[GRAPHIC: NEWSPAPER LISTING OF STOCKS, SHADED IN BACKGROUND]
U.S. GLOBAL ACCOLADE FUNDS
BONNEL GROWTH FUND
ANNUAL REPORT
SEPTEMBER 30, 1997
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U.S. Global Accolade Funds
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Bonnel Growth Fund
Annual Report
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September 30, 1997
TABLE OF CONTENTS
Letter to Shareholders 1
Management's Discussion
of Fund Performance 2
Portfolio of Investments 5
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>
[GRAPHIC: PHOTOGRAPH OF FRANK HOLMES, CHAIRMAN AND CEO]
Dear shareholder,
Thank you for investing with the Bonnel Growth Fund, one of the exciting and
dynamic funds in the U.S. Global Investors family. The fund celebrated its third
birthday this past October. As discussed in the annual report, Bonnel is
changing its fiscal year to end on October 31. At the end of December you will
be receiving another Bonnel Growth Fund report: part of a new combined report
for all four of the U.S. Global Accolade Funds. On the following pages, Art
Bonnel shares with you his insights on the markets and his Fund's performance.
As new opportunities have opened up worldwide we have expanded our investment
focus. These new opportunities have inspired us to open several new funds for
you. The Adrian Day Global Opportunity Fund invests for growth in blue-chip and
emerging companies throughout the world. The Regent Eastern European Fund seeks
out the most promising investments in Eastern Europe and the former Soviet
Union.
It's easy to open a new account in these funds or to exchange into them. It's
just as easy to open a new account in the U.S. Government Securities Savings
Fund, which was ranked #2 by Lipper Analytical for five year performance*. In
today's market environment, a fund like this can balance your portfolio for the
goal of protecting your profits and savings from market downturns while still
earning you one of the highest government only money market yields available in
America.
Ideal for the long-term investor, the Bonnel Growth Fund has great potential for
superior long term performance. Remember that its growth strategy works best for
patient investors willing to stay invested through inevitable short-term
corrections.
If you would like to add to your account, it takes no more than a phone call to
do so. Just call 1-800-US-FUNDS or 1-800-873-8637 to make a telephone purchase.
Thank you for investing with U.S. Global Investors.
Sincerely,
/s/ Frank Holmes
Frank Holmes
Chairman & CEO
P.S. Visit U.S. Global online at www.usfunds.com.
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*Our money market funds, like all mutual funds, are not insured or guaranteed by
the U.S. government. Money market funds are managed to maintain a stable $1.00
share price; however there is no guarantee that they will be able to do so. The
U.S. Government Securities Savings Fund ranked #2 out of 122 government only
money market funds according to Lipper Analytical for the 5-year period ending
9/30/97. The Fund was ranked #4 for the 1-year period ending 9/30/97. For more
complete information about U.S. Global Investors' funds, including charges and
expenses, call 1- 800-US-FUNDS or visit our Web site at www. us-global.com for a
free prospectus. Read it carefully before you invest or send money. The
prospectus details the special risks, including the political, economic and
currency risks of investing in emerging markets.
1
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MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
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SEPTEMBER 30, 1997
INTRODUCTION
Recently Bonnel Growth Fund celebrated its third birthday. The Fund currently
focuses on mid-cap growth issues in three major sectors: health care,
technology and retailing. More growth is found in these industries than most
others. Our primary objective is long term capital appreciation.
PERFORMANCE
AVERAGE ANNUAL PERFORMANCE*
As of 9/30/97. Inception 10/17/94.
