[Front cover shows racing skiff and U.S. Global Investors logo]
U.S. GLOBAL INVESTORS FUNDS
ANNUAL REPORT
JUNE 30, 1999
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U.S. GLOBAL INVESTORS FUNDS
ANNUAL REPORT
JUNE 30, 1999
TABLE OF CONTENTS
LETTER TO SHAREHOLDERS ........................................ 1
MANAGEMENT TEAMS' PERSPECTIVES ................................ 6
PORTFOLIOS OF INVESTMENTS ..................................... 38
STATEMENTS OF ASSETS AND LIABILITIES .......................... 80
STATEMENTS OF OPERATIONS ...................................... 84
STATEMENTS OF CHANGES IN NET ASSETS ........................... 88
NOTES TO FINANCIAL STATEMENTS ................................. 96
FINANCIAL HIGHLIGHTS .......................................... 104
REPORT OF INDEPENDENT ACCOUNTANTS ............................. 115
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[U.S. Global Investors Logo]
U.S. Global Investors
P.O. Box 781234
San Antonio, Texas 78278-1234
Tel 1*800*US*FUNDS
Fax 210*308*1217
www.usfunds.com
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U.S. GLOBAL INVESTORS FUNDS
Dear Shareholder:
For the past nine years we have had
unprecedented continuous economic growth.
However, throughout these nine years there [Photo of Frank Holmes]
is one certain factor--the markets have
been volatile.
While we do not control interest rates, gold price movements, government
actions, currencies, etc., we can control the investment process by
implementing, and adhering to, a disciplined and structured investment strategy.
And while no investment strategy can guarantee a profit, our job is to
successfully navigate through volatile markets and deliver consistent superior
fund performance to our shareholders with the goal of beating our average peer
group as measured by Lipper indexes. [pic]
We believe there is a market for this disciplined investment approach and that
an understanding of investment objectives, limitations and risks is fundamental
to comparing the investments of our different funds. As you are aware, different
funds have different investment objectives and limitations. Each portfolio
management team has a unique investment style and strategy. Some analysts are
growth-oriented and others are value-oriented. All these differences create
different styles and results. What is critical to U.S. Global is that each fund
be in the top half of its peer group on a consistent basis.
Asset allocation will help you successfully navigate these changing cycles.
Research studies indicate that over 90% of the returns of a successful portfolio
are a function of selecting the right asset allocation--dividing your portfolio
among the major asset classes: stocks, bonds, cash and other investments. That
means that less than 10% depends on your ability to pick the right funds. To
maintain your portfolio for maximum returns, we suggest you diversify through
asset allocation in accordance with your investment expectations and avoid
overweighting in highly volatile sectors.
Large-cap stocks continued to drive the market this year, and our All American
Equity Fund was positioned to take advantage of this favorable market. This
fund, which invests in America's strongest and most successful companies,
continued to earn Morningstar's highest rating--five-stars--out of 3,043 and
1,878 domestic equity funds for the 3- and 5-year periods ended June 30, 1999,
respectively. (1)
Our tax free funds provide investors the opportunity to diversify their
portfolios with tax free income and take advantage of the appreciation in bond
prices when interest rates fall. Morningstar awarded our Near-Term Tax Free Fund
and our Tax Free Fund four stars out of 1,591 and 1,191 municipal bond funds for
the 3- and 5-year periods ended June 30, 1999, respectively. (2)
In today's changing market, a short-term fund, such as the U.S. Government
Securities Savings Fund, is an excellent means of ensuring instant liquidity.
According to IBC Financial Data, Inc., the U.S. Government
1
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Securities Savings Fund ranked among the top 10 highest yielding money market
funds out of 184 government money market funds for the 7-day period ended June
29, 1999. And, according to Lipper Analytical Services, Inc., the fund was
ranked among the top ten for total return among government money market funds
for the 3- and 5-year periods ended June 30, 1999. The fund ranked fifth out of
102 funds and fourth out of 87 funds for those respective periods.(3)
On the global side, the Asian markets are beginning to show signs of recovery.
As the 50th anniversary of communism approaches in October 1999, we are seeing
China celebrate its political and economic achievements.(4) I was impressed to
see a rebound in our China Region Opportunity Fund, climbing approximately 51%
in the second quarter of 1999. In fact, the fund has had outstanding
performance, particularly since March, returning 37.50% for the one-year period
ended June 30, 1999. In comparison, the fund's average annual total returns were
(5.43)% and (9.22)% for the five-year and since inception (2/10/94) periods
ended June 30, 1999, respectively.
Yes, this is a volatile fund. And, everyone knows that past performance is not a
guarantee of future results. That's why we suggest investors use a dollar-cost
averaging program, such as our ABC Investment Plan(R) to build a small position
in the fund and take advantage of the benefits of investing a set amount on a
regular basis. Of course, no investment plan can guarantee a profit or protect
against depreciation in a declining market, but the ABC Investment Plan(R) can
help smooth out the effects of market volatility.(5)
For investors who want exposure to natural resources, without the risk of
investing in a single sector, such as gold, our Global Resources Fund is an
excellent alternative. As the following chart illustrates, over the past year,
the Dow Jones Basic Materials and Energy Index has demonstrated less volatility
and better returns, when compared to the Philadelphia Stock Exchange Gold and
Silver Index. The Global Resources Fund invests in companies from the natural
resources sectors with the most favorable profiles, while eliminating the risks
of investing in a single country or industrial sector.(4)
PHILADELPHIA STOCK DOW JONES BASIC
DATE EXCHANGE SILVER & GOLD INDEX MATERIALS AND ENERGY INDEX
- -------- ---------- ----------
6/30/98 $10,000.00 $10,000.00
7/31/98 $ 8,773.01 $ 9,351.18
8/31/98 $ 6,816.79 $ 8,302.83
9/30/98 $10,455.94 $ 9,303.99
10/30/98 $10,511.71 $ 9,512.97
11/30/98 $ 9,894.03 $ 9,621.40
12/31/98 $ 9,058.84 $ 9,464.97
1/29/99 $ 8,820.41 $ 9,090.87
2/26/99 $ 8,443.95 $ 8,888.35
3/31/99 $ 8,332.40 $ 9,901.07
4/30/99 $10,237.03 $11,209.44
5/28/99 $ 8,487.17 $11,506.41
6/30/99 $ 9,332.12 -6.68% $11,278.44 12.78%
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U.S. GLOBAL INVESTORS FUNDS
FOUR CRITICAL SUCCESS FACTORS FOR YOUR PORTFOLIO
Today's market has some outstanding opportunities for long-term investors. With
this in mind, please remember that following a few sound principles of prudent
investing is more important than picking any one stock, bond or fund.
USE ASSET ALLOCATION
The key for every successful investor--conservative or aggressive, large or
small, GenXer, baby boomer or retiree--is asset allocation. Research studies
have shown that over 90% of the returns of a successful portfolio are a function
of selecting the right asset allocation, not on individual fund selections. For
help in selecting an asset mix that meets your personal financial goals, you can
complete our on-line asset allocation worksheet (www.usfunds.com). This
worksheet can help you plan for retirement, education expenses and other
financial goals. If you become bearish about the stock market, it will reset
your allocation towards bonds and cash. As you age, and your investment
objectives change, it will assist you in adjusting your allocation mix.
MAX OUT YOUR 401(K) CONTRIBUTIONS
If you are nearing retirement, you should know that today's retirees must
realistically plan to live on their retirement savings for 20 to 30 years. What
does that mean for you? First, if you are working, you should max out your
401(k) or any other employer-sponsored retirement plan. Take advantage of every
dollar your employer matches and every tax advantage offered.
MAX OUT YOUR IRA SAVINGS
Max out your IRAs. Take advantage of the tax benefits offered by traditional,
Roth, spousal and educational IRAs. According to Charles Schwab, "For every five
years you put off investing, you may need to double your monthly investing
amount to achieve the same retirement income." For a quick analysis of how much
you need to save to reach your retirement goals, check out our on-line
retirement planning worksheets. The worksheets are designed to answer questions
such as: "How much should I save to comfortably retire?" and "Will I be able to
retire early?"
MAX OUT YOUR SAVINGS
Finally, max out your savings. Did you know that for the price of a cup of
coffee and a muffin each morning, you could build a substantial nest egg? That's
about $4.00 a day. As the following chart shows, you could become a millionaire
in 30 years by investing just $500 a month. The rule of thumb here is to invest
often and regularly, without regard to short-term market fluctuations. Keep in
mind that the markets are unpredictable, so don't try to outguess them. For
added discipline and easier investing, sign up for our ABC Investment Plan(R),
our personalized investing service designed to fit your needs, budget, goals and
schedule.
3
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U.S. GLOBAL INVESTORS FUNDS
MONTHLY
CONTRI-
BUTION 5 YEARS 10 YEARS 20 YEARS 30 YEARS
------ ------- -------- -------- ----------
$ 30 $ 2,323 $ 6,145 $ 22,781 $ 67,815
$ 50 $ 3,872 $ 10,242 $ 37,968 $ 113,024
$ 100 $ 7,744 $ 20,484 $ 75,937 $ 226,049
$ 250 $19,359 $ 51,211 $189,842 $ 565,122
$ 500 $38,719 $102,422 $379,684 $1,130,244
$1,000 $77,437 $201,845 $759,369 $2,260,488
This hypothetical example assumes a 10% annual return compounded monthly. Your
actual return may be more or less than these amounts.
With market fluctuations being the norm rather than the exception, we encourage
you to stay the course and focus on your long-term investment goals. As always,
our investor representatives are happy to answer any questions you may have
about your accounts. Because we understand that you may also want easy access to
your account information 24 hours a day, seven days a week, we now offer
shareholders confidential on-line account information on our website at
www.usfunds.com. Of course, you can always access your account by calling
1-800-US-FUNDS and choosing option 2.
We appreciate the confidence you have placed in us and look forward to helping
you reach your financial and retirement goals.
Sincerely,
/s/ Frank Holmes
Frank Holmes
President & CEO
P.S. Don't forget U.S. Global Investors offers 14 no-load mutual funds, covering
everything from investing in China to blue-chip stocks. Our two money market
funds, the U.S. Treasury Securities Cash Fund and the U.S. Government Securities
Savings Fund, offer free checking and competitive yields. (3) Call us or visit
our website today!
FOR MORE COMPLETE INFORMATION ON ANY OF OUR FUNDS, INCLUDING CHARGES AND
EXPENSES, PLEASE CALL 1-800-US-FUNDS OR VISIT OUR WEBSITE AT WWW.USFUNDS.COM FOR
A FREE PROSPECTUS. PLEASE READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST OR
SEND MONEY. INVESTMENT RETURNS AND PRINCIPAL WILL FLUCTUATE SO THAT YOU MAY HAVE
A GAIN OR LOSS WHEN YOU SELL SHARES. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE
RESULTS.
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U.S. GLOBAL INVESTORS FUNDS
(1) Morningstar also awarded the All American Equity Fund three stars out of
748 domestic equity funds for the 10-year period ended June 30, 1999.
Morningstar's proprietary ratings reflect historical risk-adjusted
performance. These ratings may change monthly and are calculated from the
fund's one-, three-, five- and ten-year (when available) average annual
returns in excess of 90-day Treasury bill returns, with an appropriate
adjustment for fees and with a risk factor reflecting the fund's
performance below 90-day Treasury bill returns. Morningstar awards five
stars to funds in the top 10% of their category, four stars to funds in the
next 22.5% and three stars to the next 35%. The adviser for the All
American Equity Fund has guaranteed total fund operating expenses (as a
percentage of net assets) will not exceed 1.00% through June 30, 2000.
(2) Morningstar also awarded the Tax Free Fund two stars out of 366 municipal
bond funds for the 10-year period ended June 30, 1999. The adviser for the
tax free funds has guaranteed total fund operating expenses (as a
percentage of net assets) will not exceed 0.70% through June 30, 2000. Some
investors may be subject to state, federal or AMT taxes.
(3) Like all money market funds, an investment in the funds is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although the money market funds seek to preserve the
value of your investment at $1.00 per share, it is possible to lose money
by investing in the funds. The adviser for the U.S. Government Securities
Savings Fund guaranteed total fund operating expenses (as a percentage of
net assets) will not exceed 0.40% through June 30, 2000. IBC Data ranked
the fund ninth out of 184 government money market funds for the 7-day
period ended June 29, 1999. Lipper also ranked the fund eleventh out of 118
and forty-ninth out of 49 government money market funds for the 1- and
10-year periods ended June 30, 1999, respectively. Lipper defines a
government money market fund as a fund that invests principally in
financial instruments issued or guaranteed by the U.S. Government, its
agencies or its instrumentalities, with dollar-weighted average maturities
of less than 90 days.
(4) Foreign and emerging market investing involves special risks such as
currency fluctuation, less public disclosure, as well as economic and
political risks.
(5) You should evaluate your ability to continue in such a program in view of
the possibility that you may have to redeem fund shares in periods of
declining share prices as well as periods of rising prices.
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MONEY MARKET FUNDS
MANAGEMENT TEAM'S PERSPECTIVE
INTRODUCTION
The U.S. Treasury Securities Cash Fund invests in short-term U.S. Treasury
securities, which are protected by the full faith and credit of the United
States government, and repurchase agreements, which are short-term lending
arrangements collateralized by U.S. Treasury securities.
The U.S. Government Securities Savings Fund seeks to preserve capital and
generate income by investing exclusively in short-term securities backed by the
United States government or its agencies. Typically, these government agency
securities carry a higher yield than U.S. Treasury securities.
PERFORMANCE
U.S. TREASURY SECURITIES CASH FUND AS OF JUNE 30, 1999
--------------------------------------- -------------------
7-Day Yield 3.43%
7-Day Effective Yield 3.49%
Weighted Average Days to Maturity 43
U.S. GOVERNMENT SECURITIES SAVINGS FUND AS OF JUNE 30, 1999
--------------------------------------- -------------------
7-Day Yield 4.60%
7-Day Effective Yield 4.71%
Weighted Average Days to Maturity 78
THE YEAR IN REVIEW - ECONOMIC AND POLITICAL ISSUES
The economic picture of the world changed substantially in the past year. The
"Asian Contagion" that spread to the rest of the world in the third quarter of
1998 began to show its effect on the U.S. economy. Russia, Brazil and Argentina
also felt the effects of the "Asian Contagion" by staging their own collapse
either through debt default or currency devaluation. As more foreign markets
became unstable, there was a flight to quality into U.S. Treasury securities.
6
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MONEY MARKET FUNDS
Liquidity in many of these markets evaporated, and lending institutions were
unwilling to take on more risk, which resulted in a credit "squeeze." The
collapse of Long Term Capital Management epitomized the problem by forcing a
bailout engineered by the Federal Reserve Bank. The result of these events
prompted three 25 basis point decreases in the Federal Funds Rate--taking it
from 5.50% to 4.75% by November 1998.
As the first quarter of 1999 progressed, central banks around the world
continued to reduce interest rates as inflation was essentially non-existent and
economic activity picked up. Europe, Japan, and the Pacific Rim all showed signs
of recovery, and at the end of June, the Federal Reserve raised interest rates
by 25 basis points due to exceptionally strong economic growth and record-low
unemployment, which are seen as precursors to inflation.
INVESTMENT HIGHLIGHTS
Using our top-down analysis, we were able to identify the high probability of an
interest rate increase during the second quarter of 1999 and adjusted the funds'
portfolios accordingly. However, our analysis did not predict such strong,
sustained economic growth, as we were expecting the economy to follow historical
patterns and slow down as the second quarter progressed.
In applying our bottom-up analysis, we made purchases throughout the second
quarter to increase our floating interest rate exposure. We specifically
purchased securities that would benefit directly from a Fed rate increase. In
the U.S. Treasury Securities Cash Fund, we took on positions in the one year
range as interest rates rose. We offset those positions with shorter maturities
in the one- to two-month range.
In the U.S. Government Securities Savings Fund, we concentrated on extending our
maturity out as rates rose to lock in those higher rates. In addition, we
increased our floating interest rate exposure to take advantage of the rising
interest rate environment. While we started 1999 with approximately 70% fixed
rate and 30% floating rate, we were at approximately 50% fixed rate and 50%
floating rate by the end of June 1999.
7
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MONEY MARKET FUNDS
CURRENT OUTLOOK
The economy continues to expand at a rapid pace, which in turn fuels inflation
fears. The market has priced in an additional 25 basis point increase by the end
of the year. We are not yet convinced that this increase will occur. Even before
the Fed raised rates in June 1999, the housing market was beginning to slow, and
the international markets were still in a delicate recovery period. Commodity
prices continue to remain depressed, and the U.S. dollar is still very strong.
Both these factors indicate continued low inflation.
The risk to our scenario is the consumer. Retail sales and new car sales
continue to be very strong. The stock market continues to advance, consumer
confidence is very high, and tax refunds were larger than normal this year due
to tax cuts. All these factors have attributed to the consumer's willingness to
spend. The question is whether this trend will continue. We are monitoring all
these factors very closely and expect it will be an interesting second half of
1999.
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TAX FREE FUNDS
MANAGEMENT TEAM'S PERSPECTIVE
INTRODUCTION
Both tax free funds primarily invest in municipal bond securities which pay
interest that is exempt from federal income taxation. The Near-Term Tax Free
Fund attempts to maintain an average weighted portfolio maturity of five years
or less. The Tax Free Fund has no stated maturity restriction although it will
normally have a longer average maturity than the Near-Term Tax Free Fund. Both
funds invest in securities in the four highest bond rating categories and seek
to preserve capital while providing income that is exempt from federal income
tax.
PERFORMANCE
NEAR-TERM TAX FREE FUND
[Linear graph plotted from data in table below]
NEAR-TERM TAX FREE FUND LEHMAN MUNICIPAL 3-YEAR BOND INDEX
-------------------------- ----------------------------------
12/04/90 $10,000.00 12/04/90
12/31/90 $10,010.00 12/31/90 $10,000.00
01/31/91 $10,040.00 01/31/91 $10,126.64
02/28/91 $9,989.90 02/28/91 $10,217.90
03/28/91 $9,969.78 03/28/91 $10,222.55
04/30/91 $10,151.78 04/30/91 $10,322.19
05/31/91 $10,233.24 05/31/91 $10,388.30
06/28/91 $10,151.46 06/28/91 $10,397.62
07/31/91 $10,315.85 07/31/91 $10,480.49
08/30/91 $10,491.22 08/30/91 $10,584.78
09/30/91 $10,615.75 09/30/91 $10,673.25
10/31/91 $10,751.31 10/31/91 $10,749.60
11/29/91 $10,740.83 11/29/91 $10,812.93
12/31/91 $10,983.03 12/31/91 $11,028.96
01/31/92 $10,961.83 01/31/92 $11,076.45
02/28/92 $10,951.16 02/28/92 $11,080.17
03/31/92 $10,951.16 03/31/92 $11,055.03
04/30/92 $11,037.31 04/30/92 $11,138.84
05/29/92 $11,199.62 05/29/92 $11,231.96
06/30/92 $11,395.34 06/30/92 $11,368.84
07/31/92 $11,778.10 07/31/92 $11,590.46
08/31/92 $11,503.43 08/31/92 $11,538.32
09/30/92 $11,558.63 09/30/92 $11,632.37
10/30/92 $11,248.03 10/30/92 $11,586.74
11/30/92 $11,560.17 11/30/92 $11,667.75
12/31/92 $11,705.65 12/31/92 $11,738.52
01/29/93 $11,829.46 01/29/93 $11,826.99
02/26/93 $12,338.37 02/26/93 $12,011.36
03/31/93 $12,156.59 03/31/93 $11,975.98
04/30/93 $12,282.15 04/30/93 $12,045.81
05/28/93 $12,270.69 05/28/93 $12,077.47
06/30/93 $12,431.99 06/30/93 $12,155.69
07/30/93 $12,466.72 07/30/93 $12,161.28
08/31/93 $12,594.40 08/31/93 $12,274.89
09/30/93 $12,687.52 09/30/93 $12,328.89
10/29/93 $12,722.60 10/29/93 $12,354.97
11/30/93 $12,687.39 11/30/93 $12,338.21
12/31/93 $12,852.47 12/31/93 $12,468.57
01/31/94 $12,936.08 01/31/94 $12,569.14
02/28/94 $12,804.33 02/28/94 $12,451.81
03/31/94 $12,599.94 03/31/94 $12,301.89
04/29/94 $12,624.07 04/29/94 $12,374.52
05/31/94 $12,672.54 05/31/94 $12,432.26
06/30/94 $12,684.70 06/30/94 $12,435.98
07/29/94 $12,794.57 07/29/94 $12,539.34
08/31/94 $12,831.31 08/31/94 $12,584.04
09/30/94 $12,819.01 09/30/94 $12,552.38
10/31/94 $12,794.36 10/31/94 $12,521.65
11/30/94 $12,757.28 11/30/94 $12,499.30
12/30/94 $12,844.15 12/30/94 $12,553.31
01/31/95 $12,931.27 01/31/95 $12,657.60
02/28/95 $13,006.16 02/28/95 $12,790.76
03/31/95 $13,093.87 03/31/95 $12,905.30
04/28/95 $13,131.60 04/28/95 $12,949.06
05/31/95 $13,270.50 05/31/95 $13,147.41
06/30/95 $13,321.19 06/30/95 $13,179.07
07/31/95 $13,397.53 07/31/95 $13,317.81
08/31/95 $13,461.33 08/31/95 $13,422.11
09/29/95 $13,499.76 09/29/95 $13,460.29
10/31/95 $13,551.18 10/31/95 $13,524.54
11/30/95 $13,641.53 11/30/95 $13,611.14
12/29/95 $13,680.39 12/29/95 $13,667.01
01/31/96 $13,784.62 01/31/96 $13,774.09
02/29/96 $13,784.62 02/29/96 $13,776.89
03/29/96 $13,719.04 03/29/96 $13,743.37
04/30/96 $13,719.04 04/30/96 $13,760.13
05/31/96 $13,732.25 05/31/96 $13,772.23
06/28/96 $13,811.78 06/28/96 $13,854.18
07/31/96 $13,891.61 07/31/96 $13,931.46
08/30/96 $13,931.69 08/30/96 $13,951.95
09/30/96 $14,025.55 09/30/96 $14,036.69
10/31/96 $14,119.77 10/31/96 $14,134.46
11/29/96 $14,268.40 11/29/96 $14,266.69
12/31/96 $14,268.40 12/31/96 $14,273.21
01/31/97 $14,322.91 01/31/97 $14,335.60
02/28/97 $14,402.25 02/28/97 $14,405.44
03/31/97 $14,306.15 03/31/97 $14,330.94
04/30/97 $14,376.44 04/30/97 $14,392.40
05/30/97 $14,510.65 05/30/97 $14,509.73
06/30/97 $14,620.35 06/30/97 $14,595.40
07/31/97 $14,864.26 07/31/97 $14,768.60
08/29/97 $14,787.35 08/29/97 $14,739.73
09/30/97 $14,926.24 09/30/97 $14,844.96
10/31/97 $14,991.02 10/31/97 $14,911.07
11/28/97 $15,039.06 11/28/97 $14,953.91
12/31/97 $15,196.39 12/31/97 $15,055.40
01/30/98 $15,318.76 01/30/98 $15,155.04
02/27/98 $15,311.62 02/27/98 $15,186.70
03/31/98 $15,305.89 03/31/98 $15,210.91
04/30/98 $15,285.77 04/30/98 $15,190.43
05/29/98 $15,451.61 05/29/98 $15,331.04
06/30/98 $15,500.80 06/30/98 $15,382.25
07/31/98 $15,547.42 07/31/98 $15,438.12
08/31/98 $15,722.93 08/31/98 $15,588.04
09/30/98 $15,875.61 09/30/98 $15,686.75
10/30/98 $15,868.25 10/30/98 $15,763.11
11/30/98 $15,891.87 11/30/98 $15,801.29
12/31/98 $15,900.76 12/31/98 $15,839.46
01/29/99 $16,040.44 01/29/99 $15,982.87
02/26/99 $16,001.68 02/26/99 $16,000.56
03/31/99 $16,015.14 03/31/99 $16,014.53
04/30/99 $16,066.18 04/30/99 $16,063.88
05/28/99 $16,021.00 05/28/99 $16,040.60
06/30/99 $15,865.48 06/30/99 $15,944.69
AVERAGE ANNUAL PERFORMANCE FOR THE PERIODS ENDED
JUNE 30, 1999
------------------------------------ ------------------------------
INCEPTION FIVE YEAR ONE YEAR
--------- --------- --------
Near-Term Tax Free Fund
(Inception 12/4/90) 5.53% 4.58% 2.35%
Lehman Municipal 3-Year Bond Index 5.59% 5.10% 3.66%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. INVESTMENT
RETURN AND PRINCIPAL VALUE MAY FLUCTUATE SO THAT SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL VALUE. LEHMAN
BROTHERS BOND INDEXES INCLUDE FIXED-RATE DEBT ISSUES RATED INVESTMENT
GRADE OR HIGHER BY MOODY'S INVESTMENT SERVICE, STANDARD & POOR'S
CORPORATION, OR FITCH INVESTOR'S SERVICE, IN THAT ORDER. ALL ISSUES
HAVE AT LEAST ONE YEAR TO MATURITY AND AN OUTSTANDING PAR VALUE OF AT
LEAST $100 MILLION. INTERMEDIATE INDEXES INCLUDE BONDS WITH MATURITIES
OF UP TO TEN YEARS, AND LONG-TERM INDEXES INCLUDE THOSE WITH
MATURITIES OF TEN YEARS OR LONGER.
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TAX FREE FUNDS
TAX FREE FUND
[Linear graph plotted from data in table below]
LEHMAN MUNICIPAL
TAX FREE FUND 10-YEAR BOND INDEX
-------------------------- --------------------------
DATE VALUE DATE VALUE
-------- ---------- -------- ----------
06/30/89 $10,000.00 06/30/89 $10,000.00
07/31/89 $10,088.73 07/31/89 $10,144.16
08/31/89 $10,000.00 08/31/89 $10,084.13
09/29/89 $9,955.63 09/29/89 $10,036.84
10/31/89 $10,072.65 10/31/89 $10,151.44
11/30/89 $10,216.68 11/30/89 $10,320.61
12/29/89 $10,261.68 12/29/89 $10,427.03
01/31/90 $10,161.26 01/31/90 $10,395.65
02/28/90 $10,243.43 02/28/90 $10,472.96
03/30/90 $10,243.43 03/30/90 $10,456.14
04/30/90 $10,048.93 04/30/90 $10,386.56
05/31/90 $10,328.07 05/31/90 $10,611.67
06/29/90 $10,430.88 06/29/90 $10,711.26
07/31/90 $10,609.27 07/31/90 $10,859.98
08/31/90 $10,269.77 08/31/90 $10,703.99
09/28/90 $10,336.03 09/28/90 $10,706.26
10/31/90 $10,516.69 10/31/90 $10,941.83
11/30/90 $10,860.88 11/30/90 $11,165.13
12/31/90 $10,880.10 12/31/90 $11,192.41
01/31/91 $11,015.37 01/31/91 $11,377.05
02/28/91 $11,044.46 02/28/91 $11,474.83
03/28/91 $11,025.00 03/28/91 $11,468.92
04/30/91 $11,191.01 04/30/91 $11,627.18
05/31/91 $11,259.67 05/31/91 $11,714.95
06/28/91 $11,180.86 06/28/91 $11,701.30
07/31/91 $11,348.92 07/31/91 $11,823.64
08/30/91 $11,478.00 08/30/91 $11,983.26
09/30/91 $11,597.56 09/30/91 $12,166.99
10/31/91 $11,687.62 10/31/91 $12,266.13
11/29/91 $11,677.57 11/29/91 $12,286.60
12/31/91 $11,959.93 12/31/91 $12,548.55
01/31/92 $11,929.00 01/31/92 $12,574.92
02/28/92 $11,939.36 02/28/92 $12,555.82
03/31/92 $11,928.95 03/31/92 $12,536.72
04/30/92 $12,023.13 04/30/92 $12,655.87
05/29/92 $12,180.77 05/29/92 $12,804.13
06/30/92 $12,413.19 06/30/92 $13,026.06
07/31/92 $12,880.41 07/31/92 $13,453.09
08/31/92 $12,624.51 08/31/92 $13,293.92
09/30/92 $12,667.34 09/30/92 $13,404.88
10/30/92 $12,387.52 10/30/92 $13,268.00
11/30/92 $12,668.81 11/30/92 $13,510.39
12/31/92 $12,820.92 12/31/92 $13,667.74
01/29/93 $12,919.46 01/29/93 $13,897.86
02/26/93 $13,370.27 02/26/93 $14,406.29
03/31/93 $13,193.61 03/31/93 $14,196.19
04/30/93 $13,371.01 04/30/93 $14,331.26
05/28/93 $13,415.54 05/28/93 $14,381.28
06/30/93 $13,650.31 06/30/93 $14,665.06
07/30/93 $13,672.76 07/30/93 $14,701.90
08/31/93 $13,954.56 08/31/93 $15,006.59
09/30/93 $14,124.32 09/30/93 $15,191.23
10/29/93 $14,169.81 10/29/93 $15,216.24
11/30/93 $14,032.69 11/30/93 $15,091.64
12/31/93 $14,331.25 12/31/93 $15,413.62
01/31/94 $14,483.46 01/31/94 $15,602.80
02/28/94 $14,166.05 02/28/94 $15,175.32
03/31/94 $13,634.38 03/31/94 $14,595.93
04/29/94 $13,681.89 04/29/94 $14,756.47
05/31/94 $13,813.21 05/31/94 $14,874.26
06/30/94 $13,753.21 06/30/94 $14,810.13
07/29/94 $13,970.36 07/29/94 $15,058.89
08/30/94 $14,006.71 08/30/94 $15,117.10
09/30/94 $13,872.55 09/30/94 $14,913.82
10/31/94 $13,603.42 10/31/94 $14,695.98
11/30/94 $13,271.63 11/30/94 $14,418.12
12/30/94 $13,580.56 12/30/94 $14,677.79
01/31/95 $13,954.68 01/31/95 $15,057.98
02/28/95 $14,255.32 02/28/95 $15,484.11
03/31/95 $14,444.04 03/31/95 $15,693.30
04/28/95 $14,481.96 04/28/95 $15,712.40
05/31/95 $14,850.03 05/31/95 $16,210.83
06/30/95 $14,786.30 06/30/95 $16,109.87
07/31/95 $14,863.11 07/31/95 $16,346.36
08/31/95 $15,004.42 08/31/95 $16,568.28
09/29/95 $15,107.63 09/29/95 $16,674.25
10/31/95 $15,289.03 10/31/95 $16,866.62
11/30/95 $15,484.21 11/30/95 $17,093.09
12/29/95 $15,627.94 12/29/95 $17,197.69
01/31/96 $15,719.79 01/31/96 $17,371.87
02/29/96 $15,640.73 02/29/96 $17,300.47
03/29/96 $15,455.48 03/29/96 $17,085.36
04/30/96 $15,415.65 04/30/96 $17,024.88
05/31/96 $15,428.98 05/31/96 $16,977.12
06/28/96 $15,562.91 06/28/96 $17,138.57
07/31/96 $15,697.31 07/31/96 $17,302.74
08/30/96 $15,697.31 08/30/96 $17,303.20
09/30/96 $15,887.09 09/30/96 $17,481.01
10/31/96 $16,023.10 10/31/96 $17,702.03
11/29/96 $16,268.98 11/29/96 $18,060.39
12/31/96 $16,227.83 12/31/96 $17,978.99
01/31/97 $16,282.93 01/31/97 $18,049.93
02/28/97 $16,418.51 02/28/97 $18,220.02
03/31/97 $16,264.33 03/31/97 $17,975.81
04/30/97 $16,402.42 04/30/97 $18,108.14
05/30/97 $16,609.73 05/30/97 $18,364.64
06/30/97 $16,796.78 06/30/97 $18,567.47
07/31/97 $17,213.52 07/31/97 $19,089.09
08/29/97 $17,067.47 08/29/97 $18,904.00
09/30/97 $17,253.95 09/30/97 $19,143.66
10/31/97 $17,335.43 10/31/97 $19,245.08
11/28/97 $17,437.32 11/28/97 $19,334.21
12/31/97 $17,702.26 12/31/97 $19,639.37
01/30/98 $17,857.01 01/30/98 $19,857.20
02/27/98 $17,833.78 02/27/98 $19,855.84
03/31/98 $17,816.30 03/31/98 $19,842.19
04/30/98 $17,741.70 04/30/98 $19,733.05
05/29/98 $18,029.56 05/29/98 $20,068.67
06/30/98 $18,091.48 06/30/98 $20,142.34
07/31/98 $18,149.31 07/31/98 $20,174.63
08/31/98 $18,435.17 08/31/98 $20,525.26
09/30/98 $18,653.47 09/30/98 $20,830.42
10/30/98 $18,590.44 10/30/98 $20,839.51
11/30/98 $18,676.31 11/30/98 $20,901.81
12/31/98 $18,695.97 12/31/98 $20,966.85
01/29/99 $18,915.03 01/29/99 $21,287.92
02/26/99 $18,789.84 02/26/99 $21,096.91
03/31/99 $18,822.00 03/31/99 $21,086.00
04/30/99 $18,874.28 04/30/99 $21,142.39
05/28/99 $18,707.61 05/28/99 $20,994.13
06/30/99 $18,342.13 06/30/99 $20,603.94
AVERAGE ANNUAL PERFORMANCE FOR THE PERIODS ENDED
JUNE 30, 1999
-------------------------------------- -----------------------------
TEN YEAR FIVE YEAR ONE YEAR
-------- --------- --------
Tax Free Fund 6.25% 5.93% 1.39%
Lehman Municipal 10-Year Bond Index 7.50% 6.83% 2.29%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. INVESTMENT
RETURN AND PRINCIPAL VALUE MAY FLUCTUATE SO THAT SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL VALUE. LEHMAN
BROTHERS BOND INDEXES INCLUDE FIXED-RATE DEBT ISSUES RATED INVESTMENT
GRADE OR HIGHER BY MOODY'S INVESTMENT SERVICE, STANDARD & POOR'S
CORPORATION, OR FITCH INVESTOR'S SERVICE, IN THAT ORDER. ALL ISSUES
HAVE AT LEAST ONE YEAR TO MATURITY AND AN OUTSTANDING PAR VALUE OF AT
LEAST $100 MILLION. INTERMEDIATE INDEXES INCLUDE BONDS WITH MATURITIES
OF UP TO TEN YEARS, AND LONG-TERM INDEXES INCLUDE THOSE WITH
MATURITIES OF TEN YEARS OR LONGER.
THE YEAR IN REVIEW - ECONOMIC AND POLITICAL ISSUES
The municipal bond market remained very stable in the face of fluctuating yields
over the past year. As the U.S. Treasury market saw yields plummet last fall,
municipal yields remained relatively unchanged. Municipal investors benefited
because municipal yields, as a percentage of U.S. Treasury yields, were quite
high and therefore created an environment where an investment in tax free bonds
offered a superior return when compared to a U.S. Treasury investment with a
similar maturity.
Municipal bonds remained relatively flat until the latter part of the second
quarter as yields rose in response to an increase in interest rates by the
Federal Reserve. As yields rose, retail demand increased substantially, although
this was offset somewhat by lower issuance. Municipal bond issuance is down
substantially from the levels of one year ago. This is attributable to the
strong economy and state budget surpluses.
