Frank Holmes - Chief Executive Officer and Chief Investment Officer Lisa Callicotte - Chief Financial Officer Susan McGee - President, General Counsel, and Chief Compliance Officer

Good morning. Thank you for joining us today for our webcast announcing U.S. Global Investors' Results for the Third Quarter of Fiscal 2017. I'm Lisa Aston. [Operator Instructions] Also you may download a PDF of today slides by clicking on the red handout button. The presenters for today's program are Frank Holmes, U.S. Global Investors' CEO and Chief Investment Officer; Susan McGee, President, General Counsel, and Chief Compliance Officer; and Lisa Callicotte, Chief Financial Officer. During this webcast, we may make forward-looking statements about our relative business outlook. Any forward-looking statements and all other statements made during this webcast that don't pertain to historical facts are subject to risks and uncertainties that may materially affect actual results. Please refer to our press release and corresponding Form 10-Q filing for more detail on factors that could cause actual results to differ materially from any described today in forward-looking statements. Any such statements are made as of today and U.S. Global Investors accepts no obligation to update them in the future. Now, let's go to Frank Holmes, CEO and CIO, for an overview of the period. Frank?

Thank you, Lisa. U.S. Global is an innovative investment manager with vast experience in global markets and specialized sectors. Founded as an investment public company, it's become a registered investment adviser in 1968 and has a long-standing history of global investing and launching first of their kind investment products, including the first no-load gold fund. U.S. Global Investors is well known for expertise in gold and precious metals, natural resources in emerging markets. Our strengths. We still strive to go to start for exposure in emerging markets, in particular, gold. We move around with gold, and we'll talk more about that in the presentation. We remain debt free, we have a strong balance sheet with a reflexive cost structure, which we will talk more in this presentation. Monthly dividend return and equity discipline. Even though it's been very challenging, we're very focused on how we deploy our capital to maximize returns of capital, just like other insurance companies or the Warren Buffetts of the world return invested capital, so important, which you're doing for products and services and your own cash. We like to think that top institutional holders will grow, Financial & Investment Management Group, Royce funds, the Vanguard, BlackRock, and particularly, the Newberg Family, which is a major investment for the family, and we want to thank all their support through the volatility of this gold market, and I guess the real mortification is taking place with the asset management business with mutual funds, and how this is all being impacted. We'll talk a little bit of more about that in the presentation. But GROW dividends. They are paid monthly, consistent for nine years. The current yield at the share price of $1.56 is 1.92%. Monthly dividend payments are $0.025, approved through the June 2017. The board approved the repurchase of up to $2.75 million of outstanding common stock. During the third quarter of fiscal 2017, the company repurchased 9,879 Class A shares using cash flow of approximately 17,000. This program may be suspended, as evidenced by regulatory filings. Frank Homes is purchasing shares of growth pursuing to Rule 10b-18 plan. And that basically is we buy on down days. That's our business model, and it's to be opportunistic, at the same time, always trying to buy things when they're on sale. And the fact that the fund - that GROW has its volatility, this has been the best model that we can think of for our capital. Further, we've always recommended that for investors to how they can use volatility, and we'll talk more about that in this presentation. The balance sheet. This is a strength. There's no debt. We show in the visual in 2013 when we started to really deploying higher capital or kicking our cash, which was bearing nothing, and putting into higher-yielding investments. And in particular, because we just saw the overall portfolio of the resource sectors, et cetera, was continuing to fall from 2013, only until last year that we had a rebound. So those investments have been important as an additional source of income in running our business. Earnings per share is showing quarterly. I put in there when we closed the money funds. The money funds were - they basically peaked over $0.5 billion. We go back to 2009 area, and they shrunk down to 2 53 as rates fell, in particular, when the rates were at 0, the industry, as a whole, was losing billions and we got rid of those funds and now rates have risen, but I don't think there's much profit margin in money market funds today. So we're not going to be interested. I was asked setting up a money fund again, that's been just a really challenging experience. And it's very easy to set up a mutual fund. It's extremely expensive to unwind a mutual fund. I've commented on that in previous presentations. But you can see what the earnings are, and they're slowly, we're making a transition. And this quarter is a flat quarter. Technically, we ground things off for $0.01. We lost $30,000 versus as flat, but we're still managing this volatility of gold. Quarterly average assets at our management remain stable, as you could see, and then the next visual is asset breakdown. 32% domestic funds of fixed income, 68% emerging markets and natural resources, and 80% of their profit margin is going to come from gold and resource funds. Our assets are 22% institutional and 78% retail. We still have a large shareholder base directly through Atlantic, which is very different in most other complexes, it is through the platforms. And thank god we have this relationship and that’s why we spend a lot of money on our investor alert and marketing and education because people have a direct relationship with us. The redemptions of the mutual funds, I believe, would have accelerated even more substantially, had we relied only on our funds coming through platforms, as there is a massive shift in leaving mutual funds going into EPS, or portfolios of EPS, trading EPS or separate accounts, and a lot of the separate accounts now are trading and using EPS. So that transition, as we get ready to launch ours. I think what's important when we launched our Airlines ETF was we always had this headwind that Warren Buffett didn't like the industry, and since he's turned positive on the industry, the EPF, as you can see in the next visual, has had positive fund flows. And it's interesting, just after the election came out with the results that it showed in filings that he had increased and started spending billions of dollars on the four major airlines. What I'm proud of is that our model, and I remember saying this to people, there was a headwind against our ETF in jest, telling people that the factors that we use for this intelligent smart factor model would be the factors that a Warren Buffett would like this industry now. Has a mode around it. They have high free cash flow. They have high cash flow returns on invested capital. And it's very comforting to be validated. From a marketing point of view, it's no longer a headwind. But more important, as money managers, the factors that we use to create this dynamic, readjusting every quarter ETF, is validated with why he likes the industry. He commented a lot in his last presentation. Last night I spoke on CNBC Asia. The question is, how could you ever have this ETF? Basically, with the negative news of the United Airlines, in particular, and Delta, and as I explained it, bad news is good news. The sell-off provided buying opportunity. Management is forced to start thinking about the customer that's paying. There's more benefits that come to that customer that's flying; and two, industry has a mode around it now. Two million people every day fly in America. And if you want to do