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, 2007

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, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o                    Accelerated filer þ                    Non-accelerated filer 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 5,441,054 (post-split) shares of nonvoting class A common stock held by nonaffiliates of the registrant was $93,034,297, based on the last sale price quoted on NASDAQ (adjusted for the split) as of December 29, 2006, the last business day of the registrant’s most recently completed second fiscal year. 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 209,178 (post-split) shares of the class C common stock held by nonaffiliates of the registrant on December 29, 2006 (based on the last sale price of the class C common stock in a private transaction) was $52,295. 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 24, 2007, there were 13,656,401 (post-split) shares of Registrant’s class A nonvoting common stock issued and 12,987,211 (post-split) shares of Registrant’s class A nonvoting common stock issued and outstanding, no shares of Registrant’s class B nonvoting common stock outstanding, and 2,255,147 (post-split) 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	7
Item 2. Properties	7
Item 3. Legal Proceedings	7
Item 4. Submission of Matters to a Vote of Security Holders	7
Part II of Annual Report on Form 10-K	8
Item 5. Market for Company’s Common Equity and Related Shareholder Matters	8
Item 6. Selected Financial Data	11
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 7A. Quantitative and Qualitative Disclosures About Market Risk	22
Item 8. Financial Statements and Supplementary Data	23
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	43
Item 9A. Controls and Procedures	44
Item 9B. Other Information	44
Part III of Annual Report on Form 10-K	45
Item 10. Directors and Executive Officers of the Company	45
Item 11. Executive Compensation	47
Item 12. Security Ownership of Certain Beneficial Owners and Management	56
Item 13. Certain Relationships and Related Transactions	58
Item 14. Principal Accounting Fees and Services	59
Part IV of Annual Report on Form 10-K	60
Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K	60
Signatures	65
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 Credit Agreement
Note Modification Agreement
Transfer Agency Agreement
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 four 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. In addition, the Company provides investment advisory services to several offshore institutional clients.

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Assets Under Management (AUM)

			AUM at June 30, 2007
Fund	Ticker	Category	(in thousands)
U.S. Global Investors Funds
All American Equity	GBTFX	Large cap core	$	23,589
China Region	USCOX	China region		93,787
Global Resources	PSPFX	Natural resources		1,382,845
Gold Shares	USERX	Gold oriented		178,488
Near-Term Tax Free	NEARX	Short / intermediate municipal debt		13,354
Tax Free	USUTX	General municipal debt		15,899
U.S. Government Securities Savings	UGSXX	U.S. Government money market		468,777
U.S. Treasury Securities Cash	USTXX	U.S. Government money market		115,234
World Precious Minerals	UNWPX	Gold and precious minerals		924,820
U.S. Global Accolade Funds
Eastern European	EUROX	Emerging markets		1,393,152
Global Emerging Markets	GEMFX	Emerging markets		40,040
Holmes Growth	ACBGX	Mid-cap growth		63,182
MegaTrends	MEGAX	Large-cap growth		16,197
Total SEC-Registered Funds				4,729,364
Other Advisory Clients				299,578
Total AUM at June 30, 2007			$	5,028,942

     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 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 mutual 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. 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 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 fund 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

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USGIF and USGAF will meet to consider renewal of the applicable agreements in February and May 2008, respectively. Management anticipates that these Advisory Agreements will be renewed.

In addition to providing mutual fund management and transfer agent services to USGIF and USGAF funds, the Company provides advisory services to four offshore clients: the Meridian Global Gold and Resources Fund Ltd.; the Meridian Global Energy and Resources Fund; the U.S. Global Investors Balanced Natural Resources Fund, Ltd.; and Endeavour Mining Capital Corporation’s equity investment portfolio.

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; (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 transfer agency agreements will be considered for renewal by the boards of trustees of USGIF and of USGAF on an annual basis, and management anticipates that the transfer agency agreements will be renewed.

Brokerage Services. The Company has registered its wholly owned subsidiary, U.S. Global Brokerage, Inc. (“USGB”), with the National Association of Securities Dealers (“NASD”), the Financial Industry Regulatory Authority (“FINRA”), 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. Effective September 3, 1998, USGB became the distributor for USGIF and USGAF fund shares. For the fiscal year ended June 30, 2007, the Company capitalized USGB with approximately $3,085,000 to cover the costs associated with continuing operations.

Mailing Services. A&B Mailers, Inc., a wholly owned subsidiary of the Company, provides mail-handling services to various entities. A&B Mailers’ 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.

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     Employees

As of June 30, 2007, U.S. Global and its subsidiaries employed 76 full-time employees and 6 part-time employees; as of June 30, 2006, it employed 77 full-time employees and 1 part-time employee. 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 2006 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 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 a 12b-1 plan. 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 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 are 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). 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 four 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 it 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 penalties for violation of the laws and regulations applicable to the Company and its subsidiaries are fines, imprisonment, injunctions, revocation of

4

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 is a registered investment adviser subject to regulation by the SEC pursuant to the Investment Advisers Act of 1940, the Investment Company Act of 1940, and the Securities Exchange Act of 1934 (“1934 Act”). USSI is also subject to regulation by the SEC under the 1934 Act. USGB is subject to regulation by the SEC under the 1934 Act and regulation by the NASD/FINRA, 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 the NASD/FINRA upon request. Moreover, the funds managed by the Company are subject to regulation and periodic reporting under the Investment Company Act of 1940 and, with respect to their continuous public offering of shares, the registration provisions of the Securities Act of 1933.

     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 four offshore clients. Even though the Company views its relationship with the four offshore clients as stable, the Company could be adversely affected if these relationships ended.

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Item 1A. Risk Factors

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.

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.

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

The Company is subject to a variety of federal securities laws and agencies, including the Investment Advisers Act of 1940, as amended, the SEC, the NASD/FINRA, NASDAQ, the Sarbanes-Oxley Act of 2002, and the USA PATRIOT Act of 2001. 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 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 six 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.

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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 fiscal 2007.

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Part II of Annual Report on Form 10-K

Item 5. Market for Company’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, 2007, and 2006. 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)

	2007				2006
	High ($)		Low ($)		High ($)		Low ($)
First quarter (9/30)		17.41		8.77		3.46		2.30
Second quarter (12/31)		36.31		11.28		8.25		3.05
Third quarter (3/31)		34.95		17.49		10.00		5.96
Fourth quarter (6/30)		34.90		19.98		14.07		7.38

     Holders

On August 24, 2007, there were approximately 219 holders of record of class A common stock, no holders of record of class B common stock, and 59 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 $.25 per share dividend (post-split). On May 31, 2007, the board of directors authorized a dividend of $.01 per share per month beginning in June 2007. The monthly dividend is authorized through December 2007 and will be considered for continuation at that time by the board. Prior to that, the Company had not paid cash dividends on its class C common stock during the previous twenty-two fiscal years and had never paid cash dividends on its class A common stock. Payment of cash dividends

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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. The following table provides information regarding the Company’s repurchases of shares of its class A common stock during the fiscal year ended June 30, 2007. There were no repurchases of class B or class C common stock during the fiscal year. Amounts have been restated to reflect the stock split that occurred in March 2007.

Issuer Purchases of Equity Securities
Fiscal Year Ended 6/30/07

	Total						Total Number of	Maximum Number of
	Number of		Total		Average		Shares Purchased as	Shares that May
	Shares		Amount		Price Paid		Part of Publicly	Yet Be Purchased
Period	Purchased		Purchased		Per Share		Announced Plan	Under the Plan
07-01-06 to 07-31-06		—	$	—	$	—	N/A	N/A
08-01-06 to 08-31-06		88		1,005		11.41	N/A	N/A
09-01-06 to 09-30-06		264		4,340		16.44	N/A	N/A
10-01-06 to 10-31-06		—		—		—	N/A	N/A
11-01-06 to 11-30-06		16,304		413,847		25.38	N/A	N/A
12-01-06 to 12-31-06		8,908		288,494		32.39	N/A	N/A
01-01-07 to 01-31-07		—		—		—	N/A	N/A
02-01-07 to 02-28-07		70		1,545		22.07	N/A	N/A
03-01-07 to 03-31-07		—		—		—	N/A	N/A
04-01-07 to 04-30-07		4,000		127,480		31.87	N/A	N/A
05-01-07 to 05-31-07		—		—		—	N/A	N/A
06-01-07 to 06-30-07		—		—		—	N/A	N/A
Total		29,634	$	836,711	$	28.23	N/A	N/A

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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 both the S&P 500 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, 2002, 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, 2007, 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. The selected financial data as of June 30, 2003, and the year then ended is derived from the Company’s Consolidated Financial Statements. Earnings per share have been restated for prior years to reflect the stock split that occurred in March 2007.

Selected	Year ended June 30,
Financial Data	2007			2006		2005			2004			2003
Revenues	$	58,603,637		$	44,853,588	$	16,981,339		$	12,983,500		$	7,478,936
Expenses		37,257,889			28,986,248		14,744,897			10,141,019			7,817,883
Income (loss) before gain on litigation settlement and income taxes		21,345,748			15,867,340		2,236,442			2,842,481			(338,947	)
Gain on litigation settlement		—			—		—			—			371,057
Income tax expense (benefit)		7,586,499			5,431,978		789,971			675,839			(10,502	)
Net income		13,759,249			10,435,362	$	1,446,471		$	2,166,642		$	42,612
Basic income per share		0.91			0.69		0.10			0.15			0.00
Working capital		27,925,318			18,275,909		7,078,554			5,267,573			3,562,885
Total assets		39,793,113			29,046,853		12,102,515			9,356,596			7,439,687
Long-term obligations		—			—		—			—			988,536
Dividends per common share 1		0.26			—		—			—			—
Shareholders’ equity		31,095,202			20,543,211		9,903,088			8,485,346			5,673,689
Net cash provided by operations		8,817,821			5,482,567		986,120			2,669,928			128,916
Net cash provided by (used in) investing activities		(746,787	)		265,053		(67,634	)		(30,328	)		147,470
Net cash provided by (used in) financing activities		(3,272,657	)		494,245		64,016			(970,167	)		(103,079	)

¹ A special dividend of $.25 per share (post-split) was paid on March 29, 2007, when a two-for-one stock split became effective. Subsequently, the board of directors authorized a dividend of $.01 per share per month beginning in June 2007.

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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:

(1) the Company offers a broad range of investment management products and services to meet the needs of individual and institutional investors, and (2) 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 and four offshore clients. Although the Company generates the majority of its revenues from this segment, the Company holds a significant amount of its total assets in investments. As of June 30, 2007, the Company held approximately $7.2 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 2007, average assets under management for the SEC-registered funds increased 33.9% to $4.6 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)
	2007		2006		% Change			2006		2005		% Change
USGIF — Money Market	$	564	$	526		7.2	%	$	526	$	547		(3.8	%)
USGIF — Other		2,558		1,630		56.9	%		1,630		721		126.1	%
USGIF — Total		3,122		2,156		44.8	%		2,156		1,268		70.0	%
USGAF		1,488		1,286		15.7	%		1,286		505		154.7	%
Total SEC-Registered Funds		4,610		3,442		33.9	%		3,442		1,773		94.1	%
Other Advisory Clients		236		61		286.9	%		61		4		1425.0	%
Total Average Assets Under Management	$	4,846	$	3,503		38.3	%	$	3,503	$	1,777		97.1	%

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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, 2007, and June 30, 2006.

								Unrealized
								holding gains on
								available-for-sale
					Unrealized Gain			securities, net of
Securities	Market Value		Cost		(Loss)			tax
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
Trading 1	$	4,659,824	$	4,011,961	$	647,863			N/A
Available for sale 2		82,202		45,444		36,758		$	24,259
Total at June 30, 2006	$	4,742,026	$	4,057,405	$	684,621

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, 2007, and 2006, the Company held approximately $2.0 million and $1.6 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 varies 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 2007, 2006, and 2005, the Company had net realized gains (losses) of approximately $737,000, $828,000, and ($184,000), 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.

	2007		2006		% Change			2006		2005		% Change
Net income (in thousands)	$	13,759	$	10,435		31.9	%	$	10,435	$	1,446		621.6	%
Net income per share
Basic		.91		.69		31.9	%		.69		.10		590.0	%
Diluted		.90		.69		30.4	%		.69		.10		590.0	%
Weighted average shares outstanding (in thousands)
Basic		15,162		15,032					15,032		14,960
Diluted		15,242		15,146					15,146		15,129

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

The Company posted net after-tax income of $13,759,249 ($.91 per share) for the year ended June 30, 2007, compared with net after-tax income of $10,435,362 ($.69 per share) for the year ended June 30, 2006. This 31.9% increase in profitability is primarily attributable to the following factors:

• The Company’s advisory fees, boosted primarily by the positive impact of market gains and shareholder investments in natural resource and foreign equity funds, increased by 33%, or $12.4 million; and

• Transfer agent fees increased by 41%, or $2.2 million, 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.

These factors were somewhat offset by an overall increase in expenses of 28.5% in fiscal year 2007 primarily driven by the following:

• Omnibus fees increased by 54%, or $2.6 million, due to increased asset inflows through broker/dealer platforms;

• Driven by strong mutual fund and offshore fund performance, employee compensation expense increased by 21%, or $2.2 million, primarily due to higher salaries and incentive bonuses;

• General and administrative expenses increased 37%, or $2.0 million, primarily as a result of increased consulting, legal, audit and accounting fees; and,

• Consistent with continued growth in the Eastern European Fund, subadvisory fees increased by 17%, or $1.3 million.

Year Ended June 30, 2006, Compared with Year Ended June 30, 2005

The Company posted net after-tax income of $10,435,362 ($0.69 per share) for the year ended June 30, 2006, compared with net after-tax income of $1,446,471 ($0.10 per share) for the year ended June 30, 2005. The increase in profitability in fiscal year 2006 primarily resulted from an increase of $23.1 million in advisory fees, $2.6 million in investment income and $2.1 million in transfer agent fees. These factors were somewhat offset by an increase of $4.9 million in subadvisory fees, $4.5 million in employee compensation, $3.0 million in omnibus fees and $1.6 million in general and administrative expenses.

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Revenues

(Dollars in Thousands)	2007		2006		% Change			2006		2005			% Change
Investment advisory fees:
USGIF — Money market	$	1,776	$	1,687		5.3	%	$	1,687	$	1,638			3.0	%
USGIF — Other		16,296		11,068		47.2	%		11,068		6,010			84.2	%
USGIF — Total		18,072		12,755		41.7	%		12,755		7,648			66.8	%
USGAF		18,350		15,767		16.4	%		15,767		6,059			160.2	%
Other advisory fees		13,095		8,622		51.9	%		8,622		299			2783.5	%
Total investment advisory fees		49,517		37,144		33.3	%		37,144		14,006			165.2	%
Transfer agent fees		7,537		5,332		41.4	%		5,332		3,187			67.3	%
Investment income (loss)		1,357		2,203		(38.4	)		2,203		(351	)		727.7	%
Other revenues		193		175		10.3	%		175		139			25.9	%
Total	$	58,604	$	44,854		30.7	%	$	44,854	$	16,981			164.1	%

As a percentage of total revenues, SEC-registered mutual fund advisory fees account for 62%, offshore investment advisory fees constitute 22%, transfer agent fees account for 13%, and investment income and miscellaneous income together make up the remaining 3%.

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 2007 accounted for 74% of the Company’s total advisory fees, and offshore investment advisory fees, which accounted for 26% 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 $7.9 million, or 28%, in fiscal 2007 over fiscal 2006. 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 one USGAF fund, in particular the money market and fixed income funds, through November 1, 2007, and February 28, 2008, 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 $1,178,000, $1,181,000, and $1,332,000, in 2007, 2006, and 2005, 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.

Offshore investment advisory fees increased by $4.5 million, or 52%, in fiscal 2007 compared to fiscal 2006. Due to potential market volatility, performance fees are subject to fluctuation and are not necessarily predictive of future revenue.

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

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recorded fees totaling $1,690,321 and $1,353,454 for the years ended June 30, 2007, and 2006, respectively.

In August 2006, the Company began providing 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 $222,981 for the year ended June 30, 2007.

The Company provides advisory services to the U.S. Global Investors Balanced Natural Resources Fund, Ltd., an offshore fund. For these services, the Company is paid a monthly advisory fee and a quarterly performance fee, if any. The Company recorded fees totaling $140,717 and $212,828 for the years ended June 30, 2007, and 2006, respectively.

The Company provides advisory services to Endeavour Mining Capital Corp., a Cayman corporation traded on the Toronto Stock Exchange. 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 $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 Company recorded a total of $7,055,267 comprised of $6,611,582 in annual performance fees and $443,685 in monthly advisory fees for the year ended June 30, 2006. 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.

