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FORM 10-K
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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(Mark One)
X
- -------- ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1996
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OR
- -------- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
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Commission file number 0-18441
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UNITED STATES GOLD TRUST
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(Exact name of registrant as specified in its charter)
New York 68-0146329
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
625 Second Street, Suite 102, Petaluma, California 94952
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (707) 778-1000
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Securities registered pursuant to Section 12(b) of the Act: None
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Securities registered pursuant to Section 12(g) of the Act: X
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Units of Undivided Beneficial Interest in the Bullion Portfolio
Units of Undivided Beneficial Interest in the Coin Portfolio
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(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No .
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Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
X
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The aggregate market value of Units held by non-affiliates of the Registrant at
March 7, 1997 was $4,467,116.
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<PAGE>
PART I
Item 1. Business.
United States Gold Trust
United States Gold Trust (the "Trust") is an investment trust established
under the laws of New York in accordance with an Agreement and Declaration of
Trust (the "Trust Agreement"), dated August 17, 1988, between Bullion Security
Corporation (the "Sponsor") and United States Trust Company of New York (the
"Trustee"). The Trust, which consists of a Bullion Portfolio and a Coin
Portfolio (the "Portfolios"), commenced investment operations on August 18,
1988. On September 1, 1995, Chase Manhattan Bank, N.A. acquired the securities
processing business of the Trustee, including the rights and obligations of the
Trustee under the Trust Agreement. Other than the change of the Trustee, no
changes were made to the Trust Agreement or its provisions in connection with
its acquisition by Chase Manhattan Bank, N.A. Each of the Portfolios is intended
to be treated under Federal income tax provisions as a separate, non-taxable,
grantor trust.
An investor holding Units in either Portfolio is a beneficiary of the
Trust, and the Trustee is obligated to him (as well as to all other Unitholders)
to protect the assets of the Trust in accordance with the terms of the Trust
Agreement, a copy of which has been previously filed as an exhibit hereto.
Important provisions of the Trust Agreement are summarized herein.
The Trustee is located at 770 Broadway, New York, New York 10003, telephone
number 1-718-242-8000. The Sponsor is located at 625 Second Street, Petaluma,
California 94952, telephone number 1-707-778-1000.
Units represent an interest in the Bullion Portfolio or the Coin Portfolio
of the Trust; they do not represent an interest in the Sponsor.
Purpose and Function of the Trust
The Sponsor initially established the Trust to provide both individual
investors and large institutions with a means for investing in gold bullion and
gold coins, while enjoying the economies and conveniences ordinarily associated
with a mutual fund. Unlike a conventional mutual fund or "managed investment
company," the Trust does not invest in stocks, bonds or other securities, nor
does it attempt to buy or sell gold in anticipation of price changes or other
market events. In establishing the Trust, the Sponsor included certain
safeguards and protections that the Sponsor considered particularly appropriate
for an investment in gold, all through a public offering of securities
registered with the Securities and Exchange Commission (the "Commission"). On
February 20, 1996, the Sponsor decided to terminate the public offering of Units
in the Trust. The public offering of Units, as registered with the Commission on
Post-Effective Amendment No. 7 to the Trust's Registration Statement as filed on
Form S-1, was terminated as of March 30, 1996. As a consequence, new Units may
be issued in the Trust only in transactions which are exempt from the
registration provisions of the Securities Act of 1933, as amended. The Sponsor
has no current intention to resume the public offering of Units in the Trust.
Outstanding Units continue to be redeemable daily, at prices determined by
the current value of each Portfolio's net assets, and the Trust's assets
continue to be held by a bank custodian.
The Sponsor included the Coin Portfolio as a separate Portfolio of the
Trust to accommodate investors who wish to invest in gold through an individual
retirement account, or who wished to invest in gold coins issued by the United
States Mint.
<PAGE>
Rights and Number of Unitholders
Unitholders have the rights of beneficiaries of the Trust, as set forth in
the Trust Agreement. Unitholders do not have any management powers over the
Trust. Except for their investment in Units, they should not be personally
liable for any actions by the Trust unless they actively participate in the
administration of the Trust, a practice which is not permitted under the Trust
Agreement. A Unitholder may redeem Units on any day that banks are open for
business in New York City ("Business Day"). Units may be redeemed in kind or for
cash at a daily redemption price based on the dealer bid price for wholesale
transactions ("Redemption Price"). A Unitholder is entitled to receive, at his
request, a certificate evidencing ownership of Units. No rights with respect to
one Portfolio arise from ownership of Units in the other Portfolio. There were
229 Unitholders of record in the Bullion Portfolio and 321 Unitholders of record
in the Coin Portfolio at December 31, 1996.
Business
The Trust's sole investment activity is to hold gold bullion and one-ounce,
$50-denomination American Eagle gold coins (collectively, "Gold"). It neither
buys nor sells Gold in anticipation of price changes. Apart from incidental
amounts of cash that the Trust may sometimes hold, the Trust is fully invested
in Gold at all times.
The Trust does not engage in speculative trading of Gold. The Trust sells
Gold only to the extent necessary to cover cash redemptions of Units and to pay
administrative expenses.
Custody of Gold Bullion and Coins
The Trustee has retained Wilmington Trust Company (a commercial bank with
assets in excess of $5 billion) as custodian of the Trust's Gold. Wilmington
Trust Company was founded in 1903, and serves as custodian for precious metals
storage programs offered by several national brokerage firms. All Trust Gold
stored with Wilmington Trust Company is insured against physical loss.
Tax Matters
The Trust has received a ruling from the Internal Revenue Service to the
effect that each Portfolio is treated as a grantor trust for Federal income tax
purposes and not an association taxable as a corporation. As a grantor trust,
each Portfolio is not to be treated as a taxable entity; instead, each
Unitholder in a Portfolio is treated as the owner of an undivided interest in
that Portfolio equal to the Unitholder's pro rata portion of that Portfolio's
assets.
Expenses
The Trust incurs legal, accounting, and custodial expenses, and pays fees
to the Trustee and the Sponsor based on the average daily net assets of each
Portfolio. The Sponsor anticipates that each Portfolio's net expenses (including
all fees paid to the Trustee and the Sponsor) will equal, as a share of the
Portfolio's average daily net assets ("Expense Ratio"), .35% per year
(thirty-five one-hundredths of one percent per year). The Sponsor has agreed to
reimburse the Trustee for certain amounts of Trust expenses each year up to half
of its compensation for the purpose of limiting each Portfolio's Expense Ratio
to .35%. The Sponsor's compensation is .20% per year (two-tenths of one percent
per year), so that the maximum amount that the Sponsor is obligated to reimburse
is .10% per year (one-tenth of one percent per year). In previous years, the
Sponsor voluntarily reimbursed each Portfolio of the Trust additional amounts in
order to maintain its Expense Ratio at .35%. While the Sponsor may continue
voluntarily to make such additional reimbursements, it is not required to do so,
and since the public offering of Units has terminated, the net assets of the
Trust are expected to decline over time as Units are redeemed. Accordingly,
there can be no assurance that the future expenses of the Trust can be
maintained at .35% per year.
Termination Date
The Trust was established on August 17, 1988, and is scheduled to terminate
99 years after that date. The Trust, or either Portfolio, may be terminated
earlier in certain limited circumstances, including a reduction in its net
assets to less than $1,000,000. At termination, each Portfolio's Gold will be
sold, and Unitholders in the Portfolio will be paid their pro rata share of the
Portfolio's net distributable cash.
<PAGE>
Reports and Records
Each person who at any time during the calendar year was a Unitholder of
record in either Portfolio is entitled to receive, after the end of the calendar
year, a report providing the following information with respect to the Portfolio
in which he owns Units: (1) the amount of expenses for the year; (2) the amount
of Gold sold during the year and the proceeds from such sales; (3) the cash
balance as of the last day of the year; (4) the Gold balance as of the last day
of the year; (5) the Redemption Price per Unit as of the last day of the year;
and (6) the net asset value per Unit as of the last day of the year. Such
statement will be prepared on an accrual basis of accounting in accordance with
generally accepted accounting principles and will be audited by an independent
auditor.
The Trustee is obligated under the Trust Agreement to keep books of record
and account of its transactions as Trustee and to make them available for
inspection by Unitholders at all reasonable times during usual business hours.
Such records include a current list of Trust assets and a copy of the Trust
Agreement.
Information and Assistance
A Unitholder or other interested investor may obtain additional copies of
this Form 10-K and the Annual Report to Unitholders (the "Annual Report") by
calling the Investor's Information Office at 1-800-531-5142 or by writing to
P.O. Box 5847, Austin, Texas 78763 (telecopier 1-512-453-2015).
Price of Gold
The price of gold has been subject to volatile fluctuations in the last
several years and may be subject in the future to fluctuations that are even
more volatile. Neither the extent, the direction nor the duration of such
fluctuations can be foreseen.
The price of gold tends to rise with the emergence or aggravation of any
economic, political, military or international problem that is perceived to
increase the risk of high inflation in the United States, and the price of gold
tends to decline with the amelioration or resolution of any such problem.
Substantial increases or decreases in the price of gold may occur in the future,
which would result in substantial increases or decreases in the price of Units.
The market for gold is worldwide. Gold values respond positively to
inflation, but are subject to the risk that in any country inflation or the
public's expectation of inflation will decline, thereby resulting in a decrease
in the price of gold. The price of gold also can be depressed by sales of the
metal by governments, including the U.S. Government; by sales by official
bodies, such as the International Monetary Fund; by adverse economic conditions
in countries where gold is held by the general public; by large-scale sales of
gold; by the discovery or development of new gold-bearing ore reserves or of new
processes for mining, refining or recovering gold; and by governmental
prohibitions or restrictions on the private ownership of gold.