10
<PAGE>
TAX FREE FUNDS
INVESTMENT HIGHLIGHTS
A top-down macroeconomic analysis of the economy and the income tax structure
revealed little change for municipals. During the last six months, we lengthened
maturities in both funds as yields spiked in February and March. This increase
in maturity detracted from the funds' performances in the second quarter as
rates rose. However, we believe the funds are now well positioned for the second
half of 1999.
CURRENT OUTLOOK
Our top-down outlook for the municipal market over the next six months is for a
gradual reduction in interest rates, which should benefit bonds in general. We
do not anticipate an easing of rates by the Federal Reserve, but we are looking
for rates to drift lower as we move toward year-end. We think our move to
lengthen maturities in both funds will benefit us going forward.
MUNICIPAL BOND RATINGS--BASED ON TOTAL INVESTMENTS
NEAR-TERM TAX FREE FUND
-----------------------------------------------
AAA 46.07%
AA 10.74%
A 8.69%
BBB 14.38%
TAX FREE FUND
-----------------------------------------------
AAA 52.95%
AA 20.87%
A 8.43%
BBB 3.60%
11
<PAGE>
INCOME FUND
MANAGEMENT TEAM'S PERSPECTIVE
INTRODUCTION
The Income Fund invests in a broad array of equity and debt securities, at least
80% of which are income-producing securities. The fund invests in securities
that demonstrate attractive value in the ever-changing financial marketplace.
With an emphasis on both income generation and capital appreciation through
value-oriented investing, the fund enables investors to lessen their risk
exposure with lower volatility while taking advantage of growth opportunities.
More specifically, the fund seeks to invest in companies with strong earnings
and dividend growth. Benchmarked to the BARRA Value Index, the fund is invested
across eleven industry sectors.
PERFORMANCE
INCOME FUND
[Linear graph plotted from data in table below.]
S&P/ S&P 40
S&P 500 BARRA 500 UTILITIES
INCOME FUND INDEX VALUE INDEX INDEX
---------- ---------- ---------- ----------
06/30/89 $10,000.00 $10,000.00 $10,000.00 $10,000.00
07/31/89 $10,559.86 $10,902.10 $10,689.99 $10,801.13
08/31/89 $10,680.45 $11,114.52 $10,925.18 $10,737.07
09/29/89 $10,818.26 $11,069.26 $10,808.28 $10,916.96
10/31/89 $10,714.07 $10,812.56 $10,459.17 $10,966.04
11/30/89 $11,061.37 $11,032.17 $10,552.25 $11,334.45
12/29/89 $11,625.72 $11,296.73 $10,797.06 $12,163.14
01/31/90 $10,862.37 $10,538.75 $10,163.27 $11,177.42
02/28/90 $10,844.82 $10,674.25 $10,369.60 $11,053.16
03/30/90 $10,827.28 $10,956.89 $10,492.99 $11,256.51
04/30/90 $10,226.25 $10,683.95 $10,136.23 $10,821.93
05/31/90 $10,880.31 $11,723.57 $10,943.07 $11,559.14
06/29/90 $10,889.15 $11,644.54 $10,736.24 $11,316.22
07/31/90 $10,800.11 $11,607.33 $10,737.32 $11,277.80
08/31/90 $10,167.95 $10,559.43 $9,792.44 $10,382.75
09/28/90 $10,150.15 $10,046.29 $9,339.05 $10,807.15
10/31/90 $10,518.42 $10,003.81 $9,206.44 $11,517.49
11/30/90 $10,671.13 $10,649.19 $9,835.23 $11,744.83
12/31/90 $10,617.23 $10,945.54 $10,057.51 $11,851.85
01/31/91 $10,598.62 $11,421.03 $10,533.23 $11,488.95
02/28/91 $10,980.13 $12,236.80 $11,220.00 $11,884.73
03/28/91 $10,933.61 $12,532.83 $11,322.11 $12,114.05
04/30/91 $10,933.61 $12,562.62 $11,411.53 $11,922.21
05/31/91 $11,045.75 $13,102.71 $11,955.87 $11,770.57
06/28/91 $10,662.60 $12,502.88 $11,361.66 $11,609.66
07/31/91 $10,916.92 $13,085.15 $11,812.71 $11,967.52
08/30/91 $11,190.08 $13,394.25 $11,984.00 $12,277.65
09/30/91 $11,482.08 $13,170.01 $11,858.19 $12,525.78
10/31/91 $11,624.42 $13,346.68 $12,031.31 $12,779.14
11/29/91 $11,671.87 $12,810.38 $11,359.97 $12,657.45
12/31/91 $12,136.84 $14,272.98 $12,326.70 $13,588.91
01/31/92 $11,743.79 $14,007.33 $12,326.70 $12,857.32
02/28/92 $12,021.80 $14,188.66 $12,576.93 $12,503.33
03/31/92 $11,820.48 $13,913.03 $12,379.48 $12,320.03
04/30/92 $12,013.31 $14,321.10 $12,983.58 $13,113.65
05/29/92 $12,456.82 $14,391.12 $13,019.95 $13,095.20
06/30/92 $12,263.99 $14,177.10 $12,913.18 $13,280.30
07/31/92 $12,865.07 $14,755.80 $13,379.34 $14,328.92
08/31/92 $12,797.21 $14,454.36 $12,991.33 $14,222.37
09/30/92 $12,855.38 $14,624.27 $13,134.25 $14,326.37
10/30/92 $12,913.90 $14,674.47 $13,028.65 $14,195.40
11/30/92 $12,884.64 $15,172.77 $13,381.45 $14,177.65
12/31/92 $13,118.72 $15,358.91 $13,624.07 $14,688.47
01/29/93 $13,233.53 $15,487.19 $14,000.35 $14,916.19
02/26/93 $13,901.47 $15,698.19 $14,482.68 $15,987.30
03/31/93 $14,350.24 $16,029.20 $14,882.84 $16,272.97
04/30/93 $14,224.63 $15,641.77 $14,822.72 $16,229.49
05/28/93 $14,423.50 $16,059.15 $15,099.44 $15,920.17
06/30/93 $14,800.32 $16,106.02 $15,299.05 $16,656.88
07/30/93 $14,989.79 $16,041.17 $15,489.08 $17,034.02
08/31/93 $15,768.76 $16,648.48 $16,095.95 $17,858.16
09/30/93 $15,652.97 $16,520.81 $16,090.05 $17,822.72
10/29/93 $15,705.78 $16,862.33 $16,177.45 $17,789.39
11/30/93 $14,955.87 $16,701.61 $15,888.01 $16,891.94
12/31/93 $15,441.73 $16,903.53 $16,158.47 $16,806.95
01/31/94 $15,814.61 $17,477.66 $16,911.75 $16,924.79
02/28/94 $15,134.65 $17,003.71 $16,299.94 $15,961.71
03/31/94 $14,246.31 $16,263.82 $15,629.55 $15,417.74
04/29/94 $14,554.81 $16,472.18 $15,958.74 $15,799.73
05/31/94 $14,257.33 $16,741.45 $16,222.81 $15,378.88
06/30/94 $13,937.80 $16,331.77 $15,774.16 $15,414.08
07/29/94 $13,970.36 $16,867.67 $16,307.79 $15,933.58
08/30/94 $14,703.49 $17,557.64 $16,768.81 $15,889.33
09/30/94 $14,359.49 $17,128.64 $16,178.14 $15,486.14
10/31/94 $14,526.85 $17,512.90 $16,530.31 $15,619.17
11/30/94 $13,935.51 $16,875.90 $15,860.51 $15,390.60
12/30/94 $13,857.41 $17,125.90 $16,055.30 $15,469.55
01/31/95 $14,172.86 $17,569.72 $16,490.11 $16,670.41
02/28/95 $14,420.72 $18,253.77 $17,130.08 $16,641.77
03/31/95 $14,488.31 $18,791.54 $17,602.40 $16,537.13
04/28/95 $14,828.15 $19,344.47 $18,181.91 $17,140.64
05/31/95 $15,337.90 $20,116.46 $18,990.86 $17,682.94
06/30/95 $15,235.95 $20,582.90 $19,135.04 $17,765.12
07/31/95 $15,498.44 $21,265.16 $19,794.15 $18,213.50
08/31/95 $15,521.27 $21,318.25 $19,963.23 $18,576.60
09/29/95 $16,046.25 $22,217.41 $20,657.59 $19,757.41
10/31/95 $15,839.80 $22,138.03 $20,335.92 $20,231.90
11/30/95 $16,344.47 $23,108.75 $21,401.80 $20,512.65
12/29/95 $16,952.37 $23,553.89 $21,994.97 $21,968.73
01/31/96 $17,257.39 $24,354.62 $22,653.46 $22,247.79
02/29/96 $17,292.59 $24,581.19 $22,865.85 $21,363.38
03/29/96 $17,327.78 $24,817.86 $23,401.10 $20,924.64
04/30/96 $17,481.34 $25,183.42 $23,639.34 $21,154.90
05/31/96 $17,493.15 $25,831.78 $23,995.64 $21,102.06
06/28/96 $17,764.82 $25,930.26 $23,879.82 $21,978.55
07/31/96 $17,134.61 $24,785.30 $22,872.37 $20,598.23
08/30/96 $17,419.98 $25,308.89 $23,503.82 $21,037.44
09/30/96 $17,527.00 $26,732.07 $24,510.49 $21,239.01
10/31/96 $17,790.21 $27,469.07 $25,340.20 $22,320.08
11/29/96 $18,567.85 $29,543.57 $27,278.70 $22,791.23
12/31/96 $18,723.38 $28,958.34 $26,832.31 $22,656.20
01/31/97 $19,186.56 $30,766.54 $28,069.01 $22,802.45
02/28/97 $19,228.66 $31,008.09 $28,273.14 $22,578.59
03/31/97 $18,413.20 $29,736.39 $27,305.13 $21,893.23
04/30/97 $18,639.47 $31,510.04 $28,328.85 $21,564.87
05/30/97 $19,629.43 $33,427.05 $30,105.74 $22,476.98
06/30/97 $20,531.71 $34,923.75 $31,256.63 $23,180.10
07/31/97 $21,183.51 $37,701.03 $33,757.26 $23,715.62
08/29/97 $20,560.05 $35,590.54 $32,231.69 $23,284.17
09/30/97 $21,713.45 $37,538.61 $34,121.39 $24,293.48
10/31/97 $21,343.25 $36,286.33 $32,867.52 $24,531.40
11/28/97 $22,339.94 $37,964.72 $34,120.39 $26,268.02
12/31/97 $23,044.73 $38,616.25 $34,877.94 $28,244.20
01/30/98 $23,044.73 $39,042.95 $34,447.98 $27,122.31
02/27/98 $23,950.06 $41,857.26 $37,031.88 $28,038.68
03/31/98 $25,538.50 $43,998.99 $38,907.60 $29,832.81
04/30/98 $25,538.50 $44,441.43 $39,368.12 $29,259.15
05/29/98 $25,208.12 $43,678.60 $38,814.29 $29,115.81
06/30/98 $25,442.78 $45,451.50 $39,109.04 $30,193.63
07/31/98 $25,127.24 $44,968.75 $38,259.57 $28,700.78
08/31/98 $23,067.90 $38,473.88 $32,107.54 $29,158.82
09/30/98 $24,164.00 $40,938.67 $34,058.29 $31,591.39
10/30/98 $24,830.13 $44,265.70 $36,726.12 $31,068.84
11/30/98 $25,712.76 $46,947.45 $38,639.15 $31,486.05
12/31/98 $26,277.59 $49,651.02 $39,996.27 $32,417.42
01/29/99 $26,055.68 $51,726.48 $40,804.19 $30,954.01
02/26/99 $25,242.02 $50,119.11 $39,925.70 $29,823.99
03/31/99 $25,634.06 $52,123.79 $41,135.69 $29,382.74
04/30/99 $26,728.42 $54,142.26 $44,682.01 $31,977.75
05/28/99 $26,060.67 $52,865.56 $43,892.47 $33,924.30
06/30/99 $27,097.56 $55,797.12 $45,578.27 $32,795.70
AVERAGE ANNUAL PERFORMANCE FOR THE PERIODS ENDED
JUNE 30, 1999
-------------------------------------- -----------------------------
TEN YEAR FIVE YEAR ONE YEAR
-------- --------- --------
Income Fund 10.48% 14.22% 6.50%
S&P 500 Index 18.76% 27.85% 22.76%
S&P/BARRA 500 Value Index 16.38% 23.64% 16.54%
S&P 40 Utilities Index 12.61% 16.30% 8.62%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. INVESTMENT RETURN
AND PRINCIPAL VALUE MAY FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL VALUE. THE S&P/BARRA 500 VALUE
INDEX IS A CAPITALIZATION-WEIGHTED INDEX OF ALL STOCKS IN THE S&P 500
THAT HAVE LOW PRICE-TO-BOOK RATIOS. THE INDEX IS REBALANCED
SEMI-ANNUALLY ON JANUARY 1 AND JULY 1. IT IS DESIGNED SO THAT
APPROXIMATELY 50% OF THE S&P 500 INDEX MARKET CAPITALIZATION IS IN THE
VALUE INDEX. THE S&P 40 UTILITIES INDEX IS A CAPITALIZATION-WEIGHTED
INDEX OF ALL STOCKS DESIGNED TO MEASURE THE PERFORMANCE OF THE UTILITY
SECTOR OF THE S&P 500 INDEX.
12
<PAGE>
INCOME FUND
THE YEAR IN REVIEW - ECONOMIC ANDN POLITICAL ISSUES
What goes around comes around! Last year, at this time, financial markets
realized the underlying problems with Long Term Capital Management and the
falling popularity of emerging markets and other world financial centers. Bond
markets and hedge funds around the world declined. The Federal Reserve began to
lower interest rates that effectively caused the markets to rally into the new
year and to lay groundwork for rebounds in manufacturing, basic material, and
other commodity-based businesses. Much of this rebound is also attributable to
the slow recovery of foreign economies, including Japan, Hong Kong, Indonesia
and later, Brazil.
The combination of lower rates plus recovering world economies enabled the basic
material and energy sectors to rally substantially beginning in February 1999.
The market narrowed to embrace these few sectors, leaving the previously strong
growth sectors--technology, Internet, health care and consumer--weakened.
Financials did not perform well because the Fed warned that inflation may return
to prominence, effectively sparking a need to raise rates. Indeed, as the end of
June 1999 arrived, the Fed raised interest rates 25 basis points, bringing us
full circle from last year.
INVESTMENT HIGHLIGHTS
Lipper Analytical Services reclassified the fund to the equity income category
at the beginning of 1999.
The first half of 1999 was a time for analysis and reshaping of the fund's
holdings. Still focused on income, we also raised the profile of earnings and
dividend growth in our stock selection. Our first rebalancing of the portfolio
occurred in February, followed by two others in May and then another rebalancing
in late June. We refocused our efforts on a top-down approach, coupled with a
bottom-up analysis, of those companies that met our selection criteria. At the
end of this rebalancing effort, we remain heavily weighted in communications,
including cellular and long distance.
CURRENT OUTLOOK
The effect of higher interest rates should not put a damper on the markets.
Faced with a juggernaut economy, the prospects for continued economic growth are
excellent. More significantly, underlying fundamentals for U.S. corporations are
the best they have been in years, with earnings estimates to exceed 11% for the
first time since 1997, and for second half earnings to climb higher, according
to First Call and IBES. Thus, despite a recent rise
13
<PAGE>
INCOME FUND
in interest rates, which normally causes a decline in the equity markets, the
prospects for strong earnings for the rest of 1999 are excellent.
TOP 10 HOLDINGS BASED ON TOTAL INVESTMENTS
EXXON CORP 4.23%
PETROLEUM REFINING
AT&T CORP 4.00%
TELECOMMUNICATIONS
FRONTIER CORP 3.76%
TELECOMMUNICATIONS
BANKAMERICA CORP 2.87%
BANKS
PHILIPS ELECTRONICS N.V 2.73%
MANUFACTURING
KOREA DEVELOPMENT BANK 2.45%
BANKS
HEWLETT-PACKARD CO 2.36%
COMPUTER & OFFICE EQUIPMENT
BANK ONE CORP 2.33%
BANKS
CITIGROUP CAPITAL 2.31%
FINANCIAL SERVICES
BELL ATLANTIC CORP 2.31%
TELECOMMUNICATIONS
TOP 5 INDUSTRIES BASED ON TOTAL INVESTMENTS
TELECOMMUNICATIONS 17.71%
BANKS 13.88%
FINANCIAL SERVICES 10.92%
PETROLEUM REFINING 9.44%
MANUFACTURING 7.27%
14
<PAGE>
ALL AMERICAN EQUITY FUND
MANAGEMENT TEAM'S PERSPECTIVE
INTRODUCTION
The principal objective of the All American Equity Fund is to seek capital
appreciation by investing primarily in a broadly diversified portfolio of
domestic common stocks. The fund invests in large-capitalization stocks, while
retaining the flexibility to seek out promising individual stock opportunities.
The fund seeks capital appreciation and does not emphasize income.
PERFORMANCE
ALL AMERICAN EQUITY FUND
[Linear graph plotted from data in table below.]
ALL AMERICAN S&P
EQUITY FUND 500 INDEX
----------- ----------
6/30/89 $10,000.00 $10,000.00
7/31/89 $10,911.82 $10,902.10
8/31/89 $11,685.66 $11,114.52
9/29/89 $11,637.67 $11,069.26
10/31/89 $10,719.86 $10,812.56
11/30/89 $10,725.85 $11,032.17
12/29/89 $10,623.88 $11,296.73
1/31/90 $9,837.15 $10,538.75
2/28/90 $9,959.12 $10,674.25
3/30/90 $10,093.29 $10,956.89
4/30/90 $9,812.75 $10,683.95
5/31/90 $10,190.87 $11,723.57
6/29/90 $9,959.12 $11,644.54
7/31/90 $10,070.33 $11,607.33
8/31/90 $9,304.24 $10,559.43
9/28/90 $9,007.69 $10,046.29
10/31/90 $8,754.39 $10,003.81
11/30/90 $9,217.75 $10,649.19
12/31/90 $9,427.80 $10,945.54
1/31/91 $9,825.81 $11,421.03
2/28/91 $10,516.10 $12,236.80
3/28/91 $10,758.64 $12,532.83
4/30/91 $10,746.20 $12,562.62
5/31/91 $11,169.09 $13,102.71
6/28/91 $10,640.48 $12,502.88
7/31/91 $11,106.90 $13,085.15
8/30/91 $11,349.43 $13,394.25
9/30/91 $11,119.33 $13,170.01
10/31/91 $11,243.71 $13,346.68
11/29/91 $10,783.52 $12,810.38
12/31/91 $11,940.23 $14,272.98
1/31/92 $11,733.71 $14,007.33
2/28/92 $11,852.61 $14,188.66
3/31/92 $11,602.29 $13,913.03
4/30/92 $11,921.45 $14,321.10
5/29/92 $11,959.00 $14,391.12
6/30/92 $11,758.74 $14,177.10
7/31/92 $12,203.06 $14,755.80
8/31/92 $11,927.71 $14,454.36
9/30/92 $12,040.35 $14,624.27
10/30/92 $12,065.44 $14,674.47
11/30/92 $12,460.51 $15,172.77
12/31/92 $12,611.02 $15,358.91
1/29/93 $12,705.93 $15,487.19
2/26/93 $12,870.45 $15,698.19
3/31/93 $13,136.21 $16,029.20
4/30/93 $12,818.14 $15,641.77
5/28/93 $13,148.93 $16,059.15
6/30/93 $13,187.10 $16,106.02
7/30/93 $13,123.09 $16,041.17
8/31/93 $13,596.80 $16,648.48
9/30/93 $13,487.97 $16,520.81
10/29/93 $13,745.50 $16,862.33
11/30/93 $13,578.11 $16,701.61
12/31/93 $13,874.26 $16,903.53
1/31/94 $14,228.83 $17,477.66
2/28/94 $13,979.32 $17,003.71
3/31/94 $13,296.44 $16,263.82
4/29/94 $13,527.86 $16,472.18
5/31/94 $13,389.01 $16,741.45
6/30/94 $12,965.85 $16,331.77
7/29/94 $13,410.89 $16,867.67
8/31/94 $13,836.00 $17,557.64
9/30/94 $13,444.10 $17,128.64
10/31/94 $13,570.87 $17,512.90
11/30/94 $13,017.09 $16,875.90
12/30/94 $13,137.19 $17,125.90
1/31/95 $13,370.57 $17,569.72
2/28/95 $13,746.99 $18,253.77
3/31/95 $14,093.30 $18,791.54
4/28/95 $14,509.82 $19,344.47
5/31/95 $14,994.49 $20,116.46
6/30/95 $15,297.40 $20,582.90
7/31/95 $15,685.93 $21,265.16
8/31/95 $15,617.37 $21,318.25
9/29/95 $16,287.77 $22,217.41
10/31/95 $16,333.74 $22,138.03
11/30/95 $16,938.98 $23,108.75
12/29/95 $17,191.80 $23,553.89
1/31/96 $17,722.08 $24,354.62
2/29/96 $17,914.21 $24,581.19
3/29/96 $18,052.54 $24,817.86
4/30/96 $18,314.84 $25,183.42
5/31/96 $18,885.74 $25,831.78
6/28/96 $19,016.89 $25,930.26
7/31/96 $18,358.46 $24,785.30
8/30/96 $18,614.09 $25,308.89
9/30/96 $19,559.12 $26,732.07
10/31/96 $19,963.68 $27,469.07
11/29/96 $21,371.88 $29,543.57
12/31/96 $21,021.77 $28,958.34
1/31/97 $22,464.60 $30,766.54
2/28/97 $22,488.79 $31,008.09
3/31/97 $21,621.48 $29,736.39
4/30/97 $23,093.65 $31,510.04
5/30/97 $24,395.95 $33,427.05
6/30/97 $25,422.42 $34,923.75
7/31/97 $26,979.89 $37,701.03
8/29/97 $25,592.77 $35,590.54
9/30/97 $26,761.68 $37,538.61
10/31/97 $25,940.12 $36,286.33
11/28/97 $26,965.04 $37,964.72
12/31/97 $27,392.09 $38,616.25
1/30/98 $27,929.51 $39,042.95
2/27/98 $29,674.07 $41,857.26
3/31/98 $31,048.22 $43,998.99
4/30/98 $31,520.66 $44,441.43
5/29/98 $31,064.80 $43,678.60
6/30/98 $32,365.30 $45,451.50
7/31/98 $32,265.20 $44,968.75
8/31/98 $28,036.02 $38,473.88
9/30/98 $29,818.62 $40,938.67
10/30/98 $31,700.05 $44,265.70
11/30/98 $33,681.83 $46,947.45
12/31/98 $35,292.16 $49,651.02
1/29/99 $36,548.29 $51,726.48
2/26/99 $35,447.02 $50,119.11
3/31/99 $36,358.15 $52,123.79
4/30/99 $37,255.46 $54,142.26
5/28/99 $36,642.87 $52,865.56
6/30/99 $38,672.16 $55,797.12
AVERAGE ANNUAL PERFORMANCE FOR THE PERIODS ENDED
JUNE 30, 1999
------------------------------------- -----------------------------
TEN YEAR FIVE YEAR ONE YEAR
-------- --------- --------
All American Equity Fund 14.48% 24.43% 19.49%
S&P 500 Index 18.76% 27.85% 22.76%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. INVESTMENT
RETURN AND PRINCIPAL VALUE MAY FLUCTUATE SO THAT SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL VALUE. THE S&P
500 INDEX IS AN UNMANAGED BUT COMMONLY USED MEASURE OF COMMON STOCK
TOTAL RETURN PERFORMANCE.
15
<PAGE>
ALL AMERICAN EQUITY FUND
THE YEAR IN REVIEW - ECONOMIC AND POLITICAL ISSUES
The last twelve months have been tumultuous for the financial markets. Japan's
GDP fell for the seventh consecutive quarter, and U.S. GDP dropped from 3.5% to
2.3%. The Brazilian Central Bank chief resigned, and the CRB Bridge Index
reflected that commodity prices dropped to 20-year lows. Despite financial
turbulence and an economic slowdown in Latin America, Europe and Asia, corporate
earnings for the U.S. market continued to grow.
INVESTMENT HIGHLIGHTS
The second quarter of 1999 was a robust quarter for corporate earnings, posting
a 16% profit rise, which is the largest gain since the third quarter of 1995. In
comparison, corporate earnings gained just 2.9% for the second quarter of 1998.
Consumption of consumer goods, ranging from automobiles to computers, pushed
ahead despite a 25 basis point increase in interest rates. The pace was set by
technology companies and automakers. Microsoft, the fund's largest holding,
reported a 62% rise in second quarter earnings compared to prior year, and
General Motors reported that earnings increased fivefold from last year when the
autoworkers' strike crippled share prices. Industry leaders such as Boeing and
Du Pont also reported earnings growth that was greater than expected. Not all
corporate leaders remained immune to the global slowdown. U.S. consumer goods
manufacturers, who rely on exports to Asia and Latin America, remained
vulnerable to the slowdown in consumption. Gillette, the world's largest
producer of razors, reported a 19% decline in profits, partly due to falling
consumption in Brazil, Russia and China.
16
<PAGE>
ALL AMERICAN EQUITY FUND
CURRENT OUTLOOK
The outlook for the market is that earnings will grow stronger. Signs of
recovery in the Asian economies will provide the opportunity to improve earnings
mainly for stock holdings in global consumer goods manufacturers. It is
estimated that domestic earnings for the second half of 1999 will exceed 20%,
both in the third and fourth quarters, according to First Call. This gives the
market further confidence that nine years of domestic economic expansion is
still on track.
Going forward, it is difficult to argue that corporate profits for the financial
sector will remain robust, especially in light of concerns about possible
interest rate increases. With the recent IPO euphoria, the stock market has
become frothy, and economic growth now seems to be overextended. The key
ingredient that seems to be missing is inflation. Although core inflation is
subdued, the uptick in April may be a signal that price increases are
imminent--especially if the dollar weakens in the coming months.
However, our long-term outlook is bullish, and we will use market corrections as
opportunities to buy quality big-cap stocks that demonstrate a positive
long-term earnings growth potential. America leads the world in restructuring
and layoffs, while at the same time having the lowest unemployment rates.
America is also a leader in technology and new wealth-creating business models.
The bottom line is to stay committed to buying quality growth stocks.
17
<PAGE>
ALL AMERICAN EQUITY FUND
TOP 10 HOLDINGS BASED ON TOTAL INVESTMENTS
MICROSOFT CORP 5.43%
DATA PROCESSING & SOFTWARE
GENERAL ELECTRIC CO 4.31%
HOUSEHOLD APPLIANCES
AT&T CORP 3.03%
TELECOMMUNICATIONS
FANNIE MAE 2.83%
FINANCIAL SERVICES
IBM CORP 2.77%
COMPUTER & OFFICE EQUIPMENT
WAL-MART STORES, INC 2.54%
RETAIL
AMERICAN INTERNATIONAL GROUP 2.31%
INSURANCE
MERCK & CO., INC 2.21%
PHARMACEUTICALS
INTEL CORP 1.91%
ELECTRONICS & COMPONENTS
JOHNSON & JOHNSON CO 1.84%
HEALTHCARE & EQUIPMENT
TOP 5 INDUSTRIES BASED ON TOTAL INVESTMENTS
TELECOMMUNICATIONS 11.48%
PHARMACEUTICALS 9.92%
FINANCIAL SERVICES 8.81%
RETAIL 8.65%
DATA PROCESSING & SOFTWARE 7.94%
18
<PAGE>
REAL ESTATE FUND
MANAGEMENT TEAM'S PERSPECTIVE
INTRODUCTION
The Real Estate Fund offers access to the potential long-term returns of the
real estate market. It is an attractive alternative to direct real estate
investment through participation in a diversified portfolio of fully liquid real
estate and real estate-related equities. In addition, as real estate returns do
not correlate with other asset class returns, risk is spread across asset
classes.
The fund seeks a total return through a combination of capital appreciation and
income. The fund predominantly invests in companies that derive at least 50% of
their revenues from the ownership, construction, management or sale of
residential, commercial or industrial real estate.
PERFORMANCE
REAL ESTATE FUND
[Linear graph plotted from data in table below.]
DOW JONES
EQUITY MORGAN
REAL S&P REIT TOTAL STANLEY
ESTATE FUND 500 INDEX RETURN INDEX REIT INDEX
---------- ---------- ------------ ----------
06/30/89 $10,000.00 $10,000.00
07/31/89 $10,294.41 $10,902.10
08/31/89 $10,343.47 $11,114.52
09/29/89 $10,176.64 $11,069.26
10/31/89 $9,656.53 $10,812.56
11/30/89 $9,470.07 $11,032.17
12/29/89 $9,440.63 $11,296.73
01/31/90 $8,769.98 $10,538.75 $10,000.00
02/28/90 $8,821.57 $10,674.25 $10,177.20
03/30/90 $8,800.94 $10,956.89 $10,092.29
04/30/90 $8,708.08 $10,683.95 $10,225.73
05/31/90 $8,769.98 $11,723.57 $10,209.38
06/29/90 $8,739.03 $11,644.54 $10,066.76
07/31/90 $8,404.92 $11,607.33 $10,234.98
08/31/90 $7,600.97 $10,559.43 $11,137.04
09/28/90 $7,047.60 $10,046.29 $12,010.67
10/31/90 $6,744.82 $10,003.81 $12,436.83
11/30/90 $7,162.45 $10,649.19 $11,659.22
12/31/90 $7,569.65 $10,945.54 $11,751.89
01/31/91 $8,066.37 $11,421.03 $11,126.49
02/28/91 $8,887.05 $12,236.80 $11,460.24
03/28/91 $9,480.96 $12,532.83 $12,506.99
04/30/91 $9,794.11 $12,562.62 $12,756.80
05/31/91 $9,923.69 $13,102.71 $12,907.81
06/28/91 $9,545.75 $12,502.88 $12,577.79
07/31/91 $9,556.55 $13,085.15 $12,820.94
08/30/91 $9,534.95 $13,394.25 $12,720.66
09/30/91 $9,977.68 $13,170.01 $13,037.32
10/31/91 $9,902.09 $13,346.68 $12,829.30
11/29/91 $9,804.91 $12,810.38 $12,804.53
12/31/91 $11,759.41 $14,272.98 $13,800.09
01/31/92 $12,703.68 $14,007.33 $14,489.92
02/28/92 $12,615.84 $14,188.66 $14,122.97
03/31/92 $12,286.44 $13,913.03 $13,903.06
04/30/92 $11,847.25 $14,321.10 $13,856.60
05/29/92 $11,913.13 $14,391.12 $14,455.99
06/30/92 $11,331.20 $14,177.10 $14,280.72
07/31/92 $11,888.29 $14,755.80 $14,890.72
08/31/92 $10,896.67 $14,454.36 $14,939.44
09/30/92 $11,108.36 $14,624.27 $15,264.58
10/30/92 $11,476.04 $14,674.47 $15,283.58
11/30/92 $11,788.01 $15,172.77 $15,618.40
12/31/92 $12,311.68 $15,358.91 $16,061.27
01/29/93 $12,627.65 $15,487.19 $16,975.04
02/26/93 $12,503.52 $15,698.19 $17,990.30
03/31/93 $12,943.62 $16,029.20 $19,539.95
04/30/93 $12,153.69 $15,641.77 $18,805.92
05/28/93 $11,995.70 $16,059.15 $18,347.92
06/30/93 $12,401.95 $16,106.02 $19,092.89
07/30/93 $12,345.38 $16,041.17 $19,379.76
08/31/93 $12,662.21 $16,648.48 $19,804.26
09/30/93 $13,499.57 $16,520.81 $20,787.33
10/29/93 $13,239.31 $16,862.33 $20,350.65
11/30/93 $12,254.85 $16,701.61 $19,213.56
12/31/93 $12,334.06 $16,903.53 $19,203.43
01/31/94 $12,726.35 $17,477.66 $19,711.77
02/28/94 $12,910.96 $17,003.71 $20,578.45
03/31/94 $11,872.54 $16,263.82 $19,840.55
04/29/94 $12,057.15 $16,472.18 $20,126.84
05/31/94 $11,907.16 $16,741.45 $20,551.46
06/30/94 $11,445.64 $16,331.77 $20,141.91
07/29/94 $11,306.34 $16,867.67 $20,004.45
08/30/94 $11,468.85 $17,557.64 $20,027.80
09/30/94 $11,178.65 $17,128.64 $19,738.09
10/31/94 $10,679.50 $17,512.90 $18,987.45
11/30/94 $10,180.35 $16,875.90 $18,299.76
12/30/94 $10,900.06 $17,125.90 $19,855.50 $10,000.00
01/31/95 $10,535.54 $17,569.72 $19,300.52 $9,651.00
02/28/95 $10,947.09 $18,253.77 $19,722.49 $9,812.50
03/31/95 $10,817.75 $18,791.54 $19,757.53 $9,838.00
04/28/95 $10,888.30 $19,344.47 $19,635.63 $9,741.50
05/31/95 $11,370.39 $20,116.46 $20,482.08 $10,163.50
06/30/95 $11,570.29 $20,582.90 $20,891.53 $10,386.50
07/31/95 $11,782.80 $21,265.16 $21,159.14 $10,503.00
08/31/95 $12,113.38 $21,318.25 $21,364.99 $10,589.00
09/29/95 $12,325.90 $22,217.41 $21,809.63 $10,813.50
10/31/95 $12,054.35 $22,138.03 $21,248.43 $10,475.50
11/30/95 $12,207.83 $23,108.75 $21,447.35 $10,609.50
12/29/95 $12,963.44 $23,553.89 $22,811.63 $11,290.50
01/31/96 $13,023.57 $24,354.62 $23,153.49 $11,393.50
02/29/96 $13,011.54 $24,581.19 $23,388.06 $11,528.00
03/29/96 $13,155.85 $24,817.86 $23,386.72 $11,517.50
04/30/96 $13,276.10 $25,183.42 $23,365.29 $11,512.50
05/31/96 $13,528.64 $25,831.78 $23,953.18 $11,788.50
06/28/96 $13,576.74 $25,930.26 $24,400.36 $12,009.50
07/31/96 $13,527.24 $24,785.30 $24,489.76 $12,034.00
08/30/96 $14,096.54 $25,308.89 $25,450.22 $12,505.00
09/30/96 $14,504.96 $26,732.07 $25,984.09 $12,789.00
10/31/96 $14,888.62 $27,469.07 $26,717.87 $13,132.50
11/29/96 $15,495.06 $29,543.57 $27,960.94 $13,754.00
12/31/96 $17,054.46 $28,958.34 $31,028.50 $15,343.00
01/31/97 $17,254.08 $30,766.54 $31,245.81 $15,362.00
02/28/97 $17,241.60 $31,008.09 $31,148.61 $15,303.50
03/31/97 $17,291.51 $29,736.39 $31,203.05 $15,377.00
04/30/97 $16,655.24 $31,510.04 $30,232.89 $14,877.50
05/30/97 $17,104.37 $33,427.05 $31,125.37 $15,324.50
06/30/97 $17,981.42 $34,923.75 $32,775.01 $16,134.50
07/31/97 $18,765.42 $37,701.03 $33,654.78 $16,572.50
08/29/97 $18,626.32 $35,590.54 $33,532.23 $16,460.50
09/30/97 $20,434.58 $37,538.61 $36,710.72 $18,016.50
10/31/97 $19,777.03 $36,286.33 $35,607.01 $17,529.50
11/28/97 $20,067.87 $37,964.72 $36,354.41 $17,789.50
12/31/97 $20,342.27 $38,616.25 $37,255.71 $18,193.50
01/30/98 $20,015.01 $39,042.95 $36,914.33 $17,933.50
02/27/98 $19,779.39 $41,857.26 $36,204.83 $17,645.00
03/31/98 $20,250.64 $43,998.99 $37,047.04 $18,062.50
04/30/98 $19,399.77 $44,441.43 $35,677.59 $17,423.00
05/29/98 $19,007.06 $43,678.60 $35,386.86 $17,271.00
06/30/98 $18,232.12 $45,451.50 $35,350.11 $17,269.00
07/31/98 $17,579.07 $44,968.75 $32,894.99 $16,057.50
08/31/98 $15,833.16 $38,473.88 $29,742.66 $14,545.00
09/30/98 $16,352.93 $40,938.67 $31,656.05 $15,446.00
10/30/98 $16,286.29 $44,265.70 $31,097.05 $15,154.00
11/30/98 $16,779.41 $46,947.45 $31,526.38 $15,392.50
12/31/98 $16,610.94 $49,651.02 $30,936.53 $15,118.00
01/29/99 $16,452.74 $51,726.48 $30,193.48 $14,712.00
02/26/99 $15,837.52 $50,119.11 $29,957.11 $14,470.00
03/31/99 $15,819.94 $52,123.79 $29,728.21 $14,391.00
04/30/99 $17,243.74 $54,142.26 $32,825.98 $15,782.50
05/28/99 $17,314.05 $52,865.56 $33,405.50 $16,117.00
06/30/99 $16,693.56 $55,797.12 $32,728.21 $15,817.00
AVERAGE ANNUAL PERFORMANCE FOR THE PERIODS ENDED
JUNE 30, 1999
-------------------------------------- -----------------------------
TEN YEAR FIVE YEAR ONE YEAR
-------- --------- --------
Real Estate Fund 5.25% 7.84% (8.44)%
S&P 500 Index 18.76% 27.85% 22.76%
Dow Jones Equity REIT Total
Return Index (from 1/31/90) n/a 10.20% (7.42)%
Morgan Stanley REIT Index
(from 12/30/94) n/a n/a (8.41)%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. INVESTMENT RETURN
AND PRINCIPAL VALUE MAY FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL VALUE. THE DOW JONES EQUITY REIT
TOTAL RETURN INDEX IS AN INDEX COMPRISED OF REITS TRADED PUBLICLY ON
THE NEW YORK, AMERICAN AND NASDAQ STOCK EXCHANGES. THE COMPONENTS OF
THE INDEX USE THE EQUITY INVESTMENT STRUCTURE AND ALSO REINVEST ALL
REGULAR CASH DIVIDENDS. THE MORGAN STANLEY REIT INDEX IS A TOTAL RETURN
INDEX COMPOSED OF MOST OF THE ACTIVELY TRADED REITS AND IS DESIGNED TO
BE A MEASURE OF REAL ESTATE EQUITY PERFORMANCE.
