FRONT COVER:
[GRAPHIC: Stock prices in newspaper, world globes and compass screened in
background]
U.S. GLOBAL ACCOLADE FUNDS
ANNUAL REPORT
OCTOBER 31, 1997
[GRAPHIC: U.S. Global Investors logo]
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INSIDE FRONT COVER:
U.S. GLOBAL ACCOLADE FUNDS
ANNUAL REPORT
October 31, 1997
TABLE OF CONTENTS
Letter to Shareholders 1
Fund Manager's Perspective 3
Portfolios of Investments 19
Statements of Assets and Liabilities 36
Statements of Operations 38
Statements of Changes in Net Assets 40
Notes to Financial Statements 43
Financial Highlights 49
Report of Independent Accountants 52
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[Photograph of Frank Holmes]
Dear Shareholder,
U.S. Global Investors is a unique, entrepreneurial and dynamic fund family where
the adventurous can discover a diverse collection of investment opportunities
from around the globe. Our U.S. Global Accolade Funds, which began three years
ago with the Bonnel Growth Fund, now includes three additional funds. During the
past year, we teamed up with the Regent Pacific Group, Adrian Day and Dr.
Stephen Leeb to provide you with easy and affordable access to foreign markets
and experienced money managers.
Shareholders of the MegaTrends Fund, formerly the Leeb Personal Finance Fund,
were welcomed to our fund family in November 1996 when we took over investment
management of the Fund and contracted with Leeb's Money Growth Institute to
serve as sub- advisor. Adrian Day's Global Opportunity Fund was launched in
February 1997 and expanded our selection of global funds. The Regent Eastern
European Fund, launched in March 1997, gives you direct access to the exciting
emerging markets of Eastern Europe. In October 1997, we celebrated the third
anniversary of our relationship with Art Bonnel and the Bonnel Growth Fund which
has surpassed the $100 million milestone and provided its investors with
generous returns.
I am proud to present this enhanced and improved annual report to you. In the
pages that follow, you will find a fund-by-fund analysis of the factors that
have impacted your investment's performance. Also included are reports on
portfolio holdings, information on fund diversification and financial
activities.
Financial reports are usually mailed twice a year. If you are a shareholder in
the Bonnel Growth Fund or MegaTrends Fund, however, you may notice this is the
second "annual" report you've received in the past six months. This is because
the fiscal year end for the Bonnel Growth Fund and MegaTrends Fund changed to
coincide with the other U.S. Global Accolade Funds. This change was made to
achieve operational efficiencies including reduced per fund costs of preparing
and printing the financial reports.
Between these detailed financial reports, you can stay in touch with your
investments by calling Portfolio Direct and listening to the insights of your
fund manager. These recordings are updated every six weeks. The Investor Alert
gives
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you our interpretation of the week's happenings in the marketplace. This
service is updated each week. These two services are available 24 hours a day on
our toll-free service line, 1-800-US-FUNDS.
Markets are unpredictable, so don't try to outguess them. Invest often and
invest regularly, without regard to the fluctuations in the market. If you need
discipline or just want to make investing easier, sign up for our ABC Investment
Plan, the personalized investing service designed to fit your needs, your
budget, your goals and your schedule.
If you have any questions about the facts and figures found in these pages or
have suggestions for future editions, don't hesitate to call us.
Sincerely,
/s/ Frank Holmes
Frank Holmes
President & CEO
U.S. Global Investors
P.S. Don't forget that U.S. Global Investors offers 15 no-load funds to help you
invest in China, real estate, natural resources, tax-free bonds and blue- chip
stocks. Our money markets offer free unlimited checkwriting and competitive
yields. For more information on our entire family of funds, please call
1-800-US-FUNDS or visit us on the internet at www.us-global.com.
................................................................................
Past performance does not guarantee future results. Investment return and
principal value will fluctuate. You may have a gain or a loss when you sell
shares. For more information, including charges and expenses call 1-800-US-
FUNDS. Please read the prospectus carefully before investing.
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BONNEL GROWTH FUND
FUND MANAGER'S PERSPECTIVE
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A MESSAGE FROM ART BONNEL
INTRODUCTION
Bonnel Growth Fund is now starting into its fourth year. 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
The Fund reflected market action on the day of decline in October, but we
bounced back on the following day. When the market went down 5% on October
27th, the Fund declined 8.7%. The following day we were up 5.2% indicating a
significant recovery. In the days following the decline we didn't sell any of
our stocks, but did purchase some discounted stocks with what cash we had
available.
BONNEL GROWTH FUND
AVERAGE ANNUAL PERFORMANCE
INCEPTION 1 YEAR 1 MONTH
--------- ------ -------
BONNEL GROWTH FUND
Inception 10/17/94 27.5% 16.5% (9.9)%
S&P 500 27.4% 32.1% (3.3)%
RUSSELL 2000 19.1% 27.2% (4.5)%
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
BONNEL
GROWTH RUSSELL
\ DATE FUND S&P 500 2000
-------- ------- ------- -------
10/17/94 $10,000 $10,000 $10,000
9/30/95 $14,874 $12,797 $12,173
9/30/96 $18,038 $15,398 $13,586
9/30/97 $23,209 $21,623 $17,799
10/31/97 $20,895 $20,901 $16,993
................................................................
Past performance is not predictive of future results. Investment
return and principal value may fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
3
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PORTFOLIO PROFILE
The Fund had net assets of $104.6 million as of October 31 and our expense
ratio is down to an annualized 1.72%. We are fully invested with minimal cash
holdings.
THE PERIOD IN REVIEW
The turmoil in Asia has put to rest any fears that the Federal Reserve Board
will raise interest rates in the near future. As long as the Federal Reserve
doesn't raise rates, the economy and the stock market should continue to do
very well. The dollar continues to be strong in the face of Asia's currency
uncertainty. 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.
More money continued to flow into index and blue chip stocks. As you know,
the Bonnel Growth Fund focuses on mid-cap growth issues. As a result, during
this period the Fund did not produce overall gains. However, we did not
change our investment style. A secret to success in the market is to remain
committed to your investment vector. 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. An issue which has treated us well during the past month is Airborne
Freight Corporation which continued to expand on business acquired during the
UPS strike. As a reminder, these issues are constantly being evaluated and
any mentioned here should not be taken as a recommendation.
4
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CURRENT OUTLOOK
The situation in Asia has to be monitored. If the situation stabilizes, the
market should continue its upward trend. For now, Asia's turmoil has settled
any fears of inflation. Our current outlook for the coming year is positive.
As mentioned above, the U.S. economy is progressing in a stable fashion. The
tight labor market should relax somewhat as demand for goods overseas drops,
resulting in disinflation. Increased productivity should bring about similar
results. 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. Health care and retailing both remain
strong, and we are looking for an upturn in retailing as we near the
holidays.
TOP 10 HOLDINGS BASED ON TOTAL INVESTMENTS
Cisco Systems, Inc. 2.75%
Computers & Data Processing
Airborne Freight Corp. 2.43%
Transportation
Dallas Semiconductor Corp. 2.34%
Semiconductors
Systems & Computer Technology Corp. 2.27%
Computer Software
Solectron Corporation 2.26%
Computers & Data Processing
Medtronic, Inc. 2.09%
Healthcare Equipment & Services
Theragenics Corporation 2.08%
Healthcare Equipment & Services
Kansas City Southern Industries, Inc. 2.04%
Transportation
Gap, Inc. 2.04%
Apparel
Keane, Inc. 1.99%
Computer Software
Other 77.71%
5
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TOP 5 INDUSTRIES -
BASED ON TOTAL INVESTMENTS
6.43% Semiconductors
13.41% Computer Software
6.25% Healthcare Equipment & Services
10.70% Computers & Data Processing
9.29% Transportation
6
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MEGATRENDS FUND
FUND MANAGER'S PERSPECTIVE
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A MESSAGE FROM DR. STEPHEN LEEB
INTRODUCTION
The Fund's portfolio primarily holds equity investments in order to maximize
safe growth potential, while having the flexibility to shift assets into
bonds and money market securities when we believe they offer better
performance and a higher level of safety than stocks. The Fund currently owns
no bonds.
PERFORMANCE
The Fund was up 3.34% for the four months ended October 31, 1997. Our expense
ratio is at 1.76% (four months annualized).
MEGATRENDS FUND
AVERAGE ANNUAL PERFORMANCE
INCEPTION 5 YEAR 1 YEAR 4 MONTH
--------- ------ ------ -------
MEGATRENDS FUND
Inception 10/21/91 10.5% 12.4% 19.1% 3.3%
S&P 500 18.2% 19.8% 32.1% 3.9%
LIPPER FLEXIBLE FUND INDEX 12.3 16.7% 18.9% 4.5%
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
LIPPER
FLEXIBLE
MEGATRENDS FUND
DATE FUND S&P 500 INDEX
-------- ------- ------- -------
10/21/91 $10,000 $10,000 $10,000
6/30/92 $10,794 $10,705 $10,599
6/30/93 $11,527 $12,162 $12,005
6/30/94 $11,354 $12,332 $12,158
6/30/95 $12,739 $15,542 $14,132
6/30/96 $14,918 $19,580 $16,282
6/30/97 $18,009 $26,402 $19,277
10/31/97 $18,610 $27,400 $20,150
................................................................
Past performance is not predictive of future results. Investment
return and principal value may fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
PORTFOLIO PROFILE
The Fund had net assets of $25.5 million as of October 31, 1997. The Fund has
86% of its investments in common stocks with 14% in cash equivalent
securities.
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MEGATRENDS FUND
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THE PERIOD IN REVIEW
The U.S. economy in 1997 can be explained in two simple phrases: stronger
growth and lower inflation. Though we hope this happy state will continue
indefinitely, the odds are against it. For one thing labor costs, which
represent about 70 percent of inflation, continue to accelerate and are now
rising at the fastest rate in almost a decade. This tells us that inflation
could be just around the corner. However, this hasn't come to pass yet
because the strong dollar continues to hold down prices on goods. Sooner or
later the dollar will fall and that could lead to a pretty nasty spike in
inflation.
Market averages continue to make new highs. This is not surprising
considering the performance of the economy. Like last year, the gains this
year were largely concentrated in the blue chips. There were two events that
sparked significant sell-offs this year. One was the rate hike by Mr.