The price of gold may be affected by international monetary and political
policies, such as currency devaluations or revaluations or trade or currency
restrictions between countries, by economic or political conditions within an
individual country, or by trade imbalances.
Price of Coins
The price of gold coins is expected to be determined primarily by the price
of gold, and should be expected to be as volatile as the price of gold.
The price of gold coins usually includes a premium over the value of the
coins' bullion content. Within the recent period for which this Form 10-K is
filed, the premium has been in the range of 3% to 4%, but may vary in the
future, possibly being higher or lower at the time an investor redeems Coin
Units than when the investor purchased the Units. Factors which may influence
coin premiums include changes in demand for coins relative to the demand for
gold bullion, and changes in U.S. government policies regarding production or
sale of coins or regarding investment in coins by individual retirement
accounts.
<PAGE>
A coin's premium is not a sales charge or commission. Instead, it
represents the value of the coin's fabrication in a standardized, more readily
identifiable and merchantable form than gold bullion. All or a portion of the
premium paid for a coin may be recouped, or a small increase in premium may be
earned, when the coin is resold. However, because of the large quantity of coins
already minted and sold to the public, it is unlikely that the premium will rise
substantially from current levels. It is possible for the premium to decline to
zero, but the low cost of melting coins into bullion makes it unlikely that
coins would trade at a substantial discount to the value of their gold content.
Capital Appreciation
Neither gold bullion nor coins generate interest or dividends; they offer
only the potential for capital appreciation.
Item 2. Properties.
Deposits of Gold
Through December 31, 1996, the Sponsor deposited a total of 16,858 fine
troy ounces of gold bullion (of which 11,095 ounces have been sold or redeemed
in kind) in trust with the Trustee, and in respect of those deposits the Trustee
issued to the Sponsor a total of 422,128 Bullion Units. Through the same date,
the Sponsor deposited a total of 17,899 Coins (of which 9,342 Coins have been
sold or redeemed in kind) in trust with the Trustee, and in respect of those
deposits the Trustee issued to the Sponsor a total of 449,612 Coin Units. Each
Portfolio is a separate trust within the United States Gold Trust.
Custody of Gold
The Trustee is required by the Trust Agreement to retain one or more
qualified banks as a custodian of the Trust's Gold. To be "qualified," a bank
must be a commercial bank located in the United States, must have assets of at
least $1 billion and must, as a substantial portion of its activities, provide
safekeeping and custodial services to financial institutions. Although the
Trustee itself possesses all such qualifications to be a custodian, the Trustee
is forbidden by the Trust Agreement to act as a custodian of the Trust's Gold
except under extraordinary circumstances. Neither the Sponsor nor any affiliate
of the Sponsor may act as a custodian of the Trust's Gold under any
circumstances.
The Trustee has retained Wilmington Trust Company as custodian of the
Trust's Gold (the "Custodian"), and it intends to employ the same bank as
custodian of any additional deposits of Gold into the Trust.
The Custodian is a commercial bank founded in 1903 and organized under the
laws of the State of Delaware. Its offices are located at Rodney Square North,
Wilmington, Delaware. The Custodian has assets in excess of $5 billion and
serves as custodian for precious metals storage programs offered by many
national investment brokerage firms. It is subject to supervision and
examination by the State Bank Commissioner of the State of Delaware, by the
Federal Deposit Insurance Corporation and by the Board of Governors of the
Federal Reserve System.
Insurance on Gold
Trust Gold is insured under policies obtained by the Custodian on all its
deposits of precious metals. The insurance policies provide a maximum total
coverage of $250 million against theft, fraud and all other physical loss except
loss arising out of war, nuclear explosion, government taking and comparable
causes. The underwriters of the policies include Lloyds of London and St. Paul
Fire and Marine Insurance Company. Under certain circumstances, the Trustee is
obligated to obtain or attempt to obtain insurance against physical loss of Gold
separate from the insurance maintained by any Custodian.
Item 3. Legal Proceedings.
Inapplicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Inapplicable.
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
Transferability of Units
Units are transferable by the Unitholder (by gift, sale or other
disposition) and are redeemable by the Trust for cash or in kind at the
Redemption Price. Apart from the redeemability of Units, no public market for
the Units has developed.
Redemption of Units
Unitholders may redeem Units in either Portfolio on any Business Day in
accordance with the procedures described below.
A redeeming Unitholder may elect to be paid in cash at the Portfolio's
applicable Redemption Price or in kind (i.e., by a distribution of Gold from the
same Portfolio). All requests for redemption of Units received by the Trustee in
good order prior to 12 noon Eastern Time on a Business Day are executed at the
Redemption Price on that Business Day. Requests received by the Trustee after 12
noon are executed at the Redemption Price on the next Business Day. The minimum
redemption is 50 Units, or all of the Units in the Portfolio owned by the
Unitholder, whichever is less.
Each Portfolio's Redemption Price, for cash redemptions, is computed each
Business Day following the close of trading in gold on the New York Commodity
Exchange ("COMEX") or, if the COMEX is not open for trading in gold on a
Business Day, at 2:30 p.m. Eastern Time, and is equal to: (i) the value of the
Portfolio's Gold at the dealer bid price for wholesale transactions, plus (ii)
any cash or other assets of the Portfolio, minus (iii) any liabilities
(including proper accruals for expenses and contingencies) of the Portfolio,
divided by (iv) the number of Units outstanding in the Portfolio.
<PAGE>
The range of high and low Redemption Prices for each full quarterly period
during the years ended December 31, 1996 and 1995 is as follows:
Period High Low
1996
First Quarter
Bullion Portfolio $16.24 $15.32
Coin Portfolio $16.55 $15.59
Second Quarter
Bullion Portfolio $15.57 $14.98
Coin Portfolio $15.90 $15.16
Third Quarter
Bullion Portfolio $15.27 $14.80
Coin Portfolio $15.52 $15.06
Fourth Quarter
Bullion Portfolio $15.04 $14.42
Coin Portfolio $15.31 $14.62
1995
First Quarter
Bullion Portfolio $15.40 $14.59
Coin Portfolio $15.63 $14.88
Second Quarter
Bullion Portfolio $15.53 $15.02
Coin Portfolio $15.79 $15.28
Third Quarter
Bullion Portfolio $15.29 $14.91
Coin Portfolio $15.55 $15.16
Fourth Quarter
Bullion Portfolio $15.27 $14.95
Coin Portfolio $15.55 $15.21
The Redemption Price on March 7, 1997 was $13.69 for Bullion Units and
$13.86 for Coin Units.
Under the terms of the Trust Agreement, the Sponsor designates a particular
"Qualified Dealer" from whom the Trustee is to obtain price quotations for Gold
for use in calculating Redemption Prices. The "dealer bid price for wholesale
transactions" on a Business Day is the prevailing wholesale bid price on that
Business Day of gold bullion or coins, as the case may be, quoted by that
Qualified Dealer.
Redemption Requests
Redemption requests must be accompanied by Trust certificates, if issued,
and must be sent to the Trustee. Unitholders may be required to use a redemption
form provided by the Trustee. The Trustee may refuse redemption requests not
made in the proper form.
1. By Written Request
Normally the Unitholder's signature on a written redemption request (and on
the Unit certificate, if issued) must be guaranteed by an eligible guarantor
institution which satisfies the Trustee's written standards and procedures.
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 and 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 notary publics
will not be accepted. The Trustee's standards and procedures are readily
available upon request to the Trustee. (Unitholders may verify that a guarantor
institution is a member of STAMP by contacting the STAMP administrator, Kemark
Financial Services, at 1-800-348-2724, or the Trustee.) The guarantee must be in
proper form and undated. For the protection of the Unitholder and of the Trust,
additional documentation may be required for redemption of Units held in
corporate, partnership, trust, or fiduciary accounts. The cash proceeds of
redemptions requested in writing with a signature guarantee will be sent by
check (via first-class mail) to the Unitholder at his address of record.
<PAGE>
However, by completing the appropriate section of the Unitholder Account
Application, an investor may authorize the Trustee to honor cash redemption
requests without signature guarantee. Unitholders who wish to avoid the possible
inconvenience and delay of obtaining an acceptable signature guarantee should
carefully consider making the authorization. The lack of a signature guarantee
does not render the Trustee responsible for the authenticity of the signature.
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 by
bank-to-bank wire only to the Unitholder's bank account indicated on the
Unitholder Account Application.
2. By Telephone
A Unitholder who has authorized the Trustee to honor redemption requests
without signature guarantee may submit cash redemption requests by telephone.
Telephone requests are made by calling the Trustee at 1-617-557-8000. The cash
proceeds of redemptions requested by telephone (or in writing without signature
guarantee) will be sent by check (via first-class mail) or by bank-to-bank wire,
as the Unitholder may direct in his Unitholder Account Application. Whether
remitted by check or by bank wire, the redemption proceeds will be addressed
only to the Unitholder's account at a commercial bank in the United States (not
to an account at a foreign bank, a savings bank, savings and loan association,
mutual savings bank, credit union or other thrift institution).
If the redeeming Unitholder requests a bank wire, the Trustee will charge
the Unitholder its customary fee for a wire transfer, which is currently $8. The
fee will be deducted from the proceeds of the redemption.
No telephone requests will be honored for in-kind redemptions or to redeem
shares for which certificates have been issued and are outstanding.
The Trustee reserves the right to discontinue, suspend or impose further
requirements and conditions for telephone redemptions and other redemptions
without signature guarantee at any time.
3. In-kind Redemptions
In effecting an in-kind redemption requested by a Unitholder, the Trustee
will transfer one or more bars of gold bullion (in the case of a redemption of
Bullion Units) or coins (in the case of a redemption of Coin Units) to the
account of the Unitholder at the Custodian or other bank employed by the Trustee
as a custodian for the Trust's Gold (a "Customer Account"). The amount of Gold
so transferred will equal the Portfolio's Gold per Unit multiplied by the number
of Units being redeemed in kind. The Trustee also will pay to the Unitholder an
amount of cash, for each Unit being redeemed in kind, equal to the respective
Portfolio's net cash per Unit, or, alternatively, will require the redeeming
Unitholder to pay into the Trust an amount equal to the Portfolio's net
liabilities per Unit. Any such amount payable to the Trust will be collected by
a cash redemption of Units.