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 compensation for services rendered as transfer agent and is reimbursed for out-of-pocket expenses associated with processing shareholder information. Effective April 1, 2007, the transfer agency agreement between USSI and the funds was amended to incorporate transaction- and activity-based fees. 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 2007 and 2006 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 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 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, $28,655 and $106,000 for the fiscal years ending 2007, 2006 and 2005, respectively.

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The increase in investment income of $2.6 million in fiscal 2006 compared to fiscal 2005 was primarily attributable to a $935,000 increase in realized gains and a $1.3 million increase in unrealized gains on corporate investments.

Expenses

(Dollars in Thousands)	2007		2006		% Change			2006		2005		% Change
Employee compensation and benefits	$	12,560	$	10,359		21.2	%	$	10,359	$	5,891		75.8	%
Subadvisory fees		8,935		7,619		17.3	%		7,619		2,720		180.1	%
General and administrative		7,482		5,460		37.0	%		5,460		3,821		42.9	%
Omnibus fees		7,528		4,882		54.2	%		4,882		1,833		166.3	%
Advertising		509		513		(0.8	)%		513		370		38.7	%
Depreciation		244		153		59.5	%		153		110		39.0	%
Total	$	37,258	$	28,986		28.5	%	$	28,986	$	14,745		96.6	%

Employee Compensation and Benefits. Employee compensation and benefits increased by $2.2 million, or 21%, in 2007 and $4.5 million, or 75.8%, in fiscal 2006, 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 three funds that are subadvised by third-party managers. The increases in subadvisory fees of $1.3 million and $4.9 million in fiscal years 2007 and 2006, respectively, resulted primarily from growth in assets in the Eastern European Fund.

General and Administrative. The increase in general and administrative expenses of $2.0 million, or 37%, in fiscal year 2007, resulted primarily from increased consulting, legal, audit and accounting fees. The increase in general and administrative expenses of $1.6 million, or 42.9%, in fiscal year 2006 is primarily attributable to increased consulting, auditing and accounting fees primarily related to first-year implementation of Sarbanes-Oxley and other compliance costs.

Omnibus 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 omnibus fee expenses have increased by $2.6 million and $3.0 million during fiscal years 2007 and 2006, 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 omnibus fees on those assets.

Advertising. Advertising expense was essentially flat in fiscal 2007 and increased approximately $143,000 in fiscal 2006.

Depreciation. Depreciation expense increased by $91,000 in fiscal year 2007 and $43,000 in fiscal 2006 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 bases 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, 2007, 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 amount will not be realized. Management included no valuation allowance at June 30, 2007.

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Contractual Obligations

A summary of contractual obligations of the Company as of June 30, 2007, 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	$	97,185	$	88,512	$	8,673	$	—		—
Contractual Obligations		200,000		60,000		120,000		20,000		—
Total	$	297,185	$	148,512	$	128,673	$	20,000		—

Operating leases consist of telephone equipment, printers, and copiers leased from several vendors. Contractual obligations consist of agreements to fund educational programs. 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.

The Company’s board of directors also approved a dividend of $.01 per share per month to stockholders beginning in June 2007. The monthly dividend is authorized through December 2007 and will be considered for continuation at that time by the board. The total amount of cash dividends to be paid to class A and class C shareholders from July 2007 to December 2007 will be approximately $942,000.

Liquidity and Capital Resources

At fiscal year end, the Company had net working capital (current assets minus current liabilities) of approximately $27.9 million and a current ratio (current assets divided by current liabilities) of 4.2 to 1. With approximately $14.9 million in cash and cash equivalents and $7.2 million in marketable securities, the Company has adequate liquidity to meet its current obligations. Total shareholders’ equity was approximately $31.1 million, with cash, cash equivalents, and marketable securities comprising 55.4% 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, 2008, and June 1, 2008, 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.

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 accounting principles generally accepted 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 on-going 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

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assumptions and estimates involving significant judgment are those relating to valuation of security investments, income taxes and valuation of stock-based compensation.

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 (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.

Valuation of Investments. 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.

Taxes. The Company accounts for income taxes in accordance with SFAS No. 109, “Accounting for Income Taxes.” The objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in an entity’s financial statements or tax returns. Judgment is required in assessing the future tax consequences of events that have been recognized in the Company’s financial statements or tax returns.

Stock-Based Compensation. In December 2004, the FASB issued SFAS No. 123 (revised 2004), “Share-Based Payment” (SFAS 123R). SFAS 123R eliminated the alternative to use the intrinsic value method of accounting that was provided in SFAS 123, which generally resulted in no compensation expense recorded in the financial statements related to the issuance of equity awards to employees. SFAS 123R required that the cost resulting from all share-based payment transactions be recognized in the financial statements. SFAS 123R established fair value as the measurement objective in accounting for share-based payment arrangements and required all companies to apply a fair-value-based measurement method in accounting for generally all share-based payment transactions with employees.

On July 1, 2005, the Company adopted SFAS 123R using a modified prospective application, as permitted under SFAS 123R. Accordingly, prior period amounts have not been restated. Under this application, the Company is required to record compensation expense for all awards granted after the

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date of adoption and for the unvested portion of previously granted awards that remain outstanding at the date of adoption.

Revenue Recognition on Advisory Contract. In the third quarter of fiscal year 2006, the Company began providing investment advisory services for Endeavour Mining Capital Corp. (EMCC), an offshore company. 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 $8,994,074 in annual performance fees and $2,046,976 in advisory fees for the year ended June 30, 2007.

Related Party Transactions

The Company had $19.9 million and $12.6 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, 2007, and 2006, respectively. The Company recorded $883,247 in dividend income and $170,388 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 $1,690,321 and $1,353,454 for the years ended June 30, 2007 and 2006, 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 fund.

In August 2006, the Company began providing 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 $222,981 for the year ended June 30, 2007. 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, 2007 with an estimated fair value of approximately $600,490.

The Company provides advisory services to the U.S. Global Investors Balanced Natural Resources Fund, Ltd., an offshore fund. For these services, the Company is paid a monthly advisory fee and a quarterly performance fee, if any. The Company recorded fees totaling $140,717 and $212,828 for the years ended June 30, 2007 and 2006, respectively. Mr. Holmes is a director of U.S. Global Investors Balanced Natural Resources Fund Ltd. The Company also owns a position in the fund at June 30, 2007, with an estimated fair value of approximately $760,845.

The Company provides investment advisory services to Endeavour Mining Capital Corp., a Cayman corporation traded on the Toronto Stock Exchange. 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 $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 Company recorded a total of $7,055,267 comprised of $6,611,582 in annual performance fees and $443,685 in monthly advisory fees for the year ended June 30, 2006. The performance fees for this

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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 Endeavour Mining Capital Corp.

The Company owns a position in Charlemagne Capital Limited at June 30, 2007, with an estimated fair value of approximately $739,977, 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 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. The Company is currently evaluating the impact, if any, that adopting SFAS No. 157 will have on its financial position and results of operation.

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 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS 109 by prescribing a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken on a tax return. If a tax position is more likely than not to be sustained upon examination, then an enterprise would recognize in its financial statements the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement of the tax position. FIN 48 will be effective for the fiscal years beginning after December 15, 2006. The provisions of FIN 48 are required to be applied to all tax positions in all open tax years. The Company is in the process of evaluating the impact, if any, of adoption on the Company’s financial position and results of operation.

In September 2006, the SEC issued Staff Accounting Bulletin (SAB) Topic 1N, Financial Statements — Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements (“SAB 108”). SAB 108 addresses how the effects of prior-year uncorrected misstatements should be taken into consideration when quantifying misstatements in current-year financial statements. It requires quantification of misstatements using both the balance sheet and income statement approaches and evaluation of whether either approach results in quantifying an error that is material in light of relevant quantitative and qualitative factors. SAB 108 does not change the SEC’s previous guidance on evaluating the materiality of misstatements. When the effect of initial adoption is determined to be material, the guidance allows registrants to record that effect as a cumulative-effect adjustment to beginning-of-year retained earnings. The requirements are effective for annual financial statements covering the first fiscal year ending after November 15, 2006. The adoption of SAB 108 did not have a material impact on the Company’s financial position, results of income or cash flows.

21

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, 2007, 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		Hypothetical	Hypothetical Price		Equity, Net
	June 30, 2007 ($)		Percentage Change	Change ($)		of Tax ($)
Trading securities 1		6,334,474	25% increase		7,918,093		1,045,188
			25% decrease		4,750,856		(1,045,188	)
Available-for-sale 2		856,573	25% increase		1,070,716		141,335
			25% decrease		642,430		(141,335	)

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.

22

Item 8. Financial Statements and Supplementary Data

Management’s Annual Report on Internal Control Over Financial Reporting

U.S. Global Investors, Inc.’s (Company) management is responsible for the preparation, integrity and fair presentation of the consolidated financial statements in this annual report. These consolidated financial statements and notes have been prepared in conformity with U.S. generally accepted accounting principles from accounting records which management believes fairly and accurately reflect the Company’s operations and financial position. The consolidated financial statements include amounts based on management’s best estimates and judgments considering currently available information and management’s view of current conditions and circumstances.

Management is responsible for establishing and maintaining adequate internal control over financial reporting that is designed to provide a reasonable assurance of the reliability of financial reporting and the preparation of financial statements in accordance with U.S. generally accepted accounting principles. The system of internal control over financial reporting as it relates to the financial statements is evaluated for effectiveness by management and tested for reliability. Actions are taken to correct potential deficiencies as they are identified. Any system of internal control, no matter how well designed, has inherent limitations, including the possibility that a control can be circumvented or overridden and misstatements due to error or fraud may occur and not be detected. Also, because of changes in conditions, internal control effectiveness may vary over time. Accordingly, even an effective system of internal control will provide only reasonable assurance with respect to financial statement preparation.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of June 30, 2007, in relation to criteria for effective internal control over financial reporting as described in “Internal Control — Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management concluded that, as of June 30, 2007, its system of internal control over financial reporting is properly designed and operating effectively to achieve the criteria of the “Internal Control — Integrated Framework.” BDO Seidman, LLP, independent registered public accounting firm, has audited the consolidated financial statements included in this annual report and has audited the Company’s internal control over financial reporting.

U.S. Global Investors, Inc.
/s/ Frank E. Holmes	/s/ Catherine A. Rademacher
Frank E. Holmes Chief Executive Officer and Chief Investment Officer	Catherine A. Rademacher Chief Financial Officer
September 12, 2007

23

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. (the “Company”) internal control over financial reporting as of June 30, 2007, 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, 2007, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the accompanying consolidated balances sheets of U.S. Global Investors, Inc. as of June 30, 2007 and 2006, 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, 2007 and our report dated September 12, 2007, expressed an unqualified opinion thereon.

/s/ BDO Seidman, LLP  

BDO Seidman, LLP 

Dallas, Texas 

September 12, 2007

24

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. as of June 30, 2007 and 2006 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, 2007. 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. An audit includes 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 financial statement presentation. 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, 2007 and 2006, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2007, 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, 2007, 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 12, 2007, expressed an unqualified opinion thereon.

As more fully described in Note 2 to the consolidated financial statements, effective July 1, 2005, U.S. Global Investors, Inc. adopted the provisions of SFAS 123(R), “Share-Based Payment.”

/s/ BDO Seidman, LLP  

BDO Seidman, LLP 

Dallas, Texas 

September 12, 2007

25

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

	June 30,
	2007			2006
Assets
Current Assets
Cash and cash equivalents	$	14,854,420		$	10,056,043
Trading securities, at fair value		6,334,474			4,659,824
Receivables
Advisory, net of allowance		14,654,536			11,290,240
Employees		4,638			7,669
Other		7,382			184,962
Prepaid expenses		767,779			580,813
Total Current Assets		36,623,229			26,779,551
Net Property and Equipment		2,260,288			2,122,889
Other Assets
Long-term deferred tax asset		53,023			62,211
Investment securities available-for-sale, at fair value		856,573			82,202
Total Other Assets		909,596			144,413
Total Assets	$	39,793,113		$	29,046,853
Liabilities and Shareholders’ Equity
Current Liabilities
Accounts payable	$	272,564		$	343,364
Accrued compensation and related costs		3,356,488			2,961,836
Deferred tax liability		338,511			178,707
Other accrued expenses		4,730,348			5,019,735
Total Current Liabilities		8,697,911			8,503,642
Total Liabilities		8,697,911			8,503,642
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, 13,620,625 and 12,805,948 shares at June 30, 2007, and 2006, respectively		340,516			320,149
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, 2,290,923 shares and 2,993,600 shares at June 30, 2007, and 2006, respectively		57,273			74,840
Additional paid-in capital		13,352,728			11,754,779
Treasury stock, class A shares at cost; 672,867 and 654,114 shares at June 30, 2007, and 2006, respectively		(1,640,792	)		(830,330	)
Accumulated other comprehensive income (loss), net of tax		(5,589	)		24,259
Retained earnings		18,991,066			9,199,514
Total Shareholders’ Equity		31,095,202			20,543,211
Total Liabilities and Shareholders’ Equity	$	39,793,113		$	29,046,853

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

26

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

	Year Ended June 30,
	2007			2006			2005
Revenue
Investment advisory fees	$	49,516,874		$	37,143,150		$	14,006,508
Transfer agent fees		7,537,110			5,332,066			3,187,487
Investment income (loss)		1,356,840			2,203,393			(351,248	)
Other		192,813			174,979			138,592
		58,603,637			44,853,588			16,981,339
Expenses
Employee compensation and benefits		12,560,108			10,359,365			5,891,162
General and administrative		7,481,344			5,460,442			3,821,210
Subadvisory fees		8,935,075			7,618,466			2,719,603
Omnibus fees		7,528,302			4,882,144			1,833,096
Advertising		508,992			513,076			369,927
Depreciation		244,068			152,755			109,899
		37,257,889			28,986,248			14,744,897
Income Before Income Taxes		21,345,748			15,867,340			2,236,442
Provision for Federal Income Taxes
Tax expense		7,586,499			5,431,978			789,971
Net Income		13,759,249			10,435,362			1,446,471
Other comprehensive income, net of tax:
Unrealized gains (losses) on available-for-sale securities arising during period		269,296			(2,473	)		(142,745	)
Less: reclassification adjustment for gains included in net income		(299,144	)		(363,596	)		—
Comprehensive Income	$	13,729,401		$	10,069,293		$	1,303,726
Basic Net Income per Share	$	0.91		$	0.69		$	0.10
Diluted Net Income per Share	$	0.90		$	0.69		$	0.10
Basic weighted average number of common shares outstanding		15,162,492			15,031,578			14,959,996
Diluted weighted average number of common shares outstanding		15,241,534			15,146,230			15,128,538

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

27

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

														Accumulated
	Common		Common			Additional		Retained						Other
	Stock		Stock			Paid-in		Earnings			Treasury			Comprehensive
	(class A)		(class C)			Capital		(Deficit)			Stock			Income (Loss)			Total
Balance at June 30, 2004 (12,623,948 shares of class A; 2,993,600 shares of class C)	$	315,599	$	74,840		$	10,910,053	$	(2,682,319	)	$	(665,901	)	$	533,074		$	8,485,346
Purchase of 5,960 shares of Common Stock (class A)		—		—			—		—			(13,968	)		—			(13,968	)
Reissuance of 30,980 shares of Common Stock (class A)		—		—			33,959		—			29,277			—			63,236
Exercise of 9,000 options for Common Stock (class A)		225		—			14,524		—			—			—			14,749
Recognition of current year portion of deferred compensation		—		—			50,000		—			—			—			50,000
Unrealized gain on securities available-for-sale (net of tax)		—		—			—		—			—			(142,746	)		(142,746	)
Net Income		—		—			—		1,446,471			—			—			1,446,471
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	)
Reissuance of 33,962 shares of Common Stock (class A)		—		—			109,325		—			35,458			—			144,783
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
FAS 123R compensation expense		—		—			26,585		—			—			—			26,585
Unrealized gain (loss) on securities available-for-sale (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	)
Reissuance of 10,881 shares of Common Stock (class A)		—		—			177,433		—			26,248			—			203,681
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		—		—			413,479		—			—			—			413,479
Dividends paid		—		—			—		(3,967,697	)		—			—			(3,967,697	)
FAS 123R compensation expense		—		—			45,245		—			—			—			45,245
Unrealized gain (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

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

28

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

	Year Ended June 30,
	2007			2006			2005
Cash Flow from Operating Activities
Net income	$	13,759,249		$	10,435,362		$	1,446,471
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		244,068			152,755			109,899
Net recognized loss (gain) on securities		(736,860	)		(827,718	)		184,253
Provision for deferred taxes		184,481			551,815			49,624
Deferred compensation		50,000			50,000			50,000
Benefits from tax deduction in excess of stock-based compensation expense		(1,208,822	)		(404,817	)		—
SFAS 123R compensation expense		45,245			26,585			—
Provision for losses on accounts receivable		—			(8,988	)		26,488
Loss on disposal of equipment		—			3,494			889
Changes in assets and liabilities, impacting cash from Operations:
Accounts receivable		(3,183,685	)		(9,154,571	)		(867,701	)
Prepaid expenses and other		(186,966	)		(129,850	)		(143,552	)
Trading securities		(1,392,177	)		(1,741,825	)		(1,018,428	)
Accounts payable and accrued expenses		1,243,288			6,530,325			1,148,177
Total adjustments		(4,941,428	)		(4,952,795	)		(460,351	)
Net cash provided by operations		8,817,821			5,482,567			986,120
Cash Flow from Investing Activities
Purchase of property and equipment		(381,467	)		(510,804	)		(67,634	)
Purchase of available-for-sale securities		(2,072,531	)		(8,420	)		—
Proceeds on sale of available-for-sale securities		1,707,211			784,277			—
Net cash (used in) provided by investing activities		(746,787	)		265,053			(67,634	)
Cash Flow from Financing Activities
Benefits from tax deduction in excess of stock-based compensation expense		1,208,822			404,817			—
Proceeds from issuance or exercise of stock, warrants, and options		322,928			304,624			77,984
Purchase of treasury stock		(836,710	)		(215,196	)		(13,968	)
Dividends paid		(3,967,697	)		—			—
Net cash (used in) provided by financing activities		(3,272,657	)		494,245			64,016
Net Increase in Cash and Cash Equivalents		4,798,377			6,241,865			982,502
Beginning Cash and Cash Equivalents		10,056,043			3,814,178			2,831,676
Ending Cash and Cash Equivalents	$	14,854,420		$	10,056,043		$	3,814,178
Supplemental Disclosures of Cash Flow Information
Cash paid for interest	$	425		$	—		$	81
Cash paid for income taxes	$	7,062,000		$	1,753,000		$	645,251

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

29

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.