19
<PAGE>
REAL ESTATE FUND
THE YEAR IN REVIEW
While real estate industry fundamentals showed continued strength over the past
year, the weakness in real estate equity securities persisted. The group's
lackluster performance was attributable to the market's general disinterest in
value stocks and hard assets, the perception of a lack of growth in the industry
and investors' beliefs that undisciplined management would continue to issue
equity and dilute the present and future value of their companies. Real estate
securities were also adversely affected by deflationary concerns.
Real estate stocks, however, performed well during the last quarter of the year.
This improving performance is attributable to several factors. First, value
stocks have started to regain favor. Second, Warren Buffet purchased interests
in several real estate stocks. And finally, we have begun to see several buyouts
of REITs by management and/or opportunity funds.
INVESTMENT HIGHLIGHTS
The fund holds a market weighting in residential real estate, an underweighting
in retail real estate and an overweighting in office and industrial real estate.
The market weighting in residential real estate reflects the stability in income
of this sector. The underweighting in retail real estate is because of the
rapidly changing environment caused by the e-commerce companies. Office real
estate remains our favorite sector as we believe office rents are poised to
increase in the next millennium.
Security selection remains paramount. We are positioned in large-capitalization,
high-quality, well-managed companies that we expect will benefit more than the
general industry from the REIT Modernization Act.
CURRENT OUTLOOK
We expect that "The Real Estate Investment Trust Modernization Act of 1999,"
currently before the House of Representatives, will be passed in the near
future. The passage of this bill will allow REITs to enhance their growth rates,
simplify their capital structures and become more competitive in the
marketplace. Most importantly, it furthers the evolution of REITs as operating
entities. This is an important event for the industry.
20
<PAGE>
REAL ESTATE FUND
While real estate stocks performed poorly, the North American real estate
industry has solid fundamentals, and the outlook for real estate securities
remains positive. Rents are at higher levels, vacancy rates continue to decline,
cash flows are growing and interest rates are low. Cash flow multiples are
historically low in both relative and absolute terms, dividend yields are
competitive with ten-year U.S. Treasuries, and shares are trading below their
current net asset values.
TOP 10 HOLDINGS BASED ON TOTAL INVESTMENTS
APARTMENT INVESTMENT & MANAGEMENT CO 5.36%
RESIDENTIAL PROPERTIES
CRESCENT REAL ESTATE EQUITIES 5.26%
OFFICE PROPERTY MANAGEMENT
EQUITY RESIDENT PROPERTY TRUST 5.02%
RESIDENTIAL PROPERTIES
POST PROPERTIES, INC 4.91%
RESIDENTIAL PROPERTIES
SPIEKER PROPERTIES, INC 4.88%
OFFICE PROPERTY MANAGEMENT
MEDITRUST 4.79%
HEALTHCARE
EQUITY OFFICE PROPERTIES TRUST 4.64%
OFFICE PROPERTY MANAGEMENT
BROOKFIELD PROPERTIES CORP 4.44%
OFFICE PROPERTY MANAGEMENT
MANUFACTURED HOME COMMUNITIES, INC 4.35%
RESIDENTIAL PROPERTIES
SIMON PROPERTY GROUP, INC 4.24%
RETAIL PROPERTIES
21
<PAGE>
REAL ESTATE FUND
TOP 5 INDUSTRIES BASED ON TOTAL INVESTMENTS
OFFICE PROPERTY MANAGEMENT 34.74%
RESIDENTIAL PROPERTIES 19.65%
RETAIL PROPERTIES 10.43%
DIVERSIFIED 6.29%
HOTEL & LODGING PROPERTIES 6.17%
PORTFOLIO PROFILE June 30, 1999
Country Distribution % of Investments
U.S 81.57%
Canada 11.38%
U.S. Repurchase Agreements 7.05%
Number of Stocks 25
22
<PAGE>
CHINA REGION OPPORTUNITY FUND
MANAGEMENT TEAM'S PERSPECTIVE
INTRODUCTION
The China Region Opportunity Fund seeks capital appreciation by focusing on the
economic growth in the Greater China Region, including China, Hong Kong,
Singapore and Taiwan. The fund emphasizes a long-term growth approach over
current income.
PERFORMANCE
CHINA REGION OPPORTUNITY FUND
[Linear graph plotted from data in tble below.]
INTERNATIONAL
CHINA REGION FINANCE
OPPORTUNITY CORPORATION HANG SENG
FUND CHINA INDEX 100 INDEX
---------- ---------- ----------
02/09/94 $10,000.00 $10,000.00 $10,000.00
02/28/94 $9,465.73 $9,499.49 $9,062.60
03/31/94 $8,155.24 $7,780.03 $7,860.97
04/29/94 $8,094.61 $7,383.05 $7,805.39
05/31/94 $8,417.99 $7,811.94 $8,316.83
06/30/94 $7,852.07 $6,846.73 $7,624.61
07/29/94 $8,267.47 $7,713.08 $8,255.24
08/31/94 $8,774.06 $8,243.17 $8,644.01
09/30/94 $8,834.85 $8,451.00 $8,288.69
10/31/94 $8,662.41 $8,348.25 $8,397.52
11/30/94 $7,698.79 $7,095.04 $7,370.28
12/30/94 $7,191.63 $6,089.36 $7,130.69
01/31/95 $6,430.88 $5,174.75 $6,392.13
02/28/95 $6,735.18 $5,760.10 $7,249.51
03/31/95 $6,714.89 $5,854.28 $7,476.02
04/28/95 $6,441.02 $5,129.60 $7,278.68
05/31/95 $7,019.19 $5,897.87 $8,189.57
06/30/95 $6,846.75 $5,744.53 $8,014.73
07/31/95 $7,072.58 $6,006.85 $8,229.65
08/31/95 $6,990.46 $5,728.96 $7,991.51
09/29/95 $6,939.14 $5,605.20 $8,397.60
10/31/95 $6,692.41 $5,291.51 $8,516.04
11/30/95 $6,312.05 $4,786.33 $8,542.98
12/29/95 $6,178.40 $4,534.13 $8,769.37
01/31/96 $6,642.56 $4,977.82 $9,889.16
02/29/96 $6,766.33 $5,304.74 $9,685.44
03/29/96 $6,580.67 $5,025.30 $9,538.77
04/30/96 $6,549.73 $4,962.25 $9,545.15
05/31/96 $6,621.93 $5,097.69 $9,806.49
06/28/96 $6,704.44 $5,109.36 $9,594.22
07/31/96 $6,621.03 $4,970.81 $9,298.69
08/30/96 $6,631.46 $5,142.06 $9,714.46
09/30/96 $6,662.74 $5,120.26 $10,361.63
10/31/96 $6,683.69 $5,071.22 $10,862.31
11/29/96 $7,207.49 $5,548.38 $11,660.06
12/31/96 $7,898.91 $6,389.04 $11,710.13
01/31/97 $7,877.95 $6,333.00 $11,597.25
02/28/97 $8,097.95 $6,430.29 $11,664.23
03/31/97 $7,982.71 $6,302.64 $10,911.72
04/30/97 $8,454.13 $7,219.58 $11,232.94
05/30/97 $8,894.13 $7,121.51 $12,847.38
06/30/97 $9,009.36 $7,205.57 $13,229.53
07/31/97 $9,679.83 $8,320.23 $14,247.13
08/29/97 $9,795.06 $9,643.50 $12,305.41
09/30/97 $9,239.83 $7,651.59 $13,101.14
10/31/97 $7,018.92 $6,274.62 $9,248.51
11/28/97 $6,337.98 $4,963.03 $9,164.19
12/31/97 $6,125.32 $4,863.39 $9,334.68
01/30/98 $4,784.09 $3,457.62 $8,054.62
02/27/98 $6,114.76 $4,755.97 $9,994.49
03/31/98 $6,114.76 $4,464.86 $10,027.56
04/30/98 $5,618.40 $3,914.53 $9,039.49
05/29/98 $4,984.74 $3,614.85 $7,777.96
06/30/98 $4,319.41 $3,234.22 $7,437.18
07/31/98 $3,654.07 $2,512.65 $6,908.84
08/31/98 $3,009.85 $1,952.21 $6,333.27
09/30/98 $3,654.07 $2,601.39 $6,862.93
10/30/98 $4,150.43 $2,583.48 $8,840.36
11/30/98 $4,277.16 $2,621.62 $9,055.72
12/31/98 $4,087.07 $2,388.11 $8,747.77
01/29/99 $3,576.18 $2,084.53 $8,276.21
02/26/99 $3,554.90 $2,102.44 $8,582.29
03/31/99 $3,938.06 $2,204.41 $9,525.71
04/30/99 $4,757.60 $2,833.35 $11,607.19
05/28/99 $4,640.52 $2,755.51 $10,574.65
06/30/99 $5,939.02 $3,770.53 $11,780.37
AVERAGE ANNUAL PERFORMANCE FOR THE PERIODS ENDED
JUNE 30, 1999
------------------------------------ ------------------------------
INCEPTION FIVE YEAR ONE YEAR
--------- --------- --------
China Region Opportunity Fund
(Inception 2/10/94) (9.22)% (5.43)% 37.50%
Hang Seng 100 Index 3.07% 9.09% 58.40%
International Finance Corporation
China Index (16.49)% (11.25)% 16.58%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. INVESTMENT
RETURN AND PRINCIPAL VALUE MAY FLUCTUATE SO THAT SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL VALUE. THE
HANG SENG 100 INDEX IS A CAPITALIZATION-WEIGHTED INDEX. THE INDEX IS
COMPRISED OF THE 100 HIGHEST COMPANIES IN TERMS OF MARKET
CAPITALIZATION AND TURNOVER, LISTED ON THE STOCK EXCHANGE OF HONG KONG
LIMITED. THE INTERNATIONAL FINANCE CORPORATION CHINA INDEX IS ONE
GLOBAL INDEX IN A SERIES REPRESENTING A LARGE PART OF THE MARKET AND
SHOWS TRENDS IN THE MARKETS FROM THE PERSPECTIVE OF LOCAL INVESTORS.
23
<PAGE>
CHINA REGION OPPORTUNITY FUND
THE YEAR IN REVIEW - ECONOMIC AND POLITICAL ISSUES
The Asian markets have started to show positive signs of recovery. Last year at
this time property prices in Hong Kong were extremely depressed, and a wave of
financial meltdowns had swept across many of the largest banks in the region.
The state of the Asian economies has improved in the last twelve months. The
Hong Kong market gained over 28%, and the Shanghai and Shenzhen B-share markets
gained 44% and 45%, respectively. These returns outperformed returns in the
United States, where the S&P 500 Index returned approximately 23% for the same
period. The China Region Opportunity Fund provided a return of approximately 38%
for the year ended June 30, 1999. Much of the portfolio performance came in the
second quarter of 1999, in which the portfolio rose approximately 51%.
INVESTMENT HIGHLIGHTS
We were able to capture strong returns in the second quarter of 1999 due to our
top-down and bottom-up investment discipline. Our top-down analysis favored
greater regional exposure to the B-share or mainland Chinese market in the
Shanghai and Shenzhen markets. Favorable government reforms in mainland China
provided investors with the confidence needed to create greater interest in the
mainland shares. The announcement to lower stock transaction fees and an
interest rate cut provided a catalyst for the market. It is estimated that 8% of
the Chinese population, or 100 million people, have retail stock accounts, and
they continue to invest more of their disposable income in the market.
CURRENT OUTLOOK
It may be too early to say that the China region has fully recovered and that
current government reforms will be enough to stimulate sustainable consumption.
With stellar returns in the second quarter of 1999, we are aware the markets may
fall victim to some short-term profit taking. Every market in an overbought
state is expected to correct at some point.
At this time, our bottom-up approach has identified stocks with strong financial
fundamentals and sustainable earnings. We believe the cyclical stocks will stand
to benefit from the recent announcement of increased government spending on
infrastructure projects.
24
<PAGE>
CHINA REGION OPPORTUNITY FUND
TOP 10 HOLDINGS BASED ON TOTAL INVESTMENTS
HSBC HOLDINGS LTD 7.85%
BANKING & FINANCIAL SERVICES
GUANGDONG KELON ELECTRONICS HOLDINGS 5.28%
HOUSEHOLD APPLIANCES
LI & FUNG LTD 3.22%
APPAREL
HUTCHINSON WHAMPOA 3.12%
CONGLOMERATES
CHINA INTERNATIONAL MARINE CONTAINER 2.74%
WATER TRANSPORTATION & SERVICES
SHANGHAI DAZHONG, GROUP B 2.74%
MOTOR VEHICLES & TRANSPORTATION
CITIC PACIFIC LTD 2.61%
CONGLOMERATES
HUANENG POWER INTERNATIONAL, INC 2.46%
UTILITIES
CHINA RESOURCES ENTERPRISE LTD 2.19%
REAL ESTATE DEVELOPERS
SHANGHAI PETROCHEMICAL 2.05%
CHEMICALS & ALLIED PRODUCTS
TOP 5 INDUSTRIES BASED ON TOTAL INVESTMENTS
CONGLOMERATES 9.98%
BANKING & FINANCIAL SERVICES 9.94%
REAL ESTATE DEVELOPERS 7.50%
CHEMICAL & ALLIED PRODUCTS 6.73%
HOUSEHOLD APPLIANCES 6.70%
25
<PAGE>
CHINA REGION OPPORTUNITY FUND
PORTFOLIO PROFILE June 30, 1999
COUNTRY DISTRIBUTION % OF INVESTMENTS
Hong Kong 48.94%
Republic of China 26.06%
Taiwan 4.20%
Other Foreign 2.00%
U.S. Repurchase Agreements 18.80%
NUMBER OF STOCKS 78
26
<PAGE>
GLOBAL RESOURCES FUND
MANAGEMENT TEAM'S PERSPECTIVE
INTRODUCTION
The Global Resources Fund is a diversified natural resources fund with the
principal objective of achieving long-term growth of capital, while providing
protection against inflation and monetary instability. The fund invests in
companies involved in the exploration, production and processing of petroleum,
natural gas, industrial commodities, metals, minerals, paper and forest products
from around the globe.
PERFORMANCE
GLOBAL RESOURCES FUND
[Linear graph plotted from data in table below.]
MICROPAL US:
DOW JONES EQUITY
GLOBAL BASIFC NATURAL
RESOURCES S&P MATERIALS AND RESOURCES
FUND 500 INDEX ENERGY INDEX FUND INDEX
---------- ---------- ------------ ----------
6/30/89 $10,000.00 $10,000.00 $10,000.00
7/31/89 $10,563.38 $10,902.10 $10,545.98
8/31/89 $11,126.76 $11,114.52 $10,992.68
9/29/89 $11,126.76 $11,069.26 $10,930.78
10/31/89 $10,845.07 $10,812.56 $10,550.08
11/30/89 $11,830.99 $11,032.17 $11,104.31
12/29/89 $11,690.14 $11,296.73 $11,648.27
1/31/90 $11,374.19 $10,538.75 $11,160.92
2/28/90 $11,058.24 $10,674.25 $11,371.54
3/30/90 $10,742.29 $10,956.89 $11,486.79
4/30/90 $9,636.47 $10,683.95 $10,896.12
5/31/90 $10,268.37 $11,723.57 $11,762.87
6/29/90 $9,952.42 $11,644.54 $11,509.52
7/31/90 $10,742.29 $11,607.33 $12,084.28
8/31/90 $10,584.32 $10,559.43 $11,682.04
9/28/90 $10,426.34 $10,046.29 $11,466.97
10/31/90 $9,494.29 $10,003.81 $10,780.57
11/30/90 $9,510.09 $10,649.19 $10,882.29
12/31/90 $9,826.04 $10,945.54 $10,772.27
1/31/91 $9,177.79 $11,421.03 $10,579.75
2/28/91 $9,604.27 $12,236.80 $11,487.56
3/28/91 $9,501.91 $12,532.83 $11,341.21
4/30/91 $9,604.27 $12,562.62 $11,387.50
5/31/91 $10,116.04 $13,102.71 $11,666.37
6/28/91 $10,640.48 $12,502.88 $11,105.26
7/31/91 $10,252.51 $13,085.15 $11,543.46
8/30/91 $10,167.22 $13,394.25 $11,715.81
9/30/91 $10,150.16 $13,170.01 $11,498.24
10/31/91 $10,440.16 $13,346.68 $11,754.14
11/29/91 $10,098.98 $12,810.38 $11,016.36
12/31/91 $10,320.75 $14,272.98 $11,157.78
1/31/92 $10,373.95 $14,007.33 $11,093.92
2/28/92 $10,480.35 $14,188.66 $11,168.70
3/31/92 $10,196.62 $13,913.03 $10,774.76
4/30/92 $11,921.45 $14,321.10 $11,156.41
5/29/92 $10,586.75 $14,391.12 $11,510.83
6/30/92 $10,249.82 $14,177.10 $11,125.08
7/31/92 $10,373.95 $14,755.80 $11,627.38
8/31/92 $10,072.49 $14,454.36 $11,604.53
9/30/92 $10,054.75 $14,624.27 $11,702.16
10/30/92 $9,930.62 $14,674.47 $11,478.24
11/30/92 $9,895.15 $15,172.77 $11,331.72
12/31/92 $10,037.02 $15,358.91 $10,000.00 $11,461.63
1/29/93 $9,822.71 $15,487.19 $10,181.08 $11,677.05
2/26/93 $10,001.30 $15,698.19 $10,641.92 $12,257.93
3/31/93 $10,447.79 $16,029.20 $10,930.74 $12,919.16
4/30/93 $10,626.38 $15,641.77 $11,143.74 $13,232.92
5/28/93 $10,769.26 $16,059.15 $11,342.02 $13,707.45
6/30/93 $10,912.13 $16,106.02 $11,185.46 $13,805.25
7/30/93 $11,019.29 $16,041.17 $11,268.36 $13,844.95
8/31/93 $11,376.48 $16,648.48 $11,691.95 $14,448.26
9/30/93 $11,322.90 $16,520.81 $11,600.02 $14,071.30
10/29/93 $11,822.97 $16,862.33 $11,516.40 $14,267.73
11/30/93 $11,287.18 $16,701.61 $11,200.90 $13,481.58
12/31/93 $11,894.40 $16,903.53 $11,382.83 $13,802.22
1/31/94 $12,461.67 $17,477.66 $12,111.06 $14,434.32
2/28/94 $12,022.50 $17,003.71 $11,793.65 $14,092.43
3/31/94 $11,327.13 $16,263.82 $11,321.59 $13,336.00
4/29/94 $11,070.94 $16,472.18 $11,581.83 $13,660.63
5/31/94 $11,070.94 $16,741.45 $11,837.63 $13,892.25
6/30/94 $10,503.67 $16,331.77 $11,556.99 $13,813.92
7/29/94 $13,410.89 $16,867.67 $12,052.13 $14,246.96
8/31/94 $11,144.14 $17,557.64 $12,305.80 $14,390.64
9/30/94 $11,583.32 $17,128.64 $12,143.22 $14,464.76
10/31/94 $11,400.33 $17,512.90 $12,468.09 $14,556.09
11/30/94 $10,741.56 $16,875.90 $11,711.24 $13,506.80
12/30/94 $10,741.56 $17,125.90 $11,812.96 $13,466.62
1/31/95 $10,181.30 $17,569.72 $11,732.27 $12,954.00
2/28/95 $10,297.22 $18,253.77 $12,400.29 $13,412.98
3/31/95 $10,587.01 $18,791.54 $12,968.09 $14,079.19
4/28/95 $10,876.80 $19,344.47 $13,269.80 $14,610.28
5/31/95 $11,012.03 $20,116.46 $13,767.64 $14,865.23
6/30/95 $11,127.95 $20,582.90 $13,710.32 $14,864.63
7/31/95 $11,437.06 $21,265.16 $14,103.06 $15,338.63
8/31/95 $11,610.93 $21,318.25 $13,921.33 $15,430.50
9/29/95 $11,572.29 $22,217.41 $14,083.60 $15,385.57
10/31/95 $11,050.67 $22,138.03 $13,694.25 $14,624.70
11/30/95 $11,166.59 $23,108.75 $14,452.23 $15,301.30
12/29/95 $11,707.53 $23,553.89 $14,926.06 $16,038.02
1/31/96 $12,138.24 $24,354.62 $15,313.82 $16,615.10
2/29/96 $12,275.29 $24,581.19 $15,401.84 $16,924.11
3/29/96 $12,960.51 $24,817.86 $16,311.93 $17,770.62
4/30/96 $13,724.04 $25,183.42 $16,636.56 $18,750.18
5/31/96 $13,939.40 $25,831.78 $16,552.89 $19,044.71
6/28/96 $13,665.31 $25,930.26 $16,379.29 $18,714.04
7/31/96 $13,077.98 $24,785.30 $15,763.99 $17,889.37
8/30/96 $13,547.84 $25,308.89 $16,259.15 $18,987.03
9/30/96 $14,096.02 $26,732.07 $16,895.85 $19,408.32
10/31/96 $14,761.67 $27,469.07 $17,604.54 $20,184.62
11/29/96 $15,544.78 $29,543.57 $18,458.65 $21,040.03
12/31/96 $15,701.40 $28,958.34 $18,380.24 $21,097.78
1/31/97 $16,278.01 $30,766.54 $19,227.07 $21,538.18
2/28/97 $15,390.92 $31,008.09 $18,731.70 $20,763.25
3/31/97 $15,280.04 $29,736.39 $19,204.28 $20,331.86
4/30/97 $14,880.85 $31,510.04 $19,432.75 $20,058.16
5/30/97 $16,300.18 $33,427.05 $20,701.68 $21,724.94
6/30/97 $16,278.01 $34,923.75 $21,250.42 $21,766.78
7/31/97 $17,630.81 $37,701.03 $22,908.76 $23,046.34
8/29/97 $18,606.60 $35,590.54 $22,404.03 $23,436.36
9/30/97 $20,247.71 $37,538.61 $23,444.38 $24,962.00
10/31/97 $19,183.21 $36,286.33 $22,655.39 $23,584.92
11/28/97 $16,100.59 $37,964.72 $22,330.60 $21,681.76
12/31/97 $15,268.95 $38,616.25 $22,128.63 $21,488.24
1/30/98 $13,456.08 $39,042.95 $21,218.38 $20,665.36
2/27/98 $13,762.48 $41,857.26 $22,695.43 $21,446.42
3/31/98 $13,736.95 $43,998.99 $23,660.96 $22,156.07
4/30/98 $13,379.48 $44,441.43 $24,766.29 $22,806.67
5/29/98 $12,179.41 $43,678.60 $23,852.30 $21,043.85
6/30/98 $11,413.41 $45,451.50 $23,366.90 $19,825.17
7/31/98 $10,519.74 $44,968.75 $21,850.81 $17,801.26
8/31/98 $8,834.54 $38,473.88 $19,401.14 $14,472.93
9/30/98 $9,779.28 $40,938.67 $21,740.55 $16,779.41
10/30/98 $10,136.74 $44,265.70 $22,228.86 $17,317.98
11/30/98 $9,855.88 $46,947.45 $22,482.23 $16,627.66
12/31/98 $9,387.82 $49,651.02 $22,116.71 $16,295.10
1/29/99 $8,923.89 $51,726.48 $21,242.55 $15,533.46
2/26/99 $8,842.02 $50,119.11 $20,769.32 $15,071.16
3/31/99 $9,715.30 $52,123.79 $23,135.72 $17,367.46
4/30/99 $11,325.42 $54,142.26 $26,192.98 $20,278.92
5/28/99 $10,779.62 $52,865.56 $26,886.91 $19,572.96
6/30/99 $10,943.36 $55,797.12 $26,354.22 $20,539.81
AVERAGE ANNUAL PERFORMANCE FOR THE PERIODS ENDED
JUNE 30, 1999
------------------------------------- -----------------------------
TEN YEAR FIVE YEAR ONE YEAR
-------- --------- --------
Global Resources Fund 0.91% 0.82% (4.12)%
S&P 500 Index 18.76% 27.85% 22.76%
Dow Jones Basic Materials
and Energy Index (from 12/31/92) n/a 17.92% 12.78%
Micropal US: Equity Natural
Resources Fund Index 7.46% 8.26% 3.60%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. INVESTMENT
RETURN AND PRINCIPAL VALUE MAY FLUCTUATE SO THAT SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL VALUE. THE DOW
JONES BASIC MATERIALS AND ENERGY INDEX IS A COMBINATION OF THE DOW
JONES BASIC MATERIALS INDEX AND THE DOW JONES ENERGY INDEX ALLOCATED
BASED ON THEIR RESPECTIVE MARKET CAPITALIZATION WEIGHTINGS. THE
MICROPAL US: EQUITY NATURAL RESOURCES FUND INDEX IS COMPOSED OF FUNDS
THAT INVEST THE MAJORITY OF THEIR PORTFOLIOS IN EQUITY SHARES OF
NATURAL RESOURCE COMPANIES.
27
<PAGE>
GLOBAL RESOURCES FUND
THE YEAR IN REVIEW - ECONOMIC AND POLITICAL ISSUES
Although the Dow Jones Basic Materials and Energy Index was up almost 13%, this
was a somber year for the resources sector. These index gains were all made in
the first and second quarter of 1999.
Prior to that, the majority of commodities were at multi-year lows. The
CRB/Bridge Index reached a twenty-year low, oil went below ten dollars a barrel,
gold broke south through the $300 dollar mark, and then down further to hit a
twenty-three year low. Steel and the base metals saw supplies build dramatically
as demand declined. A similar picture was seen in the paper and forest products
sectors, with demand for lumber, pulp and newsprint all falling sharply. The
chemicals sector was the only sector to survive this period relatively
unscathed.
Commodities, as the building blocks of any economy, require a stable financial
environment to stimulate demand. An overview of the global financial community
indicates that 1998-1999 was anything but stable. The Asian crisis, the
Brazilian market crisis, Chinese issues, the floatation of the EMU, central bank
gold sales and the Long Term Capital Management incident all contributed to a
global credit tightening, which restricted capital spending on development.
Consequently, the market for commodities shrunk.
This affected U.S. producers in two ways. First, a significant portion of U.S.
production goes overseas, and these markets evaporated. Second, overseas
production that is sold in the U.S. became cheaper and more plentiful, thereby
taking more of the market share. Both of these combined to lower the margins and
profitability of the U.S. producers, which was reflected in their share prices.
28
<PAGE>
GLOBAL RESOURCES FUND
INVESTMENT HIGHLIGHTS
The top-down view at the start of the year showed a bleak commodity outlook,
with an abundant supply of cheap raw materials and only the U.S. market
purchasing these materials. Commodity prices fell steadily, with few exceptions,
until March 1999 when the first signs of a turn in Asia and supply cutbacks were
announced. Up until that point, we had maintained a defensive position to
protect the fund on the downside.
As the OPEC production cuts were introduced, we increased our exposure to the
oil sector. In basic materials, we overweighted the paper and forest products,
chemicals and aluminum sectors because we believed that these sectors had more
positive fundamentals. The remaining sectors were either weighted to the Dow
Jones Basic Materials and Energy Index or underweighted with the most attractive
stocks selected from the group through bottom-up analysis.
This strategy worked well for us during the second quarter of 1999, with strong
earnings surprises coming in these sectors on the basis of continued GDP growth
in the U.S. and positive GDP growth in Europe and Asia.
CURRENT OUTLOOK
The top-down picture for the commodities sector indicates that there will be a
steady rise in earnings growth through the upcoming quarters as we move out of
the current trough.
Although commodity prices have rallied in the last few months, this increase
came too late to be reflected in the first quarter earnings and will be
understated in the second quarter of 1999. The continued growth in the U.S.
economy and the indicated recovery in Asia and Latin America should place
continued upside pressure on commodity prices, as they still have significant
room to move. Consensus earnings estimates for the basic materials and energy
sectors show much stronger growth trends for the second half of 1999.
29
<PAGE>
GLOBAL RESOURCES FUND
TOP 10 HOLDINGS BASED ON TOTAL INVESTMENTS
EXXON CORP 19.10%
PETROLEUM PRODUCTION & REFINING
MOBIL CORP 8.72%
PETROLEUM PRODUCTION & REFINING
E.I. DU PONT DE NEMOURS & CO 6.78%
CHEMICALS & ALLIED PRODUCTS
CHEVRON CORP 6.36%
PETROLEUM PRODUCTION & REFINING
SCHLUMBERGER LTD 3.48%
OIL & GAS FIELD EXTRACTION
ENRON CORP 3.29%
NATURAL GAS PRODUCTION & DISTRIBUTION
ALCOA, INC 3.26%
METAL & MINERAL MINING
DOW CHEMICAL CO 3.00%
CHEMICALS & ALLIED PRODUCTS
TEXACO, INC 2.88%
PETROLEUM PRODUCTION & REFINING
WILLIAMS COMPANIES, INC 2.25%
NATURAL GAS PRODUCTION & DISTRIBUTION
TOP 5 INDUSTRIES BASED ON TOTAL INVESTMENTS
PETROLEUM PRODUCTION & REFINING 40.93%
CHEMICALS & ALLIED PRODUCTS 16.62%
OIL & GAS EXTRACTION 9.10%
PAPER PRODUCTS 6.94%
NATURAL GAS PRODUCTION & DISTRIBUTION 6.41%
30
<PAGE>
GLOBAL RESOURCES FUND
PORTFOLIO PROFILE June 30, 1999
COUNTRY DISTRIBUTION % OF INVESTMENTS
U.S. 90.65%
Netherlands Antilles 3.48%
United Kingdom 1.85%
Other Foreign 4.01%
U.S. Repurchase Agreements 0.01%
NUMBER OF STOCKS 64
31
<PAGE>
GOLD FUNDS
MANAGEMENT TEAM'S PERSPECTIVE
INTRODUCTION
The Gold Shares Fund's primary objective is capital appreciation and protection
against inflation and monetary instability. It also pursues current income as a
secondary objective. The fund focuses on the larger companies producing gold and
precious minerals.
The World Gold Fund focuses on all types of gold and precious minerals
companies, including the smaller production and exploration companies. The fund
seeks long-term growth of capital, plus protection against inflation and
monetary instability.
PERFORMANCE
WORLD GOLD FUND
[Linear graph plotted from data in table below.]
