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, 1997, and the related statements of operations for the year then ended, the
statements of changes in net assets for each of the years in the two year period
then ended, and the financial highlights for each of the years in the three year
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, 1997, 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, 1997, 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.
As discussed in Note 8 to the financial statements, the Securities and Exchange
Commission instituted public administrative and cease-and-desist proceedings on
January 13, 1997, against the Fund's investment adviser, a wholly owned
investment of the Permanent Portfolio, and two of the Fund's directors and
officers.
KPMG PEAT MARWICK LLP
San Francisco, California
March 24, 1997
<PAGE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
STATEMENTS OF ASSETS AND LIABILITIES
January 31, 1997
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 .........................................
Corporate bonds .............................................................
United States Treasury securities ...........................................
Total investments (identified cost $65,365,715; $103,731,275; $23,000,423;
and $10,784,562, respectively)
Cash ..........................................................................
Accounts receivable for shares of the portfolio sold ..........................
Accounts receivable for investments 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 directors' and officers' fees and expenses ............................
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 - 3,965,988; 1,559,369; 372,874; and 323,519 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 depreciation 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>
$ 14,341,299 $ - $ - $ -
3,831,728 - - -
796,559 - - -
------------ ------------ ------------- ------------
18,969,586 - - -
6,316,372 - - -
11,757,247 - - -
12,370,392 - - 14,844,086
1,016,609 - 18,128,918 -
19,768,635 103,734,348 4,897,075 389,766
------------ ------------ ------------- ------------
70,198,841 103,734,348 23,025,993 15,233,852
98,728 - 54,634 3,389
9,100 5,972 - 9,150
2,503,850 - - 196,353
399,790 2,014,695 354,647 3,353
------------ ------------ ------------- ------------
73,210,309 105,755,015 23,435,274 15,446,097
- 102,727 - -
42,356 89,126 28,335 3,798
- - 2,027,955 -
63,557 49,728 10,099 13,303
4,418 8,409 1,322 189
108,455 163,490 22,622 11,468
------------ ------------ ------------- ------------
218,786 413,480 2,090,333 28,758
------------ ------------ ------------- ------------
$ 72,991,523 $105,341,535 $ 21,344,941 $ 15,417,339
============ ============ ============= ============
$ 3,966 $ 1,559 $ 373 $ 324
59,574,787 103,226,668 19,888,882 9,854,308
------------ ------------ ------------- ------------
59,578,753 103,228,227 19,889,255 9,854,632
7,322,418 2,263,201 1,556,933 122,708
1,294,439 (152,966) (126,817) 990,709
10,793 - - -
4,833,126 3,073 25,570 4,449,290
(48,006) - - -
------------ ------------ ------------- ------------
$ 72,991,523 $105,341,535 $ 21,344,941 $ 15,417,339
============ ============ ============= ============
$18.40 $67.55 $57.24 $47.66
====== ====== ====== ======
</TABLE>
<PAGE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
STATEMENTS OF OPERATIONS
Year ended January 31, 1997
Investment income:
Interest ....................................................................
Dividends ...................................................................
Expenses (Notes 3, 7 & 8):
Investment advisory fee .....................................................
Directors' fees and expenses ................................................
Officers' salary expense ....................................................
Excise tax ..................................................................
Regulatory expense ..........................................................
Shareholder meeting expense .................................................
Commitment fee ..............................................................
Total expenses
Less waiver of investment advisory fee ......................................
Net expenses
Net investment income before foreign income taxes deducted at source
Less foreign income taxes deducted at source, net of refundable taxes .........
Net investment income
Realized and unrealized gain (loss) on investments and foreign currency (Notes
1, 2, 4 & 5):
Net realized gain (loss) on:
Investments in unaffiliated issuers .........................................
Investment in an affiliated issuer ..........................................
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>
$ 2,556,926 $ 5,682,932 $ 1,217,829 $ 14,295
639,905 - - 238,144
------------ ------------ ------------- ------------
3,196,831 5,682,932 1,217,829 252,439
841,843 1,257,545 223,610 147,574
28,560 42,904 7,682 5,467
27,545 42,039 7,345 4,685
108,455 163,512 22,622 11,468
53,511 43,469 3,046 2,640
27,704 13,256 3,402 3,460
10,000 - -
------------ ------------ ------------- ------------
1,097,618 1,562,725 267,707 175,294
- 556,879 74,401 -
------------ ------------ ------------- ------------
1,097,618 1,005,846 193,306 175,294
------------ ------------ ------------- ------------
2,099,213 4,677,086 1,024,523 77,145
16,190 - - -
------------ ------------ ------------- ------------
2,083,023 4,677,086 1,024,523 77,145
------------ ------------ ------------- ------------
2,221,322 (2,228) 9,404 992,038
(924,881) - - -
10,793 - - -
------------ ------------ ------------- ------------
1,307,234 (2,228) 9,404 992,038
(2,950,852) (55,884) (148,138) 1,106,794
(56,724) - - -
------------ ------------ ------------- ------------
(1,700,342) (58,112) (138,734) 2,098,832
------------ ------------ ------------- ------------
$ 382,681 $ 4,618,974 $ 885,789 $ 2,175,977
============ ============ ============= ============
</TABLE>
<PAGE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Permanent Portfolio
-----------------------------------
Year ended Year ended
January 31, 1997 January 31, 1996
---------------- ----------------
<S> <C> <C>
Operations:
Net investment income (loss) .............................................. $ 2,083,023 $ 2,130,759
Net realized gain (loss) on investments ................................... 1,296,441 1,019,589
Net realized gain on foreign currency transactions ........................ 10,793 384,941
Change in unrealized appreciation (depreciation) of investments ........... (2,950,852) 7,555,020
Change in unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies ........................... (56,724) (19,075)
------------ ------------
Net increase in net assets resulting from operations 382,681 11,071,234
Equalization on shares issued and redeemed: ................................. (249,430) (467,059)
