U.S. GLOBAL INVESTORS FUNDS
ANNUAL REPORT
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DECEMBER 31, 2010
U.S. GLOBAL INVESTORS FUNDS
ANNUAL REPORT
DECEMBER 31, 2010
TABLE OF CONTENTS
LETTER TO SHAREHOLDERS 1
DEFINITIONS FOR MANAGEMENT TEAMS' PERSPECTIVES 11
MANAGEMENT TEAMS' PERSPECTIVES 13
EXPENSE EXAMPLE 68
PORTFOLIOS OF INVESTMENTS 71
NOTES TO PORTFOLIOS OF INVESTMENTS 139
STATEMENTS OF ASSETS AND LIABILITIES 150
STATEMENTS OF OPERATIONS 156
STATEMENTS OF CHANGES IN NET ASSETS 162
NOTES TO FINANCIAL STATEMENTS 171
FINANCIAL HIGHLIGHTS 191
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM 204
TRUSTEES AND OFFICERS 205
ADDITIONAL INFORMATION 208
NASDAQ SYMBOLS
U.S. GLOBAL INVESTORS FUNDS
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INVESTOR CLASS
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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
INSTITUTIONAL CLASS
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GLOBAL MEGATRENDS FUND MEGIX
GLOBAL RESOURCES FUND PIPFX
WORLD PRECIOUS MINERALS FUND UNWIX
P.O. Box 659405
San Antonio, Texas 78265-9604
Tel 1.800.US.FUNDS
Fax 1.210.308.1217
[USGI Logo] www.usfunds.com
U.S. GLOBAL INVESTORS FUNDS
DEAR SHAREHOLDER:
The two significant factors for the current supercycle
in emerging markets and natural resources demand are a [PHOTO]
doubling of the world's population since 1970 and
countries such as Russia, China and India embracing free
markets to build their economies. It's important to remember that these
three countries made up 50 percent of the world's population in the
1970s and were isolationists; they had no global economic footprint.
Today, China has the second-largest economy in the world with Japan and
Germany ranking third and fourth, respectively.
Growth in emerging markets can be seen the moment you arrive in major
cities like Mumbai, Shanghai, Singapore and Dubai. Ambitious
construction projects dot the landscapes of these new powerhouse
nations. In India, the government is financing industry townships to
promote manufacturing. This is a similar strategy to the one Ireland
employed 20 years ago by establishing tax-free zones. India isn't alone.
Positioned with low debt levels relative to Europe and the U.S., rising
incomes and a desire to capture the American dream, many emerging
nations are embarking on a massive infrastructure buildout within their
countries.
Today's equivalent of President Eisenhower's U.S. highway buildout is
the network of subways and rapid transit systems China is constructing.
China already has the longest high speed rail system in the world with
just under 2,200 miles of track, and Beijing has plans to extend its
high speed rail lines to a total of 8,078 miles by 2012. By 2020, some
analysts expect the distance of high speed rail lines in China to
stretch 12,427 miles.
Even more surprising is the pace at which China has been able to lay so
many tracks. The first subway cars rolled down the tracks in London and
New York during the 1860s, but Shanghai's first subway wasn't
operational until 1993. It took China 17 years to build what it took the
U.K. and the U.S. 150 years to construct.
At home in the U.S., performance from April to October was choppy as the
economy continued to rebuild and recover. Rodney Sullivan, co-editor of
the CFA Digest, claims that the global credit crisis that facilitated
the crash of 2008 wasn't unique. He analyzed financial history as far
back as the 1600s and discovered three key patterns in the 47 major
financial bubbles, approximately one every decade, that occurred over
that time span.
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U.S. GLOBAL INVESTORS FUNDS
The three key ingredients of asset bubbles he discovered are financial
innovation, investor exuberance and speculative leverage. The process
begins with innovation, which initially benefits society as a whole.
Second, usage of these innovations broadens; they become mainstream and
attract speculation. The third step, the tipping point for a bubble to
form, is when these speculators pile on massive leverage hoping to
achieve greater success.
Increased complexity and irrational exuberance soon take over and a
market imbalance emerges. Eventually the lights turn on, the spiked
punch bowl is removed and the party is over--the bubble bursts.
With Main Street home buyers leveraging 100-to-1, Fannie Mae leveraged
80-to-1 and Wall Street brokers leveraging their balance sheets 30-to-1,
we witnessed greed DNA, or the limbic "greed center" of the brain,
influencing decision making throughout our entire society.
The economic wounds from this still linger and, historically, the
healing process from similar crises takes four years--16 quarters--to
fully recover. This is a bit longer than after a normal recession, when
it takes roughly five quarters to repair the damage. Right now, we're
halfway through this healing process and there are many opportunities to
capture.
There's an old Wall Street saying that "there's always a bull market
somewhere." We are focused on discovering these markets for our
shareholders. Over the past few years, we have explored around the world
to uncover bull markets in places such as Colombia, Brazil, Indonesia
and Turkey. These discoveries have contributed to the outstanding
performance we have delivered to many of our investors.
We believe government policies are precursors to change and the
hyperactive administration's epic pieces of legislation such as
financial regulation, healthcare reform and environmental policies
created a drag on many sectors of the S&P 500 Index until the control of
Congress changed hands in November. After the election, we saw a
significant rebound in stock prices.
The continuation of robust economic activity in emerging economies and
the weaker U.S. dollar for most of 2010 created a huge boom for exports
and job creation in the industrial sector and commodity demand. This
helped the Global Resources Fund
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U.S. GLOBAL INVESTORS FUNDS
(PSPFX) finish 2010 as the top-performing fund for the 1-year and
10-year periods in the global natural resources category, accordingto
data from Lipper. In addition, the Global Resources Fund ranks in the
top 5 percent for the 1-, 5- and 10-year periods among the entire mutual
fund universe (see rankings table).
The Global Resources Fund (PSPFX) ranked #1 out of 131, #17 out of 54,
and #1 out of 32 global natural resources funds for the 1-, 5- and
10-year periods for total return as of December 31, 2010. Of course, our
past performance does not guarantee future results.
As of December 31, 2010, the fund achieved a 38 percent 1-year return,
nearly tripling the category average of 13.6 percent. Over the past 10
years, the fund has delivered a 19.5 percent annualized return to
shareholders versus the category average of 13.9 percent annualized
return. In addition, the fund's diversified portfolio has outpaced the
performance of the underlying commodities such as oil and gold, which
have returned 13 percent and 17.9 percent annually over the past 10
years, respectively, as of December 31, 2010.
[TOTAL ANNUALIZED RETURNS AS OF 12/31/10 chart]
TOTAL ANNUALIZED RETURNS AS OF 12/31/10
Gross
Expense
Fund/Ticker One-Year Five-Year Ten-Year Ratio
Global Resources Fund (PSPX) 38.00% 8.50% 19.49% 1.63%
World Precious Minerals Fund (UNWPX) 45.38% 19.40% 28.40% 1.74%
Gold and Precious Metals Fund (USERX) 36.88% 20.19% 26.49% 1.70%
Eastern European Fund (EUROX) 18.66% 2.78% 20.35% 1.98%
S&P 500 Index 15.06% 2.29% 1.41% n/a
Lipper Global Natural Resources Category 13.61% 7.93% 13.85% n/a
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<FN>
Gross expense ratio as stated in the most recent prospectus. 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>
Overall, four of U.S. Global's emerging market and resource-oriented
funds (the Eastern European Fund, the Global Resources Fund, the World
Precious Minerals Fund and the Gold and Precious Metals Fund) ranked
among the top 45 funds (top 1 percent) in the entire mutual fund
universe for the 10-year period for total return as of December 31,
2010, according to Lipper.
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U.S. GLOBAL INVESTORS FUNDS
[LIPPER RANKINGS AS OF 12/31/10 chart]
LIPPER RANKINGS AS OF 12/31/10
10-Year Rank 5-Year Rank 1-Year Rank
Gold and Precious Metals Fund (USERX) 13 39 193
World Precious Minerals Fund (UNWPX) 7 48 72
Global Resources Fund (PSPFX) 45 622 142
Eastern European Fund (EUROX) 40 8,116 4,584
Total Number of Funds 18,647 funds 14,636 funds 21,767 funds
In order to deliver this outstanding relative performance to our
shareholders, we use a matrix of top-down macro models that take into
account political, economic and currency trends, and pair that with
bottom-up micro stock selection models to determine weighting in
countries, sectors and individual securities. In following government
policies, we keep track of the fiscal and monetary policies of the G-7
and what we call the "E-7" - the world's largest emerging nations by
population.
We also focus on historical and socioeconomic cycles, and we apply both
statistical and fundamental models to identify companies with superior
growth and value metrics. We overlay these explicit knowledge models
with the tacit knowledge obtained by domestic and international travel
for first-hand observation of local and geopolitical conditions, as well
as specific companies and projects. This is part of our strategy as we
seek to create alpha for our fund shareholders. Alpha measures the
excess return of a fund relative to its benchmark.
Global markets present tremendous opportunities to those who are able to
sort out what's meaningful from the background noise. That means going
where others don't, asking the right questions, constantly fine-tuning
our investment processes to ferret out market mispricing and other
inefficiencies and moving quickly to capitalize on them.
We never rest on our laurels or linger on last season's wins. One of our
corporate values is to "be curious to learn and improve" because we are
"performance and results oriented."
If 2009 was a recovery year for commodities, 2010 was the year they
regained their crown. The Reuters-Jeffries CRB Index jumped 17.4 percent
in 2010. Combined with 2009's 24 percent gain, the CRB has climbed
nearly 45 percent off 2008 lows.
Twelve of the 14 commodities we track were in positive territory in 2010
and nine of them saw gains exceeding 20 percent. That's in
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U.S. GLOBAL INVESTORS FUNDS
contrast to 2008 when gold was the only commodity not in the red. The
commodity space has been strong for the past decade. Nine of the 14
commodities have averaged a double-digit gain each year since 2001.
[2010 COMMODITY RETURNS CHART]
2010 COMMODITY RETURNS
Palladium 96.60%
Silver 83.21%
Corn 51.75%
Wheat 46.68%
Nickel 31.47%
Coal 31.39%
Copper 29.96%
Gold 29.52%
Platinum 20.79%
Crude Oil 15.17%
Aluminum 11.29%
Lead 5.16%
Zinc -5.15%
Natural Gas -21.18%
Gold received a lot of media attention, but many other commodities
outshined gold. Palladium was the top performer, rising over 96 percent
during 2010. Part of this rise can be attributed to the explosion of
auto sales in emerging markets since palladium is a critical component
of catalytic converters in cars. Marketwatch reported in December that
Johnson Matthey estimates palladium demand to have risen 27 percent in
2010.
Silver (up 83.2 percent), corn (up 51.8 percent) and wheat (up 46.7
percent) were next in line. Natural gas was the worst performer, falling
more than 21 percent--its third-straight year of declines.
Gold continued to follow historical patterns by enjoying nice price
gains early in the year before taking the summer off. By August, gold
was reaching new highs nearly every day through the fall, reaching a new
all-time high above $1,400 in early December.
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U.S. GLOBAL INVESTORS FUNDS
[GOLD SEASONALITY CHART]
SOURCE: Moore Research Center, Inc.
I believe gold markets are being driven by two major forces: the fear
trade and the love trade.
The fear trade is what you often hear about from the media and the
gloom-and-doomers. The fear trade is driven by negative real interest
rates--where inflation is greater than the nominal interest rate--and
deficit spending. Whenever you have negative real interest rates coupled
with increased deficit spending for social welfare, gold tends to rise
in that country's currency.
With the second round of quantitative easing, or QE2, in full force in
the U.S., we're in the middle of an extended period of negative real
interest rates that will likely last through 2011. The Federal Reserve
is acutely aware that if interest rates should spike, it would be
catastrophic for the economic recovery.
The U.S. economy is on the road to recovery, however the elevated number
of home foreclosures and high unemployment make it unlikely the Fed will
risk a relapse by raising interest rates any time soon. The government
is also unlikely to cut spending or welfare support during the healing
process.
As for deficit spending, the Congressional Budget Office has set the
deficit estimate for 2011 at $1.5 trillion. History suggests governments
will devalue their countries' currencies before they cut government
spending and use additional bureaucracy as a solution to high
unemployment. Whatever measures are taken to trim the deficit, it will
likely be a long, slow process.
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U.S. GLOBAL INVESTORS FUNDS
The other side is the love trade. Gold jewelry demand in emerging
economies is rising and remains the biggest component of the demand
equation. India's gold imports were up roughly 46 percent in 2010 and
China's nearly 500 percent. Overall global jewelry demand was up 10
percent in 2010, according to the World Gold Council.
The love trade is significant and unique to gold. People buy gold out of
love and those in emerging markets are especially amorous of the metal.
Currently, the E-7 countries hold nearly half of the world's population
but make up less than 20 percent of global GDP. The G-7 industrialized
nations are a mirror of this; they host 11 percent of the world's
population but control more than 50 percent of the global economy.
Several international markets also notched big gains in 2010. Thailand
and Indonesia were top-performing markets in the Asia region with 63
percent and 57 percent gains, respectively. Among major emerging
economies, Russia and India each saw gains above 22 percent, while
China's A-shares market fell 10 percent as the government moved to keep
the economy from overheating.
In Latin America, Chile and Peru were among the top performers as local
capital returned to invest in the country's domestic markets. Colombia
was also a top performer as the market positively responded to the
election of Juan Manuel Santos, the country's new president.
Commodity and international investments have historically had a
reputation for being risky, but we believe they play an important role
in a diversified portfolio.
Here is a chart from Roger Gibson, best-selling author of Allocation:
Balancing Financial Risk, showing a hypothetical investment of $1. He
uses the S&P 500 for U.S. stocks and the S&P GSCI Commodity Index for
commodities. For the combined portfolio, he assumes annual rebalancing
to maintain the 50-50 allocation among the two.
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U.S. GLOBAL INVESTORS FUNDS
[GROWTH OF $1 GRAPH]
SOURCE: Roger C. Gibson
His math shows that an investment of $1 in the S&P 500 in 1971 would
have grown to $41.72 by the end of 2010, and an identical investment in
the S&P GSCI would have increased to $34.97.
But look what happens when you split that dollar between the two
starting in 1971. By the end of 2010, that original dollar would be
supersized to over $58.
Roger explained in a special webcast we hosted in September that, "The
whole outperformed the components. And it did so as a result of the
reduction in volatility relative to the components. That is also an
outcome that you did not ever have to predict what was going to happen
in the short run. All you had to do is have balanced representation and
keep rebalancing and keep holding."
In order to successfully navigate their portfolios through shifting
markets, investors must understand the inherent volatility in
commodities and international investments. I urge all of our
shareholders to visit www.usfunds.com and read our "Anticipate Before
You Participate" presentation.
This table shows the annual volatility based on 10 years of data for a
number of different investments. You can easily see each asset class has
its own unique DNA of volatility.
8
U.S. GLOBAL INVESTORS FUNDS
[STANDARD DEVIATION (AS OF 12/31/10) BASED ON 10-YEAR DATA GRAPH]
STANDARD DEVIATION (AS OF 12/31/10) BASED ON 10-YEAR DATA
Rolling 12-Month
NYSE Arca Gold BUGS Index (HUI) 39.6%
MSCI Emerging Markets (MXEF) 33.1%
S&P 500 Index (SPX) 19.7%
Gold Bullion 14.3%
U.S. Dollar 8.4%
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12 month rolling volatility of price
action over 10-year period
You can see that the average one-year volatility for gold bullion is
less than that of the S&P 500. In a given year, gold bullion can move
14.3 percent in either direction and that would be just normal
volatility. For gold stocks, it's a normal event to see a positive or
negative move of 39.6 percent over the same amount of time. For emerging
markets, it's just over 33.1 percent.
When investors understand this volatility, they can manage market
movements better and make better decisions. They can steer their
financial ship with confidence, rather than sitting powerless and being
pushed around by the market's powerful tides.
Thank you for trusting us with your investment--we appreciate your
loyalty. Our mission is "to maximize the growth, protection and service
of our shareholders' wealth with the highest ethical standards." We take
this mission seriously, and we are committed to building on your trust
during these exciting times.
Sincerely,
/s/ Frank Holmes
Frank Holmes
CEO and Chief Investment Officer
U.S. Global Investors, Inc.
Please consider carefully a 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.
Foreign and emerging market investing involves special risks such as
currency fluctuation and less public disclosure, as well as economic and
political risk.
9
U.S. GLOBAL INVESTORS FUNDS
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, precious metals, and precious minerals funds may be susceptible to
adverse economic, political or regulatory developments due to
concentrating in a single theme. The prices of gold, precious metals,
and precious minerals are 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 these sectors.
The Eastern European Fund invests more than 25% of its investments in
companies principally engaged 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.
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.
All opinions expressed and data provided are subject to change without
notice. Some of these opinions may not be appropriate to every investor.
Standard deviation is a measure of the dispersion of a set of data from
its mean. The more spread apart the data, the higher the deviation.
Standard deviation is also known as historical volatility. The S&P 500
Stock Index is a widely recognized capitalization-weighted index of 500
common stock prices in U.S. companies. The Reuters/ Jefferies CRB Index
is an unweighted geometric average of commodity price levels relative to
the base year average price. The NYSE Arca Gold BUGS (Basket of Unhedged
Gold Stocks) Index (HUI) is a modified equal dollar weighted index of
companies involved in gold mining. The HUI Index was designed to provide
significant exposure to near term movements in gold prices by including
companies that do not hedge their gold production beyond 1.5 years. 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 GSCI Spot Index
tracks the price of the nearby futures contracts for a basket of
commodities. Diversification does not protect an investor from market
risks and does not assure a profit. The Shanghai A-Share Stock Price
Index is a capitalization-weighted index. The index tracks the daily
price performance of all A-shares listed on the Shanghai Stock Exchange
that are restricted to local investors and qualified institutional
foreign investors. The index was developed with a base value of 100 on
December 19, 1990.
10
DEFINITIONS FOR MANAGEMENT TEAMS' PERSPECTIVES
BENCHMARK INDEX DEFINITIONS
Returns for indexes reflect no deduction for fees, expenses or taxes,
unless noted.
The BARCLAYS CAPITAL 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 BARCLAYS CAPITAL 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 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.
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 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 MSCI EMERGING MARKETS NET TOTAL 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 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.
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.
11
DEFINITIONS FOR MANAGEMENT TEAMS' PERSPECTIVES
The S&P 500 INDEX is a widely recognized capitalization-weighted index
of 500 common stock prices in U.S. companies.
The S&P COMPOSITE 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.
OTHER INDEX DEFINITIONS
The BARCLAYS CAPITAL MUNICIPAL BOND INDEX is an unmanaged index
representative of the tax-exempt bond market.
The CONSUMER PRICE INDEX (CPI) is one of the most widely recognized
price measures for tracking the price of a market basket of goods and
services purchased by individuals. The weights of components are based
on consumer spending patterns.
The ISE GLOBAL COPPER INDEX is a modified linear weighted index designed
to track public companies that are active in the copper mining industry
based on analysis of revenue derived from the sale of copper.
The ISM MANUFACTURING COMPOSITE INDEX is a diffusion index calculated
from five of the eight sub-components of a monthly survey of purchasing
managers at roughly 300 manufacturing firms from 21 industries in all 50
states.
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 S&P GLOBAL INFRASTRUCTURE INDEX provides liquid and tradable
exposure to 75 companies from around the world that represent the listed
infrastructure universe. To create diversified exposure across the
global listed infrastructure market, the index has balanced weights
across three distinct infrastructure clusters: Utilities, Transportation
and Energy.
The U.S. TRADE WEIGHTED DOLLAR INDEX provides a general indication of
the international value of the U.S. dollar.
TERMS USED
M1 and M2 are measures of total money supplies. M1 money supply includes
funds that are readily accessible for spending. M2 includes everything
in M1 and also all time-related deposits, savings deposits, and non-
institutional money-market funds.
12
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, 2010
7-Day Yield 0.01%
---------------------------------------------------------------
7-Day Effective Yield 0.01%
---------------------------------------------------------------
Weighted Average Days to Maturity 6
U.S. GOVERNMENT SECURITIES SAVINGS FUND As of December 31, 2010
7-Day Yield 0.01%
---------------------------------------------------------------
7-Day Effective Yield 0.01%
---------------------------------------------------------------
Weighted Average Days to Maturity 13
An investment in either the U.S. Treasury Securities Cash Fund or the
U.S. Government Securities Savings Fund is neither insured nor
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 these funds.
Pursuant to a voluntary arrangement, the Adviser has agreed to limit
total fund operating expenses 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. In addition, the yields reported
above include the effects of the Adviser's voluntary waiver of fees
and/or reimbursement of expenses to maintain a minimum net yield for the
funds. The Adviser can modify or terminate these arrangements at any
time.
THE YEAR IN REVIEW - ECONOMIC AND POLITICAL ISSUES THAT AFFECTED THE FUNDS
The economic recovery that began in mid-2009 continued throughout 2010.
Many cyclical indicators reached multi-year highs during 2010. One of
these, the ISM Manufacturing Composite Index, hit its highest level
since 2004. The U.S. economy had its first taste of sustained employment
growth since 2007 and retail sales were surprisingly strong as tax
refunds and government stimulus paved the way early in the year. Later
in the
13
MONEY MARKET FUNDS
year, a change in Congress and additional quantitative easing from the
Federal Reserve provided a spark in November and December.
During the second quarter, the economic recovery's momentum began to
slow. Along with a dip in cyclical indicators, China began implementing
policies to slow its economy and the European financial crisis
fundamentally changed how the global economic recovery was perceived.
This mid-year moderation in growth proved temporary and many economic
indicators had begun to reaccelerate by the end of the year.
Inflation is contained, and deflation remains the enemy of central
bankers for the time being. The Consumer Price Index (CPI) rose a very
modest 1.5 percent on a year-over-year basis through December and has
stabilized for roughly the past six months. The Federal Reserve left
interest rates unchanged but implemented an additional $600 billion
quantitative easing program which will purchase long-term Treasuries
through June 2011. The Federal Reserve continues to keep all policy
options open.
Fiscal austerity is in vogue and could be a significant drag on growth
in the U.S. and Europe. Spending cuts and higher taxes could transform a
fiscal tailwind into a stiff headwind.
Yields on the three-month Treasury bill rose 7 basis points to 0.13
percent, while yields on the six-month bill ended flat for the year at
0.19 percent. One-year agency discount note yields fell 21 basis points
to 0.24 percent. The market was still influenced by periodic bouts of
risk aversion, with investors sometimes seeking to own short-term
Treasury securities at almost any cost.
INVESTMENT HIGHLIGHTS
The U.S. Treasury Securities Cash Fund performed in line with the Lipper
Treasury money market funds for the year ending December 31, 2010,
returning 0.01 percent, the same as the peer group. The U.S. Government
Securities Savings Fund also performed in line with the Lipper
government-only money market funds for the year, returning 0.01 percent
versus 0.02 percent for the peer group.
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 24 days. The fund took advantage
of higher yields by selectively extending its ladder, but it was a very
difficult overall environment for money market fund investors during the
past year.
14
MONEY MARKET FUNDS
The U.S. Treasury Securities Cash Fund followed a similar approach,
averaging a weighted average maturity of 18 days over the period. The
U.S. Treasury Securities Cash Fund took advantage of relatively high
repurchase rates relative to Treasuries, which kept the weighted average
maturity lower than the U.S. Government Securities Savings Fund over the
period.
CURRENT OUTLOOK
The Fed continues to emphasize that it will keep interest rates low for
an extended period, and recent developments have reinforced this
position. The Fed appears unlikely to change course before mid-year 2011
when the quantitative easing program concludes, but judging by recent
Federal Reserve comments, monetary policy is likely to remain loose for
some time.
15
TAX FREE FUNDS
MANAGEMENT TEAM'S PERSPECTIVE
INTRODUCTION
The Near-Term Tax Free Fund (NEARX) and the 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 maintains a weighted average maturity of less than five years,
while the Tax Free Fund generally maintains 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
---- ------------- ----------
12/31/00 $ 10,000.00 $ 10,000.00
01/31/01 10,104.36 10,151.78
02/28/01 10,126.27 10,191.49
03/30/01 10,192.18 10,263.13
04/30/01 10,149.04 10,248.13
05/31/01 10,231.77 10,341.48
06/30/01 10,270.38 10,387.54
07/31/01 10,362.34 10,472.69
08/31/01 10,473.05 10,580.21
09/30/01 10,502.28 10,634.20
10/31/01 10,576.53 10,703.36
11/30/01 10,507.91 10,669.18
12/31/01 10,461.71 10,659.00
01/31/02 10,601.73 10,794.37
02/28/02 10,690.74 10,875.33
03/31/02 10,529.09 10,713.28
04/30/02 10,714.19 10,870.77
05/31/02 10,765.12 10,933.82
06/30/02 10,850.23 11,027.85
07/31/02 10,941.57 11,113.87
08/31/02 11,041.23 11,185.00
09/30/02 11,187.57 11,273.36
10/31/02 11,084.39 11,211.36
11/30/02 11,057.01 11,214.72
12/31/02 11,214.53 11,376.21
01/31/03 11,231.85 11,412.61
02/28/03 11,334.98 11,485.66
03/31/03 11,332.93 11,471.87
04/30/03 11,378.06 11,502.85
05/31/03 11,536.34 11,591.42
06/30/03 11,498.23 11,572.87
07/31/03 11,274.25 11,468.72
08/31/03 11,351.83 11,527.21
09/30/03 11,566.42 11,700.11
10/31/03 11,511.35 11,645.12
11/30/03 11,545.72 11,656.77
12/31/03 11,585.39 11,681.25
01/31/04 11,631.44 11,722.13
02/29/04 11,738.42 11,821.77
03/31/04 11,704.79 11,789.85
04/30/04 11,550.98 11,670.77
05/31/04 11,502.41 11,625.26
06/30/04 11,521.45 11,646.18
07/31/04 11,601.02 11,731.20
08/31/04 11,723.31 11,854.38
09/30/04 11,748.88 11,867.42
10/31/04 11,775.59 11,900.65
11/30/04 11,727.41 11,843.52
12/31/04 11,788.57 11,889.71
01/31/05 11,804.71 11,874.26
02/28/05 11,777.75 11,838.63
03/31/05 11,696.71 11,799.57
04/30/05 11,777.94 11,859.75
05/31/05 11,810.51 11,881.09
06/30/05 11,837.72 11,941.69
07/31/05 11,810.44 11,914.22
08/31/05 11,843.25 11,953.54
09/30/05 11,870.67 11,959.51
10/31/05 11,843.19 11,941.57
11/30/05 11,876.24 11,952.32
12/31/05 11,903.86 11,994.16
01/31/06 11,881.71 12,020.54
02/28/06 11,915.02 12,030.16
03/31/06 11,892.75 12,008.50
04/30/06 11,915.09 12,028.92
05/31/06 11,954.24 12,071.02
06/30/06 11,926.18 12,049.29
07/31/06 12,016.19 12,131.23
08/31/06 12,106.45 12,227.06
09/30/06 12,196.97 12,283.31
10/31/06 12,236.68 12,320.16
11/30/06 12,270.83 12,363.28
12/31/06 12,248.00 12,360.81
01/31/07 12,225.11 12,360.81
02/28/07 12,374.33 12,444.86
03/31/07 12,357.07 12,480.95
04/30/07 12,391.71 12,505.91
05/31/07 12,368.55 12,504.66
06/30/07 12,345.32 12,514.67
07/31/07 12,438.50 12,594.76
08/31/07 12,537.77 12,665.29
09/30/07 12,631.51 12,752.68
10/31/07 12,672.64 12,813.89
11/30/07 12,766.94 12,912.56
12/31/07 12,802.41 12,978.41
01/31/08 13,015.78 13,256.15
02/28/08 12,754.28 13,079.85
03/31/08 12,968.84 13,269.50
04/30/08 12,944.93 13,254.91
05/31/08 12,974.89 13,301.30
06/30/08 12,890.80 13,213.51
07/31/08 12,987.18 13,374.72
08/31/08 13,138.19 13,500.44
09/30/08 12,932.34 13,338.43
10/31/08 12,908.05 13,361.11
11/01/08 12,909.05 13,572.21
11/02/08 12,910.05 13,697.08
11/03/08 12,911.05 13,953.21
11/04/08 12,912.05 13,928.10
11/05/08 12,913.05 14,015.84
11/06/08 12,914.05 14,057.89
11/07/08 12,915.05 14,076.17
11/08/08 12,916.05 14,101.50
11/09/08 12,917.05 14,265.08
11/10/08 12,918.05 14,252.24
11/11/08 12,919.05 14,373.39
11/12/08 12,920.05 14,340.33
11/13/08 12,921.05 14,470.83
11/14/08 12,922.05 14,488.19
11/15/08 12,923.05 14,541.80
11/16/08 12,924.05 14,595.60
11/17/08 12,925.05 14,529.92
04/30/10 14,062.54 14,601.12
05/31/10 14,151.23 14,662.44
06/30/10 14,182.96 14,704.96
07/31/10 14,335.60 14,822.60
08/31/10 14,494.88 14,899.68
09/30/10 14,456.57 14,854.98
10/31/10 14,424.59 14,866.87
11/30/10 14,386.12 14,795.50
12/31/10 14,289.78 14,748.16
AVERAGE ANNUAL PERFORMANCE For the Years Ended
December 31, 2010
One Year Five Year Ten Year
Near-Term Tax Free Fund 2.95% 3.72% 3.63%
----------------------------------------------------------------------
Barclays Capital 3-Year Municipal Bond
Index 1.81% 4.22% 3.96%
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. 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.
Pursuant to a voluntary arrangement, the Adviser has agreed to limit
total fund operating expenses (exclusive of acquired fund fees and
expenses, extraordinary expenses, taxes, brokerage commissions and
interest, and advisory fee performance adjustments, if any) to not
exceed 0.45%. The Adviser can modify or terminate this arrangement at
any time.
See Definitions for Management Teams' Perspectives for index
definitions.
16
TAX FREE FUNDS
TAX FREE FUND
[Tax Free Fund Graph]
Barclays Capital
10-Year Municipal
Date Tax Free Fund Bond Index
---- ------------- ----------
12/31/00 $ 10,000.00 $ 10,000.00
01/31/01 10,091.44 10,129.09
02/28/01 10,108.29 10,146.09
03/30/01 10,197.03 10,232.59
04/30/01 10,064.69 10,105.82
05/31/01 10,168.58 10,215.83
06/30/01 10,246.33 10,276.58
07/31/01 10,393.81 10,418.19
08/31/01 10,568.48 10,594.77
09/30/01 10,521.85 10,580.90
10/31/01 10,647.42 10,711.50
11/30/01 10,517.04 10,572.85
12/31/01 10,381.00 10,462.00
01/31/02 10,567.44 10,659.73
02/28/02 10,704.48 10,812.17
03/31/02 10,468.36 10,589.44
04/30/02 10,702.66 10,835.11
05/31/02 10,757.68 10,886.04
06/30/02 10,879.69 11,021.02
07/31/02 11,009.21 11,167.60
08/31/02 11,123.06 11,312.78
09/30/02 11,347.86 11,583.16
10/31/02 11,161.14 11,372.34
11/30/02 11,095.06 11,279.09
12/31/02 11,315.69 11,526.10
01/31/03 11,279.24 11,465.01
02/28/03 11,423.43 11,663.36
03/31/03 11,411.54 11,669.19
04/30/03 11,486.76 11,755.54
05/31/03 11,756.22 12,091.75
06/30/03 11,694.45 12,033.71
07/31/03 11,237.76 11,528.29
08/31/03 11,333.27 11,627.44
09/30/03 11,644.72 12,019.28
10/31/03 11,574.80 11,927.94
11/30/03 11,658.94 12,056.76
12/31/03 11,732.98 12,184.56
01/31/04 11,802.55 12,235.73
02/29/04 11,972.24 12,451.08
03/31/04 11,913.65 12,380.11
04/30/04 11,632.16 12,038.42
05/31/04 11,597.00 12,045.64
06/30/04 11,548.40 12,085.39
07/31/04 11,653.56 12,250.96
08/31/04 11,819.35 12,519.26
09/30/04 11,868.36 12,585.61
10/31/04 11,949.28 12,686.30
11/30/04 11,849.78 12,542.94
12/31/04 11,983.49 12,690.95
01/31/05 12,067.08 12,798.82
02/28/05 12,006.64 12,718.19
03/31/05 11,931.36 12,606.27
04/30/05 12,094.24 12,850.83
05/31/05 12,165.09 12,936.93
06/30/05 12,215.45 13,011.97
07/31/05 12,170.87 12,901.36
08/31/05 12,280.16 13,058.76
09/30/05 12,208.39 12,941.23
10/31/05 12,148.40 12,842.88
11/30/05 12,205.58 12,922.50
12/31/05 12,316.45 13,040.10
01/31/06 12,347.79 13,081.83
02/28/06 12,444.18 13,159.01
03/31/06 12,367.81 13,023.47
04/30/06 12,369.85 13,000.03
05/31/06 12,413.95 13,088.43
06/30/06 12,374.84 13,029.53
07/31/06 12,513.26 13,202.82
08/31/06 12,681.21 13,428.59
09/30/06 12,752.99 13,526.62
10/31/06 12,819.78 13,607.78
11/30/06 12,903.57 13,715.28
12/31/06 12,872.04 13,650.82
01/31/07 12,835.15 13,589.39
02/28/07 12,990.69 13,781.00
03/31/07 12,964.16 13,753.44
04/30/07 12,995.05 13,797.45
05/31/07 12,943.75 13,725.71
06/30/07 12,887.99 13,651.59
07/31/07 12,975.13 13,774.45
08/31/07 12,953.54 13,808.89
09/30/07 13,145.24 13,993.93
10/31/07 13,182.18 14,042.90
11/30/07 13,256.32 14,198.78
12/31/07 13,301.17 14,238.54
01/31/08 13,497.61 14,527.58
02/28/08 12,986.77 13,924.69
03/31/08 13,319.17 14,282.55
04/30/08 13,437.74 14,366.82
05/31/08 13,491.09 14,438.65
06/30/08 13,343.91 14,288.49
07/31/08 13,419.97 14,398.51
08/31/08 13,560.23 14,600.09
09/30/08 13,074.09 14,070.11
10/31/08 13,077.47 13,953.32
11/30/08 13,106.94 14,137.51
12/31/08 13,372.94 14,452.77
01/31/09 13,757.47 15,132.05
02/28/09 13,751.75 15,017.05
03/31/09 13,757.49 14,946.47
04/30/09 13,924.56 15,219.99
05/31/09 13,976.56 15,302.18
06/30/09 13,836.33 15,086.42
07/31/09 14,057.25 15,413.79
08/31/09 14,206.57 15,587.97
09/30/09 14,563.49 16,082.11
10/31/09 14,325.26 15,686.49
11/30/09 14,440.62 15,929.63
12/31/09 14,446.52 15,878.65
01/31/10 14,498.62 15,999.33
02/28/10 14,619.74 16,218.52
03/31/10 14,568.55 16,100.13
04/30/10 14,768.14 16,314.26
05/31/10 14,858.04 16,480.66
06/30/10 14,867.66 16,531.75
07/31/10 15,018.38 16,809.49
08/31/10 15,302.55 17,275.11
09/30/10 15,273.44 17,147.28
10/31/10 15,221.15 17,071.83
11/30/10 14,999.18 16,807.21
12/31/10 14,741.04 16,519.81
AVERAGE ANNUAL PERFORMANCE For the Years Ended
December 31, 2010
One Year Five Year Ten Year
Tax Free Fund 2.04% 3.66% 3.95%
----------------------------------------------------------------------
Barclays Capital 10-Year Municipal Bond
Index 4.05% 4.84% 5.14%
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.
Pursuant to a voluntary arrangement, the Adviser has agreed to limit
total fund operating expenses (exclusive of acquired fund fees and
expenses, extraordinary expenses, taxes, brokerage commissions and
interest, and advisory fee performance adjustments, if any) to not
exceed 0.70%. The Adviser can modify or terminate this arrangement at
any time.
See Definitions for Management Teams' Perspectives for index
definitions.
Please visit our website at www.usfunds.com for updated performance
information for different time periods.
THE YEAR IN REVIEW - ECONOMIC AND POLITICAL ISSUES THAT AFFECTED THE FUNDS
The municipal bond market exhibited modest performance over the past
twelve months as the Barclays Capital Municipal Bond Index rose 2.38
percent.
Similar to 2009 when low quality and long duration bonds outperformed,
the same theme held true over the first nine months of 2010. For
example, the Barclay's BBB Index appreciated 9.68 percent while the
AAA-rated
17
TAX FREE FUNDS
Index rose about 4.99 percent through September. However, these trends
unraveled during the fourth quarter with the BBB rated index falling
5.40 percent, almost double the 2.81 percent decline for the AAA rated
index.
The Barclays Capital Municipal Bond Index fell 4.17 percent during the
fourth quarter as the general municipal market experienced a very sharp,
broad selloff, the worst quarterly performance since 1994.
A "perfect storm" of sorts hit the municipal market in the fourth
quarter as Treasury yields rose sharply, concerns over municipal budget
shortfalls intensified and tax rates were left unchanged for two
additional years. Additionally, the Build America Bond program expired
at year end, when many believed that it would be extended at least one
more year.
The long end of the yield curve was the most impacted by the expiration
of the Build America program and the interest rate selloff. The long end
took the brunt of the selling, falling more than 7 percent during the
fourth quarter.
General-obligation bonds modestly outperformed revenue-backed
municipals. Within revenue bond sectors, however, hospital and housing
issues outperformed the general market. High-yield bonds rose 7.80
percent in 2010, with the vast majority of returns occurring during the
first six months of the year.
In specialty state trading, Puerto Rico and California outperformed,
while Ohio and Illinois underperformed.
The Federal Reserve added an additional $600 billion in quantitative
easing to the mix and has pledged to keep interest rates low and
monetary policy loose for an extended period of time.
INVESTMENT HIGHLIGHTS
For the year ended December 31, 2010, the Near-Term Tax Free Fund posted
a 2.95 percent return, while the Tax Free Fund returned 2.04 percent.
The Near-Term Tax Free Fund outperformed its benchmark, the Barclays
Capital 3-Year Municipal Bond Index, which returned 1.81 percent. The
Tax Free Fund trailed the performance of its benchmark, the Barclays
Capital 10-Year Municipal Bond Index, which returned 4.05 percent.
Both the Near-Term Tax Free Fund and the Tax Free Fund outperformed
their respective Lipper peer groups over the past year. The performance
difference for the funds was primarily driven by fund credit and
maturity
18
TAX FREE FUNDS
preferences relative to their benchmarks and peer groups. The
conservative credit profile of both funds hampered performance for much
of the year, but proved to be an asset during the fourth quarter. From a
maturity perspective, the Near-Term Tax Free Fund benefited from a
slightly longer maturity profile than its benchmark. The Tax Free Fund
maintained a lower interest rate risk profile than the peer group.
STRENGTHS
* The Tax Free Fund maintained significant exposure to hospital-backed
municipals, which outperformed.
* The Near-Term Tax Free Fund's laddered maturity approach proved
beneficial as maturities out to 10 years outperformed.
* A conservative credit profile proved beneficial for both funds as each
stuck to its knitting by owning a diversified set of high quality
municipals.
WEAKNESSES
* Both funds increased exposure to Illinois during the year but have yet
to recognize much benefit from these positions.
* Both funds had little exposure in the best-performing sectors of the
market, including housing and high-yield bonds.
CURRENT OUTLOOK
OPPORTUNITIES
* There is currently a lot of discussion surrounding the outlook for
municipals as governments struggle with bloated budgets and little
revenue growth. This appears to be an opportunity to purchase high-
quality general obligation or essential service debt at distressed
levels.
THREATS
* Continued outperformance of low-quality bonds is the most significant
threat on a relative basis.
* When the Federal Reserve reverses its monetary policy stance and
begins to raise interest rates, the macroeconomic environment could
become more difficult.
19
TAX FREE FUNDS
NEAR-TERM TAX FREE FUND
MUNICIPAL BOND RATINGS December 31, 2010
(BASED ON TOTAL MUNICIPAL BONDS)
[Pie Chart]
AA 56.8%
A 25.7%
AAA 15.6%
Not Rated 1.1%
BBB 0.8%
TAX FREE FUND
MUNICIPAL BOND RATINGS December 31, 2010
(BASED ON TOTAL MUNICIPAL BONDS)
[Pie Chart]
AA 43.3%
A 26.2%
AAA 25.8%
BBB 2.6%
Not Rated 1.3%
B 0.8%
20
ALL AMERICAN EQUITY FUND
MANAGEMENT TEAM'S PERSPECTIVE
INTRODUCTION
The principal objective of the All American Equity Fund (GBTFX) is to
seek long-term 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, including stocks with
meaningful dividend yields.
PERFORMANCE GRAPH
ALL AMERICAN EQUITY FUND
[All American Equity Fund Graph]
All American S&P
Date Equity Fund 500 Index
---- ----------- ---------
12/31/00 $10,000.00 $ 10,000.00
01/31/01 10,085.47 10,354.57
02/28/01 8,858.12 9,411.02
03/30/01 8,229.74 8,815.15
04/30/01 8,989.73 9,499.63
05/31/01 8,938.38 9,563.37
06/30/01 8,714.15 9,330.70
07/31/01 8,515.48 9,238.80
08/31/01 7,874.93 8,661.03
09/30/01 7,525.89 7,961.69
10/31/01 7,614.99 8,113.59
11/30/01 8,074.22 8,735.81
12/31/01 8,094.78 8,812.40
01/31/02 7,820.62 8,683.87
02/28/02 7,628.70 8,516.37
03/31/02 7,978.26 8,836.69
04/30/02 7,580.72 8,301.18
05/31/02 8,111.92 8,240.24
06/30/02 7,265.43 7,653.50
07/31/02 6,305.84 7,057.07
08/31/02 6,422.36 7,103.28
09/30/02 5,856.89 6,332.00
10/31/02 6,148.20 6,888.79
11/30/02 6,172.19 7,293.86
12/31/02 5,942.57 6,865.59
01/31/03 5,863.75 6,686.08
02/28/03 5,767.79 6,585.62
03/31/03 5,853.47 6,649.38
04/30/03 6,295.56 7,196.83
05/31/03 6,576.58 7,575.65
06/30/03 6,562.87 7,672.43
07/31/03 6,723.95 7,807.76
08/31/03 6,953.56 7,959.73
09/30/03 6,857.60 7,875.45
10/31/03 7,371.67 8,320.73
11/30/03 7,635.55 8,393.85
12/31/03 7,803.48 8,833.76
01/31/04 7,827.47 8,995.88
02/29/04 7,930.28 9,120.87
03/31/04 7,872.02 8,983.29
04/30/04 7,429.93 8,842.45
05/31/04 7,522.46 8,963.55
06/30/04 7,721.23 9,137.79
07/31/04 7,282.56 8,834.96
08/31/04 7,265.43 8,870.45
09/30/04 7,491.62 8,966.45
10/31/04 7,604.71 9,103.43
11/30/04 8,063.94 9,471.65
12/31/04 8,197.60 9,793.86
01/31/05 8,002.25 9,555.13
02/28/05 8,293.55 9,756.10
03/31/05 8,156.47 9,583.53
04/30/05 7,875.45 9,401.85
05/31/05 8,194.17 9,700.74
06/30/05 8,386.09 9,714.64
07/31/05 8,711.66 10,075.76
08/31/05 8,691.10 9,983.77
09/30/05 9,061.22 10,064.59
10/31/05 8,787.05 9,896.72
11/30/05 9,160.61 10,270.66
12/31/05 9,170.82 10,274.30
01/31/06 10,029.06 10,546.33
02/28/06 9,633.22 10,574.86
03/31/06 10,120.13 10,706.47
04/30/06 10,337.32 10,850.14
05/31/06 9,713.79 10,538.25
06/30/06 9,664.75 10,552.25
07/31/06 9,538.64 10,617.29
08/31/06 9,598.19 10,869.53
09/30/06 9,493.10 11,149.46
10/31/06 9,839.90 11,512.55
11/30/06 10,351.33 11,731.12
12/31/06 10,171.12 11,895.65
01/31/07 10,320.75 12,075.37
02/28/07 10,304.57 11,839.90
03/31/07 10,498.70 11,972.03
04/30/07 10,931.42 12,502.18
05/31/07 11,416.72 12,938.00
06/30/07 11,558.27 12,723.19
07/31/07 11,343.93 12,329.19
08/31/07 11,238.78 12,513.74
09/30/07 12,330.71 12,981.25
10/31/07 13,317.49 13,187.70
11/30/07 12,439.90 12,636.14
12/31/07 12,919.98 12,548.70
01/31/08 11,585.75 11,796.10
02/28/08 11,590.25 11,413.20
03/31/08 11,280.28 11,363.81
04/30/08 11,931.67 11,917.13
05/31/08 12,488.72 12,071.47
06/30/08 12,250.62 11,054.76
07/31/08 11,518.37 10,961.80
08/31/08 11,141.01 11,120.45
09/30/08 9,667.52 10,130.66
10/31/08 8,652.25 8,429.42
11/30/08 7,632.49 7,824.37
12/31/08 7,788.51 7,906.81
01/31/09 7,141.34 7,241.17
02/28/09 6,503.16 6,472.67
03/31/09 6,813.26 7,038.63
04/30/09 7,554.81 7,711.70
05/31/09 7,757.05 8,142.53
06/30/09 7,577.28 8,158.79
07/31/09 7,981.76 8,775.10
08/31/09 8,246.92 9,091.47
09/30/09 8,525.56 9,430.48
10/31/09 8,188.50 9,255.52
11/30/09 8,615.45 9,810.55
12/31/09 8,859.46 9,999.96
01/31/10 8,506.89 9,640.77
02/28/10 8,741.93 9,939.00
03/31/10 9,184.91 10,538.54
04/30/10 9,379.27 10,704.96
05/31/10 8,845.90 9,851.05
06/30/10 8,488.81 9,336.05
07/31/10 8,832.34 9,989.87
08/31/10 8,714.81 9,539.72
09/30/10 9,401.87 10,390.73
10/31/10 9,745.40 10,785.96
11/30/10 9,831.29 10,787.68
12/31/10 10,269.74 11,508.46
AVERAGE ANNUAL PERFORMANCE For the Years Ended
December 31, 2010
One Year Five Year Ten Year
All American Equity Fund 15.92% 2.29% 0.27%
----------------------------------------------------------------------
S&P 500 Index 15.06% 2.29% 1.41%
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.
Pursuant to a voluntary arrangement, the Adviser has agreed to limit
total fund operating expenses (exclusive of acquired fund fees and
expenses, extraordinary expenses, taxes, brokerage commissions and
interest, and advisory fee performance adjustments, if any) to not
exceed 2.20%. The Adviser can modify or terminate this arrangement at
any time.
See Definitions for Management Teams' Perspectives for index
definitions.
Please visit our website at www.usfunds.com for updated performance
information for different time periods.
21
ALL AMERICAN EQUITY FUND
THE YEAR IN REVIEW - ECONOMIC AND POLITICAL ISSUES THAT AFFECTED THE FUND
The U.S economy has registered six straight quarters of growth. Gross
domestic product (GDP) growth by quarter in 2010 was 3.7 percent,
1.7 percent, 2.6 percent and 3.2 percent, sequentially.
Despite the better economic backdrop, the Federal Reserve kept rates at
a low level, targeting the federal funds rate between zero and 0.25
percent. In an effort to further stimulate the economy, the government
announced a second quantitative easing program (QE2) in November. The
plan was to buy back $600 billion of Treasury bonds through June 2011.
Inflation declined during the time period, with the Consumer Price Index
(CPI) starting the year at 2.6 percent and declining to 1.5 percent by
year end. It was a similar story for core CPI, which started at 1.6
percent in January and declined to 0.8 percent by year end.
Stubbornly, the unemployment rate stayed high and showed only a slight
improvement, beginning the year at 9.7 percent and falling to 9.4
percent by year end.
The yield on the 10-year Treasury note ended the period at 3.30 percent,
down from 3.84 percent at the end of 2009.
Stock market performance was marked by extreme swings over the year. The
S&P 500 Index began the year at 1,115 and fell 5 percent over the next
five weeks to close at 1,056 on February 8. The market rallied 15
percent to carry the S&P 500 to the 1,217 level in April but remained
weak throughout the summer before recovering near the end of the year to
close at 1,257.
INVESTMENT HIGHLIGHTS
OVERVIEW
The fund gained 15.92 percent for the year ended December 31, 2010,
compared to a 15.06 percent return for the benchmark S&P 500 Index.
Because the fund is actively managed, and a holding period is generally
not a consideration in investment decisions, the portfolio turnover rate
may fluctuate from year to year as the fund adjusts its portfolio
composition. Its annual portfolio turnover was, and is expected to
continue to be, more than 100 percent.
22
ALL AMERICAN EQUITY FUND
STRENGTHS
* Stock selection within the information technology sector provided
positive returns. Despite the sector being up only 9.13 percent during
the period, several of the fund's holdings did very well. Apple,
Inc.,(1) Entropic Communications, Inc.(2) and NVIDIA Corp.(3) were all
top performers. Apple is benefiting from a strong portfolio of
products, while Entropic is benefiting from strong subscriber growth.
As one of Apple's main suppliers, NVIDIA is a beneficiary of Apple's
success.
* Stock selection was also strong in the consumer discretion sector. An
overweight position in this sector was beneficial as it was the best-
performing sector in the S&P 500. Given the level of unemployment, it
was surprising that the sector remained resilient. The fund benefited
from owning Las Vegas Sands Corp.,(4) Chipotle Mexican Grill, Inc.(5)
and AutoZone, Inc.(6)
WEAKNESSES
* The fund's underweighting in the industrial sector, the second-best
performing sector in 2010, diminished the fund's return. Construction
& farm machinery was one group that the fund missed. Much of the
action in this group was related to strong sales in developing
countries.
* An overweight position in utilities also hurt the fund, as it was the
second-worst performing sector. The decision to overweight the sector
was based on owning the five highest yielding stocks in each sector
for dividend income. This meant a 5 percent allocation to utilities,
which is above the allocation of the S&P 500.
CURRENT OUTLOOK
OPPORTUNITIES
* With the Republicans winning control of the U.S. House of
Representatives, gridlock seems likely for the next two years.
Gridlock tends to be good for markets.
* Corporate cash levels are at record levels and can be used to pay
dividends, buy back stock or engage in merger and acquisition (M&A)
activity.
* Given the lack of upward wage pressure and the stubbornly high level
of unemployment, the Federal Reserve is expected to keep interest
rates low for an extended period.
23
ALL AMERICAN EQUITY FUND
THREATS
* The sovereign debt issues in Europe remain a threat. Close attention
will be paid to Spain and Portugal in 2011.
* As governments around the world begin to unwind the monetary and
fiscal stimulus programs put in place during the economic crisis, it
will likely present a headwind for stocks.
The fund ended the period with overweights in materials, energy,
utilities and telecom with an emphasis on dividend paying stocks.
(1)This security comprised 4.54% of the fund's total net assets as
of 12/31/10.
(2)This security comprised 1.36% of the fund's total net assets as
of 12/31/10.
(3)This security comprised 2.17% of the fund's total net assets as
of 12/31/10.
(4)This security comprised 0.65% of the fund's total net assets as
of 12/31/10.
(5)This security comprised 1.44% of the fund's total net assets as
of 12/31/10.
(6)This security comprised 1.84% of the fund's total net assets as
of 12/31/10.
24
ALL AMERICAN EQUITY FUND
TOP 10 HOLDINGS BASED ON NET ASSETS December 31, 2010
(EXCLUDING REPURCHASE AGREEMENTS)
APPLE, INC. 4.54%
Computers
----------------------------------------------------------------------
NATIONAL-OILWELL VARCO, INC. 3.41%
Oil Field Machinery & Equipment
----------------------------------------------------------------------
LINCOLN NATIONAL CORP. 2.35%
Life/Health Insurance
----------------------------------------------------------------------
RED HAT, INC. 2.31%
Applications Software
----------------------------------------------------------------------
NVIDIA CORP. 2.17%
Electronics & Components
----------------------------------------------------------------------
CONCHO RESOURCES, INC. 1.97%
Oil Compaies - Exploration & Production
----------------------------------------------------------------------
CHECK POINT SOFTWARE TECHNOLOGIES LTD. 1.95%
Applications Software
----------------------------------------------------------------------
AUTOZONE, INC. 1.84%
Retail - Auto Parts
----------------------------------------------------------------------
NORTHERN OIL & GAS, INC. 1.84%
Oil Companies - Exploration & Production
----------------------------------------------------------------------
ORACLE CORP. 1.76%
Enterprise Software/Services
----------------------------------------------------------------------
TOTAL TOP TEN HOLDINGS 24.14%
PORTFOLIO ALLOCATION BY INDUSTRY SECTOR*
BASED ON TOTAL INVESTMENTS December 31, 2010
[Pie Chart]
Technology 21.7%
Energy 14.7%
Materials 12.1%
Consumer Discretion 10.8%
Financials 10.7%
Telecommunications 5.8%
Health Care 5.6%
Cash Equivalent 5.4%
Industrials 4.9%
Utilities 4.3%
Consumer Staples 4.0%
* Summary information above may differ from the portfolio schedule
included in the financial statements due to the use of different
classifications of securities for presentation purposes.
25
HOLMES GROWTH FUND
MANAGEMENT TEAM'S PERSPECTIVE
INTRODUCTION
The Holmes Growth Fund (ACBGX) invests in companies with good growth
prospects and strong positive earnings momentum. The fund's primary
objective is to seek long-term capital appreciation.
PERFORMANCE GRAPH
HOLMES GROWTH FUND
[Holmes Growth Fund Graph]
S&P
Holmes Growth S&P 500 Composite
Date Fund Index 1500 Index
---- ------------- ------- ----------
12/31/00 $ 10,000.00 $ 10,000.00 $ 10,000.00
01/31/01 9,717.28 10,354.57 10,345.55
02/28/01 8,397.91 9,411.02 9,436.72
03/30/01 7,659.69 8,815.15 8,834.94
04/30/01 7,732.98 9,499.63 9,539.95
05/31/01 7,685.86 9,563.37 9,618.80
06/30/01 7,481.68 9,330.70 9,415.41
07/31/01 7,246.07 9,238.80 9,317.22
08/31/01 7,026.18 8,661.03 8,765.67
09/30/01 6,722.51 7,961.69 8,013.60
10/31/01 6,764.40 8,113.59 8,192.63
11/30/01 6,973.82 8,735.81 8,816.52
12/31/01 7,272.25 8,812.40 8,936.59
01/31/02 7,298.43 8,683.87 8,819.26
02/28/02 7,204.19 8,516.37 8,662.48
03/31/02 7,471.20 8,836.69 9,022.02
04/30/02 7,732.98 8,301.18 8,541.24
05/31/02 7,602.09 8,240.24 8,461.29
06/30/02 7,094.24 7,653.50 7,863.51
07/31/02 6,214.66 7,057.07 7,221.01
08/31/02 5,963.35 7,103.28 7,268.16
09/30/02 5,905.76 6,332.00 6,506.16
10/31/02 6,068.06 6,888.79 7,042.14
11/30/02 6,518.32 7,293.86 7,454.29
12/31/02 5,853.40 6,865.59 7,032.88
01/31/03 5,968.59 6,686.08 6,845.41
02/28/03 5,905.76 6,585.62 6,733.95
03/31/03 5,638.74 6,649.38 6,797.79
04/30/03 5,712.04 7,196.83 7,352.31
05/31/03 6,005.24 7,575.65 7,763.14
06/30/03 6,031.41 7,672.43 7,866.10
07/31/03 6,204.19 7,807.76 8,025.42
08/31/03 6,439.79 7,959.73 8,206.70
09/30/03 6,387.43 7,875.45 8,111.02
10/31/03 7,094.24 8,320.73 8,591.20
11/30/03 7,172.77 8,393.85 8,694.77
12/31/03 7,125.65 8,833.76 9,112.23
01/31/04 7,329.84 8,995.88 9,285.54
02/29/04 7,340.31 9,120.87 9,424.39
03/31/04 7,350.79 8,983.29 9,307.40
04/30/04 7,183.25 8,842.45 9,142.26
05/31/04 7,303.66 8,963.55 9,273.46
06/30/04 7,523.56 9,137.79 9,469.18
07/31/04 7,130.89 8,834.96 9,136.80
08/31/04 6,994.76 8,870.45 9,163.88
09/30/04 7,382.20 8,966.45 9,291.73
10/31/04 7,528.80 9,103.43 9,435.49
11/30/04 8,083.77 9,471.65 9,848.78
12/31/04 8,303.66 9,793.86 10,186.10
01/31/05 8,073.30 9,555.13 9,937.79
02/28/05 8,335.08 9,756.10 10,160.10
03/31/05 8,104.71 9,583.53 9,983.23
04/30/05 7,706.81 9,401.85 9,762.46
05/31/05 8,078.53 9,700.74 10,108.76
06/30/05 8,356.02 9,714.64 10,154.75
07/31/05 8,832.46 10,075.76 10,555.36
08/31/05 8,937.17 9,983.77 10,454.78
09/30/05 9,167.54 10,064.59 10,539.40
10/31/05 8,670.16 9,896.72 10,353.04
11/30/05 9,000.00 10,270.66 10,758.77
12/31/05 9,109.95 10,274.30 10,764.89
01/31/06 9,926.70 10,546.33 11,105.08
02/28/06 9,732.98 10,574.86 11,120.00
03/31/06 10,136.13 10,706.47 11,288.01
04/30/06 10,329.84 10,850.14 11,433.70
05/31/06 9,780.10 10,538.25 11,081.94
06/30/06 9,712.04 10,552.25 11,095.44
07/31/06 9,361.26 10,617.29 11,113.03
08/31/06 9,366.49 10,869.53 11,362.93
09/30/06 9,298.43 11,149.46 11,630.52
10/31/06 9,602.09 11,512.55 12,025.86
11/30/06 9,863.87 11,731.12 12,273.13
12/31/06 9,685.86 11,895.65 12,420.79
01/31/07 10,026.18 12,075.37 12,631.29
02/28/07 9,900.52 11,839.90 12,419.07
03/31/07 10,094.24 11,972.03 12,564.84
04/30/07 10,591.62 12,502.18 13,097.73
05/31/07 11,235.60 12,938.00 13,576.36
06/30/07 11,324.61 12,723.19 13,345.39
07/31/07 11,193.72 12,329.19 12,909.99
08/31/07 11,146.60 12,513.74 13,100.60
09/30/07 12,261.78 12,981.25 13,567.41
10/31/07 12,973.82 13,187.70 13,796.48
11/30/07 12,146.60 12,636.14 13,193.69
12/31/07 12,628.27 12,548.70 13,108.94
01/31/08 11,319.37 11,796.10 12,326.48
02/28/08 11,523.56 11,413.20 11,940.65
03/31/08 11,052.36 11,363.81 11,886.94
04/30/08 11,643.98 11,917.13 12,488.45
05/31/08 12,251.31 12,071.47 12,704.56
06/30/08 11,979.06 11,054.76 11,653.54
07/31/08 10,801.05 10,961.80 11,558.12
08/31/08 10,335.08 11,120.45 11,739.58
09/30/08 8,942.41 10,130.66 10,687.46
10/31/08 7,403.14 8,429.42 8,836.71
11/30/08 6,659.69 7,824.37 8,174.28
12/31/08 6,696.34 7,906.81 8,297.70
01/31/09 6,225.13 7,241.17 7,593.27
02/28/09 5,685.86 6,472.67 6,789.75
03/31/09 6,214.66 7,038.63 7,383.52
04/30/09 6,769.63 7,711.70 8,139.76
05/31/09 7,387.43 8,142.53 8,563.75
06/30/09 7,272.25 8,158.79 8,587.58
07/31/09 7,664.92 8,775.10 9,252.39
08/31/09 7,638.74 9,091.47 9,586.93
09/30/09 8,052.36 9,430.48 9,964.40
10/31/09 7,691.10 9,255.52 9,743.89
11/30/09 7,926.70 9,810.55 10,301.78
12/31/09 8,136.13 9,999.96 10,560.75
01/31/10 7,691.10 9,640.77 10,185.21
02/28/10 8,099.48 9,939.00 10,522.18
03/31/10 8,596.86 10,538.54 11,172.95
04/30/10 8,780.10 10,704.96 11,390.99
05/31/10 8,214.66 9,851.05 10,492.99
06/30/10 7,973.82 9,336.05 9,925.80
07/31/10 8,371.73 9,989.87 10,617.83
08/31/10 8,000.00 9,539.72 10,123.90
09/30/10 8,973.82 10,390.73 11,055.96
10/31/10 9,345.55 10,785.96 11,475.30
11/30/10 9,623.04 10,787.68 11,520.98
12/31/10 9,872.89 11,508.46 12,297.84
AVERAGE ANNUAL PERFORMANCE For the Years Ended
December 31, 2010
One Year Five Year Ten Year
Holmes Growth Fund 21.35% 1.62% (0.13)%
-----------------------------------------------------------------------
S&P 500 Index 15.06% 2.29% 1.41%
-----------------------------------------------------------------------
S&P Composite 1500 Index 16.43% 2.70% 2.09%
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.
Pursuant to a voluntary arrangement, the Adviser has agreed to limit
total fund operating expenses (exclusive of acquired fund fees and
expenses, extraordinary expenses, taxes, brokerage commissions and
interest, and advisory fee performance adjustments, if any) to not
exceed 2.20%. The Adviser can modify or terminate this arrangement at
any time.
See Definitions for Management Teams' Perspectives for index
definitions.
Please visit our website at www.usfunds.com for updated performance
information for different time periods.
26
HOLMES GROWTH FUND
THE YEAR IN REVIEW - ECONOMIC AND POLITICAL ISSUES THAT AFFECTED THE FUND
The United States real gross domestic product (GDP) by quarter in 2010
came in at 3.7 percent, 1.7 percent, 2.6 percent and 3.2 percent
increases, sequentially.
To aid a recovering economy, the Federal Reserve kept short-term
interest rates in a range of zero to 0.25 percent for the federal funds
rate during the year. The year began with the 10-year U.S. Treasury note
yield at 3.84 percent. The high for the year was reached in early April
at 3.99 percent and a low of 2.39 percent was reached in October. The
10-year U.S. Treasury note ended the year with its yield at 3.30
percent.
