UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 30, 2003

|_| 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
($0.05 PAR VALUE PER SHARE)

REGISTERED: NASDAQ SMALL CAP ISSUES

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 twelve 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 |X| NO |_|

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss.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. |_|

Indicate by check mark whether the registrant is an accelerated filer (as
defined by Rule 12b-2 of the Act). YES |_| NO |X|

The aggregate market value of the 4,640,452 shares of nonvoting class A common
stock held by nonaffiliates of the registrant on September 22, 2003, based on
the last sale price on Nasdaq as of December 31, 2002, was $11,369,107.
Registrant's only voting stock is its class C common stock, par value of $0.05
per share, for which there is no active market. The aggregate value of the
104,589 shares of the class C common stock held by nonaffiliates of the
registrant on December 31, 2003 (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 September 22, 2003, there were 6,311,474 shares of Registrant's class A
nonvoting common stock issued and 5,976,996 shares of Registrant's class A
nonvoting common stock issued and outstanding, no shares of Registrant's class B
nonvoting common stock outstanding, and 1,496,800 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

Item 1. Business____________________________________________________________1

Item 2. Properties__________________________________________________________4

Item 3. Legal Proceedings___________________________________________________5

Item 4. Submission of Matters to a Vote of Security Holders_________________5

Part II of Annual Report on Form 10-K

Item 5. Market for Company's Common Equity and
Related Shareholder Matters_______________________________________6

Item 6. Selected Financial Data_____________________________________________7

Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations_____________________7

Item 7A. Quantitative and Qualitative Disclosures About Market Risk________14

Item 8. Financial Statements and Supplementary Data________________________15

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure_______________________________________________________33

Item 9A. Controls and Procedures___________________________________________33

Part III of Annual Report on Form 10-K

Item 10. Directors and Executive Officers of the Company___________________34

Item 11. Executive Compensation____________________________________________36

Item 12. Security Ownership of Certain Beneficial Owners and Management____39

Item 13. Certain Relationships and Related Transactions____________________41

Item 14. Principal Accounting Fees and Services____________________________41

Part IV of Annual Report on Form 10-K

Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K__________________________________________42

Signatures_________________________________________________________________45

Certifications_____________________________________________________________46

Exhibit 16 - Letter Regarding Change in Certifying Accountant______________48

Exhibit 21 - Subsidiaries of the Company, Jurisdiction
of Incorporation, and Percentage of Ownership____________________49

Exhibit 99.1 - Certification of Chief Executive Officer

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002___50

Exhibit 99.2 - Certification of Chief Financial Officer

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002___51

PART I OF ANNUAL REPORT ON FORM 10-K

ITEM 1. BUSINESS

U.S. Global Investors, Inc. (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.

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.

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

As part of the mutual fund management business, the Company provides: (1)
investment advisory services through the Company or its subsidiaries to
institutions (namely, mutual funds) and other persons; (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. Prior to June 30, 2001, the Company provided custodial
and administrative services through its wholly owned trust company and
administrator for IRAs and other types of retirement plans. The fees from
these custodial and administrative services contributed to the Company's
revenue. The Company will continue to receive the majority of the
aforementioned custodial fees as it has contracted with another entity to
assist with these services.

In addition to managing USGIF and USGAF, the Company is actively engaged in
trading for its proprietary account. Management believes it can more
effectively manage the Company's cash position by broadening the types of
investments utilized in cash management and continues to believe that such
activities are in the best interest of the Company. These activities are
reviewed and monitored by Company compliance personnel, and various reports
are provided to investment advisory clients.

LINES OF BUSINESS

INVESTMENT MANAGEMENT SERVICES

INVESTMENT ADVISORY SERVICES. The Company furnishes an investment program
for each of the mutual funds it manages and determines, subject to overall
supervision by the boards of trustees of the funds, the funds' investments
pursuant to advisory agreements (Advisory Agreements). Consistent with the
investment restrictions, objectives and policies of the particular fund,
the portfolio team for each fund 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
the funds, 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 any fund distribution plans adopted pursuant to Investment
Company Act Rule 12b-1 (12b-1 Plan).

As required by the Investment Company Act of 1940, the Advisory Agreements
are subject to annual renewal and are terminable upon 60-day notice. The
boards of trustees of USGIF and USGAF will consider renewal of the
applicable agreements in February and May 2004, respectively. Management
anticipates that the Advisory Agreements will be renewed.

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,
lockbox, 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: (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, an annual fee per
account, 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, which payment shall not exceed the per account charge
on an annual basis.

The transfer agency agreements with USGIF and USGAF are subject to renewal
on an annual basis and are terminable upon 60-day notice. The agreements
will be considered for renewal by the boards of trustees of USGIF and of
USGAF in February and May 2004, respectively, and management anticipates
that the 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 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, 2003, the Company has
capitalized USGB with approximately $828,925 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.

TRUST COMPANY SERVICES. Security Trust & Financial Company (STFC), a wholly
owned state chartered trust company, provided custodial services for IRA
and other retirement plans administered by U.S. Global Administrators, Inc.
until June 1, 2001. Management determined that it was in the Company's best
interest to exit the 401(k) plan administration business and to voluntarily
withdraw the charter of the trust company. The Company continues to collect
the majority of the fees for custodial services to the IRAs for record
keeping activities and has contracted with another entity to act as
custodian of these accounts.

CORPORATE INVESTMENTS

INVESTMENT ACTIVITIES. In addition to mutual fund activity, the Company
attempts to maximize its cash position by using a diversified venture
capital approach to investing. Management invests in early-stage or
start-up businesses seeking initial financing and more mature businesses in
need of capital for expansion, acquisitions, management buyouts, or
recapitalization.

EMPLOYEES

As of June 30, 2003, U.S. Global and its subsidiaries employed 56 full-time
employees and 5 part-time employees; as of June 30, 2002, it employed 60
full-time employees and 6 part-time employees. The Company considers its
relationship with its employees to be good.

COMPETITION

The mutual fund industry is highly competitive. Recent reports show there
are 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, such as USGAF. 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 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. Amendments to, and regulatory pronouncements related
to, the Glass-Stegall Act, the statute that has prohibited banks from
engaging in various activities, are enabling banks to compete with the
Company in a variety of areas.

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 industry. 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 have put pressure on profit margins for the
mutual fund industry.

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 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 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. The future regulatory environment remains
uncertain as no political or regulatory initiatives are currently underway
to assess the impact or consequences to the capital markets of these costly
pronouncements and oversight.

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, 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
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 THE FUNDS

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.

ITEM 2. PROPERTIES

The Company presently 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. This building is currently subject to a
term loan for $956,560.

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 fiscal year
2003.

Part II of Annual Report on Form 10-K

ITEM 5. MARKET FOR COMPANY'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

MARKET INFORMATION

The Company has three classes of common equity: class A, class B and class
C common stock, par value $0.05 per share.

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 Company's class A common stock is traded over-the-counter and is quoted
daily under Nasdaq's Small Cap Issues. Trades are reported under the symbol
"GROW."

The following table sets forth the range of high and low sales prices from
Nasdaq for the fiscal years ended June 30, 2003 and 2002. The quotations
represent prices between dealers and do not include any retail markup,
markdown, or commission.

SALES PRICE
- -----------------------------------------------------------------------------
2003 2002
- -------------------------- ------------ ----------- ------------ ------------
HIGH ($) LOW ($) HIGH ($) LOW ($)
- -------------------------- ------------ ----------- ------------ ------------
First quarter (9/30) 2.250 1.280 1.050 0.900

Second quarter (12/31) 2.449 0.970 1.100 0.900

Third quarter (3/31) 2.580 1.860 1.800 1.000

Fourth quarter (6/30) 2.079 1.520 2.450 1.790

HOLDERS

On September 22, 2003, there were 248 holders of record of class A common
stock, no holders of record of class B common stock, and 71 holders of
record of class C common stock.

Many of the class A common shares are held of record by nominees, and
management believes that as of September 22, 2003, there were approximately
1,000 beneficial owners of the Company's class A common stock.

DIVIDENDS

The Company has not paid cash dividends on its class C common stock during
the last nineteen fiscal years and has 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.

Holders of the outstanding shares of the Company's class A common stock are
entitled to receive, when and as declared by the Company's board of
directors, a noncumulative cash dividend equal in the aggregate to 5% of
the Company's net after-tax earnings for its prior fiscal year. After such
dividend has been paid, the holders of the outstanding shares of class B
common stock are entitled to receive, when and as declared by the Company's
board of directors, cash dividends per share equal to the cash dividends
per share paid to the holders of the class A common stock. Holders of the
outstanding shares of class C common stock are entitled to receive when and
as declared by the Company's board of directors, cash dividends per share

equal to the cash dividends per share paid to the holders of the class A
and class B common stock. Thereafter, if the board of directors determines
to pay additional cash dividends, such dividends will be paid
simultaneously on a prorated basis to holders of class A, B, and C common
stock. The holders of the class A common stock are protected in certain
instances against dilution of the dividend amount payable to such holders.

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, 1999, through June 30, 2003, and
the years then ended is derived from the Company's Consolidated Financial
Statements, which were audited by Ernst & Young LLP, independent
accountants.

SELECTED YEAR ENDED JUNE 30,
FINANCIAL DATA
- ---------------------- ------------------------------------------------------------------
2003 2002 2001 2000 1999
- ---------------------- ----------- ----------- ----------- ----------- -----------

Revenues $ 7,478,936 $ 7,767,514 $ 8,893,884 $10,912,764 $ 9,739,180

Expenses 7,817,883 8,104,299 9,652,382 10,495,271 10,665,616
--------- --------- --------- ---------- ----------
Income (loss) before
equity interest,
gain on litigation
settlement and
income taxes (338,947) (336,785) (758,498) 417,493 (926,436)

Equity in income
(loss) of affiliate -- -- -- 51,739 (743,041)(1)

Gain on litigation
settlement 371,057 -- -- -- --

Income tax (benefit)
expense (10,502) (95,351) 36,181 (26,526) 183,329
-------- -------- ------ -------- -------
Net income (loss) $ 42,612 $(241,434) $(794,679) $495,758 $(1,852,806)

Basic income (loss)
per share 0.01 (0.03) (0.11) 0.07 (0.28)

Working capital 3,562,885 2,930,974 3,246,792 3,138,009 2,441,109

Total assets 7,439,687 7,905,021 7,912,184 9,118,624 8,328,138

Long-term obligations 988,536 1,067,967 1,135,903 1,197,961 1,255,724

Shareholders' equity 5,673,689 5,580,059 5,715,520 6,484,486 5,912,238

Net cash provided by
operations 128,916 6,239 132,855 1,255,844 850,577
- ------------------
(1) The gain on changes of interest in affiliate for fiscal year 1999 of
$97,744 is included in equity in income (loss) of affiliate.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

BUSINESS SEGMENTS

U.S. Global Investors, Inc. (Company or 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.

The Company generates substantially all its operating revenues from the
investment management of products and services for the U.S. Global
Investors Funds (USGIF) and U.S. Global Accolade Funds (USGAF).
Notwithstanding the fact that 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, 2003, the Company held
approximately $1.1 million in investments, comprising 15.0% of its total
assets. The following is a brief discussion of the Company's two business
segments.

INVESTMENT MANAGEMENT PRODUCTS AND SERVICES

The Company generates substantially all of its operating revenues from
managing and servicing USGIF and USGAF. These revenues are largely
dependent on the total value and composition of assets under its
management. Fluctuations in the markets and investor sentiment directly
impact the funds' asset levels, thereby affecting income and results of
operations. During fiscal year 2003, total average assets under management
decreased 8.1% to $1.07 billion primarily due to shareholder redemptions in
the U.S. Government Securities Savings Fund, which reflects a current
industry trend as investors are moving away from lower yielding money
market funds and are seeking investment products with higher yields.

