U.S. GLOBAL ACCOLADE FUNDS
[Graphic: Photo of ski jumper]
ANNUAL REPORT
OCTOBER 31, 1999
[U.S. Global Investors logo]
<PAGE>
U.S. GLOBAL ACCOLADE FUNDS
ANNUAL REPORT
OCTOBER 31, 1999
TABLE OF CONTENTS
LETTER TO SHAREHOLDERS ........................................ 1
FUND MANAGER'S PERSPECTIVE .................................... 5
PORTFOLIOS OF INVESTMENTS ..................................... 18
STATEMENTS OF ASSETS AND LIABILITIES .......................... 28
STATEMENTS OF OPERATIONS ...................................... 29
STATEMENTS OF CHANGES IN NET ASSETS ........................... 30
NOTES TO FINANCIAL STATEMENTS ................................. 32
FINANCIAL HIGHLIGHTS .......................................... 38
REPORT OF INDEPENDENT ACCOUNTANTS ............................. 41
<PAGE>
[Graphic: U.S. Global Investors logo]
P.O. Box 781234
San Antonio, Texas 78278-1234
Tel 1*800*US*FUNDS
Fax 210*308*1217
www.usfunds.com
<PAGE>
- --------------------------------------------------------------------------------
U.S. GLOBAL ACCOLADE FUNDS
- --------------------------------------------------------------------------------
DEAR SHAREHOLDER:
________________
As most savvy investors know, when it comes to the stock | |
market, nothing is certain except that the market will | Photo |
fluctuate. That's why it is important to study the history | of Frank |
of the market and look for patterns that have a high | Holmes, CEO |
probability of repeating themselves. When cycles repeat | |
themselves 60% to 70% of the time, it is compelling to | |
include them in your decision making. |________________|
For those of you who have been regular readers of our quarterly Shareholder
Report, you know that our market forecast is based on the presidential election
market cycle theory. This theory holds that the economy fluctuates in fairly
regular patterns over the course of each presidential term. The first two years
after an election tend to be weak, while years three (pre-election) and four
(election) offer strong returns for the stock market. In fact, as Yale Hirsch
reports in the 1999 Stock Trader's Almanac, "The last two years (pre-election
year and election year) of the 42 administrations since 1832 produced a total
net market gain of 703.2%, compared to the 235.7% gain of the first two years of
these administrations."
Recent studies conclude that over the past 41 years there has been at least one
thing investors have been able to count on: Stocks will rise, often sharply, in
the calendar year before a presidential- election year. Fred Allvine, a
management professor at Georgia Tech, said on BusinessToday.com, "Since 1957,
the Standard & Poor's 500 has risen 10 times out of 10 during the third year of
the four-year presidential cycle, through 1996. During that time, only five
times each in the first and second year did the S&P show a gain. In the fourth
year, the S&P rose nine times out of 10."(1)
So what can we expect as we enter the new millennium and the fourth year of a
presidential election cycle? A First Call survey of analysts is estimating S&P
500 earnings for fiscal year 2000 to be 17%. This is bullish for stocks.
CELEBRATING 5 GREAT YEARS--THE BONNEL GROWTH FUND
The Bonnel Growth Fund recently celebrated its fifth anniversary with U.S.
Global Accolade Funds. What a great five years it has been!