TORONTO
STOCK ACCOLADE
EXCHANGE STOCK
GOLD & EXCHANGE
WORLD PRECIOUS GOLD &
GOLD FUND MINERALS INDEX SILVER INDEX
---------- ---------- ----------
6/30/89 $10,000.00 $10,000.00 $10,000.00
7/31/89 $10,427.35 $10,512.56 $10,324.53
8/31/89 $10,769.23 $10,939.36 $11,048.25
9/29/89 $10,940.17 $11,088.54 $11,228.91
10/31/89 $10,940.17 $11,429.46 $11,409.56
11/30/89 $12,478.63 $13,218.77 $12,912.16
12/29/89 $12,051.28 $12,924.72 $12,973.82
1/31/90 $12,309.52 $13,631.25 $14,093.47
2/28/90 $11,706.96 $12,589.99 $13,059.28
3/30/90 $10,932.23 $12,159.26 $12,192.77
4/30/90 $9,554.95 $10,567.39 $10,760.49
5/31/90 $9,985.35 $11,457.75 $11,615.10
6/29/90 $9,296.70 $10,864.92 $10,974.69
07/31/90 $9,899.27 $11,709.83 $11,786.02
08/31/90 $9,727.11 $11,687.42 $11,688.66
09/28/90 $9,641.03 $11,645.74 $11,720.03
10/31/90 $8,031.32 $9,768.24 $9,712.25
11/30/90 $7,996.89 $9,517.12 $9,221.12
12/31/90 $8,694.14 $10,416.28 $10,497.62
01/31/91 $7,497.62 $8,735.68 $8,687.80
02/28/91 $7,919.41 $9,529.96 $9,303.33
03/28/91 $7,867.77 $9,529.96 $9,118.35
04/30/91 $7,704.21 $8,969.96 $8,715.92
05/31/91 $8,048.53 $9,266.38 $8,905.24
06/28/91 $8,642.49 $9,802.19 $9,753.35
07/31/91 $8,668.32 $9,732.40 $9,514.28
08/30/91 $7,807.51 $8,697.49 $8,211.81
09/30/91 $7,928.02 $8,557.75 $8,527.69
10/31/91 $8,728.57 $9,400.53 $8,967.98
11/29/91 $8,780.22 $9,480.25 $9,101.04
12/31/91 $8,401.47 $9,089.21 $8,739.72
01/31/92 $8,608.06 $9,006.16 $9,036.13
02/28/92 $8,487.55 $8,752.89 $8,805.71
03/31/92 $7,893.59 $8,088.47 $7,793.16
04/30/92 $7,144.69 $7,767.90 $7,564.91
05/29/92 $7,704.21 $8,402.98 $8,115.53
06/30/92 $8,177.66 $8,732.00 $8,494.16
07/31/92 $8,642.49 $9,567.71 $8,938.77
08/31/92 $8,435.90 $9,565.69 $8,532.02
09/30/92 $8,435.90 $9,404.54 $8,702.94
10/30/92 $8,091.58 $9,254.53 $8,179.36
11/30/92 $7,454.58 $8,315.25 $7,119.21
12/31/92 $8,005.49 $8,897.45 $7,713.11
01/29/93 $7,626.74 $8,756.97 $7,737.99
02/26/93 $8,246.52 $9,923.12 $8,219.39
03/31/93 $9,202.01 $11,119.88 $9,392.04
04/30/93 $10,544.87 $12,952.26 $10,689.10
05/28/93 $11,965.20 $14,521.84 $12,019.69
06/30/93 $12,559.16 $15,722.05 $12,596.28
07/30/93 $14,934.98 $17,026.28 $13,944.18
08/31/93 $13,747.07 $15,709.44 $12,750.97
09/30/93 $12,025.46 $13,743.22 $11,262.44
10/29/93 $14,005.31 $16,440.42 $13,354.61
11/30/93 $13,747.07 $16,241.41 $12,841.84
12/31/93 $15,193.22 $17,545.54 $14,269.80
01/31/94 $15,718.32 $17,712.25 $14,262.22
02/28/94 $14,900.55 $16,555.36 $13,889.01
03/31/94 $14,926.37 $16,946.79 $14,463.44
04/29/94 $13,729.85 $14,978.71 $12,378.84
05/31/94 $14,384.07 $16,094.99 $13,016.01
06/30/94 $13,454.40 $15,047.24 $12,467.55
07/29/94 $13,471.61 $14,968.73 $12,088.92
08/30/94 $13,858.97 $15,716.66 $12,821.29
09/30/94 $14,934.98 $17,815.31 $14,304.41
10/31/94 $14,117.22 $16,101.14 $12,701.21
11/30/94 $12,335.35 $13,929.95 $11,109.91
12/30/94 $12,619.41 $14,943.14 $11,827.13
01/31/95 $11,291.05 $13,086.14 $10,534.40
02/28/95 $11,532.57 $14,013.62 $11,232.15
03/31/95 $12,860.93 $15,902.36 $13,194.50
04/28/95 $13,214.59 $15,957.00 $12,649.29
05/31/95 $13,188.71 $16,646.68 $12,981.39
06/30/95 $13,637.25 $16,776.20 $13,001.95
07/31/95 $14,232.42 $16,746.97 $12,840.76
08/31/95 $14,620.58 $17,067.37 $13,269.15
09/29/95 $14,611.95 $17,253.07 $13,435.74
10/31/95 $13,111.08 $15,165.40 $11,594.55
11/30/95 $14,232.42 $16,835.50 $13,101.47
12/29/95 $14,629.20 $16,817.29 $13,026.83
01/31/96 $16,992.65 $19,304.77 $15,258.55
02/29/96 $17,449.81 $20,017.67 $15,584.16
03/29/96 $18,381.39 $20,178.46 $15,559.28
04/30/96 $18,950.69 $20,003.00 $15,514.93
05/31/96 $20,882.84 $21,258.59 $16,106.66
06/28/96 $18,321.01 $17,891.84 $13,388.14
07/31/96 $17,751.71 $17,981.94 $13,451.97
08/30/96 $19,373.34 $18,950.34 $13,473.60
09/30/96 $18,804.05 $17,948.35 $12,459.97
10/31/96 $18,312.38 $18,230.35 $12,505.41
11/29/96 $18,019.11 $18,786.94 $13,001.95
12/31/96 $17,484.31 $18,266.70 $12,629.81
01/31/97 $16,507.89 $17,477.88 $11,921.25
02/28/97 $18,186.97 $18,710.50 $13,247.51
03/31/97 $16,015.12 $15,177.71 $11,263.52
04/30/97 $15,230.33 $13,950.97 $10,153.61
05/30/97 $16,051.62 $15,106.57 $11,284.08
06/30/97 $14,564.18 $13,382.37 $10,341.84
07/31/97 $13,861.52 $13,331.38 $10,592.82
08/29/97 $14,190.04 $13,137.68 $10,695.59
09/30/97 $14,792.31 $14,570.72 $11,845.52
10/31/97 $12,310.20 $11,928.29 $9,509.95
11/28/97 $9,764.20 $8,889.50 $7,661.19
12/31/97 $10,301.69 $9,945.58 $8,025.75
01/30/98 $11,188.65 $10,397.04 $8,110.13
02/27/98 $10,597.35 $10,159.74 $8,162.05
03/31/98 $11,318.00 $10,896.40 $8,834.92
04/30/98 $11,789.20 $11,681.80 $9,512.12
05/29/98 $10,116.91 $9,992.62 $8,082.00
06/30/98 $9,109.84 $9,257.70 $7,758.55
07/31/98 $8,472.33 $8,014.59 $6,806.58
08/31/98 $6,624.50 $6,060.74 $5,288.84
09/30/98 $9,146.79 $9,605.86 $8,112.29
10/30/98 $9,026.68 $9,733.33 $8,155.56
11/30/98 $8,426.14 $9,118.07 $7,676.33
12/31/98 $8,677.44 $8,660.36 $7,028.34
01/29/99 $8,307.40 $8,425.57 $6,843.36
02/26/99 $8,131.63 $7,926.39 $6,551.28
03/31/99 $7,965.12 $7,719.47 $6,464.73
04/30/99 $8,917.97 $9,148.31 $7,942.45
05/28/99 $7,289.79 $7,570.50 $6,584.81
06/30/99 $7,206.53 $8,036.85 $7,240.37
AVERAGE ANNUAL PERFORMANCE FOR THE PERIODS ENDED
JUNE 30, 1999
-------------------------------- -----------------------------
TEN YEAR FIVE YEAR ONE YEAR
-------- --------- --------
World Gold Fund (3.22)% (11.74)% (20.89)%
Toronto Stock Exchange
Gold & Precious Minerals Index (2.16)% (11.79)% (13.19)%
Philadelphia Stock Exchange
Gold & Silver Index (3.18)% (10.30)% (6.68)%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. INVESTMENT RETURN
AND PRINCIPAL VALUE MAY FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL VALUE. THE TORONTO STOCK
EXCHANGE GOLD & PRECIOUS MINERALS INDEX (TSE) IS A
CAPITALIZATION-WEIGHTED INDEX DESIGNED TO MEASURE THE PERFORMANCE OF
THE GOLD AND SILVER SECTOR OF THE TSE 300 INDEX. THE PHILADELPHIA STOCK
EXCHANGE GOLD & SILVER INDEX (XAU) IS A CAPITALIZATION-WEIGHTED INDEX
WHICH INCLUDES THE LEADING COMPANIES INVOLVED IN THE MINING OF GOLD AND
SILVER.
32
<PAGE>
GOLD FUNDS
GOLD SHARES FUND
[Linear Graph Plotted From Data in Table Below.]
FINANCIAL JOHANNES-
GOLD TIMES GOLD BURG ALL
SHARES FUND MINES INDEX GOLD INDEX
---------- ----------- ----------
6/30/89 $10,000.00 $10,000.00
7/31/89 $10,212.20 $10,997.79
8/31/89 $10,132.63 $10,379.61
9/29/89 $11,087.53 $11,243.68
10/31/89 $11,167.11 $12,245.43
11/30/89 $13,183.02 $14,251.32
12/29/89 $14,403.18 $14,635.24
01/31/90 $15,786.54 $15,588.83
02/28/90 $13,589.44 $13,721.42
03/30/90 $12,640.08 $13,538.27
04/30/90 $11,283.85 $11,942.83
05/31/90 $11,555.10 $11,190.88
06/29/90 $10,551.48 $10,477.91
07/31/90 $11,159.16 $11,089.73
08/31/90 $11,021.05 $11,960.14
09/28/90 $10,496.24 $11,418.06
10/31/90 $9,778.08 $10,273.03
11/30/90 $9,391.37 $9,187.74
12/31/90 $9,474.24 $8,582.04
01/31/91 $8,427.83 $7,826.04
02/28/91 $9,134.86 $7,594.89
03/28/91 $8,371.27 $6,509.86
04/30/91 $8,569.24 $6,871.79
05/31/91 $9,615.65 $7,985.24
06/28/91 $10,152.99 $8,696.50
07/31/91 $9,811.71 $8,451.35
08/30/91 $8,105.33 $6,853.38
09/30/91 $8,588.80 $7,376.82
10/31/91 $8,873.20 $7,598.45
11/29/91 $9,271.36 $8,048.00
12/31/91 $7,991.57 $7,533.35
01/31/92 $7,962.51 $10,000.00 $8,326.25
02/28/92 $7,177.88 $9,504.15 $7,901.15
03/31/92 $7,061.64 $8,900.85 $7,203.82
04/30/92 $6,567.62 $8,398.20 $6,416.68
05/29/92 $7,003.52 $8,899.56 $7,047.17
06/30/92 $6,451.38 $9,123.62 $7,224.23
07/31/92 $6,128.81 $9,367.35 $7,061.47
08/31/92 $5,600.97 $8,818.10 $6,238.24
09/30/92 $5,043.80 $8,475.29 $5,834.92
10/30/92 $4,340.02 $7,710.15 $5,040.35
11/30/92 $4,046.77 $6,963.90 $5,206.78
12/31/92 $3,929.47 $7,158.25 $4,780.09
01/29/93 $4,139.45 $7,278.29 $5,363.22
02/26/93 $4,499.40 $8,111.58 $5,651.12
03/31/93 $5,339.29 $9,500.14 $6,933.51
04/30/93 $6,209.17 $11,110.67 $8,441.01
05/28/93 $7,409.01 $13,158.72 $10,595.06
06/30/93 $7,528.99 $13,664.95 $10,447.68
07/30/93 $8,557.05 $15,456.59 $11,345.20
08/31/93 $7,014.97 $13,506.32 $9,444.66
09/30/93 $6,682.36 $12,083.34 $8,019.53
10/29/93 $7,498.76 $14,147.78 $9,550.15
11/30/93 $7,438.28 $13,832.10 $9,932.85
12/31/93 $8,798.94 $15,978.00 $11,585.56
01/31/94 $7,912.94 $15,494.17 $10,346.86
02/28/94 $7,424.11 $14,481.78 $10,501.64
03/31/94 $7,332.45 $14,570.18 $10,569.31
04/29/94 $7,546.32 $13,575.12 $10,382.11
05/31/94 $7,301.90 $13,990.51 $9,650.02
06/30/94 $7,668.52 $13,671.75 $10,447.59
07/29/94 $7,946.82 $14,040.62 $10,625.07
08/31/94 $8,812.62 $14,906.12 $11,656.30
09/30/94 $9,863.95 $16,637.63 $12,508.02
10/31/94 $9,338.28 $15,432.54 $11,614.03
11/30/94 $8,163.27 $13,524.51 $10,155.07
12/30/94 $8,565.25 $14,143.19 $10,432.77
01/31/95 $6,557.28 $11,724.57 $7,797.04
02/28/95 $6,933.77 $12,387.42 $7,740.03
03/31/95 $7,247.52 $13,814.13 $7,508.47
04/28/95 $6,902.40 $13,810.41 $7,364.37
05/31/95 $6,714.15 $13,608.54 $6,888.66
06/30/95 $6,808.27 $13,797.52 $7,234.13
07/31/95 $7,349.12 $13,958.58 $7,595.85
08/31/95 $7,317.30 $14,119.64 $7,651.55
09/29/95 $7,253.67 $14,214.13 $7,576.46
10/31/95 $6,140.17 $12,332.94 $6,367.50
11/30/95 $6,203.80 $13,509.76 $6,472.84
12/29/95 $6,267.43 $13,696.59 $6,735.25
01/31/96 $7,656.60 $16,504.77 $8,502.67
02/29/96 $7,430.46 $16,751.73 $8,434.49
03/29/96 $7,010.47 $16,707.35 $8,181.12
04/30/96 $7,042.78 $16,654.38 $8,209.73
05/31/96 $7,236.62 $17,014.44 $8,439.75
06/28/96 $6,008.98 $14,435.32 $7,266.07
07/31/96 $5,943.66 $14,285.71 $7,180.32
08/30/96 $5,911.01 $14,541.26 $7,277.52
09/30/96 $5,388.49 $13,255.64 $6,659.09
10/31/96 $5,290.51 $13,441.04 $6,745.85
11/29/96 $4,931.28 $13,401.67 $6,047.47
12/31/96 $4,670.02 $13,053.06 $5,884.84
01/31/97 $4,203.02 $12,156.85 $5,402.37
02/28/97 $4,803.45 $13,653.64 $6,384.82
03/31/97 $4,136.30 $11,717.34 $5,381.08
04/30/97 $3,802.73 $10,512.60 $4,878.21
05/30/97 $3,869.45 $11,237.02 $4,801.71
06/30/97 $3,215.64 $9,970.01 $3,888.33
07/31/97 $3,284.06 $10,122.48 $3,891.61
08/29/97 $3,318.27 $10,106.73 $3,958.50
09/30/97 $3,249.85 $10,916.33 $4,019.20
10/31/97 $2,531.46 $8,887.68 $3,404.43
11/28/97 $1,949.91 $6,998.05 $2,736.86
12/31/97 $1,990.96 $7,574.86 $3,010.97
01/30/98 $1,990.96 $8,001.49 $3,261.57
02/27/98 $1,816.32 $7,709.43 $2,892.46
03/31/98 $1,851.25 $8,196.91 $2,952.27
04/30/98 $1,956.03 $9,294.27 $3,902.63
05/29/98 $1,571.81 $7,781.73 $3,310.54
06/30/98 $1,323.82 $7,114.30 $2,706.85
07/31/98 $1,334.29 $6,446.93 $2,722.53
08/31/98 $1,026.92 $5,022.08 $2,228.81
09/30/98 $1,432.10 $7,880.51 $3,412.01
10/30/98 $1,400.66 $7,967.85 $3,456.12
11/30/98 $1,313.34 $7,552.67 $3,348.34
12/31/98 $1,334.29 $6,689.31 $2,707.52
01/29/99 $1,274.91 $6,672.56 $2,820.48
02/26/99 $1,246.97 $6,237.91 $2,500.33
03/31/99 $1,239.99 $6,220.52 $2,701.23
04/30/99 $1,379.70 $7,286.38 $2,737.00
05/28/99 $1,163.14 $5,929.32 $2,692.68
06/30/99 $1,194.58 $6,335.41 $2,768.76
AVERAGE ANNUAL PERFORMANCE FOR THE PERIODS ENDED
JUNE 30, 1999
------------------------------------- -----------------------------
TEN YEAR FIVE YEAR ONE YEAR
-------- --------- --------
Gold Shares Fund (19.14)% (31.06)% (9.76)%
Financial Times Gold Mines Index
(from 1/31/92) n/a (14.26)% (10.95)%
Johannesburg All Gold Index (12.05)% (23.33)% 2.29%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. INVESTMENT RETURN
AND PRINCIPAL VALUE MAY FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL VALUE. THE FINANCIAL TIMES GOLD
MINES INDEX IS A MARKET CAPITALIZATION- WEIGHTED TOTAL RETURN INDEX OF
THE LEADING NORTH AMERICAN, AUSTRALIAN AND AFRICAN GOLD MINING
COMPANIES. THE JOHANNESBURG ALL GOLD INDEX IS A CAPITALIZATION-WEIGHTED
INDEX OF ALL DOMESTIC GOLD STOCKS TRADED ON THE JOHANNESBURG STOCK
EXCHANGE.
THE YEAR IN REVIEW - ECONOMIC AND POLITICAL ISSUES
The last twelve months proved to be very challenging for gold investors. On
August 28, 1998, gold reached a new 20-year low at $271 per ounce, followed by a
rally to above $300 on October 8, 1998. Then, for several months, gold traded in
a narrow band between the $280 and $290 levels.
Two news events in 1999 caused gold prices to drop even further. The first was
the announcement in March that the International Monetary Fund (IMF) would sell
its gold to assist developing nations with their debt. The second, and more
devastating, was the announcement at the start of May by the Bank of England
(BoE) that they plan to sell more than half of their
33
<PAGE>
GOLD FUNDS
gold reserves over a period of time via public auctions. The BoE announcement
caused gold to drop from $289 to $257, a new low, and a level unimaginable prior
to the announcement.
INVESTMENT HIGHLIGHTS
The decline in gold prices adversely affected the profitability of all companies
engaged in the mining and exploration of gold, and that is clearly evident in
the share price of these companies. In spite of the decline in gold price, value
was added by those companies with effective management, high quality assets and
successful exploration. Examples of companies with this added value include
Meridian Gold with their expansion of reserves at their El Penon deposit in
Chile, Getchell Gold, which was taken over by Placer Dome, and Argentina Gold's
discovery in Argentina, which led to the company being taken over by Homestake
Mining.
CURRENT OUTLOOK
The supply/demand fundamentals for gold are very encouraging. The World Gold
Council statistics show yearly increases in the demand for gold. The recovery in
Asian economies and the increase in 30-year government bond yields historically
has led to an increase in gold prices. On two occasions in 1999, gold prices
started to recover in line with the Asian markets and bond yields.
Unfortunately, both times the price rallies were short lived due to the
announcements regarding IMF and BoE gold sales.
Approximately 40% of global gold production is unprofitable at the $250 level.
Central bank sales are easily absorbed in the market due to the strong demand.
Unfortunately, these sales lead to a negative sentiment in the market. Based on
supply/demand relationships, we believe the current low gold price is not
sustainable over an extended period of time.
34
<PAGE>
GOLD FUNDS
WORLD GOLD FUND
TOP 10 HOLDINGS BASED ON TOTAL INVESTMENTS
DELTA GOLD NL 9.80%
INTERMEDIATE GOLD PRODUCERS
NEWMONT MINING CORP 6.35%
SENIOR GOLD PRODUCERS
PLACER DOME, INC 5.79%
SENIOR GOLD PRODUCERS
BARRICK GOLD CORP 5.73%
SENIOR GOLD PRODUCERS
EURO-NEVADA MINING CORP 5.65%
MINING FINANCE
GOLDCORP, INC 4.43%
GOLD EXPLORATION & DEVELOPMENT
ASHANTI GOLDFIELDS 4.35%
SENIOR GOLD PRODUCERS
ACACIA RESOURCES 3.72%
INTERMEDIATE GOLD PRODUCERS
IAMGOLD 3.32%
JUNIOR GOLD PRODUCERS
HOMESTAKE MINING 3.24%
SENIOR GOLD PRODUCERS
TOP 5 INDUSTRIES BASED ON TOTAL INVESTMENTS
SENIOR GOLD PRODUCERS 30.75%
INTERMEDIATE GOLD PRODUCERS 14.70%
GOLD EXPLORATION & DEVELOPMENT 11.68%
JUNIOR GOLD PRODUCERS 9.00%
MINING FINANCE 8.48%
35
<PAGE>
GOLD FUNDS
GOLD SHARES FUND
TOP 10 HOLDINGS BASED ON TOTAL INVESTMENTS
BARRICK GOLD CORP 10.18%
GOLD MINING - NORTH AMERICA
PLACER DOME, INC 7.43%
GOLD MINING - NORTH AMERICA
DELTA GOLD NL 7.10%
GOLD MINING - AUSTRALIA
NEWMONT MINING CORP 6.03%
GOLD MINING - NORTH AMERICA
GOLD FIELDS LTD 5.64%
GOLD MINING - AFRICA
HARMONY GOLD MINING 5.06%
GOLD MINING - AFRICA
ASHANTI GOLDFIELDS 4.79%
GOLD MINING - AFRICA
ACACIA RESOURCES 4.25%
GOLD MINING - AUSTRALIA
GOLDCORP, INC 4.09%
GOLD MINING - NORTH AMERICA
EURO-NEVADA MINING LTD 3.57%
GOLD MINING - NORTH AMERICA
TOP 5 INDUSTRIES BASED ON TOTAL INVESTMENTS
GOLD MINING - NORTH AMERICA 41.66%
GOLD MINING - AFRICA 22.49%
GOLD MINING - AUSTRALIA 14.06%
DIAMOND MINING & EXPLORATION 6.19%
DIVERSIFIED OPERATIONS 6.00%
36
<PAGE>
GOLD FUNDS
WORLD GOLD FUND
PORTFOLIO PROFILE June 30, 1999
COUNTRY DISTRIBUTION % OF INVESTMENTS
Canada 38.63%
Australia 19.84%
U.S. 13.66%
Ghana 4.35%
South Africa 3.19%
Other Foreign 5.60%
U.S. Repurchase Agreements 14.73%
NUMBER OF STOCKS 105
GOLD SHARES FUND
PORTFOLIO PROFILE June 30, 1999
COUNTRY DISTRIBUTION % OF INVESTMENTS
Canada 34.64%
South Africa 22.02%
Australia 14.06%
U.S. 12.20%
Other Foreign 7.46%
U.S. Repurchase Agreements 9.62%
NUMBER OF STOCKS 58
37
<PAGE>
U.S. TREASURY SECURITIES CASH FUND
PORTFOLIO OF INVESTMENTS June 30, 1999
UNITED STATES
GOVERNMENT COUPON MATURITY PRINCIPAL
OBLIGATIONS 64.40% RATE DATE AMOUNT VALUE
----- ------- ----------- -----------
UNITED STATES TREASURY
NOTES 64.40% 6.375% 7/15/99 $70,000,000 $70,053,693
5.875% 8/31/99 10,000,000 10,017,679
6.375% 5/15/00 20,000,000 20,237,675
TOTAL UNITED STATES
GOVERNMENT OBLIGATIONS 100,309,047
-----------
(cost $100,309,047)
REPURCHASE AGREEMENTS 39.73%
Joint Tri-Party Repurchase
Agreement, 6/30/99,
collateralized by U.S.
Treasury securities held in
joint tri-party repurchase
accounts:
4.85% Donaldson, Lufkin &
Jenrette, repurchase price
$39,892,830 4.85% 7/1/99 39,887,456 39,887,456
4.80% Paine Webber, Inc.,
repurchase price $22,002,933 4.80% 7/1/99 22,000,000 22,000,000
TOTAL REPURCHASE AGREEMENTS 61,887,456
----------
(cost $61,887,456)
TOTAL INVESTMENTS 104.13% 162,196,503
(cost $162,196,503)
Other assets and liabilities,
net (4.13)% (6,429,084)
------------
NET ASSETS 100% $155,767,419
============
See notes to portfolios of investments.
38
<PAGE>
U.S. GOVERNMENT SECURITIES SAVINGS FUND
PORTFOLIO OF INVESTMENTS June 30, 1999
UNITED STATES
GOVERNMENT AND AGENCY COUPON MATURITY PRINCIPAL
OBLIGATIONS 100.73% RATE DATE AMOUNT VALUE
----- ------- ------------ ------------
FEDERAL FARM CREDIT
BANK 27.37%
Discount Notes:
Yield 4.60% 07/01/99 $ 35,000,000 $ 35,000,000
Yield 5.05% 07/06/99 684,000 683,520
Yield 5.05% 07/07/99 615,000 614,482
Yield 4.60% 07/08/99 1,617,000 1,615,554
Yield 5.05% 07/13/99 512,000 511,140
Yield 5.05% 07/16/99 607,000 605,725
Yield 5.05% 07/19/99 753,000 751,103
Yield 5.06% 07/26/99 346,000 344,789
Yield 4.74% 08/16/99 15,000,000 14,909,725
Yield 4.65% 08/20/99 112,000 111,281
Yield 4.71% 08/27/99 4,000,000 3,970,360
Yield 4.73% 08/30/99 190,000 188,514
Yield 4.82% 09/20/99 225,000 222,585
Yield 4.74% 11/24/99 83,000 81,435
Yield 4.76% 12/23/99 10,000,000 9,773,959
Variable Rates:
4.73% 09/17/99 25,000,000 25,000,000
5.25% 10/01/99 25,000,000 25,000,000
4.78% 12/01/99 10,000,000 10,000,000
4.81% 03/15/00 30,000,000 29,995,928
4.81% 06/22/00 25,000,000 24,990,434
Fixed Rates:
5.55% 07/01/99 1,440,000 1,440,011
4.62% 08/02/99 3,505,000 3,504,304
4.77% 08/02/99 2,000,000 1,999,389
5.50% 08/03/99 10,000,000 9,999,222
6.30% 08/09/99 100,000 100,166
5.50% 09/01/99 1,000,000 1,000,853
5.83% 09/01/99 150,000 150,132
6.06% 09/08/99 800,000 801,510
8.65% 10/01/99 200,000 201,775
6.13% 10/22/99 150,000 150,626
6.65% 11/12/99 110,000 110,629
5.00% 12/30/99 250,000 249,627
5.20% 01/14/00 1,100,000 1,100,631
6.49% 01/20/00 600,000 604,930
5.40% 02/24/00 238,000 238,414
5.38% 03/24/00 150,000 150,075
7.17% 04/03/00 105,000 106,637
5.00% 05/03/00 10,000,000 9,990,223
------------
216,269,688
39
<PAGE>
U.S. GOVERNMENT SECURITIES SAVINGS FUND
PORTFOLIO OF INVESTMENTS June 30, 1999
UNITED STATES
GOVERNMENT AND AGENCY COUPON MATURITY PRINCIPAL
OBLIGATIONS RATE DATE AMOUNT VALUE
----- ------- ------------ ------------
FEDERAL FARM CREDIT
BANK 63.92%
Discount Notes:
Yield 4.59% 07/20/99 1,324,000 1,320,799
Yield 4.98% 07/23/99 20,150,000 20,088,916
Yield 5.04% 07/28/99 585,000 582,789
Yield 4.77% 09/01/99 2,266,000 2,247,541
Yield 4.68% 10/08/99 899,000 887,700
Yield 4.83% 11/17/99 100,000 98,170
Variable Rates:
4.91% 10/13/99 25,000,000 25,000,000
4.82% 01/19/00 25,000,000 24,996,006
4.80% 03/17/00 75,000,000 74,974,147
5.20% 04/07/00 50,000,000 49,985,353
5.00% 05/10/00 500,000 498,893
Fixed Rates:
5.51% 07/06/99 4,000,000 4,000,332
7.02% 07/06/99 720,000 720,235
6.10% 07/07/99 100,000 100,023
6.12% 07/08/99 100,000 100,027
7.11% 07/08/99 260,000 260,106
6.13% 07/09/99 700,000 700,139
5.54% 07/13/99 25,000 25,007
5.54% 07/15/99 900,000 900,219
5.54% 07/15/99 5,305,000 5,304,941
6.98% 07/26/99 100,000 100,154
8.45% 07/26/99 13,215,000 13,246,128
5.62% 08/03/99 500,000 500,316
5.56% 08/04/99 400,000 400,259
6.32% 08/09/99 250,000 250,190
6.45% 08/09/99 300,000 300,444
5.33% 08/12/99 25,000,000 24,998,242
5.55% 08/18/99 180,000 180,112
6.20% 08/20/99 60,000 60,118
8.60% 08/25/99 410,000 412,177
7.13% 08/26/99 80,000 80,289
6.09% 09/09/99 1,060,000 1,062,418
5.16% 09/22/99 10,000,000 10,004,911
6.03% 10/01/99 14,000,000 14,036,300
6.19% 10/15/99 120,000 120,487
7.51% 10/18/99 300,000 302,401
6.22% 10/20/99 1,000,000 1,004,237
7.40% 10/20/99 30,000 30,235
6.05% 10/25/99 $ 100,000 $ 100,404
8.38% 10/25/99 2,735,000 2,763,299
4.94% 10/27/99 380,000 379,962
7.65% 10/28/99 305,000 307,721
5.81% 11/04/99 745,000 747,092
5.81% 11/05/99 215,000 215,430
5.91% 11/05/99 5,000,000 5,019,106
5.83% 11/26/99 1,500,000 1,505,010
7.97% 11/30/99 1,655,000 1,675,443
5.90% 12/15/99 545,000 546,642
5.77% 12/22/99 400,000 401,558
5.00% 12/29/99 285,000 285,000
40
<PAGE>
U.S. GOVERNMENT SECURITIES SAVINGS FUND
PORTFOLIO OF INVESTMENTS June 30, 1999
UNITED STATES
GOVERNMENT AND AGENCY COUPON MATURITY PRINCIPAL
OBLIGATIONS RATE DATE AMOUNT VALUE
----- ------- ------------ ------------
FEDERAL FARM CREDIT
BANK (CONT'D) 5.98% 01/06/00 300,000 301,030
4.93% 01/13/00 10,000,000 10,001,527
4.90% 01/14/00 10,400,000 10,397,977
8.60% 01/25/00 185,000 188,627
7.78% 02/03/00 250,000 253,928
5.44% 02/04/00 100,000 100,237
4.92% 02/08/00 100,000 99,690
4.90% 02/11/00 10,000,000 9,991,921
4.98% 02/16/00 7,500,000 7,496,357
6.12% 02/18/00 250,000 251,339
4.95% 02/24/00 375,000 374,181
5.00% 02/24/00 5,750,000 5,749,248
5.00% 02/25/00 5,000,000 4,993,887
5.03% 02/25/00 5,000,000 4,981,857
5.04% 02/25/00 10,210,000 10,207,869
5.08% 03/03/00 340,000 339,167
5.10% 03/03/00 1,000,000 1,000,161
7.50% 03/07/00 375,000 380,399
5.10% 03/08/00 10,000,000 9,998,912
5.16% 03/08/00 10,000,000 10,003,987
5.10% 03/09/00 9,000,000 8,999,070
5.08% 03/15/00 10,000,000 9,998,976
5.14% 03/29/00 5,000,000 5,001,954
7.17% 03/29/00 300,000 304,701
7.05% 04/03/00 155,000 157,281
5.13% 04/12/00 1,500,000 1,500,184
5.50% 04/14/00 225,000 225,198
5.00% 04/20/00 15,000,000 14,996,627
5.05% 04/26/00 840,000 840,062
5.15% 05/10/00 100,000 100,024
5.10% 05/17/00 14,350,000 14,336,159
5.20% 05/26/00 10,000,000 9,999,293
5.26% 05/26/00 350,000 350,032
6.05% 06/08/00 500,000 503,466
41
<PAGE>
U.S. GOVERNMENT SECURITIES SAVINGS FUND
PORTFOLIO OF INVESTMENTS June 30, 1999
UNITED STATES
GOVERNMENT AND AGENCY COUPON MATURITY PRINCIPAL
OBLIGATIONS RATE DATE AMOUNT VALUE
----- ------- ------------ ------------
FEDERAL FARM CREDIT
BANK (CONT'D)
5.90% 06/09/00 $ 250,000 $ 250,579
6.37% 06/13/00 400,000 403,654
5.42% 06/14/00 470,000 469,747
6.04% 06/21/00 250,000 251,257
5.58% 06/22/00 1,275,000 1,275,777
5.66% 06/23/00 380,000 380,485
6.11% 07/17/00 2,000,000 2,010,825
------------
505,060,999
STUDENT LOAN MARKETING
ASSOCIATION 9.32%
Variable Rates:
5.54% 12/16/99 1,980,000 1,982,677
5.31% 02/02/00 25,000,000 25,007,005
5.54% 02/14/00 10,000,000 9,996,394
5.48% 03/03/00 10,000,000 10,012,500
Fixed Rates:
5.11% 08/02/99 10,000,000 9,997,521
4.84% 10/27/99 5,092,000 5,091,734
7.50% 03/08/00 1,025,000 1,037,966
5.57% 03/17/00 550,000 551,626
5.25% 06/30/00 10,000,000 9,978,928
------------
73,656,351
GOVERNMENT AGENCY BONDS 0.12%
Tennessee Valley Power
Authority Series D 8.38% 10/01/99 960,000 968,279
TOTAL INVESTMENTS 100.73% 795,955,317
(cost $795,955,317)
Other assets and liabilities,
net (0.73)% (5,807,556)
------------
NET ASSETS 100% $790,147,761
------------
See notes to portfolios of investments.
42
<PAGE>
NEAR-TERM TAX FREE FUND
PORTFOLIO OF INVESTMENTS June 30, 1999
COUPON MATURITY PRINCIPAL
MUNICIPAL BONDS 96.26% RATE DATE AMOUNT VALUE
----- -------- ------------ ---------
ALABAMA 1.57%
- -------------------------
Birmingham, Alabama
Refunded, Series B 6.25% 04/01/12 $ 110,000 $ 116,600
CONNECTICUT 8.58%
- -------------------------
Bridgeport Series A, GO 6.00% 03/01/06 300,000 323,625
South Central Connecticut
Regional Water Authority
Water Systems Revenue 5.75% 08/01/12 300,000 312,000
---------
635,625
GEORGIA 4.28%
- -------------------------
Columbus Water & Sewer
Revenue 6.65% 05/01/09 300,000 316,875
ILLINOIS 2.34%
- -------------------------
Chicago Water Revenue
(ZCB) 0.00% 11/01/08 275,000 172,906
IOWA 4.30%
- -------------------------
Finance Authority Hospital
Facility Revenue 5.15% 07/01/04 310,000 318,912
KANSAS 5.55%
- -------------------------
Seward County School
District #480 7.40% 09/01/03 370,000 411,163
LOUISIANA 4.06%
- -------------------------
Jefferson Parish Hospital,
SVC District Number 2,
Hospital Revenue 5.00% 07/01/08 300,000 300,750
MASSACHUSETTS 1.79%
- -------------------------
Massachusetts Street
Health & Educational,
Facilities Authority
Revenue 5.00% 10/01/07 135,000 132,638
NEBRASKA 3.64%
- -------------------------
Nebraska Public Power
District Revenue 5.70% 01/01/05 255,000 269,981
NEVADA 6.99%
- -------------------------
Nevada State Municipal
Bond Bank Project
#51, Series A, GO 5.10% 01/01/08 250,000 252,500
Washoe County Gas & Water
Facilities Revenue 6.30% 12/01/14 250,000 265,625
---------
518,125
NEW JERSEY 4.10%
- -------------------------
Washington Township Board
of Education, GO 5.10% 02/01/08 300,000 304,125
43
<PAGE>
NEAR-TERM TAX FREE FUND
PORTFOLIO OF INVESTMENTS June 30, 1999
COUPON MATURITY PRINCIPAL
MUNICIPAL BONDS RATE DATE AMOUNT VALUE
----- -------- ------------ ---------
NEW YORK 2.58%
- -------------------------
New York State Dorm,
Authority Revenue Carmel
Richmond Nursing Home 4.50% 07/01/10 $ 200,000 $ 190,750
NORTH CAROLINA 4.17%
- -------------------------
North Carolina Municipal
Power Agency, Number 1
Catawba Electricity
Revenue, Unrefunded Balance 7.00% 01/01/19 300,000 309,138
OKLAHOMA 2.84%
- -------------------------
University of Oklahoma
Revenue 12.00% 03/01/00 200,000 210,654
OREGON 1.64%
- -------------------------
Medford Hospital Facilities
Authority Revenue Asante
Health System, Series A 5.25% 08/15/11 120,000 121,500
PENNSYLVANIA 3.43%
- -------------------------
Philadelphia Hospitals &
Higher Education Facilities
Authority Revenue 5.00% 05/15/03 250,000 254,375
SOUTH CAROLINA 4.14%
- -------------------------
Georgetown County
Pollution Control
Facilities Revenue, Series A 7.375% 06/15/05 300,000 306,813
TEXAS 10.76%
- -------------------------
Comal Independent School
District 4.90% 02/01/00 240,000 241,872
Haltom City Tax Note 4.70% 02/01/00 195,000 196,238
5.00% 02/01/01 255,000 257,869
Harris County Revenue 10.00% 10/01/99 100,000 101,525
---------
797,504
UTAH 8.41%
- -------------------------
Weber County School
District, Series A, GO 5.15% 06/15/08 300,000 305,625
State Municipal Finance
COOP Local
Government Revenue 6.40% 08/01/09 300,000 317,625
---------
623,250
VIRGIN ISLANDS 4.08%
- -------------------------
Virgin Islands Public
Finance Authority Revenue 5.00% 10/01/03 300,000 302,250
44
<PAGE>
NEAR-TERM TAX FREE FUND
PORTFOLIO OF INVESTMENTS June 30, 1999
COUPON MATURITY PRINCIPAL
MUNICIPAL BONDS RATE DATE AMOUNT VALUE
----- -------- ------------ ---------
WASHINGTON 4.24%
- -------------------------
King County, Series A, GO
Pre-refunded 5.80% 12/01/06 $ 40,000 $ 42,150
King County, Series A, GO 5.80% 12/01/06 260,000 272,025
---------
314,175
WISCONSIN 2.77%
- -------------------------
State Health & Educational
Facilities Revenue 5.20% 06/01/05 200,000 205,500
TOTAL MUNICIPAL BONDS 7,133,609
=========
(cost $7,132,794)
REPURCHASE AGREEMENT 2.32%
Joint Tri-Party Repurchase
Agreement, Donaldson, Lufkin
& Jenrette, 6/30/99, 4.85%,
repurchase price $171,996
collateralized by U.S.
