UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES
INVESTMENT COMPANY ACT FILE NUMBER 811-1800
U.S. GLOBAL INVESTORS FUNDS
7900 CALLAGHAN ROAD
SAN ANTONIO, TX 78229
(Address of principal executive offices) (Zip code)
SUSAN B. MCGEE, ESQ.
7900 CALLAGHAN ROAD
SAN ANTONIO, TX 78229
(Name and address of agent for service)
Registrant's telephone number, including area code: 210-308-1234
Date of fiscal year end: DECEMBER 31, 2008
Date of reporting period: DECEMBER 31, 2008
ITEM 1. REPORTS TO STOCKHOLDERS.
U.S. GLOBAL INVESTORS FUNDS
ANNUAL REPORT
DECEMBER 31, 2008
TABLE OF CONTENTS
LETTER TO SHAREHOLDERS 1
MANAGEMENT TEAMS' PERSPECTIVES 10
EXPENSE EXAMPLE 69
PORTFOLIOS OF INVESTMENTS 72
NOTES TO PORTFOLIOS OF INVESTMENTS 133
STATEMENTS OF ASSETS AND LIABILITIES 140
STATEMENTS OF OPERATIONS 146
STATEMENTS OF CHANGES IN NET ASSETS 156
NOTES TO FINANCIAL STATEMENTS 165
FINANCIAL HIGHLIGHTS 182
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM 195
TRUSTEES AND OFFICERS 196
ADDITIONAL INFORMATION 199
NASDAQ SYMBOLS
U.S. GLOBAL INVESTORS FUNDS
- ---------------------------
U.S. TREASURY SECURITIES CASH FUND USTXX
U.S. GOVERNMENT SECURITIES SAVINGS FUND UGSXX
NEAR-TERM TAX FREE FUND NEARX
TAX FREE FUND USUTX
ALL AMERICAN EQUITY FUND GBTFX
HOLMES GROWTH FUND ACBGX
GLOBAL MEGATRENDS FUND MEGAX
GLOBAL RESOURCES FUND PSPFX
WORLD PRECIOUS MINERALS FUND UNWPX
GOLD AND PRECIOUS METALS FUND USERX
EASTERN EUROPEAN FUND EUROX
GLOBAL EMERGING MARKETS FUND GEMFX
CHINA REGION FUND USCOX
[USGI Logo]
P.O. Box 781234
San Antonio, Texas 78278-1234
Tel 1.800.US.FUNDS
Fax 1.210.308.1217
www.usfunds.com
U.S. GLOBAL INVESTORS FUNDS
DEAR SHAREHOLDER:
The famous author E.L. Doctorow once described the
process of writing a book: "It's like driving at [PHOTO]
night. You never see further than your headlights,
but you can make the whole trip that way."
That's also an appropriate way to describe the process of investing
during the darkest and most treacherous markets since the early
1930s. The past year has been a challenge that we have met by
striving to look as far forward as we could see and then adjusting
the wheel as needed to keep ourselves on the road.
The U.S. Global Investors Funds were not immune from the pain that
plagued domestic and global markets in 2008. Every time it looked
like things couldn't get any worse, another dose of dismal news
would drive the markets down another notch.
The United States spent the year in a recession that officially
began in December 2007, and much of Europe and Asia was in official
or de facto recession. China's phenomenal growth slowed
considerably, as did that of the other BRIC nations of Brazil,
Russia and India. The credit crisis arising from the subprime debt
catastrophe took down many formidable companies in the financial
world - Bear Stearns, Lehman Brothers, Merrill Lynch - and left
others badly wounded. Forced de-leveraging by banks, hedge funds and
others cratered stock markets, while in Detroit, the economic
slowdown and high gas prices in place most of the year left the
American auto industry languishing on life support.
Plunging oil prices in the second half of 2008 brought some relief
and governments around the world pumped out hundreds of billions of
dollars in economic stimulus spending to try to reverse the global
downturn, but that didn't stop U.S. unemployment from climbing to a
multi-year high, consumer confidence from dropping to a multi-decade
low and housing prices from continuing their freefall.
1
U.S. GLOBAL INVESTORS FUNDS
[S&P 500 INDEX VS. MSCI EMERGING MARKETS INDEX
(DEC 31, 2007 TO DEC 31, 2008) chart]
MSCI
Emerging
Date S&P 500 Markets
---- ------- -------
% Change in Index Level
12/31/2008 -38.91 -54.53
12/30/2008 -39.76 -54.63
12/29/2008 -41.20 -55.30
12/26/2008 -40.97 -55.77
12/25/2008 -41.28 -55.70
12/24/2008 -41.28 -55.60
12/23/2008 -41.62 -55.43
12/22/2008 -41.05 -54.51
12/19/2008 -39.95 -53.33
12/18/2008 -40.12 -52.67
12/17/2008 -38.83 -53.00
12/16/2008 -38.24 -54.14
12/15/2008 -41.25 -54.88
12/12/2008 -40.50 -55.76
12/11/2008 -40.91 -54.38
12/10/2008 -39.18 -54.90
12/9/2008 -39.89 -56.89
12/8/2008 -38.47 -56.93
12/5/2008 -40.75 -60.11
12/4/2008 -42.83 -59.76
12/3/2008 -41.11 -59.63
12/2/2008 -42.59 -59.81
12/1/2008 -44.79 -58.83
11/28/2008 -39.38 -57.74
11/27/2008 -39.96 -57.83
11/26/2008 -39.96 -58.84
11/25/2008 -42.01 -59.88
11/24/2008 -42.39 -61.07
11/21/2008 -45.89 -62.50
11/20/2008 -49.11 -62.77
11/19/2008 -45.45 -60.74
11/18/2008 -41.89 -59.87
11/17/2008 -42.46 -58.30
11/14/2008 -40.93 -57.48
11/13/2008 -38.36 -57.97
11/12/2008 -42.35 -57.22
11/11/2008 -39.20 -55.45
11/10/2008 -37.83 -53.25
11/7/2008 -37.03 -54.71
11/6/2008 -38.80 -55.28
11/5/2008 -35.56 -51.87
11/4/2008 -31.97 -51.64
11/3/2008 -34.64 -53.14
10/31/2008 -34.48 -54.25
10/30/2008 -35.47 -54.99
10/29/2008 -37.09 -59.30
10/28/2008 -36.39 -61.11
10/27/2008 -42.58 -63.57
10/24/2008 -40.70 -61.99
10/23/2008 -38.58 -58.76
10/22/2008 -39.34 -57.12
10/21/2008 -35.40 -53.47
10/20/2008 -33.35 -52.64
10/17/2008 -36.38 -54.46
10/16/2008 -35.99 -53.77
10/15/2008 -38.60 -50.02
10/14/2008 -32.50 -45.97
10/13/2008 -32.14 -49.03
10/10/2008 -39.18 -52.54
10/9/2008 -38.46 -50.37
10/8/2008 -33.38 -51.42
10/7/2008 -32.62 -47.15
10/6/2008 -28.52 -46.18
10/3/2008 -25.65 -40.52
10/2/2008 -24.63 -39.10
10/1/2008 -21.47 -36.96
9/30/2008 -21.11 -36.90
9/29/2008 -25.17 -37.85
9/26/2008 -17.96 -33.95
9/25/2008 -18.22 -32.78
9/24/2008 -19.79 -33.34
9/23/2008 -19.63 -33.42
9/22/2008 -18.36 -31.48
9/19/2008 -15.11 -32.20
9/18/2008 -18.40 -38.43
9/17/2008 -21.79 -38.34
9/16/2008 -17.92 -37.08
9/15/2008 -19.33 -33.82
9/12/2008 -15.34 -31.40
9/11/2008 -15.52 -32.66
9/10/2008 -16.67 -31.12
9/9/2008 -17.18 -30.35
9/8/2008 -14.25 -27.63
9/5/2008 -15.97 -29.94
9/4/2008 -16.35 -28.37
9/3/2008 -13.76 -26.87
9/2/2008 -13.59 -25.54
9/1/2008 -13.23 -25.05
8/29/2008 -13.23 -23.32
8/28/2008 -12.03 -23.26
8/27/2008 -13.31 -23.52
8/26/2008 -14.00 -24.74
8/25/2008 -14.32 -23.80
8/22/2008 -12.60 -23.32
8/21/2008 -13.58 -23.25
8/20/2008 -13.79 -22.90
8/19/2008 -14.33 -24.39
8/18/2008 -13.52 -23.01
8/15/2008 -12.19 -22.07
8/14/2008 -12.55 -21.10
8/13/2008 -13.03 -21.91
8/12/2008 -12.78 -21.21
8/11/2008 -11.71 -20.57
8/8/2008 -12.32 -20.61
8/7/2008 -14.37 -19.16
8/6/2008 -12.80 -18.84
8/5/2008 -13.10 -19.85
8/4/2008 -15.52 -19.14
8/1/2008 -14.76 -17.42
7/31/2008 -14.28 -16.46
7/30/2008 -13.14 -16.69
7/29/2008 -14.56 -18.55
7/28/2008 -16.51 -17.86
7/25/2008 -14.93 -17.85
7/24/2008 -15.28 -16.38
7/23/2008 -13.28 -15.81
7/22/2008 -13.63 -16.95
7/21/2008 -14.78 -16.48
7/18/2008 -14.73 -18.04
7/17/2008 -14.76 -17.29
7/16/2008 -15.77 -18.54
7/15/2008 -17.83 -18.52
7/14/2008 -16.92 -16.36
7/11/2008 -16.17 -16.36
7/10/2008 -15.22 -16.88
7/9/2008 -15.81 -16.85
7/8/2008 -13.85 -18.00
7/7/2008 -15.30 -16.74
7/4/2008 -14.58 -17.38
7/3/2008 -14.58 -17.13
7/2/2008 -14.68 -15.23
7/1/2008 -13.09 -14.30
6/30/2008 -13.43 -12.83
6/27/2008 -13.53 -13.01
6/26/2008 -13.21 -11.82
6/25/2008 -10.59 -11.30
6/24/2008 -11.11 -12.47
6/23/2008 -10.85 -11.82
6/20/2008 -10.86 -10.95
6/19/2008 -9.18 -9.65
6/18/2008 -9.52 -8.68
6/17/2008 -8.63 -8.28
6/16/2008 -8.00 -9.15
6/13/2008 -8.01 -10.19
6/12/2008 -9.38 -9.94
6/11/2008 -9.67 -9.27
6/10/2008 -8.12 -8.74
6/9/2008 -7.90 -6.38
6/6/2008 -7.97 -5.15
6/5/2008 -5.03 -5.02
6/4/2008 -6.85 -5.90
6/3/2008 -6.82 -4.53
6/2/2008 -6.28 -3.15
5/30/2008 -5.28 -2.97
5/29/2008 -5.43 -3.63
5/28/2008 -5.93 -4.14
5/27/2008 -6.30 -4.42
5/26/2008 -6.94 -4.31
5/23/2008 -6.94 -3.14
5/22/2008 -5.69 -2.01
5/21/2008 -5.94 -1.12
5/20/2008 -4.40 -1.07
5/19/2008 -3.51 0.21
5/16/2008 -3.59 -0.54
5/15/2008 -3.71 -2.06
5/14/2008 -4.72 -3.17
5/13/2008 -5.10 -3.33
5/12/2008 -5.07 -4.25
5/9/2008 -6.10 -4.69
5/8/2008 -5.47 -4.06
5/7/2008 -5.81 -3.29
5/6/2008 -4.07 -2.54
5/5/2008 -4.80 -2.99
5/2/2008 -4.37 -3.18
5/1/2008 -4.68 -4.35
4/30/2008 -6.28 -4.45
4/29/2008 -5.92 -5.36
4/28/2008 -5.55 -4.23
4/25/2008 -5.45 -4.66
4/24/2008 -6.06 -4.80
4/23/2008 -6.67 -4.41
4/22/2008 -6.94 -4.60
4/21/2008 -6.11 -4.82
4/18/2008 -5.96 -5.71
4/17/2008 -7.64 -5.84
4/16/2008 -7.70 -6.58
4/15/2008 -9.74 -7.72
4/14/2008 -10.16 -8.16
4/11/2008 -9.85 -6.95
4/10/2008 -7.98 -7.08
4/9/2008 -8.39 -7.75
4/8/2008 -7.64 -7.50
4/7/2008 -7.17 -6.93
4/4/2008 -7.31 -8.17
4/3/2008 -7.38 -8.35
4/2/2008 -7.50 -8.77
4/1/2008 -7.33 -10.69
3/31/2008 -10.54 -11.43
3/28/2008 -11.04 -10.77
3/27/2008 -10.33 -11.26
3/26/2008 -9.29 -11.18
3/25/2008 -8.49 -11.55
3/24/2008 -8.70 -13.98
3/21/2008 -10.08 -15.64
3/20/2008 -10.08 -16.13
3/19/2008 -12.18 -14.52
3/18/2008 -9.99 -14.59
3/17/2008 -13.66 -16.23
3/14/2008 -12.87 -12.39
3/13/2008 -11.03 -11.81
3/12/2008 -11.48 -9.29
3/11/2008 -10.68 -10.32
3/10/2008 -13.87 -12.28
3/7/2008 -12.52 -10.39
3/6/2008 -11.78 -8.24
3/5/2008 -9.79 -8.41
3/4/2008 -10.26 -8.89
3/3/2008 -9.95 -8.20
2/29/2008 -10.00 -6.37
2/28/2008 -7.49 -4.41
2/27/2008 -6.66 -4.50
2/26/2008 -6.57 -6.00
2/25/2008 -7.22 -6.86
2/22/2008 -8.48 -7.76
2/21/2008 -9.20 -7.42
2/20/2008 -8.01 -8.62
2/19/2008 -8.77 -7.49
2/18/2008 -8.69 -8.45
2/15/2008 -8.69 -9.08
2/14/2008 -8.77 -8.92
2/13/2008 -7.53 -10.87
2/12/2008 -8.77 -11.69
2/11/2008 -9.43 -13.06
2/8/2008 -9.96 -12.17
2/7/2008 -9.58 -12.15
2/6/2008 -10.28 -11.40
2/5/2008 -9.59 -9.57
2/4/2008 -6.61 -8.39
2/1/2008 -5.62 -10.19
1/31/2008 -6.76 -12.70
1/30/2008 -8.30 -12.49
1/29/2008 -7.86 -11.57
1/28/2008 -8.42 -12.78
1/25/2008 -10.00 -10.90
1/24/2008 -8.55 -13.13
1/23/2008 -9.46 -15.39
1/22/2008 -11.36 -16.52
1/21/2008 -10.37 -14.21
1/18/2008 -10.37 -8.89
1/17/2008 -9.82 -8.52
1/16/2008 -7.12 -7.99
1/15/2008 -6.60 -4.08
1/14/2008 -4.21 -2.33
1/11/2008 -5.24 -2.68
1/10/2008 -3.93 -2.07
1/9/2008 -4.69 -1.61
1/8/2008 -5.97 -2.15
1/7/2008 -4.21 -3.18
1/4/2008 -4.52 -1.77
1/3/2008 -2.12 -1.57
1/2/2008 -2.12 -0.95
1/1/2008 -0.69 -0.09
12/31/2007 -0.69 -0.12
SOURCE: U.S. Global Research
The recession began just as financial regulators were implementing a
rule known as FAS 157, which made some changes in how companies
establish the value of securities when there is little or no active
trading in those securities. As a result of this rule change, many
financial companies have written off untold billions of dollars
worth of securities on their balance sheets, even if these
securities continued to produce income because valuations are now
required to reflect exit or market prices. While there's no doubt
that this rule was enacted with the best of intentions, FAS 157 may
have played an unintended yet significant role in the seizing-up of
America's credit markets.
Leverage was another key factor. Wall Street, Main Street and
government agencies were all excessively leveraged, and a rule
change for short-selling that eliminated the uptick rule set off a
feeding frenzy by predatory short sellers. Banks and brokerages
sought to raise capital to rebuild their balance sheets, but short-
selling mercilessly drove down the value of their shares and
impaired their ability to raise enough new money.
Lacking capital, the banks had to cut back on new loans, which hurts
manufacturers and others that need access to short-term working
capital to run their businesses. Products don't get made, workers
don't get paid and before long the economy has ground to a halt.
2
U.S. GLOBAL INVESTORS FUNDS
The banks also made margin calls against existing loans, including
those to highly leveraged hedge funds. To get their hands on cash,
the hedge funds sold liquid assets, among them natural resources and
emerging markets equities that had been performing so well. This
forced selling was detrimental to our funds that were in the same
sectors.
Capital-deficient banks had to stop facilitating the auction-rate
securities market for very short-term trading in commercial debt.
This destroyed the auction-rate paper market in early 2008, in the
process locking up hundreds of billions of dollars in investors'
money. We were fortunate to not be directly affected by that
collapse in any of our products.
Before discussing the funds in greater detail, I would like to recap
the results of a special election in 2008. Shareholders approved a
momentous change for our fund family -- the merger of the nine U.S.
Global Investors Funds and the four U.S. Global Accolade Funds into
a single trust. The new trust, which began operations on October 1,
2008, is known as U.S. Global Investors Funds.
The combination of the funds into a single trust created a more
cost-efficient business structure by removing a number of
duplicative processes, including the preparation and printing of two
sets of semi-annual and annual reports each year. In addition, we
now have a single board of trustees.
Also approved by shareholders in the special election was the
addition of performance fees to the nine equity mutual funds managed
by U.S. Global Investors. If a fund surpasses its designated
benchmark by five percentage points or more over a 12-month rolling
period, the fund adviser will receive a 0.25 percent performance
fee. If a fund's returns are five percentage points or more below
its benchmark, the adviser will forfeit 0.25 percent of its base
advisory fee.
We believe the performance fee structure benefits shareholders by
aligning their interests to an even greater degree to the interests
of the fund managers. Our portfolio managers have significant
investments in the funds they manage and, hence, have exposure to
the funds' ups and downs just like other shareholders. Along with
the portfolio managers, many other U.S. Global employees invest in
the funds we manage. In this way, the financial interests of our
entire company - both at a corporate level and an individual level -
are aligned with those of the other shareholders.
3
U.S. GLOBAL INVESTORS FUNDS
I offer my sincere thanks to fund shareholders for their vote of
confidence in the special election. We have worked hard over the
years to earn your trust, and we were gratified that you supported
us during a particularly difficult period in the markets.
Another noteworthy event came in early November 2008, when U.S.
Global Investors took over day-to-day management of the Eastern
European Fund and the Global Emerging Markets Fund. We restructured
our relationship with Charlemagne Capital (IOM) Ltd., which had
previously overseen the daily operation of those funds. We will use
the services of Charlemagne Capital, who is providing
non-discretionary advisory services, when managing the funds.
We have expanded our investment team to enable us to handle the
management of these two funds, just as we did when we assumed direct
management of the Global MegaTrends Fund more than a year ago.
Adding experienced personnel from Eastern Europe to that of our
specialists in China-East Asia and natural resources further
broadens our global perspective, which we believe will serve the
fund shareholders well.
TOTAL ANNUALIZED RETURNS AS OF 12/31/08
FUND/TICKER ONE-YEAR THREE-YEAR FIVE-YEAR TEN-YEAR GROSS CAPPED
EXPENSE EXPENSE
RATIO RATIO
Gold and Precious -27.05% 8.59% 9.73% 13.85% 1.79% 1.50%
Metals Fund (USERX)
World Precious -52.96% -4.12% 3.09% 9.11% 1.71% 1.50%
Minerals Fund (UNWPX)
Global Resources Fund -62.13% -13.47% 4.70% 12.47% 1.57% 1.50%
(PSPFX)
<FN>
Gross expense ratio as stated in the most recent prospectus. The
Adviser has contractually limited total fund operating expenses (as
a percentage of net assets) to not exceed 1.50% (exclusive of
acquired fund fees and expenses of 0.04%) for the Gold and Precious
Metals Fund, 1.50% (exclusive of acquired fund fees and expenses of
0.02%) for the World Precious Minerals Fund, and 1.50% for the
Global Resources Fund through September 30, 2009. These contractual
limitations, however, may be revised at any time by the funds' Board
of Trustees. Performance data quoted above is historical. Past
performance is no guarantee of future results. Results reflect the
reinvestment of dividends and other earnings. Current performance
may be higher or lower than the performance data quoted. The
principal value and investment return of an investment will
fluctuate so that your shares, when redeemed, may be worth more or
less than their original cost. Performance does not include the
effect of any direct fees described in the fund's prospectus (e.g.,
short-term trading fees of up to 0.50%) which, if applicable, would
lower your total returns. Obtain performance data current to the
most recent month-end at www.usfunds.com or 1-800-US-FUNDS.
</FN>
Gold bullion was one of the few investment categories to finish 2008
in positive territory, but that success was not fully shared by the
Gold and Precious Metals Fund (USERX) or the World Precious Minerals
Fund (UNWPX), which invest primarily in gold-mining equities, which
were down for the year.
Mining companies produced less gold for the third straight year, and
their profit margins were squeezed by higher energy and materials
costs. For the non-producing "junior" miners, access to
4
U.S. GLOBAL INVESTORS FUNDS
capital for exploration and development work was very difficult to
find, though there were signs at year-end that this may be changing.
Oil prices peaked near $150 a barrel shortly after mid-year, and
then prices nosedived. By the end of 2008, that same barrel of crude
was under $40. The Global Resources Fund (PSPFX) was adversely
affected by oil's price reversal, as well as the drop in price of
industrial metals like copper and aluminum as the global economy
slowed.
TOTAL ANNUALIZED RETURNS AS OF 12/31/08
FUND/TICKER ONE-YEAR THREE-YEAR FIVE-YEAR TEN-YEAR GROSS CAPPED
EXPENSE EXPENSE
RATIO RATIO
All American Equity -39.72% -5.28% -0.04% -3.17% 2.31% 1.75%
Fund (GBTFX)
China Region Fund -56.12% -2.45% 2.77% 7.17% 2.29% 2.00%
(USCOX)
<FN>
Gross expense ratio as stated in the most recent prospectus. The
Adviser has contractually limited total fund operating expenses (as
a percentage of net assets) to not exceed 1.75% (exclusive of
acquired fund fees and expenses of 0.01%) for the All American
Equity Fund, and 2.00% (exclusive of acquired fund fees and expenses
of 0.01%) for the China Region Fund through September 30, 2009.
These contractual limitations, however, may be revised at any time
by the funds' Board of Trustees. Performance data quoted above is
historical. Past performance is no guarantee of future results.
Results reflect the reinvestment of dividends and other earnings.
Current performance may be higher or lower than the performance data
quoted. The principal value and investment return of an investment
will fluctuate so that your shares, when redeemed, may be worth more
or less than their original cost. Performance does not include the
effect of any direct fees described in the fund's prospectus (e.g.,
short-term trading fees of up to 1.00%) which, if applicable, would
lower your total returns. Obtain performance data current to the
most recent month-end at www.usfunds.com or 1-800-US-FUNDS.
</FN>
Early in the six-month period, the All American Equity Fund (GBTFX)
was more invested in materials and energy and held a lower weighting
in financials and health care compared to its benchmark, the S&P 500
Index, and those relative weightings caused the fund to
underperform. In the second half of the time period, the fund was
helped by a high cash position that the managers were able to invest
during a year-end rally.
The China Region Fund (USCOX) maintained an above average cash
position for most of the six-month period in light of China's
economic slowdown. But following Beijing's announcement of a huge
stimulus program, the nation's stock market climbed. In this
scenario, the defensive cash position contributed to the fund
performing below its benchmark, the Hang Seng Composite Index.
5
U.S. GLOBAL INVESTORS FUNDS
TOTAL ANNUALIZED RETURNS AS OF 12/31/08
FUND/TICKER ONE-YEAR THREE-YEAR FIVE-YEAR TEN-YEAR GROSS CAPPED
EXPENSE EXPENSE
RATIO RATIO
Holmes Growth Fund -46.97% -9.74% -1.23% 0.06% 1.92% 1.75%
(ACBGX)
Global MegaTrends -47.65% -11.85% -3.70% -0.04% 2.56% 1.85%
Fund (MEGAX)
Eastern European -69.20% -18.38% 3.11% 11.90% 2.14% 2.25%
Fund (EUROX)
Global Emerging -68.02% -16.07% n/a -7.95* 2.93% 2.50%
Markets Fund
(GEMFX)
<FN>
* As of inception date 2/24/05
Gross expense ratio as stated in the most recent prospectus. The
Adviser has contractually limited total fund operating expenses (as
a percentage of net assets) to not exceed 1.75% (exclusive of
acquired fund fees and expenses of 0.01%) for the Holmes Growth
Fund, 1.85% (exclusive of acquired fund fees and expenses of 0.01%)
for the Global MegaTrends Fund, 2.25% for the Eastern European Fund,
and 2.50% (exclusive of acquired fund fees and expenses of 0.06%)
for the Global Emerging Markets Fund through September 30, 2009.
These contractual limitations, however, may be revised at any time
by the funds' Board of Trustees. Performance data quoted above is
historical. Past performance is no guarantee of future results.
Results reflect the reinvestment of dividends and other earnings.
Current performance may be higher or lower than the performance data
quoted. The principal value and investment return of an investment
will fluctuate so that your shares, when redeemed, may be worth more
or less than their original cost. Performance does not include the
effect of any direct fees described in the fund's prospectus (e.g.,
short-term trading fees of up to 2.00%) which, if applicable, would
lower your total returns. Obtain performance data current to the
most recent month-end at www.usfunds.com or 1-800-US-FUNDS.
</FN>
We previously reported results for the four former U.S. Global
Accolade Funds as of October 31, 2008, so this report will only
cover the final two months of the year. Going forward, these four
funds will be reported at six-month intervals with the remainder of
the U.S. Global Investors Funds.
In November and December, the Holmes Growth Fund (ACBGX) benefited
from its exposure to education and health care stocks, while its
performance was hampered by its energy holdings and its limited
exposure to telecom and utilities, two of the best-performing
sectors.
The Global MegaTrends Fund (MEGAX), which focuses on infrastructure
opportunities in the U.S. and around the world, was also helped by
some sectors and hurt by others during the two-month period after
the fund outperformed the S&P 500 for most of 2008. President Obama
has made infrastructure spending in the U.S. a key component of his
economic recovery program, which is a good sign for the sector.
The Eastern European Fund (EUROX) and Global Emerging Markets Fund
(GEMFX) struggled in November and December, and while more
short-term volatility is likely, over the longer term growth
prospects remain bright for Eastern Europe and the world's emerging
markets on the whole. The BRIC nations - Brazil, Russia, India and
China - are all still largely underdeveloped and need better
housing, transport and other infrastructure.
6
U.S. GLOBAL INVESTORS FUNDS
There and elsewhere, consumers have embraced the lifestyles of the
West, and this should create investment opportunities.
TOTAL ANNUALIZED RETURNS AS OF 12/31/08
FUND/TICKER ONE-YEAR THREE-YEAR FIVE-YEAR TEN-YEAR GROSS CAPPED
EXPENSE EXPENSE
RATIO RATIO
Near-Term Tax Free 3.25% 3.55% 2.67% 3.52% 1.87% 0.45%
Fund (NEARX)
Tax Free Fund 0.54% 2.78% 2.65% 3.63% 1.92% 0.70%
(USUTX)
U.S. Government 1.87% 3.68% 2.93% 3.14% 0.72% 0.45%
Securities Savings
Fund (UGSXX)
U.S. Treasury 0.88% 2.95% 2.25% 2.42% 1.15% 1.00%
Securities Cash
Fund (USTXX)
<FN>
Gross expense ratio as stated in the most recent prospectus. The
Adviser has contractually limited total fund operating expenses (as
a percentage of net assets) to not exceed 0.45% for the Near-Term
Tax Free Fund, 0.70% for the Tax Free Fund, 0.45% for the U.S.
Government Securities Savings Fund, and 1.00% for the U.S. Treasury
Securities Cash Fund through September 30, 2009. These contractual
limitations, however, may be revised at any time by the funds' Board
of Trustees. Performance data quoted above is historical. Past
performance is no guarantee of future results. Results reflect the
reinvestment of dividends and other earnings. Current performance
may be higher or lower than the performance data quoted. The
principal value and investment return of an investment will
fluctuate so that your shares, when redeemed, may be worth more or
less than their original cost. Performance does not include the
effect of any direct fees described in the fund's prospectus which,
if applicable, would lower your total returns. Obtain performance
data current to the most recent month-end at www.usfunds.com or
1-800-US-FUNDS.
</FN>
Our municipal bond and money market funds were impacted by the
Federal Reserve's dramatic cuts in the fed funds rate in its effort
to kick-start the faltering domestic economy. At year-end, the fed
funds rate was effectively zero.
These funds were affected by the extremely tight credit conditions
that prevailed for most of 2008 and that escalated following the
collapse of Lehman Brothers in September. The stimulative efforts of
global central banks have increased the chances that we will see an
economic recovery in 2009, but that likely remains some months away.
We take a long-term perspective in managing the U.S. Global
Investors Funds, and we continue to search for long-term investment
opportunities in domestic markets, emerging markets and
global infrastructure. All of these markets can be very volatile, as
we have seen in 2008, but I provide you this reminder as a way for
you to manage your expectations and make appropriate decisions.
We strive to deliver superior market returns and serve as a source
of useful information on the trends that influence domestic and
global markets. That information is available in the "Frank Talk"
investment blog, as well as in replays of our informative webcasts
and in our Weekly Investor Alert electronic newsletter. I encourage
you to sign up for the Investor Alert on our web site
www.usfunds.com.
7
U.S. GLOBAL INVESTORS FUNDS
And as always, we urge investors to avoid chasing performance. One
way to do that is to consider a portfolio allocation model similar
to one cited by prominent financial planner Roger Gibson in his
excellent book "Asset Allocation: Balancing Financial Risk." In this
model, assets are divided among four broad categories - domestic
stocks, international stocks, fixed-income securities and hard
assets - and rebalanced periodically to maintain the desired
exposure.
Thank you for placing your trust in U.S. Global Investors. We take
that trust very seriously, and we look forward to serving you in the
years ahead.
Sincerely,
/s/ Frank Holmes
Frank Holmes
CEO and Chief Investment Officer
U.S. Global Investors, Inc.
Please consider carefully the fund's investment objectives, risks,
charges and expenses. For this and other important information,
obtain a fund prospectus by visiting www.usfunds.com or by calling
1-800-US-FUNDS (1-800-873-8637). Read it carefully before investing.
Distributed by U.S. Global Brokerage, Inc. An investment in a money
market fund is neither insured nor guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the
fund seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the fund.
All opinions expressed and data provided are subject to change
without notice. Some of these opinions may not be appropriate to
every investor. The MSCI Emerging Markets Index is a free float-
adjusted market capitalization index that is designed to measure
equity market performance in the global emerging markets. The S&P
500 Stock Index is a widely recognized capitalization-weighted index
of 500 common stock prices in U.S. companies. The Hang Seng
Composite Index is a market capitalization-weighted index that
comprises the top 200 companies listed on Stock Exchange of Hong
Kong, based on average market cap for the 12 months. Diversification
does not protect an investor from market risks and does not assure a
profit. Foreign and emerging market investing involves special risks
such as currency fluctuation and less
8
U.S. GLOBAL INVESTORS FUNDS
public disclosure, as well as economic and political risk. By
investing in a specific geographic region, a regional fund's returns
and share price may be more volatile than those of a less
concentrated portfolio. Gold funds may be susceptible to adverse
economic, political or regulatory developments due to concentrating
in a single theme. The price of gold is subject to substantial price
fluctuations over short periods of time and may be affected by
unpredicted international monetary and political policies. We
suggest investing no more than 5% to 10% of your portfolio in gold
or gold stocks. Because the Global Resources Fund concentrates its
investments in a specific industry, the fund may be subject to
greater risks and fluctuations than a portfolio representing a
broader range of industries. Tax-exempt income is federal income tax
free. A portion of this income may be subject to state and local
income taxes, and if applicable, may subject certain investors to
the Alternative Minimum Tax as well. Bond funds are subject to
interest-rate risk; their value declines as interest rates rise. All
opinions expressed and data provided are subject to change without
notice. Some of these opinions may not be appropriate to every
investor. The Eastern European Fund invests at least 25% of its
total assets in companies involved in the oil, gas or banking
industries. The risk of concentrating investments in this group of
industries will make the fund more susceptible to risk in these
industries than funds which do not concentrate their investments in
an industry and may make the fund's performance more volatile.
9
MONEY MARKET FUNDS
MANAGEMENT TEAM'S PERSPECTIVE
INTRODUCTION
The U.S. Treasury Securities Cash Fund (USTXX) seeks to obtain a
high level of current income while maintaining the highest degree of
safety of principal and liquidity. The U.S. Government Securities
Savings Fund (UGSXX) seeks to achieve a consistently high yield with
safety of principal.
PERFORMANCE
U.S. TREASURY SECURITIES CASH FUND As of December 31, 2008
7-Day Yield 0.01%
--------------------------------------------------------------
7-Day Effective Yield 0.01%
--------------------------------------------------------------
Weighted Average Days to Maturity 54
U.S. GOVERNMENT SECURITIES SAVINGS FUND As of December 31, 2008
7-Day Yield 0.78%
--------------------------------------------------------------
7-Day Effective Yield 0.78%
--------------------------------------------------------------
Weighted Average Days to Maturity 44
An investment in either the U.S. Government Securities Savings Fund
or the U.S. Treasury Securities Cash Fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or by
any other government agency. Although the funds seek to preserve the
value of your investments at $1.00 per share, it is possible to lose
money by investing in the funds.
The Adviser has contractually limited total fund operating expenses
(as a percentage of net assets) to not exceed 1.00% for the U.S.
Treasury Securities Cash Fund and 0.45% for the U.S. Government
Securities Savings Fund on an annualized basis through September 30,
2009. These contractual limitations, however, may be revised at any
time by the funds' Board of Trustees. In addition, the yields
reported above for the U.S. Treasury Securities Cash Fund include
the effects of the Adviser's voluntary waiver of fees and/or
reimbursement of expenses to maintain a minimum net yield for the
fund. The Adviser can modify or terminate this arrangement at any
time.
PERFORMANCE COMMENTARY
The U.S. Government Securities Savings Fund outperformed the Lipper
government-only money market funds for the six months ended December
31, 2008, returning 0.67 percent versus 0.60 percent for the peer
group. The U.S. Treasury Securities Cash Fund underperformed the
Lipper treasury money market funds for the six months ended December
31, 2008, returning 0.23 percent versus 0.33 percent for the peer
group.
10
MONEY MARKET FUNDS
THE SIX-MONTH PERIOD IN REVIEW - ECONOMIC AND POLITICAL ISSUES THAT
AFFECTED THE FUNDS
September was extremely volatile as the deterioration in the U.S.
and global economies accelerated rapidly. During the third calendar
quarter of 2008, the financial crisis essentially froze the global
financial system. The extreme volatility continued into the fourth
quarter. Economists determined in retrospect that the U.S. economy
officially fell into recession in December 2007, and it will likely
be the deepest recession in decades. Most economic indicators are at
multi-decade lows, among them housing starts, consumer confidence,
manufacturing indicators and unemployment. The economy lost jobs
every month this year, raising the unemployment rate to 7.2 percent,
the highest level in 15 years. The economy lost 2.6 million jobs
during 2008, the worst year in absolute terms since 1945. Housing
prices nationally fell 18 percent year over year, and in many places
around the country the decline in value was even greater. Inflation
declined sharply after the collapse of global demand, and energy
prices ended the year at just a fraction of their level just six
months earlier. A number of prominent financial firms filed for
bankruptcy or survived only with the help of government
intervention. In early October, the Federal Reserve, European
Central Bank and other central banks around the world simultaneously
cut interest rates to try to stem the credit crisis. The Fed
continued to cut interest rates during the quarter, ultimately
driving rates to virtually zero. Central banks around the globe
followed the Fed's lead by aggressively cutting interest rates to
stimulate their economies. As a result, yields collapsed across the
money market spectrum. The yield on the three-month Treasury bill
fell 165 basis points to 0.08 percent, while yields on the six-month
T-Bills fell 189 basis points to 0.26 percent. Yields on longer-term
money market instruments, such as 1-year agency bonds, fell 195
basis points to 0.85 percent.
INVESTMENT HIGHLIGHTS
For much of the period, the U.S. Government Securities Savings Fund
took a laddered approach by buying fixed-rate securities across the
money market spectrum. The fund averaged a weighted average maturity
of 47 days over the six-month period. The fund took advantage of
higher yields by selectively extending its ladder. The U.S. Treasury
Securities Cash Fund followed a similar approach - its weighted
average maturity was 23 days over the period. The market dynamics
for Treasuries changed as a tremendous amount of money flowed into
the safest and most liquid securities, pushing yields to very low
levels relative to other money market alternatives. The U.S.
Treasury Securities Cash Fund took advantage of relatively
11
MONEY MARKET FUNDS
high repurchase rates, which kept the weighted average maturity
lower than the U.S. Government Securities Savings Fund.
CURRENT OUTLOOK
The Federal Reserve went to extraordinary measures during the past
six months, cutting interest rates essentially to zero, buying
assets directly in the market and providing other liquidity
backstops. The U.S. government also took steps to ensure that the
economy did not slide from recession into depression. The combined
efforts of policy makers in the U.S. and abroad increased the odds
of a recovery in 2009, but that is likely some months away. The
economic stimulus efforts have pushed yields in the government money
markets down to very low absolute levels, where they will likely
remain for at least the next six months.
12
TAX FREE FUNDS
MANAGEMENT TEAM'S PERSPECTIVE
INTRODUCTION
The Near-Term Tax Free Fund (NEARX) and Tax Free Fund (USUTX) seek
to provide a high level of current income exempt from federal income
taxation and to preserve capital. However, a portion of any
distribution may be subject to federal and/or state income taxes.
The Near-Term Tax Free Fund will maintain a weighted average
maturity of less than five years, while the Tax Free Fund will
generally maintain a longer weighted average maturity.
PERFORMANCE GRAPHS
NEAR-TERM TAX FREE FUND
[Near-Term Tax Free Fund Graph]
Barclays Capital
Near-Term 3-Year Municipal
Date Tax Free Fund Bond Index
---- ------------- ----------
12/31/98 $ 10,000.00 $ 10,000.00
01/29/99 10,087.85 10,090.53
02/26/99 10,063.47 10,101.70
03/31/99 10,071.94 10,110.52
04/30/99 10,104.03 10,141.68
05/28/99 10,075.62 10,126.98
06/30/99 9,977.81 10,066.43
07/30/99 10,025.46 10,116.40
08/31/99 9,994.85 10,128.75
09/30/99 10,022.69 10,166.96
10/29/99 10,004.40 10,168.14
11/30/99 10,060.41 10,212.82
12/31/99 10,040.06 10,196.35
01/31/00 10,027.41 10,214.58
02/29/00 10,060.61 10,246.91
03/31/00 10,144.85 10,299.82
04/28/00 10,118.31 10,301.00
05/31/00 10,107.46 10,311.58
06/30/00 10,242.10 10,442.09
07/31/00 10,336.47 10,526.72
08/31/00 10,427.18 10,606.25
09/29/00 10,422.17 10,609.31
10/31/00 10,489.45 10,669.47
11/30/00 10,535.80 10,712.29
12/31/00 10,691.51 10,831.59
01/31/01 10,803.09 10,995.99
02/28/01 10,826.51 11,039.00
03/30/01 10,896.98 11,116.60
04/30/01 10,850.85 11,100.36
05/31/01 10,939.30 11,201.47
06/30/01 10,980.58 11,251.35
07/31/01 11,078.90 11,343.59
08/31/01 11,197.27 11,460.05
09/30/01 11,228.52 11,518.52
10/31/01 11,307.90 11,593.44
11/30/01 11,234.54 11,556.42
12/31/01 11,185.15 11,545.39
01/31/02 11,334.85 11,692.02
02/28/02 11,430.01 11,779.71
03/31/02 11,257.18 11,604.19
04/30/02 11,455.08 11,774.77
05/31/02 11,509.53 11,843.06
06/30/02 11,600.54 11,944.91
07/31/02 11,698.19 12,038.08
08/31/02 11,804.73 12,115.13
09/30/02 11,961.20 12,210.84
10/31/02 11,850.88 12,143.68
11/30/02 11,821.61 12,147.32
12/31/02 11,990.02 12,322.24
01/31/03 12,008.54 12,361.67
02/28/03 12,118.80 12,440.79
03/31/03 12,116.61 12,425.86
04/30/03 12,164.86 12,459.41
05/31/03 12,334.09 12,555.35
06/30/03 12,293.34 12,535.26
07/31/03 12,053.88 12,422.44
08/31/03 12,136.81 12,485.80
09/30/03 12,366.25 12,673.08
10/31/03 12,307.36 12,613.52
11/30/03 12,344.12 12,626.13
12/31/03 12,386.53 12,652.65
01/31/04 12,435.76 12,696.93
02/29/04 12,550.14 12,804.86
03/31/04 12,514.19 12,770.28
04/30/04 12,349.73 12,641.30
05/31/04 12,297.81 12,592.00
06/30/04 12,318.17 12,614.67
07/31/04 12,403.24 12,706.75
08/31/04 12,533.98 12,840.17
09/30/04 12,561.33 12,854.30
10/31/04 12,589.88 12,890.29
11/30/04 12,538.37 12,828.42
12/31/04 12,603.76 12,878.45
01/31/05 12,621.01 12,861.71
02/28/05 12,592.19 12,823.12
03/31/05 12,505.55 12,780.81
04/30/05 12,592.40 12,845.99
05/31/05 12,627.21 12,869.11
06/30/05 12,656.31 12,934.74
07/31/05 12,627.15 12,904.99
08/31/05 12,662.22 12,947.58
09/30/05 12,691.53 12,954.05
10/31/05 12,662.15 12,934.62
11/30/05 12,697.49 12,946.26
12/31/05 12,727.02 12,991.57
01/31/06 12,703.34 13,020.16
02/28/06 12,738.96 13,030.57
03/31/06 12,715.15 13,007.12
04/30/06 12,739.02 13,029.23
05/31/06 12,780.89 13,074.83
06/30/06 12,750.89 13,051.30
07/31/06 12,847.12 13,140.05
08/31/06 12,943.63 13,243.85
09/30/06 13,040.40 13,304.77
10/31/06 13,082.86 13,344.69
11/30/06 13,119.37 13,391.39
12/31/06 13,094.96 13,388.72
01/31/07 13,070.48 13,388.72
02/28/07 13,230.03 13,479.76
03/31/07 13,211.57 13,518.85
04/30/07 13,248.61 13,545.89
05/31/07 13,223.85 13,544.53
06/30/07 13,199.01 13,555.37
07/31/07 13,298.63 13,642.12
08/31/07 13,404.77 13,718.52
09/30/07 13,504.99 13,813.18
10/31/07 13,548.96 13,879.48
11/30/07 13,649.79 13,986.35
12/31/07 13,687.70 14,057.68
01/31/08 13,915.83 14,358.52
02/28/08 13,636.25 14,167.55
03/31/08 13,865.64 14,372.98
04/30/08 13,840.08 14,357.17
05/31/08 13,872.12 14,407.42
06/30/08 13,782.21 14,312.33
07/31/08 13,885.25 14,486.94
08/31/08 14,046.71 14,623.12
09/30/08 13,826.62 14,447.64
10/31/08 13,800.66 14,472.20
11/30/08 13,898.30 14,700.86
12/31/08 14,133.20 14,836.11
AVERAGE ANNUAL PERFORMANCE For the Periods Ended
December 31, 2008
Six Month One Year Five Year Ten Year
Near-Term Tax Free Fund 2.55% 3.25% 2.67% 3.52%
----------------------------------------------------------------------
Barclays Capital 3-Year
Municipal Bond Index 3.66% 5.53% 3.23% 4.02%
Performance data quoted above is historical. Past performance is no
guarantee of future results. Current performance may be higher or
lower than the performance data quoted. Investment return and
principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original
cost. The graph and table do not reflect the deduction of taxes that a
shareholder would pay on fund distributions or the redemption of fund
shares.
The Barclays Capital (formerly Lehman Brothers) 3-Year Municipal Bond
Index is a total return benchmark designed for municipal assets. The
index includes bonds with a minimum credit rating of BAA3, are issued
as part of a deal of at least $50 million, have an amount outstanding
of at least $5 million and have a maturity of two to four years. The
returns for the index reflects no deduction for fees, expenses or
taxes.
The Adviser has agreed to limit the fund's total operating expenses to
0.45% through September 30, 2009; however, the limitation may be
revised at any time by the funds' Board of Trustees.
13
TAX FREE FUNDS
TAX FREE FUND
[Tax Free Fund Graph]
Barclays Capital
10-Year Municipal
Date Tax Free Fund Bond Index
---- ------------- ----------
12/31/98 $ 10,000.00 $ 10,000.00
01/29/99 10,117.17 10,153.13
02/26/99 10,050.21 10,062.03
03/31/99 10,067.41 10,056.83
04/30/99 10,095.38 10,083.72
05/28/99 10,006.23 10,013.01
06/30/99 9,810.74 9,826.91
07/30/99 9,830.69 9,892.85
08/31/99 9,704.68 9,856.41
09/30/99 9,701.33 9,889.60
10/29/99 9,544.83 9,819.76
11/30/99 9,661.39 9,927.12
12/31/99 9,557.06 9,875.50
01/31/00 9,460.47 9,835.16
02/29/00 9,593.53 9,912.37
03/31/00 9,848.67 10,105.20
04/28/00 9,771.64 10,054.44
05/31/00 9,690.86 9,994.79
06/30/00 9,964.76 10,266.35
07/31/00 10,107.49 10,408.78
08/31/00 10,263.05 10,569.75
09/29/00 10,186.28 10,521.36
10/31/00 10,317.37 10,629.00
11/30/00 10,400.98 10,686.28
12/31/00 10,679.53 10,938.10
01/31/01 10,777.18 11,079.30
02/28/01 10,795.18 11,097.89
03/30/01 10,889.95 11,192.52
04/30/01 10,748.62 11,053.85
05/31/01 10,859.56 11,174.18
06/30/01 10,942.60 11,240.63
07/31/01 11,100.10 11,395.53
08/31/01 11,286.63 11,588.67
09/30/01 11,236.84 11,573.49
10/31/01 11,370.94 11,716.35
11/30/01 11,231.71 11,564.69
12/31/01 11,086.42 11,443.44
01/31/02 11,285.53 11,659.72
02/28/02 11,431.87 11,826.46
03/31/02 11,179.71 11,582.83
04/30/02 11,429.94 11,851.55
05/31/02 11,488.70 11,907.26
06/30/02 11,618.99 12,054.91
07/31/02 11,757.31 12,215.24
08/31/02 11,878.91 12,374.03
09/30/02 12,118.98 12,669.77
10/31/02 11,919.57 12,439.18
11/30/02 11,849.00 12,337.18
12/31/02 12,084.62 12,607.37
01/31/03 12,045.70 12,540.55
02/28/03 12,199.68 12,757.50
03/31/03 12,186.98 12,763.88
04/30/03 12,267.32 12,858.33
05/31/03 12,555.09 13,226.08
06/30/03 12,489.12 13,162.59
07/31/03 12,001.40 12,609.77
08/31/03 12,103.39 12,718.21
09/30/03 12,436.01 13,146.81
10/31/03 12,361.34 13,046.90
11/30/03 12,451.20 13,187.80
12/31/03 12,530.27 13,327.59
01/31/04 12,604.57 13,383.57
02/29/04 12,785.78 13,619.12
03/31/04 12,723.22 13,541.49
04/30/04 12,422.60 13,167.75
05/31/04 12,385.05 13,175.65
06/30/04 12,333.14 13,219.13
07/31/04 12,445.45 13,400.23
08/31/04 12,622.51 13,693.69
09/30/04 12,674.85 13,766.27
10/31/04 12,761.27 13,876.40
11/30/04 12,655.01 13,719.60
12/31/04 12,797.81 13,881.49
01/31/05 12,887.07 13,999.48
02/28/05 12,822.53 13,911.28
03/31/05 12,742.13 13,788.87
04/30/05 12,916.07 14,056.37
05/31/05 12,991.74 14,150.55
06/30/05 13,045.52 14,232.62
07/31/05 12,997.91 14,111.64
08/31/05 13,114.63 14,283.81
09/30/05 13,037.98 14,155.25
10/31/05 12,973.91 14,047.67
11/30/05 13,034.98 14,134.77
12/31/05 13,153.38 14,263.39
01/31/06 13,186.86 14,309.04
02/28/06 13,289.80 14,393.46
03/31/06 13,208.23 14,245.21
04/30/06 13,210.42 14,219.57
05/31/06 13,257.52 14,316.26
06/30/06 13,215.74 14,251.84
07/31/06 13,363.57 14,441.38
08/31/06 13,542.93 14,688.33
09/30/06 13,619.59 14,795.56
10/31/06 13,690.92 14,884.33
11/30/06 13,780.40 15,001.92
12/31/06 13,746.73 14,931.41
01/31/07 13,707.33 14,864.22
02/28/07 13,873.44 15,073.80
03/31/07 13,845.11 15,043.65
04/30/07 13,878.10 15,091.79
05/31/07 13,823.32 15,013.32
06/30/07 13,763.76 14,932.24
07/31/07 13,856.82 15,066.63
08/31/07 13,833.77 15,104.30
09/30/07 14,038.50 15,306.70
10/31/07 14,077.95 15,360.27
11/30/07 14,157.13 15,530.77
12/31/07 14,205.02 15,574.26
01/31/08 14,414.81 15,890.41
02/28/08 13,869.26 15,230.96
03/31/08 14,224.25 15,622.40
04/30/08 14,350.87 15,714.57
05/31/08 14,407.84 15,793.14
06/30/08 14,250.67 15,628.89
07/31/08 14,331.89 15,749.24
08/31/08 14,481.68 15,969.73
09/30/08 13,962.51 15,390.03
10/31/08 13,966.12 15,262.29
11/30/08 13,997.59 15,463.75
12/31/08 14,281.67 15,808.59
AVERAGE ANNUAL PERFORMANCE For the Periods Ended
December 31, 2008
Six Month One Year Five Year Ten Year
Tax Free Fund 0.22% 0.54% 2.65% 3.63%
----------------------------------------------------------------------
Barclays Capital 10-Year
Municipal Bond Index 1.15% 1.52% 3.47% 4.68%
Performance data quoted above is historical. Past performance is no
guarantee of future results. Current performance may be higher or
lower than the performance data quoted. Investment return and
principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original
cost. The graph and table do not reflect the deduction of taxes that a
shareholder would pay on fund distributions or the redemption of fund
shares.
The Barclays Capital (fomerly Lehman Brothers) 10-Year Municipal Bond
Index is a total return benchmark designed for long-term municipal
assets. The index includes bonds with a minimum credit rating of BAA3,
are issued as part of a deal of at least $50 million, have an amount
outstanding of at least $5 million and have a maturity of 8 to 12
years. The returns for the index reflects no deduction for fees,
expenses or taxes.
The Adviser has agreed to limit the fund's total operating expenses to
0.70% through September 30, 2009; however, the limitation may be
revised at any time by the funds' Board of Trustees.
Please visit our website at usfunds.com for updated performance
information for different time periods.
PERFORMANCE COMMENTARY
Over the six-month period ended December 31, 2008, the Near-Term Tax
Free Fund posted a 2.55 percent return, while the Tax Free Fund
returned 0.22 percent. The Near-Term Tax Free Fund trailed the
performance of its benchmark, the Barclays Capital 3-Year Municipal
Bond Index, which returned 3.66 percent. The Tax Free Fund trailed
the performance of its benchmark, the Barclays Capital 10-Year
Municipal Bond Index, which
14
TAX FREE FUNDS
returned 1.15 percent. The performance difference for the funds was
primarily driven by fund maturity preferences, as the funds
maintained exposure across a wide range of maturities versus the
bullet structure of each index.
Both funds significantly outperformed their respective Lipper peer
groups for the six-month period. The Lipper Short-Intermediate
Municipal Debt Fund peer group averaged a return of 0.04 percent and
the Lipper General Municipal Debt Fund peer group averaged a return
of -8.48 percent. Both funds benefited from a conservative credit
profile, which was the primary driver for peer group outperformance.
As the subprime debt market imploded, liquidity dried up and credit
spreads widened. This primarily affected higher-yielding securities
and longer-dated securities.
THE SIX-MONTH PERIOD IN REVIEW - ECONOMIC AND POLITICAL ISSUES THAT
AFFECTED THE FUNDS
The third quarter of 2008 was extremely volatile, with the Barclays
Capital Municipal Bond Index(1) falling 3.21 percent during that
period. September was a particularly treacherous month for the
financial markets, and municipals were not immune. The municipal
bond index suffered its largest monthly decline (4.69 percent) in
more than 20 years. Many of the same factors generally affecting the
financial markets came to bear on the municipal market, most notably
an extreme lack of liquidity as a result of constrained brokerage
firm balance sheets, brokerage consolidation, turmoil at insurance
firms and other traditional municipal buyers and arbitrage players
exiting the market. The long end of the municipal yield curve
(maturities 20 years and longer) suffered the most, with third
quarter losses of 6.5 percent to 8 percent. The short end of the
municipal curve outperformed, as 1- to 5-year bonds generated
positive total returns.
The fourth quarter saw some improvement for high-quality municipals,
but long-term and lower-quality bonds continued to suffer. The
Barclays Capital Municipal Bond Index rose 0.74 percent during the
fourth quarter, but this masked the underlying volatility in certain
segments of the market, particularly the high-yield sector, which
declined by more than 21 percent. The Barclays Capital Municipal
Bond Index fell 2.47 percent during 2008, its worst decline since
1994. The index fell 2.49 percent in the second half of the year.
Virtually all of the factors that impacted municipals in the third
quarter continued into the fourth quarter. The long end of the
municipal yield curve suffered the bulk of the underperformance,
with quarterly losses of more than 5 percent for maturities 22 years
and longer. The short-intermediate portion of the municipal curve
outperformed with gains approaching
15
TAX FREE FUNDS
4 percent in the 5- to 7-year range. The municipal yield curve
steepened significantly, as short-term yields fell by as much as 125
basis points, while 30-year bond yields rose by about 5 basis
points.
For the six-month period, revenue-backed municipals underperformed
general obligation bonds, falling more than 6 percent as credit
spreads widened. Generally speaking, credit quality and total
returns were highly correlated. High-quality securities
outperformed, with performance worsening as one moved down the
credit scale. Industrial development bonds fared the worst, driven
by poor performance of tobacco-backed issuers. The Federal Reserve
cut interest rates effectively to zero to combat the widening
financial crisis. The Fed and other government policymakers in
Washington pulled out all the stops to avert a financial and
economic collapse.
INVESTMENT HIGHLIGHTS
STRENGTHS
* Both funds maintained a conservative credit profile, which
significantly enhanced performance relative to their peer groups.
* Both funds were significantly overweight Texas municipals, which
outperformed.
* Both funds avoided the hardest-hit sectors of the market, notably
tobacco, housing and lower quality bonds.
WEAKNESSES
* Both funds maintained an overweight position relative to the
benchmark in longer term securities, which generally
underperformed.
* The funds did have some exposure to low-quality investment-grade
bonds, which underperformed.
* The funds maintained significant exposure to hospital-backed
municipals, which underperformed.
CURRENT OUTLOOK
OPPORTUNITIES
* Municipals are historically "cheap" compared to other fixed-income
alternatives such as treasuries, agency bonds and corporate bonds.
* The extremely poor performance of high-yield-related securities
offers opportunities at much more attractive prices.
16
TAX FREE FUNDS
THREATS
* The slowing economy has taken a toll on municipal issuers. Tax
receipts have fallen sharply and the potential for bankruptcies
has increased.
* The Fed has taken interest rates to zero and is now employing
"quantitative" easing measures (buying assets directly, in
addition to direct equity injections into financial institutions)
to prevent a systematic financial collapse. The threat involved in
this approach is this is likely sowing the seeds of inflation, but
it may be some time before inflation materializes.
(1)The Barclays Capital Municipal Bond Index is an unmanaged index
representative of the tax-exempt bond market.
17
TAX FREE FUNDS
NEAR-TERM TAX FREE FUND
MUNICIPAL BOND RATINGS December 31, 2008
(BASED ON TOTAL MUNICIPAL BONDS) (UNAUDITED)
[Pie Chart]
BBB 4.3%
BB 0.4%
AAA 30.4%
AA 45.3%
A 19.6%
TAX FREE FUND
MUNICIPAL BOND RATINGS December 31, 2008
(BASED ON TOTAL MUNICIPAL BONDS) (UNAUDITED)
[Pie Chart]
BBB 5.3%
BB 0.9%
AAA 39.7%
AA 28.7%
A 25.4%
18
ALL AMERICAN EQUITY FUND
MANAGEMENT TEAM'S PERSPECTIVE
INTRODUCTION
The principal objective of the All American Equity Fund (GBTFX) is
to seek capital appreciation by investing primarily in a broadly
diversified portfolio of domestic common stocks. The fund invests in
large-capitalization stocks, while retaining the flexibility to seek
out promising individual stock opportunities. The fund seeks capital
appreciation and does not emphasize income.
PERFORMANCE GRAPH
ALL AMERICAN EQUITY FUND
[All American Equity Fund Graph]
All American S&P
Date Equity Fund 500 Index
---- ----------- ---------
12/31/98 $ 10,000.00 $ 10,000.00
01/29/99 10,355.92 10,418.01
02/26/99 10,043.88 10,094.28
03/31/99 10,302.05 10,498.03
04/30/99 10,556.30 10,904.56
05/28/99 10,382.72 10,647.43
06/30/99 10,957.72 11,237.86
07/30/99 10,588.22 10,887.30
08/31/99 10,451.19 10,833.40
09/30/99 10,132.10 10,536.78
10/29/99 10,742.38 11,203.27
11/30/99 10,899.24 11,431.00
12/31/99 11,460.99 12,103.84
01/31/00 10,888.68 11,495.79
02/29/00 10,654.79 11,278.40
03/31/00 11,590.88 12,381.04
04/28/00 11,304.47 12,008.68
05/31/00 10,980.70 11,762.92
06/30/00 11,256.15 12,052.96
07/31/00 10,954.69 11,864.69
08/31/00 11,682.18 12,601.24
09/29/00 10,812.68 11,936.15
10/31/00 10,419.04 11,885.52
11/30/00 9,252.01 10,949.15
12/31/00 9,305.40 11,002.87
01/31/01 9,384.93 11,393.00
02/28/01 8,242.84 10,354.84
03/30/01 7,658.11 9,699.22
04/30/01 8,365.30 10,452.35
05/31/01 8,317.52 10,522.47
06/30/01 8,108.86 10,266.46
07/31/01 7,923.99 10,165.36
08/31/01 7,327.94 9,529.63
09/30/01 7,003.14 8,760.15
10/31/01 7,086.05 8,927.29
11/30/01 7,513.39 9,611.90
12/31/01 7,532.52 9,696.16
01/31/02 7,277.40 9,554.74
02/28/02 7,098.81 9,370.43
03/31/02 7,424.09 9,722.85
04/30/02 7,054.16 9,133.59
05/31/02 7,548.47 9,066.30
06/30/02 6,760.77 8,420.42
07/31/02 5,867.84 7,764.09
08/31/02 5,976.27 7,815.07
09/30/02 5,450.07 6,965.72
10/31/02 5,721.14 7,578.83
11/30/02 5,743.47 8,024.91
12/31/02 5,529.80 7,553.46
01/31/03 5,456.45 7,355.59
02/28/03 5,367.16 7,245.23
03/31/03 5,446.89 7,315.57
04/30/03 5,858.27 7,918.16
05/31/03 6,119.77 8,335.35
06/30/03 6,107.02 8,441.67
07/31/03 6,256.90 8,590.52
08/31/03 6,470.57 8,758.05
09/30/03 6,381.28 8,665.04
10/31/03 6,859.63 9,155.22
11/30/03 7,105.19 9,235.77
12/31/03 7,261.45 9,720.13
01/31/04 7,283.77 9,898.54
02/29/04 7,379.45 10,036.12
03/31/04 7,325.23 9,884.72
04/30/04 6,913.85 9,729.55
05/31/04 6,999.95 9,863.06
06/30/04 7,184.91 10,054.85
07/31/04 6,776.72 9,722.07
08/31/04 6,760.77 9,761.39
09/30/04 6,971.25 9,867.12
10/31/04 7,076.49 10,017.86
11/30/04 7,503.82 10,423.20
12/31/04 7,628.19 10,777.89
01/31/05 7,446.42 10,515.18
02/28/05 7,717.48 10,736.46
03/31/05 7,589.92 10,546.34
04/30/05 7,328.42 10,346.32
05/31/05 7,625.00 10,675.53
06/30/05 7,803.59 10,690.69
07/31/05 8,106.55 11,088.25
08/31/05 8,087.41 10,987.08
09/30/05 8,431.83 11,076.07
10/31/05 8,176.71 10,891.42
11/30/05 8,524.31 11,303.35
12/31/05 8,533.82 11,307.29
01/31/06 9,332.44 11,606.68
02/28/06 8,964.10 11,638.17
03/31/06 9,417.19 11,783.04
04/30/06 9,619.29 11,941.26
05/31/06 9,039.07 11,597.58
06/30/06 8,993.43 11,613.31
07/31/06 8,876.09 11,684.95
08/31/06 8,931.50 11,962.97
09/30/06 8,833.71 12,271.26
10/31/06 9,156.42 12,671.13
11/30/06 9,632.33 12,912.08
12/31/06 9,464.63 13,093.21
01/31/07 9,603.87 13,291.22
02/28/07 9,588.82 13,031.26
03/31/07 9,769.46 13,177.01
04/30/07 10,172.13 13,760.69
05/31/07 10,623.72 14,240.87
06/30/07 10,755.43 14,004.29
07/31/07 10,555.98 13,570.08
08/31/07 10,458.14 13,773.50
09/30/07 11,474.22 14,288.61
10/31/07 12,392.46 14,515.90
11/30/07 11,575.83 13,909.04
12/31/07 12,022.56 13,812.53
01/31/08 10,781.01 12,984.03
02/28/08 10,785.19 12,562.23
03/31/08 10,496.75 12,507.99
04/30/08 11,102.89 13,117.16
05/31/08 11,621.25 13,287.07
06/30/08 11,399.69 12,166.92
07/31/08 10,718.30 12,064.64
08/31/08 10,367.16 12,239.16
09/30/08 8,996.02 11,148.56
10/31/08 8,051.27 9,276.16
11/30/08 7,102.34 8,610.55
12/31/08 7,247.52 8,702.17
AVERAGE ANNUAL PERFORMANCE For the Periods Ended
December 31, 2008
Six Month One Year Five Year Ten Year
All American Equity Fund (36.42)% (39.72)% (0.04)% (3.17)%
----------------------------------------------------------------------
S&P 500 Index (28.48)% (37.00)% (2.19)% (1.38)%
Performance data quoted above is historical. Past performance is no
guarantee of future results. Current performance may be higher or
lower than the performance data quoted. Investment return and
principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original
cost. The graph and table do not reflect the deduction of taxes that a
shareholder would pay on fund distributions or the redemption of fund
shares.
The S&P 500 Index is a widely recognized capitalization-weighted index
of 500 common stock prices in U.S. companies. The returns for the
index reflects no deduction for fees, expenses or taxes.
The Adviser has agreed to limit the fund's total operating expenses to
1.75% through September 30, 2009; however, the limitation may be
revised at any time by the funds' Board of Trustees.
Please visit our website at usfunds.com for updated performance
information for different time periods.
19
ALL AMERICAN EQUITY FUND
THE SIX-MONTH PERIOD IN REVIEW - ECONOMIC AND POLITICAL ISSUES THAT
AFFECTED THE FUND
The federal funds rate was lowered three times in the last six
months of 2008 and is now targeted between 0 and 0.25 percent, with
the three cuts totaling between 175 and 200 basis points. The U.S.
has officially been in recession since December 2007. Fourth-quarter
2008 GDP was a negative 3.8 percent on a quarter-over-quarter basis,
and recent economic reports point towards negative growth in the
first quarter of 2009. The unemployment picture weakened
significantly with the unemployment rate rising from 5.6 percent in
June to 7.2 percent in December, the highest rate in 15 years.
Despite lower inflation, the investment climate became more
challenging. The Consumer Price Index (including food and energy)
fell from 5.0 percent in June 2008 to 0.1 percent in December, while
core CPI (excluding food and energy) declined from 2.4 percent to
1.8 percent.
Oil prices averaged $89 per barrel over the six-month period but
finished at $45 - a decline of more than 67 percent in six months.
The yield on the 10-year U.S. Treasury note fell from 3.97 percent
at the start of the time period to 2.21 percent at the end of
December. This reflects the weakening of the U.S. economy over the
time period.
Sector performance was all negative, with staples, healthcare and
telecom declining the least. The largest declines were seen in
materials, energy and financials.
INVESTMENT HIGHLIGHTS
OVERVIEW
The fund returned negative 36.42 percent for the six-month period
ended December 31, 2008, compared to a negative 28.48 percent return
for the S&P 500 Index.
Being overweight materials and energy and underweight financials
hurt the fund, as dramatic sector rotation took place at the start
of July. The outperformance only lasted for the first two months of
the period. All of these gains and more were lost in the last four
months. In addition, investors sought the safety of the staples and
healthcare sectors, which were also underrepresented in the fund at
the beginning of the period. In the second half of the time period,
the fund benefited from a high cash
20
ALL AMERICAN EQUITY FUND
position that was put to work at the end of the year to participate
in a year-end rally.
For the most part, the fund was able to correct the issues that hurt
it in the first half of the time period. The fund ended the year
overweight healthcare and financials.
Our top-down analysis reviews global trends that include economic
outlooks, the current political and legislative environment,
government policy changes, socioeconomic trends, currency effects
and other items. This is combined with a bottom-up analysis that
emphasizes companies that we believe have prospects to generate
long-term, sustainable growth in cash flow and relatively high
returns on capital.
STRENGTHS
* Consumer staples was the best performing sector, and the fund
benefited during the time period by owning Altria Group, Inc.,(1)
Philip Morris International, Inc.(2) and General Mills, Inc.(1)
During the uncertain times, the relative certainty of staples
tends to be beneficial.
* Healthcare was the second-best performing sector on the back of
strength in biotechnology and healthcare supplies. The fund
benefited by being overweight this sector and biotech in
particular. Positions in biotech stocks during the time period
included Gilead Sciences, Inc.,(3) Celgene Corp.,(4) Sequenom,
Inc.(5) and United Therapeutics Corp.(6)
WEAKNESSES
* The worst performing sectors were energy and materials. The fund
was hurt by being overweight both of these sectors at the start of
the time period. Positions that hurt the fund included Potash
Corp. of Saskatchewan, Inc.,(1) The Mosaic Co.,(1) Monsanto
Co.,(1) Nabors Industries, Ltd.(1) and Diamond Offshore Drilling,
Inc.(1) Other money managers were unwinding their long positions
in commodities and short positions in financial stocks, which
drove down the energy and materials markets and, for a time, drove
the market up for financials.
