NOTE 3. INVESTMENT MANAGEMENT AND OTHER FEES

The following table presents operating revenues disaggregated by performance obligation:

	Six Months Ended December 31,						Three Months Ended December 31,
(dollars in thousands)	2018			2017			2018			2017
USGIF advisory fees	$	1,684		$	2,329		$	773		$	1,184
USGIF performance fees		(262	)		(308	)		(176	)		(192	)
ETF advisory fees		319			369			153			184
Offshore advisory fees		-			3			-			2
USGIF administrative services fees		96			121			43			64
Subtotal investment management services fees		1,837			2,514			793			1,242
Galileo advisory fees		315			505			136			287
Galileo performance fees		870			464			870			464
Subtotal investment management services fees - Canada		1,185			969			1,006			751
Total Operating Revenue	$	3,022		$	3,483		$	1,799		$	1,993

The Company serves as investment adviser to USGIF and receives a fee based on a specified percentage of average assets under management. The advisory agreement for the equity funds within USGIF provides for a base advisory fee that is adjusted upwards or downwards by 0.25 percent when there is a performance difference of 5 percent or more between a fund’s performance and that of its designated benchmark index over the prior rolling 12 months.

The Company has agreed to contractually limit the expenses of the Near-Term Tax Free Fund through April 2019. The Company has voluntarily waived or reduced its fees and/or agreed to pay expenses on the remaining USGIF funds. These caps will continue on a voluntary basis at the Company’s discretion. The aggregate fees waived and expenses borne by the Company for USGIF for the three and six months ended December 31, 2018, were $212,000 and $377,000, respectively, compared with $102,000 and $334,000, respectively, for the corresponding period in the prior fiscal year. Management cannot predict the impact of future waivers due the number of variables and the range of potential outcomes.

The Company receives administrative service fees from USGIF based on the average daily net assets at an annual rate 0.05 percent per investor class and 0.04 percent per institutional class of each fund.

The Company also serves as investment advisor to two exchange-traded funds (ETFs): U.S. Global Jets ETF (ticker JETS) and U.S. Global GO GOLD and Precious Metal Miners ETF (ticker GOAU). The Company receives a unitary management fee of 0.60 percent of average net assets and has agreed to bear all expenses of the ETFs.

Galileo provides advisory services for clients in Canada and receives advisory fees based on the net asset values of the clients. Galileo may also receive performance fees from certain clients when market appreciation or realized net gains exceeds established benchmarks. Performance fees are recognized when it is determined that they are no longer probable of significant reversal, typically on an annual basis at calendar year-end. The receipt of performance fees in the future is uncertain as the fees are dependent upon many factors, including market conditions. Galileo may, at its discretion, waive and absorb some of its clients’ operating expenses. The amount of fund expenses waived and absorbed was $45,000 and $161,000 for the three and six months ended December 31, 2018, and $9,000 and $33,000 for the three and six months ended December 31, 2017, respectively.

As of December 31, 2018, the Company had $245,000 in receivables from fund clients, of which $170,000 was from USGIF, $25,000 from Galileo clients and $50,000 from ETFs. As of June 30, 2018, the Company had $419,000 in receivables from fund clients, of which $321,000 was from USGIF, $44,000 from Galileo clients and $54,000 from ETFs.