Treasury securities held in
a joint tri-party repurchase
account (cost $171,973) 4.85% 07/01/99 171,973 171,973
TOTAL INVESTMENTS 98.58% 7,305,582
---------
(cost $7,304,767)
Other assets and liabilities,
net 1.42% 105,385
----------
NET ASSETS 100% $7,410,967
==========
See notes to portfolios of investments.
45
<PAGE>
TAX FREE FUND
PORTFOLIO OF INVESTMENTS June 30, 1999
COUPON MATURITY PRINCIPAL
MUNICIPAL BONDS 97.62% RATE DATE AMOUNT VALUE
----- -------- ------------ ---------
CALIFORNIA 1.04%
- -------------------------
California Educational
Facilities Authority
Revenue, Heald Colleges 5.25% 02/15/13 $ 260,000 $ 250,900
COLORADO 3.50%
- -------------------------
Colorado Health Facilities
Authority Revenue,
Catholic Health
Initiatives, Series A 5.00% 12/01/18 500,000 456,875
Denver Colorado City &
County School District #1 5.00% 12/01/23 410,000 384,375
---------
841,250
CONNECTICUT 4.76%
- -------------------------
Connecticut State Develop-
ment Authority Water
Facility Revenue,
Refunding 7.25% 06/01/20 500,000 520,970
South Central Connecticut
Regional Water Authority
Water Systems Revenue 5.75% 08/01/12 600,000 624,000
---------
1,144,970
FLORIDA 3.14%
- -------------------------
Florida Board of Education
Capital Outlay, GO
Unlimited Tax, Refunding,
Series A 6.625% 06/01/07 700,000 755,125
HAWAII 1.72%
- -------------------------
Hawaii State Department of
Budget & Finance 6.00% 07/01/19 400,000 413,500
ILLINOIS 12.61%
- -------------------------
Boone McHenry and Dekalb
Counties Community Unit
School District (ZCB) 0.00% 12/01/08 1,000,000 623,750
Du Page County, Refunding 5.60% 01/01/21 490,000 501,637
Illinois Development
Financing Authority
Hospital Revenue 5.50% 11/15/29 900,000 829,125
Illinois Development
Financing Authority
Revenue, Series B 6.25% 09/01/17 250,000 262,188
Illinois Regional
Transportation Authority
Revenue, Series A 7.20% 11/01/20 250,000 305,625
Lake County School
District, Refunding 5.375% 01/01/11 500,000 507,500
---------
3,029,825
INDIANA 4.30%
- -------------------------
Fort Wayne Water Works
Revenue 4.75% 12/01/10 500,000 483,750
Indiana Health Facility
Finance Authority Revenue,
Series A 5.75% 08/01/08 540,000 550,125
---------
1,033,875
46
<PAGE>
TAX FREE FUND
PORTFOLIO OF INVESTMENTS June 30, 1999
COUPON MATURITY PRINCIPAL
MUNICIPAL BONDS RATE DATE AMOUNT VALUE
----- -------- ------------ ---------
IOWA 2.04%
- -------------------------
Polk County, Revenue
Catholic Health Initiatives,
Series A 5.125% 12/01/11 $ 500,000 $ 490,625
KANSAS 2.01%
- -------------------------
Kansas State Development
Finance Authority Hospital
Revenue, Series Z 5.00% 12/15/12 500,000 483,125
MASSACHUSETTS 2.88%
- -------------------------
Massachusetts Port
Authority
Revenue, Series A 5.00% 07/01/27 750,000 692,813
MICHIGAN 9.41%
- -------------------------
Allegan Public School
District 5.10% 05/01/18 580,000 556,075
Belding Area Schools 5.00% 05/01/18 390,000 369,525
Lincoln School District 5.00% 05/01/13 400,000 390,000
Michigan State Hospital
Finance Authority Revenue 4.90% 05/15/13 500,000 478,125
Wyoming, Michigan Building
Authority 5.25% 05/01/18 480,000 469,200
---------
2,262,925
MISSISSIPPI 1.69%
- -------------------------
Vicksburg Leased Housing
Corp. Housing Revenue,
Refunding, Series A 6.125% 02/15/22 400,000 406,500
NEVADA 3.66%
- -------------------------
Clark County Las Vegas
Convention & Visitors
Authority, GO Limited Tax 5.50% 07/01/17 870,000 879,788
NEW YORK 2.02%
- -------------------------
New York, GO Unlimited,
Series J 5.00% 05/15/12 500,000 486,250
NORTH CAROLINA 2.93%
- -------------------------
North Carolina Eastern
Municipal Power Agency
Revenue, Refunding,
Series A 5.60% 01/01/10 675,000 705,375
OHIO 2.05%
- -------------------------
Olentangy Local School
District, GO Limited Tax,
Series A 6.25% 12/01/15 240,000 260,700
South Euclid Special
Assessment, GO Limited Tax 6.70% 12/01/14 200,000 230,500
---------
491,200
OKLAHOMA 1.97%
- -------------------------
Oklahoma Agriculture &
Mechanical Colleges Revenue 5.00% 07/01/18 500,000 474,373
47
<PAGE>
TAX FREE FUND
PORTFOLIO OF INVESTMENTS June 30, 1999
COUPON MATURITY PRINCIPAL
MUNICIPAL BONDS RATE DATE AMOUNT VALUE
----- -------- ------------ ---------
OREGON 1.95%
- -------------------------
Multnomah County, GO
Unlimited 4.75% 10/01/15 500,000 469,375
PENNSYLVANIA 2.10%
- -------------------------
Chester County Health &
Educational Facilities
Authority Revenue 5.00% 05/15/08 250,000 250,625
Philadelphia Hospital &
Higher Educational
Facilities Authority
Revenue 4.95% 06/15/06 265,000 255,394
---------
506,019
RHODE ISLAND 4.22%
- -------------------------
North Providence, GO
Unlimited Tax, Series A 6.05% 07/01/13 500,000 538,750
Providence Public Building
Authority Revenue, Series B 7.25% 12/15/10 450,000 475,312
---------
1,014,062
SOUTH CAROLINA 1.92%
- -------------------------
South Carolina Jobs
Economic Development
Authority Revenue 5.00% 11/01/23 500,000 461,875
TENNESSEE 1.17%
- -------------------------
State Development Authority
Revenue, Series 1992 7.00% 10/01/11 265,000 281,563
TEXAS 14.10%
- -------------------------
Austin GO 5.00% 09/01/16 565,000 540,281
Bexar County Independent
School District 5.00% 06/15/18 500,000 473,750
Carroll Independent School
District 5.00% 02/15/20 500,000 471,875
Clear Lake City Independent
School District 5.00% 03/01/18 500,000 471,250
Conroe Independent School
District 5.10% 02/15/21 325,000 307,938
San Antonio Electric & Gas 5.00% 02/01/18 500,000 471,875
Victoria Independent School
District 5.00% 02/15/19 500,000 473,750
Wichita Falls Independent
School District 4.625% 08/01/18 200,000 178,250
---------
3,388,969
VIRGINIA 1.81%
- -------------------------
State Housing Development
Authority Multifamily
Revenue, Series E 5.90% 11/01/17 425,000 434,031
WASHINGTON 3.40%
- -------------------------
King & Snohomish Counties'
School District 5.00% 06/15/10 500,000 498,125
Seattle Indian Services
Revenue, Refunding 6.50% 11/01/17 305,000 319,106
---------
817,231
48
<PAGE>
TAX FREE FUND
PORTFOLIO OF INVESTMENTS June 30, 1999
COUPON MATURITY PRINCIPAL
MUNICIPAL BONDS RATE DATE AMOUNT VALUE
----- -------- ------------ ---------
WEST VIRGINIA 3.91%
- -------------------------
Berkeley County Hospital
Revenue, Refunding 6.50% 11/01/09 115,000 119,887
State Housing Development
Revenue, Series A 6.05% 05/01/27 790,000 819,625
---------
939,512
WYOMING 1.31%
- -------------------------
Wyoming Community
DevelopmentAuthority,
Series A 6.10% 06/01/33 310,000 315,425
TOTAL MUNICIPAL BONDS 23,470,483
==========
(cost $23,724,002)
REPURCHASE AGREEMENT 1.54%
Joint Tri-Party Repurchase
Agreement, Donaldson,
Lufkin & Jenrette, 6/30/99,
4.85%, repurchase price
$369,231 collateralized by
U.S. Treasury securities
held in a joint tri-party
repurchase account
(cost $369,181) 4.85% 07/01/99 369,181 369,181
TOTAL INVESTMENTS 99.16% 23,839,664
----------
(cost $24,093,183)
Other assets and liabilities,
net 0.84% 202,117
-----------
NET ASSETS 100% $24,041,781
===========
See notes to portfolios of investments.
49
<PAGE>
INCOME FUND
PORTFOLIO OF INVESTMENTS June 30, 1999
COMMON STOCKS 92.17% SHARES VALUE
- -------------------------- ------ --------
AIRCRAFT & AEROSPACE 0.82%
- --------------------------
Allied Signal, Inc. 1,300 81,900(*)
APPAREL 0.45%
- --------------------------
Nike, Inc., Class B 700 44,319(*)
BANKS 11.74%
- --------------------------
Bank of New York Co., Inc. 1,800 66,038(*)
Bank One Corp. 4,000 238,250
BankAmerica Corp. 4,000 293,250
BankBoston Corp. 500 25,562(*)
Citigroup, Inc. 3,000 142,500
Fifth Third Bancorp 600 39,938
First Union Corp. 2,300 108,100(*)
Keycorp 500 16,063(*)
Mellon Bank Corp. 1,200 43,650
National City Corp. 700 45,850(*)
PNC Bank Corp. 700 40,337(*)
Wachovia Corp. 500 42,781(*)
Wells Fargo & Co. 1,500 64,125
---------
1,166,444
BROADCASTING 1.19%
- --------------------------
CBS Corp. 1,700 73,844(*)
Infinity Broadcasting Corp., Class A 1,500 44,625(*)
---------
118,469
CHEMICAL & PHARMACEUTICALS 5.09%
- --------------------------
Air Products & Chemicals, Inc. 500 20,125(*)
Dow Chemical Co. 500 63,438
E.I. Du Pont de Nemours & Co. 2,600 177,612(*)
Merck & Co. 1,000 74,000
Pharmacia & Upjohn, Inc. 3,000 170,437
---------
505,612
COMMUNICATION EQUIPMENT 0.95%
- --------------------------
Compaq Computer Corp. 4,000 94,750
COMMUNICATION SERVICES 1.11%
- --------------------------
Clear Channel Communications, Inc. 1,600 110,300(*)
COMPUTER & OFFICE EQUIPMENT 2.43%
- --------------------------
Hewlett-Packard Co. 2,400 241,200(*)
50
<PAGE>
INCOME FUND
PORTFOLIO OF INVESTMENTS June 30, 1999
COMMON STOCKS SHARES VALUE
- -------------------------- ------ --------
DATA PROCESSING & SOFTWARE 0.20%
- --------------------------
Micron Technology, Inc. 500 20,156(*)
ELECTRIC SERVICES 2.59%
- --------------------------
AES Corp. 400 23,250(*)
Central & South West Corp. 2,500 58,437
Consolidated Edison, Inc. 500 22,625(*)
Edison International 800 21,400(*)
PECO Energy Co. 500 20,938
Reliant Energy, Inc. 1,500 41,437
Southern Co. 1,500 39,750
Texas Utilities 700 28,875
---------
256,712
ENTERTAINMENT 3.97%
- --------------------------
Carnival Corp., Class A 1,400 67,900(*)
Seagram Company Ltd. 1,000 50,375(*)
Time-Warner, Inc. 2,800 205,800(*)
Viacom Inc., Class B 1,600 70,400(*)
---------
394,475
FINANCIAL SERVICES 8.85%
- --------------------------
Allstate Corp. 1,900 68,162(*)
Chase Manhattan Corp. 2,000 173,250
Conseco, Inc. 1,000 30,437
Fannie Mae 2,400 164,100(*)
First Data Corp. 1,000 48,938
Household International, Inc. 1,000 47,375
J.P. Morgan & Co. 400 56,200(*)
Merrill Lynch & Co. 900 71,944
Morgan Stanley Dean Witter & Co. 1,300 133,250(*)
State Street Corp. 1,000 85,375
---------
879,031
HEALTHCARE 1.48%
- --------------------------
Columbia/HCA Healthcare Corp. 1,300 29,656(*)
Medtronic, Inc. 1,500 116,813
---------
146,469
INSURANCE 1.36%
- --------------------------
American General Corp. 600 45,225(*)
Cigna Corp. 500 44,500(*)
Marsh & McLennan Companies, Inc. 600 45,300(*)
---------
135,025
51
<PAGE>
INCOME FUND
PORTFOLIO OF INVESTMENTS June 30, 1999
COMMON STOCKS SHARES VALUE
- -------------------------- ------ --------
MANUFACTURING 7.47%
- --------------------------
Applied Materials, Inc. 900 66,488(*)
Boeing Co. 2,300 101,631(*)
Caterpillar, Inc. 800 48,000(*)
Delphi Automotive Systems 1,300 24,131(*)
Halliburton Co. 1,000 45,250(*)
Illinois Tool Works, Inc. 1,000 82,000
Ingersoll-Rand Co. 500 32,313(*)
Philips Electronics N.V., ADR 2,760 278,415(*)
PPG Industries, Inc. 500 29,531(*)
Weyerhaeuser Co. 500 34,375(*)
---------
742,134
MOTOR VEHICLES 2.13%
- --------------------------
Ford Motor Co. 2,000 112,875
General Motors Corp. 1,500 99,000(*)
---------
211,875
NATURAL GAS TRANSMISSION &
DISTRIBUTION 0.72%
- --------------------------
PG&E Corp. 900 29,250(*)
Williams Companies, Inc. 1,000 42,562
---------
71,812
OIL & GAS EXTRACTION 2.89%
- --------------------------
Enron Corp. 2,500 204,375
Schlumberger Ltd. 1,300 82,794(*)
---------
287,169
PETROLEUM REFINING 9.70%
- --------------------------
Chevron Corp. 1,500 142,781
Exxon Corp. 5,600 431,900
Mobil Corp. 1,800 178,200
Phillips Petroleum Co. 600 30,188
Royal Dutch Petroleum Co. 3,000 180,750(*)
---------
963,819
PHOTOGRAPHY 0.89%
- --------------------------
Xerox Corp. 1,500 88,594
PUBLISHING 2.50%
- --------------------------
New York Times Co., Class A 2,000 73,625(*)
Tribune Co. 2,000 174,250
---------
247,875
52
<PAGE>
INCOME FUND
PORTFOLIO OF INVESTMENTS June 30, 1999
COMMON STOCKS SHARES VALUE
- -------------------------- ------ --------
REAL ESTATE INVESTMENT
TRUSTS 0.44%
- --------------------------
Mills Corp. 2,000 43,375(*)
RETAIL 1.84%
- --------------------------
Albertson's, Inc. 600 30,938(*)
Costco Companies, Inc. 500 40,031(*)
Limited, Inc. 500 22,688(*)
Lowe's Companies, Inc. 1,000 56,687
May Department Stores Co. 800 32,700(*)
---------
183,044
SANITARY SERVICES 0.20%
- --------------------------
Azurix Corp. 1,000 20,000(*)
SCIENCE & TECHNOLOGY 0.60%
- --------------------------
Monsanto Co. 1,500 59,156(*)
SHIPPING 0.99%
- --------------------------
Burlington Northern Santa Fe Corp. 1,000 31,000(*)
FDX Corp. 700 37,975(*)
Union Pacific Corp. 500 29,156(*)
---------
98,131
STEEL 0.56%
- --------------------------
Alcoa, Inc. 900 55,688(*)
TELECOMMUNICATIONS 18.20%
- --------------------------
AT&T Corp. 7,324 408,771
Bell Atlantic Corp. 3,604 235,611
Bellsouth Corp. 4,400 206,250(*)
Frontier Corp. 6,500 383,500
GTE Corp. 2,000 151,500
Motorola, Inc. 1,400 132,650(*)
Nextel Communications, Inc., Class A 700 35,131
Sprint Corp., PCS Group 500 28,563(*)
Sprint Corp. 2,500 132,031
Unisys Corp. 600 23,362(*)
US West, Inc. 1,200 70,500
---------
1,807,869
53
<PAGE>
INCOME FUND
PORTFOLIO OF INVESTMENTS June 30, 1999
COMMON STOCKS SHARES VALUE
- -------------------------- ------ --------
TOBACCO 0.81%
- --------------------------
Philip Morris, Inc. 2,000 80,375
TOTAL COMMON STOCKS 9,155,778
---------
(cost $7,735,667)
PREFERRED STOCKS 3.98%
- --------------------------
ELECTRIC SERVICES 0.50%
- --------------------------
Duke Energy Capital Trust 7.20% 2,000 49,260
FINANCIAL SERVICES 2.38%
- --------------------------
Citigroup Capital Preferred 6.875% 10,000 236,300
REAL ESTATE INVESTMENT
TRUSTS 1.10%
- --------------------------
Fleet Capital Trust, 7.05%,
Series III 2,000 47,120
Public Storage, Inc., 8.875%
Series G 2,500 62,188
---------
109,308
TOTAL PREFERRED STOCKS 394,868
=======
(cost $412,500)
PRINCIPAL
CORPORATE BONDS 2.52% AMOUNT
- -------------------------- ---------
BANKS 2.52%
- --------------------------
Korea Development Bank,
7.00%, 7/15/99 (cost $245,000) $ 250,000 250,000
REPURCHASE AGREEMENT 4.10%
---------
Joint Tri-Party Repurchase Agreement,
Donaldson, Lufkin & Jenrette, 6/30/99,
4.85% due 7/1/99, repurchase price
$407,536 collateralized by U.S.
Treasury securities held in a joint
tri-party repurchase
account (cost $407,481) 407,481 407,481
TOTAL INVESTMENTS 102.77% 10,208,127
==========
(cost $8,800,648)
Other assets and liabilities,
net (2.77)% (275,057)
---------
NET ASSETS 100% $9,933,070
==========
See notes to portfolios of investments.
54
<PAGE>
ALL AMERICAN EQUITY FUND
PORTFOLIO OF INVESTMENTS June 30, 1999
COMMON STOCKS %94.02 SHARES VALUE
- -------------------------- ------ --------
AIRCRAFT & AEROSPACE 0.96%
- --------------------------
AlliedSignal, Inc. 2,200 138,600
Boeing Co. 4,950 218,728
Raytheon Company, Class A 191 13,155
Rockwell International Corp. 2,000 121,500
United Technologies Corp. 250 17,922
---------
509,905
BANKS 4.77%
- --------------------------
Bank One Corp. 6,436 383,344
BankAmerica Corp. 11,358 832,683
Chase Manhattan Corp. 6,300 545,738
Citigroup, Inc. 16,350 776,625
---------
2,538,390
BEVERAGES 3.09%
- --------------------------
Anheuser Busch Co. 2,000 141,875
Coca-Cola Co. 13,500 843,750
PepsiCo, Inc. 17,000 657,687
---------
1,643,312
BROADCAST/MEDIA 0.50%
- --------------------------
MediaOne Group, Inc. 1,800 133,875(*)
Viacom, Inc., Class A 3,000 132,375(*)
---------
266,250
BUSINESS SERVICES 2.30%
- --------------------------
Billing Concepts Corp. 27,000 302,062(*)
Bisys Group, Inc. 3,000 175,500(*)
Cendant Corp. 22,000 451,000(*)
Dun & Bradstreet Corp. 2,000 70,875
Gartner Group 6,000 123,000
Ha-Lo Industries, Inc. 10,000 98,750(*)
---------
1,221,187
CHEMICALS 0.82%
- --------------------------
E.I. Du Pont de Nemours & Co. 6,400 437,200(*)
COMPUTER & OFFICE EQUIPMENT 6.61%
- --------------------------
Apple Computer, Inc. 6,000 277,875(*)
Cisco Systems, Inc. 13,500 870,750(*)
COMPAQ Computer Corp. 11,000 260,562
Diebold, Inc. 3,000 86,250
Hewlett-Packard Co. 4,000 402,000(*)
55
<PAGE>
ALL AMERICAN EQUITY FUND
PORTFOLIO OF INVESTMENTS June 30, 1999
COMMON STOCKS SHARES VALUE
- -------------------------- ------ --------
COMPUTER & OFFICE EQUIPMENT (CONT'D)
- --------------------------
IBM Corp. 11,400 $1,473,450
Minnesota Mining & Manufacturing Co. 1,700 147,794
---------
3,518,681
DATA PROCESSING & SOFTWARE 7.94%
- --------------------------
Automatic Data Processing, Inc. 2,000 88,000
ChoicePoint, Inc. 3,000 201,375(*)
Computer Associates International 5,000 275,000
First Data Corp. 5,000 244,688
Microsoft Corp. 32,000 2,886,000(*)
National Data Corp. 3,000 128,250
Oracle Corp. 10,818 401,618(*)
---------
4,224,931
ELECTRONICS & COMPONENTS 2.94%
- --------------------------
Conexant Systems, Inc. 1,000 58,062(*)
Emerson Electric Co. 1,800 113,175
Intel Corp. 17,080 1,016,260
Motorola, Inc. 4,000 379,000
---------
1,566,497
ENTERTAINMENT 1.06%
- --------------------------
The Walt Disney Co. 11,100 342,019
Time-Warner, Inc. 3,000 220,500(*)
---------
562,519
FINANCIAL SERVICES 8.81%
- --------------------------
American Express Co. 5,170 672,746
Associates First Capital
Corp., Class A 9,096 403,067
Conseco, Inc. 11,500 350,031
Equifax, Inc. 5,000 178,438
Fannie Mae 22,000 1,504,250
Federated Investors, Inc.,
Class B 14,100 252,919
Freddie Mac 5,800 336,400
MBIA, Inc. 5,000 323,750
Pilgrim American Capital Corp. 21,900 424,312(*)
Sovereign Bancorp, Inc. 8,000 97,000
Washington Mutual, Inc. 4,000 141,500
---------
4,684,413
FOOD 0.84%
- --------------------------
Archer Daniels-Midland Co. 2,430 37,513
H.J. Heinz Co. 1,500 75,188
Kellogg Co. 1,800 59,400
56
<PAGE>
ALL AMERICAN EQUITY FUND
PORTFOLIO OF INVESTMENTS June 30, 1999
COMMON STOCKS SHARES VALUE
- -------------------------- ------ --------
FOOD (CONT'D)
- --------------------------
McCormick & Co., Inc.,
Non-Voting Shares 5,000 $ 160,625
Sara Lee Corp. 5,000 113,437
---------
446,163
FUNERAL SERVICES 0.75%
- --------------------------
Service Corp. International 20,631 397,147
HEALTHCARE & EQUIPMENT 2.68%
- --------------------------
Columbia/HCA Healthcare Corp. 3,600 82,125(*)
Guidant Corp. 1,408 72,424
Humana, Inc. 9,000 116,437(*)
Johnson & Johnson Co. 10,000 980,000
Oxford Health Plans, Inc. 5,000 77,813(*)
United Wisconsin Services 6,800 54,400
Veterinary Centers, Inc. 3,000 40,688(*)
---------
1,423,887
HOUSEHOLD APPLIANCES 4.31%
- --------------------------
General Electric Co. 20,300 2,293,900
HOUSEHOLD PRODUCTS 2.22%
- --------------------------
Colgate Palmolive 1,400 138,250
Gillette Co. 2,800 114,800
Helen of Troy 17,000 304,937
Proctor & Gamble Co. 7,000 624,750
---------
1,182,737
INSURANCE 3.28%
- --------------------------
Allstate Corp. 6,594 236,560
American International Group 10,500 1,229,156
Hartford Financial Services Group, Inc. 4,800 279,900
---------
1,745,616
INVESTMENT TRUSTS 1.55%
- --------------------------
S & P 500 Depositary Receipts 6,000 822,000
MACHINERY 0.36%
- --------------------------
Caterpillar, Inc. 3,200 192,000
MOTOR VEHICLES & PARTS 1.07%
- --------------------------
Autozone, Inc. 3,000 90,375(*)
Delphi Automotive Systems Corp. 2,096 38,907
Ford Motor Co. 4,000 225,750
57
<PAGE>
ALL AMERICAN EQUITY FUND
PORTFOLIO OF INVESTMENTS June 30, 1999
COMMON STOCKS SHARES VALUE
- -------------------------- ------ --------
MOTOR VEHICLES & PARTS (CONT'D)
- --------------------------
General Motors Corp. 3,000 $ 198,000
ITT Industries, Inc. 400 15,250
---------
568,282
OFFICE EQUIPMENT 0.27%
- --------------------------
Xerox Corp. 2,400 141,750
OIL & GAS EXTRACTION 0.36%
- --------------------------
BP Amoco plc., ADR 249 27,017
Enron Corp. 2,000 163,500
---------
190,517
PETROLEUM REFINING 2.25%
- --------------------------
Chevron Corp. 2,600 247,487
Exxon Corp. 3,800 293,075
Mobil Corp. 2,000 198,000
Phillips Petroleum Co. 1,100 55,344
Royal Dutch Petroleum 3,600 216,900
Texaco, Inc. 3,000 187,500
---------
1,198,306
PHARMACEUTICALS 9.91%
- --------------------------
Abbott Laboratories 17,500 796,250
American Home Products 4,400 253,000
Baxter International, Inc. 1,100 66,688
Biogen, Inc. 2,000 128,625(*)
Bristol-Myers Squibb Co. 7,000 493,062
Eli Lilly & Co. 8,496 608,526
Merck & Co., Inc. 15,850 1,172,900
Pfizer, Inc. 8,500 932,875
Schering-Plough Corp. 11,200 593,600
Warner-Lambert Co. 3,300 228,937
---------
5,274,463
PHOTOGRAPHY 0.42%
- --------------------------
Eastman Kodak Co. 3,300 223,575
58
<PAGE>
ALL AMERICAN EQUITY FUND
PORTFOLIO OF INVESTMENTS June 30, 1999
COMMON STOCKS SHARES VALUE
- -------------------------- ------ --------
REAL ESTATE 0.72%
- --------------------------
Felcor Lodging Trust, Inc. 5,000 103,750
Omega Healthcare Investors, Inc. 5,000 129,063
Weeks Corp. 5,000 152,500
---------
385,313
RESTAURANTS 0.54%
- --------------------------
McDonald's Corp. 5,600 231,350
Tricon Global Restaurants 1,000 54,125(*)
---------
285,475
RETAIL 8.65%
- --------------------------
Abercrombie & Fitch Co., Class A 8,000 384,000(*)
Claire's Stores, Inc. 8,000 205,000
Garden Ridge Corp. 6,000 28,500(*)
Hasbro, Inc. 11,000 307,312
Home Depot, Inc. 10,400 670,150
K Mart Corp. 16,000 263,000(*)
Lowes Companies, Inc. 8,400 476,175
OfficeMax, Inc. 15,000 180,000(*)
Sears, Roebuck & Co. 2,400 106,950
Sterling Commerce, Inc. 4,000 146,000(*)
Tommy Hilfiger 6,000 441,000(*)
Toys "R" Us, Inc. 2,100 43,444(*)
Wal-Mart Stores, Inc. 28,000 1,351,000
---------
4,602,531
SANITARY SERVICES 0.94%
- --------------------------
Waste Management, Inc. 9,305 500,144
TELECOMMUNICATIONS 11.48%
- --------------------------
Ameritech Corp. 7,600 558,600
AT&T Corp., Liberty Media, Class A 2,474 90,919(*)
AT&T Corp. 27,202 1,518,212
Bell Atlantic Corp. 5,810 379,829
Bellsouth Corp. 9,200 431,250
GTE Corp. 6,000 454,500
Lucent Technologies, Inc. 12,000 809,250
MCI Worldcom, Inc. 3,359 289,043(*)
SBC Communications, Inc. 14,000 812,000
Sprint Corp. PCS Group 2,200 125,675(*)
Sprint Corp. 6,300 332,719
US West, Inc. 1,849 108,629
Vodafone Airtouch plc., ADR 1,000 197,000
---------
6,107,626
59
<PAGE>
ALL AMERICAN EQUITY FUND
PORTFOLIO OF INVESTMENTS June 30, 1999
COMMON STOCKS SHARES VALUE
- -------------------------- ------ --------
TOBACCO 1.28%
- --------------------------
Philip Morris, Inc. 17,000 $ 683,188
UTILITIES 0.34%
- --------------------------
P G & E Corp. 1,700 55,250
Williams Companies, Inc. 3,000 127,688
---------
182,938
TOTAL COMMON STOCKS 50,020,843
==========
(cost $28,265,025)
WRITTEN OPTIONS (0.01)% CONTRACTS
APPAREL (0.01)%
- --------------------------
Tommy Hilfiger, Strike Price 80, Call, (20) (5,750)
Expiration Aug. 1999 (premium $4,940)
PRINCIPAL
REPURCHASE AGREEMENT 5.97% AMOUNT
- --------------------------
Joint Tri-Party Repurchase Agreement,
Donaldson, Lufkin & Jenrette,
6/30/99, 4.85% due 7/1/99, repurchase
price $3,174,815 collateralized by U.S.
Treasury securities held in a joint
tri-party repurchase account
(cost $3,174,387) $3,174,387 3,174,387
TOTAL INVESTMENTS 99.98% 53,189,480
==========
(cost $31,434,472)
Other assets and liabilities, net 0.02% 12,705
-----------
NET ASSETS 100% $53,202,185
===========
See notes to portfolios of investments.
60
<PAGE>
REAL ESTATE FUND
PORTFOLIO OF INVESTMENTS June 30, 1999
COMMON STOCKS 94.32% SHARES VALUE
- -------------------------- ------ --------
REAL ESTATE INVESTMENT TRUSTS 68.99%
RESIDENTIAL PROPERTIES 19.94%
- --------------------------
Apartment Investment & Management Co. 9,000 384,750
Equity Resident Property Trust 8,000 360,500
Manufactured Home Communities, Inc. 12,000 312,000
Post Properties, Inc. 8,600 352,600
---------
1,409,850
DIVERSIFIED 6.38%
- --------------------------
Entertainment Properties Trust 10,000 176,250
Glenborough Realty Trust, Inc. 15,700 274,750
---------
451,000
HEALTHCARE 4.86%
- --------------------------
Meditrust Paired Certificate 26,300 343,544
OFFICE PROPERTY MANAGEMENT 23.70%
- --------------------------
Boston Properties, Inc. 5,000 179,375
Crescent Real Estate Equities 15,900 377,625
Equity Office Properties Trust 13,000 333,125
Mack-Cali Realty Corp. 8,000 247,500
Reckson Associates Realty Corp. 7,886 188,278
Spieker Properties, Inc. 9,000 349,875
---------
1,675,778
RETAIL PROPERTIES 10.59%
- --------------------------
General Growth Properties 7,000 248,500
Kimco Realty Corp. 5,000 195,625
Simon Property Group, Inc. 12,000 304,500
---------
748,625
WAREHOUSE/INDUSTRIAL 3.52%
- --------------------------
Liberty Property Trust 10,000 248,750
OTHER REAL ESTATE 25.33%
BUILDING MAINTENANCE & SERVICE 4.04%
- --------------------------
ABM Industries, Inc. 9,300 285,394
FINANCIAL SERVICES 2.63%
- --------------------------
Capital Trust, Class A 41,400 186,300(*)
61
<PAGE>
REAL ESTATE FUND
PORTFOLIO OF INVESTMENTS June 30, 1999
COMMON STOCKS SHARES VALUE
- -------------------------- ------ --------
INDUSTRIAL CONSTRUCTION 0.85%
- --------------------------
Flour City International, Inc. 20,000 60,000(*)
OFFICE PROPERTY MANAGEMENT 11.55%
- --------------------------
Brookfield Properties Corp. 24,500 318,625
EdperBrascan Corp., Class A 16,400 250,037
Oxford Properties Group, Inc. 23,400 247,905(*)
---------
816,567
HOTEL & LODGING PROPERTIES 6.26%
- --------------------------
Mirage Resorts, Inc. 10,000 167,500(*)
Starwood Hotels & Resorts Worldwide, Inc. 9,000 275,062
---------
442,562
TOTAL COMMON STOCKS 6,668,370
=========
(cost $7,395,986)
PRINCIPAL
REPURCHASE AGREEMENT 7.16% AMOUNT
Joint Tri-Party Repurchase Agreement, Donaldson,
Lufkin & Jenrette, 6/30/99, 4.85% due 7/1/99,
repurchase price $506,124 collateralized by
U.S. Treasury securities held in a joint
tri-party repurchase account (cost $506,056) $ 506,056 506,056
TOTAL INVESTMENTS 101.48% 7,174,426
=========
(cost $7,902,042)
Other assets and liabilities, net (1.48)% (104,356)
----------
NET ASSETS 100% $7,070,070
----------
See notes to portfolios of investments.
