U.S. GLOBAL INVESTORS FUNDS
ANNUAL REPORT
JUNE 30, 1997
- --------------------------------------------------------------------------------
BOND AND EQUITY FUNDS
Past performance is not predictive of future results. Investment return and
principal may fluctuate so that shares, when redeemed, may be worth more or less
than their original cost. A fund's portfolio may differ significantly from the
securities in the index to which it is compared. Indicies are unmanaged and,
therefore, do not reflect the cost of portfolio management or trading. The
Lipper and Micropal Averages are composed of funds with similar investment
objectives.
MONEY MARKET FUNDS
Past performance is not predictive of future results. Like all other mutual
funds, our money market fund shares are not backed by the U.S. Government or its
agencies; however, the securities in which they invest are. Our money market
funds are managed to maintain a stable $1 per share value, however, there is no
assurance they will be able to do so.
U.S. GOVERNMENT SECURITIES SAVINGS
As of 6/30/97 Lipper Analytical Services ranked the U.S. Government Securities
Savings Fund #5 and #2 for the one-and five-year periods ended 6/30/97 out of
114 and 82 government money market funds, respectively. The fund's adviser has
guaranteed that total fund operating expenses (as a percentage of net assets)
will not exceed 0.40% until 6/30/98, or until such later date as the adviser
determines. The adviser subsidized certain fund expenses, enhancing the yield.
1
<PAGE>
U.S. GLOBAL INVESTORS FUNDS
ANNUAL REPORT
JUNE 30, 1997
- -----------------
TABLE OF CONTENTS
- -----------------
Letter to Shareholders ........................................................1
Management's Discussions of Fund Performance ..................................3
Portfolios of Investments ....................................................35
Notes to Portfolios of Investments ...........................................71
Statements of Assets and Liabilities .........................................76
Statements of Operations .....................................................80
Statements of Changes in Net Assets ..........................................84
Notes to Financial Statements ................................................92
Financial Highlights .........................................................99
Report of Independent Accountants ...........................................110
2
<PAGE>
[GRAPHIC: Photograph of Frank E. Holmes, CEO]
Dear Shareholder,
I am proud to present this enhanced and improved annual report to you. Our
special team of people from accounting, legal, marketing and investments worked
together to create a report that is both easier to read and filled with helpful
information.
In the pages that follow, you will find a fund-by-fund analysis of the factors
that impacted your investment's performance over the past twelve months. Also
included are reports on portfolio holdings, information on fund diversification
and financial activities.
If you have any questions about the facts and figures found in these pages or
suggestions for future editions, don't hesitate to call our shareholder
education and service center at 1-800-US-FUNDS.
Between these detailed financial reports, you can stay in touch with your
investments by calling portfolio direct and listening to the insights of your
fund manager. These recordings are updated every six weeks. The investor alert
gives you our interpretation of the week's happenings in the marketplace. This
service is updated each week. These two services are available 24 hours a day on
our toll-free service line, 1-800-US-FUNDS.
You can also learn more about your investment through our shareholder report, a
quarterly publication designed to be entertaining as well as educational. You
should have recently received the latest issue.
As the markets continue their climb, I would like to remind you of my three
simple principles of sound investing. I believe following sound principles is
more important than picking any one stock or fund.
SET YOUR GOALS. Then decide on a long-term strategy to achieve them. Stick to
your plan, even when the markets get rough or times are tough. Sometimes it
hurts to save, but a little bit of pain can bring you lots of gain. Our ABC
Investment Plan(R) makes building wealth easy and affordable for everyone.
3
<PAGE>
ALLOCATE YOUR ASSETS WISELY. Diversifying across many industry sectors, between
stocks and bonds and in many countries can reduce the overall risk and
volatility of your portfolio while giving you exposure to a world of investment
opportunity.
DON'T TRY TO TIME THE MARKET. Gradually build your position in a fund by
investing a set amount on a regular basis, regardless of share price or market
fluctuations. You can achieve this automatically when you enroll in the ABC
Investment Plan(R). Of course, none of these strategies will guarantee a profit.
If you sell at the bottom, no system will give you a gain.
Call us to discuss strategies for saving regularly, solutions for taking the
guesswork out of timing investment decisions, opportunities for reducing risk
and seeking growth. For those of you who are on-line, you may wish to send us
e-mail messages at [email protected] or visit our web site at www.usfunds.com.
And if you should travel to San Antonio for business or pleasure, plan to visit
us. We'll be happy to arrange a tour of our facility and introduce you to those
people who grow, protect and service your money.
Bullish wishes,
/s/ FRANK HOLMES
Frank Holmes
President & CEO
U.S. Global Investors
P.S. Call 1-800-US-FUNDS to see if you qualify for a free lifetime IRA.
4
<PAGE>
U.S. GLOBAL MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSIONS OF FUND PERFORMANCE
- --------------------------------------------------------------------------------
PERFORMANCE
U.S GOVERNMENT SECURITIES SAVINGS
- --------------------------------- --------------------------------
5.29% 5.05%
7-Day Yield 74 Days to Maturity 7-Day Yield 75 Days to Maturity
as of June 30, 1997 as of June 30, 1996
- --------------------------------- --------------------------------
U.S. TREASURY SECURITIES CASH
- --------------------------------- --------------------------------
4.52% 4.19%
7-Day Yield 74 Days to Maturity 7-Day Yield 75 Days to Maturity
as of June 30, 1997 as of June 30, 1996
- --------------------------------- --------------------------------
For the fiscal year ended June 30, 1997, U.S. Government Securities Savings
continued to be ranked top ten of the government-only money market fund category
as ranked by Lipper Analytical Services. The Fund continued to pay dividends
that were 100% exempt at the state and local level. U.S. Treasury Securities
Cash provided excellent value to our shareholders through free, unlimited
checkwriting and timely statements rivaling full-service commercial bank
checking accounts. On top of these benefits, the shareholder was treated to a
daily dividend far superior to that offered by most banks.
THE YEAR IN REVIEW
When comparing the yield on the three-month Treasury bill at the end of the year
to the beginning of the year, we find that they are very close (5.17% vs.
5.16%). We could end our discussion here by telling you that not much happened.
That would only be partially right. The Federal Reserve raised interest rates by
one quarter of a percent in March in response to the perception that inflation
was rising. Yet Treasury bill yields showed market participants believed that
little had changed, even after the increase. What really transpired during the
year was a lot of market speculation. The market was fairly volatile, but in
retrospect all the convulsing left us where we had started.
5
<PAGE>
U.S. GLOBAL MONEY MARKET FUNDS
INVESTMENT HIGHLIGHTS
In U.S. Treasury Securities Cash, we kept most of our investments in shorter
term Treasuries. Throughout the year, the Fund was managed to maximize the
returns offered by both Treasury bills and cash. By year-end, we had extended
our maturities.
U.S. Government Securities Savings presented some unique challenges during the
year. Federal Agencies were active in the new issue market, offering a variety
of security structures, some with fairly complex terms. As we noted earlier,
yields remained the same for the year, but during each month, there were wide
swings in yields that allowed savvy investors to increase their performance. We
were active throughout the year in both the secondary market and the new issue
market. We shortened our maturities for the first half of the year and
lengthened them after the Federal Reserve raised interest rates. We kept to our
theme of building a one-year ladder by reinvesting new proceeds and maturing
issues into the six-month area of the yield curve, and adding a few new issues
of fixed rate paper maturing in one year.
CURRENT OUTLOOK
We expected an interest rate increase at the July Federal Open Market Committee
("FOMC") meeting, which did not happen. We do not expect any change in policy at
the August FOMC meeting. Uncertainty is indeed prevalent in this market. What
the market holds for us in the future remains a mystery. Interest rates may rise
slightly by year-end, but we view stable interest rates as more likely. We will
continue to monitor market conditions and focus on the odd-lot sector for added
value. This requires much more diligence, but the rewards can be great.
6
<PAGE>
U.S. GLOBAL TAX FREE FUNDS
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSIONS OF FUND PERFORMANCE
- --------------------------------------------------------------------------------
PERFORMANCE
UNITED SERVICES NEAR-TERM TAX FREE
- --------------------------------------------------------------------------------
AVERAGE ANNUAL PERFORMANCE
- --------------------------------------------------------------------------------
Inception 5 Year 1 Year
- --------------------------------------------------------------------------------
United Services Near-Term
Tax Free (Inception 12/1/90) 5.9% 5.1% 5.9%
- --------------------------------------------------------------------------------
Lehman Municipal 3-Year
Bond Index 5.9% 5.1% 5.4%
- --------------------------------------------------------------------------------
(LINEAR GRAPH PLOTTED FROM DATA BELOW)
<TABLE>
<CAPTION>
Inception Near-Term Lehman Municipal
Tax Free 3-Year Bond Index
--------- --------- ----------------
<S> <C> <C>
12/31/90 ............................. $10,000 $10,000
1/31/91 ............................. $10,040 $10,127
2/28/91 ............................. $ 9,990 $10,218
3/31/91 ............................. $ 9,970 $10,223
4/30/91 ............................. $10,152 $10,322
5/31/91 ............................. $10,233 $10,388
6/30/91 ............................. $10,151 $10,398
7/31/91 ............................. $10,316 $10,480
8/31/91 ............................. $10,491 $10,585
9/30/91 ............................. $10,616 $10,673
10/31/91 ............................. $10,751 $10,750
11/30/91 ............................. $10,741 $10,813
12/31/91 ............................. $10,983 $11,029
1/31/92 ............................. $10,962 $11,076
2/29/92 ............................. $10,951 $11,080
3/31/92 ............................. $10,951 $11,055
4/30/92 ............................. $11,037 $11,139
5/31/92 ............................. $11,200 $11,232
6/30/92 ............................. $11,395 $11,369
7/31/92 ............................. $11,778 $11,590
8/31/92 ............................. $11,503 $11,538
9/30/92 ............................. $11,559 $11,632
10/31/92 ............................. $11,248 $11,587
11/30/92 ............................. $11,560 $11,668
12/31/92 ............................. $11,706 $11,739
1/31/93 ............................. $11,829 $11,827
2/28/93 ............................. $12,338 $12,011
3/31/93 ............................. $12,157 $11,976
4/30/93 ............................. $12,282 $12,046
5/31/93 ............................. $12,271 $12,077
6/30/93 ............................. $12,432 $12,156
7/31/93 ............................. $12,467 $12,161
8/31/93 ............................. $12,594 $12,275
9/30/93 ............................. $12,688 $12,329
10/31/93 ............................. $12,723 $12,355
11/30/93 ............................. $12,687 $12,338
12/31/93 ............................. $12,852 $12,469
1/31/94 ............................. $12,936 $12,569
2/28/94 ............................. $12,804 $12,452
3/31/94 ............................. $12,600 $12,302
4/30/94 ............................. $12,624 $12,375
5/31/94 ............................. $12,673 $12,432
6/30/94 ............................. $12,685 $12,436
7/31/94 ............................. $12,795 $12,539
8/31/94 ............................. $12,831 $12,584
9/30/94 ............................. $12,819 $12,552
10/31/94 ............................. $12,794 $12,522
11/30/94 ............................. $12,757 $12,499
12/31/94 ............................. $12,844 $12,553
1/31/95 ............................. $12,931 $12,658
2/28/95 ............................. $13,006 $12,791
3/31/95 ............................. $13,094 $12,905
4/30/95 ............................. $13,132 $12,949
5/31/95 ............................. $13,270 $13,147
6/30/95 ............................. $13,321 $13,179
7/31/95 ............................. $13,398 $13,318
8/31/95 ............................. $13,461 $13,422
9/30/95 ............................. $13,500 $13,460
10/31/95 ............................. $13,551 $13,525
11/30/95 ............................. $13,642 $13,611
12/31/95 ............................. $13,680 $13,667
1/31/96 ............................. $13,785 $13,774
2/29/96 ............................. $13,785 $13,777
3/31/96 ............................. $13,719 $13,743
4/30/96 ............................. $13,719 $13,760
5/31/96 ............................. $13,732 $13,772
6/30/96 ............................. $13,812 $13,854
7/31/96 ............................. $13,892 $13,931
8/31/96 ............................. $13,932 $13,952
9/30/96 ............................. $14,026 $14,037
10/31/96 ............................. $14,120 $14,134
11/30/96 ............................. $14,268 $14,267
12/31/96 ............................. $14,268 $14,273
1/31/97 ............................. $14,323 $14,336
2/28/97 ............................. $14,402 $14,405
3/31/97 ............................. $14,306 $14,331
4/30/97 ............................. $14,376 $14,392
5/31/97 ............................. $14,511 $14,510
6/30/97 ............................. $14,620 $14,595
</TABLE>
U.S. TAX FREE
- --------------------------------------------------------------------------------
AVERAGE ANNUAL PERFORMANCE
- --------------------------------------------------------------------------------
Inception 5 Year 1 Year
- --------------------------------------------------------------------------------
U.S. Tax Free 7.8% 6.2% 7.9%
- --------------------------------------------------------------------------------
Lehman Municipal 10-Year
Bond Index 8.1% 7.3% 8.3%
- --------------------------------------------------------------------------------
(LINEAR GRAPH PLOTTED FROM DATA BELOW)
<TABLE>
<CAPTION>
US Tax Free Fund Lehman Municipal
10-Year Bond Index
---------------- ------------------
<S> <C> <C> <C>
6/30/87 ............................. $10,000 $10,000
7/30/87 ............................. $10,128 $10,136
8/30/87 ............................. $10,145 $10,120
9/30/87 ............................. $ 9,662 $ 9,766
10/30/87 ............................. $ 9,805 $ 9,823
11/30/87 ............................. $10,052 $10,029
12/30/87 ............................. $10,260 $10,240
1/30/88 ............................. $10,678 $10,584
2/29/88 ............................. $10,804 $10,656
3/30/88 ............................. $10,571 $10,548
4/30/88 ............................. $10,631 $10,650
5/30/88 ............................. $10,680 $10,548
6/30/88 ............................. $10,869 $10,691
7/30/88 ............................. $10,950 $10,792
8/30/88 ............................. $11,000 $10,789
9/30/88 ............................. $11,213 $10,952
10/30/88 ............................. $11,460 $11,122
11/30/88 ............................. $11,347 $10,994
12/30/88 ............................. $11,491 $11,040
1/30/89 ............................. $11,627 $11,285
2/28/89 ............................. $11,554 $11,183
3/30/89 ............................. $11,543 $11,141
4/30/89 ............................. $11,798 $11,354
5/30/89 ............................. $11,968 $11,583
6/30/89 ............................. $12,117 $11,719
7/30/89 ............................. $12,224 $11,888
8/30/89 ............................. $12,117 $11,817
9/30/89 ............................. $12,063 $11,762
10/30/89 ............................. $12,205 $11,896
11/30/89 ............................. $12,379 $12,094
12/30/89 ............................. $12,434 $12,219
1/30/90 ............................. $12,312 $12,182
2/28/90 ............................. $12,412 $12,273
3/30/90 ............................. $12,412 $12,253
4/30/90 ............................. $12,176 $12,172
5/30/90 ............................. $12,514 $12,436
6/30/90 ............................. $12,639 $12,552
7/30/90 ............................. $12,855 $12,726
8/30/90 ............................. $12,443 $12,544
9/30/90 ............................. $12,524 $12,546
10/30/90 ............................. $12,743 $12,822
11/30/90 ............................. $13,160 $13,084
12/30/90 ............................. $13,183 $13,116
1/30/91 ............................. $13,347 $13,332
2/28/91 ............................. $13,382 $13,447
3/30/91 ............................. $13,359 $13,440
4/30/91 ............................. $13,560 $13,626
5/30/91 ............................. $13,643 $13,728
6/30/91 ............................. $13,547 $13,712
7/30/91 ............................. $13,751 $13,856
8/30/91 ............................. $13,907 $14,043
9/30/91 ............................. $14,052 $14,258
10/30/91 ............................. $14,161 $14,374
11/30/91 ............................. $14,149 $14,398
12/30/91 ............................. $14,491 $14,705
1/30/92 ............................. $14,454 $14,736
2/29/92 ............................. $14,466 $14,714
3/30/92 ............................. $14,454 $14,691
4/30/92 ............................. $14,568 $14,831
5/30/92 ............................. $14,759 $15,005
6/30/92 ............................. $15,041 $15,265
7/30/92 ............................. $15,607 $15,765
8/30/92 ............................. $15,297 $15,579
9/30/92 ............................. $15,349 $15,709
10/30/92 ............................. $15,009 $15,548
11/30/92 ............................. $15,350 $15,832
12/30/92 ............................. $15,535 $16,017
1/30/93 ............................. $15,654 $16,287
2/28/93 ............................. $16,200 $16,882
3/30/93 ............................. $15,986 $16,636
4/30/93 ............................. $16,201 $16,794
5/30/93 ............................. $16,255 $16,853
6/30/93 ............................. $16,540 $17,186
7/30/93 ............................. $16,567 $17,229
8/30/93 ............................. $16,908 $17,586
9/30/93 ............................. $17,114 $17,802
10/30/93 ............................. $17,169 $17,831
11/30/93 ............................. $17,003 $17,685
12/30/93 ............................. $17,365 $18,063
1/30/94 ............................. $17,549 $18,284
2/28/94 ............................. $17,164 $17,784
3/30/94 ............................. $16,520 $17,105
4/30/94 ............................. $16,578 $17,293
5/30/94 ............................. $16,737 $17,431
6/30/94 ............................. $16,664 $17,356
7/30/94 ............................. $16,927 $17,647
8/30/94 ............................. $17,015 $17,715
9/30/94 ............................. $16,809 $17,477
10/30/94 ............................. $16,483 $17,222
11/30/94 ............................. $16,081 $16,896
12/30/94 ............................. $16,455 $17,200
1/30/95 ............................. $16,908 $17,646
2/28/95 ............................. $17,273 $18,145
3/30/95 ............................. $17,501 $18,391
4/30/95 ............................. $17,547 $18,413
5/30/95 ............................. $17,993 $18,997
6/30/95 ............................. $17,916 $18,879
7/30/95 ............................. $18,009 $19,156
8/30/95 ............................. $18,180 $19,416
9/30/95 ............................. $18,305 $19,540
10/30/95 ............................. $18,525 $19,766
11/30/95 ............................. $18,762 $20,031
12/30/95 ............................. $18,936 $20,153
1/30/96 ............................. $19,047 $20,358
2/29/96 ............................. $18,951 $20,274
3/30/96 ............................. $18,727 $20,022
4/30/96 ............................. $18,679 $19,951
5/30/96 ............................. $18,695 $19,895
6/30/96 ............................. $18,857 $20,084
7/30/96 ............................. $19,020 $20,277
8/30/96 ............................. $19,020 $20,277
9/30/96 ............................. $19,250 $20,486
10/30/96 ............................. $19,415 $20,745
11/30/96 ............................. $19,713 $21,164
12/30/96 ............................. $19,663 $21,069
1/30/97 ............................. $19,729 $21,152
2/28/97 ............................. $19,894 $21,352
3/30/97 ............................. $19,707 $21,065
4/30/97 ............................. $19,874 $21,220
5/30/97 ............................. $20,125 $21,521
6/30/97 ............................. $20,352 $21,759
</TABLE>
Both of U.S. Global Investors' tax free funds are focused on investing to
provide a high level of current income that is exempt from Federal income
taxation and on preservation of capital. United Services Near-Term Tax Free
focuses on investing in the five-year sector of the municipal yield curve, while
U.S. Tax Free focuses more on investing in the intermediate
7
<PAGE>
U.S. GLOBAL TAX FREE FUNDS
to long-term sector of the municipal yield curve. Both funds performed well
during the year due to credit quality and good sector rotation. Both funds
remained about the same in size, reflecting a lack of investor interest in tax
free bonds while the stock market rallied.
THE YEAR IN REVIEW
We began the year with 6.00% yields on municipal bonds, and finished the year
with 5.00% yields. Last year investors were focused on the fear of a flat tax
and the prospect for a balanced budget. The flat tax has faded into the past,
and it appears th at we may have a balanced budget without affecting tax-free
bonds. The first half of the year brought with it much volatility and fewer new
issues. The market improved in the third quarter, but fell off in the fourth
quarter due to individual sellers. January started off well as new money, coming
from year-end intere st and principal payments, flooded the market. By March,
however, things had changed and the Federal Reserve chose to increase short-term
interest rates. Municipals sold off somewhat in response to this policy change.
At year-end, municipals rallied with the Treasuries in response to low inflation
and a moderate growth outlook. Demand for municipals was weak, particularly due
to returns offered by the stock market.
INVESTMENT HIGHLIGHTS
During the year, assets remained relatively unchanged, giving us the opportunity
to trade our portfolio. We sought mainly to improve our credit quality and pick
up higher yielding bonds whenever possible. When we executed a swap, we took
profits on current holdings and purchased new issue paper, which we plan to sell
when retail demand returns to normal. In Tax Free, the yield declined somewhat
over the year due to the rising price on the issues held in the portfolio.
In Near-Term, we had lower trading volume this year. We chose to remain highly
selective in our transactions, again focusing on quality. The Fund continues to
offer a very competitive tax-free yield with very low volatility. This Fund is a
great alte rnative to a short-term taxable bond fund for those investors in need
of tax-free income. The yield is higher than that of a tax-free money market
fund with little volatility.
8
<PAGE>
U.S. GLOBAL TAX FREE FUNDS
CURRENT OUTLOOK
We expected an interest rate increase at the July Federal Open Market Committee
("FOMC") meeting; this did not happen. The market does not expect any change in
Fed policy at the August FOMC meeting. Looking ahead, we do not expect any large
cash movements into the municipal market. Most of this money will be allocated
to equities. Look for the proposed capital gains tax reduction, when it is
finally passed, to encourage more investment in municipals. The bond market has
been out of favor, and in due time old fashioned investments such as municipal
bonds will again return to the limelight.
UNITED SERVICES NEAR-TERM TAX FREE BOND RATINGS - BASED ON TOTAL INVESTMENTS
(GRAPHIC: BAR CHART PLOTTED USING DATA BELOW)
AAA/Aaa 39.03%
A/A 27.44%
AA/Aa 16.66%
Cash Equivalents 16.87%
U.S. TAX FREE BOND RATTINGS - BASED ON TOTAL INVESTMENTS
(GRAPHIC: BAR GRAPH PLOTTED USING DATA BELOW)
AAA/Aaa 34.97%
A/A 42.70%
AA/Aa 10.08%
BBB/Bbb 3.65%
Cash Equivalents 8.60%
FIVE LARGEST POSITIONS - NEAR-TERM TAX FREE
PERCENTAGE
BOND OF TOTAL INVESTMENTS YIELD
- ---- -------------------- -----
Fort Lauderdale, FL 4.80% 1/1/01....................... 5.24% 4.41%
Columbus, GA Rev 6.65% 5/1/09.......................... 4.46% 5.02%
Bridgeport, CT. 6.00% 3/1/06........................... 4.46% 4.89%
Utah State GO 6.40% 8/1/09............................. 4.38% 5.07%
King County, WA 5.80% 12/1/06.......................... 4.34% 4.91%
9
<PAGE>
U.S. GLOBAL TAX FREE FUNDS
FIVE HIGHEST YIELDING POSITIONS - NEAR-TERM TAX FREE
PERCENTAGE
BOND OF TOTAL INVESTMENTS YIELD
- ---- -------------------- -----
Washoe, NV Rev 6.30% 12/1/14........................... 3.62% 5.50%
Utah State GO 6.40% 8/1/09............................. 4.38% 5.07%
Washington Twp, NJ 5.10% 2/1/08........................ 4.16% 5.03%
Columbus, GA Rev 6.65% 5/1/09.......................... 4.46% 5.02%
Nevada St. GO 5.10% 1/1/08............................. 3.47% 4.99%
FIVE LARGEST POSITIONS - TAX FREE
PERCENTAGE
BOND OF TOTAL INVESTMENTS YIELD
- ---- -------------------- -----
Clark Co. NV 5.50% 7/1/17 ............................. 4.67% 5.55%
WV St. Hsg 6.05% 5/1/27................................ 4.35% 5.79%
Charleston Co. SC 9.25% 10/1/11........................ 4.25% 4.96%
Florida Brd Ed 6.625% 6/1/07........................... 4.16% 4.97%
NC Eastern Pwr Rev 5.60% 1/1/10........................ 3.72% 5.37%
FIVE HIGHEST YIELDING POSITIONS - TAX FREE
PERCENTAGE
BOND OF TOTAL INVESTMENTS YIELD
- ---- -------------------- -----
Berkeley WV Hosp 6.50% 11/1/22......................... 1.55% 6.07%
Vicksburg, MS Hsg 6.125% 2/15/22....................... 2.18% 5.96%
St. Marys Hsg GA 7.375% 9/1/22......................... 2.25% 5.93%
Illinois Dev Auth 6.25% 9/1/17......................... 1.39% 5.91%
Wyoming Hsg 6.10% 6/1/33............................... 1.91% 5.90%
10
<PAGE>
U.S. INCOME
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSIONS OF FUND PERFORMANCE
- --------------------------------------------------------------------------------
PERFORMANCE
- --------------------------------------------------------------------------------
AVERAGE ANNUAL PERFORMANCE
- --------------------------------------------------------------------------------
10 years 5 years 1 year
- --------------------------------------------------------------------------------
US Income Fund 10.3% 10.9% 15.6%
- --------------------------------------------------------------------------------
S&P Utilities 12.0% 11.8% 5.4%
- --------------------------------------------------------------------------------
S&P 500 14.6% 19.8% 34.7%
- --------------------------------------------------------------------------------
[GRAPHIC: LINEAR GRAPH PLOTTED USING THE DATA BELOW]
<TABLE>
<CAPTION>
US Income Fund S&P Utilities S&P 500
-------------- ------------- -------
<S> <C> <C> <C> <C>
6/30/87 .................... $10,000 $10,000 $10,000
7/30/87 .................... $10,057 $ 9,975 $10,507
8/30/87 .................... $10,238 $10,501 $10,899
9/30/87 .................... $ 9,939 $10,524 $10,660
10/30/87 .................... $ 9,222 $ 9,783 $ 8,364
11/30/87 .................... $ 9,407 $ 9,241 $ 7,675
12/30/87 .................... $ 9,377 $ 9,341 $ 8,259
1/30/88 .................... $ 9,858 $10,419 $ 8,606
2/29/88 .................... $ 9,984 $10,236 $ 9,005
3/30/88 .................... $ 9,785 $ 9,697 $ 8,727
4/30/88 .................... $ 9,806 $ 9,716 $ 8,824
5/30/88 .................... $10,113 $10,162 $ 8,899
6/30/88 .................... $10,314 $10,482 $ 9,307
7/30/88 .................... $10,271 $10,499 $ 9,272
8/30/88 .................... $10,260 $10,354 $ 8,957
9/30/88 .................... $10,613 $10,780 $ 9,339
10/30/88 .................... $10,819 $11,060 $ 9,599
11/30/88 .................... $10,852 $10,973 $ 9,461
12/30/88 .................... $10,961 $11,041 $ 9,626
1/30/89 .................... $11,378 $11,664 $10,331
2/28/89 .................... $11,301 $11,404 $10,074
3/30/89 .................... $11,499 $11,700 $10,309
4/30/89 .................... $12,120 $12,438 $10,843
5/30/89 .................... $12,686 $13,155 $11,280
6/30/89 .................... $12,997 $13,363 $11,217
7/30/89 .................... $13,725 $14,433 $12,229
8/30/89 .................... $13,882 $14,348 $12,467
9/30/89 .................... $14,061 $14,588 $12,416
10/30/89 .................... $13,925 $14,654 $12,128
11/30/89 .................... $14,377 $15,146 $12,375
12/30/89 .................... $15,110 $16,253 $12,671
1/30/90 .................... $14,118 $14,936 $11,821
2/28/90 .................... $14,095 $14,770 $11,973
3/30/90 .................... $14,072 $15,042 $12,290
4/30/90 .................... $13,291 $14,461 $11,984
5/30/90 .................... $14,141 $15,446 $13,150
6/30/90 .................... $14,153 $15,122 $13,061
7/30/90 .................... $14,037 $15,070 $13,020
8/30/90 .................... $13,216 $13,874 $11,844
9/30/90 .................... $13,192 $14,441 $11,269
10/30/90 .................... $13,671 $15,391 $11,221
11/30/90 .................... $13,870 $15,694 $11,945
12/30/90 .................... $13,799 $15,838 $12,277
1/30/91 .................... $13,775 $15,353 $12,811
2/28/91 .................... $14,271 $15,881 $13,726
3/30/91 .................... $14,211 $16,188 $14,058
4/30/91 .................... $14,211 $15,932 $14,091
5/30/91 ..................... $14,356 $15,729 $14,697
6/30/91 ..................... $13,858 $15,514 $14,024
7/30/91 ..................... $14,189 $15,992 $14,677
8/30/91 ..................... $14,544 $16,406 $15,024
9/30/91 ..................... $14,924 $16,738 $14,773
10/30/91 .................... $15,109 $17,077 $14,971
11/30/91 .................... $15,170 $16,914 $14,369
12/30/91 .................... $15,775 $18,159 $16,010
1/30/92 ..................... $15,264 $17,181 $15,712
2/29/92 ..................... $15,625 $16,708 $15,915
3/30/92 ..................... $15,363 $16,463 $15,606
4/30/92 ..................... $15,614 $17,524 $16,064
5/30/92 ..................... $16,190 $17,499 $16,142
6/30/92 ..................... $15,940 $17,746 $15,902
7/30/92 ..................... $16,721 $19,148 $16,551
8/30/92 ..................... $16,633 $19,005 $16,213
9/30/92 ..................... $16,708 $19,144 $16,404
10/30/92 .................... $16,785 $18,969 $16,460
11/30/92 .................... $16,746 $18,945 $17,019
12/30/92 .................... $17,051 $19,628 $17,228
1/30/93 ..................... $17,200 $19,932 $17,372
2/28/93 ..................... $18,068 $21,364 $17,608
3/30/93 ..................... $18,651 $21,745 $17,980
4/30/93 ..................... $18,488 $21,687 $17,545
5/30/93 ..................... $18,747 $21,274 $18,013
6/30/93 ..................... $19,236 $22,258 $18,066
7/30/93 ..................... $19,483 $22,762 $17,993
8/30/93 ..................... $20,495 $23,864 $18,674
9/30/93 ..................... $20,345 $23,816 $18,531
10/30/93 .................... $20,413 $23,772 $18,914
11/30/93 .................... $19,439 $22,573 $18,734
12/30/93 .................... $20,070 $22,459 $18,960
1/30/94 ..................... $20,555 $22,616 $19,604
2/28/94 ..................... $19,671 $21,329 $19,073
3/30/94 ..................... $18,516 $20,603 $18,243
4/30/94 ..................... $18,917 $21,113 $18,477
5/30/94 ..................... $18,531 $20,551 $18,779
6/30/94 ..................... $18,115 $20,598 $18,319
7/30/94 ..................... $18,736 $21,292 $18,920
8/30/94 ..................... $19,053 $21,233 $19,694
9/30/94 ..................... $18,663 $20,694 $19,213
10/30/94 .................... $18,881 $20,872 $19,644
11/30/94 .................... $18,112 $20,566 $18,929
12/30/94 .................... $18,011 $20,672 $19,210
1/30/95 ..................... $18,421 $22,276 $19,708
2/28/95 ..................... $18,743 $22,238 $20,475
3/30/95 ..................... $18,831 $22,098 $21,078
4/30/95 ..................... $19,273 $22,905 $21,698
5/30/95 ..................... $19,935 $23,630 $22,564
6/30/95 ..................... $19,803 $23,739 $23,087
7/30/95 ..................... $20,144 $24,339 $23,853
8/30/95 ..................... $20,173 $24,824 $23,912
9/30/95 ..................... $20,856 $26,402 $24,921
10/30/95 .................... $20,587 $27,036 $24,832
11/30/95 .................... $21,243 $27,411 $25,921
12/30/95 .................... $22,033 $29,357 $26,420
1/30/96 ..................... $22,430 $29,729 $27,318
2/29/96 ..................... $22,476 $28,548 $27,572
3/30/96 ..................... $22,521 $27,961 $27,838
4/30/96 ..................... $22,721 $28,269 $28,248
5/30/96 ..................... $22,736 $28,198 $28,975
6/30/96 ..................... $23,089 $29,370 $29,086
7/30/96 ..................... $22,270 $27,525 $27,801
8/30/96 ..................... $22,641 $28,112 $28,389
9/30/96 ..................... $22,780 $28,381 $29,985
10/30/96 .................... $23,122 $29,826 $30,812
11/30/96 .................... $24,133 $30,456 $33,139
12/30/96 .................... $24,335 $30,275 $32,482
1/30/97 ..................... $24,937 $30,471 $34,510
2/28/97 ..................... $24,992 $30,172 $34,781
3/30/97 ..................... $23,932 $29,256 $33,355
4/30/97 ..................... $24,226 $28,817 $35,344
5/30/97 ..................... $25,513 $30,036 $37,495
6/30/97 ..................... $26,686 $30,975 $39,173
</TABLE>
U.S. Income primarily invests in dividend-paying securities with capital
appreciation potential. The Fund has significant investments in the stocks of
large utility companies. For the fiscal year ended June 30, 1997, U.S. Income
had a return of 15.6%, compared to an average gain of 13.9% for its peer group,
according to Lipper Analytical Services. Over the last twelve months, the S&P 40
Utilities Index showed a return of 5.4%. The annual return of U.S. Income
exceeded its benchmark because its non-utility holdings in general performed
much better than utility stocks.