Greenspan in the first quarter of 1997, and the other was the continuing
Asian currency crisis. These events showed how volatile and vulnerable the
U.S. and world markets can be in the face of anything resembling a threat to
worldwide growth.
INVESTMENT HIGHLIGHTS
Oil stocks suffered a big bout of profit taking toward the end of 1997. Their
fundamentals, however, remain solid. Indeed, as 1997 comes to an end, the
world is producing 95-97% capacity in oil. We desperately need to find more
oil, and the Fund has invested in oil-drilling companies such as Rowan and
Schlumberger, which stand to benefit from this trend.
The Fund is also anticipating higher food prices. Indeed, as long as growth
continues in Asia--especially China and India--demand for basic foods will
almost certainly outstrip supply. One of the Fund's good performers this year
was Pioneer Hi-Bred, one of the surest beneficiaries of higher food prices.
One of the biggest disappointments in the Fund in 1997 was the gold stocks.
Though we don't have a heavy weighting in gold stocks, one of our investments
in the gold arena includes Newmont Mining. Newmont Mining remains a strong
favorite of ours, and we think that there is a good case for "what was last
may end up first." If our views on inflation in 1998 come to fruition, this
could turn out to be an exceptionally strong buying opportunity for gold
stocks, Newmont Mining included.
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MEGATRENDS FUND
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CURRENT OUTLOOK
Our Fund continues to be focused on the beneficiaries of worldwide growth.
Our view of the world is that growth is an absolute necessity, no longer just
desirable. The vast majority of stocks in the Fund, from Weyerhauser & Co,
the leading forest product company in the world, to much smaller Alpine Group
which makes copper wire for the telecommunications market and refractories
for the steel companies, is based on worldwide economic growth. Our reasoning
is pretty simple -- in Asia and the emerging economies, growth is utterly
necessary if for no other reason than to control population. History shows
that birth rates decline as a country's standard of living rises. In our
economy, growth too is essential. One reason is that the stock market has
become almost too big to fail: any threat to economic growth could have a
devastating effect on the stock market which in turn could have a big effect
on the overall economy. There is potential for a vicious circle here, and
this is one reason the Fed has been so reluctant to raise interest rates.
Maintaining worldwide growth will sooner or later have a cost. Our feeling is
that the price will be higher inflation. Thus, the Fund will be positioned to
take advantage of growth and growth with inflation.
TOP 10 HOLDINGS BASED ON TOTAL INVESTMENTS
Schlumberger 5.35%
Oil & Gas Extraction & Services
Berkshire Hathaway, Inc. 5.01%
Holding Company
Sotheby's Holdings, Inc. 4.66%
Business Services
Chevron Corporation 3.81%
Petroleum Refining
Rowan Companies, Inc. 3.72%
Oil & Gas Extraction & Services
BRE Properties, Inc. 3.67%
Real Estate Investment Trust
New Plan Realty Trust 3.29%
Real Estate Investment Trust
The Coca-Cola Company 3.24%
Beverages
Sony Corporation 3.23%
Communications Equipment
Newmont Mining Corporation 3.21%
Metal Mining
Other 60.81%
9
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MEGATRENDS FUND
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TOP 5 INDUSTRIES -
BASED ON TOTAL INVESTMENTS
6.39% Business Services
13.83% Oil & Gas Extraction & Services
5.01% Holding Company
7.91% Metal Mining
6.96% Real Estate Investments Trusts
10
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ADRIAN DAY GLOBAL OPPORTUNITY FUND
FUND MANAGER'S PERSPECTIVE
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A MESSAGE FROM ADRIAN DAY
INTRODUCTION
Early 1997 was not an easy time for a value manager to start an equity fund.
Major stock markets around the world had already risen considerably in the
previous period and many were overvalued by traditional valuation yardsticks.
Nonetheless, the Adrian Day Global Opportunity Fund found good value among
bluechips and emerging companies around the world--we just had to look
harder.
PERFORMANCE
At October 31, 1997, the Fund was down 10.40% since its inception on February
20, 1997.
ADRIAN DAY GLOBAL OPPORTUNITY FUND
AVERAGE ANNUAL PERFORMANCE
INCEPTION
---------
ADRIAN DAY GLOBAL OPPORTUNITY FUND
Inception 2/20/97 (10.4%)
S&P 500 15.5%
MSCI WORLD INDEX 8.1%
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
ADRIAN DAY
GLOBAL MSCI
OPPORTUNITY WORLD
DATE FUND S&P 500 INDEX
------- ------- ------- -------
2/20/97 $10,000 $10,000 $10,000
3/31/97 $ 9,730 $ 9,465 $ 9,719
4/30/97 $ 9,550 $10,029 $10,022
5/31/97 $ 9,690 $10,640 $10,626
6/30/97 $ 9,670 $11,116 $11,142
7/31/97 $ 9,710 $12,000 $11,641
8/31/97 $ 9,590 $11,328 $10,848
9/30/97 $ 9,660 $11,948 $11,424
10/31/97 $ 8,960 $11,550 $10,808
................................................................
Past performance is not predictive of future results. Investment
return and principal value may fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
11
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ADRIAN DAY GLOBAL OPPORTUNITY FUND
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PORTFOLIO PROFILE
The Fund had net assets of $3.4 million as of October 31, 1997, and our
expense ratio is voluntarily capped at an annualized 2.5%.
For the time being cash holdings comprise 47% of investments, though we are
buying quality stocks on downturns.
THE PERIOD IN REVIEW
We were early in Asia, and we hold quality companies there that were very
inexpensive. The currency crisis that started in Thailand has spread, first
to other "Little Tigers" in Asia, and then to Hong Kong. The major equity
markets in North America and Europe were affected by fears of a slowdown in
exports and by deflation.
The fears of deflation may be a little overdone, but the Asian crisis will
affect earnings in the major markets, particularly among exporters. Given
that the large multinational companies and many broad markets are already
overvalued on an earnings basis, a slowdown in earnings could have a serious
impact on equity prices.
INVESTMENT HIGHLIGHTS
We have been buying quality gold stocks. This sector does have the ability to
move contrary to the broad market, so we see the holdings as a defensive
position. Gold stocks comprise over 10% of the Fund's holdings. We are
emphasizing the best quality companies with low cost, large scale reserves,
proven management and strong balance sheets, such as Freeport-McMoran and
Franco-Nevada.
At the same time, we continue to be alert to opportunities to buy quality
global companies on any declines in particular markets or sectors. For
example, we bought HSBC Holdings, the world's largest banking group, after
the Hong Kong market declined. It would be foolhardy to assert with any
degree of certainty that the lows in this stock are behind us. But we did
acquire one of the world's great companies at a good price and we feel
confident holding such a company for the long haul. We will continue to watch
for similar opportunities.
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ADRIAN DAY GLOBAL OPPORTUNITY FUND
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CURRENT OUTLOOK
We remain cautious. We are currently positioned in non-correlated markets and
sectors, that is, in areas that could be expected to hold up well even if the
U.S. and other major stock markets decline in the coming months. Among the
least correlated areas are the small markets in Asia.
Our emphasis is on economies that remain fundamentally strong, such as the
Philippines and Indonesia. Though we are not looking for an immediate
rebound, the Asia miracle is not dead, and we do expect these holdings to do
very well for us over the long term. Of course, the smaller countries in Asia
will only make up a small part of the Fund.
Overall, we are building a portfolio of great global companies, slowly,
prudently, while holding a significant amount of cash, both as a defensive
measure and also to enable us to buy more of the great companies if markets
decline more.
TOP 10 HOLDINGS BASED ON TOTAL INVESTMENTS
Freeport McMoran Copper & Gold 3.43%
Gold & Silver Mining
Yuma Copper Units 2.26%
Base Metal Mining
Freeport McMoran, Inc. 1.92%
Fertilizer
Newmont Mining Corporation 1.77%
Gold Mining
Euro-Nevada Mining Corporation 1.50%
Gold Mining
Tea Plantation Investment Trust 1.23%
Investment Companies
Booker plc 1.18%
Retail
Pan American Silver 1.14%
Silver Mining
PLD Telekom, Inc. 1.11%
Communications
Other 82.90%
13
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ADRIAN DAY GLOBAL OPPORTUNITY FUND
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TOP 5 INDUSTRIES -
BASED ON TOTAL INVESTMENTS
3.73% Diversified Operations
10.48% Gold Mining
2.96% Investment Companies
4.53% Communications
3.91% Banking
14
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REGENT EASTERN EUROPEAN FUND
FUND MANAGER'S PERSPECTIVE
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A MESSAGE FROM DOMINIC BOKOR-INGRAM
INTRODUCTION
The Regent Eastern European Fund invests in dynamic companies in the emerging
markets of Eastern Europe, including Russian and other countries within the
former Soviet Union. The Fund seeks to achieve long-term growth of capital.
PERFORMANCE
REGENT EASTERN EUROPEAN FUND
AVERAGE ANNUAL PERFORMANCE
INCEPTION
---------
REGENT EASTERN EUROPEAN FUND
Inception 3/31/97 11.9%
S&P 500 22.0%
CENTRAL EUROPEAN INDEX (5.3)%
RUSSIAN INDEX 40.2%
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
REGENT
EASTERN CENTRAL
EUROPEAN RUSSIAN EUROPEAN
DATE FUND S&P 500 INDEX INDEX
------- ------- ------- ------- -------
3/31/97 $10,000 $10,000 $10,000 $10,000
4/30/97 $10,360 $10,596 $10,660 $ 9,733
5/31/97 $10,440 $11,241 $11,804 $ 9,314
6/30/97 $11,190 $11,744 $13,894 $ 9,289
7/31/97 $11,950 $12,678 $16,809 $ 9,578
8/31/97 $11,750 $11,969 $15,758 $ 9,803
9/30/97 $12,480 $12,624 $16,542 $10,354
10/31/97 $11,190 $12,203 $14,015 $ 9,473
................................................................
Past performance is not predictive of future results. Investment
return and principal value may fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
The Fund is up 11.90% since it began operations on March 31,1997. The period
was on the whole a strong one for the major Eastern European markets.
