(GRAPHICS: Cover page green with background picture of a clock and white letters
of stock indexs)
U.S. GLOBAL ACCOLADE FUNDS
MEGATRENDS FUND
ANNUAL REPORT
June 30, 1997
<PAGE>
(back of cover page)
U.S. GLOBAL ACCOLADE FUNDS
- --------------------------------------------------------------------------------
MegaTrends Fund
ANNUAL REPORT
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June 30, 1997
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Letter to Shareholders 1
Management's Discussion
of Fund Performance 3
Portfolio of Investments 6
Statement of Assets and Liabilities 9
Statement of Operations 10
Statement of Changes in Net Assets 11
Notes to Financial Statements 12
Financial Highlights 15
Report of Independent Accountants 16
<PAGE>
(page 1)
(Graphics: Picture of Frank Holmes)
Dear Shareholder,
We are pleased to present you with the annual report for the MegaTrends Fund
managed by Dr. Stephen Leeb. Welcome to the the U.S. Global Investors family of
funds and thank you for your confidence and trust.
On the following pages you will find financial information about your MegaTrends
Fund, a look at the top portfolio holdings and a report from the fund's manager.
If you have any questions about your account or the information contained in
this report, please call us at 1-800-US-FUNDS. Our investor representatives are
waiting to help you.
Sincerely,
/S/FRANK HOLMES
Frank Holmes
Chairman & CEO
P.S. Visit U.S. Global online at www.usfunds.com.
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(page 3)
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
June 30, 1997
PERFORMANCE
AVERAGE ANNUAL PERFORMANCE
Inception 5 Year 1 Year
---------------------------------------------------
MegaTrends
inception 10/21/91 7.3% 9.0% 20.7%
---------------------------------------------------
S&P 500 18.6% 19.8% 34.7%
(linear graph plotted from date in following table)
- --------------------------------------------------------------------------------
6/30/97 = 78 10.59% 18.67%
6/30/92 = 18 10.96% 19.76%
6/30/96 = 66 21.72% 34.68%
MegaTrends Fund S&P 500
10/21/91 $10,000.00 $10,000.00
10/31/91 $9,990.00 $10,134.15
11/30/91 $9,880.00 $9,726.93
12/31/91 $10,423.30 $10,837.49
1/31/92 $10,373.14 $10,635.77
2/29/92 $10,503.56 $10,773.46
3/31/92 $10,413.27 $10,564.18
4/30/92 $10,503.56 $10,874.02
5/31/92 $10,533.65 $10,927.19
6/30/92 $10,550.31 $10,764.68
7/31/92 $10,723.43 $11,204.09
8/31/92 $10,703.06 $10,975.21
9/30/92 $10,845.63 $11,104.22
10/31/92 $10,886.37 $11,142.34
11/30/92 $11,039.12 $11,520.69
12/31/92 $11,071.08 $11,662.03
1/31/93 $11,122.43 $11,759.43
2/28/93 $11,142.98 $11,919.65
3/31/93 $11,214.87 $12,170.98
4/30/93 $11,112.16 $11,876.80
5/31/93 $11,204.59 $12,193.72
6/30/93 $11,266.22 $12,229.31
7/31/93 $11,266.22 $12,180.08
8/31/93 $11,390.93 $12,641.21
9/30/93 $11,401.33 $12,544.26
10/31/93 $11,370.15 $12,803.58
11/30/93 $11,266.22 $12,681.54
12/31/93 $11,388.75 $12,834.86
1/31/94 $11,675.33 $13,270.80
2/28/94 $11,473.66 $12,910.93
3/31/94 $11,378.14 $12,349.13
4/30/94 $11,208.31 $12,507.34
5/31/94 $11,325.07 $12,711.80
6/30/94 $11,096.87 $12,400.73
7/31/94 $11,183.14 $12,807.64
8/31/94 $11,323.33 $13,331.53
9/30/94 $11,215.49 $13,005.79
10/31/94 $11,247.85 $13,297.56
11/30/94 $10,902.75 $12,813.88
12/31/94 $11,037.55 $13,003.71
1/31/95 $11,114.51 $13,340.70
2/28/95 $11,444.32 $13,860.10
3/31/95 $11,631.21 $14,268.43
4/30/95 $11,895.05 $14,688.27
5/31/95 $12,279.83 $15,274.45
6/30/95 $12,450.23 $15,628.61
7/31/95 $12,583.98 $16,146.66
