Filed On 12/6/06 4:34pm ET · SEC File 811-09120 · Accession Number 898531-6-360
As Of Filer Filing As/For/On Docs:Pgs Issuer Agent
12/06/06 PRUDENT BEAR FUNDS INC...Svcs/LLC N-CSR 9/30/06 4:67 Dixon Mrd & Co/FA
Certified Annual Shareholder Report of a Management Investment Company · Form N-CSR
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1: N-CSR Certified Annual Shareholder Report of a 60± 258K
Management Investment Company
2: EX-99.CODE ETH Miscellaneous Exhibit 3± 13K
3: EX-99.CERT Miscellaneous Exhibit 3± 11K
4: EX-99.906 CERT Miscellaneous Exhibit 1 5K
N-CSR · Certified Annual Shareholder Report of a Management Investment Company
Document Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-09120
---------
PRUDENT BEAR FUNDS, INC.
------------------------
(Exact name of registrant as specified in charter)
8140 WALNUT HILL LANE
SUITE 300
DALLAS, TX 75231
-----------------
(Address of principal executive offices) (Zip code)
DAVID W. TICE
DAVID W. TICE & ASSOCIATES, LLC
43-46 NORRE GADE, SUITE 137
CHARLOTTE AMALIE, ST. THOMAS, U.S. VIRGIN ISLANDS 00802
--------------------------------------------------------
(Name and address of agent for service)
1-800-711-1848
--------------
Registrant's telephone number, including area code
Date of fiscal year end: SEPTEMBER 30, 2006
------------------
Date of reporting period: SEPTEMBER 30, 2006
------------------
ITEM 1. REPORT TO STOCKHOLDERS.
------------------------------
ANNUAL REPORT SEPTEMBER 30, 2006
PRUDENT BEAR FUND
NO LOAD SHARES
CLASS C SHARES
PRUDENT GLOBAL INCOME FUND
PRUDENT BEAR
FUNDS, INC.
PRUDENT BEAR FUND
NO LOAD SHARES
Prudent Bear Fund -
Date No Load Shares S&P 500 NASDAQ Composite
---- ------------------- ------- ----------------
9/30/96 $10,000 $10,000 $10,000
9/30/97 $8,356 $14,045 $13,739
9/30/98 $8,662 $15,315 $13,806
9/30/99 $5,529 $19,573 $22,383
9/30/2000 $5,001 $22,174 $29,935
9/30/2001 $8,441 $16,271 $12,216
9/30/2002 $11,435 $12,938 $9,553
9/30/2003 $9,997 $16,094 $14,564
9/30/2004 $8,794 $18,326 $15,460
9/30/2005 $8,425 $20,572 $17,537
9/30/2006 $9,091 $22,792 $18,407
For the period ended September 30, 2006
[Download Table]
Annualized
------------------------------------
One Five Ten Since
Year Year Year Inception
---- ---- ---- ---------
Prudent Bear Fund - No Load Shares 7.92% 1.50% (0.95)% (1.97)%
S&P 500 Index(1)<F1> 10.79% 6.97% 8.59% 9.27%
NASDAQ Composite Index(2)<F2> 4.96% 8.55% 6.29% 7.45%
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT GUARANTEE
FUTURE RESULTS. THE 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. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE
PERFORMANCE QUOTED. PERFORMANCE DATA FOR THE MOST RECENT MONTH-END MAY BE
OBTAINED BY VISITING WWW.PRUDENTBEAR.COM. PERFORMANCE DATA SHOWN DOES NOT
REFLECT THE 1.00% REDEMPTION FEE IMPOSED ON SHARES HELD LESS THAN 30 DAYS. IF IT
DID, TOTAL RETURNS WOULD BE REDUCED.
(1)<F1> The Standard & Poor's 500 (S&P 500) Index is a capital-weighted index,
representing the aggregate market value of the common equity of 500
stocks primarily traded on the New York Stock Exchange. It is not
possible to invest directly in an index.
(2)<F2> The NASDAQ Composite Index is a broad-based capitalization-weighted
index of all NASDAQ stocks. It is not possible to invest directly in
an index.
This chart assumes an initial gross investment of $10,000 made on 9/30/96.
Returns shown for the Prudent Bear Fund - No Load Shares and the S&P 500 Index
include the reinvestment of all dividends. Returns shown for the NASDAQ
Composite Index do not include the reinvestments of dividends. The graph and the
table do not reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares.
PRUDENT BEAR FUND
CLASS C SHARES
Prudent Bear Fund -
Date Class C Shares S&P 500 Index NASDAQ Composite Index
---- ------------------- ------------- ----------------------
2/8/99 $10,000 $10,000 $10,000
3/31/99 $9,331 $10,363 $10,235
9/30/99 $9,393 $10,401 $11,419
3/31/2000 $7,858 $12,222 $19,014
9/30/2000 $8,423 $11,782 $15,272
3/31/2001 $11,905 $9,573 $7,652
9/30/2001 $14,101 $8,646 $6,232
3/31/2002 $11,947 $9,596 $7,673
9/30/2002 $18,920 $6,875 $4,874
3/31/2003 $17,379 $7,220 $5,577
9/30/2003 $16,420 $8,552 $7,430
3/31/2004 $15,157 $9,755 $8,292
9/30/2004 $14,332 $9,738 $7,887
3/31/2005 $13,790 $10,408 $8,313
9/30/2005 $13,636 $10,931 $8,947
3/31/2006 $14,142 $11,629 $9,729
9/30/2006 $14,609 $12,111 $9,391
For the period ended September 30, 2006
Annualized
------------------
One Five Since
Year Year Inception
---- ---- ---------
Prudent Bear Fund - Class C Shares 7.14% 0.71% 5.09%
S&P 500 Index(1)<F3> 10.79% 6.97% 2.54%
NASDAQ Composite Index(2)<F4> 4.96% 8.55% (0.82)%
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT GUARANTEE
FUTURE RESULTS. THE 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. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE
PERFORMANCE QUOTED. PERFORMANCE DATA FOR THE MOST RECENT MONTH-END MAY BE
OBTAINED BY VISITING WWW.PRUDENTBEAR.COM. PERFORMANCE DATA SHOWN DOES NOT
REFLECT THE 1.00% REDEMPTION FEE IMPOSED ON SHARES HELD LESS THAN 30 DAYS. IF IT
DID, TOTAL RETURNS WOULD BE REDUCED.
(1)<F3> The Standard & Poor's 500 (S&P 500) Index is a capital-weighted index,
representing the aggregate market value of the common equity of 500
stocks primarily traded on the New York Stock Exchange. It is not
possible to invest directly in an index.
(2)<F4> The NASDAQ Composite Index is a broad-based capitalization-weighted
index of all NASDAQ stocks. It is not possible to invest directly in
an index.
This chart assumes an initial gross investment of $10,000 made on 2/08/99
(commencement of operations for the Class C Shares). Returns shown for the
Prudent Bear Fund - Class C Shares and the S&P 500 Index include the
reinvestment of all dividends. Returns shown for the NASDAQ Composite Index do
not include the reinvestments of dividends. The graph and the table do not
reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares.
PRUDENT GLOBAL INCOME FUND
Merrill Lynch
Pan-Europe Merrill Lynch Global
Prudent Global Citigroup Government Government Bond
Date Income Fund Europe WGBI 1-3 Year Index Index II
---- -------------- ----------- -------------- --------------------
2/2/2000 $10,000 $10,000 $10,000 $10,000
3/31/2000 $9,878 $10,058 $9,934 $10,282
9/30/2000 $9,340 $9,457 $9,326 $10,036
3/31/2001 $9,016 $9,919 $9,672 $10,203
9/30/2001 $9,578 $10,499 $10,295 $10,765
3/31/2002 $10,354 $10,112 $9,970 $10,288
9/30/2002 $11,736 $12,352 $11,761 $11,927
3/31/2003 $12,579 $14,008 $13,261 $12,870
9/30/2003 $13,618 $15,248 $14,395 $13,600
3/31/2004 $14,298 $16,553 $15,494 $14,551
9/30/2004 $14,183 $16,987 $15,783 $14,534
3/31/2005 $14,523 $18,499 $16,784 $15,336
9/30/2005 $14,263 $17,933 $15,834 $14,968
3/31/2006 $14,918 $17,644 $15,865 $14,657
9/30/2006 $15,329 $18,892 $16,870 $15,349
For the period ended September 30, 2006
Annualized
--------------------
One Five Since
Year Year Inception
---- ---- ---------
Prudent Global Income Fund 7.47% 9.86% 6.62%
Citigroup Europe WGBI(1)<F5> 5.35% 12.47% 10.02%
Merrill Lynch Global
Government Bond Index II(2)<F6> 2.55% 7.35% 6.64%
Merrill Lynch Pan-Europe
Government 1-3 Year Index(3)<F7> 6.54% 10.39% 8.17%
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH DOES NOT GUARANTEE
FUTURE RESULTS. THE 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. CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE
PERFORMANCE QUOTED. PERFORMANCE DATA FOR THE MOST RECENT MONTH-END MAY BE
OBTAINED BY VISITING WWW.PRUDENTBEAR.COM. PERFORMANCE DATA SHOWN DOES NOT
REFLECT THE 1.00% REDEMPTION FEE IMPOSED ON SHARES HELD LESS THAN 30 DAYS. IF IT
DID, TOTAL RETURNS WOULD BE REDUCED.
(1)<F5> The Citigroup Europe World Government Bond Index (WGBI) consists of
those fifteen sectors of the Citigroup Europe WGBI that are
geographically located in Europe, namely Austria, Belgium, Denmark,
Finland, France, Greece, Germany, Ireland, Italy, the Netherlands,
Portugal, Spain, Sweden, Switzerland and the United Kingdom. It is
not possible to invest directly in an index.
(2)<F6> The Merrill Lynch Global Government Bond Index II tracks the
performance of public debt of investment grade sovereign issuers,
issued and denominated in their own domestic market and currency. It
is a market value-weighted measure of these bonds. It is not possible
to invest directly in an index.
(3)<F7> The Merrill Lynch Pan-Europe Government 1-3 Year Index tracks the
total return performance of the outstanding debt of European sovereign
issuers. It is a market capitalization-weighted basket comprising
Euro participant, Denmark, Sweden, Switzerland, and U.K. sovereign
bonds issued in their respective domestic markets and denominated in
their local currency. This index is further segmented by debt issues
maturing from 1-3 years. It is not possible to invest directly in an
index.
This chart assumes an initial gross investment of $10,000 made on 2/02/00
(commencement of operations). Returns shown include the reinvestment of all
dividends. The graph and the table do not reflect the deduction of taxes that a
shareholder would pay on fund distributions or the redemption of fund shares.
November 1, 2006
Dear fellow shareholders:
The Prudent Bear Fund no-load shares returned 7.92% for the fiscal year ending
September 30, 2006, while the S&P 500 returned 10.79% and the NASDAQ Composite
Index provided a total return of 5.84%. All returns include reinvestment of
dividends.
Although our risk control measures benefited the fund's performance relative to
the general stock market, the ability to generate a positive return over the
period in a rising market was due, in large part, to strong performance from
precious metals mining companies. Even though they retreated sharply from their
highs set in May, major gold stock indices produced returns of 20% or more over
the 12 months.
The Prudent Global Income Fund returned 7.47% for the 12-month period as the
dollar index ended the period about 4% lower. (The dollar index compares the
U.S. dollar to a basket of currencies of our major trading partners.) The fund
benefited from the dollar's weakening as well as from strong performance from
its allocation to gold stocks. Shareholders also benefited from coupon income
generated from U.S. and foreign bond holdings. Despite rising interest rates
around the globe, bonds in the U.S. continue to boast higher yields than those
of most other industrialized countries.
ECONOMY, ONCE TOO HOT, NOW PERCEIVED AS 'JUST RIGHT'
It has been another extraordinary six months, notable for a highly unsettled
financial backdrop buffeted by dramatic swings in both market performance and
perceptions. Admittedly, the U.S. stock market has been much stronger than we
had anticipated. The Dow has recently traded to a string of all-time highs, and
many major indices - including the small- and medium-caps - are not far off
records posted earlier in the year. Bank stocks have advanced about 10% so far
this year, trading to new highs, and the broker/dealers have sprinted to upwards
of 20% year-to-date gains. Many stocks and groups, previously under pressure
from the prospect of rising interest rates, surging energy prices, and economic
retrenchment, have rallied sharply as sentiment has swung back to the too loudly
trumpeted "goldilocks" scenario.
A rapidly weakening housing market, to this point, has been perceived by the
stock and bond markets as a net positive. The slowdown has at least temporarily
restrained GDP growth, while market sentiment has shifted to the view that
current heightened inflationary pressures will prove fleeting. Expectations now
have the Federal Reserve commencing a loosening cycle early next year. This
prospect has enlivened bullish notions of perpetual economic expansion, robust
corporate profits, and low interest rates. Conventional market analysts have
been quick to ratchet up expectations for future stock market gains. In a
replay of familiar bubble dynamics, liquidity overabundance begets exuberance
that incites only greater financial excess.
Examining the landscape, we are anything but dissuaded from our dire credit
bubble thesis. In fact, there is today ample evidence of the type of
instability and volatility - especially with regard to perceptions and market
prices - that are hallmarks of a boom's capricious finale. And this is the most
unsound boom imaginable, fueled by a degree of credit and speculative excess
that even our careful reading of financial history had left us less than fully
prepared to fathom.
Disconcertingly, the economy's recent downshift has only incited a peddle-to-
the-metal mentality throughout the financial sector. It is worth noting that
non-financial debt growth has slackened somewhat this year as nominal GDP has
slowed markedly. Meanwhile, financial sector borrowings have actually
accelerated to a 10% annualized rate. The upshot of financial sector expansion
significantly beyond the funding needs of the real economy is easily
recognizable.
DESPITE HOUSING WOES, CREDIT GROWTH CONTINUES UNABATED
Through the year's first nine months, global investment grade debt issuance of
$1.3 trillion was running 16% ahead of 2005's pace, led by a 22% increase from
the U.S. Record global new "leveraged finance" surpassed $1.0 trillion, 14%
ahead of last year's pace, with U.S. leveraged lending increasing 19%.
Leveraged buyouts (LBOs), along with high-yield and "leveraged" lending are on a
record pace. Global M&A volume, already having surpassed $3.0 trillion, should
easily set a record. Global private equity is on track to raise an
unprecedented $400 billion this year. Syndicated bank lending is on pace to
reach a five-year high - going back to the fateful telecom debt bubble. And
despite the third-quarter slowdown, 2006 will post the strongest year of global
IPO issuance since the bubble year 2000. At the same time, inflated cash flows
and loose corporate debt market conditions have spurred record corporate share
repurchases.
Despite some earlier market and industry tumult, the hedge fund community raised
$44.5 billion during the third quarter, a three-year high. Year-to-date inflows
of $110 billion have already exceeded 2002's record $99.4 billion. Hedge fund
assets are said to have surpassed $1.4 trillion. And in a sign of the times,
former Treasury Secretary John Snow recently became chairman of Cerberus Capital
Management, a $16 billion hedge fund group. Clinton Treasury Secretary Lawrence
Summers accepted a managing director position at D.E. Shaw, while Paul O'Neill
is now an advisor to the Blackstone Group.
To be sure, global credit systems continue firing on all cylinders. Here at
home, total bank credit has been expanding this year at a 10% pace. Commercial
& industrial loans have expanded 15% annualized. Housing slowdown
notwithstanding, bank real estate loans have been growing at a 15% year-to-date
rate. Total system mortgage debt expanded 10.1% annualized during the first-
half, with 12.7% growth in commercial mortgages helping to offset a somewhat
slower 9.8% increase in household mortgage debt.
Citigroup, our nation's largest financial institution, expanded total assets by
$119 billion, or 30% annualized, during the third quarter. Citi's balance sheet
ballooned $275 billion, or almost 19%, during the past year to $1.75 trillion.
Bank of America is enjoying double-digit growth in both consumer and business
loans, with assets expanding 16% over the past year to almost $1.5 trillion.
JPMorganChase has posted 11% year-over-year commercial loan growth, with total
assets also up 11% the past year to $1.3 trillion. The bank's third-quarter
investment banking fees increased 44% from a year earlier to a record $1.4
billion. Though first mortgage originations have been somewhat below last
year's level, Wells Fargo has continued to achieve 10% growth in both consumer
and commercial loans. Total assets were up 15% from a year ago. And throughout
the U.S. banking system, intense competition and narrowing lending margins have
pressed bankers to press for greater loan volume.
In response to the industry-wide mortgage origination slowdown, almost without
exception the major financial institutions have moved aggressively to ensure
double-digit growth in home equity and commercial real estate loans. Yet likely
expending even greater influence upon the real economy, lenders have adopted
strategies to focus more intensively on small business and commercial lending.
And, today, the surest way to rapid lending growth is achieved through financing
mergers and acquisitions.
If the highly competitive lending business cannot secure adequate profits, the
focus then turns to the capital markets, trading, derivatives and investment
management. Never has pressure to meet Wall Street's elevated expectations been
as overwhelming, and rarely have financial conditions remained sufficiently
loose to emboldened institutions trying to exceed those expectations - in one
manner or another. Citigroup, Bank of America and JPMorganChase combined to
repurchase 120.5 million of their shares during the third quarter, increasing
year-to-date buybacks to an astounding 427.6 million.
Never to be outdone, the rapid expansion of bank credit is bettered by Wall
Street and its incredible securities-based credit apparatus. Broker/dealer
assets expanded 18% over the past year, with two-year growth of an astonishing
46%. The "big five" securities firms - Goldman Sachs, Merrill Lynch, Morgan
Stanley, Lehman Brothers and Bear Stearns - posted combined net revenue growth
during the first nine months of the year of $93.6 billion, up 33% from
comparable 2005. Compensation expense increased 36% during this period to $48.3
billion. And despite the marked slowdown in home sales, an irrepressible
mortgage-backed securities (MBS) and asset-backed securities (ABS) marketplace
lends support for another year of double-digit mortgage debt growth. Insatiable
demand for high-yielding instruments ensures that "private-label" MBS will post
another year of heady growth. One of this year's hottest products, the
collateralized debt obligation (CDO) marketplace is on pace for issuance of $400
billion, double last year.