- ---------------------------------------------------------------------------------------------
AVERAGE ASSETS UNDER MANAGEMENT
(DOLLARS IN MILLIONS)
- ----------------------- ---------- ---------- ------------ ---------- --------- -------------
2003 2002 % CHANGE 2002 2001 % CHANGE
- ----------------------- ---------- ---------- ------------ ---------- --------- -------------

USGIF - Money Market $ 746 $ 872 (14.4)% $ 872 $ 910 (4.2)%

USGIF - Other 224 167 34.1 % 167 164 1.8 %
--- --- ------ --- --- -----

USGIF - Total 970 1,039 (6.6)% 1,039 1,074 (3.3)%

USGAF 101 126 (19.8)% 126 205 (38.5)%
--- --- ------- --- --- -------

Total $1,071 $1,165 (8.1)% $1,165 $1,279 (8.9)%

INVESTMENT ACTIVITIES

Management believes it can more effectively manage the Company's cash
position by broadening the types of investments used in cash management.
Management attempts to maximize the Company's return on its cash position
by using a diversified venture capital approach to investing.
Strategically, management invests in early-stage or start-up businesses
seeking initial financing and more mature businesses in need of capital for
expansion, acquisitions, management buyouts, or recapitalization.
Management has reduced these activities due to poor market conditions.

As of June 30, 2003 and 2002, the Company held approximately $1.1 and $2.3
million, respectively, in investments other than USGIF money market mutual
fund shares. Investment income from the Company's investments includes
realized gains and losses, unrealized gains and losses on trading
securities, other-than-temporary impairments on available-for-sale
securities, and dividend and interest income. This source of revenue does
not remain at a consistent level and is dependent on market fluctuations,
the Company's ability to participate in investment opportunities, and
timing of transactions. For fiscal years 2003, 2002, and 2001, the Company
had net realized gains (losses) of approximately $(97,000), $(49,000), and
$383,000, respectively. The Company expects that gains or losses will
continue to fluctuate in the future, as fluctuations in the market value of
the Company's investments will affect the amounts of such gains or losses.

CONSOLIDATED RESULTS OF OPERATIONS

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

2003 2002 % CHANGE 2002 2001 % CHANGE
- ---------------------------------- ---------- -------- ------------ --------- ---------- -----------

Net income (loss) (in thousands) $43 $(241) 117.8% $(241) $(795) 69.7%

Net income (loss) per share - $0.01 $(0.03) 133.3% $(0.03) $(0.11) 72.7%
basic and diluted

Weighted average shares
outstanding (in thousands)
Basic 7,460 7,456 7,456 7,525
Diluted 7,469 7,456 7,456 7,525

YEAR ENDED JUNE 30, 2003, COMPARED WITH YEAR ENDED JUNE 30, 2002

The Company posted a net after-tax profit of $43,000 ($0.01 per share) for
the year ended June 30, 2003, compared with a net after-tax loss of
$241,000 ($0.03 loss per share) for the year ended June 30, 2002. The
profitability in 2003 was principally due to revenue of $386,000 associated
with private client advisory fees and a one-time gain of $371,000 related
to the favorable settlement of a lawsuit. These items were offset by
recognition of an other-than-temporary impairment on available-for-sale
securities of $247,000. In addition, declines in investment advisory and
transfer agent fees were partially offset by expense reductions during the
year.

YEAR ENDED JUNE 30, 2002, COMPARED WITH YEAR ENDED JUNE 30, 2001

The Company posted a net after-tax loss of $241,000 ($0.03 loss per share)
for the year ended June 30, 2002, compared with a net after-tax loss of
$795,000 ($0.11 loss per share) for the year ended June 30, 2001. The
decease in net loss for 2002 from 2001 was principally due to the Company's
reduction of the overall expense reimbursement levels of its funds. The
Company also realigned its cost structure in order to better cope with
declining fund asset levels due to adverse market conditions. However,
offsetting these activities was a decline in both investment advisory and
transfer agent revenues, as well as other ancillary operations.

REVENUES
(DOLLARS IN THOUSANDS) 2003 2002 % CHANGE 2002 2001 % CHANGE
------------------------------- --------- ---------- ----------- --------- ---------- -----------

Investment advisory fees:

USGIF - Money market $2,297 $2,710 (15.2)% $2,710 $2,357 15.0%

USGIF - Other 1,562 1,110 40.7% 1,110 1,081 2.7%
----- ----- ----- ----- ----- ----

USGIF - Total 3,859 3,820 1.0% 3,820 3,438 11.1%

USGAF 1,045 1,275 (18.0)% 1,275 2,060 (38.1)%
----- ----- ------- ----- ----- -------

Total investment advisory fees $4,904 $5,095 (3.7)% $5,095 $5,498 (7.3)%

Transfer agent fees 2,172 2,417 (10.1)% 2,417 2,682 (9.9)%

Custodial and administrative 155 157 (1.3)% 157 302 (48.0)%
fees

Mailing services fees 174 146 19.2% 146 302 (51.7)%

Private client advisory fees 386 27 1,329.6% 27 -- N/A

Investment income (loss) (345) (168) (105.4)% (168) 127 (232.3)%

Other revenues 33 94 (64.9)% 94 (17) 652.9%
----- ----- -------- ----- ----- -------

Total $7,479 $7,768 (3.7)% $7,768 $8,894 (12.7)%

INVESTMENT ADVISORY FEES. Investment advisory fees, the largest component
of the Company's revenues, are calculated as a percentage ranging from
0.375% to 1.25% of average net assets and are paid monthly. The Company has
agreed to waive its fee revenues and/or pay expenses for certain USGIF
funds through June 30, 2004, for purposes of enhancing the funds'
competitive market positions, in particular the money market and fixed
income funds. The aggregate amount of fees waived and expenses born by the
Company totaled $1,509,060, $1,530,046, and $2,039,360, in 2003, 2002, and
2001, 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.

Net investment advisory fees are also affected by changes in assets under
management, including market appreciation or depreciation, the addition of
new client accounts or client contributions of additional assets to
existing accounts, withdrawals of assets from and termination of client
accounts, exchanges of assets between accounts or products with different
fee structures, and the amount of fees voluntarily reimbursed.

The decrease in net advisory fees in fiscal year 2003 of approximately
$191,000, or 3.7%, over fiscal year 2002 was largely due to continued
shareholder redemptions in the U. S. Government Securities Savings Fund.
Market trends throughout the year, as reflected in Investment Company
Institute (ICI) mutual fund money flow data, have affected the investment
industry as a whole, as well as the Company. Money market funds have
continued to suffer net outflows over the last twelve months during which
time money market yields have declined to the lowest levels in
approximately 30 years. As money market investors seek alternative
short-term investments with higher yields, along with equity investors
rebalancing their portfolios, there was an increase in bond fund cash
flows. In addition, gold-related investments have performed relatively well
during this period and valuations have increased as a result of gold
bullion reaching a seven-year high of $389 per ounce during the period.

The decrease in net advisory fees in fiscal year 2002 of approximately
$402,000, or 7.3%, over fiscal year 2001 was largely due to market declines
and shareholder redemptions in the Company's equity funds, particularly the
Bonnel Growth Fund and the All American Equity Fund. The Company also
experienced net redemptions in its U.S. Government Securities Savings Fund.
Again, this is an industry trend as yields had fallen significantly and
money market funds had lost ground to other higher-yielding products.

TRANSFER AGENT FEES. United Shareholder Services, Inc., a wholly owned
subsidiary of the Company, provides transfer agency, lockbox, and printing
services for Company clients. The Company receives, as compensation for
services rendered as transfer agent, an annual fee per account and is
reimbursed for out-of-pocket expenses associated with processing
shareholder information. Transfer agent fees are therefore affected by the
number of client accounts.

The decrease in transfer agent fees in fiscal year 2003 of approximately
$245,000, or 10.1%, over fiscal year 2002 is primarily a result of a
decrease in mutual fund shareholder accounts from 92,210 to 79,856. The
Company has continued to see a decline in its number of accounts serviced
as many smaller accounts in the funds continue to close. The Company
instituted a small account fee in January 2002 for shareholders with low
account balances in the funds. Market practices in the mutual fund industry
typically demand that low fund expense ratios are necessary in order to
remain competitive. As a result of the small account fees, which serve to
reduce expenses borne by the funds, the gold funds have realized
significant improvements in their expense ratios. However, the Company has
realized a large drop in accounts under management, which has resulted in a
decline in transfer agent fees for the Company. Also, as a result of the
small account fee, the Company expects to have a continued trend in client
account closures for calendar year 2003. The Company expects that these
small account closures, though painful in the short-term, will result in
improved long-term fund profitability and lower expense ratios for its
equity funds, improving their competitive positioning against their
respective peer groups.

The decrease in fees in fiscal year 2002, as compared with fiscal year
2001, is a result of a decrease in mutual fund shareholder accounts from
97,932 to 92,210.

CUSTODIAL AND ADMINISTRATIVE FEES. Security Trust & Financial Company
(STFC), a wholly owned state chartered trust company, provided custodial
and/or trustee services for IRAs and other retirement plans administered by
the Company. The custodial fees were previously paid to STFC at calendar
year-end upon separate invoice to the customer, not the funds. Effective
January 1, 2000, U.S. Global Administrators, Inc. (USGA), a wholly owned
subsidiary of the Company, began providing qualified plan administration
and record keeping services for existing 401(k) clients, which services
were previously offered by STFC. The administrative fees were paid to USGA
on a quarterly basis by its clients. USGA ceased revenue-generating
operations on May 31, 2001. STFC continued to collect its custodial fees
through May 31, 2001, at which time a majority of these fees transferred to
USGI. Both companies were liquidated during fiscal year 2002.

Custodial and administrative fees remained relatively stable in fiscal year
2003 at $155,000 after declines were realized in prior years. Custodial and
administrative fees decreased approximately $145,000, or 48.0%, in fiscal
year 2002 as a result of the discontinuation of USGA's 401(k) servicing
operations, a decline in the number of custodial accounts administered, and
a revenue sharing agreement with the entity USGI contracted to provide
custodial services for these accounts.

MAILING SERVICES. A&B Mailers, Inc., a wholly owned subsidiary of the
Company, provides mail-handling services to various entities. Some of A&B
Mailers' primary customers include the Company, in connection with its
efforts to promote the funds, and USGIF and USGAF in fulfilling
communications services with fund shareholders. Each service is priced
separately.

Mailing service fees increased by $28,000, or 19.2%, during fiscal year
2003. The decrease in mailing service fees of approximately $156,000, or
51.7%, for fiscal year 2002 was a result of an adjustment to revenues to
reflect mailing volumes.

PRIVATE CLIENT ADVISORY FEES. During May of 2002, the Company began
managing an investment portfolio for a private advisory client. The
increase in fees of $359,000 from 2002 to 2003 reflects an entire year of
fees earned during the current fiscal year as compared to one month of fees
earned in the prior fiscal year. In addition, securities in this portfolio
realized a significant increase in market value during the year.

EXPENSES

(DOLLARS IN THOUSANDS) 2003 2002 % CHANGE 2002 2001 % CHANGE
- --------------------------- ---------- ---------- ------------ ---------- --------- -------------

Employee compensation and $ 4,266 $ 4,479 (4.8)% $ 4,479 $ 4,701 (4.7)%
benefits

General and administrative 3,106 3,132 (0.8)% 3,132 4,399 (28.8)%

Advertising 242 243 (0.4)% 243 216 12.5%

Depreciation 121 165 (26.7)% 165 226 (27.0)%

Interest 83 85 (2.4)% 85 110 (22.7)%
----- ----- ----- ----- ----- ------
Total $ 7,818 $ 8,104 (3.5)% $ 8,104 $ 9,652 (16.0)%

EMPLOYEE COMPENSATION AND BENEFITS. Employee compensation and benefits
decreased in fiscal year 2003 over fiscal year 2002 by $213,000, or 4.8%,
due to continued staff reductions and a decrease in bonuses. The staff
reductions were primarily made in the marketing area in an effort to
streamline marketing efforts to reduce overhead. Employee compensation and
benefits decreased in fiscal year 2002 over fiscal year 2001 by $222,000,
or 4.7%, which was also due to staff reductions.