Distributions to shareholders from:
Net investment income ..................................................... (1,647,665) (1,517,212)
Net realized gain on investments .......................................... (352,938) -
Capital stock transactions exclusive of amounts allocated to undistributed
net investment income (Note 6): ........................................... (1,781,916) (4,055,817)
------------ ------------
Net increase (decrease) in net assets (3,649,268) 5,031,146
Net assets at beginning of year 76,640,791 71,609,645
------------ ------------
Net assets at end of year (including undistributed net investment income
of $7,322,418 and $6,927,153; $2,263,201 and $4,340,131; $1,556,933 and
$1,672,573; $122,708 and $97,512, respectively) $ 72,991,523 $ 76,640,791
============ ============
</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, 1997 January 31, 1996 January 31, 1997 January 31, 1996 January 31, 1997 January 31, 1996
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
<C> <C> <C> <C> <C> <C>
$ 4,677,086 $ 5,651,617 $ 1,024,523 $ 1,132,191 $ 77,145 $ (5,087)
(2,228) ( 4,256) 9,404 (1,737) 992,038 104,190
- - - - - -
(55,884) 68,077 (148,138) 397,527 1,106,794 2,236,677
- - - - - -
------------ ------------- ------------ ------------ ----------- -----------
4,618,974 5,715,438 885,789 1,527,981 2,175,977 2,335,780
(1,052,143) (832,446) 16,284 (396,154) 34,901 7,218
(4,430,015) (2,879,288) (699,991) (680,753) (86,850) (28,111)
- - - - (17,370) (385,888)
(8,462,596) (9,002,323) 1,005,692 (2,543,288) 2,244,098 2,380,042
------------ ------------- ------------ ------------ ----------- -----------
(9,325,780) (6,998,619) 1,207,774 (2,092,214) 4,350,756 4,309,041
114,667,315 121,665,934 20,137,167 22,229,381 11,066,583 6,757,542
------------ ------------- ------------ ------------ ----------- -----------
$105,341,535 $ 114,667,315 $ 21,344,941 $ 20,137,167 $15,417,339 $11,066,583
============ ============= ============ ============ =========== ===========
</TABLE>
<PAGE>
<TABLE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
THE PERMANENT PORTFOLIO
SCHEDULE OF INVESTMENTS
January 31, 1997
<CAPTION>
Quantity Market Value
- ----------------- ------------
<C> <S> <C>
GOLD ASSETS - 19.65% of Total Net Assets
11,997 Troy Oz. Gold bullion (a) ......................................................... $ 4,137,863
28,583 Coins One-ounce gold coins (a) .................................................. 10,144,107
4,297 Units United States Gold Trust (a)(b) ........................................... 59,329
------------
Total Gold Assets (Cost $16,318,540) $ 14,341,299
------------
SILVER ASSETS - 5.25% of Total Net Assets
522,823 Troy Oz. Silver bullion (a) ........................................................ $ 2,562,353
379 Bags Silver coins (a) .......................................................... 1,269,375
------------
Total Silver Assets (Cost $5,003,358) $ 3,831,728
------------
</TABLE>
<TABLE>
<CAPTION>
Principal Amount SWISS FRANC ASSETS - 9.74% of Total Net Assets
- ----------------
<C> <S> <C>
CHF 1,131,671 Swiss francs in interest-bearing bank accounts ............................ $ 796,559
------------
CHF 3,700,000 5.250% Swiss Confederation bonds, 02-11-98 ................................ 2,700,450
CHF 4,000,000 4.000% Swiss Confederation bonds, 03-10-99 ................................ 2,936,581
CHF 820,000 7.000% Swiss Confederation bonds, 07-09-01 ................................ 679,341
------------
Total Swiss Confederation bonds 6,316,372
------------
Total Swiss Franc Assets (Cost $6,998,065) $ 7,112,931
------------
</TABLE>
<TABLE>
<CAPTION>
Number STOCKS OF UNITED STATES AND FOREIGN REAL ESTATE AND NATURAL
Of Shares RESOURCE COMPANIES - 16.11% of Total Net Assets
---------
<C> <S> <C>
NATURAL RESOURCES - 5.63% of Total Net Assets
14,300 Broken Hill Proprietary, Ltd. (c) ......................................... $ 389,675
12,000 Burlington Resources, Inc. ................................................ 597,000
17,200 Cyprus Amax Minerals Company ............................................. 384,850
26,600 Forest Oil Corporation (a) ................................................ 435,575
15,200 Inco, Ltd. ................................................................ 514,900
20,000 Pogo Producing Company .................................................... 842,500
29,000 Santa Fe Energy Resources, Inc. (a) ...................................... 431,375
60,000 Westmoreland Coal Company (a) ............................................. 56,250
10,000 Weyerhaeuser Company ..................................................... 455,000
------------
$ 4,107,125
</TABLE>
Continued on following page.
<PAGE>
<TABLE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
THE PERMANENT PORTFOLIO
SCHEDULE OF INVESTMENTS
January 31, 1997
<CAPTION>
Number
Of Shares Market Value
--------- ------------
<C> <S> <C>
REAL ESTATE - 10.48% of Total Net Assets
30,264 BRE Properties, Inc. Class A .............................................. $ 749,034
31,000 Burnham Pacific Properties, Inc. .......................................... 457,250
23,500 Federal Realty Investment Trust ........................................... 663,875
29,000 HRE Properties ............................................................ 507,500
47,000 IRT Property Company ...................................................... 564,000
34,200 MGI Properties ............................................................ 743,850
21,000 New Plan Realty Trust ..................................................... 501,375
20,100 Pennsylvania Real Estate Investment Trust ................................. 494,963
27,500 Security Capital Pacific Trust ............................................ 653,125
18,000 Texas Pacific Land Trust .................................................. 508,500
47,200 United Dominion Realty Trust, Inc. ........................................ 731,600
31,900 Washington Real Estate Investment Trust ................................... 590,150
37,300 Western Investment Real Estate Trust ...................................... 484,900
-----------
$ 7,650,122
-----------
Total Stocks of United States and Foreign Real Estate and Natural
Resource Companies (Cost $7,712,490) $11,757,247
-----------
AGGRESSIVE GROWTH STOCK INVESTMENTS - 16.95% of Total Net Assets
CHEMICALS - .61% of Total Net Assets
6,200 Air Products & Chemicals, Inc. ........................................... $ 442,525
-----------
$ 442,525
COMPUTER SOFTWARE - 1.02% of Total Net Assets
7,000 Autodesk, Inc. ........................................................... $ 221,375
1 Symantec Corporation warrant (a)(d) ...................................... 524,015
-----------
$ 745,390
CONSTRUCTION - .24% of Total Net Assets
2,500 Fluor Corporation ........................................................ $ 177,813
-----------
$ 177,813
</TABLE>
Continued on following page.
