N-CSR 1 d682622dncsr.htm N-CSR N-CSR

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-03379

PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

 

(Exact Name of Registrant as specified in charter)

600 Montgomery Street, Suite 4100, San Francisco, California 94111

 

(Address of Principal Executive Offices) (Zip Code)

MICHAEL J. CUGGINO, 600 Montgomery Street, Suite 4100, San Francisco, California 94111

 

(Name and Address of Agent For Service)

Registrant’s telephone number, including area code: (415) 398-8000

Date of fiscal year end:                                             January 31, 2014

Date of reporting period:                                          January 31, 2014

Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. §3507.


Item 1. Reports to Stockholders.
  

The Annual Report to Shareholders of Permanent Portfolio Family of Funds, Inc. (“Registrant”) for the fiscal year ended January 31, 2014 is attached hereto.

Item 2. Code of Ethics.
   (a)   

As of the end of the period covered by this Form N-CSR, the Registrant has adopted a code of ethics that applies to its principal executive officer and principal financial officer (“Code of Ethics for Executive Officers”).

   (b)   

No response required.

   (c)   

The Registrant has not made amendments to its Code of Ethics for Executive Officers during the fiscal year ended January 31, 2014.

   (d)   

The Registrant has not granted any waivers from any provisions of its Code of Ethics for Executive Officers during the fiscal year ended January 31, 2014.

   (e)   

Not applicable.

   (f)   

A copy of the Registrant’s Code of Ethics for Executive Officers, dated July 23, 2009, is filed as Exhibit 12(a)(1) to this Form N-CSR. The Code of Ethics for Executive Officers is available, without charge and upon request, by writing or calling the Registrant’s Shareholder Services Office at (800) 531-5142.

Item 3. Audit Committee Financial Expert.
  

The Registrant’s Board of Directors (“Board”) has determined that no member of its Audit Committee qualifies as an “audit committee financial expert” (“ACFE”). After evaluating the matter, the Board concluded that it was not necessary to have a director on the Audit Committee who qualifies as an ACFE, given that the financial statements and accounting principles that apply to registered investment companies such as the Registrant are generally simpler and more straightforward compared to operating companies, and the financial literacy of the current Audit Committee members is adequate to discharge their duties as members of the Audit Committee.


Item 4. Principal Accountant Fees and Services.
   (a)   

Audit Fees. The aggregate fees billed for each of the last two fiscal years for professional services rendered by the Registrant’s principal accountant for the audit of the Registrant’s annual financial statements, or for services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years, were $109,000 and $104,500 for the fiscal years ended January 31, 2014 and January 31, 2013, respectively.

   (b)   

Audit-Related Fees. There were no fees billed for each of the last two fiscal years ended January 31, 2014 and January 31, 2013, respectively, for assurance and related services provided by the Registrant’s principal accountant that were reasonably related to the performance of the audit of the Registrant’s financial statements and were not reported under paragraph (a) of this Item.

   (c)   

Tax Fees. The aggregate fees billed for each of the last two fiscal years for professional services rendered by the Registrant’s principal accountant for tax compliance, tax advice and tax planning were $13,600 and $13,200 for the fiscal years ended January 31, 2014 and January 31, 2013, respectively. Tax fees represent tax compliance services provided in connection with the preparation of the Registrant’s tax returns.

   (d)   

All Other Fees. There were no fees billed for each of the last two fiscal years ended January 31, 2014 and January 31, 2013, respectively, for products and services provided by the Registrant’s principal accountant, other than the services reported in paragraphs (a) through (c) of this Item.

   (e)(1)   

Pursuant to Section 3(c) of the Registrant’s Audit Committee Charter, dated May 1, 2003, as amended December 16, 2013, the pre-approval policies and procedures of the Registrant’s Audit Committee, in accordance with paragraph (c)(7) of Rule 2-01 of Regulation S-X, are as follows:

 

“The Committee shall review any audit and non-audit services provided to the Fund by its independent public accountants and the fees charged for such services. Except as provided below, the Committee’s prior approval shall be necessary for the engagement of independent public accountants to provide any audit or non-audit services on behalf of the Fund, and any non-audit services on behalf of the Fund’s investment adviser or any entity controlling, controlled by or under common control with the investment adviser that provides ongoing services to the Fund, where the proposed engagement relates directly to the operations and financial reporting of the Fund. Non-audit services that would otherwise qualify under the de minimis exception described in the Securities Exchange Act of 1934, as amended, and any applicable rules thereunder, that were not pre-approved by the Committee shall be approved by the Committee prior to the completion of the engagement. Pre-approval by the Committee shall not be required for engagements entered into pursuant to: (i) pre-approval policies and procedures established by the Committee; or (ii) pre-approval granted by one or more members of the Committee to whom, or by a subcommittee to which, the Committee has delegated pre-approval authority; provided, however, in either case, that the Committee is informed of each such engagement at the earlier of its next meeting, or at the Board’s next quarterly meeting.”

   (e)(2)   

None of the services included in each of paragraphs (b) through (d) of this Item were approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

   (f)   

Not applicable to Registrant because there were no hours expended on the principal accountant’s engagement to audit the Registrant’s financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time permanent employees.

   (g)   

The aggregate non-audit fees billed for each of the last two fiscal years for services rendered by the Registrant’s principal accountant to the Registrant were $13,600 and $13,200 for the fiscal years ended January 31, 2014 and January 31, 2013, respectively. There were no non-audit fees billed by the Registrant’s principal accountant for services rendered to the Registrant’s investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the Registrant for each of the last two fiscal years of the Registrant.

   (h)   

Not applicable to the Registrant as the Registrant’s principal accountant did not render any non-audit services to the Registrant’s investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the Registrant for each of the last two fiscal years of the Registrant.


Item 5. Audit Committee of Listed Registrants.
  

Not applicable to the Registrant.

Item 6. Investments.
  

Included in Item 1.

Item 7. Disclosure of Proxy Voting Policies and Procedures For Closed-End Management Investment Companies.
  

Not applicable to the Registrant.

Item 8. Portfolio Managers of Closed-End Management Investment Companies.
  

Not applicable to the Registrant.

Item 9. Purchases of Equity Securities By Closed-End Management Investment Company and Affiliated Purchasers.
  

Not applicable to the Registrant.

Item 10. Submission of Matters to a Vote of Security Holders.
  

There were no changes to the procedures by which shareholders may recommend nominees to the Board of Directors for the fiscal year ended January 31, 2014.

Item 11. Controls and Procedures.
   (a)   

Michael J. Cuggino, the Registrant’s President, and James H. Andrews, the Registrant’s Treasurer, each has concluded that, in his judgment, the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (“1940 Act”) (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on his evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)).

   (b)   

There was no change in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the Registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

Item 12. Exhibits.
   (a)(1)   

Code of Ethics for Executive Officers that is the subject of the disclosure required by Item 2 is attached hereto as Exhibit 99.Code Eth.

   (a)(2)   

Certifications pursuant to Rule 30a-2(a) under the 1940 Act (17 CFR 270.30a-2(a)) and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto as Exhibit 99.CERT.

   (a)(3)   

Not applicable to the Registrant.

   (b)   

Certifications pursuant to Rule 30a-2(b) under the 1940 Act (17 CFR 270.30a-2(b)) and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto as Exhibit 99.906CERT.


The certifications provided pursuant to Rule 30a-2(b) under the 1940 Act (17 CFR 270.30a-2(b)) and Section 906 of the Sarbanes-Oxley Act of 2002 are not deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section. Such certifications will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent the Registrant specifically incorporates them by reference.

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.

Permanent Portfolio Family of Funds, Inc.

/s/ Michael J. Cuggino

By: Michael J. Cuggino, President

Date: April 1, 2014

 

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.

Permanent Portfolio Family of Funds, Inc.

/s/ Michael J. Cuggino

By: Michael J. Cuggino, President

Date: April 1, 2014

/s/ James H. Andrews

By: James H. Andrews, Treasurer

Date: April 1, 2014


LOGO   

PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

ANNUAL REPORT

   

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders

Permanent Portfolio Family of Funds, Inc.

We have audited the accompanying statements of assets and liabilities of Permanent Portfolio Family of Funds, Inc. (“Fund,” comprising, respectively, the Permanent Portfolio, the Short-Term Treasury Portfolio, the Versatile Bond Portfolio and the Aggressive Growth Portfolio), including the schedules of investments, as of January 31, 2014, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of the Fund’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of investments owned by correspondence with the custodian and brokers and a physical observation of the Permanent Portfolio’s gold and silver inventory count as of January 31, 2014. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the respective Portfolios constituting Permanent Portfolio Family of Funds, Inc. as of January 31, 2014, the results of their operations for the year then ended, the changes in 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.

 

LOGO

Philadelphia, Pennsylvania

March 26, 2014


LOGO   

PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

STATEMENTS OF ASSETS AND LIABILITIES

January 31, 2014

   

 

ASSETS AND LIABILITIES    Permanent
Portfolio
     Short-Term
Treasury
Portfolio
    Versatile
Bond
Portfolio
     Aggressive
Growth
Portfolio
 
          

ASSETS

          

Investments at market value (Notes 1, 4 & 5):

          

Investments other than securities:

          

Gold assets (identified cost $1,816,747,957; $—; $— and $—, respectively)

   $ 1,857,243,280       $      $       $   

Silver assets (identified cost $492,141,133; $—; $— and $—, respectively)

     456,623,906                          

Swiss franc deposits (identified cost $108,643,033; $—; $— and $—, respectively)

     110,396,929                          
  

 

 

    

 

 

   

 

 

    

 

 

 
     2,424,264,115                          

Swiss franc bonds

     739,678,506                          

Stocks of United States and foreign real estate and natural resource companies

     1,507,154,500                          

Aggressive growth stocks

     1,523,765,500                        48,164,810   

Corporate bonds

     902,036,951                13,153,485           

Preferred stocks

                    585,000           

United States Treasury securities

     1,833,175,233         24,808,228        424,992           
  

 

 

    

 

 

   

 

 

    

 

 

 

Total investments (identified cost $8,175,634,660; $24,808,038; $14,043,239 and $27,852,436, respectively)

     8,930,074,805         24,808,228        14,163,477         48,164,810   

Cash

     21,110,246                          

Accounts receivable for shares of the portfolio sold

     9,799,773         444,000        31,000         59,100   

Accrued interest, dividends and foreign taxes receivable

     63,458,157         10,296        177,435         40,137   
  

 

 

    

 

 

   

 

 

    

 

 

 

Total assets

     9,024,442,981         25,262,524        14,371,912         48,264,047   

LIABILITIES

          

Bank overdraft

             851        23,266         31,676   

Accounts payable for investments purchased

                    51,972           

Accounts payable for shares of the portfolio redeemed

     26,161,065         10,029                15,201   

Accrued investment advisory fee

     5,872,548         14,459        9,667         49,640   

Accrued directors’ fees and expenses

     30,647         63        34         89   

Other accrued expenses

     28,413                          
  

 

 

    

 

 

   

 

 

    

 

 

 

Total liabilities

     32,092,673         25,402        84,939         96,606   
  

 

 

    

 

 

   

 

 

    

 

 

 

Net assets applicable to outstanding shares

   $ 8,992,350,308       $ 25,237,122      $ 14,286,973       $ 48,167,441   
  

 

 

    

 

 

   

 

 

    

 

 

 
NET ASSETS           

Capital stock — par value $.001 per share:

          

Authorized — 400,000,000; 25,000,000; 25,000,000 and 25,000,000 shares, respectively

          

Outstanding — 209,330,899; 384,554; 236,162 and 740,681 shares, respectively

   $ 209,331       $ 385      $ 236       $ 741   

Paid-in capital

     8,050,848,677         25,253,155        14,073,711         27,825,172   
  

 

 

    

 

 

   

 

 

    

 

 

 
     8,051,058,008         25,253,540        14,073,947         27,825,913   

Undistributed net investment income (loss) (Note 1)

             (13,367     30,082         29,154   

Accumulated net realized gain (loss) on investments

     185,884,005         (3,241     62,706           

Net unrealized appreciation of investments (Notes 1 & 5)

     754,440,145         190        120,238         20,312,374   

Net unrealized appreciation on translation of assets and liabilities in foreign currencies

     968,150                          
  

 

 

    

 

 

   

 

 

    

 

 

 

Net assets applicable to outstanding shares

   $ 8,992,350,308       $ 25,237,122      $ 14,286,973       $ 48,167,441   
  

 

 

    

 

 

   

 

 

    

 

 

 

Net asset value per share

     $  42.96         $  65.63        $  60.50         $  65.03   

 

2    See accompanying notes to financial statements.  


LOGO   

PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

STATEMENTS OF OPERATIONS

Year Ended January 31, 2014

   

 

     Permanent
Portfolio
    Short-Term
Treasury
Portfolio
    Versatile
Bond
Portfolio
    Aggressive
Growth
Portfolio
 
        

Investment income (Note 1):

        

Interest

   $ 75,683,773      $ 24,282      $ 577,807      $   

Dividends

     96,873,796               113,300        611,673   

Other income

     6,878                        
  

 

 

   

 

 

   

 

 

   

 

 

 
     172,564,447        24,282        691,107        611,673   

Expenses (Note 3):

        

Investment advisory fee

     95,772,334        312,499        168,681        442,307   

Directors’ fees and expenses

     616,500        1,286        701        1,839   

Excise tax

                          1,928   

Legal expense

     76,424        159        86        223   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

     96,465,258        313,944        169,468        446,297   

Less waiver of investment advisory fee

     (5,981,282     (131,579     (53,268       
  

 

 

   

 

 

   

 

 

   

 

 

 

Net expenses

     90,483,976        182,365        116,200        446,297   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income (loss) before foreign income taxes deducted at source

     82,080,471        (158,083     574,907        165,376   

Less foreign income taxes deducted at source, net of refundable taxes

     (588,956                     
  

 

 

   

 

 

   

 

 

   

 

 

 

Net investment income (loss)

     81,491,515        (158,083     574,907        165,376   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net realized and unrealized gain (loss) on investments and foreign currency (Notes 1, 4 & 5):

        

Net realized gain (loss) on:

        

Investments in securities

     878,158,077        (2,946     195,854        74,494   

Investments other than securities

     91,910,812                        

Foreign currency transactions

     (38,027,579                     
  

 

 

   

 

 

   

 

 

   

 

 

 
     932,041,310        (2,946     195,854        74,494   

Change in unrealized appreciation (depreciation) of:

        

Investments

     (1,752,757,111     75        (244,751     8,514,196   

Translation of assets and liabilities in foreign currencies

     85,446                        
  

 

 

   

 

 

   

 

 

   

 

 

 

Net realized and unrealized gain (loss) on investments and foreign currency

     (820,630,355     (2,871     (48,897     8,588,690   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

   $ (739,138,840   $ (160,954   $ 526,010      $ 8,754,066   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

   See accompanying notes to financial statements.     3   


LOGO   

PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

STATEMENTS OF CHANGES IN NET ASSETS

   

 

     Permanent Portfolio  
     Year Ended
January 31, 2014
    Year Ended
January 31, 2013
 

Operations:

    

Net investment income (loss)

   $ 81,491,515      $ 104,365,690   

Net realized gain (loss) on investments in securities

     878,158,077        208,492,892   

Net realized gain on investments other than securities

     91,910,812        45,662,158   

Net realized gain (loss) on foreign currency transactions

     (38,027,579     2,651,023   

Change in unrealized appreciation (depreciation) of investments

     (1,752,757,111     131,893,833   

Change in unrealized appreciation on translation of assets and liabilities in foreign currencies

     85,446        785,709   
  

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

     (739,138,840     493,851,305   

Equalization on shares issued and redeemed:

     (24,062,267     (3,101,687

Distributions to shareholders from (Note 2):

    

Net investment income

     (51,420,595     (93,702,204

Net realized gain on investments

     (894,726,236     (124,935,792

Capital stock transactions exclusive of amounts allocated to undistributed net investment income (loss) (Note 7):

     (6,296,112,035     (58,936,092
  

 

 

   

 

 

 

Net increase (decrease) in net assets

     (8,005,459,973     213,175,530   

Net assets at beginning of year

     16,997,810,281        16,784,634,751   
  

 

 

   

 

 

 

Net assets at end of year (including undistributed net investment income (loss) of $— and $—; $(13,367) and $—; $30,082 and $21,275; and $29,154 and $109,112, respectively)

   $ 8,992,350,308      $ 16,997,810,281   
  

 

 

   

 

 

 

 

4    See accompanying notes to financial statements.  


          

 

Short-Term Treasury Portfolio          Versatile Bond Portfolio          Aggressive Growth Portfolio  
Year Ended
January 31, 2014
    Year Ended
January 31, 2013
         Year Ended
January 31, 2014
    Year Ended
January 31, 2013
         Year Ended
January 31, 2014
    Year Ended
January 31, 2013
 
               
$ (158,083   $ (187,955      $ 574,907      $ 284,163         $ 165,376      $ 302,683   
  (2,946     (40        195,854        34,166           74,494        910,477   
                                             
                                             
  75        5,068           (244,751     339,934           8,514,196        3,488,265   
                                             

 

 

   

 

 

      

 

 

   

 

 

      

 

 

   

 

 

 
  (160,954     (182,927        526,010        658,263           8,754,066        4,701,425   
                   (7,728     13,494           64,382        (6,857
               
                   (505,421     (248,601        (233,577     (234,505
                   (114,563               (983,862     (310,974

 

(2,875,184

    (4,522,082        972,055        470,662           12,888,601        333,457   

 

 

   

 

 

      

 

 

   

 

 

      

 

 

   

 

 

 
  (3,036,138     (4,705,009        870,353        893,818           20,489,610        4,482,546   
  28,273,260        32,978,269           13,416,620        12,522,802           27,677,831        23,195,285   

 

 

   

 

 

      

 

 

   

 

 

      

 

 

   

 

 

 

$

25,237,122

  

  $ 28,273,260         $ 14,286,973      $ 13,416,620         $ 48,167,441      $ 27,677,831   

 

 

   

 

 

      

 

 

   

 

 

      

 

 

   

 

 

 

 

       5   


LOGO   

PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

PERMANENT PORTFOLIO

SCHEDULE OF INVESTMENTS

January 31, 2014

   

 

Quantity             Market Value  
       
     GOLD ASSETS — 20.65% of Total Net Assets   
  544,595 Troy Oz.        

Gold bullion (a)

   $ 675,352,780   
  930,000 Coins        

One-ounce gold coins (a)

     1,181,890,500   
       

 

 

 
    

Total Gold Assets (identified cost $1,816,747,957)

   $ 1,857,243,280   
       

 

 

 
     SILVER ASSETS — 5.08% of Total Net Assets   
  23,397,279 Troy Oz.        

Silver bullion (a)

   $ 451,205,633   
  379 Bags        

Silver coins (a)

     5,418,273   
       

 

 

 
    

Total Silver Assets (identified cost $492,141,133)

   $ 456,623,906   
       

 

 

 
Principal Amount                
     SWISS FRANC ASSETS — 9.45% of Total Net Assets   
  CHF    99,925,780        

Swiss franc deposits (a)

   $ 110,396,929   
       

 

 

 
  CHF  100,000,000        

2.500% Swiss Confederation Bonds, 03-12-16

   $ 116,687,842   
  CHF  100,000,000        

4.250% Swiss Confederation Bonds, 06-05-17

     126,365,796   
  CHF  100,000,000        

3.000% Swiss Confederation Bonds, 01-08-18

     123,592,774   
  CHF  100,000,000        

3.000% Swiss Confederation Bonds, 05-12-19

     127,056,289   
  CHF  100,000,000        

2.250% Swiss Confederation Bonds, 07-06-20

     123,775,065   
  CHF  100,000,000        

2.000% Swiss Confederation Bonds, 04-28-21

     122,200,740   
       

 

 

 
    

Total Swiss Confederation bonds

   $ 739,678,506   
       

 

 

 
    

Total Swiss Franc Assets (identified cost $738,939,249)

   $ 850,075,435   
       

 

 

 
Number of Shares                
       
     STOCKS OF UNITED STATES AND FOREIGN REAL ESTATE AND NATURAL RESOURCE COMPANIES — 16.76% of Total Net Assets   
     NATURAL RESOURCES — 9.19% of Total Net Assets   
  600,000              

Apache Corporation

   $ 48,156,000   
  2,000,000              

BHP Billiton, Ltd. (b)

     127,900,000   
  1,000,000              

BP, p.l.c. (b)

     46,890,000   
  2,500,000              

Cameco Corporation

     53,050,000   
  600,000              

Canadian Natural Resources Ltd.

     19,650,000   
  500,000              

Chevron Corporation

     55,815,000   
  600,000              

ConocoPhillips

     38,970,000   
  600,000              

Devon Energy Corporation

     35,532,000   
  500,000              

EPL Oil & Gas, Inc. (a)

     13,435,000   
  500,000              

Exxon Mobil Corporation

     46,080,000   
  5,000,000              

Freeport-McMoRan Copper & Gold, Inc.

     162,050,000   
  1,500,000              

Halcon Resources Corporation (a)

     5,055,000   
  3,500,000              

Peabody Energy Corporation

     59,675,000   
  1,500,000              

Rio Tinto p.l.c. (b)

     79,725,000   
  2,500,000              

Vale S.A. (b)

     34,000,000   
       

 

 

 
        $ 825,983,000   
       

 

 

 

 

6    Continued on following page.  


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SCHEDULE OF INVESTMENTS

January 31, 2014

   

 

Number of Shares             Market Value  
       
     REAL ESTATE — 7.57% of Total Net Assets   
  1,000,000        

Alexander & Baldwin, Inc. (a)

   $ 39,110,000   
  400,000        

AvalonBay Communities, Inc.

     49,400,000   
  500,000        

Boston Properties, Inc.

     54,045,000   
  600,000        

BRE Properties, Inc. Class A

     35,460,000   
  1,500,000        

Corporate Office Properties Trust

     37,275,000   
  700,000        

Digital Realty Trust, Inc.

     35,693,000   
  2,500,000        

Duke Realty Corporation

     39,275,000   
  1,500,000        

Equity One, Inc.

     33,990,000   
  400,000        

Federal Realty Investment Trust

     43,600,000   
  1,500,000        

Kimco Realty Corporation

     31,365,000   
  1,500,000        

Prologis, Inc.

     58,140,000   
  250,000        

Texas Pacific Land Trust

     25,267,500   
  2,000,000        

UDR, Inc.

     48,680,000   
  200,000        

Urstadt Biddle Properties, Inc.

     3,156,000   
  500,000        

Urstadt Biddle Properties, Inc. Class A

     9,380,000   
  500,000        

Vornado Realty Trust

     45,915,000   
  2,000,000        

Washington Real Estate Investment Trust

     46,600,000   
  1,500,000        

Weyerhaeuser Company

     44,820,000   
       

 

 

 
        $ 681,171,500   
       

 

 

 
    

Total Stocks of United States and Foreign Real Estate and Natural Resource Companies (identified cost $1,529,277,609)

   $ 1,507,154,500   
       

 

 

 
     AGGRESSIVE GROWTH STOCKS — 16.95% of Total Net Assets   
     AEROSPACE — .42% of Total Net Assets   
  250,000        

Lockheed Martin Corporation

   $ 37,727,500   
       

 

 

 
        $ 37,727,500   
     CHEMICALS — .97% of Total Net Assets   
  250,000        

Air Products & Chemicals, Inc.

   $ 26,285,000   
  1,200,000        

Chemtura Corporation (a)

     30,096,000   
  700,000        

Mosaic Company

     31,262,000   
       

 

 

 
        $ 87,643,000   
     COMMUNICATIONS EQUIPMENT — .95% of Total Net Assets   
  1,800,000        

Juniper Networks, Inc. (a)

   $ 47,898,000   
  500,000        

Qualcomm, Inc.

     37,110,000   
       

 

 

 
        $ 85,008,000   
     COMPUTER SOFTWARE & SERVICES — .81% of Total Net Assets   
  800,000        

Autodesk, Inc. (a)

   $ 41,000,000   
  1,500,000        

Symantec Corporation

     32,115,000   
       

 

 

 
        $ 73,115,000   
     ELECTRICAL EQUIPMENT & ELECTRONICS — .46% of Total Net Assets   
  2,500,000        

Sanmina Corporation (a)

   $ 41,800,000   
       

 

 

 
        $ 41,800,000   

 

   Continued on following page.     7   


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PERMANENT PORTFOLIO

SCHEDULE OF INVESTMENTS

January 31, 2014

   

 

Number of Shares             Market Value  
       
     ENERGY SERVICES & PROCESSING — 1.35% of Total Net Assets   
  500,000        

Baker Hughes, Inc.

   $ 28,320,000   
  900,000        

HollyFrontier Corporation

     41,670,000   
  3,000,000        

Parker Drilling Company (a)

     22,320,000   
  400,000        

Phillips 66

     29,236,000   
       

 

 

 
        $ 121,546,000   
     ENGINEERING & CONSTRUCTION — .74% of Total Net Assets   
  400,000        

Fluor Corporation

   $ 30,384,000   
  800,000        

Ryland Group, Inc.

     35,712,000   
       

 

 

 
        $ 66,096,000   
     ENTERTAINMENT & LEISURE — 4.03% of Total Net Assets   
  700,000        

CBS Corporation Class A

   $ 41,069,000   
  500,000        

Disney (Walt) Company

     36,305,000   
  2,500,000        

Facebook, Inc. Class A (a)

     156,425,000   
  500,000        

Viacom, Inc. Class A

     41,190,000   
  400,000        

Wynn Resorts, Ltd.

     86,968,000   
       

 

 

 
        $ 361,957,000   
     FINANCIAL SERVICES — 2.02% of Total Net Assets   
  1,000,000        

Bank of New York Mellon Corporation

   $ 31,960,000   
  4,000,000        

Janus Capital Group, Inc.

     43,960,000   
  1,200,000        

Morgan Stanley

     35,412,000   
  1,500,000        

Schwab (Charles) Corporation

     37,230,000   
  500,000        

State Street Corporation

     33,475,000   
       

 

 

 
        $ 182,037,000   
     MANUFACTURING — 2.08% of Total Net Assets   
  500,000        

Agilent Technologies, Inc.

   $ 29,075,000   
  500,000        

Harley-Davidson, Inc.

     30,845,000   
  500,000        

Illinois Tool Works, Inc.

     39,435,000   
  400,000        

IPG Photonics Corporation (a)

     26,748,000   
  700,000        

Mattel, Inc.

     26,488,000   
  300,000        

Parker-Hannifin Corporation

     34,011,000   
       

 

 

 
        $ 186,602,000   
     MATERIALS — .27% of Total Net Assets   
  500,000        

Nucor Corporation

   $ 24,175,000   
       

 

 

 
        $ 24,175,000   
     PHARMACEUTICALS — 1.27% of Total Net Assets   
  300,000        

Amgen, Inc.

   $ 35,685,000   
  250,000        

Celgene Corporation (a)

     37,982,500   
  500,000        

Gilead Sciences, Inc. (a)

     40,325,000   
       

 

 

 
        $ 113,992,500   
     RETAIL — .68% of Total Net Assets   
  250,000        

Costco Wholesale Corporation

   $ 28,090,000   
  600,000        

Williams-Sonoma, Inc.

     32,712,000   
       

 

 

 
        $ 60,802,000   

 

8    Continued on following page.  


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PERMANENT PORTFOLIO

SCHEDULE OF INVESTMENTS

January 31, 2014

   

 

Number of Shares             Market Value  
       
     TRANSPORTATION — .90% of Total Net Assets   
  250,000        

FedEx Corporation

   $ 33,330,000   
  250,000        

Kansas City Southern

     26,397,500   
  900,000        

Matson, Inc.

     21,537,000   
       

 

 

 
        $ 81,264,500   
       

 

 

 
    

Total Aggressive Growth Stocks (identified cost $957,051,443)

   $ 1,523,765,500   
       

 

 

 
Principal Amount                
     DOLLAR ASSETS — 30.42% of Total Net Assets   
     CORPORATE BONDS — 10.03% of Total Net Assets   
     BEVERAGES — .73% of Total Net Assets   
$ 65,000,000        

6.950% Bottling Group, LLC (PepsiCo, Inc.), 03-15-14

   $ 65,494,584   
       

 

 

 
        $ 65,494,584   
     COMMUNICATIONS EQUIPMENT — 1.00% of Total Net Assets   
  90,000,000        

1.625% Cisco Systems, Inc., 03-14-14

   $ 90,148,684   
       

 

 

 
        $ 90,148,684   
     COMPUTER SOFTWARE & SERVICES — 1.60% of Total Net Assets   
  67,500,000        

  .875% International Business Machines Corporation, 10-31-14

   $ 67,837,690   
  75,000,000        

3.750% Oracle Corporation, 07-08-14

     76,120,256   
       

 

 

 
        $ 143,957,946   
     CONSUMER PRODUCTS — .13% of Total Net Assets   
  11,660,000        

  .600% Colgate-Palmolive Company, 11-15-14

   $ 11,701,120   
       

 

 

 
        $ 11,701,120   
     ENTERTAINMENT & LEISURE — .22% of Total Net Assets   
  19,500,000        

  .875% Disney (Walt) Company, 12-01-14

   $ 19,606,634   
       

 

 

 
        $ 19,606,634   
     FINANCIAL SERVICES — 3.27% of Total Net Assets   
  30,000,000        

  .505% Bank of New York Mellon Corporation, 07-28-14 (c)

   $ 30,021,096   
  50,000,000        

2.150% General Electric Capital Corporation, 01-09-15

     50,829,305   
  84,000,000        

4.650% JP Morgan Chase & Company, 06-01-14

     85,105,903   
  25,000,000        

4.300% State Street Corporation, 05-30-14

     25,319,156   
  25,000,000        

4.150% TD Ameritrade Holding Company, 12-01-14

     25,767,088   
  75,000,000        

5.250% Wachovia Corporation (Wells Fargo & Company), 08-01-14

     76,723,265   
       

 

 

 
        $ 293,765,813   
     HEALTHCARE — .20% of Total Net Assets   
  17,500,000        

4.000% Baxter International, Inc., 03-01-14

   $ 17,546,968   
       

 

 

 
        $ 17,546,968   

 

   Continued on following page.     9   


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PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

PERMANENT PORTFOLIO

SCHEDULE OF INVESTMENTS

January 31, 2014

   

 

Principal Amount             Market Value  
     INSURANCE — .98% of Total Net Assets   
$ 14,988,000        

3.200% Berkshire Hathaway Finance Corporation, 02-11-15

   $ 15,431,600   
  25,000,000        

4.750% Prudential Financial, Inc., 04-01-14

     25,169,280   
  45,000,000        

4.750% Prudential Financial, Inc., 09-17-15

     47,862,181   
       

 

 

 
        $ 88,463,061   
     MANUFACTURING — .56% of Total Net Assets   
  25,000,000        

  .950% Caterpillar, Inc., 06-26-15

   $ 25,203,656   
  25,000,000        

6.875% PACCAR, Inc., 02-15-14

     25,047,340   
       

 

 