At the choice of the Unitholder, the Gold that has been transferred to him
will continue to be stored at his risk in his Customer Account, or will be
shipped, fully insured, by registered mail to the Unitholder's bank or to the
Unitholder's address. The Unitholder is responsible for all storage and shipping
costs and for any charges by the Custodian for transferring Gold into or out of
his Customer Account, which the Unitholder must pay to the Custodian before Gold
will be delivered to the Unitholder out of his Customer Account.
A redemption, or portion of a redemption, too small to be paid by a bar of
gold bullion or a coin held by the respective Portfolio will be paid in cash, in
accordance with the terms and procedures described above for cash redemptions.
Bars of gold bullion held by the Bullion Portfolio generally will be no smaller
than approximately 100 troy ounces per bar; and coins held by the Coin Portfolio
will have a gold content of 1 troy ounce. Accordingly, redemptions of fewer than
2,500 or so Bullion Units or fewer than 25 or so Coin Units ordinarily can be
made only for cash.
<PAGE>
4. General
Requests for redemption (whether in writing or by telephone) will be
processed by the Trustee at the applicable Redemption Price. Redemptions
ordinarily will be paid by the second Business Day, and in no event later than
the seventh calendar day, following receipt of the request by the Trustee.
However, Units purchased by personal check or money order may not be redeemed
until the Trustee is certain the check has cleared, but no later than 10
calendar days after the issuance of the Units. A Unitholder may avoid this delay
by purchasing Units with a cashier's check. Neither the Trust, the Trustee, the
Sponsor, nor any of their agents is responsible for losses sustained by a
Unitholder as a result of their acting on any instruction or authorization made
by the Unitholder either on his Unitholder Account Application or otherwise in
connection with redemption of his Units.
Because a Portfolio's Redemption Price per Unit fluctuates (reflecting the
market value of the Portfolio's Gold), the amount a Unitholder receives for his
Units may be more or less than the amount he paid for them and may be more or
less than their Redemption Price on the date that the Unitholder's written
redemption request was mailed to the Trustee.
Any Units presented for cash redemption may be repurchased by the Sponsor
or an affiliate, no later than the close of trading in gold on the COMEX or, if
the COMEX is not open for trading in gold on a Business Day, by 2:30 p.m.
Eastern Time on the date of redemption, at the full Redemption Price. In such
event, the same cash proceeds (unreduced by any commissions) will be forwarded
to the Unitholder as though the Units had been redeemed by the Trustee.
The Trustee may in its discretion, and must when directed by the Sponsor,
suspend the right of redemption or postpone payment of redemption requests of
Units in a Portfolio for any period during which disposal by that Portfolio of
its Gold is not reasonably practicable, or it is not reasonably practicable to
determine fairly the value of the Gold. The Trustee is not liable for any loss
or damage which may result from any such suspension or postponement, nor for any
depreciation or loss incurred by reason of any sale or redemption of Gold made
in effecting redemption of Units. Because the market for gold is worldwide, and
because continuous liquidity is provided by the activities of numerous
independent dealers, the Sponsor believes that it is extremely unlikely that any
such suspension or postponement will occur. The authority of the Securities and
Exchange Commission and the Commodity Futures Trading Commission to order
trading halts does not extend to the dealer market for gold bullion and coins.
Units redeemed by the Trustee are, by the fact of the redemption,
terminated.
Item 6. Selected Financial Data.
Selected data for each Unit of the Bullion Portfolio and the Coin Portfolio
outstanding for each of the five years in the period ended December 31, 1996 is
set forth below. The data are derived from financial statements audited by Ernst
& Young LLP, independent auditors, as set forth in their reports included in the
Annual Reports to Unitholders for the years then ended.
<PAGE>
SELECTED PER UNIT DATA AND RATIOS
<TABLE>
<CAPTION>
Year Ended December 31 (a)(b)
------------------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992
-------------------- -------------------- -------------------- --------------------- -------------------
Bullion Coin Bullion Coin Bullion Coin Bullion Coin Bullion Coin
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of year $ 15.16 $ 15.44 $ 15.06 $ 15.30 $ 15.43 $ 15.69 $ 13.17 $ 13.41 $ 14.07 $ 14.32
Net investment loss (.05) (.05) (.05) (.05) (.05) (.05) (.05) (.05) (.05) (.05)
Net realized and
unrealized gain (loss)
on investments (.60) (.77) .15 .19 (.32) (.34) 2.31 2.33 (.85) (.86)
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------
Increase (decrease) in
net asset value (.65) (.82) .10 .14 (.37) (.39) 2.26 2.28 (.90) (.91)
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------
Net asset value at end
of year $ 14.51 $ 14.62 $ 15.16 $ 15.44 $ 15.06 $ 15.30 $ 15.43 $ 15.69 $ 13.17 $ 13.41
========= ========= ========= ========= ========= ========= ========= ========= ========= ========
Ratios to average net assets:
Expenses (c) .35% .35% .35% .35% .35% .35% .35% .35% .35% .35%
Net investment loss (c) (.35%) (.35%) (.35%) (.35%) (.35%) (.35%) (.35%) (.35%) (.35%) (.35%)
Investment turnover
rate None None None 1.69% 14.24% 9.70% 15.94% 9.83% None 6.68%
Number of Units outstanding
at end of year 148,946 218,383 167,595 284,859 202,173 334,788 209,475 328,344 181,907 294,082
Net assets at end of year
(in thousands) $ 2,161 $ 3,192 $ 2,541 $ 4,397 $ 3,044 $ 5,121 $ 3,233 $ 5,151 $ 2,396 $ 3,942
<FN>
Note:
(a) The selected per unit data was calculated using average net assets during
the year.
(b) The Trust's sole investment activity was to hold Gold, and the Trust had
no income.
(c) During the years ended December 31, 1996, 1995, 1994, 1993 and 1992, the
Sponsor reimbursed expenses totaling $6,829, $6,655, $6,852, $6,337 and
$6,216 for the Bullion Portfolio and $7,694, $7,554, $7,870, $7,212 and
$6,670 for the Coin Portfolio, respectively. Absent the foregoing, the
ratios of expenses to average net assets and the ratios of net investment
loss to average net assets would have increased to .64%, .58%, .56%, .59%
and .62% for the Bullion Portfolio and .54%, .51%, .50%, .51% and .52% for
the Coin Portfolio, respectively, for the years then ended.
</FN>
</TABLE>
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Net assets of the Bullion Portfolio: increased in 1992 from $1,999,741 to
$2,396,312, as a result of additional deposits of Gold by the Sponsor in excess
of the decrease in the value of Gold; increased in 1993 from $2,396,312 to
$3,233,062, as a result of net additional deposits of Gold by the Sponsor and an
increase in the value of Gold; decreased in 1994 from $3,233,062 to $3,044,340,
as a result of net redemptions of Units and a decrease in the value of Gold;
decreased in 1995 from $3,044,340 to $2,540,829, as a result of redemptions of
Units in excess of the increase in the value of Gold; and decreased in 1996 from
$2,540,829 to $2,160,978, as a result of redemptions of Units and a decrease in
the value of Gold. Net assets of the Coin Portfolio: increased in 1992 from
$3,504,244 to $3,942,382, as a result of net additional deposits of Gold by the
Sponsor in excess of the decrease in the value of Gold; increased in 1993 from
$3,942,382 to $5,150,582, as a result of net additional deposits of Gold by the
Sponsor and an increase in the value of Gold; decreased in 1994 from $5,150,582
to $5,121,347, as a result of the net decrease in the value of Gold in excess of
net additional deposits of Gold by the Sponsor; decreased in 1995 from
$5,121,347 to $4,396,853, as a result of net redemptions of Units in excess of
an increase in the value of Gold; and decreased in 1996 from $4,396,853 to
$3,192,490, as a result of redemptions of Units and a decrease in the value of
Gold. The ratio of expenses to average net assets and net investment loss to
average net assets during each of the five years in the period ended December
31, 1996 was .35% for each Portfolio after the Sponsor's reimbursement, as
anticipated. The Trust has engaged in no activities other than the holding of
Gold, the issuance and redemption of Units and the payment of its expenses.
Item 8. Financial Statements and Supplementary Data.
See Registrant's Annual Report for the Year Ended December 31, 1996 filed
under Part IV, Item 14(a) hereof. Item 302 of Regulation S-K is inapplicable.
Item 9. Changes In and Disagreements with Accountants on Accounting and
Financial Disclosure.
Inapplicable.
PART III
Item 10. Directors and Executive Officers of the Registrant.
Sponsor
The Sponsor is a Delaware corporation organized on June 22, 1987. The
Sponsor's only activity has been as sponsor of the Trust. Units in the Trust do
not represent an interest in the Sponsor and the rights and obligations of the
Sponsor derive solely from the Trust Agreement.
Officers and directors of the Sponsor are:
Terry Coxon President and Director since 1987
Alan Sergy Secretary and Director since 1987
John Chandler Vice President and Director since 1987
Michael J. Cuggino Treasurer since 1993
All officers and directors will hold office until the next annual meeting
of stockholders of the Sponsor or until their successors are elected and
qualified. No officer or director owns more than 1% of the Units outstanding.
All of the outstanding capital stock of the Sponsor is owned by World Money
Managers, a California limited partnership that is the investment adviser to
Permanent Portfolio Family of Funds, Inc., a registered investment company. The
general partners of World Money Managers are Terry Coxon, and Terry Coxon, Inc.,
a corporation wholly owned by Mr. Coxon. World Money Managers is located at 625
Second Street, Suite 102, Petaluma, California 94952.