-----------------------------------------
1 YEAR SINCE INCEPTION
ANNUALIZED
-----------------------------------------
BONNEL GROWTH 28.7% 32.9%
S&P 500 40.4% 30.4%
RUSSELL 2000 31.0% 21.5%
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
BONNEL S&P 500 RUSSELL 2000
------ ------- ------------
10/17/94 100 100 100
12/30/94 100.9 99.98 98.19194
3/31/95 109.42 109.70 102.2748
6/30/95 126.77 120.16 111.2386
9/30/95 148.74 129.70 121.73
12/31/95 146.53 137.51 123.9236
3/31/96 157.34 144.89 129.729
6/30/96 175.52 151.38 135.867
9/30/96 180.14 156.06 135.8552
12/31/96 187.46 169.06 142.2167
3/31/97 163.18 173.60 134.3531
6/30/97 195.52 203.89 155.4575
9/30/97 231.78 219.15 177.9896
*Past performance does not guarantee future
performance. Investment return and principal
value may fluctuate so that you shares, when
redeemed, may be worth more or less than their
original cost.
In our semi-annual report, the Fund underperformed both the S&P 500 Index and
the Russell 2000 Index. However, over the past six months the Fund
outperformed both indices. In fact, the Fund was up 42.0% for the last six
months vs. 26.2% for the S&P and 32.5% for the Russell 2000. For the past 12
months the Fund's total return was 28.7%: the S&P's was 40.4% and the Russell
was 31.0%. Money seems to be flowing into growth issues once again and
hopefully this trend will continue.
PORTFOLIO PROFILE
We are pleased to report that the Fund had net assets of $117.9 million as of
September 30 and our expense ratio is now down to 1.77%. This ratio is very
positive for shareholders, since fixed costs are being spread over a larger
asset base, thus reducing the cost to each investor. At year end we were
fully invested with less than 1% cash holdings.
THE YEAR IN REVIEW
In the past 12 months the Federal Reserve Board raised interest rates a mere
25 basis points. Federal Funds have averaged 5.5% or lower for more than two
years. As long as the Federal Reserve doesn't raise rates, the economy and
the stock market should continue to do very well. The dollar has been strong.
This makes foreign goods attractive and U.S. goods more expensive which holds
down inflation. The commodity indices have shown no upside pressure. It's a
great time to have investments in the stock market. There is no raging
inflation, interest rates are stable and the economy is sound.
2
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During the third quarter of 1996 and the first quarter of this year, most
money went into the index funds and very large capitalization stocks. As you
know, the Bonnel Growth Fund focuses on mid-cap growth issues. As a result,
the Fund did not produce great gains. Yes, we own Microsoft, Intel and Dell
Computer, but they are only three of more than one hundred issues in the
Fund. Although we did not keep up with the averages, we did not change our
investment style. Patient investors were rewarded by holding on. A secret to
success in the market is to remain committed to your investment vector.
Investors need to remember that the true genius to investing is recognizing
the direction of the trend and not trying to pick sector tops and bottoms.
INVESTMENT HIGHLIGHTS
The Fund has attempted to maintain diversity while looking for quality
growth. One issue which has treated us well during the past year is
Brightpoint. It was purchased in January and we received a five for four
stock split. The company is a distributor of a wide selection of wireless
communications and accessory products, such as batteries, battery eliminators
and chargers, cases, antennas, and "hands free" kits.
TOP 10 HOLDINGS BASED ON TOTAL INVESTMENTS
--------------------------------------------
SMART MODULAR TECHNOLOGIES, INC. ... 3.17%
Computers & Data Processing
DELL COMPUTER CORPORATION .......... 2.87%
Computers & Data Processing
INTEL CORPORATION .................. 2.35%
Semiconductors
SEMTECH CORPORATION ................ 2.34%
Semiconductors
SOLECTROM CORPORATION .............. 2.26%
Computers & Data Processing
MICROSOFT CORPORATION .............. 2.24%
Computer Software
NORTHERN TELECOM LIMITED ........... 2.20%
Telecommunications
MICREL, INC. ....................... 2.15%
Semiconductors
DALLAS SEMICONDUCTOR CORP. ......... 1.90%
Semiconductors
GENERAL DYNAMICS CORPORATION ....... 1.85%
Aircraft
Other .............................. 76.67%
3
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Another interesting company is Consolidated Graphics. This was purchased in
October 1996 and with this issue we received a two for one stock split. It
operates printing companies in many states including California, Oregon,
Texas, New York and Virginia to name a few. They provide general commercial
printing services related to the production of annual reports, training
manuals, product brochures, direct mail pieces, catalogs, and other
promotional materials. As a reminder, all of our investments are constantly
being evaluated and any mentioned here should not be taken as a
recommendation.
