As filed with the Securities and Exchange Commission on July 26, 1999
Registration No. 2-75661
File No. 811-3379
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
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Pre-Effective Amendment No.
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Post-Effective Amendment No. 24 X
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
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Amendment No. 24
(Check appropriate box or boxes.)
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
625 Second Street, Suite 102, Petaluma, California 94952
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (707) 778-1000
TERRY COXON, 625 Second Street, Suite 102, Petaluma, CA 94952
(Name and Address of Agent for Service)
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Copies to:
ROBERT B. MARTIN, JR., ESQ., 625 Second Street, Suite 102, Petaluma, CA 94952
It is proposed that this filing will become effective (check
appropriate box), and that the approximate date of commencement of proposed sale
to the public will be as soon as practicable after:
immediately upon filing pursuant to paragraph (b)
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on ______________ pursuant to paragraph (b)
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X 60 days after filing pursuant to paragraph (a)
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on (date) pursuant to paragraph (a) of rule 485
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The Registrant has registered an indefinite amount of such securities under the
Securities Act of 1933 pursuant to Rule 24f-2, and the Notice thereunder for its
most recent fiscal year was filed with the Commission on March 29, 1999.
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PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
Cross Reference Sheet Pursuant to Rule 404
Between Items of Part A of Form N-1A and the Prospectus
<CAPTION>
Item Number and Caption of Part A of Form N-1A Caption in Prospectus
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<C> <S> <C>
1. Front and Back Cover Pages........................ Front and Back Cover Pages
2. Risk / Return Summary:
Investments, Risks and Performance.............. Risk / Return Summary
3. Risk / Return Summary: Fee Table.................. Pro-Forma Expense Table
4. Investment Objectives, Principal
Investment Strategies and Related Risks......... Cover Page;
Objectives and Policies;
The Four Portfolios;
The Four Portfolios-Risk Factors and Special
Considerations
5. Management's Discussion of Fund Performance....... Financial Statements
6. Management, Organization and
Capital Structure.............................. Management
7. Shareholder Information........................... Objectives and Policies;
Distributions and Taxes;
Computation of Net Asset Values;
Purchase of Shares from the Fund;
Redemption of Shares by the Fund;
Shareholder Account Services and Privileges;
Service Charges
8. Distribution Arrangements......................... Purchase of Shares from the Fund
9. Financial Highlights Information.................. Financial Highlights
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<TABLE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
Cross Reference Sheet Pursuant to Rule 404
Between Items of Part B of Form N-1A and the Statement of Additional Information
<CAPTION>
Caption in Statement of Additional
Item Number and Caption of Part B of Form N-1A Information
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<C> <S> <C>
10. Cover Page and Table of Contents.................. Cover Page;
Table of Contents
11. Fund History...................................... Organization and Management-Fund History
12. Description of the Fund and its Investments and
Risks.......................................... Objectives and Policies
13. Management of the Fund............................ Organization and Management
14. Control Persons and Principal Holders of
Securities..................................... Organization and Management-
Share Ownership
15. Investment Advisory and Other Services............ Organization and Management;
Transfer and Dividend-Disbursing Agent;
Custodian
16. Brokerage Allocation and Other Practices.......... Portfolio Transactions and Brokerage
17. Capital Stock and Other Securities................ General Information
18. Purchase, Redemption and Pricing of Shares........ Computation of Net Asset Values;
Purchase of Shares from the Fund;
Redemption of Shares by the Fund
19. Taxation of the Fund.............................. Distributions and Taxes;
Redemption of Shares by the Fund - Tax
Consequences of In-Kind Redemptions
20. Underwriters...................................... Portfolio Transactions and Brokerage;
General Information-Capitalization
21. Calculation of Performance Data................... General Information-Calculations of
Performance Data;
General Information-After-Tax Returns
22. Financial Statements.............................. Financial Statements
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<PAGE>
PROSPECTUS September 24, 1999
The
PERMANENT
PORTFOLIO
Family of Funds
(707) 778-1000
625 Second Street * Petaluma, California 94952
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Permanent Portfolio Family of Funds, Inc. (the "Fund") is a mutual fund that
contains four separate "Portfolios," each with its own separate investment
policy. Investors may invest in any one or in any combination of the Portfolios.
The Fund's four Portfolios are:
The Permanent Portfolio, which invests a fixed Target Percentage 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 U.S.
Treasury bills and bonds.
The Treasury Bill Portfolio, which invests in short-term U.S. Treasury bills
and notes.
The Versatile Bond Portfolio, which invests in a diversified portfolio of
short-term (remaining maturity of 24 months or less) corporate bonds rated "A"
or higher by Standard & Poor's.
The Aggressive Growth Portfolio, which invests in stocks and stock warrants of
U.S. companies selected for high profit potential.
The Fund is a no-load fund. Investors may purchase and redeem shares in any
Portfolio directly with the Fund without payment of commission.
This Prospectus is designed to provide you with information you should know
before investing in any of the Fund's Portfolios. You should read this entire
document and retain it for future reference.
These securities have not been approved or disapproved by the Securities and
Exchange Commission, nor has the Commission passed upon the adequacy or accuracy
of this Prospectus. Any representation to the contrary is a criminal offense.
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TABLE OF CONTENTS
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RISK / RETURN SUMMARY..........................................................i
BAR CHART AND PERFORMANCE TABLES..............................................iv
Permanent Portfolio........................................................iv
Treasury Bill Portfolio.....................................................v
Versatile Bond Portfolio...................................................vi
Aggressive Growth Portfolio...............................................vii
PRO-FORMA EXPENSE TABLE.....................................................viii
SUMMARY OF OTHER FEATURES.....................................................ix
OPTIONAL SERVICES AND CHARGES.................................................xi
FINANCIAL HIGHLIGHTS...........................................................1
Permanent Portfolio.........................................................1
Treasury Bill Portfolio.....................................................2
Versatile Bond Portfolio....................................................3
Aggressive Growth Portfolio.................................................4
OBJECTIVES AND POLICIES........................................................5
Tax Planning................................................................5
Dividends and Tax Planning..................................................5
THE FOUR PORTFOLIOS............................................................5
Permanent Portfolio.........................................................6
Treasury Bill Portfolio.....................................................7
Versatile Bond Portfolio....................................................8
Aggressive Growth Portfolio.................................................8
Risk Factors and Special Considerations.....................................9
MANAGEMENT....................................................................13
Investment Adviser.........................................................13
CONSULTANTS...................................................................15
DISTRIBUTIONS AND TAXES.......................................................15
COMPUTATION OF NET ASSET VALUES...............................................16
PURCHASE OF SHARES FROM THE FUND..............................................17
REDEMPTION OF SHARES BY THE FUND..............................................17
Written Redemption Requests................................................18
Telephone Redemption Requests..............................................18
Redemption Limitations.....................................................18
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES...................................19
Automatic Investment Program...............................................19
Portfolio Switching........................................................19
Automatic Reinvestment.....................................................20
Systematic Withdrawal Program..............................................20
Individual Retirement Account Plan.........................................20
Check Redemptions -- Treasury Bill Portfolio and
Versatile Bond Portfolio Only...........................................21
Limitations................................................................21
SERVICE CHARGES...............................................................21
CUSTODIAN, TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT.......................22
REPORTS.......................................................................22
Advertising................................................................22
<PAGE>
RISK / RETURN SUMMARY
This Summary describes the features of an investment in the Fund. Please
read the entire Prospectus for more complete information before you invest.
Investment Objectives, Principal Strategies and Risks
The Fund is a no-load, diversified management investment company consisting
of four Portfolios: Permanent Portfolio, Treasury Bill Portfolio, Versatile Bond
Portfolio and Aggressive Growth Portfolio. Each of the Fund's four Portfolios
has a separate investment policy and separate investment objectives or goals.
Each Portfolio follows the strategy of undertaking, where practicable, to
minimize or defer the recognition of taxable income by its shareholders.
There is, of course, no assurance that any Portfolio will achieve its
objective. Loss of money is a risk of investing in the Fund, especially in the
case of the Aggressive Growth Portfolio. In addition, please see "Risk Factors
and Special Considerations" for a description of the investments held by each
Portfolio and the risks that would attend an isolated purchase of any one of
those investments.
Permanent Portfolio
The objective of the Fund's Permanent Portfolio is to preserve and increase
the purchasing power value of its shares over the long term. It's strategy is to
invest a fixed Target Percentage 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 U.S. Treasury bills and bonds. To maintain the
Portfolio's Target Percentages, the Permanent Portfolio invests in gold and
silver bullion and bullion-type coins, Swiss franc denominated deposits and
Swiss government bonds, stocks of companies whose assets consist primarily of
real estate and natural resources such as oil and minerals, stock warrants and
volatile stocks of the types in which the Aggressive Growth Portfolio may invest
and high grade, short term bills and bonds of the types in which the Treasury
Bill Portfolio and Versatile Bond Portfolio may invest.
Prices of gold, silver, stocks and stock warrants are subject to market
risk and have experienced wide fluctuations from time to time. Prices of U.S.
Treasury bills and bonds and short-term corporate bonds are also subject to
market risk and decrease when prevailing interest rates rise. Short-term
corporate bonds are also subject to some risk of default. Viewed in isolation,
some of these assets, such as gold, stock warrants and long-term bonds would be
considered highly speculative. However, the Fund's management believes that the
various investments are subject to different (and, in some cases, contrary)
risks, so that the value of the Permanent Portfolio's investments in the
aggregate will be subject to less risk, over the long term, than the risk
associated with any one of the investments taken by itself.
Even if the Permanent Portfolio does achieve its objective over the long
term, it is subject to the risk of suffering substantial short-term losses from
time to time, since investment prices generally respond to changes in the
pattern of inflation with lags and delays that are impossible to foresee.
Treasury Bill Portfolio
The objective of the Fund's Treasury Bill Portfolio is to earn high current
income for the Portfolio, consistent with safety of principal. It's strategy is
to invest at least 80% of its assets in short-term U.S. Treasury bills and
notes. It also invests in U.S. Treasury bonds and notes having a remaining
maturity of thirteen months or less. The Treasury Bill Portfolio, unlike most
money market funds (which distribute their investment income daily and maintain
a constant net asset value per share), follows a dividend policy that permits
(but does not assure) its net asset value per share to rise. An investment in
the Treasury Bill Portfolio is subject to the risk of market changes in prices
and yields of short-term U.S. Treasury securities. Prices of short-term U.S.
Treasury securities like those that the Portfolio invests in go down when
prevailing interest rates rise.
<PAGE>
Versatile Bond Portfolio
The objective of the Fund's Versatile Bond Portfolio is to earn high
current income for the Portfolio, while limiting risk to principal. It's
strategy is to invest in a diversified portfolio of corporate bonds rated "A" or
higher by Standard & Poor's and having a remaining maturity of 24 months or
less. An investment in the Versatile Bond Portfolio is subject to the risk of
market changes in prices and yields of short-term corporate bonds. Prices of
short-term corporate bonds go down when prevailing interest rates rise. Such
price changes generally are smaller than changes in the prices of long-term
corporate, municipal or U.S. Treasury bonds. Also, corporate bonds generally are
not guaranteed by any government agency and are subject to the risk of default.
Unlike most short-term bond funds that pay out dividends periodically, the
Versatile Bond Portfolio follows a dividend policy that permits (but does not
assure) its net asset value per share to rise.
Aggressive Growth Portfolio
The objective of the Fund's Aggressive Growth Portfolio is to achieve high
(greater than for the stock market as a whole), long-term appreciation in the
value of its shares. It's strategy is to invest in stocks and stock warrants of
U.S. companies selected by the Investment Advisor for high profit potential. The
Investment Adviser seeks to select stocks that are expected to have higher price
volatility than the stock market as a whole, including stocks of companies in
high technology industries, companies developing or exploiting new products or
services and companies whose shares are valued primarily for potential growth in
earnings, dividends or asset values. While such investments are expected by the
Investment Adviser to have the potential to appreciate more rapidly than stock
market investments in general, they also are subject to greater market risk of
price declines, especially during periods when the prices of U.S. stock market
investments in general are declining.
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This page intentionally left blank.
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BAR CHART AND PERFORMANCE TABLES
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Permanent Portfolio
The bar chart and table below provide an indication of the risks of investing in
the Permanent Portfolio by showing changes in the Portfolio's performance from
year to year over the last ten calendar years and by showing how the Portfolio's
average annual total returns for the one, five and ten year periods ended
December 31, 1998 compare to the performance of three-month U.S. Treasury bills.
The bar chart assumes reinvestment of all dividends and distributions, deduction
of all fees and expenses except the $35 one-time account start-up fee and the
$1.50 monthly account maintenance fee. How the Permanent Portfolio has performed
in the past is not necessarily an indication of how it will perform in the
future.
GRAPH OMITTED
During the ten years shown in the bar chart above, the Permanent Portfolio's
highest return during one calendar quarter was 7.86% (quarter ending September
30, 1997) and its lowest return during one calendar quarter was -3.18% (quarter
ending March 31, 1997). The Permanent Portfolio's year-to-date return through
the latest calendar quarter was -1.71% (quarter ending June 30, 1999).
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Average Annual Total Returns
(for the periods ended December 31, 1998)
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Past 1 Year Past 5 Years Past 10 Years
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Permanent Portfolio...... 3.39% 4.43% 4.93%
U.S. Treasury bills*..... 5.00% 5.14% 5.45%
* Three-month U.S. Treasury bills are short-term loans to the U.S. Government
with a maturity of three months. Treasury bills are full-faith-and-credit
obligations of the U.S. Treasury and are generally regarded as being free
of any risk of default.
<PAGE>
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BAR CHART AND PERFORMANCE TABLES
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Treasury Bill Portfolio
The bar chart and table below provide an indication of the risks of investing in
the Treasury Bill Portfolio by showing changes in the Portfolio's performance
from year to year over the last ten calendar years and by showing how the
Portfolio's average annual total returns for the one, five and ten year periods
ended December 31, 1998 compare to the performance of three-month U.S. Treasury
bills. The bar chart assumes reinvestment of all dividends and distributions,
deduction of all fees and expenses except the $35 one-time account start-up fee
and the $1.50 monthly account maintenance fee. How the Treasury Bill Portfolio
has performed in the past is not necessarily an indication of how it will
perform in the future.
GRAPH OMITTED
During the ten years shown in the bar chart above, the Treasury Bill Portfolio's
highest return during one calendar quarter was 2.16% (quarter ending June 30,
1989) and its lowest return during one calendar quarter was .38%(quarter ending
December 31, 1992).The Treasury Bill Portfolio's year-to-date return through the
latest calendar quarter was 1.79% (quarter ending June 30, 1999).
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Average Annual Total Returns
(for the periods ended December 31, 1998)
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Past 1 Year Past 5 Years Past 10 Years
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Treasury Bill Portfolio.. 4.04% 4.08% 4.56%
U.S. Treasury bills*..... 5.00% 5.14% 5.45%
* Three-month U.S. Treasury bills are short-term loans to the U.S. Government
with a maturity of three months. Treasury bills are full-faith-and-credit
obligations of the U.S. Treasury and are generally regarded as being free
of any risk of default.
<PAGE>
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BAR CHART AND PERFORMANCE TABLES
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Versatile Bond Portfolio
The bar chart and table below provide an indication of the risks of investing in
the Versatile Bond Portfolio by showing changes in the Portfolio's performance
from year to year over the last seven calendar years and by showing how the
Portfolio's average annual total returns for the one, five and eight year
periods ended December 31, 1998 compare to the performance of the Salomon Smith
Barney AAA/AA 1-3 Year Corporate Index, a component of the Salomon Smith Barney
Broad Investment-Grade (BIG) Bond Index. The bar chart assumes reinvestment of
all dividends and distributions, deduction of all fees and expenses except the
$35 one-time account start-up fee and the $1.50 monthly account maintenance fee.
How the Versatile Bond Portfolio has performed in the past is not necessarily an
indication of how it will perform in the future.
GRAPH OMITTED
During the seven years shown in the bar chart above, the Versatile bond
Portfolio's highest return during one calendar quarter was 2.51% (quarter ending
September 30, 1992) and its lowest return during one calendar quarter was .11%
(quarter ending December 31, 1992). The Versatile Bond Portfolio's year-to-date
return through the latest calendar quarter was 1.33% (quarter ending June 30,
1999).
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Average Annual Total Returns
(for the periods ended December 31, 1998)
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Past 1 Year Past 5 Years Since Inception(1)
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Versatile Bond Portfolio.... 4.82% 4.92% 4.73%
Salomon Smith Barney AAA/AA
1-3 Year Corporate Index*. 7.25% 6.38% 6.83%
(1) The Versatile Bond Portfolio became effective September 27, 1991 and
commenced investment operations November 12, 1991.
* The Salomon Smith Barney AAA/AA 1-3 Year Corporate Index is a component of
the Salomon Smith Barney Broad Investment-Grade (BIG) Bond Index. It is
market-capitalization weighted and includes bonds rated AAA or AA by
Standard & Poor's or Moody's with maturities of one to three years and a
minimum amount outstanding of $100 million.
<PAGE>
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BAR CHART AND PERFORMANCE TABLES
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Aggressive Growth Portfolio
The bar chart and table below provide an indication of the risks of investing in
the Aggressive Growth Portfolio by showing changes in the Portfolio's
performance from year to year over the last nine calendar years and by showing
how the Portfolio's average annual total returns for the one, five and nine year
periods ended December 31, 1998 compare to the performance of the Dow Jones
Industrial Average. The bar chart assumes reinvestment of all dividends and
distributions, deduction of all fees and expenses except the $35 one-time
account start-up fee and the $1.50 monthly account maintenance fee. How the
Aggressive Growth Portfolio has performed in the past is not necessarily an
indication of how it will perform in the future.
GRAPH OMITTED
During the nine years shown in the bar chart above, the Aggressive Growth
Portfolio's highest return during one calendar quarter was 27.47% (quarter
ending December 31, 1998) and its lowest return during one calendar quarter was
- -22.44% (quarter ending September 30, 1990). The Aggressive Growth Portfolio's
year-to-date return through the latest calendar quarter was 22.41% (quarter
ending June 30, 1999).
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Average Annual Total Returns
(for the periods ended December 31, 1998)
-------------------------------------------------
Past 1 Year Past 5 Years Since Inception(1)
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Aggressive Growth Portfolio... 13.82% 18.24% 15.69%
Dow Jones Industrial Average*. 14.18% 19.22% 14.21%
(1) The Aggressive Growth Portfolio became effective January 2, 1990 and
commenced investment operations May 16, 1990.
* The Dow Jones Industrial Average is an average of the stock prices of 30
large companies and represents a widely recognized unmanaged portfolio of
common stocks.
<PAGE>
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PRO-FORMA EXPENSE TABLE
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The table below briefly describes the fees and expenses you may pay in
connection with an investment in the Fund.
Shareholder Fees (fees paid directly from your investment)
One-time account start-up fee.......................... $35.00
Optional services:
Exchange fee (Portfolio switching)..................... $ 5.00 per switch
Check redemptions
(Treasury Bill Portfolio
and Versatile Bond Portfolio only).................. $ 1.00 per check
Bank-to-bank wire transfer............................. $ 8.00 per wire
Annual Fund Operating Expenses (expenses that are deducted from Fund assets):
------------------------------------------------------------
Permanent Treasury Bill Versatile Bond Aggressive Growth
Portfolio Portfolio Portfolio Portfolio
---------- ------------- -------------- -----------------
Management fees(1).. 1.13% 1.13% 1.13% 1.13%
Other expenses
Other operating
expenses......... .30% .33% .33% .26%
Account
maintenance fees. .05% .05% .05% .05%
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Total other
expenses .35% .38% .38% .31%
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Total operating
expenses 1.48% 1.51% 1.51% 1.44%
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(1) During the year ended January 31, 1999, the Investment Adviser voluntarily
agreed to waive portions of the investment advisory (management) fee
allocable to the Treasury Bill Portfolio and to the Versatile Bond
Portfolio to the extent that the Portfolio's total investment advisory fee
would exceed an annual rate of 5/8 of 1% (0.625%), in the case of the
Treasury Bill Portfolio, or 3/4 of 1% (0.750%), in the case of the
Versatile Bond Portfolio. After fee waivers, the investment advisory fee
for the Treasury Bill Portfolio and the Versatile Bond Portfolio is
actually .63% and .75%, respectively, instead of 1.13%, and total operating
expenses are 1.01% and 1.13%, respectively. The Investment Adviser may
continue to voluntarily 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.
Example
This Example is intended to help you compare the cost of investing in a
Portfolio with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in a Portfolio for the time periods indicated and then
redeem all of your shares at the end of those periods. The Example also assumes
that your investment has a 5% return each year and that the Portfolio's
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions, your costs would be:
------------------------------------------------------------
Permanent Treasury Bill Versatile Bond Aggressive Growth
Portfolio Portfolio Portfolio Portfolio
---------- ------------- -------------- -----------------
1 Year............. $ 185 $ 188 $ 188 $ 181
3 Years............ $ 502 $ 511 $ 511 $ 489
5 Years............ $ 840 $ 856 $ 856 $ 819
10 Years............ $1,798 $1,831 $1,831 $1,754
<PAGE>
SUMMARY OF OTHER FEATURES
Other major features of the Fund include:
* Dividends and capital gain distributions (if any) paid annually.
* Tax planning at the Fund level to minimize or defer, where practicable, the
recognition of taxable income or gains by its shareholders.
* IRA Plan.
* $1,000 minimum initial investment in any Portfolio.
* $100 minimum additional investment in any Portfolio.
* No redemption or commission charge to redeem shares directly with the Fund.
Investment and Tax Planning
The Fund was designed to provide its shareholders with a flexible tool for
their investment and tax planning. In furtherance of that purpose, each of the
Fund's four Portfolios has its own particular investment policy, and each
Portfolio may be purchased through an IRA Plan sponsored by the Fund.
Each Portfolio, to the extent consistent with its investment objectives,
arranges its investments to favor opportunities for appreciation and holds
appreciated investments for at least the minimum period required for sales of
investments to qualify for long-term capital gain treatment. In addition, each
Portfolio distributes its investment income to its shareholders as per-share
dividends only once a year and only to the extent necessary for the Portfolio to
qualify for treatment as a regulated investment company under Subchapter M of
the Internal Revenue Code of 1986, as amended, thereby avoiding corporate
federal income tax. (If a Portfolio were to distribute less than the minimum
amount required for any year, which the Fund considers unlikely, it would become
subject to federal income tax for that year.) This dividend policy may lessen a
shareholder's tax burden by deferring recognition of taxable income and/or by
permitting a greater portion of the shareholder's total return to be recognized
as a capital gain on a redemption rather than as dividends, which are taxable as
ordinary income. In the case of shares that pass to a shareholder's estate, this
dividend policy may eliminate income tax on a portion of the shareholder's total
return, due to a federal income tax provision which generally treats property
acquired from a decedent as having a tax basis equal to its fair market value at
the date of death.
For shareholders holding their shares in a Portfolio continuously for
longer than one year, the tax advantages to be achieved from the Portfolio's
dividend policy will vary depending on the amount and timing of redemptions of
shares by the Portfolio's shareholders in general. See "Objectives and
Policies," "The Four Portfolios" and "Distributions and Taxes."
<PAGE>
Investing in the Fund
Investors may establish a Shareholder Account by sending a check ($1,000
minimum for each Portfolio in which you invest), together with a Shareholder
Account Application, to the Fund's Transfer Agent, Chase Global Funds Services
Company, P.O. Box 2798, Boston, Massachusetts 02208; please see "Purchase of
Shares from the Fund." Eligible investors may invest through the Fund's IRA
Plan. Existing shareholders may reinvest dividends and capital gain
distributions, if any, through the Fund's Automatic Reinvestment feature. See
"Shareholder Account Services and Privileges - Automatic Reinvestment."
Redemption of Shares
A shareholder may voluntarily redeem any or all of the shares he has
purchased in a Portfolio at that Portfolio's net asset value next determined
following receipt of a properly completed redemption request by the Transfer
Agent. Redemption requests may be made in writing or by telephone. See
"Redemption of Shares by the Fund - Telephone Redemption Requests." The cash
proceeds of a telephone redemption will be sent to the shareholder's individual
bank account by check (via first class mail), or by bank-to-bank wire if
requested. Shareholders also may redeem shares in the Treasury Bill Portfolio
and in the Versatile Bond Portfolio by writing a redemption check. In addition,
the Fund offers a Systematic Withdrawal Program whereby shareholders may receive
periodic payments of a fixed amount. The Fund reserves a limited right to redeem
shares in the Permanent Portfolio in kind; see "Risk Factors and Special
Considerations - Target Percentages and In-Kind Redemptions."
Shareholders may redeem shares in one Portfolio and simultaneously reinvest
the proceeds in another Portfolio by means of a Portfolio Switch. See
"Shareholder Account Services and Privileges - Portfolio Switching."
Computation of Net Asset Values
The Fund calculates net asset values for each Portfolio each business day
at the close of business of the New York Stock Exchange. All purchases and
redemptions are effected at the price based on the next calculation of net asset
value after the order is accepted.
Consultants
The Fund and the Investment Adviser have retained Harry Browne and Douglas
Casey as consultants at the expense of the Investment Adviser. The consultants
are available to the Fund's officers and Investment Adviser for discussion on
general economic conditions and other matters; they do not advise the Fund or
the Investment Adviser on the selection of specific investments.
Transfer Agent
The Fund has retained Chase Global Funds Services Company as its transfer
agent. The Fund's management believes that the Transfer Agent is well qualified
to provide shareholders with service that is timely, accurate and efficient. You
may contact the Transfer Agent to inquire about your Shareholder Account or
about the processing of your purchase and redemption requests by calling (800)
341-8900 (from Massachusetts, (617) 557-8000), or by writing to Chase Global
Funds Services Company, P.O. Box 2798, Boston, Massachusetts 02208.
Information Office
The Investor's Information Office (the "Information Office") is made
available by the Investment Adviser for the convenience of Fund shareholders. A
shareholder or other interested investor may obtain a current Prospectus,
Statement of Additional Information ("SAI"), Annual and Semi-Annual Report,
Shareholder Account Application, IRA Plan booklet and forms and other
informational material by calling the Information Office at (800) 531-5142 or
(512) 453-7558, or by writing to the Information Office, P.O. Box 5847, Austin,
Texas 78763 (Fax (512) 453-2015).
After you have read the Prospectus, please contact the Information Office
if you have any questions about the policies or objectives of any of the Fund's
Portfolios. The experienced personnel at the Information Office will welcome
your inquiry.
<PAGE>
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OPTIONAL SERVICES AND CHARGES
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Telephone redemptions .................... No charge;
no minimum redemption size;
no limit to the number of telephone
redemptions.
Automatic investment program ............. No charge.
Portfolio switching ...................... $5.00 per switch;
no limit to the number or frequency
of switches.
Automatic reinvestment ................... No charge.
Check redemptions ........................ $1.00 per check;
(Treasury Bill Portfolio and no minimum check size;
Versatile Bond Portfolio only) no limit to the number of check
redemptions.
Bank-to-bank wire transfer ............... $8.00 per wire.
Systematic withdrawal program ............ No charge.
Assistance from
Investor's Information Office
at (800) 531-5142 ........................ No charge.
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
These financial highlight tables are intended to help you understand each
Portfolio's financial performance for the past five years. Certain information
reflects financial results for a single share in a Portfolio. Total returns in
the tables represent the rate that an investor would have earned (or lost) on an
investment in the Portfolio (assuming reinvestment of all dividends and
distributions). This information is derived from the financial highlights in the
Fund's financial statements for the year ended January 31, 1999 and has been
audited by KPMG LLP, independent auditors, whose report dated March 12, 1999,
along with the Fund's financial statements, are included in the Fund's Annual
Report. The report of KPMG LLP on the aforementioned financial statements and
financial highlights contains an explanatory paragraph that states that the
Securities and Exchange Commission is involved in public administrative and
cease-and-desist proceedings against the Fund's Investment Adviser and two of
the Fund's directors and officers. See "Risk Factors and Special
Considerations-Regulatory matters." This report is available without charge from
the Investor's Information Office.
<TABLE>
-----------------------------------------------------
Permanent Portfolio
-----------------------------------------------------
Year ended January 31
-----------------------------------------------------
<CAPTION>
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 19.08 $ 18.40 $ 18.80 $ 16.51 $ 17.55
-------- -------- -------- -------- --------
Income (loss) from investment
operations:
Net investment income.......... .47 .37 .52 .50 .64
Net realized and unrealized
gain (loss) on investments
and foreign currencies....... - 1.01 (.41) 2.17 (1.46)
-------- -------- -------- -------- --------
Total income (loss) from
investment operations .47 1.38 .11 2.67 (.82)
Less distributions from:
Net investment income.......... (.20) (.34) (.42) (.38) (.22)
Net realized gain on
investments(1)............... (.64) (.36) (.09) - -
-------- -------- -------- -------- --------
Total distributions (.84) (.70) (.51) (.38) (.22)
-------- -------- -------- -------- --------
Net asset value, end of year $ 18.71 $ 19.08 $ 18.40 $ 18.80 $ 16.51
======== ======== ======== ======== ========
Total return(2).................... 2.48% 7.57% .57% 16.20% (4.65)%
Ratios/supplemental data:
Net assets, end of year
(in thousands).................$ 66,855 $ 71,099 $ 72,992 $ 76,641 $ 71,610
======== ======== ======== ======== ========
Ratio of expenses to
average net assets............. 1.43% 1.91% 1.49% 1.35% 1.32%
Ratio of net investment
income to average net assets... 2.48% 1.96% 2.78% 2.85% 2.63%
Portfolio turnover rate.......... 14.05% 7.66% 12.29% 9.96% 31.24%
<FN>
(1) Capital gain distribution pursuant to Section 852(b)(3) of the Internal
Revenue Code.
(2) Assumes reinvestment of all dividends and distributions, 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>
<PAGE>
<TABLE>
-----------------------------------------------------
Treasury Bill Portfolio
-----------------------------------------------------
Year ended January 31
-----------------------------------------------------
<CAPTION>
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $ 67.56 $ 67.55 $ 67.84 $ 66.40 $ 64.81
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income(1)....... 2.72 2.69 2.84 3.22 2.65
Net realized and unrealized
gain (loss) on investments(2) .03 .06 .01 .06 (.39)
-------- -------- -------- -------- --------
Total income from investment
operations 2.75 2.75 2.85 3.28 2.26
Less distributions from:
Net investment income.......... (2.34) (2.74) (3.14) (1.84) (.67)
-------- -------- -------- -------- --------
Total distributions (2.34) (2.74) (3.14) (1.84) (.67)
-------- -------- -------- -------- --------
Net asset value, end of year $ 67.97 $ 67.56 $ 67.55 $ 67.84 $ 66.40
======== ======== ======== ======== ========
Total return(3).................... 4.09% 4.09% 4.23% 4.95% 3.49%
Ratios/supplemental data:
Net assets, end of year
(in thousands). ...............$ 93,095 $ 94,200 $105,342 $114,667 $121,666
======== ======== ======== ======== ========
Ratio of expenses to
average net assets(1).......... .96% 1.20% .90% .82% .82%
Ratio of net investment
income to average net assets... 4.01% 3.98% 4.19% 4.79% 3.57%
<FN>
(l) Due to the waiver of advisory fees, the ratio of expenses to average net
assets was reduced by .50% for the year ended January 31, 1999 and .50%,
.50%, .50% and .50% for the years ended January 31, 1998, 1997, 1996 and
1995, respectively. Without this waiver, the net investment income per
share would have been $2.24 for the year ended January 31, 1999 and $2.19,
$2.37, $2.78 and $2.12 for the years then ended.
(2) 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.
(3) Assumes reinvestment of all dividends and distributions, 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>
<PAGE>
<TABLE>
-----------------------------------------------------
Versatile Bond Portfolio
-----------------------------------------------------
Year ended January 31
-----------------------------------------------------
<CAPTION>
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $ 58.58 $ 57.24 $ 56.85 $ 54.90 $ 54.76
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income(1)....... 2.77 2.87 2.94 2.91 2.12
Net realized and unrealized
gain (loss) on investments(2) (.08) .17 (.34) 1.05 (.63)
-------- -------- -------- -------- --------
Total income from investment
operations 2.69 3.04 2.60 3.96 1.49
Less distributions from:
Net investment income.......... (2.44) (1.70) (2.21) (2.01) (1.33)
Net realized gain on
investments(3)............... - - - - (.02)
-------- -------- -------- -------- --------
Total distributions (2.44) (1.70) (2.21) (2.01) (1.35)
-------- -------- -------- -------- --------
Net asset value, end of year $ 58.83 $ 58.58 $ 57.24 $ 56.85 $ 54.90
======== ======== ======== ======== ========
Total return(4).................... 4.61% 5.33% 4.58% 7.24% 2.74%
Ratios/supplemental data:
Net assets, end of year
(in thousands).................$ 24,377 $ 23,355 $ 21,345 $ 20,137 $ 22,229
======== ======== ======== ======== ========
Ratio of expenses to
average net assets(1).......... 1.08% 1.01% .97% .89% .86%
Ratio of net investment
income to average net assets... 4.72% 4.95% 5.16% 5.21% 3.84%
Portfolio turnover rate.......... 68.21% 55.53% 102.29% 51.64% 74.62%
<FN>
(1) Due to the waiver of advisory fees, the ratio of expenses to average net
assets was reduced by .37% for the year ended January 31, 1999 and .38%,
.38%, .37% and .36% for the years ended January 31, 1998, 1997, 1996 and
1995, respectively. Without this waiver, the net investment income per
share would have been $2.48 for the year ended January 31, 1999 and $2.59,
$2.66, $2.65 and $1.84 for the years then ended.
(2) 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.
(3) Capital gain distribution pursuant to Section 852(b)(3) of the Internal
Revenue Code.
(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>
<PAGE>
<TABLE>
-----------------------------------------------------
Aggressive Growth Portfolio
-----------------------------------------------------
Year ended January 31
-----------------------------------------------------
<CAPTION>
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $ 56.24 $ 47.66 $ 40.65 $ 31.61 $ 32.56
-------- -------- -------- -------- --------
Income (loss) from investment
operations:
Net investment income (loss)... (.41) (.31) .26 (.02) (.01)
Net realized and unrealized
gain (loss) on investments... 13.30 11.97 7.05 10.68 (.89)
-------- -------- -------- -------- --------
Total income (loss) from
investment operations 12.89 11.66 7.31 10.66 (.90)
Less distributions from:
Net investment income.......... - (.19) (.25) (.11) (.03)
Net realized gain on
investments(1)............... - (2.89) (.05) (1.51) (.02)
-------- -------- -------- -------- --------
Total distributions - (3.08) (.30) (1.62) (.05)
-------- -------- -------- -------- --------
Net asset value, end of year $ 69.13 $ 56.24 $ 47.66 $ 40.65 $ 31.61
======== ======== ======== ======== ========
Total return (2)................... 22.92% 24.41% 18.00% 33.78% (2.75)%
Ratios/supplemental data:
Net assets, end of year
(in thousands). ...............$ 21,764 $ 19,955 $ 15,417 $ 11,067 $ 6,758
======== ======== ======== ======== ========
Ratio of expenses to
average net assets............. 1.39% 1.46% 1.33% 1.19% 1.23%
Ratio of net investment income
(loss) to average net assets... (.65)% (.60)% .59% (.06)% (.04)%
Portfolio turnover rate.......... 2.73% 2.15% 21.32% 18.94% 26.29%
<FN>
(1) Capital gain distribution pursuant to Section 852(b)(3) of the Internal
Revenue Code.
(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>
<PAGE>
OBJECTIVES AND POLICIES
Each of the Fund's Portfolios has its own objectives and policies, as
explained below. The Fund itself is designed to provide its shareholders with a
flexible tool for their investing and tax planning. (Investors should note that
the Fund neither intends nor attempts to engage in tax planning for individual
shareholders).
To further its shareholders' individual investment programs, the Fund
includes four separate and distinct Portfolios, each with its own investment
policy. A shareholder may select a Portfolio or Portfolios in accordance with
his own financial objectives, and he may switch all or a portion of his
investment(s) from one Portfolio to another whenever he wishes.
Tax Planning
To further its shareholders' tax-planning, the Fund sponsors an IRA Plan,
and the Fund's four Portfolios have adopted policies which operate generally by
deferring (but not eliminating) federal income tax with the intent of reducing
the tax burden to the shareholders of any realized income or capital gains
earned by the Fund. There is no assurance that such policies will be successful,
nor is it possible to predict the extent to which a shareholder's tax burden
would be reduced by a successful application of the policies.
Each of the Fund's Portfolios, to the extent consistent with its investment
objectives, follows a policy of holding appreciated investments for at least the
minimum period required for sales of investments to qualify for long-term
capital gain treatment. This policy can enable a Portfolio to distribute
investment profits in the form of capital gains, which for shareholders in the
maximum federal tax bracket may be less heavily taxed than ordinary income
dividends. Any Portfolio may sell investments that have declined in value for
the purpose of offsetting taxable gain on investments that have appreciated in
value.
Each Portfolio also attempts, in furtherance of its objectives, to manage
its investments in order to reduce its net taxable income and to favor
opportunities for asset appreciation, which would be free of current federal
income taxation to the Portfolio or its shareholders. See "Distributions and
Taxes."
Dividends and Tax Planning
Each Portfolio distributes its net investment income and net capital gains,
if any, to its shareholders as per-share dividends only once a year and only to
the extent necessary for the Portfolio to qualify for treatment as a regulated
investment company under Subchapter M of the Internal Revenue Code, thereby
avoiding corporate federal income tax. Under current provisions of the Internal
Revenue Code the Fund is required to pay as dividends 90% of its net investment
company taxable income. Each Portfolio treats as per-share dividends paid the
amounts of its taxable net investment income distributed in the form of
redemption proceeds. By using this permitted method of calculating dividends
paid, each Portfolio is able to reduce the amount of its dividends that are
distributed to shareholders who have not redeemed their shares.
Each Portfolio has paid and will likely continue to pay a federal excise
tax of four percent on its undistributed income and capital gains, if any. The
Federal excise tax reduces the benefit of distributing less than 100% of the
Fund's net investment income. Such undistributed amounts are retained by the
Portfolio and reinvested to earn further income and gains. See "Distributions
and Taxes." To the extent that a Portfolio successfully executes it's policy,
the tax liability of a long-term shareholder or a shareholder who holds shares
in the Portfolio on an ex-dividend date may be lessened (to an extent which the
Fund cannot predict), without reducing the shareholder's total return (dividends
plus appreciation).
THE FOUR PORTFOLIOS
Each of the Fund's four Portfolios has its own pool of assets, and each
Portfolio has adopted its own investment policy.
Investors who wish to invest all or a portion of their capital in a way
that does not depend on any particular outcome for the economy should consider
purchasing shares in the Permanent Portfolio. Investors who wish to invest all
or a portion of their capital in a way that seeks to provide a current return
(which may be in the form of dividends, increases in net asset value per share,
or some combination of the two) and stability of principal should consider
purchasing shares in the Treasury Bill Portfolio. Investors who wish to invest
all or a portion of their capital for the high current return that can be earned
on high-grade, short-term, corporate bonds while limiting risk to principal
should consider purchasing shares in the Versatile Bond Portfolio. Investors who
wish to invest a portion of their capital to achieve high (greater than for the
stock market as a whole), long-term appreciation should consider purchasing
shares in the Aggressive Growth Portfolio.
<PAGE>
Investors may switch all or a portion of their investment in the Fund from
one Portfolio to another at any time.
Except as indicated otherwise, the investment policies and objectives of
each Portfolio, as described below, are fundamental. A Portfolio's fundamental
investment policy or objective can be changed only by a vote of a majority of
the Portfolio's outstanding shares.
Permanent Portfolio
The objective of the Permanent Portfolio is to preserve and increase the
"purchasing power" value of its shares over the long term. This goal would
require the price of shares in the Permanent Portfolio to rise at a rate equal
to or greater than the rate of general price inflation (or, in the event of a
deflation in the economy, it would require the price of shares in the Permanent
Portfolio to resist the decline in the general level of prices). If the
Permanent Portfolio succeeds in meeting its objective, the amount of goods and
services that can be purchased with an amount of money equivalent to a share in
the Permanent Portfolio will hold steady (over the long term), or rise, and
would do so regardless of the course of inflation.
Investors should note that even if the Permanent Portfolio does achieve its
objective over the long term, it may suffer substantial short-term losses from
time to time, since investment prices generally respond to changes in the
pattern of inflation with lags and delays that are impossible to foresee.
The investment policy of the Permanent Portfolio reflects the opinion of
its Investment Adviser that inflation rates and other economic events cannot be
forecast with a high degree of reliability and that only investors who are
willing to embrace a high degree of risk should act on such forecasts. An
investment vehicle such as the Permanent Portfolio, whose goals include the
preservation of purchasing power, should not depend on forecasts. Instead, it
should acknowledge a broad range of economic possibilities and, in order to
preserve purchasing power over the long term, should incorporate investments for
each of them. For a further discussion of the investment strategy of the
Permanent Portfolio, see "Objectives and Policies - Investment Strategy -
Permanent Portfolio" in the Fund's SAI.
In pursuit of its objective of preserving and increasing the purchasing
power value of its shares, the Permanent Portfolio, as its fundamental
investment policy, invests a fixed "Target Percentage" of its net assets in each
of the following categories:
- --------------------------------------------------------------------------------
Investment Category Target Percentage
- --------------------------------------------------------------------------------
Gold ...................................................................... 20%
Silver .................................................................... 5%
Swiss franc assets ........................................................ 10%
Stocks of U.S. and foreign real estate
and natural resource companies ......................................... 15%
Aggressive growth stocks .................................................. 15%
Dollar assets ............................................................. 35%
Total 100%
- --------------------------------------------------------------------------------
The Fund will not alter the Permanent Portfolio's Target Percentages or
change the composition of its investment categories without prior authorization
by the Portfolio's shareholders. The Permanent Portfolio will buy or sell
investments as needed to correct any discrepancy between its actual holdings in
a given category and the Target Percentage for that category if such a
discrepancy exceeds 1/10th of the Target Percentage. The Investment Adviser does
not attempt to anticipate short-term changes in the general price level of any
investment category. Please see the SAI under "Objectives and Policies -
Investment Categories" for a discussion of how each investment category works to
achieve the Permanent Portfolio's objectives, and under "Objectives and Policies
- - Strategic Portfolio Adjustments" for a discussion of those circumstances that
might occasion a delay in portfolio adjustments.
The Permanent Portfolio's "Gold" holdings consist of gold bullion and
bullion-type coins such as, for example, American Eagle gold coins and Canadian
Maple Leaf gold coins.
<PAGE>
The Permanent Portfolio's "Silver" holdings consist of silver bullion and
bullion-type coins.
The Permanent Portfolio's "Swiss franc assets" consist of deposits of Swiss
francs at Swiss or non-Swiss banks and the bonds and other securities of the
federal government of Switzerland.
The Permanent Portfolio's "Stocks of U.S. and foreign real estate and
natural resource companies" consist of stocks of companies whose assets consist
primarily of real estate (such as timberland, ranching and farm land, raw land,
and land with improvements and structures) and natural resources (such as oil,
gas, coal, precious and non-precious metals).
The Permanent Portfolio's "Aggressive growth stocks" include stock warrants
and stocks of U.S. companies that are more volatile than the stock market as a
whole, and consist of the same types of investments in which the Aggressive
Growth Portfolio may invest. See "The Four Portfolios - Aggressive Growth
Portfolio."
The Permanent Portfolio's "Dollar assets" include cash, U.S. Treasury bills
and notes and U.S. Treasury bonds, and may include other U.S. dollar-denominated
assets such as the obligations of U.S. Government agencies, high-grade,
short-term, corporate bonds and banker's acceptances which, in the opinion of
the Fund's management, are secure enough to escape default even under
deflationary economic conditions. The average length to maturity of the
Permanent Portfolio's net dollar assets will not exceed 15 years and corporate
bonds so denominated have a Standard & Poor's rating of "A" or higher and a
remaining time to maturity of 24 months or less.
The assets in each of the Permanent Portfolio's investment categories are
subject to certain risks. See "Risk Factors and Special Considerations" below
for a discussion of the principal risks. See, also, "Objectives and Policies -
Investment Categories" in the SAI for a discussion of other risks.
Viewed in isolation, some of the Permanent Portfolio's assets, such as gold
and stock warrants, would be considered highly speculative. However, the Fund's
management believes that the various investments are subject to different (and,
in some cases, contrary) risks, so that the value of the Permanent Portfolio's
investments in the aggregate will be subject to less risk, over the long term,
than the risk associated with any one of the investments taken by itself.
It is the Permanent Portfolio's policy to arrange its investments, whenever
feasible in keeping within the Permanent Portfolio's Target Percentages, to
reduce the Portfolio's net taxable income and to favor opportunities for asset
appreciation. To the extent that this policy is successfully executed, the
Permanent Portfolio's net asset value per share will be greater than it would
have been otherwise (since the amount of distributions to shareholders will be
less), and the federal income tax liability incurred by shareholders will be
reduced accordingly.
The Permanent Portfolio follows the same tax planning and dividend policies
as the Fund's other Portfolios. These policies are intended generally to defer
(not eliminate) the payment of federal income tax. The operation of this
deferral may lessen a shareholder's tax liability without reducing his total
return (dividends plus appreciation). See "Objectives and Policies" and
"Distributions and Taxes."
Treasury Bill Portfolio
The objective of the Treasury Bill Portfolio is to earn high current income
for the Portfolio, consistent with safety and liquidity of principal.
The Treasury Bill Portfolio, as its fundamental investment policy, invests
exclusively in debt obligations of the United States Treasury. At least 80% of
the Portfolio's assets will consist of U.S. Treasury bills and notes. The
balance of the assets may be invested in U.S. Treasury bonds having a remaining
maturity of thirteen months or less. The dollar weighted average length to
maturity of the Portfolio's investments will not exceed 90 days.
The Treasury Bill Portfolio distributes its net investment income and net
capital gains, if any, only to the extent necessary for the Portfolio to qualify
for treatment as a regulated investment company under Subchapter M of the
<PAGE>
Internal Revenue Code, thereby avoiding corporate federal income tax. The
Portfolio reduces the amount of its per-share dividends to the extent its
taxable net investment income is distributed in the form of redemption proceeds.
(The Treasury Bill Portfolio's dividend policy differs from the dividend
policies of most money market funds in this respect.) The Treasury Bill
Portfolio's dividend policy permits (but does not assure) the Portfolio's net
asset value per share to rise. As a result of this policy, the tax liability of
a long-term shareholder or a shareholder who holds shares on an ex-dividend date
may be lessened (to an extent which the Fund cannot predict), without reducing
the shareholder's total return (dividends plus appreciation).
An investment in the Treasury Bill Portfolio should be considered for the
portion of an investor's capital for which the investor wishes to provide
stability of principal while earning a current return (which may be in the form
of dividends, increases in net asset value per share, or some combination of the
two). An investor may desire such protection because he is uncertain about the
future course of investment prices, because he expects investment prices in
general to decline, because he wishes to make greater allowance for the
possibility of economic deflation than does the Permanent Portfolio, or because
he wishes to invest temporarily in a pool of liquid, short-term securities with
a low degree of risk.
Versatile Bond Portfolio
The objective of the Versatile Bond Portfolio is to earn high current
income for the Portfolio, while limiting risk to principal. The Portfolio was
designed to provide its shareholders with a versatile instrument for their
investment and tax planning and may be suitable for investors in a variety of
circumstances.
The Versatile Bond Portfolio invests in high-grade, short-term corporate
bonds selected by the Investment Adviser for their ability to earn high current
income and for their ability to protect principal.
In order to limit risk to principal arising from defaults by corporate bond
issuers, the Versatile Bond Portfolio invests only in bonds that have earned a
rating of "A" or higher by Standard & Poor's and which in the opinion of the
Fund's management are secure enough to escape default even under deflationary
economic conditions. "AAA," "AA" and "A" are the three highest of Standard &
Poor's eleven bond rating categories and mean respectively that, in the judgment
of Standard & Poor's, a bond's capacity to pay interest and repay principal is
"extremely strong," "very strong" or "strong." The Portfolio does not invest in
so-called "junk bonds." The Portfolio further reduces risk by diversifying so
that ordinarily no more than 5% of the value of its assets is invested in the
bonds of any one issuer and no more than 25% is invested in the bonds of issuers
in any one industry.
The Portfolio purchases only bonds with remaining maturities of 24 months
or less, in order to limit risk to principal arising from changes in open-market
interest rates. Prices of such short-term bonds tend to be much more stable than
prices of long-term corporate, municipal or U.S. Treasury bonds.
The Versatile Bond Portfolio follows the same tax planning and dividend
policies as the Fund's other Portfolios. These policies are intended to lessen a
shareholder's tax liability without reducing his total return (dividends plus
appreciation). See "Objectives and Policies" and "Distributions and Taxes." Even
though the Versatile Bond Portfolio invests in short-term corporate bonds having
little potential for appreciation, the Portfolio's dividend policy permits (but
does not assure) the Portfolio's net asset value per share to rise.
An investment in the Versatile Bond Portfolio should be considered for the
portion of an investor's capital that he wishes to protect from risk of
substantial loss while earning a higher current return than available in United
States Treasury securities (which may be in the form of dividends, increases in
net asset value per share, or some combination of the two). The Versatile Bond
Portfolio may be especially suitable for an investor who wishes to defer federal
income tax liability for a portion of his return on an investment with high
current income.
Aggressive Growth Portfolio
The objective of the Aggressive Growth Portfolio is to achieve high
(greater than the stock market), long-term appreciation in the value of the
Portfolio's shares. The performance of the stock market is reflected in indices,
which include for example, the Dow Jones Industrial Average and the Standard &
Poor's 500 Stock Index.
The Aggressive Growth Portfolio, as its fundamental policy, invests
exclusively in stocks and stock warrants of U.S. companies selected for high
<PAGE>
profit potential. The price volatility of such investments is expected by the
Investment Adviser to be greater than the price volatility of the U.S. stock
market as a whole. Such investments may include stocks of companies in high
technology industries, companies exploiting or developing new products or
services, and companies whose stock is valued primarily for appreciation
potential rather than current income. Stocks may be selected for purchase by the
Aggressive Growth Portfolio because they have a history of high volatility or
because the companies involved have above-average growth in income, profits or
sales. The Aggressive Growth Portfolio intends that, at any one time, it will
hold stocks from at least twelve different industry groups and that within each
industry group it ordinarily will hold the stocks of both large and small
companies. The Aggressive Growth Portfolio also purchases stock warrants, which
are long-term options to purchase shares of stock at a fixed price.
Ordinarily at least 60% of the Aggressive Growth Portfolio's assets will be
invested in securities listed on the New York Stock Exchange. The remaining
portion of the Portfolio's assets will be invested in securities listed on the
American Stock Exchange or other domestic stock exchange or traded in the
over-the-counter market.
The Aggressive Growth Portfolio will remain fully invested in stock market
investments at all times, apart from incidental amounts of cash that ordinarily
do not exceed 3% of the Portfolio's net assets. Accordingly, the success of the
Portfolio's investment policy does not depend on short-term, market timing
decisions by the Investment Adviser.
The Aggressive Growth Portfolio follows the same tax planning and dividend
policies as the Fund's other Portfolios. These policies are intended to lessen a
shareholder's tax liability without reducing his total return (dividends plus
appreciation). See "Objectives and Policies" and "Distributions and Taxes."
An investment in the Aggressive Growth Portfolio should be considered for
the portion of an investor's capital for which the investor seeks long-term
appreciation. Investors should note that, while stocks owned by the Aggressive
Growth Portfolio are expected by the Investment Adviser to appreciate in value
more rapidly than the stock market, they also are subject to greater risk,
especially during periods when the prices of U.S. stock market investments in
general are declining.
Risk Factors and Special Considerations
Investors should review carefully the risks, significant features and other
special considerations associated with an investment in the Fund.
Gold. Gold generates no interest or dividends, offering only the potential
for price appreciation. The performance of the Permanent Portfolio will be
affected by changes in the price of gold. A decline in the price of gold would
tend to reduce the net asset value of shares in the Permanent Portfolio,
although in some instances this tendency could be offset by increases in the
price of other investments held by the Permanent Portfolio.
The market for gold is worldwide. The price of gold is subject to the risk
that in any country inflation or the public's expectation of inflation will
decline. The price of gold also can be depressed by large-scale sales of the
metal by the U.S. or foreign governments, by other official bodies, or by
private parties; by adverse economic conditions in countries where gold is held
by the general public; and by governmental prohibitions or restrictions on the
private ownership of gold.
The price of gold has been subject to volatile fluctuations from time to
time.
Silver. The performance of the Permanent Portfolio will be affected by
changes in the price of silver.
Silver is subject to risks similar to those of gold and has shown even
greater price volatility than gold. In addition, because of the substantial but
variable demand for silver by industrial users, the price of silver is likely to
decline in the event of any actual or anticipated decline in the general level
of worldwide economic activity.
Real estate and natural resource company stocks. The performance of the
Permanent Portfolio will be affected by changes in the prices of real estate and
natural resource company stocks.
<PAGE>
The stocks of real estate and natural resource companies are particularly
subject to irregular price fluctuations due to the nature of the assets owned by
the companies. Any decline in the general level of prices of oil or real estate
would be expected to have an adverse impact on these stocks. The Fund's
management believes that the prices of such stocks are particularly vulnerable
to decline in the event of deflationary economic conditions, and that such
stocks may be particularly profitable during periods of rising inflation.
Aggressive growth stocks. The Permanent Portfolio's investments in this
category, and all of the Aggressive Growth Portfolio's investments, are selected
for high profit potential. Such issues tend to appreciate more than the stock
market as a whole during periods when stock prices in general are rising, and
tend to decline in value more than the stock market as a whole during periods
when stock prices in general are falling. In addition, those Portfolios might
invest in companies with small capitalization, which tend to rely on smaller
product lines and customer bases than larger companies. The prices of the stocks
in such companies therefore can be expected to be more volatile and influenced
more by changes in the economy as a whole.
U.S. Treasury bills and bonds. The performance of the Permanent Portfolio
and the Treasury Bill Portfolio will be affected by changes in the prices and
yields of U.S. Treasury securities.
Although U.S. Treasury bonds are widely considered to be free of any risk
of default, their open-market prices are affected by changes in the general
level of interest rates. Prices of existing U.S. Treasury securities tend to
rise when interest rates are falling, and tend to fall when interest rates are
rising. Price fluctuations of long-term U.S. Treasury bonds, such as the bonds
held by the Permanent Portfolio, can be as extensive as the price fluctuations
of common stocks.
Prices of U.S. Treasury bills and other short-term U.S. Treasury
securities, including those held by the Treasury Bill Portfolio, also fluctuate
in response to changes in interest rates. However, such fluctuations ordinarily
are minimal compared to other interest bearing instruments.
Short-term bonds. The short-term corporate bonds in which the Versatile
Bond Portfolio and the Permanent Portfolio may invest are not guaranteed by the
U.S. government or any government agency and hence are subject to some risk of
default. The Versatile Bond Portfolio protects against the risk of default (but
does not eliminate it entirely) by diversifying its holdings and by investing
only in bonds with remaining maturities of 24 months or less and that are rated
"A," "AA" or "AAA" by Standard & Poor's. An "A" rating by Standard & Poor's
means that the bond has strong capacity to pay interest and principal but is not
as strongly protected against the adverse effects of changes in circumstances
and economic conditions as bonds rated "AA" or "AAA." As an additional
protection, the Portfolio invests only in bonds that in the opinion of the
Fund's management are secure enough to escape default even under deflationary
economic conditions. Open-market prices of short-term corporate bonds are
affected by changes in the general level of interest rates; such price
fluctuations are small in comparison with changes in prices of long-term
corporate, municipal or U.S. Treasury bonds. Corporate bonds also may be subject
to downward changes in their ratings by Standard & Poor's and to "call," or
early repayment, at the option of the issuer. The calling of a bond that is
trading at a premium over its face value could result in a loss of the premium
to the bondholder.
Foreign investments. The Permanent Portfolio may own investments issued by
foreign banks and governments and may own stock in foreign companies or
investments held outside the United States.
Stock in foreign companies may be held in the form of American Depository
Receipts ("ADRs"). ADRs are certificates issued by a U.S. bank that represent
the right to receive securities of a foreign company deposited in the same bank
or in its correspondent bank. In addition, the Fund may direct its Custodian to
leave gold, silver, Swiss franc assets and other investments in the custody of
qualified foreign sub-custodians. The Fund may hold gold and silver bullion in
the form of claim accounts with foreign banks.
<PAGE>
In many foreign markets there is less publicly available information about
securities, including independent reports and ratings, than in U.S. markets, and
accounting and auditing standards often are less strict and less reliable than
in the U.S.
Many foreign stock markets are not as developed or efficient as those in
the United States, and securities of some foreign issuers may be less liquid and
more volatile than securities of comparable United States companies. In general,
there is less overall governmental supervision and regulation of securities
exchanges, brokers, banks and listed companies than in the United States.
Tax planning. Each Portfolio of the Fund intends to pay per-share dividends
only to the extent necessary for the Portfolio to qualify for treatment as a
regulated investment company under Subchapter M of the Internal Revenue Code
thereby avoiding corporate federal income tax on its income. If a Portfolio were
to distribute to its shareholders less than the minimum amount required for any
year, which the Fund considers unlikely, the Portfolio would become subject to
federal income tax for that year.
Target percentages and in-kind redemptions. To avoid liability for
corporate federal income tax each year, a Portfolio must, among other things,
derive at least 90% of its gross income from items including interest, dividends
and gains on sales of securities. Gains on sales of gold and silver by the
Permanent Portfolio would not qualify as "gains on sales of securities."
Consequently, in the event of a rapid rise in prices of gold and silver,
profitable sales of gold and silver (as might be required for the Permanent
Portfolio to adhere to its Target Percentages) could subject the Portfolio to
liability for corporate federal income tax. In order to avoid this adverse tax
result, the Fund has reserved the right to require redeeming shareholders in the
Permanent Portfolio to accept readily tradable gold or silver bullion or bullion
coins in complete or partial payment of redemptions. The bullion or coins would
be selected by the Fund from the Permanent Portfolio's holdings.
However, in order to reduce the possibility of inconvenience or loss to
shareholders in the Permanent Portfolio, the Fund will require a redeeming
shareholder to accept an in-kind redemption only if it has arranged a convenient
opportunity for the shareholder promptly to sell the bullion or coins through a
qualified broker or dealer at a cost not to exceed 2% of their value at the time
of the redemption. In the event that a shareholder elected not to use this
service, the Fund at its own expense would deliver the bullion or coins to the
shareholder, or, at his request, to his local bank.
From time to time the Fund, at the request of redeeming shareholders in any
Portfolio, may distribute readily tradable assets to the shareholder in payment
of his redemption. To be accepted by the Fund, any such request for an in-kind
redemption must be made in writing. The Fund will accept a request for an
in-kind redemption only if it has otherwise decided that the selected asset is
suitable for disposition in a transaction consistent with the Portfolio's
investment policies. See "In-Kind Redemptions" in the SAI for a discussion of
the Fund's operating policies for such redemptions.
For the shareholder, the tax consequences of an in-kind redemption
generally would be the same as those of a cash redemption.
Illiquid securities. The Permanent Portfolio may hold a maximum of 10%, and
the Aggressive Growth Portfolio may hold a maximum of 5%, of its net assets in
investments that have no ready market for resale and securities for which no
readily available market quotation exists. Neither the Treasury Bill Portfolio
nor the Versatile Bond Portfolio will hold illiquid securities.
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 World Money Managers, Terry Coxon and Alan Sergy (the
Fund's Investment Adviser and two of the Fund's directors and officers,
respectively, or, the "Respondents"), breached their fiduciary duties in
violation of certain provisions of federal securities laws in fiscal years 1990
through 1996. From May 5, 1997 through May 15, 1997, an administrative hearing
on these charges was held before Chief Administrative Law Judge Brenda P. Murray
(the "Hearing Officer") in San Francisco, California. The Respondents have
denied all of the allegations of the Division and have actively contested the
proceedings. No charges have been made against the Fund, which allegedly was
subject to improper charges by the Respondents, and the Fund is not a party to
the proceedings.
<PAGE>
In an initial decision dated April 1, 1999 (the "Initial Decision"), the
Hearing Officer ruled that the Respondents had committed certain violations.
Specifically, the Hearing Officer ruled that the Respondents violated Section
206(2) of the Investment Advisers Act of 1940: by charging $248,153 of transfer
agent and accounting fees to the Fund's Marketing and Distribution Plan (the
"12b-1 Plan") during calendar year 1990; by causing the excessive capitalization
of a broker-dealer subsidiary of the Permanent Portfolio (World Money
Securities, Inc., or "WMS") of $850,000 and charging it in 1990 and 1991 for
printing costs related to the distribution of shares in the Treasury Bill
Portfolio, Versatile Bond Portfolio and Aggressive Growth Portfolio in the
amount of $336,571; by charging WMS excessive rent and improper underwriting
costs of $72,426; and by acquiring a "call option" in 1990 prohibited by the
Fund's fundamental investment policies and managing the investment for the
advantage of a client of an officer of the Fund. The Hearing Officer also ruled
that the Respondents violated or aided and abetted violations of: Section 12(b)
of the Investment Company Act of 1940 (the "ICA") and Rule 12b-1 thereunder, by
receiving unauthorized reimbursements in calendar year 1990 of $214,270 under
the Fund's 12b-1 Plan and by providing insufficient information regarding the
12b-1 Plan to the Fund's Board of Directors; Section 13(a)(3) of the ICA by
acquiring the "call option;" Section 17(a) of the Securities Act of 1933,
Section 10(b) of the Exchange Act of 1934 and Rule 10b-5 thereunder, and Section
34(b) of the ICA by making misleading statements in the Fund's registration
materials; Section 10(b) of the ICA by using WMS as a principal underwriter for
the Fund; and Section 17(d) of the ICA and Rule 17d-1 thereunder, by causing WMS
to be excessively capitalized.
The Hearing Officer ordered that the Respondents: cease and desist from
committing further violations; be suspended from association with any registered
investment adviser or investment company for a period of three months; disgorge
$1,608,018, pay prejudgment interest of $1,236,726 and pay civil penalties of
$140,000.
The Respondents believe that the Hearing Officer's Initial Decision is
incorrect and contains reviewable errors. Accordingly, on April 22, 1999, they
filed petitions for review by the Commission. On April 21, 1999, the Division
also filed a petition for review by the Commission of certain sanctions
contained in the Initial Decision, seeking to bar World Money Managers from
acting as an investment adviser and to bar Terry Coxon from association with any
registered investment adviser or investment company for one year with a right to
reapply. Thereafter, the Commission granted the petitions and has accepted the
review of the Initial Decision.
Under the Fund's Bylaws, the Fund is obligated to advance expenses incurred
by the Respondents in the proceedings upon their undertaking to repay the
advances, in the event it is ultimately determined that they have committed
willful misfeasance, bad faith, gross negligence or reckless disregard of their
duties. The Fund has therefore incurred, and may continue to incur, such
expenses in connection with the allegations, including amounts paid by World
Money Managers to persons who are directors and officers of the Fund for
their litigation expenses.
The Initial Decision of the Hearing Officer does not become effective until
the Commission's decision, which could affirm, reverse or modify the Initial
Decision. World Money Managers continues to act as Investment Adviser of the
Fund, and Terry Coxon continues to serve as President and a director of the
Fund. See "Management-Investment Adviser." Alan Sergy retired from the Fund for
medical reasons in March 1998 and, except for payments being made under the
Fund's long-term disability plan, is no longer associated with the Fund.
The ultimate outcome of these proceedings is unknown. The Fund's Board of
Directors plans to continue to monitor the proceedings and to take such actions
as may be appropriate to assure the availability to the Fund of such investment
advice and administrative support as may be necessary to continuously implement
the Fund's investment policies and investment objectives, as outlined in this
Prospectus.
Year 2000. The operations of the Fund are dependent substantially on the
continued workability of the computer systems of the Fund's Custodian and its
Transfer Agent. The maintenance of the books and records of each Portfolio of
the Fund, including asset pricing, investment transactions, income and expense
recognition and shareholder accounting, could be adversely affected if the
<PAGE>
computer systems used by the Fund's Custodian, its Transfer Agent or the markets
and issuers in which the Fund invests do not properly process and calculate
date-related information and data from and after January 1, 2000 (the "Year 2000
Problem"). The Year 2000 problem could also adversly affect companies in which
the Fund has made investments, and it is expected that foreign companies are
more likely to be affected by the Year 2000 Problem. The Fund's directors,
officers and Investment Adviser are taking what they believe to be reasonable
steps to address the Year 2000 Problem as it relates to the Fund and have
received representations that corollary steps are being taken by the Custodian
and the Transfer Agent. There is no assurance that these steps will be
sufficient to avoid any adverse impact on the operation of the Fund resulting
from the Year 2000 Problem.
Unusual features. The Fund's Portfolios involve many unusual features,
including the objectives of providing tax advantages, and investments in a
foreign currency, foreign securities and precious metals. These features may
result in administrative, financial or tax consequences that are entirely
unforeseen.
MANAGEMENT
The Fund's Board of Directors has the duty and responsibility of managing
the business and affairs of the Fund. Three of the six directors are Independent
Directors, who have no financial interest in the Investment Adviser. The special
function of the Independent Directors is to assure that the Fund deals with the
Investment Adviser at arm's length and solely for the benefit of the Fund's
shareholders.
The Fund holds meetings of its shareholders only as may be required by
Maryland law. Generally, each shareholder is entitled to cast one vote for each
share he owns. A separate vote is taken when a matter affects only one
Portfolio.
Investment Adviser
The Fund retains World Money Managers (the "Investment Adviser") as its
adviser under an Investment Advisory Contract dated June 19, 1996 (the
"Contract"). The Investment Adviser is a limited partnership organized in August
1981 under the laws of the State of California. The Investment Adviser's general
partners are Terry Coxon, who is also a limited partner in the Investment
Adviser, and Terry Coxon, Inc., a California corporation wholly owned by Terry
Coxon. The Investment Adviser's business consists, and has always consisted,
solely of managing investment companies. See "Risk Factors and Special
Considerations - Regulatory matters."
The Investment Adviser furnishes the Fund continuously with suggested
investment planning and investment advice. The Investment Adviser's
responsibilities (which are performed on its behalf by Terry Coxon and Terry
Coxon, Inc., its general partners; and by Michael J. Cuggino, its consultant)
include making recommendations concerning the selection, purchase and sale of
the Fund's investments (which are placed by the Fund's officers, Terry Coxon,
its President and Michael J. Cuggino, its Treasurer). The day-to-day
administration of the Fund's activities are the responsibility of Terry Coxon,
its President and Michael J. Cuggino, its Treasurer. All activities undertaken
by the Investment Adviser on behalf of the Fund are subject to the general
policy direction of the Fund's Board of Directors. The following sets forth
certain information regarding Mr. Coxon and Mr. Cuggino.
Terry Coxon has been an investment adviser and author since 1976. Mr. Coxon
has served as President and a director of the Fund since its inception in 1981,
during all of which time he has shared primary responsibility for the activities
of the Investment Adviser and the Fund described above. Mr. Coxon also has
served as President and a director of Bullion Security Corporation, the sponsor
of an investment trust, since its inception in 1987.
Michael J. Cuggino has been a Certified Public Accountant since 1988. He
was employed by the Boston office of Ernst & Young and its predecessor company,
Arthur Young & Company, in various audit and accounting capacities, including
audit manager, from August 1985 until January 1991. In January 1991, Mr. Cuggino
established an accounting practice in Petaluma, California. He served as
Assistant Treasurer of the Fund, World Money Securities, Inc. and Bullion
Security Corporation from August 1991 until December 1992. Mr. Cuggino has
served as Treasurer: of World Money Securities, Inc. from 1993 until 1996; of
Bullion Security Corporation since 1993; and of the Fund since 1993, when he
began to share primary responsibility for the activities of the Fund described
above. Mr. Cuggino has also served as a director of the Fund since 1998.
<PAGE>
The Fund pays the Investment Adviser a comprehensive advisory fee monthly
at the following annual rate:
(i) for each Portfolio, 1/4 of 1% (0.250%) 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% (0.875%) of the first $200 million of
the Fund's average daily net assets; 13/16 of 1% (0.813%) of the next $200
million of the Fund's average daily net assets; 3/4 of 1% (0.750%) of the
next $200 million of the Fund's average daily net assets; and 11/16 of 1%
(0.688%) 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.
While the advisory fee is higher than the fees of other mutual funds, World
Money Managers absorbs a substantial portion of the Fund's ordinary operating
expenses as described below, a practice that benefits the Fund by limiting its
expenses, simplifying its internal accounting and facilitating independent
audits. The Investment Adviser also bears the Fund's distribution expenses. In
addition, during the year ended January 31, 1999, the Investment Adviser
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% (0.625%), in the case of the Treasury Bill Portfolio, or 3/4 or 1%
(0.750%), in the case of the Versatile Bond Portfolio, of the respective
Portfolio's average daily net assets. The Investment Adviser 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. Investors should note that the yields of
those two Portfolios are enhanced by the fee waiver.
The Fund also pays for its investment expenses (such as interest on
borrowings, taxes and brokerage commissions), the salary expense of the Fund's
officers (including payments under the Fund's long term disability plan), the
fees and expenses of the Fund's directors, and any and all extraordinary fees,
costs and expenses, including those associated with litigation, government
investigations or administrative proceedings. The Investment Adviser bears all
of the Fund's other ordinary operating expenses, which may include charges by
the Fund's Transfer Agent, charges by the Fund's Custodian, accounting fees,
auditing and legal fees not associated with litigation, employee and consultant
salaries and expenses, rent and occupancy, printing, postage and general
administrative expense. The Fund does not pay any of the Investment Adviser's
general or administrative overhead expense.
All fees and expenses payable by the Fund pursuant to the Contract and
attributable only to one 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.
The Investment Adviser has entered into an Administrative Agreement
effective February 1, 1986, with Permanent Portfolio Information, Inc.
("Information"), which is one of its limited partners, whereby Information
provides administrative and marketing services, such as designing and
coordinating mailings and responding to inquiries from prospective Fund
investors and shareholders. The Investment Adviser reimburses Information for
its expenses and pays Information a fee of $6,000 per month. The Investment
Adviser may enter into similar arrangements with other persons.
The Investment Adviser also receives certain service charges paid by
shareholders either directly or from their Shareholder Accounts. See "Service
Charges."
CONSULTANTS
The Fund and the Investment Adviser have entered into agreements with Harry
Browne and Douglas Casey under which those individuals make themselves available
for consultation with the Fund and the Investment Adviser on such matters as
basic trends in domestic and international finance and on the criteria for
evaluating investments. The expense of such agreements is borne by the
Investment Adviser. Neither of the consultants advises either the Investment
Adviser or the Fund on the selection of specific investments for any Portfolio.
<PAGE>
Harry Browne is a financial author and lecturer. His books include: How You
Can Profit from the Coming Devaluation, You Can Profit from a Monetary Crisis,
Complete Guide to Swiss Banks, New Profits from the Monetary Crisis,
Inflation-Proofing Your Investments (co-authored with Terry Coxon), Investment
Rule #1, Why the Best-Laid Investment Plans Usually Go Wrong and The Economic
Time Bomb.
Douglas Casey is an investment author (Crisis Investing, Strategic
Investing and The International Man) and the author of an investment advisory
service, "The International Speculator."
DISTRIBUTIONS AND TAXES
For federal income tax purposes, each Portfolio is treated as a separate
corporation.
To reduce the amount of its income that is taxable currently, each
Portfolio will, whenever practical and in accordance with its investment policy,
offset taxable gains on sales of investments that have risen in price with tax
losses from sales of assets that have fallen in price. In addition, the
Permanent Portfolio may purchase bonds or notes at a market discount, thereby
enabling the Portfolio to defer recognition for tax purposes of a portion of the
return on such notes or bonds.
Each Portfolio intends to continue to qualify annually for treatment as a
"regulated investment company" under Subchapter M of the Internal Revenue Code
of 1986, as amended. This would permit the Portfolio to deduct distributions of
its net investment income to its shareholders thereby avoiding corporate federal
income tax on the income so distributed. Under applicable federal income tax
provisions, "distributions" include per-share dividends and also include amounts
paid to redeeming shareholders that represent their share of a Portfolio's
undistributed earnings and profits. For redeeming shareholders, however, the
entire redemption proceeds generally are treated as proceeds from the sale of
shares and not as a distribution of income or gain realized by the Fund. See
"General Information" in the SAI.
In order to reduce the current tax burden of a Portfolio's investors on
their shares of the Portfolio's income and gains, each Portfolio intends to pay
per-share dividends only in amounts judged sufficient by the Fund's Board of
Directors to enable the Portfolio to qualify for treatment under Subchapter M
thereby avoiding corporate federal income tax, to the extent of such dividends.
Under the Internal Revenue Code the Fund is required to distribute as dividends
90% of its net investment company taxable income.
The amount of a Portfolio's net investment income per share that is
distributed through redemption payments rather than as per-share dividends is
reflected for financial accounting purposes in the same Portfolio's net asset
value per share. Thus, while the Fund's dividend policy may reduce a
shareholder's tax burden on his share of a Portfolio's realized income and
capital gains, it should not reduce the shareholder's total return (dividends
plus change in net asset value) on his investment.
Dividends, if any, are paid only once a year, ordinarily in December. Until
paid, amounts earmarked for dividends are retained by the Portfolio from which
they are payable and contribute to the Portfolio's net asset value and ability
to earn interest, dividends and gains. Dividend payments reduce a Portfolio's
net asset value per share.
Shareholders may benefit from the Fund's dividend policy described under
"Objectives and Policies," depending upon their personal tax circumstances. This
benefit is reduced by the payment of the federal excise tax discussed below.
Generally, the benefits are greater for shareholders who hold their shares for
longer periods. A shareholder who is accumulating assets over a period of years
may achieve a higher after-tax return as a result of the Fund's dividend policy,
since all of the portion of his return not distributed, consisting of
appreciation remains invested in the Fund, without any reduction by current
federal income tax. A shareholder who redeems portions of his shares from time
to time also may achieve a higher after-tax return as a result of the Fund's
dividend policy, since the appreciation on his remaining shares may continue to
remain invested in the Fund free of current federal income tax. (Such a
shareholder should note, however, that his benefit is achieved by deferring, not
by eliminating, the payment of taxes; thus his overall benefit may be small if
he holds his shares for only a few years.) And, in the case of shares that pass
to a shareholder's estate or heirs, the potential federal income tax liability
for previous appreciation may be eliminated entirely through the operation of
federal income tax provisions that grant a step-up in the tax basis of property
left to an estate or heir. Other capital assets may provide similar tax
advantages but be subject to different risks than an investment in the Fund.
<PAGE>
Dividends from net investment income and net short-term capital gains
generally will be taxable to shareholders as ordinary income, even though in
some cases the income will have been earned by the Portfolio before the investor
became a shareholder. Dividends from long-term capital gains, if any are paid by
a Portfolio, generally will be taxable to shareholders as capital gains
regardless of how briefly their shares have been held and regardless of when the
gains were earned by the Portfolio. Shareholders will be sent a statement no
later than February 28 of each year showing their total distributions (during
the preceding calendar year) from net investment income and capital gains.
Distributions may be automatically reinvested in additional shares of the
same Portfolio if requested.
The payor of a dividend on stock (as the Fund may be) may be required to
withhold 31% of any reportable payments (which may include dividends, capital
gains distributions, and redemptions) paid to a noncorporate shareholder if that
shareholder fails to provide the Fund with a valid taxpayer identification
number. Other withholding requirements may apply to certain foreign
shareholders.
The Fund has incurred and will likely continue to incur a federal excise
tax of four percent which is imposed on undistributed income and capital gains,
if any, of a Portfolio. Undistributed income to which the excise tax applies
would include amounts, if any, that the Fund in reliance on the judgment of its
Board of Directors has not timely distributed under Subchapter M of the Internal
Revenue Code. Such excise tax reduces a Portfolio's net asset value; however,
such undistributed income and capital gain is retained by each Portfolio and is
available to earn further interest, dividends and gains.
Conversion transactions. Under the provisions added to the Internal Revenue
Code in 1993, all or a portion of any gain on certain "conversion transactions"
is recharacterized as ordinary income, rather than capital gain. In the opinion
of the Fund's management and counsel, based on the provisions' statutory
language and legislative history, the provisions on conversion transactions do
not apply to investments in the Treasury Bill Portfolio or the Versatile Bond
Portfolio. However, no Treasury Regulations or Rulings have been issued
interpreting these provisions, and it is therefore uncertain whether the
Internal Revenue Service would agree with this conclusion. Accordingly, it
remains uncertain whether the gain that a shareholder recognizes upon a
redemption of shares in the Treasury Bill Portfolio or the Versatile Bond
Portfolio will be taxed as ordinary income or as capital gain.
In any event, regardless of the taxation of any recognized gains, the
provisions on conversion transactions do not, in the opinion of the Fund's
management and counsel, disturb the usefulness of the Treasury Bill Portfolio or
the Versatile Bond Portfolio for deferring recognition of income.
COMPUTATION OF NET ASSET VALUES
The Fund makes a separate calculation of each Portfolio's net asset value
per share at the close of business of the New York Stock Exchange (usually 4:00
p.m. Eastern Time) every day that the Exchange is open for trading ("business
day"). All requests received for purchases and requests for redemptions of
shares in each Portfolio are executed at a price equal to the Portfolio's net
asset value per share as next computed following receipt thereof by the Transfer
Agent.
<PAGE>
Investments are valued primarily at market value on the basis of the most
recent price on the exchange on which they are principally traded, or, if not
available, by a method which the Fund's Board of Directors in good faith
believes accurately reflects fair value. If there is no trading in an investment
on a business day, the investment will be valued at the mean between its bid and
asked prices. Short-term securities are marked to market daily. Gold and silver
are valued at the closing spot price on the New York Commodity Exchange, a
regulated U.S. commodity futures exchange. Foreign securities traded on an
exchange are valued on the basis of market quotations most recently available
from that exchange. Investments for which bona fide market quotations are not
readily available will be valued in good faith by the Fund's Board of Directors.
Current net asset value information for the Fund's Portfolios may be
obtained by checking newspaper listings under the heading "Perm Port Funds" or
similar abbreviation.
PURCHASE OF SHARES FROM THE FUND
Shares in the Permanent Portfolio, the Treasury Bill Portfolio, the
Versatile Bond Portfolio and the Aggressive Growth Portfolio are offered for
sale continuously by the Fund. Investors may purchase such shares directly from
the Fund without payment of commission or sales load.
The minimum initial investment in any Portfolio is $1,000. Shareholders may
make additional investments at any time in minimum amounts of $100 per
Portfolio. All requests for purchases of shares accompanied by payment therefore
are effected at a price equal to the net asset value per share next computed
after receipt of the properly completed request by the Transfer Agent.
Initial investment in the Fund. After reading this entire Prospectus, new
investors should complete and sign the accompanying Shareholder Account
Application. Mail the application, together with a check or money order payable
through a U.S. bank for the amount of your initial investment, to Permanent
Portfolio Family of Funds, Inc., c/o Chase Global Funds Services Company, P.O.
Box 2798, Boston, Massachusetts 02208. (If you use an overnight delivery service
other than U.S. mail, send your Application and check to Permanent Portfolio
Family of Funds, Inc., c/o Chase Global Funds Services Company, 73 Tremont
Street, Boston, Massachusetts 02108.) Please make your investment check payable
to "Permanent Portfolio Family of Funds, Inc."
Additional investments by mail. After your initial investment has been
accepted, you will receive a confirmation of your purchase. A form which should
be used to make additional purchases by mail will accompany the confirmation.
(It will not be necessary to fill out another Shareholder Account Application,
even if you are investing for the first time in another Portfolio.) Please
indicate clearly the Portfolio or Portfolios in which the additional investment
is to be made.