Terry Coxon, age 52, has been an investment adviser and financial author
for more than the past five years, and the president and a director of Permanent
Portfolio Family of Funds, Inc. since 1982. Mr. Coxon has had extensive
experience with precious metals investing. He is also the author of Using
Warrants and the co-author (with Harry Browne) of Inflation-Proofing Your
Investments. Mr. Coxon owns a 6.25% special limited partnership interest in
World Money Managers.
<PAGE>
Alan Sergy, age 52, has been an investment adviser and a trustee of Sergy
Trusts for more than the past five years. As the corporate secretary since 1982
and a director since 1986 of Permanent Portfolio Family of Funds, Inc., Mr.
Sergy also has had extensive experience with precious metals investing. Mr.
Sergy beneficially owns a 25% limited partnership interest and an 18.75% special
limited partnership interest in World Money Managers.
John Chandler, age 60, has been the president and a director and a 50%
owner of Permanent Portfolio Information, Inc., a financial marketing consultant
firm, and the vice president and a director of Harry Browne Special Reports,
Inc., an investment advisory newsletter, for more than the past five years.
Permanent Portfolio Information, Inc. owns a 16.67% limited partnership interest
and a 12.5% special limited partnership interest in World Money Managers.
Michael J. Cuggino, age 34, has been a Certified Public Accountant since
1988, having been employed by Ernst & Young in various audit and accounting
capacities, including audit manager, from August 1985 until January 1991, when
he established his own accounting practice. Mr. Cuggino served as the Assistant
Treasurer of the Sponsor and Permanent Portfolio Family of Funds, Inc. from
August 1991 until December 1992, when he became the Treasurer of each of those
companies.
The officers and directors of the Sponsor are not separately compensated by
the Sponsor for serving as such. The Sponsor may reimburse World Money Managers
for costs incurred by World Money Managers and allocable to the activities of
the Sponsor. No such reimbursements are paid by the Trust or the Trustee.
The Sponsor has been instrumental in the organization of the Trust and may
be deemed a "promoter" of the Trust within the meaning of Rule 405 under the
Securities Act of 1933.
Sponsor's Compensation
The Sponsor does not share in any selling commissions, nor does the Sponsor
or its affiliates charge any commissions or other fees on redemptions of Units.
Under the Trust Agreement, the Sponsor is entitled to receive a Sponsor's
fee, payable monthly from the assets of the Trust, at an annual rate equal to
.20% (two-tenths of one percent) of each Portfolio's average daily net assets.
The Sponsor also receives a one-time account establishment fee of $35 from each
investor in Units. The account establishment fee was designed to reimburse the
Sponsor for amounts it pays in respect of the Trust's costs and expenses.
The Sponsor's net profits, if any, may be reduced by reimbursements to the
Trustee for administrative expenses of the Trust.
Powers and Responsibilities of Sponsor
The Sponsor is empowered under the Trust Agreement to remove the Trustee
under certain conditions and select a new Trustee. The Sponsor has no authority
to hold Gold belonging to the Trust or to direct the sale of Trust Gold. The
Sponsor is obligated under the Trust Agreement to appoint an independent
certified public accounting firm annually to audit the Trust. Also, the Sponsor
is entitled under the Trust Agreement to inspect the books and records of the
Trust and to repurchase Units presented for cash redemption.
Under the Trust Agreement, the Sponsor may make additional deposits of gold
bullion or coins with the Trustee in exchange for the issuance of additional
Units. The Trust Agreement provides that no additional deposit into a Portfolio
will be accepted which would affect the quantity of Gold per Unit in the
Portfolio or the Net Asset Value per Unit or Redemption Price per Unit of the
Portfolio. In connection with each Additional Deposit, the Sponsor will deposit
cash equal to the Portfolio's net cash per Unit, or, alternatively, receive cash
from the Portfolio equal to the Portfolio's net accrued expenses and other
liabilities per Unit.
On February 20, 1996, the Sponsor decided to terminate the public offering
of Units in the Trust. The public offering of Units, as registered with the
Commission on Post-Effective Amendment No. 7 to the Trust's Registration
Statement as filed on Form S-1, was terminated as of March 30, 1996. As a
consequence, new Units may be issued in the Trust only in transactions which are
exempt from the registration provisions of the Securities Act of 1933, as
amended. The Sponsor has no current intention to resume the public offering of
Units in the Trust.
<PAGE>
Limitations on Liability of Sponsor
The Sponsor is liable for the performance of its obligations and duties
arising from the Trust Agreement, but is under no liability to Unitholders for
taking any action or refraining from any action in good faith or for errors in
judgment. The Sponsor is not responsible in any way for any decline in the value
of Gold owned by the Trust, or loss incurred by reason of the acquisition or
disposition of any Gold by the Trust. These limitations do not protect the
Sponsor against any liability to which the Sponsor would otherwise be subject by
reason of the Sponsor's willful misfeasance, bad faith, gross negligence or
reckless disregard of its obligations and duties.
Succession of Sponsor
If at any time the Sponsor fails to perform any of its duties under the
Trust Agreement, or becomes incapable of acting, or becomes bankrupt or
insolvent, or if the Sponsor's affairs are taken over by public authorities for
the purpose of rehabilitation, conservation or liquidation, the Trustee may
remove the Sponsor and appoint a successor or may terminate the Trust. Should
the Trustee so terminate the Trust, each Portfolio's Gold would be sold, and
Unitholders in each Portfolio would be paid their pro rata share of their
Portfolio's net distributable cash.
Trustee
The Trustee is Chase Manhattan Bank, N.A. of New York, which succeeded as
Trustee by merger with the United States Trust Company of New York. The Trustee
is a member of the New York Clearing House Association and is subject to
supervision and examination by the Superintendent of Banks of the State of New
York, by the Federal Deposit Insurance Corporation and by the Board of Governors
of the Federal Reserve System. The Trustee has total assets under custody and
management in excess of $2.9 trillion.
Trustee's Compensation
Under the Trust Agreement, the Trustee is entitled to receive a fee for its
ordinary services to the Trust, payable monthly from the assets of the Trust, at
an annual rate equal to .10% (one-tenth of one percent) of each Portfolio's
average daily net assets, subject to a minimum fee at the rate of $2,500 per
year for each Portfolio. The Trustee may also be reimbursed from Trust assets or
from the Sponsor for certain expenses of the Trust.
Powers and Responsibilities of Trustee
The Trustee is charged under the Trust Agreement with the administration
and safeguarding of the Trust and its assets for the benefit of the Unitholders.
The Trustee may require proper indemnity from the Trust for so acting. The
Trustee is required to employ a separate depository bank or banks as custodians
of the Trust's Gold and may not itself act as a custodian of the Trust's Gold
except under extraordinary circumstances. Should the Custodian fail to maintain
the insurance coverage required under the Trust Agreement or comparable
insurance, the Trustee is obligated promptly to obtain such insurance coverage
if it is reasonably available.
The Trustee is empowered under the Trust Agreement to incur expenses
necessary and advisable for the administration of the Trust and is entitled to
be reimbursed for them by the Trust unless reimbursed by some other source, and
is entitled to receive the fees described above. In addition, the Trustee is
empowered to sell Trust assets in order to make funds available to pay all
expenses, and to pay valid redemption requests.
Limitations on Liability of Trustee
Under the Trust Agreement, the Trustee is not liable or responsible in any
way for depreciation or loss incurred by reason of the disposition of any cash,
Gold or Units, or in respect of any valuation, or for any action taken in good
faith reliance on prima facie properly executed documents, except in cases of
its willful misfeasance, bad faith, gross negligence or reckless disregard of
its obligations and duties under the Trust Agreement. The Trustee is not
personally liable for any taxes or other governmental charges imposed upon, or
in respect of, the Trust.
<PAGE>
Succession of Trustee
If the Trustee becomes incapable of acting or becomes bankrupt or
insolvent, or if a receiver of the Trustee or its property is appointed, or if
its affairs are taken over by public authorities for the purpose of
rehabilitation, conservation or liquidation, or if the Trustee ceases to qualify
to act as such, the Sponsor may remove the Trustee and appoint a successor as
provided in the Trust Agreement. If the Trustee resigns (which the Trustee is
permitted to do under the Trust Agreement), the Sponsor is obligated to appoint
a successor as soon as possible. If upon resignation of the Trustee no successor
has been appointed and has accepted the appointment within thirty days after
notification, the retiring Trustee may apply to a court of competent
jurisdiction for the appointment of a successor.
The resignation or removal of the Trustee becomes effective only when the
successor accepts its appointment as such or when a court of competent
jurisdiction appoints a successor.
Item 11. Executive Compensation.
Inapplicable.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Inapplicable.
Item 13. Certain Relationships and Related Transactions.
Inapplicable.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) The following documents are filed as part of this report:
l. Financial Statements.
See the Annual Report to Unitholders starting on
the following page.
2. Financial Statement Schedules.
Inapplicable.
3. Exhibits.
See Item 14(c).
(b) Reports on Form 8-K.
None.
(c) Exhibits.
1. See Exhibits to Registrant's Registration
Statement on Form S-1, filed with the Commission
on September 1, 1987, and Amendments No. 1, 2 and
3 and Post-Effective Amendments No. 1, 2, 3, 4,
5, 6 and 7 thereto, filed with the Commission on
June 15, 1988, August 29, 1988, October 3, 1988,
December 29, 1988, March 30, 1990, March 25,
1991, March 31, 1992, March 31, 1993, March 31,
1994 and March 31, 1995, respectively, and
incorporated herein by this reference.
13. Annual Report to Unitholders.
24.1 Consent of Independent Auditors.
27.BP Financial Data Schedule for Bullion Portfolio.