* Although the financial sector ended up as the third worst
performing sector by the end of the time period, it was one of the
best performing sectors in the first three months. The fund
entered the time period more than 12 percent underweight
financials, which hurt performance for the period. We were
overweight in financials at the end of the period in expectations
of a rally in early 2009.
21
ALL AMERICAN EQUITY FUND
SECTOR WEIGHTINGS--ALL AMERICAN EQUITY FUND AND S&P 500 INDEX
(% OF INVESTMENTS AS OF DECEMBER 31, 2008)
ALL AMERICAN EQUITY S&P 500 OVER
FUND INDEX (UNDER)
% WEIGHTS % WEIGHTS % WEIGHT
SECTORS ------------------- --------- --------
Financials 24.4 13.3 11.1
Healthcare 17.4 14.8 2.6
Technology 13.8 15.3 (1.5)
Energy 13.6 13.3 0.3
Consumer Discretion 7.0 8.4 (1.4)
Materials 6.8 2.9 3.9
Utilities 6.0 4.2 1.8
Industrials 3.5 11.1 (7.6)
Consumer Staples 2.2 12.9 (10.7)
Telecommunications 1.6 3.8 (2.2)
Cash Equivalent 3.7 0.0 3.7
----- ----- -----
TOTAL 100.0 100.0 0.0
===== ===== =====
From a fund construction viewpoint, at December 31, 2008, the fund
was positioned to benefit from a weakening economy with rising
inflation.
FUND METRICS
- ----------------------------------------------------------------------------
RETURN P/E TO
ON GROWTH AVERAGE
REVENUE EARNINGS EQUITY - RATIO - MARKET
GROWTH GROWTH ROE PEG CAPITALIZATION
- ----------------------------------------------------------------------------
All American Equity $23.5
Fund 27% 22% 19.1% 1.2X Billion
- ----------------------------------------------------------------------------
$15.8
S&P 500 Index 8% -10% 20.6% 1.3X Billion
- ----------------------------------------------------------------------------
As of December 31, 2008, the average revenue growth in the last 12
months for the stocks in the fund was 54 percent, compared to 8
percent for the stocks in the S&P 500 Index. The high relative
growth also applied to earnings of the stocks in the fund, which on
average grew 150 percent year-over-year over the last 12 months
while the S&P 500 Index saw earnings growth of negative 14 percent.
The fund's holdings also exhibited stronger return on equity, which
demonstrated the quality of these companies. Despite higher growth
rates, the price-to-projected-earnings-per-share growth rate (PEG
ratio) was slightly lower than that of the S&P 500 Index.
22
ALL AMERICAN EQUITY FUND
The fund is actively managed, and holding period is not generally a
consideration in investment decisions. Its portfolio turnover is,
and is expected to continue to be, over 100 percent.
CURRENT OUTLOOK
OPPORTUNITIES
* Given the massive sell-off in equities, 2009 may be a better year
as far as relative performance.
* The unprecedented fiscal and monetary response to the current
economic weakness could begin to have an impact by midyear.
* Stocks appear to be cheap on a historical basis, given the level
of interest rates and assuming estimates are accurate.
THREATS
* Stocks historically rally on interest rate cuts. However, the U.S.
has basically cut rates as low as they possibly can with a
targeted fed funds rate between 0 and 0.25 percent.
* Trade could become an issue in light of record trade deficits and
a more confrontational Congress.
(1)The fund did not hold this security as of December 31, 2008.
(2)This security comprised 2.14% of the total net assets of the fund
as of December 31, 2008.
(3)This security comprised 2.84% of the total net assets of the fund
as of December 31, 2008.
(4)This security comprised 1.36% of the total net assets of the fund
as of December 31, 2008.
(5)This security comprised 0.98% of the total net assets of the fund
as of December 31, 2008.
(6)This security comprised 0.58% of the total net assets of the fund
as of December 31, 2008.
23
ALL AMERICAN EQUITY FUND
TOP 10 HOLDINGS BASED ON TOTAL INVESTMENTS December 31, 2008
(EXCLUDING REPURCHASE AGREEMENTS)
FIRST FINANCIAL BANKSHARES, INC. 4.44%
FINANCIAL SERVICES
---------------------------------------------------------------
VORNADO REALTY TRUST 3.49%
REAL ESTATE INVESTMENT TRUSTS
---------------------------------------------------------------
HATTERAS FINANCIAL GROUP 3.42%
REAL ESTATE INVESTMENT TRUSTS
---------------------------------------------------------------
JOHNSON & JOHNSON 3.08%
MEDICAL - PRODUCTS
---------------------------------------------------------------
VMWARE, INC. 3.05%
SOFTWARE TOOLS
---------------------------------------------------------------
GILEAD SCIENCES, INC. 2.96%
THERAPEUTICS
---------------------------------------------------------------
LOWE'S COS., INC. 2.77%
RETAIL
---------------------------------------------------------------
UNITEDHEALTH GROUP, INC. 2.40%
MEDICAL - HMO
---------------------------------------------------------------
MCDONALD'S CORP. 2.40%
RESTAURANTS
---------------------------------------------------------------
OCWEN FINANCIAL CORP. 2.36%
FINANCIAL SERVICES
---------------------------------------------------------------
TOTAL TOP TEN HOLDINGS 30.37%
PORTFOLIO PROFILE December 31, 2008
Country Distribution* % of Investments
---------------------------------------------------------------
United States 84.88%
---------------------------------------------------------------
People's Republic of China 4.17%
---------------------------------------------------------------
Canada 3.23%
---------------------------------------------------------------
Hong Kong 2.86%
---------------------------------------------------------------
Other Foreign 4.86%
---------------------------------------------------------------
* Country distribution shown is based on domicile and is not
intended to conform to the "all American" definition in the
prospectus.
24
HOLMES GROWTH FUND
MANAGEMENT TEAM'S PERSPECTIVE
INTRODUCTION
The Holmes Growth Fund (ACBGX) focuses on companies with good growth
prospects and strong positive earnings momentum. Our primary
objective is long-term capital appreciation.
PERFORMANCE GRAPH
HOLMES GROWTH FUND
[Holmes Growth Fund Graph]
Holmes Growth S&P 500 S&P 1500
Date Fund Index Index
---- ------------- ------- --------
12/31/98 $ 10,000.00 $ 10,000.00 $ 10,000.00
01/29/99 10,715.75 10,418.01 10,335.91
02/26/99 9,713.70 10,094.28 9,980.03
03/31/99 10,582.82 10,498.03 10,363.21
04/30/99 10,521.47 10,904.56 10,801.85
05/28/99 10,429.45 10,647.43 10,582.95
06/30/99 11,390.59 11,237.86 11,169.07
07/30/99 11,226.99 10,887.30 10,836.06
08/31/99 11,676.89 10,833.40 10,746.77
09/30/99 11,891.62 10,536.78 10,459.65
10/29/99 12,878.32 11,203.27 11,092.54
11/30/99 14,340.49 11,431.00 11,348.81
12/31/99 18,144.56 12,103.84 12,024.41
01/31/00 18,427.34 11,495.79 11,445.04
02/29/00 24,612.98 11,278.40 11,346.42
03/31/00 23,369.96 12,381.04 12,395.01
04/28/00 20,936.94 12,008.68 12,021.99
05/31/00 18,309.52 11,762.92 11,778.95
06/30/00 19,204.96 12,052.96 12,073.82
07/31/00 17,496.54 11,864.69 11,906.35
08/31/00 19,947.24 12,601.24 12,691.58
09/29/00 18,445.01 11,936.15 12,068.83
10/31/00 17,090.06 11,885.52 11,996.39
11/30/00 14,806.99 10,949.15 11,045.75
12/31/00 15,019.31 11,002.87 11,187.18
01/31/01 14,594.68 11,393.00 11,573.75
02/28/01 12,613.07 10,354.84 10,557.03
03/30/01 11,504.32 9,699.22 9,883.81
04/30/01 11,614.41 10,452.35 10,672.51
05/31/01 11,543.64 10,522.47 10,760.73
06/30/01 11,236.96 10,266.46 10,533.19
07/31/01 10,883.10 10,165.36 10,423.34
08/31/01 10,552.83 9,529.63 9,806.31
09/30/01 10,096.75 8,760.15 8,964.96
10/31/01 10,159.66 8,927.29 9,165.23
11/30/01 10,474.20 9,611.90 9,863.19
12/31/01 10,922.42 9,696.16 9,997.52
01/31/02 10,961.74 9,554.74 9,866.26
02/28/02 10,820.19 9,370.43 9,690.87
03/31/02 11,221.23 9,722.85 10,093.09
04/30/02 11,614.41 9,133.59 9,555.24
05/31/02 11,417.82 9,066.30 9,465.79
06/30/02 10,655.06 8,420.42 8,797.05
07/31/02 9,333.99 7,764.09 8,078.27
08/31/02 8,956.54 7,815.07 8,131.02
09/30/02 8,870.04 6,965.72 7,278.56
10/31/02 9,113.81 7,578.83 7,878.17
11/30/02 9,790.07 8,024.91 8,339.25
12/31/02 8,791.41 7,553.46 7,867.81
01/31/03 8,964.40 7,355.59 7,658.08
02/28/03 8,870.04 7,245.23 7,533.39
03/31/03 8,469.00 7,315.57 7,604.81
04/30/03 8,579.09 7,918.16 8,225.15
05/31/03 9,019.45 8,335.35 8,684.76
06/30/03 9,058.77 8,441.67 8,799.95
07/31/03 9,318.26 8,590.52 8,978.18
08/31/03 9,672.12 8,758.05 9,180.98
09/30/03 9,593.49 8,665.04 9,073.95
10/31/03 10,655.06 9,155.22 9,611.12
11/30/03 10,773.01 9,235.77 9,727.00
12/31/03 10,702.24 9,720.13 10,194.01
01/31/04 11,008.92 9,898.54 10,387.90
02/29/04 11,024.65 10,036.12 10,543.23
03/31/04 11,040.37 9,884.72 10,412.36
04/30/04 10,788.74 9,729.55 10,227.61
05/31/04 10,969.60 9,863.06 10,374.39
06/30/04 11,299.87 10,054.85 10,593.34
07/31/04 10,710.10 9,722.07 10,221.50
08/31/04 10,505.65 9,761.39 10,251.80
09/30/04 11,087.55 9,867.12 10,394.82
10/31/04 11,307.73 10,017.86 10,555.65
11/30/04 12,141.26 10,423.20 11,018.01
12/31/04 12,471.53 10,777.89 11,395.37
01/31/05 12,125.54 10,515.18 11,117.58
02/28/05 12,518.71 10,736.46 11,366.29
03/31/05 12,172.72 10,546.34 11,168.41
04/30/05 11,575.09 10,346.32 10,921.44
05/31/05 12,133.40 10,675.53 11,308.85
06/30/05 12,550.17 10,690.69 11,360.30
07/31/05 13,265.75 11,088.25 11,808.47
08/31/05 13,423.02 10,987.08 11,695.95
09/30/05 13,769.01 11,076.07 11,790.61
10/31/05 13,021.98 10,891.42 11,582.13
11/30/05 13,517.38 11,303.35 12,036.02
12/31/05 13,682.51 11,307.29 12,042.87
01/31/06 14,909.22 11,606.68 12,423.45
02/28/06 14,618.27 11,638.17 12,440.14
03/31/06 15,223.76 11,783.04 12,628.09
04/30/06 15,514.71 11,941.26 12,791.09
05/31/06 14,689.04 11,597.58 12,397.57
06/30/06 14,586.82 11,613.31 12,412.67
07/31/06 14,059.96 11,684.95 12,432.34
08/31/06 14,067.82 11,962.97 12,711.91
09/30/06 13,965.60 12,271.26 13,011.27
10/31/06 14,421.68 12,671.13 13,453.54
11/30/06 14,814.86 12,912.08 13,730.17
12/31/06 14,547.50 13,093.21 13,895.36
01/31/07 15,058.63 13,291.22 14,130.84
02/28/07 14,869.90 13,031.26 13,893.43
03/31/07 15,160.85 13,177.01 14,056.51
04/30/07 15,907.89 13,760.69 14,652.66
05/31/07 16,875.10 14,240.87 15,188.12
06/30/07 17,008.78 14,004.29 14,929.72
07/31/07 16,812.19 13,570.08 14,442.64
08/31/07 16,741.42 13,773.50 14,655.87
09/30/07 18,416.35 14,288.61 15,178.10
10/31/07 19,485.79 14,515.90 15,434.37
11/30/07 18,243.35 13,909.04 14,760.01
12/31/07 18,966.79 13,812.53 14,665.21
01/31/08 17,000.92 12,984.03 13,789.86
02/28/08 17,307.59 12,562.23 13,358.22
03/31/08 16,599.88 12,507.99 13,298.13
04/30/08 17,472.73 13,117.16 13,971.05
05/31/08 18,400.62 13,287.07 14,212.82
06/30/08 17,991.72 12,166.92 13,037.02
07/31/08 16,222.43 12,064.64 12,930.27
08/31/08 15,522.57 12,239.16 13,133.28
09/30/08 13,430.88 11,148.56 11,956.25
10/31/08 11,119.01 9,276.16 9,885.78
11/30/08 10,002.39 8,610.55 9,144.71
12/31/08 10,057.43 8,702.17 9,282.78
AVERAGE ANNUAL PERFORMANCE For the Periods Ended
December 31, 2008
Two Month One Year Five Year Ten Year
Holmes Growth Fund (9.55)% (46.97)% (1.23)% 0.06%
- ---------------------------------------------------------------------
S&P 500 Index (6.19)% (37.00)% (2.19)% (1.38)%
- ---------------------------------------------------------------------
S&P 1500 Index (6.10)% (36.70)% (1.85)% (0.74)%
Performance data quoted above is historical. Past performance is no
guarantee of future results. Current performance may be higher or
lower than the performance data quoted. Investment return and
principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original
cost.
The graph and table do not reflect the deduction of taxes that a
shareholder would pay on fund distributions or the redemption of fund
shares.
The S&P 500 Index is a widely recognized capitalization-weighted
index of 500 common stock prices in U.S. companies. The S&P 1500
Index is a broad-based capitalization-weighted index of 1500 U.S.
companies and is comprised of the S&P 400, S&P 500 and the S&P 600.
The returns for the indexes reflect no deduction for fees, expenses
or taxes.
The Adviser has agreed to limit the fund's total operating expenses
to 1.75% on an annualized basis through September 30, 2009; however,
the limitation may be revised at any time by the funds' Board of
Trustees.
Please visit our website at usfunds.com for updated performance
information for different time periods.
25
HOLMES GROWTH FUND
THE TWO-MONTH PERIOD IN REVIEW - ECONOMIC AND POLITICAL ISSUES THAT
AFFECTED THE FUND
The federal funds rate was lowered in mid-December to a target
between 0 and 0.25 percent in an effort to energize the U.S.
economy, which has officially been in recession since December 2007.
Economic reports point toward a continuation of the recession in the
first quarter of 2009. The unemployment picture weakened
significantly to 7.2 percent in December, the highest rate of
unemployment in 15 years.
The Consumer Price Index (including food and energy) came in at 0.1
percent as of December 2008. Core CPI (excluding food and energy)
was 1.8 percent. Oil prices averaged $50 per barrel over the last
two months, and finished 2008 at $45. The price range for oil over
the period was a high of $71 per barrel and a low of $34.
The yield on the 10-year U.S. Treasury note fell from 3.95 percent
at the start of the time period to 2.21 percent, reflecting the
weakening of the U.S. economy over the time period.
Sector performance was mixed, with telecom and utilities in positive
territory and all other sectors declining. The largest declines were
seen in energy, materials and consumer discretion.
INVESTMENT HIGHLIGHTS
OVERVIEW
The fund returned a negative 9.55 percent for the two-month time
period, compared to a negative 6.10 percent return for the S&P 1500
Index, the fund's benchmark.
The fund benefited from its exposure to healthcare and education
stocks. The fund's energy equities tended to be the biggest drags on
performance.
Our top down analysis reviews global trends that include economic
outlooks, political and legislative environment, government policy
changes, socioeconomic trends, currency effects and other similar
items. The bottom up analysis emphasizes companies that we believe
have prospects to generate long-term, sustainable growth in cash
flow and relatively high returns on capital.
STRENGTHS
* Although consumer discretion was the third worst performing
sector, the fund's holdings in education stocks were positive
contributors to performance. Both ITT Educational Services,
Inc.(1) and Strayer Education, Inc.(2) worked out well for the
fund.
26
HOLMES GROWTH FUND
* The fund's healthcare picks, including Bristol-Myers Squibb
Co.,(3) Humana, Inc.(4) and Emergent Biosolutions, Inc.(5), were
positive contributors to performance.
WEAKNESSES
* The decline in oil prices was the biggest reason for energy being
the worst performing sector. Holdings that detracted from
performance included Peabody Energy Corp.,(6) Helmerich & Payne,
Inc.(7) and Transocean, Inc.(8)
* The best performing sectors, telecom and utilities, were
underrepresented in the fund. The fund had no utility exposure and
was underweight the telecom sector.
SECTOR WEIGHTINGS--HOLMES GROWTH FUND AND S&P 1500 INDEX
(AS OF DECEMBER 31, 2008 IN %)
HOLMES GROWTH S&P 1500 OVER
FUND INDEX (UNDER)
% WEIGHTS % WEIGHTS % WEIGHT
SECTORS ------------- --------- --------
Healthcare 30.1 14.5 15.6
Financials 17.2 14.1 3.1
Consumer Discretion 13.6 9.0 4.6
Energy 10.3 12.5 (2.2)
Technology 8.0 15.1 (7.1)
Industrials 6.2 11.6 (5.4)
Materials 4.5 3.3 1.2
Telecom 2.9 3.5 (0.6)
Consumer Staples 2.8 11.9 (9.1)
Utilities 0.0 4.5 (4.5)
Cash Equivalent 4.4 0.0 4.4
----- ----- ----
TOTAL 100.0 100.0 0.0
===== ===== ====
From a fund construction viewpoint, at December 31, 2008, the fund
is defensively positioned with a significant presence in healthcare.
FUND METRICS
- --------------------------------------------------------------------------
RETURN P/E TO
ON GROWTH AVERAGE
REVENUE EARNINGS EQUITY - RATIO - MARKET
GROWTH GROWTH ROE PEG CAPITALIZATION
- --------------------------------------------------------------------------
Holmes Growth Fund 19% 56% 24.5% 1.0X $28.2 Billion
- --------------------------------------------------------------------------
S&P 1500 Index 9% -12% 16.9% 1.3X $5.5 Billion
- --------------------------------------------------------------------------
27
HOLMES GROWTH FUND
As of December 31, 2008, the average revenue growth for the stocks
in the fund was 19 percent, compared to 9 percent for the stocks in
the S&P 1500 Index. The high relative growth also applies to
earnings of the stocks in the fund, which on average grew 56 percent
year-over-year compared to a negative 12 percent for the S&P 1500
Index. The fund's holdings exhibited higher return on equity.
Despite these higher growth rates, the price-to-projected-earnings-
per-share growth rate (PEG ratio) is less than that of the S&P 1500
Index (1.0x for the fund compared to 1.3x for the index).
CURRENT OUTLOOK
OPPORTUNITIES
* Given the massive sell-off in equities, 2009 may be a better year
as far as relative performance.
* The unprecedented fiscal and monetary response to the current
economic weakness could begin to have an impact by midyear.
* Stocks appear to be cheap on a historical basis, given the level
of interest rates and assuming estimates are accurate.
THREATS
* Stocks historically rally on interest rate cuts. However, the U.S.
has basically cut rates as low as they possibly can with a
targeted fed funds rate between 0 and 0.25 percent.
* Trade could become an issue, given record trade deficits and the
possibility of a more confrontational Congress.
(1)This security comprised 3.51% of the total net assets of the fund
as of December 31, 2008.
(2)This security comprised 3.30% of the total net assets of the fund
as of December 31, 2008.
(3)This security comprised 3.04% of the total net assets of the fund
as of December 31, 2008.
(4)This security comprised 2.30% of the total net assets of the fund
as of December 31, 2008.
(5)This security comprised 1.61% of the total net assets of the fund
as of December 31, 2008.
(6)This security comprised 1.05% of the total net assets of the fund
as of December 31, 2008.
(7)This security comprised 1.68% of the total net assets of the fund
as of December 31, 2008.
(8)The fund did not hold this security as of December 31, 2008.
28
HOLMES GROWTH FUND
TOP 10 HOLDINGS BASED ON TOTAL INVESTMENTS December 31, 2008
(EXCLUDING REPURCHASE AGREEMENTS)
ITT EDUCATIONAL SERVICES, INC. 3.71%
SCHOOLS
---------------------------------------------------------------
BAXTER INTERNATIONAL, INC. 3.66%
MEDICAL PRODUCTS
---------------------------------------------------------------
STRAYER EDUCATION, INC. 3.49%
SCHOOLS
---------------------------------------------------------------
BRISTOL-MYERS SQUIBB CO. 3.22%
MEDICAL - PRODUCTS
---------------------------------------------------------------
PETMED EXPRESS, INC. 3.16%
RETAIL
---------------------------------------------------------------
CUBIST PHARMACEUTICALS, INC. 3.15%
MEDICAL - BIOMEDICAL
---------------------------------------------------------------
STIFEL FINANCIAL CORP. 2.99%
FINANCIAL SERVICES
---------------------------------------------------------------
EZCORP, INC. 2.97%
RETAIL
---------------------------------------------------------------
ILLUMINA, INC. 2.54%
MEDICAL - BIOMEDICAL
---------------------------------------------------------------
FIRST SOLAR, INC. 2.47%
ENERGY
---------------------------------------------------------------
TOTAL TOP TEN HOLDINGS 31.36%
PORTFOLIO PROFILE December 31, 2008
Country Distribution* % of Investments
---------------------------------------------------------------
United States 94.34%
---------------------------------------------------------------
Canada 4.21%
---------------------------------------------------------------
Switzerland 1.45%
---------------------------------------------------------------
* Country distribution shown is based on domicile and the
locale of company operations may be different. American
Depositary (ADRs) and Global Depositary Receipts (GDRs) are
included as United States investments in accordance with
the prospectus.
29
GLOBAL MEGATRENDS FUND
MANAGEMENT TEAM'S PERSPECTIVE
INTRODUCTION
The Global MegaTrends Fund (MEGAX) focuses on companies that are
well positioned to benefit from future investments in global
infrastructure, both in the private and public sectors. The fund
considers a broad range of investable opportunities, including
publicly-traded infrastructure assets (such as airports and toll
roads), select utilities, construction and engineering firms,
telecom operators, select companies in the alternative energy space,
and companies in the steel, cement and raw materials sectors.
PERFORMANCE GRAPH
GLOBAL MEGATRENDS FUND
[Global MegaTrends Fund Graph]
Global MegaTrends S&P 500
Date Fund Index
---- ----------------- -------
12/31/98 $ 10,000.00 $ 10,000.00
01/29/99 10,196.29 10,418.01
02/26/99 9,823.37 10,094.28
03/31/99 10,294.40 10,498.03
04/30/99 10,628.06 10,904.56
05/28/99 10,441.60 10,647.43
06/30/99 10,843.95 11,237.86
07/30/99 10,804.69 10,887.30
08/31/99 10,853.78 10,833.40
09/30/99 10,402.35 10,536.78
10/29/99 10,559.38 11,203.27
11/30/99 10,775.26 11,431.00
12/31/99 11,723.69 12,103.84
01/31/00 11,137.50 11,495.79
02/29/00 11,235.19 11,278.40
03/31/00 12,570.36 12,381.04
04/28/00 12,526.94 12,008.68
05/31/00 12,787.47 11,762.92
06/30/00 12,288.13 12,052.96
07/31/00 12,646.36 11,864.69
08/31/00 13,634.20 12,601.24
09/29/00 13,406.24 11,936.15
10/31/00 13,427.93 11,885.52
11/30/00 12,730.33 10,949.15
12/31/00 13,682.70 11,002.87
01/31/01 14,128.74 11,393.00
02/28/01 13,610.38 10,354.84
03/30/01 12,887.09 9,699.22
04/30/01 14,056.42 10,452.35
05/31/01 14,140.80 10,522.47
06/30/01 13,525.99 10,266.46
07/31/01 12,766.48 10,165.36
08/31/01 11,585.08 9,529.63
09/30/01 10,439.84 8,760.15
10/31/01 11,090.82 8,927.29
11/30/01 11,428.37 9,611.90
12/31/01 11,946.73 9,696.16
01/31/02 11,007.67 9,554.74
02/28/02 10,616.39 9,370.43
03/31/02 11,594.60 9,722.85
04/30/02 11,229.38 9,133.59
05/31/02 11,072.89 9,066.30
06/30/02 9,859.94 8,420.42
07/31/02 8,399.23 7,764.09
08/31/02 8,868.76 7,815.07
09/30/02 8,164.49 6,965.72
10/31/02 8,633.96 7,578.83
11/30/02 8,725.48 8,024.91
12/31/02 8,345.05 7,553.46
01/31/03 8,502.78 7,355.59
02/28/03 8,502.78 7,245.23
03/31/03 8,292.76 7,315.57
04/30/03 8,738.91 7,918.16
05/31/03 9,565.61 8,335.35
06/30/03 9,749.27 8,441.67
07/31/03 9,919.88 8,590.52
08/31/03 10,510.11 8,758.05
09/30/03 10,221.08 8,665.04
10/31/03 10,824.13 9,155.22
11/30/03 11,244.10 9,235.77
12/31/03 12,033.44 9,720.13
01/31/04 11,846.92 9,898.54
02/29/04 12,272.23 10,036.12
03/31/04 12,231.73 9,884.72
04/30/04 11,859.46 9,729.55
05/31/04 11,966.19 9,863.06
06/30/04 12,192.35 10,054.85
07/31/04 11,926.56 9,722.07
08/31/04 11,952.80 9,761.39
09/30/04 12,245.64 9,867.12
10/31/04 12,232.17 10,017.86
11/30/04 12,617.48 10,423.20
12/31/04 13,003.58 10,777.89
01/31/05 12,684.99 10,515.18
02/28/05 13,097.25 10,736.46
03/31/05 12,671.59 10,546.34
04/30/05 12,485.32 10,346.32
05/31/05 12,791.21 10,675.53
06/30/05 13,084.13 10,690.69
07/31/05 13,536.84 11,088.25
08/31/05 13,829.24 10,987.08
09/30/05 14,054.65 11,076.07
10/31/05 13,695.64 10,891.42
11/30/05 14,413.29 11,303.35
12/31/05 14,549.14 11,307.29
01/31/06 15,000.17 11,606.68
02/28/06 14,535.16 11,638.17
03/31/06 14,754.64 11,783.04
04/30/06 14,946.45 11,941.26
05/31/06 14,536.92 11,597.58
06/30/06 14,536.92 11,613.31
07/31/06 14,455.51 11,684.95
08/31/06 14,633.32 11,962.97
09/30/06 14,620.15 12,271.26
10/31/06 15,139.16 12,671.13
11/30/06 15,371.65 12,912.08
12/31/06 15,284.07 13,093.21
01/31/07 15,269.29 13,291.22
02/28/07 14,914.54 13,031.26
03/31/07 15,239.73 13,177.01
04/30/07 16,052.71 13,760.69
05/31/07 16,540.50 14,240.87
06/30/07 16,540.50 14,004.29
07/31/07 16,510.95 13,570.08
08/31/07 16,777.02 13,773.50
09/30/07 17,885.63 14,288.61
10/31/07 18,846.43 14,515.90
11/30/07 18,550.80 13,909.04
12/31/07 19,034.07 13,812.53
01/31/08 17,433.36 12,984.03
02/28/08 17,750.33 12,562.23
03/31/08 17,243.19 12,507.99
04/30/08 18,447.68 13,117.16
05/31/08 19,398.58 13,287.07
06/30/08 18,479.36 12,166.92
07/31/08 17,100.54 12,064.64
08/31/08 16,514.15 12,239.16
09/30/08 13,566.32 11,148.56
10/31/08 10,460.01 9,276.16
11/30/08 9,794.38 8,610.55
12/31/08 9,964.26 8,702.17
AVERAGE ANNUAL PERFORMANCE For the Periods Ended
December 31, 2008
Two Month One Year Five Year Ten Year
Global MegaTrends Fund (4.74)% (47.65)% (3.70)% (0.04)%
- ----------------------------------------------------------------------
S&P 500 Index (6.19)% (37.00)% (2.19)% (1.38)%
- ----------------------------------------------------------------------
S&P Global Infrastructure
Index 1.13% (38.98)% 9.51% n/a
Performance data quoted above is historical. Past performance is no
guarantee of future results. Current performance may be higher or
lower than the performance data quoted. Investment return and
principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original
cost.
The graph and table do not reflect the deduction of taxes that a
shareholder would pay on fund distributions or the redemption of fund
shares.
The S&P 500 Index is a widely recognized capitalization-weighted index
of 500 common stock prices in U.S. companies. The S&P Global
Infrastructure Index provides liquid and tradable exposure to 75
companies from around the world that represent the listed infrastruc-
ture universe. The index has balanced weights across three distinct
infrastructure clusters: utilities, transportation and energy. The
index commenced November 2001; it is not included in the graph as it
had less than the full period of data. The returns for the indexes
reflect no deduction for fees, expenses or taxes.
The Adviser has agreed to limit the fund's total operating expenses to
1.85% on an annualized basis through September 30, 2009; however, the
limitation may be revised at any time by the funds' Board of Trustees.
Please visit our website at usfunds.com for updated performance
information for different time periods.
30
GLOBAL MEGATRENDS FUND
THE TWO-MONTH PERIOD IN REVIEW - ECONOMIC AND POLITICAL ISSUES THAT
AFFECTED THE FUND
The last two months of 2008 saw a continuation of the themes
featured during the U.S. presidential election. Then President-elect
Obama frequently mentioned during his campaign a need to increase
domestic infrastructure spending and to broaden the nation's
commitment to alternative energy. We believe this was one of the
reasons Vestas Wind Systems A/S,(1) a wind turbine company,
appreciated by over 40 percent in anticipation of investments in the
space.
In Canada, where the government also remains committed to
infrastructure spending, SNC-Lavalin Group, Inc.,(2) a diversified
engineering firm, saw its price rise by 24 percent. However, the
performance of the infrastructure-related companies was uneven. The
heavy equipment manufacturer The Manitowoc Co., Inc.(3) saw its
share price fall by 12 percent.
Volatility in Russia, which started in July 2008 with an
investigation by the Russian government of alleged coal price-fixing
by steel companies and was later exacerbated by the conflict between
Russia and Georgia, affected Evraz Group S.A.,(4) one of the
vertically integrated steel producers, which suffered a 44 percent
depreciation in its share price.
INVESTMENT HIGHLIGHTS
OVERVIEW
The fund had a negative 4.74 percent return in the two-month period
ended December 31, 2008, compared to a negative 6.19 percent return
for the S&P 500 Index, the fund's benchmark, and a positive 1.13
percent return for the S&P Global Infrastructure Index.
STRENGTHS
* The fund benefited from select international holdings that saw
significant price appreciation. China Communications Construction
Co., Ltd.(5) is seen as one of the potential beneficiaries of the
forthcoming infrastructure boom in China, while Hyflux Ltd.,(6) a
water infrastructure play in Asia and the Middle East, posted
record profit.
* In the U.S., Granite Construction, Inc.,(7) specializing in roads,
bridges and tunnels construction, returned 24 percent as
President-elect Obama reiterated his commitment to the
infrastructure cause. FPL Group, Inc.,(8) another U.S. company and
the fund's largest holding at year-end, also had a positive
contribution to the fund's performance for the period.
31
GLOBAL MEGATRENDS FUND
* The fund was significantly underweight financials and energy, both
of which were among the worst performing groups of the S&P 500.
WEAKNESSES
* Many 'typical' infrastructure plays, including construction and
engineering firms and telecom, exhibited weak performance in the
last two months of 2008.
* Significantly overweighting in industrials, utilities and
materials exacerbated weak performance.
* Political volatility in Russia and general weakness across
emerging markets such as China and Brazil affected some of the
fund's holdings.
SECTOR WEIGHTINGS--GLOBAL MEGATRENDS FUND AND S&P 500 INDEX
(% OF INVESTMENTS AS OF DECEMBER 31, 2008)
GLOBAL MEGATRENDS S&P 500 OVER
FUND INDEX (UNDER)
% WEIGHTS % WEIGHTS % WEIGHT
SECTORS ----------------- --------- --------
Industrials 42.2 11.1 31.1
Utilities 23.4 4.2 19.2
Telecommunications 13.4 3.8 9.6
Materials 10.5 2.9 7.6
Energy 2.6 13.3 (10.7)
Financials 2.5 13.3 (10.8)
Technology 0.0 15.3 (15.3)
Healthcare 0.0 14.8 (14.8)
Consumer Staples 0.0 12.9 (12.9)
Consumer Discretion 0.0 8.4 (8.4)
Cash Equivalent 5.4 0.0 5.4
----- ----- -----
TOTAL 100.0 100.0 0.0
===== ===== =====
CURRENT OUTLOOK
We believe that infrastructure-related issues will be prominent for
many years to come due to a growth in population and urbanization
that will necessitate improvements to the existing global
infrastructure. Underinvestment in infrastructure assets in the past
20 to 30 years has resulted in a significant deterioration of the
existing stock.
We are encouraged by the awareness of political leaders around the
world that investments in infrastructure are needed to sustain
economic growth and competitiveness. President Obama supports a
significant increase in
32
GLOBAL MEGATRENDS FUND
infrastructure spending that, by some estimates, could total
hundreds of billions of dollars.
In addition, growing recognition of the need for alternative energy
sources will continue despite a recent decline in crude oil prices.
The U.S. Senate overwhelmingly approved tax credits for solar and
wind power in late 2008, and this will likely support continued
investment in this sector.
OPPORTUNITIES
* Market volatility allowed the fund to buy shares in some companies
in the infrastructure space that recently saw a price correction
after a stellar performance last year.
* Although the lower price of oil may change relative attractiveness
of wind and solar, we believe that investments in alternative
energy sources will gain traction due to a growing need for
additional power globally.
* The privatization of Chicago Midway Airport in October 2008
illustrates interest in quality infrastructure assets.
THREATS
* While many countries remain committed to improving their
infrastructure, it remains to be seen how tighter credit
conditions and the issue of property rights impact some of the
projects.
* Investors began to move to more defensive sectors at the beginning
of 2008 in expectation of weaker economic activity.
* Government support/subsidies are still required for a sustainable
development of alternative energy and these can vary with changes
in a political climate.
(1)This security comprised 1.36% of the fund's total net assets as
of December 31, 2008.
(2)This security comprised 1.48% of the fund's total net assets as
of December 31, 2008.
(3)This security comprised 1.18% of the fund's total net assets as
of December 31, 2008.
(4)This security comprised 0.27% of the fund's total net assets as
of December 31, 2008.
(5)This security comprised 1.47% of the fund's total net assets as
of December 31, 2008.
(6)This security comprised 1.72% of the fund's total net assets as
of December 31, 2008.
(7)This security comprised 1.00% of the fund's total net assets as
of December 31, 2008.
(8)This security comprised 5.02% of the fund's total net assets as
of December 31, 2008.
33
GLOBAL MEGATRENDS FUND
TOP 10 HOLDINGS BASED ON TOTAL INVESTMENTS December 31, 2008
(EXCLUDING REPURCHASE AGREEMENTS)
FPL GROUP, INC. 5.03%
ELECTRIC UTILITIES
---------------------------------------------------------------
CHINA MOBILE LTD. 4.84%
WIRELESS TELECOMMUNICATIONS
---------------------------------------------------------------
BURLINGTON NORTHERN SANTA FE CORP. 4.47%
TRANSPORTATION
---------------------------------------------------------------
GRUPO AEROPORTUARIO DEL SURESTE S.A.B. DE C.V. 3.73%
AIRPORTS
---------------------------------------------------------------
EXELON CORP. 3.53%
ELECTRIC UTILITIES
---------------------------------------------------------------
AT&T, INC. 3.23%
TELECOMMUNICATIONS
---------------------------------------------------------------
FIRST SOLAR, INC. 3.13%
ENERGY
---------------------------------------------------------------
FIRSTENERGY CORP. 2.87%
ELECTRIC GENERATION
---------------------------------------------------------------
STANTEC, INC. 2.80%
COMMERCIAL SERVICES
---------------------------------------------------------------
FLUOR CORP. 2.65%
ENGINEERING/RESEARCH & DEVELOPMENT
---------------------------------------------------------------
TOTAL TOP TEN HOLDINGS 36.28%
PORTFOLIO PROFILE December 31, 2008
Country Distribution* % of Investments
---------------------------------------------------------------
United States 52.97%
---------------------------------------------------------------
Brazil 10.84%
---------------------------------------------------------------
Canada 8.32%
---------------------------------------------------------------
Hong Kong 7.13%
---------------------------------------------------------------
Mexico 5.98%
---------------------------------------------------------------
People's Republic of China 5.75%
---------------------------------------------------------------
Turkey 1.99%
---------------------------------------------------------------
Singapore 1.72%
---------------------------------------------------------------
Other Foreign 5.30%
---------------------------------------------------------------
* Country distribution shown is based on domicile and the
locale of company operations may be different. Investments
in companies that are economically tied to foreign
countries were 51% of total assets at December 31, 2008.
34
GLOBAL RESOURCES FUND
MANAGEMENT TEAM'S PERSPECTIVE
INTRODUCTION
The Global Resources Fund (PSPFX) is a diversified natural resources
fund with the principal objective of achieving long-term growth of
capital while providing protection against inflation and monetary
instability. The fund invests globally in companies involved in the
exploration, production, transportation and processing of petroleum,
natural gas, industrial commodities, metals, minerals and forestry.
PERFORMANCE GRAPH
GLOBAL RESOURCES FUND
[Global Resources Fund Graph]
Morgan Stanley
Global S&P 500 Commodity Related S&P Energy &
Date Resources Fund Index Equity Index Materials Index
---- -------------- ----- ------------ ---------------
12/31/98 $ 10,000.00 $ 10,000.00 $ 10,000.00 $ 10,000.00
01/29/99 9,505.81 10,418.01 9,515.75 9,419.80
02/26/99 9,418.60 10,094.28 9,525.90 9,417.49
03/31/99 10,348.84 10,498.03 10,299.64 10,454.89
04/30/99 12,063.95 10,904.56 12,233.64 12,273.67
05/28/99 11,482.56 10,647.43 11,375.49 11,794.15
06/30/99 11,656.98 11,237.86 12,170.75 12,049.25
07/30/99 11,686.05 10,887.30 11,878.81 12,098.63
08/31/99 11,540.70 10,833.40 12,174.84 12,104.22
09/30/99 11,133.72 10,536.78 12,304.78 11,657.00
10/29/99 10,901.16 11,203.27 11,856.12 11,616.91
11/30/99 10,930.23 11,431.00 11,734.11 11,721.76
12/31/99 11,453.49 12,103.84 12,360.89 12,125.50
01/31/00 11,075.58 11,495.79 11,359.56 11,557.78
02/29/00 10,465.12 11,278.40 10,644.34 10,755.60
03/31/00 11,598.84 12,381.04 11,940.70 11,866.22
04/28/00 11,424.42 12,008.68 11,955.04 11,641.25
05/31/00 12,005.81 11,762.92 12,825.18 12,351.19
06/30/00 11,279.07 12,052.96 11,749.04 11,563.70
07/31/00 11,075.58 11,864.69 11,434.82 11,400.97
08/31/00 12,296.51 12,601.24 12,314.14 12,078.15
09/29/00 12,267.44 11,936.15 11,833.35 11,992.83
10/31/00 11,802.33 11,885.52 12,177.85 12,170.21
11/30/00 11,220.93 10,949.15 12,505.66 11,845.50
12/31/00 12,674.42 11,002.87 14,553.14 12,849.52
01/31/01 12,267.44 11,393.00 13,746.97 12,480.46
02/28/01 12,063.95 10,354.84 13,798.32 12,366.42
03/30/01 11,889.53 9,699.22 12,952.66 12,069.46
04/30/01 12,965.12 10,452.35 14,325.05 13,311.72
05/31/01 12,819.77 10,522.47 14,740.64 13,536.38
06/30/01 11,656.98 10,266.46 14,047.88 12,726.37
07/31/01 11,191.86 10,165.36 14,464.17 12,585.45
08/31/01 10,784.88 9,529.63 14,369.58 12,260.68
09/30/01 10,087.21 8,760.15 13,076.95 11,272.72
10/31/01 10,755.81 8,927.29 13,637.19 11,607.69
11/30/01 10,843.02 9,611.90 14,235.17 11,715.47
12/31/01 10,959.30 9,696.16 14,579.93 12,070.11
01/31/02 10,988.37 9,554.74 15,001.19 11,978.95
02/28/02 11,598.84 9,370.43 15,480.69 12,538.23
03/31/02 12,674.42 9,722.85 16,221.95 13,253.47
04/30/02 13,459.30 9,133.59 15,956.47 12,590.88
05/31/02 16,191.86 9,066.30 16,603.85 12,844.61
06/30/02 14,331.40 8,420.42 16,032.14 12,744.03
07/31/02 11,133.72 7,764.09 13,773.85 11,181.52
08/31/02 11,686.05 7,815.07 14,078.89 11,175.12
09/30/02 11,453.49 6,965.72 13,139.90 10,071.14
10/31/02 10,697.67 7,578.83 13,349.99 10,431.42
11/30/02 11,104.65 8,024.91 14,140.04 11,079.76
12/31/02 12,908.42 7,553.46 14,036.95 10,942.22
01/31/03 13,650.28 7,355.59 13,806.50 10,582.34
02/28/03 13,917.35 7,245.23 13,642.24 10,656.16
03/31/03 13,442.56 7,315.57 13,097.77 10,751.84
04/30/03 13,412.89 7,918.16 13,670.71 11,021.46
05/31/03 14,985.64 8,335.35 15,041.24 11,791.18
06/30/03 15,252.71 8,441.67 15,508.78 11,737.21
07/31/03 15,994.57 8,590.52 15,630.46 11,815.02
08/31/03 18,012.44 8,758.05 16,732.91 12,440.52
09/30/03 18,962.02 8,665.04 16,659.79 12,057.71
10/31/03 22,107.52 9,155.22 17,963.85 12,463.97
11/30/03 23,858.32 9,235.77 18,501.76 12,584.44
12/31/03 25,760.16 9,720.13 20,580.10 14,189.71
01/31/04 25,217.84 9,898.54 20,171.01 14,112.33
02/29/04 26,543.51 10,036.12 21,613.31 14,775.85
03/31/04 27,236.47 9,884.72 21,918.67 14,626.42
04/30/04 24,585.13 9,729.55 20,616.00 14,586.41
05/31/04 24,615.26 9,863.06 20,987.13 14,752.57
06/30/04 25,278.10 10,054.85 22,364.30 15,514.86
07/31/04 25,398.61 9,722.07 22,397.18 15,782.14
08/31/04 25,458.87 9,761.39 22,546.97 15,763.19
09/30/04 29,104.46 9,867.12 24,341.57 16,875.13
10/31/04 29,978.20 10,017.86 24,194.26 16,917.05
11/30/04 33,744.30 10,423.20 26,303.37 18,037.75
12/31/04 33,594.45 10,777.89 25,929.05 17,864.66
01/31/05 33,818.20 10,515.18 25,466.39 18,041.02
02/28/05 40,530.70 10,736.46 27,713.88 20,827.28
03/31/05 40,051.24 10,546.34 26,700.41 20,138.15
04/30/05 36,982.67 10,346.32 24,818.11 18,967.41
05/31/05 37,398.20 10,675.53 25,098.85 19,153.03
06/30/05 40,498.74 10,690.69 26,126.58 19,830.78
07/31/05 43,183.74 11,088.25 28,038.83 20,952.67
08/31/05 46,060.52 10,987.08 28,793.36 21,495.10
09/30/05 49,928.20 11,076.07 30,174.43 22,455.47
10/31/05 45,613.02 10,891.42 28,495.80 21,021.23
11/30/05 47,211.24 11,303.35 30,038.16 21,743.76
12/31/05 50,046.19 11,307.29 31,613.45 22,018.25
01/31/06 58,206.27 11,606.68 35,840.71 24,466.25
02/28/06 54,599.03 11,638.17 33,405.37 23,001.93
03/31/06 58,731.60 11,783.04 34,861.01 23,939.86
04/30/06 64,370.12 11,941.26 37,721.77 25,055.21
05/31/06 60,447.67 11,597.58 37,007.06 24,256.70
06/30/06 60,307.58 11,613.31 36,685.95 24,623.33
07/31/06 60,622.78 11,684.95 36,872.75 25,233.77
08/31/06 60,027.41 11,962.97 36,185.92 24,795.73
09/30/06 54,458.94 12,271.26 34,790.34 24,319.51
10/31/06 57,996.14 12,671.13 37,015.70 25,535.33
11/30/06 62,058.68 12,912.08 39,887.90 27,367.85
12/31/06 61,149.21 13,093.21 38,997.48 27,073.10
01/31/07 60,160.27 13,291.22 40,111.49 27,098.49
02/28/07 60,531.12 13,031.26 40,469.00 26,911.72
03/31/07 63,003.46 13,177.01 41,384.93 28,216.75
04/30/07 67,330.06 13,760.69 43,581.98 29,415.15
05/31/07 71,697.86 14,240.87 47,573.52 31,390.33
06/30/07 72,934.03 14,004.29 47,937.60 31,721.79
07/31/07 73,675.73 13,570.08 48,356.38 31,676.58
08/31/07 70,049.63 13,773.50 48,025.77 31,810.64
09/30/07 80,227.43 14,288.61 52,379.55 34,358.27
10/31/07 88,757.00 14,515.90 55,129.73 35,039.74
11/30/07 81,092.75 13,909.04 52,296.89 33,606.34
12/31/07 85,578.85 13,812.53 56,634.19 35,439.69
01/31/08 79,417.17 12,984.03 53,003.31 32,312.83
02/28/08 86,605.79 12,562.23 56,754.52 34,094.41
03/31/08 80,884.24 12,507.99 55,047.74 33,352.90
04/30/08 86,459.09 13,117.16 59,244.91 36,439.74
05/31/08 96,337.33 13,287.07 62,784.67 37,844.89
06/30/08 100,347.31 12,166.92 62,461.08 37,821.98
07/31/08 79,906.19 12,064.64 57,040.90 33,669.31
08/31/08 72,962.08 12,239.16 54,237.62 33,276.76
09/30/08 54,379.24 11,148.56 45,592.14 28,792.15
10/31/08 38,779.44 9,276.16 31,529.70 23,268.95
11/30/08 34,720.56 8,610.55 31,645.67 22,634.92
12/31/08 32,412.45 8,702.17 33,294.79 21,976.08
AVERAGE ANNUAL PERFORMANCE For the Periods Ended
December 31, 2008
Six Month One Year Five Year Ten Year
Global Resources Fund (67.70)% (62.13)% 4.70% 12.47%
------------------------------------------------------------------------
S&P 500 Index (28.48)% (37.00)% (2.19)% (1.38)%
------------------------------------------------------------------------
Morgan Stanley Commodity
Related Equity Index (46.70)% (41.21)% 10.09% 12.77%
------------------------------------------------------------------------
S&P Energy and Materials
Index (41.90)% (37.99)% 9.13% 8.18%
Performance data quoted above is historical. Past performance is no
guarantee of future results. Current performance may be higher or lower
than the performance data quoted. Investment return and principal value
of an investment will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. The graph
and table do not reflect the deduction of taxes that a shareholder would
pay on fund distributions or the redemption of fund shares.
The S&P 500 Index is a widely recognized capitalization-weighted index
of 500 common stock prices in U.S. companies. The Morgan Stanley
Commodity Related Equity Index is an equal-dollar weighted index based
on shares of widely held companies involved in commodity-related
industries such as energy, non-ferrous metals, agriculture and forest
products. In the future, this index will be used as the primary
benchmark comparison for this fund as the Adviser believes it is more
representative of the investments in the fund. The previous benchmark
was the S&P Energy and Materials Index. The S&P Energy and Materials
Index is a combination of the S&P 500 Energy Index and the S&P 500
Materials Index calculated on a 70% and 30% weighting, respectively,
with monthly rebalancing of weights. The returns for the indexes reflect
no deduction for fees, expenses or taxes.
The Adviser has agreed to limit the fund's total operating expenses to
1.50% on an annualized basis through September 30, 2009; however, the
limitation may be revised at any time by the funds' Board of Trustees.
Please visit our website at usfunds.com for updated performance
information for different time periods.
35
GLOBAL RESOURCES FUND
THE SIX-MONTH PERIOD IN REVIEW - ECONOMIC AND POLITICAL ISSUES THAT
AFFECTED THE FUND
The economy contracted significantly in the second half of the year
as negative fallout from overleveraged banks and speculative loans
accelerated, causing severe dislocation in the international equity
markets. The Standard & Poor's 500 Index declined 37 percent in 2008
(the last six months had a 28 percent decline), with periods of
extreme volatility that were on par with the Great Depression era of
the 1930s.
Credit markets froze when investment banking giant Lehman Brothers
filed for bankruptcy in September. Mortgage underwriters Fannie Mae
and Freddie Mac were nationalized by the federal government in order
to avoid a complete financial collapse. As a result, credit spreads
between banks, corporations and sovereign nations ballooned, making
it virtually impossible to roll over or secure new loans.
Barack Obama won the 2008 presidential election and quickly
responded to rising unemployment and deteriorating economic
fundamentals. President Obama pledged to introduce a stimulus
package that would create jobs and revitalize the economy.
The Russian army invaded the Republic of Georgia in an effort to
regain influence in the Caucasus region. This invasion strained
relations with NATO countries and threatened oil supplies that move
through the BTC pipeline. Russian oil production declined in 2008,
mainly due to resource nationalism and declining foreign investment.
It was Russia's first output shortfall in 13 years.
INVESTMENT HIGHLIGHTS
OVERVIEW
For the six-month period ended December 31, 2008, the Global
Resources Fund posted a negative return of 67.70 percent versus the
fund's benchmark, the Morgan Stanley Commodity Related Equity Index
(CRX), which declined by 46.70 percent. The S&P 500 Index saw a
28.48 percent decline as volatility reached historic levels due to
the global banking crisis.
The fund reduced its exposure to small and mid-sized oil and gas
equities in response to the $100 per barrel decline in the price of
crude oil and a 58 percent reduction in the price of natural gas.
The managers also reduced equity holdings with exposure to
economically sensitive metals, such as copper and aluminum, due to
weakening global industrial production. Additionally, the fund
lowered exposure to certain emerging market
36
GLOBAL RESOURCES FUND
equities due to the strength of the U.S. dollar. As a result of
increased commodity and equity market volatility, the fund's
portfolio turnover increased to 100 percent from 67 percent for the
same period in the prior year as the managers increased the average
cash position, and the frequency of sub-sector rotations in
accordance with our proprietary models.
INVESTMENT PROCESS
Our top-down analysis reviews global trends, including economic
outlook, the current political and legislative environment,
government policy changes, socioeconomic trends, supply and demand
fundamentals, currency effects and other similar items. We combine
that with a bottom-up analysis that emphasizes companies that we
believe have prospects to generate meaningful per-share growth in
reserves, production and cash flow and high returns on capital.
The fund typically invests in equity derivatives, including warrants
and exchange-traded options, to manage risk and volatility when the
managers identify opportunities to exploit the pricing of equity
derivatives relative to the underlying equity.
STRENGTHS
* Fund performance benefited from exposure to gold and related
mining equities. Holdings in Goldcorp, Inc.(1) and the SPDR Gold
Trust(2) outperformed the benchmark.
* The AMEX Oil Index(3) outperformed the S&P 500 Energy Index(4) by
500 basis points in the period. Management's decision to rotate
into large-cap oil stocks aided fund performance as positions in
Exxon Mobil Corp.,(5) Chevron,(6) ConocoPhillips,(7) and BP plc(8)
made positive contributions.
* The late fourth quarter recovery in refining margins and the
fund's corresponding holdings in Valero Energy Corp.,(9) Tesoro
Corp.(10) and Sunoco, Inc.(11) made a meaningful contribution to
the portfolio.
* The fund's ability to employ defensive positions in inverse
exchange-traded funds and covered call writing helped offset
downside volatility and added to performance in the period.
WEAKNESSES
* The price of crude oil and natural gas fell by an average of 63
percent in the period to $44.60 a barrel and $5.60 per thousand
cubic feet. Accordingly, the fund's holdings in oil and gas
exploration and production companies adversely affected
performance.
37
GLOBAL RESOURCES FUND
* In response to lower commodity prices, producers significantly
reduced exploration and development budgets, which negatively
impacted the fund's holdings in oil service and equipment
contractors. The Philadelphia Oil Service Sector Index(12)
declined nearly 66 percent in the last six months.
* The divergence between large-cap natural resource equities and
junior exploration companies weighed on performance during the
period. The S&P/TSX Venture Composite Index(13) fell 75 percent in
U.S. dollar terms, which materially underperformed the fund's
large-cap benchmark.
* The fund's foreign holdings listed in Canada, Australia and Latin
America were particularly impaired by the strength of the trade-
weighted U.S. dollar, which increased by 12 percent in the period.
* The Baltic Dry Freight Index(14) fell 92 percent as global trade
seized in response to the credit crisis. Additionally, the price
of coal was weakened by lower exports and soft utility demand,
which resulted in a near 80 percent drop in coal equities.
CURRENT OUTLOOK
OPPORTUNITIES
* In response to the weakening global economy, the U.S., Europe and
China have committed more than $2 trillion in a synchronized
effort to jump-start economic growth. Much of the stimulus is
aimed at commodity intensive infrastructure projects.
* In an effort to support falling oil prices, OPEC agreed to cut
production by 2.2 million barrels a day. Since September, members
of the oil cartel have pledged cuts totaling 4.2 million barrels a
day, or nearly 12 percent of their capacity.
* According to the International Energy Agency's latest World Energy
Outlook report, $26.3 trillion of cumulative investment will be
necessary through 2030 for energy supply infrastructure.
* President Obama promised to spend $150 billion over the next 10
years to develop alternative clean energy technologies. The
International Energy Agency forecasts crude oil demand to rise
from 87 million barrels a day to 94 million barrels by 2013, or
1.6 percent per annum. OPEC spare capacity is expected to fall to
2.2 percent over the same time period.
38
GLOBAL RESOURCES FUND
THREATS
* The International Monetary Fund expects developed economies to
contract by 0.3 percent in 2009 based on further deterioration in
producer and consumer confidence and continued financial
de-leveraging.
* An economic recovery could be at risk if the government is unable
to put together a viable plan to clean up bad loans within the
banking sector in order to normalize credit markets and restart
growth.
* According to the Energy Information Administration, U.S. oil
demand is expected to grow only 1 million barrels per day, or 0.2
percent, over the next two decades, as higher vehicle fuel
standards and increased use of renewable fuels constrain petroleum
consumption.
* The global financial and credit crises combined with a recession,
have exposed several emerging market countries to serious
financial market risks that could further disrupt an economic
recovery.
(1)This security comprised 3.17% of the total net assets of the
fund as of December 31, 2008.
(2)This security comprised 3.91% of the total net assets of the
fund as of December 31, 2008.
(3)The AMEX Oil Index (XOI) is a price weighted index designed to
measure the performance of the oil industry through changes in
the prices of a cross section of widely-held corporations
involved in the exploration, production, and development of
petroleum.
(4)The S&P 500 Energy Index is a capitalization-weighted index that
tracks the companies in the energy sector as a subset of the S&P
500.
(5)This security comprised 4.30% of the total net assets of the
fund as of December 31, 2008.
(6)The fund did not hold this security as of December 31, 2008.
(7)This security comprised 2.34% of the total net assets of the
fund as of December 31, 2008.
(8)This security comprised 1.61% of the total net assets of the
fund as of December 31, 2008.
(9)This security comprised 0.89% of the total net assets of the
fund as of December 31, 2008.
(10)This security comprised 1.13% of the total net assets of the
fund as of December 31, 2008.
(11)This security comprised 1.22% of the total net assets of the
fund as of December 31, 2008.
(12)The Philadelphia Oil Service Sector Index is a price-weighted
index composed of 15 companies that provide oil drilling and
production services, oil field equipment, support services and
geophysical/reservoir services.
(13)The S&P/TSX Venture Composite Index is a value-weighted index
that tracks the continuous price only performance of stocks
traded in meaningful levels on the Canadian Venture Exchange.
(14)The Baltic Dry Freight Index is an economic indicator that
portrays an assessed price of moving major raw materials by sea
as compiled by the London-based Baltic Exchange.
39
GLOBAL RESOURCES FUND
TOP 10 HOLDINGS BASED ON TOTAL INVESTMENTS December 31, 2008
(EXCLUDING REPURCHASE AGREEMENTS)
EXXON MOBIL CORP. 4.49%
OIL & GAS - INTEGRATED
---------------------------------------------------------------
SPDR GOLD TRUST 4.09%
EXCHANGE-TRADED FUND
---------------------------------------------------------------
CHINA SHENHUA ENERGY CO., LTD. 3.62%
COAL
---------------------------------------------------------------
GOLDCORP, INC. 3.32%
GOLD & SILVER MINING
---------------------------------------------------------------
PETROCHINA CO. LTD. 3.20%
OIL & GAS - INTEGRATED
---------------------------------------------------------------
RANGE RESOURCES CORP. 2.82%
OIL & GAS EXPLORATION & PRODUCTION - SENIOR
---------------------------------------------------------------
XTO ENERGY, INC. 2.58%
OIL & GAS EXPLORATION & PRODUCTION - SENIOR
---------------------------------------------------------------
OCCIDENTAL PETROLEUM CORP. 2.50%
OIL & GAS - INTEGRATED
---------------------------------------------------------------
CONOCOPHILLIPS 2.45%
OIL & GAS - INTEGRATED
---------------------------------------------------------------
BHP BILLITON LTD. 2.41%
GENERAL METAL & MINERAL MINING
---------------------------------------------------------------
TOTAL TOP TEN HOLDINGS 31.48%
PORTFOLIO PROFILE December 31, 2008
Country Distribution* % of Investments
---------------------------------------------------------------
United States 61.94%
---------------------------------------------------------------
Canada 20.27%
---------------------------------------------------------------
People's Republic of China 9.01%
---------------------------------------------------------------
Australia 2.77%
---------------------------------------------------------------
United Kingdom 1.96%
---------------------------------------------------------------
Other Foreign 4.05%
---------------------------------------------------------------
* Country distribution shown is based on domicile and is not
intended to conform to the classification of economic ties
as described in the prospectus. Investments in companies
that are economically tied to foreign countries were 40% of
total assets at December 31, 2008.
40
GLOBAL RESOURCES FUND
PORTFOLIO ALLOCATION BY INDUSTRY SECTOR
BASED ON TOTAL INVESTMENTS December 31, 2008
[Pie Chart]
Oil & Gas Exploration & Production 24.5%
Oil & Gas - Integrated 22.0%
Oil & Gas Drilling 3.9%
Oil & Gas Equipment & Services 1.8%
Precious Metals 17.8%
Metals & Mining 12.9%
General Basic Materials 10.2%
Other Sectors 1.5%
Cash Equivalent 5.4%
Energy:
Oil & Gas Exploration & Production 24.5%
Oil & Gas - Integrated (includes 22.0%
Refining and Marketing)
Oil & Gas Drilling 3.9%
Oil & Gas Equipment & Services 1.8%
Total Energy 52.2%
Basic Materials:
Precious Metals (includes Gold/Silver 17.8%
Mining and Platinum Group Metals)
Metals & Mining (includes Copper, 12.9%
Uranium and Coal)
General Basic Materials 10.2%
Total Basic Materials 40.9%
Other Sectors 1.5%
Cash Equivalent 5.4%
-----
Total Investments 100.0%
=====
41
PRECIOUS METALS AND MINERALS FUNDS
MANAGEMENT TEAM'S PERSPECTIVE
INTRODUCTION
The World Precious Minerals Fund (UNWPX) and the Gold and Precious
Metals Fund (USERX) pursue an objective of long-term capital growth
through investments in gold and precious metals and minerals
companies. The Gold and Precious Metals Fund also pursues current
income as a secondary objective and focuses on established,
gold-producing companies. The World Precious Minerals Fund focuses
on equity securities of companies principally engaged in the
exploration, mining and processing of precious minerals such as
gold, silver, platinum, and diamonds. Although this fund has the
latitude to invest in a broad range of precious minerals, it
currently remains focused on the gold sector.
PERFORMANCE GRAPHS
WORLD PRECIOUS MINERALS FUND
[World Precious Minerals Fund Graph]
NYSE Arca
World Precious S&P 500 Gold Miners AMEX Gold
Date Minerals Fund Index Index BUGS Index
---- ------------- ----- ----- ----------
12/31/98 $ 10,000.00 $ 10,000.00 $ 10,000.00 $ 10,000.00
01/29/99 9,573.56 10,418.01 9,886.49 9,949.14
02/26/99 9,371.00 10,094.28 9,512.61 9,838.27
03/31/99 9,179.10 10,498.03 9,551.69 9,477.02
04/30/99 10,277.19 10,904.56 11,082.22 11,465.12
05/28/99 8,400.85 10,647.43 9,326.01 9,760.36
06/30/99 8,304.90 11,237.86 9,878.41 10,368.53
07/30/99 7,835.82 10,887.30 9,263.36 9,941.33
08/31/99 8,166.31 10,833.40 9,950.82 10,471.05
09/30/99 10,287.85 10,536.78 12,487.12 12,843.14
10/29/99 9,232.41 11,203.27 11,191.35 11,823.36
11/30/99 8,827.29 11,431.00 10,376.57 11,169.70
12/31/99 8,731.34 12,103.84 10,143.82 10,997.38
01/31/00 7,750.53 11,495.79 9,085.52 9,779.24
02/29/00 7,878.46 11,278.40 9,350.94 9,991.50
03/31/00 7,281.45 12,381.04 8,780.36 9,252.31
04/28/00 6,918.98 12,008.68 8,170.03 8,763.16
05/31/00 6,705.76 11,762.92 8,171.38 8,492.24
06/30/00 6,855.01 12,052.96 8,568.49 8,677.60
07/31/00 6,130.06 11,864.69 7,796.83 7,380.12
08/31/00 6,375.27 12,601.24 8,078.41 7,544.96
09/29/00 5,724.95 11,936.15 7,624.71 6,960.79
10/31/00 5,117.27 11,885.52 6,483.88 5,753.00
11/30/00 5,063.97 10,949.15 6,699.11 6,285.77
12/31/00 5,406.18 11,002.87 6,973.29 6,113.68
01/31/01 5,352.66 11,393.00 7,324.60 7,116.45
02/28/01 5,341.95 10,354.84 8,069.32 8,218.09
03/30/01 4,988.68 9,699.22 7,266.33 7,425.74
04/30/01 5,459.71 10,452.35 8,333.73 8,378.60
05/31/01 5,673.82 10,522.47 8,742.63 9,366.28
06/30/01 5,652.41 10,266.46 8,949.78 9,463.22
07/31/01 5,331.25 10,165.36 8,738.25 9,085.11
08/31/01 5,406.18 9,529.63 9,370.14 9,857.44
09/30/01 5,716.64 8,760.15 9,834.28 10,739.40
10/31/01 5,641.70 8,927.29 9,542.93 10,155.99
11/30/01 5,609.58 9,611.90 9,165.01 9,587.32
12/31/01 5,812.99 9,696.16 9,712.35 9,776.07
01/31/02 6,829.99 9,554.74 11,168.45 11,404.42
02/28/02 7,483.01 9,370.43 12,404.59 12,932.30
03/31/02 8,703.42 9,722.85 13,642.76 14,834.07
04/30/02 9,613.37 9,133.59 14,541.75 16,141.81
05/31/02 13,531.52 9,066.30 18,052.14 21,234.64
06/30/02 11,165.64 8,420.42 15,742.19 19,070.49
07/31/02 8,028.99 7,764.09 13,023.01 16,127.44
08/31/02 9,142.34 7,815.07 15,439.73 19,375.68
09/30/02 9,206.57 6,965.72 15,566.37 18,980.05
10/31/02 7,986.16 7,578.83 13,958.71 16,696.84
11/30/02 8,071.81 8,024.91 13,982.96 17,471.47
12/31/02 10,662.09 7,553.46 17,452.59 21,885.19
01/31/03 11,068.78 7,355.59 17,590.69 21,729.85
02/28/03 10,662.09 7,245.23 15,752.64 19,965.93
03/31/03 10,046.54 7,315.57 14,599.68 18,698.59
04/30/03 9,782.74 7,918.16 14,452.83 18,866.69
05/31/03 10,497.21 8,335.35 16,257.20 21,421.96
06/30/03 10,717.05 8,441.67 17,205.36 22,628.03
07/31/03 11,409.53 8,590.52 18,187.21 24,845.67
08/31/03 13,377.07 8,758.05 20,806.70 29,395.26
09/30/03 14,410.30 8,665.04 20,712.39 29,646.62
10/31/03 17,630.91 9,155.22 22,648.79 32,819.25
11/30/03 20,543.75 9,235.77 26,099.23 37,718.78
12/31/03 20,545.66 9,720.13 25,666.75 36,902.58
01/31/04 19,065.78 9,898.54 22,527.54 32,784.99
02/29/04 19,904.38 10,036.12 23,567.65 34,204.22
03/31/04 21,643.23 9,884.72 25,202.60 35,909.64
04/30/04 16,919.95 9,729.55 19,279.53 27,234.27
05/31/04 17,474.91 9,863.06 21,271.51 30,466.87
06/30/04 16,870.62 10,054.85 20,514.67 28,794.02
07/31/04 16,056.69 9,722.07 20,182.90 28,373.23
08/31/04 16,747.30 9,761.39 21,874.09 31,655.81
09/30/04 19,337.09 9,867.12 24,099.50 35,334.28
10/31/04 19,781.05 10,017.86 24,442.39 35,696.21
11/30/04 21,630.90 10,423.20 25,181.72 36,221.65
12/31/04 20,744.16 10,777.89 23,213.98 32,949.90
01/31/05 19,666.38 10,515.18 21,586.45 30,867.83
02/28/05 21,695.15 10,736.46 23,271.25 32,994.77
03/31/05 20,680.77 10,546.34 21,991.31 30,992.88
04/30/05 17,891.21 10,346.32 19,600.53 27,355.99
05/31/05 17,827.81 10,675.53 20,216.92 28,559.68
06/30/05 19,653.70 10,690.69 21,956.62 30,987.17
07/31/05 19,767.82 11,088.25 21,411.30 30,272.45
08/31/05 20,972.40 10,987.08 22,438.61 31,718.81
09/30/05 23,939.48 11,076.07 26,254.51 37,808.50
10/31/05 21,936.07 10,891.42 24,272.96 34,384.56
11/30/05 24,129.67 11,303.35 26,595.04 37,576.52
12/31/05 27,151.20 11,307.29 29,963.96 42,801.04
01/31/06 33,591.60 11,606.68 36,062.85 52,954.99
02/28/06 32,736.44 11,638.17 32,538.31 47,329.69
03/31/06 37,413.07 11,783.04 35,418.51 52,092.05
04/30/06 41,982.81 11,941.26 39,854.15 58,698.94
05/31/06 38,655.72 11,597.58 35,410.08 51,729.85
06/30/06 38,562.19 11,613.31 35,391.90 52,333.48
07/31/06 39,310.45 11,684.95 35,421.87 51,127.25
08/31/06 40,112.16 11,962.97 37,076.70 54,253.73
09/30/06 35,782.93 12,271.26 32,598.61 46,807.41
10/31/06 38,508.74 12,671.13 34,705.11 49,696.83
11/30/06 42,503.92 12,912.08 38,271.75 55,418.67
12/31/06 41,349.94 13,093.21 36,512.85 52,893.91
01/31/07 41,319.60 13,291.22 36,205.33 52,584.85
02/28/07 41,926.35 13,031.26 36,597.39 53,211.76
03/31/07 41,274.09 13,177.01 36,100.91 52,900.05
04/30/07 43,200.52 13,760.69 36,278.76 53,235.17
05/31/07 43,382.55 14,240.87 35,838.53 52,393.47
06/30/07 42,988.16 14,004.29 34,658.96 51,656.24
07/31/07 44,611.21 13,570.08 36,643.20 54,120.30
08/31/07 39,544.86 13,773.50 34,332.24 51,351.99
09/30/07 47,993.84 14,288.61 41,258.38 61,691.92
10/31/07 56,169.78 14,515.90 46,180.74 68,305.85
11/30/07 48,509.57 13,909.04 42,331.84 63,811.80
12/31/07 50,867.45 13,812.53 42,667.99 64,354.77
01/31/08 53,347.84 12,984.03 46,610.87 72,159.72
02/28/08 58,521.79 12,562.23 49,341.84 76,428.91
03/31/08 51,468.17 12,507.99 44,470.68 68,979.08
04/30/08 46,429.87 13,117.16 40,530.50 63,237.33
05/31/08 49,724.14 13,287.07 42,898.72 66,440.36
06/30/08 49,065.29 12,166.92 44,979.96 70,891.00
07/31/08 41,895.40 12,064.64 40,455.39 63,655.86
08/31/08 36,566.43 12,239.16 34,911.25 54,276.81
09/30/08 30,074.77 11,148.56 31,341.57 49,597.50
10/31/08 17,614.67 9,276.16 19,362.05 30,605.62
11/30/08 18,622.33 8,610.55 24,668.73 39,115.64
12/31/08 23,930.23 8,702.17 31,236.82 47,859.90
AVERAGE ANNUAL PERFORMANCE For the Periods Ended
December 31, 2008
Six Month One Year Five Year Ten Year
World Precious Minerals Fund (51.23)% (52.96)% 3.09% 9.11%
- -----------------------------------------------------------------------
S&P 500 Index (28.48)% (37.00)% (2.19)% (1.38)%
- -----------------------------------------------------------------------
NYSE Arca Gold Miners Index* (30.55)% (26.79)% 4.00% 12.05%
- -----------------------------------------------------------------------
AMEX Gold BUGS Index (32.49)% (25.63)% 5.33% 16.93%
<FN>
* These are not total returns. These returns reflect simple
appreciation only and do not reflect dividend reinvestment.