<PAGE>
<TABLE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
THE PERMANENT PORTFOLIO
SCHEDULE OF INVESTMENTS
January 31, 1997
<CAPTION>
Number
Of Shares Market Value
--------- ------------
<C> <S> <C>
DATA PROCESS1NG - 1.31% of Total Net Assets
7,800 Hewlett-Packard Company ................................................... $ 410,475
10,600 Seagate Technology, Inc. (a) ............................................. 545,900
----------
$ 956,375
ELECTRICAL AND ELECTRONICS - 2.62% of Total Net Assets
20,000 DSC Communications Corporation (a) ....................................... $ 450,000
7,300 Intel Corporation ........................................................ 1,184,425
10,000 National Semiconductor Corporation (a) .................................... 277,500
----------
$1,911,925
ENTERTAINMENT AND LEISURE - 1.93% of Total Net Assets
2,500 The Walt Disney Company .................................................. $ 183,125
4,500 Harcourt General, Inc. ................................................... 203,625
24,000 Harrah's Entertainment, Inc. (a) ......................................... 468,000
12,000 Promus Hotel Corporation (a) .............................................. 391,500
4,200 Tribune Company .......................................................... 160,650
----------
$1,406,900
FINANCIAL SERVICES - 2.47% of Total Net Assets
3,000 Bank of New York, Inc. warrants (a) ..................................... $ 250,500
6,851 Bank of Petaluma (a) ...................................................... 126,744
8,400 Bear Stearns Companies, Inc. ............................................. 252,000
4,000 Morgan Stanley Group, Inc. ............................................... 228,500
17,474 The Charles Schwab Corporation ........................................... 653,091
4,000 State Street Boston Corporation .......................................... 292,500
----------
$1,803,335
MANUFACTURING - 2.97% of Total Net Assets
23,000 Collins Industries, Inc. warrants (a) .................................... $ 719
15,000 Harley-Davidson, Inc. ..................................................... 663,750
5,100 Harnischfeger Industries, Inc. ............................................ 226,313
3,500 Illinois Tool Works, Inc. ................................................ 285,688
10,618 Mattel, Inc. ............................................................. 298,631
2,000 NACCO Industries, Inc. Class A ........................................... 104,750
8,000 NACCO Industries, Inc. Class B ........................................... 419,000
4,000 Parker-Hannifin Corporation .............................................. 172,500
----------
$2,171,351
</TABLE>
Continued on following page.
<PAGE>
<TABLE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
THE PERMANENT PORTFOLIO
SCHEDULE OF INVESTMENTS
January 31, 1997
<CAPTION>
Number
Of Shares Market Value
--------- ------------
<C> <S> <C>
OIL AND OILFIELD SERVICES - .50% of Total Net Assets
20,000 Parker Drilling Company (a) ............................................... $ 195,000
48,200 Wainoco Oil Corporation (a) ............................................... 168,700
-----------
$ 363,700
PHARMACEUTICALS - 1.30% of Total Net Assets
10,000 Abbott Laboratories ....................................................... $ 543,750
2,400 Biogen, Inc. (a) .......................................................... 112,200
10,000 Genzyme Corporation (General Division) (a) ................................ 280,000
945 Genzyme Corporation Tissue Repair (a) ..................................... 9,923
-----------
$ 945,873
RETAIL - .44% of Total Net Assets
12,000 Costco Companies, Inc. (a) ................................................ $ 319,500
-----------
$ 319,500
TRANSPORTATION - .69% of Total Net Assets
12,300 ASA Holdings, Inc. ........................................................ $ 276,750
4,600 Kansas City Southern Industries, Inc. ..................................... 225,975
-----------
$ 502,725
MISCELLANEOUS - .85% of Total Net Assets
5,090 Lockheed Martin Corporation ............................................... $ 468,280
2,800 Temple-Inland, Inc. ....................................................... 154,700
-----------
$ 622,980
-----------
Total Aggressive Growth Stock Investments (Cost $4,410,731) $12,370,392
-----------
</TABLE>
Continued on following page.
<PAGE>
<TABLE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
THE PERMANENT PORTFOLIO
SCHEDULE OF INVESTMENTS
January 31, 1997
<CAPTION>
Principal Amount Market Value
---------------- ------------
<C> <S> <C>
DOLLAR ASSETS - 28.47% of Total Net Assets
CORPORATE BONDS - 1.39% of Total Net Assets
$ 100,000 8.750% Dillard Department Stores, Inc., 06-15-98 .......................... $ 103,501
100,000 8.300% Hertz Corporation, 02-02-98 ........................................ 102,370
100,000 5.650% Lockheed Martin Corporation, 04-01-97 .............................. 100,085
100,000 6.500% Pfizer, Inc., 02-01-97 ............................................. 100,016
100,000 9.000% Philip Morris Companies, Inc., 05-15-98 ............................ 103,606
100,000 9.375% Saint Paul Companies, Inc., 06-15-97 ............................... 101,406
100,000 6.125% Southern California Edison Company, 07-15-97 ....................... 100,277
100,000 6.750% USLIFE Corporation, 01-15-98 ....................................... 100,781
100,000 9.375% Virginia Electric & Power Company, 06-01-98 ........................ 104,203
100,000 6.375% WMX Technologies, Inc., 07-01-97 ................................... 100,364
------------
$ 1,016,609
UNITED STATES TREASURY SECURITIES - 27.08% of Total Net Assets
41,000,000 United States Treasury bond strips (Principal only) 7.085%, 05-15-18(e) ... $ 9,313,150
800,000 United States Treasury bonds 6.250%, 08-15-23 ............................ 738,544
300,000 United States Treasury notes 6.000%, 08-31-97 ............................. 300,861
3,000,000 United States Treasury notes 5.625%, 01-31-98 ............................ 3,000,000
3,000,000 United States Treasury notes 7.750%, 01-31-00 ............................ 3,134,910
750,000 United States Treasury bills 3.650%, 02-06-97 (e) ........................ 749,550
2,600,000 United States Treasury bills 5.660%, 07-24-97 (e(g) ....................... 2,531,620
------------
$ 19,768,635
------------
Total Dollar Assets (Cost $24,922,531) $ 20,785,244
------------
Total Portfolio - 96.17% of total net assets (identified cost $65,365,715)(f) $ 70,198,841
Other assets, less liabilities (3.83% of total net assets) 2,792,682
------------
Net assets applicable to outstanding shares $ 72,991,523
============
<FN>
Note:(a) Non-income producing.
(b) Affiliated investment trust.
(c) Sponsored ADR.
(d) Market value determined by the Board of Directors.
(e) Interest rate represents yield to maturity.
(f) Aggregate cost for Federal income tax purposes was $58,645,555.
(g) Collateral supporting line of credit(see Note 7).