business, you have to fly and meet people. So I think it's a very positive sector, and I think it will continue to remain strong. It's a utility that has a very strong capitalistic model to it. Next is showing that gold rebounded, was important last year that it rebounded. It's very different rebound that we saw from last year. The fund flows did not go into active funds anywhere in the world. It was just so modest. We experienced positive fund flows, but nothing like before, even though we won many awards and received accolades for best of gold funds in the sector. And this is the morphing that's taking place. But we're setting us up for a great opportunity as we get ready to launch our gold smart beta equity ETF. So I remain positive on that end because ours is much more intelligent than what's taking place with the GDX and GDXJ. The next visual is showing the seasonal pattern for gold. It's interesting that it's changed. If you look at the 15-year pattern, it's more similar to the 30-year, but the five-year, it seems to sell off going into Christmas earlier, which is interesting on this whole threat of rising rates. But what's important is that we usually get to sell off into June, we get a surge and so it will all depend on real interest rates. I think we're going to live with these negative real interest rates, because in my trip a couple of weeks ago, I wrote about it, that the policies that are in Washington, D.C., Beltway are pro - creating regulations, nothing to streamline regulations. It's very difficult for any President to all of a sudden try to go up there to streamline regulations. You're basically allowed three strikes at the ball, and you have to wait till the next year. So good luck, President Trump. We know it's so important that there's some streamlining of regulations. It's advocated from captains of every industry. And now that these costs of regulations are being passed on to customers, you're seeing that was a big part of the rebellion of small businesses that voted for Trump. It shocked a lot of people, but small businesses, which represent 60% of job creation, was the big backbone that voted for President Trump. It wasn't the red nexus that media tried to highlight for this. And I think it's just interesting that if we do get a reprieve in regulations, then the economy will boom. And I think it's also very positive for gold, I think with these other insignificant dynamics, in addition to the seasonal pattern. Here is another visual showing gold. I’m commenting a lot on gold because it is really highly correlated to our stock price. For those that just want to understand, what priced it up and down. So the gold price 50-day moving average. You can see there's been lots of zigzags in the past year. And if you take a look in 2017, it sold off going into the election and then it rallied. So it had a big rally in the first half and then it sold off and then it's gone through another big rally. The recent selloff is the threat of rising interest rates. But what's holding those up is the five-year government bond is still negative. And the India demand, which was not there this time last year, has now picked up. So there’s interesting factors that are still taking place out of Asia. There's big bricks that are still going to Switzerland, de-melted down the refinery. So we're going at full chill, full capacity of operation of melting down big gold bricks to smaller bricks, and they're showing up in China and India. In particular, in these past six months, they've been showing up in India. So the next visual is showing a gold map. This is just looking at the GLD, and I think, this to me, is fascinating to show you that as rates remain negative, even though gold sold off and then rebounded, the bullion has gone flat. And they will remain flat as long as we have negative real interest rates. That has been the historical pattern. However, the gold stocks have not been; when you look at the GDX and the GDXJ, and that's been very disruptive that the GDXJ, which is the smaller cap gold stocks end up having such strong inflows, we're talking $5 billion just last year in the GDXJ's small cap. And that money usually went to active fund managers. And even though we outperformed it, it didn't really matter. It just seemed that money wants to go and people are not investing. They're all trading, and that's the new reality, the new paradigm. And what happened here was they end up owning too many shares in small-cap companies. They're going to own more than 20%, so they started selling them all, and then we've had this big rotation of GDXJ selling $3 billion through your gold stocks, and now buying majors, and the GDX and GDXJ are almost identical in their holdings. But it's been extremely disruptive, and you can see these shares - the number of shares outstanding, that means redemptions. And the other thing we've discovered in looking at the GDX and GDXJ is as Direxion has a Las Vegas type product, which is leveraged 3x to the equities of the GDX and GDXJ. And in that whole change was taking place that they redeemed billions of dollars out of these ETFs. So it's interesting to watch that this industry, just prior to this past quarter, peaked at around $17 billion in assets and traded $3.5 billion a day. It's very liquid and there is no true, smart intelligent ETF out there that understands this - how things function in the gold space. So I look forward to tackling that sometime in this next quarter. Negative real interest rates, I repeat, the 5 year remains negative and places at 2.4%, and that's always positive for gold in any country's currency. So fund regulatory costs continue to be a small - impact small fund families and small funds and small shareholder accounts. All this regulatory ruling that's been just growing and growing each year for the past 16 years, it really impacts, but it benefits the large funds, groups like the Vanguards, the BlackRocks. They truly benefit from all of this. And now the last Fiduciary Rule, it was the last thing that seemed to frighten the big cap wire houses, where, if your fund expenses were small funds, it doesn't matter; small shareholders, doesn't matter. If your fund expenses are higher than the average, then you have to get off their platform because you're worried about the interpretation that cheapest was best and avoid litigation. They truly benefit from all of the channel over the last fiduciary rule, it was sort of the last thing that seemed to frighten the big chap wire houses where if the funding expenses for small funds it doesn't matter small shareholders doesn’t matter, if you're funding expenses are higher than the average, then you have to get of the platform because you were worried about the interpretation that the cheapest was best, and avoids litigation. So this is another sort of headwind we've had to deal with. And I think we've done an admirable job with that. I think the fact that we have direct shareholders is a key factor to us being able to survive through this turmoil in the mutual fund arena. I know my friends in Canada, like CI funds, they went and bought the largest ETF provider in Canada because they just see this transition taking place there. And so it's how smart are our products and how do we get them launched. And we've learned a lot from the launching of our Jets ETF. So, we'll apply that to our other slew of products coming out. Managing expectations. This is so important. You can visit our website, see Managing Expectations white paper at usfunds.com, I've commented so many times. It's important to recognize the volatility of gold on a daily basis. It's plus or minus 4%, 70% of the time. The New York ARCA Gold BUGS Index is plus or minus 3%. Bullion is 1%. S&P is 1%. Oil is plus 3%, and dollar is 1%. But on a 12-month basis, it's a nonevent for GROW to go plus or minus almost 60% and gold stock's 40%. And it's understanding how you use that. It will prevent you from buying when it's up dramatically and using volatility that down dips to be able to [indiscernible] positions. Now, I’m going to turn over to Lisa Callicotte, our CFO.