FUND STRUCTURE
JUNE 30,
PORTFOLIO PROFILE 1997
- --------------------------------------------------------------------------------
HOLDINGS
U.S.................................... 85.2%
Foreign................................ 6.6%
Cash Equivalents........................... 8.2%
Number of Stocks........................... 71
11
<PAGE>
U.S. INCOME
THE YEAR IN REVIEW
In May, 1997, Texas Governor George W. Bush announced his support for
legislation that would bring retail competition to the Texas electric utility
industry by September 1, 2001. Under the proposed bill, investor-owned electric
utilities that choose to participate would cut their rates for certain customers
and, in return, recover their sunk costs. The bill, however, failed to pass
because the regional electric co-ops and some large retail groups were unwilling
to lend their support. Without this l egislation, the regulatory outlook of the
electric utility industry in Texas is not clear.
Changes in the way of doing business in the electric utility industry also
affected utility companies in other states. For instance, it was proposed to
deregulate the electric utility industry in South Carolina by year 2000. In
Illinois, Wisconsin Ene rgy and Northern States Power called off their planned
merger because of unexpected regulatory complications. Other major mergers and
acquisitions included Duke Power with Panenergy, Western Resources with Kansas
City Power & Lighting, and Enron with P ortland General. We expect further
consolidation in the electric utility and natural gas industries in the years to
come. The structural changes in the U.S. utility industry create both risks and
opportunities for investors.
Telephone stocks generally performed well during the year. An exception was AT&T
whose share price inched up only 1.9% for the last twelve months as the company
was expected to incur large capital expenditures for its venture into the
wireless business. Meanwhile, competition from local telephone and other
long-distance companies evidently cut AT&T profit margins. Further, attempts by
AT&T to enter the local markets were apparently not easy. It was reported that
AT&T was engaged in merger talks wi th SBC Communications, but the talks were
terminated due to antitrust issues. The U.S. telephone industry will be
deregulated, but probably at a slower than expected pace.
INVESTMENT HIGHLIGHTS
The share price of Lucent Technologies, a manufacturer of telecommunication
systems and products, rallied significantly since its spin-off from AT&T in May
1996. Its earnings rose 88% from 1995 to 1996 and were forecast to grow more
than 20% annually for the next two years. We maintained a position in this stock
to capitalize on the rapid growth of the global telecommunications industry.
The Fund acquired 8,000 shares of Scientific-Atlanta in the second quarter of
1997. The company makes telecommunications network products for data
transmission and cable TV. The stock had a correction in April, but the company
was in strong financial condition. We took advantage of this temporary setback
to build a larger position in this issue. Since then, the stock has gained 45.8%
in less than three months.
12
<PAGE>
U.S. INCOME
MCI Communications was another success story. For the fiscal year, the stock
price advanced 61%. The share price was driven by the proposed acquisition of
MCI Communications (MCI) by British Telecommunications plc (BT). BT's proposed
acquisition pric e included a large premium on MCI's market price prior to
announcement of the acquisition. If the deal goes through, a combined BT-MCI, to
be called Concert, would be the fourth-largest telephone company in the world.
The Fund's two Latin American holdings also outperformed the U.S. stock market.
We purchased shares of Telefonica de Espana, and Telecomm Brasileiras in
February 1997. By the end of June, the share price of the two stocks appreciated
22% and 68%, res pectively. These two large cap stocks benefited from the recent
strong performance of the Latin American stock markets.
Overall, the performance of domestic electric utility stocks was flat for the
year. The stocks of several utility companies in Texas suffered large losses.
The share price of Texas Utilities, Houston Industries, and Central & South West
declined 19.3%, 12.9%, and 26.4%, respectively. The near-term financial outlook
of these companies was unchanged, and they continued to pay attractive
dividends.
Several telecommunications stocks had disappointing performance. Particularly,
360 Communications was down 28.6% for the year. Recently several analysts
downgraded this stock, citing lower subscriber additions and reduced earnings
growth rate. The share price of GTE Corp., one of the largest telecommunications
companies in the U.S., has been under pressure since the beginning of the year.
In the last twelve months, the stock was down 2%. At present, it has a P/E ratio
of less than 15 with a dividend yield of 4.2%. We consider it a value investment
with capital appreciation potential.
TOP 5 INDUSTRIES - BASED ON TOTAL INVESTMENTS
(GRAPHIC: BAR CHART PLOTTED USING DATA BELOW)
Telecommunications 19.86%
Electric Service 18.11%
Real Estate Investments Trusts 12.55%
Natural Gas Transmission 7.47%
Petroleum Refining 4.79%
13
<PAGE>
U.S. INCOME
CURRENT OUTLOOK
We maintain a diversified portfolio to reduce risks and pursue attractive
dividend paying stocks with capital appreciation potential as well. This
strategy has been successful. Because the U.S. utility industry is still
undergoing structural changes and regulatory uncertainties remain high, utility
stocks may continue to trail the broad market. Further, utility dividends are no
longer as safe as they once were. Today, under competitive pressure, utility
companies are more likely to maximize growth rather than dividends. Therefore,
holding income-producing stocks in a variety of sectors entails less risk.
Because the current low inflation and modest economic environment is favorable
to equity markets, we intend to have the Fund fully invested. Since the current
valuation of the stock market is near its historical high, we will take a
conservative approach to stock selection and asset allocation. Our new holdings
will focus on undervalued and dividend-paying stocks in various sectors.
------------------------------------------
TOP 10 HOLDINGS BASED ON TOTAL INVESTMENTS
------------------------------------------
Duke Energy 2.83%
Electric Services
........................................
Telebras, ADR 2.37%
Telecommunications
........................................
Lucent Technologies, Inc. 2.36%
Communications Equipment
........................................
U.S. West Communications Group 1.96%
Telecommunications
........................................
Scientific-Atlanta, Inc. 1.82%
Communications Equipment
........................................
Telefonica de Espana, S.A. ADR 1.80%
Telecommunications
........................................
Atlantic Richfield Co. 1.79%
Petrochemical & Coal Products
........................................
American Electric Power, Inc. 1.75%
Electric Services
........................................
Peoples Energy 1.75%
Natural Gas Transmission
........................................
Consolidated Natural Gas Co. 1.68%
Natural Gas Transmission
........................................
Other 79.89%
------------------------------------------
14
<PAGE>
U.S. ALL AMERICAN EQUITY
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSIONS OF FUND PERFORMANCE
- --------------------------------------------------------------------------------
PERFORMANCE
- --------------------------------------------------------------------------------
AVERAGE ANNUAL PERFORMANCE
- --------------------------------------------------------------------------------
10 years 5 years 1 year
- --------------------------------------------------------------------------------
U.S. All American Equity 8.4% 16.7% 33.7%
- --------------------------------------------------------------------------------
S&P 500 14.6% 19.8% 34.7%
- --------------------------------------------------------------------------------
[GRAPHIC: LINEAR GRAPH PLOTTED USING DATA BELOW]
<TABLE>
<CAPTION>
US All American Equity S&P 500
---------------------- -------
<S> <C> <C> <C>
6/30/87 ............................. $10,000 $10,000
7/30/87 ............................. $10,514 $10,507
8/30/87 ............................. $10,851 $10,899
9/30/87 ............................. $10,605 $10,660
10/30/87 ............................. $ 8,346 $ 8,364
11/30/87 ............................. $ 7,789 $ 7,675
12/30/87 ............................. $ 8,291 $ 8,259
1/30/88 ............................. $ 8,042 $ 8,606
2/29/88 ............................. $ 8,373 $ 9,005
3/30/88 ............................. $ 8,327 $ 8,727
4/30/88 ............................. $ 8,398 $ 8,824
5/30/88 ............................. $ 8,174 $ 8,899
6/30/88 ............................. $ 8,454 $ 9,307
7/30/88 ............................. $ 8,367 $ 9,272
8/30/88 ............................. $ 7,971 $ 8,957
9/30/88 ............................. $ 8,089 $ 9,339
10/30/88 ............................. $ 8,089 $ 9,599
11/30/88 ............................. $ 7,966 $ 9,461
12/30/88 ............................. $ 8,032 $ 9,626
1/30/89 ............................. $ 8,496 $10,331
2/28/89 ............................. $ 8,293 $10,074
3/30/89 ............................. $ 8,476 $10,309
4/30/89 ............................. $ 8,767 $10,843
5/30/89 ............................. $ 8,976 $11,280
6/30/89 ............................. $ 8,830 $11,217
7/30/89 ............................. $ 9,635 $12,229
8/30/89 ............................. $10,318 $12,467
9/30/89 ............................. $10,276 $12,416
10/30/89 ............................. $ 9,466 $12,128
11/30/89 ............................. $ 9,471 $12,375
12/30/89 ............................. $ 9,381 $12,671
1/30/90 ............................. $ 8,686 $11,821
2/28/90 ............................. $ 8,794 $11,973
3/30/90 ............................. $ 8,912 $12,290
4/30/90 ............................. $ 8,665 $11,984
5/30/90 ............................. $ 8,999 $13,150
6/30/90 ............................. $ 8,794 $13,061
7/30/90 ............................. $ 8,892 $13,020
8/30/90 ............................. $ 8,216 $11,844
9/30/90 ............................. $ 7,954 $11,269
10/30/90 ............................. $ 7,730 $11,221
11/30/90 ............................. $ 8,139 $11,945
12/30/90 ............................. $ 8,325 $12,277
1/30/91 ............................. $ 8,676 $12,811
2/28/91 ............................. $ 9,286 $13,726
3/30/91 ............................. $ 9,500 $14,058
4/30/91 ............................. $ 9,489 $14,091
5/30/91 ............................. $ 9,862 $14,697
6/30/91 ............................. $ 9,396 $14,024
7/30/91 ............................. $ 9,807 $14,677
8/30/91 ............................. $10,022 $15,024
9/30/91 ............................. $ 9,818 $14,773
10/30/91 ............................. $ 9,928 $14,971
11/30/91 ............................. $ 9,522 $14,369
12/30/91 ............................. $10,543 $16,010
1/30/92 ............................. $10,361 $15,712
2/29/92 ............................. $10,466 $15,915
3/30/92 ............................. $10,245 $15,606
4/30/92 ............................. $10,527 $16,064
5/30/92 ............................. $10,560 $16,142
6/30/92 ............................. $10,383 $15,902
7/30/92 ............................. $10,775 $16,551
8/30/92 ............................. $10,532 $16,213
9/30/92 ............................. $10,632 $16,404
10/30/92 ............................. $10,654 $16,460
11/30/92 ............................. $11,003 $17,019
12/30/92 ............................. $11,136 $17,228
1/30/93 ............................. $11,219 $17,372
2/28/93 ............................. $11,365 $17,608
3/30/93 ............................. $11,599 $17,980
4/30/93 ............................. $11,318 $17,545
5/30/93 ............................. $11,611 $18,013
6/30/93 ............................. $11,644 $18,066
7/30/93 ............................. $11,588 $17,993
8/30/93 ............................. $12,006 $18,674
9/30/93 ............................. $11,910 $18,531
10/30/93 ............................. $12,137 $18,914
11/30/93 ............................. $11,989 $18,734
12/30/93 ............................. $12,251 $18,960
1/30/94 ............................. $12,564 $19,604
2/28/94 ............................. $12,344 $19,073
3/30/94 ............................. $11,741 $18,243
4/30/94 ............................. $11,945 $18,477
5/30/94 ............................. $11,822 $18,779
6/30/94 ............................. $11,449 $18,319
7/30/94 ............................. $11,842 $18,920
8/30/94 ............................. $12,217 $19,694
9/30/94 ............................. $11,871 $19,213
10/30/94 ............................. $11,983 $19,644
11/30/94 ............................. $11,494 $18,929
12/30/94 ............................. $11,600 $19,210
1/30/95 ............................. $11,806 $19,708
2/28/95 ............................. $12,139 $20,475
3/30/95 ............................. $12,444 $21,078
4/30/95 ............................. $12,812 $21,698
5/30/95 ............................. $13,240 $22,564
6/30/95 ............................. $13,508 $23,087
7/30/95 ............................. $13,851 $23,853
8/30/95 ............................. $13,790 $23,912
9/30/95 ............................. $14,382 $24,921
10/30/95 ............................. $14,423 $24,832
11/30/95 ............................. $14,957 $25,921
12/30/95 ............................. $15,180 $26,420
1/30/96 ............................. $15,649 $27,318
2/29/96 ............................. $15,818 $27,572
3/30/96 ............................. $15,940 $27,838
4/30/96 ............................. $16,172 $28,248
5/30/96 ............................. $16,676 $28,975
6/30/96 ............................. $16,792 $29,086
7/30/96 ............................. $16,211 $27,801
8/30/96 ............................. $16,436 $28,389
9/30/96 ............................. $17,271 $29,985
10/30/96 ............................. $17,628 $30,812
11/30/96 ............................. $18,871 $33,139
12/30/96 ............................. $18,562 $32,482
1/30/97 ............................. $19,836 $34,510
2/28/97 ............................. $19,858 $34,781
3/30/97 ............................. $19,092 $33,355
4/30/97 ............................. $20,392 $35,344
5/30/97 ............................. $21,542 $37,495
6/30/97 ............................. $22,448 $39,173
</TABLE>
The table below summarizes quarterly and year-end performance for the U.S. All
American Equity compared to other indices. The S&P 500 index serves as the
benchmark for the Fund. The performance measurements are total return
calculations with dividends reinvested monthly.
YEAR
QUARTER ENDING ENDING
30-SEP-96 31-DEC-96 31-MAR-97 30-JUN-97 30-JUN-97
--------- --------- --------- --------- ---------
S&P 500....................... 2.3% 8.1% 3.2% 17.1% 34.7%
U.S. All American Equity ..... 2.9% 7.5% 2.9% 17.6% 33.7%
Lipper Average for
Growth & Income Funds ... 2.9% 7.4% 1.1% 14.3% 28.1%
15
<PAGE>
U.S. ALL AMERICAN EQUITY
THE YEAR IN REVIEW
Very benign inflation, a very cooperative bond market, very strong earnings, and
as a result, a very strong stock market characterized the last 12 months.
Obviously, this bull differs from the ones in our recent history. Its strength
and duration surprised many market watchers. We have been lucky in the sense
that we have participated in the general performance of the market and have also
benefited from some fortunate stock picks that helped the Fund to pull away from
the average of its peer group . We have stuck with our core holdings, large cap
growth stocks, because of the consistency and stability of their earnings. We
felt they would stand out in a low inflation environment with moderate growth.
We also believe that with the strong growth of the emerging markets, these
companies would have a whole new spectrum of opportunities in front of them.
------------------------------------------
TOP 10 HOLDINGS BASED ON TOTAL INVESTMENTS
------------------------------------------
General Electric Company 3.32%
Household Appliances
........................................
Coca Cola Co. 2.94%
Beverages
........................................
Microsoft Corporation 2.81%
Data Processing & Software
........................................
Intel Corporation 2.36%
Electronics & Components
........................................
Philip Morris Inc. 2.06%
Tobacco
........................................
Merck & Company, Inc. 2.05%
Pharmaceuticals
........................................
Johnson & Johnson Company 2.04%
Healthcare & Equipment
........................................
IBM Corporation 2.00%
Computer & Office Equipment
........................................
First Data Corporation 1.74%
Data Processing & Software
........................................
Procter & Gamble Co. 1.68%
Household Products
........................................
Other 77.00%
------------------------------------------
INVESTMENT HIGHLIGHTS
A number of stocks which the Fund held over the past year have performed very
well. Companies like Coca Cola, General Electric, Microsoft, Intel, have been
exceptional. Obviously, these stocks have appreciated quite a bit and are not as
attractive as they used to be in terms of valuations. However, one has a hard
time finding companies with better earnings growth and stability. They will
continue to be the core holdings in the Fund. We have also benefited from
several additional good stock picks during the past 12 months.
16
<PAGE>
Home Depot, Computer Associates, Applied Materials, Texas Instruments, BMC
Software, etc., have all done very well. Some of those exceeded our price
targets and are no longer in the portfolio. However, on average, we did pretty
well with picking the right stocks for the Fund and that is why we did much
better than the group average.
TOP 5 INDUSTRIES - BASED ON TOTAL INVESTMENTS
(GRAPHIC: BAR GRAPH PLOTTED USING DATA BELOW)
Pharmaceuticals 9.23%
Data Processing & Software 7.40%
Telecommunications 6.18%
Computer & Office Equipment 5.23%
Petroleum Refining 5.05%
CURRENT OUTLOOK
Going forward, we will continue our existing strategy, that is, buying growth
stocks at reasonable prices. At present, we like the technology and the retail
sectors. A lot of good companies were unduly punished because of concern over
the product transition in the technology sector and over-capacity in the retail
sector. We also like the financial stocks, especially names like American
Express and Travelers Group. They have done a marvelous job and their growth
profile has changed quite significantly. Although the market has given some
credit to them, there is still some upside for those stocks. With regard to the
general market, we are still positive but we believe stock selection is still
the key to outperforming the market.
17
<PAGE>
U.S. REAL ESTATE
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSIONS OF FUND PERFORMANCE
- --------------------------------------------------------------------------------
INTRODUCTION
U.S. Real Estate's primary investment objective is long-term capital
appreciation. Current income is a secondary consideration. The Fund
predominately invests in companies which derive at least 50% of their revenues
from the ownership, construction, management or sale of residential, commercial
or industrial real estate. The real estate sector is a hybrid asset class which
embodies characteristics of both the equity and fixed income markets.
Independent research also indicates this asset class may be a good inflation
hedge.
PERFORMANCE
- --------------------------------------------------------------------------------
AVERAGE ANNUAL PERFORMANCE
- --------------------------------------------------------------------------------
10 years 5 years 1 year
- --------------------------------------------------------------------------------
US Real Estate Fund 7.16% 9.68% 32.44%
- --------------------------------------------------------------------------------
Morgan Stanley Real Estate Index
(reindexed beginning 12/30/94) n/a n/a 41.78%
- --------------------------------------------------------------------------------
S&P 500 14.63% 19.76% 34.68%
- --------------------------------------------------------------------------------
[GRAPHIC: LINEAR GRAPH PLOTTED USING DATA BELOW]
<TABLE>
<CAPTION>
Morgan Stanley Real
Index (reindexed
US Real Estate Fund beginning 12/30/94) S&P 500
------------------- ------------------- -------
<S> <C> <C> <C>
6/30/87 $8,263 $5,206
7/31/87 $8,296 $5,469
8/31/87 $8,296 $5,673
9/30/87 $7,916 $5,549
10/30/87 $6,578 $4,354
11/30/87 $6,470 $3,995
12/31/87 $6,677 $4,299
1/29/88 $7,426 $4,480
2/29/88 $7,712 $4,688
3/31/88 $7,595 $4,543
4/29/88 $7,679 $4,593
5/31/88 $7,645 $4,633
6/30/88 $8,016 $4,845
7/29/88 $8,128 $4,827
8/31/88 $8,102 $4,663
9/30/88 $8,179 $4,861
10/31/88 $8,136 $4,997
11/30/88 $7,921 $4,925
12/30/88 $8,067 $5,011
1/31/89 $8,218 $5,378
2/28/89 $8,315 $5,244
3/31/89 $8,546 $5,366
4/28/89 $8,820 $5,645
5/31/89 $9,263 $5,872
6/30/89 $9,174 $5,839
7/31/89 $9,444 $6,366
8/31/89 $9,489 $6,490
9/29/89 $9,336 $6,463
10/31/89 $8,859 $6,314
11/30/89 $8,688 $6,442
12/29/89 $8,661 $6,596
1/31/90 $8,046 $6,154
2/28/90 $8,093 $6,233
3/30/90 $8,074 $6,398
4/30/90 $7,989 $6,238
5/31/90 $8,046 $6,846
6/29/90 $8,017 $6,799
7/31/90 $7,711 $6,778
8/31/90 $6,973 $6,166
9/28/90 $6,466 $5,866
10/31/90 $6,178 $5,841
11/30/90 $6,571 $6,218
12/31/90 $6,945 $6,391
1/31/91 $7,400 $6,669
2/28/91 $8,153 $7,145
3/29/91 $8,698 $7,318
4/30/91 $8,985 $7,335
5/31/91 $9,104 $7,651
6/28/91 $8,758 $7,301
7/31/91 $8,767 $7,641
8/30/91 $8,748 $7,821
9/30/91 $9,154 $7,690
10/31/91 $9,084 $7,793
11/29/91 $8,995 $7,480
12/31/91 $10,788 $8,334
1/31/92 $11,655 $8,179
2/28/92 $11,574 $8,285
3/31/92 $11,272 $8,124
4/30/92 $10,869 $8,362
5/29/92 $10,929 $8,403
6/30/92 $10,396 $8,278
7/31/92 $10,907 $8,616
8/31/92 $9,997 $8,440
9/30/92 $10,191 $8,539
10/30/92 $10,528 $8,569
11/30/92 $10,815 $8,860
12/31/92 $11,295 $8,968
1/29/93 $11,585 $9,043
2/26/93 $11,471 $9,166
3/31/93 $11,875 $9,360
4/30/93 $11,150 $9,133
5/31/93 $11,005 $9,377
6/30/93 $11,378 $9,404
7/30/93 $11,326 $9,367
8/31/93 $11,617 $9,721
9/30/93 $12,385 $9,647
10/29/93 $12,146 $9,846
11/30/93 $11,243 $9,752
12/31/93 $11,316 $9,870
1/31/94 $11,675 $10,205
2/28/94 $11,845 $9,929
3/31/94 $10,892 $9,497
4/29/94 $11,062 $9,618
5/31/94 $10,924 $9,776
6/30/94 $10,501 $9,536
7/29/94 $10,373 $9,849
8/31/94 $10,543 $10,252
9/30/94 $10,256 $10,002
10/31/94 $9,798 $10,226
11/30/94 $9,340 $9,854
12/30/94 $10,000 $10,000 $10,000
1/31/95 $9,666 $9,651 $10,259
2/28/95 $10,043 $9,813 $10,659
3/31/95 $9,924 $9,838 $10,973
4/28/95 $9,989 $9,742 $11,295
5/31/95 $10,431 $10,164 $11,746
6/30/95 $10,615 $10,387 $12,019
7/31/95 $10,810 $10,503 $12,417
8/31/95 $11,113 $10,589 $12,448
9/29/95 $11,308 $10,814 $12,973
10/31/95 $11,059 $10,476 $12,927
11/30/95 $11,200 $10,610 $13,493
12/29/95 $11,893 $11,291 $13,753
1/31/96 $11,948 $11,394 $14,221
2/29/96 $11,937 $11,528 $14,353
3/29/96 $12,070 $11,518 $14,491
4/30/96 $12,180 $11,513 $14,705
5/31/96 $12,412 $11,789 $15,083
6/30/96 $12,456 $12,010 $15,141
7/31/96 $12,410 $12,034 $14,472
8/31/96 $12,933 $12,505 $14,778
9/30/96 $13,307 $12,789 $15,609
10/31/96 $13,659 $13,133 $16,039
11/30/96 $14,216 $13,754 $17,251
12/31/96 $15,646 $15,343 $16,909
1/31/97 $15,829 $15,362 $17,965
2/28/97 $15,818 $15,304 $18,106
3/31/97 $15,864 $15,377 $17,363
4/30/97 $15,280 $14,878 $18,399
5/31/97 $15,692 $15,325 $19,518
6/30/97 $16,497 $17,027 $20,392
</TABLE>
For the fiscal year ended June 30, 1997, U.S. Real Estate had a return of 32.4%,
compared to an average return of 31.7% for its peer group, according to Lipper
Analytical Services. Currently the Fund is heavily weighted towards the REITs
(Real Estate Investment Trust) sector of the real estate universe representing
87.5% of total investments. Real estate development, hotels and lodging are also
included in the portfolio.
JUNE 30,
PORTFOLIO PROFILE 1997
- --------------------------------------------------------------------------------
REITs 87.5%
Other common stock 12.5%
Number of Stocks 38
18
<PAGE>
U.S. REAL ESTATE
THE YEAR IN REVIEW
On most fronts, the real estate market is experiencing better fundamentals as
evidenced by rising occupancies and rental rates. To the surprise of investors,
rent spikes have come earlier than tenants expected which is a positive for the
potential strength of the sector. The Lodging sector has performed well due to a
favorable supply/demand imbalance. The Office sector performed fairly well but
stock selection was important. Regional Malls, Shopping Centers, and the
Apartment sectors of the REIT universe underperformed due to concerns over
interest rates and their potential affect on retail spending. However, to some
extent there were strong regional effects; real estate companies operating
properties in California and the Atlanta area did very well due to their strong
local economies.
INVESTMENT HIGHLIGHTS
The majority of the 32.4% performance achieved by U.S. Real Estate was achieved
in the second half of 1996. For the first half of 1997, real estate stocks
underperformed the broad equity markets. Probably the most important factors
which have held back real estate stocks recently were investor's concerns over
the possibility of the Fed raising interest rates, leading to a weaker economy,
and a continued supply of new real estate offerings coming to the public market.
Over the past year, both sector and stock selection played important roles in
achieving good performance.
------------------------------------------
TOP 10 HOLDINGS BASED ON TOTAL INVESTMENTS
------------------------------------------
Bedford Property Investors, Inc. 4.14%
REIT (Warehouse/Industrial)
........................................
Patriot American Hospitality, Inc. 3.97%
REIT (Hotel/Restaurant)
........................................
Simon DeBartolo Group, Inc. 3.85%
REIT (Regional Malls)
........................................
FelCor Suite Hotels, Inc. 3.70%
REIT (Hotel/Restaurant)
........................................
Bay Apartment Communities 3.67%
REIT (Apartments)
........................................
Reckson Associates Realty Corp. 3.65%
REIT (Warehouse/Industrial)
........................................
Sun Communities, Inc. 3.57%
REIT (Manufactured Homes)
........................................
Public Storage, Inc. 3.46%
REIT (Stoarage)
........................................
Liberty Property Trust 3.44%
REIT (DIVERSIFIED)
........................................
Spieker Properties, Inc. 3.24%
REIT (DIVERSIFIED)
........................................
Other 63.31%
------------------------------------------
19
<PAGE>
U.S. REAL ESTATE
PERFORMANCE OF
U.S. REAL ESTATE'S FIVE LARGEST POSITIONS
COMPANY PERFORMANCE
- --------------------------------------------------------------------------------
Bedford Property Investors, Inc. 18.42%
Patriot America Hospitality 87.78%
Simon DeBartolo Group, Inc. 30.61%
Felcor Suite Hotels, Inc. 22.13%
Bay Apartment Communities 43.00%
For the first half of 1997, investors have favored large cap S&P 500 stocks over
smaller to mid-cap issues. On a relative valuation basis large cap stocks are
somewhat expensive. This may cause more prudent investors to look for better
value in other sectors of the market such as real estate.
TOP 5 INDUSTRIES - BASED ON TOTAL INVESTMENTS
(GRAPHIC: BAR CHART PLOTTED USING DATA BELOW)
Warehouse/Industrial 19.90%
Hotel/Restaurant 17.84%
Apartments 17.39%
Diversified 9.26%
Office Property 7.94%
CURRENT OUTLOOK
The REIT industry, which has grown from an equity market capitalization of $11
billion in 1992 to $95 billion in 1997, still has very favorable fundamentals.
Monthly net inflows into real estate mutual funds have been at all time highs.
In some ways, REITs have become the income vehicle preferred by some investors.
The traditional attractive equity yields offered by utilities is gradually
eroding because of the deregulation of this industry. Due to the valuation
differences between large cap verses small to mid-cap stocks, of which the real
estate universe resides in, we expect that this sector should close the current
performance gap. According to independent research by H.C. Wainwright Economics,
REITs will outperform the S&P 500 by about 8% over the next 12 months.
20
<PAGE>
CHINA REGION OPPORTUNITY
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSIONS OF FUND PERFORMANCE
- --------------------------------------------------------------------------------
PERFORMANCE
- --------------------------------------------------------------------------------
AVERAGE ANNUAL PERFORMANCE
- --------------------------------------------------------------------------------
Inception 1 year
- --------------------------------------------------------------------------------
China Region Opportunity Fund -3.6% 34.38%
(2/10/94 Effective date of original
registration statement)
- --------------------------------------------------------------------------------
IFCI China TR -9.2% 41.0%
- --------------------------------------------------------------------------------
[GRAPHIC: LINEAR GRAPH PLOTTED USING DATA BELOW]
<TABLE>
<CAPTION>
China Region
Inception Opportunity IFCI China TR
- --------- ----------- -------------
<S> <C> <C> <C>
2/10/94 ............................. $ 9,920 $ 9,920
2/28/94 ............................. $ 9,288 $ 9,499
3/31/94 ............................. $ 8,210 $ 7,780
4/30/94 ............................. $ 7,942 $ 7,383
5/31/94 ............................. $ 8,259 $ 7,812
6/30/94 ............................. $ 7,704 $ 6,847
7/31/94 ............................. $ 8,112 $ 7,713
8/31/94 ............................. $ 8,609 $ 8,243
9/30/94 ............................. $ 8,668 $ 8,451
10/31/94 ............................. $ 8,499 $ 8,348
11/30/94 ............................. $ 7,554 $ 7,095
12/31/94 ............................. $ 7,056 $ 6,089
1/31/95 ............................. $ 6,310 $ 5,175
2/28/95 ............................. $ 6,608 $ 5,760
3/31/95 ............................. $ 6,588 $ 5,854
4/30/95 ............................. $ 6,320 $ 5,130
5/31/95 ............................. $ 6,887 $ 5,898
6/30/95 ............................. $ 6,718 $ 5,745
7/31/95 ............................. $ 6,939 $ 6,007
8/31/95 ............................. $ 6,859 $ 5,729
9/30/95 ............................. $ 6,808 $ 5,605
10/31/95 ............................. $ 6,566 $ 5,292
11/30/95 ............................. $ 6,193 $ 4,786
12/31/95 ............................. $ 6,062 $ 4,534
1/31/96 ............................. $ 6,517 $ 4,978
2/29/96 ............................. $ 6,639 $ 5,305
3/31/96 ............................. $ 6,457 $ 5,025
4/30/96 ............................. $ 6,426 $ 4,962
5/31/96 ............................. $ 6,497 $ 5,098
6/30/96 ............................. $ 6,578 $ 5,109
7/31/96 ............................. $ 6,496 $ 4,971
8/31/96 ............................. $ 6,506 $ 5,142
9/30/96 ............................. $ 6,537 $ 5,120
10/31/96 ............................. $ 6,558 $ 5,071
11/30/96 ............................. $ 7,072 $ 5,548
12/31/96 ............................. $ 7,750 $ 6,389
1/31/97 ............................. $ 7,729 $ 6,333
2/28/97 ............................. $ 7,945 $ 6,430
3/31/97 ............................. $ 7,832 $ 6,303
4/30/97 ............................. $ 8,295 $ 7,220
5/31/97 ............................. $ 8,726 $ 7,122
6/30/97 ............................. $ 8,839 $ 7,206
</TABLE>
The table below summarizes year-end performance for U.S. China Region
Opportunity and indices of some of the major markets in which it may invest. The
indices are based on information from Bloomberg Information Services.