</FN>
Performance data quoted above is historical. Past performance is no
guarantee of future results. Current performance may be higher or lower
than the performance data quoted. Investment return and principal value
of an investment will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. The graph
and table do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares.
The S&P 500 Index is a widely recognized capitalization-weighted index
of 500 common stock prices in U.S. companies. The NYSE Arca Gold Miners
Index is a modified market capitalization-weighted index comprised of
publicly-traded companies involved primarily in the mining for gold and
silver. In the future, this index will be used as the primary benchmark
comparison for this fund as the Adviser believes it is more
representative of the investments in the fund. The previous benchmark
was the AMEX Gold BUGS Index. The AMEX Gold BUGS Index is a modified
equal-dollar weighted index of companies involved in major gold mining.
The returns for the indexes reflect no deduction for fees, expenses or
taxes.
The Adviser has agreed to limit the fund's total operating expenses to
1.50% on an annualized basis through September 30, 2009; however, the
limitation may be revised at any time by the funds' Board of Trustees.
42
PRECIOUS METALS AND MINERALS FUNDS
GOLD AND PRECIOUS METALS FUND
[Gold and Precious Metals Fund Graph]
Philadelphia
FTSE Stock Exchange
Gold and Precious S&P 500 Gold Mines Gold & Silver
Date Metals Fund Index Index Index
---- ----------- ----- ----- -----
12/31/98 $10,000.00 $10,000.00 $10,000.00 $10,000.00
01/29/99 9,554.97 10,418.01 9,974.96 9,736.80
02/26/99 9,345.55 10,094.28 9,325.19 9,324.07
03/31/99 9,293.19 10,498.03 9,299.18 9,214.93
04/30/99 10,340.31 10,904.56 10,893.53 11,335.26
05/28/99 8,717.28 10,647.43 8,863.85 9,420.96
06/30/99 8,952.88 11,237.86 9,470.91 10,358.87
07/30/99 8,376.96 10,887.30 9,038.17 9,730.50
08/31/99 8,821.99 10,833.40 9,609.60 10,531.65
09/30/99 11,230.37 10,536.78 12,084.52 12,552.28
10/29/99 10,052.36 11,203.27 10,483.56 10,879.94
11/30/99 9,633.51 11,431.00 10,016.78 10,505.33
12/31/99 9,738.22 12,103.84 9,933.63 10,651.06
01/31/00 8,560.21 11,495.79 8,766.23 9,399.03
02/29/00 8,612.57 11,278.40 9,042.96 9,433.24
03/31/00 7,958.12 12,381.04 8,364.83 8,927.42
04/28/00 7,329.84 12,008.68 8,093.24 8,650.91
05/31/00 7,329.84 11,762.92 8,337.65 8,928.42
06/30/00 7,643.98 12,052.96 8,640.59 9,173.23
07/31/00 6,910.99 11,864.69 7,797.57 8,068.87
08/31/00 7,329.84 12,601.24 7,895.06 8,362.13
09/29/00 6,858.64 11,936.15 7,475.48 7,977.29
10/31/00 6,178.01 11,885.52 6,337.86 7,010.52
11/30/00 6,282.72 10,949.15 6,684.89 7,555.36
12/31/00 6,832.46 11,002.87 7,315.17 8,252.04
01/31/01 6,753.93 11,393.00 7,142.35 7,842.73
02/28/01 6,910.99 10,354.84 7,648.72 8,476.89
03/30/01 6,282.72 9,699.22 6,895.91 7,681.83
04/30/01 7,120.42 10,452.35 8,040.16 8,902.66
05/31/01 7,434.55 10,522.47 8,315.82 9,244.52
06/30/01 7,408.38 10,266.46 8,308.12 8,618.73
07/31/01 6,858.64 10,165.36 8,110.36 8,588.04
08/31/01 7,041.88 9,529.63 8,628.50 9,193.23
09/30/01 7,329.84 8,760.15 9,411.92 9,395.25
10/31/01 7,225.13 8,927.29 9,001.96 8,867.58
11/30/01 7,172.77 9,611.90 8,641.13 8,568.90
12/31/01 7,591.62 9,696.16 8,974.25 8,875.62
01/31/02 8,848.17 9,554.74 10,256.44 10,000.76
02/28/02 10,130.89 9,370.43 11,273.67 10,663.01
03/31/02 11,570.68 9,722.85 12,430.66 11,607.23
04/30/02 12,722.51 9,133.59 13,257.84 12,109.91
05/31/02 16,858.64 9,066.30 15,191.62 13,828.80
06/30/02 13,821.99 8,420.42 13,011.47 11,735.67
07/31/02 10,209.42 7,764.09 11,008.22 9,942.34
08/31/02 11,806.28 7,815.07 12,533.97 11,493.69
09/30/02 12,146.60 6,965.72 12,600.97 11,541.47
10/31/02 10,471.20 7,578.83 11,459.92 10,498.86
11/30/02 10,575.92 8,024.91 11,166.83 10,488.93
12/31/02 13,769.63 7,553.46 13,673.43 12,723.13
01/31/03 14,109.95 7,355.59 13,612.33 12,762.92
02/28/03 13,219.90 7,245.23 12,743.08 12,009.64
03/31/03 12,382.20 7,315.57 11,954.09 11,173.43
04/30/03 11,832.46 7,918.16 11,828.47 10,907.43
05/31/03 13,167.54 8,335.35 13,181.82 12,286.81
06/30/03 13,560.21 8,441.67 13,866.05 13,158.99
07/31/03 14,267.02 8,590.52 14,368.78 13,575.59
08/31/03 16,596.86 8,758.05 16,212.73 15,283.00
09/30/03 17,329.84 8,665.04 16,330.87 15,312.21
10/31/03 20,026.18 9,155.22 17,654.29 16,487.19
11/30/03 23,795.81 9,235.77 19,539.00 18,447.80
12/31/03 23,005.82 9,720.13 19,526.59 18,315.60
01/31/04 20,405.85 9,898.54 17,080.88 16,098.32
02/29/04 21,167.45 10,036.12 17,405.46 16,840.74
03/31/04 23,215.92 9,884.72 18,880.64 17,724.25
04/30/04 17,832.14 9,729.55 14,765.79 13,846.90
05/31/04 19,276.57 9,863.06 16,271.36 15,198.66
06/30/04 18,383.65 10,054.85 15,612.37 14,603.63
07/31/04 17,306.89 9,722.07 15,659.56 14,727.54
08/31/04 18,252.33 9,761.39 17,033.06 16,078.69
09/30/04 20,878.57 9,867.12 18,282.01 17,304.98
10/31/04 21,141.19 10,017.86 18,983.36 17,564.99
11/30/04 22,743.20 10,423.20 19,576.95 18,155.00
12/31/04 21,524.92 10,777.89 18,174.13 16,906.46
01/31/05 20,494.89 10,515.18 16,834.88 15,564.19
02/28/05 21,921.08 10,736.46 17,979.16 16,877.46
03/31/05 20,547.72 10,546.34 17,114.40 16,018.48
04/30/05 17,853.80 10,346.32 15,326.63 14,282.08
05/31/05 18,249.96 10,675.53 15,492.71 14,776.93
06/30/05 20,257.19 10,690.69 17,077.24 15,932.01
07/31/05 20,415.66 11,088.25 16,501.19 15,557.05
08/31/05 21,789.03 10,987.08 17,277.89 16,442.18
09/30/05 24,905.52 11,076.07 20,813.58 19,415.82
10/31/05 23,373.69 10,891.42 19,209.04 18,301.70
11/30/05 25,301.69 11,303.35 20,944.56 19,740.43
12/31/05 28,584.73 11,307.29 23,231.72 22,071.64
01/31/06 35,610.69 11,606.68 27,485.57 26,594.58
02/28/06 33,740.66 11,638.17 23,981.71 23,008.30
03/31/06 38,576.02 11,783.04 25,135.09 24,469.51
04/30/06 44,373.11 11,941.26 28,325.76 27,331.69
05/31/06 41,140.63 11,597.58 26,006.59 24,670.24
06/30/06 41,354.35 11,613.31 26,208.42 24,875.94
07/31/06 42,182.51 11,684.95 25,657.00 24,590.91
08/31/06 43,117.52 11,962.97 26,295.22 25,468.68
09/30/06 38,469.16 12,271.26 23,685.21 22,330.18
10/31/06 40,793.34 12,671.13 24,917.88 23,889.47
11/30/06 44,827.26 12,912.08 27,109.28 25,992.36
12/31/06 42,930.52 13,093.21 26,156.66 24,835.81
01/31/07 42,476.37 13,291.22 25,169.14 24,440.65
02/28/07 42,690.09 13,031.26 25,184.55 24,416.77
03/31/07 40,980.34 13,177.01 24,675.06 23,981.42
04/30/07 41,167.35 13,760.69 24,729.97 24,011.85
05/31/07 40,980.34 14,240.87 24,069.28 24,508.41
06/30/07 40,045.33 14,004.29 23,642.84 23,850.22
07/31/07 41,487.92 13,570.08 25,551.29 26,110.43
08/31/07 38,415.73 13,773.50 24,357.79 24,737.83
09/30/07 47,231.58 14,288.61 30,222.40 29,664.72
10/31/07 54,097.26 14,515.90 33,673.76 33,088.23
11/30/07 48,834.47 13,909.04 31,674.65 30,115.92
12/31/07 50,189.83 13,812.53 31,662.24 30,522.03
01/31/08 55,635.10 12,984.03 34,789.45 32,837.03
02/28/08 59,929.09 12,562.23 36,861.55 34,655.25
03/31/08 54,390.47 12,507.99 32,279.29 31,177.25
04/30/08 49,629.75 13,117.16 29,419.18 30,232.64
05/31/08 52,523.52 13,287.07 31,474.67 32,074.17
06/30/08 53,457.00 12,166.92 33,784.53 34,527.53
07/31/08 47,980.61 12,064.64 30,072.63 29,883.57
08/31/08 42,473.11 12,239.16 25,860.05 26,438.00
09/30/08 38,334.70 11,148.56 24,733.54 23,261.21
10/31/08 25,639.44 9,276.16 15,944.97 14,404.04
11/30/08 29,715.62 8,610.55 20,864.01 18,085.68
12/31/08 36,611.50 8,702.17 25,368.69 22,058.80
AVERAGE ANNUAL PERFORMANCE For the Periods Ended
December 31, 2008
Six Month One Year Five Year Ten Year
Gold and Precious Metals Fund (31.51)% (27.05)% 9.73% 13.85%
- -----------------------------------------------------------------------
S&P 500 Index (28.48)% (37.00)% (2.19)% (1.38)%
- -----------------------------------------------------------------------
FTSE Gold Mines Index* (24.91)% (19.88)% 5.37% 9.75%
- -----------------------------------------------------------------------
Philadelphia Stock Exchange
Gold & Silver Index (36.11)% (27.73)% 3.79% 8.23%
<FN>
* These are not total returns. These returns reflect simple
appreciation only and do not reflect dividend reinvestment.
</FN>
Performance data quoted above is historical. Past performance is no
guarantee of future results. Current performance may be higher or lower
than the performance data quoted. Investment return and principal value
of an investment will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. The graph
and table do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares.
The S&P 500 Index is a widely recognized capitalization-weighted index
of 500 common stock prices in U.S. companies. The FTSE Gold Mines Index
encompasses all gold mining companies that have a sustainable and
attributable gold production of at least 300,000 ounces a year and that
derive 75% or more of their revenue from mined gold. In the future,
this index will be used as the primary benchmark comparison for this
fund as the Adviser believes it is more representative of the
investments in the fund. The previous benchmark was the Philadelphia
Stock Exchange Gold & Silver Index. The Philadelphia Stock Exchange
Gold & Silver Index is a capitalization-weighted index which includes
the leading companies involved in the mining of gold and silver. The
returns for the indexes reflect no deduction for fees, expenses or
taxes.
The Adviser has agreed to limit the fund's total operating expenses to
1.50% on an annualized basis through September 30, 2009; however, the
limitation may be revised at any time by the funds' Board of Trustees.
Please visit our website at usfunds.com for updated performance
information for different time periods.
43
PRECIOUS METALS AND MINERALS FUNDS
PERFORMANCE COMMENTARY
For the six-month period ending December 31, 2008, the Gold and
Precious Metals Fund declined 31.51 percent. The FTSE Gold Mines
Index fell 24.91 percent. The World Precious Minerals Fund posted a
negative return of 51.23 percent. The NYSE Arca Gold Miners Index
fell 30.55 percent. Spot gold finished the period at $882.05, down
$43.35, or 4.68 percent. The S&P 500 Index also posted a negative
return of 28.48 percent, the U.S. Trade Weighted Dollar Index(1)
gained 12.21 percent and the yield on the Bloomberg Generic 90 Day
Treasury Bill fell from 1.76 percent to 0.03 percent.
As of October 1, 2008, both the Gold and Precious Metals Fund and
the World Precious Minerals Fund adopted the FTSE Gold Mines Index
and the NYSE Arca Gold Miners Index as their new performance
benchmarks, respectively. The FTSE Gold Mines Index attempts to
include all gold mining companies that produce at least 300,000
ounces of gold per year and derive 75 percent or more of their
revenue from mined gold. The NYSE Arca Gold Miners Index extends its
scope beyond the senior gold mining companies to pick up more of the
mid-tier gold producers, though it underrepresents the pure
exploration and development stage companies.
The junior mining and exploration companies were still out of favor
with investors due to the unraveling of credit markets. A good proxy
for the performance of exploration and development stage companies
is the S&P/TSX Venture Composite Index,(2) which was down almost 75
percent in the six-month period. As the chart below shows, the NYSE
Arca Gold Miners Index began to rally in November but the S&P/TSX
Venture Composite Index continued to languish. Corporate activity
began to pick up in December with Agnico-Eagle Mines Ltd.(3)
completing one of the first successful stock offerings. We expect to
see more consolidation take place in the coming months, which may
lift current valuations higher in the venture stage arena.
44
PRECIOUS METALS AND MINERALS FUNDS
RELATIVE PERFORMANCE S&P/TSE VENTURE COMPOSITE INDEX
(SPTSXVEN) VS. NYSE ARCA GOLD MINERS INDEX (GDM)
OVER LAST SIX MONTHS SHOWS VENTURE STAGE COMPANIES
LAGGING ON THE RECENT RALLY
[S&P/TSX Venture Composite Index chart]
SPTSXVEN GDM
Date Index Index
---- ----- -----
6/30/2008 100% 100%
7/2/2008 99% 99%
7/3/2008 97% 97%
7/4/2008 97% 97%
7/7/2008 94% 95%
7/8/2008 91% 94%
7/9/2008 91% 94%
7/10/2008 91% 96%
7/11/2008 91% 101%
7/14/2008 91% 105%
7/15/2008 89% 102%
7/16/2008 89% 100%
7/17/2008 88% 98%
7/18/2008 88% 98%
7/21/2008 88% 100%
7/22/2008 87% 97%
7/23/2008 85% 92%
7/24/2008 83% 91%
7/25/2008 83% 92%
7/28/2008 83% 92%
7/29/2008 82% 90%
7/30/2008 83% 90%
7/31/2008 84% 90%
8/1/2008 84% 87%
8/5/2008 79% 80%
8/6/2008 79% 81%
8/7/2008 78% 80%
8/8/2008 76% 76%
8/11/2008 73% 71%
8/12/2008 72% 73%
8/13/2008 72% 78%
8/14/2008 72% 74%
8/15/2008 71% 71%
8/18/2008 70% 73%
8/19/2008 69% 75%
8/20/2008 70% 74%
8/21/2008 72% 79%
8/22/2008 72% 77%
8/25/2008 71% 76%
8/26/2008 72% 77%
8/27/2008 72% 78%
8/28/2008 72% 79%
8/29/2008 72% 78%
9/2/2008 70% 73%
9/3/2008 68% 70%
9/4/2008 66% 67%
9/5/2008 66% 67%
9/8/2008 64% 64%
9/9/2008 59% 58%
9/10/2008 58% 60%
9/11/2008 56% 59%
9/12/2008 59% 65%
9/15/2008 56% 62%
9/16/2008 53% 63%
9/17/2008 53% 70%
9/18/2008 53% 71%
9/19/2008 57% 73%
9/22/2008 59% 79%
9/23/2008 57% 76%
9/24/2008 58% 77%
9/25/2008 57% 75%
9/26/2008 57% 73%
9/29/2008 51% 71%
9/30/2008 52% 70%
10/1/2008 51% 70%
10/2/2008 47% 59%
10/3/2008 47% 60%
10/6/2008 40% 56%
10/7/2008 38% 56%
10/8/2008 36% 65%
10/9/2008 35% 62%
10/10/2008 32% 53%
10/14/2008 35% 57%
10/15/2008 32% 51%
10/16/2008 30% 46%
10/17/2008 31% 45%
10/20/2008 32% 50%
10/21/2008 31% 45%
10/22/2008 28% 38%
10/23/2008 26% 36%
10/24/2008 25% 37%
10/27/2008 24% 34%
10/28/2008 24% 38%
10/29/2008 27% 43%
10/30/2008 28% 45%
10/31/2008 29% 43%
11/3/2008 30% 43%
11/4/2008 33% 50%
11/5/2008 32% 48%
11/6/2008 30% 44%
11/7/2008 30% 46%
11/10/2008 30% 48%
11/11/2008 28% 45%
11/12/2008 26% 40%
11/13/2008 25% 45%
11/14/2008 25% 42%
11/17/2008 25% 41%
11/18/2008 24% 40%
11/19/2008 23% 38%
11/20/2008 21% 37%
11/21/2008 21% 48%
11/24/2008 23% 51%
11/25/2008 23% 51%
11/26/2008 23% 54%
11/27/2008 23% 54%
11/28/2008 24% 55%
12/1/2008 23% 48%
12/2/2008 23% 51%
12/3/2008 22% 50%
12/4/2008 21% 48%
12/5/2008 20% 48%
12/8/2008 21% 52%
12/9/2008 21% 52%
12/10/2008 22% 58%
12/11/2008 23% 57%
12/12/2008 22% 59%
12/15/2008 22% 62%
12/16/2008 23% 67%
12/17/2008 23% 66%
12/18/2008 23% 61%
12/19/2008 22% 62%
12/22/2008 22% 62%
12/23/2008 22% 63%
12/24/2008 22% 63%
12/29/2008 24% 68%
12/30/2008 24% 68%
12/31/2008 25% 69%
Source: Bloomberg. Canadian index values converted to USD returns.
THE SIX-MONTH PERIOD IN REVIEW - ECONOMIC AND POLITICAL ISSUES THAT
AFFECTED THE FUND
Very few investable assets had positive returns over the last six
months as a major deleveraging took place to meet cash calls and
settle up trades in dollars. Despite the extraordinary efforts by
central banks around the world to shore up the economy, most
investors found out what a hard landing really feels like.
Investment demand for gold coins and bars was strong. Scarce
American Eagle one-ounce coins sold at up to 50 percent premiums to
spot market prices. Gold refineries and mints in Switzerland, South
Africa and Australia commented that their production increased
dramatically as they worked to meet investor demand. India started a
successful program for selling small denomination gold coins at post
offices.
According to the World Gold Council, there was strong retail demand
for gold bars and coins, but institutional sales totaled 300 tonnes
just in the September quarter amid a scramble for cash. As we closed
out the year with higher gold prices, much of the jewelry buying was
brought to a standstill in India and Dubai. Jewelers in Dubai
commented that traditional gold sales were off as much as 80 percent
in the first two weeks of December. Indian dealers reported buyers
had stronger interest at the $765 level.
45
PRECIOUS METALS AND MINERALS FUNDS
INVESTMENT HIGHLIGHTS
STRENGTHS
* As 2008 came to a close, there were signs of improvement in
capital markets for gold mining stocks.
* Consolidation activity increased and a number of gold mining
companies successfully raised capital and traded at higher levels.
Approximately $1 billion in deals were booked.
* The mantra of "sell at any price" gave way to the realization that
gold stocks now have some of the most compelling valuations in
years. World gold mine production has fallen for the past three
years and central bank selling of bullion has been greatly
curtailed as their inventories are at record lows.
* Over the six months, our best results came from overweight
positions in Randgold Resources Ltd.,(4) Kinross Gold Corp.,(5)
Agnico-Eagle Mines Ltd.,(3) and puts purchased on the Philadelphia
Stock Exchange Gold & Silver Index.(6)
WEAKNESSES
* The collapse of credit markets shut down the ability of junior
mining and exploration companies to fund their growth, while
rising energy and material costs for most of the gold miners
squeezed their profit margins. Thus share price performance for
most of the gold mining companies was dismal.
* Tax loss selling by Canadians was intense. Canadians can refile
tax returns to obtain tax refunds by using current-year losses to
offset gains booked in the previous three years.
* Over the last six-months, the S&P/TSX Venture Composite Index (a
good barometer for the price performance of exploration stage
companies) fell 75 percent.
* Our most unfavorable investments included Eastern Platinum
Ltd.,(7) Silver Wheaton Corp.,(8) and Yamana Gold, Inc.(9)
CURRENT OUTLOOK
OPPORTUNITIES
* The latest United Nations economic study called the recent dollar
strength temporary and said that "the U.S. currency risks a hard
landing in 2009." The report recommends that international
reserves diversify out of the dollar toward a multi-currency
system. Such a move to
46
PRECIOUS METALS AND MINERALS FUNDS
diversify could lead to a spillover into additional gold purchases
since central bank gold reserves are at more than a 50-year low.
* J.P. Morgan recently cited the complicated and expensive nature of
gold mining as reason for the price of gold to increase another 20
percent to make new investments economically feasible. One of the
top South African gold miners commented that it would need to see
a gold price of $2,000 an ounce to replace its infrastructure.
THREATS
* Wall Street analysts say that mining supply will be "tighter than
ever" as a result of the financial crisis. Mining companies are
expected to either delay or cancel up to $50 billion in
development projects next year due to limited access to capital
and the fall in metals prices.
* Deutsche Bank declared the commodities supercycle over because of
sliding oil prices that will have an adverse effect on gold and
cause it to fall to around $650 per ounce.
* A senior economist at the Bank of Montreal supports this notion
and expressed the bank's belief that the commodity boom is history
and the entrance into a bear market is on the way. This comes
after the Canadian dollar reached its lowest level over a one-year
period.
* There is still uncertainty over how much farther the dollar will
rise as liquidity demands appear unabated in the near-term.
(1)The U.S. Trade Weighted Dollar Index provides a general
indication of the international value of the U.S. dollar.
(2)The S&P/TSX Venture Composite Index is a value-weighted index
that tracks the continuous price only performance of stocks
traded in meaningful levels on the Canadian Venture Exchange.
(3)This security comprised 5.88% of the total net assets of the
World Precious Minerals Fund and 6.73% of the total net assets of
the Gold and Precious Metals Fund as of December 31, 2008.
(4)This security comprised 10.86% of the total net assets of the
World Precious Minerals Fund and 7.34% of the total net assets of
the Gold and Precious Metals Fund as of December 31, 2008.
(5)This security comprised 5.76% of the total net assets of the
World Precious Minerals Fund and 8.31% of the total net assets of
the Gold and Precious Metals Fund as of December 31, 2008.
(6)Neither the World Precious Minerals Fund nor the Gold and
Precious Metals Fund held this security as of December 31, 2008.
(7)This security comprised 1.25% of the total net assets of the
World Precious Minerals Fund and 0.73% of the total net assets of
the Gold and Precious Metals Fund as of December 31, 2008.
(8)This security comprised 2.51% of the total net assets of the
World Precious Minerals Fund and 0.83% of the total net assets of
the Gold and Precious Metals Fund as of December 31, 2008.
47
PRECIOUS METALS AND MINERALS FUNDS
(9)This security comprised 1.93% of the total net assets of the
World Precious Minerals Fund and 1.33% of the total net assets of
the Gold and Precious Metals Fund as of December 31, 2008.
WORLD PRECIOUS MINERALS FUND
TOP 10 HOLDINGS BASED ON TOTAL INVESTMENTS December 31, 2008
(EXCLUDING REPURCHASE AGREEMENTS)
GOLDCORP, INC. 11.17%
SENIOR GOLD PRODUCERS
---------------------------------------------------------------
RANDGOLD RESOURCES LTD. 10.85%
INTERMEDIATE & JUNIOR GOLD PRODUCERS
---------------------------------------------------------------
AGNICO-EAGLE MINES LTD. 5.87%
SENIOR GOLD PRODUCERS
---------------------------------------------------------------
KINROSS GOLD CORP. 5.76%
SENIOR GOLD PRODUCERS
---------------------------------------------------------------
JAGUAR MINING, INC. 3.36%
INTERMEDIATE & JUNIOR GOLD PRODUCERS
---------------------------------------------------------------
RED BACK MINING, INC. 2.66%
INTERMEDIATE & JUNIOR GOLD PRODUCERS
---------------------------------------------------------------
SILVER WHEATON CORP. 2.50%
METAL & MINERAL MINING & EXPLORATION
---------------------------------------------------------------
NEWMONT MINING CORP. 2.44%
SENIOR GOLD PRODUCERS
---------------------------------------------------------------
ROYAL GOLD, INC. 2.16%
GOLD/MINERAL ROYALTY COMPANIES
---------------------------------------------------------------
IAMGOLD CORP. 2.08%
INTERMEDIATE & JUNIOR GOLD PRODUCERS
---------------------------------------------------------------
TOTAL TOP TEN HOLDINGS 48.85%
48
PRECIOUS METALS AND MINERALS FUNDS
GOLD AND PRECIOUS METALS FUND
TOP 10 HOLDINGS BASED ON TOTAL INVESTMENTS December 31, 2008
(EXCLUDING REPURCHASE AGREEMENTS)
KINROSS GOLD CORP. 8.15%
GOLD MINING
---------------------------------------------------------------
RANDGOLD RESOURCES LTD. 7.20%
GOLD MINING
---------------------------------------------------------------
AGNICO-EAGLE MINES LTD. 6.60%
GOLD MINING
---------------------------------------------------------------
GOLDCORP, INC. 5.65%
GOLD MINING
---------------------------------------------------------------
BARRICK GOLD CORP. 5.19%
GOLD MINING
---------------------------------------------------------------
NEWMONT MINING CORP. 4.71%
GOLD MINING
---------------------------------------------------------------
ROYAL GOLD, INC. 4.22%
GOLD ROYALTY COMPANY
---------------------------------------------------------------
GOLD FIELDS LTD. 4.19%
GOLD MINING
---------------------------------------------------------------
SPDR GOLD TRUST 3.96%
EXCHANGE-TRADED FUND
---------------------------------------------------------------
ANGLOGOLD ASHANTI LTD. 3.32%
GOLD MINING
---------------------------------------------------------------
TOTAL TOP TEN HOLDINGS 53.19%
49
PRECIOUS METALS AND MINERALS FUNDS
WORLD PRECIOUS MINERALS FUND
PORTFOLIO PROFILE December 31, 2008
Country Distribution* % of Investments
---------------------------------------------------------------
Canada 60.38%
---------------------------------------------------------------
United States 14.85%
---------------------------------------------------------------
Jersey, Channel Islands 11.37%
---------------------------------------------------------------
Australia 5.57%
---------------------------------------------------------------
South Africa 4.06%
---------------------------------------------------------------
Other Foreign 3.77%
---------------------------------------------------------------
* Country distribution shown is based on domicile and is not
intended to conform to the classification of economic ties
as described in the prospectus. Investments in companies
that are economically tied to foreign countries were 88% of
total assets at December 31, 2008.
GOLD AND PRECIOUS METALS FUND
PORTFOLIO PROFILE December 31, 2008
Country Distribution* % of Investments
---------------------------------------------------------------
Canada 43.22%
---------------------------------------------------------------
United States 27.23%
---------------------------------------------------------------
South Africa 10.91%
---------------------------------------------------------------
Jersey, Channel Islands 7.95%
---------------------------------------------------------------
Bermuda 2.60%
---------------------------------------------------------------
Australia 1.98%
---------------------------------------------------------------
Other Foreign 6.11%
---------------------------------------------------------------
* Country distribution shown is based on domicile and the
locale of company operations may be different.
50
PRECIOUS METALS AND MINERALS FUNDS
WORLD PRECIOUS MINERALS FUND
PORTFOLIO ALLOCATION BY INDUSTRY
BASED ON TOTAL INVESTMENTS December 31, 2008
[Pie Chart]
Senior Gold Producers 35.0%
Intermediate & Junior Gold Producers 28.4%
Gold/Mineral Exploration & Development 17.7%
Metal & Mineral Mining & Exploration 6.2%
Cash Equivalent 3.8%
Gold/Mineral Royalty Company 2.7%
Closed-End and Exchange-Traded Funds 2.2%
Other 4.0%
GOLD AND PRECIOUS METALS FUND
PORTFOLIO ALLOCATION BY INDUSTRY
BASED ON TOTAL INVESTMENTS December 31, 2008
[Pie Chart]
Gold Mining 74.4%
Cash Equivalent 9.9%
Closed-End and Exchange-Traded Funds 8.3%
Gold Royalty Company 4.3%
Other 3.1%
51
EASTERN EUROPEAN FUND
MANAGEMENT TEAM'S PERSPECTIVE
INTRODUCTION
The investment objective of the Eastern European Fund (EUROX) is to
achieve long-term capital growth by investing in a non-diversified
portfolio of equity securities of companies located in the emerging
markets of Eastern Europe.(1)
PERFORMANCE GRAPH
EASTERN EUROPEAN FUND
[Eastern European Fund Graph]
MSCI Emerging
Eastern Markets Europe
European S&P 500 10/40 Index
Date Fund Index (Net Total Return)
---- --------- ------- ------------------
12/31/98 $ 10,000.00 $ 10,000.00 $ 10,000.00
01/29/99 10,323.35 10,418.01 10,713.71
02/26/99 9,401.20 10,094.28 11,066.35
03/31/99 9,844.31 10,498.03 11,583.95
04/30/99 10,634.73 10,904.56 12,653.71
05/28/99 10,874.25 10,647.43 13,030.19
06/30/99 11,532.93 11,237.86 13,270.42
07/30/99 11,976.05 10,887.30 14,250.18
08/31/99 11,688.62 10,833.40 14,506.21
09/30/99 10,083.83 10,536.78 14,625.69
10/29/99 10,371.26 11,203.27 14,612.83
11/30/99 10,754.49 11,431.00 15,505.86
12/31/99 12,970.06 12,103.84 18,861.39
01/31/00 13,568.86 11,495.79 18,296.06
02/29/00 14,227.54 11,278.40 18,649.71
03/31/00 15,748.50 12,381.04 18,865.97
04/28/00 13,616.77 12,008.68 18,209.92
05/31/00 12,670.66 11,762.92 17,514.14
06/30/00 11,832.34 12,052.96 16,175.38
07/31/00 11,892.22 11,864.69 15,911.09
08/31/00 12,359.28 12,601.24 15,035.79
09/29/00 11,041.92 11,936.15 14,278.06
10/31/00 10,562.87 11,885.52 13,775.71
11/30/00 9,245.51 10,949.15 10,956.38
12/31/00 10,191.62 11,002.87 12,311.51
01/31/01 11,029.94 11,393.00 12,924.79
02/28/01 10,263.47 10,354.84 10,871.17
03/30/01 10,059.88 9,699.22 10,067.07
04/30/01 10,514.97 10,452.35 11,370.66
05/31/01 11,077.84 10,522.47 11,039.09
06/30/01 11,401.20 10,266.46 10,540.16
07/31/01 10,922.16 10,165.36 9,469.06
08/31/01 10,802.40 9,529.63 9,411.02
09/30/01 9,976.05 8,760.15 7,855.28
10/31/01 11,041.92 8,927.29 9,171.27
11/30/01 11,724.55 9,611.90 10,344.32
12/31/01 12,167.66 9,696.16 11,316.97
01/31/02 13,185.63 9,554.74 12,295.47
02/28/02 13,029.94 9,370.43 11,152.62
03/31/02 14,203.59 9,722.85 12,201.60
04/30/02 15,341.32 9,133.59 12,848.25
05/31/02 15,568.86 9,066.30 12,474.86
06/30/02 14,622.75 8,420.42 10,935.71
07/31/02 13,724.55 7,764.09 10,305.23
08/31/02 14,443.11 7,815.07 10,554.74
09/30/02 14,263.47 6,965.72 10,138.83
10/31/02 15,245.51 7,578.83 11,215.77
11/30/02 16,419.16 8,024.91 12,421.69
12/31/02 16,383.23 7,553.46 11,689.52
01/31/03 15,868.26 7,355.59 11,484.24
02/28/03 16,395.21 7,245.23 12,068.77
03/31/03 15,784.43 7,315.57 11,212.34
04/30/03 17,760.48 7,918.16 13,355.39
05/31/03 19,473.05 8,335.35 14,897.37
06/30/03 19,556.89 8,441.67 15,037.77
07/31/03 19,293.41 8,590.52 14,958.19
08/31/03 21,221.56 8,758.05 16,835.90
09/30/03 22,658.68 8,665.04 17,693.82
10/31/03 23,281.44 9,155.22 17,955.62
11/30/03 24,047.90 9,235.77 17,879.00
12/31/03 26,434.44 9,720.13 20,148.77
01/31/04 28,316.29 9,898.54 20,734.76
02/29/04 30,981.21 10,036.12 22,396.11
03/31/04 33,128.30 9,884.72 24,374.18
04/30/04 29,996.07 9,729.55 21,440.99
05/31/04 29,655.07 9,863.06 20,552.63
06/30/04 30,324.45 10,054.85 21,116.59
07/31/04 29,554.03 9,722.07 20,561.97
08/31/04 31,019.10 9,761.39 21,721.85
09/30/04 33,785.05 9,867.12 23,513.92
10/31/04 35,881.62 10,017.86 25,019.61
11/30/04 37,675.07 10,423.20 25,615.33
12/31/04 40,277.57 10,777.89 27,308.78
01/31/05 40,724.23 10,515.18 27,866.54
02/28/05 45,703.09 10,736.46 31,903.37
03/31/05 40,829.32 10,546.34 28,581.91
04/30/05 37,939.22 10,346.32 26,999.96
05/31/05 38,871.93 10,675.53 27,617.98
06/30/05 41,407.34 10,690.69 29,329.58
07/31/05 45,584.86 11,088.25 32,283.77
08/31/05 49,525.91 10,987.08 35,200.74
09/30/05 55,161.62 11,076.07 39,205.95
10/31/05 50,747.64 10,891.42 35,841.38
11/30/05 54,885.75 11,303.35 38,961.87
12/31/05 56,704.25 11,307.29 40,426.25
01/31/06 65,690.80 11,606.68 45,938.33
02/28/06 67,485.24 11,638.17 48,205.71
03/31/06 65,590.31 11,783.04 46,734.13
04/30/06 72,035.93 11,941.26 51,710.62
05/31/06 60,666.37 11,597.58 44,807.77
06/30/06 59,101.62 11,613.31 44,863.24
07/31/06 62,633.08 11,684.95 47,984.42
08/31/06 64,370.09 11,962.97 48,586.96
09/30/06 61,929.66 12,271.26 46,708.69
10/31/06 66,494.71 12,671.13 50,359.39
11/30/06 70,987.98 12,912.08 54,217.68
12/31/06 75,295.99 13,093.21 57,282.98
01/31/07 74,335.75 13,291.22 56,467.44
02/28/07 72,945.06 13,031.26 55,847.15
03/31/07 78,127.04 13,177.01 59,357.25
04/30/07 79,865.41 13,760.69 61,118.44
05/31/07 78,358.82 14,240.87 59,941.67
06/30/07 83,689.81 14,004.29 63,816.24
07/31/07 87,762.55 13,570.08 66,830.47
08/31/07 84,203.04 13,773.50 63,918.53
09/30/07 91,404.83 14,288.61 70,037.84
10/31/07 98,904.63 14,515.90 76,729.74
11/30/07 95,792.13 13,909.04 74,836.90
12/31/07 100,041.21 13,812.53 76,840.50
01/31/08 85,256.70 12,984.03 64,267.09
02/28/08 88,506.48 12,562.23 67,878.45
03/31/08 85,477.36 12,507.99 66,264.23
04/30/08 89,349.02 13,117.16 68,257.13
05/31/08 98,636.98 13,287.07 75,568.70
06/30/08 91,294.88 12,166.92 69,467.96
07/31/08 85,517.48 12,064.64 66,391.78
08/31/08 75,106.13 12,239.16 58,183.10
09/30/08 59,338.66 11,148.56 46,100.22
10/31/08 38,215.06 9,276.16 30,398.94
11/30/08 31,715.49 8,610.55 25,723.28
12/31/08 30,812.77 8,702.17 25,490.08
AVERAGE ANNUAL PERFORMANCE For the Periods Ended
December 31, 2008
Two Month One Year Five Year Ten Year
Eastern European Fund (19.37)% (69.20)% 3.11% 11.90%
- ----------------------------------------------------------------------
S&P 500 Index (6.19)% (37.00)% (2.19)% (1.38)%
- ----------------------------------------------------------------------
MSCI Emerging Markets
Europe 10/40 Index
(Net Total Return) (16.15)% (66.83)% 4.81% 9.80%
Performance data quoted above is historical. Past performance is no
guarantee of future results. Current performance may be higher or
lower than the performance data quoted. Investment return and
principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original
cost. Foreign and emerging market investing involves special risks
such as currency fluctuation and less public disclosure, as well as
economic and political risk.
The graph and table do not reflect the deduction of taxes that a
shareholder would pay on fund distributions or the redemption of fund
shares.
The S&P 500 Index is a widely recognized capitalization-weighted index
of 500 common stock prices in U.S. companies. The MSCI Emerging
Markets Europe 10/40 Index (Net Total Return) is a free float-adjusted
market capitalization index that is designed to measure equity
performance in the emerging market countries of Europe (Czech
Republic, Hungary, Poland, Russia, and Turkey). The index is
calculated on a net return basis (i.e., reflects the minimum possible
dividend reinvestment after deduction of the maximum rate withholding
tax). The index is periodically rebalanced relative to the
constituents' weights in the parent index. The returns for the indexes
reflect no deduction for fees, expenses or taxes, except as noted
above.
The Adviser has agreed to limit the fund's total operating expenses to
2.25% on an annualized basis through September 30, 2009; however, the
limitation may be revised at any time by the funds' Board of Trustees.
Please visit our website at usfunds.com for updated performance
information for different time periods.
52
EASTERN EUROPEAN FUND
THE TWO-MONTH PERIOD IN REVIEW - ECONOMIC AND POLITICAL ISSUES THAT
AFFECTED THE FUND
The situation in Russia began to deteriorate in July 2008 when Prime
Minister Putin criticized steel and coal producer Mechel(2) for
selling coal on the international market at a price lower than in
Russia. The subsequent Russian incursion into the Georgian
territories of South Ossetia and Abkhazia gave investors an
additional excuse to avoid the country. A significant weakening of
the ruble gave investors another reason to shy away from the Russian
market despite compelling valuations.
The price of crude oil, from which Russia derives a significant
portion of its export revenue, declined significantly in the second
half of 2008. This caused deterioration of market conditions in the
country that spread to other sectors. Turkey, on the other hand, was
a beneficiary of lower energy and materials prices, and this was
reflected in the positive contribution to the performance of the
fund.
INVESTMENT HIGHLIGHTS
As the fund is focused on relatively few securities (typically it
holds shares in 30 to 40 companies), the performance of an
individual holding can have a significant impact on overall fund
performance.
The fund had a negative return of 19.37 percent for the two-month
period ending December 31, 2008, compared to a total return of
negative 6.19 percent for the S&P 500 Index and negative 16.15
percent for the MSCI Emerging Markets Europe 10/40 (Net Total
Return) Index, the fund's benchmark.
The fund's portfolio allocation is driven by country and sector
investment themes, combined with bottom-up stock selection criteria
that is based on sales growth, return on common equity, free cash
flow to equity, and price to book ratio. The fund invests at least
25 percent of its total assets in companies involved in the oil, gas
or banking industries.
Russian equities comprised the largest component of the fund and
were the main reason for the underperformance compared to the MSCI
index for the reasons discussed above. Fund holdings that
underperformed tended to be concentrated in the energy and materials
sectors, which were negatively impacted by falling demand and
prices. Fund holdings that underperformed during the two-month
period under review included natural gas producer Gazprom OAO(3) and
fertilizer maker Uralkali.(4) Russian telecom companies also
underperformed, with Vimple-Communications(5) leading the decline.
53
EASTERN EUROPEAN FUND
Turkey, the second-largest country exposure in the fund, fared
better. Turkish banks led the advance on mild inflation news and a
stand-by loan guarantee by the International Monetary Fund. In the
November-December period, the best performer for the fund was the
leasing company Finans Finansal Kiralama a.s.,(6) followed by mobile
phone operator Turkcell Iletisim Hizmetleri a.s.(7) We continue to
look for quality names in the Turkish market, one of the most
attractive in terms of valuations, but we remain vigilant about
political risks in that country.
The Czech Republic, with the third-largest weighting in the fund,
was down 2.1 percent in the two-month period. We have underweighted
Hungary relative to the index base on a view that the country's
economy is poised to slip into recession next year. Poland was
another country that was relatively underweight in the fund.
The fund reduced its exposure to the real estate sector in
anticipation of continued lack of demand for commercial and
residential properties. We also trimmed exposure to the financial
sector in light of ruble depreciation and its impact on banks. We
have added positions in the Russian steel sector in anticipation
that it will be one of the early beneficiaries of government
stimulus, rebounding export prices and lower-cost raw materials.
U.S. Global Investors restructured its relationship with subadviser
Charlemagne Capital (IOM) Limited regarding the management of the
Eastern European Fund. U.S. Global assumed day-to-day management of
the fund from Charlemagne Capital on November 7, 2008.
CURRENT OUTLOOK
The short-term outlook for Eastern Europe and other emerging markets
is hard to predict with any degree of certainty. The world's
financial markets are still in turmoil and economic activity is
slowing around the globe. Governments are working to stabilize
markets and economies, though the extent to which they will succeed
is as yet unknown. The longer term outlook, however, remains
encouraging. Russia, the driving force of the region, remains
largely underdeveloped and has an enormous need for better housing,
transport and other infrastructure. We expect demand for its massive
natural resources to recover when global growth resumes. And from
Turkey to Kazakhstan, the desire of consumers to catch up with the
lifestyles of their western counterparts remains as powerful as
ever. These trends give companies operating in the region every
chance to grow earnings and thus share price.
54
EASTERN EUROPEAN FUND
In addition, the current depressed state of world stock markets
means that valuations, on both an historical and comparative basis,
have rarely been more attractive. Most of the region's stock markets
are trading at less than 10 times 2008 earnings, with some (notably
Russia and Turkey) trading on less than five times 2008 earnings. In
the past, such low valuations have proved to be attractive entry
points into markets. They more than discount even the most gloomy of
economic predictions over the year ahead. There is, therefore,
reason to be optimistic over the longer term.
(1)The following countries are considered to be in the Eastern
European region: Albania, Armenia, Azerbaijan, Belarus, Bulgaria,
Croatia, Czech Republic, Estonia, FYR Macedonia, Georgia,
Hungary, Latvia, Lithuania, Moldova, Poland, Romania, Russia,
Slovakia, Slovenia, Turkey and Ukraine.
(2)The fund did not hold this security as of December 31, 2008.
(3)This security comprised 9.13% of the fund's total net assets as
of December 31, 2008.
(4)This security comprised 1.89% of the fund's total net assets as
of December 31, 2008.
(5)This security comprised 4.69% of the fund's total net assets as
of December 31, 2008.
(6)This security comprised 1.21% of the fund's total net assets as
of December 31, 2008.
(7)This security comprised 4.23% of the fund's total net assets as
of December 31, 2008.
COUNTRY DISTRIBUTION*
BASED ON TOTAL INVESTMENTS December 31, 2008
[Pie Chart]
Russian Federation 45.8%
Turkey 16.9%
Czech Republic 10.5%
Poland 5.9%
Kazakhstan 5.8%
Hungary 4.7%
United States 4.4%
Other 6.0%
* Country distribution shown is based on domicile and the locale of
company operations may be different.
55
EASTERN EUROPEAN FUND
TOP 10 HOLDINGS BASED ON TOTAL INVESTMENTS December 31, 2008
(EXCLUDING REPURCHASE AGREEMENTS)
GAZPROM OAO 9.27%
OIL & GAS - INTEGRATED
---------------------------------------------------------------
LUKOIL 7.72%
OIL & GAS - INTEGRATED
---------------------------------------------------------------
SBERBANK RF 7.02%
DIVERSIFIED BANKS
---------------------------------------------------------------
CEZ A.S. 6.79%
ELECTRIC UTILITY
---------------------------------------------------------------
TURKIYE GARANTI BANKASI A.S. 6.13%
DIVERSIFIED BANKS
---------------------------------------------------------------
KAZMUNAIGAS EXPLORATION PRODUCTION 5.75%
OIL & GAS EXPLORATION & PRODUCTION
---------------------------------------------------------------
ROSNEFT OIL CO. OJSC 5.01%
OIL & GAS - INTEGRATED
---------------------------------------------------------------
VIMPEL-COMMUNICATIONS 4.76%
COMMUNICATIONS
---------------------------------------------------------------
OTP BANK NYRT. 4.67%
DIVERSIFIED BANKS
---------------------------------------------------------------
TURKCELL ILETISIM HIZMETLERI A.S. 4.29%
WIRELESS TELECOMMUNICATION SERVICES
---------------------------------------------------------------
TOTAL TOP TEN HOLDINGS 61.41%
TOP 5 INDUSTRIES BASED ON TOTAL INVESTMENTS December 31, 2008
DIVERSIFIED BANKS 26.20%
OIL & GAS - INTEGRATED 22.00%
OIL & GAS EXPLORATION & PRODUCTION 12.18%
COMMUNICATIONS 8.57%
ELECTRIC UTILITY 6.79%
56
GLOBAL EMERGING MARKETS FUND
MANAGEMENT TEAM'S PERSPECTIVE
INTRODUCTION
The investment objective of the Global Emerging Markets Fund (GEMFX)
is to achieve long-term capital growth by investing in a non-
diversified portfolio of the equity securities of companies located
in or with a significant business presence in emerging countries.(1)
PERFORMANCE GRAPH
GLOBAL EMERGING MARKETS FUND
[Global Emerging Markets Fund Graph]
MSCI Emerging
Global Emerging S&P 500 Markets Total
Date Markets Fund Index Net Return Index
---- --------------- ------- ----------------
2/24/2005 $ 10,000.00 $ 10,000.00 $ 10,000.00
2/28/2005 10,180.00 10,029.62 10,196.56
3/31/2005 9,370.00 9,852.10 9,522.68
4/30/2005 9,020.00 9,664.91 9,267.07
5/31/2005 9,190.00 9,972.25 9,589.64
6/30/2005 9,440.00 9,986.21 9,915.45
7/31/2005 10,230.00 10,357.70 10,608.51
8/31/2005 10,520.00 10,263.44 10,699.37
9/30/2005 11,470.00 10,346.58 11,695.59
10/31/2005 10,650.00 10,173.79 10,931.16
11/30/2005 11,440.00 10,558.36 11,835.44
12/31/2005 12,298.06 10,561.53 12,534.99
1/31/2006 13,908.39 10,841.41 13,935.03
2/28/2006 13,764.80 10,870.68 13,918.54
3/31/2006 13,805.82 11,005.47 14,041.19
4/30/2006 14,759.72 11,152.95 15,040.99
5/31/2006 13,077.58 10,831.74 13,465.14
6/30/2006 12,995.53 10,846.91 13,432.22
7/31/2006 13,251.95 10,914.16 13,624.53
8/31/2006 13,672.48 11,173.92 13,971.64
9/30/2006 13,569.91 11,462.20 14,087.99
10/31/2006 14,287.90 11,835.87 14,756.92
11/30/2006 15,241.79 12,060.75 15,853.90
12/31/2006 16,305.69 12,229.60 16,567.76
1/31/2007 16,206.06 12,414.27 16,389.35
2/28/2007 16,128.57 12,170.95 16,292.08
3/31/2007 16,593.50 12,307.26 16,940.86
4/30/2007 17,301.96 12,852.48 17,725.17
5/31/2007 17,910.80 13,300.96 18,603.10
6/30/2007 18,729.95 13,079.99 19,475.14
7/31/2007 20,091.53 12,674.45 20,502.70
8/31/2007 19,615.53 12,864.44 20,066.98
9/30/2007 21,785.19 13,345.56 22,283.04
10/31/2007 24,220.53 13,557.84 24,768.06
11/30/2007 22,183.70 12,991.03 23,012.33
12/31/2007 22,722.72 12,900.90 23,093.03
1/31/2008 19,244.61 12,127.08 20,211.25
2/29/2008 20,151.36 11,733.12 21,703.09
3/31/2008 18,635.61 11,682.45 20,554.58
4/30/2008 20,219.02 12,251.42 22,222.67
5/31/2008 20,584.43 12,410.12 22,634.92
6/30/2008 18,567.94 11,363.89 20,377.38
7/31/2008 17,038.66 11,268.37 19,608.75
8/31/2008 15,116.90 11,431.37 18,042.48
9/30/2008 12,044.80 10,412.75 14,885.04
10/31/2008 8,038.89 8,663.93 10,811.31
11/30/2008 6,983.28 8,042.25 9,997.46
12/31/2008 7,267.85 8,127.82 10,777.19
AVERAGE ANNUAL PERFORMANCE For the Periods Ended
December 31, 2008
Two Month One Year Inception
Global Emerging Markets Fund
(Inception 2/24/05) (9.59)% (68.02)% (7.95)%
------------------------------------------------------------------------
S&P 500 Index (6.19)% (37.00)% (5.24)%
------------------------------------------------------------------------
MSCI Emerging Markets
Total Net Return Index (0.32)% (53.33)% 1.96%
Performance data quoted above is historical. Past performance is no
guarantee of future results. Current performance may be higher or lower
than the performance data quoted. Investment return and principal value
of an investment will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. Foreign
and emerging market investing involves special risks such as currency
fluctuation and less public disclosure, as well as economic and
political risk.
The graph and table do not reflect the deduction of taxes that a
shareholder would pay on fund distributions or the redemption of fund
shares.
The S&P 500 Index is a widely recognized capitalization-weighted index
of 500 common stock prices in U.S. companies. The MSCI Emerging Markets
Total Net Return Index is a free float-adjusted market capitalization
index that is designed to measure equity market performance in emerging
market countries on a net return basis (i.e., reflects the minimum
possible dividend reinvestment after deduction of the maximum rate
withholding tax). The returns for the indexes reflect no deduction for
fees, expenses or taxes, except as noted above.
The Adviser has agreed to limit the fund's total operating expenses to
2.50% on an annualized basis through September 30, 2009; however, the
limitation may be revised at any time by the funds' Board of Trustees.
Please visit our website at usfunds.com for updated performance
information for different time periods.
57
GLOBAL EMERGING MARKETS FUND
THE TWO-MONTH PERIOD IN REVIEW - ECONOMIC AND POLITICAL ISSUES THAT
AFFECTED THE FUND
When China began reporting its monthly macro economic figures, it
became clear that the nation's economy had slowed. Inflation (as
measured by the CPI) was the primary focus of the government for
most of 2008, but in the final months of the year, inflation
concerns cooled off and the government began to focus on growth by
cutting interest rates and introducing a massive RMB 4 trillion
stimulus package that would focus on infrastructure building.
Hong Kong and South Korea are the largest and third-largest
weightings in the fund, and both officially entered recession. Hong
Kong's economy is closely tied to that of China. In South Korea, the
government proposed a stimulus package to lessen the impact of the
recession.
The situation in Russia began to deteriorate in July when Prime
Minister Putin criticized Mechel,(2) a steel and coal producer, for
selling coal on the international market at a price lower than in
Russia. The Russian incursion into the Georgian territories of South
Ossetia and Abkhazia gave investors an additional excuse to avoid
the country, as did the weakening of the ruble by 14 percent between
October and December. The price of crude oil, from which Russia
derives a significant portion of its export revenue, declined
significantly during 2008, which caused deterioration of market
conditions in the country and spread to other sectors.
INVESTMENT HIGHLIGHTS
As the fund is focused on a relatively few securities (typically the
fund holds shares in 60 to 80 companies), the performance of an
individual holding can have a significant impact on the performance
of the fund as a whole.
The fund had a negative return of 9.59 percent for the two-month
period ending December 31, 2008, compared to a total return of
negative 6.19 percent for the S&P 500 Index and negative 0.32
percent for the MSCI Emerging Markets Total Net Return Index, the
fund's benchmark. The underperformance stems primarily from
underweighting the energy sector in the fund and overweighting the
telecom and information technology sector during the period.
The fund's portfolio allocation is driven by country and sector
investment themes, combined with bottom up stock selection criteria
that is based on sales growth, return on common equity, free cash
flow to equity, and price to book ratio.
58
GLOBAL EMERGING MARKETS FUND
The bright spots were in China and Hong Kong, which had a combined
26 percent weighting in the fund at December 31, 2008. In this
market, Shenzhen International Holdings Ltd.(3) and China Grand
Forestry Green Resources Group Ltd.(4) were two of the best
performers, returning 31 percent and 25 percent for the two-month
period, respectively. China Mobile Ltd.,(5) which was the fund's
largest holding at December 31, 2008, returned 16 percent for the
period. The fund also had a positive impact from South Africa, which
accounted for 8 percent of the fund. Anglogold Ashanti Ltd.(6) was
one of the best performers from this country.
South Korea was the third largest country weighting at December 31,
2008, at 11 percent. Samsung Electronics Co., Ltd.,(7) down 11
percent in November-December, was one of the weakest performers. The
fund's exposure to India, at 7 percent, was adversely impacted by a
40 percent price decline in the IT provider Satyam Computer Services
Ltd.(8)
The biggest price declines in the fund came in Russia, which
accounted for 9 percent of the allocation. The coal miner
Raspadskaya(9) and the mobile operator Vimpel-Communications(10)
were the weakest performers, losing just over 50 percent of their
respective values in the two-month period. The sentiment was
particularly bearish in Russia in the fourth quarter of 2008 in
light of lower commodities prices, political instability and the
weakening ruble.
Brazil, which had an 8 percent weighting, was up 0.8 percent in
November-December 2008. Positive momentum came from M&A activity in
the banking sector following an acquisition of Unibanco(11) by Banco
Itau.(2) This was followed by an acquisition of Banco Nossa Caixa
S.A.,(2) whose shares skyrocketed by 111 percent, by Banco do
Brasil.(2) However, the performance of the Brazilian bourse was
uneven, with some commodity-related stocks declining due to lower
commodities prices.
We adjusted our portfolio allocations during the period, increasing
sector weights in energy, power, and materials, and reducing the
exposure to telecom.
U.S. Global Investors restructured its relationship with subadviser
Charlemagne Capital (IOM) Limited regarding the management of the
Global Emerging Markets Fund. U.S. Global assumed day-to-day
management of the fund on November 7, 2008.
CURRENT OUTLOOK
The short-term outlook for emerging markets remains especially
difficult and is hard to predict with any degree of certainty. The
world's financial markets are still in turmoil and economic activity
is slowing around the
59
GLOBAL EMERGING MARKETS FUND
globe. Government attempts at stability are in progress, though the
extent to which they will succeed is as yet unknown.
The longer term outlook, however, remains encouraging. The BRIC
nations -- Brazil, Russia, India and China - are all still largely
underdeveloped and have enormous pent-up need for better housing,
transport and other infrastructure. The demand for natural resources
will likely recover over time given the demand that remains in place
across the region. Elsewhere, from Mexico to Malaysia, the desire on
the part of consumers to catch up with the lifestyles of the West
remains as powerful as ever, and it is in the interests of
democratic governments to work toward fulfilling such desires. These
trends give companies operating in emerging markets a good chance of
growing earnings significantly with a consequent impact on their
share prices.
In addition, the current depressed state of world stock markets
means that valuations, on both an historical and comparative basis,
have rarely been more attractive. Many of the region's stock markets
are trading at less than 10 times 2008 earnings, while Russia and
Turkey are trading at less than five times 2008 earnings. In the
past, such low valuations have proved to be attractive entry points
into markets. They more than discount even the gloomiest of economic
predictions over the year ahead. There is, therefore, reason to be
optimistic over the longer term.
(1)Emerging market countries are those countries defined as such by
the World Bank, the International Finance Corporation, the
United Nations or the European Bank for Reconstruction and
Development or included in the MSCI Emerging Markets Index.
(2)The fund did not hold this security as of December 31, 2008.
(3)This security comprised 1.53% of the fund's total net assets as
of December 31, 2008.
(4)This security comprised 1.45% of the fund's total net assets as
of December 31, 2008.
(5)This security comprised 6.73% of the fund's total net assets as
of December 31, 2008.
(6)This security comprised 1.97% of the fund's total net assets as
of December 31, 2008.
(7)This security comprised 5.58% of the fund's total net assets as
of December 31, 2008.
(8)This security comprised 0.98% of the fund's total net assets as
of December 31, 2008.
(9)This security comprised 0.48% of the fund's total net assets as
of December 31, 2008.
(10)This security comprised 0.47% of the fund's total net assets as
of December 31, 2008.
(11)This security comprised 2.01% of the fund's total net assets as
of December 31, 2008.
60
GLOBAL EMERGING MARKETS FUND
COUNTRY DISTRIBUTION*
BASED ON TOTAL INVESTMENTS December 31, 2008
[Pie Chart]
Hong Kong 13.8%
People's Republic of China 12.6%
Korea, Republic Of 10.7%
Russian Federation 8.6%
Brazil 8.2%
South Africa 7.5%
Mexico 7.3%
India 6.6%
Taiwan 5.8%
Cayman Islands 3.9%
Turkey 2.3%
Other 12.7%
* Country distribution shown is based on domicile and the locale of
company operations may be different.
61
GLOBAL EMERGING MARKETS FUND
TOP 10 HOLDINGS BASED ON TOTAL INVESTMENTS December 31, 2008
(EXCLUDING REPURCHASE AGREEMENTS)
CHINA MOBILE LTD. 7.08%
COMMUNICATIONS
---------------------------------------------------------------
SAMSUNG ELECTRONICS CO., LTD. 5.88%
SEMICONDUCTORS
---------------------------------------------------------------
INDUSTRIAL AND COMMERCIAL BANK OF CHINA LTD. 4.55%
DIVERSIFIED BANKS
---------------------------------------------------------------
AMERICA MOVIL SAB DE C.V. 3.91%
COMMUNICATIONS
---------------------------------------------------------------
METAGE SPECIAL EMERGING MARKETS FUND LTD. 3.86%
CLOSED-END FUND
---------------------------------------------------------------
KB FINANCIAL GROUP, INC. 3.23%
DIVERSIFIED BANKS
---------------------------------------------------------------
SASOL LTD. 3.12%
OIL & GAS - INTEGRATED
---------------------------------------------------------------
SHIMAO PROPERTY HOLDINGS LTD. 3.05%
REAL ESTATE COMPANIES
---------------------------------------------------------------
GAZPROM OAO 2.50%
OIL & GAS - INTEGRATED
---------------------------------------------------------------
SILICONWARE PRECISION INDUSTRIES CO. 2.41%
SEMICONDUCTORS
---------------------------------------------------------------
TOTAL TOP TEN HOLDINGS 39.59%
TOP 5 INDUSTRIES BASED ON TOTAL INVESTMENTS December 31, 2008
DIVERSIFIED BANKS 18.52%
COMMUNICATIONS 14.98%
SEMICONDUCTORS 8.63%
OIL & GAS - INTEGRATED 8.00%
GOLD MINING 3.16%
62
CHINA REGION FUND
MANAGEMENT TEAM'S PERSPECTIVE
INTRODUCTION
The China Region Fund (USCOX) seeks capital appreciation by focusing
on the economic growth in the greater China region, including China,
Hong Kong, Singapore, Korea, Taiwan and other Asian countries.(1)
The fund emphasizes a long-term growth approach over current income.