8/31/95 $12,617.42 $16,186.96
9/30/95 $12,751.18 $16,869.69
10/31/95 $12,795.76 $16,809.42
11/30/95 $13,263.90 $17,546.49
12/31/95 $13,710.52 $17,884.48
1/31/96 $13,939.22 $18,492.48
2/29/96 $13,984.96 $18,664.52
3/31/96 $13,973.53 $18,844.22
4/30/96 $14,293.71 $19,121.79
5/31/96 $14,568.15 $19,614.09
6/30/96 $14,579.70 $19,688.87
7/31/96 $13,764.68 $18,819.50
8/31/96 $14,165.72 $19,217.06
9/30/96 $14,631.44 $20,297.68
10/31/96 $15,355.90 $20,857.29
11/30/96 $16,015.67 $22,432.46
12/31/96 $15,821.62 $21,988.09
1/31/97 $16,651.56 $23,361.06
2/28/97 $16,309.05 $23,544.46
3/31/97 $15,953.36 $22,578.86
4/30/97 $16,203.66 $23,925.60
5/31/97 $17,310.25 $25,381.18
6/30/97 $17,746.30 $26,517.63
- --------------------------------------------------------------------------------
MegaTrends invests principally in equity securities to meet its primary
investment objective: long-term capital appreciation consistent with the
preservation of capital For the year ended June 30, 1997, MegaTrends had a
return of 20.72% compared with 34.70% for the Standard & Poor's 500 Index.
THE YEAR IN REVIEW
Performance of the U.S. economy and growth of the domestic equity market for an
extended period has been nothing short of extraordinary. Highlights of this past
year include mild inflation, consistent and better-than-expected earnings gains,
increased employment and declining unemployment, continued improvement in
productivity, and tenacity of the bull market that continued to hit record
highs.
As always, we experienced periods of concern. The trip to long-term investment
profits is rarely smooth sailing. The stock market's tumble earlier this spring
was enough to make even the heartiest investor a little seasick. After peaking
in mid-March, the Dow Jones Industrial Average dropped nearly 700 points in five
swift weeks. Investors were also concerned about the exceptional strength of the
dollar against most foreign currencies, an unnerving uptick in interest rates,
and the unexciting performance of many fixed income investments.
Market leadership continued to be very narrowly focused, with a handful of
large-capitalization, blue chip stocks (such as those represented in the S&P 500
Index) moving ahead relentlessly. Most small- and mid-cap stocks did not fare as
well as the large caps.
<PAGE>
(page 4)
INVESTMENT HIGHLIGHTS
We continue to believe that, over the next several years, the best investment
opportunities will come from companies best positioned to take advantage of
strong and probably inflationary economic growth. We have positioned the Fund to
take advantage of strong worldwide growth.
Schumberger Ltd., a leading player in the oil and gas extraction and services
industry, is one of the Fund's largest investments. Because the energy industry
is currently operating above 95 percent of capacity, new energy supplies are
going to be needed even if oil prices do not rise. Rising oil prices would be
icing on the cake for oil and gas related companies. In other words, we expect
profits for oil and gas related companies to grow even if oil prices are
flat--but to grow rapidly if oil prices rise.
Similarly, real estate holdings should do particularly well if inflation picks
up. MegaTrends has made a substantial investment in BRE Properties, Inc., a real
estate investment trust (REIT). The management of BRE Properties, Inc. has
proven its mettle in the worst of times for the real estate industry. The
company avoided dividend cuts during the real estate slump of the late 1980s and
1990s.