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”).

The Company formed two subsidiaries utilized primarily for corporate investment purposes: U.S. Global Investors (Guernsey) Limited (USGG), which was incorporated in Guernsey on August 20, 1993, and U.S. Global Investors (Bermuda) Limited (USBERM) which was incorporated in Bermuda on June 15, 2005.

The Company also provides advisory services to various offshore clients.

Note 2. Significant Accounting Policies

Principles of Consolidation. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries: USSI, A&B, 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.

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

30

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. In December 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 123 (revised 2004), “Share-Based Payment” (SFAS 123R). SFAS 123R eliminated the alternative to use the intrinsic value method of accounting provided in SFAS 123, which generally resulted in no compensation expense recorded in the financial statements related to the issuance of equity awards to employees. SFAS 123R required that the cost resulting from all share-based payment transactions be recognized in the financial statements. SFAS 123R established fair value as the measurement objective in accounting for share-based payment arrangements and required all companies to apply a fair-value-based measurement method in accounting for generally all share-based payment transactions with employees.

On July 1, 2005, the Company adopted SFAS 123R using a modified prospective application, as permitted under SFAS 123R. Accordingly, prior period amounts have not been restated. Under this application, the Company records 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.

Had the Company adopted SFAS No. 123R for the 2005 fiscal year, net income reported of $1,446,471 would have decreased to $1,443,254, with the difference attributable to the difference between $33,000 stock-based employee compensation expense included in reported net income (net of tax) and $36,217 stock-based employee compensation expense under the fair value method (net of tax). Basic and diluted earnings per share of $0.10 would not have changed.

For purposes of pro forma disclosure, the estimated fair value of the options is amortized to expense over the options’ vesting period. The fair value of these options was estimated at the date of the grant using a Black-Scholes option-pricing model. During fiscal 2007, options for 23,000 shares were granted with a fair value, net of tax, of $320,753. During fiscal 2006, an option for 10,000 shares was granted with a fair value, net of tax, of $43,400. During fiscal year 2005, options for 40,000 shares were granted with a fair value, net of tax, of $30,750.

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.

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In June 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109” (FIN 48). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS No. 109 by prescribing a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken on a tax return. If a tax position is more likely than not to be sustained upon examination, then an enterprise would recognize in its financial statements the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement of the tax position. FIN 48 will be effective for the fiscal years beginning after December 15, 2006. The provisions of FIN 48 are required to be applied to all tax positions in all open tax years. The Company is in the process of evaluating the impact, if any, of adoption on the Company’s financial position and results of operation.

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. Revenue shown on the Consolidated Statements of Operations and Comprehensive Income are net of any fee waivers.

In the third quarter of fiscal year 2006, the Company began providing investment advisory services for Endeavour Mining Capital Corp. (EMCC), an offshore company. 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 $8,994,074 in annual performance fees and $2,046,976 in advisory fees related to the EMCC contract for the year ended June 30, 2007. The Company recorded $6,611,582 in annual performance fees and $443,685 in advisory fees related to the EMCC contract for fiscal year 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, 2007, 2006, and 2005, the Company had capitalized sales materials of approximately $31,000, $59,000, and $48,000, respectively. Net advertising expenditures were approximately $509,000, $513,000, and $370,000 during fiscal 2007, 2006, and 2005, 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 rather than other comprehensive 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

32

reported in the financial statements and accompanying notes. Actual results could differ from these estimates.

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. Per share amounts for fiscal 2006 and 2005 have been restated to reflect the Company’s two-for-one stock split effective March 29, 2007.

Note 3. Investments

As of June 30, 2007, the Company held investments with a market value of $7.2 million and a cost basis of $6.9 million. The market value of these investments is approximately 18 percent of the Company’s total assets.

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

	Year Ended June 30,
	2007			2006			2005
Realized gains (losses) on sale of trading securities	$	282,473		$	305,469		$	(78,253	)
Trading securities, at cost		5,990,256			4,011,961			3,040,700
Trading securities, at fair value 1		6,334,474			4,659,824			2,612,529
Net change in unrealized gains (losses) on trading securities (included in earnings) 2		(303,645	)		1,076,034			(243,355	)
Available-for-sale securities, at cost		865,152			45,444			299,055
Available-for-sale securities, at fair value 1		856,573			82,202			890,461
Gross realized gains on sale of available-for-sale securities		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		(79,731	)		(3,137	)		(76,746	)
Gross unrealized gains recorded in shareholders’ equity		71,151			39,896			668,152
Losses on available-for-sale securities deemed to have other-than-temporary declines in value		—			(28,655	)		(106,000	)

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 and losses on trading securities recorded in fiscal 2007 are comprised primarily of the unrealized gains and losses on seven securities, which make up $197,172 of the $303,645, or 65%, of the gross unrealized losses recorded.

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
2007	$	739,977	$	79,731	$	0	$	0	$	739,977	$	79,731
2006	$	7,614	$	3,137	$	0	$	0	$	7,614	$	3,137

The aggregate gross unrealized loss of $79,731 and $3,137 at June 30, 2007, and 2006, respectively, was primarily related to one investment in a company that specializes in emerging markets. There are many risks associated with an investment of this type including general market risk and emerging

33

markets risk. Many of the investments included above are early-stage or start-up businesses whose fair values fluctuate.

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. Three of the four funds within USGAF are sub-advised by third-party managers, who are 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 one USGAF fund through November 1, 2007, and February 28, 2008, 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 $1,178,000, $1,181,000, and $1,332,000, in 2007, 2006, and 2005, respectively.

The investment advisory and related contracts between the Company and USGIF and USGAF will expire on March 1, 2008, and June 1, 2008, respectively. Management anticipates the boards of both USGIF and USGAF will renew the contracts.

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 from A&B, as well as investment income.

Note 5. Property and Equipment

Property and equipment are composed of the following:

	June 30,
	2007			2006
Building and land	$	2,574,530		$	2,523,623
Furniture, equipment, and other		1,831,531			1,678,790
		4,406,061			4,202,413
Accumulated depreciation		(2,145,773	)		(2,079,524	)
Net property and equipment	$	2,260,288		$	2,122,889

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     Note 6. Other Accrued Expenses

Other accrued expenses consist of the following:

	June 30,
	2007		2006
Taxes payable	$	2,188,521	$	2,907,266
Omnibus fees		1,054,870		981,524
Subadvisory fees		695,509		642,644
Vendors payable		506,473		286,168
Legal, professional, and consulting fees		277,398		176,619
Other		7,577		25,514
Total other accrued expenses	$	4,730,348	$	5,019,735

     Note 7. Borrowings

As of June 30, 2007, 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 April 25, 2007, and requires the Company to maintain certain quarterly financial covenants to access the line of credit. The covenants include (1) liquidity of $1 million or more in cash, cash equivalents and marketable equity securities, and (2) a debt to equity ratio of .75 or less. The amended credit agreement will expire on February 1, 2008, 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, 2007, 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 2008 through 2009. Lease expenses totaled $249,233, $416,491, and $360,778 in fiscal years 2007, 2006, and 2005, respectively. Future minimum lease payments required under these leases are as follows:

Fiscal Year	Amount
2008	$	88,512
2009		8,673
Total	$	97,185

     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 $148,165, $73,166, and $55,018 for fiscal years 2007, 2006, and 2005, 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 $369,000, $220,000, and $0 for fiscal years 2007, 2006 and 2005, 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

35

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 $72,923, $61,061, and $54,616 in fiscal years 2007, 2006, and 2005, 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 2007, 2006, and 2005, employees purchased 8,981, 6,441 and 7,564 shares of treasury stock from the Company, respectively. Beginning in January 2007, the Company has issued treasury shares to each of its independent directors on a quarterly basis.

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, 2007.

     Note 10. Shareholders’ Equity

On February 21, 2007, the Company’s shareholders approved the first of two proposed amendments to the Company’s Articles of Incorporation. The first amendment approved an increase in authorized shares that enabled the Company to effectuate a two-for-one stock split of the Company’s outstanding stock. Shareholders of record as of March 19, 2007, received one additional share of class A common stock, par value $0.025 per share, for every outstanding share of class A common stock and one additional share of class C common stock, par value $0.025 per share, for every outstanding share of class C common stock. The amendment provided that the Company issue no fractional shares of common stock and all shares were rounded up or down to the nearest whole number of shares. Accordingly, all per-share and share data in the accompanying consolidated financial statements and in these accompanying notes has been adjusted to give retroactive effect to this stock split.

On February 22, 2007, shareholders approved the second of two proposed amendments, which modified the relative dividend and liquidation preference rights of the different classes of common stock and permits conversion of class C common stock to class A common stock. As a result of approval of both proposals, shareholders of record on March 19, 2007, received a special cash dividend of $0.25 per share based on the number of post-split shares held. Both the split and the dividend were distributed on March 29, 2007. The Company believes there was no significant differential in the value of either class of common stock as a result of the amendments. Therefore, no modification to the fair value of either class of stock was warranted.

In addition to the $0.25 per share dividend paid on March 29, 2007, the board authorized a dividend of $0.01 per share per month beginning in June 2007. The monthly dividend is authorized through December 2007 and will be considered for continuation at that time by the board. Prior to that, the Company had not paid cash dividends on its class C common stock during the previous twenty-two fiscal years and had never paid cash dividends on its class A common stock. 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 (post-split) shares of class C common stock to Frank Holmes in exchange for services and cancellation of the option to purchase 800,000 (post-split) shares of class C common stock held by Mr. Holmes and the cancellation of warrants to purchase 1,172,244 (post-split) shares of class C common stock held by Mr. Holmes and F.E. Holmes Organization, Inc. The 2,000,000 shares vest over a ten-year period beginning July 1, 1998, and will vest fully on June 30, 2008, or in the event of Mr. Holmes’ death, and were valued at $0.50 (pre-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, 2007, were valued at $5.21 per share, which incorporated factors including the ability to 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 2007 from the tax deduction in excess of stock-based compensation expense of $1,208,822. Of this total benefit, $363,479 related to the value of these 200,000 shares that vested during fiscal 2007, and the remaining $845,343 was attributable to the tax-effected difference between the market value of the shares acquired upon exercise of non-qualified stock options in fiscal 2007 and the strike price.

During the fiscal years ended June 30, 2007, 2006, and 2005 the Company purchased 29,634, 34,100, and 5,960 shares, respectively, of its class A common stock at an average price of $28.23, $6.31, and $2.34, per share, respectively.

During the year ended June 30, 2007, the Company granted 1,000 shares of class A common stock to certain employees at a weighted average fair value on grant date of $19.48. 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. During the year ended June 30, 2005, the Company granted no shares of class A common stock to employees.

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. Since adoption of the 1989 Plan, options have been granted at prices ranging from $0.75 to $2.84 per share, which equaled or exceeded the fair market value at date of grant. 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.

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 October 2004, options for 40,000 shares were granted at an exercise price of $1.65 per share and vesting of 50 percent on the first and second anniversary dates. 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. 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.

In connection with the two-for-one split on March 29, 2007, the board of directors authorized an adjustment to outstanding options so that a proportionate number of shares underlying each option was maintained. Option information disclosed herein has been adjusted to give retroactive effect to the stock split.

The estimated fair value of options granted is amortized to expense over the options’ vesting period. The fair value of these options was estimated at the date of the grant using a Black-Scholes option pricing model with the following assumptions for options granted in fiscal 2007, 2006, and 2005, respectively: expected volatility factors based on historical volatility of 80.0%, 84.0%, and 57.4%, risk-free interest rates of 4.6%, 4.6% and 4.2%, and an expected life of 10, 10 and 10 years. During fiscal 2007, options for 23,000 shares were granted with a fair value, net of tax, of $320,753. During fiscal 2006, an option for 10,000 shares was granted with a fair value, net of tax, of $43,400. In fiscal 2005, options for 40,000 shares were granted with a fair value, net of tax, of $30,750.

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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		Aggregate
			Average		Remaining		Intrinsic
			Exercise		Contractual		Value (net
	Shares		Price ($)		Life in Yrs		of tax)
Outstanding June 30, 2004		302,000		.97
Granted		40,000		1.65
Canceled		4,000		1.04
Exercised		9,000		.82
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		6.56	$	364,325

As of June 30, 2007, 2006, and 2005 exercisable employee stock options totaled 29,000, 116,000, and 289,000 shares and had weighted average exercise prices of $1.95, $.90, and $.98 per share, respectively.

Class A common stock options outstanding and exercisable under the employee stock option plans at June 30, 2007, 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		2.42		.75		24,000		.75
		2/24/06		10,000		8.65		7.69		5,000		7.69
		6/20/07		23,000		9.97		24.74		—		24.74
				57,000		6.56		11.65		29,000		1.95

     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, 2007, 2006, or 2005, 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,
	2007		% of Pretax			2006			% of Pretax			2005			% of Pretax
Tax expense at statutory rate	$	7,439,441		34.9	%	$	5,479,589			34.5	%	$	760,390			34.0	%
Change in valuation allowance		—		—			—			—			(34,472	)		(1.5	%)
Other		147,058		0.7	%		(47,611	)		(0.3	)%		64,053			2.9	%
	$	7,586,499		35.5	%	$	5,431,978			34.2	%	$	789,971			35.3	%

Components of total tax expense are as follows:

	Year Ended June 30,
	2007		2006		2005
Current tax expense	$	7,386,637	$	4,875,027	$	740,347
Deferred tax expense		199,862		556,951		49,624
Total tax expense	$	7,586,499	$	5,431,978	$	789,971

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 total assets and liabilities using the effective statutory tax rate (34.9% for 2007 and 34% for 2006) are as follows:

	Year Ended June 30,
	2007			2006
Book/tax differences in the balance sheet
Trading securities	$	(119,967	)	$	(220,273	)
Prepaid expenses		(236,289	)		(167,574	)
Accumulated depreciation		(37,599	)		(22,531	)
Accrued expenses		17,744			209,141
FAS 123R compensation expense		15,769			12,136
Available-for-sale securities		74,854			58,021
		(285,488	)		(131,080	)
Tax carryovers
Capital loss carryover		—			14,584
		—			14,584
Total gross deferred tax liability		(285,488	)		(116,496	)
Valuation allowance		—			—
Net deferred tax liability	$	(285,488	)	$	(116,496	)

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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,
	2007		2006		2005
Basic and diluted net income	$	13,759,249	$	10,435,362	$	1,446,471
Weighted average number of outstanding shares
Basic		15,162,492		15,031,578		14,959,996
Effect of dilutive securities
Employee stock options		79,042		114,652		168,542
Diluted		15,241,534		15,146,230		15,128,538
Earnings per share
Basic	$	.91	$	.69	$	.10
Diluted	$	.90	$	.69	$	.10

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, 2007, 2006, and 2005, employee stock options for 23,000, 10,000, and 0 shares, respectively, were excluded from diluted EPS. The Company repurchased 29,634 shares of its class A common stock from employees during fiscal 2007. 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, 2005
Change in unrealized gains on available-for-sale securities	$	(216,280	)	$	73,535		$	(142,745	)
Other comprehensive income	$	(216,280	)	$	73,535		$	(142,745	)
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	)

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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, 2005
Net revenues (loss)	$	17,408,377	$	(427,038	)	$	16,981,339
Net income (loss) before income taxes		2,691,479		(455,037	)		2,236,442
Depreciation		109,899		—			109,899
Interest expense		81		—			81
Capital expenditures		67,634		—			67,634
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
Gross identifiable assets at June 30, 2006		24,220,565		4,764,077			28,984,642
Deferred tax asset							62,211
Consolidated total assets at June 30, 2006							29,046,853
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

     Note 15. Related Party Transactions

The Company had $19.9 million and $12.6 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, 2007, and 2006, respectively. The Company recorded $883,247 in dividend income and $170,388 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 $1,690,321 and $1,353,454 for the years ended June 30, 2007 and 2006, 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 fund.

