PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
ANNUAL REPORT
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Permanent Portfolio Family of Funds, Inc.
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of Permanent Portfolio Family of Funds, Inc.
(comprising, respectively, the Permanent Portfolio, the Treasury Bill Portfolio,
the Versatile Bond Portfolio and the Aggressive Growth Portfolio), as of January
31, 1996, and the related statements of operations for the year then ended, and
the statements of changes in net assets and financial highlights for each of the
two years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits. All periods indicated in the accompanying financial
highlights ending prior to February 1, 1994, were audited by other auditors
whose report dated March 18, 1994, expressed an unqualified opinion on this
information.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
January 31, 1996, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective portfolios constituting Permanent Portfolio Family of Funds,
Inc. as of January 31, 1996, the results of their operations, the changes in
their net assets and their financial highlights for the periods indicated
herein, except as noted above, in conformity with generally accepted accounting
principles.
KPMG PEAT MARWICK LLP
San Francisco, California
March 15, 1996
<PAGE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
STATEMENTS OF ASSETS AND LIABILITIES
January 31, 1996
ASSETS AND LIABILITIES
ASSETS
Investments at market value (Notes 1, 2, 4 & 5):
Investments other than securities:
Gold assets ..............................................................
Silver assets ............................................................
Swiss franc deposits .....................................................
Swiss franc bonds ...........................................................
Stocks of United States and foreign real estate and natural resource companies
Aggressive growth stock investments .........................................
Investment in an affiliate ..................................................
Corporate bonds .............................................................
United States Treasury securities ...........................................
Total investments (identified cost $68,192,094; $113,118,803; $19,681,027;
and $7,726,194, respectively)
Cash ..........................................................................
Accounts receivable for shares of the portfolio sold ..........................
Accrued interest, dividends and foreign taxes receivable ......................
Total assets
LIABILITIES
Bank overdraft ................................................................
Accounts payable for shares of the portfolio redeemed .........................
Accounts payable for investments purchased ....................................
Accrued investment advisory fee ...............................................
Accrued excise tax ............................................................
Total liabilities
Net assets applicable to outstanding shares
NET ASSETS
Capital stock - par value $.001 per share:
Authorized - 100,000,000; 100,000,000; 10,000,000; and 25,000,000 shares,
respectively
Outstanding - 4,076,533; 1,690,168; 354,239; and 272,239 shares,
respectively ..............................................................
Paid-in capital ...............................................................
Undistributed net investment income (Note 1) ..................................
Accumulated net realized gain (loss) on investments ...........................
Accumulated net realized gain on foreign currency transactions ................
Net unrealized appreciation of investments .....................................
Net unrealized appreciation on translation of assets and liabilities in foreign
currencies ....................................................................
Net assets applicable to outstanding shares
Net asset value per share
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
Permanent Portfolio Treasury Bill Portfolio Versatile Bond Portfolio Aggressive Growth Portfolio
------------------- ----------------------- ------------------------ ---------------------------
<C> <C> <C> <C>
$ 15,270,315 $ - $ - $ -
3,913,874 - - -
321,168 - - -
------------ ------------ ------------- ------------
19,505,357 - - -
6,655,985 - - -
11,503,851 - - -
12,033,261 - - 11,068,690
55,358 - - -
800,944 - 18,791,723 -
25,421,316 113,177,760 1,063,012 -
------------ ------------ ------------- ------------
75,976,072 113,177,760 19,854,735 11,068,690
78,626 - - 138,442
130,338 18,334 - 9,500
629,723 1,806,772 332,022 3,852
------------ ------------ ------------- ------------
76,814,759 115,002,866 20,186,757 11,220,484
- 13,701 315 -
3,000 82,144 14,035 -
- - - 142,010
64,854 53,338 10,931 7,498
106,114 186,368 24,309 4,393
------------ ------------ ------------- ------------
173,968 335,551 49,590 153,901
------------ ------------ ------------- ------------
$ 76,640,791 $114,667,315 $ 20,137,167 $ 11,066,583
============ ============ ============= ============
$ 4,077 $ 1,690 $ 354 $ 272
59,926,897 110,283,616 18,426,753 7,610,262
------------ ------------ ------------- ------------
59,930,974 110,285,306 18,427,107 7,610,534
6,927,153 4,340,131 1,672,573 97,512
1,605,027 (17,079) (136,221) 16,041
384,941 - - -
7,783,978 58,957 173,708 3,342,496
8,718 - - -
------------ ------------ ------------- ------------
$ 76,640,791 $114,667,315 $ 20,137,167 $ 11,066,583
============ ============ ============= ============
$18.80 $67.84 $56.85 $40.65
====== ====== ====== ======
</TABLE>
<PAGE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
STATEMENTS OF OPERATIONS
Year ended January 31, 1996
Investment income:
Interest ....................................................................
Dividends ...................................................................
Expenses (Notes 3, 7 & 8):
Investment advisory fee .....................................................
Directors' fees and expenses ................................................
Excise tax ..................................................................
Regulatory expense ..........................................................
Commitment fee ..............................................................
Total expenses
Less waiver of investment advisory fee expense ............................
Net expenses
Net investment income (loss) before foreign income taxes deducted at source
Less foreign income taxes deducted at source, net of refundable taxes .........
Net investment income (loss)
Realized and unrealized gain (loss) on investments and foreign currency (Notes
1, 2, 4 & 5):
Net realized gain (loss) on:
Investments in unaffiliated issuers .........................................
Investments other than securities ............................................
Foreign currency transactions ...............................................
Change in unrealized appreciation (depreciation) of:
Investments .................................................................
Translation of assets and liabilities in foreign currencies .................
Net realized and unrealized gain (loss) on investments
and foreign currency
Net increase in net assets resulting
from operations
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
Permanent Portfolio Treasury Bill Portfolio Versatile Bond Portfolio Aggressive Growth Portfolio
------------------- ---------------------- ------------------------ ---------------------------
<C> <C> <C> <C>
$ 2,583,525 $ 6,615,356 $ 1,325,506 $ 18,254
557,055 - - 83,894
------------ ------------ ------------- ------------
3,140,580 6,615,356 1,325,506 102,148
837,879 1,325,627 245,372 100,276
10,993 17,781 3,264 1,718
108,890 186,368 24,309 4,393
26,100 22,233 1,646 848
10,000 - - -
------------ ------------ ------------- ------------
993,862 1,552,009 274,591 107,235
- 588,270 81,276 -
------------ ------------ ------------- ------------
993,862 963,739 193,315 107,235
------------ ------------ ------------- ------------
2,146,718 5,651,617 1,132,191 (5,087)
15,959 - - -
------------ ------------ ------------- ------------
2,130,759 5,651,617 1,132,191 (5,087)
------------ ------------ ------------- ------------
1,206,285 (4,256) (1,737) 104,190
(186,696) - - -
384,941 - - -
------------ ------------ ------------- ------------
1,404,530 (4,256) (1,737) 104,190
7,555,020 68,077 397,527 2,236,677
(19,075) - - -
------------ ------------ ------------- ------------
8,940,475 63,821 395,790 2,340,867
------------ ------------ ------------- ------------
$ 11,071,234 $ 5,715,438 $ 1,527,981 $ 2,335,780
============ ============ ============= ============
</TABLE>
<PAGE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Permanent Portfolio
-----------------------------------
Year ended Year ended
January 31, 1996 January 31, 1995
---------------- ----------------
<S> <C> <C>
Operations:
Net investment income (loss) .............................................. $ 2,130,759 $ 1,990,773
Net realized gain (loss) on investments ................................... 1,019,589 (209,558)
Net realized gain on foreign currency transactions ........................ 384,941 425,151
Change in unrealized appreciation (depreciation) of investments ........... 7,555,020 (5,998,661)
Change in unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies ........................... (19,075) 27,793
------------ ------------
Net increase (decrease) in net assets resulting from operations 11,071,234 (3,764,502)
Equalization on shares issued and redeemed: ................................. (467,059) 46,544
Distributions to shareholders from:
Net investment income ..................................................... (1,517,212) (949,685)
Net realized gain on investments .......................................... - -
Capital stock transactions exclusive of amounts allocated to undistributed
net investment income (Note 6): ........................................... (4,055,817) (2,765,425)
------------ ------------