------------------------------------------------------
TOP 10 HOLDINGS BASED ON TOTAL INVESTMENTS
======================================================
Berkshire Hathaway, Inc., Class A 5.56%
Holding Company
------------------------------------------------------
Cyprus Amax Minerals Company 4.86%
Metal Mining
------------------------------------------------------
Sotheby's Holdings, Inc., Class A 4.84%
Business Service
------------------------------------------------------
Hartford Financial Services Group, Inc. 4.22%
Insurance
------------------------------------------------------
Shlumberger Ltd. 3.93%
Oil & Gas Extraction Services
------------------------------------------------------
Telephone & Data Systems, Inc. 3.91%
Telecommunications
------------------------------------------------------
BRE Properties, Inc. Class A 3.90%
Real Estate Investment Trust
------------------------------------------------------
Newmont Mining Corporation 3.67%
Metal Mining
------------------------------------------------------
Rowan Companies, Inc. 3.54%
Oil & Gas Extraction Services
------------------------------------------------------
Chevron Corporation 3.48%
Petroleum Refining
------------------------------------------------------
Other 58.09%
======================================================
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(page 5)
TOP 5 INDUSTRIES -
BASED ON TOTAL INVESTMENTS (GRAPH - chart reflecting the following)
7.16% Insurance
10.82% Oil & Gas Extraction & Services
5.56% Holding Company
10.24% Metal Mining
7.22% Business Services
CURRENT OUTLOOK
Recent market volatility should convince investors that big cap stocks are not a
one-way street to riches. Even more important, the market volatility should
prove to policy makers--in particular the Federal Reserve--that stocks and the
economy are very vulnerable to even small rises in short term interest rates. As
a result, the Fed will be forced to let the economy grow at a strong and
somewhat inflationary clip. Growth in the U.S. will be accompanied by growth in
most other major countries in the world. For example, most southeast Asia
economies are currently expanding at double digit rates, which they can probably
sustain in the near future. In Europe, where key countries such as Germany are
suffering their highest unemployment rates since the 1930s, the case for
inflation and strong growth is absolutely compelling. We expect the global
companies we own to feel the effect of these economies.
Although the Fund will do best as growth and inflation accelerate, the nature of
our selections is such that if, contrary to our expectations, growth is moderate
and inflation remains in the 3 percent area, our stocks should still perform
well.
While clearly we cannot promise that we will be right about long-term trends, we
do promise we will continue to monitor very closely this ever changing world of
ours. We will react quickly and decisively to any sign of important changes.
<PAGE>
page 6)
================================================================================
PORTFOLIO OF INVESTMENTS June 30, 1997
================================================================================
COMMON STOCKS 88.20% SHARES VALUE
AIRCRAFT 1.66%
................................................................................
The Boeing Company 8,000 $ 424,500
APPAREL 2.06%
................................................................................
Nautica Enterprises, Inc. 20,000 528,750*
BEVERAGES 2.64%
................................................................................
The Coca-Cola Company 10,000 675,000
BUILDING PRODUCTS 3.41%
................................................................................
Royal Group Technologies Ltd. 33,000 874,500
BUSINESS SERVICES 7.18%
................................................................................
Fluor Corporation 11,000 607,063
Sotheby's Holdings, Inc., Class A 73,000 1,231,875
---------
1,838,938
COMMUNICATION EQUIPMENT 3.43%
................................................................................
Sony Corporation, ADR 10,000 880,000
COMPUTERS & DATA PROCESSING 2.47%
................................................................................
Microsoft Corporation 5,000 631,875*
ELECTRONICS & COMPONENTS 3.32%
................................................................................
Intel Corporation 6,000 850,875
ENTERTAINMENT 2.82%
................................................................................
The Walt Disney Company 9,000 722,250
FARMING .97%
................................................................................
Pioneer Hi-Bred International, Inc. 3,100 248,000
FINANCIAL SERVICES 2.78%
................................................................................
Fannie Mae 16,300 711,088
FORESTRY 2.60%
................................................................................
Weyerhaeuser Company 12,800 665,600
HEALTHCARE EQUIPMENT 2.91%
................................................................................
ThermoTrex Corporation 30,000 744,375*
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(page 7)
================================================================================
PORTFOLIO OF INVESTMENTS
================================================================================
COMMON STOCKS SHARES VALUE
HOLDING COMPANY 5.53%
................................................................................
Berkshire Hathaway, Inc., Class A 30 $ 1,416,000*
HOUSEHOLD APPLIANCES 2.55%
................................................................................