 
        $ 50,250,996   
     PHARMACEUTICALS — .56% of Total Net Assets   
  50,000,000        

1.875% Amgen, Inc., 11-15-14

   $ 50,555,925   
       

 

 

 
        $ 50,555,925   
     RETAIL — .50% of Total Net Assets   
  37,500,000        

  .650% Amazon.com, Inc., 11-27-15

   $ 37,528,564   
  7,140,000        

4.200% TJX Companies, Inc., 08-15-15

     7,527,774   
       

 

 

 
        $ 45,056,338   
     TOBACCO — .22% of Total Net Assets   
  20,000,000        

  .287% Philip Morris International, Inc., 02-26-15 (c)

   $ 20,020,282   
       

 

 

 
        $ 20,020,282   
     UTILITIES — .06% of Total Net Assets   
  5,467,000        

  .550% Alabama Power Company, 10-15-15

   $ 5,468,600   
       

 

 

 
        $ 5,468,600   
       

 

 

 
        $ 902,036,951   
       

 

 

 

 

10    Continued on following page.  


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PERMANENT PORTFOLIO

SCHEDULE OF INVESTMENTS

January 31, 2014

   

 

Principal Amount             Market Value  
     UNITED STATES TREASURY SECURITIES — 20.39% of Total Net Assets   
$ 150,000,000        

United States Treasury bond strips (Principal only) 1.456%, 11-15-18 (d)

   $ 139,933,593   
  150,000,000        

United States Treasury bond strips (Principal only) 2.052%, 08-15-20 (d)

     131,247,656   
  150,000,000        

United States Treasury bonds 7.250%, 05-15-16

     173,146,769   
  150,000,000        

United States Treasury bonds 6.250%, 08-15-23

     197,123,156   
  150,000,000        

United States Treasury bonds 6.000%, 02-15-26

     197,247,922   
  150,000,000        

United States Treasury bonds 5.250%, 11-15-28

     187,222,438   
  50,000,000        

United States Treasury notes  2.375%, 10-31-14

     50,829,995   
  150,000,000        

United States Treasury notes  1.250%, 09-30-15

     152,450,004   
  150,000,000        

United States Treasury notes  2.625%, 02-29-16

     156,996,299   
  150,000,000        

United States Treasury notes  2.250%, 11-30-17

     156,584,035   
  150,000,000        

United States Treasury notes  3.625%, 08-15-19

     165,395,872   
  125,000,000        

United States Treasury bills     .027%, 02-27-14 (d)

     124,997,494   
       

 

 

 
        $ 1,833,175,233   
       

 

 

 
    

Total Dollar Assets (identified cost $2,641,477,269)

   $ 2,735,212,184   
       

 

 

 
    

Total Portfolio — 99.31% of total net assets (identified cost $8,175,634,660) (e)

   $ 8,930,074,805   
    

Other assets, less liabilities (.69% of total net assets)

     62,275,503   
       

 

 

 
    

Net assets applicable to outstanding shares

   $ 8,992,350,308   
       

 

 

 
    

Notes:

  
    

(a)  Non-income producing.

  
    

(b)  Sponsored American Depositary Receipt (ADR).

  
    

(c)  Variable or floating rate security whereby the interest rate is periodically reset. The interest rate shown reflects the rate in effect as of January 31, 2014.

  
    

(d)  Interest rate represents yield to maturity.

  
    

(e)  Aggregate cost for book and federal income tax purposes are the same.

  

 

   See accompanying notes to financial statements.     11   


 

 

 

 

 

 

12    This page intentionally left blank.  


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SHORT-TERM TREASURY PORTFOLIO

SCHEDULE OF INVESTMENTS

January 31, 2014

   

 

Principal Amount             Market Value  
       
     UNITED STATES TREASURY SECURITIES — 98.30% of Total Net Assets   
$ 5,000,000        

United States Treasury notes  .250%, 03-31-14

   $ 5,000,820   
  5,000,000        

United States Treasury notes  .250%, 04-30-14

     5,002,403   
  5,000,000        

United States Treasury notes  .250%, 05-31-14

     5,003,205   
  3,000,000        

United States Treasury notes  .250%, 06-30-14

     3,001,936   
  6,800,000        

United States Treasury bills    .027%, 02-27-14 (a)

     6,799,864   
       

 

 

 
    

Total Portfolio — 98.30% of total net assets (identified cost $24,808,038) (b)

   $ 24,808,228   
    

Other assets, less liabilities (1.70% of total net assets)

     428,894   
       

 

 

 
    

Net assets applicable to outstanding shares

   $ 25,237,122   
       

 

 

 
    

Notes:

  
    

(a)  Interest rate represents yield to maturity.

  
    

(b)  Aggregate cost for book and federal income tax purposes are the same.

  

 

   See accompanying notes to financial statements.     13   


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PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

VERSATILE BOND PORTFOLIO

SCHEDULE OF INVESTMENTS

January 31, 2014

   

 

Principal Amount             Market Value  
       
     CORPORATE BONDS — 92.07% of Total Net Assets   
     CHEMICALS — 3.59% of Total Net Assets   
$ 500,000        

5.750% Chemtura Corporation, 07-15-21

   $ 513,125   
       

 

 

 
        $ 513,125   
     COMPUTER HARDWARE & PERIPHERALS — 5.03% of Total Net Assets   
  700,000        

4.375% Hewlett-Packard Company, 09-15-21

   $ 718,406   
       

 

 

 
        $ 718,406   
     COMPUTER SOFTWARE & SERVICES — 4.41% of Total Net Assets   
  600,000        

4.200% Symantec Corporation, 09-15-20

   $ 630,306   
       

 

 

 
        $ 630,306   
     ELECTRIAL EQUIPMENT & ELECTRONICS — 3.74% of Total Net Assets   
  500,000        

7.000% Sanmina Corporation, 05-15-19 (a)

   $ 533,750   
       

 

 

 
        $ 533,750   
     ENERGY SERVICES & PROCESSING — 12.86% of Total Net Assets   
  600,000        

6.500% Dresser-Rand Group, Inc., 05-01-21

   $ 643,500   
  650,000        

6.375% GulfMark Offshore, Inc., 03-15-22

     659,750   
  500,000        

8.875% Star Gas Partners, L.P., 12-01-17

     533,750   
       

 

 

 
        $ 1,837,000   
     FINANCIAL SERVICES — 8.84% of Total Net Assets   
  600,000        

3.875% Jefferies Group, LLC, 11-01-29 (b)

   $ 638,130   
  600,000        

5.629% Manufacturers & Traders Trust Company, 12-01-21 (c)

     624,173   
       

 

 

 
        $ 1,262,303   
     INSURANCE — 4.81% of Total Net Assets   
  600,000        

6.000% Pacific Lifecorp, 02-10-20 (a)

   $ 687,306   
       

 

 

 
        $ 687,306   
     MANUFACTURING — 8.46% of Total Net Assets   
  650,000        

5.500% Hillenbrand, Inc., 07-15-20

   $ 696,818   
  520,000        

3.875% Kennametal, Inc., 02-15-22

     512,034   
       

 

 

 
        $ 1,208,852   
     NATURAL RESOURCES — 8.25% of Total Net Assets   
  600,000        

3.700% Murphy Oil Corporation, 12-01-22

   $ 570,773   
  600,000        

6.250% Peabody Energy Corporation, 11-15-21

     607,500   
       

 

 

 
        $ 1,178,273   
     REAL ESTATE — 14.44% of Total Net Assets   
  600,000        

7.500% DDR Corporation, 07-15-18

   $ 720,720   
  575,000        

7.750% SL Green Realty Corporation, 03-15-20

     684,265   
  650,000        

7.750% Winthrop Realty Trust, 08-15-22

     658,580   
       

 

 

 
        $ 2,063,565   

 

14    Continued on following page.  


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PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

VERSATILE BOND PORTFOLIO

SCHEDULE OF INVESTMENTS

January 31, 2014

   

 

Principal Amount             Market Value  
       
     RESTAURANTS — 5.00% of Total Net Assets   
$ 800,000        

3.350% Darden Restaurants, Inc., 11-01-22

   $ 714,737   
       

 

 

 
        $ 714,737   
     RETAIL — 4.27% of Total Net Assets   
  600,000        

4.000% Kohl’s Corporation, 11-01-21

   $ 609,534   
       

 

 

 
        $ 609,534   
     TRANSPORTATION — 4.41% of Total Net Assets   
  500,000        

8.000% FedEx Corporation, 01-15-19

   $ 630,025   
       

 

 

 
        $ 630,025   
     UTILITIES — 3.96% of Total Net Assets   
  500,000        

6.250% SCANA Corporation, 04-01-20

   $ 566,303   
       

 

 

 
        $ 566,303   
       

 

 

 
    

Total Corporate Bonds (identified cost $13,002,948)

   $ 13,153,485   
       

 

 

 
     UNITED STATES TREASURY SECURITIES — 2.98% of Total Net Assets   
  425,000        

United States Treasury bills     .027%, 02-27-14 (d)

   $ 424,992   
       

 

 

 
    

Total United States Treasury Securities (identified cost $424,991)

   $ 424,992   
       

 

 

 
Number of Shares                
     PREFERRED STOCKS — 4.09% of Total Net Assets   
  25,000        

7.125% Urstadt Biddle Properties, Inc., Series F, Perpetual

   $ 585,000   
       

 

 

 
    

Total Preferred Stocks (identified cost $615,300)

   $ 585,000   
       

 

 

 
    

Total Portfolio — 99.14% of total net assets (identified cost $14,043,239) (e)

   $ 14,163,477   
    

Other assets, less liabilities (.86% of total net assets)

     123,496   
       

 

 

 
    

Net assets applicable to outstanding shares

   $ 14,286,973   
       

 

 

 
    

Notes:

  
    

(a)  Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended, and may be resold in transactions exempt from registration to qualified institutional investors. As of January 31, 2014, these securities amounted to $1,221,056, or 8.55% of the Versatile Bond Portfolio’s total net assets, and have been determined by the Portfolio’s investment adviser to be liquid.

  
    

(b)  Convertible security. As of January 31, 2014, these securities amounted to $638,130, or 4.47% of the Versatile Bond Portfolio’s total net assets.

  
    

(c)  Variable or floating rate security whereby the interest rate is periodically reset. The interest rate shown reflects the rate in effect as of January 31, 2014.

  
    

(d)  Interest rate represents yield to maturity.

  
    

(e)  Aggregate cost for book and federal income tax purposes are the same.

  

 

   See accompanying notes to financial statements.     15   


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PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

AGGRESSIVE GROWTH PORTFOLIO

SCHEDULE OF INVESTMENTS

January 31, 2014

   

 

Number of Shares             Market Value  
       
     AGGRESSIVE GROWTH STOCKS — 99.99% of Total Net Assets   
     AEROSPACE — 2.51% of Total Net Assets   
  8,000        

Lockheed Martin Corporation

   $ 1,207,280   
       

 

 

 
        $ 1,207,280   
     CHEMICALS — 6.58% of Total Net Assets   
  10,000        

Air Products & Chemicals, Inc.

   $ 1,051,400   
  40,000        

Chemtura Corporation (a)

     1,003,200   
  25,000        

Mosaic Company

     1,116,500   
       

 

 

 
        $ 3,171,100   
     COMMUNICATIONS EQUIPMENT — 5.07% of Total Net Assets   
  50,000        

Juniper Networks, Inc. (a)

   $ 1,330,500   
  15,000        

Qualcomm, Inc.

     1,113,300   
       

 

 

 
        $ 2,443,800   
     COMPUTER SOFTWARE & SERVICES — 4.88% of Total Net Assets   
  25,000        

Autodesk, Inc. (a)

   $ 1,281,250   
  50,000        

Symantec Corporation

     1,070,500   
       

 

 

 
        $ 2,351,750   
     ELECTRICAL EQUIPMENT & ELECTRONICS — 2.08% of Total Net Assets   
  60,000        

Sanmina Corporation (a)

   $ 1,003,200   
       

 

 

 
        $ 1,003,200   
     ENERGY SERVICES & PROCESSING — 7.37% of Total Net Assets   
  25,000        

Baker Hughes, Inc.

   $ 1,416,000   
  30,000        

HollyFrontier Corporation

     1,389,000   
  100,000        

Parker Drilling Company (a)

     744,000   
       

 

 

 
        $ 3,549,000   
     ENGINEERING & CONSTRUCTION — 5.15% of Total Net Assets   
  15,000        

Fluor Corporation

   $ 1,139,400   
  30,000        

Ryland Group, Inc.

     1,339,200   
       

 

 

 
        $ 2,478,600   
     ENTERTAINMENT & LEISURE — 13.82% of Total Net Assets   
  15,000        

Disney (Walt) Company

   $ 1,089,150   
  48,000        

Facebook, Inc. Class A (a)

     3,003,360   
  10,000        

Viacom, Inc. Class A

     823,800   
  8,000        

Wynn Resorts, Ltd.

     1,739,360   
       

 

 

 
        $ 6,655,670   
     FINANCIAL SERVICES — 10.41% of Total Net Assets   
  20,000        

Bank of New York Mellon Corporation

   $ 639,200   
  100,000        

Janus Capital Group, Inc.

     1,099,000   
  35,000        

Morgan Stanley

     1,032,850   
  50,000        

Schwab (Charles) Corporation

     1,241,000   
  15,000        

State Street Corporation

     1,004,250   
       

 

 

 
        $ 5,016,300   

 

16    Continued on following page.  


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PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

AGGRESSIVE GROWTH PORTFOLIO

SCHEDULE OF INVESTMENTS

January 31, 2014

   

 

Number of Shares             Market Value  
       
     MANUFACTURING — 12.20% of Total Net Assets   
  15,000        

Agilent Technologies, Inc.

   $ 872,250   
  15,000        

Harley-Davidson, Inc.

     925,350   
  15,000        

Illinois Tool Works, Inc.

     1,183,050   
  15,000        

IPG Photonics Corporation (a)

     1,003,050   
  20,000        

Mattel, Inc.

     756,800   
  10,000        

Parker-Hannifin Corporation

     1,133,700   
       

 

 

 
        $ 5,874,200   
     MATERIALS — 2.01% of Total Net Assets   
  20,000        

Nucor Corporation

   $ 967,000   
       

 

 

 
        $ 967,000   
     NATURAL RESOURCES — 8.24% of Total Net Assets   
  55,000        

EPL Oil & Gas, Inc. (a).

   $ 1,477,850   
  35,000        

Freeport-McMoRan Copper & Gold, Inc.

     1,134,350   
  80,000        

Peabody Energy Corporation

     1,364,000   
       

 

 

 
        $ 3,976,200   
     PHARMACEUTICALS — 10.11% of Total Net Assets   
  10,000        

Amgen, Inc.

   $ 1,189,500   
  12,000        

Celgene Corporation (a)

     1,823,160   
  23,000        

Gilead Sciences, Inc. (a)

     1,854,950   
       

 

 

 
        $ 4,867,610   
     RETAIL — 4.60% of Total Net Assets   
  10,000        

Costco Wholesale Corporation

   $ 1,123,600   
  20,000        

Williams-Sonoma, Inc.

     1,090,400   
       

 

 

 
        $ 2,214,000   
     TRANSPORTATION — 4.96% of Total Net Assets   
  10,000        

FedEx Corporation

   $ 1,333,200   
  10,000        

Kansas City Southern

     1,055,900   
       

 

 

 
        $ 2,389,100   
       

 

 

 
    

Total Portfolio — 99.99% of total net assets (identified cost $27,852,436) (b)

   $ 48,164,810   
    

Other assets, less liabilities (.01% of total net assets)

     2,631   
       

 

 

 
    

Net assets applicable to outstanding shares

   $ 48,167,441   
       

 

 

 
    

Notes:

  
    

(a)  Non-income producing.