Net increase (decrease) in net assets 5,031,146 (7,433,068)
Net assets at beginning of year 71,609,645 79,042,713
------------ ------------
Net assets at end of year (including undistributed net investment income
of $6,927,153 and $6,530,118; $4,340,131 and $4,095,285; $1,672,573 and
$2,043,196; $97,512 and $36,965, respectively) $ 76,640,791 $ 71,609,645
============ ============
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
Treasury Bill Portfolio Versatile Bond Portfolio Aggressive Growth Portfolio
- ------------------------------------ ----------------------------------- --------------------------------------
Year ended Year ended Year ended Year ended Year ended Year ended
January 31, 1996 January 31, 1995 January 31, 1996 January 31, 1995 January 31, 1996 January 31, 1995
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
<C> <C> <C> <C> <C> <C>
$ 5,651,617 $ 4,472,190 $ 1,132,191 $ 1,093,206 $ (5,087) $ (2,937)
(4,256) (12,823) (1,737) (134,484) 104,190 413,502
- - - - - -
68,077 20,468 397,527 (286,684) 2,236,677 (665,360)
- - - - - -
------------ ------------- ------------ ------------ ----------- -----------
5,715,438 4,479,835 1,527,981 672,038 2,335,780 (254,795)
(832,446) (3,116,665) (396,154) (1,606,019) 7,218 (384)
(2,879,288) (1,179,051) (680,753) (578,352) (28,111) (6,071)
- - - (4,906) (385,888) (4,047)
(9,002,323) (12,488,118) (2,543,288) (11,935,372) 2,380,042 (178,351)
------------ ------------- ------------ ------------ ----------- -----------
(6,998,619) (12,303,999) (2,092,214) (13,452,611) 4,309,041 (443,648)
121,665,934 133,969,933 22,229,381 35,681,992 6,757,542 7,201,190
------------ ------------- ------------ ------------ ----------- -----------
$114,667,315 $ 121,665,934 $ 20,137,167 $ 22,229,381 $11,066,583 $ 6,757,542
============ ============= ============ ============ =========== ===========
</TABLE>
<PAGE>
<TABLE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
THE PERMANENT PORTFOLIO
SCHEDULE OF INVESTMENTS
January 31, 1996
<CAPTION>
Quantity Market Value
- ----------------- ------------
<C> <S> <C>
GOLD ASSETS - 19.92% of Total Net Assets
11,997 Troy Oz. Gold bullion (a) ......................................................... $ 4,866,094
24,757 Coins One-ounce gold coins (a) .................................................. 10,334,810
4,297 Units United States Gold Trust (a)(c) ........................................... 69,411
------------
Total Gold Assets (Cost $14,918,799) $ 15,270,315
------------
SILVER ASSETS - 5.11% of Total Net Assets
446,824 Troy Oz. Silver bullion (a) ........................................................ $ 2,486,574
379 Bags Silver coins (a) .......................................................... 1,427,300
------------
Total Silver Assets (Cost $4,643,504) $ 3,913,874
------------
</TABLE>
<TABLE>
<CAPTION>
Principal Amount SWISS FRANC ASSETS - 9.10% of Total Net Assets
- ----------------
<C> <S> <C>
SF 389,352 Swiss francs in interest-bearing bank accounts ............................ $ 321,168
------------
SF 3,700,000 5.250% Swiss Confederation bonds, 02-11-98 ................................ 3,224,491
SF 4,000,000 4.000% Swiss Confederation bonds, 03-10-99 ................................ 3,431,494
------------
Total Swiss Confederation bonds 6,655,985
------------
Total Swiss Franc Assets (Cost $5,677,980) $ 6,977,153
------------
</TABLE>
<TABLE>
<CAPTION>
Number STOCKS OF UNITED STATES AND FOREIGN REAL ESTATE AND NATURAL
Of Shares RESOURCE COMPANIES - 15.01% of Total Net Assets
---------
<C> <S> <C>
NATURAL RESOURCES - 5.59% of Total Net Assets
14,300 Broken Hill Proprietary, Ltd. ............................................. $ 804,375
12,000 Burlington Resources ...................................................... 450,000
17,200 Cypress Amax Minerals Company ............................................ 455,800
11,600 Forest Oil Corporation (a) ................................................ 133,400
12,000 Inco, Ltd. ................................................................ 420,000
40,000 Pogo Producing Company .................................................... 1,155,000
25,600 Santa Fe Energy Resources, Inc. (a) ...................................... 246,400
60,000 Westmoreland Coal Company (a) ............................................. 157,500
10,000 Weyerhaeuser Company ..................................................... 461,250
------------
$ 4,283,725
</TABLE>
Continued on following page.
<PAGE>
<TABLE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
THE PERMANENT PORTFOLIO
SCHEDULE OF INVESTMENTS
January 31, 1996
<CAPTION>
Number
Of Shares Market Value
--------- ------------
<C> <S> <C>
REAL ESTATE - 9.42% of Total Net Assets
14,500 BRE Properties, Inc. Class A .............................................. $ 538,313
13,000 Burnham Pacific Properties, Inc. .......................................... 130,000
19,000 Federal Realty Investment Trust ........................................... 406,125
29,700 HRE Properties ............................................................ 400,950
47,000 IRT Property Company ...................................................... 446,500
34,200 MGI Properties ............................................................ 581,400
21,000 New Plan Realty Trust ..................................................... 462,000
20,100 Pennsylvania Real Estate Investment Trust ................................. 417,075
27,600 Real Estate Investment Trust of California ................................ 565,800
55,000 Security Capital Pacific Trust ............................................ 1,079,375
24,900 Texas Pacific Land Trust .................................................. 647,400
47,200 United Dominion Realty Trust, Inc. ........................................ 708,000
25,500 Washington Real Estate Investment Trust ................................... 417,563
37,300 Western Investment Real Estate Trust ...................................... 419,625
-----------
$ 7,220,126
-----------
Total Stocks of United States and Foreign Real Estate and Natural
Resource Companies (Cost $8,161,741) $11,503,851
-----------
AGGRESSIVE GROWTH STOCK INVESTMENTS, INCLUDING AN INVESTMENT
IN AN AFFILIATE - 15.77% of Total Net Assets
AGGRESSIVE GROWTH STOCK INVESTMENTS - 15.70% of Total Net Assets
CHEMICALS - .67% of Total Net Assets
6,200 Air Products and Chemicals, Inc. ......................................... $ 330,925
9,000 Wellman, Inc. ............................................................ 180,000
-----------
$ 510,925
COMPUTER SOFTWARE - .74% of Total Net Assets
7,000 Autodesk, Inc. ........................................................... $ 211,750
1 Symantec Corporation warrant (a)(e) ...................................... 353,321
-----------
$ 565,071
CONSTRUCTION - .45% of Total Net Assets
2,500 Fluor Corporation ........................................................ $ 167,500
16,900 Manville Corporation warrants (a) ........................................ 57,038
8,000 The Ryland Group, Inc. .................................................... 118,000
-----------
$ 342,538
</TABLE>
Continued on following page.
<PAGE>
<TABLE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
THE PERMANENT PORTFOLIO
SCHEDULE OF INVESTMENTS
January 31, 1996
<CAPTION>
Number
Of Shares Market Value
--------- ------------
<C> <S> <C>
DATA PROCESS1NG - .84% of Total Net Assets
3,900 Hewlett-Packard Company ................................................... $ 330,525
5,300 Seagate Technology, Inc. (a) ............................................. 314,025
----------
$ 644,550
ELECTRICAL AND ELECTRONICS - 2.21% of Total Net Assets
30,600 DSC Communications Corporation (a) ....................................... $ 891,225
10,000 Intel Corporation ........................................................ 552,344
14,500 National Semiconductor Corporation (a) .................................... 250,125
----------
$1,693,694
ENTERTAINMENT AND LEISURE - 2.23% of Total Net Assets
2,500 The Walt Disney Company .................................................. $ 160,625
4,500 Harcourt General, Inc. ................................................... 175,500
24,000 Harrah's Entertainment, Inc. (a) ......................................... 660,000
12,000 Promus Hotel Corporation (a) .............................................. 300,000
12,600 Sizzler International, Inc. .............................................. 44,100
2,100 Tribune Company .......................................................... 131,513
5,900 Viacom, Inc. Class A (a) .................................................. 236,000
----------
$1,707,738
FINANCIAL SERVICES - 1.58% of Total Net Assets
3,000 Bank of New York, Inc. warrants (a) ..................................... $ 123,000
6,525 Bank of Petaluma (a) ...................................................... 92,981
8,000 The Bear Stearns Companies, Inc. ......................................... 184,000
4,000 Morgan Stanley Group, Inc. ............................................... 190,500
17,474 The Charles Schwab Corporation ........................................... 436,850
4,000 State Street Boston Corporation .......................................... 181,500
----------
$1,208,831
MANUFACTURING - 2.84% of Total Net Assets
23,000 Collins Industries, Inc. warrants (a) .................................... $ 719
5,000 Dana Corporation ......................................................... 164,375
20,000 Harley-Davidson, Inc. ..................................................... 690,000
5,100 Harnischfeger Industries, Inc. ............................................ 172,763
3,500 Illinois Tool Works, Inc. ................................................ 214,813
8,495 Mattel, Inc. ............................................................. 273,964
2,000 Nacco Industries, Inc. Class A ........................................... 105,250
8,000 Nacco Industries, Inc. Class B ........................................... 421,000
4,000 Parker Hannifin Corporation .............................................. 136,500
----------
$2,179,384
</TABLE>
Continued on following page.