PERFORMANCE GRAPH
CHINA REGION FUND
[China Region Fund Graph]
MSCI All Country
Far East
China Region Free ex
Date Fund Japan Index
---- ---- -----------
12/31/98 $ 10,000.00 $ 10,000.00
01/29/99 8,750.00 9,658.80
02/26/99 8,697.92 9,471.13
03/31/99 9,635.42 10,501.64
04/30/99 11,640.63 12,913.31
05/28/99 11,354.17 12,315.45
06/30/99 14,531.25 14,430.48
07/30/99 13,802.08 13,852.56
08/31/99 13,880.21 14,064.80
09/30/99 13,151.04 12,926.49
10/29/99 13,020.83 13,534.97
11/30/99 14,427.08 14,872.88
12/31/99 15,572.92 15,940.07
01/31/00 15,651.04 15,576.91
02/29/00 16,692.71 14,740.25
03/31/00 17,343.75 15,400.97
04/28/00 15,572.92 14,128.87
05/31/00 14,739.58 12,962.26
06/30/00 15,911.46 13,547.81
07/31/00 15,989.58 13,043.52
08/31/00 15,651.04 12,866.86
09/29/00 14,348.96 11,364.65
10/31/00 13,072.92 10,464.75
11/30/00 12,369.79 9,931.30
12/31/00 12,632.81 9,902.57
01/31/01 13,160.28 11,227.01
02/28/01 12,500.95 10,676.36
03/30/01 12,395.45 9,506.96
04/30/01 12,896.55 9,521.30
05/31/01 13,318.52 9,428.07
06/30/01 12,975.67 9,213.84
07/31/01 11,894.36 8,846.33
08/31/01 10,971.29 8,687.01
09/30/01 9,731.75 7,293.82
10/31/01 10,100.98 7,658.72
11/30/01 10,813.05 8,702.02
12/31/01 10,971.29 9,488.03
01/31/02 11,235.03 9,870.17
02/28/02 11,103.16 9,885.57
03/31/02 11,657.00 10,584.10
04/30/02 11,973.48 10,709.29
05/31/02 11,947.11 10,463.54
06/30/02 11,551.51 9,887.31
07/31/02 10,786.68 9,505.70
08/31/02 10,391.08 9,279.17
09/30/02 9,520.76 8,208.06
10/31/02 9,599.88 8,644.08
11/30/02 10,048.23 9,068.28
12/31/02 9,626.26 8,439.62
01/31/03 9,916.36 8,539.17
02/28/03 9,916.36 8,120.00
03/31/03 9,494.39 7,730.76
04/30/03 9,547.14 7,975.64
05/31/03 10,628.44 8,626.17
06/30/03 10,997.67 9,112.36
07/31/03 12,026.23 9,872.01
08/31/03 12,949.29 10,568.99
09/30/03 13,371.27 10,594.67
10/31/03 15,665.74 11,484.63
11/30/03 16,114.09 11,300.92
12/31/03 17,436.47 11,880.68
01/31/04 17,542.79 12,648.34
02/29/04 18,526.25 13,103.00
03/31/04 17,914.91 12,806.75
04/30/04 16,107.47 12,030.54
05/31/04 16,027.73 11,700.01
06/30/04 15,575.87 11,566.18
07/31/04 15,416.39 11,220.05
08/31/04 15,549.29 11,767.17
09/30/04 16,612.49 12,147.48
10/31/04 16,639.07 12,191.51
11/30/04 17,702.27 13,225.49
12/31/04 18,170.53 13,571.61
01/31/05 17,572.10 13,649.97
02/28/05 19,176.98 14,413.10
03/31/05 18,578.55 13,709.50
04/30/05 18,252.14 13,535.60
05/31/05 18,007.32 13,792.84
06/30/05 18,687.36 14,077.31
07/31/05 19,367.39 14,939.31
08/31/05 19,258.59 14,395.43
09/30/05 20,319.44 15,086.13
10/31/05 19,095.38 14,131.96
11/30/05 19,965.82 15,125.14
12/31/05 21,564.83 15,995.45
01/31/06 23,824.53 17,111.61
02/28/06 23,545.56 17,048.41
03/31/06 25,191.51 17,205.70
04/30/06 26,893.26 18,403.31
05/31/06 25,107.82 17,093.65
06/30/06 24,298.79 16,951.36
07/31/06 24,047.71 16,912.79
08/31/06 24,270.89 17,329.11
09/30/06 24,689.36 17,807.14
10/31/06 25,498.39 18,261.94
11/30/06 27,423.32 19,697.42
12/31/06 29,722.64 20,549.24
01/31/07 29,269.29 20,188.49
02/28/07 28,815.94 20,337.14
03/31/07 29,609.30 20,734.98
04/30/07 30,799.34 21,445.04
05/31/07 33,462.76 22,572.69
06/30/07 35,559.49 23,762.28
07/31/07 37,996.24 25,421.83
08/31/07 39,497.96 25,062.43
09/30/07 47,119.87 27,933.63
10/31/07 54,118.43 30,709.20
11/30/07 47,176.54 27,814.86
12/31/07 45,562.06 27,407.57
01/31/08 38,516.75 23,588.51
02/28/08 39,732.69 25,186.12
03/31/08 35,262.31 23,828.47
04/30/08 37,336.57 25,632.24
05/31/08 36,299.44 24,919.61
06/30/08 32,508.56 22,118.85
07/31/08 31,042.28 21,627.83
08/31/08 28,610.40 19,936.08
09/30/08 24,604.94 16,622.57
10/31/08 20,027.28 12,681.90
11/30/08 18,882.86 11,967.83
12/31/08 19,991.51 13,166.15
AVERAGE ANNUAL PERFORMANCE For the Periods Ended
December 31, 2008
Six Month One Year Five Year Ten Year
China Region Fund (38.50)% (56.12)% 2.77% 7.17%
- -----------------------------------------------------------------------
Hang Seng Composite Index (34.43)% (47.32)% 7.61% n/a
- -----------------------------------------------------------------------
MSCI All Country Far East Free
ex Japan Index* (40.48)% (51.96)% 2.07% 2.79%
<FN>
* These are not total returns. These returns reflect simple
appreciation only and do not reflect dividend reinvestment.
</FN>
Performance data quoted above is historical. Past performance is no
guarantee of future results. Current performance may be higher or lower
than the performance data quoted. Investment return and principal value
of an investment will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. The graph
and table do not reflect the deduction of taxes that a shareholder
would pay on fund distributions or the redemption of fund shares.
The Hang Seng Composite Index is a market-capitalization weighted index
that comprises the top 200 companies listed on the Stock Exchange of
Hong Kong, based on average market capitalization for the twelve
months. The index commenced January 2000; it is not included in the
graph as it had less than ten years of data. The MSCI All Country Far
East Free ex Japan Index is a free float-adjusted market
capitalization-weighted index that is designed to measure the equity
market performance of the Far East, excluding Japan. The index consists
of the following developed and emerging market country indices: China,
Hong Kong, Indonesia, Korea, Malaysia, New Zealand, Philippines,
Singapore, Taiwan and Thailand. The returns for the indexes reflect no
deduction for fees, expenses or taxes.
The Adviser has agreed to limit the fund's total operating expenses to
2.00% on an annualized basis through September 30, 2009; however, the
limitation may be revised at any time by the funds' Board of Trustees.
Please visit our website at usfunds.com for updated performance
information for different time periods.
63
CHINA REGION FUND
THE SIX-MONTH PERIOD IN REVIEW - ECONOMIC AND POLITICAL ISSUES THAT
AFFECTED THE FUND
China's economy showed signs of significantly slowing down for the
six months ended December 31, 2008. Third quarter GDP was 9 percent,
which was the first quarter in nearly three years that the growth
rate was less than 10 percent. Expectations are for even further
weakness for the fourth quarter of 2008.
The Chinese government was quick to try to slow down a runaway
economy, and it has moved just as quickly in response to the current
weakness. China has reduced interest rates five times to its current
level of 5.31 percent. It also reduced the required reserve ratio to
15.5 percent in order to increase liquidity in the banking system.
Fixed asset investment (FAI) averaged 27 percent growth from July
through November (December figures not yet released), as the
government intended for FAI to make up for export slowdowns. Exports
averaged 13.9 percent growth over the six months, but became a drag
on GDP growth in the last two months as exports fell in November and
December compared to a year earlier. Although a slowdown in exports
was expected, the magnitude and speed of the decline was surprising.
Another contributor to China's growth is domestic consumption --
retail sales were fairly stable at 21.9 percent growth during the
time period.
Despite moves to increase the liquidity within the financial
markets, money supply as measured by M2(2) averaged 15.9 percent
growth during the time period, in line with the government target of
16 percent. M1(2) money supply growth averaged 9.9 percent,
indicating that liquidity was not a major concern of individuals.
The performance of the various sectors in the Hang Seng Composite
Index (HSCI), the fund's benchmark, was all negative during the six
months. Utilities, telecom and consumer goods declined the least,
while materials, energy and services declined the most.
INVESTMENT HIGHLIGHTS
OVERVIEW
The fund returned a negative 38.50 percent for the six-month time
period, compared to a negative 34.43 percent return for the HSCI.
The fund was defensively positioned with above average cash levels
for much of the time period, but upon China's announcement of a
massive
64
CHINA REGION FUND
stimulus program totaling 4 trillion RMB, interest in China-related
stocks rose and the fund's higher cash position contributed to
performance below its benchmark.
STRENGTHS
* Companies doing business in China that were winners for the fund
included Zijin Mining Group Co., Ltd.,(3) China Mobile Ltd.,(4)
China Overseas Land & Investment Ltd.(5) and China Resources Land
Ltd.(6)
* The Chinese B-share markets performed the worst over the six
months. The fund had no exposure in these stocks.
* Since South Korea did not perform well overall during the period,
the fund benefited from being under-represented in this market
compared to the benchmark. The fund's investment in this region,
KT&G Corp.,(7) a seller of tobacco products, performed relatively
well.
WEAKNESSES
* The price volatility in the markets provided a very good trading
environment, but a bad one for investing. It is not clear that the
environment for investing has improved.
* Financial stocks were another source of weakness over concerns
about rising credit losses and a poor environment for lending in
general. While the fund was underweight in this sector relative to
the benchmark, the exposure that the fund did have to financials
was a source of negative return for the period. Stocks that the
fund held that underperformed include Industrial & Commercial Bank
of China Ltd.(8) and China Construction Bank Corp.(9)
65
CHINA REGION FUND
SECTOR WEIGHTINGS--CHINA REGION FUND
AND HANG SENG COMPOSITE INDEX
(% OF INVESTMENTS AS OF DECEMBER 31, 2008)
HANG SENG
CHINA REGION COMPOSITE OVER
FUND INDEX (UNDER)
% WEIGHTS % WEIGHTS % WEIGHT
SECTORS ------------ --------- --------
Financial 26.8 47.6 (20.8)
Industrials 21.5 11.6 9.9
Oil & Resources 18.9 8.7 10.2
Consumer 14.9 5.3 9.6
Telecommunications 6.1 20.1 (14.0)
Utilities 4.6 4.6 0.0
Technology 4.5 2.1 2.4
Cash Equivalent 2.7 0.0 2.7
----- ----- -----
TOTAL 100.0 100.0 0.0
===== ===== =====
COUNTRY WEIGHTINGS--CHINA REGION FUND
(% OF INVESTMENTS AS OF DECEMBER 31, 2008)
CHINA REGION
FUND
% WEIGHTS
COUNTRY* ------------
People's Republic of China 54.4
Hong Kong 37.0
United States 3.1
Korea, Republic of 1.7
Other Foreign 3.8
-----
TOTAL 100.0
=====
<FN>
* Country distribution shown is based on domicile and not intended
to conform to the China region definition in the prospectus.
</FN>
At the start of the time period, the fund was properly positioned by
taking a defensive stance. Being underweight in energy and materials
proved to be the right move for most of the time period, until the
announcement of a very large stimulus package by the Chinese
government in mid-November, which proved to be beneficial to the
materials sector.
Given the sharp sell-off in China stocks, valuations have become
very attractive. We are not expecting any more tightening policies
and inflation should continue to trend downward in 2009. China has
the luxury of a
66
CHINA REGION FUND
large current account surplus as well as strong foreign exchange
reserves. This will allow the country to invest its way out of the
current growth slowdown.
The fund is actively managed, and holding period is not generally a
consideration in investment decisions. Its portfolio turnover is,
and is expected to continue to be, over 100 percent.
CURRENT OUTLOOK
OPPORTUNITIES
* The primary focus in 2008 was inflation. Given the global
slowdown, inflation should not be a problem in 2009 and the
government can focus on resuscitating growth.
* Although China has cut interest rates five times in the fourth
quarter of 2008, its benchmark 1-year lending rate is still high
relative to other countries. Therefore, it has the opportunity to
cut rates further.
THREATS
* Anti-China rhetoric may heat up as the Obama administration takes
over the White House and in light of larger Democratic majorities
in Congress.
* Unemployment appears to be picking up, although this is not
evident in the "official" numbers. Social unrest could result from
high unemployment.
(1)The China region is defined as any country that either shares a
border with China or is located in the South China Sea or the
East China Sea and includes: the People's Republic of China (PRC
or China), Bangladesh, Hong Kong, India, Indonesia, Kazakhstan,
Korea, Kyrgyzstan, Laos, Malaysia, Mongolia, Nepal, Pakistan,
Philippines, Singapore, Taiwan, Tajikistan, Thailand, and
Vietnam.
(2)M1 and M2 are measures of total money supplies. The M1 money
supply includes only checkable demand deposits. M2 includes
everything in M1 and also savings and other time deposits.
(3)This security comprised 3.20% of the fund's total net assets as
of December 31, 2008.
(4)This security comprised 5.29% of the fund's total net assets as
of December 31, 2008.
(5)This security comprised 4.40% of the fund's total net assets as
of December 31, 2008.
(6)This security comprised 4.84% of the fund's total net assets as
of December 31, 2008.
(7)This security comprised 1.63% of the fund's total net assets as
of December 31, 2008.
(8)This security comprised 3.46% of the fund's total net assets as
of December 31, 2008.
(9)The fund did not hold this security as of December 31, 2008.
67
CHINA REGION FUND
TOP 10 HOLDINGS BASED ON TOTAL INVESTMENTS December 31, 2008
(EXCLUDING REPURCHASE AGREEMENTS)
CHINA MOBILE LTD. 5.64%
CELLULAR TELECOMMUNICATIONS
---------------------------------------------------------------
CHEUNG KONG INFRASTRUCTURE HOLDINGS LTD. 5.24%
CONSTRUCTION
---------------------------------------------------------------
CHINA RESOURCES LAND LTD. 5.16%
REAL ESTATE COMPANIES
---------------------------------------------------------------
CHINA LIFE INSURANCE CO., LTD. 5.14%
INSURANCE
---------------------------------------------------------------
CHINA COMMUNICATIONS CONSTRUCTION CO., LTD. 4.86%
CONSTRUCTION
---------------------------------------------------------------
CHINA OVERSEAS LAND & INVESTMENT LTD. 4.73%
REAL ESTATE COMPANIES
---------------------------------------------------------------
TENCENT HOLDINGS LTD. 4.52%
INTERNET
---------------------------------------------------------------
HENGAN INTERNATIONAL GROUP CO., LTD. 4.48%
HEALTH & PERSONAL CARE
---------------------------------------------------------------
INDUSTRIAL & COMMERCIAL BANK OF CHINA LTD. 3.69%
BANKS
---------------------------------------------------------------
BANK OF COMMUNICATIONS CO., LTD. 3.64%
BANKS
---------------------------------------------------------------
TOTAL TOP TEN HOLDINGS 47.10%
68
EXPENSE EXAMPLE (UNAUDITED) December 31, 2008
As a shareholder of the funds, you incur two types of costs: (1)
transaction costs, including short-term trading fees and exchange
fees; and (2) ongoing costs, including management fees and other
fund expenses. This example is intended to help you understand your
ongoing costs (in dollars) of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the
beginning of the period and held for the entire period as indicated
below.
* ACTUAL EXPENSES. The first line of the following table for each
fund provides information about actual account values and actual
expenses. You may use the information in this line, together with
the amount you invested, to estimate the expenses you paid over
the period. Simply divide your account value by $1,000 (for
example, an $8,600 account value divided by $1,000 = 8.6), then
multiply the result by the number in the first line under the
heading "Expenses Paid During Period" to estimate the expenses you
paid on your account during this period.
* HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES. The second line of
the following table for each fund provides information about
hypothetical account values and hypothetical expenses based on the
fund's actual expense ratio and an assumed rate of return of 5
percent per year before expenses, which is not the fund's actual
return. The hypothetical account values and expenses may not be
used to estimate the actual ending account balance or expenses you
paid for the period. You may use this information to compare the
ongoing costs of investing in these funds and other funds. To do
so, compare this 5 percent hypothetical example with the 5 percent
hypothetical examples that appear in the shareholder reports of
other funds.
Please note that the expenses shown in the table are meant to
highlight your ongoing costs only and do not reflect any direct or
transactional costs, such as small account, exchange or short-term
trading fees. Therefore, the second line of the table is useful in
comparing ongoing costs only, and will not help you determine the
relative total costs of owning different funds. In addition, if
these direct or transactional costs were included, your costs would
have been higher.
69
EXPENSE EXAMPLE (UNAUDITED) December 31, 2008
- -----------------------------------------------------------------------------------
PERIOD ENDED DECEMBER 31, 2008 BEGINNING ENDING
ACCOUNT VALUE ACCOUNT VALUE EXPENSES
JULY 1, DECEMBER 31, PAID DURING
2008 2008*** PERIOD*/***
- -----------------------------------------------------------------------------------
U.S. TREASURY SECURITIES CASH FUND
Based on Actual Fund Return $1,000.00 $1,002.30 $ 3.68
Based on Hypothetical 5% Yearly Return $1,000.00 $1,021.53 $ 3.72
- -----------------------------------------------------------------------------------
U.S. GOVERNMENT SECURITIES SAVINGS FUND
Based on Actual Fund Return $1,000.00 $1,006.70 $ 2.38
Based on Hypothetical 5% Yearly Return $1,000.00 $1,022.84 $ 2.40
- -----------------------------------------------------------------------------------
NEAR-TERM TAX FREE FUND
Based on Actual Fund Return $1,000.00 $1,025.50 $ 2.30
Based on Hypothetical 5% Yearly Return $1,000.00 $1,022.94 $ 2.29
- -----------------------------------------------------------------------------------
TAX FREE FUND
Based on Actual Fund Return $1,000.00 $1,002.20 $ 3.53
Based on Hypothetical 5% Yearly Return $1,000.00 $1,021.68 $ 3.57
- -----------------------------------------------------------------------------------
ALL AMERICAN EQUITY FUND
Based on Actual Fund Return $1,000.00 $ 635.80 $ 7.22
Based on Hypothetical 5% Yearly Return $1,000.00 $1,016.38 $ 8.89
- -----------------------------------------------------------------------------------
GLOBAL RESOURCES FUND
Based on Actual Fund Return $1,000.00 $ 323.00 $ 3.60
Based on Hypothetical 5% Yearly Return $1,000.00 $1,019.76 $ 5.50
- -----------------------------------------------------------------------------------
WORLD PRECIOUS MINERALS FUND
Based on Actual Fund Return $1,000.00 $ 487.70 $ 4.69
Based on Hypothetical 5% Yearly Return $1,000.00 $1,018.90 $ 6.36
- -----------------------------------------------------------------------------------
GOLD AND PRECIOUS METALS FUND
Based on Actual Fund Return $1,000.00 $ 684.90 $ 5.90
Based on Hypothetical 5% Yearly Return $1,000.00 $1,018.20 $ 7.07
- -----------------------------------------------------------------------------------
CHINA REGION FUND
Based on Actual Fund Return $1,000.00 $ 615.00 $ 8.91
Based on Hypothetical 5% Yearly Return $1,000.00 $1,014.17 $11.12
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
PERIOD ENDED DECEMBER 31, 2008 BEGINNING ENDING
ACCOUNT VALUE ACCOUNT VALUE EXPENSES
NOVEMBER 1, DECEMBER 31, PAID DURING
2008 2008 PERIOD**
- -----------------------------------------------------------------------------------
HOLMES GROWTH FUND
Based on Actual Fund Return $1,000.00 $ 904.50 $2.79
Based on Hypothetical 5% Yearly Return $1,000.00 $1,005.43 $2.93
- -----------------------------------------------------------------------------------
GLOBAL MEGATRENDS FUND
Based on Actual Fund Return $1,000.00 $ 952.60 $3.02
Based on Hypothetical 5% Yearly Return $1,000.00 $1,005.26 $3.10
- -----------------------------------------------------------------------------------
EASTERN EUROPEAN FUND
Based on Actual Fund Return $1,000.00 $ 807.60 $3.17
Based on Hypothetical 5% Yearly Return $1,000.00 $1,004.85 $3.52
- -----------------------------------------------------------------------------------
GLOBAL EMERGING MARKETS FUND
Based on Actual Fund Return $1,000.00 $ 904.10 $3.98
Based on Hypothetical 5% Yearly Return $1,000.00 $1,004.18 $4.19
- -----------------------------------------------------------------------------------
<FN>
*These calculations are based on expenses incurred in the most
recent fiscal half-year. The funds' annualized expense ratios (after
reimbursements and offsets) for the six-month period ended December
31, 2008, were 0.73%, 0.47%, 0.45%, 0.70%, 1.75%, 1.08%, 1.25%,
1.39% and 2.19%, respectively, for the U.S. Treasury Securities
Cash, U.S. Government Securities Savings, Near-Term Tax Free, Tax
Free, All American Equity, Global Resources, World Precious Minerals
and Gold and Precious Metals and China Region Funds. The dollar
amounts shown as "Expenses Paid" are equal to the annualized expense
ratio multiplied by the average account value over the period,
multiplied by 184, the number of days in the most recent fiscal
half-year, and then divided by 365 days.
70
EXPENSE EXAMPLE (UNAUDITED) December 31, 2008
**These calculations are based on expenses incurred in the most
recent fiscal period. The funds' annualized expense ratios (after
reimbursements and offsets) for the two-month period ended December
31, 2008, were 1.75%, 1.85%, 2.10% and 2.50%, respectively, for the
Holmes Growth, Global MegaTrends, Eastern European and Global
Emerging Markets Funds. The dollar amounts shown as "Expenses Paid"
are equal to the annualized expense ratio multiplied by the average
account value over the period, multiplied by 61, the number of days
in the most recent fiscal period, and then divided by 365 days.
***As detailed in the Notes to Financial Statements, there were
several changes in agreements and fees during the six-month period.
Had the current fees and expense limitations been in place
throughout the entire six-month period, the values in the first
table above would be shown as below. The values shown in the second
table above would not be affected.
</FN>
- -----------------------------------------------------------------------------------
PERIOD ENDED DECEMBER 31, 2008 BEGINNING ENDING
ACCOUNT VALUE ACCOUNT VALUE EXPENSES
JULY 1, DECEMBER 31, PAID DURING
2008 2008 PERIOD*
- -----------------------------------------------------------------------------------
U.S. TREASURY SECURITIES CASH FUND
Based on Actual Fund Return $1,000.00 $1,002.30 $ 3.68
Based on Hypothetical 5% Yearly Return $1,000.00 $1,021.53 $ 3.72
- -----------------------------------------------------------------------------------
U.S. GOVERNMENT SECURITIES SAVINGS
FUND
Based on Actual Fund Return $1,000.00 $1,006.70 $ 2.38
Based on Hypothetical 5% Yearly Return $1,000.00 $1,022.84 $ 2.40
- -----------------------------------------------------------------------------------
NEAR-TERM TAX FREE FUND
Based on Actual Fund Return $1,000.00 $1,025.50 $ 2.30
Based on Hypothetical 5% Yearly Return $1,000.00 $1,022.94 $ 2.29
- -----------------------------------------------------------------------------------
TAX FREE FUND
Based on Actual Fund Return $1,000.00 $1,002.20 $ 3.53
Based on Hypothetical 5% Yearly Return $1,000.00 $1,021.68 $ 3.57
- -----------------------------------------------------------------------------------
ALL AMERICAN EQUITY FUND
Based on Actual Fund Return $1,000.00 $ 635.80 $ 7.22
Based on Hypothetical 5% Yearly Return $1,000.00 $1,016.38 $ 8.89
- -----------------------------------------------------------------------------------
GLOBAL RESOURCES FUND
Based on Actual Fund Return $1,000.00 $ 320.88 $ 5.00
Based on Hypothetical 5% Yearly Return $1,000.00 $1,017.64 $ 7.63
- -----------------------------------------------------------------------------------
WORLD PRECIOUS MINERALS FUND
Based on Actual Fund Return $1,000.00 $ 486.44 $ 5.62
Based on Hypothetical 5% Yearly Return $1,000.00 $1,017.64 $ 7.63
- -----------------------------------------------------------------------------------
GOLD AND PRECIOUS METALS FUND
Based on Actual Fund Return $1,000.00 $ 684.35 $ 6.37
Based on Hypothetical 5% Yearly Return $1,000.00 $1,017.64 $ 7.63
- -----------------------------------------------------------------------------------
CHINA REGION FUND
Based on Actual Fund Return $1,000.00 $ 615.96 $ 8.14
Based on Hypothetical 5% Yearly Return $1,000.00 $1,015.12 $10.16
- -----------------------------------------------------------------------------------
71
U.S. TREASURY SECURITIES CASH FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
UNITED STATES
GOVERNMENT COUPON MATURITY PRINCIPAL
OBLIGATIONS 53.41% RATE DATE AMOUNT VALUE
UNITED STATES TREASURY BILLS 53.41%
- -------------------------------------------------------------------------------------
Yield 0.10% 01/02/09 $ 5,000,000 $ 4,999,986
Yield 0.41% 04/02/09 35,000,000 34,963,853
Yield 1.03% 06/04/09 10,000,000 9,956,367
Yield 1.28% 07/02/09 10,000,000 9,935,794
Yield 0.29% 09/15/09 5,000,000 4,989,649
- -------------------------------------------------------------------------------------
TOTAL UNITED STATES GOVERNMENT OBLIGATIONS 64,845,649
- -------------------------------------------------------------------------------------
(cost $64,845,649)
REPURCHASE AGREEMENTS 46.85%
Joint Tri-Party Repurchase Agreements,
12/31/08, collateralized by U.S.
Treasury securities held in joint
tri-party repurchase accounts:
0.01% Morgan Stanley, repurchase
price $6,000,003 0.01% 01/02/09 6,000,000 6,000,000
0.02% UBS Financial Services, Inc.,
repurchase price $20,376,147 0.02% 01/02/09 20,376,124 20,376,124
0.03% Credit Suisse First Boston,
repurchase price $30,500,051 0.03% 01/02/09 30,500,000 30,500,000
- -------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS 56,876,124
- -------------------------------------------------------------------------------------
(cost $56,876,124)
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS 100.26% 121,721,773
- -------------------------------------------------------------------------------------
(cost $121,721,773)
Other assets and liabilities, net (0.26)% (311,636)
------------
NET ASSETS 100% $121,410,137
------------
See notes to portfolios of investments and notes to financial statements.
72
U.S. GOVERNMENT SECURITIES SAVINGS FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
UNITED STATES
GOVERNMENT AND AGENCY COUPON MATURITY PRINCIPAL
OBLIGATIONS 100.02% RATE DATE AMOUNT VALUE
FEDERAL FARM CREDIT BANK 21.02%
- ------------------------------------------------------------------------------------
Discount Notes:
Yield 0.01% 01/02/09 $ 29,871,000 $ 29,870,993
Yield 2.27% 01/08/09 7,087,000 7,083,899
Yield 1.41% 06/19/09 3,905,000 3,879,335
Yield 1.93% 09/14/09 5,000,000 4,932,444
Fixed Rates:
3.88% 01/12/09 2,000,000 2,001,018
5.01% 01/22/09 2,880,000 2,884,305
4.75% 02/02/09 1,509,000 1,512,390
5.13% 02/17/09 5,000,000 5,018,728
5.08% 03/16/09 5,000,000 5,028,503
2.75% 06/05/09 4,000,000 4,000,000
4.13% 07/17/09 6,758,000 6,896,471
5.25% 08/03/09 2,055,000 2,100,831
------------
75,208,917
FEDERAL HOME LOAN BANK 79.00%
- ------------------------------------------------------------------------------------
Discount Notes:
Yield 2.34% 01/02/09 24,970,000 24,968,390
Yield 0.02% 01/05/09 14,378,000 14,377,969
Yield 2.29% 01/08/09 5,000,000 4,997,793
Yield 3.34% 01/09/09 6,387,000 6,382,302
Yield 0.52% 01/12/09 17,593,000 17,590,235
Yield 0.07% 01/13/09 8,372,000 8,371,805
Yield 0.34% 01/14/09 38,960,000 38,955,276
Yield 2.76% 01/16/09 5,000,000 4,994,333
Yield 0.10% 01/20/09 1,185,000 1,184,937
Yield 0.12% 01/23/09 10,000,000 9,999,267
Yield 0.09% 01/27/09 4,764,000 4,763,705
Yield 2.96% 02/02/09 8,660,000 8,637,470
Yield 0.15% 02/03/09 4,460,000 4,459,387
Yield 2.76% 02/11/09 10,000,000 9,969,022
Yield 0.05% 02/12/09 20,027,000 20,025,832
Yield 2.27% 03/02/09 2,075,000 2,067,219
Yield 0.08% 03/11/09 7,496,000 7,494,851
Yield 2.50% 03/17/09 5,000,000 4,974,271
Yield 2.91% 05/01/09 8,000,000 7,923,833
Yield 0.22% 05/11/09 552,000 551,561
Yield 0.90% 07/01/09 8,039,000 8,002,884
Yield 0.89% 09/08/09 1,428,000 1,419,273
Fixed Rates:
2.15% 01/21/09 5,000,000 4,998,613
2.16% 01/30/09 5,000,000 4,997,637
See notes to portfolios of investments and notes to financial statements.
73
U.S. GOVERNMENT SECURITIES SAVINGS FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
UNITED STATES
GOVERNMENT AND AGENCY COUPON MATURITY PRINCIPAL
OBLIGATIONS RATE DATE AMOUNT VALUE
FEDERAL HOME LOAN BANK (CONT'D)
- ------------------------------------------------------------------------------------
3.50% 02/13/09 $ 1,000,000 $ 1,001,278
4.04% 03/09/09 1,000,000 1,002,875
2.90% 03/24/09 5,000,000 5,018,078
2.13% 04/01/09 5,680,000 5,677,191
2.35% 04/21/09 3,000,000 3,000,000
3.75% 04/27/09 5,000,000 5,012,224
2.75% 05/07/09 3,000,000 3,000,000
2.50% 05/28/09 4,000,000 3,997,157
5.38% 07/17/09 2,900,000 2,953,797
Variable Rates:
0.66% 02/18/09 10,000,000 10,000,000
0.32% 02/19/09 10,000,000 9,994,400
0.43% 04/08/09 10,000,000 10,000,000
------------
282,764,865
- ------------------------------------------------------------------------------------
TOTAL INVESTMENTS 100.02% 357,973,782
- ------------------------------------------------------------------------------------
(cost $357,973,782)
Other assets and liabilities, net
(0.02)% (63,759)
------------
NET ASSETS 100% $357,910,023
------------
See notes to portfolios of investments and notes to financial statements.
74
NEAR-TERM TAX FREE FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
COUPON MATURITY PRINCIPAL
MUNICIPAL BONDS 90.74% RATE DATE AMOUNT VALUE
ALABAMA 7.18%
- ---------------------------------------------------------------------------------------
Bessemer, Alabama Water Revenue 4.00% 01/01/16 $ 300,000 $ 248,151
DCH Health Care Authority Facilities
Revenue 5.00% 06/01/09 250,000 253,273
Mountain Brook City Board of Education
Capital Outlay 4.00% 02/15/15 200,000 211,196
University of Alabama at Birmingham,
Hospital Revenue, Series A 5.00% 09/01/15 300,000 292,098
-----------
1,004,718
ALASKA 2.19%
- ---------------------------------------------------------------------------------------
Alaska Municipal Bond Bank Authority,
Series A 4.00% 02/01/16 300,000 306,108
ARIZONA 2.17%
- ---------------------------------------------------------------------------------------
Pima County Unified School District, GO
Unlimited, Refunding 3.70% 07/01/12 300,000 304,218
CALIFORNIA 1.68%
- ---------------------------------------------------------------------------------------
San Diego, California Community College
District, Capital Appreciation,
Election 2002, GO Unlimited (ZCB) 4.34%(1) 05/01/15 300,000 234,735
CONNECTICUT 3.54%
- ---------------------------------------------------------------------------------------
Connecticut State, Series D, GO
Unlimited 5.38% 11/15/18 250,000 281,175
Connecticut State, Series E, GO
Unlimited 5.13% 11/15/14 200,000 213,476
-----------
494,651
DISTRICT OF COLUMBIA 1.09%
- ---------------------------------------------------------------------------------------
District of Columbia, Unrefunded,
Series B 5.50% 06/01/09 150,000 152,183
FLORIDA 2.75%
- ---------------------------------------------------------------------------------------
Florida State Board of Education
Capital Outlay, Series B, GO 5.25% 06/01/11 175,000 176,381
Florida State Department of
Environmental Protection Preservation
Revenue, Florida Forever, Series B 5.00% 07/01/09 205,000 208,241
-----------
384,622
ILLINOIS 7.11%
- ---------------------------------------------------------------------------------------
Cook County, Illinois Capital
Improvement, GO Unlimited,
Prerefunded, Series A 5.25% 11/15/14 300,000 314,241
Illinois Finance Authority Revenue,
Refunding 5.00% 07/01/16 390,000 424,623
See notes to portfolios of investments and notes to financial statements.
75
NEAR-TERM TAX FREE FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
COUPON MATURITY PRINCIPAL
MUNICIPAL BONDS RATE DATE AMOUNT VALUE
ILLINOIS (CONT'D)
- --------------------------------------------------------------------------------------
Illinois State Sales Tax Revenue 6.00% 06/15/09 $ 250,000 $ 255,268
-----------
994,132
INDIANA 6.40%
- --------------------------------------------------------------------------------------
Indiana State Educational Facilities
Authority Revenue, University of
Indianapolis Project 5.65% 10/01/15 200,000 209,014
Indiana State Finance Authority
Revenue, Refunding 4.00% 05/01/12 350,000 367,870
Tippecanoe County, Indiana School
Improvements 4.00% 01/15/15 300,000 318,462
-----------
895,346
IOWA 3.59%
- --------------------------------------------------------------------------------------
Ames, Iowa Hospital Revenue, Refunding 5.00% 06/15/15 300,000 298,362
Johnston Community School District, GO
Unlimited 4.00% 06/01/16 200,000 204,532
-----------
502,894
KANSAS 1.52%
- --------------------------------------------------------------------------------------
Kansas State Development Finance
Authority Revenue 4.00% 10/01/15 200,000 212,862
MICHIGAN 0.34%
- --------------------------------------------------------------------------------------
Detroit, Michigan Local Development
Finance Authority, Refunding,
series A 5.20% 05/01/10 85,000 47,464
MISSOURI 1.71%
- --------------------------------------------------------------------------------------
Missouri State Health & Educational
Facilities Authority Revenue,
Series A 6.75% 05/15/13 200,000 239,086
NEVADA 1.43%
- --------------------------------------------------------------------------------------
North Las Vegas, GO Limited 4.00% 03/01/16 200,000 200,730
NEW HAMPSHIRE 1.24%
- --------------------------------------------------------------------------------------
New Hampshire Health & Education
Facilities Authority Revenue 5.00% 07/01/14 175,000 173,733
NEW JERSEY 3.81%
- --------------------------------------------------------------------------------------
New Jersey State 5.13% 05/01/10 250,000 260,283
New Jersey State Transportation Trust
Fund Authority, Series D 4.00% 06/15/14 250,000 273,225
-----------
533,508
See notes to portfolios of investments and notes to financial statements.
76
NEAR-TERM TAX FREE FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
COUPON MATURITY PRINCIPAL
MUNICIPAL BONDS RATE DATE AMOUNT VALUE
NEW YORK 4.46%
- ---------------------------------------------------------------------------------------
New York, New York, Series B 5.25% 08/01/09 $ 200,000 $ 203,900
New York, New York, Subseries L-1, GO
Unlimited 4.00% 04/01/15 300,000 303,456
Schenectady Metroplex Development
Authority Revenue, Series A 5.00% 12/15/12 110,000 116,606
-----------
623,962
OREGON 0.92%
- ---------------------------------------------------------------------------------------
Oregon State Department of
Transportation Highway 5.00% 11/15/09 125,000 129,185
PENNSYLVANIA 2.16%
- ---------------------------------------------------------------------------------------
Pennsylvania State Turnpike Commission,
Bond Anticipation Notes, Series A 4.00% 10/15/09 300,000 301,626
SOUTH CAROLINA 6.64%
- ---------------------------------------------------------------------------------------
Horry County Hospitality Fee Special
Obligation 5.00% 04/01/10 200,000 206,140
Jasper County School District, GO
Unlimited 4.00% 03/01/15 195,000 206,439
Piedmont Municipal Power Agency
Electric Revenue, Refunding, Series B 5.25% 01/01/09 200,000 200,000
Spartanburg County School District 3.88% 04/01/12 300,000 315,606
-----------
928,185
TENNESSEE 2.29%
- ---------------------------------------------------------------------------------------
Tennessee State, GO Unlimited,
Refunding, Series A 5.00% 05/01/11 300,000 320,361
TEXAS 12.42%
- ---------------------------------------------------------------------------------------
Addison, Texas Certificates of
Obligation, GO Unlimited 4.00% 02/15/20 250,000 246,025
Bexar County Hospital District, GO
Limited 3.50% 02/15/10 300,000 306,735
Conroe, Texas, GO Limited 2.75% 03/01/10 170,000 164,543
Katy, Texas Independent School
District, School Building, Series D,
GO Unlimited 4.50% 02/15/19 325,000 332,329
Killeen, Texas Independent School
District, GO Unlimited, Unrefunded 5.00% 02/15/09 90,000 90,029
Lewisville, Texas Independent School
District, GO Unlimited, Refunding
(ZCB) 4.04%(1) 08/15/15 400,000 316,804
San Antonio Water System Revenue 5.00% 05/15/13 100,000 105,194
San Patricio, Texas Municipal Water
District, Refunded 4.00% 07/10/18 200,000 175,564
-----------
1,737,223
See notes to portfolios of investments and notes to financial statements.
77
NEAR-TERM TAX FREE FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
COUPON MATURITY PRINCIPAL
MUNICIPAL BONDS RATE DATE AMOUNT VALUE
UTAH 2.37%
- --------------------------------------------------------------------------------------
Utah State, Refunding, Series B, GO
Unlimited 5.38% 07/01/12 $ 300,000 $ 331,902
VIRGINIA 4.76%
- --------------------------------------------------------------------------------------
Virginia College Building Authority
Educational Facilities Revenue,
Prerefunded, Series A 5.00% 09/01/15 10,000 11,477
Virginia College Building Authority
Educational Facilities Revenue,
Unrefunded, Series A 5.00% 09/01/15 290,000 326,035
Virginia State Public Building
Authority & Public Facilities
Revenue, Refunding, Series A 5.00% 08/01/12 300,000 327,816
-----------
665,328
WASHINGTON 4.81%
- --------------------------------------------------------------------------------------
Clark County, Washington School
District, GO Unlimited 5.13% 12/01/11 100,000 108,209
King County, Washington School District
No. 401 Highline Public Schools, GO
Unlimited 5.50% 12/01/13 240,000 262,601
Seattle, Washington Municipal Light and
Power Revenue, Refunding 5.00% 07/01/17 300,000 302,424
-----------
673,234
WISCONSIN 2.16%
- --------------------------------------------------------------------------------------
Wisconsin State, Refunding, Series 2,
GO Unlimited 4.13% 11/01/16 300,000 301,800
- --------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS 12,693,796
- --------------------------------------------------------------------------------------
(cost $12,536,792)
REPURCHASE AGREEMENT 8.36%
Joint Tri-Party Repurchase Agreement,
Morgan Stanley, 12/31/08, 0.01%,
due 01/02/09, repurchase price
$1,170,076, collateralized by U.S.
Treasury securities held in a joint
tri-party account (cost $1,170,075) 0.01% 01/02/09 1,170,075 1,170,075
- --------------------------------------------------------------------------------------
TOTAL INVESTMENTS 99.10% 13,863,871
- --------------------------------------------------------------------------------------
(cost $13,706,867)
Other assets and liabilities, net 0.90% 125,267
-----------
NET ASSETS 100% $13,989,138
-----------
<FN>
(1)Represents Yield
</FN>
See notes to portfolios of investments and notes to financial statements.
78
TAX FREE FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
COUPON MATURITY PRINCIPAL
MUNICIPAL BONDS 96.75% RATE DATE AMOUNT VALUE
ALABAMA 7.55%
- ---------------------------------------------------------------------------------------
Alabama 21st Century Authority, Tobacco
Settlement Revenue 5.75% 12/01/19 $ 275,000 $ 240,149
Alabama State, GO Unlimited, Series A 4.63% 09/01/22 375,000 375,338
Bessemer, Alabama Water Revenue 4.00% 01/01/16 200,000 165,434
Mountain Brook City Board of Education
Capital Outlay 4.00% 02/15/15 195,000 205,916
University of Alabama at Birmingham,
Hospital Revenue, Series A 5.00% 09/01/15 300,000 292,098
-----------
1,278,935
CALIFORNIA 7.76%
- ---------------------------------------------------------------------------------------
Anaheim, California City School
District, Capital Appreciation,
Election 2002, GO Unlimited (ZCB) 4.60%(1) 08/01/28 580,000 154,663
California State, GO Unlimited 4.75% 03/01/34 205,000 169,105
California State, GO Unlimited 5.00% 06/01/37 455,000 387,278
Campbell, California Union High School
District, GO Unlimited 4.75% 08/01/34 300,000 252,354
San Diego, California Community College
District, Capital Appreciation,
Election 2002, GO Unlimited (ZCB) 4.34%(1) 05/01/15 450,000 352,103
-----------
1,315,503
COLORADO 0.82%
- ---------------------------------------------------------------------------------------
Colorado Health Facilities Authority
Revenue 5.00% 09/01/16 150,000 138,527
CONNECTICUT 1.89%
- ---------------------------------------------------------------------------------------
Connecticut State, Series E, GO
Unlimited 5.13% 11/15/14 300,000 320,214
FLORIDA 4.23%
- ---------------------------------------------------------------------------------------
Florida Board of Education, GO
Unlimited, Refunding, Series C 4.50% 06/01/28 300,000 257,991
St. Lucie County Florida Sales Tax
Revenue 5.25% 10/01/23 465,000 459,327
-----------
717,318
GEORGIA 2.93%
- ---------------------------------------------------------------------------------------
Atlanta Development Authority Revenue 5.25% 07/01/22 500,000 496,185
ILLINOIS 7.78%
- ---------------------------------------------------------------------------------------
Du Page County, Refunding 5.60% 01/01/21 490,000 560,510
Illinois Development Financing
Authority Hospital Revenue, Adventist
Health System 5.65% 11/15/24 435,000 456,937
See notes to portfolios of investments and notes to financial statements.
79
TAX FREE FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
COUPON MATURITY PRINCIPAL
MUNICIPAL BONDS RATE DATE AMOUNT VALUE
ILLINOIS (CONT'D)
- --------------------------------------------------------------------------------------
Illinois Regional Transportation
Authority Revenue, Series A 7.20% 11/01/20 $ 250,000 $ 301,313
-----------
1,318,760
INDIANA 1.60%
- --------------------------------------------------------------------------------------
Indianapolis Local Public Improvement
Bond Bank, Waterworks Project, Series
2007 L 5.25% 01/01/33 305,000 271,926
KANSAS 8.26%
- --------------------------------------------------------------------------------------
Kansas State Development Finance
Authority Hospital Revenue, Series Z 5.00% 12/15/12 500,000 497,165
Kansas State Development Finance
Authority Revenue 4.00% 10/01/15 250,000 266,078
University of Kansas Hospital Authority
Health Facilities Revenue 5.63% 09/01/12 570,000 634,956
-----------
1,398,199
KENTUCKY 1.33%
- --------------------------------------------------------------------------------------
Bowling Green, Kentucky, GO Unlimited,
Series B 4.00% 09/01/16 215,000 225,840
MARYLAND 1.92%
- --------------------------------------------------------------------------------------
Maryland Health & Higher Educational
Facilities Authority Revenue 5.75% 07/01/21 300,000 325,704
MICHIGAN 2.64%
- --------------------------------------------------------------------------------------
Detroit, Michigan Local Development
Financing Authority, Refunding,
Series A 5.38% 05/01/18 300,000 150,348
Macomb County Building Authority, GO
Limited 4.50% 11/01/23 300,000 296,784
-----------
447,132
MISSOURI 2.47%
- --------------------------------------------------------------------------------------
St. Louis Airport Development Program,
Prerefunded, Series A 5.00% 07/01/11 165,000 178,241
St. Louis Airport Development Program,
Unrefunded, Series A 5.00% 07/01/11 235,000 241,124
-----------
419,365
NEW HAMPSHIRE 2.98%
- --------------------------------------------------------------------------------------
Manchester, New Hampshire School
Facilities Revenue, Refunding 5.50% 06/01/26 300,000 325,683
See notes to portfolios of investments and notes to financial statements.
80
TAX FREE FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
COUPON MATURITY PRINCIPAL
MUNICIPAL BONDS RATE DATE AMOUNT VALUE
NEW HAMPSHIRE (CONT'D)
- --------------------------------------------------------------------------------------
New Hampshire Health & Education
Facilities Authority Revenue 5.00% 07/01/14 $ 180,000 $ 178,697
-----------
504,380
NEW JERSEY 2.66%
- --------------------------------------------------------------------------------------
New Jersey Health Care Facilities
Financing Authority Revenue 4.38% 07/01/10 460,000 451,232
NEW YORK 1.51%
- --------------------------------------------------------------------------------------
New York, GO Unlimited, Prerefunded,
Series J 5.00% 05/15/12 225,000 230,699
New York, GO Unlimited, Unrefunded
Balance, Series J 5.00% 05/15/12 25,000 25,629
-----------
256,328
OHIO 2.79%
- --------------------------------------------------------------------------------------
Ohio State Mental Health Facilities
Revenue 5.50% 06/01/15 300,000 327,168
South Euclid Special Assessment, GO
Limited Tax 6.70% 12/01/14 130,000 145,920
-----------
473,088
RHODE ISLAND 3.41%
- --------------------------------------------------------------------------------------
Rhode Island State Health & Educational
Building Corporation Revenue 6.50% 08/15/32 500,000 577,749
SOUTH CAROLINA 1.23%
- --------------------------------------------------------------------------------------
South Carolina Jobs Economic
Development Authority Revenue 5.00% 11/01/23 250,000 208,938
TENNESSEE 1.28%
- --------------------------------------------------------------------------------------
Memphis, Tennessee Sanitary Sewage
System Revenue, Refunding 5.00% 05/01/20 200,000 216,726
TEXAS 22.91%
- --------------------------------------------------------------------------------------
Baytown, Texas, GO Limited 4.50% 02/01/27 250,000 224,183
Dallas, Texas Waterworks & Sewer
Systems Revenue, Refunding 4.50% 10/01/19 225,000 230,378
Duncanville, Texas Independent School
District, GO Unlimited, Prerefunded,
Series B 5.25% 02/15/32 495,000 547,025
Duncanville, Texas Independent School
District, GO Unlimited, Unrefunded,
Series B 5.25% 02/15/32 5,000 5,005
Forney, Texas, GO Limited 5.00% 02/15/27 500,000 498,205
See notes to portfolios of investments and notes to financial statements.
81
TAX FREE FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
COUPON MATURITY PRINCIPAL
MUNICIPAL BONDS RATE DATE AMOUNT VALUE
TEXAS (CONT'D)
- ---------------------------------------------------------------------------------------
Goose Creek, Texas Independent School
District Schoolhouse, Series A 5.25% 02/15/18 $ 370,000 $ 407,392
Greenville, Texas Independent School
District, GO Unlimited, Refunding 4.00% 08/15/17 120,000 122,684
Houston Community College System
Revenue, Refunding 4.00% 04/15/17 300,000 299,775
North Texas Municipal Water District
Regional Solid Waste Disposal System
Revenue 4.25% 09/01/17 385,000 394,852
North Texas Tollway Authority Revenue,
Series F 5.75% 01/01/38 250,000 208,533
Prosper, Texas Independent School
District, Capital Appreciation,
School Building, GO Unlimited (ZCB) 6.00%(1) 08/15/33 1,000,000 223,630
San Marcos, Texas Tax & Toll Revenue,
GO Limited 5.10% 08/15/27 400,000 401,916
White Settlement, Texas Independent
School District, GO Unlimited 4.13% 08/15/15 300,000 319,161
-----------
3,882,739
UTAH 3.35%
- ---------------------------------------------------------------------------------------
Utah State Building Ownership
Authority, Lease Revenue, Refunded,
Series C 5.50% 05/15/19 500,000 567,719
WASHINGTON 3.45%
- ---------------------------------------------------------------------------------------
King County, Washington School District
No. 401 Highline Public Schools, GO
Unlimited 5.50% 12/01/13 300,000 328,251
Spokane County School District No. 81
Spokane 5.05% 06/01/22 255,000 255,678
-----------
583,929
- ---------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS 16,396,436
- ---------------------------------------------------------------------------------------
(cost $16,616,634)
See notes to portfolios of investments and notes to financial statements.
82
TAX FREE FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
COUPON MATURITY PRINCIPAL
REPURCHASE AGREEMENT 2.06% RATE DATE AMOUNT VALUE
Joint Tri-Party Repurchase Agreement,
Morgan Stanley, 12/31/08, 0.01%, due
01/02/09, repurchase price $348,497,
collateralized by U.S. Treasury
securities held in a joint tri-party
account (cost $348,497) 0.01% 01/2/2009 $ 348,497 $ 348,497
- --------------------------------------------------------------------------------------
TOTAL INVESTMENTS 98.81% 16,744,933
- --------------------------------------------------------------------------------------
(cost $16,965,131)
Other assets and liabilities, net 1.19% 201,099
-----------
NET ASSETS 100% $16,946,032
-----------
<FN>
(1)Represents Yield.
</FN>
See notes to portfolios of investments and notes to financial statements.
83
ALL AMERICAN EQUITY FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
COMMON STOCKS 79.40% SHARES VALUE
APPLICATIONS SOFTWARE 2.06%
- ---------------------------------------------------------------------------------------
Activision Blizzard, Inc. 25,000 $ 216,000*
Citrix Systems, Inc. 5,000 117,850*
-----------
333,850
CELLULAR TELECOMMUNICATIONS 1.57%
- ---------------------------------------------------------------------------------------
China Mobile Ltd., Sponsored ADR 5,000 254,250
CHEMICALS 0.56%
- ---------------------------------------------------------------------------------------
The Dow Chemical Co. 6,000 90,540
COMPUTERS 2.10%
- ---------------------------------------------------------------------------------------
Apple, Inc. 4,000 341,400*
DIVERSIFIED MINERALS 1.86%
- ---------------------------------------------------------------------------------------
Compania Vale do Rio Doce, Sponsored ADR 25,000 302,750
ELECTRIC GENERATION 1.80%
- ---------------------------------------------------------------------------------------
Huaneng Power International, Inc., Sponsored ADR 10,000 291,800
ELECTRONICS & COMPONENTS 0.99%
- ---------------------------------------------------------------------------------------
NVIDIA Corp. 20,000 161,400*
ENERGY 1.27%
- ---------------------------------------------------------------------------------------
First Solar, Inc. 1,500 206,940*
FINANCIAL SERVICES 10.92%
- ---------------------------------------------------------------------------------------
First Financial Bankshares, Inc. 12,500 690,125
Ocwen Financial Corp. 40,000 367,200*
People's United Financial, Inc. 10,000 178,300
U.S. Bancorp 12,000 300,120
Wells Fargo & Co. 8,000 235,840
-----------
1,771,585
GAS - DISTRIBUTION 3.41%
- ---------------------------------------------------------------------------------------
New Jersey Resources Corp. 6,000 236,100
Piedmont Natural Gas Co. 10,000 316,700
-----------
552,800
INSURANCE 0.72%
- ---------------------------------------------------------------------------------------
Stewart Information Services Corp. 5,000 117,450
See notes to portfolios of investments and notes to financial statements.
84
ALL AMERICAN EQUITY FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
COMMON STOCKS SHARES VALUE
INTERNET 1.80%
- ---------------------------------------------------------------------------------------
F5 Networks, Inc. 12,500 $ 285,750*
Stockhouse, Inc. 131,125 7,212*
-----------
292,962
MACHINERY 1.07%
- ---------------------------------------------------------------------------------------
The Manitowoc Co., Inc. 20,000 173,200
MEDICAL - BIOMEDICAL 4.69%
- ---------------------------------------------------------------------------------------
Celgene Corp. 4,000 221,120*
Illumina, Inc. 11,000 286,550*
Sequenom, Inc. 8,000 158,720*
United Therapeutics Corp. 1,500 93,825*
-----------
760,215
MEDICAL - DRUGS 2.87%
- ---------------------------------------------------------------------------------------
Novartis AG, ADR 4,000 199,040
Pfizer, Inc. 15,000 265,650
-----------
464,690
MEDICAL - HMO 2.29%
- ---------------------------------------------------------------------------------------
UnitedHealth Group, Inc. 14,000 372,400
MEDICAL - PRODUCTS 5.33%
- ---------------------------------------------------------------------------------------
Johnson & Johnson 8,000 478,640
Quality Systems, Inc. 5,000 218,100
ResMed, Inc. 4,500 168,660*
-----------
865,400
OFFICE SUPPLIES 0.55%
- ---------------------------------------------------------------------------------------
Office Depot, Inc. 30,000 89,400*
OIL & GAS - INTEGRATED 4.50%
- ---------------------------------------------------------------------------------------
Chevron Corp. 2,500 184,925
CNOOC Ltd. 2,000 190,480
PetroChina Co. Ltd., ADR 4,000 355,920
-----------
731,325
OIL & GAS EQUIPMENT & SERVICES 0.83%
- ---------------------------------------------------------------------------------------
Weatherford International Ltd. 12,500 135,250*
See notes to portfolios of investments and notes to financial statements.
85
ALL AMERICAN EQUITY FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
COMMON STOCKS SHARES VALUE
OIL & GAS EXPLORATION & PRODUCTION 4.44%
- ---------------------------------------------------------------------------------------
Anadarko Petroleum Corp. 9,000 $ 346,950
Goodrich Petroleum Corp. 5,000 149,750*
Linn Energy LLC 15,000 224,550
-----------
721,250
OIL & GAS FIELD SERVICES 0.78%
- ---------------------------------------------------------------------------------------
Schlumberger Ltd. 3,000 126,990*
OIL & GAS ROYALTY TRUST 0.84%
- ---------------------------------------------------------------------------------------
Permian Basin Royalty Trust 10,000 137,000*
RESTAURANTS 2.30%
- ---------------------------------------------------------------------------------------
McDonald's Corp. 6,000 373,140
RETAIL 2.65%
- ---------------------------------------------------------------------------------------
Lowe's Cos, Inc. 20,000 430,400
RETAIL - DISCOUNT 1.20%
- ---------------------------------------------------------------------------------------
Family Dollar Stores, Inc. 7,500 195,525
SILVER MINING 3.05%
- ---------------------------------------------------------------------------------------
Pan American Silver Corp. 15,000 256,050*
Silver Standard Resources, Inc. 15,000 239,100*
-----------
495,150
SOFTWARE TOOLS 2.92%
- ---------------------------------------------------------------------------------------
VMware, Inc., Class A 20,000 473,800*
TELECOMMUNICATIONS 1.99%
- ---------------------------------------------------------------------------------------
QUALCOMM, Inc. 9,000 322,470
THERAPEUTICS 2.84%
- ---------------------------------------------------------------------------------------
Gilead Sciences, Inc. 9,000 460,260*
TOBACCO 2.14%
- ---------------------------------------------------------------------------------------
Philip Morris International, Inc. 8,000 348,080
See notes to portfolios of investments and notes to financial statements.
86
ALL AMERICAN EQUITY FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
COMMON STOCKS SHARES VALUE
TRANSPORTATION 2.49%
- ---------------------------------------------------------------------------------------
Atlas Air Worldwide Holdings, Inc. 8,000 $ 151,200*
Nordic American Tanker Shipping 7,500 253,125
-----------
404,325
WATER 0.57%
- ---------------------------------------------------------------------------------------
California Water Service Group 2,000 92,860
- ---------------------------------------------------------------------------------------
TOTAL COMMON STOCKS 12,890,857
- ---------------------------------------------------------------------------------------
(cost $13,583,122)
REAL ESTATE INVESTMENT TRUSTS (REIT) 9.34%
Boston Properties, Inc. 4,500 247,500
Hatteras Financial Corp. 20,000 532,000
SL Green Realty Corp. 7,500 194,250
Vornado Realty Trust 9,000 543,150
- ---------------------------------------------------------------------------------------
TOTAL REAL ESTATE INVESTMENT TRUSTS 1,516,900
- ---------------------------------------------------------------------------------------
(cost $1,386,531)
EXCHANGE-TRADED FUNDS (ETF) 2.18%
SPDR Gold Trust 2,000 173,100*
SPDR KBW Insurance ETF 6,500 179,465
- ---------------------------------------------------------------------------------------
TOTAL EXCHANGE-TRADED FUNDS 352,565
- ---------------------------------------------------------------------------------------
(cost $339,651)
PURCHASED OPTION 0.00% CONTRACTS
INTERNET 0.00%
- ---------------------------------------------------------------------------------------
Yahoo!, Inc., Strike Price 25, Call, Expiration
Jan. 2009 (premium $16,800) 200 600*
See notes to portfolios of investments and notes to financial statements.
87
ALL AMERICAN EQUITY FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
MASTER LIMITED PARTNERSHIP 1.28% UNITS VALUE
FINANCIAL SERVICES 1.28%
- ---------------------------------------------------------------------------------------
AllianceBernstein Holding LP 10,000 $ 207,900
(cost $218,389)
- ---------------------------------------------------------------------------------------
TOTAL SECURITIES 14,968,822
- ---------------------------------------------------------------------------------------
(cost $15,544,493)
PRINCIPAL
REPURCHASE AGREEMENT 3.53% AMOUNT
Joint Tri-Party Repurchase Agreement, UBS Financial
Services, Inc., 12/31/08, 0.02%, due 01/02/09,
repurchase price $572,528, collateralized by U.S.
Treasury securities held in a joint tri-party account
(cost $572,527) $ 572,527 572,527
- ---------------------------------------------------------------------------------------
TOTAL INVESTMENTS 95.73% 15,541,349
- ---------------------------------------------------------------------------------------
(cost $16,117,020)
Other assets and liabilities, net 4.27% 692,997
-----------
NET ASSETS 100% $16,234,346
-----------
See notes to portfolios of investments and notes to financial statements.
88
HOLMES GROWTH FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
COMMON STOCKS 85.80% SHARES VALUE
APPAREL 2.16%
- ------------------------------------------------------------------------------------
The Buckle, Inc. 15,000 $ 327,300
True Religion Apparel, Inc. 30,000 373,200*
-----------
700,500
BANKS 0.90%
- ------------------------------------------------------------------------------------
Bancolombia S.A., Sponsored ADR 12,500 291,875
CABLE & WIRE PRODUCTS 0.95%
- ------------------------------------------------------------------------------------
General Cable Corp. 17,500 309,575*
CELLULAR TELECOMMUNICATIONS 0.94%
- ------------------------------------------------------------------------------------
China Mobile Ltd., Sponsored ADR 6,000 305,100
COAL 1.05%
- ------------------------------------------------------------------------------------
Peabody Energy Corp. 15,000 341,250
COMMUNICATIONS 1.75%
- ------------------------------------------------------------------------------------
AT&T, Inc. 20,000 570,000
COMPUTER SOFTWARE & HARDWARE 2.05%
- ------------------------------------------------------------------------------------
Oracle Corp. 37,500 664,875*
COSMETICS/PERSONAL CARE 1.48%
- ------------------------------------------------------------------------------------
Avon Products, Inc. 20,000 480,600
DIVERSIFIED MINERALS 1.86%
- ------------------------------------------------------------------------------------
Compania Vale do Rio Doce, ADR 50,000 605,500
DIVERSIFIED OPERATIONS 1.71%
- ------------------------------------------------------------------------------------
Team, Inc. 20,000 554,000*
E-COMMERCE 0.92%
- ------------------------------------------------------------------------------------
CYBERplex, Inc. 1,073,000 299,819*
ELECTRONICS & COMPONENTS 2.45%
- ------------------------------------------------------------------------------------
Altera Corp. 20,000 334,200
FLIR Systems, Inc. 15,000 460,200*
-----------
794,400
See notes to portfolios of investments and notes to financial statements.
89
HOLMES GROWTH FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
COMMON STOCKS SHARES VALUE
ENERGY 2.34%
- ------------------------------------------------------------------------------------
First Solar, Inc. 5,500 $ 758,780*
ENGINEERING & CONSTRUCTION 0.83%
- ------------------------------------------------------------------------------------
Fluor Corp. 6,000 269,220
ENTERTAINMENT 2.13%
- ------------------------------------------------------------------------------------
Activision Blizzard, Inc. 80,000 691,200*
FINANCIAL SERVICES 9.37%
- ------------------------------------------------------------------------------------
Charles Schwab Corp. 20,000 323,400
Citigroup, Inc. 25,000 167,750
GMP Capital Trust 63,800 265,833
Jovian Capital Corp. 685,000 140,738*
JPMorgan Chase & Co. 8,000 252,240
Northern Trust Corp. 3,000 156,420
Stifel Financial Corp. 20,000 917,000*
The Goldman Sachs Group, Inc. 4,500 379,755
U.S. Bancorp 7,000 175,070
Wells Fargo & Co. 9,000 265,320
-----------
3,043,526
FOOD PRODUCTS 1.13%
- ------------------------------------------------------------------------------------
CoolBrands International, Inc. 995,200 368,048*
GOLD & COPPER EXPLORATION AND DEVELOPMENT 0.02%
- ------------------------------------------------------------------------------------
New Gold, Inc. 4,338 6,310*
HEALTHCARE SERVICES 4.43%
- ------------------------------------------------------------------------------------
Almost Family, Inc. 16,000 719,680*
LHC Group, Inc. 20,000 720,000*
-----------
1,439,680
MEDICAL - BIOMEDICAL 8.01%
- ------------------------------------------------------------------------------------
Celgene Corp. 6,000 331,680*
Cubist Pharmaceuticals, Inc. 40,000 966,400*
Emergent Biosolutions, Inc. 20,000 522,200*
Illumina, Inc. 30,000 781,500*
-----------
2,601,780
MEDICAL - HMO 2.30%
- ------------------------------------------------------------------------------------
Humana, Inc. 20,000 745,600*
See notes to portfolios of investments and notes to financial statements.
90
HOLMES GROWTH FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
COMMON STOCKS SHARES VALUE
MEDICAL - PRODUCTS 10.03%
- ------------------------------------------------------------------------------------
Alcon, Inc. 5,000 $ 445,950
Baxter International, Inc. 21,000 1,125,390
Bristol-Myers Squibb Co. 42,500 988,125
Varian Medical Systems, Inc. 20,000 700,800*
-----------
3,260,265
METAL & MINERAL MINING 0.09%
- ------------------------------------------------------------------------------------
Eastern Platinum Ltd. 108,800 29,954*
OIL & GAS - INTEGRATED 2.21%
- ------------------------------------------------------------------------------------
Exxon Mobil Corp. 9,000 718,470
OIL & GAS DRILLING 1.68%
- ------------------------------------------------------------------------------------
Helmerich & Payne, Inc. 24,000 546,000
OIL & GAS EXPLORATION & PRODUCTION 0.91%
- ------------------------------------------------------------------------------------
Noble Energy, Inc. 6,000 295,320
OIL & GAS FIELD MACHINERY 2.13%
- ------------------------------------------------------------------------------------
Cameron International Corp. 20,000 410,000*
Weatherford International Ltd. 26,000 281,320*
-----------
691,320
OIL & GAS ROYALTY TRUSTS 1.79%
- ------------------------------------------------------------------------------------
Canadian Oil Sands Trust 5,000 86,703
San Juan Basin Royalty Trust 16,000 495,520
-----------
582,223
PHARMACEUTICALS 3.72%
- ------------------------------------------------------------------------------------
Pfizer, Inc. 40,000 708,400
United Therapeutics Corp. 8,000 500,400*
-----------
1,208,800
RESTAURANTS 0.95%
- ------------------------------------------------------------------------------------
Chipotle Mexican Grill, Inc., Class A 5,000 309,900*
RETAIL 5.79%
- ------------------------------------------------------------------------------------
EZCORP, Inc., Class A 60,000 912,600*
PetMed Express, Inc. 55,000 969,650*
-----------
1,882,250
See notes to portfolios of investments and notes to financial statements.
91
HOLMES GROWTH FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
COMMON STOCKS SHARES VALUE
SCHOOLS 6.80%
- ------------------------------------------------------------------------------------
ITT Educational Services, Inc. 12,000 $ 1,139,760*
Strayer Education, Inc. 5,000 1,072,050
-----------
2,211,810
STEEL 0.92%
- ------------------------------------------------------------------------------------
United States Steel 8,000 297,600
- ------------------------------------------------------------------------------------
TOTAL COMMON STOCKS 27,875,550
- ------------------------------------------------------------------------------------
(cost $34,198,564)
REAL ESTATE INVESTMENT TRUST (REIT) 1.49%
Vornado Realty Trust (cost $622,446) 8,000 482,800
EXCHANGE-TRADED FUNDS (ETF) 2.80%
SPDR Gold Trust 4,000 346,200*
SPDR KBW Insurance ETF 12,500 345,125
SPDR KBW Regional Banking ETF 7,500 218,700
- ------------------------------------------------------------------------------------
TOTAL EXCHANGE-TRADED FUNDS 910,025
- ------------------------------------------------------------------------------------
(cost $944,832)
WARRANTS 0.30%
GOLD & COPPER EXPLORATION AND DEVELOPMENT 0.00%
- ------------------------------------------------------------------------------------
New Gold, Inc., Warrants (April 2012) 23,500 386*
METAL & MINERAL MINING 0.30%
- ------------------------------------------------------------------------------------
Eastern Platinum Ltd., Warrants (March 2009) 2,543 21*
Silver Wheaton Corp., Warrants (December 2010) 32,500 96,154*
-----------
96,175
- ------------------------------------------------------------------------------------
TOTAL WARRANTS 96,561
- ------------------------------------------------------------------------------------
(cost $36,766)
- ------------------------------------------------------------------------------------
TOTAL SECURITIES 29,364,936
- ------------------------------------------------------------------------------------
(cost $35,802,608)
See notes to portfolios of investments and notes to financial statements.
92
HOLMES GROWTH FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
PRINCIPAL
REPURCHASE AGREEMENT 4.14% AMOUNT VALUE
Joint Tri-Party Repurchase Agreement, Morgan Stanley,
12/31/08, 0.01%, due 01/02/09, repurchase price
$1,347,193, collateralized by U.S. Treasury
securities held in a joint tri-party account
(cost $1,347,192) $ 1,347,192 $ 1,347,192
- ------------------------------------------------------------------------------------
TOTAL INVESTMENTS 94.53% 30,712,128
- ------------------------------------------------------------------------------------
(cost $37,149,800)
Other assets and liabilities, net 5.47% 1,775,556
-----------
NET ASSETS 100% $32,487,684
-----------
See notes to portfolios of investments and notes to financial statements.
93
GLOBAL MEGATRENDS FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
COMMON STOCKS 88.99% SHARES VALUE
AIRPORTS 3.73%
- --------------------------------------------------------------------------------------
Grupo Aeroportuario del Sureste S.A.B. de C.V., ADR 22,000 $ 822,360
CABLE & WIRE PRODUCTS 1.00%
- --------------------------------------------------------------------------------------
General Cable Corp. 12,500 221,125*
COAL 1.03%
- --------------------------------------------------------------------------------------
Peabody Energy Corp. 10,000 227,500
COMMERCIAL SERVICES 2.80%
- --------------------------------------------------------------------------------------
Stantec, Inc. 25,000 617,500*
CONSTRUCTION 3.70%
- --------------------------------------------------------------------------------------
Aecon Group, Inc. 30,000 271,203
China Communications Construction Co., Ltd., H shares 260,000 324,954
Granite Construction, Inc. 5,000 219,650
------------
815,807
CONSULTING SERVICES 1.60%
- --------------------------------------------------------------------------------------
Hill International, Inc. 50,000 352,000*
DIVERSIFIED OPERATIONS 1.38%
- --------------------------------------------------------------------------------------
Team, Inc. 11,000 304,700*
ELECTRIC GENERATION 11.18%
- --------------------------------------------------------------------------------------
China Resources Power Holdings Co., Ltd. 100,000 194,351
Compania Energetica de Minas Gerais, Sponsored ADR 32,161 441,892
CPFL Energia S.A., ADR 12,500 488,375
FirstEnergy Corp. 13,000 631,540
Huaneng Power International, Inc., Sponsored ADR 14,000 408,520
Vestas Wind Systems A/S 5,000 298,639*
------------
2,463,317
ELECTRIC UTILITIES 9.49%
- --------------------------------------------------------------------------------------
CEZ a.s. 5,000 205,278
Exelon Corp. 14,000 778,540
FPL Group, Inc. 22,000 1,107,260
------------
2,091,078
ELECTRONICS & COMPONENTS 0.83%
- --------------------------------------------------------------------------------------
China High Speed Transmission Equipment Group Co., Ltd. 150,000 183,053
See notes to portfolios of investments and notes to financial statements.