  
    

(b)  Aggregate cost for book and federal income tax purposes are the same.

  

 

   See accompanying notes to financial statements.     17   


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PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

NOTES TO FINANCIAL STATEMENTS

January 31, 2014

   

 

1.

SIGNIFICANT ACCOUNTING POLICIES

Permanent Portfolio Family of Funds, Inc. (“Fund”) is registered under the Investment Company Act of 1940, as amended (“1940 Act”), as a no-load, open-end, series, management investment company. The Fund currently consists of the following four series (each a “Portfolio”): Permanent Portfolio, Short-Term Treasury Portfolio, Versatile Bond Portfolio and Aggressive Growth Portfolio. Permanent Portfolio, Short-Term Treasury Portfolio, Versatile Bond Portfolio and Aggressive Growth Portfolio commenced investment operations on December 1, 1982, September 21, 1987, November 12, 1991 and May 16, 1990, respectively.

The following significant accounting policies are consistently followed by the Fund in the preparation of its financial statements, and such policies are in conformity with accounting principles generally accepted in the United States for registered investment companies. The preparation of such financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses earned and incurred, respectively, during the reporting period. Actual results could differ from those estimates.

Valuation of investments

Each Portfolio’s investments are valued primarily at market value on the basis of the last quoted sales price on the exchange or system on which they are principally traded. Equity securities traded on the Nasdaq National Market System are normally valued at the Nasdaq Official Closing Price provided by Nasdaq, usually as of 4:00 p.m. Eastern Time each business day. Equity securities that are not traded on a listed exchange or system are valued at the last sales price in the over-the-counter market. If there is no trading in an investment on a business day, the investment will be valued at the mean between its closing bid and asked prices on the exchange or system on which the security is principally traded. Short- and long-term debt securities, including U.S. government securities, listed corporate bonds, other fixed income securities and unlisted securities, are generally valued at the latest price furnished by an independent pricing service. Gold and silver bullion are valued at the closing spot settlement price on the New York Commodity Exchange. Gold and silver coins, and deposits of foreign currencies, are valued at the price furnished by an independent pricing service which reflects latest prices. Foreign securities traded on an exchange are valued on the basis of market quotations most recently available from that exchange. Investments for which bona fide market quotations are not readily available, or investments for which the Fund’s investment adviser determines that a quotation or a price for a portfolio security provided by a dealer or an independent pricing service is not believed to be reflective of market value, will be valued by the Valuation Committee of the Fund’s investment adviser pursuant to fair value policies approved by the Fund’s Board of Directors.

The Fund has adopted authoritative fair value accounting standards which establish an authoritative definition of fair value and set out a hierarchy for measuring fair value. These standards require additional disclosures about the various inputs and valuation techniques used to develop the measurements of fair value, a discussion of changes in valuation techniques and related inputs during a reporting period and expanded disclosure of valuation levels for major security types. These inputs are summarized in the three broad levels listed on the following page.

 

18    Continued on following page.  


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PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

NOTES TO FINANCIAL STATEMENTS

January 31, 2014

   

 

Level 1 — Quoted prices in active markets for identical assets

The Fund’s Level 1 valuation techniques use unadjusted quoted prices in active markets for assets or liabilities with sufficient frequency and volume to provide pricing information as the most reliable evidence of fair value.

Level 2 — Significant other observable inputs (including quoted prices for similar securities, interest rates, credit risk, etc.)

The Fund’s Level 2 valuation techniques include inputs other than quoted prices within Level 1 that are observable for an asset or liability, either directly or indirectly. Observable inputs may include quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in markets that are not active, in which there are few transactions, where prices may not be current, or where price quotations vary substantially over time or among market participants. Inputs that are observable for an asset or liability in Level 2 include such factors as interest rates, yield curves, foreign exchange rates, put or call provisions, credit risk and default rates for similar assets or liabilities.

Level 3 — Significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)

The Fund’s Level 3 valuation techniques include the use of unobservable inputs that reflect assumptions market participants may use or could be expected to use in pricing an asset or liability. Unobservable inputs are used to measure fair value to the extent that observable inputs are not available, and are developed based on the best information available under the circumstances. In developing unobservable inputs, market participant assumptions are used if they are reasonably available without undue cost and effort.

The Fund may record changes to valuations based on the amount that it might reasonably be expected to receive for an investment upon its current sale, consistent with the fair value measurement objective. Each determination is based on a consideration of all relevant factors, which are likely to vary from one pricing context to another. Examples of such factors may include, but are not limited to: (i) type of the investment; (ii) existence of any contractual restrictions on the investment’s disposition; (iii) price and extent of public trading in similar investments or of comparable investments; (iv) quotations or evaluated prices from broker-dealers and/or pricing services; (v) information obtained from the issuer, analysts, and/or the appropriate stock exchange (for exchange-traded securities); (vi) analysis of an issuer’s financial statements; (vii) evaluation of the forces that influence the issuer and the market(s) in which the investment is purchased and sold; and (viii) with respect to debt securities, maturity, coupon, creditworthiness, spread, currency denomination, and the movement of the market in which the security is normally traded. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value determined upon sale of those investments.

 

   Continued on following page.     19   


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PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

NOTES TO FINANCIAL STATEMENTS

January 31, 2014

   

 

The following is a summary of the inputs used as of January 31, 2014 in valuing the Fund’s assets:

 

     Level 1
(Quoted Prices in
Active Markets for
Identical Assets)
     Level 2
(Significant
Other Observable
Inputs)
     Level 3
(Significant
Unobservable
Inputs)
     Total  
           

Permanent Portfolio

                           

Gold assets

   $ 1,857,243,280       $       $       $ 1,857,243,280   

Silver assets

     456,623,906                         456,623,906   

Swiss franc assets

     110,396,929         739,678,506                 850,075,435   

Stocks of United States and foreign real estate and natural resource companies

     1,507,154,500                         1,507,154,500   

Aggressive growth stocks †

     1,523,765,500                         1,523,765,500   

Dollar assets:

           

Corporate bonds †

             902,036,951                 902,036,951   

United States Treasury securities

     1,833,175,233                         1,833,175,233   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Portfolio

   $ 7,288,359,348       $ 1,641,715,457       $       $ 8,930,074,805   
  

 

 

    

 

 

    

 

 

    

 

 

 
     81.62%         18.38%         —%         100.00%   

Short-Term Treasury Portfolio

                           

United States Treasury securities

   $ 24,808,228       $       $       $ 24,808,228   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Portfolio

   $ 24,808,228       $       $       $ 24,808,228   
  

 

 

    

 

 

    

 

 

    

 

 

 
     100.00%         —%         —%         100.00%   

Versatile Bond Portfolio

                           

Corporate bonds †

   $       $ 13,153,485       $       $ 13,153,485   

United States Treasury securities

     424,992                         424,992   

Preferred stocks

     585,000                         585,000   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Portfolio

   $ 1,009,992       $ 13,153,485       $       $ 14,163,477   
  

 

 

    

 

 

    

 

 

    

 

 

 
     7.13%         92.87%         —%         100.00%   

Aggressive Growth Portfolio

                           

Aggressive growth stocks †

   $ 48,164,810       $       $       $ 48,164,810   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Portfolio

   $ 48,164,810       $       $       $ 48,164,810   
  

 

 

    

 

 

    

 

 

    

 

 

 
     100.00%         —%         —%         100.00%   

 

 

See the Schedules of Investments for the Permanent Portfolio and the Aggressive Growth Portfolio for each Portfolio’s industry classification of aggressive growth stocks and the Schedules of Investments for the Permanent Portfolio and the Versatile Bond Portfolio for each Portfolio’s industry classification of corporate bonds.

Transfers between levels are recognized at the end of a reporting period. There were no transfers into or out of Levels 1 and 2 during the year ended January 31, 2014 and the Fund held no Level 3 assets during the year then ended.

 

20    Continued on following page.  


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PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

NOTES TO FINANCIAL STATEMENTS

January 31, 2014

   

 

As of January 31, 2014 and during the year then ended, the Fund did not hold any derivative instruments, nor did it engage in any hedging activities using derivative instruments.

Translation of foreign currencies

Amounts denominated in or expected to settle in foreign currencies are translated into U.S. dollars on the following basis: (i) market value of investment securities and other assets and liabilities are translated at the closing rate of exchange; and (ii) purchases and sales of investment securities, income and expenses are translated at the rate of exchange prevailing on the respective dates of such transactions.

The Fund separately reports the portions of the results of operations attributable to the effect of changes in foreign exchange rates on the value of investments. Reported net realized gains or losses on foreign currency transactions arise from sales of foreign currencies, foreign currency gains or losses realized between the trade and settlement dates on securities transactions and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund’s books versus the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains or losses arise from changes in the exchange rate applicable to cash, receivables and liabilities denominated in foreign currencies.

Investment transactions and investment income

Investment transactions are accounted for on the date of purchase, sale or maturity. Interest income is accrued daily and includes amortization of any premiums or discounts for financial and tax reporting purposes using the effective yield method. Dividend income is recorded on the ex-dividend date. Realized gains and losses from investment transactions and unrealized appreciation or depreciation of investments are recorded on an identified cost basis for financial and tax reporting purposes.

During the year ended January 31, 2014, investment income was earned as follows:

 

     Permanent
Portfolio
     Short-Term
Treasury
Portfolio
     Versatile
Bond
Portfolio
     Aggressive
Growth
Portfolio
 
           

Interest on:

           

Corporate bonds

   $ 6,694,718       $       $ 577,807       $   

Swiss franc assets

     9,613,069                           

United States Treasury securities

     59,375,986         24,282                   

Dividends

     96,873,796                 113,300         611,673   

Other income

     6,878                           
  

 

 

    

 

 

    

 

 

    

 

 

 
   $   172,564,447       $ 24,282       $ 691,107       $ 611,673   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

   Continued on following page.     21   


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PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

NOTES TO FINANCIAL STATEMENTS

January 31, 2014

   

 

Federal taxes

Each of the Fund’s Portfolios will continue to be treated as a separate regulated investment company and each Portfolio intends to qualify under Subchapter M of the United States Internal Revenue Code of 1986, as amended (“Code”). Accordingly, no provision has been made for United States income taxes, as each Portfolio intends to declare necessary dividend distributions from investment company taxable income and net realized capital gains, if any, to its shareholders prior to October 15, 2014, pursuant to the requirements of the Code.

As of January 31, 2014, the Fund’s Permanent Portfolio, Versatile Bond Portfolio and Aggressive Growth Portfolio had no capital loss carryforwards available to offset future realized gains, if any. The Fund’s Short-Term Treasury Portfolio had $3,241 in such capital loss carryforwards available, of which $249 expire on January 31, 2019 and $2,992 which do not expire. During the year ended January 31, 2014, the Fund’s Versatile Bond Portfolio utilized capital loss carryforwards of $18,585. Any capital losses incurred in taxable years beginning after December 22, 2010 (“Post-2010 Losses”) may be carried forward without limit, and such capital loss carryforwards must be fully utilized before capital loss carryforwards from earlier periods may be utilized. As a result, if the Fund’s Portfolios have Post-2010 Losses, capital loss carryforwards from earlier periods may be more likely to expire unused. Additionally, net capital losses attributable to investment transactions that occur after October 31, if any, are recognized for federal tax purposes as arising on February 1, the first day of each Portfolio’s next taxable year. The Fund’s Short-Term Treasury Portfolio has $13,367 of such losses.

During the year ended January 31, 2014, the Fund’s Permanent Portfolio, Short-Term Treasury Portfolio and Versatile Bond Portfolio incurred no federal excise tax. The Fund’s Aggressive Growth Portfolio recognized federal excise tax of $1,928 during the year then ended.

The Fund’s Portfolios recognize the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. The Fund’s Portfolios have analyzed their respective tax positions and have concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on tax returns previously filed for open tax years 2011 through 2013 or expected to be taken on the Fund’s Portfolios’ 2014 tax returns. The Fund’s Portfolios are not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next twelve months.

Equalization

The Fund follows the accounting practice of equalization, by which a portion of the proceeds from sales and a portion of the costs of redemptions of shares of capital stock are allocated to undistributed net investment income. The effect of this practice is to prevent the calculation of net investment income per share from being affected by sales or redemptions of shares in each Portfolio, and for periods of net issuances of shares, allows undistributed net investment income to exceed distributable investment company taxable income.

Indemnifications

The Fund indemnifies its officers and directors for certain liabilities that might arise from the performance of their duties for the Fund. Additionally, in the normal course of business, the Fund enters into contracts that contain a variety of representations and warranties which may provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown, as it involves future claims that may be made against the Fund under circumstances that have not occurred.

 

22    Continued on following page.  


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PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

NOTES TO FINANCIAL STATEMENTS

January 31, 2014

   

 

 

2.

DISTRIBUTIONS TO SHAREHOLDERS

On December 30, 2013, the Fund’s Permanent Portfolio, Versatile Bond Portfolio and Aggressive Growth Portfolio paid ordinary income dividends per share of $.25, $2.25 and $.33, respectively, to shareholders of record on December 27, 2013. Also on December 30, 2013, the Fund’s Permanent Portfolio, Versatile Bond Portfolio and Aggressive Growth Portfolio paid long-term capital gain distributions per share of $4.35, $.51 and $1.39, respectively, to shareholders of record on December 27, 2013. The Fund’s Short-Term Treasury Portfolio paid no ordinary income dividends or capital gain distributions during the year ended January 31, 2014.

The tax character of such dividends and distributions paid was as follows:

 

     Permanent
Portfolio
     Short-Term
Treasury
Portfolio
     Versatile
Bond
Portfolio
     Aggressive
Growth
Portfolio
 
           

Distributions paid from:

           

Ordinary income

   $ 43,463,936       $       $ 505,421       $ 234,795   

Long-term capital gain †

     902,682,895                 114,563         982,644   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 946,146,831       $       $ 619,984       $ 1,217,439   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

 

Capital gain distribution pursuant to Section 852(b)(3) of the Code.

On December 5, 2012, the Fund’s Permanent Portfolio, Versatile Bond Portfolio and Aggressive Growth Portfolio paid ordinary income dividends per share of $.27, $1.34 and $.46, respectively, to shareholders of record on December 4, 2012. Also on December 5, 2012, the Fund’s Permanent Portfolio and Aggressive Growth Portfolio paid long-term capital gain distributions per share of $.36 and $.61, respectively, to shareholders of record on December 4, 2012. The Fund’s Short-Term Treasury Portfolio paid no ordinary income dividends or capital gain distributions and the Fund’s Versatile Bond Portfolio paid no capital gain distributions during the year ended January 31, 2013.

The tax character of such dividends and distributions paid was as follows:

 

     Permanent
Portfolio
     Short-Term
Treasury
Portfolio
     Versatile
Bond
Portfolio
     Aggressive
Growth
Portfolio
 
           

Distributions paid from:

           

Ordinary income

   $ 91,598,819       $       $ 248,601       $ 234,505   

Long-term capital gain †

     127,039,177                         310,974   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 218,637,996       $       $ 248,601       $ 545,479   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

 

Capital gain distribution pursuant to Section 852(b)(3) of the Code.