Additional investments by wire. Another way to add to your investment is by
bank wire. To do so, send a bank wire to: State Street Bank and Trust Company,
Boston, Massachusetts, ABA#011000028; Attention: Permanent Portfolio Family of
Funds, Inc., Account #53839882. The bank wire must include your Shareholder
Account number and a message indicating that you wish to make a purchase in a
specific Portfolio(s) in the stated amount(s). (Your initial investment in the
Fund cannot be made by bank wire.) Your bank may assess a charge for use of a
bank wire.
Automatic investment program. Shareholders may add systematically to their
investment in any of the Fund's Portfolios by enrolling in the Fund's Automatic
Investment Program. See "Shareholder Account Services and Privileges-Automatic
Investment Program."
If a shareholder sends money to the Fund without clearly indicating how it
is to be invested, the Fund's policy is to treat the money as an investment in
the Treasury Bill Portfolio.
The Fund reserves the right to reject investments in part or in whole.
REDEMPTION OF SHARES BY THE FUND
Shareholders may redeem all or some of their shares in any Portfolio.
Subject to the limitations noted below, requests for redemption will be
accepted on any business day. The price paid to the redeeming shareholder is the
Portfolio's net asset value per share next computed after receipt by the
Transfer Agent of the properly completed redemption request.
Redemption requests must be accompanied by share certificates, if issued,
and must be sent to the Transfer Agent. The Fund may refuse redemption requests
not made in the proper manner.
<PAGE>
Written Redemption Requests
Normally the shareholder's signature on a written redemption request (and
on the share certificate, if issued) must match exactly the name on the
Shareholder Account and must be guaranteed by an eligible guarantor institution.
Eligible guarantor institutions include banks, trust companies, brokers,
dealers, municipal or government securities brokers or dealers, credit unions,
national securities exchanges, registered securities associations, clearing
agencies or savings associations, provided that they are members of STAMP
(Securities Transfer Agents Medallion Program). Signature guarantees from
institutions that are not STAMP members and notarizations from Notaries Public
will not be accepted. (Shareholders may verify that a guarantor institution is a
member of STAMP by contacting the STAMP administrator, Kemark Financial
Services, at (800) 348-2724, or the Transfer Agent.) The signature guarantee
must be in proper form and undated. For protection of the shareholder and the
Fund, additional documentation may be required for redemption of shares held in
corporate, partnership, trust or fiduciary accounts.
However, by completing the appropriate section of the Shareholder Account
Application ("Redemption by Telephone and Without Signature Guarantee," of the
Application), an investor may authorize the Fund to honor redemption requests
without signature guarantee. The lack of the signature guarantee does not render
the Fund responsible for the authenticity of the signature or of telephone
redemption requests. While the Fund will employ reasonable procedures to confirm
telephone instructions, such as verification of certain information with the
caller, the investor will bear the risk of loss from any such request that is
unauthorized. Such a redemption request would be processed as though it had been
made by telephone (see below), and the cash proceeds would be sent by check or,
if requested, by bank-to-bank wire to the shareholder's bank account.
Investors who wish to avoid the possible inconvenience and delay of
obtaining an acceptable signature guarantee should carefully consider
authorizing the Fund to accept redemption requests without signature guarantee.
Telephone Redemption Requests
A shareholder who has authorized the Fund to honor redemption requests
without signature guarantee may submit redemption requests by telephone.
Telephone requests are made by calling the Transfer Agent at (800) 341-8900 or
(617) 557-8000. Unless applied to the purchase of shares in another Portfolio
(see "Shareholder Account Services and Privileges - Portfolio Switching"), the
cash proceeds of redemptions requested by telephone or in writing without a
signature guarantee will be sent by check, via first-class mail. As an optional
alternative, the redeeming shareholder may request that the cash proceeds be
sent by bank-to-bank wire. Whether remitted by check or by bank wire, the
redemption proceeds will be addressed only to the shareholder's U.S. commercial
bank account (not to an account at a savings bank, savings and loan association,
credit union or other thrift institution).
If the redeeming shareholder requests a wire transfer, the Transfer Agent's
bank will charge the shareholder its customary fee for a wire transfer, which
currently is $8. The fee will be deducted from the proceeds of the redemption. A
shareholder should ascertain and verify that his bank will accept a "federal
funds" wire transfer before requesting that the proceeds of a redemption be sent
by bank wire. Failure to do so may result in delay in receiving the redemption
proceeds and in additional bank-wire fees which will be charged to the
shareholder.
No telephone requests will be honored to redeem shares for which
certificates have been issued and are outstanding.
Telephone redemptions of shares held in an IRA Plan will be accepted only
if the proceeds are to be applied to the purchase of shares in another Portfolio
or are otherwise to be reinvested within the Fund's IRA Plan. See "Shareholder
Account Services and Privileges - Portfolio Switching."
Redemption Limitations
The Fund ordinarily will honor a valid redemption request at the
Portfolio's net asset value per share next computed after receipt by the
Transfer Agent of the properly completed redemption request, and by law must pay
it within seven calendar days following the redemption. However, the Fund may
delay payment of a request to redeem shares purchased by check until the Fund is
certain that the check has cleared, which may take up to 15 calendar days after
<PAGE>
the issuance of the shares. A shareholder may avoid this delay by purchasing
shares with a cashier's check. Shares for which certificates have been issued
may not be redeemed until the certificates have been returned to the Transfer
Agent. Neither the Fund, the Investment Adviser, the Transfer Agent, nor any of
their agents is responsible for losses sustained by a shareholder as a result of
their acting on any authorized instruction or authorization on the shareholder's
Shareholder Account Application or otherwise in connection with redemption of
his shares in the Fund.
The right to redeem may be limited or suspended by the Fund, or the payment
date postponed, for any period during which the New York Stock Exchange is
closed or during any emergency or other period for which the Securities and
Exchange Commission has permitted or required a suspension for the protection of
shareholders.
The Fund may redeem an investor's shares in any Portfolio at any time that
the value of the shares is less than $500 other than by reason of a decline in
their net asset value. The Fund will notify such an investor at least 30 days
prior to effecting such a redemption.
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES
When an investor makes his initial investment in one of the Fund's
Portfolios, a Shareholder Account is opened in accordance with his application.
Subsequent investments by the shareholder in any Portfolio will be added to his
same Shareholder Account. Fund shareholders will receive a confirmation
statement showing each transaction in their Shareholder Account, along with a
summary of the status of the account as of the transaction date. A shareholder
may inquire about his Shareholder Account by mail or by telephone. See
"Custodian, Transfer Agent and Dividend-Disbursing Agent." Investors who
purchase or redeem shares in the Fund through a broker-dealer may be charged a
transaction fee by the broker-dealer, who may place such orders by telephone in
accordance with the Fund's procedures.
Certain optional services and privileges are available with a Shareholder
Account, as described below. Some of the services involve a fee; a shareholder
will incur the fee only if he uses the service. Shareholders who do not use a
particular service do not bear the cost of providing the service to other
shareholders.
Automatic Investment Program
The Fund's Automatic Investment Program allows shareholders to invest in
any portfolio on a regular schedule. To participate in the Program, a
shareholder should complete an Automatic Investment Program enrollment form
which authorizes the Transfer Agent to deduct a specified dollar amount from the
shareholder's checking account (minimum investment $100 per Portfolio each
month) and apply that amount to purchase shares in the Portfolio selected by the
shareholder. These deductions may be scheduled for either the 1st or the 15th of
each month. The Program is free of charge and is available to shareholders in
all of the Fund's Portfolios; the costs of administering the Program are paid by
the Investment Adviser. Shareholders in the Fund's IRA Plan are also eligible
for the Automatic Investment Program. An Automatic Investment Program may be
terminated or suspended at any time by the shareholder or by the Fund.
Portfolio Switching
Shareholders may redeem shares in one Portfolio and simultaneously invest
the proceeds in another Portfolio. Such a transaction would constitute a taxable
event to the shareholder. By completing the appropriate section of the
Shareholder Account Application ("Portfolio Switching (Exchange)"), an investor
may authorize the Fund to accept Portfolio switching instructions by telephone
and in writing without a signature guarantee. Each Portfolio Switch is subject
to a charge of $5 by the Fund's Investment Adviser. If you are unable to execute
a Portfolio Switch by telephone, you should consider sending your Portfolio
Switch request by mail.
An individual who has both a regular Shareholder Account and an IRA Plan in
exactly the same name may use a Portfolio Switch to redeem shares from his
regular account and purchase shares in his IRA Plan. An IRA contribution
effected in this manner is subject, for federal income tax purposes, to the same
conditions and limitations that apply to all IRA contributions generally.
<PAGE>
Automatic Reinvestment
A shareholder may request that all dividends, including distributions of
long-term capital gains, be automatically reinvested in shares of the same
Portfolio.
A shareholder's tax liability for dividends is not reduced by reinvesting
dividends (whether through the Automatic Reinvestment Plan or otherwise) in
additional Fund shares.
Systematic Withdrawal Program
An investor whose Shareholder Account totals at least $5,000 may establish
a Systematic Withdrawal Program under which shares with a value predesignated by
him (but at least $100) are automatically redeemed either monthly or quarterly.
Withdrawal payments ordinarily will be mailed within five business days after
the end of the withdrawal period.
Systematic Withdrawal Program payments are financed by the automatic
redemption from the Shareholder's Account of the necessary number of shares to
pay the shareholder the amount of cash requested. Redemptions ordinarily are
made on the 3rd business day of the month. Because the prices of Fund shares
fluctuate, the number of shares redeemed to finance Systematic Withdrawal
Program payments of a given amount will vary from payment to payment.
If a shareholder owns shares in more than one Portfolio, he may designate
the Portfolio from which the redemptions under a Systematic Withdrawal Program
will be made.
A Systematic Withdrawal Program may be terminated or suspended at any time,
either by the shareholder or by the Fund. No separate charge is made for a
Systematic Withdrawal Program; the costs of administering the Program are borne
by the Investment Adviser.
Individual Retirement Account Plan
Eligible taxpayers may contribute up to $2,000 per year of income earned
from wages, salary and self-employment to an Individual Retirement Account
("Traditional IRA"). Such annual contributions generally are deductible by the
taxpayer in computing his adjusted gross income for federal income tax purposes,
if he does not participate in an employer sponsored retirement plan or if his
adjusted gross income does not exceed certain limits. All investment earnings in
a Traditional IRA accumulate tax free until withdrawn, usually at retirement. In
addition, deductible contributions can be made to a Traditional IRA for the
non-employed spouse of a person who is employed. With certain limitations,
amounts withdrawn from a Traditional IRA or received as a lump-sum distribution
from a corporate pension or profit-sharing plan or from a Keogh plan can be
rolled over without tax into a new IRA account.
Also, a Traditional IRA may be used in connection with a Simplified
Employer Pension Plan ("SEP") maintained by a taxpayer's employer.
In addition, beginning January 1, 1998, eligible taxpayers may contribute
up to $2,000 per year of income earned from wages, salary and self-employment to
a Roth Individual Retirement Account ("Roth IRA"). Under a Roth IRA, the
earnings and interest on an individual's nondeductible contributions grow
without being taxed, and qualifying distributions are generally tax-free.
Additionally, unlike a Traditional IRA, there is no rule against making
contributions to a Roth IRA after turning age 70 1/2, and there's no requirement
to begin making minimum withdrawals at that age. A Roth IRA can be used instead
of a Traditional IRA, to replace an existing Traditional IRA, or to complement a
Traditional IRA.
Under the terms of the Fund's IRA Plan (including both Traditional and Roth
IRAs), contributions are invested in shares of the Portfolio(s) selected by the
shareholder, and all dividends and distributions are reinvested in additional
shares of the same Portfolio(s).
State Street Bank and Trust Company, Boston, Massachusetts (which is the
Custodian of the Fund's assets) acts as custodian for each Shareholder Account
opened under an IRA Plan and charges the fees described in the IRA Plan
materials which are available upon request to the Investor's Information Office.
Shareholder services available with a regular Shareholder Account
(including Automatic Investment Program, Portfolio Switching, Automatic
Reinvestment and Systematic Withdrawal Program) are also available with an IRA
Plan, but subject to such limitations as the Fund or the IRA Plan custodian may
impose from time to time, and subject to a separate account maintenance fee.
<PAGE>
Shares held in an IRA Plan may not be redeemed by means of a check redemption,
nor may they be redeemed by telephone except as part of a Portfolio Switch.
Check Redemptions - Treasury Bill Portfolio and Versatile Bond Portfolio Only
Investors who have completed the appropriate section of the Shareholder
Account Application ("Redemption by Check") may redeem shares in the Treasury
Bill Portfolio or in the Versatile Bond Portfolio by writing a redemption check,
as explained below. Such checks may be deposited by a shareholder in his local
bank account or used to make payments to third parties.
A book of personalized checks drawn on Chase Manhattan Bank, N.A. will be
sent upon request to a shareholder maintaining a regular Shareholder Account.
The checks will be preprinted for use with the Portfolio for which the
shareholder requests check redemption. (Shareholders wishing to write checks on
both Portfolios will be provided with two separate books of checks.) When a
check signed by the shareholder is presented for payment by Chase Manhattan
Bank, N.A., the Fund redeems a sufficient number of the shareholder's shares in
the appropriate Portfolio to pay the check. Please note that a check can be used
to redeem shares only in the Portfolio preprinted on the face of the check.
Shares for which certificates have been issued and not returned to the
Transfer Agent may not be redeemed by check! Please do not write redemption
checks for which insufficient shares are available; such checks will be returned
unpaid, and your Shareholder Account will be charged a "bad check" fee of $25.
Neither the Fund nor its Investment Adviser or Transfer Agent bears any
responsibility in regard to the payment or non-payment of redemption checks by
Chase Manhattan Bank, N.A.
The check redemption privilege is offered by the Fund as a convenience to
its shareholders. There is no limit to the number of checks a shareholder may
write, nor is any minimum check amount required. However, check redemptions are
not intended to be used as a substitute for a bank checking account. The fee for
each check redemption is $1, which is collected by redeeming an additional
fraction of a share from the Shareholder's Account.
Shares held in an IRA Plan may not be redeemed by check redemption.
Limitations
The Fund's management has designed the foregoing services and privileges in
accordance with its intention to provide its shareholders with a flexible tool
for their investing. However, the Fund reserves the right to limit or suspend
check redemption, automatic investment, portfolio switching, automatic
reinvestment or systematic withdrawal services at any time without notice.
SERVICE CHARGES
Each shareholder pays the Fund's Investment Adviser an account maintenance
fee of $1.50 per month, whether he invests in one or in more than one Portfolio.
No additional fee is charged for an IRA Plan Account maintained by a shareholder
who also maintains a regular Shareholder Account in exactly the same name and
address.
At the shareholder's option, the fee may be paid annually by check.
Otherwise, the fee is collected once a year, usually in December, from any
dividends payable to the shareholder. If the shareholder's dividends are
insufficient to pay the fee, the Fund will redeem a sufficient number of shares
to pay the remaining amount, redeeming first from the Treasury Bill Portfolio,
next from the Permanent Portfolio, next from the Versatile Bond Portfolio, and
lastly from the Aggressive Growth Portfolio. If a shareholder invests both
through a regular Shareholder Account and also through an IRA Plan Account in
exactly the same name and with the same Social Security number, and if the
shareholder does not pay the fees for the two accounts separately by check, they
will be collected first from dividends on, and/or redemption of, shares held in
the regular Shareholder Account rather than by drawing on the IRA Plan Account.
Any accrued but unpaid account maintenance fee will be collected from the
amount owed to a shareholder who closes his Shareholder Account during the year.
The account maintenance fee offsets a portion of the recurring costs
associated with maintaining each Shareholder Account. Such costs could include
charges by the Fund's Transfer Agent for shareholder accounting and data
<PAGE>
processing; printing of the Fund's annual and interim financial reports sent to
shareholders; printing of shareholder proxy materials and the tabulation of
shareholder proxies not deemed extraordinary expenses as defined by the
Contract; postage associated with mailing reports, shareholder statements and
other materials to shareholders; and costs of maintaining the "800" telephone
lines to the Transfer Agent and the Investor's Information Office. The
Investment Adviser collected a total of $102,633 in account maintenance fees in
the last fiscal year, which is less than the Investment Adviser paid for the
recurring costs referred to above. The Investment Adviser believes that the
amounts paid by it for such costs were lower than those which the Fund might
have paid to obtain comparable services from unaffiliated parties.
All mutual funds incur similar expenses. Most funds pay them directly, a
practice which reduces their shareholders' net investment income per share
and/or net asset value per share. The Fund, however, asks each of its
shareholders to pay an account maintenance fee in order to avoid any such
reduction in net income or net asset value per share.
For an investor, account maintenance fees generally are a tax-deductible
investment expense, subject to the general limitations on the deductibility of
such expenses.
The Investment Adviser charges each investor a one-time account start-up
fee of $35. An investor pays this fee only once, even if he invests in more than
one Portfolio, and even if he maintains both an IRA Plan Account and a regular
Shareholder Account with the Fund in exactly the same name and address. This fee
is deducted from the investor's initial investment and will be deducted a second
time only if a former shareholder opens a new Shareholder Account.
The one-time account start-up fee offsets a portion of the costs associated
with establishing an account for each shareholder. The Fund's Board of Directors
considers that the amount of such fee is lower than that which the Fund might
have paid to obtain comparable services from unaffiliated parties.
A current shareholder may invest in one or more additional Portfolios
without incurring an additional account start-up fee.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT
The Fund's custodian is State Street Bank and Trust Company (the
"Custodian"), located in Boston, Massachusetts.
The Fund's transfer agent and dividend-disbursing agent is Chase Global
Funds Services Company (the "Transfer Agent"), telephone number (800) 341-8900
or (617) 557-8000. The Transfer Agent's primary offices are located at 73
Tremont Street, Boston, Massachusetts 02108. Correspondence should be addressed
to P.O. Box 2798, Boston, Massachusetts 02208.
REPORTS
The Fund sends its shareholders financial statements, including a report of
each Portfolio's investment holdings, every six months. The Fund's fiscal year
ends on January 31. Further information about the performance of the Fund is
contained in the Fund's Annual Report to Shareholders for the year ended January
31, 1999. The report of KPMG LLP on the aforementioned financial statements and
financial highlights contains an explanatory paragraph that states that the
Securities and Exchange Commission is involved in public administrative and
cease-and-desist proceedings against the Fund's Investment Adviser and two of
the Fund's directors and officers. A copy of the Annual Report to Shareholders
is available without charge from the Investor's Information Office.
Advertising
From time to time the Fund may advertise its yield or total return in
accordance with applicable federal securities regulations, See "Calculations of
Performance Data" in the SAI for a discussion of how yield and total return is
calculated.
- --------------------------------------------------------------------------------
No Person is authorized to give any information or to make any representation
not contained in this Prospectus in connection with the matters described
herein. If given or made, such information or representation must not be relied
upon as having been authorized.
<PAGE>
Investment Adviser THE
World Money Managers PERMANENT
Terry Coxon, General Partner PORTFOLIO
Petaluma, California Family of Funds
Consultants to the Fund
Harry Browne
Douglas Casey
Transfer Agent
Chase Global Funds Services Company
Boston, Massachusetts
Custodian
State Street Bank and Trust Company
Boston, Massachusetts
Additional information about the Fund's investments
is available in the Fund's Annual and Semi-Annual
Reports to shareholders. In the Fund's Annual
Report, you will find a discussion of the market
conditions and investment strategies that sig- including
nificantly affected the Fund's performance during
this last fiscal year. The Fund's Statement of Permanent Portfolio,
Additional Information ("SAI"), which has been (Symbol PRPFX)
filed with the Securities and Exchange Commission
("SEC"), also provides additional information about
the Fund and is incorporated herein by reference Treasury Bill Portfolio,
(a legal part of this Prospectus). (Symbol PRTBX)
Information about the Fund (including the SAI) can Versatile Bond Portfolio
be reviewed and copied at the SEC's Public (Symbol PRVBX)
Reference Room in Washington, D.C. Information on
the operation of the Public Reference Room may be and
obtained by calling the SEC at (800) SEC-0330.
Reports and other information about the Fund are Aggressive Growth Portfolio
available on the SEC's Internet site at (Symbol PAGRX)
http://www.sec.gov and copies of this information
- ------------------
may be obtained, upon payment of a duplication fee,
by writing the Public Reference Section of the SEC,
Washington, D.C. 20549-6009.
To obtain a copy of the Fund's SAI or Annual and
Semi-Annual Reports free of charge, to request
other information about the Fund, or to make
shareholder inquiries, please write or call:
Investor's Information Office Prospectus
P.O. BOX 5847, Austin, Texas 78763
(800) 531-5142
or (Investment Company Act
(512) 453-7558 - FAX (512) 453-2015 File No. 811-3379)
<PAGE>
STATEMENT OF September 24, 1999
ADDITIONAL
INFORMATION
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
625 Second Street * Petaluma, California 94952
This Statement of Additional Information (the "SAI") of Permanent Portfolio
Family of Funds, Inc. (The "Fund") is not a prospectus and should be read in
conjunction with the Fund's Prospectus dated September 24, 1999 (the
"Prospectus").
The Prospectus and the Fund's Annual Report to Shareholders for the year ended
January 31, 1999 may be obtained without charge by request to the Investor's
Information Office, P.O. Box 5847, Austin, Texas 78763.
The Fund's Permanent Portfolio reserves a limited right to redeem its shares
in kind in certain circumstances, as explained herein under the heading
"REDEMPTION OF SHARES BY THE FUND - IN-KIND REDEMPTIONS."
<PAGE>
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
OBJECTIVES AND POLICIES.......................................................1
The Four Portfolios.......................................................1
Investment Strategy.......................................................1
Permanent Portfolio...................................................1
Treasury Bill Portfolio...............................................2
Versatile Bond Portfolio..............................................2
Aggressive Growth Portfolio...........................................3
Investment Categories.....................................................4
Illiquid Investments......................................................6
Offsetting and Indirect Investments.......................................7
Strategic Portfolio Adjustments..........................................13
Investment Restrictions..................................................13
ORGANIZATION AND MANAGEMENT..................................................15
Fund History.............................................................15
Investment Adviser.......................................................16
Board of Directors.......................................................17
Directors and Officers...................................................18
Share Ownership..........................................................18
Compensation.............................................................18
CONSULTANTS..................................................................19
DISTRIBUTIONS AND TAXES......................................................19
Foreign Taxes............................................................20
COMPUTATION OF NET ASSET VALUES..............................................20
PURCHASE OF SHARES FROM THE FUND.............................................21
REDEMPTION OF SHARES BY THE FUND.............................................22
Redemption Limitations...................................................22
In-Kind Redemptions......................................................22
In-Kind Redemption Requests..............................................23
Tax Consequences of In-Kind Redemptions..................................24
PORTFOLIO TRANSACTIONS AND BROKERAGE.........................................24
TRANSFER AND DIVIDEND-DISBURSING AGENT.......................................25
CUSTODIAN....................................................................25
GENERAL INFORMATION..........................................................26
Capitalization...........................................................26
Income Equalization Accounting...........................................26
Calculations of Performance Data.........................................26
After-Tax Returns........................................................28
FINANCIAL STATEMENTS.........................................................29
<PAGE>
OBJECTIVES AND POLICIES
The Four Portfolios
The Fund has four separate portfolios (the "Portfolios"), the Permanent
Portfolio, the Treasury Bill Portfolio, the Versatile Bond Portfolio and the
Aggressive Growth Portfolio.
The Permanent Portfolio invests a fixed Target Percentage 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 U.S. Treasury
bills, notes and bonds. The Permanent Portfolio's objective is to preserve and
increase the purchasing power value of its shares over the long term.
The Treasury Bill Portfolio invests in short-term U.S. Treasury bills, and
may also invest in U.S. Treasury bonds and notes having a remaining maturity of
thirteen months or less. The Portfolio's objective is to earn high current
income for the Portfolio, consistent with safety of principal.
The Versatile Bond Portfolio invests in a diversified portfolio of
short-term corporate bonds rated "A" or higher by Standard & Poor's. The
Portfolio's objective is to earn high current income for the Portfolio, while
limiting risk to principal.
The Aggressive Growth Portfolio invests in U.S. stock market investments
selected for high profit potential. The Aggressive Growth Portfolio's objective
is to achieve high, long-term appreciation in the value of its shares.
Solely for the purpose of holding overnight cash balances (but not for
investment purposes), the Fund may hold investments up to 7 days in short-term
U.S. Treasury securities or repurchase agreements with commercial banks and
securities broker-dealers, in amounts ordinarily not to exceed 3% of the Fund's
net assets, or 4% if the repurchase agreement is entered into with the Fund's
Custodian, State Street Bank and Trust Company.
Investment Strategy
Permanent Portfolio
The Permanent Portfolio's investment policies reflect the opinion of the
Fund's management that it is impossible to forecast inflation rates or other
economic events with a high degree of reliability and that only investors who
are willing to embrace a high degree of risk should act on such forecasts. An
investment vehicle such as the Permanent Portfolio, whose goals include the
preservation of purchasing power, should acknowledge a broad range of economic
possibilities and, in order to preserve purchasing power over the long term,
should incorporate investments for each of them. In the opinion of the Fund's
management, economic possibilities for the future are limited to the following:
1. Rising inflation. From 1960 through 1980 the rate of inflation generally,
with intermittent pauses and reversals, rose. The inflation rate generally
fell from 1980 through 1998. The Fund's management believes that if the
pattern of rising inflation resumes, the investments most likely to
appreciate would include gold, silver, Swiss franc assets and interests in
real estate and natural resources. Gold, silver, real estate and natural
resources tend to be profitable during periods of rising inflation because
inflation and the fear of further inflation add to investor demand for
assets whose values are not denominated in a fiat (non-convertible)
currency. Swiss franc assets tend to appreciate during periods of rising
inflation because, although the Swiss franc is a fiat currency, the Swiss
government traditionally has acted with a high degree of restraint in
permitting the issuance of new currency. Such restraint is generally taken
to indicate that a currency will preserve its purchasing power. If the rate
of inflation does rise, the prices of common stocks (other than those of
real estate and natural resource companies) and, more especially, of dollar
assets, are likely to decline.
2. Abruptly-slowing inflation. Most periods of extended inflation in U.S.
history have been followed by abrupt declines in the rate of inflation and,
in many cases, by deflation. The Fund's management believes that if
inflation should decline abruptly (or deteriorate into a deflation), the
investments most likely to appreciate would include previously issued
dollar assets such as U.S. Treasury securities, since interest rates on
newly issued dollar investments of these types tend to decline during
periods of declining inflation, thus increasing the value of previously
issued securities. If the rate of inflation does decline abruptly, it is
likely that gold, silver, Swiss franc assets and most common stocks would
decline in value.
<PAGE>
3. Gradually-slowing inflation. In the event that the rate of inflation
declines slowly (a "soft landing") and the economy escapes the trauma that
has followed most inflations, the Fund's management believes that common
stocks would be among the investments most likely to appreciate. The
results for stock market issues that tend to rise and fall to a greater
degree than the stock market as a whole (the types of issues that the
Fund's management attempts to identify and include in the Permanent
Portfolio's investment portfolio as aggressive growth stocks) would be
especially favorable. In the opinion of the Fund's management, common
stocks tend to appreciate during periods of gradually declining inflation
because the effective rate of taxation faced by most operating businesses
declines in step with the inflation rate (due to the interaction between
inflation and the depreciation allowances provided for under the Internal
Revenue Code), and because the occurrence of a soft landing indicates that
the economy will not suffer the disruption associated with an abrupt
decline in inflation. If the rate of inflation does decline gradually, it
is likely that gold, Swiss franc assets and the stocks of real estate and
natural resource companies would decline in value.
The Permanent Portfolio attempts to achieve its objective by maintaining a
combination of investments whose purchasing power as a whole should hold steady
or increase in the variety of economic circumstances listed above. The Fund's
management is able to make no assessment as to the current state of the economy
and has no opinion as to the occurrence of any particular economic possibility
for the future.
As indicated above, the Permanent Portfolio's investments include gold,
silver, Swiss franc assets, various stock market issues and dollar assets. The
investment categories were selected and the Target Percentages assigned in
accordance with the Fund's management's opinion of the volatility of the
investments, and their past and anticipated future performances in varying
economic circumstances. Of course, the Fund has no control over the manner in
which particular investments respond to changes in economic conditions. For
example, even in an inflationary climate there may be large-volume sellers of
gold or silver whose actions would tend to depress the prices of those
commodities.
Treasury Bill Portfolio
The Treasury Bill Portfolio's investment policies reflect the opinion of
the Fund's management that among investors' primary goals for their cash
holdings are safety and liquidity plus, when possible, a way to reduce the tax
burden on the income that cash can earn on money market investments. The
Treasury Bill Portfolio was designed for investors who wish to avoid the risk of
large price declines that can occur in the stock and bond markets and who may be
concerned about the safety of banks, savings institutions and other money market
funds, but who desire tax planning and check-writing privileges. The Treasury
Bill Portfolio therefore invests only in U.S. Treasury securities and provides
those shareholder services described in the Prospectus under the heading
"Shareholder Account Services and Privileges," and follows the dividend and
tax-planning policies described in the Prospectus under "Objectives and
Policies" and "Distributions and Taxes."
Versatile Bond Portfolio
The Versatile Bond Portfolio's investment policies reflect the opinion of
the Fund's management that short-term (24 months or less), investment-grade
(Standard & Poor's ratings of "A" or higher) corporate bonds historically have
provided high returns and their price fluctuations ordinarily are mild.
Constructing a portfolio from such bonds can be a formula for achieving high
current income without bearing the serious risks of buying junk bonds or
long-term corporate, municipal or U.S. Treasury bonds. In addition, the
Versatile Bond Portfolio follows the same dividend and tax-planning policies as
the Fund's other Portfolios. The Versatile Bond Portfolio may purchase U.S.
Treasury securities with remaining maturities of two years or less for temporary
cash holdings.
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Aggressive Growth Portfolio
The Aggressive Growth Portfolio's investment policies reflect the opinion
of the Fund's management that the stock market has been the most successful
long-term investment since 1926, and that an investor seeking to construct his
own investment portfolio should include an investment whose profitability is
linked directly to the stock market. The Fund's management believes that stocks
have been the most successful long-term investment because stocks represent
ownership in the engines of wealth - factories, mines, airlines, telephone
systems, research laboratories, publishing companies, financial service
organizations and other productive enterprises - that turn out the goods and
services people need and want. Stock market investments have earned the best
profits because they feed capital to these engines of wealth, making them even
more productive.
Stock market investors, however, need caution. While the stock market's
total return has been high, it has not been smooth or steady. Most stocks are
riskier than bonds or money market instruments; and, unlike gold, stocks are
vulnerable to inflation. And there is no guarantee that the economic growth that
underlies long-term stock market profits will continue in the future, which is
one reason a prudent investor should carefully consider how much of his capital
to invest in stocks. Stocks are tightly linked to the real world of production
and commerce, and any shock in the economy (inflation, recession, political
turmoil, bad news of any kind) can translate into a shock for the stock market.
For an investor who holds only a limited portion of his investment portfolio in
stocks, the Fund's management believes that the stocks that the investor holds
should be volatile, the kinds of stocks whose prices move faster and farther
than the stock market as a whole. In addition, volatile stocks can reduce such
an investor's portfolio's overall risk by minimizing the share of his portfolio
that needs to be devoted to stocks. With less of his overall portfolio allocated
to stocks, the investor is less vulnerable to any single economic event - such
as inflation, deflation, or recession - that might be disastrous for the stock
market as a whole.
The Aggressive Growth Portfolio invests in U.S. companies whose stocks have
been selected for their high, long-term appreciation potential (higher than for
the stock market as a whole). With such a selection, when the stock market as a
whole rises, the value of shares in the Aggressive Growth Portfolio should rise
more. Of course, no selection of stocks can be guaranteed to "outrun" a rising
market. While the Aggressive Growth Portfolio's stocks involve more risk than
the average stock, especially when the stock market as a whole is declining,
they also offer greater potential reward. During bull markets in stocks,
volatile stocks can put the investor on the "fast track" to high stock market
prices because, in the opinion of the Fund's management, stocks in general
typically gain much more during periods when the stock market as a whole is
rising than they lose during periods that follow when the stock market as a
whole is declining. Therefore, the Fund's management believes that in the long
term, volatile stocks should outperform other stocks.
The Aggressive Growth Portfolio is fully invested in the stock market at
all times. It does not take on the unnecessary risks that come with attempts to
switch in and out of the market. Its "fully-invested" policy assures that it
will not miss out on a bull market in stocks because it has mistakenly decided
to sit on the sidelines. And the Aggressive Growth Portfolio follows the same
dividend and tax-planning policies as the Fund's other Portfolios.
Investors in the following circumstances may find that the Aggressive
Growth Portfolio can help to achieve their objectives. An investor who has only
recently begun investing and has many earning years ahead of him may be willing
to bear short-term risks for his capital, in order to maximize long-term
appreciation. An investor whose wealth is mostly tied up in real estate,
annuities, life insurance, pension plans or trusts may desire to use any cash
available for a stock market investment in a way that is most effective. An
investor who owns high-yielding stocks (those that pay high taxable dividends)
may improve his after-tax return by replacing the high-yielding issues with
shares in the Aggressive Growth Portfolio. Although this may tend to increase
the short-term volatility of his stock market holdings, the Portfolio's tax
planning could permit more of his stock market profits to be retained, instead
of being lost to current taxes, so that his capital may grow faster. And an
investor who is interested in short-term stock trading may acquire shares in the
Portfolio whenever he believes the time is right to invest in stocks, knowing
that the Portfolio is always fully invested in stocks and being able to take
advantage of the fact that the Portfolio invests only in volatile stocks.
Thereby he can maintain a larger position in the stock market without risking
too much of his speculative budget.
Investment Categories
Dollar assets. The Prospectus describes the investment categories and
Target Percentages of the Fund's Permanent Portfolio. As a further elaboration
on the Dollar asset investment category, and for information regarding the
holdings of the Treasury Bill Portfolio and the Versatile Bond Portfolio, please
see the box on the following page. Any dollar asset is subject to default risk,
that is, the risk that the issuer's promise to make payment will not be kept.
The Fund's management attempts to reduce this risk to a very low level by
purchasing high-grade dollar assets, i.e., those which, in the opinion of the
Fund's management, are secure enough to escape default even under deflationary
economic conditions. Consequently, the Portfolios do not invest in certificates
of deposit or commercial paper, even though the yields on such investments may
be higher than the yields on high-grade dollar assets. Long-term dollar assets,
and, to a lesser extent, short-term dollar assets, are subject to the risk of
rising interest rates. As rates rise, as they tend to do during periods of
rising inflation, the market values of dollar assets decline. See the discussion
under "Investment Strategy - Abruptly-slowing inflation" above. The degree to
which the Permanent Portfolio through its dollar assets is exposed to the risk
of rising interest rates can be measured by the average length to maturity (the
"term structure") of the Permanent Portfolio's net dollar assets (the amount of
the Permanent Portfolio's dollar assets reduced by any outstanding borrowings).
The greater the average length to maturity, the greater the risk. The average
length to maturity of the Permanent Portfolio's net dollar assets will not
exceed 15 years. For purposes of computing the average length to maturity of the
Permanent Portfolio's dollar assets, the following method is used:
(i) multiply the value of each dollar asset by the length of time until
its maturity;
(ii) compute the sum of the results of (i);
(iii)from the result of (ii), subtract the sum of the amount of each debt
(including reverse repurchase agreements) owed by the Permanent
Portfolio multiplied by the length of time until its repayment is due;
(iv) divide the result of (iii) by the Permanent Portfolio's average net
dollar assets.
Repurchase agreements. The Permanent Portfolio may also hold repurchase
agreements on the dollar assets described above. (The Treasury Bill Portfolio,
the Versatile Bond Portfolio and the Aggressive Growth Portfolio may also
include repurchase agreements in their assets.) See the box on the following
page. A Portfolio would suffer a loss on a repurchase agreement if the seller
defaulted on his repurchase obligation when the value of the underlying
investment had declined to less than the agreed upon repurchase price. In order
to reduce the risk of loss from such transactions, a Portfolio will enter into
repurchase agreements whose underlying investments are, in the case of the
Permanent Portfolio, the Versatile Bond Portfolio and the Aggressive Growth
Portfolio, only other Dollar assets (or, in the case of the Treasury Bill
Portfolio, Treasury securities), which in the opinion of the Fund's management
present only a very small risk of default. Less than 5% of the net assets of the
Fund during the last fiscal year were subject to repurchase agreements, and the
Fund intends that less than 5% of its net assets will be subject to repurchase
agreements during the current fiscal year.
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HIGH-GRADE DOLLAR ASSETS
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U.S. Treasury Bills. Treasury bills are short-term (52 weeks or less) loans
to the U.S. Government. Treasury bills are full-faith-and-credit obligations of
the U.S. Treasury and are generally regarded as being free of any risk of
default. Treasury bills are actively traded in the open market. Because of their
short time to maturity, their day-to-day price fluctuations are small.
U.S. Treasury Notes and Bonds. Treasury notes and bonds are long-term (as
long as 30 years) loans to the U.S. Government. Like Treasury bills, they are
full-faith-and-credit obligations of the U.S. Treasury and are generally
regarded as free of any risk of default. Treasury notes and bonds are actively
traded in the open market. Because of their long maturities, they are subject to
larger day-to-day fluctuations in price than Treasury bills.
U.S. Government Agency Securities. Short-term notes and long-term bonds are
also issued by various agencies of the U.S. Government or by enterprises
sponsored by the U.S. Government, such as the Federal National Mortgage
Association and the Government National Mortgage Association. Most such notes
and bonds are not full-faith-and-credit obligations of the U.S. Treasury and
generally do not carry a direct guaranty by the U.S. Government itself. However,
because their issuers exist to carry out government programs, these securities
are generally regarded as having negligible risk of default.
High-Grade Corporate Bonds. High-grade corporate bonds are debt obligations
of corporations with a Standard & Poor's rating of "A" or higher and a remaining
time to maturity of 24 months or less, and may include corporate notes and
debentures. Such bonds are not guaranteed by the U.S. Government and are subject
to some risk of default; however, the risk of default generally is considered to
be very low. Such bonds also are subject to price fluctuations caused by changes
in open-market interest rates; however, such fluctuations are much smaller than
for long-term bonds and are only slightly greater than for U.S. Treasury bills.
The Permanent Portfolio may invest in high-grade corporate bonds which, in the
opinion of the Fund's management, are secure enough to escape default even under
deflationary economic conditions.
Banker's Acceptances. A banker's acceptance is a postdated check written by
a business (not necessarily a major corporation) that has been "accepted" and
guaranteed by a bank. Usually, the postdating is for no more than nine months.
The types of acceptances which the Permanent Portfolio would acquire are those
which are actively traded in the open market.
There are two, often three, guaranties behind a banker's acceptance. First,
the acceptance is an obligation of the bank that has accepted it. Second, if the
accepting bank should default on its obligation, the business that wrote the
accepted check ordinarily would be responsible for making payment to the
investor. Third, an acceptance is often secured by a pledge of merchandise or
other property. Banker's acceptances are generally regarded as among the safest
of all privately issued, short-term dollar assets. The Fund's management
considers banker's acceptances, with their multiple backing, to be significantly
safer than certificates of deposit, which represent the obligation of a single
entity.
Repurchase Agreements. In a repurchase agreement, the Permanent Portfolio
buys an investment (the "underlying security"), such as a Treasury bond, that
the seller agrees to buy back at a later date for a stated price. Repurchase
agreements entered into by the Permanent Portfolio will generally run for seven
days or less. The Permanent Portfolio earns interest on the transactions either
in the form of an explicit payment or in the form of a differential between the
purchase price and the repurchase price.
Repurchase agreements may be considered loans to sellers of the underlying
securities, with those securities constituting the collateral for the loans. The
Permanent Portfolio would suffer a loss on a repurchase agreement if the seller
defaulted on his obligation to repurchase the underlying securities when the
value of the securities had declined to less than the agreed upon repurchase
price. In order to reduce the risk of loss from such transactions, the Permanent
Portfolio will enter into repurchase agreements whose underlying securities are
only U.S. Treasury securities, U.S. Government Agency securities and banker's
acceptances, which in the opinion of the Fund's management, present only a very
small risk of default.
The Permanent Portfolio generally will enter into repurchase agreements
only with banks. It may enter into a repurchase agreement with a broker-dealer
provided that the agreement is fully collateralized and "marked to market" daily
(which would require sufficient adjustments of cash or collateral to be made
each day so that the current value of the collateral is at least equal to the
amount of the loan including accrued interest thereon). Such collateral would be
deposited with the Fund's Custodian.
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Gold. The Permanent Portfolio will buy and sell gold only to and from banks
(both U.S. and foreign), regulated U.S. commodities exchanges, exchanges
affiliated with a regulated U.S. stock exchange and dealers who are members of,
or affiliated with members of, a regulated U.S. commodities exchange or stock
exchange or approved by the U.S. Treasury as qualified to purchase American
Eagle coins from the U.S. Mint, or interests equivalent thereto, in accordance
with applicable investment laws. The Permanent Portfolio will not purchase gold
from any producer of the metal or in any form that is not readily marketable.
However, to the extent that the Permanent Portfolio actually holds gold bullion
and coins, it may encounter higher storage and transaction costs than those
normally associated with the ownership of securities. Gold generates no interest
or dividends, offering only the potential for capital appreciation.
Silver. The Permanent Portfolio's silver holdings may include bullion-type
silver coins minted by the U.S. Treasury.
Swiss franc assets. The Permanent Portfolio also holds Swiss franc assets.
The Swiss franc is subject to the risk that inflation (either actual or
expected) will decrease in the U.S. or rise in Switzerland. The price of the
Swiss franc is also subject to the imposition of exchange controls; to
manipulation by the Federal Reserve System, the Swiss National Bank, and, to a
lesser extent, by other Swiss central banks and official agencies; and to
investment controls established by the Swiss or U.S. Government. While
Switzerland has historically been a politically stable nation, there is no
assurance that the country may not become subject to the risks discussed under
"Risk Factors and Special Considerations - Foreign investments" in the
Prospectus.
Real estate and natural resource company stocks. Investments in the
Permanent Portfolio's real estate and natural resource company stocks category
are generally common stocks, but the Permanent Portfolio may acquire preferred
stocks, shares of beneficial interest in real estate investment trusts and
American Depository Receipts ("ADRs") on stocks within this category. The
Permanent Portfolio will invest in a security in this category only if it is
listed on a national securities exchange in the United States, the principal
exchange of a foreign country, as determined by the Board of Directors, or is an
over-the-counter stock quoted on NASDAQ.
Aggressive growth stocks. Investments in the Permanent Portfolio's
aggressive growth stocks category, and investments in the Aggressive Growth
Portfolio, may include stock warrants, which are long-term options to purchase
shares of stock at a fixed price. Most stock warrants are subject to expiration,
which causes their value to dwindle with the passage of time. Each of the
Permanent Portfolio's and the Aggressive Growth Portfolio's total investments in
warrants is limited to a value (at the lower of cost or market) not to exceed 5%
of the Portfolio's net assets; and warrants which are not listed on the New York
or American Stock Exchanges may not exceed 2% of the Portfolio's net assets.
Short-term corporate bonds. Investments in the Permanent Portfolio's dollar
asset category, and investments in the Versatile Bond Portfolio, may include
short-term corporate bonds rated "A" or higher by Standard & Poor's when
acquired by the Portfolio, but whose ratings subsequently have become
downgraded. Ordinarily the Portfolio will sell any investment that has been
downgraded below Standard & Poor's "A" rating, but may retain such an investment
if, in the opinion of the Fund's management, the investment still appears secure
enough to escape default even under deflationary economic conditions and if such
investments in the aggregate do not exceed 2% of the Portfolio's net assets.
Illiquid Investments
The Permanent Portfolio may hold in the aggregate a maximum of 10%, and the
Aggressive Growth Portfolio may hold in the aggregate a maximum of 5%, of its
net assets in investments that have no ready market for resale and securities
for which no readily available market quotation exists, including repurchase
agreements maturing in more than 7 days. For this purpose, securities of U.S.
issuers are deemed to have no readily available market quotation if they are
restricted securities (securities that must be registered under the Securities
Act of 1933 before they may be offered or sold to the public); securities of
non-governmental foreign issuers are deemed to have no readily available market
quotation if they are not listed or traded on a recognized domestic or foreign
securities exchange; other assets of the Portfolio are deemed to have no ready
<PAGE>
market for resale if, in the opinion of the Fund's Board of Directors, no bona
fide market exists for the asset at the time of its purchase or subsequent
valuation. However, no investment is counted toward the limit if its bid/asked
spread (on bona fide quotes from dealers and market-makers) normally is less
than 4%, or if it is subject to a put option exercisable in 7 days or less or a
forward contract that matures in 7 days or less.
Such illiquid investments may include investments in a broker-dealer
subsidiary of the Fund in amounts not to exceed in the aggregate 1% of the
Permanent Portfolio's net assets and 2% of the Aggressive Growth Portfolio's net
assets. The Fund has, however, liquidated and dissolved its broker-dealer
subsidiary World Money Securities, Inc., and has no present plans to hold such
investments in the future. Also, see "Investment Restrictions" below.
If through the appreciation of restricted securities and other assets for
which no readily available market quotation or ready market exists or through
the depreciation of unrestricted securities or other assets for which a ready
market does exist, more than 10% of the Permanent Portfolio's net assets, or
more than 5% of the Aggressive Growth Portfolio's net assets, should be invested
in illiquid assets, then the Fund's management would consider appropriate steps
to protect its liquidity. Less than 5% of the Permanent Portfolio's assets and
less than 5% of the Aggressive Growth Portfolio's assets during the last fiscal
year were considered to be illiquid investments, and the Permanent Portfolio and
the Aggressive Growth Portfolio each intends that less than 5% of its assets
will be considered to be illiquid investments during the current fiscal year.
Offsetting and Indirect Investments
The Permanent Portfolio, in carrying out its investment and tax planning
policies and in maintaining the Target Percentage for each investment category,
and the Aggressive Growth Portfolio, in carrying out its investment and tax
planning policies, each may write covered call options and purchase put options
on stocks that it owns, make short sales of stocks that it owns, and borrow
money and enter into reverse repurchase agreements. The Permanent Portfolio also
may buy and sell gold, silver and Swiss francs in the forward market (including
through the purchase and sale of futures contracts). None of the Permanent
Portfolio's assets during the last fiscal year was subject to or consisted of
covered call options, put options, forward contracts, short sales, borrowed
money or reverse repurchase agreements, and the Permanent Portfolio anticipates
that none of its assets will be subject to or consist of such investments or
techniques during the current fiscal year. None of the Aggressive Growth
Portfolio's assets during the last fiscal year was subject to or consisted of
covered call options, put options, short sales, borrowed money or reverse
repurchase agreements, and the Aggressive Growth Portfolio anticipates that none
of its assets will be subject to or consist of such investments or techniques
during the current fiscal year. Although these devices are commonly associated
with speculative, short-term trading, each of the Permanent Portfolio and the
Aggressive Growth Portfolio is prohibited from using them, and will not use
them, for such purpose (or in contravention of such rules and regulations or
orders as the Securities and Exchange Commission may prescribe). The Permanent
Portfolio will use short sales, forward contracts, put and call options,
borrowings and reverse repurchase agreements only to reduce discrepancies
between the Permanent Portfolio's actual holdings and the Target Percentages in
instances where the devices appear to offer an advantage in price or yield over
a direct purchase or sale of the underlying asset, or for tax planning. The
Aggressive Growth Portfolio will use such devices only in instances where they
appear to offer an advantage in price or yield over a direct purchase or sale of
the underlying asset, or for tax planning. Each of the Permanent Portfolio and
the Aggressive Growth Portfolio expects, when it uses put and call options,
forward contracts, and short sales, actually to make or accept delivery of the
underlying asset. The Permanent Portfolio and the Aggressive Growth Portfolio
would elect not to make or accept delivery only when so electing would, in the
opinion of the Fund's management, achieve an advantage in price, yield, or tax
planning. In such instances, those Portfolios would enter into an offsetting
<PAGE>
option transaction (selling the put and purchasing the call), or an offsetting
forward transaction (selling or purchasing a forward contract, as the case might
be), or would close out the short sale by purchasing and delivering the
underlying securities. Those Portfolios generally would incur additional
brokerage costs in doing so. The Permanent Portfolio may engage in forward
contracts and short sales outside of the United States, which might entail
additional risks. See "Risk Factors and Special Considerations - Foreign
investments" in the Prospectus.
As an example of how the Permanent Portfolio might use the strategies
described above, if the Permanent Portfolio's actual holdings of gold exceeded
the Target Percentage of 20%, the Permanent Portfolio might enter into a forward
sale for the excess amount. The quantity of gold subject to the forward sale
then would be counted as an offset against the Permanent Portfolio's actual
holdings, and the payment receivable from the forward sale would be counted as a
dollar asset.
Similarly, the Permanent Portfolio might increase its position in an
investment category by making purchases in the forward market. For example, if
the Permanent Portfolio's actual holdings of silver fell below the Target
Percentage of 5%, the Permanent Portfolio might purchase silver in the forward
market and count it as silver owned. The money payable to the seller upon
delivery of the silver to the Permanent Portfolio would be counted as an offset
against the Permanent Portfolio's holdings of dollar assets.
As a further example, the Permanent Portfolio or the Aggressive Growth
Portfolio might use put and call options to effectively reduce its holdings of a
particular stock. Those Portfolios would do so by writing (selling) call options
on the shares of stock they owned and simultaneously purchasing put options
(with the same expiration date and striking price) on the same stock. The effect
of the option transactions would be virtually to eliminate the Portfolio's
interest in the price of the stock for the duration of the options, since the
net value of the option position would (within narrow limits) change dollar for
dollar with, but in the direction opposite to, changes in the price of the
stock. The combined dollar value of the stock and the option position would be
approximately fixed, but, due to competitive factors in the option market,
normally would tend to rise gradually over the life of the options. Accordingly,
while the option position remains open, the Permanent Portfolio would count the
value of the stock together with the option position as a dollar asset.
The Permanent Portfolio may borrow money or enter into reverse repurchase
agreements in order to reduce its net holdings of dollar assets to the level
called for by the Target Percentages, but the Portfolio may not and will not
borrow for the purpose of speculative, short-term trading. The amount of any
borrowing by the Permanent Portfolio would be counted as an offset against the
Permanent Portfolio's holdings of dollar assets, and the money borrowed would be
invested to increase the Permanent Portfolio's holdings in other investment
categories to the levels called for by the Target Percentages.
Additional information regarding offsetting and indirect investments
appears below.
Put and call options. In exchange for a premium, the seller (writer) of a
call option grants to the option buyer the right, until a certain expiration
date, to purchase shares of stock at a fixed price (the striking price). For a
speculative trader, the risk assumed by selling a call option is that the market
price of the underlying stock prevailing on the expiration date may be above the
option's striking price. In that case the speculative option seller (unlike the
Permanent Portfolio and the Aggressive Growth Portfolio, which would own the
underlying stock) could be forced to purchase the stock to cover the option and
deliver it to the option buyer. The difference between the option's striking
price and the stock's price in the open market would represent a loss to the
option seller.
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By paying a premium, the purchaser of a put option acquires the right,
until a certain expiration date, to sell shares of stock at a fixed striking
price. For a speculative trader, the risk of purchasing a put is that the market
price of the underlying stock prevailing on the expiration date may be above the
option's striking price. In that case the option would expire worthless and the
entire amount invested in it would be lost.
The purchase of a put option simultaneously with the sale of a call option
(on the same stock and with the same striking price and expiration date) is
considered in economic effect a short sale of the underlying stock; the net
value of the option position tends to change dollar for dollar with, but in a
direction counter to, the price of the underlying stock. The Permanent Portfolio
or the Aggressive Growth Portfolio might enter into a short sale, instead of a
combined option transaction, of a particular stock that it owned if no option
were available on the stock or if the short sale provided an advantage in price
over a combined option transaction.
The combined option transaction also involves both the payment of a premium
(for the purchase of the put option) and the receipt of a premium (from the sale
of the call option). For a speculative trader, the risk of such a combined
option transaction is that the price of the underlying stock will rise. In that
case, each one-dollar rise in the price of the stock would result in a loss of
approximately one dollar on the combined option transaction.
The only type of option transaction which the Permanent Portfolio or the
Aggressive Growth Portfolio may enter into as an offsetting or indirect
investment is the combined transaction described in the preceding paragraph.
However, those Portfolios will enter into such a transaction only if they
actually own the stock to which the options apply, and they will continue to
hold the option position only while they continue to hold the stock. Thus any
loss on a permissible option transaction should be approximately equalled by a
gain on the price of the stock. Consequently those Portfolios will not be
exposed to the risks normally associated with the speculative use of put and
call options.
Each of the Permanent Portfolio and the Aggressive Growth Portfolio has
adopted the following operating policies with respect to option transactions
used as offsetting or indirect investments, which may be changed only by the
Fund's Board of Directors:
* the aggregate value of the stock underlying option transactions,
determined as of the date the options are entered into, will not
ordinarily exceed 10% and may not exceed 25% of such Portfolio's net
assets. Neither of such Portfolio's net assets during the last fiscal
year were subject to option transactions, and each of such Portfolios
intends that less than 5% of its net assets will be subject to option
transactions during the current fiscal year;
* the stock underlying the options must be listed on a national
securities exchange, and the option must be issued by the Chicago
Board Options Clearing Corporation;
* the aggregate premiums paid for all put options purchased by such
Portfolio and held by such Portfolio at any one time will not exceed
2% of such Portfolio's net assets;
* the stock underlying the options must be qualified within such
Portfolio's investment categories; and
* the maximum term of the options will not exceed nine months.
Any gain (or loss) on stocks liquidated through such an option transaction
would be recognized in the year the options are exercised. During most months of
the year, options are available that do not expire until the following year.
Thus, provided that the holder of the call option which the Permanent Portfolio
or the Aggressive Growth Portfolio has sold does not exercise it before the end
of the year in which it is written, the Portfolio could use a combined option
transaction to defer recognition of a capital gain (or loss) into the following
<PAGE>
year. In some cases those Portfolios might want to accomplish such a deferral in
order to offset the gain (or loss) of one stock position against the loss (or
gain) from the sale of other assets. In addition, the net proceeds of a stock
liquidation through a combined option transaction may be greater, even allowing
for brokerage costs, than through a direct sale.
The foregoing discussion applies only to option transactions used as
offsetting or indirect investments and has no application to the acquisition of
stock warrants by the Permanent Portfolio or the Aggressive Growth Portfolio.
See "Investment Categories - Aggressive growth stocks" in this SAI.
Forward contracts. A forward purchase obligates the purchaser to pay a
fixed price for a commodity (or currency) to be delivered at a fixed date in the
future. A forward sale is the counterpart of a forward purchase; it obligates
the seller to deliver a commodity (or currency) on a fixed date in the future in
exchange for a fixed price.
Except for futures contracts (the type of forward contract that is traded
on a U.S. futures exchange), forward contracts usually are settled in cash at
the contract's maturity date. A futures contract, on the other hand, usually
involves daily settlement, in cash, of the gain or loss on the commodity's price
each day. Commodity futures contracts traded on U.S. commodity exchanges are
subject to the regulation of the exchange and of the Commodity Futures Trading
Commission under the Commodity Exchange Act, in order to prevent price
manipulation and excessive speculation, and to promote orderly and effective
commodity futures markets. Such regulations may include trading and daily price
limits, position limits and margin requirements. Forward contracts with a bank
or dealer generally are not secured or guaranteed by an exchange, clearing
corporation, or similar entity.
Because it is possible to enter into forward purchase and sales contracts
by making an initial payment of as little as 5% (or even less) of the value of
the commodity, forward contracts can involve a high degree of risk; even a small
decline in the price of the commodity could result in the loss of most or all of
the cash invested. The Permanent Portfolio, however, will not trade in commodity
forward contracts; it will enter into forward purchases only for amounts of
commodities (or Swiss francs) needed to meet the Target Percentages, and it will
enter into forward sales only for amounts of commodities (or Swiss francs) it
actually owns that exceed the Target Percentages. Consequently, the Permanent
Portfolio will not be subject to the high degree of risk associated with the
speculative use of forward contracts, although each forward transaction, viewed
in isolation, would still appear to involve the risks normally associated with
forward contracts. Furthermore, the Permanent Portfolio has adopted the
following operating policies, which may be changed only by the Fund's Board of
Directors:
* the Permanent Portfolio will use forward contracts only to acquire and
dispose of actual commodities (or Swiss francs) within the Target
Percentages, and not for any speculative purpose;
* the Permanent Portfolio will enter into forward contracts only through a
regulated U.S. commodity exchange or dealers who are members of or
affiliated with members of a regulated U.S. commodity exchange, or with the
ten largest (in assets) U.S. banks or ten largest (in assets) Swiss
commercial banks, excluding cantonal and savings banks, as determined by
the Swiss National Bank;
* the Permanent Portfolio's net assets plus borrowings by the Permanent
Portfolio and the aggregate price of all commodity forward contracts owned
by the Permanent Portfolio (measured by multiplying the number of units to
which the contracts refer by the price per unit specified) will equal at
least 300% of the aggregate price of all commodity forward contracts owned
by the Permanent Portfolio and any borrowings. If the 300% requirement
specified above is not being met at any time, the Permanent Portfolio will
take the necessary steps to restore the 300% coverage within three business
days. Sales of commodity forward contracts in order to comply with this
300% limitation may have an adverse impact on the Permanent Portfolio;
* the Permanent Portfolio will segregate, and maintain in a segregated
account until the commodity forward purchase contract is closed out, cash
or U.S. government securities equal in value to the purchase price required
to be paid by the Permanent Portfolio due on the settlement date under the
contract;
<PAGE>
* the Permanent Portfolio will not invest (including the placing of
additional margin deposits) more than twice the amount of the original
margin deposit in any commodity forward contract; and
* the Permanent Portfolio will not invest in, or be contingently obligated in
connection with, commodity contracts in an amount exceeding 10% of its
assets.
The assets maintained in the segregated account referred to above will
continue to be treated as dollar assets for purposes of the Target Percentages
until the settlement date under the contract.
The Permanent Portfolio did not engage in any forward contracts during the
last fiscal year, and does not intend to engage in any forward contracts during
the current fiscal year.
Short sales. A short sale obligates the seller to deliver a security at a
later, perhaps indefinite, date. In return, the seller receives a price that is
fixed on the date of the sale. For a speculative trader, the risk of making a
short sale is that the price of the security will rise, forcing the short seller
to purchase the security at a higher price than he receives from the short sale.
In principle, the potential loss is unlimited, since there is no absolute limit
on how high an investment's price might rise.
Each of the Permanent Portfolio and the Aggressive Growth Portfolio will
enter into short sales only of stocks which it contemporaneously owns, and it
will retain such stocks so long as the short position remains open. (In other
words, those Portfolios will enter into short sales "against the box.")
Consequently, those Portfolios will not be exposed to the risks associated with
the speculative use of short sales. Neither the Permanent Portfolio nor the
Aggressive Growth Portfolio entered into short sales during its last fiscal
year, nor intends to enter into short sales during its current fiscal year.
Furthermore, the Permanent Portfolio and the Aggressive Growth Portfolio each
has adopted the following operating policies with respect to short sales, which
may be changed only by the Fund's Board of Directors:
* such Portfolio will limit the dollar amount of short sales at any one time
to a value ordinarily not to exceed 10% and in no instance to exceed 25% of
its net assets; and
* the value of securities of any one issuer in which such Portfolio may be
short will not exceed the lesser of 2% of the value of such Portfolio's net
assets or 2% of the securities of that class of that issuer.
For tax purposes, a capital gain (or loss) on a short sale is generally
recognized when the seller makes delivery of the securities he has sold short. A
short sale "against the box" is treated as a constructive sale of the underlying
security at the time it is entered into. The gain (or loss) is long-term only if
the securities had been held for more than the applicable minimum holding period
for long-term capital gains at the time of the short sale.
Borrowed money. The purchase of investments with borrowed money can entail
a higher degree of risk from price fluctuations than a cash purchase using one's
own funds, since the borrowings allow the buyer to purchase more of the
investment than he could using only his own cash ("Leverage Risk"). For example,
if the buyer finances a purchase 50% with his own cash and 50% with borrowed
funds, each 1% decline in the price of the investment would result in a 2%
decline in the net value of his position in the investment. A 50% decline in
price would result in a total loss. In addition, the buyer would incur interest
expense on borrowed funds.
Borrowing also can add to the risk of loss from investment price
fluctuations if the borrowing increases the average length to maturity of the
borrower's net dollar assets, since such borrowing may increase the borrower's
exposure to fluctuations in the prices of dollar assets due to changes in
interest rates ("Interest Rate Risk"). However, as indicated under "Investment
Categories" above, the average length to maturity of the Permanent Portfolio's
net dollar assets may not exceed 15 years - a term structure that the Permanent
Portfolio could achieve without the use of borrowed money. Consequently, the
Permanent Portfolio's ability to borrow will not increase its
<PAGE>
potential exposure to loss from investment price fluctuations due to Interest
Rate Risk. Furthermore, the Permanent Portfolio, the Versatile Bond Portfolio
and the Aggressive Growth Portfolio each has adopted the following operating
policies with respect to borrowings:
* the amount of money such Portfolio may borrow will be limited by the
Investment Company Act of 1940 (the "Act") so that immediately after such
borrowing the amount borrowed may not exceed 33 1/3% of the value of such
Portfolio's assets (including the amount borrowed) less its liabilities
(not including any borrowings but including the fair market value at the
time of computation of any securities with respect to which there are open
short positions). If, due to market fluctuations or other reasons, the
value of such Portfolio's assets falls below the coverage requirement of
the Act, such Portfolio will, within three business days, reduce its debt
to the extent necessary. To do this such Portfolio may have to sell a
portion of its investments at a time when it may be disadvantageous to do
so;
* such Portfolio may borrow only from banks in accordance with the Act, and
will also be subject to applicable margin limitations imposed by
regulations adopted by the Federal Reserve Board;
* in observing these limits, such Portfolio will count the proceeds of
reverse repurchase agreements (see below) as borrowed money; and
* such Portfolio will segregate, and maintain in a segregated account until
the borrowing is repaid, cash, U.S. government securities or other
appropriate liquid assets equal to the amount borrowed. See "Forward
contracts" above for the treatment of the segregated assets.
No Portfolio engaged in any borrowings during the last fiscal year, and no
Portfolio intends to engage in any borrowings during the current fiscal year.
Reverse repurchase agreements. A reverse repurchase agreement is a special
device for borrowing money. Under such an agreement, the borrower sells an
investment (usually a bond, money market instrument or other dollar asset) and
agrees to repurchase it later at a fixed price. Because it is possible to borrow
nearly the entire purchase price of a bond or other dollar asset through a
reverse repurchase agreement, such agreements can be used by traders to
speculate on price changes, especially price changes associated with declines in
interest rates. Such speculation is highly risky, since an unforeseen rise in
interest rates could cause a loss that equalled or even exceeded the cash
invested.
Neither the Permanent Portfolio, the Versatile Bond Portfolio nor the
Aggressive Growth Portfolio will use reverse repurchase agreements for any
speculative purpose. Reverse repurchase agreements have virtually the same
effect on a Portfolio as borrowing. Those Portfolios might enter into a reverse
repurchase agreement, instead of a borrowing, if the reverse repurchase
agreement provides an advantage in interest rate over a borrowing. None of the
Permanent Portfolio's, the Versatile Bond Portfolio's or the Aggressive Growth
Portfolio's net assets during the last fiscal year were subject to reverse
repurchase agreements, and none of such Portfolios intends that its net assets
will be subject to reverse repurchase agreements during the current fiscal year.
The Permanent Portfolio, the Versatile Bond Portfolio and the Aggressive
Growth Portfolio will count the proceeds of a reverse repurchase agreement as
borrowed money. Consequently, as in the case of direct borrowing (discussed
above) a Portfolio's use of reverse repurchase agreements should not add to its
potential risk of loss from investment price fluctuations. Furthermore, the
Permanent Portfolio, the Versatile Bond Portfolio and the Aggressive Growth
Portfolio each has adopted the following operating policies with respect to
reverse repurchase agreements:
* such Portfolio will enter into only those reverse repurchase agreements
that have a specified repurchase price;
* such Portfolio will enter into reverse repurchase agreements only with
banks; and
* such Portfolio will segregate, and maintain in a segregated account until
the reverse repurchase agreement is closed out, cash, U.S. government
securities or other appropriate liquid assets equal to the repurchase
price. See "Forward contracts" above for the treatment of the segregated
assets.
<PAGE>
Default risk. Put and call options, forward purchases, short sales,
borrowings and reverse repurchase agreements all involve contracts between a
Portfolio and a bank, broker, dealer or clearinghouse. A default by any of them
could expose the Portfolio to serious loss. Although the risk of such a loss is
small, the Fund's management intends to reduce a Portfolio's exposure by giving
preference to banks, brokers, dealers and clearinghouses which, in the opinion
of the Fund's management, have an especially high degree of creditworthiness and
by giving preference to transactions that require the corresponding party to
pledge or otherwise deliver or establish collateral to the benefit of such
Portfolio.
Strategic Portfolio Adjustments
Because investment prices are constantly changing, the actual composition
of the Permanent Portfolio's holdings will never exactly match the Target
Percentages. Ordinarily, whenever the Permanent Portfolio's actual holdings in
any investment category deviate from the category's Target Percentage by more
than 1/10th of the Target Percentage, the Permanent Portfolio will buy or sell
investments to correct the discrepancy (unless it is corrected by changes in
market prices) and will do so within 30 days from the initial day of such
deviation.
The Permanent Portfolio's management is authorized to delay portfolio
adjustments whenever, in its opinion, extraordinary circumstances make it
desirable to do so. In the event of such a delay, the Permanent Portfolio's
actual holdings in one or more investment categories could deviate by more than
1/10th from the Target Percentages for those categories for a period in excess
of 30 days. Circumstances that might occasion a delay include:
1. A disorderly market, i.e., when the differences between the buying and
selling prices (bid and asked) quoted by market makers and investment
dealers are, in the opinion of the Fund's management, abnormally large;
2. A banking crisis or other financial emergency that compromises the ability
of brokers and dealers to consummate investment transactions;
3. The inability to make a portfolio adjustment without recognizing a large
short-term capital gain; and
4. The inability to make a portfolio adjustment without jeopardizing the
Permanent Portfolio's federal tax status as a regulated investment company.
The Permanent Portfolio will not delay portfolio adjustments called for by
the Target Percentages in anticipation of a change in the general price level of
any investment category.
A Portfolio may acquire assets from another Portfolio that are otherwise
qualified investments for the Portfolio, so long as neither Portfolio bears any
markup or spread and no commission, fee or other remuneration is paid in
connection with the acquisition. Any such transaction would be a cash purchase
or sale of a security for which market quotations are readily available, at its
independent current market price, in a manner consistent with SEC Rule 17a-7
under the Investment Company Act of 1940.
Investment Restrictions
The investment policies and restrictions described in the Prospectus and
this SAI are intended to remain in force indefinitely. The investment
restrictions described below have been adopted by the Fund as operating policies
and are subject to change by the Fund's Board of Directors. However, the Fund
will not change any operating policy without notifying its shareholders in
advance. The Fund will not:
1. Purchase securities of companies for the purpose of exercising control or
management.
2. Purchase securities on margin, although the Permanent Portfolio may enter
into commodity forward contracts (but only in accordance with the operating
procedures and policies contained elsewhere in the Prospectus and this SAI)
and obtain such short-term credit as may be necessary for the clearance of
purchases and sales of portfolio investments.
<PAGE>
3. Purchase securities of any other registered open-end investment company
except as part of a merger or consolidation.
4. Invest in straddles or spreads.
5. Purchase from or sell to any officer, director or employee of the Fund, or
its adviser, or any of its partners or employees, any securities other than
shares of any Portfolio of the Fund.
6. Purchase or retain the securities of any issuer if those officers and
directors of the Fund or partners of its adviser owning individually more
than 1/2% of a class of securities of such issuer together own more than 5%
of such securities of such issuer.
7. Retain a custodian for its assets which shall be other than a bank or trust
company having at least $2,000,000 in aggregate capital, surplus and
undivided profits and, upon the resignation or inability to serve of the
custodian, the Fund shall use its best efforts to obtain and transfer its
assets to a similarly qualified custodian or submit to its stockholders the
question whether to function without such a custodian.
8. Invest more than 5% of the value of the total assets of a Portfolio in
securities of companies which together with predecessors have a record of
less than three years' continuous operation.
9. Pledge, mortgage or hypothecate assets of any Portfolio having a market
value greater than 15% of the value of that Portfolio's gross assets (taken
at cost), except to secure permitted borrowings of that Portfolio. Less
than 5% of the value of any Portfolio's gross assets during the last fiscal
year were pledged, mortgaged or hypothecated, and each Portfolio intends
that less than 5% of the value of its gross assets will be pledged,
mortgaged or hypothecated during the current fiscal year.
10. Use as security for borrowings of any Portfolio more than 35% of value of
that Portfolio's assets. Less than 5% of value of any Portfolio's assets
during the last fiscal year were used as security for borrowings of that
Portfolio, and each Portfolio intends that less than 5% of value of its
assets will be so used during the current fiscal year.
Under the Investment Company Act of 1940, certain policies of the Fund may
not be changed unless authorized by the vote of a majority of its outstanding
voting securities. In addition to those fundamental policies described in the
Prospectus, without shareholder approval:
1. Subject to the policy regarding a wholly-owned broker-dealer subsidiary,
the Fund will not act as a securities underwriter of other issuers except
to the extent that acting as such may be necessary to dispose of securities
acquired by the Fund. (However, in connection with the disposition of
"restricted securities" and securities for which there is no readily
available market quotation, the Fund may be deemed to be an underwriter
under certain federal securities laws.)
2. The Fund will not lend its assets to its officers, directors, adviser or
affiliates of its adviser, nor shall such persons take long or short
positions in shares of the Fund (which prohibition shall not prevent them
from acquiring such shares for investment purposes at the current net asset
value).
3. No Portfolio will concentrate its investments in any particular industry or
group of industries (i.e., no more than 25% of the value of any Portfolio's
assets, other than securities issued by the United States government or an
agency or instrumentality thereof, will be invested in any one industry).
4. No Portfolio will invest in the stock of any issuer, other than the United
States government or an agency or instrumentality thereof, if immediately
thereafter more than 5% of that Portfolio's total assets (taken at market
value) would be invested therein. For this purpose, options on the stock of
any corporation will be deemed to be securities issued by that corporation.
5. Subject to the policy regarding a wholly-owned broker-dealer subsidiary,
neither the Permanent Portfolio nor the Aggressive Growth Portfolio will
invest in the stock of any issuer, other than the United States government
or an agency or instrumentality thereof, if immediately thereafter more
than 10% of the outstanding voting stock of such issuer would be held by
the respective Portfolio.
<PAGE>
6. Neither the Treasury Bill Portfolio nor the Versatile Bond Portfolio will
invest in the stock of any issuer, other than the United States government
or an agency or instrumentality thereof, if immediately thereafter more
than 10% of the outstanding voting stock of such issuer would be held by
the respective Portfolio.
7. The Permanent Portfolio will not borrow money, issue senior securities,
purchase or sell real estate (including real estate limited partnerships)
or commodities or oil, gas or other mineral leases, or make loans to other
persons, except as follows: the amount of money the Permanent Portfolio may
borrow will be limited by the Investment Company Act of 1940 so that
immediately after such borrowing the amount borrowed may not exceed 33 1/3%
of the value of the Permanent Portfolio's assets (including the amount
borrowed) less its liabilities (not including any borrowings but including
the fair market value at the time of computation of any securities with
respect to which there are open short positions). In observing these
limits, the Permanent Portfolio will count the proceeds of reverse
repurchase agreements as borrowed money.
8. Neither the Treasury Bill Portfolio, the Versatile Bond Portfolio nor the
Aggressive Growth Portfolio will borrow money, issue senior securities,
purchase or sell real estate (including limited partnership interests) or
commodities or oil, gas or other mineral leases, make loans or lend its
assets to other persons, hold more than 5% of its net assets in investments
which are not readily marketable, engage in short sales or write put
options or uncovered call options (other than as noted above), except as
follows: the amount of money any such Portfolio may borrow will be limited
by the Investment Company Act of 1940 so that immediately after such
borrowing the amount borrowed may not exceed 33 1/3% of the value of the
respective Portfolio's assets (including the amount borrowed) less its
liabilities (not including any borrowings but including the fair market
value at the time of computation of any securities with respect to which
there are open short positions).
9. Notwithstanding any other policy of the Permanent Portfolio, the Permanent
Portfolio may form a wholly-owned subsidiary for the purpose of engaging in
broker-dealer activities. The total amount of the Permanent Portfolio's
capital contributions to such subsidiary shall be limited to an amount not
to exceed, in the aggregate, 1% of the net assets of the Permanent
Portfolio as of the time that any capital contribution is made. The
Permanent Portfolio shall not make any capital contribution to such
subsidiary that would increase the then current value of the Permanent
Portfolio's investment in the subsidiary to an amount in excess of 1% of
the then net assets of the Permanent Portfolio.
ORGANIZATION AND MANAGEMENT
Fund History
The Fund was incorporated under the laws of Maryland on December 14, 1981,
under the name "Permanent Portfolio Fund, Inc." and changed its name to
"Permanent Portfolio Family of Funds, Inc." on August 10, 1988. The Fund was
originally organized with a single Portfolio which commenced operations as an
investment company on October 15, 1982. That Portfolio continues, with the same
investment policy, and is now called the Fund's "Permanent Portfolio." The
Fund's Treasury Bill Portfolio commenced operations on May 26, 1987, the Fund's
Aggressive Growth Portfolio commenced operations on January 2, 1990 and the
Fund's Versatile Bond Portfolio commenced operations on September 27, 1991. The
Fund may offer additional Portfolios from time to time.
Investment Adviser
The Fund retains World Money Managers (the "Investment Adviser") as its
adviser. The Investment Adviser is a limited partnership organized in August
1981 under the laws of the State of California. The Investment Adviser's limited
partners are Terry Coxon, Robert F. Allen, Jr., Robert F. Schaub Irrevocable
Trusts, The Schaub Corporation, The Alan and Holly Sergy 1998 Trust and
Permanent Portfolio Information, Inc. The Investment Adviser's general partners
are Terry Coxon and Terry Coxon, Inc., a California corporation wholly owned by
Terry Coxon. Mr. Coxon also serves as President and a director of the Fund. See
"Directors and Officers" on the following page.
<PAGE>
The services the Investment Adviser provides to the Fund and the
compensation it receives are defined in the Investment Advisory Contract (the
"Contract") between the Fund and the Investment Adviser, dated June 19, 1996.
The Investment Adviser received the following investment advisory fees from each
Portfolio for the last three fiscal years:
- --------------------------------------------------------------------------------
Advisory Fees Paid for Fiscal Year Ended January 31
- --------------------------------------------------------------------------------
1999 1998 1997
---------- ---------- ----------
Permanent Portfolio $ 775,077 $ 800,234 $ 841,843
Treasury Bill Portfolio(1) 582,473 622,117 700,666
Versatile Bond Portfolio(2) 161,938 171,008 149,209
Aggressive Growth Portfolio 229,836 202,493 147,574
- ---------
(1) Net of investment advisory fees waived of $466,838, $494,877 and $556,879
for the fiscal years ended January 31, 1999, 1998 and 1997, respectively.
(2) Net of investment advisory fees waived of $80,753, $85,809 and $74,401 for
the fiscal years ended January 31, 1999, 1998 and 1997, respectively.
During the year ended January 31, 1999, the Investment Adviser 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% (0.625%), in the case of the Treasury Bill Portfolio, or 3/4 of 1% (0.750%),
in the case of the Versatile Bond Portfolio, of the respective Portfolio's
average daily net assets. The Investment Adviser 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.
The Contract also provides that the Investment Adviser shall not be liable
to the Fund or to any shareholder for anything done or omitted by it, including
losses sustained by the Fund in the purchase, holding or sale of any Fund
investment, except acts or omissions involving willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties imposed upon it by the
Contract.
The Contract was most recently approved by the Board of Directors of the
Fund, including a majority of the Fund's Independent Directors, on December 7,
1998; the Contract was most recently approved by a majority of the outstanding
voting securities of each of the Permanent Portfolio, the Treasury Bill
Portfolio, the Versatile Bond Portfolio and the Aggressive Growth Portfolio on
August 22, 1996.
The Contract will continue in force and may be renewed from year to year
thereafter with respect to a Portfolio, provided that any such renewal has been
specifically approved annually by the vote of a majority of the outstanding
voting securities of the Portfolio or by the Fund's Board of Directors. In
addition, to continue in force, the Contract must be approved annually by a
majority of the Fund's Independent Directors, voting in person at a meeting
called for the purpose of considering continuation of the Contract.
The Contract may be terminated by either party without penalty on 60 days'
written notice to the other party. Such termination may be effected on behalf of
the Fund by its Board of Directors or by a vote of a majority of its outstanding
voting securities, or on behalf of a Portfolio of the Fund by a vote of a
majority of the outstanding voting securities of that Portfolio. Assignment of
the Contract to another party automatically terminates it.
Additional information regarding the Contract is set forth in the
Prospectus under "Management-Investment Adviser."
<PAGE>
- --------------------------------------------------------------------------------
DIRECTORS AND OFFICERS(1)(7)
- --------------------------------------------------------------------------------
David P. Bergland(2)(3)(4)(5)(6) age 64, Director
Attorney specializing in business litigation, currently a sole practitioner in
Costa Mesa, California. Mr. Bergland is also a writer, lecturer, publisher and
Adjunct Professor of Law at Western State University College of Law in Irvine,
California. Mr. Bergland has served as a director of the Fund since 1992.
Hugh A. Butler(2)(4)(5)(6) age 46, Director
Chief Executive Officer and Founder of Computer Consultants Corporation, Salt
Lake City, Utah. Mr. Butler has served as a director of the Fund since 1996.
Terry Coxon* age 55, President and Director
Investment adviser and author since 1976; along with Terry Coxon, Inc., a
corporation which he wholly owns and for which he serves as President and
director, Mr. Coxon is the general partner of the Investment Adviser. Mr. Coxon
also has served as President and a director since 1987 of Bullion Security
Corporation, the sponsor of United States Gold Trust, an investment trust. Mr.
Coxon is the founder of the Fund and has served as its President and as a
director since its inception.
Michael J. Cuggino* age 36, Treasurer and Director
A Certified Public Accountant, Mr. Cuggino has served as Treasurer of the Fund
since 1993 and was elected to the Fund's Board of Directors on June 25, 1998.
Mr. Cuggino has also served as Treasurer since 1993 of Bullion Security
Corporation and from 1993 through 1996 of World Money Securities, Inc., the
Fund's former broker-dealer subsidiary. From 1991 through 1992, Mr. Cuggino
served as Assistant Treasurer of the Fund, Bullion Security Corporation and
World Money Securities, Inc. From 1985 until 1991, Mr. Cuggino was employed by
Ernst & Young, the Fund's former independent auditors, in various audit and
accounting capacities, including audit manager.
Robert B. Martin, Jr.*(3) age 55, Secretary and Director
Attorney specializing in tax matters, currently a sole practitioner in Pasadena,
California. Mr. Martin has served as a director of the Fund since its inception,
as legal counsel to the Fund and the Investment Adviser since 1994 and as
Secretary of the Fund since 1998.
Mark Tier(2)(3)(4)(6) age 51, Director
Self-employed marketing consultant in Hong Kong for more than the preceding five
years. Mr. Tier has served as a director of the Fund since 1986.
- ----------
* Interested person within the meaning of the Investment Company Act of 1940.
Messrs. Coxon and Cuggino are deemed interested persons because of their
association with the Investment Adviser. Mr. Martin is deemed an interested
person because of his association as legal counsel to the Fund and the
Investment Adviser.
(1) The address for each officer and director is 625 Second Street, Suite 102,
Petaluma, California 94952.
(2) Independent director, not considered to be an interested person within the
meaning of the Investment Company Act of 1940.
(3) Member, Audit Committee.
(4) Member, Compensation Committee.
(5) Member, Legal Affairs Committee.
(6) Member, Nominating Committee.
(7) No director of officer has any family relationship with another.