General Electric Company 10,000 653,750
INSURANCE 7.12%
................................................................................
American International Group, Inc. 5,000 746,875
Hartford Financial Services Group, Inc. 13,000 1,075,750
---------
1,822,625
METAL MINING 10.19%
................................................................................
Barrick Gold Corporation 14,000 308,000
Cyprus Amax Minerals Company 50,500 1,237,250
Newmont Mining Corporation 24,000 936,000
TVX Gold, Inc. 24,000 127,500*
--------
2,608,750
MOTOR VEHICLES 1.28%
................................................................................
Chrysler Corporation 10,000 328,125
OIL & GAS EXTRACTION & SERVICES 10.76%
................................................................................
Apache Corporation 12,000 390,000
ENSCO International Incorporated 8,800 464,200*
Rowan Companies, Inc. 32,000 902,000*
Schlumberger Ltd. 8,000 1,000,000
----------
2,756,200
PETROLEUM REFINING 3.46%
................................................................................
Chevron Corporation 12,000 887,250
REAL ESTATE INVESTMENT TRUST 5.17%
................................................................................
BRE Properties, Inc., Class A 39,500 992,437
New Plan Realty Trust 15,000 330,937
----------
1,323,375
TELECOMMUNICATIONS 3.89%
................................................................................
Telephone & Data Systems, Inc. 26,200 995,600
- --------------------------------------------------------------------------------
Total Common Stocks 22,587,425
- --------------------------------------------------------------------------------
(cost $17,725,193)
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(page 8)
================================================================================
PORTFOLIO OF INVESTMENTS
================================================================================
PRINCIPAL
REPURCHASE AGREEMENT 11.26% AMOUNT VALUE
Joint Repurchase Agreement Account:
PaineWebber, Inc., 6/30/97, 5.95%,
due 7/1/97, repurchase price $2,885,716,
collateralized by U.S. Treasury Note,
6.0%, 6/30/99 held in a joint
repurchase account (cost $2,885,239) $2,885,239 $ 2,885,239
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS 99.46% 25,472,664
- --------------------------------------------------------------------------------
(cost of $20,610,432)
Other assets and liabilities, net 0.54% 137,447
---------
NET ASSETS 100% $25,610,111
-----------
* Non-income producing
See accompanying notes to financial statements.
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(PAGE 9)
================================================================================
STATEMENTS OF ASSETS AND LIABILITIES June 30, 1997
================================================================================
Investments, at identified cost $20,610,432
ASSETS
................................................................................
Investments, at value $25,472,664
Cash 4,276
Receivables:
Investments sold 175,354
Dividends 23,873
Interest 477
Capital shares sold 12,567
Other 724
................................................................................
TOTAL ASSETS 25,689,935
................................................................................
LIABILITIES
................................................................................
Payables:
Capital shares redeemed 10,559
To manager and affiliates 28,769
Dividends and distribution 55
Accounts payable and accrued expenses 40,441
................................................................................
TOTAL LIABILITIES 79,824
................................................................................
NET ASSETS $25,610,111
===========
NET ASSETS CONSIST OF:
................................................................................
Paid in capital $18,146,460
Undistributed net investment income (loss) (55)
Accumulated net realized gain on investments 2,601,474
Net unrealized appreciation of investments 4,862,232
-----------
Net assets applicable to capital shares outstanding $25,610,111
===========
Capital shares outstanding, an unlimited number
of no par shares authorized 1,903,792
-----------
NET ASSET VALUE, PER SHARE $13.45
===========
See accompanying notes to financial statements.