In an effort to stimulate the economy, the Federal Reserve announced its
second round of quantitative easing (QE2) in November, a plan to
purchase $600 billion in U.S. Treasury bonds through June 2011.
Inflation remained relatively contained, with year-over-year change in
the Consumer Price Index (CPI) registering 2.6 percent in January,
declining to 1.1 percent for much of the latter part of the year and
ending the year at 1.5 percent.
The employment picture remained weak. Unemployment was at 9.7 percent in
January, hit a high of 9.8 percent in both April and in November, and
ended the year at 9.4 percent in December.
Stock market performance was marked by wide swings over the period. The
benchmark S&P Composite 1500 Index began the year at 254.79, declined
4.2 percent in early February, rose 14.9 percent in late April, and then
declined 16.2 percent to the low for the year in early July. A 10.3
percent rise in early August was followed by a 7.2 percent decline
before the month was over. Then, the market rose by 20.9 percent to end
the year at 290.89.
The political environment was one of strongly divided partisan debates
over national healthcare legislation and financial regulatory reform. It
was also marked by what some observers interpreted as an anti-business
tilt on the part of the current administration and parts of the
legislative bodies. Concern over government spending and increasing
government control over major parts of the economy helped raise the
profile of the Tea Party movement, which partly helped the Republican
Party gain control of the U.S. House of Representatives in the November
elections.
27
HOLMES GROWTH FUND
INVESTMENT HIGHLIGHTS
OVERVIEW
The fund returned 21.35 percent for the year ended December 31, 2010,
compared to a 16.43 percent return for the benchmark S&P Composite 1500
Index.
The fund is actively managed and a holding period is generally not a
consideration in investment decisions so the portfolio turnover rate may
fluctuate from year to year as the fund adjusts its composition. Its
annual portfolio turnover was, and is expected to continue to be, more
than 100 percent.
STRENGTHS
* The fund benefited from being overweight the consumer discretionary
sector, which was the best-performing sector for the year. Stock
selection was a key driver of fund performance in this sector, with
positive contributions from Netflix, Inc.,(1) Deckers Outdoor
Corp.(2)and Chipotle Mexican Grill, Inc.(2) Netflix benefited from
increased customer usage of its movie DVD-by-mail and online movie
streaming services. Deckers gained through continued popularity of its
Ugg line of boots. Chipotle flourished by providing good value to the
customer in a down economy and increasing the number of its
restaurants.
* The fund was overweight energy, another outperforming sector, and
benefited from stock selection here. Companies such as Concho
Resources, Inc.,(3) Pacific Rubiales Energy Corp.(4) and Brigham
Exploration Co.(5) advanced through successful exploration and
development of reserves in each company's respective geographical
area.
* The technology sector underperformed the benchmark, but stock
selection resulted in a positive contribution from this sector.
Riverbed Technology, Inc.(6) benefited by helping corporations to
optimize their wide-area networks. Baidu, Inc.(7) gained by
successfully operating the largest Internet search marketing business
in China. Rackspace Hosting, Inc.(8) benefited by providing a high
level of service in the managed hosting and cloud infrastructure
business.
WEAKNESSES
* Relative fund performance was diminished by being underweight the
industrials sector, the second-best performing sector in 2010. Also,
individual investments in Aegean Marine Petroleum Network, Inc.(2) and
Duoyuan Global Water, Inc.(2) failed to live up to expectations.
28
HOLMES GROWTH FUND
* The fund was underweight the underperforming telecom sector, but stock
selection detracted from fund performance as an investment in
AboveNet, Inc.(2) disappointed.
* The fund was underweight the underperforming financials sector, but
stock selection proved to be sub-optimal.
CURRENT OUTLOOK
OPPORTUNITIES
* The cyclical recovery now underway in the global economy should
provide an opportunity for corporate earnings gains, thereby providing
a positive fundamental background for stocks.
* Corporate cash levels are high, providing corporations the ability to
pursue mergers and acquisitions. An increase in merger and acquisition
(M&A) activity holds promise for both portfolio gains and an increase
in overall market valuations.
* Low interest rates, if continued throughout 2011, should provide a
favorable backdrop for the economy and stock prices.
THREATS
* Expectations for a continuing recovery in the economy are present, and
if recovery does not materialize in line with or ahead of
expectations, it could be negative for stocks.
* An escalation in concerns over sovereign debt obligations in Europe
would be negative for stocks.
* Quantitative easing currently being implemented by the Federal Reserve
might result in unintended consequences.
From a fund construction viewpoint, at December 31, 2010, the fund was
in an offensive posture, being overweight consumer discretion,
technology, energy and materials.
(1)This security comprised 0.78% of the fund's total net assets as
of 12/31/10.
(2)The fund did not hold this security as of 12/31/10.
(3)This security comprised 3.02% of the fund's total net assets as
of 12/31/10.
(4)This security comprised 2.33% of the fund's total net assets as
of 12/31/10.
(5)This security comprised 3.02% of the fund's total net assets as
of 12/31/10.
(6)This security comprised 1.39% of the fund's total net assets as
of 12/31/10.
(7)This security comprised 1.07% of the fund's total net assets as
of 12/31/10.
(8)This security comprised 2.32% of the fund's total net assets as
of 12/31/10.
29
HOLMES GROWTH FUND
TOP 10 HOLDINGS BASED ON NET ASSETS December 31, 2010
(EXCLUDING REPURCHASE AGREEMENTS)
NEWFOUNDLAND CAPITAL CORP., LTD. 6.67%
Radio
----------------------------------------------------------------------
APPLE, INC. 3.18%
Computers
----------------------------------------------------------------------
CONCHO RESOURCES, INC. 3.02%
Oil Companies - Exploration & Production
----------------------------------------------------------------------
BRIGHAM EXPLORATION CO. 3.02%
Oil Companies - Exploration & Production
----------------------------------------------------------------------
MERCADOLIBRE, INC. 2.46%
E-Commerce/Products
----------------------------------------------------------------------
PACIFIC RUBIALES ENERGY CORP. 2.33%
Oil Companies - Exploration & Production
----------------------------------------------------------------------
EBIX, INC. 2.33%
Application Software
----------------------------------------------------------------------
RACKSPACE HOSTING, INC. 2.32%
Web Hosting/Design
----------------------------------------------------------------------
RANDGOLD RESOURCES LTD. 2.12%
Gold Mining
----------------------------------------------------------------------
COGNIZANT TECHNOLOGY SOLUTIONS CORP. 2.11%
Computer Services
----------------------------------------------------------------------
TOTAL TOP TEN HOLDINGS 29.56%
PORTFOLIO ALLOCATION BY INDUSTRY SECTOR*
BASED ON TOTAL INVESTMENTS December 31, 2010
[Pie Chart]
Technology 22.9%
Consumer Discretion 17.7%
Energy 15.7%
Financials 10.5%
Materials 10.3%
Industrials 7.9%
Health Care 5.3%
Consumer Staples 5.1%
Cash Equivalent 4.6%
* Summary information above may differ from the portfolio schedule
included in the financial statements due to the use of different
classifications of securities for presentation purposes.
30
GLOBAL MEGATRENDS FUND
MANAGEMENT TEAM'S PERSPECTIVE
INTRODUCTION
The Global MegaTrends Fund (MEGAX and MEGIX) 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
[MegaTrends Fund Graph]
Global MegaTrends
Fund - S&P 500
Date Investor Class Index
---- ----------------- -------
12/31/00 $ 10,000.00 $ 10,000.00
01/31/01 10,325.99 10,354.57
02/28/01 9,947.14 9,411.02
03/30/01 9,418.50 8,815.15
04/30/01 10,273.13 9,499.63
05/31/01 10,334.80 9,563.37
06/30/01 9,885.46 9,330.70
07/31/01 9,330.40 9,238.80
08/31/01 8,466.96 8,661.03
09/30/01 7,629.96 7,961.69
10/31/01 8,105.73 8,113.59
11/30/01 8,352.42 8,735.81
12/31/01 8,731.28 8,812.40
01/31/02 8,044.98 8,683.87
02/28/02 7,759.02 8,516.37
03/31/02 8,473.91 8,836.69
04/30/02 8,207.02 8,301.18
05/31/02 8,092.64 8,240.24
06/30/02 7,206.16 7,653.50
07/31/02 6,138.58 7,057.07
08/31/02 6,481.73 7,103.28
09/30/02 5,967.01 6,332.00
10/31/02 6,310.16 6,888.79
11/30/02 6,376.88 7,293.86
12/31/02 6,099.10 6,865.59
01/31/03 6,214.18 6,686.08
02/28/03 6,214.18 6,585.62
03/31/03 6,060.74 6,649.38
04/30/03 6,386.79 7,196.83
05/31/03 6,990.95 7,575.65
06/30/03 7,125.20 7,672.43
07/31/03 7,249.87 7,807.76
08/31/03 7,681.41 7,959.73
09/30/03 7,470.44 7,875.45
10/31/03 7,911.57 8,320.73
11/30/03 8,218.44 8,393.85
12/31/03 8,795.12 8,833.76
01/31/04 8,659.06 8,995.88
02/29/04 8,970.05 9,120.87
03/31/04 8,940.90 8,983.29
04/30/04 8,668.78 8,842.45
05/31/04 8,746.53 8,963.55
06/30/04 8,911.74 9,137.79
07/31/04 8,717.38 8,834.96
08/31/04 8,736.81 8,870.45
09/30/04 8,950.62 8,966.45
10/31/04 8,940.90 9,103.43
11/30/04 9,222.73 9,471.65
12/31/04 9,504.56 9,793.86
01/31/05 9,271.32 9,555.13
02/28/05 9,572.59 9,756.10
03/31/05 9,261.60 9,583.53
04/30/05 9,125.55 9,401.85
05/31/05 9,349.07 9,700.74
06/30/05 9,562.87 9,714.64
07/31/05 9,893.30 10,075.76
08/31/05 10,107.10 9,983.77
09/30/05 10,272.31 10,064.59
10/31/05 10,009.92 9,896.72
11/30/05 10,534.71 10,270.66
12/31/05 10,634.00 10,274.30
01/31/06 10,963.82 10,546.33
02/28/06 10,624.01 10,574.86
03/31/06 10,783.92 10,706.47
04/30/06 10,923.84 10,850.14
05/31/06 10,624.01 10,538.25
06/30/06 10,624.01 10,552.25
07/31/06 10,564.04 10,617.29
08/31/06 10,693.97 10,869.53
09/30/06 10,683.98 11,149.46
10/31/06 11,063.76 11,512.55
11/30/06 11,233.67 11,731.12
12/31/06 11,169.66 11,895.65
01/31/07 11,158.86 12,075.37
02/28/07 10,921.21 11,839.90
03/31/07 11,137.25 11,972.03
04/30/07 11,731.38 12,502.18
05/31/07 12,087.86 12,938.00
06/30/07 12,087.86 12,723.19
07/31/07 12,066.26 12,329.19
08/31/07 12,260.70 12,513.74
09/30/07 13,070.88 12,981.25
10/31/07 13,773.03 13,187.70
11/30/07 13,556.99 12,636.14
12/31/07 13,910.15 12,548.70
01/31/08 12,740.36 11,796.10
02/28/08 12,972.00 11,413.20
03/31/08 12,601.37 11,363.81
04/30/08 13,481.61 11,917.13
05/31/08 14,176.54 12,071.47
06/30/08 13,504.78 11,054.76
07/31/08 12,497.13 10,961.80
08/31/08 12,068.59 11,120.45
09/30/08 9,914.31 10,130.66
10/31/08 7,644.21 8,429.42
11/30/08 7,157.76 7,824.37
12/31/08 7,281.92 7,906.81
01/31/09 6,748.53 7,241.17
02/28/09 6,099.18 6,472.67
03/31/09 6,412.26 7,038.63
04/30/09 7,212.34 7,711.70
05/31/09 8,313.91 8,142.53
06/30/09 8,128.38 8,158.79
07/31/09 8,766.13 8,775.10
08/31/09 8,545.82 9,091.47
09/30/09 8,824.11 9,430.48
10/31/09 8,592.20 9,255.52
11/30/09 9,183.56 9,810.55
12/31/09 9,477.19 9,999.96
01/31/10 8,930.65 9,640.77
02/28/10 8,988.80 9,939.00
03/31/10 9,384.16 10,538.54
04/30/10 9,465.56 10,704.96
05/31/10 8,546.92 9,851.05
06/30/10 8,372.49 9,336.05
07/31/10 8,919.03 9,989.87
08/31/10 8,674.83 9,539.72
09/30/10 9,488.82 10,390.73
10/31/10 9,686.50 10,785.96
11/30/10 9,756.27 10,787.68
12/31/10 10,276.26 11,508.46
AVERAGE ANNUAL PERFORMANCE For the Periods Ended December 31, 2010
Since Inception
(Institutional
One Year Five Year Ten Year Class)
Global MegaTrends Fund -
Investor Class 8.43% (0.68)% 0.27% n/a
-------------------------------------------------------------------------------
Global MegaTrends Fund - Institutional Class
(Inception 3/1/10) n/a n/a n/a 13.08%
-------------------------------------------------------------------------------
S&P 500 Index 15.06% 2.29% 1.41% 14.60%
-------------------------------------------------------------------------------
S&P Global Infrastructure Index 5.77% 6.80% n/a 10.58%
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. Returns for
periods less than one year are not annualized.
The S&P Global Infrastructure Index is not included in the line graph as
it had less than ten years of data.
Pursuant to a voluntary arrangement, the Adviser has agreed to limit
total fund operating expenses (exclusive of acquired fund fees and
expenses, extraordinary expenses, taxes, brokerage commissions and
interest, and advisory fee performance adjustments, if any) to not
exceed 2.35% for the Investor Class. Also pursuant to a voluntary
agreement, the Adviser has agreed to waive all class specific expenses
of the Institutional Class. The Adviser can modify or terminate these
arrangements at any time.
See Definitions for Management Teams' Perspectives for index definitions.
Please visit our website at www.usfunds.com for updated performance
information for different time periods.
31
GLOBAL MEGATRENDS FUND
THE YEAR IN REVIEW - ECONOMIC AND POLITICAL ISSUES THAT AFFECTED THE FUND
Political and economic considerations have a big influence on the
climate in which the Global MegaTrends Fund operates.
The first half of 2010 was dominated by the sovereign debt crisis in
Europe, with risks of the crisis potentially spreading beyond Europe.
This created uncertainty about the finances of many countries, which
could impact infrastructure spending globally. In addition, the Chinese
property boom became a cause for concern as numerous market participants
anticipated a sharp correction. A slowdown in the Chinese property
market would likely dampen demand for commodities. This created
uncertainty that resource-rich countries would not have enough resources
to carry out major infrastructure projects.
The second quarter of 2010 was the high point of the sovereign debt
crisis, and this adversely affected the performance of global
infrastructure stocks. Going forward, there are different views with
respect to potential demand for commodities. China's latest Five-Year
Plan deemphasizes the country's growth rate, which has driven fixed
asset formation in the past, and focuses on sustainable and structural
adjustment to its domestic economy. Some expect China's insatiable
appetite for commodities to moderate in the next few years as the
country places new emphasis on the modernization of its agriculture
sector, upgrading its manufacturing industry, and accelerating the
growth of the services sector. A counterargument is that demand for
selected commodities, copper in particular, is expected to grow over the
coming years from countries such as India as they build up their
infrastructure backbone. As a result, we believe that underweighting
some of the basic material stocks may be warranted in the near term.
However, we believe it is inappropriate to abandon the theme altogether.
Toward the end of 2010, we rotated the portfolio in favor of industrial
plays, both inside the U.S. and internationally, in anticipation of a
pick up in activity during 2011.
INVESTMENT HIGHLIGHTS
The Global MegaTrends Fund began offering an institutional class of
shares on March 1, 2010. Performance of the Institutional Class (MEGIX)
is included in the performance graph on the previous page. As the
Institutional Class had less than one year of operations, the following
discussion of performance is for the one-year period ended December 31,
2010, of the Investor Class.
32
GLOBAL MEGATRENDS FUND
OVERVIEW
The Investor Class of the fund had an 8.43 percent return for the year
ended December 31, 2010, compared to a 15.06 percent return for the S&P
500 Index, the fund's benchmark, and a 5.77 percent return for the S&P
Global Infrastructure Index.
Because the fund is actively managed, and a holding period is generally
not a consideration in investment decisions, the portfolio turnover rate
may fluctuate from year to year as the fund adjusts its portfolio
composition. Its annual portfolio turnover was, and is expected to
continue to be, more than 100 percent.
STRENGTHS
* Similar to 2009, international stocks were the top contributors to the
fund's performance in 2010. In terms of contribution to return,
industrials led all groups. This group was boosted by the fund's
holdings in Westshore Terminals Income Fund,(1) Zhuzhou CSR Times
Electric Co. Ltd.(2) and the Brazilian toll-road operator Compania de
Concessoes Rodoviarias.(3)
* While the performance of utilities in the U.S. was a drag on fund
performance, international utilities fared better. Brazil's CPFL
Energia S.A.(4) was the top contributor in the group.
* In general, the fund's overseas holdings significantly outperformed
the domestic holdings.
WEAKNESSES
* Utilities holdings in the U.S. negatively impacted performance in
2010, which was also the case in 2009. These underperforming stocks
included FirstEnergy Corp.(5) and Exelon Corp.(5) In fact, utilities,
up 0.86 percent for the year, were the second-weakest performing group
of the S&P 500. Only the healthcare sector performed worse.
* The most negative impact for the fund came from Aegean Marine
Petroleum Network, Inc.(5) and Duoyuan Global Water, Inc.(5)
* The fund's underperformance of the S&P 500 Index was mainly a result
of stock selection, both domestic and international.
CURRENT OUTLOOK
We believe that the infrastructure theme will be prominent for many
years to come due to the continuing trend toward population growth and
urbanization, particularly in emerging nations. In developed countries,
33
GLOBAL MEGATRENDS FUND
decades of underinvestment in infrastructure assets have resulted in a
significant deterioration of existing infrastructure.
We are encouraged by the awareness of the political leaders around the
world that investments in infrastructure are needed to sustain economic
growth and competitiveness.
OPPORTUNITIES
* Until recently China was at the forefront of the infrastructure boom,
but it appears that India is now stepping up with an estimated $1
trillion of needed investments.
* Although the lower oil price compared to the peak in 2008 may change
the relative attractiveness of wind and solar, we believe investments
in alternative energy sources will gain traction due to a global need
for power. Nuclear energy also fits into this group.
* Improved water infrastructure will be crucial as emerging economies
develop. Opportunities in this space are currently limited, but they
offer significant potential, both in desalination and waste treatment.
THREATS
* While many countries remain committed to improving their
infrastructure, delays due to tight credit conditions and legal
impediments appear to affect numerous projects.
* Government subsidies are still required for a sustainable development
of alternative energy and this support could change as the political
climate changes. There appears to be growing opposition from residents
to developments of wind farms in various parts of the world on health
and aesthetic grounds.
(1)This security comprised 2.84% of the fund's total net assets as
of 12/31/10.
(2)This security comprised 2.62% of the fund's total net assets as
of 12/31/10.
(3)This security comprised 3.38% of the fund's total net assets as
of 12/31/10.
(4)This security comprised 2.84% of the fund's total net assets as
of 12/31/10.
(5)The fund did not hold this security as of 12/31/10.
34
GLOBAL MEGATRENDS FUND
TOP 10 HOLDINGS BASED ON NET ASSETS December 31, 2010
(EXCLUDING REPURCHASE AGREEMENTS)
CSX CORP. 3.53%
Transportation - Rail
----------------------------------------------------------------------
COMPANIA DE CONCESSOES RODOVIARIAS 3.38%
Public Thoroughfares
----------------------------------------------------------------------
NUSTAR ENERGY L.P. 3.08%
Pipelines
----------------------------------------------------------------------
ECORODOVIAS INFRAESTRUTURA E LOGISTICA S.A. 3.04%
Public Thoroughfares
----------------------------------------------------------------------
SNC-LAVALIN GROUP, INC. 2.95%
Engineering/R&D Services
----------------------------------------------------------------------
CPFL ENERGIA S.A. 2.84%
Electric - Integrated
----------------------------------------------------------------------
WESTSHORE TERMINALS INCOME FUND 2.84%
Storage/Warehousing
----------------------------------------------------------------------
TOFAS TURK OTOMOBIL FABRIKASI A.S. 2.75%
Automotive - Cars & Light Trucks
----------------------------------------------------------------------
ZHUZHOU CSR TIMES ELECTRIC CO., LTD. 2.62%
Electric Products - Miscellaneous
----------------------------------------------------------------------
GRUPO EMPRESARIAL IBIZA S.A. 2.56%
Metal & Mineral Mining
----------------------------------------------------------------------
TOTAL TOP TEN HOLDINGS 29.59%
PORTFOLIO ALLOCATION BY INDUSTRY SECTOR*
BASED ON TOTAL INVESTMENTS December 31, 2010
[Pie Chart]
Industrials 38.0%
Materials 22.0%
Energy 12.0%
Telecommunications 8.3%
Utilities 5.2%
Consumer Discretion 3.6%
Financials 4.9%
Other 6.0%
* Summary information above may differ from the portfolio schedule
included in the financial statements due to the use of different
classifications of securities for presentation purposes.
35
GLOBAL RESOURCES FUND
MANAGEMENT TEAM'S PERSPECTIVE
INTRODUCTION
The Global Resources Fund (PSPFX and PIPFX) is a non-diversified natural
resources fund that seeks long-term growth of capital plus 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]
Global Morgan Stanley
Resources Fund - S&P 500 Commodity Related
Date Investor Class Index Equity Index
---- -------------- ----- ------------
12/31/00 $ 10,000.00 $ 10,000.00 $ 10,000.00
01/31/01 9,678.90 10,354.57 9,446.05
02/28/01 9,518.35 9,411.02 9,481.33
03/30/01 9,380.73 8,815.15 8,900.25
04/30/01 10,229.36 9,499.63 9,843.27
05/31/01 10,114.68 9,563.37 10,128.84
06/30/01 9,197.25 9,330.70 9,652.81
07/31/01 8,830.28 9,238.80 9,938.86
08/31/01 8,509.17 8,661.03 9,873.86
09/30/01 7,958.72 7,961.69 8,985.65
10/31/01 8,486.24 8,113.59 9,370.61
11/30/01 8,555.05 8,735.81 9,781.51
12/31/01 8,646.79 8,812.40 10,018.41
01/31/02 8,669.72 8,683.87 10,307.87
02/28/02 9,151.38 8,516.37 10,637.35
03/31/02 10,000.00 8,836.69 11,146.70
04/30/02 10,619.27 8,301.18 10,964.28
05/31/02 12,775.23 8,240.24 11,409.11
06/30/02 11,307.34 7,653.50 11,016.27
07/31/02 8,784.40 7,057.07 9,464.52
08/31/02 9,220.18 7,103.28 9,674.12
09/30/02 9,036.70 6,332.00 9,028.91
10/31/02 8,440.37 6,888.79 9,173.27
11/30/02 8,761.47 7,293.86 9,716.14
12/31/02 10,184.62 6,865.59 9,645.30
01/31/03 10,769.95 6,686.08 9,486.96
02/28/03 10,980.66 6,585.62 9,374.08
03/31/03 10,606.06 6,649.38 8,999.96
04/30/03 10,582.64 7,196.83 9,393.65
05/31/03 11,823.53 7,575.65 10,335.39
06/30/03 12,034.25 7,672.43 10,656.65
07/31/03 12,619.57 7,807.76 10,740.26
08/31/03 14,211.65 7,959.73 11,497.80
09/30/03 14,960.86 7,875.45 11,447.55
10/31/03 17,442.63 8,320.73 12,343.62
11/30/03 18,824.00 8,393.85 12,713.24
12/31/03 20,324.53 8,833.76 14,141.34
01/31/04 19,896.64 8,995.88 13,860.24
02/29/04 20,942.58 9,120.87 14,851.30
03/31/04 21,489.33 8,983.29 15,061.12
04/30/04 19,397.45 8,842.45 14,166.01
05/31/04 19,421.22 8,963.55 14,421.03
06/30/04 19,944.19 9,137.79 15,367.33
07/31/04 20,039.27 8,834.96 15,389.92
08/31/04 20,086.82 8,870.45 15,492.85
09/30/04 22,963.15 8,966.45 16,725.99
10/31/04 23,652.52 9,103.43 16,624.76
11/30/04 26,623.94 9,471.65 18,074.01
12/31/04 26,505.72 9,793.86 17,816.80
01/31/05 26,682.25 9,555.13 17,498.89
02/28/05 31,978.35 9,756.10 19,043.22
03/31/05 31,600.06 9,583.53 18,346.83
04/30/05 29,178.99 9,401.85 17,053.44
05/31/05 29,506.84 9,700.74 17,246.34
06/30/05 31,953.13 9,714.64 17,952.53
07/31/05 34,071.57 10,075.76 19,266.51
08/31/05 36,341.33 9,983.77 19,784.97
09/30/05 39,392.89 10,064.59 20,733.96
10/31/05 35,988.26 9,896.72 19,580.51
11/30/05 37,249.23 10,270.66 20,640.32
12/31/05 39,485.98 10,274.30 21,722.76
01/31/06 45,924.22 10,546.33 24,627.47
02/28/06 43,078.13 10,574.86 22,954.06
03/31/06 46,338.70 10,706.47 23,954.28
04/30/06 50,787.43 10,850.14 25,920.01
05/31/06 47,692.66 10,538.25 25,428.91
06/30/06 47,582.13 10,552.25 25,208.26
07/31/06 47,830.82 10,617.29 25,336.62
08/31/06 47,361.08 10,869.53 24,864.68
09/30/06 42,967.60 11,149.46 23,905.72
10/31/06 45,758.43 11,512.55 25,434.85
11/30/06 48,963.73 11,731.12 27,408.44
12/31/06 48,246.16 11,895.65 26,796.60
01/31/07 47,465.90 12,075.37 27,562.07
02/28/07 47,758.50 11,839.90 27,807.74
03/31/07 49,709.15 11,972.03 28,437.11
04/30/07 53,122.80 12,502.18 29,946.78
05/31/07 56,568.95 12,938.00 32,689.51
06/30/07 57,544.28 12,723.19 32,939.69
07/31/07 58,129.48 12,329.19 33,227.45
08/31/07 55,268.52 12,513.74 33,000.27
09/30/07 63,298.71 12,981.25 35,991.91
10/31/07 70,028.46 13,187.70 37,881.66
11/30/07 63,981.44 12,636.14 35,935.12
12/31/07 67,520.92 12,548.70 38,915.43
01/31/08 62,659.42 11,796.10 36,420.52
02/28/08 68,331.18 11,413.20 38,998.11
03/31/08 63,816.92 11,363.81 37,825.32
04/30/08 68,215.43 11,917.13 40,709.35
05/31/08 76,009.27 12,071.47 43,141.65
06/30/08 79,173.11 11,054.76 42,919.30
07/31/08 63,045.25 10,961.80 39,194.89
08/31/08 57,566.41 11,120.45 37,268.66
09/30/08 42,904.72 10,130.66 31,328.04
10/31/08 30,596.62 8,429.42 21,665.22
11/30/08 27,394.20 7,824.37 21,744.90
12/31/08 25,573.13 7,906.81 22,878.07
01/31/09 25,718.98 7,241.17 21,723.96
02/28/09 24,309.06 6,472.67 19,859.20
03/31/09 26,496.87 7,038.63 21,945.37
04/30/09 29,511.20 7,711.70 24,764.03
05/31/09 35,005.04 8,142.53 29,023.10
06/30/09 32,087.96 8,158.79 27,265.00
07/31/09 35,199.52 8,775.10 29,603.41
08/31/09 35,588.46 9,091.47 30,208.74
09/30/09 39,429.29 9,430.48 32,247.10
10/31/09 39,332.06 9,255.52 31,742.11
11/30/09 41,811.58 9,810.55 34,417.78
12/31/09 43,027.03 9,999.96 35,417.93
01/31/10 40,255.80 9,640.77 32,999.35
02/28/10 42,443.62 9,939.00 35,321.11
03/31/10 45,555.17 10,538.54 37,136.79
04/30/10 46,722.01 10,704.96 37,475.85
05/31/10 41,374.02 9,851.05 33,643.95
06/30/10 40,304.42 9,336.05 31,907.85
07/31/10 41,471.25 9,989.87 34,872.95
08/31/10 41,033.69 9,539.72 34,388.46
09/30/10 45,992.74 10,390.73 37,086.93
10/31/10 50,562.84 10,785.96 39,003.50
11/30/10 53,917.49 10,787.68 40,266.91
12/31/10 59,375.80 11,508.46 44,509.59
AVERAGE ANNUAL PERFORMANCE For the Periods Ended December 31, 2010
Since Inception
(Institutional
One Year Five Year Ten Year Class)
Global Resources Fund - Investor
Class 38.00% 8.50% 19.49% n/a
-------------------------------------------------------------------------------
Global Resources Fund - Institutional Class
(Inception 3/1/10) n/a n/a n/a 38.53%
-------------------------------------------------------------------------------
S&P 500 Index 15.06% 2.29% 1.41% 14.60%
-------------------------------------------------------------------------------
Morgan Stanley Commodity Related
Equity Index 25.66% 15.41% 16.08% 24.06%
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. Returns for periods less than one year are not annualized.
Pursuant to a voluntary arrangement, the Adviser has agreed to limit total fund
operating expenses (exclusive of acquired fund fees and expenses, extraordinary
expenses, taxes, brokerage commissions and interest, and advisory fee
performance adjustments, if any) to not exceed 1.90% for the Investor Class.
Also pursuant to a voluntary agreement, the Adviser has agreed to waive all
class specific expenses of the Institutional Class. The Adviser can modify or
terminate these arrangements at any time.
See Definitions for Management Teams' Perspectives for index definitions.
Please visit our website at www.usfunds.com for updated performance
information for different time periods.
36
GLOBAL RESOURCES FUND
THE YEAR IN REVIEW - ECONOMIC AND POLITICAL ISSUES THAT AFFECTED THE FUND
Improving economic conditions throughout 2010 helped global growth gain
momentum during the year. In addition, we continued to see easy monetary
policy from governments around the globe despite several emerging
markets moving from very accommodative to more neutral interest rates.
These conditions are likely to drive financial asset values higher in
2011.
Recent economic data have been better-than-expected and point to
strengthening growth momentum. Chinese gross domestic product (GDP) grew
10.3 percent in 2010 accelerating from 9.1 percent in 2009. U.S. data on
consumer spending, investment and trade showed solid gains in demand
during the fourth quarter. Markets across Europe, where the sovereign
debt crisis became a cause for concern with an unprecedented
intervention from the European Central Bank (ECB) in the spring of 2010,
began to recover from the low levels experienced early in the year.
Potential hurdles for future growth, such as Europe's sovereign debt
problems, have continued to linger. However, Europe is committing more
political capital and additional future funds to solve this issue and
healthy economic growth in the region is making it clear that Europe is
in a decent position to pay down its debts.
Worries about accelerating inflation, especially in the developing
world, have recently started to grab headlines as the next destabilizing
force. Inflation in emerging economies has climbed quickly in recent
months, most notably pushing world food commodity prices up 20 percent
from the prior year. In developed economies such as the U.S., inflation
remains subdued as raw food costs account for only a small part of
overall consumer spending.
The U.S. Federal Reserve's game plan is playing out as expected. The
Federal Reserve's policy of increased liquidity is keeping U.S.
short-term interest rates very low, the U.S. dollar relatively weak,
economic activity accelerating and equity markets pushing higher. This
has removed any significant risk of deflation from the U.S. economy. As
strong economic growth tightens supply/demand balances and drives
financial assets higher, a bullish environment is created for commodity
prices, particularly copper and oil.
INVESTMENT HIGHLIGHTS
The Global Resources Fund began offering an institutional class of
shares on March 1, 2010. Performance of the Institutional Class shares
(PIPFX) is
37
GLOBAL RESOURCES FUND
included in the performance graph on the previous page. As the
Institutional Class had less than one year of operations, the following
discussion of performance is for the one-year period ended December 31,
2010, of the Investor Class.
OVERVIEW
The Investor Class of the Global Resources Fund posted a strong 38.00
percent return in 2010, outperforming its benchmark, the Morgan Stanley
Commodity Related Equity Index (CRX), by 12.34 percent.
The fund also topped its Lipper category of global natural resources
funds, besting the other 130 funds in the category. The Global Resources
Fund ranked 1 out of 131, 17 out of 54, and 1 out of 32 global natural
resources funds for total return for the 1-, 5- and 10-year periods as
of December 31, 2010.
The first half of 2010 was rather volatile for investors. The fund had
gained approximately 10 percent by late April, and then gave back all of
those gains and more during a broad-market selloff in the second
quarter. This selloff was triggered by European sovereign debt worries
and an overheated Chinese property market.
The management team repositioned the fund for a rebound in the second-
half of 2010 as it became more likely that the Federal Reserve would
launch a second round of quantitative easing (QE2). This drove a rally
in gold, base metals and energy commodities that played out through the
end of the year and helped the fund gain 47 percent during the second
half of 2010.
Because the fund is actively managed, and a holding period is generally
not a consideration in investment decisions, the portfolio turnover rate
may fluctuate from year-to-year as the fund adjusts its portfolio
composition. Its annual portfolio turnover was, and is expected to
continue to be, more than 100 percent.
STRENGTHS
* Gold posted its tenth year of positive performance in 2010, up 29.2
percent, and closed the year near a record level at $1,421 per ounce.
Fear of sovereign debt default in several southern European countries
increased demand for safe haven assets such as gold. In addition, the
second round of quantitative easing by the Federal Reserve also
provided a catalyst for gold prices.
* Base metals, particularly copper, benefited from an improving global
economy. Copper mining stocks, as measured by the ISE Global Copper
38
GLOBAL RESOURCES FUND
Index, gained 52.99 percent in 2010. The fund's investments in copper
mining stocks, such as Freeport-McMoRan Copper & Gold, Inc.(1) and
First Quantum Minerals Ltd.,(2) contributed to its strong performance.
* Crude oil prices gained 15 percent and reached nearly $92 per barrel
by late December. This is a substantial recovery back up to price
levels previously attained before the collapse of Lehman Brothers put
financial markets in a crisis. The fund benefited from an increased
allocation to the energy sector during the second half of 2010. Also
key to performance was the fund's exposure to oil exploration and
production companies such as Pacific Rubiales Energy Corp.,(3) which
gained more than 132 percent. Additionally, the fund benefited from
strong stock performance of oil exploration company HRT Participacoes
Em Petroleo,(4) which listed on the Brazilian stock exchange in
October. Both of these holdings, which are not included in the fund's
benchmark index, helped the fund outperform its benchmark this year.
WEAKNESSES
* U.S. natural gas futures fell nearly 21 percent in 2010, making it the
third-straight year of price declines. Rapid growth in natural gas
supply has swamped a mild recovery in demand and depressed prices,
which dampened performance of the natural gas producing companies in
the portfolio.
CURRENT OUTLOOK
OPPORTUNITIES
* The U.S. Department of Agriculture's (USDA) recent World Agricultural
Supply and Demand Estimates (WASDE) report projects a 10.5 percent
decline for corn inventories and 15.2 percent decline for soybean
inventories for the 2010-2011 marketing year. The projected stock-
to-use ratio for U.S. corn is now 5.5 percent, the lowest since
1995-1996. Based on the December 2011 corn futures prices of $5.48,
farmers are likely to see record profitability even after subtracting
the rising fertilizer and seed input costs.
* In its Short-Term Energy Outlook, the U.S. Energy Information
Association (EIA) said it expects "continued tightening of world oil
markets over the next 2 years." The EIA expects West Texas
intermediate (WTI) crude prices to average $93.50 per barrel in 2011
and $97.50 per barrel in 2012.
39
GLOBAL RESOURCES FUND
THREATS
* The number of young recruits hired to replace aging petroleum
engineers has declined over the last 10 years, as many college
graduates choose managerial positions over engineering jobs and other
field assignments, according to Andrew Gould, the chairman and chief
executive officer of Schlumberger Ltd.(1) "The talent gap is still a
factor that limits the expansion of the oil and gas exploration
industry," he told a conference in Dhahran, Saudi Arabia, as reported
by Bloomberg.
(1)The fund did not hold this security as of 12/31/10.
(2)This security comprised 1.11% of the fund's total net assets as
of 12/31/10.
(3)This security comprised 3.57% of the fund's total net assets as
of 12/31/10.
(4)This security comprised 4.64% of the fund's total net assets as
of 12/31/10.
TOP 10 HOLDINGS BASED ON NET ASSETS December 31, 2010
(EXCLUDING REPURCHASE AGREEMENTS)
HRT PARTICIPACOES EM PETROLEO 4.64%
Oil Companies - Exploration & Production
----------------------------------------------------------------------
PACIFIC RUBIALES ENERGY CORP. 3.57%
Oil Companies - Exploration & Production
----------------------------------------------------------------------
ANADARKO PETROLEUM CORP. 2.95%
Oil Companies - Exploration & Production
----------------------------------------------------------------------
APACHE CORP. 1.92%
Oil Companies - Exploration & Production
----------------------------------------------------------------------
HALLIBURTON CO. 1.89%
Oil - Field Services
----------------------------------------------------------------------
PIONEER NATURAL RESOURCES CO. 1.87%
Oil Companies - Exploration & Production
----------------------------------------------------------------------
RIO TINTO PLC 1.81%
Metal - Diversified
----------------------------------------------------------------------
SHAMARAN PETROLEUM CORP. 1.80%
Oil Companies - Exploration & Production
----------------------------------------------------------------------
GRAN TIERRA ENERGY, INC. 1.75%
Oil Companies - Exploration & Production
----------------------------------------------------------------------
AGRIUM, INC. 1.73%
Agricultural Chemicals & Fertilizers
----------------------------------------------------------------------
TOTAL TOP TEN HOLDINGS 23.93%
40
GLOBAL RESOURCES FUND
PORTFOLIO ALLOCATION BY INDUSTRY SECTOR* December 31, 2010
[Pie Chart]
Oil & Gas Exploration & Production 35.6%
Metals & Mining 14.9%
General Basic Materials 10.9%
Precious Metals 10.6%
Oil & Gas Equipment & Services 9.8%
Cash Equivalent 7.7%
Oil & Gas - Other 3.3%
Oil & Gas - Integrated 1.0%
Other Sectors 6.2%
Energy:
Oil & Gas Exploration & Production 35.6%
Oil & Gas Equipment & Services 9.8%
Oil & Gas - Integrated (includes 1.0%
Refining and Marketing)
Oil & Gas - Other 3.3%
Total Energy 49.7%
Basic Materials:
Metals & Mining (includes Copper, 14.9%
Uranium and Coal)
Precious Metals (includes Gold/Silver 10.6%
Mining and Platinum)
General Basic Materials 10.9%
Total Basic Materials 36.4%
Other Sectors 6.2%
Repurchase Agreement 7.7%
-----
100.0%
=====
* Summary information above may differ from the portfolio schedule
included in the financial statements due to the use of different
classifications of securities for presentation purposes.
41
PRECIOUS METALS AND MINERALS FUNDS
MANAGEMENT TEAM'S PERSPECTIVE
INTRODUCTION
The World Precious Minerals Fund (UNWPX and UNWIX) and the Gold and
Precious Metals Fund (USERX) seek an objective of long-term capital
growth plus protection against inflation and monetary instability. The
Gold and Precious Metals Fund focuses on equity securities of
established gold and precious metals companies and pursues current
income as a secondary objective. 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]
World Precious NYSE Arca
Minerals Fund - S&P 500 Gold Miners
Date Investor Class Index Index
---- -------------- ----- -----
12/31/00 $ 10,000.00 $ 10,000.00 $ 10,000.00
01/31/01 9,900.99 10,354.57 10,503.79
02/28/01 9,881.19 9,411.02 11,571.75
03/30/01 9,227.72 8,815.15 10,420.23
04/30/01 10,099.01 9,499.63 11,950.92
05/31/01 10,495.05 9,563.37 12,537.31
06/30/01 10,455.45 9,330.70 12,834.37
07/31/01 9,861.39 9,238.80 12,531.03
08/31/01 10,000.00 8,661.03 13,437.18
09/30/01 10,574.26 7,961.69 14,102.79
10/31/01 10,435.64 8,113.59 13,684.97
11/30/01 10,376.24 8,735.81 13,143.02
12/31/01 10,752.48 8,812.40 13,927.93
01/31/02 12,633.66 8,683.87 16,016.04
02/28/02 13,841.58 8,516.37 17,788.73
03/31/02 16,099.01 8,836.69 19,564.31
04/30/02 17,782.18 8,301.18 20,853.50
05/31/02 25,029.70 8,240.24 25,887.55
06/30/02 20,653.47 7,653.50 22,574.99
07/31/02 14,851.49 7,057.07 18,675.55
08/31/02 16,910.89 7,103.28 22,141.24
09/30/02 17,029.70 6,332.00 22,322.85
10/31/02 14,772.28 6,888.79 20,017.39
11/30/02 14,930.69 7,293.86 20,052.17
12/31/02 19,722.02 6,865.59 25,027.77
01/31/03 20,474.30 6,686.08 25,225.81
02/28/03 19,722.02 6,585.62 22,589.96
03/31/03 18,583.43 6,649.38 20,936.58
04/30/03 18,095.46 7,196.83 20,725.98
05/31/03 19,417.04 7,575.65 23,313.53
06/30/03 19,823.68 7,672.43 24,673.24
07/31/03 21,104.60 7,807.76 26,081.24
08/31/03 24,744.02 7,959.73 29,837.70
09/30/03 26,655.23 7,875.45 29,702.46
10/31/03 32,612.50 8,320.73 32,479.35
11/30/03 38,000.47 8,393.85 37,427.43
12/31/03 38,004.00 8,833.76 36,807.23
01/31/04 35,266.61 8,995.88 32,305.46
02/29/04 36,817.80 9,120.87 33,797.03
03/31/04 40,034.22 8,983.29 36,141.62
04/30/04 31,297.41 8,842.45 27,647.68
05/31/04 32,323.93 8,963.55 30,504.27
06/30/04 31,206.16 9,137.79 29,418.92
07/31/04 29,700.60 8,834.96 28,943.15
08/31/04 30,978.05 8,870.45 31,368.40
09/30/04 35,768.47 8,966.45 34,559.73
10/31/04 36,589.68 9,103.43 35,051.44
11/30/04 40,011.41 9,471.65 36,111.67
12/31/04 38,371.18 9,793.86 33,289.86
01/31/05 36,377.57 9,555.13 30,955.90
02/28/05 40,130.25 9,756.10 33,371.98
03/31/05 38,253.91 9,583.53 31,536.49
04/30/05 33,093.97 9,401.85 28,108.00
05/31/05 32,976.70 9,700.74 28,991.93
06/30/05 36,354.11 9,714.64 31,486.74
07/31/05 36,565.20 10,075.76 30,704.73
08/31/05 38,793.36 9,983.77 32,177.95
09/30/05 44,281.66 10,064.59 37,650.10
10/31/05 40,575.88 9,896.72 34,808.48
11/30/05 44,633.47 10,270.66 38,138.43
12/31/05 50,222.50 10,274.30 42,969.62
01/31/06 62,135.51 10,546.33 51,715.69
02/28/06 60,553.70 10,574.86 46,661.35
03/31/06 69,204.23 10,706.47 50,791.67
04/30/06 77,657.03 10,850.14 57,152.59
05/31/06 71,502.80 10,538.25 50,779.60
06/30/06 71,329.79 10,552.25 50,753.51
07/31/06 72,713.87 10,617.29 50,796.50
08/31/06 74,196.82 10,869.53 53,169.59
09/30/06 66,188.90 11,149.46 46,747.81
10/31/06 71,230.92 11,512.55 49,768.63
11/30/06 78,620.95 11,731.12 54,883.35
12/31/06 76,486.38 11,895.65 52,361.01
01/31/07 76,430.26 12,075.37 51,920.01
02/28/07 77,552.58 11,839.90 52,482.25
03/31/07 76,346.09 11,972.03 51,770.27
04/30/07 79,909.46 12,502.18 52,025.31
05/31/07 80,246.16 12,938.00 51,394.00
06/30/07 79,516.65 12,723.19 49,702.46
07/31/07 82,518.87 12,329.19 52,547.94
08/31/07 73,147.46 12,513.74 49,233.93
09/30/07 88,775.82 12,981.25 59,166.30
10/31/07 103,899.14 13,187.70 66,225.18
11/30/07 89,729.80 12,636.14 60,705.69
12/31/07 94,091.23 12,548.70 61,187.75
01/31/08 98,679.30 11,796.10 66,842.00
02/28/08 108,249.72 11,413.20 70,758.34
03/31/08 95,202.41 11,363.81 63,772.88
04/30/08 85,882.89 11,917.13 58,122.49
05/31/08 91,976.42 12,071.47 61,518.62
06/30/08 90,757.72 11,054.76 64,503.21
07/31/08 77,495.33 10,961.80 58,014.78
08/31/08 67,638.16 11,120.45 50,064.24
09/30/08 55,630.32 10,130.66 44,945.18
10/31/08 32,582.45 8,429.42 27,766.02
11/30/08 34,446.35 7,824.37 35,386.66
12/31/08 44,264.55 7,906.81 44,794.96
01/31/09 45,051.69 7,241.17 45,323.38
02/28/09 45,514.70 6,472.67 44,212.43
03/31/09 51,580.24 7,038.63 49,174.03
04/30/09 50,330.10 7,711.70 43,782.06
05/31/09 66,906.15 8,142.53 58,816.60
06/30/09 59,868.27 8,158.79 50,283.53
07/31/09 65,146.68 8,775.10 52,924.70
08/31/09 65,146.68 9,091.47 52,528.14
09/30/09 72,693.88 9,430.48 60,154.57
10/31/09 72,554.98 9,255.52 56,447.37
11/30/09 84,454.55 9,810.55 67,781.00
12/31/09 83,882.19 9,999.96 61,502.68
01/31/10 75,840.67 9,640.77 54,259.29
02/28/10 81,233.79 9,939.00 58,545.14
03/31/10 85,230.47 10,538.54 59,040.72
04/30/10 93,609.06 10,704.96 67,433.22
05/31/10 86,241.68 9,851.05 66,214.56
06/30/10 86,289.83 9,336.05 69,278.37
07/31/10 84,219.26 9,989.87 64,383.42
08/31/10 91,442.18 9,539.72 71,370.82
09/30/10 104,202.67 10,390.73 74,637.98
10/31/10 109,210.57 10,785.96 76,262.86
11/30/10 117,155.78 10,787.68 79,274.98
12/31/10 121,944.53 11,508.46 82,376.95
AVERAGE ANNUAL PERFORMANCE For the Periods Ended December 31, 2010
Since Inception
(Institutional
One Year Five Year Ten Year Class)
World Precious Minerals Fund -
Investor Class 45.38% 19.40% 28.40% n/a
--------------------------------------------------------------------------------
World Precious Minerals Fund - Institutional Class
(Inception 3/1/10) n/a n/a n/a 46.72%
--------------------------------------------------------------------------------
S&P 500 Index 15.06% 2.29% 1.41% 14.60%
--------------------------------------------------------------------------------
NYSE Arca Gold Miners Index* 33.94% 13.89% 23.45% 38.35%
* These are not total returns. These returns reflect simple appreciation only
and do not reflect dividend reinvestment.
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. Returns for periods less than one year are not annualized.
Pursuant to a voluntary arrangement, the Adviser has agreed to limit total fund
operating expenses (exclusive of acquired fund fees and expenses, extraordinary
expenses, taxes, brokerage commissions and interest, and advisory fee
performance adjustments, if any) to not exceed 1.90% for the Investor Class.
Also pursuant to a voluntary agreement, the Adviser has agreed to waive all
class specific expenses of the Institutional Class. The Adviser can modify or
terminate these arrangements at any time.
See Definitions for Management Teams' Perspectives for index definitions.
42
PRECIOUS METALS AND MINERALS FUNDS
GOLD AND PRECIOUS METALS FUND
[Gold and Precious Metals Fund Graph]
FTSE
Gold and Precious S&P 500 Gold Mines
Date Metals Fund Index Index
---- ----------------- ------- ----------
12/31/00 $ 10,000.00 $ 10,000.00 $ 10,000.00
01/31/01 9,885.06 10,354.57 9,763.75
02/28/01 10,114.94 9,411.02 10,455.97
03/30/01 9,195.40 8,815.15 9,426.86
04/30/01 10,421.46 9,499.63 10,991.08
05/31/01 10,881.23 9,563.37 11,367.91
06/30/01 10,842.91 9,330.70 11,357.37
07/31/01 10,038.31 9,238.80 11,087.04
08/31/01 10,306.51 8,661.03 11,795.35
09/30/01 10,727.97 7,961.69 12,866.30
10/31/01 10,574.71 8,113.59 12,305.88
11/30/01 10,498.08 8,735.81 11,812.61
12/31/01 11,111.11 8,812.40 12,267.99
01/31/02 12,950.19 8,683.87 14,020.77
02/28/02 14,827.59 8,516.37 15,411.35
03/31/02 16,934.87 8,836.69 16,992.98
04/30/02 18,620.69 8,301.18 18,123.76
05/31/02 24,674.33 8,240.24 20,767.26
06/30/02 20,229.89 7,653.50 17,786.86
07/31/02 14,942.53 7,057.07 15,048.42
08/31/02 17,279.69 7,103.28 17,134.14
09/30/02 17,777.78 6,332.00 17,225.72
10/31/02 15,325.67 6,888.79 15,665.89
11/30/02 15,478.93 7,293.86 15,265.21
12/31/02 20,153.26 6,865.59 18,691.78
01/31/03 20,651.34 6,686.08 18,608.25
02/28/03 19,348.66 6,585.62 17,419.98
03/31/03 18,122.61 6,649.38 16,341.43
04/30/03 17,318.01 7,196.83 16,169.69
05/31/03 19,272.03 7,575.65 18,019.75
06/30/03 19,846.74 7,672.43 18,955.09
07/31/03 20,881.23 7,807.76 19,642.33
08/31/03 24,291.19 7,959.73 22,162.52
09/30/03 25,363.98 7,875.45 22,324.02
10/31/03 29,310.34 8,320.73 24,133.12
11/30/03 34,827.59 8,393.85 26,709.48
12/31/03 33,671.35 8,833.76 26,692.51
01/31/04 29,866.03 8,995.88 23,349.18
02/29/04 30,980.72 9,120.87 23,792.86
03/31/04 33,978.85 8,983.29 25,809.39
04/30/04 26,099.14 8,842.45 20,184.61
05/31/04 28,213.21 8,963.55 22,242.69
06/30/04 26,906.33 9,137.79 21,341.87
07/31/04 25,330.39 8,834.96 21,406.38
08/31/04 26,714.14 8,870.45 23,283.94
09/30/04 30,557.91 8,966.45 24,991.22
10/31/04 30,942.28 9,103.43 25,949.97
11/30/04 33,286.98 9,471.65 26,761.41
12/31/04 31,503.91 9,793.86 24,843.77
01/31/05 29,996.36 9,555.13 23,013.02
02/28/05 32,083.73 9,756.10 24,577.24
03/31/05 30,073.67 9,583.53 23,395.11
04/30/05 26,130.85 9,401.85 20,951.29
05/31/05 26,710.67 9,700.74 21,178.32
06/30/05 29,648.46 9,714.64 23,344.35
07/31/05 29,880.39 10,075.76 22,556.90
08/31/05 31,890.46 9,983.77 23,618.64
09/30/05 36,451.76 10,064.59 28,451.87
10/31/05 34,209.76 9,896.72 26,258.48
11/30/05 37,031.59 10,270.66 28,630.92
12/31/05 41,836.65 10,274.30 31,757.46
01/31/06 52,119.86 10,546.33 37,572.41
02/28/06 49,382.88 10,574.86 32,782.77
03/31/06 56,459.92 10,706.47 34,359.42
04/30/06 64,944.55 10,850.14 38,721.04
05/31/06 60,213.49 10,538.25 35,550.76
06/30/06 60,526.29 10,552.25 35,826.65
07/31/06 61,738.38 10,617.29 35,072.85
08/31/06 63,106.87 10,869.53 35,945.29
09/30/06 56,303.53 11,149.46 32,377.41
10/31/06 59,705.20 11,512.55 34,062.46
11/30/06 65,609.25 11,731.12 37,058.07
12/31/06 62,833.17 11,895.65 35,755.85
01/31/07 62,168.48 12,075.37 34,405.94
02/28/07 62,481.27 11,839.90 34,427.00
03/31/07 59,978.89 11,972.03 33,730.54
04/30/07 60,252.59 12,502.18 33,805.59
05/31/07 59,978.89 12,938.00 32,902.43
06/30/07 58,610.41 12,723.19 32,319.49
07/31/07 60,721.79 12,329.19 34,928.32
08/31/07 56,225.33 12,513.74 33,296.81
09/30/07 69,128.22 12,981.25 41,313.63
10/31/07 79,176.83 13,187.70 46,031.60
11/30/07 71,474.20 12,636.14 43,298.86
12/31/07 73,457.92 12,548.70 43,281.89
01/31/08 81,427.62 11,796.10 47,556.76
02/28/08 87,712.30 11,413.20 50,389.26
03/31/08 79,605.98 11,363.81 44,125.51
04/30/08 72,638.18 11,917.13 40,215.77
05/31/08 76,873.50 12,071.47 43,025.60
06/30/08 78,239.74 11,054.76 46,183.15
07/31/08 70,224.49 10,961.80 41,108.84
08/31/08 62,163.70 11,120.45 35,350.35
09/30/08 56,106.73 10,130.66 33,810.42
10/31/08 37,525.93 8,429.42 21,796.52
11/30/08 43,491.82 7,824.37 28,520.77
12/31/08 53,584.64 7,906.81 34,678.61
01/31/09 53,238.30 7,241.17 34,267.12
02/28/09 52,842.47 6,472.67 33,034.08
03/31/09 57,394.44 7,038.63 36,961.09
04/30/09 53,683.60 7,711.70 33,016.68
05/31/09 69,615.50 8,142.53 43,040.81
06/30/09 61,501.12 8,158.79 38,053.25
07/31/09 64,024.49 8,775.10 39,421.74
08/31/09 63,430.76 9,091.47 38,940.17
09/30/09 71,347.23 9,430.48 43,814.66
10/31/09 70,258.72 9,255.52 41,866.15
11/30/09 80,649.09 9,810.55 49,154.77
12/31/09 76,685.41 9,999.96 44,954.65
01/31/10 69,493.05 9,640.77 39,825.48
02/28/10 73,262.84 9,939.00 42,529.55
03/31/10 74,850.12 10,538.54 43,343.33
04/30/10 83,828.16 10,704.96 48,718.11
05/31/10 80,256.78 9,851.05 47,619.66
06/30/10 82,240.88 9,336.05 49,939.73
07/31/10 77,925.47 9,989.87 46,326.51
08/31/10 84,919.42 9,539.72 51,441.05
09/30/10 93,500.64 10,390.73 53,990.49
10/31/10 96,327.98 10,785.96 54,929.78
11/30/10 102,329.88 10,787.68 55,424.52
12/31/10 104,969.88 11,508.46 58,006.44
AVERAGE ANNUAL PERFORMANCE For the Years Ended
December 31, 2010
One Year Five Year Ten Year
Gold and Precious Metals Fund 36.88% 20.19% 26.49%
----------------------------------------------------------------------
S&P 500 Index 15.06% 2.29% 1.41%
----------------------------------------------------------------------
FTSE Gold Mines Index* 29.03% 12.79% 19.20%
* These are not total returns. These returns reflect simple
appreciation only and do not reflect dividend reinvestment
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.
Pursuant to a voluntary arrangement, the Adviser has agreed to limit
total fund operating expenses (exclusive of acquired fund fees and
expenses, extraordinary expenses, taxes, brokerage commissions and
interest, and advisory fee performance adjustments, if any) to not
exceed 1.90%. The Adviser can modify or terminate this arrangement at
any time.
See Definitions for Management Teams' Perspectives for index
definitions.
Please visit our website at www.usfunds.com for updated performance
information for different time periods.
43
PRECIOUS METALS AND MINERALS FUNDS
THE YEAR IN REVIEW - ECONOMIC AND POLITICAL ISSUES THAT AFFECTED THE FUNDS
Inflation fears in China fueled demand for gold as a store of value in
2010. China's gold imports rose nearly five times during the first 10
months of 2010, and the country approved its first mutual fund that
invests in gold-backed, exchange-traded funds overseas. "The fund offers
a brand new way to invest in gold, giving investors access to golden
opportunities globally," Lion Fund Management, the firm which launched
the fund, said in a statement.
China also moved to further develop its gold market by increasing the
number of banks allowed to trade bullion internationally and announced
measures that will encourage the development of gold-linked products.
India's central bank is considering a proposal that will allow the
country's banks to trade in gold. If approved, the move will only
strengthen the bullish case for gold.
In a major shift in direction, participating members of the Central Bank
Gold Agreement sold 96 percent less gold in 2010 than the previous year.
Recent research conducted by Bank of America-Merrill Lynch showed that
adding 8 to 20 percent of gold to a currency portfolio had a significant
effect in lowering the overall volatility of the pool of reserve,
regardless of the directional move in gold prices. Currencies are the
predominant vehicle used by central banks to maintain reserve balances.
The world's largest mining companies are expected to spend up to $120
billion in 2010, three times the 15-year average, according to the
Financial Times. Mining support services should perform well in this
environment. A PricewaterhouseCoopers survey of top gold mining
executives revealed 70 percent of the executives expect to use
additional cash inflows from higher prices to look for new projects.
This should be positive for further acquisition activity.
The Chilean government reached an agreement on a bill that fixes the tax
rate for miners operating in the country over the next six years; some
of these rates are as high as 14 percent, which will raise the marginal
cost of mining. The China Daily newspaper reported that China plans to
further cut export quotas up to 30 percent for rare earth metals in
2011. This could further pressure importing nations to swiftly find new
sources of supply since China currently accounts for more than 90
percent of the world's production of rare earth metals.
South African officials said the country's mining sector is filled with
problems such as illegal drilling, rights sold without permission, and
companies having competing claims to the same plot. The South African
44
PRECIOUS METALS AND MINERALS FUNDS
mining ministry has now imposed a six-month halt on new prospecting bids
in order to overhaul mining laws, iron out irregularities in the way
mining rights are awarded, and audit existing exploration and drilling
contracts. Jacob Zuma, the President of the African National Congress,
said the government has agreed to explore greater state control of the
mining sector. However, Zuma announced no firm shift in policy during a
large government meeting, one of the country's largest in years.
INVESTMENT HIGHLIGHTS
The World Precious Minerals Fund began offering an institutional class
of shares on March 1, 2010. Performance of the Institutional Class
shares (UNWIX) is included in the performance graph on the previous
page. As the Institutional Class had less than one year of operations,
the following discussion of performance is for the one-year period ended
December 31, 2010, of the Investor Class.
For the year ending December 31, 2010, the Investor Class of the World
Precious Minerals Fund returned 45.38 percent, while its benchmark NYSE
Arca Gold Miners Index rose 34.76 percent on a total return basis. The
Gold and Precious Metals Fund gained 36.88 percent, compared to a 29.03
percent return (simple appreciation basis) for its benchmark, the FTSE
Gold Mines Index.
Both funds outperformed their benchmarks primarily due to their higher
relative exposure to mid-tier and smaller capitalization stocks.
Spot gold finished the year at $1,420.78 per ounce, up $323.83, or 29.52
percent. The S&P 500 Index posted a gain of 15.06 percent, the U.S.
Trade Weighted Dollar Index increased 1.50 percent, and the yield on the
90-day Treasury bill finished the year at a yield of 0.13 percent.
Because the funds are actively managed and the holding period is
generally not a consideration in investment decisions, the portfolio
turnover rate may fluctuate from year to year as the fund adjusts its
portfolio composition. The annual portfolio turnover for Gold and
Precious Minerals Fund was, and is expected to continue to be, more than
100 percent.
STRENGTHS
* Consolidation over the past year was a significant driver of
outperformance in both funds as several senior gold mining companies
made important acquisitions of several fund holdings. Red Back Mining,
Inc.,(1) which was purchased by Kinross Gold Corp.,(2) was a
significant driver of performance in both funds. In addition, Andean
Resources Ltd.,(1) which was taken over by Goldcorp, Inc.,(3) was a
45
PRECIOUS METALS AND MINERALS FUNDS
significant contributor to the performance of World Precious Minerals
Fund.
* Another strong contributor to the World Precious Minerals Fund's
performance was its holding in Pacific Rubiales Energy Corp.(4) The
fund holds this security as a hedge against higher oil prices, a key
component of mining costs.
* Silver stocks also were strong performers across the board as silver
prices moved up about 83 percent for the year. Silver mining holdings
such as Silver Wheaton Corp.,(5) Silvercorp Metals, Inc.(6) were also
contributors to both funds' performance.
* World Bank President Robert Zoellick wrote in the Financial Times that
gold should be used as an "international reference point of market
expectations about inflation, deflation and future currency values.
Although textbooks may view gold as the old money, markets are using
gold as an alternative monetary asset today." Zoellick later said that
he was not advocating a return to a gold standard for exchange rates,
but described the metal as "the elephant in the room" that
policymakers needed to acknowledge.
* The World Gold Council released its Gold Demand Trends publication for
the second quarter of 2010 and highlighted the massive growth in
investment demand, including a 414 percent jump in gold ETFs compared
to the same period last year. Gold demand also rose 36 percent higher
than the same period last year.
* Gold's role as a reserve asset has been underlined as the Bank of
International Settlements reported record activity for gold swaps. The
fact that countries in financial distress have swapped their gold
rather than sell it suggests that they want to hold on to it for the
long term.
WEAKNESSES
* Absent from being a major contributor to our returns for 2010 was
Randgold Resources Ltd.,(7) which was a top holding in both funds.
While Randgold had significant returns through the end of the third
quarter, political uncertainty in the Ivory Coast, where Randgold's
newest mine is located, from contested presidential elections took its
toll.
* "The global financial crisis has weakened mining and metals companies'
defenses against fraud," the 2010 Ernst & Young Business Risk Reports
says. "That provides increased exposure to corruption as mining and
metal companies must expand their operations to [new] territories."