Some analysts have been lulled into complacency by this year's 4.5% growth rate
in M2 "money supply." Meanwhile, outstanding commercial paper has expanded at a
19% rate this year to reach a record $1.92 trillion. Outstanding asset-backed
securities ended the second quarter at $3.22 trillion, up 20% year-over-year.
"Fed funds and repurchase agreements" continue to play prominently in the U.S.
financial sector expansion, expanding 17% during the past year and 40% over two
years. And reinvigorated by more enticing yields, money market fund assets have
expanded 13.6% over the past year to $2.26 trillion. Overall, there's been only
moderate slowing in total non-financial credit from last year's record $2.3
trillion, or 9.5%, expansion, the strongest pace of growth since 1986.
Yet when it comes to awe-inspiring growth, derivatives these days have no match.
Expanding unremittingly at double-digit rates, global derivatives markets have
reached nearly $300 trillion in notional value. Amazingly, positions have
tripled in size since 2000 to surpass four-times the total combined market value
of the world's equity and bond markets. Globally, the notional value of
interest-rate swaps jumped 25% over the past year to $250 trillion. U.S.
commercial bank derivative positions were up 24% over the past year to $119
billion. Interest-rate derivatives jumped 21% year-over-year to $98.7 billion,
with U.S. banks' credit derivative contracts ballooning 60% to $6.6 trillion.
Alarmingly, the global credit derivatives market has doubled over the past year
to $26 trillion, in the process demonstrating all the signs of problematic
excess. There is sound basis for presuming the mania that's enveloped the
credit default swap arena has been a primary driving force for this year's
insatiable demand for new corporate debt. With credit so readily available and
marketplace liquidity in surplus, writing corporate credit protection has been
as alluringly profitable as selling flood insurance in the midst of a long
drought. The only limiting factor is finding enough buyers of insurance. This
quandary has been at least partially ameliorated by the proliferation of Wall
Street structures incorporating highly leveraged pools of corporate credits that
then acquire hedging protection in the credit derivatives marketplace.
Meanwhile, this year's setbacks in energy and commodities trading have buoyed
"credit arbitrage" funds to the top of the global performance leader board. And
with success in this environment comes the bounty of huge investor inflows -
that then must be put to work. Ironically, heightened uncertainty and overall
global financial market volatility have only fanned the burgeoning bubble in
corporate debt. This manic backdrop has the Wall Street "structured finance"
mega-machine burning the midnight oil, with recent new products incorporating as
much as 15 to 1 underlying leverage in corporate credits.
CREDIT BUBBLE GOES GLOBAL
To be sure, bubble excesses are no longer confined to the U.S. credit system.
Throughout the Eurozone, the pace of private credit growth has accelerated to
better than 11%. Credit systems around the world today flourish with unequalled
leeway, posting double-digit growth across a wide spectrum of economies
including the United Kingdom, Scandinavia, Eastern Europe, Russia, Australia,
New Zealand, India, China, and throughout much of non-Japan Asia. Mirroring the
U.S., the Chinese economy has attained the status of one of history's
spectacular credit booms. Also luxuriating in the miraculous global liquidity
backdrop, India has set its sights on following in China's footsteps. And all
the while fanning the global boom, America's captivation with leveraged
speculation, derivatives, MBS, ABS, CDOs, CLOs (collateralized loan
obligations), LBOs, "repos," and who knows what else, has taken the world by
storm.
Little wonder global markets are these days characterized by such phenomenal
price volatility and, increasingly, severe price distortions and divergences.
Credit conditions and liquidity creation have remained, in our opinion, too
loose for too long, with each year of excess adding to the cumulate supply of
international "finance" focused intently on generating a rousing return. This
amassing global pool of "hot money" - absolutely unparalleled in scope and
dynamism - now revels in its freedom to rampage about. For the past several
years, this dynamic has imparted a stubborn upward price bias upon the vast
majority of global asset and commodity markets. Lately, however, a conflux of
heightened speculative excess, "crowded trades," and derivatives-related
leveraging has nurtured susceptibility to abrupt price reversals, sizable market
pullbacks, and some rather exceptional trading anomalies (i.e. natural gas
versus the industrial metals).
The abundantly liquid and highly speculative U.S. and global market backdrop has
proceeded to the point where any real or perceived scarcity risks foment panic
buying and spectacular price spikes. This has been the circumstance throughout
the energy and commodities complex, and is even a recurring factor for
securities markets around the world. Seemingly, myriad marketplaces share a
similar propensity for wild speculative runs on the upside, only to leave them
susceptible to equally dramatic price collapses and speculative routs on the
downside.
Earlier in the year, a liquidity-fueled speculative run propelled a synchronized
skyward lunge in global stocks, energy and commodities, and emerging debt and
equities markets, only to abruptly reverse in May and plummet collectively as
well. The nature of global market instability has been disconcerting, but so
far the vast sea of global liquidity has succeeded in keeping things afloat.
Fear that the Bank of Japan was removing global liquidity has dissipated, as
have notions of concerted global central bank "tightening." The bottom line is
that global credit systems are firing on all cylinders. Liquidity has stayed
readily abundant, which has ensured that bullishness perseveres; that
speculators have become only more emboldened; and that global economies have
remained resilient. Even Iceland and New Zealand, notable examples of
susceptibility to the whims of global finance, have defied predictions of
financial and economic hardship.
Sound the global system is not. This year's backdrop exudes instability and
uncertainty, characterized by wild volatility and some notable divergences among
various markets and asset classes. Importantly, there has been no letup in
upward price pressure for commodities in limited supply. Copper has posted a
better than 60% rise so far this year. The industrial metals nickel, tin, zinc
and lead have spiked to multi-year or record highs. Global drought conditions
and weather uncertainty have wheat prices up 50% to a 10-year high and corn
rising 50% to a multi-year high. Cotton, orange juice, sugar, coffee and other
staples have traded with significant volatility.
Take a deep breath and watch out below, however, when a presumed shortage fails
to materialize. An unexpectedly placid hurricane season and relative calm in
the Middle East tipped the energy markets where, in hindsight, an anomalous
throng of investors, speculators, and derivative traders were all loaded onto
the same side of the boat. A major liquidation of speculative positions surely
played a key role as the price of crude oil sank about 25% in the two months
following July's record $81 a barrel. And, of course, natural gas collapsed
better than 50%, in the process taking down the $6 billion Amaranth hedge fund.
With a segment of the leveraged speculator community rushing to stop the
bleeding, a contagious commodities rout saw the Goldman Sachs Commodities Index
drop 20% in two months from its August record high. The index, however, remains
about double the level from 2003.
Global market booms and self-reinforcing liquidity abundance have become reliant
upon - and beholden to - pervasive leveraged speculation. Such a predicament
eventually manifests as erratic market behavior. We've reached such a point,
and there's today no escaping chronic susceptibility to the whims of a highly
speculative and leveraged marketplace. Bubbles inflating, and others aged and
endangered, now emerge as a primary market focus. Moreover, there is a nagging
disquiet that the liquidity gala must at some point be interrupted or perhaps
even abruptly dissolved, a backdrop sure to intimidate the indecisive and
challenge even those of us with the strongest convictions. At this stage of the
cycle, we likely have little alternative than to become accustomed to formidable
speculative runs that set the stage for unsettling downdrafts - a challenging
environment for managing a short portfolio and our long positions.
COMMODITIES BULL MARKET NOT OVER
As for our long portfolio, we tend to view the recent commodities tumble in the
context of the first meaningful correction in what we expect will prove a
prolonged - and oftentimes topsy-turvy - bull market. Taking exception to
others' analyses, we do not believe the recent decline is evidence of a
turnabout in global liquidity. The confluence internationally of rampant
equities market inflation, minimal risk premiums, record debt issuance, and
booming emerging stocks and bonds instead confirm our view of ongoing credit and
liquidity over-abundance. Yes, gold and silver are considerably off earlier
highs. Not only do we doubt there's been a fundamental change in the liquidity
backdrop, it is our view that ongoing global developments only enhance the
metals stocks' investment merits. Perhaps the liquidity-induced equities,
emerging markets, and credit "arbitrage" booms have provided rather tough
competition of late for the precious metals and commodities overall. And
there's surely been heavy liquidation of energy and metals speculations. The
global "inflation trade," previously rather overcrowded, has by now seen the
crowd thinned.
With regard to the U.S. bubble economy, it is these days on notably less sure
footing. Of course, the onset of a major housing downturn is the most
noteworthy economic development. Unsustainable price inflation, gross
overbuilding and mounting inventories finally punctured grossly unrealistic
expectations. Home prices can and will decline. The major national
homebuilders - having previously taken full advantage of the speculative bubble
- now find themselves in the forefront of cancelled orders, evaporating waiting
lists, and costly price concessions. It was estimated that speculators
accounted for upwards of 25% to 30% of last year's home transactions.
Speculative buying has all but evaporated in many of the frothiest markets,
leaving bloated inventories and sharply diminished demand.
MORTGAGE BUBBLE STILL INTACT
In the next shareholder letter I could very well take a more pessimistic view of
short-term prospects for what clearly has the potential to develop into a full-
fledged housing disaster. Thus far, however - and defying many bearish analysts
- housing prices have remained relatively stable nationally, while posting thus
far modest reversals - perhaps retracing the past year or so of price inflation
- in the most extended markets.
As disciplined analysts, we will not dismiss the significance of what has to
this point been surprising general home price resiliency. Steep price declines
would have initiated a self-reinforcing wave of foreclosures and the onset of
lender angst and mortgage security holder fear and revulsion. Instead, lenders
remain keen to lend and MBS buyers eager to buy. That the mortgage finance
spigot remains wide open has certainly played a key role in sustaining narrow
spreads and seemingly insatiable demand for agency and "private-label" mortgage
securities. Curiously, credit market demand for adjustable-rate, negative-
amortization, "reset" and other "exotic" mortgages remains about as robust as
ever. Intense speculative demand for yield and the resulting proliferation of
CDOs and other "structured products" have created an insatiable appetite for
risky loans.
It was clearly constructive for the marketplace that yields responded promptly
to the prospect of economic moderation. Benchmark 30-year mortgage rates have
dropped 50 basis points from this summer's highs. And while I can write with
confidence that air has begun exiting local housing bubbles around the country,
the same cannot yet be said for the national mortgage finance bubble. Credit
availability has slackened little, if at all. Importantly, borrowers facing
potentially problematic adjustable- and teaser-rate mortgage payment resets are
being actively accommodated. Ongoing loose marketplace conditions empower
aggressive lenders with the capacity to offer mortgage terms favorable to
borrowers desperate to refinance, and at the same time appealing to booming ABS
and CDO marketplaces clamoring for higher-yielding fodder. The bottom line is
that, despite the housing downturn, total mortgage credit is on track for the
sixth consecutive year of double-digit growth and the ninth uninterrupted year
of at least 9% annual growth.
WAGE INFLATION GENERATING LITTLE INTEREST - FOR NOW
Irrepressible mortgage credit may have lost much of its capacity to inflate home
prices. Importantly, however, loose financial conditions are these days
boosting household sector income. Beyond question, rising compensation is today
a primary factor operating to sustain elevated home values, while at the same
time enlarging government tax receipts and inflating corporate cash flows. From
a macro credit analysis standpoint, income growth has now superseded housing
inflation as a paramount consequence of system excess.
Year-to-date, household personal income has expanded at an eye-opening 7.5%
rate. During the 12 months ended June 30th, "compensation of employees" (per
the Fed's quarterly "flow of funds" report) expanded at an 8.3% rate, the
strongest pace of expansion since 1984. For perspective, compensation growth
accelerated from 2005's 5.7%, 2004's 5.2%, 2003's 3.8%, and 2002's 2.5%. And in
the category of anomalous developments worthy of serious contemplation, federal
government personal income tax receipts surged 12.6% during fiscal 2006,
surpassing $1 trillion for the first time. Not to be left far behind, federal
spending jumped 7.4%. Hopefully governments at all levels are not extrapolating
this inflationary windfall as they did those from the late-'90s.
The upsurge in income inflation is not receiving the attention it deserves. For
one, this development marks the emergence of inflationary pressures from the
cozy confines of the asset markets, where they have been erroneously
characterized as "wealth creation." Rising income is as well a departure from
credit inflation-induced "wealth effect" over-consumption and inflated imports,
where it has been misconstrued as a virtue of free-trade and "globalization."
The nature of inflationary effects is changing, subtly perhaps, yet decidedly.
The global backdrop and the unusual structure of the contemporary U.S. economy
have surely impeded its normal headway. Though, as students of inflation
dynamics and processes, we appreciate how the fundamental progression of credit
excess eventually twists and turns its way to gains in remuneration. If
anything, shortages of skilled workers have turned more acute and broad-based.
Coupled with booming corporate earnings, swelling cash hordes, and ultra-easy
corporate credit conditions, the environment has become ripe for steadfast gains
in wages, salaries, bonuses, and stock grants. Most importantly, expectations
have changed, with workers today demanding and receiving the largest pay
increases in years.
The pervasive effects of accelerating household income growth are perhaps
becoming somewhat less ambiguous. Thus far, rising incomes have been performing
yeoman's work in sustaining inflated home prices, in the process buttressing the
mortgage finance bubble and prolonging the aged U.S. credit and economic
bubbles. Mollifying housing worries, compensation trends have supported
spending and in the process spurred only larger trade deficits. And the outward
torrent of finance associated with swelling current account deficits continues
to provide the major impetus for what has evolved into a global credit and
liquidity bubble. Again, we don't want to underplay the significance of U.S.
income trends.
DEPENDENCY ON FOREIGN INVESTORS ESCALATES
The "Rest of World" (ROW) accumulation of U.S. financial obligations is unlike
anything ever experienced in the long history of finance. Foreign holdings of
U.S. financial assets expanded, amazingly, at an almost $1.4 trillion annual
pace during the first-half. For perspective, ROW holdings increased an average
$393 billion per annum during the nineties, and didn't surpass $1 trillion for
the first time until 2004. The ROW stockpile of US financial assets has
ballooned 50% in just three years to $11.6 trillion. During this period, total
holdings of U.S. credit market instruments jumped 63% to $6.0 trillion, as
Treasuries holdings increased $636 billion (46%) to $2.0 trillion; agencies rose
$400 billion (59%) to $1.1 trillion; and corporate bonds including ABS surged
$1.2 trillion (80%) to $2.5 trillion. ROW's $800 billion annualized first-half
credit market instrument purchases accounted for a large percentage of total
Treasury and agency issuance.
It is worth noting that U.S. trade deficits have more than doubled since the
dollar's early 2002 peak. Total foreign central bank reserves have swelled an
incredible $1.3 trillion, or 38%, over just the past two years and will soon
surpass $5 trillion. China's reserves are up 366% since 2002 to about $1.0
trillion, now outranking Japan as our largest creditor. During this period,
Taiwan's reserves have about doubled to $260 billion and South Korea's have
increased two-fold to $230 billion. Russia's reserves have ballooned to $250
billion from less than $50 billion in early 2003, with Brazil's almost doubling
to $74 billion and India's reserves up 50% to $160 billion. Look no further
than massive U.S. current account deficits and the dollar balances gushing to
the rest of the world to largely explain the destabilizing global liquidity
glut.
The "recycling" of dollar liquidity back through U.S. securities markets has
over time severely distorted our credit system. For one, this process has
created enormous artificial demand for top-rated U.S. securities, as foreign
central banks and others direct the global flow of dollar balances to the
perceived safest and most liquid dollar-denominated instruments. Think of this
dynamic in terms of a massive credit system expansion - comprising the banks,
Wall Street, securitizations, finance companies, securities finance, etc. -
generating purchasing power that propagates mushrooming current account
deficits. This global flood of dollar balances is then funneled back to a
limited supply of requisite securities.
This unparalleled market intervention has not gone unnoticed by the enterprising
speculator community. Ramifications include the markets' perception of
uninterrupted liquidity and prevailing price support, breeding only more
emboldened leveraged speculation. The resulting tight supply of Treasuries and
agencies creates further price distortion, including a mischief-making
propensity for short-squeezes. And with the Treasury market anchoring market
yields generally, the process of dollar "recycling" has placed significant
downward pressure on yields across the board. Deficient real interest-rates,
then, promote only greater credit excess, resultant trade deficit expansion and
a more unwieldy "liquidity glut." We always thought "conundrum" a misnomer.
"Bubble effect" would be more explanatory.
Foreign "recycling" operations have recalibrated the yield curve and, this year
in particular, induced a consequential change in the nature of leveraged
speculation. Coveted "borrow-short-to-lend-long" speculative profits have
disappeared, that is unless speculators shifted their borrowing to low-yielding
currencies such as the yen and Swiss franc. In general, we would argue that
prospective returns from speculating within the entire upper-tier of the U.S.
fixed-income marketplace have been minimized by the massive flows to our most
liquid securities.
Importantly, this has squeezed the ballooning leveraged speculating community
only deeper into the higher-yielding debt universe, while shifting the
"structured finance" apparatus into high gear. The resulting pronounced boost
to credit availability and surge in liquidity throughout the corporate sector
have been self-reinforcing, nurturing a resurgent corporate debt boom and a
credit derivatives bubble. These speculative bubble dynamics explain the
insatiable demand for corporate debt that has provided a major impetus for the
commercial lending, junk bond, syndicated bank "leveraged lending," and global
M&A booms.