27.CP Financial Data Schedule for Coin Portfolio.
(d) Financial Statement Schedules.
Inapplicable.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Unitholders, Trustee and Sponsor
United States Gold Trust
We have audited the accompanying statements of assets and liabilities of the
Bullion Portfolio and the Coin Portfolio, comprising United States Gold Trust,
as of December 31, 1996 and 1995, including the schedules of investments as of
December 31, 1996, and the related statements of operations and changes in net
assets for each of the three years in the period ended December 31, 1996 and the
selected per unit data and ratios for each of the years since 1992. These
financial statements and per unit data and ratios are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and per unit data and ratios based on our audits.
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 per unit data
and ratios 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 as of December
31, 1996 and 1995, by correspondence with the custodian. 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 selected per unit data and ratios
referred to above present fairly, in all material respects, the financial
position of the Bullion Portfolio and the Coin Portfolio, comprising United
States Gold Trust, at December 31, 1996 and 1995, the results of their
operations and changes in their net assets for each of the three years in the
period ended December 31, 1996 and the selected per unit data and ratios for
each of the years since 1992, in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Chicago, Illinois
March 24, 1997
<PAGE>
UNITED STATES GOLD TRUST
STATEMENTS OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
Bullion Portfolio Coin Portfolio
---------------------------- ---------------------------
December 31 December 31
---------------------------- ---------------------------
1996 1995 1996 1995
------------ ----------- ----------- -----------
ASSETS
<S> <C> <C> <C> <C>
Investments, at value
(based on bid side evaluation)
(cost: $2,092,158, $2,384,540,
$3,173,783 and $4,163,696,
respectively)
Gold Bullion $ 2,127,172 $ 2,530,281 $ - $ -
American Eagle Gold Coins - - 3,222,138 4,426,671
Cash 42,264 21,408 - -
------------ ----------- ----------- -----------
Total Assets 2,169,436 2,551,689 3,222,138 4,426,671
LIABILITIES
Bank overdraft - - 13,292 11,805
Payable to Sponsor 4,620 5,435 7,864 8,938
Payable to Trustee 2,500 2,718 3,932 4,469
Other accrued liabilities 1,338 2,707 4,560 4,606
----------- ----------- ----------- -----------
Total Liabilities 8,458 10,860 29,648 29,818
----------- ----------- ----------- -----------
NET ASSETS $ 2,160,978 $ 2,540,829 $ 3,192,490 $ 4,396,853
=========== =========== =========== ===========
INTEREST OF UNITHOLDERS
Outstanding Units 148,946 167,595 218,383 284,859
=========== =========== =========== ===========
Redemption Price per Unit
(based on bid side evaluation) $ 14.51 $ 15.16 $ 14.62 $ 15.44
=========== =========== =========== ===========
Calculation of Offering Price per Unit:
Aggregate offering side evaluation $ 2,174,810 $ 2,557,226 $ 3,230,141 $ 4,446,001
=========== =========== =========== ===========
Divided by outstanding Units $ 14.60 $ 15.26 $ 14.79 $ 15.61
Plus sales charge of 1.96% of Offering
Price (2% of net amount invested) .29 .30 .30 .31
----------- ----------- ----------- -----------
Offering Price per Unit $ 14.89 $ 15.56 $ 15.09 $ 15.92
=========== =========== =========== ===========
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
UNITED STATES GOLD TRUST
SCHEDULE OF INVESTMENTS
December 31, 1996
Bullion Portfolio
<CAPTION>
Net Weight Value
Refiner (Fine troy ounces) (based on bid side evaluation)
- --------------------- ------------------ ------------------------------
<S> <C> <C>
ASARCO 95.912 $ 35,401
CREDIT SUISSE 99.500 36,725
DEGUSSA 300.557 110,936
ENGELHARD 2,586.518 954,684
ENGELHARD LONDON 99.823 36,845
HANDY & HARTMAN 592.096 218,543
JOHNSON & MATTHEY 898.162 331,512
MATTHEY BISHOP, USA 199.562 73,658
PAMP-SUISSE 796.000 293,803
PMR 95.002 35,065
--------- -----------
Total (identified cost $2,092,158) 5,763.132 $ 2,127,172
========= ===========
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
UNITED STATES GOLD TRUST
SCHEDULE OF INVESTMENTS
December 31, 1996
Coin Portfolio
<CAPTION>
Value
Coins (based on bid side evaluation)
-------- ------------------------------
<S> <C> <C>
American Eagle gold coins, one ounce
(fine weight), $50 denomination
(identified cost $3,173,783) 8,557 $3,222,138
===== ==========
</TABLE>
See accompanying notes.
<PAGE>
UNITED STATES GOLD TRUST
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Bullion Portfolio Coin Portfolio
-------------------------------------------- ----------------------------------------
Year Ended December 31 Year Ended December 31
-------------------------------------------- ----------------------------------------
1996 1995 1994 1996 1995 1994
------------ ----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Expenses (Note 3):
Trustee fees $ 2,500 $ 2,718 $ 3,115 $ 3,932 $ 4,469 $ 4,927
Sponsor fees 4,620 5,435 6,230 7,864 8,938 9,854
Gold storage fees 3,090 3,530 4,022 5,163 5,642 6,218
Professional fees 4,500 4,500 4,350 4,500 4,500 4,350
Other 500 500 500 500 500 500
------------ ----------- ----------- ----------- ----------- ----------
Total expenses 15,210 16,683 18,217 21,959 24,049 25,849
Less: amount waived or
absorbed by Sponsor 6,829 6,655 6,852 7,694 7,554 7,870
------------ ----------- ----------- ----------- ----------- ----------
Net investment loss (8,381) (10,028) (11,365) (14,265) (16,495) (17,979)
Net realized and unrealized gain
(loss) on investments (Notes 5 & 6):
Net realized gain (loss)
on investments 21,678 15,677 (22,556) 53,901 7,137 (15,141)
Net change in unrealized
appreciation (depreciation)
on investments (110,727) 12,357 (33,917) (214,620) 54,399 (95,243)
------------ ----------- ----------- ----------- ----------- ----------
Net realized and unrealized
gain (loss) on investments (89,049) 28,034 (56,473) (160,719) 61,536 (110,384)
------------ ----------- ----------- ----------- ----------- ----------
Net increase (decrease) in net
assets resulting from operations $ (97,430) $ 18,006 $ (67,838) $ (174,984) $ 45,041 $ (128,363)
============ =========== =========== =========== =========== ==========
</TABLE>
See accompanying notes.
<PAGE>
UNITED STATES GOLD TRUST
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Bullion Portfolio Coin Portfolio
-------------------------------------------- -----------------------------------------
Year Ended December 31 Year Ended December 31
-------------------------------------------- -----------------------------------------
1996 1995 1994 1996 1995 1994
----------- ----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
From Operations
Net investment loss $ (8,381) $ (10,028) $ (11,365) $ (14,265) $ (16,495) $ (17,979)
Net realized gain (loss) on
investments 21,678 15,677 (22,556) 53,901 7,137 (15,141)
Net change in unrealized
appreciation (depreciation) on
investments (110,727) 12,357 (33,917) (214,620) 54,399 (95,243)
----------- ----------- ---------- ----------- ----------- -----------
Net increase (decrease) in net
assets resulting from
operations (97,430) 18,006 (67,838) (174,984) 45,041 (128,363)
From Unit Transactions
Issuance of 0; 0; 29,982; 0;
5,178 and 35,500 Units,
respectively - - 456,175 - 79,592 547,249
Redemption of 18,649; 34,578;
37,284; 66,476; 55,107 and
29,056 Units, respectively (282,421) (521,517) (577,059) (1,029,379) (849,127) (448,121)
----------- ----------- ---------- ----------- ----------- -----------
Net increase (decrease) in net
assets from Unit transactions (282,421) (521,517) (120,884) (1,029,379) (769,535) 99,128
----------- ----------- ---------- ----------- ----------- -----------
Net decrease in net
assets (379,851) (503,511) (188,722) (1,204,363) (724,494) (29,235)
Net assets at beginning of year 2,540,829 3,044,340 3,233,062 4,396,853 5,121,347 5,150,582
----------- ----------- ---------- ----------- ----------- -----------
Net assets at end of year
(including accumulated net
investment loss of $68,804;
$60,423; $50,395; $99,183;
$84,918 and $68,423,
respectively) $ 2,160,978 $ 2,540,829 $ 3,044,340 $ 3,192,490 $ 4,396,853 $ 5,121,347
=========== =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes.
<PAGE>
UNITED STATES GOLD TRUST
SELECTED PER UNIT DATA AND RATIOS
<TABLE>
<CAPTION>
Year Ended December 31 (a)(b)
------------------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992
-------------------- -------------------- -------------------- --------------------- -------------------
Bullion Coin Bullion Coin Bullion Coin Bullion Coin Bullion Coin
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of year $ 15.16 $ 15.44 $ 15.06 $ 15.30 $ 15.43 $ 15.69 $ 13.17 $ 13.41 $ 14.07 $ 14.32
Net investment loss (.05) (.05) (.05) (.05) (.05) (.05) (.05) (.05) (.05) (.05)
Net realized and
unrealized gain (loss)
on investments (.60) (.77) .15 .19 (.32) (.34) 2.31 2.33 (.85) (.86)
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------
Increase (decrease) in
net asset value (.65) (.82) .10 .14 (.37) (.39) 2.26 2.28 (.90) (.91)
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------
Net asset value at end
of year $ 14.51 $ 14.62 $ 15.16 $ 15.44 $ 15.06 $ 15.30 $ 15.43 $ 15.69 $ 13.17 $ 13.41
========= ========= ========= ========= ========= ========= ========= ========= ========= ========
Ratios to average net assets:
Expenses (c) .35% .35% .35% .35% .35% .35% .35% .35% .35% .35%
Net investment loss (c) (.35%) (.35%) (.35%) (.35%) (.35%) (.35%) (.35%) (.35%) (.35%) (.35%)
Investment turnover
rate None None None 1.69% 14.24% 9.70% 15.94% 9.83% None 6.68%
Number of Units outstanding
at end of year 148,946 218,383 167,595 284,859 202,173 334,788 209,475 328,344 181,907 294,082
Net assets at end of year
(in thousands) $ 2,161 $ 3,192 $ 2,541 $ 4,397 $ 3,044 $ 5,121 $ 3,233 $ 5,151 $ 2,396 $ 3,942
<FN>
Note:
(a) The selected per unit data was calculated using average net assets during
the year.