MAJOR MARKETS IN THE CHINA REGION
Year
Ended
30-Jun-97
---------
Hang Seng Index.........................................41.7%
H share Index...........................................29.4%
Shanghai B share Index..................................58.1%
Shenzhen B share Index .................................69.5%
Taiwan Weighted Index...................................39.3%
Korea Composite Index...................................-8.9%
US China Region Opportunity Fund ......................34.4%
Lipper Average of Pacific Region Fund ...................8.7%
21
<PAGE>
CHINA REGION OPPORTUNITY
MARKET WEIGHTINGS OF US CHINA REGION OPPORTUNITY
Region Weightings Weightings
as of 6/30/96 as of 6/30/97
------------- -------------
Hong Kong.........................35.30% 52.33%
HK-listed Chinese Shares .........14.25% 10.58%
Shanghai B shares.................18.31% 11.96%
Shenzhen B shares.................12.20% 3.80%
Taiwan Shares......................2.15% 1.04%
South Korean Shares................0.42% 0.24%
THE YEAR IN REVIEW
HONG KONG
The Hong Kong market performed quite well for the past 12 months because of a
favorable interest rate environment and strong positive sentiment towards China.
The Hong Kong market continued to be highly correlated with the U.S. market
because its currency is strongly tied to the U.S. dollar. This year we saw
stable growth in the U.S. economy without much threat of inflation. Hong Kong
also benefited from its increasingly close relationship with the Chinese
economy. Many Hong Kong companies have made substantial investments in China
over the years which are now paying off with the brightening outlook for the
Chinese economy. Hong Kong is the largest foreign investor in China and China is
becoming one of the largest investors in Hong Kong. We think this bodes well for
Hong Kong in the long run and we have been focusing on finding well-managed Hong
Kong companies with increasing exposure to China, such as New World Development
and Citic Pacific. They have excellent management and good connections in China.
CHINA
Although it experienced some volatility, the Chinese market also did extremely
well for the past 12 months. We have been maintaining that the Chinese market
was extremely undervalued and any change in investor sentiment could move the
market much higher. During the last quarter of 1996, the Chinese market offered
great performance as investors were getting more and more positive towards the
Chinese economy. Although the Chinese market is not as attractive as it used to
be in terms of valuation, we still see significant upside because of earnings
improvement and asset restructuring. The asset restructuring theme will be the
driver of the market in the future because there is still significant room for
improving economic efficiency. In addition, the Chinese government is directing
its efforts towards providing a favorable investment environment. Although the
market could be volatile in the short term, we feel quite confident about the
potential of the Chinese market.
22
<PAGE>
CHINA RGION OPPORTUNITY
TAIWAN
Taiwan's market rose from the shadow of the political struggle against China.
Military exercises conducted by Taiwan and China negatively impacted the
Taiwanese market and Taiwan experienced some capital flight as investors were
afraid of the possibility of a military war between Taiwan and mainland China.
However, the military exercises turned out to be more politically motivated.
After realizing that there was little chance that two sides could actually go to
war against each other, investors started to bargain hunting in the Taiwan
market. Benefiting the Taiwan market even more, the electronics sector also
turned the corner. Being one of the largest electronics and computer exporters
in the world, Taiwan's economy is increasingly dependent on the high-tech
industry, which will benefit Taiwan when the high-tech sector is doing well.
SOUTH KOREA
The South Korean market continued to be dogged by a slowdown in the electronics
industry and a worsening trade deficit. Going forward, we feel the market should
perform better as the electronics sector has started to turn up recently and the
Japanese yen has appreciated against the South Korean currency, which improves
the competitiveness of South Korea companies.
TOP 5 INDUSTRIES - BASED ON TOTAL INVESTMENTS
(GRAPHIC: BAR CHART PLOTTED USING DATA BELOW)
Conglomerates 12.10%
Real Estate Developers 10.40%
Banking & Finanacial Services 4.83%
Chemicals & Allied Products 4.66%
Retail 4.46%
23
<PAGE>
CHINA REGION OPPORTUNITY
CURRENT OUTLOOK
Overall, we think the past twelve months have been very favorable to us and we
think we are still at an early stage of an economic upturn. We will continue to
maintain our current weightings in all the markets.
------------------------------------------
TOP 10 HOLDINGS BASED ON TOTAL INVESTMENTS
------------------------------------------
HSBC Holdings Ltd. 4.83%
Holding Company
........................................
Citic Pacific Ltd. 2.94%
Conglomerates
........................................
Shanghai Dazhong 2.36%
Motor Vehicles & Transporation
........................................
Peregrine Investment Holdings Ltd. 2.15%
Security & Commodity Brokers
........................................
China Resources Enterprise Ltd. 2.14%
Real Estate Developers
........................................
New World Development Co. 1.98%
Real Estate Developers
........................................
Hutchison Whampoa 1.97%
Conglomerates
........................................
Guangdong Kelon Electronics
Holdings 1.92%
Household Appliances
........................................
Shanghai Industrial Holdings Ltd. 1.90%
Conglomerates
........................................
China International Marine
Container 1.74%
Aircraft & Parts
........................................
Other 76.07%
------------------------------------------
24
<PAGE>
U.S. GLOBAL RESOURCES
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSIONS OF FUND PERFORMANCE
- --------------------------------------------------------------------------------
PERFORMANCE
- --------------------------------------------------------------------------------
AVERAGE ANNUAL PERFORMANCE
- --------------------------------------------------------------------------------
10 years 5 years 1 year
- --------------------------------------------------------------------------------
Global 1.9% 9.7% 19.0%
- --------------------------------------------------------------------------------
Mpal U.S.: Equity U.S. Natural
Resource Index 8.1% 14.4% 16.3%
- --------------------------------------------------------------------------------
S&P 500 14.6% 19.8% 34.7%
- --------------------------------------------------------------------------------
[GRAPHIC: LINEAR GRAPH PLOTTED USING DATA BELOW]
<TABLE>
<CAPTION>
Mpal US:Equity
US Global US Natural
Resources Resource Index S&P 500
--------- -------------- -------
<S> <C> <C> <C> <C>
6/30/87 .................... $10,000 $10,000 $10,000
7/30/87 .................... $12,091 $10,843 $10,507
8/30/87 .................... $11,727 $10,773 $10,899
9/30/87 .................... $11,818 $10,632 $10,660
10/30/87 .................... $ 7,545 $ 7,716 $ 8,364
11/30/87 .................... $ 8,727 $ 7,511 $ 7,675
12/30/87 .................... $ 8,091 $ 8,000 $ 8,259
1/30/88 .................... $ 6,414 $ 7,949 $ 8,606
2/29/88 .................... $ 6,216 $ 8,382 $ 9,005
3/30/88 .................... $ 6,907 $ 8,723 $ 8,727
4/30/88 .................... $ 6,907 $ 8,906 $ 8,824
5/30/88 .................... $ 6,808 $ 8,719 $ 8,899
6/30/88 .................... $ 7,598 $ 8,938 $ 9,307
7/30/88 .................... $ 7,499 $ 8,934 $ 9,272
8/30/88 .................... $ 7,104 $ 8,716 $ 8,957
9/30/88 .................... $ 6,611 $ 8,622 $ 9,339
10/30/88 .................... $ 6,907 $ 8,743 $ 9,599
11/30/88 .................... $ 6,907 $ 8,654 $ 9,461
12/30/88 .................... $ 7,104 $ 8,846 $ 9,626
1/30/89 .................... $ 7,627 $ 9,480 $10,331
2/28/89 .................... $ 7,627 $ 9,442 $10,074
3/30/89 .................... $ 7,627 $ 9,641 $10,309
4/30/89 .................... $ 7,522 $ 9,935 $10,843
5/30/89 .................... $ 7,418 $ 9,990 $11,280
6/30/89 .................... $ 7,418 $10,002 $11,217
7/30/89 .................... $ 7,836 $10,548 $12,229
8/30/89 .................... $ 8,253 $10,995 $12,467
9/30/89 .................... $ 8,253 $10,933 $12,416
10/30/89 .................... $ 8,044 $10,552 $12,128
11/30/89 .................... $ 8,776 $11,106 $12,375
12/30/89 .................... $ 8,671 $11,650 $12,671
1/30/90 .................... $ 8,437 $11,163 $11,821
2/28/90 .................... $ 8,203 $11,373 $11,973
3/30/90 .................... $ 7,968 $11,489 $12,290
4/30/90 .................... $ 7,148 $10,898 $11,984
5/30/90 .................... $ 7,617 $11,765 $13,150
6/30/90 .................... $ 7,382 $11,511 $13,061
7/30/90 .................... $ 7,968 $12,086 $13,020
8/30/90 .................... $ 7,851 $11,684 $11,844
9/30/90 .................... $ 7,734 $11,469 $11,269
10/30/90 .................... $ 7,043 $10,782 $11,221
11/30/90 .................... $ 7,054 $10,884 $11,945
12/30/90 .................... $ 7,289 $10,774 $12,277
1/30/91 .................... $ 6,808 $10,582 $12,811
2/28/91 .................... $ 7,124 $11,489 $13,726
3/30/91 .................... $ 7,048 $11,343 $14,058
4/30/91 .................... $ 7,124 $11,389 $14,091
5/30/91 .................... $ 7,504 $11,668 $14,697
6/30/91 .................... $ 7,301 $11,107 $14,024
7/30/91 .................... $ 7,605 $11,545 $14,677
8/30/91 .................... $ 7,542 $11,718 $15,024
9/30/91 .................... $ 7,529 $11,500 $14,773
10/30/91 .................... $ 7,744 $11,756 $14,971
11/30/91 .................... $ 7,491 $11,018 $14,369
12/30/91 .................... $ 7,656 $11,160 $16,010
1/30/92 .................... $ 7,695 $11,096 $15,712
2/29/92 .................... $ 7,774 $11,171 $15,915
3/30/92 .................... $ 7,563 $10,777 $15,606
4/30/92 .................... $ 7,669 $11,158 $16,064
5/30/92 .................... $ 7,853 $11,513 $16,142
6/30/92 .................... $ 7,603 $11,127 $15,902
7/30/92 .................... $ 7,695 $11,629 $16,551
8/30/92 .................... $ 7,471 $11,606 $16,213
9/30/92 .................... $ 7,458 $11,704 $16,404
10/30/92 .................... $ 7,366 $11,480 $16,460
11/30/92 .................... $ 7,340 $11,334 $17,019
12/30/92 .................... $ 7,445 $11,464 $17,228
1/30/93 .................... $ 7,286 $11,679 $17,372
2/28/93 .................... $ 7,419 $12,260 $17,608
3/30/93 .................... $ 7,750 $12,921 $17,980
4/30/93 .................... $ 7,882 $13,235 $17,545
5/30/93 .................... $ 7,988 $13,710 $18,013
6/30/93 .................... $ 8,094 $13,808 $18,066
7/30/93 .................... $ 8,174 $13,847 $17,993
8/30/93 .................... $ 8,439 $14,451 $18,674
9/30/93 .................... $ 8,399 $14,074 $18,531
10/30/93 .................... $ 8,770 $14,270 $18,914
11/30/93 .................... $ 8,372 $13,484 $18,734
12/30/93 .................... $ 8,823 $13,805 $18,960
1/30/94 .................... $ 9,244 $14,437 $19,604
2/28/94 .................... $ 8,918 $14,095 $19,073
3/30/94 .................... $ 8,402 $13,338 $18,243
4/30/94 .................... $ 8,212 $13,663 $18,477
5/30/94 .................... $ 8,212 $13,895 $18,779
6/30/94 .................... $ 7,791 $13,816 $18,319
7/30/94 .................... $ 8,022 $14,249 $18,920
8/30/94 .................... $ 8,266 $14,393 $19,694
9/30/94 .................... $ 8,592 $14,467 $19,213
10/30/94 .................... $ 8,456 $14,559 $19,644
11/30/94 .................... $ 7,968 $13,509 $18,929
12/30/94 .................... $ 7,968 $13,469 $19,210
1/30/95 .................... $ 7,552 $12,956 $19,708
2/28/95 .................... $ 7,638 $13,415 $20,475
3/30/95 .................... $ 7,853 $14,082 $21,078
4/30/95 .................... $ 8,068 $14,613 $21,698
5/30/95 .................... $ 8,168 $14,868 $22,564
6/30/95 .................... $ 8,254 $14,867 $23,087
7/30/95 .................... $ 8,484 $15,341 $23,853
8/30/95 .................... $ 8,613 $15,433 $23,912
9/30/95 .................... $ 8,584 $15,388 $24,921
10/30/95 .................... $ 8,197 $14,627 $24,832
11/30/95 .................... $ 8,283 $15,304 $25,921
12/30/95 .................... $ 8,684 $16,041 $26,420
1/30/96 .................... $ 9,004 $16,618 $27,318
2/29/96 .................... $ 9,105 $16,927 $27,572
3/30/96 .................... $ 9,614 $17,774 $27,838
4/30/96 .................... $10,180 $18,753 $28,248
5/30/96 .................... $10,340 $19,048 $28,975
6/30/96 .................... $10,136 $18,717 $29,086
7/30/96 .................... $ 9,701 $17,892 $27,801
8/30/96 .................... $10,049 $18,990 $28,389
9/30/96 .................... $10,456 $19,412 $29,985
10/30/96 .................... $10,950 $20,188 $30,812
11/30/96 .................... $11,531 $21,044 $33,139
12/30/96 .................... $11,647 $21,101 $32,482
1/30/97 .................... $12,074 $21,542 $34,510
2/28/97 .................... $11,416 $20,767 $34,781
3/30/97 .................... $11,334 $20,335 $33,355
4/30/97 .................... $11,038 $20,061 $35,344
5/30/97 .................... $12,091 $21,729 $37,495
6/30/97 .................... $12,074 $21,770 $39,173
</TABLE>
U.S. Global Resources invests in the securities of the companies related to
energy, precious metals, base metals, chemicals, forestry, as well as other
natural resources sectors. At present, the Fund has a significant exposure to
the oil and gas industry. For the fiscal year ended June 30, 1997, the Fund
returned 19.0%, compared to an average gain of 15.8% for its peer group,
according to Lipper Analytical Services.
The performance of the Fund was attributed to both the strategic asset
allocation mix of the Fund and good stock selection within each sector. During
the first half of the year, our mining stocks did reasonably well. Later, our
oil and gas holdings we re very important to the Fund's total return. During the
year, we significantly increased the Fund's exposure to those companies that
provide oil and gas contract drilling and oil field services. Particularly, our
Canadian stocks in this sector achieved superior returns.
25
<PAGE>
U.S. GLOBAL RESOURCES
FUND STRUCTURE
June 30,
Portfolio Profile 1997
- --------------------------------------------------------------------------------
Holdings
U.S...................................57.1%
Canadian..............................31.5%
Australian............................ 8.9%
Other Foreign............................ 2.5%
Number of Stocks ........................94
THE YEAR IN REVIEW
In general, our investments in energy stocks met our expectations. In 1996,
excellent returns on energy stocks resulted from strong oil and gas prices. The
average price for imported crude oil in 1996 was about $20.26/bbl, compared with
$16.77/bbl in 1995. The average wellhead natural gas price was $2.25/Mcf in
1996, as compared with $1.55/Mcf in 1995. The higher oil and gas prices created
a favorable environment for investment in energy securities in 1996.
In the first six months of 1997, the prices of oil and gas declined due to
increased supplies. The share prices of some oil and gas exploration and
production companies were hit particularly hard because their cash flows were
directly dependent on energy commodity prices. But the impact of the lower oil
and gas prices on integrated international oils was less significant. Lower oil
prices reduce upstream profits, but they may improve downstream margins. In
Spring, an offshore shipping company announced the purchase of several new ships
for its fleet. The news produced a chilling impact on some investors and the
impact spread to the offshore drilling sector. After it became clear that
current day rates were not high enough to justify speculative construction of
new rigs and oil and gas prices were still able to support offshore drilling,
the major offshore drilling stocks regained their losses and reached new highs.
In Canada, the rotary rig count was about 250 at the end of December 1995. The
number rose to 342 by the end of December 1996, an increase of 37%. Last year,
about 12,500 wells were drilled in Canada, and this number is expected to rise
to 14,000 in 1997. The strong oil and gas drilling activities in Canada led to
increased mergers and acquisitions, and double-digit earnings growth rates for
major drilling contractors and oil field service companies.
Gold prices declined from $382/oz. to $334/oz. They fell below several technical
support levels, even though physical demand for gold exceeded gold production.
The major culprits for the declining gold prices were the gold sales by several
central banks. Copper prices
26
<PAGE>
climbed in the first half of 1997 because of strikes, wet weather and production
problems in several major copper producing countries. Aluminum prices were firm
and lately maintained a trading range around $0.72/lb. In June 1996, Aluminum
LME inventories were about 900,000 tons. Today, they stand at about 670,000
tons. The current zinc prices are the highest in seven years. The zinc market
was supported by high consumption and the decline in LME stockpile.
INVESTMENT HIGHLIGHTS
Falcon Drilling was one of our largest winners. The share price of this offshore
oil and gas drilling company gained nearly 112% during the year. A few years
ago, the company was basically a shallow-water driller operating in the Gulf of
Mexico. Today it has emerged as one of the premiere international oil and gas
contract drillers. Another exciting story was Cooper Cameron, an international
designer, manufacturer and marketer of a variety of products such as valves,
wellhead equipment and chokes which find their primary uses in the oil and gas
industry. Its share prices rose 114% last year. Other holdings of the Fund also
achieved excellent returns. They included Transocean Offshore, ENSCO
International, BJ services, and Schlumberger.
------------------------------------------
TOP 10 HOLDINGS BASED ON TOTAL INVESTMENTS
------------------------------------------
Ensign Resources 3.88%
Oil & Gas Field Services
........................................
Meridian Gold, Inc. 3.87%
Gold & Silver Mining
........................................
Ensco International 3.26%
Oil & Gas Drilling
........................................
Brunswick Technologies, Inc. 3.17%
Chemicals & Allied Products
........................................
Precision Drilling Corporation 2.92%
Oil & Gas Drilling
........................................
Woodside Petroleum Company 2.54%
Oil & Gas Drilling
........................................
Prudential Steel Ltd. 2.26%
Oil & Gas Field Machinery
........................................
Exxon Corporation 2.02%
Oil & Gas Extraction
........................................
Texaco, Inc. 2.00%
Petroleum Refining
........................................
Total S.A., ADR 2.00%
Oil & Gas Extraction
........................................
Other 72.08%
------------------------------------------
27
<PAGE>
U.S. GLOBAL RESOURCES
Our holdings in the Australian oil and gas sector performed exceptionally well.
The share prices of Novus Petroleum, Oil Search, and Woodside Petroleum
registered significant gains. The stocks of these companies were propelled by
new discoveries and international expansion of business. For the last five
years, the Australian oil and gas sector outperformed the Australian market by a
large margin.
Another market we were pleased with was the Canadian oil and gas industry.
Currently, three of the top ten holdings of the Fund are Canadian companies.
Particularly worth mentioning is Prudential Steel, a company providing tubular
goods to the oil and gas industry. The share price of Prudential Steel has
nearly doubled since the Fund purchased the stock less than a year ago. Because
of the sustained high level of oil and gas drilling, stable steel prices and
potential increase in tubular goods prices, Prudential Steel still has good
fundamentals to go even higher. The share prices of Ensign Resource Service, a
Canadian oil and gas drilling contractor, also had a stellar performance,
gaining 60% in about eleven months. The superior performance of the Canadian oil
and gas service sector was primarily driven by strong oil and gas prices.
TOP 5 INDUSTRIES - BASED ON TOTAL INVESTMENTS
(GRAPHIC: BAR CHART PLOTTED USING DATA BELOW)
Oil & Gas Extraction 24.71%
Oil & Gas Field Servicees 20.15%
Oil International 17.77%
Gold & Silver Mining 6.47%
Chemicals & Allied Products 9.02%
28
<PAGE>
U.S. GLOBAL RESOURCES
Nevertheless, the share prices of Abacan Resources, a Canadian oil and gas
exploration and production company operating in Nigeria, declined 24% for the
year. After the company announced disappointing operating results in early June,
it lost nearly 70% of its market capitalization. The company produced about
21,000 barrels per day (bbls/d) in May, but the production was expected to
decline to about 16,000 bbls/d in June. Further, because of lower than expected
cash flows, the company had to postpone a planned debt financing of C$160
million. The share price once reached a high of C$15, and was recently trading
around C$5.
The Fund held small positions in several junior gold exploration companies and
many of them suffered heavy losses after Bre-X Minerals was exposed as a fraud.
However, U.S. Global Resources captured very significant gains in Bre-X prior to
its collapse. The fall of Bre-X dragged down the whole Canadian mining sector.
For example, Minco Mining & Metals, a Canadian mining company having several
operations in China, was down 43%. Another example was Interoil Corp., which was
down 19%. The company has a joint venture with Enron Corp. to build a refinery
in Papua New Guinea. But the delay in setting up the plant and having the stock
listed caused the stock to drift down.
CURRENT OUTLOOK
Despite increased volatility in the stock market, our confidence is unshaken. As
long as oil prices do not plummet to historical lows and metal prices are stable
at current levels, our equity holdings should be poised for further gains. The
Fund has about 25% of its total investments in several oil and gas drilling and
service stocks. These companies are expected to have higher earnings growth
rates but lower P/E ratios than the general market. Further, the stocks of
mining companies in general are near their annual lows and therefore present an
excellent risk/reward trade off once investors' confidence in this sector
returns. Such a scenario is very likely as current economic indicators point
towards continuing low inflation and steady economic growth.
29
<PAGE>
U.S. GLOBAL GOLD FUNDS
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSIONS OF FUND PERFORMANCE
- --------------------------------------------------------------------------------
INTRODUCTION
The past year has been difficult for our shareholders. It is important to
remember, however, that the mining business is a cyclic business. To profit from
an otherwise tough time requires discipline and forward thinking. U.S. World
Gold and U.S. Gold Shares are committed to long-term investments by focusing on
quality companies with seasoned management, growing reserves and production, and
superior financial strengths. U.S. World Gold will invest in exploration and
junior mining companies while U.S . Gold Shares is more focused on large
capitalization senior mining companies. The risk profile of the two funds can be
quite different. The U.S. Gold Shares is more sensitive to changes in the price
of gold than the U.S. World Gold. The success or failure of an exploration or
junior mining company stock price is more driven by their ability to find new
gold deposits and eventually establish a mine with an attractive growth profile.
PERFORMANCE
- --------------------------------------------------------------------------------
AVERAGE ANNUAL PERFORMANCE
- --------------------------------------------------------------------------------
10 years 5 years 1 year
- --------------------------------------------------------------------------------
US World Gold Fund -0.4% 12.3% -20.1%
- --------------------------------------------------------------------------------
Toronto Gold Index 6.9% 10.2% -25.2%
- --------------------------------------------------------------------------------
S&P 500 14.6% 19.8% 34.7%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
US World Toronto
Gold Fund Gold Index S&P 500
--------- ---------- -------
<S> <C> <C> <C> <C>
6/30/87 .....................$10,000 $10,000 $10,000
7/30/87 .....................$11,902 $ 9,842 $10,507
8/30/87 .....................$11,658 $10,874 $10,899
9/30/87 .....................$11,854 $10,016 $10,660
10/30/87 ....................$ 7,544 $ 9,179 $ 8,364
11/30/87 ....................$ 8,915 $ 8,884 $ 7,675
12/30/87 ....................$ 8,376 $ 8,771 $ 8,259
1/30/88 .....................$ 6,802 $ 9,020 $ 8,606
2/29/88 .....................$ 6,690 $ 9,330 $ 9,005
3/30/88 .....................$ 7,646 $10,523 $ 8,727
4/30/88 .....................$ 7,589 $11,288 $ 8,824
5/30/88 .....................$ 7,702 $11,500 $ 8,899
6/30/88 .....................$ 7,870 $12,080 $ 9,307
7/30/88 .....................$ 7,927 $12,005 $ 9,272
8/30/88 .....................$ 7,421 $14,053 $ 8,957
9/30/88 .....................$ 6,746 $15,551 $ 9,339
10/30/88 ....................$ 6,971 $18,529 $ 9,599
11/30/88 ....................$ 7,083 $20,161 $ 9,461
12/30/88 ....................$ 6,802 $18,599 $ 9,626
1/30/89 .....................$ 7,027 $17,764 $10,331
2/28/89 .....................$ 7,083 $21,765 $10,074
3/30/89 .....................$ 6,915 $22,148 $10,309
4/30/89 .....................$ 6,634 $23,030 $10,843
5/30/89 .....................$ 6,296 $14,960 $11,280
6/30/89 .....................$ 6,521 $17,723 $11,217
7/30/89 .....................$ 6,859 $17,040 $12,229
8/30/89 .....................$ 7,083 $13,546 $12,467
9/30/89 .....................$ 7,196 $13,659 $12,416
10/30/89 ....................$ 7,196 $14,990 $12,128
11/30/89 ....................$ 8,208 $15,031 $12,375
12/30/89 ....................$ 7,927 $14,904 $12,671
1/30/90 .....................$ 8,096 $14,743 $11,821
2/28/90 .....................$ 7,700 $14,673 $11,973
3/30/90 .....................$ 7,191 $13,901 $12,290
4/30/90 .....................$ 6,285 $12,682 $11,984
5/30/90 .....................$ 6,568 $12,985 $13,150
6/30/90 .....................$ 6,115 $12,788 $13,061
7/30/90 .....................$ 6,511 $12,279 $13,020
8/30/90 .....................$ 6,398 $12,716 $11,844
9/30/90 .....................$ 6,341 $13,872 $11,269
10/30/90 ....................$ 5,283 $13,150 $11,221
11/30/90 ....................$ 5,260 $12,396 $11,945
12/30/90 ....................$ 5,718 $12,265 $12,277
1/30/91 .....................$ 4,960 $13,132 $12,811
2/28/91 .....................$ 5,209 $13,600 $13,726
3/30/91 .....................$ 5,175 $14,098 $14,058
4/30/91 .....................$ 5,067 $14,322 $14,091
5/30/91 .....................$ 5,294 $14,682 $14,697
6/30/91 .....................$ 5,685 $16,805 $14,024
7/30/91 .....................$ 5,702 $16,352 $14,677
8/30/91 .....................$ 5,135 $17,635 $15,024
9/30/91 .....................$ 5,215 $16,377 $14,773
10/30/91 ....................$ 5,741 $15,531 $14,971
11/30/91 ....................$ 5,775 $13,426 $14,369
12/30/91 ....................$ 5,526 $14,630 $16,010
1/30/92 .....................$ 5,662 $13,745 $15,712
2/29/92 .....................$ 5,583 $14,673 $15,915
3/30/92 .....................$ 5,192 $14,650 $15,606
4/30/92 .....................$ 4,699 $14,596 $16,064
5/30/92 .....................$ 5,079 $12,358 $16,142
6/30/92 .....................$ 5,373 $11,978 $15,902
7/30/92 .....................$ 5,685 $13,046 $16,551
8/30/92 .....................$ 5,549 $10,969 $16,213
9/30/92 .....................$ 5,549 $11,806 $16,404
10/30/92 ....................$ 5,322 $11,722 $16,460
11/30/92 ....................$ 4,903 $11,113 $17,019
12/30/92 ....................$ 5,266 $11,220 $17,228
1/30/93 .....................$ 5,016 $12,728 $17,372
2/28/93 .....................$ 5,424 $14,423 $17,608
3/30/93 .....................$ 6,053 $16,163 $17,980
4/30/93 .....................$ 6,936 $18,826 $17,545
5/30/93 .....................$ 7,870 $21,108 $18,013
6/30/93 .....................$ 8,261 $22,852 $18,066
7/30/93 .....................$ 9,818 $24,748 $17,993
8/30/93 .....................$ 9,042 $22,834 $18,674
9/30/93 .....................$ 7,910 $19,976 $18,531
10/30/93 ....................$ 9,212 $23,897 $18,914
11/30/93 ....................$ 9,042 $23,607 $18,734
12/30/93 ....................$ 9,993 $25,503 $18,960
1/30/94 .....................$10,339 $25,745 $19,604
2/28/94 .....................$ 9,801 $24,064 $19,073
3/30/94 .....................$ 9,818 $24,633 $18,243
4/30/94 .....................$ 9,031 $21,772 $18,477
5/30/94 .....................$ 9,461 $23,394 $18,779
6/30/94 .....................$ 8,850 $21,872 $18,319
7/30/94 .....................$ 8,861 $21,757 $18,920
8/30/94 .....................$ 9,268 $22,845 $19,694
9/30/94 .....................$ 9,823 $25,895 $19,213
10/30/94 ....................$ 9,416 $23,403 $19,644
11/30/94 ....................$ 8,113 $20,248 $18,929
12/30/94 ....................$ 8,300 $21,720 $19,210
1/30/95 .....................$ 7,427 $19,021 $19,708
2/28/95 .....................$ 7,585 $20,369 $20,475
3/30/95 .....................$ 8,459 $23,114 $21,078
4/30/95 .....................$ 8,692 $23,194 $21,698
5/30/95 .....................$ 8,675 $24,196 $22,564
6/30/95 .....................$ 8,970 $24,385 $23,087
7/30/95 .....................$ 9,361 $24,342 $23,853
8/30/95 .....................$ 9,617 $24,808 $23,912
9/30/95 .....................$ 9,611 $25,078 $24,921
10/30/95 ....................$ 8,624 $22,043 $24,832
11/30/95 ....................$ 9,361 $24,471 $25,921
12/30/95 ....................$ 9,622 $24,444 $26,420
1/30/96 .....................$11,177 $28,060 $27,318
2/29/96 .....................$11,477 $29,096 $27,572
3/30/96 .....................$12,090 $29,330 $27,838
4/30/96 .....................$12,465 $29,075 $28,248
5/30/96 .....................$13,736 $30,900 $28,975
6/30/96 .....................$12,050 $26,006 $29,086
7/30/96 .....................$11,676 $26,137 $27,801
8/30/96 .....................$12,743 $27,545 $28,389
9/30/96 .....................$12,368 $26,088 $29,985
10/30/96 ....................$12,045 $26,498 $30,812
11/30/96 ....................$11,852 $27,307 $33,139
12/30/96 ....................$11,500 $26,551 $32,482
1/30/97 .....................$10,858 $25,405 $34,510
2/28/97 .....................$11,962 $27,196 $34,781
3/30/97 .....................$10,534 $22,061 $33,355
4/30/97 .....................$10,018 $20,278 $35,344
5/30/97 .....................$10,558 $21,958 $37,495
6/30/97 .....................$ 9,579 $19,452 $39,173
</TABLE>
For the fiscal year ended June 30, 1997, U.S. World Gold and U.S. Gold Shares
had a return of (20.1)% and (46.5)%, respectively, compared to an average of
(24.4)% for their peer group, according to Lipper Analytical Services. Gold
bullion declined 12.42% over the same period. Obviously, the fall in price of
gold was a major factor in the decline of the share prices of gold producing
companies. The South African rand that depreciated 4.75% for the year also
contributed to the lower performance of U.S. Gold Shares.