PORTFOLIO PROFILE
The Fund had net assets of $8.8 million as of October 31, 1997. Our annual
expense ratio is voluntarily capped at 3.25%.
15
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REGENT EASTERN EUROPEAN FUND
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THE PERIOD IN REVIEW
Russia, the largest market, was also the strongest performer. Hungary was
also positive although declines were experienced in Poland and the Czech
Republic. More encouraging than the performance of the stock markets was the
performance of the underlying economies. In these major markets, the first
phase of the transition process is now complete, and the benefits of the
early, painful years which required the political will to follow the reform
process through, are now beginning to show dividends.
Poland was a big loser in the period, falling by over 15%. The major factor
influencing the market was the government elections held in September,
resulting in a satisfactory outcome. Once the current account deficit fears
have been overcome, the attractive equity market valuation and extremely
strong GDP growth should provide for strong growth in the equity market over
the coming months.
The Czech market was another loser, and we are still substantially avoiding
that market. The fundamental problems surround the lack of reform at the
micro-level of the economy, with company restructuring lagging well behind
the rest of the region. A large current account deficit which has led to a
devaluation of the Czech Koruna, together with a very unstable political
outlook due to the incumbent government having a majority of one, make the
outlook for the equity market uncertain at best. Until there is a clear
commitment from the government for a continuation of the reform process, we
do not expect much upside in the market.
INVESTMENT HIGHLIGHTS
Russia has experienced economic growth in September and October; the first
two months of economic growth since the start of the transition process. We
expect 1998 to be the first full year of economic growth, and for the growth
rate subsequently to move toward the Eastern European average of
approximately 5%. Inflation has now been brought under control and is
forecast to reach single digits in 1998. With large hard currency inflows,
increased portfolio and direct investment, and the enormous revenues
generated by natural resources such as oil and gas, the Russian currency has
been stable over the past six months and is expected to remain stable.
Hungary continues to move smoothly down the reform path, with more progress
being made at the micro-economic level than in the rest of the region. This
was evident in very strong corporate earnings, leading to better than
expected GDP growth numbers following the austerity package imposed in 1995
and 1996. With corporate earnings keeping pace with the performance of the
market, valuations are still undemanding and therefore, following the recent
correction, we expect continual growth in the market.
16
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REGENT EASTERN EUROPEAN FUND
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CURRENT OUTLOOK
Our outlook for the next 6 months in the region remains positive,
particularly in the light of potential reallocation of emerging market money
from the Asian markets. Hungary and Russia will, we believe, continue to lead
the region's markets upwards with Poland showing the potential for a strong
rally in early 1998. We continue to search for value in some of the newer
markets.
TOP 10 HOLDINGS BASED ON TOTAL INVESTMENTS
A.O. Tatneft, ADR 6.48%
Oil & Gas Extraction
Unified Energy Systems 5.38%
Electric Services
Hungarian InveStment Co., Ltd. 5.28%
Investment Companies
Lukoil Holding 5.14%
Oil & Gas Extraction
Graboplast Rt 4.89%
Manufacturing
MOL Magyar Olaj-es Gazipari Rt. 4.72%
Oil & Gas Extraction
Rostelekom 3.89%
Communications
EGIS Pharmaceuticals, Ltd. 3.68%
Pharmaceuticals
KGHM Polska Miedz 3.28%
Metals Mining
Mosenergo 3.21%
Electric Services
Other 54.05%
17
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REGENT EASTERN EUROPEAN FUND
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TOP 5 INDUSTRIES -
BASED ON TOTAL INVESTMENTS
7.23% Manufacturing
16.33% Oil & Gas Extraction
5.73% Investment Companies
11.42% Electric Services
8.23% Communications
18
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BONNEL GROWTH FUND
PORTFOLIO OF INVESTMENTS October 31, 1997
- --------------------------------------------------------------------------------
COMMON STOCKS 99.76% SHARES VALUE
AIRCRAFT 2.98%
- --------------------------------------------------------------------------------
General Dynamics Corporation 25,000 $2,029,687
Sundstrand Corporation 20,000 1,087,500
----------
3,117,187
APPAREL 5.21%
- --------------------------------------------------------------------------------
Dress Barn 10,000 253,750*
Gap, Inc. 40,000 2,127,500
Intimate Brands, Inc. 10,000 213,750
Jones Apparel Group, Inc. 25,000 1,271,875*
Men's Wearhouse, Inc. 5,000 193,750*
Pacific Sunwear of California 7,500 207,188*
Stein Mart, Inc. 10,000 292,500*
VF Corporation 10,000 893,750
----------
5,454,063
ASPHALT FELTS & COATINGS .35%
- --------------------------------------------------------------------------------
Elcor Corporation 10,000 365,625
BUILDING PRODUCTS 2.63%
- --------------------------------------------------------------------------------
Martin Marietta Materials, Inc. 15,000 523,125
Modtech, Inc. 5,000 115,000*
Oregon Metallurgical Corp. 20,000 468,750*
Texas Industries, Inc. 20,000 948,750
Tredegar Industries, Inc. 10,000 698,750
----------
2,754,375
BUSINESS SERVICES 4.66%
- --------------------------------------------------------------------------------
Actrade International, Ltd. 25,000 606,250*
Computer Horizons Corporation 10,000 303,750*
Concord EFS, Inc. 38,000 1,128,125*
Logic Works, Inc. 10,000 93,750*
Lo-Jack Corporation 30,000 416,250*
Pre-Paid Legal Services, Inc. 10,000 302,500*
Sapient Corporation 20,000 1,065,000*
Wind River Systems 25,000 959,375*
----------
4,875,000
CARPETS & RUGS .29%
- --------------------------------------------------------------------------------
Mohawk Industries, Inc. 10,000 307,500*
19
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BONNEL GROWTH FUND
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
COMMON STOCKS SHARES VALUE
COMMUNICATION EQUIPMENT 3.72%
- --------------------------------------------------------------------------------
Adtran, Inc. 20,000 $ 720,000*
Communication Systems, Inc. 30,000 517,500
Digital Microwave Corporation 50,000 1,800,000*
Scientific Atlanta 30,000 556,875
Yurie Systems, Inc. 10,000 303,125*
----------
3,897,500
COMPUTER SOFTWARE 13.38%
- --------------------------------------------------------------------------------
Aladdin Knowledge Systems, Ltd. 25,000 387,500*
Analysts International Corp. 15,000 676,875
Applied Voice Technology, Inc. 10,000 260,000*
Baan Company NV 10,000 701,250*
Cambridge Technology Partners 20,000 730,000*
Citrix Systems, Inc. 25,000 1,835,937*
Datastream Systems, Inc. 30,000 915,000*
Keane, Inc. 70,000 2,073,750*
Legato Systems, Inc. 20,000 855,000*
Platinum Technology, Inc. 30,000 727,500*
Siebel Systems, Inc. 30,000 1,211,250*
Symantec Corporation 40,000 875,000*
System Software Associates, Inc. 20,000 235,000*
Systems & Computer Technology Corp. 55,000 2,371,875*
Timberline Software Corp. 10,000 147,500
----------
14,003,437
COMPUTERS & DATA PROCESSING 10.67%
- --------------------------------------------------------------------------------
Cisco Systems, Inc. 35,000 2,871,094*
Dell Computer Corporation 25,000 2,003,125*
Lexmark International Group 20,000 611,250*
MicroAge, Inc. 20,000 440,000*
Quantum Corporation 15,000 474,375*
Rainbow Technologies 10,000 246,250*
SBE, Inc. 20,000 280,000*
Smart Modular Technologies, Inc. 30,000 1,492,500*
Solectron Corporation 60,000 2,355,000*
Symbol Technologies, Inc. 10,000 397,500
----------
11,171,094
20
<PAGE>
- --------------------------------------------------------------------------------
BONNEL GROWTH FUND
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
COMMON STOCKS SHARES VALUE
DOLLS & STUFFED TOYS .48%
- --------------------------------------------------------------------------------
THQ, Inc. 30,000 $ 498,750*
EATING & DRINKING PLACES 1.07%
- --------------------------------------------------------------------------------
Landry's Seafood Restaurants 40,000 1,120,000*
ELECTRONICS & COMPONENTS 3.96%
- --------------------------------------------------------------------------------
Bel Fuse, Inc. 5,000 101,250*
Cohu, Inc. 5,000 187,187
Helix Technology Corporation 5,000 225,000
HMT Technology Corporation 20,000 337,500*
Molex, Inc. 32,500 1,218,750
Nam Tai Electronics, Inc. 30,000 614,063
Uniphase Corporation 10,000 671,250*
Veeco Instruments, Inc. 20,000 792,500*
----------
4,147,500
ENTERTAINMENT .21%
- --------------------------------------------------------------------------------
Rio Hotel & Casino, Inc. 10,000 219,375*
FABRICATED RUBBER PRODUCTS 1.52%
- --------------------------------------------------------------------------------
Safeskin Corporation 35,000 1,588,125*
FACILITIES SUPPORT MANAGEMENT SERVICES .44%
- --------------------------------------------------------------------------------
Corrections Corp. of America 15,000 457,500*
FINANCIAL SERVICES 2.80%
- --------------------------------------------------------------------------------
Bear Stearns Companies, Inc. 20,000 793,750
Charles Schwab Corporation 20,000 682,500
Merrill Lynch & Co., Inc. 15,000 1,014,375
Paine Webber Group, Inc. 10,000 441,875
----------
2,932,500
FLUID POWER PUMPS & MOTORS 1.20%
- --------------------------------------------------------------------------------
Parker-Hannifin Corporation 30,000 1,254,375
GENERAL MERCHANDISE STORES .29%
- --------------------------------------------------------------------------------
99 Cents Only Stores 5,000 187,812*
Tuesday Morning 5,000 121,250*
----------
309,062
21
<PAGE>
- --------------------------------------------------------------------------------
BONNEL GROWTH FUND
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