TOP 5 INDUSTRIES -
BASED ON TOTAL INVESTMENTS
[CHART REFLECTING DATA IN TABLE BELOW]
17.25% Semiconductors
12.41% Computers & Data Processing
10.69% Computer Software
9.27% Business Services
7.89% Healthcare Equipment and Services
CURRENT OUTLOOK
Our current outlook for the coming year is very positive. As mentioned above,
the U.S. economy is progressing in a stable fashion. Technology will continue
to make advances which will lead to further advances. We are in a
never-ending cycle. Americans are very creative. Computers are getting
faster, modem speeds are increasing at the speed of light which will open new
markets in the Internet, and create demand for newer and better accessories.
In health care, seldom a day goes by without some new discovery or advance in
medicine. I predict that within twenty years science will be able to extend
our life expectancy by at least twenty to thirty years. The best part of that
will be the quality of life associated with the additional years we will be
given. Of course this could make your investment in the Bonnel Growth Fund an
even better choice, since growth of principal will be needed to maintain the
quality of life to which we are becoming accustomed.
Thank you for your support. You have many choices of mutual funds in which to
invest and I appreciate your support as a shareholder in the Bonnel Growth
Fund and U.S. Global Investors. We will continue to work hard to find what we
consider to be good quality investments for the fund.
4
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PORTFOLIO OF INVESTMENTS
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SEPTEMBER 30, 1997
COMMON STOCKS 99.93% SHARES VALUE
AIRCRAFT 2.34%
................................................................................
General Dynamics Corporation 25,000 $2,178,125
Sundstrand Corporation 10,000 576,250
----------
2,754,375
APPAREL 3.81%
................................................................................
Dress Barn, Inc. 10,000 240,000*
Gap, Inc. 30,000 1,501,875
Intimate Brands, Inc. 10,000 233,125
Jones Apparel Group, Inc. 15,000 810,000*
Men's Wearhouse, Inc. 5,000 186,250*
Pacific Sunwear of California 5,000 205,000*
Tommy Hilfiger Corporation 20,000 998,750*
Warnaco Group, Inc. Class A 10,000 317,500
---------
4,492,500
BALL BEARINGS .34%
................................................................................
Timken Company 10,000 400,625
BUILDING PRODUCTS 1.07%
................................................................................
Centex Construction Products 10,000 296,250
Martin Marietta Materials, Inc. 15,000 540,000
Texas Industries, Inc. 10,000 424,375
---------
1,260,625
BUSINESS SERVICES 9.28%
................................................................................
Actrade International, Ltd. 25,000 507,813*
AmeriLink Corporation 30,000 870,000*
Analysts International Corp. 5,000 193,750
Concord EFS, Inc. 28,000 756,000*
Electronics for Imaging, Inc. 25,000 1,275,000*
Lo-Jack Corporation 30,000 427,500*
Mercury Interactive Corp. 30,000 573,750*
Sapient Corporation 10,000 508,750*
Stratus Computer, Inc. 33,000 1,596,375*
Sun Microsystems, Inc. 25,000 1,170,313*
Systems & Computer Technology Corporation 45,000 2,027,813*
Wind River Systems 25,000 1,031,250*
----------
10,938,314
CATALOG RETAILERS .78%
................................................................................
Tech Data Corporation 20,000 920,000*
CHEMICALS 1.58%
................................................................................
Air Products & Chemicals, Inc. 20,000 1,658,750
Nalco Chemical Company 5,000 200,312
----------
1,859,062
COMMERCIAL PRINTING 2.11%
................................................................................
Consolidated Graphics, Inc. 50,000 2,487,500*
5
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PORTFOLIO OF INVESTMENTS
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COMMON STOCKS SHARES VALUE
COMMUNICATION EQUIPMENT 3.44%
................................................................................