* The Ernst & Young report revealed that capital allocation is the
number one risk for mining companies in 2011. The volatility of
prices, cash flow,
46
PRECIOUS METALS AND MINERALS FUNDS
risk appetites and availability of capital during the recent global
financial crisis have all made the allocation of capital in mining and
metals companies more complex, the report said. A shortage of skilled
labor was the second-most important risk to mining companies; cost
management was third.
* Investors in the U.S. bought roughly 45 metric tons of gold bars and
coins during the first half of 2010, according to GFMS, Ltd. This is
less than half the amount of gold bars and coins purchased during the
same time period in 2009.
CURRENT OUTLOOK
OPPORTUNITIES
* Bank of America-Merrill Lynch believes mining merger and acquisition
(M&A) activity will soon increase. The firm expects "the reserve
hungry senior and mid-tier producers to continue focusing their
attention on resource-rich junior producers and developers."
* Due to strong demand for metals, Ernst & Young is forecasting more
initial public offerings (IPOs). "We're very busy looking at IPOs at
the moment," said Lee Downham, a partner in the mining division of
Ernst & Young. "I would expect some multi-billion, FTSE-100 mining
companies coming to market at some point next year."
* The China Gold Association forecasts China's gold demand to rise 12
percent in 2011 and continue to increase further next year because
"Chinese investors have shown their willingness to buy more when
prices are on the rise." Meanwhile, Japan's biggest bank recently
proclaimed assets held in the country's first gold-backed,
exchange-traded funds may increase eight times by year end as
investors seek to protect their wealth. Japan has the world's largest
amount of public debt.
THREATS
* In South Africa, supporters of mine nationalism want to create a
state-owned mining company that could control 60 percent ownership of
new mining operations. This debate around the nationalism of South
African mines has created great uncertainty with investors and could
even see some projects put on hold until after a ruling by the African
National Congress policy review conference in 2012.
* China's central bank, the People's Bank of China (PBOC), raised the
reserve requirements for its banks numerous times in 2010 to stem the
tide of rising inflation. This move tightens the Chinese economy and
the popular belief is that this action will put a burden on commodity
prices.
47
PRECIOUS METALS AND MINERALS FUNDS
* Nevada gold producers are seeing higher-than-expected profit margins
in 2010. The average price of gold received by gold producers in
Nevada is $100 higher than a year earlier. At the same time, the
average cost of gold production in the state declined about $20 for
the first time in a decade during 2010. Despite these numbers, Nevada
lawmakers warned miners that the state's budget situation is bleak. It
is a strong possibility that the Nevada legislature may target the
state's mining industry through increased taxes and fees to generate
state revenue.
(1)Neither fund held this security at 12/31/10.
(2)This security comprised 5.30% of the total net assets of the
World Precious Minerals Fund and 8.35% of the total net assets of
the Gold and Precious Metals Fund as of 12/31/10.
(3)This security comprised 3.54% of the total net assets of the
World Precious Minerals Fund and 3.46% of the total net assets of
the Gold and Precious Metals Fund as of 12/31/10.
(4)This security comprised 1.34% of the total net assets of the
World Precious Minerals Fund and 0.00% of the total net assets of
the Gold and Precious Metals Fund as of 12/31/10.
(5)This security comprised 1.17% of the total net assets of the
World Precious Minerals Fund and 5.67% of the total net assets of
the Gold and Precious Metals Fund as of 12/31/10.
(6)This security comprised 1.78% of the total net assets of the
World Precious Minerals Fund and 2.76% of the total net assets of
the Gold and Precious Metals Fund as of 12/31/10.
(7)This security comprised 6.31% of the total net assets of the
World Precious Minerals Fund and 7.58% of the total net assets of
the Gold and Precious Metals Fund as of 12/31/10.
48
PRECIOUS METALS AND MINERALS FUNDS
WORLD PRECIOUS MINERALS FUND
TOP 10 HOLDINGS BASED ON NET ASSETS December 31, 2010
(EXCLUDING REPURCHASE AGREEMENTS)
RANDGOLD RESOURCES LTD. 6.31%
Gold Mining
----------------------------------------------------------------------
KINROSS GOLD CORP. 5.30%
Gold Mining
----------------------------------------------------------------------
ROMARCO MINERALS, INC. 4.98%
Gold Mining
----------------------------------------------------------------------
GOLDCORP, INC. 3.54%
Gold Mining
----------------------------------------------------------------------
CENTAMIN EGYPT LTD. 3.05%
Gold Mining
----------------------------------------------------------------------
GRAN COLOMBIA GOLD CORP. 3.00%
Gold Mining
----------------------------------------------------------------------
MEDORO RESOURCES LTD. 2.62%
Gold Mining
----------------------------------------------------------------------
BARRICK GOLD CORP. 2.57%
Gold Mining
----------------------------------------------------------------------
YAMANA GOLD, INC. 2.08%
Gold Mining
----------------------------------------------------------------------
CHESAPEAKE GOLD CORP. 2.00%
Gold Mining
----------------------------------------------------------------------
TOTAL TOP TEN HOLDINGS 35.45%
PORTFOLIO ALLOCATION BY INDUSTRY*
BASED ON TOTAL INVESTMENTS December 31, 2010
[Pie Chart]
Gold Mining 65.1%
Diversified Minerals 6.2%
Cash Equivalent 5.6%
Silver Mining 5.4%
Metal - Diversified 4.9%
Precious Metals 2.6%
Exchange-Traded Funds 2.5%
Other 7.7%
* Summary information above may differ from the portfolio schedule
included in the financial statements due to the use of different
classifications of securities for presentation purposes.
49
PRECIOUS METALS AND MINERALS FUNDS
GOLD AND PRECIOUS METALS FUND
TOP 10 HOLDINGS BASED ON NET ASSETS December 31, 2010
(EXCLUDING REPURCHASE AGREEMENTS)
KINROSS GOLD CORP. 8.35%
Gold Mining
----------------------------------------------------------------------
RANDGOLD RESOURCES LTD. 7.58%
Gold Mining
----------------------------------------------------------------------
BARRICK GOLD CORP. 6.88%
Gold Mining
----------------------------------------------------------------------
DUNDEE PRECIOUS METALS, INC. 6.23%
Gold Mining
----------------------------------------------------------------------
SILVER WHEATON CORP. 5.67%
Silver Mining
----------------------------------------------------------------------
CENTAMIN EGYPT LTD. 4.23%
Gold Mining
----------------------------------------------------------------------
GRAN COLOMBIA GOLD CORP. 4.03%
Gold Mining
----------------------------------------------------------------------
GOLDCORP, INC. 3.46%
Gold Mining
----------------------------------------------------------------------
AGNICO-EAGLE MINES LTD. 2.93%
Gold Mining
----------------------------------------------------------------------
SILVERCORP METALS, INC. 2.76%
Silver Mining
----------------------------------------------------------------------
TOTAL TOP TEN HOLDINGS 52.12%
PORTFOLIO ALLOCATION BY INDUSTRY*
BASED ON TOTAL INVESTMENTS December 31, 2010
[Pie Chart]
Gold Mining 65.4%
Silver Mining 12.6%
Cash Equivalent 9.8%
Exchange-Traded Funds 3.3%
Gold/Mineral Royalty Companies 3.2%
Other 5.7%
* Summary information above may differ from the portfolio schedule
included in the financial statements due to the use of different
classifications of securities for presentation purposes.
50
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)
---- --------- ------- ------------------
12/31/00 $ 10,000.00 $ 10,000.00 $ 10,000.00
01/31/01 10,822.56 10,354.57 10,498.13
02/28/01 10,070.51 9,411.02 8,830.08
03/30/01 9,870.74 8,815.15 8,176.96
04/30/01 10,317.27 9,499.63 9,235.79
05/31/01 10,869.57 9,563.37 8,966.47
06/30/01 11,186.84 9,330.70 8,561.22
07/31/01 10,716.80 9,238.80 7,691.23
08/31/01 10,599.29 8,661.03 7,644.08
09/30/01 9,788.48 7,961.69 6,380.44
10/31/01 10,834.31 8,113.59 7,449.34
11/30/01 11,504.11 8,735.81 8,402.15
12/31/01 11,938.90 8,812.40 9,192.18
01/31/02 12,937.72 8,683.87 9,986.97
02/28/02 12,784.96 8,516.37 9,058.69
03/31/02 13,936.55 8,836.69 9,910.72
04/30/02 15,052.88 8,301.18 10,435.96
05/31/02 15,276.15 8,240.24 10,132.68
06/30/02 14,347.83 7,653.50 8,882.51
07/31/02 13,466.51 7,057.07 8,370.40
08/31/02 14,171.56 7,103.28 8,573.06
09/30/02 13,995.30 6,332.00 8,235.24
10/31/02 14,958.87 6,888.79 9,109.99
11/30/02 16,110.46 7,293.86 10,089.49
12/31/02 16,075.21 6,865.59 9,494.79
01/31/03 15,569.92 6,686.08 9,328.05
02/28/03 16,086.96 6,585.62 9,802.83
03/31/03 15,487.66 6,649.38 9,107.20
04/30/03 17,426.56 7,196.83 10,847.89
05/31/03 19,106.93 7,575.65 12,100.35
06/30/03 19,189.19 7,672.43 12,214.40
07/31/03 18,930.67 7,807.76 12,149.76
08/31/03 20,822.56 7,959.73 13,674.92
09/30/03 22,232.67 7,875.45 14,371.76
10/31/03 22,843.71 8,320.73 14,584.41
11/30/03 23,595.77 8,393.85 14,522.18
12/31/03 25,937.43 8,833.76 16,365.80
01/31/04 27,783.91 8,995.88 16,841.76
02/29/04 30,398.72 9,120.87 18,191.19
03/31/04 32,505.44 8,983.29 19,797.87
04/30/04 29,432.11 8,842.45 17,415.40
05/31/04 29,097.51 8,963.55 16,693.83
06/30/04 29,754.31 9,137.79 17,151.90
07/31/04 28,998.37 8,834.96 16,701.41
08/31/04 30,435.90 8,870.45 17,643.52
09/30/04 33,149.85 8,966.45 19,099.13
10/31/04 35,206.99 9,103.43 20,322.12
11/30/04 36,966.72 9,471.65 20,805.99
12/31/04 39,520.30 9,793.86 22,181.50
01/31/05 39,958.55 9,555.13 22,634.53
02/28/05 44,843.81 9,756.10 25,913.44
03/31/05 40,061.67 9,583.53 23,215.59
04/30/05 37,225.90 9,401.85 21,930.65
05/31/05 38,527.78 9,700.74 22,432.65
06/30/05 40,628.83 9,714.64 23,822.89
07/31/05 44,727.80 10,075.76 26,222.42
08/31/05 48,594.76 9,983.77 28,591.72
09/30/05 54,124.51 10,064.59 31,844.95
10/31/05 49,793.51 9,896.72 29,112.08
11/30/05 53,853.82 10,270.66 31,646.69
12/31/05 55,638.13 10,274.30 32,836.13
01/31/06 64,455.72 10,546.33 37,313.31
02/28/06 66,216.42 10,574.86 39,154.98
03/31/06 64,357.12 10,706.47 37,959.69
04/30/06 70,681.56 10,850.14 42,001.83
05/31/06 59,525.76 10,538.25 36,395.01
06/30/06 57,990.43 10,552.25 36,440.06
07/31/06 61,455.49 10,617.29 38,975.24
08/31/06 63,159.84 10,869.53 39,464.65
09/30/06 60,765.29 11,149.46 37,939.02
10/31/06 65,244.51 11,512.55 40,904.30
11/30/06 69,653.31 11,731.12 44,038.18
12/31/06 73,880.32 11,895.65 46,527.97
01/31/07 72,938.14 12,075.37 45,865.55
02/28/07 71,573.59 11,839.90 45,361.72
03/31/07 76,658.14 11,972.03 48,212.79
04/30/07 78,363.82 12,502.18 49,643.31
05/31/07 76,885.57 12,938.00 48,687.48
06/30/07 82,116.32 12,723.19 51,834.59
07/31/07 86,112.49 12,329.19 54,282.90
08/31/07 82,619.90 12,513.74 51,917.68
09/30/07 89,686.29 12,981.25 56,888.07
10/31/07 97,045.08 13,187.70 62,323.56
11/30/07 93,991.10 12,636.14 60,786.10
12/31/07 98,160.30 12,548.70 62,413.52
01/31/08 83,653.75 11,796.10 52,200.80
02/28/08 86,842.43 11,413.20 55,134.12
03/31/08 83,870.27 11,363.81 53,822.97
04/30/08 87,669.13 11,917.13 55,441.70
05/31/08 96,782.47 12,071.47 61,380.50
06/30/08 89,578.40 11,054.76 56,425.19
07/31/08 83,909.63 10,961.80 53,926.57
08/31/08 73,694.03 11,120.45 47,259.09
09/30/08 58,223.01 10,130.66 37,444.80
10/31/08 37,496.56 8,429.42 24,691.47
11/30/08 31,119.20 7,824.37 20,893.68
12/31/08 30,233.45 7,906.81 20,704.26
01/31/09 26,040.92 7,241.17 17,433.81
02/28/09 24,564.68 6,472.67 16,155.70
03/31/09 27,989.56 7,038.63 19,082.25
04/30/09 33,599.28 7,711.70 23,683.05
05/31/09 41,866.24 8,142.53 29,238.34
06/30/09 39,386.15 8,158.79 27,181.10
07/31/09 43,696.78 8,775.10 31,200.72
08/31/09 44,523.48 9,091.47 32,695.30
09/30/09 49,306.50 9,430.48 35,763.46
10/31/09 49,365.55 9,255.52 36,810.79
11/30/09 51,432.29 9,810.55 37,867.70
12/31/09 53,794.28 9,999.96 39,350.64
01/31/10 54,148.58 9,640.77 40,080.99
02/28/10 51,078.00 9,939.00 37,711.84
03/31/10 56,687.72 10,538.54 42,138.68
04/30/10 57,101.07 10,704.96 42,430.20
05/31/10 50,369.40 9,851.05 37,086.96
06/30/10 48,243.61 9,336.05 35,687.37
07/31/10 53,853.33 9,989.87 40,497.46
08/31/10 51,963.74 9,539.72 39,120.02
09/30/10 58,282.06 10,390.73 43,184.79
10/31/10 61,293.60 10,785.96 45,272.86
11/30/10 59,344.95 10,787.68 43,004.01
12/31/10 63,832.73 11,508.46 46,427.69
AVERAGE ANNUAL PERFORMANCE For the Years Ended
December 31, 2010
One Year Five Year Ten Year
Eastern European Fund 18.66% 2.78% 20.35%
----------------------------------------------------------------------
S&P 500 Index 15.06% 2.29% 1.41%
----------------------------------------------------------------------
MSCI Emerging Markets Europe 10/40
Index (Net Total Return) 17.98% 7.16% 16.57%
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.
Pursuant to a voluntary arrangement, the Adviser has agreed to limit
total fund operating expenses (exclusive of acquired fund fees and
expenses, extraordinary expenses, taxes, brokerage commissions and
interest, and advisory fee performance adjustments, if any) to not
exceed 2.85%. The Adviser can modify or terminate this arrangement at
any time.
See Definitions for Management Teams' Perspectives for index
definitions.
Please visit our website at www.usfunds.com for updated performance
information for different time periods.
51
EASTERN EUROPEAN FUND
THE YEAR IN REVIEW - ECONOMIC AND POLITICAL ISSUES THAT AFFECTED THE FUND
Increasingly positive macroeconomic data flow is a theme that flowed
through 2010. The Russian economy's sluggish recovery caused the
nation's government to continue to provide stimulus through lowering
interest rates below 8 percent and expanding the monetary base by 30
percent from a year earlier. These measures ran counter to the other
BRIC countries (Brazil, Russia, India and China), where signs of
overheating led policymakers to apply the brakes. The green shoots of
Russia's recovery were clearly seen across the Russian economic
landscape, such as industrial production which rose 6.7 percent on a
year-over-year basis in November. Russia's domestic sectors proved
resilient through the market's mid-year downturn, and then built upon
their gains as the year progressed. Stocks with the most domestic
exposure outperformed key natural resources such as oil and natural gas.
Even though European spot natural gas prices edged up 5 percent on
higher demand, the gap with oil-linked Russian exports widened,
rendering the latter less competitive.
The recovery was more robust in Turkey, where gross domestic product
(GDP) expanded 10.2 percent during the first half of the year. The
region's most vibrant economy rebounded on strength in exports and
domestic demand. Borrowing rates touched a four-decade low, spurring
double-digit loan growth among the nation's banks.
With subdued inflation risk, both Russia and Turkey are likely to
maintain a lower interest rate environment for an extended period.
Global deflationary forces create an opportunity for structural changes
in the economies that have historically struggled under the burden of
high domestic inflation. Against this stable macroeconomic backdrop, the
Russian ruble and Turkish lira remained relatively unchanged relative to
the U.S. dollar.
The same cannot be said about other currencies in the region. The euro
lost 6.5 percent of its value amid concerns of a Greek sovereign debt
default. Hungary's forint was the most battered currency, declining 10.1
percent for the year. Hungary's domestic demand has been contracting for
three years amid an austerity program separate from the International
Monetary Fund (IMF) support deal. After elections in May, the new
government has plans to grow the economy via fiscal spending and has
tried without success to renegotiate the IMF deal.
While a weaker euro is a sign of structural problems in the European
Union, it made German exports more competitive. German firms, in turn,
rely on suppliers from Eastern Europe, and industrial production in
Czech
52
EASTERN EUROPEAN FUND
Republic, Slovakia and Hungary saw double digit percentage growth in
November.
INVESTMENT HIGHLIGHTS
OVERVIEW
The fund returned 18.66 percent for the year ended December 31, 2010,
compared to 17.98 percent return for the benchmark MSCI Emerging Markets
Europe 10/40 Index (Net Total Return).
STRENGTHS
* The fund's significant overweighting in materials, which was one of
the top-performing sectors during the year, was the main contributor
to the portfolio's performance. The top contributor in this sector was
Russia's Novolipetsk Steel,(2) which returned over 50 percent during
the year.
* Stock selection within the energy sector also played a role. NovaTek
OAO,(3) the fund's largest holding in the sector, appreciated by over
80 percent during the year. TNK-BP Holding(4) is another example of a
positive contributor. We built our position in this stock through the
over-the-counter market prior to its listing on the Russian Trading
System Stock Exchange (RTS).
* The fund's relative overweight in Turkey contributed to its
performance, as this was the best-performing market in the region.
Banks led the advance, with Turkiye Garanti Bankasi A.S.(5) returning
over 20 percent during the year.
* The fund was significantly underweight in Central European equities
out of concern that they would be negatively impacted by currency
devaluation stemming from the Greek crisis contagion. This concern has
materialized, with Hungary, Czech Republic and Poland underperforming
Russia and Turkey.
* Strategic underweighting in Russian oil and gas companies, which
generally underperformed the RTS and overall index, was another major
contributor to the portfolio's relative performance versus the
benchmark. Index heavyweight Gazprom OAO(6) underperformed.
WEAKNESSES
* Faced with a budget deficit, the Russian government decided on an
early end to the export duty waiver for green field development in
East Siberia. As a result, Rosneft Oil Co. OJSC(7) underperformed with
a negative return.
53
EASTERN EUROPEAN FUND
* Sberbank RF(8) continued to attract customer deposits and grow retail
loans, but shares ended the first half down over 10 percent due to
anemic growth in corporate lending.
CURRENT OUTLOOK
OPPORTUNITIES
* Russian banks are experiencing accelerating credit growth, and are
positively geared to inflation and the rate hike cycle. Bad loan
provisions are expected to decline, boosting earnings growth.
* Two recent deals by major multinational companies, PepsiCo Inc.'s(9)
acquisition of Wimm-Bill-Dann Foods OJSC(9) and BP plc's(9) share swap
with Rosneft, may change investors' perception about the balance of
risks and opportunities in Russia.
* Adoption of a fiscal rule in Turkey may trigger credit rating upgrades
on sovereign bonds to investment grade. The law, set to take effect in
2011, aims at cutting the budget deficit to 1 percent of GDP and the
debt-to-GDP ratio to 30 percent in five to ten years.
THREATS
* Reliance on state support is potentially risky for minority
shareholders of Russian electricity distribution companies. Minority
shareholders may face a considerable dilution if the state provides
money for capital expenditure programs through additional share
issuance, as occurred for federal transmission and hydro generation
companies in 2009-2010.
* The prospect of shale gas in Europe could potentially reduce Europe's
dependence on supplies of natural gas from the former Soviet Union
states. However, the extent of total reserves of shale gas in Europe
and the potential for extraction remain unclear.
* The Polish government has taken advantage of improved market
conditions to shore up its budget deficit by continuing to tap equity
markets. A steady pipeline of state and private initial public
offerings (IPOs) may exceed demand for new equity offerings.
(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)This security comprised 3.79% of the fund's total net assets as
of 12/31/10.
(3)This security comprised 5.39% of the fund's total net assets as
of 12/31/10.
(4)This security comprised 2.70% of the fund's total net assets as
of 12/31/10.
(5)This security comprised 3.72% of the fund's total net assets as
of 12/31/10.
(6)This security comprised 3.26% of the fund's total net assets as
of 12/31/10.
54
EASTERN EUROPEAN FUND
(7)This security comprised 4.99% of the fund's total net assets as
of 12/31/10.
(8)This security comprised 10.19% of the fund's total net assets as
of 12/31/10.
(9)The fund did not hold this security as of 12/31/10.
TOP 10 HOLDINGS BASED ON NET ASSETS December 31, 2010
(EXCLUDING REPURCHASE AGREEMENTS)
SBERBANK RF 10.19%
Commercial Banks - Non US
----------------------------------------------------------------------
NOVATEK OAO 5.39%
Oil Companies - Exploration & Production
----------------------------------------------------------------------
ROSNEFT OIL CO. OJSC 4.99%
Oil Companies - Integrated
----------------------------------------------------------------------
VTB BANK OJSC 4.49%
Commercial Banks - Non US
----------------------------------------------------------------------
NOVOLIPETSK STEEL 3.79%
Steel - Producers
----------------------------------------------------------------------
TURKIYE GARANTI BANKASI A.S. 3.72%
Commercial Banks - Non US
----------------------------------------------------------------------
MECHEL 3.59%
Steel - Producers
----------------------------------------------------------------------
X5 RETAIL GROUP N.V. 3.42%
Food - Retail
----------------------------------------------------------------------
GAZPROM OAO 3.26%
Oil Companies - Exploration & Production
----------------------------------------------------------------------
MOL HUNGARIAN OIL & GAS NYRT. 2.95%
Oil Compainies - Integrated
----------------------------------------------------------------------
TOTAL TOP TEN HOLDINGS 45.79%
55
EASTERN EUROPEAN FUND
COUNTRY DISTRIBUTION*
BASED ON TOTAL INVESTMENTS December 31, 2010
(EXCLUDING REPURCHASE AGREEMENT)
[Eastern European Fund Pie Chart]
Russia 60.5%
Turkey 18.1%
Poland 6.0%
Hungary 5.2%
Netherlands 3.5%
Canada 2.5%
Luxembourg 2.1%
Other 2.1%
* Country distribution shown is based on domicile. The locale of
company operations may be different.
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 market countries.(1)
PERFORMANCE GRAPH
GLOBAL EMERGING MARKETS FUND
[Global Emerging Markets Fund Graph]
MSCI Emerging
Global Emerging S&P 500 Markets Net Total
Date Markets Fund Index Return Index
---- --------------- ------- -----------------
02/24/05 $ 10,000.00 $ 10,000.00 $ 10,000.00
02/28/05 10,180.00 10,210.33 10,196.56
03/31/05 9,370.00 10,029.72 9,522.68
04/30/05 9,020.00 9,839.59 9,267.07
05/31/05 9,190.00 10,152.39 9,589.64
06/30/05 9,440.00 10,166.93 9,915.45
07/31/05 10,230.00 10,544.87 10,608.51
08/31/05 10,520.00 10,448.60 10,699.37
09/30/05 11,470.00 10,533.18 11,695.59
10/31/05 10,650.00 10,357.49 10,931.16
11/30/05 11,440.00 10,748.84 11,835.44
12/31/05 12,298.06 10,752.65 12,534.99
01/31/06 13,908.39 11,037.34 13,935.03
02/28/06 13,764.80 11,067.20 13,918.54
03/31/06 13,805.82 11,204.94 14,041.19
04/30/06 14,759.72 11,355.30 15,040.99
05/31/06 13,077.58 11,028.89 13,465.14
06/30/06 12,995.53 11,043.54 13,432.22
07/31/06 13,251.95 11,111.61 13,624.53
08/31/06 13,672.48 11,375.59 13,971.64
09/30/06 13,569.91 11,668.56 14,087.99
10/31/06 14,287.90 12,048.56 14,756.92
11/30/06 15,241.79 12,277.30 15,853.90
12/31/06 16,305.69 12,449.49 16,567.76
01/31/07 16,206.06 12,637.57 16,389.35
02/28/07 16,128.57 12,391.14 16,292.08
03/31/07 16,593.50 12,529.43 16,940.86
04/30/07 17,301.96 13,084.26 17,725.17
05/31/07 17,910.80 13,540.37 18,603.10
06/30/07 18,729.95 13,315.56 19,475.14
07/31/07 20,091.53 12,903.22 20,502.70
08/31/07 19,615.53 13,096.35 20,066.98
09/30/07 21,785.19 13,585.63 22,283.04
10/31/07 24,220.53 13,801.70 24,768.06
11/30/07 22,183.70 13,224.46 23,012.33
12/31/07 22,722.72 13,132.94 23,093.03
01/31/08 19,244.61 12,345.31 20,211.25
02/29/08 20,151.36 11,944.58 21,703.09
03/31/08 18,635.61 11,892.88 20,554.58
04/30/08 20,219.02 12,471.97 22,222.67
05/31/08 20,584.43 12,633.50 22,634.92
06/30/08 18,567.94 11,569.45 20,377.38
07/31/08 17,038.66 11,472.17 19,608.75
08/31/08 15,116.90 11,638.20 18,042.48
09/30/08 12,044.80 10,602.32 14,885.04
10/31/08 8,038.89 8,821.87 10,811.31
11/30/08 6,983.28 8,188.66 9,997.46
12/31/08 7,267.85 8,274.94 10,777.19
01/31/09 6,608.39 7,578.31 10,081.18
02/28/09 6,223.70 6,774.02 9,512.50
03/31/09 6,883.17 7,366.33 10,879.54
04/30/09 7,693.76 8,070.74 12,689.97
05/31/09 9,150.08 8,521.63 14,858.29
06/30/09 8,847.82 8,538.65 14,658.12
07/31/09 9,946.93 9,183.65 16,306.38
08/31/09 10,056.84 9,514.75 16,248.04
09/30/09 10,166.75 9,869.55 17,722.87
10/31/09 9,988.15 9,686.44 17,744.79
11/30/09 10,785.00 10,267.31 18,506.99
12/31/09 10,922.39 10,465.54 19,237.88
01/31/10 10,249.18 10,089.63 18,164.95
02/28/10 10,427.79 10,401.74 18,228.85
03/31/10 11,279.60 11,029.19 19,700.54
04/30/10 11,238.38 11,203.36 19,939.21
05/31/10 10,359.09 10,309.69 18,185.40
06/30/10 10,276.66 9,770.72 18,051.75
07/31/10 11,032.30 10,454.98 19,555.00
08/31/10 10,963.60 9,983.88 19,175.24
09/30/10 12,062.71 10,874.50 21,306.14
10/31/10 12,529.83 11,288.13 21,924.79
11/30/10 12,117.67 11,289.94 21,346.02
12/31/10 12,598.53 12,044.27 22,869.25
AVERAGE ANNUAL PERFORMANCE For the Periods Ended
December 31, 2010
One Year Five Year Inception
Global Emerging Markets Fund
(Inception 2/24/05) 15.35% 0.48% 4.03%
------------------------------------------------------------------------
S&P 500 Index 15.06% 2.29% 3.23%
------------------------------------------------------------------------
MSCI Emerging Markets Net
Total Return Index 18.88% 12.76% 15.18%
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. 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.
Pursuant to a voluntary arrangement, the Adviser has agreed to limit
total fund operating expenses (exclusive of acquired fund fees and
expenses, extraordinary expenses, taxes, brokerage commissions and
interest, and advisory fee performance adjustments, if any) to not
exceed 3.15%. The Adviser can modify or terminate this arrangement at
any time.
See Definitions for Management Teams' Perspectives for index
definitions.
Please visit our website at www.usfunds.com for updated performance
information for different time periods.
57
GLOBAL EMERGING MARKETS FUND
THE YEAR IN REVIEW - ECONOMIC AND POLITICAL ISSUES THAT AFFECTED THE FUND
Given the global nature of the fund and its cross-sector exposure, the
fund can be volatile at times. The performance of the fund in 2010 was
uneven, outperforming the benchmark MSCI Emerging Markets Net Total
Return Index in the first quarter but underperforming it during the
second, third and fourth quarters of 2010.
Russia's outperformance early in the year benefited the fund as it was
overweighted this market after the Russian government provided stimulus
by lowering interest rates below 8 percent. In addition, the fund was
overweight Mexico and Hungary, which were among the best performers of
the index. China was a wild card for much of 2010 due to the formation
of an alleged real estate bubble that led many investors to feel
uncomfortable with the near-term prospects for this market. However,
despite all the negative rhetoric, China's economy continued to grow as
exports rebounded early in the year. In addition, the government
remained committed to recalibrating the economy toward domestic
consumption. Over the long term, this recalibration could provide more
stability and less of a reliance on exports and fixed asset investments.
This is why the government has increased spending on social safety net
programs to encourage people to increase spending.
The sovereign debt crisis in Europe, although concentrated in selected
Western European countries, impacted sentiment in countries with a
problematic macroeconomic situation such as Hungary around mid year. The
introduction of a bank tax in that country was negatively perceived by
various market participants. By contrast, Turkey was perceived as a
place of stability among investors due to solid gross domestic product
(GDP) growth of 11.7 percent in the first quarter alone. This growth was
mainly due to the country's strength of exports and robust domestic
demand. In addition, lower interest rates contributed to double-digit
loan growth in the first half of the year among the nation's banks.
In Latin America, the performance was mixed during 2010. Brazil, the
most liquid market, underperformed due to a subdued outlook for
commodities early in the year and new equity issues coming to the market
in abundance. Going forward, the election of Dilma Rousseff as the new
president of Brazil last October bodes well for a continuation of the
market-friendly policies of her predecessor, President Lula. The fund's
overweight position in Brazil negatively affected its performance.
By contrast, Chile and Peru outperformed and were among the best
performers in the Latin universe for the year as many local pension
funds
58
GLOBAL EMERGING MARKETS FUND
reduced international holdings and increased local equity allocation.
These pension funds have been a driving force of the Chilean market in
particular. Colombia also outperformed and was seen as one of the
favorite markets in Latin American by many investors. This was a result
of the presidential election that brought Juan Manuel Santos to power.
President Santos promises a continuation of the market-friendly policies
which outgoing President Alvaro Uribe began during his term.
In the latter part of the year, the fund was underweight countries like
South Korea due to tensions building up with North Korea, but the
stalemate was resolved with no detrimental impact on the local market.
Unfortunately, this underweight position in South Korea and Taiwan
negatively impacted performance.
INVESTMENT HIGHLIGHTS
OVERVIEW
The fund gained 15.35 percent for the year ending December 31, 2010,
compared to an 18.88 percent return for the MSCI Emerging Markets Net
Total Return Index, the fund's benchmark.
Because the fund is actively managed, and a holding period is generally
not a consideration in investment decisions, the portfolio turnover rate
may fluctuate from year to year as the fund adjusts its portfolio
composition. Its annual portfolio turnover was, and is expected to
continue to be, more than 100 percent.
STRENGTHS
* Although Brazil was an underperformer during 2010, selected stocks
provided a good return for the fund. In fact, the best contribution
came from Brazilian retailer Lojas Renner S.A.(2)
* South African media company Naspers Ltd.(3) was one of the best
contributors to the fund's performance.
* An overweighting of Russia and Turkey proved beneficial for the fund,
as both of these markets outperformed. In these markets, X5 Retail
Group N.V.(4) and Tofas Turk Otomobil Fabrikasi A.S.(5) provided the
most contribution to the fund's return.
WEAKNESSES
* The performance of Chinese stocks was uneven. The biggest
disappointment was Duoyuan Global Water, Inc.,(6) a water
infrastructure play that negatively impacted return.
59
GLOBAL EMERGING MARKETS FUND
* The fund underweighted its exposure to selected Asian markets during
the year. This adversely impacted performance as some of these markets
turned out to be the best performers in the broad emerging markets
universe.
CURRENT OUTLOOK
OPPORTUNITIES
* As the Chinese leadership embarked on the route of recalibrating the
economy away from fixed assets formation towards domestic consumption,
the fund's portfolio was redesigned to capture this trend. An overhaul
of the social security system in China should encourage greater
consumption by households over time.
* Growth of incomes per capita around the world has created
opportunities for protein producers, particularly in agriculturally
rich countries like Brazil and Australia. Demand for poultry, and to a
lesser extent, for pork and beef are likely to remain strong for years
to come.
* The issue of urbanization in China, as the country prepares for 90
million people to move to cities by 2015, will be positive for
resources such as iron ore and copper. As a result of continued strong
demand for copper, Chile's state-owned Corporacion Nacional del Cobre
de Chile(6) (Codelco), the largest copper producer in the world,
announced a record $16.3 billion in planned capital expenditures for
2011-15.
THREATS
* Clearly the talk about the dangers for the Chinese real estate market
has put some investors on edge in anticipation of a correction. If the
correction were to be drastic, demand for many global commodities
would likely fall precipitously.
* Although the sovereign crisis in Europe has been centered on the PIGS
(Portugal, Ireland, Greece and Spain), the situation in Hungary also
remains precarious in light of mixed messages coming out of the new
government. A deterioration of the climate in Hungary would impact
sentiment for other countries in the region.
* Escalation of violence in Mexico does not provide a level of comfort
for investors, although the country's economy is doing well thanks to
its link to the United States, which is steadily recovering and which
accounts for 80 percent of Mexico's exports.
(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.
60
GLOBAL EMERGING MARKETS FUND
(2)This security comprised 1.69% of the fund's total net assets as
of 12/31/10.
(3)This security comprised 2.84% of the fund's total net assets as
of 12/31/10.
(4)This security comprised 2.42% of the fund's total net assets as
of 12/31/10.
(5)This security comprised 1.04% of the fund's total net assets as
of 12/31/10.
(6)The fund did not hold this security as of 12/31/10.
61
GLOBAL EMERGING MARKETS FUND
TOP 10 HOLDINGS BASED ON NET ASSETS December 31, 2010
(EXCLUDING REPURCHASE AGREEMENTS)
NASPERS LTD. 2.84%
Multimedia
----------------------------------------------------------------------
TNK-BP HOLDING 2.80%
Oil Companies - Integrated
----------------------------------------------------------------------
MERCADOLIBRE, INC. 2.59%
E-Commerce/Products
----------------------------------------------------------------------
X5 RETAIL GROUP N.V. 2.42%
Food - Retail
----------------------------------------------------------------------
SBERBANK RF 2.29%
Commercial Banks - Non US
----------------------------------------------------------------------
KGHM POLSKA MIEDZ S.A. 2.18%
Metal - Diversified
----------------------------------------------------------------------
RANDGOLD RESOURCES LTD. 2.10%
Gold Mining
----------------------------------------------------------------------
KOLON INDUSTRIES, INC. 1.98%
Chemicals - Fibers
----------------------------------------------------------------------
VIVO PARTICIPACOES S.A. 1.95%
Cellular Telecommunicaitons
----------------------------------------------------------------------
OGX PETROLEO E GAS PARTICIPACOES S.A. 1.80%
Oil Companies - Exploration & Production
----------------------------------------------------------------------
TOTAL TOP TEN HOLDINGS 22.95%
COUNTRY DISTRIBUTION*
BASED ON TOTAL INVESTMENTS
(EXCLUDING REPURCHASE AGREEMENT) December 31, 2010
[Global Emerging Markets Fund Pie Chart]
Brazil 16.6%
Russia 10.5%
People's Republic of China 8.7%
India 6.5%
Turkey 6.2%
Korea, Republic Of 5.8%
Mexico 5.6%
United States 5.2%
South Africa 4.1%
Taiwan 3.9%
Hong Kong 3.8%
Canada 3.8%
Argentina 3.5%
Poland 3.2%
Other 12.6%
* Country distribution shown is based on domicile. The locale of
company operations may be different.
62
CHINA REGION FUND
MANAGEMENT TEAM'S PERSPECTIVE
INTRODUCTION
The China Region Fund (USCOX) seeks long-term growth of capital. The
fund invests in both established and emerging companies registered and
operating in the China region.(1)
PERFORMANCE GRAPH
CHINA REGION FUND
[China Region Fund Graph]
MSCI All Country
Hang Seng Far East
China Region Composite Free ex
Date Fund Index* Japan Index
---- ---- --------- ----------------
12/31/00 $ 10,000.00 $ 10,000.00 $ 10,000.00
01/31/01 10,417.54 10,643.72 11,337.47
02/28/01 9,895.62 9,926.37 10,781.41
03/30/01 9,812.11 8,577.16 9,600.50
04/30/01 10,208.77 9,085.61 9,614.98
05/31/01 10,542.80 9,113.22 9,520.83
06/30/01 10,271.40 9,002.02 9,304.50
07/31/01 9,415.45 8,481.79 8,933.37
08/31/01 8,684.76 7,666.77 8,772.48
09/30/01 7,703.55 6,866.07 7,365.58
10/31/01 7,995.82 7,044.11 7,734.08
11/30/01 8,559.50 7,799.96 8,787.64
12/31/01 8,684.76 7,877.24 9,581.38
01/31/02 8,893.53 7,505.26 9,967.28
02/28/02 8,789.14 7,386.87 9,982.84
03/31/02 9,227.56 7,758.37 10,688.24
04/30/02 9,478.08 8,097.48 10,814.66
05/31/02 9,457.20 8,019.61 10,566.49
06/30/02 9,144.05 7,553.93 9,984.59
07/31/02 8,538.62 7,248.11 9,599.23
08/31/02 8,225.47 7,053.62 9,370.47
09/30/02 7,536.53 6,408.20 8,288.82
10/31/02 7,599.16 6,624.32 8,729.13
11/30/02 7,954.07 7,051.16 9,157.50
12/31/02 7,620.04 6,612.73 8,522.65
01/31/03 7,849.69 6,637.02 8,623.19
02/28/03 7,849.69 6,563.10 8,199.89
03/31/03 7,515.66 6,239.75 7,806.82
04/30/03 7,557.41 6,264.39 8,054.11
05/31/03 8,413.36 6,856.51 8,711.04
06/30/03 8,705.64 6,985.11 9,202.01
07/31/03 9,519.83 7,427.33 9,969.14
08/31/03 10,250.52 8,042.55 10,672.98
09/30/03 10,584.55 8,359.72 10,698.91
10/31/03 12,400.84 9,090.15 11,597.63
11/30/03 12,755.74 9,157.64 11,412.11
12/31/03 13,802.53 9,530.38 11,997.57
01/31/04 13,886.69 10,031.35 12,772.79
02/29/04 14,665.19 10,500.45 13,231.92
03/31/04 14,181.26 9,656.09 12,932.76
04/30/04 12,750.51 8,975.34 12,148.91
05/31/04 12,687.38 9,168.36 11,815.13
06/30/04 12,329.70 9,183.60 11,679.98
07/31/04 12,203.45 9,184.30 11,330.45
08/31/04 12,308.66 9,574.42 11,882.95
09/30/04 13,150.27 9,850.75 12,267.00
10/31/04 13,171.31 9,832.50 12,311.46
11/30/04 14,012.93 10,658.44 13,355.61
12/31/04 14,383.60 10,753.65 13,705.14
01/31/05 13,909.89 10,376.30 13,784.28
02/28/05 15,180.30 10,814.91 14,554.91
03/31/05 14,706.58 10,292.40 13,844.39
04/30/05 14,448.20 10,488.79 13,668.77
05/31/05 14,254.40 10,474.32 13,928.54
06/30/05 14,792.71 10,776.04 14,215.81
07/31/05 15,331.02 11,315.77 15,086.30
08/31/05 15,244.89 11,288.24 14,537.06
09/30/05 16,084.65 11,668.27 15,234.56
10/31/05 15,115.70 10,829.96 14,271.00
11/30/05 15,804.73 11,339.69 15,273.96
12/31/05 17,070.49 11,461.58 16,152.83
01/31/06 18,859.25 12,318.22 17,279.97
02/28/06 18,638.41 12,512.44 17,216.14
03/31/06 19,941.33 12,671.05 17,374.99
04/30/06 21,288.42 13,119.78 18,584.38
05/31/06 19,875.08 12,612.02 17,261.83
06/30/06 19,234.66 12,822.37 17,118.14
07/31/06 19,035.91 13,155.81 17,079.19
08/31/06 19,212.58 13,445.79 17,499.61
09/30/06 19,543.83 13,675.79 17,982.34
10/31/06 20,184.25 14,273.65 18,441.62
11/30/06 21,708.01 15,173.05 19,891.23
12/31/06 23,528.12 16,438.63 20,751.42
01/31/07 23,169.26 16,292.80 20,387.12
02/28/07 22,810.39 15,907.99 20,537.24
03/31/07 23,438.41 16,187.46 20,938.99
04/30/07 24,380.43 16,656.89 21,656.04
05/31/07 26,488.76 17,133.01 22,794.78
06/30/07 28,148.52 18,148.07 23,996.07
07/31/07 30,077.42 19,597.90 25,671.95
08/31/07 31,266.16 20,288.51 25,309.01
09/30/07 37,299.59 23,036.31 28,208.47
10/31/07 42,839.58 26,487.45 31,011.34
11/30/07 37,344.45 23,746.20 28,088.53
12/31/07 36,066.44 23,021.86 27,677.23
01/31/08 30,489.45 19,259.45 23,820.40
02/28/08 31,451.97 20,330.64 25,434.07
03/31/08 27,913.27 18,915.79 24,062.72
04/30/08 29,555.23 21,170.17 25,884.53
05/31/08 28,734.25 20,436.80 25,164.79
06/30/08 25,733.43 18,190.40 22,336.28
07/31/08 24,572.74 18,467.22 21,840.87
08/31/08 22,647.69 17,106.91 20,132.08
09/30/08 19,477.01 14,137.08 16,786.02
10/31/08 15,853.38 10,961.90 12,806.72
11/30/08 14,947.47 11,034.10 12,085.48
12/31/08 15,825.07 11,671.87 13,295.45
01/31/09 14,466.21 10,811.37 12,502.63
02/28/09 13,956.64 10,418.40 11,726.64
03/31/09 15,768.45 11,196.71 13,349.72
04/30/09 17,580.27 12,617.60 15,511.20
05/31/09 20,496.16 14,879.94 17,589.17
06/30/09 20,043.20 15,254.22 17,504.97
07/31/09 21,911.64 16,994.67 19,803.47
08/31/09 20,269.68 16,038.46 19,055.70
09/30/09 21,571.92 16,914.31 20,645.62
10/31/09 21,713.47 17,617.55 20,615.20
11/30/09 23,327.12 17,857.04 21,016.56
12/31/09 23,666.83 17,960.37 21,938.58
01/31/10 21,770.09 16,584.12 20,573.42
02/28/10 22,591.07 17,041.96 20,628.32
03/31/10 23,638.52 17,709.28 22,050.72
04/30/10 23,525.28 17,557.77 22,461.24
05/31/10 22,166.42 16,252.11 20,464.89
06/30/10 22,534.45 16,469.28 20,705.84
07/31/10 23,468.66 17,353.90 21,950.67
08/31/10 23,525.28 16,986.84 21,644.09
09/30/10 26,384.55 18,672.31 23,900.27
10/31/10 27,063.98 19,264.12 24,551.06
11/30/10 26,639.34 19,087.91 24,334.34
12/31/10 26,809.20 19,067.02 25,599.16
AVERAGE ANNUAL PERFORMANCE For the Years Ended
December 31, 2010
One Year Five Year Ten Year
China Region Fund 13.28% 9.44% 10.36%
----------------------------------------------------------------------
Hang Seng Composite Index* 6.16% 10.70% 6.66%
----------------------------------------------------------------------
MSCI All Country Far East Free ex Japan
Index* 16.69% 9.64% 9.84%
* These are not total returns. These returns reflect simple
appreciation only and do not reflect dividend reinvestment.
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.
Pursuant to a voluntary arrangement, the Adviser has agreed to limit
total fund operating expenses (exclusive of acquired fund fees and
expenses, extraordinary expenses, taxes, brokerage commissions and
interest, and advisory fee performance adjustments, if any) to not
exceed 2.55%. The Adviser can modify or terminate this arrangement at
any time.
See Definitions for Management Teams' Perspectives for index
definitions.
Please visit our website at www.usfunds.com for updated performance
information for different time periods.
63
CHINA REGION FUND
THE YEAR IN REVIEW - ECONOMIC AND POLITICAL ISSUES THAT AFFECTED THE FUND
The Chinese economy exhibited a slowdown throughout 2010 as gross
domestic product (GDP) peaked in the first quarter at 11.9 percent. GDP
growth for the next three quarters was 10.3 percent, 9.6 percent and 9.8
percent, sequentially. Fixed asset investment showed a slowdown as well,
peaking at a growth rate of 26.6 percent in February and declining to
24.5 percent by December. The government was concerned that bank lending
was growing more than necessary and that property prices were
appreciating too much.
Exports provided a boost as they showed double-digit percentage gains
every month in 2010. However, this growth was from a low base in 2009.
This also was a reflection of the growing trade within Asia.
Retail sales are higher than a year ago with 18.4 percent growth from
2009. The government sees consumption as a long-term driver of GDP
growth and has increased spending on social safety net programs to
encourage people to save less and spend more.
Money supply (M2) was very strong in 2010, growing at an average rate of
21.3 percent. However, the growth rate moderated to 19.7 percent by
December 2010.
The performance of the various sectors in the Hang Seng Composite Index
(HSCI), the fund's benchmark, was mostly positive. All sectors, except
for financials and information technology, were positive.
INVESTMENT HIGHLIGHTS
OVERVIEW
The fund returned 13.28 percent for the year ended December 31, 2010,
compared to a 9.03 percent return for the HSCI (total return basis).
Because the fund is actively managed, and a holding period is generally
not a consideration in investment decisions, the portfolio turnover rate
may fluctuate from year to year as the fund adjusts its portfolio
composition. Its annual portfolio turnover was, and is expected to
continue to be, more than 100 percent.
STRENGTHS
* Increasing the country allocation to Indonesia, South Korea and
Singapore while lowering exposure to Hong Kong and China stocks helped
64
CHINA REGION FUND
the fund to outperform its benchmark. Positive contributors to
performance from Indonesia included PT Astra International Tbk,(2) PT
Indofood Sukses Makmur Tbk(3) and Bank Mandiri Tbk PT.(3) In South
Korea, Hyundai Heavy Industries Co., Ltd.(4) was the best contributor.
In Singapore, Genting Singapore plc(5) was the top contributor to
performance.
* Despite the underperformance of the information technology sector, the
best contributor to fund performance was Baidu, Inc.,(3) a Chinese web
services company. The company benefited from its competitor Google,
Inc.'s(3) withdrawal from the China market.
* Two strong contributors to performance, retailers Belle International
Holdings Ltd.(6) and IT Ltd.,(3) were related to China's increasing
emphasis on consumption.
WEAKNESSES
* The fund's benchmark, the HSCI, was a lagging index in 2010. This was
driven by the underperformance of the technology and financial
sectors. Technology was impacted by earnings concerns at some of the
auto companies, while financials reflected the growing concern about
the level of loans given to local governments and their ability to
repay those loans.
* Property stocks were a drag on performance as the government undertook
a series of measures to slow down the rising price of property
ownership.
CURRENT OUTLOOK
OPPORTUNITIES
* China will be unveiling its twelfth Five-Year Plan in March and many
new industries will be fostered and nurtured in an attempt to help
China move up the manufacturing value-added chain and grow the
country's green energy businesses.
* Hong Kong-based stocks have underperformed other indices over the past
two years so a reversion to the mean could lead these stocks to
outperform in 2011.
* The urbanization move is still going strong in China. This is positive
for iron ore and copper demand.
THREATS
* In the near term, inflation remains a concern. Historically, when
consumer price inflation gets over 5 percent on a year-over-year
basis,
65
CHINA REGION FUND
public dissent starts to grow and inflation expectations tend to rise.
Interest rate hikes and a slowdown in lending are policy steps that
can be expected if this happens.
* The economic state of the G3 (Europe, United States and Japan) is
still key as a meaningful slowdown in any of these trade partners
could impact exports.
(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)This security comprised 0.88% of the fund's total net assets as
of 12/31/10.
(3)The fund did not hold this security as of 12/31/10.
(4)This security comprised 2.28% of the fund's total net assets as
of 12/31/10.
(5)This security comprised 1.32% of the fund's total net assets as
of 12/31/10.
(6)This security comprised 1.95% of the fund's total net assets as
of 12/31/10.
TOP 10 HOLDINGS BASED ON NET ASSETS December 31, 2010
(EXCLUDING REPURCHASE AGREEMENTS)
CNOOC LTD. 3.68%
Oil Companies - Exploration & Production
----------------------------------------------------------------------
JIANGXI COPPER CO., LTD. 3.18%
Metal - Copper
----------------------------------------------------------------------
ZHAOJIN MINING INDUSTRY CO., LTD. 3.16%
Gold Mining
----------------------------------------------------------------------
CHINA STATE CONSTRUCTION INTERNATIONAL HOLDING LTD. 2.74%
Building & Construction
----------------------------------------------------------------------
DONGFANG ELECTRIC CORP., LTD. 2.68%
Power Converter/Power Supply Equipment
----------------------------------------------------------------------
HUTCHISON WHAMPOA LTD. 2.39%
Diversified Operations
----------------------------------------------------------------------
WEICHAI POWER CO., LTD. 2.38%
Automotive/Truck Parts & Equipment - Replacement
----------------------------------------------------------------------
HYUNDAI HEAVY INDUSTRIES CO., LTD. 2.28%
Shipbuilding
----------------------------------------------------------------------
CHIAN YURUN FOOD GROUP LTD. 2.23%
Food - Miscellaneous/Diversified
----------------------------------------------------------------------
HONG KONG EXCHANGES & CLEARING LTD. 2.19%
Finance - Other Services
----------------------------------------------------------------------
TOTAL TOP TEN HOLDINGS 26.91%
66
CHINA REGION FUND
COUNTRY DISTRIBUTION*
BASED ON TOTAL INVESTMENTS December 31, 2010
(EXCLUDING REPURCHASE AGREEMENT)
[Pie Chart]
People's Republic of China 43.9%
Hong Kong 29.5%
Korea, Republic Of 6.0%
Canada 3.9%
Taiwan 3.3%
United States 2.9%
Other 10.5%
* Country distribution shown is based on domicile and not intended
to conform to the China region definition in the prospectus. The
locale of company operations may be different.
67
EXPENSE EXAMPLE (UNAUDITED) December 31, 2010
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.
68
EXPENSE EXAMPLE (UNAUDITED) December 31, 2010
-----------------------------------------------------------------------------------
SIX MONTHS ENDED DECEMBER 31, 2010 BEGINNING ENDING
ACCOUNT VALUE ACCOUNT VALUE EXPENSES
JULY 1, DECEMBER 31, PAID DURING
2010 2010 PERIOD*
-----------------------------------------------------------------------------------
U.S. TREASURY SECURITIES CASH FUND
Based on Actual Fund Return $1,000.00 $1,000.10 $ 0.86
Based on Hypothetical 5% Yearly Return $1,000.00 $1,024.35 $ 0.87
-----------------------------------------------------------------------------------
U.S. GOVERNMENT SECURITIES SAVINGS
FUND
Based on Actual Fund Return $1,000.00 $1,000.10 $ 0.76
Based on Hypothetical 5% Yearly Return $1,000.00 $1,024.45 $ 0.77
-----------------------------------------------------------------------------------
NEAR-TERM TAX FREE FUND
Based on Actual Fund Return $1,000.00 $1,007.50 $ 2.28
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 $ 991.50 $ 3.51
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 $1,209.80 $12.20
Based on Hypothetical 5% Yearly Return $1,000.00 $1,014.17 $11.12
-----------------------------------------------------------------------------------
HOLMES GROWTH FUND
Based on Actual Fund Return $1,000.00 $1,238.20 $11.28
Based on Hypothetical 5% Yearly Return $1,000.00 $1,015.12 $10.16
-----------------------------------------------------------------------------------
GLOBAL MEGATRENDS FUND INVESTOR CLASS
Based on Actual Fund Return $1,000.00 $1,227.40 $12.52
Based on Hypothetical 5% Yearly Return $1,000.00 $1,013.96 $11.32
GLOBAL MEGATRENDS FUND INSTITUTIONAL
CLASS
Based on Actual Fund Return $1,000.00 $1,230.40 $ 9.05
Based on Hypothetical 5% Yearly Return $1,000.00 $1,017.09 $ 8.18
-----------------------------------------------------------------------------------
GLOBAL RESOURCES FUND INVESTOR CLASS
Based on Actual Fund Return $1,000.00 $1,473.20 $10.83
Based on Hypothetical 5% Yearly Return $1,000.00 $1,016.45 $ 8.83
GLOBAL RESOURCES FUND INSTITUTIONAL
CLASS
Based on Actual Fund Return $1,000.00 $1,478.10 $ 6.67
Based on Hypothetical 5% Yearly Return $1,000.00 $1,019.82 $ 5.44
-----------------------------------------------------------------------------------
WORLD PRECIOUS MINERALS FUND INVESTOR
CLASS
Based on Actual Fund Return $1,000.00 $1,413.20 $11.06
Based on Hypothetical 5% Yearly Return $1,000.00 $1,016.04 $ 9.24
WORLD PRECIOUS MINERALS FUND
INSTITUTIONAL CLASS
Based on Actual Fund Return $1,000.00 $1,418.10 $ 6.89
Based on Hypothetical 5% Yearly Return $1,000.00 $1,019.50 $ 5.76
-----------------------------------------------------------------------------------
GOLD AND PRECIOUS METALS FUND
Based on Actual Fund Return $1,000.00 $1,276.40 $ 9.87
Based on Hypothetical 5% Yearly Return $1,000.00 $1,016.53 $ 8.74
-----------------------------------------------------------------------------------
EASTERN EUROPEAN FUND
Based on Actual Fund Return $1,000.00 $1,323.10 $11.42
Based on Hypothetical 5% Yearly Return $1,000.00 $1,015.38 $ 9.91
-----------------------------------------------------------------------------------
69
EXPENSE EXAMPLE (UNAUDITED) December 31, 2010
-----------------------------------------------------------------------------------
SIX MONTHS ENDED DECEMBER 31, 2010 BEGINNING ENDING
ACCOUNT VALUE ACCOUNT VALUE EXPENSES
JULY 1, DECEMBER 31, PAID DURING
2010 2010 PERIOD*
-----------------------------------------------------------------------------------
GLOBAL EMERGING MARKETS FUND
Based on Actual Fund Return $1,000.00 $1,225.90 $17.22
Based on Hypothetical 5% Yearly Return $1,000.00 $1,009.73 $15.55
-----------------------------------------------------------------------------------
CHINA REGION FUND
Based on Actual Fund Return $1,000.00 $1,189.70 $14.07
Based on Hypothetical 5% Yearly Return $1,000.00 $1,012.35 $12.93
-----------------------------------------------------------------------------------
<FN>
*These calculations are based on expenses incurred in the most recent
fiscal half-year. The funds' Investor Classes' annualized expense ratios
(after reimbursements and offsets) for the six-month period ended
December 31, 2010, were 0.17%, 0.15%, 0.45%, 0.70%, 2.19%, 2.00%, 2.23%,
1.74%, 1.82%, 1.72%, 1.95%, 3.07% and 2.55%, respectively, for the U.S.
Treasury Securities Cash, U.S. Government Securities Savings, Near-Term
Tax Free, Tax Free, 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. The funds' Institutional Class's annualized expense ratios (after
reimbursements and offsets) for the six-month period ended December 31,
2010, were 1.61%, 1.07% and 1.13%, respectively, for the Global
MegaTrends, Global Resources and World Precious Minerals 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 period, then divided by 365
days in the current fiscal year.
</FN>
70
U.S. TREASURY SECURITIES CASH FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
UNITED STATES
GOVERNMENT COUPON MATURITY PRINCIPAL
OBLIGATIONS 40.20% RATE DATE AMOUNT VALUE
UNITED STATES TREASURY BILLS 40.20%
-------------------------------------------------------------------------------------
Yield 0.16% 01/06/11 $ 20,000,000 $ 19,999,569
Yield 0.12% 01/13/11 10,000,000 9,999,617
Yield 0.12% 01/20/11 10,000,000 9,999,393
-------------------------------------------------------------------------------------
TOTAL UNITED STATES GOVERNMENT OBLIGATIONS 39,998,579
-------------------------------------------------------------------------------------
(cost $39,998,579)
REPURCHASE AGREEMENTS 59.96%
Joint Tri-Party Repurchase
Agreements, 12/31/10, collateralized
by U.S. Treasury securities held in
joint tri-party repurchase accounts:
0.25% Barclays Capital, Inc.,
repurchase price $15,100,315 0.25% 01/03/11 15,100,000 15,100,000
0.15% Credit Suisse Securities USA
LLC, repurchase price $24,555,308 0.15% 01/03/11 24,555,002 24,555,002
0.08% Morgan Stanley, repurchase
price $20,000,133 0.08% 01/03/11 20,000,000 20,000,000
-------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS 59,655,002
-------------------------------------------------------------------------------------
(cost $59,655,002)
-------------------------------------------------------------------------------------
TOTAL INVESTMENTS 100.16% 99,653,581
-------------------------------------------------------------------------------------
(cost $99,653,581)
Other assets and liabilities, net (0.16)% (162,351)
------------
NET ASSETS 100% $99,491,230
-----------
See notes to portfolios of investments and notes to financial statements.
71
U.S. GOVERNMENT SECURITIES SAVINGS FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
UNITED STATES
GOVERNMENT AND AGENCY COUPON MATURITY PRINCIPAL
OBLIGATIONS 99.89% RATE DATE AMOUNT VALUE
FEDERAL FARM CREDIT BANK 43.47%
------------------------------------------------------------------------------------
Discount Notes:
Yield 0.01% 01/03/11 $ 40,000,000 $ 39,999,978
Yield 0.15% 01/05/11 5,000,000 4,999,917
Yield 0.25% 01/11/11 1,600,000 1,599,891
Yield 0.09% 01/18/11 10,000,000 9,999,575
Yield 0.13% 02/10/11 10,000,000 9,998,555
Yield 0.22% 07/13/11 2,000,000 1,997,641
Fixed Rates:
0.45% 01/04/11 3,000,000 3,000,047
3.50% 01/18/11 5,000,000 5,007,643
Variable Rates:
0.33% 07/01/11 7,000,000 7,004,536
0.29% 10/26/11 5,000,000 5,000,000
------------
88,607,783
FEDERAL HOME LOAN BANK 36.79%
------------------------------------------------------------------------------------
Discount Notes:
Yield 0.04% 01/03/11 30,000,000 29,999,933
Yield 0.09% 01/05/11 10,000,000 9,999,906
Yield 0.09% 01/14/11 10,000,000 9,999,675
Yield 0.09% 02/04/11 4,900,000 4,899,583
Yield 0.19% 05/27/11 1,365,000 1,363,948
Yield 0.21% 06/15/11 2,233,000 2,230,902
Fixed Rates:
0.25% 01/27/11 3,000,000 2,999,945
Variable Rates:
0.24% 05/06/11 3,500,000 3,499,322
0.25% 07/22/11 5,000,000 5,000,000
0.18% 09/09/11 5,000,000 4,997,912
------------
74,991,126
TENNESSEE VALLEY AUTHORITY NOTE 4.91%
------------------------------------------------------------------------------------
Discount Note: Yield 0.01% 01/03/11 10,000,000 9,999,994
See notes to portfolios of investments and notes to financial statements.
72
U.S. GOVERNMENT SECURITIES SAVINGS FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
UNITED STATES
GOVERNMENT AND AGENCY COUPON MATURITY PRINCIPAL
OBLIGATIONS RATE DATE AMOUNT VALUE
UNITED STATES TREASURY BILLS 14.72%
------------------------------------------------------------------------------------
Discount Notes: Yield 0.16% 01/06/11 $ 20,000,000 $ 19,999,569
Yield 0.12% 01/13/11 10,000,000 9,999,617
------------
29,999,186
------------------------------------------------------------------------------------
TOTAL INVESTMENTS 99.89% 203,598,089
------------------------------------------------------------------------------------
(cost $203,598,089)
Other assets and liabilities,
net 0.11% 236,604
------------
NET ASSETS 100% $203,834,693
------------
See notes to portfolios of investments and notes to financial statements.