Dividends to shareholders from net investment income and distributions to shareholders from net realized gain on investments, if any, are recorded on the ex-dividend date. The amount of such dividends and distributions are determined in accordance with the Code, which may differ from accounting principles generally accepted in the United States. These differences result primarily from different treatment of net investment income and net realized gains on certain investment securities held by the Fund’s Portfolios. During the year ended January 31, 2014: (i) the Fund’s Permanent Portfolio reclassified $28,290,595 from accumulated net realized gain on investments to paid-in capital and $30,070,920 from undistributed net investment income to accumulated net

 

   Continued on following page.     23   


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PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

NOTES TO FINANCIAL STATEMENTS

January 31, 2014

   

 

realized gain on investments; (ii) the Fund’s Short-Term Treasury Portfolio reclassified $144,716 from paid-in capital to undistributed net investment loss; (iii) the Fund’s Versatile Bond Portfolio reclassified $60,679 from undistributed net investment income to paid-in capital; and (iv) the Fund’s Aggressive Growth Portfolio reclassified $10,539 from undistributed net investment income to paid-in capital and $1,218 from undistributed net investment income to accumulated net realized gain on investments, to reflect such book and tax basis differences.

As of January 31, 2014, the components of distributable earnings on a tax basis were as follows:

 

     Permanent
Portfolio
     Short-Term
Treasury
Portfolio
    Versatile
Bond
Portfolio
     Aggressive
Growth
Portfolio
 
          

Distributable ordinary income

   $       $      $ 61,083       $ 29,154   

Undistributed capital gain (loss) carryforwards

     185,884,005         (3,241     31,705           

Post October losses

             (13,367               

Unrealized appreciation on investments and foreign currencies

     755,408,295         190        120,238         20,312,374   
  

 

 

    

 

 

   

 

 

    

 

 

 
   $ 941,292,300       $ (16,418   $ 213,026       $ 20,341,528   
  

 

 

    

 

 

   

 

 

    

 

 

 

 

3.

INVESTMENT ADVISER AND INVESTMENT ADVISORY CONTRACT

Pacific Heights Asset Management, LLC (“Pacific Heights”) has served as the Fund’s investment adviser since May 1, 2003 under an Investment Advisory Contract, dated November 24, 2002 (“Contract”). In accordance with the terms of the Contract, Pacific Heights receives, before any waivers, annual investment advisory fees, which are calculated daily and paid monthly, based on the average daily net assets of each Portfolio of the Fund (“Advisory Fee”) as follows: (i) 1.1875% of the first $200 million of the Portfolio’s average daily net assets; (ii) .8750% of the next $200 million of the Portfolio’s average daily net assets; (iii) .8125% of the next $200 million of the Portfolio’s average daily net assets; and (iv) .7500% of all of the Portfolio’s average daily net assets in excess of $600 million.

All fees and expenses payable by the Fund pursuant to the Contract and attributable only to one Portfolio are borne entirely by that Portfolio; all other fees and expenses are allocated among the Fund’s Portfolios in proportion to their net assets. Except for: (i) the Advisory Fee; (ii) all fees, costs, expenses and allowances relating to Fund investments, including brokerage commissions, charges in the purchase and sale of Fund assets and interest on borrowings; (iii) all taxes payable by the Fund; (iv) the fees and expenses of the Fund’s directors; (v) the salaries and expenses of the Fund’s officers (subject to the Waiver Agreement described below); and (vi) extraordinary expenses, as defined in the Contract, Pacific Heights pays or reimburses the Fund for substantially all of the Fund’s ordinary operating expenses out of its Advisory Fee.

Pursuant to an Advisory Fee Waiver and Expense Assumption Agreement dated December 17, 2013 (“Waiver Agreement”), effective through June 1, 2015, Pacific Heights has agreed to waive portions of its Advisory Fee allocable to: (i) the Permanent Portfolio, such that the Advisory Fee paid by the Portfolio does not exceed an annual rate of .6875% of the Portfolio’s average daily net assets in excess of $6 billion up to $8 billion, .6600% of the Portfolio’s average daily net assets in excess of $8 billion up to $10 billion, .6400% of the

 

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PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

NOTES TO FINANCIAL STATEMENTS

January 31, 2014

   

 

Portfolio’s average daily net assets in excess of $10 billion up to $15 billion, .6200% of the Portfolio’s average daily net assets in excess of $15 billion up to $25 billion and .6000% of the Portfolios average daily net assets in excess of $25 billion; (ii) the Short-Term Treasury Portfolio, such that the Advisory Fee paid by the Portfolio does not exceed an annual rate of .6875% of the Portfolio’s average daily net assets; and (iii) the Versatile Bond Portfolio, such that the Advisory Fee paid by the Portfolio does not exceed an annual rate of .8125% of the Portfolio’s average daily net assets. Also, under the Waiver Agreement, Pacific Heights has agreed to pay the Fund’s officers’ salaries and expenses during the term of the Waiver Agreement. Neither the Fund nor any Portfolio will be required to reimburse Pacific Heights for amounts waived or paid by Pacific Heights pursuant to the Waiver Agreement. The Waiver Agreement may be terminated or amended only in writing and only with the approval of the Fund’s Board of Directors.

Pacific Heights is a California limited liability company. Its manager and sole member, Michael J. Cuggino (who is also its President and Chief Executive Officer), is the President, Secretary and a director of the Fund and has been the portfolio manager of the Fund’s Portfolios since May 1, 2003. In addition to the benefits that result from being the sole owner of Pacific Heights, Mr. Cuggino was paid $90,000 by the Fund during the year ended January 31, 2014 for his service as a director of the Fund.

Annual Renewal of Investment Advisory Contract (Unaudited)

The renewal of the Contract was unanimously approved by the Fund’s Board of Directors (“Board”), including all of the Fund’s directors who are not “interested persons” of the Fund as defined under the 1940 Act (“Independent Directors”), at an “in person” meeting held on December 17, 2013 (“Meeting”). In preparation for consideration of the continuance of the Contract, the Board reviewed a variety of materials provided by Pacific Heights prior to the Meeting, including memoranda provided by Pacific Heights responding to information requests from the Independent Directors and material prepared by Lipper, Inc. (“Lipper”), an independent third party, containing information comparing the expenses of the Fund’s Portfolios to other comparable mutual funds selected by Lipper (“Peer Groups”) and information regarding the performance of the Fund’s Portfolios relative to relevant market indices and the performance of the Peer Groups. The Board also took into account information provided to the Board or its Committees at meetings held throughout the year. During the Meeting, the Directors met with senior management of the Fund and Pacific Heights to discuss the Contract and the information provided. The Independent Directors also met prior to the Meeting and in executive session during the Meeting to review the information provided. The Independent Directors were assisted by counsel that is independent of Fund management and Pacific Heights during their deliberations regarding the Contract, and also received materials discussing the legal standards applicable to their consideration of the proposed continuance of the Contract. The annual Contract review extended over two regular meetings of the Board to ensure that Fund management and Pacific Heights had time to respond to any questions the Independent Directors may have had on their initial review of the materials prepared for the Contract review and that the Independent Directors had time to consider those materials. Although the Board gave attention to all information provided, the following discusses some of the primary factors that the Board deemed relevant to its decision to approve the continuance of the Contract.

The Board reviewed the Advisory Fee payable by each of the Portfolios under the Contract as well as each Portfolio’s overall expense ratio. Utilizing the material prepared by Lipper, the Board considered each Portfolio’s Advisory Fee and overall expense ratio against the median of the advisory fees and overall expense ratios for such

 

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PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

NOTES TO FINANCIAL STATEMENTS

January 31, 2014

   

 

Portfolio’s Peer Group and observed the following: (i) for the Permanent Portfolio (after fee waivers), its Advisory Fee was lower than the median in its Peer Group and its overall expense ratio was lower than the median and the lowest in its Peer Group; (ii) for the Short-Term Treasury Portfolio (after fee waivers), its Advisory Fee was higher than the median and the highest in its Peer Group, and its overall expense ratio was lower than the median and the lowest in its Peer Group; (iii) for the Versatile Bond Portfolio (after fee waivers), its Advisory Fee was higher than the median in its Peer Group and its overall expense ratio was lower than the median in its Peer Group; and (iv) for the Aggressive Growth Portfolio, its Advisory Fee was higher than the median in its Peer Group and its overall expense ratio was lower than the median in its Peer Group. The Board also considered that, in absolute terms, except for the Permanent Portfolio, each Portfolio’s expense ratio (after applicable waivers) had declined over the last several years. With respect to the Permanent Portfolio, the Board noted that the Portfolio had experienced substantial redemptions during 2013. The Board observed that the slight increase in the expense ratio (after applicable waivers) was the function of the Portfolio’s assets falling below levels required to achieve certain breakpoints under the then-current advisory fee waiver and expense assumption agreement.

In reviewing the Lipper materials, the Board noted that unlike the mutual funds comprising the Portfolios’ Peer Groups, the Fund’s Portfolios operate under a unitary fee structure whereby many of the Portfolios’ ordinary operating expenses are paid by Pacific Heights out of its Advisory Fee rather than paid directly by the Portfolios. The Board noted the difficulty of comparing the Fund’s Portfolios to non-unitary fee funds and observed that given the Portfolios’ unitary fee structure and unlike non-unitary fee funds, the Portfolios’ other ordinary operating expenses were minimal, an observation borne out by the fact that the non-management expenses for each of the Fund’s Portfolios were the lowest or among the lowest in each Portfolio’s respective Peer Group. The Board observed that when each Portfolio’s Advisory Fee was compared to the overall expense ratio of others funds in its Peer Group, in each case the overall expense ratio was lower than the median in its Peer Group and, in the case of the Permanent Portfolio and the Short-Term Treasury Portfolio, the lowest in its Peer Group. The Board also observed that the unitary fee provides predictability in Portfolio expenses at various asset levels and also protects the Portfolios against the risks of increase in third-party service provider fees and other expenses covered under the unitary fee.

The Board also reviewed the short-term and long-term investment performance of each of the Fund’s Portfolios. As part of this review, the Board reviewed the material prepared by Lipper, comparing the performance of each Portfolio to its respective Peer Group and Lipper selected benchmark index for the one-, three-, five- and ten-year periods ended June 30, 2013. Utilizing the material prepared by Lipper, the Board observed the following with respect to the total return performance of the Portfolios as compared to each of their respective Peer Groups and Lipper selected indices: (i) that the Permanent Portfolio’s total return performance exceeded the average total return performance of its Peer Group for the five- and ten-year measurement periods, but lagged for the one-and three-year periods, exceeded the median total return performance of its Peer Group for the ten-year measurement period, equaled the median total return performance for the five-year period but lagged for the one-, and three-year periods, and exceeded the total return performance of its Lipper benchmark index for the ten-year measurement period but lagged for the one-, three- and five-year periods; (ii) that the Short-Term Treasury Portfolio’s total return performance lagged the average and median total return performance of its Peer Group and the Citigroup 3-Month U.S. Treasury Bill Index for each measurement period; (iii) that the Versatile Bond Portfolio’s total return performance exceeded the average and median total return performance of

 

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PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

NOTES TO FINANCIAL STATEMENTS

January 31, 2014

   

 

its Peer Group and its Lipper benchmark index for the one-year measurement period but lagged for the three-, five- and ten-year periods; and (iv) that the Aggressive Growth Portfolio’s total return performance exceeded the average and median total return performance of its Peer Group for the one-, three- and ten-year measurement periods but the Portfolio’s total return performance lagged the average and exceeded the median total return performance for the five-year period, and exceeded its Lipper benchmark index for the one-, three- and ten-year measurement periods but lagged for the five-year period. The Directors also compared each Portfolio’s total return performance against its respective benchmark index(es) for the one-, three-, five- and ten-year periods ended September 30, 2013 and observed the following: (i) that the Permanent Portfolio’s total return performance exceeded the returns of the Citigroup 3-Month U.S. Treasury Bill Index for the three-, five- and ten-year measurement periods but lagged for the one-year period and exceeded the returns of the Standard & Poor’s 500 Composite Stock Index for the ten-year measurement period but lagged for the one-, three- and five-year periods; (ii) that the Short-Term Treasury Portfolio’s total return performance lagged the returns of the Citigroup 3-Month U.S. Treasury Bill Index for each measurement period; (iii) that the Versatile Bond Portfolio’s total return performance exceeded the returns of the Barclay’s Capital Global Aggregate (Excluding Securitized) Bond Index for the one- and three-year measurement periods but lagged for five-and ten-year periods; and (iv) that the Aggressive Growth Portfolio’s total return performance exceeded the returns of the Standard & Poor’s 500 Composite Stock Index for the one-, three- and ten-year measurement periods but lagged for the five-year period. The Board observed that the Portfolios’ benchmark indices do not reflect deductions for any fees, expenses or taxes. The Board also considered the updated performance information for each Portfolio for the calendar year through December 13, 2013.

The Board noted that the Permanent Portfolio’s negative returns in 2013 were attributable to net negative performance of the Portfolio’s diversified asset categories, with gold, silver, longer-term U.S. Treasury bonds and natural resource stocks detracting from the positive performance of other asset categories. The Board recognized that the Permanent Portfolio’s fundamental investment policy, which cannot be changed without shareholder approval, is to maintain a fixed allocation of specified asset categories, with the objective of preserving and increasing the purchasing power value of its shares over the long term. The Board noted that the Versatile Bond Portfolio had been operating under its new investment objective and strategies since late May 2012 and noted with approval the improvement in investment performance of the Portfolio. With regard to the Short-Term Treasury Portfolio’s underperformance, the Board noted that the continued extremely low yields on short-term U.S. Treasury securities were more than offset by the Portfolio’s expenses, even after the fee waiver. The Board observed that given the Portfolio’s fundamental investment policies and historical low interest rates on short-term U.S. Treasuries, the Portfolio’s investment performance is unlikely to improve until prevailing interest rates rise. The Board noted that the strong performance of the Aggressive Growth Portfolio reflected its investment in growth stocks in a rising equity market.

The Board considered the services provided by Pacific Heights under the Contract and reviewed Pacific Heights’ services to the Fund over the past year. The Board considered the experience and staffing of personnel at Pacific Heights who perform investment research and manage the Portfolios’ investments. In addition to investment advisory services, the Board also considered the quality of the administrative and non-investment advisory services provided by Pacific Heights. Under the Contract, Pacific Heights and its personnel provide all administrative, accounting, compliance and other services required in connection with the administration of the

 

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PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

NOTES TO FINANCIAL STATEMENTS

January 31, 2014

   

 

affairs of the Fund, including overseeing and coordinating the activities of other service providers. The Board also considered the services provided to the Fund by Mr. Cuggino, who is also the principal executive officer of Pacific Heights. The Board considered that Mr. Cuggino is responsible for management of each Portfolio and is thoroughly involved in overseeing all aspects of the Fund’s operations. The Board concluded that Pacific Heights had experienced personnel and sufficient infrastructure and resources and had delivered high-quality investment advisory, administrative, accounting, compliance and other services to the Fund.

The Board also considered whether Pacific Heights had the ability to continue providing high-quality services. The Board noted that Pacific Heights retained experienced personnel to service the Fund’s Portfolios and continued to improve its infrastructure and technological and other capabilities. The Board noted that despite the substantial decline in assets under management attributable to redemptions in the Permanent Portfolio in the current year, the level of service provided by Pacific Heights remained consistently high.

The Board considered Pacific Heights’ financial condition. The Board noted in this regard that it reviewed Pacific Heights’ audited and unaudited financial statements on an annual and quarterly basis, respectively, and that Pacific Heights appeared to have the financial resources to fulfill its obligations under the Contract. The Board further noted that Pacific Heights’ financial health provides it with the resources to waive or cap fees in three Portfolios, to make significant investments in its business for the benefit of the Fund and to build and maintain its distribution network to increase assets in the Portfolios.