94
GLOBAL MEGATRENDS FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
COMMON STOCKS SHARES VALUE
ENERGY 4.73%
- --------------------------------------------------------------------------------------
Energy Conversion Devices, Inc. 14,000 $ 352,940*
First Solar, Inc. 5,000 689,800*
------------
1,042,740
ENGINEERING/RESEARCH & DEVELOPMENT 6.27%
- --------------------------------------------------------------------------------------
ABB Ltd., Sponsored ADR 15,000 225,150
Aecom Technology Corp. 8,000 245,840*
Fluor Corp. 13,000 583,310
SNC-Lavalin Group, Inc. 10,000 326,183
------------
1,380,483
ENVIRONMENTAL CONTROL 1.55%
- --------------------------------------------------------------------------------------
Energy Recovery, Inc. 45,000 341,100*
HOLDING COMPANY 2.48%
- --------------------------------------------------------------------------------------
Berkshire Hathaway, Inc., Class B 170 546,380*
MACHINERY 1.40%
- --------------------------------------------------------------------------------------
Lonking Holdings Ltd. 600,000 309,537
MANUFACTURING 2.33%
- --------------------------------------------------------------------------------------
ITT Corp. 5,500 252,945
The Manitowoc Co., Inc. 30,000 259,800
------------
512,745
METAL & MINERAL MINING 2.56%
- --------------------------------------------------------------------------------------
Compania Vale do Rio Doce, ADR 35,000 423,850
Eastern Platinum Ltd. 19,400 5,341*
Novolipetsk Steel, GDR 13,000 134,412
------------
563,603
OIL & GAS EXPLORATION & PRODUCTION 0.05%
- --------------------------------------------------------------------------------------
Pacific Rubiales Energy Corp. 6,233 11,218*
OIL & GAS EXTRACTION & SERVICES 0.58%
- --------------------------------------------------------------------------------------
Schlumberger Ltd. 3,000 126,990
PUBLIC THOROUGHFARES 1.87%
- --------------------------------------------------------------------------------------
Compania de Concessoes Rodoviarias 40,000 412,596
See notes to portfolios of investments and notes to financial statements.
95
GLOBAL MEGATRENDS FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
COMMON STOCKS SHARES VALUE
STEEL MANUFACTURING 5.62%
- --------------------------------------------------------------------------------------
Compania Siderurgica Nacional S.A., Sponsored ADR 17,500 $ 224,175
Evraz Group S.A. 7,000 60,200
Gerdau S.A., Sponsored ADR 60,000 396,000
United States Steel 15,000 558,000
------------
1,238,375
TELECOMMUNICATIONS 6.33%
- --------------------------------------------------------------------------------------
AT&T, Inc. 25,000 712,500
NTT DoCoMo, Inc., Sponsored ADR 12,500 245,250
Turkcell Iletisim Hizmetleri A.S., ADR 30,000 437,400
------------
1,395,150
TRANSPORT & STORAGE 1.61%
- --------------------------------------------------------------------------------------
Westshore Terminals Income Fund 45,000 355,030
TRANSPORTATION 6.06%
- --------------------------------------------------------------------------------------
Burlington Northern Santa Fe Corp. 13,000 984,230
China Railway Group Ltd., H shares 500,000 350,897*
------------
1,335,127
WATER TREATMENT SYSTEMS 1.72%
- --------------------------------------------------------------------------------------
Hyflux Ltd. 300,000 378,005
WIRELESS TELECOMMUNICATIONS 7.09%
- --------------------------------------------------------------------------------------
America Movil SAB de C.V., ADR, Series L 16,000 495,840
China Mobile Ltd. 75,000 760,396
China Mobile Ltd., Sponsored ADR 6,000 305,100
------------
1,561,336
- --------------------------------------------------------------------------------------
TOTAL COMMON STOCKS 19,608,855
- --------------------------------------------------------------------------------------
(cost $24,405,002)
EXCHANGE-TRADED FUNDS (ETF) 3.55%
SPDR Gold Trust 3,000 259,650*
Utilities Select Sector SPDR Fund 18,000 522,540
- --------------------------------------------------------------------------------------
TOTAL EXCHANGE-TRADED FUNDS 782,190
- --------------------------------------------------------------------------------------
(cost $764,202)
See notes to portfolios of investments and notes to financial statements.
96
GLOBAL MEGATRENDS FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
WARRANTS 0.00% SHARES VALUES
OIL & GAS EXPLORATION & PRODUCTION 0.00%
- --------------------------------------------------------------------------------------
Pacific Rubiales Energy Corp., Warrants (July 2012) 58 $ 16*
(cost $326)
MASTER LIMITED PARTNERSHIP 0.93% UNITS
OIL & GAS TRANSPORTATION 0.93%
- --------------------------------------------------------------------------------------
NuStar Energy L.P. 5,000 205,300
(cost $216,248)
UNITS 1.12%
CONSTRUCTION 1.12%
- --------------------------------------------------------------------------------------
Polaris Minerals Corp. (RS) 200,000 246,549*@
(cost $262,543)
- --------------------------------------------------------------------------------------
TOTAL SECURITIES 20,842,910
- --------------------------------------------------------------------------------------
(cost $25,648,321)
PRINCIPAL
REPURCHASE AGREEMENT 5.37% AMOUNT
Joint Tri-Party Repurchase Agreement, Morgan Stanley,
12/31/08, 0.01%, due 01/02/09, repurchase price
$1,182,811, collateralized by U.S. Treasury
securities held in a joint tri-party account
(cost $1,182,810) $ 1,182,810 1,182,810
- --------------------------------------------------------------------------------------
TOTAL INVESTMENTS 99.96% 22,025,720
- --------------------------------------------------------------------------------------
(cost $26,831,131)
Other assets and liabilities, net 0.04% 9,421
------------
NET ASSETS 100% $22,035,141
-----------
See notes to portfolios of investments and notes to financial statements.
97
GLOBAL RESOURCES FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
COMMON STOCKS 76.02% SHARES VALUE
AGRICULTURAL CHEMICALS & FERTILIZERS 4.35%
- ----------------------------------------------------------------------------------------------
Archer-Daniels-Midland Co. 300,000 $ 8,649,000*
Monsanto Co. 77,500 5,452,125
Potash Corporation of Saskatchewan, Inc. 82,500 6,040,650
Spur Ventures, Inc. 274,867 49,697*
--------------
20,191,472
CHEMICALS 0.49%
- ----------------------------------------------------------------------------------------------
The Dow Chemical Co. 150,000 2,263,500*
COAL 7.10%
- ----------------------------------------------------------------------------------------------
Bounty Mining Ltd. 22,000,000 704,236*+
Caledon Resources plc 4,000,000 503,511*
China Shenhua Energy Co. Ltd. 7,500,000 16,083,150
Coalcorp Mining, Inc. 5,782,661 926,709*
CONSOL Energy, Inc. 265,000 7,573,700
Peabody Energy Corp. 285,000 6,483,750
Western Canadian Coal Corp., 144A 1,200,000 700,197*
--------------
32,975,253
DIAMOND MINING & EXPLORATION 0.02%
- ----------------------------------------------------------------------------------------------
Diamond Fields International Ltd. 22,400 644*
Diamond Fields International Ltd., 144A 1,800,000 51,775*
Rockwell Diamonds, Inc., 144A 950,000 50,748*
Vaaldiam Resources Ltd. 1,044,001 12,870*
--------------
116,037
FINANCIAL SERVICES 0.35%
- ----------------------------------------------------------------------------------------------
GMP Capital Trust 341,600 1,423,333
Jovian Capital Corp. 1,038,100 213,285*
--------------
1,636,618
FOOD & BEVERAGES 0.22%
- ----------------------------------------------------------------------------------------------
CoolBrands International, Inc. 2,714,200 1,003,772*
FORESTRY 0.95%
- ----------------------------------------------------------------------------------------------
Weyerhaeuser Co. 145,000 4,438,450
GENERAL METAL & MINERAL MINING 4.01%
- ----------------------------------------------------------------------------------------------
Atacama Minerals Corp. 1,025,000 204,276*
Baja Mining Corp. 1,381,050 249,697*
BHP Billiton Ltd., Sponsored ADR 250,000 10,725,000
Calibre Mining Corp. 811,400 10,002*
See notes to portfolios of investments and notes to financial statements.
98
GLOBAL RESOURCES FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
COMMON STOCKS SHARES VALUE
GENERAL METAL & MINERAL MINING (CONT'D)
- ----------------------------------------------------------------------------------------------
Canada Zinc Metals Corp. 1,000,000 $ 123,274*
Century Mining Corp. 225,911 4,642*
Crowflight Minerals, Inc. 1,129,000 171,651*
Jiangxi Copper Co. Ltd., H shares 7,000,000 5,203,784
Natasa Mining Ltd. 1,099,160 838,031*+
Red Dragon Resources Corp. 3,720,000 305,720*+
Revett Minerals, Inc. 5,048,000 248,915*+
Savant Explorations Ltd. 54,191 2,227*
Selwyn Resources Ltd. 500,000 34,928*
Starfield Resources, Inc. 1,000,000 119,165*
Sterling Group Ventures, Inc. 500,000 10,000*
Terrane Metals Corp. 2,337,000 259,283*
Titanium Resources Group Ltd. 1,000,000 67,857*@
Toledo Mining Corp. plc 426,200 65,440*
--------------
18,643,892
GOLD & COPPER MINING 2.17%
- ----------------------------------------------------------------------------------------------
Continental Minerals Corp. 1,026,227 278,057*
Fortress Minerals Corp. 431,425 74,457*
Freeport-McMoRan Copper & Gold, Inc. 100,000 2,444,000
Los Andes Copper Ltd. 754,000 34,081*
Lumina Copper Corp. 168,600 56,810*
New Gold, Inc. 1,276,522 1,856,874*
Northern Dynasty Minerals Ltd. 1,150,000 4,252,959*
Northern Dynasty Minerals Ltd., 144A 200,000 739,645*
Orsu Metals Corp. 1,476,050 121,306*
Suramina Resources, Inc. 1,184,200 214,106*
--------------
10,072,295
GOLD & SILVER MINING 2.50%
- ----------------------------------------------------------------------------------------------
Canadian Gold Hunter Corp. 1,061,000 226,709*
Chesapeake Gold Corp. 716,350 1,872,118*
Corona Gold Ltd. 50,000 2,223*@
Dundee Precious Metals, Inc. 1,250,000 1,530,654*
Kinross Gold Corp. 1 18
MAG Silver Corp. 150,600 677,007*
Medoro Resources Ltd. 3,255,514 107,019*
Olympus Pacific Minerals, Inc. 375,000 23,114*
Planet Exploration, Inc. 160,000 26,298*
Red Back Mining, Inc. 310,844 2,194,403*
Red Back Mining, Inc., 144A 385,000 2,717,908*
Rusoro Mining Ltd. 3,567,500 1,905,716*
Rusoro Mining Ltd., 144A 433,333 231,481*
Silk Road Resources Ltd. 240,000 13,807*
See notes to portfolios of investments and notes to financial statements.
99
GLOBAL RESOURCES FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
COMMON STOCKS SHARES VALUE
GOLD & SILVER MINING (CONT'D)
- ----------------------------------------------------------------------------------------------
TVI Pacific, Inc. 6,037,428 $ 74,426*
--------------
11,602,901
GOLD/MINERAL ROYALTY COMPANY 0.02%
- ----------------------------------------------------------------------------------------------
Aberdeen International, Inc. 1,274,750 110,001*
IRON AND STEEL 3.97%
- ----------------------------------------------------------------------------------------------
Angang Steel Co. Ltd., H shares 4,000,000 4,526,399
Consolidated Thompson Iron Mines Ltd. 1,060,000 818,869*
Schnitzer Steel Industries, Inc., Class A 200,000 7,530,000
United States Steel 150,000 5,580,000
--------------
18,455,268
OIL & GAS - INTEGRATED 16.72%
- ----------------------------------------------------------------------------------------------
BP plc, Sponsored ADR 160,000 7,478,400
ConocoPhillips 210,000 10,878,000
Exxon Mobil Corp. 250,000 19,957,500
Murphy Oil Corp. 150,000 6,652,500
Occidental Petroleum Corp. 185,000 11,098,150
PetroChina Co. Ltd., ADR 160,000 14,236,800
Petroleo Brasileiro S.A., ADR 300,000 7,347,000
--------------
77,648,350
OIL & GAS DRILLING 3.63%
- ----------------------------------------------------------------------------------------------
Helmerich & Payne, Inc. 200,000 4,550,000
Transocean Ltd. 198,500 9,379,125*
Vantage Drilling Co. 2,674,000 2,941,400*
--------------
16,870,525
OIL & GAS EQUIPMENT & SERVICES 1.72%
- ----------------------------------------------------------------------------------------------
Oil States International, Inc. 200,000 3,738,000*
Schlumberger Ltd. 100,000 4,233,000
--------------
7,971,000
OIL & GAS EXPLORATION & PRODUCTION - JUNIOR 9.90%
- ----------------------------------------------------------------------------------------------
Abraxas Petroleum Corp. 589,294 424,292*
Americas Petrogas, Inc. 4,325,000 710,881*
Arena Resources, Inc. 250,000 7,022,500*
Bankers Petroleum Ltd. 1,016,667 618,289*
Birchcliff Energy Ltd. 500,000 2,075,115*
BNK Petroleum, Inc. 140,000 13,807*
Cano Petroleum, Inc. 2,725,000 1,199,000*+
See notes to portfolios of investments and notes to financial statements.
100
GLOBAL RESOURCES FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
COMMON STOCKS SHARES VALUE
OIL & GAS EXPLORATION & PRODUCTION - JUNIOR (CONT'D)
- ----------------------------------------------------------------------------------------------
CARBO Ceramics, Inc. 185,000 $ 6,573,050
Coastal Energy Co. 1,322,000 1,618,820*
Foothills Resources, Inc. 1,278,667 19,180*
Gran Tierra Energy, Inc. 2,763,000 7,736,400*
Green Dragon Gas Ltd. 828,831 3,522,532*
Ivanhoe Energy, Inc. 1,830,000 872,288*
Ivory Energy, Inc. 4,138,166 255,064*+
Legacy Energy LLC, 144A (RS) 2,631,580 5,157,897*@
North Peace Energy Corp. 3,233,400 704,184*+
Pacific Rubiales Energy Corp. 3,794,500 6,829,352*
Royalite Petroleum Co., Inc. 2,266,333 90,653*
Verona Development Corp. 708,800 21,844*@
White Nile Ltd. 13,247,308 506,358*
--------------
45,971,506
OIL & GAS EXPLORATION & PRODUCTION - SENIOR 12.59%
- ----------------------------------------------------------------------------------------------
Devon Energy Corp. 135,000 8,870,850
Petrohawk Energy Corp. 600,000 9,378,000*
Range Resources Corp. 365,000 12,552,350
Southwestern Energy Co. 280,000 8,111,600*
Ultra Petroleum Corp. 235,000 8,109,850*
XTO Energy, Inc. 325,000 11,462,750
--------------
58,485,400
OIL & GAS REFINING AND MARKETING 3.36%
- ----------------------------------------------------------------------------------------------
Sunoco, Inc. 130,000 5,649,800
Tesoro Corp. 400,000 5,268,000
Valero Energy Corp. 190,000 4,111,600
Value Creation, Inc. (RS) 282,137 579,670*@
--------------
15,609,070
PLATINUM GROUP METALS 0.81%
- ----------------------------------------------------------------------------------------------
Anooraq Resources Corp. 725,000 226,413*
Beartooth Platinum Corp. 2,657,500 52,416*@
Eastern Platinum Ltd. 9,936,186 2,735,554*
Ivanhoe Nickel and Platinum Ltd. (RS) 15,000 9,418*@
Osmium Holdings S.A. (RS) 104 0*@
Platinum Group Metals Ltd. 492,700 753,141*
--------------
3,776,942
See notes to portfolios of investments and notes to financial statements.
101
GLOBAL RESOURCES FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
COMMON STOCKS SHARES VALUE
SUGAR/ETHANOL 0.21%
- ----------------------------------------------------------------------------------------------
Bioenergy Africa Ltd. (RS) 8,750,000 $ 867,007*+@
Infinity Bio-Energy Ltd. 682,400 85,300*
--------------
952,307
TRANSPORTATION 0.76%
- ----------------------------------------------------------------------------------------------
Diana Shipping, Inc. 275,000 3,509,000*
URANIUM 0.17%
- ----------------------------------------------------------------------------------------------
Govi Uranium, Inc. (RS) 750,000 735,000*@
GoviEx IP Holdings, Inc. (RS) 750,000 15,000*@
UMC Energy plc 1,000,000 54,724*
Uranium North Resources Corp. 12,500 925*
--------------
805,649
- ----------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS 353,109,208
- ----------------------------------------------------------------------------------------------
(cost $614,279,170)
PREFERRED STOCK 0.22%
OIL & GAS EXPLORATION & PRODUCTION - JUNIOR 0.22%
- ----------------------------------------------------------------------------------------------
Trident Resources Corp., Series B, Preferred Stock (RS) 80,000 1,012,400*@
(cost $5,000,000)
EXCHANGE-TRADED FUNDS (ETF) 6.10%
Market Vectors Gold Miners ETF 300,000 10,164,000*
SPDR Gold Trust 210,000 18,175,500*
- ----------------------------------------------------------------------------------------------
TOTAL EXCHANGE-TRADED FUNDS 28,339,500
- ----------------------------------------------------------------------------------------------
(cost $27,063,619)
WARRANTS 5.48%
COAL 0.07%
- ----------------------------------------------------------------------------------------------
Bounty Mining Ltd., Warrants (December 2011) 5,500,000 58,686*
Coalcorp Mining, Inc., Warrants (February 2011) 1,228,071 5,046*
Coalcorp Mining, Inc., Warrants (August 2011) 885,500 3,639*
Coalcorp Mining, Inc., Warrants (June 2013) 3,803,000 125,017*
See notes to portfolios of investments and notes to financial statements.
102
GLOBAL RESOURCES FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
WARRANTS SHARES VALUE
COAL (CONT'D)
- ----------------------------------------------------------------------------------------------
Western Canadian Coal Corp., Warrants (June 2012) 425,000 $ 99,544*
--------------
291,932
DIAMOND MINING & EXPLORATION 0.00%
- ----------------------------------------------------------------------------------------------
Rockwell Diamonds, Inc., Warrants (November 2009) 950,000 0*@
GENERAL METAL & MINERAL MINING 0.05%
- ----------------------------------------------------------------------------------------------
Baja Mining Corp., Warrants (April 2009) 55,070 226*
Baja Mining Corp., Warrants (April 2011) 1,055,500 0*@
Stingray Copper, Inc., Warrants (April 2009) 1,000,000 4,109*
Terrane Metals Corp., Warrants (June 2012) 562,500 23,114*
Thompson Creek Metals Co. Inc., Warrants (October 2011) 240,291 217,225*
--------------
244,674
GOLD & COPPER MINING 0.15%
- ----------------------------------------------------------------------------------------------
New Gold, Inc., Warrants (April 2012) 1,478,000 24,294*
New Gold, Inc., Warrants (November 2012) 5,394,000 443,294*
New Gold, Inc., Warrants (June 2017) 822,570 202,803*
Orsu Metals Corp., Warrants (April 2010) 950,000 11,711*
Orsu Metals Corp., Warrants (March 2011) 660,000 18,984*
--------------
701,086
GOLD & SILVER MINING 4.44%
- ----------------------------------------------------------------------------------------------
Chesapeake Gold Corp., Warrants (February 2012) 91,023 75,927*
Dundee Precious Metals, Inc., Warrants (November 2015) 625,000 308,185*
Goldcorp, Inc., Warrants (June 2011) 1,463,766 14,674,329*
Medoro Resources Ltd., Warrants (March 2010) 1,125,000 0*@
Rusoro Mining Ltd., Warrants (November 2011) 216,667 0*@
Rusoro Mining Ltd., Warrants (November 2012) 3,150,000 297,707*
Silver Wheaton Corp., Warrants (December 2010) 1,385,840 4,100,118*
Silver Wheaton Corp., Warrants (September 2013) 239,044 382,494*
Yamana Gold, Inc., Warrants (February 2010) 712,643 784,798*
--------------
20,623,558
GOLD/MINERAL ROYALTY COMPANIES 0.00%
- ----------------------------------------------------------------------------------------------
Aberdeen International, Inc., Warrants (July 2012) 500,000 14,382*
OIL & GAS DRILLING 0.05%
- ----------------------------------------------------------------------------------------------
Vantage Drilling Co., Warrants (May 2011) 2,461,400 246,140*
See notes to portfolios of investments and notes to financial statements.
103
GLOBAL RESOURCES FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
WARRANTS SHARES VALUE
OIL & GAS EXPLORATION & PRODUCTION - JUNIOR 0.70%
- ----------------------------------------------------------------------------------------------
Americas Petrogas, Inc., Warrants (June 2009) 2,162,500 $ 0*@
Bankers Petroleum Ltd., Warrants (November 2009) 144A 994,866 120,597*
Coastal Energy Co., Warrants (July 2010) 250,000 0*@
Energy XXI Bermuda Ltd., Warrants (October 2009) 790,000 335,750*
Foothills Resources, Inc., Warrants (September 2011) 633,334 0*@
Gran Tierra Energy, Inc., Warrants (June 2012) 1,550,000 2,712,500*@
North Peace Energy Corp., Warrants (February 2010) 1,616,700 0*@
Pacific Rubiales Energy Corp., Warrants (July 2012) 347,749 94,311*
Trident Resources Corp., Warrants (March 2013) (RS) 80,000 0*@
--------------
3,263,158
PLATINUM GROUP METALS 0.00%
- ----------------------------------------------------------------------------------------------
Eastern Platinum Ltd., Warrants (March 2009) 1,175,258 9,658*
URANIUM 0.02%
- ----------------------------------------------------------------------------------------------
Denison Mines Corp., Warrants (March 2011) 231,050 94,942*
- ----------------------------------------------------------------------------------------------
TOTAL WARRANTS 25,489,530
- ----------------------------------------------------------------------------------------------
(cost $37,750,162)
PURCHASED OPTIONS 0.03% CONTRACTS
AGRICULTURAL CHEMICALS & FERTILIZERS 0.00%
- ----------------------------------------------------------------------------------------------
The Mosaic Co., Strike Price 60, Call, Expiration Jan. 2009
(premium $2,935,130) 1,100 5,500
ALUMINUM 0.00%
- ----------------------------------------------------------------------------------------------
Alcoa, Inc., Strike Price 45, Call, Expiration Jan. 2009
(premium $252) 21 21
COAL 0.00%
- ----------------------------------------------------------------------------------------------
Alpha Natural Resources, Inc., Strike Price 100, Call,
Expiration Jan. 2009 (premium $3,082,901) 2,050 10,250
ENGINEERING & CONSTRUCTION 0.00%
- ----------------------------------------------------------------------------------------------
Fluor Corp., Strike Price 100, Call, Expiration Jan. 2009
(premium $1,067,912) 1,020 5,100
GENERAL METAL & MINERAL MINING 0.00%
- ----------------------------------------------------------------------------------------------
BHP Billiton Ltd., Strike Price 80, Call, Expiration
Jan. 2009 (premium $1,517,996) 1,100 5,500
See notes to portfolios of investments and notes to financial statements.
104
GLOBAL RESOURCES FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
PURCHASED OPTIONS CONTRACTS VALUE
GOLD & SILVER MINING 0.01%
- ----------------------------------------------------------------------------------------------
Goldcorp, Inc., Strike Price 15, Put, Expiration Apr. 2009
(premium $413,467) 1,703 $ 66,417
OIL & GAS DRILLING 0.01%
- ----------------------------------------------------------------------------------------------
Helmerich & Payne, Inc., Strike Price 70, Call,
Expiration Jan. 2009 (premium $1,792,954) 1,975 19,750
OIL & GAS EXPLORATION & PRODUCTION - SENIOR 0.01%
- ----------------------------------------------------------------------------------------------
Range Resources Corp., Strike Price 45, Call,
Expiration Jan. 2010 (premium $4,012) 6 4,200
Southwestern Energy Co., Strike Price 50, Call,
Expiration Jan. 2009 (premium $912,925) 1,325 39,750
--------------
43,950
- ----------------------------------------------------------------------------------------------
TOTAL PURCHASED OPTIONS 156,488
- ----------------------------------------------------------------------------------------------
(cost $11,727,549)
MASTER LIMITED PARTNERSHIP 0.97% UNITS
OIL & GAS TRANSPORTATION 0.97%
- ----------------------------------------------------------------------------------------------
NuStar Energy L.P.
(cost $4,666,046) 110,000 4,516,600
PRINCIPAL
CONVERTIBLE DEBENTURE 0.51% AMOUNT
COAL 0.51%
- ----------------------------------------------------------------------------------------------
Western Canadian Coal Corp., 7.50%, maturity 3/24/11 $ 4,000,000 2,350,427
(cost $3,073,403)
NOTES 1.19%
COAL 0.39%
- ----------------------------------------------------------------------------------------------
Coalcorp Mining, Inc., 12.00%, maturity 8/31/11 2,999,000 1,814,395
See notes to portfolios of investments and notes to financial statements.
105
GLOBAL RESOURCES FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
PRINCIPAL
NOTES AMOUNT VALUE
GOLD & COPPER MINING 0.80%
- ----------------------------------------------------------------------------------------------
New Gold, Inc., 10.00%, maturity 6/28/17 $ 7,000,000 $ 3,710,552
- ----------------------------------------------------------------------------------------------
TOTAL NOTES 5,524,947
- ----------------------------------------------------------------------------------------------
(cost $9,538,611)
- ----------------------------------------------------------------------------------------------
TOTAL SECURITIES 420,499,100
- ----------------------------------------------------------------------------------------------
(cost $713,098,560)
REPURCHASE AGREEMENT 5.18%
Joint Tri-Party Repurchase Agreement, UBS Financial
Services, Inc., 12/30/08, 0.02%, due 01/02/09,
repurchase price $24,069,244, collateralized by U.S.
Treasury securities held in a join tri-party account
(cost $24,069,217) 24,069,217 24,069,217
- ----------------------------------------------------------------------------------------------
TOTAL INVESTMENTS 95.70% 444,568,317
- ----------------------------------------------------------------------------------------------
(cost $737,167,777)
Other assets and liabilities, net 4.30% 19,955,671
--------------
NET ASSETS 100% $464,523,988
------------
See notes to portfolios of investments and notes to financial statements.
106
WORLD PRECIOUS MINERALS FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
COMMON STOCKS 74.75% SHARES VALUE
DIAMOND MINING & EXPLORATION 0.40%
- ---------------------------------------------------------------------------------------------
Diagem, Inc. 406,350 $ 14,694*@
Diamond Fields International Ltd. 448,600 12,904*
Diamonds North Resources Ltd. 2,804,200 691,371*
Metalex Ventures Ltd. 204,000 10,897*
Olivut Resources Ltd. 664,000 133,695*
Rockwell Diamonds, Inc. 123,800 6,613*
Rockwell Diamonds, Inc., 144A 2,575,000 137,553*
Shore Gold, Inc. 1,126,500 416,605*
Vaaldiam Resources Ltd. 1,513,999 18,664*
------------
1,442,996
FINANCIAL SERVICES 0.66%
- ---------------------------------------------------------------------------------------------
GMP Capital Trust 474,800 1,978,333
Jovian Capital Corp. 1,975,100 405,798*
------------
2,384,131
GOLD/MINERAL EXPLORATION & DEVELOPMENT 17.60%
- ---------------------------------------------------------------------------------------------
African Gold Group, Inc. 1,084,400 75,751*
Amarc Resources Ltd. 695,545 70,023*
Amerix Precious Metals Corp. 792,175 13,021*
Andean Resources Ltd. 5,302,356 4,160,667*
Andina Minerals, Inc. 1,241,700 1,102,101*
Atikwa Minerals Corp. 3,062,333 75,501*+
AuEx Ventures, Inc. 746,600 1,135,117*
Bendigo Mining NL 1,500,000 155,240*
Brazauro Resources Corp. 1,475,000 315,171*
Canadian Gold Hunter Corp. 1,980,400 423,162*
Candente Resource Corp. 328,100 43,143*
Carnavale Resources Ltd. 3,348,857 220,354*+
Carpathian Gold, Inc. 1,187,800 136,663*
Centerra Gold, Inc. 233,000 850,197*
Chesapeake Gold Corp. 1,974,219 5,159,448*+
Continental Minerals Corp. 758,946 205,829*
Continental Precious Minerals, Inc. 267,000 102,034*
Corona Gold Ltd. 812,500 36,123*@
Corriente Resources, Inc., Class A 500,000 1,598,455*
Crystallex International Corp. 312,000 48,718*
Eastmain Resources, Inc. 620,000 550,296*
ECU Silver Mining, Inc. 1,090,000 806,213*
Entree Gold, Inc. 1,020,000 888,560*
Erdene Resource Development Corp. 731,500 114,222*
EXMIN Resources, Inc. 1,424,000 35,108*
EXMIN Resources, Inc., 144A 1,000,000 24,655*
Farallon Resources Ltd. 850,000 104,783*
First Point Minerals Corp. 2,423,000 79,652*
See notes to portfolios of investments and notes to financial statements.
107
WORLD PRECIOUS MINERALS FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
COMMON STOCKS SHARES VALUE
GOLD/MINERAL EXPLORATION & DEVELOPMENT (CONT'D)
- ---------------------------------------------------------------------------------------------
Fortress Minerals Corp. 870,525 $ 150,239*
Fortress Minerals Corp. (RS) 1,400,000 229,536*@
Gold Summit Corp. 273,000 3,365*
Golden Odyssey Mining, Inc. 1,646,500 54,126*
Grandview Gold, Inc. 1,513,000 62,172*
Grayd Resource Corp. 1,133,200 447,022*
Great Basin Gold Ltd. 2,208,500 2,849,560*
Greystar Resources Ltd. 557,900 875,731*
Guyana Goldfields, Inc. 1,389,000 2,168,886*
Hainan Mining Corp. (RS) 2,018,700 294,589*@
Helio Resource Corp. 234,100 55,793*
Inca Pacific Resources, Inc. 337,000 38,774*
Inter-Citic Minerals, Inc. 120,000 43,393*
Ivanhoe Mines Ltd. 631,100 1,696,003*
Ivanhoe Nickel and Platinum Ltd. (RS) 135,000 84,763*@
Kings Minerals NL 15,275,000 1,253,346*
Lake Shore Gold Corp. 1,020,000 1,190,335*
Leyshon Resources Ltd. 2,220,000 105,616*
Linear Gold Corp. 1,225,000 765,122*
MAG Silver Corp. 366,800 1,648,912*
Marengo Mining Ltd. 1,300,000 74,388*
Medoro Resources Ltd. 3,732,942 122,714*
Metallic Ventures Gold, Inc. 1,426,800 644,921*
Metorex Ltd. 450,000 104,371*
Mindoro Resources Ltd. 1,484,000 195,135*
Mindoro Resources Ltd., 144A 1,500,000 197,239*
Mirasol Resources Ltd. 649,500 74,729*
Moss Lake Gold Mines Ltd. 3,162,000 493,738*+
Moto Goldmines Ltd. 2,002,500 3,044,564*
Moydow Mines International, Inc. 495,000 34,578*
Nautilus Minerals, Inc. 252,000 207,101*
New Pacific Metals Corp. 610,700 245,926*
Northern Dynasty Minerals Ltd. 748,750 2,769,046*
Northern Dynasty Minerals Ltd., 144A 250,000 924,556*
Olympus Pacific Minerals, Inc. 1,539,000 94,859*
Osisko Mining Corp. 800,000 2,393,162*
Oxus Gold plc 200,000 16,236*
Pacific North West Capital Corp. 1,727,466 113,574*
Pacific Rim Mining Corp. 5,674,500 803,988*
Paragon Minerals Corp. 174,000 6,435*
Paramount Gold and Silver Corp. 857,500 415,627*
PDX Resources, Inc. 1,595,000 2,162,845
Pelangio Mines, Inc. 1,560,000 83,333*
Planet Exploration, Inc. 1,020,500 167,735*
Platte River Gold U.S., Inc. (RS) 1,098,900 1,340,236*@
Premier Gold Mines Ltd. 393,900 524,423*
See notes to portfolios of investments and notes to financial statements.
108
WORLD PRECIOUS MINERALS FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
COMMON STOCKS SHARES VALUE
GOLD/MINERAL EXPLORATION & DEVELOPMENT (CONT'D)
- ---------------------------------------------------------------------------------------------
Q2 Gold Resources, Inc. (RS) 201,333 $ 0*@
Radius Gold, Inc. 1,698,200 139,563*
Reunion Gold Corp. 2,129,500 175,008*
Romarco Minerals, Inc. 22,301,706 3,115,787*+
Rubicon Minerals Corp., 144A 1,179,600 1,376,588*
San Anton Resource Corp. 1,298,200 320,069*
San Gold Corp. 682,100 672,682*
SEMAFO, Inc. 1,102,400 1,087,179*
Simberi Mining Corp. 1,262,000 7,779*
Solitario Exploration & Royalty Corp. 934,100 1,397,158*
Southwestern Resources Corp. 20,000 3,123*
St Andrew Goldfields Ltd. 927,549 175,326*
Staccato Gold Resources Ltd. 3,091,500 190,551*
Strongbow Exploration, Inc. 880,500 32,563*
Terrane Metals Corp. 9,010,400 999,674*+
Verena Minerals Corp. 1,741,000 200,313*
Verona Development Corp. 48,500 1,495*@
VG Gold Corp. 5,936,510 317,121*+
Victoria Gold Corp. 1,590,000 300,542*
Virginia Mines, Inc. 589,700 1,938,527*
Wesdome Gold Mines Ltd. 418,200 395,242*
West Timmins Mining, Inc. 1,135,000 541,009*
------------
63,190,248
GOLD/MINERAL ROYALTY COMPANIES 2.64%
- ---------------------------------------------------------------------------------------------
Aberdeen International, Inc. 2,371,500 204,641*
Gold Wheaton Gold Corp. 3,750,000 611,234*
International Royalty Corp. 655,550 905,099
Royal Gold, Inc. 157,800 7,765,338
------------
9,486,312
INTERMEDIATE & JUNIOR GOLD PRODUCERS 26.74%
- ---------------------------------------------------------------------------------------------
Aurizon Mines Ltd. 630,000 2,054,882*
Central Sun Mining, Inc. 1,335,098 318,194*
Century Mining Corp. 2,940,559 60,416*
DRDGOLD Ltd., Sponsored ADR 2,500 13,925*
Dundee Precious Metals, Inc. 2,492,000 3,051,513*
Eldorado Gold Corp. 210,000 1,669,500*
Golden Star Resources Ltd. 1,462,900 1,462,900*
IAMGOLD Corp. 1,207,901 7,464,242
Jaguar Mining, Inc. 2,354,197 12,072,805*
Kingsgate Consolidated Ltd. 347,776 906,261*
New Gold, Inc. 2,193,466 3,190,569*
OceanaGold Corp. 950,000 117,110*
Orsu Metals Corp. 3,008,000 247,206*
See notes to portfolios of investments and notes to financial statements.
109
WORLD PRECIOUS MINERALS FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
COMMON STOCKS SHARES VALUE
INTERMEDIATE & JUNIOR GOLD PRODUCERS (CONT'D)
- ---------------------------------------------------------------------------------------------
Randgold Resources Ltd., ADR 880,000 $ 38,649,600
Red Back Mining, Inc. 582,906 4,115,025*
Red Back Mining, Inc., 144A 770,000 5,435,815*
Resolute Mining Ltd. 1,350,000 230,477*@
Rusoro Mining Ltd. 7,811,600 4,172,863*
Rusoro Mining Ltd., 144A 1,120,000 598,291*
Sino Gold Mining Ltd. 1,585,610 5,668,905*
St Barbara Ltd. 5,405,344 1,222,028*
TVI Pacific, Inc. 15,255,856 188,065*
Zhaojin Mining Industry Co., Ltd., H shares 3,678,450 2,867,544
Zijin Mining Group Co., Ltd., H shares 379,400 232,625
------------
96,010,761
INTERNET 0.02%
- ---------------------------------------------------------------------------------------------
Stockhouse, Inc. 1,027,000 79,466*
METAL & MINERAL MINING & EXPLORATION 3.57%
- ---------------------------------------------------------------------------------------------
AMT International Mining 1,000,000 10,700*@
Avion Resources Corp. 3,900,000 272,436*+
Baja Mining Corp. 685,450 123,931*
Breakwater Resources Ltd. 450,000 42,530*
Brilliant Mining Corp. 317,800 52,235*
Calibre Mining Corp. 2,378,400 29,320*
Coalcorp Mining, Inc. 32,071 5,140*
Dia Bras Exploration, Inc. 1,375,800 62,187*
Freewest Resources Canada, Inc. 1,090,000 152,285*
Independence Group NL 363,950 564,075
JNR Resources, Inc. 456,800 108,869*
Linear Metals Corp. 1,004,410 57,782*
Lundin Mining Corp. 1,386,000 1,355,473*
Mineral Deposits Ltd. 1,000,000 499,636*
Mines Management, Inc. 887,830 1,110,763*
Natasa Mining Ltd. 503,045 359,404*
North American Tungsten Corp. 1,289,000 158,900*
North Arrow Minerals, Inc. 261,500 15,044*
Odyssey Resources Ltd. 414,900 43,474*
Red Hill Energy, Inc. 145,000 36,941*
Revett Minerals, Inc. 3,194,500 157,520*
Ridge Mining plc 1,653,000 796,846*
Silvercorp Metals, Inc. 2,813,020 6,033,845
Stingray Copper, Inc. 300,000 54,241*
Suramina Resources, Inc. 1,337,700 241,859*
Taseko Mines Ltd. 359,000 209,476*
Toledo Mining Corp. plc 432,900 66,469*
Uranium North Resources Corp. 517,035 38,242*
See notes to portfolios of investments and notes to financial statements.
110
WORLD PRECIOUS MINERALS FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
COMMON STOCKS SHARES VALUE
METAL & MINERAL MINING & EXPLORATION (CONT'D)
- ---------------------------------------------------------------------------------------------
Wallbridge Mining Co. Ltd. 1,541,000 $ 63,322*
Western Copper Corp. 499,400 98,501*
------------
12,821,446
OIL & GAS EXPLORATION & PRODUCTION 0.58%
- ---------------------------------------------------------------------------------------------
Big Sky Energy Corp. 2,000,000 2,000*
Pacific Rubiales Energy Corp. 1,158,232 2,084,589*
------------
2,086,589
PLATINUM GROUP METALS 2.00%
- ---------------------------------------------------------------------------------------------
Anooraq Resources Corp. 3,472,400 1,084,411*
Beartooth Platinum Corp. 5,478,500 108,057*@
Eastern Platinum Ltd. 16,280,475 4,482,215*
Osmium Holdings S.A. (RS) 891 0*@
Platinum Group Metals Ltd. 985,900 1,507,046*
------------
7,181,729
SENIOR GOLD PRODUCERS 20.32%
- ---------------------------------------------------------------------------------------------
Agnico-Eagle Mines Ltd. 181,520 9,363,914
Agnico-Eagle Mines Ltd. (RS) 220,000 11,292,600@
AngloGold Ashanti Ltd., Sponsored ADR 186,000 5,154,060
Barrick Gold Corp. 133,574 4,911,516^
Gold Fields Ltd. 548,600 5,434,364
Harmony Gold Mining Co., Ltd., Sponsored ADR 317,000 3,477,490*^
Kinross Gold Corp. 757,754 13,957,829^
Lihir Gold Ltd., Sponsored ADR 255,300 5,598,729*
Newcrest Mining Ltd. 87,000 2,105,264
Newmont Mining Corp. 192,900 7,851,030
Polyus Gold Co., Sponsored ADR 89,600 1,068,032
Yamana Gold, Inc. 356,293 2,767,068
------------
72,981,896
SUGAR/ETHANOL 0.16%
- ---------------------------------------------------------------------------------------------
Bioenergy Africa Ltd. (RS) 5,750,000 569,747*+@
WIRELESS EQUIPMENT 0.06%
- ---------------------------------------------------------------------------------------------
Active Control Technology, Inc. 4,575,000 206,792*
- ---------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS 268,442,113
- ---------------------------------------------------------------------------------------------
(cost $481,260,765)
See notes to portfolios of investments and notes to financial statements.
111
WORLD PRECIOUS MINERALS FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
EXCHANGE-TRADED FUNDS (ETF) 1.70% SHARES VALUE
ETFS Physical Platinum 20,900 $ 1,898,418*
SPDR Gold Trust 48,600 4,206,330*
- ---------------------------------------------------------------------------------------------
TOTAL EXCHANGE-TRADED FUNDS 6,104,748
- ---------------------------------------------------------------------------------------------
(cost $5,734,468)
CLOSED-END FUND 0.45%
ASA Ltd. 32,000 1,632,000
(cost $1,320,375)
WARRANTS 17.82%
DIAMOND MINING & EXPLORATION 0.00%
- ---------------------------------------------------------------------------------------------
Rockwell Diamonds, Inc., Warrants (November 2009) 2,575,000 0*@
GOLD/MINERAL EXPLORATION & DEVELOPMENT 0.11%
- ---------------------------------------------------------------------------------------------
Avnel Gold Mining Ltd., Warrants (June 2010) 14,000 2,013*
Carnavale Resources Ltd., Warrants (June 2009) 3,348,857 17,867*
Chesapeake Gold Corp., Warrants (February 2012) 319,874 266,825*
Crystallex International Corp., Warrants (August 2009) 162,500 0*@
Fortress Minerals Corp., Warrants (December 2010) (RS) 1,400,000 0*@
Grandview Gold, Inc., Warrants (March 2009) 350,000 0*@
Great Basin Gold Ltd., Warrants (April 2009) 457,000 7,512*
Hainan Mining Corp., Warrants (May 2009) (RS) 313,700 0*@
Hainan Mining Corp., Warrants (August 2011) (RS) 1,705,000 0*@
Medoro Resources Ltd., Warrants (March 2010) 1,250,000 0*@
Metallic Ventures Gold, Inc., Warrants (March 2009) 691,500 2,841*
Mindoro Resources Ltd., Warrants (May 2009) 1,500,000 6,164*@
Osisko Mining Corp., Warrants (November 2009) 547,000 89,908*
Platte River Gold U.S., Inc., Warrants (March 2009)
(RS) 195,000 0*@
Platte River Gold U.S., Inc., Warrants (February 2010)
(RS) 75,200 0*@
Romarco Minerals, Inc., Warrants (July 2009) 2,430,000 0*@
Romarco Minerals, Inc., Warrants (April 2010) 2,650,000 0*@
Staccato Gold Resources Ltd., Warrants (August 2009) 3,000,000 0*@
Terrane Metals Corp., Warrants (June 2012) 219,000 8,999*
US Gold Corp., Warrants (February 2011) 39,000 2,564*
------------
404,693
GOLD/MINERAL ROYALTY COMPANIES 0.08%
- ---------------------------------------------------------------------------------------------
Franco-Nevada Corp., Warrants (March 2012) 86,500 279,021*
See notes to portfolios of investments and notes to financial statements.
112
WORLD PRECIOUS MINERALS FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
WARRANTS SHARES VALUE
INTERMEDIATE & JUNIOR GOLD PRODUCERS 0.59%
- ---------------------------------------------------------------------------------------------
Dundee Precious Metals, Inc., Warrants (November 2015) 1,125,000 $ 554,734*
GBS Gold International, Inc., Warrants (May 2010) 630,000 0*@
New Gold, Inc., Warrants (April 2012) 6,531,600 107,357*
New Gold, Inc., Warrants (June 2017) 1,452,430 358,095*
New Gold, Inc., Warrants (November 2012) 4,470,000 367,357*
Orsu Metals Corp., Warrants (April 2010) 2,476,000 30,523*
Orsu Metals Corp., Warrants (March 2011) 4,082,000 117,414*
Rusoro Mining Ltd., Warrants (November 2011) 600,000 0*@
Rusoro Mining Ltd., Warrants (November 2012) 6,302,750 595,674*
------------
2,131,154
METAL & MINERAL MINING & EXPLORATION 2.67%
- ---------------------------------------------------------------------------------------------
Avion Resources Corp., Warrants (May 2010) 1,950,000 0*@
Baja Mining Corp., Warrants (April 2009) 1,007,090 4,138*
Baja Mining Corp., Warrants (April 2011) 527,750 0*@
Breakwater Resources Ltd., Warrants (January 2009) 604,650 2,485*
Coalcorp Mining, Inc., Warrants (February 2011) 113,214 465*
Denison Mines Corp., Warrants (March 2011) 188,295 77,373*
Denison Mines Corp., Warrants (November 2009) 97,600 32,084*
Mines Management, Inc., Warrants (April 2012) 691,300 207,390*
Silver Wheaton Corp., Warrants (December 2010) 2,809,520 8,312,189*
Silver Wheaton Corp., Warrants (September 2013) 429,695 687,554*
Thompson Creek Metals Co. Inc., Warrants (October
2011) 274,900 248,512*
------------
9,572,190
OIL & GAS EXPLORATION & PRODUCTION 0.07%
- ---------------------------------------------------------------------------------------------
Pacific Rubiales Energy Corp., Warrants (July 2012) 973,275 263,955*
PLATINUM GROUP METALS 0.00%
- ---------------------------------------------------------------------------------------------
Eastern Platinum Ltd., Warrants (March 2009) 1,637,664 13,459*
SENIOR GOLD PRODUCERS 14.30%
- ---------------------------------------------------------------------------------------------
Agnico-Eagle Mines Ltd., Warrants (December 2013) (RS) 110,000 448,800*@
Goldcorp, Inc., Warrants (June 2011) 3,991,933 39,978,935*
Kinross Gold Corp., Warrants (September 2011) 1,531,720 4,544,304*
Kinross Gold Corp., Warrants (September 2013) 446,371 2,197,372*
Yamana Gold, Inc., Warrants (February 2010) 3,782,263 4,165,214*
------------
51,334,625
- ---------------------------------------------------------------------------------------------
TOTAL WARRANTS 63,999,097
- ---------------------------------------------------------------------------------------------
(cost $89,388,301)
See notes to portfolios of investments and notes to financial statements.
113
WORLD PRECIOUS MINERALS FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
SPECIAL WARRANTS 0.00% SHARES VALUE
GOLD/MINERAL EXPLORATION & DEVELOPMENT 0.00%
- ---------------------------------------------------------------------------------------------
Western Exploration & Development Ltd., 144A, Special
Warrants (RS) 600,000 $ 0*@
(cost $300,000)
RIGHTS 0.00%
GOLD/MINERAL EXPLORATION & DEVELOPMENT 0.00%
- ---------------------------------------------------------------------------------------------
Metorex Ltd. 157,230 3,847
(cost $0)
PURCHASED OPTIONS 0.60% CONTRACTS
EXCHANGE-TRADED FUND 0.07%
- ---------------------------------------------------------------------------------------------
Market Vectors Gold Miners ETF, Strike Price 28, Put,
Expiration Jan. 2009 (premium $947,731) 6,950 243,250
INTERMEDIATE & JUNIOR GOLD PRODUCERS 0.11%
- ---------------------------------------------------------------------------------------------
Hecla Mining Co., Strike Price 10, Call, Expiration
Jan. 2010 (premium $889,136) 1,600 32,000
Randgold Resources Ltd., Strike Price 50, Call,
Expiration Jan. 2010 (premium $377,409) 350 357,000
------------
389,000
SENIOR GOLD PRODUCERS 0.42%
- ---------------------------------------------------------------------------------------------
Goldcorp, Inc., Strike Price 15, Put, Expiration Apr.
2009 (premium $1,138,196) 4,697 183,183
Harmony Gold Mining Co., Ltd., Strike Price 12.50,
Call, Expiration Jan. 2009 (premium $331,129) 1,875 56,250
Harmony Gold Mining Co., Ltd., Strike Price 12.50,
Expiration Jan. 2010 (premium $379,451) 1,300 357,500
Newmont Mining Corp., Strike Price 45, Call,
Expiration Jan. 2010 (premium $904,200) 1,100 913,000
------------
1,509,933
- ---------------------------------------------------------------------------------------------
TOTAL PURCHASED OPTIONS 2,142,183
- ---------------------------------------------------------------------------------------------
(cost $4,967,252)
See notes to portfolios of investments and notes to financial statements.
114
WORLD PRECIOUS MINERALS FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
PRINCIPAL
NOTES 1.02% AMOUNT VALUE
INTERMEDIATE & JUNIOR GOLD PRODUCERS 1.02%
- ---------------------------------------------------------------------------------------------
GBS Gold International, Inc., 12.00%, maturity 5/27/11
(RS) $ 3,600,000 $ 2,071,006*@
New Gold, Inc., 10.00%, maturity 6/28/17 3,000,000 1,590,237*
- ---------------------------------------------------------------------------------------------
TOTAL NOTES 3,661,243
- ---------------------------------------------------------------------------------------------
(cost $6,387,277)
- ---------------------------------------------------------------------------------------------
TOTAL SECURITIES 345,985,231
- ---------------------------------------------------------------------------------------------
(cost $589,358,438)
REPURCHASE AGREEMENT 3.80%
Joint Tri-Party Repurchase Agreement, Morgan Stanley,
12/31/08, 0.01%, due 01/02/09, repurchase price
$13,631,487, collateralized by U.S. Treasury
securities held in a joint tri-party account
(cost $13,631,479) 13,631,479 13,631,479
- ---------------------------------------------------------------------------------------------
TOTAL INVESTMENTS 100.14% 359,616,710
- ---------------------------------------------------------------------------------------------
(cost $602,989,917)
Other assets and liabilities, net (0.14)% (496,926)
------------
NET ASSETS 100% $359,119,784
------------
SHARES SUBJECT
CALL OPTIONS WRITTEN TO CALL VALUE
- ---------------------------------------------------------------------------------------------
Barrick Gold Corp., Strike Price 35, Call, Expiration
Jan. 2009 150 $ 45,000
Harmony Gold Mining Co., Ltd., Strike Price 10, Call,
Expiration Jan. 2009 265 37,100
Kinross Gold Corp., Strike Price 20, Call, Expiration
Jan. 2009 2,142 107,100
- ---------------------------------------------------------------------------------------------
TOTAL CALL OPTIONS WRITTEN $ 189,200
- ---------------------------------------------------------------------------------------------
(premiums received $180,422) (Note 1 E)
See notes to portfolios of investments and notes to financial statements.
115
GOLD & PRECIOUS METALS FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
COMMON STOCKS 70.68% SHARES VALUE
DIAMOND MINING & EXPLORATION 0.00%
- ----------------------------------------------------------------------------------------
Diamond Fields International Ltd. 21,600 $ 621*
FINANCIAL SERVICES 0.20%
- ----------------------------------------------------------------------------------------
GMP Capital Trust 92,900 387,084
GOLD MINING 63.71%
- ----------------------------------------------------------------------------------------
Agnico-Eagle Mines Ltd. 105,980 5,454,849
Agnico-Eagle Mines Ltd. (RS) 140,000 7,186,200@
AngloGold Ashanti Ltd., Sponsored ADR 233,237 6,462,997
Aurizon Mines Ltd. 123,365 399,703
Barrick Gold Corp. 276,647 10,172,310^
Centerra Gold, Inc. 341,000 1,244,280*
Century Mining Corp. 509,512 10,468*
Compania de Minas Buenaventura S.A., ADR 160,770 3,202,538
Crystallex International Corp. 120,000 18,738*
DRDGOLD Ltd., Sponsored ADR 60,000 334,200*
Dundee Precious Metals, Inc. 2,005,000 2,455,169*
Eldorado Gold Corp. 552,859 4,394,455*
Gold Fields Ltd. 651,357 6,461,105
Goldcorp, Inc. 6,023 189,905*
Golden Star Resources Ltd. 1,445,364 1,445,364*
Harmony Gold Mining Co., Ltd., Sponsored ADR 527,566 5,787,399*^
IAMGOLD Corp. 906,722 5,586,274
Jaguar Mining, Inc. 976,059 5,005,430*
Kingsgate Consolidated Ltd. 199,625 520,198*
Kinross Gold Corp. 602,749 11,102,637^
Lihir Gold Ltd., Sponsored ADR 170,488 3,738,802*
New Gold, Inc. 1,043,237 1,517,411*
Newcrest Mining Ltd. 45,400 1,098,609
Newmont Mining Corp. 204,281 8,314,237
OceanaGold Corp. 130,000 16,026*
Polyus Gold Co., Sponsored ADR 127,900 1,524,568
Randgold Resources Ltd., ADR 300,000 13,176,000
Red Back Mining, Inc. 525,750 3,711,532*
Red Back Mining, Inc., 144A 245,000 1,729,578*
Rusoro Mining Ltd. 1,579,200 843,590*
SEMAFO, Inc. 816,300 805,030*
Sino Gold Mining Ltd. 400,000 1,430,088*
St Barbara Ltd. 1,234,467 279,085*
Troy Resources NL 411,300 296,486
Western Goldfields, Inc. 1,055,000 1,699,375*
Yamana Gold, Inc. 169,785 1,318,597
Zhaojin Mining Industry Co., Ltd., H shares 4,387,550 3,420,324
Zijin Mining Group Co., Ltd., H shares 154,600 94,792
-----------
122,448,349
See notes to portfolios of investments and notes to financial statements.
116
GOLD & PRECIOUS METALS FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
COMMON STOCKS SHARES VALUE
GOLD ROYALTY COMPANIES 4.62%
- ----------------------------------------------------------------------------------------
Aberdeen International, Inc. 52,250 $ 4,509*
Gold Wheaton Gold Corp. 3,750,000 611,234*
Royal Gold, Inc. 167,971 8,265,853
-----------
8,881,596
METAL & MINERAL MINING 0.46%
- ----------------------------------------------------------------------------------------
Independence Group NL 155,000 240,230
Ivanhoe Mines Ltd. 109,400 293,999*
Lundin Mining Corp. 356,330 348,482*
-----------
882,711
PLATINUM GROUP METALS 0.72%
- ----------------------------------------------------------------------------------------
Eastern Platinum Ltd. 5,059,450 1,392,929*
SILVER MINING 0.97%
- ----------------------------------------------------------------------------------------
Coeur d'Alene Mines Corp. 400,549 361,559*
Silvercorp Metals, Inc. 698,000 1,497,189
-----------
1,858,748
- ----------------------------------------------------------------------------------------
TOTAL COMMON STOCKS 135,852,038
- ----------------------------------------------------------------------------------------
(cost $151,534,620)
EXCHANGE-TRADED FUNDS (ETF) 5.75%
ETFS Physical Platinum 16,275 1,478,313*
iShares Silver Trust 160,000 1,800,000*
SPDR Gold Trust 89,700 7,763,535*
- ----------------------------------------------------------------------------------------
TOTAL EXCHANGE-TRADED FUNDS 11,041,848
- ----------------------------------------------------------------------------------------
(cost $10,855,686)
CLOSED-END FUND 2.65%
ASA Ltd. 100,000 5,100,000
(cost $4,399,606)
See notes to portfolios of investments and notes to financial statements.
117
GOLD & PRECIOUS METALS FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
WARRANTS 10.25% SHARES VALUE
GOLD MINING 9.35%
- ----------------------------------------------------------------------------------------
Agnico-Eagle Mines Ltd., Warrants (December 2013) (RS) 70,000 $ 285,600*@
Crystallex International Corp., Warrants (August 2009) 62,500 0*@
Dundee Precious Metals, Inc., Warrants (November 2015) 770,500 379,931*
GBS Gold International, Inc., Warrants (May 2010) 175,000 0*@
Goldcorp, Inc., Warrants (June 2011) 1,080,574 10,834,158*
Kinross Gold Corp., Warrants (September 2011) 831,080 2,465,647*
Kinross Gold Corp., Warrants (September 2013) 489,534 2,409,853*
New Gold, Inc., Warrants (April 2012) 3,775,400 62,054*
New Gold, Inc., Warrants (November 2012) 1,222,000 100,427*
New Gold, Inc., Warrants (June 2017) 231,800 57,150*
Rusoro Mining Ltd., Warrants (November 2012) 1,439,250 136,023*
Yamana Gold, Inc., Warrants (February 2010) 1,118,831 1,232,112*
-----------
17,962,955
GOLD ROYALTY COMPANY 0.07%
- ----------------------------------------------------------------------------------------
Franco-Nevada Corp., Warrants (March 2012) 43,600 140,639*
PLATINUM GROUP METALS 0.00%
- ----------------------------------------------------------------------------------------
Eastern Platinum Ltd., Warrants (March 2009) 440,235 3,618*
SILVER MINING 0.83%
- ----------------------------------------------------------------------------------------
Silver Wheaton Corp., Warrants (December 2010) 437,640 1,294,793*
Silver Wheaton Corp., Warrants (September 2013) 188,106 300,988*
-----------
1,595,781
- ----------------------------------------------------------------------------------------
TOTAL WARRANTS 19,702,993
- ----------------------------------------------------------------------------------------
(cost $20,434,759)
PURCHASED OPTIONS 2.28% CONTRACTS
EXCHANGE-TRADED FUND 0.07%
- ----------------------------------------------------------------------------------------
Market Vectors Gold Miners ETF, Strike Price 28, Put,
Expiration Jan. 2009 (premium $518,182) 3,800 133,000
GOLD MINING 2.21%
- ----------------------------------------------------------------------------------------
AngloGold Ashanti Ltd., Strike Price 50, Call, Expiration
Jan. 2010 (premium $175,980) 200 40,500
Gold Fields Ltd., Strike Price 15, Call, Expiration Jan. 2010
(premium $2,059,040) 9,780 1,760,400
Goldcorp, Inc., Strike Price 15, Put, Expiration Apr. 2009
(premium $310,226) 1,278 49,842
See notes to portfolios of investments and notes to financial statements.
118
GOLD & PRECIOUS METALS FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
PURCHASED OPTIONS CONTRACTS VALUE
GOLD MINING (CONT'D)
- ----------------------------------------------------------------------------------------
Harmony Gold Mining Co., Ltd., Strike Price 12.50, Call,
Expiration Jan. 2009 (premium $110,376) 625 $ 18,750
Harmony Gold Mining Co., Ltd., Strike Price 12.50,
Expiration Jan. 2010 (premium $554,579) 1,900 522,500
Hecla Mining Co., Strike Price 10, Call, Expiration Jan. 2010
(premium $227,124) 420 8,400
Newmont Mining Corp., Strike Price 45, Call, Expiration
Jan. 2010 (premium $904,200) 1,100 913,000
Randgold Resources Ltd., Strike Price 50, Call, Expiration
Jan. 2010 (premium $925,204) 910 928,200
-----------
4,241,592
- ----------------------------------------------------------------------------------------
TOTAL PURCHASED OPTIONS 4,374,592
- ----------------------------------------------------------------------------------------
(cost $5,784,911)
PRINCIPAL
NOTE 0.30% AMOUNT
GOLD MINING 0.30%
- ----------------------------------------------------------------------------------------
GBS Gold International, Inc., 12.00%, maturity 5/27/11 (RS) $1,000,000 575,279@
(cost $995,718)
- ----------------------------------------------------------------------------------------
TOTAL SECURITIES 176,646,750
- ----------------------------------------------------------------------------------------
(cost $194,005,300)
REPURCHASE AGREEMENTS 10.06%
Joint Tri-Party Repurchase Agreement, Credit Suisse
First Boston, 12/31/08, 0.03%, due 01/02/09,
repurchase price $4,500,008, collateralized by U.S.
Treasury securities held in a joint tri-party account
(cost $4,500,000) 4,500,000 4,500,000
Joint Tri-Party Repurchase Agreement, Morgan Stanley,
12/31/08, 0.01%, due 01/02/09, repurchase price
$10,000,006, collateralized by U.S. Treasury
securities held in a joint tri-party account
(cost $10,000,000) 10,000,000 10,000,000
See notes to portfolios of investments and notes to financial statements.
119
GOLD & PRECIOUS METALS FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
PRINCIPAL
REPURCHASE AGREEMENTS AMOUNT VALUE
Joint Tri-Party Repurchase Agreement, UBS Financial
Services, Inc., 12/31/08, 0.02%, due 01/02/09,
repurchase price $4,844,311, collateralized by U.S.
Treasury securities held in a joint tri-party account
(cost $4,844,306) $4,844,306 $ 4,844,306
- ----------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS 19,344,306
- ----------------------------------------------------------------------------------------
(cost $19,344,306)
- ----------------------------------------------------------------------------------------
TOTAL INVESTMENTS 101.97% 195,991,056
- ----------------------------------------------------------------------------------------
(cost $213,349,606)
Other assets and liabilities, net (1.97)% (3,785,492)
-----------
NET ASSETS 100% $192,205,564
------------
SHARES SUBJECT
CALL OPTIONS WRITTEN TO CALL VALUE
- ----------------------------------------------------------------------------------------
Barrick Gold Corp., Strike Price 35, Call, Expiration
Jan. 2009 250 $ 75,000
Harmony Gold Mining Co., Ltd., Strike Price 10, Call,
Expiration Jan. 2009 235 32,900
Kinross Gold Corp., Strike Price 20, Call, Expiration
Jan. 2009 1,708 85,400
- ----------------------------------------------------------------------------------------
TOTAL CALL OPTIONS WRITTEN $ 193,300
- ----------------------------------------------------------------------------------------
(premiums received $163,402) (Note 1E)
See notes to portfolios of investments and notes to financial statements.
120
EASTERN EUROPEAN FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
COMMON STOCKS 92.90% SHARES VALUE
BROADCASTING & CABLE TV 5.08%
- -------------------------------------------------------------------------------------------
Cyfrowy Polsat S.A. 1,518,595 $ 6,915,643
TVN S.A. 2,023,135 9,201,567
--------------
16,117,210
COMMODITY CHEMICALS 1.89%
- -------------------------------------------------------------------------------------------
Uralkali, Sponsored 671,015 6,010,365
COMMUNICATIONS 8.43%
- -------------------------------------------------------------------------------------------
Mobile TeleSystems 888,391 3,446,798
Telefonica O2 Czech Republic a.s. 379,953 8,434,952
Vimpel-Communications, Sponsored ADR 2,078,157 14,879,604
--------------
26,761,354
DIVERSIFIED BANKS 25.79%
- -------------------------------------------------------------------------------------------
Erste Group Bank AG 251,508 5,925,022
Komercni Banka a.s. 20,000 3,124,087
OTP Bank Nyrt. 633,934 9,689,065*
OTP Bank Nyrt., GDR 646,903 4,891,234@
Powszechna Kasa Oszczednosci Bank Polski S.A. 190,491 2,276,929
Raiffeisen International Bank Holding AG 162,747 4,577,143
Sberbank RF 29,127,095 21,928,391
Turkiye Garanti Bankasi a.s. 11,200,082 19,161,403
Turkiye Halk Bankasi a.s. 2,599,036 7,818,560
VTB Bank OJSC, Sponsored GDR,7144A 1,120,780 2,454,672
--------------
81,846,506
DIVERSIFIED METALS & MINING 0.86%
- -------------------------------------------------------------------------------------------
Belon OJSC 7,004,000 2,167,038@
Orsu Metals Corp. 6,947,400 570,957*
--------------
2,737,995
ELECTRIC UTILITY 6.68%
- -------------------------------------------------------------------------------------------
CEZ a.s. 516,471 21,204,063
FINANCIAL SERVICES 1.21%
- -------------------------------------------------------------------------------------------
Finans Finansal Kiralama a.s. 4,692,448 3,840,256
GOLD MINING 1.26%
- -------------------------------------------------------------------------------------------
Dundee Precious Metals, Inc. 1,000,000 1,224,523*
KazakhGold Group Ltd., GDR 700,174 2,769,346*
--------------
3,993,869
See notes to portfolios of investments and notes to financial statements.
121
EASTERN EUROPEAN FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
COMMON STOCKS SHARES VALUE
INSURANCE 2.71%
- -------------------------------------------------------------------------------------------
Aksigorta a.s. 4,595,732 $ 8,590,716
OIL & GAS - INTEGRATED 21.66%
- -------------------------------------------------------------------------------------------
Gazprom OAO, Sponsored ADR 2,032,777 28,967,071
LUKOIL, Sponsored ADR 752,810 24,127,560
Rosneft Oil Co. OJSC, GDR 4,117,309 15,643,917
--------------
68,738,548
OIL & GAS EXPLORATION & PRODUCTION 10.84%
- -------------------------------------------------------------------------------------------
KazMunaiGas Exploration Production, GDR 1,414,544 17,970,456
NovaTek OAO, Sponsored GDR 381,477 7,378,644@
Surgutneftegaz 15,599,642 9,044,033
--------------
34,393,133
REAL ESTATE INVESTMENT TRUSTS 0.00%
- -------------------------------------------------------------------------------------------
MirLand Development Corp. plc 12,790 6,579*
REAL ESTATE MANAGEMENT & DEVELOPMENT 0.70%
- -------------------------------------------------------------------------------------------
Plaza Centers N.V. 1,881,175 1,551,850
RGI International Ltd. 1,357,449 664,728*
--------------
2,216,578
STEEL - PRODUCERS 1.56%
- -------------------------------------------------------------------------------------------
Evraz Group S.A., GDR 190,000 1,634,000
Novolipetsk Steel, GDR 320,000 3,308,606
--------------
4,942,606
WIRELESS TELECOMMUNICATION SERVICES 4.23%
- -------------------------------------------------------------------------------------------
Turkcell Iletisim Hizmetleri a.s. 2,324,975 13,408,361
- -------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS 294,808,139
- -------------------------------------------------------------------------------------------
(cost $669,297,007)
PREFERRED STOCKS 1.16%
OIL & GAS EXPLORATION & PRODUCTION 1.16%
- -------------------------------------------------------------------------------------------
Surgutneftegaz, Preferred Stock 13,529,631 2,693,750@
Surgutneftegaz, Preferred Stock, Sponsored ADR 490,333 976,253@
- -------------------------------------------------------------------------------------------
TOTAL PREFERRED STOCKS 3,670,003
- -------------------------------------------------------------------------------------------
(cost $14,159,388)
See notes to portfolios of investments and notes to financial statements.