The fund currently focuses on technology, retail and healthcare -- three market
sectors that have experienced explosive growth over the past year. As the
following chart shows, the fund has outperformed the S&P 500 and the S&P Mid-cap
400 since its inception in October 1994. Morningstar, an independent mutual fund
rating service, recently awarded the fund a 4-star
1
<PAGE>
- --------------------------------------------------------------------------------
U.S. GLOBAL ACCOLADE FUNDS
- --------------------------------------------------------------------------------
rating out of 3,272 and 2,047 domestic equity funds for the 3-and 5-year periods
ended October 31, 1999, respectively.(2)
[Linear graph plotted from data in table below]
THE BONNEL GROWTH FUND VS. THE S&P 500
AND THE S&P MID-CAP 400 Inception date (10/17/94)
-----------------------------------------------------------------
BONNEL S&P RUSSELL
GROWTH 500 2000
DATE FUND INDEX INDEX
---------- ----------- ----------- ----------
10/14/1994 $ 10,000.00 $10,000.00
10/31/1994 $ 10,010.00 $ 10,000.00 $10,109.06
11/30/1994 $ 10,030.00 $ 9,636.27 $ 9,653.44
12/30/1994 $ 10,090.00 $ 9,779.02 $ 9,741.72
1/31/1995 $ 9,859.31 $ 10,032.44 $ 9,843.54
2/28/1995 $ 10,491.19 $ 10,423.04 $10,359.27
3/31/1995 $ 10,942.53 $ 10,730.11 $10,538.76
4/28/1995 $ 11,423.97 $ 11,045.84 $10,750.15
5/31/1995 $ 11,594.47 $ 11,486.65 $11,009.27
6/30/1995 $ 12,677.69 $ 11,752.99 $11,457.23
7/31/1995 $ 14,121.99 $ 12,142.57 $12,054.68
8/31/1995 $ 14,252.38 $ 12,172.88 $12,277.27
9/29/1995 $ 14,874.22 $ 12,686.31 $12,574.90
10/31/1995 $ 14,523.18 $ 12,640.98 $12,251.40
11/30/1995 $ 14,804.02 $ 13,195.27 $12,786.05
12/29/1995 $ 14,653.02 $ 13,449.45 $12,754.07
1/31/1996 $ 14,442.94 $ 13,906.67 $12,938.67
2/29/1996 $ 15,031.16 $ 14,036.05 $13,378.30
3/29/1996 $ 15,734.93 $ 14,171.18 $13,538.53
4/30/1996 $ 17,604.63 $ 14,379.92 $13,951.62
5/31/1996 $ 19,085.69 $ 14,750.14 $14,140.11
6/28/1996 $ 17,552.11 $ 14,806.38 $13,928.09
7/31/1996 $ 15,734.93 $ 14,152.59 $12,986.06
8/30/1996 $ 16,564.74 $ 14,451.57 $13,734.79
9/30/1996 $ 18,014.29 $ 15,264.21 $14,333.17
10/31/1996 $ 17,909.25 $ 15,685.05 $14,374.87
11/29/1996 $ 18,746.40 $ 16,869.60 $15,184.25
12/31/1996 $ 18,746.40 $ 16,535.43 $15,200.89
1/31/1997 $ 18,884.24 $ 17,567.93 $15,771.32
2/28/1997 $ 17,219.54 $ 17,705.85 $15,641.88
3/31/1997 $ 16,318.27 $ 16,979.70 $14,975.99
4/30/1997 $ 16,593.95 $ 17,992.47 $15,364.12
5/30/1997 $ 18,385.89 $ 19,087.10 $16,706.77
6/30/1997 $ 19,552.24 $ 19,941.73 $17,175.97
7/31/1997 $ 21,386.58 $ 21,527.57 $18,875.83
8/29/1997 $ 21,715.28 $ 20,322.46 $18,852.85
9/30/1997 $ 23,178.52 $ 21,434.83 $19,936.04
10/31/1997 $ 20,877.63 $ 20,719.77 $19,069.31
11/28/1997 $ 20,873.45 $ 21,678.14 $19,351.84
12/31/1997 $ 20,680.06 $ 22,050.17 $20,102.48
1/30/1998 $ 20,821.88 $ 22,293.82 $19,719.69
2/27/1998 $ 22,381.91 $ 23,900.81 $21,352.86
3/31/1998 $ 23,323.09 $ 25,123.75 $22,315.46
4/30/1998 $ 23,556.23 $ 25,376.39 $22,722.58
5/29/1998 $ 22,295.22 $ 24,940.81 $21,701.00
6/30/1998 $ 23,894.24 $ 25,953.15 $21,837.09
7/31/1998 $ 23,218.23 $ 25,677.49 $20,991.40
8/31/1998 $ 19,708.19 $ 21,968.88 $17,087.08
9/30/1998 $ 21,216.21 $ 23,376.29 $18,681.87
10/30/1998 $ 21,034.21 $ 25,276.05 $20,349.39
11/30/1998 $ 23,010.23 $ 26,807.35 $21,364.94
12/31/1998 $ 26,293.20 $ 28,351.11 $23,944.28
1/29/1999 $ 28,175.12 $ 29,536.21 $23,012.47
2/26/1999 $ 25,540.43 $ 28,618.39 $21,807.97
3/31/1999 $ 27,825.62 $ 29,763.07 $22,417.18
4/30/1999 $ 27,664.32 $ 30,915.64 $24,184.53
5/31/1999 $ 27,422.35 $ 30,186.63 $24,289.59
6/30/1999 $ 29,949.51 $ 31,860.57 $25,589.38
7/30/1999 $ 29,519.36 $ 30,867.22 $25,046.09
8/31/1999 $ 30,702.28 $ 30,714.40 $24,187.80
9/30/1999 $ 31,266.86 $ 29,873.43 $23,442.01
-------------------
Past performance is no guarantee of future results. Investment
returns and principal value will vary, and you may have a gain or
loss when you sell shares. The S&P Mid-Cap 400 is a
capitalization-weighted index that measures the performance of the
mid-range sector of the U.S. stock market. The S&P 500 Index is an
unmanaged but commonly used measure of common stock total return
performance. Source: Micropal
The MegaTrends Fund continues to seek long-term growth. The fund is currently
focused in three sectors that are expected to grow over the next five years:
energy--in particular, oil drillers--property and casualty insurers, and
technology and telecommunications. The fund's largest holding continues to be
Berkshire Hathaway, the holding company headed by Warren Buffett, who is
considered to be one of this country's leading investment authorities. The fund
also has holdings in oil service companies that are expected to benefit not only
from worldwide economic growth, but also from a shortage of rigs and other
equipment. In fact, the fundamentals for many oil service companies remain
strong going forward into the next year.