62
<PAGE>
CHINA REGION OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS June 30, 1999
COMMON STOCKS AND WARRANTS 77.65% SHARES VALUE
- -------------------------- ------ --------
AEROSPACE 0.30%
- --------------------------
Boeing Co. 2,000 $ 88,375
APPAREL 4.23%
- --------------------------
Chaifa Holdings Ltd. 670,800 9,338(*)
Giordano International Ltd. 299,000 210,031
Li & Fung Ltd. 376,000 898,977
Yue Yuen Industrial Holdings Ltd. 49,200 113,510
---------
1,231,856
BANKING & FINANCIAL SERVICES 9.51%
- --------------------------
Aeon Credit Service 994,000 288,261
Guoco Group Ltd. 110,000 294,898
HSBC Holdings Ltd. 60,000 2,188,539
---------
2,771,698
BEVERAGES 0.56%
- --------------------------
Guangdong Brewery
Holdings Ltd. 1,073,000 80,213
Vitasoy International
Holdings Ltd. 240,000 84,293
---------
164,506
CHEMICALS & ALLIED PRODUCTS 6.43%
- --------------------------
Jilin Chemical Industrial
Co., Ltd., Class H 2,308,000 279,628
Shanghai Petrochemical,
Class H 2,432,000 570,495
Yizheng Chemical Fibre,
Class H 1,844,000 475,343(*)
Zhenhai Refining and
Chemical Co., Ltd., Class H 1,815,000 549,745
---------
1,875,211
COMPUTERS & OFFICE EQUIPMENT 1.97%
- --------------------------
Acer, Inc., GDR 16,406 204,832(*)
Founder Hong Kong Ltd. 490,586 186,532(*)
GVC Corp., GDR 89 290(*)
Vanda Systems & Communications Holdings Ltd. 1,384,000 183,734(*)
---------
575,388
CONGLOMERATES 9.55%
- --------------------------
China Vanke Co., Ltd. 73,018 49,033
Citic Pacific Ltd. 228,200 727,960
First Pacific Co., Ltd. 635,230 540,370
Guangzhou Investment Co., Ltd. 500,000 50,911
Hutchinson Whampoa 96,000 869,229
Shanghai Industrial Holdings Ltd. 229,000 546,039
---------
2,783,542
63
<PAGE>
CHINA REGION OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS June 30, 1999
COMMON STOCKS AND WARRANTS SHARES VALUE
- -------------------------- ------ --------
ELECTRONIC EQUIPMENT 4.35%
- --------------------------
ASM Pacific Technology Ltd. 306,000 $ 205,088
GP Batteries International Ltd. 30,000 57,462
Samsung Electronics, GDR, 144A 3,380 91,682
Samsung Electronics, GDR 1/2 Voting Shares, 144A 132 7,069
Varitronix International 267,000 555,777
VTech Holdings Ltd. 110,000 350,192
Yageo Corp. 1 5
---------
1,267,275
FURNITURE 0.11%
- --------------------------
Lamex Holdings Ltd. 1,315,861 28,832(*)
Lamex Holdings Ltd., Warrants 219,310 2,148(*)
---------
30,980
GROCERIES - WHOLESALE 1.85%
- --------------------------
Guangnan Holdings Ltd. 10,000 670
NG Fung Hong Ltd. 648,000 538,706
---------
539,376
HEAVY CONSTRUCTION 0.44%
- --------------------------
Road King Infrastructure Ltd. 180,000 127,600
HOTELS 0.98%
- --------------------------
Shanghai New Asia, Group B 1,063,448 287,131(*)
HOUSEHOLD APPLIANCES 6.41%
- --------------------------
Guangdong Kelon Electronics Holdings 1,269,000 1,472,044
Shenzhen Konka Electronic Holdings, Group B 355,110 396,367(*)
---------
1,868,411
INDUSTRIAL/COMMERCIAL MACHINERY 0.34%
- --------------------------
Shanghai Diesel Engine Ltd., Group B 376,320 100,101
METAL INDUSTRIES 0.48%
- --------------------------
Shenzhen Fangda Co., Ltd. 157,800 141,151(*)
MOTOR VEHICLES & TRANSPORTATION 4.01%
- --------------------------
Qingling Motors Co. Ltd., Class H 1,688,000 406,847
Shanghai Dazhong, Group B 1,121,502 762,621(*)
---------
1,169,468
64
<PAGE>
CHINA REGION OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS June 30, 1999
COMMON STOCKS AND WARRANTS SHARES VALUE
- -------------------------- ------ --------
OFFICE SUPPLIES 2.16%
- --------------------------
China First Pencil Company Ltd. 1,194,914 $ 351,305
Shanghai Hero Pen, Group B 777,884 278,482(*)
---------
629,787
PHOTOGRAPHY 0.25%
- --------------------------
China HK Photo Products Holdings 450,000 71,920
REAL ESTATE DEVELOPERS 7.17%
- --------------------------
Cheung Kong Holdings Ltd. 50,000 444,668
China Overseas Land & Investment 970,000 137,525
China Resources Enterprise Ltd. 344,000 609,646
Lai Sun Development Co. Ltd. 40,000 3,557(*)
New World Development Co. 142,095 425,813
Shanghai Lujiazhui Finance, Group B 1,000 650(*)
Shum Yip Investment Ltd. 350,000 91,350
Silver Grant International Industries Ltd. 940,000 146,599(*)
Silver Grant International Industries, Warrants 94,000 4,119(*)
Sun Hung Kai Properties HK 25,000 227,973
---------
2,091,900
RETAIL 3.11%
- --------------------------
China Everbright-IHD Pacific Ltd. 200,000 199,778(*)
China Everbright-IHD Pacific Ltd., Warrants 20,000 8,507(*)
Glorious Sun Enterprises Ltd. 984,000 336,092
Shanghai Friendship & Overseas Chinese, Group B 966,014 363,221
---------
907,598
TELECOMMUNICATIONS 1.45%
- --------------------------
Hong Kong Telecommunications Ltd. 87,540 226,788
Shanghai Posts & Telecommunications, Group B 268,110 144,779(*)
SK Telecom Company Ltd., ADR 3,000 51,000
---------
422,567
TEXTILE MILL PRODUCTS 1.03%
- --------------------------
First Sign International Holdings 290,000 15,512
Shanghai Haixin Co., Group B 662,350 283,486(*)
---------
298,998
TRAFFIC SYSTEM MANAGEMENT 0.36%
- --------------------------
Anhui Expressway Co. Ltd. 726,000 99,188
GZI Transport Ltd. 25,769 5,646
---------
104,834
65
<PAGE>
CHINA REGION OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS June 30, 1999
COMMON STOCKS AND WARRANTS SHARES VALUE
- -------------------------- ------ --------
UNIT INVESTMENT TRUST 0.25%
- --------------------------
Cathay Investment Fund 350,000 $ 72,539(*)
UTILITIES 6.30%
- --------------------------
Guangdong Electric Power Development Co., Group B 205,400 141,370
Hong Kong & China Gas Co. 336,869 488,461
Huaneng Power International, Inc., ADR 40,000 685,000
Dongfang Electrical Machinery Co., Ltd., Class H 736,000 93,914
Shandong Huaneng Power Company Ltd., ADR 82,600 428,488
---------
1,837,233
WATER TRANSPORTATION & SERVICES 4.05%
- --------------------------
China International Marine Container, Group B 835,059 764,174(*)
China Merchants Shekou Port Service Co., Ltd. 133,144 70,188
Cosco Pacific Ltd. 350,000 288,712
Guangzhou Shipyard International Co., Class H 100,000 10,053
Pacific Ports Co., Ltd. 300,000 46,787(*)
---------
1,179,914
TOTAL COMMON STOCKS AND WARRANTS 22,639,359
==========
(cost $24,178,531)
PRINCIPAL
REPURCHASE AGREEMENT 17.99% AMOUNT
Joint Tri-Party Repurchase Agreement, Donaldson,
Lufkin & Jenrette, 6/30/99, 4.85%, due 7/1/99,
repurchase price $5,244,626 collateralized by
U.S. Treasury securities held in a joint
tri-party repurchase account (cost $5,243,920) $5,243,920 5,243,920
TOTAL INVESTMENTS 95.64% 27,883,279
==========
(cost $29,422,451)
Other assets and liabilities, net 4.36% 1,272,934
-----------
NET ASSETS 100% $29,156,213
===========
See notes to portfolios of investments.
66
<PAGE>
GLOBAL RESOURCES FUND
PORTFOLIO OF INVESTMENTS June 30, 1999
COMMON STOCKS AND WARRANTS 99.72% SHARES VALUE
- -------------------------- ------ --------
AGRICULTURAL SYSTEMS 0.12%
- --------------------------
Monsanto Co. 500 $ 19,719
CHEMICALS & ALLIED PRODUCTS 16.57%
- --------------------------
Air Products & Chemicals, Inc. 3,700 148,925
Albermarle Corp. 2,600 60,125
Dow Chemical Co. 4,000 507,500
E.I. Du Pont de Nemours & Co. 16,800 1,147,650(*)
Eastman Chemical Co. 3,400 175,950
Ecolab, Inc. 2,500 109,062
IMC Global, Inc. 3,800 66,975
Lubrizol Corp. 3,200 87,200
Praxair, Inc. 3,600 176,175
Rohm & Haas Co. 3,000 128,625
Solutia, Inc. 4,000 85,250
W. R. Grace & Co. 6,400 117,600(*)
---------
2,811,037
DIVERSIFIED MINING 1.07%
- --------------------------
De Beers Consolidated Mines Ltd., ADR 7,600 181,450
ELECTRIC SERVICES 0.55%
- --------------------------
Korea Electric Power Corp., ADR 4,500 92,250
FORESTRY 1.46%
- --------------------------
Weyerhaeuser Co. 3,600 247,500
GOLD & SILVER MINING 1.21%
- --------------------------
Barrick Gold Corp. 1,000 19,375
Newmont Mining Corp. 8,500 168,937
Placer Dome, Inc. 1,500 17,719
---------
206,031
METAL & MINERAL MINING 4.20%
- --------------------------
Alcoa, Inc. 8,900 550,687
Minco Mining & Metals Corp., Warrants 25,000 0(*)
Osmium Holdings S.A. (RS) 104 0(*)
Stillwater Mining Company 1,800 58,838(*)
Zimasco Consolidated Enterprises Ltd. (RS) 40,000 102,440
---------
711,965
MINING SERVICES 1.30%
- --------------------------
Freeport McMoRan Copper & Gold, Inc., Class B 10,000 179,375
Winspear Resources Ltd. 15,500 41,474(*)
---------
220,849
67
<PAGE>
GLOBAL RESOURCES FUND
PORTFOLIO OF INVESTMENTS June 30, 1999
COMMON STOCKS AND WARRANTS SHARES VALUE
- -------------------------- ------ --------
NATURAL GAS PRODUCTION & DISTRIBUTION 6.39%
- --------------------------
El Paso Energy Gas Co. 4,200 $ 147,788
Enron Corp. 6,800 555,900
Williams Companies, Inc. 8,950 380,934
---------
1,084,622
OIL & GAS EXTRACTION 9.08%
- --------------------------
Anadarko Petroleum Corp. 4,000 147,250
Apache Corp. 2,000 78,000
EuroSov Energy plc 283,100 95,950(*)
Noble Affiliates, Inc. 2,000 56,375
Oil Search Ltd. 30,000 44,443(*)
Phillips Petroleum Co. 4,000 201,250
Rowan Companies, Inc. 6,000 110,625(*)
Schlumberger Ltd. 9,250 589,109
Union Pacific Resources Group, Inc. 6,000 97,875
Unocal Corp. 3,000 118,875
---------
1,539,752
OIL & GAS FIELD SERVICES 3.88%
- --------------------------
Atlantic Richfield Co. 4,400 367,675
Baker Hughes, Inc. 6,000 201,000
ENSCO International, Inc. 4,500 89,719
---------
658,394
OIL & GAS INTEGRATED 3.89%
- --------------------------
Amerada Hess Corp. 2,000 119,000
Halliburton Co. 8,000 362,000
Occidental Petroleum Corp. 8,500 179,562
---------
660,562
PAPER PRODUCTS 6.92%
- --------------------------
Boise Cascade Corp. 7,000 300,125
Bowater, Inc. 3,000 141,750
Georgia Pacific Group 5,400 255,825
International Paper Co. 4,500 227,250
Louisiana Pacific Corp. 10,500 249,375
---------
1,174,325
PETROLEUM PRODUCTION & REFINING 40.82%
- --------------------------
Ashland, Inc. 1,300 52,163
BP Amoco plc, ADR 2,000 217,000
Chevron Corp. 11,300 1,075,619
ELF Aquitane S.A., ADR 1,300 95,631
Exxon Corp. 41,900 3,231,537
68
<PAGE>
GLOBAL RESOURCES FUND
PORTFOLIO OF INVESTMENTS June 30, 1999
COMMON STOCKS AND WARRANTS 99.72% SHARES VALUE
- -------------------------- ------ --------
PETROLEUM PRODUCTION & REFINING (CONT'D)
- --------------------------
Mobil Corp. 14,900 $1,475,100
Texaco, Inc. 7,800 487,500
Tosco Corp. 2,300 59,656
Total S.A., ADR 1,300 83,769(*)
USX-Marathon Group 4,500 146,531
---------
6,924,506
STEEL MANUFACTURING 2.26%
- --------------------------
Ak Steel Holding Corp. 4,700 105,750
Nucor Corp. 3,000 142,313
USX-U.S. Steel Group, Inc. 5,000 135,000
---------
383,063
TOTAL COMMON STOCKS AND WARRANTS 16,916,025
==========
(cost $16,236,259)
RIGHTS 0.00%
CHEMICALS & ALLIED PRODUCTS 0.00%
- --------------------------
IMC Global, Inc. Rights 3,800 0
(cost $0)
PRINCIPAL
REPURCHASE AGREEMENT 0.01% AMOUNT
Joint Tri-Party Repurchase Agreement, Donaldson,
Lufkin & Jenrette, 6/30/99, 4.85%, due 7/1/99,
repurchase price $1,723, collateralized by U.S.
Treasury securities held in a joint tri-party
repurchase account (cost $1,723) $ 1,723 1,723
TOTAL INVESTMENTS 99.86% 16,917,748
==========
(cost $16,237,982)
Other assets and liabilities, net 0.27% 46,003
---------
NET ASSETS 100% $16,963,751
===========
See notes to portfolios of investments
69
<PAGE>
WORLD GOLD FUND
PORTFOLIO OF INVESTMENTS June 30, 1999
COMMON STOCKS AND WARRANTS 78.85% SHARES VALUE
- -------------------------- ------ --------
DIAMOND MINING & EXPLORATION 3.82%
- --------------------------
De Beers Centenary, Linked Unit 39,600 $ 945,452
De Beers Consolidated Mines Ltd., ADR 85,100 2,031,763
DIA Met Minerals Ltd., Class B 40,000 692,699(*)
---------
3,669,914
DIVERSIFIED OPERATIONS 1.78%
- --------------------------
Anglo American Agriculture plc 30,000 1,422,071
Black Sea Energy Ltd. 176,950 240,340(*)
General Minerals Corp. 99,200 50,526(*)
---------
1,712,937
GOLD EXPLORATION & DEVELOPMENT 11.34%
- --------------------------
Ancash Resources, Special Warrants (RS) 800,000 0(*)+
Aurizon Mines Ltd. 483,500 229,847(*)
Aurora Gold Ltd. 112,389 54,978(*)
Balaclava Mines, Inc. 400,000 43,464(*)
Balaclava Mines, Inc., Warrants 200,000 0(*)
Ballarat Goldfields NL 1,043,100 31,719(*)
Ballarat Goldfields NL, Warrants 260,775 0(*)
Colony Pacific Explorations Ltd., Warrants 50,000 0(*)
Continental Precious Minerals, Inc. 200,000 69,949(*)
Cream Minerals Ltd. 200,000 33,956(*)
Cream Minerals Ltd., Warrants 200,000 0(*)
Eldorado Gold Corp. 753,200 332,482(*)
Fischer Watt Gold, Inc. 140,600 21,090(*)
Fischer Watt Gold, Inc. (RS) 800,000 60,000(*)
Franc-Or Resources Corp. 647,900 123,200(*)
Glamis Gold Ltd. 800,000 1,439,728(*)
Glencar Mining plc 872,438 391,964(*)
Gold Corp. of Africa Ltd. (RS) 195,000 24,375(*)+
Goldcorp, Inc., Class A, Subordinate Voting Shares 750,000 3,692,699(*)
Goldcorp, Inc., Warrants 375,000 432,937(*)
Great Basin Gold Ltd. 200,000 179,287(*)
Madison Enterprises Corp. 250,000 144,312(*)
Madison Enterprises Corp., Warrants 250,000 0(*)
Miramar Mining Corp. 592,100 361,895
Miranda Mining (RS) 1,600,000 999,443(*)
Moydow Mines International, Inc. 300,000 285,229(*)
Nevsun Resources 505,000 178,336(*)
Opawica Explorations, Inc. 400,000 236,333(*)
Ormonde Mining plc 3,607,143 353,182(*)+
Otter Gold Mines Ltd. 500,000 208,231(*)
Otter Gold Mines Ltd., Warrants (October 2001) 50,000 727(*)
Otter Gold Mines Ltd., Warrants (June 2003) 200,000 15,865(*)
Patrician Gold Mines Ltd. 602,000 16,353(*)
Platinova A/S 63,300 11,822(*)
70
<PAGE>
WORLD GOLD FUND
PORTFOLIO OF INVESTMENTS June 30, 1999
COMMON STOCKS AND WARRANTS SHARES VALUE
- -------------------------- ------ --------
GOLD EXPLORATION DEVELOPMENT (CONT'D)
- --------------------------
Platinova Resources Ltd., Special Shares 36,700 $ 6,356(*)
Solitario Resources Corp. 459,522 386,966(*)
Star Resources Corp. 1,976,400 268,441(*)+
Western Exploration & Development, Special Warrants
(RS) 600,000 255,000(*)+
---------
10,890,166
INTERMEDIATE GOLD PRODUCERS 14.27%
- --------------------------
Acacia Resources 3,000,974 3,471,639
Delta Gold NL 6,428,100 9,135,986
Kinross Gold Corp. 201,800 341,244(*)
Resolute Ltd. 1,500,000 753,597
---------
13,702,466
JUNIOR GOLD PRODUCERS 8.74%
- --------------------------
Agnico Eagle Mines Ltd. 19,200 118,655
Dayton Mining Corp. 31,068,000 1,801,944(*)+
Geomaque Explorations Ltd. 200,000 107,301(*)
IAMGOLD 1,520,000 3,096,774(*)
Norcal Resources Ltd. 470,000 28,727(*)
Ranger Minerals NL 1,681,899 2,612,775
Ross Mining NL 1,180,848 499,584
Vista Gold Corp. 834,300 130,315(*)
---------
8,396,075
METAL MINING 1.97%
- --------------------------
AMT International Mining Corp. 2,126,350 259,927(*)+
Metallica Resources, Inc. 47,500 23,548(*)
Nuinsco Resources Ltd. 100,000 35,993(*)
Osmium Holdings S.A. (RS) 891 0(*)
Platexco, Inc. 100,000 202,377(*)
Platexco, Inc., Warrants 50,000 0(*)
Red Back Mining, NL 1,000,000 171,873(*)
Zimasco Consolidated Enterprises Ltd. (RS) 350,000 896,350
Zimbabwe Platinum Mines Ltd. 1,360,000 305,670(*)
---------
1,895,738
MINERAL EXPLORATION & DEVELOPMENT 2.76%
- --------------------------
Aber Resources Ltd. 14,400 123,219(*)
Argosy Minerals, Inc. 823,720 67,128(*)
Augusta Resource Corp. 798,773 325,476(*)+
Billiton plc 300,000 1,046,336
Centaur Mining & Exploration Ltd. 300,000 52,554(*)
Chilean Gold Ltd. (RS) 500,000 0(*)
Gitennes Exploration, Inc. 200,000 33,956(*)
Indochina Goldfields Ltd. 475,400 403,565(*)
71
<PAGE>
WORLD GOLD FUND
PORTFOLIO OF INVESTMENTS June 30, 1999
COMMON STOCKS AND WARRANTS SHARES VALUE
- -------------------------- ------ --------
MINERAL EXPLORATION & DEVELOPMENT (CONT'D)
- --------------------------
Lonmin plc 50,000 $ 465,038
Yamana Resources, Inc. 330,000 134,465(*)
---------
2,651,737
MINING FINANCE 8.24%
- --------------------------
Euro-Nevada Mining Corp., Ltd. 408,700 4,884,971
Euro-Nevada Mining Corp., Ltd., Warrants, Series B 35,000 380,306(*)
Franco-Nevada Mining Corp., Ltd. 100,000 1,555,178
Franco-Nevada Mining Corp., Ltd., Warrants 200,000 1,089,983(*)
---------
7,910,438
SENIOR GOLD PRODUCERS 25.93%
- --------------------------
Ashanti Goldfields Co., Ltd., GDR 584,800 4,057,050
AGSM Preference Stock 203,932 336,488
Barrick Gold Corp. 237,500 4,601,572
Battle Mountain Gold Co. 108,750 265,078
Cambior, Inc. 500,000 1,612,903
Elkhorn Gold Mining Corp. 200,000 15,620(*)
Freeport-McMoRan Copper & Gold, Inc., Class B 45,000 807,187
Homestake Mining 360,000 2,947,500
Newmont Mining Corp. 235,075 4,672,116
Normandy Mining Ltd. 2,106,100 1,486,909
Orezone Resources, Inc. 466,000 189,881(*)
Orezone Resources, Inc. Special Warrants (RS) 550,000 224,109(*)
Placer Dome, Inc. 312,700 3,693,787
---------
24,910,200
TOTAL COMMON STOCKS AND WARRANTS 75,739,671
==========
(cost $90,202,814)
RIGHTS 0.00%
METAL MINING 0.00%
- --------------------------
Red Back Mining, NL (cost $2,240) 100,000 0
PURCHASED OPTIONS 3.92% CONTRACTS
---------
SENIOR GOLD PRODUCERS 3.92%
- --------------------------
Barrick Gold Corp., Strike Price 20, Call,
Expiration Jan. 2000 (premium $566,500) 1,350 388,125
Barrick Gold Corp., Strike Price 22.50, Call,
Expiration Jan. 2000 (premium $7,248) 16 3,000
Barrick Gold Corp., Strike Price 25, Call,
Expiration Jan. 2000 (premium $1,126,413) 2,775 346,875
72
<PAGE>
WORLD GOLD FUND
PORTFOLIO OF INVESTMENTS June 30, 1999
PURCHASED OPTIONS CONTRACTS VALUE
- -------------------------- --------- -----
SENIOR GOLD PRODUCERS (CONT'D)
- --------------------------
Barrick Gold Corporation, Strike Price 30, Call,
Expiration Jan 2000 (premium $19,695) 65 $ 2,844
Homestake Mining, Strike Price 10, Call,
Expiration Date Jan. 2000 (premium $139,000) 500 40,625
Homestake Mining, Strike Price 12.50, Call,
Expiration Date Jan. 2000 (premium $167,425) 600 28,140
Newmont Mining Corp., Strike Price 10, Call,
Expiration Date Jan. 2001 (premium $338,400) 300 330,000
Newmont Mining Corp., Strike Price 20, Call,
Expiration Date Jan. 2001 (premium $987,475) 1,450 833,750
Newmont Mining Corp., Strike Price 25, Call,
Expiration Date Jan. 2000 (premium $298,375) 500 87,500
Placer Dome, Inc., Strike Price 10, Call,
Expiration Date Jan. 2001 (premium $453,000) 1,000 431,300
Placer Dome, Inc., Strike Price 12.50, Call,
Expiration Date Jan. 2000 (premium $635,513) 2,150 403,125
Expiration Date Jan. 2001 (premium $943,625) 2,250 773,550
Placer Dome, Inc., Strike Price 17.50, Call,
Expiration Jan. 2000 (premium $528,435) 1,520 95,000
----- ------
TOTAL PURCHASED OPTIONS 3,763,834
=========
(cost $6,211,104)
PRINCIPAL
REPURCHASE AGREEMENT 14.30% AMOUNT
Joint Tri-Party Repurchase Agreement, Donaldson,
Lufkin & Jenrette, 6/30/99, 4.85%, due 7/1/99,
repurchase price $13,736,793, collateralized
by U.S. Treasury securities held in a joint
tri-party repurchase account (cost $13,734,943) $13,734,943 13,734,943
----------- ----------
TOTAL INVESTMENTS 97.07% 93,238,448
==========
(cost $110,151,101)
Other assets and liabilities, net 2.93% 2,818,423
---------
NET ASSETS 100% $96,056,871
===========
See notes to portfolios of investments
73
<PAGE>
GOLD SHARES FUND
PORTFOLIO OF INVESTMENTS June 30, 1999
COMMON STOCKS AND WARRANTS 75.60% SHARES VALUE
- -------------------------- ------ --------
DIAMOND MINING & EXPLORATION 5.44%
- --------------------------
De Beers Centenary, Linked Unit 11,300 $ 269,788
De Beers Consolidated Mines, ADR 32,400 773,550
DIA Met Minerals Ltd., Class B 60,000 1,039,049(*)
---------
2,082,387
DIVERSIFIED OPERATIONS 5.27%
- --------------------------
Aber Resources Ltd. 57,400 491,165(*)
Anglo American plc 10,000 474,023(*)
Anglovaal Mining Ltd. 75,800 489,924
Billiton plc 100,000 348,778
Black Sea Energy Ltd. 59,050 80,204(*)
Indochina Goldfields Ltd. 158,400 134,465(*)
---------
2,018,559
GOLD MINING - AFRICA 19.68%
- --------------------------
Anglogold Ltd., ADR 30,400 653,600
Ashanti Goldfields, GDR 232,600 1,613,662
ASA Ltd. 30,700 510,388
Avgold Ltd. 300,000 163,573(*)
Gencor Ltd. 60,000 165,065
Gold Fields Ltd. 502,470 1,727,251
Gold Fields Ltd., ADR 50,000 171,875(*)
Goldfields South Africa 200,000 400,000
Harmony Gold Mining 351,800 1,704,020(*)
Kalahari Goldridge Mining Ltd. 321,600 111,926(*)
Randfontein Estates Ltd. 21,900 37,746
Western Areas Gold Mining, ADR 63,000 198,387(*)
Zimbabwe Platinum Mines Ltd. 344,791 77,494(*)
---------
7,534,987
GOLD MINING - AUSTRALIA 12.36%
- --------------------------
Acacia Resources 1,237,795 1,431,928
Delta Gold NL 1,680,870 2,388,949
Normandy Mining Ltd. 600,000 423,601
Ranger Minerals Ltd. 152,713 237,235(*)
Resolute Resources Ltd. 500,000 251,199
---------
4,732,912
GOLD MINING - NORTH AMERICA 32.93%
- --------------------------
Agnico Eagle Mines Ltd. 5,800 35,844
Barrick Gold Corp. 162,500 3,148,440
Battle Mountain Gold Co. 36,250 88,359
Cambior, Inc. 150,000 483,871
Dayton Mining Corp. 11,250,000 652,500(*)
Euro-Nevada Mining Ltd. 95,000 1,135,484
74
<PAGE>
GOLD SHARES FUND
PORTFOLIO OF INVESTMENTS June 30, 1999
COMMON STOCKS AND WARRANTS SHARES VALUE
- -------------------------- ------ --------
Euro-Nevada Mining Ltd., Warrants, Series B 6,000 $ 65,195(*)
Franco Nevada Mining Corp., Ltd. 10,000 155,518
Franco Nevada Mining Corp., Ltd., Warrants 50,000 272,496(*)
Freeport-McMoRan Copper & Gold, Inc., Class B 15,000 269,062
Goldcorp, Inc., Class A Subordinate
Voting Shares 250,000 1,230,900(*)
Goldcorp, Inc., Warrants 125,000 144,312(*)
Homestake Mining 80,000 655,000
IAMGOLD 100,000 203,735(*)
Kinross Gold Corp. 312,600 528,607(*)
Newmont Mining Corp. 78,425 1,558,697
Placer Dome, Inc. 157,500 1,860,478
Stillwater Mining Co. 3,600 117,676(*)
---------
12,606,174
TOTAL COMMON STOCKS AND WARRANTS 28,975,019
==========
(cost $31,885,616)
PURCHASED OPTIONS 3.79% CONTRACTS
GOLD MINING - AFRICA 0.09%
- --------------------------
ASA Ltd., Strike Price 17.50, Call,
Expiration Jan. 2000 (premium $75,600) 200 35,000
GOLD MINING - NORTH AMERICA 3.70%
- --------------------------
Barrick Gold Corp., Strike Price 20, Call,
Expiration Jan. 2000 (premium $169,950) 400 115,000
Barrick Gold Corp., Strike Price 25, Call,
Expiration Jan. 2000 (premium $527,827) 1,305 163,125
Barrick Gold Corp., Strike Price 30, Call,
Expiration Jan. 2000 (premium $10,605) 35 1,531
Homestake Mining, Strike Price 10, Call,
Expiration Jan. 2000 (premium $55,600) 200 16,250
Homestake Mining, Strike Price 12.50, Call,
Expiration Jan. 2000 (premium $69,500) 250 11,725
Newmont Mining Corp., Strike Price 20, Call,
Expiration Jan. 2001 (premium $381,025) 550 316,250
Newmont Mining Corp., Strike Price 25, Call,
Expiration Jan. 2000 (premium $150,750) 250 43,750
Newmont Mining Corp., Strike Price 100, Call,
Expiration Jan. 2001 (premium $112,800) 100 110,000
Placer Dome, Inc., Strike Price 10, Call,
Expiration Jan. 2001 (premium $147,150) 300 129,390
75
<PAGE>
GOLD SHARES FUND
PORTFOLIO OF INVESTMENTS June 30, 1999
COMMON STOCKS AND WARRANTS 75.60% SHARES VALUE
- -------------------------- ------ --------
GOLD MINING - NORTH AMERICA (CONT'D)
- --------------------------
Placer Dome, Inc., Strike Price 12.50, Call,
Expiration Jan. 2000 (premium $254,738) 850 $ 159,375
Expiration Jan. 2001 (premium $327,875) 750 257,850
Placer Dome, Inc., Strike Price 17.50, Call,
Expiration Jan. 2000 (premium $568,065) 1,480 92,500
---------
1,416,746
TOTAL PURCHASED OPTIONS 1,451,746
=========
(cost $2,851,485)
PRINCIPAL
REPURCHASE AGREEMENT 8.46% AMOUNT
Joint Tri-Party Repurchase Agreement, Donaldson,
Lufkin & Jenrette, 6/30/99, 4.85%, due 7/1/99
repurchase price $3,237,726 collateralized by
U.S. Treasury securities held in a joint
tri-party repurchase account (cost $3,237,290) $3,237,290 3,237,290
TOTAL INVESTMENTS 87.93% 33,664,055
==========
(cost $37,974,391)
Other assets and liabilities, net 12.07% 4,621,591
---------
NET ASSETS 100% $38,285,646
===========
See notes to portfolios of investments.
76
<PAGE>
LEGEND
* Non-income producing security GDR Global Depository Receipt
+ Affiliated company (see following) RS Restricted Security (see following)
ADR American Depository Receipt ZCB Zero Coupon Bond
GO General Obligation Bond
GENERAL
The yield reflects the effective yield from the date of purchase.
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. Rates shown are current rates at 6/30/99.
Securities with a 144A designation are exempt from registration under Rule 144A
of the Securities Act of 1933.
JOINT TRI-PARTY REPURCHASE AGREEMENTS (SEE ALSO NOTE 1 TO FINANCIAL STATEMENTS.)
The terms of the repurchase agreements and the securities held as collateral in
the tri-party joint repurchase agreements at June 30, 1999 were:
Donaldson, Lufkin & Jenrette repurchase agreement, 6/30/99, 4.85%, due 7/1/99:
(with a market value of $75,803,636)
$50,080,000 U.S. Treasury Bond, 3.625%, 1/15/08
$19,881,000 U.S. Treasury Bond, 6.125%, 11/15/27
$3,262,000 U.S. Treasury Note, 5.625%, 10/31/99
$1,519,000 U.S. Treasury Bond, 0.00%, 11/15/17
$1,302,000 U.S. Treasury Bond, 0.00%, 11/15/23
$1,071,000 U.S. Treasury Bond, 0.00%, 2/15/25
$1,032,000 U.S. Treasury Bond, 0.00%, 11/15/22
$777,000 U.S. Treasury Bill, 0.00%, 12/9/99
$599,000 U.S. Treasury Bond, 0.00%, 8/15/17
$472,000 U.S. Treasury Bond, 0.00%, 2/15/19
$440,000 U.S. Treasury Note, 6.00%, 8/15/00
$426,000 U.S. Treasury Bond, 0.00%, 2/15/16
$403,000 U.S. Treasury Bond, 0.00%, 11/15/25
$358,000 U.S. Treasury Bond, 0.00%, 11/15/24
$306,000 U.S. Treasury Bond, 0.00%, 11/15/28
$216,000 U.S. Treasury Bond, 0.00%, 8/15/25
$152,000 U.S. Treasury Bond, 0.00%, 5/15/11
$100,000 U.S. Treasury Bond, 0.00%, 2/15/25
$100,000 U.S. Treasury Bond, 0.00%, 11/15/27
$68,000 U.S. Treasury Bond, 0.00%, 8/15/22
$65,000 U.S. Treasury Bond, 0.00%, 8/15/23
$42,000 U.S. Treasury Bond, 0.00%, 11/15/28
$32,000 U.S. Treasury Bond, 0.00%, 8/15/14
$29,000 U.S. Treasury Bond, 0.00%, 8/15/25
$28,000 U.S. Treasury Bond, 0.00%, 2/15/27
$24,000 U.S. Treasury Bond, 0.00%, 5/15/27
$10,000 U.S. Treasury Bond, 0.00%, 8/15/19
$4,000 U.S. Treasury Bond, 0.00%, 11/15/27
$4,000 U.S. Treasury Bond, 0.00%, 5/15/28
$2,000 U.S. Treasury Bond, 0.00%, 5/15/26
Total principal amount: $82,804,000; Total repurchase value: $75,057,891
77
<PAGE>
NOTES TO PORTFOLIOS OF INVESTMENTS June 30, 1999
PaineWebber, Inc. repurchase agreement, 6/30/99, 4.80%, due 7/1/99:
(with a market value of $24,481,242)
$5,302,000 U.S. Treasury Note, 7.875%, 11/15/04
$5,000,000 U.S. Treasury Bond, 10.625%, 8/15/15
$5,000,000 U.S. Treasury Bond, 9.00%, 11/15/18
$3,945,000 U.S. Treasury Note, 8.125%, 8/15/19
Total principal amount: $19,247,000; Total repurchase value: $24,003,200
Other mutual funds managed by U.S. Global Investors, Inc. participate in the
tri-party joint repurchase agreements. Each owns an undivided interest in the
accounts.
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 period ended
June 30, 1999.
SHARES OF AFFILIATED COMPANIES
---------------------------------------------------------
JUNE 30, 1998 ADDITIONS REDUCTIONS JUNE 30, 1999
------------- --------- ---------- -------------
GLOBAL RESOURCES
Goldbeam
Resources Ltd. 300,000 -- (300,000) --
At June 30, 1999, the value of investments in affiliated companies was $0
representing 0% of net assets, and the total cost was $0. Net realized losses on
transactions with affiliates were $765,345 and there was no income earned for
the period.