Brightpoint, Inc. 40,000 $1,855,000*
Communication Systems, Inc. 20,000 415,000
Digital Microwave Corporation 40,000 1,790,000*
----------
4,060,000
COMPUTER SOFTWARE 10.70%
................................................................................
Aladdin Knowledge Systems, Ltd. 25,000 356,250*
Computer Associates International 25,000 1,795,313
Computer Task Group, Inc. 35,000 1,467,813
Datastream Systems, Inc. 30,000 1,122,188*
Keane, Inc. 60,000 1,905,000*
MicroAge, Inc. 20,000 580,000*
Microsoft Corporation 20,000 2,646,250*
Siebel Systems, Inc. 30,000 1,276,875*
Structural Dynamics Research 10,000 256,250*
Symantec Corporation 40,000 910,000*
System Software Associates, Inc. 20,000 295,000*
----------
12,610,939
COMPUTERS & DATA PROCESSING 12.42%
................................................................................
Applied Magnetics Corp. 40,000 1,260,000*
Cisco Systems, Inc. 10,000 730,625*
Data General Corporation 65,000 1,730,625*
Dell Computer Corporation 35,000 3,390,625*
Innovex, Inc. 25,000 806,250
SBE, Inc. 20,000 322,500*
Smart Modular Technologies, Inc. 45,000 3,735,000*
Solectron Corporation 60,000 2,670,000*
----------
14,645,625
EATING & DRINKING PLACES 1.44%
................................................................................
Landry's Seafood Restaurants 30,000 881,250*
Logan's Roadhouse, Inc. 5,000 130,000*
Papa John's International, Inc. 10,000 341,875*
Showbiz Pizza Time, Inc. 15,000 345,000*
----------
1,698,125
ELECTRONICS & COMPONENTS 3.01%
................................................................................
Molex, Inc. 22,500 998,437
Nam Tai Electronics, Inc. 30,000 652,500
Veeco Instruments, Inc. 30,000 1,895,625*
----------
3,546,562
ENTERTAINMENT .30%
................................................................................
Callaway Golf Company 10,000 348,750
FABRICATED RUBBER PRODUCTS 1.39%
................................................................................
Cooper Tire & Rubber 20,000 531,250
Safeskin Corporation 25,000 1,109,375*
----------
1,640,625
FINANCIAL SERVICES .31%
................................................................................
Jefferies Group, Inc. 5,000 365,000
6
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PORTFOLIO OF INVESTMENTS
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COMMON STOCKS SHARES VALUE
GLASS CONTAINERS 1.30%
................................................................................
Owens-Illinois, Inc. 45,000 $1,527,187*
HEALTHCARE EQUIPMENT AND SERVICES 7.89%
................................................................................
Acuson Corporation 30,000 817,500*
Biogen, Inc. 25,000 810,937*
Centocor, Inc. 23,000 1,093,937*
Diagnostic Health Services, Inc. 30,000 453,750*
Medtronic, Inc. 40,000 1,880,000
Misonix, Inc. 30,000 615,000*
Omnicare, Inc. 10,000 325,000
Osteotech, Inc. 30,000 603,750*
Patterson Dental Company 15,000 607,500*
Theragenics Corporation 40,000 1,985,000*
U.S. Bioscience, Inc. 10,000 113,750*
----------
9,306,124
HOUSEHOLD APPLIANCES .23%
................................................................................
American Safety Razor 15,000 275,625*
INSURANCE AGENTS .53%
................................................................................
Concentra Managed Care, Inc. 17,860 630,681*
MACHINERY 2.98%
................................................................................
Grainger (W.W.), Inc. 20,000 1,780,000
Orbotech Ltd. 30,000 1,732,500*
----------
3,512,500
MEASURING & CONTROLLING DEVICES 1.15%
................................................................................
Datum, Inc. 20,000 912,500*
Input/Output, Inc. 15,000 444,375*
----------
1,356,875
OIL & GAS EXTRACTION SERVICES 3.54%
................................................................................