<PAGE>
Board of Directors
The business and affairs of the Fund are managed under the direction of the
Board of Directors who exercise all powers of the Corporation granted under
Maryland law.
Directors and Officers
As of July 15, 1999, all officers and directors of the Fund as a group
owned less than 1% of the outstanding common stock of the Fund. No officer or
director has any family relationship with another See "Organization and
Management-Investment Adviser".
The chart on the preceding page is provided as of July 15, 1999 as to each
director and officer of the Fund.
Share Ownership
As of July 15, 1999, the following persons are known by the Board of
Directors to own beneficially or to hold of record 5% or more of the outstanding
common stock of any class of the Fund:
- --------------------------------------------------------------------------------
Number of Shares Percent
Name(1) Held of Record of Class
- ------------------------------------------------------------- -----------------
Versatile Bond Portfolio:
Bercom Nominees c/o 82,244.450 24.383%
Bermuda Commercial Bank, Ltd.
Aggressive Growth Portfolio:
Charles Schwab & Co., Inc. 27,360.396 9.242%
c/o Reinvest Account
Bercom Nominees c/o 49,856.943 16.841%
Bermuda Commercial Bank, Ltd.
- ---------
(1) The address for each holder is c/o 625 Second Street, Suite 102, Petaluma,
California 94952. No person is known by the Board of Directors to own
beneficially or to hold of record 5% or more of the shares of the Fund as a
whole.
Compensation
Under the Contract, the Fund has the obligation to pay the salaries, fees
and expenses of all of the officers and directors of the Fund. The Fund
currently compensates its President at a rate of $72,000 per annum and its
Secretary and Treasurer at a rate of $48,000 per annum. Each Director of the
Fund receives $6,000 per annum plus $900 and out-of-pocket expenses for each
Board of Directors meeting attended.
On March 9, 1998, the Fund's Board of Directors adopted the Permanent
Portfolio Family of Funds, Inc. Long Term Disability Plan (the "Plan"). The Plan
provides for payment by the Fund to any qualified officer of the Fund who is
totally disabled (a "Participant"), as defined by the Plan, a disability benefit
equal to 50% of the Participant's salary as an officer as of the time the
disability is determined, subject to cost-of-living adjustments, for a period
not to exceed five years. The Plan is renewable annually and may be terminated
by the Fund's Board of Directors at any time prior to each annual renewal. On
March 10, 1998, the Fund accrued an estimated liability of $107,808 under the
Plan and the Plan was most recently renewed by the Fund's Board of Directors on
December 7, 1998.
The table at the top of the following page sets forth information on
compensation paid by the Fund to each officer and director for services in such
capacities during the fiscal year ended January 31, 1999.
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
COMPENSATION TABLE
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
(1) (2) (3) (4) (5)
Name of Person, Aggregate Pension or Retirement Estimated Annual Total Compensation from
Position Compensation Benefits Accrued as Benefits Fund/Fund Complex
from Fund Part of Fund Expenses upon Retirement Paid to Directors and Officers
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
David P. Bergland, $ 10,500 $ 0 $ 0 $ 10,500
Director
Hugh A. Butler, 10,500 0 0 10,500
Director
Terry Coxon, 81,600 0 0 81,600
President and Director
Michael J. Cuggino, 55,200 0 0 55,200
Treasurer and Director(a)
Robert B. Martin, Jr., 49,600 0 0 49,600
Secretary and Director(b)
Alan M. Sergy, 30,400 (d) 0 0 30,400
Secretary and Director(c)
Mark Tier, 9,600 0 0 9,600
Director
- -------------
<FN>
(a) Elected as a director of the Fund on June 25, 1998.
(b) Began serving as Secretary of the Fund effective April 1, 1998.
(c) Served as a Secretary and a director of the Fund through March 31, 1998 and
May 15, 1998, respectively.
(d) Includes $20,000 paid under the Fund's Long Term Disability Plan.
- --------------------------------------------------------------------------------
</FN>
</TABLE>
CONSULTANTS
As discussed under "Consultants" in the Prospectus, Harry Browne and
Douglas Casey serve as consultants to the Fund and the Investment Adviser. Each
consulting agreement may be terminated without prior notice by either the
Investment Adviser, the Fund or the consultant. Each agreement requires the
Investment Adviser, during the term of the agreement and for 90 days after its
termination, if any, to transmit to all Fund shareholders any written statement
that the consultant may submit regarding the Fund or the Investment Adviser. In
payment for his consulting services, the general partners of the Investment
Adviser have agreed to assign to Mr. Casey a portion, not to exceed 10%, of
their share of the profits earned by World Money Managers in advising the Fund.
DISTRIBUTIONS AND TAXES
Dividends from net interest and dividend income and net short-term capital
gains, if any, generally will be taxable to shareholders as ordinary income. To
the extent that such distributions consist of qualifying income from certain
domestic sources, they may be subject to the 70% dividends-received deduction
for corporate shareholders. The payor of a dividend on stock (as the Fund may
be) may be required to withhold 31% of any reportable payments (which may
include dividends, capital gains distributions and redemptions) paid to a
noncorporate shareholder if that shareholder fails to provide the Fund with a
valid taxpayer identification number. Other withholding requirements may apply
to certain foreign shareholders.
<PAGE>
Any dividend paid by a Portfolio has the effect of reducing the Portfolio's
net asset value. Therefore, a dividend paid shortly after a shareholder's
investment in the Portfolio would represent, in substance, a return of capital
to the shareholder. Nevertheless, the distribution would be subject to the
income taxes discussed here and in the Prospectus.
Redemption of Fund shares (including redemptions under a Systematic
Withdrawal Program) is a taxable event for redeeming shareholders. Any gain or
loss realized on a sale or redemption of Fund shares by a shareholder who is not
a dealer in securities will generally be treated as a long-term capital gain or
loss if the shares have been held more than one year and otherwise as a
short-term capital gain or loss. Any such loss, however, will be treated as a
long-term capital loss to the extent of any capital gain distribution received
by the shareholder in the year in which the loss is recognized if such
shareholder held his shares for less than six months. Also, see "Redemption of
Shares by the Fund-Tax Consequences of In-Kind Redemptions."
The Fund is required by federal law to ask each shareholder to certify on
his Shareholder Account Application that the social security or taxpayer
identification number provided is correct and that he is not subject to 31%
backup withholding for previous underreporting to the IRS. If the application is
not so certified, the Fund must withhold 31% of reportable payments (which may
include dividends, capital gains distributions and redemptions) made to those
shareholders' accounts.
Foreign Taxes
The Permanent Portfolio expects to earn interest income in Switzerland and
possibly to earn interest or dividends in other foreign countries, principally
Australia and Canada, which levy withholding taxes on payments made to U.S.
corporations. In many cases there are tax treaties between the U.S. and a
foreign country which may qualify the Permanent Portfolio for a reduced rate of
tax, usually provided that more than 75% of the Permanent Portfolio's shares are
owned by individuals who are residents or citizens of the United States.
The Permanent Portfolio may be subject to withholding taxes on income
derived from sources in other countries, but the Fund's management anticipates
that the amount of such taxes will not be significant. The Permanent Portfolio
does not expect to be able to pass through any foreign tax credits to its U.S.
shareholders. The Permanent Portfolio incurred $320 of foreign income taxes
deducted at the source, net of refundable taxes, during its last fiscal year.
COMPUTATION OF NET ASSET VALUES
The net asset values of Fund shares are computed at the close of business
of the New York Stock Exchange (usually 1:00 P.M. Pacific Time) every day that
the Exchange is open for trading ("business day"). The Exchange is generally
open for trading every Monday through Friday, but is closed for trading on
certain customary national business holidays consisting of New Year's Day,
Martin Luther King, Jr.'s Birthday, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Since the Fund
has significant holdings that are principally traded on foreign exchanges which
may be open for trading on days other than the Fund's business days, the net
asset values of the Fund's shares may be significantly affected on days when
investors have no access to the Fund. All awaiting and accepted requests for
purchases and redemptions of Fund shares are executed, at a price equal to net
asset value per share, immediately following the computation. See "Purchase of
Shares from the Fund" and "Redemption of Shares by the Fund."
Net asset value per share of a Portfolio is computed by adding the current
value of all the Portfolio's assets, subtracting the amount of its liabilities
(including proper accruals of expense items), dividing the result by the total
number of outstanding shares of the Portfolio, and rounding up or down to the
nearest cent per share. The current value of Fund assets is determined as
follows: assets that are traded on one or more public exchanges (including stock
options) will be valued at their most recent price of the day on the exchange on
<PAGE>
which they are principally traded. If there is no trading in such an asset on a
business day, the asset will be valued at the mean between its bid and ask
prices. Assets that are traded over-the-counter will be valued at the mean
between their bid and ask prices. The Fund will value gold and silver each
business day at the closing spot price on the New York Commodity Exchange, a
regulated U.S. commodity futures exchange. Deposits of Swiss francs will be
valued each business day at the 4 p.m. (Eastern Time) price (converted into U.S.
dollars) quoted by Reuters. Swiss government bonds will be valued each business
day at the closing price in Zurich, Switzerland, converted into U.S. dollars at
the 4 p.m. (Eastern Time) Swiss franc rate quoted by Reuters. Short-term
securities will be marked to market daily. Assets for which there is no public
market will be valued at the current price of substantially similar assets on
the basis of comparable marketability, maturity, quality and type. All other
assets (including restricted securities and forward contracts with banks or
brokers) will be valued at fair value as determined in good faith by the Board
of Directors. Also, the Fund may rely upon bona fide quotations obtained from
sources other than those referred to above when doing so would, in the opinion
of the Board of Directors, better serve the fair and accurate valuation of the
Fund's assets. In the event of an extraordinary occurrence or emergency which
would affect the value of Fund assets traded on a foreign exchange, and which
the Board of Directors learns of prior to 4:00 p.m. Eastern Time, those assets
will be valued at fair value as determined in good faith by the Board of
Directors.
As of January 31, 1999, the net asset value (offering price and redemption
price) per share of Common Shares in the Permanent Portfolio was $18.71, which
was computed by dividing the Portfolio's net assets, valued as described above,
on that date ($66,854,785) by the number of its shares outstanding on that date
(3,573,170). As of that date, the net asset value per share of Common Shares in
the Treasury Bill Portfolio, the Versatile Bond Portfolio and the Aggressive
Growth Portfolio were $67.97, $58.83 and $69.13, respectively, as similarly
computed.
PURCHASE OF SHARES FROM THE FUND
Shares in each Portfolio are offered for sale continuously by the Fund.
Investors who purchase such shares directly from the Fund pay no commissions or
sales charges. The minimum initial investment in any Portfolio is $1,000.
Shareholders may make additional investments at any time in minimum amounts of
$100 per Portfolio. All requests for purchases of shares accompanied by payment
therefor are effected at a price equal to the net asset value per share, as
described under "Computation of Net Asset Values," next computed after receipt
of the properly completed request by the Fund's Transfer Agent. Please see
"Purchase of Shares from the Fund" in the Prospectus for further information.
If a shareholder sends money to the Fund without clearly indicating how it
is to be invested, the Fund's policy is to treat the money as an investment in
the Treasury Bill Portfolio.
The Fund reserves the right to reject investments in part or in whole.
Complete and detailed records for each Shareholder Account are maintained
by the Transfer Agent. A confirmation is sent to a shareholder at the time of
each purchase, redemption or other transaction. Certificates for shares are
issued without charge, but only when specifically requested in writing by the
investor. Certificates are not issued for fractional interests.
The Fund has authorized one or more broker-dealers to accept purchase and
redemption orders for Fund shares on the Fund's behalf. Such broker-dealers are
authorized to designate other intermediaries to accept purchase and redemption
orders for Fund shares on the Fund's behalf. The Fund will be deemed to have
received a purchase or redemption order for Fund shares when an authorized
broker-dealer or, if applicable, a broker-dealer's authorized designee or
intermediary, accepts the order. In such instances an investor's order will be
priced at the Fund's net asset value next computed after it is accepted by such
an authorized broker-dealer or the broker-dealer's authorized designee.
Investors who purchase or redeem shares in the Fund through a broker-dealer
may be charged a transaction fee by the broker-dealer, who may place such orders
by telephone in accordance with the Fund's procedures.
<PAGE>
REDEMPTION OF SHARES BY THE FUND
Shareholders may redeem all or some of their shares in any Portfolio.
Subject to the limitations noted below, requests for redemption will be
accepted for a Portfolio on any business day. The price paid to the redeeming
shareholder is the Portfolio's net asset value per share next computed after
receipt by the Transfer Agent of the properly completed redemption request.
Redemption requests must be accompanied by certificates, if issued, and
must be sent to the Transfer Agent. Shareholders may be required to use a
redemption form provided by the Fund. The Fund may refuse redemption requests
not made in the proper manner. Please see "Redemption of Shares by the Fund" in
the Prospectus for further information.
Requests for redemption (whether in writing or by telephone) will be
processed by the Transfer Agent at the net asset value next determined after
receipt of the request. Because the net asset values per share of the Fund
fluctuate (reflecting the market value of assets owned by the Portfolios), the
amount a shareholder receives for a redemption may be more or less than the
amount of his purchase and may be more or less than the net asset value on the
date that a written redemption request is mailed. Any such redemptions are
purely voluntary on the part of the shareholder.
Redemption Limitations
The right to redeem may be limited or suspended by the Fund, or the payment
date postponed, as follows:
* for any period during which the New York Stock Exchange is closed or
trading thereon is restricted, as determined by the Securities and Exchange
Commission;
* for any period during which the Securities and Exchange Commission
determines that an emergency makes it impractical to dispose of portfolio
securities or to calculate net asset values; or
* during any period for which the Securities and Exchange Commission has by
order permitted a suspension for the protection of shareholders.
In-Kind Redemptions
Subject to the restrictions set forth below, the Fund reserves the right to
require redeeming shareholders in the Permanent Portfolio (but not shareholders
in any other Portfolio) to accept readily tradable assets from the Permanent
Portfolio in complete or partial payment of redemptions in instances where so
doing would present an advantage to the Permanent Portfolio in pursuit of its
tax planning objectives over a sale or other disposition of the asset. Although
the Fund's management believes it is unlikely that the Fund would ever use an
asset other than gold or silver bullion or bullion coins for any such in-kind
redemption, the assets would be selected by the Fund from the Permanent
Portfolio and generally would not reflect Target Percentages. The Fund would not
require redeeming shareholders to accept any investment that is not readily
saleable.
Investors should note that an in-kind distribution might result in
inconvenience or in financial loss or gain due to price fluctuations. The risk
of financial loss would be especially great in the case of an investment subject
to high price volatility. Also, shareholders might incur high brokerage costs in
liquidating small lots of distributed investments.
In order to reduce the possibility of inconvenience or loss, the Fund has
agreed that it will not exercise its right to make such a required in-kind
redemption unless it has arranged, on behalf of the shareholder, a convenient
opportunity to accomplish the prompt sale of the assets through a qualified
broker or dealer. Further, the Fund will not require a shareholder to accept an
asset in an in-kind redemption if the necessary costs of selling the asset (in
the form and quantity distributed to the shareholder) exceed 2% of the asset's
<PAGE>
value at the time of the redemption. In the event that a shareholder elected not
to use the broker or dealer provided by the Fund to sell assets distributed to
him, the Fund would deliver the assets to the shareholder or, at his request, to
his bank.
The Permanent Portfolio makes portfolio changes on the basis of investment
factors at the time and in pursuit of its investment objectives, and in order to
adhere to the Target Percentages. See "Objectives and Policies" in the
Prospectus. In accordance with these objectives, at the time the decision is
made to dispose of assets from the Permanent Portfolio, the Fund will decide
whether to sell the assets or to distribute them in satisfaction of redemption
requests.
If the Fund ever elects to dispose of assets through such required in-kind
redemptions, it will inform the Transfer Agent of the specific assets to be used
and the order in which to use them. The Transfer Agent thereafter would honor
all redemption requests, in the order received, by distributing the designated
assets. Generally, the Transfer Agent would continue to effect all redemption
requests for the Permanent Portfolio with in-kind distributions until the
designated assets were exhausted or until the Fund instructed the Transfer Agent
otherwise. The Fund might instruct the Transfer Agent otherwise, for example, if
the Fund no longer intended to dispose of a designated asset or if a particular
redemption request would result in a distribution of assets that, in the
estimation of the Fund's management, could not then be sold at a cost of 2% or
less of the value of the assets.
From time to time, the Fund at the request of a redeeming shareholder in
any Portfolio, may distribute readily tradable assets to the shareholder in
payment of his redemption. To be accepted by the Fund, any such request for an
in-kind payment must be made in writing and must be included in the redemption
request to which it pertains. The Fund will accept a request for in-kind payment
of redemption of shares in a Portfolio only as an alternative to making a sale
of the respective asset in a transaction consistent with the Portfolio's
investment policies.
In-Kind Redemption Requests
If the Fund ever elects to make assets available for in-kind payment of
redemptions, it will inform the Transfer Agent of the specific assets to be
used. The Transfer Agent thereafter would honor all written redemption requests
for a particular such asset, in the order received, by distributing the
designated asset. The Transfer Agent would continue to effect all redemption
requests for a particular asset with in-kind payment until the asset was
exhausted or until the Fund instructed the Transfer Agent otherwise. The Fund
might instruct the Transfer Agent otherwise, for example, if the Fund no longer
intended to dispose of the asset.
The Fund makes no representation that it will attempt to protect any
redeeming shareholder from inconvenience, expense or loss that results from an
in-kind redemption requested by the shareholder.
The Fund has adopted the following operating policies with respect to such
in-kind redemptions:
* the Fund shall identify before 4:00 p.m. Eastern time of the day on which
such identification is made any readily tradable assets held by a
Portfolio that are available for in-kind redemption;
* any shareholder, (except an affiliate as set forth below) may request an
in-kind redemption of shares in such Portfolio prior to 4:00 p.m. of such
day, and any such request shall become irrevocable at 4:00 p.m. of such
day;
* no such request for redemption shall be accepted for any Fund shares held
by an affiliated person or other person specified in section 17(a) of the
Investment Company Act;
* the Fund will accept a request for an in-kind redemption only as an
alternative to the sale of the asset to be distributed in a transaction
consistent with the Portfolio's investment policies;
* requested in-kind redemptions shall be limited to assets for which market
quotations are readily available; and
* the asset price used to effect the redemption shall be the respective asset
price used to calculate the net asset value of the shares being redeemed.
<PAGE>
Tax Consequences of In-Kind Redemptions
Under present federal income tax laws, the tax consequences to an
individual (noncorporate) shareholder of an in-kind redemption are similar to
the consequences of a redemption for cash. See "Distributions and Taxes" in the
Prospectus. The shareholder recognizes a capital gain (or loss) equal to the
market value of the assets he receives minus the cost basis of the shares being
redeemed. (The Fund would inform a shareholder as to its determination of the
market value of any assets distributed to him.) The gain would be recognized by
the shareholder in the period when the redeemed assets became constructively
available to the shareholder (or the loss would be recognized immediately on the
day the redemption is consummated), even though the shareholder did not
subsequently sell the assets. The shareholder's cost basis in the assets
distributed in kind would equal their market value at the time of the
redemption. The federal income tax consequences of an in-kind redemption to a
corporate shareholder are complex, and corporations considering investing in the
Fund should consult their tax advisers in this regard. Generally, no capital
gain or loss would be recognized by a Portfolio upon a distribution of assets
through an in-kind redemption.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Fund's portfolio transactions are recommended by the Investment Adviser
and placed by the Fund's officers. The objective of the Fund in effecting
portfolio transactions is to obtain the best available prices, taking into
account services and the costs and promptness of executions. Some of the Fund's
purchases and sales of investments will be made directly with dealers and
market-makers, usually without brokerage commissions. In other cases the Fund
will use a broker-dealer and will pay commissions. In many foreign countries,
commission rates are fixed by governmental or exchange regulation or by industry
agreement, and may be higher or lower than those charged on comparable
transactions in the United States. There currently is no agreement or commitment
to place orders with any dealer, market-maker or broker-dealer. The Fund in the
past had directed certain portfolio transactions to World Money Securities, Inc.
("WMS"), its wholly owned broker-dealer subsidiary. In 1996, the Fund liquidated
and dissolved WMS and has no current intention of having a broker-dealer
subsidiary in the future. Please see the chart below for information on
commissions paid by the Portfolios.
- --------------------------------------------------------------------------------
PORTFOLIO COMMISSIONS & TURNOVER
- --------------------------------------------------------------------------------
Each Portfolio paid the following commissions and had the following
portfolio turnover rates during the last three fiscal years:
----------------------------------------------
Fiscal Year Ended January 31
----------------------------------------------
1999 1998 1997
-------------- ------------ --------------
Total commissions paid
Permanent Portfolio............ $ 21,592 $ 10,997 $ 30,046
Treasury Bill Portfolio........ 0 0 0
Versatile Bond Portfolio....... 0 0 0
Aggressive Growth Portfolio.... 8,978 460 37,031
Portfolio turnover rate
Permanent Portfolio ........... 14.05% 7.66% 12.29%
Treasury Bill Portfolio........ N/A N/A N/A
Versatile Bond Portfolio....... 68.21% 55.53% 102.29%
Aggressive Growth Portfolio.... 2.73% 2.15% 21.32%
<PAGE>
Neither the Fund's Board of Directors, its officers nor the Investment
Adviser intends to request research, statistical, securities pricing or other
related services from any broker-dealer beyond what the broker-dealer provides
to its customers generally, nor will the Fund's Board of Directors, its officers
or the Investment Adviser pay any broker additional commissions on portfolio
transactions as an inducement to sell Fund shares. Nevertheless, the Fund's
officers may, in circumstances in which two or more broker-dealers are in a
position to offer comparable prices and execution, give preference to those
which have provided research, statistical and related services to the Fund or
the Investment Adviser for the benefit of the Fund. The Investment Adviser
believes that while research and related services may be useful in varying
degrees, they are of indeterminable value and may or may not reduce the expenses
of the Investment Adviser.
The Fund's Board of Directors does not consider that it has an obligation
to obtain the lowest available commission rate with respect to portfolio
transactions to the exclusion of price, service and qualitative considerations.
Nevertheless, the officers of the Fund and the general partners of the
Investment Adviser are authorized to negotiate payment only for brokerage
services rendered and not for research, statistical or other services. The
Fund's Board of Directors does not authorize the payment of commissions to
brokers in recognition of their having provided such services, in excess of
commissions other qualified brokers would have charged for handling comparable
transactions.
TRANSFER AND DIVIDEND-DISBURSING AGENT
The Fund's transfer and dividend disbursing-agent is Chase Global Funds
Services Company, P.O. Box 2798, Boston, Massachusetts 02208 (the "Transfer
Agent"), telephone number (800) 341-8900 (from outside Massachusetts) or
(617) 557-8000.
The Transfer Agent maintains the records of each Shareholder Account,
answers shareholders' inquiries concerning their accounts, processes purchases
and redemptions of the Fund's shares, acts as dividend and disbursing agent, and
performs other related shareholder service functions. See "Redemption of Shares
By the Fund-In-Kind Redemptions."
The Investment Adviser pays all customary fees and charges of the Transfer
Agent incurred by the Fund (See "Management-Investment Adviser" in the
Prospectus).
CUSTODIAN
The Fund's custodian is State Street Bank and Trust Company, P.O. Box 1713,
Boston, Massachusetts 02105 (the "Custodian").
The Custodian receives and deposits cash, holds all securities and other
evidences of investments of the Fund, receives and delivers securities and other
investments bought or sold by the Fund, and receives and collects income from
the Fund's investments. From time to time, but only upon direction of the Fund's
management, some of the Fund's assets may be held in the London, Zurich or other
foreign offices of the Custodian's sub-custodians or foreign custodians which
are qualified to act as such under the Investment Company Act of 1940, in
accordance with Rule 17f-5 thereunder.
The custodial agreement between the Fund and the Custodian requires the
Custodian to hold the Fund's assets in strict segregation; the custodial
agreement prohibits commingling of the Fund's assets with assets owned by the
Custodian, and it requires the Custodian to receive and maintain the Fund's
assets in a form and condition that would make them readily identifiable as
customer property in an audit or in the event that the Fund appoints a successor
custodian.
In executing portfolio transactions, the Custodian acts as an agent for the
Fund but has no part in the management or investment decisions of the Fund or in
the Fund's general administration. The Custodian does not provide trusteeship
protection or protection for investors against possible depreciation of assets.
<PAGE>
The Investment Adviser pays all customary fees and charges of the Custodian
incurred by the Fund (See "Management-Investment Adviser" in the Prospectus).
GENERAL INFORMATION
Capitalization
The Fund's present authorized capitalization is 500,000,000 shares, $.001
par value per share, divided into two classes consisting of 150,000,000 shares
of preferred stock and 350,000,000 shares of common stock. The Fund is currently
authorized and has registered to issue an indefinite number of shares of its
common stock in the following series: 100,000,000 shares in the Permanent
Portfolio; 100,000,000 shares in the Treasury Bill Portfolio; 10,000,000 in the
Versatile Bond Portfolio; and 25,000,000 shares in the Aggressive Growth
Portfolio. The Fund has not registered the sale of any of its preferred stock
and has no plan to do so. Upon issuance and sale, shares of the Fund are fully
paid and nonassessable, have no preemptive rights and are freely transferable.
Shareholders may require redemption of their shares. See "Redemption of Shares
By the Fund."
Holders of shares in each Portfolio are entitled to vote separately on any
change in the Fund's investment policy, as provided in Section 13(a) of the
Investment Company Act and on all matters on which the Investment Company Act,
other applicable law or the Articles of Incorporation of the Fund require a vote
by Portfolios. Otherwise, all Fund shareholders have equal voting rights, vote
as a single class and are entitled to one vote per share.
The Fund will hold an annual meeting of its shareholders in any year in
which an annual meeting is required under Maryland law and the charter and
bylaws of the Fund. Maryland law and the Fund's bylaws provide that the Fund is
not required to hold an annual meeting in any year in which the election of
directors is not required to be acted upon under the Investment Company Act of
1940. In any year in which the election of directors is not presented to its
shareholders, the Fund will call a meeting of shareholders for the purpose of
voting upon the question of removal of any director if requested in writing so
to do by the record holders of not less than 10% of its outstanding shares and
assist with shareholder communications as required.
The Fund has no other securities outstanding. However, from time to time
the Board of Directors may authorize the Fund to issue additional shares of
common or preferred stock, in series, with such rights and preferences as will
be determined by the Board of Directors in authorizing any such shares. Any
offering or sale by the Fund of shares of additional series or classes to the
public would be subject to effective registration of the shares as necessary
under federal and state securities laws.
Income Equalization Accounting
The Fund follows an accounting practice known variously as "equalization"
or "income equalization." When a share in a Portfolio is purchased by an
investor, the Portfolio's undistributed income account is increased by an amount
equal to the Portfolio's undistributed income per share immediately before the
purchase. When a share is redeemed, the Portfolio's undistributed income account
is decreased by an amount equal to the Portfolio's undistributed income per
share immediately before the redemption. The effect of income equalization
accounting, and the Fund's purpose for using it, is to prevent purchases and
redemptions from influencing a Portfolio's undistributed net income per share.
Calculations of Performance Data
From time to time the Fund in accordance with applicable regulations may
advertise performance data or reprint material from the Fund's consultants or
other investment authors which contain performance data or represent that
consultant's or author's views on such matters as portfolio strategy, basic
trends in domestic and international finance and on the criteria for evaluating
and holding investments. In addition, fund performance may be compared to
statistical information and well-known indices of market performance, such as
those included in Appendices A and B as described below. Please see
"Consultants" in the Prospectus for additional information regarding the Fund's
consultants and material authored by them.
<PAGE>
Dollar Assets. Attached to this SAI as Appendix A are two tables that show
the historical performance of various types of dollar assets from December 1981
to January 1999. The dollar assets and their respective sources of data are the
following: 30-year U.S. Treasury bonds ("T-Bonds"), coupon-equivalent yield
reported by Bank of America; 20-year U.S. Government Agency bonds through
January 1995 and 30-Year U.S. Government Agency bonds thereafter ("Agency
Bonds"), coupon-equivalent yield reported by Bank of America; short-term,
high-grade corporate bonds ("STHG Bonds"), average of coupon-equivalent yields
for corporate bonds with maturities of one to two years and rated "A" or higher
by Standard & Poor's included in the Salomon Smith Barney Broad Investment-Grade
(BIG) Bond Index; 91-day U.S. Treasury bills ("T-Bills"), bank discount rate
thereon reported by the Federal Reserve System; 3-month banker's acceptances
("Acceptances"), bank discount rate thereon reported by Bank of America; 3-month
bank certificates of deposit ("CDs"), bank discount rate thereon reported by
Bank of America; overnight repurchase agreements for U.S. Government securities
("Repos"), bank discount rate thereon reported by Bank of America.
Table 1 shows, as of the last business day of each month in the period, for
T-Bonds, Agency Bonds and STHG Bonds, the respective instrument's
coupon-equivalent yield and annual yield and the current market price of an
instrument whose market price was 100 at the end of the preceding month ("Old
Bond Price"). Table 2 shows, as of the last business day of each month in the
period, the bank discount rate, the annual yield and the market price for
T-Bills, Acceptances and CDs and the bank discount rate and annual yield for
Repos. All calculations of annual yields assume reinvestment of all interest.
For STHG Bonds, the calculation of Old Bond Price assumes a term to maturity of
18 months.
Stocks. Attached to this SAI as Appendix B is a table that shows the Dow
Jones Industrial Average and the Standard & Poor's 500 Stock Index daily from
January 2, 1990 through January 31, 1999.
Please see "Consultants" in the Prospectus for additional information regarding
the Fund's consultants and material authored by them.
The results shown below do not represent or guarantee the gain or loss to
be realized from an investment in the Fund. The investment return and principal
value of an investment in the Fund will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost.
The following tables show the average annual total return for the Permanent
Portfolio, the Treasury Bill Portfolio, the Versatile Bond Portfolio and the
Aggressive Growth Portfolio, assuming hypothetical initial investment in shares
of $1,000, reinvestment of all dividends and distributions, deduction of all
fees and expenses except the $35 one-time account start-up fee, and complete
redemption of the investment at the end of the respective periods. Such
calculations were made according to the following formula: P(1+T)n = ERV, where
P = a hypothetical initial investment in shares of $1,000, T = average annual
total return, n = number of years and ERV = ending redeemable value at the end
of the respective period of a hypothetical $1,000 investment in shares made at
the beginning of the respective period.
- --------------------------------------------------------------------------------
Permanent Portfolio
- --------------------------------------------------------------------------------
1 year ended January 31, 1999 2.42%
5 years ended January 31, 1999 4.13%
10 years ended January 31, 1999 4.92%
15 years ended January 31, 1999 4.95%
16 years 62 days ended January 31, 1999 4.89%
- --------------------------------------------------------------------------------
Treasury Bill Portfolio
- --------------------------------------------------------------------------------
1 year ended January 31, 1999 4.04%
5 years ended January 31, 1999 4.10%
10 years ended January 31, 1999 4.52%
11 years 250 days ended January 31, 1999 4.67%
- --------------------------------------------------------------------------------
Versatile Bond Portfolio
- --------------------------------------------------------------------------------
1 year ended January 31, 1999 4.56%
5 years ended January 31, 1999 4.83%
7 years 127 days ended January 31, 1999 4.71%
- --------------------------------------------------------------------------------
Aggressive Growth Portfolio
- --------------------------------------------------------------------------------
1 year ended January 31, 1999 22.86%
5 years ended January 31, 1999 18.54%
9 years 29 days ended January 31, 1999 16.35%
<PAGE>
The yield and effective yield for the Treasury Bill Portfolio for the
seven-day period ended February 1, 1999, was 4.61% and 4.71%, respectively,
assuming a hypothetical preexisting account having a balance of one share at the
beginning of the period, reinvestment of all dividends and distributions during
the period, deduction of the $1.50 monthly account maintenance fees in
proportion to the length of the base period and relative to the size of the
account but not deduction of the $35 one-time account start-up fee, and dividing
the difference by the value of the account at the beginning of the base period
to obtain the base period return. For yield, that return is annualized; for
effective yield, that return is annualized and compounded.
The yield on the Versatile Bond Portfolio will be based on a 30-day (or one
month) period and will be computed by dividing the net investment income (i.e.,
dividends and interest earned during the period less expenses accrued for the
period, net of reimbursements) per share earned during the period by the net
asset value per share on the last day of the period, using the average number of
shares outstanding during the period, deducting the $1.50 monthly account
maintenance fees in proportion to the length of the base period and relative to
the size of the account but not deducting the $35 one-time account start-up fee,
and then annualizing the result. The yield on the Versatile Bond Portfolio as so
computed for the 30 days ended January 31, 1999 was 3.38%.
After-Tax Returns
The foregoing calculations of return and yield are made in conformity with
federal securities rules of uniform application to investment companies
regarding the calculation of performance data. Such rules do not take into
effect potential federal income tax effects, and as a consequence, the returns
and yield set forth do not represent after-tax returns.
For investors subject to federal income tax, the Fund's tax planning
policies described in the Prospectus under "Distributions and Taxes" may
increase an investor's after-tax return. Such policies operate generally to
defer and not eliminate the payment of federal income tax.
For example, a direct investment in a fixed-dollar instrument yielding
currently taxable interest or dividends will result in an investor paying
current tax on the entire amount of such interest or dividends without regard to
the amount withdrawn in a given year. By contrast, the Fund's tax planning
policies allow a portion of the Fund's return to be added to the redemption
value of its shares which additions are taxable to a shareholder only at the
time he redeems his shares. If an investor redeems only a portion of his shares,
the tax deferral continues for the rest.
The successful implementation of such deferral policies can have the effect
of deferring an investor's current exposure to tax under a Systematic Withdrawal
Program. For example, an investor who adopts a strategy of withdrawing each year
an amount equal to all of the earnings on his investment in the Fund will be
taxed only on that portion of the withdrawal representing deferred gain, and the
rest will come as a tax-free return of capital, thus giving the investor more
spendable after-tax cash. Similar benefits can be achieved year after year.
Investors should note, however, that these benefits are achieved by deferring,
not eliminating, the payment of taxes. Thus, the overall benefit may be small if
the investor holds all of his shares for only a few years. When he redeems
shares, the deferral comes to an end and the deferred gains on those shares
become taxable.
The advantage increases if the investor lets his gains accumulate. The
share value can grow year by year, compounding free of current tax until the day
the investor chooses to redeem. Letting gains accumulate also gives the investor
greater flexibility in his personal tax planning. If the investor is in a low
tax bracket in a later year he can redeem his appreciated shares in the Fund to
take advantage of the lower tax bracket.
If the investor uses the Fund as an estate planning tool, the accumulated
gains may never be subject to income tax. Generally, when an investment passes
to the investor's heirs on his death, all potential liability for tax on capital
gains is left behind. His heirs get a stepped-up basis and can sell the
investment without paying tax on the appreciation accumulated during the
investor's lifetime.
<PAGE>
Of course, while the tax-planning advantages of an investment in the Fund
may be substantial, in practice, investment yields fluctuate, and it cannot be
known in advance what portion of its income a Portfolio will add to share value
each year (it is unlikely to add all of it) and what portion the Portfolio will
pay out in ordinary dividends. Also, other investments may earn higher
before-tax returns by accepting risks that the Fund avoids.
FINANCIAL STATEMENTS
The financial statements of the Fund as of and for the year ended January
31, 1999 are incorporated by reference. Except for periods ending prior to
February 1, 1994, which were audited by other auditors whose report dated March
18, 1994, expressed an unqualified opinion on those financial statements, such
financial statements have been audited by KPMG LLP, independent auditors, as set
forth in their report thereon included therein, and are incorporated by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing. The report of KPMG LLP, dated March 12,
1999, on the aforementioned financial statements and financial highlights
contains an explanatory paragraph that states that the Securities and Exchange
Commission is involved in public administrative and cease-and-desist proceedings
against the Fund's Investment Adviser and two of the Fund's directors and
officers.
On July 8, 1999, KPMG LLP resigned as independent auditor of the Fund. At
no time during the past two fiscal years did any audit report of KPMG LLP on the
Fund's financial statements contain any adverse opinions or disclaimers of
opinion; nor were such audit reports qualified or modified as to uncertainty,
audit scope, or accounting principles, except that the audit reports of KPMG LLP
for the fiscal years ended January 31, 1999 and 1998 each contained an
explanatory paragraph that states that the Securities and Exchange Commission is
involved in public administrative and cease-and-desist proceedings against the
Fund's investment adviser and two of the Fund's directors and officers. In
connection with the audits of the fiscal years ended January 31, 1999 and 1998,
and the subsequent interim period through July 8, 1999, there were no
disagreements with KPMG LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedures, which
disagreements if not resolved to the satisfaction of KPMG LLP would have caused
KPMG LLP to make reference in connection with their opinion to the subject
matter of the disagreement.
The Fund will furnish, without charge, a copy of the Fund's Annual Report
to Shareholders for the year ended January 31, 1999, on request to the
Investor's Information Office listed on the front cover.
No person is authorized to give any information or to make any representation
not contained in this Statement of Additional Information or in the Prospectus
in connection with the matters described herein and therein. If given or made,
such information or representation must not be relied upon as having been
authorized.
<PAGE>
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, 1999, 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 five-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, 1999, 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, 1999, 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 is involved in public administrative and cease-and-desist proceedings
against the Fund's investment adviser and two of the Fund's directors and
officers, for which no decision has been rendered.
KPMG LLP
San Francisco, California
March 12, 1999
<PAGE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
STATEMENTS OF ASSETS AND LIABILITIES
January 31, 1999
ASSETS AND LIABILITIES
ASSETS
Investments at market value (Notes 1, 2, 5 & 6):
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 $62,238,944; $92,082,132; $24,625,931
and $9,240,049, 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 - 3,573,170; 1,369,730; 414,387 and 314,811 shares,
respectively ................................................................
Paid-in capital ...............................................................
Undistributed net investment income (loss) (Note 1) ...........................
Accumulated net realized gain (loss) on investments ...........................
Accumulated net realized loss 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
------------------- ----------------------- ------------------------ ---------------------------
<S> <C> <C> <C> <C>
$ 13,345,951 $ - $ - $ -
3,642,136 - - -
129,169 - - -
------------ ------------ ------------- ------------
17,117,256 - - -
6,554,228 - - -
9,830,720 - - -
10,842,572 - - 21,798,449
- - 21,421,240 -
21,836,350 92,087,050 3,239,136 -
------------ ------------ ------------- ------------
66,181,126 92,087,050 24,660,376 21,798,449
61,964 9,810 - -
17,991 326,350 454,471 14,052
288,615 - - -
490,866 1,491,915 426,432 7,712
------------ ------------ ------------- ------------
67,040,562 93,915,125 25,541,279 21,820,213
- - 95,567 5,770
10,000 584,324 5,864 15,102
- - 1,015,081 -
64,032 49,286 15,223 20,061
51,246 68,698 15,051 15,035
60,499 117,587 17,126 -
------------ ------------ ------------- ------------
185,777 819,895 1,163,912 55,968
------------ ------------ ------------- ------------
$ 66,854,785 $ 93,095,230 $ 24,377,367 $ 21,764,245
============ ============ ============= ============
$ 3,573 $ 1,370 $ 414 $ 315
53,242,874 93,377,607 23,110,470 9,433,051
------------ ------------ ------------- ------------
53,246,447 93,378,977 23,110,884 9,433,366
7,414,839 (120,246) 1,372,050 (202,864)
2,416,848 (168,419) (140,012) (24,657)
(162,612) - - -
3,942,182 4,918 34,445 12,558,400
(2,919) - - -
------------ ------------ ------------- ------------
$ 66,854,785 $ 93,095,230 $ 24,377,367 $ 21,764,245
============ ============ ============= ============
$18.71 $67.97 $58.83 $69.13
====== ====== ====== ======
</TABLE>
<PAGE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
STATEMENTS OF OPERATIONS
Year ended January 31, 1999
Investment income (Note 1):
Interest ....................................................................
Dividends ...................................................................
Expenses (Notes 3, 4 & 8):
Investment advisory fee .....................................................
Directors' fees and expenses ................................................
Officers' salary expense ....................................................
Long term disability plan expense.............................................
Excise tax ..................................................................
Regulatory expense ..........................................................
Total expenses
Less waiver of investment advisory fee ......................................
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, 5 & 6):
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
------------------- ----------------------- ------------------------ ---------------------------
<S> <C> <C> <C> <C>
$ 2,165,609 $ 4,646,145 $ 1,256,975 $ 1,848
532,212 - - 147,689
------------ ------------ ------------- ------------
2,697,821 4,646,145 1,256,975 149,537
775,077 1,049,311 242,691 229,836
39,420 53,284 12,323 11,670
61,639 83,426 19,264 18,210
36,702 48,648 11,421 11,037
60,499 117,587 17,126 -
14,333 14,015 11,155 11,473
------------ ------------ ------------- ------------
987,670 1,366,271 313,980 282,226
- 466,838 80,753 -
------------ ------------ ------------- ------------
987,670 899,433 233,227 282,226
------------ ------------ ------------- ------------
1,710,151 3,746,712 1,023,748 (132,689)
320 - - -
------------ ------------ ------------- ------------
1,709,831 3,746,712 1,023,748 (132,689)
------------ ------------ ------------- ------------
2,738,528 (7,146) 3,227 68,336
(320,020) - - -
(162,612) - - -
------------ ------------ ------------- ------------
2,255,896 (7,146) 3,227 68,336
(2,399,261) (6,913) (63,398) 4,132,624
33,472 - - -
------------ ------------ ------------- ------------
(109,893) (14,059) (60,171) 4,200,960
------------ ------------ ------------- ------------
$ 1,599,938 $ 3,732,653 $ 963,577 $ 4,068,271
============ ============ ============= ============
</TABLE>
<PAGE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Permanent Portfolio
-----------------------------------
Year ended Year ended
January 31, 1999 January 31, 1998
---------------- ----------------
<S> <C> <C>
Operations:
Net investment income (loss) .............................................. $ 1,709,831 $ 1,402,992
Net realized gain (loss) on investments ................................... 2,418,508 2,224,037
Net realized loss on foreign currency transactions ........................ (162,612) -
Change in unrealized appreciation (depreciation) of investments ............ (2,399,261) 1,508,317
Change in unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies ........................... 33,472 11,615
------------ ------------
Net increase in net assets resulting from operations 1,599,938 5,146,961
Equalization on shares issued and redeemed: ................................. (313,988) (497,147)
Distributions to shareholders from:
Net investment income ..................................................... (691,911) (1,233,055)
Net realized gain on investments .......................................... (2,212,316) (1,305,588)
Capital stock transactions exclusive of amounts allocated to undistributed
net investment income (Note 7): ........................................... (2,625,499) (4,004,133)
------------ ------------
Net increase (decrease) in net assets (4,243,776) (1,892,962)
Net assets at beginning of year 71,098,561 72,991,523
------------ ------------
Net assets at end of year (including undistributed net investment income
(loss) of $7,414,839 and $6,831,523; $(120,246) and $520,264; $1,372,050
and $1,725,080; $(202,864) and $(70,175), respectively) $ 66,854,785 $ 71,098,561
============ ============
</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, 1999 January 31, 1998 January 31, 1999 January 31, 1998 January 31, 1999 January 31, 1998
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
<S><C> <C> <C> <C> <C> <C>
$ 3,746,712 $ 3,956,396 $ 1,023,748 $ 1,127,755 $ (132,689) $ (107,261)
(7,146) (7,073) 3,227 (16,422) 68,336 (92,993)
- - - - - -
(6,913) 8,758 (63,398) 72,273 4,132,624 3,976,486
- - - - - -
------------ ------------- ------------ ------------ ------------ ------------
3,732,653 3,958,081 963,577 1,183,606 4,068,271 3,776,232
(329,728) (853,426) (224,680) 86,852 - 4,600
(2,854,801) (3,465,235) (616,185) (588,840) - (65,240)
- - - - - (992,338)
(1,652,736) (10,781,113) 899,737 1,328,359 (2,259,519) 1,814,900
------------ ------------- ------------ ------------ ------------ ------------
(1,104,612) (11,141,693) 1,022,449 2,009,977 1,808,752 4,538,154
94,199,842 105,341,535 23,354,918 21,344,941 19,955,493 15,417,339
------------ ------------- ------------ ------------ ------------ ------------
$ 93,095,230 $ 94,199,842 $ 24,377,367 $ 23,354,918 $ 21,764,245 $ 19,955,493
============ ============= ============ ============ ============ ============
</TABLE>
<PAGE>
<TABLE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
THE PERMANENT PORTFOLIO
SCHEDULE OF INVESTMENTS
January 31, 1999
<CAPTION>
Quantity Market Value
- ----------------- ------------
<C> <S> <C>
GOLD ASSETS - 19.96% of Total Net Assets
11,997 Troy Oz. Gold bullion (a) ......................................................... $ 3,434,818
33,383 Coins One-ounce gold coins (a) .................................................. 9,862,674
4,297 Units United States Gold Trust (a)(b) ........................................... 48,459
------------
Total Gold Assets (Cost $17,554,688) $ 13,345,951
------------
SILVER ASSETS - 5.45% of Total Net Assets
351,133 Troy Oz. Silver bullion (a) ........................................................ $ 1,833,618
379 Bags Silver coins (a) .......................................................... 1,808,518
------------
Total Silver Assets (Cost $3,126,799) $ 3,642,136
------------
</TABLE>
<TABLE>
<CAPTION>
Principal Amount SWISS FRANC ASSETS - 10.00% of Total Net Assets
- ----------------
<C> <S> <C>
CHF 182,813 Swiss francs in interest-bearing bank accounts ............................ $ 129,169
------------
CHF 4,000,000 4.000% Swiss Confederation bonds, 03-10-99 ................................ 2,834,169
CHF 4,500,000 6.250% Swiss Confederation bonds, 01-07-03 ................................ 3,720,059
------------
Total Swiss Confederation bonds 6,554,228
------------
Total Swiss Franc Assets (Cost $6,460,732) $ 6,683,397
------------
</TABLE>
<TABLE>
<CAPTION>
Number STOCKS OF UNITED STATES AND FOREIGN REAL ESTATE AND NATURAL
Of Shares RESOURCE COMPANIES - 14.70% of Total Net Assets
---------
<C> <S> <C>
NATURAL RESOURCES - 4.57% of Total Net Assets
20,000 Broken Hill Proprietary, Ltd. (c) ......................................... $ 295,000
12,000 Burlington Resources, Inc. ................................................ 363,000
30,000 Cyprus Amax Minerals Company ............................................. 286,875
40,000 Forest Oil Corporation (a) ................................................ 257,500
35,000 Inco, Ltd. ................................................................ 369,688
25,000 Pogo Producing Company .................................................... 271,875
50,000 Santa Fe Energy Resources, Inc. (a) ...................................... 290,625
8,000 Texaco, Inc. .............................................................. 379,000
10,000 Weyerhaeuser Company ..................................................... 541,250
------------
$ 3,054,813
</TABLE>
Continued on following page.
<PAGE>
<TABLE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
THE PERMANENT PORTFOLIO
SCHEDULE OF INVESTMENTS
January 31, 1999
<CAPTION>
Number
Of Shares Market Value
--------- ------------
<C> <S> <C>
REAL ESTATE - 10.13% of Total Net Assets
27,500 Archstone Communities Trust ................................................ $ 537,969
22,000 BRE Properties, Inc. Class A ............................................... 528,000
31,000 Burnham Pacific Properties, Inc. ........................................... 368,125
23,500 Federal Realty Investment Trust ............................................ 540,500
47,000 IRT Property Company ....................................................... 464,125
25,000 MGI Properties ............................................................. 687,500
21,000 New Plan Excel Realty Trust, Inc............................................ 441,000
22,000 Pennsylvania Real Estate Investment Trust .................................. 440,000
15,000 Texas Pacific Land Trust ................................................... 873,750
40,000 United Dominion Realty Trust, Inc. ......................................... 395,000
29,000 Urstadt Biddle Properties, Inc.............................................. 239,250
29,000 Urstadt Biddle Properties, Inc. Class A..................................... 242,875
31,900 Washington Real Estate Investment Trust .................................... 570,213
37,300 Western Investment Real Estate Trust ....................................... 447,600
-----------
$ 6,775,907
-----------
Total Stocks of United States and Foreign Real Estate and Natural
Resource Companies (Cost $7,840,689) $ 9,830,720
-----------
AGGRESSIVE GROWTH STOCK INVESTMENTS - 16.22% of Total Net Assets
CHEMICALS - .54% of Total Net Assets
8,000 Air Products & Chemicals, Inc. ........................................... $ 269,000
10,000 Wellman, Inc. ............................................................. 94,375
-----------
$ 363,375
COMPUTER SOFTWARE - 1.43% of Total Net Assets
6,000 Autodesk, Inc. ............................................................ $ 265,125
1 Symantec Corporation warrant (a)(d) ....................................... 688,276
-----------
$ 953,401
CONSTRUCTION - .52% of Total Net Assets
5,000 Fluor Corporation ........................................................ $ 190,625
9,000 Johns Manville Corporation ................................................ 160,875
-----------
$ 351,500
</TABLE>
Continued on following page.
<PAGE>
<TABLE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
THE PERMANENT PORTFOLIO
SCHEDULE OF INVESTMENTS
January 31, 1999
<CAPTION>
Number
Of Shares Market Value
--------- ------------
<C> <S> <C>
DATA PROCESSING - .72% of Total Net Assets
3,000 Hewlett-Packard Company ................................................... $ 235,125
6,000 Seagate Technology, Inc. (a) .............................................. 244,125
-----------
$ 479,250
ELECTRICAL AND ELECTRONICS - .92% of Total Net Assets
3,000 Intel Corporation ........................................................ $ 422,813
15,000 National Semiconductor Corporation (a) .................................... 194,063
-----------
$ 616,876
ENTERTAINMENT AND LEISURE - 1.57% of Total Net Assets
6,000 Disney (Walt) Company .................................................... $ 198,000
3,000 Harcourt General, Inc. ................................................... 144,000
12,000 Harrah's Entertainment, Inc. (a) ......................................... 178,500
7,000 Promus Hotel Corporation (a) .............................................. 209,125
5,000 Tribune Company .......................................................... 319,688
-----------
$ 1,049,313
FINANCIAL SERVICES - 3.69% of Total Net Assets
18,000 Bank of New York, Inc. .................................................... $ 639,000
14,386 Bank of Petaluma ... ...................................................... 323,685
5,000 Bear Stearns Companies, Inc. ............................................. 235,625
4,000 Morgan Stanley Dean Witter & Company ..................................... 347,250
8,000 Schwab (Charles) Corporation ............................................. 562,500
5,000 State Street Corporation ................................................. 357,500
-----------
$ 2,465,560
MANUFACTURING - 2.76% of Total Net Assets
3,000 Dana Corporation .......................................................... $ 123,375
4,000 Harley-Davidson, Inc. ..................................................... 208,000
5,000 Illinois Tool Works, Inc. ................................................ 301,563
8,000 Mattel, Inc. ............................................................. 181,500
2,000 NACCO Industries, Inc. Class A ........................................... 169,375
8,000 NACCO Industries, Inc. Class B ........................................... 677,500
6,000 Parker-Hannifin Corporation .............................................. 184,500
-----------
$ 1,845,813
</TABLE>
Continued on following page.
<PAGE>
<TABLE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
THE PERMANENT PORTFOLIO
SCHEDULE OF INVESTMENTS
January 31, 1999
<CAPTION>
Number
Of Shares Market Value
--------- ------------
<C> <S> <C>
OIL AND OILFIELD SERVICES - .48% of Total Net Assets
40,000 Frontier Oil Corporation (a) .............................................. $ 225,000
30,000 Parker Drilling Company (a) ............................................... 93,750
-----------
$ 318,750
PHARMACEUTICALS - 1.26% of Total Net Assets
7,000 Abbott Laboratories ....................................................... $ 325,063
3,000 Biogen, Inc. (a) .......................................................... 294,750
4,000 Genzyme Corporation (General Division) (a) ................................ 218,000
756 Genzyme Corporation Molecular Oncology (a) ................................. 2,033
1,245 Genzyme Corporation Tissue Repair (a) ..................................... 4,513
-----------
$ 844,359
RETAIL - .63% of Total Net Assets
4,000 Costco Companies, Inc. (a) ................................................ $ 331,500
6,000 Toys "R" Us, Inc. (a) ...................................................... 90,000
-----------
$ 421,500
TRANSPORTATION - 1.04% of Total Net Assets
8,000 ASA Holdings, Inc. ........................................................ $ 250,000
6,000 Kansas City Southern Industries, Inc. ..................................... 285,000
5,000 M. S. Carriers, Inc. (a) ................................................... 158,125
-----------
$ 693,125
MISCELLANEOUS - .66% of Total Net Assets
6,000 Lockheed Martin Corporation ............................................... $ 211,500
4,000 Temple-Inland, Inc. ....................................................... 228,250
-----------
$ 439,750
-----------
Total Aggressive Growth Stock Investments (Cost $3,749,143) $10,842,572
-----------
</TABLE>
Continued on following page.
<PAGE>
<TABLE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
THE PERMANENT PORTFOLIO
SCHEDULE OF INVESTMENTS
January 31, 1999
<CAPTION>
Principal Amount Market Value
---------------- ------------
<C> <S> <C>
UNITED STATES TREASURY SECURITIES - 32.66% of Total Net Assets
$41,000,000 United States Treasury bond strips (Principal only) 5.556%, 05-15-18(e) ... $ 14,246,270
800,000 United States Treasury bonds 6.250%, 08-15-23 ............................ 898,920
1,000,000 United States Treasury notes 7.750%, 01-31-00 ............................ 1,030,020
2,000,000 United States Treasury notes 5.250%, 01-31-01 ............................ 2,024,460
1,100,000 United States Treasury bills 5.400%, 02-04-99 (e).......................... 1,099,340
2,600,000 United States Treasury bills 5.044%, 07-22-99 (e).......................... 2,537,340
------------
Total United States Treasury securities (Cost $23,506,893) $ 21,836,350
------------
Total Portfolio - 98.99% of total net assets (identified cost $62,238,944)(f) $ 66,181,126
Other assets, less liabilities (1.01% of total net assets) 673,659
------------
Net assets applicable to outstanding shares $ 66,854,785
============
<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 $54,194,820.
</FN>
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
THE TREASURY BILL PORTFOLIO
SCHEDULE OF INVESTMENTS
January 31, 1999
<CAPTION>
Principal Amount Market Value
---------------- ------------
<C> <S> <C>
UNITED STATES TREASURY SECURITIES - 98.92% of Total Net Assets
$20,000,000 United States Treasury notes 5.500%, 02-28-99 ............................. $ 20,017,200
20,000,000 United States Treasury notes 6.250%, 03-31-99 ............................. 20,058,800
20,000,000 United States Treasury notes 6.375%, 04-30-99 ............................. 20,091,800
20,000,000 United States Treasury notes 6.250%, 05-31-99 ............................. 20,109,200
10,000,000 United States Treasury notes 6.000%, 06-30-99 ............................. 10,061,100
1,750,000 United States Treasury bills 5.400%, 02-04-99 (a) ......................... 1,748,950
------------
Total Portfolio - 98.92% of total net assets (identified cost $92,082,132)(b) $ 92,087,050
Other assets, less liabilities (1.08% of total net assets) 1,008,180
------------
Net assets applicable to outstanding shares $ 93,095,230
============
<FN>
Note:(a) Interest rate represents yield to maturity.
(b) 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, 1999
<CAPTION>
Principal Amount Market Value
---------------- ------------
<C> <S> <C>
CORPORATE BONDS - 87.87% of Total Net Assets
AEROSPACE - 4.26% of Total Net Assets
$ 1,000,000 8.250% McDonnell Douglas Corporation, 07-01-00 ............................ $ 1,039,340
------------
$ 1,039,340
BEVERAGES - 4.22% of Total Net Assets
1,000,000 8.750% Anheuser-Busch Companies, Inc., 12-01-99 .......................... $ 1,028,570
------------
$ 1,028,570
BROADCASTING - 4.36% of Total Net Assets
1,000,000 8.875% Capital Cities / ABC, Inc., 12-15-00 ............................... $ 1,063,490
------------
$ 1,063,490
DATA PROCESSING - 4.16% of Total Net Assets
1,000,000 6.375% International Business Machines Corporation, 06-15-00 .............. $ 1,015,080
------------
$ 1,015,080
ELECTRIC UTILITIES - 8.49% of Total Net Assets
1,000,000 8.750% Pacific Gas & Electric Company, 01-01-01 ........................... $ 1,064,780
1,000,000 7.500% Southern California Edison Company, 04-15-99 ....................... 1,005,220
------------
$ 2,070,000
ELECTRICAL AND ELECTRONICS - 4.13% of Total Net Assets
1,000,000 6.750% Texas Instruments, Inc., 07-15-99 .................................. $ 1,007,320
------------
$ 1,007,320
FINANCIAL SERVICES - 8.30% of Total Net Assets
1,000,000 8.500% American General Finance Corporation, 06-15-99 ..................... $ 1,012,230
1,000,000 5.650% Ameritech Capital Funding Corporation, 01-15-01 .................... 1,009,970
------------
$ 2,022,200
INSURANCE - 4.14% of Total Net Assets
1,000,000 7.750% CitiGroup, Inc., 06-15-99 .......................................... $ 1,009,550
------------
$ 1,009,550
MANUFACTURING - 4.11% of Total Net Assets
1,000,000 6.375% Eaton Corporation, 04-01-99 ........................................ $ 1,001,990
------------
$ 1,001,990
</TABLE>
Continued on following page.
<PAGE>
<TABLE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
THE VERSATILE BOND PORTFOLIO
SCHEDULE OF INVESTMENTS
January 31, 1999
<CAPTION>
Principal Amount Market Value
---------------- ------------
<C> <S> <C>
OIL AND OILFIELD SERVICES - 8.26% of Total Net Assets
$ 1,000,000 7.625% Baker Hughes, Inc., 02-15-99 ....................................... $ 1,001,270
1,000,000 6.250% Dresser Industries, Inc., 06-01-00 ................................ 1,013,160
------------
$ 2,014,430
PHARMACEUTICALS - 12.58% of Total Net Assets
1,000,000 7.700% American Home Products Corporation, 02-15-00 ....................... $ 1,024,950
1,000,000 9.250% Baxter International, Inc., 12-15-99 ............................... 1,032,010
1,000,000 5.875% Upjohn Company, 04-15-00............................................ 1,008,660
------------
$ 3,065,620
PUBLISHING - 4.14% of Total Net Assets
1,000,000 5.850% Gannett Company, Inc., 05-01-00 ................................... $ 1,008,090
------------
$ 1,008,090
RETAIL - 4.34% of Total Net Assets
1,000,000 9.875% May Department Stores, 06-15-00 ................................... $ 1,057,630
------------
$ 1,057,630
TELECOMMUNICATIONS - 12.38% of Total Net Assets
1,000,000 6.125% GTE Northwest, 02-15-99 ............................................ $ 1,000,880
1,000,000 6.150% New England Telephone & Telegraph Company, 09-01-99 ............... 1,006,620
1,000,000 6.125% Southwestern Bell Telephone Company, 03-01-00 ...................... 1,010,430
------------
$ 3,017,930
------------
Total Corporate bonds (Cost $21,389,082) $ 21,421,240
------------
UNITED STATES TREASURY SECURITIES - 13.29% of Total Net Assets
3,200,000 United States Treasury notes 5.250%, 01-31-01.............................. $ 3,239,136
------------
Total United States Treasury securities (Cost $3,236,849) $ 3,239,136
Total Portfolio - 101.16% of total net assets ------------
(identified cost $24,625,931)(a) $ 24,660,376
Liabilities, less other assets (1.16% of total net assets) (283,009)
------------
Net assets applicable to outstanding shares $ 24,377,367
============
<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, 1999
<CAPTION>
Number
Of Shares Market Value
--------- ------------
<C> <S> <C>
AGGRESSIVE GROWTH STOCK INVESTMENTS - 100.16% of Total Net Assets
CHEMICALS - 2.07% of Total Net Assets
12,000 Air Products & Chemicals, Inc. ............................................ $ 403,500
5,000 Wellman, Inc. ............................................................. 47,188
------------
$ 450,688
COMPUTER SOFTWARE - 4.84% of Total Net Assets
13,000 Autodesk, Inc. ............................................................ $ 574,438
9,450 Computer Associates International, Inc. ................................... 478,406
------------
$ 1,052,844
CONSTRUCTION - 4.99% of Total Net Assets
5,000 Fluor Corporation ......................................................... $ 190,625
15,000 Johns Manville Corporation ............................................... 268,125
24,000 Ryland Group, Inc. ........................................................ 627,000
------------
$ 1,085,750
DATA PROCESSING - 2.88% of Total Net Assets
8,000 Hewlett-Packard Company ................................................... $ 627,000
------------
$ 627,000
ELECTRICAL AND ELECTRONICS - 4.21% of Total Net Assets
5,400 Intel Corporation ........................................................ $ 761,063
12,000 National Semiconductor Corporation (a) .................................... 155,250
------------
$ 916,313
ENTERTAINMENT AND LEISURE - 9.91% of Total Net Assets
15,900 Disney (Walt) Company ..................................................... $ 524,700
9,000 Harcourt General, Inc. .................................................... 432,000
2,000 Promus Hotel Corporation (a) .............................................. 59,750
8,000 Tribune Company .......................................................... 511,500
7,500 Viacom, Inc. Class A (a) .................................................. 629,063
------------
$ 2,157,013
FINANCIAL SERVICES - 23.27% of Total Net Assets
20,800 Bank of New York, Inc. .................................................... $ 738,400
15,000 Bear Stearns Companies, Inc. .............................................. 706,875
8,000 Morgan Stanley Dean Witter & Company ...................................... 694,500
30,000 Schwab (Charles) Corporation .............................................. 2,109,375
11,400 State Street Corporation .................................................. 815,100
------------
$ 5,064,250
MANUFACTURING - 9.37% of Total Net Assets
8,400 Dana Corporation ......................................................... $ 345,450
10,000 Harley-Davidson, Inc. ..................................................... 520,000
8,600 Illinois Tool Works, Inc. ................................................. 518,688
12,583 Mattel, Inc. .............................................................. 285,477
12,000 Parker-Hannifin Corporation ............................................... 369,000
------------
$ 2,038,615
</TABLE>
Continued on following page.
<PAGE>
<TABLE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
THE AGGRESSIVE GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS
January 31, 1999
<CAPTION>
Number
Of Shares Market Value
--------- ------------
<C> <S> <C>
OIL AND OILFIELD SERVICES - 3.01% of Total Net Assets
105,200 Frontier Oil Corporation (a) .............................................. $ 591,750
20,000 Parker Drilling Company (a) ............................................... 62,500
------------
$ 654,250
PHARMACEUTICALS - 14.19% of Total Net Assets
8,000 Amgen, Inc. (a) .......................................................... $ 1,022,500
11,000 Biogen, Inc. (a) .......................................................... 1,080,750
7,000 Chiron Corporation (a) .................................................... 159,250
15,000 Genzyme Corporation (General Division) (a) ................................ 817,500
1,621 Genzyme Corporation Molecular Oncology (a) ................................ 4,356
1,170 Genzyme Corporation Tissue Repair (a) .................................... 4,238
------------
$ 3,088,594
RETAIL - 5.43% of Total Net Assets
13,000 Costco Companies, Inc. (a) ................................................ $ 1,077,375
7,000 Toys "R" Us, Inc. (a) ..................................................... 105,000
------------
$ 1,182,375
TRANSPORTATION - 11.38% of Total Net Assets
16,000 ASA Holdings, Inc. ........................................................ $ 500,000
21,000 Kansas City Southern Industries, Inc. ..................................... 997,500
20,100 M.S. Carriers, Inc. (a) ................................................... 635,663
37,500 Mesa Air Group, Inc. (a) ................................................. 344,531
------------
$ 2,477,694
MISCELLANEOUS - 4.61% of Total Net Assets
12,000 Browning-Ferris Industries, Inc. .......................................... $ 330,000
11,000 Lockheed Martin Corporation .............................................. 387,750
5,000 Temple-Inland, Inc. ....................................................... 285,313
------------
$ 1,003,063
------------
Total Portfolio - 100.16% of total net assets (identified cost $9,240,049)(b) $ 21,798,449
Liabilities, less other assets (.16% of total net assets) (34,204)
------------
Net assets applicable to outstanding shares $ 21,764,245
============
<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, 1999
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, investment management 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, 1999, one such investment in the Permanent
Portfolio (1.03% 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, 1999, 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 .................... $ 6,795 $ - $ 1,220,723 $ -
Swiss franc assets ................. 279,191 - - -
United States Treasury securities .. 1,861,910 4,613,866 5,802 -
Other investments .................. 17,713 32,279 30,450 1,848
Dividends ............................ 532,212 - - 147,689
------------ ------------ ------------ -----------
$ 2,697,821 $ 4,646,145 $ 1,256,975 $ 149,537
============ ============ ============ ===========
</TABLE>
Continued on following page.
<PAGE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
January 31, 1999
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, 1999; 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.
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, 1999.
Federal 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, 1999,
pursuant to the requirements of the Code.
At January 31, 1999, capital loss carry forwards available to offset future
realized gains, if any, were as follows: $165,381 in the Treasury Bill
Portfolio, of which $1,752, $98,561, $41,743, $5,429, $3,632 and $14,264
expire on January 31, 2001, January 31, 2002, January 31, 2003, January 31,
2004, January 31, 2005 and January 31, 2007, respectively; $140,012 in the
Versatile Bond Portfolio, of which $86,614, $34,492 and $18,906 expire on
January 31, 2003, January 31, 2004 and January 31, 2006, respectively; and
$24,657 in the Aggressive Growth Portfolio, all of which expires on January
31, 2006. There were no capital loss carryforwards in the Permanent
Portfolio.
Pursuant to the Code, 14.49% of the distributions made from investment
company taxable income in 1998 by the Permanent Portfolio qualifies for the
corporate dividends received deduction.
During the year ended January 31, 1999, the Fund's Permanent Portfolio,
Treasury Bill Portfolio and Versatile Bond Portfolio incurred federal
excise taxes of $60,499, $117,587 and $17,126, respectively, which was
imposed on four percent of each Portfolio's undistributed income and
capital gains, if any. Such tax reduced the Portfolio's net asset value,
however, such undistributed income and capital gains were retained by the
Portfolio to earn further interest, dividends and profit.
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, 1999, the Fund reclassified
from undistributed net investment income to paid-in capital, certain
Continued on following page.
<PAGE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
January 31, 1999
book and tax basis differences relating to shareholder distributions,
totaling $122,848, $1,202,693 and $535,913 for the Permanent Portfolio, the
Treasury Bill Portfolio and the Versatile Bond Portfolio, respectively.
Additionally: in the Permanent Portfolio, $2,232 was reclassified from
accumulated net realized gain on investments to undistributed net
investment income; in the Treasury Bill Portfolio, $1,234 was reclassified
from accumulated net realized loss on investments to paid-in capital; and
in the Aggressive Growth Portfolio, $1,629 was reclassified from paid-in
capital to accumulated net realized loss on investments, due to these
differences.
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
The Permanent Portfolio held 4,297 units of United States Gold Trust, an
affiliated investment trust, resulting in net unrealized depreciation of
$17,487 at January 31, 1999. The Permanent Portfolio received no income
from this investment during the year then ended.
3. INVESTMENT ADVISORY CONTRACT
In accordance with the terms of an Investment Advisory Contract (the
"Contract"), World Money Managers ("WMM"), the Fund's investment adviser,
receives a comprehensive advisory fee monthly (the "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.
All fees and expenses payable by the Fund pursuant to the Contract and
attributable only to one 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 Advisory Fee, the fees
and expenses of the Fund's directors, the salary expense of the Fund's
officers (including payments made by the Fund under its Long Term
Disability Plan described in Note 4), 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
Advisory Fee.
During the year ended January 31, 1999, 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.
Continued on following page.
<PAGE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
January 31, 1999
4. LONG TERM DISABILITY PLAN
On March 9, 1998, the Fund's Board of Directors adopted the Permanent
Portfolio Family of Funds, Inc. Long Term Disability Plan (the "Plan"). The
Plan provides for payment by the Fund to any qualified officer of the Fund
who is totally disabled (a "Participant"), as defined by the Plan, a
disability benefit equal to 50% of the Participant's salary as of the time
the disability is determined, subject to cost-of-living adjustments, for a
period not to exceed five years. The Plan is renewable annually and may be
terminated by the Fund's Board of Directors at any time prior to each
annual renewal. On March 10, 1998, the Fund accrued an estimated liability
of $107,808 for one Participant under the Plan.
5. 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, 1999:
<TABLE>
<CAPTION>
Permanent Treasury Bill Versatile Bond Aggressive Growth
Portfolio Portfolio Portfolio Portfolio
------------- ------------- -------------- -----------------
<S> <C> <C> <C> <C>
Purchases................................ $ 6,472,276 None $16,469,310 $ 554,062
Sales.................................... 9,048,885 None 14,433,040 2,937,283
</TABLE>
6. NET UNREALIZED APPRECIATION OF INVESTMENTS
<TABLE>
The following is a summary of net unrealized appreciation of investments at
January 31, 1999 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 .................... $16,932,971 $ 7,157 $ 49,777 $12,768,630
Investments other than securities ....... 515,337 - - -
----------- -------- ----------- -----------
17,448,308 7,157 49,777 12,768,630
Aggregate gross unrealized depreciation
of investments with excess of tax cost
over value:
Investments in securities of unaffiliated
issuers ................................. (1,250,487) (2,239) (15,332) (210,230)
Investments other than securities........ (4,211,515) - - -
----------- -------- ----------- -----------
(5,462,002) (2,239) (15,332) (210,230)
----------- -------- ----------- -----------
Net unrealized appreciation
of investments $11,986,306 $ 4,918 $ 34,445 $12,558,400
=========== ======== =========== ===========
</TABLE>
Continued on following page.
<PAGE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
January 31, 1999
7. 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 years ended January 31, 1999 and 1998:
<CAPTION>
Permanent Portfolio
---------------------------------------------------------------------------------
1999 1998
---------------------------------------- -------------------------------------
Shares Dollars Shares Dollars
---------------- -------------------- ------------------- ----------------
<S> <C> <C> <C> <C>
Shares sold...................... 325,975 $ 5,316,770 267,705 $ 4,309,828
Distributions reinvested......... 142,118 2,651,913 124,147 2,324,036
------- ------------ ------- ------------
468,093 7,968,683 391,852 6,633,864
Shares redeemed.................. (620,388) (10,594,182) (632,375) (10,637,997)
------- ------------ ------- ------------
Net decrease (152,295) $ (2,625,499) (240,523) $ (4,004,133)
======= ============ ======= ============
</TABLE>
<TABLE>
<CAPTION>
Treasury Bill Portfolio
---------------------------------------------------------------------------------
1999 1998
---------------------------------------- -------------------------------------
Shares Dollars Shares Dollars
---------------- -------------------- ------------------- ----------------
<S> <C> <C> <C> <C>
Shares sold...................... 719,836 $ 47,806,798 667,488 $ 43,964,269
Distributions reinvested......... 39,785 2,689,841 48,405 3,251,352
------- ------------ ------- ------------
759,621 50,496,639 715,893 47,215,621
Shares redeemed.................. (784,288) (52,149,375) (880,865) (57,996,734)
------- ------------ ------- ------------
Net decrease (24,667) $ (1,652,736) (164,972) $(10,781,113)
======= ============ ======= ============
</TABLE>
<TABLE>
<CAPTION>
Versatile Bond Portfolio
---------------------------------------------------------------------------------
1999 1998
---------------------------------------- --------------------------------------
Shares Dollars Shares Dollars
---------------- -------------------- ------------------- -----------------
<S> <C> <C> <C> <C>
Shares sold...................... 409,669 $ 22,138,246 410,273 $ 21,564,778
Distributions reinvested......... 9,691 566,997 9,512 553,476
------- ------------ ------- ------------
419,360 22,705,243 419,785 22,118,254
Shares redeemed.................. (403,659) (21,805,506) (393,973) (20,789,895)
------- ------------ ------- ------------
Net increase 15,701 $ 899,737 25,812 $ 1,328,359
======= ============ ======= ============
</TABLE>
<TABLE>
<CAPTION>
Aggressive Growth Portfolio
---------------------------------------------------------------------------------
1999 1998
---------------------------------------- -------------------------------------
Shares Dollars Shares Dollars
---------------- -------------------- ------------------- ----------------
<S> <C> <C> <C> <C>
Shares sold...................... 58,283 $ 3,529,499 195,149 $ 10,447,677
Distributions reinvested......... - - 18,011 1,021,204
------ ------------ ------- ------------
58,283 3,529,499 213,160 11,468,881
Shares redeemed.................. (98,311) (5,789,018) (181,840) (9,653,981)
------ ------------ ------- ------------
Net increase (decrease) (40,028) $ (2,259,519) 31,320 $ 1,814,900
====== ============ ======= ============
</TABLE>
Continued on following page.
<PAGE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
January 31, 1999
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 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, Terry Coxon
and Alan Sergy violated Section 206 of the Investment Advisers Act of 1940,
as amended, through conduct that included improper self-dealing at the
expense of the Fund; that WMM received excessive reimbursements under the
Fund's Marketing and Distribution Plan (the "Marketing Plan") during the
fiscal year ended January 31, 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; 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. From May 5, 1997 through May
15, 1997, an administrative hearing on these charges was held before Chief
Administrative Law Judge Brenda P. Murray in San Francisco, California.
Thereafter, the Division and Respondents submitted post-hearing briefs and
the matter is currently under submission for decision. 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, including expenses
paid by WMM to persons who are directors and officers of the Fund for
litigation support services. The Fund's management does not believe the
Fund will incur substantial additional expenses relating to this matter.
The Fund so paid or reimbursed the following expenses during the years
January 31, 1992 through 1999:
Permanent Treasury Bill Versatile Bond Aggressive Growth
Portfolio Portfolio Portfolio Portfolio
------------- ------------- -------------- -----------------
1992 .... $ - $ - $ - $ -
1993 .... 52,331 63,961 - -
1994 .... - - - -
1995 .... 78,010 71,156 6,213 1,777
1996 .... 26,100 22,233 1,646 848
1997 .... 53,511 43,469 3,046 2,640
1998 .... 325,585 293,026 - 32,558
1999 .... 14,333 14,015 11,155 11,473
---------- ---------- ---------- ----------
$ 549,870 $ 507,860 $ 22,060 $ 49,296
========== ========== ========== ==========
<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, 1999 January 31, 1998 January 31, 1997 January 31, 1996
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of year $ 19.08 $ 18.40 $ 18.80 $ 16.51
--------- --------- --------- ---------
Income (loss) from investment operations:
Net investment income ................ .47 .37 .52 .50
Net realized and unrealized gain (loss)
on investments and foreign
currencies ........................... - 1.01 (.41) 2.17
--------- --------- --------- ---------
Total income (loss) from
investment operations .47 1.38 .11 2.67
Less distributions from:
Net investment income ................ (.20) (.34) (.42) (.38)
Net realized gain on investments (1)... (.64) (.36) (.09) -
--------- --------- --------- ---------
Total distributions (.84) (.70) (.51) (.38)
--------- --------- --------- ---------
Net asset value, end of year $ 18.71 $ 19.08 $ 18.40 $ 18.80
========= ========= ========= =========
Total return (2) ......................... 2.48% 7.57% .57% 16.20%
Ratios / supplemental data:
Net assets, end of year (in thousands)... $ 66,855 $ 71,099 $ 72,992 $ 76,641
========= ========= ========= =========
Ratio of expenses to average net assets.. 1.43% 1.91% 1.49% 1.35%
Ratio of net investment income
to average net assets ................. 2.48% 1.96% 2.78% 2.85%
Portfolio turnover rate ................. 14.05% 7.66% 12.29% 9.96%
<FN>
(l) Capital gain distribution pursuant to Section 852(b)(3) of the Code.
(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 Year ended Year ended Year ended
January 31, 1995 January 31, 1994 January 31, 1993 January 31, 1992 January 31, 1991 January 31, 1990
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
<S><C> <C> <C> <C> <C> <C>
$ 17.55 $ 15.36 $ 15.21 $ 15.10 $ 15.57 $ 15.00
--------- --------- --------- --------- --------- ---------
.64 .44 .49 .51 .64 .57
(1.46) 1.99 (.05) .51 (.63) -
--------- --------- --------- --------- --------- ---------
(.82) 2.43 .44 1.02 .01 .57
(.22) (.24) (.29) (.91) (.48) -
- - - - - -
--------- --------- --------- --------- --------- ---------
(.22) (.24) (.29) (.91) (.48) -
--------- --------- --------- --------- --------- ---------
$ 16.51 $ 17.55 $ 15.36 $ 15.21 $ 15.10 $ 15.57
========= ========= ========= ========= ========= =========
(4.65)% 15.86% 2.93% 7.01% .15% 3.80%
$ 71,610 $ 79,043 $ 65,937 $ 72,312 $ 80,542 $ 93,663
========= ========= ========= ========= ========= =========
1.32% 1.21% 1.25% 1.27% 1.36% 1.17%
2.63% 2.66% 3.20% 3.29% 4.22% 3.80%
31.24% 49.51% 70.77% 8.01% 31.58% 61.44%
</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 year:
<CAPTION>
Year ended Year ended Year ended Year ended
January 31, 1999 January 31, 1998 January 31, 1997 January 31, 1996
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of year $ 67.56 $ 67.55 $ 67.84 $ 66.40
---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (1) .................... 2.72 2.69 2.84 3.22
Net realized and unrealized gain (loss)
on investments (2) ........................... .03 .06 .01 .06
---------- ---------- ---------- ----------
Total income from investment operations 2.75 2.75 2.85 3.28
Less distributions from:
Net investment income ........................ (2.34) (2.74) (3.14) (1.84)
---------- ---------- ---------- ----------
Total distributions (2.34) (2.74) (3.14) (1.84)
---------- ---------- ---------- ----------
Net asset value, end of year $ 67.97 $ 67.56 $ 67.55 $ 67.84
========== ========== ========== ==========
Total return (3) ................................... 4.09% 4.09% 4.23% 4.95%
Ratios / supplemental data:
Net assets, end of year (in thousands) ......... $ 93,095 $ 94,200 $ 105,342 $ 114,667
========== ========== ========== ==========
Ratio of expenses to average net assets (1) ..... .96% 1.20% .90% .82%
Ratio of net investment income
to average net assets ......................... 4.01% 3.98% 4.19% 4.79%
<FN>
(l) 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, 1999 and
.50%, .50%, .50%, .50%, .49%, .47%, .48%, .47% and .62% for the years ended
January 31, 1998, 1997, 1996, 1995, 1994, 1993, 1992, 1991 and 1990,
respectively. Without this waiver, the net investment income per share
would have been $2.24 for the year ended January 31, 1999 and $2.19, $2.37,
$2.78, $2.12, $1.04, $1.28, $2.85, $3.85 and $3.96 for the years then
ended.
(2) 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.