<PAGE>
<TABLE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
THE PERMANENT PORTFOLIO
SCHEDULE OF INVESTMENTS
January 31, 1996
<CAPTION>
Number
Of Shares Market Value
--------- ------------
<C> <S> <C>
OIL AND OILFIELD SERVICES - .23% of Total Net Assets
20,000 Parker Drilling Company (a) ............................................... $ 115,000
18,200 Wainoco Oil Corporation (a) ............................................... 59,150
-----------
$ 174,150
PHARMACEUTICALS - 1.26% of Total Net Assets
10,000 Abbott Laboratories ....................................................... $ 422,500
1,200 Biogen, Inc. (a) .......................................................... 84,300
1,441 Chiron Corporation (a) .................................................... 165,715
7,000 Genzyme Corporation warrants (a) .......................................... 294,000
-----------
$ 966,515
RETAIL - .39% of Total Net Assets
12,000 Price/Costco, Inc. (a) .................................................... $ 187,500
5,000 Toys "R" Us, Inc. (a) ...................................................... 110,625
-----------
$ 298,125
TRANSPORTATION - .94% of Total Net Assets
12,300 Atlantic Southeast Airlines, Inc. ......................................... $ 226,781
4,600 Kansas City Southern Industries, Inc. ..................................... 209,300
8,000 M.S. Carriers, Inc. (a) .................................................... 128,000
20,000 Mesa Airlines, Inc. (a) .................................................... 161,250
-----------
$ 725,331
MISCELLANEOUS - 1.32% of Total Net Assets
12,000 Bethlehem Steel Corporation (a) ........................................... $ 181,500
5,000 Browning-Ferris Industries, Inc. ........................................... 147,500
7,490 Lockheed Martin Corporation ............................................... 564,559
2,800 Temple-Inland, Inc. ....................................................... 122,850
-----------
$ 1,016,409
-----------
$12,033,261
-----------
INVESTMENT IN AN AFFILIATE - .07% of Total Net Assets
100 World Money Securities, Inc. (a)(b)(e) .................................... $ 55,358
-----------
$ 55,358
-----------
Total Aggressive Growth Stock Investments (Cost$6,837,692),
including an Investment in an Affiliate $12,088,619
-----------
</TABLE>
Continued on following page.
<PAGE>
<TABLE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
THE PERMANENT PORTFOLIO
SCHEDULE OF INVESTMENTS
January 31, 1996
<CAPTION>
Principal Amount Market Value
---------------- ------------
<C> <S> <C>
DOLLAR ASSETS - 34.22% of Total Net Assets
CORPORATE BONDS - 1.05% of Total Net Assets
$ 800,000 5.250% ITT Corporation, 02-15-96 .......................................... $ 800,944
------------
$ 800,944
UNITED STATES TREASURY SECURITIES - 33.17% of Total Net Assets
41,000,000 United States Stripped Principal Only Treasury bonds 6.370%, 05-15-18 (f).. $ 10,125,770
800,000 United States Treasury bonds 6.250%, 08-15-23 ............................ 814,984
1,000,000 United States Treasury notes 5.125%, 03-31-96 ............................. 1,000,220
2,000,000 United States Treasury notes 6.750%, 02-28-97 ............................. 2,037,820
1,200,000 United States Treasury notes 6.125%, 05-31-97 ............................. 1,218,252
300,000 United States Treasury notes 6.000%, 08-31-97 ............................. 304,791
3,000,000 United States Treasury notes 7.750%, 01-31-00 ............................ 3,275,190
3,145,000 United States Treasury bills 4.320%, 02-08-96 (f) ........................ 3,141,979
2,600,000 United States Treasury bills 5.310%, 07-25-96 (f) ........................ 2,532,400
1,000,000 United States Treasury bills 4.670%, 09-19-96 (f) ........................ 969,910
------------
$ 25,421,316
------------
Total Dollar Assets (Cost $27,952,378) $ 26,222,260
------------
Total Portfolio - 99.13% of total net assets (identified cost $68,192,094)(d) $ 75,976,072
Other assets, less liabilities (.87% of total net assets) 664,719
------------
Net assets applicable to outstanding shares $ 76,640,791
============
<FN>
Note:(a) Non-income producing.
(b) Restricted security.
(c) Affiliated investment trust.
(d) Aggregate cost for Federal income tax purposes was $62,212,362.
(e) Market value determined by the Board of Directors.
(f) Interest rate represents yield to maturity.
</FN>
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
THE TREASURY BILL PORTFOLIO
SCHEDULE OF INVESTMENTS
January 31, 1996
<CAPTION>
Principal Amount Market Value
---------------- ------------
<C> <S> <C>
UNITED STATES TREASURY SECURITIES - 98.70% of Total Net Assets
$18,000,000 United States Treasury notes 4.625%, 02-15-96 ............................. $ 17,999,100
22,000,000 United States Treasury notes 4.625%, 02-29-96 ............................. 21,994,940
22,000,000 United States Treasury notes 5.125%, 03-31-96 ............................. 22,004,840
31,000,000 United States Treasury notes 5.500%, 04-30-96 ............................. 31,037,510
7,000,000 United States Treasury notes 4.250%, 05-15-96 ............................. 6,985,860
7,000,000 United States Treasury notes 5.875%, 05-31-96 ............................. 7,019,250
6,000,000 United States Treasury notes 7.500%, 12-31-96 ............................. 6,136,260
-------------
Total Portfolio - 98.70% of total net assets (identified cost $113,118,803)(a) $ 113,177,760
Other assets, less liabilities (1.30% of total net assets) 1,489,555
-------------
Net assets applicable to outstanding shares $ 114,667,315
=============
<FN>
Note:(a) Aggregate cost for Federal income tax purposes.
</FN>
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
THE VERSATILE BOND PORTFOLIO
SCHEDULE OF INVESTMENTS
January 31, 1996
<CAPTION>
Principal Amount Market Value
---------------- ------------
<C> <S> <C>
CORPORATE BONDS - 93.32% of Total Net Assets
AEROSPACE - 9.97% of Total Net Assets
$1,000,000 8.375% Boeing Company, 03-01-96 .......................................... $ 1,002,580
1,000,000 5.650% Lockheed Martin Corporation, 04-01-97 ............................. 1,004,680
------------
$ 2,007,260
BEVERAGES - 11.38% of Total Net Assets
1,275,000 7.750% Coca-Cola Company, 02-15-96 ....................................... $ 1,276,556
1,000,000 7.875% PepsiCo, Inc., 08-15-96 ............................................ 1,014,080
------------
$ 2,290,636
CHEMICALS - 5.07% of Total Net Assets
1,000,000 8.450% DuPont EI DeNemours & Company, 10-15-96 ........................... $ 1,021,860
------------
$ 1,021,860
ENVIRONMENTAL - 5.04% of Total Net Assets
1,000,000 6.375% WMX Technologies, Inc., 07-01-97 ................................... $ 1,015,130
------------
$ 1,015,130
FINANCIAL SERVICES - 15.14% of Total Net Assets
1,000,000 7.375% American General Finance Corporation, 11-15-96 .................... $ 1,016,400
1,000,000 6.875% Associates Corporation of North America, 01-15-97 ................. 1,015,470
1,000,000 7.900% International Lease Finance Company, 10-01-96 ..................... 1,017,490
------------
$ 3,049,360
INSURANCE - 10.29% of Total Net Assets
1,000,000 9.375% Saint Paul Companies, Inc., 06-15-97 .............................. $ 1,051,940
1,000,000 7.625% Travelers Group, Inc., 01-15-97 ................................... 1,020,900
------------
$ 2,072,840
</TABLE>
Continued on following page.