And while speculator flows from low-yielding currencies are today lending
support to the dollar, only foreign central bank accumulations of dollar
reserves on a massive, unprecedented scale could have forestalled a dollar
crisis. The consequences of this ongoing endeavor, however, are becoming
increasingly dire. Credit bubble excesses - at home and abroad - are left
unchecked to run to only more perilous extremes. We do not believe it is
hyperbole to warn that consequences include economic maladjustments and
financial instability beyond compare. Yet, credit bubble effects include
seductive "fundamentals" such as booming corporate profits, robust financial
markets, and economic resiliency, altogether presenting a convincing aura of
soundness and sustainability.
A major dilemma today, as we see it, is that massive positions are being
accumulated in dollar securities perceived as sound and liquid as "money."
Confidence that foreign central bank operations will interminably support both
U.S. securities markets and our currency promotes huge dollar instrument "carry
trades" and other speculations. In reality, "official" dollar buying
exacerbates excesses, dollar vulnerability and the risk of future speculator de-
leveraging and illiquidity. To be sure, irrepressible credit inflation, non-
productive debt growth, and unmanageable current account deficits guarantee that
the perception of "moneyness" (with regard to U.S. financial assets) is an
illusion to be shattered at some future date. Our fear is that the unavoidable
dollar crisis will now likely coincide with a crisis in market confidence at the
very heart of the U.S. credit system.
Manifestly, U.S. and global systems retain little capacity for adjustment or
self-correction. Our housing slowdown only incites heightened excess throughout
the credit system. The prospect for slower growth encourages an intense flurry
of mergers, acquisitions and leveraged buyouts incorporating progressively more
leverage. The prospect of the reversal of Fed "tightening" has equities
speculation raging in markets across the globe. Meanwhile, speculator mishaps
in energy and commodities trading only empower players operating in the fixed-
income and credit "arbitrage" arenas, in the process promoting only more
destabilizing system credit and liquidity excess.
Recently, markets have prospered from the view the Fed's next move will be a
rate cut. Through 17 rate increases, the bond market always took solace in
housing bubble fragility. Surely, Chairman Bernanke would today prefer not to
apply added pressure on faltering housing markets. At 5.25%, the Fed funds rate
is agreeable to the financial sector and markets. As bullish analysts see it,
the current rate structure would seem to procure double-digit corporate earnings
growth for as far as the eye can see. Even savers are offered respectable
nominal returns, while borrowers continue to enjoy free-flowing credit at
minimal real rates. The rate environment is today creating nothing in the way
of headwinds for asset markets or for the real economy.
There is, however, something quite askew with this glowing picture: The Fed has
willfully orchestrated the most transparent and agreeable "tightening" cycle,
yet without having ever actually tightened financial conditions. This
experiment in New Age central banking has suited market participants just fine,
as illustrated by the broker/dealer and NYSE Financial indices having surged 84%
and 37%, respectively, since rates were first nudged upward back in June of
2004. This does not, however, alter the harsh reality that credit and
speculative excesses have emerged more forceful and unwieldy with each passing
year. U.S. and global imbalances have been left to cumulate exponentially,
ensuring a dreadfully formidable adjustment period. In the final analysis,
what's askew is the Fed's misguided determination to avoid popping bubbles, an
irresponsible policy stance that has tacitly accommodated runaway excess.
A CENTRAL BANKS MOST PERILOUS PREDICAMENT
There is a particular scenario worthy of the title "A central bank's most
perilous predicament:" Follow the error of indulging credit, asset inflation and
speculative excess with a cycle of policy acquiescence and accommodation. In
the process, fashion a New Age policy doctrine readily endorsed by a highly
speculative marketplace, firmly locking the central bank into a perpetually
accommodative stance. This clinches acute system fragility - always inherent to
runaway financial and economic bubbles - that will further extort promises of
"asymmetrical" policy responses. The marketplace comes to perceive that already
loose financial conditions will be loosened aggressively at the first sign of
trouble. And, lastly, the most perilous predicament would have a central bank
resolutely circumventing the business cycle, precluding recessions while
convincing everyone that they're merely nuisances that can and should be
avoided. Most regrettably, this is precisely the predicament now facing the
Bernanke Fed.
It may have appeared logical for the Federal Reserve to tread ever so gingerly
in an environment fraught with asset and economic bubble vulnerability, while
financial fragility seemed to beckon for a degree of policy forbearance. And,
of course, no one welcomes the hardship and uncertainty that accompany bursting
bubbles.
There is, however, no escaping the reality that bubbles, along with their innate
frailty, are very much an outgrowth of an underlying financial structure, credit
infrastructure and monetary environment. It is also true that epic credit
bubbles are creatures fashioned by especially all-powerful dynamics and atypical
monetary backdrops, usually associated with the interplay of extraordinary
financial and economic phenomena. Once ingrained, they will categorically
exhibit every inclination to avoid simply rolling over and obligingly exhausting
themselves. Characteristically, they will defy the hopes and prayers of central
bankers.
The stakes inevitably become too high. Years of financial sector expansion,
innovation and evolution work to embed a systemic propensity for ever-expanding
excess. Speculators, elemental to bubbles, develop a predilection for
increasingly audacious risk-taking (and leveraging), emboldened after
persevering and prospering through years of mostly ups and a few downs and close
calls. Eventually, limitless liquidity is presumed. And the greater the scope
of bubble excess the more assured the marketplace is of unconditional central
bank benevolence. Meanwhile, the maladjusted bubble economy is sustained only
by ever larger doses of credit and asset inflation.
Until a catalyst coerces a change in behavior, lenders will go on lending,
borrowers will keep on borrowing; and speculators will relish in speculating.
An increasingly commanding Wall Street today stops at nothing when it comes to
creating and unloading securities, as well as inventing new products and
creative vehicles for financing more and larger deals. And, quite naturally,
uninterrupted growth becomes the imperative - for financier, lender, borrower,
businessperson, central banker and politician - growth that, not coincidently,
is essential for avoiding the scourge of deflating bubbles.
So the Fed is forced to choose among two unattractive options: Administer
sufficient pain to exact a bubble-terminating change in conduct, or acquiesce to
ever more destabilizing degrees of excess, distortion and maladjustment.
Unfortunately, it is the nature of commanding credit bubbles - as we've been
witnessing - to provide absolutely no policymaking middle ground.
As investment managers operating in such an extraordinary environment, we must
be prepared for markedly opposing scenarios. Foremost, we recognize that we may
face the prospect of having to endure somewhat longer the continuation of credit
bubble "blow-off" excess. At the same time, however, current financial and
economic fragility leave the U.S. financial markets and economy acutely
susceptible. Our role is not to predict but to prepare for - and react to - any
environment that might present itself.
The current liquidity-induced stock market rally is challenging. Not drifting
from our investment mandate, our portfolio posture remains significantly more
short than long. We have, however, lessened our overall risk profile. We've
become especially focused on liquidity, covering some individual shorts while
increasing the relative size of our index futures position. Our strategy is to
reduce portfolio "beta" when the stock market is going against us and work to
avoid short squeezes when they proliferate, while at the same time maintaining
exposure to the downside of highly speculative stock markets. And as frustrating
as loose financial conditions, liquidity over-abundance and rampant speculative
excess are to us market bears, they do always create exceptional profit
opportunities. We remain focused, analytically diligent, disciplined and
determined to capture some of these opportunities for our shareholders.
Our strategy for Prudent Global Income has changed little over the past year.
We reduced our already small exposures to the Japanese yen and Iceland krona,
while increasing positions in the Canadian dollar and Swedish krona. We booked
some gains and reduced our gold exposure somewhat when gold stocks surged this
past spring. With most global central banks in a tightening bias, we continue
to keep the duration of our portfolio of major industrialized government bonds
at less than one year. Portfolio yield continues to benefit from reinvesting
funds in higher-yielding short-term debt instruments. Due to the significant
interest-rate differentials, we retain some exposure to U.S. Treasury bonds. In
conclusion, the portfolio remains structured to benefit from the secular bear
market in the U.S. dollar that we expect to continue.
Sincerely,
/s/David W. Tice
David W. Tice
Past performance does not guarantee future results.
Opinions expressed in this letter are those of the fund manager, are subject to
change and are not guaranteed.
THE PRUDENT BEAR FUND REGULARLY MAKES SHORT SALES OF SECURITIES, WHICH INVOLVES
UNLIMITED RISK INCLUDING THE POSSIBILITY THAT LOSSES MAY EXCEED THE ORIGINAL
AMOUNT INVESTED. THE FUND MAY ALSO USE OPTIONS AND FUTURE CONTRACTS, WHICH HAVE
RISKS ASSOCIATED WITH UNLIMITED LOSSES OF THE UNDERLYING HOLDINGS DUE TO
UNANTICIPATED MARKET MOVEMENTS AND FAILURE TO CORRECTLY PREDICT THE DIRECTION OF
SECURITIES PRICES, INTEREST RATES AND CURRENCY EXCHANGE RATES. THE FUND MAY
ALSO HOLD RESTRICTED SECURITIES PURCHASED THROUGH PRIVATE PLACEMENTS. SUCH
SECURITIES MAY BE DIFFICULT TO SELL WITHOUT EXPERIENCING DELAYS OR ADDITIONAL
COSTS.
THE PRUDENT GLOBAL INCOME FUND INVESTS IN FOREIGN SECURITIES, WHICH INVOLVE
GREATER VOLATILITY AND POLITICAL, ECONOMIC AND CURRENCY RISKS AND DIFFERENCES IN
ACCOUNTING METHODS. THE FUNDS MAY ALSO INVEST IN GOLD, WHICH INVOLVES
ADDITIONAL RISKS, SUCH AS THE POSSIBILITY FOR SUBSTANTIAL PRICE FLUCTUATIONS
OVER A SHORT PERIOD OF TIME.
The S&P 500 Index is a broad based unmanaged index of 500 stocks, which is
widely recognized as representative of the equity market in general. The NASDAQ
Composite Index is a market capitalization-weighted index that is designed to
represent the performance of the National Market System, which includes over
5,000 stocks traded only over-the-counter and not on an exchange. You cannot
invest directly in an index.
Please refer to the Schedule of Investments on page 30 for a list of holdings as
of 9/30/06. Fund holdings and sector allocations are subject to change at any
time and are not recommendations to buy or sell any security.
Beta measures the sensitivity of rates of return on a fund to general market
movements.
Cash flow: measures the cash generating capability of a company by adding non-
cash charges (e.g. depreciation) and interest expense to pretax income.
While the funds are no-load, management and other expenses still apply. Please
refer to the prospectus for further details.
Must be preceded or accompanied by a current prospectus.
EXPENSE EXAMPLE
SEPTEMBER 30, 2006
As a shareholder of the Prudent Bear Fund or the Prudent Global Income Fund
(each a "Fund" and collectively the "Funds"), you incur two types of costs: (1)
redemption fees and (2) ongoing costs, including management fees; distribution
and/or service fees; and other Fund expenses. This Example is intended to help
you understand your ongoing costs (in dollars) of investing in each Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested for the period 4/01/06
- 9/30/06.
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. Although the Funds charge no sales load or
transaction fees, you will be assessed fees for outgoing wire transfers,
returned checks and stop payment orders at prevailing rates charged by U.S.
Bancorp Fund Services, LLC, the Funds' transfer agent. If you request that a
redemption be made by wire transfer, currently a $15.00 fee is charged by the
Funds' transfer agent. You will be charged a redemption fee equal to 1.00% of
the net amount of the redemption if you redeem your shares less than 30 calendar
days after you purchase them. Individual retirement accounts (IRAs) will be
charged a $15.00 annual maintenance fee. To the extent the Funds invest in
shares of other investment companies as part of its investment strategy, you
will indirectly bear your proportionate share of any fees and expenses charged
by the underlying funds in which the Funds invest in addition to the expenses of
the Funds. Actual expenses of the underlying funds are expected to vary among
the various underlying funds. These expenses are not included in the example
below. The example below includes, but is not limited to, management fees,
shareholder servicing fees, fund accounting, custody and transfer agent fees.
However, the example below does not include portfolio trading commissions and
related expenses or other extraordinary expenses as determined under generally
accepted accounting principles. You may use the information in this line,
together with the amount you invested, to estimate the expenses that 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 entitled "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 table below provides information about hypothetical
account values and hypothetical expenses based on the Funds' actual expense
ratio and an assumed rate of return of 5% per year before expenses, which are
not the Funds' actual returns. 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 the Funds and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds. Please note that the expenses shown in the table are meant
to highlight your ongoing costs only and do not reflect any transactional costs,
such as sales charges (loads), redemption fees, or exchange 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 transactional costs were included, your costs would have been
higher.
PRUDENT BEAR FUND
NO LOAD SHARES
[Download Table]
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD*<F12>
4/01/06 9/30/06 4/01/06 - 9/30/06
------------- ------------- -------------------
Actual +<F8> (1)<F10> $1,000.00 $1,037.30 $12.29
Hypothetical ++<F9> (2)<F11> $1,000.00 $1,013.00 $12.15
+<F8> Excluding dividends on short positions, your actual cost of
investment in the Fund would be $8.95.
++<F9> Excluding dividends on short positions, your hypothetical cost of
investment in the Fund would be $8.85.
(1)<F10> Ending account values and expenses paid during period based on a
3.73% return. The return is considered after expenses are deducted
from the fund.
(2)<F11> Ending account values and expenses paid during period based on a
5.00% annual return before expenses.
*<F12> Expenses are equal to the Fund's annualized expense ratio of 2.41%,
multiplied by the average account value over the period, multiplied
by 183/365 (to reflect the one-half year period).
PRUDENT BEAR FUND
CLASS C SHARES
[Download Table]
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD*<F17>
4/01/06 9/30/06 4/01/06 - 9/30/06
------------- ------------- -------------------
Actual +<F13> (1)<F15> $1,000.00 $1,033.10 $16.08
Hypothetical ++<F14> (2)<F16> $1,000.00 $1,009.25 $15.90
+<F13> Excluding dividends on short positions, your actual cost of
investment in the Fund would be $12.75.
++<F14> Excluding dividends on short positions, your hypothetical cost of
investment in the Fund would be $12.62.
(1)<F15> Ending account values and expenses paid during period based on a
3.31% return. The return is considered after expenses are deducted
from the fund.
(2)<F16> Ending account values and expenses paid during period based on a
5.00% annual return before expenses.
*<F17> Expenses are equal to the Fund's annualized expense ratio of 3.16%,
multiplied by the average account value over the period, multiplied
by 183/365 (to reflect the one-half year period).
PRUDENT GLOBAL INCOME FUND
[Download Table]
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD*<F20>
4/01/06 9/30/06 4/01/06 - 9/30/06
------------- ------------- -------------------
Actual (1)<F18> $1,000.00 $1,027.60 $6.41
Hypothetical (2)<F19> $1,000.00 $1,018.74 $6.39
(1)<F18> Ending account values and expenses paid during period based on a
2.76% return. The return is considered after expenses are deducted
from the fund.
(2)<F19> Ending account values and expenses paid during period based on a
5.00% annual return before expenses.
*<F20> Expenses are equal to the Fund's annualized expense ratio of 1.26%,
multiplied by the average account value over the period, multiplied
by 183/365 (to reflect the one-half year period).
PRUDENT BEAR FUND
ALLOCATION OF PORTFOLIO ASSETS - SEPTEMBER 30, 2006
Common Stocks 15.7%
Warrants 0.4%
Purchased Put Options 0.7%
Short Transactions -37.3%
Futures -35.4%
Does not include investments used for collateral or short-term cash investments.
PRUDENT GLOBAL INCOME FUND
ALLOCATION OF PORTFOLIO ASSETS - SEPTEMBER 30, 2006
Common Stocks 7.6%
Convertible Bonds 0.4%
Corporate Bonds 2.8%
Foreign Treasury Obligations 70.1%
Short-Term Investments 18.3%
Other Assets in Excess of Liabilities 0.8%
STATEMENTS OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2006
[Enlarge/Download Table]
PRUDENT BEAR PRUDENT GLOBAL
FUND INCOME FUND
------------ --------------
ASSETS:
Investments, at value
Unaffiliated issuers (cost $615,533,756
and $331,892,234, respectively) $638,499,212 $343,166,485
Affiliated issuers (cost $28,834,775 and $728,252, respectively) 48,658,049 331,757
Deposit at brokers for short sales 13,074,490 --
Receivable from broker for proceeds on securities sold short 229,327,569 --
Receivable for futures contracts 563,875 --
Receivable for investments sold 1,105,394 --
Receivable for capital shares issued 2,839,126 557,376
Interest and dividends receivable 3,823,603 3,472,746
Cash 9,656,272 1,530
Other assets 1,092,590 27,530
------------ ------------
Total Assets 948,640,180 347,557,424
------------ ------------
LIABILITIES:
Securities sold short, at value
(Proceeds of $224,218,951 and $0, respectively) 254,133,820 --
Payable for securities purchased 7,404,155 --
Payable for capital shares redeemed 3,320,903 539,077
Payable to Adviser 730,995 219,664
Dividends payable on short positions 337,100 --
Accrued expenses and other liabilities 1,125,647 571,889
------------ ------------
Total Liabilities 267,052,620 1,330,630
------------ ------------
NET ASSETS $681,587,560 $346,226,794
------------ ------------
------------ ------------
NET ASSETS CONSIST OF:
Capital stock $815,960,312 $328,949,315
Accumulated net investment income (loss) 8,460,169 (3,038,000)
Accumulated undistributed net realized gain (loss) on long
transactions, short transactions, option contracts expired or
closed, futures contracts closed and foreign currency translation (148,587,782) 9,542,197
Net unrealized appreciation (depreciation) on:
Investments 42,788,730 10,877,756
Short transactions (29,914,869) --
Futures contracts (7,119,000) --
Foreign currency translation -- (104,474)
------------ ------------
TOTAL NET ASSETS $681,587,560 $346,226,794
------------ ------------
------------ ------------
NO LOAD SHARES:
Net assets $650,304,909 $346,226,794
Shares outstanding (250,000,000 shares
of $.0001 par value authorized) 111,307,474 28,140,337
Net asset value, redemption price and offering price per share $ 5.84 $ 12.30
------------ ------------
------------ ------------
CLASS C SHARES:
Net assets $ 31,282,651
Shares outstanding (250,000,000 shares
of $.0001 par value authorized) 5,562,226
Net asset value, redemption price and offering price per share $ 5.62
------------
------------
See notes to the financial statements.
