[GRAPHIC: United Services Funds Logo]
SPECIAL REPORT
Special Report for U.S. World Gold Fund Shareholders
----------------------------------------------------
Dear Shareholder, April 1996
I have just returned from Vancouver where I reviewed over 40 companies and
properties with junior mining companies, brokers and financial newsletter
writers. While it was exciting to see so much vitality in the mining industry, I
am greatly concerned about the short term implications of all this activity. It
is evident that many institutions that have never invested in junior exploration
companies are entering this high risk game, hoping to find the next Bre-X or
Diamond Fields. Too many companies are promoting that they have the next
world-class discovery, even though the odds are clearly not in their favor.
World class mining discoveries such as Bre-X in Indonesia (which was $9 in
August 1995) soared to a high over $160, based on very positive drill hole
results.
The U.S. World Gold Fund participated in the Bre-X discovery, realized
profits on its investment and still owns 40,000 shares which have an approximate
value of $5 million for our shareholders. The Fund also invested in Greenstone
Resources at $2. That stock is now close to $10. Many of these junior mining
stocks have gone ballistic--and this can be dangerous. Many novice individual
players are also entering this sophisticated game, and I have heard that
subscriptions to mining publications and precious metals newsletters are on the
rise. These are all signs of a short-term top. There have been times when even
the great money master Warren Buffett would cut back in his investing because he
was unable to find good value in the marketplace.
It is important to remember that it is easy for junior mining stocks to
correct 50 to 90%. No one likes to lose 50 to 90% of his or her money. New gold
funds are aggressively playing this high risk game, ignoring the fact that it
takes technical knowledge to evaluate the merit of junior mining companies. In
my investment banking days, when I financed both junior and senior mining
companies, there were three basic pricing levels: wholesale, retail and fairy
tale! We believe too many stocks are trading at fairy tale prices today. Be very
cautious when someone tells you they have found the next Bre-X. Based on my
professional experience with junior mining public companies, less than 1% of
junior exploration companies ever have a major, world-class discovery. I urge
you not to be tricked by the hype of people who do not have strong analytical
and technical mining skills or long term records in a field where real expertise
is required.
At United Services, our gold team consists of geologists, mining engineers
and analysts with CFAs and PhDs who search for ground floor opportunities in the
mining sector. Our team dedicated to mining is made up of six people all who
have a wealth of knowledge and experience in this high risk field. We are
actively traveling around the globe searching for ground floor opportunities for
your Fund. Portfolio manager VictorFlores just returned from Africa and South
America, research analyst Michael Chapman recently traveled to Indonesia and
presently is in Myanmar (Burma), and research analyst David Maynard recently
visited mines in Nevada.
There are several writers who have made buy and sell recommendations
regarding the U.S. World Gold Fund over the past three years. We have suggested
that you use the ABC Investment Plan(R) to invest over the long term using a
dollar-cost averaging strategy. Long term we are very bullish; however, in the
short term there could be some big losses for individual stocks. So please stay
prudent, maintain a long term view and remain committed to regular investing in
the U.S. World Gold Fund.
Please do not confuse investing with aggressive speculation. If you play
the game because you fear being left out of the party, you are susceptible to
making big mistakes and incurring potential losses. Investing in mining stocks
is much more than a high risk game of probabilities, it is an art and a science
which requires market seasoning and strong technical knowledge.
At United Services, we are growth oriented stock pickers looking for proven
mining management and the right geological environment combined with minimal
political risk. Look at the U.S. World Gold Fund's track records for 1993, 1994,
1995 and year-to-date in 1996. We believe we have a team which can deliver long
term performance and are proud of our achievements. Thank you for your loyalty
and confidence in our expertise.
Sincerely,
/s/Frank Holmes
Frank Holmes
President and CEO
(LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW)
<TABLE>
<CAPTION>
U.S. WORLD GOLD VS. GOLD BULLION
U.S. WORLD GOLD
GOLD BULLION
---- -------
<S> <C> <C>
12/31/90 ........... 10.10 378.16
1/31/91 ........... 8.71 383.64
2/28/91 ........... 9.20 363.83
3/28/91 ........... 9.14 363.30
4/30/91 ........... 8.95 358.38
5/31/91 ........... 9.35 356.82
6/28/91 ........... 10.04 366.72
7/31/91 ........... 10.07 367.50
8/30/91 ........... 9.07 356.23
9/30/91 ........... 9.21 348.78
10/31/91 ........... 10.14 358.69
11/29/91 ........... 10.20 359.53
12/31/91 ........... 9.76 361.06
1/31/92 ........... 10.00 354.45
2/28/92 ........... 9.86 353.89
3/31/92 ........... 9.17 344.35
4/30/92 ........... 8.30 338.50
5/29/92 ........... 8.95 337.23
6/30/92 ........... 9.50 340.80
7/31/92 ........... 10.04 353.05
8/31/92 ........... 9.80 342.96
9/30/92 ........... 9.80 345.55
10/30/92 ........... 9.40 344.38
11/30/92 ........... 8.66 335.08
12/31/92 ........... 9.30 334.58
1/29/93 ........... 8.86 329.02
2/26/93 ........... 9.58 329.46
3/31/93 ........... 10.69 330.05
4/30/93 ........... 12.25 341.91
5/28/93 ........... 13.90 366.72
6/30/93 ........... 14.59 371.89
7/30/93 ........... 17.35 392.48
8/31/93 ........... 15.97 378.45
9/30/93 ........... 13.97 354.86
10/29/93 ........... 16.27 364.13
11/30/93 ........... 15.97 373.43
12/31/93 ........... 17.65 383.70
1/31/94 ........... 18.26 387.08
2/28/94 ........... 17.31 382.01
3/31/94 ........... 17.34 384.17
4/29/94 ........... 15.95 378.18
5/31/94 ........... 16.71 381.21
6/30/94 ........... 15.63 385.64
7/29/94 ........... 15.65 385.27
8/31/94 ........... 16.37 380.43
9/30/94 ........... 17.35 391.66
10/31/94 ........... 16.63 389.53
11/30/94 ........... 14.33 384.37
12/30/94 ........... 14.63 379.61
1/31/95 ........... 13.09 378.55
2/28/95 ........... 13.37 376.51
3/31/95 ........... 14.91 392.00
4/28/95 ........... 15.32 389.75
5/31/95 ........... 15.29 385.50
6/30/95 ........... 15.81 387.05
7/31/95 ........... 16.50 383.35
8/31/95 ........... 16.95 382.35
9/29/95 ........... 16.94 384.00
10/31/95 ........... 15.20 382.65
11/30/95 ........... 16.50 387.80
12/29/95 ........... 16.96 386.95
</TABLE>
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 2/29/96
51.31% 28.38% 17.12% 9.21%
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
Call 1-800-US-FUNDS (800-873-8637) for a free prospectus containing more
information including fees and expenses. Please read the prospectus carefully
before investing. Past performance is no guarantee of future results. Investment
return and principal value will fluctuate. You may have a gain or a loss when
you sell shares. U.S. stands for United Services. Using the ABC Investment
Plan(R) does not guarantee a profit. If you sell at bottom, no system will give
you a gain. Chart source: Micropal