<PAGE>
<TABLE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
THE VERSATILE BOND PORTFOLIO
SCHEDULE OF INVESTMENTS
January 31, 1996
<CAPTION>
Principal Amount Market Value
---------------- ------------
<C> <S> <C>
MEDICAL EQUIPMENT - 5.01% of Total Net Assets
$1,000,000 8.375% Becton, Dickinson & Company, 06-01-96 ............................. $ 1,009,740
------------
$ 1,009,740
PHARMACEUTICALS - 10.02% of Total Net Assets
1,000,000 7.750% Merck & Company, 05-01-96 .......................................... $ 1,005,740
1,000,000 6.500% Pfizer, Inc., 02-01-97 ............................................ 1,012,470
------------
$ 2,018,210
TELECOMMUNICATIONS - 11.33% of Total Net Assets
1,000,000 7.500% Pacific Northwest Bell Telephone Company, 12-01-96 ................ $ 1,018,340
1,250,000 8.300% Southwestern Bell Telephone Company, 06-01-96 ..................... 1,262,287
------------
$ 2,280,627
TOBACCO - 5.04% of Total Net Assets
1,000,000 8.875% Philip Morris Companies, Inc., 07-01-96 ........................... $ 1,014,530
------------
$ 1,014,530
UTILITIES - 5.03% of Total Net Assets
1,000,000 6.125% Southern California Edison Company, 07-15-97 ...................... $ 1,011,530
------------
$ 1,011,530
------------
Total Corporate Bonds (Cost $18,618,904) $ 18,791,723
------------
UNITED STATES TREASURY SECURITIES - 5.28% of Total Net Assets
1,000,000 United States Treasury notes 5.625%, 01-31-98 ............................ $ 1,013,060
50,000 United States Treasury bills 4.320%, 02-08-96(b) .......................... 49,952
------------
Total United States Treasury Securities (Cost $1,062,123) $ 1,063,012
------------
Total Portfolio - 98.60% of total net assets (identified cost $19,681,027)(a) $ 19,854,735
Other assets, less liabilities (1.40% of total net assets) 282,432
------------
Net assets applicable to outstanding shares $ 20,137,167
============
<FN>
Note: (a) Aggregate cost for Federal income tax purposes.
(b) Interest rate represents yield to maturity.
</FN>
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
THE AGGRESSIVE GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS
January 31, 1996
<CAPTION>
Number
Of Shares Market Value
--------- ------------
<C> <S> <C>
AGGRESSIVE GROWTH STOCK INVESTMENTS - 100.02% of Total Net Assets
CHEMICALS - 4.34% of Total Net Assets
6,000 Air Products and Chemicals, Inc. .......................................... $ 320,250
8,000 Wellman, Inc. ............................................................. 160,000
----------
$ 480,250
COMPUTER SOFTWARE - 4.26% of Total Net Assets
6,100 Autodesk, Inc. ............................................................ $ 184,525
4,200 Computer Associates International, Inc. ................................... 287,175
----------
$ 471,700
CONSTRUCTION - 5.56% of Total Net Assets
5,200 Fluor Corporation ......................................................... $ 348,400
20,000 Manville Corporation warrants (a) ........................................ 67,500
13,500 The Ryland Group, Inc. .................................................... 199,125
----------
$ 615,025
DATA PROCESSING - 9.03% of Total Net Assets
12,827 AST Research, Inc. (a) .................................................... $ 101,013
5,500 Hewlett-Packard Company ................................................... 466,125
7,300 Seagate Technology, Inc. (a) .............................................. 432,525
----------
$ 999,663
ELECTRICAL & ELECTRONICS - 5.91% of Total Net Assets
6,200 DSC Communications Corporation (a) ........................................ $ 180,575
5,700 Intel Corporation ......................................................... 314,836
9,200 National Semiconductor Corporation (a) .................................... 158,700
----------
$ 654,111
ENTERTAINMENT AND LEISURE - 10.46% of Total Net Assets
3,700 The Walt Disney Company ................................................... $ 237,725
5,100 Harcourt General, Inc. .................................................... 198,900
34,300 Sizzler International, Inc. ............................................... 120,050
4,800 Tribune Company .......................................................... 300,600
7,500 Viacom, Inc. Class A (a) .................................................. 300,000
----------
$1,157,275
FINANCIAL SERVICES - 13.64% of Total Net Assets
2,600 Bank of New York, Inc. warrants (a) ...................................... $ 106,600
14,679 The Bear Stearns Companies, Inc. .......................................... 337,617
5,600 Morgan Stanley Group, Inc. ................................................ 266,700
21,600 The Charles Schwab Corporation ............................................ 540,000
5,700 State Street Boston Corporation ........................................... 258,638
----------
$1,509,555
MANUFACTURING - 11.17% of Total Net Assets
8,400 Dana Corporation ......................................................... $ 276,150
6,900 Harnischfeger Industries, Inc. ............................................ 233,738
4,300 Illinois Tool Works, Inc. ................................................. 263,913
7,987 Mattel, Inc. .............................................................. 257,581
6,000 Parker Hannifin Corporation ............................................... 204,750
----------
$1,236,132
</TABLE>
Continued on following page.
<PAGE>
<TABLE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
THE AGGRESSIVE GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS
January 31, 1996
<CAPTION>
Number
Of Shares Market Value
--------- ------------
<C> <S> <C>
OIL AND OILFIELD SERVICES - 2.01% of Total Net Assets
17,000 Parker Drilling Company (a) .............................................. $ 97,750
38,400 Wainoco Oil Corporation (a) ............................................... 124,800
-----------
$ 222,550
PHARMACEUTICALS - 9.26% of Total Net Assets
5,600 Amgen, Inc. (a) .......................................................... $ 336,700
6,200 Biogen, Inc. (a) ......................................................... 435,550
6,000 Genzyme Corporation warrants (a) ......................................... 252,000
-----------
$ 1,024,250
RETAIL - 4.75% of Total Net Assets
15,200 Price/Costco, Inc. (a) .................................................... $ 237,500
13,000 Toys "R" Us, Inc. (a) ..................................................... 287,625
-----------
$ 525,125
TRANSPORTATION - 9.44% of Total Net Assets
11,700 Atlantic Southeast Airlines, Inc. ......................................... $ 215,719
5,600 Kansas City Southern Industries, Inc. ..................................... 254,800
17,000 M.S. Carriers, Inc. (a) ................................................... 272,000
37,500 Mesa Airlines, Inc. (a) .................................................. 302,344
-----------
$ 1,044,863
MISCELLANEOUS - 10.19% of Total Net Assets
15,600 Bethlehem Steel Corporation (a) ........................................... $ 235,950
7,000 Browning-Ferris Industries, Inc. .......................................... 206,500
6,100 Lockheed Martin Corporation .............................................. 459,788
5,150 Temple-Inland, Inc. ....................................................... 225,953
-----------
$ 1,128,191
-----------
<CAPTION>
Total Portfolio - 100.02% of total net assets (identified cost $7,726,194)(b) $11,068,690
Liabilities, less other assets (.02% of total net assets) (2,107)
-----------
Net assets applicable to outstanding shares $11,066,583
===========
<FN>
Note:(a) Non-income producing.
(b) Aggregate cost for Federal income tax purposes.
</FN>
</TABLE>
See accompanying notes.
<PAGE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
January 31, 1996
1. SIGNIFICANT ACCOUNTING POLICIES
Permanent Portfolio Family of Funds, Inc. (the "Fund") is registered under
the Investment Company Act of 1940 as a no-load, open-end, series
management investment company. The Fund commenced operations as the
Permanent Portfolio, the Treasury Bill Portfolio, the Versatile Bond
Portfolio and the Aggressive Growth Portfolio on January 8, 1982, May 26,
1987, September 27, 1991 and January 2, 1990, respectively. Investment
operations in the Permanent Portfolio, the Treasury Bill Portfolio, the
Versatile Bond Portfolio and the Aggressive Growth Portfolio commenced on
December 1, 1982, September 21, 1987, November 12, 1991 and May 16, 1990,
respectively.
The following significant accounting policies are consistently followed by
the Fund in the preparation of its financial statements, and such policies
are in conformity with generally accepted accounting principles for
registered investment companies. The preparation of such financial
statements requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses earned and incurred,
respectively, during the reporting period. Actual results could differ from
those estimates.
Valuation of investments
Investments are valued at market. Securities for which market quotations
are readily available are valued at the latest sale price. Unlisted
securities or securities for which the most active market is
over-the-counter are valued at the mean between the closing bid and asked
prices. Swiss francs are valued at the closing spot price on the
International Monetary Market. Swiss Confederation bonds are valued at the
closing price in Zurich, Switzerland, converted into U.S. dollars at 4 p.m.
(Eastern Time). Investments in gold and silver are valued based on the
closing spot prices on the New York Commodity Exchange. Short-term
securities are valued at market daily. Investments for which there is no
active market are valued at fair value as determined by the Board of
Directors. At January 31, 1996, two investments in the Permanent Portfolio
(0.53)% of total net assets) were so valued.
Investment transactions and investment income
Investment transactions are accounted for on the date of purchase, sale or
maturity. Interest income is accrued daily and includes amortization of any
premium and discount for financial and tax reporting purposes. Dividend
income is recorded on the ex-dividend date. Realized gains and losses from
securities transactions and unrealized appreciation or depreciation of
investments are recorded on an identified cost basis for financial and tax
reporting purposes.