In August 2006, the Company began providing advisory services for the Meridian Global Energy and Resources Fund Ltd., an offshore fund. The Company receives a monthly advisory fee and a quarterly

41

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 $222,981 for the year ended June 30, 2007. 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, 2007 with an estimated fair value of approximately $600,490.

The Company provides advisory services to the U.S. Global Investors Balanced Natural Resources Fund, Ltd., an offshore fund. For these services, the Company is paid a monthly advisory fee and a quarterly performance fee, if any. The Company recorded fees totaling $140,717 and $212,828 for the years ended June 30, 2007, and 2006, respectively. Mr. Holmes is a director of U.S. Global Investors Balanced Natural Resources Fund Ltd. The Company also owns a position in the fund at June 30, 2007, with an estimated fair value of approximately $760,845.

The Company provides investment advisory services to Endeavour Mining Capital Corp., a Cayman corporation traded on the Toronto Stock Exchange. 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 $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 Company recorded a total of $7,055,267 comprised of $6,611,582 in annual performance fees and $443,685 in monthly advisory fees for the year ended June 30, 2006. 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 Endeavour Mining Capital Corp.

The Company owns a position in Charlemagne Capital Limited at June 30, 2007, with an estimated fair value of approximately $739,977, 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.

     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 $200,000 for fiscal years 2008 through 2012.

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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 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		3,712		3,767		3,738		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

Fiscal 2005	1st Quarter		2nd Quarter		3rd Quarter		4th Quarter
(in thousands except per share figures)
Revenues	$	2,962	$	4,106	$	4,884	$	5,029
Expenses		2,631		3,495		4,154		4,465
Income (Loss) Before Income Taxes		331		611		730		564
Net Income		240		407		449		350
Earnings per Share:
Basic	$	0.02	$	0.03	$	0.03	$	0.02
Diluted	$	0.02	$	0.03	$	0.03	$	0.02

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

Disclosure Controls and Procedures. An evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of June 30, 2007, was conducted under the supervision and with the participation of management, including the chief executive officer and chief financial officer. Based on that evaluation the chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2007.

     Internal Control over Financial Reporting.

(a) Management’s Annual Report on Internal Control Over Financial Reporting

The management report on U.S. Global Investors, Inc.’s internal control over financial reporting required by Item 9A appears in Item 8 on page 23 of this report, and is incorporated herein by reference.

(b) Attestation Report of the Independent Registered Public Accounting Firm.

The report of BDO Seidman, LLP on our management’s assessment of U.S. Global Investors, Inc.’s internal control over financial reporting appears in Item 8 on page 24 of this report, and is incorporated herein by reference.

(c) Changes in Internal Control Over Financial Reporting

There has been no change in the Company’s internal control over financial reporting that occurred during the quarter ended June 30, 2007, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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		52	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 also served as Director of 71316 Ontario, Inc. since April 1987. 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, Chairman and Director of Fortress IT Corp (formerly Consolidated Fortress) from November 2000 to November 2003, and Director of Broadband Collaborative Solutions from May 2000 to June 2002.
Jerold H. Rubinstein		69	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		61	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.		47	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. Fund Relations Chair for SAAFTI since 1994.
Susan B. McGee		48	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		47	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. Recruiting Manager with Robert Half International from November 2002 to June 2003. Controller of Luby’s, Inc. from June 2000 to October 2002.

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 with respect to (a) employee qualified benefit plans and employee programs, (b) executive

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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 Securities and Exchange Commission, 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, during the year ended June 30, 2007, all Section 16(a) filing requirements applicable to its directors, officers and more than 10% beneficial owners were met.

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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”), as well as our directors in fiscal 2007. 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 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.us-global.com.

The individuals listed below are the chief executive officer and chief financial officer, plus our other most highly compensated executive officer (“named executive officers”) in fiscal 2007.

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 Committee considers the various functions Mr. Holmes assumes, including the dual role of chief executive officer and chief investment officer. In addition, the committee considers various measures of company performance, including profitability and total shareholder return. The committee also reviews Mr. Holmes’ performance in managing our securities portfolio, in overseeing the management of our client portfolios and the results of our operational earnings.

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).

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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 named executive officers. The committee does not use rigid formulas with respect to the compensation of named executive officers. 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 are:

• base salary,

• performance-based cash and stock bonuses,

• long-term incentive awards, and

• other compensation and benefits.

     Base Salary

Base salaries for named executive officers are reviewed annually by the Compensation Committee. Generally, the salaries of named executive officers 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 2007 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 named executive officers 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 2007, stock bonuses totaling $34,285 were awarded to named executive officers, of which $22,600 was distributed in fiscal 2008.

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 Balanced Scorecard, 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 addition to her base salary, Ms. Rademacher is

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generally paid discretionary bonuses upon timely and accurate completion of the annual Sarbanes-Oxley audit, the annual financial audit and the Form 10-K filing.

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 department, Ms. McGee receives a monthly bonus for new accounts and 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 named executive officers, 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 named executive officers, 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 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 Chief Investment Officer and in exchange for cancellation of options and warrants held by Mr. Holmes. The shares vest over a ten-year period beginning with fiscal year 1998, and will fully vest 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, 2007, there were no grants. As of June 30, 2007, 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, 2007, three options for a total of 23,000 shares were granted. As of June 30, 2007, 554,000 options had been granted, 233,000 shares had been exercised, 264,000 options had expired, 57,000 options remained outstanding, and 110,000 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 named executive officers. 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 named executive officers. 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 2007. 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 $369,000, and $220,000 were made in fiscal years 2007 and 2006, respectively. Profit sharing contributions were made to our named executive officers totaling $52,446 in fiscal 2007. We did not make a profit sharing contribution in fiscal year 2005.

     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 named executive officers, and a maximum of $30 for all other employees. Similarly, certain management-level employees, including named executive officers, 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.

     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 2007, 2006, and 2005, employees purchased 8,981, 6,441, and 7,564 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 named executive officers 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 named officer.

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     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 insurance. The Summary Compensation Table shows the value of perquisites provided to named executive officers in fiscal year 2007 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, 2007, the compensation reportable for the named executive officers, 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
Position	Year		Salary ($)		Bonus ($)		($) 1		($)2		Compensation ($)			Total ($)
Frank E. Holmes Chief Executive Officer Chief Investment Officer		2007		421,788		9,700		50,000		1,856,760		148,373	3		2,486,621
Catherine A. Rademacher Chief Financial Officer		2007		96,003		104,940		11,300		—		31,065	4		243,308
Susan B. McGee President General Counsel		2007		176,547		221,060		22,985		276,114		66,771	5		763,477

1	Stock awards consist of restricted stock in the case of Mr. Holmes and grants of stock awards for the other named executive officers 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 shares will fully vest on June 30, 2008. At June 30, 2007, 200,000 shares vested, with the final 200,000 shares to vest on June 30, 2008.
2	Amounts consist of cash incentive compensation awards earned for services rendered in fiscal 2007. 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) $44,750 in trustee fees, (ii) $31,816 in matched contributions, (iii) $20,056 in insurance, (iv) $17,482 in profit sharing contributions, (v) $8,227 in club memberships, and (vi) $26,042 in miscellaneous items.
4	Represents amounts paid by us on behalf of Ms. Rademacher as follows: (i) $17,482 in profit sharing contributions, (ii) $11,264 in matched contributions, and (iii) $2,319 in miscellaneous items.
5	Represents amounts paid us on behalf of Ms. McGee as follows: (i) $21,074 in matched contributions, (ii) $17,482 in profit sharing contributions, (iii) $12,379 in insurance, (iv) $10,939 in club memberships, and (v) $4,897 in miscellaneous items.

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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
				Awards: Number of		Grant Date Fair
				Shares of Stock or		Value of Stock and
Name	Grant Date			Units (#)		Option Awards ($)
Frank E. Holmes		—			—		—
Catherine A. Rademacher		7/11/2007	1		500		11,300
Susan B. McGee		3/02/2007			600		11,685
Susan B. McGee		7/11/2007	1		500		11,300

¹ These shares were awarded in fiscal 2007 but distributed in fiscal 2008.

The following table sets forth information concerning the outstanding options and stock awards held at the end of the fiscal year by the named executive officers. Columns were omitted if they were not applicable.

Outstanding Equity Awards at Fiscal Year-End
	Stock Awards
	Number of Shares			Market Value of
	or Units of Stocks			Shares or Units That
Name	That Have Not Vested (#)			Have Not Vested ($)
Frank E. Holmes		200,000	1		1,042,820
Catherine A. Rademacher		—			—
Susan B. McGee		—			—

¹ 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 shares will fully vest on June 30, 2008. At June 30, 2007, 200,000 shares vested, with the final 200,000 shares to vest on June 30, 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, 2007. Columns that did not apply were omitted.

Option Exercises and Stock Vested
	Option Awards				Stock Awards
	Number of Shares		Value Realized on		Number of Shares		Value Realized on
	Acquired on		Exercise		Acquired on Vesting		Vesting
Name	Exercise (#)		($) 1		(#)		($) 2
Frank E. Holmes		—		—		200,000		1,042,820
Catherine A. Rademacher		5,000		200,350		—		—
Susan B. McGee		15,000		627,900		—		—
Susan B. McGee		50,000		1,016,505		—		—

1	The value realized equals the difference between the option exercise price and the sale price of class A common stock at the time of exercise, multiplied by the number of shares for which the option was exercised.
2	The value realized equals the valuation of class C common stock on the vesting date, multiplied by the number of shares that vested.

The 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, 2007, is detailed in the table below. Columns that were not applicable were omitted.

Director Compensation
	Fees Earned
	or Paid in		Stock
	Cash		Awards
Name	($) 1		($) 2		Total ($)
Jerold H. Rubinstein		142,000		9,029	$	151,029
Roy D. Terracina		27,000		9,029	$	36,029
Thomas F. Lydon, Jr.		24,000		9,029	$	33,029

1	Includes certain fees earned in fiscal 2007 but paid in 2008. Difference in fees earned was primarily due to Mr. Rubinstein receiving an additional $5,000 per month and bonuses 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 2007. 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.

54

     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 24, 2007, there were 2,255,147 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
7900 Callaghan Road
San Antonio, TX 78229		2,084,422	1		92.4	%

¹ Includes 2,000,000 (post-split) shares of class C common stock issued to Mr. Holmes that will be vested in equal amounts over a ten-year period and will be fully vested on June 30, 2008; 74,560 shares owned directly by Mr. Holmes; and 9,862 shares owned by Mr. Holmes in an IRA.

     Class A Common Stock (Nonvoting Stock)

On August 24, 2007, there were 12,987,211 shares of the Company’s class A common stock issued and outstanding. As of August 24, 2007, there were no persons or entities known by the Company to own 5% or more of the outstanding shares of class A common stock.

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     Security Ownership of Management

The following table sets forth, as of August 24, 2007, 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		2,084,422	1		92.4	%		199,932		1.54	%
Catherine A. Rademacher, CFO		—			—			13,210		0.10	%
Susan B. McGee, President, General Counsel		—			—			79,270		0.61	%
Jerold H Rubinstein, Director		—			—			500		0.004	%
Roy D. Terracina, Director		—			—			34,500		0.27	%
Thomas F. Lydon, Jr., Director		—			—			500		0.004	%
All directors and executive officers as a group (six persons)		2,084,422			92.4	%		327,912		2.53	%

¹ Includes 2,000,000 (post-split) shares of class C common stock issued to Mr. Holmes that will be vested in equal amounts over a period of ten years and will be fully vested on June 30, 2008; 74,560 shares owned directly by Mr. Holmes; and 9,862 shares owned by Mr. Holmes in an IRA.

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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		57,000	$	11.65		110,000
Employee Stock Purchase Plan 3		N/A		N/A		35,313
Total		57,000				862,313

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, 2007, and 2006, respectively, rendered by BDO Seidman, LLP.

	Fiscal year ended June 30,
	2007		2006
Audit fees 1	$	415,363	$	446,409
Audit-related fees 2		10,670		7,490
Tax fees 3		24,065		20,210
Total fees	$	450,098	$	474,109

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, 2007, and 2006 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, and Reports on Form 8-K

(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, 2007 and 2006

• Consolidated Statements of Operations and Comprehensive Income for the three years ended June 30, 2007

• Consolidated Statements of Shareholders’ Equity for the three years ended June 30, 2007

• Consolidated Statements of Cash Flows for the three years ended June 30, 2007

• 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).

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10.3	Sub-Advisory Agreement dated November 15, 1996, by and between Company, U.S. Global Accolade Funds/MegaTrends Fund, and Money Growth Institute, Inc., incorporated by reference to Post-Effective Amendment No. 5 to Registration Statement on Form N-1A dated June 21, 1996 (EDGAR Accession No. 0000902042-96-000046).
10.4	Sub-Advisory Agreement dated January 25, 2002, by and between Company, U.S. Global Accolade Funds/ Eastern European Fund, and Charlemagne Capital Limited, incorporated by reference to Annual Report on Form 10-K for fiscal year ended June 30, 2002 (EDGAR Accession No. 07777811-02-000019).
10.5	Transfer Agency Agreement dated December 15, 2000, by and between United Shareholder Services, Inc. and U.S. Global Accolade Funds 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).
10.6	Transfer Agency Agreement dated February 21, 2001, by and between United Shareholder Services, Inc. and U.S. Global Investors Funds, incorporated by reference to Annual Report on Form 10-K for fiscal year ended June 30, 2001 (EDGAR Accession No. 0000754811-01-500016).
10.7	Loan Agreement between Company and Bank One NA, dated February 1, 2001, for refinancing building, 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 No. 1, dated July 1, 2001, to loan agreement between Company and Bank One NA for refinancing building, incorporated by reference to Annual Report on Form 10-K for fiscal year ended June 30, 2003 (EDGAR Accession No. 0000754811-03-000018).
10.9	Amendment No. 2, dated February 1, 2003, to loan agreement between Company and Bank One NA for refinancing building, incorporated by reference to Annual Report on Form 10-K for fiscal year ended June 30, 2003 (EDGAR Accession No. 0000754811-03-000018).
10.10	Amendment dated June 3, 2005, to loan agreement between Company and Bank One NA, incorporated by reference to Exhibit 10.10 of the Company’s Form 10-K filing on September 12, 2006 (EDGAR Accession No. 0000950134-06-017619).
10.11	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).
10.12	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).
10.13	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).
10.14	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).
10.15	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

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	Annual Report on Form 10-K for fiscal year ended June 30, 2001 (EDGAR Accession No. 0000754811-01-500016).
10.16	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).
10.17	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).
10.18	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).
10.19	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).
10.20	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).
10.21	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).
10.22	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).
10.23	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).
10.24	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).
10.25	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).
10.26	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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10.27	Amendment to Credit Agreement dated February 1, 2007, by and between the Company and JP Morgan Chase Bank N.A., originally entered into on June 3, 2005, included herein.
10.28	Note Modification Agreement dated February 1, 2007, by and between the Company and JP Morgan Chase Bank N.A. referencing a Line of Credit Note entered on June 3, 2005, included herein.
10.29	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).
10.30	Transfer Agency Agreement Dated April 1, 2007, by and between United Shareholder Services, Inc. and U.S. Global Accolade Funds, included herein.
10.31	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 March 23, 2005, incorporated by reference to Annual Report on Form 10-K for fiscal year ended June 30, 2005 (EDGAR Accession Number 0000950134-05-018480).
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.