Thank you, Frank. Good morning I like to summarize our results of operations for the quarter ended March 31, 2017. Beginning on Page 26, we reported total operating revenue of $1.7 million for the quarter. This is a 26% increase from the $1.3 million we reported the same quarter last year. The increase is primarily due to an increase in average assets under management, and the US Global Investors Fund, USGIF, mainly due to market appreciation in the gold and natural resource fund. Our operating expenses for the quarter were $1.9 million, which is a slight decrease of 0.5%. Changes in expenses included the following: Employee compensation and benefits actually increased 46,000 or 5%, primarily due to bonuses paid related to improved portfolio performance. General and administrative expenses decreased 35,000 or 4%, primarily due to strategic cost-cutting measures implemented. Depreciation and amortization decreased $16,000 or 20%, mainly due to a decrease in amortization of the intangible assets for Galileo's non-compete agreement, which became fully amortized in May 2016. We have an operating loss of 191,000 for the quarter, versus an operating loss of 540,000 for the same quarter in the prior year. On Page 27, our other income, which is income related to our investments was 161,000 for the quarter, compared to 148,000 the quarter ending March 31, 2016. Net loss attributable to USGI after taxes for the quarter was a loss of $33,000. It was an improvement over the same quarter of the previous year, which was a net loss of $350,000 and equates to $0.00 per share for the current period, versus a loss of $0.02 per share in the prior year. Moving to Page 28, we see we still have a strong balance sheet. We own our own building and we have cash and marketable securities of approximately 16.7 million that combine to make up 64% of our total assets. As you can see on Page 29, we still had no long-term debt. The company has a networking capital of $16.2 million, and the current ratio of 16.5:1. With that, I’d like to turn it over to Susan McGee.