122
EASTERN EUROPEAN FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
WARRANTS 0.08% SHARES VALUE
GOLD MINING 0.08%
- -------------------------------------------------------------------------------------------
Dundee Precious Metals, Inc., Warrants (November 2015) 500,000 $ 246,548*
(cost $0)
- -------------------------------------------------------------------------------------------
TOTAL SECURITIES 298,724,690
- -------------------------------------------------------------------------------------------
(cost $683,456,395)
PRINCIPAL
REPURCHASE AGREEMENT 4.33% AMOUNT
Joint Tri-Party Repurchase Agreement, Morgan
Stanley, 12/31/08, 0.01%, due 01/02/09, repurchase
price $13,724,247, collateralized by U.S. Treasury
securities held in a joint tri-party account
(cost $13,724,239) 13,724,239 13,724,239
- -------------------------------------------------------------------------------------------
TOTAL INVESTMENTS 98.46% 312,448,929
- -------------------------------------------------------------------------------------------
(cost $697,180,634)
Other assets and liabilities, net 1.54% 4,871,226
--------------
NET ASSETS 100% $317,320,155
------------
See notes to portfolios of investments and notes to financial statements.
123
GLOBAL EMERGING MARKETS
PORTFOLIO OF INVESTMENTS December 31, 2008
COMMON STOCKS 83.04% SHARES VALUE
AIR FREIGHT & LOGISTICS 1.53%
- --------------------------------------------------------------------------------------
Shenzhen International Holdings Ltd. 3,392,000 $ 148,081
ALTERNATIVE CARRIERS 1.58%
- --------------------------------------------------------------------------------------
GVT Holding SA 13,700 152,766*
ALUMINUM 0.07%
- --------------------------------------------------------------------------------------
Vimetco NV, GDR 41,428 7,075*
APPAREL 1.04%
- --------------------------------------------------------------------------------------
China Dongxiang Group Co. 412,000 100,620
BEVERAGES 2.06%
- --------------------------------------------------------------------------------------
Fomento Economico Mexicano, S.A.B. de C.V., Sponsored
ADR 6,600 198,858
COMMODITY CHEMICALS 1.27%
- --------------------------------------------------------------------------------------
Israel Chemicals Ltd. 13,346 93,234
Uralkali, Sponsored GDR 3,328 29,809
-----------
123,043
COMMUNICATIONS 14.24%
- --------------------------------------------------------------------------------------
America Movil SAB de C.V., ADR, Series L 11,600 359,484
China Mobile Ltd. 48,000 486,654
China Mobile Ltd., Sponsored ADR 3,223 163,890
Chunghwa Telecom Co., Ltd. 78,650 125,661
Empresa Nacional de Telecomunicaciones S.A. 6,050 66,013
Telecom Egypt 44,072 128,713
Vimpel-Communications, Sponsored ADR 6,333 45,344
-----------
1,375,759
COMPUTER HARDWARE 1.62%
- --------------------------------------------------------------------------------------
Wistron Corp. 203,378 156,542
CONSTRUCTION & ENGINEERING 0.52%
- --------------------------------------------------------------------------------------
Era Infra Engineering Ltd. 34,152 50,301
DEPARTMENT STORES 1.16%
- --------------------------------------------------------------------------------------
Lojas Renner S.A. 16,269 111,752
DIVERSIFIED BANKS 15.59%
- --------------------------------------------------------------------------------------
China Construction Bank, Class H 258,000 142,771
Commercial Bank of Qatar, GDR 40,249 191,183*
See notes to portfolios of investments and notes to financial statements.
124
GLOBAL EMERGING MARKETS
PORTFOLIO OF INVESTMENTS December 31, 2008
COMMON STOCKS SHARES VALUE
DIVERSIFIED BANKS (CONT'D)
- --------------------------------------------------------------------------------------
Industrial and Commercial Bank of China Ltd., H shares 787,000 $ 418,258
KB Financial Group, Inc., ADR 11,331 296,872
OTP Bank Nyrt. 6,068 92,743*
Sberbank RF 196,497 147,933
Turkiye Garanti Bankasi a.s. 80,969 138,524
Turkiye Vakiflar Bankasi T.A.O., Class D 101,100 77,676
-----------
1,505,960
DIVERSIFIED METALS & MINING 1.51%
- --------------------------------------------------------------------------------------
Belon OJSC 206,900 64,015*@
Orsu Metals Corp. 430,836 35,407*
Raspadskaya 46,785 46,551
-----------
145,973
ELECTRIC GENERATION 1.36%
- --------------------------------------------------------------------------------------
Huaneng Power International, Inc., Sponsored ADR 4,500 131,310
ELECTRONICS & COMPONENTS 1.26%
- --------------------------------------------------------------------------------------
China High Speed Transmission Equipment Group Co., Ltd. 100,000 122,035
FOREST PRODUCTS 1.45%
- --------------------------------------------------------------------------------------
China Grand Forestry Green Resources Group Ltd. 3,314,000 140,094*
GOLD MINING 3.00%
- --------------------------------------------------------------------------------------
AngloGold Ashanti Ltd. 6,978 190,584
KazakhGold Group Ltd., GDR 25,082 99,205*
-----------
289,789
HEALTHCARE EQUIPMENT & SERVICES 1.36%
- --------------------------------------------------------------------------------------
Opto Circuits India Ltd. 71,048 131,215
INSURANCE 1.88%
- --------------------------------------------------------------------------------------
China Life Insurance Co., Ltd., H shares 59,000 181,810
MACHINERY 0.53%
- --------------------------------------------------------------------------------------
Lonking Holdings Ltd. 100,000 51,590
METAL & MINERAL MINING 2.85%
- --------------------------------------------------------------------------------------
Compania Vale do Rio Doce, Sponsored ADR 16,000 193,760
Eastern Platinum Ltd. 295,021 81,223*
-----------
274,983
See notes to portfolios of investments and notes to financial statements.
125
GLOBAL EMERGING MARKETS
PORTFOLIO OF INVESTMENTS December 31, 2008
COMMON STOCKS SHARES VALUE
OIL & GAS - INTEGRATED 7.60%
- --------------------------------------------------------------------------------------
Gazprom OAO, Sponsored ADR 16,124 $ 229,767
LUKOIL, Sponsored ADR 5,000 160,250
PetroChina Co., Ltd., H shares 66,000 58,479
Sasol Ltd. 9,528 286,247
-----------
734,743
OIL & GAS EXPLORATION & PRODUCTION 1.40%
- --------------------------------------------------------------------------------------
KazMunaiGas Exploration Production, GDR 10,682 135,705
REAL ESTATE COMPANIES 2.90%
- --------------------------------------------------------------------------------------
Shimao Property Holdings Ltd. 400,000 280,277
REAL ESTATE MANAGEMENT & DEVELOPMENT 0.25%
- --------------------------------------------------------------------------------------
RGI International Ltd. 48,574 23,786*
RETAIL 1.17%
- --------------------------------------------------------------------------------------
Wal-Mart de Mexico SAB de CV, Series V 41,900 112,954
SEMICONDUCTORS 8.20%
- --------------------------------------------------------------------------------------
Samsung Electronics Co., Ltd. 1,158 419,343
Samsung Electronics Co., Ltd., GDR, 144A 687 120,225
Siliconware Precision Industries Co. 252,686 221,124
Taiwan Semiconductor Manufacturing Co., Ltd., Sponsored
ADR 23,115 31,680
-----------
792,372
STEEL - PRODUCERS 1.93%
- --------------------------------------------------------------------------------------
Evraz Group S.A., GDR 3,000 25,800
Gerdau S.A., Sponsored ADR 15,000 99,000
Novolipetsk Steel, GDR 6,000 62,036
-----------
186,836
TOBACCO 1.55%
- --------------------------------------------------------------------------------------
KT&G Corp. 2,400 149,659
WIRELESS TELECOMMUNICATION SERVICES 2.16%
- --------------------------------------------------------------------------------------
MTN Group Ltd. 17,954 208,926
- --------------------------------------------------------------------------------------
TOTAL COMMON STOCKS 8,024,814
- --------------------------------------------------------------------------------------
(cost $15,381,899)
See notes to portfolios of investments and notes to financial statements.
126
GLOBAL EMERGING MARKETS
PORTFOLIO OF INVESTMENTS December 31, 2008
EXCHANGE-TRADED FUND (ETF) 1.34% SHARES VALUE
SPDR Gold Trust 1,500 $ 129,825*
(cost $123,628)
CLOSED-END FUND 3.67%
Metage Special Emerging Markets Fund Ltd. 7,191 354,229*@
(cost $918,299)
EQUITY-LINKED SECURITIES 4.38%
APPLICATIONS SOFTWARE 1.18%
- --------------------------------------------------------------------------------------
Tanla Solutions Ltd. (January 2010) 80,110 113,676@
CONSTRUCTION & ENGINEERING 1.04%
- --------------------------------------------------------------------------------------
Arabtec Holding Co. (March 2017) 81,827 100,729@
IT CONSULTING & OTHER SERVICES 2.16%
- --------------------------------------------------------------------------------------
Mastek Ltd., 144A (October 2009) 34,445 114,358*@
Satyam Computer Services Ltd. (January 2017) 26,966 94,381@
-----------
208,739
- --------------------------------------------------------------------------------------
TOTAL EQUITY-LINKED SECURITIES 423,144
- --------------------------------------------------------------------------------------
(cost $1,177,703)
WARRANTS 0.01%
DIVERSIFIED METALS & MINING 0.01%
- --------------------------------------------------------------------------------------
Orsu Metals Corp., Warrants (March 2011) 25,813 742*
(cost $0)
UNITS 2.01% UNITS
DIVERSIFIED BANKS 2.01%
- --------------------------------------------------------------------------------------
Unibanco, Units 30,100 194,346
(cost $391,895)
- --------------------------------------------------------------------------------------
TOTAL SECURITIES 9,127,100
- --------------------------------------------------------------------------------------
(cost $17,993,424)
See notes to portfolios of investments and notes to financial statements.
127
GLOBAL EMERGING MARKETS
PORTFOLIO OF INVESTMENTS December 31, 2008
PRINCIPAL
REPURCHASE AGREEMENT 0.58% AMOUNT VALUE
Joint Tri-Party Repurchase Agreement, Morgan Stanley,
12/31/08, 0.01%, due 01/02/09, repurchase price
$55,641, collateralized by U.S. Treasury securities
held in a joint tri-party account (cost $55,641) $ 55,641 $ 55,641
- --------------------------------------------------------------------------------------
TOTAL INVESTMENTS 95.03% 9,182,741
- --------------------------------------------------------------------------------------
(cost $18,049,065)
Other assets and liabilities, net 4.97% 480,014
-----------
NET ASSETS 100% $9,662,755
----------
See notes to portfolios of investments and notes to financial statements.
128
CHINA REGION FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
COMMON STOCKS 90.94% SHARES VALUE
AGRICULTURE 1.31%
- ----------------------------------------------------------------------------------------
China Agri-Industries Holdings Ltd. 1,000,000 $ 500,576*
AUTO MANUFACTURERS 1.77%
- ----------------------------------------------------------------------------------------
Sinotruk Hong Kong Ltd. 1,000,000 678,852
BANKS 6.88%
- ----------------------------------------------------------------------------------------
Bank of Communications Co., Ltd., H shares 1,800,000 1,311,048
Industrial & Commercial Bank of China Ltd., H shares 2,500,000 1,328,645
-----------
2,639,693
CELLULAR TELECOMMUNICATIONS 5.30%
- ----------------------------------------------------------------------------------------
China Mobile Ltd. 150,000 1,520,791
China Mobile Ltd., Sponsored ADR 10,000 508,500
-----------
2,029,291
CHEMICALS - AGRICULTURAL 0.00%
- ----------------------------------------------------------------------------------------
Danhua Chemical Technology Co., Ltd., B shares 1 1*
COAL 1.05%
- ----------------------------------------------------------------------------------------
China Coal Energy Co., H shares 500,000 404,045
CONSTRUCTION 14.73%
- ----------------------------------------------------------------------------------------
Cheung Kong Infrastructure Holdings Ltd. 500,000 1,886,520
China Communications Construction Co., Ltd., H shares 1,400,000 1,749,754
China Railway Construction Corp., H shares 500,000 750,353*
China Railway Group Ltd., H shares 1,800,000 1,263,231*
-----------
5,649,858
DIVERSIFIED MINERALS 0.04%
- ----------------------------------------------------------------------------------------
Erdene Resource Development Corp. 100,000 15,615*
EDUCATION 0.53%
- ----------------------------------------------------------------------------------------
CIBT Education Group, Inc. 533,632 202,831*
ELECTRIC GENERATION 4.31%
- ----------------------------------------------------------------------------------------
China Resources Power Holdings Co., Ltd. 400,000 777,403
Huaneng Power International, Inc., Sponsored ADR 30,000 875,400
-----------
1,652,803
See notes to portfolios of investments and notes to financial statements.
129
CHINA REGION FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
COMMON STOCKS SHARES VALUE
ELECTRONICS & COMPONENTS 0.95%
- ----------------------------------------------------------------------------------------
China High Speed Transmission Equipment Group Co., Ltd. 300,000 $ 366,106
Yageo Corp., Sponsored GDR 1 1*@
-----------
366,107
FOOD & BEVERAGES 4.97%
- ----------------------------------------------------------------------------------------
China Green (Holdings) Ltd. 602,000 481,189
China Yurun Food Group Ltd. 500,000 591,553
Want Want China Holdings Ltd. 2,000,000 833,337
-----------
1,906,079
GOLD MINING 5.08%
- ----------------------------------------------------------------------------------------
Kingsgate Consolidated Ltd. 2,599 6,773*
Lihir Gold Ltd., Sponsored ADR 20,000 438,600*
Olympus Pacific Minerals, Inc. 340,500 20,987*
Silk Road Resources Ltd. 210,000 12,081*
Sino Gold Mining Ltd. 67,721 242,117*
Zijin Mining Group Co., Ltd., H shares 2,000,000 1,226,281
-----------
1,946,839
HEALTH & PERSONAL CARE 4.20%
- ----------------------------------------------------------------------------------------
Hengan International Group Co., Ltd. 500,000 1,612,149
INSURANCE 6.10%
- ----------------------------------------------------------------------------------------
China Life Insurance Co., Ltd., H shares 600,000 1,848,914
Ping An Insurance Group Co. of China Ltd., H shares 100,000 488,675
-----------
2,337,589
INTERNET 4.24%
- ----------------------------------------------------------------------------------------
Asia Broadband, Inc. 500,000 0*@
Tencent Holdings Ltd. 250,000 1,627,528
-----------
1,627,528
MACHINERY 1.61%
- ----------------------------------------------------------------------------------------
Lonking Holdings Ltd. 1,200,000 619,074
METAL - COPPER 2.37%
- ----------------------------------------------------------------------------------------
Continental Minerals Corp. 56,920 15,237*
Jiangxi Copper Co. Ltd., H shares 1,200,000 892,077
-----------
907,314
See notes to portfolios of investments and notes to financial statements.
130
CHINA REGION FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
COMMON STOCKS SHARES VALUE
NON-FERROUS METALS 0.03%
- ----------------------------------------------------------------------------------------
Sterling Group Ventures, Inc. 510,000 $ 10,200*
OIL & GAS - INTEGRATED 2.32%
- ----------------------------------------------------------------------------------------
PetroChina Co. Ltd., ADR 10,000 889,800
OIL & GAS EXPLORATION & PRODUCTION 1.94%
- ----------------------------------------------------------------------------------------
CNOOC Ltd. 5,000 476,200
Green Dragon Gas Ltd. 62,949 267,533*
-----------
743,733
PRECIOUS METALS 0.03%
- ----------------------------------------------------------------------------------------
TVI Pacific, Inc. 1,000,000 12,327*
PUBLISHING 0.06%
- ----------------------------------------------------------------------------------------
Lingo Media Corp. 22,642 22,143*
REAL ESTATE COMPANIES 12.17%
- ----------------------------------------------------------------------------------------
China Overseas Land & Investment Ltd. 1,200,000 1,686,890
China Resources Land Ltd. 1,500,000 1,857,059
Shimao Property Holdings Ltd. 1,600,000 1,121,108
-----------
4,665,057
RETAIL 1.27%
- ----------------------------------------------------------------------------------------
China Dongxiang Group Co. 2,000,000 488,447
China First Pencil Co., Ltd., B shares 1 0
-----------
488,447
SILVER MINING 0.50%
- ----------------------------------------------------------------------------------------
Silvercorp Metals, Inc. 90,000 193,047
STEEL 4.02%
- ----------------------------------------------------------------------------------------
Angang Steel Co. Ltd., H shares 400,000 452,640
Maanshan Iron and Steel Co., Ltd., H shares 3,000,000 1,087,179
-----------
1,539,819
TELECOMMUNICATIONS 0.43%
- ----------------------------------------------------------------------------------------
Chunghwa Telecom Co., Ltd., ADR 10,480 163,488
TOBACCO 1.63%
- ----------------------------------------------------------------------------------------
KT&G Corp. 10,000 623,579
See notes to portfolios of investments and notes to financial statements.
131
CHINA REGION FUND
PORTFOLIO OF INVESTMENTS December 31, 2008
COMMON STOCKS SHARES VALUE
TRANSPORTATION 1.10%
- ----------------------------------------------------------------------------------------
China COSCO Holdings Co. Ltd., H shares 600,000 $ 422,783
- ----------------------------------------------------------------------------------------
TOTAL COMMON STOCKS 34,870,667
- ----------------------------------------------------------------------------------------
(cost $36,320,967)
EXCHANGE-TRADED FUND (ETF) 0.33%
SPDR Gold Trust
(cost $95,749) 1,500 128,117*
WARRANTS 0.00%
CONSTRUCTION 0.00%
- ----------------------------------------------------------------------------------------
85,714 111*
China State Construction International Holdings Ltd.,
Warrants (February 2009) (cost $0)
RIGHTS 0.04%
REAL ESTATE COMPANIES 0.04%
- ----------------------------------------------------------------------------------------
China Overseas Land & Investment Ltd.
(cost $0) 48,000 17,217*@
- ----------------------------------------------------------------------------------------
TOTAL SECURITIES 35,016,112
- ----------------------------------------------------------------------------------------
(cost $36,416,716)
PRINCIPAL
REPURCHASE AGREEMENT 2.55% AMOUNT
Joint Tri-Party Repurchase Agreement, Morgan Stanley,
12/31/08, 0.01%, due 01/02/09, repurchase price
$977,464, collateralized by U.S. Treasury securities
held in a joint tri-party account (cost $977,463) $ 977,463 977,463
- ----------------------------------------------------------------------------------------
TOTAL INVESTMENTS 93.86% 35,993,575
- ----------------------------------------------------------------------------------------
(cost $37,394,179)
Other assets and liabilities, net 6.14% 2,354,295
-----------
NET ASSETS 100% $38,347,870
-----------
See notes to portfolios of investments and notes to financial statements.
132
NOTES TO PORTFOLIOS OF INVESTMENTS December 31, 2008
LEGEND
* Non-income producing security GO General Obligation Bond
+ Affiliated company (see following) RS Restricted Security (see following)
ADR American Depositary Receipt ZCB Zero Coupon Bond
GDR Global Depositary Receipt ^ Security or portion of security
segregated as collateral for written
options
@ Security was fair valued at December 31, 2008, by the Adviser in accordance with
valuation procedures approved by the Board of Trustees. Fair valued securities as a
percentage of net assets at December 31, 2008, were 1.12% of Global MegaTrends,
2.42% of Global Resources, 4.66% of World Precious Minerals, 4.19% of Gold and
Precious Metals, 5.71% of Eastern European, 8.71% of Global Emerging Markets and
0.04% of China Region. See also Note 1B in the Notes to Financial Statements and
the Fair Valuation of Securities section of these Notes to Portfolios of
Investments for further discussion of fair valued securities. See further
information and detail on restricted securities in the Restricted Securities
section of these Notes to Portfolios of Investments.
GENERAL
The yields reflect the effective yield from the date of purchase.
Variable Rate Notes have periodic reset features, which effectively
shorten the maturity dates and reset the interest rates as tied to
various interest-bearing instruments. Rates shown are current rates
at December 31, 2008.
Securities with a 144A designation are exempt from registration
under Rule 144A of the Securities Act of 1933.
JOINT TRI-PARTY REPURCHASE AGREEMENTS
The terms of the joint tri-party repurchase agreements and the
securities held as collateral at December 31, 2008 were:
Credit Suisse First Boston repurchase agreement, 12/31/08, 0.03%, due 01/02/09:
Total principal amount: $35,000,000; Total repurchase price: $35,000,058
Collateral:
$25,805,000 U.S. Treasury Bond, 4.375%, 02/15/38
(total collateral market value, including accrued interest, of
$35,703,699)
Morgan Stanley repurchase agreement, 12/31/08, 0.01%, due 01/02/09:
Total principal amount: $48,437,396; Total repurchase price: $48,437,423
Collateral:
$33,368,000 U.S. Treasury Bond, 6.000%, 02/15/26
$600,000 U.S. Treasury Bond, 6.875%, 08/15/25
(total collateral market value, including accrued interest, of
$49,406,273)
UBS Financial Services, Inc. repurchase agreement, 12/31/08, 0.02%, due
01/02/09:
Total principal amount: $49,862,174; Total repurchase price: $49,862,229
Collateral:
$26,120,000 U.S. Treasury Note, 2.000%, 11/30/13
$23,396,000 U.S. Treasury Note, 4.500%, 04/30/09
(total collateral market value, including accrued interest, of
$50,863,312)
Other mutual funds managed by U.S. Global Investors, Inc.
participate in the joint tri-party repurchase agreements. Each owns
an undivided interest in the accounts.
133
NOTES TO PORTFOLIOS OF INVESTMENTS December 31, 2008
FAIR VALUATION OF SECURITIES
For the Funds' policies regarding the valuation of investments and
other significant accounting policies, please refer to the Notes to
Financial Statements.
The Funds adopted Statement of Financial Accounting Standards No.
157, Fair Value Measurements (SFAS 157 or the Statement), effective
July 1, 2008. SFAS 157 governs the application of generally accepted
accounting principles that require fair value measurements of a
Fund's assets and liabilities. Fair value is the price that would be
received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement
date. SFAS 157 established a three-tier hierarchy to maximize the
use of observable market data and minimize the use of unobservable
inputs and to establish classification of fair value measurements
for disclosure purposes. Inputs refer broadly to the assumptions
that market participants would use in pricing the asset or
liability, including assumptions about risk, for example, the risk
inherent in a particular valuation technique used to measure fair
value including such a pricing model and/or the risk inherent in the
inputs to the valuation technique. Inputs may be observable or
unobservable. Observable inputs are inputs that reflect the
assumptions market participants would use in pricing the asset or
liability developed based on market data obtained from sources
independent of the reporting entity. Unobservable inputs are inputs
that reflect the reporting entity's own assumptions about the
assumptions market participants would use in pricing the asset or
liability developed based on the best information available in the
circumstances. The three levels defined by the SFAS 157 hierarchy
are as follows:
Level 1 - quoted prices in active markets for identical securities.
Level 2 - significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds, credit risk,
etc.)
Level 3 - significant unobservable inputs (including the Fund's own
assumptions in determining the fair value of investments).
In some instances, the inputs used to measure fair value might fall
in different levels of the fair value hierarchy. The level in the
fair value hierarchy within which the fair value measurement in its
entirety falls is determined based on the lowest input level that is
significant to the fair value measurement in its entirety. Because
of the inherent uncertainties of valuation, the values reflected in
the financial statements may materially differ from the value
received upon actual sale of those investments.
134
NOTES TO PORTFOLIOS OF INVESTMENTS December 31, 2008
The following table summarizes the valuation of each fund's
securities using the fair value hierarchy:
AT DECEMBER 31, 2008 TOTAL LEVEL 1 LEVEL 2 LEVEL 3
U.S. TREASURY SECURITIES CASH FUND
Investments in Securities $121,721,773 $ 56,876,124 $ 64,845,649 $ 0
U.S. GOVERNMENT SECURITIES SAVINGS
FUND
Investments in Securities $357,973,782 $ 0 $357,973,782 $ 0
NEAR-TERM TAX FREE FUND
Investments in Securities $ 13,863,871 $ 1,170,075 $ 12,693,796 $ 0
TAX FREE FUND
Investments in Securities $ 16,744,933 $ 348,497 $ 16,396,436 $ 0
ALL AMERICAN EQUITY FUND
Investments in Securities $ 15,541,349 $ 15,541,349 $ 0 $ 0
HOLMES GROWTH FUND
Investments in Securities $ 30,712,128 $ 30,712,128 $ 0 $ 0
GLOBAL MEGATRENDS FUND
Investments in Securities $ 22,025,720 $ 18,227,053 $ 3,798,667 $ 0
GLOBAL RESOURCES FUND
Investments in Securities $444,568,317 $393,366,244 $ 43,690,465 $7,511,608
WORLD PRECIOUS MINERALS FUND
Investments in Securities $359,616,710 $317,291,039 $ 38,488,254 $3,837,417
Other Financial Instruments* $ (8,778) $ (8,778) $ 0 $ 0
GOLD AND PRECIOUS METALS FUND
Investments in Securities $195,991,056 $178,149,372 $ 17,266,405 $ 575,279
Other Financial Instruments* $ (29,898) $ (29,898) $ 0 $ 0
EASTERN EUROPEAN FUND
Investments in Securities $312,448,929 $ 85,374,504 $227,074,425 $ 0
Other Financial Instruments* $ 6 $ 6
GLOBAL EMERGING MARKETS FUND
Investments in Securities $ 9,182,741 $ 2,327,398 $ 6,855,343 $ 0
CHINA REGION FUND
Investments in Securities $ 35,993,575 $ 4,834,031 $ 31,159,543 $ 1
<FN>
*Other financial instruments include currency contracts and written
options. Currency contracts and written options are reported at
their unrealized appreciation/depreciation at measurement date,
which represents the change in the contract's value from trade
date.
</FN>
135
NOTES TO PORTFOLIOS OF INVESTMENTS December 31, 2008
The following is a reconciliation of assets for which significant
unobservable inputs (Level 3) were used in determining fair value
during the period July 1, 2008, through December 31, 2008:
INVESTMENTS IN SECURITIES
GLOBAL RESOURCES FUND
Balance as of June 30, 2008 $ 28,337,151
Total realized gain (loss) --
Change in unrealized appreciation (depreciation) (13,769,058)
Net purchases (sales) --
Transfers in and/or out of Level 3 (7,056,485)
------------
Balance as of December 31, 2008 $ 7,511,608
============
INVESTMENTS IN SECURITIES
WORLD PRECIOUS MINERALS FUND
Balance as of June 30, 2008 $ 9,532,126
Total realized gain (loss) --
Change in unrealized appreciation (depreciation) (4,263,067)
Net purchases (sales) --
Transfers in and/or out of Level 3 (1,431,642)
------------
Balance as of December 31, 2008 $ 3,837,417
============
INVESTMENTS IN SECURITIES
GOLD AND PRECIOUS METALS FUND
Balance as of June 30, 2008 $ 980,729
Total realized gain (loss) --
Change in unrealized appreciation (depreciation) (405,450)
Net purchases (sales) --
Transfers in and/or out of Level 3 --
------------
Balance as of December 31, 2008 $ 575,279
============
INVESTMENTS IN SECURITIES
CHINA REGION FUND
Balance as of June 30, 2008 $ --
Total realized gain (loss) --
Change in unrealized appreciation (depreciation) --
Net purchases (sales) --
Transfers in and/or out of Level 3 1
------------
Balance as of December 31, 2008 $ 1
============
136
NOTES TO PORTFOLIOS OF INVESTMENTS December 31, 2008
AFFILIATED COMPANIES - INDICATED IN PORTFOLIO OF INVESTMENTS AS "+"
The Investment Company Act of 1940 defines affiliates as companies
in which the Fund owns at least 5% of the outstanding voting
securities. The following is a summary of transactions with each
affiliated company during the period ended December 31, 2008.
SHARES OF AFFILIATED COMPANIES
JUNE 30, 2008 ADDITIONS REDUCTIONS DECEMBER 31, 2008
GLOBAL RESOURCES FUND
- -------------------------------------------------------------------------------------------------------
Bioenergy Africa, Ltd.
(formerly Southern African Energy) -- 8,750,000 -- 8,750,000
Bounty Mining Ltd. 22,000,000 -- -- 22,000,000
Cano Petroleum, Inc. 2,570,000 514,100 (359,100) 2,725,000
Ivory Energy, Inc. 4,603,166 -- (465,000) 4,138,166
Natasa Mining Ltd. 1,099,160 -- -- 1,099,160
New Gold, Inc. 1,853,421 1 (576,900) 1,276,522(a)
North Peace Energy Corp. -- 3,233,400 -- 3,233,400
Red Dragon Resources Corp. 3,720,000 -- -- 3,720,000
Revett Minerals, Inc. 5,048,000 -- -- 5,048,000
Royalite Petroleum Co., Inc. 2,266,333 -- -- 2,266,333(a)
Vantage Drilling Co. 2,405,000 358,400 (89,400) 2,674,000(a)
At December 31, 2008, the value of investments in affiliated
companies was $5,122,157, representing 1.10% of net assets, and the
total cost was $38,130,261. Net realized losses on transactions were
$2,542,726 and there was no income earned for the period.
SHARES OF AFFILIATED COMPANIES
JUNE 30, 2008 ADDITIONS REDUCTIONS DECEMBER 31, 2008
WORLD PRECIOUS MINERALS FUND
- -------------------------------------------------------------------------------------------------------
Atikwa Minerals Corp. 3,062,333 -- -- 3,062,333
Avion Resources Corp. -- 3,900,000 -- 3,900,000
Bioenergy Africa, Ltd.
(formerly Southern African Energy) -- 5,750,000 -- 5,750,000
Carnavale Resources Ltd. 3,348,857 -- -- 3,348,857
Chesapeake Gold Corp. 1,897,639 76,580 -- 1,974,219
Golden Odyssey Mining plc 2,070,500 -- (424,000) 1,646,500(a)
Moss Lake Gold Mines Ltd. 3,162,000 -- -- 3,162,000
Romarco Minerals, Inc. 17,081,706 5,286,000 (66,000) 22,301,706
Terrane Metals Corp. 4,223,000 4,787,400 -- 9,010,400
VG Gold Corp. 5,856,510 80,000 -- 5,936,510
At December 31, 2008, the value of investments in affiliated
companies was $11,223,806, representing 3.13% of net assets, and the
total cost was $23,687,473. Net realized losses on transactions were
$63,975, and there was no income earned for the period.
(a) At December 31, 2008, the company is no longer defined as an
affiliate, although it was an affiliated company during the
period.
137
NOTES TO PORTFOLIOS OF INVESTMENTS December 31, 2008
RESTRICTED SECURITIES - INDICATED IN PORTFOLIO OF INVESTMENTS AS
"RS"
The following securities are subject to contractual and regulatory
restrictions on resale or transfer. These investments may involve a
high degree of business and financial risk. Because of the thinly
traded markets for these investments, a Fund may be unable to
liquidate its securities in a timely manner, especially if there is
negative news regarding the specific securities or the markets
overall. These securities could decline significantly in value
before the Fund could liquidate these securities. The issuer bears
the cost of registration, if any, involved in the disposition of
these securities.
ACQUISITION COST PER
DATE SHARE/UNIT
GLOBAL MEGATRENDS FUND
- ----------------------------------------------------------------------------------------
Polaris Minerals Corp., Units 12/22/08 $1.31
As of December 31, 2008, the total cost of restricted securities was
$262,543, and the total value was $246,549, representing 1.12% of
net assets.
ACQUISITION COST PER
DATE SHARE/UNIT
GLOBAL RESOURCES FUND
- ----------------------------------------------------------------------------------------
Bioenergy Africa Ltd. (formerly Southern
African Energy) 02/04/08 $0.25
Govi Uranium, Inc. (formerly Govi HighPower
Exploration) 10/04/07 $1.96
GoviEx IP Holdings, Inc. 10/04/07 $0.04
Ivanhoe Nickel and Platinum Ltd. 07/09/03 $5.00
Legacy Energy LLC, 144A 02/27/06 $1.90
Osmium Holdings S.A. 10/22/96-01/29/98 $987.07
Trident Resources Corp., Series B, Preferred
Stock 06/08/06 $62.50
Trident Resources Corp., Warrants (March 2013) 06/08/06 $0.00
Value Creation, Inc. 08/11/06 $12.66
At December 31, 2008, the total cost of restricted securities was
$17,408,065, and the total value was $8,376,392, representing 1.80%
of net assets.
138
NOTES TO PORTFOLIOS OF INVESTMENTS December 31, 2008
ACQUISITION COST PER
DATE SHARE/UNIT
WORLD PRECIOUS MINERALS FUND
- ----------------------------------------------------------------------------------------
Agnico-Eagle Mines Ltd. 11/24/08 $31.50
Agnico-Eagle Mines Ltd., Warrants (December 2013) 11/24/08 $0.00
Bioenergy Africa Ltd. 02/04/08 $0.25
Fortress Minerals Corp. 11/25/08 $0.16
Fortress Minerals Corp., Warrants (December 2010) 11/25/08 $0.00
GBS Gold International, Inc., 12% Note, maturity
5/27/11 05/12/08 $995.72
Hainan Mining Corp. 08/31/06-05/16/07 $0.85
Hainan Mining Corp., Warrants (May 2009) 05/16/07 $0.00
Hainan Mining Corp., Warrants (August 2011) 08/31/06 $0.00
Ivanhoe Nickel and Platinum Ltd. 07/09/03 $5.00
Osmium Holdings S.A. 10/22/96-01/29/98 $1,280.75
Platte River Gold U.S., Inc. 03/01/04-01/25/08 $1.70
Platte River Gold U.S., Inc., Warrants
(March 2009) 03/01/04 $0.00
Platte River Gold U.S., Inc., Warrants
(February 2010) 01/25/08 $0.00
Q2 Gold Resources, Inc. 06/18/07 $0.00
Western Exploration & Development Ltd., 144A,
Special Warrants 08/14/97 $0.50
At December 31, 2008, the total cost of restricted securities was
$17,863,918 and the total value was $16,331,277, representing 4.55%
of net assets.
ACQUISITION COST PER
DATE SHARE/UNIT
GOLD AND PRECIOUS METALS FUND
- ----------------------------------------------------------------------------------------
Agnico-Eagle Mines Ltd. 11/24/08 $31.50
Agnico-Eagle Mines Ltd., Warrants (December 2013) 11/24/08 $0.00
GBS Gold International, Inc., 12% Note, maturity
5/27/11 05/12/08 $995.72
At December 31, 2008, the total cost of restricted securities was
$5,405,718 and the total value was $8,047,079, representing 4.19% of
net assets.
139
STATEMENTS OF ASSETS AND LIABILITIES
U.S. TREASURY
SECURITIES
CASH FUND
Investments, at identified cost $121,721,773
============
ASSETS
- ---------------------------------------------------------------------------
Investments, at value:
Securities $ 64,845,649
Repurchase agreements 56,876,124
Cash --
Receivables:
Interest 38
Capital shares sold 1,337,930
From adviser 13,556
Other assets 24,528
- ---------------------------------------------------------------------------
TOTAL ASSETS 123,097,825
- ---------------------------------------------------------------------------
LIABILITIES
- ---------------------------------------------------------------------------
Payables:
Investments purchased --
Capital shares redeemed 1,629,851
Adviser and affiliates --
Dividends and distributions --
Accounts payable and accrued expenses 57,837
- ---------------------------------------------------------------------------
TOTAL LIABILITIES 1,687,688
- ---------------------------------------------------------------------------
NET ASSETS $121,410,137
============
NET ASSETS CONSIST OF:
- ---------------------------------------------------------------------------
Paid-in capital $121,410,422
Accumulated undistributed net investment income --
Accumulated net realized loss on investments (285)
Net unrealized appreciation (depreciation) of investments --
------------
Net assets applicable to capital shares outstanding $121,410,137
============
Capital shares outstanding, an unlimited number of no
par shares authorized 121,486,219
============
NET ASSET VALUE, PUBLIC OFFERING PRICE, REDEMPTION PRICE,
PER SHARE $ 1.00
============
See accompanying notes to financial statements.
140
December 31, 2008
U.S. GOVERNMENT
SECURITIES NEAR-TERM TAX FREE
SAVINGS FUND TAX FREE FUND FUND
Investments, at identified cost $357,973,782 $13,706,867 $16,965,131
============ =========== ===========
ASSETS
- -----------------------------------------------------------------------------------------------------------------
Investments, at value:
Securities $357,973,782 $12,693,796 $16,396,436
Repurchase agreements -- 1,170,075 348,497
Cash 241 -- --
Receivables:
Interest 898,986 152,632 236,586
Capital shares sold 793,827 61 2,596
From adviser -- 8,389 5,082
Other assets 58,888 3,320 4,879
- -----------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 359,725,724 14,028,273 16,994,076
- -----------------------------------------------------------------------------------------------------------------
LIABILITIES
- -----------------------------------------------------------------------------------------------------------------
Payables:
Investments purchased -- -- --
Capital shares redeemed 1,637,798 48 1,496
Adviser and affiliates 92,708 -- --
Dividends and distributions -- 8,451 13,261
Accounts payable and accrued expenses 85,195 30,636 33,287
- -----------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 1,815,701 39,135 48,044
- -----------------------------------------------------------------------------------------------------------------
NET ASSETS $357,910,023 $13,989,138 $16,946,032
============ =========== ===========
NET ASSETS CONSIST OF:
- -----------------------------------------------------------------------------------------------------------------
Paid-in capital $357,448,714 $14,098,891 $17,654,206
Accumulated undistributed net investment income 461,309 21,225 34,524
Accumulated net realized loss on investments -- (287,983) (522,500)
Net unrealized appreciation (depreciation) of investments -- 157,005 (220,198)
------------ ----------- -----------
Net assets applicable to capital shares outstanding $357,910,023 $13,989,138 $16,946,032
============ =========== ===========
Capital shares outstanding, an unlimited number of no
par shares authorized 358,077,690 6,486,313 1,446,152
============ =========== ===========
NET ASSET VALUE, PUBLIC OFFERING PRICE, REDEMPTION PRICE,
PER SHARE $ 1.00 $ 2.16 $ 11.72
============ =========== ===========
141
STATEMENTS OF ASSETS AND LIABILITIES
ALL AMERICAN HOLMES GROWTH
EQUITY FUND FUND
Investments, at identified cost $16,117,020 $37,149,800
=========== ===========
ASSETS
- ---------------------------------------------------------------------------------
Investments, at value:
Securities of unaffiliated issuers $14,968,822 $29,364,936
Securities of affiliated issuers -- --
Repurchase agreements 572,527 1,347,192
Cash 2 --
Foreign currencies (Cost $0, $0, $261,930,
$112,329 and $0) -- --
Receivables:
Investments sold 1,030,400 1,818,818
Dividends 58,280 64,754
Interest -- --
Capital shares sold 8,360 2,825
Other assets 17,405 20,708
- ---------------------------------------------------------------------------------
TOTAL ASSETS 16,655,796 32,619,233
- ---------------------------------------------------------------------------------
LIABILITIES
- ---------------------------------------------------------------------------------
Payables:
Investments purchased 358,778 --
Capital shares redeemed 19,443 55,773
Adviser and affiliates 5,856 23,088
Accounts payable and accrued expenses 37,373 52,688
Written options at value (Premiums $0,
$0, $0, $0 and $180,422) -- --
- ---------------------------------------------------------------------------------
TOTAL LIABILITIES 421,450 131,549
- ---------------------------------------------------------------------------------
NET ASSETS $16,234,346 $32,487,684
=========== ===========
NET ASSETS CONSIST OF:
- ---------------------------------------------------------------------------------
Paid-in capital $21,977,926 $45,277,468
Accumulated undistributed net investment
income (distributions in excess of net
investment income) 29,875 --
Accumulated net realized loss on investments
and foreign currencies (5,197,784) (6,352,112)
Net unrealized depreciation of investments
and other assets and liabilities
denominated in foreign currencies (575,671) (6,437,672)
----------- -----------
Net assets applicable to capital shares
outstanding $16,234,346 $32,487,684
=========== ===========
Capital shares outstanding, an unlimited
number of no par shares authorized 936,998 2,540,793
=========== ===========
NET ASSET VALUE, PUBLIC OFFERING PRICE,
REDEMPTION PRICE, PER SHARE $ 17.33 $ 12.79
=========== ===========
See accompanying notes to financial statements.
142
December 31, 2008
GLOBAL MEGATRENDS GLOBAL RESOURCES WORLD PRECIOUS
FUND FUND MINERALS FUND
Investments, at identified cost $ 26,831,131 $ 737,167,777 $602,989,917
============== ============== ============
ASSETS
- ------------------------------------------------------------------------------------------------------------
Investments, at value:
Securities of unaffiliated issuers $ 20,842,910 $ 415,376,943 $334,761,425
Securities of affiliated issuers -- 5,122,157 11,223,806
Repurchase agreements 1,182,810 24,069,217 13,631,479
Cash 1 830 18,778
Foreign currencies (Cost $0, $0, $261,930,
$112,329 and $0) 262,985 113,022 --
Receivables:
Investments sold 632,745 25,692,801 2,261,550
Dividends 57,686 533,734 132,943
Interest -- 361,847 126,021
Capital shares sold 80,852 1,212,262 762,611
Other assets 19,113 149,563 114,678
- ------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 23,079,102 472,632,376 363,033,291
- ------------------------------------------------------------------------------------------------------------
LIABILITIES
- ------------------------------------------------------------------------------------------------------------
Payables:
Investments purchased 262,985 5,770,218 2,212,192
Capital shares redeemed 726,303 1,553,034 916,352
Adviser and affiliates 8,454 511,922 384,347
Accounts payable and accrued expenses 46,219 273,214 211,416
Written options at value (Premiums $0,
$0, $0, $0 and $180,422) -- -- 189,200
- ------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 1,043,961 8,108,388 3,913,507
- ------------------------------------------------------------------------------------------------------------
NET ASSETS $ 22,035,141 $ 464,523,988 $359,119,784
============== ============== ============
NET ASSETS CONSIST OF:
- ------------------------------------------------------------------------------------------------------------
Paid-in capital $ 41,439,799 $1,211,154,938 $742,677,191
Accumulated undistributed net investment
income (distributions in excess of net
investment income) -- (7,742,455) (25,221,445)
Accumulated net realized loss on investments
and foreign currencies (14,599,869) (446,258,029) (114,943,551)
Net unrealized depreciation of investments
and other assets and liabilities
denominated in foreign currencies (4,804,789) (292,630,466) (243,392,411)
-------------- -------------- ------------
Net assets applicable to capital shares
outstanding $ 22,035,141 $ 464,523,988 $359,119,784
============== ============== ============
Capital shares outstanding, an unlimited
number of no par shares authorized 3,510,149 88,292,337 37,548,210
============== ============== ============
NET ASSET VALUE, PUBLIC OFFERING PRICE,
REDEMPTION PRICE, PER SHARE $ 6.28 $ 5.26 $ 9.56
============== ============== ============
143
STATEMENTS OF ASSETS AND LIABILITIES
GOLD AND PRECIOUS
METALS FUND
Investments, at identified cost $213,349,606
============
ASSETS
- -------------------------------------------------------------------------------
Investments, at value:
Securities of unaffiliated issuers $176,646,750
Repurchase agreements 19,344,306
Cash 6,520
Foreign currencies (Cost $54,361, $89, $0 and $1,452,136) 54,580
Receivables:
Investments sold 3,192,501
Dividends 72,685
Interest 68
Capital shares sold 370,621
Unrealized appreciation on foreign currency exchange
contracts - Note 1 G --
From adviser --
Other assets 66,912
- -------------------------------------------------------------------------------
TOTAL ASSETS 199,754,943
- -------------------------------------------------------------------------------
LIABILITIES
- -------------------------------------------------------------------------------
Payables:
Investments purchased 6,831,508
Capital shares redeemed 252,580
Adviser and affiliates 159,449
Accounts payable and accrued expenses 112,542
Written options at value (Premiums $163,402, $0, $0
and $0) 193,300
- -------------------------------------------------------------------------------
TOTAL LIABILITIES 7,549,379
- -------------------------------------------------------------------------------
NET ASSETS $192,205,564
============
NET ASSETS CONSIST OF:
- -------------------------------------------------------------------------------
Paid-in capital $256,963,799
Distributions in excess of net investment income (1,197,725)
Accumulated net realized loss on investments and foreign
currencies (46,148,163)
Net unrealized depreciation of investments and other assets
and liabilities denominated in foreign currencies (17,412,347)
------------
Net assets applicable to capital shares outstanding $192,205,564
============
Capital shares outstanding, an unlimited number of no
par shares authorized 17,754,288
============
NET ASSET VALUE, PUBLIC OFFERING PRICE, REDEMPTION PRICE,
PER SHARE $ 10.83
============
See accompanying notes to financial statements.
144
December 31, 2008
EASTERN GLOBAL EMERGING CHINA
EUROPEAN FUND MARKETS FUND REGION FUND
Investments, at identified cost $697,180,634 $18,049,065 $37,394,179
============ =========== ===========
ASSETS
- ------------------------------------------------------------------------------------------------------------------
Investments, at value:
Securities of unaffiliated issuers $298,724,690 $ 9,127,100 $35,016,112
Repurchase agreements 13,724,239 55,641 977,463
Cash 1,593,760 -- --
Foreign currencies (Cost $54,361, $89, $0 and $1,452,136) 98 -- 1,345,784
Receivables:
Investments sold 5,003,643 503,196 1,101,104
Dividends 1,775,723 28,063 20,580
Interest 4 -- --
Capital shares sold 142,220 14,250 99,710
Unrealized appreciation on foreign currency exchange
contracts - Note 1 G 6 -- --
From adviser -- 18,113 --
Other assets 107,066 26,898 32,123
- ------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 321,071,449 9,773,261 38,592,876
- ------------------------------------------------------------------------------------------------------------------
LIABILITIES
- ------------------------------------------------------------------------------------------------------------------
Payables:
Investments purchased 1,593,795 -- --
Capital shares redeemed 1,272,477 34,076 129,172
Adviser and affiliates 483,744 -- 48,853
Accounts payable and accrued expenses 401,278 76,430 66,981
Written options at value (Premiums $163,402, $0, $0
and $0) -- -- --
- ------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 3,751,294 110,506 245,006
- ------------------------------------------------------------------------------------------------------------------
NET ASSETS $317,320,155 $ 9,662,755 $38,347,870
============ =========== ===========
NET ASSETS CONSIST OF:
- ------------------------------------------------------------------------------------------------------------------
Paid-in capital $828,764,184 $26,836,498 $73,004,500
Distributions in excess of net investment income (6) -- (722,297)
Accumulated net realized loss on investments and foreign
currencies (126,719,834) (8,307,140) (32,427,380)
Net unrealized depreciation of investments and other assets
and liabilities denominated in foreign currencies (384,724,189) (8,866,603) (1,506,953)
------------ ----------- -----------
Net assets applicable to capital shares outstanding $317,320,155 $ 9,662,755 $38,347,870
============ =========== ===========
Capital shares outstanding, an unlimited number of no
par shares authorized 62,036,159 1,825,734 6,859,152
============ =========== ===========
NET ASSET VALUE, PUBLIC OFFERING PRICE, REDEMPTION PRICE,
PER SHARE $ 5.12 $ 5.29 $ 5.59
============ =========== ===========
145
STATEMENTS OF OPERATIONS
U.S. TREASURY
SECURITIES CASH FUND
----------------------------
FOR THE FOR THE
PERIOD ENDED YEAR ENDED
DECEMBER 31, JUNE 30,
2008(a) 2008
NET INVESTMENT INCOME
INCOME:
- ------------------------------------------------------------------------------------------
Interest and other $ 692,041 $4,097,237
EXPENSES:
- ------------------------------------------------------------------------------------------
Management fee 297,009 598,885
Administrative services fee 24,867 --
Transfer agent fees and expenses 176,258 414,961
Accounting service fees and expenses 12,930 25,828
Professional fees 30,682 53,494
Custodian fees 36,681 50,278
Shareholder reporting expenses 23,896 74,585
Registration fees 24,361 29,696
Trustee fees and expenses 8,478 28,546
Miscellaneous expenses 22,460 24,241
---------- ----------
Total expenses before reductions 657,622 1,300,514
Expenses offset - Note 1 J (93) (566)
Expenses reimbursed - Note 2 (225,023) (109,402)
---------- ----------
NET EXPENSES 432,506 1,190,546
- ------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 259,535 2,906,691
- ------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS
Realized gain from securities -- --
Net change in unrealized appreciation of investments -- --
- ------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS -- --
- ------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 259,535 $2,906,691
========== ==========
<FN>
(a) for the six-month fiscal period ended December 31, 2008
</FN>
See accompanying notes to financial statements.
146
U.S. GOVERNMENT
SECURITIES SAVINGS NEAR-TERM
FUND TAX FREE FUND
----------------------------- ----------------------------
FOR THE FOR THE FOR THE FOR THE
PERIOD ENDED YEAR ENDED PERIOD ENDED YEAR ENDED
DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30,
2008(a) 2008 2008(a) 2008
NET INVESTMENT INCOME
INCOME:
- ----------------------------------------------------------------------------------------------------------------------
Interest and other $3,773,680 $18,091,509 $ 255,441 $ 523,496
EXPENSES:
- ----------------------------------------------------------------------------------------------------------------------
Management fee 935,315 2,066,736 35,621 67,941
Administrative services fee 77,022 -- 2,829 --
Transfer agent fees and expenses 239,126 525,735 20,586 40,635
Accounting service fees and expenses 34,670 78,666 18,026 36,276
Professional fees 45,202 82,074 26,759 50,716
Custodian fees 37,414 69,077 6,575 13,393
Shareholder reporting expenses 49,728 113,956 1,655 2,555
Registration fees 18,636 39,464 5,456 13,408
Trustee fees and expenses 8,478 28,546 8,978 28,046
Miscellaneous expenses 67,305 48,773 2,625 6,627
---------- ----------- ---------- ----------
Total expenses before reductions 1,512,896 3,053,027 129,110 259,597
Expenses offset - Note 1 J -- -- (105) (391)
Expenses reimbursed - Note 2 (541,087) (951,257) (97,071) (198,121)
---------- ----------- ---------- ----------
NET EXPENSES 971,809 2,101,770 31,934 61,085
- ----------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 2,801,871 15,989,739 223,507 462,411
- ----------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS
Realized gain from securities 3,459 64,190 -- 277
Net change in unrealized appreciation of investments -- -- 84,257 110,288
- ----------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 3,459 64,190 84,257 110,565
- ----------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $2,805,330 $16,053,929 $ 307,764 $ 572,976
========== =========== ========== ==========
147
STATEMENTS OF OPERATIONS
TAX FREE FUND
----------------------------------------
FOR THE FOR THE
PERIOD ENDED YEAR ENDED
DECEMBER 31, 2008(a) JUNE 30, 2008
NET INVESTMENT INCOME
INCOME:
- ----------------------------------------------------------------------------------------------------
Dividends $ -- $ --
Foreign tax withheld on dividends -- --
---------- -------------
Net dividends -- --
Interest and other 418,482 790,951
---------- -------------
TOTAL INCOME 418,482 790,951
EXPENSES:
- ----------------------------------------------------------------------------------------------------
Management fee 68,256 128,802
Administrative services fee 3,414 --
Transfer agent fees and expenses 24,649 45,051
Accounting service fees and expenses 19,673 37,189
Professional fees 27,020 49,633
Distribution plan expenses -- --
Custodian fees 7,025 13,592
Shareholder reporting expenses 2,259 4,452
Registration fees 8,830 17,447
Trustee fees and expenses 8,477 28,546
Miscellaneous expenses 3,362 7,656
---------- -------------
Total expenses before reductions 172,965 332,368
Expenses offset - Note 1J (7) (62)
Expenses reimbursed - Note 2 (109,507) (212,246)
---------- -------------
NET EXPENSES 63,451 120,060
- ----------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 355,031 670,891
- ----------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) from:
Securities 33,947 (42,271)
Written options -- --
Foreign currency transactions -- --
---------- -------------
NET REALIZED GAIN (LOSS) 33,947 (42,271)
---------- -------------
Net change in unrealized appreciation
(depreciation) of:
Investments (457,262) (74,214)
Other assets and liabilities denominated
in foreign currencies -- --
---------- -------------
NET UNREALIZED APPRECIATION (DEPRECIATION) (457,262) (74,214)
- ----------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS (423,315) (116,485)
- ----------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $ (68,284) $ 554,406
========== =============
<FN>
(a) for the six-month fiscal period ended December 31, 2008
(b) for the two-month fiscal period ended December 31, 2008
</FN>
See accompanying notes to financial statements.
148
ALL AMERICAN EQUITY FUND HOLMES GROWTH FUND
------------------------------------- ---------------------------------------
FOR THE FOR THE FOR THE FOR THE
PERIOD ENDED YEAR ENDED PERIOD ENDED YEAR ENDED
DECEMBER 31, 2008(a) JUNE 30, 2008 DECEMBER 31, 2008(b) OCTOBER 31, 2008
NET INVESTMENT INCOME
INCOME:
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends $ 197,961 $ 230,648 $ 79,085 $ 488,034
Foreign tax withheld on dividends (670) (4,440) (1,238) (36,828)
----------- ------------- ----------- ------------
Net dividends 197,291 226,208 77,847 451,206
Interest and other 20,378 84,755 2,433 176,489
----------- ------------- ----------- ------------
TOTAL INCOME 217,669 310,963 80,280 627,695
EXPENSES:
- ------------------------------------------------------------------------------------------------------------------------------------
Management fee 80,068 195,312 54,369 572,815
Administrative services fee 3,408 -- 4,350 2,558
Transfer agent fees and expenses 55,746 114,632 19,828 127,672
Accounting service fees and expenses 14,077 31,004 5,108 46,915
Professional fees 28,988 56,687 22,555 58,268
Distribution plan expenses 10,650 -- 13,592 51,808
Custodian fees 13,205 24,493 4,778 57,884
Shareholder reporting expenses 7,856 22,477 4,628 18,890
Registration fees 10,583 18,457 1,180 18,922
Trustee fees and expenses 8,478 28,546 3,995 19,868
Miscellaneous expenses 12,207 22,668 2,086 26,628
----------- ------------- ----------- ------------
Total expenses before reductions 245,266 514,276 136,469 1,002,228
Expenses offset - Note 1J (199) (726) (38) (1,085)
Expenses reimbursed - Note 2 (63,867) (58,304) (41,285) --
----------- ------------- ----------- ------------
NET EXPENSES 181,200 455,246 95,146 1,001,143
- ------------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 36,469 (144,283) (14,866) (373,448)
- ------------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) from:
Securities (4,477,749) 403,484 (2,833,261) (2,549,531)
Written options (28,488) -- (10,331) 74,386
Foreign currency transactions -- (373) (875) (10,384)
----------- ------------- ----------- ------------
NET REALIZED GAIN (LOSS) (4,506,237) 403,111 (2,844,467) (2,485,529)
----------- ------------- ----------- ------------
Net change in unrealized appreciation
(depreciation) of:
Investments (5,129,815) 1,022,225 (650,462) (25,643,178)
Other assets and liabilities denominated
in foreign currencies -- -- (41) (63)
----------- ------------- ----------- ------------
NET UNREALIZED APPRECIATION (DEPRECIATION) (5,129,815) 1,022,225 (650,503) (25,643,241)
- ------------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS (9,636,052) 1,425,336 (3,494,970) (28,128,770)
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $(9,599,583) $ 1,281,053 $(3,509,836) $(28,502,218)
=========== ============= =========== ============
149
STATEMENTS OF OPERATIONS
GLOBAL MEGATRENDS FUND
---------------------------------------
FOR THE
FOR THE YEAR ENDED
PERIOD ENDED OCTOBER 31,
DECEMBER 31, 2008(b) 2008
NET INVESTMENT INCOME
INCOME:
- -------------------------------------------------------------------------------------------------
Dividends from unaffiliated issuers $ 64,496 $ 490,421
Foreign tax withheld on dividends (2,439) (25,558)
----------- ------------
Net dividends 62,057 464,863
Interest and other 1,652 138,782
----------- ------------
TOTAL INCOME 63,709 603,645
EXPENSES:
- -------------------------------------------------------------------------------------------------
Management fee 38,532 310,564
Administration services expenses 3,083 1,879
Transfer agent fees and expenses 20,403 100,003
Accounting service fees and expenses 5,873 40,103
Professional fees 20,337 47,972
Distribution plan expenses 9,633 77,844
Custodian fees 6,209 36,847
Shareholder reporting expenses 2,402 11,271
Registration fees 1,913 25,397
Trustee fees and expenses 4,303 19,868
Miscellaneous expenses 1,594 16,279
----------- ------------
Total expenses before reductions 114,282 688,027
Expenses offset - Note 1J (36) (443)
Expenses reimbursed - Note 2 (42,962) (66,157)
----------- ------------
NET EXPENSES 71,284 621,427
- -------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) (7,575) (17,782)
- -------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) from:
Securities from unaffiliated issuers (5,664,448) (8,932,568)
Securities from affiliated issuers -- --
Written options (49,647) 41,101
Foreign currency transactions 167 2,551
----------- ------------
NET REALIZED GAIN (LOSS) (5,713,928) (8,888,916)
----------- ------------
Net change in unrealized appreciation
(depreciation) of:
Investments 4,516,372 (13,841,299)
Written options (37,330) 37,330
Other assets and liabilities denominated
in foreign currencies 621 3,030
----------- ------------
NET UNREALIZED APPRECIATION (DEPRECIATION) 4,479,663 (13,800,939)
- -------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (1,234,265) (22,689,855)
- -------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $(1,241,840) $(22,707,637)
=========== ============
<FN>
(a) for the six-month fiscal period ended December 31, 2008
(b) for the two-month fiscal period ended December 31, 2008
</FN>
See accompanying notes to financial statements.
150
WORLD PRECIOUS MINERALS
GLOBAL RESOURCES FUND FUND
------------------------------------- -------------------------------------
FOR THE FOR THE FOR THE FOR THE
PERIOD ENDED YEAR ENDED PERIOD ENDED YEAR ENDED
DECEMBER 31, 2008(a) JUNE 30, 2008 DECEMBER 31, 2008(a) JUNE 30, 2008
NET INVESTMENT INCOME
INCOME:
- --------------------------------------------------------------------------------------------------------------------------------
Dividends from unaffiliated issuers $ 2,631,342 $ 14,738,471 $ 830,781 $ 2,538,158
Foreign tax withheld on dividends (63,671) (968,416) (94,952) (247,097)
--------------- ------------ ------------- ------------
Net dividends 2,567,671 13,770,055 735,829 2,291,061
Interest and other 1,102,163 4,675,306 431,022 3,033,521
--------------- ------------ ------------- ------------
TOTAL INCOME 3,669,834 18,445,361 1,166,851 5,324,582
EXPENSES:
- --------------------------------------------------------------------------------------------------------------------------------
Management fee 3,443,348 9,303,615 1,998,128 6,254,087
Administration services expenses 112,737 -- 62,904 --
Transfer agent fees and expenses 1,322,017 2,687,220 662,987 1,612,020
Accounting service fees and expenses 232,518 696,173 143,959 501,330
Professional fees 76,369 198,035 69,388 160,412
Distribution plan expenses 352,303 -- 196,575 --
Custodian fees 157,566 582,845 170,435 708,402
Shareholder reporting expenses 170,897 353,827 99,923 214,782
Registration fees 38,652 83,842 18,978 61,106
Trustee fees and expenses 8,478 28,546 8,477 28,546
Miscellaneous expenses 79,108 148,265 65,172 129,969
--------------- ------------ ------------- ------------
Total expenses before reductions 5,993,993 14,082,368 3,496,926 9,670,654
Expenses offset - Note 1J (8,308) (91,173) (1,290) (20,741)
Expenses reimbursed - Note 2 (599,300) -- (278,182) --
--------------- ------------ ------------- ------------
NET EXPENSES 5,386,385 13,991,195 3,217,454 9,649,913
- --------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) (1,716,551) 4,454,166 (2,050,603) (4,325,331)
- --------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) from:
Securities from unaffiliated issuers (437,572,205) 277,972,030 (106,846,593) 173,859,833
Securities from affiliated issuers (2,542,726) (728,926) (63,975) 147,227
Written options 10,574,475 679,136 1,693,380 4,168,881
Foreign currency transactions (541,384) (573,378) (533,573) 13,589
--------------- ------------ ------------- ------------
NET REALIZED GAIN (LOSS) (430,081,840) 277,348,862 (105,750,761) 178,189,530
--------------- ------------ ------------- ------------
Net change in unrealized appreciation
(depreciation) of:
Investments (823,886,071) 231,527,557 (373,223,392) (57,059,936)
Written options -- (8,349) 4,510,024 (5,145,161)
Other assets and liabilities denominated
in foreign currencies (11,455) 51,294 (5,770) 2,891
--------------- ------------ ------------- ------------
NET UNREALIZED APPRECIATION (DEPRECIATION) (823,897,526) 231,570,502 (368,719,138) (62,202,206)
- --------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (1,253,979,366) 508,919,364 (474,469,899) 115,987,324
- --------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $(1,255,695,917) $513,373,530 $(476,520,502) $111,661,993
=============== ============ ============= ============
151
STATEMENTS OF OPERATIONS
GOLD AND PRECIOUS
METALS FUND
----------------------------------------
FOR THE FOR THE
PERIOD ENDED YEAR ENDED
DECEMBER 31, 2008(a) JUNE 30, 2008
NET INVESTMENT INCOME
INCOME:
- --------------------------------------------------------------------------------------------------
Dividends (dividend adjustments) $ 430,909 $ 608,620
Foreign taxes withheld on dividends (35,238) (35,534)
------------ -----------
Net dividends 395,671 573,086
Interest and other 284,052 1,310,565
------------ -----------
TOTAL INCOME 679,723 1,883,651
EXPENSES:
- --------------------------------------------------------------------------------------------------
Management fee 755,361 1,629,448
Administrative services fee 30,259 --
Transfer agent fees and expenses 227,436 455,397
Accounting service fees and expenses 74,215 164,466
Professional fees 39,841 74,268
Distribution plan expenses 94,560 --
Custodian fees 101,140 232,807
Shareholder reporting expenses 46,054 96,239
Registration fees 17,021 29,954
Trustee fees and expenses 8,576 28,546
Miscellaneous expenses 34,694 70,107
------------ -----------
Total expenses before reductions 1,429,157 2,781,232
Expenses offset - Note 1J (2,320) (4,634)
Expenses reimbursed - Note 2 (135,057) --
------------ -----------
NET EXPENSES 1,291,780 2,776,598
- --------------------------------------------------------------------------------------------------
NET INVESTMENT LOSS (612,057) (892,947)
- --------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) from:
Securities (47,202,746) 43,522,592
Written options 1,776,178 2,062,044
Foreign currency transactions (231,516) (28,528)
------------ -----------
NET REALIZED GAIN (LOSS) (45,658,084) 45,556,108
------------ -----------
Net change in unrealized appreciation
(depreciation) of:
Investments (38,919,535) 4,493,644
Written options 1,282,148 (1,512,042)
Other assets and liabilities denominated
in foreign currencies 5,914 (4,751)
------------ -----------
NET UNREALIZED APPRECIATION (DEPRECIATION) (37,631,473) 2,976,851
- --------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS (83,289,557) 48,532,959
- --------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $(83,901,614) $47,640,012
============ ===========
<FN>
(a) for the six-month fiscal period ended December 31, 2008
(b) for the two-month fiscal period ended December 31, 2008
</FN>
See accompanying notes to financial statements.
152
EASTERN EUROPEAN FUND
---------------------------------------------
FOR THE FOR THE
PERIOD ENDED YEAR ENDED
DECEMBER 31, 2008(b) OCTOBER 31, 2008
NET INVESTMENT INCOME
INCOME:
- ----------------------------------------------------------------------------------------------------
Dividends (dividend adjustments) $ (579,958) $ 25,189,193
Foreign taxes withheld on dividends 34,427 (3,975,271)
------------ -------------
Net dividends (545,531) 21,213,922
Interest and other 9,019 1,228,721
------------ -------------
TOTAL INCOME (536,512) 22,442,643
EXPENSES:
- ----------------------------------------------------------------------------------------------------
Management fee 727,005 15,406,046
Administrative services fee 46,528 31,241
Transfer agent fees and expenses 165,304 2,057,712
Accounting service fees and expenses 40,056 563,828
Professional fees 32,497 130,738
Distribution plan expenses 145,401 2,689,610
Custodian fees 111,066 3,088,719
Shareholder reporting expenses 91,595 259,366
Registration fees 4,991 47,886
Trustee fees and expenses 3,995 19,868
Miscellaneous expenses 12,332 139,673
------------ -------------
Total expenses before reductions 1,380,770 24,434,687
Expenses offset - Note 1J (287) (77,398)
Expenses reimbursed - Note 2 (160,802) (56,835)
------------ -------------
NET EXPENSES 1,219,681 24,300,454
- ----------------------------------------------------------------------------------------------------
NET INVESTMENT LOSS (1,756,193) (1,857,811)
- ----------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) from:
Securities (81,979,492) 12,228,474
Written options -- --
Foreign currency transactions (79,634) (1,348,009)
------------ -------------
NET REALIZED GAIN (LOSS) (82,059,126) 10,880,465
------------ -------------
Net change in unrealized appreciation
(depreciation) of:
Investments (2,609,582) (828,006,568)
Written options -- --
Other assets and liabilities denominated
in foreign currencies 542,912 (845,940)
------------ -------------
NET UNREALIZED APPRECIATION (DEPRECIATION) (2,066,670) (828,852,508)
- ----------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS (84,125,796) (817,972,043)
- ----------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $(85,881,989) $(819,829,854)
============ =============
153
STATEMENTS OF OPERATIONS
GLOBAL EMERGING MARKETS
FUND
---------------------------------------
FOR THE
FOR THE YEAR ENDED
PERIOD ENDED OCTOBER 31,
DECEMBER 31, 2008(b) 2008
NET INVESTMENT INCOME
INCOME:
- ----------------------------------------------------------------------------------------------------
Dividends $ 26,792 $ 643,235
Foreign taxes withheld on dividends (4,452) (76,699)
----------- ------------
Net dividends 22,340 566,536
Interest and other 391 24,481
----------- ------------
TOTAL INCOME 22,731 591,017
EXPENSES:
- ----------------------------------------------------------------------------------------------------
Management fee 23,297 539,299
Administrative services fee 1,355 925
Transfer agent fees and expenses 14,572 125,581
Accounting service fees and expenses 5,499 56,802
Professional fees 26,828 62,876
Distribution plan expenses 4,236 99,017
Custodian fees 15,106 156,646
Shareholder reporting expenses 4,369 19,154
Registration fees 15,598 19,740
Trustee fees and expenses 3,995 19,868
Miscellaneous expenses 860 10,416
----------- ------------
Total expenses before reductions 115,715 1,110,324
Expenses offset - Note 1J (12) (871)
Expenses reimbursed - Note 2 (73,347) (119,279)
----------- ------------
NET EXPENSES 42,356 990,174
- ----------------------------------------------------------------------------------------------------
NET INVESTMENT LOSS (19,625) (399,157)
- ----------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) from:
Securities (2,930,885) (4,842,013)
Foreign currency transactions (3,053) (114,101)
----------- ------------
NET REALIZED GAIN (LOSS) (2,933,938) (4,956,114)
----------- ------------
Net change in unrealized appreciation (depreciation) of:
Investments 1,795,083 (27,074,905)
Other assets and liabilities denominated in
foreign currencies 14,469 21,041
----------- ------------
NET UNREALIZED APPRECIATION (DEPRECIATION) 1,809,552 (27,053,864)
- ----------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED LOSS
ON INVESTMENTS (1,124,386) (32,009,978)
- ----------------------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(1,144,011) $(32,409,135)
=========== ============
<FN>
(a) for the six-month fiscal period ended December 31, 2008
(b) for the two-month fiscal period ended December 31, 2008
</FN>
See accompanying notes to financial statements.