(b) Reports on Form 8-K

(i)	On August 10, 2006, the Company filed a Current Report on Form 8-K dated August 10, 2006, reporting Item 8.01 (Other Events) announcing a press release reporting the earnings of an annual performance fee for its role in providing advisory services to a merchant banking company that invests in the natural resources sector.
(ii)	On September 8, 2006, the Company filed a Current Report on Form 8-K dated September 8, 2006, reporting Item 2.02 (Results of Operations and Financial Condition) announcing a press release reporting earnings for the fiscal year ended June 30, 2006.
(iii)	On November 8, 2006, the Company filed a Current Report on Form 8-K dated November 8, 2006, reporting Item 8.01 (Other Events) announcing a press release that the board of directors had approved a two-for-one stock split, special dividend, and amendment to the Articles of Incorporation.
(iv)	On November 9, 2006, the Company filed a Current Report on Form 8-K dated November 9, 2006, reporting Item 2.02 (Results of Operation and Financial Condition) announcing a press release for reporting earnings for the quarter ended September 30, 2006.

63

(v)	On November 21, 2006, the Company filed a Current Report on Form 8-K dated November 21, 2006, reporting Item 8.01 (Other Events) announcing a press release that the Company has filed its definitive proxy statement and declaration of a dividend.
(vi)	On January 12, 2007, the Company filed a Current Report on Form 8-K dated January 12, 2007, reporting Item 8.01 (Other Events) announcing a press release regarding the adjournment of the special meeting dated January 10, 2007.
(vii)	On January 12, 2007, the Company filed a Current Report on Form 8-K/A dated January 12, 2007, reporting Item 8.01 (Other Events) announcing a press release regarding the adjournment of the special meeting dated January 10, 2007.
(viii)	On January 26, 2007, the Company filed a Current Report on Form 8-K dated January 26, 2007, reporting Item 2.02 (Results of Operation and Financial Condition) announcing a press release reporting the performance fee to date accruing to the Company for serving as the equity investment manager for Endeavour Mining Capital.
(ix)	On January 31, 2007, the Company filed a Current Report on Form 8-K dated January 31, 2007, reporting Item 8.01 (Other Events) announcing a press release regarding the Company’s adjournment of the special meeting called for January 31, 2007 to February 21, 2007.
(x)	On February 1, 2007, the Company filed a Current Report on Form 8-K/A dated February 1, 2007, reporting Item 8.01 (Other Events) containing a corrected press release, which was issued by the Company on January 31, 2007.
(xi)	On February 8, 2007, the Company filed a Current Report on Form 8-K dated February 8, 2007, reporting Item 2.02 (Results of Operation and Financial Condition) announcing a press release for reporting earnings and other financial results for its second fiscal quarter of the fiscal year ending June 30, 2007.
(xii)	On February 22, 2007, the Company filed a Current Report on Form 8-K dated February 22, 2007, reporting Item 8.01 (Other Events) announcing two press releases for (i) shareholder approval to affect a two-for-one stock split and (i) shareholder approval for the second amendment to its Articles of Incorporation.
(xiii)	On May 7, 2007, the Company filed a Current Report on Form 8-K dated May 7, 2007, reporting Item 2.02 (Results of Operation and Financial Condition) announcing a press release for reporting earnings and other financial results for its third fiscal quarter of the fiscal year ending June 30, 2007.

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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 Holmes
		Frank E. Holmes
Date: September 12, 2007		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 Holmes Frank E. Holmes	Chief Executive Officer	September 12, 2007
	Chief Investment Officer
* /s/ Thomas F. Lydon, Jr. Thomas F. Lydon, Jr.	Director	September 12, 2007
* /s/ Jerold H. Rubinstein Jerold H. Rubinstein	Chairman of the Board of Directors	September 12, 2007
* /s/ Roy D. Terracina Roy D. Terracina	Director	September 12, 2007
/s/ Catherine A. Rademacher Catherine A. Rademacher	Chief Financial Officer	September 12, 2007

*BY:  /s/ Susan B. McGee   Susan B. McGee
Attorney-in-Fact under Power
of Attorney dated
September 26, 2001
September 12, 2007

65

EX-10.27

Exhibit 10.27 —

Chase Amendment to Credit Agreement   

This agreement is dated as of February 1, 2007, by and between U.S. Global Investors, Inc. (the “Borrower”) and JPMorgan Chase Bank, N.A. (the “Bank”), and its successors and assigns. 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 and the Bank entered into a credit agreement dated June 3, 2005, as amended (if applicable) (the “Credit Agreement”); and

WHEREAS, the Borrower has requested and the Bank has agreed to amend the Credit Agreement as set forth below;

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

1.	DEFINED TERMS. Capitalized terms not defined herein shall have the meaning ascribed in the Credit Agreement.
2.	MODIFICATION OF CREDIT AGREEMENT. The Credit Agreement is hereby amended as follows:

2.1 From and after the date of this agreement, the provisions in the Credit Agreement under section 3.5 captioned “Financial Reports” subsection “A” is hereby amended to read as follows:

A. Within sixty (60) days after each quarterly period, publicly traded 10-Q reports.

2.2	From and after the date of this agreement, the provisions in the Credit Agreement under section 3.5 captioned “C” and “D” are hereby deleted.
2.3	From and after the date of this agreement, the provision in the Credit Agreement under section 4.2 captioned “I. Current Ratio” is hereby deleted.

3.

RATIFICATION. The Borrower ratifies and reaffirms the Credit Agreement and the Credit Agreement shall remain in full force and effect as modified herein.

4.

BORROWER REPRESENTATIONS AND WARRANTIES. The Borrower represents and warrants that (a) the representations and warranties contained in the Credit Agreement are true and correct in all material respects as of the date of this agreement, (b) no condition, act or event which could constitute an event of default under the Credit Agreement or any promissory note or credit facility executed in reference to the Credit Agreement exists, and (c) no condition, event, act or omission has occurred, which, with the giving of notice or passage of time, would constitute an event of default under the Credit Agreement or any promissory note or credit facility executed in reference to the Credit Agreement.

5.	FEES AND EXPENSES. The Borrower agrees to pay all fees and out-of-pocket disbursements incurred by the Bank in connection with this agreement, including legal fees incurred by the Bank in the preparation, consummation, administration and enforcement of this agreement.
6.	EXECUTION AND DELIVERY. This agreement shall become effective only after it is fully executed by the Borrower and the Bank.
7.	ACKNOWLEDGEMENTS OF BORROWER. The Borrower acknowledges that as of the date of this agreement it has no offsets with respect to all amounts owed by the Borrower to the Bank arising under or related to the Credit Agreement on or prior to the date of this agreement. 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 claims, causes of action, debts and liabilities, of whatever kind or nature, in law or in equity, of the Borrower, whether now known or unknown to the Borrower, which may have arisen in connection with the Credit Agreement or the actions or omissions of the Bank related to the Credit Agreement on or prior to the date hereof. The Borrower acknowledges and agrees that this agreement is limited to the terms outlined above, and shall not be construed as an agreement to change any other terms or provisions of the Credit Agreement. This agreement shall not establish a course of dealing or be construed as evidence of any willingness on the Bank’s part to grant other or future agreements, should any be requested.

8. NOT A NOVATION. This agreement is a modification only and not a novation. Except for the above-quoted modification(s) the Credit Agreement, any loan agreements, credit agreements, reimbursement agreements, security

1

agreements, mortgages, deeds of trust, pledge agreements, assignments, guaranties, instruments or documents executed in connection with the Credit Agreement, 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 Credit Agreement and made a part thereof. This agreement shall not release or affect the liability of any guarantor of any promissory note or credit facility executed in reference to the Credit Agreement or release any owner of collateral granted as security for the Credit Agreement. The validity, priority and enforceability of the Credit Agreement shall not be impaired hereby. To the extent that any provision of this agreement conflicts with any term or condition set forth in the Credit Agreement, or any document executed in conjunction therewith, the provisions of this agreement shall supersede and control. The Bank expressly reserves all rights against all parties to the Credit Agreement.

     THIS AGREEMENT REPRESENTS THE FINAL AGREEMENT OF THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OR PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

Borrower: U.S. Global Investors, Inc
By:	/s/ Frank E. Holmes
	Printed Name	Frank E. Holmes
	Title	Chief Executive Officer

Date Signed:

BANK’S ACCEPTANCE

The foregoing agreement is hereby agreed to and acknowledged.

Bank: JPMorgan Chase Bank, N.A.
By:
	Printed Name	John L. Dockendorf II,
	Title	Vice President

Date Signed:  4/25/07  

2

EX-10.28

Exhibit 10.28 —

    CHASE Note Modification Agreement

This agreement is dated as of February 1, 2007 (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, 2007 to February 1, 2008.
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.

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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.

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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 die 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

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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.

Address: 7900 Callaghan Road San Antonio, TX 78229	Borrower: U.S. Global Investors, Inc.
	By:	/s/ Frank E. Holmes
		Printed Name	Frank E. Holmes
		Title	Chief Executive Officer
	Date Signed:

BANK’S ACCEPTANCE

The foregoing agreement is hereby agreed to and acknowledged.

Bank: JPMorgan Chase Bank, N.A.
By:	/s/ John L. Dockendorf II
	Printed Name	John L. Dockendorf II,
	Title	Vice President
Date Signed: 4/25/07

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EX-10.30

Exhibit 10.30 —

Transfer Agency Agreement

          This Agreement is made as of the 1st day of April, 2007 by and between U.S. Global Accolade Funds, an unincorporated business trust organized under the laws of the Commonwealth of Massachusetts, having its principal office and place of business at 7900 Callaghan Road, San Antonio, Texas 78229 (hereinafter referred to as the “Trust”), and United Shareholder Services, Inc., a Texas corporation authorized to do business at 7900 Callaghan Road, San Antonio, Texas 78229 (hereinafter referred to as the “Transfer Agent”).

Witnesseth:

          That for and in consideration of the mutual promises hereinafter set forth, the Trust on behalf of each Fund and the Transfer Agent agree as follows:

1. Definitions. Whenever used in this Agreement, the following words and phrases, unless the context otherwise requires, shall have the following meanings:

(a)	“Authorized Person” includes the President, any Vice President, the Secretary, Treasurer, the persons listed in Appendix A hereto, as such Appendix may be amended from time to time, or any other person, whether or not the person is an Officer or employee of the Trust, duly authorized to give Oral Instructions and Written Instructions on behalf of the Trust as indicated in a certification pursuant to Section 7(d) or 7(e) hereof as the Transfer Agent may receive from time to time;
(b)	“By-Laws” means the By-Laws that are currently effect for the Trust, as such may be amended from time to time.
(c)	“Certificate” means any notice, instruction, or other instrument in writing, authorized or required by this Agreement to be given to the Transfer Agent, which the Transfer Agent actually receives and which any two Officers of the Trust have signed on its behalf;
(d)	“Commission” has the meaning given it in the 1940 Act;
(e)	“Custodian” refers to the custodian of all of the securities and other moneys the Trust owns;
(f)	“Declaration of Trust” means the Master Trust Agreement and Declaration of Trust of the Trust, as it is amended from time to time;
(g)	“Fund” means each series of Shares established and designated under or in accordance with the provisions of the Declaration of Trust, as listed in Appendix D, which Appendix may be amended from time to time;
(h)	“Officer” means the President, Vice President, Secretary, and Treasurer;
(i)	“Oral Instructions” means instructions orally communicated to and actually received by the Transfer Agent from an Authorized Person or from a person the Transfer Agent reasonably believes to be an Authorized Person;
(j)	“Prospectus” means the most current effective prospectus relating to the particular Fund’s Shares under the Securities Act of 1933, as amended;

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(k)	“Shares” refers to the transferable units of interest into which the beneficial interest in the Trust or any Fund of the Trust (as the context may require) shall be divided from time to time;
(l)	“Shareholder” means a record owner of Shares;
(m)	“Trust” refers to the Massachusetts business trust established under the Declaration of Trust;
(n)	“Trustees” or “Board of Trustees” refers to the duly elected Trustees of the Trust;
(o)	“Written Instruction” means a written communication the Transfer Agent actually receives from an Authorized Person or from a person the Transfer Agent reasonably believes to be an Authorized Person by telex or any other system whereby the receiver of a communication is able to verify through codes or otherwise with a reasonable degree of certainty the authenticity of the sender of the communication; and
(p)	The “1940 Act” refers to the Investment Company Act of 1940, as amended and the regulations thereunder.

2.

Representation Of Transfer Agent. The Transfer Agent does hereby represent and warrant to the Trust that (a) it is duly registered as a transfer agent as provided in Section 17A(c) of the Securities Exchange Act of 1934, as amended; (b) it is duly organized and existing and in good standing under the laws of the state of Texas; (c) that it is empowered under applicable laws and by its organizational documents and By-laws to enter into and perform this agreement; that all necessary filings with the states will have been made and will be current during the term of this Agreement; (d) no legal or administrative proceedings have been instituted or threatened that would impair the Transfer Agent’s ability to perform its duties and obligations under this Agreement; (e) the various procedures and systems which the Transfer Agent has implemented with regard to safekeeping of the blank checks, records, and other data of the Trust from loss or damage attributable to fire, theft or any other cause and the Transfer Agent’s records, data, equipment, facilities and other property used in the performance of its obligations hereunder are reasonably designed to ensure such safekeeping and the Transfer Agent will make such changes thereto from time to time as are reasonably required for the secure performance of its obligations hereunder; (f) it has adopted policies and procedures that are reasonably designed to prevent violation of the federal securities laws with respect to the services to be provided to the Funds under this Agreement; and (g) this Agreement, when executed and delivered, will constitute a legal, valid and binding obligation of the Transfer Agent, enforceable against the Transfer Agent in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors and secured parties.

3.

Representations Of The Trust. The Trust represents to the Transfer Agent that, as of the date hereof, all outstanding Shares are validly issued, fully paid, and non-assessable by the Trust. The Trust may hereafter issue an unlimited number of Shares of each Fund presently existing or hereafter created. When Shares are hereafter issued in accordance with the terms of the Prospectus, the Shares shall be validly issued, fully paid, and non-assessable by the Trust. The Trust represents that it is validly existing under the laws of the Commonwealth of Massachusetts; that it is empowered under applicable laws and by its Declaration of Trust and By-laws to enter into and perform this Agreement; that it is registered under the 1940 Act; that a registration statement on Form N-1A has been filed and will be effective during the term of this Agreement; that all necessary filings with the states (including all registration or filing fees) will have been

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	made and will be current during the term of this Agreement; and that no legal or administrative proceedings have been instituted or threatened that would impair the Fund’s ability to perform its duties and obligations under this Agreement.
4.	Appointment Of The Transfer Agent. The Trust hereby appoints and constitutes the Transfer Agent as transfer agent for all of the Shares of each Fund of the Trust in existence as of the date hereof, and as shareholder-servicing agent for the Trust and the Transfer Agent accepts these appointments and agrees to perform the duties in accordance with the terms of the Agreement. In addition to the services and duties of the Transfer Agent, the Transfer Agent agrees to perform all services usually and customarily performed by a Transfer Agent, services incidental to the performance of the services enumerated herein and such additional services as agreed upon by the Transfer Agent and Trust in writing from time to time.
5.	Compensation.