The Board also evaluated economies of scale in relation to the services provided to the Fund’s Portfolios and whether fee levels appropriately reflect economies of scale. The Board noted that during the period from January 31, 2008 through the six months ended July 31, 2013, the Permanent Portfolio, Short-Term Treasury Portfolio, Versatile Bond Portfolio and Aggressive Growth Portfolio had benefited from declines in their respective expense ratios. The Board attributed the decline in the Portfolios’ expense ratios primarily to: (i) the overall growth of assets under management; (ii) the Advisory Fee breakpoint schedule in the Contract; (iii) Pacific Heights’ voluntary fee waivers with respect to the Short-Term Treasury Portfolio and the Versatile Bond Portfolio through the end of 2009; and (iv) the Advisory Fee waivers for the Permanent Portfolio, the Short-Term Treasury Portfolio and the Versatile Bond Portfolio and the absorption of the Fund’s officers’ salaries and expenses since 2010 pursuant to previous advisory fee waiver and expense assumption agreements. The Board further noted that the growth of the Permanent Portfolio had also helped the other Portfolios achieve economies of scale. The Board also considered the fee structure. The Board noted that the Contract has breakpoints that provide for a reduction of the applicable investment advisory fee as assets increase and that the Waiver Agreement provided for additional fee waivers with respect to the Permanent Portfolio and for fee waivers for the Short-Term Treasury Portfolio and the Versatile Bond Portfolio before any breakpoints contemplated by the Contract had been reached. The Board considered that Pacific Heights proposed to extend the terms of the current advisory fee waiver and expense assumption agreement for another year (until June 1, 2015), including the absorption by Pacific Heights of all salaries, fees and expenses of the officers of the Fund, including the Fund’s Chief Compliance Officer. The Board agreed that the terms of the Waiver Agreement were appropriate and that the current fee arrangements provide appropriate sharing of economies of scale between Portfolio shareholders and Pacific Heights.

 

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PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

NOTES TO FINANCIAL STATEMENTS

January 31, 2014

   

 

The Board considered Pacific Heights’ profitability. The Board reviewed a profitability analysis provided by Pacific Heights that compared Pacific Heights’ profitability for the six months ended June 30, 2013 and the year ended December 31, 2012 to that of certain publicly-traded investment advisers. The Board reviewed the methodology used by Pacific Heights to determine its profitability and discussed various factors involved in determining Pacific Heights’ profitability. In assessing Pacific Heights’ profitability, the Board observed that the Permanent Portfolio’s overall expense ratio was lower than the median and the lowest in its Peer Group and that Pacific Heights operated certain Portfolios at a loss. The Board recognized that, as a business matter, Pacific Heights is entitled to earn a reasonable level of profit for services it provides to the Fund’s Portfolios.

Based on the foregoing, the Board considered the following factors and reached the following conclusions:

a) The nature, quality and extent of the investment advisory, compliance, administrative and other services to be provided to the Portfolios by Pacific Heights. Conclusion: Pacific Heights could be expected to continue to provide a high level of service to each Portfolio.

b) The operating expenses and expense ratios of the Portfolios compared to their Peer Groups. Conclusion: the operating expenses and expense ratios of the Portfolios were comparable to their Peer Groups and fair and reasonable.

c) The performance of the Portfolios compared to their Peer Groups and relevant market indices. Conclusion: the Permanent Portfolio’s performance was satisfactory; the Short-Term Treasury Portfolio’s performance was as expected taking into account the constraints imposed by the fundamental investment policies to which the Portfolio is subject and the Board maintained confidence in Pacific Heights’ capabilities to manage the Portfolio; the Versatile Bond Portfolio’s performance was satisfactory; and the Aggressive Growth Portfolio’s performance was satisfactory.

d) Pacific Heights’ financial condition. Conclusion: Pacific Heights has the financial ability to fulfill its commitment to the Fund under the Contract.

e) The extent to which economies of scale might be realized as each Portfolio grows and whether fee levels reflect any such potential economies of scale. Conclusion: the Permanent Portfolio has achieved economies of scale that benefit shareholders, given that the Permanent Portfolio has exceeded the final breakpoint in its Advisory Fee under the Contract, and is currently at the second breakpoint in its Advisory Fee under the Waiver Agreement. The other Portfolios have benefited from economies of scale by virtue of the still sizeable assets in the Permanent Portfolio and expense caps in place for the Short-Term Treasury Portfolio and the Versatile Bond Portfolio.

f) The profitability of the Contract to Pacific Heights. Conclusion: the profitability of the Contract to Pacific Heights was fair, reasonable and sufficient for the financial stability of Pacific Heights.

g) Advisory fee payable by each Portfolio. Conclusion: the Advisory Fee payable by each of the Portfolios was fair and reasonable given the nature and quality of the services provided.

h) The benefits accruing to Pacific Heights by virtue of its relationship to the Portfolios were reasonable in comparison with the benefits accruing to each Portfolio.

In their deliberations, the Board members did not identify any particular information that was all important or controlling. Based on the foregoing, the Board, including its Independent Directors, unanimously approved the continuance of the Contract.

 

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PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

NOTES TO FINANCIAL STATEMENTS

January 31, 2014

   

 

 

4.

PURCHASES AND SALES OF SECURITIES

The following is a summary of purchases and sales of securities other than short-term securities for the year ended January 31, 2014:

 

     Permanent
Portfolio
     Short-Term
Treasury
Portfolio
     Versatile
Bond
Portfolio
     Aggressive
Growth
Portfolio
 
           

Purchases

   $ 368,979,257       $       $ 7,815,923       $ 12,047,772   

Sales

     5,626,246,468                 6,889,968         113,882   

The Fund’s Permanent Portfolio also purchased $35,578,119 of silver and sold $821,383,380 and $115,681,421 of gold and silver, respectively, during the year ended January 31, 2014.

The Fund’s Short-Term Treasury Portfolio only invested in short-term U.S. Treasury securities having maturities of one year or less during the year ended January 31, 2014. Purchases and sales of portfolio securities were $92,869,786 and $96,223,281, respectively, during the year then ended.

 

5.

NET UNREALIZED APPRECIATION OF INVESTMENTS

The following is a summary of net unrealized appreciation of investments as of January 31, 2014 for federal income tax purposes:

 

     Permanent
Portfolio
    Short-Term
Treasury
Portfolio
    Versatile
Bond
Portfolio
    Aggressive
Growth
Portfolio
 
        

Aggregate gross unrealized appreciation of investments with excess of value over tax cost:

        

Investments in securities

   $ 978,751,260      $ 962      $ 268,252      $ 21,457,654   

Investments other than securities

     70,925,991                        
  

 

 

   

 

 

   

 

 

   

 

 

 
     1,049,677,251        962        268,252        21,457,654   

Aggregate gross unrealized depreciation of investments with excess of tax cost over value:

        

Investments in securities

     (229,289,211     (772     (148,014     (1,145,280

Investments other than securities

     (65,947,895                     
  

 

 

   

 

 

   

 

 

   

 

 

 
     (295,237,106     (772     (148,014     (1,145,280
  

 

 

   

 

 

   

 

 

   

 

 

 

Net unrealized appreciation of investments

   $ 754,440,145      $ 190      $ 120,238      $ 20,312,374   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

6.

SUBSEQUENT EVENTS

The Fund has evaluated the impact of subsequent events on its Portfolios and has determined that there were no subsequent events requiring recognition or disclosure in the Fund’s financial statements.

 

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PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

NOTES TO FINANCIAL STATEMENTS

January 31, 2014

   

 

 

7.

CAPITAL STOCK TRANSACTIONS

Transactions in shares of each Portfolio’s capital stock exclusive of amounts allocated to undistributed net investment income (loss) were as follows for the years then ended.

 

    

Permanent Portfolio

 
     Year Ended January 31, 2014          Year Ended January 31, 2013  
           
     Shares     Dollars          Shares     Dollars  

Shares sold

     47,032,573      $ 2,212,879,326           116,446,770      $ 5,633,007,019   

Distributions reinvested

     16,234,065        697,902,399           3,374,317        163,182,008   
  

 

 

   

 

 

      

 

 

   

 

 

 
     63,266,638        2,910,781,725           119,821,087        5,796,189,027   

Shares redeemed

     (196,721,833     (9,206,893,760        (121,774,219     (5,855,125,119
  

 

 

   

 

 

      

 

 

   

 

 

 

Net decrease

     (133,455,195   $ (6,296,112,035        (1,953,132   $ (58,936,092
  

 

 

   

 

 

      

 

 

   

 

 

 
    

Short-Term Treasury Portfolio

 
     Year Ended January 31, 2014          Year Ended January 31, 2013  
           
     Shares     Dollars          Shares     Dollars  

Shares sold

     127,628      $ 8,403,046           176,319      $ 11,678,218   

Distributions reinvested

     —          —             —          —     
  

 

 

   

 

 

      

 

 

   

 

 

 
     127,628        8,403,046           176,319        11,678,218   

Shares redeemed

     (171,260     (11,278,230        (244,739     (16,200,300
  

 

 

   

 

 

      

 

 

   

 

 

 

Net decrease

     (43,632   $ (2,875,184        (68,420   $ (4,522,082
  

 

 

   

 

 

      

 

 

   

 

 

 
    

Versatile Bond Portfolio

 
     Year Ended January 31, 2014          Year Ended January 31, 2013  
           
     Shares     Dollars          Shares     Dollars  

Shares sold

     71,805      $ 4,360,543           117,139      $ 6,941,719   

Distributions reinvested

     9,930        590,325           3,720        231,793   
  

 

 

   

 

 

      

 

 

   

 

 

 
     81,735        4,950,868           120,859        7,173,512   

Shares redeemed

     (65,773     (3,978,813        (112,374     (6,702,850
  

 

 

   

 

 

      

 

 

   

 

 

 

Net increase

     15,962      $ 972,055           8,485      $ 470,662   
  

 

 

   

 

 

      

 

 

   

 

 

 
    

Aggressive Growth Portfolio

 
     Year Ended January 31, 2014          Year Ended January 31, 2013  
           
     Shares     Dollars          Shares     Dollars  

Shares sold

     295,183      $ 17,581,650           101,263      $ 4,664,348   

Distributions reinvested

     17,660        1,184,075           11,392        533,128   
  

 

 

   

 

 

      

 

 

   

 

 

 
     312,843        18,765,725           112,655        5,197,476   

Shares redeemed

     (98,589     (5,877,124        (105,381     (4,864,019
  

 

 

   

 

 

      

 

 

   

 

 

 

Net increase

     214,254      $ 12,888,601           7,274      $ 333,457   
  

 

 

   

 

 

      

 

 

   

 

 

 

 

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PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

PERMANENT PORTFOLIO

   

 

Financial highlights for the Permanent Portfolio

For each share of capital stock outstanding throughout each year:

 

     Year Ended
January 31,
2014
    Year Ended
January 31,
2013
    Year Ended
January 31,
2012
    Year Ended
January 31,
2011
    Year Ended
January 31,
2010
 

Net asset value, beginning of year

   $ 49.59      $ 48.69      $ 45.50      $ 38.06      $ 31.57   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from investment operations:

          

Net investment income (1)

     .31        .29        .24        .35        .37   

Net realized and unrealized gain (loss) on investments and foreign currencies (2)

     (2.34     1.24        3.67        7.41        6.40   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total income (loss) from investment operations

     (2.03     1.53        3.91        7.76        6.77   

Less distributions from:

          

Net investment income

     (.25     (.27     (.42     (.29     (.28

Net realized gain on investments

     (4.35     (.36     (.30     (.03       
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions

     (4.60     (.63     (.72     (.32     (.28
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of year

   $ 42.96      $ 49.59      $ 48.69      $ 45.50      $ 38.06   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total return (3)

     (4.12)%        3.17%        8.63%        20.41%        21.43%   

Ratios / supplemental data:

          

Net assets, end of year (in thousands)

   $ 8,992,350      $ 16,997,810      $ 16,784,635      $ 10,542,812      $ 5,083,251   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Portfolio turnover rate

     4.29%        23.71%        8.87%        9.11%        12.78%   

Ratio of expenses to average net assets:

          

After Advisory Fee waiver

     .72%        .69%        .71%        .77%        .82%   

Before Advisory Fee waiver

     .77%        .76%        .76%        .78%        .82%   

Ratio of net investment income to average net assets:

          

After Advisory Fee waiver

     .65%        .61%        .49%        .82%        1.03%   

Before Advisory Fee waiver

     .60%        .54%        .44%        .81%        1.03%   

 

(1)

Net investment income is based on average shares outstanding during the year.

(2)

Per share net realized and unrealized gains or losses on investments and foreign currencies may not correspond with the change in aggregate unrealized gains and losses in the Portfolio’s securities because of the timing of sales and repurchases of the Portfolio’s shares in relation to fluctuating market values for the Portfolio.

(3)

Assumes reinvestment of all dividends and distributions, and deduction of all fees and expenses except the $35 one-time account start-up fee.

 

32    See accompanying notes to financial statements.  


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PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

SHORT-TERM TREASURY PORTFOLIO

   

 

Financial highlights for the Short-Term Treasury Portfolio

For each share of capital stock outstanding throughout each year:

 

     Year Ended
January 31,
2014
    Year Ended
January 31,
2013
    Year Ended
January 31,
2012
    Year Ended
January 31,
2011
    Year Ended
January 31,
2010
 

Net asset value, beginning of year

   $ 66.03      $ 66.41      $ 66.81      $ 67.75      $ 68.44   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss from investment operations:

          

Net investment loss (1)

     (.40     (.39     (.40     (.39     (.26

Net realized and unrealized gain (loss) on investments (2)

            .01               .01        (.05
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loss from investment operations

     (.40     (.38     (.40     (.38     (.31

Less distributions from:

          

Net investment income

                          (.56     (.38
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions

                          (.56     (.38
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of year

   $ 65.63      $ 66.03      $ 66.41      $ 66.81      $ 67.75   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total return (3)

     (.61)%        (.57)%        (.60)%        (.58)%        (.44)%   

Ratios / supplemental data:

          

Net assets, end of year (in thousands)

   $ 25,237      $ 28,273      $ 32,978      $ 34,383      $ 44,806   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Portfolio turnover rate (4)

     —%        —%        —%        —%        —%   

Ratio of expenses to average net assets:

          

After Advisory Fee waiver

     .69%        .69%        .69%        .73%        .71%   

Before Advisory Fee waiver

     1.19%        1.19%        1.19%        1.23%        1.21%   

Ratio of net investment loss to average net assets:

          

After Advisory Fee waiver

     (.60)%        (.58)%        (.59)%        (.58)%        (.37)%   

Before Advisory Fee waiver

     (1.10)%        (1.08)%        (1.09)%        (1.08)%        (.87)%   

 

(1)

Net investment loss is based on average shares outstanding during the year.

(2)

Per share net realized and unrealized gains or losses on investments may not correspond with the change in aggregate unrealized gains and losses in the Portfolio’s securities because of the timing of sales and repurchases of the Portfolio’s shares in relation to fluctuating market values for the Portfolio.

(3)

Assumes reinvestment of all dividends and distributions, and deduction of all fees and expenses except the $35 one-time account start-up fee.

(4)

Portfolio turnover rate is not applicable since the Portfolio only invested in securities with maturities of one year or less.