2
<PAGE>
- --------------------------------------------------------------------------------
U.S. GLOBAL ACCOLADE FUNDS
- --------------------------------------------------------------------------------
"INTEREST IN OVERSEAS INVESTING HEATING UP"
I recently read this headline, remembering that last year at this time, I was
writing to shareholders about the turbulence in overseas capital markets. What
is making foreign economies now show signs of life? As you will see when you
read portfolio manager Dominic Bokor-Ingram's report on the Regent Eastern
European Fund, the economies in Europe have a lot of room to grow. In addition,
foreign companies are starting to restructure. Most of these companies have a
long way to go to catch up with U.S. companies. However, the restructuring
should boost foreign business, economies and stock markets.
Also, for the first time in a long time, the world's four largest GDPs (Gross
Domestic Product) are growing. GDP for the United States, Japan, Germany, and
China should all be positive next year, and that is healthy for U.S. exports.
Even with anticipated growth, we continue to urge a cautious approach toward
investing in emerging markets. A good basis for a well-diversified portfolio is
usually no more than 5 - 10% in emerging markets.(3)
As we enter into the new millennium, please remember that following a few sound
investment principles is key to successful investing:
* Set your goals. Then decide on a realistic long-term plan for achieving them
and stick with it. Time is your ally here; and although at first it may seem
difficult, you can develop the habit of investing regularly more easily than
you think.
* Allocate your assets wisely. Financial planning experts agree that asset
allocation is very important in determining both your long-term investment
results and the volatility of your investment portfolio. Research studies
have shown that over 90% of the returns of a successful portfolio are a
function of selecting the right asset allocation, not on individual fund
selections. For help in selecting an asset mix that meets your personal
financial goals and needs, complete our on-line asset allocation worksheet at
www.usfunds.com. This worksheet can help you plan for retirement, educational
expenses and other financial goals.
* Don't try to time the market. The rule of thumb here is to invest often and
regularly, without regard to short-term market fluctuations. Keep in mind
that the markets are unpredictable, so don't try to outguess them. For added
discipline and easier investing, sign up for our ABC Investment Plan,(R) a
dollar-cost averaging program that allows you to build a position in a fund
and take advantage of investing a set amount on a regular basis.(4) Of
course, no investment plan can guarantee a profit or protect against
depreciation in a declining market, but the
3
<PAGE>
- --------------------------------------------------------------------------------
U.S. GLOBAL ACCOLADE FUNDS
- --------------------------------------------------------------------------------
ABC Investment Plan(R) can help smooth out the effects of market volatility.
We are excited about the opportunities for our shareholders and believe that our
investment options and financial programs will enable our shareholders to better
meet their financial goals for their families and businesses as we move forward
into the new millennium.
Sincerely,
/s/ Frank Holmes
Frank Holmes
Chairman & CEO
P.S. Max out your IRA contributions, and take advantage of the tax benefits
offered by traditional, Roth, spousal and education IRAs! Call 1-800-US-FUNDS to
see if you qualify for a free lifetime IRA.
For more complete information on any of our funds, including charges and ongoing
expenses, please call 1-800-US-FUNDS or visit www.usfunds.com for a free
prospectus. Please read the prospectus carefully before you invest or send
money.
(1) "History suggests 1999 could be up year for stock market," by Thomas
Granahan/Dow Jones, BusinessToday.com, November 29, 1999.
