[The following message is available to shareholders who dial our toll-free
telephone number.]
US GLOBAL RESOURCES FUND
This is Ralph Aldis, Portfolio Manager of the US Global Resources Fund. Today is
Monday, July 8 1996. Natural resource stocks have performed well this year. At
the end of the first quarter the Global Resources Fund was up 10.70%. This trend
in performance continued almost up until the end of May. At that point the GRF
was up almost 20% for the year. However, in June we saw across the board
corrections of natural resource stocks. Many sectors corrected 5 - 15%. The
correction in the gold sector was the first negative sign. Soon thereafter, the
Sumitomo copper trading scandal became public with the news that $1.8 billion in
copper trading losses had been hidden over the past 10 years by a rouge trader.
This news has been very negative for the metals markets. Our exposure to the
copper correction was minimal though, because at the time the story broke we had
less than 1% of the Fund exposed to copper. The GRF finished the 2nd quarter up
16.72% for the year. Fortunately, during the second quarter we began to take
profits on some of our best performing holdings. BreX, a gold exploration
company which was trading for about $5 per share at the beginning of the year
went to prices north of $25.00. Significant gains were also realized in Zoltek,
a specialty chemical company that produces carbon fiber. The Global Resource
Fund had purchased the shares on a secondary offering at $7.50 per share back in
the 4th quarter of 1995. During the second quarter Zoltek traded as high as
$47.25. Other successful investments which contributed to the Fund's performance
during the first half of this year included our overweighing of the oil and gas
service sector and selected investments in oil and gas exploration companies
like Benton Oil & Gas, Flores & Rucks, Harken Energy, and Phoenix Resources. We
believe that the recent correction in the prices of resource stocks and negative
sentiment in metals market currently provides an attractive opportunity to
adjust our weightings in Fund. Investors should note that the upcoming
shareholder report will feature the Global Resources Fund. This report will
outline some of our investment criteria, how the fund is structured, and some of
the positive trends we see in the natural resources sector. Thank you for you
interest in the GRF. The next Portfolio Direct update on the Fund is scheduled
for mid August.
Investment returns and principal value may vary, and you may have a gain or a
loss when you sell shares. Average annual total rate of return for 1, 5, and 10
year period ended 6/28/96, 22.80%, 6.82%, 7.72%. Average annual total rate of
return for life of the Fund (8/03/83 through 6/28/96), .85%. Past performance is
no guarantee of future results. US stands for "United Services." Please read the
prospectus carefully before investing.