30
<PAGE>
U.S. GLOBAL GOLD FUNDS
- --------------------------------------------------------------------------------
AVERAGE ANNUAL PERFORMANCE
- --------------------------------------------------------------------------------
10 years 5 years 1 year
- --------------------------------------------------------------------------------
U.S. Gold Shares -14.1% -13.0% -46.5%
Johannesburg Gold Index -14.4% -11.7% -46.5%
S&P 500 14.6% 19.8% 34.7%
<TABLE>
<CAPTION>
US Gold Johannesburg
Shares Fund Gold S&P 500
----------- ------------ -------
<S> <C> <C> <C> <C>
6/30/87 .....................$10,000 $10,000 $10,000
7/31/87 .....................$11,946 $11,583 $10,507
8/31/87 .....................$11,321 $11,662 $10,899
9/30/87 .....................$11,175 $10,849 $10,660
10/31/87 ....................$ 8,801 $ 9,071 $ 8,364
11/30/87 ....................$ 9,997 $ 9,736 $ 7,675
12/31/87 ....................$ 9,254 $ 9,177 $ 8,259
1/31/88 .....................$ 7,413 $ 6,499 $ 8,606
2/29/88 .....................$ 7,346 $ 5,781 $ 9,005
3/31/88 .....................$ 7,798 $ 6,333 $ 8,727
4/30/88 .....................$ 6,928 $ 5,567 $ 8,824
5/31/88 .....................$ 7,129 $ 5,529 $ 8,899
6/30/88 .....................$ 6,355 $ 5,524 $ 9,307
7/31/88 .....................$ 6,270 $ 5,376 $ 9,272
8/31/88 .....................$ 5,930 $ 5,052 $ 8,957
9/30/88 .....................$ 5,437 $ 5,042 $ 9,339
10/31/88 ....................$ 5,811 $ 5,335 $ 9,599
11/30/88 ....................$ 6,406 $ 5,810 $ 9,461
12/31/88 ....................$ 5,947 $ 5,466 $ 9,626
1/31/89 .....................$ 5,929 $ 5,473 $10,331
2/28/89 .....................$ 6,303 $ 5,683 $10,074
3/31/89 .....................$ 6,819 $ 6,152 $10,309
4/30/89 .....................$ 6,659 $ 5,829 $10,843
5/31/89 .....................$ 6,089 $ 4,983 $11,280
6/30/89 .....................$ 6,801 $ 5,436 $11,217
7/31/89 .....................$ 6,946 $ 5,978 $12,229
8/31/89 .....................$ 6,892 $ 5,642 $12,467
9/30/89 .....................$ 7,541 $ 6,112 $12,416
10/31/89 ....................$ 7,595 $ 6,657 $12,128
11/30/89 ....................$ 8,966 $ 7,747 $12,375
12/31/89 ....................$ 9,796 $ 7,956 $12,671
1/31/90 .....................$10,737 $ 8,474 $11,821
2/28/90 .....................$ 9,243 $ 7,459 $11,973
3/31/90 .....................$ 8,597 $ 7,359 $12,290
4/30/90 .....................$ 7,675 $ 6,492 $11,984
5/31/90 .....................$ 7,859 $ 6,083 $13,150
6/30/90 .....................$ 7,177 $ 5,696 $13,061
7/31/90 .....................$ 7,590 $ 6,028 $13,020
8/31/90 .....................$ 7,496 $ 6,502 $11,844
9/30/90 .....................$ 7,139 $ 6,207 $11,269
10/31/90 ....................$ 6,651 $ 5,584 $11,221
11/30/90 ....................$ 6,388 $ 4,994 $11,945
12/31/90 ....................$ 6,444 $ 4,665 $12,277
1/31/91 .....................$ 5,732 $ 4,254 $12,811
2/28/91 .....................$ 6,213 $ 4,129 $13,726
3/31/91 .....................$ 5,694 $ 3,539 $14,058
4/30/91 .....................$ 5,828 $ 3,735 $14,091
5/31/91 .....................$ 6,540 $ 4,341 $14,697
6/30/91 .....................$ 6,906 $ 4,727 $14,024
7/31/91 .....................$ 6,673 $ 4,594 $14,677
8/31/91 .....................$ 5,513 $ 3,725 $15,024
9/30/91 .....................$ 5,842 $ 4,010 $14,773
10/31/91 ....................$ 6,035 $ 4,131 $14,971
11/30/91 ....................$ 6,306 $ 4,375 $14,369
12/31/91 ....................$ 5,435 $ 4,095 $16,010
1/31/92 .....................$ 5,416 $ 4,526 $15,712
2/29/92 .....................$ 4,744 $ 4,295 $15,915
3/31/92 .....................$ 4,803 $ 3,916 $15,606
4/30/92 .....................$ 4,467 $ 3,488 $16,064
5/31/92 .....................$ 4,763 $ 3,831 $16,142
6/30/92 .....................$ 4,388 $ 3,927 $15,902
7/31/92 .....................$ 4,169 $ 3,839 $16,551
8/31/92 .....................$ 3,809 $ 3,391 $16,213
9/30/92 .....................$ 3,431 $ 3,172 $16,404
10/31/92 ....................$ 2,952 $ 2,740 $16,460
11/30/92 ....................$ 2,752 $ 2,830 $17,019
12/31/92 ....................$ 2,673 $ 2,598 $17,228
1/31/93 .....................$ 2,815 $ 2,915 $17,372
2/28/93 .....................$ 3,060 $ 3,072 $17,608
3/31/93 .....................$ 3,632 $ 3,769 $17,980
4/30/93 .....................$ 4,223 $ 4,589 $17,545
5/31/93 .....................$ 5,039 $ 5,759 $18,013
6/30/93 .....................$ 5,121 $ 5,679 $18,066
7/31/93 .....................$ 5,820 $ 6,167 $17,993
8/31/93 .....................$ 4,771 $ 5,134 $18,674
9/30/93 .....................$ 4,545 $ 4,359 $18,531
10/31/93 ....................$ 5,100 $ 5,191 $18,914
11/30/93 ....................$ 5,059 $ 5,399 $18,734
12/31/93 ....................$ 5,985 $ 6,298 $18,960
1/31/94 .....................$ 5,382 $ 5,625 $19,604
2/28/94 .....................$ 5,050 $ 5,709 $19,073
3/31/94 .....................$ 4,987 $ 5,745 $18,243
4/30/94 .....................$ 5,133 $ 5,644 $18,477
5/31/94 .....................$ 4,966 $ 5,246 $18,779
6/30/94 .....................$ 5,216 $ 5,679 $18,319
7/31/94 .....................$ 5,405 $ 5,776 $18,920
8/31/94 .....................$ 5,994 $ 6,336 $19,694
9/30/94 .....................$ 6,709 $ 6,799 $19,213
10/31/94 ....................$ 6,351 $ 6,313 $19,644
11/30/94 ....................$ 5,552 $ 5,520 $18,929
12/31/94 ....................$ 5,826 $ 5,671 $19,210
1/31/95 .....................$ 4,460 $ 4,238 $19,708
2/28/95 .....................$ 4,716 $ 4,207 $20,475
3/31/95 .....................$ 4,929 $ 4,082 $21,078
4/30/95 .....................$ 4,695 $ 4,003 $21,698
5/31/95 .....................$ 4,567 $ 3,745 $22,564
6/30/95 .....................$ 4,631 $ 3,932 $23,087
7/31/95 .....................$ 4,998 $ 4,129 $23,853
8/31/95 .....................$ 4,977 $ 4,159 $23,912
9/30/95 .....................$ 4,934 $ 4,119 $24,921
10/31/95 ....................$ 4,176 $ 3,461 $24,832
11/30/95 ....................$ 4,220 $ 3,519 $25,921
12/31/95 ....................$ 4,263 $ 3,661 $26,420
1/31/96 .....................$ 5,208 $ 4,622 $27,318
2/29/96 .....................$ 5,054 $ 4,585 $27,572
3/31/96 .....................$ 4,768 $ 4,447 $27,838
4/30/96 .....................$ 4,790 $ 4,463 $28,248
5/31/96 .....................$ 4,922 $ 4,588 $28,975
6/30/96 .....................$ 4,087 $ 3,950 $29,086
7/31/96 .....................$ 4,043 $ 3,903 $27,801
8/31/96 .....................$ 4,020 $ 3,956 $28,389
9/30/96 .....................$ 3,665 $ 3,620 $29,985
10/31/96 ....................$ 3,598 $ 3,667 $30,812
11/30/96 ....................$ 3,354 $ 3,287 $33,139
12/31/96 ....................$ 3,176 $ 3,199 $32,482
1/31/97 .....................$ 2,859 $ 2,937 $34,510
2/28/97 .....................$ 3,267 $ 3,471 $34,781
3/31/97 .....................$ 2,813 $ 2,925 $33,355
4/30/97 .....................$ 2,586 $ 2,652 $35,344
5/31/97 .....................$ 2,632 $ 2,610 $37,495
6/30/97 .....................$ 2,187 $ 2,114 $39,173
</TABLE>
FUND STRUCTURE FOR THE U.S. WORLD GOLD
June 30,
Portfolio Profile 1997
- --------------------------------------------------------------------------------
Equities 97.1%
Cash Equivalents 2.9%
Number of Stocks 81
June 30,
Country Distribution 1997
- --------------------------------------------------------------------------------
African Gold Mining 17.2%
North American Gold Mining 61.6%
Australian Gold Mining 18.3%
31
<PAGE>
U.S. GLOBAL GOLD FUNDS
FUND STRUCTURE FOR THE U.S. GOLD SHARES
June 30,
Portfolio Profile 1997
- --------------------------------------------------------------------------------
Equities 100%
Number of Stocks 27
June 30,
Country Distribution 1997
- --------------------------------------------------------------------------------
African Gold Mining 67.2%
North American Gold Mining 25.8%
Australian Gold Mining 7.0%
THE YEAR IN REVIEW
U.S. WORLD GOLD
------------------------------------------
TOP 10 HOLDINGS BASED ON TOTAL INVESTMENTS
------------------------------------------
Barrick Gold Corp. 9.19%
Major Gold Production
........................................
Delta Gold, NL 8.50%
Gold Production
........................................
The Pioneer Group, Inc. 6.81%
Investment Advisors
........................................
Franco-Nevada Mining Corp. 6.34%
Mining Finance
........................................
Euro-Nevada Mining Corp. 5.81%
Mining Finance
........................................
Meridian Gold, Inc. 5.41%
Gold Production
........................................
Getchell Gold Corporation 5.40%
Gold Production
........................................
Greenstone Resources 4.92%
Gold Production
........................................
Ashanti Goldfields Co. Ltd., GDR 4.31%
Major Gold Production
........................................
Ranger Minerals NL 3.54%
Gold Explortion
........................................
Other 39.77%
------------------------------------------
32
<PAGE>
The gold sector was one of the lowest performing sectors in the equity market
despite a strong bull run in the broader equities. The gold market was punished
by a falling gold price and persistent rumors of central bank selling. The price
of gold stood at $382.00/oz. at the end of June 1996, and declined to
$334.55/oz. at the end of June 1997. The share prices of gold exploration
stocks, in particular, were further affected by the dramatic fall of Bre-X
Minerals following the revelation that its reserve calculations were fraudulent.
Fortunately, our own internal analysis led us to believe that Bre-X Minerals had
become significantly overvalued by speculators and novices to the gold market,
thus we realized significant gains in this stock before the scandal hit the
market.
Several fundamental events affected the price of gold last year. First, it was
reported that Switzerland held up to US$7 billion dollars worth of gold which
was stolen by the Nazis during World War II. Investors were fearful that the
bank might have to sell some of the gold in order to set up a fund to pay to the
victims of the war. Secondly, investors were also concerned that the formation
of the European Monetary Union (EMU) could have an adverse impact on the gold
market because the prospective members would potentially sell their gold
reserves to shore up their finances to meet the membership requirements.
U.S. GOLD SHARES
------------------------------------------
TOP 10 HOLDINGS BASED ON TOTAL INVESTMENTS
------------------------------------------
Meridian Gold, Inc. 12.38%
Gold Mining - North America
........................................
Barrick Gold Corp. 10.84%
Gold Mining - North America
........................................
The Pioneer Group, Inc. 10.72%
Investment Advisors
........................................
Beatrix Mines Ltd., ADR 9.29%
Gold Mining - Africa
........................................
Southvaal Holdings Ltd., ADR 7.36%
Gold Mining - Africa
........................................
Ashanti Goldfields Co. Ltd. 6.90%
Gold Mining - Africa
........................................
Western Areas Gold
Mining Co., Ltd., ADR 6.62%
Gold Mining - Africa
........................................
Driefontein Consolidated Ltd.,
ADR 6.49%
Gold Mining - Africa
........................................
Resolute Resource Ltd. 3.52%
Gold Mining - Africa
........................................
Elandsrand Gold Mining
Company Ltd. 3.19%
Gold Explortion
........................................
Other 22.69%
------------------------------------------
33
<PAGE>
U.S. GLOBAL GOLD FUNDS
These fears were not unfounded. Finally, several central banks announced during
the year that they had sold a portion of their gold holdings into the market.
These sales had a dramatic impact on investor sentiment towards any investment
in gold related vehicles.
In 1996, the central bank of Belgium was the first to announce that it had sold
160 tons of gold. Early this year the Dutch central bank announced that it had
sold a total of 300 tons of gold to rebalance its foreign exchange portfolio.
Recently, the Reserve Bank of Australia announced that it had sold 5.4 million
ounces of gold or approximately 68% of its gold reserves. The market was stunned
by the Australian sale as most participants believed that the Australians would
be supporters of gold given the country's position as the third largest gold
producer in the world.
Despite the fact that demand for gold exceeded mine production last year, the
pressure on the gold market was evident as it entered 1997. The Indian market
began to show signs of weakening as wholesalers started to step out of the way,
waiting for gold prices to bottom. The Chinese market slowed down too as the
Chinese government was expected to reduce the official price of gold in order to
bring it more in line with world prices. Speculators were also very active.
Short sales exacerbated the decline of gold prices. By the end of the fiscal
year, the price of gold declined to the lowest level seen in the last ten years.
Ultimately, the revelation of Bre-X Minerals as a fraud also had a significant
impact on investors, causing a precipitous fall in the share prices of
exploration mining companies on a worldwide basis. The gold market relies on the
success of exploration companies to provide growth, and the negative sentiment
toward exploration companies dragged the entire market down.
34
<PAGE>
U.S. GLOBAL GOLD FUNDS
INVESTMENT HIGHLIGHTS
PERFORMANCE OF
U.S. WORLD GOLD'S FIVE LARGEST POSITIONS
Company Performance
- --------------------------------------------------------------------------------
Barrick Gold -18.89%
Delta Gold -34.91%
Pioneer Group -14.02%
Euro Nevada -28.23%
Franco Nevada -20.91%
Three of the U.S. World Gold's largest positions are responsible for its
relative outperformance to the average gold fund. In addition, our realized
gains in the gold exploration sector, particularly in Bre-X, helped the Fund's
performance.
PERFORMANCE OF
U.S. GOLD SHARES' FIVE LARGEST POSITIONS
Company Performance
- --------------------------------------------------------------------------------
Meridian Gold +24.53%
Barrick Gold Corp. -18.89%
Pioneer Group -14.02%
Beatrix Mines Ltd. -43.41%
Western Areas Gold Mining -57.20%
35
<PAGE>
U.S. GLOBAL GOLD FUNDS
From the table above it is quite clear that the losses suffered from the South
African securities were much greater than their North American counterparts.
U.S. Gold Shares still has a significant amount of the portfolio invested in
South Africa. Over the past year this position was reduced in an attempt to
buffer the sharp drop in South African mining companies due to the fall in the
price of gold. Meridian Gold, which was purchased by both of our gold funds and
our natural resources fund, was one of the few gold mining stocks which actually
rose in value over the past year.
CURRENT OUTLOOK
Numerous factors affect the gold market. The balance between supply and demand,
inflation fears, political uncertainty, and negative investor sentiment, all
impacted the price of this fascinating commodity. In evaluating these inputs we
have found no compelling reasons to believe a catalyst will emerge to turn the
market around immediately. At this point gold may be considered a value
investment, particularly after gold hit twelve year lows following the
announcement of the Australian gold sales.
Given the outlook, our objective is to invest in mining companies that will
generate profits in a low gold price environment. We continue to maintain a
large position in Barrick Gold Corp. due to its track record of growth, strong
management, low-cost production, and excellent cash flows. From a more
fundamental standpoint we also favor companies with large cash positions. Those
companies with significant cash on their balance sheet, such as Meridian Gold,
Franco Nevada and Euro Nevada, will have the financial strength to further
develop their properties or to drive hard bargains with those companies that
require cash to advance projects. This approach typifies our investment style.
36
<PAGE>
U.S. TREASURY SECURITIES CASH
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS JUNE 30, 1997
- --------------------------------------------------------------------------------
Principal
Coupon Maturity Amount Value
UNITED STATES GOVERNMENT
OBLIGATIONS 56.27%
United States Treasury Bills 8.62%
- --------------------------------------------------------------------------------
Yield 4.67% 07/03/97 $20,000,000 $ 19,994,811
United States Treasury Notes 47.65%
- --------------------------------------------------------------------------------
5.50% 09/30/97 30,000,000 30,008,887
8.75% 10/15/97 50,000,000 50,476,109
5.25% 12/31/97 20,000,000 19,977,186
6.125% 03/31/98 10,000,000 10,023,576
-----------
110,485,758
- --------------------------------------------------------------------------------
Total United States Government Obligations 130,480,569
- --------------------------------------------------------------------------------
(cost $130,480,569)
REPURCHASE AGREEMENT 42.77%
Joint Repurchase
Agreement Accounts A,
B & C, repurchase
price $99,181,850,
collateralized in
a joint repurchase
account
(cost $99,165,638) 5.89% 07/01/97 99,165,638 99,165,638
- --------------------------------------------------------------------------------
Total Investments 99.04% 229,646,207
- --------------------------------------------------------------------------------
(cost of $229,646,207)
Other assets and liabilities, net .96% 2,236,024
-----------
NET ASSETS 100% $231,882,231
============
See notes to portfolios of investments.
37
<PAGE>
U.S. GOVERNMENT SECURITIES SAVINGS
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS JUNE 30, 1997
- --------------------------------------------------------------------------------
Principal
Coupon Maturity Amount Value
UNITED STATES GOVERNMENT AND
AGENCY OBLIGATIONS 100.20%
United States Treasury Bills 1.44%
- --------------------------------------------------------------------------------
Discount Yield 4.90% 07/17/97 $ 10,000,000 $ 9,978,226
Federal Farm Credit Bank 33.09%
- --------------------------------------------------------------------------------
Variable Rates: 5.545% 10/01/97 50,000,000 49,996,669
5.271% 11/26/97 34,000,000 33,994,217
5.251% 05/28/98 25,000,000 24,995,624
5.380% 07/01/97 19,000,000 19,000,000
5.360% 09/02/97 15,000,000 14,999,309
5.492% 10/02/97 20,000,000 19,997,000
5.631% 02/03/98 25,000,000 24,994,352
Fixed Rates:
5.850% 08/01/97 6,000,000 6,000,404
5.270% 09/02/97 2,615,000 2,612,877
11.900% 10/20/97 11,415,000 11,626,264
5.600% 11/03/97 5,000,000 5,000,784
4.800% 01/14/98 250,000 248,695
5.450% 03/03/98 10,000,000 9,973,867
6.130% 04/23/98 500,000 500,453
5.810% 06/30/98 4,955,000 4,945,153
-----------
228,885,668
Federal Home Loan Bank 38.13%
- --------------------------------------------------------------------------------
Discount Note Yield 5.30% 07/01/97 3,470,000 3,470,000
Variable Rates: 5.250% 08/14/97 14,000,000 13,998,990
5.519% 09/22/97 50,000,000 49,993,369
5.519% 09/26/07 20,000,000 19,997,541
5.563% 12/16/97 10,000,000 9,999,327
5.530% 12/19/97 20,000,000 19,994,458
5.527% 01/02/98 5,000,000 4,998,972
5.575% 03/19/98 1,000,000 999,258
Fixed Rates: 5.830% 09/18/97 830,000 830,482
5.900% 10/16/97 3,000,000 3,000,000
7.680% 11/28/97 40,000 40,252
5.450% 12/26/97 1,810,000 1,806,230
5.681% 01/13/98 5,330,000 5,329,476
6.000% 01/13/98 500,000 500,569
5.592% 01/16/98 1,000,000 997,951
5.490% 01/16/98 1,095,000 1,093,709
7.930% 01/20/98 250,000 252,863
5.710% 01/21/98 9,600,000 9,597,446
5.810% 01/23/98 15,030,000 15,023,095
38
<PAGE>
U.S. GOVERNMENT SECURITIES SAVINGS
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS JUNE 30, 1997
- --------------------------------------------------------------------------------
Principal
Coupon Maturity Amount Value
Federal Home Loan Bank
- --------------------------------------------------------------------------------
Fixed Rates: (cont'd) 5.875% 01/30/98 $10,000,000 $ 9,999,544
4.920% 02/09/98 5,000,000 4,975,500
5.805% 02/13/98 5,000,000 4,990,849
4.810% 02/23/98 1,000,000 994,090
5.875% 03/18/98 5,000,000 4,999,443
5.790% 03/18/98 785,000 786,302
5.900% 03/19/98 5,000,000 5,000,000
5.875% 03/24/98 11,900,000 11,900,000
5.910% 03/24/98 10,000,000 10,000,000
5.910% 04/02/98 5,950,000 5,947,452
5.955% 04/07/98 10,000,000 9,999,401
6.020% 04/15/98 10,000,000 9,999,373
6.120% 04/17/98 165,000 165,168
5.260% 04/27/98 200,000 198,834
6.280% 05/05/98 4,700,000 4,700,000
5.270% 05/13/98 200,000 198,757
6.010% 06/24/98 17,000,000 17,000,000
-----------
263,778,701
Student Loan Marketing Association 27.54%
- --------------------------------------------------------------------------------
Variable Rates: 5.260% 07/17/97 50,000,000 49,999,927
5.250% 07/18/97 30,000,000 29,999,321
6.217% 07/23/97 1,000,000 1,000,429
5.250% 08/21/97 2,000,000 2,000,000
5.202% 10/01/97 10,000,000 9,997,105
5.241% 10/14/97 21,000,000 20,996,545
5.184% 10/16/97 12,000,000 11,990,755
5.281% 10/17/97 21,925,000 21,919,274
5.418% 10/30/97 1,300,000 1,300,411
5.420% 11/20/97 2,825,000 2,825,194
5.242% 11/24/97 560,000 559,785
5.270% 12/18/97 13,000,000 13,000,000
5.418% 01/21/98 2,000,000 2,000,662
Fixed Rates: 5.965% 09/12/97 2,445,000 2,445,025
5.990% 09/18/97 5,000,000 5,001,848
5.500% 10/24/97 5,000,000 4,997,165
5.630% 12/24/97 10,000,000 9,979,403
5.350% 02/25/98 500,000 498,718
-----------
190,511,567
- --------------------------------------------------------------------------------
Total Investments 100.20% 693,154,162
- --------------------------------------------------------------------------------
(cost $693,154,162)
Other assets and liabilities, net (.20)% (1,384,857)
-----------
NET ASSETS 100% $691,769,305
- ----------
See notes to portfolios of investments.
39
<PAGE>
UNITED SERVICES NEAR-TERM TAX FREE
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS JUNE 30, 1997
- --------------------------------------------------------------------------------
Principal
Municipal Bonds 81.87% Coupon Maturity Amount Value
California 2.60%
- --------------------------------------------------------------------------------
West Hollywood
Certificates of
Participation,
Series A 12.00% 02/01/00 $ 170,000 $ 191,037
Connecticut 4.39%
- --------------------------------------------------------------------------------
Bridgeport, Series A, GO 6.00% 03/01/06 300,000 323,250
Florida 8.83%
- --------------------------------------------------------------------------------
Fort Lauderdale Park
Project, GO 4.80% 01/01/01 375,000 379,687
Palm Beach County
Solid Waste, Revenue 7.90% 07/01/97 270,000 270,000
-----------
649,687
Georgia 4.40%
- --------------------------------------------------------------------------------
Columbus Water & Sewer,
Revenue 6.65% 05/01/09 300,000 323,625
Iowa 4.27%
- --------------------------------------------------------------------------------
Finance Authority Hospital
Facility, Revenue 5.15% 07/01/04 310,000 314,263
Illinois 2.82%
- --------------------------------------------------------------------------------
Kankakee Sewer, Revenue 6.30% 05/01/99 200,000 207,250
Nebraska 3.64%
- --------------------------------------------------------------------------------
Nebraska Public Power
District, Revenue 5.70% 01/01/05 255,000 268,069
Nevada 6.99%
- --------------------------------------------------------------------------------
Nevada State Municipal Bond
Bank Project #51,
Series A, GO 5.10% 01/01/08 250,000 251,875
Washoe County Gas & Water
Facilities, Revenue 6.30% 12/01/14 250,000 262,500
-----------
514,375
New Jersey 4.10%
- --------------------------------------------------------------------------------
Washington Township Board
of Education, GO 5.10% 02/01/08 300,000 301,500
Ohio 2.18%
- --------------------------------------------------------------------------------
Ohio State Building
Authority, Revenue 7.30% 03/01/02 150,000 160,500
Oklahoma 3.22%
- --------------------------------------------------------------------------------
University of Oklahoma,
Revenue 12.00% 03/01/00 200,000 237,250
Oregon 8.16%
- --------------------------------------------------------------------------------
Marion & Palk Counties
Schools, GO 4.50% 10/01/03 300,000 297,375
Portland Water System,
Revenue 4.80% 08/01/05 300,000 303,375
-----------
600,750
40
<PAGE>
UNITED SERVICES NEAR-TERM TAX FREE
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS JUNE 30, 1997
- --------------------------------------------------------------------------------
Principal
MUNICIPAL BONDS Coupon Maturity Amount Value
- --------------------------------------------------------------------------------
Puerto Rico 4.25%
- --------------------------------------------------------------------------------
Municipal Finance
Agency, Series A,
Revenue 5.70% 07/01/03 $ 300,000 $ 313,125
South Carolina 3.57%
- --------------------------------------------------------------------------------
Charleston County Resource
Recovery, Revenue 9.25% 01/01/10 250,000 262,580
Texas 5.75%
- --------------------------------------------------------------------------------
Comal Independent School
District, Revenue 4.50% 02/01/98 105,000 105,401
Dallas Civic Center,
Revenue 6.10% 01/01/08 205,000 205,767
Harris County, Revenue 10.00% 10/01/99 100,000 111,875
-----------
423,043
Utah 8.43%
- --------------------------------------------------------------------------------
Municipal Finance COOP
Local Government,
Revenue 6.40% 08/01/09 300,000 317,625
Weber County School
District, Series A,
GO 5.15% 06/15/08 300,000 303,000
-----------
620,625
Washington 4.27%
- --------------------------------------------------------------------------------
King County, Series A,
GO 5.80% 12/01/06 300,000 314,625
- --------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS 6,025,554
- --------------------------------------------------------------------------------
(cost $6,006,917)
REPURCHASE AGREEMENT 16.62%
Joint Repurchase
Agreement Account A,
repurchase price
$1,223,507, repurchase
in a joint repurchase
account (cost
$1,223,305) 5.95% 07/01/97 1,223,305 1,223,305
- --------------------------------------------------------------------------------
Total Investments 98.49% 7,248,859
- --------------------------------------------------------------------------------
(cost of $7,230,222)
Other assets and liabilities, net 1.51% 111,096
-----------
NET ASSETS 100% $7,359,955
See notes to portfolios of investments.
