Susan Filyk - IR Frank Holmes - CEO Susan McGee - President Lisa Callicotte - CFO

Welcome to the U.S. Global Investors Webcast, U.S. Global Investors Earnings Announcement for the Second Quarter of Fiscal 2015. If you have any questions during the webcast, simply enter your question in dialogue box at the bottom of the screen and click submit. Also you may download a PDF of today's slides by clicking on Resources tab in the top center area of your screen. To switch back to the presentation, just click the Slide tab. We would like to begin by introducing Susan Filyk, Investor Relations at U.S. Global Investors. Ms. Filyk.

Thank you and good morning. Welcome everyone to our webcast announcing results for the quarter ended December 31st, 2014. The presenters for today's program are Frank Holmes, U.S. Global Investors' CEO and Chief Investment Officer; Susan McGee, President and General Counsel; and Lisa Callicotte, Chief Financial Officer. During this webcast, we may make forward-looking statements about our business outlook. Any forward-looking statements and all other statements made during this webcast that don't pertain to historical facts are subject to risk and uncertainties that may materially affect actual results. Please refer to our press release and corresponding Form 10-Q filing for more detail on any factors that could cause actual results to differ materially from any described today in forward-looking statements. Any such statements are made as of today and U.S. Global Investors accepts no obligation to update them in the future. If you have a question for us, you can submit it at any time during the webcast. Simply type your question in the dialogue box at the bottom of the screen and click submit. If we aren't able to answer your question during the live presentation, we will follow-up with you individually. Now let's go to Frank Holmes, CEO and CIO for an overview of the quarter. Frank?

Thank you, Susan. For everyone I'm calling in from Cape Town of Indaba Conference which is the largest mining conference in Africa with ministers from every country attend in addition to the CEOs and predominantly from every major mining company, so I'm doing both research as a Chief Investment Officer and branding in speaking on panels and participating. So the call may have bit of an echo, so I apologize for that, but let's get onto Slide number 4. We are a boutique publicly listed investment advisors specializing gold, natural resources, emerging markets, domestic equities or municipal bonds and for the past year and quarter the real highlight and strength has been coming from our near term municipal bond fund and the challenges continue for the last year of the show and reflect on emerging markets and resources which seem to have peaked in 2011 and hopefully that this will be a trough year. Basically, there's a thought process of this particular conference also with the accelerated spending of €60 billion a month out of Europe and to the idea that $500 billion piece dividend from America and oil prices collapsing thanks to fracking and I think the technology advances that we've made basically are accelerating budgeting, spending and many of these countries will have to import oil. South Africa which is the biggest country and richest country in Africa is also net oil importer, so this is a big benefit to the economy here it's going to take about 6 months before we start seeing a take off as sort of highlight of what I am listing to at this conference. Going on our next visual on Slide 5, we're a go to stock for exposure to emerging markets and resources. We're debt free, strong balance sheet with reflexive…

Thank you, Frank. Good morning. I'd like to summarize our results for operations for quarter ended December 31st, 2014. As I discussed our financial results significant change compared to the same quarter last year and due to obtaining control and interest in Galileo in June 2014 and consolidating Galileo's balance sheet and revenues and expenses in our financial statement. Therefore these statements increased by the amount we consolidated for Galileo. Beginning on Page 25, we recorded total operating revenues of 2.3 million for the quarter this is a 13% decrease in the 2.7 million we recorded in the same quarter last year. The decrease is primarily due to decreases in our mutual fund, assets under management and was offset by the consolidation of 519,000 of Galileo revenue. Moving onto Page 26, operating expenses for the quarter was 3.3 million a decrease of 942,000 or 22% primarily for the following reasons. Employee compensation and benefits decreased $325,000 or 17% as a result of fewer employees and lower performance based bonuses offset by the addition of Galileo expenses of $144,000. General and administrative expenses decreased 552,000, that's 36% primarily due to higher fun reimbursement and fund restructuring cost in the prior year, offset somewhat by the consolidation of Galileo expenses of a $171,000. Platform fee expenses increased 67,000 or 15% as a result of including 211,000 of Galileo's platform fees and was offset by a decrease in platform fees of our mutual funds due to lower assets sold through broker dealer platform. On Page 27, we see our operating loss for the quarter ended December 31, 2014 at $891,000, our other income which is our income related for our investment was $53,000 for the quarter, and this amount includes approximately 264,00 of dividend and interest income but was offset by unrealized losses in our trading security of $295,000. Our investments in energy, natural resource sectors had a large decline as sectors as a whole declined. And at this time we do have the ability to hold these investments until the market changes and these sectors are more favorable. But these downturn had approximately $0.02 per share effect on our net income. Net loss attributable to USGI after taxes for the quarter is $842,000 and as you can see on page 28 it's a loss of $0.05 per share. Moving on to Page 29, we still have a strong balance sheet, we're own our own building, we have cash and marketable securities of 21.6 million that combines and make up 75% of our total asset. As you can see on Page 30, we still have no long-term debt and the company has a networking capital of 22.3 million and a current ratio of 14.8 to 1. With that I'd like to turn it over to Susan McGee.