COMMON STOCKS SHARES VALUE
GLASS CONTAINERS & PRODUCTS 2.42%
- --------------------------------------------------------------------------------
Gentex Corporation 40,000 $ 980,000*
Owens-Illinois, Inc. 45,000 1,552,500*
----------
2,532,500
HEALTHCARE EQUIPMENT & SERVICES 6.24%
- --------------------------------------------------------------------------------
Diagnostic Health Services, Inc. 40,000 485,000*
Gulf South Medical Supply 10,000 330,000*
Insight Enterprises, Inc. 10,000 391,250*
Medtronic, Inc. 50,000 2,175,000
National Surgery Centers, Inc. 5,000 125,000*
Osteotech, Inc. 30,000 600,000*
Res-Care, Inc. 10,000 240,000*
Theragenics Corporation 50,000 2,181,250*
----------
6,527,500
INSURANCE AGENTS .87%
- --------------------------------------------------------------------------------
Concentra Managed Care, Inc. 27,860 908,932*
MACHINERY 3.07%
- --------------------------------------------------------------------------------
Applied Science & Technology 10,000 197,500*
Gehl Company 10,000 210,156*
General Scanning, Inc. 20,000 516,250*
Orbotech Ltd. 40,000 1,710,000*
Presstek, Inc. 5,000 154,688*
SI Handling Systems, Inc. 20,000 420,000
----------
3,208,594
MEASURING & CONTROLLING DEVICES 1.57%
- --------------------------------------------------------------------------------
Input/Output, Inc. 45,000 1,206,563*
SCI Systems, Inc. 10,000 440,000*
----------
1,646,563
MOTOR VEHICLE PARTS .13%
- --------------------------------------------------------------------------------
Strattec Security Corporation 5,000 136,250*
MOTORCYCLES .80%
- --------------------------------------------------------------------------------
Harley Davidson, Inc. 30,000 832,500
22
<PAGE>
- --------------------------------------------------------------------------------
BONNEL GROWTH FUND
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
COMMON STOCKS SHARES VALUE
OIL & GAS EXTRACTION SERVICES 2.87%
- --------------------------------------------------------------------------------
Pool Energy Services 60,000 $2,036,250*
Rowan Companies, Inc. 25,000 971,875*
----------
3,008,125
PHARMACEUTICALS 3.16%
- --------------------------------------------------------------------------------
Biovail, Corp. 10,000 288,750*
Columbia Laboratories 30,000 480,000*
Jones Medical Industries, Inc. 10,000 301,250
Nature's Sunshine Products 5,000 115,625
Rexall Sundown, Inc. 20,000 437,500*
Schering-Plough Corporation 30,000 1,681,875
----------
3,305,000
PHOTOGRAPHIC EQUIPMENT .54%
- --------------------------------------------------------------------------------
Ballantyne of Omaha, Inc. 10,000 167,500*
Xerox 5,000 396,563
----------
564,063
PUBLISHING & PRINTING 1.42%
- --------------------------------------------------------------------------------
McGraw-Hill Companies, Inc. 10,000 653,750
Tribune Company 15,000 826,875
----------
1,480,625
SEMICONDUCTORS 6.42%
- --------------------------------------------------------------------------------
Dallas Semiconductor Corp. 50,000 2,443,750
Level One Communications 35,000 1,575,000*
Semtech Corporation 40,000 1,862,500*
Siliconix, Inc. 18,000 831,375*
----------
6,712,625
TELECOMMUNICATIONS 4.50%
- --------------------------------------------------------------------------------
Cognitronics Corporation 30,000 495,000*
Coherent Communications Systems 60,000 1,815,000*
Lucent Technologies 20,000 1,648,750
Teleflex, Inc. 20,000 745,000
----------
4,703,750
TOOLS .62%
- --------------------------------------------------------------------------------
Snap-On, Inc. 15,000 645,000
23
<PAGE>
- --------------------------------------------------------------------------------
BONNEL GROWTH FUND
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
COMMON STOCKS SHARES VALUE
TRANSPORTATION 9.27%
- --------------------------------------------------------------------------------
Airborne Freight Corporation 40,000 $2,535,000
American Freightways Corp. 20,000 310,000*
Celadon Group 10,000 146,250*
Comair Holdings, Inc. 50,000 1,837,500
Kansas City Southern
Industries, Inc. 70,000 2,135,000
Rent-Way, Inc. 30,000 543,750*
Rural / Metro Corporation 10,000 347,500*
Superior Services, Inc. 20,000 535,000*
Tidewater, Inc. 20,000 1,313,750
----------
9,703,750
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS 104,388,745
- --------------------------------------------------------------------------------
(cost $98,195,515)
PRINCIPAL
REPURCHASE AGREEMENT .02% AMOUNT
Joint Repurchase Agreement Account,
Dean Witter, Inc., 10/31/97,
5.7%, due 11/3/97, repurchase
price $22,437 collateralized by
U.S. Government and Agency
securities held in a joint
repurchase account (cost
$22,426) $ 22,426 22,426
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS 99.78% 104,411,171
- --------------------------------------------------------------------------------
(cost $98,217,941)
Other assets and liabilities, net .22% 232,214
------------
NET ASSETS 100% $104,643,385
============
* Non-income producing.
See accompanying notes to financial statements.
24
<PAGE>
- --------------------------------------------------------------------------------
MEGATRENDS FUND
PORTFOLIO OF INVESTMENTS October 31, 1997
- --------------------------------------------------------------------------------
COMMON STOCKS 88.11% SHARES VALUE
AIRCRAFT 3.00%
- --------------------------------------------------------------------------------
The Boeing Company 16,000 $ 766,000
BEVERAGES 3.33%
- --------------------------------------------------------------------------------
The Coca-Cola Company 15,000 847,500
BUILDING PRODUCTS 4.17%
- --------------------------------------------------------------------------------
International Comfort
Products Corp. 30,000 225,000
Royal Group Technologies Ltd. 33,000 837,375
----------
1,062,375
BUSINESS SERVICES 6.56%
- --------------------------------------------------------------------------------
Fluor Corporation 11,000 452,375
Sotheby's Holdings, Inc.,
Class A 65,000 1,218,750
----------
1,671,125
COMMUNICATIONS EQUIPMENT 3.31%
- --------------------------------------------------------------------------------
Sony Corporation, ADR 10,000 843,750
COMPUTERS & DATA PROCESSING 2.55%
- --------------------------------------------------------------------------------
Microsoft Corporation 5,000 650,000*
CORDAGE & TWINE 2.88%
- --------------------------------------------------------------------------------
Alpine Group Inc. 50,000 734,375
ELECTRONICS & COMPONENTS 1.51%
- --------------------------------------------------------------------------------
Intel Corporation 5,000 385,000
ENTERTAINMENT 2.90%
- --------------------------------------------------------------------------------
The Walt Disney Company 9,000 740,250
FARMING 1.11%
- --------------------------------------------------------------------------------
Pioneer Hi-Bred
International, Inc. 3,100 284,038
FOOD STORES 1.24%
- --------------------------------------------------------------------------------
General Nutrition Co. 10,000 315,000
FINANCIAL SERVICES 3.10%
- --------------------------------------------------------------------------------
Fannie Mae 16,300 789,531
FORESTRY 2.81%
- --------------------------------------------------------------------------------
Weyerhauser Company 15,000 716,250
25
<PAGE>
- --------------------------------------------------------------------------------
MEGATRENDS FUND
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
COMMON STOCKS SHARES VALUE
HEALTHCARE EQUIPMENT 2.71%
- --------------------------------------------------------------------------------
ThermoTrex Corporation 30,000 $ 690,000*
HOLDING COMPANY 5.14%
- --------------------------------------------------------------------------------
Berkshire Hathaway, Inc.,
Class A 30 1,311,000*
HOUSEHOLD APPLIANCES 2.53%
- --------------------------------------------------------------------------------
General Electric Company 10,000 645,625
INSURANCE 4.54%
- --------------------------------------------------------------------------------
American International
Group, Inc 5,000 510,312
Hartford Financial Services
Group, Inc. 8,000 648,000
----------
1,158,312
METAL MINING 8.11%
- --------------------------------------------------------------------------------
Barrick Gold Corporation 14,000 287,875
Cyprus Amax Minerals Company 40,000 837,500
Newmont Mining Corporation 24,000 840,000
TVX Gold, Inc. 24,000 102,000*
----------
2,067,375
MOTOR VEHICLES 1.38%
- --------------------------------------------------------------------------------
Chrysler Corporation 10,000 352,500
OIL & GAS EXTRACTION & SERVICES 14.19%
- --------------------------------------------------------------------------------
Apache Corporation 12,000 504,000
ENSCO International Incorporated 17,600 740,300*
Rowan Companies, Inc. 25,000 971,875*
Schlumberger Ltd. 16,000 1,400,000
----------
3,616,175
PETROLEUM REFINING 3.90%
- --------------------------------------------------------------------------------
Chevron Corporation 12,000 995,250
REAL ESTATE INVESTMENT TRUST 7.14%
- --------------------------------------------------------------------------------
BRE Properties, Inc., Class A 35,000 960,313
New Plan Realty Trust 36,000 859,500
----------
1,819,813
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS 22,461,244
- --------------------------------------------------------------------------------
(cost $17,729,957)
26
<PAGE>
- --------------------------------------------------------------------------------
MEGATRENDS FUND
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
PRINCIPAL
REPURCHASE AGREEMENT 14.46% AMOUNT VALUE
Joint Repurchase Agreement Account,
Dean Witter, Inc., 10/31/97, 5.7%,
due 11/3/97, repurchase price
$3,687,310, collateralized by U.S.
Government and Agency securities
held in a joint repurchase account
(cost $3,685,559) $ 3,685,559 $ 3,685,559
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS 102.57% 26,146,803
- --------------------------------------------------------------------------------
(cost $21,415,516)
Other assets and liabilities, net (2.57)% (654,802)
-----------
NET ASSETS 100% $25,492,001
===========
* Non-income producing.
See accompanying notes to financial statements.