(3) 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, 1995 January 31, 1994 January 31, 1993 January 31, 1992 January 31, 1991 January 31, 1990
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
<S><C> <C> <C> <C> <C> <C>
$ 64.81 $ 64.45 $ 64.99 $ 63.11 $ 59.35 $ 54.91
---------- ---------- ---------- ---------- ---------- ----------
2.65 1.53 1.68 3.26 4.20 4.36
(.39) (.09) .19 (.08) (.01) .08
---------- ---------- ---------- ---------- ---------- ----------
2.26 1.44 1.87 3.18 4.19 4.44
(.67) (1.08) (2.41) (1.30) (.43) -
---------- ---------- ---------- ---------- ---------- ----------
(.67) (1.08) (2.41) (1.30) (.43) -
---------- ---------- ---------- ---------- ---------- ----------
$ 66.40 $ 64.81 $ 64.45 $ 64.99 $ 63.11 $ 59.35
========== ========== ========== ========== ========== ==========
3.49% 2.24% 2.89% 5.05% 7.06% 8.09%
$ 121,666 $ 133,970 $ 179,888 $ 320,382 $ 207,889 $ 61,056
========== ========== ========== ========== ========== ==========
.82% .72% .73% .73% .83% .54%
3.57% 2.46% 2.97% 4.87% 6.74% 7.87%
</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 Year ended
January 31, 1999 January 31, 1998 January 31, 1997
---------------- ---------------- ----------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 58.58 $ 57.24 $ 56.85
--------- --------- ---------
Income from investment operations:
Net investment income (2) ............... 2.77 2.87 2.94
Net realized and unrealized gain (loss)
on investments (3) .................... (.08) .17 (.34)
--------- --------- ---------
Total income from investment operations 2.69 3.04 2.60
Less distributions from:
Net investment income ................... (2.44) (1.70) (2.21)
Net realized gain on investments (4)...... - - -
--------- --------- ---------
Total distributions (2.44) (1.70) (2.21)
--------- --------- ---------
Net asset value, end of period $ 58.83 $ 58.58 $ 57.24
========= ========= =========
Total return (5) ............................ 4.61% 5.33% 4.58%
Ratios / supplemental data:
Net assets, end of period (in thousands).... $ 24,377 $ 23,355 $ 21,345
========= ========= =========
Ratio of expenses to average net assets (2). 1.08% 1.01% .97%
Ratio of net investment income
to average net assets ................... 4.72% 4.95% 5.16%
Portfolio turnover rate ................... 68.21% 55.53% 102.29%
<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, 1999 and .38%, .38%, .37%,
.36%, .39%, .41% and .43% for the years ended January 31, 1998, 1997, 1996,
1995, 1994, 1993 and the period ended January 31, 1992, respectively.
Without this waiver, the net investment income per share would have been
$2.48 for the year ended January 31, 1999 and $2.59, $2.66, $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) Capital gain distribution pursuant to Section 852(b)(3) of the Code.
(5) 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 Period ended
January 31, 1996 January 31, 1995 January 31, 1994 January 31, 1993 January 31, 1992(1)
- ---------------- ---------------- ---------------- ---------------- ------------------
<S><C> <C> <C> <C> <C>
$ 54.90 $ 54.76 $ 53.63 $ 50.58 $ 50.00
--------- --------- --------- --------- ---------
2.91 2.12 1.87 2.06 2.51
1.05 (.63) (.04) 1.00 (1.93)
--------- --------- --------- --------- ---------
3.96 1.49 1.83 3.06 .58
(2.01) (1.33) (.70) (.01) -
- (.02) - - -
--------- --------- --------- --------- ---------
(2.01) (1.35) (.70) (.01) -
--------- --------- --------- --------- ---------
$ 56.85 $ 54.90 $ 54.76 $ 53.63 $ 50.58
========= ========= ========= ========= =========
7.24% 2.74% 3.42% 6.05% 3.33%*
$ 20,137 $ 22,229 $ 35,682 $ 23,217 $ 596
========= ========= ========= ========= =========
.89% .86% .89% .89% 1.07%*
5.21% 3.84% 3.46% 3.86% 4.00%*
51.64% 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, 1999 January 31, 1998 January 31, 1997
---------------- ---------------- ----------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 56.24 $ 47.66 $ 40.65
---------- ---------- ----------
Income (loss) from investment operations:
Net investment income (loss) ............................ (.41) (.31) .26
Net realized and unrealized gain (loss)
on investments ........................................ 13.30 11.97 7.05
---------- ---------- ----------
Total income (loss) from investment operations 12.89 11.66 7.31
Less distributions from:
Net investment income ................................... - (.19) (.25)
Net realized gain on investments (2)...................... - (2.89) (.05)
---------- ---------- ----------
Total distributions - (3.08) (.30)
---------- ---------- ----------
Net asset value, end of period $ 69.13 $ 56.24 $ 47.66
========== ========== ==========
Total return (3) ............................................. 22.92% 24.41% 18.00%
Ratios / supplemental data:
Net assets, end of period (in thousands) ................... $ 21,764 $ 19,955 $ 15,417
========== ========== ==========
Ratio of expenses to average net assets ..................... 1.39% 1.46% 1.33%
Ratio of net investment income (loss) to average net assets.. (.65)% (.60)% .59%
Portfolio turnover rate ..................................... 2.73% 2.15% 21.32%
<FN>
* Computed on an annualized basis.
(l) The Aggressive Growth Portfolio commenced investment operations May 16,
1990.
(2) Capital gain distribution pursuant to Section 852(b)(3) of the Code.
(3) 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, 1996 January 31, 1995 January 31, 1994 January 31, 1993 January 31, 1992 January 31, 1991(1)
---------------- ---------------- ---------------- ---------------- ---------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
$ 31.61 $ 32.56 $ 26.63 $ 22.77 $ 18.35 $ 20.00
--------- --------- --------- --------- --------- ---------
(.02) (.01) .01 .02 .06 .13
10.68 (.89) 6.41 4.44 4.38 (1.78)
--------- --------- --------- --------- --------- ---------
10.66 (.90) 6.42 4.46 4.44 (1.65)
(.11) (.03) (.02) (.13) (.02) -
(1.51) (.02) (.47) (.47) - -
--------- --------- --------- --------- --------- ---------
(1.62) (.05) (.49) (.60) (.02) -
--------- --------- --------- --------- --------- ---------
$ 40.65 $ 31.61 $ 32.56 $ 26.63 $ 22.77 $ 18.35
========= ========= ========= ========= ========= =========
33.78% (2.75)% 24.25% 19.77% 24.21% (8.25)%*
$ 11,067 $ 6,758 $ 7,201 $ 3,596 $ 2,577 $ 1,151
========= ========= ========= ========= ========= =========
1.19% 1.23% 1.20% 1.12% 1.18% 1.07%*
(.06)% (.04)% .02% .12% .23% .64%*
18.94% 26.29% 29.83% 25.62% 53.18% 36.88%*
</TABLE>
<PAGE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
Permanent Portfolio (PP)
(Graph omitted, see description on page 35)
Versatile Bond Portfolio (VBP)
(Graph omitted, see description on page 35)
Aggressive Growth Portfolio (AGP)
(Graph omitted, 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; and 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. A
graph is not provided for the Treasury Bill Portfolio because it is a money
market portfolio. The tables below show each of the Fund's Portfolio's
average annual total returns for the periods indicated, assuming a
hypothetical investment in shares of $1,000, reinvestment of all dividends
and distributions, deduction of all fees and expenses except the $35
one-time account start-up fee and complete redemption of the investment at
the end of the period. Past performance is not predictive of future
performance.
<TABLE>
<CAPTION>
Permanent Portfolio(1) Treasury Bill Portfolio (2)(5)
- --------------------------------------- ------------------------------------
<S><C> <C> <C>
1 year ended January 31, 1999 2.42% 1 year ended January 31, 1999 4.04%
5 years ended January 31, 1999 4.13% 5 years ended January 31, 1999 4.10%
10 years ended January 31, 1999 4.92% 10 years ended January 31, 1999 4.52%
15 years ended January 31, 1999 4.95% 11 years 250 days ended
16 years 62 days ended January 31, 1999 4.67%
January 31, 1999 4.89%
Aggressive Growth Portfolio(3) Versatile Bond Portfolio (4)(6)
- --------------------------------------- ------------------------------------
<C> <C> <C> <C>
1 year ended January 31, 1999 22.86% 1 year ended January 31, 1999 4.56%
5 years ended January 31, 1999 18.54% 5 years ended January 31, 1999 4.83%
9 years 29 days end 7 years 127 days ended
January 31, 1999 16.35% January 31, 1999 4.71%
<FN>
- -----------------------
(1) The Permanent Portfolio commenced operations on December 1, 1982.
(2) The Treasury Bill Portfolio commenced operations on May 26, 1987.
(3) The Aggressive Growth Portfolio commenced operations on January 2, 1990.
(4) The Versatile Bond Portfolio commenced operations on September 27, 1991.
(5) Yield on the Treasury Bill Portfolio for the seven days ended February 1 ,
1999, assuming reinvestment of all dividends and distributions and
deduction of all fees and expenses except the $35 one-time account start-up
fee, was 4.61%, and effective yield was 4.71%.
(6) The 30-day SEC standardized yield for the Versatile Bond Portfolio at
January 31, 1999, calculated by dividing the net investment income per
share earned during the specified 30-day period by the net asset value per
share on the last day of the period and annualizing the resulting figure,
and assuming reinvestment of all dividends and distributions and deduction
of all fees and expenses except the $35 one-time account start-up fee, was
3.38.
</FN>
</TABLE>
<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 U.S. stocks, particularly growth
stocks, as well as strength in the bond and silver markets throughout 1998
were substantially offset by weakness in shares of natural resource
companies, gold assets and the relative value of the Swiss franc.
Accordingly, the Portfolio achieved a total return of 2.48% for the year
ended January 31, 1999, as compared to an inflation rate of 1.67% 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 4.09% and maintained an average maturity of
between 60 and 90 days throughout the year ended January 31, 1999. 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 4.61% while
maintaining an average maturity of between 270 and 450 days throughout the
year ended January 31, 1999. 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 22.92% for the year
ended January 31, 1999, as compared to 20.32% for the Dow Jones Industrial
Average and 31.44% for the Standard and Poor's 500 Stock Index during 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 LLP
Three Embarcadero Center
San Francisco, California 94111
INVESTOR'S INFORMATION OFFICE
P.O. Box 5847 ANNUAL REPORT
Austin, Texas 78763 January 31, 1999
1-800-531-5142 Nationwide
Local 1-512-453-7558
<PAGE>
Appendix A
<PAGE>
<TABLE>
Table 1
<CAPTION>
Date T-Bonds T-Bonds T-Bonds Agency Agency Agency STHG STHG STHG
Coupon- Annual Old Bond Bonds Bonds Bonds Old Bonds Bonds Bonds
Equivalent Yield Price Coupon- Annual Bond Coupon Annual Old Bond
Yield Equivalent Yield Price Equivalent Yield Price
Yield Yield
- -------- --------- -------- --------- ---------- -------- --------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/81 13.64% 14.10% 13.61% 14.08% 14.66% 15.19%
1/29/82 13.85% 14.33% 98.4880 14.37% 14.88% 95.0990 15.09% 15.66% 99.4396
2/26/82 13.81% 14.29% 100.2797 14.60% 15.13% 98.4963 15.20% 15.78% 99.8510
3/31/82 13.68% 14.14% 100.9752 14.69% 15.23% 99.3908 15.20% 15.77% 100.0096
4/30/82 13.37% 13.82% 102.2408 13.48% 13.94% 108.3184 14.76% 15.30% 100.5740
5/31/82 13.39% 13.84% 99.8484 13.37% 13.82% 100.7780 14.60% 15.14% 100.1973
6/30/82 13.88% 14.37% 96.5140 14.39% 14.91% 93.3540 15.35% 15.93% 99.0381
7/30/82 13.41% 13.85% 103.4913 13.89% 14.37% 103.3698 14.30% 14.81% 101.3696
8/31/82 12.50% 12.89% 107.0762 12.51% 12.90% 110.0373 12.73% 13.14% 102.0771
9/30/82 11.77% 12.11% 105.9954 11.80% 12.15% 105.4201 12.22% 12.59% 100.6905
10/29/82 10.97% 11.27% 106.9895 11.21% 11.52% 104.6753 10.76% 11.05% 101.9729
11/30/82 10.68% 10.97% 102.5749 11.20% 11.51% 100.0928 10.84% 11.13% 99.8929
12/31/82 10.43% 10.70% 102.3220 11.10% 11.41% 100.7527 10.38% 10.65% 100.6250
1/31/83 10.95% 11.25% 95.3908 11.42% 11.74% 97.5566 10.23% 10.49% 100.2029
2/28/83 10.49% 10.76% 104.2259 11.06% 11.36% 102.8495 10.17% 10.43% 100.0788
3/31/83 10.67% 10.96% 98.3493 11.12% 11.43% 99.5297 10.04% 10.29% 100.1774
4/29/83 10.37% 10.64% 102.7433 10.86% 11.15% 102.0921 9.66% 9.89% 100.5152
5/31/83 10.97% 11.27% 94.8001 11.33% 11.65% 96.3363 10.26% 10.52% 99.1908
6/30/83 10.99% 11.29% 99.8492 11.39% 11.72% 99.4776 10.77% 11.06% 99.3120
7/29/83 11.75% 12.09% 93.7194 12.19% 12.56% 94.0534 11.21% 11.52% 99.4024
8/31/83 11.95% 12.31% 98.3781 12.20% 12.58% 99.9142 11.59% 11.93% 99.4848
9/30/83 11.43% 11.76% 104.3780 11.69% 12.03% 103.9724 10.92% 11.21% 100.9148
10/31/83 11.79% 12.13% 97.0760 12.01% 12.37% 97.5662 10.98% 11.28% 99.9196
11/30/83 11.65% 11.99% 101.1087 11.84% 12.19% 101.2965 10.77% 11.06% 100.2728
12/30/83 11.85% 12.21% 98.3463 11.99% 12.35% 98.8889 11.32% 11.64% 99.2658
1/31/84 11.76% 12.10% 100.7857 11.84% 12.19% 101.1384 10.70% 10.99% 100.8339
2/29/84 12.15% 12.52% 96.8634 12.24% 12.61% 97.0354 11.09% 11.40% 99.4789
3/30/84 12.53% 12.92% 97.0755 12.64% 13.04% 97.1046 11.64% 11.98% 99.2647
4/30/84 12.84% 13.26% 97.6020 13.00% 13.43% 97.4215 11.97% 12.33% 99.5518
5/31/84 13.81% 14.29% 93.0929 13.97% 14.46% 93.5236 12.96% 13.38% 98.6979
6/29/84 13.63% 14.09% 101.3549 13.98% 14.46% 99.9834 13.16% 13.60% 99.7267
7/31/84 12.77% 13.18% 106.5547 13.04% 13.46% 106.6224 12.98% 13.41% 100.2376
8/31/84 12.51% 12.90% 102.0447 12.89% 13.31% 101.0210 12.90% 13.32% 100.1058
9/28/84 12.26% 12.63% 101.9579 12.43% 12.81% 103.4260 12.26% 12.63% 100.8628
10/31/84 11.62% 11.96% 105.2964 11.87% 12.22% 104.2178 11.56% 11.89% 100.9405
11/30/84 11.59% 11.92% 100.2902 11.65% 11.99% 101.6987 11.09% 11.40% 100.6227
12/31/84 11.50% 11.83% 100.7599 11.53% 11.87% 100.8873 10.50% 10.78% 100.7994
1/31/85 11.20% 11.51% 102.5863 11.24% 11.56% 102.3311 10.38% 10.65% 100.1681
2/28/85 11.89% 12.24% 94.3802 11.89% 12.25% 95.0383 10.67% 10.96% 99.6067
3/29/85 11.63% 11.97% 102.1173 11.82% 12.17% 100.5681 10.86% 11.15% 99.7473
4/30/85 11.48% 11.81% 101.2648 12.29% 12.67% 96.5398 10.65% 10.93% 100.2861
5/31/85 10.59% 10.87% 108.0550 11.42% 11.74% 106.8012 10.24% 10.50% 100.5538
6/28/85 10.46% 10.74% 101.1247 11.24% 11.55% 101.4337 10.02% 10.28% 100.2921
7/31/85 10.72% 11.00% 97.7501 11.51% 11.84% 97.8951 10.19% 10.44% 99.7822
8/30/85 10.48% 10.75% 102.1446 11.48% 11.81% 100.1996 9.86% 10.10% 100.4463
9/30/85 10.56% 10.84% 99.2741 11.62% 11.96% 98.9386 9.79% 10.03% 100.0866
10/31/85 10.28% 10.54% 102.5901 11.36% 11.69% 101.9905 9.74% 9.97% 100.0807
11/29/85 9.84% 10.08% 104.2683 10.90% 11.19% 103.7825 9.33% 9.55% 100.5534
12/31/85 9.26% 9.48% 105.7483 9.63% 9.86% 111.1317 9.02% 9.22% 100.4332
1/31/86 9.33% 9.54% 99.3855 9.68% 9.91% 99.5882 8.89% 9.08% 100.1794
2/28/86 8.27% 8.45% 111.5960 8.75% 8.94% 108.6822 8.66% 8.85% 100.3061
3/31/86 7.43% 7.57% 110.1238 7.81% 7.96% 109.4679 8.21% 8.38% 100.6274
4/30/86 7.46% 7.60% 99.6471 8.06% 8.23% 97.4738 7.99% 8.15% 100.3118
5/30/86 7.72% 7.87% 96.9063 8.58% 8.77% 95.0826 8.25% 8.42% 99.6332
6/30/86 7.24% 7.37% 105.9007 8.27% 8.44% 103.0222 7.86% 8.01% 100.5440
7/31/86 7.46% 7.60% 97.3771 8.59% 8.77% 97.0072 7.61% 7.76% 100.3422
8/29/86 7.21% 7.33% 103.1002 8.36% 8.53% 102.1940 7.76% 7.91% 99.7968
9/30/86 7.59% 7.73% 95.4710 8.77% 8.96% 96.1563 7.34% 7.48% 100.5810
10/31/86 7.61% 7.76% 99.7293 8.67% 8.86% 100.9432 7.10% 7.22% 100.3451
</TABLE>
Appendix A
Page 1
<PAGE>
<TABLE>
Table 1
<CAPTION>
Date T-Bonds T-Bonds T-Bonds Agency Agency Agency STHG STHG STHG
Coupon- Annual Old Bond Bonds Bonds Bonds Old Bonds Bonds Bonds
Equivalent Yield Price Coupon- Annual Bond Coupon Annual Old Bond
Yield Equivalent Yield Price Equivalent Yield Price
Yield Yield
- -------- --------- -------- --------- ---------- -------- --------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11/28/86 7.40% 7.54% 102.5474 8.50% 8.68% 101.6236 7.05% 7.18% 100.0640
12/31/86 7.49% 7.63% 98.9564 8.37% 8.55% 101.2506 7.25% 7.38% 99.7179
1/30/87 7.48% 7.62% 100.0666 8.29% 8.46% 100.7817 7.10% 7.22% 100.2192
2/27/87 7.47% 7.61% 100.1255 8.27% 8.44% 100.2150 7.16% 7.29% 99.9138
3/31/87 7.81% 7.96% 96.1198 8.44% 8.62% 98.3230 7.46% 7.60% 99.5808
4/30/87 8.45% 8.63% 93.0407 9.14% 9.35% 93.6439 8.31% 8.48% 98.8205
5/29/87 8.64% 8.82% 98.0043 9.38% 9.60% 97.8745 8.57% 8.76% 99.6397
6/30/87 8.50% 8.68% 101.4665 9.25% 9.47% 101.1218 8.27% 8.44% 100.4202
7/31/87 8.89% 9.09% 95.9076 9.65% 9.88% 96.5486 8.35% 8.52% 99.8924
8/31/87 9.17% 9.38% 97.2095 9.87% 10.12% 98.0309 8.64% 8.82% 99.6018
9/30/87 9.77% 10.01% 94.2310 10.47% 10.74% 95.0500 9.29% 9.51% 99.1007
10/30/87 9.02% 9.22% 107.7465 9.65% 9.88% 107.2135 8.76% 8.95% 100.7365
11/30/87 9.11% 9.31% 99.0803 9.84% 10.09% 98.3064 8.76% 8.95% 99.9961
12/31/87 8.95% 9.15% 101.6556 9.64% 9.87% 101.8342 8.66% 8.84% 100.1438
1/29/88 8.41% 8.59% 105.7953 9.06% 9.27% 105.2480 8.09% 8.26% 100.7819
2/29/88 8.35% 8.52% 100.7396 8.97% 9.17% 100.8806 7.99% 8.15% 100.1400
3/31/88 8.78% 8.98% 95.3907 9.47% 9.69% 95.5634 8.19% 8.36% 99.7251
4/29/88 9.09% 9.30% 96.8608 9.78% 10.02% 97.2816 8.61% 8.79% 99.4244
5/31/88 9.29% 9.51% 97.9725 10.05% 10.30% 97.6750 8.91% 9.11% 99.5865
6/30/88 8.85% 9.05% 104.5799 9.57% 9.80% 104.2071 8.74% 8.93% 100.2293
7/29/88 9.22% 9.43% 96.2813 10.26% 10.52% 94.2503 9.02% 9.22% 99.6206
8/31/88 9.32% 9.54% 99.0211 10.25% 10.52% 100.0156 9.38% 9.60% 99.4998
9/30/88 8.98% 9.18% 103.4977 9.83% 10.07% 103.6568 9.08% 9.28% 100.4210
10/31/88 8.73% 8.92% 102.6830 9.46% 9.68% 103.3470 8.91% 9.11% 100.2296
11/30/88 9.06% 9.27% 96.5498 9.82% 10.06% 96.8502 9.41% 9.63% 99.3101
12/30/88 8.99% 9.19% 100.7340 9.69% 9.93% 101.1028 9.79% 10.03% 99.4848
1/31/89 8.83% 9.03% 101.6630 9.49% 9.72% 101.8023 9.71% 9.94% 100.1133
2/28/89 9.13% 9.34% 96.9254 9.65% 9.88% 98.6210 10.09% 10.34% 99.4842
3/31/89 9.10% 9.30% 100.3944 9.64% 9.88% 100.0236 10.48% 10.76% 99.4598
4/28/89 8.92% 9.12% 101.7912 9.41% 9.63% 102.1189 10.07% 10.33% 100.5587
5/31/89 8.60% 8.79% 103.4278 9.12% 9.33% 102.5890 9.63% 9.87% 100.6021
6/30/89 8.05% 8.21% 106.2381 8.58% 8.77% 105.1340 9.04% 9.25% 100.8134
7/31/89 7.92% 8.07% 101.5115 8.43% 8.60% 101.4964 8.67% 8.86% 100.5090
8/31/89 8.21% 8.38% 96.7600 8.58% 8.77% 98.5091 9.32% 9.54% 99.1127
9/29/89 8.24% 8.41% 99.6298 8.68% 8.86% 99.1350 9.35% 9.57% 99.9593
10/31/89 7.91% 8.07% 103.7378 8.33% 8.50% 103.3720 8.87% 9.06% 100.6658
11/30/89 7.90% 8.05% 100.2165 8.31% 8.48% 100.1388 8.71% 8.90% 100.2092
12/29/89 7.99% 8.15% 98.9240 8.44% 8.62% 98.7531 8.86% 9.05% 99.8015
1/31/90 8.46% 8.64% 94.9131 8.97% 9.17% 95.1120 9.19% 9.40% 99.5427
2/28/90 8.54% 8.72% 99.1404 9.03% 9.23% 99.5131 9.32% 9.53% 99.8288
3/30/90 8.64% 8.83% 98.9426 9.07% 9.27% 99.6378 9.39% 9.61% 99.8987
4/30/90 9.02% 9.22% 96.1069 9.47% 9.70% 96.3599 9.65% 9.88% 99.6501
5/31/90 8.58% 8.76% 104.6835 9.05% 9.26% 103.8650 9.21% 9.42% 100.5974
6/29/90 8.40% 8.57% 101.9818 8.86% 9.05% 101.8196 8.96% 9.16% 100.3442
7/31/90 8.42% 8.59% 99.7955 8.86% 9.05% 100.0147 8.70% 8.89% 100.3599
8/31/90 8.98% 9.18% 94.1903 9.87% 10.11% 91.2071 8.76% 8.95% 99.9143
9/28/90 8.94% 9.14% 100.3600 9.85% 10.09% 100.1822 8.92% 9.12% 99.7824
10/31/90 8.78% 8.97% 101.7241 9.77% 10.01% 100.7231 8.84% 9.03% 100.1155
11/30/90 8.40% 8.58% 104.1445 9.49% 9.72% 102.4382 8.68% 8.87% 100.2145
12/31/90 8.24% 8.41% 101.8195 9.47% 9.69% 100.2070 8.46% 8.64% 100.3038
1/31/91 8.20% 8.36% 100.4431 9.31% 9.52% 101.4593 8.44% 8.62% 100.0225
2/28/91 8.19% 8.36% 100.0369 9.23% 9.44% 100.7443 8.27% 8.45% 100.2347
3/29/91 8.24% 8.41% 99.4909 9.26% 9.48% 99.6669 8.11% 8.27% 100.2307
4/30/91 8.18% 8.35% 100.6179 9.24% 9.45% 100.2092 7.88% 8.03% 100.3202
5/31/91 8.26% 8.43% 99.1458 9.25% 9.46% 99.9189 7.70% 7.85% 100.2496
6/28/91 8.42% 8.60% 98.2656 9.35% 9.57% 99.1059 7.88% 8.04% 99.7466
7/31/91 8.36% 8.53% 100.6541 9.25% 9.46% 100.8802 7.72% 7.87% 100.2188
8/30/91 8.06% 8.22% 103.3743 8.98% 9.18% 102.4878 7.35% 7.49% 100.5208
9/30/91 7.81% 7.96% 102.8796 8.81% 9.00% 101.5856 7.03% 7.15% 100.4481
</TABLE>
Appendix A
Page 2
<PAGE>
<TABLE>
Table 1
<CAPTION>
Date T-Bonds T-Bonds T-Bonds Agency Agency Agency STHG STHG STHG
Coupon- Annual Old Bond Bonds Bonds Bonds Old Bonds Bonds Bonds
Equivalent Yield Price Coupon- Annual Bond Coupon Annual Old Bond
Yield Equivalent Yield Price Equivalent Yield Price
Yield Yield
- -------- --------- -------- --------- ---------- -------- --------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10/31/91 7.90% 8.06% 98.9722 8.94% 9.14% 98.7988 6.67% 6.78% 100.5031
11/29/91 7.95% 8.11% 99.4317 8.79% 8.98% 101.4011 6.48% 6.58% 100.2717
12/31/91 7.40% 7.54% 106.5922 8.30% 8.47% 104.7428 5.98% 6.07% 100.7101
1/31/92 7.76% 7.91% 95.8335 8.50% 8.68% 98.0923 6.07% 6.16% 99.8742
2/28/92 7.83% 7.98% 99.1953 8.73% 8.92% 97.8424 6.09% 6.18% 99.9675
3/31/92 7.97% 8.13% 98.4118 8.78% 8.97% 99.4738 6.36% 6.46% 99.6195
4/30/92 8.05% 8.21% 99.0993 8.88% 9.08% 98.9570 5.95% 6.04% 100.5730
5/31/92 7.84% 7.99% 102.4119 8.58% 8.76% 103.2153 5.70% 5.79% 100.3546
6/30/92 7.79% 7.94% 100.5770 8.55% 8.73% 100.3224 5.41% 5.48% 100.4182
7/31/92 7.46% 7.60% 103.9321 8.39% 8.57% 101.7450 5.00% 5.06% 100.5898
8/31/92 7.42% 7.56% 100.4785 8.33% 8.50% 100.6580 4.76% 4.81% 100.3421
9/30/92 7.37% 7.51% 100.6011 8.23% 8.40% 101.1070 4.41% 4.46% 100.5012
10/31/92 7.63% 7.78% 96.9528 8.45% 8.63% 97.6138 5.03% 5.09% 99.1135
11/30/92 7.60% 7.74% 100.3526 8.59% 8.77% 98.5009 5.48% 5.56% 99.3561
12/31/92 7.39% 7.53% 102.5195 9.06% 9.27% 95.1759 5.25% 5.32% 100.3362
1/31/93 7.22% 7.35% 102.0741 8.81% 9.00% 102.6240 4.83% 4.89% 100.5950
2/28/93 6.89% 7.01% 104.1619 8.52% 8.70% 103.1252 4.54% 4.59% 100.4174
3/31/93 6.82% 6.94% 100.8891 8.54% 8.72% 99.7849 4.46% 4.51% 100.1134
4/30/93 6.92% 7.04% 98.7426 8.53% 8.71% 100.1077 4.35% 4.40% 100.1610
5/31/93 6.81% 6.93% 101.3986 8.54% 8.72% 99.8924 4.69% 4.74% 99.5130
6/30/93 6.63% 6.74% 102.3313 8.22% 8.39% 103.5456 4.48% 4.53% 100.3014
7/31/93 6.32% 6.42% 104.1465 8.10% 8.26% 101.3447 4.50% 4.55% 99.9727
8/31/93 6.00% 6.09% 104.4281 7.73% 7.88% 104.2947 4.33% 4.38% 100.2415
9/30/93 5.94% 6.03% 100.8356 7.66% 7.81% 100.8180 4.32% 4.36% 100.0201
10/31/93 6.21% 6.31% 96.3464 7.65% 7.80% 100.1170 4.43% 4.47% 99.8435
11/30/93 6.25% 6.35% 99.4610 8.04% 8.20% 95.6051 4.58% 4.63% 99.7835
12/31/93 6.22% 6.32% 100.4055 8.08% 8.24% 99.5509 4.53% 4.58% 100.0674
1/31/94 6.29% 6.39% 99.0607 7.88% 8.04% 102.2883 4.36% 4.40% 100.2500
2/28/94 6.68% 6.79% 95.0183 8.36% 8.53% 94.7610 4.87% 4.93% 99.2679
3/31/94 7.09% 7.22% 94.8720 8.83% 9.03% 95.0640 5.36% 5.43% 99.2984
4/29/94 7.32% 7.45% 97.2481 9.07% 9.27% 97.5673 5.88% 5.97% 99.2595
5/31/94 7.43% 7.57% 98.6520 9.21% 9.43% 98.5151 6.19% 6.28% 99.5694
6/30/94 7.62% 7.77% 97.7783 9.43% 9.65% 97.8855 6.36% 6.46% 99.7618
7/29/94 7.38% 7.52% 102.8789 9.08% 9.29% 103.5570 6.22% 6.32% 100.1891
8/31/94 7.45% 7.59% 99.1979 9.22% 9.44% 98.5361 6.34% 6.44% 99.8351
9/30/94 7.82% 7.97% 95.7421 8.21% 8.38% 111.2693 6.76% 6.88% 99.4047
10/31/94 7.96% 8.12% 98.3455 8.34% 8.51% 98.5664 6.99% 7.11% 99.6834
11/30/94 8.00% 8.16% 99.6039 8.34% 8.51% 100.0062 7.69% 7.84% 99.0217
12/30/94 7.89% 8.04% 101.2846 8.20% 8.37% 101.5408 8.02% 8.18% 99.5408
1/31/95 7.71% 7.86% 102.0481 8.06% 8.22% 101.6144 7.59% 7.74% 100.6031
2/28/95 7.46% 7.60% 102.9698 7.85% 8.00% 102.3596 7.09% 7.22% 100.6984
3/31/95 7.43% 7.57% 100.3791 7.80% 7.95% 100.5897 7.11% 7.24% 99.9706
4/28/95 7.34% 7.47% 101.1114 7.70% 7.85% 101.1540 6.91% 7.03% 100.2888
5/31/95 6.66% 6.77% 108.7546 7.02% 7.14% 108.5221 6.26% 6.35% 100.9185
6/30/95 6.58% 6.69% 101.0415 6.95% 7.07% 100.7904 6.21% 6.30% 100.0678
7/31/95 6.80% 6.92% 97.1999 7.17% 7.30% 97.2813 6.19% 6.29% 100.0254
8/31/95 6.50% 6.61% 103.9380 7.04% 7.16% 101.7039 6.14% 6.23% 100.0777
9/29/95 6.53% 6.64% 99.6074 6.96% 7.08% 100.9299 6.18% 6.27% 99.9393
10/31/95 6.32% 6.42% 102.8090 6.72% 6.83% 103.1387 5.99% 6.08% 100.2702
11/30/95 6.11% 6.20% 102.8720 6.50% 6.60% 102.8946 5.76% 5.84% 100.3289
12/29/95 5.92% 6.01% 102.6519 6.39% 6.49% 101.4632 5.54% 5.62% 100.2997
1/31/96 5.95% 6.04% 99.5826 6.35% 6.45% 100.4925 5.27% 5.34% 100.3845
</TABLE>
Appendix A
Page 3
<PAGE>
<TABLE>
Table 1
<CAPTION>
Date T-Bonds T-Bonds T-Bonds Agency Agency Agency STHG STHG STHG
Coupon- Annual Old Bond Bonds Bonds Bonds Old Bonds Bonds Bonds
Equivalent Yield Price Coupon- Annual Bond Coupon Annual Old Bond
Yield Equivalent Yield Price Equivalent Yield Price
Yield Yield
- -------- --------- -------- --------- ---------- -------- --------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2/29/96 6.47% 6.57% 93.1527 6.84% 6.95% 93.8454 5.71% 5.79% 99.3873
3/31/96 6.73% 6.84% 96.6670 7.04% 7.16% 97.4797 6.00% 6.09% 99.5884
4/30/96 6.97% 7.09% 96.9976 7.22% 7.35% 97.7441 6.24% 6.34% 99.6585
5/31/96 7.00% 7.12% 99.6258 7.35% 7.48% 98.5159 6.38% 6.48% 99.8069
6/30/96 6.90% 7.02% 101.2599 7.26% 7.39% 101.1073 6.28% 6.38% 100.1340
7/31/96 6.98% 7.10% 99.0002 7.34% 7.48% 98.9449 6.40% 6.50% 99.8366
8/31/96 7.13% 7.26% 98.1534 7.50% 7.64% 98.1949 6.47% 6.58% 99.8944
9/30/96 6.93% 7.05% 102.5122 7.28% 7.41% 102.6287 6.27% 6.36% 100.2920
10/31/96 6.66% 6.77% 103.4861 7.04% 7.17% 102.9418 5.91% 6.00% 100.4968
11/30/96 6.36% 6.46% 103.9960 6.71% 6.82% 104.3268 5.81% 5.89% 100.1488
12/31/96 6.65% 6.76% 96.2518 6.95% 7.07% 96.9547 6.06% 6.15% 99.6523
1/31/97 6.80% 6.92% 98.0908 7.13% 7.26% 97.7454 6.05% 6.14% 100.0085
2/28/97 6.80% 6.92% 100.0000 7.22% 7.35% 98.9710 6.18% 6.28% 99.8108
3/31/97 7.10% 7.23% 96.2957 7.49% 7.63% 96.7459 6.55% 6.66% 99.4865
4/30/97 6.95% 7.07% 101.8803 7.34% 7.47% 101.8085 6.43% 6.53% 100.1704
5/31/97 6.92% 7.04% 100.3772 7.28% 7.41% 100.7277 6.33% 6.43% 100.1325
6/30/97 6.80% 6.92% 101.5273 7.08% 7.21% 102.4745 6.26% 6.36% 100.1002
7/31/97 6.30% 6.40% 106.7021 6.63% 6.74% 105.8282 5.96% 6.05% 100.4259
8/31/97 6.61% 6.72% 95.9768 6.89% 7.01% 96.7209 6.19% 6.28% 99.6809
9/30/97 6.47% 6.57% 101.8435 6.85% 6.97% 100.5065 6.06% 6.15% 100.1767
10/31/97 6.21% 6.31% 103.5183 6.81% 6.93% 100.5086 5.99% 6.08% 100.0962
11/30/97 6.12% 6.21% 101.2296 6.50% 6.61% 104.0693 6.20% 6.29% 99.7148
12/31/97 5.93% 6.02% 102.6490 6.33% 6.43% 102.2715 6.06% 6.15% 100.1965
1/31/98 5.82% 5.90% 101.5520 6.22% 6.32% 101.4869 5.80% 5.88% 100.3713
2/28/98 5.92% 6.01% 98.6043 6.30% 6.40% 98.9277 5.97% 6.06% 99.7496
3/31/98 5.94% 6.03% 99.7215 6.26% 6.36% 100.5384 6.00% 6.09% 99.9604
4/30/98 5.95% 6.04% 99.8609 6.28% 6.38% 99.7314 5.99% 6.08% 100.0198
5/31/98 5.81% 5.89% 101.9774 6.18% 6.28% 101.3575 5.97% 6.05% 100.0297
6/30/98 5.62% 5.70% 102.7397 5.97% 6.06% 102.9153 5.94% 6.02% 100.0410
7/31/98 5.72% 5.80% 98.5737 6.08% 6.17% 98.4908 5.93% 6.02% 100.0085
8/31/98 5.30% 5.37% 106.2747 5.94% 6.03% 101.9498 5.69% 5.77% 100.3476
9/30/98 4.98% 5.04% 104.9567 5.56% 5.64% 105.5157 5.24% 5.31% 100.6283
10/31/98 5.15% 5.22% 97.4171 6.02% 6.11% 93.6482 5.34% 5.41% 99.8605
11/30/98 5.08% 5.14% 101.0720 5.62% 5.70% 105.7678 5.43% 5.51% 99.8692
12/31/98 5.09% 5.15% 99.8470 5.65% 5.73% 99.5688 5.43% 5.51% 100.0014
1/31/99 5.09% 5.15% 100.0000 5.73% 5.81% 98.8602 5.34% 5.41% 100.1352
</TABLE>
Appendix A
Page 4
<PAGE>
<TABLE>
Table 2
<CAPTION>
Date T-Bill T-Bill T-Bill Accep- Accep- Accep- CD's CD's CD's Repos Repos
Bank Annual Market tances tances tances Bank Annual Market Bank Annual
Discount Yield Price Bank Annual Market Discount Yield Price Discount Yield
Rate Discount Yield Price Rate Rate
Rate
- -------- ------- ------ ------- ------ ------ ------- ------ ------ ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
12/31/81 11.08% 12.07% 97.1992 12.40% 13.63% 96.8656 12.90% 14.22% 96.7392 11.25% 12.08%
1/29/82 12.52% 13.77% 96.8352 13.55% 15.00% 96.5749 13.95% 15.49% 96.4738 13.13% 14.24%
2/26/82 12.44% 13.67% 96.8554 13.65% 15.12% 96.5496 14.10% 15.67% 96.4358 12.50% 13.51%
3/31/82 13.26% 14.65% 96.6482 14.10% 15.67% 96.4358 14.80% 16.52% 96.2589 15.50% 17.02%
4/30/82 12.34% 13.55% 96.8807 13.75% 15.24% 96.5243 14.20% 15.79% 96.4106 12.50% 13.51%
5/31/82 11.50% 12.56% 97.0931 12.95% 14.28% 96.7265 13.40% 14.82% 96.6128 11.88% 12.80%
6/30/82 12.76% 14.05% 96.7746 14.70% 16.40% 96.2842 15.05% 16.83% 96.1957 11.88% 12.80%
7/30/82 10.17% 11.01% 97.4293 11.60% 12.68% 97.0678 12.00% 13.15% 96.9667 9.75% 10.39%
8/31/82 8.42% 9.01% 97.8716 9.90% 10.70% 97.4975 10.40% 11.28% 97.3711 8.75% 9.28%
9/30/82 7.62% 8.11% 98.0738 10.05% 10.87% 97.4596 10.50% 11.39% 97.3458 10.25% 10.95%
10/29/82 7.90% 8.43% 98.0031 8.80% 9.44% 97.7756 9.05% 9.73% 97.7124 9.13% 9.69%
11/30/82 8.28% 8.85% 97.9070 8.60% 9.22% 97.8261 8.95% 9.61% 97.7376 8.75% 9.28%
12/31/82 7.92% 8.45% 97.9980 8.55% 9.16% 97.8388 8.65% 9.27% 97.8135 12.00% 12.94%
1/31/83 8.10% 8.65% 97.9525 8.50% 9.10% 97.8514 8.65% 9.27% 97.8135 8.38% 8.86%
2/28/83 7.93% 8.46% 97.9955 8.05% 8.60% 97.9651 8.20% 8.76% 97.9272 8.25% 8.73%
3/31/83 8.64% 9.26% 97.8160 8.90% 9.56% 97.7503 9.15% 9.84% 97.6871 10.25% 10.95%
4/29/83 8.08% 8.63% 97.9576 8.25% 8.82% 97.9146 8.35% 8.93% 97.8893 8.50% 9.00%
5/31/83 8.63% 9.25% 97.8185 8.95% 9.61% 97.7376 9.05% 9.73% 97.7124 8.40% 8.89%
6/30/83 8.79% 9.43% 97.7781 9.00% 9.67% 97.7250 9.15% 9.84% 97.6871 9.38% 9.97%
7/29/83 9.22% 9.92% 97.6694 9.45% 10.18% 97.6113 9.60% 10.36% 97.5733 9.20% 9.78%
8/31/83 9.26% 9.97% 97.6593 9.55% 10.30% 97.5860 9.80% 10.58% 97.5228 9.25% 9.83%
9/30/83 8.71% 9.34% 97.7983 9.00% 9.67% 97.7250 9.25% 9.95% 97.6618 9.50% 10.11%
10/31/83 8.51% 9.11% 97.8489 9.00% 9.67% 97.7250 9.30% 10.01% 97.6492 9.13% 9.69%
11/30/83 8.88% 9.53% 97.7553 9.13% 9.81% 97.6934 9.33% 10.05% 97.6416 8.88% 9.42%
12/30/83 8.97% 9.64% 97.7326 9.45% 10.18% 97.6113 9.65% 10.41% 97.5607 10.88% 11.66%
1/31/84 8.89% 9.54% 97.7528 9.15% 9.84% 97.6871 9.37% 10.09% 97.6315 9.15% 9.72%
2/29/84 9.14% 9.83% 97.6896 9.45% 10.18% 97.6113 9.70% 10.47% 97.5481 9.00% 9.56%
3/30/84 9.72% 10.49% 97.5430 10.10% 10.93% 97.4469 10.28% 11.14% 97.4014 10.00% 10.67%
4/30/84 9.72% 10.49% 97.5430 10.32% 11.18% 97.3913 10.55% 11.45% 97.3332 10.25% 10.95%
5/31/84 9.75% 10.53% 97.5354 10.88% 11.84% 97.2498 11.45% 12.50% 97.1057 10.00% 10.67%
6/29/84 9.92% 10.72% 97.4924 11.42% 12.47% 97.1133 11.75% 12.86% 97.0299 10.15% 10.84%
7/31/84 10.40% 11.28% 97.3711 11.15% 12.15% 97.1815 11.43% 12.48% 97.1108 11.38% 12.23%
8/31/84 10.63% 11.54% 97.3130 11.24% 12.26% 97.1588 11.60% 12.68% 97.0678 11.50% 12.37%
9/28/84 10.22% 11.07% 97.4166 10.77% 11.71% 97.2776 11.23% 12.24% 97.1613 10.75% 11.52%
10/31/84 9.01% 9.68% 97.7225 9.48% 10.22% 97.6037 9.56% 10.31% 97.5834 9.80% 10.45%
11/30/84 8.44% 9.03% 97.8666 8.89% 9.54% 97.7528 8.92% 9.58% 97.7452 8.55% 9.06%
12/31/84 7.85% 8.37% 98.0157 8.20% 8.76% 97.9272 8.45% 9.05% 97.8640 8.88% 9.42%
1/31/85 8.05% 8.60% 97.9651 8.17% 8.73% 97.9348 8.30% 8.88% 97.9019 8.38% 8.86%
2/28/85 8.50% 9.10% 97.8514 8.75% 9.39% 97.7882 8.90% 9.56% 97.7503 8.50% 9.00%
3/29/85 8.18% 8.74% 97.9323 8.60% 9.22% 97.8261 8.78% 9.42% 97.7806 8.50% 9.00%
4/30/85 7.85% 8.37% 98.0157 8.15% 8.71% 97.9399 8.40% 8.99% 97.8767 8.00% 8.45%
5/31/85 7.14% 7.58% 98.1952 7.37% 7.83% 98.1370 7.43% 7.90% 98.1219 7.35% 7.74%
6/28/85 6.83% 7.24% 98.2735 7.37% 7.83% 98.1370 7.49% 7.97% 98.1067 7.55% 7.96%
7/31/85 7.28% 7.73% 98.1598 7.70% 8.20% 98.0536 7.83% 8.35% 98.0208 8.75% 9.28%
8/30/85 7.14% 7.58% 98.1952 7.67% 8.17% 98.0612 7.82% 8.34% 98.0233 7.45% 7.85%
9/30/85 7.04% 7.47% 98.2204 7.70% 8.20% 98.0536 7.84% 8.36% 98.0182 7.65% 8.07%
10/31/85 7.19% 7.63% 98.1825 7.70% 8.20% 98.0536 7.71% 8.21% 98.0511 7.70% 8.12%
11/29/85 7.16% 7.60% 98.1901 7.73% 8.24% 98.0460 7.83% 8.35% 98.0208 7.80% 8.23%
12/31/85 7.05% 7.48% 98.2179 7.55% 8.04% 98.0915 7.72% 8.23% 98.0486 7.70% 8.12%
1/31/86 6.97% 7.39% 98.2381 7.55% 8.04% 98.0915 7.69% 8.19% 98.0561 7.80% 8.23%
2/28/86 7.02% 7.45% 98.2255 7.49% 7.97% 98.1067 7.54% 8.02% 98.0941 7.65% 8.07%
3/31/86 6.34% 6.69% 98.3974 6.82% 7.22% 98.2761 7.08% 7.51% 98.2103 7.35% 7.74%
4/30/86 6.10% 6.43% 98.4581 6.43% 6.79% 98.3746 6.50% 6.87% 98.3569 6.70% 7.03%
5/30/86 6.30% 6.65% 98.4075 6.66% 7.05% 98.3165 6.80% 7.20% 98.2811 6.55% 6.87%
6/30/86 5.96% 6.28% 98.4934 6.44% 6.80% 98.3721 6.55% 6.93% 98.3443 7.38% 7.76%
7/31/86 5.79% 6.09% 98.5364 6.11% 6.44% 98.4555 6.30% 6.65% 98.4075 6.20% 6.49%
8/29/86 5.17% 5.42% 98.6931 5.31% 5.57% 98.6578 5.45% 5.72% 98.6224 5.50% 5.74%
9/30/86 5.20% 5.45% 98.6856 5.67% 5.96% 98.5668 5.82% 6.12% 98.5288 5.75% 6.00%
10/31/86 5.20% 5.45% 98.6856 5.53% 5.81% 98.6021 5.70% 5.99% 98.5592 5.65% 5.90%
11/28/86 5.39% 5.66% 98.6375 5.67% 5.96% 98.5668 5.78% 6.08% 98.5389 5.25% 5.47%
12/31/86 5.67% 5.96% 98.5668 5.95% 6.27% 98.4960 6.50% 6.87% 98.3569 17.00% 18.82%
</TABLE>
Appendix A
Page 1
<PAGE>
<TABLE>
Table 2
<CAPTION>
Date T-Bill T-Bill T-Bill Accep- Accep- Accep- CD's CD's CD's Repos Repos
Bank Annual Market tances tances tances Bank Annual Market Bank Annual
Discount Yield Price Bank Annual Market Discount Yield Price Discount Yield
Rate Discount Yield Price Rate Rate
Rate
- -------- ------- ------ ------- ------ ------ ------- ------ ------ ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1/30/87 5.60% 5.89% 98.5844 5.85% 6.16% 98.5213 6.10% 6.43% 98.4581 5.95% 6.22%
2/27/87 5.45% 5.72% 98.6224 5.98% 6.30% 98.4884 6.15% 6.49% 98.4454 5.80% 6.06%
3/31/87 5.61% 5.90% 98.5819 6.15% 6.49% 98.4454 6.32% 6.67% 98.4024 6.00% 6.27%
4/30/87 5.53% 5.81% 98.6021 6.71% 7.10% 98.3039 6.70% 7.09% 98.3064 6.05% 6.33%
5/29/87 5.86% 6.17% 98.5187 6.96% 7.38% 98.2407 6.97% 7.39% 98.2381 6.40% 6.70%
6/30/87 5.73% 6.03% 98.5516 6.87% 7.28% 98.2634 6.95% 7.37% 98.2432 6.50% 6.81%
7/31/87 6.07% 6.40% 98.4656 6.60% 6.98% 98.3317 6.77% 7.17% 98.2887 6.45% 6.76%
8/31/87 6.25% 6.60% 98.4201 6.83% 7.24% 98.2735 7.05% 7.48% 98.2179 6.70% 7.03%
9/30/87 6.61% 6.99% 98.3291 7.72% 8.23% 98.0486 7.98% 8.52% 97.9828 7.45% 7.85%
10/30/87 5.27% 5.53% 98.6679 7.25% 7.70% 98.1674 7.55% 8.04% 98.0915 6.65% 6.98%
11/30/87 5.21% 5.46% 98.6830 7.55% 8.04% 98.0915 7.70% 8.20% 98.0536 6.75% 7.08%
12/31/87 5.68% 5.97% 98.5642 7.08% 7.51% 98.2103 7.20% 7.65% 98.1800 6.90% 7.25%
1/29/88 5.64% 5.93% 98.5743 6.77% 7.17% 98.2887 6.68% 7.07% 98.3114 6.35% 6.65%
2/29/88 5.62% 5.91% 98.5794 6.49% 6.86% 98.3595 6.57% 6.95% 98.3393 6.30% 6.60%
3/31/88 5.71% 6.00% 98.5566 6.60% 6.98% 98.3317 6.70% 7.09% 98.3064 6.50% 6.81%
4/29/88 5.98% 6.30% 98.4884 6.94% 7.36% 98.2457 7.10% 7.53% 98.2053 6.80% 7.14%
5/31/88 6.43% 6.79% 98.3746 7.42% 7.89% 98.1244 7.60% 8.09% 98.0789 6.80% 7.14%
6/30/88 6.56% 6.94% 98.3418 7.51% 7.99% 98.1016 7.75% 8.26% 98.0410 7.30% 7.68%
7/29/88 6.95% 7.37% 98.2432 7.94% 8.47% 97.9929 7.94% 8.47% 97.9929 7.56% 7.97%
8/31/88 7.30% 7.76% 98.1547 8.26% 8.83% 97.9121 8.55% 9.16% 97.8388 7.70% 8.12%
9/30/88 7.25% 7.70% 98.1674 8.19% 8.75% 97.9298 8.45% 9.05% 97.8640 8.50% 9.00%
10/31/88 7.36% 7.82% 98.1396 8.18% 8.74% 97.9323 8.45% 9.05% 97.8640 8.10% 8.56%
11/30/88 7.83% 8.35% 98.0208 8.88% 9.53% 97.7553 9.00% 9.67% 97.7250 8.20% 8.67%
12/30/88 8.10% 8.65% 97.9525 8.83% 9.48% 97.7680 9.25% 9.95% 97.6618 9.25% 9.83%
1/31/89 8.39% 8.98% 97.8792 8.96% 9.62% 97.7351 9.20% 9.90% 97.6744 8.80% 9.33%
2/28/89 8.71% 9.34% 97.7983 9.76% 10.54% 97.5329 10.13% 10.97% 97.4394 9.50% 10.11%
3/31/89 8.90% 9.56% 97.7503 9.86% 10.65% 97.5076 10.15% 10.99% 97.4343 9.50% 10.11%
4/28/89 8.41% 9.00% 97.8741 9.50% 10.24% 97.5986 9.80% 10.58% 97.5228 9.45% 10.06%
5/31/89 8.61% 9.23% 97.8236 9.25% 9.95% 97.6618 9.40% 10.13% 97.6239 9.60% 10.22%
6/30/89 7.99% 8.53% 97.9803 8.76% 9.40% 97.7857 9.10% 9.78% 97.6997 9.40% 10.00%
7/31/89 7.80% 8.31% 98.0283 8.14% 8.70% 97.9424 8.40% 8.99% 97.8767 8.55% 9.06%
8/31/89 7.89% 8.42% 98.0056 8.56% 9.17% 97.8362 8.80% 9.44% 97.7756 8.80% 9.33%
9/29/89 7.91% 8.44% 98.0005 8.75% 9.39% 97.7882 9.00% 9.67% 97.7250 9.10% 9.67%
10/31/89 7.77% 8.28% 98.0359 8.26% 8.83% 97.9121 8.49% 9.09% 97.8539 8.80% 9.33%
11/30/89 7.59% 8.08% 98.0814 8.08% 8.63% 97.9576 8.30% 8.88% 97.9019 8.55% 9.06%
12/29/89 7.55% 8.04% 98.0915 7.89% 8.42% 98.0056 8.10% 8.65% 97.9525 9.20% 9.78%
1/31/90 7.74% 8.25% 98.0435 8.00% 8.54% 97.9778 8.27% 8.84% 97.9095 8.15% 8.62%
2/28/90 7.77% 8.28% 98.0359 7.99% 8.53% 97.9803 8.25% 8.82% 97.9146 8.13% 8.59%
3/30/90 7.80% 8.31% 98.0283 8.15% 8.71% 97.9399 8.40% 8.99% 97.8767 8.05% 8.51%
4/30/90 7.79% 8.30% 98.0309 8.29% 8.87% 97.9045 8.56% 9.17% 97.8362 7.95% 8.40%
5/31/90 7.75% 8.26% 98.0410 8.03% 8.57% 97.9702 8.28% 8.85% 97.9070 8.00% 8.45%
6/29/90 7.74% 8.25% 98.0435 7.96% 8.49% 97.9879 8.25% 8.82% 97.9146 8.20% 8.67%
7/31/90 7.49% 7.97% 98.1067 7.59% 8.08% 98.0814 7.92% 8.45% 97.9980 7.93% 8.37%
8/31/90 7.39% 7.86% 98.1320 7.70% 8.20% 98.0536 8.02% 8.56% 97.9727 7.95% 8.40%
9/28/90 7.14% 7.58% 98.1952 7.92% 8.45% 97.9980 8.19% 8.75% 97.9298 8.00% 8.45%
10/31/90 7.11% 7.55% 98.2028 7.66% 8.16% 98.0637 7.96% 8.49% 97.9879 7.75% 8.18%
11/30/90 7.02% 7.45% 98.2255 7.90% 8.43% 98.0031 8.30% 8.88% 97.9019 7.55% 7.96%
12/31/90 6.44% 6.80% 98.3721 7.17% 7.61% 98.1876 7.50% 7.98% 98.1042 6.75% 7.08%
1/31/91 6.12% 6.45% 98.4530 6.71% 7.10% 98.3039 6.97% 7.39% 98.2381 7.25% 7.63%
2/28/91 6.04% 6.37% 98.4732 6.54% 6.91% 98.3468 6.75% 7.15% 98.2938 6.85% 7.19%
3/29/91 5.74% 6.04% 98.5491 6.08% 6.41% 98.4631 6.27% 6.62% 98.4151 7.50% 7.90%
4/30/91 5.51% 5.79% 98.6072 5.75% 6.05% 98.5465 5.95% 6.27% 98.4960 5.75% 6.00%
5/31/91 5.53% 5.81% 98.6021 5.85% 6.16% 98.5213 5.95% 6.27% 98.4960 5.80% 6.06%
6/28/91 5.54% 5.82% 98.5996 5.95% 6.27% 98.4960 6.07% 6.40% 98.4656 5.85% 6.11%
7/31/91 5.53% 5.81% 98.6021 5.90% 6.21% 98.5086 5.97% 6.29% 98.4909 5.90% 6.17%
8/30/91 5.33% 5.59% 98.6527 5.55% 5.83% 98.5971 5.70% 5.99% 98.5592 5.40% 5.63%
9/30/91 5.11% 5.35% 98.7083 5.40% 5.67% 98.6350 5.55% 5.83% 98.5971 6.60% 6.92%
10/31/91 4.82% 5.04% 98.7816 5.05% 5.29% 98.7235 5.20% 5.45% 98.6856 5.00% 5.20%
11/29/91 4.35% 4.53% 98.9004 4.84% 5.06% 98.7766 4.95% 5.18% 98.7488 4.82% 5.01%
12/31/91 3.86% 4.01% 99.0243 4.05% 4.21% 98.9763 4.18% 4.35% 98.9434 5.25% 5.47%
1/31/92 3.84% 3.99% 99.0293 4.01% 4.17% 98.9864 4.15% 4.32% 98.9510 5.65% 5.90%
</TABLE>
Appendix A
Page 2
<PAGE>
<TABLE>
Table 2
<CAPTION>
Date T-Bill T-Bill T-Bill Accep- Accep- Accep- CD's CD's CD's Repos Repos
Bank Annual Market tances tances tances Bank Annual Market Bank Annual
Discount Yield Price Bank Annual Market Discount Yield Price Discount Yield
Rate Discount Yield Price Rate Rate
Rate
- -------- ------- ------ ------- ------ ------ ------- ------ ------ ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2/28/92 3.93% 4.09% 99.0066 4.07% 4.24% 98.9712 4.18% 4.35% 98.9434 4.05% 4.19%
3/31/92 4.05% 4.21% 98.9763 4.17% 4.34% 98.9459 4.30% 4.48% 98.9131 4.63% 4.81%
4/30/92 3.70% 3.84% 99.0647 4.00% 4.16% 98.9889 3.85% 4.00% 99.0268 3.75% 3.88%
5/31/92 3.70% 3.84% 99.0647 3.84% 3.99% 99.0293 3.95% 4.11% 99.0015 3.75% 3.88%
6/30/92 3.57% 3.70% 99.0976 3.77% 3.92% 99.0470 3.88% 4.03% 99.0192 3.70% 3.82%
7/31/92 3.18% 3.29% 99.1962 3.33% 3.45% 99.1583 3.38% 3.50% 99.1456 3.38% 3.49%
8/31/92 3.16% 3.27% 99.2012 3.30% 3.42% 99.1658 3.42% 3.54% 99.1355 3.60% 3.72%
9/30/92 2.69% 2.77% 99.3200 3.07% 3.17% 99.2240 3.15% 3.26% 99.2038 4.75% 4.93%
10/31/92 2.96% 3.06% 99.2518 3.33% 3.45% 99.1583 3.42% 3.54% 99.1355 3.05% 3.14%
11/30/92 3.27% 3.39% 99.1734 3.70% 3.84% 99.0647 3.85% 4.00% 99.0268 3.60% 3.72%
12/31/92 3.08% 3.18% 99.2214 3.31% 3.43% 99.1633 3.35% 3.47% 99.1532 3.50% 3.61%
1/31/93 2.90% 3.00% 99.2669 3.09% 3.20% 99.2189 3.12% 3.23% 99.2113 3.05% 3.14%
2/28/93 2.95% 3.05% 99.2543 3.09% 3.20% 99.2189 3.13% 3.24% 99.2088 3.25% 3.35%
3/31/93 2.89% 2.98% 99.2695 3.10% 3.21% 99.2164 3.12% 3.23% 99.2113 4.00% 4.14%
4/30/93 2.91% 3.01% 99.2644 3.04% 3.14% 99.2316 3.08% 3.18% 99.2214 3.00% 3.09%
5/31/93 3.06% 3.16% 99.2265 3.16% 3.27% 99.2012 3.22% 3.33% 99.1861 3.10% 3.19%
6/30/93 3.03% 3.13% 99.2341 3.14% 3.25% 99.2063 3.19% 3.30% 99.1936 3.80% 3.93%
7/31/93 3.03% 3.13% 99.2341 3.11% 3.22% 99.2139 3.15% 3.26% 99.2038 2.95% 3.04%
8/31/93 3.01% 3.11% 99.2391 3.09% 3.20% 99.2189 3.14% 3.25% 99.2063 3.20% 3.30%
9/30/93 2.92% 3.02% 99.2619 3.10% 3.21% 99.2164 3.25% 3.36% 99.1785 3.40% 3.51%
10/31/93 3.03% 3.13% 99.2341 3.25% 3.36% 99.1785 3.30% 3.42% 99.1658 3.00% 3.09%
11/30/93 3.14% 3.25% 99.2063 3.31% 3.43% 99.1633 3.35% 3.47% 99.1532 3.05% 3.14%
12/31/93 3.01% 3.11% 99.2391 3.19% 3.30% 99.1936 3.24% 3.35% 99.1810 3.20% 3.30%
1/31/94 2.96% 3.06% 99.2518 3.08% 3.18% 99.2214 3.13% 3.24% 99.2088 3.16% 3.26%
2/28/94 3.36% 3.48% 99.1507 3.55% 3.68% 99.1026 3.65% 3.79% 99.0774 3.50% 3.61%
3/31/94 3.48% 3.61% 99.1203 3.80% 3.95% 99.0394 3.83% 3.98% 99.0319 3.63% 3.75%
4/29/94 3.87% 4.02% 99.0218 4.15% 4.32% 98.9510 4.20% 4.37% 98.9383 3.55% 3.67%
5/31/94 4.16% 4.33% 98.9484 4.45% 4.64% 98.8751 4.52% 4.72% 98.8574 4.50% 4.67%
6/30/94 4.15% 4.32% 98.9510 4.69% 4.90% 98.8145 4.73% 4.94% 98.8044 5.25% 5.47%
7/29/94 4.27% 4.45% 98.9206 4.58% 4.78% 98.8423 4.67% 4.88% 98.8195 4.23% 4.38%
8/31/94 4.56% 4.76% 98.8473 4.82% 5.04% 98.7816 4.89% 5.12% 98.7639 4.78% 4.97%
9/30/94 4.67% 4.88% 98.8195 5.30% 5.56% 98.6603 5.41% 5.68% 98.6325 5.00% 5.20%
10/31/94 5.03% 5.27% 98.7285 5.45% 5.72% 98.6224 5.54% 5.82% 98.5996 4.71% 4.89%
11/30/94 5.56% 5.84% 98.5946 6.02% 6.34% 98.4783 6.12% 6.45% 98.4530 5.60% 5.84%
12/30/94 5.53% 5.81% 98.6021 6.25% 6.60% 98.4201 6.39% 6.75% 98.3848 5.78% 6.04%
1/31/95 5.83% 6.14% 98.5263 6.10% 6.43% 98.4581 6.23% 6.57% 98.4252 5.88% 6.14%
2/28/95 5.76% 6.06% 98.5440 6.03% 6.35% 98.4758 6.11% 6.44% 98.4555 6.23% 6.52%
3/31/95 5.70% 5.99% 98.5592 6.07% 6.40% 98.4656 6.19% 6.53% 98.4353 6.40% 6.70%
4/30/95 5.69% 5.98% 98.5617 6.01% 6.33% 98.4808 6.10% 6.43% 98.4581 6.04% 6.32%
5/31/95 5.63% 5.92% 98.5769 5.86% 6.17% 98.5187 5.96% 6.28% 98.4934 6.18% 6.46%
6/30/95 5.44% 5.71% 98.6249 5.80% 6.10% 98.5339 5.96% 6.28% 98.4934 6.33% 6.63%
7/31/95 5.42% 5.69% 98.6299 5.65% 5.94% 98.5718 5.76% 6.06% 98.5440 5.90% 6.17%
8/31/95 5.29% 5.55% 98.6628 5.68% 5.97% 98.5642 5.75% 6.05% 98.5465 5.88% 6.14%
9/30/95 5.24% 5.49% 98.6754 5.73% 6.03% 98.5516 5.82% 6.12% 98.5288 6.38% 6.68%
10/31/95 5.32% 5.58% 98.6552 5.67% 5.96% 98.5668 5.78% 6.08% 98.5389 5.99% 6.26%
11/30/95 5.32% 5.58% 98.6552 5.59% 5.87% 98.5870 5.71% 6.00% 98.5566 6.00% 6.27%
12/31/95 4.96% 5.19% 98.7462 5.45% 5.72% 98.6224 5.48% 5.75% 98.6148 5.93% 6.19%
1/31/96 4.91% 5.14% 98.7589 5.14% 5.39% 98.7007 5.24% 5.49% 98.6754 5.93% 6.20%
2/29/96 4.89% 5.12% 98.7639 5.11% 5.35% 98.7083 5.20% 5.45% 98.6856 5.25% 5.46%
3/31/96 5.00% 5.23% 98.7361 5.29% 5.55% 98.6628 5.36% 5.62% 98.6451 5.03% 5.23%
4/30/96 5.01% 5.24% 98.7336 5.28% 5.54% 98.6653 5.34% 5.60% 98.6502 5.40% 5.62%
5/31/96 5.04% 5.28% 98.7260 5.32% 5.58% 98.6552 5.37% 5.63% 98.6426 5.33% 5.55%
6/30/96 5.04% 5.28% 98.7260 5.40% 5.67% 98.6350 5.48% 5.75% 98.6148 5.38% 5.60%
7/31/96 5.18% 5.43% 98.6906 5.45% 5.72% 98.6224 5.55% 5.83% 98.5971 5.88% 6.14%
8/31/96 5.15% 5.40% 98.6982 5.34% 5.60% 98.6502 5.45% 5.72% 98.6224 5.18% 5.39%
9/30/96 4.91% 5.14% 98.7589 5.31% 5.57% 98.6578 5.51% 5.79% 98.6072 5.84% 6.10%
10/31/96 5.01% 5.24% 98.7336 5.31% 5.57% 98.6578 5.39% 5.66% 98.6375 6.08% 6.35%
11/30/96 5.00% 5.23% 98.7361 5.30% 5.56% 98.6603 5.40% 5.67% 98.6350 5.88% 6.14%
12/31/96 5.07% 5.31% 98.7184 5.32% 5.58% 98.6552 5.41% 5.68% 98.6325 6.25% 6.54%
1/31/97 5.02% 5.26% 98.7311 5.32% 5.58% 98.6552 5.42% 5.69% 98.6299 5.44% 5.67%
2/28/97 5.09% 5.33% 98.7134 5.30% 5.56% 98.6603 5.41% 5.68% 98.6325 5.35% 5.57%
</TABLE>
Appendix A
Page 3
<PAGE>
<TABLE>
Table 2
<CAPTION>
Date T-Bill T-Bill T-Bill Accep- Accep- Accep- CD's CD's CD's Repos Repos
Bank Annual Market tances tances tances Bank Annual Market Bank Annual
Discount Yield Price Bank Annual Market Discount Yield Price Discount Yield
Rate Discount Yield Price Rate Rate
Rate
- -------- ------- ------ ------- ------ ------ ------- ------ ------ ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3/31/97 5.21% 5.46% 98.6830 5.63% 5.92% 98.5769 5.69% 5.98% 98.5617 6.20% 6.49%
4/30/97 5.14% 5.39% 98.7007 5.65% 5.94% 98.5718 5.72% 6.02% 98.5541 4.98% 5.18%
5/31/97 4.82% 5.04% 98.7816 5.61% 5.90% 98.5819 5.69% 5.98% 98.5617 5.48% 5.71%
6/30/97 5.06% 5.30% 98.7209 5.62% 5.91% 98.5794 5.66% 5.95% 98.5693 5.95% 6.22%
7/31/97 5.11% 5.35% 98.7083 5.49% 5.77% 98.6123 5.57% 5.85% 98.5920 5.95% 6.22%
8/31/97 5.10% 5.34% 98.7108 5.53% 5.81% 98.6021 5.59% 5.87% 98.5870 5.45% 5.68%
9/30/97 5.18% 5.43% 98.6906 5.56% 5.84% 98.5946 5.67% 5.96% 98.5668 6.33% 6.63%
10/31/97 5.07% 5.31% 98.7184 5.58% 5.86% 98.5895 5.58% 5.86% 98.5895 5.60% 5.84%
11/30/97 5.08% 5.32% 98.7159 5.74% 6.04% 98.5491 5.70% 5.99% 98.5592 5.68% 5.93%
12/31/97 5.22% 5.47% 98.6805 5.55% 5.83% 98.5971 5.65% 5.94% 98.5718 6.18% 6.47%
1/31/98 5.06% 5.30% 98.7209 5.48% 5.75% 98.6148 5.52% 5.80% 98.6047 5.63% 5.87%
2/28/98 5.18% 5.43% 98.6906 5.51% 5.79% 98.6072 5.58% 5.86% 98.5895 5.43% 5.66%
3/31/98 5.02% 5.26% 98.7311 5.50% 5.78% 98.6097 5.60% 5.89% 98.5844 5.98% 6.25%
4/30/98 4.87% 5.09% 98.7690 5.48% 5.75% 98.6148 5.60% 5.89% 98.5844 5.43% 5.66%
5/31/98 4.89% 5.12% 98.7639 5.50% 5.78% 98.6097 5.59% 5.87% 98.5870 5.85% 6.11%
6/30/98 4.97% 5.20% 98.7437 5.53% 5.81% 98.6021 5.61% 5.90% 98.5819 5.68% 5.93%
7/31/98 4.97% 5.20% 98.7437 5.50% 5.78% 98.6097 5.59% 5.87% 98.5870 5.68% 5.93%
8/31/98 4.77% 4.99% 98.7943 5.46% 5.73% 98.6198 5.53% 5.81% 98.6021 6.15% 6.43%
9/30/98 4.26% 4.44% 98.9232 5.21% 5.46% 98.6830 5.25% 5.50% 98.6729 5.13% 5.34%
10/31/98 4.23% 4.41% 98.9308 5.10% 5.34% 98.7108 5.17% 5.42% 98.6931 5.13% 5.34%
11/30/98 4.42% 4.61% 98.8827 5.14% 5.39% 98.7007 5.26% 5.52% 98.6704 5.03% 5.23%
12/31/98 4.37% 4.56% 98.8954 5.15% 5.40% 98.6982 4.97% 5.20% 98.7437 4.98% 5.18%
1/31/99 4.37% 4.56% 98.8954 4.78% 5.00% 98.7917 4.87% 5.09% 98.7690 4.68% 4.86%
</TABLE>
Appendix A
Page 4
<PAGE>
Appendix B
<PAGE>
DOW JONES INDUSTRIAL AVERAGE
Dow Jones Dow Jones Dow Jones
Industrial Industrial Industrial
Date Average Date Average Date Average
- --------------------------- -------------------------- -----------------------
Jan 2, 1990 2,810.20 Mar 28, 1990 2,743.70 Jun 25, 1990 2,845.05
Jan 3, 1990 2,809.72 Mar 29, 1990 2,727.70 Jun 26, 1990 2,842.33
Jan 4, 1990 2,796.08 Mar 30, 1990 2,707.20 Jun 27, 1990 2,862.13
Jan 5, 1990 2,773.26 Apr 2, 1990 2,700.46 Jun 28, 1990 2,878.71
Jan 8, 1990 2,794.38 Apr 3, 1990 2,736.72 Jun 29, 1990 2,880.69
Jan 9, 1990 2,766.00 Apr 4, 1990 2,719.38 Jul 2, 1990 2,899.26
Jan 10, 1990 2,750.64 Apr 5, 1990 2,721.18 Jul 3, 1990 2,911.63
Jan 11, 1990 2,760.66 Apr 6, 1990 2,717.12 Jul 5, 1990 2,879.21
Jan 12, 1990 2,689.20 Apr 9, 1990 2,722.08 Jul 6, 1990 2,904.95
Jan 15, 1990 2,669.36 Apr 10, 1990 2,731.08 Jul 9, 1990 2,914.11
Jan 16, 1990 2,692.62 Apr 11, 1990 2,729.74 Jul 10, 1990 2,890.84
Jan 17, 1990 2,659.14 Apr 12, 1990 2,751.80 Jul 11, 1990 2,932.67
Jan 18, 1990 2,666.38 Apr 16, 1990 2,763.06 Jul 12, 1990 2,969.80
Jan 19, 1990 2,677.90 Apr 17, 1990 2,765.78 Jul 13, 1990 2,980.20
Jan 22, 1990 2,600.46 Apr 18, 1990 2,732.88 Jul 16, 1990 2,999.75
Jan 23, 1990 2,615.32 Apr 19, 1990 2,711.94 Jul 17, 1990 2,999.75
Jan 24, 1990 2,604.50 Apr 20, 1990 2,695.94 Jul 18, 1990 2,981.68
Jan 25, 1990 2,561.00 Apr 24, 1990 2,654.50 Jul 19, 1990 2,993.81
Jan 26, 1990 2,559.24 Apr 25, 1990 2,666.44 Jul 20, 1990 2,961.14
Jan 29, 1990 2,553.38 Apr 26, 1990 2,676.58 Jul 23, 1990 2,904.70
Jan 30, 1990 2,543.24 Apr 27, 1990 2,645.06 Jul 24, 1990 2,922.52
Jan 31, 1990 2,590.54 Apr 30, 1990 2,656.80 Jul 25, 1990 2,930.94
Feb 1, 1990 2,586.26 May 1, 1990 2,668.92 Jul 26, 1990 2,920.79
Feb 2, 1990 2,602.70 May 2, 1990 2,689.64 Jul 27, 1990 2,898.51
Feb 5, 1990 2,622.52 May 3, 1990 2,696.18 Jul 30, 1990 2,917.33
Feb 6, 1990 2,606.30 May 4, 1990 2,710.36 Jul 31, 1990 2,905.20
Feb 7, 1990 2,640.10 May 7, 1990 2,721.62 Aug 1, 1990 2,899.25
Feb 8, 1990 2,644.36 May 8, 1990 2,733.56 Aug 2, 1990 2,864.60
Feb 9, 1990 2,648.20 May 9, 1990 2,732.88 Aug 3, 1990 2,809.65
Feb 12, 1990 2,619.14 May 10, 1990 2,738.52 Aug 6, 1990 2,716.34
Feb 13, 1990 2,624.10 May 11, 1990 2,801.58 Aug 7, 1990 2,710.64
Feb 14, 1990 2,624.32 May 14, 1990 2,821.54 Aug 8, 1990 2,734.90
Feb 15, 1990 2,649.54 May 15, 1990 2,822.46 Aug 9, 1990 2,758.91
Feb 16, 1990 2,635.58 May 16, 1990 2,819.68 Aug 10, 1990 2,716.58
Feb 20, 1990 2,596.84 May 17, 1990 2,831.72 Aug 13, 1990 2,746.78
Feb 21, 1990 2,583.56 May 18, 1990 2,819.92 Aug 14, 1990 2,747.77
Feb 22, 1990 2,574.78 May 21, 1990 2,844.68 Aug 15, 1990 2,748.27
Feb 23, 1990 2,564.18 May 22, 1990 2,852.24 Aug 16, 1990 2,681.44
Feb 26, 1990 2,602.48 May 23, 1990 2,856.26 Aug 17, 1990 2,644.80
Feb 27, 1990 2,617.12 May 24, 1990 2,855.56 Aug 20, 1990 2,656.44
Feb 28, 1990 2,627.26 May 25, 1990 2,820.92 Aug 21, 1990 2,603.96
Mar 1, 1990 2,635.58 May 29, 1990 2,870.50 Aug 22, 1990 2,560.15
Mar 2, 1990 2,660.36 May 30, 1990 2,878.56 Aug 23, 1990 2,483.42
Mar 5, 1990 2,649.54 May 31, 1990 2,876.66 Aug 24, 1990 2,532.92
Mar 6, 1990 2,676.80 Jun 1, 1990 2,900.98 Aug 27, 1990 2,611.63
Mar 7, 1990 2,669.60 Jun 4, 1990 2,935.19 Aug 28, 1990 2,614.85
Mar 8, 1990 2,696.18 Jun 5, 1990 2,925.00 Aug 29, 1990 2,632.43
Mar 9, 1990 2,683.34 Jun 6, 1990 2,911.65 Aug 30, 1990 2,593.32