(b) The Trust's sole investment activity was to hold Gold, and the Trust had
no income.
(c) During the years ended December 31, 1996, 1995, 1994, 1993 and 1992, the
Sponsor reimbursed expenses totaling $6,829, $6,655, $6,852, $6,337 and
$6,216 for the Bullion Portfolio and $7,694, $7,554, $7,870, $7,212 and
$6,670 for the Coin Portfolio, respectively. Absent the foregoing, the
ratios of expenses to average net assets and the ratios of net investment
loss to average net assets would have increased to .64%, .58%, .56%, .59%
and .62% for the Bullion Portfolio and .54%, .51%, .50%, .51% and .52% for
the Coin Portfolio, respectively, for the years then ended.
</FN>
</TABLE>
<PAGE>
UNITED STATES GOLD TRUST
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
1. Description of the Trust
United States Gold Trust (the "Trust") is an investment trust established
under the laws of New York in accordance with an Agreement and Declaration
of Trust (the "Trust Agreement"), dated August 17, 1988, between Bullion
Security Corporation (the "Sponsor") and United States Trust Company of New
York (the "Trustee"). The Trust, which consists of a Bullion Portfolio and
a Coin Portfolio (the "Portfolios"), commenced investment operations on
August 18, 1988. On September 1, 1995, Chase Manhattan Bank, N.A. acquired
the securities processing business of the Trustee, including the rights and
obligations of the Trustee under the Trust Agreement. Other than the change
of the Trustee, no changes were made to the Trust Agreement or its
provisions in connection with its acquisition by Chase Manhattan Bank, N.A.
2. Significant accounting policies
Value is based on the dealer bid price for wholesale transactions at 2:30
p.m. Eastern Time.
On August 18, 1988, 25,000 Units of each Portfolio were issued to the
Sponsor in return for the deposit of gold bullion and American Eagle gold
coins by the Sponsor. Additional Units of each Portfolio may be issued, up
to a maximum aggregate of 1 million Units in each Portfolio, in exchange
for additional deposits of gold bullion and American Eagle gold coins by
the Sponsor. The deposits must be made so as not to vary the underlying
gold per Unit and net asset value per Unit of the respective Portfolio.
Cost to investors includes a sales charge computed at a rate of 1.96% of
the Offering Price (equivalent to 2% of the net amount invested). A
redeeming Unitholder may elect to be paid in cash at the Portfolio's
applicable redemption price, based on the dealer bid price for wholesale
transactions, or in kind. No commissions are charged on redemption
transactions. Organizational and offering costs in connection with the
formation of the Trust were borne by the Sponsor. On February 20, 1996, the
Sponsor decided to terminate the public offering of Units in the Trust.
Accordingly, there were no Units of either Portfolio issued to the Sponsor
in return for deposits of gold bullion and American Eagle gold coins by the
Sponsor during the year ended December 31, 1996.
3. Transactions with affiliates
Under the Trust Agreement, the Trustee is to receive a fee for its ordinary
services to the Trust, payable monthly from the assets of the Trust, at an
annual rate equal to .10% of each Portfolio's average daily net assets,
subject to a minimum fee at the rate of $2,500 per year for each Portfolio.
The Sponsor is to receive a fee, payable monthly from the assets of the
Trust, at an annual rate equal to .20% of each Portfolio's average daily
net assets. The Trust Agreement provides that, with respect to each
Portfolio, the Sponsor will reimburse the Trustee for each calendar year of
the Trust, up to 50% of the Sponsor's fee for the year, as may be needed to
reduce the annual expense ratio of the Portfolio to .35%. During 1996, 1995
and 1994, the Sponsor voluntarily reimbursed each Portfolio of the Trust
additional amounts in order to maintain its expense ratio at .35%. The
Sponsor may continue voluntarily to make such additional reimbursements,
although it is not required to do so.
Continued on following page.
<PAGE>
UNITED STATES GOLD TRUST
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
For the years ended December 31, 1996, 1995 and 1994, the Trust had no
income and made no distributions. Trustee fees, Sponsor fees and amounts
waived or absorbed by the Sponsor for the years then ended consisted of the
following:
<TABLE>
<CAPTION>
Bullion Portfolio Coin Portfolio
------------------------------------- -------------------------------------
1996 1995 1994 1996 1995 1994
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Trustee fees $ 2,500 $ 2,718 $ 3,115 $ 3,932 $ 4,469 $ 4,927
Sponsor fees 4,620 5,435 6,230 7,864 8,938 9,854
Amounts waived or absorbed
by the Sponsor 6,829 6,655 6,852 7,694 7,554 7,870
</TABLE>
Pursuant to an agreement between the Sponsor and World Money Securities,
Inc. ("WMS"), an affiliate of the Sponsor, WMS receives from the Sponsor a
commission equal to 1.96% of the Offering Price of each Unit sold by the
Trust. For the years ended December 31, 1996, 1995 and 1994, WMS received
commissions of $1,167, $2,760 and $17,630, respectively. The agreement was
terminated effective February 29, 1996 due to the liquidation of WMS.
4. Federal income taxes
The Trust has received a ruling from the Internal Revenue Service to the
effect that each Portfolio will be treated as a grantor trust for Federal
income tax purposes and not as an association taxable as a corporation. As
a grantor trust, each Portfolio will not be treated as a taxable entity;
instead, each Unitholder in a Portfolio will be treated as the owner of an
undivided interest in that Portfolio equal to the Unitholder's pro rata
portion of that Portfolio's assets.
5. Investments
Purchases and cost of sales of investments and redemptions in-kind for the
years ended December 31 were as follows:
<TABLE>
<CAPTION>
Bullion Portfolio Coin Portfolio
------------------------------------- -------------------------------------
1996 1995 1994 1996 1995 1994
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Purchases $ - $ - $458,922 $ - $ 78,860 $551,060
Sales 292,382 121,494 398,769 468,043 75,880 76,934
Redemptions in-kind - 403,791 239,025 521,870 777,086 420,310
</TABLE>
For the years ended December 31, 1996, 1995 and 1994, the Bullion Portfolio
incurred net realized gains of $0 and $14,041 and a net realized loss of
$9,492, respectively, and the Coin Portfolio incurred net realized gains of
$34,509 and $1,928 and a net realized loss of $16,967, respectively, for
redemptions in-kind. For the years ended December 31, 1996, 1995 and 1994,
the Bullion Portfolio incurred net realized gains of $21,678 and $1,636 and
a net realized loss of $13,064, respectively, and the Coin Portfolio
incurred net realized gains of $19,392, $5,209 and $1,826, respectively, on
the sale of investments. The realized gain or loss for Federal income tax
purposes is recognized only upon the sale of gold bullion or American Eagle
gold coins, either by the Trust (in which case the gain or loss would be
allocated to all Unitholders) or by a redeeming Unitholder who elects an
in-kind distribution (in which case any gain or loss would be that of the
redeeming Unitholder at the time of ultimate sale).
Continued on following page.
<PAGE>
UNITED STATES GOLD TRUST
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
Based on the cost of investments of $2,092,158 and $2,384,540 for the
Bullion Portfolio and $3,173,783 and $4,163,696 for the Coin Portfolio for
Federal income tax purposes at December 31, 1996 and 1995, respectively,
the aggregate gross and net unrealized appreciation of investments were
$35,014 and $145,741 for the Bullion Portfolio and $48,355 and $262,975 for
the Coin Portfolio, respectively.
6. Composition of net assets
At December 31 net assets consisted of the following:
<TABLE>
<CAPTION>
Bullion Portfolio Coin Portfolio
------------------------------- -------------------------------
1996 1995 1996 1995
-------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
ASSETS
Cost of investments $ 2,092,158 $ 2,384,540 $ 3,173,783 $ 4,163,696
Net unrealized appreciation
of investments 35,014 145,741 48,355 262,975
Accumulated assets (liabilities)
in excess of Trust (liabilities)
assets other than investments 33,806 10,548 (29,648) (29,818)
-------------- -------------- -------------- -------------
$ 2,160,978 $ 2,540,829 $ 3,192,490 $ 4,396,853
============== ============== ============== =============
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, the Registrant has duly caused this
Report to be signed on its behalf by the undersigned thereunto duly authorized.
Dated: March 27, 1997 UNITED STATES GOLD TRUST
----------------------------------------------
By BULLION SECURITY CORPORATION, its SPONSOR
By TERRY COXON
--------------------------------------------
Terry Coxon, President
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this Report has been signed below by the following persons in the
capacities indicated on March 27, 1997.
Signature Title
President and Director of
TERRY COXON Bullion Security Corporation
- ----------------------------- (principal executive officer)
TERRY COXON
MICHAEL J. CUGGINO Treasurer of Bullion Security Corporation
- ----------------------------- (principal financial and accounting officer)
MICHAEL J. CUGGINO
REPORT OF INDEPENDENT AUDITORS
Unitholders, Trustee and Sponsor
United States Gold Trust
We have audited the accompanying statements of assets and liabilities of the
Bullion Portfolio and the Coin Portfolio, comprising United States Gold Trust,
as of December 31, 1996 and 1995, including the schedules of investments as of
December 31, 1996, and the related statements of operations and changes in net
assets for each of the three years in the period ended December 31, 1996 and the
selected per unit data and ratios for each of the years since 1992. These
financial statements and per unit data and ratios are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and per unit data and ratios based on our audits.