73
NEAR-TERM TAX FREE FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COUPON MATURITY PRINCIPAL
MUNICIPAL BONDS 91.37% RATE DATE AMOUNT VALUE
ALABAMA 4.64%
--------------------------------------------------------------------------------------
Alabama State Public School & College
Authority 5.00% 12/01/16 $ 290,000 $ 330,081
Bessemer, Alabama Water Revenue 4.00% 01/01/16 300,000 300,672
Jasper Alabama Water Works & Sewer
Board, Inc., Utilities Revenue,
Series A 3.00% 06/01/15 90,000 91,451
Jasper Alabama Water Works & Sewer
Board, Inc., Utilities Revenue,
Series A 3.00% 06/01/16 90,000 90,221
Mountain Brook City Board of Education
Capital Outlay 4.00% 02/15/15 200,000 216,366
University of Alabama at Birmingham,
Hospital Revenue, Series A 5.00% 09/01/15 300,000 324,522
-----------
1,353,313
ALASKA 1.11%
--------------------------------------------------------------------------------------
Alaska Municipal Bond Bank Authority,
Series A 4.00% 02/01/16 300,000 322,344
ARIZONA 4.60%
--------------------------------------------------------------------------------------
Arizona Board Regents Certificates of
Participation, Series B 4.50% 06/01/16 200,000 216,210
Arizona Health Facilities Authority
Revenues, Series D 5.00% 01/01/14 250,000 269,615
Arizona School Facilities Board
Certificates, Series A-1 5.00% 09/01/17 325,000 341,341
Arizona State Transportation Board
Excise Tax Revenue 5.00% 07/01/17 175,000 200,942
Pima County Unified School District, GO
Unlimited, Refunding 3.70% 07/01/12 300,000 311,307
-----------
1,339,415
CALIFORNIA 2.87%
--------------------------------------------------------------------------------------
San Diego, California Community College
District, Capital Appreciation,
Election 2002, GO Unlimited (ZCB) 4.34%(1) 05/01/15 300,000 263,769
California State, Refunding,
Recreational Facility, GO Unlimited 5.00% 12/01/19 250,000 262,260
Vernon, California Electric Systems
Revenue, Series A 3.75% 08/01/13 300,000 309,585
-----------
835,614
CONNECTICUT 1.64%
--------------------------------------------------------------------------------------
Connecticut State, Series D, GO
Unlimited 5.38% 11/15/18 250,000 271,667
Connecticut State, Series E, GO
Unlimited 5.13% 11/15/14 200,000 206,860
-----------
478,527
See notes to portfolios of investments and notes to financial statements.
74
NEAR-TERM TAX FREE FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COUPON MATURITY PRINCIPAL
MUNICIPAL BONDS RATE DATE AMOUNT VALUE
DISTRICT OF COLUMBIA 2.26%
--------------------------------------------------------------------------------------
District of Columbia Certifications of
Participation 4.00% 01/01/14 $ 250,000 $ 261,543
Washington D.C. Convention Center
Authority Dedicated Tax Revenue,
Refunding, Series A 5.00% 10/01/13 110,000 118,749
Washington D.C. Convention Center
Authority Dedicated Tax Revenue,
Refunding, Series A 5.00% 10/01/16 250,000 276,725
-----------
657,017
FLORIDA 8.20%
--------------------------------------------------------------------------------------
Cape Coral, Florida Gas Tax Revenue,
Series A 4.00% 10/01/16 255,000 260,368
Florida Gulf Coast University Financing
Corp., Florida Capital Improvement
Revenue, Series B 3.00% 02/01/16 365,000 364,142
Florida State Board of Education
Lottery Revenue, Series A 4.00% 07/01/14 300,000 320,751
Fort Pierce, Florida Stormwater
Utilities Revenue 4.50% 10/01/17 255,000 262,326
Hillsborough Country Florida Community
Investment Tax Revenue 4.00% 05/01/16 300,000 317,001
Miami - Dade County, Florida Water &
Sewer Revenue System, Series A 4.00% 10/01/16 235,000 255,697
Orange County, Florida Tourist
Development Tax Revenue, Refunding 5.00% 10/01/14 260,000 283,735
Reedy Creek, Florida Improvement
District Utilities Revenue,
Refunding, Series 2 5.00% 10/01/16 300,000 324,654
-----------
2,388,674
GEORGIA 3.29%
--------------------------------------------------------------------------------------
Atlanta Downtown Development Authority 4.25% 12/01/16 250,000 268,972
Atlanta, Georgia Water & Wastewater
Revenue, Series B 3.50% 11/01/13 400,000 418,172
Emanuel County Georgia Hospital
Authority Revenue Anticipation
Certificates 4.30% 07/01/17 250,000 272,568
-----------
959,712
ILLINOIS 14.34%
--------------------------------------------------------------------------------------
Aurora, Illinois, Series B, GO
Unlimited 3.00% 12/30/15 200,000 207,804
Chicago Board of Education, Dedicated
Revenues, Series F, GO Unlimited 5.00% 12/01/16 300,000 336,903
Chicago Board of Education, Series A 5.25% 12/01/13 250,000 271,940
Chicago, Illinois Sales Tax Revenue 5.50% 01/01/15 350,000 393,449
Chicago, Illinois, Direct Access Bond,
Series E-1 B, GO Unlimited 4.00% 01/01/19 200,000 200,000
Chicago, Illinois, Unrefunded Balance,
Series B 5.13% 01/01/15 325,000 353,100
Dundee Township, GO Unlimited 5.00% 12/01/13 240,000 261,002
Illinois Finance Authority Revenue,
Refunding 5.00% 07/01/16 390,000 419,644
See notes to portfolios of investments and notes to financial statements.
75
NEAR-TERM TAX FREE FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COUPON MATURITY PRINCIPAL
MUNICIPAL BONDS RATE DATE AMOUNT VALUE
ILLINOIS (CONT'D)
--------------------------------------------------------------------------------------
Illinois State Sales Tax Revenue 5.00% 06/15/14 $ 200,000 $ 213,534
Illinois State Toll Highway Authority,
Toll Highway Revenue, Series A 5.00% 01/01/16 200,000 216,420
Illinois State, Refunding, GO Unlimited 5.00% 01/01/16 300,000 314,967
Metropolitan Pier & Exposition
Authority 5.38% 06/01/15 280,000 297,797
State of Illinois, First Series,
Refunding 5.50% 08/01/19 300,000 307,335
Winnebago County Public Safety Sales
Tax,
Series A, GO Unlimited 5.00% 12/30/16 350,000 383,796
-----------
4,177,691
INDIANA 4.31%
--------------------------------------------------------------------------------------
Hamilton Heights Independent School 5.25% 07/15/11 305,000 312,625
Indiana State Finance Authority
Revenue, Refunding 4.00% 05/01/12 350,000 363,990
Noblesville Independent Redevelopment
Authority Lease Rent Revenue 5.00% 01/15/24 250,000 258,620
Tippecanoe County, Indiana School
Improvements 4.00% 01/15/15 300,000 319,035
-----------
1,254,270
IOWA 1.76%
--------------------------------------------------------------------------------------
Ames, Iowa Hospital Revenue, Refunding 5.00% 06/15/15 300,000 302,667
Johnston Community School District, GO
Unlimited 4.00% 06/01/16 200,000 211,068
-----------
513,735
KANSAS 0.75%
--------------------------------------------------------------------------------------
Kansas State Development Finance
Authority Revenue 4.00% 10/01/15 200,000 218,374
KENTUCKY 1.08%
--------------------------------------------------------------------------------------
Louisville & Jefferson County
Metropolitan Sewer District & Drain
Systems, Series A 5.50% 05/15/15 300,000 313,689
MASSACHUSETTS 1.23%
--------------------------------------------------------------------------------------
New Bedford, Massachusetts, State
Qualified Municipal Loan, GO Limited 3.00% 03/01/15 345,000 359,107
MICHIGAN 4.16%
--------------------------------------------------------------------------------------
Detroit, Michigan Sewer Disposal
Revenue, Refunding, Series C-1 5.25% 07/01/15 400,000 432,816
Michigan State Building Authority
Revenue, Refunding, Series I 5.25% 10/15/14 300,000 324,345
Michigan State Grant Anticipation Bonds 5.00% 09/15/16 200,000 224,346
See notes to portfolios of investments and notes to financial statements.
76
NEAR-TERM TAX FREE FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COUPON MATURITY PRINCIPAL
MUNICIPAL BONDS RATE DATE AMOUNT VALUE
MICHIGAN (CONT'D)
--------------------------------------------------------------------------------------
Michigan State Hospital Finance
Authority Revenue, Trinity Health,
Series A 6.00% 12/01/18 $ 200,000 $ 230,532
-----------
1,212,039
MISSOURI 0.78%
--------------------------------------------------------------------------------------
Missouri State Health & Educational
Facilities Authority Revenue,
Series A 6.75% 05/15/13 200,000 227,370
NEVADA 2.49%
--------------------------------------------------------------------------------------
Clark County Nevada School District,
Refunding, Series A 5.50% 06/15/16 250,000 273,207
North Las Vegas, GO Limited 4.00% 03/01/16 200,000 201,150
Nye County School District, GO Limited 4.00% 05/01/15 230,000 250,746
-----------
725,103
NEW HAMPSHIRE 0.42%
--------------------------------------------------------------------------------------
New Hampshire Health & Education
Facilities Authority Revenue 5.00% 07/01/14 120,000 123,222
NEW JERSEY 0.94%
--------------------------------------------------------------------------------------
New Jersey State Transportation Trust
Fund Authority, Series D 4.00% 06/15/14 250,000 273,105
NEW YORK 3.10%
--------------------------------------------------------------------------------------
New York State Dormitory Authority
Revenues, Nonconstruction Supported
Debt, Municipal Facilities Health
Lease, Series 1 5.00% 01/15/17 300,000 330,771
New York, New York, Series G, GO
Unlimited 5.00% 08/01/12 125,000 133,206
New York, New York, Subseries L-1, GO
Unlimited 4.00% 04/01/15 300,000 323,502
Schenectady Metroplex Development
Authority Revenue, Series A 5.00% 12/15/12 110,000 116,913
-----------
904,392
PENNSYLVANIA 0.69%
--------------------------------------------------------------------------------------
Philadelphia, Pennsylvania 4.50% 08/01/12 195,000 201,064
PUERTO RICO 1.81%
--------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, GO
Unlimited 6.00% 07/01/13 250,000 270,670
Commonwealth of Puerto Rico, Refunding,
GO Unlimited 5.50% 07/01/11 250,000 255,372
-----------
526,042
See notes to portfolios of investments and notes to financial statements.
77
NEAR-TERM TAX FREE FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COUPON MATURITY PRINCIPAL
MUNICIPAL BONDS RATE DATE AMOUNT VALUE
RHODE ISLAND 0.94%
--------------------------------------------------------------------------------------
Rhode Island State Economic Development
Corporation Revenue, Series A 5.00% 06/15/17 $ 250,000 $ 274,940
SOUTH CAROLINA 2.35%
--------------------------------------------------------------------------------------
Jasper County School District, GO
Unlimited 4.00% 03/01/15 195,000 213,164
Piedmont Municipal Power Agency 5.00% 01/01/16 150,000 162,215
Spartanburg County School District 3.88% 04/01/12 300,000 310,287
-----------
685,666
TENNESSEE 2.07%
--------------------------------------------------------------------------------------
Metropolitan Government of Nashville &
Davidson County, Water & Sewer
Revenue 6.50% 12/01/14 250,000 298,605
Tennessee State, GO Unlimited,
Refunding, Series A 5.00% 05/01/11 300,000 304,545
-----------
603,150
TEXAS 12.62%
--------------------------------------------------------------------------------------
Addison, Texas Certificates of
Obligation, GO Unlimited 4.00% 02/15/20 250,000 257,643
Annetta, Texas Certificates of
Obligation, GO Limited 4.00% 08/01/16 200,000 201,288
Grand Prairie Independent School
District, Refunding, GO Unlimited
(ZCB) 3.92%(1) 08/15/16 400,000 335,656
Houston Texas, Public Improvement,
Refunding, Series A 5.38% 03/01/16 180,000 201,179
Katy, Texas Independent School
District, School Building, Series D,
GO Unlimited 4.50% 02/15/19 325,000 351,614
Lewisville, Texas Independent School
District, GO Unlimited, Refunding
(ZCB) 4.04%(1) 08/15/15 400,000 360,296
Lower Colorado River Authority Texas,
Refunding 5.25% 05/15/19 240,000 254,921
North Texas Municipal Water District,
Regional Solid Waste Disposal Systems
Revenue 3.00% 09/01/12 300,000 306,138
Port Arthur, Texas, Refunding, GO
Unlimited 2.85% 02/15/11 200,000 200,474
San Antonio Water System Revenue 5.00% 05/15/13 100,000 101,433
San Antonio, Texas Municipal Drain
Utilities Systems Revenue 4.00% 02/01/16 300,000 310,938
San Patricio, Texas Municipal Water
District, Refunding 4.00% 07/10/18 200,000 202,804
Texas Municipal Power Agency Revenue,
Refunding 5.00% 09/01/17 250,000 282,367
Texas State Public Finance Authority
Revenue 5.00% 10/15/21 300,000 310,404
-----------
3,677,155
See notes to portfolios of investments and notes to financial statements.
78
NEAR-TERM TAX FREE FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COUPON MATURITY PRINCIPAL
MUNICIPAL BONDS RATE DATE AMOUNT VALUE
UTAH 1.10%
--------------------------------------------------------------------------------------
Utah State, Refunding, Series B, GO
Unlimited 5.38% 07/01/12 $ 300,000 $ 321,294
VIRGINIA 2.27%
--------------------------------------------------------------------------------------
Virginia College Building Authority
Educational Facilities Revenue,
Prerefunded, Series A 5.00% 09/01/15 10,000 11,505
Virginia College Building Authority
Educational Facilities Revenue,
Unrefunded, Series A 5.00% 09/01/15 290,000 330,284
Virginia State Public Building
Authority & Public Facilities
Revenue, Refunding, Series A 5.00% 08/01/12 300,000 320,478
-----------
662,267
WASHINGTON 2.20%
--------------------------------------------------------------------------------------
Clark County, Washington School
District, GO Unlimited 5.13% 12/01/11 100,000 104,238
Energy Northwest, Washington Electric
Revenue 5.00% 07/01/14 250,000 279,635
King County, Washington School District
No. 401 Highline Public Schools, GO
Unlimited 5.50% 12/01/13 240,000 256,152
-----------
640,025
WISCONSIN 1.35%
--------------------------------------------------------------------------------------
Chippewa Valley, Wisconsin, Technical
College District Promissory Notes,
Series A, GO Unlimited 4.00% 04/01/14 250,000 269,600
Wisconsin State, Refunding, Series 2,
GO Unlimited 4.13% 11/01/16 120,000 123,341
-----------
392,941
--------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS 26,621,257
--------------------------------------------------------------------------------------
(cost $26,014,517)
See notes to portfolios of investments and notes to financial statements.
79
NEAR-TERM TAX FREE FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COUPON MATURITY PRINCIPAL
REPURCHASE AGREEMENT 7.84% RATE DATE AMOUNT VALUE
Joint Tri-Party Repurchase Agreement,
Banc of America Securities LLC
Merrill Lynch, 12/31/2010, 0.09%,
due 01/03/2011, repurchase price
$2,285,058, collateralized by
U.S. Treasury securities held in
joint tri-party account
(cost $2,285,040) 0.09% 01/03/11 $2,285,040 $ 2,285,040
--------------------------------------------------------------------------------------
TOTAL INVESTMENTS 99.21% 28,906,297
--------------------------------------------------------------------------------------
(cost $28,299,557)
Other assets and liabilities, net 0.79% 231,548
-----------
NET ASSETS 100% $29,137,845
-----------
<FN>
(1)Represents Yield
</FN>
See notes to portfolios of investments and notes to financial statements.
80
TAX FREE FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COUPON MATURITY PRINCIPAL
MUNICIPAL BONDS 97.61% RATE DATE AMOUNT VALUE
ALABAMA 7.09%
--------------------------------------------------------------------------------------
Alabama 21st Century Authority, Tobacco
Settlement Revenue 5.75% 12/01/19 $ 275,000 $ 280,448
Alabama State, GO Unlimited, Series A 4.63% 09/01/22 375,000 387,870
Bessemer, Alabama Water Revenue 4.00% 01/01/16 200,000 200,448
Mountain Brook City Board of Education
Capital Outlay 4.00% 02/15/15 195,000 210,957
University of Alabama at Birmingham,
Hospital Revenue, Series A 5.00% 09/01/15 300,000 324,522
-----------
1,404,245
ARIZONA 2.34%
--------------------------------------------------------------------------------------
Scottsdale Arizona Municipal Property
Corp., Excise Tax Revenue, Refunding 5.00% 07/01/26 180,000 194,141
University of Arizona Certificates of
Participation, Series C 5.00% 06/01/22 260,000 268,593
-----------
462,734
CALIFORNIA 15.25%
--------------------------------------------------------------------------------------
Anaheim, California City School
District, Capital Appreciation,
Election 2002, GO Unlimited (ZCB) 4.60%(1) 08/01/28 580,000 158,282
California State, GO Unlimited 5.00% 03/01/32 300,000 273,237
California State, GO Unlimited 4.75% 03/01/34 205,000 178,038
California State, GO Unlimited 5.00% 06/01/37 455,000 408,913
Campbell, California Union High School
District, GO Unlimited 4.75% 08/01/34 300,000 255,426
Chaffey Community College District,
Series C, GO Unlimited 5.00% 06/01/32 300,000 284,136
Imperial Community College District, GO
Unlimited 5.00% 08/01/29 500,000 499,380
Los Angeles Unified School District,
Election 2004, Series H, GO Unlimited 5.00% 07/01/32 200,000 190,632
San Diego, California Community College
District, Capital Appreciation,
Election 2002, GO Unlimited (ZCB) 4.34%(1) 05/01/15 450,000 395,654
Santa Clara Valley Transportation
Authority, Refunding, Series A 5.00% 04/01/27 370,000 375,517
-----------
3,019,215
COLORADO 0.78%
--------------------------------------------------------------------------------------
Colorado Health Facilities Authority
Revenue 5.00% 09/01/16 150,000 154,843
DISTRICT OF COLUMBIA 1.62%
--------------------------------------------------------------------------------------
District of Columbia Income Tax
Revenue, Series A 5.25% 12/01/27 300,000 319,974
See notes to portfolios of investments and notes to financial statements.
81
TAX FREE FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COUPON MATURITY PRINCIPAL
MUNICIPAL BONDS RATE DATE AMOUNT VALUE
FLORIDA 1.52%
--------------------------------------------------------------------------------------
Florida Board of Education, GO
Unlimited, Refunding, Series C 4.50% 06/01/28 $ 300,000 $ 300,273
GEORGIA 2.55%
--------------------------------------------------------------------------------------
Atlanta Development Authority Revenue 5.25% 07/01/22 500,000 504,550
GUAM 1.21%
--------------------------------------------------------------------------------------
Guam Education Financing Foundation
Certificate of Participation,
Series A 4.25% 10/01/18 250,000 238,577
ILLINOIS 8.94%
--------------------------------------------------------------------------------------
Chicago Board of Education, GO
Unlimited 5.25% 12/01/19 300,000 328,794
Chicago, Illinois Water Revenue,
Refunding 5.75% 11/01/30 225,000 234,461
Du Page County, Refunding 5.60% 01/01/21 490,000 558,825
Illinois Finance Authority, Refunding,
Series A 5.00% 10/01/14 150,000 163,133
Illinois Regional Transportation
Authority Revenue, Series A 7.20% 11/01/20 235,000 279,370
State of Illinois, First Series,
Refunding 5.50% 08/01/19 200,000 204,890
-----------
1,769,473
INDIANA 1.53%
--------------------------------------------------------------------------------------
Indianapolis Local Public Improvement
Bond Bank, Waterworks Project, Series
2007 L 5.25% 01/01/33 305,000 302,249
KANSAS 7.03%
--------------------------------------------------------------------------------------
Kansas State Development Finance
Authority Revenue 4.00% 10/01/15 250,000 272,967
Kansas State Development Finance
Authority, Hospital Revenue, Series Z 5.00% 12/15/12 500,000 504,205
University of Kansas Hospital Authority
Health Facilities Revenue 5.63% 09/01/27 570,000 614,346
-----------
1,391,518
KENTUCKY 1.19%
--------------------------------------------------------------------------------------
Bowling Green, Kentucky, GO Unlimited,
Series B 4.00% 09/01/16 215,000 235,829
MARYLAND 1.55%
--------------------------------------------------------------------------------------
Maryland Health & Higher Educational
Facilities Authority Revenue 5.75% 07/01/21 300,000 307,830
See notes to portfolios of investments and notes to financial statements.
82
TAX FREE FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COUPON MATURITY PRINCIPAL
MUNICIPAL BONDS RATE DATE AMOUNT VALUE
MASSACHUSETTS 1.51%
--------------------------------------------------------------------------------------
Massachusetts Bay Transportation
Authority, Massachusetts Sales Tax
Revenue, Refunding, Series A-1 5.25% 07/01/30 $ 285,000 $ 298,897
MICHIGAN 4.66%
--------------------------------------------------------------------------------------
Detroit, Michigan Local Development
Financing Authority, Refunding,
Series A 5.38% 05/01/18 300,000 156,330
Detroit, Michigan Water Supply System
Revenue, Series B 5.00% 07/01/16 430,000 463,067
Macomb County Building Authority, GO
Limited 4.50% 11/01/23 300,000 302,859
-----------
922,256
MISSOURI 3.37%
--------------------------------------------------------------------------------------
Kansas City Water Revenue 4.00% 12/01/22 250,000 260,840
St. Louis Airport Development Program,
Prerefunded, Series A 5.00% 07/01/11 165,000 168,703
St. Louis Airport Development Program,
Unrefunded, Series A 5.00% 07/01/11 235,000 238,123
-----------
667,666
NEVADA 1.29%
--------------------------------------------------------------------------------------
Nye County School District, GO Limited 4.00% 05/01/15 235,000 256,197
NEW HAMPSHIRE 2.36%
--------------------------------------------------------------------------------------
Manchester, New Hampshire School
Facilities Revenue, Refunding 5.50% 06/01/26 300,000 338,787
New Hampshire Health & Education
Facilities Authority Revenue 5.00% 07/01/14 125,000 128,356
-----------
467,143
OHIO 2.03%
--------------------------------------------------------------------------------------
Ohio State Mental Health Facilities
Revenue 5.50% 06/01/15 300,000 306,255
South Euclid Special Assessment, GO
Limited Tax 6.70% 12/01/14 90,000 95,164
-----------
401,419
PUERTO RICO 2.66%
--------------------------------------------------------------------------------------
Commonwealth of Puerto Rico, GO
Unlimited 6.00% 07/01/13 250,000 270,670
Commonwealth of Puerto Rico, Refunding,
GO Unlimited 5.50% 07/01/11 250,000 255,373
-----------
526,043
See notes to portfolios of investments and notes to financial statements.
83
TAX FREE FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COUPON MATURITY PRINCIPAL
MUNICIPAL BONDS RATE DATE AMOUNT VALUE
RHODE ISLAND 2.75%
--------------------------------------------------------------------------------------
Rhode Island State Health & Educational
Building Corporation Revenue 6.50% 08/15/32 $ 500,000 $ 544,425
SOUTH CAROLINA 1.27%
--------------------------------------------------------------------------------------
South Carolina Jobs Economic
Development Authority Revenue 5.00% 11/01/23 250,000 250,440
TENNESSEE 1.12%
--------------------------------------------------------------------------------------
Memphis, Tennessee Sanitary Sewage
System Revenue, Refunding 5.00% 05/01/20 200,000 221,830
TEXAS 15.79%
--------------------------------------------------------------------------------------
Dallas, Texas Waterworks & Sewer
Systems Revenue, Refunding 4.50% 10/01/19 225,000 244,728
Duncanville, Texas Independent School
District, GO Unlimited, Prerefunded,
Series B 5.25% 02/15/32 495,000 519,938
Duncanville, Texas Independent School
District, GO Unlimited, Unrefunded,
Series B 5.25% 02/15/32 5,000 5,043
Forney, Texas, GO Limited 5.00% 02/15/27 500,000 509,460
Goose Creek, Texas Independent School
District Schoolhouse, Series A 5.25% 02/15/18 370,000 426,643
Greenville, Texas Independent School
District, GO Unlimited, Refunding 4.00% 08/15/17 120,000 129,106
North Texas Tollway Authority Revenue,
Series F 5.75% 01/01/38 250,000 232,875
Prosper, Texas Independent School
District, Capital Appreciation,
School Building, GO Unlimited (ZCB) 6.00%(1) 08/15/33 1,000,000 310,440
San Marcos, Texas Tax & Toll Revenue,
GO Limited 5.10% 08/15/27 400,000 416,592
White Settlement, Texas Independent
School District, GO Unlimited 4.13% 08/15/15 300,000 331,287
-----------
3,126,112
UTAH 2.88%
--------------------------------------------------------------------------------------
Utah State Building Ownership
Authority, Lease Revenue, Refunding,
Series C 5.50% 05/15/19 500,000 569,880
VIRGINIA 1.97%
--------------------------------------------------------------------------------------
Virginia Port Authority Facilities
Revenue, Refunding 5.00% 07/01/40 400,000 389,764
See notes to portfolios of investments and notes to financial statements.
84
TAX FREE FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COUPON MATURITY PRINCIPAL
MUNICIPAL BONDS RATE DATE AMOUNT VALUE
WASHINGTON 1.35%
--------------------------------------------------------------------------------------
Spokane County, Washington School
District, No. 81, GO Unlimited 5.05% 06/01/22 $ 255,000 $ 268,232
--------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS 19,321,614
--------------------------------------------------------------------------------------
(cost $19,180,889)
REPURCHASE AGREEMENT 1.68%
Joint Tri-Party Repurchase Agreement,
Banc of America Securities LLC
Merrill Lynch, 12/31/2010, 0.09%, due
01/03/2011, repurchase price $333,050,
collateralized by U.S. Treasury
securities held in a joint tri-party
account (cost $333,047) 0.09% 01/03/11 333,047 333,047
--------------------------------------------------------------------------------------
TOTAL INVESTMENTS 99.29% 19,654,661
--------------------------------------------------------------------------------------
(cost $19,513,936)
Other assets and liabilities, net 0.71% 139,583
-----------
NET ASSETS 100% $19,794,244
--------------------------------------------------------------------------------------
<FN>
(1)Represents Yield
</FN>
See notes to portfolios of investments and notes to financial statements.
85
ALL AMERICAN EQUITY FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COMMON STOCKS 91.11% SHARES VALUE
AEROSPACE/DEFENSE 0.91%
---------------------------------------------------------------------------------------
Northrop Grumman Corp. 2,500 $ 161,950
AGRICULTURAL CHEMICALS 2.70%
---------------------------------------------------------------------------------------
CF Industries Holdings, Inc. 2,000 270,300
Monsanto Co. 3,000 208,920
-----------
479,220
APPAREL MANUFACTURERS 1.54%
---------------------------------------------------------------------------------------
Under Armour, Inc., Class A 5,000 274,200*
APPLICATIONS SOFTWARE 4.27%
---------------------------------------------------------------------------------------
Check Point Software Technologies Ltd. 7,500 346,950*
Red Hat, Inc. 9,000 410,850*
-----------
757,800
AUTOMOTIVE - CARS & LIGHT TRUCKS 0.66%
---------------------------------------------------------------------------------------
Tata Motors Ltd., Sponsored ADR 4,000 117,360
BEVERAGES - NON-ALCOHOLIC 1.06%
---------------------------------------------------------------------------------------
Coca-Cola Enterprises, Inc. 7,500 187,725
CABLE/SATELLITE TV 0.90%
---------------------------------------------------------------------------------------
DIRECTV, Class A 4,000 159,720*
CASINO HOTELS 0.65%
---------------------------------------------------------------------------------------
Las Vegas Sands Corp. 2,500 114,875*
CHEMICALS - DIVERSIFIED 1.12%
---------------------------------------------------------------------------------------
EI du Pont de Nemours & Co. 4,000 199,520
CHEMICALS - SPECIALTY 1.03%
---------------------------------------------------------------------------------------
Ferro Corp. 12,500 183,000*
COAL 1.10%
---------------------------------------------------------------------------------------
Consol Energy, Inc. 4,000 194,960
COATINGS/PAINT 0.94%
---------------------------------------------------------------------------------------
Sherwin-Williams Co. 2,000 167,500
See notes to portfolios of investments and notes to financial statements.
86
ALL AMERICAN EQUITY FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COMMON STOCKS SHARES VALUE
COMMERCIAL BANKS - WESTERN U.S. 1.19%
---------------------------------------------------------------------------------------
SVB Financial Group 4,000 $ 212,200*
COMMERCIAL SERVICES - FINANCIAL 1.98%
---------------------------------------------------------------------------------------
H&R Block, Inc. 14,000 166,740
Western Union Co. 10,000 185,700
-----------
352,440
COMPUTERS 4.54%
---------------------------------------------------------------------------------------
Apple, Inc. 2,500 806,400*
CONTAINERS - METAL/GLASS 0.96%
---------------------------------------------------------------------------------------
Ball Corp. 2,500 170,125
DATA PROCESSING/MANAGEMENT 1.06%
---------------------------------------------------------------------------------------
Dun & Bradstreet Corp. 2,300 188,807
DISTRIBUTION/WHOLESALE 1.09%
---------------------------------------------------------------------------------------
WW Grainger, Inc. 1,400 193,354
E-COMMERCE/PRODUCTS 0.59%
---------------------------------------------------------------------------------------
Nutrisystem, Inc. 5,000 105,150
ELECTRIC - INTEGRATED 4.36%
---------------------------------------------------------------------------------------
Dominion Resources, Inc. 3,500 149,520
Duke Energy Corp. 9,000 160,290
Entergy Corp. 2,000 141,660
Pepco Holdings, Inc. 9,000 164,250
TECO Energy, Inc. 8,900 158,420
-----------
774,140
ELECTRONIC COMPONENTS - SEMICONDUCTORS 4.63%
---------------------------------------------------------------------------------------
Entropic Communications, Inc. 20,000 241,600*
NVIDIA Corp. 25,000 385,000*
Texas Instruments, Inc. 6,000 195,000
-----------
821,600
ENTERPRISE SOFTWARE/SERVICES 1.76%
---------------------------------------------------------------------------------------
Oracle Corp. 10,000 313,000
FIDUCIARY BANKS 1.30%
---------------------------------------------------------------------------------------
State Street Corp. 5,000 231,700
See notes to portfolios of investments and notes to financial statements.
87
ALL AMERICAN EQUITY FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COMMON STOCKS SHARES VALUE
FINANCIAL SERVICES 0.00%
---------------------------------------------------------------------------------------
Invictus Financial, Inc. 131,125 $ 302*
FOOD - RETAIL 0.95%
---------------------------------------------------------------------------------------
Safeway, Inc. 7,500 168,675
FORESTRY 1.07%
---------------------------------------------------------------------------------------
Weyerhaeuser Co. 10,000 189,300
GOLD MINING 1.52%
---------------------------------------------------------------------------------------
Agnico-Eagle Mines Ltd. 1,000 76,700
Eldorado Gold Corp. 6,000 111,420
Randgold Resources Ltd., Sponsored ADR 1,000 82,330
-----------
270,450
INTERNET SECURITY 1.20%
---------------------------------------------------------------------------------------
VeriSign, Inc. 6,500 212,355
INVESTMENT MANAGEMENT/ADVISORY SERVICES 2.04%
---------------------------------------------------------------------------------------
Federated Investors, Inc., Class B 7,500 196,275
Franklin Resources, Inc. 1,500 166,815
-----------
363,090
LIFE/HEALTH INSURANCE 2.35%
---------------------------------------------------------------------------------------
Lincoln National Corp. 15,000 417,150
MEDICAL - BIOMEDICAL/GENE 1.13%
---------------------------------------------------------------------------------------
Biogen Idec, Inc. 3,000 201,150*
MEDICAL - DRUGS 0.89%
---------------------------------------------------------------------------------------
Bristol-Myers Squibb Co. 6,000 158,880
MEDICAL - HMO 1.23%
---------------------------------------------------------------------------------------
Humana, Inc. 4,000 218,960*
METAL - COPPER 0.68%
---------------------------------------------------------------------------------------
Freeport-McMoRan Copper & Gold, Inc. 1,000 120,090
METAL - IRON 0.98%
---------------------------------------------------------------------------------------
Mesabi Trust 4,500 173,205
See notes to portfolios of investments and notes to financial statements.
88
ALL AMERICAN EQUITY FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COMMON STOCKS SHARES VALUE
MULTI-LINE INSURANCE 0.87%
---------------------------------------------------------------------------------------
Assurant, Inc. 4,000 $ 154,080
NETWORKING PRODUCTS 1.71%
---------------------------------------------------------------------------------------
Netgear, Inc. 9,000 303,120*
OIL COMPANIES - EXPLORATION & PRODUCTION 3.81%
---------------------------------------------------------------------------------------
Concho Resources, Inc. 4,000 350,680*
Northern Oil & Gas, Inc. 12,000 326,520*
-----------
677,200
OIL COMPANIES - INTEGRATED 2.18%
---------------------------------------------------------------------------------------
Chevron Corp. 2,000 182,500
ConocoPhillips 3,000 204,300
-----------
386,800
OIL FIELD MACHINERY & EQUIPMENT 3.41%
---------------------------------------------------------------------------------------
National-Oilwell Varco, Inc. 9,000 605,250
PHARMACY SERVICES 1.04%
---------------------------------------------------------------------------------------
Medco Health Solutions, Inc. 3,000 183,810*
PIPELINES 0.98%
---------------------------------------------------------------------------------------
Spectra Energy Corp. 7,000 174,930
PROPERTY/CASUALTY INSURANCE 1.95%
---------------------------------------------------------------------------------------
Chubb Corp. 3,000 178,920
The Travelers Cos., Inc. 3,000 167,130
-----------
346,050
RETAIL - APPAREL/SHOE 1.01%
---------------------------------------------------------------------------------------
Urban Outfitters, Inc. 5,000 179,050*
RETAIL - AUTO PARTS 1.84%
---------------------------------------------------------------------------------------
AutoZone, Inc. 1,200 327,108*
RETAIL - AUTOMOBILE 1.03%
---------------------------------------------------------------------------------------
AutoNation, Inc. 6,500 183,300*
RETAIL - DISCOUNT 0.98%
---------------------------------------------------------------------------------------
Family Dollar Stores, Inc. 3,500 173,985
See notes to portfolios of investments and notes to financial statements.
89
ALL AMERICAN EQUITY FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COMMON STOCKS SHARES VALUE
RETAIL - RESTAURANTS 1.44%
---------------------------------------------------------------------------------------
Chipotle Mexican Grill, Inc., Class A 1,200 $ 255,192*
STEEL - PRODUCERS 1.22%
---------------------------------------------------------------------------------------
United States Steel Corp. 3,700 216,154
TELECOMMUNICATION EQUIPMENT - FIBER OPTICS 1.06%
---------------------------------------------------------------------------------------
JDS Uniphase Corp. 13,000 188,240*
TELEPHONE - INTEGRATED 4.37%
---------------------------------------------------------------------------------------
AT&T, Inc. 6,500 190,970
Frontier Communications Corp. 21,320 207,444
Verizon Communications, Inc. 5,500 196,790
Windstream Corp. 13,000 181,220
-----------
776,424
TOBACCO 2.09%
---------------------------------------------------------------------------------------
Philip Morris International, Inc. 3,000 175,590
Reynolds American, Inc. 6,000 195,720
-----------
371,310
TRANSPORTATION - MARINE 0.03%
---------------------------------------------------------------------------------------
Golar LNG Energy Ltd. 2,857 6,150*
TRANSPORTATION - SERVICES 1.19%
---------------------------------------------------------------------------------------
Ryder System, Inc. 4,000 210,560
VETERINARY DIAGNOSTICS 1.39%
---------------------------------------------------------------------------------------
Neogen Corp. 6,000 246,180*
WIRELESS EQUIPMENT 3.13%
---------------------------------------------------------------------------------------
American Tower Corp., Class A 5,000 258,200*
QUALCOMM, Inc. 6,000 296,940
-----------
555,140
---------------------------------------------------------------------------------------
TOTAL COMMON STOCKS 16,180,386
---------------------------------------------------------------------------------------
(cost $13,562,400)
EXCHANGE-TRADED FUND (ETF) 1.15%
Energy Select Sector SPDR Fund 3,000 204,750
(cost $170,252)
See notes to portfolios of investments and notes to financial statements.
90
ALL AMERICAN EQUITY FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
WARRANTS 1.01% SHARES VALUE
DIVERSIFIED BANKING INSTITUTIONS 1.01%
---------------------------------------------------------------------------------------
Bank of America Corp., Warrants (January 2019) 25,000 $ 178,500*
(cost $175,302)
PURCHASED OPTION 0.05% CONTRACTS
DIVERSIFIED BANKING INSTITUTIONS 0.05%
---------------------------------------------------------------------------------------
Citigroup, Inc., Strike Price 8, Call, Expiration
Jan. 2012 800 9,600
(premium $30,300)
MASTER LIMITED PARTNERSHIP 1.13% UNITS
OIL COMPANIES - EXPLORATION & PRODUCTION 1.13%
---------------------------------------------------------------------------------------
BreitBurn Energy Partners L.P. 10,000 201,200
(cost $168,221)
UNITS 1.06%
OIL & GAS EXPLORATION & PRODUCTION 1.06%
---------------------------------------------------------------------------------------
Linn Energy LLC 5,000 187,450
(cost $178,350)
---------------------------------------------------------------------------------------
TOTAL SECURITIES 16,961,886
---------------------------------------------------------------------------------------
(cost $14,284,825)
PRINCIPAL
REPURCHASE AGREEMENT 5.47% AMOUNT
Joint Tri-Party Repurchase Agreement, Barclays Capital,
Inc., 12/31/2010, 0.25%, due 01/03/2011, repurchase
price $971,290, collateralized by U.S. Treasury
securities held in a joint tri-party account
(cost $971,270) $971,270 971,270
---------------------------------------------------------------------------------------
TOTAL INVESTMENTS 100.98% 17,933,156
---------------------------------------------------------------------------------------
(cost $15,256,095)
Other assets and liabilities, net (0.98%) (173,254)
-----------
NET ASSETS 100% $17,759,902
-----------
See notes to portfolios of investments and notes to financial statements.
91
HOLMES GROWTH FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COMMON STOCKS 89.83% SHARES VALUE
AGRICULTURAL CHEMICALS 1.03%
-------------------------------------------------------------------------------------
The Mosaic Co. 5,500 $ 419,980
APPLICATIONS SOFTWARE 2.33%
-------------------------------------------------------------------------------------
Ebix, Inc. 40,000 946,800*
AUTOMOTIVE - TRUCK PARTS & EQUIPMENT 0.98%
-------------------------------------------------------------------------------------
WABCO Holdings, Inc. 6,500 396,045*
BREWERY 1.17%
-------------------------------------------------------------------------------------
Boston Beer Co., Inc., Class A 5,000 475,450*
CABLE/SATELLITE TV 1.72%
-------------------------------------------------------------------------------------
DIRECTV, Class A 17,500 698,775*
CHEMICALS - SPECIALTY 2.88%
-------------------------------------------------------------------------------------
Albemarle Corp. 10,000 557,800
International Flavors & Fragrances, Inc. 11,000 611,490
-----------
1,169,290
COMPUTER SERVICES 2.11%
-------------------------------------------------------------------------------------
Cognizant Technology Solutions Corp., Class A 11,700 857,493*
COMPUTERS 3.18%
-------------------------------------------------------------------------------------
Apple, Inc. 4,000 1,290,240*
COMPUTERS - INTEGRATED SYSTEMS 1.39%
-------------------------------------------------------------------------------------
Riverbed Technology, Inc. 16,000 562,720*
COMPUTERS - MEMORY DEVICES 1.08%
-------------------------------------------------------------------------------------
NetApp, Inc. 8,000 439,680*
CONTAINERS - METAL/GLASS 0.84%
-------------------------------------------------------------------------------------
Ball Corp. 5,000 340,250
COSMETICS & TOILETRIES 0.89%
-------------------------------------------------------------------------------------
The Estee Lauder Cos., Inc., Class A 4,500 363,150
DIVERSIFIED BANKING INSTITUTIONS 1.67%
-------------------------------------------------------------------------------------
JPMorgan Chase & Co. 16,000 678,720
See notes to portfolios of investments and notes to financial statements.
92
HOLMES GROWTH FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COMMON STOCKS SHARES VALUE
E-COMMERCE/PRODUCTS 2.46%
-------------------------------------------------------------------------------------
MercadoLibre, Inc. 15,000 $ 999,750*
E-COMMERCE/SERVICES 3.40%
-------------------------------------------------------------------------------------
Ctrip.com International Ltd., Sponsored ADR 11,500 465,175*
Netflix, Inc. 1,800 316,260*
priceline.com, Inc. 1,500 599,325*
-----------
1,380,760
ELECTRONIC COMPONENTS - MISCELLANEOUS 0.99%
-------------------------------------------------------------------------------------
Jabil Circuit, Inc. 20,000 401,800
ELECTRONIC COMPONENTS - SEMICONDUCTORS 3.83%
-------------------------------------------------------------------------------------
Altera Corp. 15,000 533,700
Broadcom Corp., Class A 15,000 653,250
Intel Corp. 17,500 368,025
-----------
1,554,975
ENGINES - INTERNAL COMBUSTION 1.22%
-------------------------------------------------------------------------------------
Cummins, Inc. 4,500 495,045
FILTRATION/SEPARATE PRODUCTION 0.86%
-------------------------------------------------------------------------------------
Donaldson Co., Inc. 6,000 349,680
FINANCE - INVESTMENT BANKER/BROKER 0.08%
-------------------------------------------------------------------------------------
GMP Capital, Inc. 2,800 33,972
FINANCE - OTHER SERVICES 1.17%
-------------------------------------------------------------------------------------
IntercontinentalExchange, Inc. 4,000 476,600*
FINANCIAL SERVICES 0.20%
-------------------------------------------------------------------------------------
MCO Capital, Inc., 144A (RS) 1,000,000 82,723*+@
FOOTWEAR & RELATED APPAREL 1.03%
-------------------------------------------------------------------------------------
Steven Madden Ltd. 10,000 417,200*
GARDEN PRODUCTS 1.06%
-------------------------------------------------------------------------------------
The Toro Co. 7,000 431,480
GOLD MINING 3.67%
-------------------------------------------------------------------------------------
Agnico-Eagle Mines Ltd. 3,000 230,100
Eldorado Gold Corp. 12,500 232,125
See notes to portfolios of investments and notes to financial statements.
93
HOLMES GROWTH FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COMMON STOCKS SHARES VALUE
GOLD MINING (CONT'D)
-------------------------------------------------------------------------------------
Endeavour Mining Corp. 70,000 $ 197,233*
Randgold Resources Ltd., Sponsored ADR 10,100 831,533
-----------
1,490,991
INDUSTRIAL AUDIO & VIDEO PRODUCTS 1.38%
-------------------------------------------------------------------------------------
Imax Corp. 20,000 561,000*
INSTRUMENTS - CONTROLS 0.93%
-------------------------------------------------------------------------------------
Sensata Technologies Holding N.V. 12,500 376,375*
INTERNET CONTENT - INFO/NEWS 1.07%
-------------------------------------------------------------------------------------
Baidu, Inc., Sponsored ADR 4,500 434,385*
INTERNET INFRASTRUCTURE SOFTWARE 1.60%
-------------------------------------------------------------------------------------
F5 Networks, Inc. 5,000 650,800*
INVESTMENT MANAGEMENT/ADVISORY SERVICES 2.80%
-------------------------------------------------------------------------------------
Altisource Portfolio Solutions S.A. 17,500 502,425*
Waddell & Reed Financial, Inc.,7Class A 18,000 635,220
-----------
1,137,645
MACHINERY - GENERAL INDUSTRIAL 1.96%
-------------------------------------------------------------------------------------
Altra Holdings, Inc. 40,000 794,400*
MEDICAL - BIOMEDICAL/GENE 1.98%
-------------------------------------------------------------------------------------
Alexion Pharmaceuticals, Inc. 10,000 805,500*
MEDICAL - DRUGS 1.36%
-------------------------------------------------------------------------------------
Valeant Pharmaceuticals International, Inc. 19,589 554,173
MEDICAL - HOSPITALS 0.32%
-------------------------------------------------------------------------------------
African Medical Investments plc 1,000,000 130,654*
MEDICAL INSTRUMENTS 1.64%
-------------------------------------------------------------------------------------
Bruker Corp. 40,000 664,000*
METAL - COPPER 0.74%
-------------------------------------------------------------------------------------
Freeport-McMoRan Copper & Gold, Inc. 2,500 300,225
See notes to portfolios of investments and notes to financial statements.
94
HOLMES GROWTH FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COMMON STOCKS SHARES VALUE
MULTI-LINE INSURANCE 0.57%
-------------------------------------------------------------------------------------
American International Group, Inc. 4,000 $ 230,480*
OIL - FIELD SERVICES 1.32%
-------------------------------------------------------------------------------------
Core Laboratories N.V. 6,000 534,300
OIL COMPANIES - EXPLORATION & PRODUCTION 12.08%
-------------------------------------------------------------------------------------
Alange Energy Corp. 1,385,000 749,925*
Brigham Exploration Co. 45,000 1,225,800*
Concho Resources, Inc. 14,000 1,227,380*
Continental Resources, Inc. 9,000 529,650*
GeoResources, Inc. 10,000 222,100*
Pacific Rubiales Energy Corp. 28,000 947,558
-----------
4,902,413
PLATINUM 0.16%
-------------------------------------------------------------------------------------
Eastern Platinum Ltd. 36,000 63,892*
RADIO 6.67%
-------------------------------------------------------------------------------------
Newfoundland Capital Corp., Ltd., Class A 391,400 2,707,972
REAL ESTATE MANAGEMENT/SERVICES 2.02%
-------------------------------------------------------------------------------------
CB Richard Ellis Group, Inc., Class A 40,000 819,200*
REAL ESTATE OPERATING/DEVELOPMENT 0.25%
-------------------------------------------------------------------------------------
Pacific Infrastructure, Inc. (RS) 100,000 100,000*@
RETAIL - AUTO PARTS 1.14%
-------------------------------------------------------------------------------------
Advance Auto Parts, Inc. 7,000 463,050
RETAIL - AUTOMOBILE 1.01%
-------------------------------------------------------------------------------------
Rush Enterprises, Inc., Class A 20,000 408,800*
RETAIL - RESTAURANTS 0.79%
-------------------------------------------------------------------------------------
Starbucks Corp. 10,000 321,300
RETAIL - VITAMINS/NUTRITIONAL SUPPLEMENTS 1.66%
-------------------------------------------------------------------------------------
Vitamin Shoppe, Inc. 20,000 672,800*
VITAMINS & NUTRITION PRODUCTS 2.10%
-------------------------------------------------------------------------------------
Herbalife Ltd. 12,500 854,625
See notes to portfolios of investments and notes to financial statements.
95
HOLMES GROWTH FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COMMON STOCKS SHARES VALUE
WEB HOSTING/DESIGN 2.32%
-------------------------------------------------------------------------------------
Rackspace Hosting, Inc. 30,000 $ 942,300*
WIRELESS EQUIPMENT 0.72%
-------------------------------------------------------------------------------------
Aruba Networks, Inc. 14,000 292,320*
-------------------------------------------------------------------------------------
TOTAL COMMON STOCKS 36,476,178
-------------------------------------------------------------------------------------
(cost $28,959,924)
EXCHANGE-TRADED FUNDS (ETF) 3.01%
iShares Dow Jones U.S. Oil Equipment & Services Index
Fund 9,000 507,150
Market Vectors Agribusiness ETF 7,500 401,550
SPDR KBW Bank ETF 12,000 310,920
-------------------------------------------------------------------------------------
TOTAL EXCHANGE-TRADED FUNDS 1,219,620
-------------------------------------------------------------------------------------
(cost $1,204,205)
WARRANTS 1.09%
DIVERSIFIED BANKING INSTITUTIONS 1.06%
-------------------------------------------------------------------------------------
Bank of America Corp., Warrants (January 2019) 60,000 428,400*
GOLD MINING 0.03%
-------------------------------------------------------------------------------------
Kinross Gold Corp., Warrants (September 2014) 935 4,397*
Medoro Resources Ltd., Warrants (November 2011) 33,333 9,191*
-----------
13,588
MEDICAL - HOSPITALS 0.00%
-------------------------------------------------------------------------------------
African Medical Investments plc, Warrants (June 2011) 500,000 0*@
-------------------------------------------------------------------------------------
TOTAL WARRANTS 441,988
-------------------------------------------------------------------------------------
(cost $442,618)
PURCHASED OPTION 0.07% CONTRACTS
GOLD MINING 0.07%
-------------------------------------------------------------------------------------
Randgold Resources Ltd., Strike Price 80, Call,
Expiration Jan. 2011 75 29,250
(premium $82,765)
See notes to portfolios of investments and notes to financial statements.
96
HOLMES GROWTH FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
MASTER LIMITED PARTNERSHIP 1.15% UNITS VALUE
PIPELINES 1.15%
-------------------------------------------------------------------------------------
El Paso Pipeline Partners, L.P. 14,000 $ 468,300
(cost $408,470)
PRINCIPAL
CONVERTIBLE DEBENTURE 0.94% AMOUNT
METAL & MINERAL MINING 0.94%
-------------------------------------------------------------------------------------
Grupo Empresarial Ibiza S.A., 12.68%, maturity
05/03/11 (RS) $380,000 380,000@
(cost $380,000)
-------------------------------------------------------------------------------------
TOTAL SECURITIES 39,015,336
-------------------------------------------------------------------------------------
(cost $31,477,982)
REPURCHASE AGREEMENTS 4.61%
Joint Tri-Party Repurchase Agreement, Banc of America
Securities LLC Merrill Lynch, 12/31/2010, 0.09%, due
01/03/2011, repurchase price $1,872,901,
collateralized by U.S. Treasury securities held in a
joint tri-party account (cost $1,872,887) 1,872,887 1,872,887
-------------------------------------------------------------------------------------
TOTAL INVESTMENTS 100.70% 40,888,223
-------------------------------------------------------------------------------------
(cost $33,350,869)
Other assets and liabilities, net (0.70%) (284,011)
-----------
NET ASSETS 100% $40,604,212
-----------
See notes to portfolios of investments and notes to financial statements.
97
GLOBAL MEGATRENDS FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COMMON STOCKS 89.52% SHARES VALUE
AGRICULTURAL CHEMICALS 1.03%
---------------------------------------------------------------------------------------
The Mosaic Co. 2,750 $ 209,990
AIRLINES 1.95%
---------------------------------------------------------------------------------------
Alaska Air Group, Inc. 7,000 396,830*
AIRPORT DEVELOPMENT/MAINTENANCE 4.10%
---------------------------------------------------------------------------------------
Grupo Aeroportuario del Sureste S.A.B. de C.V.,
Sponsored ADR 7,000 395,150
TAV Havalimanlari Holding A.S. 90,000 436,604*
-----------
831,754
AUTOMOTIVE - CARS & LIGHT TRUCKS 2.75%
---------------------------------------------------------------------------------------
Tofas Turk Otomobil Fabrikasi A.S. 108,000 557,546
BUILDING & CONSTRUCTION 1.42%
---------------------------------------------------------------------------------------
China Communications Construction Co., Ltd., H shares 150,000 131,039
China Railway Construction Corp., Ltd., H shares 130,000 156,552
-----------
287,591
CELLULAR TELECOMMUNICATIONS 4.95%
---------------------------------------------------------------------------------------
America Movil SAB de C.V., Series L, Sponsored ADR 9,000 516,060
Vivo Participacoes S.A., Sponsored ADR 15,000 488,850
-----------
1,004,910
CHEMICALS - FIBERS 0.98%
---------------------------------------------------------------------------------------
Kolon Industries, Inc. 3,000 198,586*
COAL 1.26%
---------------------------------------------------------------------------------------
Walter Energy, Inc. 2,000 255,680
DIVERSIFIED MINERALS 1.22%
---------------------------------------------------------------------------------------
Teck Resources Ltd., Class B 4,000 247,320
DIVERSIFIED OPERATIONS 1.18%
---------------------------------------------------------------------------------------
Siam Cement PCL 20,000 240,090
ELECTRIC - GENERATION 0.11%
---------------------------------------------------------------------------------------
Ronter, Inc. (RS) 349,057 23,358*@
ELECTRIC - INTEGRATED 2.84%
---------------------------------------------------------------------------------------
CPFL Energia S.A., Sponsored ADR 7,500 576,075
See notes to portfolios of investments and notes to financial statements.
98
GLOBAL MEGATRENDS FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COMMON STOCKS SHARES VALUE
ELECTRIC PRODUCTS - MISCELLANEOUS 2.62%
---------------------------------------------------------------------------------------
Zhuzhou CSR Times Electric Co., Ltd., H shares 135,000 $ 531,489
ELECTRONIC COMPONENTS - MISCELLANEOUS 1.07%
---------------------------------------------------------------------------------------
Toshiba Corp. 40,000 217,659
ENGINEERING/R&D SERVICES 4.99%
---------------------------------------------------------------------------------------
McDermott International, Inc. 20,000 413,800*
SNC-Lavalin Group, Inc. 10,000 599,318
-----------
1,013,118
ENGINES - INTERNAL COMBUSTION 1.25%
---------------------------------------------------------------------------------------
Cummins, Inc. 2,300 253,023
FILTRATION/SEPARATIONS PRODUCTS 1.15%
---------------------------------------------------------------------------------------
Donaldson Co., Inc. 4,000 233,120
GOLD MINING 1.25%
---------------------------------------------------------------------------------------
Agnico-Eagle Mines Ltd. 1,500 115,050
Eldorado Gold Corp. 7,500 139,275
-----------
254,325
MACHINERY - CONSTRUCTION & MINING 3.47%
---------------------------------------------------------------------------------------
Caterpillar, Inc. 4,000 374,640
Changsha Zoomlion Heavy Industry Science and Technology
Development Co., Ltd., H shares 50,000 112,962*
Joy Global, Inc. 2,500 216,875
-----------
704,477
MACHINERY - FARM 1.02%
---------------------------------------------------------------------------------------
Deere & Co. 2,500 207,625
MACHINERY - GENERAL INDUSTRIAL 1.89%
---------------------------------------------------------------------------------------
Babcock & Wilcox Co. 15,000 383,850*
MARINE SERVICES 1.08%
---------------------------------------------------------------------------------------
COSCO Pacific Ltd. 125,000 218,398
METAL - COPPER 0.89%
---------------------------------------------------------------------------------------
Freeport-McMoRan Copper & Gold, Inc. 1,500 180,135
See notes to portfolios of investments and notes to financial statements.
99
GLOBAL MEGATRENDS FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COMMON STOCKS SHARES VALUE
METAL - IRON 3.90%
---------------------------------------------------------------------------------------
Magnitogorsk Iron & Steel Works, Sponsored GDR 20,000 $ 291,000
Novolipetsk Steel, Sponsored GDR 10,500 500,850
-----------
791,850
NON-FERROUS METALS 2.51%
---------------------------------------------------------------------------------------
Cameco Corp. 6,000 242,280
Uranium Energy Corp. 44,400 268,176*
-----------
510,456
OIL & GAS DRILLING 0.83%
---------------------------------------------------------------------------------------
Seadrill Ltd. 5,000 169,600
OIL COMPANIES - EXPLORATION & PRODUCTION 0.87%
---------------------------------------------------------------------------------------
Pacific Rubiales Energy Corp. 5,233 177,092
OIL REFINING & MARKETING 1.02%
---------------------------------------------------------------------------------------
Valero Energy Corp. 9,000 208,080
PLATINUM 0.10%
---------------------------------------------------------------------------------------
Eastern Platinum Ltd. 11,000 19,523*
POWER CONVERTERS/POWER SUPPLY EQUIPMENT 1.71%
---------------------------------------------------------------------------------------
Dongfang Electric Corp. Ltd., H shares 70,000 347,186
PUBLIC THOROUGHFARES 6.42%
---------------------------------------------------------------------------------------
Compania de Concessoes Rodoviarias 24,300 686,878
EcoRodovias Infraestrutura e Logistica S.A. 80,000 616,058
-----------
1,302,936
REAL ESTATE MANAGEMENT/SERVICES 1.01%
---------------------------------------------------------------------------------------
CB Richard Ellis Group, Inc., Class A 10,000 204,800*
REAL ESTATE OPERATING/DEVELOPMENT 3.80%
---------------------------------------------------------------------------------------
LSR Group OJSC, GDR 28,600 263,406*
Pacific Infrastructure, Inc. (RS) 326,533 326,533*@
PIK Group, Sponsored GDR 45,000 182,250*
-----------
772,189
REINSURANCE 2.37%
---------------------------------------------------------------------------------------
Berkshire Hathaway, Inc., Class B 6,000 480,660*
See notes to portfolios of investments and notes to financial statements.
100
GLOBAL MEGATRENDS FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COMMON STOCKS SHARES VALUE
RETAIL - AUTOMOBILE 1.01%
---------------------------------------------------------------------------------------
Rush Enterprises, Inc., Class A 10,000 $ 204,400*
STEEL - PRODUCERS 3.74%
---------------------------------------------------------------------------------------
Evraz Group S.A., Sponsored GDR 13,000 466,310*
Mechel, Sponsored ADR 10,000 292,300
-----------
758,610
STORAGE/WAREHOUSING 2.84%
---------------------------------------------------------------------------------------
Westshore Terminals Income Fund 25,000 576,055
TRANSPORTATION - RAIL 3.53%
---------------------------------------------------------------------------------------
CSX Corp. 11,100 717,171
WATER 0.77%
---------------------------------------------------------------------------------------
Aqua America, Inc. 7,000 157,360
WATER TREATMENT SYSTEMS 3.13%
---------------------------------------------------------------------------------------
Beijing Enterprises Water Group Ltd. 240,000 89,855*
Hyflux Ltd. 125,000 225,989
Nalco Holding Co. 10,000 319,400
-----------
635,244
WEB HOSTING/DESIGN 2.09%
---------------------------------------------------------------------------------------
Rackspace Hosting, Inc. 13,500 424,035*
WIRELESS EQUIPMENT 3.40%
---------------------------------------------------------------------------------------
American Tower Corp., Class A 7,000 361,480*
Crown Castle International Corp. 7,500 328,725*
-----------
690,205
---------------------------------------------------------------------------------------
TOTAL COMMON STOCKS 18,174,401
---------------------------------------------------------------------------------------
(cost $14,558,933)
EXCHANGE-TRADED FUNDS (ETF) 2.29%
iShares Dow Jones U.S. Oil Equipment & Services Index
Fund 4,500 253,575
ProShares UltraShort FTSE China 25 7,000 210,560*
---------------------------------------------------------------------------------------
TOTAL EXCHANGE-TRADED FUNDS 464,135
---------------------------------------------------------------------------------------
(cost $468,219)
See notes to portfolios of investments and notes to financial statements.
101
GLOBAL MEGATRENDS FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
WARRANTS 0.00% SHARES VALUE
BUILDING PRODUCTS - CEMENT/AGGREGATES 0.00%
---------------------------------------------------------------------------------------
Polaris Minerals Corp., Warrants (January 2011) 100,000 $ 501*
(cost $9,053)
PURCHASED OPTION 0.03% CONTRACTS
OIL - FIELD SERVICES 0.03%
---------------------------------------------------------------------------------------
Core Laboratories N.V., Strike Price 85, Put, Expiration
Jan. 2011 (premium $5,715) 60 5,700
PRINCIPAL
MASTER LIMITED PARTNERSHIPS 4.73% UNITS
PIPELINES 4.73%
---------------------------------------------------------------------------------------
El Paso Pipeline Partners, L.P. 10,000 334,500
NuStar Energy L.P. 9,000 625,320
---------------------------------------------------------------------------------------
TOTAL MASTER LIMITED PARTNERSHIPS 959,820
---------------------------------------------------------------------------------------
(cost $724,234)
PRINCIPAL
CONVERTIBLE DEBENTURE 2.56% AMOUNT
METAL & MINERAL MINING 2.56%
---------------------------------------------------------------------------------------
Grupo Empresarial Ibiza S.A., 12.68%, maturity
05/03/11 (RS) $520,000 520,000@
(cost $520,000)
---------------------------------------------------------------------------------------
TOTAL SECURITIES 20,124,557
---------------------------------------------------------------------------------------
(cost $16,286,154)
REPURCHASE AGREEMENT 1.87%
Joint Tri-Party Repurchase Agreement, Banc of America
Securities LLC Merrill Lynch, 12/31/2010, 0.09%, due
01/03/2011, repurchase price $380,601, collateralized
by U.S. Treasury securities held in a joint tri-party
account (cost $380,598) 380,598 380,598
---------------------------------------------------------------------------------------
TOTAL INVESTMENTS 101.00% 20,505,155
---------------------------------------------------------------------------------------
(cost $16,666,752)
Other assets and liabilities, net (1.00%) (203,457)
-----------
NET ASSETS 100% $20,301,698
-----------
See notes to portfolios of investments and notes to financial statements.
102
GLOBAL RESOURCES FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COMMON STOCKS 87.60% SHARES VALUE
AGRICULTURAL CHEMICALS 4.61%
----------------------------------------------------------------------------------------------
Agrium, Inc. 175,000 $ 16,056,250
CF Industries Holdings, Inc. 65,000 8,784,750
Monsanto Co. 120,000 8,356,800
Spur Ventures, Inc. 274,867 122,647*
The Mosaic Co. 125,000 9,545,000
--------------
42,865,447
AGRICULTURAL OPERATIONS 0.23%
----------------------------------------------------------------------------------------------
Agriterra Ltd. 46,500,000 2,089,219*+
CHEMICALS - DIVERSIFIED 0.83%
----------------------------------------------------------------------------------------------
LyondellBasell Industries NV, Class A 225,000 7,740,000*
COAL 5.67%
----------------------------------------------------------------------------------------------
Alpha Natural Resources, Inc. 160,000 9,604,800*
Arch Coal, Inc. 300,000 10,518,000
Coalcorp Mining, Inc. 779,661 89,904*
Coalcorp Mining, Inc., 144A 4,953,000 571,137*
Lysander Minerals Corp. 475,000 238,143*
Massey Energy Co. 250,000 13,412,500
Pacific Coal S.A., 144A (RS) 2,400,000 2,400,000*@
Sable Mining Africa Ltd. 27,300,000 11,073,235*
Xinergy Ltd. 190,800 660,042*
Xinergy Ltd., 144A 1,185,000 4,099,318*
--------------
52,667,079
DIAMONDS/PRECIOUS STONES 0.04%
----------------------------------------------------------------------------------------------
Diamond Fields International Ltd., 144A 1,800,000 342,926*
Rockwell Diamonds, Inc., 144A 950,000 61,917*
--------------
404,843
DIVERSIFIED MINERALS 4.17%
----------------------------------------------------------------------------------------------
Atacama Minerals Corp. 1,025,000 770,831*
Calibre Mining Corp., 144A 550,000 68,936*
Canada Zinc Metals Corp. 1,000,000 571,543*
Lithium Americas Corp. 486,667 927,171*
Lundin Mining Corp. 1,000,000 7,279,655*
Northern Dynasty Minerals Ltd. 1,014,173 14,492,532*
Teck Resources Ltd., Class B 200,000 12,366,000
Woulfe Mining Corp. 8,147,700 2,287,533*
--------------
38,764,201
See notes to portfolios of investments and notes to financial statements.