STATEMENTS OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 2006
[Enlarge/Download Table]
PRUDENT BEAR PRUDENT GLOBAL
FUND INCOME FUND
------------ --------------
INVESTMENT INCOME:
Interest income $26,586,015 $ 9,240,390
Dividend income on long positions (net of foreign taxes
withheld of $0 and $10,837, respectively) 630,287 140,039
----------- -----------
Total investment income 27,216,302 9,380,429
----------- -----------
EXPENSES:
Investment advisory fee 6,683,343 2,602,970
Administration fee 447,682 248,146
Shareholder servicing and accounting costs 547,814 368,072
Custody fees 83,045 58,058
Federal and state registration 81,365 36,236
Professional fees 109,973 111,116
Distribution expense - No Load shares 1,274,335 867,657
Distribution expense - Class C shares 249,337 --
Reports to shareholders 45,607 24,465
Directors' fees and expenses 17,635 17,985
Insurance expense 64,696 50,728
Miscellaneous expense 25,555 25,955
Dividends on short positions 3,847,576 --
----------- -----------
Total expenses 13,477,963 4,411,388
----------- -----------
NET INVESTMENT INCOME 13,738,339 4,969,041
----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) on:
Long transactions from sales of unaffiliated issuers 20,838,629 5,939,783
Long transactions from sales of affiliated issuers 19,395,955 --
Short transactions (8,407,285) --
Option contracts expired or closed (4,545,159) --
Futures contracts closed (1,977,543) --
Foreign currency translation -- (1,333,301)
----------- -----------
Net realized gain (loss) 25,304,597 4,606,482
Change in unrealized appreciation (depreciation) on:
Investments 16,746,345 13,125,816
Short transactions (20,557,621) --
Futures contracts (8,164,000) --
Foreign currency translation -- 195,361
----------- -----------
Net change in unrealized appreciation (depreciation) (11,975,276) 13,321,177
----------- -----------
Net realized and unrealized gain on investments 13,329,321 17,927,659
----------- -----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $27,067,660 $22,896,700
----------- -----------
----------- -----------
See notes to the financial statements.
STATEMENTS OF CHANGES IN NET ASSETS
[Enlarge/Download Table]
PRUDENT BEAR FUND
--------------------------------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2006 SEPTEMBER 30, 2005
------------------ ------------------
OPERATIONS:
Net investment income (loss) $ 13,738,339 $ (269,475)
Net realized gain (loss) on:
Long transactions from sales of unaffiliated issuers 20,838,629 4,007,205
Long transactions from sales of affiliated issuers 19,395,955 7,670,028
Short transactions (8,407,285) (17,840,922)
Option contracts expired or closed (4,545,159) (20,290,717)
Futures contracts closed (1,977,543) (11,990,125)
Change in unrealized appreciation (depreciation) on:
Investments 16,746,345 18,359,981
Short transactions (20,557,621) (295,702)
Futures contracts (8,164,000) 806,437
------------ ------------
Net increase (decrease) in net assets resulting from operations 27,067,660 (19,843,290)
------------ ------------
DISTRIBUTIONS TO NO LOAD SHAREHOLDERS
FROM NET INVESTMENT INCOME (4,250,205) --
------------ ------------
DISTRIBUTIONS TO CLASS C SHAREHOLDERS
FROM NET INVESTMENT INCOME (169,533) --
------------ ------------
CAPITAL SHARE TRANSACTIONS (Note 2):
Proceeds from shares issued 510,760,585 194,797,082
Redemption fees 382,022 101,802
Shares issued to holders in reinvestment of dividends 3,712,744 --
Cost of shares redeemed (286,725,206) (189,689,072)
------------ ------------
Net increase in net assets resulting
from capital share transactions 228,130,145 5,209,812
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 250,778,067 (14,633,478)
NET ASSETS:
Beginning of period 430,809,493 445,442,971
------------ ------------
End of period (including accumulated net investment
income (loss) of $8,460,169, and
($2,574,436), respectively) $681,587,560 $430,809,493
------------ ------------
------------ ------------
See notes to the financial statements.
STATEMENTS OF CHANGES IN NET ASSETS (CONT.)
[Enlarge/Download Table]
PRUDENT GLOBAL INCOME FUND
---------------------------------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2006 SEPTEMBER 30, 2005
------------------ ------------------
OPERATIONS:
Net investment income $ 4,969,041 $ 4,415,701
Net realized gain (loss) on:
Long transactions from sales of unaffiliated issuers 5,939,783 24,989,235
Long transactions from sales of affiliated issuers -- 746,835
Short transactions -- (284)
Foreign currency translation (1,333,301) (824,046)
Change in unrealized appreciation (depreciation) on:
Investments 13,125,816 (25,883,686)
Foreign currency translation 195,361 (710,832)
------------ ------------
Net increase in net assets resulting from operations 22,896,700 2,732,923
------------ ------------
DISTRIBUTIONS TO NO LOAD SHAREHOLDERS
FROM NET INVESTMENT INCOME (603,095) (30,557,779)
FROM NET REALIZED GAINS (1,753,869) (5,448,501)
FROM RETURN OF CAPITAL -- (1,588,575)
------------ ------------
TOTAL DISTRIBUTIONS (2,356,964) (37,594,855)
------------ ------------
CAPITAL SHARE TRANSACTIONS (Note 2):
Proceeds from shares issued 149,501,678 237,659,061
Redemption fees 32,998 23,783
Shares issued to holders in reinvestment of dividends 2,128,752 33,574,236
Cost of shares redeemed (168,987,580) (356,146,412)
------------ ------------
Net decrease in net assets resulting
from capital share transactions (17,324,152) (84,889,332)
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 3,215,584 (119,751,264)
NET ASSETS:
Beginning of period 343,011,210 462,762,474
------------ ------------
End of period (including accumulated net investment
loss of $3,038,000 and $614,000, respectively) $346,226,794 $343,011,210
------------ ------------
------------ ------------
See notes to the financial statements.
PRUDENT BEAR FUND
FINANCIAL HIGHLIGHTS
Selected per share data is based on a share outstanding throughout each period.
[Enlarge/Download Table]
NO LOAD SHARES
---------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
SEPT. 30, SEPT. 30, SEPT. 30, SEPT. 30, SEPT. 30,
2006 2005 2004 2003 2002
---- ---- ---- ---- ----
Per Share Data:
Net asset value, beginning of period $5.47 $5.71 $6.84 $8.31 $6.31
----- ----- ----- ----- -----
Income from investment operations:
Net investment income (loss)(1)<F21>(2)<F22> 0.15 (0.00)(4)<F24> (0.02) (0.05) 0.06
Net realized and unrealized
gains (losses) on investments 0.28 (0.24) (0.78) (0.96) 2.08
----- ----- ----- ----- -----
Total from investment operations 0.43 (0.24) (0.80) (1.01) 2.14
----- ----- ----- ----- -----
Redemption fees 0.00(4)<F24> 0.00(4)<F24> 0.00(4)<F24> -- --
----- ----- ----- ----- -----
Less distributions:
Dividends from net investment income (0.06) -- (0.33) (0.22) (0.14)
Distributions from net realized gains -- -- -- (0.24) --
----- ----- ----- ----- -----
Total distributions (0.06) -- (0.33) (0.46) (0.14)
----- ----- ----- ----- -----
Net asset value, end of period $5.84 $5.47 $5.71 $6.84 $8.31
----- ----- ----- ----- -----
----- ----- ----- ----- -----
Total return 7.92% (4.20)% (12.03)% (12.58)% 35.47%
Supplemental data and ratios:
Net assets, end of period (000's) $650,305 $411,780 $429,469 $541,452 $521,030
Ratio of total expenses to average net assets 2.49% 2.58% 2.28% 2.30% 2.29%
Ratio of dividends on short positions
to average net assets 0.72% 0.73% 0.44% 0.44% 0.40%
Ratio of expenses to average net assets
excluding dividends on short positions:
Before expense reductions 1.77% 1.85% 1.84% 1.86% 1.89%
After expense reductions(5)<F25> 1.77% 1.85% 1.83% 1.83% 1.84%
Ratio of net investment income (loss)
to average net assets 2.60% (0.03)% (0.38)% (0.71)% 0.93%
Portfolio turnover rate(3)<F23> 104% 129% 138% 178% 266%
(1)<F21> Net investment income (loss) per share before dividends on short
positions for the periods ended September 30, 2006, September 30,
2005, September 30, 2004, September 30, 2003, and September 30, 2002
was $0.19, $0.04, $0.00, $(0.02), and $0.08, respectively.
(2)<F22> Net investment income (loss) per share represents net investment
income (loss) divided by the average shares outstanding throughout
the period.
(3)<F23> Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(4)<F24> Amount calculated is less than $0.005.
(5)<F25> See Note 5 in Notes to the Financial Statements.
See notes to the financial statements.
PRUDENT BEAR FUND
FINANCIAL HIGHLIGHTS (CONT.)
Selected per share data is based on a share outstanding throughout each period.
[Enlarge/Download Table]
CLASS C SHARES
---------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
SEPT. 30, SEPT. 30, SEPT. 30, SEPT. 30, SEPT. 30,
2006 2005 2004 2003 2002
---- ---- ---- ---- ----
Per Share Data:
Net asset value, beginning of period $5.29 $5.56 $6.68 $8.14 $6.23
----- ----- ----- ----- -----
Income from investment operations:
Net investment income (loss)(1)<F26>(2)<F27> 0.11 (0.04) (0.07) (0.10) 0.01
Net realized and unrealized
gains (losses) on investments 0.26 (0.24) (0.75) (0.94) 2.03
----- ----- ----- ----- -----
Total from investment operations 0.37 (0.28) (0.82) (1.04) 2.04
----- ----- ----- ----- -----
Redemption fees 0.00(4)<F29> 0.01 0.00(4)<F29> -- --
----- ----- ----- ----- -----
Less distributions:
Dividends from net investment income (0.04) -- (0.30) (0.18) (0.13)
Distributions from net realized gains -- -- -- (0.24) --
----- ----- ----- ----- -----
Total distributions (0.04) -- (0.30) (0.42) (0.13)
----- ----- ----- ----- -----
Net asset value, end of period $5.62 $5.29 $5.56 $6.68 $8.14
----- ----- ----- ----- -----
----- ----- ----- ----- -----
Total return 7.14% (4.86)% (12.72)% (13.21)% 34.18%
Supplemental data and ratios:
Net assets, end of period (000's) $31,283 $19,029 $15,971 $13,059 $7,842
Ratio of total expenses to average net assets 3.24% 3.33% 3.03% 3.05% 3.04%
Ratio of dividends on short positions
to average net assets 0.72% 0.73% 0.44% 0.44% 0.40%
Ratio of expenses to average net assets
excluding dividends on short positions:
Before expense reductions 2.52% 2.60% 2.59% 2.61% 2.64%
After expense reductions(5)<F30> 2.52% 2.60% 2.58% 2.58% 2.59%
Ratio of net investment income (loss)
to average net assets 1.85% (0.78)% (1.13)% (1.46)% 0.18%
Portfolio turnover rate(3)<F28> 104% 129% 138% 178% 266%
(1)<F26> Net investment income (loss) per share before dividends on short
positions for the periods ended September 30, 2006, September 30,
2005, September 30, 2004, September 30, 2003, and September 30,
2002, was $0.14, $(0.00)(4), $(0.04), $(0.07), and $0.04,
respectively.
(2)<F27> Net investment income (loss) per share represents net investment
income (loss) divided by the average shares outstanding throughout
the period.
(3)<F28> Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(4)<F29> Amount calculated is less than $0.005.
(5)<F30> See Note 5 in Notes to the Financial Statements.
See notes to the financial statements.
PRUDENT GLOBAL INCOME FUND
FINANCIAL HIGHLIGHTS (CONT.)
Selected per share data is based on a share outstanding throughout each period.
[Enlarge/Download Table]
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
SEPT. 30, SEPT. 30, SEPT. 30, SEPT. 30, SEPT. 30,
2006 2005 2004 2003 2002
---- ---- ---- ---- ----
Per Share Data:
Net asset value, beginning of period $11.53 $12.41 $12.49 $11.15 $ 9.31
------ ------ ------ ------ ------
Income from investment operations:
Net investment income 0.17(2)<F32> 0.12(2)<F32> 0.16(2)<F32> 0.11(1)<F31> 0.14(1)<F31>
Net realized and unrealized
gains (losses) on investments 0.68 (0.03) 0.35 1.65 1.94
------ ------ ------ ------ ------
Total from investment operations 0.85 0.09 0.51 1.76 2.08
------ ------ ------ ------ ------
Redemption fees 0.00(3)<F33> 0.00(3)<F33> 0.00(3)<F33> -- --
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income (0.02) (0.81) (0.55) (0.28) (0.23)
Distributions from net realized gains (0.06) (0.12) (0.04) (0.14) (0.01)
Return of capital -- (0.04) -- -- --
------ ------ ------ ------ ------
Total distributions (0.08) (0.97) (0.59) (0.42) (0.24)
------ ------ ------ ------ ------
Net asset value, end of period $12.30 $11.53 $12.41 $12.49 $11.15
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Total return 7.47% 0.56% 4.15% 16.03% 22.54%
Supplemental data and ratios:
Net assets, end of period (000's) $346,227 $343,011 $462,762 $480,104 $126,191
Ratio of operating expenses
to average net assets:
Before expense reductions 1.27% 1.31% 1.31% 1.34% 1.55%
After expense reductions(4)<F34> 1.27% 1.31% 1.27% 1.34% 1.50%
Ratio of net investment income
to average net assets 1.43% 0.97% 1.24% 0.69% 1.34%
Portfolio turnover rate 57% 232% 98% 117% 82%
(1)<F31> Net investment income per share is calculated using ending balances
prior to consideration of adjustments for permanent book and tax
differences.
(2)<F32> Net investment income per share represents net investment income
divided by the average shares outstanding throughout the period.
(3)<F33> Amount calculated is less than $0.005.
(4)<F34> See Note 5 in Notes to the Financial Statements.
See notes to the financial statements.
PRUDENT BEAR FUND
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2006
[Enlarge/Download Table]
SHARES VALUE
------ -----
COMMON STOCKS -- 15.7%
BASIC MATERIALS -- 10.2%
1,500,000 Alberta Star Development Corp.(a)<F35> $ 2,160,591
1,000,000 Alberta Star Development Corp. (Acquired 9/20/05, Cost $333,753)(a)<F35>(b)<F36>(c)<F37>(d)<F38> 1,440,394
900,000 Anatolia Minerals Development Ltd.
(Acquired 12/15/04, Cost $1,275,345)(a)<F35>(b)<F36>(c)<F37>(d)<F38> 3,035,563
714,715 Aquiline Resources, Inc.(a)<F35> 2,794,278
275,000 Aurora Energy Resources, Inc. (Acquired 3/22/06, Cost $850,662)(a)<F35>(b)<F36>(c)<F37>(d)<F38> 2,337,285
5,512,798 Capstone Mining Corp.(a)<F35>(e)<F39> 7,792,638
592,000 Capstone Mining Corp.
(Acquired 12/21/05 & 5/12/06, Cost $617,436)(a)<F35>(b)<F36>(c)<F37>(d)<F38>(e)<F39> 836,824
705,883 Capstone Mining Corp. (Acquired 5/11/06, Cost $805,208)(a)<F35>(b)<F36>(c)<F37>(d)<F38>(e)<F39> 997,804
1,363,778 Cascadero Copper Corporation(a)<F35> 122,011
546,200 East Asia Minerals Corporation(a)<F35> 202,794
1,127,038 East Asia Minerals Corporation (Acquired 3/03/05, $402,548)(a)<F35>(b)<F36>(c)<F37>(d)<F38> 418,448
300,000 East Asia Minerals Corporation (Acquired 10/27/05, Cost $317,161)(a)<F35>(b)<F36>(c)<F37>(d)<F38> 111,385
33 Exploration Capital Partners, LP (Acquired 10/14/98, Cost $29,714)(b)<F36>(c)<F37> 7,169,464
550,000 First Majestic Resource Corp.(a)<F35> 1,313,800
275,000 First Majestic Resource Corp. (Acquired 5/07/04, Cost $512,931)(a)<F35>(b)<F36>(c)<F37>(d)<F38> 656,900
809,091 Fronteer Development Group Inc.(a)<F35> 4,321,425
400,000 Fronteer Development Group Inc. (Acquired 2/16/05, Cost $567,569)(a)<F35>(b)<F36>(c)<F37>(d)<F38> 2,136,435
454,545 Fronteer Development Group Inc. (Acquired 4/11/06, Cost $651,934)(a)<F35>(b)<F36>(c)<F37>(d)<F38> 2,427,764
1,155,000 Gold Canyon Resources, Inc. (Acquired 8/26/04, Cost $484,003)(a)<F35>(b)<F36>(c)<F37>(d)<F38> 320,331
1,298,265 Golden Cycle Gold Corporation(a)<F35>(e)<F39> 10,373,137
2,643,513 Golden Phoenix Minerals, Inc. (Acquired 1/14/00, Cost $300,000)(a)<F35>(b)<F36>(c)<F37> 851,740
3,300,000 International KRL Resources Corp.(a)<F35>(e)<F39> 501,901
40,000 Laramide Resources Ltd. (Acquired 9/29/06, Cost $117,993)(a)<F35>(b)<F36>(c)<F37>(d)<F38> 168,213
1,890,000 Northern Lion Gold Corp.(a)<F35>(e)<F39> 405,815
3,235,000 Pershing Resources Corporation Inc.(a)<F35> 388,200
500,000 Powertech Uranium Corp. (Acquired 5/11/06, Cost $451,138)(a)<F35>(b)<F36>(c)<F37>(d)<F38> 796,242
1,821,403 Rimfire Minerals Corporation(a)<F35>(e)<F39> 2,590,947
2,842,300 Sabina Silver Corporation(a)<F35>(e)<F39> 3,076,880
750,000 Sabina Silver Corporation
(Acquired 11/05/03, Cost $283,050)(a)<F35>(b)<F36>(c)<F37>(d)<F38>(e)<F39> 811,899
791,700 San Gold Corp.(a)<F35> 1,005,783
281,000 Santoy Resources Ltd.(a)<F35> 103,073
1,737,599 Silverstone Resources Corp.