SHARES OF AFFILIATED COMPANIES
---------------------------------------------------------
JUNE 30, 1998 ADDITIONS REDUCTIONS JUNE 30, 1999
------------- --------- ---------- -------------
WORLD GOLD
AMT International
Mining Corp. 2,126,350 100 100 2,126,350
Ancash Resources (RS) 800,000 100 100 800,000
Augusta Resource Corp 100 798,773 100 798,773
Balaclava Mines, Inc. 400,000 -- -- 400,000(a)
Dayton Mining Corp. 688,000 30,671,700 (291,700) 31,068,000
Gold Corp. of
Africa (RS) 200,000 -- (5,000) 195,000
Highlake Resources NL 4,257,565 -- (4,257,565) --
Opawica Exploration,
Inc 400,000 -- -- 400,000(a)
Ormonde Mining plc 3,607,143 -- -- 3,607,143
Star Resources Corp. 1,976,400 -- -- 1,976,400
Western Exploration
& Development Ltd.
(RS) 600,000 -- -- 600,000
At June 30, 1999, the value of investments in affiliated companies was
$3,288,345, representing 3.42% of net assets, and the total cost was $7,747,812.
Net realized losses on transactions were $59,361 and there was no income earned
for the period.
(a) AtJune 30, 1999, the company is no longer defined as an affiliate, although
it was an affiliated company during the year.
78
<PAGE>
NOTES TO PORTFOLIOS OF INVESTMENTS June 30, 1999
RESTRICTED SECURITIES - INDICATED IN PORTFOLIO OF INVESTMENTS AS "RS"
The following securities are subject to legal restrictions on their resale. The
issuer bears the cost of registration, if any, involved in the disposition of
these securities.
ACQUISITION COST PER
SECURITY DATE SHARE
----------------- --------
GLOBAL RESOURCES
COMMON STOCK AND WARRANTS
Osmium Holdings S.A 10/22/96-01/29/98 $ 9 87.07
Zimasco Consolidated Enterprises Ltd. 06/15/95 $ 2.50
At June 30, 1999, the total cost of restricted securities was $202,655, and the
total value was $102,440, representing 0.60% of net assets.
WORLD GOLD
COMMON STOCK AND WARRANTS
Chilean Gold Ltd. 01/17/97 $ 1.10
Fischer-Watt Gold 06/16/97-08/27/97 $ 0.33
Gold Corp. of Africa 08/14/96-11/14/97 $ 2.00
Miranda Mining 03/25/96 $ 1.13
Osmium Holdings S.A 10/22/96-01/29/98 $1,280.75
Zimasco Consolidated Enterprises Ltd. 06/15/95 $ 2.50
SPECIAL WARRANTS AND UNITS
Ancash Resources 09/30/96-05/02/97 $ 0.55
Orezone Resource, Inc. 04/30/99 $ 0.48
Western Exploration & Development 08/14/97 $ 0.50
At June 30, 1999, the total cost of restricted securities was $6,031,680, and
the total value was $2,459,277, representing 2.56% of net assets.
79
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
June 30, 1999
U.S. TREASURY U.S. GOVERNMENT
SECURITIES SECURITIES NEAR-TERM TAX FREE INCOME ALL AMERICAN
CASH FUND SAVINGS FUND TAX FREE FUND FUND FUND EQUITY FUND
------------- ------------- ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Investments, at identified cost $ 162,196,503 $ 795,955,317 $ 7,304,767 $ 24,093,183 $ 8,800,648 $31,434,472
============= ============= =========== ============ ============ ===========
ASSETS
Investments, at value:
Securities $ 100,309,047 $ 795,955,317 $ 7,133,609 $ 23,470,483 $ 9,800,646 $50,015,093
Repurchase agreements 61,887,456 -- 171,973 369,181 407,481 3,174,387
Cash -- 257,000 -- -- 111,838 18,001
Receivables: -- -- -- 65,150
Investments sold -- -- -- -- 13,780 43,773
Dividends -- -- 131,959 329,115 8,150 428
Interest 2,426,260 6,758,382 60 17,757 182 5,000
Capital shares sold 1,315,947 1,140,749 12,538 1,142 -- --
From manager -- -- 3,564 22,242 3,540 5,795
Other assets 241,706 58,027
TOTAL ASSETS 166,180,416 804,169,475 7,453,703 24,209,920 10,345,617 53,327,627
LIABILITIES
Payables:
Investments purchased -- 10,309,697 -- -- 370,336 40,809
Capital shares redeemed 9,790,087 522,634 -- 61,342 1,217 --
To manager and affiliates 67,012 164,279 -- -- 9,780 1,855
Dividends and distributions 486,613 2,961,187 26,201 89,832 12,936 50,212
Accounts payable
and accrued expenses 69,285 63,917 16,535 16,965 18,278 32,566
TOTAL LIABILITIES 10,412,997 14,021,714 42,736 168,139 412,547 125,442
NET ASSETS $ 155,767,419 $ 790,147,761 $ 7,410,967 $ 24,041,781 $ 9,933,070 $53,202,185
============= ============= =========== ============ ============ ===========
NET ASSETS CONSIST OF:
Paid in capital $ 155,691,434 $ 791,094,620 $ 7,603,823 $ 24,223,265 $ 7,348,360 $30,878,269
Undistributed net investment
income (loss) 94,173 682,533 6,840 6,566 (5,289) (14,031)
Accumulated net realized gain
(loss) on investments and
foreign currencies (18,188) (1,629,392) (200,511) 65,469 1,182,520 582,939
Net unrealized appreciation
(depreciation) of investments
and other assets and
liabilities denominated in
foreign currencies -- -- 815 (253,519) 1,407,479 21,755,008
------------- ------------- ----------- ------------ ------------ -----------
Net assets applicable to
capital shares outstanding $ 155,767,419 $ 790,147,761 $ 7,410,967 $ 24,041,781 $ 9,933,070 $53,202,185
============= ============= =========== ============ ============ ===========
Capital shares outstanding,
and unlimited number of
no par shares authorized 155,741,073 790,244,449 708,147 2,037,942 680,796 1,188,052
============= ============= =========== ============ ============ ===========
NET ASSET VALUE, PER SHARE $ 1.00 $ 1.00 $ 10.47 $ 11.80 $ 14.59 $ 44.78
============= ============= =========== ============ ============ ===========
</TABLE>
See accompanying notes to financial statements.
80 and 81
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
June 30, 1999
GLOBAL
REAL ESTATE CHINA REGION RESOURCES WORLD GOLD GOLD SHARES
FUND OPPORTUNITY FUND FUND FUND FUND
----------- ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
Investments, at identified cost $ 7,902,042 $ 29,422,451 $ 16,237,982 $ 110,151,101 $ 37,974,391
=========== ============ ============ ============= =============
ASSETS
Investments, at value:
Securities $ 6,668,370 $ 22,639,359 $ 16,916,025 $ 79,503,505 $ 30,426,765
Repurchase agreements 506,056 5,243,920 1,723 13,734,943 3,237,290
Cash -- -- 54,140 291,656 300,219
Receivables: 142,391 2,120,979 234,437
Investments sold -- -- 16,008 3,462 --
Dividends 50,828 85,143 -- 204,897 22,491
Interest 68 706 46,509 4,698,822 4,977,629
Capital shares sold 2,017 1,257,411 12,682 73,789 102,893
Other assets 5,874 19,090
TOTAL ASSETS 7,233,213 29,245,629 17,189,478 100,632,053 39,301,724
LIABILITIES
Payables:
Investments purchased -- -- 126,515 4,189,010 826,274
Capital shares redeemed 2,581 15,797 24,391 211,281 2,485
To manager and affiliates 8,639 35,016 31,874 119,028 96,801
Dividends and distributions 126,581 -- -- -- --
Accounts payable and 42,947 55,863 90,518
accrued expenses 25,342 38,603
TOTAL LIABILITIES 163,143 89,416 225,727 4,575,182 1,016,078
NET ASSETS $ 7,070,070 $ 29,156,213 $ 16,963,751 $ 96,056,871 $ 38,285,646
=========== ============ ============ ============= =============
NET ASSETS CONSIST OF:
Paid in capital $ 8,413,139 $ 41,584,241 $ 25,967,643 $ 166,614,069 $ 239,856,043
Undistributed net investment
income (loss) (13,248) 62,826 (6,875) 3,484,235 (263,967)
Accumulated net realized gain
(loss) on investments and
foreign currencies (602,202) (10,951,620) (9,676,783) (57,128,272) (197,008,838)
Net unrealized appreciation
(depreciation) of investments
and other assets and
liabilities denominated in
foreign currencies (727,619) (1,539,234) 679,766 (16,913,161) (4,297,592)
----------- ------------ ------------ ------------- -------------
Net assets applicable to
capital shares outstanding $ 7,070,070 $ 29,156,213 $ 16,963,751 $ 96,056,871 $ 38,285,646
=========== ============ ============ ============= =============
Capital shares outstanding,
and unlimited number of
no par shares authorized 757,854 5,224,566 4,227,306 12,329,929 11,183,900
=========== ============ ============ ============= =============
NET ASSET VALUE, PER SHARE $ 9.33 $ 5.58 $ 4.01 $ 7.79 $ 3.42
=========== ============ ============ ============= =============
</TABLE>
See accompanying notes to financial statements.
82 and 83
<PAGE>
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Year Ended June 30, 1999
U.S. TREASURY U.S. GOVERNMENT
SECURITIES SECURITIES NEAR-TERM TAX FREE INCOME ALL AMERICAN
CASH FUND SAVINGS FUND TAX FREE FUND FUND FUND EQUITY FUND
------------- ------------- ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME
INCOME:
Dividends $ -- $ -- $ -- $ -- $ 301,365 $ 467,581
Foreign taxes withheld on
dividends -- -- -- -- -- (1,343)
------------- ------------- ----------- ------------ ------------ -----------
Net dividends -- -- -- -- 301,365 466,238
Interest and other 8,547,361 40,756,734 351,406 1,209,587 84,949 264,808
------------- ------------- ----------- ------------ ------------ -----------
TOTAL INCOME 8,547,361 40,756,734 351,406 1,209,587 386,314 731,046
EXPENSES:
Management fee 876,133 3,316,843 37,879 172,836 78,288 330,562
Transfer agent fees and
expenses 370,170 860,534 10,530 31,641 42,635 131,646
Accounting service fees
and expenses 34,839 101,932 45,027 39,992 40,219 40,244
Legal and professional
fees 41,918 35,756 30,106 30,154 39,516 71,372
Custodian fees 161,356 111,223 12,222 17,268 18,517 29,279
Shareholder reporting 137,791 253,840 2,916 9,213 12,490 50,568
Registration fees 40,138 34,893 10,103 11,345 12,109 10,652
Trustee fees and
expenses 14,897 15,314 14,814 14,747 14,822 14,962
Interest Expense -- 706 -- -- -- --
Miscellaneous 88,689 181,176 7,560 9,599 8,177 9,330
------------- ------------- ----------- ------------ ------------ -----------
Total expenses before
reductions 1,765,931 4,912,217 171,157 336,795 266,773 688,615
Short-term trading fee -- -- -- -- -- --
Expenses offset (407) (26,755) (94) (233) (125) (1,531)
Expenses reimbursed -- (2,415,935) (117,488) (172,964) -- (246,280)
------------- ------------- ----------- ------------ ------------ -----------
NET EXPENSES 1,765,524 2,469,527 53,575 163,598 266,648 440,804
NET INVESTMENT INCOME (LOSS) 6,781,837 38,287,207 297,831 1,045,989 119,666 290,242
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) from:
Securities (10,657) 21,754 9,766 180,137 1,488,145 1,005,069
Foreign currency
transactions -- -- -- -- -- --
------------- ------------- ----------- ------------ ------------ -----------
NET REALIZED GAIN
(LOSS) (10,657) 21,754 9,766 180,137 1,488,145 1,005,069
------------- ------------- ----------- ------------ ------------ -----------
Net change in unrealized
appreciation (depreciation)
of:
Investments -- -- (129,794) (1,008,256) (978,966) 7,258,310
Other assets and
liabilities denominated
in foreign currencies -- -- -- -- -- --
------------- ------------- ----------- ------------ ------------ -----------
NET UNREALIZED
APPRECIATION
(DEPRECIATION) -- -- (129,794) (1,008,256) (978,966) 7,258,310
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS (10,657) 21,754 (120,028) (828,119) 509,179 8,263,379
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS $ 6,771,180 $ 38,308,961 $ 177,803 $ 217,870 $ 628,845 $ 8,553,621
============= ============= =========== ============ ============ ===========
</TABLE>
See accompanying notes to financial statements.
84 AND 85
<PAGE>
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
CHINA REGION GLOBAL
REAL ESTATE OPPORTUNITY RESOURCES WORLD GOLD GOLD SHARES
FUND FUND FUND FUND FUND
----------- ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME
INCOME:
Dividends $ 325,601 $ 489,142 $ 304,370 $ 1,830,685 $ 534,399
Foreign taxes withheld
on dividends (4,358) (4,302) (4,874) (46,776) (18,376)
----------- ------------ ------------ ------------- -------------
Net dividends 321,243 484,840 299,496 1,783,909 516,023
Interest and other 79,911 33,492 100,143 887,024 473,281
----------- ------------ ------------ ------------- -------------
TOTAL INCOME 401,154 518,332 399,639 2,670,933 989,304
EXPENSES:
Management fee 65,427 200,343 159,064 1,119,941 314,052
Transfer agent fees and
expenses 52,578 170,044 204,368 586,654 982,799
Accounting service fees
and expenses 42,576 45,582 38,851 47,063 46,581
Legal and professional
fees 44,947 151,932 112,137 162,529 133,496
Custodian fees 22,268 44,229 36,159 90,110 165,870
Shareholder reporting 14,982 44,183 66,120 191,661 361,377
Registration fees 10,976 14,381 39,720 77,792 92,747
Trustee fees and expenses 14,829 14,795 14,817 15,019 15,441
Interest Expense 1,067 -- -- 56,544 146,137
Miscellaneous 10,687 22,019 19,832 91,768 83,024
----------- ------------ ------------ ------------- -------------
Total expenses before
reductions 280,337 707,508 691,068 2,439,081 2,341,524
Short-term trading fee (1,067) -- -- (56,544) (146,137)
Expenses offset (350) -- (307) (10,291) (2,184)
Expenses reimbursed -- -- -- -- --
----------- ------------ ------------ ------------- -------------
NET EXPENSES 278,920 707,508 690,761 2,372,246 2,193,203
NET INVESTMENT INCOME (LOSS) 122,234 (189,176) (291,122) 298,687 (1,203,899)
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) from:
Securities (602,202) (5,972,694) (5,085,414) (26,440,392) (10,536,259)
Foreign currency
transactions 1,994 (257) (8,582) 200,301 (31,994)
----------- ------------ ------------ ------------- -------------
NET REALIZED GAIN (LOSS) (600,208) (5,972,951) 5,093,996) (26,240,091) (10,568,253)
----------- ------------ ------------ ------------- -------------
Net change in unrealized
appreciation (depreciation)
of:
Investments (528,112) 12,406,745 4,444,758 6,443,228 10,518,698
Other assets and
liabilities denominated
in foreign currencies 112 (141) 612 344 45,045
----------- ------------ ------------ ------------- -------------
NET UNREALIZED
APPRECIATION
(DEPRECIATION) (528,000) 12,406,604 4,445,370 6,443,572 10,563,743
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS (1,128,208) 6,433,653 (648,626) (19,796,519) (4,510)
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS $(1,005,974) $ 6,244,477 $ (939,748) $ (19,497,832) $ (1,208,409)
=========== ============ ============ ============= =============
</TABLE>
See accompanying notes to financial statements.
86 AND 87
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
U.S. TREASURY SECURITIES U.S. GOVERNMENT SECURITIES
CASH FUND SAVINGS FUND NEAR-TERM TAX FREE FUND
---------------------------------- ------------------------------ --------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, 1999 JUNE 30, 1998 JUNE 30, 1999 JUNE 30, 1998 JUNE 30, 1999 JUNE 30, 1998
--------------- --------------- ------------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS FROM INVESTMENT
OPERATIONS:
Net investment
income (loss) $ 6,781,837 $ 8,226,289 $ 38,287,207 $ 38,271,461 $ 297,831 $ 320,155
Net realized gain (loss) (10,657) 13,569 21,754 2,317 9,766 19,843
Net unrealized appreciation
(depreciation) -- -- -- -- (129,794) 111,972
--------------- --------------- ------------- ------------- ----------- -----------
NET INCREASE (DECREASE)
IN NET ASSETS FROM
INVESTMENT OPERATIONS 6,771,180 8,239,858 38,308,961 38,273,778 177,803 451,970
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (6,734,351) (8,231,765) (38,310,800) (38,322,248) (296,765) (347,902)
In excess of net investment
income -- -- -- -- -- --
From net capital gains (2,912) -- -- -- -- --
In excess of net capital
gains (18,188) -- -- -- -- --
--------------- --------------- ------------- ------------- ----------- -----------
TOTAL DISTRIBUTIONS TO
SHAREHOLDERS (6,755,451) (8,231,765) (38,310,800) (38,322,248) (296,765) (347,902)
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 2,639,284,234 3,497,365,077 819,242,776 714,492,554 1,655,595 3,145,125
Distributions reinvested 6,038,434 8,105,535 34,977,709 37,764,547 244,701 284,226
Paid-in capital portion of
short-term trading
fee -- -- -- --
--------------- --------------- ------------- ------------- ----------- -----------
2,645,322,668 3,505,470,612 854,220,485 752,257,101 1,900,296 3,429,351
Cost of shares redeemed (2,638,992,364) (3,587,939,550) (825,588,463) (682,460,358) (2,431,826) (2,831,915)
--------------- --------------- ------------- ------------- ----------- -----------
NET INCREASE (DECREASE)
IN NET ASSETS FROM
CAPITAL SHARE
TRANSACTIONS 6,330,304 (82,468,938) 28,632,022 69,796,743 (531,530) 597,436
NET INCREASE (DECREASE) IN NET
ASSETS 6,346,033 (82,460,845) 28,630,183 69,748,273 (650,492) 701,504
NET ASSETS
Beginning of year 149,421,386 231,882,231 761,517,578 691,769,305 8,061,459 7,359,955
END OF YEAR $ 155,767,419 $ 149,421,386 $ 790,147,761 $ 761,517,578 $ 7,410,967 $ 8,061,459
Undistributed net investment
income, end of year $ 94,173 $ 46,687 $ 682,533 $ 1,650,857 $ 6,840 $ 5,774
=============== =============== ============= ============= =========== ===========
CAPITAL SHARE ACTIVITY
Shares sold 2,639,281,454 3,497,366,478 819,245,215 714,490,615 154,848 295,052
Shares reinvested 6,035,413 8,105,535 34,977,710 37,764,547 22,872 26,711
Shares redeemed (2,638,992,374) (3,587,939,550) (825,594,140) (682,460,358) (226,989) (265,953)
--------------- --------------- ------------- ------------- ----------- -----------
NET SHARE ACTIVITY 6,324,493 (82,467,537) 28,628,785 69,794,804 (49,269) 55,810
=============== =============== ============= ============= =========== ===========
</TABLE>
See accompanying notes to financial statements.
88 AND 89
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
TAX FREE FUND INCOME FUND ALL AMERICAN EQUITY FUND
----------------------------------- ------------------------------ ---------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, 1999 JUNE 30, 1998 JUNE 30, 1999 JUNE 30, 1998 JUNE 30, 1999 JUNE 30, 1998
--------------- --------------- ------------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
FROM INVESTMENT OPERATIONS:
Net investment income (loss) $ 1,045,989 $ 964,182 $ 119,666 $ 159,539 $ 290,242 $ 295,491
Net realized gain (loss) 180,137 117,574 1,488,145 775,019 1,005,069 1,150,496
Net unrealized appreciation
(depreciation) (1,008,256) 407,090 (978,966) 1,282,975 7,258,310 5,567,709
--------------- --------------- ------------- ------------- ----------- -----------
NET INCREASE (DECREASE)
IN NET ASSETS FROM
INVESTMENT OPERATIONS 217,870 1,488,846 628,845 2,217,533 8,553,621 7,013,696
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (1,043,518) (997,172) (117,430) (182,284) (274,031) (294,531)
In excess of net investment
income -- -- (5,289) -- (14,031) (21,819)
From net capital gains (47,637) -- (1,026,461) (1,415,785) (1,212,356) (507,110)
In excess of net capital
gains -- -- -- -- -- --
--------------- --------------- ------------- ------------- ----------- -----------
TOTAL DISTRIBUTIONS TO
SHAREHOLDERS (1,091,155) (997,172) (1,149,180) (1,598,069) (1,500,418) (823,460)
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 12,183,581 9,840,352 2,157,731 5,132,257 32,540,631 26,967,395
Distributions reinvested 767,994 784,777 1,090,457 1,417,432 1,391,632 770,612
Paid-in capital portion of
short-term trading fee -- -- 615 3,516 10,142 12,410
--------------- --------------- ------------- ------------- ----------- -----------
12,951,575 10,625,129 3,248,803 6,553,205 33,942,405 27,750,417
Cost of shares redeemed (9,436,152) (8,044,567) (3,932,219) (5,650,697) (22,464,397) (24,748,051)
--------------- --------------- ------------- ------------- ----------- -----------
NET INCREASE (DECREASE)
IN NET ASSETS FROM
CAPITAL SHARE
TRANSACTIONS 3,515,423 2,580,562 (683,416) 902,508 11,478,008 3,002,366
NET INCREASE (DECREASE) IN NET
ASSETS 2,642,138 3,072,236 (1,203,751) 1,521,972 18,531,211 9,192,602
NET ASSETS
Beginning of year 21,399,643 18,327,407 11,136,821 9,614,849 34,670,974 25,478,372
END OF YEAR $ 24,041,781 $ 21,399,643 $ 9,933,070 $ 11,136,821 $53,202,185 $34,670,974
Undistributed net investment
income, end of year $ 6,566 $ 4,095 $ (5,289) $ (2,236) $ (14,031) $ (16,211)
=============== =============== ============= ============= =========== ===========
CAPITAL SHARE ACTIVITY
Shares sold 988,731 808,610 147,478 337,095 820,839 781,985
Shares reinvested 64,403 64,542 78,865 104,459 35,559 22,147
Shares redeemed (768,823) (661,154) (272,413) (378,119) (561,919) (723,425)
--------------- --------------- ------------- ------------- ----------- -----------
NET SHARE ACTIVITY 284,311 211,998 (46,070) 63,435 294,479 80,707
=============== =============== ============= ============= =========== ===========
</TABLE>
See accompanying notes to financial statements.
90 AND 91
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
CHINA REGION
REAL ESTATE FUND OPPORTUNITY FUND GLOBAL RESOURCES FUND
------------------------------ ----------------------------- ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, 1999 JUNE 30, 1998 JUNE 30, 1999 JUNE 30, 1998 JUNE 30, 1999 JUNE 30, 1998
-------------- -------------- -------------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS INVESTMENT OPERATIONS:
Net investment income
(loss) $ 122,234 $ 296,173 $ (189,176) $ 122,601 $ (291,122) $ (447,823)
Net realized gain (loss) (600,208) 2,410,511 (5,972,951) (357,192) (5,093,996) (433,737)
Net unrealized appreciation
(depreciation) (528,000) (2,358,454) 12,406,604 (19,946,443) 4,445,370 (8,934,964)
------------ ------------ ------------ ------------ ------------ ------------
NET INCREASE (DECREASE)
IN NET ASSETS FROM
INVESTMENT OPERATIONS (1,005,974) 348,230 6,244,477 (20,181,034) (939,748) (9,816,524)
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (111,679) (407,325) -- (207,619) -- --
In excess of net investment
income (15,242) -- (121,787) -- -- --
From net capital gains (1,474,435) (368,775) -- -- -- (160,639)
In excess of net capital
gains (600,208) -- -- -- (944,679) (3,620,754)
------------ ------------ ------------ ------------ ------------ ------------
TOTAL DISTRIBUTIONS TO
SHAREHOLDERS (2,201,564) (776,100) (121,787) (207,619) (944,679) (3,781,393)
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 2,473,754 10,993,821 22,272,330 36,040,287 8,066,887 29,416,915
Distributions reinvested 2,019,625 739,094 117,943 198,979 883,249 3,469,677
Paid-in capital portion of
short-term trading fee 377 127 138,153 263,326 12,487 22,484
------------ ------------ ------------ ------------ ------------ ------------
4,493,756 11,733,042 22,528,426 36,502,592 8,962,623 32,909,076
Cost of shares redeemed (5,584,443) (13,833,733) (18,954,748) (38,753,107) (9,072,387) (30,336,586)
------------ ------------ ------------ ------------ ------------ ------------
NET INCREASE (DECREASE)
IN NET ASSETS FROM
CAPITAL SHARE
TRANSACTIONS (1,090,687) (2,100,691) 3,573,678 (2,250,515) (109,764) 2,572,490
NET INCREASE (DECREASE) IN NET
ASSETS (4,298,225) (2,528,561) 9,696,368 (22,639,168) (1,994,191) (11,025,427)
NET ASSETS
Beginning of year 11,368,295 13,896,856 19,459,845 42,099,013 18,957,942 29,983,369
END OF YEAR $ 7,070,070 $ 11,368,295 $ 29,156,213 $ 19,459,845 $ 16,963,751 $ 18,957,942
Undistributed net investment
income, end of year $ (13,248) $ (10,555) $ 62,826 $ (119,508) $ (6,875) $ (50,365)
============ ============ ============ ============ ============ ============
CAPITAL SHARE ACTIVITY
Shares sold 237,613 709,555 5,390,405 5,562,694 2,135,644 3,859,064
Shares reinvested 218,102 49,283 30,715 34,307 257,507 580,214
Shares redeemed (528,888) (904,995) (4,950,301) (5,740,651) (2,406,976) (4,286,561)
------------ ------------ ------------ ------------ ------------ ------------
NET SHARE ACTIVITY (73,173) (146,157) 470,819 (143,650) (13,825) 152,717
============ ============ ============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
92 AND 93
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
WORLD GOLD FUND GOLD SHARES FUND
--------------------------------- -----------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, 1999 JUNE 30, 1998 JUNE 30, 1999 JUNE 30, 1998
--------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS FROM INVESTMENT
OPERATIONS:
Net investment income (loss) $ 298,687 $ (1,126,252) $ (1,203,899) $ 442,921
Net realized gain (loss) (26,240,091) (5,618,417) (10,568,253) (51,900,714)
Net unrealized appreciation
(depreciation) 6,443,572 (60,561,663) 10,563,743 18,623,002
--------------- ------------- --------------- ---------------
NET INCREASE (DECREASE)
IN NET ASSETS FROM
INVESTMENT OPERATIONS (19,497,832) (67,306,332) (1,208,409) (32,834,791)
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (130,356) -- -- (1,269,718)
In excess of net investment
income (8,874) (1,637,556) -- (131,682)
From net capital gains -- -- -- --
In excess of net capital
gains -- -- -- --
--------------- ------------- --------------- ---------------
TOTAL DISTRIBUTIONS TO
SHAREHOLDERS (139,230) (1,637,556) -- (1,401,400)
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 1,350,820,121 735,521,254 914,373,012 2,855,272,222
Distributions reinvested 131,031 1,481,375 -- 1,265,832
Paid-in capital portion of
short-term trading fee 3,235,444 1,423,972 2,027,603 6,755,275
--------------- ------------- --------------- ---------------
1,354,186,596 738,426,601 916,400,615 2,863,293,329
Cost of shares redeemed (1,388,251,977) $(707,189,284) (923,157,109) (2,862,329,383)
--------------- ------------- --------------- ---------------
NET INCREASE (DECREASE)
IN NET ASSETS FROM
CAPITAL SHARE
TRANSACTIONS (34,065,381) 31,237,317 (6,756,494) 963,946
NET INCREASE (DECREASE) IN NET
ASSETS (53,702,443) (37,706,571) (7,964,903) (33,272,245)
NET ASSETS
Beginning of year 149,759,314 187,465,885 46,250,549 79,522,794
END OF YEAR $ 96,056,871 $ 149,759,314 $ 38,285,646 $ 46,250,549
Undistributed net investment
income, end of year $ 3,484,235 $ (168,311) $ (263,967) $ (177,162)
=============== ============= =============== ===============
CAPITAL SHARE ACTIVITY
Shares sold 147,284,153 61,013,502 241,479,468 441,295,800
Shares reinvested 13,969 132,859 -- 222,076
Shares redeemed (150,152,337) (57,712,475) (242,511,961) (437,784,893)
--------------- ------------- --------------- ---------------
NET SHARE ACTIVITY (2,854,215) 3,433,886 (1,032,493) 3,732,983
=============== ============= =============== ===============
</TABLE>
See accompanying notes to financial statements.
94 AND 95
<PAGE>
NOTES TO FINANCIAL STATEMENTS June 30, 1999
NOTE 1: SIGNIFICANT ACCOUNTING POLICIES
U.S. Global Investors Funds (Trust) is organized as a Massachusetts business
trust, consisting of eleven separate funds (Funds), as follows: U.S. Treasury
Securities Cash, U.S. Government Securities Savings, Near-Term Tax Free, Tax
Free, Income, All American Equity, Real Estate, China Region Opportunity, Global
Resources, World Gold and Gold Shares. The Trust is a diversified, open-end
management investment company registered under the Investment Company Act of
1940, as amended.
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 or over-the-counter at the last sales price reported by the security's
primary exchange at the time of daily valuation. Securities for which no sale
was reported are valued at the mean between the last reported bid and asked
prices or using quotes provided by principal market makers. Short-term
investments with effective maturities of sixty days or less at the date of
purchase and investments of U.S. Treasury Securities Cash and U.S. Government
Securities Savings Funds 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. FAIR VALUED SECURITIES
Securities for which market quotations are not readily available or which are
subject to legal restrictions are valued at their fair value as determined in
good faith under consistently applied procedures under the general supervision
of the Board of Trustees. The following factors are generally considered in
determining fair value: nature and duration of any trading 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. The fair values
may differ from what would have been used had a broader market for these
securities existed.
C. SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are accounted for on trade date. 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
96
<PAGE>
NOTES TO FINANCIAL STATEMENTS June 30, 1999
the information becomes available to the Funds. Interest income, which may
include original issue discount, 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 the liquid assets on their books to collateralize the obligation until
trade settlement. Such investments are 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 joint tri-party repurchase
agreements with other Funds under common management 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 to manage their exposure
to stock or commodity markets as well as fluctuations in interest and currency
conversion rates. Written options include a risk of loss in excess of the option
premium. The use of options carries the risk of a change in value of the
underlying instruments, an illiquid secondary market, or that the counterparty
may fail to perform its obligations. 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.
<TABLE>
<CAPTION>
INCOME FUND ALL AMERICAN EQUITY GLOBAL RESOURCES FUND
-------------------- -------------------- --------------------
PREMIUMS PREMIUMS PREMIUMS
NUMBER OF PAID/ NUMBER OF PAID/ NUMBER OF PAID/
CONTRACTS (RECEIVED) CONTRACTS (RECEIVED) CONTRACTS (RECEIVED)
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Options outstanding at
June 30, 1998 -- $ -- -- $ -- -- $ --
Options written (230) (52,246) (266) (47,920) (295) (35,831)
Options purchased -- -- 20 780 300 30,075
Options terminated in
closing purchase
transactions 95 27,839 106 16,026 245 31,951
Options sold -- -- (20) (780) (300) (30,075)
Close of written
options 30 8,035 110 23,294 30 1,440
Options expired 105 16,372 30 3,660 20 2,440
-------- -------- -------- -------- -------- --------
Options outstanding at
June 30, 1999 -- $ -- (20) $ (4,940) -- $ --
======== ======== ======== ======== ======== ========
</TABLE>
97
<PAGE>
NOTES TO FINANCIAL STATEMENTS June 30, 1999
WORLD GOLD FUND GOLD SHARES FUND
--------------------------- -------------------------
NUMBER OF PREMIUMS NUMBER OF PREMIUMS
CONTRACTS PAID/(RECEIVED) CONTRACTS PAID/(RECEIVED)
Options outstanding at
June 30, 1998 900 $ 386,450 1,200 $ 834,550
Options written (393) (37,790) (95) (7,758)
Options purchased 32,776 11,488,288 14,920 5,531,955
Options terminated in
closing purchase
transactions 293 23,715 95 7,758
Options sold (14,450) (4,959,134) (7,200) (3,181,770)
Close of written
options -- -- -- --
Options expired (4,650) (690,425) (2,250) (333,250)
------- ----------- ------ -----------
Options outstanding at
June 30, 1999 14,476 $ 6,211,104 6,670 $ 2,851,485
======= =========== ====== ===========
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 to U.S. dollars 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 unrealized foreign
currency gains or losses are reported separately.
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
substantially all of their taxable income to shareholders. Accordingly, no
provision for federal income taxes is required.
H. 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
which 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. The U.S. Treasury Securities
Cash and U.S. Government Securities Savings Funds 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. Dividends and distributions payable at period end were
processed for reinvestment on the following business day.
98
<PAGE>
NOTES TO FINANCIAL STATEMENTS June 30, 1999
I. 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 costs; any excess is treated as paid-in capital. Expense
offset arrangements have been made with the Funds' custodian so the custodian
fees may be paid indirectly by credits earned on the Funds' cash balances. Such
deposit arrangements are an alternative to overnight investments.
J. 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
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
NOTE 2: RELATED PARTY TRANSACTIONS
U.S. Global Investors, Inc. (Adviser), under an investment advisory agreement
with the Trust in effect through February 29, 2000, furnishes management and
investment advisory services and, subject to the supervision of the Trustees,
directs the investments of each Fund according to its investment objectives,
policies and limitations. The Adviser 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 Adviser.
99
<PAGE>
NOTES TO FINANCIAL STATEMENTS June 30, 1999
For the services of the Adviser, each Fund pays a management fee based upon 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 Equity, .75% of the first $250,000,000
Income, Tax Free and Real Estate and .50% of the excess
U.S. Treasury Securities Cash and .50% of the first $250,000,000
U.S. Government Securities and .375% of the excess
Savings
World Gold and Global Resources 1.00% of the first $250,000,000,
and .50% of the excess
Near-Term Tax Free .50%
China Region Opportunity 1.25%
The Adviser has voluntarily agreed to reimburse specific Funds so that their
total operating expenses will not exceed certain annual percentages of average
net assets. The expenses for the year ended June 30, 1999, were voluntarily
limited as follows: All American Equity at 1.00%, Tax Free and Near-Term Tax
Free at .70% and U.S. Government Securities Savings at .40%.
United Shareholder Services, Inc. (USSI), a wholly-owned subsidiary of the
Adviser, is the transfer agent for the Funds. Each Fund pays an annual fee based
on its 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 the Funds. Effective, November 1, 1997, the Funds
engaged Brown Brothers Harriman & Co. as the custodian, fund accounting and
administration service agent with a fee structure based on average net assets of
the Funds. Additionally, the Adviser was reimbursed at cost for in-house legal
and internal administration services pertaining to each Fund during the year
ended June 30, 1999, in the amounts of $223,403 and $54,820, respectively.