103
GLOBAL RESOURCES FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COMMON STOCKS SHARES VALUE
ELECTRIC - GENERATION 0.06%
----------------------------------------------------------------------------------------------
Etrion Corp. 91,320 $ 62,925*
Ronter, Inc. (RS) 7,568,396 506,454*@+
--------------
569,379
ENERGY - ALTERNATE SOURCES 0.36%
----------------------------------------------------------------------------------------------
Infinity Bio-Energy Ltd. 682,400 0*@
Magma Energy Corp. 2,250,000 3,316,454*
--------------
3,316,454
FINANCE - INVESTMENT BANKER/BROKER 0.11%
----------------------------------------------------------------------------------------------
Aberdeen International, Inc. 274,750 228,660*
Aberdeen International, Inc., 144A 1,000,000 832,247*
--------------
1,060,907
FORESTRY 1.55%
----------------------------------------------------------------------------------------------
Prima Colombia Hardwood, Inc. 14,965,832 5,402,286*+
Sino-Forest Corp. 385,000 8,990,925*
--------------
14,393,211
GOLD MINING 5.67%
----------------------------------------------------------------------------------------------
Century Mining Corp., 144A 225,911 100,803*
Chesapeake Gold Corp. 399,600 5,028,557*
Corona Gold Ltd. 50,000 0*@
Dundee Precious Metals, Inc., 144A 234,816 2,208,537*
Endeavour Mining Corp. 1,255,000 3,536,098*
Euromax Resources Ltd., 144A 540,840 154,557*
European Goldfields Ltd. 620,000 8,659,982*
Gran Colombia Gold Corp. 3,858,125 8,433,483*
Kinross Gold Corp. 1 19
Medoro Resources Ltd. 2,539,466 5,958,438*
Medoro Resources Ltd., 144A 1,958,333 4,594,905*
NGEx Resources, Inc. 1,930,000 2,689,963*
Olympus Pacific Minerals, Inc. 265,000 143,487*
Planet Exploration, Inc. 160,000 53,745*
Randgold Resources Ltd., Sponsored ADR 116,200 9,566,746
Rusoro Mining Ltd., 144A 3,583,333 1,455,179*
Wildcat Silver Corp. 125,000 76,456*
--------------
52,660,955
See notes to portfolios of investments and notes to financial statements.
104
GLOBAL RESOURCES FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COMMON STOCKS SHARES VALUE
MACHINERY - CONSTRUCTION & MINING 1.93%
----------------------------------------------------------------------------------------------
Caterpillar, Inc. 80,000 $ 7,492,800
Joy Global, Inc. 120,000 10,410,000
--------------
17,902,800
MACHINERY - FARM 0.98%
----------------------------------------------------------------------------------------------
Deere & Co. 110,000 9,135,500
MACHINERY - GENERAL INDUSTRIAL 1.20%
----------------------------------------------------------------------------------------------
Robbins & Myers, Inc. 311,800 11,156,204
MACHINERY - PUMPS 1.15%
----------------------------------------------------------------------------------------------
Flowserve Corp. 90,000 10,729,800
MEDICAL - HOSPITALS 0.03%
----------------------------------------------------------------------------------------------
African Medical Investments plc 2,400,000 313,570*
METAL - COPPER 3.05%
----------------------------------------------------------------------------------------------
Augusta Resource Corp. 753,000 2,868,930*
Catalyst Copper Corp. 1,800,000 324,877*
First Quantum Minerals Ltd. 95,000 10,287,777
Los Andes Copper Ltd. 754,000 355,339*
Lumina Copper Corp. 35,800 174,459*
Quadra FNX Mining Ltd. 575,000 9,657,325*
Revett Minerals, Inc. 950,600 4,670,551*
Verona Development Corp. 708,800 0*@
--------------
28,339,258
METAL - DIVERSIFIED 1.91%
----------------------------------------------------------------------------------------------
Orsu Metals Corp., 144A 147,605 50,322*
Peregrine Metals Ltd. 900,000 812,193*
Rio Tinto plc, Sponsored ADR 235,000 16,840,100
--------------
17,702,615
METAL - IRON 2.02%
----------------------------------------------------------------------------------------------
Cliffs Natural Resources, Inc. 105,000 8,191,050
Consolidated Thompson Iron Mines Ltd. 750,000 10,596,110*
--------------
18,787,160
See notes to portfolios of investments and notes to financial statements.
105
GLOBAL RESOURCES FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COMMON STOCKS SHARES VALUE
MINING SERVICES 0.14%
----------------------------------------------------------------------------------------------
Bounty Mining Ltd. 22,000,000 $ 280,995*@
Natasa Mining Ltd. 1,038,350 1,020,523*
--------------
1,301,518
NATURAL RESOURCE TECHNOLOGY 0.00%
----------------------------------------------------------------------------------------------
I-Pulse, Inc. (RS) 15,971 7,500*@
NON-FERROUS METALS 0.82%
----------------------------------------------------------------------------------------------
Anfield Nickel Corp., 144A 200,000 982,653*
Anfield Nickel Corp., 144A (RS) 190,000 886,844*@
GoviEx Uranium, Inc. (RS) 750,000 2,062,500*@
Sterling Group Ventures, Inc. 500,000 56,250*
Toledo Mining Corp. plc 64,100 25,000*
Uranium Energy Corp. 416,200 2,513,848*
Uranium North Resources Corp., 144A 12,500 2,256*
Western Uranium Corp. 1,000,000 1,082,924*
--------------
7,612,275
OIL - FIELD SERVICES 9.85%
----------------------------------------------------------------------------------------------
Acergy S.A., ADR 450,000 10,953,000
CARBO Ceramics, Inc. 135,000 13,977,900
Core Laboratories N.V. 110,000 9,795,500
Halliburton Co. 430,000 17,556,900
Oceaneering International, Inc. 120,000 8,835,600*
Oil States International, Inc. 150,000 9,613,500*
Trican Well Service Ltd. 465,000 9,390,454
Weatherford International Ltd. 500,000 11,400,000*
--------------
91,522,854
OIL & GAS DRILLING 2.92%
----------------------------------------------------------------------------------------------
ENSCO International plc, Sponsored ADR 185,000 9,875,300
Pioneer Drilling Co. 1,000,000 8,810,000*
Seadrill Ltd. 250,000 8,480,000
--------------
27,165,300
OIL COMPANIES - EXPLORATION & PRODUCTION 33.81%
----------------------------------------------------------------------------------------------
Africa Oil Corp. 3,837,430 7,695,638*
Alange Energy Corp. 12,742,500 6,899,579*
Alange Energy Corp., 144A 13,786,000 7,464,594*
Anadarko Petroleum Corp. 360,000 27,417,600
Apache Corp. 150,000 17,884,500
Bankers Petroleum Ltd. 1,025,000 7,811,090*
BNK Petroleum, Inc. 1,000,000 3,409,205*
See notes to portfolios of investments and notes to financial statements.
106
GLOBAL RESOURCES FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COMMON STOCKS SHARES VALUE
OIL COMPANIES - EXPLORATION & PRODUCTION (CONT'D)
----------------------------------------------------------------------------------------------
Canadian Natural Resources Ltd. 300,000 $ 13,326,000
Cimarex Energy Co. 140,000 12,394,200
Cobalt International Energy, Inc. 750,000 9,157,500*
Gran Tierra Energy, Inc. 675,000 5,433,750*
HRT Participacoes Em Petroleo (RS) 70,830 33,930,794*@
Ivanhoe Energy, Inc. 1,000,000 2,727,364*
Lundin Petroleum AB 400,000 5,035,682*
Niko Resources Ltd. 90,000 9,311,341
NiMin Energy Corp. 1,900,000 3,143,487*
Noble Energy, Inc. 185,000 15,924,800
Pacific Rubiales Energy Corp. 980,000 33,164,544
Petroamerica Oil Corp. 10,000 6,117*
Petroamerica Oil Corp., 144A 8,000,000 4,893,212*
Petroleum Development Corp. 250,000 10,552,500*
Petromanas Energy, Inc. 1,960,000 776,296*
Pioneer Natural Resources Co. 200,000 17,364,000
Range Energy Resources, Inc. 15,000,000 2,632,107*+
Royalite Petroleum Co., Inc. 2,266,333 1,586*
Shamaran Petroleum Corp. 12,262,000 16,721,468*
Southwestern Energy Co. 365,000 13,661,950*
Tourmaline Oil Corp. 400,000 8,743,608*
TransAtlantic Petroleum Ltd. 2,000,000 6,660,000*
Venoco, Inc. 549,001 10,129,068*
--------------
314,273,580
OIL REFINING & MARKETING 1.04%
----------------------------------------------------------------------------------------------
Valero Energy Corp. 400,000 9,248,000
Value Creation, Inc. (RS) 336,880 424,402*@
--------------
9,672,402
PLATINUM 0.38%
----------------------------------------------------------------------------------------------
Anooraq Resources Corp., 144A 350,000 568,535*
Eastern Platinum Ltd. 1,660,000 2,946,155*
Osmium Holdings S.A. (RS) 104 0*@
--------------
3,514,690
PRECIOUS METALS 0.33%
----------------------------------------------------------------------------------------------
Fortress Minerals Corp. 170,071 741,812*
Greystar Resources Ltd. 463,600 1,878,014*
TVI Pacific, Inc. 3,350,000 436,679*
--------------
3,056,505
See notes to portfolios of investments and notes to financial statements.
107
GLOBAL RESOURCES FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COMMON STOCKS SHARES VALUE
REAL ESTATE OPERATING/DEVELOPMENT 0.80%
----------------------------------------------------------------------------------------------
Pacific Infrastructure, Inc. (RS) 7,443,544 $ 7,443,544*@
STEEL - PRODUCERS 1.04%
----------------------------------------------------------------------------------------------
United States Steel Corp. 165,000 9,639,300
TRANSPORTATION - MARINE 0.90%
----------------------------------------------------------------------------------------------
Frontline Ltd. 330,000 8,372,100
----------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS 814,180,170
----------------------------------------------------------------------------------------------
(cost $639,615,044)
EXCHANGE-TRADED FUNDS (ETF) 0.77%
ProShares Ultra Gold 60,000 4,240,200*
ProShares UltraShort Silver 300,000 2,946,000*
----------------------------------------------------------------------------------------------
TOTAL EXCHANGE-TRADED FUNDS 7,186,200
----------------------------------------------------------------------------------------------
(cost $7,853,778)
WARRANTS 4.70%
COAL 0.40%
----------------------------------------------------------------------------------------------
Coalcorp Mining, Inc., Warrants (February 2011) 1,228,071 6,157*
Coalcorp Mining, Inc., 144A, Warrants (August 2011) 885,500 4,440*
Coalcorp Mining, Inc., 144A, Warrants (June 2013) 3,803,000 28,600*
Western Coal Corp., Warrants (June 2012) 375,000 3,433,019*
Xinergy Ltd., 144A, Warrants (December 2011) 592,500 288,140*
--------------
3,760,356
DIVERSIFIED MINERALS 0.00%
----------------------------------------------------------------------------------------------
Lithium Americas Corp., 144A, Warrants (December 2049) 283,333 0*@
FINANCE - INVESTMENT BANKER/BROKER 0.01%
----------------------------------------------------------------------------------------------
Aberdeen International, Inc., 144A, Warrants
(July 2012) 500,000 105,284*
GOLD MINING 1.32%
----------------------------------------------------------------------------------------------
Chesapeake Gold Corp., Warrants (February 2012) 53,800 318,279*
Dundee Precious Metals, Inc., 144A, Warrants
(November 2015) 625,000 4,060,965*
Goldcorp, Inc., Warrants (June 2011) 1,196,683 4,619,703*
See notes to portfolios of investments and notes to financial statements.
108
GLOBAL RESOURCES FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
WARRANTS SHARES VALUE
GOLD MINING (CONT'D)
----------------------------------------------------------------------------------------------
Gran Colombia Gold Corp., Warrants (August 2015) 625,000 $ 595,358*
Medoro Resources Ltd., Warrants (November 2011) 416,666 114,893*
New Gold, Inc., Warrants (November 2012) 269,000 97,102*
New Gold, Inc., Warrants (June 2017) 122,570 349,041*
New Gold, Inc., 144A, Warrants (June 2017) 700,000 1,993,382*
Rusoro Mining Ltd., 144A, Warrants (November 2011) 216,667 0*@
Rusoro Mining Ltd., 144A, Warrants (November 2012) 3,150,000 94,756*
--------------
12,243,479
GOLD/MINERAL ROYALTY COMPANIES 0.04%
----------------------------------------------------------------------------------------------
Franco-Nevada Corp., 144A, Warrants (June 2017) 44,000 322,070*
MEDICAL - HOSPITALS 0.00%
----------------------------------------------------------------------------------------------
African Medical Investments plc, Warrants (June 2011) 1,162,500 0*@
METAL - DIVERSIFIED 0.00%
----------------------------------------------------------------------------------------------
Baja Mining Corp., 144A, Warrants (April 2011) 1,055,500 0*@
Orsu Metals Corp., 144A, Warrants (March 2011) 660,000 3,309*
Peregrine Metals Ltd., 144A, Warrants (September 2011) 450,000 30,457*
--------------
33,766
MINING SERVICES 0.00%
----------------------------------------------------------------------------------------------
Bounty Mining Ltd., Warrants (December 2011) 5,500,000 0*@
NATURAL RESOURCE TECHNOLOGY 0.00%
----------------------------------------------------------------------------------------------
I-Pulse, Inc., Warrants (March 2011) (RS) 15,971 0*@
OIL & GAS DRILLING 0.00%
----------------------------------------------------------------------------------------------
Vantage Drilling Co., Warrants (May 2011) 2,461,400 2,708*
OIL COMPANIES - EXPLORATION & PRODUCTION 2.33%
----------------------------------------------------------------------------------------------
Foothills Resources, Inc., Warrants (September 2011) 633,334 0*@
Gran Tierra Energy, Inc., Warrants (June 2012) 1,550,000 10,850,000*@
HRT Participacoes Em Petroleo, Warrants
(November 2013) (RS) 35,430 9,165,835*@
Petroamerica Oil Corp., 144A, Warrants (October 2014) 8,000,000 1,644,440*
Range Energy Resources, Inc., 144A, Warrants
(October 2011) 15,000,000 0*@
--------------
21,660,275
See notes to portfolios of investments and notes to financial statements.
109
GLOBAL RESOURCES FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
WARRANTS SHARES VALUE
SILVER MINING 0.60%
----------------------------------------------------------------------------------------------
Silver Wheaton Corp., Warrants (September 2013) 225,044 $ 5,536,082*
----------------------------------------------------------------------------------------------
TOTAL WARRANTS 43,664,020
----------------------------------------------------------------------------------------------
(cost $20,664,465)
PURCHASED OPTIONS 0.03% CONTRACTS
OIL - FIELD SERVICES 0.03%
----------------------------------------------------------------------------------------------
CARBO Ceramics, Inc., Strike Price 95, Put, Expiration
Jan. 2011 (premium $172,592) 1,350 87,750
Core Laboratories N.V., Strike Price 85, Put,
Expiration Jan. 2011 (premium $104,751) 1,100 104,500
Oceaneering International, Inc., Strike Price 70, Put,
Expiration Jan. 2011 (premium $117,600) 1,200 114,000
----------------------------------------------------------------------------------------------
TOTAL PURCHASED OPTIONS 306,250
----------------------------------------------------------------------------------------------
(cost $394,943)
PRINCIPAL
CONVERTIBLE DEBENTURE 0.53% AMOUNT
METAL & MINERAL MINING 0.53%
----------------------------------------------------------------------------------------------
Grupo Empresarial Ibiza S.A., 12.68%, maturity
05/03/11 (RS) $ 4,900,000 4,900,000@
(cost $4,900,000)
----------------------------------------------------------------------------------------------
TOTAL SECURITIES 870,236,640
----------------------------------------------------------------------------------------------
(cost $673,428,230)
REPURCHASE AGREEMENT 7.78%
Joint Tri-Party Repurchase Agreement, Credit Suisse
Securities USA LLC, 12/31/10, 0.15%, due 01/03/11,
repurchase price $72,309,276, collateralized by U.S.
Treasury securities held in a joint tri-party account
(cost $72,308,373) 72,308,373 72,308,373
----------------------------------------------------------------------------------------------
TOTAL INVESTMENTS 101.41% 942,545,013
----------------------------------------------------------------------------------------------
(cost $745,736,603)
Other assets and liabilities, net (1.41%) (13,063,840)
------------
NET ASSETS 100% $929,481,173
------------
See notes to portfolios of investments and notes to financial statements.
110
WORLD PRECIOUS MINERALS FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COMMON STOCKS 84.51% SHARES VALUE
AGRICULTURAL OPERATIONS 0.16%
----------------------------------------------------------------------------------------------
Agriterra Ltd. 28,800,000 $ 1,293,968*
COAL 0.89%
----------------------------------------------------------------------------------------------
Sable Mining Africa Ltd. 18,200,000 7,382,156*
DIAMONDS/PRECIOUS STONES 1.39%
----------------------------------------------------------------------------------------------
Diagem, Inc. 406,350 0*@
Diamonds North Resources Ltd. 1,757,400 246,702*
Diamonds North Resources Ltd., 144A 1,046,800 146,949*
Lucara Diamond Corp. 1,450,000 1,381,229*
Olivut Resources Ltd. 675,000 1,008,473*
Petra Diamonds Ltd. 4,000,000 8,486,672*
Rockwell Diamonds, Inc. 1,000,000 65,176*
Rockwell Diamonds, Inc., 144A 2,575,000 167,828*
--------------
11,503,029
DIVERSIFIED MINERALS 6.08%
----------------------------------------------------------------------------------------------
Aldridge Minerals, Inc. 1,315,000 2,465,707*
Amarc Resources Ltd. 695,545 474,251*
Azumah Resources Ltd. 4,500,000 3,264,651*
Calibre Mining Corp., 144A 900,000 112,805*
Dorato Resources, Inc. 1,007,500 1,555,751*
Erdene Resource Development Corp. 410,000 509,776*
Fronteer Gold, Inc. 275,000 3,204,151*
Golden Alliance Resources Corp. 197,000 181,731*
Grayd Resource Corp. 2,360,000 3,549,584*
Helio Resource Corp. 493,500 257,315*
Kings Minerals NL 21,258,000 3,649,399*
Mindoro Resources Ltd., 144A 2,984,000 777,940*
Mines Management, Inc. 825,400 3,479,554*
Moss Lake Gold Mines Ltd. 3,300,000 1,257,395*+
New Pacific Metals Corp. 670,000 1,551,890*
North American Tungsten Corp. 1,000,000 396,069*
Northern Dynasty Minerals Ltd. 990,000 14,147,100*
Pelangio Exploration, Inc. 1,275,000 1,316,805*
Roca Mines, Inc. 1,000,000 280,758*
Rochester Resources Ltd. 1,125,000 101,524*+
Rochester Resources Ltd., 144A 6,630,000 598,316*+
Rubicon Minerals Corp. 900,000 5,125,840*
Strongbow Exploration, Inc. 880,500 379,640*
Valley High Ventures Ltd. 650,000 1,342,625*
Wallbridge Mining Co., Ltd. 1,541,000 378,567*
--------------
50,359,144
See notes to portfolios of investments and notes to financial statements.
111
WORLD PRECIOUS MINERALS FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COMMON STOCKS 84.51% SHARES VALUE
FINANCE - INVESTMENT BANKER/BROKER 0.31%
----------------------------------------------------------------------------------------------
Aberdeen International, Inc. 1,386,000 $ 1,153,494*
Aberdeen International, Inc., 144A 1,000,000 832,247*
GMP Capital, Inc. 50,700 615,131
--------------
2,600,872
FINANCIAL SERVICES 0.00%
----------------------------------------------------------------------------------------------
Invictus Financial, Inc. 1,027,000 5,065*
GOLD MINING 59.97%
----------------------------------------------------------------------------------------------
Agnico-Eagle Mines Ltd. 100,000 7,670,000
Almaden Minerals Ltd. 310,700 1,473,590*
Banro Corp. 634,616 2,544,810*
Barrick Gold Corp. 400,000 21,272,000
Belo Sun Mining Corp., 144A 930,500 821,057*
Canaco Resources, Inc. 650,000 3,917,076*
Candente Gold Corp. 525,000 531,686*+
Candente Gold Corp., 144A 4,875,000 4,937,080*+
Canyon Resources Ltd. 300,000 202,316*
Canyon Resources Ltd. (RS) 526,316 351,392*@
Centamin Egypt Ltd. 7,575,000 21,115,512*
Centamin Egypt Ltd., 144A 1,500,000 4,181,289*
Centerra Gold, Inc. 110,500 2,198,255
Century Mining Corp., 144A 2,634,809 1,175,664*
Chesapeake Gold Corp. 1,227,200 15,443,056*
Claude Resources, Inc. 1,570,000 3,463,351*
Continental Gold Ltd. 1,301,600 13,051,238*
Corona Gold Ltd. 812,500 0*@
Crystallex International Corp. 2,150,000 674,025*
Dundee Precious Metals, Inc. 198,000 1,862,268*
Dundee Precious Metals, Inc., 144A 777,630 7,313,917*
Eastmain Resources, Inc. 680,000 1,425,048*
Eldorado Gold Corp. 228,325 4,235,448
Elissa Resources Ltd. (RS) 36,250 0*@
Endeavour Mining Corp. 2,060,000 5,804,272*
Entree Gold, Inc. 1,306,700 4,546,525*
European Goldfields Ltd. 600,000 8,380,628*
Extorre Gold Mines Ltd. 1,000,000 6,752,932*
Goldcorp, Inc. 362,500 16,667,750
Golden Arrow Resources Corp. 1,000,000 466,259*
Golden Arrow Resources Corp., 144A 1,000,000 466,259*
Golden Odyssey Mining, Inc. 674,500 91,304*
Golden Predator Corp. 3,849,000 2,894,565*+
Gran Colombia Gold Corp. 10,813,700 23,637,688*+
Grandview Gold, Inc. 1,100,000 71,694*
Great Basin Gold Ltd. 1,600,000 4,732,778*
See notes to portfolios of investments and notes to financial statements.
112
WORLD PRECIOUS MINERALS FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COMMON STOCKS SHARES VALUE
GOLD MINING (CONT'D)
----------------------------------------------------------------------------------------------
Guyana Goldfields, Inc. 400,000 $ 4,291,587*
Harmony Gold Mining Co., Ltd., Sponsored ADR 500,000 6,270,000
IAMGOLD Corp. 800,000 14,240,000
Kaminak Gold Corp., Class A 100,000 300,812*
Kilo Goldmines Ltd. 1,000,000 381,029*
Kimber Resources, Inc. 250,000 350,000*
Kingsgate Consolidated Ltd. 200,000 2,223,437
Kinross Gold Corp. 2,124,146 40,276,108
Klondex Mines Ltd. 2,620,000 6,567,733*+
Lake Shore Gold Corp. 2,118,700 8,837,654*
Leyshon Resources Ltd. 800,000 227,767*
Malbex Resources, Inc. 475,000 285,772*
Malbex Resources, Inc., 144A 1,333,333 802,166*
Medoro Resources Ltd. 2,442,207 5,730,236*+
Medoro Resources Ltd., 144A 6,621,967 15,537,354*+
Mirasol Resources Ltd. 1,339,100 8,136,916*
NGEx Resources, Inc. 3,000,000 4,181,289*
Olympus Pacific Minerals, Inc. 3,456,700 1,871,671*
Pacific Rim Mining Corp. 2,064,913 408,853*
Pan African Resources plc 12,000,000 2,064,906
Planet Exploration, Inc. 1,020,500 342,793*
PMI Gold Corp. 9,950,000 6,064,984*+
Premier Gold Mines Ltd. 950,000 7,039,507*
Queenston Mining, Inc. 285,000 1,708,914*
Radius Gold, Inc. 2,145,000 1,914,218*
Rainy River Resources Ltd. 739,500 9,357,756*
Randgold Resources Ltd., Sponsored ADR 630,000 51,867,900
Renaissance Gold, Inc. 501,300 904,783*
Reunion Gold Corp. 2,020,000 1,276,045*
Rio Alto Mining Ltd. 982,000 2,441,953*
Romarco Minerals, Inc. 5,425,000 12,565,677*
Romarco Minerals, Inc., 144A 12,395,706 28,711,602*
Rusoro Mining Ltd., 144A 7,225,000 2,934,047*
Rye Patch Gold Corp. 198,000 61,546*
Rye Patch Gold Corp., 144A 3,600,000 1,119,021*
San Gold Corp. 1,665,000 6,627,945*
SEMAFO, Inc. 250,000 2,694,776*
Torex Gold Resources, Inc. 2,000,000 3,349,042*
TriStar Gold, Inc. 1,116,666 649,420*
Ventana Gold Corp. 750,000 9,971,924*
VG Gold Corp. 2,250,000 2,481,701*
VG Gold Corp., 144A 2,406,501 2,654,318*
Virginia Mines, Inc. 650,000 5,572,546*
Wildcat Silver Corp. 125,000 76,456*
Yamana Gold, Inc. 1,350,000 17,280,000
--------------
497,026,896
See notes to portfolios of investments and notes to financial statements.
113
WORLD PRECIOUS MINERALS FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COMMON STOCKS SHARES VALUE
MEDICAL - HOSPITALS 0.07%
----------------------------------------------------------------------------------------------
African Medical Investments plc 4,510,000 $ 589,250*
METAL - COPPER 0.83%
----------------------------------------------------------------------------------------------
Augusta Resource Corp. 564,000 2,148,840*
Catalyst Copper Corp. 1,564,000 282,282*
Continental Minerals Corp. 543,600 1,417,187*
Revett Minerals, Inc. 620,100 3,046,716*
Verona Development Corp. 48,500 0*@
--------------
6,895,025
METAL - DIVERSIFIED 4.54%
----------------------------------------------------------------------------------------------
Avion Gold Corp. 25,000 49,383*
Avion Gold Corp., 144A 3,900,000 7,703,800*
Carnavale Resources Ltd. 3,500,000 590,090*
Dalradian Resources, Inc. 1,535,000 3,540,058*
Dia Bras Exploration, Inc. 88,571 290,411*
First Point Minerals Corp. 2,400,000 2,045,523*
HudBay Minerals, Inc. 700,000 12,613,055
Imperial Metals Corp. 250,000 6,602,828*
Mariana Resources Ltd. 2,600,000 1,977,363*
Orsu Metals Corp., 144A 1,800,000 613,657*
Orsu Metals Corp. 289,800 98,799*
Prophecy Resource Corp., 144A 133,400 133,761*
Robust Resources Ltd. 600,000 1,060,628*
Temex Resources Corp. 950,000 347,689*
--------------
37,667,045
MINING SERVICES 0.91%
----------------------------------------------------------------------------------------------
Argent Minerals Ltd. 4,500,000 850,649*
Energold Drilling Corp. 500,000 2,055,550*
Major Drilling Group International, Inc. 80,000 3,332,999
Natasa Mining Ltd. 1,306,449 1,284,019*
--------------
7,523,217
NON-FERROUS METALS 0.07%
----------------------------------------------------------------------------------------------
Farallon Mining Ltd., 144A 700,000 554,497*
Toledo Mining Corp. plc 65,000 25,351*
--------------
579,848
OIL COMPANIES - EXPLORATION & PRODUCTION 1.51%
----------------------------------------------------------------------------------------------
Alange Energy Corp. 2,670,000 1,445,704*
Big Sky Energy Corp. 2,000,000 0*@
See notes to portfolios of investments and notes to financial statements.
114
WORLD PRECIOUS MINERALS FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COMMON STOCKS SHARES VALUE
OIL COMPANIES - EXPLORATION & PRODUCTION (CONT'D)
----------------------------------------------------------------------------------------------
Pacific Rubiales Energy Corp. 328,200 $ 11,106,738
--------------
12,552,442
PLATINUM 1.31%
----------------------------------------------------------------------------------------------
Anooraq Resources Corp., 144A 650,000 1,055,851*
Eastern Platinum Ltd. 2,418,000 4,291,447*
Osmium Holdings S.A. (RS) 891 0*@
Pacific North West Capital Corp. 1,291,666 161,895*
Platinum Group Metals Ltd. 2,000,000 5,334,403*
--------------
10,843,596
PRECIOUS METALS 2.59%
----------------------------------------------------------------------------------------------
Atikwa Resources, Inc., 144A 1,333,333 93,586*
Fortress Minerals Corp. 267,500 1,166,775*
Greystar Resources Ltd. 1,407,900 5,703,315*
Mindfinders Corp. Ltd. 654,860 7,229,655*
Sabina Gold & Silver Corp. 500,000 2,812,594*
Solitario Exploration & Royalty Corp. 928,522 3,435,522*
TVI Pacific, Inc. 7,686,428 1,001,941*
--------------
21,443,388
SILVER MINING 3.88%
----------------------------------------------------------------------------------------------
Fortuna Silver Mines, Inc. 1,200,000 5,751,529*
Hochschild Mining plc 100,000 998,432
MAG Silver Corp. 530,000 6,584,478*
Polymetal, Sponsored GDR 224,000 4,101,440*
Silvercorp Metals, Inc. 1,156,000 14,767,312
--------------
32,203,191
----------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS 700,468,132
----------------------------------------------------------------------------------------------
(cost $473,146,677)
EXCHANGE-TRADED FUNDS (ETF) 2.45%
SPDR Gold Trust 17,033 2,362,818*
Sprott Physical Gold Trust 870,509 10,746,433*
Sprott Physical Silver Trust 509,200 7,164,444*
----------------------------------------------------------------------------------------------
TOTAL EXCHANGE-TRADED FUNDS 20,273,695
----------------------------------------------------------------------------------------------
(cost $17,756,430)
See notes to portfolios of investments and notes to financial statements.
115
WORLD PRECIOUS MINERALS FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
WARRANTS 6.68% SHARES VALUE
COAL 0.00%
----------------------------------------------------------------------------------------------
Coalcorp Mining, Inc., Warrants (February 2011) 113,214 $ 568*
DIVERSIFIED MINERALS 0.10%
----------------------------------------------------------------------------------------------
Mines Management, Inc., Warrants (April 2012) 897,800 861,888*
Rochester Resources Ltd., 144A, Warrants
(November 2011) 6,630,000 0*@
--------------
861,888
GOLD MINING 4.60%
----------------------------------------------------------------------------------------------
Agnico-Eagle Mines Ltd., Warrants (December 2013) 26,500 893,050*
Agnico-Eagle Mines Ltd., 144A, Warrants (December 2013) 110,000 3,707,000*
Argonaut Gold, Inc., Warrants (December 2012) 250,000 358,468*
Candente Gold Corp., 144A, Warrants (December 2011) 2,437,500 1,002,080*@
Chesapeake Gold Corp., Warrants (February 2012) 194,699 1,151,834*
Crystallex International Corp., 144A, Warrants
(December 2049) 162,500 0*@
Dundee Precious Metals, Inc., 144A, Warrants
(November 2015) 1,125,000 7,309,736*
Endeavour Mining Corp., Warrants (February 2014) 1,100,500 1,081,410*
Goldcorp, Inc., Warrants (June 2011) 3,285,326 12,682,748*
Gran Colombia Gold Corp., Warrants (August 2015) 1,250,000 1,190,715*
Kinross Gold Corp., Warrants (September 2011) 1,179,800 1,265,804*
Kinross Gold Corp., Warrants (September 2013) 827,671 1,817,507*
Kinross Gold Corp., Warrants (September 2014) 119,020 559,715*
Malbex Resources, Inc., 144A, Warrants (April 2011) 666,666 0*@
Medoro Resources Ltd., Warrants (November 2011) 1,699,999 468,765*
New Gold, Inc., Warrants (April 2012) 2,525,100 227,874*
New Gold, Inc., Warrants (November 2012) 326,000 117,678*
New Gold, Inc., Warrants (June 2017) 1,142,430 3,253,285*
New Gold, Inc., 144A, Warrants (June 2017) 300,000 854,307*
Rusoro Mining Ltd., Warrants (November 2012) 225,750 6,791*
Rusoro Mining Ltd., 144A, Warrants (November 2011) 600,000 0*@
Rusoro Mining Ltd., 144A, Warrants (November 2012) 6,105,000 183,646*
Rye Patch Gold Corp., 144A, Warrants (December 2011) 1,800,000 0*@
Timberline Resources Corp., 144A, Warrants
(August 2011) 428,571 0*@
--------------
38,132,413
GOLD/MINERAL ROYALTY COMPANIES 0.14%
----------------------------------------------------------------------------------------------
Franco-Nevada Corp., Warrants (March 2012) 68,900 373,067*
Franco-Nevada Corp., Warrants (June 2017) 60,200 440,650*
Franco-Nevada Corp., 144A, Warrants (June 2017) 37,000 270,831*
Gold Wheaton Gold Corp., Warrants (July 2013) 21,200 5,952*
Gold Wheaton Gold Corp., 144A, Warrants (July 2013) 125,000 35,095*
--------------
1,125,595
MEDICAL - HOSPITALS 0.00%
----------------------------------------------------------------------------------------------
African Medical Investments plc, Warrants (June 2011) 2,125,000 0*@
See notes to portfolios of investments and notes to financial statements.
116
WORLD PRECIOUS MINERALS FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
WARRANTS SHARES VALUE
METAL - DIVERSIFIED 0.33%
----------------------------------------------------------------------------------------------
Avion Gold Corp., 144A, Warrants (May 2011) 1,950,000 $ 2,580,969*@
Baja Mining Corp., 144A, Warrants (April 2011) 527,750 0*@
Carnavale Resources Ltd., Warrants (February 2013) 3,500,000 139,476*
Orsu Metals Corp., Warrants (March 2011) 3,927,000 19,688*
Orsu Metals Corp., 144A, Warrants (March 2011) 185,000 927*
Orsu Metals Corp., 144A, Warrants (April 2012) 900,000 0*@
--------------
2,741,060
SILVER MINING 1.51%
----------------------------------------------------------------------------------------------
Hecla Mining Co., 144A, Warrants (August 2014) 315,250 2,761,590*@
Silver Wheaton Corp., Warrants (September 2013) 394,795 9,711,957*
--------------
12,473,547
----------------------------------------------------------------------------------------------
TOTAL WARRANTS 55,335,071
----------------------------------------------------------------------------------------------
(cost $50,280,024)
SPECIAL WARRANTS 0.00%
GOLD/MINERAL EXPLORATION & DEVELOPMENT 0.00%
----------------------------------------------------------------------------------------------
Miocene Metals Ltd., Special Warrants (October 2011)
(RS) 256,833 0*@
Western Exploration & Development Ltd., 144A, Special
Warrants (December 2049) (RS) 600,000 0*@
----------------------------------------------------------------------------------------------
TOTAL SPECIAL WARRANTS 0
----------------------------------------------------------------------------------------------
(cost $300,000)
PURCHASED OPTIONS 0.11% CONTRACTS
EXCHANGE-TRADED FUND 0.05%
----------------------------------------------------------------------------------------------
Market Vector Junior Gold Miners ETF, Strike Price 39,
Put, Expiration Jan. 2011 (premium $459,242) 4,200 462,000
GOLD MINING 0.06%
----------------------------------------------------------------------------------------------
Randgold Resources Ltd., Strike Price 80, Call,
Expiration Jan. 2011 (premium $1,323,942) 1,200 468,000
----------------------------------------------------------------------------------------------
TOTAL PURCHASED OPTIONS 930,000
----------------------------------------------------------------------------------------------
(cost $1,783,184)
See notes to portfolios of investments and notes to financial statements.
117
WORLD PRECIOUS MINERALS FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
UNITS 0.26% SHARES VALUE
GOLD MINING 0.17%
----------------------------------------------------------------------------------------------
Petaquilla Minerals Ltd. (RS) 1,400,000 $ 1,426,953*@
PLATINUM 0.09%
----------------------------------------------------------------------------------------------
Seafield Resources Ltd. (RS) 1,300,000 730,623*@
----------------------------------------------------------------------------------------------
TOTAL UNITS 2,157,576
----------------------------------------------------------------------------------------------
(cost $2,014,851)
SUBSCRIPTION RECEIPTS 0.17%
GOLD MINING 0.17%
----------------------------------------------------------------------------------------------
Petaquilla Minerals Ltd. (RS) 1,400,000 1,426,953*@
(cost $1,376,124)
----------------------------------------------------------------------------------------------
TOTAL SECURITIES 780,591,427
----------------------------------------------------------------------------------------------
(cost $546,657,290)
PRINCIPAL
REPURCHASE AGREEMENT 5.57% AMOUNT
Joint Tri-Party Repurchase Agreement, Banc of America
Securities LLC Merrill Lynch, 12/31/2010, 0.09%, due
01/03/2011, repurchase price $46,193,900,
collateralized by U.S. Treasury securities held in a
joint tri-party account (cost $46,193,553) $46,193,553 46,193,553
----------------------------------------------------------------------------------------------
TOTAL INVESTMENTS 99.75% 826,784,980
----------------------------------------------------------------------------------------------
(cost $592,850,843)
Other assets and liabilities, net 0.25% 2,046,136
------------
NET ASSETS 100% $828,831,116
------------
See notes to portfolios of investments and notes to financial statements.
118
GOLD AND PRECIOUS METALS FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COMMON STOCKS 74.10% SHARES VALUE
DIAMONDS/PRECIOUS STONES 0.71%
----------------------------------------------------------------------------------------
Petra Diamonds Ltd. 1,000,000 $ 2,121,668*
FINANCE - INVESTMENT BANKER/BROKER 0.08%
----------------------------------------------------------------------------------------
GMP Capital, Inc. 19,500 236,589
GOLD MINING 57.65%
----------------------------------------------------------------------------------------
Agnico-Eagle Mines Ltd. 75,000 5,752,500
Alamos Gold, Inc. 160,000 3,035,396
Barrick Gold Corp. 350,000 18,613,000
Centamin Egypt Ltd. 3,570,000 9,951,469*
Centamin Egypt Ltd., 144A 1,000,000 2,787,526*
Centerra Gold, Inc. 58,500 1,163,782
Century Mining Corp., 144A 509,512 227,347*
Claude Resources, Inc. 2,850,000 6,286,975*
DRDGOLD Ltd., Sponsored ADR 300,000 1,461,000
Dundee Precious Metals, Inc. 619,669 5,828,231*
Dundee Precious Metals, Inc., 144A 520,387 4,894,445*
Eldorado Gold Corp. 60,300 1,119,771
Endeavour Mining Corp. 1,170,000 3,296,601*
European Goldfields Ltd. 225,000 3,142,735*
Goldcorp, Inc. 152,500 7,011,950
Golden Star Resources Ltd. 100,000 459,000*
Gran Colombia Gold Corp. 5,250,000 11,475,985*
Great Basin Gold Ltd. 455,000 1,345,884*
Harmony Gold Mining Co., Ltd., Sponsored ADR 500,000 6,270,000
IAMGOLD Corp. 350,000 6,230,000
Kingsgate Consolidated Ltd. 150,000 1,667,577
Kinross Gold Corp. 1,185,863 22,484,937
Lake Shore Gold Corp. 152,700 636,952*
Medoro Resources Ltd. 1,773,049 4,160,167*
New Gold, Inc. 125,000 1,220,000*
Newmont Mining Corp. 50,000 3,071,500
Pan African Resources plc 8,000,000 1,376,604*
Randgold Resources Ltd., Sponsored ADR 275,000 22,640,750
Rusoro Mining Ltd., 144A 930,000 377,670*
San Gold Corp. 800,000 3,184,598*
SEMAFO, Inc. 550,000 5,928,507*
Yamana Gold, Inc. 500,000 6,400,000
-----------
173,502,859
GOLD/MINERAL ROYALTY COMPANIES 2.94%
----------------------------------------------------------------------------------------
Franco-Nevada Corp. 101,000 3,368,355
Royal Gold, Inc. 100,000 5,463,000
-----------
8,831,355
See notes to portfolios of investments and notes to financial statements.
119
GOLD AND PRECIOUS METALS FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COMMON STOCKS SHARES VALUE
MEDICAL - HOSPITALS 0.08%
----------------------------------------------------------------------------------------
African Medical Investments plc 1,925,000 $ 251,509*
METAL - DIVERSIFIED 1.80%
----------------------------------------------------------------------------------------
HudBay Minerals, Inc. 300,000 5,405,595
MINING SERVICES 0.69%
----------------------------------------------------------------------------------------
Major Drilling Group International, Inc. 50,000 2,083,124
OIL COMPANIES - EXPLORATION & PRODUCTION 0.73%
----------------------------------------------------------------------------------------
Canadian Natural Resources Ltd. 49,500 2,198,790
PLATINUM 0.81%
----------------------------------------------------------------------------------------
Eastern Platinum Ltd. 1,377,000 2,443,889*
PRECIOUS METALS 0.87%
----------------------------------------------------------------------------------------
Mindfinders Corp. Ltd. 238,154 2,629,220*
SILVER MINING 7.74%
----------------------------------------------------------------------------------------
First Majestic Silver Corp. 226,000 3,263,211*
Fortuna Silver Mines, Inc. 975,000 4,673,117*
Hochschild Mining plc 50,000 499,216
Polymetal, Sponsored GDR 144,000 2,636,640*
Silver Wheaton Corp. 100,000 3,904,000*
Silvercorp Metals, Inc. 651,000 8,316,194
-----------
23,292,378
----------------------------------------------------------------------------------------
TOTAL COMMON STOCKS 222,996,976
----------------------------------------------------------------------------------------
(cost $152,956,823)
EXCHANGE-TRADED FUNDS (ETF) 3.21%
SPDR Gold Trust 7,867 1,091,310*
Sprott Physical Gold Trust 482,083 5,951,315*
Sprott Physical Silver Trust 186,800 2,628,276*
----------------------------------------------------------------------------------------
TOTAL EXCHANGE-TRADED FUNDS 9,670,901
----------------------------------------------------------------------------------------
(cost $8,680,131)
See notes to portfolios of investments and notes to financial statements.
120
GOLD AND PRECIOUS METALS FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
WARRANTS 11.71% SHARES VALUE
DIVERSIFIED MINERALS 0.01%
----------------------------------------------------------------------------------------
Mines Management, Inc., Warrants (April 2012) 44,000 $ 42,240*
GOLD MINING 6.53%
----------------------------------------------------------------------------------------
Agnico-Eagle Mines Ltd., Warrants (December 2013) 21,400 721,180*
Agnico-Eagle Mines Ltd., 144A, Warrants (December 2013) 70,000 2,359,000*
Crystallex International Corp., 144A, Warrants (December
2049) 62,500 0*@
Dundee Precious Metals, Inc., Warrants (November 2015) 483,400 3,140,912*
Dundee Precious Metals, Inc., 144A, Warrants (November
2015) 750,000 4,873,158*
Endeavour Mining Corp., Warrants (February 2014) 407,000 399,940*
Goldcorp, Inc., Warrants (June 2011) 884,618 3,415,000*
Gran Colombia Gold Corp., Warrants (August 2015) 669,749 637,984*
Kinross Gold Corp., Warrants (September 2011) 818,600 878,273*
Kinross Gold Corp., Warrants (September 2013) 676,734 1,486,060*
Kinross Gold Corp., Warrants (September 2014) 60,435 284,207*
Medoro Resources Ltd., Warrants (November 2011) 105,666 29,137*
New Gold, Inc., Warrants (April 2012) 3,078,400 277,806*
New Gold, Inc., Warrants (November 2012) 1,062,500 383,536*
New Gold, Inc., Warrants (June 2017) 257,300 732,710*
Rusoro Mining Ltd., Warrants (November 2012) 688,750 20,718*
Rusoro Mining Ltd., 144A, Warrants (November 2012) 930,000 27,976*
-----------
19,667,597
GOLD/MINERAL ROYALTY COMPANIES 0.30%
----------------------------------------------------------------------------------------
Franco-Nevada Corp., Warrants (March 2012) 94,700 512,764*
Franco-Nevada Corp., Warrants (June 2017) 30,200 221,057*
Franco-Nevada Corp., 144A, Warrants (June 2017) 17,000 124,436*
Gold Wheaton Gold Corp., 144A, Warrants (July 2013) 125,000 35,095*
-----------
893,352
MEDICAL - HOSPITALS 0.00%
----------------------------------------------------------------------------------------
African Medical Investments plc, Warrants (June 2011) 912,500 0*@
SILVER MINING 4.87%
----------------------------------------------------------------------------------------
Hecla Mining Co., 144A, Warrants (August 2014) 169,750 1,487,010*@
Silver Wheaton Corp., Warrants (September 2013) 534,977 13,160,434*
-----------
14,647,444
----------------------------------------------------------------------------------------
TOTAL WARRANTS 35,250,633
----------------------------------------------------------------------------------------
(cost $18,227,464)
See notes to portfolios of investments and notes to financial statements.
121
GOLD AND PRECIOUS METALS FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
PURCHASED OPTIONS 0.12% CONTRACTS VALUE
EXCHANGE-TRADED FUND 0.07%
----------------------------------------------------------------------------------------
Market Vector Junior Gold Miners ETF, Strike Price 39,
Put, Expiration Jan. 2011 (premium $196,818) 1,800 $ 198,000
GOLD MINING 0.05%
----------------------------------------------------------------------------------------
Randgold Resources Ltd., Strike Price 80, Call,
Expiration Jan. 2011 (premium $468,805) 425 165,750
----------------------------------------------------------------------------------------
TOTAL PURCHASED OPTIONS 363,750
----------------------------------------------------------------------------------------
(cost $665,623)
PRINCIPAL
NOTES 1.42% AMOUNT
GOLD MINING 1.42%
----------------------------------------------------------------------------------------
Barrick Gold Corp., 6.95%, maturity 04/01/19 $1,700,000 2,089,428
Newmont Mining Corp., 6.25%, maturity 10/01/39 2,000,000 2,182,172
----------------------------------------------------------------------------------------
TOTAL NOTES 4,271,600
----------------------------------------------------------------------------------------
(cost $4,466,529)
----------------------------------------------------------------------------------------
TOTAL SECURITIES 272,553,860
----------------------------------------------------------------------------------------
(cost $184,996,570)
REPURCHASE AGREEMENT 9.84%
Joint Tri-Party Repurchase Agreement, Credit Suisse
Securities USA LLC, 12/31/10, 0.15%, due 01/03/11,
repurchase price $29,599,068, collateralized by U.S.
Treasury securities held in a joint tri-party account
(cost $29,598,697) 29,598,697 29,598,697
----------------------------------------------------------------------------------------
TOTAL INVESTMENTS 100.40% 302,152,557
----------------------------------------------------------------------------------------
(cost $214,595,267)
Other assets and liabilities, net (0.40%) (1,203,774)
------------
NET ASSETS 100% $300,948,783
------------
See notes to portfolios of investments and notes to financial statements.
122
EASTERN EUROPEAN FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COMMON STOCKS 96.93% SHARES VALUE
AGRICULTURAL OPERATIONS 0.49%
-------------------------------------------------------------------------------------------
Kernel Holding S.A. 85,000 $ 2,135,750*
AIRPORT DEVELOPMENT/MAINTENANCE 1.49%
-------------------------------------------------------------------------------------------
TAV Havalimanlari Holding A.S. 1,350,000 6,549,063*
APPLIANCES 1.72%
-------------------------------------------------------------------------------------------
Arcelik A.S. 1,500,000 7,588,041
AUTOMOTIVE - CARS & LIGHT TRUCKS 2.35%
-------------------------------------------------------------------------------------------
Tofas Turk Otomobil Fabrikasi A.S. 2,000,000 10,324,924
CELLULAR TELECOMMUNICATIONS 1.91%
-------------------------------------------------------------------------------------------
Mobile TeleSystems, Sponsored ADR 402,500 8,400,175
COMMERCIAL BANKS - NON US 26.89%
-------------------------------------------------------------------------------------------
Albaraka Turk Katilim Bankasi A.S. 1,427,744 2,500,103
Bank Pekao S.A. 100,000 6,037,100
OTP Bank Nyrt. plc 183,300 4,421,855*
Powszechna Kasa Oszczednosci Bank Polski S.A. 500,000 7,310,287
Sberbank RF 13,162,095 44,845,048@
Turkiye Garanti Bankasi A.S. 3,230,082 16,381,893
Turkiye Halk Bankasi A.S. 1,000,000 8,496,011
Turkiye Is Bankasi, Class C 2,396,185 8,547,258
VTB Bank OJSC, Sponsored GDR 3,000,000 19,770,000
--------------
118,309,555
DIVERSIFIED MINERALS 0.05%
-------------------------------------------------------------------------------------------
Lysander Minerals Corp. 475,000 238,143*
DIVERSIFIED OPERATIONS 1.54%
-------------------------------------------------------------------------------------------
Haci Omer Sabanci Holding A.S. 1,451,729 6,778,941
FINANCE - INVESTMENT BANKER/BROKER 1.38%
-------------------------------------------------------------------------------------------
Turkiye Sinai Kalkinma Bankasi A.S. 3,600,000 6,093,780
FOOD - MEAT PRODUCTS 0.61%
-------------------------------------------------------------------------------------------
Cherkizovo Group, Sponsored GDR 150,000 2,701,500*
FOOD - RETAIL 5.92%
-------------------------------------------------------------------------------------------
BIM Birlesik Magazalar A.S. 100,000 3,404,890
Magnit OJSC, Sponsored GDR 260,000 7,618,000
See notes to portfolios of investments and notes to financial statements.
123
EASTERN EUROPEAN FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COMMON STOCKS SHARES VALUE
FOOD - RETAIL (CONT'D)
-------------------------------------------------------------------------------------------
X5 Retail Group N.V., Sponsored GDR 325,000 $ 15,031,250*
--------------
26,054,140
FOOD - WHOLESALE/DISTRIBUTION 0.90%
-------------------------------------------------------------------------------------------
Eurocash S.A. 450,000 3,947,555
GOLD MINING 1.71%
-------------------------------------------------------------------------------------------
Centerra Gold, Inc. 44,500 885,270
Dundee Precious Metals, Inc., 144A 236,767 2,226,887*
Eldorado Gold Corp. 124,700 2,315,679
European Goldfields Ltd. 150,000 2,095,157*
--------------
7,522,993
INVESTMENT COMPANIES 0.16%
-------------------------------------------------------------------------------------------
Vostok Nafta Investment Ltd. 130,000 721,952*
MEDICAL - DRUGS 3.78%
-------------------------------------------------------------------------------------------
Egis Gyogyszergyar Nyrt. 30,000 2,896,274
Pharmstandard, Sponsored GDR 410,000 11,685,000*
Richter Gedeon Nyrt. 10,000 2,044,739
--------------
16,626,013
METAL - ALUMINUM 2.63%
-------------------------------------------------------------------------------------------
United Co. RUSAL plc 7,500,000 11,559,987*
METAL - DIVERSIFIED 2.35%
-------------------------------------------------------------------------------------------
KGHM Polska Miedz S.A. 150,000 8,752,108
Orsu Metals Corp., 144A 4,025,000 1,372,205*
Orsu Metals Corp. 664,240 226,453*
--------------
10,350,766
OIL - FIELD SERVICES 0.52%
-------------------------------------------------------------------------------------------
Eurasia Drilling Co., Ltd., Sponsored GDR 70,000 2,275,000
OIL COMPANIES - EXPLORATION & PRODUCTION 10.22%
-------------------------------------------------------------------------------------------
Alliance Oil Co., Ltd. 300,000 4,748,949*
BNK Petroleum, Inc. 500,000 1,704,602*
Gazprom OAO, Sponsored ADR 563,901 14,326,641
NovaTek OAO, Sponsored GDR 198,477 23,718,002
Tethys Petroleum Ltd. 300,000 484,308*
--------------
44,982,502
See notes to portfolios of investments and notes to financial statements.
124
EASTERN EUROPEAN FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COMMON STOCKS SHARES VALUE
OIL COMPANIES - INTEGRATED 12.20%
------------------------------------------------------------------------------------------------
Lukoil OAO, Sponsored ADR 121,810 $ 6,882,265
MOL Hungarian Oil & Gas Nyrt. 130,000 12,987,818*
Rosneft Oil Co. OJSC, Sponsored GDR 3,067,309 21,961,932
TNK-BP Holding 4,426,500 11,866,442@
--------------
53,698,457
REAL ESTATE OPERATING/DEVELOPMENT 1.37%
------------------------------------------------------------------------------------------------
LSR Group OJSC, GDR 477,100 4,394,091*
PIK Group, Sponsored GDR 400,000 1,620,000*
--------------
6,014,091
SILVER MINING 1.64%
------------------------------------------------------------------------------------------------
Polymetal, Sponsored GDR 395,000 7,232,450*
STEEL - PRODUCERS 11.34%
------------------------------------------------------------------------------------------------
Evraz Group S.A., Sponsored GDR 250,000 8,967,500*
Magnitogorsk Iron & Steel Works, Sponsored GDR 580,000 8,439,000
Mechel, Sponsored ADR 540,000 15,784,200
Novolipetsk Steel, Sponsored GDR 350,000 16,695,000
--------------
49,885,700
STEEL PIPE & TUBE 2.32%
------------------------------------------------------------------------------------------------
OAO TMK, Sponsored GDR 495,000 10,226,700*
TELEVISION 1.44%
------------------------------------------------------------------------------------------------
CTC Media, Inc. 270,000 6,326,100
------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS 426,544,278
------------------------------------------------------------------------------------------------
(cost $287,551,419)
REAL ESTATE INVESTMENT TRUST (REIT) 0.29%
Emlak Konut Gayrimenkul Yatirim Ortakligi A.S. 1,000,000 1,284,130*
(cost $1,140,633)
See notes to portfolios of investments and notes to financial statements.
125
EASTERN EUROPEAN FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
WARRANTS 0.74% SHARES VALUE
GOLD MINING 0.74%
------------------------------------------------------------------------------------------------
Dundee Precious Metals, Inc., 144A, Warrants (November
2015) 500,000 $ 3,248,772*
METAL - DIVERSIFIED 0.00%
------------------------------------------------------------------------------------------------
Orsu Metals Corp., 144A, Warrants (April 2012) 2,012,500 0*@
------------------------------------------------------------------------------------------------
TOTAL WARRANTS 3,248,772
------------------------------------------------------------------------------------------------
(cost $0)
PURCHASED OPTION 0.07% CONTRACTS
EXCHANGE-TRADED FUND 0.07%
------------------------------------------------------------------------------------------------
Market Vectors Russia ETF, Strike Price 37, Put,
Expiration Feb. 2011 (premium $354,500) 2,500 300,000
------------------------------------------------------------------------------------------------
TOTAL SECURITIES 431,377,180
------------------------------------------------------------------------------------------------
(cost $289,046,552)
PRINCIPAL
REPURCHASE AGREEMENT 2.18% AMOUNT
Joint Tri-Party Repurchase Agreement, Barclays Capital,
Inc., 12/31/2010, 0.25%, due 01/03/2011, repurchase
price $9,614,759, collateralized by U.S. Treasury
securities held in a joint tri-party account
(cost $9,614,559) $9,614,559 9,614,559
------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS 100.21% 440,991,739
------------------------------------------------------------------------------------------------
(cost $298,661,111)
Other assets and liabilities, net (0.21%) (954,598)
------------
NET ASSETS 100% $440,037,141
------------
See notes to portfolios of investments and notes to financial statements.
126
GLOBAL EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COMMON STOCKS 93.84% SHARES VALUE
AIRLINES 1.04%
--------------------------------------------------------------------------------------
EVA Airways Corp. 110,000 $ 138,773*
AIRPORT DEVELOPMENT/MAINTENANCE 1.27%
--------------------------------------------------------------------------------------
TAV Havalimanlari Holding A.S. 35,000 169,791*
APPLIANCES 0.94%
--------------------------------------------------------------------------------------
Arcelik 25,000 126,467
AUTOMOTIVE - CARS & LIGHT TRUCKS 2.62%
--------------------------------------------------------------------------------------
Hyundai Motor Co. 800 123,684*
Tata Motors Ltd., Sponsored ADR 3,000 88,020
Tofas Turk Otomobil Fabrikasi A.S. 27,000 139,387
-----------
351,091
BREWERY 1.16%
--------------------------------------------------------------------------------------
Compania de Bebidas das Americas, Sponsored ADR 5,000 155,150
BROADCAST SERVICES/PROGRAMMING 1.45%
--------------------------------------------------------------------------------------
Grupo Televisa S.A., Sponsored ADR 7,500 194,475
BUILDING - HEAVY CONSTRUCTION 0.53%
--------------------------------------------------------------------------------------
Grana y Montero S.A. 30,000 71,091
CASINO HOTELS 0.89%
--------------------------------------------------------------------------------------
Genting Singapore plc 70,000 119,462*
CELLULAR TELECOMMUNICATIONS 5.62%
--------------------------------------------------------------------------------------
America Movil SAB de C.V., Series L, Sponsored ADR 4,000 229,360
MTN Group Ltd. 7,954 161,385
Tim Participacoes S.A., Sponsored ADR 3,000 102,420
Vivo Participacoes S.A., Sponsored ADR 8,000 260,720
-----------
753,885
CHEMICALS - FIBERS 1.98%
--------------------------------------------------------------------------------------
Kolon Industries, Inc. 4,000 264,782*
COMMERCIAL BANKS - NON US 14.63%
--------------------------------------------------------------------------------------
Axis Bank Ltd. 4,000 120,566
Banco do Brasil S.A. 6,334 119,952
Bank of China Ltd., H shares 120,000 63,455
Bank of Georgia, Class A, Sponsored GDR 10,000 202,000*
See notes to portfolios of investments and notes to financial statements.
127
GLOBAL EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COMMON STOCKS SHARES VALUE
COMMERCIAL BANKS - NON US (CONT'D)
--------------------------------------------------------------------------------------
China Construction Bank Corp., H shares 100,000 $ 90,061
Credicorp Ltd. 1,000 118,910
Grupo Financiero Galicia S.A., Sponsored ADR 7,500 114,825*
Itau Unibanco Banco Multiplo S.A. 8,837 212,089
Sberbank RF 90,000 306,642@
State Bank of India Ltd., Sponsored GDR 1,500 194,250
Turkiye Garanti Bankasi A.S. 20,000 101,433
Turkiye Is Bankasi, Class C 51,835 184,897
VTB Bank OJSC, Sponsored GDR 20,000 131,800
-----------
1,960,880
COMPUTER SERVICES 0.90%
--------------------------------------------------------------------------------------
VanceInfo Technologies, Inc., Sponsored ADR 3,500 120,890*
DIVERSIFIED OPERATIONS 0.70%
--------------------------------------------------------------------------------------
Haci Omer Sabanci Holding A.S. 20,000 93,391
E-COMMERCE/PRODUCTS 2.59%
--------------------------------------------------------------------------------------
MercadoLibre, Inc. 5,200 346,580*
E-COMMERCE/SERVICES 1.36%
--------------------------------------------------------------------------------------
Ctrip.com International Ltd., Sponsored ADR 4,500 182,025*
ELECTRIC PRODUCTS - MISCELLANEOUS 0.81%
--------------------------------------------------------------------------------------
Johnson Electric Holdings Ltd. 150,000 108,459
ELECTRONIC COMPONENTS - MISCELLANEOUS 0.65%
--------------------------------------------------------------------------------------
TPK Holding Co., Ltd. 3,800 87,281*
ELECTRONIC COMPONENTS - SEMICONDUCTORS 1.31%
--------------------------------------------------------------------------------------
Samsung Electronics Co., Ltd. 208 175,935
FINANCE - MORTGAGE LOAN/BANKER 0.98%
--------------------------------------------------------------------------------------
LIC Housing Finance Ltd. 30,000 131,138
FINANCE - OTHER SERVICES 1.78%
--------------------------------------------------------------------------------------
Bolsa de Valores de Colombia 3,000,000 67,187
Bolsa Mexicana de Valores S.A. 17,000 35,818
Hong Kong Exchanges & Clearing Ltd. 6,000 136,095
-----------
239,100
See notes to portfolios of investments and notes to financial statements.
128
GLOBAL EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COMMON STOCKS SHARES VALUE
FOOD - RETAIL 3.67%
--------------------------------------------------------------------------------------
Compania Brasileira de Distribuicao Grupo Pao de Acucar,
Class A, Sponsored ADR 4,000 $ 167,920
X5 Retail Group N.V., Sponsored GDR 7,000 323,750*
-----------
491,670
GOLD MINING 4.91%
--------------------------------------------------------------------------------------
Centamin Egypt Ltd. 60,000 167,252*
Eldorado Gold Corp. 3,000 55,710
Randgold Resources Ltd., Sponsored ADR 3,300 271,689
Zhaojin Mining Industry Co., Ltd., H shares 40,000 163,654
-----------
658,305
INTERNET CONTENT - INFO/NEWS 1.15%
--------------------------------------------------------------------------------------
Baidu, Inc., Sponsored ADR 1,600 154,448*
INVESTMENT COMPANIES 0.83%
--------------------------------------------------------------------------------------
Vostok Nafta Investment Ltd. 20,000 111,070*
MEDICAL - DRUGS 2.06%
--------------------------------------------------------------------------------------
Pharmstandard, Sponsored GDR 5,000 142,500*
Ranbaxy Laboratories Ltd. 10,000 133,687*
-----------
276,187
MEDICAL LABS & TESTING SERVICES 2.44%
--------------------------------------------------------------------------------------
Diagnosticos da America 17,500 237,104
Fleury S.A. 5,600 89,933
-----------
327,037
METAL - DIVERSIFIED 2.79%
--------------------------------------------------------------------------------------
KGHM Polska Miedz S.A. 5,000 291,737
Orsu Metals Corp. 41,083 14,006*
Orsu Metals Corp., 144A 200,000 68,184*
-----------
373,927
MISCELLANEOUS MANUFACTURERS 0.86%
--------------------------------------------------------------------------------------
China International Marine Containers Co., Ltd., Class B 50,000 115,793
MULTIMEDIA 2.84%
--------------------------------------------------------------------------------------
Naspers Ltd., Class N 6,500 380,630
See notes to portfolios of investments and notes to financial statements.