154
CHINA REGION FUND
------------------------------------------
FOR THE FOR THE
PERIOD ENDED YEAR ENDED
DECEMBER 31, 2008(a) JUNE 30, 2008
NET INVESTMENT INCOME
INCOME:
- --------------------------------------------------------------------------------------------------------
Dividends $ 470,067 $ 1,745,454
Foreign taxes withheld on dividends (38,428) (106,449)
------------ ------------
Net dividends 431,639 1,639,005
Interest and other 37,635 288,073
------------ ------------
TOTAL INCOME 469,274 1,927,078
EXPENSES:
- --------------------------------------------------------------------------------------------------------
Management fee 342,311 1,431,338
Administrative services fee 8,111 --
Transfer agent fees and expenses 117,339 302,494
Accounting service fees and expenses 32,190 109,404
Professional fees 32,885 74,911
Distribution plan expenses 25,348 --
Custodian fees 50,947 181,505
Shareholder reporting expenses 15,754 43,189
Registration fees 13,967 21,812
Trustee fees and expenses 8,477 28,546
Miscellaneous expenses 23,535 36,752
------------ ------------
Total expenses before reductions 670,864 2,229,951
Expenses offset - Note 1J (245) (1,046)
Expenses reimbursed - Note 2 (73,208) --
------------ ------------
NET EXPENSES 597,411 2,228,905
- --------------------------------------------------------------------------------------------------------
NET INVESTMENT LOSS (128,137) (301,827)
- --------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) from:
Securities (25,255,671) 8,268,856
Foreign currency transactions (34,497) (571)
------------ ------------
NET REALIZED GAIN (LOSS) (25,290,168) 8,268,285
------------ ------------
Net change in unrealized appreciation (depreciation) of:
Investments (3,013,550) (21,301,271)
Other assets and liabilities denominated in
foreign currencies (128,218) 20,733
------------ ------------
NET UNREALIZED APPRECIATION (DEPRECIATION) (3,141,768) (21,280,538)
- --------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED LOSS
ON INVESTMENTS (28,431,936) (13,012,253)
- --------------------------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(28,560,073) $(13,314,080)
============ ============
155
STATEMENTS OF CHANGES IN NET ASSETS
U.S. TREASURY SECURITIES
CASH FUND
--------------------------------------------
PERIOD ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, JUNE 30, JUNE 30,
2008(a) 2008 2007
INCREASE (DECREASE)
IN NET ASSETS
FROM OPERATIONS:
- ---------------------------------------------------------------------------------------
Net investment income $ 259,535 $ 2,906,691 $ 5,084,492
Net realized gain (loss) -- -- --
Net unrealized appreciation -- -- --
------------ ------------ ------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS 259,535 2,906,691 5,084,492
DISTRIBUTIONS TO SHAREHOLDERS:
- ---------------------------------------------------------------------------------------
From net investment income (259,483) (2,910,606) (5,084,891)
------------ ------------ ------------
TOTAL DISTRIBUTIONS TO
SHAREHOLDERS (259,483) (2,910,606) (5,084,891)
FROM CAPITAL SHARE TRANSACTIONS:
- ---------------------------------------------------------------------------------------
Proceeds from shares sold 130,413,946 255,882,468 383,660,609
Distributions reinvested 251,689 2,823,671 4,907,563
------------ ------------ ------------
130,665,635 258,706,139 388,568,172
Cost of shares redeemed (121,210,250) (262,759,089) (391,584,524)
------------ ------------ ------------
NET INCREASE (DECREASE) IN NET
ASSETS FROM CAPITAL SHARE
TRANSACTIONS 9,455,385 (4,052,950) (3,016,352)
- ---------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 9,455,437 (4,056,865) (3,016,751)
- ---------------------------------------------------------------------------------------
NET ASSETS
Beginning of year 111,954,700 116,011,565 119,028,316
- ---------------------------------------------------------------------------------------
END OF YEAR $121,410,137 $111,954,700 $116,011,565
- ---------------------------------------------------------------------------------------
Accumulated undistributed net investment
income, (distributions in excess of net
income), end of year $ -- $ (682) $ 1,043
============ ============ ============
CAPITAL SHARE ACTIVITY
- ---------------------------------------------------------------------------------------
Shares sold 130,413,946 255,882,468 383,660,609
Shares reinvested 251,689 2,823,671 4,907,563
Shares redeemed (121,210,250) (262,759,089) (391,584,524)
------------ ------------ ------------
NET SHARE ACTIVITY 9,455,385 (4,052,950) (3,016,352)
============ ============ ============
<FN>
(a) for the six-month fiscal period ended December 31, 2008
</FN>
See accompanying notes to financial statements.
156
U.S. GOVERNMENT SECURITIES
SAVINGS FUND NEAR-TERM TAX FREE FUND
------------------------------------------ ----------------------------------------
PERIOD ENDED YEAR ENDED YEAR ENDED PERIOD ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, JUNE 30, JUNE 30, DECEMBER 31, JUNE 30, JUNE 30,
2008(a) 2008 2007 2008(a) 2008 2007
INCREASE (DECREASE)
IN NET ASSETS
FROM OPERATIONS:
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 2,801,871 $ 15,989,739 $ 21,124,115 $ 223,507 $ 462,411 $ 501,566
Net realized gain (loss) 3,459 64,190 2,458 -- 277 (9,533)
Net unrealized appreciation -- -- -- 84,257 110,288 67,546
------------ ------------ ------------ ----------- ----------- -----------
NET INCREASE IN NET ASSETS FROM
OPERATIONS 2,805,330 16,053,929 21,126,573 307,764 572,976 559,579
DISTRIBUTIONS TO SHAREHOLDERS:
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income (2,801,889) (15,993,388) (21,124,058) (223,006) (459,010) (501,654)
------------ ------------ ------------ ----------- ----------- -----------
TOTAL DISTRIBUTIONS TO
SHAREHOLDERS (2,801,889) (15,993,388) (21,124,058) (223,006) (459,010) (501,654)
FROM CAPITAL SHARE TRANSACTIONS:
- -------------------------------------------------------------------------------------------------------------------------------
Proceeds from shares sold 134,091,962 369,995,971 368,491,428 1,808,188 3,217,467 2,312,722
Distributions reinvested 2,737,639 15,556,039 20,689,962 175,005 356,102 384,910
------------ ------------ ------------ ----------- ----------- -----------
136,829,601 385,552,010 389,181,390 1,983,193 3,573,569 2,697,632
Cost of shares redeemed (225,130,630) (408,499,445) (355,506,639) (1,681,960) (3,467,805) (5,202,546)
------------ ------------ ------------ ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET
ASSETS FROM CAPITAL SHARE
TRANSACTIONS (88,301,029) (22,947,435) 33,674,751 301,233 105,764 (2,504,914)
- -------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (88,297,588) (22,886,894) 33,677,266 385,991 219,730 (2,446,989)
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of year 446,207,611 469,094,505 435,417,239 13,603,147 13,383,417 15,830,406
- -------------------------------------------------------------------------------------------------------------------------------
END OF YEAR $357,910,023 $446,207,611 $469,094,505 $13,989,138 $13,603,147 $13,383,417
- -------------------------------------------------------------------------------------------------------------------------------
Accumulated undistributed net investment
income, (distributions in excess of net
income), end of year $ 461,309 $ 403,299 $ 406,948 $ 21,225 $ 20,724 $ 17,323
============ ============ ============ =========== =========== ===========
CAPITAL SHARE ACTIVITY
- -------------------------------------------------------------------------------------------------------------------------------
Shares sold 134,091,962 369,995,971 368,491,428 841,748 1,487,510 1,078,441
Shares reinvested 2,737,639 15,556,039 20,689,962 81,677 165,330 179,915
Shares redeemed (225,130,630) (408,499,445) (355,506,639) (787,328) (1,603,148) (2,428,359)
------------ ------------ ------------ ----------- ----------- -----------
NET SHARE ACTIVITY (88,301,029) (22,947,435) 33,674,751 136,097 49,692 (1,170,003)
============ ============ ============ =========== =========== ===========
157
STATEMENTS OF CHANGES IN NET ASSETS
TAX FREE FUND
------------------------------------------
PERIOD ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, JUNE 30, JUNE 30,
2008(a) 2008 2007
INCREASE (DECREASE)
IN NET ASSETS
FROM OPERATIONS:
- ----------------------------------------------------------------------------------------
Net investment income (loss) $ 355,031 $ 670,891 $ 619,096
Net realized gain (loss) 33,947 (42,271) 15,231
Net unrealized appreciation
(depreciation) (457,262) (74,214) (41,981)
----------- ----------- -----------
NET INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS (68,284) 554,406 592,346
DISTRIBUTIONS TO SHAREHOLDERS:
- ----------------------------------------------------------------------------------------
From net investment income (355,381) (668,191) (615,389)
From net capital gains -- -- --
Tax return of capital -- -- --
----------- ----------- -----------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (355,381) (668,191) (615,389)
FROM CAPITAL SHARE TRANSACTIONS:
- ----------------------------------------------------------------------------------------
Proceeds from shares sold 2,556,729 6,825,328 4,168,323
Distributions reinvested 287,716 544,322 509,442
Proceeds from short-term trading fees -- -- --
----------- ----------- -----------
2,844,445 7,369,650 4,677,765
Cost of shares redeemed (3,854,351) (4,816,254) (3,706,262)
----------- ----------- -----------
NET INCREASE (DECREASE) IN NET
ASSETS FROM CAPITAL SHARE
TRANSACTIONS (1,009,906) 2,553,396 971,503
- ----------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (1,433,571) 2,439,611 948,460
- ----------------------------------------------------------------------------------------
NET ASSETS
Beginning of period 18,379,603 15,939,992 14,991,532
- ----------------------------------------------------------------------------------------
END OF PERIOD $16,946,032 $18,379,603 $15,939,992
- ----------------------------------------------------------------------------------------
Accumulated undistributed net investment
income, (distributions in excess of net
income), end of period $ 34,524 $ 34,874 $ 32,174
=========== =========== ===========
CAPITAL SHARE ACTIVITY
- ----------------------------------------------------------------------------------------
Shares sold 215,622 563,924 341,911
Shares reinvested 24,537 45,182 41,891
Shares redeemed (334,996) (398,760) (304,399)
----------- ----------- -----------
NET SHARE ACTIVITY (94,837) 210,346 79,403
=========== =========== ===========
<FN>
(a) for the six-month fiscal period ended December 31, 2008
(b) for the two-month fiscal period ended December 31, 2008
</FN>
See accompanying notes to financial statements.
158
ALL AMERICAN EQUITY FUND HOLMES GROWTH FUND
---------------------------------------- ----------------------------------------
PERIOD ENDED YEAR ENDED YEAR ENDED PERIOD ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, JUNE 30, JUNE 30, DECEMBER 31, OCTOBER 31, OCTOBER 31,
2008(a) 2008 2007 2008(b) 2008 2007
INCREASE (DECREASE)
IN NET ASSETS
FROM OPERATIONS:
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) $ 36,469 $ (144,283) $ (62,274) $ (14,866) $ (373,448) $ (389,550)
Net realized gain (loss) (4,506,237) 403,111 2,102,393 (2,844,467) (2,485,529) 5,122,087
Net unrealized appreciation
(depreciation) (5,129,815) 1,022,225 1,982,026 (650,503) (25,643,241) 14,431,854
----------- ----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS (9,599,583) 1,281,053 4,022,145 (3,509,836) (28,502,218) 19,164,391
DISTRIBUTIONS TO SHAREHOLDERS:
- -------------------------------------------------------------------------------------------------------------------------------
From net investment income (6,594) -- -- -- -- --
From net capital gains -- (2,702,440) (2,948,106) -- -- --
Tax return of capital -- (110,537) -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (6,594) (2,812,977) (2,948,106) -- -- --
FROM CAPITAL SHARE TRANSACTIONS:
- -------------------------------------------------------------------------------------------------------------------------------
Proceeds from shares sold 2,272,974 11,702,468 3,497,874 481,499 4,868,436 5,258,754
Distributions reinvested 6,496 2,717,435 2,897,452 -- -- --
Proceeds from short-term trading fees 285 755 603 52 517 250
----------- ----------- ----------- ----------- ----------- -----------
2,279,755 14,420,658 6,395,929 481,551 4,868,953 5,259,004
Cost of shares redeemed (2,952,671) (9,854,499) (5,538,258) (714,741) (9,017,148) (17,352,136)
----------- ----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET
ASSETS FROM CAPITAL SHARE
TRANSACTIONS (672,916) 4,566,159 857,671 (233,190) (4,148,195) (12,093,132)
- -------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (10,279,093) 3,034,235 1,931,710 (3,743,026) (32,650,413) 7,071,259
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of period 26,513,439 23,479,204 21,547,494 36,230,710 68,881,123 61,809,864
- -------------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $16,234,346 $26,513,439 $23,479,204 $32,487,684 $36,230,710 $68,881,123
- -------------------------------------------------------------------------------------------------------------------------------
Accumulated undistributed net investment
income, (distributions in excess of net
income), end of period $ 29,875 $ -- $ -- $ -- $ -- $ (40,296)
=========== =========== =========== =========== =========== ===========
CAPITAL SHARE ACTIVITY
- -------------------------------------------------------------------------------------------------------------------------------
Shares sold 103,969 422,589 128,990 35,294 228,630 261,279
Shares reinvested 391 96,056 115,759 -- -- --
Shares redeemed (139,580) (367,851) (204,356) (57,386) (445,988) (851,885)
----------- ----------- ----------- ----------- ----------- -----------
NET SHARE ACTIVITY (35,220) 150,794 40,393 (22,092) (217,358) (590,606)
=========== =========== =========== =========== =========== ===========
159
STATEMENTS OF CHANGES IN NET ASSETS
GLOBAL MEGATRENDS FUND
------------------------------------------
PERIOD ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, OCTOBER 31, OCTOBER 31,
2008(b) 2008 2007
INCREASE (DECREASE)
IN NET ASSETS
FROM OPERATIONS:
- ----------------------------------------------------------------------------------------
Net investment income (loss) $ (7,575) $ (17,782) $ (151,391)
Net realized gain (loss) (5,713,928) (8,888,916) 1,314,908
Net unrealized appreciation
(depreciation) 4,479,663 (13,800,939) 2,392,655
----------- ----------- -----------
NET INCREASE (DECREASE)
IN NET ASSETS FROM
OPERATIONS (1,241,840) (22,707,637) 3,556,172
DISTRIBUTIONS TO SHAREHOLDERS:
- ----------------------------------------------------------------------------------------
From net investment income -- -- --
From net capital gains -- (1,317,151) (1,261,684)
Tax return of capital (25,988) -- --
----------- ----------- -----------
TOTAL DISTRIBUTIONS TO
SHAREHOLDERS (25,988) (1,317,151) (1,261,684)
FROM CAPITAL SHARE TRANSACTIONS:
- ----------------------------------------------------------------------------------------
Proceeds from shares sold 1,746,194 46,895,942 3,021,763
Distributions reinvested 24,701 1,265,576 1,206,946
Proceeds from short-term
trading fees 61 5,176 566
----------- ----------- -----------
1,770,956 48,166,694 4,229,275
Cost of shares redeemed (3,855,326) (16,477,891) (5,877,311)
----------- ----------- -----------
NET INCREASE (DECREASE) IN
NET ASSETS FROM CAPITAL
SHARE TRANSACTIONS (2,084,370) 31,688,803 (1,648,036)
- ----------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS (3,352,198) 7,664,015 646,452
- ----------------------------------------------------------------------------------------
NET ASSETS
Beginning of year 25,387,339 17,723,324 17,076,872
- ----------------------------------------------------------------------------------------
END OF YEAR $22,035,141 $25,387,339 $17,723,324
- ----------------------------------------------------------------------------------------
Accumulated undistributed
net investment income,
(distributions in excess of
net income), end of year $ -- $ -- $ --
=========== =========== ===========
CAPITAL SHARE ACTIVITY
- ----------------------------------------------------------------------------------------
Shares sold 285,800 4,151,097 259,412
Shares reinvested 4,043 107,984 116,164
Shares redeemed (627,748) (1,801,601) (527,010)
----------- ----------- -----------
NET SHARE ACTIVITY (337,905) 2,457,480 (151,434)
=========== =========== ===========
<FN>
(a) for the six-month fiscal period ended December 31, 2008
(b) for the two-month fiscal period ended December 31, 2008
</FN>
See accompanying notes to financial statements.
160
GLOBAL RESOURCES FUND WORLD PRECIOUS MINERALS FUND
------------------------------------------------ ------------------------------------------
PERIOD ENDED YEAR ENDED YEAR ENDED PERIOD ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, JUNE 30, JUNE 30, DECEMBER 31, JUNE 30, JUNE 30,
2008(a) 2008 2007 2008(a) 2008 2007
INCREASE (DECREASE)
IN NET ASSETS
FROM OPERATIONS:
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) $ (1,716,551) $ 4,454,166 $ 9,042,961 $ (2,050,603) $ (4,325,331) $ 564,918
Net realized gain (loss) (430,081,840) 277,348,862 92,470,318 (105,750,761) 178,189,530 106,003,267
Net unrealized appreciation
(depreciation) (823,897,526) 231,570,502 109,964,218 (368,719,138) (62,202,206) (11,580,180)
-------------- -------------- -------------- ------------ ------------ ------------
NET INCREASE (DECREASE)
IN NET ASSETS FROM
OPERATIONS (1,255,695,917) 513,373,530 211,477,497 (476,520,502) 111,661,993 94,988,005
DISTRIBUTIONS TO SHAREHOLDERS:
- ----------------------------------------------------------------------------------------------------------------------------------
From net investment income -- (78,221,305) (61,878,978) -- (99,747,352) (51,570,418)
From net capital gains (96,308,578) (176,347,594) (120,720,087) (61,845,712) (103,097,880) (69,178,178)
Tax return of capital -- -- -- -- -- --
-------------- -------------- -------------- ------------ ------------ ------------
TOTAL DISTRIBUTIONS TO
SHAREHOLDERS (96,308,578) (254,568,899) (182,599,065) (61,845,712) (202,845,232) (120,748,596)
FROM CAPITAL SHARE TRANSACTIONS:
- ----------------------------------------------------------------------------------------------------------------------------------
Proceeds from shares sold 178,643,865 817,774,032 645,950,934 82,524,302 418,681,230 697,217,101
Distributions reinvested 93,000,270 246,775,705 175,690,973 59,587,050 192,776,672 114,711,593
Proceeds from short-term
trading fees 47,596 91,286 65,595 48,834 206,975 815,105
-------------- -------------- -------------- ------------ ------------ ------------
271,691,731 1,064,641,023 821,707,502 142,160,186 611,664,877 812,743,799
Cost of shares redeemed (465,744,284) (696,115,025) (749,000,008) (193,687,785) (495,247,072) (783,452,968)
-------------- -------------- -------------- ------------ ------------ ------------
NET INCREASE (DECREASE) IN
NET ASSETS FROM CAPITAL
SHARE TRANSACTIONS (194,052,553) 368,525,998 72,707,494 (51,527,599) 116,417,805 29,290,831
- ----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS (1,546,057,048) 627,330,629 101,585,926 (589,893,813) 25,234,566 3,530,240
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of year 2,010,581,036 1,383,250,407 1,281,664,481 949,013,597 923,779,031 920,248,791
- ----------------------------------------------------------------------------------------------------------------------------------
END OF YEAR $ 464,523,988 $2,010,581,036 $1,383,250,407 $359,119,784 $949,013,597 $923,779,031
- ----------------------------------------------------------------------------------------------------------------------------------
Accumulated undistributed
net investment income,
(distributions in excess of
net income), end of year $ (7,742,455) $ (47,434,621) $ (12,989,617) $(25,221,445) $(64,048,128) $(15,710,691)
============== ============== ============== ============ ============ ============
CAPITAL SHARE ACTIVITY
- ----------------------------------------------------------------------------------------------------------------------------------
Shares sold 15,106,616 44,109,226 39,780,025 5,873,543 14,550,574 24,505,326
Shares reinvested 18,379,336 14,892,921 12,000,749 8,473,439 8,106,672 4,350,079
Shares redeemed (43,177,704) (39,167,676) (48,049,221) (14,285,921) (17,762,117) (28,153,172)
-------------- -------------- -------------- ------------ ------------ ------------
NET SHARE ACTIVITY (9,691,752) 19,834,471 3,731,553 61,061 4,895,129 702,233
============== ============== ============== ============ ============ ============
161
STATEMENTS OF CHANGES IN NET ASSETS
GOLD AND PRECIOUS METALS FUND
------------------------------------------
PERIOD ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, JUNE 30, JUNE 30,
2008(a) 2008 2007
INCREASE (DECREASE)
IN NET ASSETS
FROM OPERATIONS:
- ---------------------------------------------------------------------------------------
Net investment income (loss) $ (612,057) $ (892,947) $ 689,923
Net realized gain (loss) (45,658,084) 45,556,108 27,431,014
Net unrealized appreciation
(depreciation) (37,631,473) 2,976,851 (36,875,467)
------------ ------------ ------------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING
FROM OPERATIONS (83,901,614) 47,640,012 (8,754,530)
DISTRIBUTIONS TO SHAREHOLDERS:
- ---------------------------------------------------------------------------------------
From net investment income -- -- --
From net capital gains (11,619,090) (25,521,881) --
Tax return of capital -- -- --
------------ ------------ ------------
TOTAL DISTRIBUTIONS TO
SHAREHOLDERS (11,619,090) (25,521,881) --
FROM CAPITAL SHARE TRANSACTIONS:
- ---------------------------------------------------------------------------------------
Proceeds from shares sold 83,548,879 182,890,757 187,856,134
Distributions reinvested 10,904,039 24,120,907 --
Proceeds from short-term
trading fees 65,548 127,619 278,592
------------ ------------ ------------
94,518,466 207,139,283 188,134,726
Cost of shares redeemed (65,814,015) (148,997,522) (208,645,621)
------------ ------------ ------------
NET INCREASE (DECREASE) IN NET
ASSETS FROM CAPITAL SHARE
TRANSACTIONS 28,704,451 58,141,761 (20,510,895)
- ---------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (66,816,253) 80,259,892 (29,265,425)
- ---------------------------------------------------------------------------------------
NET ASSETS
Beginning of period 259,021,817 178,761,925 208,027,350
- ---------------------------------------------------------------------------------------
END OF PERIOD $192,205,564 $259,021,817 $178,761,925
- ---------------------------------------------------------------------------------------
Accumulated undistributed net investment
income, (distributions in excess of net
income), end of period $ (1,197,725) $ (796,871) $ 926,160
============ ============ ============
CAPITAL SHARE ACTIVITY
- ---------------------------------------------------------------------------------------
Shares sold 7,260,223 10,241,147 12,003,311
Shares reinvested 1,295,781 1,635,316 --
Shares redeemed (5,876,426) (8,730,139) (13,510,813)
------------ ------------ ------------
NET SHARE ACTIVITY 2,679,578 3,146,324 (1,507,502)
============ ============ ============
<FN>
(a) for the six-month fiscal period ended December 31, 2008
(b) for the two-month fiscal period ended December 31, 2008
</FN>
See accompanying notes to financial statements.
162
EASTERN EUROPEAN FUND GLOBAL EMERGING MARKETS FUND
---------------------------------------------- ----------------------------------------
PERIOD ENDED YEAR ENDED YEAR ENDED PERIOD ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, OCTOBER 31, OCTOBER 31, DECEMBER 31, OCTOBER 31, OCTOBER 31,
2008(b) 2008 2007 2008(b) 2008 2007
INCREASE (DECREASE)
IN NET ASSETS
FROM OPERATIONS:
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) $ (1,756,193) $ (1,857,811) $ (8,564,082) $ (19,625) $ (399,157) $ (364,142)
Net realized gain (loss) (82,059,126) 10,880,465 282,693,981 (2,933,938) (4,956,114) 8,311,640
Net unrealized appreciation
(depreciation) (2,066,670) (828,852,508) 285,436,753 1,809,552 (27,053,864) 13,963,701
------------ -------------- -------------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING
FROM OPERATIONS (85,881,989) (819,829,854) 559,566,652 (1,144,011) (32,409,135) 21,911,199
DISTRIBUTIONS TO SHAREHOLDERS:
- -----------------------------------------------------------------------------------------------------------------------------------
From net investment income -- -- (25,188,053) -- (1,235,838) --
From net capital gains -- (273,627,367) (170,169,454) -- (8,418,305) (2,463,937)
Tax return of capital -- -- -- (147,530) -- --
------------ -------------- -------------- ----------- ----------- -----------
TOTAL DISTRIBUTIONS TO
SHAREHOLDERS -- (273,627,367) (195,357,507) (147,530) (9,654,143) (2,463,937)
FROM CAPITAL SHARE TRANSACTIONS:
- -----------------------------------------------------------------------------------------------------------------------------------
Proceeds from shares sold 24,488,731 269,122,580 330,290,055 176,198 11,160,939 27,400,995
Distributions reinvested -- 266,926,394 190,987,756 137,693 9,156,240 2,307,884
Proceeds from short-term
trading fees 108,582 1,599,093 1,180,568 1,230 116,466 62,030
------------ -------------- -------------- ----------- ----------- -----------
24,597,313 537,648,067 522,458,379 315,121 20,433,645 29,770,909
Cost of shares redeemed (36,889,330) (611,403,256) (651,110,037) (1,068,774) (26,283,342) (18,626,085)
------------ -------------- -------------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET
ASSETS FROM CAPITAL SHARE
TRANSACTIONS (12,292,017) (73,755,189) (128,651,658) (753,653) (5,849,697) 11,144,824
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (98,174,006) (1,167,212,410) 235,557,487 (2,045,194) (47,912,975) 30,592,086
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of period 415,494,161 1,582,706,571 1,347,149,084 11,707,949 59,620,924 29,028,838
- -----------------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $317,320,155 $ 415,494,161 $1,582,706,571 $ 9,662,755 $11,707,949 $59,620,924
- -----------------------------------------------------------------------------------------------------------------------------------
Accumulated undistributed net investment
income, (distributions in excess of net
income), end of period $ (6) $ (1,796) $ (186,878) $ -- $ (300) $ (314,610)
============ ============== ============== =========== =========== ===========
CAPITAL SHARE ACTIVITY
- -----------------------------------------------------------------------------------------------------------------------------------
Shares sold 3,727,676 17,749,450 20,278,182 32,218 739,179 1,643,572
Shares reinvested -- 16,352,444 12,852,474 26,789 570,838 161,843
Shares redeemed (7,172,967) (48,093,690) (40,900,278) (203,613) (2,064,625) (1,165,080)
------------ -------------- -------------- ----------- ----------- -----------
NET SHARE ACTIVITY (3,445,291) (13,991,796) (7,769,622) (144,606) (754,608) 640,335
============ ============== ============== =========== =========== ===========
163
STATEMENTS OF CHANGES IN NET ASSETS
CHINA REGION FUND
------------------------------------------
PERIOD ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, JUNE 30, JUNE 30,
2008(a) 2008 2007
INCREASE (DECREASE)
IN NET ASSETS
FROM OPERATIONS:
- ----------------------------------------------------------------------------------------
Net investment income (loss) $ (128,137) $ (301,827) $ 14,318
Net realized gain (loss) (25,290,168) 8,268,285 13,318,745
Net unrealized appreciation
(depreciation) (3,141,768) (21,280,538) 17,987,184
----------- ----------- -----------
NET INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS (28,560,073) (13,314,080) 31,320,247
DISTRIBUTIONS TO SHAREHOLDERS:
- ----------------------------------------------------------------------------------------
From net investment income -- (862,509) (1,333,614)
From net capital gains -- (24,776,876) --
Tax return of capital -- (1,395,287) --
----------- ----------- -----------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS -- (27,034,672) (1,333,614)
FROM CAPITAL SHARE TRANSACTIONS:
- ----------------------------------------------------------------------------------------
Proceeds from shares sold 6,720,245 87,256,997 41,842,142
Distributions reinvested -- 26,049,930 1,288,571
Proceeds from short-term trading fees 59,386 363,983 153,356
----------- ----------- -----------
6,779,631 113,670,910 43,284,069
Cost of shares redeemed (20,981,063) (86,017,501) (47,227,127)
----------- ----------- -----------
NET INCREASE (DECREASE) IN NET
ASSETS FROM CAPITAL SHARE
TRANSACTIONS (14,201,432) 27,653,409 (3,943,058)
- ----------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (42,761,505) (12,695,343) 26,043,575
- ----------------------------------------------------------------------------------------
NET ASSETS
Beginning of year 81,109,375 93,804,718 67,761,143
- ----------------------------------------------------------------------------------------
END OF YEAR $38,347,870 $81,109,375 $93,804,718
- ----------------------------------------------------------------------------------------
Distributions in excess of net investment
income, end of year $ (722,297) $(1,910,999) $(2,258,850)
=========== =========== ===========
CAPITAL SHARE ACTIVITY
- ----------------------------------------------------------------------------------------
Shares sold 979,972 6,246,450 4,193,823
Shares reinvested -- 2,136,992 128,472
Shares redeemed (3,044,240) (6,934,355) (4,630,983)
----------- ----------- -----------
NET SHARE ACTIVITY (2,064,268) 1,449,087 (308,688)
=========== =========== ===========
<FN>
(a) for the six-month fiscal period ended December 31, 2008
</FN>
See accompanying notes to financial statements.
164
NOTES TO FINANCIAL STATEMENTS December 31, 2008
NOTE 1: SIGNIFICANT ACCOUNTING POLICIES
U.S. Global Investors Funds (Trust), consisting of thirteen
separate funds (Funds), is organized as a Delaware statutory trust.
Each Fund is an open-end management investment company registered
under the Investment Company Act of 1940, as amended. All funds are
diversified with the exception of Global Resources, World Precious
Minerals, Gold and Precious Metals, Eastern European, Global
Emerging Markets and China Region. A nondiversified fund may invest
a significant portion of its assets in a small number of companies.
Four of the Funds, Holmes Growth Fund, Global MegaTrends Fund,
Eastern European Fund and Global Emerging Markets Fund, were
formerly in the U.S. Global Accolade Funds Trust. Recent
organizational and contractual changes have occurred for the Trust
and the Funds. See Note 2 for more information about these changes.
Effective December 31, 2008, the fiscal year for all Funds in the
Trust changed to December 31. The four Funds previously in the
Accolade trust had a fiscal year that ended October 31. The fiscal
period ended December 31, 2008, presented in these financial
statements is a two-month period for these funds. The nine funds
originally in the U.S. Global Investors Funds Trust (U.S. Treasury
Securities Cash, U.S. Government Securities Savings, Near-Term Tax
Free, Tax Free, All American Equity, Global Resources, World
Precious Minerals, Gold and Precious Metals and China Region) had a
fiscal year that ended June 30. The fiscal period ended December
31, 2008, presented is a six-month period for these funds.
Effective October 1, 2008, the name of the China Region Opportunity
Fund changed to China Region Fund.
The following is a summary of significant accounting policies
consistently followed by the Funds in the preparation of their
financial statements. The policies are in conformity with U.S.
generally accepted accounting principles.
A. SECURITY VALUATIONS
The Funds value investments traded on national or international
securities exchanges or over-the-counter at the last sales price
reported by the security's primary exchange of its market at the
time of daily valuation. Securities for which no sale was reported
are valued at the mean between the last bid and ask quotation.
Short-term investments with effective maturities of sixty days or
less at the date of purchase may be valued at amortized cost, which
approximates market value. Investments of U.S. Treasury Securities
Cash and U.S. Government Securities Savings Funds are valued at
amortized cost. An independent pricing service values municipal
securities, long-term U.S. Government obligations and corporate
debt securities using a system based on such factors as credit
rating, maturity, coupon and type of security to determine fair
value.
165
NOTES TO FINANCIAL STATEMENTS December 31, 2008
B. FAIR VALUED SECURITIES
Securities for which market quotations are not readily available or
which are subject to legal restrictions are valued at their fair
value as determined in good faith under consistently applied
procedures under the general supervision of the Board of Trustees.
The following factors are generally considered in determining fair
value: nature and duration of any trading restrictions, trading
volume, market values of unrestricted shares of the same or similar
class, investment management's judgment regarding the market
experience of the issuer, financial status and other operational
and market factors affecting the issuer, issuer's management,
quality of the underlying property based on review of independent
geological studies, the extent of a Fund's investment in the
trading securities of the issuer; and other relevant matters. The
fair values may differ from what would have been used had a broader
market for these securities existed.
For securities traded on international exchanges, if events which
may materially affect the value of a Fund's securities occur after
the close of the primary exchange and before a Fund's net asset
value is next determined, then those securities will be valued at
their fair value as determined in good faith under the supervision
of the Board of Trustees. The Funds may use a systematic fair value
model provided by an independent third party to value international
securities. At December 31, 2008, this model was used to value
certain foreign securities in Global MegaTrends, Global Resources,
World Precious Minerals, Gold and Precious Metals, Eastern
European, Global Emerging Markets and China Region Funds.
C. SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are accounted for on trade date. Realized
gains and losses from security transactions are determined on an
identified-cost basis. Dividend income is recorded on the
ex-dividend date except that certain dividends from foreign
securities where the ex-dividend date may have passed are recorded
as soon as a fund is informed of the ex-dividend data in the
exercise of reasonable diligence. Interest income, which may
include original issue discount, is recorded on an accrual basis.
Discounts and premiums on securities purchased are accreted and
amortized, respectively, on a yield-to-maturity basis as
adjustments to interest income. Investment income is recorded net
of foreign taxes withheld where recovery of such taxes is
uncertain.
The Funds may purchase securities on a when-issued or
delayed-delivery basis and segregate the liquid assets on their
books collateral with a value at least equal to the amount of the
commitment. Losses may arise due to the changes in the value of the
underlying securities or if the counterparty does not perform under
the contract.
The equity funds may invest in private placements and initial
public offerings (IPOs), the volatility of which may significantly
affect performance. There is no
166
NOTES TO FINANCIAL STATEMENTS December 31, 2008
guarantee that these high-risk investments will affect a Fund's
performance in the same way in the future.
D. REPURCHASE AGREEMENTS
The Funds may enter into repurchase agreements with recognized
financial institutions or registered broker-dealers and, in all
instances, hold as collateral, underlying securities with a value
exceeding the principal amount of the repurchase obligation. The
Funds use joint tri-party repurchase agreement accounts with other
funds under common management where uninvested cash is collectively
invested in repurchase agreements, and each participating fund owns
an undivided interest in the account.
E. OPTIONS
Some Funds may write or purchase options on securities to manage
their exposure to stock or commodity markets as well as
fluctuations in interest and currency conversion rates. Written
options include a risk of loss in excess of the option premium. The
use of options carries the risks of a change in value of the
underlying instruments, an illiquid secondary market, or failure of
the counterparty to perform its obligations. The option premium is
the basis for recognition of unrealized or realized gain or loss on
the option. The cost of securities acquired or the proceeds from
securities sold through the exercise of the option is adjusted by
the amount of the premium.
As of December 31, 2008, portfolio securities valued at $4,787,819
and $4,323,181 were held in escrow by the custodian as cover for
call options written for the World Precious Minerals Fund and Gold
and Precious Metals Fund, respectively.
Transactions in written call options during the period ended
December 31, 2008, were as follows:
ALL AMERICAN GLOBAL
EQUITY FUND RESOURCES FUND
----------------------------------------------------
NUMBER OF PREMIUMS NUMBER OF PREMIUMS
CONTRACTS RECEIVED CONTRACTS RECEIVED
Options outstanding at June 30, 2008 -- $ -- -- $ --
Options written 85 81,855 54,480 17,013,069
Options closed (85) (81,855) (36,910) (13,026,533)
Options expired -- -- (17,570) (3,986,536)
Options exercised -- -- -- --
--- -------- ------- ------------
Options outstanding at December 31, 2008 -- $ -- -- $ --
=== ======== ======= ============
167
NOTES TO FINANCIAL STATEMENTS December 31, 2008
WORLD PRECIOUS GOLD AND PRECIOUS
MINERALS FUND METALS FUND
-------------------------------------------------
NUMBER OF PREMIUMS NUMBER OF PREMIUMS
CONTRACTS RECEIVED CONTRACTS RECEIVED
Options outstanding at June 30, 2008 35,162 $ 7,537,863 11,303 $ 2,223,554
Options written 19,277 3,027,125 18,720 2,317,356
Options closed (44,784) (9,393,829) (17,584) (3,254,257)
Options expired (2,967) (230,371) (2,023) (141,686)
Options exercised (4,131) (760,366) (8,223) (981,565)
------- ----------- ------- -----------
Options outstanding at December 31, 2008 2,557 $ 180,422 2,193 $ 163,402
======= =========== ======= ===========
HOLMES GLOBAL
GROWTH FUND MEGATRENDS FUND
---------------------------------------------
NUMBER OF PREMIUMS NUMBER OF PREMIUMS
CONTRACTS RECEIVED CONTRACTS RECEIVED
Options outstanding at October 31, 2008 -- $ -- 220 $ 110,130
Options written 185 175,304 165 157,485
Options closed (185) (175,304) (345) (247,675)
Options expired -- -- (40) (19,940)
Options exercised -- -- -- --
---- -------- ---- ---------
Options outstanding at December 31, 2008 -- $ -- -- $ --
==== ======== ==== =========
F. FOREIGN CURRENCY TRANSACTIONS
Some Funds may invest in securities of foreign issuers. The
accounting records of these funds are maintained in U.S. dollars.
At each net asset value determination date, the value of assets and
liabilities denominated in foreign currencies are translated into
U.S. dollars using the current prevailing exchange rate. Security
transactions, income and expenses are converted at the prevailing
rate of exchange on the respective dates of the transactions. The
effect of changes in foreign exchange rates on foreign denominated
securities is included with the net realized and unrealized gain or
loss on securities. Other foreign currency gains or losses are
reported separately.
G. FORWARD FOREIGN CURRENCY CONTRACTS
The Funds may enter into forward foreign currency contracts to lock
in the U.S. dollar cost of purchase and sale transactions or to
defend the portfolio against currency fluctuations. A forward
foreign currency contract is a commitment to purchase or sell a
foreign currency at a future date at a negotiated rate. These
contracts are valued daily, and the Fund's net equity therein,
representing unrealized gain or loss on the contracts as measured
by the difference between the forward foreign exchange rates at the
dates of entry into the contracts and the forward rates at the
reporting, is included in the statement of assets and liabilities.
Realized and unrealized gains and losses are included in the
statement of operations. Risks may arise upon entering into these
contracts from the potential inability of counterparties to meet
the terms of the contract and from unanticipated movements in the
value of foreign currencies relative to the U.S. dollar.
168
NOTES TO FINANCIAL STATEMENTS December 31, 2008
Open forward foreign currency contracts at December 31, 2008, were:
FOREIGN IN EXCHANGE SETTLEMENT UNREALIZED UNREALIZED
FUND CONTRACT CURRENCY FOR USD DATE VALUE APPRECIATION (DEPRECIATION)
- ----------------------------------------------------------------------------------------------------------------
Eastern European Fund
SALES:
British Pounds 438 $644 01/02/09 $638 $6 $--
H. FEDERAL INCOME TAXES
The Funds intend to continue to comply with the requirements of
Subchapter M of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of their
taxable income to shareholders. Accordingly, no provision for
federal income taxes is required. Each Fund may be subject to
foreign taxes on income and gains on investments, which are accrued
based on the Fund's understanding of the tax rules and regulations
in the foreign markets.
I. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
The Funds record dividends and distributions to shareholders on the
ex-dividend date. Distributions are determined in accordance with
income tax regulations, which may differ from accounting principles
generally accepted in the United States. Accordingly, periodic
reclassifications related to permanent book and tax basis
differences are made within the funds' capital accounts to reflect
income and gains available for distribution under income tax
regulations.
The Funds generally pay income dividends and distribute capital
gains, if any, annually. The U.S. Treasury Securities Cash and U.S.
Government Securities Savings Funds accrue dividends on a daily
basis with payment monthly. The Tax Free and Near-Term Tax Free
Funds pay monthly dividends. Dividends and distributions payable at
period end are processed for reinvestment on the following business
day. A Fund may elect to designate a portion of the earnings and
profits distributed to shareholders on the redemption of fund
shares during the year as distributions for federal income tax
purposes.
J. EXPENSES
Each Fund bears expenses incurred specifically on its behalf plus
an allocation of its share of Trust level expenses. Expense offset
arrangements have been made with the Funds' custodian so the
custodian fees may be paid indirectly by credits earned on the
Funds' cash balances. Such deposit arrangements are an alternative
to overnight investments.
K. SHORT-TERM TRADING (REDEMPTION) FEES
Shares held in the All American Equity Fund 30 days or less are
subject to a short-term trading fee equal to 0.10% of the proceeds
of the redeemed shares. Shares held in the Holmes Growth, Global
MegaTrends and Global Resources Funds 30 days or less are subject
to a short-term trading fee equal to 0.25% of the proceeds of the
redeemed shares. Shares held in the World Precious Minerals and
Gold and
169
NOTES TO FINANCIAL STATEMENTS December 31, 2008
Precious Metals Funds 30 days or less are subject to a short-term
trading fee equal to 0.50% of the proceeds of the redeemed shares.
Shares held in the Eastern European and Global Emerging Markets
Funds 180 days or less are subject to a short-term trading fee
equal to 2.00% of the proceeds of the redeemed shares. Shares held
in the China Region Fund 180 days or less are subject to a
short-term trading fee equal to 1.00% of the proceeds of the
redeemed shares. These fees, which are retained by the Funds, are
accounted for as an addition to paid-in capital.
L. USE OF ESTIMATES IN FINANCIAL STATEMENT PREPARATION
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during
the reporting period. Actual results could differ from those
estimates.
M. NEW ACCOUNTING PRONOUNCEMENTS
In June 2006, the Financial Accounting Standards Board (FASB)
issued FASB Interpretation No. 48 (FIN 48), Accounting for
Uncertainty in Income Taxes. This standard defines the threshold
for recognizing the benefits of tax-return positions in the
financial statements as "more-likely-than-not" to be sustained upon
challenge by the taxing authority and requires measurement of a tax
position meeting the more-likely-than-not criterion, based on the
largest benefit that is more than 50 percent likely to be realized.
FIN 48 was effective for fiscal years beginning after December 15,
2006, with early application permitted if no interim financial
statements had been issued. Acknowledging the unique issues that
FIN 48 presents for investment companies that calculate NAVs, the
SEC indicated that they would not object if a fund implemented FIN
48 in its NAV calculation as late as its last NAV calculation in
the first required financial statement reporting period for its
fiscal year beginning after December 15, 2006. At adoption,
companies must adjust their financial statements to reflect only
those tax positions that are more-likely-than-not to be sustained.
Management of the Funds has analyzed the tax positions of the
Funds. Upon adoption of FIN 48 on December 31, 2007 (or April 30,
2008, for the four funds formerly in the Accolade trust),
management identified no uncertain tax positions that have not met
the more-likely-than-not standard. As of December 31, 2008, tax
years 2004 through 2007 remain subject to examination by the Funds'
major tax jurisdictions, which include the United States of America
and the Commonwealth of Massachusetts.
In addition, in September 2006, Statement of Financial Accounting
Standards No. 157, Fair Value Measurements (SFAS 157), was issued
and is effective for fiscal years beginning after November 15,
2007. SFAS 157 defines fair value, establishes a framework for
measuring fair value and expands disclosures about fair value
170
NOTES TO FINANCIAL STATEMENTS December 31, 2008
measurements. SFAS 157 has been adopted and the related disclosures
included in the notes to portfolios.
In March 2008, Statement of Financial Accounting Standards No. 161,
Disclosures about Derivative Instruments and Hedging Activities
(SFAS 161), was issued. SFAS 161 requires enhanced disclosures
about the use of and accounting for derivative instruments. SFAS
161 is effective for financial statements issued for fiscal years
and interim periods beginning after November 15, 2008. Management
is in the process of evaluating the impact adoption of SFAS 161
will have on the Funds' financial statement disclosures.
NOTE 2: RELATED PARTY TRANSACTIONS
U.S. Global Investors, Inc. (Adviser), under an investment advisory
agreement with the Trust in effect through September 30, 2009,
furnishes management and investment advisory services and, subject
to the supervision of the trustees, directs the investments of each
Fund according to its investment objectives, policies and
limitations. The Adviser also furnishes all necessary office
facilities, business equipment and personnel for administering the
affairs of the Trust. Frank E. Holmes, a trustee of the Funds, is
the controlling owner of the Adviser.
A special meeting of shareholders of U.S. Global Investor Funds and
U.S. Global Accolade Funds was held on September 23, 2008, to
consider several proposals. The new proposals were approved
effective October 1, 2008, and included (i) a reorganization of
U.S. Global Investor Funds and U.S. Global Accolade Funds from two
separate Massachusetts business trusts into a single Delaware
statutory trust under the name U.S. Global Investors Funds, (ii) a
new advisory agreement, (iii) a new administrative services
agreement and (iv) a new distribution plan for the equity funds
under which a subsidiary of the Adviser will be paid a fee at an
annual rate of 0.25 percent of the average daily net assets of each
fund.
171
NOTES TO FINANCIAL STATEMENTS December 31, 2008
For the services of the Adviser, each Fund pays a management fee
based upon its net assets. Fees are accrued daily and paid monthly.
The contractual management fee for each fund, effective October 1,
2008, is:
ANNUAL PERCENTAGE OF
FUND AVERAGE DAILY NET ASSETS
------------------------------------------------------------------------------
U.S. Treasury Securities Cash and .50% of the first $250,000,000 and
U.S. Government Securities Savings .375% of the excess
Near-Term Tax Free 0.50%
Tax Free .75% of the first $250,000,000 and
.50% of the excess
All American Equity .80% of the first $500,000,000 and
.75% of the excess
Holmes Growth and Global MegaTrends 1.00%
Global Resources .95% of the first $500,000,000;
.90% of $500,000,001 to $1,000,000,000
and .85% of the excess
World Precious Minerals 1.00% of the first $500,000,000;
.95% of $500,000,001 to $1,000,000,000
and .90% of the excess
Gold and Precious Metals .90% of the first $500,000,000 and
.85% of the excess
Eastern European 1.25%
Global Emerging Markets 1.375%
China Region 1.25%
172
NOTES TO FINANCIAL STATEMENTS December 31, 2008
Prior to October 1, 2008, the management fees were the same as
above except as follows:
ANNUAL PERCENTAGE OF
AVERAGE DAILY NET ASSETS
FUND (PRIOR TO OCTOBER 1, 2008)
---------------------------------------------------------------------------
All American Equity .75% of the first $250,000,000 and
.50% of the excess
Global Resources 1.00% of the first $250,000,000 and
.50% of the excess
World Precious Minerals 1.00% of the first $250,000,000 and
.50% of the excess
Gold and Precious Metals .75% of the first $250,000,000 and
.50% of the excess
The new advisory agreement for the equity funds also provides for a
base advisory fee that will be adjusted upwards or downwards by
0.25 percent if there is a performance difference of 5 percent or
more between a fund's performance and that of its designated
benchmark index over the prior rolling 12 months. This performance
fee will be effective October 1, 2009.
Effective October 1, 2008, administrative services that were part
of the advisory agreement were removed and became the subject of a
separate agreement. Under the new administrative services
agreement, the Funds no longer reimburse the Adviser for certain
legal and administrative services, but instead pay compensation at
an annual rate of 0.08 percent of the average daily net assets of
each Fund for administrative services provided.
Prior to October 1, 2008, Holmes Growth, Global MegaTrends, Eastern
European and Global Emerging Markets Funds had adopted a
distribution plan pursuant to Rule 12b-1 of the Investment Company
Act of 1940 that allowed an annual fee of up to 0.25% of its
average net assets to be used for, or to reimburse the Adviser for,
expenditures in connection with sales and promotional services
related to the distribution of each Fund's shares. A portion of
this fee could be reallowed to securities dealers, banks and other
financial institutions for the distribution of shares and providing
shareholder support services. Distribution expenses paid by the
Adviser or other third parties in prior periods that exceeded 0.25%
of net assets could be paid by the Fund with distribution expenses
accrued in current or future periods, so long as the 0.25%
limitation was never exceeded. Effective October 1, 2008, all
equity Funds in the Trust adopted a new distribution plan which a
subsidiary of the Adviser is paid a fee at an annual rate of 0.25%
of the average daily net assets of each Fund.
The Adviser has agreed to reimburse specific funds so that their
total operating expenses will not exceed certain annual percentages
of average net assets. The
173
NOTES TO FINANCIAL STATEMENTS December 31, 2008
expenses for the fiscal periods ended December 31, 2008, were
limited as follows: U.S. Treasury Securities Cash Fund at 1.00%,
U.S. Government Securities Savings Fund at 0.45%, Near-Term Tax
Free Fund at 0.45%, Tax Free Fund at 0.70%, All American Equity
Fund at 1.75%, Holmes Growth Fund at 1.75%, Global MegaTrends Fund
at 1.85% (effective May 12, 2008), Global Resources Fund, World
Precious Minerals Fund, and Gold and Precious Metals Funds at 1.50%
(effective October 1, 2008), Eastern European Fund at 2.25%
(effective October 1, 2008), Global Emerging Markets Fund at 2.50%
(effective February 28, 2007) and China Region Fund at 2.00%
(effective October 1, 2008). These contractual limitations continue
through September 30, 2009; however, they may be revised at any
time by the Funds' Board of Trustees.
As of March 19, 2008, the Adviser voluntarily agreed to waive fees
and/or reimburse U.S. Treasury Securities Cash Fund and U.S.
Government Securities Savings Fund to the extent necessary to
maintain the respective fund's yield at a certain level as
determined by the Adviser (Minimum Yield). The Adviser may
recapture any fees waived and/or expenses reimbursed within three
years after the end of the fiscal year of such waiver and/or
reimbursement to the extent that such recapture would not cause the
fund's yield to fall below the Minimum Yield. For the period ended
December 31, 2008, fees waived and/or expenses reimbursed as a
result of this agreement were $170,642 and $0 for the U.S. Treasury
Securities Cash Fund and the U.S. Government Securities Savings
Fund, respectively. These amounts are recoverable by the Adviser
through December 31, 2011.
Prior to November 7, 2008, for the Eastern European Fund and Global
Emerging Markets Fund, the Adviser contracted with and compensated
subadviser Charlemagne Capital (IOM) Limited to serve in the
execution of the Adviser's investment responsibilities. Effective
November 7, 2008, the Adviser took over the day-to-day management
of both the Eastern European Fund and the Global Emerging Markets
Fund. Charlemagne continues to provide non-discretionary advisory
services to the Adviser, but is not responsible for the investment
or management of the funds' assets.
Prior to October 1, 2007, Leeb Capital Management, Inc. provided
subadvisory services to the MegaTrends Fund. On October 1, 2007,
the Adviser assumed management of the Fund, which was renamed
Global MegaTrends Fund.
United Shareholder Services, Inc. (USSI), a wholly-owned subsidiary
of the Adviser, is the transfer agent for the Funds. Each Fund pays
an annual fee based on the number of shareholder accounts, certain
base fees and transaction- and activity-based fees for transfer
agency services. Certain account fees are paid directly by
shareholders to the transfer agent, which, in turn, reduces its
charge to the Funds. The Adviser was reimbursed for in-house legal
and internal administration services pertaining to the Funds during
the fiscal periods ended December 31, 2008, in the amounts of
$77,656 and $12,309, respectively. Effective October 1,
174
NOTES TO FINANCIAL STATEMENTS December 31, 2008
2008, as noted above, the Funds no longer reimburse the Adviser for
in-house legal and administration services as those services are
included in the administrative services agreement. The Adviser was
reimbursed for services of the Funds' Chief Compliance Officer
during the fiscal periods ended December 31, 2008, in the amount of
$54,995. The Funds will continue to reimburse the Adviser for
certain compliance services.
Brown Brothers Harriman & Co. (BBH) serves as the custodian, fund
accounting and administration service agent with a fee structure
based on average net assets of the Funds, certain base fees and
transaction-based fees.
The independent Trustees receive compensation for serving on the
Board. Trustees serving as Chairman of the Board or a special
committee or as a member of a committee receive additional
compensation. Trustees are also reimbursed for out-of-pocket
expenses incurred while attending meetings. Frank E. Holmes
receives no compensation from the Funds for serving on the Board.
NOTE 3: INVESTMENTS
Cost of purchases and proceeds from sales of long-term securities
for the period ended December 31, 2008, are summarized as follows:
FUND PURCHASES SALES
----------------------------------------------------------------------
Near-Term Tax Free $ 1,067,784 $ 950,001
Tax Free 1,041,616 1,855,517
All American Equity 35,072,477 34,472,378
Holmes Growth 11,827,893 5,059,203
Global MegaTrends 8,785,865 5,343,676
Global Resources 966,880,751 1,248,276,519
World Precious Minerals 136,858,963 187,332,583
Gold and Precious Metals 168,630,189 96,053,764
Eastern European 42,122,201 36,873,446
Global Emerging Markets 1,900,454 2,315,343
China Region 56,916,726 68,668,800
U.S. Treasury Securities Cash and U.S. Government Securities
Savings held only short-term investments. The Funds neither
purchased nor sold long-term U.S. government securities during the
period.
Investments in foreign issuers as a percent of total investments at
December 31, 2008, were: 15.12% of All American Equity, 9.58% of
Holmes Growth, 47.03% of Global MegaTrends, 38.06% of Global
Resources, 85.15% of World Precious Minerals, 72.77% of Gold and
Precious Metals, 95.61% of Eastern European, 97.98% of Global
Emerging Markets and 96.93% of China Region.
175
NOTES TO FINANCIAL STATEMENTS December 31, 2008
NOTE 4: TAX INFORMATION
The following table presents the income tax basis of securities
owned at December 31, 2008, and the tax basis components of net
unrealized appreciation (depreciation):
GROSS GROSS NET UNREALIZED
AGGREGATE UNREALIZED UNREALIZED APPRECIATION/
FUND TAX COST APPRECIATION DEPRECIATION (DEPRECIATION)
-------------------------------------------------------------------------------------------------
U.S. Treasury Securities Cash $121,721,773 $ -- $ -- $ --
U.S. Government Securities Savings 357,973,782 -- -- --
Near-Term Tax Free 13,706,867 319,733 (162,728) 157,005
Tax Free 16,965,131 505,797 (725,995) (220,198)
All American Equity 16,205,659 618,194 (1,282,504) (664,310)
Holmes Growth 37,349,705 747,282 (7,384,859) (6,637,577)
Global MegaTrends 26,831,131 831,438 (5,636,849) (4,805,411)
Global Resources 764,233,452 21,030,929 (340,696,064) (319,665,135)
World Precious Minerals 634,371,374 45,574,743 (320,329,407) (274,754,664)
Gold and Precious Metals 219,949,871 23,907,049 (47,865,864) (23,958,815)
Eastern European 740,294,896 4,193,053 (432,039,020) (427,845,967)
Global Emerging Markets 19,127,378 160,704 (10,105,341) (9,944,637)
China Region 39,056,399 2,663,855 (5,726,679) (3,062,824)
As of December 31, 2008, the components of distributable earnings
on a tax basis were as follows:
UNDISTRIBUTED UNDISTRIBUTED UNDISTRIBUTED NET UNREALIZED
TAX-EXEMPT ORDINARY LONG-TERM APPRECIATION
FUND INCOME INCOME CAPITAL GAINS (DEPRECIATION)
--------------------------------------------------------------------------------------------------
U.S. Treasury Securities Cash $ -- $ -- $-- $ --
U.S. Government Securities Savings -- 461,309 -- --
Near-Term Tax Free 11,456 9,769 -- 157,005
Tax Free 5,389 29,135 -- (220,198)
All American Equity -- 97,543 -- (664,310)
Holmes Growth -- -- -- (6,637,577)
Global MegaTrends -- -- -- (4,804,789)
Global Resources -- -- -- (319,696,142)
World Precious Minerals -- -- -- (274,773,868)
Gold and Precious Metals -- -- -- (24,012,612)
Eastern European -- -- -- (427,838,457)
Global Emerging Markets -- -- -- (9,944,916)
China Region -- -- -- (3,169,172)
The differences between book-basis and tax-basis unrealized
appreciation (depreciation) for All American Equity, Holmes Growth,
Global MegaTrends, Global Resources, World Precious Minerals, Gold
and Precious Metals, Eastern European, Global Emerging Markets and
China Region Funds are attributable primarily to the tax deferral
of losses on wash sales, investment in passive foreign investment
companies (PFIC), forwards marked to markets, unreversed return of
capital in Canadian Trusts, adjustments for partnerships, tax
straddle loss deferrals on written options, and adjustments for
grantor trusts.
176
NOTES TO FINANCIAL STATEMENTS December 31, 2008
Reclassifications are made to the Funds' capital accounts to
reflect income and gains available for distribution (or available
capital loss carryovers) under income tax regulations. For the
period ended December 31, 2008, the Funds recorded the following
reclassifications to increase (decrease) the accounts listed below:
ACCUMULATED NET ACCUMULATED NET PAID-IN
FUND INVESTMENT INCOME REALIZED GAIN CAPITAL
----------------------------------------------------------------------------------------
U.S. Treasury Securities Cash $ 630 $ -- $ (630)
U.S. Government Securities Savings 58,028 (58,028) --
Near-Term Tax Free -- 59,454 (59,454)
Tax Free -- 234,550 (234,550)
All American Equity -- -- --
Holmes Growth 14,866 24,293,638 (24,308,504)
Global MegaTrends 33,563 (167) (33,396)
Global Resources 41,408,717 (34,934,009) (6,474,708)
World Precious Minerals 40,877,286 (20,021,016) (20,856,270)
Gold and Precious Metals 211,203 (1,403,245) 1,192,042
Eastern European 1,757,983 683,630 (2,441,613)
Global Emerging Markets 167,455 306 (167,761)
China Region 1,316,839 (560,383) (756,456)
The tax character of distributions paid during the fiscal period
ended December 31, 2008, were as follows:
TAX-EXEMPT ORDINARY LONG-TERM TAX RETURN
FUND INCOME INCOME CAPITAL GAINS OF CAPITAL TOTAL
----------------------------------------------------------------------------------------------------
U.S. Treasury Securities Cash $ -- $ 259,483 $ -- $ -- $ 259,483
U.S. Government Securities
Savings -- 2,801,889 -- -- 2,801,889
Near-Term Tax Free 183,663 39,343 -- -- 223,006
Tax Free 324,296 31,085 -- -- 355,381
All American Equity -- 6,594 -- -- 6,594
Holmes Growth -- -- -- -- --
Global MegaTrends -- -- -- 25,988 25,988
Global Resources -- 10,465,142 85,843,436 -- 96,308,578
World Precious Minerals -- -- 61,845,712 -- 61,845,712
Gold and Precious Metals -- 5,098,335 6,520,755 -- 11,619,090
Eastern European -- -- -- -- --
Global Emerging Markets -- -- -- 147,530 147,530
China Region -- -- -- -- --
177
NOTES TO FINANCIAL STATEMENTS December 31, 2008
The tax character of distributions paid during the fiscal year
ended June 30, 2008, were as follows:
TAX-EXEMPT ORDINARY LONG-TERM TAX RETURN
FUND INCOME INCOME CAPITAL GAINS OF CAPITAL TOTAL
------------------------------------------------------------------------------------------------------
U.S. Treasury Securities Cash $ -- $ 2,910,606 $ -- $ -- $ 2,910,606
U.S. Government Securities
Savings -- 15,993,388 -- -- 15,993,388
Near-Term Tax Free 397,725 61,285 -- -- 459,010
Tax Free 598,358 69,833 -- -- 668,191
All American Equity -- 2,184,301 518,139 110,537 2,812,977
Global Resources -- 149,122,250 105,446,649 -- 254,568,899
World Precious Minerals -- 120,839,685 82,005,547 -- 202,845,232
Gold and Precious Metals -- 1,341,359 24,180,522 -- 25,521,881
China Region -- 23,799,607 1,839,778 1,395,287 27,034,672
The tax character of distributions paid during the fiscal year
ended June 30, 2007, were as follows:
TAX-EXEMPT ORDINARY LONG-TERM
FUND INCOME INCOME CAPITAL GAINS TOTAL
-----------------------------------------------------------------------------------------------
U.S. Treasury Securities Cash $ -- $ 5,084,891 $ -- $ 5,084,891
U.S. Government Securities Savings -- 21,124,058 -- 21,124,058
Near-Term Tax Free 439,674 61,980 -- 501,654
Tax Free 542,232 73,157 -- 615,389
All American Equity -- 2,601,988 346,118 2,948,106
China Region -- 1,333,614 -- 1,333,614
Global Resources -- 146,150,003 36,449,062 182,599,065
World Precious Minerals -- 77,575,723 43,172,873 120,748,596
Gold and Precious Metals -- -- -- --
The tax character of distributions paid during the fiscal year
ended October 31, 2008, were as follows:
ORDINARY LONG-TERM
FUND INCOME CAPITAL GAINS TOTAL
---------------------------------------------------------------------------------------
Holmes Growth $ -- $ -- $ --
Global MegaTrends -- 1,317,151 1,317,151
Eastern European 55,221,730 218,405,637 273,627,367
Global Emerging Markets 5,732,993 3,921,150 9,654,143
The tax character of distributions paid during the fiscal year
ended October 31, 2007, were as follows:
ORDINARY LONG-TERM
FUND INCOME CAPITAL GAINS TOTAL
-------------------------------------------------------------------------------------
Holmes Growth $ -- $ -- $ --
Global MegaTrends 85,614 1,176,070 1,261,684
Eastern European 124,453,568 70,903,939 195,357,507
Global Emerging Markets 1,164,374 1,299,563 2,463,937
178
NOTES TO FINANCIAL STATEMENTS December 31, 2008
Net realized capital loss carryforwards, for federal income tax
purposes, may be used to offset current or future capital gains
until expiration. The Funds' tax-basis capital gains and losses are
determined only at the end of each fiscal year. The loss
carryforwards and related expiration dates for each fund, as of
December 31, 2008, are as follows:
EXPIRATION DATE
--------------------------------------
FUND 2009 2010 2011 2012
----------------------------------------------------------------------------------
U.S. Treasury Securities Cash $ -- $285 $ -- $ --
U.S. Government Securities Savings -- -- -- --
Near-Term Tax Free -- -- 46,218 33,686
Tax Free -- -- 90,567 421,236
All American Equity -- -- -- --
Holmes Growth 1,040,063 -- -- --
Global MegaTrends -- -- -- --
Global Resources -- -- -- --
World Precious Minerals -- -- -- --
Gold and Precious Metals -- -- -- --
Eastern European -- -- -- --
Global Emerging Markets -- -- -- --
China Region -- -- -- --
EXPIRATION DATE
------------------------------------------------------------
FUND 2013 2014 2015 2016 TOTAL
------------------------------------------------------------------------------------------------
U.S. Treasury Securities Cash $ -- $ -- $ -- $ -- $ 285
U.S. Government Securities Savings -- -- -- -- --
Near-Term Tax Free 2,760 202,719 2,488 112 287,983
Tax Free -- -- -- 10,697 522,500
All American Equity -- -- -- 3,188,188 3,188,188
Holmes Growth -- -- 2,281,824 2,830,320 6,152,207
Global MegaTrends -- -- 8,605,703 5,994,166 14,599,869
Global Resources -- -- -- 174,188,308 174,188,308
World Precious Minerals -- -- -- 43,534,505 43,534,505
Gold and Precious Metals -- -- -- 18,951,332 18,951,332
Eastern European -- -- -- 83,605,572 83,605,572
Global Emerging Markets -- -- 4,262,898 2,965,929 7,228,827
China Region -- -- -- 24,694,256 24,694,256
POST OCTOBER 31, 2008 POST OCTOBER 31, 2008
FUND CAPITAL LOSS DEFERRAL CURRENCY LOSS DEFERRAL
----------------------------------------------------------------------------
All American Equity $ 1,988,625 $ --
Global Resources 252,675,661 70,839
World Precious Minerals 65,086,087 162,947
Gold & Precious Metals 21,778,685 15,605
China Region 6,793,201 --
The above amounts, in accordance with tax rules, are deemed to have
occurred on January 1, 2009.
179
NOTES TO FINANCIAL STATEMENTS December 31, 2008
NOTE 5: RISKS OF CONCENTRATIONS
The investment policies of the World Precious Minerals and Gold and
Precious Metals Funds present unique risks to their respective
portfolios' values. The prices of gold and other precious metals
may be subject to fluctuations caused by international monetary and
political developments including trade or currency restrictions,
currency devaluation and revaluation, and social and political
conditions within a country. Fluctuations in the prices of gold and
other precious metals will affect the market values of the
securities held by these funds.
The Eastern European and Global Emerging Markets Funds may be
exposed to risks not typically associated with investment in the
United States due to their concentration of investments in emerging
markets. These risks include possible revaluation of currencies,
less public information about companies, disruptive political or
economic conditions and the possible imposition of adverse
governmental laws or currency exchange restrictions. Moreover,
securities of many foreign issuers and their markets may be less
liquid and their prices more volatile than those securities of
comparable U.S. issuers.
The China Region Fund may be exposed to risks not typically
associated with investments in the United States, due to
concentration of investments in foreign issuers in the region.
These investments present risks resulting from disruptive political
or economic conditions and the potential imposition of adverse
governmental laws or currency exchange restrictions affecting the
area.
NOTE 6: CREDIT ARRANGEMENTS
Each of the Funds, along with other funds under common management,
has a revolving credit facility with BBH. Borrowings of each Fund
are collateralized by any or all of the securities held by BBH as
the Fund's custodian up to the amount of the borrowing. Interest on
borrowings is charged at the current overnight Federal Funds Rate
plus 2%. Each Fund has a maximum borrowing limit of 10% of
qualified assets. The aggregate of borrowings by all Funds under
the agreement cannot exceed $30,000,000 at any one time. There were
no borrowings under the revolving credit facility during the period
ended December 31, 2008. The U.S. Global Investors Funds paid BBH a
total of $17,188 in commitment fees during the period ended
December 31, 2008, under this arrangement.