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(PAGE 10)
================================================================================
STATEMENT OF OPERATIONS Year Ended June 30, 1997
================================================================================
NET INVESTMENT INCOME
Income:
Dividends.......................................$336,323
Interest and other...............................160,883
--------
Total Income.....................................497,206
Expenses:
Management fee...................................253,386
Transfer agent fees and expenses..................49,994
Administrative service fees.......................29,508
Accounting service fees and expenses..............34,986
Legal and professional fees.......................35,230
Distribution plan expenses........................38,207
Custodian fees.....................................4,553
Shareholder reporting..............................7,283
Registration fees.................................19,554
Trustees' fees and expenses.......................12,800
Amortization of organizational costs...............2,534
Miscellaneous......................................8,305
Total expenses before reductions.................496,340
Expenses reimbursed..............................(20,988)
Net Expenses................................475,352
Net Investment Income..................................21,854
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Realized gain from investments.................3,046,765
Unrealized appreciation of investments.........1,777,070
---------
Net Realized and Unrealized Gain on Investments.....4,823,835
Net Increase in Net Assets Resulting
From Operations $4,845,689
===========
See accompanying notes to financial statements.
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(page 11)
================================================================================
STATEMENT OF CHANGES IN NET ASSETS
================================================================================
Years Ended June 30, 1997 and 1996
1997 1996
INCREASE (DECREASE) IN NET ASSETS
From investment operations:
................................................................................
Net investment income $ 21,854 $ 396,853
Net realized gain 3,046,765 4,277,995
Net unrealized appreciation 1,777,070 133,795
---------- ---------
NET INCREASE IN NET ASSETS FROM
INVESTMENT OPERATIONS 4,845,689 4,808,643
Distributions to shareholders:
................................................................................
From net investment income (21,909) (399,897)
From net capital gains (426,654) (3,618,910)
In excess of net capital gains --- (18,637)
---------- -----------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (448,563) (4,037,444)
From capital share transactions:
................................................................................
Proceeds from shares sold 1,955,228 1,464,215
Distributions reinvested 437,124 3,933,064
Paid-in capital portion of short-term trading fee 2,420 ---
--------- ----------
2,394,772 5,397,279
Cost of shares redeemed (9,127,072) (11,199,062)
----------- ------------
NET DECREASE IN NET ASSETS
FROM CAPITAL SHARE TRANSACTIONS (6,732,300) (5,801,783)
................................................................................
NET INCREASE (DECREASE) IN NET ASSETS (2,335,174) (5,030,584)
................................................................................
NET ASSETS
Beginning of year 27,945,285 32,975,869
................................................................................
End of year $25,610,111 $27,945,285
................................................................................
Undistributed net investment income (loss) ($55) $0
----------- -----------
Capital Share Activity
................................................................................
Shares sold 157,711 123,208
Shares reinvested 36,380 344,965
Shares redeemed (769,632) (941,635)
---------- ---------
NET SHARE ACTIVITY (575,541) (473,462)
========== =========
See accompanying notes to financial statements.
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(page 12)
================================================================================
NOTES TO FINANCIAL STATEMENTS June 30, 1997
================================================================================
Note 1: SIGNIFICANT ACCOUNTING POLICIES
MegaTrends Fund (the "Fund") is a diversified, open-end management investment
company registered under the Investment Company Act of 1940. Effective November
18, 1996, the Fund was reorganized as a portfolio of U.S. Global Accolade Funds
(the "Trust"), a Massachusetts business trust. The reorganization was a tax-free
exchange, where shareholders received one share of MegaTrends for each share of
The Leeb Personal Finance Fund, the predecessor fund.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
A. SECURITY VALUATIONS
The Fund values investments traded on national or international securities
exchanges and NASDAQ quoted securities at the last sales price reported by the
security's primary exchange at the time of daily valuation. Domestically listed
and NASDAQ securit ies for which no sale was reported, over-the-counter
securities and corporate bonds are valued at the mean between the last reported
bid and ask prices obtained from one or more dealers making markets in the
securities. Short-term investments with effective maturities of sixty days or
less at the date of purchase are valued at amortized cost, which approximates
market value. The trustees determine fair value for securities if market
quotations are not available or the security is subject to legal restrictions on
resale.
B. SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are accounted for on trade date. Realized gains and losses
from security transactions are determined on an identified-cost basis. Dividend
income is recorded on the ex-dividend date. Interest income, accretion of
discount and amortization of premium are recorded on an accrual basis.
C. REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements with recognized financial
institutions or registered broker-dealers and, in all instances, hold, as
collateral, underlying securities with a value exceeding the total repurchase
price, including accrued interest. The Fund uses a joint repurchase agreement
account with other Funds under common management where uninvested cash is
collectively invested in repurchase agreements, and each participating Fund owns
an undivided interest in the account.