41
<PAGE>
U.S. TAX FREE
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS JUNE 30, 1997
- --------------------------------------------------------------------------------
Principal
MUNICIPAL BONDS 92.41% Coupon Maturity Amount Value
- --------------------------------------------------------------------------------
Arizona 2.75%
- --------------------------------------------------------------------------------
Coconino County School
District, Refunding (WI) 5.00% 07/01/06 $ 500,000 $ 504,375*
Connecticut 2.94%
- --------------------------------------------------------------------------------
Connecticut State
Development Authority
Water Facility Revenue,
Refunding 7.25% 06/01/20 500,000 538,125
Florida 4.21%
- --------------------------------------------------------------------------------
Florida State Board of
Education Capital
Outlay GO Unlimited
Tax, Refunding,
Series A 6.625% 06/01/07 700,000 770,875#
Georgia 3.55%
- --------------------------------------------------------------------------------
St. Mary's Housing
Authority Multifamily
Revenue, Refunding 7.375% 09/01/22 395,000 417,219
Savannah Hospital
Authority Revenue 6.20% 07/01/23 230,000 232,875
-----------
650,094
Hawaii 2.20%
- --------------------------------------------------------------------------------
Hawaii State Department
of Budget and Finance 6.00% 07/01/19 400,000 403,000
Illinois 8.07%
- --------------------------------------------------------------------------------
Illinois Development
Financing Authority
Revenue, Series B 6.25% 09/01/17 250,000 256,875
Illinois Health Facility
Authority Revenue,
Series A 6.80% 01/01/22 400,000 417,000
Illinois Regional
Transportation Authority
Revenue, Series A 7.20% 11/01/20 250,000 301,250
Lake County School District
GO Unlimited 5.375% 01/01/11 500,000 503,750
-----------
1,478,875
Indiana 5.86%
- --------------------------------------------------------------------------------
Indiana Health Facility
Financing Authority,
Revenue 5.75% 08/01/08 540,000 551,475
Warren TWP Independent
School Building, Revenue,
Series A 6.00% 07/15/12 500,000 521,875
-----------
1,073,350
Massachusetts 2.89%
- --------------------------------------------------------------------------------
Massachusetts State Health &
Educational Facilities
Authority Revenue, Refunding
Issue A 7.10% 07/01/21 500,000 530,625
42
<PAGE>
U.S. TAX FREE
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS JUNE 30, 1997
- --------------------------------------------------------------------------------
Principal
MUNICIPAL BONDS Coupon Maturity Amount Value
- --------------------------------------------------------------------------------
Mississippi 2.20%
- --------------------------------------------------------------------------------
Vicksburg Leased Housing
Corp. Housing Revenue,
Refunding, Series A 6.125% 02/15/22 $ 400,000 $ 403,500
Nevada 4.72%
- --------------------------------------------------------------------------------
Clark County Las Vegas
Convention & Visitors
Authority, GO Limited
Tax 5.50% 07/01/17 870,000 864,563
North Carolina 3.76%
- --------------------------------------------------------------------------------
North Carolina Eastern
Municipal Power Agency,
Revenue, Refunding,
Series A 5.60% 01/01/10 675,000 688,500
Ohio 2.63%
- --------------------------------------------------------------------------------
Olentangy Local School
District, GO Limited
Tax, Series A 6.25% 12/01/15 240,000 255,900
South Euclid Special
Assessment, GO Limited 6.70% 12/01/14 200,000 226,000
-----------
481,900
Oklahoma 1.51%
- --------------------------------------------------------------------------------
Muskogee Pollution Control
Revenue, Series A 7.00% 03/01/17 270,000 276,248
Pennsylvania 1.99%
- --------------------------------------------------------------------------------
Allegheny County Hospital
Development Authority,
Revenue, Refunding 6.00% 05/01/20 365,000 365,000
Rhode Island 5.59%
- --------------------------------------------------------------------------------
North Providence, GO
Unlimited Tax,
Series A 6.05% 07/01/13 500,000 531,875
Providence Public Building
Authority Revenue,
Series B 7.25% 12/15/10 450,000 492,188
-----------
1,024,063
South Carolina 4.30%
- --------------------------------------------------------------------------------
Charleston County Resource
Recovery Revenue,
Series A 9.25% 01/01/10 750,000 787,740
Tennessee 1.55%
- --------------------------------------------------------------------------------
State Development Authority
Revenue, Series 1992 7.00% 10/01/11 265,000 285,206
43
<PAGE>
U.S. TAX FREE
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS JUNE 30, 1997
- --------------------------------------------------------------------------------
Principal
MUNICIPAL BONDS Coupon Maturity Amount Value
- --------------------------------------------------------------------------------
Texas 17.40%
- --------------------------------------------------------------------------------
Bexar County Health
Facility Development,
Revenue 6.90% 08/15/13 $ 500,000 $ 558,125
Boerne Texas
Certificates of
Obligation, GO
Limited Tax: 4.90% 02/01/98 25,000 25,040
5.00% 02/01/99 25,000 25,031
5.10% 02/01/00 20,000 20,025
5.25% 02/01/01 30,000 30,000
5.35% 02/01/02 25,000 25,031
5.45% 02/01/03 30,000 30,038
5.50% 02/01/04 25,000 25,031
5.65% 02/01/05 30,000 30,150
5.75% 02/01/06 60,000 60,300
Brazos County Health
Facility Revenue,
Refunding, Series B: 6.00% 01/01/13 210,000 212,100
6.00% 01/01/19 300,000 300,375
Collin County Texas Housing
Finance Corp. Multifamily
Revenue, Series A-2: 6.00% 03/01/10 100,000 102,250
6.00% 03/01/11 230,000 235,175
Comal Independent School
District: 4.50% 02/01/98 110,000 110,420
4.75% 02/01/99 230,000 230,575
4.90% 02/01/00 240,000 240,300
5.00% 02/01/01 255,000 255,319#
Pflugerville Independent
School District,
Refunding 5.45% 08/15/13 200,000 201,250
Tara Glen Municipal District,
GO Unlimited Tax: 5.75% 03/01/20 300,000 304,125
5.80% 03/01/21 165,000 167,887
-----------
3,188,547
Virginia 2.33%
- --------------------------------------------------------------------------------
State Housing Development
Authority Multifamily,
Revenue, Series E 5.90% 11/01/17 425,000 428,187
Washington 1.74%
- --------------------------------------------------------------------------------
Seattle Indian Services,
Refunding Revenue 6.50% 11/01/17 305,000 318,725
West Virginia 8.29%
- --------------------------------------------------------------------------------
Berkeley County Hospital
Revenue, Refunding: 6.50% 11/01/09 115,000 119,168
6.50% 11/01/22 280,000 287,000
West Virginia Housing
Development Revenue,
Series A 6.05% 05/01/27 790,000 806,788
West Virginia State
Hospital Finance
Authority Revenue 6.10% 01/01/18 300,000 306,000
-----------
1,518,956
44
<PAGE>
U.S. TAX FREE
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS JUNE 30, 1997
- --------------------------------------------------------------------------------
Principal
MUNICIPAL BONDS Coupon Maturity Amount Value
- --------------------------------------------------------------------------------
Wyoming 1.93%
- --------------------------------------------------------------------------------
Wyoming Community
Development Authority,
Series A 6.10% 06/01/33 $ 350,000 $ 354,375
- --------------------------------------------------------------------------------
Total Municipal Bonds 16,934,829
- --------------------------------------------------------------------------------
(cost $16,587,182)
REPURCHASE AGREEMENT 8.69%
Joint Repurchase Agreement
Account A, repurchase
price $1,593,720,
collateralized in a
joint repurchase account
(cost $1,593,457) 5.95% 07/01/97 1,593,457 1,593,457
- --------------------------------------------------------------------------------
Total Investments 101.10% 18,528,286
- --------------------------------------------------------------------------------
(cost of $18,180,639)
Other assets and liabilities, net (1.10)% (200,879)
-----------
NET ASSETS 100% $18,327,407
-----------
See notes to portfolios of investments.
45
<PAGE>
U.S. INCOME
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS JUNE 30, 1997
- --------------------------------------------------------------------------------
COMMON STOCKS 86.26% Shares Value
- --------------------------------------------------------------------------------
Banks 1.26%
- --------------------------------------------------------------------------------
Banc One Corporation 2,500 $ 121,094
Business Services 1.09%
- --------------------------------------------------------------------------------
Dun & Bradstreet Corporation 4,000 105,000
Chemicals & Pharmaceuticals 4.08%
- --------------------------------------------------------------------------------
Energy Group plc, ADR 2,062 87,377
Hanson, plc, ADR 2,062 51,550
Pharmacia & Upjohn, Inc 3,000 104,250
Warner-Lambert Company 1,200 149,100
-----------
392,277
Communication Equipment 4.18%
- --------------------------------------------------------------------------------
Lucent Technologies, Inc. 3,148 226,853
Scientific-Atlanta, Inc. 8,000 175,000
-----------
401,853
Communication Services 1.24%
- --------------------------------------------------------------------------------
Comsat Corporation 5,000 119,062
Computers & Data Processing 2.22%
- --------------------------------------------------------------------------------
Electronic Data Services Corp 2,000 82,000
First Data Corporation 3,000 131,813
-----------
213,813
Electric Services 18.09%
- --------------------------------------------------------------------------------
American Electric Power, Inc. 4,000 168,000
Baltimore Gas & Electric Company 3,000 80,062
Central & South West Corporation 5,000 106,250
DPL, Inc. 4,000 98,500
DQE, Inc. 4,000 113,000
Duke Power Company 5,664 271,518
FPL Group, Inc. 3,000 138,188
Houston Industries 4,000 85,750
Minnesota Power & Light Company 3,000 91,125
Sierra Pacific Resources 5,000 160,000
Southern Company 7,000 153,125
TNP Enterprises 2,000 46,375
Washington Water Power Company 5,000 98,125
Western Resources, Inc. 4,000 129,750
-----------
1,739,768
46
<PAGE>
U.S. INCOME
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS JUNE 30, 1997
- --------------------------------------------------------------------------------
COMMON STOCKS Shares Value
- --------------------------------------------------------------------------------
Entertainment .23%
- --------------------------------------------------------------------------------
Ascent Entertainment Group 2,450 $ 22,356
Food & Beverages 2.85%
- --------------------------------------------------------------------------------
H.J. Heinz Company 3,500 161,437
PepsiCo, Inc. 3,000 112,688
-----------
274,125
Instruments 1.09%
- --------------------------------------------------------------------------------
Baxter International, Inc. 2,000 104,500
Insurance 1.31%
- --------------------------------------------------------------------------------
Travelers Group, Inc. 2,000 126,125
Motor Vehicles 1.18%
- --------------------------------------------------------------------------------
Ford Motor Company 3,000 113,250
Natural Gas Transmission & Distribution 7.47%
- --------------------------------------------------------------------------------
AGL Resources, Inc. 5,300 108,650
Consolidated Natural Gas Company 3,000 161,437
MCN Energy Group, Inc. 4,000 122,500
New Jersey Resources Corp. 5,000 156,875
Peoples Energy 4,500 168,469
-----------
717,931
Oil & Gas Extraction 1.48%
- --------------------------------------------------------------------------------
Enron Corporation 3,500 142,844
Petroleum Refining 4.79%
- --------------------------------------------------------------------------------
Amoco Corporation 1,000 86,938
Chevron Corporation 1,500 110,906
Exxon Corporation 2,000 123,000
Mobil Corporation 2,000 139,750
-----------
460,594
Photography 2.84%
- --------------------------------------------------------------------------------
Eastman Kodak 1,500 115,125
Xerox Corporation 2,000 157,750
-----------
272,875
47
<PAGE>
U.S. INCOME
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS JUNE 30, 1997
- --------------------------------------------------------------------------------
COMMON STOCKS Shares Value
- --------------------------------------------------------------------------------
Real Estate Investment Trusts 9.87%
- --------------------------------------------------------------------------------
American Health Properties, Inc. 3,000 $ 75,375
Beacon Properties 4,000 133,500
Capstead Mortgage Corporation 4,000 98,750
Commercial Net Lease Realty 10,000 153,125
Essex Property Trust, Inc. 3,000 96,375
Evans Withycombe Residential 5,000 103,750
Glimcher Realty Trust 5,000 103,125
Liberty Property Trust 4,000 99,500
Starwood Lodging Trust 2,000 85,375
-----------
948,875
Telecommunications 19.85%
- --------------------------------------------------------------------------------
360 Communications Company 4,166 71,343*
AT&T Corporation 3,500 122,719
Bell Atlantic Corporation 1,500 113,812
Century Telephone Enterprises 3,500 117,906
Frontier Corporation 6,500 129,594
GTE Corporation 3,500 153,562
MCI Communications Corporation 3,000 114,844
NYNEX Corporation 1,500 86,437
SBC Communications, Inc. 2,000 123,750
Sprint Corporation 3,000 157,875
Telebras, ADR 1,500 227,625
Telefonica de Espana,S.A., ADR 2,000 172,500
US West Communications Group 5,000 188,438
WorldCom, Inc. 4,000 128,000
-----------
1,908,405
Wholesale Food Supplies 1.14%
- --------------------------------------------------------------------------------
Sysco Corporation 3,000 109,500
- --------------------------------------------------------------------------------
Total Common Stocks 8,294,247
- --------------------------------------------------------------------------------
(cost $7,181,665)
48
<PAGE>
U.S. INCOME
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS JUNE 30, 1997
- --------------------------------------------------------------------------------
PREFERRED STOCKS 3.68% Shares Value
- --------------------------------------------------------------------------------
Banks 1.01%
- --------------------------------------------------------------------------------
Allied Irish Banks, 11.875%, Series 3,500 $ 97,125
Real Estate Investment Trusts 2.67%
Public Storage, Inc., 8.875%, Series G 5,000 127,813
Walden Resources Property, 9.20% Unit 5,000 128,750
-----------
256,563
- --------------------------------------------------------------------------------
Total Preferred Stocks 353,688
- --------------------------------------------------------------------------------
(cost $340,050)
Principal
CONVERTIBLE SECURITIES 1.79% Amount
Petrochemical and Coal Products
- --------------------------------------------------------------------------------
Atlantic Richfield Co. Exchangeable Note,
9%,9/15/97 mandatory exchangeable at
maturity into Lyondell Petrochemical
Company common stock $ 8,000 172,000
- --------------------------------------------------------------------------------
Total Convertible Securities 172,000
- --------------------------------------------------------------------------------
(cost $194,750)
REPURCHASE AGREEMENT 8.20%
Joint Repurchase Agreement Account A,
5.95%, due 7/1/97, repurchase price
$788,454, collateralized in a joint
repurchase account (cost $788,324) 788,324 788,324
- --------------------------------------------------------------------------------
Total Investments 99.93% 9,608,259
- --------------------------------------------------------------------------------
(cost of $8,504,789)
Other assets and liabilities, net .07% 6,590
-----------
NET ASSETS 100% $9,614,849
-----------
See notes to portfolios of investments.
49
<PAGE>
U.S. ALL AMERICAN EQUITY
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS JUNE 30, 1997
- --------------------------------------------------------------------------------
COMMON STOCKS 82.71% Shares Value
- --------------------------------------------------------------------------------
Aircraft & Aerospace 1.39%
- --------------------------------------------------------------------------------
Allied Signal, Inc. 1,100 $ 92,400
The Boeing Company 2,950 156,534
Rockwell International Corp. 1,800 106,200
-----------
355,134
Apparel .31%
Nautica Enterprises, Inc. 3,000 79,312*
Banks 3.83%
- --------------------------------------------------------------------------------
Banc One Corporation 1,760 85,250
BankAmerica Corporation 5,000 322,813
Chase Manhattan Corporation 2,400 232,950
Citicorp 1,600 192,900
NationsBank Corporation 2,200 141,900
-----------
975,813
Beverages 4.69%
- --------------------------------------------------------------------------------
Anheuser Busch Co. 2,000 83,875
Coca Cola Co. 11,000 742,500
PepsiCo, Inc. 8,200 308,013
Seagram Company Ltd. 1,500 60,375
-----------
1,194,763
Broadcast/Media .45%
- --------------------------------------------------------------------------------
Tele-Communications, Class A 2,200 32,725*
US West Media Group 1,800 36,450*
Viacom, Inc., Class B 1,500 44,531*
-----------
113,706
Business Services .29%
- --------------------------------------------------------------------------------
Dun & Bradstreet Corporation 2,000 52,500
Norwood Promotional Products 1,500 21,000*
-----------
73,500
Chemicals 1.71%
- --------------------------------------------------------------------------------
Dow Chemical Company 1,100 95,838
E.I. Du Pont de Nemours & Co. 5,400 339,525
-----------
435,363
Communication Equipment .96%
- --------------------------------------------------------------------------------
InterVoice, Inc. 3,000 27,562*
Lucent Technologies, Inc. 3,000 216,188
-----------
243,750
50
<PAGE>
U.S. ALL AMERICAN EQUITY
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS JUNE 30, 1997
- --------------------------------------------------------------------------------
COMMON STOCKS Shares Value
- --------------------------------------------------------------------------------
Computer & Office Equipment 5.18%
- --------------------------------------------------------------------------------
Cisco Systems, Inc. 3,000 $ 201,375*
COMPAQ Computer Corporation 1,000 99,250*
Diebold, Inc. 3,000 117,000
Hewlett-Packard Company 4,000 224,000
IBM Corporation 5,600 505,050
Minnesota Mining & Manufacturing Co. 1,700 173,400
-----------
1,320,075
Data Processing & Software 7.32%
- --------------------------------------------------------------------------------
Automatic Data Processing, Inc. 1,000 47,000
BISYS Group, Inc. 7,000 292,250*
Ceridian Corporation 2,000 84,500*
Computer Associates International 2,000 111,375
First Data Corporation 10,000 439,375
Informix Corporation 1,000 9,000*
Microsoft Corporation 5,600 707,700*
Oracle Corporation 3,475 175,053*
-----------
1,866,253
Eating & Drinking Places .72%
- --------------------------------------------------------------------------------
McDonald's Corporation 3,800 183,588
Electric Utility .16%
- --------------------------------------------------------------------------------
PG&E Corporation 1,700 41,225
Electronics & Components 4.50%
- --------------------------------------------------------------------------------
Carlisle Cos., Inc. 3,000 104,625
Emerson Electric Co. 1,800 99,112
Intel Corporation 4,200 595,613
Motorola, Inc. 2,300 174,800
Technitrol, Inc. 2,000 54,750
Texas Instruments, Inc. 1,400 117,687
-----------
1,146,587
Entertainment 1.52%
- --------------------------------------------------------------------------------
Liberty Media Group, Class A 825 19,594*
The Walt Disney Company 3,700 296,925
Time Warner, Inc. 1,500 72,375
-----------
388,894
51
<PAGE>
U.S. ALL AMERICAN EQUITY
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS JUNE 30, 1997
- --------------------------------------------------------------------------------
COMMON STOCKS Shares Value
- --------------------------------------------------------------------------------
Financial Services 3.69%
- --------------------------------------------------------------------------------
American Express Company 2,900 $ 216,050
AMRESCO, Inc. 2,000 43,000*
Credit Acceptance Corporation 5,000 64,375*
Fannie Mae 7,000 305,375
Freddie Mac 3,800 130,625
Green Tree Financial Corp. 3,000 106,875
J.P. Morgan & Company, Inc. 700 73,063
-----------
939,363
Food 1.09%
- --------------------------------------------------------------------------------
Archer-Daniels-Midland Company 2,205 51,817
H.J. Heinz Company 1,500 69,187
Kellogg Company 900 77,063
Sara Lee Corporation 1,900 79,088
-----------
277,155
Funeral Services .19%
- --------------------------------------------------------------------------------
Equity Corporation International 2,000 48,375*
Healthcare & Equipment 3.05%
- --------------------------------------------------------------------------------
Allegiance Corporation 220 5,995
Columbia/HCA Healthcare Corp. 3,600 141,525
Humana, Inc. 5,000 115,625
Johnson & Johnson Company 8,000 515,000
-----------
778,145
Household Appliances 3.49%
- --------------------------------------------------------------------------------
General Electric Company 12,800 836,800
Helen of Troy Ltd. 2,000 51,250*
-----------
888,050
Household Products 2.54%
- --------------------------------------------------------------------------------
Colgate Palmolive 1,400 91,350
Gillette Co. 1,400 132,650
Procter & Gamble Co. 3,000 423,750
-----------
647,750
Instruments .34%
- --------------------------------------------------------------------------------
Guidant Corporation 352 29,920
Thermedics Detection, Inc. 2,200 26,400*
Thermedics, Inc. 2,000 31,375*
-----------
87,695
52
<PAGE>
U.S. ALL AMERICAN EQUITY
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS JUNE 30, 1997
- --------------------------------------------------------------------------------
COMMON STOCKS Shares Value
- --------------------------------------------------------------------------------
Insurance 4.15%
- --------------------------------------------------------------------------------
Allstate Corp. 2,297 $ 167,681
American Annuity Group, Inc. 7,000 126,000
American International Group 2,400 358,500
General RE Corporation 800 145,600
Hartford Financial Services Group 400 33,100
Travelers Group, Inc. 3,600 227,025
-----------
1,057,906
Machinery .34%
- --------------------------------------------------------------------------------
Caterpillar, Inc. 800 85,900
Motor Vehicles & Parts 1.93%
- --------------------------------------------------------------------------------
Chrysler Corporation 4,130 135,515
Ford Motor Co. 4,000 151,000
General Motors Corporation 3,000 167,062
Lo-Jack Corporation 2,000 28,750*
ITT Industries, Inc. 400 10,300
-----------
492,627
Oil & Gas Extraction .82%
- --------------------------------------------------------------------------------
Atlantic Richfield Co. 1,200 84,600
Enron Corporation 3,000 122,438
-----------
207,038
Petroleum Refining 5.00%
- --------------------------------------------------------------------------------
AMOCO Corp. 1,700 147,793
Chevron Corporation 2,600 192,237
Exxon Corporation 5,800 356,700
Mobil Corp. 3,200 223,600
Phillips Petroleum Co. 1,100 48,125
Royal Dutch Petroleum 3,600 195,750
Texaco, Inc. 1,000 108,750
-----------
1,272,955
53
<PAGE>
U.S. ALL AMERICAN EQUITY
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS JUNE 30, 1997
- --------------------------------------------------------------------------------
COMMON STOCKS Shares Value
- --------------------------------------------------------------------------------
Pharmaceuticals 9.14%
- --------------------------------------------------------------------------------
Abbott Labs 3,000 $ 200,250
American Home Products 2,200 168,300
Baxter International, Inc. 1,100 57,475
Bristol Myers Squibb 3,400 275,400
Eli Lilly & Company 3,198 349,581
Merck & Company, Inc. 5,000 517,500
Pfizer, Inc. 3,400 406,300
Schering Plough 4,800 229,800
Warner-Lambert Company 1,000 124,250
-----------
2,328,856
Photography 1.07%
- --------------------------------------------------------------------------------
Eastman Kodak Company 2,300 176,525
Xerox Corporation 1,200 94,650
-----------
271,175
Residential Construction .09%
- --------------------------------------------------------------------------------
Continental Homes Holding Corp. 1,300 22,913
Retail 4.16%
- --------------------------------------------------------------------------------
Amway Asia Pacific Ltd. 4,000 174,500
Best Buy Company, Inc. 5,000 74,375*
Garden Ridge Corporation 6,000 75,000*
Home Depot, Inc. 2,800 193,025
OfficeMax, Inc. 5,000 72,187*
Sears, Roebuck and Company 2,400 129,000
Toys "R" Us, Inc. 1,100 38,500*
Wal-Mart Stores, Inc. 9,000 304,313
-----------
1,060,900
Sanitary Services .44%
Browning Ferris Industries, Inc. 1,600 53,200
Waste Management, Inc. 1,800 57,825
-----------
111,025
54
<PAGE>
U.S. ALL AMERICAN EQUITY
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS JUNE 30, 1997
- --------------------------------------------------------------------------------
COMMON STOCKS Shares Value
- --------------------------------------------------------------------------------
Telecommunications 6.11%
- --------------------------------------------------------------------------------
360 Communications Company 5,466 $ 93,605*
AT&T Corp. 8,500 298,031
Airtouch Communications, Inc. 3,000 82,125*
Ameritech Corp. 2,000 135,875
Bell Atlantic Corporation 1,600 121,400
Bellsouth Corp. 3,600 166,950
GTE Corporation 3,800 166,725
MCI Communications Corp. 2,700 103,359
NCR Corporation 468 13,923*
NYNEX Corporation 1,700 97,963
SBC Communications, Inc. 2,200 136,125
Sprint Corporation 1,400 73,675
US West Communications Group 1,800 67,838
-----------
1,557,594
Tobacco 2.04%
- --------------------------------------------------------------------------------
Philip Morris, Inc. 11,700 519,188
- --------------------------------------------------------------------------------
Total Common Stocks 21,072,573
- --------------------------------------------------------------------------------
(cost $12,143,584)
Principal
REPURCHASE AGREEMENT 16.28% Amount
Joint Repurchase Agreement Account A,
5.95%, due 7/1/97, repurchase price
$4,148,497, collateralized in a joint
repurchase account (cost $4,147,811) $4,147,811 $ 4,147,811
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS 98.99%
- --------------------------------------------------------------------------------
(cost of $16,291,395)
Other assets and liabilities, net 1.01% 257,988
-----------
NET ASSETS 100% $25,478,372
------------
See notes to portfolios of investments.
55
<PAGE>
U.S. REAL ESTATE
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS JUNE 30, 1997
- --------------------------------------------------------------------------------
COMMON STOCKS 101.56% Shares Value
- --------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS 88.82%
Apartments 17.65%
- --------------------------------------------------------------------------------
Avalon Properties, Inc. 13,500 $ 386,438
Bay Apartment Communities 14,000 518,000
Camden Property Trust 13,000 411,125
Equity Residential Property Trust 6,500 308,750
Essex Property Trust, Inc. 13,000 417,625
Security Capital Pacific Trust 18,000 411,750
------------
2,453,688
Diversified 9.40%
- --------------------------------------------------------------------------------
Duke Realty Investments, Inc. 9,000 364,500
Liberty Property Trust 19,500 485,062
Spieker Properties, Inc. 13,000 457,438
------------
1,307,000
Hotel/Restaurant 12.92%
- --------------------------------------------------------------------------------
FelCor Suite Hotels, Inc. 14,000 521,500
Patriot American Hospitality, Inc. 22,000 561,000
Starwood Lodging Trust 6,500 277,469
Sunstone Hotel Investors, Inc. 30,000 435,000
------------
1,794,969
Manufactured Homes 6.86%
- --------------------------------------------------------------------------------
Manufactured Home Communities 19,500 449,719
Sun Communities, Inc. 15,000 503,437
------------
953,156
Office Property 7.98%
- --------------------------------------------------------------------------------
Cornerstone Properties, Inc. 20,000 307,500
Crescent Real Estate Equities 10,000 317,500
Parkway Properties, Inc. 10,000 268,750
Trinet Corp. Realty Trust, Inc. 6,500 214,906
------------
1,108,656
Regional Malls 5.13%
- --------------------------------------------------------------------------------
Simon DeBartolo Group, Inc. 17,000 544,000
Westfield America, Inc. 10,000 168,750*
------------
712,750
Shopping Centers 5.16%
- --------------------------------------------------------------------------------
Developers Diversified Realty Corp. 10,000 400,000
Excel Realty Trust, Inc. 12,000 316,500
------------
716,500
56
<PAGE>
U.S. REAL ESTATE
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS JUNE 30, 1997
- --------------------------------------------------------------------------------
COMMON STOCKS Shares Value
- --------------------------------------------------------------------------------
Storage 3.51%
- --------------------------------------------------------------------------------
Public Storage, Inc. 16,700 $ 488,475
Warehouse/Industrial 20.21%
Arden Realty Group, Inc. 14,000 364,000
Bedford Property Investors, Inc. 29,000 583,625
Brandywine Realty Trust 11,500 232,875
Cali Realty Corporation 8,000 272,000
CarrAmerica Realty Corporation 15,000 431,250
First Industrial Realty 14,000 409,500
Reckson Associates Realty Corp. 22,400 515,200
------------
2,808,450
OTHER 12.74%
Hotels & Motels 5.20%
- --------------------------------------------------------------------------------
Aztar Corporation 13,000 91,812*
Doubletree Corporation 5,000 205,625*
Host Marriott Corporation 23,900 425,719*
------------
723,156
Industrial Construction 1.14%
- --------------------------------------------------------------------------------
Lend Lease Corporation Ltd. 7,500 158,298
Office Property Management .09%
- --------------------------------------------------------------------------------
Crescent Operating, Inc. 1,000 12,000*
Real Estate Development 6.31%
- --------------------------------------------------------------------------------
Catellus Development Corp. 25,000 453,125*
Trizec Hahn Corporation 19,800 423,225
------------
876,350
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS 101.56% 14,113,448
- --------------------------------------------------------------------------------
(cost of $11,954,613)
Other assets and liabilities, net (1.56)% (216,592)
NET ASSETS 100% $13,896,856
------------
See notes to portfolios of investments.