NOTE 7: SHARES OF BENEFICIAL INTEREST
At December 31, 2008, individual shareholders holding more than 5%
of outstanding shares comprised 6.85% and 16.47% of the Near-Term
Tax Free Fund and Tax Free Fund, respectively. In addition, the
Adviser held 10.59% and 9.33% of the Near-Term Tax Free Fund and
Tax Free Fund, respectively. Control is defined by the 1940 Act as
the beneficial ownership, either directly or through one or more
controlled companies, of more than 25% of the voting securities of a
180
NOTES TO FINANCIAL STATEMENTS December 31, 2008
company. Investment activities of these shareholders could have a
material impact on the Funds.
NOTE 8: EASTERN EUROPEAN FUND STOCK SPLIT
Effective as of May 27, 2008, the Eastern European Fund instituted
a 3-for-1 stock split. All capital share activity and per share
data for Eastern European Fund for the previous periods presented
in these financial statements has been adjusted to reflect the
stock split.
NOTE 9: PARTICIPATION IN FEDERAL MONEY MARKET FUND PROGRAM
Effective October 8, 2008, the U.S. Treasury Securities Fund and
U.S. Government Securities Savings Fund agreed to participate in
the U.S. Treasury Guarantee Program for Money Market Funds (the
Program). The Program is designed to guarantee to investors in
participating money market funds that they receive $1.00 for each
money market fund share held as of the close of business on
September 19, 2008. The Program does not cover any increase in the
number of fund shares held in an account or any new purchases of
fund shares after the close of business on September 19, 2008. The
guarantee will be triggered if the fund's net asset value per share
falls below $0.995 - what is commonly referred to as "breaking the
buck" - and the fund liquidates. U.S. Treasury Securities Cash Fund
and U.S. Government Securities Savings Fund paid $11,320 and
$42,788, respectively, to participate in the Program. The cost for
the Funds to participate is without regard to any expense
limitations in effect. The initial term of the Program ended on
December 18, 2008, and the Funds did not extend their
participation.
181
FINANCIAL HIGHLIGHTS
U.S. TREASURY SECURITIES CASH FUND
FOR A CAPITAL SHARE OUTSTANDING DURING THE
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, --------------------------------------------------------
2008 2008 2007 2006 2005 2004
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income --(a) .02 .04 .03 .01 --(a)
Net realized and unrealized gain -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Total from investment activities --(a) .02 .04 .03 .01 --(a)
-------- -------- -------- -------- -------- --------
Distributions from net investment income --(a) (.02) (.04) (.03) (.01) --(a)
- ------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (excluding account fees) (b) .23% 2.46% 4.36% 3.11% 1.12% .08%
Ratios to Average Net Assets: (c)
Net investment income .44% 2.43% 4.27% 3.06% 1.11% .07%
Total expenses 1.11% 1.09% .91% .92% .97% 1.00%
Expenses reimbursed (d) (.38)% (.09)% (.02)% -- -- (.04)%
Net recouped fees (e) -- --(g) -- .03% -- --
Net expenses (f) .73% 1.00% .89% .95% .97% .96%
NET ASSETS, END OF PERIOD (IN THOUSANDS) $121,410 $111,955 $116,012 $119,028 $124,058 $112,575
<FN>
(a) The per share amount does not round to a full penny.
(b) Total returns for periods less than one year are not
annualized. Assumes investment at the net asset value at the
beginning of the period, reinvestment of all distributions
and a complete redemption of the investment at the net asset
value at the end of the period.
(c) Ratios are annualized for periods of less than one year.
(d) Expenses reimbursed reflect reductions to total expenses, as
discussed in the notes to the financial statements. These
amounts would decrease the net investment income ratio had
such reductions not occurred.
(e) During the year ended June 30, 2004, the Adviser waived fees
and/or reimbursed expenses as a result of a Minimum Yield
Agreement in the amount of $45,136. As allowed by the
recapture provision of this agreement, the U.S. Treasury
Securities Cash Fund reimbursed the Adviser the previously
waived amount of $45,136 during the year ended June 30,
2006. During the year ended June 30, 2008, the Adviser
waived fees and/or reimbursed expenses under the Minimum
Yield Agreement in the amount of $4,259. The Fund reimbursed
the Adviser the $4,259 during the year ended June 30, 2008.
During the six months ended December 31, 2008, the Adviser
waived fees and/or reimbursed expenses under the Minimum
Yield Agreement in the amount of $170,642.
(f) The net expense ratios shown above reflect expenses after
reimbursements but exclude the effect of reductions to total
expenses for any expenses offset. Expense offset
arrangements reduce total expenses, as discussed in the
notes to the financial statements. These amounts would
decrease the net investment income ratio had such reductions
not occurred. The effect of expenses offset are as follows:
</FN>
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, --------------------------------------------------------
2008 2008 2007 2006 2005 2004
Ratios to Average Net Assets (c):
Expenses offset (g) -- -- -- -- -- --
<FN>
(g) Effect on the expense ratio was not greater than 0.005%.
</FN>
See accompanying notes to financial statements.
182
FINANCIAL HIGHLIGHTS
U.S. GOVERNMENT SECURITIES SAVINGS FUND
FOR A CAPITAL SHARE OUTSTANDING DURING THE
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, ----------------------------------------------------------
2008 2008 2007 2006 2005 2004
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- --------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income .01 .03 .05 .04 .02 .01
Net realized and unrealized gain --(a) --(a) --(a) -- -- --
-------- -------- -------- -------- -------- --------
Total from investment activities .01 .03 .05 .04 .02 .01
-------- -------- -------- -------- -------- --------
Distributions from net investment income (.01) (.03) (.05) (.04) (.02) (.01)
- --------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- --------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (excluding account fees) (b) .67% 3.47% 4.86% 3.69% 1.70% .63%
Ratios to Average Net Assets: (c)
Net investment income 1.36% 3.42% 4.75% 3.64% 1.67% .61%
Total expenses .73% .65% .62% .64% .65% .65%
Expenses reimbursed (d) (.26)% (.20)% (.17)% (.19)% (.20)% (.20)%
Net expenses (e) .47%(g) .45% .45% .45% .45% .45%
NET ASSETS, END OF PERIOD (IN THOUSANDS) $357,910 $446,208 $469,095 $435,417 $411,979 $441,722
<FN>
(a) The per share amount does not round to a full penny.
(b) Total returns for periods less than one year are not
annualized. Assumes investment at the net asset value at the
beginning of the period, reinvestment of all distributions
and a complete redemption of the investment at the net asset
value at the end of the period.
(c) Ratios are annualized for periods of less than one year.
(d) Expenses reimbursed reflect reductions to total expenses, as
discussed in the notes to the financial statements. These
amounts would decrease the net investment income ratio had
such reductions not occurred.
(e) The net expense ratios shown above reflect expenses after
reimbursements but exclude the effect of reductions to total
expenses for any expenses offset. Expense offset
arrangements reduce total expenses, as discussed in the
notes to the financial statements. These amounts would
decrease the net investment income ratio had such reductions
not occurred. The effect of expenses offset are as follows:
</FN>
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, --------------------------------------------------------
2008 2008 2007 2006 2005 2004
Ratios to Average Net Assets (c):
Expenses offset (f) -- -- -- -- -- --
<FN>
(f) Effect on the expense ratio was not greater than 0.005%.
(g) The annualized net expense ratio for the six months ended
December 31, 2008, exceeded the limitation for the period
due to the cost of participating in the U.S. Treasury
Guarantee Program for Money Market Funds (see Note 9 to the
financial statements). The cost to participate was without
regard to the expense limitation.
</FN>
See accompanying notes to financial statements.
183
FINANCIAL HIGHLIGHTS
NEAR-TERM TAX FREE FUND
FOR A CAPITAL SHARE OUTSTANDING DURING THE
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, --------------------------------------------------------
2008 2008 2007 2006 2005* 2004*
NET ASSET VALUE, BEGINNING OF PERIOD $2.14 $2.12 $2.12 $2.17 $2.17 $2.23
- ------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income .03 .07 .07 .07 .07 .06
Net realized and unrealized gain (loss) .02 .02 --(a) (.05) (.01) (.06)
------- ------- ------- ------- ------- -------
Total from investment activities .05 .09 .07 .02 .06 .00
------- ------- ------- ------- ------- -------
Distributions from net investment income (.03) (.07) (.07) (.07) (.06) (.06)
- ------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $2.16 $2.14 $2.12 $2.12 $2.17 $2.17
- ------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (excluding account fees) (b) 2.55% 4.42% 3.51% .75% 2.75% .20%
Ratios to Average Net Assets: (c)
Net investment income 3.15% 3.41% 3.43% 3.08% 2.79% 2.73%
Total expenses 1.82% 1.91% 1.63% 1.54% 1.49% 1.25%
Expenses reimbursed (d) (1.37)% (1.46)% (1.18)% (1.09)% (1.04)% (.80)%
Net expenses (e) .45% .45% .45% .45% .45% .45%
Portfolio turnover rate 8% 8% 22% 33% 5% 21%
NET ASSETS, END OF PERIOD (IN THOUSANDS) $13,989 $13,603 $13,383 $15,830 $18,706 $18,673
<FN>
* The values shown for Near-Term Tax Free Fund prior periods
have been adjusted to reflect the 5-for-1 stock split, which
was effective on January 3, 2005.
(a) The per share amount does not round to a full penny.
(b) Total returns for periods less than one year are not
annualized. Assumes investment at the net asset value at the
beginning of the period, reinvestment of all distributions
and a complete redemption of the investment at the net asset
value at the end of the period.
(c) Ratios are annualized for periods of less than one year.
(d) Expenses reimbursed reflect reductions to total expenses, as
discussed in the notes to the financial statements. These
amounts would decrease the net investment income ratio had
such reductions not occurred.
(e) The net expense ratios shown above reflect expenses after
reimbursements but exclude the effect of reductions to total
expenses for any expenses offset. Expense offset
arrangements reduce total expenses, as discussed in the
notes to the financial statements. These amounts would
decrease the net investment income ratio had such reductions
not occurred. The effect of expenses offset are as follows:
</FN>
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, --------------------------------------------------------
2008 2008 2007 2006 2005 2004
Ratios to Average Net Assets (c):
Expenses offset (f) -- -- -- -- -- --
<FN>
(f) Effect on the expense ratio was not greater than 0.005%.
</FN>
See accompanying notes to financial statements.
184
FINANCIAL HIGHLIGHTS
TAX FREE FUND
FOR A CAPITAL SHARE OUTSTANDING DURING THE
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, --------------------------------------------------------
2008 2008 2007 2006 2005 2004
NET ASSET VALUE, BEGINNING OF PERIOD $11.93 $11.98 $11.98 $12.33 $12.08 $12.65
- ------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income .23 .47 .50 .52 .44 .43
Net realized and unrealized gain (loss) (.21) (.05) --(a) (.36) .25 (.58)
------- ------- ------- ------- ------- -------
Total from investment activities .02 .42 .50 .16 .69 (.15)
------- ------- ------- ------- ------- -------
Distributions from net investment income (.23) (.47) (.50) (.51) (.44) (.42)
- ------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $11.72 $11.93 $11.98 $11.98 $12.33 $12.08
- ------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (excluding account fees) (b) .22% 3.54% 4.15% 1.30% 5.78% (1.25)%
Ratios to Average Net Assets: (c)
Net investment income 3.92% 3.91% 4.09% 4.01% 3.50% 3.22%
Total expenses 1.91% 1.94% 1.86% 1.69% 1.47% 1.09%
Expenses reimbursed (d) (1.21)% (1.24)% (1.16)% (.99)% (.77)% (.39)%
Net expenses (e) .70% .70% .70% .70% .70% .70%
Portfolio turnover rate 6% 11% 6% 19% 40% 54%
NET ASSETS, END OF PERIOD (IN THOUSANDS) $16,946 $18,380 $15,940 $14,992 $22,433 $28,167
<FN>
(a) The per share amount does not round to a full penny.
(b) Total returns for periods less than one year are not
annualized. Assumes investment at the net asset value at the
beginning of the period, reinvestment of all distributions
and a complete redemption of the investment at the net asset
value at the end of the period.
(c) Ratios are annualized for periods of less than one year.
(d) Expenses reimbursed reflect reductions to total expenses, as
discussed in the notes to the financial statements. These
amounts would decrease the net investment income ratio had
such reductions not occurred.
(e) The net expense ratios shown above reflect expenses after
reimbursements but exclude the effect of reductions to total
expenses for any expenses offset. Expense offset
arrangements reduce total expenses, as discussed in the
notes to the financial statements. These amounts would
decrease the net investment income ratio had such reductions
not occurred. The effect of expenses offset are as follows:
</FN>
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, --------------------------------------------------------
2008 2008 2007 2006 2005 2004
Ratios to Average Net Assets (c):
Expenses offset (f) -- -- -- -- -- --
<FN>
(f) Effect on the expense ratio was not greater than 0.005%.
</FN>
See accompanying notes to financial statements.
185
FINANCIAL HIGHLIGHTS
ALL AMERICAN EQUITY FUND
FOR A CAPITAL SHARE OUTSTANDING DURING THE
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, --------------------------------------------------------
2008 2008 2007 2006 2005 2004
NET ASSET VALUE, BEGINNING OF PERIOD $27.27 $28.58 $27.59 $24.47 $22.53 $19.15
- ------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment gain (loss) .04 (.15) (.08) (.18) (.02) (.11)
Net realized and unrealized gain (loss) (9.97) 1.98 4.94 3.89 1.96 3.49
------- ------- ------- ------- ------- -------
Total from investment activities (9.93) 1.83 4.86 3.71 1.94 3.38
------- ------- ------- ------- ------- -------
Distributions
From net realized gains (.01) (3.01) (3.87) (.59) -- --
From tax return of capital -- (.13) -- -- -- --
------- ------- ------- ------- ------- -------
Total distributions (.01) (3.14) (3.87) (.59) -- --
------- ------- ------- ------- ------- -------
Short-Term Trading Fees * (a) -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $17.33 $27.27 $28.58 $27.59 $24.47 $22.53
- ------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (excluding account fees) (b) (36.42)% 5.99% 19.59% 15.25% 8.61% 17.65%
Ratios to Average Net Assets: (c)
Net investment income (loss) .35% (.55)% (.28)% (.67)% (.09)% (.49)%
Total expenses 2.37% 1.98% 2.01% 2.20% 2.44% 2.31%
Expenses reimbursed (d) (.62)% (.23)% (.26)% (.44)% (.69)% (.56)%
Net expenses (e) 1.75% 1.75% 1.75% 1.76% 1.75% 1.75%
Portfolio turnover rate 205% 225% 223% 369% 262% 96%
NET ASSETS, END OF PERIOD (IN THOUSANDS) $16,234 $26,513 $23,479 $21,547 $19,253 $19,974
<FN>
* Based on average monthly shares outstanding.
(a) The per share amount does not round to a full penny.
(b) Total returns for periods less than one year are not
annualized. Assumes investment at the net asset value at the
beginning of the period, reinvestment of all distributions
and a complete redemption of the investment at the net asset
value at the end of the period.
(c) Ratios are annualized for periods of less than one year.
(d) Expenses reimbursed reflect reductions to total expenses, as
discussed in the notes to the financial statements. These
amounts would increase the net investment loss ratio or
decrease the net investment income ratio, as applicable, had
such reductions not occurred.
(e) The net expense ratios shown above reflect expenses after
reimbursements but exclude the effect of reductions to total
expenses for any expenses offset. Expense offset
arrangements reduce total expenses, as discussed in the
notes to the financial statements. These amounts would
increase the net investment loss ratio, or decrease the net
investment income ratio, as applicable, had such reductions
not occurred. The effect of expenses offset are as follows:
</FN>
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, --------------------------------------------------------
2008 2008 2007 2006 2005 2004
Ratios to Average Net Assets (c):
Expenses offset --(f) --(f) --(f) (0.01)% --(f) --(f)
<FN>
(f) Effect on the expense ratio was not greater than 0.005%.
</FN>
See accompanying notes to financial statements.
186
FINANCIAL HIGHLIGHTS
HOLMES GROWTH FUND
FOR A CAPITAL SHARE OUTSTANDING DURING THE
TWO MONTHS
ENDED YEAR ENDED OCTOBER 31,
DECEMBER 31, --------------------------------------------------------
2008 2008 2007 2006 2005 2004**
NET ASSET VALUE, BEGINNING OF PERIOD $14.14 $24.78 $18.34 $16.56 $14.38 $13.55
- ------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment loss (.01) (.15) (.14) (.14) (.18) (.19)
Net realized and unrealized gain (loss) (1.34) (10.49) 6.58 1.92 2.36 1.01
------- ------- ------- ------- ------- -------
Total from investment activities (1.35) (10.64) 6.44 1.78 2.18 .82
------- ------- ------- ------- ------- -------
Distributions -- -- -- -- -- --
Short-Term Trading Fees * --(a) --(a) --(a) --(a) --(a) .01
- ------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $12.79 $14.14 $24.78 $18.34 $16.56 $14.38
- ------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (excluding account fees) (b) (9.55)% (42.94)% 35.11% 10.75% 15.16% 6.13%
Ratios to Average Net Assets: (c)
Net investment loss (.27)% (.65)% (.62)% (.69)% (.98)% (1.15)%
Total expenses 2.51% 1.74% 1.72% 1.74% 1.83% 1.82%
Expenses reimbursed (d) (.76)% -- -- -- -- --
Net expenses (e) 1.75% 1.74% 1.72% 1.74% 1.83% 1.82%
Portfolio turnover rate 20% 140% 98% 290% 268% 192%
NET ASSETS, END OF PERIOD (IN THOUSANDS) $32,488 $36,231 $68,881 $61,810 $65,065 $67,074
<FN>
* Based on average monthly shares outstanding.
** Effective June 1, 2004, U.S. Global Investors, Inc. assumed
management of Holmes Growth Fund from the former subadviser.
(a) The per share amount does not round to a full penny.
(b) Total returns for periods less than one year are not
annualized. Assumes investment at the net asset value at the
beginning of the period, reinvestment of all distributions
and a complete redemption of the investment at the net asset
value at the end of the period.
(c) Ratios are annualized for periods of less than one year.
(d) Expenses reimbursed reflect reductions to total expenses, as
discussed in the notes to the financial statements. These
amounts would increase the net investment loss ratio or
decrease the net investment income ratio, as applicable, had
such reductions not occurred.
(e) The expense ratios shown above exclude the effect of
reductions to total expenses for any expenses offset.
Expense offset arrangements reduce total expenses, as
discussed in the notes to financial statements. These
amounts would increase the net investment loss ratio, or
decrease the net investment income ratio, as applicable, had
such reductions not occurred. The effect of expenses offset
are as follows:
</FN>
TWO MONTHS
ENDED YEAR ENDED OCTOBER 31,
DECEMBER 31, --------------------------------------------------------
2008 2008 2007 2006 2005 2004
Ratios to Average Net Assets (c):
Expenses offset --(f) --(f) --(f) (0.01)% --(f) --
<FN>
(f) Effect on the expense ratio was not greater than 0.005%.
</FN>
See accompanying notes to financial statements.
187
FINANCIAL HIGHLIGHTS
GLOBAL MEGATRENDS FUND
FOR A CAPITAL SHARE OUTSTANDING DURING THE
TWO MONTHS
ENDED YEAR ENDED OCTOBER 31,
DECEMBER 31, --------------------------------------------------------
2008 2008 2007** 2006 2005 2004
NET ASSET VALUE, BEGINNING OF PERIOD $6.60 $12.75 $11.07 $10.30 $9.20 $8.25
- ------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment loss --(a) --(a) (.11) (.10) (.14) (.17)
Net realized and unrealized gain (loss) (.31) (5.30) 2.63 1.18 1.24 1.24
------- ------- ------- ------- ------- -------
Total from investment activities (.31) (5.30) 2.52 1.08 1.10 1.07
------- ------- ------- ------- ------- -------
Distributions
From net investment income -- -- -- -- -- (.12)
From net realized gains -- (.85) (.84) (.31) -- --
From tax return of capital (.01) -- -- -- -- --
------- ------- ------- ------- ------- -------
Total distributions (.01) (.85) (.84) (.31) -- (.12)
------- ------- ------- ------- ------- -------
Short-Term Trading Fees * (a) -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $6.28 $6.60 $12.75 $11.07 $10.30 $9.20
- ------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (excluding account fees) (b) (4.74)% (44.50)% 24.49% 10.53% 11.96% 13.01%
Ratios to Average Net Assets: (c)
Net investment loss (.20)% (.06)% (.93)% (.89)% (1.37)% (1.77)%
Total expenses 2.96% 2.21% 2.49% 2.55% 2.83% 2.83%
Expenses reimbursed (d) (1.11)% (.21)% -- -- -- --
Net expenses (e) 1.85% 2.00% 2.49% 2.55% 2.83% 2.83%
Portfolio turnover rate 29% 92% 65% 75% 54% 64%
NET ASSETS, END OF PERIOD (IN THOUSANDS) $22,035 $25,387 $17,723 $17,077 $14,276 $13,239
<FN>
* Based on average monthly shares outstanding.
** Effective October 1, 2007, U.S. Global Investors, Inc.
assumed management of Global MegaTrends Fund from the former
subadviser.
(a) The per share amount does not round to a full penny.
(b) Total returns for periods less than one year are not
annualized. Assumes investment at the net asset value at the
beginning of the period, reinvestment of all distributions
and a complete redemption of the investment at the net asset
value at the end of the period.
(c) Ratios are annualized for periods of less than one year.
(d) Expenses reimbursed reflect reductions to total expenses, as
discussed in the notes to the financial statements. These
amounts would increase the net investment loss ratio or
decrease the net investment income ratio, as applicable, had
such reductions not occurred.
(e) The expense ratios shown above exclude the effect of
reductions to total expenses for any expenses offset.
Expense offset arrangements reduce total expenses, as
discussed in the notes to financial statements. These
amounts would increase the net investment loss ratio, or
decrease the net investment income ratio, as applicable, had
such reductions not occurred. The effect of expenses offset
are as follows:
</FN>
TWO MONTHS
ENDED YEAR ENDED OCTOBER 31,
DECEMBER 31, --------------------------------------------------------
2008 2008 2007 2006 2005 2004
Ratios to Average Net Assets (c):
Expenses offset (f) -- -- -- -- -- --
<FN>
(f) Effect on the expense ratio was not greater than 0.005%.
</FN>
See accompanying notes to financial statements.
188
FINANCIAL HIGHLIGHTS
GLOBAL RESOURCES FUND
FOR A CAPITAL SHARE OUTSTANDING DURING THE
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, ------------------------------------------------------------------
2008 2008 2007 2006 2005 2004
NET ASSET VALUE, BEGINNING OF
PERIOD $20.52 $17.70 $17.22 $12.67 $8.39 $5.14
- --------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income (loss) (.02)* .05* .21 .29 .25 .12
Net realized and unrealized
gain (loss) (13.92)* 5.86* 2.86 5.63 4.67 3.26
-------- ---------- ---------- ---------- -------- --------
Total from investment
activities (13.94) 5.91 3.07 5.92 4.92 3.38
-------- ---------- ---------- ---------- -------- --------
Distributions
From net investment income -- (.95) (.88) (.32) (.34) (.13)
From net realized gains (1.32) (2.14) (1.71) (1.05) (.30) --
-------- ---------- ---------- ---------- -------- --------
Total distributions (1.32) (3.09) (2.59) (1.37) (.64) (.13)
-------- ---------- ---------- ---------- -------- --------
Short-Term Trading Fees * (a) -- -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $5.26 $20.52 $17.70 $17.22 $12.67 $8.39
- --------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (excluding account
fees) (b) (67.70)% 37.59% 20.94% 48.91% 60.21% 65.73%
Ratios to Average Net Assets: (c)
Net investment income (loss) (.34)% .28% .74% 1.07% .91% .74%
Total expenses 1.20% .88% .95% .96% 1.30% 1.54%
Expenses reimbursed (d) (.12)% -- -- -- -- --
Net expenses (e) 1.08% .88% .95% .96% 1.30% 1.54%
Portfolio turnover rate 100% 133% 122% 157% 116% 140%
NET ASSETS, END OF PERIOD
(IN THOUSANDS) $464,524 $2,010,581 $1,383,250 $1,281,664 $488,183 $135,574
<FN>
* Based on average monthly shares outstanding.
(a) The per share amount does not round to a full penny.
(b) Total returns for periods less than one year are not
annualized. Assumes investment at the net asset value at the
beginning of the period, reinvestment of all distributions
and a complete redemption of the investment at the net asset
value at the end of the period.
(c) Ratios are annualized for periods of less than one year.
(d) Expenses reimbursed reflect reductions to total expenses, as
discussed in the notes to the financial statements. These
amounts would increase the net investment loss ratio or
decrease the net investment income ratio, as applicable, had
such reductions not occurred.
(e) The net expense ratios shown above reflect expenses after
reimbursements but exclude the effect of reductions to total
expenses for any expenses offset. Expense offset
arrangements reduce total expenses, as discussed in the
notes to the financial statements. These amounts would
increase the net investment loss ratio, or decrease the net
investment income ratio, as applicable, had such reductions
not occurred. The effect of expenses offset are as follows:
</FN>
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, ------------------------------------------------------------------
2008 2008 2007 2006 2005 2004
Ratios to Average Net Assets (c):
Expenses offset --(f) (0.01)% (0.01)% (0.01)% --(f) --(f)
<FN>
(f) Effect on the expense ratio was not greater than 0.005%.
</FN>
See accompanying notes to financial statements.
189
FINANCIAL HIGHLIGHTS
WORLD PRECIOUS MINERALS FUND
FOR A CAPITAL SHARE OUTSTANDING DURING THE
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, --------------------------------------------------------
2008 2008 2007 2006 2005 2004
NET ASSET VALUE, BEGINNING OF PERIOD $25.32 $28.34 $28.86 $15.50 $13.68 $9.75
- ------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income (loss) (.06)* (.13)* --* .72 (.22) (.17)*
Net realized and unrealized gain (loss) (13.65)* 3.70* 3.02 13.62 2.42 5.85
-------- -------- -------- -------- -------- --------
Total from investment activities (13.71) 3.57 3.02 14.34 2.20 5.68
-------- -------- -------- -------- -------- --------
Distributions
From net investment income -- (3.25) (1.52) (.67) (.46) (1.86)
From net realized gains (2.05) (3.35) (2.04) (.37) -- --
-------- -------- -------- -------- -------- --------
Total distributions (2.05) (6.60) (3.56) (1.04) (.46) (1.86)
-------- -------- -------- -------- -------- --------
Short-Term Trading Fees * --(a) .01 .02 .06 .08 .11
- ------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $9.56 $25.32 $28.34 $28.86 $15.50 $13.68
- ------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (excluding account fees) (b) (51.23)% 14.14% 11.48% 96.21% 16.50% 57.42%
Ratios to Average Net Assets: (c)
Net investment income (loss) (.80)% (.43)% .06% .05% (1.01)% (1.15)%
Total expenses 1.36% .97% .99% 1.13% 1.48% 1.47%
Expenses reimbursed (d) (.11)% -- -- -- -- --
Net expenses (e) 1.25% .97% .99% 1.13% 1.48% 1.47%
Portfolio turnover rate 27% 58% 54% 66% 55% 65%
NET ASSETS, END OF PERIOD (IN THOUSANDS) $359,120 $949,014 $923,779 $920,249 $268,312 $246,852
<FN>
* Based on average monthly shares outstanding.
(a) The per share amount does not round to a full penny.
(b) Total returns for periods less than one year are not
annualized. Assumes investment at the net asset value at the
beginning of the period, reinvestment of all distributions
and a complete redemption of the investment at the net asset
value at the end of the period.
(c) Ratios are annualized for periods of less than one year.
(d) Expenses reimbursed reflect reductions to total expenses, as
discussed in the notes to the financial statements. These
amounts would increase the net investment loss ratio or
decrease the net investment income ratio, as applicable, had
such reductions not occurred.
(e) The net expense ratios shown above reflect expenses after
reimbursements but exclude the effect of reductions to total
expenses for any expenses offset. Expense offset
arrangements reduce total expenses, as discussed in the
notes to the financial statements. These amounts would
increase the net investment loss ratio, or decrease the net
investment income ratio, as applicable, had such reductions
not occurred. The effect of expenses offset are as follows:
</FN>
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, --------------------------------------------------------
2008 2008 2007 2006 2005 2004
Ratios to Average Net Assets (c):
Expenses offset (f) -- -- -- -- -- --
<FN>
(f) Effect on the expense ratio was not greater than 0.005%.
</FN>
See accompanying notes to financial statements.
190
FINANCIAL HIGHLIGHTS
GOLD AND PRECIOUS METALS FUND
FOR A CAPITAL SHARE OUTSTANDING DURING THE
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, --------------------------------------------------------
2008 2008 2007 2006 2005 2004
NET ASSET VALUE, BEGINNING OF PERIOD $17.18 $14.99 $15.48 $7.67 $7.00 $5.18
- ------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income (loss) (.03) (.08)* .05 (.01)* (.11) (.10)
Net realized and unrealized gain (loss) (5.59) 4.69 (.56) 7.88 .79 1.91
-------- -------- -------- -------- ------- -------
Total from investment activities (5.62) 4.61 (.51) 7.87 .68 1.81
-------- -------- -------- -------- ------- -------
Distributions from net realized gains (.73) (2.43) -- (.12) (.05) (.03)
Short-Term Trading Fees * --(a) .01 .02 .06 .04 .04
- ------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $10.83 $17.18 $14.99 $15.48 $7.67 $7.00
- ------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (excluding account fees) (b) (31.51)% 33.49% (3.17)% 104.15% 10.19% 35.57%
Ratios to Average Net Assets: (c)
Net investment income (loss) (.66)% (.41)% .31% (.06)% (1.13)% (1.45)%
Total expenses 1.54% 1.27% 1.29% 1.47% 1.97% 1.93%
Expenses reimbursed (d) (.15)% -- -- -- -- --
Net expenses (e) 1.39% 1.27% 1.29% 1.47% 1.97% 1.93%
Portfolio turnover rate 61% 93% 72% 78% 66% 85%
NET ASSETS, END OF PERIOD (IN THOUSANDS) $192,206 $259,022 $178,762 $208,027 $63,816 $66,732
<FN>
* Based on average monthly shares outstanding.
(a) The per share amount does not round to a full penny.
(b) Total returns for periods less than one year are not
annualized. Assumes investment at the net asset value at the
beginning of the period, reinvestment of all distributions
and a complete redemption of the investment at the net asset
value at the end of the period.
(c) Ratios are annualized for periods of less than one year.
(d) Expenses reimbursed reflect reductions to total expenses, as
discussed in the notes to the financial statements. These
amounts would increase the net investment loss ratio or
decrease the net investment income ratio, as applicable, had
such reductions not occurred.
(e) The net expense ratios shown above reflect expenses after
reimbursements but exclude the effect of reductions to total
expenses for any expenses offset. Expense offset
arrangements reduce total expenses, as discussed in the
notes to the financial statements. These amounts would
increase the net investment loss ratio, or decrease the net
investment income ratio, as applicable, had such reductions
not occurred. The effect of expenses offset are as follows:
</FN>
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, --------------------------------------------------------
2008 2008 2007 2006 2005 2004
Ratios to Average Net Assets (c):
Expenses offset --(f) --(f) (0.01)% --(f) --(f) --(f)
<FN>
(f) Effect on the expense ratio was not greater than 0.005%.
</FN>
See accompanying notes to financial statements.
191
FINANCIAL HIGHLIGHTS
EASTERN EUROPEAN FUND
FOR A CAPITAL SHARE OUTSTANDING DURING THE
TWO MONTHS
ENDED YEAR ENDED OCTOBER 31,
DECEMBER 31, -------------------------------------------------------------
2008*** 2008* 2007* 2006* 2005* 2004*
NET ASSET VALUE, BEGINNING OF PERIOD $6.35 $19.91 $15.44 $12.88 $9.47 $6.48
- -----------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income (loss) (.03) (.03) (.10) .13 (.03)** (.01)
Net realized and unrealized gain (loss) (1.20) (10.10) 6.83 3.60 3.81** 3.31
-------- -------- ---------- ---------- -------- --------
Total from investment activities (1.23) (10.13) 6.73 3.73 3.78 3.30
-------- -------- ---------- ---------- -------- --------
Distributions
From net investment income -- -- (.29) -- (.09) (.02)
From net realized gains -- (3.46) (1.98) (1.22) (.31) (.35)
-------- -------- ---------- ---------- -------- --------
Total distributions -- (3.46) (2.27) (1.22) (.40) (.37)
-------- -------- ---------- ---------- -------- --------
Short-Term Trading Fees ** --(a) .03 .01 .05 .03 .06
- -----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $5.12 $6.35 $19.91 $15.44 $12.88 $9.47
- -----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (excluding account fees) (b) (19.37)% (61.36)% 48.74% 31.03% 41.43% 54.12%
Ratios to Average Net Assets: (c)
Net investment income (loss) (3.02)% (.15)% (.61)% .71% (.31)% (.23)%
Total expenses 2.37% 1.96% 1.98% 1.95% 2.00% 2.08%
Expenses reimbursed (d) (.27)% --(f) -- -- -- --
Net expenses (e) 2.10% 1.96% 1.98% 1.95% 2.00% 2.08%
Portfolio turnover rate 11% 82% 54% 68% 95% 89%
NET ASSETS, END OF PERIOD (IN THOUSANDS) $317,320 $415,494 $1,582,707 $1,347,149 $903,855 $279,545
<FN>
* The per share amounts shown for the current and prior
periods have been adjusted to reflect the 3-for-1 stock
split which was effective on May 27, 2008.
** Based on average monthly shares outstanding.
*** Effective November 7, 2008, U.S. Global Investors, Inc.
assumed management of the fund from Charlemagne Capital
(IOM) Limited.
(a) The per share amount does not round to a full penny.
(b) Total returns for periods less than one year are not
annualized. Assumes investment at the net asset value at the
beginning of the period, reinvestment of all distributions
and a complete redemption of the investment at the net asset
value at the end of the period.
(c) Ratios are annualized for periods of less than one year.
(d) Expenses reimbursed reflect reductions to total expenses, as
discussed in the notes to the financial statements. These
amounts would increase the net investment loss ratio or
decrease the net investment income ratio, as applicable, had
such reductions not occurred.
(e) The expense ratios shown above exclude the effect of
reductions to total expenses for any expenses offset and for
fees rebated from the subadviser. Expense offset
arrangements reduce total expenses, as discussed in the
notes to the financial statements. Through June 2006, the
subadviser of the above fund provided advisory services to
two closed-end investment companies that the above fund had
invested in. The subadviser rebated amounts to the above
fund representing the portion of management fees paid by the
two investment companies to the subadviser based on the
above fund's investment. Fees rebated by the subadviser also
reduce total expenses. These amounts would increase the net
investment loss ratio, or decrease the net investment income
ratio, as applicable, had such reductions not occurred. The
effect of expenses offset and expenses rebated by the
subadviser are as follows:
</FN>
TWO MONTHS
ENDED YEAR ENDED OCTOBER 31,
DECEMBER 31, ------------------------------------------------------------
2008 2008 2007 2006 2005 2004
Ratios to Average Net Assets (c):
Expenses offset --(f) (0.01)% (0.01)% (0.01)% (0.01)% --(f)
Expenses rebated by subadviser n/a n/a n/a (0.01)% (0.02)% (0.05)%
<FN>
(f) Effect on the expense ratio was not greater than 0.005%.
</FN>
See accompanying notes to financial statements.
192
FINANCIAL HIGHLIGHTS
GLOBAL EMERGING MARKETS FUND
FOR A CAPITAL SHARE OUTSTANDING DURING THE
TWO MONTHS
ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
DECEMBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
2008** 2008 2007 2006 2005 (a)
NET ASSET VALUE, BEGINNING OF PERIOD $5.94 $21.88 $13.93 $10.65 $10.00
- --------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income (loss) (.01) (.43) (.13) .02 .06
Net realized and unrealized gain (loss) (.56) (11.98) 9.18 3.50 .56
------ ------- ------- ------- -------
Total from investment activities (.57) (12.41) 9.05 3.52 .62
------ ------- ------- ------- -------
Distributions
From net investment income -- (.46) -- (.05) --
From net realized gains -- (3.11) (1.13) (.26) --
From tax return of capital (.08) -- -- -- --
------ ------- ------- ------- -------
Total distributions (.08) (3.57) (1.13) (.31) --
------ ------- ------- ------- -------
Short-Term Trading Fees * --(b) .04 .03 .07 .03
- --------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $5.29 $5.94 $21.88 $13.93 $10.65
- --------------------------------------------------------------------------------------------------------------
TOTAL RETURN (excluding account fees) (d) (9.59)% (66.81)% 69.52% 34.16% 6.50%
Ratios to Average Net Assets (d):
Net investment income (loss) (1.16)% (1.01)% (.92)% .13% 1.08%
Total expenses 6.83% 2.80% 2.75% 3.07% 4.16%
Expenses reimbursed (e) (4.33)% (.30)% (.39)% (1.05)% (2.16)%
Net expenses (f) 2.50% 2.50% 2.36% 2.02% 2.00%
Portfolio Turnover Rate 21% 83% 125% 136% 93%
NET ASSETS, END OF PERIOD (IN THOUSANDS) $9,663 $11,708 $59,621 $29,029 $16,157
<FN>
* Based on average monthly shares outstanding.
** Effective November 7, 2008, U.S. Global Investors, Inc.
assumed management of the fund from Charlemagne Capital
(IOM) Limited.
(a) From February 24, 2005, commencement of operations.
(b) The per share amount does not round to a full penny.
(c) Total returns for periods less than one year are not
annualized. Assumes investment at the net asset value at the
beginning of the period, reinvestment of all distributions
and a complete redemption of the investment at the net asset
value at the end of the period.
(d) Ratios are annualized for periods of less than one year.
(e) Expenses reimbursed reflect reductions to total expenses, as
discussed in the notes to the financial statements. These
amounts would increase the net investment loss ratio or
decrease the net investment income ratio, as applicable, had
such reductions not occurred.
(f) The expense ratios shown above exclude the effect of
reductions to total expenses for any expenses offset and for
fees rebated from the subadviser. Expense offset
arrangements reduce total expenses, as discussed in the
notes to the financial statements. Through June 2006, the
subadviser of the above fund provided advisory services to a
closed-end investment company that the above fund had
invested in. The subadviser rebated amounts to the above
fund representing the portion of management fees paid by the
investment company to the subadviser based on the above
fund's investment. Fees rebated by the subadviser also
reduce total expenses. These amounts would increase the net
investment loss ratio, or decrease the net investment income
ratio, as applicable, had such reductions not occurred. The
effect of expenses offset and expenses rebated by the
subadviser are as follows:
</FN>
TWO MONTHS
ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
DECEMBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
2008 2008 2007 2006 2005 (a)
Ratios to Average Net Assets (d):
Expenses offset --(g) --(g) n/a n/a n/a
Expenses rebated by subadviser n/a n/a n/a (0.02)% --(g)
<FN>
(g) Effect on the expense ratio was not greater than 0.005%.
</FN>
See accompanying notes to financial statements.
193
FINANCIAL HIGHLIGHTS
CHINA REGION FUND
FOR A CAPITAL SHARE OUTSTANDING DURING THE
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, --------------------------------------------------------
2008 2008 2007 2006 2005 2004
NET ASSET VALUE, BEGINNING OF PERIOD $9.09 $12.55 $8.71 $6.87 $5.86 $4.17
- ------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income (loss) (.02)* (.03)* --* (.01)* (.06) --*
Net realized and unrealized gain (loss) (3.49)* (.27)* 3.98* 2.02 1.22 1.69
------- ------- ------- ------- ------- -------
Total from investment activities (3.51) (.30) 3.98 2.01 1.16 1.69
------- ------- ------- ------- ------- -------
Distributions
From net investment income -- (.10) (.16) (.19) (.16) (.05)
From net realized gains -- (2.93) -- -- -- --
From tax return of capital -- (.17) -- -- -- --
------- ------- ------- ------- ------- -------
Total distributions -- (3.20) (.16) (.19) (.16) (.05)
------- ------- ------- ------- ------- -------
Short-Term Trading Fees * .01 .04 .02 .02 .01 .05
- ------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $5.59 $9.09 $12.55 $8.71 $6.87 $5.86
- ------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (excluding account fees) (a) (38.50)% (8.58)% 46.34% 30.03% 19.98% 41.63%
Ratios to Average Net Assets: (b)
Net investment income (loss) (.47)% (.26)% .02% (.08)% (.54)% .05%
Total expenses 2.46% 1.95% 2.02% 2.31% 2.56% 2.25%
Expenses reimbursed (c) (.27)% -- -- -- -- --
Net expenses (d) 2.19% 1.95% 2.02% 2.31% 2.56% 2.25%
Portfolio turnover rate 117% 208% 208% 292% 136% 126%
NET ASSETS, END OF PERIOD (IN THOUSANDS) $38,348 $81,109 $93,805 $67,761 $30,511 $35,090
<FN>
* Based on average monthly shares outstanding.
(a) Total returns for periods less than one year are not
annualized. Assumes investment at the net asset value at the
beginning of the period, reinvestment of all distributions
and a complete redemption of the investment at the net asset
value at the end of the period.
(b) Ratios are annualized for periods of less than one year.
(c) Expenses reimbursed reflect reductions to total expenses, as
discussed in the notes to the financial statements. These
amounts would increase the net investment loss ratio or
decrease the net investment income ratio, as applicable, had
such reductions not occurred.
(d) The net expense ratios shown above reflect expenses after
reimbursements but exclude the effect of reductions to total
expenses for any expenses offset. Expense offset
arrangements reduce total expenses, as discussed in the
notes to the financial statements. These amounts would
increase the net investment loss ratio, or decrease the net
investment income ratio, as applicable, had such reductions
not occurred. The effect of expenses offset are as follows:
</FN>
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DECEMBER 31, --------------------------------------------------------
2008 2008 2007 2006 2005 2004
Ratios to Average Net Assets (c):
Expenses offset --(e) --(e) --(e) (0.01)% --(e) --(e)
<FN>
(e) Effect on the expense ratio was not greater than 0.005%.
</FN>
See accompanying notes to financial statements.
194
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Trustees and Shareholders
of the U.S. Global Investors Funds Trust:
We have audited the accompanying statements of assets and
liabilities, including the schedules of investments, of the Holmes
Growth Fund, Global MegaTrends Fund, Eastern European Fund and
Global Emerging Markets Fund, each a portfolio within the U.S.
Global Investors Funds Trust as of December 31, 2008, and the
related statements of operations for the two-month period then ended
and the year ended October 31, 2008, the statements of changes in
net assets for the two-month period then ended and the two-year
period ended October 31, 2008 and financial highlights for the
two-month period then ended and each of the years in the five-year
period ended October 31, 2008. We have audited the accompanying
statements of assets and liabilities, including the schedules of
investments, of the U.S. Treasury Securities Cash Fund, U.S.
Government Securities Savings Fund, Near-Term Tax Free Fund, Tax
Free Fund, All American Equity Fund, Global Resources Fund, World
Precious Minerals Fund, Gold and Precious Metals Fund and China
Region Fund, each a portfolio within the U.S. Global Investors Funds
Trust as of December 31, 2008, and the related statements of
operations for the six-month period then ended and the year ended
June 30, 2008, the statements of changes in net assets for the
six-month period then ended and the two-year period ended June 30,
2008 and financial highlights for the six-month period then ended
and each of the years in the five-year period ended June 30, 2008.
These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to
express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). 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 securities owned as of December 31, 2008, by
correspondence with the custodian and brokers or by other
appropriate auditing procedures where replies from brokers were not
received. 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 funds within the U.S.
Global Investors Funds Trust, as of December 31, 2008, and the
results of their operations, the changes in their net assets and
financial highlights for the periods described above, in conformity
with U.S. generally accepted accounting principles.
/s/ KPMG LLP
Boston, Massachusetts
February 23, 2009
195
TRUSTEES AND OFFICERS (UNAUDITED) December 31, 2008
The following table presents information about the Trustees as of
December 31, 2008, together with a brief description of their
principal occupations during the last five years. The Agreement and
Declaration of Trust provides that each trustee shall serve as a
trustee of the Trust during the lifetime of this Trust and until its
termination except as such trustee sooner dies, resigns or is
removed. In addition, each trustee who is not an "interested person"
of the Trust shall be required to retire in accordance with the
terms of any retirement policy then in effect that has been approved
by a majority vote of all independent trustees. The current
retirement policy provides that the retirement age for
non-interested trustees is 72 years of age. If you would like more
information about the Trustees, you may call 1-800-US-FUNDS
(1-800-873-8637) to request a free copy of the Statement of
Additional Information.
NON-INTERESTED TRUSTEES
NAME (AGE)
ADDRESS
POSITIONS HELD WITH TRUST
LENGTH OF TIME SERVED*
NUMBER OF PORTFOLIOS IN FUND PRINCIPAL OCCUPATION(S) AND PREVIOUS POSITIONS
COMPLEX OVERSEEN BY TRUSTEE DURING PAST 5 YEARS AND OTHER DIRECTORSHIPS HELD
- ---------------------------------------------------------------------------------
Mr. J. Michael Belz (55) PRINCIPAL OCCUPATION: President and Chief
7900 Callaghan Road Executive Officer of Catholic Life Insurance
San Antonio, TX 78229 since 1984.
Trustee OTHER DIRECTORSHIPS HELD: Director, Broadway
November 1998 to present National Bank from October 2003 to present.
Thirteen portfolios
- ---------------------------------------------------------------------------------
James F. Gaertner (65) PRINCIPAL OCCUPATION: President of Sam Houston
7900 Callaghan Road State University from August 2001 to present.
San Antonio, TX 78229 OTHER DIRECTORSHIPS HELD: Chairman of the Audit
Trustee Committee, Tandy Brands Accessories, Inc. from
November 2002 to present October 1997 to present.
Thirteen portfolios
- ---------------------------------------------------------------------------------
Clark R. Mandigo (65) PRINCIPAL OCCUPATION: Restaurant operator,
7900 Callaghan Road business consultant since 1991.
San Antonio, TX 78229
Trustee
May 1993 to present
Thirteen portfolios
- ---------------------------------------------------------------------------------
Joe C. McKinney (62) PRINCIPAL OCCUPATION: Vice Chairman, Broadway
7900 Callaghan Road National Bank from October 2002 to present.
San Antonio, TX 78229 OTHER DIRECTORSHIPS HELD: Director, Broadway
Trustee National Bank from October 2002 to present;
October 2008 to present Director, USAA Real Estate Company from
Thirteen portfolios September 2004 to present; Director, Luby's,
Inc. from January 2003 to present.
- ---------------------------------------------------------------------------------
<FN>
*These dates include service for a predecessor trust.
</FN>
196
TRUSTEES AND OFFICERS (UNAUDITED) December 31, 2008
INTERESTED TRUSTEE
NAME (AGE)
ADDRESS
POSITIONS HELD WITH TRUST
LENGTH OF TIME SERVED*
NUMBER OF PORTFOLIOS IN FUND PRINCIPAL OCCUPATION(S) AND PREVIOUS POSITIONS
COMPLEX OVERSEEN BY TRUSTEE DURING PAST 5 YEARS AND OTHER DIRECTORSHIPS HELD
- ---------------------------------------------------------------------------------
Frank Holmes ** (53) PRINCIPAL OCCUPATION: Director, Chief Executive
7900 Callaghan Road Officer, and Chief Investment Officer of the
San Antonio, TX 78229 Adviser. Since October 1989, Mr. Holmes has
Trustee, Chief Executive served and continues to serve in various
Officer, Chief Investment positions with the Adviser, its subsidiaries,
Officer, President January 1990 and the investment companies it sponsors.
to present OTHER DIRECTORSHIPS HELD: Director of 71316
Thirteen portfolios Ontario, Inc. since April 1987 and of F. E.
Holmes Organization, Inc. since July 1978.
- ---------------------------------------------------------------------------------
<FN>
*These dates include service for a predecessor trust.
**Mr. Holmes is an "interested person" of the Trust by virtue of his
positions with U.S. Global Investors, Inc.
</FN>
The following table presents information about each Officer of the
Trust as of December 31, 2008, together with a brief description of
their principal occupations during the last five years. Each holds
office until his or her successor is duly elected and qualified.
OFFICERS
NAME (AGE)
ADDRESS
POSITIONS HELD WITH TRUST
LENGTH OF TIME SERVED* PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
- --------------------------------------------------------------------------------
Frank Holmes (53) Director, Chief Executive Officer, and Chief
7900 Callaghan Road Investment Officer of the Adviser. Since
San Antonio, TX 78229 October 1989, Mr. Holmes has served and
Trustee, Chief Executive continues to serve in various positions with
Officer, Chief Investment the Adviser, its subsidiaries, and the
Officer, President investment companies it sponsors.
January 1990 to present
- --------------------------------------------------------------------------------
Susan McGee (49) President and General Counsel of the Adviser.
7900 Callaghan Road Since September 1992, Ms. McGee has served and
San Antonio, TX 78229 continues to serve in various positions with
Executive Vice President, the Adviser, its subsidiaries, and the
Secretary, General Counsel investment companies it sponsors.
March 1997 to present
- --------------------------------------------------------------------------------
Catherine Rademacher (48) Chief Financial Officer of the Adviser. Since
7900 Callaghan Road April 2004, Ms. Rademacher has served and
San Antonio, TX 78229 continues to serve in various positions with
Treasurer the Adviser, its subsidiaries, and the
July 2004 to present investment companies it sponsors. Associate
with Resources Connection from July 2003 to
February 2004.
- --------------------------------------------------------------------------------
197
TRUSTEES AND OFFICERS (UNAUDITED) December 31, 2008
NAME (AGE)
ADDRESS
POSITIONS HELD WITH TRUST
LENGTH OF TIME SERVED* PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
- --------------------------------------------------------------------------------
James L. Love (40) Chief Compliance Officer of the Adviser since
7900 Callaghan Road September 2007. Executive Director Executive
San Antonio, TX 78229 Attorney from January 2003 to September 2007,
Chief Compliance Officer Senior Counsel May 2002 to January 2003 with
September 2007 to present USAA.
- --------------------------------------------------------------------------------
Mark Carter (41) Vice President, Shareholder Services of the
7900 Callaghan Road Adviser since April 2008. Operations Manager of
San Antonio, TX 78229 the Adviser from April 2007 through March 2008;
Vice President, Shareholder Transfer Agent Operations Manager, Invesco AIM
Services from 2004 to April 2007.
April 2008 to present
- --------------------------------------------------------------------------------
T. Kelly Niland (46) Vice President of Investment Operations of the
7900 Callaghan Road Adviser since January 2006. Fund Accounting
San Antonio, TX 78229 Manager with AIM Investments from June 1992 to
Vice President, Investment January 2006.
Operations
December 2008 to present;
Assistant Treasurer from May
2006 to December 2008.
- --------------------------------------------------------------------------------
Susan K. Filyk (39) Director of Marketing of the Adviser since
7900 Callaghan Road August 2008. Ms. Filyk has served and continues
San Antonio, TX 78229 to serve in various positions with the Adviser,
Vice President, Marketing its subsidiaries, and the investment companies
December 2008 to present it sponsors. Sr. VP Marketing with Frost
National Bank from May 1998 to August 2007.
- --------------------------------------------------------------------------------
<FN>
*These dates include service for a predecessor trust.
</FN>
198
ADDITIONAL INFORMATION (UNAUDITED)
ADDITIONAL FEDERAL TAX INFORMATION
The percentage of tax-exempt dividends paid by the Funds for the six
months ended December 31, 2008, was:
Near-Term Tax Free 82.35%
Tax Free 94.87%
The percentage of ordinary income dividends paid by the Funds during
the calendar year ended December 31, 2008, which qualify for the
Dividends Received Deduction available to corporate shareholders
was:
Global Resources 4.55%
Gold and Precious Metals 1.70%
The Funds hereby designate the following approximate amounts as
capital gain dividends for the purpose of the dividends paid
deduction:
Global Resources $85,843,436
World Precious Minerals 61,845,712
Gold and Precious Metals 6,520,755
The amounts which represent foreign source income and foreign taxes
paid during the six months ended December 31, 2008, are as follows:
FOREIGN SOURCE FOREIGN TAX
INCOME CREDIT
Gold and Precious Metals $430,909 $34,458
In early 2009, the Funds reported on Form 1099-DIV the tax status of
all distributions made during the calendar year 2008. The funds
intend to distribute the maximum amount of qualified dividend income
allowable. The amount of qualified dividend income distributed by
each fund will be reported to shareholders on their Form 1099-DIV.
Shareholders should use the information on Form 1099-DIV for their
income tax returns.
PROXY VOTING
A description of the policies and procedures that the Funds use to
determine how to vote proxies relating to portfolio securities is
available without charge, upon request, by calling 1-800-US-FUNDS
(1-800-873-8637). It also appears in the Funds' statement of
additional information (Form 485B), which can be found on the SEC's
website at www.sec.gov.
Information regarding how the Funds voted proxies relating to
portfolio securities during the most recent 12-month period ended
June 30 is available without charge, upon request, by calling
1-800-US-FUNDS (1-800-873-8637) or accessing the Funds' Form N-PX on
the SEC's website at www.sec.gov.
199
ADDITIONAL INFORMATION (UNAUDITED)
AVAILABILITY OF QUARTERLY PORTFOLIO SCHEDULES
The Funds provide complete lists of holdings four times in each
fiscal year, at the quarter-ends. For the second and fourth
quarters, the lists appear in the Funds' semi-annual and annual
reports to shareholders. For the first and third quarters, the Funds
file the lists with the SEC on Form N-Q. Shareholders can look up
the Funds' Forms N-Q on the SEC's website at www.sec.gov. You may
also visit or call the SEC's Public Room in Washington, D.C.
(1-202-942-8090) or send a request plus a duplicating fee to the
SEC, Public Reference Section, Washington, DC 20549-0102 or by
electronic request at the following e-mail address:
publicinfo@sec.gov.
APPROVAL OF THE ADVISORY AGREEMENT FOR EACH FUND
On July 31, 2008, the Board of Trustees (the "Board") of U.S. Global
Investors Funds, the Delaware statutory trust into which the U.S.
Global Investors Funds and U.S. Global Accolade Funds were
reorganized, including all of the trustees who are not "interested
persons" of the Trust (the "Independent Trustees"), approved a new
advisory agreement with the Adviser for each fund for a one-year
term, effective October 1, 2008. The Independent Trustees considered
the materials provided by the Adviser in support of the new form of
advisory agreement, along with the applicable rules and regulations
related to the proposal. The Board also considered the Adviser's
representation that the Board may rely on and take into account the
information provided in connection with the prior advisory agreement
for each fund.
With respect to the new form of advisory agreement, the Board
considered the following factors, among others:
* Pro forma advisory fee and expense ratio analyses prepared by a
third party and by management, giving effect to the advisory fees
under the advisory agreement, the administration expenses under
the administrative services agreement and the distribution plan
(as applicable).
* Current and pro forma expense data for each fund;
* Information on the selection of the proposed benchmarks, on a
fund-by-fund basis (as applicable), for the proposed performance
fee adjustments;
* Information comparing the historical performance of each fund with
a proposed performance fee adjustment to its proposed benchmark;
* The pro forma profitability impact to the Adviser from the
advisory agreement and administrative services agreement;
* Historical and pro forma historical performance data for each
fund, giving effect to the advisory agreement, administrative
services agreement and the distribution plan (as applicable),
along with the fund's historical and pro forma peer group rank;
and
* The Adviser's agreement to cap the expenses for each fund for the
one-year period of the advisory agreement.
200
ADDITIONAL INFORMATION (UNAUDITED)
The Board took note of the following factors, among others: (1) the
nature, extent and quality of services provided by the Adviser, (2)
the advisory fees and expense ratio, (3) the profits realized by the
Adviser and its affiliates from their relationship with the funds,
(4) whether the funds benefit from any economies of scale, and (5)
the benefits realized by the Adviser and its affiliates from their
relationship with the funds. The board reached the following
conclusions in approving the Advisory Agreement for each applicable
fund: (1) the nature and extent of the services historically
provided by the Adviser were appropriate and the quality of services
was good, (2) the advisory fees, coupled with the Adviser's
commitment to cap expenses, were reasonable and appropriate in
amount given the quality of services provided, (3) the profits to be
realized by the Adviser from the advisory agreement and
administrative services agreement were reasonable in comparison with
the costs of providing investment advisory services to the Funds,
(4) with respect to economies of scale, profitability to the Adviser
and its affiliates is not excessive, and (5) the direct and indirect
benefits accruing to the Adviser were reasonable in comparison with
the costs of providing advisory services, the advisory fees charged,
the Adviser's commitment to cap expenses (as applicable) and the
benefits to the funds.
Based on all the information considered and the conclusions reached,
the Board determined that the terms of the new advisory agreement,
effective October 1, 2008, is fair and reasonable and that the
approval of the new agreement is in the best interests of each
applicable fund.
SHAREHOLDER VOTES
On September 23, 2008, a special meeting of the shareholders of U.S.
Global Accolade Funds and U.S. Global Investors Funds was held. The
following proposals were presented to and approved by the
shareholders:
1. To approve the reorganization of each fund from the two separate
Massachusetts business trusts into a corresponding new fund
organized under a single Delaware statutory trust.
2. ALL AMERICAN EQUITY FUND, HOLMES GROWTH FUND, GLOBAL MEGATRENDS
FUND, GLOBAL RESOURCES FUND, GOLD & PRECIOUS METALS FUND, WORLD
PRECIOUS MINERALS FUND, EASTERN EUROPEAN FUND, GLOBAL EMERGING
MARKETS FUND, AND CHINA REGION FUND. To approve a new Distribution
Plan.
3. To approve a new Advisory Agreement for each fund.
4. EASTERN EUROPEAN FUND, GLOBAL EMERGING MARKETS FUND. To approve a
new Subadvisory Agreement.
5. EASTERN EUROPEAN FUND. To approve a change in the Fund's
concentration policy to permit the Fund to invest more than 25% of
its assets in securities of companies involved in oil, gas, or
banking.
201
ADDITIONAL INFORMATION (UNAUDITED)
The results of the votes were as follows:
BROKER
NON-
PROPOSAL FOR AGAINST ABSTAIN WITHHELD VOTES
- ---------------------------------------------------------------------------------------------------
PROPOSAL 1:
U.S. Treasury Securities Cash Fund 55,216,304 2,728,590 3,535,825 NA NA
U.S. Government Securities Savings Fund 247,423,461 9,112,193 10,141,436 NA NA
Near-Term Tax Free Fund 3,959,724 47,425 427,075 NA NA
Tax Free Fund 1,038,632 17,687 53,001 NA NA
All American Equity Fund 462,840 11,525 50,729 NA NA
Holmes Growth Fund 1,352,751 38,960 114,213 NA NA
Global MegaTrends Fund 2,308,744 52,916 89,602 NA NA
Global Resources Fund 44,083,176 2,328,033 3,082,753 NA NA
Gold & Precious Metals Fund 7,807,537 377,192 325,799 NA NA
World Precious Minerals Fund 17,633,167 825,498 1,070,354 NA NA
Eastern European Fund 37,406,107 1,934,682 2,432,523 NA NA
Global Emerging Markets Fund 1,422,684 55,770 69,801 NA NA
China Region Fund 4,244,330 231,111 270,278 NA NA
PROPOSAL 2:
All American Equity Fund 442,029 26,812 56,252 NA NA
Holmes Growth Fund 1,284,882 92,103 128,940 NA NA
Global MegaTrends Fund 2,151,788 195,073 104,399 NA NA
Global Resources Fund 41,622,516 4,444,484 3,426,957 NA NA
Gold & Precious Metals Fund 7,373,781 773,883 362,863 NA NA
World Precious Minerals Fund 16,531,112 1,851,973 1,145,931 NA NA
Eastern European Fund 35,506,284 3,494,987 2,772,040 NA NA
Global Emerging Markets Fund 1,352,678 123,011 72,564 NA NA
China Region Fund 4,060,459 412,430 272,829 NA NA
PROPOSAL 3:
U.S. Treasury Securities Cash Fund 51,915,852 5,688,665 3,876,201 NA NA
U.S. Government Securities Savings Fund 236,420,495 19,175,557 11,081,038 NA NA
Near-Term Tax Free Fund 3,900,978 92,413 440,834 NA NA
Tax Free Fund 987,418 51,837 70,065 NA NA
All American Equity Fund 452,327 21,048 51,717 NA NA
Holmes Growth Fund 1,302,024 79,067 124,833 NA NA
Global MegaTrends Fund 2,249,976 100,701 100,583 NA NA
Global Resources Fund 41,756,633 4,316,812 3,420,517 NA NA
Gold & Precious Metals Fund 7,354,354 776,488 379,683 NA NA
World Precious Minerals Fund 16,662,369 1,687,958 1,178,691 NA NA
Eastern European Fund 36,042,372 3,029,644 2,701,294 NA NA
Global Emerging Markets Fund 1,369,090 103,485 75,680 NA NA
China Region Fund 4,071,097 331,781 342,841 NA NA
PROPOSAL 4:
Eastern European Fund 35,783,985 3,188,394 2,800,931 NA NA
Global Emerging Markets Fund 1,377,198 93,740 77,316 NA NA
PROPOSAL 5:
Eastern European Fund 35,934,299 3,438,622 2,400,392 NA NA
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202
ITEM 2. CODE OF ETHICS.
(a) The registrant has adopted a code of ethics that applies to its principal
executive officer and principal financial officer.
(b) During the period covered by this report, no material amendments were
made to the provisions of the code of ethics adopted in 2(a) above.
(c) During the period covered by this report, no implicit or explicit waivers
to the provisions of the code of ethics adopted in 2(a) above were
granted.
(d) Not applicable.
(e) Not applicable.
(f) The registrant has posted such code of ethics on its Internet website at
www.usfunds.com.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
For the period from July 1, 2008 through September 30, 2008, the registrant's
Board of Trustees determined that the registrant had at least two "audit
committee financial experts" serving on its audit committee: Mr. Clark Mandigo
and Dr. James F. Gaertner, who are "independent" (as defined in Item 3 of Form
N-CSR.). Effective October 1, 2008, pursuant to reorganization of U.S. Global
Investors Funds and U.S. Global Accolade Funds, Massachusetts business trusts,
into a Delaware statutory trust under the name U.S. Global Investors Funds,
the following audit committee financial experts, both of whom are independent
trustees, were designated: Mr. Clark Mandigo and Dr. James F. Gaertner.
An "audit committee financial expert" is not an "expert" for any purpose,
including for purposes of Section 11 of the Securities Act of 1933, as a
result of being designated as an "audit committee financial expert." Further,
the designation of a person as an "audit committee financial expert" does not
mean that the person has any greater duties, obligations, or liability than
those imposed on the person without the "audit committee financial expert"
designation. Similarly, the designation of a person as an "audit committee
financial expert" does not affect the duties, obligations, or liability of any
other member of the audit committee or Board of Trustees.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(A) AUDIT FEES
The aggregate fees billed to the registrant for professional services rendered
by the registrant's principal accountant for the audit of the registrant's
annual financial statements or for services that are normally provided by the
accountant in connection with statutory or regulatory filings or engagements
for the funds listed in Attachment A were $211,946 for the fiscal year ended
December 31, 2008, $206,800 for funds listed in Attachment B for their prior
fiscal year ended June 30, 2008, and $90,090 for funds listed in Attachment C
for their prior fiscal year ended October 31, 2008.
(B) AUDIT-RELATED FEES
There were no fees billed for assurance and related services by the
registrant's principal accountant that were reasonably related to the
performance of the audit of the registrant's financial statements and were not
reported under paragraph (a) of this Item for the last two fiscal years.
(C) TAX FEES
The aggregate fees billed for professional services rendered by the
registrant's principal accountant for tax compliance, tax advice and tax
planning for the funds listed in Attachment A were $62,499 for the fiscal year
ended December 31, 2008, $38,900 for funds listed in Attachment B for their
prior fiscal year ended June 30, 2008, and $21,780 for funds listed in
Attachment C for their prior fiscal year ended October 31, 2008. The nature of
the services comprising the tax fees included the review of the registrant's
income and excise tax returns and distribution requirements.
(D) ALL OTHER FEES
There were no other fees during the last two fiscal years billed to the
registrant.
(E)(1) The registrant's audit committee is directly responsible for approving
the services to be provided by the auditors, including approval in advance of
audit and non-audit services at regularly scheduled audit committee meetings.
If non-audit services are required between regularly scheduled audit committee
meetings, approval may be authorized by the chairman of the audit committee
for non-prohibited services for engagements of less than $3,500 with
notification of other audit committee members at the next scheduled audit
committee meeting.
(2) No services included in (b) - (d) above were approved pursuant to
paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(F) Less than 50 percent of the hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most recent
fiscal year were attributed to work performed by persons other than the
principal accountant's full-time, permanent employees.
(G) The aggregate fees billed by the registrant's principal accountant for
non-audit services rendered to the registrant, its investment adviser, and any
entity controlling, controlled by, or under common control with the investment
adviser that provides ongoing services to the registrant were $62,499 for the
fiscal year ended December 31, 2008 and $116,280 for the previous fiscal year.
These fees related to tax services rendered to the registrant and the issuance
of a report on internal controls for an entity controlled by the investment
adviser.
(H) All non-audit services rendered in (g) above were considered by the
registrant's audit committee in maintaining the principal accountant's
independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to the registrant.
ITEM 6. SCHEDULE OF INVESTMENTS.
Not applicable. The complete schedule of investments is included in Item 1 of
this Form N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's president and treasurer have determined that the
registrant's disclosure controls and procedures are effective based on
their evaluation of the disclosure controls and procedures as of a date
within 90 days of the filing date of this report.
(b) There was no change in the registrant's internal control over financial
reporting that occurred in the registrant's second fiscal quarter of the
period covered by this report that has materially affected, or is
reasonably likely to materially affect, the registrant's internal control
over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Code of ethics is posted on registrant's Internet website at
www.usfunds.com.
(a)(2) Certifications of principal executive officer and principal financial
officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002.
(a)(3) Not applicable.
(b) Certifications of principal executive officer and principal financial
officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
U.S. GLOBAL INVESTORS FUNDS
By: /s/ Frank E. Holmes
-------------------
Frank E. Holmes
President, Chief Executive Officer
Date: March 3, 2009
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Frank E. Holmes
-------------------
Frank E. Holmes
President, Chief Executive Officer
Date: March 3, 2009
By: /s/ Catherine A. Rademacher
---------------------------
Catherine A. Rademacher
Treasurer
Date: March 3, 2009