Thank you, Lisa. Our sales and marketing efforts have continued to focus on our gold and natural resources fund, our municipal bond fund and our U.S. Global Jets ETF. Our investors appreciate all the expertise that we offer in these specialized areas, and we're pleased that Thomson Reuters Lipper, which is a trusted financial authority, recognized us with the recent Lipper Award. Investors can find more information on our funds on our website, which is www.usfunds.com. The company and our funds continue to receive an invaluable amount of viral publicity, which is gained through media interviews, recommendations by influential financial newsletter writers, and the sharing and syndication of our award-winning original content by third-party publishers. For example, our airline ETF has received media coverage from a vast array of news outlets. The news letters have loyal followings, and they receive millions of visitors each month. Our blog, Frank Holmes' CEO blog, the Frank Talk, continues to grow in popularity, as well. His commentary is often featured by prominent publications, including Forbes, Seeking Alpha, ValueAll, Business Insider. And all of these have millions of monthly visitors as well. Our investment team continues to travel around the world to share a thought leadership. We interact frequently with loyal followers through Facebook, through Twitter, through LinkedIn, InstaGram, and Pinterest. Kitco News, the biggest gold website in the world, with an audience of about 10 million monthly visitors, in partnership with TheStreet continues to feature our Gold Game Film show, which is Frank Holmes' weekly gold market analysis. Since the show's beginning, we have filmed 129 video episodes of the Gold Game Film. All this coverage helps us leverage our brand, because we can reach millions of readers, viewers and potential investors. Our website was visited over 520,000 times during 2016 by investors from all over the world. In fact, our website receives visitors from over 200 countries and territories. U.S. Global is well known for our timely and balanced market insight and our thought leadership, and we've been awarded several STAR Awards by the Mutual Fund Education Alliance. They've recognized our excellence that we have produced in investor education. Some of the awards that we have received included best overall communications to retail and adviser audiences within the small funds category. Our weekly free investor alert newsletter has been named the Best Electronic Newsletter six times. And to-date, we've received around a total of 80 STAR Awards over the years. Investors can sign up on our website, usfunds.com, and join over 30,000 subscribers, who currently are receiving our award-winning investor alert and adviser alert, e-newsletters and our CEO blog, Frank Talk. And so now, I’d like to open it up for questions.

Thank you, Susan. [Operator Instructions]

First question is, what are the opportunities or how do you look at the opportunities and separate accounts and ETFs. Frank, can you take that one?

Sure. We mentioned before that we've looked at, and we continue to explore separate account business. We believe that, that's an important growth opportunity, and the ETFs - it is the big sure that when you come up with these smart factors, smart beta as they like to call them, ETFs, you really have to do a lot more rigorous work on analyzing the factors for up-and-down cycles. And when they launch in the marketplace, there is much more oversight than just a pure market cap index ETF. And so we've done more work on it, and so we're looking forward to launching products in Canada, as well in the U.S.

Thank you, Frank. Another question is regarding Galileo, and the question is how much is at Galileo?

I don't have that in my fingertips.

I think Susan or…

I do. Actually our average assets were $840 million for the quarter and about $119 million of that was Galileo. Just about 14%.

Thank you.

Okay. Thank you. And one final question for Susan, what is the update on our new product launches?

We do have, as is public record, a few ETFs in registration, however we are limited by regulatory rules and how much we can say about that. We do believe that our growth strategy is revolving around the launching of ETF and the growth in that area. Because as Frank mentioned previously, we do see industry flows, particularly in our specialized sectors going into ETF as opposed to the traditional mutual fund. So, we do believe that our growth in AUM is tied to the launch of ETF.

Thank you, Susan.

Have you considered strategic mergers with other asset managers? Yes, we've always considered. We're truly open. Open in what's the best way for us to grow and launch. And it's interesting, in several transactions, many have looked to go buy. The entrepreneurs always have these exaggerated valuations, and I'd say, well, then buy me out at that valuation. And immediately they back away. So it's sort of frustrating. But if someone has a great deal to offer to help the GROW shareholders faster than I can do it, absolutely, I will sell the company in a second because that's my fiduciary to the shareholders. And is it in the best interest for all the GROW shareholders is what I have to always take to heart, in addition to my own interest in GROW, which I continue to show by buying on those down days, along with GROW buying back of stock.

Okay. Thank you everyone for the questions. This concludes the U.S. Global Investors webcast for the third quarter of 2017. This presentation will be available on our website at www.usfunds.com. Thank you all for your participation today.

Thank you. Good job. Thank you everyone.