27
<PAGE>
- --------------------------------------------------------------------------------
ADRIAN DAY GLOBAL OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS October 31, 1997
- --------------------------------------------------------------------------------
COMMON AND
PREFERRED STOCKS 54.88% SHARES VALUE
AGRICULTURE .63%
- --------------------------------------------------------------------------------
United Palm Oil Industry 25,000 $ 21,685
AIR TRANSPORTATION .86%
- --------------------------------------------------------------------------------
British Airways, ADR 300 29,437
BANKS 4.06%
- --------------------------------------------------------------------------------
Banco BHIF, ADR 1,500 25,968
Bank Fuer International Zahlungs 5 35,052
HSBC Holdings plc 1,200 27,162
Security Bank Corporation 30,000 15,700*
Siam Commercial Bank plc 4,000 7,782
Thai Farmers Bank
Public Co., Ltd. 10,000 27,261*
----------
138,925
BASE METAL MINING 2.95%
- --------------------------------------------------------------------------------
Inco, Ltd. 1,000 20,625
Yuma Copper Company Units (RS) 60,000 80,478*
----------
101,103
BEVERAGES .00%
- --------------------------------------------------------------------------------
Buenos Aires Embotelladora, ADR 4,000 0*
CHEMICALS 2.39%
- --------------------------------------------------------------------------------
E.I. DuPont de Nemours & Co. 500 28,438
ICI Australia, Ltd. 4,000 30,099
Millennium Chemical, Inc. 1,000 23,500
----------
82,037
COMMERCIAL SERVICES .53%
- --------------------------------------------------------------------------------
Trans Zambesi Industries, Ltd. 30,000 18,000
COMMUNICATIONS 4.70%
- --------------------------------------------------------------------------------
AirTouch Communications, Inc. 1,000 38,625*
Digital Telecom Philippines 300,000 14,596*
Jasmine International Public
Co., Ltd. 25,000 13,940
PLD Telekom, Inc. 5,000 39,375*
PT Indosat, ADR 1,000 23,688
SK Telecommunications Co., Ltd. 2,000 11,000
Telefonica de Peru S.A., ADR 1,000 19,750
----------
160,974
28
<PAGE>
- --------------------------------------------------------------------------------
ADRIAN DAY GLOBAL OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
COMMON AND
PREFERRED STOCKS SHARES VALUE
DIVERSIFIED MINING .59%
- --------------------------------------------------------------------------------
Minorco SA, ADR 1,000 $ 20,375
DIVERSIFIED OPERATIONS 3.87%
- --------------------------------------------------------------------------------
Brierley Investment, Ltd. 40,000 30,884
BTR plc, ADR 2,500 33,825
First Pacific Company, Ltd. 14,000 8,827
Lonrho plc 20,000 32,882
PT Bakrie & Brothers 80,000 13,870
Semi-Tech Corp., Class A 10,000 12,207*
----------
132,495
ELECTRIC UTILITIES 2.15%
- --------------------------------------------------------------------------------
Enersis S.A., ADR 1,000 33,000
Empresa Nacional Electricidad,
ADR 800 16,100
Korea Electric Power Corp., ADR 3,000 24,563
----------
73,663
FERTILIZER 2.85%
- --------------------------------------------------------------------------------
Freeport McMoRan, Inc. 2,000 68,250
Freeport McMoRan Resources LP 3,000 29,438
----------
97,688
FINANCIAL SERVICES 1.85%
- --------------------------------------------------------------------------------
Global Equity Corporation 10,000 22,001*
Guinness Peat Group plc 50,000 27,395
London Pacific Group Ltd., ADR 1,000 13,938
----------
63,334
FOOD PRODUCTS .89%
- --------------------------------------------------------------------------------
Group Danone, ADR 1,000 30,640
FORESTRY .90%
- --------------------------------------------------------------------------------
Fletcher Challenge Forests 3,000 30,750
GLASS CONTAINERS .36%
- --------------------------------------------------------------------------------
Thai Glass Industries 7,300 12,483
29
<PAGE>
- --------------------------------------------------------------------------------
ADRIAN DAY GLOBAL OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
COMMON AND
PREFERRED STOCKS SHARES VALUE
GOLD MINING 10.88%
- --------------------------------------------------------------------------------
Bema Gold Corporation 9,000 $ 28,688*
Corriente Resources, Inc. 2,000 1,987*
Eldorado Gold Corporation, Ltd. 17,000 32,575*
Euro-Nevada Mining Corporation 3,500 53,156
Franco Nevada Mining Corp., Ltd. 2,400 55,442
Freeport McMoran Copper & Gold 2,500 57,656
Freeport McMoran Copper & Gold,
Preferred Class C 1,000 27,375
Miramar Mining Corporation 6,500 18,452*
Newmont Mining Corporation 1,800 63,000
Pangea Goldfields, Inc. 5,000 8,871*
Trillion Resources, Ltd. 10,000 25,549*
----------
372,750
HOTELS 1.21%
- --------------------------------------------------------------------------------
Mandarin Oriental
International, Ltd 30,000 23,700
Shangri-La Asia Limited 24,000 17,849
----------
41,549
INSURANCE 2.82%
- --------------------------------------------------------------------------------
Bangkok Insurance Public
Company 1,000 8,625
Istituto Nazionale, ADR 2,000 32,625
Jardine Lloyd Thompson Group 10,000 28,856
PT Asuransi Lippo Life 200,000 26,352
----------
96,458
INVESTMENT COMPANIES 3.07%
- --------------------------------------------------------------------------------
Czech Republic Fund, Inc. 2,000 24,000
India Fund, Inc. 3,000 24,750
Korea Fund, Inc. 1,394 11,413*
Tea Plantation Investment Trust 23,571 43,894*
Tea Plantation Investment Trust
Warrants 1,714 1,208*
----------
105,265
OIL & GAS EXTRACTION .82%
- --------------------------------------------------------------------------------
Eni Spa, ADR 500 28,188
PAPER & ALLIED PRODUCTS .67%
- --------------------------------------------------------------------------------
PT Indah Kiat Pulp &
Paper Corp. 60,000 22,884
30
<PAGE>
- --------------------------------------------------------------------------------
ADRIAN DAY GLOBAL OPPORTUNITY FUND
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
COMMON AND
PREFERRED STOCKS SHARES VALUE
REAL ESTATE .54%
- --------------------------------------------------------------------------------
JG Summit Holdings, Inc. 175,000 $ 18,564
RETAIL 2.26%
- --------------------------------------------------------------------------------
Booker plc 8,000 42,075
Singer Company N.V 1,500 20,344
Thakral Corporation, Ltd. 25,000 15,000
----------
77,419
SILVER MINING 2.26%
- --------------------------------------------------------------------------------
Freeport McMoran Copper & Gold,
Preferred Class D 2,000 36,750
Pan American Silver 5,000 40,625*
----------
77,375
TOBACCO .77%
- --------------------------------------------------------------------------------
B.A.T. Industries plc 3,000 26,247
- --------------------------------------------------------------------------------
TOTAL COMMON AND PREFERRED STOCKS 1,880,289
- --------------------------------------------------------------------------------
(cost $2,222,111)
PRINCIPAL
REPURCHASE AGREEMENT 48.90% AMOUNT
Joint Repurchase Agreement Accounts,
10/31/97, due 11/3/97,
collateralized by U.S. Government
and Agency securities held in joint
repurchase accounts:
5.7%, Dean Witter, Inc., repurchase
price $854,630 $ 854,224 854,224
5.68%, Prudential Securities, Inc.,
repurchase price $821,389 821,000 821,000
- --------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS 1,675,224
- --------------------------------------------------------------------------------
(cost $1,675,224)
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS 103.78% 3,555,513
- --------------------------------------------------------------------------------
(cost $3,897,335)
Other assets and liabilities, net (3.78)% (129,598)
----------
NET ASSETS 100% $3,425,914
==========
ADR - American Depository Receipt
RS - Restricted Security, See Note 1A
*Non-income producing
See accompanying notes to financial statements.
31
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS October 31, 1997
- --------------------------------------------------------------------------------
GLOBAL PORTFOLIO SECURITIES
BY COUNTRY
PERCENT OF
COUNTRY VALUE TOTAL INVESTMENT
ADRIAN DAY GLOBAL OPPORTUNITY
United States $ 500,757 14.08%
Canada 400,656 11.27
Britain 252,362 7.10
Thailand 91,776 2.58
New Zealand 89,029 2.50
Indonesia 86,793 2.44
Chile 75,069 2.11
Hong Kong 53,838 1.51
Philippines 48,861 1.37
Singapore 38,700 1.09
Luxembourg 38,375 1.08
South Korea 35,563 1.00
Switzerland 35,052 0.99
Italy 32,625 0.92
France 30,640 0.86
Austria 30,099 0.85
Netherlands 20,344 0.57
Peru 19,750 0.56
United States-Repurchase
Agreements 1,675,224 47.12
---------- ------
TOTAL INVESTMENTS $3,555,513 100.00%
========== ======
REGENT EASTERN EUROPEAN
Russia $3,104,952 32.47%
Hungary 2,295,280 24.00
Poland 1,259,014 13.17
Czech Republic 196,900 2.06
Ukraine 49,754 0.52
United States-Repurchase
Agreements 2,656,037 27.78
---------- ------
TOTAL INVESTMENTS $9,561,936 100.00%
========== ======
See accompanying notes to financial statements.