57
<PAGE>
CHINA REGION OPPORTUNITY
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS JUNE 30, 1997
- --------------------------------------------------------------------------------
COMMON STOCKS Shares Value
- --------------------------------------------------------------------------------
Agriculture 1.34%
CP Pokphand Company Ltd. 800,000 $ 247,838
Shanghai Dajiang Co. Ltd., Group B 986,634 315,723
------------
563,561
Apparel - Wholesale 1.42%
- --------------------------------------------------------------------------------
Chaifa Holdings Limited 1,090,800 168,964
Giordano International Ltd. 299,000 204,557
Li & Fung Ltd. 200,000 224,603
------------
598,124
Banking/Financial Services 4.84%
- --------------------------------------------------------------------------------
HSBC Holdings 67,749 2,037,630
Beverages .30%
- --------------------------------------------------------------------------------
Vitasoy International Holdings Ltd. 284,000 127,391
Chemicals & Allied Products 4.67%
- --------------------------------------------------------------------------------
Jilin Chemical Industrial Company
Limited, Class H 2,308,000 342,610
Shang Inner Mongolia Erdos Cashmere 337,700 283,668
Shanghai Chlor-Alkali Chemical
Company, Group B 573,600 164,050*
Shanghai Petrochemical, Class H 2,932,000 703,953
Tianjin Bohai Chemical, Class H 1,248,000 141,763
Yizheng Chemcal Fibre, Class H 1,844,000 328,478
------------
1,964,522
Computers & Office Equipment 2.92%
- --------------------------------------------------------------------------------
Acer, Inc. GDR 10,500 186,638*
Founder Hong Kong Limited 611,200 414,199
GVC Corp. GDR 55 577*
Vanda Systems & Communications Holdings Ltd. 1,354,000 629,198
------------
1,230,612
Conglomerates 12.12%
- --------------------------------------------------------------------------------
Beijing Enterprise Holdings 50,000 314,961*
Citic Pacific Ltd. 198,200 1,238,270
First Pacific Company, Ltd. 430,000 549,503
Guangdong Investments, Warrants 24,000 11,308*
Guangdong Investments 240,000 360,914
Guangzhou Investment Co. Ltd. 500,000 275,913
Hutchison Whampoa 96,000 830,257
Shanghai Industrial Holdings Ltd. 129,000 802,607
Swire Pacific Ltd, Group A 80,000 720,279
------------
5,104,012
58
<PAGE>
CHINA REGION OPPORTUNITY
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS JUNE 30, 1997
- --------------------------------------------------------------------------------
COMMON STOCKS
AND WARRANTS Shares Value
- --------------------------------------------------------------------------------
Construction Equipment .34%
- --------------------------------------------------------------------------------
Shanghai Jintai Machinery, Group B 1,194,550 $ 143,346
Credit & Financial Services 1.93%
- --------------------------------------------------------------------------------
Aeon Credit Service 694,000 232,916
Guoco Group, Ltd. 110,000 579,321
------------
812,237
Electric Generation .81%
- --------------------------------------------------------------------------------
Dongfang Electrical Machinery
Co. Ltd., Class H 766,000 247,192
Harbin Power Equip Co Ltd, Class H 418,000 92,265
------------
339,457
Electronic Equipment 2.08%
- --------------------------------------------------------------------------------
ASE Test Limited 5,000 211,250*
ASM Pacific Technology Ltd. 686,000 478,172
GP Batteries Int'l Ltd. 30,000 89,389
Samsung Electronics, GDR 3,512 96,580
Samsung Electronics, Rights 58 0*
------------
875,391
Furniture .45%
- --------------------------------------------------------------------------------
Lamex Holdings Ltd. 700,000 189,751
Glass & Cement Products .90%
- --------------------------------------------------------------------------------
Huaxin Cement Co. Ltd., Group B 904,600 166,446
Luoyang Glasswork, Class H 962,000 167,639
Shanghai Yaohua Pilkington
Glass Co. Ltd., Group B 125,750 45,522*
------------
379,607
Groceries - Wholesale 2.91%
- --------------------------------------------------------------------------------
Guangnan Holdings Ltd. 440,000 687,234
Guangnan Holdings, Warrants 25,521 15,154*
NG Fung Hong Limited 348,000 521,079
------------
1,223,467
Heavy Contruction .93%
- --------------------------------------------------------------------------------
Anhai Expressway Co. Ltd. 726,000 139,633
GZI Transport Limited 25,769 10,312*
GZI Transport Limited, Warrants 5,154 532*
New World Infrastructure Hong Kong 31,201 88,202*
Road King Infrastructure Ltd. 180,000 152,188*
------------
390,867
Hotels 1.13%
- --------------------------------------------------------------------------------
Shanghai New Asia, Group B 873,800 477,095
59
<PAGE>
CHINA REGION OPPORTUNITY
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS JUNE 30, 1997
- --------------------------------------------------------------------------------
COMMON STOCKS
AND WARRANTS Shares Value
- --------------------------------------------------------------------------------
Household Appliances 3.95%
- --------------------------------------------------------------------------------
Guangdong Kelon Electronics Holdings 846,000 $ 808,106
Hualing Holding Ltd 1,344,000 209,919*
Hualing Holdings, Warrants 268,800 0*
Shanghai Shangling Electronics Appliance 363,360 74,852*
Shenzhen Konka Electronic Holdings, Group B 385,000 571,015
------------
1,663,892
Industrial/Commercial Machinery 1.86%
- --------------------------------------------------------------------------------
China Yuchai International Ltd., ADR 83,900 262,188*
First Tractor Co. Ltd., Class H 150,000 98,748*
Shanghai Automation Instrumentation, Group B 1,615,589 294,037*
Shanghai Diesel Engine Ltd., Group B 376,320 127,949*
------------
782,922
Investment Advisor .20%
- --------------------------------------------------------------------------------
Regent Pacific Group Ltd. (RS) 300,000 84,226*
Manufacturing 2.11%
- --------------------------------------------------------------------------------
Shanghai Hero Pen, Group B 474,064 216,173
Varitronix International 317,000 538,086
Yageo Corporation 1 21*
Yue Yuen Industrial Holdings Ltd. 49,200 101,931
Zindart Limited, ADR 3,000 30,750*
------------
886,961
Metal Industries .39%
- --------------------------------------------------------------------------------
Jiang Xi Copper Company Ltd. 140,000 38,402
Maanshan Iron & Steel Co., Class H 440,000 92,010
Shanghai Steel Tubes, Group B 269,280 35,545
------------
165,957
Motor Vehicles & Transportation 3.87%
- --------------------------------------------------------------------------------
Qingling Motors Co Ltd., Class H 1,224,000 631,987
Shanghai Dazhong, Group B 1,121,502 995,894
------------
1,627,881
Office Supplies .87%
- --------------------------------------------------------------------------------
China First Pencil Company Ltd. 919,165 367,666
Petroleum Refining 1.21%
- --------------------------------------------------------------------------------
Zhenhai Refining and
Chemical Co. Ltd., Class H 1,405,000 507,809
Pharmaceuticals .72%
- --------------------------------------------------------------------------------
Livzon Pharmaceutical, Group B 454,200 301,940
60
<PAGE>
CHINA REGION OPPORTUNITY
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS JUNE 30, 1997
- --------------------------------------------------------------------------------
COMMON STOCKS
AND WARRANTS Shares Value
- --------------------------------------------------------------------------------
Photography .31%
- --------------------------------------------------------------------------------
China HK Photo Products Holdings 450,000 $ 130,696
Real Estate Developers 10.42%
- --------------------------------------------------------------------------------
Cheung Kong Holdings Ltd. 35,000 345,618
China Overseas Land & Investment 870,000 701,885
China Resources Enterprise Ltd. 184,000 902,543
Lai Sun Development Co Ltd. 40,000 44,921
New World Development Co. 139,779 833,586
Shanghai Lujiazhui Finance, Group B 277,060 396,196
Shum Yip Investment Ltd. 350,000 388,538*
Silver Grant International Industries Ltd. 440,000 230,025
Sun Hung Kai Properties HK 45,000 541,661
------------
4,384,973
Retail 4.47%
- --------------------------------------------------------------------------------
Amway Asia Pacific Ltd. 9,000 393,440
China Everbright-IHD Pacific Ltd. 200,000 597,651
Glorious Sun Enterprises Ltd. 984,000 466,787*
Shanghai Friendship & O/S Chinese, Group B 771,606 424,383
------------
1,882,261
Rubber & Plastic Products .19%
- --------------------------------------------------------------------------------
China Tire Holdings Ltd. 1,800 15,975
Shanghai Tyre & Rubber Co. Group B 133,000 65,170
------------
81,145
Security & Commodity Brokers 2.17%
- --------------------------------------------------------------------------------
Peregrine Investment Holdings Ltd. 440,000 905,899
Peregrine Investments, Warrants 16,000 7,022*
------------
912,921
Telecommunications 1.91%
- --------------------------------------------------------------------------------
Hong Kong Telecommunications, Ltd. 183,000 437,007
Shanghai Post &Telecom, Group B 471,700 247,171
Sigma Alpha Group, Ltd. 48,000 120,000*
------------
804,178
Textile Mill Products 1.32%
- --------------------------------------------------------------------------------
First Sign International Holdings 620,000 120,046
Shanghai Haixin Co., Group B 407,600 259,234
Shanghai Lian Hua Fibre, Group B 268,780 34,941
Shanghai Sanmao Textile Class, Group B 879,700 142,511
------------
556,732
61
<PAGE>
CHINA REGION OPPORTUNITY
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS JUNE 30, 1997
- --------------------------------------------------------------------------------
COMMON STOCKS
AND WARRANTS Shares Value
- --------------------------------------------------------------------------------
Travel Services .98%
- --------------------------------------------------------------------------------
China Travel International Investment 500,000 $ 290,435
Shanghai China International Travel, Group B 242,500 120,765
------------
411,200
Unit Investment Trust 1.18%
- --------------------------------------------------------------------------------
Cathay Investment Fund 350,000 496,967
Utilities 4.41%
- --------------------------------------------------------------------------------
Guangdong Electric Power
Development Co., Group B 168,000 137,704
Hong Kong & China Gas Co. 264,000 528,204
Hong Kong & China Gas, Warrants 10,000 10,714*
Huaneng Power International, Inc., ADR 25,000 637,500*
Shandong Huaneng Power Company Ltd. ADR 50,600 543,950
------------
1,858,072
Water Transportation & Services 4.31%
- --------------------------------------------------------------------------------
China International Marine Container,
Group B 620,516 732,893
China Merchants Shekou Port Service Co., Ltd. 166,040 91,089
Continental Mariner Investment 400,000 382,083*
Cosco Pacific Ltd. 200,000 463,405
Guangzhou Shipyard International Co.,
Class H 424,000 79,360
Pacific Ports Company Ltd. 300,000 60,023*
Shenzhen Chiwan Wharf Holdings Ltd. 5,913 3,618
------------
1,812,471
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS AND WARRANTS 36,177,940
- --------------------------------------------------------------------------------
(cost $30,177,335)
Principal
REPURCHASE AGREEMENT 14.24% Amount
Joint Repurchase Agreement Account A,
5.95%, due 7/1/97, repurchase price
$5,997,748, collateralized
in a joint repurchase account
(cost $5,996,757) $5,996,757 5,996,757
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS 100.18% 42,174,697
- --------------------------------------------------------------------------------
(cost of $36,174,092)
Other assets and liabilities, net (.18)% (75,684)
------------
NET ASSETS 100% $42,099,013
------------
See notes to portfolios of investments.
62
<PAGE>
U.S. GLOBAL RESOURCES
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS JUNE 30, 1997
- --------------------------------------------------------------------------------
COMMON STOCKS
AND WARRANTS 101.53% Shares Value
- --------------------------------------------------------------------------------
Aluminum Production 2.24%
- --------------------------------------------------------------------------------
Alcan Aluminium Ltd. 8,500 $ 294,844
Alumax, Inc. 5,000 189,687*
Aluminum Company of America 2,500 188,438
------------
672,969
Chemicals & Allied Products 9.16%
- --------------------------------------------------------------------------------
Acetex Corporation 15,000 135,821*
Air Products & Chemicals, Inc. 3,700 300,625
Boron Chemicals International Ltd. 230,000 250,746*
Brunswick Technologies, Inc. 103,000 965,625*
Cytec Industries, Inc. 10,000 373,750*
E.I. Du Pont de Nemours & Co. 5,200 326,950
Praxair, Inc. 7,000 392,000
------------
2,745,517
Copper Refining .59%
- --------------------------------------------------------------------------------
Cobre Mining Co. 53,333 139,082*
Cobre Mining Co., Warrants Series A 13,333 0*
Cobre Mining Co., Warrants Series B 13,333 0*
Jiang Xi Copper Company Ltd. 140,000 38,402*
------------
177,484
Gold & Silver Mining 6.57%
- --------------------------------------------------------------------------------
America Mineral Fields, Inc. 50,000 220,935*
Boliden Ltd., Installment Receipts 5,000 55,596*
Chase Resources Corp. 50,000 27,165*
Combined Metals Reduction (RS) 535,000 0*
Dayton Mining Corporation 50,000 173,850*
Fischer-Watt Gold Company, Inc. 8,300 2,780*
Fischer-Watt Gold Company, Inc. (RS) 443,140 141,051*
Fischer-Watt Gold Company, Inc., Warrants 156,860 5,490*
Goldbeam Resources Ltd. (RS) + 300,000 0*
Major Drilling Group International, Inc.,
Special Warrants (RS) 12,000 163,094*
Meridian Gold, Inc. 260,500 1,179,388*
------------
1,969,349
Manufacturing .27%
- --------------------------------------------------------------------------------
Kesoram Industries Limited, GDR 62,500 79,706
Metal Mining 3.41%
- --------------------------------------------------------------------------------
Brokern Hill Proprietary Co., Ltd. 15,000 220,295
Minco Mining & Metals Corporation 50,000 53,605*
Minco Mining & Metals Corp., Warrants 25,000 0*
63
<PAGE>
U.S. GLOBAL RESOURCES
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS JUNE 30, 1997
- --------------------------------------------------------------------------------
COMMON STOCKS
AND WARRANTS Shares Value
- --------------------------------------------------------------------------------
Metal Mining (cont'd)
- --------------------------------------------------------------------------------
Osmium Holdings S.A. (RS) 57,000 $ 51,402*
Osmium Holdings S.A. Units (RS) 217 286*
Resolute Limited 75,000 133,425
Tenke Mining Corp. 50,000 153,930*
Tenke Mining Corp., Warrants 7,500 0*
Westmin Resources Ltd. 50,000 239,045*
Zimasco Consolidated Enterprises Ltd. (RS) 40,000 168,000
------------
1,019,988
Mineral Mining 2.01%
- --------------------------------------------------------------------------------
Aber Resources, Ltd. 15,000 209,706*
Asia Pacific Resources Ltd. 75,000 199,388*
Southernera Resources Ltd. 15,000 84,751*
Star Resources Corporation 600,000 78,240*
Star Resources Corporation,
Special Warrants (RS) 290,000 32,132*
------------
604,217
Natural Gas Production & Distribution 2.68%
- --------------------------------------------------------------------------------
AGL Resources, Inc. 12,000 246,000
Sonat, Inc. 5,000 256,250
TransCanada PipeLines Limited 15,000 301,875
------------
804,125
Oil & Gas Extraction 25.09%
- --------------------------------------------------------------------------------
A & B Geoscience Corporation 150,000 198,840*
Abacan Resource Corporation 110,000 350,625*
Anderson Exploration Ltd. 20,000 257,878*
Canrise Resources Ltd. 25,000 132,197*
Coplex Resources NL 1,600,000 536,640*
Energy Africa Limited, GDR 20,000 530,000*
Enron Oil & Gas Co. 10,000 181,250
Epic Energy, Inc. 30,000 8,694*
Epic Energy, Inc. (RS) 300,000 228,180*
Epic Energy, Inc., Warrants 150,000 0*
Falcon Drilling Company, Inc. 10,000 576,250*
Force Energy Gas Exploration, Inc. 12,500 379,687*
Harken Energy Corp. 70,000 490,000*
Hurricane Hydrocarbons Ltd. 40,800 147,773*
International Petroleum Corp. 75,000 359,925*
Louisiana Land and Exploration Co. 5,000 285,625
Novus Petroleum Limited 106,873 366,553
64
<PAGE>
U.S. GLOBAL RESOURCES
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS JUNE 30, 1997
- --------------------------------------------------------------------------------
COMMON STOCKS
AND WARRANTS Shares Value
- --------------------------------------------------------------------------------
Oil & Gas Extraction (cont'd)
- --------------------------------------------------------------------------------
Ocean Energy, Inc. 6,500 $ 300,625*
Oil Search Limited 200,000 542,740
Peak Energy Inc., Special Warrants 50,000 172,040*
Renata Resources, Special Warrants (RS) 600,000 523,800*
Rio Alto Exploration Ltd. 35,000 292,828*
Stampeder Explorations Ltd. 25,000 97,790*
Tap Oil NL 125,000 155,475*
Tarragon Oil & Gas Ltd. 10,000 117,349*
USX - Marathon Group 10,000 288,750
------------
7,521,514
Oil & Gas Field Machinery 5.13%
- --------------------------------------------------------------------------------
Camco International, Inc. 7,000 383,250
Cooper Cameron Corporation 10,000 467,500*
Prudential Steel Ltd. 25,000 688,158
------------
1,538,908
Oil & Gas Field Services 20.46%
- --------------------------------------------------------------------------------
BJ Services Company 7,000 375,375*
Bonus Resources Services Corp. 150,000 548,715*
Diamond Offshore Drilling, Inc. 5,000 389,375*
ENSCO International, Inc. 18,800 991,700*
Ensign Resource Service Group, Inc. 50,000 1,182,545
Global Industries, Inc. 15,000 350,391*
Nabors Industries, Inc. 14,500 358,875*
Plains Energy Services Ltd. 40,000 275,264*
Precision Drilling Corporation 18,500 888,483*
Santa Fe International Corp. 5,000 170,000*
Schlumberger, Ltd. 2,500 312,500
Transocean Offshore, Inc. 4,000 290,500
------------
6,133,723
65
<PAGE>
U.S. GLOBAL RESOURCES
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS JUNE 30, 1997
- --------------------------------------------------------------------------------
COMMON STOCKS
AND WARRANTS Shares Value
- --------------------------------------------------------------------------------
Oil International 18.04%
- --------------------------------------------------------------------------------
Amoco Corporation 5,900 $ 512,931
British Petroleum plc 8,000 599,000
Chevron Corporation 4,000 295,750
Coastal Corporation 6,000 319,125
Exxon Corporation 10,000 615,000
Interoil Corp. 25,000 287,500*
Mobil Corporation 7,400 517,075
Texaco, Inc. 5,600 609,000
Total S.A., ADR 12,000 609,000
Unocal Corporation 7,000 271,687
Woodside Petroleum Company 90,000 773,397
------------
5,409,465
Paper Products .96%
- --------------------------------------------------------------------------------
Lafayette Paper Mills Limited 600,000 45,000*
Temple-Inland, Inc. 4,500 243,000
------------
288,000
Railroads 2.20%
- --------------------------------------------------------------------------------
CSX Corporation 4,600 255,300
Illinois Central Corporation 7,800 272,513
RaiLink Ltd., Class A 25,000 133,105*
------------
660,918
Water Transportation & Services 2.72%
- --------------------------------------------------------------------------------
Hvide Marine, Inc., Class A 25,000 553,125*
Tidewater, Inc. 6,000 264,000
------------
817,125
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS 101.53% 30,443,008
- --------------------------------------------------------------------------------
(cost of $25,273,248)
Other assets and liabilities, net (1.53)% (459,639)
------------
NET ASSETS 100% $29,983,369
------------
See notes to portfolios of investments.
66
<PAGE>
U.S. WORLD GOLD
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS JUNE 30, 1997
- --------------------------------------------------------------------------------
COMMON STOCKS
AND WARRANTS 100.31% Shares Value
- --------------------------------------------------------------------------------
Chemicals .57%
- --------------------------------------------------------------------------------
Boron Chemicals International Limited 976,000 $ 1,064,035*
Diamond Mining & Exploration .23%
- --------------------------------------------------------------------------------
Brazilian Resources Inc., Units (RS) 1,200,000 152,520*
Star Resources Corp. + 1,500,000 195,600*
Star Resources Corp., Special Warrants (RS) 710,000 78,668*
------------
426,788
Gold Development 6.49%
- --------------------------------------------------------------------------------
Ancash Resources, Special Warrants (RS) 800,000 391,200*
Canyon Resources Corp. 1,391,183 3,391,008*
Canyon Resources Corp.,Warrants 166,667 0*
Chase Resource Corporation 100,000 54,330*
Chilean Gold Ltd. (RS) + 500,000 488,950*
Crown Resources Corp. + 742,500 4,733,438*
Exploro Minerals Corp. Ltd. + 1,000,000 575,000*
Laguna Gold Company 500,000 163,000*
Laguna Gold Company (RS) 280,000 86,716*
Laguna Gold Company, Warrants 500,000 9,950*
Major Drilling Group International, Inc.,
Special Warrants (RS) 88,000 1,196,026*
Metallica Resources, Inc. 350,000 773,255*
Minorca Resources, Inc. 400,000 249,200*
Minorca Resources, Inc.,
Special Warrants (RS) 100,000 59,180*
------------
12,171,253
Gold Exploration 8.39%
- --------------------------------------------------------------------------------
Argosy Mining Corporation 220,000 127,490*
Argosy Mining Corporation, Warrants 110,000 0*
Birch Mountain Resources, Ltd., Warrants 50,000 0*
Bro-X Minerals Ltd. 30,000 0*
Colony Pacific Explorations Ltd. 100,000 79,680*
Colony Pacific Explorations Ltd., Warrants 50,000 0*
Crown Butte Resources Ltd. 275,000 428,285*
Gold Corporation of Africa Ltd. (RS) 150,000 240,000*
Highlake Resources NL + 2,857,565 323,191*
Leo Shield Exploration NL 1,000,000 309,100*
Lone Star Exploration NL, Warrants 150,000 0*
Minefinders Corporation Ltd. 61,000 136,097*
Minefinders Corporation Ltd.,
Special Warrants (RS) 100,000 200,800*
Mink International Resources Corporation 400,000 278,160*
Nevsun Resources 200,000 601,240*
67
<PAGE>
U.S. WORLD GOLD
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS JUNE 30, 1997
- --------------------------------------------------------------------------------
COMMON STOCKS
AND WARRANTS Shares Value
- --------------------------------------------------------------------------------
Gold Exploration (cont'd)
- --------------------------------------------------------------------------------
Nevsun Resources, Special Warrants (RS) 50,000 $ 142,795*
Nevsun Resources, Warrants 265,000 412,711*
Opawica Exploration Inc. + 405,000 234,697*
Ormonde Mining plc + 2,750,000 457,600*
Orvana Minerals Corp. 250,000 1,041,300*
Otter Gold Mines Ltd. 500,000 429,650*
Patrician Gold Mines Ltd. 211,500 15,313*
Ranger Minerals NL 2,250,000 6,869,025*
Solitario Resources Corp. 459,522 1,497,904*
Sutton Resources Ltd.,
Special Warrants (RS) 40,000 586,748*
Tombstone Explorations Company Ltd. 512,500 612,540*
Treminco Resources Ltd. 200,000 130,380*
Vengold, Inc. 217,500 299,345*
Venoro Gold Corp., Class A + 900,000 48,870*
Venoro Gold Corp., Series H Warrants (RS) 350,000 16,170*
Verena Minerals Corporation 300,000 206,460
------------
15,725,551
Gold Production 40.03%
- --------------------------------------------------------------------------------
Agnico-Eagle Mines Ltd. 346,500 3,325,707
Aurizon Mines Ltd. 700,000 887,390*
Cathedral Gold Corp. 590,000 341,905*
Dayton Mining Corporation 798,000 2,774,646*
Delta Gold, NL 9,900,000 16,492,410*#
Eagle Mining Corporation NL 750,000 1,430,325*
Fischer-Watt Gold Company, Inc. + 831,700 278,620
Fischer-Watt Gold Company, Inc. (RS) + 1,856,860 591,039*
Fischer-Watt Gold Company, Inc., Warrants 543,140 19,010*
Geomaque Explorations Ltd. 145,800 337,964*
Getchell Gold Corporation 297,360 10,481,940*
Greenstone Resources Ltd. 1,089,000 9,544,976*
IAMGOLD International African Mining 1,237,500 4,840,638*
IAMGOLD International African Mining,
Warrants 333,330 0*
Macraes Mining Company Ltd. 750,000 1,045,875
Meridian Gold, Inc. 2,316,400 10,487,269*
Miranda Mining Development Corporation (RS) 1,600,000 1,692,800*
Pacific Island Gold NL 2,000,000 377,000
Plutonic Resources Ltd. 750,000 2,340,525*
Randgold Resources Ltd. 88,000 1,452,000*
Rea Gold Corp. + 2,500,000 1,430,750*
Resolute Limited 1,675,000 2,979,825
Ross Mining NL 1,660,248 1,113,860
Vista Gold 854,300 767,332*
------------
75,033,806
68
<PAGE>
U.S. WORLD GOLD
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS JUNE 30, 1997
- --------------------------------------------------------------------------------
COMMON STOCKS
AND WARRANTS Shares Value
- --------------------------------------------------------------------------------
Investment Advisors 7.04%
- --------------------------------------------------------------------------------
The Pioneer Group, Inc. 574,200 $ 13,206,600
Major Gold Production 20.04%
- --------------------------------------------------------------------------------
Ashanti Goldfields Co. Ltd. 216,819 2,534,072
Ashanti Goldfields Co. Ltd., GDR 715,500 8,362,406
Ashanti Preference Stock 203,932 471,593*
Barrick Gold Corp. 810,000 17,820,000
Battle Mountain Gold Co. 300,000 1,706,250
Newmont Mining Corp. 148,500 5,791,500
Placer Dome, Inc. 38,300 627,163
TVX Gold, Inc. 49,600 263,500*
------------
37,576,484
Metal Mining 3.08%
- --------------------------------------------------------------------------------
AMT International Mining Corp. + 2,650,000 1,823,730*
Boliden Limited, Installment Receipts 45,000 500,362*
Osmium Holdings S.A. (RS) 832,200 750,478*
Osmium Holdings S.A., Units (RS) 3,171 4,172*
Tenke Mining Corp. 400,000 1,231,440*
Tenke Mining Corp., Warrants (RS) 60,000 0*
Zimasco Consolidated Enterprises Ltd. (RS) 350,000 1,470,000
------------
5,780,182
Mineral Exploration & Development .47%
- --------------------------------------------------------------------------------
Altoro Gold Corp. 150,000 155,385*
Altoro Gold Corp. (RS) 100,000 93,230*
Franc-Or Resources Corporation 497,900 306,557*
Panorama Resources NL 1,250,000 316,875*
Taseko Mines Ltd., Warrants 96,550 0*
Virginia Gold Mines, Inc., Warrants 125,000 0*
------------
872,047
Mining Finance 13.64%
- --------------------------------------------------------------------------------
Armada Gold Corp., Class A 450,000 169,515*
Continental Precious Minerals, Inc. 200,000 253,540*
Euro-Nevada Mining Corp. 366,300 11,276,875
Euro-Nevada Mining Corp., Ltd.,
Warrants - 1998, Series A 60,000 1,140,900*
Euro-Nevada Mining Corp., Ltd.,
Warrants - 1998, Series B 35,000 253,533*
Franco-Nevada Mining Corp. 245,000 12,289,935
Franco-Nevada Mining Corp., Warrants 20,000 188,338*
------------
25,572,636
69
<PAGE>
U.S. WORLD GOLD
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS JUNE 30, 1997
- --------------------------------------------------------------------------------
COMMON STOCKS
AND WARRANTS Shares Value
- --------------------------------------------------------------------------------
Precious & Industrial Metals Exploration .33%
Glencar Explorations plc 872,438 $ 624,230*
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS & WARRANTS 188,053,612
- --------------------------------------------------------------------------------
(cost $150,688,861)
OPTIONS .01%
Gold Exploration .01%
- --------------------------------------------------------------------------------
Otter Gold Mines Ltd.,
Strike Price 2.75 NZD, Expiration Oct. 2001
(premium $0) 50,000 8,480*
Principal
CONVERTIBLE SECURITIES .19% Amount
Gold Production .19%
- --------------------------------------------------------------------------------
Macraes Mining Company Ltd., 7% Convertible
Subordinated Note, due September 15, 1998
(cost $527,803) $250,000 360,500
REPURCHASE AGREEMENT 2.96%
Joint Repurchase Agreement Account A, 5.95%,
due 7/1/97, repurchase price $5,549,550,
collateralized in a joint repurchase
account (cost $5,548,633) 5,548,633 5,548,633
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS 103.47% 193,971,225
- --------------------------------------------------------------------------------
(cost of $156,765,297)
Other assets and liabilities, net (3.47)% (6,505,340)
------------
NET ASSETS 100% $187,465,885
------------
See notes to portfolios of investments.
70
<PAGE>
U.S. WORLD GOLD
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS JUNE 30, 1997
- --------------------------------------------------------------------------------
COMMON STOCKS 106.54% Shares Value
- --------------------------------------------------------------------------------
Gold Mining - Africa 58.44%
- --------------------------------------------------------------------------------
Ashanti Goldfields Co. Ltd., ADR 500,000 $ 5,843,750
Avgold Ltd. 2,557,468 2,429,595*
Beatrix Mines Ltd., ADR 1,726,000 7,874,875#
Driefontein Consolidated Ltd., ADR 815,000 5,501,250
East Rand Gold and Uranium Co., Ltd., ADR 662,781 927,893
Elandsrand Gold Mining Company, Ltd. 750,000 2,704,275
Evander Gold Mines 21,500 91,106
Evander Gold Mines, ADR 225,000 953,437
Free State Development &
Investment Corp., Ltd., ADR 704,000 513,920
Harmony Gold Mining Co. 210,000 960,960*
H.J. Joel Gold Mining Co., Ltd. 1,959,000 1,512,152*
Oryx Gold Holdings Limited 2,000,000 2,028,800*
Randfontein Estates Gold Mining Co.
Witwatersrand, Ltd., ADR 576,110 1,188,227
Randgold Resources Ltd. 59,000 973,500*
Southvaal Holdings Ltd., ADR 311,000 6,239,438
Sub Nigel Gold Mining Co., Ltd., ADR + 1,354,600 169,325*
Western Areas Gold Mining Co., Ltd. 143,229 957,844
Western Areas Gold Mining Co., Ltd., ADR 838,603 5,608,158
------------
46,478,505
Gold Mining - Australia 7.44%
- --------------------------------------------------------------------------------
Delta Gold NL 323,955 539,677
Lihir Gold Limited 500,000 832,950*
Plutonic Resources Ltd. 500,000 1,560,350
Resolute Resource Ltd. 1,675,000 2,979,825
------------
5,912,802
Gold Mining - North America 27.43%
- --------------------------------------------------------------------------------
AMT International Mining Corporation 550,000 378,510*
Barrick Gold Corp 417,500 9,185,000
Getchell Gold Corporation 50,000 1,762,500*
Meridian Gold, Inc. 2,316,400 10,487,269*
------------
21,813,279
Investment Advisors 11.42%
- --------------------------------------------------------------------------------
The Pioneer Group, Inc. 395,000 9,085,000
Mining Finance .85%
- --------------------------------------------------------------------------------
Genbel Securities Limited 43,208 675,125
71
<PAGE>
U.S. WORLD GOLD
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS JUNE 30, 1997
- --------------------------------------------------------------------------------
COMMON STOCKS 106.54% Shares Value
- --------------------------------------------------------------------------------
Other Mineral Mining .96%
- --------------------------------------------------------------------------------
Ocean Diamond Mining Holdings Ltd 500,000 $ 760,850
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS 106.54%. 84,725,561
- --------------------------------------------------------------------------------
(cost of $118,211,049)
Other assets and liabilities, net (6.54)% (5,202,767)
------------
Net Assets 100% $79,522,794
------------
See notes to portfolios of investments.
72
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS JUNE 30, 1997
- --------------------------------------------------------------------------------
LEGEND
* - Non-income producing security GO - General Obligation Bond
# - Security segregated as collateral IDR - International Depository Receipt
+ - Affiliated company (see below) RS - Restricted Security (see below)
ADR - American Depository Receipt WI - When issued security
GDR - Global Depository Receipt
GENERAL
The yields reflect the yield to maturity as of June 30, 1997. Variable Rate
Notes have periodic reset features which effectively shorten the maturity dates
and reset the interest rates as tied to various interest bearing instruments.
JOINT REPURCHASE AGREEMENT ACCOUNTS (SEE ALSO NOTE 1 TO FINANCIAL STATEMENTS)
The terms of the repurchase agreements and the securities held as collateral in
the joint repurchase agreement accounts at June 30, 1997, were:
ACCOUNT A:
PaineWebber, Inc. repurchase agreement, 5.95%, 6/30/97, due 7/1/97:
$35,295,000 U. S. Treasury Note, 6.0%, 6/30/99.
Total principal amount: $34,579,603; Total repurchase value: $34,585,318
ACCOUNT B:
Donaldson, Lufkin, Jenrette repurchase agreement, 5.90%, 6/30/97, due 7/1/97:
$ 9,700,000 U. S. Treasury Bill, 9/18/97
$40,332,000 U. S. Treasury Bond, 7.125%, 2/15/23
Total principal amount: $51,442,000; Total repurchase value: $51,430,427
ACCOUNT C:
Dean Witter, Inc. repurchase agreement, 5.85%, 6/30/97, due 7/1/97:
$15,772,000 U. S. Treasury Bill, 7/17/97
$ 4,209,000 U. S. Treasury Note, 8.125%, 2/15/98
$ 7,202,000 U. S. Treasury Note, 7.875%, 4/15/98
$ 1,498,000 U. S. Treasury Note, 5.0%, 1/31/99
$10,048,000 U. S. Treasury Note, 7.0%, 7/15/06
Total principal amount: $39,000,000; Total repurchase value: $39,006,338
Other mutual funds managed by U.S. Global Investors, Inc. participate in the
joint repurchase agreement accounts. Each Fund owns an undivided interest in the
accounts.
73
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS JUNE 30, 1997
- --------------------------------------------------------------------------------
AFFILIATED COMPANIES - INDICATED IN PORTFOLIO OF INVESTMENTS AS "+"
The Investment Company Act of 1940 defines affiliates as companies in which the
Fund owns at least 5% of the outstanding voting securities. The following is a
summary of transactions with each affiliated company during the year ended June
30, 1997,
Shares of Affiliated Companies
------------------------------
Security June 30, 1996 Additions Reductions June 30, 1997
GLOBAL RESOURCES
- --------------------------------------------------------------------------------
Goldbeam Resources
Ltd. (RS) 300,000 --- --- 300,000
At June 30, 1997, the value of investments in affiliated companies was $0 and
the total cost was $765,345. There were no transactions with the affiliate.
WORLD GOLD FUND
- --------------------------------------------------------------------------------
AMT International
Mining Corp. 1,250,000 1,950,000 550,000 2,650,000
Boron Chemical
International Limited --- 976,000 --- 976,000(a)
Cathedral Gold Corp. 717,000 --- 127,000 590,000(a)
Chilean Gold Ltd. (RS) --- 500,000 --- 500,000
Continental Precious
Minerals, Inc. 244,500 --- 44,500 200,000(a)
Crown Resources Corp. 750,000 --- 7,500 742,500
Exploro Minerals Corp. Ltd. --- 1,000,000 --- 1,000,000
Fischer-Watt Gold
Company, Inc. --- 1,000,000 168,300 831,700
Fischer-Watt Gold
Company, Inc. (RS) --- 1,856,860 --- 1,856,860
Gold Corporation of
Africa Ltd. (RS) --- 150,000 --- 150,000(a)
Greenstone Resources Ltd. 1,570,370 --- 481,370 1,089,000(a)
Highlake Resources NL --- 2,857,565 --- 2,857,565
International Capri
Resources Ltd. 200,000 20,500 220,500 ---
Nevsun Resources 250,000 50,000 100,000 200,000(a)
Opawica Exploration Inc. 155,000 250,000 --- 405,000
Ormonde Mining plc 2,500,000 250,000 --- 2,750,000
Patrician Gold Mines Ltd. 370,000 --- 158,500 211,500(a)
Ranger Minerals NL 2,500,000 200,000 450,000 2,250,000(a)
Rea Gold Corp. 2,575,000 350,000 425,000 2,500,000
Star Resources Corp. 1,290,000 210,000 --- 1,500,000
Venoro Gold Corp., Class A 550,000 350,000 --- 900,000
74
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS JUNE 30, 1997
- --------------------------------------------------------------------------------
AFFILIATED COMPANIES (cont'd)
At June 30, 1997, the value of investments in affiliated companies was
$11,181,484, representing 5.96% of net assets and the total cost was
$14,149,206. Net realized gains on transactions with affiliates were $6,128,946
and there was no income earned for the year.