129
GLOBAL EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COMMON STOCKS SHARES VALUE
OIL COMPANIES - EXPLORATION & PRODUCTION 5.58%
--------------------------------------------------------------------------------------
Alange Energy Corp. 92,500 $ 50,085*
FX Energy, Inc. 25,000 153,750*
Gran Tierra Energy, Inc. 15,000 120,750*
Niko Resources Ltd. 800 82,768
OGX Petroleo e Gas Participacoes S.A. 20,000 241,039*
TransAtlantic Petroleum Ltd. 30,000 99,900*
-----------
748,292
OIL COMPANIES - INTEGRATED 4.50%
--------------------------------------------------------------------------------------
Ecopetrol S.A., Sponsored ADR 2,500 109,050
PetroChina Co., Ltd., Sponsored ADR 900 118,341
TNK-BP Holding 140,000 375,308@
-----------
602,699
PATIENT MONITORING EQUIPMENT 1.40%
--------------------------------------------------------------------------------------
Opto Circuits India Ltd. 31,048 187,069
PLATINUM 0.64%
--------------------------------------------------------------------------------------
Eastern Platinum Ltd. 48,000 85,190*
POWER CONVERTERS/POWER SUPPLY EQUIPMENT 0.56%
--------------------------------------------------------------------------------------
Dongfang Electric Corp. Ltd., H shares 15,000 74,397
PROPERTY/CASUALTY INSURANCE 0.89%
--------------------------------------------------------------------------------------
Powszechny Zaklad Ubezpieczen S.A. 1,000 119,899
REAL ESTATE OPERATING/DEVELOPMENT 2.85%
--------------------------------------------------------------------------------------
Cheung Kong Holdings Ltd. 7,500 115,600
Kerry Properties Ltd. 10,000 51,849
LSR Group OJSC, GDR 14,300 131,703*
Sun Hung Kai Properties Ltd. 5,000 82,728
-----------
381,880
RETAIL - APPAREL/SHOE 1.69%
--------------------------------------------------------------------------------------
Lojas Renner S.A. 6,669 226,681
RETAIL - HYPERMARKETS 2.04%
--------------------------------------------------------------------------------------
Grupo Comercial Chedraui S.A. de CV 30,000 91,238
Wal-Mart de Mexico SAB de CV, Series V 63,800 182,451
-----------
273,689
See notes to portfolios of investments and notes to financial statements.
130
GLOBAL EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COMMON STOCKS SHARES VALUE
SEMICONDUCTOR COMPONENTS - INTEGRATED CIRCUITS 1.03%
--------------------------------------------------------------------------------------
Taiwan Semiconductor Manufacturing Co., Ltd., Sponsored
ADR 11,000 $ 137,940
SHIPBUILDING 1.47%
--------------------------------------------------------------------------------------
Hyundai Heavy Industries Co., Ltd. 500 197,366*
STEEL - PRODUCERS 1.09%
--------------------------------------------------------------------------------------
Mechel, Sponsored ADR 5,000 146,150
SUGAR 2.76%
--------------------------------------------------------------------------------------
Cosan Ltd., Class A 12,500 170,250
Sao Martinho S.A. 12,500 199,647
-----------
369,897
THERAPEUTICS 0.43%
--------------------------------------------------------------------------------------
China Shineway Pharmaceutical Group Ltd. 20,000 57,382
TRANSPORTATION - MARINE 1.08%
--------------------------------------------------------------------------------------
Evergreen Marine Corp. 140,000 145,423*
WEB PORTALS/INTERNET SERVICE PROVIDERS 1.07%
--------------------------------------------------------------------------------------
Mail.ru Group Ltd., GDR, 144A 4,000 144,000*@
--------------------------------------------------------------------------------------
TOTAL COMMON STOCKS 12,577,667
--------------------------------------------------------------------------------------
(cost $10,834,603)
EXCHANGE-TRADED FUNDS (ETF) 3.97%
Emerging Global Shares Dow Jones Emerging Markets Energy
Titans Index ETF 1,200 32,724
Emerging Global Shares Dow Jones Emerging Markets Metals
& Mining Titans ETF 1,500 35,100
iShares MSCI All Peru Capped Index Fund 700 35,252
iShares MSCI Brazil Index Fund 430 33,282*
iShares MSCI Malaysia Index Fund 2,400 34,512
iShares MSCI Mexico Investable Market Index Fund 600 37,152
iShares MSCI Singapore Index Fund 2,400 33,240
iShares MSCI South Korea Index Fund 600 36,714
iShares MSCI Taiwan Index Fund 2,300 35,926
Market Vectors Russia ETF 900 34,119
PowerShares India Portfolio 1,300 33,046
See notes to portfolios of investments and notes to financial statements.
131
GLOBAL EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
EXCHANGE-TRADED FUNDS (ETF) SHARES VALUE
ProShares UltraShort FTSE China 25 5,000 * 150,400
--------------------------------------------------------------------------------------
TOTAL EXCHANGE-TRADED FUNDS 531,467
--------------------------------------------------------------------------------------
(cost $527,078)
WARRANTS 0.00%
METAL - DIVERSIFIED 0.00%
--------------------------------------------------------------------------------------
Orsu Metals Corp., Warrants (March 2011) 25,813 129*
Orsu Metals Corp., 144A, Warrants (April 2012) 100,000 0*@
--------------------------------------------------------------------------------------
TOTAL WARRANTS 129
--------------------------------------------------------------------------------------
(cost $0)
PURCHASED OPTION 0.07% CONTRACTS
GOLD MINING 0.07%
--------------------------------------------------------------------------------------
Randgold Resources Ltd., Strike Price 80, Call,
Expiration Jan. 2011 25 9,750
(premium $27,641)
--------------------------------------------------------------------------------------
TOTAL SECURITIES 13,119,013
--------------------------------------------------------------------------------------
(cost $11,389,322)
PRINCIPAL
REPURCHASE AGREEMENT 1.03% AMOUNT
Joint Tri-Party Repurchase Agreement, Banc of America
Securities LLC Merrill Lynch, 12/31/2010, 0.09%, due
01/03/2011, repurchase price $137,474, collateralized
by U.S. Treasury securities held in a joint tri-party
account (cost $137,473) $137,473 137,473
--------------------------------------------------------------------------------------
TOTAL INVESTMENTS 98.91% 13,256,486
--------------------------------------------------------------------------------------
(cost $11,526,795)
Other assets and liabilities, net 1.09% 146,375
-----------
NET ASSETS 100% $13,402,861
-----------
See notes to portfolios of investments and notes to financial statements.
132
CHINA REGION FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COMMON STOCKS 91.12% SHARES VALUE
AIRLINES 1.76%
-------------------------------------------------------------------------------------------
Air China Ltd., H shares 300,000 $ 335,028*
EVA Airways Corp. 457,500 577,168*
--------------
912,196
AUTOMOTIVE - CARS & LIGHT TRUCKS 2.82%
-------------------------------------------------------------------------------------------
Dongfeng Motor Group Co., Ltd., H shares 400,000 690,640
Hyundai Motor Co. 5,000 773,027*
--------------
1,463,667
AUTOMOTIVE/TRUCK PARTS & EQUIPMENT - ORIGINAL 0.50%
-------------------------------------------------------------------------------------------
China Yuchai International Ltd. 8,200 259,858
AUTOMOTIVE/TRUCK PARTS & EQUIPMENT - REPLACEMENT 3.37%
-------------------------------------------------------------------------------------------
Weichai Power Co., Ltd., H shares 200,000 1,236,410
Xinyi Glass Holdings Ltd. 620,000 510,518
--------------
1,746,928
BEVERAGES - WINE/SPIRITS 0.72%
-------------------------------------------------------------------------------------------
Yantai Changyu Pioneer Wine Co., Ltd., B shares 35,000 372,493
BUILDING & CONSTRUCTION 2.74%
-------------------------------------------------------------------------------------------
China State Construction International Holdings Ltd. 1,500,000 1,418,463
BUILDING & CONSTRUCTION PRODUCTS - MISCELLANEOUS 0.62%
-------------------------------------------------------------------------------------------
China Liansu Group Holdings Ltd. 400,000 321,647*
CASINO HOTELS 2.87%
-------------------------------------------------------------------------------------------
Genting Singapore plc 400,000 682,642*
Wynn Macau Ltd. 360,000 804,065
--------------
1,486,707
CHEMICALS - FIBERS 1.28%
-------------------------------------------------------------------------------------------
Kolon Industries, Inc. 10,000 661,954*
CHEMICALS - SPECIALTY 0.64%
-------------------------------------------------------------------------------------------
Huabao International Holdings Ltd. 200,000 329,366
See notes to portfolios of investments and notes to financial statements.
133
CHINA REGION FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COMMON STOCKS SHARES VALUE
COAL 2.58%
-------------------------------------------------------------------------------------------
China Shenhua Energy Co., Ltd., H shares 122,900 $ 515,477
Fushan International Energy Group Ltd. 1,200,000 822,901
--------------
1,338,378
COMMERCIAL BANKS - NON US 3.71%
-------------------------------------------------------------------------------------------
Bank of China Ltd., H shares 1,000,000 528,788
BOC Hong Kong Holdings Ltd. 158,600 542,780
China Construction Bank Corp., H shares 600,000 540,367
TMB Bank Public Company Ltd. 4,000,000 313,828*
--------------
1,925,763
COMPUTER SERVICES 1.33%
-------------------------------------------------------------------------------------------
VanceInfo Technologies, Inc., Sponsored ADR 20,000 690,800*
COSMETICS & TOILETRIES 0.67%
-------------------------------------------------------------------------------------------
LG Household & Health Care Ltd. 1,000 347,684
DISPOSABLE MEDICAL PRODUCTS 0.55%
-------------------------------------------------------------------------------------------
Shandong Weigao Group Medical Polymer Co., Ltd.,
H shares 100,000 283,049
DISTRIBUTION/WHOLESALE 1.01%
-------------------------------------------------------------------------------------------
Li & Fung Ltd. 90,000 526,279
DIVERSIFIED MINERALS 2.47%
-------------------------------------------------------------------------------------------
BHP Billiton Ltd., Sponsored ADR 10,000 929,200
Erdene Resource Development Corp. 100,000 124,336*
Woulfe Mining Corp. 814,800 228,761*
--------------
1,282,297
DIVERSIFIED OPERATIONS 3.55%
-------------------------------------------------------------------------------------------
Hutchison Whampoa Ltd. 120,000 1,238,212
Siam Cement PCL 50,000 600,223
--------------
1,838,435
E-COMMERCE/SERVICES 1.17%
-------------------------------------------------------------------------------------------
Ctrip.com International Ltd., Sponsored ADR 15,000 606,750*
ELECTRIC PRODUCTS - MISCELLANEOUS 3.10%
-------------------------------------------------------------------------------------------
Johnson Electric Holdings Ltd. 1,000,000 723,062
Zhuzhou CSR Times Electric Co., Ltd., H shares 225,000 885,815
--------------
1,608,877
See notes to portfolios of investments and notes to financial statements.
134
CHINA REGION FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COMMON STOCKS SHARES VALUE
ELECTRONIC COMPONENTS - MISCELLANEOUS 0.85%
-------------------------------------------------------------------------------------------
TPK Holding Co., Ltd. 19,200 $ 441,001*
Yageo Corp., Sponsored GDR 1 0*@
--------------
441,001
ELECTRONIC COMPONENTS - SEMICONDUCTORS 0.89%
-------------------------------------------------------------------------------------------
Spreadtrum Communications, Inc., Sponsored ADR 25,000 459,250*
FINANCE - OTHER SERVICES 2.19%
-------------------------------------------------------------------------------------------
Hong Kong Exchanges & Clearing Ltd. 50,000 1,134,127
FOOD - MISCELLANEOUS/DIVERSIFIED 2.23%
-------------------------------------------------------------------------------------------
China Yurun Food Group Ltd. 350,000 1,157,285
FOOD - RETAIL 0.92%
-------------------------------------------------------------------------------------------
Lianhua Supermarket Holdings Co., Ltd., H shares 100,000 477,967
GOLD MINING 4.92%
-------------------------------------------------------------------------------------------
Euromax Resources Ltd., 144A 473,235 135,237*
Olympus Pacific Minerals, Inc. 479,500 259,631*
Real Gold Mining Ltd. 300,000 521,840*
Zhaojin Mining Industry Co., Ltd., H shares 400,000 1,636,539
--------------
2,553,247
HOTELS & MOTELS 1.31%
-------------------------------------------------------------------------------------------
Shangri-La Asia Ltd. 250,000 678,675
HUMAN RESOURCES 0.95%
-------------------------------------------------------------------------------------------
51job, Inc., Sponsored ADR 10,000 492,500*
INTERNET APPLICATION SOFTWARE 1.49%
-------------------------------------------------------------------------------------------
Tencent Holdings Ltd. 35,000 770,023
INTERNET TELEPHONY 0.00%
-------------------------------------------------------------------------------------------
Asia Broadband, Inc. 500,000 0*@
INVESTMENT MANAGEMENT/ADVISORY SERVICES 0.50%
-------------------------------------------------------------------------------------------
Noah Holdings Ltd., Sponsored ADR 13,200 258,060*
MACHINERY - FARM 1.49%
-------------------------------------------------------------------------------------------
First Tractor Co., Ltd., H shares 693,200 775,028
See notes to portfolios of investments and notes to financial statements.
135
CHINA REGION FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COMMON STOCKS SHARES VALUE
MACHINERY - PUMPS 0.30%
-------------------------------------------------------------------------------------------
China Valves Technology, Inc. 15,000 $ 157,200*
MARINE SERVICES 1.01%
-------------------------------------------------------------------------------------------
COSCO Pacific Ltd. 300,000 524,156
METAL - COPPER 3.18%
-------------------------------------------------------------------------------------------
Jiangxi Copper Co., Ltd., H shares 500,000 1,646,832
METAL - DIVERSIFIED 1.66%
-------------------------------------------------------------------------------------------
Rio Tinto plc, Sponsored ADR 12,000 859,920
MISCELLANEOUS MANUFACTURERS 0.89%
-------------------------------------------------------------------------------------------
China International Marine Containers Co., Ltd.,
B shares 200,000 463,171
NON-FERROUS METALS 0.11%
-------------------------------------------------------------------------------------------
Sterling Group Ventures, Inc. 500,000 56,250*
OIL - FIELD SERVICES 1.25%
-------------------------------------------------------------------------------------------
China Oilfield Services Ltd., H shares 300,000 646,124
OIL COMPANIES - EXPLORATION & PRODUCTION 3.68%
-------------------------------------------------------------------------------------------
CNOOC Ltd., Sponsored ADR 8,000 1,906,960
OIL COMPANIES - INTEGRATED 0.51%
-------------------------------------------------------------------------------------------
PetroChina Co., Ltd., Sponsored ADR 2,000 262,980
PETROCHEMICALS 0.00%
-------------------------------------------------------------------------------------------
Danhua Chemical Technology Co., Ltd., B shares 2 2*
POWER CONVERTERS/POWER SUPPLY EQUIPMENT 2.68%
-------------------------------------------------------------------------------------------
Dongfang Electric Corp., Ltd., H shares 280,000 1,388,742
PRECIOUS METALS 0.25%
-------------------------------------------------------------------------------------------
TVI Pacific, Inc. 1,000,000 130,352*
PUBLISHING - BOOKS 0.03%
-------------------------------------------------------------------------------------------
Lingo Media Corp. 22,642 14,757*
See notes to portfolios of investments and notes to financial statements.
136
CHINA REGION FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COMMON STOCKS SHARES VALUE
REAL ESTATE OPERATING/DEVELOPMENT 4.33%
-------------------------------------------------------------------------------------------
Cheung Kong Holdings Ltd. 60,000 $ 924,799
China Vanke Co., Ltd., B shares 400,000 494,049
Sun Hung Kai Properties Ltd. 50,000 827,276
--------------
2,246,124
RETAIL - APPAREL/SHOE 2.88%
-------------------------------------------------------------------------------------------
Anta Sports Products Ltd. 300,000 480,926
Belle International Holdings Ltd. 600,000 1,011,258
--------------
1,492,184
RETAIL - AUTOMOBILE 0.88%
-------------------------------------------------------------------------------------------
PT Astra International Tbk 75,000 454,079
RETAIL - CONSUMER ELECTRONICS 1.86%
-------------------------------------------------------------------------------------------
GOME Electrical Appliances Holdings Ltd. 2,663,500 966,365*
RETAIL - JEWELRY 0.00%
-------------------------------------------------------------------------------------------
Lao Feng Xiang Co., Ltd., B shares 1 3
SCHOOLS 0.35%
-------------------------------------------------------------------------------------------
CIBT Education Group, Inc. 436,666 179,518*
SHIPBUILDING 2.28%
-------------------------------------------------------------------------------------------
Hyundai Heavy Industries Co., Ltd. 3,000 1,184,195*
SILVER MINING 1.11%
-------------------------------------------------------------------------------------------
Silvercorp Metals, Inc. 45,000 574,852
STEEL - PRODUCERS 1.88%
-------------------------------------------------------------------------------------------
Xingda International Holdings Ltd. 900,000 972,660
TELECOMMUNICATIONS EQUIPMENT 1.15%
-------------------------------------------------------------------------------------------
ZTE Corp., H shares 150,000 597,298
TELEPHONE - INTEGRATED 0.56%
-------------------------------------------------------------------------------------------
Philippine Long Distance Telephone Co., Sponsored
ADR 5,000 291,350
THERAPEUTICS 0.55%
-------------------------------------------------------------------------------------------
China Shineway Pharmaceutical Group Ltd. 100,000 286,909
See notes to portfolios of investments and notes to financial statements.
137
CHINA REGION FUND
PORTFOLIO OF INVESTMENTS December 31, 2010
COMMON STOCKS SHARES VALUE
TRANSPORTATION - MARINE 1.21%
-------------------------------------------------------------------------------------------
Evergreen Marine Corp. 603,600 $ 626,983*
WEB PORTALS/INTERNET SERVICE PROVIDERS 1.33%
-------------------------------------------------------------------------------------------
Sina Corp. 10,000 688,200*
-------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS 47,236,920
-------------------------------------------------------------------------------------------
(cost $40,635,627)
REAL ESTATE INVESTMENT TRUST (REIT) 0.90%
The Link Real Estate Investment Trust 150,000 466,066
(cost $428,154)
EXCHANGE-TRADED FUNDS (ETF) 3.11%
iShares MSCI Singapore Index Fund 9,400 130,190
iShares MSCI Taiwan Index Fund 9,500 148,390
Market Vectors Rare Earth/Strategic Metals ETF 25,000 600,000*
ProShares UltraShort FTSE China 25 18,000 541,440*
Sprott Physical Gold Trust 15,698 193,792*
-------------------------------------------------------------------------------------------
TOTAL EXCHANGE-TRADED FUNDS 1,613,812
-------------------------------------------------------------------------------------------
(cost $1,628,877)
-------------------------------------------------------------------------------------------
TOTAL SECURITIES 49,316,798
-------------------------------------------------------------------------------------------
(cost $42,692,658)
PRINCIPAL
REPURCHASE AGREEMENT 6.83% AMOUNT
Joint Tri-Party Repurchase Agreement, Banc of
America Securities LLC Merrill Lynch, 12/31/2010,
0.09%, due 01/03/2011, repurchase price $3,542,895,
collateralized by U.S. Treasury securities held in a
joint tri-party account (cost $3,542,867) $3,542,867 3,542,867
-------------------------------------------------------------------------------------------
TOTAL INVESTMENTS 101.96% 52,859,665
-------------------------------------------------------------------------------------------
(cost $46,235,525)
Other assets and liabilities, net (1.96%) (1,016,269)
-----------
NET ASSETS 100% $51,843,396
-----------
See notes to portfolios of investments and notes to financial statements.
138
NOTES TO PORTFOLIOS OF INVESTMENTS December 31, 2010
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 was fair valued at December 31, 2010, by U.S. Global Investors, Inc.
(Adviser) in accordance with valuation procedures approved by the Board of
Trustees. Fair valued securities, which were primarily composed of restricted
securities, as a percentage of net assets at December 31, 2010, were 1.39% of
Holmes Growth, 4.28% of Global MegaTrends, 7.84% of Global Resources, 1.24% of
World Precious Minerals, 0.49% of Gold and Precious Metals, 12.89% of Eastern
European, and 6.16% of Global Emerging Markets. See 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, 2010.
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, 2010, were:
Barclays Capital, Inc. repurchase agreement, 12/31/10, 0.25%, due
01/03/11:
Total principal amount: $25,685,829; Total repurchase price: $25,686,364
Collateral:
$72,328,478 U.S. Treasury STRIPS, 0.000%, 8/15/32
(total collateral market value, including accrued interest, of
$26,199,545)
Credit Suisse Securities USA LLC repurchase agreement, 12/31/10, 0.15%,
due 01/03/11:
Total principal amount: $126,462,072; Total repurchase price: $126,463,652
Collateral:
$125,695,000 U.S. Treasury Note, 1.750%, 08/15/12
(total collateral market value, including accrued interest, of
$128,994,809)
Banc of America Securities LLC Merrill Lynch repurchase agreement,
12/31/10, 0.09%, due 01/03/11:
Total principal amount: $54,745,466; Total repurchase price: $54,745,877
Collateral:
$54,995,200 U.S. Treasury Note, 1.375%, 04/15/12
(total collateral market value, including accrued interest, of
$55,840,402)
Morgan Stanley, repurchase agreement, 12/31/10, 0.08%, due 01/03/11:
Total principal amount: $20,000,000; Total repurchase price: $20,000,133
Collateral:
$19,238,800 U.S. Treasury Inflation Indexed Bond, 1.750%, 01/15/28
(total collateral market value, including accrued interest, of
$20,400,032)
139
NOTES TO PORTFOLIOS OF INVESTMENTS December 31, 2010
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 are required to disclose information regarding the 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. The disclosure requirement 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 inputs or methodology used for valuing securities are not an
indication of the risk associated with investing in those securities.
For example, money market securities are valued using amortized cost, in
accordance with the investment Company Act of 1940. Generally, amortized
cost reflects the current fair value of a security, but since the value
is not obtained from a quoted price in an active market, such securities
are reflected as Level 2. Fair value determinations are required for
securities whose value is affected by a significant event that will
materially affect the value of a domestic or foreign security and which
occurs subsequent to the time of the close of the principal market on
which such domestic or foreign security trades but prior to the
calculation of the Fund's NAV.
The three levels defined by the fair value 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.
The following table summarizes the valuation of each Fund's securities
as of December 31, 2010 using the fair value hierarchy:
QUOTED PRICES
IN ACTIVE SIGNIFICANT
MARKETS FOR OTHER SIGNIFICANT
IDENTICAL OBSERVABLE UNOBSERVABLE
INVESTMENTS INPUTS INPUTS
(LEVEL 1)* (LEVEL 2)* (LEVEL 3) TOTAL
U.S. TREASURY SECURITIES CASH FUND
Investments in securities**
U.S. Government Obligations $ -- $ 39,998,579 $ -- $ 39,998,579
Repurchase Agreements 59,655,002 -- -- 59,655,002
------------ ------------ ------------ ------------
Total $ 59,655,002 $ 39,998,579 $ -- $ 99,653,581
============ ============ ============ ============
140
NOTES TO PORTFOLIOS OF INVESTMENTS December 31, 2010
QUOTED PRICES
IN ACTIVE SIGNIFICANT
MARKETS FOR OTHER SIGNIFICANT
IDENTICAL OBSERVABLE UNOBSERVABLE
INVESTMENTS INPUTS INPUTS
(LEVEL 1)* (LEVEL 2)* (LEVEL 3) TOTAL
U.S. GOVERNMENT SECURITIES SAVINGS FUND
Investments in securities**
U.S. Government and Agency
Obligations $ -- $203,598,089 $ -- $203,598,089
------------ ------------ ------------ ------------
Total $ -- $203,598,089 $ -- $203,598,089
============ ============ ============ ============
NEAR-TERM TAX FREE FUND
Investments in securities**
Municipal Bonds $ -- $ 26,621,257 $ -- $ 26,621,257
Repurchase Agreement 2,285,040 -- -- 2,285,040
------------ ------------ ------------ ------------
Total $ 2,285,040 $ 26,621,257 $ -- $ 28,906,297
============ ============ ============ ============
TAX FREE FUND
Investments in securities**
Municipal Bonds $ -- $ 19,321,614 $ -- $ 19,321,614
Repurchase Agreement 333,047 -- -- 333,047
------------ ------------ ------------ ------------
Total $ 333,047 $ 19,321,614 $ -- $ 19,654,661
============ ============ ============ ============
ALL AMERICAN EQUITY FUND
Investments in securities**
Common Stocks:
Transportation - Marine $ -- $ 6,150 $ -- $ 6,150
All Other Common Stocks 15,984,936 -- -- 15,984,936
Real Estate Investment Trust 189,300 -- -- 189,300
Exchange-Traded Fund 204,750 -- -- 204,750
Warrants 178,500 -- -- 178,500
Purchased Option 9,600 -- -- 9,600
Master Limited Partnership 201,200 -- -- 201,200
Units 187,450 -- -- 187,450
Repurchase Agreement 971,270 -- -- 971,270
------------ ------------ ------------ ------------
Total $ 17,927,006 $ 6,150 $ -- $ 17,933,156
============ ============ ============ ============
HOLMES GROWTH FUND
Investments in securities**
Common Stocks:
Financial Services $ -- $ -- $ 82,723 $ 82,723
Real Estate Operating/Development -- -- 100,000 100,000
All Other Common Stocks 36,293,455 -- -- 36,293,455
Exchange-Traded Funds 1,219,620 -- -- 1,219,620
Warrants:
Medical - Hospitals -- -- -- --
All Other Warrants 441,988 -- -- 441,988
Purchased Option 29,250 -- -- 29,250
Master Limited Partnership 468,300 -- -- 468,300
Convertible Debenture:
Metal & Mineral Mining -- -- 380,00 380,000
Repurchase Agreement 1,872,887 -- -- 1,872,887
------------ ------------ ------------ ------------
Total $ 40,325,500 $ -- $ 562,723 $ 40,888,223
============ ============ ============ ============
141
NOTES TO PORTFOLIOS OF INVESTMENTS December 31, 2010
QUOTED PRICES
IN ACTIVE SIGNIFICANT
MARKETS FOR OTHER SIGNIFICANT
IDENTICAL OBSERVABLE UNOBSERVABLE
INVESTMENTS INPUTS INPUTS
(LEVEL 1)* (LEVEL 2)* (LEVEL 3) TOTAL
GLOBAL MEGATRENDS FUND
Investments in securities**
Common Stocks:
Chemicals - Fibers $ -- $ 198,586 $ -- $ 198,586
Diversified Operations -- 240,090 -- 240,090
Electric - Generation -- -- 23,358 23,358
Electronic Components -
Miscellaneous -- 217,659 -- 217,659
Public Thoroughfares -- 1,302,936 -- 1,302,936
Real Estate Operating/Development 445,656 -- 326,533 772,189
All Other Common Stocks 15,419,583 -- -- 15,419,583
Exchange-Traded Funds 464,135 -- -- 464,135
Warrants 501 -- -- 501
Purchased Option 5,700 -- -- 5,700
Master Limited Partnerships 959,820 -- -- 959,820
Convertible Debenture:
Metal & Mineral Mining -- -- 520,000 520,000
Repurchase Agreement 380,598 -- -- 380,598
------------ ------------ ------------ ------------
Total $ 17,675,993 $ 1,959,271 $ 869,891 $ 20,505,155
============ ============ ============ ============
GLOBAL RESOURCES FUND
Investments in securities**
Common Stocks:
Coal $ 50,028,936 $ -- $ 2,400,000 $ 52,428,936
Electric - Generation -- 62,925 506,454 569,379
Energy - Alternate Sources 3,316,454 -- -- 3,316,454
Gold Mining 52,660,955 -- -- 52,660,955
Metal - Copper 28,339,258 -- -- 28,339,258
Mining Services 1,020,523 -- 280,995 1,301,518
Natural Resource Technology -- -- 7,500 7,500
Non-Ferrous Metals 4,662,931 886,844 2,062,500 7,612,275
Oil Companies - Exploration &
Production 275,307,104 5,035,682 33,930,794 314,273,580
Oil Refining & Marketing 9,248,000 -- 424,402 9,672,402
Platinum 3,514,690 -- -- 3,514,690
Real Estate Operating/Development -- -- 7,443,544 7,443,544
All Other Common Stocks 333,039,679 -- -- 333,039,679
Exchange-Traded Funds 7,186,200 -- -- 7,186,200
Warrants:
Diversified Minerals -- -- -- --
Gold Mining 12,243,479 -- -- 12,243,479
Medical - Hospitals -- -- -- --
Metal - Diversified 33,766 -- -- 33,766
Mining Services -- -- -- --
Natural Resource Technology -- -- -- --
Oil Companies - Exploration &
Production 1,644,440 10,850,000 9,165,835 21,660,275
All Other Warrants 9,726,500 -- -- 9,726,500
Purchased Options 306,250 -- -- 306,250
Convertible Debenture:
Metal & Mineral Mining -- -- 4,900,000 4,900,000
Repurchase Agreement 72,308,373 -- -- 72,308,373
------------ ------------ ------------ ------------
Total $864,587,538 $ 16,835,451 $ 61,122,024 $942,545,013
============ ============ ============ ============
142
NOTES TO PORTFOLIOS OF INVESTMENTS December 31, 2010
QUOTED PRICES
IN ACTIVE SIGNIFICANT
MARKETS FOR OTHER SIGNIFICANT
IDENTICAL OBSERVABLE UNOBSERVABLE
INVESTMENTS INPUTS INPUTS
(LEVEL 1)* (LEVEL 2)* (LEVEL 3) TOTAL
WORLD PRECIOUS MINERALS FUND
Investments in securities**
Common Stocks:
Diamond/Precious Stones $ 11,503,029 $ -- $ -- $ 11,503,029
Gold Mining 496,675,504 351,392 -- 497,026,896
Metal - Copper 6,895,025 -- -- 6,895,025
Oil Companies - Exploration &
Production 12,552,442 -- -- 12,552,442
Platinum 10,843,596 -- -- 10,843,596
All Other Common Stocks 161,647,144 -- -- 161,647,144
Exchange-Traded Funds 20,273,695 -- -- 20,273,695
Warrants:
Diversified Minerals 861,888 -- -- 861,888
Gold Mining 37,130,333 1,002,080 -- 38,132,413
Medical - Hospitals -- -- -- --
Metal - Diversified 160,091 2,580,969 -- 2,741,060
Silver Mining 9,711,957 2,761,590 -- 12,473,547
All Other Warrants 1,126,163 -- -- 1,126,163
Special Warrants:
Gold/Mineral Exploration &
Development -- -- -- --
Purchased Options 930,000 -- -- 930,000
Units:
Gold Mining -- 1,426,953 -- 1,426,953
Platinum -- 730,623 -- 730,623
Subscription Receipts:
Gold Mining -- 1,426,953 -- 1,426,953
Repurchase Agreement 46,193,553 -- -- 46,193,553
------------ ------------ ------------ ------------
Total $816,504,420 $ 10,280,560 $ -- $826,784,980
============ ============ ============ ============
Other Financial Instruments***
Foreign Currency $ (22,186) $ -- $ -- $ (22,186)
GOLD AND PRECIOUS METALS FUND
Investments in securities**
Common Stocks $222,996,976 $ -- $ -- $222,996,976
Exchange-Traded Funds 9,670,901 -- -- 9,670,901
Warrants:
Gold Mining 19,667,597 -- -- 19,667,597
Medical - Hospitals -- -- -- --
Silver Mining 13,160,434 1,487,010 -- 14,647,444
All Other Warrants 935,592 -- -- 935,592
Purchased Options 363,750 -- -- 363,750
Notes:
Gold Mining -- 4,271,600 -- 4,271,600
Repurchase Agreement 29,598,697 -- -- 29,598,697
------------ ------------ ------------ ------------
Total $296,393,947 $ 5,758,610 $ -- $302,152,557
============ ============ ============ ============
143
NOTES TO PORTFOLIOS OF INVESTMENTS December 31, 2010
QUOTED PRICES
IN ACTIVE SIGNIFICANT
MARKETS FOR OTHER SIGNIFICANT
IDENTICAL OBSERVABLE UNOBSERVABLE
INVESTMENTS INPUTS INPUTS
(LEVEL 1)* (LEVEL 2)* (LEVEL 3) TOTAL
EASTERN EUROPEAN FUND
Investments in securities**
Common Stocks:
Commercial Banks - Non US $ 73,464,507 $ 44,845,048 $ -- $118,309,555
Investment Companies -- 721,952 -- 721,952
Oil Companies - Exploration &
Production 40,233,553 4,748,949 -- 44,982,502
Oil Companies - Integrated 41,832,015 11,866,442 -- 53,698,457
All Other Common Stocks 208,831,812 -- -- 208,831,812
Real Estate Investment Trust 1,284,130 -- -- 1,284,130
Warrants:
Metal - Diversified -- -- -- --
All Other Warrants 3,248,772 -- -- 3,248,772
Purchased Option 300,000 -- -- 300,000
Repurchase Agreement 9,614,559 -- -- 9,614,559
------------ ------------ ------------ ------------
Total $378,809,348 $ 62,182,391 $ -- $440,991,739
============ ============ ============ ============
GLOBAL EMERGING MARKETS FUND
Investments in securities**
Common Stocks:
Automotive - Cars & Light Trucks $ 227,407 $ 123,684 $ -- $ 351,091
Chemicals - Fibers -- 264,782 -- 264,782
Commercial Banks - Non US 1,322,197 638,683 -- 1,960,880
Electronic Components -
Semiconductors -- 175,935 -- 175,935
Investment Companies -- 111,070 -- 111,070
Medical Labs & Testing Services -- 327,037 -- 327,037
Oil Companies - Exploration &
Production 507,253 241,039 -- 748,292
Oil Companies - Integrated 227,391 375,308 -- 602,699
Retail - Apparel/Shoe -- 226,681 -- 226,681
Shipbuilding -- 197,366 -- 197,366
Sugar 170,250 199,647 -- 369,897
Web Portals/Internet Service
Providers -- 144,000 -- 144,000
All Other Common Stocks 7,097,937 -- -- 7,097,937
Exchange-Traded Funds 531,467 -- -- 531,467
Warrants:
Metal - Diversified 129 -- -- 129
Purchased Option 9,750 -- -- 9,750
Repurchase Agreement 137,473 -- -- 137,473
------------ ------------ ------------ ------------
Total $ 10,231,254 $ 3,025,232 $ -- $ 13,256,486
============ ============ ============ ============
144
NOTES TO PORTFOLIOS OF INVESTMENTS December 31, 2010
QUOTED PRICES
IN ACTIVE SIGNIFICANT
MARKETS FOR OTHER SIGNIFICANT
IDENTICAL OBSERVABLE UNOBSERVABLE
INVESTMENTS INPUTS INPUTS
(LEVEL 1)* (LEVEL 2)* (LEVEL 3) TOTAL
CHINA REGION FUND
Investments in securities**
Common Stocks:
Automotive - Cars & Light Trucks $ 690,640 $ 773,027 $ -- $ 1,463,667
Chemicals - Fibers -- 661,954 -- 661,954
Commercial Banks - Non US 1,611,935 313,828 -- 1,925,763
Cosmetics & Toiletries -- 347,684 -- 347,684
Diversified Operations 1,238,212 600,223 -- 1,838,435
Electronic Components -
Miscellaneous 441,001 -- -- 441,001
Internet Telephony -- -- -- --
Shipbuilding -- 1,184,195 -- 1,184,195
All Other Common Stocks 39,374,221 -- -- 39,374,221
Real Estate Investment Trust 466,066 -- -- 466,066
Exchange-Traded Funds 1,613,812 -- -- 1,613,812
Repurchase Agreement 3,542,867 -- -- 3,542,867
------------ ------------ ------------ ------------
Total $ 48,978,754 $ 3,880,911 $ -- $ 52,859,665
============ ============ ============ ============
<FN>
*Significant transfers between Levels 1 and 2 included securities valued
at $1,762,576, $211,274,002, $2,458,142 and $10,980,368 at December 31,
2010, in the Global MegaTrends, Eastern European, Global Emerging
Markets and China Region Funds, respectively, included in Level 1 that
had previously been included in Level 2 at December 31, 2009. These
changed were primarily the result of certain foreign securities using a
systematic fair value model at the prior period end but not at December
31, 2010.
**Refer to the portfolio of investments for a detailed list of the
fund's investments.
***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>
The following is a reconciliation of assets for which significant
unobservable inputs (Level 3) were used in determining fair value during
the period January 1, 2010, through December 31, 2010:
CHANGE IN
UNREALIZED
APPRECIATION
(DEPRECIATION)
CHANGE IN TRANSFERS FROM
BEGINNING TOTAL UNREALIZED NET IN AND/OR ENDING INVESTMENTS
BALANCE REALIZED APPRECIATION PURCHASES OUT OF BALANCE HELD AS OF
12/31/09 GAIN (LOSS) (DEPRECIATION) (SALES) LEVEL 3* 12/31/10 12/31/10
----------------------------------------------------------------------------------------------------------------------------------
HOLMES GROWTH FUND
Investments in Securities
Common Stock:
Financial Services $ 78,523 $ -- $ 4,200 $ -- $ -- $ 82,723 $ 4,200
Real Estate Operating/
Development -- -- -- 100,000 -- 100,000 --
Convertible Debenture:
Metal & Mineral Mining -- -- -- 380,000 -- 380,000 --
-----------------------------------------------------------------------------------------------------------------------------------
Total Investments in Securities $ 78,523 $ -- $ 4,200 $ 480,000 $ -- $ 562,723 $ 4,200
-----------------------------------------------------------------------------------------------------------------------------------
145
NOTES TO PORTFOLIOS OF INVESTMENTS December 31, 2010
CHANGE IN
UNREALIZED
APPRECIATION
(DEPRECIATION)
CHANGE IN TRANSFERS FROM
BEGINNING TOTAL UNREALIZED NET IN AND/OR ENDING INVESTMENTS
BALANCE REALIZED APPRECIATION PURCHASES OUT OF BALANCE HELD AS OF
12/31/09 GAIN (LOSS) (DEPRECIATION) (SALES) LEVEL 3* 12/31/10 12/31/10
-----------------------------------------------------------------------------------------------------------------------------------
GLOBAL MEGATRENDS FUND
Investments in Securities
Common Stock:
Electric - Generation $ -- $ -- $ (17) $ 23,375 $ -- $ 23,358 $ (17)
Real Estate Operating/
Development -- -- (92) 326,625 -- 326,533 (92)
Convertible Debenture:
Metal & Mineral Mining -- -- -- 520,000 -- 520,000 --
-----------------------------------------------------------------------------------------------------------------------------------
Total Investments in Securities $ -- $ -- $ (109) $ 870,000 $ -- $ 869,891 $ (109)
-----------------------------------------------------------------------------------------------------------------------------------
GLOBAL RESOURCES FUND
Investments in Securities
Common Stock:
Coal $ -- $ -- $ -- $ 2,400,000 $ -- $ 2,400,000 $ --
Electric - Generation -- -- (2) 506,456 -- 506,454 (2)
Energy - Alternate Sources -- -- -- -- -- -- --
Gold Mining -- -- -- -- -- -- --
Metal - Copper -- -- -- -- -- -- --
Mining Services 247,019 -- 33,976 -- -- 280,995 33,976
Natural Resource Technology -- -- -- -- 7,500 7,500 --
Non - Ferrous Metals 525,000 -- 1,545,000 -- (7,500) 2,062,500 1,545,000
Oil Companies - Exploration &
Production -- -- 23,929,598 -- 10,001,196 33,930,794 23,929,598
Oil Refining & Marketing 537,136 -- (112,734) -- -- 424,402 (112,734)
Platinum 20,966 40,649 54,034 (115,649) -- -- --
Real Estate Operating/
Development -- -- -- 7,443,544 -- 7,443,544 --
Warrants:
Mining Services -- -- -- -- -- -- --
Oil & Gas Exploration and
Production -- -- -- -- -- -- --
Oil Companies - Exploration &
Production -- -- 9,165,835 -- -- 9,165,835 9,165,835
Units:
Diversified Minerals 809,023 -- (3,717) -- (805,306) -- --
Oil & Gas Exploration &
Production 10,001,196 -- -- -- (10,001,196) -- --
Convertible Debenture:
Metal & Mineral Mining -- -- -- 4,900,000 -- 4,900,000 --
----------------------------------------------------------------------------------------------------------------------------------
Total Investments in Securities $12,140,340 $ 40,649 $34,611,990 $15,134,351 $ (805,306) $61,122,024 $34,561,673
----------------------------------------------------------------------------------------------------------------------------------
146
NOTES TO PORTFOLIOS OF INVESTMENTS December 31, 2010
CHANGE IN
UNREALIZED
APPRECIATION
(DEPRECIATION)
CHANGE IN TRANSFERS FROM
BEGINNING TOTAL UNREALIZED NET IN AND/OR ENDING INVESTMENTS
BALANCE REALIZED APPRECIATION PURCHASES OUT OF BALANCE HELD AS OF
12/31/09 GAIN (LOSS) (DEPRECIATION) (SALES) LEVEL 3* 12/31/10 12/31/10
-----------------------------------------------------------------------------------------------------------------------------------
WORLD PRECIOUS MINERALS FUND
Investments in Securities
Common Stock:
Diamonds/Precious Stones $ -- $ -- $ -- $ -- $ -- $ -- $ --
Gold Mining -- -- 739,238 2,888,544 (3,627,782) -- --
Gold/Mineral Exploration &
Development 3,124,059 (527,295) 461,215 (1,191,761) (1,866,218) -- --
Metal - Copper -- -- -- -- -- -- --
Oil Companies - Exploration &
Production -- -- -- -- -- -- --
Platinum 188,690 365,843 486,310 (1,040,843) -- -- --
Warrants:
Gold/Mineral Exploration and
Development 241,427 346,809 (241,427) (346,809) -- -- --
Special Warrants:
Gold/Mineral Exploration and
Development -- -- -- -- -- -- --
Notes:
Gold Mining 1,027,682 (333,913) 445,070 (1,138,839) -- -- --
Units:
Gold Mining 1,855,994 -- (16,805) -- (1,839,189) -- --
-----------------------------------------------------------------------------------------------------------------------------------
Total Investments in Securities $ 6,437,852 $ (148,556) $ 1,873,601 $ (829,708) $ (7,333,189) $ -- $ --
-----------------------------------------------------------------------------------------------------------------------------------
GOLD AND PRECIOUS METALS
Investments in Securities
Notes:
Gold Mining $ 285,467 $ (92,754) $ 123,631 $ (316,344) $ -- $ -- $ --
-----------------------------------------------------------------------------------------------------------------------------------
Total Investments in Securities $ 285,467 $ (92,754) $ 123,631 $ (316,344) $ -- $ -- $ --
--------------------------------------------------------------------------------------------------------------------- -------------
<FN>
* The Funds' policy is to recognize transfers in and transfers out as of the end of the reporting period.
</FN>
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 year ended December 31, 2010.
SHARES OF AFFILIATED COMPANIES
HOLMES GROWTH FUND DECEMBER 31, 2009 ADDITIONS REDUCTIONS DECEMBER 31, 2010
------------------------------------------------------------------------------------------------
MCO Capital, Inc. 1,000,000 -- -- 1,000,000
At December 31, 2010, the value of investments in affiliated companies
was $82,723, representing 0.20% of net assets, and the total cost was
$78,441. There were no realized gains or losses on transactions. There
was no income earned for the year.
SHARES OF AFFILIATED COMPANIES
GLOBAL RESOURCES FUND DECEMBER 31, 2009 ADDITIONS REDUCTIONS DECEMBER 31, 2010
------------------------------------------------------------------------------------------------
Agriterra Ltd. 46,380,108 119,892 -- 46,500,000
Natasa Mining Ltd. 1,099,160 -- (60,810)(a) 1,038,350
NiMin Energy Corp. 2,631,580 -- (731,580)(a) 1,900,000
Prima Colombia Hardwood, Inc. -- 15,741,665 (775,833) 14,965,832
Range Energy Resources, Inc.
(formerly Range Metals, Inc.) 15,000,000 -- -- 15,000,000
Ronter, Inc. -- 7,568,396 -- 7,568,396
147
NOTES TO PORTFOLIOS OF INVESTMENTS December 31, 2010
At December 31, 2010, the value of investments in affiliated companies
was $10,630,066, representing 1.14% of net assets, and the total cost
was $13,861,807. Net realized losses on transactions were $468,768, and
there was no income earned for the year.
SHARES OF AFFILIATED COMPANIES
WORLD PRECIOUS MINERALS FUND DECEMBER 31, 2009 ADDITIONS REDUCTIONS DECEMBER 31, 2010
------------------------------------------------------------------------------------------------
Agriterra Ltd. 28,207,200 592,800 --(a) 28,800,000
Aldridge Minerals, Inc. 1,145,100 169,900 --(a) 1,315,000
Candente Gold Corp. 4,875,000 645,000 (120,000) 5,400,000
Carnavale Resources Ltd. 3,500,000 -- --(a) 3,500,000
Chesapeake Gold Corp. 2,042,219 7,781 (822,800)(a) 1,227,200
Golden Predator Corp. 989,000 2,940,000 (80,000) 3,849,000
Gran Colombia Gold Corp. -- 10,816,200 (2,500) 10,813,700
Hainan Mining Corp. plc 2,018,700 -- (2,018,700)(a) --
Klondex Mines Ltd. 2,575,000 82,000 (37,000) 2,620,000
Medoro Resources Ltd. 10,687,557 5,524,988 (7,148,371) 9,064,174
Moss Lake Gold Mines Ltd. 3,182,000 118,000 -- 3,300,000
PMI Gold Corp. -- 10,037,500 (87,500) 9,950,000
Rochester Resources Ltd. 7,130,000 625,000 -- 7,755,000
Romarco Minerals, Inc. 16,845,706 4,468,000 (3,493,000)(a) 17,820,706
Rye Patch Gold Corp. 3,800,000 -- (2,000)(a) 3,798,000
At December 31, 2010, the value of investments in affiliated companies
was $67,858,561, representing 8.19% of net assets, and the total cost
was $41,792,306. Net realized gains on transactions were $10,671,002,
and there was no income earned for the year.
(a) At December 31, 2010, the company is no longer defined as an
affiliate, although it was an affiliated company during the year.
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
HOLMES GROWTH FUND DATE SHARE/UNIT
----------------------------------------------------------------------------------------
Grupo Empresarial Ibiza S.A., Convertible Debenture 04/19/10 $100.00
MCO Capital, Inc., 144A 12/04/09 $0.08
Pacific Infrastructure, Inc. 11/22/10 $1.00
As of December 31, 2010, the total cost of restricted securities was
$558,441 and the total value was $562,723, representing 1.39% of net
assets.
ACQUISITION COST PER
GLOBAL MEGATRENDS FUND DATE SHARE/UNIT
----------------------------------------------------------------------------------------
Grupo Empresarial Ibiza S.A., Convertible Debenture 04/19/10 $100.00
Pacific Infrastructure, Inc. 08/06/10-11/22/10 $1.00
Ronter, Inc. 08/06/10 $0.07
148
NOTES TO PORTFOLIOS OF INVESTMENTS December 31, 2010
As of December 31, 2010, the total cost of restricted securities was
$870,000 and the total value was $869,891, representing 4.28% of net
assets.
ACQUISITION COST PER
GLOBAL RESOURCES FUND DATE SHARE/UNIT
------------------------------------------------------------------------------------------
Anfield Nickel Corp., 144A 10/22/10 $3.65
GoviEX Uranium, Inc. 10/04/07 $1.96
Grupo Empresarial Ibiza S.A., Convertible Debenture 04/19/10 $100.00
HRT Participacoes Em Petroleo 10/28/09 $141.20
HRT Participacoes Em Petroleo, Warrant
(November 2013) 10/28/09 $0.00
I-Pulse, Inc. (formerly GoviEx IP Holdings, Inc.) 10/04/07 $1.88
I-Pulse, Inc., Warrants (March 2011) 10/04/07 $0.00
Osmium Holdings S.A. 10/22/96-01/29/98 $987.07
Pacific Coal, S.A., 144A 09/10/10 $1.00
Pacific Infrastructure, Inc. 08/06/10-11/22/10 $1.00
Ronter, Inc. 08/06/10 $0.07
Value Creation, Inc. 08/11/06 $10.60
As of December 31, 2010, the total cost of restricted securities was
$31,119,638 and the total value was $61,727,873, representing 6.64% of
net assets.
ACQUISITION COST PER
WORLD PRECIOUS MINERALS FUND DATE SHARE/UNIT
----------------------------------------------------------------------------------------
Canyon Resources Ltd. 12/15/10 $0.38
Elissa Resources Ltd. 04/19/10 $0.00
Miocene Metals Ltd., Special Warrants
(October 2011) 04/28/10 $0.00
Osmium Holdings S.A. 10/22/96-01/29/98 $1,280.75
Petaquilla Minerals Ltd., Units 12/21/10 $0.98
Petaquilla Minerals Ltd., Subscription Receipts 12/21/10 $0.98
Seafield Resources Ltd., Units 12/20/10 $0.49
Western Exploration & Development Ltd., 144A, Special
Warrants (December 2049) 08/14/97 $0.50
As of December 31, 2010, the total cost of restricted securities was
$5,030,440 and the total value was $3,935,921, representing 0.47% of net
assets.
149
STATEMENTS OF ASSETS AND LIABILITIES
U.S. TREASURY
SECURITIES
CASH FUND
Investments, at identified cost $99,653,581
===========
ASSETS
---------------------------------------------------------------------------
Investments, at value:
Securities $39,998,579
Repurchase agreements 59,655,002
Cash --
Receivables:
Interest 252
Capital shares sold 447,682
From adviser 23,336
Other assets 28,151
---------------------------------------------------------------------------
TOTAL ASSETS 100,153,002
---------------------------------------------------------------------------
LIABILITIES
---------------------------------------------------------------------------
Payables:
Capital shares redeemed 606,654
Adviser and affiliates 18,376
Dividends and distributions --
Accounts payable and accrued expenses 36,742
---------------------------------------------------------------------------
TOTAL LIABILITIES 661,772
---------------------------------------------------------------------------
NET ASSETS $99,491,230
===========
NET ASSETS CONSIST OF:
---------------------------------------------------------------------------
Paid-in capital $99,490,323
Accumulated undistributed net investment income 907
Accumulated net realized gain (loss) on investments --
Net unrealized appreciation of investments --
-----------
Net assets applicable to capital shares outstanding $99,491,230
-----------
BY SHARE CLASS
NET ASSETS
---------------------------------------------------------------------------
Investor class $99,491,230
CAPITAL SHARES OUTSTANDING, AN UNLIMITED NUMBER OF NO PAR
SHARES AUTHORIZED
---------------------------------------------------------------------------
Investor class 99,566,483
NET ASSET VALUE, PUBLIC OFFERING PRICE, REDEMPTION PRICE,
PER SHARE
---------------------------------------------------------------------------
Investor class $ 1.00
See accompanying notes to financial statements.
150
December 31, 2010
U.S. GOVERNMENT
SECURITIES NEAR-TERM TAX FREE
SAVINGS FUND TAX FREE FUND FUND
Investments, at identified cost $203,598,089 $28,299,557 $19,513,936
============ =========== ===========
ASSETS
-------------------------------------------------------------------------------------------------------------------------------
Investments, at value:
Securities $203,598,089 $26,621,257 $19,321,614
Repurchase agreements -- 2,285,040 333,047
Cash 771 8,750 --
Receivables:
Interest 98,511 322,793 283,588
Capital shares sold 472,566 27,418 3,078
From adviser 16,232 1,773 --
Other assets 42,718 5,621 5,975
-------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 204,228,887 29,272,652 19,947,302
-------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
-------------------------------------------------------------------------------------------------------------------------------
Payables:
Capital shares redeemed 327,295 81,901 102,135
Adviser and affiliates 21,675 3,951 3,927
Dividends and distributions -- 10,465 12,102
Accounts payable and accrued expenses 45,224 38,490 34,894
-------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 394,194 134,807 153,058
-------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $203,834,693 $29,137,845 $19,794,244
============ =========== ===========
NET ASSETS CONSIST OF:
-------------------------------------------------------------------------------------------------------------------------------
Paid-in capital $203,833,656 $28,804,702 $20,077,287
Accumulated undistributed net investment income -- 17,640 33,463
Accumulated net realized gain (loss) on investments 1,037 (291,237) (457,231)
Net unrealized appreciation of investments -- 606,740 140,725
------------ ----------- -----------
Net assets applicable to capital shares outstanding $203,834,693 $29,137,845 $19,794,244
============ =========== ===========
BY SHARE CLASS
NET ASSETS
-------------------------------------------------------------------------------------------------------------------------------
Investor class $203,834,693 $29,137,845 $19,794,244
CAPITAL SHARES OUTSTANDING, AN UNLIMITED NUMBER OF NO PAR
SHARES AUTHORIZED
-------------------------------------------------------------------------------------------------------------------------------
Investor class 204,001,900 13,130,794 1,647,825
NET ASSET VALUE, PUBLIC OFFERING PRICE, REDEMPTION PRICE,
PER SHARE
-------------------------------------------------------------------------------------------------------------------------------
Investor class $ 1.00 $ 2.22 $ 12.01
151
STATEMENTS OF ASSETS AND LIABILITIES
ALL AMERICAN HOLMES GROWTH
EQUITY FUND FUND
Investments, at identified cost $15,256,095 $33,350,869
=========== ===========
ASSETS
--------------------------------------------------------------------------------
Investments, at value:
Securities of unaffiliated issuers $16,961,886 $38,932,613
Securities of affiliated issuers -- 82,723
Repurchase agreements 971,270 1,872,887
Cash -- --
Foreign currencies (Cost $0, $0, $0, $0 and
$4,393,298) -- --
Receivables:
Investments sold 33,849 1,030,483
Dividends and interest 13,294 37,759
Capital shares sold 43,505 109,343
Other assets 16,748 20,814
--------------------------------------------------------------------------------
TOTAL ASSETS 18,040,552 42,086,622
--------------------------------------------------------------------------------
LIABILITIES
--------------------------------------------------------------------------------
Payables:
Investments purchased 196,176 1,360,483
Capital shares redeemed 24,542 23,173
Adviser and affiliates 23,229 60,762
Accounts payable and accrued expenses 36,703 37,992
Unrealized depreciation on foreign currency
exchange contracts - Note 2 B -- --
Due to custodian -- --
--------------------------------------------------------------------------------
TOTAL LIABILITIES 280,650 1,482,410
--------------------------------------------------------------------------------
NET ASSETS $17,759,902 $40,604,212
=========== ===========
NET ASSETS CONSIST OF:
--------------------------------------------------------------------------------
Paid-in capital $18,926,295 $37,903,874
Accumulated undistributed net investment income
(distributions in excess of net investment
income) 9,718 (386,452)
Accumulated net realized loss on investments
and foreign currencies (3,853,172) (4,450,437)
Net unrealized appreciation of investments and
other assets and liabilities denominated in
foreign currencies 2,677,061 7,537,227
----------- -----------
Net assets applicable to capital shares
outstanding $17,759,902 $40,604,212
=========== ===========
BY SHARE CLASS
NET ASSETS
--------------------------------------------------------------------------------
Investor class $17,759,902 $40,604,212
Institutional class n/a n/a
CAPITAL SHARES OUTSTANDING, AN UNLIMITED NUMBER
OF NO PAR SHARES AUTHORIZED
--------------------------------------------------------------------------------
Investor class 781,785 2,176,676
Institutional class n/a n/a
NET ASSET VALUE, PUBLIC OFFERING PRICE,
REDEMPTION PRICE, PER SHARE
--------------------------------------------------------------------------------
Investor class $ 22.72 $ 18.65
Institutional class N/A N/A
See accompanying notes to financial statements.
152
December 31, 2010
GLOBAL MEGATRENDS GLOBAL RESOURCES WORLD PRECIOUS
FUND FUND MINERALS FUND
Investments, at identified cost $16,666,752 $ 745,736,603 $592,850,843
=========== ============== ============
ASSETS
---------------------------------------------------------------------------------------------------------------
Investments, at value:
Securities of unaffiliated issuers $20,124,557 $ 859,606,574 $712,732,866
Securities of affiliated issuers -- 10,630,066 67,858,561
Repurchase agreements 380,598 72,308,373 46,193,553
Cash -- 1,914,971 --
Foreign currencies (Cost $0, $0, $0, $0 and
$4,393,298)
Receivables: -- -- 4,536,978
Investments sold 407,608 6,643,459 6,129,060
Dividends and interest 23,128 237,530 108,645
Capital shares sold 11,306 3,058,372 1,505,477
Other assets 19,727 115,602 116,238
---------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 20,966,924 954,514,947 839,181,378
---------------------------------------------------------------------------------------------------------------
LIABILITIES
---------------------------------------------------------------------------------------------------------------
Payables:
Investments purchased 600,358 21,899,949 8,191,510
Capital shares redeemed 12,287 1,723,054 795,423
Adviser and affiliates 11,324 1,202,105 1,147,190
Accounts payable and accrued expenses 41,257 184,529 193,953
Unrealized depreciation on foreign currency
exchange contracts - Note 2 B -- -- 22,186
Due to custodian -- 24,137 --
---------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 665,226 25,033,774 10,350,262
---------------------------------------------------------------------------------------------------------------
NET ASSETS $20,301,698 $ 929,481,173 $828,831,116
=========== ============== ============
NET ASSETS CONSIST OF:
---------------------------------------------------------------------------------------------------------------
Paid-in capital $31,242,665 $1,160,548,561 $760,641,199
Accumulated undistributed net investment income
(distributions in excess of net investment
income) 69,637 (19,036,655) (71,805,230)
Accumulated net realized loss on investments
and foreign currencies (14,849,038) (408,837,930) (93,987,720)
Net unrealized appreciation of investments and
other assets and liabilities denominated in
foreign currencies 3,838,434 196,807,197 233,982,867
----------- -------------- ------------
Net assets applicable to capital shares $20,301,698 $ 929,481,173 $828,831,116
outstanding =========== ============== ============
BY SHARE CLASS
NET ASSETS
---------------------------------------------------------------------------------------------------------------
Investor class $16,331,649 $ 911,558,647 $826,598,066
Institutional class 3,970,049 17,922,526 2,233,050
CAPITAL SHARES OUTSTANDING, AN UNLIMITED NUMBER
OF NO PAR SHARES AUTHORIZED
---------------------------------------------------------------------------------------------------------------
Investor class 1,850,538 76,514,447 37,094,244
Institutional class 451,818 1,496,622 100,173
NET ASSET VALUE, PUBLIC OFFERING PRICE,
REDEMPTION PRICE, PER SHARE
---------------------------------------------------------------------------------------------------------------
Investor class $ 8.83 $ 11.91 $ 22.28
Institutional class 8.79 11.98 22.29
153
STATEMENTS OF ASSETS AND LIABILITIES
GOLD AND PRECIOUS
METALS FUND
Investments, at identified cost $214,595,267
============
ASSETS
-------------------------------------------------------------------------------
Investments, at value:
Securities $272,553,860
Repurchase agreements 29,598,697
Cash 148,551
Foreign currencies (Cost $0, $0, $303,945 and $0) --
Receivables:
Investments sold 850,661
Dividends and interest 111,714
Capital shares sold 491,727
Other assets 67,700
-------------------------------------------------------------------------------
TOTAL ASSETS 303,822,910
-------------------------------------------------------------------------------
LIABILITIES
-------------------------------------------------------------------------------
Payables:
Investments purchased 2,205,948
Capital shares redeemed 176,807
Adviser and affiliates 395,163
Accounts payable and accrued expenses 96,209
-------------------------------------------------------------------------------
TOTAL LIABILITIES 2,874,127
-------------------------------------------------------------------------------
NET ASSETS $300,948,783
============
NET ASSETS CONSIST OF:
-------------------------------------------------------------------------------
Paid-in capital $219,011,279
Distributions in excess of net investment income (4,185,270)
Accumulated net realized loss on investments and foreign
currencies (1,433,785)
Net unrealized appreciation of investments and other assets
and liabilities denominated in foreign currencies 87,556,559
------------
Net assets applicable to capital shares outstanding $300,948,783
============
BY SHARE CLASS
NET ASSETS
-------------------------------------------------------------------------------
Investor class $300,948,783
CAPITAL SHARES OUTSTANDING, AN UNLIMITED NUMBER OF NO PAR
SHARES AUTHORIZED
-------------------------------------------------------------------------------
Investor class 15,356,062
NET ASSET VALUE, PUBLIC OFFERING PRICE, REDEMPTION PRICE,
PER SHARE
-------------------------------------------------------------------------------
Investor class $ 19.60
See accompanying notes to financial statements.