For the year ended January 31, 1996, investment income was earned as
follows:
<TABLE>
<CAPTION>
Permanent Treasury Bill Versatile Bond Aggressive Growth
Portfolio Portfolio Portfolio Portfolio
------------ ------------- -------------- -----------------
<S> <C> <C> <C> <C>
Interest on:
Corporate bonds $ 47,920 $ - $ 1,284,978 $ -
Swiss franc assets 353,868 - - -
United States Treasury securities 2,123,141 6,534,854 16,587 154
Other investments 58,596 80,502 23,941 18,100
Dividends 557,055 - - 83,894
------------ ------------ ------------ -----------
Total $ 3,140,580 $ 6,615,356 $ 1,325,506 $ 102,148
============ ============ ============ ===========
</TABLE>
Translation of foreign currencies
Amounts denominated in or expected to settle in foreign currencies are
translated into U.S. dollars on the following basis: (i) market value of
investment securities and other assets and liabilities are translated at
the closing rate of exchange at January 31, 1996; and (ii) purchases and
sales of investment securities, income and expenses are translated at the
rate of exchange prevailing on the respective dates of such transactions.
Continued on following page.
<PAGE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
January 31, 1996
The Fund separately reports the portions of the results of operations
attributable to the effect of changes in foreign exchange rates on the
value of investments. Reported net realized foreign exchange gains or
losses arise from sales of foreign currencies; foreign currency gains or
losses realized between the trade and settlement dates on securities
transactions; and the difference between the amounts of dividends, interest
and foreign withholding taxes recorded on the Fund's books verses the U.S.
dollar equivalent of the amounts actually received or paid. Net unrealized
foreign exchange gains arise from changes in the exchange rate applicable
to cash, receivables and liabilities denominated in foreign currencies at
January 31, 1996.
Federal income taxes
Each of the Fund's Portfolios will continue to be treated as a separate
regulated investment company and each Portfolio intends to qualify under
Subchapter M of the United States Internal Revenue Code of 1986, as amended
(the "Code"). Accordingly, no provision has been made for United States
income taxes, as each Portfolio intends to declare necessary dividend
distributions from investment company taxable income and net realized
capital gains, if any, to its shareholders prior to October 15, 1996
pursuant to the requirements of the Code.
At January 31, 1996, capital loss carryforwards available to offset future
realized gains, if any, aggregate approximately: $149,000 in the Treasury
Bill Portfolio, of which $4,000, $99,000, $41,000, and $5,000 expire on
January 31, 2001, January 31, 2002, January 31, 2003 and January 31, 2004,
respectively; and $136,000 in the Versatile Bond Portfolio, of which
$102,000 and $34,000 expire on January 31, 2003 and January 31, 2004,
respectively. There were no capital loss carryforwards in the Permanent
Portfolio or the Aggressive Growth Portfolio. Additionally, net capital
losses of approximately $3,000, in the Treasury Bill Portfolio are
attributable to investment transactions that occurred after October 31,
1995 and are recognized for Federal income tax purposes as arising on
February 1, 1996, the first day of the Portfolio's next taxable year.
Pursuant to the Code, 30.11% and 96.80% of the distributions made from
investment company taxable income in 1995 by the Permanent Portfolio and
Aggressive Growth Portfolio, respectively, qualify for the corporate
dividends received deduction.
Distributions
Distributions to shareholders from net investment income and realized gain
on investments, if any, are recorded on the ex-dividend date. The amount of
such distributions are determined in accordance with the Code which may
differ from generally accepted accounting principles. These differences
result primarily from different treatment of net investment income and
realized gains on certain investment securities held by the Fund's
Portfolios. During the year ended January 31, 1996, the Fund reclassified
from undistributed net investment income to paid-in capital, certain book
and tax basis differences relating to shareholder distributions, totaling
$174,604, $1,695,037, $425,907 and $833 for the Permanent Portfolio, the
Treasury Bill Portfolio, the Versatile Bond Portfolio and the Aggressive
Growth Portfolio, respectively. Additionally, $425,151 in the Permanent
Portfolio was reclassified from accumulated net realized gain on foreign
currency transactions to undistributed net investment income and $87,360 in
the Aggressive Growth Portfolio was reclassified from accumulated net
realized gain on investments to undistributed net investment income, due to
these differences. At January 31, 1996, undistributed net investment income
exceeds amounts distributable under the Fund's distribution policy referred
to above by approximately $5,300,000, $900,000 and $14,000 for the
Permanent Portfolio, the Versatile Bond Portfolio and the Aggressive Growth
Portfolio, respectively. Undistributed net investment income in the
Treasury Bill Portfolio at January 31, 1996, approximately equals amounts
distributable under the Fund's aforementioned distribution policy.
Continued on following page.
<PAGE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
January 31, 1996
Equalization
The Fund follows the accounting practice of equalization, by which a
portion of the proceeds from sales and a portion of the costs of
redemptions of shares of capital stock are allocated to undistributed net
investment income. The effect of this practice is to prevent the
calculation of net investment income per share from being affected by sales
or redemptions of shares in each Portfolio, and for periods of net
issuances of shares, allows undistributed net investment income to exceed
distributable investment company taxable income.
2. INVESTMENTS IN AFFILIATED ISSUERS
During fiscal year 1990, the Permanent Portfolio acquired from World Money
Managers ("WMM"), the Fund's investment adviser and distributor for that
Portfolio, a 100% interest in World Money Securities, Inc. ("WMS"), a
registered broker-dealer and distributor for the Fund's Treasury Bill
Portfolio, Versatile Bond Portfolio and Aggressive Growth Portfolio.
Additional investments could be made in WMS, provided that the cost of all
investments did not exceed 1% of the net assets of the Permanent Portfolio
at the date of the additional investment. During the year ended January 31,
1996, no additional investments by the Permanent Portfolio were permitted
in WMS. At January 31, 1996, the cost basis of the investment was $924,881
and the investment was valued at $55,358 (0.07% of total net assets) which
approximated fair value as determined by the Board of Directors. The
Permanent Portfolio did not receive any dividends or interest from WMS, an
illiquid, restricted security, during the year then ended. On February 17,
1996, the Fund's Board of Directors voted to discontinue the business of
WMS and directed the Board of Directors of WMS to prepare a Plan of
Liquidation (the "Plan"). The Plan provides for the realization and
satisfaction of all of WMS's remaining assets and liabilities,
respectively, and the termination of WMS's existence. Assets of WMS
remaining after completion of the Plan, if any, will be distributed to the
Permanent Portfolio as a liquidating dividend. The Fund's management
believes any such dividend will be immaterial to the Permanent Portfolio's
financial position.
The Permanent Portfolio held 4,297 units of United States Gold Trust, an
affiliated investment trust, resulting in net unrealized appreciation of
$3,465 at January 31, 1996. The Permanent Portfolio received no income from
this investment during the year ended January 31, 1996. Commissions paid to
WMS relating to purchases and sales of these units aggregated $5,199 during
the year then ended.
3. INVESTMENT ADVISORY CONTRACT
In accordance with the terms of an Investment Advisory Contract (the
"Contract"), WMM receives monthly, a comprehensive advisory fee computed at
the following annual rate: (i) for each Portfolio, 1/4 of 1% of the first
$200 million of the Portfolio's average daily net assets; plus (ii) for the
Fund as a whole: 7/8 of 1% of the first $200 million of the Fund's average
daily net assets; 13/16 of 1% of the next $200 million of the Fund's
average daily net assets; 3/4 of 1% of the next $200 million of the Fund's
average daily net assets; and 11/16 of 1% of the Fund's average daily net
assets in excess of $600 million, such fee for the Fund as a whole to be
allocated among the Portfolios in proportion to their net assets. Effective
January 1, 1996, WMM has voluntarily agreed to continue to waive for at
least the current calendar year ending December 31, 1996, portions of the
advisory fee allocable to the Treasury Bill Portfolio and to the Versatile
Bond Portfolio to the extent that either Portfolio's total advisory fee
otherwise would exceed an annual rate of 5/8 of 1%, in the case of the
Treasury Bill Portfolio, or 3/4 of 1%, in the case of the Versatile Bond
Portfolio, of the respective Portfolio's average daily net assets.
Thereafter, WMM reserves the right to revoke, reduce or change the waiver
prospectively upon five days' written notice to the Fund.
Continued on following page.