Shares of Affiliated Companies
------------------------------
Security June 30, 1996 Additions Reductions June 30, 1997
Gold Shares
East Daggafontein 1,077,044 --- 1,077,044 ---
Eastern Transvaal 4,787,000 --- 4,787,000 --- (b)
Kinross ADR 870,200 --- 870,200 --- (b)
Kinross 100,000 --- 100,000 --- (b)
Sub Nigel Gold
Mining Co. Ltd, ADR 1,354,600 --- --- 1,354,600
At June 30, 1997, the value of investments in affiliated companies was $169,325,
representing .21% of net assets and the total cost was $3,096,319. Net realized
losses on transactions with affiliates were $(2,092,287). Income earned for the
year was: $283,107 from East Daggafontein and $163,081 from Kinross.
- ----------------------
(a) At June 30, 1997, the company is no longer defined as an affiliate,
although it was affiliated during the year.
(b) The companies merged during the year into non-affiliated companies.
75
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS JUNE 30, 1997
- --------------------------------------------------------------------------------
RESTRICTED SECURITIES - INDICATED IN PORTFOLIO OF INVESTMENTS AS "RS"
The following securities are subject to legal restrictions on their resale. The
issuer bears the costs of registration, if any, involved in the disposition of
these securities. For securities acquired during the year, the market price, if
applicable, of the unrestricted security on agreement date and on enforceable
date are shown.
Price of Unrestricted
Security
-----------------------
Aquisition Cost per Agreement Enforceable
Security Date Share Date Date
U.S. GLOBAL RESOURCES
- --------------------------------------------------------------------------------
COMMON STOCK
Combined Metals Reduction 3/19 to 7/17/85 $1.40 --- ---
Epic Energy, Inc. 11/06/96 $0.30* --- ---
Fischer-Watt Gold
Company, Inc. 10/13/95 $0.29* --- ---
Goldbeam Resources Ltd. 5/15 to 5/21/85 $2.55 --- ---
Osmium Holdings S.A. 10/22/96 $1,919.00* --- ---
Zimasco Consolidated
Enterprises Ltd. 06/15/95 $2.50 --- ---
SPECIAL WARRANTS & UNITS
Major Drilling Group
International 06/06/97 $13.03 $13.19 $13.19
Osmium Holdings S.A. 10/22/96 $1.32* --- ---
Renata Resources 02/20/97 $0.88 $0.80 $0.80
Star Resources Corporation 06/27/97 $0.15 $0.14 $0.14
At June 30, 1997, the total cost of restricted securities was $2,493,839 and the
total value was $1,085,256, representing 3.62% of net assets.
U.S. WORLD GOLD
- --------------------------------------------------------------------------------
COMMON STOCK
Altoro Gold Corp. 12/05/96 $0.55 $0.55 $0.55
Chilean Gold Ltd. 01/17/97 $1.10 --- ---
Fischer-Watt Gold Company, Inc. 10/13/95 $0.29* --- ---
Gold Corporation of Africa Ltd. 08/16/96 $2.00 --- ---
Laguna Gold Company 10/30/96 $0.75 $1.04 $1.04
Miranda Mining Development
Corporation 03/25/96 $1.13 --- ---
Osmium Holdings S.A. 10/22/96 $1,919.00* --- ---
Zimasco Consolidated
Enterprises Ltd. 06/15/95 $2.50 --- ---
76
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS JUNE 30, 1997
- --------------------------------------------------------------------------------
RESTRICTED SECURITIES (cont'd)
Price of Unrestricted
Security
-----------------------
Aquisition Cost per Agreement Enforceable
Security Date Share Date Date
SPECIAL WARRANTS & UNITS
Ancash Resources 10/01/96 $0.73 --- ---
Brazilian Resources, Inc. 03/03/97 $0.33 $0.26 $0.26
Major Drilling Group
International, Inc. 06/06/97 $13.03 $13.19 $13.19
Minefinders Corporation Ltd. 03/27/97 $3.61 $2.90 $2.90
Minorca Resources 03/03/97 $4.46 $4.32 $4.32
Nevsun Resources, Special 09/09/96 $7.29 $7.74 $7.74
Osmium Holdings S.A. Units 10/22/96 $1.32* --- ---
Star Resources Corp., Special 06/27/97 $0.15 $0.14 $0.14
Sutton Resources Ltd., Special 02/21/97 $17.79 $18.34 $18.34
Venoro Gold Corp., Series H 08/29/96 $0.33 $0.32 $0.38
At June 30, 1997, the total cost of restricted securities was $9,038,866 and the
total value was $8,654,203, representing 4.62% of net assets.
- -----------------------
* Acquired through exercise of warrant or conversion of unit.
77
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
U.S. U.S.
TREASURY GOVERNMENT
SECURITIES SECURITIES
CASH SAVINGS
INVESTMENTS, AT IDENTIFIED COST $229,646,207 $693,154,162
----------- -----------
ASSETS
- --------------------------------------------------------------------------------
Investments, at value 229,646,207 693,154,162
Cash 556,282 9,998,845
Receivables:
Dividends --- ---
Interest 1,508,205 8,630,602
Capital shares sold 2,543,241 3,030,030
From manager --- 150,200
Other assets 133,307 63,455
- --------------------------------------------------------------------------------
TOTAL ASSETS 234,387,242 715,027,294
- --------------------------------------------------------------------------------
LIABILITIES
- --------------------------------------------------------------------------------
Payables:
Investments purchased --- 22,065,236
Capital shares redeemed 2,306,511 1,137,254
To manager and affiliates 130,063 ---
Dividends and distributions --- ---
Accounts payable and accrued expenses 68,437 55,499
- --------------------------------------------------------------------------------
TOTAL LIABILITIES 2,505,011 23,257,989
- --------------------------------------------------------------------------------
NET ASSETS $231,882,231 $691,769,305
----------- -----------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Paid in capital $231,830,068 $691,874,733
Undistributed net investment
income (loss) 52,163 1,667,229
Accumulated net realized gain (loss)
on investments --- (1,772,657)
Net unrealized appreciation
(depreciation) of investments --- ---
----------- -----------
Net assets applicable to capital
shares outstanding $231,882,231 $691,769,305
----------- -----------
Capital shares outstanding, an
unlimited number of no par shares
authorized 231,884,117 691,820,860
----------- -----------
NET ASSET VALUE, PER SHARE $1.00 $1.00
----- -----
See accompanying notes to financial statements.
78
<PAGE>
- --------------------------------------------------------------------------------
June 30, 1997
- --------------------------------------------------------------------------------
UNITED U.S.
SERVICES ALL
NEAR-TERM U.S. U.S. AMERICAN
TAX FREE TAX FREE INCOME EQUITY
$7,230,222 $18,180,639 $8,504,789 $16,291,395
- ---------- ----------- ---------- -----------
- --------------------------------------------------------------------------------
$7,248,859 $18,528,286 $9,608,259 $25,220,384
546 3,037 7,596 10,703
--- --- 25,050 23,856
131,307 328,850 130 686
--- 2,216 15,818 449,988
6,839 12,713 --- 992
5,348 6,577 4,970 5,332
- --------------------------------------------------------------------------------
7,392,899 18,881,679 9,661,823 25,711,941
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
--- 496,625 --- 214,445
24,581 34,038 25,602 6,161
--- --- 12,410 ---
3,850 16,231 1,149 960
4,513 7,378 7,813 12,003
- --------------------------------------------------------------------------------
32,944 554,272 46,974 233,569
- --------------------------------------------------------------------------------
$7,359,955 $18,327,407 $9,614,849 $25,478,372
- ---------- ----------- ---------- -----------
- --------------------------------------------------------------------------------
$7,537,927 $18,127,280 $7,150,062 $16,397,764
33,511 37,085 20,508 (960)
(230,120) (184,605) 1,340,809 152,579
18,637 347,647 1,103,470 8,928,989
- ---------- ----------- ---------- -----------
$7,359,955 $18,327,407 $9,614,849 $25,478,372
- ---------- ----------- ---------- -----------
701,606 1,541,633 663,431 812,866
- ---------- ----------- ---------- -----------
$10.49 $11.89 $14.49 $31.34
------ ------ ------ ------
79
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
U.S. China
Real Region
Estate Opportunity
INVESTMENTS, AT IDENTIFIED COST $11,954,613 $36,174,092
----------- -----------
ASSETS
- --------------------------------------------------------------------------------
Investments, at value $14,113,448 $42,174,697
Cash --- 78,093
Receivables:
Investments sold 356,433 ---
Dividends 78,553 130,886
Interest --- 991
Capital shares sold 96,671 153,817
Other assets 6,362 11,864
- --------------------------------------------------------------------------------
TOTAL ASSETS 14,651,467 42,550,348
- --------------------------------------------------------------------------------
LIABILITIES
- --------------------------------------------------------------------------------
Payables:
Bank overdraft 528,216 ---
Investments purchased --- 329,823
Capital shares redeemed 192,976 34,527
To manager and affiliates 16,163 62,596
Dividends and distributions 9,979 ---
Accounts payable and accrued
expenses 7,277 24,389
- --------------------------------------------------------------------------------
TOTAL LIABILITIES 754,611 451,335
- --------------------------------------------------------------------------------
NET ASSETS $13,896,856 $42,099,013
----------- -----------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Paid in capital $11,606,692 $40,578,674
Undistributed net investment income (loss) 105,364 204,822
Accumulated net realized gain (loss)
on investments and foreign currencies 25,965 (4,685,088)
Net unrealized appreciation (depreciation)
of investments and other assets and
liabilities denominated in foreign
currencies 2,158,835 6,000,605
----------- -----------
Net assets applicable to capital
shares outstanding $13,896,856 $42,099,013
----------- -----------
Capital shares outstanding, an
unlimited number of no par shares
authorized 977,184 4,897,397
----------- -----------
NET ASSET VALUE, PER SHARE $14.22 $8.60
----------- -----------
See accompanying notes to financial statements.
80
<PAGE>
- --------------------------------------------------------------------------------
June 30, 1997
- --------------------------------------------------------------------------------
U.S. U.S. U.S.
GLOBAL WORLD GOLD
RESOURCES GOLD SHARES
$25,273,248 $156,765,297 $118,210,973
- ----------- ------------ ------------
$30,443,008 $193,971,225 $ 84,725,561
--- --- ---
688,681 905,265 1,703,583
17,029 140,786................135,551
.........---...................2,117....................---
......22,745.................472,923................140,187
......12,525..................29,523.................36,889
..31,183,988.............195,521,839.............86,741,771
.....442,263.................489,290................845,630
.....521,020...............6,086,499..............5,714,685
.....168,097...............1,175,019................141,425
......45,457.................247,912................155,713
.........---....................--- ................166,414
......23,782..................57,234................195,110
...1,200,619...............8,055,954..............7,218,977
.$29,983,369............$187,465,885............$79,522,794
$ 24,219,845............$194,897,888...........$272,072,778
.......(212).................500,641................826,797
.....594,376............(45,137,574)..........(159,892,444)
...5,169,360..............37,204,930...........(33,484,337)
$ 29,983,369............$187,465,885...........$ 79,522,794
...4,088,414..............11,750,258.............84,834,098
.......$7.33..................$15.95..................$0.94
81
<PAGE>
Statements of Operations
...................................U.S.........................U.S.
.................................Treasury...................Government
................................Securities..................Securities
...................................Cash.....................Savings
NET INVESTMENT INCOME.....................................
Income:
.......Dividends..................................$ ---........$ ---
.......Foreign taxes withheld on dividends................--- ---
..............Net dividends...............................---........---
.......Interest and other...........................8,699,219........34,981,442
..............Total Income..........................8,699,219........34,981,442
Expenses:............................................................
.......Management fee.................................826,231........2,734,316
.......Transfer agent fees and expenses................440,131 835,234
.......Accounting service fees and expenses.............67,493 177,295
.......Legal and professional fees.....................69,387........217,692
.......Custodian fees.................................151,904........99,563
.......Shareholder reporting...........................54,938........100,152
.......Registration fees...............................32,099........58,073
.......Trustees' fees and expenses.....................26,833........93,616
.......Miscellaneous...................................55,787........188,663
.......Total expenses before reductions.............1,724,803 4,504,604
.......Short-term trading fee.............................---............. ---
.......Expenses offset.................................(5,481) (15,808)
.......Expenses reimbursed................................---........(2,642,534)
..............Net Expenses..........................1,719,322 1,846,262
Net Investment Income...............................6,979,897.........33,135,180
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS............................................
.......Realized gain (loss) from investments..............--- 9,340
.......Unrealized appreciation (depreciation).............
..............of investments..............................---............ ---
Net Realized and Unrealized Gain on Investments ---
9,340
Net Increase in Net Assets Resulting From Operations
.......$6,979,897...................................................$33,144,520
See accompanying notes to financial statements.
82
<PAGE>
...United.........................................................U.S.
..Services.........................................................All
..Near-Term..............U.S......... U.S................American
..Tax Free.............Tax Free..... Income............. Equity
$ ---...........$ ---..... $ 374,480 $ 279,036
.......---...................---..... --- (1,336)
.......---...................---..... 374,480 277,700
327,931 1,016,933..... 33,184 111,315
327,931 1,016,933..... 407,664 389,015
.....32,370............. 141,232..... 70,067 134,125
......12,449..............39,017..... 46,713 71,808
......35,008..............40,251..... 33,268 35,550
......11,679..............17,181..... 12,253 16,842
.......5,280...............7,443..... 12,637 24,301
.......1,570...............5,065..... 6,361 13,865
......19,514..............15,622..... 16,405 18,368
.......1,935...............3,765..... 3,867 4,323
.......4,580...............6,830..... 4,126 4,891
.....124,385.............276,406..... 205,697 324,073
.........---............---..... (1,027) (5,338)
.........(59.).........(554.) (481) (372)
.....(98,358.).....(200,437.) --- (198,975)
......25,968.........75,415.. 204,189 119,388
.....301,963........941,518.. 203,475 269,627
.........................9,354........(38,538.) 1,752,977 281,397
........................52,103........534,837.. (593,053) 4,872,127
........................61,457........496,299.. 1,159,924 5,153,524
......................$363,420.....$1,437,817.. $1,363,399 $5,423,151
83
<PAGE>
84
<PAGE>
Statements of Operations
................................................
....................................... U.S..............China
...................................... Real ............Region
..................................... Estate............Opportunity
NET INVESTMENT INCOME
Income:
.......Dividends.......................$ 625,340............$ 600,601
.......Foreign taxes withheld on dividends....--- ---
.............Net dividends.........625,340.................... 600,601
.......Interest and other...........43,936.................... 263,589
.............Total Income..........669,276.................... 864,190
Expenses:
.......Management fee..............101,214.................... 350,719
.......Transfer agent fees and expenses.........58,281 184,492
.......Accounting service fees and expenses...................31,911 68,313
.......Legal and professional fees............................14,447......22,000
.......Custodian fees..........................................7,472......13,809
.......Shareholder reporting...................................7,122......23,105
.......Registration fees......................................14,289......22,370
.......Trustee's fees and expenses.............................4,518......6,392
.......Amortization of organizational costs......................--- 2,916
.......Miscellaneous...........................................5,874...16,643
.......Total expenses before reductions..................... 245,128 710,759
.......Short-term trading fee.................................(2,851) (9,473)
.......Expenses offset..........................................(611) (649)
.......Expenses reimbursed.......................................---... (79,725)
.............Net Expenses....................................241,666... 620,912
Net Investment Income (Loss).................................427,610... 243,278
.......
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
.......Realized gain (loss) from:
.............Securities....................................1,242,646.....637,171
.............Foreign currency transactions........................--- (5,471)
............. Net realized gain (loss)....................1,242,646 631,700
.......Unrealized appreciation (depreciation) of:
.............Investments...................................1,659,405...7,311,762
.............Other assets and liabilities denominated in
.............foreign currencies.............................---.........(17,895)
............. Net unrealized
appreciation (depreciation) 1,659,405 7,293,867
Net Realized and Unrealized Gain (Loss)
.............on Investments..........................2,902,051........7,925,567
Net Increase (Decrease) in Net Assets
Resulting From Operations...........................$3,329,661.......$8,168,845
See accompanying notes to financial statements.
85
<PAGE>
...U.S...............................U.S................U.S.
..Global.............................World..............Gold
.Resources...........................Gold..............Shares
.....$368,395...........$1,577,948. $4,677,004
......(16,576)........... (104,229) ---
......351,819............1,473,719. 4,677,004
.......79,589..............767,995. 2,321,833
......431,408............2,241,714. 6,998,837
......281,264............2,380,969. 1,173,225
......208,714..............814,580. 1,194,230
.......51,549..............165,745. 107,570
.......22,892..............104,850. 68,639
.......14,549...............36,157. 114,540
.......31,091..............102,773. 182,110
.......20,866...............29,073. 27,451
........6,508...............36,064. 21,952
..........--- .................---. ---
.......21,665...............51,422. 61,300
......659,098............3,721,633. 2,951,017
......(11,147).............(38,540) (140,154 )
.......(2,499)..............(6,499) (3,791 )
.........--- ---..................---
......645,452............3,676,594. 2,807,072
.....(214,044)..........(1,434,880) 4,191,765
......922,438............9,537,972. (43,710,642 )
........1,517................3,618. 19,584
......923,955............9,541,590. (43,691,058 )
....3,709,113..........(58,478,255) (23,588,796 )
.........(462)................(909) ---
....3,708,651..........(58,479,164) (23,588,796 )
....4,632,606..........(48,937,574) (67,279,854 )
...$4,418,562.........$(50,372,454) $(63,088,089 )
86
<PAGE>
Statements of Changes in Net Assets
..................................................................U.S. Treasury
............................................................Securities Cash
....................................................1997...................1996
INCREASE (DECREASE) IN NET ASSETS
From investment operations:
.......Net investment income.........................$6,979,897. $7,388,094
.......Net realized gain (loss).....................---. ---
.......Net unrealized appreciation (depreciation) --- ---
..............Net increase in net assets from...................
..............investment operations...................6,979,897. 7,388,094
Distributions to shareholders:..................................
.......From net investment income....................(6,979,895) (7,388,094)
.......In excess of net investment income.................--- ---
.......From net capital gains...............................---.........---
..............Total distributions to shareholders.....(6,979,895 ) (7,388,094)
From capital share transactions:
.......Proceeds from shares sold.............4,905,311,931....,914,474,200
.......Distributions reinvested..................6,949,861....,356,338
.............................................4,912,261,792....,921,830,538
.......Cost of shares redeemed...............4,869,223,284) (4,923,359,484)
..............Net increase (decrease) in net assets
..............from capital share transactions......43,038,508 (1,528,946)
.............................................................
NET INCREASE (DECREASE) IN NET ASSETS..............43,038,510 (1,528,946)
NET ASSETS
Beginning of year..................188,843,721............ 190,372,667
End of year.......................$231,882,231............ $188,843,721
Undistributed net investment
income, end of year $52,163 $52,161
Capital Share Activity
.......Shares sold..................4,905,311,902. 4,914,471,458
.......Shares reinvested................6,949,861. 7,356,337
.......Shares redeemed.............(4,869,221,951) (4,923,359,484)
..............Net share activity.......43,039,812. (1,531,689)
See accompanying notes to financial statements.
87
<PAGE>
................U.S. Government......................United Services
..............Securities Savings ..................Near-Term Tax Free
.1997...................1996.............1997...............1996
$ 33,135,180 $ 29,918,820 $ 301,963 $306,958
9,340 (612,482) 9,354 24,495
------------- --------
--- --- 52,103 (72,642)
33,144,520 29,306,338 363,420 258,811
(33,144,634) (29,306,338) (301,300) (306,958)
------------- --------
-- (4,578)
------------- ------------- --------
--------
(33,144,634 ) (29,306,338 )
(301,300 ) (311,536 )
649,752,926 583,224,976
4,278,905 2,764,904
33,129,743 29,287,828
243,513 252,029
682,882,669 612,512,804
4,522,418 3,016,933
(579,521,813 ) (553,476,691 )
(3,769,377 ) (3,547,566 )
103,360,856 59,036,113
753,041 (530,633)
103,360,742 59,036,113
815,161 (583,358)
588,408,563 529,372,450
6,544,794 7,128,152
$ 691,769,305 $ 588,408,563
$ 7,359,955 $ 6,544,794
$ 1,667,229 $ 1,639,506
$ 33,511 $ 32,848
649,751,804 583,226,089
408,508 263,905
33,129,743 29,287,828
23,316 24,065
(579,521,813) (553,476,691 )
(360,674) (338,499 )
103,359,734 59,037,226
71,150 (50,529)
88
<PAGE>
Statements of Changes in Net Assets
......................................................... .....U.S. Tax Free
........................................................1997.............1996
INCREASE (DECREASE) IN NET ASSETS
From investment operations:
.......Net investment income..........................$941,518. $979,635
.......Net realized gain (loss)........................(38,538) 47,281
.......Net unrealized appreciation (depreciation) 534,837
(16,415......................................................)
..............Net increase in net assets from..................
..............investment operations..................1,437,817. 1,010,501
Distributions to shareholders:
.......From net investment income.....................(938,596) (942,876)
.......From net capital gains..............................---. ---
..............Total distributions to shareholders......(938,596) (942,876)
From capital share transactions:
.......Proceeds from shares sold...........................9,028,653. 13,085,062
.......Distributions reinvested..............................760,035. 755,742
.......Paid-in capital portion of short-term trading fee --- ---
.......................................................9,788,688. 13,840,804
.......Cost of shares redeemed.......................(11,909,505) (12,572,221)
..............Net increase (decrease) in net assets
..............from capital share transactions.........(2,120,817) 1,268,583
NET INCREASE (DECREASE) IN NET ASSETS.................(1,621,596) 1,336,208
NET ASSETS
Beginning of year................................19,949,003 18,612,795
End of year........................................$ 18,327,407. $ 19,949,003
................................................................
Undistributed net investment income, end of year $37,085 $34,163
Capital Share Activity
.......Shares sold..................................768,737. 1,120,663
.......Shares reinvested.............................64,725. 64,582
.......Shares redeemed...........................(1,014,702) (1,074,406)
..............Net share activity...................(181,240) 110,839
See accompanying notes to financial statements.
89
<PAGE>
<TABLE>
U.S. Income........................U.S. All American Equity
. 1997. 1996....................1997.........1996
<CAPTION>
<S> <C> <C> <C> <C>
......$203,475...........$239,825. $269,627 $246,841
.....1,752,977..........1,011,146. 281,397 433,841
......(593,053)...........236,929. 4,872,127 2,192,371
.....1,363,399..........1,487,900. 5,423,151 2,873,053
..................................
......(173,113)..........(238,013) (291,937)(228,060)
....(1,400,898)..........(164,479) (511,031) ---
....(1,574,011)..........(402,492) (802,968) (228,060)
.....2,905,625..........5,105,879. 16,746,661 6,841,391
.....1,473,596............380,195. 759,303 196,271
...........---................---. 113 ---
.....4,379,221..........5,486,074. 17,506,077 7,037,662
....(4,251,783)........(7,103,504) (11,868,167)(6,392,929)
.......127,438.........(1,617,430) 5,637,910 644,733
.....(83,174)......... (532,022) 10,258,093 3,289,726
.....9,698,023.........10,230,045. 15,220,279 11,930,553
....$ 9,614,849........$ 9,698,023. $ 25,478,372 $ 15,220,279
......$ 20,508............$(3,771) $(960) $46,595
....203,876............355,655. 595,950 302,225
....110,120.............26,224. 28,750 8,612
....(299,586)..........(499,325) (431,873) (285,028)
.......14,410...........(117,446) 192,827 25,809
90
<PAGE>
Statements of Changes in Net Assets
.................................... U.S. Real Estate
.....................................1997..............................1996
INCREASE (DECREASE) IN NET ASSETS
From investment operations:
.......Net investment income (loss)..$ 427,610................$ 311,942
.......Net realized gain (loss)........1,242,646................417,019
.......Net unrealized appreciation.....1,659,405................601,257
..............Net increase (decrease)
in net assets from
..............investment operations....3,329,661................1,330,218
Distributions to shareholders:
.......From net investment income...........(342,360) (297,959)
.......In excess of net investment income........--- ---
.......From net capital gains....................---..................---
.......Tax return of capital.....................---..................(96,776)
..............Total distributions to
shareholders...........................(342,360) (394,735)
.......................................................................
From capital share transactions:
.......Proceeds from shares sold............30,297,759.............6,020,565
.......Distributions reinvested................324,421.............344,204
.......Paid-in capital portion of
short-term trading fee 3,697 ---
.............................................30,625,877. 6,364,769
.......Cost of shares redeemed..............(27,936,336) (8,249,033)
..............Net increase (decrease) in net assets
..............from capital share transactions.....2,689,541 (1,884,264)
NET INCREASE (DECREASE) IN NET ASSETS............5,676,842 (948,781)
NET ASSETS
Beginning of year........................8,220,014................. 9,168,795
End of year..............................$ 13,896,856...............$ 8,220,014
Undistributed net investment income, end of year $105,364 $(29,047)
Capital Share Activity
.......Shares sold........................2,314,927. 563,985
.......Shares reinvested.....................23,230. 31,601
.......Shares redeemed...................(2,110,101) (782,228)
..............Net share activity............228,056. (186,642)
See accompanying notes to financial statements.
91
<PAGE>
.................................China Region ....................................... U.S. Global
....................................... Opportunity............................................. Resources
.................... 1997 ...........1996 .............. 1997 ....................... 1996
.............................................................................................................
...................................................................................................
......................$ 243,278.........$ 235,190....... $ (214,044)$ (28,103)
.........................631,700...........(1,474,336) 923,955 3,861,566
.......................7,293,867..............851,953. 3,708,651 614,768
.......................8,168,845.............(387,193) 4,418,562 4,448,231
.........................(92,833)........(235,190) (142,583) --- .---...........(68,295) (3,778)
(34,009)
.............................---.......................................................---......... (3,293,334)
(238,064)
.............................---.......................................................---......... --- ---
.........................(92,833)..................(303,485) (3,439,695)
(272,073)
................................
......................34,873,032.................14,272,348. 27,452,394
8,361,170
..........................89,879....................293,252. 3,089,881
242,924
.........................144,774.....................35,467. 10,465 ---
......................35,107,685.................14,601,067. 30,552,740
8,604,094
.....................(22,051,958)...............(11,964,951) (26,082,216 )
(9,698,547......................)
......................13,055,727..................2,636,116. 4,470,524
(1,094,453......................)
......................21,131,739..................1,945,438. 5,449,391
3,081,705
......................20,967,274.................19,021,836. 24,533,978
21,452,273
....................$ 42,099,013...............$ 20,967,274. $ 29,983,369
$ 24,533,978
........................$204,822....................$78,442. $(212)
$142,583
.......................4,590,966..................2,218,121. 3,747,347
1,290,538
..........................14,132.....................45,974. 436,424
40,623
......................(2,966,726)................(1,856,024) (3,609,089 )
(1,540,513......................)
.......................1,638,372....................408,071. 574,682
(209,352......................)
Statements of Changes in Net Assets
........................................................................U.S. World Gold
............................................................1997..............................1996
INCREASE (DECREASE) IN NET ASSETS
From investment operations:
.......Net investment income (loss)....................$ (1,434,880) $ (914,444)
.......Net realized gain (loss).............................9,541,590. 12,866,523
.......Net unrealized appreciation (depreciation).........(58,479,164) 52,719,791
.......Net increase (decrease) in net assets from.....................
..............investment operations.......................(50,372,454) 64,671,870
Distributions to shareholders:
.......From net investment income.........................(13,061,240) ---
.......In excess of net investment income........................ --- ---
.......From net capital gains.....................................---.............................. ---
..............Total distributions to shareholders (13,061,240) ---
From capital share transactions:
.......Proceeds from shares sold..........................525,463,040.............................. 634,622,523
.......Distributions reinvested............................12,024,924.............................. ---
.......Paid-in capital portion of short-term trading fee 823,646
371,046
.............................................................538,311,610.............................. 634,993,569
.......Cost of shares redeemed..............................(536,193,421) (632,356,617)
..............Net increase (decrease) in net assets
..............from capital share transactions.................2,118,189 2,636,952
NET INCREASE (DECREASE) IN NET ASSETS.......................(61,315,505) 67,308,822
NET ASSETS
Beginning of year............................................248,781,390.............................. 181,472,568
End of year................................................$ 187,465,885.............................. $ 248,781,390
Undistributed net investment income, end of year $500,641
$13,474,939
Capital Share Activity
.......Shares sold............................................26,738,670 33,665,564
.......Shares reinvested.........................................627,606 ---
.......Shares redeemed.......................................(27,393,631) (33,367,372)
..............Net share activity.................................(27,355) 298,192
See accompanying notes to financial statements.
92
<PAGE>
........................................................................
.................................U.S. Gold Shares
.......................1997................................1996
...................$ 4,191,765. $ 4,175,035
.....................(43,691,058) (17,219,457 )
.....................(23,588,796) 31,413,759
.....................(63,088,089) 18,369,337
......................(5,265,799) (4,175,035 )
.............................---. (198,462)
.............................---. ---
......................(5,265,799) (4,373,497 )
...................4,140,600,024. 4,429,334,712
.......................4,884,235. 4,005,509
.......................9,317,558. 4,213,513
...................4,154,801,817. 4,437,553,734
..................(4,160,764,515) (4,508,881,568 )
......................(5,962,698) (71,327,834 )
.....................(74,316,586) (57,331,994 )
.....................153,839,380. 211,171,374
....................$ 79,522,794. $ 153,839,380
.......................$ 826,797. $ 1,803,201
...................2,897,102,803. 2,035,370,163
.......................4,125,689. 2,107,294
..................(2,900,033,745) (2,052,468,648 )
.......................1,194,747. 14,991,191
</TABLE>
93
<PAGE>
Notes to Financial Statements
Note 1: Significant Accounting Policies U.S. Global Investors Funds, formerly
United Services Funds, (the "Trust"), consisting of eleven separate funds (the
"Funds"), is organized as a Massachusetts business trust. Each Fund is a
diversified, open-end management investment company registered under the
Investment Company Act of 1940. The U.S./United Services prefix is omitted
throughout the notes to financial statements. The following is a summary of
significant accounting policies consistently followed by the Funds in the
preparation of their financial statements. The policies are in conformity with
generally accepted accounting principles.
A. Security Valuations
The Funds value investments traded on national or international securities
exchanges and NASDAQ quoted securities at the last sales price reported by the
security's primary exchange at the time of daily valuation. Domestically listed
and NASDAQ securities for which no sale was reported, over-the-counter
securities and corporate bonds are valued at the mean between the last reported
bid and ask prices obtained from one or more dealers making markets in the
securities. Short-term investments with effective maturities of sixty days or
less at the date of purchase and investments of Treasury Securities Cash and
Government Securities Savings are valued at amortized cost, which approximates
market value. An independent pricing service values municipal securities and
long-term U. S. government obligations using a system based on such factors as
credit rating, maturity, coupon and type of security to determine fair value.