Pool Energy Services 50,000 1,693,750*
Rowan Companies, Inc. 15,000 534,375*
Smith International, Inc. 25,000 1,942,187*
----------
4,170,312
PAPER MILLS .18%
................................................................................
Pope & Talbot, Inc. 10,000 211,875
PHARMACEUTICALS 1.01%
................................................................................
Bindley Western Industries, Inc. 15,000 419,063
Medco Research, Inc. 10,000 137,500*
Nature's Sunshine Products 5,000 118,125
Schering-Plough Corporation 10,000 515,000
----------
1,189,688
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PORTFOLIO OF INVESTMENTS
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COMMON STOCKS SHARES VALUE
SEMICONDUCTORS 17.26%
................................................................................
Altera Corporation 30,000 $1,537,500*
Dallas Semiconductor Corp. 50,000 2,237,500
Intel Corporation 30,000 2,769,375
Lattice Semiconductor Corp. 20,000 1,302,500*
Level One Communications 30,000 1,207,500*
Linear Technology Corporation 25,000 1,718,750
Micrel, Inc. 60,000 2,538,750*
Microchip Technology, Inc. 40,000 1,806,250*
Photronics, Inc. 5,000 302,813*
Semtech Corporation 40,000 2,765,000*
Siliconix, Inc. 15,000 684,375*
Unitrode Corporation 20,000 1,482,500*
----------
20,352,813
TELECOMMUNICATIONS 5.46%
................................................................................
Cognitronics Corporation 20,000 365,000*
Coherent Communications Systems 50,000 1,418,750*
Lucent Technologies 20,000 1,627,500
Northern Telecom Limited 25,000 2,598,437
Symmetricom, Inc. 5,000 79,687*
Teleflex, Inc. 10,000 346,250
----------
6,435,624
TRANSPORTATION 4.08%
................................................................................
Airborne Freight Corporation 20,000 1,211,250
Kansas City Southern Industries, Inc. 60,000 2,066,250
Rent-Way, Inc. 30,000 633,750*
Superior Services, Inc. 20,000 570,000
Yellow Corporation 10,000 325,625*
----------
4,806,875
................................................................................
TOTAL COMMON STOCKS (COST $94,299,182) 117,804,806
................................................................................
PRINCIPAL
REPURCHASE AGREEMENT .15% AMOUNT
Joint Repurchase Agreement Account,
Prudential Securities, Inc. 9/30/97,
6.10%, due 10/1/97, repurchase price
$175,888, collateralized by U.S.
Treasury Securities, plus accrued
interest held in a joint repurchase
account (cost $175,858) $175,858 175,858
................................................................................
TOTAL INVESTMENTS 100.08% 117,980,664
................................................................................
(cost $94,475,040)
Other assets and liabilities, net (.08)% ( 89,225)
------------
NET ASSETS 100% $117,891,439
============
* Non-income producing.
See accompanying notes to financial statements.
8
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STATEMENT OF ASSETS AND LIABILITIES
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SEPTEMBER 30, 1997
INVESTMENTS, AT IDENTIFIED COST $ 94,475,040
============
ASSETS
................................................................................
Investments, at value $117,980,664
Cash 6,688
Receivables:
Dividends 8,638
Interest 30
Capital shares sold 389,805
Other 6,889
................................................................................
TOTAL ASSETS 118,392,714
................................................................................
LIABILITIES
................................................................................
Payables:
Capital shares redeemed 327,509
To manager and affiliates 119,327
Accounts payable and accrued expenses 54,439
................................................................................
TOTAL LIABILITIES 501,275
................................................................................
NET ASSETS $117,891,439
============
NET ASSETS CONSIST OF:
................................................................................
Paid in capital $ 80,321,118
Undistributed net investment income -0-
Accumulated net realized gain on investments 14,154,697
Net unrealized appreciation of investments 23,505,624
------------
Net assets applicable to capital shares outstanding $117,891,439
============
Capital shares outstanding, an unlimited number
of no par shares authorized 5,392,745
============
NET ASSET VALUE, PER SHARE $ 21.86
============
9
See accompanying notes to financial statements.