Thank you Lisa and thank you to everyone listening in today. The U.S. Global Investors Fund have a history of demonstrating leadership in investment performance. In fact since 2000 our funds have received 29 liquid performance awards certificates and top rankings. During the past quarter our sales and marketing efforts have focused on one of our top rank funds, our five star near-term tax refund or NEARX in particular, and it has delivered consistent positive performance over quite a long period of time. In fact out of 25,000 equity and bond mutual funds only 30 have had consecutive positive annual returns for the past 20 years. And we're very, very proud that NEARX is one of the few. Our investors and financial advisors repeatedly tell us that they appreciate of history of new dollar performance that this fund has provided during fall to market. If you compare the S&P 500 to NEARX since 2000 you will see that it took the S&P 500 13 years to pass a steady growth of the near-term funds. This fund seeks preservation of capital and it has demonstrated minimal fluctuation and its share price rarely moving more than a penny in a day, with interest rates that we had now at 50 year low of the tax equivalent yield for NEARX is an attractive alternative to prevent [seeding] rates. NEARX has earned the coveted five star rating for overall performance among municipal national short-term funds. We're also pleased that two of our funds hold the top Lipper Leader rating. This rating is based on investor centric criteria and on a scale of one to five Lipper Leader funds got rated five, are in the top 20% of your category. The near-term tax refund rate of five for preservation and the U.S. government securities ultra-short…

I am sorry, yes. And what I would like to really comment on is I would add to color to as Susan had to say that it’s very difficult for our no drama NEARX line to create an ETF round off because of big part of that alpha creation is managing cash and the volatility that takes place. So recently we had some volatility gain to 10 year government bond and five year and we have quant models that measure that and the recent take a look at inflection points along the yield perk. So there are times when we will have 20% cash and try to capture that and that’s helped us deliver that term, performance with lower volatility, when it comes to the EPF bases we’ve been doing lot of work on it’s more of an -- it’s a very different factoring model. And so I think for our subs going forward is just really truly to stay focused on what’s taking place in the capital markets and how can we have a product line that’s diversified for investors to be able to inexpensively be attracted and use that as a go to place in addition to other funds groups, how do we do what we are doing such as our ETF for Jets which is a global perspective dominated by the U.S. and news factors to be able to dynamically adjustment and adapt to the key factors that we are looking at these companies. So with that I would like to roll into what we experienced last year and we wrote about this and we lot of coverage around the world it was the epic price reversal in the dollar and commodities and there are several factors have led to that. So you can go to the…

(Operator Instructions). Our first question. Can you discuss any expansion plans for more funds in Canada?

In Canada, we are working on dividend paying -- U.S. dividend paying stocks for total investment yield and so that’s -- we are going through what we have done for Jets has to go through the detailed analysis to assure that it’s a product that is sustainable rather than just a fact. And so we hope that we will be able to come out in a second quarter and get the process fast track in Canada.

Our next question related to ETF. Do you put the U.S. Global eventually bringing out more ETF so that the company focus will be on ETF as supposed to mutual funds. How you market in sale ETF differently and will you need to add more staff?

I don’t think we need to add more staff we have to educated staff and we have a highly educated workforce, so it’s we are [indiscernible] and we have recently had a bit continuously of to ETF conference in Florida in addition to Orlando’s retail conference of 8,000 retired retail investors and I think Susan feel like you can comment, it was dominated with ETFs and that’s where the space is going to. I think the mutual fund world is just too expensively. It’s really is a just burden that if you want to have an inexpensive product and then you add all the regulatory cost and all the committees that you have to deal with on and around for board meetings and audits and weekly meetings the list goes on, it’s just too expensive you cannot do it for the buy that so I think the market is going to bifurcate the private equity it will be special funds that will deal with the opportunities of being ground for the between some new company and we will focus on the ETF space in our product line up and separate for accounts and that’s why we continue to look at in the business of separate accounts.

Can you discuss the investment strategy for the proprietary investment account? You mentioned that the company’s investment generated income of about 53,000 for the quarter; do the user investments generate more income to build the volatile revenue stream from resources in emerging market?

Lisa you can -- Lisa helped me give some exact numbers, the income from the dividends et cetera is more than 53,000?

Right, the income from the dividend was 264,000. So we have been investing lately in items that actually produce income on a monthly and quarterly basis, but it was offset by unrealized losses in our training securities $295,000.

Then it’s not so much that we are training them by how its categorize, but if they’re available for sale than the volatility leads through the income statement, correct Lisa?

The trained securities if they are qualified at training securities that does through our income statement and available for sale directly with the balance sheet in comprehensive economy.

Thank you, I hope that answers your question.

Thank you. That concludes our questions for today. This concludes U.S. Global Investors earnings Web cast for the second quarter of fiscal 2015. This presentation will be available for replay on our Web site at usfunds.com. Thank you all for your participation today.

Thank you team, you're doing a great job, I really appreciate it. Susan and Lisa, thank you, thank you.

Ladies and gentlemen, thank you for participating in today's conference. That does conclude today's conference you may all disconnect. Have a great day everyone.