GENERAL AND ADMINISTRATIVE. General and administrative expenses decreased
by $26,000, or 0.8%, in fiscal year 2003 over fiscal year 2002. This was
primarily a result of a write-off of $157,000 associated with a receivable
from an insurance carrier during fiscal year 2002. Additionally, the cost
of defending a lawsuit reached reimbursable levels on the Company's
insurance policy during late fiscal 2002. Prior to this, all costs had been
expensed as the Company paid the deductible on this claim. These items were
offset by increases in insurance expenses, sub-advisory fees, and omnibus

account fees. Insurance costs have continued to rise since September 11,
2001, as the insurance industry has continued to pass through its
increasing costs of coverage. Sub-advisory fees increased as a result of
strong growth in assets in the Eastern European Fund, and omnibus account
fees increased as the Company has realized an increase in asset growth
through broker/dealer distribution platforms. General and administrative
expenses decreased by approximately $1.3 million, or 28.8%, in fiscal year
2002 over fiscal year 2001 primarily as a result of a decrease in
sub-advisory fees paid for portfolio management of the Bonnel Growth Fund
and an overall realignment of overhead costs with reduced revenues.

ADVERTISING. Fiscal year 2003 advertising expenses were flat as compared to
fiscal year 2002. Fiscal year 2002 advertising expenses increased by
approximately $27,000, or 12.5%, over fiscal year 2001. The net increase
was due to a decreased percentage of costs that were reimbursed by 12b-1
plans adopted by the funds despite an overall reduction in advertising
costs.

DEPRECIATION. Depreciation expense decreased by approximately $44,000, or
26.7%, in fiscal year 2003 from 2002 due to a continuation of assets
becoming fully depreciated without being replaced with additional capital
purchases. Depreciation expense decreased by approximately $61,000, or
27.0%, in fiscal year 2002 from 2001, which was also due to existing assets
becoming fully depreciated.

INTEREST. Interest charges are incurred primarily from a note payable on
the Company's building. The decrease in interest expense of approximately
$2,000, or 2.4%, from fiscal year 2002 to 2003 is attributable to continued
amortization of the note payable. The decrease in interest expense of
approximately $25,000, or 22.7%, from fiscal year 2001 to 2002, was due to
the continued amortization of the note payable as well as a reduction in
rates that was negotiated during fiscal year 2001.

EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION, AND AMORTIZATION (EBITDA)

Management considers EBITDA to be the best measure of the Company's
financial performance since this measurement reflects the operations of the
Company's primary business segment, managing and servicing USGIF and USGAF.
The following is a reconciliation of income (loss) before income taxes to
EBITDA:

EBITDA
- --------------------------------------------------------------------------------
2003 2002 2001
- -------------------------------- ---------- ---------- ----------
Income (loss) before income taxes $ 32,110 $(336,785) $(758,498)

Adjustments:

Interest 82,945 85,384 110,250

Depreciation 121,493 164,674 226,150

Gain on litigation settlement (371,057) -- --

Recognized (gains) losses
on securities 344,505 100,862 (383,379)

Unrealized losses on
trading securities 34,308 112,092 379,861
---------- -------- ----------
EBITDA $244,304 $126,227 $(425,616)

The increase in EBITDA of $118,000, or 94%, from fiscal year 2002 to 2003
was primarily attributable to a revenue increase of $359,000 associated
with our private client advisory fees. This was partially offset by a
decrease of $242,000 in transfer agent fees due to a reduction in
shareholder accounts. The increase in EBITDA of $552,000, or 130%, from
fiscal year 2001 to 2002 was principally due to the Company's reduction of
the overall expense reimbursement levels of its funds.

INCOME TAXES

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, 2003, the Company
had net operating losses (NOLs) of approximately $1.3 million, which will
expire between fiscal 2010 and 2022, charitable contribution carryovers of
approximately $68,000 expiring between fiscal 2004 and 2007, and
alternative minimum tax credits of $139,729 with indefinite expirations. If
certain changes in the Company's ownership occur subsequent to June 30,
2003, there could be an annual limitation on the amount of NOLs that could
be utilized under Section 382 of the Internal Revenue Code. The Company has
a tax planning strategy, including the sale of owned assets and investments
if necessary, which would be implemented to realize the deferred tax asset
prior to the expiration of any unused NOLs.

A valuation allowance is provided when it is more likely than not that some
portion of the deferred tax amount will not be realized. As such,
management has included a valuation allowance of approximately $315,000 and
$684,000 at June 30, 2003, and 2002, respectively, providing for the
utilization of NOLs, charitable contributions, and investment tax credits
against future taxable income.

CONTRACTUAL OBLIGATIONS

A summary of contractual obligations of the Company as of June 30, 2003, is
as follows:

PAYMENTS DUE BY PERIOD
- ------------------------------------ ----------- ----------- ----------- ---------- --------------
TOTAL LESS THAN 1 - 3 4 - 5 MORE THAN
CONTRACTUAL OBLIGATIONS 1 YEAR YEARS YEARS 5 YEARS
- ------------------------------------ ----------- ----------- ----------- ---------- --------------

Long-Term Debt Obligations $956,560 $70,033 $886,527

Operating Lease Obligations 237,973 87,155 81,432 $69,386

Annuity and Contractual Obligations 112,473 10,464 23,251 26,734 $52,024
------- ------ ------ ------ -------

Total $1,307,006 $167,652 $991,210 $96,120 $52,024

LIQUIDITY AND CAPITAL RESOURCES

At year end, the Company had net working capital (current assets minus
current liabilities) of approximately $3.6 million and a current ratio of
5.6 to 1. With approximately $1.2 million in cash and cash equivalents and
almost $1.1 million in marketable securities, the Company has adequate
liquidity to meet its current debt obligations. Total shareholders' equity
was approximately $5.7 million, with cash, cash equivalents, and marketable
securities comprising 30.6% of total assets. With the exception of
operating expenses, the Company's only material commitment is the mortgage
on its corporate headquarters. The Company must maintain certain financial
covenants as a result of the mortgage. One of the covenants requires that
the Company maintain cash and cash equivalents and eligible marketable
securities to meet or exceed $1 million at the end of each quarter. 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, including debt service.

The investment advisory and related contracts between the Company and USGIF
and USGAF will expire on February 29, 2004, and May 31, 2004, respectively.
Management anticipates the trustees of both USGIF and USGAF 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

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 them 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 classified neither as trading securities nor as
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, are reported, net
of tax, as a separate component of shareholders' equity, and are recorded
in earnings on the date of sale. For available-for-sale securities with
declines in value that are deemed other than temporary, the cost basis of
the securities is reduced accordingly, and the resulting loss is realized
in earnings.

Securities traded on a securities exchange are valued at the last sale
price. Securities for which over-the-counter market quotations are
available 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 fair value, as determined by the Company's management.

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.

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 investment
advisory clients. The Company has in place a code of ethics which requires
pre-clearance of any trading activity by the Company. Written procedures
are also in place to manage compliance with the code of ethics.

The table below summarizes the Company's equity price risks as of June 30,
2003, and shows the effects of a hypothetical 25% increase and a 25%
decrease in market prices.

ESTIMATED FAIR INCREASE
VALUE AFTER (DECREASE) IN
FAIR VALUE AT HYPOTHETICAL HYPOTHETICAL SHAREHOLDERS'
JUNE 30, 2003 ($) PERCENTAGE CHANGE PRICE CHANGE ($) EQUITY ($)
- ------------------- ------------------ ------------------- ------------------ -------------------

Trading securities 723,428 25% increase 904,285 119,366
25% decrease 542,571 (119,366)

Available-for-sale 390,251 25% increase 487,814 64,392
25% decrease 292,688 (64,392)

The selected hypothetical change does not reflect what could be considered
best- or worst-case scenarios. Results could be much worse due to both the
nature of equity markets and the concentration of the Company's investment
portfolio.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of U.S. Global Investors, Inc.

We have audited the accompanying consolidated balance sheets of U.S. Global
Investors, Inc. and Subsidiaries (Company) as of June 30, 2003 and 2002,
and the related consolidated statements of operations and comprehensive
income (loss), shareholders' equity, and cash flows for each of the three
years in the period ended June 30, 2003. 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 auditing standards generally
accepted in the 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. An audit also includes 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 consolidated financial
position of U.S. Global Investors, Inc. and Subsidiaries at June 30, 2003
and 2002, and the consolidated results of their operations and their cash
flows for each of the three years in the period ended June 30, 2003, in
conformity with accounting principles generally accepted in the United
States.

/s/ Ernst & Young LLP

Ernst & Young LLP
Dallas, Texas
September 24, 2003

CONSOLIDATED BALANCE SHEETS

- --------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------
JUNE 30,
- ---------------------------------------------------- ------------- -------------
2003 2002
- --------------------------------------------------------------------------------
CURRENT ASSETS

Cash and cash equivalents $1,162,243 $ 988,936

Due from brokers 3,889 70,871

Trading securities, at fair value 723,428 1,409,474

Receivables

Mutual funds 966,260 963,730

Private advisory client 378,832 27,320

Litigation settlement 371,057 --

Employees 3,998 78,070

Other 20,536 4,874

Prepaid expenses 338,020 279,273

Deferred tax asset 372,084 365,421
--------- ---------
TOTAL CURRENT ASSETS 4,340,347 4,187,969
--------- ---------
NET PROPERTY AND EQUIPMENT 1,778,832 1,869,990
--------- ---------

OTHER ASSETS

Restricted investments 195,000 210,000

Long-term deferred tax asset 735,257 739,154

Investment securities
available-for-sale, at fair value 390,251 853,612

Other -- 44,296
--------- ---------
TOTAL OTHER ASSETS 1,320,508 1,847,062
--------- ---------

TOTAL ASSETS $7,439,687 $7,905,021
========== ==========
- --------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
- --------------------------------------------------------------------------------

CURRENT LIABILITIES

Accounts payable $ 70,437 $ 695,693

Accrued compensation and related costs 264,697 221,282

Current portion of notes payable 70,033 65,637

Current portion of annuity and 10,464 9,758
contractual obligation

Other accrued expenses 361,831 264,625
---------- ----------

TOTAL CURRENT LIABILITIES 777,462 1,256,995
---------- ----------
NONCURRENT LIABILITIES

Notes payable - net of current portion 886,527 955,569

Annuity and contractual obligations 102,009 112,398
---------- ----------
TOTAL NONCURRENT LIABILITIES 988,536 1,067,967
---------- ----------
TOTAL LIABILITIES 1,765,998 2,324,962
---------- ----------

SHAREHOLDERS' EQUITY

Common stock (class A) -- $0.05 par value; 315,574 315,574
nonvoting;authorized 7,000,000 shares; issued,
6,311,474 shares

Common stock (class B) -- $0.05 par value; -- --
nonvoting;authorized 2,250,000 shares; no
shares issued

Common stock (class C) -- $0.05 par value; 74,840 74,840
voting; authorized 1,750,000 shares;
issued, 1,496,800 shares

Additional paid-in capital 10,806,655 10,761,276

Treasury stock, class A shares at cost; (663,536) (639,407)
361,948 and 345,331 shares at June 30, 2003,
and 2002, respectively

Accumulated other comprehensive loss, (10,883) (40,651)
net of tax

Accumulated deficit (4,848,961) (4,891,573)
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 5,673,689 5,580,059
----------- -----------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $7,439,687 $7,905,021
========== ==========

The accompanying notes are an integral part of this statement.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

YEAR ENDED JUNE 30,
- -------------------------------------- -----------------------------------------
2003 2002 2001
- -------------------------------------- ------------- ------------- -------------
REVENUE

Investment advisory fees $ 4,904,036 $ 5,095,343 $ 5,497,802

Transfer agent fees 2,171,908 2,417,203 2,682,226

Custodial and administrative fees 155,219 156,688 302,017

Private client advisory fees 385,820 27,320 --

Investment income (loss) (344,525) (168,326) 127,395

Other 206,478 239,286 284,444
----------- ------------ ------------
7,478,936 7,767,514 8,893,884
----------- ------------ ------------

EXPENSES

General and administrative 7,613,445 7,854,241 9,315,982

Depreciation 121,493 164,674 226,150

Interest 82,945 85,384 110,250
----------- ------------ ------------
7,817,883 8,104,299 9,652,382
----------- ------------ ------------

GAIN ON LITIGATION SETTLEMENT 371,057 -- --
----------- ------------ ------------

INCOME (LOSS) BEFORE INCOME TAXES 32,110 (336,785) (758,498)