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 per unit data
and ratios 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 as of December
31, 1996 and 1995, by correspondence with the custodian. 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 selected per unit data and ratios
referred to above present fairly, in all material respects, the financial
position of the Bullion Portfolio and the Coin Portfolio, comprising United
States Gold Trust, at December 31, 1996 and 1995, the results of their
operations and changes in their net assets for each of the three years in the
period ended December 31, 1996 and the selected per unit data and ratios for
each of the years since 1992, in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Chicago, Illinois
March 24, 1997
<PAGE>
UNITED STATES GOLD TRUST
STATEMENTS OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
Bullion Portfolio Coin Portfolio
---------------------------- ---------------------------
December 31 December 31
---------------------------- ---------------------------
1996 1995 1996 1995
------------ ----------- ----------- -----------
ASSETS
<S> <C> <C> <C> <C>
Investments, at value
(based on bid side evaluation)
(cost: $2,092,158, $2,384,540,
$3,173,783 and $4,163,696,
respectively)
Gold Bullion $ 2,127,172 $ 2,530,281 $ - $ -
American Eagle Gold Coins - - 3,222,138 4,426,671
Cash 42,264 21,408 - -
------------ ----------- ----------- -----------
Total Assets 2,169,436 2,551,689 3,222,138 4,426,671
LIABILITIES
Bank overdraft - - 13,292 11,805
Payable to Sponsor 4,620 5,435 7,864 8,938
Payable to Trustee 2,500 2,718 3,932 4,469
Other accrued liabilities 1,338 2,707 4,560 4,606
----------- ----------- ----------- -----------
Total Liabilities 8,458 10,860 29,648 29,818
----------- ----------- ----------- -----------
NET ASSETS $ 2,160,978 $ 2,540,829 $ 3,192,490 $ 4,396,853
=========== =========== =========== ===========
INTEREST OF UNITHOLDERS
Outstanding Units 148,946 167,595 218,383 284,859
=========== =========== =========== ===========
Redemption Price per Unit
(based on bid side evaluation) $ 14.51 $ 15.16 $ 14.62 $ 15.44
=========== =========== =========== ===========
Calculation of Offering Price per Unit:
Aggregate offering side evaluation $ 2,174,810 $ 2,557,226 $ 3,230,141 $ 4,446,001
=========== =========== =========== ===========
Divided by outstanding Units $ 14.60 $ 15.26 $ 14.79 $ 15.61
Plus sales charge of 1.96% of Offering
Price (2% of net amount invested) .29 .30 .30 .31
----------- ----------- ----------- -----------
Offering Price per Unit $ 14.89 $ 15.56 $ 15.09 $ 15.92
=========== =========== =========== ===========
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
UNITED STATES GOLD TRUST
SCHEDULE OF INVESTMENTS
December 31, 1996
Bullion Portfolio
<CAPTION>
Net Weight Value
Refiner (Fine troy ounces) (based on bid side evaluation)
- --------------------- ------------------ ------------------------------
<S> <C> <C>
ASARCO 95.912 $ 35,401
CREDIT SUISSE 99.500 36,725
DEGUSSA 300.557 110,936
ENGELHARD 2,586.518 954,684
ENGELHARD LONDON 99.823 36,845
HANDY & HARTMAN 592.096 218,543
JOHNSON & MATTHEY 898.162 331,512
MATTHEY BISHOP, USA 199.562 73,658
PAMP-SUISSE 796.000 293,803
PMR 95.002 35,065
--------- -----------
Total (identified cost $2,092,158) 5,763.132 $ 2,127,172
========= ===========
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
UNITED STATES GOLD TRUST
SCHEDULE OF INVESTMENTS
December 31, 1996
Coin Portfolio
<CAPTION>
Value
Coins (based on bid side evaluation)
-------- ------------------------------
<S> <C> <C>
American Eagle gold coins, one ounce
(fine weight), $50 denomination
(identified cost $3,173,783) 8,557 $3,222,138
===== ==========
</TABLE>
See accompanying notes.
<PAGE>
UNITED STATES GOLD TRUST
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Bullion Portfolio Coin Portfolio
-------------------------------------------- ----------------------------------------
Year Ended December 31 Year Ended December 31
-------------------------------------------- ----------------------------------------
1996 1995 1994 1996 1995 1994
------------ ----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Expenses (Note 3):
Trustee fees $ 2,500 $ 2,718 $ 3,115 $ 3,932 $ 4,469 $ 4,927
Sponsor fees 4,620 5,435 6,230 7,864 8,938 9,854
Gold storage fees 3,090 3,530 4,022 5,163 5,642 6,218
Professional fees 4,500 4,500 4,350 4,500 4,500 4,350
Other 500 500 500 500 500 500
------------ ----------- ----------- ----------- ----------- ----------
Total expenses 15,210 16,683 18,217 21,959 24,049 25,849
Less: amount waived or
absorbed by Sponsor 6,829 6,655 6,852 7,694 7,554 7,870
------------ ----------- ----------- ----------- ----------- ----------
Net investment loss (8,381) (10,028) (11,365) (14,265) (16,495) (17,979)
Net realized and unrealized gain
(loss) on investments (Notes 5 & 6):
Net realized gain (loss)
on investments 21,678 15,677 (22,556) 53,901 7,137 (15,141)
Net change in unrealized
appreciation (depreciation)
on investments (110,727) 12,357 (33,917) (214,620) 54,399 (95,243)
------------ ----------- ----------- ----------- ----------- ----------
Net realized and unrealized
gain (loss) on investments (89,049) 28,034 (56,473) (160,719) 61,536 (110,384)
------------ ----------- ----------- ----------- ----------- ----------
Net increase (decrease) in net
assets resulting from operations $ (97,430) $ 18,006 $ (67,838) $ (174,984) $ 45,041 $ (128,363)
============ =========== =========== =========== =========== ==========
</TABLE>
See accompanying notes.
<PAGE>
UNITED STATES GOLD TRUST
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Bullion Portfolio Coin Portfolio
-------------------------------------------- -----------------------------------------
Year Ended December 31 Year Ended December 31
-------------------------------------------- -----------------------------------------
1996 1995 1994 1996 1995 1994
----------- ----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
From Operations
Net investment loss $ (8,381) $ (10,028) $ (11,365) $ (14,265) $ (16,495) $ (17,979)
Net realized gain (loss) on
investments 21,678 15,677 (22,556) 53,901 7,137 (15,141)
Net change in unrealized
appreciation (depreciation) on
investments (110,727) 12,357 (33,917) (214,620) 54,399 (95,243)
----------- ----------- ---------- ----------- ----------- -----------
Net increase (decrease) in net
assets resulting from
operations (97,430) 18,006 (67,838) (174,984) 45,041 (128,363)
From Unit Transactions
Issuance of 0; 0; 29,982; 0;
5,178 and 35,500 Units,
respectively - - 456,175 - 79,592 547,249
Redemption of 18,649; 34,578;
37,284; 66,476; 55,107 and
29,056 Units, respectively (282,421) (521,517) (577,059) (1,029,379) (849,127) (448,121)
----------- ----------- ---------- ----------- ----------- -----------
Net increase (decrease) in net
assets from Unit transactions (282,421) (521,517) (120,884) (1,029,379) (769,535) 99,128
----------- ----------- ---------- ----------- ----------- -----------
Net decrease in net
assets (379,851) (503,511) (188,722) (1,204,363) (724,494) (29,235)
Net assets at beginning of year 2,540,829 3,044,340 3,233,062 4,396,853 5,121,347 5,150,582
----------- ----------- ---------- ----------- ----------- -----------
Net assets at end of year
(including accumulated net
investment loss of $68,804;
$60,423; $50,395; $99,183;
$84,918 and $68,423,
respectively) $ 2,160,978 $ 2,540,829 $ 3,044,340 $ 3,192,490 $ 4,396,853 $ 5,121,347
=========== =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes.
<PAGE>
UNITED STATES GOLD TRUST
SELECTED PER UNIT DATA AND RATIOS
<TABLE>
<CAPTION>
Year Ended December 31 (a)(b)
------------------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992
-------------------- -------------------- -------------------- --------------------- -------------------
Bullion Coin Bullion Coin Bullion Coin Bullion Coin Bullion Coin
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of year $ 15.16 $ 15.44 $ 15.06 $ 15.30 $ 15.43 $ 15.69 $ 13.17 $ 13.41 $ 14.07 $ 14.32
Net investment loss (.05) (.05) (.05) (.05) (.05) (.05) (.05) (.05) (.05) (.05)
Net realized and
unrealized gain (loss)
on investments (.60) (.77) .15 .19 (.32) (.34) 2.31 2.33 (.85) (.86)
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------
Increase (decrease) in
net asset value (.65) (.82) .10 .14 (.37) (.39) 2.26 2.28 (.90) (.91)
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------
Net asset value at end
of year $ 14.51 $ 14.62 $ 15.16 $ 15.44 $ 15.06 $ 15.30 $ 15.43 $ 15.69 $ 13.17 $ 13.41
========= ========= ========= ========= ========= ========= ========= ========= ========= ========
Ratios to average net assets:
Expenses (c) .35% .35% .35% .35% .35% .35% .35% .35% .35% .35%
Net investment loss (c) (.35%) (.35%) (.35%) (.35%) (.35%) (.35%) (.35%) (.35%) (.35%) (.35%)
Investment turnover
rate None None None 1.69% 14.24% 9.70% 15.94% 9.83% None 6.68%
Number of Units outstanding
at end of year 148,946 218,383 167,595 284,859 202,173 334,788 209,475 328,344 181,907 294,082
Net assets at end of year
(in thousands) $ 2,161 $ 3,192 $ 2,541 $ 4,397 $ 3,044 $ 5,121 $ 3,233 $ 5,151 $ 2,396 $ 3,942
<FN>
Note:
(a) The selected per unit data was calculated using average net assets during
the year.