Mar 12, 1990 2,686.72 Jun 7, 1990 2,897.33 Aug 31, 1990 2,614.36
Mar 13, 1990 2,674.54 Jun 8, 1990 2,862.38 Sep 4, 1990 2,613.37
Mar 14, 1990 2,687.84 Jun 11, 1990 2,892.57 Sep 5, 1990 2,628.22
Mar 15, 1990 2,695.72 Jun 12, 1990 2,933.42 Sep 6, 1990 2,596.29
Mar 16, 1990 2,741.22 Jun 13, 1990 2,929.95 Sep 7, 1990 2,619.55
Mar 19, 1990 2,755.64 Jun 14, 1990 2,928.22 Sep 10, 1990 2,615.59
Mar 20, 1990 2,738.74 Jun 15, 1990 2,935.89 Sep 11, 1990 2,612.62
Mar 21, 1990 2,727.92 Jun 18, 1990 2,882.18 Sep 12, 1990 2,625.74
Mar 22, 1990 2,695.72 Jun 19, 1990 2,893.56 Sep 13, 1990 2,582.67
Mar 23, 1990 2,704.28 Jun 20, 1990 2,895.30 Sep 14, 1990 2,564.11
Mar 26, 1990 2,707.66 Jun 21, 1990 2,901.73 Sep 17, 1990 2,567.33
Mar 27, 1990 2,736.94 Jun 22, 1990 2,857.18 Sep 18, 1990 2,571.29
Appendix B
page 1
<PAGE>
DOW JONES INDUSTRIAL AVERAGE
Dow Jones Dow Jones Dow Jones
Industrial Industrial Industrial
Date Average Date Average Date Average
- -------------------------- -------------------------- ----------------------
Sep 19, 1990 2,557.43 Dec 13, 1990 2,614.36 Mar 13, 1991 2,955.20
Sep 20, 1990 2,518.32 Dec 14, 1990 2,593.81 Mar 14, 1991 2,952.23
Sep 21, 1990 2,512.38 Dec 17, 1990 2,593.32 Mar 15, 1991 2,948.27
Sep 24, 1990 2,452.97 Dec 18, 1990 2,626.73 Mar 18, 1991 2,929.95
Sep 25, 1990 2,485.64 Dec 19, 1990 2,626.73 Mar 19, 1991 2,867.82
Sep 26, 1990 2,459.65 Dec 20, 1990 2,629.46 Mar 20, 1991 2,872.03
Sep 27, 1990 2,427.48 Dec 21, 1990 2,633.66 Mar 21, 1991 2,855.45
Sep 28, 1990 2,452.48 Dec 24, 1990 2,621.29 Mar 22, 1991 2,858.91
Oct 1, 1990 2,515.84 Dec 26, 1990 2,637.13 Mar 25, 1991 2,865.84
Oct 2, 1990 2,505.20 Dec 27, 1990 2,625.50 Mar 26, 1991 2,914.85
Oct 3, 1990 2,489.36 Dec 28, 1990 2,629.21 Mar 27, 1991 2,917.57
Oct 4, 1990 2,516.83 Dec 31, 1990 2,633.66 Mar 28, 1991 2,913.86
Oct 5, 1990 2,510.64 Jan 2, 1991 2,610.64 Apr 1, 1991 2,881.19
Oct 8, 1990 2,523.76 Jan 3, 1991 2,573.51 Apr 2, 1991 2,945.05
Oct 9, 1990 2,445.54 Jan 4, 1991 2,566.09 Apr 3, 1991 2,926.73
Oct 10, 1990 2,407.92 Jan 7, 1991 2,522.77 Apr 4, 1991 2,924.50
Oct 11, 1990 2,365.10 Jan 8, 1991 2,509.41 Apr 5, 1991 2,896.78
Oct 12, 1990 2,398.02 Jan 9, 1991 2,470.30 Apr 8, 1991 2,918.56
Oct 16, 1990 2,381.19 Jan 11, 1991 2,501.49 Apr 10, 1991 2,874.50
Oct 17, 1990 2,387.87 Jan 14, 1991 2,483.91 Apr 11, 1991 2,905.45
Oct 18, 1990 2,452.72 Jan 15, 1991 2,490.59 Apr 12, 1991 2,920.79
Oct 19, 1990 2,520.79 Jan 16, 1991 2,508.91 Apr 15, 1991 2,933.17
Oct 22, 1990 2,516.09 Jan 17, 1991 2,623.51 Apr 16, 1991 2,986.88
Oct 23, 1990 2,494.06 Jan 18, 1991 2,646.78 Apr 17, 1991 3,004.46
Oct 24, 1990 2,504.21 Jan 22, 1991 2,603.22 Apr 18, 1991 2,999.26
Oct 25, 1990 2,484.16 Jan 23, 1991 2,619.06 Apr 19, 1991 2,965.59
Oct 26, 1990 2,436.14 Jan 24, 1991 2,643.07 Apr 22, 1991 2,927.72
Oct 29, 1990 2,430.20 Jan 25, 1991 2,659.41 Apr 23, 1991 2,930.45
Oct 30, 1990 2,448.02 Jan 28, 1991 2,654.46 Apr 24, 1991 2,949.50
Oct 31, 1990 2,442.33 Jan 29, 1991 2,662.62 Apr 25, 1991 2,921.04
Nov 1, 1990 2,454.95 Jan 30, 1991 2,713.12 Apr 26, 1991 2,912.38
Nov 2, 1990 2,490.84 Jan 31, 1991 2,736.39 Apr 29, 1991 2,876.98
Nov 5, 1990 2,502.23 Feb 1, 1991 2,730.69 Apr 30, 1991 2,887.87
Nov 6, 1990 2,485.15 Feb 4, 1991 2,772.28 May 1, 1991 2,930.20
Nov 7, 1990 2,441.09 Feb 5, 1991 2,788.37 May 2, 1991 2,938.61
Nov 8, 1990 2,443.81 Feb 6, 1991 2,830.94 May 3, 1991 2,938.86
Nov 9, 1990 2,488.61 Feb 7, 1991 2,810.64 May 6, 1991 2,941.64
Nov 12, 1990 2,540.35 Feb 8, 1991 2,830.69 May 7, 1991 2,917.49
Nov 13, 1990 2,535.40 Feb 11, 1991 2,902.23 May 8, 1991 2,930.90
Nov 14, 1990 2,559.65 Feb 12, 1991 2,874.75 May 9, 1991 2,971.15
Nov 15, 1990 2,545.05 Feb 13, 1991 2,909.16 May 10, 1991 2,920.17
Nov 16, 1990 2,550.25 Feb 14, 1991 2,877.23 May 13, 1991 2,924.42
Nov 19, 1990 2,565.35 Feb 15, 1991 2,934.65 May 14, 1991 2,886.85
Nov 20, 1990 2,530.20 Feb 19, 1991 2,932.18 May 15, 1991 2,865.38
Nov 21, 1990 2,539.36 Feb 20, 1991 2,899.01 May 16, 1991 2,894.01
Nov 23, 1990 2,527.23 Feb 21, 1991 2,891.83 May 17, 1991 2,886.63
Nov 26, 1990 2,533.17 Feb 22, 1991 2,889.36 May 20, 1991 2,892.22
Nov 27, 1990 2,543.81 Feb 25, 1991 2,887.87 May 21, 1991 2,906.08
Nov 28, 1990 2,535.15 Feb 26, 1991 2,864.60 May 22, 1991 2,910.33
Nov 29, 1990 2,518.81 Feb 27, 1991 2,889.11 May 23, 1991 2,900.04
Nov 30, 1990 2,559.65 Feb 28, 1991 2,882.18 May 24, 1991 2,913.91
Dec 3, 1990 2,565.59 Mar 1, 1991 2,909.90 May 28, 1991 2,958.86
Dec 4, 1990 2,579.70 Mar 4, 1991 2,914.11 May 29, 1991 2,969.59
Dec 5, 1990 2,610.40 Mar 5, 1991 2,972.52 May 30, 1991 3,000.45
Dec 6, 1990 2,602.48 Mar 6, 1991 2,973.27 May 31, 1991 3,027.50
Dec 7, 1990 2,590.10 Mar 7, 1991 2,963.37 Jun 3, 1991 3,035.33
Dec 10, 1990 2,596.78 Mar 8, 1991 2,955.20 Jun 4, 1991 3,027.95
Dec 11, 1990 2,586.14 Mar 11, 1991 2,939.36 Jun 5, 1991 3,005.37
Dec 12, 1990 2,622.28 Mar 12, 1991 2,922.52 Jun 6, 1991 2,994.86
Appendix B
page 2
<PAGE>
DOW JONES INDUSTRIAL AVERAGE
Dow Jones Dow Jones Dow Jones
Industrial Industrial Industrial
Date Average Date Average Date Average
- -------------------------- -------------------------- ----------------------
Jun 7, 1991 2,976.74 Sep 3, 1991 3,017.67 Nov 26, 1991 2,916.14
Jun 10, 1991 2,975.40 Sep 4, 1991 3,008.50 Nov 27, 1991 2,900.04
Jun 11, 1991 2,985.91 Sep 5, 1991 3,008.50 Nov 29, 1991 2,894.68
Jun 12, 1991 2,961.99 Sep 6, 1991 3,011.63 Dec 2, 1991 2,935.38
Jun 13, 1991 2,965.12 Sep 9, 1991 3,007.16 Dec 3, 1991 2,929.56
Jun 14, 1991 3,000.45 Sep 10, 1991 2,982.56 Dec 4, 1991 2,911.67
Jun 17, 1991 2,993.96 Sep 11, 1991 2,987.03 Dec 5, 1991 2,889.09
Jun 18, 1991 2,986.81 Sep 12, 1991 3,007.83 Dec 6, 1991 2,886.40
Jun 19, 1991 2,955.50 Sep 13, 1991 2,985.69 Dec 9, 1991 2,871.65
Jun 20, 1991 2,953.94 Sep 16, 1991 3,015.21 Dec 10, 1991 2,863.82
Jun 21, 1991 2,965.56 Sep 17, 1991 3,013.19 Dec 11, 1991 2,865.38
Jun 24, 1991 2,913.01 Sep 18, 1991 3,017.89 Dec 12, 1991 2,895.13
Jun 25, 1991 2,910.11 Sep 19, 1991 3,024.37 Dec 13, 1991 2,914.36
Jun 26, 1991 2,913.01 Sep 20, 1991 3,019.23 Dec 16, 1991 2,919.05
Jun 27, 1991 2,934.93 Sep 23, 1991 3,010.51 Dec 17, 1991 2,902.28
Jun 28, 1991 2,906.75 Sep 24, 1991 3,029.07 Dec 18, 1991 2,908.09
Jul 1, 1991 2,958.41 Sep 25, 1991 3,021.02 Dec 19, 1991 2,914.36
Jul 2, 1991 2,972.72 Sep 26, 1991 3,017.22 Dec 20, 1991 2,934.48
Jul 3, 1991 2,934.71 Sep 27, 1991 3,006.04 Dec 23, 1991 3,022.58
Jul 5, 1991 2,932.47 Sep 30, 1991 3,016.77 Dec 24, 1991 3,050.98
Jul 8, 1991 2,961.99 Oct 1, 1991 3,018.34 Dec 26, 1991 3,082.96
Jul 9, 1991 2,947.23 Oct 2, 1991 3,012.52 Dec 27, 1991 3,101.52
Jul 10, 1991 2,944.77 Oct 3, 1991 2,984.79 Dec 30, 1991 3,163.91
Jul 11, 1991 2,959.75 Oct 4, 1991 2,961.76 Dec 31, 1991 3,168.83
Jul 12, 1991 2,980.77 Oct 7, 1991 2,942.75 Jan 2, 1992 3,172.41
Jul 15, 1991 2,990.61 Oct 8, 1991 2,963.77 Jan 3, 1992 3,201.48
Jul 16, 1991 2,983.90 Oct 9, 1991 2,946.33 Jan 6, 1992 3,200.13
Jul 17, 1991 2,978.76 Oct 10, 1991 2,976.52 Jan 7, 1992 3,204.83
Jul 18, 1991 3,016.32 Oct 11, 1991 2,983.68 Jan 8, 1992 3,203.94
Jul 19, 1991 3,016.32 Oct 14, 1991 3,019.45 Jan 9, 1992 3,209.53
Jul 22, 1991 3,012.97 Oct 15, 1991 3,041.37 Jan 10, 1992 3,199.46
Jul 23, 1991 2,983.23 Oct 16, 1991 3,061.72 Jan 13, 1992 3,185.60
Jul 24, 1991 2,966.23 Oct 17, 1991 3,053.00 Jan 14, 1992 3,246.20
Jul 25, 1991 2,980.10 Oct 18, 1991 3,077.15 Jan 15, 1992 3,258.50
Jul 26, 1991 2,972.50 Oct 21, 1991 3,060.38 Jan 16, 1992 3,249.55
Jul 29, 1991 2,985.24 Oct 22, 1991 3,039.80 Jan 17, 1992 3,264.98
Jul 30, 1991 3,016.32 Oct 23, 1991 3,040.92 Jan 20, 1992 3,254.03
Jul 31, 1991 3,024.82 Oct 24, 1991 3,016.32 Jan 21, 1992 3,223.39
Aug 1, 1991 3,017.67 Oct 25, 1991 3,004.92 Jan 22, 1992 3,255.81
Aug 2, 1991 3,006.26 Oct 28, 1991 3,045.62 Jan 23, 1992 3,226.74
Aug 5, 1991 2,989.04 Oct 29, 1991 3,061.94 Jan 27, 1992 3,240.61
Aug 6, 1991 3,027.28 Oct 30, 1991 3,071.78 Jan 28, 1992 3,272.14
Aug 7, 1991 3,026.61 Oct 31, 1991 3,069.10 Jan 29, 1992 3,224.96
Aug 8, 1991 3,013.86 Nov 1, 1991 3,056.35 Jan 30, 1992 3,244.86
Aug 9, 1991 2,996.20 Nov 4, 1991 3,045.62 Jan 31, 1992 3,223.39
Aug 12, 1991 3,001.34 Nov 5, 1991 3,031.31 Feb 3, 1992 3,234.12
Aug 13, 1991 3,008.72 Nov 6, 1991 3,038.46 Feb 4, 1992 3,272.81
Aug 14, 1991 3,005.37 Nov 7, 1991 3,054.11 Feb 5, 1992 3,257.60
Aug 15, 1991 2,998.43 Nov 8, 1991 3,045.62 Feb 6, 1992 3,255.59
Aug 16, 1991 2,968.02 Nov 11, 1991 3,042.26 Feb 7, 1992 3,225.40
Aug 19, 1991 2,898.03 Nov 12, 1991 3,054.11 Feb 10, 1992 3,245.08
Aug 20, 1991 2,913.69 Nov 13, 1991 3,065.30 Feb 11, 1992 3,251.57
Aug 21, 1991 3,001.79 Nov 14, 1991 3,063.51 Feb 12, 1992 3,276.83
Aug 22, 1991 3,007.38 Nov 15, 1991 2,943.20 Feb 13, 1992 3,246.65
Aug 23, 1991 3,040.25 Nov 18, 1991 2,972.72 Feb 14, 1992 3,245.97
Aug 26, 1991 3,039.36 Nov 19, 1991 2,931.57 Feb 18, 1992 3,224.73
Aug 27, 1991 3,026.16 Nov 20, 1991 2,930.01 Feb 19, 1992 3,230.32
Aug 28, 1991 3,055.23 Nov 21, 1991 2,932.69 Feb 20, 1992 3,280.64
Aug 29, 1991 3,049.64 Nov 22, 1991 2,902.73 Feb 21, 1992 3,280.19
Aug 30, 1991 3,043.60 Nov 25, 1991 2,902.06 Feb 24, 1992 3,282.42
Appendix B
page 3
<PAGE>
DOW JONES INDUSTRIAL AVERAGE
Dow Jones Dow Jones Dow Jones
Industrial Industrial Industrial
Date Average Date Average Date Average
- -------------------------- -------------------------- ----------------------
Feb 25, 1992 3,257.83 May 20, 1992 3,393.84 Aug 14, 1992 3,328.94
Feb 26, 1992 3,283.32 May 21, 1992 3,378.71 Aug 17, 1992 3,324.89
Feb 27, 1992 3,269.45 May 22, 1992 3,386.77 Aug 18, 1992 3,329.48
Feb 28, 1992 3,267.67 May 26, 1992 3,364.21 Aug 19, 1992 3,307.06
Mar 2, 1992 3,275.27 May 27, 1992 3,370.44 Aug 20, 1992 3,304.89
Mar 3, 1992 3,290.25 May 28, 1992 3,398.43 Aug 21, 1992 3,254.10
Mar 4, 1992 3,268.56 May 29, 1992 3,396.88 Aug 24, 1992 3,228.17
Mar 5, 1992 3,241.50 Jun 1, 1992 3,413.21 Aug 25, 1992 3,232.22
Mar 6, 1992 3,221.60 Jun 2, 1992 3,396.10 Aug 26, 1992 3,246.81
Mar 9, 1992 3,215.12 Jun 3, 1992 3,406.99 Aug 27, 1992 3,254.64
Mar 10, 1992 3,230.99 Jun 4, 1992 3,399.73 Aug 28, 1992 3,267.61
Mar 11, 1992 3,208.63 Jun 5, 1992 3,398.69 Aug 31, 1992 3,257.35
Mar 12, 1992 3,208.63 Jun 8, 1992 3,404.14 Sep 1, 1992 3,266.26
Mar 13, 1992 3,235.91 Jun 9, 1992 3,369.92 Sep 2, 1992 3,290.31
Mar 16, 1992 3,236.36 Jun 10, 1992 3,343.22 Sep 3, 1992 3,292.20
Mar 17, 1992 3,256.04 Jun 11, 1992 3,351.51 Sep 4, 1992 3,281.93
Mar 18, 1992 3,254.25 Jun 12, 1992 3,354.36 Sep 8, 1992 3,260.59
Mar 19, 1992 3,261.40 Jun 15, 1992 3,354.90 Sep 9, 1992 3,271.39
Mar 20, 1992 3,276.39 Jun 16, 1992 3,329.49 Sep 10, 1992 3,305.16
Mar 23, 1992 3,272.14 Jun 17, 1992 3,287.76 Sep 11, 1992 3,305.70
Mar 24, 1992 3,260.96 Jun 18, 1992 3,274.12 Sep 14, 1992 3,376.22
Mar 25, 1992 3,259.39 Jun 19, 1992 3,285.35 Sep 15, 1992 3,327.32
Mar 26, 1992 3,267.67 Jun 22, 1992 3,280.80 Sep 16, 1992 3,319.21
Mar 27, 1992 3,231.44 Jun 23, 1992 3,285.62 Sep 17, 1992 3,315.70
Mar 30, 1992 3,235.24 Jun 24, 1992 3,290.70 Sep 18, 1992 3,327.05
Mar 31, 1992 3,235.47 Jun 25, 1992 3,284.01 Sep 21, 1992 3,320.83
Apr 1, 1992 3,249.33 Jun 26, 1992 3,282.41 Sep 22, 1992 3,280.85
Apr 2, 1992 3,234.12 Jun 29, 1992 3,319.86 Sep 23, 1992 3,278.69
Apr 3, 1992 3,249.11 Jun 30, 1992 3,318.52 Sep 24, 1992 3,287.87
Apr 6, 1992 3,275.49 Jul 1, 1992 3,354.10 Sep 25, 1992 3,250.32
Apr 7, 1992 3,213.55 Jul 2, 1992 3,330.29 Sep 28, 1992 3,276.26
Apr 8, 1992 3,181.35 Jul 6, 1992 3,339.21 Sep 29, 1992 3,266.80
Apr 9, 1992 3,224.96 Jul 7, 1992 3,295.17 Sep 30, 1992 3,271.66
Apr 10, 1992 3,255.37 Jul 8, 1992 3,293.28 Oct 1, 1992 3,254.37
Apr 13, 1992 3,260.06 Jul 9, 1992 3,324.08 Oct 2, 1992 3,200.61
Apr 14, 1992 3,306.13 Jul 10, 1992 3,330.56 Oct 5, 1992 3,179.00
Apr 15, 1992 3,353.76 Jul 13, 1992 3,337.31 Oct 6, 1992 3,178.19
Apr 16, 1992 3,366.50 Jul 14, 1992 3,358.39 Oct 7, 1992 3,152.25
Apr 20, 1992 3,336.31 Jul 15, 1992 3,345.42 Oct 8, 1992 3,176.03
Apr 21, 1992 3,343.25 Jul 16, 1992 3,361.63 Oct 9, 1992 3,136.58
Apr 22, 1992 3,338.77 Jul 17, 1992 3,331.64 Oct 12, 1992 3,174.41
Apr 23, 1992 3,348.61 Jul 20, 1992 3,303.00 Oct 13, 1992 3,201.42
Apr 24, 1992 3,324.46 Jul 21, 1992 3,308.41 Oct 14, 1992 3,195.48
Apr 27, 1992 3,304.56 Jul 22, 1992 3,277.61 Oct 15, 1992 3,174.68
Apr 28, 1992 3,307.92 Jul 23, 1992 3,290.04 Oct 16, 1992 3,174.41
Apr 29, 1992 3,333.18 Jul 24, 1992 3,285.71 Oct 19, 1992 3,188.45
Apr 30, 1992 3,359.12 Jul 27, 1992 3,282.20 Oct 20, 1992 3,186.02
May 1, 1992 3,336.09 Jul 28, 1992 3,334.07 Oct 21, 1992 3,187.10
May 4, 1992 3,378.13 Jul 29, 1992 3,379.19 Oct 22, 1992 3,200.88
May 5, 1992 3,359.35 Jul 30, 1992 3,391.89 Oct 23, 1992 3,207.64
May 6, 1992 3,369.41 Jul 31, 1992 3,393.78 Oct 26, 1992 3,244.11
May 7, 1992 3,363.37 Aug 3, 1992 3,395.40 Oct 27, 1992 3,235.73
May 8, 1992 3,369.41 Aug 4, 1992 3,384.32 Oct 28, 1992 3,251.40
May 11, 1992 3,397.58 Aug 5, 1992 3,365.14 Oct 29, 1992 3,246.27
May 12, 1992 3,385.12 Aug 6, 1992 3,340.56 Oct 30, 1992 3,226.28
May 13, 1992 3,391.98 Aug 7, 1992 3,332.18 Nov 2, 1992 3,262.21
May 14, 1992 3,368.88 Aug 10, 1992 3,337.58 Nov 3, 1992 3,252.48
May 15, 1992 3,353.09 Aug 11, 1992 3,331.10 Nov 4, 1992 3,223.04
May 18, 1992 3,376.03 Aug 12, 1992 3,320.83 Nov 5, 1992 3,243.84
May 19, 1992 3,397.99 Aug 13, 1992 3,313.27 Nov 6, 1992 3,240.06
Appendix B
page 4
<PAGE>
DOW JONES INDUSTRIAL AVERAGE
Dow Jones Dow Jones Dow Jones
Industrial Industrial Industrial
Date Average Date Average Date Average
- -------------------------- -------------------------- ----------------------
Nov 9, 1992 3,240.87 Feb 4, 1993 3,416.74 May 3, 1993 3,446.46
Nov 10, 1992 3,225.47 Feb 5, 1993 3,442.14 May 4, 1993 3,446.19
Nov 11, 1992 3,240.33 Feb 8, 1993 3,437.54 May 5, 1993 3,449.10
Nov 12, 1992 3,239.79 Feb 9, 1993 3,414.58 May 6, 1993 3,441.90
Nov 13, 1992 3,233.03 Feb 10, 1993 3,412.42 May 7, 1993 3,437.19
Nov 16, 1992 3,205.74 Feb 11, 1993 3,422.69 May 10, 1993 3,443.28
Nov 17, 1992 3,193.32 Feb 12, 1993 3,392.43 May 11, 1993 3,468.75
Nov 18, 1992 3,207.37 Feb 16, 1993 3,309.49 May 12, 1993 3,482.31
Nov 19, 1992 3,209.53 Feb 17, 1993 3,312.19 May 13, 1993 3,447.99
Nov 20, 1992 3,227.36 Feb 18, 1993 3,302.19 May 14, 1993 3,443.01
Nov 23, 1992 3,223.04 Feb 19, 1993 3,322.18 May 17, 1993 3,449.93
Nov 24, 1992 3,248.70 Feb 22, 1993 3,342.99 May 18, 1993 3,444.39
Nov 25, 1992 3,266.26 Feb 23, 1993 3,323.27 May 19, 1993 3,500.03
Nov 27, 1992 3,282.20 Feb 24, 1993 3,356.50 May 20, 1993 3,523.28
Nov 30, 1992 3,305.16 Feb 25, 1993 3,365.14 May 21, 1993 3,492.83
Dec 1, 1992 3,294.36 Feb 26, 1993 3,370.81 May 24, 1993 3,507.78
Dec 2, 1992 3,286.25 Mar 1, 1993 3,355.41 May 25, 1993 3,516.63
Dec 3, 1992 3,276.53 Mar 2, 1993 3,400.53 May 26, 1993 3,540.16
Dec 4, 1992 3,288.68 Mar 3, 1993 3,404.04 May 27, 1993 3,554.83
Dec 7, 1992 3,307.33 Mar 4, 1993 3,398.91 May 28, 1993 3,527.43
Dec 8, 1992 3,322.18 Mar 5, 1993 3,404.58 Jun 1, 1993 3,552.34
Dec 9, 1992 3,323.81 Mar 8, 1993 3,469.42 Jun 2, 1993 3,553.45
Dec 10, 1992 3,312.19 Mar 9, 1993 3,472.12 Jun 3, 1993 3,544.87
Dec 11, 1992 3,304.08 Mar 10, 1993 3,478.34 Jun 4, 1993 3,545.14
Dec 14, 1992 3,292.20 Mar 11, 1993 3,457.00 Jun 7, 1993 3,532.13
Dec 15, 1992 3,284.36 Mar 12, 1993 3,427.82 Jun 8, 1993 3,510.54
Dec 16, 1992 3,255.18 Mar 15, 1993 3,442.41 Jun 9, 1993 3,511.93
Dec 17, 1992 3,269.23 Mar 16, 1993 3,442.95 Jun 10, 1993 3,491.72
Dec 18, 1992 3,313.27 Mar 17, 1993 3,426.74 Jun 11, 1993 3,505.01
Dec 21, 1992 3,312.46 Mar 18, 1993 3,465.64 Jun 14, 1993 3,514.69
Dec 22, 1992 3,321.10 Mar 19, 1993 3,471.58 Jun 15, 1993 3,492.00
Dec 23, 1992 3,313.54 Mar 22, 1993 3,463.48 Jun 16, 1993 3,511.65
Dec 24, 1992 3,326.24 Mar 23, 1993 3,461.86 Jun 17, 1993 3,521.89
Dec 28, 1992 3,333.26 Mar 24, 1993 3,445.38 Jun 18, 1993 3,494.77
Dec 29, 1992 3,310.84 Mar 25, 1993 3,461.32 Jun 21, 1993 3,510.82
Dec 30, 1992 3,321.10 Mar 26, 1993 3,439.98 Jun 22, 1993 3,497.53
Dec 31, 1992 3,301.11 Mar 29, 1993 3,455.10 Jun 23, 1993 3,466.81
Jan 4, 1993 3,309.22 Mar 30, 1993 3,457.27 Jun 24, 1993 3,490.61
Jan 5, 1993 3,307.87 Mar 31, 1993 3,435.11 Jun 25, 1993 3,490.89
Jan 6, 1993 3,305.16 Apr 1, 1993 3,439.44 Jun 28, 1993 3,530.19
Jan 7, 1993 3,268.96 Apr 2, 1993 3,370.81 Jun 29, 1993 3,518.85
Jan 8, 1993 3,251.67 Apr 5, 1993 3,379.19 Jun 30, 1993 3,516.08
Jan 11, 1993 3,262.75 Apr 6, 1993 3,377.57 Jul 1, 1993 3,510.54
Jan 12, 1993 3,264.64 Apr 7, 1993 3,397.02 Jul 2, 1993 3,483.97
Jan 13, 1993 3,263.56 Apr 8, 1993 3,396.48 Jul 6, 1993 3,449.93
Jan 14, 1993 3,267.88 Apr 12, 1993 3,428.09 Jul 7, 1993 3,475.67
Jan 15, 1993 3,271.12 Apr 13, 1993 3,444.03 Jul 8, 1993 3,514.42
Jan 18, 1993 3,274.91 Apr 14, 1993 3,455.64 Jul 9, 1993 3,521.06
Jan 19, 1993 3,255.99 Apr 15, 1993 3,455.92 Jul 12, 1993 3,524.38
Jan 20, 1993 3,241.95 Apr 16, 1993 3,478.61 Jul 13, 1993 3,515.44
Jan 21, 1993 3,253.02 Apr 19, 1993 3,466.99 Jul 14, 1993 3,542.55
Jan 22, 1993 3,256.81 Apr 20, 1993 3,443.49 Jul 15, 1993 3,550.93
Jan 25, 1993 3,292.20 Apr 21, 1993 3,439.44 Jul 16, 1993 3,528.29
Jan 26, 1993 3,298.95 Apr 22, 1993 3,429.17 Jul 19, 1993 3,535.28
Jan 27, 1993 3,291.39 Apr 23, 1993 3,413.77 Jul 20, 1993 3,544.78
Jan 28, 1993 3,306.25 Apr 26, 1993 3,398.37 Jul 21, 1993 3,555.40
Jan 29, 1993 3,310.03 Apr 27, 1993 3,415.93 Jul 22, 1993 3,525.22
Feb 1, 1993 3,332.18 Apr 28, 1993 3,413.50 Jul 23, 1993 3,546.74
Feb 2, 1993 3,328.67 Apr 29, 1993 3,425.12 Jul 26, 1993 3,567.70
Feb 3, 1993 3,373.79 Apr 30, 1993 3,427.55 Jul 27, 1993 3,565.46
Appendix B
page 5
<PAGE>
DOW JONES INDUSTRIAL AVERAGE
Dow Jones Dow Jones Dow Jones
Industrial Industrial Industrial
Date Average Date Average Date Average
- -------------------------- -------------------------- ----------------------
Jul 28, 1993 3,553.45 Oct 21, 1993 3,636.16 Jan 17, 1994 3,870.29
Jul 29, 1993 3,567.42 Oct 22, 1993 3,649.30 Jan 18, 1994 3,870.29
Jul 30, 1993 3,539.47 Oct 25, 1993 3,673.61 Jan 19, 1994 3,884.37
Aug 2, 1993 3,560.99 Oct 26, 1993 3,672.49 Jan 20, 1994 3,891.96
Aug 3, 1993 3,561.27 Oct 27, 1993 3,664.66 Jan 21, 1994 3,914.48
Aug 4, 1993 3,552.05 Oct 28, 1993 3,687.86 Jan 24, 1994 3,912.79
Aug 5, 1993 3,548.97 Oct 29, 1993 3,680.59 Jan 25, 1994 3,895.34
Aug 6, 1993 3,560.43 Nov 1, 1993 3,692.61 Jan 26, 1994 3,908.00
Aug 9, 1993 3,576.08 Nov 2, 1993 3,697.64 Jan 27, 1994 3,926.30
Aug 10, 1993 3,572.73 Nov 3, 1993 3,661.87 Jan 28, 1994 3,945.43
Aug 11, 1993 3,583.35 Nov 4, 1993 3,624.98 Jan 31, 1994 3,978.36
Aug 12, 1993 3,569.09 Nov 5, 1993 3,643.43 Feb 1, 1994 3,964.01
Aug 13, 1993 3,569.65 Nov 8, 1993 3,647.90 Feb 2, 1994 3,975.54
Aug 16, 1993 3,579.15 Nov 9, 1993 3,640.07 Feb 3, 1994 3,967.66
Aug 17, 1993 3,586.98 Nov 10, 1993 3,663.55 Feb 4, 1994 3,871.42
Aug 18, 1993 3,604.86 Nov 11, 1993 3,662.43 Feb 7, 1994 3,906.32
Aug 19, 1993 3,612.13 Nov 12, 1993 3,684.51 Feb 8, 1994 3,906.03
Aug 20, 1993 3,615.48 Nov 15, 1993 3,677.52 Feb 9, 1994 3,931.92
Aug 23, 1993 3,605.98 Nov 16, 1993 3,710.77 Feb 10, 1994 3,895.34
Aug 24, 1993 3,638.96 Nov 17, 1993 3,704.35 Feb 11, 1994 3,894.78
Aug 25, 1993 3,652.09 Nov 18, 1993 3,685.34 Feb 14, 1994 3,904.06
Aug 26, 1993 3,648.18 Nov 19, 1993 3,694.01 Feb 15, 1994 3,928.27
Aug 27, 1993 3,640.63 Nov 22, 1993 3,670.25 Feb 16, 1994 3,937.27
Aug 30, 1993 3,643.99 Nov 23, 1993 3,674.17 Feb 17, 1994 3,922.64
Aug 31, 1993 3,651.25 Nov 24, 1993 3,687.58 Feb 18, 1994 3,887.46
Sep 1, 1993 3,645.10 Nov 26, 1993 3,683.95 Feb 22, 1994 3,911.66
Sep 2, 1993 3,626.10 Nov 29, 1993 3,677.80 Feb 23, 1994 3,891.68
Sep 3, 1993 3,633.93 Nov 30, 1993 3,683.95 Feb 24, 1994 3,839.90
Sep 7, 1993 3,607.10 Dec 1, 1993 3,697.08 Feb 25, 1994 3,838.78
Sep 8, 1993 3,588.93 Dec 2, 1993 3,702.11 Feb 28, 1994 3,832.02
Sep 9, 1993 3,589.49 Dec 3, 1993 3,704.07 Mar 1, 1994 3,809.23
Sep 10, 1993 3,621.63 Dec 6, 1993 3,710.21 Mar 2, 1994 3,831.74
Sep 13, 1993 3,634.21 Dec 7, 1993 3,718.88 Mar 3, 1994 3,824.42
Sep 14, 1993 3,615.76 Dec 8, 1993 3,734.53 Mar 4, 1994 3,832.30
Sep 15, 1993 3,633.65 Dec 9, 1993 3,729.78 Mar 7, 1994 3,856.22
Sep 16, 1993 3,630.85 Dec 10, 1993 3,740.67 Mar 8, 1994 3,851.72
Sep 17, 1993 3,613.25 Dec 13, 1993 3,764.43 Mar 9, 1994 3,853.41
Sep 20, 1993 3,575.80 Dec 14, 1993 3,742.63 Mar 10, 1994 3,830.62
Sep 21, 1993 3,537.24 Dec 15, 1993 3,716.92 Mar 11, 1994 3,862.70
Sep 22, 1993 3,547.02 Dec 16, 1993 3,726.14 Mar 14, 1994 3,862.98
Sep 23, 1993 3,539.75 Dec 17, 1993 3,751.57 Mar 15, 1994 3,849.59
Sep 24, 1993 3,543.11 Dec 20, 1993 3,755.21 Mar 16, 1994 3,848.15
Sep 27, 1993 3,567.70 Dec 21, 1993 3,745.15 Mar 17, 1994 3,865.14
Sep 28, 1993 3,566.02 Dec 22, 1993 3,762.19 Mar 18, 1994 3,895.65
Sep 29, 1993 3,566.30 Dec 23, 1993 3,757.72 Mar 21, 1994 3,864.85
Sep 30, 1993 3,555.12 Dec 27, 1993 3,792.93 Mar 22, 1994 3,862.55
Oct 1, 1993 3,581.11 Dec 28, 1993 3,793.77 Mar 23, 1994 3,869.46
Oct 4, 1993 3,577.76 Dec 29, 1993 3,794.33 Mar 24, 1994 3,821.09
Oct 5, 1993 3,587.26 Dec 30, 1993 3,775.88 Mar 25, 1994 3,774.73
Oct 6, 1993 3,598.99 Dec 31, 1993 3,754.09 Mar 28, 1994 3,762.35
Oct 7, 1993 3,583.63 Jan 3, 1994 3,756.60 Mar 29, 1994 3,699.02
Oct 8, 1993 3,584.74 Jan 4, 1994 3,783.90 Mar 30, 1994 3,626.75
Oct 11, 1993 3,593.41 Jan 5, 1994 3,798.82 Mar 31, 1994 3,635.96
Oct 12, 1993 3,593.13 Jan 6, 1994 3,803.88 Apr 4, 1994 3,593.35
Oct 13, 1993 3,603.19 Jan 7, 1994 3,820.77 Apr 5, 1994 3,675.41
Oct 14, 1993 3,621.63 Jan 10, 1994 3,865.51 Apr 6, 1994 3,679.73
Oct 15, 1993 3,629.73 Jan 11, 1994 3,850.31 Apr 7, 1994 3,693.26
Oct 18, 1993 3,642.31 Jan 12, 1994 3,848.63 Apr 8, 1994 3,674.26
Oct 19, 1993 3,635.32 Jan 13, 1994 3,842.43 Apr 11, 1994 3,688.83
Oct 20, 1993 3,645.10 Jan 14, 1994 3,867.20 Apr 12, 1994 3,681.69
Appendix B
page 6
<PAGE>
DOW JONES INDUSTRIAL AVERAGE
Dow Jones Dow Jones Dow Jones
Industrial Industrial Industrial
Date Average Date Average Date Average
- -------------------------- -------------------------- ----------------------
Apr 13, 1994 3,661.47 Jul 11, 1994 3,703.00 Oct 4, 1994 3,801.13
Apr 14, 1994 3,663.25 Jul 12, 1994 3,702.66 Oct 5, 1994 3,787.34
Apr 15, 1994 3,661.47 Jul 13, 1994 3,704.28 Oct 6, 1994 3,775.56
Apr 18, 1994 3,620.42 Jul 14, 1994 3,739.26 Oct 7, 1994 3,797.43
Apr 19, 1994 3,619.82 Jul 15, 1994 3,753.82 Oct 10, 1994 3,821.32
Apr 20, 1994 3,598.71 Jul 18, 1994 3,755.44 Oct 11, 1994 3,876.83
Apr 21, 1994 3,652.54 Jul 19, 1994 3,748.31 Oct 12, 1994 3,875.15
Apr 22, 1994 3,648.68 Jul 20, 1994 3,727.27 Oct 13, 1994 3,889.95
Apr 25, 1994 3,705.78 Jul 21, 1994 3,732.45 Oct 14, 1994 3,910.47
Apr 26, 1994 3,699.54 Jul 22, 1994 3,735.04 Oct 17, 1994 3,923.93
Apr 28, 1994 3,668.31 Jul 25, 1994 3,741.84 Oct 18, 1994 3,917.54
Apr 29, 1994 3,681.69 Jul 26, 1994 3,735.68 Oct 19, 1994 3,936.04
May 2, 1994 3,701.02 Jul 27, 1994 3,720.47 Oct 20, 1994 3,911.15
May 3, 1994 3,714.41 Jul 28, 1994 3,730.83 Oct 21, 1994 3,891.30
May 4, 1994 3,697.75 Jul 29, 1994 3,764.50 Oct 24, 1994 3,855.30
May 5, 1994 3,695.97 Aug 1, 1994 3,798.17 Oct 25, 1994 3,850.59
May 6, 1994 3,669.50 Aug 2, 1994 3,796.22 Oct 26, 1994 3,848.23
May 9, 1994 3,629.04 Aug 3, 1994 3,792.66 Oct 27, 1994 3,875.15
May 10, 1994 3,656.41 Aug 4, 1994 3,765.79 Oct 28, 1994 3,930.66
May 11, 1994 3,629.04 Aug 5, 1994 3,747.02 Oct 31, 1994 3,908.12
May 12, 1994 3,652.84 Aug 8, 1994 3,753.81 Nov 1, 1994 3,863.37
May 13, 1994 3,659.68 Aug 9, 1994 3,755.76 Nov 2, 1994 3,837.13
May 16, 1994 3,671.50 Aug 10, 1994 3,766.76 Nov 3, 1994 3,845.88
May 17, 1994 3,720.61 Aug 11, 1994 3,750.90 Nov 4, 1994 3,807.52
May 18, 1994 3,732.89 Aug 12, 1994 3,768.71 Nov 7, 1994 3,808.87
May 19, 1994 3,758.98 Aug 15, 1994 3,760.29 Nov 8, 1994 3,830.74
May 20, 1994 3,766.36 Aug 16, 1994 3,784.57 Nov 9, 1994 3,831.75
May 23, 1994 3,742.40 Aug 17, 1994 3,776.48 Nov 10, 1994 3,821.99
May 24, 1994 3,745.16 Aug 18, 1994 3,755.43 Nov 11, 1994 3,801.47
May 25, 1994 3,755.30 Aug 19, 1994 3,755.11 Nov 14, 1994 3,829.73
May 26, 1994 3,753.50 Aug 22, 1994 3,751.22 Nov 15, 1994 3,826.36
May 27, 1994 3,757.10 Aug 23, 1994 3,775.83 Nov 16, 1994 3,845.20
May 31, 1994 3,758.40 Aug 24, 1994 3,846.73 Nov 17, 1994 3,828.05
Jun 1, 1994 3,760.84 Aug 25, 1994 3,829.89 Nov 18, 1994 3,815.26
Jun 2, 1994 3,759.00 Aug 26, 1994 3,881.05 Nov 21, 1994 3,769.51
Jun 3, 1994 3,772.20 Aug 29, 1994 3,898.85 Nov 22, 1994 3,677.99
Jun 6, 1994 3,768.52 Aug 30, 1994 3,917.30 Nov 23, 1994 3,674.63
Jun 7, 1994 3,755.92 Aug 31, 1994 3,913.42 Nov 25, 1994 3,708.27
Jun 8, 1994 3,749.50 Sep 1, 1994 3,901.44 Nov 28, 1994 3,739.56
Jun 9, 1994 3,753.14 Sep 2, 1994 3,885.58 Nov 29, 1994 3,738.55
Jun 10, 1994 3,773.50 Sep 6, 1994 3,898.70 Nov 30, 1994 3,739.23
Jun 13, 1994 3,783.12 Sep 7, 1994 3,886.25 Dec 1, 1994 3,700.87
Jun 14, 1994 3,814.80 Sep 8, 1994 3,908.46 Dec 2, 1994 3,745.62
Jun 15, 1994 3,790.40 Sep 9, 1994 3,874.81 Dec 5, 1994 3,741.92
Jun 16, 1994 3,811.34 Sep 12, 1994 3,860.34 Dec 6, 1994 3,745.95
Jun 17, 1994 3,776.80 Sep 13, 1994 3,879.86 Dec 7, 1994 3,735.52
Jun 20, 1994 3,741.90 Sep 14, 1994 3,895.33 Dec 8, 1994 3,685.73
Jun 21, 1994 3,707.98 Sep 15, 1994 3,953.88 Dec 9, 1994 3,691.11
Jun 22, 1994 3,724.78 Sep 16, 1994 3,933.35 Dec 12, 1994 3,718.37
Jun 23, 1994 3,699.10 Sep 19, 1994 3,936.72 Dec 13, 1994 3,715.34
Jun 24, 1994 3,636.94 Sep 20, 1994 3,869.09 Dec 14, 1994 3,746.29
Jun 27, 1994 3,685.50 Sep 21, 1994 3,851.60 Dec 15, 1994 3,765.47
Jun 28, 1994 3,669.64 Sep 22, 1994 3,837.13 Dec 16, 1994 3,807.19
Jun 29, 1994 3,667.06 Sep 23, 1994 3,831.75 Dec 19, 1994 3,790.70
Jun 30, 1994 3,624.96 Sep 26, 1994 3,849.24 Dec 20, 1994 3,767.15
Jul 1, 1994 3,646.66 Sep 27, 1994 3,863.04 Dec 21, 1994 3,801.80
Jul 5, 1994 3,652.48 Sep 28, 1994 3,878.18 Dec 22, 1994 3,814.92
Jul 6, 1994 3,674.50 Sep 29, 1994 3,854.63 Dec 23, 1994 3,833.43
Jul 7, 1994 3,688.42 Sep 30, 1994 3,843.19 Dec 27, 1994 3,861.69
Jul 8, 1994 3,709.14 Oct 3, 1994 3,846.89 Dec 28, 1994 3,839.49
Appendix B
page 7
<PAGE>
DOW JONES INDUSTRIAL AVERAGE
Dow Jones Dow Jones Dow Jones
Industrial Industrial Industrial
Date Average Date Average Date Average
- -------------------------- -------------------------- ----------------------
Dec 29, 1994 3,833.43 Mar 27, 1995 4,157.34 Jun 21, 1995 4,547.10
Dec 30, 1994 3,834.44 Mar 28, 1995 4,151.81 Jun 22, 1995 4,589.64
Jan 3, 1995 3,838.48 Mar 29, 1995 4,160.80 Jun 23, 1995 4,585.84
Jan 4, 1995 3,857.65 Mar 30, 1995 4,172.56 Jun 26, 1995 4,551.25
Jan 5, 1995 3,850.92 Mar 31, 1995 4,157.69 Jun 27, 1995 4,542.61
Jan 6, 1995 3,867.41 Apr 3, 1995 4,168.41 Jun 28, 1995 4,556.79
Jan 9, 1995 3,861.35 Apr 4, 1995 4,201.61 Jun 29, 1995 4,550.56
Jan 10, 1995 3,866.74 Apr 5, 1995 4,200.57 Jun 30, 1995 4,556.10
Jan 11, 1995 3,862.03 Apr 6, 1995 4,205.41 Jul 3, 1995 4,585.15
Jan 12, 1995 3,859.00 Apr 7, 1995 4,192.62 Jul 5, 1995 4,615.23
Jan 13, 1995 3,908.46 Apr 10, 1995 4,198.15 Jul 6, 1995 4,664.00
Jan 16, 1995 3,932.34 Apr 11, 1995 4,187.08 Jul 7, 1995 4,702.73
Jan 17, 1995 3,930.66 Apr 12, 1995 4,197.81 Jul 10, 1995 4,702.39
Jan 18, 1995 3,928.98 Apr 13, 1995 4,208.18 Jul 11, 1995 4,680.60
Jan 19, 1995 3,882.21 Apr 17, 1995 4,195.38 Jul 12, 1995 4,727.29
Jan 20, 1995 3,869.43 Apr 18, 1995 4,179.13 Jul 13, 1995 4,727.48
Jan 23, 1995 3,867.41 Apr 19, 1995 4,207.49 Jul 14, 1995 4,708.82
Jan 24, 1995 3,862.70 Apr 20, 1995 4,230.66 Jul 17, 1995 4,736.29
Jan 25, 1995 3,871.45 Apr 21, 1995 4,270.09 Jul 18, 1995 4,686.28
Jan 26, 1995 3,870.44 Apr 24, 1995 4,303.98 Jul 19, 1995 4,628.87
Jan 27, 1995 3,857.99 Apr 25, 1995 4,300.17 Jul 20, 1995 4,641.55
Jan 30, 1995 3,832.08 Apr 26, 1995 4,299.83 Jul 21, 1995 4,641.55
Jan 31, 1995 3,843.86 Apr 27, 1995 4,314.70 Jul 24, 1995 4,668.67
Feb 1, 1995 3,847.56 Apr 28, 1995 4,321.27 Jul 25, 1995 4,714.45
Feb 2, 1995 3,870.77 May 1, 1995 4,316.08 Jul 26, 1995 4,707.06
Feb 3, 1995 3,928.64 May 2, 1995 4,328.88 Jul 27, 1995 4,732.77
Feb 6, 1995 3,937.73 May 3, 1995 4,373.15 Jul 28, 1995 4,715.51
Feb 7, 1995 3,937.39 May 4, 1995 4,359.66 Jul 31, 1995 4,708.47
Feb 8, 1995 3,935.37 May 5, 1995 4,343.40 Aug 1, 1995 4,700.37
Feb 9, 1995 3,932.68 May 8, 1995 4,383.87 Aug 2, 1995 4,690.15
Feb 10, 1995 3,939.07 May 9, 1995 4,390.78 Aug 3, 1995 4,701.42
Feb 13, 1995 3,954.21 May 10, 1995 4,404.62 Aug 4, 1995 4,683.46
Feb 14, 1995 3,958.25 May 11, 1995 4,411.19 Aug 7, 1995 4,693.32
Feb 15, 1995 3,986.17 May 12, 1995 4,430.56 Aug 8, 1995 4,693.32
Feb 16, 1995 3,987.52 May 15, 1995 4,437.47 Aug 9, 1995 4,671.49
Feb 17, 1995 3,953.54 May 16, 1995 4,435.05 Aug 10, 1995 4,643.66
Feb 21, 1995 3,963.97 May 17, 1995 4,422.60 Aug 11, 1995 4,618.30
Feb 22, 1995 3,973.05 May 18, 1995 4,340.64 Aug 14, 1995 4,659.86
Feb 23, 1995 4,003.33 May 19, 1995 4,341.33 Aug 15, 1995 4,640.84
Feb 24, 1995 4,011.74 May 22, 1995 4,395.63 Aug 16, 1995 4,639.08
Feb 27, 1995 3,988.57 May 23, 1995 4,436.44 Aug 17, 1995 4,630.63
Feb 28, 1995 4,011.05 May 24, 1995 4,438.16 Aug 18, 1995 4,617.60
Mar 1, 1995 3,994.80 May 25, 1995 4,412.23 Aug 21, 1995 4,614.78
Mar 2, 1995 3,979.93 May 26, 1995 4,369.00 Aug 22, 1995 4,620.42
Mar 3, 1995 3,989.61 May 30, 1995 4,378.68 Aug 23, 1995 4,584.85
Mar 6, 1995 3,997.56 May 31, 1995 4,465.14 Aug 24, 1995 4,580.62
Mar 7, 1995 3,962.63 Jun 1, 1995 4,472.75 Aug 25, 1995 4,601.40
Mar 8, 1995 3,979.23 Jun 2, 1995 4,444.39 Aug 28, 1995 4,594.00
Mar 9, 1995 3,983.39 Jun 5, 1995 4,476.55 Aug 29, 1995 4,608.44
Mar 10, 1995 4,035.61 Jun 6, 1995 4,485.20 Aug 30, 1995 4,604.57
Mar 13, 1995 4,025.23 Jun 7, 1995 4,462.03 Aug 31, 1995 4,610.56
Mar 14, 1995 4,048.75 Jun 8, 1995 4,458.57 Sep 1, 1995 4,647.54
Mar 15, 1995 4,038.37 Jun 9, 1995 4,423.99 Sep 5, 1995 4,670.08
Mar 16, 1995 4,069.15 Jun 12, 1995 4,446.46 Sep 6, 1995 4,683.81
Mar 17, 1995 4,073.65 Jun 13, 1995 4,484.51 Sep 7, 1995 4,669.72
Mar 20, 1995 4,083.68 Jun 14, 1995 4,491.08 Sep 8, 1995 4,700.72
Mar 21, 1995 4,072.61 Jun 15, 1995 4,496.27 Sep 11, 1995 4,704.94
Mar 22, 1995 4,082.99 Jun 16, 1995 4,510.79 Sep 12, 1995 4,747.21
Mar 23, 1995 4,087.83 Jun 19, 1995 4,553.68 Sep 13, 1995 4,765.52
Mar 24, 1995 4,138.67 Jun 20, 1995 4,550.56 Sep 14, 1995 4,801.80
Appendix B
page 8
<PAGE>
DOW JONES INDUSTRIAL AVERAGE
Dow Jones Dow Jones Dow Jones
Industrial Industrial Industrial
Date Average Date Average Date Average
- -------------------------- -------------------------- ----------------------
Sep 15, 1995 4,797.57 Dec 11, 1995 5,184.32 Mar 07, 1996 5,641.69
Sep 18, 1995 4,780.41 Dec 12, 1995 5,174.92 Mar 08, 1996 5,470.45
Sep 19, 1995 4,767.04 Dec 13, 1995 5,216.47 Mar 11, 1996 5,581.00
Sep 20, 1995 4,792.69 Dec 14, 1995 5,182.15 Mar 12, 1996 5,583.89
Sep 21, 1995 4,767.40 Dec 15, 1995 5,176.73 Mar 13, 1996 5,568.72
Sep 22, 1995 4,764.15 Dec 18, 1995 5,075.21 Mar 14, 1996 5,586.06
Sep 25, 1995 4,769.93 Dec 19, 1995 5,109.89 Mar 15, 1996 5,584.97
Sep 26, 1995 4,765.60 Dec 20, 1995 5,059.32 Mar 18, 1996 5,683.60
Sep 27, 1995 4,762.35 Dec 21, 1995 5,096.53 Mar 19, 1996 5,669.51
Sep 28, 1995 4,787.64 Dec 22, 1995 5,097.97 Mar 20, 1996 5,655.42
Sep 29, 1995 4,789.08 Dec 26, 1995 5,110.26 Mar 21, 1996 5,626.88
Oct 2, 1995 4,761.26 Dec 27, 1995 5,105.92 Mar 22, 1996 5,636.64
Oct 3, 1995 4,749.70 Dec 28, 1995 5,095.80 Mar 25, 1996 5,643.86
Oct 4, 1995 4,740.67 Dec 29, 1995 5,117.12 Mar 26, 1996 5,670.60
Oct 5, 1995 4,762.71 Jan 2, 1996 5,177.45 Mar 27, 1996 5,626.88
Oct 6, 1995 4,769.21 Jan 3, 1996 5,194.07 Mar 28, 1996 5,630.85
Oct 9, 1995 4,726.22 Jan 4, 1996 5,173.84 Mar 29, 1996 5,587.14
Oct 10, 1995 4,720.80 Jan 5, 1996 5,181.43 Apr 1, 1996 5,637.72
Oct 11, 1995 4,735.25 Jan 8, 1996 5,197.68 Apr 2, 1996 5,671.68
Oct 12, 1995 4,764.88 Jan 9, 1996 5,130.13 Apr 3, 1996 5,689.74
Oct 13, 1995 4,793.78 Jan 10, 1996 5,032.94 Apr 4, 1996 5,682.88
Oct 16, 1995 4,784.38 Jan 11, 1996 5,065.10 Apr 8, 1996 5,594.37
Oct 17, 1995 4,795.94 Jan 12, 1996 5,061.12 Apr 9, 1996 5,560.41
Oct 18, 1995 4,777.52 Jan 15, 1996 5,043.78 Apr 10, 1996 5,485.98
Oct 19, 1995 4,802.45 Jan 16, 1996 5,088.22 Apr 11, 1996 5,487.07
Oct 20, 1995 4,794.86 Jan 17, 1996 5,066.90 Apr 12, 1996 5,532.59
Oct 23, 1995 4,755.48 Jan 18, 1996 5,124.35 Apr 15, 1996 5,592.92
Oct 24, 1995 4,783.66 Jan 19, 1996 5,184.68 Apr 16, 1996 5,620.02
Oct 25, 1995 4,753.68 Jan 22, 1996 5,219.36 Apr 17, 1996 5,549.93
Oct 26, 1995 4,703.82 Jan 23, 1996 5,192.27 Apr 18, 1996 5,551.74
Oct 27, 1995 4,741.75 Jan 24, 1996 5,242.84 Apr 19, 1996 5,535.48
Oct 30, 1995 4,756.57 Jan 25, 1996 5,216.83 Apr 22, 1996 5,564.74
Oct 31, 1995 4,755.48 Jan 26, 1996 5,271.75 Apr 23, 1996 5,588.59
Nov 1, 1995 4,766.68 Jan 29, 1996 5,304.98 Apr 24, 1996 5,553.90
Nov 2, 1995 4,808.59 Jan 30, 1996 5,381.21 Apr 25, 1996 5,566.91
Nov 3, 1995 4,825.57 Jan 31, 1996 5,395.30 Apr 26, 1996 5,567.99
Nov 6, 1995 4,814.01 Feb 1, 1996 5,405.06 Apr 29, 1996 5,573.41
Nov 7, 1995 4,797.03 Feb 2, 1996 5,373.99 Apr 30, 1996 5,569.08
Nov 8, 1995 4,852.67 Feb 5, 1996 5,407.59 May 1, 1996 5,575.22
Nov 9, 1995 4,864.23 Feb 6, 1996 5,459.61 May 2, 1996 5,498.27
Nov 10, 1995 4,870.37 Feb 7, 1996 5,492.12 May 3, 1996 5,478.03
Nov 13, 1995 4,872.90 Feb 8, 1996 5,539.45 May 6, 1996 5,464.31
Nov 14, 1995 4,871.81 Feb 9, 1996 5,541.62 May 7, 1996 5,420.95
Nov 15, 1995 4,922.75 Feb 12, 1996 5,600.15 May 8, 1996 5,474.06
Nov 16, 1995 4,969.36 Feb 13, 1996 5,601.23 May 9, 1996 5,475.14
Nov 17, 1995 4,989.95 Feb 14, 1996 5,579.55 May 10, 1996 5,518.14
Nov 20, 1995 4,983.09 Feb 15, 1996 5,551.37 May 13, 1996 5,582.60
Nov 21, 1995 5,023.55 Feb 16, 1996 5,503.32 May 14, 1996 5,624.71
Nov 22, 1995 5,041.61 Feb 20, 1996 5,458.53 May 15, 1996 5,625.44
Nov 24, 1995 5,048.84 Feb 21, 1996 5,515.97 May 16, 1996 5,635.05
Nov 27, 1995 5,070.88 Feb 22, 1996 5,608.46 May 17, 1996 5,687.50
Nov 28, 1995 5,078.10 Feb 23, 1996 5,630.49 May 20, 1996 5,748.82
Nov 29, 1995 5,105.56 Feb 26, 1996 5,565.10 May 21, 1996 5,736.26
Nov 30, 1995 5,074.49 Feb 27, 1996 5,549.21 May 22, 1996 5,778.00
Dec 1, 1995 5,087.13 Feb 28, 1996 5,506.21 May 23, 1996 5,762.12
Dec 4, 1995 5,139.52 Feb 29, 1996 5,485.62 May 24, 1996 5,762.86
Dec 5, 1995 5,177.45 Mar 1, 1996 5,536.56 May 28, 1996 5,709.67
Dec 6, 1995 5,199.13 Mar 4, 1996 5,600.15 May 29, 1996 5,673.83
Dec 7, 1995 5,159.39 Mar 5, 1996 5,642.42 May 30, 1996 5,693.41
Dec 8, 1995 5,156.86 Mar 6, 1996 5,629.77 May 31, 1996 5,643.18
Appendix B
page 9
<PAGE>
DOW JONES INDUSTRIAL AVERAGE
Dow Jones Dow Jones Dow Jones
Industrial Industrial Industrial
Date Average Date Average Date Average
- -------------------------- -------------------------- ----------------------
Jun 3, 1996 5,624.71 Aug 27, 1996 5,711.27 Nov 20, 1996 6,430.02
Jun 4, 1996 5,665.71 Aug 28, 1996 5,712.38 Nov 21, 1996 6,418.47
Jun 5, 1996 5,697.48 Aug 29, 1996 5,647.65 Nov 22, 1996 6,471.76
Jun 6, 1996 5,667.19 Aug 30, 1996 5,616.21 Nov 25, 1996 6,547.79
Jun 7, 1996 5,697.11 Sep 3, 1996 5,648.39 Nov 26, 1996 6,528.41
Jun 10, 1996 5,687.87 Sep 4, 1996 5,656.90 Nov 27, 1996 6,499.34
Jun 11, 1996 5,668.66 Sep 5, 1996 5,606.96 Nov 29, 1996 6,521.70
Jun 12, 1996 5,668.29 Sep 6, 1996 5,659.86 Dec 2, 1996 6,521.70
Jun 13, 1996 5,657.95 Sep 9, 1996 5,733.84 Dec 3, 1996 6,442.69
Jun 14, 1996 5,649.45 Sep 10, 1996 5,727.18 Dec 4, 1996 6,422.94
Jun 17, 1996 5,652.78 Sep 11, 1996 5,754.92 Dec 5, 1996 6,437.10
Jun 18, 1996 5,628.03 Sep 12, 1996 5,771.94 Dec 6, 1996 6,381.94
Jun 19, 1996 5,648.35 Sep 13, 1996 5,838.52 Dec 9, 1996 6,463.94
Jun 20, 1996 5,659.43 Sep 16, 1996 5,889.20 Dec 10, 1996 6,473.25
Jun 21, 1996 5,705.23 Sep 17, 1996 5,888.83 Dec 11, 1996 6,402.52
Jun 24, 1996 5,717.79 Sep 18, 1996 5,877.36 Dec 12, 1996 6,303.71
Jun 25, 1996 5,719.27 Sep 19, 1996 5,867.74 Dec 13, 1996 6,304.87
Jun 26, 1996 5,682.70 Sep 20, 1996 5,888.46 Dec 16, 1996 6,268.35
Jun 27, 1996 5,677.53 Sep 23, 1996 5,894.74 Dec 17, 1996 6,308.33
Jun 28, 1996 5,654.63 Sep 24, 1996 5,874.03 Dec 18, 1996 6,346.77
Jul 1, 1996 5,729.98 Sep 25, 1996 5,877.36 Dec 19, 1996 6,473.64
Jul 2, 1996 5,720.38 Sep 26, 1996 5,868.85 Dec 20, 1996 6,484.40
Jul 3, 1996 5,703.02 Sep 27, 1996 5,872.92 Dec 23, 1996 6,489.02
Jul 5, 1996 5,588.14 Sep 30, 1996 5,882.17 Dec 24, 1996 6,522.85
Jul 8, 1996 5,550.83 Oct 1, 1996 5,904.90 Dec 26, 1996 6,546.68
Jul 9, 1996 5,581.86 Oct 2, 1996 5,933.97 Dec 27, 1996 6,560.91
Jul 10, 1996 5,603.65 Oct 3, 1996 5,932.85 Dec 30, 1996 6,549.37
Jul 11, 1996 5,520.54 Oct 4, 1996 5,992.86 Dec 31, 1996 6,448.27
Jul 12, 1996 5,510.56 Oct 7, 1996 5,979.81 Jan 2, 1997 6,442.49
Jul 15, 1996 5,349.51 Oct 8, 1996 5,966.77 Jan 3, 1997 6,544.09
Jul 16, 1996 5,358.76 Oct 9, 1996 5,930.62 Jan 6, 1997 6,567.18
Jul 17, 1996 5,376.88 Oct 10, 1996 5,921.67 Jan 7, 1997 6,600.66
Jul 18, 1996 5,464.18 Oct 11, 1996 5,969.38 Jan 8, 1997 6,549.48
Jul 19, 1996 5,426.82 Oct 14, 1996 6,010.00 Jan 9, 1997 6,625.67
Jul 22, 1996 5,390.94 Oct 15, 1996 6,004.78 Jan 10, 1997 6,703.79
Jul 23, 1996 5,346.55 Oct 16, 1996 6,020.81 Jan 13, 1997 6,709.18
Jul 24, 1996 5,354.69 Oct 17, 1996 6,059.20 Jan 14, 1997 6,762.29
Jul 25, 1996 5,422.01 Oct 18, 1996 6,094.23 Jan 15, 1997 6,726.88
Jul 26, 1996 5,473.06 Oct 21, 1996 6,090.87 Jan 16, 1997 6,765.37
Jul 29, 1996 5,434.59 Oct 22, 1996 6,061.80 Jan 17, 1997 6,833.10
Jul 30, 1996 5,481.93 Oct 23, 1996 6,036.46 Jan 20, 1997 6,843.87
Jul 31, 1996 5,528.91 Oct 24, 1996 5,992.48 Jan 21, 1997 6,883.90
Aug 1, 1996 5,594.75 Oct 25, 1996 6,007.02 Jan 22, 1997 6,850.03
Aug 2, 1996 5,679.83 Oct 28, 1996 5,972.73 Jan 23, 1997 6,755.75
Aug 5, 1996 5,674.28 Oct 29, 1996 6,007.02 Jan 24, 1997 6,696.48
Aug 6, 1996 5,696.11 Oct 30, 1996 5,993.23 Jan 27, 1997 6,660.69
Aug 7, 1996 5,718.67 Oct 31, 1996 6,029.38 Jan 28, 1997 6,656.08
Aug 8, 1996 5,713.49 Nov 1, 1996 6,021.93 Jan 29, 1997 6,740.74
Aug 9, 1996 5,681.31 Nov 4, 1996 6,041.68 Jan 30, 1997 6,823.86
Aug 12, 1996 5,704.98 Nov 5, 1996 6,081.18 Jan 31, 1997 6,813.09
Aug 13, 1996 5,647.28 Nov 6, 1996 6,177.71 Feb 3, 1997 6,806.16
Aug 14, 1996 5,666.88 Nov 7, 1996 6,206.04 Feb 4, 1997 6,833.48
Aug 15, 1996 5,665.78 Nov 8, 1996 6,219.82 Feb 5, 1997 6,746.90
Aug 16, 1996 5,689.45 Nov 11, 1996 6,255.60 Feb 6, 1997 6,773.06
Aug 19, 1996 5,699.44 Nov 12, 1996 6,266.04 Feb 7, 1997 6,855.80
Aug 20, 1996 5,721.26 Nov 13, 1996 6,274.24 Feb 10, 1997 6,806.54
Aug 21, 1996 5,689.82 Nov 14, 1996 6,313.00 Feb 11, 1997 6,858.11
Aug 22, 1996 5,733.47 Nov 15, 1996 6,348.03 Feb 12, 1997 6,961.63
Aug 23, 1996 5,722.74 Nov 18, 1996 6,346.91 Feb 13, 1997 7,022.44
Aug 26, 1996 5,693.89 Nov 19, 1996 6,397.60 Feb 14, 1997 6,988.96
Appendix B
page 10
<PAGE>
DOW JONES INDUSTRIAL AVERAGE
Dow Jones Dow Jones Dow Jones
Industrial Industrial Industrial
Date Average Date Average Date Average
- -------------------------- -------------------------- ----------------------
Feb 18, 1997 7,067.46 May 14, 1997 7,286.16 Aug 8, 1997 8,031.22
Feb 19, 1997 7,020.13 May 15, 1997 7,333.55 Aug 11, 1997 8,062.11
Feb 20, 1997 6,927.38 May 16, 1997 7,194.67 Aug 12, 1997 7,960.84
Feb 21, 1997 6,931.62 May 19, 1997 7,228.88 Aug 13, 1997 7,928.32
Feb 24, 1997 7,008.20 May 20, 1997 7,303.46 Aug 14, 1997 7,942.03
Feb 25, 1997 7,038.21 May 21, 1997 7,290.69 Aug 15, 1997 7,694.66
Feb 26, 1997 6,983.18 May 22, 1997 7,258.13 Aug 18, 1997 7,803.36
Feb 27, 1997 6,925.07 May 23, 1997 7,345.91 Aug 19, 1997 7,918.10
Feb 28, 1997 6,877.74 May 27, 1997 7,383.41 Aug 20, 1997 8,021.23
Mar 3, 1997 6,918.92 May 28, 1997 7,357.23 Aug 21, 1997 7,893.95
Mar 4, 1997 6,852.72 May 29, 1997 7,330.18 Aug 22, 1997 7,887.91
Mar 5, 1997 6,945.85 May 30, 1997 7,331.04 Aug 25, 1997 7,859.57
Mar 6, 1997 6,944.70 Jun 2, 1997 7,289.40 Aug 26, 1997 7,782.22
Mar 7, 1997 7,000.89 Jun 3, 1997 7,312.15 Aug 27, 1997 7,787.33
Mar 10, 1997 7,079.39 Jun 4, 1997 7,269.66 Aug 28, 1997 7,694.43
Mar 11, 1997 7,085.16 Jun 5, 1997 7,305.29 Aug 29, 1997 7,622.42
Mar 12, 1997 7,039.37 Jun 6, 1997 7,435.78 Sep 2, 1997 7,879.76
Mar 13, 1997 6,878.89 Jun 9, 1997 7,478.50 Sep 3, 1997 7,894.64
Mar 14, 1997 6,935.46 Jun 10, 1997 7,539.27 Sep 4, 1997 7,867.24
Mar 17, 1997 6,955.48 Jun 11, 1997 7,575.83 Sep 5, 1997 7,822.40
Mar 18, 1997 6,896.56 Jun 12, 1997 7,711.47 Sep 8, 1997 7,835.16
Mar 19, 1997 6,877.68 Jun 13, 1997 7,782.04 Sep 9, 1997 7,851.88
Mar 20, 1997 6,820.28 Jun 16, 1997 7,772.09 Sep 10, 1997 7,719.28
Mar 21, 1997 6,804.79 Jun 17, 1997 7,760.78 Sep 11, 1997 7,660.96
Mar 24, 1997 6,905.25 Jun 18, 1997 7,718.71 Sep 12, 1997 7,742.96
Mar 25, 1997 6,876.17 Jun 19, 1997 7,777.06 Sep 15, 1997 7,721.12
Mar 26, 1997 6,880.70 Jun 20, 1997 7,796.51 Sep 16, 1997 7,895.92
Mar 27, 1997 6,740.59 Jun 23, 1997 7,604.26 Sep 17, 1997 7,886.44
Mar 31, 1997 6,583.48 Jun 24, 1997 7,758.06 Sep 18, 1997 7,922.72
Apr 1, 1997 6,611.05 Jun 25, 1997 7,689.98 Sep 19, 1997 7,917.24
Apr 2, 1997 6,517.01 Jun 26, 1997 7,654.25 Sep 22, 1997 7,996.80
Apr 3, 1997 6,477.35 Jun 27, 1997 7,687.72 Sep 23, 1997 7,970.04
Apr 4, 1997 6,526.07 Jun 30, 1997 7,672.79 Sep 24, 1997 7,906.68
Apr 7, 1997 6,555.91 Jul 1, 1997 7,722.33 Sep 25, 1997 7,848.00
Apr 8, 1997 6,609.16 Jul 2, 1997 7,795.38 Sep 26, 1997 7,922.16
Apr 9, 1997 6,563.84 Jul 3, 1997 7,895.81 Sep 29, 1997 7,991.40
Apr 10, 1997 6,540.05 Jul 7, 1997 7,858.49 Sep 30, 1997 7,945.24
Apr 11, 1997 6,391.69 Jul 8, 1997 7,962.31 Oct 1, 1997 8,015.48
Apr 14, 1997 6,451.90 Jul 9, 1997 7,842.43 Oct 2, 1997 8,027.52
Apr 15, 1997 6,587.16 Jul 10, 1997 7,886.76 Oct 3, 1997 8,038.56
Apr 16, 1997 6,679.87 Jul 11, 1997 7,921.82 Oct 6, 1997 8,100.20
Apr 17, 1997 6,658.60 Jul 14, 1997 7,922.98 Oct 7, 1997 8,178.28
Apr 18, 1997 6,703.55 Jul 15, 1997 7,975.71 Oct 8, 1997 8,095.04
Apr 21, 1997 6,660.21 Jul 16, 1997 8,038.88 Oct 9, 1997 8,061.40
Apr 22, 1997 6,833.59 Jul 17, 1997 8,020.77 Oct 10, 1997 8,045.20
Apr 23, 1997 6,812.72 Jul 18, 1997 7,890.46 Oct 13, 1997 8,072.20
Apr 24, 1997 6,792.25 Jul 21, 1997 7,906.72 Oct 14, 1997 8,096.28
Apr 25, 1997 6,738.87 Jul 22, 1997 8,061.65 Oct 15, 1997 8,057.96
Apr 28, 1997 6,783.02 Jul 23, 1997 8,088.36 Oct 16, 1997 7,938.88
Apr 29, 1997 6,962.03 Jul 24, 1997 8,116.93 Oct 17, 1997 7,847.00
Apr 30, 1997 7,008.99 Jul 25, 1997 8,113.44 Oct 20, 1997 7,921.44
May 1, 1997 6,976.48 Jul 28, 1997 8,121.11 Oct 21, 1997 8,060.44
May 2, 1997 7,071.20 Jul 29, 1997 8,174.53 Oct 22, 1997 8,034.64
May 5, 1997 7,214.49 Jul 30, 1997 8,254.89 Oct 23, 1997 7,847.76
May 6, 1997 7,225.32 Jul 31, 1997 8,222.61 Oct 24, 1997 7,715.40
May 7, 1997 7,085.65 Aug 1, 1997 8,194.04 Oct 27, 1997 7,161.12
May 8, 1997 7,136.62 Aug 4, 1997 8,198.45 Oct 28, 1997 7,498.32
May 9, 1997 7,169.53 Aug 5, 1997 8,187.54 Oct 29, 1997 7,506.64
May 12, 1997 7,292.75 Aug 6, 1997 8,259.31 Oct 30, 1997 7,381.64
May 13, 1997 7,274.21 Aug 7, 1997 8,188.00 Oct 31, 1997 7,443.00
Appendix B
page 11
<PAGE>
DOW JONES INDUSTRIAL AVERAGE
Dow Jones Dow Jones Dow Jones
Industrial Industrial Industrial
Date Average Date Average Date Average
- -------------------------- -------------------------- ----------------------
Nov 3, 1997 7,674.36 Jan 30, 1998 7,906.48 Apr 28, 1998 8,898.96
Nov 4, 1997 7,689.12 Feb 2, 1998 8,107.76 Apr 29, 1998 8,951.52
Nov 5, 1997 7,692.56 Feb 3, 1998 8,160.32 Apr 30, 1998 9,063.36
Nov 6, 1997 7,683.20 Feb 4, 1998 8,129.68 May 1, 1998 9,147.04
Nov 7, 1997 7,581.32 Feb 5, 1998 8,117.24 May 4, 1998 9,192.64
Nov 10, 1997 7,552.56 Feb 6, 1998 8,189.48 May 5, 1998 9,147.56
Nov 11, 1997 7,558.72 Feb 9, 1998 8,180.52 May 6, 1998 9,054.64
Nov 12, 1997 7,401.32 Feb 10, 1998 8,295.60 May 7, 1998 8,976.68
Nov 13, 1997 7,487.76 Feb 11, 1998 8,314.52 May 8, 1998 9,055.12
Nov 14, 1997 7,572.48 Feb 12, 1998 8,369.60 May 11, 1998 9,091.52
Nov 17, 1997 7,698.20 Feb 13, 1998 8,370.08 May 12, 1998 9,161.76
Nov 18, 1997 7,650.80 Feb 17, 1998 8,398.48 May 13, 1998 9,211.84
Nov 19, 1997 7,724.72 Feb 18, 1998 8,451.04 May 14, 1998 9,172.20
Nov 20, 1997 7,826.60 Feb 19, 1998 8,375.56 May 15, 1998 9,096.00
Nov 21, 1997 7,881.04 Feb 20, 1998 8,413.92 May 18, 1998 9,050.88
Nov 24, 1997 7,767.92 Feb 23, 1998 8,410.20 May 19, 1998 9,054.64
Nov 25, 1997 7,808.92 Feb 24, 1998 8,370.08 May 20, 1998 9,171.48
Nov 26, 1997 7,794.76 Feb 25, 1998 8,457.76 May 21, 1998 9,132.36
Nov 28, 1997 7,823.12 Feb 26, 1998 8,490.64 May 22, 1998 9,114.44
Dec 1, 1997 8,013.08 Feb 27, 1998 8,545.72 May 26, 1998 8,963.72
Dec 2, 1997 8,018.80 Mar 2, 1998 8,550.44 May 27, 1998 8,936.56
Dec 3, 1997 8,032.00 Mar 3, 1998 8,584.80 May 28, 1998 8,970.20
Dec 4, 1997 8,050.16 Mar 4, 1998 8,539.24 May 29, 1998 8,899.92
Dec 5, 1997 8,149.12 Mar 5, 1998 8,444.32 Jun 1, 1998 8,922.36
Dec 8, 1997 8,110.84 Mar 6, 1998 8,569.36 Jun 2, 1998 8,891.24
Dec 9, 1997 8,049.64 Mar 9, 1998 8,567.12 Jun 3, 1998 8,803.80
Dec 10, 1997 7,978.76 Mar 10, 1998 8,643.12 Jun 4, 1998 8,870.56
Dec 11, 1997 7,848.96 Mar 11, 1998 8,675.72 Jun 5, 1998 9,037.68
Dec 12, 1997 7,838.28 Mar 12, 1998 8,659.56 Jun 8, 1998 9,069.60
Dec 15, 1997 7,922.56 Mar 13, 1998 8,602.52 Jun 9, 1998 9,049.92
Dec 16, 1997 7,976.28 Mar 16, 1998 8,718.84 Jun 10, 1998 8,971.68
Dec 17, 1997 7,957.40 Mar 17, 1998 8,749.96 Jun 11, 1998 8,811.76
Dec 18, 1997 7,846.48 Mar 18, 1998 8,775.40 Jun 12, 1998 8,834.92
Dec 19, 1997 7,756.28 Mar 19, 1998 8,803.04 Jun 15, 1998 8,627.92
Dec 22, 1997 7,819.28 Mar 20, 1998 8,906.40 Jun 16, 1998 8,665.28
Dec 23, 1997 7,691.76 Mar 23, 1998 8,816.24 Jun 17, 1998 8,829.44
Dec 24, 1997 7,660.12 Mar 24, 1998 8,904.44 Jun 18, 1998 8,813.00
Dec 26, 1997 7,679.28 Mar 25, 1998 8,872.80 Jun 19, 1998 8,712.84
Dec 29, 1997 7,792.40 Mar 26, 1998 8,846.88 Jun 22, 1998 8,711.12
Dec 30, 1997 7,915.92 Mar 27, 1998 8,796.08 Jun 23, 1998 8,828.44
Dec 31, 1997 7,908.24 Mar 30, 1998 8,782.12 Jun 24, 1998 8,923.84
Jan 2, 1998 7,965.04 Mar 31, 1998 8,799.80 Jun 25, 1998 8,935.56
Jan 5, 1998 7,978.96 Apr 1, 1998 8,868.32 Jun 26, 1998 8,944.52
Jan 6, 1998 7,906.24 Apr 2, 1998 8,986.64 Jun 29, 1998 8,997.36
Jan 7, 1998 7,902.24 Apr 3, 1998 8,983.40 Jun 30, 1998 8,952.00
Jan 8, 1998 7,802.60 Apr 6, 1998 9,033.20 Jul 1, 1998 9,048.64
Jan 9, 1998 7,580.40 Apr 7, 1998 8,956.48 Jul 2, 1998 9,025.24
Jan 12, 1998 7,647.16 Apr 8, 1998 8,891.48 Jul 6, 1998 9,091.76
Jan 13, 1998 7,732.12 Apr 9, 1998 8,994.84 Jul 7, 1998 9,085.04
Jan 14, 1998 7,787.68 Apr 13, 1998 9,012.28 Jul 8, 1998 9,174.96
Jan 15, 1998 7,691.76 Apr 14, 1998 9,110.20 Jul 9, 1998 9,089.76
Jan 16, 1998 7,753.52 Apr 15, 1998 9,162.24 Jul 10, 1998 9,105.72
Jan 20, 1998 7,873.12 Apr 16, 1998 9,076.56 Jul 13, 1998 9,096.20
Jan 21, 1998 7,794.40 Apr 17, 1998 9,167.48 Jul 14, 1998 9,245.52
Jan 22, 1998 7,730.88 Apr 20, 1998 9,141.84 Jul 15, 1998 9,234.44
Jan 23, 1998 7,700.72 Apr 21, 1998 9,184.92 Jul 16, 1998 9,328.16
Jan 26, 1998 7,712.92 Apr 22, 1998 9,176.72 Jul 17, 1998 9,337.96
Jan 27, 1998 7,815.08 Apr 23, 1998 9,143.32 Jul 20, 1998 9,295.72
Jan 28, 1998 7,915.44 Apr 24, 1998 9,064.60 Jul 21, 1998 9,190.16
Jan 29, 1998 7,973.00 Apr 27, 1998 8,917.64 Jul 22, 1998 9,128.88
Appendix B
page 12
<PAGE>
DOW JONES INDUSTRIAL AVERAGE
Dow Jones Dow Jones Dow Jones
Industrial Industrial Industrial
Date Average Date Average Date Average
- -------------------------- -------------------------- -----------------------
Jul 23, 1998 8,932.96 Oct 15, 1998 8,299.36 Jan 11, 1999 9,619.89
Jul 24, 1998 8,937.36 Oct 16, 1998 8,416.76 Jan 12, 1999 9,474.68
Jul 27, 1998 9,028.24 Oct 19, 1998 8,466.45 Jan 13, 1999 9,349.56
Jul 28, 1998 8,934.76 Oct 20, 1998 8,505.85 Jan 14, 1999 9,120.93
Jul 29, 1998 8,914.96 Oct 21, 1998 8,519.23 Jan 15, 1999 9,340.55
Jul 30, 1998 9,026.92 Oct 22, 1998 8,533.14 Jan 19, 1999 9,355.22
Jul 31, 1998 8,883.28 Oct 23, 1998 8,452.29 Jan 20, 1999 9,335.91
Aug 3, 1998 8,786.72 Oct 26, 1998 8,432.21 Jan 21, 1999 9,264.08
Aug 4, 1998 8,487.28 Oct 27, 1998 8,366.04 Jan 22, 1999 9,120.67
Aug 5, 1998 8,546.76 Oct 28, 1998 8,371.97 Jan 25, 1999 9,203.32
Aug 6, 1998 8,577.68 Oct 29, 1998 8,495.03 Jan 26, 1999 9,324.58
Aug 7, 1998 8,598.00 Oct 30, 1998 8,592.10 Jan 27, 1999 9,200.23
Aug 10, 1998 8,574.84 Nov 2, 1998 8,706.15 Jan 28, 1999 9,281.33
Aug 11, 1998 8,462.84 Nov 3, 1998 8,706.15 Jan 29, 1999 9,358.83
Aug 12, 1998 8,552.96 Nov 4, 1998 8,783.14
Aug 13, 1998 8,459.48 Nov 5, 1998 8,915.47
Aug 14, 1998 8,425.00 Nov 6, 1998 8,975.46
Aug 17, 1998 8,574.84 Nov 9, 1998 8,897.96
Aug 18, 1998 8,714.64 Nov 10, 1998 8,863.98
Aug 19, 1998 8,693.28 Nov 11, 1998 8,823.82
Aug 20, 1998 8,611.40 Nov 12, 1998 8,829.74
Aug 21, 1998 8,533.64 Nov 13, 1998 8,919.59
Aug 24, 1998 8,566.60 Nov 16, 1998 9,011.25
Aug 25, 1998 8,602.64 Nov 17, 1998 8,986.28
Aug 26, 1998 8,523.32 Nov 18, 1998 9,041.11
Aug 27, 1998 8,165.96 Nov 19, 1998 9,056.05
Aug 28, 1998 8,051.68 Nov 20, 1998 9,159.55
Aug 31, 1998 7,539.04 Nov 23, 1998 9,374.27
Sep 1, 1998 7,827.43 Nov 24, 1998 9,301.15
Sep 2, 1998 7,782.37 Nov 25, 1998 9,314.28
Sep 3, 1998 7,682.22 Nov 27, 1998 9,333.08
Sep 4, 1998 7,640.25 Nov 30, 1998 9,116.55
Sep 8, 1998 8,020.78 Dec 1, 1998 9,133.54
Sep 9, 1998 7,865.02 Dec 2, 1998 9,064.54
Sep 10, 1998 7,615.54 Dec 3, 1998 8,879.68
Sep 11, 1998 7,795.50 Dec 4, 1998 9,016.14
Sep 14, 1998 7,945.35 Dec 7, 1998 9,070.47
Sep 15, 1998 8,024.39 Dec 8, 1998 9,027.98
Sep 16, 1998 8,089.78 Dec 9, 1998 9,009.19
Sep 17, 1998 7,873.77 Dec 10, 1998 8,841.58
Sep 18, 1998 7,895.66 Dec 11, 1998 8,821.76
Sep 21, 1998 7,933.25 Dec 14, 1998 8,695.60
Sep 22, 1998 7,897.20 Dec 15, 1998 8,823.30
Sep 23, 1998 8,154.41 Dec 16, 1998 8,790.60
Sep 24, 1998 8,001.99 Dec 17, 1998 8,875.82
Sep 25, 1998 8,028.77 Dec 18, 1998 8,903.63
Sep 28, 1998 8,108.84 Dec 21, 1998 8,988.85