32
<PAGE>
- --------------------------------------------------------------------------------
REGENT EASTERN EUROPEAN FUND
PORTFOLIO OF INVESTMENTS October 31, 1997
- --------------------------------------------------------------------------------
COMMON AND
PREFERRED STOCKS 78.67% SHARES VALUE
AUTOMOTIVE 1.76%
- --------------------------------------------------------------------------------
KamAZ 25,000 $ 76,247*
North American Bus
Industries Rt 2,870 77,793*
----------
154,040
CHEMICALS 3.40%
- --------------------------------------------------------------------------------
BorsodChem Rt., GDR 4,950 176,962
Tiszai Vegyi Kombinat
Rt., GDR 6,000 121,500
----------
298,462
COMMERCIAL BANKS 4.41%
- --------------------------------------------------------------------------------
Bank Handlowy W. Warszawie 10,650 143,019*
BIG Bank Gdanski, GDR 12,418 174,473*
OTP Bank, Preferred Stock 3,503 69,235*
----------
386,727
COMMUNICATIONS 8.97%
- --------------------------------------------------------------------------------
Rostelekom 109,900 371,935*
SPT Telekom 1,340 153,684*
Vimpel-Communications, ADR 7,980 261,345*
----------
786,964
CONGLOMERATES .95%
- --------------------------------------------------------------------------------
Elektrim Spolka Akcyjna 8,900 83,765
ELECTRIC SERVICES 12.44%
- --------------------------------------------------------------------------------
Irkutskenergo 271,988 76,837*
Irkutskenergo, ADR 14,090 193,737
Mosernergo 146,879 218,483*
Mosernergo, ADR 2,086 88,655*
Unified Energy Systems 910,285 300,394
Unified Energy Systems
Preferred Stock 330,000 88,110
Unified Energy Systems, GDR 4,000 126,000*
----------
1,092,216
GAS PRODUCTION & DISTRIBUTION .92%
- --------------------------------------------------------------------------------
Gazprom, ADR 3,633 80,398
GLASS & GLASSWARE .30%
- --------------------------------------------------------------------------------
Krosnienskie Huty Szkla Kros 2,706 26,788*
33
<PAGE>
- --------------------------------------------------------------------------------
REGENT EASTERN EUROPEAN FUND
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
COMMON AND
PREFERRED STOCKS SHARES VALUE
INVESTMENT COMPANIES 6.24%
- --------------------------------------------------------------------------------
Hungarian Investment Co., Ltd. 3,162 $ 504,339*
Sporitelni Privatizacni 3,625 43,216*
----------
547,555
MANUFACTURING 7.87%
- --------------------------------------------------------------------------------
Graboplast Rt 3,180 171,411
Graboplast Rt., GDR 33,890 296,537*
Mostostal-Export 82,764 223,237
----------
691,185
METALS MINING 5.41%
- --------------------------------------------------------------------------------
Ashurst Technology, Ltd.
Units 93,470 49,754*
KGHM Polska Miedz 313,339*
Norilsk Nickel 12,000 112,009*
----------
475,102
OIL & GAS EXTRACTION 17.79%
- --------------------------------------------------------------------------------
Lukoil Holding 5,120 111,836
Lukoil Holding, ADR 4,555 379,204
MOL Magyar Olaj-es
Gazipari Rt 11,000 236,890
MOL Magyar Olaj-es
Gazipari Rt., GDR 9,872 214,222*
A.O. Tatneft, ADR 4,334 619,762
----------
1,561,914
PHARMACEUTICALS 4.86%
- --------------------------------------------------------------------------------
EGIS Pharmaceuticals, Ltd. 7,506 352,190
Richter Gedeon Rt., GDR 800 74,200
----------
426,390
- --------------------------------------------------------------------------------
TOTAL COMMON AND PREFERRED STOCKS 6,611,506
- --------------------------------------------------------------------------------
(cost $7,389,571)
PRIVATIZATION CERTIFICATES 3.35% CERTIFICATES
Polish National InvestmentFund 7,892 294,393*
- --------------------------------------------------------------------------------
TOTAL PRIVATIZATION CERTIFICATES 294,393
- --------------------------------------------------------------------------------
(cost $326,605)
34
<PAGE>
- --------------------------------------------------------------------------------
REGENT EASTERN EUROPEAN FUND
PORTFOLIO OF INVESTMENTS
- --------------------------------------------------------------------------------
PRINCIPAL
REPURCHASE AGREEMENT 30.26% AMOUNT VALUE
Joint Repurchase Agreement Accounts,
10/31/97, due 11/3/97,
collateralized by U.S. Government
and Agency securities held in joint
repurchase accounts:
5.7%, Dean Witter, Inc.,
repurchase price $2,153,059 $ 2,152,037 $ 2,152,037
5.68%, Prudential Securities, Inc.,
repurchase price $504,239 504,000 504,000
- --------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS 2,656,037
- --------------------------------------------------------------------------------
(cost $2,656,037)
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS 108.93% 9,561,936
- --------------------------------------------------------------------------------
(cost $10,045,608)
Other assets and liabilities, net (8.93)% (783,698)
----------
NET ASSETS 100% $8,778,238
==========
ADR - American Depository Receipt
GDR - Global Depository Receipt
*Non-income producing
See accompanying notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ADRIAN DAY REGENT
GLOBAL EASTERN
BONNEL GROWTH MEGATRENDS OPPORTUNITY EUROPEAN
<S> <C> <C> <C> <C>
Investments, at identified cost $ 98,217,941 $ 21,415,516 $ 3,897,335 $ 10,045,608
============= =========== =========== ============
ASSETS
- ----------------------------------------------------------------------------------------------------------
Investments, at value 104,411,171 $ 26,146,803 $ 3,555,513 $ 9,561,936
Cash 2,850 1,408 262 413
Receivables:
Investments sold 5,291,211 -- -- 161,638
Capital shares sold 320,960 51,092 -- 76,786
Dividends 25,650 20,508 4,417 2,175
Interest 11 1,751 794 1,261
From manager and affiliates -- -- 7,333 --
Other assets 8,136 683 9,085 11,690
- ----------------------------------------------------------------------------------------------------------
TOTAL ASSETS 110,059,989 26,222,245 3,577,404 9,815,899
- ----------------------------------------------------------------------------------------------------------
LIABILITIES
- ----------------------------------------------------------------------------------------------------------
Payables:
Investments purchased 5,113,518 689,580 132,846 993,545
Capital shares redeemed 98,113 3,176 2,653 8,020
To manager and affiliates 121,767 4,093 -- 13,500
Accounts payable and accrued
expenses 83,206 33,395 15,991 22,596
- ----------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 5,416,604 730,244 151,490 1,037,661
- ----------------------------------------------------------------------------------------------------------
NET ASSETS $ 104,643,385 $25,492,001 $ 3,425,914 $ 8,778,238
============= =========== =========== ============
NET ASSETS CONSIST OF:
- ----------------------------------------------------------------------------------------------------------
Paid in capital $ 78,715,240 $17,171,486 $ 3,733,367 $ 9,216,769
Undistributed net investment
income (loss) 0 20,079 34,585 (2,983)
Accumulated net realized gain
on investments and foreign
currencies 19,734,915 3,569,149 (207) 40,303
Net unrealized appreciation
(depreciation) of
investments and other assets
and liabilities denominated
in foreign currencies 6,193,230 4,731,287 (341,831) (475,851)
------------- ----------- ----------- ------------
Net assets applicable to
capital shares outstanding $ 104,643,385 $25,492,001 $ 3,425,914 $ 8,778,238
============= =========== =========== ============
Capital shares out-
standing, an unlimited
number of no par shares
authorized 5,315,916 1,834,011 382,401 784,294
============= =========== =========== ============
NET ASSET VALUE, PER SHARE $19.68 $13.90 $8.96 $11.19
====== ====== ===== ======
</TABLE>
See accompanying notes to financial statements.
36 and 37
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BONNEL GROWTH
--------------------------------
MONTH ENDED YEAR ENDED
OCTOBER 31, SEPTEMBER 30,
1997 1997
<S> <C> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME
INCOME:
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends $ 23,200 $ 528,069 $ 110,933 $ 336,323 $ 13,805 $ 9,545
Foreign taxes
withheld on dividends -- -- -- -- (1,682) (479)
============ =========== ========= =========== ========= =========
Net dividends 23,200 528,069 110,933 336,323 12,123 9,066
Interest and other 4,835 38,905 64,583 160,883 65,553 57,216
============ =========== ========= =========== ========= =========
TOTAL INCOME 28,035 566,974 175,516 497,206 77,676 66,282
EXPENSES:
- ------------------------------------------------------------------------------------------------------------------------------------
Management fee 95,210 972,364 88,031 253,386 23,137 30,239
Transfer agent fees
and expenses 20,624 222,592 18,074 49,994 7,239 8,702
Accounting service
fees and expenses 6,011 59,632 12,225 29,508 24,514 26,402
Administrative service
fees -- -- -- 34,986 -- --
Legal and professional
fees 10,671 61,413 2,953 35,230 12,323 15,784
Distribution plan
expenses 25,913 242,710 22,610 38,207 4,614 6,003
Custodian fees 1,897 22,309 2,778 4,553 9,385 8,763
Shareholder reporting 1,278 30,004 1,857 7,283 4,445 6,132
Registration fees 207 52,165 4,549 19,554 17,650 16,157
Trustees' fees and
expenses 999 33,141 1,574 12,800 490 1,191
Amortization of
organizational costs -- -- -- 2,534 -- --
Miscellaneous 1,719 23,680 872 8,305 115 316
============ =========== ========= =========== ========= =========
Total expenses before
reductions 164,529 1,720,010 155,523 496,340 103,912 119,689
Short-term trading fee -- (1,649) (141) -- (141) (53)
Expenses offset (419) (1,608) -- (20,988) (57,622) (41,595)
Expenses reimbursed -- -- 155,382 475,352 46,149 78,041
============ =========== ========= =========== ========= =========
NET EXPENSES 164,110 1,716,753 20,134 21,854 31,527 (11,759)
- ------------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) (136,075) (1,149,779) 20,134 21,854 31,527 (11,759)
- ------------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Realized gain (loss) from:
Securities 5,716,293 17,376,123 967,675 3,046,765 (207) 53,803
Foreign currencies -- -- -- -- 3,058 (4,724)
============ =========== ========= =========== ========= =========
Net realized gain 5,716,293 17,376,123 967,675 3,046,765 2,851 49,079
============ =========== ========= =========== ========= =========
Unrealized appreciation
(depreciation) of:
Investments (17,312,394) 8,711,402 (130,945) 1,777,070 (341,822) (483,672)
Other assets and
liabilities
denominated in
foreign currencies -- -- -- -- (9) 7,821
============ =========== ========= =========== ========= =========
Net unrealized appreciation
(depreciation) (17,312,394) 8,711,402 (130,945) 1,777,070 (341,831) (475,851)
- ------------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED
GAIN (LOSS)ON INVESTMENTS (11,596,101) 26,087,525 836,730 4,823,835 (338,980) (426,772)
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS $(11,732,176) $24,937,746 $ 856,864 $ 4,845,689 $(307,453) $(438,531)
============ =========== ========= =========== ========= =========
</TABLE>
*Commencement of operations.