</FN>
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
THE TREASURY BILL PORTFOLIO
SCHEDULE OF INVESTMENTS
January 31, 1997
<CAPTION>
Principal Amount Market Value
---------------- ------------
<C> <S> <C>
UNITED STATES TREASURY SECURITIES - 98.47% of Total Net Assets
$25,000,000 United States Treasury notes 4.750%, 02-15-97 ............................. $ 24,994,000
24,000,000 United States Treasury notes 6.875%, 02-28-97 ............................. 24,033,360
28,000,000 United States Treasury notes 6.625%, 03-31-97 ............................. 28,064,960
26,600,000 United States Treasury notes 5.625%, 06-30-97 ............................. 26,642,028
-------------
Total Portfolio - 98.47% of total net assets (identified cost $103,731,275)(a) $ 103,734,348
Other assets, less liabilities (1.53% of total net assets) 1,607,187
-------------
Net assets applicable to outstanding shares $ 105,341,535
=============
<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, 1997
<CAPTION>
Principal Amount Market Value
---------------- ------------
<C> <S> <C>
CORPORATE BONDS - 84.94% of Total Net Assets
AEROSPACE - 4.22% of Total Net Assets
$ 900,000 5.650% Lockheed Martin Corporation, 04-01-97 ............................. $ 900,765
------------
$ 900,765
AUTOMOBILE RENTAL AND SERVICES - 4.32% of Total Net Assets
900,000 8.300% Hertz Corporation, 02-02-98 ....................................... $ 921,330
------------
$ 921,330
BEVERAGES - 9.62% of Total Net Assets
1,000,000 7.875% Coca Cola Company, 09-15-98 ....................................... $ 1,028,190
1,000,000 7.625% PepsiCo, Inc., 11-01-98 ............................................ 1,024,940
------------
$ 2,053,130
ELECTRIC UTILITIES - 12.78% of Total Net Assets
900,000 5.000% Gulf Power Company, 07-01-98 ...................................... $ 887,067
900,000 6.125% Southern California Edison Company, 07-15-97 ....................... 902,493
900,000 9.375% Virginia Electric & Power Company, 06-01-98 ........................ 937,827
------------
$ 2,727,387
1,000,000 ELECTRICAL AND ELECTRONICS - 4.82% of Total Net Assets
7.875% General Electric Company, 09-15-98 ................................. $ 1,028,650
------------
$ 1,028,650
ENVIRONMENTAL - 4.23% of Total Net Assets
900,000 6.375% WMX Technologies, Inc., 07-01-97 ................................... $ 903,276
------------
$ 903,276
FINANCIAL SERVICES - 4.63% of Total Net Assets
1,000,000 5.250% Associates Corporation of North America, 09-01-98 ................. $ 988,260
------------
$ 988,260
INSURANCE - 8.52% of Total Net Assets
900,000 9.375% Saint Paul Companies, Inc., 06-15-97 .............................. $ 912,654
900,000 6.750% USLIFE Corporation, 01-15-98 ...................................... 907,029
------------
$ 1,819,683
</TABLE>
Continued on following page.
<PAGE>
<TABLE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
THE VERSATILE BOND PORTFOLIO
SCHEDULE OF INVESTMENTS
January 31, 1997
<CAPTION>
Principal Amount Market Value
---------------- ------------
<C> <S> <C>
NATURAL GAS UTILITIES - 4.66% of Total Net Assets
$1,000,000 5.875% Consolidated Natural Gas Company, 10-01-98 ........................ $ 994,990
------------
$ 994,990
PHARMACEUTICALS - 9.03% of Total Net Assets
1,000,000 8.625% McKesson Corporation, 02-01-98 ..................................... $ 1,026,630
900,000 6.500% Pfizer, Inc., 02-01-97 ............................................ 900,144
------------
$ 1,926,774
RETAIL - 9.03% of Total Net Assets
900,000 8.750% Dillard Department Stores, Inc., 06-15-98 ......................... $ 931,509
1,000,000 5.500% Wal-Mart Stores, Inc., 03-01-98 ................................... 995,870
------------
$ 1,927,379
TELECOMMUNICATIONS - 4.71% of Total Net Assets
1,000,000 6.250% New England Telephone & Telegraph Company, 12-15-97 ............... $ 1,004,840
------------
$ 1,004,840
TOBACCO - 4.37% of Total Net Assets
900,000 9.000% Philip Morris Companies, Inc., 05-15-98 ........................... $ 932,454
------------
$ 932,454
------------
Total Corporate Bonds (Cost $18,102,694) $ 18,128,918
------------
UNITED STATES TREASURY SECURITIES - 22.94% of Total Net Assets
500,000 United States Treasury notes 6.250%, 07-31-98 ............................ $ 503,315
2,000,000 United States Treasury notes 5.750%, 12-31-98 ............................ 1,995,440
2,400,000 United States Treasury notes 5.875%, 01-31-99 ............................ 2,398,320
------------
Total United States Treasury Securities (Cost $4,897,729) $ 4,897,075
------------
Total Portfolio - 107.88% of total net assets (identified cost $23,000,423)(a) $ 23,025,993
Liabilities, less other assets (7.88% of total net assets) (1,681,052)
------------
Net assets applicable to outstanding shares $ 21,344,941
============
<FN>
Note: (a) Aggregate cost for Federal income tax purposes.
</FN>
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
THE AGGRESSIVE GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS
January 31, 1997
<CAPTION>
Number
Of Shares Market Value
--------- ------------
<C> <S> <C>
AGGRESSIVE GROWTH STOCK INVESTMENTS - 96.28% of Total Net Assets
CHEMICALS - 4.81% of Total Net Assets
6,000 Air Products & Chemicals, Inc. ............................................ $ 428,250
17,800 Wellman, Inc. ............................................................. 313,725
----------
$ 741,975
COMPUTER SOFTWARE - 4.89% of Total Net Assets
14,800 Autodesk, Inc. ............................................................ $ 468,050
6,300 Computer Associates International, Inc. ................................... 285,863
----------
$ 753,913
CONSTRUCTION - 5.81% of Total Net Assets
5,900 Fluor Corporation ......................................................... $ 419,638
25,400 Ryland Group, Inc. ....................................................... 330,200
13,000 Schuller Corporaton ....................................................... 146,250
----------
$ 896,088
DATA PROCESSING - 5.64% of Total Net Assets
69,827 AST Research, Inc. (a) .................................................... $ 353,496
9,800 Hewlett-Packard Company ................................................... 515,725
----------
$ 869,221
ELECTRICAL & ELECTRONICS - 5.98% of Total Net Assets
22,200 DSC Communications Corporation (a) ........................................ $ 499,500
15,200 National Semiconductor Corporation (a) .................................... 421,800
----------
$ 921,300
ENTERTAINMENT AND LEISURE - 8.76% of Total Net Assets
5,300 The Walt Disney Company ................................................... $ 388,225
7,500 Harcourt General, Inc. .................................................... 339,375
9,600 Tribune Company .......................................................... 367,200
7,500 Viacom, Inc. Class A (a) .................................................. 255,000
----------
$1,349,800
FINANCIAL SERVICES - 12.89% of Total Net Assets
2,600 Bank of New York, Inc. warrants (a) ...................................... $ 217,100
15,412 Bear Stearns Companies, Inc. .............................................. 462,360
5,600 Morgan Stanley Group, Inc. ................................................ 319,900
15,300 The Charles Schwab Corporation ............................................ 571,838
5,700 State Street Boston Corporation ........................................... 416,813
----------
$1,988,011
MANUFACTURING - 10.94% of Total Net Assets
8,400 Dana Corporation ......................................................... $ 274,050
6,900 Harnischfeger Industries, Inc. ............................................ 306,188
4,300 Illinois Tool Works, Inc. ................................................. 350,988
12,583 Mattel, Inc. .............................................................. 353,895
9,300 Parker-Hannifin Corporation ............................................... 401,063
----------
$1,686,184
</TABLE>
Continued on following page.