 

   See accompanying notes to financial statements.     33   


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PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

VERSATILE BOND PORTFOLIO

   

 

Financial highlights for the Versatile Bond Portfolio

For each share of capital stock outstanding throughout each year:

 

     Year Ended
January 31,
2014
    Year Ended
January  31,

2013
    Year Ended
January 31,
2012
    Year Ended
January 31,
2011
    Year Ended
January 31,
2010
 

Net asset value, beginning of year

   $ 60.93      $ 59.15      $ 59.15      $ 60.40      $ 59.39   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from investment operations:

          

Net investment income (1)

     2.50        1.34        .15        .76        1.20   

Net realized and unrealized gain (loss) on investments (2)

     (.17     1.78        .03        (.52     .69   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total income from investment operations

     2.33        3.12        .18        .24        1.89   

Less distributions from:

          

Net investment income

     (2.25     (1.34     (.18     (1.49     (.88

Net realized gain on investments

     (.51                            
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions

     (2.76     (1.34     (.18     (1.49     (.88
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of year

   $ 60.50      $ 60.93      $ 59.15      $ 59.15      $ 60.40   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total return (3)

     3.90%        5.31%        .31%        .40%        3.18%   

Ratios / supplemental data:

          

Net assets, end of year (in thousands)

   $ 14,287      $ 13,417      $ 12,523      $ 13,300      $ 18,087   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Portfolio turnover rate

     48.71%        137.43%        71.55%        57.05%        61.18%   

Ratio of expenses to average net assets:

          

After Advisory Fee waiver

     .82%        .82%        .81%        .83%        .88%   

Before Advisory Fee waiver

     1.19%        1.20%        1.19%        1.20%        1.26%   

Ratio of net investment income to average net assets:

          

After Advisory Fee waiver

     4.05%        2.24%        .25%        1.26%        1.98%   

Before Advisory Fee waiver

     3.68%        1.86%        (.13)%        .89%        1.60%   

 

(1)

Net investment income is based on average shares outstanding during the year.

(2)

Per share net realized and unrealized gains or losses on investments may not correspond with the change in aggregate unrealized gains and losses in the Portfolio’s securities because of the timing of sales and repurchases of the Portfolio’s shares in relation to fluctuating market values for the Portfolio.

(3)

Assumes reinvestment of all dividends and distributions, and deduction of all fees and expenses except the $35 one-time account start-up fee.

 

34    See accompanying notes to financial statements.  


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PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

AGGRESSIVE GROWTH PORTFOLIO

   

 

Financial highlights for the Aggressive Growth Portfolio

For each share of capital stock outstanding throughout each year:

 

     Year Ended
January 31,
2014
    Year Ended
January 31,
2013
    Year Ended
January 31,
2012
    Year Ended
January 31,
2011
    Year Ended
January 31,
2010
 

Net asset value, beginning of year

   $ 52.58      $ 44.68      $ 49.14      $ 39.80      $ 29.53   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from investment operations:

          

Net investment income (1)

     .26        .58        .24        .11        .08   

Net realized and unrealized gain (loss) on investments (2)

     13.91        8.39        (1.75     10.45        10.19   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total income (loss) from investment operations

     14.17        8.97        (1.51     10.56        10.27   

Less distributions from:

          

Net investment income

     (.33     (.46     (.32     (.11       

Net realized gain on investments

     (1.39     (.61     (2.63     (1.11       
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions

     (1.72     (1.07     (2.95     (1.22       
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of year

   $ 65.03      $ 52.58      $ 44.68      $ 49.14      $ 39.80   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total return (3)

     26.84%        20.37%        (2.68)%        26.73%        34.78%   

Ratios / supplemental data:

          

Net assets, end of year (in thousands)

   $ 48,167      $ 27,678      $ 23,195      $ 22,905      $ 18,436   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Portfolio turnover rate

     .31%        8.71%        17.13%        15.51%        4.92%   

Ratio of expenses to average net assets

     1.20%        1.19%        1.19%        1.22%        1.21%   

Ratio of net investment income to average net assets

     .44%        1.26%        .52%        .25%        .23%   

 

(1)

Net investment income is based on average shares outstanding during the year.

(2)

Per share net realized and unrealized gains or losses on investments may not correspond with the change in aggregate unrealized gains and losses in the Portfolio’s securities because of the timing of sales and repurchases of the Portfolio’s shares in relation to fluctuating market values for the Portfolio.

(3)

Assumes reinvestment of all dividends and distributions, and deduction of all fees and expenses except the $35 one-time account start-up fee.

 

   See accompanying notes to financial statements.     35   


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PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

PERMANENT PORTFOLIO

Ten Years Ended January 31, 2014

(Unaudited)

   

 

LOGO

 

  *

The Citigroup 3-Month U.S. Treasury Bill Index tracks the performance of U.S. Treasury bills with a remaining maturity of three months. U.S. Treasury bills, which are short-term loans to the U.S. government, are full- faith-and-credit obligations of the U.S. Treasury. The Standard & Poor’s 500 Composite Stock Index is a market-capitalization weighted index of common stocks and represents an unmanaged portfolio. You cannot invest directly in an index. Returns shown for the Citigroup 3-Month U.S. Treasury Bill Index and the Standard & Poor’s 500 Composite Stock Index reflect reinvested interest, dividends and other distributions as applicable, but do not reflect a deduction for fees, expenses or taxes.

 

Past performance does not guarantee future results. The graph does not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or on the redemption of Portfolio shares.

 

36    See page 40 for explanation of graphs and additional performance information.  


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PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

SHORT-TERM TREASURY PORTFOLIO

Ten Years Ended January 31, 2014

(Unaudited)

   

 

LOGO

 

  *

The Citigroup 3-Month U.S. Treasury Bill Index tracks the performance of U.S. Treasury bills with a remaining maturity of three months. U.S. Treasury bills, which are short-term loans to the U.S. government, are full- faith-and-credit obligations of the U.S. Treasury. You cannot invest directly in an index. Returns shown for the Citigroup 3-Month U.S. Treasury Bill Index reflect reinvested interest as applicable, but do not reflect a deduction for fees, expenses or taxes.

 

Past performance does not guarantee future results. The graph does not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or on the redemption of Portfolio shares.

 

   See page 40 for explanation of graphs and additional performance information.     37   


LOGO   

PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

VERSATILE BOND PORTFOLIO

Ten Years Ended January 31, 2014

(Unaudited)

   

 

LOGO

 

  *

The Citigroup AAA/AA 1-3 Year Corporate Bond Index and the Citigroup A 1-3 Year Corporate Bond Index are components of the Citigroup Broad Investment-Grade (BIG) Bond Index and have characteristics relevant to the Portfolio’s investment strategies prior to May 30, 2012. Both indices are market-capitalization weighted and include bonds rated AAA, AA or A by Standard & Poor’s or Moody’s Investor Services, Inc. (“Moody’s”) with maturities of one to three years and a minimum amount outstanding of $100 million. They should not be considered predictive or representative of results the Portfolio may experience under its current investment strategy. The Barclays Capital Global Aggregate Bond Index is a market-capitalization weighted, broad-based measure of global, government-related, treasury, corporate and securitized fixed income investments. The Barclays Capital Global Aggregate (Excluding Securitized) Bond Index, which excludes securitized fixed income investments, is a sub-index of the Barclays Capital Global Aggregate Bond Index and has characteristics relevant to the Portfolio’s investment strategies after May 30, 2012. You cannot invest directly in an index. Returns shown for the indices reflect reinvested interest, dividends and other distributions as applicable, but do not reflect a deduction for fees, expenses or taxes.

 

Past performance does not guarantee future results. The graph does not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or on the redemption of Portfolio shares.

 

38    See page 40 for explanation of graphs and additional performance information.  


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PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

AGGRESSIVE GROWTH PORTFOLIO

Ten Years Ended January 31, 2014

(Unaudited)

   

 

LOGO

 

  *

The Dow Jones Industrial Average is an average of the stock prices of thirty large companies and represents a widely recognized unmanaged portfolio of common stocks. The Standard & Poor’s 500 Composite Stock Index is a market capitalization weighted index of common stocks and also represents an unmanaged portfolio. You cannot invest directly in an index. Returns shown for the Dow Jones Industrial Average and the Standard & Poor’s 500 Composite Stock Index reflect reinvested dividends and other distributions as applicable, but do not reflect a deduction for fees, expenses or taxes.

 

Past performance does not guarantee future results. The graph does not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or on the redemption of Portfolio shares.

 

   See page 40 for explanation of graphs and additional performance information.     39   


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PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

AVERAGE ANNUAL TOTAL RETURNS

For Periods Ended January 31, 2014

(Unaudited)

   

 

The graphs on pages 36 through 39 compare the initial account values and subsequent account values at the end of each of the most recently completed ten year periods indicated of the Fund’s Permanent Portfolio, Short-Term Treasury Portfolio, Versatile Bond Portfolio and Aggressive Growth Portfolio, assuming a hypothetical $10,000 investment in each Portfolio at the beginning of the first period indicated and reinvestment of all dividends and other distributions, without the deduction of taxes, to a $10,000 investment over the same periods in comparable broad-based securities market indices. The tables below show each of the Fund’s Portfolio’s average annual total returns for the periods indicated, assuming reinvestment of all dividends and other distributions, and deduction of all fees and expenses except the $35 one-time account start-up fee. If such fee were reflected, the returns would be less than those shown. Returns for the Fund’s Permanent Portfolio, Short-Term Treasury Portfolio and Versatile Bond Portfolio reflect fee waivers in effect. In the absence of such fee waivers, total return would be reduced. After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. In particular, after-tax returns are not relevant to investors who hold their shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts.

Performance data shown below for each of the Fund’s Portfolios represents past performance and 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. Investment performance, current to the most recent month-end, may be lower or higher than the performance shown below, and can be obtained by calling the Fund’s Shareholder Services Office at (800) 531-5142.

Investments in the Fund’s Portfolios are not insured or guaranteed by the Federal Deposit Insurance Corporation or other government agency. It is therefore possible to lose money by investing in the Fund’s Portfolios.

 

    Average Annual Total Returns Through January 31, 2014  
    1 Year     3 Years     5 Years     10 Years     15 Years     Since
Inception
 

Permanent Portfolio (Since 12/1/82) (1)(2)

           

Return before taxes

    -4.12%        2.43%        9.46%        7.91%        8.22%        6.48%   

Return after taxes on distributions

    -6.32%        1.48%        8.77%        7.44%        7.61%        5.89%   

Return after taxes on distributions and sale of portfolio shares

    -.51%        1.93%        7.53%        6.44%        6.72%        5.37%   

Citigroup 3-Month U.S. Treasury Bill Index (4)(5)

    .05%        .06%        .10%        1.58%        2.19%        4.28%   

Standard & Poor’s 500 Composite Stock Index (4)(6)

    21.52%        13.93%        19.19%        6.83%        4.15%        11.32%   

Short-Term Treasury Portfolio (Since 5/26/87) (1)(2)(3)

           

Return before taxes

    -.61%        -.59%        -.56%        .93%        1.39%        2.81%   

Return after taxes on distributions

    -.61%        -.59%        -.66%        .64%        .83%        2.16%   

Return after taxes on distributions and sale of portfolio shares

    -.34%        -.45%        -.45%        .67%        .88%        2.01%   

Citigroup 3-Month U.S. Treasury Bill Index (4)(5)

    .05%        .06%        .10%        1.58%        2.19%        3.66%   

Versatile Bond Portfolio (Since 9/27/91) (1)(2)(3)

           

Return before taxes

    3.90%        3.15%        2.60%        2.56%        3.01%        3.56%   

Return after taxes on distributions

    2.07%        2.24%        1.78%        1.77%        1.99%        2.55%   

Return after taxes on distributions and sale of portfolio shares

    2.35%        2.06%        1.69%        1.70%        1.95%        2.41%   

Barclays Capital Global Aggregate (Excluding Securitized) Bond Index (4)(7)

    -1.03%        2.51%        4.78%        4.46%        4.95%        6.22%   

Citigroup AAA/AA 1-3 Year Corporate Bond Index (4)(8)

    .92%        1.45%        2.32%        3.04%        4.18%        5.04%   

Citigroup A 1-3 Year Corporate Bond Index (4)(9)

    1.53%        2.33%        4.47%        3.51%        4.56%        5.33%   

Aggressive Growth Portfolio (Since 1/2/90) (1)(2)

           

Return before taxes

    26.84%        14.11%        20.48%        8.55%        7.38%        10.68%   

Return after taxes on distributions

    26.09%        13.38%        19.92%        7.06%        6.26%        9.79%   

Return after taxes on distributions and sale of portfolio shares

    15.85%        11.13%        16.83%        6.93%        6.06%        9.34%   

Dow Jones Industrial Average (4)(10)

    16.07%        12.61%        17.61%        6.82%        5.94%        10.06%   

Standard & Poor’s 500 Composite Stock Index (4)(6)

    21.52%        13.93%        19.19%        6.83%        4.15%        9.18%   

 

40    See following page for footnote explanations.  


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PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

AVERAGE ANNUAL TOTAL RETURNS

For Periods Ended January 31, 2014

(Unaudited)

   

 

(1)

Returns before taxes do not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or on the redemption of Portfolio shares.

 

(2)

Returns reflect the impact of contractual waivers through June 1, 2015 pursuant to the Waiver Agreement. Amounts so waived may not be recaptured by the Fund’s investment adviser. The net expense ratio (after fee waivers) and the gross expense ratio (before fee waivers) for the fiscal year ended January 31, 2014, were: (i) for the Permanent Portfolio, .72% and .77%, respectively; (ii) for the Short-Term Treasury Portfolio, .69% and 1.19%, respectively; (iii) for the Versatile Bond Portfolio, .82% and 1.19%, respectively; and (iv) for the Aggressive Growth Portfolio, 1.20% and 1.20%, respectively.

 

(3)

The thirty-day SEC standardized yield on the Fund’s Short-Term Treasury Portfolio and Versatile Bond Portfolio for the thirty days ended January 31, 2014, calculated for each Portfolio by dividing the net investment income per share earned during the specified thirty-day period by the net asset value per share on the last day of the period and annualizing the resulting figure, and assuming reinvestment of all dividends and other distributions, and deduction of all fees and expenses except the $35 one-time account start-up fee, was -.58% and 3.65%, respectively.

 

(4)

Returns reflect reinvested interest, dividends and other distributions as applicable, but do not reflect a deduction for fees, expenses or taxes.

 

(5)

The Citigroup 3-Month U.S. Treasury Bill Index tracks the performance of U.S. Treasury bills with a remaining maturity of three months. U.S. Treasury bills, which are short-term loans to the U.S. government, are full-faith-and-credit obligations of the U.S. Treasury. You cannot invest directly in an index.

 

(6)

The Standard & Poor’s 500 Composite Stock Index is a market-capitalization weighted index of common stocks and represents an unmanaged portfolio of common stocks. You cannot invest directly in an index.

 

(7)

The Barclays Capital Global Aggregate Bond Index is a market-capitalization weighted, broad-based securities index that measures a wide range of global, government-related, treasury, corporate and securitized fixed-income investments. Barclays Capital Global Aggregate (Excluding Securitized) Bond Index, which commenced on September 30, 2002, is a sub-index of Barclays Capital Global Aggregate Bond Index that excludes securitized fixed-income investments. Returns presented are calculated using the return data of Barclays Capital Global Aggregate Bond Index through September 29, 2002 and the return data of Barclays Capital Global Aggregate (Excluding Securitized) Bond Index since September 30, 2002. You cannot invest directly in an index.

 

(8)

The Citigroup AAA/AA 1-3 Year Corporate Bond Index is a component of the Citigroup Broad Investment-Grade (BIG) Bond Index. It is market-capitalization weighted and includes bonds rated AAA or AA by Standard & Poor’s or Moody’s with maturities of one to three years and a minimum amount outstanding of $100 million. You cannot invest directly in an index.

 

(9)

The Citigroup A 1-3 Year Corporate Bond Index is a component of the Citigroup Broad Investment-Grade (BIG) Bond Index. It is market-capitalization weighted and includes bonds rated A by Standard & Poor’s or Moody’s with maturities of one to three years and a minimum amount outstanding of $100 million. You cannot invest directly in an index.

 

(10)

The Dow Jones Industrial Average is an average of the stock prices of thirty large companies and represents a widely recognized unmanaged portfolio of common stocks. You cannot invest directly in an index.