(2) Morningstar proprietary ratings reflect risk-adjusted performance and are
subject to change every month. Overall ratings are calculated from a fund's
3-, 5- and 10-year (when available) average annual returns in excess of
90-day T-bill returns with appropriate fee adjustments and a risk factor
that reflects fund performance below 90-day T-bill returns. The top 10% of
the funds in an investment category receive 5 stars and the next 22.5%
receive 4 stars.
(3) Please keep in mind that international investments are subject to special
risks such as currency fluctuation or political instability.
(4) You should evaluate your ability to continue in such a program in view of
the possibility that you may have to redeem fund shares in periods of
declining share prices as well as periods of rising prices.
4
<PAGE>
- --------------------------------------------------------------------------------
BONNEL GROWTH FUND
- --------------------------------------------------------------------------------
FUND MANAGER'S PERSPECTIVE
A MESSAGE FROM ART BONNEL
INTRODUCTION
The Bonnel Growth Fund focuses on mid-cap growth stocks in three major sectors:
healthcare, technology and retailing. More growth is found in these industries
than most others. The fund's primary objective is long-term capital
appreciation.
PERFORMANCE
[Linear graph plotted from data in table below]
----------------------------------------------------------------------
BONNEL GROWTH FUND
----------------------------------------------------------------------
BONNEL S&P S&P RUSSELL
GROWTH 500 MID-CAP 400 2000
DATE FUND INDEX INDEX INDEX
---------- ----------- ----------- ---------- -----------
10/14/1994 $ 10,000.00 $10,000.00 $ 10,000.00
10/31/1994 $ 10,010.00 $ 10,000.00 $10,109.06 $ 10,007.21
11/30/1994 $ 10,030.00 $ 9,636.27 $ 9,653.44 $ 9,603.05
12/30/1994 $ 10,090.00 $ 9,779.02 $ 9,741.72 $ 9,861.06
1/31/1995 $ 9,859.31 $ 10,032.44 $ 9,843.54 $ 9,736.64
2/28/1995 $ 10,491.19 $ 10,423.04 $10,359.27 $ 10,141.67
3/31/1995 $ 10,942.53 $ 10,730.11 $10,538.76 $ 10,316.34
4/28/1995 $ 11,423.97 $ 11,045.84 $10,750.15 $ 10,545.72
5/31/1995 $ 11,594.47 $ 11,486.65 $11,009.27 $ 10,727.05
6/30/1995 $ 12,677.69 $ 11,752.99 $11,457.23 $ 11,283.53
7/31/1995 $ 14,121.99 $ 12,142.57 $12,054.68 $ 11,933.52
8/31/1995 $ 14,252.38 $ 12,172.88 $12,277.27 $ 12,180.39
9/29/1995 $ 14,874.22 $ 12,686.31 $12,574.90 $ 12,397.87
10/31/1995 $ 14,523.18 $ 12,640.98 $12,251.40 $ 11,843.40
11/30/1995 $ 14,804.02 $ 13,195.27 $12,786.05 $ 12,340.96
12/29/1995 $ 14,653.02 $ 13,449.45 $12,754.07 $ 12,666.61
1/31/1996 $ 14,442.94 $ 13,906.67 $12,938.67 $ 12,653.03
2/29/1996 $ 15,031.16 $ 14,036.05 $13,378.30 $ 13,047.36
3/29/1996 $ 15,734.93 $ 14,171.18 $13,538.53 $ 13,312.95
4/30/1996 $ 17,604.63 $ 14,379.92 $13,951.62 $ 14,024.77
5/31/1996 $ 19,085.69 $ 14,750.14 $14,140.11 $ 14,577.50
6/28/1996 $ 17,552.11 $ 14,806.38 $13,928.09 $ 13,978.90
7/31/1996 $ 15,734.93 $ 14,152.59 $12,986.06 $ 12,757.90
8/30/1996 $ 16,564.74 $ 14,451.57 $13,734.79 $ 13,498.66
9/30/1996 $ 18,014.29 $ 15,264.21 $14,333.17 $ 14,026.19
10/31/1996 $ 17,909.25 $ 15,685.05 $14,374.87 $ 13,810.02
11/29/1996 $ 18,746.40 $ 16,869.60 $15,184.25 $ 14,379.03
12/31/1996 $ 18,746.40 $ 16,535.43 $15,200.89 $ 14,755.87
1/31/1997 $ 18,884.24 $ 17,567.93 $15,771.32 $ 15,050.77
2/28/1997 $ 17,219.54 $ 17,705.85 $15,641.88 $ 14,685.83