<PAGE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
January 31, 1996
All fees and expenses directly attributable to a Portfolio are borne
entirely by that Portfolio; all other such fees and expenses are allocated
among the Fund's Portfolios in proportion to their net assets. Except for
the comprehensive advisory fee, the fees and expenses of the Fund's
directors who are not also officers of the Fund, excise taxes and
extraordinary expenses as defined by the Contract, WMM pays or reimburses
the Fund for substantially all of the Fund's ordinary operating expenses
out of its comprehensive advisory fee.
WMM is a limited partnership of which one of the general partners is the
President and a director of the Fund and the other general partner is a
corporation wholly owned by the same individual.
4. PURCHASES AND SALES OF SECURITIES
The following is a summary of purchases and sales of securities other than
short-term securities for the year ended January 31, 1996:
<TABLE>
<CAPTION>
Permanent Treasury Bill Versatile Bond Aggressive Growth
Portfolio Portfolio Portfolio Portfolio
----------- ------------- -------------- -----------------
<S> <C> <C> <C> <C>
Purchases................................ $ 4,838,405 None $11,294,439 $ 3,443,783
Sales.................................... 6,791,631 None 14,529,474 1,442,456
</TABLE>
5. NET UNREALIZED APPRECIATION OF INVESTMENTS
<TABLE>
The following is a summary of net unrealized appreciation of investments at
January 31, 1996 for federal income tax purposes:
<CAPTION>
Permanent Treasury Bill Versatile Bond Aggressive Growth
Portfolio Portfolio Portfolio Portfolio
------------- ------------- -------------- -----------------
<S> <C> <C> <C> <C>
Aggregate gross unrealized appreciation of
investments with excess of value over tax cost:
Investments in securities of
unaffiliated issuers .................... $ 16,120,647 $ 58,957 $ 173,708 $ 3,575,831
Investments other than securities........ 430,522 - - -
------------- --------- ---------- -----------
16,551,169 58,957 173,708 3,575,831
Aggregate gross unrealized depreciation
of investments with excess of tax
cost over value:
Investments in securities of unaffiliated
issuers ................................. (1,118,557) - - (233,335)
Investments other than securities........ (799,379) - - -
Investment in an affiliated issuer....... (869,523) - - -
------------- --------- ---------- -----------
(2,787,459) - - (233,335)
------------- --------- ---------- -----------
Net unrealized appreciation
of investments $ 13,763,710 $ 58,957 $ 173,708 $ 3,342,496
============= ========= ========== ===========
</TABLE>
Continued on following page.
<PAGE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
January 31, 1996
6. CAPITAL STOCK TRANSACTIONS
<TABLE>
Transactions in shares of each Portfolio's capital stock exclusive of
amounts allocated to undistributed net investment income were as follows
for the the years ended January 31, 1996 and 1995:
<CAPTION>
Permanent Portfolio
---------------------------------------------------------------------------------
1996 1995
---------------------------------------- -------------------------------------
Shares Dollars Shares Dollars
---------------- -------------------- ------------------- ----------------
<S> <C> <C> <C> <C>
Shares sold...................... 361,698 $ 5,920,587 516,273 $ 7,024,021
Distributions reinvested......... 76,064 1,415,559 54,412 880,926
--------- ------------ ---------- ------------
437,762 7,336,146 570,685 7,904,947
Shares redeemed.................. (698,896) (11,391,963) (737,073) (10,670,372)
--------- ------------ ---------- ------------
Net decrease (261,134) $ (4,055,817) (166,388) $ (2,765,425)
========= ============ ========== ============
</TABLE>
<TABLE>
<CAPTION>
Treasury Bill Portfolio
---------------------------------------------------------------------------------
1996 1995
---------------------------------------- -------------------------------------
Shares Dollars Shares Dollars
---------------- -------------------- ------------------- ----------------
<S> <C> <C> <C> <C>
Shares sold...................... 675,087 $ 42,837,954 3,439,873 $186,355,664
Distributions reinvested......... 39,686 2,678,382 16,692 1,102,014
--------- ------------ ---------- ------------
714,773 45,516,336 3,456,565 187,457,678
Shares redeemed.................. (856,988) (54,518,659) (3,691,450) (199,945,796)
--------- ------------ ---------- ------------
Net decrease (142,215) $ (9,002,323) (234,885) $(12,488,118)
========= ============ ========== ============
</TABLE>
<TABLE>
<CAPTION>
Versatile Bond Portfolio
---------------------------------------------------------------------------------
1996 1995
---------------------------------------- --------------------------------------
Shares Dollars Shares Dollars
---------------- -------------------- ------------------- -----------------
<S> <C> <C> <C> <C>
Shares sold...................... 226,619 $ 11,362,172 221,755 $ 10,683,200
Distributions reinvested......... 11,536 650,964 10,191 554,197
--------- ------------ ---------- ------------
238,155 12,013,136 231,946 11,237,397
Shares redeemed.................. (288,848) (14,556,424) (478,583) (23,172,769)
--------- ------------ ---------- ------------
Net decrease (50,693) $ (2,543,288) (246,637) $(11,935,372)
========= ============ ========== ============
</TABLE>
<TABLE>
<CAPTION>
Aggressive Growth Portfolio
---------------------------------------------------------------------------------
1996 1995
---------------------------------------- -------------------------------------
Shares Dollars Shares Dollars
---------------- -------------------- ------------------- ----------------
<S> <C> <C> <C> <C>
Shares sold...................... 121,097 $ 4,712,767 78,367 $ 2,441,932
Distributions reinvested......... 9,846 395,703 330 9,796
--------- ------------ ---------- ------------
130,943 5,108,470 78,697 2,451,728
Shares redeemed.................. (72,494) (2,728,428) (86,044) (2,630,079)
--------- ------------ ---------- ------------
Net increase (decrease) 58,449 $ 2,380,042 (7,347) $ (178,351)
========= ============ ========== ============
</TABLE>
Continued on following page.
<PAGE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
January 31, 1996
7. LINE OF CREDIT
On March 3, 1990, the Fund entered into a line of credit agreement with a
foreign bank whereby the Permanent Portfolio may borrow up to $2,000,000
for a period not to exceed twenty-one days, for the purpose of making
settlement for purchases of investments in the event that banks in the
United States are not able to operate according to their normal procedures.
Interest is charged at a base rate of 1.0% per annum above the offered rate
for deposits of United States Dollars on the London Interbank Market
(LIBOR) for terms substantially similar to any drawdown. The Permanent
Portfolio is obligated to pay a commitment fee of 1/2% ($10,000), payable
annually, on the entire commitment amount.
The line is collateralized by United States Treasury bills having a face
value of not less than 125% of the outstanding principal balance and a
maturity date of not more than one year. The agreement contains certain
covenants, including among other things, the Permanent Portfolio
maintaining a specified net asset value of at least $60 million. During the
year ended January 31, 1996, there were no amounts outstanding under this
agreement.
8. REGULATORY MATTERS
By letter dated February 9, 1994 (the "Letter"), the Staff of the San
Francisco District Office of the Securities and Exchange Commission (the
"Staff" and "Commission," respectively) advised the Fund and certain of its
officers and affiliates of alleged violations of certain provisions of
federal securities laws, including those relating to the Fund's advertising
materials, transactions among the Fund's Portfolios, the Fund's
distribution expense practices and the composition of the Fund's Board of
Directors. The Staff stated in the Letter that it had decided to recommend
to the Commission that it authorize the filing of a civil action and the
institution of public administrative proceedings seeking sanctions against
certain of the Fund's officers and affiliates. Management of the Fund
believes that there have been no such violations. During the year ended
January 31, 1996, the Fund received no further communications regarding the
matter from the Staff or the Commission and as of January 31, 1996, no such
civil action or public administrative proceedings have been instituted.
Pursuant to Maryland law and the Fund's bylaws, the Fund has agreed to pay
directly on behalf of certain officers, directors and affiliates, or to
reimburse them, for certain expenses incurred by them in connection with
the matter. The Fund's Permanent Portfolio, Treasury Bill Portfolio,
Versatile Bond Portfolio and Aggressive Growth Portfolio so paid or
reimbursed expenses of $26,100, $22,233, $1,646 and $848, respectively,
during the year then ended.