154
December 31, 2010
EASTERN GLOBAL EMERGING CHINA
EUROPEAN FUND MARKETS FUND REGION FUND
Investments, at identified cost $298,661,111 $ 11,526,795 $ 46,235,525
------------ ------------ ------------
ASSETS
---------------------------------------------------------------------------------------------------------------------
Investments, at value:
Securities $431,377,180 $ 13,119,013 $ 49,316,798
Repurchase agreements 9,614,559 137,473 3,542,867
Cash 2,373,892 -- --
Foreign currencies (Cost $0, $0, $303,945 and $0) -- 311,329 --
Receivables: 42,793 -- --
Investments sold
Dividends and interest 1,574,322 36,855 14,837
Capital shares sold 146,932 170,208 4,274
Other assets 73,961 27,754 27,104
---------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 445,203,639 13,802,632 52,905,880
---------------------------------------------------------------------------------------------------------------------
LIABILITIES
---------------------------------------------------------------------------------------------------------------------
Payables:
Investments purchased 3,505,547 144,168 725,933
Capital shares redeemed 884,162 184,211 193,727
Adviser and affiliates 671,609 18,119 82,937
Accounts payable and accrued expenses 105,180 53,273 59,887
---------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 5,166,498 399,771 1,062,484
---------------------------------------------------------------------------------------------------------------------
NET ASSETS $440,037,141 $ 13,402,861 $ 51,843,396
------------ ------------ ------------
NET ASSETS CONSIST OF:
---------------------------------------------------------------------------------------------------------------------
Paid-in capital $672,675,014 $ 24,000,039 $ 60,753,969
Distributions in excess of net investment income (449,559) (58,730) (454,818)
Accumulated net realized loss on investments and foreign
currencies (374,534,947) (12,275,600) (15,079,893)
Net unrealized appreciation of investments and other assets
and liabilities denominated in foreign currencies 142,346,633 1,737,152 6,624,138
------------ ------------ ------------
Net assets applicable to capital shares outstanding $440,037,141 $ 13,402,861 $ 51,843,396
------------ ------------ ------------
BY SHARE CLASS
NET ASSETS
---------------------------------------------------------------------------------------------------------------------
Investor class $440,037,141 $ 13,402,861 $ 51,843,396
CAPITAL SHARES OUTSTANDING, AN UNLIMITED NUMBER OF NO PAR
SHARES AUTHORIZED
---------------------------------------------------------------------------------------------------------------------
Investor class 40,717,369 1,462,067 5,474,781
NET ASSET VALUE, PUBLIC OFFERING PRICE, REDEMPTION PRICE,
PER SHARE
---------------------------------------------------------------------------------------------------------------------
Investor class $ 10.81 $ 9.17 $ 9.47
155
STATEMENTS OF OPERATIONS
U.S. TREASURY
SECURITIES
CASH FUND
NET INVESTMENT INCOME
INCOME:
---------------------------------------------------------------------------
Interest and other $ 167,583
EXPENSES:
---------------------------------------------------------------------------
Management fee 522,585
Administrative services fee 83,614
Transfer agent fees and expenses 227,444
Accounting service fees and expenses 19,838
Professional fees 34,291
Custodian fees 63,193
Shareholder reporting expenses 26,096
Registration fees 30,374
Trustee fees and expenses 18,936
Miscellaneous expenses 33,750
----------
Total expenses before reductions 1,060,121
Expenses offset - Note 1 H (3)
Expenses reimbursed - Note 3 (902,994)
-----------
NET EXPENSES 157,124
---------------------------------------------------------------------------
NET INVESTMENT INCOME 10,459
---------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Realized gain (loss) from securities --
Net change in unrealized appreciation (depreciation) of
Investments --
---------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS --
---------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 10,459
==========
See accompanying notes to financial statements.
156
For the Year Ended December 31, 2010
U.S. GOVERNMENT NEAR-TERM
SECURITIES TAX FREE
SAVINGS FUND FUND TAX FREE FUND
NET INVESTMENT INCOME
INCOME:
-----------------------------------------------------------------------------------------------------------
Interest and other $ 376,524 $ 771,839 $ 929,181
EXPENSES:
-----------------------------------------------------------------------------------------------------------
Management fee 1,145,869 132,475 164,008
Administrative services fee 183,415 21,196 17,494
Transfer agent fees and expenses 281,415 49,960 48,064
Accounting service fees and expenses 37,159 42,243 36,051
Professional fees 43,735 37,089 34,906
Custodian fees 55,914 15,478 12,933
Shareholder reporting expenses 37,226 6,737 7,356
Registration fees 27,920 14,278 15,790
Trustee fees and expenses 18,936 18,937 18,937
Miscellaneous expenses 61,274 6,836 7,897
----------- --------- ---------
Total expenses before reductions 1,892,863 345,229 363,436
Expenses offset - Note 1 H -- (68) (123)
Expenses reimbursed - Note 3 (1,539,262) (225,934) (210,238)
----------- --------- ---------
NET EXPENSES 353,601 119,227 153,075
-----------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 22,923 652,612 776,106
-----------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Realized gain (loss) from securities 1,037 (2,532) 63,643
Net change in unrealized appreciation (depreciation) of
Investments -- 21,885 (339,473)
-----------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 1,037 19,353 (275,830)
-----------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 23,960 $ 671,965 $ 500,276
=========== ========= =========
157
STATEMENTS OF OPERATIONS
ALL AMERICAN HOLMES
EQUITY FUND GROWTH FUND
NET INVESTMENT INCOME
INCOME:
-------------------------------------------------------------------------------------
Dividends from unaffiliated issuers $ 358,911 $ 214,684
Foreign tax withheld on dividends (331) (13,274)
---------- ----------
Net dividends 358,580 201,410
Interest and other 1,454 37,136
---------- ----------
TOTAL INCOME 360,034 238,546
EXPENSES:
-------------------------------------------------------------------------------------
Management fee 112,663 318,100
Administrative services fee 13,218 29,634
Administrative services fee - Investor class -- --
Administrative services fee - Institutional class -- --
Transfer agent fees and expenses - Investor class 100,795 95,497
Transfer agent fees and expenses - Institutional
class -- --
Accounting service fees and expenses 20,500 26,700
Professional fees 35,832 36,982
Professional fees - Investor class -- --
Professional fees - Institutional class -- --
Distribution plan fee 41,307 92,606
Custodian fees 18,088 38,742
Shareholder reporting expenses - Investor class 23,687 16,736
Shareholder reporting expenses - Institutional class -- --
Registration fees 16,049 17,153
Registration fees - Investor class -- --
Registration fees - Institutional class -- --
Trustee fees and expenses 18,937 18,936
Miscellaneous expenses 21,125 24,409
---------- ----------
Total expenses before reductions 422,201 715,495
Expenses offset - Note 1 H (195) (102)
Expenses reimbursed - Note 3 (79,186) (20)
---------- ----------
NET EXPENSES 342,820 715,373
-------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 17,214 (476,827)
-------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) from:
Securities from unaffiliated issuers 2,249,349 6,233,735
Securities from affiliated issuers -- --
Written options 57,396 (23,967)
Foreign currency transactions -- (9,344)
---------- ----------
NET REALIZED GAIN 2,306,745 6,200,424
---------- ----------
Net change in unrealized appreciation
(depreciation) of:
Investments 160,595 1,602,076
Written options 672 1,512
Other assets and liabilities denominated in
foreign currencies -- 78
---------- ----------
NET UNREALIZED APPRECIATION (DEPRECIATION) 161,267 1,603,666
-------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 2,468,012 7,804,090
-------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $2,485,226 $7,327,263
========== ==========
See accompanying notes to financial statements.
158
For the Year Ended December 31, 2010
GLOBAL MEGATRENDS GLOBAL RESOURCES WORLD PRECIOUS
FUND FUND MINERALS FUND
NET INVESTMENT INCOME
INCOME:
--------------------------------------------------------------------------------------------------------------------------
Dividends from unaffiliated issuers $ 578,758 $ 4,381,827 $ 1,090,187
Foreign tax withheld on dividends (32,249) (146,826) (108,497)
----------- ------------ ------------
Net dividends 546,509 4,235,001 981,690
Interest and other 49,693 655,905 132,426
----------- ------------ ------------
TOTAL INCOME 596,202 4,890,906 1,114,116
EXPENSES:
--------------------------------------------------------------------------------------------------------------------------
Management fee 196,859 7,424,689 7,999,662
Administrative services fee 10,680 334,097 309,916
Administrative services fee - Investor class 7,175 238,032 229,667
Administrative services fee - Institutional class 129 1,371 60
Transfer agent fees and expenses - Investor class 89,335 1,662,309 1,285,566
Transfer agent fees and expenses - Institutional
class 10,842 11,634 10,841
Accounting service fees and expenses 33,470 240,023 229,999
Professional fees 36,264 89,675 105,184
Professional fees - Investor class 805 1,123 1,083
Professional fees - Institutional class 2,420 2,749 2,420
Distribution plan fee 55,392 1,783,573 1,686,011
Custodian fees 43,677 183,165 269,154
Shareholder reporting expenses - Investor class 15,357 218,979 143,951
Shareholder reporting expenses - Institutional class 6 25 6
Registration fees 10,801 26,691 31,199
Registration fees - Investor class 5,400 9,251 4,965
Registration fees - Institutional class 14,465 14,465 14,465
Trustee fees and expenses 18,947 18,941 18,936
Miscellaneous expenses 23,968 129,435 113,189
----------- ------------ ------------
Total expenses before reductions 575,992 12,390,227 12,456,274
Expenses offset - Note 1 H (129) (258) (96)
Expenses reimbursed - Note 3 (77,491) (30,244) (27,791)
----------- ------------ ------------
NET EXPENSES 498,372 12,359,725 12,428,387
--------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 97,830 (7,468,819) (11,314,271)
--------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) from:
Securities from unaffiliated issuers 1,172,058 105,390,872 79,945,600
Securities from affiliated issuers -- (468,768) 10,671,002
Written options 27,276 615,988 969,302
Foreign currency transactions 1,602 (466,792) (819,487)
----------- ------------ ------------
NET REALIZED GAIN 1,200,936 105,071,300 90,766,417
----------- ------------ ------------
Net change in unrealized appreciation
(depreciation) of:
Investments (12,633) 139,044,550 184,883,632
Written options -- (89,481) --
Other assets and liabilities denominated in
foreign currencies 172 (352) 16,514
----------- ------------ ------------
NET UNREALIZED APPRECIATION (DEPRECIATION) (12,461) 138,954,717 184,900,146
--------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 1,188,475 244,026,017 275,666,563
--------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 1,286,305 $236,557,198 $264,352,292
=========== ============ ============
159
STATEMENTS OF OPERATIONS
GOLD AND PRECIOUS
METALS FUND
NET INVESTMENT INCOME
INCOME:
----------------------------------------------------------------------------------
Dividends $ 783,726
Foreign tax withheld on dividends (70,450)
-----------
Net dividends 713,276
Interest and other 127,150
-----------
TOTAL INCOME 840,426
EXPENSES:
----------------------------------------------------------------------------------
Management fee 2,623,518
Administrative services fee 195,649
Transfer agent fees and expenses 461,547
Accounting service fees and expenses 100,613
Professional fees 55,247
Distribution plan fee 611,403
Custodian fees 138,664
Shareholder reporting expenses 92,671
Registration fees 26,884
Trustee fees and expenses 18,937
Miscellaneous expenses 72,993
-----------
Total expenses before reductions 4,398,126
Expenses offset - Note 1 H (43)
Expenses reimbursed - Note 3 --
-----------
NET EXPENSES 4,398,083
----------------------------------------------------------------------------------
NET INVESTMENT LOSS (3,557,657)
----------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) from:
Securities from unaffiliated issuers 32,560,922
Written options 585,697
Foreign currency transactions (225,461)
-----------
NET REALIZED GAIN 32,921,158
-----------
Net change in unrealized appreciation (depreciation) of:
Investments 50,236,447
Other assets and liabilities denominated in
foreign currencies (17,784)
-----------
NET UNREALIZED APPRECIATION (DEPRECIATION) 50,218,663
----------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 83,139,821
----------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $79,582,164
===========
See accompanying notes to financial statements.
160
For the Year Ended December 31, 2010
EASTERN EUROPEAN GLOBAL EMERGING CHINA REGION
FUND MARKETS FUND FUND
NET INVESTMENT INCOME
INCOME:
-------------------------------------------------------------------------------------------------------------------------------
Dividends $ 7,803,305 $ 254,201 $ 757,733
Foreign tax withheld on dividends (1,141,155) (22,860) (51,049)
----------- ---------- -----------
Net dividends 6,662,150 231,341 706,684
Interest and other 39,037 821 7,663
----------- ---------- -----------
TOTAL INCOME 6,701,187 232,162 714,347
EXPENSES:
-------------------------------------------------------------------------------------------------------------------------------
Management fee 4,716,190 159,072 633,102
Administrative services fee 345,907 10,466 41,785
Transfer agent fees and expenses 1,019,185 69,833 171,997
Accounting service fees and expenses 155,000 30,700 42,300
Professional fees 62,487 57,842 60,357
Distribution plan fee 1,080,958 32,708 130,579
Custodian fees 623,120 52,960 63,083
Shareholder reporting expenses 120,185 12,980 32,920
Registration fees 16,626 15,843 18,974
Trustee fees and expenses 18,937 18,937 18,937
Miscellaneous expenses 88,280 30,360 34,770
----------- ---------- -----------
Total expenses before reductions 8,246,875 491,701 1,248,804
Expenses offset - Note 1 H (130) (143) (69)
Expenses reimbursed - Note 3 -- (100,261) (163)
----------- ---------- -----------
NET EXPENSES 8,246,745 391,297 1,248,572
-------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT LOSS (1,545,558) (159,135) (534,225)
-------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) from:
Securities from unaffiliated issuers 11,212,887 1,043,518 10,066,184
Written options 82,003 25,951 45,464
Foreign currency transactions (348,903) (6,773) (38,904)
----------- ---------- -----------
NET REALIZED GAIN 10,945,987 1,062,696 10,072,744
----------- ---------- -----------
Net change in unrealized appreciation (depreciation) of:
Investments 61,356,416 846,713 (3,498,233)
Other assets and liabilities denominated in
foreign currencies 44,490 7,408 (6,088)
----------- ---------- -----------
NET UNREALIZED APPRECIATION (DEPRECIATION) 61,400,906 854,121 (3,504,321)
-------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 72,346,893 1,916,817 6,568,423
-------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $70,801,335 $1,757,682 $ 6,034,198
=========== ========== ===========
161
STATEMENTS OF CHANGES IN NET ASSETS
U.S. TREASURY SECURITIES
CASH FUND
------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
2010 2009
INCREASE (DECREASE)
IN NET ASSETS
FROM OPERATIONS:
-----------------------------------------------------------------------------------------
Net investment income $ 10,459 $ 11,265
Net realized gain (loss) -- --
Net unrealized appreciation -- --
------------- ------------
NET INCREASE IN NET ASSETS FROM OPERATIONS 10,459 11,265
DISTRIBUTIONS TO SHAREHOLDERS:
-----------------------------------------------------------------------------------------
From net investment income
Investor class (10,459) (10,436)
------------- -------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (10,459) (10,436)
FROM CAPITAL SHARE TRANSACTIONS:
-----------------------------------------------------------------------------------------
Proceeds from shares sold
Investor class 153,202,824 153,649,644
Distributions reinveste
Investor class 10,282 10,353
------------- -------------
153,213,106 153,659,997
Cost of shares redeemed
Investor class (157,611,264) (171,181,575)
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL SHARE TRANSACTIONS (4,398,158) (17,521,578)
-----------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (4,398,158) (17,520,749)
------------------------------------------------------------------------------------------
NET ASSETS
Beginning of year 103,889,388 121,410,137
-----------------------------------------------------------------------------------------
END OF YEAR $ 99,491,230 $ 103,889,388
-----------------------------------------------------------------------------------------
Accumulated undistributed net investment income,
end of year $ 907 $ 829
============= =============
CAPITAL SHARE ACTIVITY
-----------------------------------------------------------------------------------------
Investor class:
Shares sold 153,202,824 153,649,644
Shares reinvested 10,282 10,353
Shares redeemed (157,611,264) (171,181,575)
------------- -------------
NET SHARE ACTIVITY (4,398,158) (17,521,578)
------------- -------------
See accompanying notes to financial statements.
162
U.S. GOVERNMENT SECURITIES
SAVINGS FUND NEAR-TERM TAX FREE FUND
--------------------------- ---------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2010 2009 2010 2009
INCREASE (DECREASE)
IN NET ASSETS
FROM OPERATIONS:
-----------------------------------------------------------------------------------------------------------------
Net investment income $ 22,923 $ 333,999 $ 652,612 $ 495,023
Net realized gain (loss) 1,037 -- (2,532) (722)
Net unrealized appreciation -- -- 21,885 427,850
------------- ------------- ------------ -----------
NET INCREASE IN NET ASSETS FROM OPERATIONS 23,960 333,999 671,965 922,151
DISTRIBUTIONS TO SHAREHOLDERS:
-----------------------------------------------------------------------------------------------------------------
From net investment income
Investor class (22,923) (334,574) (656,447) (494,773)
------------- ------------- ------------ -----------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (22,923) 334,574) (656,447) (494,773)
FROM CAPITAL SHARE TRANSACTIONS:
-----------------------------------------------------------------------------------------------------------------
Proceeds from shares sold
Investor class 144,957,231 151,396,515 15,798,166 14,685,709
Distributions reinvested
Investor class 22,628 319,050 566,087 402,076
------------- ------------- ------------ -----------
144,979,859 151,715,565 16,364,253 15,087,785
Cost of shares redeemed
Investor class (194,377,841) (256,393,375) (10,579,005) (6,167,222)
------------- ------------- ------------ -----------
NET INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL SHARE TRANSACTIONS (49,397,982) (104,677,810) 5,785,248 8,920,563
-----------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (49,396,945) (104,678,385) 5,800,766 9,347,941
-----------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of year 253,231,638 357,910,023 23,337,079 13,989,138
-----------------------------------------------------------------------------------------------------------------
END OF YEAR $ 203,834,693 $ 253,231,638 $ 29,137,845 $23,337,079
-----------------------------------------------------------------------------------------------------------------
Accumulated undistributed net investment income,
end of year $ -- $ 260,734 $ 17,640 $ 21,475
============= ============= ============ ===========
CAPITAL SHARE ACTIVITY
-----------------------------------------------------------------------------------------------------------------
Investor class:
Shares sold 144,957,231 151,396,515 7,062,013 6,661,147
Shares reinvested 22,628 319,050 253,175 182,801
Shares redeemed (194,377,841) (256,393,375) (4,723,665) (2,790,990)
------------- ------------- ------------ -----------
NET SHARE ACTIVITY (49,397,982) (104,677,810) 2,591,523 4,052,958
------------- ------------- ------------ -----------
163
STATEMENTS OF CHANGES IN NET ASSETS
TAX FREE FUND
----------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
2010 2009
INCREASE (DECREASE)
IN NET ASSETS
FROM OPERATIONS:
-----------------------------------------------------------------------------------------
Net investment income (loss) $ 776,106 $ 715,558
Net realized gain (loss) 63,643 1,626
Net unrealized appreciation (depreciation) (339,473) 700,396
----------- -----------
NET INCREASE IN NET ASSETS FROM OPERATIONS 500,276 1,417,580
DISTRIBUTIONS TO SHAREHOLDERS:
-----------------------------------------------------------------------------------------
From net investment income
Investor class (776,783) (715,942)
----------- -----------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (776,783) (715,942)
FROM CAPITAL SHARE TRANSACTIONS:
-----------------------------------------------------------------------------------------
Proceeds from shares sold
Investor class 7,219,358 9,240,470
Distributions reinvested
Investor class 629,779 557,292
Proceeds from short-term trading fees
Investor class -- --
----------- -----------
7,849,137 9,797,762
Cost of shares redeemed
Investor class (9,880,465) (5,343,353)
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL SHARE TRANSACTIONS (2,031,328) 4,454,409
-----------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (2,307,835) 5,156,047
-----------------------------------------------------------------------------------------
NET ASSETS
Beginning of year 22,102,079 16,946,032
-----------------------------------------------------------------------------------------
END OF YEAR $19,794,244 $22,102,079
-----------------------------------------------------------------------------------------
Accumulated undistributed net investment income,
(distributions in excess of net investment income),
end of year $ 33,463 $ 34,140
=========== ===========
CAPITAL SHARE ACTIVITY
-----------------------------------------------------------------------------------------
Investor class:
Shares sold 584,696 759,141
Shares reinvested 51,074 46,071
Shares redeemed (799,442) (439,867)
----------- -----------
NET SHARE ACTIVITY (163,672) 365,345
=========== ===========
See accompanying notes to financial statements.
164
ALL AMERICAN EQUITY FUND HOLMES GROWTH FUND
--------------------------- ---------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2010 2009 2010 2009
INCREASE (DECREASE)
IN NET ASSETS
FROM OPERATIONS:
-------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) $ 17,214 $ (113,977) $ (476,827) $ (320,658)
Net realized gain (loss) 2,306,745 (997,174) 6,200,424 (5,028,765)
Net unrealized appreciation (depreciation) 161,267 3,091,465 1,603,666 12,371,233
----------- ----------- ----------- -----------
NET INCREASE IN NET ASSETS FROM OPERATIONS 2,485,226 1,980,314 7,327,263 7,021,810
DISTRIBUTIONS TO SHAREHOLDERS:
-------------------------------------------------------------------------------------------------------------------------
From net investment income
Investor class -- (91,991) (449,513) --
----------- ----------- ----------- -----------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS -- (91,991) (449,513) --
FROM CAPITAL SHARE TRANSACTIONS:
-------------------------------------------------------------------------------------------------------------------------
Proceeds from shares sold
Investor class 2,787,127 2,018,841 3,457,830 2,773,433
Distributions reinvested
Investor class -- 90,879 416,688 --
Proceeds from short-term trading fees
Investor class 626 469 528 132
----------- ----------- ----------- -----------
2,787,753 2,110,189 3,875,046 2,773,565
Cost of shares redeemed
Investor class (3,949,320) (3,796,615) (7,297,562) (5,134,081)
----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL SHARE TRANSACTIONS (1,161,567) (1,686,426) (3,422,516) (2,360,516)
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 1,323,659 201,897 3,455,234 4,661,294
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of year 16,436,243 16,234,346 37,148,978 32,487,684
-------------------------------------------------------------------------------------------------------------------------
END OF YEAR $17,759,902 $16,436,243 $40,604,212 $37,148,978
-------------------------------------------------------------------------------------------------------------------------
Accumulated undistributed net investment income,
(distributions in excess of net investment income),
end of year $ 9,718 $ -- $ (386,452) $ (115,375)
----------- ----------- ----------- -----------
CAPITAL SHARE ACTIVITY
-------------------------------------------------------------------------------------------------------------------------
Investor class:
Shares sold 135,491 117,450 206,574 217,283
Shares reinvested -- 4,761 22,152 --
Shares redeemed (192,080) (220,835) (443,142) (366,984)
----------- ----------- ----------- -----------
NET SHARE ACTIVITY (56,589) (98,624) (214,416) (149,701)
----------- ----------- ----------- -----------
165
STATEMENTS OF CHANGES IN NET ASSETS
GLOBAL MEGATRENDS
FUND
----------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
2010 2009
INCREASE (DECREASE)
IN NET ASSETS
FROM OPERATIONS:
-----------------------------------------------------------------------------------------
Net investment income (loss) $ 97,830 $ 119,187
Net realized gain (loss) 1,200,936 (1,465,573)
Net unrealized appreciation (depreciation) (12,461) 8,655,684
----------- -----------
NET INCREASE IN NET ASSETS FROM OPERATIONS 1,286,305 7,309,298
DISTRIBUTIONS TO SHAREHOLDERS:
-----------------------------------------------------------------------------------------
From net investment income
Investor class (13,170) (86,578)
Institutional class(a) (35,430) --
----------- -----------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (48,600) (86,578)
FROM CAPITAL SHARE TRANSACTIONS:
-----------------------------------------------------------------------------------------
Proceeds from shares sold
Investor class 3,924,530 11,166,132
Institutional class(a) 3,798,205 --
Distributions reinvested
Investor class 11,854 81,740
Institutional class(a) 35,329 --
Proceeds from short-term trading fees
Investor class 189 1,360
Institutional class(a) -- --
----------- -----------
7,770,107 11,249,232
Cost of shares redeemed
Investor class (17,251,944) (11,949,778)
Institutional class(a) (11,485) --
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL SHARE TRANSACTIONS (9,493,322) (700,546)
-----------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (8,255,617) 6,522,174
-----------------------------------------------------------------------------------------
NET ASSETS
Beginning of year 28,557,315 22,035,141
-----------------------------------------------------------------------------------------
END OF YEAR $20,301,698 $28,557,315
-----------------------------------------------------------------------------------------
Accumulated undistributed net investment income,
(distributions in excess of net investment income),
end of year $ 69,637 $ 35,372
=========== ===========
CAPITAL SHARE ACTIVITY
-----------------------------------------------------------------------------------------
Investor class:
Shares sold 493,451 1,647,632
Shares reinvested 1,374 10,129
Shares redeemed (2,146,538) (1,665,659)
----------- -----------
NET SHARE ACTIVITY (1,651,713) (7,898)
----------- -----------
Institutional class(a):
Shares sold 449,052 --
Shares reinvested 4,113 --
Shares redeemed (1,347) --
----------- -----------
NET SHARE ACTIVITY 451,818 --
=========== ===========
<FN>
(a)Institutional class commenced operations on March 1, 2010.
</FN>
See accompanying notes to financial statements.
166
WORLD PRECIOUS MINERALS
GLOBAL RESOURCES FUND FUND
--------------------------- ---------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2010 2009 2010 2009
INCREASE (DECREASE)
IN NET ASSETS
FROM OPERATIONS:
----------------------------------------------------------------------------------------------------------------------
Net investment income (loss) $ (7,468,819) $ (455,031) $(11,314,271) $ (6,444,886)
Net realized gain (loss) 105,071,300 (49,597,871) 90,766,417 24,568,769
Net unrealized appreciation (depreciation) 138,954,717 350,482,946 184,900,146 292,475,132
------------ ------------ ------------ ------------
NET INCREASE IN NET ASSETS FROM OPERATIONS 236,557,198 300,430,044 264,352,292 310,599,015
DISTRIBUTIONS TO SHAREHOLDERS:
----------------------------------------------------------------------------------------------------------------------
From net investment income
Investor class (21,220,358) -- (99,236,093) (24,089,084)
Institutional class(a) (430,785) -- (209,612) --
------------ ------------ ------------ ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (21,651,143) -- (99,445,705) (24,089,084)
FROM CAPITAL SHARE TRANSACTIONS:
----------------------------------------------------------------------------------------------------------------------
Proceeds from shares sold
Investor class 226,317,551 181,440,914 176,168,966 139,489,345
Institutional class(a) 15,811,980 -- 2,132,887 --
Distributions reinvested
Investor class 19,867,690 -- 95,387,525 23,204,309
Institutional class(a) 430,457 -- 207,819 --
Proceeds from short-term trading fees
Investor class 42,821 30,658 106,901 58,946
Institutional class(a) 2 -- -- --
------------ ------------ ------------ ------------
262,470,501 181,471,572 274,004,098 162,752,600
Cost of shares redeemed
Investor class (287,376,779) (206,354,015) (249,079,298) (169,346,997)
Institutional class(a) (590,193) -- (35,589) --
------------ ------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL SHARE TRANSACTIONS (25,496,471) (24,882,443) 24,889,211 (6,594,397)
----------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 189,409,584 275,547,601 189,795,798 279,915,534
----------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of year 740,071,589 464,523,988 639,035,318 359,119,784
----------------------------------------------------------------------------------------------------------------------
END OF YEAR $929,481,173 $740,071,589 $828,831,116 $639,035,318
----------------------------------------------------------------------------------------------------------------------
Accumulated undistributed net investment income,
(distributions in excess of net investment income),
end of year $(19,036,655) $ (5,516,161) $(71,805,230) $(32,180,775)
============ ============ ============ ============
CAPITAL SHARE ACTIVITY
----------------------------------------------------------------------------------------------------------------------
Investor class:
Shares sold 22,219,873 26,149,328 9,059,127 10,066,467
Shares reinvested 1,735,173 -- 4,369,562 1,380,387
Shares redeemed (31,066,105) (30,816,159) (13,011,737) (12,317,772)
------------ ------------ ------------ ------------
NET SHARE ACTIVITY (7,111,059) (4,666,831) 416,952 (870,918)
------------ ------------ ------------ ------------
Institutional class(a):
Shares sold 1,511,708 -- 92,296 --
Shares reinvested 37,398 -- 9,520 --
Shares redeemed (52,484) -- (1,643) --
------------ ------------ ------------ ------------
NET SHARE ACTIVITY 1,496,622 -- 100,173 --
============ ============ ============ ===========-
167
STATEMENTS OF CHANGES IN NET ASSETS
GOLD AND PRECIOUS
METALS FUND
------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
2010 2009
INCREASE (DECREASE)
IN NET ASSETS
FROM OPERATIONS:
---------------------------------------------------------------------------------------
Net investment income (loss) $ (3,557,657) $ (2,470,350)
Net realized gain (loss) 32,921,158 24,636,372
Net unrealized appreciation 50,218,663 54,750,243
------------ ------------
NET INCREASE IN NET ASSETS FROM OPERATIONS 79,582,164 76,916,265
DISTRIBUTIONS TO SHAREHOLDERS:
---------------------------------------------------------------------------------------
From net investment income
Investor class (3,708,191) (605,996)
From net capital gains
Investor class (18,871,531) --
------------ ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (22,579,722) (605,996)
FROM CAPITAL SHARE TRANSACTIONS:
---------------------------------------------------------------------------------------
Proceeds from shares sold
Investor class 106,304,844 69,373,429
Distributions reinvested
Investor class 21,269,596 576,071
Proceeds from short-term trading fees
Investor class 158,455 65,721
------------ ------------
127,732,895 70,015,221
Cost of shares redeemed
Investor class (118,179,940) (104,137,668)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL SHARE TRANSACTIONS 9,552,955 (34,122,447)
---------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 66,555,397 42,187,822
---------------------------------------------------------------------------------------
NET ASSETS
Beginning of year 234,393,386 192,205,564
---------------------------------------------------------------------------------------
END OF YEAR $300,948,783 $234,393,386
---------------------------------------------------------------------------------------
Distributions in excess of net investment income, end
of year $ (4,185,270) $ (1,935,664)
============ ============
CAPITAL SHARE ACTIVITY
---------------------------------------------------------------------------------------
Investor class:
Shares sold 6,055,096 5,480,136
Shares reinvested 1,079,127 37,166
Shares redeemed (6,936,401) (8,113,350)
------------ ------------
NET SHARE ACTIVITY 197,822 (2,596,048)
============ ============
See accompanying notes to financial statements.
168
GLOBAL EMERGING MARKETS
EASTERN EUROPEAN FUND FUND
--------------------------- ---------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2010 2009 2010 2009
INCREASE (DECREASE)
IN NET ASSETS
FROM OPERATIONS:
--------------------------------------------------------------------------------------------------------------------
Net investment income (loss) $ (1,545,558) $ 12,626 $ (159,135) $ (87,232)
Net realized gain (loss) 10,945,987 (259,277,580) 1,062,696 (5,043,969)
Net unrealized appreciation 61,400,906 465,669,916 854,121 9,749,634
------------ ------------ ----------- -----------
NET INCREASE IN NET ASSETS FROM OPERATIONS 70,801,335 206,404,962 1,757,682 4,618,433
DISTRIBUTIONS TO SHAREHOLDERS:
--------------------------------------------------------------------------------------------------------------------
From net investment income
Investor class -- -- -- --
From net capital gains
Investor class -- -- -- --
------------ ------------ ----------- -----------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS -- -- -- --
FROM CAPITAL SHARE TRANSACTIONS:
--------------------------------------------------------------------------------------------------------------------
Proceeds from shares sold
Investor class 32,629,184 60,092,169 2,208,443 2,643,707
Distributions reinvested
Investor class -- -- -- --
Proceeds from short-term trading fees
Investor class 164,174 259,343 9,357 8,428
------------ ------------ ----------- -----------
32,793,358 60,351,512 2,217,800 2,652,135
Cost of shares redeemed
Investor class (127,966,431) (119,667,750) (4,391,819) (3,114,125)
------------ ------------ ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL SHARE TRANSACTIONS (95,173,073) (59,316,238) (2,174,019) (461,990)
--------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (24,371,738) 147,088,724 (416,337) 4,156,443
--------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of year 464,408,879 317,320,155 13,819,198 9,662,755
--------------------------------------------------------------------------------------------------------------------
END OF YEAR $440,037,141 $464,408,879 $13,402,861 $13,819,198
--------------------------------------------------------------------------------------------------------------------
Distributions in excess of net investment income, end
of year $ (449,559) $ (110,313) $ (58,730) $ (19,144)
============ ============ =========== ===========
CAPITAL SHARE ACTIVITY
--------------------------------------------------------------------------------------------------------------------
Investor class: 3,355,448 8,490,410 259,919 401,295
Shares sold -- -- -- --
Shares reinvested (13,620,205) (19,544,443) (536,473) (488,408)
Shares redeemed ------------ ------------ ----------- -----------
(10,264,757) (11,054,033) (276,554) (87,113)
NET SHARE ACTIVITY ============ ============ =========== ===========
169
STATEMENTS OF CHANGES IN NET ASSETS
CHINA REGION FUND
----------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
2010 2009
INCREASE (DECREASE)
IN NET ASSETS
FROM OPERATIONS:
-----------------------------------------------------------------------------------------
Net investment loss $ (534,225) $ (377,483)
Net realized gain 10,072,744 7,910,825
Net unrealized appreciation (depreciation) (3,504,321) 11,635,412
----------- -----------
NET INCREASE IN NET ASSETS FROM OPERATIONS 6,034,198 19,168,754
DISTRIBUTIONS TO SHAREHOLDERS:
-----------------------------------------------------------------------------------------
From net investment income -- --
TOTAL DISTRIBUTIONS TO SHAREHOLDERS -- --
FROM CAPITAL SHARE TRANSACTIONS:
-----------------------------------------------------------------------------------------
Proceeds from shares sold
Investor class 9,110,783 17,131,885
Distributions reinvested
Investor class -- --
Proceeds from short-term trading fees
Investor class 38,856 85,053
----------- -----------
9,149,639 17,216,938
Cost of shares redeemed
Investor class (19,663,761) (18,410,242)
----------- -----------
NET DECREASE IN NET ASSETS FROM CAPITAL
SHARE TRANSACTIONS (10,514,122) (1,193,304)
-----------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (4,479,924) 17,975,450
-----------------------------------------------------------------------------------------
NET ASSETS
Beginning of year 56,323,320 38,347,870
-----------------------------------------------------------------------------------------
END OF YEAR $51,843,396 $56,323,320
-----------------------------------------------------------------------------------------
Distributions in excess of net investment income,
end of year $ (454,818) $ (661,723)
=========== ===========
CAPITAL SHARE ACTIVITY
-----------------------------------------------------------------------------------------
Investor class:
Shares sold 1,060,010 2,675,507
Shares reinvested -- --
Shares redeemed (2,325,277) (2,794,611)
----------- -----------
NET SHARE ACTIVITY (1,265,267) (119,104)
=========== ===========
See accompanying notes to financial statements.
170
NOTES TO FINANCIAL STATEMENTS December 31, 2010
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.
Effective March 1, 2010, Global MegaTrends, Global Resources and World
Precious Minerals Funds offered a new Institutional class of shares
("Institutional Class"). For all funds, the class existing prior to
March 1, 2010, was renamed the Investor Class ("Investor Class").
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 reported bid and asked 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. 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.
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.
171
NOTES TO FINANCIAL STATEMENTS December 31, 2010
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, 2010, this model was used to value certain foreign
securities in All American Equity, Global MegaTrends, Global Resources,
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. 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. Investment income and
realized and unrealized gains (losses) are allocated to each Fund's
share class based on their respective net assets.
The Funds may purchase securities on a when-issued or delayed-delivery
basis and segregate 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.
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. 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
172
NOTES TO FINANCIAL STATEMENTS December 31, 2010
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.
F. 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.
The Funds recognize the tax benefits of uncertain tax positions only
where the position is "more likely than not" to be sustained assuming
examination by tax authorities. Management has analyzed the Funds' tax
positions and has concluded that no liability for unrecognized tax
benefits should be recorded related to uncertain tax positions taken on
returns filed for open tax years or expected to be taken in 2010 tax
returns. The Funds' 2007, 2008, 2009 and 2010 tax returns are open to
examination by the federal and applicable state tax authorities. The
Funds have no examinations in progress. Management is not aware of any
tax positions for which it is reasonably possible that the total
amounts of unrecognized tax benefits will change materially in the next
12 months.
G. 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.
H. EXPENSES
Fund specific expenses are allocated to that Fund and pro rata across
share classes. Expenses that are not fund specific are allocated among
Funds and pro rata across share classes. Class specific expenses
(including, but not limited to, distribution plan fees, if any, a
portion of the administrative services fees, transfer agency fees
173
NOTES TO FINANCIAL STATEMENTS December 31, 2010
and expenses, shareholder reporting expenses and certain legal and
registration fees) are allocated to the class that incurs such expense.
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.
I. 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 30 days or less in the World Precious Minerals and Gold and
Precious Metals Funds 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.
J. 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.
K. SUBSEQUENT EVENTS EVALUATION
Management has evaluated subsequent events after the balance sheet date
of December 31, 2010, through the date that the financial statements
were issued and determined that there were no events or transactions
that would require recognition or disclosure in the financial
statements.
L. NEW ACCOUNTING PRONOUNCEMENTS
In January 2010, the Financial Accounting Standards Board (FASB) issued
Accounting Standards Update (ASU) No. 2010-06, Improving Disclosures
about Fair Value Measurements. This ASU adds new requirements for
disclosures into and out of Levels 1 and 2 fair-value measurements and
information on purchases, sales, issuances and settlements on a gross
basis in the reconciliation of Level 3 fair-value measurements. It also
clarifies existing fair value disclosures about the level of
disaggregation, inputs and valuation techniques. Except for the
detailed Level 3 reconciliation disclosures, the guidance in the ASU is
effective for annual
174
NOTES TO FINANCIAL STATEMENTS December 31, 2010
and interim reporting periods in fiscal years beginning after December
15, 2009, and has been incorporated in these financial statements. The
new disclosures for Level 3 activity are effective for annual and
interim reporting periods in fiscal years beginning after December 15,
2010.
NOTE 2: FINANCIAL DERIVATIVE INSTRUMENTS
A. OPTIONS CONTRACTS
Equity Funds may purchase or write (sell) options on securities to
manage their exposure to stock or commodity markets as well as
fluctuations in interest and currency conversion rates. 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.
A put option gives the purchaser of the option, upon payment of a
premium, the right to sell, and the issuer of the option the obligation
to buy, the underlying security, commodity, index, currency or other
instrument at the exercise price. A call option, upon payment of a
premium, gives the purchaser of the option the right to buy, and the
issuer the obligation to sell, the underlying instrument at the
exercise price.
Purchasing a put option tends to decrease a Fund's exposure to the
underlying instrument, whereas purchasing a call option tends to
increase a Fund's exposure to the underlying instrument. A Fund pays a
premium which is included in the Statement of Assets and Liabilities as
an investment and subsequently marked to market to reflect the current
value of the option. Premiums paid to purchase options which expire are
treated as realized losses. Premiums paid to purchase options which are
exercised or closed are added to the cost of securities acquired or the
proceeds from securities sold. The risk associated with purchasing put
and call options is limited to the premium paid.
The Funds will realize a loss equal to all or a part of the premium
paid for an option if the price of the underlying security or other
instrument decreases or does not increase by more than the premium (in
the case of a call option), or if the price of the underlying security
or other instrument increases or does not decrease by more than the
premium (in the case of a put option).
Writing a put option tends to increase a Fund's exposure to the
underlying instrument, whereas writing a call option tends to decrease
a Fund's exposure to the underlying instrument. The premium received is
recorded as a liability in the Statement of Assets and Liabilities and
subsequently marked to market to reflect the current value of the
option written. Premiums received from writing options which expire are
treated as realized gains. Premiums received from options which are
exercised or closed are added to the proceeds or offset against amounts
paid on the underlying transaction to determine the realized gain or
loss. Written
175
NOTES TO FINANCIAL STATEMENTS December 31, 2010
options include a risk of loss in excess of the option premium. A Fund
as a writer of an option has no control over whether the underlying
instrument may be sold (call) or purchased (put) and thus bears the
market risk of an unfavorable change in the price of the instrument
underlying the written option. There is the risk a Fund may not be able
to enter into a closing transaction because of an illiquid market.
A Fund's ability to close out its position as a purchaser or seller of
a put or call option is dependent, in part, upon the liquidity of the
market for that particular option. There can be no guarantee that a
fund will be able to close out an option position when desired. An
inability to close out its options positions may reduce a Fund's
anticipated profits or increase its losses.
As of December 31, 2010, there were no securities held in escrow by the
custodian as cover for call options written.
Transactions in written call options during the year ended December 31,
2010, were as follows:
ALL AMERICAN HOLMES
EQUITY FUND GROWTH FUND
--------------------------- -----------------------
NUMBER OF PREMIUMS NUMBER OF PREMIUMS
CONTRACTS RECEIVED CONTRACTS RECEIVED
Options outstanding at December 31, 2009 16 $ 3,488 36 $ 7,848
Options written 223 92,948 1,210 386,815
Options closed (40) (41,199) (823) (295,815)
Options expired (43) (28,109) (88) (54,753)
Options exercised (156) (27,128) (335) (44,095)
------ ----------- ------- -----------
Options outstanding at December 31, 2010 -- $ -- -- $ --
====== =========== ======= ===========
GLOBAL GLOBAL
MEGATRENDS FUND RESOURCES FUND
--------------------------- -----------------------
NUMBER OF PREMIUMS NUMBER OF PREMIUMS
CONTRACTS RECEIVED CONTRACTS RECEIVED
Options outstanding at December 31, 2009 -- $ -- 2,000 $ 727,981
Options written 200 32,851 12,630 2,315,275
Options closed (50) (18,945) (12,180) (2,572,151)
Options expired -- -- (2,450) (471,105)
Options exercised (150) (13,906) -- --
------ ----------- ------- -----------
Options outstanding at December 31, 2010 -- $ -- -- $ --
====== =========== ======= ===========
WORLD PRECIOUS GOLD AND PRECIOUS
MINERALS FUND METALS FUND
--------------------------- -----------------------
NUMBER OF PREMIUMS NUMBER OF PREMIUMS
CONTRACTS RECEIVED CONTRACTS RECEIVED
Options outstanding at December 31, 2009 -- $ -- -- $ --
Options written 15,860 1,677,595 11,348 1,159,067
Options closed (8,711) (1,285,873) (7,347) (963,774)
Options expired (6,699) (358,634) (3,651) (169,558)
Options exercised (450) (33,088) (350) (25,735)
------ ----------- ------- -----------
Options outstanding at December 31, 2010 -- $ -- -- $ --
====== =========== ======= ===========
176
NOTES TO FINANCIAL STATEMENTS December 31, 2010
EASTERN GLOBAL EMERGING
EUROPEAN FUND MARKETS FUND
--------------------------- -----------------------
NUMBER OF PREMIUMS NUMBER OF PREMIUMS
CONTRACTS RECEIVED CONTRACTS RECEIVED
Options outstanding at December 31, 2009 -- $ -- -- $ --
Options written 2,467 88,239 192 22,978
Options closed (467) (19,740) (30) (3,489)
Options expired (2,000) (68,499) -- --
Options exercised -- -- (162) (19,489)
------ ----------- ------- -----------
Options outstanding at December 31, 2010 -- $ -- -- $ --
====== =========== ======= ===========
CHINA
REGION FUND
---------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
Options outstanding at December 31, 2009 -- $ --
Options written 250 46,520
Options closed (200) (23,260)
Options expired -- --
Options exercised (50) (23,260)
------ -----------
Options outstanding at December 31, 2010 -- $ --
====== ===========
B. FORWARD FOREIGN CURRENCY CONTRACTS
The Funds 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 date, 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.
Open forward foreign currency contracts at December 31, 2010, were:
FOREIGN IN EXCHANGE SETTLEMENT UNREALIZED UNREALIZED
FUND CONTRACT CURRENCY FOR USD DATE VALUE APPRECIATION (DEPRECIATION)
---------------------------------------------------------------------------------------------------------------
World Precious Minerals Fund
SALES:
Canadian Dollars 1,755,000 $1,746,269 01/05/11 $1,759,720 $ -- $(13,451)
Canadian Dollars 550,000 542,674 01/12/11 551,409 -- (8,735)
---------- ---------- ---- --------
$2,288,943 $2,311,129 $ -- $(22,186)
177
NOTES TO FINANCIAL STATEMENTS December 31, 2010
C. SUMMARY OF DERIVATIVE INSTRUMENTS
The following is a summary of the valuations of derivative instruments
categorized by location in the Statement of Assets and Liabilities as
of December 31, 2010:
ALL HOLMES GLOBAL GLOBAL
AMERICAN GROWTH MEGATRENDS RESOURCES
LOCATION EQUITY FUND FUND FUND FUND
--------------------------------------------------------------------------------------------------
ASSET DERIVATIVES
Investments, at value
Equity contracts - Note 2 A $ 9,600 $ 29,250 $ 5,700 $ 306,250
-----------------------------------------------------
TOTAL 9,600 29,250 5,700 306,250
=====================================================
LIABILITY DERIVATIVES - none
WORLD GLOBAL
PRECIOUS GOLD & EASTERN EMERGING CHINA
MINERALS PRECIOUS EUROPEAN MARKETS REGION
LOCATION FUND METALS FUND FUND FUND FUND
--------------------------------------------------------------------------------------------------------------
ASSET DERIVATIVES
Investments, at value
Equity contracts - Note 2 A $ 930,000 $ 363,750 $ 300,000 $ 9,750 $ --
-----------------------------------------------------------------
TOTAL 930,000 363,750 300,000 9,750 --
=================================================================
LIABILITY DERIVATIVES
Unrealized depreciation on foreign currency
exchange contracts
Foreign exchange contracts - Note 2 B $ 22,186 $ -- $ -- $ -- $ --
-----------------------------------------------------------------
$ 22,186 $ -- $ -- $ -- $ --
=================================================================
TOTAL
178
NOTES TO FINANCIAL STATEMENTS December 31, 2010
The following is a summary of the effect of deriative instruments on
the Statement of Operations for the year ended December 31, 2010:
ALL HOLMES GLOBAL GLOBAL
AMERICAN GROWTH MEGATRENDS RESOURCES
LOCATION EQUITY FUND FUND FUND FUND
--------------------------------------------------------------------------------------------------
REALIZED GAIN/(LOSS) ON DERIVATIVES
RECOGNIZED IN INCOME
Realized gain (loss) from securities
Equity contracts $ (45,746) $ 211,432 $ (126,057) $3,387,218
Realized gain (loss) on written options
Equity contracts 57,396 (23,967) 27,276 615,988
Net realized gain (loss) on foreign
currency transactions
Foreign exchange contracts -- (9,206) 3,502 (367,369)
-----------------------------------------------------
11,650 178,259 (95,279) 3,635,837
-----------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION/
(DEPRECIATION) ON DERIVATIVES RECOGNIZED
IN INCOME
Net change in unrealized appreciation
(depreciation) on investments
Equity contracts (22,076) (55,966) (1,547) 1,126,747
Net change in unrealized appreciation
(depreciation) on options written
Equity contracts 672 1,512 -- (89,481)
-----------------------------------------------------
(21,404) (54,454) (1,547) 1,037,266
-----------------------------------------------------
TOTAL $ (9,754) $ 123,805 $ (96,826) $4,673,103
=====================================================
WORLD GLOBAL
PRECIOUS GOLD & EASTERN EMERGING CHINA
MINERALS PRECIOUS EUROPEAN MARKETS REGION
LOCATION FUND METALS FUND FUND FUND FUND
---------------------------------------------------------------------------------------------------------------
REALIZED GAIN/(LOSS) ON DERIVATIVES
RECOGNIZED IN INCOME
Realized loss from securities
Equity contracts $(12,578,769) $(4,424,027) $(2,411,307) $ (72,650) $(207,710)
Realized gain on written options
Equity contracts 969,302 585,697 82,003 25,951 45,464
Net realized loss on foreign currency
transactions
Foreign exchange contracts (321,849) -- (46,516) (36) (472)
------------------------------------------------------------------
(11,931,316) (3,838,330) (2,375,820) (46,735) (162,718)
------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION/
(DEPRECIATION) ON DERIVATIVES RECOGNIZED
IN INCOME
Net change in unrealized appreciation
(depreciation) on investments
Equity contracts 1,539,376 520,122 152,500 (18,810) (3,677)
Net change in unrealized appreciation
(depreciation) on translation of assets
and liabilities denominated in foreign
currencies
Foreign exchange contracts (22,174) -- -- -- --
------------------------------------------------------------------
1,517,202 520,122 152,500 (18,810) (3,677)
------------------------------------------------------------------
$(10,414,114) $(3,318,208) $(2,223,320) $ (65,545) $(166,395)
==================================================================
TOTAL
179
NOTES TO FINANCIAL STATEMENTS December 31, 2010
The average notional amounts of written options, purchased options and
forward currency contracts outstanding during the year ended December 31,
2010, were approximately as follows:
FORWARD
WRITTEN PURCHASED CURRENCY
FUND OPTIONS OPTIONS CONTRACTS
--------------------------------------------------------------------------------
All American Equity Fund $ 5,049 $ 44,935 $ --
Holmes Growth Fund 25,847 62,811 41,382
Global MegaTrends Fund 2,077 19,254 --
Global Resources Fund 213,231 2,397,040 3,413,515
World Precious Minerals Fund 69,683 2,630,388 2,109,429
Gold and Precious Metals Fund 45,736 1,133,857 654,139
Eastern European Fund 3,132 608,654 138,559
Global Emerging Markets Fund 2,722 11,355 --
China Region Fund 2,958 29,844 --
NOTE 3: RELATED PARTY TRANSACTIONS
U.S. Global Investors, Inc. (Adviser), under an investment advisory
agreement with the Trust in effect through September 30, 2011, 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.
180
NOTES TO FINANCIAL STATEMENTS December 31, 2010
For the services of the Adviser, each Fund pays a base management or
advisory fee based upon its net assets. Fees are accrued daily and paid
monthly. The contractual management fee for each fund 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 .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%
181
NOTES TO FINANCIAL STATEMENTS December 31, 2010
The advisory agreement also provides, effective October 1, 2009, that
the base advisory fee of the Equity Funds 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 12 months. The performance adjustment is
calculated separately for each share class. For purposes of calculating
the performance adjustment for the Institutional Class, the performance
will include the performance of the Investor Class shares for periods
prior to March 1, 2011. After such time, for purposes of calculating
the performance adjustment, the performance of each class will be
calculated based on its respective performance. The benchmarks are as
follows:
FUND BENCHMARK INDEX
-----------------------------------------------------------------------
All American Equity S&P 500 Index
Holmes Growth S&P Composite 1500 Index
Global MegaTrends S&P 500 Index
Global Resources Morgan Stanley Commodity Related
Equity Index
World Precious Minerals NYSE Arca Gold Miners Index
Gold and Precious Metals FTSE Gold Mines Index
Eastern European MSCI Emerging Markets Europe 10/40
Index (Net Total Return)
Global Emerging Markets MSCI Emerging Markets Total Net Return
Index
China Region Hang Seng Composite Index
No performance adjustment is applied unless the difference between the
class's investment performance and the benchmark is 5 percent or
greater (positive or negative) during the applicable performance
measurement period. The performance fee adjustment is calculated
monthly in arrears and is accrued ratably during the month. The
management fee, net of any performance fee adjustment, is paid monthly
in arrears.
182
NOTES TO FINANCIAL STATEMENTS December 31, 2010
The Funds' prospectus and statement of additional information contain
additional information about the performance adjustment. The amounts
shown as management fees on the Statements of Operations reflects the
base fee plus/minus any performance adjustment. During the year ended
December 31, 2010, the Funds recorded performance adjustments as
follows:
INVESTOR CLASS INSTITUTIONAL CLASS
PERFORMANCE FEE PERFORMANCE FEE
FUND ADJUSTMENT ADJUSTMENT
----------------------------------------------------------------
All American Equity $ (19,520) N/A
Holmes Growth (52,325) N/A
Global MegaTrends (29,003) $ (5)
Global Resources 711,072 1,303
World Precious Minerals 1,340,923 18
Gold and Precious Metals 422,467 N/A
Eastern European (688,600) N/A
Global Emerging Markets (20,820) N/A
China Region (19,793) N/A
Under an administrative services agreement, the U.S. Treasury
Securities Cash, U.S. Government Securities Savings, Near-Term Tax
Free, Tax Free, All American Equity, Holmes Growth, Gold and Precious
Metals, Eastern European, Global Emerging Markets and China Region
Funds compensate the Adviser at an annual rate of 0.08% of the average
daily net assets of each Fund for administrative services provided. The
Global MegaTrends, Global Resources and World Precious Minerals Funds
compensate the Adviser at an annual rate of 0.08% of the average daily
net assets for the Investor Class and 0.06% of the average daily net
assets for the Institutional Class for administrative services
provided. For these funds, for both classes, half is a fund-level fee
and half is a class-level fee.
The Investor Class shares for Equity Funds in the Trust have adopted a
distribution plan pursuant to Rule 12b-1 of the Investment Company Act
of 1940 in which a subsidiary of the Adviser is paid a fee at an annual
rate of 0.25% of the average daily net assets of the Investor Class for
sales and promotional services related to the distribution of Investor
Class shares. The Institutional Class does not incur distribution plan
fees.
Effective October 1, 2009, the Adviser has voluntarily agreed to
reimburse specific funds so that their total operating expenses will
not exceed certain annual percentages of average net assets. The
expenses for the year ended December 31, 2010, were limited as follows
for the Investor Class: 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
2.20%, Holmes Growth Fund at 2.20%, Global MegaTrends Fund at 2.35%,
183
NOTES TO FINANCIAL STATEMENTS December 31, 2010
Global Resources, World Precious Minerals, and Gold and Precious Metals
Funds at 1.90%, Eastern European Fund at 2.85%, Global Emerging Markets
Fund at 3.15% and China Region Fund at 2.55%. These expense limitations
are exclusive of any performance fee adjustments and will continue on a
voluntary basis at the Adviser's discretion.
Effective March 1, 2010, the Adviser has agreed to waive all class
specific expenses for the Institutional Class. The expense waiver is
exclusive of performance fees, and the Adviser can modify or terminate
this arrangement at any time.
The Adviser has 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 year ended
December 31, 2010, fees waived and/or expenses reimbursed as a result
of this agreement were $884,850 and $678,107 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, 2013. In addition, $170,642 is recoverable by the Adviser
from the U.S. Treasury Securities Cash Fund through December 31, 2011,
and $789,420 and $258,561 is recoverable by the Adviser from the U.S.
Treasury Securities Cash Fund and the U.S. Government Securities
Savings Fund, respectively, through December 31, 2012, for fees waived
and/or expenses reimbursed in previous fiscal years.
United Shareholder Services, Inc. (USSI), a wholly-owned subsidiary of
the Adviser, is the transfer agent for the Funds. Each Fund's share
class 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 services of the Funds' Chief Compliance
Officer during the year ended December 31, 2010, in the amount of
$155,682.
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. BBH voluntarily waived certain fund accounting
service fees for the six-month period ended December 31, 2009. This
voluntary fee waiver ended December 31, 2009.
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-
184
NOTES TO FINANCIAL STATEMENTS December 31, 2010
of-pocket expenses incurred while attending meetings. Frank E. Holmes
receives no compensation from the Funds for serving on the Board.
NOTE 4: INVESTMENTS
Cost of purchases and proceeds from sales of long-term securities for
the year ended December 31, 2010, are summarized as follows:
FUND PURCHASES SALES
----------------------------------------------------------------------
Near-Term Tax Free $ 7,546,080 $ 175,000
Tax Free 3,798,421 3,090,334
All American Equity 44,640,318 44,743,292
Holmes Growth 53,819,879 55,892,579
Global MegaTrends 21,352,965 26,912,547
Global Resources 961,711,021 1,040,735,979
World Precious Minerals 420,155,472 515,678,894
Gold and Precious Metals 219,722,880 241,479,658
Eastern European 278,500,773 350,654,316
Global Emerging Markets 22,749,126 24,280,645
China Region 111,864,316 123,664,531
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, 2010, were: 4.37% of All American Equity, 26.10% of Holmes
Growth, 57.48% of Global MegaTrends, 58.26% of Global Resources, 97.01%
of World Precious Minerals, 94.87% of Gold and Precious Metals, 99.54%
of Eastern European, 94.80% of Global Emerging Markets and 97.10% of
China Region.
185
NOTES TO FINANCIAL STATEMENTS December 31, 2010
NOTE 5: TAX INFORMATION
The following table presents the income tax basis of securities owned
at December 31, 2010, 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 $ 99,653,581 $ -- $ -- $ --
U.S. Government Securities
Savings 203,598,089 -- -- --
Near-Term Tax Free 28,299,557 679,864 (73,124) 606,740
Tax Free 19,513,936 638,402 (497,677) 140,725
All American Equity 15,285,126 2,869,255 (221,226) 2,648,029
Holmes Growth 33,776,595 7,834,221 (722,593) 7,111,628
Global MegaTrends 16,633,501 3,972,383 (100,729) 3,871,654
Global Resources 798,960,453 265,006,869 (121,422,309) 143,584,560
World Precious Minerals 735,142,618 315,429,167 (223,786,805) 91,642,362
Gold and Precious Metals 220,184,942 101,121,500 (19,153,885) 81,967,615
Eastern European 317,010,897 148,938,536 (24,957,694) 123,980,842
Global Emerging Markets 11,603,041 2,290,821 (637,376) 1,653,445
China Region 46,749,969 8,032,488 (1,922,792) 6,109,696
As of December 31, 2010, 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 $ -- $ 907 $ -- $ --
U.S. Government Securities
Savings -- 1,037 -- --
Near-Term Tax Free 5,974 11,666 -- 606,740
Tax Free 2,831 30,632 -- 140,725
All American Equity -- 9,087 -- 2,648,030
Holmes Growth -- -- -- 7,111,585
Global MegaTrends -- 36,114 -- 3,871,686
Global Resources -- 30,550,082 -- 143,583,347
World Precious Minerals -- 69,269,383 -- 91,713,278
Gold and Precious Metals -- -- -- 81,966,884
Eastern European -- -- -- 123,996,737
Global Emerging Markets -- -- -- 1,660,906
China Region -- -- -- 6,109,694
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
186
NOTES TO FINANCIAL STATEMENTS December 31, 2010
capital in Canadian Trusts, adjustments for partnerships, tax straddle
loss deferrals on written options, and adjustments for grantor trusts.
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 year ended December
31, 2010, the Funds recorded the following reclassifications to
increase (decrease) the accounts listed below:
ACCUMULATED
NET ACCUMULATED
INVESTMENT NET REALIZED
FUND INCOME GAIN PAID-IN CAPITAL
---------------------------------------------------------------------------------------
U.S. Treasury Securities Cash $ 78 $ 285 $ (363)
U.S. Government Securities Savings (260,734) -- 260,734
Near-Term Tax Free -- -- --
Tax Free -- -- --
All American Equity (7,496) 41,490 (33,994)
Holmes Growth 655,263 (139,267) (515,996)
Global MegaTrends (14,965) 18,231 (3,266)
Global Resources 15,599,468 (15,599,497) 29
World Precious Minerals 71,135,521 (71,135,531) 10
Gold and Precious Metals 5,016,242 8,131,804 (13,148,046)
Eastern European 1,206,312 348,345 (1,554,657)
Global Emerging Markets 119,549 28,045 (147,594)
China Region 741,130 (379,575) (361,555)
The tax character of distributions paid during the fiscal year ended
December 31, 2010, were as follows:
TAX-EXEMPT ORDINARY LONG-TERM
FUND INCOME INCOME CAPITAL GAINS TOTAL
-----------------------------------------------------------------------------------------
U.S. Treasury Securities Cash $ -- $ 10,459 $ -- $ 10,459
U.S. Government Securities
Savings -- 22,923 -- 22,923
Near-Term Tax Free 619,205 37,242 -- 656,447
Tax Free 737,171 39,612 -- 776,783
All American Equity -- -- -- --
Holmes Growth -- 449,513 -- 449,513
Global MegaTrends - Investor
Class -- 13,170 -- 13,170
Global MegaTrends -
Institutional Class -- 35,430 -- 35,430
Global Resources - Investor
Class -- 21,220,358 -- 21,220,358
Global Resources - Institutional
Class -- 430,785 -- 430,785
World Precious Minerals -
Investor Class -- 99,236,093 -- 99,236,093
World Precious Minerals -
Institutional Class -- 209,612 -- 209,612
Gold and Precious Metals -- 3,708,191 18,871,531 22,579,722
Eastern European -- -- -- --
Global Emerging Markets -- -- -- --
China Region -- -- -- --
187
NOTES TO FINANCIAL STATEMENTS December 31, 2010
The tax character of distributions paid during the fiscal year ended
December 31, 2009, were as follows:
TAX-EXEMPT ORDINARY LONG-TERM
FUND INCOME INCOME CAPITAL GAINS TOTAL
-----------------------------------------------------------------------------------------
U.S. Treasury Securities Cash $ -- $ 10,436 $ -- $ 10,436
U.S. Government Securities
Savings -- 334,574 -- 334,574
Near-Term Tax Free 462,656 32,117 -- 494,773
Tax Free 677,673 38,269 -- 715,942
All American Equity -- 91,991 -- 91,991
Holmes Growth -- -- -- --
Global MegaTrends -- 86,578 -- 86,578
Global Resources -- -- -- --
World Precious Minerals -- 24,089,084 -- 24,089,084
Gold and Precious Metals -- 605,996 -- 605,996
Eastern European -- -- -- --
Global Emerging Markets -- -- -- --
China Region -- -- -- --
Capital loss carryforwards may be used to offset current or future
taxable capital gains until expiration. The Funds' tax-basis capital
gains and losses are determined only at the end of each fiscal year.