<PAGE>
<TABLE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
THE AGGRESSIVE GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS
January 31, 1997
<CAPTION>
Number
Of Shares Market Value
--------- ------------
<C> <S> <C>
OIL AND OILFIELD SERVICES - 5.09% of Total Net Assets
42,700 Parker Drilling Company (a) .............................................. $ 416,325
105,200 Wainoco Oil Corporation (a) ............................................... 368,200
-----------
$ 784,525
PHARMACEUTICALS - 10.27% of Total Net Assets
6,400 Amgen, Inc. (a) .......................................................... $ 360,800
11,000 Biogen, Inc. (a) .......................................................... 514,250
19,500 Chiron Corporation (a) .................................................... 363,188
12,000 Genzyme Corporation (General Division) (a) ................................ 336,000
810 Genzyme Corporation Tissue Repair (a) .................................... 8,505
-----------
$ 1,582,743
RETAIL - 4.73% of Total Net Assets
15,200 Costco Companies, Inc. (a) ................................................ $ 404,700
13,000 Toys "R" Us, Inc. (a) ..................................................... 325,000
-----------
$ 729,700
TRANSPORTATION - 8.14% of Total Net Assets
11,700 ASA Holdings, Inc. ........................................................ $ 263,250
8,600 Kansas City Southern Industries, Inc. ..................................... 422,475
20,100 M.S. Carriers, Inc. (a) ................................................... 321,600
37,500 Mesa Air Group, Inc. (a) .................................................. 248,438
-----------
$ 1,255,763
MISCELLANEOUS - 8.33% of Total Net Assets
13,000 Browning-Ferris Industries, Inc. .......................................... $ 422,500
5,500 Lockheed Martin Corporation .............................................. 506,000
6,450 Temple-Inland, Inc. ....................................................... 356,363
-----------
$ 1,284,863
-----------
Total Aggressive Growth Stock Investments (Cost $10,394,800) $14,844,086
-----------
</TABLE>
<TABLE>
<CAPTION>
Principal Amount
- ----------------
UNITED STATES TREASURY SECURITIES - 2.53% of Total Net Assets
<C> <S> <C>
$ 390,000 United States Treasury bills 3.650%, 02-06-97 (b) ......................... $ 389,766
-----------
Total United States Treasury Securities (Cost $389,762) $ 389,766
-----------
Total Portfolio - 98.81% of total net assets (identified cost $10,784,562)(c) $15,233,852
Other assets, less liabilities (1.19% of total net assets) 183,487
-----------
Net assets applicable to outstanding shares $15,417,339
===========
<FN>
Note:(a) Non-income producing.
(b) Interest rate represents yield to maturity.
(c) 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, 1997
1. SIGNIFICANT ACCOUNTING POLICIES
Permanent Portfolio Family of Funds, Inc. (the "Fund") is registered under
the Investment Company Act of 1940, as amended (the "Act"), 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, 1997, one such investment in the Permanent
Portfolio (0.72% of total net assets) was 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, 1997, 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 $ 73,316 $ - $ 1,135,175 $ -
Swiss franc assets 316,683 - - -
United States Treasury securities 2,120,346 5,621,347 27,963 48
Other investments 46,581 61,585 54,691 14,247
Dividends 639,905 - - 238,144
------------ ------------ ------------ -----------
Total $ 3,196,831 $ 5,682,932 $ 1,217,829 $ 252,439
============ ============ ============ ===========
</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, 1997; 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, 1997
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 gains or losses on foreign
currency transactions 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 currency gains or losses arise from changes in
the exchange rate applicable to cash, receivables and liabilities
denominated in foreign currencies at January 31, 1997.
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, 1997,
pursuant to the requirements of the Code.
At January 31, 1997, capital loss carryforwards available to offset future
realized gains, if any, aggregate approximately: $153,000 in the Treasury
Bill Portfolio, of which $4,000, $99,000, $41,000, $5,000 and $4,000 expire
on January 31, 2001, January 31, 2002, January 31, 2003, January 31, 2004
and January 31, 2005, respectively; and $124,000 in the Versatile Bond
Portfolio, of which $90,000 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.
Pursuant to the Code, 43.14% and 100.00% of the distributions made from
investment company taxable income in 1996 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, 1997, the Fund reclassified
from undistributed net investment income to paid-in capital, certain book
and tax basis differences relating to shareholder distributions, totaling
$175,604, $1,405,517 and $456,456 for the Permanent Portfolio, the Treasury
Bill Portfolio and the Versatile Bond Portfolio, respectively.
Additionally: in the Permanent Portfolio, $384,941 was reclassified from
accumulated net realized gain on foreign currency transactions to
undistributed net investment income and $1,254,091 was reclassified from
accumulated net realized gain on investments to paid-in capital; and in the
Treasury Bill Portfolio, $133,659 was reclassified from accumulated net
realized loss on investments to undistributed net investment income, due to
these differences.
Continued on following page.
<PAGE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
January 31, 1997
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. Under
the Fund's fundamental investment policies, additional investments could be
made by the Permanent Portfolio in WMS, an illiquid and restricted
security, provided that the aggregate investment cost did not exceed 1% of
the net assets of the Permanent Portfolio at the date of an additional
investment. 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 Complete Plan of Liquidation (the "Plan") which was adopted on
February 29, 1996. The Plan, which provided for the realization and
satisfaction of all of WMS' remaining assets and liabilities, respectively,
and the termination of WMS' existence, was completed on October 31, 1996.
In connection with the realization of such remaining assets, WMS received
$28,301 from WMM related to certain marketing contracts between WMS and
WMM. The Permanent Portfolio received no liquidating dividend upon WMS'
termination as WMS' liabilities exceeded its assets. Accordingly, and as
determined by the Fund's Board of Directors, the Permanent Portfolio
realized a capital loss of $924,881, the Portfolio's cost basis in the
investment. The Permanent Portfolio received no dividends or interest from
WMS during the year ended January 31, 1997, nor was it permitted to make
any additional investments in WMS during that time.