(a)	Each Fund will compensate the Transfer Agent for the services set forth on Exhibit B rendered under this Agreement in accordance with the fees set forth in the Fee Schedule annexed hereto and incorporated herein for the existing Funds, except as provided in paragraph 5(e) of this Agreement. The Fee Schedule may be amended upon mutual agreement of the parties and by executing a later dated Fee Schedule. The Transfer Agent shall also be compensated for reasonable and customary out-of-pocket disbursements (including, but not limited to, telephone toll-free lines, call transfers, mailing, sorting and postage, stationery, envelopes, development and programming, service/data conversion, telecommunication charges and equipment maintenance, 22c-2 connectivity charges, special reports, record retention, literature fulfillment kits, microfilm, microfiche, proxies, proxy services, lost shareholder search, escheatment services and reporting, disaster recovery charges, ACH fees, new and existing shareholder database searches, Fed wire charges, NSCC charges, delivery charges, and all other out-of-pocket expenses as are reasonably incurred by the Transfer Agent in performing its duties hereunder. The Transfer Agent shall be entitled to bill these expenses separately. No Fund shall be liable for any expenses, debts, or obligations arising under this Agreement of any other Fund.
(b)	The parties will agree upon the compensation for acting as Transfer Agent for any Fund hereafter designated and established at the time that the Transfer Agent commences serving as transfer agent for that Fund, and this Agreement shall be reflected in a Fee Schedule for that Fund, dated and signed by an authorized officer of each party, to be attached to this Agreement.
(c)	Any compensation to be paid under this Agreement may be adjusted by attaching to this Agreement a revised Fee Schedule, approved by the Board of Trustees and dated and signed by an Officer of each party.
(d)	The Transfer Agent will bill the Trust for each Fund as soon as practicable after the end of each calendar month, and the billings will be detailed in accordance with the Fee Schedule for each Fund. The Trust promptly will pay the amount of the bill to the Transfer Agent. If fees begin to accrue in the middle of a month or if this Agreement terminates before the end of any month, all fees for the period from that date to the end of that month or from the beginning of that month to the date of termination, as the case may be, shall be prorated according to the proportion that the period bears to the full month in which the effectiveness or termination occurs. Upon the termination of this Agreement with respect to a Fund, the Fund shall pay to the Transfer Agent such compensation as shall be payable prior to the effective date of termination.

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(e) If this Agreement is terminated by the Trust, the Trust shall be responsible for all reasonable and customary out-of-pocket expenses or costs associated with the movement of records and materials to the successor transfer agent and providing assistance to any successor person in the establishment of the accounts and records necessary to carry out the successor’s responsibilities. Additionally, the Transfer Agent reserves the right to charge for any other reasonable and customary expenses associated with such termination.

6. Documents. In connection with the appointment of the Transfer Agent, the Trust shall, on or before the date this Agreement goes into effect, provide copies of the following documents to the Transfer Agent:

(a)	A copy of the Declaration of Trust as then in effect;
(b)	A copy of the By-laws of the Trust, as then in effect;
(c)	A copy of the resolution of the Trustees authorizing this Agreement;
(d)	If applicable, a specimen of the certificate for Shares of each Fund of the Trust in the form the Trustees approved, with a certificate of the Secretary of the Trust as to this approval;
(e)	All account application forms and other documents relating to Shareholder accounts or relating to any plan, program or service the Trust offers;
(f)	If applicable, a list of Shareholders of the existing Funds with the name, address, and tax identification number of each Shareholder, and the number of Shares of the existing Funds each Shareholder holds, certificate numbers and denominations (if any certificates have been issued), lists of any accounts against which stops have been placed, together with the reasons for the stops, and the number of Shares the Funds redeemed; and
(g)	A copy of the opinion of counsel for the Trust on the validity of the Shares and the status of the shares under the Securities Act of 1933, amended.

7. Further Documentation. The Trust will also furnish to the Transfer Agent from time to time the following documents, and shall promptly furnish the Transfer Agent with all amendments of or supplements to the following:

(a)	Each resolution of the Trustees authorizing the original issue of Shares or establishing a new Fund;
(b)	Each Registration Statement filed with the Commission, and all amendments and orders pertaining to the Registration Statement, in effect for the sale of Shares of the Trust;
(c)	A copy of each amendment to the Declaration of Trust by the By-laws of the Trust;
(d)	Copies of each vote of the Trustees designating Authorized Persons to give instructions to the Transfer Agent;
(e)	Certificates as to any change in an Officer or Trustee of the Trust;
(f)	Specimens of all new certificates for Shares, accompanied by the Trustees’ resolutions approving these forms;

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(g)	Any relevant procedures adopted by the Trust with respect to the Funds; and
(h)	Any other certificates, documents, or opinions as the Transfer Agent and the Trust may mutually deem necessary or appropriate for the Transfer Agent in the proper performance of its duties.

8. Duties Of The Transfer Agent.

(a)	The Transfer Agent shall be responsible for administering and/or performing transfer agent functions, for acting as service agent in connection with dividend and distribution functions, and for performing shareholder account administrative agent functions in connection with the issuance, transfer, and redemption or repurchase (including coordination with the Custodian) of the Trust’s Shares. The details of the operating standards and procedures to be followed shall be determined from time to time as the Transfer Agent and the Trust agree.
(b)	The Board of Trustees has, in connection with its review of each service providers policies and procedures under Rule 38a-1 under the 1940 Act, has reviewed a summary of the Transfer Agent’s policies and procedures (collectively, the “Procedures”). Further, in connection with this review, the Board has determined that the Procedures are reasonably designed to prevent violation of the federal securities laws. It is contemplated that these Procedures will be amended from time to time by the parties as additional regulations are adopted and/or regulatory guidance is provided relating to the Trust’s responsibilities.
(c)	The Transfer Agent will provide the services listed in Appendix B and Appendix C subject to the control, direction, and supervision of the Board of Trustees and its designated agents and in compliance with the purchase, sale, and exchange provisions of the Trust’s prospectus and statement of additional information as in effect from time to time.
(d)	The Trust hereby delegates to the Transfer Agent and the Transfer Agent accepts such delegation of the implementation and operation of the Trust’s anti-money laundering (“AML”) compliance program. The Transfer Agent will carryout the Trust’s AML Compliance Program in accordance with the Trust’s International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001 Policies and Procedures and Customer Identification Program, as such policies and procedures may be amended from time to time by the Board of Trustees. Except with respect to the Transfer Agent’s duties as set forth in Appendix C and except as otherwise specifically provided herein, the Trust assumes all responsibility for ensuring that the Trust complies with all applicable requirements of the Securities Act, the 1940 Act, the USA PATRIOT Act of 2001 (“USA PATRIOT Act”) and any other laws, rules and regulations of governmental authorities with jurisdiction over the Trust.
(e)	The Transfer Agent shall record the issuance of shares pursuant to Rule 17Ad-10(e) of the 1934 Act and maintain a record of the total number of Shares of each Fund which are authorized, based upon data the Trust provides to it, and issued and outstanding. The Transfer Agent shall provide the Trust and its agent for preparing and making “blue sky” filings with the states on a regular basis with the total number of Shares of each Fund which are authorized and issued and outstanding and shall have no obligation, when recording the issuance of Shares, to monitor the issuance of such Shares or to take cognizance of any laws relating to the issue or sale of such Shares, which functions shall be the sole responsibility of the Trust.

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(f)

The Transfer Agent shall create and maintain all records required by applicable laws, rules, and regulations, including but not limited to records required by Section 31(a) of the 1940 Act and the rules thereunder, as they may be amended from time to time, pertaining to the various functions the Transfer Agent performs and which are not otherwise created and maintained by another party pursuant to contract with the Trust. All such records shall be the property of the Trust at all times and shall be available for its inspection and use. When applicable, the Transfer Agent shall maintain these records for the periods and in the places required by Rule 31a-2 under the 1940 Act. The retention of such records shall be at the expense of the Trust. The Transfer Agent shall make available during regular business hours all record and other data created and maintained pursuant to this Agreement for the reasonable audit and inspection by the Trust, any person the Trust retains, or any regulatory agency having authority over the Trust at reasonable times.

(g)

In addition to the duties set forth herein or as otherwise listed in Appendix B and Appendix C, the Transfer Agent shall perform other duties and functions and shall be paid for these services as the Transfer Agent and the Trust may from time to time agree in writing.

9.	Responsibilities Retained by the Trust. The Trust has and retains primary responsibility for all compliance matters relating to the Fund, including, but not limited to, compliance with the 1940 Act, the Internal Revenue Code of 1986, the Sarbanes-Oxley Act of 2002, the USA Patriot Act, including suspicious activity reporting, OFAC reporting, Rule 22c-2 under the 1940 Act, and the policies and limitations of the Fund relating to its portfolio investments as set forth in its Prospectus and Statement of Additional Information. Transfer Agent’s services hereunder shall not relieve the Trust of its responsibilities for assuring such compliance or the Board of Trustee’s oversight responsibility with respect thereto.
10.	Lost Shareholder Due Diligence Searches and Servicing. The Trust hereby acknowledges that the Transfer Agent may, at its discretion, perform searches using an outside vendor database, or arrange with outside vendors to conduct lost shareholder searches, as and to the extent required by Rule 17Ad-17 under the Securities Exchange Act of 1934, as amended. Outside vendor costs associated with such searches which will be passed through to the Trust as an out-of-pocket expense. If the Transfer Agent conducts the search, the Transfer Agent will charge for its services per the Fee Schedule, in addition to the outside vendor costs associated with such searches which will be passed through to the Trust as an out-of-pocket expense.
	If a shareholder remains lost and the shareholder’s account is unresolved after completion of the mandatory Rule 17Ad-17 search, the Trust hereby authorizes a vendor to enter, at its discretion, into fee sharing arrangements with the lost shareholder (or such lost shareholder’s representative or executor) to conduct a more in-depth search in order to locate the lost shareholder before the shareholder’s assets escheat to the applicable state. The Trust hereby acknowledges that the Transfer Agent is not a party to these arrangements and does not receive any revenue sharing or other fees relating to these arrangements. Furthermore, the Trust hereby acknowledges that vendor may receive up to 35% of the lost shareholder’s assets as compensation for its efforts in locating the lost shareholder.

11. Escheatment of Lost Shareholder Accounts. The Trust hereby acknowledges that the Transfer Agent may, at its discretion, perform escheatment services using outside vendor services, or arrange with outside vendors to perform escheatment services as and to the extent required by applicable state law. Outside vendor costs associated with such services will be passed through to the Trust as an out-of-pocket expense. If the Transfer Agent provides the escheatment services, the Transfer Agent will charge for its services per the Fee Schedule, in

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	addition to the outside vendor costs associated with such services which will be passed through to the Trust as an out-of-pocket expense.
12.	Right To Seek Assurances. The Transfer Agent reserves the right to refuse to transfer or redeem Shares until it is satisfied that the requested transfer or redemption is legally authorized, and it shall incur no liability for the refusal, in good faith, to make transfers or redemptions that the Transfer Agent, in its judgment, deems improper or unauthorized, or until it is satisfied that there is no basis for any claim adverse to the transfer or redemption. The Transfer Agent may, in effecting transfers, rely upon the provisions of the Uniform Act for the Simplification of Fiduciary Security Transfers or the Uniform Commercial Code, as these may be amended from time to time, which in the opinion of legal counsel for the Trust or of its own legal counsel, protect it in not requiring certain documents in connection with the transfer or redemption of Shares of any Fund. The Trust shall indemnify the Transfer Agent for any act it does or omits to do in reliance upon these laws or opinions of counsel of the Trust or its own counsel.
13.	Reliance By Transfer Agent; Instructions.

(a)	The Transfer Agent shall be protected in acting upon any paper or document it believes to be genuine and to have been signed by an Authorized Person and shall not be held to have any notice of any change of authority of any person until receipt of written certification thereof from the Trust. It shall also be protected in processing Share certificates that it reasonably believes to bear the proper manual or facsimile signatures.
(b)	At any time, the Transfer Agent may apply to any Authorized Person of the Trust for Written Instructions, and at the expense of the Trust, may seek advice from legal counsel for the Trust or its own legal counsel, for any matter arising in connection with this Agreement, and it shall not be liable for any action it takes or does not take or suffers in good faith in accordance with these Written Instructions or with the opinion of counsel. In addition, the Transfer Agent, its officers, agents, or employees shall accept instructions or requests from any person representing or acting on behalf of the Trust only if the Transfer Agent, its officers, agents, or employees knows the representative to be an Authorized Person. The Transfer Agent shall have no duty or obligation to inquire into, nor shall the Transfer Agent be responsible for, the legality of any act it does upon the request or direction of Authorized Persons of the Trust.
(c)	Notwithstanding any of the foregoing provisions of this Agreement, the Transfer Agent shall be under no duty or obligation to inquire into, and shall not be liable for: (i) the legality of the issue or sale of any Shares of the Trust, or the sufficiency of the amount to be received therefore; (ii) the legality of the redemption of any Shares of the Trust, or the propriety of the amount to be paid therefore; (iii) the legality of the Trust’s declaration of any dividend, or the legality of the issue of any Shares of the Trust in payment of any stock dividend; or (iv) the legality of any recapitalization or readjustment of the Shares of the Trust.

14. Standard Of Care And Indemnification. The Transfer Agent shall not be responsible for, and the Trust shall indemnify and hold the Transfer Agent harmless from and against, any and all losses, damages, costs, charges, reasonable counsel fees (including the defense of any law suit in which the Transfer Agent or affiliate is a named party), payments, expenses and liability arising out of or attributable to:

(a) All actions of the Transfer Agent or its agents or subcontractors required to be taken pursuant to this Agreement, provided that such actions are taken in good faith and without negligence, reckless disregard or willful misconduct;

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(b)	The lack of good faith, negligence or willful misconduct of the Trust;
(c)	The reliance upon, and any subsequent use of or action taken or omitted, by the Transfer Agent, or its agents or subcontractors on: (i) any information, records, documents, data, stock certificates or services, which are received by the Transfer Agent or its agents or subcontractors by machine readable input, facsimile, CRT data entry, electronic instructions or other similar means authorized by the Trust, and which have been prepared, maintained or performed by the Trust or any other person or firm on behalf of the Trust; (ii) any instructions or requests of the Trust or any of its officers; (iii) any instructions or opinions of legal counsel to the Trust with respect to any matter arising in connection with the services to be performed by the Transfer Agent under this Agreement which are provided to the Transfer Agent after consultation with such legal counsel; or (iv) any paper or document, reasonably believed to be genuine, authentic, or signed by the proper person or persons;
(d)	The offer or sale of Shares in violation of federal or state securities laws or regulations requiring that such Shares be registered or in violation of any stop order or other determination or ruling by any federal or any state agency with respect to the offer or sale of such Shares;
(e)	The processing of any checks or wires, including without limitation for deposit into the Trust’s demand deposit account maintained by the Transfer Agent; or
(f)	The breach of any representation or warranty set forth in Section 3 above.

The Trust shall not be responsible for, and the Transfer Agent shall indemnify and hold the Trust, its Board, officers, employees and agents, harmless from and against any losses, damages, costs, charges, reasonable counsel fees, payments, expenses and liability arising directly out of or attributable to any action or failure of the Transfer Agent to act as a result of the Transfer Agent’s lack of good faith, negligence or willful misconduct in the performance of its services hereunder or the breach of any representation or warranty set forth in Section 2 above.

In order that the indemnification provisions contained in this Section 11 shall apply, upon the assertion of an indemnification claim, the party seeking the indemnification shall promptly notify the other party of such assertion, and shall keep the other party advised with respect to all developments concerning such claim. The Trust shall have the option to participate with the Transfer Agent in the defense of such claim or to defend against said claim in its own name or that of the Transfer Agent. The party seeking indemnification shall in no case confess any claim or make any compromise in any case in which the other party may be required to indemnify it except with the indemnifying party’s written consent, which consent shall not be unreasonably withheld.

Notwithstanding the above, the Transfer Agent reserves the right to reprocess and correct administrative errors at its own expense.

15.	Taxes. The Transfer Agent shall not be liable for any taxes, assessments or governmental charges that may be levied or assessed on any basis whatsoever in connection with the Trust or any shareholder or any purchase of shares, excluding taxes assessed against the Transfer Agent for compensation received by it under this Agreement.
16.	Data Necessary to Perform Services. Trust or its agent shall furnish to Transfer Agent the data necessary to perform the services described herein at such times and in such form as mutually agreed upon by the parties.