B. Securities Valued by the Trustees
The trustees determine fair value for securities when market quotations are not
available or the security is subject to legal restrictions on resale. The
following factors are considered in determining fair value: nature and duration
of restrictions, trading volume, market values of unrestricted shares of the
same or similar class, investment management's judgment regarding the market
experience of the issuer, financial status and other operational and market
factors affecting the issuer, issuer's management, quality of the underlying
property based on review of independent geological studies, the extent of the
Fund's investment in the trading securities of the issuer; and other relevant
matters.
94
<PAGE>
C. Security Transactions and Investment Income
Security transactions are accounted for on trade date. Certain transaction costs
are capitalized and included in the cost of securities. Realized gains and
losses from security transactions are determined on an identified-cost basis.
Dividend income is recorded on the ex-dividend date or, for certain foreign
securities, when the information becomes available to the Funds. Interest income
is recorded on an accrual basis. Discounts and premiums on securities purchased
are accreted and amortized, respectively, on the same basis as used for federal
tax reporting. The Funds may purchase securities on a when-issued or
delayed-delivery basis and segregate on their books liquid assets equal to the
obligation until settlement. The investment is accounted for in the same manner
as marketable portfolio securities.
D. Repurchase Agreements
The Funds may enter into repurchase agreements with recognized financial
institutions or registered broker-dealers and, in all instances, hold, as
collateral, underlying securities with a value exceeding the total repurchase
price, including accrued interest. The Funds use a joint repurchase agreement
account where uninvested cash is collectively invested in repurchase agreements,
and each participating Fund owns an undivided interest in the account.
E. Options
Some Funds may write or purchase options on securities. The option premium is
the basis for recognition of unrealized or realized gain or loss on the option.
The cost of securities acquired or the proceeds from securities sold through the
exercise of the option is adjusted by the amount of the premium. There was no
activity in options written or purchased during the year.
F. Foreign Currency Transactions
Some Funds may invest in securities of foreign issuers. The accounting records
of these Funds are maintained in U.S. dollars. At each net asset value
determination date, the value of assets and liabilities denominated in foreign
currencies are translated into U. S. dollars using the current exchange rate.
Security transactions, income and expenses are converted at the prevailing rate
of exchange on the date of the event. The effect of changes in foreign exchange
rates on foreign denominated securities is included with the net realized and
unrealized gain or loss on securities. Other foreign currency gains or losses
are reported separately.
95
<PAGE>
G. Federal Income Taxes
The Funds intend to continue to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute all
of their taxable income to shareholders. Accordingly, no provision for federal
income taxes is required.
H. Organizational Costs
Costs incurred in organizing the Funds have been capitalized and are being
amortized on a straight-line basis over a 60-month period.
I. Dividends and Distributions to Shareholders
The Funds record dividends and distributions to shareholders on the ex-dividend
date. Distributions are determined in accordance with income tax regulations
that may differ from generally accepted accounting principles. Accordingly,
periodic reclassifications are made within the Funds' capital accounts to
reflect income and gains available for distribution under income tax
regulations. The Funds make distributions at least annually. Treasury Securities
Cash and Government Securities Savings accrue dividends, including short-term
gains or losses, on a daily basis with payment monthly. Tax Free and Near-Term
Tax Free pay monthly dividends. All American Equity and Income pay quarterly
dividends.
J. Expenses
Each Fund bears expenses incurred specifically on its behalf plus an allocation
of its share of Trust level expenses. Short-term trading fees collected from
temporary investors in the Funds are applied as a reduction of expenses to the
extent of such related cost; any excess is credited as paid-in capital. Expense
offset arrangements have been made with the Funds' custodian so the custodian
fees are paid indirectly by credits earned on the Funds' cash balances.
Such deposit arrangements are an alternative to overnight investments.
K. Use of Estimates in Financial Statement Preparation The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and reported amounts of
income and expenses during the reporting period. Actual results could differ
from those estimates.
96
<PAGE>
NOTE 2: RELATED PARTY TRANSACTIONS
U.S. Global Investors, Inc. (the "Manager"), under an investment advisory
agreement with the Trust in effect through October 30, 1997, furnishes
management and investment advisory services and, subject to the supervision of
the Trustees, directs the in vestments of each Fund according to its investment
objectives, policies and limitations. The Manager also furnishes all necessary
office facilities, business equipment and personnel for administering the
affairs of the Trust. Frank E. Holmes, a trustee of the Funds, is the
controlling owner of the Manager. For the services of the Manager, each Fund
pays a management fee based on its net assets. Fees are accrued daily and paid
monthly. The contractual management fee for each Fund is:
................................................. Annual Percentage of
Fund Average Daily Net Assets
..........Gold Shares, All American .75% of the first $250,000,000
and
..........Equity, Income, Tax Free and .50% of the excess
..........Real Estate
..........Treasury Securities Cash and .50% of the first
$250,000,000 and
..........Government Securities Savings .375% of the excess
..........World Gold and Global Resources 1% of the first $250,000,000
and
............................50% of the excess
..........Near-Term Tax Free .50%
..........China Region Opportunity 1.25%
The Manager has voluntarily guaranteed to reimburse specific Funds so that their
total operating expenses will not exceed certain annual percentages of average
net assets. The expense limits for the year ended June 30, 1997, were: China
Region Opportunity at 2.25%, All American Equity at .70%, Government Securities
Savings, Near-Term Tax Free and Tax Free at .40% each. The expenses for the year
ending June 30, 1998, will be voluntarily limited as follows: All American
Equity at 1.00%, Tax Free and Near-Term Tax Free at .70% and Government
Securities Savings at .40%.
United Shareholder Services, Inc. ("USSI"), a wholly owned subsidiary of the
Manager, is transfer agent and accounting service agent for the Funds. Each Fund
pays an annual fee based on number of shareholder accounts for transfer agency
services. Certain account fees are paid directly by shareholders to the transfer
agent, which, in turn, reduces its charge to
97
<PAGE>
the Funds. For maintaining the books and records of the Funds and calculating
the daily net asset values, USSI is paid a fee based on Fund net assets subject
to a minimum fee. Additionally, the Manager is reimbursed at cost for internal
audit and in-house legal services pertaining to each Fund.
During the period ended June 30, 1997, A & B Mailers, Inc., a wholly owned
subsidiary of the Manager, was paid $591,339 for mailing services provided to
the Funds.
The five independent trustees each receive $24,000 annually as compensation for
serving on the board, plus $2,000 per each meeting attended. The chairman and
members of special committees receive additional compensation ranging from
$1,500 to $14,000.
NOTE 3: INVESTMENT ACTIVITY
Purchases and sales of long-term securities for the period ended June 30, 1997,
are summarized as follows:
...Fund........................... Purchases................... Sales
- --------------------------------------------------------------------------------
...Near-Term Tax Free...............$ 5,756,209...............$ 5,881,161
...Tax Free............................15,528,792...................18,250,721
Income 7,777,424................... 9,062,085
...All American Equity..................3,505,808....................1,406,363
...Real Estate.........................18,622,990...................15,061,868
...China Region Opportunity............15,647,378....................5,763,309
...Global Resources....................18,577,166...................14,178,153
...World Gold..........................93,083,514..................104,460,686
...Gold Shares.........................70,287,337..................133,182,436
Treasury Securities Cash and Government Securities Savings held only short-term
investments.
Investments in foreign issuers as a percent of total investments at June 30,
1997 were: 7% of Income, 80% of China Region Opportunity, 43% of Global
Resources, 79% of World Gold and 77% of Gold Shares.
98
<PAGE>
The following table presents the income tax basis of securities owned at June
30, 1997, and the tax basis components of net unrealized appreciation or
depreciation:
<TABLE>
.......................................................Gross..............Gross..........Net unrealized
.................................Aggregate.......... unrealized.........unrealized....... appreciation
Fund..............................cost............ appreciation.......depreciation......(depreciation)
<S> <C> <C> <C> <C>
Treasury Securities Cash.........$229,646,207 ......$ -- ... $ -- $ . ---
Government Securities Savings.....693,154,162 ...... -- --
........
Near-Term Tax Free................7,230,222 ...........32,349............(13,712) 18,637
Tax Free.........................18,180,639...........355,397.............(7,750) ....... 347,647
Income............................8,507,159.........1,284,963...........(183,864) ....... 1,101,099
All American Equity..............16,298,425.........9,052,757...........(130,799) 8,921,958
Real Estate......................11,955,515.........2,206,969............(49,036) ....... 2,157,933
China Region Opportunity.........36,282,016.........8,986,695.........(3,093,901) 5,892,794
Global Resources.................25,363,921.........8,173,018.........(3,093,931) ......... 5,079,087
World Gold......................163,425,145........60,001,279........(29,455,199) ......... 30,546,080
Gold Shares.....................121,302,633.........1,456,592........(38,033,663) .........(36,577,071)
</TABLE>
Net realized capital loss carryforwards, for federal income tax purposes, may be
used to offset future capital gains until expiration. The loss carryforwards,
expiration dates, losses utilized and expired losses for each Fund, as of June
30, 1997, are as follows:
.............................Loss........Expiration.....Losses......Expired
Fund ..Carryforwards.. Dates Utilized
- --------------------------------------------------------------------------------
Losses
Government Securities
Savings ....$1,772,657....1999-2005 $ 377,467
Near-Term Tax Free ............230,120....2003-2004....$ 9,354
Tax Free........................184,605....2003-2005
Real Estate ..........................................1,157,788
China Region Opportunity......4,563,918....2003-2005.....
World Gold...................38,477,726....1999-2001.....4,357,723
Gold Shares.................119,418,200....1998-2005................ 34,881,276
Gold Shares had post-October 31, 1996 capital losses of $37,316,583 which, in
accordance with tax rules, are deemed to have occurred on July 1, 1997.
99
<PAGE>
NOTE 4: EQUITY ACCOUNTS
The following reclassifications were made within the equity accounts of the
funds to reflect permanent differences between financial and tax accounting. The
permanent differences were primarily the result of expiration of capital loss
carryforwards, classification of gains from passive foreign investment
companies, treatment of partnership investments, utilization of net operating
loss and other tax characteristics of earnings or distributions.
...............................................Undistributed .......Accumulated
.................................Paid-in ...Net Investment......Net Realized
Fund.............................Capital........ Income Gain (Loss)
- --------------------------------------------------------------------------------
Government Securities Savings....$ (414,824) $ 37,177 $ 377,647
Income..................................---...........(6,083) 6,083
All American Equity..................(8,464).........(25,245) 33,709
Real Estate.............................---...........49,161 (49,161)
China Region Opportunity (17,115) (24,065) 41,180
Global Resources........................361..........217,610 (217,971)
World Gold...........................(4,347).......1,521,822 (1,517,475)
Gold Shares.....................(34,881,274).........97,630 34,783,644
NOTE 5: RISKS OF CONCENTRATIONS
Gold Shares has significant investments in South African issuers. The unstable
political and social condition in South Africa may have disruptive effects on
the market prices of investments held by the Fund.
China Region Opportunity may be exposed to risk not typically associated with
investments in the United States, due to its investments in foreign issuers in
the region. These investments present risks resulting from disruptive political
or economic conditions and the possible imposition of adverse governmental laws
or currency exchange restrictions affecting the area.
100
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS -- U.S. TREASURY SECURITIES CASH June 30, 1997
For a capital share outstanding during
each year ended June 30, 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF YEAR $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.04 0.04 0.04 0.02 0.02
Distributions
From net investment income (0.04) (0.04) (0.04) (0.02) (0.02)
- ------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $ 1.00 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------------------------------------------------------------------
TOTAL RETURN (EXCLUDING ACCOUNT FEES) 4.35% 4.54% 4.43% 2.38% 2.46%
Ratios to Average Net Assets (a)
Net investment income 4.22% 4.42% 4.32% 2.38% 2.41%
Total expenses 1.04% 1.03% 0.97% 0.96% 1.14%
Expenses reimbursed or offset -- -- -- (0.03)% (0.15)%
Net expenses 1.04% 1.03% 0.97% 0.93% 0.99%
Net assets, end of year (in thousands) $231,882 $188,844 $190,373 $164,708 $142,888
(a) Expenses reimbursed or offset reflect reductions to total expenses, as discussed in the notes to
the financial statements. Such amounts would decrease the net investment income ratio had such
reductions not occurred.
See accompanying notes to financial statements.
</TABLE>
101
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS - U.S. GOVERNMENT SECURITIES June 30, 1997
For a capital share outstanding
during each year ended June 30, 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF YEAR $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- --------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.05 0.05 0.05 0.03 .04
Net realized and unrealized
gain (loss) -- -- (0.01 ) -- --
Total from investment activities 0.05 0.05 0.04 0.03 .04
Distributions
From net investment income (0.05) (0.05) (0.05) (0.03) (0.04)
Capital contribution from manager -- -- 0.01 -- --
- --------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- --------------------------------------------------------------------------------------------------------
TOTAL RETURN (EXCLUDING ACCOUNT FEES) 5.27% 5.34% 5.09% (b) 3.34% 3.79%
Ratios to Average Net Assets (a)
Net investment income 5.13% 5.28% 5.03% 3.34% 3.61%
Total expenses 0.70% 0.71% 0.68% 0.71% 0.81%
Expenses reimbursed or offset (0.41)% (0.45)% (0.45)% (0.55)% (0.62)%
Net expenses 0.29% 0.26% 0.23% 0.16% 0.19%
Net assets, end of year (in thousands) $691,769 $588,409 $529,372 $610,229 $445,418
(a) Expenses reimbursed or offset reflect reductions to total expenses, as discussed in the notes to
the financial statements. Such amounts would decrease the net investment income ratio had such
reductions not occurred.
(b) Total return includes the effect of a voluntary capital contribution by the Manager; otherwise the
return would have been 4.19%.
See accompanying notes to financial statements.
</TABLE>
102
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS -- UNITED SERVICES NEAR-TERM TAX FREE June 30, 1997
For a capital share outstanding
during each year ended June 30, 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF YEAR $ 10.38 $ 10.47 $ 10.39 $ 10.74 $ 10.42
- -------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.48 0.47 0.45 0.43 0.61
Net realized and unrealized gain (loss) 0.12 (0.09) 0.06 (0.21) 0.31
Total from investment activities 0.60 0.38 0.51 0.22 0.92
Distributions
From net investment income (0.49) (0.47) (0.43) (0.44) (0.59)
In excess of net investment income -- -- -- (0.07) --
From net realized gains -- -- -- -- (0.01)
In excess of net realized gains -- -- -- (0.06) --
Total distributions (0.49) (0.47) (0.43) (0.57) (0.60)
- -------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $ 10.49 $ 10.38 $ 10.47 $ 10.39 $ 10.74
- -------------------------------------------------------------------------------------------------------
TOTAL RETURN (EXCLUDING ACCOUNT FEES) 5.85% 3.68% 5.02% 2.03% 9.10%
Ratios to Average Net Assets (a)
Net investment income 4.67% 4.41% 4.25% 4.34% 5.73%
Total expenses 1.92% 1.75% 1.62% 1.80% 2.55%
Expenses reimbursed or offset (1.52)% (1.23)% (1.42)% (1.80)% (2.55)%
Net expenses 0.40% 0.52% 0.20% -- --
Portfolio turnover rate 103% 83% 53% 69% 140%
Net assets, end of year (in thousands) $ 7,360 $ 6,545 $ 7,128 $ 9,190 $1,775
(a) Expenses reimbursed or offset reflect reductions to total expenses, as discussed in the notes to
the financial statements. Such amounts would decrease the net investment income ratio had such
reductions not occurred.
See accompanying notes to financial statements.
</TABLE>
103
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS -- U.S. TAX FREE June 30, 1997
For a capital share outstanding
during each year ended June 30, 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF YEAR $ 11.58 $ 11.55 $ 11.40 $ 12.16 $ 11.69
- ------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.59 0.59 0.64 0.67 0.66
Net realized and unrealized gain (loss) 0.31 0.01 0.18 (0.56) 0.47
Total from investment activities 0.90 0.60 0.82 0.11 1.13
Distributions
From net investment income (0.59) (0.57) (0.64) (0.68) (0.63)
In excess of net investment income -- -- (0.03) (0.06) --
From net realized gains -- -- -- (0.06) (0.03)
In excess of net realized gains -- -- -- (0.07) --
Total distributions (0.59) (0.57) (0.67) (0.87) (0.66)
- ------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $ 11.89 $ 11.58 $ 11.55 $ 11.40 $ 12.16
- ------------------------------------------------------------------------------------------------------------
TOTAL RETURN (EXCLUDING ACCOUNT FEES) 7.93% 5.25% 7.51% 0.75% 9.97%
Ratios to Average Net Assets (a)
Net investment income 5.00% 5.06% 5.62% 5.68% 5.48%
Total expenses 1.46% 1.44% 1.49% 1.46% 1.53%
Expenses reimbursed or offset (1.06)% (1.08)% (1.27)% (1.46)% (1.21)%
Net expenses 0.40% 0.36% 0.22% -- 0.32%
Portfolio turnover rate 87% 69% 22% 51% 94%
Net assets, end of year (in thousands) $ 18,327 $19,949 $ 8,613 $ 18,656 $ 17,192
(a) Expenses reimbursed or offset reflect reductions to total expenses, as discussed in the notes to the
financial statements. Such amounts would decrease the net investment income ratio had such
reductions not occurred.
See accompanying notes to financial statements.
</TABLE>
104
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS -- U.S. INCOME June 30, 1997
For a capital share outstanding during
each year ended June 30, 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF YEAR $ 14.94 $ 13.35 $ 12.57 $ 14.06 $ 12.65
- -------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.31 0.35 0.35 0.31 0.30
Net realized and unrealized gain (loss) 1.77 1.84 0.79 (1.06) 2.19
Total from investment activities 2.08 2.19 1.14 (0.75) 2.49
Distributions
From net investment income (0.27) (0.35) (0.34) (0.31) (0.27)
In excess of net investment income -- -- (0.03) -- --
From net realized gains (2.26) (0.25) (0.02) (0.01) (0.79)
In excess of net realized gains -- -- (0.39) (0.02) --
Total distributions (2.53) (0.60) (0.36) (0.74) (1.08)
- -------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $ 14.49 $ 14.94 $ 13.35 $ 12.57 $ 14.06
- -------------------------------------------------------------------------------------------------------------
TOTAL RETURN (EXCLUDING ACCOUNT FEES) 15.58% 16.60% 9.31% (5.83% 20.68%
Ratios to Average Net Assets (a)
Net investment income 2.18% 2.45% 2.59% 2.27% 2.34%
Total expenses 2.20% 2.10% 2.01% 1.79% 1.88%
Expenses reimbursed or offset (0.01)% (0.02)% (0.03)% (0.05)% (0.05)%
Net expenses 2.19% 2.08% 1.98% 1.74% 1.83%
Average commission rate paid $0.0945 0.0941 n/a n/a n/a
Portfolio turnover rate 88% 51% 7% 7% 44%
Net assets, end of year (in thousands) $ 9,615 $ 9,698 $ 10,230 $ 11,865 $ 11,009
(a) Expenses reimbursed or offset reflect reductions to total expenses, as discussed in the notes to the
financial statements. Such amounts would decrease the net investment income ratio had such reductions not
occurred.
See accompanying notes to financial statements.
</TABLE>
105
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS -- U.S. ALL AMERICAN EQUITY June 30, 1997
For a capital share outstanding during
each year ended June 30, 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF YEAR $ 24.55 $ 20.08 $ 19.52 $ 20.60 $ 18.79
- ---------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.38 0.41 0.44 0.44 0.36
Net realized and unrealized gain (loss) 7.64 4.44 2.68 (0.75) 1.91
Total from investment activities 8.02 4.85 3.12 (0.31) 2.27
Distributions
From net investment income (0.43) (0.38) (0.39) (0.44) (0.37)
In excess of net investment income -- -- (0.02) (0.09) --
From net realized gains (0.80) -- (0.31) -- --
In excess of net realized gains -- (2.17) -- -- --
Total distributions (1.23) (0.38) (2.56) (0.77) (0.46)
- ---------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $ 31.34 $ 24.55 $ 20.08 $ 19.52 $ 20.60
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (EXCLUDING ACCOUNT FEES) 33.68% 24.31% 17.98% (1.67)% 12.15%
Ratios to Average Net Assets (a)
Net investment income 1.51% 1.84% 2.33% 2.11% 1.86%
Total expenses 1.81% 1.90% 2.17% 2.08% 1.75%
Expenses reimbursed or offset (1.14)% (1.22)% (1.47)% (1.47)% (0.72)%
Net expenses 0.67% 0.68% 0.70% 0.61% 1.03%
Average commission rate paid $0.1000 $0.1000 n/a n/a n/a
Portfolio turnover rate 7% 16% 97% 117% 12%
Net assets, end of year (in thousands) $25,478 $15,220 $11,931 $10,227 $12,331
(a) Expenses reimbursed or offset reflect reductions to total expenses, as discussed in the notes to the financial
statements. Such amounts would decrease the net investment income ratio had such reductions not occurred.
See accompanying notes to financial statements.
</TABLE>
106
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS -- U.S. REAL ESTATE June 30, 1997
For a capital share outstanding during
each year ended June 30, 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF YEAR $ 10.97 $ 9.80 $ 9.86 $ 10.96 $ 10.17
- ---------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.40 0.42 0.23 0.22 0.17
Net realized and unrealized gain (loss) 3.15 1.27 (0.13) (1.05) 0.79
Total from investment activities 3.55 1.69 0.10 (0.83) 0.96
Distributions
From net investment income (0.30) (0.39) (0.16) (0.22) (0.17)
In excess of net investment income -- -- -- (0.02) --
Tax return of capital -- (0.13) -- (0.03) --
Total distributions (0.30) (0.52) (0.16) (0.27) (0.17)
- ---------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $ 14.22 $ 10.97 $ 9.80 $9.86 $10.96
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (EXCLUDING ACCOUNT FEES) 32.44% 17.34% 1.09% (7.70)% 9.45%
Ratios to Average Net Assets (a)
Net investment income 3.19% 3.63% 2.22% 1.96% 1.55%
Total expenses 1.82% 2.27% 1.95% 1.62% 1.42%
Expenses reimbursed or offset (0.02)% (0.01)% (0.03)% (0.03)% (0.02)%
Net expenses 1.80% 2.26% 1.92% 1.59% 1.40%
Average commission rate paid $0.0830 $0.0925 n/a n/a n/a
Portfolio turnover rate 118% 108% 48% 145% 187%
Net assets, end of year (in thousands) $13,897 $ 8,220 $ 9,169 $14,597 $19,780
(a) Expenses reimbursed or offset reflect reductions to total expenses, as discussed in the notes to the financial
statements. Such amounts would decrease the net investment income ratio had such reductions not occurred.
See accompanying notes to financial statements.
</TABLE>
107
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS -- CHINA REGION OPPORTUNITY June 30, 1997
For a capital share outstanding during
each year ended June 30, 1997 1996 1995 1994 * 1994 **
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF YEAR $ 6.43 $ 6.67 $ 7.75 $ 10.00 $ 9.92
- ----------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income 0.05 0.08 0.10 0.04 0.04
Net realized and unrealized gain (loss) 2.15 (0.22) (1.09) (2.25) (2.17)
Total from investment activities 2.20 (0.14) (0.99) (2.21) (2.13)
Distributions
From net investment income (0.03) (0.08) (0.09) (0.04) (0.04)
In excess of net investment income -- (0.02) -- -- --
From net realized gains -- -- -- -- --
Total distributions (0.03) (0.10) (0.09) (0.04) (0.04)
- ----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $ 8.60 $ 6.43 $ 6.67 $ 7.75 $ 7.75
- ----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (EXCLUDING ACCOUNT FEES) 34.38% (2.07)% (12.79)% (21.11)% (21.48)%
Ratios to Average Net Assets (a)
Net investment income 0.87% 1.24% 1.53% 1.51% 1.33%
Total expenses 2.54% 2.60% 2.51% 3.10% 3.26%
Expenses reimbursed or offset (0.32)% (0.45)% (0.56)% (1.48)% (1.38)%
Net expenses 2.22% 2.15% 1.95% 1.62% 1.88%
Average commission rate paid $0.0034 $0.0028 n/a n/a n/a
Portfolio turnover rate 24% 37% 54% 13% 13%
Net assets, end of year (in thousands) $42,099 $20,967 $19,022 $ 7,655 $7,655
(a) Ratios are annualized for periods of less than one year. Expenses reimbursed or offset reflect reductions to total
expenses, as discussed in the notes to the financial statements. Such amounts would decrease the net investment
income ratio had such reductions not occurred.
* For the period January 10, 1994, commencement of operations, through June 30, 1994.
** For the period February 10, 1994, effective date of registration and public offering, through June 30, 1994.
See accompanying notes to financial statements.
</TABLE>
108
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS -- U.S. GLOBAL RESOURCES June 30, 1997
For a capital share outstanding during
each year ended June 30, 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF YEAR $ 6.98 $ 5.76 $ 5.74 $ 6.10 $ 5.78
- ------------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income (0.05) (0.01) (0.03) (0.02) 0.01
Net realized and unrealized gain (loss) 1.34 1.31 0.36 (0.18) 0.35
Total from investment activities 1.29 1.30 0.33 (0.20) 0.36
Distributions
From net investment income (0.04) -- -- -- (0.01)
In excess of net investment income -- (0.01) -- (0.01) (0.03)
From net realized gains (0.90) (0.07) -- (0.15) --
In excess of net realized gains -- -- (0.31) -- --
Total distributions (0.94) (0.08) (0.31) (0.16) (0.04)
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $ 7.33 $ 6.98 $ 5.76 $ 5.74 $6.10
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (EXCLUDING ACCOUNT FEES) 18.96% 22.80% 5.94% (3.73)% 6.46%
Ratios to Average Net Assets (a)
Net investment income (0.76)% (0.13)% (0.60)% (0.34)% 0.17%
Total expenses 2.34% 2.58% 2.51% 2.44% 2.48%
Expenses reimbursed or offset (0.04)% (0.01)% (0.02)% (0.01)% (0.02)%
Net expenses 2.30% 2.57% 2.49% 2.43% 2.46%
Average commission rate paid $0.0179 $0.0306 n/a n/a n/a
Portfolio turnover rate 52% 117% 50% 58% 120%
Net assets, end of year (in thousands) $29,983 $24,534 $21,452 $21,620 $23,939
(a) Expenses reimbursed or offset reflect reductions to total expenses, as discussed in the notes to the financial
statements. Such amounts would decrease the net investment income ratio had such reductions not occurred.
See accompanying notes to financial statements.
</TABLE>
109
<PAGE>
<TABLE>
<CAPTION>
U.S. WORLD GOLD -- FINANCIAL HIGHLIGHTS June 30, 1997
For a capital share outstanding during
each year ended June 30, 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF YEAR $ 21.12 $ 15.81 $ 15.63 $ 14.59 $ 9.51
- ------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income (0.12) (0.08) (0.12) (0.09) (0.12)
Net realized and unrealized gain (loss) (3.94) 5.39 0.33 1.13 5.20
Total from investment activities (4.06) 5.31 0.21 1.04 5.08
Distributions
From net investment income (1.11) -- -- -- --
In excess of net investment income -- -- (0.03) -- --
From net realized gains -- -- -- -- --
Total distributions (1.11) -- (0.03) -- --
- ------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $ 15.95 $ 21.12 $15.81 $ 15.63 $ 14.59
- ------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (EXCLUDING ACCOUNT FEES) (20.10)% 33.59% 1.36% 7.13% 53.58%
Ratios to Average Net Assets (a)
Net investment income (0.60)% (0.40)% (0.66)% (0.66)% (1.15)%
Total expenses 1.54% 1.53% 1.58% 1.57% 2.06%
Expenses reimbursed or offset (0.02)% (0.02)% (0.03)% (0.04)% (0.06)%
Net expenses 1.52% 1.51% 1.55% 1.53% 2.00%
Average commission rate paid $ 0.0220 $ 0.0202 n/a n/a n/a
Portfolio turnover rate 40% 26% 28% 20% 26%
Net assets, end of year (in thousands) $187,466 $248,781 $181,473 $202,819 $109,805
(a) Expenses reimbursed or offset reflect reductions to total expenses, as
discussed in the notes to the financial statements. Such amounts would
decrease the net investment income ratio had such reductions not occurred.
See accompanying notes to financial statements.
</TABLE>
110
<PAGE>
<TABLE>
<CAPTION>
U.S. GOLD SHARES -- FINANCIAL HIGHLIGHTS June 30, 1997
For a capital share outstanding during
each year ended June 30, 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF YEAR $ 1.84 $ 2.14 $ 2.48 $ 2.49 $ 2.21
- -------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income $ 0.04 $ 0.05 $ 0.06 0.07 0.04
Net realized and unrealized gain (loss) (0.89) (0.30) (0.33) (0.02) 0.29
Total from investment activities (0.85) (0.25) (0.27) 0.05 0.33
Distributions
From net investment income (0.05) (0.05) (0.06) (0.06) (0.04)
In excess of net investment income -- -- (0.01) -- (0.01)
From net realized gains -- -- -- -- --
Total distributions (0.05) (0.05) (0.07) (0.06) (0.05)
- -------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $ 0.94 $ 1.84 $ 2.14 $2.48 $2.49
- -------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (EXCLUDING ACCOUNT FEES) (46.49)% (11.73)% (11.21)% 1.85% 16.70%
Ratios to Average Net Assets (a)
Net investment income 2.68% 1.81% 2.47% 2.61% 2.58%
Total expenses 1.84% 1.58% 1.47% 1.52% 1.95%
Expenses reimbursed or offset (0.04)% 0.04% (0.05)% (0.06)% (0.07)%
Net expenses 1.80% 1.54% 1.42% 1.46% 1.88%
Average commission rate paid $0.0340 $0.0523 n/a n/a n/a
Portfolio turnover rate 44% 24% 33% 29% 20%
Net assets, end of year (in thousands) $79,598 $153,839 $211,171 $263,827 $299,808
(a) Expenses reimbursed or offset reflect reductions to total expenses, as discussed in the notes to the financial
statements. Such amounts would decrease the net investment income ratio had such reductions not occurred.
See accompanying notes to financial statements.
</TABLE>
111
<PAGE>
- ---------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- ---------------------------------
TO THE TRUSTEES AND SHAREHOLDERS OF U.S. GLOBAL INVESTORS FUNDS
In our opinion, the accompanying statements of assets and liabilities, including
the portfolios of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of U.S. Treasury Securities Cash, U.S.
Government Securities Savings, United Services Near-Term Tax Free, U.S. Tax
Free, U.S. Income, U.S. All American Equity, U.S. Real Estate, China Region
Opportunity, U.S. Global Resources, U.S. World Gold, and U.S. Gold Shares Funds,
comprising the separate funds of U.S. Global Investors Funds (the "Funds"), at
June 30, 1997, the results of each of their operations for the year then ended,
the changes in each of their net assets for each of the two years in the period
then ended and the financial highlights for the periods indicated, in conformity
with generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Funds' management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at June 30, 1997, by
correspondence with the custodian and brokers and the application of alternative
auditing procedures where confirmations from brokers were not received, provide
a reasonable basis for the opinion expressed above.
Our examinations were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The financial highlights for China Region
Opportunity Fund for the period February 10, 1994 through June 30, 1994 is
presented for purposes of additional information required by the Securities and
Exchange Commission. Such information has been subjected to the auditing
procedures applied in the examination of the basic financial statements and, in
our opinion, is fairly stated in all material respects in relation to the
financial statements taken as a whole.
PRICE WATERHOUSE LLP
San Antonio, Texas
August 13, 1997
112
<PAGE>