PROVISION FOR FEDERAL INCOME TAXES

Tax (Benefit) Expense (10,502) (95,351) 36,181
----------- ------------ ------------

NET INCOME (LOSS) 42,612 (241,434) (794,679)

Other comprehensive income (loss), net of tax:

Unrealized gains (losses) on 29,768 61,713 (50,593)
available-for-sale securities ----------- ------------ -----------

COMPREHENSIVE INCOME (LOSS) $ 72,380 $ (179,721) $(845,272)
======== =========== ==========

BASIC AND DILUTED NET INCOME (LOSS) $ 0.01 $ (0.03) $ (0.11)
PER SHARE ======== ========= =========

The accompanying notes are an integral part of this statement.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

ACCUMULATED TOTAL
COMMON COMMON ADDITIONAL OTHER
STOCK STOCK PAID-IN ACCUMULATED TREASURY COMPREHENSIVE
(CLASS A) (CLASS C) CAPITAL DEFICIT STOCK INCOME (LOSS)
- ------------------------------ ---------- --------- ------------ ------------- ----------- -------------- -----------

BALANCE AT JUNE 30, 2000
(6,299,474 SHARES OF CLASS
A; 1,496,800 SHARES OF
CLASS C) $314,974 $74,840 $10,578,419 $(3,794,678) $(637,298) $(51,771) $6,484,486

Purchase of 71,346 shares of
Common Stock (Class A) -- -- -- -- (81,326) -- (81,326)

Reissuance of 40,270 shares
of Common Stock (Class A) -- -- -- (28,731) 86,363 -- 57,632

Recognition of current year
portion of deferred
compensation -- -- 100,000 -- -- -- 100,000

Unrealized gain (loss) on
securities available-for-sale
(net of tax) -- -- -- -- -- (50,593) (50,593)

Net Loss -- -- -- (794,679) -- -- (794,679)
-------- ------- ----------- ------------ ---------- --------- ----------

BALANCE AT JUNE 30, 2001
(6,299,474 SHARES OF CLASS
A; 1,496,800 SHARES OF
CLASS C) 314,974 74,840 10,678,419 (4,618,088) (632,261) (102,364) 5,715,520

Purchase of 86,275 shares of -- -- -- -- (106,482) -- (106,482)
Common Stock (Class A)

Reissuance of 54,370 shares
of Common Stock (Class A) -- -- 6,679 (32,051) 99,336 -- 73,964

Exercise of 12,000 options
for Common Stock (Class A) 600 -- 26,178 -- -- -- 26,778

Recognition of current year
portion of deferred
compensation -- -- 50,000 -- -- -- 50,000

Unrealized gain (loss) on
securities
available-for-sale (net of
tax) -- -- -- -- -- 61,713 61,713

Net Loss -- -- -- (241,434) -- -- (241,434)
-------- ------- ----------- ------------ ---------- --------- ----------

BALANCE AT JUNE 30, 2002
(6,311,474 SHARES OF CLASS
A; 1,496,800 SHARES OF CLASS
C) 315,574 74,840 10,761,276 (4,891,573) (639,407) (40,651) 5,580,059

Purchase of 40,127 shares of -- -- -- -- (65,649) -- (65,649)
Common Stock (Class A)

Reissuance of 23,510 shares
of Common Stock (Class A) -- -- (4,621) -- 41,520 -- 36,899

Recognition of current year
portion of deferred
compensation -- -- 50,000 -- -- -- 50,000

Unrealized gain (loss) on -- -- -- -- -- 29,768 29,768
securities
available-for-sale (net of
tax)

Net Income -- -- -- 42,612 -- -- 42,612
---------- --------- ------------ ------------- ----------- -------------- -----------

BALANCE AT JUNE 30, 2003
(6,311,474 SHARES OF CLASS
A; 1,496,800 SHARES OF CLASS
C) $315,574 $74,840 $10,806,655 $(4,848,961) $(663,536) $(10,883) $5,673,689
========= ======= =========== ============ ========== =========== ==========

The accompanying notes are an integral part of this statement.

CONSOLIDATED STATEMENTS OF CASH FLOW

YEAR ENDED JUNE 30,
- ----------------------------------------------------- -------------------------------------------
2003 2002 2001
- ----------------------------------------------------- --------------- -------------- ------------

Cash Flow from Operating Activities

Net income (loss) $42,612 $(241,434) $(794,679)

Adjustments to reconcile net income (loss) to net cash provided by
operating activities:

Depreciation 121,493 164,674 226,150

Net recognized loss (gain) on securities 344,505 100,862 (383,379)

Provision for deferred taxes (10,502) (95,351) 36,181

Deferred compensation 50,000 50,000 100,000

Provision for losses on accounts receivable 64,488 -- --

Gain on litigation settlement (371,057) -- --

Loss on disposal of equipment -- -- 97,752

Reserve against impairment of equipment -- -- 9,436

Changes in assets and liabilities, impacting cash from operations:

Accounts receivable (360,120) 96,430 56,933

Prepaid expenses and other 59,930 (126,079) 142,964

Trading securities 672,202 (141,896) 1,018,363

Accounts payable and accrued expenses (484,635) 199,033 (376,866)
---------- --------- ----------
Total adjustments 86,304 247,673 927,534
---------- --------- ----------

Net cash provided by operations 128,916 6,239 132,855
---------- --------- ----------

Cash Flow from Investing Activities

Purchase of property and equipment (30,335) (4,765) (84,493)

Purchase of available-for-sale securities (139,866) (269,985) (233,310)

Proceeds on sale of available-for-sale
securities 317,671 -- 246,269
---------- --------- ----------

Net cash provided by (used in) investing activities 147,470 (274,750) (71,534)
---------- --------- ----------

Cash Flow from Financing Activities

Payments on annuity (9,683) (9,100) (8,487)

Payments on note payable (64,646) (61,635) (52,121)

Proceeds from issuance or exercise of stock, 36,899 100,742 57,632
warrants, and options

Purchase of treasury stock (65,649) (106,482) (81,326)
---------- --------- ----------
Net cash used in financing activities (103,079) (76,475) (84,302)
---------- --------- ----------

Net Increase (Decrease) in Cash and Cash Equivalents 173,307 (344,986) (22,981)

Beginning Cash and Cash Equivalents 988,936 1,333,922 1,356,903
---------- --------- ---------
Ending Cash and Cash Equivalents $1,162,243 $ 988,936 $1,333,922
========== ========= ==========

Supplemental Disclosures of Cash Flow Information

Cash paid for interest $82,945 $85,384 $133,250

Non-cash Transaction

Re-registration of private client investment $581,000 -- --

The accompanying notes are an integral part of this statement.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. ORGANIZATION

U.S. Global Investors, Inc. (Company or U.S. Global) serves as investment
adviser and transfer agent to U.S. Global Investors Funds (USGIF) and U.S.
Global Accolade Funds (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 has served as investment adviser
and manager since the inception of USGIF and USGAF and assumed the transfer
agency function of USGIF in November 1984, and of USGAF in October 1994,
its commencement of operations. 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), U.S. Global Brokerage, Inc. (USGB), U.S. Global
Administrators, Inc. (USGA), and Security Trust & Financial Company (STFC).
USGA and STFC were liquidated during fiscal year 2002.

The Company formed a limited liability company, which was incorporated in
Guernsey on August 20, 1993. This company, U.S. Global Investors (Guernsey)
Limited (USGG), is utilized in conducting the Company's cash management
activities.

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, and USGB. As of June 30, 2002, STFC and USGA were liquidated and are
no longer included in the consolidated financial statements.

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

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

DUE FROM BROKERS. The Company conducts business with various brokers for
its investment activities. The clearing and depository operations for the
investment activities are performed pursuant to agreements with the
brokers. The due from brokers balance represents cash balances with these
brokers. The Company is subject to credit risk to the extent any broker
with whom the Company conducts business is unable to deliver cash balances
owed the Company. Management monitors the financial condition of the
brokers with which the Company conducts business and believes the
likelihood of loss under the aforementioned circumstances is remote.

MUTUAL FUND RECEIVABLES. Mutual fund receivables consist primarily of
monthly investment advisory and transfer agent fees owed to the Company by
USGIF and USGAF. 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-1 of the Investment
Company Act of 1940. The Company evaluates the collectibility of these
receivables on an ongoing basis, and, as a result, has placed an allowance
of $64,488 and $0 against the receivable balance as of June 30, 2003 and
June 30, 2002, respectively. Growth in mutual fund assets, in particular
growth in assets which are invested directly with the funds and not through
broker/dealer distribution platforms, may serve to reduce this allowance in
future periods.

that are purchased and held principally for the purpose of selling them 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 classified neither as trading securities nor as
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, are reported, net
of tax, as a separate component of shareholders' equity, and are recorded
in earnings on the date of sale. For available-for-sale securities with
declines in value that are deemed other than temporary, the cost basis of
the securities is reduced accordingly, and the resulting loss is realized
in earnings.

Securities traded on a securities exchange are valued at the last sale
price. Securities for which over-the-counter market quotations are
available, but there was no trade on 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 fair value, as
determined by the Company's management.

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 31.5 to 40 years.

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

STOCK-BASED COMPENSATION. The Company accounts for stock-based compensation
using the intrinsic value method in accordance with Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25),
and related interpretations, as allowed under Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation",
(SFAS 123). In accordance with APB 25, no compensation expense is
recognized for stock options where the exercise price equals or exceeds the
underlying stock price on the date of grant.

The following table illustrates the effect on net income and earnings per
share if the Company had applied the fair value recognition provisions of
SFAS 123:

FISCAL YEAR ENDED JUNE 30,
2003 2002 2001

Net income (loss), as reported $ 42,612 $(241,434) $ (794,679)

Add: Stock-based employee compensation expense
included in reported net income, net of tax 36,168 55,397 82,570

Deduct: Total stock-based employee compensation
expense determined under fair value based method, net
of tax (40,554) (61,723) (90,240)
--------- ---------- ------------

Pro forma net income (loss) $ 38,226 $(247,760) $ (802,349)
========= ========== ============
Earnings per share:
Basic & Diluted - as reported $ 0.01 $ (0.03) $ (0.11)

Basic & Diluted - pro forma $ 0.01 $ (0.03) $ (0.11)

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. No options were granted during fiscal
years 2003, 2002 or 2001.

INCOME TAXES. 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.

REVENUE RECOGNITION. The Company earns substantially all of its revenues
from investment advisory and transfer agency services. Investment advisory
fees, calculated as a percentage of client assets under management, are
recorded as revenue as services are performed. The private advisory client
contract provides for a performance fee, in addition to the base fee, which
is calculated as a percentage of absolute investment results. Transfer
agency fees are account based and calculated using a charge based upon the
number of shareholder accounts serviced.

DIVIDENDS AND INTEREST. Dividends are recorded on the ex-dividend date, and
interest income is recorded on an accrual basis.

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, 2003, 2002 and 2001, the Company had capitalized
sales materials of approximately $11,000, $4,000 and $7,000, respectively.
Net advertising expenditures were approximately $242,000, $243,000 and
$216,000 during fiscal 2003, 2002 and 2001, 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 gain (loss) is included as a
component of investment income.

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

RECENT ACCOUNTING DEVELOPMENTS. In December 2002, the Financial Accounting
Standards Board (FASB) issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure." SFAS 148 amends SFAS 123 to
provide alternative methods of transition to the fair value method of
accounting for stock-based compensation when companies elect to expense
stock options at fair value at the time of grant. As the Company currently
follows the intrinsic value method described in APB 25, the transition
provision of SFAS 148 does not apply. SFAS 148 also requires additional
disclosures for all companies with stock-based employee compensation. The
Company applied the disclosure provisions of SFAS 148 in its financial
statements for the year ended June 30, 2003.

In January 2003, the FASB issued Interpretation No. 46 (FIN 46),
"Consolidation of Variable Interest Entities." FIN 46 requires the
consolidation of the assets, liabilities and results of operations of a
variable interest entity (VIE) by the primary beneficiary. FIN 46 also
requires the disclosure of information concerning VIEs by entities that
hold a significant variable interest but may not be the primary
beneficiary. FIN 46 also requires the disclosure of the nature, purpose,
size and activities of VIEs, as well as the maximum exposure to loss in
connection with VIEs. The provisions of FIN 46 apply immediately to VIEs
created after January 31, 2003, and is effective for interim periods
beginning after June 15, 2003 for interests in VIEs that were acquired
before February 1, 2003. Management is in the process of evaluating the
impact of FIN 46 on its consolidated financial statements for periods after
June 30, 2003.