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STATEMENT OF OPERATIONS
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YEAR ENDED SEPTEMBER 30, 1997
NET INVESTMENT INCOME
INCOME:
................................................................................
Dividends $ 528,069
Interest and other 38,905
------------
Total Income 566,974
EXPENSES:
................................................................................
Management fee 972,364
Transfer agent fees and expenses 222,592
Accounting service fees and expenses 59,632
Legal and professional fees 61,413
Distribution plan expenses 242,710
Custodian fees 22,309
Shareholder reporting 30,004
Registration fees 52,165
Trustees' fees and expenses 33,141
Miscellaneous 23,680
------------
Total expenses before reductions 1,720,010
Short-term trading fee (1,649)
Expenses offset (1,608)
------------
Net Expenses 1,716,753
................................................................................
NET INVESTMENT INCOME (LOSS) (1,149,779)
................................................................................
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS
Realized gain from investments 17,376,123
Unrealized appreciation of investments 8,711,402
................................................................................
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 26,087,525
................................................................................
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 24,937,746
============
See accompanying notes to financial statements.
10
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STATEMENT OF CHANGES IN NET ASSETS
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YEARS ENDED SEPTEMBER 30,
1997 1996
INCREASE (DECREASE) IN NET ASSETS
FROM INVESTMENT OPERATIONS:
................................................................................
Net investment income (loss) $(1,149,779) $ (740,292)
Net realized gain (loss) 17,376,123 (728,847)
Net unrealized appreciation 8,711,402 11,257,430
----------- -----------
NET INCREASE IN NET ASSETS FROM
INVESTMENT OPERATIONS 24,937,746 9,788,291
DISTRIBUTIONS TO SHAREHOLDERS:
................................................................................
From net capital gains (896,933) --
In excess of net capital gains -- (1,492,488)
----------- -----------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (896,933) (1,492,488)
FROM CAPITAL SHARE TRANSACTIONS:
................................................................................
Proceeds from shares sold 66,851,063 116,765,133
Distributions reinvested 863,247 1,437,680
Paid-in capital portion of short-term
trading fee 40,392 25,613
----------- -----------
67,754,702 118,228,426
Cost of shares redeemed (64,599,629) (60,501,758)
----------- -----------
NET INCREASE IN NET ASSETS
FROM CAPITAL SHARE TRANSACTIONS 3,155,073 57,726,668
................................................................................
NET INCREASE IN NET ASSETS 27,195,886 66,022,511
................................................................................
NET ASSETS
Beginning of year 90,695,553 24,673,042
................................................................................
END OF YEAR $117,891,439 $90,695,553
................................................................................
Undistributed net investment income (loss) $0 $0
----------- -----------
CAPITAL SHARE ACTIVITY
................................................................................
Shares sold 3,724,404 7,483,138
Shares reinvested 49,413 104,558
Shares redeemed (3,668,729) (3,965,534)
----------- -----------
NET SHARE ACTIVITY 105,088 (3,622,162)
=========== ===========
See accompanying notes to financial statements.
11
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NOTES TO FINANCIAL STATEMENTS
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SEPTEMBER 30, 1997
NOTE 1: SIGNIFICANT ACCOUNTING POLICIES
Bonnel Growth Fund (the "Fund") is a diversified, open-end management
investment company registered under the Investment Company Act of 1940. The
Fund is one of four portfolios of U.S. Global Accolade Funds (the "Trust"), a
Massachusetts business trust.
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 securities 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.
12
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NOTES TO FINANCIAL STATEMENTS
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E. 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 and realized capital
gains at least annually.