3/31/1997 $ 16,318.27 $ 16,979.70 $14,975.99 $ 13,992.88
4/30/1997 $ 16,593.95 $ 17,992.47 $15,364.12 $ 14,031.87
5/30/1997 $ 18,385.89 $ 19,087.10 $16,706.77 $ 15,592.92
6/30/1997 $ 19,552.24 $ 19,941.73 $17,175.97 $ 16,261.20
7/31/1997 $ 21,386.58 $ 21,527.57 $18,875.83 $ 17,017.85
8/29/1997 $ 21,715.28 $ 20,322.46 $18,852.85 $ 17,407.21
9/30/1997 $ 23,178.52 $ 21,434.83 $19,936.04 $ 18,681.35
10/31/1997 $ 20,877.63 $ 20,719.77 $19,069.31 $ 17,860.67
11/28/1997 $ 20,873.45 $ 21,678.14 $19,351.84 $ 17,745.15
12/31/1997 $ 20,680.06 $ 22,050.17 $20,102.48 $ 18,055.74
1/30/1998 $ 20,821.88 $ 22,293.82 $19,719.69 $ 17,770.79
2/27/1998 $ 22,381.91 $ 23,900.81 $21,352.86 $ 19,084.82
3/31/1998 $ 23,323.09 $ 25,123.75 $22,315.46 $ 19,871.92
4/30/1998 $ 23,556.23 $ 25,376.39 $22,722.58 $ 19,981.88
5/29/1998 $ 22,295.22 $ 24,940.81 $21,701.00 $ 18,905.71
6/30/1998 $ 23,894.24 $ 25,953.15 $21,837.09 $ 18,945.49
7/31/1998 $ 23,218.23 $ 25,677.49 $20,991.40 $ 17,411.78
8/31/1998 $ 19,708.19 $ 21,968.88 $17,087.08 $ 14,030.77
9/30/1998 $ 21,216.21 $ 23,376.29 $18,681.87 $ 15,128.78
10/30/1998 $ 21,034.21 $ 25,276.05 $20,349.39 $ 15,745.79
11/30/1998 $ 23,010.23 $ 26,807.35 $21,364.94 $ 16,570.75
12/31/1998 $ 26,293.20 $ 28,351.11 $23,944.28 $ 17,596.18
1/29/1999 $ 28,175.12 $ 29,536.21 $23,012.47 $ 17,830.01
2/26/1999 $ 25,540.43 $ 28,618.39 $21,807.97 $ 16,385.88
3/31/1999 $ 27,825.62 $ 29,763.07 $22,417.18 $ 16,641.69
4/30/1999 $ 27,664.32 $ 30,915.64 $24,184.53 $ 18,132.90
5/31/1999 $ 27,422.35 $ 30,186.63 $24,289.59 $ 18,397.77
6/30/1999 $ 29,949.51 $ 31,860.57 $25,589.38 $ 19,229.71
7/30/1999 $ 29,519.36 $ 30,867.22 $25,046.09 $ 18,702.06
8/31/1999 $ 30,702.28 $ 30,714.40 $24,187.80 $ 18,009.92
9/30/1999 $ 31,266.86 $ 29,873.43 $23,442.01 $ 18,013.85
10/29/1999 $ 33,834.34 $ 31,763.04 $24,635.70 $ 18,086.81
----------------------------------------------------------------------
AVERAGE ANNUAL PERFORMANCE FOR THE PERIODS ENDED
OCTOBER 31, 1999
----------------------------------------------------------------------
INCEPTION FIVE YEAR ONE YEAR
--------- --------- --------
Bonnel Growth Fund
(Inception 10/17/94) 27.34% 27.58% 60.85%
S&P 500 Index 26.02% 26.00% 25.66%
S&P Mid-Cap 400 Index 19.77% 19.50% 21.06%
Russell 2000 Index 12.47% 12.57% 14.87%
--------------------
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 value. The S&P
500 Index is an unmanaged but commonly used measure of common stock
total return performance. The S&P Mid-Cap 400 Index is a
capitalization-weighted index that measures the performance of the
mid-range sector of the U.S. stock market. The Russell 2000 Index is
an unmanaged index that consists of 2,000 small- and mid-cap publicly
traded companies.
5
<PAGE>
- --------------------------------------------------------------------------------
BONNEL GROWTH FUND
- --------------------------------------------------------------------------------
THE YEAR IN REVIEW - THE BIG PICTURE ECONOMIC AND POLITICAL ISSUES THAT AFFECTED
THE MARKETS
This past year has been quite exciting. The President of the United States was
almost impeached. NATO began bombing the Serbs. Brazil suffered a currency
crisis. The Dow Jones Industrials exceeded 10,000. The Federal Reserve Board
raised interest rates three times during the year. Inflation returned and then
slowed down. Unemployment dropped to 4.1%. Interest rates on the long bond
exceeded 6% once again.