NOTE 3. INVESTMENTS

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

YEAR ENDED JUNE 30,
- ------------------------------------------------------- -------------------------------------------
2003 2002 2001
- ------------------------------------------------------- ------------ ----------------- ------------

Realized gains (losses) on sale of trading securities $(7,583) $(48,975) $350,717

Trading securities, at cost 1,658,058 2,178,041 1,951,963

Trading securities, at fair value * 723,428 1,409,474 1,163,693

Net change in unrealized losses on trading securities (34,308) (112,092) (379,861)
(included in earnings)

Available-for-sale securities, at cost 406,739 915,204 849,966

Available-for-sale securities, at fair value * 390,251 853,612 694,870

Gross realized gains on sale of available-for-sale 178,326 -- 32,673
securities

Gross realized losses on sale of available-for-sale (267,836) -- (11)
securities

Gross unrealized losses recorded in shareholders' (44,481) (272,118) (211,510)
equity

Gross unrealized gains recorded in shareholders' 27,992 210,525 56,413
equity

Losses on available-for-sale securities deemed to (247,412) (51,887) --
have other-than-temporary declines in value

- -----------------
* These categories of securities are comprised primarily of equity investments,
including those investments discussed in Note 15 regarding related party
transactions.

During fiscal 2002, a security was purchased on behalf of a private
advisory client of the Company for which $581,000 was included in trading
securities on the Company's balance sheet at June 30, 2002. This security
had a contingent payable that was required to be paid by the Company to the
private advisory client upon liquidation of the securities, net of any fees
earned. This payable was included in accounts payable on the balance sheet
at June 30, 2002. To better reflect the terms of the relationship, during
December 2002 these securities were re-registered, and, as a result, were
no longer recorded as an asset of the Company and there were no longer any
associated contingent payables. Beneficial ownership of the securities has
been, and still is, maintained by the private advisory client. The Company
has a fee arrangement for these securities whereby it receives an
administrative fee annually plus a percentage of any gains from the sale of
the securities, payable at the settlement of the sales. The Company has
recorded $385,820 and $27,320 in revenue from these fee arrangements for
period ended June 30, 2003, and June 30, 2002, respectively. These amounts
have been classified as private client advisory fees on the statement of
operations.

Subsequent to fiscal year-end, it was determined, based upon market
quotations, that the value of an available-for-sale security had declined
$89,000 below its recorded value at June 30, 2003.

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. USGAF
are sub-advised by outside third-party managers, who are in turn paid out
of the investment advisory fees received by the Company. In March 2002, an
agreement was reached with one of these sub-advisors whereby $165,000 of
sub-advisory fees payable were waived. The Company also serves as transfer
agent to USGIF and USGAF and receives a fee based on the number of
shareholder accounts serviced. The Company also provides in-house legal
services to USGIF and USGAF for which it is reimbursed. The Company also
receives exchange, maintenance, closing, and small account fees directly
from USGIF and USGAF shareholders. Fees for providing services to USGIF and
USGAF continue to be the Company's primary revenue source.

The Company receives additional revenue from several sources including:
custodian revenues, revenues from miscellaneous transfer agency activities
including lockbox and printing functions, A&B mailroom operations, private
account advisory services, as well as gains on marketable securities
transactions.

The Company has voluntarily waived or reduced its advisory fees and/or has
agreed to pay expenses on several funds within USGIF through June 30, 2004,
or such later date as the Company determines. The aggregate amount of fees
waived and expenses borne by the Company were $1,509,061, $1,530,046, and
$2,039,360 in 2003, 2002, and 2001, respectively.

The investment advisory contract and related contracts between the Company
and USGIF expire in February 2004, and the contracts between the Company
and USGAF expire in May 2004. Management anticipates the trustees of both
USGIF and USGAF will renew the contracts.

NOTE 5. PROPERTY AND EQUIPMENT

Property and equipment are composed of the following:

JUNE 30,
- ------------------------------------------------------ -------------------------
2003 2002
- ------------------------------------------------------ ------------ ------------

Building and land $2,271,613 $2,271,613

Furniture, equipment, and other 2,144,770 2,136,843
----------- -----------
4,416,383 4,408,456
Accumulated depreciation (2,637,551) (2,538,466)
----------- -----------
Net property and equipment $1,778,832 $1,869,990
========== ==========

The building and land are pledged as collateral for the financing used to
acquire the building.

NOTE 6. BORROWINGS

The Company has a note payable to a bank, which is secured by land, an
office building, and related improvements. As of June 30, 2003, the balance
on the note was $956,560. The loan is currently being amortized over a
twelve-year period with payments of both principal and interest due monthly
based on a fixed rate of 6.50%. The current monthly payment is $10,840, and
the note matures on January 31, 2006. Under this agreement, the Company
must maintain certain financial covenants. One of the covenants requires
that the Company maintain cash and cash equivalents and eligible marketable
securities to meet or exceed $1 million at the end of each quarter. As of
June 30, 2003, the Company was in full compliance with all financial
covenants.

Management believes that the Company has adequate cash, cash equivalents,
and equity in the underlying asset to retire the obligation if necessary.

The Company has access to a $1 million credit facility with a one-year
maturity for working capital purposes. Any use of this credit facility will
be secured by the Company's eligible accounts receivable. As of June 30,
2003, this credit facility remained unutilized by the Company.

Future principal payments to be made over the next three years based on the
note payable outstanding at June 30, 2003, are as follows:

FISCAL YEAR AMOUNT
----------- --------
2004 $ 70,033

2005 74,712

2006 811,815
--------
Total $956,560
========

NOTE 7. LEASE COMMITMENTS

The Company has operating leases for computers and equipment that expire
between fiscal years 2004 and 2008. Total lease expenses were $188,558,
$222,983, and $202,006 in fiscal years 2003, 2002, and 2001, respectively.
Future minimum lease payments required under these leases are as follows:

FISCAL YEAR AMOUNT
----------- --------
2004 $ 87,155

2005 43,728

2006 37,704

2007 34,693

2008 34,693
--------
Total $237,973
========

NOTE 8. ANNUITY AND CONTRACTUAL OBLIGATIONS

On February 6, 1989, the Company entered into an agreement with Clark
Aylsworth (Aylsworth) related to his retirement on December 31, 1988. This
agreement provided for the payment to Aylsworth of a monthly annuity of
$1,500 for the remainder of his life or his wife's life, if he predeceases
her. The Company has recorded an obligation related to this agreement.

On December 30, 1990, the Company entered into a noncompete/noninterference
agreement, an executory contract, pursuant to which it pays the Aylsworths
$4,500 monthly, such amount to continue for the longer of Aylsworth's or
his wife's life. The Company determined that the executory contract should
be expensed as payments are made.

The Company placed cash in escrow to cover the Company's obligation to the
Aylsworths if the Company defaults. The escrowed amount decreases $15,000
annually and the balance was $195,000 at June 30, 2003, which is disclosed
on the balance sheet as restricted investments.

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 50% of their contribution up to 2% of
compensation. The Company has recorded expenses related to the 401(k) plan
of $46,918, $48,760, and $37,477 for fiscal years 2003, 2002, and 2001,
respectively.

The 401(k) plan allows for a discretionary profit sharing contribution by
the Company, as authorized by the board of directors. The Company has
neither accrued nor paid a contribution for fiscal years 2003, 2002, and
2001. Prior to January 1, 2002, there was a separate profit sharing plan.
Effective January 1, 2002, the separate profit sharing plan was merged into
the 401(k) plan to provide a more efficient manner of administration.

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
essentially all such employees accepted. Limited employee contributions to
an Individual Retirement Account are matched by the Company. Similarly,
certain employees may contribute monthly to the Tax Free Fund, and the
Company will match these contributions on a limited basis. A similar
savings plan utilizing UGMA accounts is offered to employees to save for
their children's education. The Company match, reflected in base salary
expense, aggregated in all programs to $52,983, $52,692, and $67,485 in
fiscal years 2003, 2002 and 2001, respectively.

The Company has a program whereby employees can purchase treasury shares,
at market price, and the Company will match their contribution up to 3% of
gross salary. During fiscal years 2003, 2002 and 2001, employees purchased
20,510, 37,770 and 21,870 shares of treasury stock from the Company,
respectively.

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, 2003.

NOTE 10. SHAREHOLDERS' EQUITY

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, with the exception that any dividends
declared must first be paid to the holders of the class A stock to the
extent of 5% of the Company's after-tax prior year net earnings. The
holders of the class A stock have a liquidation preference equal to the par
value of $.05 per share.

During fiscal year 1999, the Board of Directors of the Company approved the
issuance of 1,000,000 shares of class C common stock to Frank Holmes in
exchange for services and cancellation of the option to purchase 400,000
shares of class C common stock held by Mr. Holmes and the cancellation of
warrants to purchase 586,122 shares of class C common stock held by Mr.
Holmes and F.E. Holmes Organization, Inc. The 1,000,000 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 $.50 per
share for compensation purposes. The agreement was executed on August 10,
1999. At June 30, 2003, the unvested balance of this deferred compensation
arrangement is $250,000 and is included on the statement of financial
condition as a contra account to additional paid-in capital.

During the fiscal years ended June 30, 2003 and 2002, the Company purchased
40,127 and 86,275 shares, respectively, of its class A common stock at an
average price of $1.64 and $1.23, per share, respectively.

During the years ended June 30, 2003, 2002 and 2001, the Company granted
3,000, 16,600 and 18,400 shares, respectively, of class A common stock to
certain employees at a weighted average fair value on grant date of $1.60,
$2.04, and $1.36, respectively. In addition, at June 30, 2003, the Company
accrued a discretionary bonus to certain employees of approximately
$38,000. Subsequent to June 30, 2003, the Company granted 15,000 shares of
its class A common stock in payment of this bonus.

In March 1985, the board of directors adopted an Incentive Stock Option
Plan (1985 Plan), amended in November 1989 and December 1991, which
provides for the granting of options to purchase 200,000 shares of the
Company's class A common stock, at or above fair market value, to certain
executives and key salaried employees of the Company and its subsidiaries.
Options under the 1985 Plan were granted for a term of up to five years in
the case of employees who own in excess of 10% of the total combined voting
power of all classes of the Company's stock and up to ten years for other
employees. Options issued under the 1985 Plan vest six months from the
grant date or 20% on the first, second, third, fourth and fifth
anniversaries of the grant date. Options were granted at prices ranging
from $1.50 to $4.50 per share, which equaled or exceeded the fair market
value at date of grant. The 1985 Plan expired December 31, 1994;
consequently, there will be no further option granted under the 1985 Plan.
As of June 30, 2003, 2,500 options remain outstanding.

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 800,000 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 $1.50 to $5.69 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% 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 200,000 shares of the
Company's class A common stock to directors, officers, and employees of the
Company and its subsidiaries.

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

WEIGHTED
AVERAGE
EXERCISE
SHARES PRICE ($)
--------------------------- -------------- --------------

OUTSTANDING JUNE 30, 2000 380,800 2.16

Granted -- --

Canceled 39,000 1.58

Exercised -- --
-------

OUTSTANDING JUNE 30, 2001 341,800 2.23

Granted -- --

Canceled 150,300 2.62

Exercised 12,000 1.92
-------

OUTSTANDING JUNE 30, 2002 179,500 1.92

Granted -- --

Canceled 18,000 1.68

Exercised -- --
-------

OUTSTANDING JUNE 30, 2003 161,500 1.94
=======

As of June 30, 2003, 2002, and 2001, exercisable stock options totaled
144,700, 144,100, and 293,000 shares and had weighted average exercise
prices of $2.00, $2.02, and $2.35 per share, respectively.