See accompanying notes to financial statements
38 & 39
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
BONNEL GROWTH
--------------------------------------------
MONTH ENDED YEAR ENDED SEPTEMBER 30,
OCTOBER 31, 1997 1997 1996
INCREASE (DECREASE)
IN NET ASSETS
FROM INVESTMENT OPERATIONS:
- ------------------------------------------------------------------------------
Net investment income(loss) $ (136,075) $ (1,149,779) $ (740,292)
Net realized gain (loss) 5,716,293 17,376,123 (728,847)
Net unrealized appreciation
(depreciation) (17,312,394) 8,711,402 11,257,430
------------ ------------ ------------
NET INCREASE (DECREASE) IN
NET ASSETS FROM INVEST-
MENT OPERATIONS (11,732,176) 24,937,746 9,788,291
DISTRIBUTIONS TO SHAREHOLDERS:
- ------------------------------------------------------------------------------
From net investment income -- -- --
From net capital gains -- (896,933) --
In excess of net investment
income -- -- (1,492,448)
------------ ------------ ------------
TOTAL DISTRIBUTIONS TO
SHAREHOLDERS -- (896,933) (1,492,448)
FROM CAPITAL SHARE TRANSACTIONS:
- ------------------------------------------------------------------------------
Proceeds from shares sold 5,595,992 66,851,063 116,765,133
Distributions reinvested -- 863,247 1,437,680
Paid-in capital portion of
short-term trading fee 4,962 40,392 25,613
------------ ------------ ------------
5,600,954 67,754,702 118,228,426
Cost of shares redeemed (7,116,832) (64,599,629) (60,501,758)
------------ ------------ ------------
NET INCREASE (DECREASE)
IN NET ASSETS FROM
CAPITAL SHARE
TRANSACTIONS (1,515,878) 3,155,073 57,726,668
- ------------------------------------------------------------------------------
NET INCREASE (DECREASE)
IN NET ASSETS (13,248,054) 27,195,886 66,022,511
- ------------------------------------------------------------------------------
NET ASSETS
Beginning of period 117,891,439 90,695,553 24,673,042
- ------------------------------------------------------------------------------
END OF PERIOD $104,643,385 $117,891,439 $ 90,695,553
- ------------------------------------------------------------------------------
Undistributed net investment
income, end of period $ 0 $ 0 $ 0
------------ ------------ ------------
CAPITAL SHARE ACTIVITY
- ------------------------------------------------------------------------------
Shares sold 265,753 3,724,404 7,483,138
Shares reinvested -- 49,413 104,558
Shares redeemed (342,582) (3,668,729) (3,965,534)
------------ ------------ ------------
NET SHARE ACTIVITY (76,829) 105,088 3,622,162
============ ============ ============
See accompanying notes to financial statements
40
<PAGE>
MEGATRENDS
--------------------------------------------
FOUR MONTHS
ENDED YEAR ENDED JUNE 30,
OCTOBER 31, 1997 1997 1996
INCREASE (DECREASE)
IN NET ASSETS
FROM INVESTMENT OPERATIONS:
- ------------------------------------------------------------------------------
Net investment income(loss) $ 20,134 $ 21,854 $ 396,853
Net realized gain (loss) 967,675 3,046,765 4,277,995
Net unrealized appreciation
(depreciation) (130,945) 1,777,070 133,795
------------ ------------ ------------
NET INCREASE (DECREASE) IN
NET ASSETS FROM INVEST-
MENT OPERATIONS 856,864 4,845,689 4,808,643
DISTRIBUTIONS TO SHAREHOLDERS:
- ------------------------------------------------------------------------------
From net investment income -- (21,909) (399,897)
From net capital gains -- (426,564) (3,618,910)
In excess of net investment
income -- -- (18,637)
------------ ------------ ------------
TOTAL DISTRIBUTIONS TO
SHAREHOLDERS -- (448,563) (4,037,444)
FROM CAPITAL SHARE TRANSACTIONS
- ------------------------------------------------------------------------------
Proceeds from shares sold 1,385,991 1,955,228 1,464,215
Distributions reinvested -- 437,124 3,933,064
Paid-in capital portion of
short-term trading fee 1,730 2,420 --
------------ ------------ ------------
1,387,721 2,394,772 5,397,279
Cost of shares redeemed (2,362,695) (9,127,072) (11,199,062)
------------ ------------ ------------
NET INCREASE (DECREASE)
IN NET ASSETS FROM
CAPITAL SHARE
TRANSACTIONS (974,974) (6,732,300) (5,801,783)
- ------------------------------------------------------------------------------
NET INCREASE (DECREASE)
IN NET ASSETS (118,110) (2,335,174) (5,030,584)
- ------------------------------------------------------------------------------
NET ASSETS
Beginning of period 25,610,111 27,945,285 32,975,869
- ------------------------------------------------------------------------------
END OF PERIOD $ 25,492,001 $ 25,610,111 $ 27,945,285
- ------------------------------------------------------------------------------
Undistributed net investment
income, end of period $ 20,079 $ (55) $ 0
------------ ------------ ------------
CAPITAL SHARE ACTIVITY
- ------------------------------------------------------------------------------
Shares sold 96,569 157,711 123,208
Shares reinvested -- 36,380 344,965
Shares redeemed (166,350) (769,632) (941,635)
------------ ------------ ------------
NET SHARE ACTIVITY (69,781) (575,541) (473,462)
============ ============ ============
See accompanying notes to financial statements.
41
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
ADRIAN DAY REGENT
GLOBAL EASTERN
OPPORTUNITY EUROPEAN
------------ ------------
FEB 20, 1997 MAR 31, 1997
TO TO
OCT 31, 1997 OCT 31, 1997
INCREASE (DECREASE)
IN NET ASSETS
FROM INVESTMENT OPERATIONS:
- ---------------------------------------------------------------------------
Net investment income (loss) $ 31,527 $ (11,759)
Net realized gain (loss) 2,851 49,079
Net unrealized appreciation
(depreciation) (341,831) (475,851)
----------- ------------
NET INCREASE (DECREASE) IN
NET ASSETS FROM INVESTMENT
OPERATIONS (307,453) (438,531)
DISTRIBUTIONS TO SHAREHOLDERS:
- ---------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS -- --
FROM CAPITAL SHARE TRANSACTIONS:
- ---------------------------------------------------------------------------
Proceeds from shares sold 4,505,667 10,634,504
Paid-in capital portion of
short-term trading fee 218 27,428
----------- ------------
4,505,885 10,661.932
Cost of shares redeemed (722,518) (1,445,163)
----------- ------------
NET INCREASE IN NET ASSETS FROM
CAPITAL SHARE TRANSACTIONS 3,733,367 9,216,769
- ---------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 3,425,914 8,778,238
- ---------------------------------------------------------------------------
NET ASSETS
Beginning of period 0 0
- ---------------------------------------------------------------------------
END OF PERIOD $ 3,425,914 $ 8,778,238
- ---------------------------------------------------------------------------
Undistributed net investment income
(loss), end of period $ 34,585 $ (2,983)
=========== ============
CAPITAL SHARE ACTIVITY
- ---------------------------------------------------------------------------
Shares sold 463,365 906,179
Shares redeemed (80,964) (121,885)
----------- ------------
NET SHARE ACTIVITY 382,401 784,294
=========== ============
See accompanying notes to financial statements.
42
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS October 31, 1997
- --------------------------------------------------------------------------------
NOTE 1: SIGNIFICANT ACCOUNTING POLICIES
U.S. Global Accolade Funds (the "Trust"), consisting of four separate funds
(the "Funds"), is organized as a Massachusetts business trust. Each Fund is a
diversified, open-end management investment company registered under the
Investment Company Act of 1940.
Bonnel Growth and MegaTrends changed their fiscal year ends from September 30
and June 30, respectively, to October 31. These changes were effected in 1997
resulting in a current reporting period of one month for Bonnel Growth and
four months for MegaTrends, both ended October 31, 1997. Adrian Day Global
Opportunity ("Adrian Day Global") commenced operations on February 20, 1997,
and Regent Eastern European commenced on March 31, 1997.
Effective November 18, 1996, MegaTrends was reorganized as a fund of the
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 Funds in the preparation of their financial statements. The
policies are in conformity with generally accepted accounting principles.
A. SECURITY VALUATIONS
The Funds value investments traded on national or international securities
exchanges or over-the-counter at the last sales price reported by the
security's primary exchange at the time of daily valuation. Securities for
which no sale was reported are valued at the mean between the last reported
bid and ask prices. 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 when market quotations are
not available or the security is subject to legal restrictions on resale
(restricted security). The trustees valued the restricted security in Adrian
Day Global on October 31, 1997 at $80,478, representing 2.35% of net assets.
This security was acquired on July 2, 1997 at $1.84 per share when the
unrestricted security price was $2.99 per share. The issuer bears the cost of
registration, if any, involved in the disposition of the security.
43
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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 or, for certain foreign
securities, when the information becomes available to the Funds. Interest
income is recorded on an accrual basis. Discounts and premiums on securities
purchased are accreted and amortized, respectively, on the same basis as used
for federal tax reporting.
The Funds may purchase securities on a when-issued or delayed-delivery basis
and segregate on their books liquid assets equal to the obligation until
settlement. The investment is accounted for in the same manner as marketable
portfolio securities.
C. REPURCHASE AGREEMENTS
The Funds may enter into repurchase agreements with recognized financial
institutions or registered broker-dealers and, in all instances, hold, as
collateral, underlying securities with a value exceeding the total repurchase
price, including accrued interest. The Funds use joint repurchase agreement
accounts with other Funds under common management where uninvested cash is
collectively invested in repurchase agreements, and each participating Fund
owns an undivided interest in the accounts.
D. FOREIGN CURRENCY TRANSACTIONS
Some Funds may invest in securities of foreign issuers. The accounting
records of these Funds are maintained in U.S. dollars. At each net asset
value determination date, the value of assets and liabilities denominated in
foreign currencies are translated into U. S. dollars using the current
exchange rate. Security transactions, income and expenses are converted at
the prevailing rate of exchange on the date of the event. The effect of
changes in foreign exchange rates on foreign denominated securities is
included with the net realized and unrealized gain or loss on securities.
Other foreign currency gains or losses are reported separately.