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17.	Consequential Damages. No party to this Agreement shall be liable to the other party for special, indirect or consequential damages under any provision of this Agreement or for any special, indirect or consequential damages arising out of any act or failure to act hereunder.
18.	Proprietary Information; Confidentiality. The Trust acknowledges that the databases, computer programs, screen formats, report formats, interactive design techniques, and documentation manuals maintained by the Transfer Agent on databases under the control and ownership of the Transfer Agent or a third party constitute copyrighted, trade secret, or other proprietary information (collectively, “Proprietary Information”) of substantial value to the Transfer Agent or the third party. The Trust agrees to treat all Proprietary Information as proprietary to the Transfer Agent and further agrees that it shall not divulge any Proprietary Information to any person or organization except as may be provided under this Agreement.
	The Transfer Agent acknowledges that the shareholder lists and all information related to shareholders of the Funds that is furnished to the Transfer Agent by the Funds or a shareholder in connection with this Agreement shall constitute proprietary information of substantial value to the Fund. The Transfer Agent agrees on behalf of itself and its employees to treat confidentially all records and other information relative to the Trust and its shareholders received by the Transfer Agent in connection with this Agreement, including any non-public personal information as defined by Regulation S-P, and that it shall not use or disclose any such information except for the purpose of carrying out the terms of this Agreement; provided, however, that the Transfer Agent may disclose such information as required by law or in connection with any requested disclosure to a regulatory authority with appropriate jurisdiction after prior notification to, and approval of the Trust.
	Upon termination of this Agreement, each party shall return to the other party all copies of confidential or Proprietary Information received from such other party hereunder, other than materials or information required to be retained by such party under applicable laws or regulations. Each party hereby agrees to dispose of any “consumer report information,” as such term is defined in Regulation S-P.
19.	Affiliation Between Trust And Transfer Agent. It is understood that the Trustees, officers, employees, agents, and Shareholders of the Trust are or may be interested in the Transfer Agent as directors, officers, employees, agents, stockholders, or otherwise, and that the directors, officers, employees, agents, or stockholders of the Transfer Agent may be interested in the Trust as Trustees, officers, employees, agents, Shareholders, or otherwise. The fact that the officers, Trustees, employees, agents, or Shareholders of the Trust are or may be affiliated persons (as defined in the 1940 Act) of the Transfer Agent shall not affect the validity of this Agreement.
20.	Limitation Of Liability Of Trustees. The Transfer Agent acknowledges that the Funds’ obligations hereunder are binding only on the assets and property belonging to the Funds. It is expressly agreed that obligations of the Trust hereunder shall not be binding upon any Trustee, Shareholder, nominees, officers, agents, or employees of the Trust, personally, but bind only the assets and property of the Trust, as provided in the Declaration of Trust. The execution and delivery of this Agreement have been authorized by the Trustees and signed by an authorized officer of the Trust, acting as such, and neither this authorization nor this execution and delivery shall be deemed to have been made by any of them individually or to impose any liability on any of them personally, but shall bind only the assets and property of the Trust as provided in the Declaration of Trust.

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21.	Services Not Exclusive. The services of the Transfer Agent rendered to the Trust hereunder are not to be deemed to be exclusive. The Transfer Agent is free to render such services to others and to have other businesses and interests.
22.	Term.

(a)	This Agreement shall become effective on the date hereof (the “Effective Date”) and shall continue so long as the continuance is specifically approved at least annually by either a majority of the Trustees or the vote of a majority of the outstanding voting securities (as defined in the 1940 Act).
	Any approval of this Agreement by the holders of a majority of the outstanding shares (as defined in the 1940 Act) of any Fund shall be effective to continue this Agreement for any Fund notwithstanding: (i) that this Agreement has not been approved by the holders of a majority of the outstanding shares of any other Fund affected thereby, and (ii) that this Agreement has not been approved by the vote of a majority of the outstanding shares of the Trust, unless this approval shall be required by any other applicable law or otherwise.
(b)	This Agreement may be terminated at any time without payment of any penalty by vote of the Trustees of the Trust or by the Transfer Agent on sixty (60) day written notice to the other party. In the event the Trust gives notice, notice shall be accompanied by a resolution of the Board of Trustees, certified by the Secretary, electing to terminate this Agreement and designating a successor transfer agent.

23.	Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto and supersedes all prior agreements, understandings and arrangements with respect to the subject matter hereof.
24.	Amendment. This Agreement may not be amended or modified in any manner except by a written agreement executed by both parties with the formality of this Agreement and authorized or approved by a resolution of the Board of Trustees.
25.	Subcontracting. The Trust agrees that the Transfer Agent may, in its discretion, subcontract for certain of the services to be provided hereunder. The Transfer Agent shall be liable for the actions taken by its agents as if they were performed by the Transfer Agent.
26.	Security. The Transfer Agent represents and warrants that, to the best of its knowledge, the various procedures and systems which the Transfer Agent has implemented for safeguarding from loss or damage attributable to fire, theft, or any other cause (including provision for twenty-four hours a day restricted access) the Trust’s blank checks, records, and other data and the Transfer Agent’s records, data, equipment, facilities, and other property used in the performance of its obligations hereunder are adequate and that it will make changes therein from time to time as in its judgment are required for the secure performance of its obligations hereunder. The parties shall periodically review these systems and procedures.
27.	Additional Funds. In the event that the Board of Trustees establishes one or more series of Shares, in addition to those listed on the attached Appendix A, with respect to which it desires to have the Transfer Agent render services as transfer agent under the terms hereof, it shall so notify the Transfer Agent and such series of Shares shall become a Fund hereunder upon an amendment to Appendix D hereto. In the event that new affiliated funds and their portfolios become parties to this Agreement, the fees and expenses set forth on Exhibit B shall apply to such funds for their applicable initial term or renewal term, provided that the requirements of such funds and

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	portfolios are generally consistent with the services then being provided by the Transfer Agent under this Agreement to the Fund.
28.	Force Majeure. In the event either party is unable to perform its obligations under the terms of this Agreement because of acts of God, acts of war or terrorism, strikes, equipment or transmission failure or damage reasonably beyond its control, or other causes reasonably beyond its control, such party shall not be liable for damages to the other for any damages resulting from such failure to perform or otherwise from such causes; provided, however, that this provision shall not imply that the Transfer Agent is excused from maintaining reasonable business continuity plans to address potential service outages.
	In the event of a mechanical breakdown or failure of communication or power supplies beyond its control, the Transfer Agent shall take all reasonable steps to minimize service interruptions for any period that such interruption continues. Transfer Agent will make every reasonable effort to restore any lost or damaged data and correct any errors resulting from such a breakdown. Transfer Agent agrees that it shall, at all times, have reasonable contingency plans with appropriate parties, making reasonable provision for emergency use of electrical data processing equipment to the extent appropriate equipment is available. Representatives of the Trust shall be entitled to inspect Transfer Agent’s premises and operating capabilities at any time during regular business hours of Transfer Agent, upon reasonable notice to Transfer Agent. Moreover, Transfer Agent shall provide the Trust, at such times as the Trust may reasonably require, copies of reports rendered by independent accountants on the internal controls and procedures of Transfer Agent relating to the services provided by Transfer Agent under this Agreement.
	The Trust shall be responsible for all costs and expenses due to events that require the Transfer Agent to invoke emergency contingency plans due to mechanical breakdowns, failure of communication or power supplies beyond its reasonable control, or other events beyond its reasonable control where the Transfer Agent cannot perform its duties as defined in this Agreement. This includes, but is not limited to, use of appropriate parties to perform those customary Transfer Agent services and duties defined herein, including but not limited to out of pocket expenses. The Trustees authorize the Transfer Agent to, on behalf of the Trust, contract with appropriate parties to provide such duties and services. The Trust acknowledges that the costs and expenses may be higher or lower than the Trust or Fund current costs and expenses under the terms of this Agreement.
29.	Notices. Any notice or other instrument in writing, authorized or required by this Agreement to be given to the Trust or the Transfer Agent, shall be sufficiently given if addressed to that party and mailed or delivered to it at its office set forth below or at another place as it may from time to time designate in writing.

To the Trust:	To the Transfer Agent:
U.S. Global Accolade Funds	United Shareholder Services, Inc.
7900 Callaghan Road	7900 Callaghan Road
San Antonio, Texas 78229	San Antonio, Texas 78229
Attention: President	Attention: President

30. Assignment; Third Party Beneficiaries. Neither party may assign this Agreement nor any rights or obligations hereunder without the written consent of the other party. Any attempt to do so in violation of this provision shall be void. Unless specifically stated to the contrary in any written consent to an assignment, no assignment will release or discharge the assignor from any duty or responsibility under this Agreement. For avoidance of doubt, a transaction involving a merger or sale of substantially all of the assets of a Fund shall not require the written consent of

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	the Transfer Agent. Except as explicitly stated elsewhere in this Agreement, nothing under this Agreement shall be construed to give any rights or benefits in this Agreement to anyone other than the Transfer agent and the Fund, and the duties and responsibilities undertaken pursuant to this Agreement shall be for the sole and exclusive benefit of the Transfer Agent and the Fund. This Agreement shall inure to the benefit of and be binding upon the parties and their permitted successors and assigns.
31.	Governing Law. This Agreement shall be construed in accordance with the laws of the State of Texas.
32.	Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original; but the counterparts shall, together, constitute only one instrument.
33.	Severability. If any term or condition of this Agreement shall be invalid or unenforceable to any extent or in any application, then the remainder of this Agreement (including the term or condition to the extent possible) shall not be affected thereby, and each and every term and condition of this Agreement shall be valid and enforceable to the fullest extent and in the broadest application permitted by law.
34.	Waiver. The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver nor shall it deprive the party of the right thereafter to insist upon strict adherence to that term or any term of this Agreement. Any waiver must be in writing signed by the waiving party.
35.	Headings. All Section headings contained in this Agreement are for convenience of reference only, do not form a part of this Agreement and will not affect in any way the meaning or interpretation of this Agreement. Words used herein, regardless of the number and gender specifically used, will be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine, or neuter, as the contract requires.

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     In Witness Whereof, the parties hereto have caused this Agreement to be executed by their respective officers thereunder duly authorized and their respective seals to be hereunto affixed, as of the day and year first above written.

		U.S. Global Accolade Funds
Attest:
By:	/s/ Martha Kay Kimsey	By:	/s/ Frank E. Holmes
			Frank E. Holmes
			President and Chief Executive Officer
SEAL
		United Shareholder Services, Inc.
Attest:
By:	/s/ Martha Kay Kimsey	By:	/s/ Shannon F. Neill
			Shannon F. Neill
			President
SEAL

13

Fee Schedule
to the
Transfer Agency and Services Agreement
between
U.S. Global Accolade Funds (the “Trust”) and
United Shareholder Services, Inc. (the “Transfer Agent”)

Dated as of April 1, 2007

Annual Fee

$15.00 per open account — Equity
$15.00 per open account — Income
$21.00 per open account — Money Market
$2.50 per closed account
$10,000 per fund/year
$13,500 per fund complex — email services

Activity Charges
Shareholder & Intermediary Servicing Transactions	2.00 / 1st 25,000; $0.75 thereafter
Correspondence or email	$4.00 / item
Shareholder Telephone Calls	$2.50 / call
Telephone System	$0.35 / call received
Lost Shareholder Searches	$6.00 / account
Escheatment Filings	(included in lost shareholder costs)
ACH Shareholder Services
$125.00 month per fund
$0.50 per ACH or IDR (Check Imaging) per item
Physical Certificate Processing — Services to handle processing of physical certified shares for a fund family.
Set up	$750 per fund group
Certificate Transaction	$10.00 each
Mailing Operations
Materials Warehousing	— Monthly Base Fee$1,200.00
Operations Base Fee	— Monthly Base Fee$3,900.00
Handling Charges
Daily, Monthly, Quarterly Statements	$0.08 per mailed package
Tax Forms	$0.08 per mailed package
Other Required Regulatory Mailings	$0.08 per mailed package
Printing	$0.21 per image
New Account Kits (prospectus, etc.)	$3.00 per mailed package
Non-NSCC Accounts
Anti-Money Laundering
Base Fee

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0 — 999 accounts	$1,000 per fund, per year
1,000 — 4,999 accounts	$2,000 per fund, per year
5,000 — 9,999 accounts	$3,500 per fund, per year
10,000 — + accounts	$6,500 per fund, per year
Name Search	$1.00 per legal owner
Name Search	$1.00 per authorized trader
NSCC Account Monitoring Charges
Redemption Fee	$2.00 per account, per year
Excessive Trader	$2.00 per account, per year
Out-of-Pocket Expenses, including but not limited to:
Telephone — toll free lines
Telephone — long distance calls
Retention of records
Postage
Microfilm/fiche/CD/other electronic media records
Programming/enhancements
Special reports
Disaster recovery site — including equipment, hardware, and other customary items
Stationery/envelopes
Confirmations
Monthly statements
Quarterly statements
Annual statements
Transcripts
NSCC charges
Proxies
Freight
Computer, printer, devices hardware/configuration and maintenance contracts,
Telecommunications hardware/configuration and maintenance contracts
Network hardware/configuration and maintenance contracts
Data warehousing, access, security, storage, recording, retrieval, reproduction
Support, consulting, management
Regulatory searches — OFAC, FinCEN, etc.
All other out-of-pocket expenses incurred on the Fund’s behalf, in addition to the following:
These fees are subject to change as determined by the provider.
TA2000
Short-Term Trader — Software application used to track and/or assess transaction (redemption) fees determined to be short-term trades.

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90 days or less	$0.08 per open account
91 — 180 days	$0.14 per open account
181 — 270 days	$0.20 per open account
Excessive Trader — Software application used to track the number of trades (exchanges or redemptions) that meet fund criteria.
Set up per fund	$1,500
Per account, per year	$0.12
Disaster Recovery Fee — This fee supports four-hour recovery and is a pro-rata portion of the service provider cost for the service.
Per open account, per year	$0.20
NSCC Communication Charge — This fee is pro-rata portion of service to support circuits and equipment to connect to the DTCC, and maintenance and support of the NSCC interfaces.
Per CUSIP, per month	$100.00
Average Cost Tracking — This fee allows the system to track shareholder financial transactions and provide average cost basis information.
Per account, per year	$0.25
Average Cost Holding Period Identification — This fee is based on the history records kept, see Average Cost Tracking.
Per thousand history records	$3.50

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Web Site Out-of-Pocket Charges
These fees are subject to change as determined by the provider.
Fan Web Services — These fees provide shareholders access to accounts via the internet.
Set up Fees
Initial Web Site	N/A already established
Each Additional Web Site	$5,000
Each Plan Sponsor Web Site	$10,000
Monthly Base Access and Support Charge	$3,000 per month
Transaction Fees
Inquiry	$0.15 per event
Maintenance	$0.25 per event
Financial	$0.50 per event

Data Processing & Telecommunication
Out-of-Pocket Charges

Support of electronic communications such as: data processing, data and voice recordings, data warehousing, data security, data access, data feeds, data recovery, statement and tax data, email, voicemail, printers, hardware, software, maintenance, support, consulting, storage, and lease or license fees of said charges, and etc.

     For example:

3rd party data feeds; web feeds; data processing and communications equipment, software, and maintenance, communication circuits, telephone lines, modems, etc. (including hardware, software, maintenance, management, support, etc.); Desktops (PC),Servers, Printers, Scanners, and Other Devices, Etc. (including hardware, software, maintenance, management, support, etc.); and Data Warehousing, Data Security, Data Access, Recording Devices, Email, Voice, devices, etc.)

     Billed at cost.

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Computer/Technical Personnel
Out-of-Pocket Charges

     These fees are subject to change.

Computer/Technical Personnel
Business Analyst Tester
Dedicated	$102,000 per year
Hourly	$81.00 per hour
COBOL Programmer
Dedicated	$163,000 per year
Hourly	$135.00 per hour
Workstation Programmer
Dedicated	$199,000 per year
Hourly	$163.00 per hour
Web Programmer
Dedicated	$235,000 per year
Hourly	$194.00 per hour
Other Technical	Billed as incurred

NSCC
Out-of-Pocket Charges

     These fees are subject to change.