The Permanent Portfolio held 4,297 units of United States Gold Trust, an
affiliated investment trust, resulting in net unrealized depreciation of
$6,617 at January 31, 1997. The Permanent Portfolio received no income from
this investment during the year then ended and paid no Commissions to WMS
relating to purchases and sales of these units during that time.
3. INVESTMENT ADVISORY CONTRACT
Prior to August 23, 1996 and in accordance with the terms of an Investment
Advisory Contract (the "Old Contract"), WMM received a comprehensive
advisory fee monthly, 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.
All fees and expenses payable by the Fund pursuant to the Old Contract and
attributable only to one Portfolio were borne entirely by that Portfolio;
all other such fees and expenses were 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 were not also
officers of the Fund, excise taxes and extraordinary expenses as defined by
the Contract, WMM paid or reimbursed the Fund for substantially all of the
Fund's ordinary operating expenses out of its comprehensive advisory fee
under the Old Contract.
Continued on following page.
<PAGE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
January 31, 1997
At a special meeting of the shareholders of the Fund on August 22, 1996,
the shareholders voted to approve a new Investment Advisory Contract (the
"New Contract") with WMM, effective immediately. The New Contract is
identical to the Old Contract, except for the elimination of the provision
whereby WMM is obligated to pay the salary expense of the Fund's officers
and the fees and expenses of the Fund's directors who are also officers. In
connection with the special meeting, the Fund's Permanent Portfolio,
Treasury Bill Portfolio, Versatile Bond Portfolio and Aggressive Growth
Portfolio incurred solicitation expenses of $27,704, $13,256, $3,402 and
$3,460, respectively, during the year ended January 31, 1997.
During the year ended January 31, 1997, WMM voluntarily agreed to waive
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. WMM may continue voluntarily to waive such fees, although it is not
required to do so, and reserves the right to revoke, reduce or change the
waiver prospectively upon five days written notice to the Fund.
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, 1997:
<TABLE>
<CAPTION>
Permanent Treasury Bill Versatile Bond Aggressive Growth
Portfolio Portfolio Portfolio Portfolio
----------- ------------- -------------- -----------------
<S> <C> <C> <C> <C>
Purchases................................ $ 6,153,817 None $22,823,437 $ 4,387,929
Sales.................................... 6,382,707 None 19,302,873 2,711,361
</TABLE>
5. NET UNREALIZED APPRECIATION OF INVESTMENTS
<TABLE>
The following is a summary of net unrealized appreciation of investments at
January 31, 1997 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 .................... $ 15,742,154 $ 4,956 $ 40,979 $ 4,775,229
------------- --------- ---------- -----------
15,742,154 4,956 40,979 4,775,229
Aggregate gross unrealized depreciation
of investments with excess of tax
cost over value:
Investments in securities of unaffiliated
issuers ................................. (986,383) (1,883) (15,409) (325,939)
Investments other than securities........ (3,202,485) - - -
------------- --------- ---------- -----------
(4,188,868) (1,883) (15,409) (325,939)
------------- --------- ---------- -----------
Net unrealized appreciation
of investments $ 11,553,286 $ 3,073 $ 25,570 $ 4,449,290
============= ========= ========== ===========
</TABLE>
Continued on following page.
<PAGE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
January 31, 1997
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, 1997 and 1996:
<CAPTION>
Permanent Portfolio
---------------------------------------------------------------------------------
1997 1996
---------------------------------------- -------------------------------------
Shares Dollars Shares Dollars
---------------- -------------------- ------------------- ----------------
<S> <C> <C> <C> <C>
Shares sold...................... 437,736 $ 7,182,111 361,698 $ 5,920,587
Distributions reinvested......... 99,400 1,837,906 76,064 1,415,559
--------- ------------ ---------- ------------
537,136 9,020,017 437,762 7,336,146
Shares redeemed.................. (647,681) (10,801,933) (698,896) (11,391,963)
--------- ------------ ---------- ------------
Net decrease (110,545) $ (1,781,916) (261,134) $ (4,055,817)
========= ============ ========== ============
</TABLE>
<TABLE>
<CAPTION>
Treasury Bill Portfolio
---------------------------------------------------------------------------------
1997 1996
---------------------------------------- -------------------------------------
Shares Dollars Shares Dollars
---------------- -------------------- ------------------- ----------------
<S> <C> <C> <C> <C>
Shares sold...................... 763,237 $ 49,387,677 675,087 $ 42,837,954
Distributions reinvested......... 61,755 4,149,954 39,686 2,678,382
--------- ------------ ---------- ------------
824,992 53,537,631 714,773 45,516,336
Shares redeemed.................. (955,791) (62,000,227) (856,988) (54,518,659)
--------- ------------ ---------- ------------
Net decrease (130,799) $ (8,462,596) (142,215) $ (9,002,323)
========= ============ ========== ============
</TABLE>
<TABLE>
<CAPTION>
Versatile Bond Portfolio
---------------------------------------------------------------------------------
1997 1996
---------------------------------------- --------------------------------------
Shares Dollars Shares Dollars
---------------- -------------------- ------------------- -----------------
<S> <C> <C> <C> <C>
Shares sold...................... 337,677 $ 17,383,088 226,619 $ 11,362,172
Distributions reinvested......... 11,742 670,356 11,536 650,964
--------- ------------ ---------- ------------
349,419 18,053,444 238,155 12,013,136
Shares redeemed.................. (330,784) (17,047,752) (288,848) (14,556,424)
--------- ------------ ---------- ------------
Net increase (decrease) 18,635 $ 1,005,692 (50,693) $ (2,543,288)
========= ============ ========== ============
</TABLE>
<TABLE>
<CAPTION>
Aggressive Growth Portfolio
---------------------------------------------------------------------------------
1997 1996
---------------------------------------- -------------------------------------
Shares Dollars Shares Dollars
---------------- -------------------- ------------------- ----------------
<S> <C> <C> <C> <C>
Shares sold...................... 159,742 $ 6,989,548 121,097 $ 4,712,767
Distributions reinvested......... 2,099 98,304 9,846 395,703
--------- ------------ ---------- ------------
161,841 7,087,852 130,943 5,108,470
Shares redeemed.................. (110,561) (4,843,754) (72,494) (2,728,428)
--------- ------------ ---------- ------------
Net increase 51,280 $ 2,244,098 58,449 $ 2,380,042
========= ============ ========== ============
</TABLE>
Continued on following page.
<PAGE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
January 31, 1997
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 but not limited to, the Permanent Portfolio
maintaining a specified net asset value of at least $60 million. During the
year ended January 31, 1997, there were no amounts outstanding under this
agreement.