As you can tell, there is always something to watch. That's what makes investing
in the stock market so exciting. New developments that influence investment
decisions are taking place every day. The real secret to investing is to
recognize the direction of the trend rather than trying to guess short-term
market swings.
The Bonnel Growth Fund celebrated its fifth anniversary on October 17, 1999.
During the past five years, the market experienced major swings--both up and
down. Individual issues have moved dramatically. We believe the stock market
still has a great deal of upside potential. Our long-term forecast for the Dow
Jones Industrials is 20,000 by 2006. As some of you know, the super long-term
forecast is for the Dow to continue to advance at a rate of 10% per year for the
next 25 years. That would mean it could reach 100,000 by 2025!
INVESTMENT HIGHLIGHTS
The fund has maintained diversity while looking for quality growth stocks. We
continue to own Gap, which operates over 2,300 casual apparel specialty stores
with over 17.9 million square feet of space. Old Navy and Banana Republic, both
included in Gap, Inc.'s brands, are playing a major role in Gap's growth.
Another interesting retailer that we own is Ethan Allen Interiors. They operate
73 galleries, 18 manufacturing facilities and three saw mills with 236
independent franchisee-owned and operated stores. They recently redesigned their
website to allow for the direct sale of more than 5,000 home-furnishing
products.
The fund also owns stock in Liz Claiborne designs, which markets the Liz
Claiborne lines of better clothing. It also markets the Emma James and
Russ/Villager lines of clothing, which are popular- priced apparel. They
recently acquired Lucky Brand, a maker of men and women's premium-priced denim
sportswear.
6
<PAGE>
- --------------------------------------------------------------------------------
BONNEL GROWTH FUND
- --------------------------------------------------------------------------------
In the biotech area, we still like and hold Amgen. Amgen uses biotechnology to
develop pharmaceutical products for humans. They manufacture and market Epogen
for anemia associated with chronic kidney failure and Neupogen, an immune system
stimulator. An amazing number of new products, developed to make our lives
better and healthier, are coming to the market. With the current rate of
development, it is exciting to imagine the variety of new pharmaceutical
products we will have in five years.
One of our favorite technology companies is Lucent. Lucent, which was spun off
from AT&T in April 1996, is the leading designer of telecommunications systems,
software and products. As the exploding wireless buildout expands in the U.S.
and Europe, Lucent should be able to take full advantage of it.
CURRENT OUTLOOK
The U.S. economy is in great shape. We are leading the world into the next
century. Our technology and energy will shape the world for many years to come.
The electronic revolution will change the way all of us live. It is exciting to
be part of it.
The Bonnel Growth Fund seeks companies that have foresight and products that
will grow and prosper as we move forward into the 21st century. The market acts
like it will continue to climb much higher, but as investors, we must remind
ourselves that it is not a one-way street. There will always be corrections, but
corrections can also be great buying opportunities for the astute and patient
investor.