<PAGE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
THE PERMANENT PORTFOLIO
<TABLE>
Financial highlights for the Permanent Portfolio
For each share of capital stock outstanding throughout each fiscal year:
<CAPTION>
Year ended Year ended Year ended Year ended
January 31, 1996 January 31, 1995 January 31, 1994 January 31, 1993
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of year $ 16.51 $ 17.55 $ 15.36 $ 15.21
--------- --------- -------- --------
Income from investment operations:
Net investment income ................ .50 .64 .44 .49
Net realized and unrealized gains
or losses on investments ........... 2.17 (1.46) 1.99 (.05)
--------- --------- -------- --------
Total income or loss from
investment operations 2.67 (.82) 2.43 .44
Less distributions from:
Net investment income ................ (.38) (.22) (.24) (.29)
Net realized gain on investments ..... - - - -
--------- --------- -------- --------
Total distributions (.38) (.22) (.24) (.29)
--------- --------- -------- --------
Net asset value, end of year $ 18.80 $ 16.51 $ 17.55 $ 15.36
========= ========= ======== ========
Total return (1) ......................... 16.20% (4.65)% 15.86% 2.93%
Ratios / supplemental data:
Net assets, end of period (in thousands) $ 76,641 $ 71,610 $ 79,043 $ 65,937
========= ========= ======== ========
Ratio of expenses to average net assets.. 1.35% 1.32% 1.21% 1.25%
Ratio of net investment income
to average net assets ................ 2.85% 2.63% 2.66% 3.20%
Portfolio turnover rate ................. 9.96% 31.24% 49.51% 70.77%
<FN>
(l) Assumes reinvestment of all dividends and distributions, and deduction of
all fees and expenses except the $35 one-time account start-up fee and the
$1.50 monthly account maintenance fee.
</FN>
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
Year ended Year ended Year ended Year ended Year ended Year ended
January 31, 1992 January 31, 1991 January 31, 1990 January 31, 1989 January 31, 1988 January 31, 1987
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
<C> <C> <C> <C> <C> <C>
$ 15.10 $ 15.57 $ 15.00 $ 14.71 $ 13.66 $ 11.88
--------- --------- --------- ---------- ---------- ----------
.51 .64 .57 .46 .37 .33
.51 (.63) - (.15) .80 1.45
--------- --------- --------- ---------- ---------- ----------
1.02 .01 .57 .31 1.17 1.78
(.91) (.48) - - - -
- - - (.02) (.12) -
--------- --------- --------- ---------- ---------- ----------
(.91) (.48) - (.02) (.12) -
--------- --------- --------- ---------- ---------- ----------
$ 15.21 $ 15.10 $ 15.57 $ 15.00 $ 14.71 $ 13.66
========= ========= ========= ========== ========== ==========
7.01% .15% 3.80% 2.11% 8.58% 14.98%
$ 72,312 $ 80,542 $ 93,663 $ 97,475 $ 90,177 $ 72,523
========= ========= ========= ========== ========== ==========
1.27% 1.36% 1.17% 1.17% 1.15% 1.17%
3.29% 4.22% 3.80% 3.00% 2.53% 2.51%
8.01% 31.58% 61.44% 23.87% 21.97% 30.89%
</TABLE>
<PAGE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
THE TREASURY BILL PORTFOLIO
<TABLE>
Financial highlights for the Treasury Bill Portfolio
For each share of capital stock outstanding throughout each fiscal period:
<CAPTION>
Year ended Year ended Year ended
January 31, 1996 January 31, 1995 January 31, 1994
---------------- ---------------- ----------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 66.40 $ 64.81 $ 64.45
---------- ---------- ----------
Income from investment operations:
Net investment income (2) ............................... 3.22 2.65 1.53
Net realized and unrealized gains or losses on investments (3) .06 (.39) (.09)
---------- ---------- ----------
Total income from investment operations 3.28 2.26 1.44
Less distributions from:
Net investment income ................................... (1.84) (.67) (1.08)
---------- ---------- ----------
Total distributions (1.84) (.67) (1.08)
---------- ---------- ----------
Net asset value, end of period $ 67.84 $ 66.40 $ 64.81
========== ========== ==========
Total return (4) ............................................. 4.95% 3.49% 2.24%
Ratios / supplemental data:
Net assets, end of period (in thousands) .................. $ 114,667 $ 121,666 $ 133,970
========== ========== ==========
Ratio of expenses to average net assets (2) ............... .82% .82% .72%
Ratio of net investment income to average net assets ...... 4.79% 3.57% 2.46%
<FN>
* Computed on an annualized basis.
(l) The Treasury Bill Portfolio commenced investment operations September 21,
1987.
(2) Due to the waiver of advisory fees and, effective January 1, 1991 through
January 31, 1994, distribution expenses, the ratio of expenses to average
net assets was reduced by .50% for the year ended January 31, 1996 and
.50%, .49%, .47%, .48%, .47%, .62%, .62% and .65% for the years ended
January 31, 1995, 1994, 1993, 1992, 1991, 1990 and 1989 and the period
ended January 31, 1988, respectively. Without this waiver, the net
investment income per share would have been $2.78 for the year ended
January 31, 1996 and $2.12, $1.04, $1.28, $2.85, $3.85, $3.96, $3.00 and
$1.33 for the years and the period then ended.
(3) Per share net realized and unrealized gains or losses on investments may
not correspond with the change in aggregate unrealized gains and losses in
the Portfolio's securities because of the timing of sales and repurchases
of the Portfolio's shares in relation to fluctuating market values for the
Portfolio.
(4) Assumes reinvestment of all dividends and distributions, and deduction of
all fees and expenses except the $35 one-time account start-up fee and the
$1.50 monthly account maintenance fee.
</FN>
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
Year ended Year ended Year ended Year ended Year ended Period ended
January 31, 1993 January 31, 1992 January 31, 1991 January 31, 1990 January 31, 1989 January 31, 1988(1)
---------------- ---------------- ---------------- ---------------- ---------------- -------------------
<C> <C> <C> <C> <C> <C>
$ 64.99 $ 63.11 $ 59.35 $ 54.91 $ 51.54 $ 50.00
---------- ---------- ---------- --------- ---------- ----------
1.68 3.26 4.20 4.36 3.38 1.55
.19 (.08) (.01) .08 .02 (.01)
---------- ---------- ---------- --------- ---------- ----------
1.87 3.18 4.19 4.44 3.40 1.54
(2.41) (1.30) (.43) - (.03) -
---------- ---------- ---------- --------- ---------- ----------
(2.41) (1.30) (.43) - (.03) -
---------- ---------- ---------- --------- ---------- ----------
$ 64.45 $ 64.99 $ 63.11 $ 59.35 $ 54.91 $ 51.54
========== ========== ========== ========= ========== ==========
2.89% 5.05% 7.06% 8.09% 6.60% 4.48%*
$ 179,888 $ 320,382 $ 207,889 $ 61,056 $ 31,370 $ 6,475
========== ========== ========== ========= ========== ==========
.73% .73% .83% .54% .54% .50%*
2.97% 4.87% 6.74% 7.87% 6.70% 5.32%*
</TABLE>
<PAGE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
THE VERSATILE BOND PORTFOLIO
<TABLE>
Financial highlights for the Versatile Bond Portfolio
For each share of capital stock outstanding throughout each fiscal period:
<CAPTION>
Year ended Year ended
January 31, 1996 January 31, 1995
---------------- ----------------
<S> <C> <C>
Net asset value, beginning of period $ 54.90 $ 54.76
-------- ---------
Income from investment operations:
Net investment income (2) ............... 2.91 2.12
Net realized and unrealized gains
or losses on investments (3) .......... 1.05 (.63)
-------- ---------
Total income from investment operations 3.96 1.49
Less distributions from:
Net investment income ................... (2.01) (1.33)
Net realized gain on investments ........ - (.02)
-------- ---------
Total distributions (2.01) (1.35)
-------- ---------
Net asset value, end of period $ 56.85 $ 54.90
======== =========
Total return (4) ............................ 7.24% 2.74%
Ratios / supplemental data:
Net assets, end of period (in thousands).... $ 20,137 $ 22,229
======== =========
Ratio of expenses to average net assets (2). .89% .86%
Ratio of net investment income
to average net assets ................... 5.21% 3.84%
Portfolio turnover rate ................... 51.64% 74.62%
<FN>
* Computed on an annualized basis.
(l) The Versatile Bond Portfolio commenced investment operations November 12,
1991.
(2) Due to the waiver of advisory fees and through January 31, 1994,
distribution expenses, the ratio of expenses to average net assets was
reduced by .37% for the year ended January 31, 1996 and .36%, .39%, .41%
and .43% for the years ended January 31, 1995, 1994, 1993 and the period
ended January 31, 1992, respectively. Without this waiver, the net
investment income per share would have been $2.65 for the year ended
January 31, 1996 and $1.84, $1.57, $1.77 and $2.13 for the years and the
period then ended.
(3) Per share net realized and unrealized gains or losses on investments may
not correspond with the change in aggregate unrealized gains and losses in
the Portfolio's securities because of the timing of sales and repurchases
of the Portfolio's shares in relation to fluctuating market values for the
Portfolio.
(4) Assumes reinvestment of all dividends and distributions, and deduction of
all fees and expenses except the $35 one-time account start-up fee and the
$1.50 monthly account maintenance fee.