Class A common stock options outstanding and exercisable at June 30, 2003,
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 ($) EXERCISABLE PRICE ($)

1985 PLAN 12/15/94 2,500 1.45 2.63 2,500 2.63
CLASS A

1989 PLAN 05/16/94 1,000 .87 4.75 1,000 4.75
CLASS A
09/05/95 4,500 2.18 2.63 4,500 2.63

05/24/96 10,000 2.90 3.06 10,000 3.06

06/04/97 20,000 3.93 2.00 20,000 2.00

12/03/99 15,000 6.42 1.50 9,000 1.50
------- ---- ---- ------- ----

50,500 2.69 2.17 44,500 2.26

1997 PLAN 06/04/97 31,500 3.93 1.82 31,500 1.82
CLASS A
06/04/97 50,000 3.93 2.00 50,000 2.00

12/03/99 27,000 6.42 1.50 16,200 1.50
------- ---- ---- ------- ----

108,500 4.55 1.82 97,700 1.86

ALL PLANS 12/91 161,500 3.92 1.94 144,700 2.00
through ======== ==== ==== ======= ====
12/99

NOTE 11. INCOME TAXES

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

YEAR ENDED JUNE 30,
2003 2002 2001

Tax expense (benefit) at statutory rate $ 10,917 $ (114,507) $ (257,889)

Nondeductible membership dues 8,690 14,754 10,788

Nondeductible meals and entertainment 15,091 14,242 18,758

Change in valuation allowance (369,068) 137,928 253,966

Other 323,868 (147,768) 10,558
----------- ----------- -----------
$(10,502) $(95,351) $ 36,181
========= ========= ========

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 a 34% tax rate are as
follows:

YEAR ENDED JUNE 30,

2003 2002

BOOK/TAX DIFFERENCES IN THE BALANCE SHEET

Trading securities $ 317,774 $ 306,110
Accumulated depreciation 22,636 31,930
Accrued expenses 54,310 59,311
Available-for-sale securities 120,267 20,942
Losses of USGG 229,307 195,107
Annuity obligations 38,241 41,533
------ ------
782,535 654,933

TAX CARRYOVERS

Net operating loss (NOL) carryover 442,909 941,357
Charitable contributions carryover 23,089 18,545
Investment tax credit 34,472 34,472
Alternative minimum tax credits 139,729 139,729
--------- --------
640,199 1,134,103

TOTAL GROSS DEFERRED TAX ASSET 1,422,734 1,789,036

VALUATION ALLOWANCE (315,393) (684,461)
---------- ---------

NET DEFERRED TAX ASSET $1,107,341 $1,104,575
========== ==========

For federal income tax purposes at June 30, 2003, the Company has NOLs of
approximately $1.3 million, which will begin expiring between fiscal 2010
and 2022, charitable contribution carryovers of approximately $68,000
expiring between 2004 and 2007, and alternative minimum tax credits of
$139,729 with indefinite expirations. If certain changes in the Company's
ownership should occur, there could be an annual limitation on the amount
of NOLs that could be utilized. The Company has a tax planning strategy,
including the sale of owned assets and investments if necessary, which
would be implemented to realize the deferred tax asset prior to the
expiration of any unused NOLs.

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 a valuation allowance of $315,393 and $684,461 at June 30, 2003
and 2002, respectively, providing for the utilization of NOLs, charitable
contributions, and investment tax credits against future taxable income.

NOTE 12. EARNINGS PER SHARE

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

YEAR ENDED JUNE 30,

2002 2002 2001

BASIC AND DILUTED NET INCOME (LOSS) $42,612 $ (241,434) $ (794,679)

WEIGHTED AVERAGE NUMBER OF
OUTSTANDING SHARES
Basic 7,460,260 7,456,181 7,524,913

EFFECT OF DILUTIVE SECURITIES
Employee stock options 8,860 -- --
------------ --------- ---------
Diluted 7,469,120 7,456,181 7,524,913
============ ========= =========

EARNINGS (LOSS) PER SHARE
Basic $ 0.01 $ (0.03) $ (0.11)
======== ========== =========
Diluted $ 0.01 $ (0.03) $ (0.11)
======== ========== =========

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, 2003, 2002, and 2001, options for 88,000, 179,500, and 341,800
shares, respectively, were excluded from diluted EPS.

NOTE 13. COMPREHENSIVE INCOME (LOSS)

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

TAX
BEFORE-TAX (EXPENSE) OR NET-OF-TAX
AMOUNT BENEFIT AMOUNT

JUNE 30, 2003
Unrealized gains (losses) on $ 45,103 $(15,335) $ 29,768
available-for-sale securities -------- --------- --------

Other comprehensive income (loss) $ 45,103 $(15,335) $ 29,768
======== ========= ========
JUNE 30, 2002
Unrealized gains (losses) on $ 93,504 $ (31,791) $ 61,713
available-for-sale securities -------- ---------- --------

Other comprehensive income (loss) $ 93,504 $ (31,791) $ 61,713
======== ========== ========
JUNE 30, 2001
Unrealized gains (losses) on $(76,656) $26,063 $(50,593)
available-for-sale securities --------- ------- ---------

Other comprehensive income (loss) $(76,656) $26,063 $(50,593)
========= ======= =========

NOTE 14. FINANCIAL INFORMATION BY BUSINESS SEGMENT

The Company operates principally in two business segments: providing mutual
fund investment management services to its clients and investing for its
own account in an effort to add growth and value to its cash position. The
following details total revenues and income (loss) by business segment:

INVESTMENT CORPORATE CONSOLI-
MANAGEMENT INVESTMENT DATED
SERVICES ($) ($) ($)
YEAR ENDED JUNE 30, 2003

Net revenues 7,842,828 (363,892) 7,478,936
========= ========= =========
Net income (loss) before income taxes 427,341 (395,231) 32,110
======= ========= ========
Depreciation 121,493 121,493
======= ========== =======
Interest expense 82,216 729 82,945
======= ========= =========
Gain on litigation settlement 371,057 -- 371,057
======= ========== =======
Capital expenditures 30,335 -- 30,335
====== ========== ========
Gross identifiable assets at June 30, 5,218,667 1,113,679 6,332,346
2003
Deferred tax asset 1,107,341
---------
Consolidated total assets at June 30, 7,439,687
2003 =========

YEAR ENDED JUNE 30, 2002
Net revenues 7,975,056 (207,542) 7,767,514
========= ========= =========
Net income (loss) before income taxes (128,643) (208,142) (336,785)
========= ======== =========
Depreciation 164,674 -- 164,674
======= ======== =======
Interest expense 84,810 574 85,384
======= ======== ======
Capital expenditures 4,765 -- 4,765
===== ======== =====
Gross identifiable assets at June 30, 4,537,360 2,263,086 6,800,446
2002
Deferred tax asset 1,104,575
---------
Consolidated total assets at June 30, 7,905,021
2002 =========

YEAR ENDED JUNE 30, 2001
Net revenues 8,881,776 12,108 8,893,884
========= ====== =========
Net income (loss) before income taxes (742,801) (15,697) (758,498)
========= ======== =========
Depreciation 226,150 -- 226,150
======= ======== =======
Interest expense 109,995 255 110,250
======= ======= =======
Capital expenditures 84,493 -- 84,493
======= ======= =======
Gross identifiable assets at June 30, 5,012,606 1,858,563 6,871,169
2001
Deferred tax asset 1,041,015
---------
Consolidated total assets at June 30, 7,912,184
2001 =========

NOTE 15. RELATED PARTY TRANSACTIONS

In addition to the Company's receivable from USGIF and USGAF relating to
investment management, transfer agent, and other fees, the Company had
$1,125,037 and $969,087 invested in USGIF money market mutual funds at June
30, 2003 and 2002, respectively. Receivables from mutual funds 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.

Frank Holmes, a director and CEO of the Company, has served as an
independent director of Franc-Or Resources beginning in June 2000 and
chairman of Fortress IT Corp (formerly Consolidated Fortress Resources)
beginning November 2000. He also served as an independent director for
Broadband Collaborative Solutions, a private company, from May 2000 to June
30, 2002. Mr. Holmes resigned as director of Broadband Collaborative
Solutions when the entity became a public company. The Company owns a
position in Franc-Or Resources at June 30, 2003, with an estimated fair
value of $267,949, recorded as a trading security on the balance sheet. The
Company also owns positions in Fortress IT and Broadband Collaborative
Solutions at June 30, 2003, with estimated fair values of $15,037 and
$81,867, respectively, recorded as investment securities available-for-sale
on the balance sheet. Mr. Holmes personally owned shares of Broadband
Collaborative Solutions at June 30, 2003.

Mr. Holmes had an outstanding payable to the Company of $1,613 and $43,567
at June 30, 2003 and 2002, respectively. In addition, Mr. Holmes had
advances outstanding at June 30, 2002 of $76,651, and this amount was
settled through a bonus to Mr. Holmes after June 30, 2002.

During fiscal year 2002, J. Stephen Penner, a former director of the
Company who resigned during fiscal year 2002, exercised options for 10,000
shares of Class A stock at $2.00 per share.

NOTE 16. RECEIVABLE ADJUSTMENTS

In fiscal year 2001, the Company paid $182,115 for losses from shareholder
activity incurred by USGIF in previous years. Management consulted with its
insurance carrier and determined that it was probable that this sum could
be claimed against the Company's insurance policy. The deductible on this
policy was $25,000, which amount was expensed in fiscal 2000. The balance
of approximately $157,000 was booked as a receivable at June 30, 2001. In
fiscal year 2002, discussions with the insurance carrier indicated that the
possibility of recovery was not likely, and as such, the entire receivable
balance was expensed. Any subsequent collections on this claim will result
in a reversal of this expense to the extent of collection. During fiscal
year 2003, the Company collected $20,000 on this claim.

During fiscal 2002, an adjustment was made to the billing practices related
to the Company's mail services. As a result, an overall reduction of
$104,000 was applied to mail service revenues and related receivables in
order to reflect billing volumes.

NOTE 17. CONTINGENCIES

The Company was named as one of several defendants in a civil lawsuit filed
in New York. During June 2003, this lawsuit was dismissed, however, on July
28, 2003, the plaintiff filed an appeal. Management consulted with legal
counsel and determined that the Company has strong merits for obtaining a
favorable ruling. The Company had filed a claim against its insurance
policy that would provide reimbursement of legal costs that exceeded the
deductible. This deductible was reached in late fiscal year 2002. The
Company received $172,000 and $66,000 in reimbursements from its insurance
carrier during fiscal years 2003 and 2002, respectively. All reimbursements
were recorded as a reduction in general and administrative expenses on the
statement of operations.

The Company was the plaintiff in a lawsuit filed in Ontario, Canada and a
mediation was held during June 2003. During this mediation, the Company and
the defendant agreed to a settlement in the amount of $371,057, which has
been recorded as a receivable and a gain on the balance sheet and statement
of operations, respectively. Payment on the settlement was received by the
Company subsequent to June 30, 2003, and the case has been formally
dismissed.

NOTE 18. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

FISCAL 2003 1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER
(in thousands except per share
figures)

Revenues $1,971 $2,041 $1,874 $1,593

Income (Loss) Before Income Taxes $ 114 $ 137 $ (74) $ (145)
Net Income
$ 111 $ 142 $ (70) $ (140)
Earnings per Share:
Basic $0.01 $0.02 ($0.01) ($0.02)
Diluted $0.01 $0.02 ($0.01) ($0.02)

Fiscal 2002 1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER
(in thousands except per share
figures)

Revenues $1,828 $1,886 $1,933 $2,121

Income (Loss) Before Income Taxes $ (52) $ 1 $ 68 $(354)

Net Income $ (5) $ (22) $ (25) $(189)
Earnings per Share:
Basic ($0.00) ($0.00) ($0.00) ($0.03)
Diluted ($0.00) ($0.00) ($0.00) ($0.03)

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

On September 22, 2003, Ernst & Young LLP (E&Y) notified the Registrant,
including the audit committee of the board of directors, that it will not
stand for reelection following the completion of the audit for fiscal year
ended June 30, 2003. E&Y's reports on the Registrant's financial statements
for the past two most recent fiscal years contained no adverse opinion or
disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope or accounting principles. The board of directors, including the
members of the audit committee, accepted E&Y's resignation at a board
meeting held September 29, 2003.