(Acquired 12/16/03 - 12/15/04, Cost $0)(a)<F35>(b)<F36>(c)<F37>(d)<F38>(e)<F39> 982,476
432,628 Silverstone Resources Corp.
(Acquired 12/21/05 & 5/03/06, Cost $0)(a)<F35>(b)<F36>(c)<F37>(d)<F38>(e)<F39> 244,617
1,400,000 Skygold Ventures Ltd.(a)<F35> 2,129,278
268,409 Sunridge Gold Corp.(a)<F35> 600,333
250,000 Sunridge Gold Corp. (Acquired 9/18/06, Cost $205,789)(a)<F35>(b)<F36>(c)<F37>(d)<F38> 475,285
527,900 Trade Winds Ventures Inc.(a)<F35>(e)<F39> 148,771
1,825,000 Trade Winds Ventures Inc.
(Acquired 6/29/04, Cost $1,001,743)(a)<F35>(b)<F36>(c)<F37>(d)<F38>(e)<F39> 514,314
800,000 Trade Winds Ventures Inc.
(Acquired 11/30/04, Cost $847,500)(a)<F35>(b)<F36>(c)<F37>(d)<F38>(e)<F39> 225,453
630 Viceroy Exploration Ltd.(a)<F35> 5,642
151,515 Viceroy Exploration Ltd. (Acquired 12/01/04, Cost $374,605)(a)<F35>(b)<F36>(c)<F37>(d)<F38> 1,153,358
666,667 YGC Resources Ltd. (Acquired 4/13/05, Cost $322,532)(a)<F35>(b)<F36>(c)<F37>(d)<F38> 984,120
------------
69,133,611
------------
HEALTH CARE -- 0.6%
850,000 ADVENTRX Pharmaceuticals, Inc.(a)<F35> 2,329,000
375,000 ADVENTRX Pharmaceuticals, Inc.
(Acquired 3/01/06, Cost $228,750)(a)<F35>(b)<F36>(c)<F37>(d)<F38> 873,375
435,367 Cardima, Inc.(a)<F35> 19,592
100,000 Genitope Corporation(a)<F35> 292,000
250,000 Pro Pharmaceuticals, Inc.(a)<F35> 205,000
------------
3,718,967
------------
METALS & MINING -- 4.5%
300,000 American Gold Capital Corp.(a)<F35> 448,222
400,000 Andina Minerals, Inc.(a)<F35> 747,931
800,000 Bear Creek Mining Corporation(a)<F35> 7,157,235
40,000 Bear Creek Mining Corporation (Acquired 8/30/05, Cost $107,953)(a)<F35>(b)<F36>(c)<F37>(d)<F38> 357,862
3,000,000 Brilliant Mining Corp.(a)<F35>(e)<F39> 2,227,690
1,000,000 Brilliant Mining Corp. (Acquired 5/10/06, Cost $708,012)(a)<F35>(b)<F36>(c)<F37>(d)<F38>(e)<F39> 742,563
4,975,000 Cash Minerals Ltd.(a)<F35>(e)<F39> 7,121,449
2,000,000 Commander Resources Ltd.(a)<F35> 1,252,516
3,366,200 Crosshair Exploration & Mining Corp.(a)<F35>(e)<F39> 5,842,476
500,000 Crosshair Exploration & Mining Corp.
(Acquired 11/04/05, Cost $338,070)(a)<F35>(b)<F36>(c)<F37>(d)<F38>(e)<F39> 867,815
857,143 Franklin Lake Resources Inc.(a)<F35>(e)<F39> 171,429
1,500,000 Fury Explorations Ltd.(a)<F35>(e)<F39> 1,100,425
600,000 Fury Explorations Ltd. (Acquired 9/20/06, Cost $429,744)(a)<F35>(b)<F36>(c)<F37>(d)<F38>(e)<F39> 374,145
485,000 Gateway Gold Corp.(a)<F35> 433,907
500,000 Global Copper Corp.(a)<F35> 702,304
800,000 Grayd Resource Corp.(a)<F35> 687,095
85,000 Kenrich-Eskay Mining Corp.(a)<F35> 88,973
260,000 Niblack Mining Corp.(a)<F35> 130,262
222,500 Niblack Mining Corp. (Acquired 3/30/04, Cost $0)(a)<F35>(b)<F36>(c)<F37>(d)<F38> 111,474
525,000 Niblack Mining Corp. (Acquired 3/02/06, Cost $252,050)(a)<F35>(b)<F36>(c)<F37>(d)<F38> 263,028
------------
30,828,801
------------
POLLUTION CONTROL -- 0.1%
628,209 Migami, Inc.(a)<F35> 223,014
566,300 Sonic Environmental Solutions Inc.(a)<F35>(e)<F39> 303,986
750,000 Sonic Environmental Solutions Inc.
(Acquired 9/20/05, Cost $1,267,329)(a)<F35>(b)<F36>(c)<F37>(d)<F38>(e)<F39> 402,595
------------
929,595
------------
RESTAURANTS -- 0.0%
6 Restaurant Brands New Zealand Limited 4
------------
SATELLITE -- 0.3%
107,777 Globalstar Inc. - Series A (Acquired 12/21/04, Cost $401,833)(a)<F35>(b)<F36>(c)<F37>(d)<F38> 1,976,630
------------
TECHNOLOGY -- 0.0%
398,433 Aura Systems, Inc.(a)<F35> 302,809
------------
TOTAL COMMON STOCKS (Cost $63,765,427) 106,890,417
------------
PRINCIPAL
AMOUNT
---------
U.S. TREASURY OBLIGATIONS -- 48.0%
U.S. TREASURY NOTES:
$25,605,000 2.500%, 10/31/2006(f)<F40> 25,554,994
73,500,000 2.875%, 11/30/2006(g)<F41> 73,253,114
10,300,000 3.000%, 12/31/2006(g)<F41> 10,247,295
18,300,000 3.125%, 1/31/2007(f)<F40> 18,187,052
2,500,000 2.250%, 2/15/2007 2,474,415
11,700,000 3.375%, 2/28/2007(g)<F41> 11,621,844
25,300,000 3.750%, 3/31/2007(f)<F40> 25,140,888
59,250,000 3.625%, 4/30/2007(f)<F40> 58,782,458
5,100,000 4.375%, 5/15/2007 5,080,676
97,870,000 3.500%, 5/31/2007(f)<F40> 96,921,835
------------
TOTAL U.S. TREASURY OBLIGATIONS (Cost $327,460,264) 327,264,571
------------
SHARES
------
WARRANTS -- 0.4%
Alberta Star Development Corp.
500,000 Expiration: September 2007, Exercise Price: $0.65 CAD
(Acquired 9/20/05, Cost $5,000) (b)<F36>(c)<F37>(d)<F38> 444,867
Anatolia Minerals Development Ltd.
450,000 Expiration: December 2006, Exercise Price: $2.50 CAD
(Acquired 12/15/04, Cost $4,500) (b)<F36>(c)<F37>(d)<F38> 488,146
Aquiline Resources, Inc.
78,125 Expiration: October 2006, Exercise Price: $2.00 CAD
(Acquired 10/07/05, Cost $781) (b)<F36>(c)<F37>(d)<F38> 149,205
Aura Systems, Inc.
105,990 Expiration: January 2007-2011, Exercise Price: $3.00
(Acquired 3/21/06, Cost $1,060) (b)<F36>(c)<F37>(d)<F38> --
Bear Creek Mining Corporation
20,000 Expiration: August 2007, Exercise Price: $4.25 CAD
(Acquired 8/30/05, Cost $200) (b)<F36>(c)<F37>(d)<F38> 112,762
Brilliant Mining Corp.
500,000 Expiration: May 2008, Exercise Price: $1.05 CAD
(Acquired 5/10/06, Cost $5,000) (b)<F36>(c)<F37>(d)<F38> 198,613
Cascadero Copper Corporation
888,889 Expiration: December 2006, Exercise Price: $0.65 CAD
(Acquired 12/21/04, Cost $8,889) (b)<F36>(c)<F37>(d)<F38> --
Crosshair Exploration & Mining Corp.
250,000 Expiration: November 2007, Exercise Price: $1.25 CAD
(Acquired 11/04/05, Cost $2,500) (b)<F36>(c)<F37>(d)<F38> 209,931
East Asia Minerals Corporation
563,519 Expiration: March 2007, Exercise Price: $1.00 CAD
(Acquired 3/03/05, Cost $5,635) (b)<F36>(c)<F37>(d)<F38> 7,562
150,000 Expiration: October 2007, Exercise Price: $1.75 CAD
(Acquired 10/27/05, Cost $1,500) (b)<F36>(c)<F37>(d)<F38> 4,026
Fronteer Development Group Inc.
200,000 Expiration: February 2007, Exercise Price: $2.75 CAD
(Acquired 2/16/05, Cost $2,000) (b)<F36>(c)<F37>(d)<F38> 538,510
Fury Explorations Ltd.
300,000 Expiration: February 2008, Exercise Price: $1.25 CAD
(Acquired 9/20/06, Cost $3,000) (b)<F36>(c)<F37>(d)<F38> 60,470
Kenrich-Eskay Mining Corp.
250,000 Expiration: February 2007, Exercise Price: $1.25 CAD
(Acquired 2/06/06, Cost $2,500) (b)<F36>(c)<F37>(d)<F38> 52,740
Metalline Mining Co. Inc.
22,220 Expiration: October 2007, Exercise Price: $5.00
(Acquired 10/08/02, Cost $222) (b)<F36>(c)<F37>(d)<F38> 2,102
Niblack Mining Corp.
262,500 Expiration: September 2007, Exercise Price: $0.80 CAD
(Acquired 3/02/06, Cost $2,625) (b)<F36>(c)<F37>(d)<F38> 39,642
Powertech Uranium Corp.
250,000 Expiration: May 2007, Exercise Price: $1.30 CAD
(Acquired 5/11/06, Cost $2,500) (b)<F36>(c)<F37>(d)<F38> 142,183
Silverstone Resources Corp.
1,085,114 Expiration: June 2007, Exercise Price: $1.80 CAD
(Acquired 12/16/03 - 5/03/06, Cost $0) (b)<F36>(c)<F37>(d)<F38> --
Sonic Environmental Solutions Inc.
375,000 Expiration: September 2007, Exercise Price: $2.75 CAD
(Acquired 9/20/05, Cost $3,750) (b)<F36>(c)<F37>(d)<F38> 1,376
Trade Winds Ventures Inc.
400,000 Expiration: November 2006, Exercise Price: $1.75 CAD
(Acquired 11/30/04, Cost $4,000) (b)<F36>(c)<F37>(d)<F38> --
YGC Resources Ltd.
333,334 Expiration: April 2007, Exercise Price: $1.00 CAD
(Acquired 4/13/05, Cost $3,334) (b)<F36>(c)<F37>(d)<F38> 181,406
------------
TOTAL WARRANTS (Cost $58,996) 2,633,541
------------
CONTRACTS (100 SHARES PER CONTRACT)
-----------------------------------
PURCHASED PUT OPTIONS -- 0.7%
Advanced Micro Devices, Inc.
300 Expiration: October 2006, Exercise Price: $27.50 93,000
Agnico-Eagle Mines Limited
400 Expiration: November 2006, Exercise Price: $40.00 360,000
Alliance Data Systems Corp.
200 Expiration: December 2006, Exercise Price: $50.00 28,500
AMBAC Financial Group, Inc.
200 Expiration: November 2006, Exercise Price: $80.00 22,500
200 Expiration: February 2007, Exercise Price: $80.00 47,000
Apple Computer, Inc.
300 Expiration: October 2006, Exercise Price: $62.50 3,750
Avery Dennison Corp.
300 Expiration: October 2006, Exercise Price: $60.00 23,250
200 Expiration: January 2007, Exercise Price: $60.00 44,500
Bank of America Corporation
400 Expiration: November 2006, Exercise Price: $47.50 4,000
400 Expiration: November 2006, Exercise Price: $50.00 9,000
300 Expiration: January 2007, Exercise Price: $45.00 4,500
Barrick Gold Corporation
600 Expiration: October 2006, Exercise Price: $35.00 255,000
The Bear Stearns Companies Inc.
200 Expiration: April 2007, Exercise Price: $120.00 62,000
Bed Bath & Beyond, Inc.
300 Expiration: January 2007, Exercise Price: $37.50 49,500
Brightpoint, Inc.
500 Expiration: October 2006, Exercise Price: $20.88 (h)<F42> 399,000
Bristol-Myers Squibb Company
1,000 Expiration: December 2006, Exercise Price: $20.00 10,000
Caremark Rx, Inc.
400 Expiration: December 2006, Exercise Price: $45.00 8,000
200 Expiration: December 2006, Exercise Price: $50.00 13,000
250 Expiration: March 2007, Exercise Price: $50.00 33,125
Citigroup Inc.
1,000 Expiration: December 2006, Exercise Price: $47.50 60,000
200 Expiration: December 2006, Exercise Price: $50.00 30,000
200 Expiration: January 2007, Exercise Price: $47.50 16,000
300 Expiration: March 2007, Exercise Price: $50.00 64,500
Commerce Bancorp Inc.
200 Expiration: December 2006, Exercise Price: $37.50 46,000
Corus Bankshares, Inc.
200 Expiration: December 2006, Exercise Price: $30.00 153,000
D.R. Horton, Inc.
300 Expiration: November 2006, Exercise Price: $22.50 25,500
Darden Restaurants, Inc.
300 Expiration: January 2007, Exercise Price: $40.00 48,000
Fannie Mae
200 Expiration: December 2006, Exercise Price: $45.00 3,000
Financial Select Sector SPDR Fund
300 Expiration: December 2006, Exercise Price: $34.00 16,500
First Horizon National Corporation
100 Expiration: November 2006, Exercise Price: $40.00 22,500
The First Marblehead Corp.
100 Expiration: December 2006, Exercise Price: $40.00 1,750
Freddie Mac
200 Expiration: October 2006, Exercise Price: $60.00 2,000
Genworth Financial Inc. - Class A
200 Expiration: December 2006, Exercise Price: $30.00 3,000
The Goldman Sachs Group, Inc.
200 Expiration: April 2007, Exercise Price: $145.00 70,000
Google, Inc.
100 Expiration: January 2007, Exercise Price: $310.00 31,000
IndyMac Bancorp, Inc.
200 Expiration: October 2006, Exercise Price: $45.00 79,000
Investors Financial Services Corp.
200 Expiration: October 2006, Exercise Price: $47.50 91,000
JPMorgan Chase & Co.
200 Expiration: December 2006, Exercise Price: $40.00 3,500
500 Expiration: December 2006, Exercise Price: $42.50 17,500
200 Expiration: December 2006, Exercise Price: $45.00 15,000
400 Expiration: January 2007, Exercise Price: $40.00 12,000
300 Expiration: March 2007, Exercise Price: $45.00 42,000
Kohl's Corporation
400 Expiration: October 2006, Exercise Price: $50.00 1,000
Lehman Brothers Holdings Inc.
200 Expiration: January 2007, Exercise Price: $60.00 14,000
200 Expiration: April 2007, Exercise Price: $65.00 47,000
M.D.C. Holdings, Inc.
150 Expiration: November 2006, Exercise Price: $45.00 29,250
Mattel, Inc.
500 Expiration: October 2006, Exercise Price: $17.50 3,750
MBIA Inc.
100 Expiration: November 2006, Exercise Price: $50.00 1,000
200 Expiration: January 2007, Exercise Price: $55.00 19,000
200 Expiration: February 2007, Exercise Price: $60.00 48,500
Merrill Lynch & Co., Inc.
200 Expiration: January 2007, Exercise Price: $70.00 18,500
200 Expiration: April 2007, Exercise Price: $75.00 60,500
MGIC Investment Corporation
300 Expiration: December 2006, Exercise Price: $65.00 168,000
Morgan Stanley
200 Expiration: April 2007, Exercise Price: $65.00 36,000
The Morgan Stanley Retail Index
100 Expiration: December 2006, Exercise Price: $155.00 9,750
400 Expiration: December 2006, Exercise Price: $160.00 57,000
200 Expiration: December 2006, Exercise Price: $165.00 43,000
600 Expiration: December 2006, Exercise Price: $175.00 264,000
New Century Financial Corp.
100 Expiration: November 2006, Exercise Price: $40.00 24,500
Newell Rubbermaid Inc.
300 Expiration: January 2007, Exercise Price: $25.00 10,500
The PHLX Housing Sector Index
200 Expiration: October 2006, Exercise Price: $195.00 31,500
100 Expiration: October 2006, Exercise Price: $210.00 62,500
400 Expiration: November 2006, Exercise Price: $205.00 284,000
Rent-A-Center, Inc.