Sep 29, 1998 8,080.52 Dec 22, 1998 9,044.46
Sep 30, 1998 7,842.62 Dec 23, 1998 9,202.03
Oct 1, 1998 7,632.53 Dec 24, 1998 9,217.99
Oct 2, 1998 7,784.69 Dec 28, 1998 9,226.75
Oct 5, 1998 7,726.24 Dec 29, 1998 9,320.98
Oct 6, 1998 7,742.98 Dec 30, 1998 9,274.64
Oct 7, 1998 7,741.69 Dec 31, 1998 9,181.43
Oct 8, 1998 7,731.91 Jan 4, 1999 9,184.27
Oct 9, 1998 7,899.52 Jan 5, 1999 9,311.19
Oct 12, 1998 8,001.47 Jan 6, 1999 9,544.97
Oct 13, 1998 7,938.14 Jan 7, 1999 9,537.76
Oct 14, 1998 7,968.78 Jan 8, 1999 9,643.32
Appendix B
page 13
<PAGE>
STANDARD & POOR'S 500 STOCK INDEX
Date S&P500 Date S&P500 Date S&P500
- ------------ ------ ------------ ------ ------------ ------
Jan 2, 1990 359.69 Mar 29, 1990 340.79 Jun 26, 1990 352.06
Jan 3, 1990 358.76 Mar 30, 1990 339.94 Jun 27, 1990 355.14
Jan 4, 1990 355.67 Apr 2, 1990 338.70 Jun 28, 1990 357.63
Jan 5, 1990 352.20 Apr 3, 1990 343.64 Jun 29, 1990 358.02
Jan 8, 1990 353.79 Apr 4, 1990 341.09 Jul 2, 1990 359.54
Jan 9, 1990 349.62 Apr 5, 1990 340.73 Jul 3, 1990 360.16
Jan 10, 1990 347.31 Apr 6, 1990 340.08 Jul 5, 1990 355.68
Jan 11, 1990 348.53 Apr 9, 1990 341.37 Jul 6, 1990 358.42
Jan 12, 1990 339.93 Apr 10, 1990 342.07 Jul 9, 1990 359.52
Jan 15, 1990 337.00 Apr 11, 1990 341.92 Jul 10, 1990 356.49
Jan 16, 1990 340.75 Apr 12, 1990 344.34 Jul 11, 1990 361.23
Jan 17, 1990 337.40 Apr 16, 1990 344.74 Jul 12, 1990 365.44
Jan 18, 1990 338.19 Apr 17, 1990 344.68 Jul 13, 1990 367.31
Jan 19, 1990 339.15 Apr 18, 1990 340.72 Jul 16, 1990 368.95
Jan 22, 1990 330.38 Apr 19, 1990 338.09 Jul 17, 1990 367.52
Jan 23, 1990 331.61 Apr 20, 1990 335.12 Jul 18, 1990 364.22
Jan 24, 1990 330.26 Apr 23, 1990 331.05 Jul 19, 1990 365.32
Jan 25, 1990 326.08 Apr 24, 1990 330.36 Jul 20, 1990 361.61
Jan 26, 1990 325.80 Apr 25, 1990 332.03 Jul 23, 1990 355.31
Jan 29, 1990 325.20 Apr 26, 1990 332.92 Jul 24, 1990 355.79
Jan 30, 1990 322.98 Apr 27, 1990 329.11 Jul 25, 1990 357.09
Jan 31, 1990 329.08 Apr 30, 1990 330.80 Jul 26, 1990 355.91
Feb 1, 1990 328.79 May 1, 1990 332.25 Jul 27, 1990 353.44
Feb 2, 1990 330.92 May 2, 1990 334.48 Jul 30, 1990 355.55
Feb 5, 1990 331.85 May 3, 1990 335.57 Jul 31, 1990 356.15
Feb 6, 1990 329.66 May 4, 1990 338.39 Aug 1, 1990 355.52
Feb 7, 1990 333.75 May 7, 1990 340.53 Aug 2, 1990 351.48
Feb 8, 1990 332.96 May 8, 1990 342.01 Aug 3, 1990 344.86
Feb 9, 1990 333.62 May 9, 1990 347.86 Aug 6, 1990 334.43
Feb 12, 1990 330.08 May 10, 1990 343.82 Aug 7, 1990 334.83
Feb 13, 1990 331.02 May 11, 1990 352.00 Aug 8, 1990 338.35
Feb 14, 1990 332.01 May 14, 1990 354.75 Aug 9, 1990 339.94
Feb 15, 1990 334.89 May 15, 1990 354.28 Aug 10, 1990 335.52
Feb 16, 1990 332.72 May 16, 1990 354.00 Aug 13, 1990 338.84
Feb 20, 1990 327.99 May 17, 1990 354.47 Aug 14, 1990 339.39
Feb 21, 1990 327.67 May 18, 1990 354.64 Aug 15, 1990 340.06
Feb 22, 1990 325.70 May 21, 1990 358.00 Aug 16, 1990 332.39
Feb 23, 1990 324.15 May 22, 1990 358.43 Aug 17, 1990 327.83
Feb 26, 1990 328.67 May 23, 1990 359.29 Aug 20, 1990 328.51
Feb 27, 1990 330.26 May 24, 1990 358.41 Aug 21, 1990 321.86
Feb 28, 1990 331.89 May 25, 1990 354.58 Aug 22, 1990 316.55
Mar 1, 1990 332.74 May 29, 1990 360.65 Aug 23, 1990 307.06
Mar 2, 1990 335.54 May 30, 1990 360.86 Aug 24, 1990 311.51
Mar 5, 1990 333.74 May 31, 1990 361.23 Aug 27, 1990 321.44
Mar 6, 1990 337.93 Jun 1, 1990 363.16 Aug 28, 1990 321.34
Mar 7, 1990 336.95 Jun 4, 1990 367.40 Aug 29, 1990 324.19
Mar 8, 1990 340.27 Jun 5, 1990 366.64 Aug 30, 1990 318.71
Mar 9, 1990 337.93 Jun 6, 1990 364.96 Aug 31, 1990 322.56
Mar 12, 1990 338.67 Jun 7, 1990 363.15 Sep 4, 1990 323.09
Mar 13, 1990 336.00 Jun 8, 1990 358.71 Sep 5, 1990 324.39
Mar 14, 1990 336.87 Jun 11, 1990 361.63 Sep 6, 1990 320.46
Mar 15, 1990 338.07 Jun 12, 1990 366.25 Sep 7, 1990 323.40
Mar 16, 1990 341.91 Jun 13, 1990 364.90 Sep 10, 1990 321.63
Mar 19, 1990 343.53 Jun 14, 1990 362.90 Sep 11, 1990 321.04
Mar 20, 1990 341.57 Jun 15, 1990 362.91 Sep 12, 1990 322.54
Mar 21, 1990 339.74 Jun 18, 1990 356.88 Sep 13, 1990 318.65
Mar 22, 1990 335.65 Jun 19, 1990 358.97 Sep 14, 1990 316.83
Mar 23, 1990 337.22 Jun 20, 1990 359.10 Sep 17, 1990 317.77
Mar 26, 1990 337.63 Jun 21, 1990 360.47 Sep 18, 1990 318.60
Mar 27, 1990 341.50 Jun 22, 1990 355.43 Sep 19, 1990 316.60
Mar 28, 1990 342.00 Jun 25, 1990 352.31 Sep 20, 1990 311.48
Appendix B
page 1
<PAGE>
STANDARD & POOR'S 500 STOCK INDEX
Date S&P500 Date S&P500 Date S&P500
- ------------ ------ ------------ ------ ------------ ------
Sep 21, 1990 311.32 Dec 18, 1990 330.05 Mar 19, 1991 366.59
Sep 24, 1990 304.59 Dec 19, 1990 330.20 Mar 20, 1991 367.92
Sep 25, 1990 308.26 Dec 20, 1990 330.12 Mar 21, 1991 366.58
Sep 26, 1990 305.06 Dec 21, 1990 331.75 Mar 26, 1991 370.30
Sep 27, 1990 300.97 Dec 24, 1990 329.90 Mar 27, 1991 375.35
Sep 28, 1990 306.05 Dec 26, 1990 330.85 Mar 28, 1991 375.22
Oct 1, 1990 314.94 Dec 27, 1990 328.29 Apr 1, 1991 371.30
Oct 2, 1990 315.21 Dec 28, 1990 328.72 Apr 2, 1991 379.30
Oct 3, 1990 311.40 Dec 31, 1990 330.22 Apr 3, 1991 378.94
Oct 4, 1990 312.69 Jan 2, 1991 326.45 Apr 4, 1991 379.77
Oct 5, 1990 311.50 Jan 3, 1991 321.91 Apr 5, 1991 375.36
Oct 8, 1990 313.48 Jan 4, 1991 321.00 Apr 8, 1991 378.66
Oct 9, 1990 305.10 Jan 7, 1991 315.44 Apr 9, 1991 373.56
Oct 10, 1990 300.39 Jan 8, 1991 314.90 Apr 10, 1991 373.15
Oct 11, 1990 295.46 Jan 9, 1991 311.49 Apr 11, 1991 377.63
Oct 12, 1990 300.03 Jan 10, 1991 314.53 Apr 12, 1991 380.40
Oct 15, 1990 303.23 Jan 11, 1991 315.23 Apr 15, 1991 381.19
Oct 16, 1990 298.92 Jan 14, 1991 312.49 Apr 16, 1991 387.62
Oct 17, 1990 298.76 Jan 15, 1991 313.73 Apr 17, 1991 390.45
Oct 18, 1990 305.74 Jan 16, 1991 316.17 Apr 18, 1991 388.46
Oct 19, 1990 312.48 Jan 17, 1991 327.97 Apr 19, 1991 384.20
Oct 22, 1990 314.76 Jan 18, 1991 332.23 Apr 22, 1991 380.95
Oct 23, 1990 312.36 Jan 22, 1991 328.31 Apr 23, 1991 381.76
Oct 24, 1990 312.60 Jan 23, 1991 330.21 Apr 24, 1991 382.76
Oct 25, 1990 310.17 Jan 24, 1991 334.78 Apr 25, 1991 379.25
Oct 26, 1990 304.71 Jan 25, 1991 336.07 Apr 26, 1991 379.02
Oct 29, 1990 301.88 Jan 28, 1991 336.03 Apr 29, 1991 373.66
Oct 30, 1990 304.06 Jan 29, 1991 335.84 Apr 30, 1991 375.35
Oct 31, 1990 304.00 Jan 30, 1991 340.91 May 1, 1991 380.29
Nov 1, 1990 307.02 Jan 31, 1991 343.93 May 2, 1991 380.52
Nov 2, 1990 311.85 Feb 1, 1991 343.35 May 3, 1991 380.80
Nov 5, 1990 314.59 Feb 4, 1991 348.34 May 6, 1991 380.08
Nov 6, 1990 311.62 Feb 5, 1991 351.26 May 7, 1991 377.32
Nov 7, 1990 306.01 Feb 6, 1991 358.07 May 8, 1991 378.51
Nov 8, 1990 307.61 Feb 7, 1991 356.52 May 9, 1991 383.25
Nov 9, 1990 313.74 Feb 8, 1991 359.35 May 10, 1991 375.74
Nov 12, 1990 319.48 Feb 11, 1991 368.58 May 13, 1991 376.76
Nov 13, 1990 317.67 Feb 12, 1991 365.50 May 14, 1991 371.62
Nov 14, 1990 320.40 Feb 13, 1991 369.02 May 15, 1991 388.57
Nov 15, 1990 317.02 Feb 14, 1991 369.00 May 16, 1991 372.19
Nov 16, 1990 317.12 Feb 15, 1991 369.06 May 17, 1991 372.39
Nov 19, 1990 319.34 Feb 19, 1991 369.39 May 20, 1991 372.28
Nov 20, 1990 315.31 Feb 20, 1991 365.14 May 21, 1991 375.35
Nov 21, 1990 316.03 Feb 21, 1991 364.97 May 22, 1991 376.19
Nov 23, 1990 315.10 Feb 22, 1991 365.65 May 23, 1991 374.97
Nov 26, 1990 316.51 Feb 25, 1991 367.26 May 24, 1991 377.49
Nov 27, 1990 318.10 Feb 26, 1991 362.81 May 27, 1991 377.49
Nov 28, 1990 317.95 Feb 27, 1991 367.74 May 28, 1991 381.94
Nov 29, 1990 316.42 Feb 28, 1991 367.07 May 29, 1991 382.79
Nov 30, 1990 322.22 Mar 1, 1991 370.47 May 30, 1991 386.96
Dec 3, 1990 324.10 Mar 4, 1991 369.33 May 31, 1991 389.83
Dec 4, 1990 326.35 Mar 5, 1991 376.72 Jun 3, 1991 388.06
Dec 5, 1990 329.92 Mar 6, 1991 376.17 Jun 4, 1991 387.74
Dec 6, 1990 329.07 Mar 7, 1991 375.91 Jun 5, 1991 385.09
Dec 7, 1990 327.75 Mar 8, 1991 374.95 Jun 6, 1991 383.63
Dec 10, 1990 328.89 Mar 11, 1991 372.96 Jun 7, 1991 379.43
Dec 11, 1990 326.44 Mar 12, 1991 370.03 Jun 10, 1991 378.57
Dec 12, 1990 330.19 Mar 13, 1991 374.57 Jun 11, 1991 381.05
Dec 13, 1990 329.34 Mar 14, 1991 373.50 Jun 12, 1991 376.65
Dec 14, 1990 326.82 Mar 15, 1991 373.59 Jun 13, 1991 377.63
Dec 17, 1990 326.02 Mar 18, 1991 372.11 Jun 14, 1991 382.29
Appendix B
page 2
<PAGE>
STANDARD & POOR'S 500 STOCK INDEX
Date S&P500 Date S&P500 Date S&P500
- ------------ ------ ------------ ------ ------------ ------
Jun 17, 1991 380.13 Sep 12, 1991 387.34 Dec 9, 1991 378.26
Jun 18, 1991 378.59 Sep 13, 1991 383.59 Dec 10, 1991 377.90
Jun 19, 1991 375.09 Sep 16, 1991 385.78 Dec 11, 1991 377.70
Jun 20, 1991 375.42 Sep 17, 1991 385.50 Dec 12, 1991 381.55
Jun 21, 1991 377.75 Sep 18, 1991 386.94 Dec 13, 1991 384.47
Jun 24, 1991 370.94 Sep 19, 1991 387.56 Dec 16, 1991 384.46
Jun 25, 1991 370.65 Sep 20, 1991 387.92 Dec 17, 1991 382.74
Jun 26, 1991 371.59 Sep 23, 1991 385.92 Dec 18, 1991 383.48
Jun 27, 1991 374.40 Sep 24, 1991 387.71 Dec 19, 1991 382.52
Jun 28, 1991 371.16 Sep 25, 1991 386.88 Dec 20, 1991 387.04
Jul 1, 1991 377.92 Sep 26, 1991 386.59 Dec 23, 1991 396.82
Jul 2, 1991 377.47 Sep 27, 1991 385.90 Dec 24, 1991 399.33
Jul 3, 1991 373.33 Sep 30, 1991 387.86 Dec 26, 1991 404.84
Jul 5, 1991 374.08 Oct 1, 1991 389.20 Dec 27, 1991 406.46
Jul 8, 1991 377.94 Oct 2, 1991 388.26 Dec 30, 1991 415.14
Jul 9, 1991 376.11 Oct 3, 1991 384.47 Dec 31, 1991 417.09
Jul 10, 1991 375.74 Oct 4, 1991 381.24 Jan 2, 1992 417.26
Jul 11, 1991 376.97 Oct 7, 1991 379.50 Jan 3, 1992 419.34
Jul 12, 1991 380.25 Oct 8, 1991 380.67 Jan 6, 1992 417.96
Jul 15, 1991 382.39 Oct 9, 1991 376.80 Jan 7, 1992 417.40
Jul 16, 1991 381.54 Oct 10, 1991 380.55 Jan 8, 1992 418.10
Jul 17, 1991 381.18 Oct 11, 1991 381.45 Jan 9, 1992 417.61
Jul 18, 1991 385.37 Oct 14, 1991 386.47 Jan 10, 1992 415.10
Jul 19, 1991 384.22 Oct 15, 1991 391.01 Jan 13, 1992 414.34
Jul 22, 1991 382.88 Oct 16, 1991 392.80 Jan 14, 1992 420.44
Jul 23, 1991 379.42 Oct 17, 1991 391.92 Jan 15, 1992 420.77
Jul 24, 1991 378.64 Oct 18, 1991 392.50 Jan 16, 1992 418.21
Jul 25, 1991 380.96 Oct 21, 1991 390.02 Jan 17, 1992 418.86
Jul 26, 1991 380.93 Oct 22, 1991 387.83 Jan 20, 1992 416.36
Jul 29, 1991 383.15 Oct 23, 1991 387.94 Jan 21, 1992 412.64
Jul 30, 1991 386.69 Oct 24, 1991 385.07 Jan 22, 1992 418.13
Jul 31, 1991 387.81 Oct 25, 1991 384.20 Jan 23, 1992 414.96
Aug 1, 1991 387.12 Oct 28, 1991 389.52 Jan 24, 1992 415.48
Aug 2, 1991 387.18 Oct 29, 1991 391.48 Jan 27, 1992 414.99
Aug 5, 1991 385.06 Oct 30, 1991 392.96 Jan 28, 1992 414.96
Aug 6, 1991 390.62 Oct 31, 1991 392.46 Jan 29, 1992 410.34
Aug 7, 1991 390.56 Nov 1, 1991 391.32 Jan 30, 1992 411.63
Aug 8, 1991 389.32 Nov 4, 1991 390.28 Jan 31, 1992 408.79
Aug 9, 1991 387.12 Nov 5, 1991 388.71 Feb 3, 1992 409.53
Aug 12, 1991 388.02 Nov 6, 1991 389.97 Feb 4, 1992 413.85
Aug 13, 1991 389.62 Nov 7, 1991 393.72 Feb 5, 1992 413.84
Aug 14, 1991 389.90 Nov 8, 1991 392.89 Feb 6, 1992 413.82
Aug 15, 1991 389.33 Nov 11, 1991 393.12 Feb 7, 1992 411.09
Aug 16, 1991 385.58 Nov 12, 1991 396.74 Feb 10, 1992 413.77
Aug 19, 1991 376.47 Nov 13, 1991 397.41 Feb 11, 1992 413.76
Aug 20, 1991 379.43 Nov 14, 1991 397.15 Feb 12, 1992 417.13
Aug 21, 1991 390.59 Nov 15, 1991 382.62 Feb 13, 1992 413.69
Aug 22, 1991 391.33 Nov 18, 1991 385.24 Feb 14, 1992 412.48
Aug 23, 1991 395.17 Nov 19, 1991 379.42 Feb 18, 1992 407.38
Aug 26, 1991 393.85 Nov 20, 1991 378.53 Feb 19, 1992 408.26
Aug 27, 1991 393.06 Nov 21, 1991 380.06 Feb 20, 1992 413.90
Aug 28, 1991 396.64 Nov 22, 1991 376.14 Feb 21, 1992 411.46
Aug 29, 1991 396.47 Nov 25, 1991 375.34 Feb 24, 1992 412.27
Aug 30, 1991 395.43 Nov 26, 1991 377.96 Feb 25, 1992 410.45
Sep 3, 1991 392.15 Nov 27, 1991 376.55 Feb 26, 1992 415.35
Sep 4, 1991 389.97 Nov 29, 1991 375.22 Feb 27, 1992 413.86
Sep 5, 1991 389.14 Dec 2, 1991 381.40 Feb 28, 1992 412.70
Sep 6, 1991 389.10 Dec 3, 1991 380.96 Mar 2, 1992 412.45
Sep 9, 1991 388.77 Dec 4, 1991 380.07 Mar 3, 1992 412.85
Sep 10, 1991 384.56 Dec 5, 1991 377.39 Mar 4, 1992 409.33
Sep 11, 1991 385.09 Dec 6, 1991 379.10 Mar 5, 1992 406.51
Appendix B
page 3
<PAGE>
STANDARD & POOR'S 500 STOCK INDEX
Date S&P500 Date S&P500 Date S&P500
- ------------ ------ ------------ ------ ------------ ------
Mar 6, 1992 404.44 Jun 3, 1992 414.59 Aug 28, 1992 414.84
Mar 9, 1992 405.21 Jun 4, 1992 413.26 Aug 31, 1992 414.03
Mar 10, 1992 406.89 Jun 5, 1992 413.48 Sep 1, 1992 416.07
Mar 11, 1992 404.03 Jun 8, 1992 413.36 Sep 2, 1992 417.98
Mar 12, 1992 403.89 Jun 9, 1992 410.06 Sep 3, 1992 419.98
Mar 13, 1992 405.84 Jun 10, 1992 407.25 Sep 4, 1992 417.08
Mar 16, 1992 406.39 Jun 11, 1992 409.05 Sep 8, 1992 414.44
Mar 17, 1992 409.58 Jun 12, 1992 409.76 Sep 9, 1992 416.36
Mar 18, 1992 409.15 Jun 15, 1992 410.29 Sep 10, 1992 419.95
Mar 19, 1992 409.80 Jun 16, 1992 408.32 Sep 11, 1992 419.58
Mar 20, 1992 411.30 Jun 17, 1992 402.26 Sep 14, 1992 425.27
Mar 23, 1992 409.91 Jun 18, 1992 400.96 Sep 15, 1992 419.77
Mar 24, 1992 408.88 Jun 19, 1992 403.67 Sep 16, 1992 419.92
Mar 25, 1992 407.52 Jun 22, 1992 403.40 Sep 17, 1992 419.93
Mar 26, 1992 407.86 Jun 23, 1992 404.04 Sep 18, 1992 422.93
Mar 27, 1992 403.50 Jun 24, 1992 403.83 Sep 21, 1992 422.14
Mar 30, 1992 403.00 Jun 25, 1992 403.12 Sep 22, 1992 417.14
Mar 31, 1992 403.69 Jun 26, 1992 403.45 Sep 23, 1992 417.44
Apr 1, 1992 404.23 Jun 29, 1992 408.94 Sep 24, 1992 418.47
Apr 2, 1992 400.50 Jun 30, 1992 408.14 Sep 25, 1992 414.35
Apr 3, 1992 401.55 Jul 1, 1992 412.88 Sep 28, 1992 416.62
Apr 6, 1992 405.59 Jul 2, 1992 411.77 Sep 29, 1992 416.80
Apr 7, 1992 398.06 Jul 6, 1992 413.84 Sep 30, 1992 417.80
Apr 8, 1992 394.50 Jul 7, 1992 409.16 Oct 1, 1992 416.29
Apr 9, 1992 400.64 Jul 8, 1992 410.28 Oct 2, 1992 410.47
Apr 10, 1992 404.29 Jul 9, 1992 414.23 Oct 5, 1992 407.57
Apr 13, 1992 406.08 Jul 10, 1992 414.62 Oct 6, 1992 407.18
Apr 14, 1992 412.39 Jul 13, 1992 414.87 Oct 7, 1992 404.25
Apr 15, 1992 416.28 Jul 14, 1992 417.68 Oct 8, 1992 407.75
Apr 16, 1992 416.05 Jul 15, 1992 417.10 Oct 9, 1992 402.66
Apr 20, 1992 410.16 Jul 16, 1992 417.54 Oct 12, 1992 407.44
Apr 21, 1992 410.26 Jul 17, 1992 415.62 Oct 13, 1992 409.30
Apr 22, 1992 409.81 Jul 20, 1992 413.75 Oct 14, 1992 409.37
Apr 23, 1992 411.60 Jul 21, 1992 413.76 Oct 15, 1992 409.60
Apr 24, 1992 409.02 Jul 22, 1992 410.93 Oct 16, 1992 411.73
Apr 27, 1992 408.45 Jul 23, 1992 412.08 Oct 19, 1992 414.98
Apr 28, 1992 409.11 Jul 24, 1992 411.60 Oct 20, 1992 415.48
Apr 29, 1992 412.02 Jul 27, 1992 411.54 Oct 21, 1992 415.67
Apr 30, 1992 414.95 Jul 28, 1992 417.52 Oct 22, 1992 414.90
May 1, 1992 412.53 Jul 29, 1992 422.23 Oct 23, 1992 414.10
May 4, 1992 416.91 Jul 30, 1992 423.92 Oct 26, 1992 418.16
May 5, 1992 416.84 Jul 31, 1992 424.21 Oct 27, 1992 418.49
May 6, 1992 416.79 Aug 3, 1992 425.09 Oct 28, 1992 420.13
May 7, 1992 415.85 Aug 4, 1992 424.36 Oct 29, 1992 420.86
May 8, 1992 416.05 Aug 5, 1992 422.19 Oct 30, 1992 418.68
May 11, 1992 418.49 Aug 6, 1992 420.59 Nov 2, 1992 422.75
May 12, 1992 416.29 Aug 7, 1992 418.88 Nov 3, 1992 419.92
May 13, 1992 416.45 Aug 10, 1992 419.42 Nov 4, 1992 417.11
May 14, 1992 413.14 Aug 11, 1992 418.90 Nov 5, 1992 418.34
May 15, 1992 410.09 Aug 12, 1992 417.78 Nov 6, 1992 417.58
May 18, 1992 412.81 Aug 13, 1992 417.73 Nov 9, 1992 418.59
May 19, 1992 416.37 Aug 14, 1992 419.91 Nov 10, 1992 418.62
May 20, 1992 415.39 Aug 17, 1992 420.74 Nov 11, 1992 422.20
May 21, 1992 412.60 Aug 18, 1992 421.34 Nov 12, 1992 422.87
May 22, 1992 414.02 Aug 19, 1992 418.19 Nov 13, 1992 422.43
May 26, 1992 411.41 Aug 20, 1992 418.26 Nov 16, 1992 420.68
May 27, 1992 412.17 Aug 21, 1992 414.85 Nov 17, 1992 419.27
May 28, 1992 416.74 Aug 24, 1992 410.72 Nov 18, 1992 422.85
May 29, 1992 415.35 Aug 25, 1992 411.61 Nov 19, 1992 423.61
Jun 1, 1992 417.30 Aug 26, 1992 413.51 Nov 20, 1992 426.65
Jun 2, 1992 413.50 Aug 27, 1992 413.53 Nov 23, 1992 425.12
Appendix B
page 4
<PAGE>
STANDARD & POOR'S 500 STOCK INDEX
Date S&P500 Date S&P500 Date S&P500
- ------------ ------ ------------ ------ ------------ ------
Nov 24, 1992 427.59 Feb 23, 1993 434.80 May 20, 1993 450.59
Nov 25, 1992 429.19 Feb 24, 1993 440.87 May 21, 1993 445.84
Nov 27, 1992 430.16 Feb 25, 1993 442.33 May 24, 1993 448.00
Nov 30, 1992 431.35 Feb 26, 1993 443.38 May 25, 1993 448.85
Dec 1, 1992 430.78 Mar 1, 1993 442.01 May 26, 1993 453.44
Dec 2, 1992 429.89 Mar 2, 1993 447.90 May 27, 1993 452.42
Dec 3, 1992 429.91 Mar 3, 1993 449.26 May 28, 1993 450.21
Dec 4, 1992 432.06 Mar 4, 1993 447.34 Jun 1, 1993 453.83
Dec 7, 1992 435.31 Mar 5, 1993 446.11 Jun 2, 1993 453.85
Dec 8, 1992 436.99 Mar 8, 1993 454.71 Jun 3, 1993 452.49
Dec 9, 1992 435.65 Mar 9, 1993 454.40 Jun 4, 1993 450.06
Dec 10, 1992 434.64 Mar 10, 1993 456.34 Jun 7, 1993 447.69
Dec 11, 1992 433.73 Mar 11, 1993 453.72 Jun 8, 1993 444.71
Dec 14, 1992 432.84 Mar 12, 1993 449.83 Jun 9, 1993 445.78
Dec 15, 1992 432.57 Mar 15, 1993 451.43 Jun 10, 1993 445.38
Dec 16, 1992 431.52 Mar 16, 1993 451.37 Jun 11, 1993 447.30
Dec 17, 1992 435.43 Mar 17, 1993 448.31 Jun 14, 1993 447.71
Dec 18, 1992 441.28 Mar 18, 1993 451.89 Jun 15, 1993 446.27
Dec 21, 1992 440.70 Mar 19, 1993 450.18 Jun 16, 1993 447.43
Dec 22, 1992 440.31 Mar 22, 1993 448.88 Jun 17, 1993 448.54
Dec 23, 1992 439.03 Mar 23, 1993 448.76 Jun 18, 1993 443.68
Dec 24, 1992 439.77 Mar 24, 1993 448.07 Jun 21, 1993 446.22
Dec 28, 1992 439.15 Mar 25, 1993 450.88 Jun 22, 1993 445.93
Dec 29, 1992 437.98 Mar 26, 1993 447.78 Jun 23, 1993 443.19
Dec 30, 1992 438.82 Mar 29, 1993 450.77 Jun 24, 1993 446.62
Dec 31, 1992 435.71 Mar 30, 1993 451.97 Jun 25, 1993 447.60
Jan 4, 1993 435.38 Mar 31, 1993 451.67 Jun 28, 1993 451.85
Jan 5, 1993 434.34 Apr 1, 1993 450.30 Jun 29, 1993 450.69
Jan 6, 1993 434.52 Apr 2, 1993 441.39 Jun 30, 1993 450.53
Jan 7, 1993 430.73 Apr 5, 1993 442.29 Jul 1, 1993 449.02
Jan 8, 1993 429.04 Apr 6, 1993 441.16 Jul 2, 1993 445.84
Jan 11, 1993 430.95 Apr 7, 1993 442.73 Jul 6, 1993 441.43
Jan 12, 1993 431.04 Apr 8, 1993 441.84 Jul 7, 1993 442.83
Jan 13, 1993 433.03 Apr 12, 1993 448.37 Jul 8, 1993 448.64
Jan 14, 1993 435.94 Apr 13, 1993 449.22 Jul 9, 1993 448.11
Jan 15, 1993 437.15 Apr 14, 1993 448.66 Jul 12, 1993 448.98
Jan 18, 1993 436.84 Apr 15, 1993 448.40 Jul 13, 1993 448.09
Jan 19, 1993 435.13 Apr 16, 1993 448.94 Jul 14, 1993 450.08
Jan 20, 1993 433.37 Apr 19, 1993 447.46 Jul 15, 1993 449.22
Jan 21, 1993 435.49 Apr 20, 1993 445.10 Jul 16, 1993 445.75
Jan 22, 1993 436.11 Apr 21, 1993 443.63 Jul 19, 1993 446.03
Jan 25, 1993 440.01 Apr 22, 1993 439.46 Jul 20, 1993 447.31
Jan 26, 1993 439.95 Apr 23, 1993 437.03 Jul 21, 1993 447.18
Jan 27, 1993 438.11 Apr 26, 1993 433.54 Jul 22, 1993 444.51
Jan 28, 1993 438.66 Apr 27, 1993 438.01 Jul 23, 1993 447.10
Jan 29, 1993 438.78 Apr 28, 1993 438.02 Jul 26, 1993 449.09
Feb 1, 1993 442.52 Apr 29, 1993 438.89 Jul 27, 1993 448.24
Feb 2, 1993 442.55 Apr 30, 1993 440.19 Jul 28, 1993 447.19
Feb 3, 1993 447.20 May 3, 1993 442.46 Jul 29, 1993 450.24
Feb 4, 1993 449.56 May 4, 1993 444.05 Jul 30, 1993 448.13
Feb 5, 1993 448.93 May 5, 1993 444.52 Aug 2, 1993 450.15
Feb 8, 1993 447.85 May 6, 1993 443.26 Aug 3, 1993 449.27
Feb 9, 1993 445.33 May 7, 1993 442.31 Aug 4, 1993 448.54
Feb 10, 1993 446.23 May 10, 1993 442.80 Aug 5, 1993 448.13
Feb 11, 1993 447.66 May 11, 1993 444.36 Aug 6, 1993 448.68
Feb 12, 1993 444.58 May 12, 1993 444.80 Aug 9, 1993 450.74
Feb 16, 1993 433.91 May 13, 1993 439.23 Aug 10, 1993 449.45
Feb 17, 1993 433.30 May 14, 1993 439.56 Aug 11, 1993 450.46
Feb 18, 1993 431.90 May 17, 1993 440.37 Aug 12, 1993 448.96
Feb 19, 1993 434.22 May 18, 1993 440.32 Aug 13, 1993 450.14
Feb 22, 1993 435.24 May 19, 1993 447.54 Aug 16, 1993 452.38
Appendix B
page 5
<PAGE>
STANDARD & POOR'S 500 STOCK INDEX
Date S&P500 Date S&P500 Date S&P500
- ------------ ------ ------------ ------ ------------ ------
Aug 17, 1993 453.13 Nov 11, 1993 462.64 Feb 8, 1994 471.06
Aug 18, 1993 456.04 Nov 12, 1993 465.39 Feb 9, 1994 472.77
Aug 19, 1993 456.43 Nov 15, 1993 463.75 Feb 10, 1994 468.93
Aug 20, 1993 456.16 Nov 16, 1993 466.74 Feb 11, 1994 470.18
Aug 23, 1993 455.23 Nov 17, 1993 464.81 Feb 14, 1994 470.23
Aug 24, 1993 459.77 Nov 18, 1993 463.62 Feb 15, 1994 472.52
Aug 25, 1993 460.13 Nov 19, 1993 462.60 Feb 16, 1994 472.79
Aug 26, 1993 461.04 Nov 22, 1993 459.13 Feb 17, 1994 470.34
Aug 27, 1993 460.54 Nov 23, 1993 461.03 Feb 18, 1994 467.69
Aug 30, 1993 461.90 Nov 24, 1993 462.36 Feb 22, 1994 471.46
Aug 31, 1993 463.56 Nov 26, 1993 463.06 Feb 23, 1994 470.69
Sep 1, 1993 463.15 Nov 29, 1993 461.90 Feb 24, 1994 464.26
Sep 2, 1993 461.30 Nov 30, 1993 461.79 Feb 25, 1994 466.07
Sep 3, 1993 461.34 Dec 1, 1993 461.89 Feb 28, 1994 467.14
Sep 7, 1993 458.52 Dec 2, 1993 463.11 Mar 1, 1994 464.44
Sep 8, 1993 456.65 Dec 3, 1993 464.89 Mar 2, 1994 464.81
Sep 9, 1993 457.50 Dec 6, 1993 466.43 Mar 3, 1994 463.01
Sep 10, 1993 461.72 Dec 7, 1993 466.76 Mar 4, 1994 464.74
Sep 13, 1993 462.06 Dec 8, 1993 466.29 Mar 7, 1994 466.91
Sep 14, 1993 459.90 Dec 9, 1993 464.18 Mar 8, 1994 465.88
Sep 15, 1993 461.60 Dec 10, 1993 463.93 Mar 9, 1994 467.06
Sep 16, 1993 459.43 Dec 13, 1993 465.70 Mar 10, 1994 463.90
Sep 17, 1993 458.83 Dec 14, 1993 463.06 Mar 11, 1994 466.44
Sep 20, 1993 455.05 Dec 15, 1993 461.84 Mar 14, 1994 467.39
Sep 21, 1993 452.95 Dec 16, 1993 463.34 Mar 15, 1994 467.01
Sep 22, 1993 456.20 Dec 17, 1993 466.38 Mar 16, 1994 469.42
Sep 23, 1993 457.74 Dec 20, 1993 465.85 Mar 17, 1994 470.90
Sep 24, 1993 457.63 Dec 21, 1993 465.30 Mar 18, 1994 471.06
Sep 27, 1993 461.80 Dec 22, 1993 467.32 Mar 21, 1994 468.54
Sep 28, 1993 461.53 Dec 23, 1993 467.38 Mar 22, 1994 468.80
Sep 29, 1993 460.11 Dec 27, 1993 470.54 Mar 23, 1994 468.54
Sep 30, 1993 458.93 Dec 28, 1993 470.94 Mar 24, 1994 464.35
Oct 1, 1993 461.28 Dec 29, 1993 470.58 Mar 25, 1994 460.58
Oct 4, 1993 461.34 Dec 30, 1993 468.64 Mar 28, 1994 460.00
Oct 5, 1993 461.20 Dec 31, 1993 466.45 Mar 29, 1994 452.48
Oct 6, 1993 460.74 Jan 3, 1994 465.44 Mar 30, 1994 445.55
Oct 7, 1993 459.18 Jan 4, 1994 466.89 Mar 31, 1994 445.77
Oct 8, 1993 460.31 Jan 5, 1994 467.55 Apr 1, 1994 445.77
Oct 11, 1993 460.88 Jan 6, 1994 467.12 Apr 4, 1994 438.92
Oct 12, 1993 461.12 Jan 7, 1994 469.9 Apr 5, 1994 448.29
Oct 13, 1993 461.49 Jan 10, 1994 475.27 Apr 6, 1994 448.05
Oct 14, 1993 466.83 Jan 11, 1994 474.13 Apr 7, 1994 450.88
Oct 15, 1993 469.50 Jan 12, 1994 474.17 Apr 8, 1994 447.10
Oct 18, 1993 468.45 Jan 13, 1994 472.47 Apr 11, 1994 449.87
Oct 19, 1993 466.21 Jan 14, 1994 474.91 Apr 12, 1994 447.57
Oct 20, 1993 466.07 Jan 17, 1994 473.3 Apr 13, 1994 446.26
Oct 21, 1993 465.36 Jan 18, 1994 474.25 Apr 14, 1994 446.38
Oct 22, 1993 463.27 Jan 19, 1994 474.3 Apr 15, 1994 446.18
Oct 25, 1993 464.20 Jan 20, 1994 474.98 Apr 18, 1994 442.46
Oct 26, 1993 464.30 Jan 21, 1994 474.73 Apr 19, 1994 442.54
Oct 27, 1993 464.61 Jan 24, 1994 471.97 Apr 20, 1994 441.96
Oct 28, 1993 467.73 Jan 25, 1994 470.92 Apr 21, 1994 448.73
Oct 29, 1993 467.83 Jan 26, 1994 473.2 Apr 22, 1994 447.63
Nov 1, 1993 469.10 Jan 27, 1994 477.05 Apr 25, 1994 452.71
Nov 2, 1993 468.44 Jan 28, 1994 478.7 Apr 26, 1994 451.87
Nov 3, 1993 463.02 Jan 31, 1994 481.61 Apr 28, 1994 449.10
Nov 4, 1993 457.49 Feb 1, 1994 479.62 Apr 29, 1994 450.91
Nov 5, 1993 459.57 Feb 2, 1994 482.00 May 2, 1994 453.02
Nov 8, 1993 460.21 Feb 3, 1994 480.71 May 3, 1994 453.03
Nov 9, 1993 460.33 Feb 4, 1994 469.81 May 4, 1994 451.72
Nov 10, 1993 463.72 Feb 7, 1994 471.76 May 5, 1994 451.38
Appendix B
page 6
<PAGE>
STANDARD & POOR'S 500 STOCK INDEX
Date S&P500 Date S&P500 Date S&P500
- ------------ ------ ------------ ------ ------------ ------
May 6, 1994 447.82 Aug 2, 1994 460.56 Oct 27, 1994 465.85
May 9, 1994 442.32 Aug 3, 1994 461.46 Oct 28, 1994 473.77
May 10, 1994 446.01 Aug 4, 1994 458.40 Oct 31, 1994 472.35
May 11, 1994 441.49 Aug 5, 1994 457.09 Nov 1, 1994 468.42
May 12, 1994 443.75 Aug 8, 1994 457.89 Nov 2, 1994 466.51
May 13, 1994 444.14 Aug 9, 1994 457.92 Nov 3, 1994 467.91
May 16, 1994 444.49 Aug 10, 1994 460.30 Nov 4, 1994 462.28
May 17, 1994 449.37 Aug 11, 1994 458.88 Nov 7, 1994 463.06
May 18, 1994 453.69 Aug 12, 1994 461.95 Nov 8, 1994 465.65
May 19, 1994 456.48 Aug 15, 1994 461.23 Nov 9, 1994 465.42
May 20, 1994 454.92 Aug 16, 1994 465.01 Nov 10, 1994 464.35
May 23, 1994 453.20 Aug 17, 1994 465.17 Nov 11, 1994 462.35
May 24, 1994 454.81 Aug 18, 1994 463.17 Nov 14, 1994 466.04
May 25, 1994 456.34 Aug 19, 1994 463.68 Nov 15, 1994 465.03
May 26, 1994 457.06 Aug 22, 1994 462.31 Nov 16, 1994 465.62
May 27, 1994 457.33 Aug 23, 1994 464.51 Nov 17, 1994 463.57
May 31, 1994 456.50 Aug 24, 1994 469.03 Nov 18, 1994 461.47
Jun 1, 1994 457.63 Aug 25, 1994 468.08 Nov 21, 1994 458.29
Jun 2, 1994 457.65 Aug 26, 1994 473.80 Nov 22, 1994 450.08
Jun 3, 1994 460.13 Aug 29, 1994 474.59 Nov 23, 1994 449.93
Jun 6, 1994 458.88 Aug 30, 1994 476.09 Nov 25, 1994 452.29
Jun 7, 1994 458.21 Aug 31, 1994 475.50 Nov 28, 1994 454.16
Jun 8, 1994 457.06 Sep 1, 1994 473.17 Nov 29, 1994 455.17
Jun 9, 1994 457.86 Sep 2, 1994 470.99 Nov 30, 1994 453.69
Jun 10, 1994 458.67 Sep 6, 1994 471.86 Dec 1, 1994 448.92
Jun 13, 1994 459.10 Sep 7, 1994 470.99 Dec 2, 1994 453.30
Jun 14, 1994 462.37 Sep 8, 1994 473.14 Dec 5, 1994 453.33
Jun 15, 1994 460.61 Sep 9, 1994 468.18 Dec 6, 1994 453.11
Jun 16, 1994 461.93 Sep 12, 1994 466.21 Dec 7, 1994 451.23
Jun 17, 1994 458.45 Sep 13, 1994 467.52 Dec 8, 1994 445.45
Jun 20, 1994 455.48 Sep 14, 1994 468.80 Dec 9, 1994 446.97
Jun 21, 1994 451.34 Sep 15, 1994 474.81 Dec 12, 1994 449.47
Jun 22, 1994 453.09 Sep 16, 1994 471.19 Dec 13, 1994 450.15
Jun 23, 1994 449.63 Sep 19, 1994 470.85 Dec 14, 1994 454.97
Jun 24, 1994 442.80 Sep 20, 1994 463.36 Dec 15, 1994 455.35
Jun 27, 1994 447.31 Sep 21, 1994 461.46 Dec 16, 1994 458.80
Jun 28, 1994 446.07 Sep 22, 1994 461.27 Dec 19, 1994 457.91
Jun 29, 1994 447.63 Sep 23, 1994 459.67 Dec 20, 1994 457.10
Jun 30, 1994 444.27 Sep 26, 1994 460.82 Dec 21, 1994 459.61
Jul 1, 1994 446.20 Sep 27, 1994 462.05 Dec 22, 1994 459.68
Jul 4, 1994 446.20 Sep 28, 1994 464.81 Dec 23, 1994 459.83
Jul 5, 1994 446.37 Sep 29, 1994 462.23 Dec 27, 1994 462.47
Jul 6, 1994 446.13 Sep 30, 1994 462.71 Dec 28, 1994 460.86
Jul 7, 1994 448.38 Oct 3, 1994 461.74 Dec 29, 1994 461.17
Jul 8, 1994 449.55 Oct 4, 1994 454.59 Dec 30, 1994 459.27
Jul 11, 1994 448.06 Oct 5, 1994 453.52 Jan 3, 1995 459.11
Jul 12, 1994 447.95 Oct 6, 1994 452.36 Jan 4, 1995 460.71
Jul 13, 1994 448.73 Oct 7, 1994 455.10 Jan 5, 1995 460.34
Jul 14, 1994 453.41 Oct 10, 1994 459.04 Jan 6, 1995 460.68
Jul 15, 1994 454.16 Oct 11, 1994 465.79 Jan 9, 1995 460.83
Jul 18, 1994 455.22 Oct 12, 1994 465.47 Jan 10, 1995 461.68
Jul 19, 1994 453.86 Oct 13, 1994 467.79 Jan 11, 1995 461.67
Jul 20, 1994 451.60 Oct 14, 1994 469.10 Jan 12, 1995 461.64
Jul 21, 1994 452.61 Oct 17, 1994 468.96 Jan 13, 1995 465.97
Jul 22, 1994 453.11 Oct 18, 1994 467.66 Jan 16, 1995 469.38
Jul 25, 1994 454.25 Oct 19, 1994 470.28 Jan 17, 1995 470.05
Jul 26, 1994 453.36 Oct 20, 1994 466.85 Jan 18, 1995 469.71
Jul 27, 1994 452.57 Oct 21, 1994 464.89 Jan 19, 1995 466.95
Jul 28, 1994 454.24 Oct 24, 1994 460.83 Jan 20, 1995 464.78
Jul 29, 1994 458.25 Oct 25, 1994 461.52 Jan 23, 1995 465.82
Aug 1, 1994 461.01 Oct 26, 1994 462.61 Jan 24, 1995 465.86
Appendix B
page 7
<PAGE>
STANDARD & POOR'S 500 STOCK INDEX
Date S&P500 Date S&P500 Date S&P500
- ------------ ------ ------------ ------ ------------ ------
Jan 25, 1995 467.44 Apr 24, 1995 512.89 Jul 20, 1995 553.54
Jan 26, 1995 468.32 Apr 25, 1995 512.10 Jul 21, 1995 553.62
Jan 27, 1995 470.39 Apr 26, 1995 512.66 Jul 24, 1995 556.63
Jan 30, 1995 468.51 Apr 27, 1995 513.55 Jul 25, 1995 561.10
Jan 31, 1995 470.42 Apr 28, 1995 514.71 Jul 26, 1995 561.61
Feb 1, 1995 470.40 May 1, 1995 514.26 Jul 27, 1995 565.22
Feb 2, 1995 472.79 May 2, 1995 514.86 Jul 28, 1995 562.93
Feb 3, 1995 478.65 May 3, 1995 520.48 Jul 31, 1995 562.06
Feb 6, 1995 481.14 May 4, 1995 520.54 Aug 1, 1995 559.64
Feb 7, 1995 480.81 May 5, 1995 520.12 Aug 2, 1995 558.80
Feb 8, 1995 481.19 May 8, 1995 523.96 Aug 3, 1995 558.75
Feb 9, 1995 480.19 May 9, 1995 523.56 Aug 4, 1995 558.94
Feb 10, 1995 481.46 May 10, 1995 524.36 Aug 7, 1995 560.03
Feb 13, 1995 481.65 May 11, 1995 524.37 Aug 8, 1995 560.39
Feb 14, 1995 482.55 May 12, 1995 525.55 Aug 9, 1995 559.71
Feb 15, 1995 484.54 May 15, 1995 527.74 Aug 10, 1995 557.45
Feb 16, 1995 485.22 May 16, 1995 528.19 Aug 11, 1995 555.11
Feb 17, 1995 481.97 May 17, 1995 527.07 Aug 14, 1995 559.74
Feb 21, 1995 482.72 May 18, 1995 519.58 Aug 15, 1995 558.57
Feb 22, 1995 485.07 May 19, 1995 519.19 Aug 16, 1995 559.97
Feb 23, 1995 486.91 May 22, 1995 523.65 Aug 17, 1995 559.04
Feb 24, 1995 488.26 May 23, 1995 528.59 Aug 18, 1995 559.21
Feb 27, 1995 483.96 May 24, 1995 528.61 Aug 21, 1995 558.11
Feb 28, 1995 487.39 May 25, 1995 528.59 Aug 22, 1995 559.52
Mar 1, 1995 485.65 May 26, 1995 523.65 Aug 23, 1995 557.14
Mar 2, 1995 485.13 May 30, 1995 523.58 Aug 24, 1995 557.46
Mar 3, 1995 485.42 May 31, 1995 533.40 Aug 25, 1995 560.10
Mar 6, 1995 485.63 Jun 1, 1995 533.49 Aug 28, 1995 559.05
Mar 7, 1995 482.12 Jun 2, 1995 532.51 Aug 29, 1995 560.00
Mar 8, 1995 483.14 Jun 5, 1995 535.60 Aug 30, 1995 560.92
Mar 9, 1995 483.16 Jun 6, 1995 535.55 Aug 31, 1995 561.88
Mar 10, 1995 489.57 Jun 7, 1995 533.13 Sep 1, 1995 563.84
Mar 13, 1995 490.05 Jun 8, 1995 532.35 Sep 5, 1995 569.17
Mar 14, 1995 492.89 Jun 9, 1995 527.94 Sep 6, 1995 570.17
Mar 15, 1995 491.88 Jun 12, 1995 530.88 Sep 7, 1995 570.29
Mar 16, 1995 495.41 Jun 13, 1995 536.05 Sep 8, 1995 572.68
Mar 17, 1995 495.52 Jun 14, 1995 536.47 Sep 11, 1995 573.91
Mar 20, 1995 496.14 Jun 15, 1995 537.12 Sep 12, 1995 576.51
Mar 21, 1995 495.07 Jun 16, 1995 539.83 Sep 13, 1995 578.77
Mar 22, 1995 495.67 Jun 19, 1995 545.22 Sep 14, 1995 583.61
Mar 23, 1995 495.95 Jun 20, 1995 544.98 Sep 15, 1995 583.35
Mar 24, 1995 500.97 Jun 21, 1995 543.98 Sep 18, 1995 582.77
Mar 27, 1995 503.20 Jun 22, 1995 551.07 Sep 19, 1995 584.20
Mar 28, 1995 503.90 Jun 23, 1995 549.71 Sep 20, 1995 586.77
Mar 29, 1995 503.12 Jun 26, 1995 544.13 Sep 21, 1995 583.00
Mar 30, 1995 502.22 Jun 27, 1995 542.43 Sep 22, 1995 581.73
Mar 31, 1995 500.71 Jun 28, 1995 544.73 Sep 25, 1995 581.81
Apr 3, 1995 501.85 Jun 29, 1995 543.87 Sep 26, 1995 581.41
Apr 4, 1995 505.24 Jun 30, 1995 544.75 Sep 27, 1995 581.04
Apr 5, 1995 505.57 Jul 3, 1995 547.09 Sep 28, 1995 585.87
Apr 6, 1995 506.08 Jul 5, 1995 547.26 Sep 29, 1995 584.41
Apr 7, 1995 506.42 Jul 6, 1995 553.99 Oct 2, 1995 581.72
Apr 10, 1995 507.01 Jul 7, 1995 556.37 Oct 3, 1995 582.34
Apr 11, 1995 505.53 Jul 10, 1995 557.19 Oct 4, 1995 581.47
Apr 12, 1995 507.17 Jul 11, 1995 554.78 Oct 5, 1995 582.63
Apr 13, 1995 509.23 Jul 12, 1995 560.89 Oct 6, 1995 582.49
Apr 17, 1995 506.13 Jul 13, 1995 561.00 Oct 9, 1995 578.37
Apr 18, 1995 505.37 Jul 14, 1995 559.89 Oct 10, 1995 577.52
Apr 19, 1995 504.92 Jul 17, 1995 562.72 Oct 11, 1995 579.46
Apr 20, 1995 505.29 Jul 18, 1995 558.46 Oct 12, 1995 583.10
Apr 21, 1995 508.49 Jul 19, 1995 550.98 Oct 13, 1995 584.50
Appendix B
page 8
<PAGE>
STANDARD & POOR'S 500 STOCK INDEX
Date S&P500 Date S&P500 Date S&P500
- ------------ ------ ------------ ------ ------------ ------
Oct 16, 1995 583.03 Jan 12, 1996 601.81 Apr 10, 1996 633.50
Oct 17, 1995 586.78 Jan 15, 1996 599.82 Apr 11, 1996 631.18
Oct 18, 1995 587.44 Jan 16, 1996 608.44 Apr 12, 1996 636.71
Oct 19, 1995 590.65 Jan 17, 1996 606.37 Apr 15, 1996 642.49
Oct 20, 1995 587.46 Jan 18, 1996 608.24 Apr 16, 1996 645.00
Oct 23, 1995 585.06 Jan 19, 1996 611.83 Apr 17, 1996 641.61
Oct 24, 1995 586.56 Jan 22, 1996 613.40 Apr 18, 1996 643.61
Oct 25, 1995 582.47 Jan 23, 1996 612.79 Apr 19, 1996 645.07
Oct 26, 1995 576.72 Jan 24, 1996 619.96 Apr 22, 1996 647.89
Oct 27, 1995 579.70 Jan 25, 1996 617.03 Apr 23, 1996 651.58
Oct 30, 1995 583.25 Jan 26, 1996 621.62 Apr 24, 1996 650.17
Oct 31, 1995 581.50 Jan 29, 1996 624.22 Apr 25, 1996 652.87
Nov 1, 1995 584.22 Jan 30, 1996 630.15 Apr 26, 1996 653.46
Nov 2, 1995 589.72 Jan 31, 1996 636.02 Apr 29, 1996 654.16
Nov 3, 1995 590.57 Feb 1, 1996 638.46 Apr 30, 1996 654.17
Nov 6, 1995 588.46 Feb 2, 1996 635.85 May 1, 1996 654.58
Nov 7, 1995 586.32 Feb 5, 1996 641.43 May 2, 1996 643.38
Nov 8, 1995 591.71 Feb 6, 1996 646.33 May 3, 1996 641.63
Nov 9, 1995 593.26 Feb 7, 1996 649.93 May 6, 1996 640.81
Nov 10, 1995 592.72 Feb 8, 1996 656.07 May 7, 1996 638.26
Nov 13, 1995 592.30 Feb 9, 1996 656.37 May 8, 1996 644.78
Nov 14, 1995 589.29 Feb 12, 1996 661.45 May 9, 1996 645.44
Nov 15, 1995 593.96 Feb 13, 1996 660.51 May 10, 1996 652.09
Nov 16, 1995 597.34 Feb 14, 1996 655.58 May 13, 1996 661.51
Nov 17, 1995 600.07 Feb 15, 1996 651.32 May 14, 1996 665.60
Nov 20, 1995 596.85 Feb 16, 1996 647.98 May 15, 1996 665.42
Nov 21, 1995 600.24 Feb 20, 1996 640.65 May 16, 1996 664.85
Nov 22, 1995 598.40 Feb 21, 1996 648.10 May 17, 1996 668.91
Nov 24, 1995 599.97 Feb 22, 1996 658.86 May 20, 1996 673.15
Nov 27, 1995 601.32 Feb 23, 1996 659.08 May 21, 1996 672.76
Nov 28, 1995 606.45 Feb 26, 1996 650.46 May 22, 1996 678.42
Nov 29, 1995 607.64 Feb 27, 1996 647.24 May 23, 1996 676.00
Nov 30, 1995 605.37 Feb 28, 1996 644.75 May 24, 1996 678.51
Dec 1, 1995 606.98 Feb 29, 1996 640.43 May 28, 1996 672.23
Dec 4, 1995 613.68 Mar 1, 1996 644.37 May 29, 1996 667.93
Dec 5, 1995 617.68 Mar 4, 1996 650.81 May 30, 1996 671.70
Dec 6, 1995 620.18 Mar 5, 1996 655.79 May 31, 1996 669.12
Dec 7, 1995 616.17 Mar 6, 1996 652.00 Jun 3, 1996 667.68
Dec 8, 1995 617.48 Mar 7, 1996 653.65 Jun 4, 1996 672.56
Dec 11, 1995 619.52 Mar 8, 1996 633.50 Jun 5, 1996 678.44
Dec 12, 1995 618.78 Mar 11, 1996 640.02 Jun 6, 1996 673.03
Dec 13, 1995 621.69 Mar 12, 1996 637.09 Jun 7, 1996 673.31
Dec 14, 1995 616.92 Mar 13, 1996 638.55 Jun 10, 1996 672.16
Dec 15, 1995 616.34 Mar 14, 1996 640.87 Jun 11, 1996 670.97
Dec 18, 1995 606.81 Mar 15, 1996 641.43 Jun 12, 1996 669.04
Dec 19, 1995 611.93 Mar 18, 1996 652.65 Jun 13, 1996 667.92
Dec 20, 1995 605.94 Mar 19, 1996 651.69 Jun 14, 1996 665.85
Dec 21, 1995 610.49 Mar 20, 1996 649.98 Jun 17, 1996 665.16
Dec 22, 1995 611.95 Mar 21, 1996 649.19 Jun 18, 1996 662.06
Dec 26, 1995 614.30 Mar 22, 1996 650.62 Jun 19, 1996 661.96
Dec 27, 1995 614.53 Mar 25, 1996 650.04 Jun 20, 1996 662.10
Dec 28, 1995 614.12 Mar 26, 1996 652.97 Jun 21, 1996 666.84
Dec 29, 1995 615.93 Mar 27, 1996 648.91 Jun 24, 1996 668.85
Jan 2, 1996 620.73 Mar 28, 1996 648.94 Jun 25, 1996 668.48
Jan 3, 1996 621.32 Mar 29, 1996 645.50 Jun 26, 1996 664.39
Jan 4, 1996 617.70 Apr 1, 1996 653.73 Jun 27, 1996 668.55
Jan 5, 1996 616.72 Apr 2, 1996 655.26 Jun 28, 1996 670.63
Jan 8, 1996 618.46 Apr 3, 1996 655.88 Jul 1, 1996 675.88
Jan 9, 1996 609.45 Apr 4, 1996 655.86 Jul 2, 1996 673.61
Jan 10, 1996 598.48 Apr 8, 1996 644.24 Jul 3, 1996 672.40
Jan 11, 1996 602.69 Apr 9, 1996 642.19 Jul 5, 1996 657.44
Appendix B
page 9
<PAGE>
STANDARD & POOR'S 500 STOCK INDEX
Date S&P500 Date S&P500 Date S&P500
- ------------ ------ ------------ ------ ------------ ------
Jul 8, 1996 652.54 Oct 2, 1996 694.01 Dec 30, 1996 753.85
Jul 9, 1996 654.75 Oct 3, 1996 692.78 Dec 31, 1996 740.74
Jul 10, 1996 656.06 Oct 4, 1996 701.46 Jan 2, 1997 737.01
Jul 11, 1996 645.67 Oct 7, 1996 703.38 Jan 3, 1997 748.03
Jul 12, 1996 646.19 Oct 8, 1996 700.64 Jan 6, 1997 747.65
Jul 15, 1996 629.80 Oct 9, 1996 696.74 Jan 7, 1997 753.23
Jul 16, 1996 628.37 Oct 10, 1996 694.61 Jan 8, 1997 748.41
Jul 17, 1996 634.07 Oct 11, 1996 700.66 Jan 9, 1997 754.85
Jul 18, 1996 643.56 Oct 14, 1996 703.54 Jan 10, 1997 759.50
Jul 19, 1996 638.73 Oct 15, 1996 702.57 Jan 13, 1997 759.51
Jul 22, 1996 633.77 Oct 16, 1996 704.41 Jan 14, 1997 768.86
Jul 23, 1996 626.87 Oct 17, 1996 706.99 Jan 15, 1997 767.20
Jul 24, 1996 626.65 Oct 18, 1996 710.82 Jan 16, 1997 769.75
Jul 25, 1996 631.17 Oct 21, 1996 709.85 Jan 17, 1997 776.17
Jul 26, 1996 635.90 Oct 22, 1996 706.57 Jan 20, 1997 776.70
Jul 29, 1996 630.91 Oct 23, 1996 707.27 Jan 21, 1997 782.72
Jul 30, 1996 635.26 Oct 24, 1996 702.29 Jan 22, 1997 786.23
Jul 31, 1996 639.95 Oct 25, 1996 700.92 Jan 23, 1997 777.56
Aug 1, 1996 650.02 Oct 28, 1996 697.26 Jan 24, 1997 770.52
Aug 2, 1996 662.49 Oct 29, 1996 701.50 Jan 27, 1997 765.02
Aug 5, 1996 660.23 Oct 30, 1996 700.90 Jan 28, 1997 765.02
Aug 6, 1996 662.38 Oct 31, 1996 705.27 Jan 29, 1997 772.50
Aug 7, 1996 664.16 Nov 1, 1996 703.77 Jan 30, 1997 784.17
Aug 8, 1996 662.59 Nov 4, 1996 706.73 Jan 31, 1997 786.16
Aug 9, 1996 662.10 Nov 5, 1996 714.14 Feb 3, 1997 786.73
Aug 12, 1996 665.77 Nov 6, 1996 724.59 Feb 4, 1997 789.26
Aug 13, 1996 660.20 Nov 7, 1996 727.65 Feb 5, 1997 778.28
Aug 14, 1996 662.05 Nov 8, 1996 730.82 Feb 6, 1997 780.15
Aug 15, 1996 662.28 Nov 11, 1996 731.87 Feb 7, 1997 789.56
Aug 16, 1996 665.21 Nov 12, 1996 729.56 Feb 10, 1997 785.43
Aug 19, 1996 666.58 Nov 13, 1996 731.13 Feb 11, 1997 789.59
Aug 20, 1996 665.69 Nov 14, 1996 735.88 Feb 12, 1997 802.77
Aug 21, 1996 665.07 Nov 15, 1996 737.62 Feb 13, 1997 811.82
Aug 22, 1996 670.68 Nov 18, 1996 737.02 Feb 14, 1997 808.48
Aug 23, 1996 667.03 Nov 19, 1996 742.16 Feb 18, 1997 816.29
Aug 26, 1996 663.88 Nov 20, 1996 743.95 Feb 19, 1997 812.49
Aug 27, 1996 666.40 Nov 21, 1996 742.75 Feb 20, 1997 802.80
Aug 28, 1996 664.81 Nov 22, 1996 748.73 Feb 21, 1997 801.77
Aug 29, 1996 657.40 Nov 25, 1996 757.03 Feb 24, 1997 810.28
Aug 30, 1996 651.99 Nov 26, 1996 755.96 Feb 25, 1997 812.03
Sep 3, 1996 654.72 Nov 27, 1996 755.00 Feb 26, 1997 805.68
Sep 4, 1996 655.61 Nov 29, 1996 757.02 Feb 27, 1997 795.07
Sep 5, 1996 649.44 Dec 2, 1996 756.56 Feb 28, 1997 790.82
Sep 6, 1996 655.68 Dec 3, 1996 748.28 Mar 3, 1997 795.31
Sep 9, 1996 663.76 Dec 4, 1996 745.10 Mar 4, 1997 790.95
Sep 10, 1996 663.81 Dec 5, 1996 744.38 Mar 5, 1997 801.99
Sep 11, 1996 667.28 Dec 6, 1996 739.60 Mar 6, 1997 798.56
Sep 12, 1996 671.13 Dec 9, 1996 749.76 Mar 7, 1997 804.97
Sep 13, 1996 680.54 Dec 10, 1996 747.54 Mar 10, 1997 813.65
Sep 16, 1996 683.98 Dec 11, 1996 740.73 Mar 11, 1997 811.34
Sep 17, 1996 682.94 Dec 12, 1996 729.30 Mar 12, 1997 804.26
Sep 18, 1996 681.47 Dec 13, 1996 728.64 Mar 13, 1997 789.56
Sep 19, 1996 683.00 Dec 16, 1996 720.98 Mar 14, 1997 793.17
Sep 20, 1996 687.02 Dec 17, 1996 726.04 Mar 17, 1997 795.71
Sep 23, 1996 686.48 Dec 18, 1996 731.54 Mar 18, 1997 789.66
Sep 24, 1996 685.61 Dec 19, 1996 745.76 Mar 19, 1997 785.77
Sep 25, 1996 685.83 Dec 20, 1996 748.87 Mar 20, 1997 782.65
Sep 26, 1996 685.86 Dec 23, 1996 746.92 Mar 21, 1997 784.10
Sep 27, 1996 686.19 Dec 24, 1996 751.03 Mar 24, 1997 790.89
Sep 30, 1996 687.33 Dec 26, 1996 755.82 Mar 25, 1997 789.07
Oct 1, 1996 689.08 Dec 27, 1996 756.79 Mar 26, 1997 790.50
Appendix B
page 10
<PAGE>
STANDARD & POOR'S 500 STOCK INDEX
Date S&P500 Date S&P500 Date S&P500
- ------------ ------ ------------ ------ ------------ ------
Mar 27, 1997 773.88 Jun 24, 1997 896.34 Sep 19, 1997 950.51
Mar 31, 1997 757.12 Jun 25, 1997 888.99 Sep 22, 1997 955.43
Apr 1, 1997 759.64 Jun 26, 1997 883.68 Sep 23, 1997 951.93
Apr 2, 1997 750.11 Jun 27, 1997 887.30 Sep 24, 1997 944.48
Apr 3, 1997 750.32 Jun 30, 1997 885.14 Sep 25, 1997 937.91
Apr 4, 1997 757.90 Jul 1, 1997 891.03 Sep 26, 1997 945.22
Apr 7, 1997 762.13 Jul 2, 1997 904.03 Sep 29, 1997 953.34
Apr 8, 1997 766.12 Jul 3, 1997 916.92 Sep 30, 1997 947.28
Apr 9, 1997 760.60 Jul 7, 1997 912.20 Oct 1, 1997 955.41
Apr 10, 1997 758.34 Jul 8, 1997 918.75 Oct 2, 1997 960.46
Apr 11, 1997 737.65 Jul 9, 1997 907.54 Oct 3, 1997 965.03
Apr 14, 1997 743.73 Jul 10, 1997 913.78 Oct 6, 1997 972.69
Apr 15, 1997 754.72 Jul 11, 1997 916.68 Oct 7, 1997 983.12
Apr 16, 1997 763.53 Jul 14, 1997 918.38 Oct 8, 1997 973.84
Apr 17, 1997 761.77 Jul 15, 1997 925.76 Oct 9, 1997 970.62
Apr 18, 1997 766.34 Jul 16, 1997 936.59 Oct 10, 1997 966.98
Apr 21, 1997 760.37 Jul 17, 1997 931.61 Oct 13, 1997 968.10
Apr 22, 1997 774.61 Jul 18, 1997 915.30 Oct 14, 1997 970.28
Apr 23, 1997 773.64 Jul 21, 1997 912.94 Oct 15, 1997 965.72
Apr 24, 1997 771.18 Jul 22, 1997 933.98 Oct 16, 1997 955.23
Apr 25, 1997 765.37 Jul 23, 1997 936.56 Oct 17, 1997 944.16
Apr 28, 1997 772.96 Jul 24, 1997 940.28 Oct 20, 1997 955.61
Apr 29, 1997 794.05 Jul 25, 1997 938.79 Oct 21, 1997 972.28
Apr 30, 1997 801.34 Jul 28, 1997 936.45 Oct 22, 1997 968.49
May 1, 1997 798.53 Jul 29, 1997 942.29 Oct 23, 1997 950.69
May 2, 1997 812.97 Jul 30, 1997 952.29 Oct 24, 1997 941.64
May 5, 1997 830.29 Jul 31, 1997 954.31 Oct 27, 1997 876.99
May 6, 1997 827.76 Aug 1, 1997 947.14 Oct 28, 1997 921.85
May 7, 1997 815.62 Aug 4, 1997 950.30 Oct 29, 1997 919.16
May 8, 1997 820.26 Aug 5, 1997 952.37 Oct 30, 1997 903.68
May 9, 1997 824.78 Aug 6, 1997 960.32 Oct 31, 1997 914.62
May 12, 1997 837.66 Aug 7, 1997 951.19 Nov 3, 1997 938.99
May 13, 1997 833.13 Aug 8, 1997 933.54 Nov 4, 1997 940.76
May 14, 1997 836.04 Aug 11, 1997 937.00 Nov 5, 1997 942.76
May 15, 1997 841.88 Aug 12, 1997 926.53 Nov 6, 1997 938.03
May 16, 1997 829.75 Aug 13, 1997 922.02 Nov 7, 1997 927.51
May 19, 1997 833.27 Aug 14, 1997 924.77 Nov 10, 1997 921.13
May 20, 1997 841.66 Aug 15, 1997 900.81 Nov 11, 1997 923.78
May 21, 1997 839.35 Aug 18, 1997 912.49 Nov 12, 1997 905.96
May 22, 1997 835.66 Aug 19, 1997 926.01 Nov 13, 1997 916.66
May 23, 1997 847.03 Aug 20, 1997 939.35 Nov 14, 1997 928.35
May 27, 1997 849.71 Aug 21, 1997 925.05 Nov 17, 1997 946.20
May 28, 1997 847.21 Aug 22, 1997 923.54 Nov 18, 1997 938.23
May 29, 1997 844.08 Aug 25, 1997 920.16 Nov 19, 1997 944.59
May 30, 1997 848.28 Aug 26, 1997 913.02 Nov 20, 1997 958.98
Jun 2, 1997 846.36 Aug 27, 1997 913.70 Nov 21, 1997 963.09
Jun 3, 1997 845.48 Aug 28, 1997 903.67 Nov 24, 1997 946.67
Jun 4, 1997 840.11 Aug 29, 1997 899.47 Nov 25, 1997 950.82
Jun 5, 1997 843.43 Sep 2, 1997 927.58 Nov 26, 1997 951.64
Jun 6, 1997 858.01 Sep 3, 1997 927.86 Nov 28, 1997 955.40
Jun 9, 1997 862.91 Sep 4, 1997 930.87 Dec 1, 1997 974.77
Jun 10, 1997 865.27 Sep 5, 1997 929.05 Dec 2, 1997 971.68
Jun 11, 1997 869.57 Sep 8, 1997 931.20 Dec 3, 1997 976.77
Jun 12, 1997 883.46 Sep 9, 1997 933.62 Dec 4, 1997 973.10
Jun 13, 1997 893.27 Sep 10, 1997 919.03 Dec 5, 1997 983.79
Jun 16, 1997 893.90 Sep 11, 1997 912.59 Dec 8, 1997 982.37
Jun 17, 1997 894.43 Sep 12, 1997 923.91 Dec 9, 1997 975.78
Jun 18, 1997 889.10 Sep 15, 1997 919.77 Dec 10, 1997 969.79
Jun 19, 1997 897.99 Sep 16, 1997 945.64 Dec 11, 1997 954.94
Jun 20, 1997 898.70 Sep 17, 1997 943.00 Dec 12, 1997 953.39
Jun 23, 1997 878.62 Sep 18, 1997 947.29 Dec 15, 1997 963.39
Appendix B
page 11
<PAGE>
STANDARD & POOR'S 500 STOCK INDEX
Date S&P500 Date S&P500 Date S&P500
- ------------ ------ ------------ ------ ------------ --------
Dec 16, 1997 968.04 Mar 17, 1998 1,080.45 Jun 12, 1998 1,098.84
Dec 17, 1997 965.54 Mar 18, 1998 1,085.52 Jun 15, 1998 1,077.01
Dec 18, 1997 955.30 Mar 19, 1998 1,089.74 Jun 16, 1998 1,087.59
Dec 19, 1997 946.78 Mar 20, 1998 1,099.16 Jun 17, 1998 1,107.11
Dec 22, 1997 953.70 Mar 23, 1998 1,095.55 Jun 18, 1998 1,106.37
Dec 23, 1997 939.13 Mar 24, 1998 1,105.65 Jun 19, 1998 1,100.65
Dec 24, 1997 932.70 Mar 25, 1998 1,101.93 Jun 22, 1998 1,103.24
Dec 26, 1997 936.46 Mar 26, 1998 1,100.80 Jun 23, 1998 1,119.49
Dec 29, 1997 953.35 Mar 27, 1998 1,095.44 Jun 24, 1998 1,132.88
Dec 30, 1997 970.84 Mar 30, 1998 1,093.55 Jun 25, 1998 1,129.28
Dec 31, 1997 970.43 Mar 31, 1998 1,101.75 Jun 26, 1998 1,133.20
Jan 2, 1998 975.04 Apr 1, 1998 1,108.15 Jun 29, 1998 1,138.49
Jan 5, 1998 977.07 Apr 2, 1998 1,120.01 Jun 30, 1998 1,133.84
Jan 6, 1998 966.58 Apr 3, 1998 1,122.70 Jul 1, 1998 1,148.56
Jan 7, 1998 964.00 Apr 6, 1998 1,121.39 Jul 2, 1998 1,146.42
Jan 8, 1998 956.05 Apr 7, 1998 1,109.55 Jul 6, 1998 1,157.31
Jan 9, 1998 927.69 Apr 8, 1998 1,101.65 Jul 7, 1998 1,154.66
Jan 12, 1998 939.21 Apr 9, 1998 1,110.67 Jul 8, 1998 1,166.37
Jan 13, 1998 952.12 Apr 13, 1998 1,109.69 Jul 9, 1998 1,158.56
Jan 14, 1998 957.94 Apr 14, 1998 1,115.75 Jul 10, 1998 1,164.33
Jan 15, 1998 950.73 Apr 15, 1998 1,119.32 Jul 13, 1998 1,165.19
Jan 16, 1998 961.51 Apr 16, 1998 1,108.17 Jul 14, 1998 1,177.58
Jan 20, 1998 978.60 Apr 17, 1998 1,122.72 Jul 15, 1998 1,174.81
Jan 21, 1998 970.81 Apr 20, 1998 1,123.65 Jul 16, 1998 1,183.99
Jan 22, 1998 963.04 Apr 21, 1998 1,126.67 Jul 17, 1998 1,186.75
Jan 23, 1998 957.59 Apr 22, 1998 1,130.54 Jul 20, 1998 1,184.10
Jan 26, 1998 956.95 Apr 23, 1998 1,119.58 Jul 21, 1998 1,165.07
Jan 27, 1998 969.02 Apr 24, 1998 1,107.90 Jul 22, 1998 1,164.08
Jan 28, 1998 977.46 Apr 27, 1998 1,086.54 Jul 23, 1998 1,139.75
Jan 29, 1998 985.49 Apr 28, 1998 1,085.11 Jul 24, 1998 1,140.80
Jan 30, 1998 980.28 Apr 29, 1998 1,094.63 Jul 27, 1998 1,147.27
Feb 2, 1998 1,001.27 Apr 30, 1998 1,111.77 Jul 28, 1998 1,130.24
Feb 3, 1998 1,006.00 May 1, 1998 1,121.00 Jul 29, 1998 1,125.21
Feb 4, 1998 1,006.90 May 4, 1998 1,122.07 Jul 30, 1998 1,142.95
Feb 5, 1998 1,003.54 May 5, 1998 1,115.65 Jul 31, 1998 1,120.67
Feb 6, 1998 1,012.46 May 6, 1998 1,104.92 Aug 3, 1998 1,112.44
Feb 9, 1998 1,010.74 May 7, 1998 1,095.14 Aug 4, 1998 1,072.12
Feb 10, 1998 1,019.01 May 8, 1998 1,108.14 Aug 5, 1998 1,081.43
Feb 11, 1998 1,020.01 May 11, 1998 1,106.64 Aug 6, 1998 1,089.63
Feb 12, 1998 1,024.14 May 12, 1998 1,115.79 Aug 7, 1998 1,089.45
Feb 13, 1998 1,020.09 May 13, 1998 1,118.86 Aug 10, 1998 1,083.14
Feb 17, 1998 1,022.76 May 14, 1998 1,117.37 Aug 11, 1998 1,068.98
Feb 18, 1998 1,032.08 May 15, 1998 1,108.73 Aug 12, 1998 1,084.22
Feb 19, 1998 1,028.28 May 18, 1998 1,105.82 Aug 13, 1998 1,074.91
Feb 20, 1998 1,034.21 May 19, 1998 1,109.52 Aug 14, 1998 1,062.75
Feb 23, 1998 1,038.14 May 20, 1998 1,119.06 Aug 17, 1998 1,083.67
Feb 24, 1998 1,030.56 May 21, 1998 1,114.64 Aug 18, 1998 1,101.20
Feb 25, 1998 1,042.90 May 22, 1998 1,110.47 Aug 19, 1998 1,098.06
Feb 26, 1998 1,048.67 May 26, 1998 1,094.02 Aug 20, 1998 1,091.60
Feb 27, 1998 1,049.34 May 27, 1998 1,092.23 Aug 21, 1998 1,081.18
Mar 2, 1998 1,047.70 May 28, 1998 1,097.60 Aug 24, 1998 1,088.14
Mar 3, 1998 1,052.02 May 29, 1998 1,090.82 Aug 25, 1998 1,092.86
Mar 4, 1998 1,047.33 Jun 1, 1998 1,090.98 Aug 26, 1998 1,084.19
Mar 5, 1998 1,035.05 Jun 2, 1998 1,093.03 Aug 27, 1998 1,042.59
Mar 6, 1998 1,055.69 Jun 3, 1998 1,082.73 Aug 28, 1998 1,027.25
Mar 9, 1998 1,052.31 Jun 4, 1998 1,094.83 Aug 31, 1998 957.53
Mar 10, 1998 1,064.25 Jun 5, 1998 1,113.86 Sep 1, 1998 994.24
Mar 11, 1998 1,068.47 Jun 8, 1998 1,115.72 Sep 2, 1998 990.48
Mar 12, 1998 1,069.92 Jun 9, 1998 1,118.41 Sep 3, 1998 982.26
Mar 13, 1998 1,068.61 Jun 10, 1998 1,112.28 Sep 4, 1998 973.89
Mar 16, 1998 1,079.27 Jun 11, 1998 1,094.58 Sep 8, 1998 1,023.46
Appendix B
page 12
<PAGE>
STANDARD & POOR'S 500 STOCK INDEX
Date S&P500 Date S&P500
- ------------ ------ ------------ ------
Sep 9, 1998 1,006.20 Dec 4, 1998 1,176.74
Sep 10, 1998 980.19 Dec 7, 1998 1,187.70
Sep 11, 1998 1,009.06 Dec 8, 1998 1,181.38
Sep 14, 1998 1,029.72 Dec 9, 1998 1,183.49
Sep 15, 1998 1,037.68 Dec 10, 1998 1,165.02
Sep 16, 1998 1,045.48 Dec 11, 1998 1,166.46
Sep 17, 1998 1,018.87 Dec 14, 1998 1,141.20
Sep 18, 1998 1,020.09 Dec 15, 1998 1,162.83
Sep 21, 1998 1,023.89 Dec 16, 1998 1,161.97
Sep 22, 1998 1,029.63 Dec 17, 1998 1,179.98
Sep 23, 1998 1,066.09 Dec 18, 1998 1,188.03
Sep 24, 1998 1,042.72 Dec 21, 1998 1,202.84
Sep 25, 1998 1,044.75 Dec 22, 1998 1,203.57
Sep 28, 1998 1,048.69 Dec 23, 1998 1,228.54
Sep 29, 1998 1,049.02 Dec 24, 1998 1,226.27
Sep 30, 1998 1,017.05 Dec 28, 1998 1,225.49
Oct 1, 1998 986.39 Dec 29, 1998 1,241.81
Oct 2, 1998 1,002.60 Dec 30, 1998 1,231.93
Oct 5, 1998 988.56 Dec 31, 1998 1,229.23
Oct 6, 1998 984.59 Jan 4, 1999 1,228.10
Oct 7, 1998 970.68 Jan 5, 1999 1,244.78
Oct 8, 1998 959.44 Jan 6, 1999 1,272.34
Oct 9, 1998 984.39 Jan 7, 1999 1,269.73
Oct 12, 1998 997.71 Jan 8, 1999 1,275.09
Oct 13, 1998 994.80 Jan 11, 1999 1,263.88
Oct 14, 1998 1,005.53 Jan 12, 1999 1,239.51
Oct 15, 1998 1,047.49 Jan 13, 1999 1,234.40
Oct 16, 1998 1,056.42 Jan 14, 1999 1,212.19
Oct 19, 1998 1,062.39 Jan 15, 1999 1,243.26
Oct 20, 1998 1,063.93 Jan 19, 1999 1,250.89
Oct 21, 1998 1,069.92 Jan 20, 1999 1,256.62
Oct 22, 1998 1,078.48 Jan 21, 1999 1,235.16
Oct 23, 1998 1,070.67 Jan 22, 1999 1,225.19
Oct 26, 1998 1,072.32 Jan 25, 1999 1,233.98
Oct 27, 1998 1,065.34 Jan 26, 1999 1,252.31
Oct 28, 1998 1,068.09 Jan 27, 1999 1,243.19
Oct 29, 1998 1,085.93 Jan 28, 1999 1,265.37
Oct 30, 1998 1,098.67 Jan 29, 1999 1,279.64
Nov 2, 1998 1,111.60
Nov 3, 1998 1,110.84
Nov 4, 1998 1,118.67
Nov 5, 1998 1,133.68
Nov 6, 1998 1,141.01
Nov 9, 1998 1,130.20
Nov 10, 1998 1,128.26
Nov 11, 1998 1,120.97
Nov 12, 1998 1,117.69
Nov 13, 1998 1,125.72
Nov 16, 1998 1,135.86
Nov 17, 1998 1,139.32
Nov 18, 1998 1,144.48
Nov 19, 1998 1,152.61
Nov 20, 1998 1,163.55
Nov 23, 1998 1,188.21
Nov 24, 1998 1,182.99
Nov 25, 1998 1,186.87
Nov 27, 1998 1,192.29
Nov 30, 1998 1,163.63
Dec 1, 1998 1,175.28
Dec 2, 1998 1,171.25
Dec 3, 1998 1,150.14
Appendix B
page 13
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements.
Included in Part A of the Registration Statement:
For the Permanent Portfolio:
Financial Highlights for each share outstanding for the
years ended January 31, 1995 through 1999.
For the Treasury Bill Portfolio:
Financial Highlights for each share outstanding for the
years ended January 31, 1995 through 1999.
For the Versatile Bond Portfolio:
Financial Highlights for each share outstanding for the
years ended January 31, 1995 through 1999.
For the Aggressive Growth Portfolio:
Financial Highlights for each share outstanding for the
years ended January 31, 1995 through 1999.