During the year ended June 30, 1999, A & B Mailers, Inc., a wholly-owned
subsidiary of the Adviser, was paid $716,690 for mailing services provided to
the Funds.
The six independent Trustees receive compensation for serving on the Board. The
Chairman and members of special committees receive additional compensation.
Trustees are also reimbursed for out-of-pocket expenses incurred while attending
meetings. Please refer to the Statement of Operations for Trustees' fees and
expenses. Frank E. Holmes receives no compensation for serving on the Board.
100
<PAGE>
NOTES TO FINANCIAL STATEMENTS June 30, 1999
NOTE 3: INVESTMENT ACTIVITY
Purchases and sales of long-term securities for the year ended June 30, 1999,
are summarized as follows:
FUND PURCHASES SALES
- -------------------------------- ------------ ------------
Near-Term Tax Free $ 2,742,673 $ 2,864,061
Tax Free 12,614,774 9,128,602
Income 10,869,634 11,315,202
All American Equity 22,052,790 9,614,762
Real Estate 3,941,420 5,693,491
China Region Opportunity 2,059,520 3,080,897
Global Resources 24,107,721 21,678,029
World Gold 244,173,224 261,427,239
Gold Shares 134,614,436 141,824,936
U.S. Treasury Securities Cash and U.S. Government Securities Savings held only
short-term investments. The Funds neither purchased nor sold long-term U.S.
government securities during the year.
Investments in foreign issuers as a percent of total investments at June 30,
1999 were: 11.38% of Real Estate, 81.20% of China Region Opportunity, 9.34% of
Global Resources, 71.61% of World Gold and 78.18% of Gold Shares.
The following table presents the income tax basis of the securities owned at
June 30, 1999, and the tax basis components of net unrealized appreciation or
depreciation:
GROSS GROSS NET UNREALIZED
AGGREGATE UNREALIZED UNREALIZED APPRECIATION
FUND COST APPRECIATION DEPRECIATION (DEPRECIATION)
- ------------------- ------------ ------------ ------------- --------------
U.S. Treasury
Securities Cash $162,196,503 $ -- $ -- $ --
U.S. Government
Securities Savings 795,955,317 -- -- --
Near-Term Tax Free 7,304,767 57,107 (56,292) 815
Tax Free 24,093,183 360,239 (613,758) (253,519)
Income 8,800,648 1,467,541 (60,062) 1,407,479
All American Equity 31,659,369 22,246,134 (716,023) 21,530,111
Real Estate 7,902,042 177,982 (905,598) (727,616)
China Region
Opportunity 29,613,288 4,028,181 (5,758,190) (1,730,009)
Global Resources 16,338,745 1,433,307 (854,304) 579,003
World Gold 112,044,585 9,255,929 (28,062,066) (18,806,137)
Gold Shares 38,719,171 917,927 (5,973,043) (5,055,116)
101
<PAGE>
NOTES TO FINANCIAL STATEMENTS June 30, 1999
Net realized capital loss carryforwards, for federal income tax purposes, may be
used to offset current or future capital gains until expiration. The loss
carryforwards and related expiration dates for each fund, as of June 30, 1999,
are as follows:
LOSS EXPIRATION
FUND CARRYFORWARDS DATE
- --------------------------------------------------------------------------------
U.S. Treasury Securities Cash $ 7,531 2007
U.S. Government Securities Savings 1,629,392 2003 - 2005
Near-Term Tax Free 200,511 2002 - 2003
Real Estate 360,575 2007
China Region Opportunity 6,602,805 2004 - 2007
Global Resources 6,668,259 2007
World Gold 42,669,885 2000 - 2007
Gold Shares 193,554,980 2000 - 2007
POST OCTOBER 31,
POST OCTOBER 31, 1998 CURRENCY LOSS
FUND 1998 CAPITAL LOSSES DEFERRAL
- --------------------------------------------------------------------------------
U.S. Treasury Securities Cash $ 10,657 $ --
Real Estate 241,627 --
China Region Opportunity 4,144,732 233
Global Resources 2,907,762 6,875
World Gold 12,564,904 122,651
Gold Shares 2,787,360 185,685
The amounts above, in accordance with tax rules, are deemed to have occurred on
July 1, 1999.
NOTE 4: RISKS OF CONCENTRATIONS
China Region Opportunity may be exposed to risks not typically associated with
investments in the United States, due to concentration of 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.
NOTE 5: CAPITAL STOCK
On May 22, 1998, the Trustees declared a 1-for-10 reverse stock split, with an
effective date of July 1, 1998, for the shareholders of the Gold Shares Fund.
All capital share activity and per share data for the Gold Shares Fund have been
restated to reflect the reverse stock split.
NOTE 6: REVOLVING DEMAND NOTES
On November 6, 1997, each of the Funds entered into revolving demand notes with
Brown Brothers Harriman & Co. as denoted below subject to the borrowing
102
<PAGE>
NOTES TO FINANCIAL STATEMENTS June 30, 1999
limits as set forth in the Funds' registration statement. These notes were
collateralized by any or all of the securities held by Brown Brothers Harriman &
Co. as the Funds' custodian. Borrowing under these notes was charged interest at
the overnight Federal Funds Rate plus 1.75%.
AMOUNT AVAILABLE UNDER
FUND REVOLVING DEMAND NOTE
- --------------------------------------------------------------------------------
U.S. Treasury Securities Cash $ 30,000,000
U.S. Government Securities Savings 30,000,000
Near-Term Tax Free 5,000,000
Tax Free 5,000,000
Income 5,000,000
All American Equity 5,000,000
Real Estate 5,000,000
China Region Opportunity 5,000,000
Global Resources 5,000,000
World Gold 15,000,000
Gold Shares 100,000,000
U.S. Global Investors Funds, along with other Funds under common management,
currently participate in an $85 million revolving credit facility (Facility)
dated March 1, 1999. The Facility is intended to provide short-term financing,
if necessary, subject to certain restrictions in connection with abnormal
redemption activity. Commitment fees related to the Facility are paid by the
participating Funds. Borrowings under these notes will be charged interest at
the current overnight Federal Funds Rate plus 2.00%. There were no borrowings
under the outstanding Facility as of June 30, 1999.
NOTE 7: SHARES OF BENEFICIAL INTEREST
At June 30, 1999, individual shareholders holding more than 5% of outstanding
shares comprised 14.33% of the Near-Term Tax Free Fund.
103
<PAGE>
FINANCIAL HIGHLIGHTS
U.S. TREASURY SECURITIES CASH FUND
<TABLE>
<CAPTION>
FOR A CAPITAL SHARE OUTSTANDING DURING THE YEAR ENDED JUNE 30,
1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
<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 .04 .04 .04 .04 .04
Net realized and unrealized
gain -- -- -- -- --
--------- --------- --------- --------- ---------
Total from investment
activities .04 .04 .04 .04 .04
--------- --------- --------- --------- ---------
Distributions
From net investment income (.04) (.04) (.04) (.04) (.04)
From net realized gains -- -- -- -- --
--------- --------- --------- --------- ---------
Total distributions (.04) (.04) (.04) (.04) (.04)
NET ASSET VALUE, END OF YEAR $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN
(excluding account fees) 3.92% 4.55% 4.35% 4.54% 4.43%
Ratios to Average Net
Assets (a):
Net investment income 3.87% 4.37% 4.22% 4.42% 4.32%
Total expenses 1.01% .96% 1.04% 1.03% .97%
Expenses reimbursed or offset -- -- -- -- --
Net expenses 1.01% .96% 1.04% 1.03% .97%
Net assets, end of year
(in thousands) $ 155,767 $ 149,421 $ 231,882 $ 188,844 $ 190,373
(a) Expenses reimbursed or offset reflect reductions to total expenses, as
discussed in the notes to the financial statements. These amounts would
decrease the net investment income ratio had such reductions not occurred.
</TABLE>
See accompanying notes to financial statements.
104
<PAGE>
FINANCIAL HIGHLIGHTS
U.S. GOVERNMENT SECURITIES SAVINGS FUND
<TABLE>
<CAPTION>
FOR A CAPITAL SHARE OUTSTANDING DURING THE YEAR ENDED JUNE 30,
1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
<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 .05 .05 .05 .05 .05
Net realized and unrealized
gain (loss) -- -- -- -- (.01)
--------- --------- --------- --------- ---------
Total from investment
activities .05 .05 .05 .05 .04
--------- --------- --------- --------- ---------
Distributions
From net investment income (.05) (.05) (.05) (.05) (.05)
From net realized gains -- -- -- -- --
--------- --------- --------- --------- ---------
Total distributions (.05) (.05) (.05) (.05) (.05)
Capital contribution by manager -- -- -- -- .01
NET ASSET VALUE, END OF YEAR $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN
(excluding account fees) 4.90% 5.38% 5.27% 5.34% 5.09%(b)
Ratios to Average Net
Assets (a):
Net investment income 4.78% 5.25% 5.13% 5.28% 5.03%
Total expenses .61% .67% .70% .71% .68%
Expenses reimbursed or offset (.30)% (.36)% (.41)% (.45)% (.45)%
Net expenses .31% .31% .29% .26% .23%
Net assets, end of year
(in thousands) $ 790,148 $ 761,518 $ 691,769 $ 588,409 $ 529,372
(a) Expenses reimbursed or offset reflect reductions to total expenses, as
discussed in the notes to the financial statements. These 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
Adviser; otherwise the return would have been 4.19%.
</TABLE>
See accompanying notes to financial statements.
105
<PAGE>
FINANCIAL HIGHLIGHTS
NEAR-TERM TAX FREE FUND
<TABLE>
<CAPTION>
FOR A CAPITAL SHARE OUTSTANDING DURING THE YEAR ENDED JUNE 30,
1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
YEAR $ 10.64 $ 10.49 $ 10.38 $ 10.47 $ 10.39
Investment Activities
Net investment income .42 .43 .48 .47 .45
Net realized and unrealized
gain (loss) (.17) .19 .12 (.09) .06
--------- --------- --------- --------- ---------
Total from investment
activities .25 .62 .60 .38 .51
--------- --------- --------- --------- ---------
Distributions
From net investment income (.42) (.47) (.49) (.47) (.43)
In excess of net investment
income -- -- -- -- --
From net realized gains -- -- -- -- --
In excess of net realized
gains -- -- -- -- --
--------- --------- --------- --------- ---------
Total distributions (.42) (.47) (.49) (.47) (.43)
NET ASSET VALUE, END OF YEAR $ 10.47 $ 10.64 $ 10.49 $ 10.38 $ 10.47
TOTAL RETURN
(excluding account fees) 2.35% 6.02% 5.85% 3.68% 5.02%
Ratios to Average Net
Assets (a):
Net investment income 3.93% 4.12% 4.67% 4.41% 4.25%
Total expenses 2.25% 1.83% 1.92% 1.75% 1.62%
Expenses reimbursed or offset (1.55)% (1.13)% (1.52)% (1.23)% (1.42)%
Net expenses .70% .70% .40% .52% .20%
Portfolio turnover rate 38% 39% 103% 83% 53%
Net assets, end of year
(in thousands) $ 7,411 $ 8,061 $ 7,360 $ 6,545 $ 7,128
(a) Expenses reimbursed or offset reflect reductions to totalexpenses, as
discussed in the notes to the financial statements. These amounts would
decrease the net investment income ratio had such reductions not occurred.
</TABLE>
See accompanying notes to financial statements.
106
<PAGE>
FINANCIAL HIGHLIGHTS
TAX FREE FUND
<TABLE>
<CAPTION>
FOR A CAPITAL SHARE OUTSTANDING DURING THE YEAR ENDED JUNE 30,
1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
YEAR $ 12.20 $ 11.89 $ 11.58 $ 11.55 $ 11.40
Investment Activities
Net investment income .55 .57 .59 .59 .64
Net realized and unrealized
gain (loss) (.37) .33 .31 .01 .18
--------- --------- --------- --------- ---------
Total from investment
activities .18 .90 .90 .60 .82
--------- --------- --------- --------- ---------
Distributions
From net investment income (.55) (.59) (.59) (.57) (.64)
In excess of net investment
income -- -- -- -- (.03)
From net realized gains (.03) -- -- -- --
In excess of net realized
gains -- -- -- -- --
--------- --------- --------- --------- ---------
Total distributions (.58) (.59) (.59) (.57) (.67)
NET ASSET VALUE, END OF YEAR $ 11.80 $ 12.20 $ 11.89 $ 11.58 $ 11.55
TOTAL RETURN
(excluding account fees) 1.39% 7.71% 7.93% 5.25% 7.51%
Ratios to Average Net
Assets (a):
Net investment income 4.54% 4.77% 5.00% 5.06% 5.62%
Total expenses 1.45% 1.45% 1.46% 1.44% 1.49%
Expenses reimbursed or offset (.75)% (.75)% (1.06)% (1.08)% (1.27)%
Net expenses .70% .70% .40% .36% .22%
Portfolio turnover rate 42% 49% 87% 69% 22%
Net assets, end of year
(in thousands) $ 24,042 $ 21,400 $ 18,327 $ 19,949 18,613
(a) Expenses reimbursed or offset reflect reductions to total expenses, as
discussed in the notes to the financial statements. These amounts would
decrease the net investment income ratio had such reductions not occurred.
</TABLE>
See accompanying notes to financial statements.
107
<PAGE>
FINANCIAL HIGHLIGHTS
INCOME FUND
<TABLE>
<CAPTION>
FOR A CAPITAL SHARE OUTSTANDING DURING THE YEAR ENDED JUNE 30,
1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
YEAR $ 15.32 $ 14.49 $ 14.94 $ 13.35 $ 12.57
Investment Activities
Net investment income .17 .23 .31 .35 .35
Net realized and unrealized
gain .72 2.84 1.77 1.84 .79
--------- --------- --------- --------- ---------
Total from investment
activities .89 3.07 2.08 2.19 1.14
--------- --------- --------- --------- ---------
Distributions
From net investment income (.17) (.28) (.27) (.35) (.34)
In excess of net investment
income -- -- -- -- --
From net realized gains (1.45) (1.96) (2.26) (.25) (.02)
In excess of net realized
gains -- -- -- -- --
--------- --------- --------- --------- ---------
Total distributions (1.62) (2.24) (2.53) (.60) (.36)
NET ASSET VALUE, END OF YEAR $ 14.59 $ 15.32 $ 14.49 $ 14.94 $ 13.35
TOTAL RETURN
(excluding account fees) 6.50% 23.92% 15.58% 16.60% 9.31%
Ratios to Average Net
Assets (a):
Net investment income 1.15% 1.54% 2.18% 2.45% 2.59%
Total expenses 2.56% 2.14% 2.20% 2.10% 2.01%
Expenses reimbursed or offset -- -- (.01)% (.02)% (.03)%
Net expenses 2.56% 2.14% 2.19% 2.08% 1.98%
Portfolio turnover rate 101% 29% 88% 51% 7%
Net assets, end of year
(in thousands) $ 9,933 $ 11,137 $ 9,615 $ 9,698 $ 10,230
(a) Expenses reimbursed or offset reflect reductions to total expenses, as
discussed in the notes to the financial statements. These amounts would
decrease the net investment income ratio had such reductions not occurred.
</TABLE>
See accompanying notes to financial statements.
108
<PAGE>
FINANCIAL HIGHLIGHTS
ALL AMERICAN EQUITY FUND
<TABLE>
<CAPTION>
FOR A CAPITAL SHARE OUTSTANDING DURING THE YEAR ENDED JUNE 30,
1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
YEAR $ 38.80 $ 31.34 $ 24.55 $ 20.08 $ 19.52
Investment Activities
Net investment income .26 .38 .38 .41 .44
Net realized and unrealized
gain 7.10 8.06 7.64 4.44 2.68
--------- --------- --------- --------- ---------
Total from investment
activities 7.36 8.44 8.02 4.85 3.12
--------- --------- --------- --------- ---------
Distributions
From net investment income (.25) (.37) (.43) (.38) (.39)
In excess of net investment
income (.01) (.03) -- -- --
From net realized gains (1.12) (.58) (.80) -- --
In excess of net realized
gains -- -- -- -- (2.17)
--------- --------- --------- --------- ---------
Total distributions (1.38) (.98) (1.23) (.38) (2.56)
NET ASSET VALUE, END OF YEAR $ 44.78 $ 38.80 $ 31.34 $ 24.55 $ 20.08
TOTAL RETURN
(excluding account fees) 19.49% 27.31% 33.68% 24.31% 17.98%
Ratios to Average Net
Assets (a):
Net investment income .66% 1.03% 1.51% 1.84% 2.33%
Total expenses 1.56% 1.61% 1.81% 1.90% 2.17%
Expenses reimbursed or offset (.56)% (.64)% (1.14)% (1.22)% (1.47)%
Net expenses 1.00% .97% .67% .68% .70%
Portfolio turnover rate 25% 24% 7% 16% 97%
Net assets, end of year
(in thousands) $ 53,202 $ 34,671 $ 25,478 $ 15,220 $ 11,931
(a) Expenses reimbursed or offset reflect reductions to total expenses, as
discussed in the notes to the financial statements. These amounts would
decrease the net investment income ratio had such reductions not occurred.
</TABLE>
See accompanying notes to financial statements.
109
<PAGE>
FINANCIAL HIGHLIGHTS
REAL ESTATE FUND
<TABLE>
<CAPTION>
FOR A CAPITAL SHARE OUTSTANDING DURING THE YEAR ENDED JUNE 30,
1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
YEAR $ 13.68 $ 14.22 $ 10.97 $ 9.80 $ 9.86
Investment Activities
Net investment income .16 .27 .40 .42 .23
Net realized and unrealized
gain (loss) (1.39) .03 3.15 1.27 (.13)
--------- --------- --------- --------- ---------
Total from investment
activities (1.23) .30 3.55 1.69 .10
--------- --------- --------- --------- ---------
Distributions
From net investment income (.15) (.39) (.30) (.39) (.16)
In excess of net investment
income (.02) -- -- -- --
From net realized gains (2.10) (.45) -- -- --
In excess of net realized
gains (.85) -- -- -- --
Tax return of capital -- -- -- (.13) --
--------- --------- --------- --------- ---------
Total distributions (3.12) (.84) (.30) (.52) (.16)
NET ASSET VALUE, END OF YEAR $ 9.33 $ 13.68 $ 14.22 $ 10.97 $ 9.80
TOTAL RETURN
(excluding account fees) (8.44)% 1.39% 32.44% 17.34% 1.09%
Ratios to Average Net
Assets (a):
Net investment income 1.40% 2.05% 3.19% 3.63% 2.22%
Total expenses 3.21% 2.01% 1.82% 2.27% 1.95%
Expenses reimbursed or offset (.01)% (.04)% (.02)% (.01)% (.03)%
Net expenses 3.20% 1.97% 1.80% 2.26% 1.92%
Portfolio turnover rate 54% 95% 118% 108% 48%
Net assets, end of year
(in thousands) $ 7,070 $ 11,368 $ 13,897 $ 8,220 $ 9,169
(*) Effective May 1, 1998, the fund changed to a new sub-adviser, Goodman & Co.
(a) Expenses reimbursed or offset reflect reductions to total expenses, as
discussed in the notes to the financial statements. These amounts would
decrease the net investment income ratio had such reductions not occurred.
</TABLE>
See accompanying notes to financial statements.
110
<PAGE>
FINANCIAL HIGHLIGHTS
CHINA REGION OPPORTUNITY FUND
<TABLE>
<CAPTION>
FOR A CAPITAL SHARE OUTSTANDING DURING THE YEAR ENDED JUNE 30,
1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
YEAR $ 4.09 $ 8.60 $ 6.43 $ 6.67 $ 7.75
Investment Activities
Net investment income (loss) (.03) .03 .05 .08 .10
Net realized and unrealized
gain (loss) 1.55 (4.49) 2.15 (.22) (1.09)
--------- --------- --------- --------- ---------
Total from investment
activities 1.52 (4.46) 2.20 (.14) (.99)
--------- --------- --------- --------- ---------
Distributions
From net investment income -- (.05) (.03) (.08) (.09)
In excess of net investment
income (.03) -- -- (.02) --
From net realized gains -- -- -- -- --
--------- --------- --------- --------- ---------
Total distributions (.03) (.05) (.03) (.10) (.09)
NET ASSET VALUE, END OF YEAR $ 5.58 $ 4.09 $ 8.60 $ 6.43 $ 6.67
TOTAL RETURN
(excluding account fees) 37.50% (52.06)% 34.38% (2.07)% (12.79)%
Ratios to Average Net
Assets (a):
Net investment income (loss) (1.18)% .39% .87% 1.24% 1.53%
Total expenses 4.41% 2.60% 2.54% 2.60% 2.51%
Expenses reimbursed or offset -- -- (.32)% (.45)% (.56)%
Net expenses 4.41% 2.60% 2.22% 2.15% 1.95%
Portfolio turnover rate 13% 17% 24% 37% 54%
Net assets, end of year
(in thousands) $ 29,156 $ 19,460 $ 42,099 $ 20,967 $ 19,022
(a) Expenses reimbursed or offset reflect reductions to total expenses, as
discussed in the notes to the financial statements. These amounts would
decrease the net investment income ratio had such reductions not occurred.
</TABLE>
See accompanying notes to financial statements.
111
<PAGE>
FINANCIAL HIGHLIGHTS
GLOBAL RESOURCES FUND
<TABLE>
<CAPTION>
FOR A CAPITAL SHARE OUTSTANDING DURING THE YEAR ENDED JUNE 30,
1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
YEAR $ 4.47 $ 7.33 $ 6.98 $ 5.76 $ 5.74
Investment Activities
Net investment income (loss) (.07) (.01) (.05) (.01) (.03)
Net realized and unrealized
gain (loss) (.15) (1.95) 1.34 1.31 .36
--------- --------- --------- --------- ---------
Total from investment
activities (.22) (1.96) 1.29 1.30 .33
--------- --------- --------- --------- ---------
Distributions
From net investment income -- -- (.04) -- --
In excess of net investment
income -- -- -- (.01) --
From net realized gains -- (.04) (.90) (.07) --
In excess of net realized
gains (.24) (.86) -- -- (.31)
--------- --------- --------- --------- ---------
Total distributions (.24) (.90) (.94) (.08) (.31)
NET ASSET VALUE, END OF YEAR $ 4.01 $ 4.47 $ 7.33 $ 6.98 $ 5.76
TOTAL RETURN
(excluding account fees) (4.12)% (29.79)% 18.96% 22.80% 5.94%
Ratios to Average Net
Assets (a):
Net investment income (loss) (1.83)% (1.51)% (.76)% (.13)% (.60)%
Total expenses 4.34% 2.42% 2.34% 2.58% 2.51%
Expenses reimbursed or offset -- (.04)% (.04)% (.01)% (.02)%
Net expenses 4.34% 2.38% 2.30% 2.57% 2.49%
Portfolio turnover rate 153% 192% 52% 117% 50%
Net assets, end of year
(in thousands) $ 16,964 $ 18,958 $ 29,983 $ 24,534 $ 21,452
(a) Expenses reimbursed or offset reflect reductions to total expenses, as
discussed in the notes to the financial statements. These amounts would
decrease the net investment income ratio had such reductions not occurred.
</TABLE>
See accompanying notes to financial statements.
112
<PAGE>
FINANCIAL HIGHLIGHTS
WORLD GOLD FUND
<TABLE>
<CAPTION>
FOR A CAPITAL SHARE OUTSTANDING DURING THE YEAR ENDED JUNE 30,
1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
YEAR $ 9.86 $ 15.95 $ 21.12 $ 15.81 $ 15.63
Investment Activities
Net investment income (loss) .02 (.05) (.12) (.08) (.12)
Net realized and unrealized
gain (loss) (2.08) (5.90) (3.94) 5.39 .33
--------- --------- --------- --------- ---------
Total from investment
activities (2.06) (5.95) (4.06) 5.31 .21
--------- --------- --------- --------- ---------
Distributions
From net investment income (.01) -- (1.11) -- --
In excess of net investment
income -- (.14) -- -- (.03)
From net realized gains -- -- -- -- --
--------- --------- --------- --------- ---------
Total distributions (.01) (.14) (1.11) -- (.03)
NET ASSET VALUE, END OF YEAR $ 7.79 $ 9.86 $ 15.95 $ 21.12 $ 15.81
TOTAL RETURN
(excluding account fees) (20.89)% (37.41)% (20.10)% 33.59% 1.36%
Ratios to Average Net
Assets (a):
Net investment income (loss) .27% (.72)% (.60)% (.40)% (.66)%
Total expenses 2.18% 1.74% 1.54% 1.53% 1.58%
Expenses reimbursed or offset (.06)% -- (.02)% (.02)% (.03)%
Net expenses 2.12% 1.74% 1.52% 1.51% 1.55%
Portfolio turnover rate 252% 43% 40% 26% 28%
Net assets, end of year
(in thousands) $ 96,057 $ 149,759 $ 187,466 $ 248,781 $ 181,473
(a) Expenses reimbursed or offset reflect reductions to total expenses, as
discussed in the notes to the financial statements. These amounts would
decrease the net investment income ratio had such reductions not occurred.
</TABLE>
See accompanying notes to financial statements.
113
<PAGE>
FINANCIAL HIGHLIGHTS
GOLD SHARES FUND
<TABLE>
<CAPTION>
FOR A CAPITAL SHARE OUTSTANDING DURING THE YEAR ENDED JUNE 30,
1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
YEAR $ 3.79 $ 9.40 $ 18.40 $ 21.40 $ 24.80
Investment Activities
Net investment income (loss) (.11) .01 .40 .50 .60
Net realized and unrealized
gain (loss) (.26) (5.50) (8.90) (3.00) (3.30)
--------- --------- --------- --------- ---------
Total from investment
activities (.37) (5.49) (8.50) (2.50) (2.70)
--------- --------- --------- --------- ---------
Distributions
From net investment income -- (.11) (.50) (.50) (.60)
In excess of net investment
income -- (.01) -- -- (.10)
From net realized gains -- -- -- -- --
--------- --------- --------- --------- ---------
Total distributions -- (.12) (.50) (.50) (.70)
NET ASSET VALUE, END OF YEAR $ 3.42 $ 3.79 $ 9.40 $ 18.40 $ 21.40
TOTAL RETURN
(excluding account fees) (9.76)% (58.83)% (46.49)% (11.73)% (11.21)%
Ratios to Average Net
Assets (a):
Net investment income (loss) (2.88)% .53% 2.68% 1.81% 2.47%
Total expenses 5.59% 2.67% 1.84% 1.58% 1.47%
Expenses reimbursed or offset (.35)% (.20)% (.04)% (.04)% (.05)%
Net expenses 5.24% 2.47% 1.80% 1.54% 1.42%
Portfolio turnover rate 388% 220% 44% 24% 33%
Net assets, end of year
(in thousands) $ 38,286 $ 46,251 $ 79,598 $ 153,839 $ 211,171
The values shown above for the prior periods have been adjusted to reflect
the 1-for-10 reverse stock split, which was effective on July 1, 1998.
(a) Expenses reimbursed or offset reflect reductions to total expenses, as
discussed in the notes to the financial statements. These amounts would
decrease the net investment income ratio had such reductions not occurred.
</TABLE>
See accompanying notes to financial statements.
114
<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 each of the funds constituting U.S.
Global Investors Funds (the "Funds") at June 30, 1999, 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 include
confirmation of securities at June 30, 1999 by correspondence with the custodian
and brokers, provide a reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
August 23, 1999
115
<PAGE>
NOTICE OF CHANGE IN INDEPENDENT ACCOUNTANTS
On July 1, 1999, PricewaterhouseCoopers LLP (PwC) informed the chairman of the
Audit Committee and management of U.S. Global Investors Funds that they declined
to stand for reappointment, upon the completion of the audit of the June 30,
1999 Financial Statements of the Funds. During the two most recent fiscal years
ended June 30, 1999 and June 30, 1998 the audit reports of PwC contained no
adverse opinion or disclaimer of opinion; nor were its reports qualified or
modified as to uncertainty, audit scope, or accounting principle. Further, in
connection with its audits for the two most recent fiscal years ended June 30,
1999 and June 30, 1998 and through August 23, 1999, there were no disagreements
between the Funds and PwC on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure, which if not
resolved to the satisfaction of PwC would have caused it to make reference to
the disagreements in its report of the financial statements for such years.
116
<PAGE>
ADDITIONAL INFORMATION
SHAREHOLDER VOTES
Shareholders voted, during the period, that the Global Resources Fund, World
Gold Fund and Gold Shares Fund are no longer subject to the fundamental
investment restriction, and that they be diversified. Accordingly, the Funds
will be allowed to invest, without limitation, in the securities of any single
issuer, subject to certain limitations of the Internal Revenue Code. The results
of the votes were as follows:
SHARES
SHARES CAST IN
SHARES CAST OPPOSI-
FUND DATE OF VOTE VOTED IN FAVOR TION ABSTAINED
- ---------------- ---------------- --------- --------- ------- ---------
Global Resources April 30, 1999 2,144,787 1,927,802 131,070 85,915
World Gold January 19, 1999 6,001,660 5,491,446 341,621 168,593
Gold Shares January 19, 1999 5,296,026 4,588,781 429,805 277,440
117
<PAGE>
ADDITIONAL INFORMATION
Additional Federal Tax Information
(Unaudited)
The percentage of tax-exempt dividends paid by the Funds for the year ended June
30, 1999, was:
Near-Term Tax Free 93.59%
The percentage of ordinary income dividends paid by the Funds during the year
ended June 30, 1999, which qualify for the Dividends Received Deduction
available to corporate shareholders was:
Income 100.00%
All American Equity 65.15%
Real Estate 93.19%
The Funds hereby designate the following approximate amounts as capital gain
dividends for the purpose of the dividends paid deduction:
Tax Free $ 47,637
Income 973,441
All American 906,566
Real Estate 2,074,643
Global Resources 944,679
In January 2000, the Funds will report on Form 1099 the tax status of all
distributions made during the calendar year 1999. Shareholders should use the
information on Form 1099 for their income tax returns.
118
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE ANNUAL REPORT FILED ON FORM N-SAR AND IS QUALIFIED IN ITS ENTIRETY BY
REFERNCE TO SUCH ANNUAL REPORT ON FORM N-SAR.
</LEGEND>
<CIK> 0000101507
<NAME> U.S. GLOBAL INVESTORS FUNDS
<SERIES>
<NUMBER> 1
<NAME> GOLD SHARES FUND
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> JUN-30-1999
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 37974391
<INVESTMENTS-AT-VALUE> 33664055
<RECEIVABLES> 5234557
<ASSETS-OTHER> 403112
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 39301724
<PAYABLE-FOR-SECURITIES> 826274
<SENIOR-LONG-TERM-DEBT> 0
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<TOTAL-LIABILITIES> 1016078
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<SHARES-COMMON-STOCK> 11183900
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<NET-ASSETS> 38285646
<DIVIDEND-INCOME> 516023
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<EXPENSES-NET> 2193203
<NET-INVESTMENT-INCOME> (1203899)
<REALIZED-GAINS-CURRENT> (10568253)
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<NET-CHANGE-FROM-OPS> (1208409)
<EQUALIZATION> 0
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<NUMBER-OF-SHARES-SOLD> 241479468
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<ACCUMULATED-NII-PRIOR> (177162)
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<EXPENSE-RATIO> 5.24
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE ANNUAL REPORT FILED ON FORM N-SAR AND IS QUALIFIED IN ITS ENTIRETY BY
REFERNCE TO SUCH ANNUAL REPORT ON FORM N-SAR.
</LEGEND>
<CIK> 0000101507
<NAME> U.S. GLOBAL INVESTORS FUNDS
<SERIES>
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<NUMBER> 2
<CURRENCY> U.S. DOLLARS
<S> <C>
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<PERIOD-START> JUL-01-1998
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<GROSS-EXPENSE> 688615
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<PER-SHARE-NAV-BEGIN> 38.80
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE ANNUAL REPORT FILED ON FORM N-SAR AND IS QUALIFIED IN ITS ENTIRETY BY
REFERNCE TO SUCH ANNUAL REPORT ON FORM N-SAR.
</LEGEND>
<CIK> 0000101507
<NAME> U.S. GLOBAL INVESTORS FUNDS
<SERIES>
<NUMBER> 3
<NAME> GLOBAL RESOURCES FUND
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
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<PERIOD-START> JUL-01-1998
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<INVESTMENTS-AT-COST> 1627982
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE ANNUAL REPORT FILED ON FORM N-SAR AND IS QUALIFIED IN ITS ENTIRETY BY
REFERNCE TO SUCH ANNUAL REPORT ON FORM N-SAR.
</LEGEND>
<CIK> 0000101507
<NAME> U.S. GLOBAL INVESTORS FUNDS
<SERIES>
<NUMBER> 5
<NAME> U.S. TREASURY SECURITIES CASH FUND
<CURRENCY> U.S. DOLLARS
<S> <C>
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<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE ANNUAL REPORT FILED ON FORM N-SAR AND IS QUALIFIED IN ITS ENTIRETY BY
REFERNCE TO SUCH ANNUAL REPORT ON FORM N-SAR.
</LEGEND>
<CIK> 0000101507
<NAME> U.S. GLOBAL INVESTORS FUNDS
<SERIES>
<NUMBER> 6
<NAME> INCOME FUND
<CURRENCY> U.S. DOLLARS
<S> <C>
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<PERIOD-START> JUL-01-1998
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
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REFERNCE TO SUCH ANNUAL REPORT ON FORM N-SAR.
</LEGEND>
<CIK> 0000101507
<NAME> U.S. GLOBAL INVESTORS FUNDS
<SERIES>
<NUMBER> 7
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<CURRENCY> U.S. DOLLARS
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE ANNUAL REPORT FILED ON FORM N-SAR AND IS QUALIFIED IN ITS ENTIRETY BY
REFERNCE TO SUCH ANNUAL REPORT ON FORM N-SAR.
</LEGEND>
<CIK> 0000101507
<NAME> U.S. GLOBAL INVESTORS FUNDS
<SERIES>
<NUMBER> 9
<NAME> WORLD GOLD FUND
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THIS FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
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REFERNCE TO SUCH ANNUAL REPORT ON FORM N-SAR.
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<CIK> 0000101507
<NAME> U.S. GLOBAL INVESTORS FUNDS
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<NAME> U.S. GOVERNMENT SECURITIES SAVINGS FUND
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<LEGEND>
THIS FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE ANNUAL REPORT FILED ON FORM N-SAR AND IS QUALIFIED IN ITS ENTIRETY BY
REFERNCE TO SUCH ANNUAL REPORT ON FORM N-SAR.
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<CIK> 0000101507
<NAME> U.S. GLOBAL INVESTORS FUNDS
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<NAME> REAL ESTATE FUND
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<LEGEND>
THIS FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
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REFERNCE TO SUCH ANNUAL REPORT ON FORM N-SAR.
</LEGEND>
<CIK> 0000101507
<NAME> U.S. GLOBAL INVESTORS FUNDS
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<NAME> NEAR-TERM TAX FREE FUND
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE ANNUAL REPORT FILED ON FORM N-SAR AND IS QUALIFIED IN ITS ENTIRETY BY
REFERNCE TO SUCH ANNUAL REPORT ON FORM N-SAR.
</LEGEND>
<CIK> 0000101507
<NAME> U.S. GLOBAL INVESTORS FUNDS
<SERIES>
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<NAME> CHINA REGION OPPORTUNITY FUND
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