D. FEDERAL INCOME TAXES
The Fund intends to continue to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute all
of its taxable income to shareholders. Accordingly, no provision for federal
income taxes is required.
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(page 13)
================================================================================
NOTES TO FINANCIAL STATEMENTS
================================================================================
E. ORGANIZATIONAL COSTS
Costs incurred in organizing the Fund were capitalized and amortized on a
straight-line basis over a 60-month period.
F. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
The Fund records dividends and distributions to shareholders on the ex-dividend
date. Distributions are determined in accordance with income tax regulations
that may differ from generally accepted accounting principles. Accordingly,
periodic reclassifications are made within the Fund's capital accounts to
reflect income and gains available for distribution under income tax
regulations.
The Fund makes distributions from net investment income semi-annually and from
realized capital gains at least annually.
G. EXPENSES
The Fund bears expenses incurred specifically on its behalf plus an allocation
of its share of Trust level expenses. Short-term trading fees collected from
temporary investors in the Fund are applied as a reduction of expenses to the
extent of such related cost; any excess is credited as paid-in capital. Expense
offset arrangements have been made with the Fund's custodian so the custodian
fees are paid indirectly by credits earned on the Fund's cash balances. Such
deposit arrangements are an alternative to overnight investments.
H. USE OF ESTIMATES IN FINANCIAL STATEMENT PREPARATION
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
NOTE 2: RELATED PARTY TRANSACTIONS
Effective with the reorganization on November 18, 1996, the Fund entered into
contracts with the new investment manager and its affiliated service providers.
U.S. Global Investors, Inc. (the "Manager"), under an investment advisory
agreement with the Trust in effect through October 30, 1997, furnishes
management and investmentadvisory services and, subject to the supervision of
the Trustees, directs the inv estments of the Fund according to its investment
objectives, policies and limitations. The Manager has contracted with Money
Growth Institute, Inc. to serve as Sub-Advisor in the execution of the Manager's
investment responsibilities. The Manager also furnishes
<PAGE>
(PAGE 14)
================================================================================
NOTES TO FINANCIAL INSTITUTIONS
================================================================================
all necessary office facilities, business equipment and personnel for
administering the affairs of the Trust. Franko E. Holmes, a trustee of the Fund,
is the controlling owner of the Manager.
The Fund pays a management fee at an annual rate of 1% of average net assets.
Fees are accrued daily and paid monthly.
United Shareholder Services, Inc. ("USSI"), a wholly owned subsidiary of the
Manager, is transfer agent and accounting service agent for the Fund. The Fund
pays an annual fee based on number of shareholder accounts for transfer agency
services. Certain account fees are paid directly by shareholders to the transfer
agent, which, in turn, reduces its charge to the Fund. For maintaining the books
and records of the Fund and calculating the daily net asset values, USSI is paid
a fee based on Fund net assets subject to a minimum fee. Additionally, the
Manager is reimbursed at cost for in-house legal services.
Effective November 18, 1996, the Fund adopted a Distribution Plan under Rule
12b-1 of the Investment Company Act of 1940 that allows an annual fee of up to
.25% of its average net assets to be used for, or to reimburse the Manager for,
expenditures in connection with sales and promotional services related to the
distribution of the Fund's shares.
Brimberg & Co., L.P., a broker-dealer affiliate of the Sub-Advisor, received
$97,945 representing all commissions paid by the Fund on purchases and sales of
securities during the year.
During the year ended June 30, 1997, A & B Mailers, Inc., a wholly owned
subsidiary of the Manager, was paid $4,603 for mailing services provided to the
Fund.
The two independent trustees each receive $8,000 annually as compensation for
serving on the board, plus $500 per each meeting attended. The fees are
allocated among the four portfolios in the Trust.
The former administrative services agent, shareholder servicing and transfer
agent and the accounting services agent for the Fund were affiliates of the
former manager. Fees for administrative services, which terminated with the
change in Manager, were based on the Fund's average net assets. For the period
from July 1 through November 17, 1996, the former manager reimbursed the Fund
$20,988 for fees and expenses.