There have been no disagreements with E&Y on any matter of accounting
principles or practices, financial statement disclosures or auditing scope
or procedures during the Registrant's two most recent fiscal years or in
the subsequent interim period through September 22, 2003 (the date of
resignation) which disagreement(s), if not resolved to E&Y's satisfaction,
would have caused E&Y to make reference to the subject matter of the
disagreement(s) in connection with its report.

E&Y did not advise the Registrant during the Registrant's two most recent
fiscal years or in the subsequent interim period through September 22, 2003
(the date of resignation):

1. that the internal controls necessary for the Registrant to develop
reliable financial statements did not exist except as follows; in
response to a design in control deficiency reported by E&Y related to
the fiscal 2002 audit, the Registrant corrected this design in control
deficiency by realigning certain reporting responsibilities;

2. that information had come to its attention that had led it to no
longer be able to rely on management's representations, or that had
made it unwilling to be associated with the financial statements
prepared by management;

3. (i) of the need to expand significantly the scope of its audit, or
that information had come to its attention during the two most recent
fiscal years or any subsequent interim period that if further
investigated might (a) materially have impacted the fairness or
reliability of either a previously issued audit report or the
underlying financial statements, or the financial statements issued or
to be issued covering the fiscal period(s) subsequent to the date of
the most recent financial statements covered by an audit report or (b)
have caused it to be unwilling to rely on management's representations
or be associated with the Registrant's financial statements, and (ii)
it did not, due to its resignation or for any other reason, expand the
scope of its audit or conduct such further investigation; or

4. (i) that information had come to its attention that it had concluded
materially impacts the fairness or reliability of either: (a) a
previously issued audit report or the underlying financial statements,
or (b) the financial statements issued or to be issued covering the
fiscal period(s) subsequent to the date of the most recent financial
statements covered by an audit report.

The Registrant has requested E&Y to provide a letter addressed to the
Securities and Exchange Commission stating whether it agrees with the
statements set forth above. A copy of E&Y's letter to the Securities and
Exchange Commission is filed as Exhibit 16 to this Form 10-K. E&Y was
authorized by the Registrant to respond fully to inquiries of the new
independent principal accountant to be hired.

ITEM 9A. CONTROLS AND PROCEDURES

In the fiscal year ended June 30, 2003, there were no significant changes
in the Company's internal controls or in other factors that could
significantly affect those controls subsequent to the date of their most
recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.

Part III of Annual Report on Form 10-K

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

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

NAME AGE POSITION

Frank E. Holmes 48 Chairman of the Board of Directors 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 has served as
Director of Franc-Or Resources Corporation since
June 2000 and Chairman and Director of Fortress
IT Corp (formerly Consolidated Fortress) since
November 2000.

Jerold H. Rubinstein 65 Director of the Company since October 1989.Chief
Executive Officer and founder of Music Imaging
& Media, Inc. from July 2002 to present.
Chairman of Musicplex, Inc. from September 1999
to June 2002. Chairman and Chief Executive
Officer of Xtra Music from July 1997 to May
2000. Chairman of the Board of Directors and
Chief Executive Officer of DMX Inc. from May
1986 to July 1997.

Roy D. Terracina 57 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. 43 Director of the Company since June 1997.Chairman
of the Board and President of Global Trends
Investments since April 1996. President, Vice
President and Account Manager with Fabian
Financial Services, Inc. from April 1984 to
March 1996. Member of the Advisory Board for
Schwab Institutional from 1989 to 1991 and from
1995 to 1996. Member of the Advisory Board of
Rydex Series Trust since January 1999. Fund
Relations Chair for SAAFTI since 1994.

Susan B. McGee 44 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.

Tracy C. Peterson 31 Chief Financial Officer of the Company since
January 2002. Since 1997, Mr. Peterson has
served and continues to serve in various
positions with the Company, its subsidiaries,
and the investment companies it sponsors.

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 consists of Messrs. Holmes, Lydon, Rubinstein, and Terracina. The
Company's Audit Committee consists of Messrs. Rubinstein and Terracina. The
Stock Option Committee consists of Mr. Rubinstein and Mr. Terracina. The
Company does not have a Nominating Committee.

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 Securities and Exchange Commission (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.

Frank E. Holmes, Tracy C. Peterson and Susan B. McGee participated during
the period in a Company-sponsored employee stock purchase plan under which
Company employees may elect to have a portion of their salary, which is
paid on a semi-monthly basis, withheld for the purpose of purchasing common
stock of the Company at its prevailing market price. From and after August
29, 2002, the effective date of the SEC's amendments to the reporting
requirements under Section 16(a) of the Exchange Act, Mr. Holmes, Mr.
Peterson and Ms. McGee did not timely file Forms 4 to report purchases of
common stock made under this employee stock purchase plan. During the
period, Mr. Holmes did not file 20 different Forms 4 which would have
reported 20 different purchases made under this employee stock purchase
plan. Mr. Holmes reported all of the common stock purchased under this
employee stock purchase plan during this period on a Form 4 filed with the
SEC on July 7, 2003. During this period, Mr. Peterson did not file 20
different Forms 4 which would have reported 20 different purchases made
under this employee stock purchase plan. Mr. Peterson reported all of the
common stock purchased under this employee stock purchase plan during this
period on a Form 4 filed on July 7, 2003. During the period, Ms. McGee did
not file 4 different Forms 4 which would have reported 4 different
purchases made under this employee stock purchase plan. Ms. McGee reported
all of the common stock purchased under this employee stock purchase plan
during this period on a Form 4 filed on July 7, 2003. Effective June 30,
2003, the Company adopted a new employee stock purchase plan, under which
employee purchases are deemed to take place only once every quarter.

ITEM 11. EXECUTIVE COMPENSATION

The Company has intentionally omitted columns (g), (h), and (i) as they are
not applicable.

Includes amounts identified for 401(k) contributions (calculable through
the end of the June 30, 2003, fiscal year) and amounts for Company savings
plans (calculable through the end of the June 30, 2003, fiscal year).

ANNUAL COMPENSATION LONG-TERM
COMPENSATION
AWARDS

(A) (B) (C) (D) (E) (F) (G)

NAME AND YEAR SALARY($) BONUS($) OTHER
PRINCIPAL POSITION ANNUAL RESTRICTED NUMBER OF
DURING FY 2003 COMPEN- STOCK OPTIONS/
SATION($)
AWARDS($) SARS

Frank E. Holmes 2003 445,675 110,195 82,858(1) 50,000(2) --
Chairman, Chief Executive
Officer

2002 318,280 103,715 74,784(1) 50,000(2) --

2001 318,280 141,918 82,644(1) 100,000(2) --

Susan B. McGee 2003 175,206 64,390 --(3) 6,500 --
President, General Counsel

2002 151,610 50,536 --(3) 4,300 --

2001 139,054 46,650 --(3) 217 --

Tracy C. Peterson 2003 91,284 14,333 --(3) 4,050 --
Chief Financial Officer

2002 82,443 19,130 --(3) 2,150 --

2001 62,638 10,459 --(3) 217 --

(1) Includes trustee fees of $40,350, $38,200 and $48,000 paid by the
Company during fiscal year 2003, 2002 and 2001, respectively.

(2) In June 1999, the board of directors granted Mr. Holmes 1,000,000
shares of class C common stock to be vested, in equal parts, over a
ten-year period beginning with fiscal year 1999, with an annual
compensation value of $50,000. Mr. Holmes will be fully vested on June
30, 2008. Issuance was in part to compensate him for his efforts and
upon cancellation of Mr. Holmes' warrants and option to acquire
986,122 shares of class C common stock.

(3) The Company believes that the aggregate amounts of such omitted
personal benefits do not exceed the lesser of $50,000 or 10% of the
total of annual salary and bonus reported in columns (c) and (d) for
the named executive officers.

INCENTIVE COMPENSATION

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.

401(K) PLAN

The Company offers a 401(k) plan covering substantially all employees. The
Company will match a certain percentage of a participating employee's pay
deferment. The Company contributes 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 Company's
matching contribution.

The 401(k) plan allows for a discretionary profit sharing contribution by
the Company, as authorized by the board of directors. The Company did not
make a profit sharing contribution for the 2003, 2002 or 2001 fiscal years.
Prior to January 1, 2002, there was a separate profit sharing plan.

Effective January 1, 2002, the separate profit sharing plan was merged into
the 401(k) plan to provide a more efficient manner of administration.

SAVINGS PLANS

The Company has continued the program pursuant to which it offers
employees, including its executive officers, an opportunity to participate
in savings programs using managed investment companies. Limited employee
contributions to an Individual Retirement Account are matched by the
Company. Similarly, certain employees may contribute monthly to the Tax
Free Fund, and the Company will match these contributions on a limited
basis. A similar savings plan utilizing UGMA accounts is offered to
employees to save for their children's education.

STOCK PURCHASE PLAN

STOCK OPTION PLANS

In March 1985, the board of directors of the Company adopted an Incentive
Stock Option Plan (1985 Plan), giving certain executives and key salaried
employees of the Company and its subsidiaries options to purchase shares of
the Company's class A common stock. The 1985 Plan was amended on November
7, 1989 and December 6, 1991. In December 1991, it was amended to provide
provisions to cause the plan and future grants under the plan to qualify
under the Securities Exchange Act of 1934 (1934 Act) Rule 16b-3. As of June
30, 2003, under this plan, 202,500 options were granted, 88,000 options had
been exercised, 112,000 options had expired, and 2,500 options remained
outstanding. The 1985 Plan, as amended, terminated on December 31, 1994.

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 the Company's class A common stock to directors,
officers and employees of the Company and its subsidiaries. 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 a committee consisting of
two 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 800,000 shares. During the fiscal year ended June 30, 2003, there were
no grants. As of June 30, 2003, under this amended plan, 876,700 options
had been granted, 403,000 options had been exercised, 423,200 options had
expired, and 50,500 options remained outstanding, and 346,500 options are
available for grant.

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 the Company's class A common stock to
directors, officers, and employees of the Company and its subsidiaries. The
1997 Plan expressly requires that all grants under the plan qualify under
1934 Act Rule 16b-3. The 1997 Plan is administered by a committee
consisting of two 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 200,000 shares. During the fiscal year ended June
30, 2003, there were no options granted. As of June 30, 2003, 240,500
options had been granted, 8,000 shares had been exercised, 124,000 options
had expired, 108,500 options remained outstanding, and 85,500 options are
available for grant.

The following table shows, as to each of the officers of the Company listed in
the cash compensation table, aggregated option exercises during the last fiscal
year and fiscal year-end option values. There were no options or SARs awarded
during the period.

(A) (B) (C) (D) (E)

NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT FY END (#) AT FY END ($)

NAME NUMBER OF
SHARES
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE

Frank E. Holmes 0 0 1,000/0 $0/$0
Susan B. McGee 0 0 45,500/6,000 $3,900/$2,100
Tracy C. Peterson 0 0 3,000/2,000 $1,050/$700

COMPENSATION OF DIRECTORS

The Company may grant nonemployee directors options under the Company's
1989 and 1997 Stock Option Plans. Their compensation is subject to a
minimum of $3,750 in any quarter paid in arrears. During the fiscal year
ended June 30, 2003, the nonemployee directors each received compensation
of $12,750. Directors are reimbursed for reasonable travel expenses
incurred in attending the meetings held by the board of directors.

REPORT ON EXECUTIVE COMPENSATION

The board appointed Messrs. Holmes, Lydon, Terracina, and Rubinstein as
members of the Compensation Committee. There are no compensation committee
interlocks to report. Mr. Holmes serves as an employee and officer of the
Company. The board of directors reviews Mr. Holmes' compensation annually
to determine an acceptable base compensation, reflecting an amount
competitive with industry peers and taking into account the relative cost
of living in San Antonio, Texas. The board of directors also reviews Mr.
Holmes' performance in managing the Company's securities portfolio and
determines periodically whether to pay Mr. Holmes a cash bonus with respect
to such performance. During fiscal year 1999, Mr. Holmes, in addition to
his other duties, became the Company's chief investment officer responsible
for supervising management of clients' portfolios. In August 1999, in part
to compensate him for these efforts and upon cancellation of Mr. Holmes'
warrants and option to acquire 986,122 shares of class C common stock, the
board approved the issuance of 1,000,000 shares of class C common stock to
Mr. Holmes to be vested over a ten-year period beginning with fiscal year
1998, with an annual compensation value of $50,000. Mr. Holmes will be
fully vested on June 30, 2008.