500 Expiration: December 2006, Exercise Price: $25.00 26,250
The Russell 2000 Index
100 Expiration: December 2006, Exercise Price: $700.00 181,000
100 Expiration: January 2007, Exercise Price: $680.00 173,000
The Ryland Group, Inc.
200 Expiration: November 2006, Exercise Price: $40.00 31,000
SanDisk Corp.
300 Expiration: October 2006, Exercise Price: $50.00 43,500
Sonic Corp.
120 Expiration: December 2006, Exercise Price: $20.00 2,400
50 Expiration: December 2006, Exercise Price: $22.50 4,500
SPDR Trust Series 1
200 Expiration: October 2006, Exercise Price: $130.00 8,000
200 Expiration: November 2006, Exercise Price: $132.00 28,500
Standard and Poor's 500 Index
600 Expiration: December 2006, Exercise Price: $1,200.00 237,000
100 Expiration: December 2006, Exercise Price: $1,210.00 47,000
100 Expiration: December 2006, Exercise Price: $1,275.00 108,500
Stericycle, Inc.
500 Expiration: November 2006, Exercise Price: $65.00 38,750
Toll Brothers, Inc.
200 Expiration: November 2006, Exercise Price: $27.50 26,000
Washington Mutual, Inc.
200 Expiration: January 2007, Exercise Price: $45.00 51,500
------------
TOTAL PURCHASED PUT OPTIONS (Cost $7,283,787) 4,562,525
------------
SHARES
------
SHORT-TERM INVESTMENTS -- 36.0%
MUTUAL FUNDS -- 1.3%
9,075,390 Federated US Treasury Cash Reserve Fund 9,075,390
------------
PRINCIPAL
AMOUNT
---------
U.S. TREASURY BILLS -- 34.7%
$20,000,000 4.653%, 10/05/2006 19,989,185
56,782,000 4.900%, 10/12/2006(g)<F41> 56,698,349
20,000,000 4.740%, 10/19/2006(g)<F41> 19,951,689
16,000,000 4.775%, 10/26/2006(f)<F40> 15,946,686
21,000,000 4.780%, 11/02/2006(g)<F41> 20,916,796
20,000,000 4.900%, 11/09/2006(g)<F41> 19,895,949
20,000,000 4.838%, 11/16/2006(g)<F41> 19,877,170
20,000,000 4.810%, 11/24/2006(f)<F40> 19,855,299
10,000,000 4.840%, 11/30/2006(g)<F41> 9,923,530
5,000,000 4.915%, 12/14/2006 4,952,205
13,000,000 4.810%, 12/21/2006 12,862,551
16,000,000 4.815%, 12/07/2006 15,861,408
------------
236,730,817
------------
TOTAL SHORT-TERM INVESTMENTS (Cost $245,800,057) 245,806,207
------------
Total Investments (Cost $644,368,531) -- 100.8% 687,157,261
Liabilities in Excess of Other Assets -- (0.8)% (5,569,701)
------------
TOTAL NET ASSETS -- 100.0% $681,587,560
------------
------------
Percentages are stated as a percent of net assets.
(a)<F35> Non-income producing security.
(b)<F36> Fair valued security.
(c)<F37> Restricted security.
(d)<F38> Private placement issue.
(e)<F39> Affiliated company. See Note 7 in Notes to the Financial Statements.
(f)<F40> All or a portion of the securities have been committed as collateral
for open short positions.
(g)<F41> All or a portion of the securities have been committed as collateral
for futures contracts.
(h)<F42> 120 shares per contract.
CAD - Canadian Dollars
See notes to the financial statements.
PRUDENT BEAR FUND
SCHEDULE OF SECURITIES SOLD SHORT
SEPTEMBER 30, 2006
SHARES VALUE
------ -----
8,000 Advanced Micro Devices, Inc. $ 198,800
45,000 Agnico-Eagle Mines Limited 1,400,850
44,000 Analog Devices, Inc. 1,293,160
120,000 Apollo Group, Inc. 5,908,800
102,000 Avery Dennison Corp. 6,137,340
63,000 Bank of America Corporation 3,374,910
40,000 Bed Bath & Beyond, Inc. 1,530,400
115,000 Boston Scientific Corp. 1,700,850
80,000 Bristol-Myers Squibb Company 1,993,600
95,500 Brunswick Corporation 2,978,645
16,000 Capital One Financial Corp. 1,258,560
50,000 Career Education Corp. 1,124,500
37,000 Caremark Rx, Inc. 2,096,790
68,000 Citigroup Inc. 3,377,560
47,000 Commerce Bancorp Inc. 1,725,370
37,000 Comverse Technology, Inc. 793,280
235,000 Constellation Brands, Inc. - Class A 6,763,300
30,000 Consumer Staples Select Sector SPDR Fund 761,400
28,000 Countrywide Financial Corporation 981,120
65,000 D.R. Horton, Inc. 1,556,750
75,000 Darden Restaurants, Inc. 3,185,250
250,000 DIAMONDS Trust Series I 29,185,000
170,000 Dollar General Corp. 2,317,100
20,300 Eldorado Gold Corporation 88,305
125,000 Eli Lilly & Company 7,125,000
28,000 EMC Corporation 335,440
34,000 Fannie Mae 1,900,940
13,000 First Horizon National Corporation 494,130
100,000 Flextronics International Ltd. 1,264,000
70,000 Florida Rock Industries, Inc. 2,709,700
25,000 Freddie Mac 1,658,250
26,000 Gentex Corporation 369,460
125,000 Golden Star Resources Ltd. 341,250
310,000 H&R Block, Inc. 6,739,400
23,500 Harman International Industries, Inc. 1,960,840
8,000 The Houston Exploration Co. 441,200
55,000 Hovnanian Enterprises, Inc. 1,613,700
15,000 iShares Lehman 20+ Year Treasury Bond Fund 1,340,850
30,000 iShares Russell 2000 Growth Index Fund 2,171,700
225,000 Ivanhoe Mines Ltd. 1,408,500
100,000 Ivanhoe Mines Ltd. 623,574
72,000 JPMorgan Chase & Co. 3,381,120
37,000 KB Home 1,620,600
15,500 L-3 Communications Holdings, Inc. 1,214,115
270,000 Leggett & Platt, Inc. 6,758,100
36,000 Lennar Corporation 1,629,000
42,000 M.D.C. Holdings, Inc. 1,950,900
60,000 Marvell Technology Group Ltd. 1,162,200
265,000 Mattel, Inc. 5,220,500
24,000 MBIA Inc. 1,474,560
34,000 MGIC Investment Corporation 2,038,980
75,000 Mohawk Industries, Inc. 5,583,750
180,000 Newell Rubbermaid Inc. 5,097,600
37,000 Nokia Corp. - ADR 728,530
70,000 Office Depot, Inc. 2,779,000
168,000 O'Reilly Automotive, Inc. 5,579,280
205,000 Patterson Companies, Inc. 6,890,050
83,000 Polaris Industries, Inc. 3,415,450
82,000 Pool Corporation 3,157,000
3,000 Radian Group, Inc. 180,000
40,000 The Ryland Group, Inc. 1,728,400
128,000 Seagate Technology 2,955,520
10,000 Shell Canada Ltd. 280,474
180,000 Sonic Corp. 4,069,800
235,000 SPDR Trust Series 1 31,391,300
82,000 Stericycle, Inc. 5,722,780
210,000 SUPERVALU INC. 6,226,500
49,000 Telefonaktiebolaget LM Ericsson - ADR 1,688,050
7,000 Thor Industries, Inc. 288,190
58,000 Toll Brothers, Inc. 1,628,640
125,000 UTStarcom, Inc. 1,108,750
59,838 Valueclick, Inc. 1,109,397
120,000 Wal-Mart Stores, Inc. 5,918,400
45,000 Websense, Inc. 972,450
91,000 Wells Fargo & Company 3,292,380
68,000 Whirlpool Corporation 5,719,480
100,000 Whole Foods Market, Inc. 5,943,000
------------
TOTAL SECURITIES SOLD SHORT (Proceeds $224,218,951) $254,133,820
------------
------------
ADR - American Depository Receipt
See notes to the financial statements.
PRUDENT GLOBAL INCOME FUND
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2006
[Enlarge/Download Table]
SHARES VALUE
------ -----
COMMON STOCKS -- 7.6%
CANADA -- 5.6%
180,186 Agnico-Eagle Mines Limited $ 5,579,278
3,371,100 BacTech Mining Corporation(a)<F43>(f)<F48> 331,757
445,000 Central Fund of Canada Limited - Class A 3,742,450
1,155,353 First Majestic Resource Corp.(a)<F43> 2,759,823
687,500 First Majestic Resource Corp.
(Acquired 5/07/04, Cost $1,282,327)(a)<F43>(b)<F44>(c)<F45>(d)<F46> 1,642,250
100,000 Goldcorp, Inc. 2,358,309
120,000 Goldcorp, Inc. 2,832,000
------------
19,245,867
------------
SOUTH AFRICA -- 0.9%
85,000 AngloGold Ashanti Limited - ADR 3,207,900
------------
UNITED STATES -- 1.1%
30,000 Newmont Mining Corp. 1,282,500
100,000 Royal Gold, Inc. 2,713,000
------------
3,995,500
------------
TOTAL COMMON STOCKS (Cost $16,841,266) 26,449,267
------------
PRINCIPAL
AMOUNT
---------
CONVERTIBLE BONDS -- 0.4%
BacTech Mining Corporation
3,000,000 CAD 10.000%, 3/15/2009 (Acquired 3/15/04, Cost $2,230,050)(a)<F43>(b)<F44>(c)<F45>(d)<F46> 1,341,982
------------
TOTAL CONVERTIBLE BONDS (Cost $2,230,050) 1,341,982
------------
CORPORATE BONDS -- 2.8%
UBS Gold Bullion Notes
$ 7,000,000 0.000%, 8/29/2008(a)<F43>(e)<F47> 9,800,000
------------
TOTAL CORPORATE BONDS (Cost $7,000,000) 9,800,000
------------
FOREIGN TREASURY OBLIGATIONS -- 70.1%
AUSTRALIA -- 3.6%
Australian Government Bond
16,620,000 AUD 6.750%, 11/15/2006 12,395,299
------------
CANADA -- 8.8%
Canadian Treasury Bill
34,030,000 CAD 0.000%, 10/19/2006 30,386,106
------------
DENMARK -- 3.6%
Kingdom of Denmark Bonds
74,070,000 DKK 3.000%, 11/15/2006 12,588,064
------------
GERMANY -- 17.0%
German Treasury Bill
22,860,000 EUR 0.000%, 12/07/2006 28,823,352
23,880,000 EUR 0.000%, 12/13/2006 30,092,779
------------
58,916,131
------------
HONG KONG -- 7.1%
Hong Kong Government Bond
190,000,000 HKD 7.370%, 10/30/2006 24,461,178
------------
ITALY -- 1.0%
Republic of Italy Bond
400,000,000 JPY 0.375%, 10/10/2006 3,386,328
------------
NEW ZEALAND -- 1.1%
New Zealand Government Bond
6,020,000 NZD 8.000%, 11/15/2006 3,933,384
------------
NORWAY -- 4.8%
Norwegian Government Bond
108,559,000 NOK 6.750%, 1/15/2007 16,776,928
------------
SINGAPORE -- 4.5%
Singapore Government Bond
24,600,000 SGD 4.000%, 3/01/2007 15,555,843
------------
SWEDEN -- 4.0%
Swedish Government Bond
96,700,000 SEK 8.000%, 08/15/2007 13,735,394
------------
SWITZERLAND -- 12.1%
Swiss Government Bond
31,900,000 CHF 0.000%, 11/09/2006 25,467,448
20,163,000 CHF 4.500%, 6/10/2007 16,406,808
------------
41,874,256
------------
UNITED KINGDOM -- 2.5%
United Kingdom Treasury Bond
4,560,000 GBP 4.500%, 3/07/2007 8,521,340
------------
TOTAL FOREIGN TREASURY OBLIGATIONS
(Cost $243,172,428) 242,530,251
------------
SHARES
------
SHORT-TERM INVESTMENTS -- 18.3%
MUTUAL FUNDS -- 1.9%
6,538,703 Federated US Treasury Cash Reserve Fund 6,538,703
------------
PRINCIPAL
AMOUNT
---------
U.S. TREASURY BILLS -- 16.4%
$ 5,000,000 4.653%, 10/05/2006 4,997,333
18,000,000 4.900%, 10/12/2006 17,974,308
4,000,000 4.740%, 10/19/2006 3,990,857
10,000,000 4.775%, 10/26/2006 9,968,254
7,000,000 4.780%, 11/02/2006 6,971,245
13,000,000 4.900%, 11/09/2006 12,936,042
------------
56,838,039
------------
TOTAL SHORT-TERM INVESTMENTS (Cost $63,376,742) 63,376,742
------------
Total Investments (Cost $332,620,486) -- 99.2% 343,498,242
Other Assets in Excess of Liabilities -- 0.8% 2,728,552
------------
TOTAL NET ASSETS -- 100.0% $346,226,794
------------
------------
Percentages are stated as a percent of net assets.
(a)<F43> Non-income producing security.
(b)<F44> Fair valued security.
(c)<F45> Restricted security.
(d)<F46> Private placement issue.
(e)<F47> Redemption value linked to the value of gold bullion.
(f)<F48> Affiliated company. See Note 7 in Notes to the Financial Statements.
ADR American Depository Receipt
AUD Australian Dollars
GBP British Pounds
CAD Canadian Dollars
DKK Danish Krone
EUR European Monetary Units
HKD Hong Kong Dollars
JPY Japanese Yen
NOK Norwegian Kroner
NZD New Zealand Dollars
SGD Singapore Dollars
CHF Swiss Francs
SEK Swedish Krona
See notes to the financial statements.
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2006
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Prudent Bear Funds, Inc. (the "Company") was incorporated on October 25,
1995, as a Maryland Corporation and is registered as an open-end management
investment company under the Investment Company Act of 1940 ("1940 Act").
The Company currently consists of a diversified series, the Prudent Bear
Fund, and a non-diversified series, the Prudent Global Income Fund
(formerly the Prudent Safe Harbor Fund) (each a "Fund" and collectively the
"Funds"). The investment objectives of the Funds are set forth below.
The investment objective of the Prudent Bear Fund is capital appreciation,
which it seeks to obtain primarily through short sales of equity securities
when overall market valuations are high and through long positions in
value-oriented equity securities when overall market valuations are low.
The Prudent Bear Fund commenced operations on December 28, 1995.
The Prudent Bear Fund has issued two classes of shares: No Load and Class C
shares. The No Load shares are subject to a 0.25% 12b-1 fee, while the
Class C shares are subject to a 1.00% 12b-1 fee, as described in accordance
with the Fund's prospectuses. Each class of shares has identical rights and
privileges except with respect to 12b-1 fees and voting rights on matters
affecting a single class of shares.
The investment objective of the Prudent Global Income Fund is current
income and capital appreciation through investments primarily in liquid
securities issued by major industrialized nations and equity securities of
companies that mine gold. The Prudent Global Income Fund commenced
operations on February 2, 2000.
The following is a summary of significant accounting policies consistently
followed by the Funds.
a) Investment Valuation - Common stocks, preferred stocks and securities
sold short that are listed on a securities exchange are valued at the
last quoted sales price on the day the valuation is made. Securities
listed on the NASDAQ Global Market are valued at the NASDAQ Official
Closing Price. Price information on listed stocks is taken from the
exchange where the security is primarily traded. Common stocks and
securities sold short which are listed on an exchange or the NASDAQ
Stock Market but which are not traded on the valuation date are valued
at the average of the current bid and asked price. Unlisted equity
securities for which market quotations are readily available are
valued at the latest quoted bid price. Debt securities are valued at
the latest bid prices furnished by an independent pricing service.
Mutual fund investments are valued at the net asset value on the day
the valuation is made. Short-term instruments (those with remaining
maturities of 60 days or less) are valued at amortized cost, which
approximates market value. Other assets and securities for which no
quotations are readily available (or which are deemed unreliable) are
valued at fair value as determined in good faith by David W. Tice &
Associates, LLC (the "Adviser") in accordance with procedures approved
by the Board of Directors of the Company. Types of securities that
the Funds may hold for which fair value pricing might be required
include, but are not limited to: (a) illiquid securities, including
"restricted" securities and private placements for which there is no
public market; (b) warrants; (c) securities of an issuer that has
entered into a restructuring; (d) securities whose trading has been
halted or suspended; and (e) fixed income securities that have gone
into default and for which there is not a current market value
quotation. Further, if events occur that materially affect the value
of a security between the time trading ends on that particular
security and the close of the normal trading session of the New York
Stock Exchange, the Funds may value the security at its fair value.