Included in Part B of the Registration Statement:
For the Permanent Portfolio:
Schedule of Investments at January 31, 1999.
Statement of Assets and Liabilities at January 31, 1999.
Statement of Operations for the Year Ended January 31, 1999.
Statements of Changes in Net Assets for the Years Ended
January 31, 1998 and 1999.
For the Treasury Bill Portfolio:
Schedule of Investments at January 31, 1999.
Statement of Assets and Liabilities at January 31, 1999.
Statement of Operations for the Year Ended January 31, 1999.
Statements of Changes in Net Assets for the Years Ended
January 31, 1998 and 1999.
For the Versatile Bond Portfolio:
Schedule of Investments at January 31, 1999.
Statement of Assets and Liabilities at January 31, 1999.
Statement of Operations for the Year Ended January 31, 1999.
Statements of Changes in Net Assets for the Years Ended
January 31, 1998 and 1999.
<PAGE>
For the Aggressive Growth Portfolio:
Schedule of Investments at January 31, 1999.
Statement of Assets and Liabilities at January 31, 1999.
Statement of Operations for the Year Ended January 31, 1999.
Statements of Changes in Net Assets for the Years Ended
January 31, 1998 and 1999.
For all Portfolios:
Notes to Financial Statements.
Independent Auditors' Report of KPMG LLP.
Schedules Omitted:
Required schedules are included in Registrant's Reports.
(b) Exhibits.
(1.1) Copy of Articles of Incorporation of Registrant. (a)
(1.2) Copy of Amendment to Articles of Incorporation of
Registrant. (f)
(2.1) Copy of Bylaws (a) and Amendments to Bylaws (d) of
Registrant.
(2.2) Copy of Amendment to Bylaws of Registrant. (j)
(2.3) Copy of Amended and Restated Bylaws of Registrant. (n)
(3) None.
(4) Specimen copy of Common Stock of Registrant. (a)
(5) Copy of Investment Advisory Contract by and between
Registrant and World Money Managers dated June 19, 1996.
(q)
(6) None.
(7) None.
(8.1) Copy of Custodian Contract by and between Registrant and
State Street Bank and Trust Company. (c)
(8.2) Copy of Sub-Custodian Contract by and between State
Street Bank and Trust Company and Bank of Delaware.(e)
(8.3) Copy of Sub-Custodian Contract by and between The Chase
Manhattan Bank, N.A. and State Street Bank and Trust
Company. (e)
(8.4) Copy of Agreement by and between The Chase Manhattan
Bank, N.A. and Registrant. (f)
(8.5) Copy of Amendment to Custodian Contract by and between
Registrant and State Street Bank and Trust Company. (h)
<PAGE>
(8.6) Copy of Amendment to Custodian Contract by and between
Registrant and State Street Bank and Trust Company. (p)
(9.1) Copy of Transfer Agent Agreement by and between
Registrant and AIM Financial Services, Inc. (f)
(9.2) Copy of Administrative Agreement by and between World
Money Managers and Permanent Portfolio Information,
Inc.(f)
(10) Opinion and Consent of Richard B. Rolnick, Esq., filed
with respect to the Registration Statement under the
Securities Act of 1933. (l)
(11) Consent and Report of Ernst & Young, Independent
Auditors. (o)
(11.1) Consent and Report of Ernst & Young LLP, Independent
Auditors. (p)
(11.2) Consent of KPMG LLP, Independent Auditors.
(12) None.
(13) None.
(14) Copy of prototype of Individual Retirement Account
Custodial Account Agreement to be entered into by those
of Registrant's shareholders who so desire and
Registrant's Custodian. (g)
(14.1) Copy of Universal Individual Retirement Account
Information Kit for Traditional and Roth IRAs, including
Adoption Agreement and Transfer Form, effective January
1, 1998, to be entered into by those of Registrant's,
shareholders who so desire and Registrant's Custodian.
(15) None.
(16) Schedules of Calculations of Performance Data.
-----------------
(a) Filed as Exhibits (1), (2) and (4), respectively, to Registrant's
Registration Statement on Form N-1, filed with the Commission on
January 12, 1982, and incorporated herein by this reference.
(c) Filed as Exhibit (8) to Amendment No. 2 to Registrant's Registration
Statement on Form N-1, filed with the Commission on July 8, 1982, and
incorporated herein by this reference.
(d) Filed as Exhibit (2) to Amendment No. 3 to Registrant's Registration
Statement on Form N-1, filed with the Commission on October 12, 1982,
and incorporated herein by this reference.
(e) Filed as Exhibit (8) to Post-Effective Amendment No. 3 to Registrant's
Registration Statement on Form N-1A, filed with the Commission on
April 1, 1985, and incorporated herein by this reference.
(f) Filed as Exhibits (1), (8) and (9), respectively, to Post-Effective
Amendment No. 4 to Registrant's Registration Statement on Form N-1A,
filed with the Commission on March 7, 1986, and incorporated herein by
this reference.
<PAGE>
(g) Filed as Exhibit (14) to Registrant's Annual Report on Form N-1R for
the year ended December 31, 1983 and the month ended January 31, 1984,
and incorporated herein by this reference.
(h) Filed as Exhibit (8) to Post-Effective Amendment No. 5 to Registrant's
Registration Statement on Form N-1A, filed with the Commission on
March 17, 1987, and incorporated herein by this reference.
(i) Filed as Exhibit (10) to Post-Effective Amendment No. 7 to
Registrant's Registration Statement on Form N-1A, filed with the
Commission on March 31, 1988, and incorporated herein by this
reference.
(j) Filed as Exhibit (2) to Post-Effective Amendment No. 10 to
Registrant's Registration Statement on Form N-1A, filed with the
Commission on May 31, 1990, and incorporated herein by this reference.
(l) Filed as Exhibit (10) to Post-Effective Amendment No. 13 to
Registrant's Registration Statement on Form N-1A, filed with the
Commission on July 29, 1991, and incorporated herein by this
reference.
(n) Filed as Exhibit (2) to Post-Effective Amendment No. 16 to
Registrant's Registration Statement on Form N-1A, filed with the
Commission on June 1, 1993, and incorporated herein by this reference.
(o) Filed as Exhibit (11) to Post-Effective Amendment No. 17 to
Registrant's Registration Statement on Form N-1A, filed with the
Commission on April 5, 1994, and incorporated herein by this
reference.
(p) Filed as Exhibits (8) and (11), respectively, to Post-Effective
Amendment No. 19 to Registrant's Registration Statement on Form N-1A,
filed with the Commission on May 31, 1995, and incorporated herein by
this reference.
(q) Filed as Exhibit (5) to Post-Effective Amendment No. 22 to
Registrant's Registration Statement on Form N-1A, filed with the
Commission on July 3, 1997, and incorporated herein by this reference.
<PAGE>
Item 25. Persons Controlled by or Under Common Control with Registrant
-------------------------------------------------------------
None.
Item 26. Number of Holders of Securities
-------------------------------
The number of record holders of the only class of securities of
Registrant issued and outstanding as of July 15, 1999 was as
follows:
Title of Class Number of Record Holders
----------------------------- ------------------------
Common Stock, $.001 par value:
Permanent Portfolio 3,053
Treasury Bill Portfolio 2,551
Versatile Bond Portfolio 526
Aggressive Growth Portfolio 875
------
Total 7,005
======
Item 27. Indemnification
---------------
Reference is made to Part One, Paragraph (5) of the Investment
Advisory Contract filed as Exhibit (5) hereto.
Reference is made to Section 2-418 of the Maryland Corporations
and Associations Law, which generally provides for indemnification
of directors, officers, employees and agents by reason of service
in that capacity unless it is established that the act or omission
of the person was material to the matter giving rise to the
proceeding, and was committed in bad faith or was the result of
active or deliberate dishonesty, or the person actually received
an improper personal benefit in money, property or services, or,
in the case of any criminal proceeding, the person had reasonable
cause to believe that the act or omission was unlawful.
Reference is made to Article VIII of the Amended and Restated
Bylaws of the Registrant filed as Exhibit (2.3) hereto.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or
controlling persons of the Registrant, pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
----------------------------------------------------
See "Management" in the Prospectus included as part A of this
Registration Statement and "Organization and Management" in the
Statement of Additional Information included as part B of this
Registration Statement.
<PAGE>
Item 29. Principal Underwriters
----------------------
(a) None.
(b) None.
(c) None.
Item 30. Location of Accounts and Records
--------------------------------
Accounts, books and other documents required by Section 31(a) of
the Investment Company Act of 1940, as amended, and Rules 31a-1
and 31a-2 promulgated thereunder are maintained and held in the
offices of Registrant and its Investment Adviser, 625 Second
Street, Suite 102, Petaluma, California 94952.
Records covering shareholder accounts are maintained and kept by
Registrant's Transfer Agent, Chase Global Funds Services Company,
73 Tremont Street, Boston, Massachusetts 02108.
Records covering portfolio transactions are maintained and kept by
Registrant's Custodian, State Street Bank and Trust Company, The
Joseph Palmer Building-North Wing, One Heritage Drive, North
Quincy, Massachusetts 02171.
Item 31. Management Services
-------------------
Inapplicable.
Item 32. Undertakings
------------
Inapplicable.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940 the Registrant certifies that it meets all of the
requirements for effectiveness of this Post-Effective Amendment No. 24 to
Registration Statement pursuant to Rule 485(a) under the Securities Act of 1933
and has duly caused this Post-Effective Amendment No. 24 to Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Petaluma, and State of California on the 26th day of
July, 1999.
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
By TERRY COXON
-----------------------------------
Terry Coxon, President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 24 to Registration Statement has been signed below
by the following persons in the capacities indicated on July 26, 1999.
*DAVID P. BERGLAND Director
- -----------------------------
David P. Bergland
*HUGH A. BUTLER Director
- -----------------------------
Hugh A. Butler
TERRY COXON President and Director
- ----------------------------- (principal executive officer)
Terry Coxon
MICHAEL J. CUGGINO Treasurer and Director
- ----------------------------- (principal financial and accounting officer)
Michael J. Cuggino
ROBERT B. MARTIN, JR. Secretary and Director
- -----------------------------
Robert B. Martin, Jr.
*MARK TIER Director
- -----------------------------
Mark Tier
*By: TERRY COXON
------------------------------------
Terry Coxon, Attorney-in-fact
Independent Auditors' Consent
-----------------------------
The Board of Directors and Shareholders
Permanent Portfolio Family of Funds, Inc.:
We consent to the use of our report dated March 12, 1999, on the 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, 1999, 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 five-year period then ended, in the
Permanent Portfolio Family of Funds, Inc.'s Post-Effective Amendment No. 24 to
the Registration Statement No. 2-75661 on Form N-1A under the Securities Act of
1933 and Amendment No. 24 to the Registration Statement No. 811-3379 on Form
N-1A under the Investment Company Act of 1940. We also consent to the
incorporation by reference of our report in the Statement of Additional
Information.
We also consent to the reference to our Firm under the headings "Financial
Highlights" and "Reports" in the Prospectus and under the heading "Financial
Statements" in the Statement of Additional Information.
Our report dated March 12, 1999, contains an explanatory paragraph that
states that the Securities and Exchange Commission is involved in public
administrative and cease-and-desist proceedings against the Fund's investment
adviser and two of the Fund's directors and officers.
/s/ KPMG LLP
San Francisco, California
November 11, 1999
UNIVERSAL INDIVIDUAL RETIREMENT ACCOUNT
INFORMATION KIT
(EFFECTIVE JANUARY 1, 1998)
LOGO
COMBINED
TRADITIONAL/ROTH
IRA
UNIVERSAL IRA ADOPTION AGREEMENT & TRANSFER FORM
<PAGE>
Table of Contents
Section One
* Introduction 1
* Differences in Roth and Traditional IRAs 2
* Instructions for Opening Roth and Traditional IRAs 4
* IRA Forms and Applications (after page 6) i-iv
* IRA Transfer Form (after page 6) v
Section Two
* Descriptions, Questions & Answers on Traditional IRAs 7
* Descriptions, Questions & Answers on Roth IRAs 13
* IRA Transfers and Rollovers -
Including Questions & Answers on Conversions from
a Traditional IRA to a Roth IRA 15
Section Three
* Rules for all IRA Accounts (Traditional and Roth) 20
* Custodial Agreement for Traditional IRAs 23
* Custodial Agreement for Roth IRAs 25
* Provisions Applicable to Both Traditional and Roth IRAs 27
<PAGE>
State Street Bank and Trust Company
Universal IRA Information Kit
INTRODUCTION
- ------------
What's New In The World Of IRAs?
An Individual Retirement Account ("Traditional IRA") has always provided an
attractive means to save money for the future on a tax advantaged basis. Recent
changes to Federal tax law have now made the IRA an even more flexible
investment and savings vehicle. Among the changes is the creation of the Roth
Individual Retirement Account ("Roth IRA"), which was first available for use
starting January 1, 1998. Under a Roth IRA, the earnings and interest on an
individual's nondeductible contributions grow without being taxed, and
distributions may be tax-free under certain circumstances. Most taxpayers
(except for those with very high income levels) will be eligible to contribute
to a Roth IRA. A Roth IRA can be used instead of a Traditional IRA, to replace
an existing Traditional IRA, or complement a Traditional IRA you wish to
continue maintaining.
Taxpayers with adjusted gross income of up to $100,000 are eligible to
convert existing Traditional IRAs into Roth IRAs. If you convert early in a year
and later turn out to be ineligible because your gross income exceeds $100,000
(or for other reasons you wish to reverse the conversion), you can
"recharacterize" the conversion by transferring the amount in the converted Roth
IRA back to a Traditional IRA. The details on conversion (and
recharacterization) are found later in this booklet.
Other IRA changes effective starting in 1998 are as follows: First,
Congress increased the income levels at which IRA holders who participate in
employer-sponsored retirement plans can make deductible Traditional IRA
contributions. Also the rules for deductible contributions by an IRA holder
whose spouse is a participant in an employer-sponsored retirement plan have been
liberalized. Second, the 10% penalty tax for premature withdrawals (before age
59 1/2) will no longer apply in the case of withdrawals to pay certain higher
education expenses or certain first-time homebuyer expenses. Also starting in
the year 2000, the 10% penalty tax will not apply to any amount distributed to
the IRS under a levy for unpaid taxes.
What's In This Kit?
In this Kit you will find detailed information about Roth IRAs and about
the changes that have been made to Traditional IRAs. You will also find
everything you need to establish and maintain either a Traditional or Roth IRA,
or to convert all or part of an existing Traditional IRA to a Roth IRA.
The first section of this Kit contains the instructions and forms you will
need to open a new Traditional or Roth IRA, to transfer from another IRA to a
State Street Bank and Trust IRA, or to convert a Traditional IRA to a Roth IRA.
The second section of this Kit contains our Universal IRA Disclosure
Statement. The Disclosure Statement is divided into three parts:
* Part One describes the basic rules and benefits that are specifically
applicable to your Traditional IRA.
* Part Two describes the basic rules and benefits that are specifically
applicable to your Roth IRA.
* Part Three describes important rules and information applicable to all
IRAs.
The third section of this Kit contains the Universal IRA Custodial
Agreement. The Custodial Agreement is also divided into three parts:
* Part One contains provisions specifically applicable to Traditional
IRAs.
* Part Two contains provisions specifically applicable to Roth IRAs.
* Part Three contains provisions applicable to all IRAs (Traditional and
Roth).
<PAGE>
This Universal Individual Retirement Account Information Kit contains
information and forms for both Traditional IRAs and Roth IRAs. However, you may
use the Adoption Agreement in this Kit to establish only one Traditional IRA or
one Roth IRA; separate Adoption Agreements must be completed if you want to
establish multiple (Roth or Traditional) IRA accounts.
What's the Difference Between a Traditional IRA and a Roth IRA?
With a Traditional IRA, an individual can contribute up to $2,000 per year
and may be able to deduct the contribution from taxable income, reducing current
income taxes. Taxes on investment growth and dividends are deferred until the
money is withdrawn. Withdrawals are taxed as additional ordinary income when
received. Nondeductible contributions, if any, are withdrawn tax-free.
Withdrawals before age 59 1/2 are assessed a 10% penalty in addition to income
tax, unless an exception applies.
With a Roth IRA, the contribution limits are essentially the same as
Traditional IRAs, but there is no tax deduction for contributions. All dividends
and investment growth in the account are tax-free. Most important with a Roth
IRA: There is no income tax on qualified withdrawals from your Roth IRA.
Additionally, unlike a Traditional IRA, there is no rule against making
contributions to Roth IRAs after turning age 7O 1/2, and there's no requirement
that you begin making minimum withdrawals at that age.
The following chart highlights some of the major differences between a
Traditional IRA and a Roth IRA:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Characteristics Traditional Roth
IRA IRA
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Eligibility * Individuals (and their spouses) who * Individuals (and their spouses) who
receive compensation receive compensation
* Individuals age 7O 1/2 and over may * Individuals age 7O 1/2 and over may
not contribute contribute
- -----------------------------------------------------------------------------------------------------------------------------------
Tax Treatment of Contributions * Subject to limitations, contributions are * No deduction permitted for amounts
deductible contributed
- -----------------------------------------------------------------------------------------------------------------------------------
Contribution Limits * Individuals may contribute up to $2,000 * Individuals may generally contribute up
annually (or 100% of compensation, if to $2,000 (or 100% of compensation, if
less) less)
* Deductibility depends on income level * Ability to contribute phases out at
for individuals who are active income levels of $95,000 to $110,000
participants in an employer-sponsored (individual taxpayer) and $150,000 to
retirement plan $160,000 (married taxpayers)
* Overall limit for contributions to
Traditional and Roth IRAs (but not
including SEP or SIMPLE IRAs) is
$2,000 annually (or 100% of
compensation, if less)
- -----------------------------------------------------------------------------------------------------------------------------------
Earnings * Earnings and interest are not taxed * Earnings and interest are not taxed
when received by your IRA when received by your IRA
- -----------------------------------------------------------------------------------------------------------------------------------
Rollover/Conversions * Individual may rollover amounts held in * Rollovers from other IRAs only
employer-sponsored retirement * Amounts rolled over (or converted)
arrangements (401(k), SEP IRA, etc.) from another IRA are subject to income
tax free to Traditional IRA tax in the year rolled over or converted
* Tax on amounts rolled over or converted
in 1998 may be spread over four year
period (1998-2001)
- -----------------------------------------------------------------------------------------------------------------------------------
Withdrawals * Total (principal + earnings) taxable as * Not taxable as long as a qualified
income in year withdrawn (except for distribution-generally, account open
any prior non-deductible contributions) for 5 years, and age 59 1/2
* Minimum withdrawals must begin after * Minimum withdrawals not required
age 7O 1/2 after age 70 1/2
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Is a Roth or a Traditional IRA Right For Me?
We cannot act as your legal or tax adviser and so we cannot tell you which
kind of IRA is right for you. The information contained in this Kit is intended
to provide you with the basic information and material you will need if you
decide whether a Traditional or Roth IRA is better for you, or if you want to
convert an existing Traditional IRA to a Roth IRA. We suggest that you consult
with your accountant, lawyer or other tax adviser, or with a qualified financial
planner, to determine whether you should open a Traditional or Roth IRA or
convert any or all of an existing Traditional IRA to a Roth IRA. Your tax
adviser can also advise you as to the state tax consequences that may affect
whether a Traditional or Roth IRA is right for you.
<PAGE>
SEPs and SIMPLEs.
The State Street Bank Traditional IRA may be used in connection with a
simplified employee pension ("SEP") plan maintained by your employer. To
establish a Traditional IRA as part of your Employer's SEP plan, complete the
Adoption Agreement for a Traditional IRA, indicating in the proper box that the
IRA is part of a SEP plan. A Roth IRA should not be used in connection with a
SEP plan.
A Roth IRA may not be used as part of an employer SIMPLE IRA plan.
(However, after two years amounts contributed to a SIMPLE IRA may be converted
to a Roth IRA.) A Traditional IRA may be used, but only after an individual has
been participating for two or more years (for the first two years, only a
special SIMPLE IRA may be used). SIMPLE IRA plans were added by the 1996 tax law
to provide an easy and inexpensive way for small employers to provide retirement
benefits for their employees. If you are interested in a SIMPLE IRA plan at your
place of employment, call or write to the number or address given at the end of
the Disclosure Statement portion of this Kit.
Other Points to Note.
The Disclosure Statement in this Kit provides information you should know
about State Street Bank and Trust Company Traditional IRAs and Roth IRAs. The
Disclosure Statement provides general information about the governing rules for
these IRAs and the benefits and features offered through each type of IRA.
However, the State Street Bank and Trust Company Adoption Agreement and the
Custodial Agreement, are the primary documents controlling the terms and
conditions of your personal State Street Bank and Trust Company Traditional or
Roth IRA, and these shall govern in the case of any difference with the
Disclosure Statement.
You or your when used throughout this Kit refer to the person for whom the
State Street Bank and Trust Company Traditional or Roth IRA is established. A
Roth IRA is either a State Street Bank and Trust Company Roth IRA or any Roth
IRA established by any other financial institution. A Traditional IRA is any
non-Roth IRA offered by State Street Bank and Trust Company or any other
financial institution.
<PAGE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
State Street Bank and Trust Company
Universal Individual Retirement Account Custodial Agreement
Instructions for Opening Your Traditional IRA or Roth IRA
1. Read carefully the applicable sections of the Universal IRA Disclosure
Statement contained in this Kit, the Traditional or Roth Universal
Individual Retirement Account Custodial Agreement document (as applicable),
the Adoption Agreement, and the prospectus(es) for any Fund(s) you are
considering. Consult your lawyer or other tax adviser if you have any
questions about how opening a Traditional IRA or Roth IRA will affect your
financial and tax situation.
This Universal Individual Retirement Account Information Kit contains
information and forms for both Traditional IRAs and Roth IRAs. However, you
may use the Adoption Agreement to establish only one Traditional IRA or one
Roth IRA; separate Adoption Agreements must be completed if you want to
establish multiple (Roth or Traditional) IRA accounts. In addition, if you
are establishing a Roth IRA, we require separate Adoption Agreements for a
Roth IRA to hold annual contributions and a Roth IRA to hold conversion
contributions, and, if you make conversion contributions for different
calendar years, you should establish separate Roth IRA Accounts for each
calendar year. Separate Roth IRA Accounts are needed to facilitate proper
recordkeeping and tax reporting of withdrawals.
2. Complete the Adoption Agreement.
* Print the identifying information where requested in Part 1 of the
Adoption Agreement.
* Make your desired IRA election in Part 2 as follows:
For a Traditional IRA, check the box for Part A and check the other
boxes in Part A to specify the type of Traditional IRA you are opening
and provide the registered information.
If this is an IRA to which you expect to make annual contributions
each year, check Box 1 and enclose a check in the amount of your first
contribution. If you are making an annual contribution between January
1 and April 15, be sure to indicate whether this is a contribution for
the prior year or for the current year.
If this is a transfer directly from another IRA custodian or trustee,
check Box 2. Check the appropriate box to indicate whether the funds
transferred were originally from contributions to an employee
qualified plan or a 403(b) arrangement, or whether any of the funds
were originally from your annual contributions to the IRA. Complete
and sign the Universal IRA Transfer of Assets Form.
If this is a rollover of amounts distributed to you from another IRA
or an employer qualified plan or a 403(b)arrangement, check Box 3.
Check the appropriate box to indicate whether the transfer is coming
from a qualified plan or 403(b) arrangement, or from an IRA that held
only funds that were originally from contributions to a qualified plan
or 403(b), or whether any of the funds were originally from your
annual contributions to the IRA. Enclose a check for the rollover
contribution amount.
If this is a direct rollover from a qualified plan or 403(b)
arrangement, check Box 4. Complete and sign the Universal IRA Transfer
of Assets Form.
If this is a "recharacterization" of a Roth IRA you previously
established originally by converting from a Traditional (or other)
IRA, check Box 5. If State Street Bank is the Roth IRA Custodian,
indicate the current account number. If there is a different trustee
or custodian of your current Roth IRA, complete and sign the Universal
IRA Transfer of Assets Form. A recharacterization must be completed by
the due date (including extensions) for your federal income tax return
for the year when you established the Roth IRA in the first place.
<PAGE>
Recharacterization is subject to complex tax rules; consult the IRS or
your professional tax adviser if necessary.
Check Box 6 if applicable (for a Traditional IRA that will be used to
receive employer contributions under an employer's simplified employee
pension (or SEP) plan or under a grandfathered salary reduction SEP
plan (or "SARSEP").
* For a Roth IRA, check the box for Part B. Check the other boxes in
Part B to specify the type of Roth IRA you are opening and provide the
requested information.
If this is a Roth IRA to which you expect to make annual contributions
each year, enclose a check in the amount of your first contribution.
If you are making an annual contribution between January 1 and April
15, be sure to indicate whether this is a contribution for the prior
year or for the current year. Only annual contributions may be
accepted in an annual contribution Roth IRA account.
If you are converting an existing Traditional IRA with State Street
Bank and Trust Company as IRA custodian or trustee, check Box 2.
Indicate your current IRA account number and how much you are
converting. Conversion of an existing Traditional IRA will result in
inclusion of taxable amounts in the existing Traditional IRA on your
income tax return. Carefully read and, if needed, complete the section
entitled Tax Withholding Election for Conversion. You may elect to
have income taxes withheld if you want, but this may be
disadvantageous. Unless you elect, there will be no withholding. Note:
If a conversion, rollover or transfer from a Traditional IRA to a Roth
IRA is being made, only amounts converted, rolled over or transferred
during the same calendar year will be accepted in a single Roth IRA. A
separate Roth IRA must be established to hold such amounts from a
different calendar year. Annual contributions may not be deposited in
a Roth IRA holding such converted, rolled over or transferred amounts.
If you are making a rollover or a transfer from an existing
Traditional IRA with a different custodian or trustee, check Box 3. A
rollover or transfer from an existing Traditional IRA means that the
taxable amount in the existing Traditional IRA will be treated as
additional income on your income tax return.
You can also convert, transfer or rollover a SEP IRA account you have
as part of an employer simplified employee pension program, or a
SIMPLE IRA you have as part of an employer SIMPLE IRA program. (A
SIMPLE IRA must have been in existence at least two years before it
can be converted to a Roth IRA.) Fill out Part 2 as if you were
converting, transferring or rolling over a Traditional IRA.
If you are making a rollover or a transfer from another Roth IRA with
a different trustee or custodian, check Box 4. Provide the requested
information where indicated.
* In Part 3, indicate your investment choices.
* In Part 4, indicate your Primary and Alternate Beneficiaries.
(Signature by your spouse on the spousal waiver may be needed if you
reside in a community or marital property state and if the beneficiary
is other than your spouse.)
* Sign and date the Adoption Agreement in Part 5 at the end.
3. If you are transferring assets from an existing IRA to this IRA, complete
the Universal IRA Transfer of Assets Form.
4. The Custodial fees for maintaining your IRA are listed in the fees and
expenses section of Part Three of the Disclosure Statement. If you are
paying by check, enclose a check for the correct amount payable as
specified below. If you do not pay by check, the correct amount will be
taken from your Account.
<PAGE>
5. Check to be sure you have properly completed all necessary forms and
enclosed a check for the Custodial fees (unless being withdrawn from your
Account) and a check for the first contribution to your Traditional or Roth
IRA (if applicable). Your Traditional IRA or Roth IRA cannot be accepted
without the properly completed documents.
All checks should be payable to: "Permanent Portfolio Family of Funds, Inc."
Send the completed forms and checks to:
The Permanent Portfolio Family of Funds, Inc.
c/o 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
<PAGE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
State Street Bank and Trust Company
Universal Individual Retirement Account Custodial Agreement
Adoption Agreement
I, the person signing this Adoption Agreement (hereinafter called the
"Depositor"), establish an Individual Retirement Account ("IRA"), which is
either a Traditional IRA or a Roth IRA, as indicated below, (the "Account") with
State Street Bank and Trust Company as Custodian ("the Bank"). A Traditional IRA
operates under Internal Revenue Code Section 408(a). A Roth IRA operates under
Internal Revenue Code Section 408A. I agree to the terms of my Account, which
are contained in the applicable provisions of the document entitled "State
Street Bank and Trust Company Universal Individual Retirement Account Custodial
Agreement" and this Adoption Agreement. I certify the accuracy of the
information in this Adoption Agreement. My Account will be effective upon
acceptance by State Street Bank and Trust Company.
Part 1.Depositor Information Social Security Number
- -
-- -- -- -- -- -- -- -- --
- --------------------------------------
Print Full Name
- --------------------------------------- ---------------------------------------
Address U. S. State or Foreign Country of
Permanent Residence
- --------------------------------------- ---------------------------------------
Date of Birth
( )
- --------------------------------------- ---------------------------------------
City State Zip Daytime Telephone No.
- --------------------------------------------------------------------------------
Part 2. IRA Election
INSTRUCTIONS: To establish a Traditional IRA, check Box A and complete that
section. To establish a Roth IRA, check Box B and complete that section. (In
either case, complete Part 3 to select your investment choices, and sign at the
end of Part 5.)
- -- A. TRADITIONAL IRA -- By checking this box, I designate my Account as a
Traditional IRA under Code Section 408(a). (Complete 1, 2, 3, 4 or 5
below to indicate the type of Traditional IRA you are opening. Check
box 6, if applicable.)
1.-- Annual Contributions
Current Contribution for the year . Check enclosed for
---------------
$ .
--------------------
This contribution does not exceed the maximum permitted amount as
described in the Traditional IRA Disclosure Statement.
2.-- Transfer
Transfer of existing Traditional IRA directly from current Custodian
or Trustee. Complete the Universal IRA Transfer of Assets Form.
-- The transferring IRA held annual contributions by me (or amounts
transferred or rolled over from another IRA holding annual
contributions).
-- The transferring IRA held only amounts that were originally
contributions to an employer qualified plan or 403(b) plan.
<PAGE>
3.-- Rollover
The requirements for a valid rollover are complex. See the Traditional
IRA Disclosure Statement for additional information and consult your
tax adviser for help if needed. Check enclosed for
$ .
----------------------------
-- Rollover of a qualifying rollover distribution to the Depositor
from an employer plan or 403(b) arrangement, or rollover from
another Traditional IRA which held only assets distributed to
Depositor from an employer plan or 403(b) arrangement and to
which the Depositor made no direct contributions.
-- Rollover of distribution to the Depositor from another
Traditional IRA that held amounts that originated from annual
contributions by the Depositor.
4.-- Direct Rollover
-- Direct rollover of an eligible distribution from a qualified
plan.
-- Direct rollover of an eligible distribution from a 403(b) account
or annuity.
Direct rollovers are described in the Traditional IRA Disclosure
Statement. Complete the Universal IRA Transfer of Assets Form.
5.-- Recharacterization of existing Roth IRA
-- with State Street Bank and Trust Company as Custodian. Give
current Roth IRA Account No.: . Put amount
---------------
recharacterized, if less than entire account balance:
$ . (If no amount is inserted here, we will
-------------
recharacterize the entire account balance.)
-- with another Custodian or Trustee: Complete the Universal IRA
Transfer of Assets Form.
6.-- SEP Provision
check here if the Depositor intends to use this Account in connection
with a SEP Plan or grandfathered SARSEP Plan established by the
Depositor's employer.
- -- B. ROTH IRA -- By checking this box, I designate my Account as a Roth IRA
under Code Section 408A. (Complete 1, 2, 3 or 4 below to indicate the
type of Roth IRA you are opening.)
1.-- Annual Contributions
Current Contribution for the year . Check enclosed for
-----------
$ .
-------------------
This contribution does not exceed the maximum permitted amount as
described in the Roth IRA Disclosure Statement.
2.-- Conversion of existing Traditional IRA with State Street Bank as
Custodian or Trustee to a Roth IRA with State Street Bank. Current
Traditional IRA Account No.: .
----------------------
Amount Converted:
-- All
-- Part (specify how much): $ .
-----------------------
<PAGE>
Tax Withholding Election for Conversion
Under IRS rules, a conversion of a Traditional IRA to a Roth IRA is
treated for income tax purposes as a distribution of taxable amounts
in the Traditional IRA. IRS rules also require the custodian to
withhold 10% of the conversion amount for federal income taxes unless
you elect no withholding below. See IRS Publication 505, "Tax
Withholding and Estimated Tax" for more information. State tax
withholding may also apply if federal income tax is withheld.
Caution: Withholding income taxes from the amount converted (instead
of paying applicable income taxes from another source) may adversely
impact the expected financial benefits of converting from a
Traditional to a Roth IRA (consult your financial adviser if you have
a question). Because of this impact, by electing to convert a
Traditional IRA to a Roth IRA, you are deemed to elect no withholding
unless you check the box below:
-- Withhold 10% for federal income taxes (if you want a greater
percentage, put it here: %).
-------------
3.-- Rollover or Transfer from existing Traditional IRA with a Custodian or
Trustee other than State Street Bank to a Roth IRA with State Street
Bank.
4.-- Rollover or Transfer from existing Roth IRA with another Custodian or
Trustee to a Roth IRA with State Street Bank.
Date existing Roth IRA was originally opened:
--------------
-- Check this box if this rollover or transfer contains any amounts
converted from a Traditional IRA to a Roth IRA in calendar year
1998.
Complete the Universal IRA Transfer of Assets Form if either 3 or 4 is
checked and the transaction is a transfer (as opposed to a rollover).
Note: To facilitate proper recordkeeping and tax reporting for your Roth
IRA, we require separate Roth IRA accounts to hold annual contributions and
to hold conversion amounts. If you wish to make both annual contributions
and conversion contributions by converting, transferring or rolling over an
existing Traditional IRA, please complete different Adoption Agreements to
set up separate Roth IRAs. If you are transferring or rolling over an
existing Roth IRA, please set up separate Roth IRAs for a transfer/rollover
of an annual contributions Roth IRA and a conversion Roth IRA.
- --------------------------------------------------------------------------------
Part 3. Investments
Invest contributions to my Account as follows:
-- Permanent Portfolio invests in gold, silver,
Swiss franc assets, stocks of real estate and
natural resource companies, aggressive U.S.
stocks, and high-grade U.S. dollar assets. %
----
-- Treasury Bill Portfolio invests exclusively
in U.S.Treasury securities. %
----
-- Aggressive Growth Portfolio invests in
aggressive U.S. stock market investments. %
----
-- Versatile Bond Portfolio invests in short-term,
high-grade corporate bonds. %
----
Must Total 100%
I acknowledge that I have sole responsibility for my investment choices and
that I have received the current prospectus of Permanent Portfolio Family
of Funds, Inc. (the "Fund"). Please read the Fund's prospectus before
investing.
-- Portfolio Switching (Exchange)
I authorize Permanent Portfolio Family of Funds, Inc. to honor portfolio
switching instructions (instructions to exchange one investment for
another) received by telephone or in writing without signature guarantee.
<PAGE>
Part 4. Designation of Beneficiary
Note: Any amount remaining in the Account that is not disposed of by a proper
Designation of Beneficiary will be distributed to your estate (unless otherwise
required by the laws of your state of residence). You may change the
beneficiary(ies) named below at anytime by filing a new Designation of
Beneficiary with the Custodian. Any subsequent Designation filed with the
Custodian will revoke all prior Designations, even if the subsequent designation
does not dispose of your entire account.
As Depositor, I hereby make the following Designation of Beneficiary in
accordance with the State Street Bank and Trust Company Traditional Universal
Individual Retirement Account Custodial Agreement, or Roth Universal Individual
Retirement Custodial Agreement:
In the event of my death, pay any interest I may have under my Account to the
following Primary Beneficiary or Beneficiaries who survive me. Make payment in
the proportions specified below (or in equal proportions if no different
proportions are specified). If any Primary Beneficiary predeceases me, his share
is to be divided among the Primary Beneficiaries who survive me in the relative
proportions assigned to each such surviving Primary Beneficiary.
Primary Beneficiary or Beneficiaries:
Name Relationship Date of Birth Social Security Number Proportion
- ------------ ------------ ------------- ----------------------- ----------
- ------------ ------------ ------------- ----------------------- ----------
- ------------ ------------ ------------- ----------------------- ----------
- ------------ ------------ ------------- ----------------------- ----------
If none of the Primary Beneficiaries survives me, pay any interest I may have
under my Account to the following Alternate Beneficiary or Beneficiaries who
survive me. Make payment in the proportions specified below (or in equal
proportions if no different proportions are specified). If any Alternate
Beneficiary predeceases me, his share is to be divided among the Alternate
Beneficiaries who survive me in the relative proportions assigned to each such
surviving Alternate Beneficiary.
Alternate Beneficiary or Beneficiaries:
Name Relationship Date of Birth Social Security Number Proportion
- ------------ ------------ ------------- ----------------------- ----------
- ------------ ------------ ------------- ----------------------- ----------
- ------------ ------------ ------------- ----------------------- ----------
- ------------ ------------ ------------- ----------------------- ----------
IMPORTANT: This Designation of Beneficiary may have important tax or estate
planning effects. Also, if you are married and reside in a community property or
marital property state (Arizona, California, Idaho, Louisiana, Nevada, New
Mexico, Texas, Washington or Wisconsin), you may need to obtain your spouse's
consent if you have not designated your spouse as primary beneficiary for at
least half of your Account. See your lawyer or other tax professional for
additional information and advice.
<PAGE>
- --------------------------------------------------------------------------------
SPOUSAL (This section should be reviewed if the Depositor is married and
CONSENT designates a beneficiary other than the spouse. It is the Depositor's
responsibility to determine if this section applies. The Depositor may
need to consult with legal counsel. Neither the Custodian nor the
Sponsor are liable for any consequences resulting from a failure of
the Depositor to provide proper spousal consent.)
I am the spouse of the above-named Depositor. I acknowledge that I
have received a full and reasonable disclosure of my spouse's property
and financial obligations. Due to any possible consequences of giving
up my community or marital property interest in this IRA, I have been
advised to see a tax professional or legal adviser.
I hereby consent to the beneficiary designation(s) indicated above. I
assume full responsibility for any adverse consequence that may
result. No tax or legal advice was given to me by the Custodian or
Sponsor.
------------------------------------------ -----------------------
SIGNATURE OF SPOUSE DATE
------------------------------------------ -----------------------
SIGNATURE OF WITNESS FOR SPOUSE DATE
- --------------------------------------------------------------------------------
Part 5. Certifications and Signatures
If the Depositor has indicated a Traditional IRA Rollover or Direct Rollover
above, the Depositor certifies that the contribution does not include any
employee contributions to any qualified plan (other than accumulated deductible
employee contributions) or 403(b) arrangement; that any assets transferred in
kind by the Depositor are the same assets received by the Depositor in the
distribution being rolled over; if the distribution is from another Traditional
IRA, that the Depositor has not made another rollover within the one-year period
immediately preceding this rollover; that such distribution was received within
60 days of making the rollover to this Account; and that no portion of the
amount rolled over is a required minimum distribution under the required
distribution rules.
If the Depositor has indicated a Conversion, Transfer or a Rollover of an
existing Traditional IRA to a Roth IRA, the Depositor acknowledges that the
amount converted will be treated as taxable income (except for any prior
nondeductible contributions) for federal income tax purposes, and certifies that
no portion of the amount converted, transferred or rolled over is a required
minimum distribution under applicable rules. If the Depositor has elected to
convert an existing Traditional IRA with State Street Bank and Trust Company as
Custodian to a Roth IRA (Item 2 of Part B above) and has elected no withholding,
the Depositor understands that the Depositor may be required to pay estimated
tax and that insufficient payments of estimated tax may result in penalties. If
the Depositor has indicated a rollover from another Roth IRA (Item 4 of Part B
above), the Depositor certifies that the information given in Item 4 is correct
and acknowledges that adverse tax consequences or penalties could result from
giving incorrect information. The Depositor certifies that any rollover
contribution to the Roth IRA was completed within 60 days after the amount was
withdrawn from the other IRA.
The Depositor has received and read the applicable sections of the "State Street
Bank and Trust Company Universal Individual Retirement Account Disclosure
Statement" relating to this Account (including the Custodian's fee schedule),
the "State Street Bank and Trust Company Universal Individual Retirement Account
Custodial Agreement", and the "Instructions" pertaining to this Adoption
Agreement. The Depositor acknowledges receipt of the Universal Individual
Retirement Account Custodial Adoption Agreement and Universal Individual
Retirement Account Disclosure Statement at least 7 days before the date
inscribed below and acknowledges that the Depositor has no further right of
revocation.
<PAGE>
The Depositor acknowledges that it is his/her sole responsibility to report all
contributions to or withdrawals from the Account correctly on his or her tax
returns, and to keep necessary records of all the Depositor's IRAs (including
any that may be held by another Custodian or Trustee) for tax purposes. All
forms must be acceptable to the Custodian and dated and signed by the Depositor.
- ------------------------------- Custodian Acceptance. State Street Bank and
Signature of Depositor Trust Company will accept appointment as
Custodian of the Depositor's Account.
However, this Agreement is not binding upon
the Custodian until the Depositor has received
a statement confirming the initial transaction
Date for the Account. Receipt by the Depositor of
-------------------------- a confirmation of the purchase of the Fund
shares indicated above will serve as
notification of State Street Bank and Trust
Company's acceptance of appointment as
Custodian of the Depositor's Account.
STATE STREET BANK AND TRUST COMPANY, CUSTODIAN
By
------------------------------------------
Date
------------------------------------------
If the Depositor is a minor under the laws of the Depositor's state of
residence, a parent or guardian must also sign the Adoption Agreement here.
Until the Depositor reaches the age of majority, the parent or guardian will
exercise the powers and duties of the Depositor.
----------------------------------------------------------
Signature of Parent or Guardian
RETAIN A PHOTOCOPY OF THE COMPLETED ADOPTION AGREEMENT FOR YOUR RECORDS
<PAGE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
State Street Bank and Trust Company
Universal Individual Retirement Account Custodial Agreement
Universal IRA Transfer of Assets Form
- --------------------------------------------------------------------------------
1. NAME AND ADDRESS OF DEPOSITOR
Name
-------------------------------------------------------------------
Address
-------------------------------------------------------------------
Street City State Zip
-------------------------------------------------------------------
Day Telephone No.( ) Social Security No.
------------------- --------------------
- --------------------------------------------------------------------------------
2. IDENTIFICATION OF RECEIVING ACCOUNT
This a transfer to a State Street Bank and Trust Company
-- Traditional IRA* -- SEP IRA* -- Roth IRA** -- SIMPLE IRA***
* You may not transfer from a Roth IRA to a Traditional IRA or a
simplified employee pension SEP IRA or SIMPLE IRA (unless this is a
recharacterization transaction as permitted under IRS rules-consult
the IRS or a tax professional for assistance, if needed). Transfers to
a Traditional IRA or SEP IRA may be made from another Traditional IRA
or SEP IRA, qualified employer plan, 403(b) arrangement, or a SIMPLE
IRA account (but not until at least 2 years after the first
contribution to your SIMPLE IRA account).
** Transfers to a Roth IRA are possible from another Roth IRA, from a
Traditional IRA, from a SEP IRA, or from a SIMPLE IRA (but not until
at least 2 years after the first contribution to the SIMPLE IRA
account), not from other types of tax-deferred accounts. A transfer to
a Roth IRA from another IRA will trigger federal income tax on the
taxable amount transferred from the other IRA. Note: If a conversion,
rollover or transfer from a Traditional IRA to a Roth IRA is being
made, only amounts converted, rolled over or transferred during the
same calendar year will be accepted in a single Roth IRA. A separate
Roth IRA must be established to hold such amounts from a different
calendar year. Annual contributions may not be deposited in a Roth IRA
holding such converted, rolled over or transferred amounts.
*** Transfers to a SIMPLE IRA may be made only from another SIMPLE IRA.
During the first two years after a SIMPLE IRA is established,
transfers from the SIMPLE IRA may be made only to another SIMPLE IRA;
after two years, transfers may be made from a SIMPLE IRA to a
Traditional IRA or to a Roth IRA.
If you already have a Traditional IRA, SEP IRA, SIMPLE IRA or Roth IRA,
indicate the Account No.: .
---------------------------
- --------------------------------------------------------------------------------
3. TAX WITHHOLDING ELECTION (Complete Only For Transfer From Another Type of
IRA to a ROTH IRA)
Under IRS rules, a transfer or a Traditional IRA, SEP IRA or SIMPLE IRA to
a Roth IRA is treated for income tax purposes as a distribution of taxable
amounts in the other IRA. IRS rules also require the custodian to withhold
10% of the amount transferred for federal income taxes unless no
withholding has been elected. See IRS Publication 505, "Tax Withholding and
Estimated Tax" for more information. State tax withholding may also apply
if federal income tax is withheld. Caution: Withholding income taxes from
the amount transferred (instead of paying applicable income taxes from
another source) may adversely impact the expected financial benefits of
transferring from another IRA to a Roth IRA (consult your financial adviser
if you have a question). Because of this impact, by electing to convert a
Traditional IRA to a Roth IRA, you are deemed to elect no withholding
unless you check the box below: in so doing, by signing this form, you
acknowledge that you may be required to pay estimated tax and that
insufficient payments of estimated tax may result in penalties.
-- Withhold 10% for federal income taxes (if you want a greater
percentage, put it here: %).
----
<PAGE>
- --------------------------------------------------------------------------------
4. INSTRUCTIONS TO PRESENT IRA CUSTODIAN OR TRUSTEE (Completed by Depositor)
Name of Custodian/Trustee
-------------------------------------------------
Attention: Mr./Ms.
---------------------------------------------------------
Address
-------------------------------------------------------------------
Street City State Zip
Identification of Sending Account (including Account No.)
-----------------
Please transfer assets from the above account to State Street Bank and
Trust Company. Transfer should be in cash according to the following
instructions:
-- Transfer the total amount in my or -- Transfer $ and
Account. -------------
retain the balance.
Make check payable to:
-----------------------------------
-----------------------------------
-----------------------------------
- --------------------------------------------------------------------------------
5. INVESTMENT INSTRUCTIONS TO STATE STREET BANK AND TRUST COMPANY
(Depositor -- check one box and complete if necessary)
-- Invest the transferred amount in accordance with the investment
instructions in the Adoption Agreement for my State Street Bank
and Trust Company Individual Retirement Account Custodial Agreement.
-- Invest the transferred
amount as follows: Permanent Portfolio -------%
Treasury Bill Portfolio -------%
Aggressive Growth Portfolio -------%
Versatile Bond Portfolio -------%
Must Total 100%
I acknowledge that I have sole responsibility for my investment choices and that
I have received the Fund's current prospectus. Please read the prospectus before
investing.
I understand that the requirements for a valid transfer to a Traditional IRA,
SEP IRA, Roth IRA or SIMPLE IRA are complex and that I have the responsibility
for complying with all requirements and for the tax results of any such
transfer.
<PAGE>
- --------------------------------------------------------------------------------
6. SIGNATURE OF DEPOSITOR
The undersigned certifies to the present IRA Custodian or Trustee that the
undersigned has established a successor Individual Retirement Account
meeting the requirements of Internal Revenue Code Section 408(a), 408(k),
408(p) or 408A (as the case may be) to which assets will be transferred,
and certifies to State Street Bank and Trust Company that the IRA from
which assets are being transferred meets the requirements of Internal
Revenue Code Section 408(a), 408(k), 408(p) or 408A (as the case may be).
------------------------------ -------------------------------------
Date Signature of Depositor
SIGNATURE GUARANTEE (only if required by current Custodian or Trustee;
signature by a notary public is not acceptable)
---
Signature guaranteed by:
--------------------------------------------------
Name of Bank or Dealer Firm
--------------------------------------------------
Signature of Officer and Title
- --------------------------------------------------------------------------------
7. ACCEPTANCE BY NEW CUSTODIAN (Completed by State Street Bank and Trust
Company)
State Street Bank and Trust Company agrees to accept transfer of the above
amount for deposit to the Depositor's State Street Bank and Trust Company
Individual Retirement Account, and requests the liquidation and transfer of
assets as indicated above.
By: Date:
------------------------------------------------- -----------------
<PAGE>
State Street Bank and Trust Company
Universal Individual Retirement Account
Disclosure Statement
Part One: Description of Traditional IRAs
-----------------------------------------
SPECIAL NOTE
Part One of the Disclosure Statement describes the rules applicable to
Traditional IRAs beginning January 1, 1998.
IRAs described in these pages are called "Traditional IRAs" to distinguish
them from the new "Roth IRAs" first available starting in 1998. Roth IRAs are
described in Part Two of this Disclosure Statement. Contributions to a Roth IRA
are not deductible (regardless of your AGI), but withdrawals that meet certain
requirements are not subject to federal income tax, so that dividends and
investment growth on amounts held in the Roth IRA can escape federal income tax.
Please see Part Two of this Disclosure Statement if you are interested in
learning more about Roth IRAs.
Traditional IRAs described in this Disclosure Statement may be used as part
of a simplified employee pension "SEP" plan maintained by your employer. Under a
SEP your employer may make contributions to your Traditional IRA, and these
contributions may exceed the normal limits on Traditional IRA contributions.
This Disclosure Statement does not describe IRAs established in connection with
a "SIMPLE IRA" program maintained by your employer. Employers provide special
explanatory materials for accounts established as part of a SIMPLE IRA program.
Traditional IRAs may be used in connection with a SIMPLE IRA program, but for
the first two years of participation a special SIMPLE IRA (not a Traditional
IRA) is required.
YOUR TRADITIONAL IRA
This Part One contains information about your Traditional Individual
Retirement Account with State Street Bank and Trust Company as Custodian. A
Traditional IRA gives you several tax benefits. Earnings on the assets held in
your Traditional IRA are not subject to federal income tax until withdrawn by
you. You may be able to deduct all or part of your Traditional IRA contribution
on your federal income tax return. State income tax treatment of your
Traditional IRA may differ from federal treatment; ask your state tax department
or your personal tax adviser for details.
Be sure to read Part Three of this Disclosure Statement for important
additional information, including information on how to revoke your Traditional
IRA, investments and prohibited transactions, fees and expenses, and certain tax
requirements.
ELIGIBILITY
What are the eligibility requirements for a Traditional IRA?
You are eligible to establish and contribute to a Traditional IRA for a
year if:
* You received compensation (or earned income if you are self employed)
during the year for personal services you rendered. If you received taxable
alimony, this is treated like compensation for IRA purposes.
* You did not reach age 70 1/2 during the year.
Can I contribute to a Traditional IRA for my spouse?
For each year before the year when your spouse attains age 70 1/2, you can
contribute to a separate Traditional IRA for your spouse, regardless of whether
your spouse had any compensation or earned income in that year. This is called a
"spousal IRA." To make a contribution to a Traditional IRA for your spouse, you
must file a joint tax return for the year with your spouse. For a Spousal IRA,
your spouse must set up a different Traditional IRA, separate from yours, to
which you contribute.
<PAGE>
CONTRIBUTIONS
When can I make contributions to a Traditional IRA?
You may make a contribution to your existing Traditional IRA or establish a
new Traditional IRA for a taxable year by the due date (not including any
extensions) for your federal income tax return for the year. Usually this is
April 15 of the following year.
How Much Can I Contribute to my Traditional IRA?
For each year when you are eligible (see above), you can contribute up to
the lesser of $2,000 or 100% of your compensation (or earned income, if you are
self-employed). However, under the tax laws, all or a portion of your
contribution may not be deductible.
If you and your spouse have spousal Traditional IRAs, each spouse may
contribute up to $2,000 to his or her IRA for a year as long as the combined
compensation of both spouses for the year (as shown on your joint income tax
return) is at least $4,000. If the combined compensation of both spouses is less
than $4,000, the spouse with the higher amount of compensation may contribute up
to that spouse's compensation amount, or $2,000 if less. The spouse with the
lower compensation amount may contribute any amount up to that spouse's
compensation plus any excess of the other spouse's compensation over the other
spouse's IRA contribution. However, the maximum contribution to either spouse's
Traditional IRA is $2,000 for the year.
If you (or your spouse) establish a new Roth IRA and make contributions to
both your Traditional IRA and a Roth IRA, the combined limit on contributions to
both your (or your spouse's) Traditional IRA and Roth IRA for a single calendar
year is $2,000.
How do I know if my contribution is tax deductible?
The deductibility of your contribution depends upon whether you are an
active participant in any employer-sponsored retirement plan. If you are not an
active participant, the entire contribution to your Traditional IRA is
deductible.
If you are an active participant in an employer-sponsored plan, your
Traditional IRA contribution may still be completely or partly deductible on
your tax return. This depends on the amount of your income (see below).
Similarly, the deductibility of a contribution to a Traditional IRA for
your spouse depends upon whether your spouse is an active participant in any
employer-sponsored retirement plan. If your spouse is not an active participant,
the contribution to your spouse's Traditional IRA will be deductible. If your
spouse is an active participant, the Traditional IRA contribution will be
completely, partly or not deductible depending upon your combined income.
An exception to the preceding rules applies to high-income married
taxpayers, where one spouse is an active participant in an employer-sponsored
retirement plan and the other spouse is not. A contribution to the non-active
participant spouse's Traditional IRA will be only partly deductible starting at
an adjusted gross income level on the joint tax return of $150,000, and the
deductibility will be phased out as described below over the next $10,000 so
that there will be no deduction at all with an adjusted gross income level of
$160,000 or higher.
How do I determine my or my spouse's "active participant" status?
Your (or your spouse's) Form W-2 should indicate if you (or your spouse)
were an active participant in an employer-sponsored retirement plan for a year.
If you have a question, you should ask your employer or the plan administrator.
In addition, regardless of income level, your spouse's "active participant"
status will not affect the deductibility of your contributions to your
Traditional IRA if you and your spouse file separate tax returns for the taxable
year and you lived apart at all times during the taxable year.
What are the deduction restrictions for active participants?
If you (or your spouse) are an active participant in an employer plan
during a year, the contribution to your Traditional IRA (or your spouse's
Traditional IRA) may be completely, partly or not deductible depending upon your
filing status and your amount of adjusted gross income ("AGI"). If AGI is any
amount up to the lower limit, the contribution is deductible. If your AGI falls
between the lower limit and the upper limit, the contribution is partly
deductible. If your AGI falls above the upper limit, the contribution is not
deductible.
<PAGE>
<TABLE>
FOR ACTIVE PARTICIPANTS - 1998
<CAPTION>
-------------------------------------------------------------------------
If You Are If You Are Then Your Traditional
Single Married Filing Jointly IRA Contribution Is
-------------------------------------------------------------------------
-------------------------------------------------------------------------
<S> <C> <C> <C>
Up to Up to Fully
Lower Limit Lower Limit Deductible
($30,000 for 1998) ($50,000 for 1998)
-------------------------------------------------------------------------
Adjusted More than Lower Limit More than Lower Limit Partly
Gross but less than but less than Deductible
Income (AGI) Upper Limit Upper Limit
Level ($40,000 for 1998) ($60,000 for 1998)
-------------------------------------------------------------------------
Upper Limit or more Upper Limit or more Not
Deductible
-------------------------------------------------------------------------
</TABLE>
The Lower Limit and the Upper Limit will change for 1999 and later years. The
Lower Limit and Upper Limit for these years are shown in the following table.
Substitute the correct Lower Limit and Upper Limit in the table above to
determine deductibility in any particular year. (Note: if you are married but
filing separate returns, your Lower Limit is always zero and your Upper Limit is
always $10,000).
<TABLE>
TABLE OF LOWER AND UPPER LIMITS
- -----------------------------------------------------------------------------------------
<CAPTION>
Year Single Married
Filing Jointly
- ------------------ ----------------------------- ------------------------------
Lower Limit Upper Limit Lower Limit Upper Limit
- ------------------ ----------------------------- ------------------------------
<S> <C> <C> <C> <C>
1999 $31,000 $41,000 $51,000 $ 61,000
2000 $32,000 $42,000 $52,000 $ 62,000
2001 $33,000 $43,000 $53,000 $ 63,000
2002 $34,000 $44,000 $54,000 $ 64,000
2003 $40,000 $50,000 $60,000 $ 70,000
2004 $45,000 $55,000 $65,000 $ 75,000
2005 $50,000 $60,000 $70,000 $ 80,000
2006 $50,000 $60,000 $75,000 $ 85,000
2007 and $50,000 $60,000 $80,000 $100,000
later
- -----------------------------------------------------------------------------------------
</TABLE>
How do I calculate my deduction if I fall in the "partly deductible" range?
If your AGI falls in the partly deductible range, you must calculate the
portion of your contribution that is deductible. To do this, multiply your
contribution by a fraction. The numerator is the amount by which your AGI
exceeds the lower limit (for 1998: $30,000 if single, or $50,000 if married
filing jointly). The denominator is $10,000 (note that the denominator for
married joint filers is $20,000 starting in 2007). Subtract this from your
contribution and then round down to the nearest $10. When you fall in the
"partly deductible" range, the deductible amount is the greater of the amount
calculated or $200 (provided you contribute at least $200). If your contribution
is less than $200, then the entire contribution is deductible.
<PAGE>
For example, assume that you make a $2,000 contribution to your Traditional
IRA in 1998, a year in which you are an active participant in your employer's
retirement plan. Also assume that your AGI is $57,555 and you are married,
filing jointly. You would calculate the deductible portion of your contribution
this way:
1. The amount by which your AGI exceeds the lower limit of the partly
deductible range:
($57,555-$50,000) = $7,555
2. Divide this by $10,000: $ 7,555
------- = 0.7555
$10,000
3. Multiply this by your contribution limit: 0.7555 x $2,000 = $1,511
4. Subtract this from your contribution: ($2,000 - $1,511) = $489
5. Round this down to the nearest $10: = $480
6. Your deductible contribution is the greater of this amount or $200.
Even though part or all of your contribution is not deductible, you may still
contribute to your Traditional IRA (and your spouse may contribute to your
spouse's Traditional IRA) up to the limit on contributions. When you file your
tax return for the year, you must designate the amount of non-deductible
contributions to your Traditional IRA for the year. See IRS Form 8606.
How do I determine my AGI?
AGI is your gross income minus those deductions which are available to all
taxpayers even if they don't itemize. Instructions to calculate your AGI are
provided with your income tax Form 1040 or 1040A.
What happens if I contribute more than allowed to my Traditional IRA?
The maximum contribution you can make to a Traditional IRA generally is
$2,000 or 100% of compensation or earned income, whichever is less. Any amount
contributed to the IRA above the maximum is considered an "excess contribution."
The excess is calculated using your contribution limit, not the deductible
------------ ----------
limit. An excess contribution is subject to excise tax of 6% for each year it
remains in the IRA.
How can I correct an excess contribution?
Excess contributions may be corrected without paying a 6% penalty. To do
so, you must withdraw the excess and any earnings on the excess before the due
date (including extensions) for filing your federal income tax return for the
year for which you made the excess contribution. A deduction should not be taken
for any excess contribution. Earnings on the amount withdrawn must also be
withdrawn. The earnings must be included in your income for the tax year for
which the contribution was made and may be subject to a 10% premature withdrawal
tax if you have not reached age 59 1/2.
What happens if I don't correct the excess contribution by the tax return due
date?
Any excess contribution withdrawn after the tax return due date (including
any extensions) for the year for which the contribution was made will be subject
to the 6% excise tax. There will be an additional 6% excise tax for each year
the excess remains in your account.
Under limited circumstances, you may correct an excess contribution after
tax filing time by withdrawing the excess contribution (leaving the earnings in
the account). This withdrawal will not be includible in income nor will it be
subject to any premature withdrawal penalty if (1) your contributions to all
Traditional IRAs do not exceed $2,000 and (2) you did not take a deduction for
the excess amount (or you file an amended return (Form 1040X) which removes the
excess deduction).
<PAGE>
How are excess contributions treated if none of the preceding rules apply?
Unless an excess contribution qualifies for the special treatment outlined
above, the excess contribution and any earnings on it withdrawn after tax filing
time will be includible in taxable income and may be subject to a 10% premature
withdrawal penalty. No deduction will be allowed for the excess contribution for
the year in which it is made.
Excess contributions may be corrected in a subsequent year to the extent
that you contribute less than your maximum contribution amount. As the prior
excess contribution is reduced or eliminated, the 6% excise tax will become
correspondingly reduced or eliminated for subsequent tax years. Also, you may be
able to take an income tax deduction for the amount of excess that was reduced
or eliminated, depending on whether you would be able to take a deduction if you
had instead contributed the same amount.
Are the earnings on my Traditional IRA funds taxed?
Any dividends on or growth of the investments held in your Traditional IRA
are generally exempt from federal income taxes and will not be taxed until
withdrawn by you, unless the tax exempt status of your Traditional IRA is
revoked (this is described in Part Three of this Disclosure Statement).
TRANSFERS/ROLLOVERS
Can I transfer or roll over a distribution I receive from my employer's
retirement plan into a Traditional IRA?
Almost all distributions from employer plans or 403(b) arrangements (for
employees of tax-exempt employers) are eligible for rollover to a Traditional
IRA. The main exceptions are:
* payments over the lifetime or life expectancy of the participant (or
participant and a designated beneficiary),
* installment payments for a period of 10 years or more,
* required distributions (generally the rules require distributions starting
at age 70 1/2 or for certain employees starting at retirement, if later),
* payments of employee after-tax contributions, and
* starting in 1999, hardship withdrawals from a 401(k) plan or a 403(b)
arrangement.
If you are eligible to receive a distribution from a tax qualified
retirement plan as a result of, for example, termination of employment, plan
discontinuance, or retirement, all or part of the distribution may be
transferred directly into your Traditional IRA. This is a called a "direct
rollover." Or, you may receive the distribution and make a regular rollover to
your Traditional IRA within 60 days. By making a direct rollover or a regular
rollover, you can defer income taxes on the amount rolled over until you
subsequently make withdrawals from your Traditional IRA.
The maximum amount you may roll over is the amount of employer
contributions and earnings distributed. You may not roll over any after-tax
employee contributions you made to the employer retirement plan. If you are over
age 70 1/2 and are required to take minimum distributions under the tax laws,
you may not roll over any amount required to be distributed to you under the
minimum distribution rules. Also, if you are receiving periodic payments over
your or your and your designated beneficiary's life expectancy or for a period
of at least 10 years, you may not roll over these payments. A rollover to a
Traditional IRA must be completed within 60 days after the distribution from the
employer retirement plan to be valid.
NOTE: A qualified plan administrator or 403(b) sponsor MUST WITHHOLD 20% OF
YOUR DISTRIBUTION for federal income taxes UNLESS you elect a direct rollover.
Your plan or 403(b) sponsor is required to provide you with information about
direct and regular rollovers and withholding taxes before you receive your
distribution and must comply with your directions to make a direct rollover.
The rules governing rollovers are complicated. Be sure to consult your tax
adviser or the IRS if you have a question about rollovers.
<PAGE>
Once I have rolled over a plan distribution into a Traditional IRA, can I
subsequently roll over into another employer's qualified retirement plan?
Yes. Part or all of an eligible distribution received from a qualified plan
may be transferred from the Traditional IRA holding it to another qualified
plan. However, the Traditional IRA must have no assets other than those which
were previously distributed to you from the qualified plan. Specifically, the
Traditional IRA cannot contain any annual contributions by you (or your spouse).
Also, the new qualified plan must accept rollovers. Similar rules apply to
Traditional IRAs established with rollovers from 403(b) arrangements.
Can I make a rollover from my Traditional IRA to another Traditional IRA?
You may make a rollover from one Traditional IRA to another Traditional IRA
you have or you establish to receive the rollover. Such a rollover must be
completed within 60 days after the withdrawal from your first Traditional IRA.
After making such a regular rollover from one Traditional IRA to another, you
must wait a full year (365 days) before you can make another such rollover.
(However, you can instruct a Traditional IRA custodian to transfer amounts
directly to another Traditional IRA custodian; such a direct transfer does not
count as a rollover.)
What happens if I combine rollover contributions with my annual contributions in
one IRA?
If you wish to make both a normal annual contribution and a rollover
contribution, you may wish to open two separate Traditional IRAs by completing
two Adoption Agreements and two sets of forms. You should consult a tax adviser
before making your annual contribution to the Traditional IRA you established
with rollover contributions (or make a rollover contribution to the Traditional
IRA to which you make your annual contributions). This is because combining your
annual contributions and rollover contributions originating from an employer
plan distribution would prohibit any future rollover out of the Traditional IRA
into another qualified plan. If despite this, you still wish to combine a
rollover contribution and the IRA holding your annual contributions, you should
establish the account as an Annual Contributions IRA on the Adoption Agreement
(not a Rollover IRA or Direct Rollover IRA) and make the contributions to that
account.
How do rollovers affect my contribution or deduction limits?
Rollover contributions, if properly made, do not count toward the maximum
contribution. Also, rollovers are not deductible and they do not affect your
deduction limits as described above.
What about converting my Traditional IRA to a Roth IRA?
The rules for converting a Traditional IRA to a Roth IRA, or making a
rollover from a Traditional IRA to a Roth IRA, are described in Part Two below.
<PAGE>
WITHDRAWALS
When can I make withdrawals from my Traditional IRA?
You may withdraw from your Traditional IRA at any time. However,
withdrawals before age 59 1/2 may be subject to a 10% penalty tax in addition to
regular income taxes (see below).
When must I start making withdrawals?
If you have not withdrawn the total amount held in your Traditional IRA by
the April 1 following the year in which you reach 70 1/2, you must make minimum
withdrawals in order to avoid penalty taxes. The rule allowing certain employees
to postpone distributions from an employer qualified plan until actual
retirement (even if this is after age 70 1/2) does not apply to Traditional
IRAs. ---
The minimum withdrawal amount is determined by dividing the balance in your
Traditional IRA (or IRAs) by your life expectancy or the combined life
expectancy of you and your designated beneficiary. The minimum withdrawal rules
are complex. Consult your tax adviser for assistance.
The penalty tax is 50% of the difference between the minimum withdrawal
amount and your actual withdrawals during a year. The IRS may waive or reduce
the penalty tax if you can show that your failure to make the required minimum
withdrawals was due to reasonable cause and you are taking reasonable steps to
remedy the problem.
How are withdrawals from my Traditional IRA taxed?
Amounts withdrawn by you are includible in your gross income in the taxable
year that you receive them, and are taxable as ordinary income. Amounts
withdrawn may be subject to income tax withholding by the custodian unless you
elect not to have withholding. See Part Three below for additional information
on withholding. Lump sum withdrawals from a Traditional IRA are not eligible for
averaging treatment currently available to certain lump sum distributions from
qualified employer retirement plans.
Since the purpose of a Traditional IRA is to accumulate funds for
retirement, your receipt or use of any portion of your Traditional IRA before
you attain age 59 1/2 generally will be considered as an early withdrawal and
subject to a 10% penalty tax.
The 10% penalty tax for early withdrawal will not apply if:
* The distribution was a result of your death or disability.
* The purpose of the withdrawal is to pay certain higher education expenses
for yourself or your spouse, child, or grandchild. Qualifying expenses
include tuition, fees, books, supplies and equipment required for
attendance at a post-secondary educational institution. Room and board
expenses may qualify if the student is attending at least half-time.
* The withdrawal is used to pay eligible first-time homebuyer expenses. These
are the costs of purchasing, building or rebuilding a principal residence
(including customary settlement, financing or closing costs). The purchaser
may be you, your spouse, or a child, grandchild, parent or grandparent of
you or your spouse. An individual is considered a "first-time homebuyer" if
the individual did not have (or, if married, neither spouse had) an
ownership interest in a principal residence during the two-year period
immediately preceding the acquisition in question. The withdrawal must be
used for eligible expenses within 120 days after the withdrawal. (If there
is an unexpected delay, or cancellation of the home acquisition, a
withdrawal may be redeposited as a rollover).
There is a lifetime limit on eligible first-time homebuyer expenses of
$10,000 per individual.
* The distribution is one of a scheduled series of substantially equal
periodic payments for your life or life expectancy (or the joint lives or
life expectancies of you and your beneficiary).
If there is an adjustment to the scheduled series of payments, the 10%
penalty tax may apply. The 10% penalty will not apply if you make no change
in the series of payments until the end of five years or until you reach
age 59 1/2, whichever is later. If you make a change before then, the
penalty will apply. For example, if you begin receiving payments at age 50
under a withdrawal program providing for substantially equal payments over
your life expectancy, and at age 58 you elect to receive the remaining
amount in your Traditional IRA in a lump-sum, the 10% penalty tax will
apply to the lump sum and to the amounts previously paid to you before age
59 1/2.
<PAGE>
* The distribution does not exceed the amount of your deductible medical
expenses for the year (generally speaking, medical expenses paid during a
year are deductible if they are greater than 7 1/2% of your adjusted gross
income for that year).
* The distribution does not exceed the amount you paid for health insurance
coverage for yourself, your spouse and dependents. This exception applies
only if you have been unemployed and received federal or state unemployment
compensation payments for at least 12 weeks; this exception applies to
distributions during the year in which you received the unemployment
compensation and during the following year, but not to any distributions
received after you have been reemployed for at least 60 days.
* Starting in the year 2000, the distribution is made pursuant to an IRS levy
to pay overdue taxes.
How are nondeductible contributions taxed when they are withdrawn?
A withdrawal of nondeductible contributions (not including earnings) will
be tax-free. However, if you made both deductible and nondeductible
contributions to your Traditional IRA, then each distribution will be treated as
partly a return of your nondeductible contributions (not taxable) and partly a
distribution of deductible contributions and earnings (taxable). The nontaxable
amount is the portion of the amount withdrawn which bears the same ratio as your
total nondeductible Traditional IRA contributions bear to the total balance of
all your Traditional IRAs (including rollover IRAs and SEPs, but not including
Roth IRAs).
For example, assume that you made the following Traditional IRA
contributions:
Year Deductible Nondeductible
---- ---------- -------------
1995 $2,000
1996 $2,000
1997 $1,000 $1,000
1998 $1,000
------ ------
$5,000 $2,000
In addition assume that your Traditional IRA has total investment earnings
through 1998 of $1,000. During 1998 you withdraw $500. Your total account
balance as of December 31, 1998 is $7,500 as shown in the next column.
Deductible Contributions $5,000
Nondeductible Contributions $2,000
Earnings On IRA $1,000
Less 1998 Withdrawal $ 500
------
Total Account Balance as of December 31, 1998 $7,500
To determine the nontaxable portion of your 1998 withdrawal, the total 1998
withdrawal ($500) must be multiplied by a fraction. The numerator of the
fraction is the total of all nondeductible contributions remaining in the
account before the 1998 withdrawal ($2,000). The denominator is the total
account balance as of December 31, 1998 ($7,500) plus the 1998 withdrawal ($500)
or $8,000. The calculation is:
Total Remaining
Nondeductible Contributions $2,000 x $500 = $ 125
--------------------------- ------
Total Account Balance $8,000
Thus, $125 of the $500 withdrawal in 1998 will not be included in your
taxable income. The remaining $375 will be taxable for 1998. In addition, for
future calculations the remaining nondeductible contribution total will be
$2,000 minus $125, or $1,875.
A loss in your Traditional IRA investment may be deductible. You should
consult your tax adviser for further details on the appropriate calculation for
this deduction if applicable.
Is there a penalty tax on certain large withdrawals or accumulations in my IRA?
Earlier tax laws imposed a "success" penalty equal to 15% of withdrawals
from all retirement accounts (including IRAs, 401(k) or other employer
retirement plans, 403(b) arrangements and others) in a year exceeding a
specified amount (initially $150,000 per year). Also, there was a 15% estate tax
penalty on excess accumulations remaining in IRAs and other tax-favored
arrangements upon your death. These 15% penalty taxes have been repealed.
--------
Important: Please see Part Three below which contains important information
- ----------
applicable to all State Street Bank and Trust Company IRAs.
---
<PAGE>
Part Two: Description of Roth IRAs
----------------------------------
SPECIAL NOTE
Part Two of the Disclosure Statement describes the rules generally
applicable to Roth IRAs beginning January 1, 1998.
Roth IRAs are available for the first time in 1998. Contributions to a Roth
IRA are not tax-deductible, but withdrawals that meet certain requirements are
not subject to federal income taxes. This makes the dividends on and growth of
the investments held in your Roth IRA tax-free for federal income tax purposes
if the requirements are met.
Traditional IRAs, which have existed since 1975, are still available.
Contributions to a Traditional IRA may be tax-deductible. Earnings and gains on
amounts while held in a Traditional IRA are tax-deferred. Withdrawals are
subject to federal income tax (except for prior after-tax contributions which
may be recovered without additional federal income tax).
This Part Two does not describe Traditional IRAs. If you wish to review
information about Traditional IRAs, please see Part One of this Disclosure
Statement.
This Disclosure Statement also does not describe IRAs established in
connection with a SIMPLE IRA program or a Simplified Employee Pension (SEP) plan
maintained by your employer. Roth IRAs may not be used in connection with a
SIMPLE IRA program or a SEP plan.
YOUR ROTH IRA
Your Roth IRA gives you several tax benefits. While contributions to a Roth
IRA are not deductible, dividends on and growth of the assets held in your Roth
IRA are not subject to federal income tax. Withdrawals by you from your Roth IRA
are excluded from your income for federal income tax purposes if certain
requirements (described below) are met. State income tax treatment of your Roth
IRA may differ from federal treatment; ask your state tax department or your
personal tax adviser for details.
Be sure to read Part Three of this Disclosure Statement for important
additional information, including information on how to revoke your Roth IRA,
investments and prohibited transactions, fees and expenses and certain tax
requirements.
ELIGIBILITY
What are the eligibility requirements for a Roth IRA?
You are eligible to establish and contribute to a Roth IRA for a year if
you received compensation (or earned income if you are self employed) during the
year for personal services you rendered. If you received taxable alimony, this
is treated like compensation for Roth IRA purposes.
In contrast to a Traditional IRA, with a Roth IRA you may continue making
contributions after you reach age 70 1/2.
Can I contribute to Roth IRA for my spouse?
If you meet the eligibility requirements you can not only contribute to
your own Roth IRA, but also to a separate Roth IRA for your spouse out of your
compensation or earned income, regardless of whether your spouse had any
compensation or earned income in that year. This is called a "Spousal Roth IRA."
To make a contribution to a Roth IRA for your spouse, you must file a joint tax
return for the year with your spouse. For a Spousal Roth IRA, your spouse must
set up a different Roth IRA, separate from yours, to which you contribute.
Of course, if your spouse has compensation or earned income, your spouse
can establish his or her own Roth IRA and make contributions to it in accordance
with the rules and limits described in this Part Two of the Disclosure
Statement.
CONTRIBUTIONS
When can I make contributions to a Roth IRA?
You may make a contribution to your Roth IRA or establish a new Roth IRA
for a taxable year by the due date (not including any extensions) for your
---
federal income tax return for the year. Usually this is April 15 of the
following year. For example, you will have until April 15, 1999 to establish and
make a contribution to a Roth IRA for 1998.
How much can I contribute to my Roth IRA?
For each year when you are eligible (see above), you can contribute up to
the lesser of $2,000 or 100% of your compensation (or earned income, if you are
self-employed).
<PAGE>
Your Roth IRA limit is reduced by any contributions for the same year to a
Traditional IRA. For example, assuming you have at least $2,000 in compensation
or earned income, if you contribute $500 to your Traditional IRA for a year,
your maximum Roth IRA contribution for that year will be $1,500. (Note: the Roth
IRA contribution limit is not reduced by contributions made to either a SEP IRA
---
or a SIMPLE IRA; salary reduction contributions by you are considered employer
contributions for this purpose.)
If you and your spouse have Spousal Roth IRAs, each spouse may contribute
up to $2,000 to his or her Roth IRA for a year as long as the combined
compensation of both spouses for the year (as shown on your joint income tax
return) is at least $4,000. If the combined compensation of both spouses is less
than $4,000, the spouse with the higher amount of compensation may contribute up
to that spouse's compensation amount, or $2,000 if less. The spouse with the
lower compensation amount may contribute any amount up to that spouse's
compensation plus any excess the other spouse's compensation over the other
spouse's Roth IRA contribution. However, the maximum contribution to either
spouse's Roth IRA is $2,000 for the year.
As noted above, the Spousal Roth IRA limits are reduced by any
contributions for the same calendar year to a Traditional IRA maintained by you
or your spouse.
For taxpayers with high income levels, the contribution limits may be
reduced (see below).
Are contributions to a Roth IRA tax deductible?
Contributions to a Roth IRA are not deductible. This is a major difference
---
between Roth IRAs and Traditional IRAs. Contributions to a Traditional IRA may
be deductible on your federal income tax return depending on whether or not you
are an active participant in an employer-sponsored plan and on your income
level.
Are the earnings on my Roth IRA funds taxed?
Any dividends on or growth of investments held in your Roth IRA are
generally exempt from federal income taxes and will not be taxed until withdrawn
---
by you, unless the tax exempt status of your Roth IRA is revoked. If the
withdrawal qualifies as a tax-free withdrawal (see below), amounts reflecting
earnings or growth of assets in your Roth IRA will not be subject to federal
income tax.
Which is better, a Roth IRA or a Traditional IRA?
This will depend upon your individual situation. A Roth IRA may be better
if you are an active participant in an employer-sponsored plan and your adjusted
gross income is too high to make a deductible IRA contribution (but not too high
to make a Roth IRA contribution). Also, the benefits of a Roth IRA vs. a
Traditional IRA may depend upon a number of other factors including, but not
limited to: your current income tax bracket vs. your expected income tax bracket
when you make withdrawals from your IRA, whether you expect to be able to make
nontaxable withdrawals from your Roth IRA (see below), how long you expect to
leave your contributions in the IRA, how much you expect the IRA to earn in the
meantime, and possible future tax law changes.
Consult a qualified tax or financial adviser for assistance on this
question.
<PAGE>
Are there any restrictions on contributions to my Roth IRA?
Taxpayers with very high income levels may not be able to contribute to a
Roth IRA at all, or their contribution may be limited to an amount less than
$2,000. This depends upon your filing status and the amount of your adjusted
gross income (AGI). The following table shows how the contribution limits are
restricted:
<TABLE>
<CAPTION>
ROTH IRA CONTRIBUTION LIMITS
---------------------------------------------------------------------------------
<S> <C> <C> <C>
If You Are If You Are Then Your Roth
Single Married Filing Jointly IRA Contribution Is
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Up to Up to Full
$95,000 $150,000 Contribution
---------------------------------------------------------------------------------
Adjusted More than $95,000 More than $150,000
Gross but less than but less than
Income (AGI) $110,000 $160,000
Level Reduced Contribution
(see explanation below)
---------------------------------------------------------------------------------
$110,000 $160,000 Zero (No Contribution)
and up and up
---------------------------------------------------------------------------------
</TABLE>
Note: If you are a married taxpayer filing separately, your maximum Roth
IRA contribution limit phases out over the first $10,000 of adjusted gross
income. If your AGI is $10,000 or more you may not contribute to a Roth IRA for
the year.
How do I calculate my limit if I fall in the "reduced contribution" range?
If your AGI falls in the reduced contribution range, you must calculate
your contribution limit. To do this, multiply your normal contribution limit
($2,000 or your compensation if less) by a fraction. The numerator is the amount
by which your AGI exceeds the lower limit of the reduced contribution range
($95,000 if single, or $150,000 if married filing jointly). The denominator is
$15,000 (single taxpayers) or $10,000 (married filing jointly). Subtract this
from your normal limit and then round down to the nearest $10. With AGI in the
reduced contribution range, the contribution limit is the greater of the amount
calculated or $200.
For example, assume that your AGI for the year is $157,555 and you are
married, filing jointly. You would calculate your Roth IRA contribution limit
this way:
1. The amount by which your AGI exceeds the lower limit of the reduced
contribution deductible range:
($157,555-$150,000) = $7,555
2. Divide this by $10,000: $ 7,555
-------
$10,000 = 0.7555
3. Multiply this by $2,000 (or your
compensation for the year, if less): 0.7555 x $2,000 = $1,511
4. Subtract this from your $2,000 limit: ($2,000 - $1,511) = $489
5. Round this down to the nearest $10 = $480
6. Your contribution limit is the greater of this amount or $200.
Remember, your Roth IRA contribution limit of $2,000 is reduced by any
contributions for the same year to a Traditional IRA. If you fall in the reduced
contribution range, the reduction formula applies to the Roth IRA contribution
limit left after subtracting your contribution for the year to a Traditional
IRA.