NOTE 3 INVESTMENT ACTIVITY
Purchases and sales of long-term securities for the year were $13,735,317 and
$18,778,767, respectively.
The federal income tax basis of securities owned at June 30, 1997 was
$20,614,787. The tax basis components of net unrealized appreciation and
depreciation were $5,405,772 and $547,895, respectively.
<PAGE>
(PAGE 15)
================================================================================
FINANCIAL HIGHLIGHTS June 30, 1997
================================================================================
For a capital share outstanding during each year ended June 30,
1997* 1996 1995 1994 1993
...............................................................................
Net asset value, beginning of year $11.27 $11.17 $10.29 $10.84 $10.36
...............................................................................
Investment Activities
Net investment income .01 .17 .28 .19 .15
Net realized and unrealized gain
(loss) 2.39 1.72 .95 (.35) .55
----- ---- ---- ----- ----
Total from investment activities 2.40 1.89 1.23 (.16) .70
----- ---- ---- ----- ----
Distributions
From net investment income (.01) (.17) (.28) (.19) (.15)
From net realized gains (.21) (1.61) --- (.20) (.07)
In excess of net realized gains --- (.01) (.07) --- ---
----- ----- ----- ----- ----
Total distributions (.22) (1.79) (.35) (.39) (.22)
................................................................................
Net asset value, end of period $13.45 $11.27 $11.17 $10.29 $10.84
................................................................................
Total Return (excluding account fees) 20.72% 17.10% 12.20% (1.50)% 6.79%
Ratios to Average Net Assets (a):
Net investment income .09% 1.30% 2.36% 1.65% 1.60%
Total expenses 1.97% 2.10% 1.98% 1.81% 1.95%
Expenses reimbursed or offset (.09)% (.60)% (.48)% (.31)% (.45)%
Net expenses 1.88% 1.50% 1.50% 1.50% 1.50%
Average commission rate paid $.0800 n/a n/a n/a n/a
Portfolio turnover rate 62% 115% 163% 143% 83%
Net assets, end of year (in thousands) $25,610 $27,945 $32,976 $45,523 $58,955
* Effective November 18, 1996, the Fund changed to a new investment manager.
(a) Expenses reimbursed or offset reflect reductions to total expenses, as
discussed in the notes to the financial statements. Such amounts would
decrease the net investment income ratio had such reductions not occurred.
See accompanying notes to financial statements.
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(PAGE 16)
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REPORT OF INDEPENDENT ACCOUNTANTS June 30, 1997
================================================================================
TO THE TRUSTEES AND SHAREHOLDERS OF U.S. GLOBAL ACCOLADE FUNDS
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of MegaTrends Fund (the "Fund") (one
of the portfolios constituting the U.S. Global Accolade Funds) at Juneo 30,
1997, and the results of its operations, the changes in its net assets and the
financial highlights for the year then ended, in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audit. We conducted our audit
of these financial statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit, which included confirmation of securities at June 30, 1997 by
correspondence with the custodian, provides a reasonable basis for the opinion
expressed above. The financial statements for the year ended June 30, 1996
including the financial highlights for each of the four years in the period then
ended, were examined by other independent accountants whose report dated July
19, 1996 expressed an unqualified opinion on those financial statements and
financial highlights.
Price Waterhouse LLP
San Antonio, Texas
August 20, 1997
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(page 17)
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ADDITIONAL FEDERAL TAX INFORMATION FOR
CORPORATE SHAREHOLDERS (unaudited)
The Dividends Received Deduction is available to
corporate shareholders on 6.7% of the ordinary
income dividends paid by the Fund during the year
ended June 30, 1997.
CHANGE IN INDEPENDENT ACCOUNTANTS
With MegaTrends' merger into the Trust, the Board
appointed Price Waterhouse LLP as the new
independent accountants for the year ended June 30,
1997. The Fund received unquallified opinions on
its financial statements in this annual report.
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(company logo)
U.S. Global Investors
P.O. Box 781234 San Antonio, Texas 78278-1234
1-800-US-FUNDS
