recommendations; and

• I engaged in and reported any personal securities transactions in USGI stock in accordance with the applicable provisions of the USGI Code of Ethics.

Director 

Date 

EX-21

Exhibit 21 — Subsidiaries of the Company, Jurisdiction of Incorporation, and Percentage of Ownership

1.	United Shareholder Services, Inc. — incorporated in Texas and wholly owned by the Company
2.	U.S. Global Investors (Bermuda) Ltd., incorporated in Bermuda and wholly owned by the Company
3.	U.S. Global Investors (Guernsey) Limited — incorporated in Guernsey, Channel Islands, and wholly owned by the Company
4.	U.S. Global Brokerage, Inc. — incorporated in Texas and wholly owned by the Company

EX-31.1

Exhibit 31.1 — Rule 13a — 14(a) Certifications
(under Section 302 of the Sarbanes-Oxley Act of 2002)

I, Frank E. Holmes, the principal executive officer of U.S. Global Investors, Inc., certify that:

1.	I have reviewed this annual report on Form 10-K of U.S. Global Investors, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d — 15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: September 11, 2008
 

/s/ Frank E. Holmes  

Frank E. Holmes 

Chief Executive Officer 

65

Rule 13a — 14(a) Certifications
(under Section 302 of the Sarbanes-Oxley Act of 2002)

I, Catherine A. Rademacher, the principal financial officer of U.S. Global Investors, Inc., certify that:

1.	I have reviewed this annual report on Form 10-K of U.S. Global Investors, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d — 15(f) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: September 11, 2008
 

/s/ Catherine A. Rademacher  

Catherine A. Rademacher 

Chief Financial Officer 

66

EX-32.1

Exhibit 32.1 — Section 1350 Certifications
(under Section 906 of the Sarbanes-Oxley Act of 2002)

In connection with the Annual Report of U.S. Global Investors, Inc. (the Company) on Form 10-K for the year ending June 30, 2008 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Frank E. Holmes, Chief Executive Officer of the Company, hereby certify to my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: September 11, 2008
 

/s/ Frank E. Holmes  

Frank E. Holmes 

Chief Executive Officer 

A signed original of the written statement required by Section 906 has been provided to U.S. Global Investors, Inc. and will be retained by U.S. Global Investors, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

67

Section 1350 Certifications
(under Section 906 of the Sarbanes-Oxley Act of 2002)

In connection with the Annual Report of U.S. Global Investors, Inc. (the Company) on Form 10-K for the year ending June 30, 2008, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Catherine A. Rademacher, Chief Financial Officer of the Company, hereby certify to my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: September 11, 2008
 

/s/ Catherine A. Rademacher  

Catherine A. Rademacher 

Chief Financial Officer 

A signed original of the written statement required by Section 906 has been provided to U.S. Global Investors, Inc. and will be retained by U.S. Global Investors, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

68