7
<PAGE>
- --------------------------------------------------------------------------------
BONNEL GROWTH FUND
- --------------------------------------------------------------------------------
--------------------------------------------------------------------
TOP 10 HOLDINGS BASED ON TOTAL INVESTMENTS
--------------------------------------------------------------------
JDS UNIPHASE CORP 3.72%
FIBER OPTICS
--------------------------------------------------------------------
CISCO SYSTEMS, INC 3.30%
COMPUTERS & DATA PROCESSING
--------------------------------------------------------------------
QLOGIC CO 3.17%
ELECTRONICS & COMPONENTS
--------------------------------------------------------------------
POWER INTEGRATIONS, INC 3.03%
ELECTRONICS & COMPONENTS
--------------------------------------------------------------------
XILINX, INC 2.92%
COMPUTER SOFTWARE & HARDWARE
--------------------------------------------------------------------
MERCURY INTERACTIVE CORP 2.77%
COMPUTER SOFTWARE & HARDWARE
--------------------------------------------------------------------
SUN MICROSYSTEMS, INC 2.20%
COMPUTERS & DATA PROCESSING
--------------------------------------------------------------------
IDEC PHARMACEUTICALS CORP 2.16%
PHARMACEUTICALS
--------------------------------------------------------------------
MACROVISION CORP 2.10%
MOTION PICTURES & SERVICES
--------------------------------------------------------------------
ADVENT SOFTWARE, INC 2.01%
COMPUTER SOFTWARE & HARDWARE
--------------------------------------------------------------------
TOP 5 INDUSTRIES BASED ON TOTAL INVESTMENTS
--------------------------------------------------------------------
ELECTRONICS & COMPONENTS 21.09%
COMPUTER SOFTWARE & HARDWARE 21.06%
COMPUTERS & DATA PROCESSING 10.08%
PHARMACEUTICALS 7.99%
FIBER OPTICS 7.59%
8
<PAGE>
- --------------------------------------------------------------------------------
MEGATRENDS FUND
- --------------------------------------------------------------------------------
FUND MANAGER'S PERSPECTIVE
A MESSAGE FROM DR. STEPHEN LEEB
INTRODUCTION
The goal of the MegaTrends Fund is long-term capital appreciation consistent
with capital preservation. The fund diversifies its holdings among industries
and asset classes that reflects the manager's view of the major trends affecting
the world's economy. Because the fund is flexible, the fund may invest any
portion of its assets in the following three asset classes: stocks, bonds or
money market instruments. Unless the manager believes a major recession is
imminent or likely, the fund will invest primarily in stocks in order to pursue
growth potential. Thus the key decision is which industries are most leveraged
to broad economic themes.
PERFORMANCE
[Linear graph plotted from data in table below]
----------------------------------------------------------------------
MEGATRENDS FUND
----------------------------------------------------------------------
LIPPER
S&P FLEXIBLE
MEGATRENDS 500 PORTFOLIO
DATE FUND INDEX FUND INDEX
---------- ----------- ----------- -----------
10/21/1991 $ 10,000.00
10/31/1991 $ 9,990.00 $ 10,000.00 $ 10,000.00
11/29/1991 $ 9,880.00 $ 9,598.18 $ 9,784.60
12/31/1991 $ 10,423.30 $ 10,694.03 $ 10,624.72
1/31/1992 $ 10,373.14 $ 10,494.99 $ 10,567.45
2/28/1992 $ 10,503.56 $ 10,630.85 $ 10,683.28
3/31/1992 $ 10,413.27 $ 10,424.34 $ 10,455.52
4/30/1992 $ 10,503.56 $ 10,730.08 $ 10,478.30
5/29/1992 $ 10,533.65 $ 10,782.55 $ 10,605.84
6/30/1992 $ 10,550.31 $ 10,622.19 $ 10,495.22