NSCC Interfaces
Set Up
Fund/SERV, Networking	N/A already established
ACATS, Exchanges *	$5,000 set-up (one time)
DCCS, TORA Commission Settlement *	$5,000 set-up (one time)
* 3rd party estimate
Processing Fee Types, for example
Fund/SERV	Determined by the DTCC
Networking	Determined by the DTCC
CPU Access	Determined by the DTCC
Fund/SERV Transactions	Determined by the DTCC
Networking — per item	Determined by the DTCC
Additional as Determined by the DTCC
Mutual Fund Services Out-of-Pocket Expense Items
Forms Costs
Statement Paper	At cost
#9, #10 Envelopes	At cost
Check/Statement Paper	At cost
Certificate	At cost

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Fulfillment Envelope	At cost
Presort	At cost
Printing & Mail Costs
Postage	At cost
Statement, Images	At cost

19

APPENDIX A
to the
Transfer Agency and Services Agreement
between
U.S. Global Accolade Funds (the “Trust”) and
United Shareholder Services, Inc. (the “Transfer Agent”)

Dated as of April 1, 2007

Authorized Persons

          I, Frank E. Holmes, President, and I, Susan B. McGee, Secretary, of U.S. Global Accolade Funds, a Massachusetts business trust (the “Trust”), do hereby certify that:

          The Board of Trustees of the Trust has duly authorized the following individuals in conformity with the Trust’s Declaration of Trust and By-Laws to give Oral Instructions and Written Instructions on behalf of the Trust, and the signatures set forth opposite their respective names are their true and correct signatures:

Name	Position	Signature
Frank E. Holmes	President Chief Executive Officer	/s/ Frank E. Holmes
Susan B. McGee	Executive Vice President Secretary	/s/ Susan B. McGee

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APPENDIX B
to the
Transfer Agency and Services Agreement
between
U.S. Global Accolade Funds (the “Trust”) and
United Shareholder Services, Inc. (the “Transfer Agent”)

Dated as of April 1, 2007

Duties of the Transfer Agent

	The following is a general description of the transfer agency services the Transfer Agent shall provide to each Fund.
A.	Shareholder Record Keeping. Maintain shareholder and stock transfer records as required by the rules of the Securities and Exchange Commission, including records for each shareholder showing: (i) name, address, appropriate tax certification, and tax identifying number; (ii) number of shares of each Fund, portfolio, or class; (iii) historical information including, but not limited to, dividends paid, date and price of all transactions including individual purchases and redemptions, based upon appropriate supporting documents; (iv) any capital gain or dividend reinvestment order, application, specific address, payment and processing instructions and correspondence relating to the current maintenance of the account; (v) any stop or restraining order placed against a Shareholder’s account; (vi) certificate numbers, denominations, and the name of the holder of record for any Shareholders holding certificates; (vii) any information required in order for the Transfer Agent to perform the calculations this Agreement contemplates or requires; and (viii) any other information and data as applicable law may require.
B.	Share Issuance. Record the issuance of Shares of each Fund. Except as specifically agreed in writing between the Transfer Agent and the Trust, the Transfer Agent shall have no obligation when countersigning and issuing and/or crediting Shares to take cognizance of any other laws relating to the issue and sale of Shares except insofar as policies and procedures of the Stock Transfer Association recognize these laws.
C.	Purchase, Exchange, Transfer, and Redemption Orders. Process all orders for the purchase, exchange, transfer, and redemption of shares of the Trust in accordance with the Trust’s current prospectus and customary transfer agency policies and procedures, including electronic transmissions which the Trust acknowledges it has authorized, or in accordance with any instructions of the Trust or its agents which the Transfer Agent reasonably believes to be authorized.

1. Purchases. Upon the sale of any Shares of a Fund, the Trust shall transmit, or cause to be transmitted, the following information to the Transfer Agent via a mutually acceptable means of communication, specifying: (i) the name of the Fund whose Shares were sold; (ii) the number of Shares sold, trade date, and price; (iii) the amount of money to be delivered to the Custodian for the sale of the Shares and specifically allocated to the Fund; and (iv) in the case of a new account, a new account application or sufficient information to establish an account.

(a) The Transfer Agent will, upon its receipt of a check or other payment it identifies as an investment in Shares of a Fund and drawn or endorsed to the Transfer Agent as agent for, or identified as being for the account of, a Fund, promptly deposit the check or other payment to the appropriate account and make such postings as are necessary to reflect the

B-1

investment. The Transfer Agent will notify the Trust, or its designee, and the Custodian of all purchases and related account adjustments.

(b)	Under procedures as the Trust and Transfer Agent establish, the Transfer Agent shall issue to the purchaser or his authorized agent the Shares he is entitled to receive, based on the appropriate net asset value of the Fund’s Shares, determined in accordance with the Trust’s pricing procedures, as approved by the Board of Trustees. In issuing Shares to a purchaser or his authorized agent, the Transfer Agent shall be entitled to rely upon the latest directions, if any, the Transfer Agent previously received from the purchaser or his authorized agent concerning the delivery of the Shares.
(c)	The Transfer Agent shall not be required to issue any Shares of the Trust when it has received a Written Instruction from the Trust or written notification from any appropriate Federal or state authority that the sale of the Shares of the Fund in question has been suspended or discontinued, and the Transfer Agent shall be entitled to rely upon the Written Instruction or written notification.
(d)	Upon the issuance of any Shares of any Fund in accordance with the foregoing provision of this Section, the Transfer Agent shall not be responsible for the payment of any original issue or other taxes the Trust is required to pay in connection with the issuance.
(e)	The Transfer Agent may establish additional policies and practices governing the transfer or registration of Shares as it may deem advisable and consistent with those transfer agents generally adopt.

2. Exchanges, Transfers, and Redemptions. The Transfer Agent is authorized to review and process transfers of Shares of each Fund, exchanges between Funds on the records of the Funds the Transfer Agent maintains, exchanges between the Trust and other funds as the Trust’s prospectus may permit, and redemptions of Shares of a Fund. If Shares to be transferred, exchanged, or redeemed are represented by outstanding certificates, the Transfer Agent will, upon surrender to it of the certificates in proper form for transfer, and upon cancellation thereof, in the case of exchanges and transfers, countersign and issue new certificates for a like number of Shares and deliver the same or, in the case of a redemption, cause redemption proceeds to be paid to the shareholder. If the Shares to be exchanged, transferred, or redeemed are not represented by outstanding certificates, the Transfer Agent will, upon receipt of an order therefore by or on behalf of the registered holder thereof in proper form, credit the same to the transferee on its books or process the redemption request. If Shares are to be exchanged for shares of another fund, the Transfer Agent will process the exchange in the same manner as a redemption of sale of Shares, except that it may in its discretion waive requirements for information and documentation.

D.	Shareholder Communications. The Transfer Agent will transmit all communications by the Trust to its shareholders promptly following the Trust’s delivery to the Transfer Agent of the material to be transmitted by mail, telephone, courier service, or electronically.
E.	Proxy Materials. In connection with special meetings of Shareholders, the Transfer Agent will prepare Shareholder lists, assist with the mailing or transmission of proxy materials, process and tabulate returned proxy cards, report on proxies voted prior to meetings, act as teller at meetings, and certify Shares voted at meetings.
F.	Returned Checks. If any check or other order for the transfer of money is returned unpaid for any reason, the Transfer Agent will take any steps as it may, in its discretion, deem appropriate to

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protect the Trust from financial loss or as the Trust or its designee may instruct, and notify the Fund of the steps taken. If the Transfer Agent adheres to standard procedures, as the Trust and Transfer Agent agree upon from time to time, regarding purchases and redemptions of shares, the Transfer Agent shall not be liable for any loss the Fund suffers as a result of returned or unpaid purchase or redemption transactions. Legal or other expenses incurred to collect amounts owed to a Fund as a consequence of returned or unpaid purchase or redemption transaction shall be an expense of that Fund. A Fund may, at its option, purchase insurance to reduce its potential losses from collection activities.

G.	Shareholder and Broker-Dealer Correspondence. The Transfer Agent will investigate all Shareholder inquiries relating to Shareholder accounts and will answer all correspondence from Shareholders, securities brokers, and others relating to its duties hereunder and other correspondence as may from time to time be mutually agreed upon between the Transfer Agent and the Trust.
H.	Tax Reporting. The Transfer Agent shall file appropriate information returns concerning the payment of dividends and capital gain distributions with the proper Federal, State and local authorities as the Trust is required by law to file and shall withhold any sums required to be withheld by applicable law.
I.	Dividend Disbursing. The Transfer Agent will prepare and mail checks, place wire transfers, or credit income and capital gain payments to shareholders. The Trust will advise the Transfer Agent of the declaration of any dividend or distribution and the record and payable date thereof at least five (5) days prior to the record date. The Trust shall furnish to the Transfer Agent a resolution of the Board of Trustees of the Trust certified by the Secretary: (i) authorizing the declaration of dividends on a specified period basis and authorizing the Transfer Agent to rely on Oral Instructions or a Certificate specifying the date of the declaration of the dividend or distribution, the date of payment thereof, the record date as of which Shareholders entitled to payment shall be determined and the amount payable per share to Shareholders of record as of that date and the total amount payable to the Transfer Agent of the Trust on the payment date; or (ii) setting forth the date of the declaration of any dividend or distribution by a Fund, the date of payment thereof, the record date as of which Shareholders entitled to payment shall be determined, and the amount payable per share to the Shareholders of record as of that date and the total amount payable to the Transfer Agent on the payment date.
	The Transfer Agent will, on or before the payment date of any dividend or distribution, notify the Trust’s Custodian of the estimated amount required to pay any portion of the dividend or distribution payable in cash, and on or before the payment date of the distribution, the Trust will instruct its Custodian to make available to the Transfer Agent sufficient funds for the cash amount to be paid out. If the Transfer Agent does not receive from the Custodian sufficient cash to pay all shareholders of the Trust as of the record date, the Transfer Agent shall, upon notifying the Trust, withhold payment to all Shareholders of record as of the record date until it receives sufficient cash for this purpose.
	If a shareholder is entitled to receive additional shares by virtue of any distribution or dividend, appropriate credits will be made to each shareholder’s account. The Transfer Agent will calculate, prepare, and mail checks to, or (where appropriate) credit the dividend or distribution to the account of, Fund Shareholders, and maintain and safeguard all underlying records. The Transfer Agent will replace lost checks at its discretion and in conformity with regular business practices. The Transfer Agent will maintain all records necessary to reflect the crediting of dividends that are reinvested in Shares of the Trust, including without limitation daily dividends. The Transfer

B-3

Agent shall not be liable for any improper payments made in accordance with a resolution of the Board of Trustees of the Trust.

J.	Escheatment. The Transfer Agent shall provide escheatment services abandoned accounts and returned checks under applicable law and report such actions to the Trust.
K.	Telephone Services. The Transfer Agent will provide staff coverage, training, and supervision in connection with the Trust’s telephone line for shareholder inquiries, and will respond to inquiries concerning shareholder records, transactions the Transfer Agent processes, procedures to effect the shareholder records, and inquiries of a general nature relative to shareholder services.
L.	12b-1. The Transfer Agent will calculate and process, or will cause to be processed, all 12b-1 payments in accordance with each Fund’s current prospectus.
M.	Commission Payments. The Transfer Agent will calculate and process all commission payments in accordance with each Fund’s current prospectus.
N.	Requests for Information. The Transfer Agent will provide all required information in a timely fashion in support of regulatory filings.
O.	SAS 70. The Transfer Agent will make available to the Trust any independent auditor reports in compliance with SAS 70, if applicable.
P.	Regulatory Changes. The Transfer Agent will assist with the analysis and implementation of any changes required by regulatory bodies.
Q.	The Transfer Agent will:

1.	Provide office facilities for the provision of the services contemplated herein (which may be in the offices of the Transfer Agent or its corporate affiliate);
2.	Provide or otherwise obtain personnel sufficient for provision of the services contemplated herein;
3.	Furnish equipment and other materials necessary or desirable for provision of the services contemplated herein; and
4.	Keep records relating to the services provided hereunder in the form and manner as the Transfer Agent may deem appropriate or advisable. To the extent required by Section 31 of the 1940 Act and the rules thereunder, the Transfer Agent agrees that all records it prepares or maintains relating to the services provided hereunder are the property of the Funds and will be preserved for the periods prescribed under Rule 31a-2 under the 1940 Act, maintained at the Funds’ expense, and made available in accordance with Section 31 and the rules thereunder. The Transfer Agent will make available during regular business hours all records and other data created and maintained pursuant to this Agreement for reasonable audit and inspection by the Trust, or any person the Trust retains. Upon reasonable notice by the Trust, the Transfer Agent shall make available during regular business hours its facilities and premises employed in connection with its performance of this Agreement for reasonable visitation by the Trust or any person the Trust retains. The Transfer Agent may, at its option at any time, and shall forthwith upon the Trust’s demand, turn over to the Trust and cease to retain in the Transfer Agent’s files, records and documents it created and maintained in

B-4

performance of its services or for its protection. At the end of the six-year retention period, these records and documents either will be turned over to the Trust, or destroyed in accordance with the Trust’s authorization.

R. The Transfer Agent shall furnish the Trust any state notice filing reports, any periodic and special reports as the Trust may reasonably request, and other information, including Shareholder lists and statistical information concerning accounts, as the Trust and the Transfer Agent may agree upon.

B-5

APPENDIX C
to the
Transfer Agency and Services Agreement
between
U.S. Global Accolade Funds (the “Trust”) and
United Shareholder Services, Inc. (the “Transfer Agent”)

Dated as of April 1, 2007

AML DELEGATION

1. Delegation.

1.1

Subject to the terms and conditions set forth in this Agreement, the Trust hereby delegates to the Transfer Agent those aspects of the Trust’s Anti-Money Laundering Program (the “AML Program”) that are required to implement the International Money Laundering Abatement and Anti-Terrorist Financing Act Of 2001 Policies and Procedures and Customer Identification Program, as such policies and procedures may be amended from time to time (the “Delegated Duties”). The Delegated Duties may be further amended, from time to time, by mutual agreement of the Trust and the Transfer Agent upon the execution by such parties of a revised Appendix C bearing a later date than the date hereof.

1.2

The Transfer Agent agrees to perform such Delegated Duties, with respect to the Fund shareholders for which the Transfer Agent maintains the applicable shareholder information, subject to and in accordance with the terms and conditions of this Agreement.

2.	Consent to Examination. In connection with the performance by the Transfer Agent of the Delegated Duties, the Transfer Agent understands and acknowledges that the Trust remains responsible for assuring compliance with the USA PATRIOT Act of 2001 (“USA PATRIOT Act”) and the laws implementing the USA PATRIOT Act and that the records the Transfer Agent maintains for the Trust relating to the AML Program may be subject, from time to time, to examination and/or inspection by federal regulators in order that the regulators may evaluate such compliance. The Transfer Agent hereby consents to such examination and/or inspection and agrees to cooperate with such federal regulators in connection with their review. For purposes of such examination and/or inspection, the Transfer Agent will use its best efforts to make available, during normal business hours and on reasonable notice, all required records and information for review by such regulators.
3.	Limitation on Delegation. The Trust acknowledges and agrees that in accepting the delegation hereunder, the Transfer Agent is agreeing to perform only the Delegated Duties, as may be amended from time to time, and is not undertaking and shall not be responsible for any other aspect of the AML Program or for the overall compliance by the Trust with the USA PATRIOT Act or for any other matters that have not been delegated hereunder. Additionally, the parties acknowledge and agree that the Transfer Agent shall only be responsible for performing the Delegated Duties with respect to the accounts for which the Transfer Agent maintains the applicable shareholder information.
4.	AML Reporting to the Trust

C-1

4.1	On a quarterly basis, the Transfer Agent shall provide a report to the Trust on its performance of the AML Delegated Duties, among other compliance items, which report shall include information regarding the number of: (i) potential incidents involving cash and cash equivalents or unusual or suspicious activity, (ii) any required reports or forms that have been filed on behalf of the Fund, (iii) outstanding customer verification items, (iv) potential and confirmed matches against the known offender and OFAC databases and (v) potential and confirmed matches in connection with FinCen requests. Notwithstanding anything in this Section 4.1(a) to the contrary, the Transfer Agent reserves the right to amend and update the form of its AML reporting from time to time to comply with new or amended requirements of applicable law.
4.2	At least annually, the Transfer Agent, in conjunction with the internal auditor of U.S. Global Investors, Inc., will arrange for an audit of the AML services it provides to its clients on an organization-wide basis, as required by applicable regulation. The Transfer Agent will provide the Board of Trustees with the results of the audit and testing, including any material deficiencies or weaknesses identified and any remedial steps that will be taken or have been taken by the Transfer Agent to address such material deficiencies or weaknesses.
4.3	On a periodic basis, but no less frequently than annually, the Transfer Agent will provide the Trust with a written certification that, among other things, it has implemented its AML Program and has performed the Delegated Duties.

C-2

APPENDIX D
to the
Transfer Agency and Services Agreement
between
U.S. Global Accolade Funds (the “Trust”) and
United Shareholder Services, Inc. (the “Transfer Agent”)

Dated as of April 1, 2007

Funds of the Trust

Eastern European Fund
Global Emerging Markets Fund
Holmes Growth Fund
MegaTrends Fund

D-1

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.	A & B Mailers, Inc. — incorporated in Texas 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
5.	<i>Weblabs, Inc. — incorporated in Texas and wholly owned by the Company
6.	U.S. Global Investors (Bermuda) Ltd., incorporated in Bermuda 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 12, 2007

/s/ Frank E. Holmes  

Frank E. Holmes 

Chief Executive Officer 

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 12, 2007

/s/ Catherine A. Rademacher  

Catherine A. Rademacher 

Chief Financial Officer 

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, 2007 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 12, 2007

/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.

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, 2007, 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 12, 2007

/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.