</FN>
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
Year ended Year ended Period ended
January 31, 1994 January 31, 1993 January 31, 1992 (1)
---------------- ---------------- --------------------
<C> <C> <C>
$ 53.63 $ 50.58 $ 50.00
--------- ---------- ---------
1.87 2.06 2.51
(.04) 1.00 (1.93)
--------- ---------- ---------
1.83 3.06 .58
(.70) (.01) -
- - -
--------- ---------- ---------
(.70) (.01) -
--------- ---------- ---------
$ 54.76 $ 53.63 $ 50.58
========= ========== =========
3.42% 6.05% 3.33%*
$ 35,682 $ 23,217 $ 596
========= ========== =========
.89% .89% 1.07%*
3.46% 3.86% 4.00%*
75.05% 224.95% 600.99%*
</TABLE>
<PAGE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
THE AGGRESSIVE GROWTH PORTFOLIO
<TABLE>
Financial highlights for the Aggressive Growth Portfolio
For each share of capital stock outstanding throughout each fiscal period:
<CAPTION>
Year ended Year ended
January 31, 1996 January 31, 1995
---------------- ----------------
<S> <C> <C>
Net asset value, beginning of period $ 31.61 $ 32.56
---------- ---------
Income from investment operations:
Net investment income (loss) ............................ (.02) (.01)
Net realized and unrealized gains
or losses on investments ................................ 10.68 (.89)
---------- ---------
Total income or loss from investment operations 10.66 (.90)
Less distributions from:
Net investment income ................................... (.11) (.03)
Net realized gain on investments ........................ (1.51) (.02)
---------- ---------
Total distributions (1.62) (.05)
---------- ---------
Net asset value, end of period $ 40.65 $ 31.61
========== =========
Total return (2) ............................................. 33.78% (2.75)%
Ratios / supplemental data:
Net assets, end of period (in thousands) .................... $ 11,067 $ 6,758
========== =========
Ratio of expenses to average net assets ...................... 1.19% 1.23%
Ratio of net investment income (loss) to average net assets... (.06)% (.04)%
Portfolio turnover rate ...................................... 18.94% 26.29%
<FN>
* Computed on an annualized basis.
(l) The Aggressive Growth Portfolio commenced investment operations May 16,
1990.
(2) Assumes reinvestment of all dividends and distributions, and deduction of
all fees and expenses except the $35 one-time account start-up fee and the
$1.50 monthly account maintenance fee.
</FN>
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
Year ended Year ended Year ended Period ended
January 31, 1994 January 31, 1993 January 31, 1992 January 31, 1991(1)
---------------- ---------------- ---------------- -------------------
<C> <C> <C> <C>
$ 26.63 $ 22.77 $ 18.35 $ 20.00
--------- --------- ---------- ---------
.01 .02 .06 .13
6.41 4.44 4.38 (1.78)
--------- --------- ---------- ---------
6.42 4.46 4.44 (1.65)
(.02) (.13) (.02) -
(.47) (.47) - -
--------- --------- ---------- ---------
(.49) (.60) (.02) -
--------- --------- ---------- ---------
$ 32.56 $ 26.63 $ 22.77 $ 18.35
========= ========= ========== =========
24.25% 19.77% 24.21% (8.25)%*
$ 7,201 $ 3,596 $ 2,577 $ 1,151
========= ========= ========== =========
1.20% 1.12% 1.18% 1.07%*
.02% .12% .23% .64%*
29.83% 25.62% 53.18% 36.88%*
</TABLE>
<PAGE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
Permanent Portfolio (PP)
(Graph ommitted, see description on page 34)
Versatile Bond Portfolio (VBP)
(Graph ommitted, see description on page 34)
Aggressive Growth Portfolio (AGP)
(Graph ommitted, see description on page 34)
See following page for explanation of graphs.
<PAGE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
The graphs on the preceding page compare the initial account value and
subsequent account values at the end of each of the most recently completed ten
fiscal years of the Permanent Portfolio and each of the most recently completed
fiscal years since the commencement of investment operations for the Aggressive
Growth Portfolio and the Versatile Bond Portfolio, assuming a $10,000 investment
in the Portfolio at the beginning of the first fiscal year and reinvestment of
all dividends and distributions, to a $10,000 investment over the same periods
in the following broad-based securities market indexes: for the Permanent
Portfolio, 3-month Treasury bills from the weekly releases of Selected Interest
Rates from the Federal Reserve; for the Versatile Bond Portfolio, 180-day rates
on certificates of deposit from the Dow Jones News Retrieval Service; for the
Aggressive Growth Portfolio, the Dow Jones Industrial Average, which is an
average of the stock prices of 30 large companies and represents an unmanaged
portfolio. The tables below show each Portfolio's average annual total returns
for the periods indicated, assuming reinvestment of all dividends and
distributions and deduction of all fees and expenses except the $35 one-time
account start-up fee. Past performance is not predictive of future performance.
<TABLE>
<CAPTION>
Permanent Portfolio(1) Versatile Bond Portfolio(2) Aggressive Growth Portfolio(3)
---------------------- --------------------------- ------------------------------
<C> <C> <C>
1 year ended 1/31/96 16.11% 1 year ended 1/31/96 7.17% 1 year ended 1/31/96 33.69%
5 years ended 1/31/96 7.10% 4 years, 127 days ended 1/31/96 4.66% 5 years ended 1/31/96 19.10%
10 years ended 1/31/96 6.36% 6 years, 29 days ended 1/31/96 13.81%
13 years, 62 days ended 1/31/96 5.22%
- ---------------------
</TABLE>
(1) The Permanent Portfolio commenced operations on December 1, 1982.
(2) The Versatile Bond Portfolio commenced operations on September 27, 1991.
(3) The Aggressive Growth Portfolio commenced operations on January 2, 1990.
(4) The Treasury Bill Portfolio is not included in the data above because it is
a money market portfolio.
<PAGE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
Management's Discussion and Analysis
Permanent Portfolio
The Permanent Portfolio's investment objective is to preserve and increase
the purchasing power of its shares over the long term. The Portfolio
invests fixed target percentages of its net assets in gold, silver, Swiss
franc assets, stocks of real estate and natural resource companies,
aggressive growth stocks, and dollar assets such as United States Treasury
securities. Due to the strong performance of the stock and bond markets
throughout 1995, the Portfolio achieved a total return of 16.20% for the
year ended January 31, 1996, as compared to an inflation rate of 2.73%
during the year then ended.
Treasury Bill Portfolio
The Treasury Bill Portfolio's investment objective is to achieve high
current income, consistent with safety and liquidity of principal. It
invests in short-term United States Treasury securities. The Portfolio
achieved a total return of 4.95% and maintained an average maturity of
between 60 and 90 days throughout the year ended January 31, 1996. This
return was consistent with other money market funds that invest primarily
in short-term United States Treasury securities.
Versatile Bond Portfolio
The Versatile Bond Portfolio's investment objective is to achieve high
current income while limiting risk to principal. It invests in a
diversified portfolio of short-term corporate bonds rated "A" or higher by
Standard & Poor's. The Portfolio achieved a total return of 7.24% while
maintaining an average maturity of between 300 and 500 days throughout the
year ended January 31, 1996. This return was consistent with other mutual
funds that invest primarily in corporate bonds of similar safety, liquidity
and maturity.
Aggressive Growth Portfolio
The Aggressive Growth Portfolio's investment objective is to achieve high
long-term appreciation. It is fully invested at all times in a diversified
portfolio of domestic stocks and stock warrants selected for high profit
potential. The Portfolio achieved a total return of 33.78% for the year
ended January 31, 1996, as compared to 43.73% for the Dow Jones Industrial
Average and 35.21% for the Standard and Poor's 500 Stock Index for the year
then ended.
<PAGE>
This page intentionally left blank.
<PAGE>
INVESTMENT ADVISER The
World Money Managers PERMANENT
Terry Coxon, General Partner PORTFOLIO
625 Second Street Family of Funds
Petaluma, California 94952
CONSULTANTS TO THE FUND
Harry Browne
Douglas Casey
TRANSFER AGENT
Chase Global Funds Services Company
P.O. Box 2798
Boston, Massachusetts 02208
(for overnight delivery services,
73 Tremont Street
Boston, Massachusetts 02108)
1-800-341-8900
In Mass. 1-617-557-8000
CUSTODIAN
State Street Bank and Trust Company
Boston, Massachusetts 02105
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
Three Embarcadero Center
San Francisco, California 94111
INVESTOR'S INFORMATION OFFICE
P.O. BOX 5847
Austin, Texas 78763 ANNUAL REPORT
1-800-531-5142 Nationwide January 31, 1996
Local 1-512-453-7558