44
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
E. INCOME TAXES
The Funds intend to comply with the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute substantially
all of their taxable income to shareholders. Accordingly, no provision for
federal income taxes is required. Each Fund may be subject to foreign taxes
on income and gains on investments which are accrued based upon the Fund's
understanding of the tax rules and regulations in the foreign markets.
F. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
The Funds record dividends and distributions to shareholders on the
ex-dividend date. Distributions are determined in accordance with income tax
regulations that may differ from generally accepted accounting principles.
Accordingly, periodic reclassifications are made within the Funds' capital
accounts to reflect income and gains available for distribution under income
tax regulations. The Funds make distributions at least annually.
G. EXPENSES
Each 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 Funds 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 Funds'
custodian so the custodian fees are paid indirectly by credits earned on the
Funds' 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.
45
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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 each Fund according to its
investment objectives, policies and limitations. 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
Funds, is the controlling owner of the Manager. For each fund, the Manager
has contracted with and compensates Sub-Advisors to serve in the execution of
the Manager's investment responsibilities as follows:
Bonnel Growth Bonnel, Inc.
MegaTrends Money Growth Institute, Inc.
Adrian Day Global Global Strategic Management, Inc.
Regent Eastern European Regent Fund Management, Ltd.
For the services of the Manager, each Fund pays a management fee at an annual
rate of 1% for Bonnel Growth and MegaTrends and 1.25% for Adrian Day Global
and Regent Eastern European based on their average net assets. Fees are
accrued daily and paid monthly.
The Manager has agreed, for an indefinite period, to limit the annual
expenses of Adrian Day Global to 2.50% of its average net assets and of
Regent Eastern European to 3.25% of its average net assets.
United Shareholder Services, Inc. ("USSI"), a wholly owned subsidiary of the
Manager, is transfer agent and accounting service agent for the Funds. Each
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
Funds. For maintaining the books and records of the Funds 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 pertaining to each Fund. Effective November 1, 1997,
the Funds changed to Brown Brothers Harriman & Co. as the new custodian, fund
accounting and administration service agent with a fee structure based on
average net assets.
Each Fund has adopted a Distribution Plan pursuant to 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 each Fund's shares. MegaTrends adopted the plan on November
18, 1996.
46
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Brimberg & Co., L.P., a broker-dealer affiliate of Money Growth Institute,
Inc., received $16,152 and $97,945, representing 86% and 100% of commissions
paid by MegaTrends on purchases and sales of securities during the four-month
period ended October 31, 1997 and the year ended June 30, 1997, respectively.
During the period ended October 31, 1997, A&B Mailers, Inc., a wholly owned
subsidiary of the Manager, was paid $2,303 for mailing services provided to
the Funds. MegaTrends paid $4,603 and Bonnel Growth paid $4,777 to A&B
Mailers, Inc. for their fiscal years ended June 30, 1997 and September 30,
1997, respectively.
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 Funds.
At October 31, 1997, individual shareholders holding more than 5% of
outstanding shares comprised 25.6% of Adrian Day Global (including 13.3% held
by the Fund's Sub- Advisor) and 5.1% of Regent Eastern European held by an
affiliate of its Sub- Advisor.
The former administrative services agent, shareholder servicing and transfer
agent and the accounting services agent for MegaTrends 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: INVESTMENTS
Purchases and sales of long-term securities for the period ended October 31,
1997, are summarized as follows:
FUND PURCHASES SALES
----------------------- ----------- -----------
Bonnel Growth $57,108,765 $58,928,725
MegaTrends 3,013,193 3,976,102
Adrian Day Global 2,344,748 122,431
Regent Eastern European 7,633,353 297,584
Purchases and sales for MegaTrends for the fiscal year ended June 30, 1997
were $13,735,317 and $18,778,767, respectively. Purchases and sales for
Bonnel Growth for the fiscal year ended September 30, 1997 were $232,320,834
and $230,654,608, respectively.
47
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The following table presents the income tax basis of securities owned at
October 31, 1997, and the tax basis components of net unrealized appreciation
or depreciation:
GROSS GROSS NET UNREALIZED
AGGREGATE UNREALIZED UNREALIZED APPRECIATION
FUND COST APPRECIATION DEPRECIATION (DEPRECIATION)
- ------------- ------------ ------------ ----------- -----------
BONNEL GROWTH $ 98,329,555 $ 10,222,299 $ 4,140,683 $ 6,081,616
MEGATRENDS 21,419,871 5,754,609 1,027,677 4,726,932
ADRIAN DAY
GLOBAL 3,899,269 64,250 408,006 (343,756)
REGENT EASTERN
EUROPE 10,045,608 166,098 649,770 (483,672)
Regent Eastern European may be exposed to risk not typically associated with
investments in the United States due to its concentration of investments in
emerging markets. These risks include disruptive political or economic
conditions and the possible imposition of adverse governmental laws or
currency exchange restrictions.
NOTE 4: EQUITY ACCOUNTS
Certain reclassifications were made within the equity accounts of the Funds
to reflect permanent differences between financial and tax accounting. The
permanent differences were primarily the result of classification of gains
from passive foreign investment companies, treatment of foreign currency
gains and recharacterization of net operating loss.
48
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
For a capital share outstanding during each period ended:
<TABLE>
<CAPTION>
BONNEL GROWTH
-------------------------------------------
OCTOBER 31, YEAR ENDED SEPTEMBER 30,
1997* 1997 1996 1995**
<S> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 21.86 $ 17.15 $ 14.81 $ 10.02
- ----------------------------------------------------------------------------------------
Investment Activities
Net investment income (loss) (.03) (.21) (.14) (.07)
Net realized and unrealized gain (loss) (2.15) 5.09 3.13 4.91
------- ------- ------- -------
Total from investment activities (2.18) 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 distribution -- (.17) (.65) (.05)
- ----------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 19.68 $ 21.86 $ 17.15 $ 14.81
- ----------------------------------------------------------------------------------------
TOTAL RETURN (excluding account fees) (9.97)% 28.67% 21.27% 48.74%
Ratios to Average Net Assets (a):
Net investment income (loss) (1.43)% (1.18)% (1.32)% (1.46)%
Total expenses 1.72% 1.77% 1.83% 2.50%
Expenses reimbursed or offset -- -- -- (.02)%
Net expenses 1.72% 1.77% 1.83% 2.48%
Average commission rate paid $ 0.0685 $ 0.0685 $ 0.0708 n/a
Portfolio turnover rate 52% 239% 212% 145%
Net assets, end of period
(in thousands) $104,643 $117,891 $ 90,696 $ 24,673
</TABLE>
* Change in fiscal year end.
** From October 17, 1994, commencement of operations.
(a)Ratios are annualized for periods of less than one year. 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 ration had such reductions not occurred. See accompanying notes to
financial statements.
See accompanying notes to financial statements.
49
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
For a capital share outstanding during each period ended:
<TABLE>
<CAPTION>
ADRIAN DAY REGENT
GLOBAL EASTERN
MEGATRENDS OPPORTUNITY EUROPEAN
-------------------------------------------------------------- ----------- ----------
OCTOBER YEAR ENDED JUNE 30, OCTOBER 31, OCTOBER 31,
1997* 1997** 1996 1995 1994 1993 1997*** 1997****
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF
PERIOD $13.45 $11.27 $11.17 $10.29 $10.84 $10.36 $10.00 $10.00
- ---------------------------------------------------------------------------------------------------------------
Investment Activities
Net investment
income (loss) .01 .01 .17 .28 .19 .15 .08 (.01)
Net realized and
unrealized
gain (loss) .44 2.39 1.72 .95 (.35) .55 (1.12) 1.20
------ ------ ------ ------ ------ ------ ----- ------
Total from
investment
activities .45 2.40 1.89 1.23 (.16) .70 (1.04) 1.19
------ ------ ------ ------ ------ ------ ----- ------
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 distribution -- (.22) (1.79) (.35) (.39) (.22) -- --
- ---------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END
OF PERIOD $13.90 $13.45 $11.27 $11.17 $10.29 $10.84 $8.96 $11.19
- ---------------------------------------------------------------------------------------------------------------
TOTAL RETURN
(excluding
account fees) 3.34% 20.72% 17.10% 12.20% (1.50)% 6.79% (10.40)% 11.90%
Ratios to Average Net
Assets (a):
Net investment
income (loss) .23% .09% 1.30% 2.36% 1.65% 1.60% 1.71% (.49)%
Total expenses 1.76% 1.97% 2.10% 1.98% 1.81% 1.95% 5.63% 4.98%
Expenses reimbursed
or offset -- (.09)% (.60)% (.48)% (.31)% (.45)% (3.13)% 1.73)%
Net expenses 1.76% 1.88% 1.50% 1.50% 1.50% 1.50% 2.50% 3.25%
Average commission
rate paid $0.0777 $0.0800 n/a n/a n/a n/a $0.0119 $0.0804
Portfolio turnover
rate 13% 62% 115% 163% 143% 83% 13% 11%
Net assets, end of
period (in
thousands) $25,492 $25,160 $27,945 $32,976 $45,523 $58,955 $3,426 $8,778
</TABLE>
* Change in fiscal year end.
** Effective November 18, 1996, the Fund changed to a new investment manager.
*** From February 20, 1997, commencement of operations.
****From March 31, 1997, commencement of operations.
(a) Ratios are annualized for periods of less than one year. 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.
50 and 51
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REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE TRUSTEES AND SHAREHOLDERS OF U.S. GLOBAL ACCOLADE FUNDS
In our opinion, the accompanying statements of assets and liabilities, including
the portfolios 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, MegaTrends
Fund, Adrian Day Global Opportunity Fund, and Regent Eastern European Fund,
comprising the separate funds of U.S. Global Accolade Funds (the "Funds"), at
October 31, 1997, and the results of each of their operations, the changes in
each of their net assets and the financial highlights for each of 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 Funds' management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with 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 October
31, 1997 by correspondence with the custodian and brokers and the application of
alternative auditing procedures where confirmations from brokers were not
received, provide a reasonable basis for the opinion expressed above. The
MegaTrends 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
December 17, 1997
52
<PAGE>
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[GRAPHIC: U.S. GLOBAL INVESTORS LOGO] P.O. Box 781234
San Antonio, Texas 78278-1234
1-800-US-FUNDS