(b) The Trust's sole investment activity was to hold Gold, and the Trust had
no income.
(c) During the years ended December 31, 1996, 1995, 1994, 1993 and 1992, the
Sponsor reimbursed expenses totaling $6,829, $6,655, $6,852, $6,337 and
$6,216 for the Bullion Portfolio and $7,694, $7,554, $7,870, $7,212 and
$6,670 for the Coin Portfolio, respectively. Absent the foregoing, the
ratios of expenses to average net assets and the ratios of net investment
loss to average net assets would have increased to .64%, .58%, .56%, .59%
and .62% for the Bullion Portfolio and .54%, .51%, .50%, .51% and .52% for
the Coin Portfolio, respectively, for the years then ended.
</FN>
</TABLE>
<PAGE>
UNITED STATES GOLD TRUST
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
1. Description of the Trust
United States Gold Trust (the "Trust") is an investment trust established
under the laws of New York in accordance with an Agreement and Declaration
of Trust (the "Trust Agreement"), dated August 17, 1988, between Bullion
Security Corporation (the "Sponsor") and United States Trust Company of New
York (the "Trustee"). The Trust, which consists of a Bullion Portfolio and
a Coin Portfolio (the "Portfolios"), commenced investment operations on
August 18, 1988. On September 1, 1995, Chase Manhattan Bank, N.A. acquired
the securities processing business of the Trustee, including the rights and
obligations of the Trustee under the Trust Agreement. Other than the change
of the Trustee, no changes were made to the Trust Agreement or its
provisions in connection with its acquisition by Chase Manhattan Bank, N.A.
2. Significant accounting policies
Value is based on the dealer bid price for wholesale transactions at 2:30
p.m. Eastern Time.
On August 18, 1988, 25,000 Units of each Portfolio were issued to the
Sponsor in return for the deposit of gold bullion and American Eagle gold
coins by the Sponsor. Additional Units of each Portfolio may be issued, up
to a maximum aggregate of 1 million Units in each Portfolio, in exchange
for additional deposits of gold bullion and American Eagle gold coins by
the Sponsor. The deposits must be made so as not to vary the underlying
gold per Unit and net asset value per Unit of the respective Portfolio.
Cost to investors includes a sales charge computed at a rate of 1.96% of
the Offering Price (equivalent to 2% of the net amount invested). A
redeeming Unitholder may elect to be paid in cash at the Portfolio's
applicable redemption price, based on the dealer bid price for wholesale
transactions, or in kind. No commissions are charged on redemption
transactions. Organizational and offering costs in connection with the
formation of the Trust were borne by the Sponsor. On February 20, 1996, the
Sponsor decided to terminate the public offering of Units in the Trust.
Accordingly, there were no Units of either Portfolio issued to the Sponsor
in return for deposits of gold bullion and American Eagle gold coins by the
Sponsor during the year ended December 31, 1996.
3. Transactions with affiliates
Under the Trust Agreement, the Trustee is to receive a fee for its ordinary
services to the Trust, payable monthly from the assets of the Trust, at an
annual rate equal to .10% of each Portfolio's average daily net assets,
subject to a minimum fee at the rate of $2,500 per year for each Portfolio.
The Sponsor is to receive a fee, payable monthly from the assets of the
Trust, at an annual rate equal to .20% of each Portfolio's average daily
net assets. The Trust Agreement provides that, with respect to each
Portfolio, the Sponsor will reimburse the Trustee for each calendar year of
the Trust, up to 50% of the Sponsor's fee for the year, as may be needed to
reduce the annual expense ratio of the Portfolio to .35%. During 1996, 1995
and 1994, the Sponsor voluntarily reimbursed each Portfolio of the Trust
additional amounts in order to maintain its expense ratio at .35%. The
Sponsor may continue voluntarily to make such additional reimbursements,
although it is not required to do so.
Continued on following page.
<PAGE>
UNITED STATES GOLD TRUST
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
For the years ended December 31, 1996, 1995 and 1994, the Trust had no
income and made no distributions. Trustee fees, Sponsor fees and amounts
waived or absorbed by the Sponsor for the years then ended consisted of the
following:
<TABLE>
<CAPTION>
Bullion Portfolio Coin Portfolio
------------------------------------- -------------------------------------
1996 1995 1994 1996 1995 1994
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Trustee fees $ 2,500 $ 2,718 $ 3,115 $ 3,932 $ 4,469 $ 4,927
Sponsor fees 4,620 5,435 6,230 7,864 8,938 9,854
Amounts waived or absorbed
by the Sponsor 6,829 6,655 6,852 7,694 7,554 7,870
</TABLE>
Pursuant to an agreement between the Sponsor and World Money Securities,
Inc. ("WMS"), an affiliate of the Sponsor, WMS receives from the Sponsor a
commission equal to 1.96% of the Offering Price of each Unit sold by the
Trust. For the years ended December 31, 1996, 1995 and 1994, WMS received
commissions of $1,167, $2,760 and $17,630, respectively. The agreement was
terminated effective February 29, 1996 due to the liquidation of WMS.
4. Federal income taxes
The Trust has received a ruling from the Internal Revenue Service to the
effect that each Portfolio will be treated as a grantor trust for Federal
income tax purposes and not as an association taxable as a corporation. As
a grantor trust, each Portfolio will not be treated as a taxable entity;
instead, each Unitholder in a Portfolio will be treated as the owner of an
undivided interest in that Portfolio equal to the Unitholder's pro rata
portion of that Portfolio's assets.
5. Investments
Purchases and cost of sales of investments and redemptions in-kind for the
years ended December 31 were as follows:
<TABLE>
<CAPTION>
Bullion Portfolio Coin Portfolio
------------------------------------- -------------------------------------
1996 1995 1994 1996 1995 1994
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Purchases $ - $ - $458,922 $ - $ 78,860 $551,060
Sales 292,382 121,494 398,769 468,043 75,880 76,934
Redemptions in-kind - 403,791 239,025 521,870 777,086 420,310
</TABLE>
For the years ended December 31, 1996, 1995 and 1994, the Bullion Portfolio
incurred net realized gains of $0 and $14,041 and a net realized loss of
$9,492, respectively, and the Coin Portfolio incurred net realized gains of
$34,509 and $1,928 and a net realized loss of $16,967, respectively, for
redemptions in-kind. For the years ended December 31, 1996, 1995 and 1994,
the Bullion Portfolio incurred net realized gains of $21,678 and $1,636 and
a net realized loss of $13,064, respectively, and the Coin Portfolio
incurred net realized gains of $19,392, $5,209 and $1,826, respectively, on
the sale of investments. The realized gain or loss for Federal income tax
purposes is recognized only upon the sale of gold bullion or American Eagle
gold coins, either by the Trust (in which case the gain or loss would be
allocated to all Unitholders) or by a redeeming Unitholder who elects an
in-kind distribution (in which case any gain or loss would be that of the
redeeming Unitholder at the time of ultimate sale).
Continued on following page.
<PAGE>
UNITED STATES GOLD TRUST
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
Based on the cost of investments of $2,092,158 and $2,384,540 for the
Bullion Portfolio and $3,173,783 and $4,163,696 for the Coin Portfolio for
Federal income tax purposes at December 31, 1996 and 1995, respectively,
the aggregate gross and net unrealized appreciation of investments were
$35,014 and $145,741 for the Bullion Portfolio and $48,355 and $262,975 for
the Coin Portfolio, respectively.
6. Composition of net assets
At December 31 net assets consisted of the following:
<TABLE>
<CAPTION>
Bullion Portfolio Coin Portfolio
------------------------------- -------------------------------
1996 1995 1996 1995
-------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
ASSETS
Cost of investments $ 2,092,158 $ 2,384,540 $ 3,173,783 $ 4,163,696
Net unrealized appreciation
of investments 35,014 145,741 48,355 262,975
Accumulated assets (liabilities)
in excess of Trust (liabilities)
assets other than investments 33,806 10,548 (29,648) (29,818)
-------------- -------------- -------------- -------------
$ 2,160,978 $ 2,540,829 $ 3,192,490 $ 4,396,853
============== ============== ============== =============
</TABLE>
<PAGE>
Trustee UNITED STATES
Chase Manhattan Bank, N.A. GOLD TRUST
770 Broadway
New York, New York 10003
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
Wilmington Trust Company
Rodney Square North including
Wilmington, Delaware 19890
the Bullion Portfolio
Sponsor
Bullion Security Corporation and
625 Second Street
Petaluma, California 94952 the Coin Portfolio
Independent Auditors
Ernst & Young LLP
Sears Tower
233 South Wacker Drive
Chicago, Illinois 60606
Investor's Information Office
207 Jefferson Square
Austin, Texas 78763 ANNUAL REPORT
1-800-531-5142 Nationwide December 31, 1996
Local or Foreign 1-512-453-7558
Telecopier 1-512-453-2015
EXHIBIT 24.1
CONSENT OF INDEPENDENT AUDITORS
-------------------------------
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of United States Gold Trust of our report dated March 24, 1997, included in the
Annual Report of United States Gold Trust.
ERNST & YOUND LLP
Chicago, Illinois
March 24, 1997
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NAME> BULLION PORTFOLIO
<NUMBER> 001
<S> <C>
<MULTIPLIER> 1
<CURRENCY> 1
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 2,092,158
<INVESTMENTS-AT-VALUE> 2,127,172
<RECEIVABLES> 0
<ASSETS-OTHER> 42,264
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,169,436
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 8,458
<TOTAL-LIABILITIES> 8,458
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 148,946
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