Valuing securities at fair value involves greater reliance on judgment
than securities that have readily available market quotations. There
can be no assurance that the Funds could obtain the fair value
assigned to a security if they were to sell the security at
approximately the time at which the Funds determine their net asset
value per share. At September 30, 2006, fair valued investments
represent 5.5% and 0.9% of net assets in the Prudent Bear Fund and the
Prudent Global Income Fund, respectively.
b) Short Positions - The Funds may engage in short sale transactions. For
financial statement purposes, an amount equal to the settlement amount
is initially included in the Statements of Assets and Liabilities as
an asset and an equivalent liability. The amount of the liability is
subsequently marked-to-market to reflect the current value of the
short position. Subsequent fluctuations in the market values of
securities sold, but not yet purchased, may require purchasing the
securities at values which may differ from the market value reflected
on the Statements of Assets and Liabilities. The Funds are liable for
any dividends paid on securities sold short. The Prudent Bear Fund's
receivables from brokers for proceeds on securities sold short are
with two major securities dealers. The Funds do not require the
brokers to maintain collateral in support of these receivables.
c) Written Option Accounting - The Funds may write (sell) put and call
options. When the Funds write (sell) an option, an amount equal to the
premium received by the Funds is included in the Statements of Assets
and Liabilities as an asset and an equivalent liability. The amount of
the liability is subsequently marked-to-market to reflect the current
value of the option written. By writing an option, the Funds may
become obligated during the term of the option to deliver (with
respect to a call option) or purchase (with respect to a put option)
the securities underlying the option at the exercise price if the
option is exercised. Option contracts are valued at the average of the
current bid and asked price reported on the day of valuation. When an
option expires on its stipulated expiration date, the Funds realize a
gain. When the Funds enter into a closing purchase transaction, the
Funds realize a gain or loss if the cost of the closing purchase
transaction differs from the premium received when the option was sold
without regard to any unrealized gain or loss on the underlying
security, and the liability related to such option is eliminated. If a
call option written by a Fund is exercised, the proceeds of the sale
of the underlying security will be increased by the premium originally
received and the Fund will realize a gain or loss on the sale of the
security. If a put option written by a Fund is exercised, the Fund's
basis in the underlying security will be reduced by the premium
originally received.
d) Futures Contracts and Options on Futures Contracts - The Prudent Bear
Fund may purchase and sell stock index futures contracts and options
on such futures contracts, while the Prudent Global Income Fund may
purchase and sell debt futures contracts and options on such futures
contracts. Upon entering into a contract, the Funds deposit and
maintain as collateral such initial margin as required by the exchange
on which the transaction is effected. Pursuant to the contract, the
Funds agree to receive from or pay to the futures commission merchant
an amount of cash equal to the daily fluctuation in the value of the
contract. Such receipts or payments are known as variation margin and
are recorded by the Funds as unrealized gains and losses. When the
contract is closed, the Funds record a realized gain or loss equal to
the difference between the value of the contract at the time it was
opened and the value at the time it was closed.
e) Risks of Options, Futures Contracts and Options onFutures Contracts -
The risks inherent in the use of options, futures contracts, and
options on futures contracts include: 1) adverse changes in the value
of such instruments; 2) imperfect correlation between the price of
options and futures contracts and options thereon and movements in the
price of the underlying securities, index or futures contracts; 3) the
possible absence of a liquid secondary market for any particular
instrument at any time; 4) the possible need to defer closing out
certain positions to avoid adverse tax consequences; and 5) the
possible nonperformance by the counterparty under the terms of the
contract.
f) Collateral on Short Sales, Written Options and Futures Contracts - As
collateral for short positions, written options and futures contracts,
the Funds are required under the 1940 Act to maintain assets
consisting of cash or liquid securities. For short positions, this
collateral must equal the market value of the securities sold short.
For written options, this collateral must equal the market value of
the purchase obligation for put options or the market value of the
instrument underlying the contract for call options. For futures
contracts, this collateral must equal the market value of the purchase
obligation for long futures contracts or the market value of the
instrument underlying the contract for short futures contracts. All
collateral is required to be adjusted daily.
g) Purchased Option Accounting - Premiums paid for option contracts
purchased are included in the Statements of Assets and Liabilities as
an asset. Option contracts are valued at the average of the current
bid and asked price reported on the day of valuation. When option
contracts expire or are closed, realized gains or losses are
recognized without regard to any unrealized gains or losses on the
underlying securities. Put option contracts are held by the Funds for
trading purposes and call option contracts are held by the Funds for
trading and hedging purposes.
h) Foreign Securities - Investing in securities of foreign companies and
foreign governments involves special risks and consideration not
typically associated with investing in U.S. companies and the U.S.
government. These risks include revaluation of currencies and future
adverse political and economic developments. Moreover, securities of
many foreign companies and foreign governments and their markets may
be less liquid and their prices more volatile than those of securities
of comparable U.S. companies and the U.S. government.
i) Foreign Currency Translations - The books and records of the Funds are
maintained in U.S. dollars. Foreign currency transactions are
translated into U.S. dollars on the following basis: (i) market value
of investment securities, assets and liabilities at the daily rates of
exchange, and (ii) purchases and sales of investment securities,
dividend and interest income and certain expenses at the rates of
exchange prevailing on the respective dates of such transactions. For
financial reporting purposes, the Funds do not isolate changes in the
exchange rate of investment securities from the fluctuations arising
from changes in the market price of such securities. However, for
federal income tax purposes the Funds do isolate and treat as ordinary
income the effect of changes in foreign exchange rates on realized
gain or loss from the sale of debt securities and payables and
receivables arising from trade date and settlement date differences.
j) Restricted Securities - The Prudent Bear Fund and the Prudent Global
Income Fund own investment securities which are unregistered and thus
restricted as to resale. These securities are valued by the Funds
after giving due consideration to pertinent factors including recent
private sales, market conditions and the issuer's financial
performance. Where future disposition of these securities requires
registration under the Securities Act of 1933, the Funds have the
right to include these securities in such registration, generally
without cost to the Funds. The Funds have no right to require
registration of unregistered securities. At September 30, 2006, the
Prudent Bear Fund and the Prudent Global Income Fund had restricted
securities with an aggregate market value of $37,699,342 and
$2,984,232, respectively, representing 5.5% and 0.9% of the net assets
of the Prudent Bear Fund and the Prudent Global Income Fund,
respectively.
k) Distributions to Shareholders - Dividends from net investment income,
if any, are declared and paid annually for the Prudent Bear Fund and
quarterly for the Prudent Global Income Fund. Distributions of net
realized capital gains, if any, are declared and paid at least
annually by each of the Funds.
l) Federal Income Taxes - No provision for federal income taxes has been
made since the Funds intend to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies and
to distribute investment company net taxable income and net capital
gains to shareholders. Additionally, the Funds intend to make all
required distributions to avoid being liable for federal excise taxes.
m) Use of Estimates - The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America require 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 revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
n) Guarantees and Indemnifications - In the normal course of business,
the Funds enter into contracts with service providers that contain
general indemnification clauses. The Funds' maximum exposure under
these arrangements is unknown, as this would involve future claims
that may be made against the Funds that have not yet occurred.
However, based on experience, the Funds expect the risk of loss to be
remote.
o) Other - Investment and shareholder transactions are recorded on trade
date. The Funds determine the gain or loss realized from investment
transactions by comparing the original cost of the security lot sold
with the net sales proceeds. Dividend income is recognized on the ex-
dividend date or as soon as information is available to the Fund, and
interest income is recognized on an accrual basis. Investment income
for the Prudent Bear Fund includes $8,918,793 of interest earned on
receivables from brokers for proceeds on securities sold short.
Accounting principles generally accepted in the United States of
America require that permanent financial reporting and tax differences
be reclassified in the capital accounts.
2. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Funds were as follows:
Prudent Bear Fund
No Load Shares:
Year Ended
September 30, 2006
---------------------------
Dollars Shares
---------- ----------
Issued $ 491,154,870 83,375,346
Redemption fees 373,874 --
Issued as reinvestment of dividends 3,595,735 668,352
Redeemed (278,094,369) (48,014,983)
------------- -----------
Net Increase $ 217,030,110 36,028,715
-------------
-------------
Shares Outstanding:
Beginning of Period 75,278,759
-----------
End of Period 111,307,474
-----------
-----------
Class C Shares:
Year Ended
September 30, 2006
---------------------------
Dollars Shares
---------- ----------
Issued $ 19,605,715 3,485,099
Redemption fees 8,148 --
Issued as reinvestment of dividends 117,009 22,459
Redeemed (8,630,837) (1,539,945)
------------- -----------
Net Increase $ 11,100,035 1,967,613
-------------
-------------
Shares Outstanding:
Beginning of Period 3,594,613
-----------
End of Period 5,562,226
-----------
-----------
No Load Shares:
Year Ended
September 30, 2005
---------------------------
Dollars Shares
---------- ----------
Issued $ 184,083,559 34,033,039
Redemption fees 73,846 --
Redeemed (182,689,042) (33,966,732)
------------- -----------
Net Increase $ 1,468,363 66,307
-------------
-------------
Shares Outstanding:
Beginning of Period 75,212,452
-----------
End of Period 75,278,759
-----------
-----------
Class C Shares:
Year Ended
September 30, 2005
---------------------------
Dollars Shares
---------- ----------
Issued $ 10,713,523 2,042,646
Redemption fees 27,956 --
Redeemed (7,000,030) (1,318,890)
------------- -----------
Net Increase $ 3,741,449 723,756
-------------
-------------
Shares Outstanding:
Beginning of Period 2,870,857
-----------
End of Period 3,594,613
-----------
-----------
Prudent Global Income Fund
Year Ended
September 30, 2006
---------------------------
Dollars Shares
---------- ----------
Issued $ 149,501,678 12,196,509
Redemption fees 32,998 --
Issued as reinvestment of dividends 2,128,752 184,148
Redeemed (168,987,580) (13,978,683)
------------- -----------
Net Decrease $ (17,324,152) (1,598,026)
-------------
-------------
Shares Outstanding:
Beginning of Period 29,738,363
-----------
End of Period 28,140,337
-----------
-----------
Year Ended
September 30, 2005
---------------------------
Dollars Shares
---------- ----------
Issued $ 237,659,061 18,983,215
Redemption fees 23,783 --
Issued as reinvestment of dividends 33,574,236 2,780,541
Redeemed (356,146,412) (29,326,956)
------------- -----------
Net Decrease $ (84,889,332) (7,563,200)
-------------
-------------
Shares Outstanding:
Beginning of Period 37,301,563
-----------
End of Period 29,738,363
-----------
-----------
3. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of investments, excluding short-term
investments and options, by the Funds for the year ended September 30,
2006, were as follows:
Prudent Bear Fund Prudent Global Income Fund
----------------- --------------------------
Purchases $723,510,408 $ 69,901,685
Sales 936,273,100 248,133,086
Included in these amounts were purchases and sales of long-term U.S.
government securities, for the year ended September 30, 2006, as follows:
Prudent Bear Fund Prudent Global Income Fund
----------------- --------------------------
Purchases $ 21,633,135 $34,124,259
Sales 177,705,530 82,196,274
At September 30, 2006, the components of accumulated earnings (losses) on a
tax basis were as follows:
[Enlarge/Download Table]
Prudent Bear Fund Prudent Global Income Fund
----------------- --------------------------
Cost of investments $ 649,442,038 $334,465,148
------------- ------------
------------- ------------
Gross unrealized appreciation $ 62,306,902 $ 13,739,859
Gross unrealized depreciation (24,591,679) (4,706,765)
------------- ------------
Net unrealized appreciation (depreciation) $ 37,715,223 $ 9,033,094
------------- ------------
------------- ------------
Undistributed ordinary income $ 10,660,226 $ --
Undistributed long-term capital gain -- 9,642,459
------------- ------------
Total distributable earnings $ 10,660,226 $ 9,642,459
------------- ------------
------------- ------------
Other accumulated losses $(182,748,201) $ (1,398,074)
------------- ------------
Total accumulated earnings (losses) $(134,372,752) $ 17,277,479
------------- ------------
------------- ------------
The cost basis of investments for tax and financial reporting purposes
differs principally due to the deferral of losses on wash sales, Section
1256 Mark to Market, and passive foreign investment company (PFIC)
adjustments for tax purposes. Undistributed ordinary income for tax
purposes at September 30, 2006 takes into consideration the currently
estimated effects of mark-to-market tax basis adjustments for PFIC
investments, and these estimates may change upon final determination for
tax purposes.
The tax character of distributions paid during the year ended September 30,
2006 and the year ended September 30, 2005 were as follows:
Prudent Bear Fund
Year Ended Year Ended
September 30, 2006 September 30, 2005
------------------ ------------------
Ordinary income $4,419,738 $ --
Long-term capital gain -- --
---------- -----------
$4,419,738 $ --
---------- -----------
---------- -----------
Prudent Global Income Fund
Year Ended Year Ended
September 30, 2006 September 30, 2005
------------------ ------------------
Ordinary income $ 603,095 $27,901,220
Long-term capital gain 1,753,869 8,105,060
Return of capital -- 1,588,575
---------- -----------
$2,356,964 $37,594,855
---------- -----------
---------- -----------
The tax components of capital loss carryovers as of September 30, 2006, and
tax-basis post-October loss deferrals (recognized for tax purposes on
October 1, 2006) are as follows:
Net Capital Capital Loss
Loss Carryover Post-October
Carryover*<F49> Expiration Currency Loss
--------------- ----------- -------------
Prudent Bear Fund $ 2,974,983 2011 $1,707
90,004,020 2012
36,433,089 2013
19,131,095 2014
------------
$148,543,187
Prudent Global
Income Fund -- -- $1,293,600
*<F49> Capital gain distributions will resume in the future to the extent
gains are realized in excess of the available carryforwards.
Additionally, U.S. generally accepted accounting principles require that
certain components of net assets relating to permanent differences be
reclassified between financial and tax reporting. These reclassifications
have no effect on net assets or net asset value per share. For the year
ended September 30, 2006, the following table shows the reclassifications
made:
Prudent Global
Prudent Bear Fund Income Fund
----------------- --------------
Capital stock $ (594,895) $ --
Accumulated net investment
income (loss) 1,716,004 (6,789,852)
Accumulated undistributed
net realized gain (loss) (1,121,109) 6,789,852
The permanent differences primarily relate to foreign currency adjustments
with differing book and tax methods.
For the fiscal year ended September 30, 2006, certain dividends paid by the
Funds may be subject to a maximum tax rate of 15%, as provided for by the
Jobs and Growth Tax Relief Reconciliation Act of 2003. The percentage of
dividends declared from net investment income designated as qualified
dividend income were as follows (unaudited):
Prudent Bear Fund 3.86%
Prudent Global Income Fund 0.00%
For corporate shareholders, the percent of ordinary income distributions
qualifying for the corporate dividends received deduction for the fiscal
year ended September 30, 2006 were as follows (unaudited):
Prudent Bear Fund 0.00%
Prudent Global Income Fund 0.00%
Additional Information Applicable to Foreign Shareholders Only:
The percent of ordinary income distributions designated as interest related
dividends for the fiscal year ended September 30, 2006 were as follows
(unaudited):
Prudent Bear Fund 73.10%
Prudent Global Income Fund 55.92%
The percent of ordinary income distributions designated as short-term
capital gain distributions for the fiscal year ended September 30, 2006
were as follows (unaudited):
Prudent Bear Fund 0.00%
Prudent Global Income Fund 0.00%
4. INVESTMENT ADVISORY AND OTHER AGREEMENTS
The Funds have entered into Investment Advisory Agreements with David W.
Tice & Associates, LLC. Pursuant to its advisory agreements with the Funds,
the Adviser is entitled to receive a fee, calculated daily and payable
monthly, at the annual rate of 1.25% and 0.75% for the Prudent Bear Fund
and the Prudent Global Income Fund, respectively, as applied to the Funds'
daily net assets. Certain officers of the Adviser are also officers of the
Funds.
U.S. Bancorp Fund Services, LLC ("U.S. Bancorp") serves as transfer agent,
administrator and accounting services agent for the Funds. U.S. Bank, N.A.
serves as custodian for the Funds. Quasar Distributors, LLC ("Quasar")
serves as distributor and principal underwriter for the Funds.
During 2005, the Prudent Bear Fund and the Prudent Global Income Fund were
reimbursed $96,233 and $7,550, respectively by U.S. Bancorp for charges
related to certain transactions conducted with an affiliate of Quasar
during 2002 through 2004. Such revenues were included as "Realized gain
(loss)" in the Statements of Operations of the Funds.
5. EXPENSE REDUCTIONS AND RECOVERY
The Adviser may direct certain of the Funds' portfolio trades to brokers at
best price and execution and generate directed brokerage credits to reduce
certain U.S. Bancorp service provider fees. In accordance with Securities
and Exchange Commission requirements, such amount, when incurred, is
required to be shown as an expense and will be included in each of the U.S.
Bancorp fees in the Statements of Operations.
Under the terms of the Prudent Global Income Fund's Investment Advisory
Agreement with David W. Tice & Associates, LLC, any Fund expenses waived or
reimbursed by the Advisor may be recovered by the Advisor to the extent
actual operating expenses for the following three years are less than the
expense limitation caps at the time of the waiver or reimbursement. During
the year ended September 30, 2006, the Advisor did not recover any expenses
from the Prudent Global Income Fund.