8. REGULATORY MATTERS
Following a routine examination of the Fund in 1991, the Securities and
Exchange Commission (the "Commission") instituted public administrative and
cease-and-desist proceedings on January 13, 1997, to determine the truth of
allegations by the Commission's Division of Enforcement (the "Division")
that WMM, WMS and two of the Fund's directors and officers (the
"Respondents") violated certain provisions of federal securities laws in
fiscal years 1990 through 1992. The allegations include the following: that
WMM received excessive reimbursements under the Fund's Marketing and
Distribution Plan (the "Marketing Plan") during fiscal years ended January
31, 1990 and 1991; that during fiscal years 1990 through 1992, the Fund's
Board of Directors did not meet at the end of each quarter to review the
expenses incurred under the Marketing Plan and that the reports thereon
contained insufficient detail; that from August 1990 through July 1992, the
Fund's Board of Directors did not include the proportion of disinterested
directors as required by the Act; and in April 1990, the Permanent
Portfolio acquired a "call option" prohibited by the Fund's fundamental
investment policies and managed the investment for the advantage of a
client of an officer of the Fund. No charges have been made against the
Fund. The Respondents have denied all of the allegations of the Division
and are contesting the proceedings. Pursuant to Maryland law and the Fund's
bylaws, the Fund has agreed to continue to pay directly on behalf of the
Respondents, or to reimburse them, for certain expenses incurred by them in
connection with the proceedings. The Fund's Permanent Portfolio, Treasury
Bill Portfolio, Versatile Bond Portfolio and Aggressive Growth Portfolio so
paid or reimbursed expenses of $53,511, $43,469, $3,046 and $2,640,
respectively, during the year ended January 31, 1997.
<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, 1997 January 31, 1996 January 31, 1995 January 31, 1994
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of year $ 18.80 $ 16.51 $ 17.55 $ 15.36
--------- --------- -------- --------
Income or loss from investment operations:
Net investment income ................ .52 .50 .64 .44
Net realized and unrealized gains
or losses on investments and
foreign currencies ................ (.41) 2.17 (1.46) 1.99
--------- --------- -------- --------
Total income or loss from
investment operations .11 2.67 (.82) 2.43
Less distributions from:
Net investment income ................ (.42) (.38) (.22) (.24)
Net realized gain on investments ..... (.09) - - -
--------- --------- -------- --------
Total distributions (.51) (.38) (.22) (.24)
--------- --------- -------- --------
Net asset value, end of year $ 18.40 $ 18.80 $ 16.51 $ 17.55
========= ========= ======== ========
Total return (1) ......................... .57 16.20% (4.65)% 15.86%
Ratios / supplemental data:
Net assets, end of year (in thousands)... $ 72,992 $ 76,641 $ 71,610 $ 79,043
========= ========= ======== ========
Ratio of expenses to average net assets.. 1.49% 1.35% 1.32% 1.21%
Ratio of net investment income
to average net assets ................ 2.78% 2.85% 2.63% 2.66%
Portfolio turnover rate ................. 12.29% 9.96% 31.24% 49.51%
Average brokerage commission
rate paid (2) ........................ $ .05874 $ - $ - $ -
<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.
(2) Average brokerage commission rate paid information was not required for
years beginning before September 1, 1995.
</FN>
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
Year ended Year ended Year ended Year ended Year ended Year ended
January 31, 1993 January 31, 1992 January 31, 1991 January 31, 1990 January 31, 1989 January 31, 1988
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
<C> <C> <C> <C> <C> <C>
$ 15.21 $ 15.10 $ 15.57 $ 15.00 $ 14.71 $ 13.66
--------- --------- --------- ---------- ---------- ----------
.49 .51 .64 .57 .46 .37
(.05) .51 (.63) - (.15) .80
--------- --------- --------- ---------- ---------- ----------
.44 1.02 .01 .57 .31 1.17
(.29) (.91) (.48) - - -
- - - - (.02) (.12)
--------- --------- --------- ---------- ---------- ----------
(.29) (.91) (.48) - (.02) (.12)
--------- --------- --------- ---------- ---------- ----------
$ 15.36 $ 15.21 $ 15.10 $ 15.57 $ 15.00 $ 14.71
========= ========= ========= ========== ========== ==========
2.93% 7.01% .15% 3.80% 2.11% 8.58%
$ 65,937 $ 72,312 $ 80,542 $ 93,663 $ 97,475 $ 90,177
========= ========= ========= ========== ========== ==========
1.25% 1.27% 1.36% 1.17% 1.17% 1.15%
3.20% 3.29% 4.22% 3.80% 3.00% 2.53%
70.77% 8.01% 31.58% 61.44% 23.87% 21.97%
$ - $ - $ - $ - $ - $ -
</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 Year ended
January 31, 1997 January 31, 1996 January 31, 1995 January 31, 1994
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 67.84 $ 66.40 $ 64.81 $ 64.45
---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (2) .................... 2.84 3.22 2.65 1.53
Net realized and unrealized gains
or losses on investments (3) ................. .01 .06 (.39) (.09)
---------- ---------- ---------- ----------
Total income from investment operations 2.85 3.28 2.26 1.44
Less distributions from:
Net investment income ........................ (3.14) (1.84) (.67) (1.08)
---------- ---------- ---------- ----------
Total distributions (3.14) (1.84) (.67) (1.08)
---------- ---------- ---------- ----------
Net asset value, end of period $ 67.55 $ 67.84 $ 66.40 $ 64.81
========== ========== ========== ==========
Total return (4) ................................... 4.23% 4.95% 3.49% 2.24%
Ratios / supplemental data:
Net assets, end of period (in thousands) ........ $ 105,342 $ 114,667 $ 121,666 $ 133,970
========== ========== ========== ==========
Ratio of expenses to average net assets (2) ..... .90% .82% .82% .72%
Ratio of net investment income
to average net assets ......................... 4.19% 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, 1997
and .50%, .50%, .49%, .47%, .48%, .47%, .62%, .62% and .65% for the years
ended January 31, 1996, 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 $2.37 for the year ended
January 31, 1997 and $2.78, $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, 1997 January 31, 1996
---------------- ----------------
<S> <C> <C>
Net asset value, beginning of period $ 56.85 $ 54.90
-------- ---------
Income from investment operations:
Net investment income (2) ............... 2.94 2.91
Net realized and unrealized gains
or losses on investments (3) .......... (.34) 1.05
-------- ---------
Total income from investment operations 2.60 3.96
Less distributions from:
Net investment income ................... (2.21) (2.01)
Net realized gain on investments ........ - -
-------- ---------
Total distributions (2.21) (2.01)
-------- ---------
Net asset value, end of period $ 57.24 $ 56.85
======== =========
Total return (4) ............................ 4.58% 7.24%