Under the recently enacted Regulated Investment Company Modernization
Act of 2010, the Funds will be permitted to carry forward capital
losses incurred in taxable years beginning after December 22, 2010, for
an unlimited period. However, any losses incurred during those future
years will be required to be utilized prior to the losses incurred in
pre-enactment tax years. As a result of this ordering rule,
pre-enactment capital loss carryforwards may be more likely to expire
unused. Additionally, post-enactment capital losses that are carried
forward will retain their character as either short-term or long-term
capital losses rather than being considered all short-term as under
previous law. The loss carryforwards and related expiration dates for
each fund, as of December 31, 2010, are as follows:
EXPIRATION DATE
---------------------------------------------------
FUND 2011 2012 2013 2014 2015
----------------------------------------------------------------------------------------
U.S. Treasury Securities Cash $ -- $ -- $ -- $ -- $ --
U.S. Government Securities Savings -- -- -- -- --
Near-Term Tax Free 46,218 33,686 2,760 202,719 2,488
Tax Free 25,127 421,236 -- -- --
All American Equity -- -- -- -- --
Holmes Growth -- -- -- -- --
Global MegaTrends -- -- -- -- 7,656,370
Global Resources -- -- -- -- --
World Precious Minerals -- -- -- -- --
Gold and Precious Metals -- -- -- -- --
Eastern European -- -- -- -- --
Global Emerging Markets -- -- -- -- 3,474,958
China Region -- -- -- -- --
188
NOTES TO FINANCIAL STATEMENTS December 31, 2010
EXPIRATION DATE
---------------------------------------------------------
FUND 2016 2017 2018 TOTAL
-----------------------------------------------------------------------------------------
U.S. Treasury Securities Cash $ -- $ -- $ -- $ --
U.S. Government Securities
Savings -- -- -- --
Near-Term Tax Free 112 722 2,532 291,237
Tax Free 10,697 -- -- 457,060
All American Equity 899,593 2,923,917 -- 3,823,510
Holmes Growth -- 4,410,934 -- 4,410,934
Global MegaTrends 5,994,166 995,675 -- 14,646,211
Global Resources 91,976,938 313,223,879 -- 405,200,817
World Precious Minerals 26,243,323 65,119,274 -- 91,362,597
Gold and Precious Metals -- -- -- --
Eastern European 83,605,572 257,523,539 15,445,946 356,575,057
Global Emerging Markets 2,965,929 5,814,949 -- 12,255,836
China Region 15,020,267 -- -- 15,020,267
POST OCTOBER 31, 2010 POST OCTOBER 31, 2010
FUND CAPITAL LOSS DEFERRAL CURRENCY LOSS DEFERRAL
-------------------------------------------------------------------------------
Tax Free $ 171 $ --
Holmes Growth -- 314
Global MegaTrends 202,556 --
World Precious Minerals 1,430,147 --
Gold and Precious Metals -- 29,380
Eastern European -- 59,553
Global Emerging Markets -- 2,248
The above amounts, in accordance with tax rules, are deemed to have
occurred on January 1, 2011.
NOTE 6: RISKS OF CONCENTRATIONS
The Near-Term Tax Free Fund and the Tax Free Fund may be exposed to
risks related to concentration of investments in a particular state or
geographic area. These investments present risks resulting from changes
in economic conditions of the region or the issuer.
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.
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.
189
NOTES TO FINANCIAL STATEMENTS December 31, 2010
The Eastern European invests more than 25% of its investments in
companies principally engaged 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.
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 7: 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 year ended December 31, 2010. The
U.S. Global Investors Funds paid BBH a total of $45,625 in commitment
fees for the year ended December 31, 2010, under this arrangement.
NOTE 8: SHARES OF BENEFICIAL INTEREST
At December 31, 2010, individual shareholders holding more than 5% of
outstanding Investor Class shares comprised 5.52% and 12.51% of the
Near-Term Tax Free Fund and the Tax Free Fund, respectively. In
addition, the Adviser held 11.06%, 8.68% and 8.21% of the Investor
Class shares of U.S. Government Securities Savings Fund, 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 company. Investment activities of these shareholders could have a
material impact on the Funds.
190
FINANCIAL HIGHLIGHTS
U.S. TREASURY SECURITIES CASH FUND
FOR A CAPITAL SHARE OUTSTANDING DURING THE
INVESTOR CLASS
--------------------------------------------------------------------------
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED YEAR ENDED JUNE 30,
------------------------ DECEMBER 31, ------------------------------
2010 2009 2008* 2008 2007 2006
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income --(a) --(a) --(a) .02 .04 .03
Net realized and unrealized gain -- -- -- -- -- --
------- -------- ---------- -------- -------- --------
Total from investment activities --(a) --(a) --(a) .02 .04 .03
------- -------- ---------- -------- -------- --------
Distributions from net investment income --(a) --(a) --(a) (.02) (.04) (.03)
------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (excluding account fees) (b) .01% .01% .23% 2.46% 4.36% 3.11%
Ratios to Average Net Assets: (c)
Net investment income .01% .01% .44% 2.43% 4.27% 3.06%
Total expenses 1.01% 1.01% 1.11% 1.09% .91% .92%
Expenses waived or reimbursed (d)(e) (.86)% (.75)% (.38)% (.09)% (.02)% --
Net recouped fees (e) -- -- -- --(g) -- .03%
Net expenses (f) .15% .26% .73% 1.00% .89% .95%
NET ASSETS, END OF PERIOD (IN THOUSANDS) $99,491 $103,889 $121,410 $111,955 $116,012 $119,028
<FN>
* Effective December 31, 2008, the fiscal year changed to
December 31.
(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 distribution
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 waived or 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 year
ended December 31, 2009 and the year ended December 31,
2010, the Adviser waived fees and/or reimbursed expenses
under the Minimum Yield Agreement in the amount of $170,642,
$789,420 and $884,850, respectively. These
waivers/reimbursements are subject to recapture in future
periods.
(f) The net expense ratios shown above reflect expenses after
waivers and reimbursements but exclude the effect of
reductions to total expenses for any expense 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 effects of expenses offset are as follows:
</FN>
INVESTOR CLASS
--------------------------------------------------------------------------
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED YEAR ENDED JUNE 30,
------------------------ DECEMBER 31, ------------------------------
2010 2009 2008* 2008 2007 2006
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.
191
FINANCIAL HIGHLIGHTS
U.S. GOVERNMENT SECURITIES SAVINGS FUND
FOR A CAPITAL SHARE OUTSTANDING DURING THE
INVESTOR CLASS
-----------------------------------------------------------------------------
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED YEAR ENDED JUNE 30,
------------------------- DECEMBER 31, --------------------------------
2010 2009 2008* 2008 2007 2006
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
--------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income --(a) --(a) .01 .03 .05 .04
Net realized and unrealized gain --(a) -- --(a) --(a) --(a) --
-------- -------- ---------- -------- -------- --------
Total from investment activities --(a) --(a) .01 .03 .05 .04
-------- -------- ---------- -------- -------- --------
Distributions from net investment income --(a) --(a) (.01) (.03) (.05) (.04)
--------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
--------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (excluding account fees) (b) .01% .10% .67% 3.47% 4.86% 3.69%
Ratios to Average Net Assets: (c)
Net investment income .01% .11% 1.36% 3.42% 4.75% 3.64%
Total expenses .82% .78% .73% .65% .62% .64%
Expenses waived or reimbursed (d) (.67)% (.42)% (.26)% (.20)% (.17)% (.19)%
Net expenses (e) .15% .36% .47%(g) .45% .45% .45%
NET ASSETS, END OF PERIOD (IN THOUSANDS) $203,835 $263,232 $357,910 $446,208 $469,095 $435,417
<FN>
* Effective December 31, 2008, the fiscal year changed to
December 31.
(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 waived or 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. During the
year ended December 31, 2009 and the year ended December 31,
2010, the Adviser waived fees and/or reimbursed expenses
under the Minimum Yield Agreement in the amount of $258,561
and $678,107, respectively. These waivers/reimbursements are
subject to recapture in future periods.
(e) The net expense ratios shown above reflect expenses after
waivers and 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>
INVESTOR CLASS
---------------------------------------------------------------------------
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED YEAR ENDED JUNE 30,
------------------------- DECEMBER 31, ------------------------------
2010 2009 2008* 2008 2007 2006
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 the Money Market Funds. The cost to
participate was without regard to the expense limitation.
</FN>
See accompanying notes to financial statements.
192
FINANCIAL HIGHLIGHTS
NEAR-TERM TAX FREE FUND
FOR A CAPITAL SHARE OUTSTANDING DURING THE
INVESTOR CLASS
-----------------------------------------------------------------------
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED YEAR ENDED JUNE 30,
----------------------- DECEMBER 31, ----------------------------
2010 2009 2008* 2008 2007 2006
NET ASSET VALUE, BEGINNING OF PERIOD $2.21 $2.16 $2.14 $2.12 $2.12 $2.17
------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income .06 .06 .03 .07 .07 .07
Net realized and unrealized gain (loss) .01 .05 .02 .02 --(a) (.05)
------- ------- --------- ------- ------- -------
Total from investment activities .07 .11 .05 .09 .07 .02
------- ------- --------- ------- ------- -------
Distributions from net investment income (.06) (.06) (.03) (.07) (.07) (.07)
------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $2.22 $2.21 $2.16 $2.14 $2.12 $2.12
------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (excluding account fees) (b) 2.95% 5.00% 2.55% 4.42% 3.51% .75%
Ratios to Average Net Assets: (c)
Net investment income 2.46% 2.63% 3.15% 3.41% 3.43% 3.08%
Total expenses 1.30% 1.53% 1.82% 1.91% 1.63% 1.54%
Expenses waived or reimbursed (d) (.85)% (1.08)% (1.37)% (1.46)% (1.18)% (1.09)%
Net expenses (e) .45% .45% .45% .45% .45% .45%
Portfolio turnover rate 1% --(g) 8% 8% 22% 33%
NET ASSETS, END OF PERIOD (IN THOUSANDS) $29,138 $23,337 $13,989 $13,603 $13,383 $15,830
<FN>
* Effective December 31, 2008, the fiscal year changed to
December 31.
(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 waived or 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
waivers and 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>
INVESTOR CLASS
----------------------------------------------------------------------
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED YEAR ENDED JUNE 30,
----------------------- DECEMBER 31, ---------------------------
2010 2009 2008* 2008 2007 2006
Ratios to Average Net Assets (c):
Expenses offset (f) -- -- -- -- -- --
<FN>
(f) Effect on the expense ratio was not greater than 0.005%.
(g) Portfolio turnover was not greater than 0.5%
</FN>
See accompanying notes to financial statements.
193
FINANCIAL HIGHLIGHTS
TAX FREE FUND
FOR A CAPITAL SHARE OUTSTANDING DURING THE
INVESTOR CLASS
-----------------------------------------------------------------------
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED YEAR ENDED JUNE 30,
----------------------- DECEMBER 31, ----------------------------
2010 2009 2008* 2008 2007 2006
NET ASSET VALUE, BEGINNING OF PERIOD $12.20 $11.72 $11.93 $11.98 $11.98 $12.33
------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income .44 .45 .23 .47 .50 .52
Net realized and unrealized gain (loss) (.19) .48 (.21) (.05) --(a) (.36)
------- ------- --------- ------- ------- -------
Total from investment activities .25 .93 .02 .42 .50 .16
------- ------- --------- ------- ------- -------
Distributions from net investment income (.44) (.45) (.23) (.47) (.50) (.51)
------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $12.01 $12.20 $11.72 $11.93 $11.98 $11.98
------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (excluding account fees) (b) 2.04% 8.03% .22% 3.54% 4.15% 1.30%
Ratios to Average Net Assets: (c)
Net investment income 3.55% 3.73% 3.92% 3.91% 4.09% 4.01%
Total expenses 1.66% 1.75% 1.91% 1.94% 1.86% 1.69%
Expenses waived or reimbursed (d) (.96)% (1.05)% (1.21)% (1.24)% (1.16)% (.99)%
Net expenses (e) .70% .70% .70% .70% .70% .70%
Portfolio turnover rate 15% --(g) 6% 11% 6% 19%
NET ASSETS, END OF PERIOD (IN THOUSANDS) $19,794 $22,102 $16,946 $18,380 $15,940 $14,992
<FN>
* Effective December 31, 2008, the fiscal year changed to
December 31.
(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 waived or 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
waivers and 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>
INVESTOR CLASS
----------------------------------------------------------------------
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED YEAR ENDED JUNE 30,
----------------------- DECEMBER 31, ---------------------------
2010 2009 2008* 2008 2007 2006
Ratios to Average Net Assets (c):
Expenses offset (f) -- -- -- -- -- --
<FN>
(f) Effect on the expense ratio was not greater than 0.005%.
(g) Portfolio turnover was not greater than 0.5%
</FN>
See accompanying notes to financial statements.
194
FINANCIAL HIGHLIGHTS
ALL AMERICAN EQUITY FUND
FOR A CAPITAL SHARE OUTSTANDING DURING THE
INVESTOR CLASS
----------------------------------------------------------------------
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED YEAR ENDED JUNE 30,
----------------------- DECEMBER 31, ---------------------------
2010 2009 2008* 2008 2007 2006
NET ASSET VALUE, BEGINNING OF PERIOD $19.60 $17.33 $27.27 $28.58 $27.59 $24.47
-----------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income (loss) .02 (.13) .04 (.15) (.08) (.18)
Net realized and unrealized gain (loss) 3.10 2.51 (9.97) 1.98 4.94 3.89
------- ------- --------- ------- ------- -------
Total from investment activities 3.12 2.38 (9.93) 1.83 4.86 3.71
------- ------- --------- ------- ------- -------
Distributions
From net investment income -- (.11) (.01) -- -- --
From net realized gains -- -- -- (3.01) (3.87) (.59)
From tax return of capital -- -- -- (.13) -- --
------- ------- --------- ------- ------- -------
Total distributions -- (.11) (.01) (3.14) (3.87) (.59)
------- ------- --------- ------- ------- -------
Short-Term Trading Fees ** (a) -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $22.72 $19.60 $17.33 $27.27 $28.58 $27.59
-----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (excluding account fees) (b) 15.92% 13.75% (36.42)% 5.99% 19.59% 15.25%
Ratios to Average Net Assets: (c)
Net investment income (loss) .10% (.74)% .35% (.55)% (.28)% (.67)%
Total expenses 2.56% 2.79% 2.37% 1.98% 2.01% 2.20%
Expenses waived or reimbursed (d) (.48)% (.96)% (.62)% (.23)% (.26)% (.44)%
Net expenses (e) 2.08% 1.83% 1.75% 1.75% 1.75% 1.76%
Portfolio turnover rate 299% 343% 205% 225% 223% 369%
NET ASSETS, END OF PERIOD (IN THOUSANDS) $17,760 $16,436 $16,234 $26,513 $23,479 $21,547
<FN>
* Effective December 31, 2008, the fiscal year changed to
December 31.
** 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 distribution
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 waived or 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
waivers and 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>
INVESTOR CLASS
-----------------------------------------------------------------------
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED YEAR ENDED JUNE 30,
----------------------- DECEMBER 31, ----------------------------
2010 2009 2008* 2008 2007 2006
Ratios to Average Net Assets (c):
Expenses offset --(f) --(f) --(f) --(f) --(f) (0.01)%
<FN>
(f) Effect on the expense ratio was not greater than 0.005%.
</FN>
See accompanying notes to financial statements.
195
FINANCIAL HIGHLIGHTS
HOLMES GROWTH FUND
FOR A CAPITAL SHARE OUTSTANDING DURING THE
INVESTOR CLASS
----------------------------------------------------------------------
TWO MONTHS
YEAR ENDED DECEMBER 31, ENDED YEAR ENDED OCTOBER 31,
----------------------- DECEMBER 31, ---------------------------
2010 2009 2008* 2008 2007 2006
NET ASSET VALUE, BEGINNING OF PERIOD $15.54 $12.79 $14.14 $24.78 $18.34 $16.56
-----------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment loss (.22) (.13) (.01) (.15) (.14) (.14)
Net realized and unrealized gain (loss) 3.54 2.88 (1.34) (10.49) 6.58 1.92
------- ------- --------- ------- ------- -------
Total from investment activities 3.32 2.75 (1.35) (10.64) 6.44 1.78
------- ------- --------- ------- ------- -------
Distributions (.21) -- -- -- -- --
Short-Term Trading Fees ** (a) -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $18.65 $15.54 $12.79 $14.14 $24.78 $18.34
-----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (excluding account fees) (b) 21.35% 21.50% (9.55)% (42.94)% 35.11% 10.75%
Ratios to Average Net Assets: (c)
Net investment loss (1.29)% (.93)% (.27)% (.65)% (.62)% (.69)%
Total expenses 1.93% 2.10% 2.51% 1.74% 1.72% 1.74%
Expenses waived or reimbursed (d) --(f) (.33)% (.76)% -- -- --
Net expenses (e) 1.93% 1.77% 1.75% 1.74% 1.72% 1.74%
Portfolio turnover rate 160% 219% 20% 140% 98% 290%
NET ASSETS, END OF PERIOD (IN THOUSANDS) $40,604 $37,149 $32,488 $36,231 $68,881 $61,810
<FN>
* Effective December 31, 2008, the fiscal year changed to
December 31.
** 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 waived or 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 shown above reflect expenses after waivers
and 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>
INVESTOR CLASS
-----------------------------------------------------------------------
TWO MONTHS
YEAR ENDED DECEMBER 31, ENDED YEAR ENDED OCTOBER 31,
----------------------- DECEMBER 31, ----------------------------
2010 2009 2008* 2008 2007 2006
Ratios to Average Net Assets (c):
Expenses offset --(f) --(f) --(f) --(f) --(f) (0.01)%
<FN>
(f) Effect on the expense ratio was not greater than 0.005%.
</FN>
See accompanying notes to financial statements.
196
FINANCIAL HIGHLIGHTS
GLOBAL MEGATRENDS FUND
FOR A CAPITAL SHARE OUTSTANDING DURING THE
INSTITUTIONAL
INVESTOR CLASS CLASS
-------------------------------------------------------------------- -------------
YEAR ENDED TWO MONTHS PERIOD
DECEMBER 31, ENDED YEAR ENDED OCTOBER 31, ENDED
-------------------- DECEMBER 31, ----------------------------- DECEMBER 31,
2010 2009 2008* 2008 2007** 2006 2010(e)
NET ASSET VALUE, BEGINNING OF
PERIOD $8.15 $6.28 $6.60 $12.75 $11.07 $10.30 $7.84
---------------------------------------------------------------------------------------------------------- ------------
Investment Activities
Net investment income (loss) .06 .03 --(a) --(a) (.11) (.10) .01
Net realized and unrealized gain
(loss) .63 1.86 (.31) (5.30) 2.63 1.18 1.02
------- ------- --------- ------- ------- ------- ---------
Total from investment activities .69 1.89 (.31) (5.30) 2.52 1.08 1.03
------- ------- --------- ------- ------- ------- ---------
Distributions
From net investment income (.01) (.02) -- -- -- -- (.08)
From net realized gains -- -- -- (.85) (.84) (.31) --
From tax return of capital -- -- (.01) -- -- -- --
------- ------- --------- ------- ------- ------- ---------
Total distributions (.01) (.02) (.01) (.85) (.84) (.31) (.08)
------- ------- --------- ------- ------- ------- ---------
Short-Term Trading Fees *** --(a) --(a) --(a) --(a) --(a) --(a) --
--------------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE, END OF PERIOD $8.83 $8.15 $6.28 $6.60 $12.75 $11.07 $8.79
--------------------------------------------------------------------------------------------------------- -------------
TOTAL RETURN (excluding account
fees) (b) 8.43% 30.15% (4.74)% (44.50)% 24.49% 10.53% 13.08%
Ratios to Average Net Assets: (c)
Net investment income (loss) .43% .45% (.20)% (.06)% (.93)% (.89)% .51%
Total expenses 2.44% 2.43% 2.96% 2.21% 2.49% 2.55% 8.09%
Expenses waived or reimbursed (d) (.22)% (.48)% (1.11)% (.21)% -- -- (6.48)%
Net expenses (f) 2.22% 1.95% 1.85% 2.00% 2.49% 2.55% 1.61%
Portfolio turnover rate (h) 104% 100% 29% 92% 65% 75% 104%
NET ASSETS, END OF PERIOD (IN
THOUSANDS) $16,332 $28,557 $22,035 $25,387 $17,723 $17,077 $3,970
<FN>
* Effective December 31, 2008, the fiscal year changed to
December 31.
** Effective October 1, 2007, U.S. Global Investors, Inc.
assumed management of Global MegaTrends Fund from the former
subadviser.
*** 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 waived or 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) From March 1, 2010, commencement of operations for the
Institutional Class.
(f) 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>
INSTITUTIONAL
INVESTOR CLASS CLASS
------------------------------------------------------------------ -------------
YEAR ENDED TWO MONTHS PERIOD
DECEMBER 31, ENDED YEAR ENDED OCTOBER 31, ENDED
-------------------- DECEMBER 31, --------------------------- DECEMBER 31,
2010 2009 2008* 2008 2007 2006 2010(E)
Ratios to Average Net Assets (c):
Expenses offset (g) -- -- -- -- -- -- --
<FN>
(g) Effect on the expense ratio was not greater than 0.005%.
(h) Portfolio turnover rate is calculated at the fund level.
</FN>
See accompanying notes to financial statements.
197
FINANCIAL HIGHLIGHTS
GLOBAL RESOURCES FUND
FOR A CAPITAL SHARE OUTSTANDING DURING THE
INSTITUTIONAL
INVESTOR CLASS CLASS
------------------------------------------------------------------------- -------------
YEAR ENDED SIX MONTHS PERIOD
DECEMBER 31, ENDED YEAR ENDED JUNE 30, ENDED
------------------- DECEMBER 31, ------------------------------------ DECEMBER 31,
2010 2009 2008* 2008 2007 2006 2010(e)
NET ASSET VALUE, BEGINNING OF
PERIOD $8.85 $5.26 $20.52 $17.70 $17.22 $12.67 $8.87
------------------------------------------------------------------------------------------------------------- -------------
Investment Activities
Net investment income (loss) (.09) (.01) (.02)** .05** .21 .29 (.01)
Net realized and unrealized
gain (loss) 3.44 3.60 (13.92)** 5.86** 2.86 5.63 3.41
-------- -------- ---------- ---------- ---------- ---------- ---------
Total from investment
activities 3.35 3.59 (13.94) 5.91 3.07 5.92 3.40
-------- -------- ---------- ---------- ---------- ---------- ---------
Distributions
From net investment income (.29) -- -- (.95) (.88) (.32) (.29)
From net realized gains -- -- (1.32) (2.14) (1.71) (1.05) --
-------- -------- ---------- ---------- ---------- ---------- ---------
Total distributions (.29) -- (1.32) (3.09) (2.59) (1.37) (.29)
-------- -------- ---------- ---------- ---------- ---------- ---------
Short-Term Trading Fees ** (a) -- -- -- -- -- -- --
---------------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE, END OF PERIOD $11.91 $8.85 $5.26 $20.52 $17.70 $17.22 $11.98
---------------------------------------------------------------------------------------------------------- -------------
TOTAL RETURN (excluding account
fees) (b) 38.00% 68.25% (67.70)% 37.59% 20.94% 48.91% 38.53%
Ratios to Average Net Assets: (c)
Net investment income (loss) (1.04)% (.08)% (.34)% .28% .74% 1.07% (.35)%
Total expenses 1.73% 1.64% 1.20% .88% .95% .96% 1.74%
Expenses waived or reimbursed (d) -- (.17)% (.12)% -- -- -- (.66)%
Net expenses (f) 1.73% 1.47% 1.08% .88% .95% .96% 1.08%
Portfolio turnover rate(h) 145% 189% 100% 133% 122% 157% 145%
NET ASSETS, END OF PERIOD (IN
THOUSANDS) $911,559 $740,072 $464,524 $2,010,581 $1,383,250 $1,281,664 $17,923
<FN>
* Effective December 31, 2008, the fiscal year changed to
December 31.
** 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 waived or 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) From March 1, 2010, commencement of operations for the
Institutional Class.
(f) The net expense ratios shown above reflect expenses after
waivers and 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>
INSTITUTIONAL
INVESTOR CLASS CLASS
------------------------------------------------------------------------- -------------
YEAR ENDED SIX MONTHS PERIOD
DECEMBER 31, ENDED YEAR ENDED JUNE 30, ENDED
------------------- DECEMBER 31, ------------------------------------ DECEMBER 31,
2010 2009 2008* 2008 2007 2006 2010(E)
Ratios to Average Net Assets (c):
Expenses offset --(g) --(g) --(g) (0.01)% (0.01)% (0.01)% --
<FN>
(g) Effect on the expense ratio was not greater than 0.005%.
(h) Portfolio turnover rate is calculated at the fund level.
</FN>
See accompanying notes to financial statements.
198
FINANCIAL HIGHLIGHTS
WORLD PRECIOUS MINERALS FUND
FOR A CAPITAL SHARE OUTSTANDING DURING THE
INSTITUTIONAL
INVESTOR CLASS CLASS
---------------------------------------------------------------------- -------------
YEAR ENDED SIX MONTHS PERIOD
DECEMBER 31, ENDED YEAR ENDED JUNE 30, ENDED
-------------------- DECEMBER 31, ------------------------------ DECEMBER 31,
2010 2009 2008* 2008 2007 2006 2010(e)
NET ASSET VALUE, BEGINNING OF PERIOD $17.42 $9.56 $25.32 $28.34 $28.86 $15.50 $17.36
----------------------------------------------------------------------------------------------------------- -------------
Investment Activities
Net investment income (loss) (.32)** (.18) (.06)** (.13)** --** .72 (.10)**
Net realized and unrealized gain
(loss) 8.16** 8.71 (13.65)** 3.70** 3.02 13.62 8.14**
-------- -------- -------- -------- -------- -------- ---------
Total from investment activities 7.84 8.53 (13.71) 3.57 3.02 14.34 8.04
-------- -------- -------- -------- -------- -------- ---------
Distributions
From net investment income (2.98) (.67) -- (3.25) (1.52) (.67) (3.11)
From net realized gains -- -- (2.05) (3.35) (2.04) (.37) --
-------- -------- -------- -------- -------- -------- ---------
Total distributions (2.98) (.67) (2.05) (6.60) (3.56) (1.04) (3.11)
-------- -------- -------- -------- -------- -------- ---------
Short-Term Trading Fees ** --(a) --(a) --(a) .01 .02 .06 --
------------------------------------------------------------------------------------------------------------ -------------
NET ASSET VALUE, END OF PERIOD $22.28 $17.42 $9.56 $25.32 $28.34 $28.86 $22.29
------------------------------------------------------------------------------------------------------------ -------------
TOTAL RETURN (excluding account
fees) (b) 45.38% 89.50% (51.23)% 14.14% 11.48% 96.21% 46.72%
Ratios to Average Net Assets: (c)
Net investment income (loss) (1.68)% (1.32)% (.80)% (.43)% .06% .05% (.86)%
Total expenses 1.84% 1.75% 1.36% .97% .99% 1.13% 15.19%
Expenses waived or reimbursed (d) -- (.17)% (.11)% -- -- -- (14.06)%
Net expenses (f) 1.84% 1.58% 1.25% .97% .99% 1.13% 1.13%
Portfolio turnover rate (h) 68% 72% 27% 58% 54% 66% 68%
NET ASSETS, END OF PERIOD
(IN THOUSANDS) $826,598 $639,035 $359,120 $949,014 $923,779 $920,249 $2,233
<FN>
* Effective December 31, 2008, the fiscal year changed to
December 31.
** 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 waived or 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) From March 1, 2010, commencement of operations for the
Institutional Class.
(f) The net expense ratios shown above reflect expenses after
waivers and 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>
INSTITUTIONAL
INVESTOR CLASS CLASS
------------------------------------------------------------------- -------------
YEAR ENDED SIX MONTHS PERIOD
DECEMBER 31, ENDED YEAR ENDED JUNE 30, ENDED
------------------- DECEMBER 31, ------------------------------ DECEMBER 31,
2010 2009 2008* 2008 2007 2006 2010(E)
Ratios to Average Net Assets (c):
Expenses offset (g) -- -- -- -- -- -- --
<FN>
(g) Effect on the expense ratio was not greater than 0.005%.
(h) Portfolio turnover rate is calculated at the fund level.
</FN>
See accompanying notes to financial statements.
199
FINANCIAL HIGHLIGHTS
GOLD AND PRECIOUS METALS FUND
FOR A CAPITAL SHARE OUTSTANDING DURING THE
INVESTOR CLASS
----------------------------------------------------------------------------
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED YEAR ENDED JUNE 30,
------------------------- DECEMBER 31, -------------------------------
2010 2009 2008* 2008 2007 2006
NET ASSET VALUE, BEGINNING OF PERIOD $15.46 $10.83 $17.18 $14.99 $15.48 $7.67
-------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income (loss) (.21) (.17)** (.03) (.08)** .05 (.01)**
Net realized and unrealized gain (loss) 5.91 4.84 (5.59) 4.69 (.56) 7.88
-------- -------- ---------- -------- -------- --------
Total from investment activities 5.70 4.67 (5.62) 4.61 (.51) 7.87
-------- -------- ---------- -------- -------- --------
Distributions
From net investment income (.26) (.04) -- -- -- (.12)
From net realized gains (1.31) -- (.73) (2.43) -- --
-------- -------- ---------- -------- -------- --------
Total distributions (1.57) (.04) (.73) (2.43) -- (.12)
-------- -------- ---------- -------- -------- --------
Short-Term Trading Fees ** .01 --(a) --(a) .01 .02 .06
-------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $19.60 $15.46 $10.83 $17.18 $14.99 $15.48
-------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (excluding account fees) (b) 36.88% 43.11% (31.51)% 33.49% (3.17)% 104.15%
Ratios to Average Net Assets: (c)
Net investment income (loss) (1.46)% (1.16)% (.66)% (.41)% .31% (.06)%
Total expenses 1.80% 1.69% 1.54% 1.27% 1.29% 1.47%
Expenses waived or reimbursed (d) -- (.15)% (.15)% -- -- --
Net expenses (e) 1.80% 1.54% 1.39% 1.27% 1.29% 1.47%
Portfolio turnover rate 103% 135% 61% 93% 72% 78%
NET ASSETS, END OF PERIOD (IN THOUSANDS) $300,949 $234,393 $192,206 $259,022 $178,762 $208,027
<FN>
* Effective December 31, 2008, the fiscal year changed to
December 31.
** 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 waived or 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
waivers and 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>
INVESTOR CLASS
---------------------------------------------------------------------------
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED YEAR ENDED JUNE 30,
------------------------- DECEMBER 31, ------------------------------
2010 2009 2008* 2008 2007 2006
Ratios to Average Net Assets (c):
Expenses offset --(f) --(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.
200
FINANCIAL HIGHLIGHTS
EASTERN EUROPEAN FUND
FOR A CAPITAL SHARE OUTSTANDING DURING THE
INVESTOR CLASS
--------------------------------------------------------------------------------
TWO MONTHS
YEAR ENDED DECEMBER 31, ENDED YEAR ENDED OCTOBER 31,
------------------------- DECEMBER 31, -----------------------------------
2010 2009 2008*/** 2008*** 2007*** 2006***
NET ASSET VALUE, BEGINNING OF PERIOD $9.11 $5.12 $6.35 $19.91 $15.44 $12.88
--------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income (loss) (.04) --(a) (.03) (.03) (.10) .13
Net realized and unrealized gain
(loss) 1.74 3.99 (1.20) (10.10) 6.83 3.60
-------- -------- ---------- -------- ---------- ----------
Total from investment activities 1.70 3.99 (1.23) (10.13) 6.73 3.73
-------- -------- ---------- -------- ---------- ----------
Distributions
From net investment income -- -- -- -- (.29) --
From net realized gains -- -- -- (3.46) (1.98) (1.22)
-------- -------- ---------- -------- ---------- ----------
Total distributions -- -- -- (3.46) (2.27) (1.22)
-------- -------- ---------- -------- ---------- ----------
Short-Term Trading Fees **** --(a) --(a) --(a) .03 .01 .05
--------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $10.81 $9.11 $5.12 $6.35 $19.91 $15.44
--------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (excluding account
fees) (b) 18.66% 77.93% (19.37)% (61.36)% 48.74% 31.03%
Ratios to Average Net Assets: (c)
Net investment income (loss) (.36)% --(f) (3.02)% (.15)% (.61)% .71%
Total expenses 1.91% 2.04% 2.37% 1.96% 1.98% 1.95%
Expenses waived or reimbursed (d) -- (.08)% (.27)% --(f) -- --
Net expenses (e) 1.91% 1.96% 2.10% 1.96% 1.98% 1.95%
Portfolio turnover rate 69% 80% 11% 82% 54% 68%
NET ASSETS, END OF PERIOD (IN THOUSANDS) $440,037 $464,409 $317,320 $415,494 $1,582,707 $1,347,149
<FN>
* Effective December 31, 2008, the fiscal year changed to
December 31.
** Effective November 7, 2008, U.S. Global Investors, Inc.
assumed management of the fund from Charlemagne Capital
(IOM) Limited.
*** The per share amounts shown were adjusted to reflect the
3-for-1 stock split which was effective on May 27, 2008.
**** 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 waived or 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 fund1s investment. Fees rebated by the subadviser also
reduced 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>
INVESTOR CLASS
-------------------------------------------------------------------------------
TWO MONTHS
YEAR ENDED DECEMBER 31, ENDED YEAR ENDED OCTOBER 31,
------------------------- DECEMBER 31, ----------------------------------
2010 2009 2008*/** 2008*** 2007*** 2006***
Ratios to Average Net Assets (c):
Expenses offset --(f) --(f) --(f) (0.01)% (0.01)% (0.01)%
Expenses rebated by subadviser n/a n/a n/a n/a n/a (0.01)%
<FN>
(f) Effect on the ratio was not greater than 0.005%.
</FN>
See accompanying notes to financial statements.
201
FINANCIAL HIGHLIGHTS
GLOBAL EMERGING MARKETS FUND
FOR A CAPITAL SHARE OUTSTANDING DURING THE
INVESTOR CLASS
----------------------------------------------------------------------
TWO MONTHS
YEAR ENDED DECEMBER 31, ENDED YEAR ENDED OCTOBER 31,
----------------------- DECEMBER 31, ---------------------------
2010 2009 2008*/** 2008 2007 2006
NET ASSET VALUE, BEGINNING OF PERIOD $7.95 $5.29 $5.94 $21.88 $13.93 $10.65
-----------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income (loss) (.11) (.05) (.01) (.43) (.13) .02
Net realized and unrealized gain (loss) 1.32 2.71 (.56) (11.98) 9.18 3.50
------- ------- --------- ------- ------- -------
Total from investment activities 1.21 2.66 (.57) (12.41) 9.05 3.52
------- ------- --------- ------- ------- -------
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 *** .01 --(a) --(a) .04 .03 .07
-----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $9.17 $7.95 $5.29 $5.94 $21.88 $13.93
-----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (excluding account fees) (b) 15.35% 50.28% (9.59)% (66.81)% 69.52% 34.16%
Ratios to Average Net Assets (c):
Net investment income (loss) (1.22)% (.77)% (1.16)% (1.01)% (.92)% .13%
Total expenses 3.76% 4.02% 6.83% 2.80% 2.75% 3.07%
Expenses waived or reimbursed (d) (.77)% (1.38)% (4.33)% (.30)% (.39)% (1.05)%
Net expenses (e) 2.99% 2.64% 2.50% 2.50% 2.36% 2.02%
Portfolio Turnover Rate 190% 166% 21% 83% 125% 136%
NET ASSETS, END OF PERIOD (IN THOUSANDS) $13,403 $13,819 $9,663 $11,708 $59,621 $29,029
<FN>
* Effective December 31, 2008, the fiscal year changed to
December 31.
** Effective November 7, 2008, U.S. Global Investors, Inc.
assumed management of the fund from Charlemagne Capital
(IOM) Limited.
*** 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 waived or 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 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
fund1s investment. Fees rebated by the subadviser also
reduced 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>
INVESTOR CLASS
----------------------------------------------------------------------
TWO MONTHS
YEAR ENDED DECEMBER 31, ENDED YEAR ENDED OCTOBER 31,
----------------------- DECEMBER 31, ---------------------------
2010 2009 2008*/** 2008 2007 2006
Ratios to Average Net Assets (c):
Expenses offset --(f) --(f) --(f) --(f) n/a n/a
Expenses rebated by subadviser n/a n/a n/a n/a n/a (0.02)%
<FN>
(f) Effect on the expense ratio was not greater than 0.005%.
</FN>
See accompanying notes to financial statements.
202
FINANCIAL HIGHLIGHTS
CHINA REGION FUND
FOR A CAPITAL SHARE OUTSTANDING DURING THE
INVESTOR CLASS
------------------------------------------------------------------------
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED YEAR ENDED JUNE 30,
----------------------- DECEMBER 31, -----------------------------
2010 2009 2008* 2008 2007 2006
NET ASSET VALUE, BEGINNING OF PERIOD $8.36 $5.59 $9.09 $12.55 $8.71 $6.87
-------------------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment income (loss) (.12) (.05) (.02)** (.03)** --** (.01)
Net realized and unrealized gain (loss) 1.22 2.81 (3.49)** (.27)** 3.98** 2.02
------- ------- --------- ------- ------- -------
Total from investment activities 1.10 2.76 (3.51) (.30) 3.98 2.01
------- ------- --------- ------- ------- -------
Distributions
From net investment income -- -- -- (.10) (.16) (.19)
From net realized gains -- -- -- (2.93) -- --
From tax return of capital -- -- -- (.17) -- --
------- ------- --------- ------- ------- -------
Total distributions -- -- -- (3.20) (.16) (.19)
------- ------- --------- ------- ------- -------
Short-Term Trading Fees ** .01 .01 .01 .04 .02 .02
-------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $9.47 $8.36 $5.59 $9.09 $12.55 $8.71
-------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (excluding account fees) (b) 13.28% 49.55% (38.50)% (8.58)% 46.34% 30.03%
Ratios to Average Net Assets: (c)
Net investment income (loss) (1.02)% (.79)% (.47)% (.26)% .02% (.08)%
Total expenses 2.39% 2.47% 2.46% 1.95% 2.02% 2.31%
Expenses waived or reimbursed (d) -- (.45)% (.27)% -- -- --
Net expenses (e) 2.39% 2.02% 2.19% 1.95% 2.02% 2.31%
Portfolio turnover rate 242% 327% 117% 208% 208% 292%
NET ASSETS, END OF PERIOD (IN THOUSANDS) $51,843 $56,323 $38,348 $81,109 $93,805 $67,761
<FN>
* Effective December 31, 2008, the fiscal year changed to
December 31.
** 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 waived or 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 reduction not occurred.
(e) The net expense ratios shown above reflect expenses after
waivers and 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 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>
INVESTOR CLASS
----------------------------------------------------------------------
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED YEAR ENDED JUNE 30,
----------------------- DECEMBER 31, ---------------------------
2010 2009 2008* 2008 2007 2006
Ratios to Average Net Assets (c):
Expenses offset --(f) --(f) --(f) --(f) --(f) (0.01)%
<FN>
(f) Effect on the expense ratio was not greater than 0.005%.
</FN>
See accompanying notes to financial statements.
203
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Trustees and Shareholders
of U.S. Global Investors Funds:
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments, of the All American Equity Fund,
China Region Fund, Eastern European Fund, Global Emerging Markets Fund,
Global MegaTrends Fund, Global Resources Fund, Gold and Precious Metals
Fund, Holmes Growth Fund, Near-Term Tax Free Fund, Tax Free Fund, U.S.
Government Securities Savings Fund, U.S Treasury Securities Cash Fund,
and World Precious Minerals Fund, each a portfolio within the U.S.
Global Investors Funds (the "Trust") as of December 31, 2010 and the
related statements of operations for the year then ended, statements of
changes in net assets for each of the years or periods in the two-year
period then ended, and the financial highlights for each of the years or
periods in the five-year period then ended. 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, 2010, 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 portfolios within the
Trust, as of December 31, 2010, 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 24, 2011
204
TRUSTEES AND OFFICERS (UNAUDITED) December 31, 2010
The following table presents information about the Trustees as of
December 31, 2010, 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
---------------------------------------------------------------------------------
J. Michael Belz (57) 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 (67) PRINCIPAL OCCUPATION: President Emeritus of Sam
7900 Callaghan Road Houston State University. Served as President
San Antonio, TX 78229 from August 2001 to August 2010.
Trustee OTHER DIRECTORSHIPS HELD: Chairman of the Audit
November 2002 to present Committee, Tandy Brands Accessories, Inc. since
Thirteen portfolios 2008; Director from 2009 to present.
---------------------------------------------------------------------------------
Clark R. Mandigo (67) PRINCIPAL OCCUPATION: Restaurant operator,
7900 Callaghan Road business consultant from 1991 to present.
San Antonio, TX 78229
Trustee
May 1993 to present
Thirteen portfolios
---------------------------------------------------------------------------------
Joe C. McKinney (64) 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>
205
TRUSTEES AND OFFICERS (UNAUDITED) December 31, 2010
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 E. Holmes ** (55) 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 and the investment companies it sponsors.
January 1990 to present OTHER DIRECTORSHIPS HELD: Director of 71316
Thirteen portfolios Ontario, Inc. since April 1987.
---------------------------------------------------------------------------------
<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, 2010, 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 E. Holmes (55) 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 B. McGee (51) 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 A. Rademacher (50) 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.
--------------------------------------------------------------------------------
206
TRUSTEES AND OFFICERS (UNAUDITED) December 31, 2010
NAME (AGE)
ADDRESS
POSITIONS HELD WITH TRUST
LENGTH OF TIME SERVED* PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
--------------------------------------------------------------------------------
James L. Love, Jr. (42) Chief Compliance Officer and Associate General
7900 Callaghan Road Counsel of the Adviser since September 2007.
San Antonio, TX 78229 Executive Director Executive Attorney from
Chief Compliance Officer January 2003 to September 2007, Senior Counsel
September 2007 to present May 2002 to January 2003 with USAA.
--------------------------------------------------------------------------------
Mark Carter (43) 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 (48) 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 (41) Director of Marketing of the Adviser since
7900 Callaghan Road August 2007. Sr. VP Marketing with Frost
San Antonio, TX 78229 National Bank from May 1998 to August 2007.
Vice President, Marketing
December 2008 to present
--------------------------------------------------------------------------------
<FN>
*These dates include service for a predecessor trust.
</FN>
207
ADDITIONAL INFORMATION (UNAUDITED)
ADDITIONAL FEDERAL TAX INFORMATION
The percentage of tax-exempt dividends paid by the Funds for the year
ended December 31, 2010, was:
Near-Term Tax Free 94.36%
Tax Free 94.58%
The percentage of ordinary income dividends paid by the Funds during the
year ended December 31, 2010, which qualify for the Dividends Received
Deduction available to corporate shareholders was:
Holmes Growth 18.26%
Global MegaTrends 100.00%
Global Resources 11.57%
World Precious Minerals 0.00%
Gold and Precious Metals 2.41%
The amounts which represent foreign source income and foreign taxes paid
during the year ended December 31, 2010, are as follows:
FOREIGN SOURCE FOREIGN TAX
INCOME CREDIT
Global MegaTrends $ 453,607 $ 27,898
Global Resources $1,848,636 $129,460
World Precious Minerals $ 996,980 $ 93,206
Gold and Precious Metals $ 692,912 $ 60,388
During the year ended December 31, 2010, the Gold and Precious Metals
Fund declared $18,871,531 in distributions that were designated as
long-term capital gain distributions.
In January 2011, the Funds reported on Form 1099-DIV the tax status of
all distributions made during the calendar year 2010. 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
http://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 http://www.sec.gov.
208
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 http://www.sec.gov. The Funds' Forms N-Q may also be reviewed
and copied at the SEC's Public Reference Room in Washington, D.C.
(information on the Public Reference Room may be obtained by calling
1-800-SEC-0330).
APPROVAL OF THE ADVISORY AGREEMENT FOR EACH FUND
On August 26, 2010, the Board of Trustees (the "Board") of U.S. Global
Investors Funds (the "Trust"), including all of the trustees who are not
"interested persons" of the Trust (the "Independent Trustees"), approved
continuation of the advisory agreement with U.S. Global Investors, Inc.
(the "Adviser") for each fund for an additional one-year term ending
October 1, 2011.
In considering approval of the agreement, the Board reviewed a variety
of materials relating to each fund and the Adviser including (i) the
nature, extent and quality of services provided; (ii) comparison of
services rendered and amounts paid to other registered investment
companies, including other registered investment companies managed by
the Adviser, and other accounts managed by the Adviser; (iii) the
investment performance of the fund measured against appropriate
benchmarks; (iv) the costs of services provided and estimated profits
realized by the Adviser (and its affiliates); (v) the extent to which
economies of scale are realized as the fund grows; (vi) whether fee
levels reflect any possible economies of scale for the benefit of fund
shareholders; and (vii) benefits realized by the Adviser (and its
affiliates) from its relationship with the fund.
The Independent Trustees began their process of reviewing information,
which they had previously requested, and considering approval of the
agreement at the Board's May 26, 2010 meeting. The Independent Trustees
were represented by independent legal counsel throughout the process.
After the May 26, 2010 Board meeting, at the direction of the
Independent Trustees, independent legal counsel requested additional
information from the Adviser. The Independent Trustees also had separate
meetings among themselves and with independent legal counsel during this
period. In addition, the Independent Trustees received materials from
their independent legal counsel discussing the legal standards
applicable to their consideration of the agreement. After their review
of the information received, the Independent Trustees presented their
findings and recommendations to the full Board.
The Board reviewed the functions performed by the Adviser, the portfolio
management team and support staff of the Adviser, the Adviser's
investment strategy and process for each fund, and the Adviser's
financial condition, and considered the quality of services provided.
The Board also reviewed information on the performance of each fund,
along with the performance information of a relevant securities index, a
peer group and a peer universe using information supplied by Lipper Inc.
("Lipper").
209
ADDITIONAL INFORMATION (UNAUDITED)
For the All American Equity Fund, the information showed that for the
one-, two-, three- and four-year periods ended December 31, 2009, the
fund's performance was in the 5th, 5th, 4th and 3rd quintile,
respectively, of its applicable Lipper peer group and peer universe (the
1st quintile being the best performers and the 5th quintile being the
worst performers). In addition, the information showed that for the
five-year period ended December 31, 2009, the fund's performance was in
the 2nd quintile of its applicable Lipper peer group and the 3rd
quintile of its applicable Lipper peer universe. For the one-year period
ended December 31, 2009 and for the year-to-date period through March
31, 2010, this information also showed that the fund underperformed its
benchmark index. The Board noted that the fund's advisory fee includes a
performance incentive adjustment, which went into effect beginning with
the month ended October 31, 2009, and is based on the performance of the
fund during the prior 12-month period.
For the Holmes Growth Fund, the information showed that for the one-,
two-, three-, four- and five-year periods ended December 31, 2009, the
fund's performance was in the 5th, 5th, 5th, 5th and 4th quintile,
respectively, of its applicable Lipper peer group, and for the one-,
two-, three-, four- and five-year periods ended December 31, 2009, the
fund's performance was in the 5th, 5th, 4th, 5th and 4th quintile,
respectively, of its applicable Lipper peer universe. In addition, for
the one-year period ended December 31, 2009 and for the year-to-date
period through March 31, 2010, this information showed that the fund
underperformed its benchmark index. In response to questions from the
Independent Trustees, the Adviser provided supplemental information,
noting that longer-term performance was significantly affected by poor
performance in the last two quarters of 2008 and 2009 and that the fund
had outperformed its benchmark index and its Lipper peer group for the
three years ended June 30, 2008. The Adviser also noted that for the
year-to-date period through June 30, 2010, the fund outperformed its
benchmark and peer group. The Board noted that the fund's advisory fee
includes a performance incentive adjustment, which went into effect
beginning with the month ended October 31, 2009, and is based on the
performance of the fund during the prior 12-month period.
For the Global MegaTrends Fund, the information showed that for the
one-, two-, three-, four- and five-year periods ended December 31, 2009
(the Adviser assumed management of the fund effective October 1, 2007),
the fund's performance was in the 4th, 5th, 5th, 5th and 4th quintile,
respectively, of its applicable Lipper peer group and for the one-,
two-, three-, four- and five-year periods ended December 31, 2009, the
fund's performance was in the 4th, 5th, 4th, 5th and 4th quintile,
respectively, of its applicable Lipper peer universe. In addition, this
information showed that the fund underperformed its benchmark index for
the one-year period ended December 31, 2009. In response to questions
from the Independent Trustees, the Adviser provided supplemental
information noting that the fund's performance was significantly
impacted by the financial crisis in the last two quarters of 2008, but
that the fund has since rebounded and outperformed its benchmark index
by 600 points since December 2008. The Board took into consideration
that the fund's advisory fee includes a performance incentive
adjustment, which went into effect beginning with the month ended
October 31, 2009, and is based on the performance of the fund during the
prior 12-month period.
For the Global Resources Fund, the information showed that for the
one-year period ended December 31, 2009, the fund's performance was in
the 1st quintile of its applicable Lipper peer
210
ADDITIONAL INFORMATION (UNAUDITED)
group and peer universe, and it outperformed its benchmark index for the
same period and for the year-to-date period through March 31, 2010. The
information showed for the two-, three- and four-year periods ended
December 31, 2009, the fund's performance was in the 5th quintile of its
applicable Lipper peer group and peer universe. In addition, for the
five-year period ended December 31, 2009, the Fund's performance was in
the 3rd and 4th quintile of its applicable Lipper peer group and peer
universe, respectively. The Board noted that the fund's performance had
significantly improved, and took into consideration that the fund's
advisory fee includes a performance incentive adjustment, which went
into effect beginning with the month ended October 31, 2009 and is based
on the performance of the fund during the prior 12-month period.
For the World Precious Minerals Fund, the information showed that for
the one-, two-, three-, four- and five-year periods ended December 31,
2009, the fund's performance was in the 1st, 5th, 5th, 4th and 4th
quintile, respectively, of its applicable Lipper peer group and peer
universe. In addition, the information showed that the fund outperformed
its benchmark index for the one-year period ended December 31, 2009 and
for the year-to-date period through March 31, 2010. The Board noted that
the fund's performance had significantly improved, and took into
consideration that the fund's advisory fee includes a performance
incentive adjustment, which went into effect beginning with the month
ended October 31, 2009 and is based on the performance of the fund
during the prior 12-month period.
For the Gold and Precious Metals Fund, the information showed that for
the one-, two-, three-, four- and five-year periods ended December 31,
2009, the fund's performance was in the 5th, 3rd, 3rd, 1st and 1st
quintile, respectively, of its applicable Lipper peer group, and for the
one-, two-, three-, four- and five-year periods ended December 31, 2009,
the fund's performance was in the 4th, 4th, 4th, 2nd and 2nd quintile,
respectively, of its applicable Lipper peer universe. However, the Board
took into account that the fund outperformed its benchmark index for the
one-year period ended December 31, 2009 and for the year-to-date period
through March 31, 2010. The Board also took into consideration that the
fund's advisory fee includes a performance incentive adjustment, which
went into effect beginning with the month ended October 31, 2009 and is
based on the performance of the fund during the prior 12-month period.
For the Eastern European Fund, the information showed that for the
one-year period ended December 31, 2009, the fund's performance was in
the 1st and 2nd quintile of its applicable Lipper peer group and peer
universe, respectively. For the two-, three-, four- and five-year
periods ended December 31, 2009, the information showed that the fund's
performance was in the 5th quintile of its applicable Lipper peer group
and Lipper peer universe. In addition, the information showed that the
fund underperformed its benchmark index for the one-year period ended
December 31, 2009 and for the year-to-date period through March 31,
2010. The Board noted that the fund's performance had significantly
improved and that the Adviser only recently assumed management of the
fund (effective November 7, 2008). The Board also took into
consideration that the fund's advisory fee includes a performance
incentive adjustment, which went into effect beginning with the month
ended October 31, 2009, and is based on the performance of the fund
during the prior 12-month period.
211
ADDITIONAL INFORMATION (UNAUDITED)
For the Global Emerging Markets Fund, the information showed that for
the one-, two-, three- and four-year periods ended December 31, 2009, the
fund's performance was in the 5th quintile of its applicable Lipper peer
group and peer universe, and the fund underperformed its benchmark index
for the one-year period ended December 31, 2009. In addition, this
information showed that the fund outperformed its benchmark index for
the year-to-date period through March 31, 2010. In response to questions
from the Independent Trustees, the Adviser provided supplemental
information noting that the fund outperformed its benchmark for the
year-to-date period through June 30, 2010, and has been in the top half
of its peer group for that same period. The Board took into
consideration that that the fund's advisory fee includes a performance
incentive adjustment, which went into effect beginning with the month
ended October 31, 2009 and is based on the performance of the fund
during the prior 12-month period.
For the China Region Fund, the information showed that for the one-,
two-, three- and four-year periods ended December 31, 2009, the fund's
performance was in the 5th quintile of its applicable Lipper peer group.
In addition, this information showed that for the one-, two-, three-,
four- and five-year periods ended December 31, 2009, the fund's
performance was in the 5th quintile of its applicable Lipper peer
universe. The Board also noted that the information showed that the fund
underperformed its benchmark for the one-year period ended December 31,
2009. In response to questions from the Independent Trustees, the
Adviser provided supplemental information noting that, for the past five
years ended June 30, 2010, the Fund outperformed its benchmark index for
over 21/2 years through February 2008, but that the Fund's
underperformance came primarily during the second half of 2008 and early
2009, as a result of the global financial crisis. The Adviser noted that
the Fund has outperformed its benchmark index over the last three
quarters ended June 30, 2010 and was in the top half of its Lipper peer
group for that same period. The Board took into consideration that that
the fund's advisory fee includes a performance incentive adjustment,
which went into effect beginning with the month ended October 31, 2009
and is based on the performance of the fund during the prior 12-month
period.
For the Tax Free Fund, the information showed for the one-year period
ended December 31, 2009, the fund's performance was in the 4th quintile
of its applicable Lipper peer group. In addition, this information
showed for the one-, two-, three-, four- and five-year periods ended
December 31, 2009, the fund's performance was in the 5th, 2nd, 1st, 1st
and 1st quintile of its applicable Lipper peer universe. The Board noted
that while the information also showed that the fund underperformed its
benchmark index for the one-year period ended December 31, 2009, it
outperformed its benchmark index for the year-to-date period through
March 31, 2010.
For the Near-Term Tax Free Fund, the information showed for the one-year
period ended December 31, 2009, the fund's performance was in the 2nd
quintile of its applicable Lipper peer group. In addition, this
information showed that for the one-, two-, three-, four- and five-year
periods ended December 31, 2009, the fund's performance was in the 4th,
4th, 2nd, 3rd and 2nd quintile of its applicable Lipper peer universe.
This information also showed that the fund underperformed its benchmark
index for the one-year period ended December 31, 2009 and for the
year-to-date period through March 31, 2010.
212
ADDITIONAL INFORMATION (UNAUDITED)
For the U.S. Government Securities Savings Fund, the information showed
that for the one-, two-, three-, four- and five-year periods ended
December 31, 2009, the fund's performance was in the 2nd, 3rd, 3rd, 3rd
and 2nd quintile, respectively, of its applicable Lipper peer group, and
for these same periods, the fund's performance was in the 2nd quintile
of its applicable Lipper peer universe. In addition, this information
showed that the fund outperformed its benchmark index for the one-year
period ended December 31, 2009.
For the U.S. Treasury Securities Cash Fund, the information showed that
for the one-year period ended December 31, 2009, the fund's performance
was in the 3rd quintile of its applicable Lipper peer group, and for the
two-, three-, four- and five-year periods ended December 31, 2009, the
fund's performance was in the 5th quintile of its applicable Lipper peer
group. The information also showed that for the one-year period ended
December 31, 2009, the fund's performance was in the 3rd quintile of its
applicable Lipper peer universe and for the two-, three-, four- and
five-year periods ended December 31, 2009, the fund's performance was in
the 4th quintile of its applicable Lipper peer universe. In addition,
this information showed that the fund underperformed its benchmark index
for the one-year period ended December 31, 2009. In response to
questions from the Independent Trustees, the Adviser provided
supplemental information on the fund's gross yield, noting that, while
in prior years the fund outperformed its peer universe on a gross basis,
during 2009, the fund underperformed its Lipper peer universe on a gross
basis because the Adviser took a conservative approach to credit and
liquidity in 2009, which negatively impacted all historical time frames.
On the basis of this evaluation and the ongoing review of performance by
the Board, the Board concluded that the nature, quality and extent of
services provided by the Adviser historically have been and continue to
be satisfactory.
The Board also reviewed information on each fund's advisory fee and
expense ratio (on both an actual net basis (giving effect to any expense
cap) and on a pro forma gross basis), an estimate provided by the
Adviser (without giving effect to any expense cap)) compared to the
actual expenses of a peer group of funds based upon information prepared
by Lipper. The Board also compared the advisory fees to the fees charged
by the Adviser to two non-U.S. registered funds managed by the Adviser.
(The Board noted that, although these non-U.S. registered funds may have
investment objectives and policies that are similar to some of the
funds, the contractual fees payable to the Adviser for managing those
client assets are the same or higher than the advisory fees of the
similar funds.)
For the All American Equity Fund, the information showed that, with
respect to the fund's advisory fee, the fund is in the 3rd quintile of
its applicable Lipper peer group; in the 5th quintile of its applicable
Lipper peer group with respect to its actual net expenses; and in the
4th quintile of its applicable Lipper peer group with respect to its pro
forma gross expenses.
For the Holmes Growth Fund, the information showed that, with respect to
the fund's advisory fee, the fund is in the 4th quintile of its
applicable Lipper peer group and in the 5th quintile of its applicable
Lipper peer group with respect to its actual net expenses and pro forma
gross expenses.
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ADDITIONAL INFORMATION (UNAUDITED)
For the Global MegaTrends Fund, the information showed that, with
respect to the fund's advisory fee, actual net expenses and pro forma
gross expenses, the fund is in the 5th quintile of its applicable Lipper
peer group.
For the Global Resources Fund, the information showed that, with respect
to the fund's advisory fee, actual net expenses and pro forma gross
expenses, the fund is in the 5th quintile of its applicable Lipper peer
group.
For the World Precious Minerals Fund, the information showed that, with
respect to the fund's advisory fee, actual net expenses and pro forma
gross expenses, the fund is in the 5th quintile of its applicable Lipper
peer group.
For the Gold and Precious Metals Fund, the information showed that, with
respect to the fund's advisory fee, the fund is in the 2nd quintile of
its applicable Lipper peer group and in the 4th quintile of its
applicable Lipper peer group, with respect to its actual net expenses
and pro forma gross expenses.
For the Eastern European Fund, the information showed that, with respect
to the fund's advisory fee and pro forma gross expenses, the fund is in
the 5th quintile of its applicable Lipper peer group and, with respect
to its actual net expenses, the fund is the 4th quintile of its
applicable Lipper peer group.
For the Global Emerging Markets Fund, the information showed that, with
respect to the fund's advisory fee, actual net expenses and pro forma
gross expenses, the fund is in the 5th quintile of its applicable Lipper
peer group.
For the China Region Fund, the information showed that, with respect to
the fund's advisory fee and pro forma gross expenses, the fund is in the
5th quintile of its applicable Lipper peer group and, with respect to
actual net expenses, the fund is in the 4th quintile of its applicable
Lipper peer group.
For the Tax Free Fund, the information showed that, with respect to the
fund's advisory fee and pro forma gross expenses, the fund is in the 5th
quintile of its applicable Lipper peer group and, with respect to the
fund's actual net expenses, the fund is in the 4th quintile of its
applicable Lipper peer group.
For the Near-Term Tax Free Fund, the information showed that, with
respect to the fund's advisory fee, the fund is in the 3rd quintile of
its applicable Lipper peer group and, with respect to actual net
expenses and pro forma gross expenses, the fund is in the 1st quintile
and 5th quintile, respectively, of its applicable Lipper peer group.
For the U.S. Government Securities Savings Fund and U.S. Treasury
Securities Cash Fund, the information showed that, with respect to each
fund's advisory fee and pro forma gross expenses, each fund is in the
5th quintile of its applicable Lipper peer group and, with respect to
actual net expenses, each fund is in the 1st quintile of its applicable
Lipper peer group.
214
ADDITIONAL INFORMATION (UNAUDITED)
The Board considered the Adviser's belief that higher expenses are
inherent in small fund complexes, such as the U.S. Global Funds, and
that it could not operate effectively at a lower level of fees or with
the burden of contractual expense caps. However, the Board noted that
the Adviser is currently voluntarily limiting expenses at the following
levels (the expense limitation may be modified or removed by the Adviser
at any time):
VOLUNTARY EXPENSE LIMITATION
FUND % OF AVERAGE NET ASSETS
---------------------------------------------------------------------
All American Equity Fund 2.20%
Holmes Growth Fund 2.20%
Global MegaTrends Fund 2.35%
Global Resources Fund 1.90%
World Precious Minerals Fund 1.90%
Gold and Precious Metals Fund 1.90%
Eastern European Fund 2.85%
Global Emerging Markets Fund 3.15%
China Region Fund 2.55%
Tax Free Fund 0.70%
U.S. Treasuries Securities Cash Fund 1.00%
Near-Term Tax Free Fund 0.45%
U.S. Government Securities Savings Fund 0.45%
In each case, the Board concluded that the advisory fee was reasonable
and appropriate in amount, given the quality of services provided.
The Board considered the fee structure of the agreement, including the
costs of the services provided and the profits realized by the Adviser
and its affiliates from their relationship with the funds. For all funds
except the World Precious Minerals Fund, Global Resources Fund, Gold and
Precious Metals Fund Eastern European Fund and U.S. Government
Securities Savings Fund, the net income generated from the advisory
relationship was negative. The Board concluded for each fund that the
profits realized by the Adviser were reasonable in comparison with the
costs of providing investment advisory services to the fund.
As part of its review of the agreement, the Board considered whether
there will be economies of scale with respect to the management of each
fund and whether each fund will benefit from any economies of scale. The
Board considered that the advisory fees for the All American Equity
Fund, Gold and Precious Metals Fund, World Precious Minerals Fund,
Global Resources Fund, Tax Free Fund, U.S. Government Securities Savings
Fund and U.S. Treasury Securities Cash Fund include a breakpoint. For
the remaining funds, the Board reviewed each fund's asset size and
whether the Adviser was realizing economies of scale. The Board noted
that, in all cases, the Adviser did not believe, with respect to the
investment advisory services provided, that it was realizing significant
economies of scale, and that the current fees represent an appropriate
sharing of economies of scale. Based upon its review of all available
information, the Board concluded for the funds with a flat advisory fee
that such fee was reasonable and appropriate.
215
ADDITIONAL INFORMATION (UNAUDITED)
The Board considered that the Adviser engages in soft dollar
arrangements in connection with brokerage transactions for the funds.
The Board also considered benefits derived by the Adviser from its
relationship with the funds, including the other services provided and
fees received by the Adviser and its affiliates for providing such
services, and concluded for each fund that the direct and indirect
benefits accruing to the Adviser were reasonable in comparison with the
costs of providing advisory services, the advisory fee charged to each
fund, and the benefits to each fund.
Based on all of the above-mentioned factors and related conclusions,
with no single factor or conclusion being determinative and with each
Trustee not necessarily attributing the same weight to each factor, the
Board, including the Independent Trustees, concluded that approval of
the advisory agreement would be in the interests of each fund.
216