The base pay of the executives is relatively fixed, but the executive has
the opportunity to increase his/her compensation by participating directly
in retirement and savings programs whereby the Company will contribute
amounts relative to the executive's contribution.

The Company has utilized option grants under the 1985 Plan, the 1989 Plan,
and the 1997 Plan to induce qualified individuals to join the Company with
a base pay consistent with the foregoing, thereby providing the individual
with an opportunity to benefit if there is significant Company growth.
Similarly, options have been utilized to reward existing employees for long
and faithful service and to encourage them to stay with the Company. Mr.

Rubinstein and Mr. Terracina are the members of the Stock Option Committee
of the board of directors. This committee acts upon recommendations of the
Chief Executive Officer.

COMPANY PERFORMANCE PRESENTATION

[GRAPHIC: Graph plotted from data points in following chart]

U.S. GLOBAL INVESTORS, INC.
JUNE 30, 1998 THROUGH JUNE 30, 2003

TSE
S&P Gold &
500 Prec. Min.
DATE INDEX Index GROW
$ $ $
--------- ------- --------- ------
Jun-98 10,000 10,000 10,000
Jul-98 9,894 8,621 8,125
Aug-98 8,465 6,523 7,188
Sep-98 9,007 10,367 7,813
Oct-98 9,739 10,545 6,563
Nov-98 10,329 9,824 7,813
Dec-98 10,924 9,339 7,813
Jan-99 11,381 9,095 8,125
Feb-99 11,027 8,559 10,313
Mar-99 11,468 8,357 7,500
Apr-99 11,912 9,852 6,875
May-99 11,631 8,174 7,188
Jun-99 12,276 8,709 6,250
Jul-99 11,893 8,162 6,875
Aug-99 11,834 8,445 7,188
Sep-99 11,510 10,636 7,500
Oct-99 12,238 9,135 8,125
Nov-99 12,487 8,606 7,500
Dec-99 13,222 8,240 7,500
Jan-00 12,558 7,308 8,125
Feb-00 12,320 7,114 10,938
Mar-00 13,525 6,693 8,125
Apr-00 13,118 6,971 7,500
May-00 12,850 7,275 8,438
Jun-00 13,167 7,434 8,750
Jul-00 12,961 6,572 8,438
Aug-00 13,766 6,856 7,813
Sep-00 13,039 6,658 7,500
Oct-00 12,984 5,951 7,032
Nov-00 11,961 6,601 5,625
Dec-00 12,019 7,175 5,313
Jan-01 12,446 6,752 5,625
Feb-01 11,312 7,062 6,094
Mar-01 10,595 6,516 5,938
Apr-01 11,418 7,514 5,750
May-01 11,495 7,696 5,250
Jun-01 11,215 7,472 5,350
Jul-01 11,105 7,348 5,250
Aug-01 10,410 7,790 5,000
Sep-01 9,570 8,576 4,500
Oct-01 9,752 7,935 4,750
Nov-01 10,500 7,685 4,850
Dec-01 10,592 7,994 5,250
Jan-02 10,438 8,928 5,350
Feb-02 10,236 9,344 5,900
Mar-02 10,621 9,760 9,000
Apr-02 9,978 10,414 10,750
May-02 9,904 12,185 11,945
Jun-02 9,199 10,621 10,000
Jul-02 8,482 8,567 7,755
Aug-02 8,538 9,722 8,750
Sep-02 7,611 9,661 6,500
Oct-02 8,280 8,790 5,800
Nov-02 8,767 8,633 6,250
Dec-02 8,252 10,296 12,245
Jan-03 8,036 10,471 11,490
Feb-03 7,915 9,780 12,900
Mar-03 7,992 9,219 10,000
Apr-03 8,650 9,104 9,500
May-03 9,105 10,151 9,850
Jun-03 9,222 10,428 9,250

The graph above compares the cumulative total return for both Company's
class A common stock to the cumulative total return for the S&P 500 Index
and the Toronto Stock Exchange Gold and Precious Minerals Index (without
dividend reinvestment) 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, 1998, and that all dividends are reinvested.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

CLASS C COMMON STOCK (VOTING STOCK)

On September 22, 2003, there were 1,496,800 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.

NAME AND ADDRESS OF BENEFICIAL OWNER CLASS C COMMON PERCENT OF
SHARES CLASS (%)
BENEFICIALLY
OWNED

Frank E. Holmes 1,392,211 (1) 93.01%
7900 Callaghan Road
San Antonio, TX 78229

(1) Includes 1,000,000 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; 102,280 shares owned by F. E. Holmes
Organization Inc.; 285,000 shares owned directly by Mr. Holmes; and 4,931
shares owned by Mr. Holmes in an IRA.

CLASS A COMMON STOCK (NONVOTING STOCK)

On September 22, 2003, there were 5,976,996 shares of the Company's class A
common stock issued and outstanding. The following table sets forth, as of
such date, information regarding the beneficial ownership of the Company's
class A common stock by each person known by the Company to own 5% or more
of the outstanding shares of class A common stock.

NAME AND ADDRESS OF BENEFICIAL OWNER CLASS A COMMON PERCENT OF
SHARES CLASS (%)
BENEFICIALLY
OWNED

Royce Associates, LLC. - New York, New York (1) 886,305(1) 14.82%

(1) Information is from Schedule 13G for period ending December 31, 2002,
filed with the SEC February 5, 2003.

SECURITY OWNERSHIP OF MANAGEMENT

The following table sets forth, as of September 22, 2003, information
regarding the beneficial ownership of the Company's class A and class C
common stock by each director and by all directors and executive officers
as a group. Except as otherwise indicated in the notes below, each director
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

BENEFICIAL OWNER NUMBER % NUMBER %
OF OF
SHARES SHARES

Frank E. Holmes, CEO, Director 1,392,211(1) 93.01% 265,570(2) 4.44%

Thomas F. Lydon, Jr., Director -- -- 10,000(3) 0.17%

Susan B. McGee, President, General Counsel -- -- 62,804(3) 1.05%

Tracy C. Peterson, CFO -- -- 12,765(3) 0.21%

Jerold H. Rubinstein, Director -- -- 10,000(3) 0.17%

Roy D. Terracina, Director -- -- 89,100(3) 1.49%

All directors and executive officers as a group 1,392,211 93.01% 450,239 7.53%
(six persons)

(1) Includes 1,000,000 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; 102,280 shares owned by F. E.
Holmes Organization Inc.; 285,000 shares owned directly by Mr. Holmes;
and 4,931 shares owned by Mr. Holmes in an IRA.

(2) Includes options to obtain 1,000 shares of class A common stock;
100,000 shares of class A common stock held by F.E. Holmes
Organization, Inc., a corporation wholly owned by Mr. Holmes; 99,453
shares owned directly by Mr. Holmes, 64,817 shares owned by Mr. Holmes
in retirement accounts, and 1,300 shares of class A common stock owned
separately by Mr. Holmes' wife. Mr. Holmes disclaims beneficial
ownership of these 1,300 shares of class A common stock.

(3) Includes shares of class A common stock underlying presently
exercisable options held directly by each individual as follows: Mr.
Lydon - 10,000 shares; Ms. McGee - 51,500 shares; Mr. Peterson - 5,000
shares; Mr. Rubinstein - 10,000 shares; and Mr. Terracina - 51,000
shares.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Section not applicable until fiscal year ending June 30, 2004.

Part IV of Annual Report on Form 10-K

ITEM 14. 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:

o Report of Independent Accountants

o Consolidated Balance Sheets as of June 30, 2003 and 2002

o Consolidated Statements of Operations and Comprehensive Income (Loss)
for the three years ended June 30, 2003

o Consolidated Statements of Shareholders' Equity for the three years
ended June 30, 2003

o Consolidated Statements of Cash Flows for the three years ended June
30, 2003

o Notes to Consolidated Financial Statements

2. FINANCIAL STATEMENT SCHEDULES

None.

3. EXHIBITS

3.1 Third Restated and Amended Articles of Incorporation of Company,
incorporated by reference to the Company's Form 10-K for the fiscal
year ended June 30, 1996 (EDGAR Accession Number
0000754811-96-000025).

3.2 By-Laws of Company, incorporated by reference to Exhibit D of the
Company's Registration Statement No. 33-33012 filed on Form S-8 with
the Commission on January 30, 1990, as amended (EDGAR Accession Number
0000754811-00-000017).

10.1 Advisory Agreement dated October 27, 1989, by and between Company and
United Services Funds, incorporated by reference to Exhibit (4)(b) of
the Company's Form 10-K for fiscal year ended June 30, 1990 (EDGAR
Accession No. 0000101507-99-000019).

10.2 Advisory Agreement dated September 21, 1994, by and between Company
and Accolade Funds, incorporated by reference to Exhibit 10.2 of
Company's Form 10-K for fiscal year ended June 30, 1995 (EDGAR
Accession Number 0000754811-95-000002).

10.3 Sub-Advisory Agreement dated September 21, 1994, by and between
Company, Accolade Funds/Bonnel Growth Fund and Bonnel, Inc.,
incorporated by reference to Exhibit 10.3 of Company's Form 10-K for
fiscal year ended June 30, 1995 (EDGAR Accession Number
0000754811-95-000002).

10.4 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).

10.5 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).

10.6 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).

10.7 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).

10.8 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).

10.9 Amendment No. 1, dated July 1, 2001, to loan agreement between Company
and Bank One NA for refinancing building, included herein.

10.10Amendment No. 2, dated February 1, 2003, to loan agreement between
Company and Bank One NA for refinancing building, included herein.

10.11United 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).

10.12United 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).

10.13U.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).

10.14Custodian 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).

10.15Amendment dated June 30, 2001, to Custodian Agreement dated November
1, 1997, between U.S. Global Investors Funds and Brown Brothers
Harriman & Co., incorporated by reference to Annual Report on Form
10-K for fiscal year ended June 30, 2001 (EDGAR Accession No.
0000754811-01-500016).

10.16Appendix A to Custodian Agreement dated November 1, 1997, between U.S.
Global Investors Funds and Brown Brothers Harriman & Co., incorporated
by reference to Annual Report on Form 10-K for fiscal year ended June
30, 2001 (EDGAR Accession No. 0000754811-01-500016).

10.17Amendment 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).

10.18Custodian 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).

10.19Amendment 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).

10.20Amendment 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).

10.21Appendix A 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).

10.22Amendment 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).

10.23Distribution 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).

10.24Distribution 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).

16 Letter Regarding Change in Certifying Accountant

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).

99.1 Certification of Chief Executive Officer Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002

99.2 Certification of Chief Financial Officer Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002

(b) Reports on Form 8-K

None.

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 29, 2003 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 Chairman of the Board of September 29, 2003
Directors
Chief Executive Officer
Chief Investment Officer

* /s/ Thomas F. Lydon, Jr.
- ---------------------------
THOMAS F. LYDON, JR. Director September 29, 2003

* /s/ Jerold H. Rubinstein
- ---------------------------
JEROLD H. RUBINSTEIN Director September 29, 2003

* /s/ Roy D. Terracina
- ---------------------------
ROY D. TERRACINA Director September 29, 2003

/s/ Tracy C. Peterson
- ---------------------------
TRACY C. PETERSON Chief Financial Officer September 29, 2003

*BY: /s/ Susan B. McGee
- ---------------------------
Susan B. McGee September 29, 2003
Attorney-in-Fact under Power
of Attorney dated
September 26, 2001

CERTIFICATIONS

I, Frank E. Holmes, 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 annual 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 annual report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures 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 annual report
is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.

Date: September 29, 2003

/s/ Frank E. Holmes
---------------------------------
Signature
Frank E. Holmes, Chief Executive Officer

I, Tracy C. Peterson, certify that:

1. I have reviewed this annual report on Form 10-K of U.S. Global Investors,
Inc.;

b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and

Date: September 29, 2003

/s/ Tracy C. Peterson
----------------------------------
Signature
Tracy C. Peterson, Chief Financial Officer