Ratios / supplemental data:
Net assets, end of period (in thousands).... $ 21,345 $ 20,137
======== =========
Ratio of expenses to average net assets (2). .97% .89%
Ratio of net investment income
to average net assets ................... 5.16% 5.21%
Portfolio turnover rate ................... 102.29% 51.64%
<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 .38% for the year ended January 31, 1997 and .37%, .36%, .39%,
.41% and .43% for the years ended January 31, 1996, 1995, 1994, 1993 and
the period ended January 31, 1992, respectively. Without this waiver, the
net investment income per share would have been $2.66 for the year ended
January 31, 1997 and $2.65, $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 Year ended Period ended
January 31, 1995 January 31, 1994 January 31, 1993 January 31, 1992 (1)
- ---------------- ---------------- ---------------- --------------------
<C> <C> <C> <C>
$ 54.76 $ 53.63 $ 50.58 $ 50.00
--------- --------- ---------- ---------
2.12 1.87 2.06 2.51
(.63) (.04) 1.00 (1.93)
--------- --------- ---------- ---------
1.49 1.83 3.06 .58
(1.33) (.70) (.01) -
(.02) - - -
--------- --------- ---------- ---------
(1.35) (.70) (.01) -
--------- --------- ---------- ---------
$ 54.90 $ 54.76 $ 53.63 $ 50.58
========= ========= ========== =========
2.74% 3.42% 6.05% 3.33%*
$ 22,229 $ 35,682 $ 23,217 $ 596
========= ========= ========== =========
.86% .89% .89% 1.07%*
3.84% 3.46% 3.86% 4.00%*
74.62% 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 Year ended
January 31, 1997 January 31, 1996 January 31, 1995
---------------- ---------------- ----------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 40.65 $ 31.61 $ 32.56
---------- ---------- ---------
Income or loss from investment operations:
Net investment income (loss) ............................ .26 (.02) (.01)
Net realized and unrealized gains
or losses on investments ................................ 7.05 10.68 (.89)
---------- ---------- ---------
Total income or loss from investment operations 7.31 10.66 (.90)
Less distributions from:
Net investment income ................................... (.25) (.11) (.03)
Net realized gain on investments ........................ (.05) (1.51) (.02)
---------- ---------- ---------
Total distributions (.30) (1.62) (.05)
---------- ---------- ---------
Net asset value, end of period $ 47.66 $ 40.65 $ 31.61
========== ========== =========
Total return (2) ............................................. 18.00% 33.78% (2.75)%
Ratios / supplemental data:
Net assets, end of period (in thousands) .................... $ 15,417 $ 11,067 $ 6,758
========== ========== =========
Ratio of expenses to average net assets ...................... 1.33% 1.19% 1.23%
Ratio of net investment income (loss) to average net assets... .59% (.06)% (.04)%
Portfolio turnover rate ...................................... 21.32% 18.94% 26.29%
Average brokerage commission rate paid (3) ................... $ 0.0588 $ - $ -
<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.
(3) Average brokerage commission rate paid information was not required for
years beginning before September 1, 1995.
</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 35)
Versatile Bond Portfolio (VBP)
(Graph ommitted, see description on page 35)
Aggressive Growth Portfolio (AGP)
(Graph ommitted, see description on page 35)
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 1/31/97 0.51% 1 year ended 1/31/97 4.52% 1 year ended 1/31/97 17.93%
5 years ended 1/31/97 5.78% 5 years ended 1/31/97 4.73% 5 years ended 1/31/97 17.89%
10 years ended 1/31/97 4.96% 5 years, 127 days ended 1/31/97 4.63% 7 years, 29 days ended 1/31/97 14.38%
14 years, 62 days ended 1/31/97 4.88%
- ---------------------
</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. The strong performance of the U.S. stock and bond markets
throughout 1996 were approximately offset by the weak performance in the
gold and silver markets, as well as the relative performance of the Swiss
franc. Accordingly, the Portfolio achieved a total return of .57% for the
year ended January 31, 1997, as compared to an inflation rate of 3.04%
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 4.23% and maintained an average maturity of
between 60 and 90 days throughout the year ended January 31, 1997. 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 4.58% while
maintaining an average maturity of between 300 and 500 days throughout the
year ended January 31, 1997. 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 18.00% for the year
ended January 31, 1997, as compared to 28.93% for the Dow Jones Industrial
Average and 27.35% for the Standard and Poor's 500 Stock Index for the year
then ended.
<PAGE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
<TABLE>
Special Meeting of Shareholders
On August 22, 1996, a special meeting of shareholders in the Fund was held to
vote on the following proposals:
(i). To elect six directors.
(ii). To approve a new Investment Advisory Contract (the "New Contract") between
the Fund and WMM that is identical to the current Contract except for the
elimination of the provision whereby WMM is obligated to pay fees and expenses
of the Fund's officers and of the Fund's directors who are also officers.
A summary of the voting results is as follows:
<CAPTION>
Permanent Treasury Bill Versatile Bond Aggressive Growth
Portfolio Portfolio Portfolio Portfolio
-------------- ----------------- ------------------ -------------------
<S> <C> <C> <C> <C>
Proposal (i) Election of directors:
David P. Bergland
Affirmative 1,997,666.382 923,028,437 173,261.784 155,428.549
Withhold 55,350.228 13,399,227 4,814.191 8,255.074
Hugh A. Butler
Affirmative 1,998,816.083 923,065.678 173,322.062 155,514.905
Withhold 54,200.527 13,361.986 4,753.913 8,168.718
Terry Coxon
Affirmative 2,004,282.116 924,272.479 173,322.062 155,537.117
Withhold 48,734.494 12,155.185 4,753.913 8,146.506
Robert B. Martin, Jr.
Affirmative 1,997,540.282 923,190.984 173,261.784 155,428.549
Withhold 55,476.328 13,236.680 4,814.191 8,255.074
Alan M. Sergy
Affirmative 2,004,850.661 923,228.225 173,322.062 155,621.381
Withhold 48,165.949 13,199.439 4,753.913 8,062.242
Mark Tier
Affirmative 2,003,192.361 921,902.803 173,322.062 155,668.643
Withhold 49,824.249 14,524.861 4,753.913 8,014.980
Proposal (ii) Approval of new Contract:
Affirmative 1,898,886.054 849,901.034 167,578.959 150,882.713
Against 91,515.179 59,521.980 8,180.685 9,626.188
Abstain 62,615.377 27,004.650 2,316.331 3,174.722
</TABLE>
Each of the proposals received the required majority of votes in each portfolio
and were adopted. The New Contract became effective immediately upon approval of
the shareholders of the Fund. There were no broker non-votes submitted with
respect to either proposal, and no other proposals were voted on at the special
meeting.
<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, 1997
Local 1-512-453-7558