6. FUTURES CONTRACTS
At September 30, 2006, the Prudent Bear Fund had entered into stock index
futures contracts. The net unrealized depreciation of $7,119,000 is
included in the net unrealized appreciation (depreciation) section of the
accompanying financial statements. The terms of the open contracts are as
follows:
[Download Table]
Market Value
Number of of Underlying Unrealized
Contracts Underlying Instrument Instrument Depreciation
--------- --------------------- ------------- ------------
(225) NASDAQ 100 Index Futures
December 2006 $ (37,603,125) $(1,903,500)
(110) Russell 2000 Index Futures
December 2006 (40,265,500) (1,075,250)
(485) S&P 500 Index Futures
December 2006 (163,129,750) (4,140,250)
------------- -----------
$(240,998,375) $(7,119,000)
------------- -----------
------------- -----------
7. TRANSACTIONS WITH AFFILIATES
The following issuers are affiliated with the Prudent Bear Fund; that is,
the Fund held 5% or more of the outstanding voting securities during the
period from October 1, 2005 through September 30, 2006. As defined in
Section (2)(a)(3) of the Investment Company Act of 1940, such issuers are:
[Enlarge/Download Table]
SHARE SHARE
BALANCE AT BALANCE AT VALUE AT REALIZED
OCT. 1, SEPT. 30, SEPT. 30, GAINS
ISSUER NAME 2005 PURCHASES SALES 2006 2006 (LOSSES)
----------- ---------- --------- ----- ---------- --------- --------
Aquiline Resources, Inc.*<F50> 1,970,946 506,250 1,762,481 714,715 $ 2,794,278 $ 2,120,212
Brilliant Mining Corp. -- 4,000,000 -- 4,000,000 2,970,253 --
Capstone Mining Corp. (formerly
Capstone Gold Corp.) 5,212,798 1,597,883 -- 6,810,681 9,627,266 --
Cardero Resource Corporation*<F50> 2,370,700 -- 2,370,700 -- -- 5,170,767
Cascadero Copper Corporation*<F50> 1,777,778 -- 414,000 1,363,778 122,011 (101,830)
Cash Minerals Ltd. -- 4,975,000 -- 4,975,000 7,121,449 --
Crosshair Exploration
& Mining Corp. 1,466,200 2,900,000 500,000 3,866,200 6,710,291 423,450
East Asia Minerals Corporation*<F50> 1,673,238 300,000 -- 1,973,238 732,627 --
Franklin Lake Resources Inc. 857,143 -- -- 857,143 171,429 --
Fronteer Development
Group Inc.*<F50> 3,620,691 454,545 2,411,600 1,663,636 8,885,624 10,673,757
Fury Explorations Ltd. -- 2,100,000 -- 2,100,000 1,474,570 --
Gateway Gold Corp. *<F50> 1,300,000 -- 815,000 485,000 433,907 509,231
Golden Cycle Gold Corporation 1,298,265 -- -- 1,298,265 10,373,137 --
International KRL
Resources Corp. 1,300,000 2,000,000 -- 3,300,000 501,901 --
Migami, Inc. (formerly
KleenAir Systems, Inc.) *<F50> 3,141,045 -- 2,512,836(1)<F51> 628,209 223,014 --
Niblack Mining Corp.*<F50> 222,500 785,000 -- 1,007,500 504,764 --
Northern Lion Gold Corp. 2,823,700 -- 933,700 1,890,000 405,815 (318,922)
Pershing Resources
Corporation Inc. *<F50> 3,235,000 -- -- 3,235,000 388,200 --
Rimfire Minerals Corporation 1,821,403 -- -- 1,821,403 2,590,947 --
Sabina Silver Corporation
(formerly Sabina
Resources Limited) 3,592,300 -- -- 3,592,300 3,888,779 --
Silverstone Resources Corp. -- 2,170,227(2)<F52> -- 2,170,227 1,227,093 --
Sonic Environmental
Solutions Inc. 1,316,300 -- -- 1,316,300 706,581 --
Sunridge Gold Corp.*<F50> 1,872,767 285,409 1,639,767 518,409 1,075,618 919,290
Trade Winds Ventures Inc. 3,152,900 -- -- 3,152,900 888,538 --
-----------
$19,395,955
-----------
-----------
*<F50> Issuer was not an affiliate as of September 30, 2006.
(1)<F51> Reverse stock split.
(2)<F52> 1,836,266 shares received from Capstone Mining Corp. spinoff.
The following issuers are affiliated with the Prudent Global Income Fund;
that is, the Fund held 5% or more of the outstanding voting securities
during the period from October 1, 2005 through September 30, 2006. As
defined in Section (2)(a)(3) of the Investment Company Act of 1940, the
issuers are:
[Enlarge/Download Table]
SHARE SHARE
BALANCE AT BALANCE AT VALUE AT REALIZED
OCT. 1, SEPT. 30, SEPT. 30, GAINS
ISSUER NAME 2005 PURCHASES SALES 2006 2006 (LOSSES)
----------- ---------- --------- ----- ---------- --------- --------
BacTech Mining Corporation 871,100 2,500,000 -- 3,371,100 $ 331,757 $ --
First Majestic Resource Corp.*<F53> 1,155,353 687,500 -- 1,842,853 4,402,073 --
-----------
$ --
-----------
-----------
*<F53> Issuer was not an affiliate as of September 30, 2006.
8. SERVICE AND DISTRIBUTION PLAN
The Funds have adopted Service and Distribution Plans (the "Plans")
pursuant to Rule 12b-1 under the 1940 Act. The Plans authorize payments by
the Funds in connection with the distribution of their shares at an annual
rate, as determined from time to time by the Board of Directors, of up to
0.25% of the Funds' average daily net assets for the Prudent Bear Fund - No
Load shares and the Prudent Global Income Fund and up to 1.00% for the
Prudent Bear Fund - Class C shares. The currently approved rate for the
Prudent Bear Fund - No Load shares and the Prudent Global Income Fund is
0.25% of average daily net assets. The currently approved rate for the
Prudent Bear Fund - Class C shares is 1.00% of average daily net assets.
Payments made pursuant to the Plans may only be used to pay distribution
expenses in the year incurred. Amounts paid under the Plans by the Funds
may be spent by the Funds on any activities or expenses primarily intended
to result in the sale of shares of the Funds, including but not limited to,
advertising, compensation for sales and marketing activities of financial
institutions and others such as dealers and distributors, shareholder
account servicing, the printing and mailing of prospectuses to other than
current shareholders and the printing and mailing of sales literature. The
Prudent Bear Fund incurred $1,274,335 for the No Load Shares and $249,337
for the Class C Shares pursuant to the Plans for the year ended September
30, 2006. The Prudent Global Income Fund incurred $867,657 pursuant to the
Plan for the year ended September 30, 2006.
9. NEW ACCOUNTING STANDARDS
On July 13, 2006, the Financial Accounting Standards Board ("FASB")
released FASB Interpretation No. 48 "Accounting for Uncertainty in Income
Taxes" ("FIN 48"). FIN 48 provides guidance for how uncertain tax
positions should be recognized, measured, presented and disclosed in the
financial statements. FIN 48 requires the evaluation of tax positions
taken or expected to be taken in the course of preparing the Funds' tax
returns to determine whether the tax positions are "more-likely-than-not"
of being sustained by the applicable tax authority. Tax positions not
deemed to meet the more-likely-than-not threshold would be recorded as a
tax benefit or expense in the current year. Adoption of FIN 48 is required
for fiscal years beginning after December 15, 2006 and is to be applied to
all open tax years as of the effective date. At this time, management is
evaluating the implications of FIN 48 and its impact in the financial
statements has not yet been determined.
In September 2006, FASB issued its new Standard No. 157, "Fair Value
Measurements" ("FAS 157"). FAS 157 is designed to unify guidance for the
measurement of fair value of all types of assets, including financial
instruments, and certain liabilities, throughout a number of accounting
standards. FAS 157 also establishes a hierarchy for measuring fair value in
generally accepted accounting principles and expands financial statement
disclosures about fair value measurements that are relevant to mutual
funds. FAS 157 is effective for financial statements issued for fiscal
years beginning after November 15, 2007, and earlier adoption is permitted.
At this time, management is evaluating the implications of FAS 157 and its
impact in the financial statements has not yet been determined.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of
Prudent Bear Funds, Inc.
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments and of securities sold short, and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
Prudent Bear Fund and Prudent Global Income Fund (constituting Prudent Bear
Funds, Inc., hereafter referred to as the "Funds") at September 30, 2006, the
results of each of their operations for the year then ended, the changes in each
of their net assets for each of the two years in the period then ended and their
financial highlights for each of the five years in the period then ended, in
conformity with accounting principles generally accepted in the United States of
America. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Funds'
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements 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 are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
September 30, 2006 by correspondence with the custodian and brokers, provide a
reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Milwaukee, Wisconsin
November 17, 2006
AVAILABILITY OF QUARTERLY PORTFOLIO SCHEDULE
Beginning with the Funds' fiscal quarter ending December 31, 2004, the
Funds filed their complete schedule of portfolio holdings with the Securities
and Exchange Commission ("SEC") on Form N-Q. The Funds will file Form N-Q for
the first and third quarters of each fiscal year. The Funds' Forms N-Q will be
available on the SEC's website at http://www.sec.gov and may be reviewed and
copied at the SEC's Public Reference Room in Washington, DC. Information on
the operations of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
PROXY VOTING INFORMATION
Information on how the Funds voted proxies relating to their portfolio
securities during the twelve month period ending June 30, 2006 is available at
the Funds' website at http://www.prudentbear.com or on the website of the SEC at
http://www.sec.gov.
INFORMATION ABOUT DIRECTORS AND OFFICERS
The business and affairs of the Funds are managed by its officers under the
direction of the Funds' Board of Directors. Information pertaining to the
directors and officers of the Funds are set forth below. The SAI includes
additional information about the Funds' officers and directors and is available,
without charge, upon request by calling 1-800-711-1848.
[Enlarge/Download Table]
NUMBER OF
PORTFOLIOS
IN FUND OTHER
TERM OF PRINCIPAL COMPLEX DIRECTORSHIPS
POSITION(S) OFFICE AND OCCUPATION(S) OVERSEEN HELD BY
HELD WITH LENGTH OF DURING PAST BY OFFICER OFFICER
NAME, ADDRESS AND AGE THE FUND SERVICE 5 YEARS OR DIRECTOR OR DIRECTOR
--------------------- ----------- ---------- ------------- ----------- -------------
David W. Tice *<F54> Director, Director - President and 2 Prudent
43-46 Norre Gade President Indefinite, Chief Compliance Global Gold
Suite 137 and since 1995 Officer of David Fund, Prudent
St. Thomas, Treasurer President - W. Tice & Global
USVI 00802 1 yr term, Associates, LLC, Natural
Age: 52 since 1995 the adviser of the Resources
Treasurer - Funds; President Offshore
1 yr term, of David W. Tice Fund, Ltd.
since 1995 & Assoc., Inc.,
BTN Research,
Inc., David W. Tice
Management, LLC
and Behind the
Numbers, LLC;
Partner & Employee,
ISS, LLLP
Gregg Jahnke *<F54> Director, Director - Analyst, senior 2 Prudent
8140 Walnut Hill Lane Vice Indefinite, strategist, and Global
Suite 300 President since 1995 Chief Compliance Gold
Dallas, TX 75231 and (resigned Officer for David Fund
Age: 48 Secretary May 29, 2002 W. Tice & Assoc.,
and reinstated Inc.
September 23,
2002) Vice
President -
1 yr term,
since 1995
Secretary -
1 yr term,
since 1995
David Eric Luck Independent Indefinite, Private investor 2 None
8332 Briar Drive Director since 1995 and Writer. Former
Dallas, TX 75243 CEO of Redstone
Age: 52 Oil & Gas Company
Elwyn Kim Evans Independent Indefinite, Private investor 2 None
690 Osceola Avenue #404 Director since 2000
Winter Park, FL 32789
Age: 61
Edmund M. McCarthy Director Indefinite, Principal, 2 None
6060 SW 85th Street since 2002 President and
Miami, FL 33143 CEO of Financial
Age: 71 Risk Management
Advisors Co.
Guy Talarico Chief 1 yr term, CEO of ALARIC 2 None
41 Madison Avenue Compliance since July Compliance
36th Floor Officer 2006 Services, LLC.
New York, NY 10010 Former Co-CEO of
Age: 50 EOS Compliance
Services, LLC
(2004-2005) and
former Senior
Director of Investors
Bank & Trust
Institutional Custody
Division (2001-2004)
*<F54> Denotes a director who is an "interested person" as that term is
defined in Section 2 (a)(19) of the Investment Company Act of 1940, as
amended (the "1940 Act").
INVESTMENT ADVISER
DAVID W. TICE & ASSOCIATES, LLC
43-46 NORRE GADE, SUITE 137
ST. THOMAS, U.S. VIRGIN ISLANDS 00802
HTTP://WWW.PRUDENTBEAR.COM
ADMINISTRATOR, TRANSFER AGENT,
DIVIDEND PAYING AGENT &
SHAREHOLDER SERVICING AGENT
U.S. BANCORP FUND SERVICES, LLC
615 EAST MICHIGAN STREET
P.O. BOX 701
MILWAUKEE, WISCONSIN 53201
1-800-711-1848
CUSTODIAN
U.S. BANK, N.A.
CUSTODY OPERATIONS
1555 NORTH RIVERCENTER DRIVE, SUITE 302
MILWAUKEE, WISCONSIN 53212
DISTRIBUTOR
QUASAR DISTRIBUTORS, LLC
615 EAST MICHIGAN STREET
MILWAUKEE, WISCONSIN 53202
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PRICEWATERHOUSECOOPERS LLP
MILWAUKEE, WISCONSIN 53202
LEGAL COUNSEL
FOLEY & LARDNER LLP
MILWAUKEE, WISCONSIN 53202
ITEM 2. CODE OF ETHICS.
-----------------------
The registrant has adopted a code of ethics that applies to the registrant's
principal executive officer and principal financial officer. The registrant has
not made any amendments to its code of ethics during the period covered by this
report. The registrant has not granted any waivers from any provisions of the
code of ethics during the period covered by this report. A copy of the
registrant's Code of Ethics is filed herewith.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
----------------------------------------
The registrant's board of directors has determined that it does not have an
audit committee financial expert serving on its audit committee. At this time,
the registrant believes that the experience provided by each member of the audit
committee together offers the registrant adequate oversight for the registrant's
level of financial complexity.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
-----------------------------------------------
The registrant has engaged its principal accountant to perform audit services
and tax services during the past two fiscal years. "Audit services" refer to
performing an audit of the registrant's annual financial statements or services
that are normally provided by the accountant in connection with statutory and
regulatory filings or engagements for those fiscal years. "Tax services" refer
to professional services rendered by the principal accountant for tax
compliance, tax advice, and tax planning. The following table details the
aggregate fees billed or expected to be billed for each of the last two fiscal
years for audit fees and tax fees by the principal accountant.
FYE 9/30/2006 FYE 9/30/2005
-------------- --------------
Audit Fees $95,000 $89,500
Audit-Related Fees $0 $0
Tax Fees $32,400 $30,200
All Other Fees $0 $0
The audit committee has adopted pre-approval policies and procedures that
require the audit committee to pre-approve all audit and non-audit services of
the registrant, including services provided to any entity affiliated with the
registrant. All of the principal accountant's hours spent on auditing the
registrant's financial statements were attributed to work performed by full-time
permanent employees of the principal accountant.
There were no non-audit fees billed or expected to be billed by the registrant's
accountant for services to the registrant or to the registrant's investment
adviser (and any other controlling entity, etc.--not sub-adviser) for the last
two years.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
----------------------------------------------
Not applicable to registrants who are not listed issuers (as defined in Rule
10A-3 under the Securities Exchange Act of 1934).
ITEM 6. SCHEDULE OF INVESTMENTS.
--------------------------------
Schedule of Investments is included as part of the report to shareholders filed
under Item 1 of this Form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
-------------------------------------------------------------------------
MANAGEMENT INVESTMENT COMPANIES.
--------------------------------
Not applicable to open-end investment companies.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
-------------------------------------------------------------------------
Not applicable to open-end investment companies.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
---------------------------------------------------------------------------
COMPANY AND AFFILIATED PURCHASERS.
----------------------------------
Not applicable to open-end investment companies.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
------------------------------------------------------------
There have been no material changes to the procedures by which shareholders may
recommend nominees to the registrant's board of directors.
ITEM 11. CONTROLS AND PROCEDURES.
---------------------------------
(a) The Registrant's President/Chief Executive Officer and Treasurer/Chief
Financial Officer have reviewed the Registrant's disclosure controls and
procedures (as defined in Rule 30a-3(c) under the Investment Company Act of
1940 (the "Act")) as of a date within 90 days of the filing of this report,
as required by Rule 30a-3(b) under the Act and Rules 13a-15(b) or 15d-15(b)
under the Securities Exchange Act of 1934. Based on their review, such
officers have concluded that the disclosure controls and procedures are
effective in ensuring that information required to be disclosed in this
report is appropriately recorded, processed, summarized and reported and
made known to them by others within the Registrant and by the Registrant's
service provider.
(b) There were no significant changes in the Registrant's internal controls
over financial reporting that occurred during the Registrant's last fiscal
half-year that has materially affected, or is reasonably likely to
materially affect, the Registrant's internal control over financial
reporting.
ITEM 12. EXHIBITS.
-----------------
(a) (1) Any code of ethics or amendment thereto, that is subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy Item 2 requirements through filing an exhibit. Filed herewith.
(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of
2002. Filed herewith.
(3) Any written solicitation to purchase securities under Rule 23c-1 under
the Act sent or given during the period covered by the report by or on
behalf of the registrant to 10 or more persons. Not applicable to open-end
investment companies.
(b) Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Furnished herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Prudent Bear Funds, Inc.
--------------------------------------------
By (Signature and Title)*<F55> /s/ David W. Tice
---------------------------
David W. Tice, President
Date November 29, 2006
---------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)*<F55> /s/ David W. Tice
--------------------------
David W. Tice, President
Date November 29, 2006
----------------------------------------------------
By (Signature and Title)*<F55> /s/ David W. Tice
--------------------------
David W. Tice, Treasurer
Date November 29, 2006
----------------------------------------------------
*<F55> Print the name and title of each signing officer under his or her
signature.
Dates Referenced Herein and Documents Incorporated By Reference
| This N-CSR Filing | | Date | | Other Filings |
|---|
| |  |
| | 10/25/95 |
| | 12/28/95 |
| | 2/2/00 |
| | 5/29/02 |
| | 9/23/02 | | DEF 14A |
| | 9/30/02 | | 24F-2NT, N-30D, NSAR-B |
| | 9/30/03 | | 24F-2NT, N-CSR, NSAR-B |
| | 9/30/04 | | 24F-2NT, N-CSR, NSAR-B |
| | 12/31/04 | | N-Q |
| | 9/30/05 | | 24F-2NT, N-CSR, NSAR-B |
| | 10/1/05 |
| | 6/30/06 | | N-PX, N-PX/A, N-Q |
| | 7/13/06 |
| For The Period Ended | | 9/30/06 | | NSAR-B |
| | 10/1/06 |
| | 11/1/06 |
| | 11/17/06 |
| | 11/29/06 | | NSAR-B |
| Filed On / Filed As Of / Effective As Of | | 12/6/06 |
| | 12/15/06 |
| | 11/15/07 |
| |
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