[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.