 

   See pages 42-45 for Portfolio specific risks.     41   


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PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

PERMANENT PORTFOLIO

MANAGEMENT’S DISCUSSION AND ANALYSIS

Year Ended January 31, 2014

(Unaudited)

   

 

The Permanent Portfolio’s investment objective is to preserve and increase the purchasing power of its shares over the long term. The Portfolio invests fixed target percentages of its net assets in gold, silver, Swiss franc assets, stocks of U.S. and foreign real estate and natural resource companies, aggressive growth stocks and dollar assets, such as U.S. Treasury securities and short-term, high grade corporate bonds. During the year ended January 31, 2014, the Portfolio achieved a total return of -4.12%, net of expenses to average net assets of .72%, as compared to .05% for the Citigroup 3-Month U.S. Treasury Bill Index and 21.52% for the Standard & Poor’s 500 Composite Stock Index, and as compared to an inflation rate as measured by the change in the Consumer Price Index (“CPI-U”), a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services as compiled by the U.S. Bureau of Labor Statistics, of 1.60% over the same period. The Portfolio’s return during the year then ended reflected the negative returns earned on its gold and silver holdings, its natural resource company stocks and its longer term bonds, being only partially offset by the positive returns earned from its aggressive growth and real estate stocks, its shorter term dollar assets and its Swiss Franc assets. Neither the Citigroup 3-Month U.S. Treasury Bill Index return, the Standard & Poor’s 500 Composite Stock Index return nor the change in CPI-U reflect deductions for fees, expenses or taxes.

Mutual fund investing involves risk; loss of principal is possible. The Permanent Portfolio invests in foreign securities, which will involve greater volatility and political, economic and currency risks and differences in accounting methods. The Portfolio will be affected by changes in the prices of gold, silver, U.S. and foreign real estate and natural resource company stocks and aggressive growth stocks.

The following pie chart shows the Permanent Portfolio’s investment holdings by asset class, as a percentage of total net assets as of January 31, 2014.

 

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Allocations are subject to change and should not be considered a recommendation to buy or sell any security within a sector.

 

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PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

SHORT-TERM TREASURY PORTFOLIO

MANAGEMENT’S DISCUSSION AND ANALYSIS

Year Ended January 31, 2014

(Unaudited)

   

 

The Short-Term Treasury Portfolio’s investment objective is to achieve high current income, consistent with safety and liquidity of principal. The Portfolio invests its assets in debt obligations of the U.S. Treasury, at least 80% of which are invested in short-term U.S. Treasury bills and notes with maturities of less than thirteen months, with the balance being invested in U.S. Treasury bonds having a remaining maturity of thirteen months or less. The Portfolio’s dollar-weighted average length to maturity will not exceed ninety days. During the year ended January 31, 2014, the Portfolio achieved a total return of -.61%, net of expenses to average net assets of .69%, as compared to .05% for the Citigroup 3-Month U.S. Treasury Bill Index over the same period. The Portfolio’s return during the year then ended was primarily due to the very low investment returns available on short-term U.S. Treasury securities which were more than offset by the Portfolio’s expenses during the period. The Citigroup 3-Month U.S. Treasury Bill Index does not reflect a deduction for fees, expenses or taxes.

Mutual fund investing involves risk; loss of principal is possible. Investments in debt securities typically decrease in value when interest rates rise. This risk is usually greater for longer-term debt securities.

The following pie chart shows the Short-Term Treasury Portfolio’s investment holdings by days to maturity, as a percentage of investments as of January 31, 2014.

 

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Allocations are subject to change and should not be considered a recommendation to buy or sell any security within a sector.

 

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PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

VERSATILE BOND PORTFOLIO

MANAGEMENT’S DISCUSSION AND ANALYSIS

Year Ended January 31, 2014

(Unaudited)

   

 

The Versatile Bond Portfolio’s investment objective is to achieve high current income. The Portfolio invests at least 80% of its net assets in bonds, which may include debt securities of all types and of any maturity. During the year ended January 31, 2014, the Portfolio achieved a total return of 3.90%, net of expenses to average net assets of .82%, as compared to -1.03% for the Barclays Capital Global Aggregate (Excluding Securitized) Bond Index, .92% for the Citigroup AAA/AA 1-3 Year Corporate Bond Index and 1.53% for the Citigroup A 1-3 Year Corporate Bond Index over the same period. The Portfolio’s return and the returns of the indices during the year then ended were generally lower then in recent years due to rising interest rates during the period. The Portfolio’s return reflects investments in corporate securities having longer durations and greater credit risk than the indices. The returns of the indices do not reflect a deduction for fees, expenses or taxes.

Mutual fund investing involves risk; loss of principal is possible. Investments in debt securities typically decrease in value when interest rates rise. This risk is usually greater for longer-term debt securities. Investments in debt securities are also subject to credit risk, which is the risk that an issuer of debt securities may be unable or unwilling to pay principal and interest when due. Below investment grade bonds involve greater risk of loss because they are subject to greater levels of credit risk.

The following pie chart shows the Versatile Bond Portfolio’s investment holdings by Standard & Poor’s credit rating, as a percentage of investments as of January 31, 2014.

 

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Allocations are subject to change and should not be considered a recommendation to buy or sell any security within a sector.

 

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PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

AGGRESSIVE GROWTH PORTFOLIO

MANAGEMENT’S DISCUSSION AND ANALYSIS

Year Ended January 31, 2014

(Unaudited)

   

 

The Aggressive Growth Portfolio’s investment objective is to achieve high (greater than the stock market as a whole), long-term appreciation in the value of its shares. The Portfolio is fully invested at all times in a portfolio of domestic stocks and stock warrants selected for high profit potential. During the year ended January 31, 2014, the Portfolio achieved a total return of 26.84%, net of expenses to average net assets of 1.20%, as compared to 16.07% for the Dow Jones Industrial Average and 21.52% for the Standard & Poor’s 500 Composite Stock Index over the same period. The Portfolio’s return during the year then ended was primarily due to the Portfolio’s investment selection and the timing of purchases and sales of those investments in relation to fluctuating market values relative to the aforementioned indices. Industry sectors contributing the most appreciation to the Portfolio during the year ended January 31, 2014 included entertainment & leisure, electrical equipment & electronics, pharmaceuticals, aerospace and financial services, while the natural resources sector contributed the most depreciation over the same period. Neither the Dow Jones Industrial Average nor the Standard & Poor’s 500 Composite Stock Index reflect a deduction for fees, expenses or taxes.

Mutual fund investing involves risk; loss of principal is possible. The Aggressive Growth Portfolio’s stock market investments will fluctuate, sometimes rapidly and unexpectedly. Aggressive growth stock investments are subject to greater market risk of price declines, especially during periods when the prices of U.S. stock market investments in general are declining. The Portfolio may also invest in smaller and medium capitalization companies which will involve additional risks, such as limited liquidity and greater volatility.

The following pie chart shows the Aggressive Growth Portfolio’s investment holdings by industry sector, as a percentage of total net assets as of January 31, 2014.

 

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Allocations are subject to change and should not be considered a recommendation to buy or sell any security within a sector.

 

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PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

EXPENSE EXAMPLES

Six Months Ended January 31, 2014

(Unaudited)

   

 

Expense Examples

As a shareholder in one or more of the Fund’s Portfolios, you incur two types of costs: (1) transaction costs, including the $35 one-time account start-up fee; and (2) ongoing costs, including management fees and other Portfolio expenses. The Examples on the following page are intended to help you understand your ongoing costs (in dollars) of investing in the Fund’s Portfolios and to compare these costs with the ongoing costs of investing in other mutual funds.

These Examples are based on an investment of $1,000 invested at July 31, 2013 and held for the entire six months ended January 31, 2014.

Actual Expenses

The first line of each of the tables on the following page provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the six months ended January 31, 2014. 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 Six Months Ended January 31, 2014” to estimate the expenses you paid on your account during the six months ended January 31, 2014.

Hypothetical Example for Comparison Purposes

The second line of each of the tables on the following page provides information about hypothetical account values and hypothetical expenses based on each Portfolio’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which are not the Fund’s Portfolios’ 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 six months ended January 31, 2014. You may use this information to compare the ongoing costs of investing in the Fund’s Portfolios 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 tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as the $35 one-time account start-up fee. Therefore, the second line of the tables are 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, including the $35 one-time account start-up fee, were included, your costs would have been higher.

 

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PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

EXPENSE EXAMPLES

Six Months Ended January 31, 2014

(Unaudited)

   

 

     Beginning
Account Value
July 31, 2013
     Ending
Account Value
January 31, 2014
     Expenses Paid*
During Six
Months Ended
January 31, 2014
 

PERMANENT PORTFOLIO

        

Actual

   $ 1,000.00       $ 1,022.30       $ 3.72   

Hypothetical (5% return before expenses)

     1,000.00         1,021.53         3.72   

SHORT-TERM TREASURY PORTFOLIO

        

Actual

     1,000.00         996.80         3.47   

Hypothetical (5% return before expenses)

     1,000.00         1,021.73         3.52   

VERSATILE BOND PORTFOLIO

        

Actual

     1,000.00         1,026.70         4.19   

Hypothetical (5% return before expenses)

     1,000.00         1,021.07         4.18   

AGGRESSIVE GROWTH PORTFOLIO

        

Actual

     1,000.00         1,136.00         6.41   

Hypothetical (5% return before expenses)

     1,000.00         1,019.21         6.06   

 

  *

Expenses are equal to the Permanent Portfolio’s annualized expense ratio of .73%, the Short-Term Treasury Portfolio’s annualized expense ratio of .69%, the Versatile Bond Portfolio’s annualized expense ratio of .82% and the Aggressive Growth Portfolio’s annualized expense ratio of 1.19%, respectively, multiplied by the applicable Portfolio’s average account value over the period, multiplied by 184/365 (to reflect the one-half year period ended January 31, 2014).

 

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PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

OTHER INFORMATION

(Unaudited)

   

 

Proxy Voting

The Fund’s Portfolios vote proxies relating to their portfolio securities in accordance with the Fund’s Proxy Voting Policies and Procedures. A copy of the Fund’s Proxy Voting Policies and Procedures as well as information regarding how each of the Fund’s Portfolios voted such proxies during the twelve-month period ended June 30, 2013 is available, without charge and upon request, by writing or calling the Fund’s Shareholder Services Office at (800) 531-5142, or by accessing the SEC’s website at http://www.sec.gov.

Quarterly Holdings

Each of the Fund’s Portfolios files its complete schedule of portfolio holdings for its first and third quarters of each fiscal year on the Fund’s Form N-Q. The Fund’s Form N-Qs for such periods, beginning with the quarter ended October 31, 2004, are available on the SEC’s website at http://www.sec.gov. The Fund’s Form N-Qs may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling the SEC at (800) SEC-0330.

 

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PERMANENT PORTFOLIO FAMILY OF FUNDS, INC.

DIRECTORS AND OFFICERS

(Unaudited)

   

 

All of the Fund’s directors and officers may be reached c/o Permanent Portfolio Family of Funds, Inc., 600 Montgomery Street, Suite 4100, San Francisco, California 94111. No director or officer has any family relationship with another and each of the Fund’s directors will hold office until their successors have been duly elected and qualified, or until their earlier resignation, removal, death or disqualification. The Fund’s officers are elected annually by the Fund’s Board of Directors and each officer holds office until their successor has been duly elected and qualified, or until their earlier resignation, removal, death or disqualification. The principal occupation(s) of the Fund’s directors and officers are listed below. The Fund’s Statement of Additional Information includes additional information regarding the Fund’s directors and officers and is available, without charge and upon request, by writing or calling the Fund’s Shareholder Services Office at (800) 531-5142.

 

DAVID P. BERGLAND

Director

age 78

 

Member of the State Bar of California, formerly a sole practitioner specializing in business litigation in Costa Mesa, California, now retired from the active practice of law. Mr. Bergland is also a writer, lecturer and a former Adjunct Professor of Law at Western State University College of Law in Irvine, California. Mr. Bergland has served as a director of the Fund since 1992 and oversees all four of the Fund’s Portfolios.

HUGH A. BUTLER

Director

age 61

 

Now retired, Mr. Butler was formerly Executive Vice President from 2004 through 2006 of the Credit Union Services Division of Fidelity National Information Services, Inc. (formerly Fidelity Information Systems), a publicly-traded provider of software, outsourcing and information technology consulting for the financial services and mortgage industries, majority-owned by Fidelity National, Inc. Previously, Mr. Butler was Chief Executive Officer and Founder of Computer Consultants Corporation, an information systems consulting firm to financial institutions, in Salt Lake City, Utah. Mr. Butler has served as a director of the Fund since 1996 and oversees all four of the Fund’s Portfolios.

ROGER DOEBKE

Director

age 74

 

President, Simplex Realty Services, Inc., a commercial real estate acquisition, development and property management firm located in Orange County, California since 1993. Mr. Doebke has served as a director of the Fund since 2004 and oversees all four of the Fund’s Portfolios.

MICHAEL J. CUGGINO*

Chairman, President, Secretary & Director

age 51

 

A Certified Public Accountant, Mr. Cuggino has served as Chairman of the Board and President of the Fund since 2003, as Treasurer of the Fund from 1993 through 2007, as Secretary of the Fund since 2006 and as a director of the Fund since 1998. He is the manager and sole member (also its President and Chief Executive Officer) of the Fund’s investment adviser. Mr. Cuggino oversees all four of the Fund’s Portfolios.

JAMES H. ANDREWS*

Treasurer

age 59

 

Mr. Andrews has served as Treasurer of the Fund since 2007 and previously served as Assistant Treasurer of the Fund from 2006 through 2007. He has also served as Director of Finance of the Fund’s investment adviser since 2006. Previously, Mr. Andrews was employed in various financial, investment and operational capacities at Blum Capital Partners LP, an investment management firm located in San Francisco, California from 1994 through 2005.

SUSAN K. FREUND*

Chief Compliance Officer

age 59

 

Ms. Freund has served as the Chief Compliance Officer of the Fund and the Fund’s investment adviser since April 2010 and March 2010, respectively. Previously, Ms. Freund served as an independent consultant to various asset management firms from March 2009 through March 2010 and served as President, Secretary, Treasurer and Chief Compliance Officer of the Embarcadero Funds from 2007 through 2009. From 2001 through 2007, Ms. Freund served as Senior Counsel at Bank of the West. Ms. Freund is a member of the State Bar of California.

 

 

 

*

Considered to be an “interested person” within the meaning of the 1940 Act by virtue of, among other considerations, his or her association with the Fund’s investment adviser.

 

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INVESTMENT ADVISER

Pacific Heights Asset Management, LLC

600 Montgomery Street

San Francisco, California 94111

CUSTODIAN

State Street Bank and Trust Company

One Lincoln Street

Boston, Massachusetts 02111

DISTRIBUTOR

Quasar Distributors, LLC

615 East Michigan Street

Milwaukee, Wisconsin 53202

TRANSFER AGENT

U.S. Bancorp Fund Services, LLC

P. O. Box 701

Milwaukee, Wisconsin 53201

(for overnight delivery services,

615 East Michigan Street

Milwaukee, Wisconsin 53202)

(800) 341-8900

INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

Tait, Weller & Baker LLP

1818 Market Street, Suite 2400

Philadelphia, Pennsylvania 19103

SHAREHOLDER SERVICES OFFICE

130 South Brune Street

Bartlett, Texas 76511

(254) 527-3102

(800) 531-5142 Nationwide

www.permanentportfoliofunds.com

Must be preceded or accompanied by a prospectus.

 

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ANNUAL REPORT

January 31, 2014

04/14