<PAGE>
How do I determine my AGI?
AGI is your gross income minus those deductions which are available to all
taxpayers even if they don't itemize. Instructions to calculate your AGI are
provided with your income tax Form 1040 or 1040A.
There are two additional rules when calculating AGI for purposes of Roth
IRA contribution limits. First, if you are making a deductible contribution for
the year to a Traditional IRA, your AGI is not reduced by the amount of the
deduction. Second, if you are converting a Traditional IRA to a Roth IRA in a
year (see below), the amount includible in your income as a result of the
conversion is not considered AGI when computing your Roth IRA contribution limit
for the year.
What happens if I contribute more than allowed to my Roth IRA?
The maximum contribution you can make to a Roth IRA generally is $2,000 or
100% of compensation or earned income, whichever is less. As noted above, your
maximum is reduced by the amount of any contribution to a Traditional IRA for
the same year and may be further reduced if you have high AGI. Any amount
contributed to the Roth IRA above the maximum is considered an "excess
contribution."
An excess contribution is subject to excise tax of 6% for each year it
remains in the Roth IRA.
How can I correct an excess contribution?
Excess contributions may be corrected without paying a 6% penalty. To do
so, you must withdraw the excess and any earnings on the excess before the due
date (including extensions) for filing your federal income tax return for the
year for which you made the excess contribution. Earnings on the amount
withdrawn must also be withdrawn. The earnings must be included in your income
for the tax year for which the contribution was made and may be subject to a 10%
premature withdrawal tax if you have not reached age 59 1/2 (unless an exception
to the 10% penalty tax applies).
What happens if I don't correct the excess contribution by the tax return due
date?
Any excess contribution withdrawn after the tax return due date (including
any extensions) for the year for which the contribution was made will be subject
to the 6% excise tax. There will be an additional 6% excise tax for each year
the excess remains in your account.
Unless an excess contribution qualifies for the special treatment outlined
above, the excess contribution and any earnings on it withdrawn after tax filing
time will be includible in taxable income and may be subject to a 10% premature
withdrawal penalty.
You may reduce the excess contributions by making a withdrawal equal to the
excess. Earnings need not be withdrawn. To the extent that no earnings are
withdrawn, the withdrawal will not be subject to income taxes or possible
penalties for premature withdrawals before age 59 1/2. Excess contributions may
also be corrected in a subsequent year to the extent that you contribute less
than your Roth IRA contribution limit for the subsequent year. As the prior
excess contribution is reduced or eliminated, the 6% excise tax will become
correspondingly reduced or eliminated for subsequent tax years.
CONVERSION OF EXISTING TRADITIONAL IRA
Can I convert an existing Traditional IRA into a Roth IRA?
Yes, you can convert an existing Traditional IRA into a Roth IRA if you
meet the eligibility requirements described below. Conversion may be
accomplished in any of three ways: First, you can withdraw the amount you want
to convert from your Traditional IRA and roll it over to a Roth IRA within 60
days. Second, you can establish a Roth IRA and then direct the custodian of your
Traditional IRA to transfer the amount in your Traditional IRA you wish to
convert to the new Roth IRA. Third, if you want to convert an existing
Traditional IRA with State Street Bank as custodian to a Roth IRA, you may give
us directions to convert; we will convert your existing account when the
paperwork to establish your new Roth IRA is complete.
You are eligible to convert a Traditional IRA to a Roth IRA if, for the
year of the conversion, your AGI is $100,000 or less. The same limit applies to
married and single taxpayers, and the limit is not indexed to cost-of-living
increases. Married taxpayers are eligible to convert a Traditional IRA to a Roth
IRA only if they file a joint income tax return; married taxpayers filing
separately are not eligible to convert. However, if you file separately and have
lived apart from your spouse for the entire taxable year, you are considered not
married, and the fact that you are filing separately will not prevent you from
converting.
<PAGE>
If you accomplish a conversion by withdrawing from your Traditional IRA and
rolling over to a Roth IRA within 60 days, the requirements in the preceding
sentence apply to the year of the withdrawal (even though the rollover
contribution occurs in the following calendar year).
Caution; If you have reached age 70 1/2 by the year when you convert
another non-Roth IRA you own to a Roth IRA, be careful not to convert any amount
that would be a required minimum distribution under the applicable age 70 1/2
rules. Under current IRS regulations, required minimum distributions may not be
converted.
What happens if I change my mind about converting?
You can undo a conversion by notifying the custodian or trustee of each IRA
(the custodian of the first IRA - the Traditional IRA you converted - and the
custodian of the second IRA - the Roth IRA that received the conversion). The
amount you want to unconvert by transferring back to the first custodian is
treated as if it had not been converted. This is called "recharacterization."
If you want to recharacterize a converted amount, you must do so before the
due date (including any extensions you receive) for your federal income tax
return for the year of the conversion. Any net income on the amount
recharacterized must accompany it back to the Traditional IRA.
Under current IRS rules, you can recharacterize for any reason. For
example, you would recharacterize if you converted early in a year and then
turned out to be ineligible because your income was over the $100,000 limit.
Also, if you convert and then recharacterize during a year, you can then convert
to a Roth IRA a second time if you wish. Under the current IRS rules, there is
no limit on the number of times you can convert, recharacterize and then convert
again during a year, and no restrictions on the reasons for doing so. However,
if you convert an amount more than twice in a year, any additional conversion
transactions will be disregarded when determining the amount of income taxes you
have to pay because of the conversion (see below).
For example, suppose you converted a Traditional IRA with $100,000 in it to
a Roth IRA early in 1998. You will owe income taxes on $100,000 (assuming
the Traditional IRA held all taxable amounts). The market value of your
Roth IRA declines to $80,000, so you recharacterize it back to a
Traditional IRA, and then convert the Traditional IRA a second time to a
Roth IRA. You will have to pay income taxes on $80,000 for the second
conversion, rather than on $100,000. The value of the Roth IRA declines
further and, in late 1998 the Roth IRA is worth $60,000, so you
recharacterize back to a Traditional IRA and then convert it to a Roth IRA
a third time. This last conversion is disregarded for income tax purposes,
and you will still have to pay income taxes on $80,000 under this example.
Note: conversions from a Traditional IRA to a Roth IRA that failed because
you did not meet the eligibility requirements (more than $100,000 of AGI or
married but not filing jointly) and which you then recharacterize do not
count when applying these rules. Similarly, any conversions before November
1, 1998 do not count when applying these rules. (Caution: As you can see,
these rules are very complex; be sure to consult a competent tax
professional for assistance. Also, the limits on the number of conversions
that will be recognized for income tax purposes apply for 1998 and 1999.
The IRS may adopt different rules thereafter, or may change the foregoing
rules to provide different limits on the number of conversions permitted or
the acceptable reasons for recharacterizing-check with your tax adviser for
the latest developments.)
Under current IRS rules, Recharacterization is not restricted to amounts
you converted from a Traditional IRA to a Roth IRA. You can, for example, make
an annual contribution to a Traditional IRA and recharacterize it as a
contribution to a Roth IRA, or vice versa. You must make the election to
recharacterize by the due date for your tax return for the year and follow the
procedures summarized above.
What are the tax results from converting?
The taxable amount in your Traditional IRA you convert to a Roth IRA will
be considered taxable income on your federal income tax return for the year of
the conversion. All amounts in a Traditional IRA are taxable except for your
prior non-deductible contributions to the Traditional IRA.
If you make the conversion during 1998, the taxable income is spread over
four years. In other words, you would include one quarter of the taxable amount
on your federal income tax return for 1998, 1999, 2000 and 2001. If you want to
treat all the income as 1998 income (not spread over four years), you can elect
to do so on Form 8606 filed with your 1998 federal income tax return.
<PAGE>
If you convert a Traditional IRA (or a SEP IRA or SIMPLE IRA -- see below)
to a Roth IRA, under IRS rules income tax withholding will apply unless you
elect not to have withholding. The Adoption Agreement or the Universal IRA
Transfer of Assets Form has more information about withholding. However,
withholding income taxes from the amount converted (instead of paying applicable
income taxes from another source) may adversely affect the anticipated financial
benefits of converting. Consult your financial adviser for more information.
Can I convert a SEP IRA or SIMPLE IRA account to a Roth IRA?
If you have a SEP IRA as part of an employer simplified employee pension
(SEP) program, or a SIMPLE IRA as part of an employer SIMPLE IRA program, you
can convert the IRA to a Roth IRA. However, with a SIMPLE IRA account, this can
be done only after the SIMPLE IRA account has been in existence for at least two
years. You must meet the eligibility rules summarized above to convert.
Should I convert my Traditional IRA to a Roth IRA?
Only you can answer this question, in consultation with your tax or
financial advisers. A number of factors, including the following, may be
relevant. Conversion may be advantageous if you expect to leave the converted
funds on deposit in your Roth IRA for at least five years and to be able to
withdraw the funds under circumstances that will not be taxable (see below). The
benefits of converting will also depend on whether you expect to be in the same
tax bracket when you withdraw from your Roth IRA as you are now. Also,
conversion is based upon an assumption that Congress will not change the tax
rules for withdrawals from Roth IRAs in the future, but this cannot be
guaranteed.
TRANSFERS/ROLLOVERS
Can I transfer or roll over a distribution I receive from my employer's
retirement plan into a Roth IRA?
Distributions from qualified employer-sponsored retirement plans or 403(b)
arrangements (for employees of tax-exempt employers) are not eligible for
---
rollover or direct transfer to a Roth IRA. However, in certain circumstances it
may be possible to make a direct rollover of an eligible distribution to a
Traditional IRA and then to convert the Traditional IRA to Roth IRA (see above).
Consult your tax or financial adviser for further information on this
possibility.
Can I make a rollover from my Roth IRA to another Roth IRA?
You may make a rollover from one Roth IRA to another Roth IRA you have or
you establish to receive the rollover. Such a rollover must be completed within
60 days after the withdrawal from your first Roth IRA. After making a rollover
from one Roth IRA to another, you must wait a full year (365 days) before you
can make another such rollover. (However, you can instruct a Roth IRA custodian
to transfer amounts directly to another Roth IRA custodian; such a direct
transfer does not count as a rollover.)
How do rollovers affect my Roth IRA contribution limits?
Rollover contributions, if properly made, do not count toward the maximum
contribution. Also, you may make a rollover from one Roth IRA to another even
during a year when you are not eligible to contribute to a Roth IRA (for
example, because your AGI for that year is too high).
WITHDRAWALS
When can I make withdrawals from my Roth IRA?
You may withdraw from your Roth IRA at any time. If the withdrawal meets
the requirements discussed below, it is tax-free. This means that you pay no
federal income tax even though the withdrawal includes earnings or gains on your
contributions while they were held in your Roth IRA.
When must I start making withdrawals?
There are no rules on when you must start making withdrawals from your Roth
IRA or on minimum required withdrawal amounts for any particular year during
your lifetime. Unlike Traditional IRAs, you are not required to start making
withdrawals from a Roth IRA by the April 1 following the year in which you reach
age 70 1/2.
After your death, there are IRS rules on the timing and amount of
distributions. In general, the amount in your Roth IRA must be distributed by
the end of the fifth year after your death. However, distributions to a
designated beneficiary that begin by the end of the year following the year of
your death and that are paid over the life expectancy of the beneficiary satisfy
the rules. Also, if your surviving spouse is your designated beneficiary, the
spouse may defer the start of distributions until you would have reached age
70 1/2 had you lived.
<PAGE>
What are the requirements for a tax-free withdrawal?
To be tax-free, a withdrawal from your Roth IRA must meet two requirements.
First, the Roth IRA must have been open for 5 or more years before the
withdrawal. Second, at least one of the following conditions must be satisfied:
* You are age 59 1/2 or older when you make the withdrawal.
* The withdrawal is made by your beneficiary after you die.
* You are disabled (as defined in IRS rules) when you make the withdrawal.
* You are using the withdrawal to cover eligible first time homebuyer
expenses. These are the costs of purchasing, building or rebuilding a
principal residence (including customary settlement, financing or closing
costs). The purchaser may be you, your spouse or a child, grandchild,
parent or grandparent of you or your spouse. An individual is considered a
"first-time homebuyer" if the individual did not have (or, if married,
neither spouse had) an ownership interest in a principal residence during
the two-year period immediately preceding the acquisition in question. The
withdrawal must be used for eligible expenses within 120 days after the
withdrawal (if there is an unexpected delay, or cancellation of the home
acquisition, a withdrawal may be redeposited as a rollover).
There is a lifetime limit on eligible first-time homebuyer expenses of
$10,000 per individual.
For purposes of the 5-year rule, all your Roth IRAs are considered. As soon
as the 5-year rule is satisfied for any Roth IRA, it is considered satisfied for
all your Roth IRAs. For a Roth IRA that you started with annual contribution,
the 5 year period starts with the year for which you make the initial annual
contribution. For a Roth IRA that you set up with amounts rolled over or
converted from a non-Roth IRA, the 5 year period begins with the year in which
the conversion or rollover was made.
How are withdrawals from my Roth IRA taxed if the tax-free requirements are not
met?
If the qualified withdrawal requirements are not met, the tax treatment of
a withdrawal depends on the character of the amounts withdrawn. To determine
this, all your Roth IRAs (if you have more than one) are treated as one,
including any Roth IRA you may have established with another Roth IRA custodian.
Amounts withdrawn are considered to come out in the following order:
* First, all annual contributions.
* Second, all conversion amounts (on a first-in, first-out basis).
* Third, earnings (including dividends and gains).
A withdrawal treated as your own prior annual contribution amounts to your
Roth IRA will not be considered taxable income in the year you receive it,
nor will the 10% penalty apply. A withdrawal consisting of previously taxed
conversion amounts also is not considered taxable income in the year of the
withdrawal, and is also not subject to the 10% premature withdrawal
penalty. To the extent that the nonqualified withdrawal consists of
dividends or gains while your contributions were held in your Roth IRA, the
withdrawal is includible in your gross income in the taxable year you
receive it, and may be subject to the 10% withdrawal penalty.
As mentioned, for purposes of determining what portion of any withdrawal is
includible in income, all of your Roth IRA accounts are considered as one single
account. Therefore, withdrawals from Roth IRA accounts are not considered to be
from earnings or interest until an amount equal to all prior annual
---
contributions and, if applicable, all conversion amounts, made to all of an
---
individual's Roth IRA accounts is withdrawn. The following example illustrates
this:
A single individual contributes $1,000 a year to his State Street Bank and
Trust Company Roth IRA account and $1,000 a year to the Brand X Roth IRA account
over a period of ten years. At the end of 10 years his account balances are as
follows:
Principal Earnings
Contributions
State Street Bank Roth
IRA $10,000 $10,000
Brand X Roth IRA $10,000 $ 7,000
------- -------
Total $20,000 $17,000
<PAGE>
At the end of 10 years, this person has $37,000 in both Roth IRA accounts,
of which $20,000 represents his contributions (aggregated) and $17,000
represents his earnings (aggregated). This individual, who is 40, withdraws the
entire $17,000 from his Brand X Roth IRA (not a qualified withdrawal). We look
to the aggregate amount of all principal contributions - in this case $20,000 -
to determine if the withdrawal is from contributions, and thus non-taxable. In
this example, there is no ($0) taxable income as a result of this withdrawal
because the $17,000 withdrawal is less than the total amount of aggregated
contributions ($20,000). If this individual then withdrew $15,000 from his State
Street Bank Roth IRA, $3,000 would not be taxable (the remaining aggregate
contributions) and $12,000 would be treated as taxable income for the year of
the withdrawal, subject to normal income taxes and the 10% premature withdrawal
penalty (unless an exception applies).
Taxable withdrawals of dividends and gains from a Roth IRA are treated as
ordinary income. Withdrawals of taxable amounts from a Roth IRA are not eligible
for averaging treatment currently available to certain lump sum distributions
from qualified employer-sponsored retirement plans, nor are such withdrawals
eligible for capital gains tax treatment.
Amounts withdrawn may be subject to income tax withholding by the custodian
unless you elect not to have withholding. See Part Three below for additional
information on withholding.
Your receipt of any taxable withdrawal from your Roth IRA before you attain
age 59 1/2 generally will be considered as an early withdrawal and subject to a
10% penalty tax.
The 10% penalty tax for early withdrawal will not apply if any of the
following exceptions applies:
* The withdrawal was a result of your death or disability.
* The withdrawal is one of a scheduled series of substantially equal periodic
payments for your life or life expectancy (or the joint lives or life
expectancies of you and your beneficiary).
* If there is an adjustment to the scheduled series of payments, the 10%
penalty tax will apply. For example, if you begin receiving payments at age
50 under a withdrawal program providing for substantially equal payments
over your life expectancy, and at age 58 you elect to withdraw the
remaining amount in your Roth IRA in a lump-sum, the 10% penalty tax will
apply to the lump sum and to the amounts previously paid to you before age
59 1/2 to the extent they were includible in your taxable income.
* The withdrawal is used to pay eligible higher education expenses. These are
expenses for tuition, fees, books, and supplies required to attend an
institution for post-secondary education. Room and board expenses are also
eligible for a student attending at least half-time. The student may be
you, your spouse, or your child or grandchild. However, expenses that are
paid for with a scholarship or other educational assistance payment are not
eligible expenses.
* The withdrawal is used to cover eligible first time homebuyer expenses (as
described above in the discussion of tax-free withdrawals).
* The withdrawal does not exceed the amount of your deductible medical
expenses for the year (generally speaking, medical expenses paid during a
year are deductible if they are greater than 7 1/2% of your adjusted gross
income for that year).
* The withdrawal does not exceed the amount you paid for health insurance
coverage for yourself, your spouse and dependents. This exception applies
only if you have been unemployed and received federal or state unemployment
compensation payments for at least 12 weeks; this exception applies to
distributions during the year in which you received the unemployment
compensation and during the following year, but not to any distributions
received after you have been reemployed for at least 60 days.
* Starting in the year 2000 a distribution is made pursuant to an IRS levy to
pay overdue taxes.
There is one additional time when the 10% penalty tax may apply. If you
convert an amount from a non-Roth IRA to a Roth IRA, and then make a withdrawal
that is treated as coming from that converted amount within five years after the
conversion, the 10% penalty applies (unless there is an exception). This rule is
the one exception to the usual Roth IRA rule that, once the five year
requirement is satisfied for one of your Roth IRAs, it is satisfied for all your
Roth IRAs.
See the Table at the end of this Part for a summary of the rules on when
withdrawals from your Roth IRA will be subject to income taxes or the 10%
penalty tax.
<PAGE>
How are the tax rules affected if I converted a non-Roth IRA to a Roth IRA in
1998?
If you convert a non-Roth IRA to a Roth IRA in 1998 and are spreading the
taxable income over the years 1998-2001, and if you make a withdrawal during
that period, special rules apply. Consult your tax adviser.
What about the 15 percent penalty tax?
The rule imposing a 15% penalty tax on very large withdrawals from
tax-favored arrangements (including IRAs, 403(b) arrangements and qualified
employer-sponsored plans), or on excess amounts remaining in such tax-favored
arrangements at your death, has been repealed. This 15% tax no longer applies.
Two Important Points: First, the custodian will report withdrawals from your
- ----------------------
Roth IRA to the IRS on Form 1099-R as required and will complete Form 1099-R
based on your Roth IRA account with the custodian. However, since all Roth IRAs
are considered together when determining the tax treatment of withdrawals, and
since you may have other Roth IRAs with other custodians (about which we have no
information) you have sole responsibility for correctly reporting withdrawals on
your tax return. It is essential that you keep proper records and report the
income taxes properly if you have multiple Roth IRAs. Second, the discussion of
the tax rules for Roth IRAs in this Disclosure Statement is based upon the best
available information. However, there may be changes in pending IRS proposed
regulations or further legislation on the requirements for and tax treatment of
Roth IRA accounts. Therefore, you should consult your tax adviser for the latest
developments or for advice about how maintaining a Roth IRA will affect your
personal tax or financial situation.
Note: In order to facilitate proper recordkeeping and tax reporting for
your Roth IRA, the service company maintaining certain account records may
require you to set up separate Roth IRAs to hold annual contributions and
conversion amounts. In addition, the service company may require separate Roth
IRAs for conversion amounts from different calendar years. Any such requirement
will be noted in the Adoption Agreement for your Roth IRA or in the instructions
for opening your Roth IRA.
Also, please see Part Three below which contains important information
applicable to all State Street Bank and Trust Company IRAs.
---
<PAGE>
SUMMARY OF TAX RULES FOR WITHDRAWALS
The following table summarizes when income taxes or the 10% premature withdrawal
penalty tax will apply to a withdrawal from your Roth IRA. Remember, income
taxes or penalties apply or not depending on the type of contribution withdrawn.
This is determined under the IRS rules described above, considering all of your
Roth IRAs together (including any you may maintain with another trustee or
custodian). Therefore, if you have multiple Roth IRAs, the tax treatment of a
withdrawal will not necessarily follow from the type of contributions held in
the particular Roth IRA account you withdrew from. Also, the income and penalty
tax rules for Roth IRA withdrawals are extremely complex; the following table is
only a summary and may not cover every possible situation. Consult the IRS or
your personal tax adviser if you have a question about your individual
situation.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Qualified Withdrawal Not a Qualified Withdrawal
-------------------------------------------------------------------------------------------
Type of Contribution (the requirements for a Exception to 10% tax applies Exception to 10% tax
Withdrawn qualified withdrawal are (exceptions are listed above) does not apply
outlined above)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
* Annual Contribution Amounts . . . . . . . . . . No income or penalty tax on withdrawal . . . . . . . . . .
- ------------------------------------------------------------------------------------------------------------------------------------
* 1998 Conversion Amounts
Income taxes on amount converted No income or penalty No income or penalty tax on No income tax on
previously paid (in other words, tax on withdrawal. withdrawal. withdrawal. Penalty tax
either you paid any income taxes applies if the withdrawal
due on your 1998 tax return, or occurs within 5 years of
you spread the income taxes due conversion and if the
over 1998-2001, but have paid withdrawal is treated as
them all by the time of the consisting of taxable
withdrawal) amounts included in the
original conversion.
Income taxes on amount converted N/A Income tax applies to Income and penalty tax
were spread over 1998-2001 and withdrawal to the extent of apply to withdrawal.
not fully paid by the time of remaining taxable amount.
withdrawal No penalty tax.
- ------------------------------------------------------------------------------------------------------------------------------------
* 1999 and Later Conversion No income or penalty tax on No income or penalty tax on No income tax on withdrawal.
Amounts withdrawal. withdrawal. Penalty tax applies to
taxable amounts included in
the conversion if the
withdrawal occurs within 5
years of conversion.
- ------------------------------------------------------------------------------------------------------------------------------------
* Earnings, Gains or Growth of No income or penalty tax on Income tax applies. Income and penalty tax apply.
Account withdrawal. No penalty tax.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The table summarizes the tax rules that may apply if you withdraw from your Roth
IRA. What happens if you die and your beneficiary wants to make withdrawals from
the account? The following is a summary of the rules.
* First, if you converted from a Traditional IRA to a Roth IRA in 1998,
spreading the income taxes due over the 1998-2001 period, and you die
before 2001, the deferred income taxes must be recognized and paid with
your final income tax return for the year of death. As an exception to this
rule, if your surviving spouse is the sole beneficiary of all your Roth
IRAs, the spouse can elect to continue spreading the income over the
remainder of the 1998-2001 period.
* Second, if your beneficiary is not your surviving spouse, withdrawals by
the beneficiary will be subject to income taxes depending on the type of
contribution withdrawn as summarized in the table. However, in determining
what type of contribution the beneficiary is withdrawing, any Roth IRAs the
beneficiaries owns in his or her own right are not considered (this is an
exception to the normal rule that all Roth IRAs are considered together). A
beneficiary will not be subject to the 10% premature withdrawal penalty
because withdrawals following the original owner's death are an exception
to the 10% penalty tax.
<PAGE>
* Third, if your surviving spouse is the beneficiary, the spouse can elect
either to receive withdrawals as beneficiary, or to treat your Roth IRA as
the spouse's Roth IRA. If the spouse receives withdrawals as a beneficiary,
the rules in the preceding paragraph generally apply to the spouse just as
to any other beneficiary. If the spouse treats the Roth IRA as the spouse's
own, there are a couple of special rules. First, the spouse will be treated
as having had a Roth IRA for five years (one of the requirements for
tax-free withdrawals) if either your Roth IRA or any of the spouse's Roth
IRAs has been in effect for at least five years. Second, withdrawals will
be subject to the 10% penalty tax unless an exception applies. Since the
spouse has elected to treat your Roth IRA as the spouse's own Roth IRA, the
exception for payments following your death will not apply.
<PAGE>
Part Three: Rules for All IRAs (Traditional and Roth)
-----------------------------------------------------
GENERAL INFORMATION
IRA Requirements
All IRAs must meet certain requirements. Contributions generally must be
made in cash. The IRA trustee or custodian must be a bank or other person who
has been approved by the Secretary of the Treasury. Your contributions may not
be invested in life insurance or collectibles or be commingled with other
property except in a common trust or investment fund. Your interest in the
account must be nonforfeitable at all times. You may obtain further information
on IRAs from any district office of the Internal Revenue Service.
May I revoke my IRA?
You may revoke a newly established Traditional or Roth IRA at any time
within seven days after the date on which you receive this Disclosure Statement.
A Traditional or Roth IRA established more than seven days after the date of
your receipt of this Disclosure Statement may not be revoked.
To revoke your Traditional or Roth IRA, mail or deliver a written notice of
revocation to the Custodian at the address which appears at the end of this
Disclosure Statement. Mailed notice will be deemed given on the date that it is
postmarked (or, if sent by certified or registered mail, on the date of
certification or registration). If you revoke your Traditional or Roth IRA
within the seven-day period, you are entitled to a return of the entire amount
you originally contributed into your Traditional or Roth IRA, without adjustment
for such items as sales charges, administrative expenses or fluctuations in
market value.
INVESTMENTS
How are my IRA contributions invested?
You control the investment and reinvestment of contributions to your
Traditional or Roth IRA. Investments must be in one or more of the Fund's
Portfolios available from time to time as listed in the Adoption Agreement for
your Traditional or Roth IRA or in an investment selection form provided with
your Adoption Agreement or from the Fund Distributor or Service Company. You
direct the investment of your IRA by giving your investment instructions to the
Distributor or Service Company for the Fund. Since you control the investment of
your Traditional or Roth IRA, you are responsible for any losses; neither the
Custodian, the Distributor nor the Service Company has any responsibility for
any loss or diminution in value occasioned by your exercise of investment
control. Transactions for your Traditional or Roth IRA will generally be at the
applicable public offering price or net asset value for shares of the Portfolios
involved next established after the Distributor or the Service Company
(whichever may apply) receives proper investment instructions from you; consult
the Fund's current prospectus for additional information.
Before making any investment, read carefully the Fund's current prospectus
for any Portfolio you are considering as an investment for your Traditional IRA
or Roth IRA. The prospectus will contain information about the Fund's investment
objectives and policies, as well as any minimum initial investment or minimum
balance requirements and any sales, redemption or other charges.
Because you control the selection of investments for your Traditional or
Roth IRA and because mutual fund shares fluctuate in value, the growth in value
of your Traditional or Roth IRA cannot be guaranteed or projected.
Are there any restrictions on the use of my IRA assets?
The tax-exempt status of your Traditional or Roth IRA will be revoked if
you engage in any of the prohibited transactions listed in Section 4975 of the
tax code. Upon such revocation, your Traditional or Roth IRA is treated as
distributing its assets to you. The taxable portion of the amount in your IRA
will be subject to income tax (unless, in the case of a Roth IRA, the
requirements for a tax-free withdrawal are satisfied). Also, you may be subject
to a 10% penalty tax on the taxable amount as a premature withdrawal if you have
not yet reached the age of 59 1/2. There may also be prohibited transaction
penalty taxes.
Any investment in a collectible (for example, rare stamps) by your
Traditional or Roth IRA is treated as a withdrawal; the only exception involves
certain types of government-sponsored coins or certain types of precious metal
bullion.
<PAGE>
What is a prohibited transaction?
Generally, a prohibited transaction is any improper use of the assets in
your Traditional or Roth IRA. Some examples of prohibited transactions are:
* Direct or indirect sale or exchange of property between you and your
Traditional or Roth IRA.
* Transfer of any property from your Traditional or Roth IRA to yourself or
from yourself to your Traditional or Roth IRA.
Your Traditional or Roth IRA could lose its tax exempt status if you use
all or part of your interest in your Traditional or Roth IRA as security for a
loan or borrow any money from your Traditional or Roth IRA. Any portion of your
Traditional or Roth IRA used as security for a loan will be treated as a
distribution in the year in which the money is borrowed. This amount may be
taxable and you may also be subject to the 10% premature withdrawal penalty on
the taxable amount.
FEES AND EXPENSES
Depositor's Selection of the Fund
Depositor directs Custodian to invest all custodial funds in investment
shares issued by Permanent Portfolio Family of Funds, Inc. Depositor agrees that
his investment in the Fund shall be subject to all shareholder fees customarily
charged by the Fund and its Investment Advisor and disclosed in the Fund's
prospectus, including a one-time account start-up fee of $35 and a monthly
account maintenance fee of $1.50, and directs Custodian to pay such fees.
Custodian's Fees
The following is a list of the fees charged by the Custodian for
maintaining either a Traditional IRA or a Roth IRA.
Plan Installation Fee $ 5.00
Annual Maintenance Fee $ 8.00
Termination, Rollover, or Transfer of
Account to Successor Custodian $10.00
General Fee Policies
* Fees may be paid by you directly, or the Custodian may deduct them from
your Traditional or Roth IRA.
* Fees may be changed upon 30 days written notice to you.
* The full annual maintenance fee will be charged for any calendar year
during which you have a Traditional or Roth IRA with us. This fee is not
prorated for periods of less than one full year.
* If provided for in this Disclosure Statement or the Adoption Agreement,
termination fees are charged when your account is closed whether the funds
are distributed to you or transferred to a successor custodian or trustee.
* The Custodian may charge you for its reasonable expenses for services not
covered by its fee schedule.
Other Charges
There may be sales or other charges associated with the purchase or
redemption of shares of a Portfolio in which your Traditional IRA or Roth IRA is
invested. Before investing, be sure to read carefully the Fund's current
prospectus for a description of applicable charges.
<PAGE>
TAX MATTERS
What IRA reports does the Custodian issue?
The Custodian will report all withdrawals to the IRS and the recipient on
the appropriate form. For reporting purposes, a direct transfer of assets to a
Successor Custodian or Trustee is not considered a withdrawal (except for such a
transfer that effects a conversion of a Traditional IRA to a Roth IRA, or a
recharacterization of a Roth IRA back to a Traditional IRA).
The Custodian will report to the IRS the year-end value of your account and
the amount of any rollover (including conversions of a Traditional IRA to a Roth
IRA) or a regular annual contribution made during a calendar year, as well as
the tax year for which a contribution is made. Unless the Custodian receives an
indication from you to the contrary, it will treat any amount as a contribution
for the tax year in which it is received. It is most important that a
---------------
contribution between January and April 15th for the prior year be clearly
designated as such.
What tax information must I report to the IRS?
You must file Form 5329 with the IRS for each taxable year for which you
made an excess contribution or you take a premature withdrawal that is subject
to the 10% penalty tax, or you withdraw less than the minimum amount required
from your
Traditional IRA. If your beneficiary fails to make required minimum
withdrawals from your Traditional or Roth IRA after your death, your beneficiary
may be subject to an excise tax and be required to file Form 5329.
For Traditional IRAs, you must also report each nondeductible contribution
to the IRS by designating it a nondeductible contribution on your tax return.
Use Form 8606. In addition, for any year in which you make a nondeductible
contribution or take a withdrawal, you must include additional information on
your tax return. The information required includes: (1) the amount of your
nondeductible contributions for that year; (2) the amount of withdrawals from
Traditional IRAs in that year; (3) the amount by which your total nondeductible
contributions for all the years exceed the total amount of your distributions
previously excluded from gross income; and (4) the total value of all your
Traditional IRAs as of the end of the year. If you fail to report any of this
information, the IRS will assume that all your contributions were deductible.
This will result in the taxation of the portion of your withdrawals that should
be treated as a nontaxable return of your nondeductible contributions.
Which withdrawals are subject to withholding?
Roth IRA
Federal income tax may be withheld at a flat rate of 10% of any taxable
withdrawal from your Roth IRA, unless you elect not to have tax withheld.
Withdrawals from a Roth IRA are not subject to the mandatory 20% income tax
withholding that applies to most distributions from qualified plans or 403(b)
accounts that are not directly rolled over to another plan or IRA.
Traditional IRA
Federal income tax will be withheld at a flat rate of 10% from any
withdrawal from your Traditional IRA, unless you elect not to have tax withheld.
Withdrawals from a Traditional IRA are not subject to the mandatory 20% income
tax withholding that applies to most distributions from qualified plans or
403(b) accounts that are not directly rolled over to another plan or IRA.
ACCOUNT TERMINATION
You may terminate your Traditional IRA or Roth IRA at any time after its
establishment by sending properly completed withdrawal instructions (see Fund's
prospectus or call our Transfer Agent at 1-800-341-8900) or a transfer
authorization form, to:
CHASE GLOBAL FUNDS SERVICES COMPANY
P.O. Box 2798
Boston, MA 02208
1-800-341-8900
In Mass. 1-617-557-8000
<PAGE>
Your Traditional IRA or Roth IRA with State Street Bank will terminate upon
the first to occur of the following:
* The date your properly executed withdrawal form or instructions (as
described above) withdrawing your total Traditional IRA or Roth IRA balance
is received and accepted by the Custodian or, if later, the termination
date specified in the withdrawal form.
* The date the Traditional IRA or Roth IRA ceases to qualify under the tax
code. This will be deemed a termination.
* The transfer of the Traditional IRA or Roth IRA to another
Custodian/Trustee.
* The rollover of the amounts in the Traditional IRA or Roth IRA to another
Custodian/Trustee.
Any outstanding fees must be received prior to such a termination of your
account.
The amount you receive from your IRA upon termination of the account will
be treated as a withdrawal, and thus the rules relating to Traditional IRA or
Roth IRA withdrawals will apply. For example, if the IRA is terminated before
you reach age 59 1/2, the 10% early withdrawal penalty may apply to the taxable
amount you receive.
IRA DOCUMENTS
Traditional IRA
The terms contained in Articles I to VII of Part One of the State Street
Bank and Trust Company Universal Individual Retirement Account Custodial
Agreement document have been promulgated by the IRS in Form 5305-A for use in
establishing a Traditional IRA Custodial Account that meets the requirements of
Code Section 408(a) for a valid Traditional IRA. This IRS approval relates only
to the form of Articles I to VII and is not an approval of the merits of the
Traditional IRA or of any investment permitted by the Traditional IRA.
Roth IRA
The terms contained in Articles I to VII of Part Two of the State Street
Bank and Trust Company Universal Individual Retirement Account Custodial
Agreement have been promulgated by the IRS in Form 5305-RA for use in
establishing a Roth IRA Custodial Account that meets the requirements of Code
Section 408A for a valid Roth IRA. This IRS approval relates only to the form of
Articles I to VII and is not an approval of the merits of the Roth IRA or of any
investment permitted by the Roth IRA.
Based on our legal advice relating to current tax laws and IRS meetings,
State Street Bank believes that the use of a Universal Individual Retirement
Account Information Kit such as this, containing information and documents for
both a Traditional IRA or a Roth IRA, will be acceptable to the IRS. However, if
the IRS makes a ruling, or if Congress enacts legislation, regarding the use of
different documentation, State Street Bank will forward to you new documentation
for your Traditional IRA or a Roth IRA (as appropriate) for you to read and, if
necessary, an appropriate new Adoption Agreement to sign. By adopting a
Traditional IRA or a Roth IRA using these materials, you acknowledge this
possibility and agree to this procedure if necessary. In all cases, to the
extent permitted State Street Bank will treat your IRA as being opened on the
date your account was opened using the Adoption Agreement in this Kit.
ADDITIONAL INFORMATION
The Investor's Information Office (the "Information Office") is made
available by the Investment Adviser for the convenience of the Fund
shareholders. A shareholder or other interested investor may obtain a current
prospectus, shareholder account application, IRA plan booklet and forms and
other informational material by calling the Information Office at 1-800-531-5142
or 1-512-453-7558 or by writing to the Information Office, P.O.Box 5847, Austin,
Texas 78763 (telecopier (FAX) 1-512-453-2015).
<PAGE>
State Street Bank and Trust Company Universal Individual Retirement
-------------------------------------------------------------------
Account Custodial Agreement
---------------------------
Part One: Provisions applicable to Traditional IRAs
---------------------------------------------------
The following provisions of Articles I to VII are in the form promulgated
by the Internal Revenue Service in Form 5305-A (Rev. January 1998) for use in
establishing an individual retirement custodial account.
Article I.
The Custodian may accept additional cash contributions on behalf of the
Depositor for a tax year of the Depositor. The total cash contributions are
limited to $2,000 for the tax year unless the contribution is a rollover
contribution described in section 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or an
employer contribution to a simplified employee pension plan as described in
section 408(k).
Article II.
The Depositor's interest in the balance in the custodial account is
nonforfeitable.
Article III.
1. No part of the custodial funds may be invested in life insurance
contracts, nor may the assets of the custodial account be commingled with other
property except in a common trust fund or common investment fund (within the
meaning of section 408(a)(5)).
2. No part of the custodial funds may be invested in collectibles (within
the meaning of section 408(m) except as otherwise permitted by section 408(m)(3)
which provides an exception for certain gold, silver and platinum coins, coins
issued under the laws of any state, and certain bullion.
Article IV.
1. Notwithstanding any provisions of this agreement to the contrary, the
distribution of the Depositor's interest in the custodial account shall be made
in accordance with the following requirements and shall otherwise comply with
section 408(a)(6) and Proposed Regulations section 1.408-8, including the
incidental death benefit provisions of Proposed Regulations section
1.401(a)(9)-2, the provisions of which are incorporated by reference.
2. Unless otherwise elected by the time distributions are required to begin
to the Depositor under paragraph 3, or to the surviving spouse under paragraph
4, other than in the case of a life annuity, life expectancies shall be
recalculated annually. Such election shall be irrevocable as to the Depositor
and the surviving spouse and shall apply to all subsequent years. The life
expectancy of a nonspouse beneficiary may not be recalculated.
3. The Depositor's entire interest in the custodial account must be, or
begin to be, distributed by the Depositor's required beginning date, the April 1
following the calendar year end in which the Depositor reaches age 70 1/2. By
that date, the Depositor may elect, in a manner acceptable to the Custodian, to
have the balance in the custodial account distributed in:
(a) A single-sum payment.
(b) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the life of the
Depositor.
(c) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the joint and last
survivor lives of the Depositor and his or her designated
beneficiary.
(d) Equal or substantially equal annual payments over a specified
period that may not be longer than the Depositor's life
expectancy.
(e) Equal or substantially equal annual payments over a specified
period that may not be longer than the joint life and last
survivor expectancy of the Depositor and his or her designated
beneficiary.
4. If the Depositor dies before his or her entire interest is distributed
to him or her, the entire remaining interest will be distributed as follows:
(a) If the Depositor dies on or after distribution of his or her
interest has begun, distribution must continue to be made in
accordance with paragraph 3.
(b) If the Depositor dies before distribution of his or her interest
has begun, the entire remaining interest will, at the election of
the Depositor or, if the Depositor has not so elected, at the
election of the beneficiary or beneficiaries, either
(i) Be distributed by the December 31 of the year containing the
fifth anniversary of the Depositor's death, or
(ii) Be distributed in equal or substantially equal payments over
the life or life expectancy of the designated beneficiary or
beneficiaries starting by December 31 of the year following
the year of the Depositor's death. If, however, the
beneficiary is the Depositor's surviving spouse, then this
distribution is not required to begin before December 31 of
the year in which the Depositor would have reached age
70 1/2.
(c) Except where distribution in the form of an annuity meeting the
requirements of section 408(b)(3) and its related regulations has
irrevocably commenced, distributions are treated as having begun
on the Depositor's required beginning date, even though payments
may actually have been made before that date.
(d) If the Depositor dies before his or her entire interest has been
distributed and if the beneficiary is other than the surviving
spouse, no additional cash contributions or rollover
contributions may be accepted in the account.
5. In the case of distribution over life expectancy in equal or
substantially equal annual payments, to determine the minimum annual payment for
each year, divide the Depositor's entire interest in the custodial account as of
the close of business on December 31 of the preceding year by the life
expectancy of the Depositor (or the joint life and last survivor expectancy of
the Depositor and the Depositor's designated beneficiary, or the life expectancy
of the designated beneficiary, whichever applies.) In the case of distributions
under paragraph 3, determine the initial life expectancy (or joint life and last
survivor expectancy) using the attained ages of the Depositor and designated
beneficiary as of their birthdays in the year the Depositor reaches age 70 1/2.
In the case of a distribution in accordance with paragraph 4(b)(ii), determine
life expectancy using the attained age of the designated beneficiary as of the
beneficiary's birthday in the year distributions are required to commence.
6. The owner of two or more individual retirement accounts may use the
"alternative method" described in Notice 88-38, 1988-1 C.B. 524, to satisfy the
minimum distribution requirements described above. This method permits an
individual to satisfy these requirements by taking from one individual
retirement account the amount required to satisfy the requirement for another.
Article V.
1. The Depositor agrees to provide the Custodian with information necessary
for the Custodian to prepare any reports required under section 408(i) and
Regulations sections 1.408-5 and 1.408-6.
2. The Custodian agrees to submit reports to the Internal Revenue Service
and the Depositor as prescribed by the Internal Revenue Service.
Article VI.
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through III and this sentence will be controlling. Any
additional articles that are not consistent with section 408(a) and the related
regulations will be invalid.
Article VII.
This agreement will be amended from time to time to comply with the
provisions of the Code and related regulations. Other amendments may be made
with the consent of the persons whose signatures appear on the Adoption
Agreement.
<PAGE>
Part Two: Provisions applicable to Roth IRAs
--------------------------------------------
The following provisions of Articles I to VII are in the form promulgated
by the Internal Revenue Service in Form 5305-RA (January 1998) for use in
establishing a Roth Individual Retirement Custodial Account.
Article I
1. If this Roth IRA is not designated as a Roth Conversion IRA, then,
except in the case of a rollover contribution described in section 408A(e), the
Custodian will accept only cash contributions and only up to a maximum amount of
$2,000 for any tax year of the Depositor.
2. If this Roth IRA is designated as a Roth Conversion IRA, no
contributions other than IRA Conversion Contributions made during the same tax
year will be accepted.
Article IA
The $2,000 limit described in Article I is gradually reduced to $0 between
certain levels of adjusted gross income (AGI). For a single Depositor, the
$2,000 annual contribution is phased out between AGI of $95,000 and $110,000;
for a married Depositor who files jointly, between AGI of $150,000 and $160,000;
and for a married Depositor who files separately, between $0 and $10,000. In
case of a conversion, the Custodian will not accept IRA Conversion Contributions
in a tax year if the Depositor's AGI for that tax year exceeds $100,000 or if
the Depositor is married and files a separate return. Adjusted gross income is
defined in section 408A(c)(3) and does not include IRA Conversion Contributions.
Article II
The Depositor's interest in the balance in the custodial account is
nonforfeitable.
Article III
1. No part of the custodial funds may be invested in life insurance
contracts, nor may the assets of the custodial account be commingled with other
property except in a common trust fund or common investment fund (within the
meaning of section 408(a)(5)).
2. No part of the custodial funds may be invested in collectibles (within
the meaning of section 408(m)) except as otherwise permitted by section
408(m)(3), which provides an exception for certain gold, silver, and platinum
coins, coins issued under the laws of any state, and certain bullion.
Article IV
1. If the Depositor dies before his or her entire interest is distributed
to him or her and the Depositor's surviving spouse is not the sole beneficiary,
the entire remaining interest will, at the election of the Depositor or, if the
Depositor has not so elected, at the election of the beneficiary or
beneficiaries, either:
(a) Be distributed by December 31 of the year containing the fifth
anniversary of the Depositor's death, or
(b) Be distributed over the life expectancy of the designated
beneficiary starting no later than December 31 of the year
following the year of the Depositor's death.
If distributions do not begin by the date described in (b), distribution
method (a) will apply.
2. In the case of distribution method 1(b) above, to determine the minimum
annual payment for each year, divide the Depositor's entire interest in the
custodial account as of the close of business on December 31 of the preceding
year by the life expectancy of the designated beneficiary using the attained age
of the designated beneficiary as of the beneficiary's birthday in the year
distributions are required to commence and subtract 1 for each subsequent year.
3. If the Depositor's spouse is the sole beneficiary on the Depositor's
date of death, such spouse will then be treated as the Depositor.
Article V
1. The Depositor agrees to provide the Custodian with information necessary
for the Custodian to prepare any reports required under sections 408(i) and
408A(d)(3)(E), and Regulations section 1.408-5 and 1.408-6, and under guidance
published by the Internal Revenue Service.
2. The Custodian agrees to submit reports to the Internal Revenue Service
and the Depositor as prescribed by the Internal Revenue Service.
<PAGE>
Article VI
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through IV and this sentence will be controlling. Any
additional articles that are not consistent with section 408A, the related
regulations, and other published guidance will be invalid.
Article VII
This agreement will be amended from time to time to comply with the
provisions of the Code, related regulations, and other published guidance. Other
amendments may be made with the consent of the persons whose signatures appear
below.
<PAGE>
Part Three: Provisions applicable to both Traditional IRAs and Roth IRAs
------------------------------------------------------------------------
Article VIII.
1. As used in this Article VIII the following terms have the following
meanings:
"Account" or "Custodial Account" means the individual retirement account
established using the terms of either Part One or Part Two and, in either event,
Part Three of this State Street Bank and Trust Company Universal Individual
Retirement Account Custodial Agreement and the Adoption Agreement signed by the
Depositor. The Account may be a Traditional Individual Retirement Account or a
Roth Individual Retirement Account, as specified by the Depositor. See Section
24 below.
"Custodian" means State Street Bank and Trust Company.
"Fund" means any registered investment company which is advised, sponsored
or distributed by Sponsor; provided, however, that such a mutual fund or
registered investment company must be legally offered for sale in the state of
the Depositor's residence.
"Distributor" means the entity which has a contract with the Fund(s) to
serve as distributor of the shares of such Fund(s).
In any case where there is no Distributor, the duties assigned hereunder to
the Distributor may be performed by the Fund(s) or by an entity that has a
contract to perform management or investment advisory services for the Fund(s).
"Service Company" means any entity employed by the custodian or the
Distributor, including the transfer agent for the Fund(s), to perform various
administrative duties of either the Custodian or the Distributor.
In any case where there is no Service Company, the duties assigned
hereunder to the Service Company will be performed by the Distributor (if any)
or by an entity specified in the second preceding paragraph.
"Sponsor" means World Money Managers, the Fund's Investment Advisor.
2. The Depositor may revoke the Custodial Account established hereunder by
mailing or delivering a written notice of revocation to the Custodian within
seven days after the Depositor receives the Disclosure Statement related to the
Custodial Account. Mailed notice is treated as given to the Custodian on date of
the postmark (or on the date of Post Office certification or registration in the
case of notice sent by certified or registered mail). Upon timely revocation,
the Depositor's initial contribution will be returned, without adjustment for
administrative expenses, commissions or sales charges, fluctuations in market
value or other changes.
The Depositor may certify in the Adoption Agreement that the Depositor
received the Disclosure Statement related to the Custodial Account at least
seven days before the Depositor signed the Adoption Agreement to establish the
Custodial Account, and the Custodian may rely upon such certification.
3. All contributions to the Custodial Account shall be invested and
reinvested in full and fractional shares of one or more Funds. All such shares
shall be issued and accounted for as book entry shares, and no physical shares
or share certificate will be issued. Such investments shall be made in such
proportions and/or in such amounts as Depositor from time to time in the
Adoption Agreement or by other written notice to the Service Company (in such
form as may be acceptable to the Service Company) may direct.
The Service Company shall be responsible for promptly transmitting all
investment directions by the Depositor for the purchase or sale of shares of one
or more Funds hereunder to the Funds' transfer agent for execution. However, if
investment directions with respect to the investment of any contribution
hereunder are not received from the Depositor as required or, if received, are
unclear or incomplete in the opinion of the Service Company, the contribution
will be returned to the Depositor, or will be held uninvested (or invested in a
money market fund if available) pending clarification or completion by the
Depositor, in either case without liability for interest or for loss of income
or appreciation. If any other directions or other orders by the Depositor with
respect to the sale or purchase of shares of one or more Funds for the Custodial
Account are unclear or incomplete in the opinion of the Service Company, the
Service Company will refrain from carrying out such investment directions or
from executing any such sale or purchase, without liability for loss of income
or for appreciation or depreciation of any asset, pending receipt of
clarification or completion from the Depositor.
<PAGE>
All investment directions by Depositor will be subject to any minimum
initial or additional investment or minimum balance rules applicable to a Fund
as described in its prospectus.
All dividends and capital gains or other distributions received on the
shares of any Fund held in the Depositor's Account shall be (unless received in
additional shares) reinvested in full and fractional shares of such Fund (or of
any other Fund offered by the Sponsor, if so directed).
4. Subject to the minimum initial or additional investment, minimum balance
and other exchange rules applicable to a Fund, the Depositor may at any time
direct the Service Company to exchange all or a specified portion of the shares
of a Fund in the Depositor's Account for shares and fractional shares of one or
more other Funds. The Depositor shall give such directions by written or
telephonic notice acceptable to the Service Company, and the Service Company
will process such directions as soon as practicable after receipt thereof
(subject to the second paragraph of Section 3 of this Article VIII).
5. Any purchase or redemption of shares of a Fund for or from the
Depositor's Account will be effected at the public offering price or net asset
value of such Fund (as described in the then effective prospectus for such Fund)
next established after the Service Company has transmitted the Depositor's
investment directions to the transfer agent for the Fund(s).
Any purchase, exchange, transfer or redemption of shares of a Fund for or
from the Depositor's Account will be subject to any applicable sales, redemption
or other charge as described in the then effective prospectus for such Fund.
6. The Service Company shall maintain adequate records of all purchases or
sales of shares of one or more Funds for the Depositor's Custodial Account. Any
account maintained in connection herewith shall be in the name of the Custodian
for the benefit of the Depositor. All assets of the Custodial Account shall be
registered in the name of the Custodian or of a suitable nominee. The books and
records of the Custodian shall show that all such investments are part of the
Custodial Account.
The Custodian shall maintain or cause to be maintained adequate records
reflecting transactions of the Custodial Account. In the discretion of the
Custodian, records maintained by the Service Company with respect to the Account
hereunder will be deemed to satisfy the Custodian's recordkeeping
responsibilities therefor. The Service Company agrees to furnish the Custodian
with any information the Custodian requires to carry out the Custodian's
recordkeeping responsibilities.
7. Neither the Custodian nor any other party providing services to the
Custodial Account will have any responsibility for rendering advice with respect
to the investment and reinvestment of Depositor's Custodial Account, nor shall
such parties be liable for any loss or diminution in value which results from
Depositor's exercise of investment control over his Custodial Account. Depositor
shall have and exercise exclusive responsibility for and control over the
investment of the assets of his Custodial Account, and neither Custodian nor any
other such party shall have any duty to question his directions in that regard
or to advise him regarding the purchase, retention or sale of shares of one or
more Funds for the Custodial Account.
8. The Depositor may in writing appoint an investment adviser with respect
to the Custodial Account on a form acceptable to the Custodian and the Service
Company. The investment adviser's appointment will be in effect until written
notice to the contrary is received by the Custodian and the Service Company.
While an investment adviser's appointment is in effect, the investment adviser
may issue investment directions or may issue orders for the sale or purchase of
shares of one or more Funds to the Service Company, and the Service Company will
be fully protected in carrying out such investment directions or orders to the
same extent as if they had been given by the Depositor.
The Depositor's appointment of any investment adviser will also be deemed
to be instructions to the Custodian and the Service Company to pay such
investment adviser's fees to the investment adviser from the Custodial Account
hereunder without additional authorization by the Depositor or the Custodian.
<PAGE>
9. (a) Distribution of the assets of the Custodial Account shall be made at
such time and in such form as Depositor (or the Beneficiary if
Depositor is deceased) shall elect by written order to the Custodian.
Depositor acknowledges that any distribution of a taxable amount from
the Custodial Account (except for distribution on account of
Depositor's disability or death, return of an "excess contribution"
referred to in Code Section 4973, or a "rollover" from this Custodial
Account) made earlier than age 59 1/2 may subject Depositor to an
"additional tax on early distributions" under Code Section 72(t)
unless an exception to such additional tax is applicable. For that
purpose, Depositor will be considered disabled if Depositor can prove,
as provided in Code Section 72(m)(7), that Depositor is unable to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to
result in death or be of long-continued and indefinite duration. It is
the responsibility of the Depositor (or the Beneficiary) by
appropriate distribution instructions to the Custodian to insure that
any applicable distribution requirements of Code Section 401(a)(9) and
Article IV above are met. If the Depositor (or Beneficiary) does not
direct the Custodian to make distributions from the Custodial Account
by the time that such distributions are required to commence in
accordance with such distribution requirements, the Custodian (and
Service Company) shall assume that the Depositor (or Beneficiary) is
meeting the minimum distribution requirements from another individual
retirement arrangement maintained by the Depositor (or Beneficiary)
and the Custodian and Service Company shall be fully protected in so
doing. The Depositor (or the Depositor's surviving spouse) may elect
to comply with the distribution requirements in Article IV using the
recalculation of life expectancy method, or may elect that the life
expectancy of the Depositor and/or the Depositor's surviving spouse,
as applicable, will not be recalculated; any such election may be in
such form as the Depositor (or surviving spouse) provides (including
the calculation of minimum distribution amounts in accordance with a
method that does not provide for recalculation of the life expectancy
of one or both of the Depositor and surviving spouse and instructions
for withdrawals to the Custodian in accordance with such method).
Notwithstanding any other provision of Article IV, unless an election
to have life expectancies recalculated annually is made by the time
distributions are required to begin, life expectancies shall not be
recalculated.
(b) The Depositor acknowledges (i) that any withdrawal from the Custodial
Account will be reported by the Custodian in accordance with
applicable IRS requirements (currently, on Form 1099-R), (ii) that the
information reported by the Custodian will be based on the amounts in
the Custodial Account and will not reflect any other individual
retirement accounts the Depositor may own and that, consequently, the
tax treatment of the withdrawal may be different than if the Depositor
had no other individual retirement accounts, and (iii) that,
accordingly, it is the responsibility of the Depositor to maintain
appropriate records so that the Depositor (or other person ordering
the distribution) can correctly compute all taxes due. Neither the
Custodian nor any other party providing services to the Custodial
Account assumes any responsibility for the tax treatment of any
distribution from the Custodial Account; such responsibility rests
solely with the person ordering the distribution.
10. The Custodian assumes (and shall have) no responsibility to make any
distribution except upon the written order of Depositor (or Beneficiary if
Depositor is deceased) containing such information as the Custodian may
reasonably request. Also, before making any distribution or honoring any
assignment of the Custodial Account, Custodian shall be furnished with any and
all applications, certificates, tax waivers, signature guarantees and other
documents (including proof of any legal representative's authority) deemed
necessary or advisable by Custodian, but Custodian shall not be responsible for
complying with any order or instruction which appears on its face to be genuine,
or for refusing to comply if not satisfied it is genuine, and Custodian has no
duty of further inquiry. Any distributions from the Account may be mailed,
first-class postage prepaid, to the last known address of the person who is to
receive such distribution, as shown on the Custodian's records, and such
distribution shall to the extent thereof completely discharge the Custodian's
liability for such payment.
<PAGE>
11. (a) The term "Beneficiary" means the person or persons designated as
such by the "designating person" (as defined below) on a form
acceptable to the Custodian for use in connection with the Custodial
Account, signed by the designating person, and filed with the
Custodian. The form may name individuals, trusts, estates, or other
entities as either primary or contingent beneficiaries. However, if
the designation does not effectively dispose of the entire Custodial
Account as of the time distribution is to commence, the term
"Beneficiary" shall then mean the designating person's estate with
respect to the assets of the Custodial Account not disposed of by the
designation form. The form last accepted by the Custodian before such
distribution is to commence, provided it was received by the Custodian
(or deposited in the U.S. Mail or with a reputable delivery service)
during the designating person's lifetime, shall be controlling and,
whether or not fully dispositive of the Custodial Account, thereupon
shall revoke all such forms previously filed by that person. The term
"designating person" means Depositor during his/her lifetime; after
Depositor's death, it also means Depositor's spouse, but only if the
spouse elects to treat the Custodial Account as the spouse's own
Custodial Account in accordance with applicable provisions of the
Code.
(b) When and after distributions from the Custodial Account to Depositor's
Beneficiary commence, all rights and obligations assigned to Depositor
hereunder shall inure to, and be enjoyed and exercised by, Beneficiary
instead of Depositor.
(c) Notwithstanding Section 3 of Article IV of Part Two above, if the
Depositor's spouse is the sole Beneficiary on the Depositor's date of
death, the spouse will not be treated as the Depositor if the spouse
elects not to be so treated. In such event, the Custodial Account will
be distributed in accordance with the other provisions of such Article
IV, except that distributions to the Depositor's spouse are not
required to commence until December 31 of the year in which the
Depositor would have turned age 70 1/2.
12. (a) The Depositor agrees to provide information to the Custodian at such
time and in such manner as may be necessary for the Custodian to
prepare any reports required under Section 408(i) or Section
408A(d)(3)(E) of the Code and the regulations thereunder or otherwise.
(b) The Custodian or the Service Company will submit reports to the
Internal Revenue Service and the Depositor at such time and manner and
containing such information as is prescribed by the Internal Revenue
Service.
(c) The Depositor, Custodian and Service Company shall furnish to each
other such information relevant to the Custodial Account as may be
required under the Code and any regulations issued or forms adopted by
the Treasury Department thereunder or as may otherwise be necessary
for the administration of the Custodial Account.
(d) The Depositor shall file any reports to the Internal Revenue Service
which are required of him by law (including Form 5329), and neither
the Custodian nor Service Company shall have any duty to advise
Depositor concerning or monitor Depositor's compliance with such
requirement.
13. (a) Depositor retains the right to amend this Custodial Account document
in any respect at any time, effective on a stated date which shall be
at least 60 days after giving written notice of the amendment
(including its exact terms) to Custodian by registered or certified
mail, unless Custodian waives notice as to such amendment. If the
Custodian does not wish to continue serving as such under this
Custodial Account document as so amended, it may resign in accordance
with Section 17 below.
(b) Depositor delegates to the Custodian the Depositor's right so to
amend, provided (i) the Custodian does not change the investments
available under this Custodial Agreement and (ii) the Custodian amends
in the same manner all agreements comparable to this one, having the
same Custodian, permitting comparable investments, and under which
such power has been delegated to it; this includes the power to amend
retroactively if necessary or appropriate in the opinion of the
Custodian in order to conform this Custodial Account to pertinent
provisions of the Code and other laws or successor provisions of law,
or to obtain a governmental ruling that such requirements are met, to
adopt a prototype or master form of agreement in substitution for this
Agreement, or as otherwise may be advisable in the opinion of the
Custodian. Such an amendment by the Custodian shall be communicated in
writing to Depositor, and Depositor shall be deemed to have consented
thereto unless, within 30 days after such communication to Depositor
is mailed, Depositor either (i) gives Custodian a written order for a
complete distribution or transfer of the Custodial Account, or (ii)
removes the Custodian and appoints a successor under Section 17 below.
<PAGE>
Pending the adoption of any amendment necessary or desirable to
conform this Custodial Account document to the requirements of any
amendment to any applicable provision of the Internal Revenue Code or
regulations or rulings thereunder, the Custodian and the Service
Company may operate the Depositor's Custodial Account in accordance
with such requirements to the extent that the Custodian and/or the
Service Company deem necessary to preserve the tax benefits of the
Account.
(c) Notwithstanding the provisions of subsections (a) and (b) above, no
amendment shall increase the responsibilities or duties of Custodian
without its prior written consent.
(d) This Section 13 shall not be construed to restrict the Custodian's
right to substitute fee schedules in the manner provided by Section 16
below, and no such substitution shall be deemed to be an amendment of
this Agreement.
14. (a) Custodian shall terminate the Custodial Account if this Agreement is
terminated or if, within 30 days (or such longer time as Custodian may
agree) after resignation or removal of Custodian under Section 17,
Depositor or Sponsor, as the case may be, has not appointed a
successor which has accepted such appointment. Termination of the
Custodial Account shall be effected by distributing all assets thereof
in a single payment in cash or in kind to Depositor, subject to
Custodian's right to reserve funds as provided in Section 17.
(b) Upon termination of the Custodial Account, this custodial account
document shall have no further force and effect (except for Sections
15(f), 17(b) and (c) hereof which shall survive the termination of the
Custodial Account and this document), and Custodian shall be relieved
from all further liability hereunder or with respect to the Custodial
Account and all assets thereof so distributed.
15. (a) In its discretion, the Custodian may appoint one or more contractors
or service providers to carry out any of its functions and may
compensate them from the Custodial Account for expenses attendant to
those functions. In the event of such appointment, all rights and
privileges of the Custodian under this Agreement shall pass through to
such contractors or service providers who shall be entitled to enforce
them as if a named party.
(b) The Service Company shall be responsible for receiving all
instructions, notices, forms and remittances from Depositor and for
dealing with or forwarding the same to the transfer agent for the
Fund(s).
(c) The parties do not intend to confer any fiduciary duties on Custodian
or Service Company (or any other party providing services to the
Custodial Account), and none shall be implied. Neither shall be liable
(or assumes any responsibility) for the collection of contributions,
the proper amount, time or tax treatment of any contribution to the
Custodial Account or the propriety of any contributions under this
Agreement, or the purpose, time, amount (including any minimum
distribution amounts), tax treatment or propriety of any distribution
hereunder, which matters are the sole responsibility of Depositor and
Depositor's Beneficiary.
(d) Not later than 60 days after the close of each calendar year (or after
the Custodian's resignation or removal), the Custodian or Service
Company shall file with Depositor a written report or reports
reflecting the transactions effected by it during such period and the
assets of the Custodial Account at its close. Upon the expiration of
60 days after such a report is sent to Depositor (or Beneficiary), the
Custodian or Service Company shall be forever released and discharged
from all liability and accountability to anyone with respect to
transactions shown in or reflected by such report except with respect
to any such acts or transactions as to which Depositor shall have
filed written objections with the Custodian or Service Company within
such 60 day period.
<PAGE>
(e) The Service Company shall deliver, or cause to be delivered, to
Depositor all notices, prospectuses, financial statements and other
reports to shareholders, proxies and proxy soliciting materials
relating to the shares of the Funds(s) credited to the Custodial
Account. No shares shall be voted, and no other action shall be taken
pursuant to such documents, except upon receipt of adequate written
instructions from Depositor.
(f) Depositor shall always fully indemnify Service Company, Distributor,
the Fund(s), Sponsor and Custodian and save them harmless from any and
all liability whatsoever which may arise either (i) in connection with
this Agreement and the matters which it contemplates, except that
which arises directly out of the Service Company's, Distributor's,
Fund's, Sponsor's or Custodian's bad faith, gross negligence or
willful misconduct, (ii) with respect to making or failing to make any
distribution, other than for failure to make distribution in
accordance with an order therefor which is in full compliance with
Section 10, or (iii) actions taken or omitted in good faith by such
parties. Neither Service Company nor Custodian shall be obligated or
expected to commence or defend any legal action or proceeding in
connection with this Agreement or such matters unless agreed upon by
that party and Depositor, and unless fully indemnified for so doing to
that party's satisfaction.
(g) The Custodian and Service Company shall each be responsible solely for
performance of those duties expressly assigned to it in this
Agreement, and neither assumes any responsibility as to duties
assigned to anyone else hereunder or by operation of law.
(h) The Custodian and Service Company may each conclusively rely upon and
shall be protected in acting upon any written order from Depositor or
Beneficiary, or any investment adviser appointed under Section 8, or
any other notice, request, consent, certificate or other instrument or
paper believed by it to be genuine and to have been properly executed,
and so long as it acts in good faith, in taking or omitting to take
any other action in reliance thereon. In addition, Custodian will
carry out the requirements of any apparently valid court order
relating to the Custodial Account and will incur no liability or
responsibility for so doing.
16. (a) The Custodian, in consideration of its services under this
Agreement, shall receive the fees specified on the applicable fee
schedule. The fee schedule originally applicable shall be the one
specified in the Adoption Agreement or Disclosure Statement, as
applicable. The Custodian may substitute a different fee schedule at
any time upon 30 days' written notice to Depositor. The Custodian
shall also receive reasonable fees for any services not contemplated
by any applicable fee schedule and either deemed by it to be necessary
or desirable or requested by Depositor.
(b) Any income, gift, estate and inheritance taxes and other taxes of any
kind whatsoever, including transfer taxes incurred in connection with
the investment or reinvestment of the assets of the Custodial Account,
that may be levied or assessed in respect to such assets, and all
other administrative expenses incurred by the Custodian in the
performance of its duties (including fees for legal services rendered
to it in connection with the Custodial Account) shall be charged to
the Custodial Account. If the Custodian is required to pay any such
amount, the Depositor (or Beneficiary) shall promptly upon notice
thereof reimburse the Custodian.
(c) All such fees and taxes and other administrative expenses charged to
the Custodial Account shall be collected either from the amount of any
contribution or distribution to or from the Account, or (at the option
of the person entitled to collect such amounts) to the extent possible
under the circumstances by the conversion into cash of sufficient
shares of one or more Funds held in the Custodial Account (without
liability for any loss incurred thereby). Notwithstanding the
foregoing, the Custodian or Service Company may make demand upon the
Depositor for payment of the amount of such fees, taxes and other
administrative expenses. Fees which remain outstanding after 60 days
may be subject to a collection charge.
<PAGE>
17. (a) Upon 30 days' prior written notice to the Custodian, Depositor or
Sponsor, as the case may be, may remove it from its office hereunder.
Such notice, to be effective, shall designate a successor custodian
and shall be accompanied by the successor's written acceptance. The
Custodian also may at any time resign upon 30 days' prior written
notice to Sponsor, whereupon the Sponsor shall notify the Depositor
(or Beneficiary) and shall appoint a successor to the Custodian. In
connection with its resignation hereunder, the Custodian may, but is
not required to, designate a successor custodian by written notice to
the Sponsor or Depositor (or Beneficiary), and the Sponsor or
Depositor (or Beneficiary) will be deemed to have consented to such
successor unless the Sponsor or Depositor (or Beneficiary) designates
a different successor custodian and provides written notice thereof
together with such a different successor's written acceptance by such
date as the Custodian specifies in its original notice to the Sponsor
or Depositor (or Beneficiary) (provided that the Sponsor or Depositor
(or Beneficiary) will have a minimum of 30 days to designate a
different successor).
(b) The successor custodian shall be a bank, insured credit union, or
other person satisfactory to the Secretary of the Treasury under Code
Section 408(a)(2). Upon receipt by Custodian of written acceptance by
its successor of such successor's appointment, Custodian shall
transfer and pay over to such successor the assets of the Custodial
Account and all records (or copies thereof) of Custodian pertaining
thereto, provided that the successor custodian agrees not to dispose
of any such records without the Custodian's consent. Custodian is
authorized, however, to reserve such sum of money or property as it
may deem advisable for payment of all its fees, compensation, costs,
and expenses, or for payment of any other liabilities constituting a
charge on or against the assets of the Custodial Account or on or
against the Custodian, with any balance of such reserve remaining
after the payment of all such items to be paid over to the successor
custodian.
(c) Any Custodian shall not be liable for the acts or omissions of its
predecessor or its successor.
18. References herein to the "Internal Revenue Code" or "Code" and sections
thereof shall mean the same as amended from time to time, including successors
to such sections.
19. Except where otherwise specifically required in this Agreement, any
notice from Custodian to any person provided for in this Agreement shall be
effective if sent by first-class mail to such person at that person's last
address on the Custodian's records.
20. Depositor or Depositor's Beneficiary shall not have the right or power
to anticipate any part of the Custodial Account or to sell, assign, transfer,
pledge or hypothecate any part thereof. The Custodial Account shall not be
liable for the debts of Depositor or Depositor's Beneficiary or subject to any
seizure, attachment, execution or other legal process in respect thereof except
to the extent required by law. At no time shall it be possible for any part of
the assets of the Custodial Account to be used for or diverted to purposes other
than for the exclusive benefit of the Depositor or his/her Beneficiary except to
the extent required by law.
21. When accepted by the Custodian, this Agreement is accepted in and shall
be construed and administered in accordance with the laws of the state where the
principal offices of the Custodian are located. Any action involving the
Custodian brought by any other party must be brought in a state or federal court
in such state.
If in the Adoption Agreement, Depositor designates that the Custodial
Account is a Traditional IRA, this Agreement is intended to qualify under Code
Section 408(a) as an individual retirement Custodial Account and to entitle
Depositor to the retirement savings deduction under Code Section 219 if
available. If in the Adoption Agreement Depositor designates that the Custodial
Account is a Roth IRA, this Agreement is intended to qualify under Code Section
408A as a Roth individual retirement Custodial Account and to entitle Depositor
to the tax-free withdrawal of amounts from the Custodial Account to the extent
permitted in such Code section.
If any provision hereof is subject to more than one interpretation or any
term used herein is subject to more than one construction, such ambiguity shall
be resolved in favor of that interpretation or construction which is consistent
with the intent expressed in whichever of the two preceding sentences is
applicable.
However, the Custodian shall not be responsible for whether or not such
intentions are achieved through use of this Agreement, and Depositor is referred
to Depositor's attorney for any such assurances.
<PAGE>
22. Depositor should seek advice from Depositor's attorney regarding the
legal consequences (including but not limited to federal and state tax matters)
of entering into this Agreement, contributing to the Custodial Account, and
ordering Custodian to make distributions from the Account. Depositor
acknowledges that Custodian and Service Company (and any company associated
therewith) are prohibited by law from rendering such advice.
23. If any provision of any document governing the Custodial Account
provides for notice, instructions or other communications from one party to
another in writing, to the extent provided for in the procedures of the
Custodian, Service Company or another party, any such notice, instructions or
other communications may be given by telephonic, computer, other electronic or
other means, and the requirement for written notice will be deemed satisfied.
24. The legal documents governing the Custodial Account are as follows:
(a) If in the Adoption Agreement the Depositor designated the Custodial
Account as a Traditional IRA under Code Section 408(a), the provisions
of Part One and Part Three of this Agreement and the provisions of the
Adoption Agreement are the legal documents governing the Depositor's
Custodial Account.
(b) If in the Adoption Agreement the Depositor designated the Custodial
Account as a Roth IRA under Code Section 408A, the provisions of Part
Two and Part Three of this Agreement and the provisions of the
Adoption Agreement are the legal documents governing the Depositor's
Custodial Account.
(c) In the Adoption Agreement the Depositor must designate the Custodian
Account as either a Roth IRA or a Traditional IRA, and a separate
account will be established for such IRA. One Custodial Account may
not serve as a Roth IRA and a Traditional IRA (through the use of
subaccounts or otherwise).
(d) The Depositor acknowledges that the Service Company may require the
establishment of different Roth IRA accounts to hold annual
contributions under Code Section 408A(c)(2) and to hold conversion
amounts under Code Section 408A(c)(3)(B). The Service Company may also
require the establishment of different Roth IRA accounts to hold
amounts converted in different calendar years. If the Service Company
does not require such separate account treatment, the Depositor may
make annual contributions and conversion contributions to the same
account.
25. Articles I through VII of Part One of this Agreement are in the form
promulgated by the Internal Revenue Service as Form 5305-A. It is anticipated
that, if and when the Internal Revenue Service promulgates changes to Form
5305-A, the Custodian will amend this Agreement correspondingly.
Articles I through VII of Part Two of this Agreement are in the form
promulgated by the Internal Revenue Service as Form 5305-RA. It is anticipated
that, if and when the Internal Revenue Service promulgates changes to Form
5305-RA, the Custodian will amend this Agreement correspondingly.
The Internal Revenue Service has endorsed the use of documentation
permitting a Depositor to establish either a Traditional IRA or Roth IRA (but
not both using a single Adoption Agreement), and this Kit complies with the
requirements of the IRS guidance for such use. If the Internal Revenue Service
subsequently determines that such an approach is not permissible, or that the
use of a "combined" Adoption Agreement does not establish a valid Traditional
IRA or a Roth IRA (as the case may be), the Custodian will furnish the Depositor
with replacement documents and the Depositor will if necessary sign such
replacement documents. Depositor acknowledge and agrees to such procedures and
to cooperate with Custodian to preserve the intended tax treatment of the
Account.
<PAGE>
26. If the Depositor maintains an Individual Retirement Account under Code
section 408(a), Depositor may convert or transfer such other IRA to a Roth IRA
under Code section 408A using the terms of this Agreement and the Adoption
Agreement by completing and executing the Adoption Agreement and giving suitable
directions to the Custodian and the custodian or trustee of such other IRA.
Alternatively, the Depositor may convert or transfer such other IRA to a Roth
IRA by use of a reply card or by telephonic, computer or electronic means in
accordance with procedures adopted by the Custodian or Service Company intended
to meet the requirements of Code section 408A, and the Depositor will be deemed
to have executed the Adoption Agreement and adopted the provisions of this
Agreement and the Adoption Agreement in accordance with such procedures.
In accordance with the requirements of Code Section 408A(d)(6) and
regulations thereunder, the Depositor may recharacterize a contribution to a
Traditional IRA as a contribution to a Roth IRA, or may recharacterize a
contribution to a Roth IRA as a contribution to a Traditional IRA. The Depositor
agrees to observe any limitations imposed by the Service Company on the number
of such transactions in any year (or any such limitations or other restrictions
that may be imposed by the Service Company or the IRS).
27. The Depositor acknowledges that he or she has received and read the
current prospectus for each Fund in which his or her Account is invested and the
Individual Retirement Account Disclosure Statement related to the Account. The
Depositor represents under penalties of perjury that his or her Social Security
number (or other Taxpayer Identification Number) as stated in the Adoption
Agreement is correct.
<PAGE>
The
PERMANENT
PORTFOLIO
Family of Funds
INFORMATION OFFICE
207 Jefferson Square / P.O. Box 5847
Austin, Texas 78763
1-800-531-5142
or 1-512-453-7558 direct
or 1-512-453-2015 by telecopier (FAX)
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
PERMANENT PORTFOLIO
SCHEDULE OF CALCULATIONS OF PERFORMANCE DATA
n
P (1+T) = ERV
P = initial investment in shares
T = average annual total return
n = number of days
ERV = ending redeemable value
Average annual total return for 1 year ended January 31, 1999:
n
P (1+T) = ERV
1
1,000 (1+T) = 1,024.24
1+T = 1.02424
T = 2.42%
Average annual total return for 5 years ended January 31, 1999:
n
P (1+T) = ERV
5
1,000 (1+T) = 1,224.44
1/5
1+T = 1.22444
1+T = 1.04133
T = 4.13%
Average annual total return for 10 years ended January 31, 1999:
n
P (1+T) = ERV
10
1,000 (1+T) = 1,616.46
1/10
1+T = 1.61646
1+T = 1.04920
T = 4.92%
Average annual total return for 15 years ended January 31, 1999:
n
P (1+T) = ERV
15
1,000 (1+T) = 2,064.86
1/15
1+T = 2.06486
1+T = 1.04952
T = 4.95%
Average annual total return for 16 years, 62-days ended January 31, 1999:
n
P (1+T) = ERV
16.1699
1,000 (1+T) = 2,162.45
1/16.1699
1+T = 2.16245
1+T = 1.04885
T = 4.89%
<PAGE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
TREASURY BILL PORTFOLIO
SCHEDULE OF CALCULATIONS OF PERFORMANCE DATA
n
P (1+T) = ERV
P = initial investment in shares
T = average annual total return
n = number of days
ERV = ending redeemable value
Average annual total return for 1 year ended January 31, 1999:
n
P (1+T) = ERV
1
1,000 (1+T) = 1,040.37
1+T = 1.04037
T = 4.04%
Average annual total return for 5 years ended January 31, 1999:
n
P (1+T) = ERV
5
1,000 (1+T) = 1,222.74
1/5
1+T = 1.22274
1+T = 1.04104
T = 4.10%
Average annual total return for 10 years ended January 31, 1999:
n
P (1+T) = ERV
10
1,000 (1+T) = 1,555.99
1/10
1+T = 1.55599
1+T = 1.04520
T = 4.52%
Average annual total return for 11 years, 250-days ended January 31, 1999:
n
P (1+T) = ERV
11.6849
1,000 (1+T) = 1,704.46
1/11.6849
1+T = 1.70446
1+T = 1.04669
T = 4.67%
<PAGE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
TREASURY BILL PORTFOLIO
SCHEDULE OF CALCULATIONS OF PERFORMANCE DATA
Yield for 7 days ended February 1, 1999:
Share price at January 25, 1999 (net of capital gains): $67.91
Share price at February 1, 1999 (net of capital gains): $67.97
( )
( 67.97 - 67.91 ) 365
( ------------- ) * --- = 4.61%
( 67.91 ) 7
Effective yield for 7 days ended February 1, 1999:
[( ) ^ 52.14 ]
[( 67.97 - 67.91 ) ]
[( 1 + ------------- ) ] - 1 = 4.71%
[( 67.91 ) ]
<PAGE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
VERSATILE BOND PORTFOLIO
SCHEDULE OF CALCULATIONS OF PERFORMANCE DATA
n
P (1+T) = ERV
P = initial investment in shares
T = average annual total return
n = number of days
ERV = ending redeemable value
Average annual total return for 1 year ended January 31, 1999:
n
P (1+T) = ERV
1
1,000 (1+T) = 1,045.62
1+T = 1.04562
T = 4.56%
Average annual total return for 5 years ended January 31, 1999:
n
P (1+T) = ERV
5
1,000 (1+T) = 1,265.75
1/5
1+T = 1.26575
1+T = 1.04826
T = 4.83%
Average annual total return for 7 years, 127-days ended January 31, 1999:
n
P (1+T) = ERV
7.3479
1,000 (1+T) = 1,402.15
1/7.3479
1+T = 1.40215
1+T = 1.04707
T = 4.71%
<PAGE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
VERSATILE BOND PORTFOLIO
SCHEDULE OF CALCULATIONS OF PERFORMANCE DATA
Yield for 30 days ended January 31, 1999:
[( ) 6 ]
YIELD = [( a-b + 1 ) ]
2 [( ------- ) -1 ]
[( (c)(d) ) ]
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the period that were
entitled to receive dividends
d = the maximum offering price per share on the last day of the period
[( ) 6 ]
[( 94,897.93-27,409.87 + 1 ) ]
YIELD = 2 [( -------------------- ) -1 ]
[( (410,177.020)(58.83) ) ]
[( ) 6 ]
[( 67,488.06 + 1 ) ]
YIELD = 2 [( ------------- ) -1 ]
[( 24,130,714.09 ) ]
[( ) 6 ]
[( ) ]
YIELD = 2 [( 1.00279677 ) -1 ]
[( ) ]
[( ]
[( ]
YIELD = 2 [( 1.01689839 ]
[( ]
YIELD = 3.3797%
<PAGE>
PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.
AGGRESSIVE GROWTH PORTFOLIO
SCHEDULE OF CALCULATIONS OF PERFORMANCE DATA
n
P (1+T) = ERV
P = initial payment
T = average annual total return
n = number of days
ERV = ending redeemable value
Average annual total return for 1 year ended January 31, 1999:
n
P (1+T) = ERV
1
1,000 (1+T) = 1,228.58
1+T = 1.22858
T = 22.86%
Average annual total return for 5 years ended January 31, 1999:
n
P (1+T) = ERV
5
1,000 (1+T) = 2,340.12
1/5
1+T = 2.34012
1+T = 1.18535
T = 18.54%
Average annual total return for 9 years, 29-days ended January 31, 1999:
n
P (1+T) = ERV
9.079
1,000 (1+T) = 3,954.62
1/9.079
1+T = 3.95462
1+T = 1.16349
T = 16.35%