F. 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.
G. 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
U.S. Global Investors, Inc. (the "Manager"), under an investment advisory
agreement with the Trust in effect through March 8, 1998, furnishes
management and investment advisory services and, subject to the supervision
of the Trustees, directs the investments of the Fund according to its
investment objectives, policies and limitations. The Manager has contracted
with Bonnel, Inc. to serve as Sub-Advisor in the execution of the Manager's
investment responsibilities. The Manager also furnishes all necessary office
facilities, business equipment and personnel for administering the affairs of
the Trust. Frank E. Holmes, a trustee of the Fund, is the controlling owner
of the Manager.
13
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NOTES TO FINANCIAL STATEMENTS
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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 the 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.
The Fund has 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.
During the year ended September 30, 1997, A & B Mailers, Inc., a wholly owned
subsidiary of the Manager, was paid $4,777 for mailing services provided to
the Fund.
The two independent trustees each receive $8,000 annually as compensation for
serving on the board, plus $2,000 per each meeting attended. The fees are
allocated among the four portfolios in the Trust.
NOTE 3: INVESTMENT ACTIVITY
Purchases and sales of long-term securities for the year were $232,320,834
and $230,654,608, respectively.
The federal income tax basis of securities owned at September 30, 1997 was
$94,635,490. The tax basis components of net unrealized appreciation and
depreciation were $24,535,846 and $1,190,672, respectively.
NOTE 4: EQUITY ACCOUNTS
A reclassification of $1,149,779, increasing undistributed net investment
income and reducing accumulated net realized gain on investments, was made to
reflect a permanent difference in the treatment of net operating losses
between financial and tax reporting.
NOTE 5: SUBSEQUENT EVENT
Effective October 1, 1997, the trustees approved a change in the Fund's
fiscal year end from September 30 to October 31.
14
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FINANCIAL HIGHLIGHTS
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For a capital share outstanding during each year ended September 30,
1997 1996 1995*
................................................................................
NET ASSET VALUE,
BEGINNING OF YEAR $17.15 $14.81 $10.02
................................................................................
Investment Activities
Net investment income (loss) (.21) (.14) (.07)
Net realized and unrealized gain 5.09 3.13 4.91
Total from investment activities 4.88 2.99 4.84
---- ---- ----
Distributions
In excess of net investment income -- -- (.05)
From net realized gains (.17) -- --
In excess of net realized gains -- (.65) --
---- ---- ----
Total distributions (.17) (.65) (.05)
................................................................................
NET ASSET VALUE, END OF PERIOD $21.86 $17.15 $14.81
................................................................................
TOTAL RETURN (excluding account fees) 28.67% 21.27% 48.74%
Ratios to Average Net Assets (a):
Net investment income (1.18)% (1.32)% (1.46)%
Total expenses 1.77% 1.83% 2.50%
Expenses reimbursed or offset -- -- (.02)%
Net expenses 1.77% 1.83% 2.48%
Average commission rate paid $.0685 $.0708 n/a
Portfolio turnover rate 239% 212% 145%
Net assets, end of year
(in thousands) $117,891 $90,696 $24,673
* From October 17, 1994, commencement of operations. Ratios are annualized for
periods of less than one year.
(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.
15
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REPORT OF INDEPENDENT ACCOUNTANTS
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SEPTEMBER 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 Bonnel Growth
Fund (the "Fund") (one of the portfolios constituting the U.S. Global
Accolade Funds) at September 30, 1997, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in
the period then ended and the financial highlights for the periods indicated,
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 audits. We conducted our audits 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 audits, which included
confirmation of securities at September 30, 1997 by correspondence with the
custodian, provide a reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
San Antonio, Texas
November 5, 1997
16
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FEDERAL INCOME TAX INFORMATION (UNAUDITED)
None of the Fund's distributions qualify for the
Dividends Received Dedution available to corporate
shareholders.
In January 1998, the Fund will report on Form 1099
the tax status of all distributions made during
the calendar year 1997. Shareholders should use
the information on Form 1099 for their income tax
returns.
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[GRAPHIC: U.S. GLOBAL INVESTORS LOGO]
U.S. Global Investors
P.O. Box 781234 San Antonio, Texas 78278-1234
1-800-US-FUNDS