7/31/1992 $ 10,723.43 $ 11,055.78 $ 10,809.53
8/31/1992 $ 10,703.06 $ 10,829.93 $ 10,704.76
9/30/1992 $ 10,845.63 $ 10,957.24 $ 10,831.00
10/28/1992 $ 10,947.47 $ 10,994.84 $ 10,831.65
11/30/1992 $ 11,039.12 $ 11,368.19 $ 11,070.48
12/31/1992 $ 11,071.08 $ 11,507.66 $ 11,226.65
1/29/1993 $ 11,122.43 $ 11,603.77 $ 11,414.72
2/26/1993 $ 11,142.97 $ 11,761.86 $ 11,442.05
3/31/1993 $ 11,214.86 $ 12,009.87 $ 11,682.83
4/30/1993 $ 11,112.16 $ 11,719.59 $ 11,563.09
5/28/1993 $ 11,204.59 $ 12,032.32 $ 11,797.36
6/30/1993 $ 11,266.21 $ 12,067.43 $ 11,887.81
7/30/1993 $ 11,266.21 $ 12,018.85 $ 11,932.71
8/31/1993 $ 11,390.93 $ 12,473.87 $ 12,338.78
9/30/1993 $ 11,401.33 $ 12,378.21 $ 12,384.98
10/29/1993 $ 11,370.15 $ 12,634.10 $ 12,564.59
11/30/1993 $ 11,266.21 $ 12,513.68 $ 12,390.84
12/31/1993 $ 11,388.75 $ 12,664.97 $ 12,655.69
1/31/1994 $ 11,675.33 $ 13,095.13 $ 13,000.59
2/28/1994 $ 11,473.66 $ 12,740.03 $ 12,716.21
3/31/1994 $ 11,378.14 $ 12,185.66 $ 12,206.68
4/29/1994 $ 11,208.31 $ 12,341.78 $ 12,254.83
5/31/1994 $ 11,325.07 $ 12,543.53 $ 12,297.78
6/30/1994 $ 11,096.87 $ 12,236.58 $ 12,039.44
7/29/1994 $ 11,183.14 $ 12,638.10 $ 12,325.76
8/31/1994 $ 11,323.33 $ 13,155.06 $ 12,675.21
9/30/1994 $ 11,215.49 $ 12,833.63 $ 12,454.61
10/31/1994 $ 11,247.85 $ 13,121.54 $ 12,544.41
11/30/1994 $ 10,902.75 $ 12,644.27 $ 12,243.12
12/30/1994 $ 11,037.55 $ 12,831.58 $ 12,317.30
1/31/1995 $ 11,114.51 $ 13,164.11 $ 12,414.26
2/28/1995 $ 11,444.32 $ 13,676.63 $ 12,775.43
3/31/1995 $ 11,631.21 $ 14,079.56 $ 13,045.49
4/28/1995 $ 11,895.05 $ 14,493.84 $ 13,290.17
5/31/1995 $ 12,279.83 $ 15,072.26 $ 13,712.50
6/30/1995 $ 12,450.23 $ 15,421.73 $ 13,994.27
7/31/1995 $ 12,583.98 $ 15,932.92 $ 14,358.04
8/31/1995 $ 12,617.42 $ 15,972.69 $ 14,479.73
9/29/1995 $ 12,751.18 $ 16,646.39 $ 14,744.58
10/31/1995 $ 12,795.76 $ 16,586.92 $ 14,635.91
11/30/1995 $ 13,263.90 $ 17,314.23 $ 15,063.45
12/29/1995 $ 13,710.52 $ 17,647.75 $ 15,223.53
1/31/1996 $ 13,939.22 $ 18,247.70 $ 15,518.32
2/29/1996 $ 13,984.96 $ 18,417.46 $ 15,599.01
3/30/1996 $ 13,973.53 $ 18,594.78 $ 15,709.64
4/30/1996 $ 14,293.71 $ 18,868.67 $ 15,945.86
5/31/1996 $ 14,568.15 $ 19,354.46 $ 16,148.24
6/28/1996 $ 14,579.35 $ 19,428.25 $ 16,123.51
7/31/1996 $ 13,764.36 $ 18,570.38 $ 15,622.44
8/30/1996 $ 14,165.39 $ 18,962.68 $ 15,892.50
9/30/1996 $ 14,631.10 $ 20,029.00 $ 16,494.44
10/31/1996 $ 15,355.54 $ 20,581.20 $ 16,792.48
11/29/1996 $ 16,015.29 $ 22,135.52 $ 17,605.91
12/31/1996 $ 15,821.25 $ 21,697.03 $ 17,370.34
1/31/1997 $ 16,651.17 $ 23,051.83 $ 17,871.41
2/28/1997 $ 16,308.66 $ 23,232.80 $ 17,846.03
3/31/1997 $ 15,952.98 $ 22,279.98 $ 17,307.22
4/30/1997 $ 16,203.28 $ 23,608.89 $ 17,761.44
5/30/1997 $ 17,309.84 $ 25,045.21 $ 18,515.65
6/30/1997 $ 17,745.88 $ 26,166.62 $ 19,060.97
7/31/1997 $ 18,931.57 $ 28,247.49 $ 20,133.40
8/29/1997 $ 18,312.38 $ 26,666.20 $ 19,500.88
9/30/1997 $ 19,300.46 $ 28,125.79 $ 20,326.67
10/31/1997 $ 18,286.03 $ 27,187.53 $ 19,899.13
11/28/1997 $ 18,378.25 $ 28,445.06 $ 20,259.65
12/31/1997 $ 18,287.35 $ 28,933.22 $ 20,539.47
1/30/1998 $ 18,364.44 $ 29,252.92 $ 20,661.61
2/27/1998 $ 19,382.12 $ 31,361.55 $ 21,663.17
3/31/1998 $ 20,214.77 $ 32,966.24 $ 22,393.96
4/30/1998 $ 20,538.57 $ 33,297.74 $ 22,534.46
5/29/1998 $ 19,705.93 $ 32,726.19 $ 22,309.10
6/30/1998 $ 19,736.77 $ 34,054.53 $ 22,739.31
7/31/1998 $ 18,379.86 $ 33,692.83 $ 22,503.35
8/31/1998 $ 15,666.06 $ 28,826.55 $ 20,293.62
9/30/1998 $ 16,591.22 $ 30,673.29 $ 21,101.06
10/30/1998 $ 17,500.96 $ 33,166.07 $ 22,101.13
11/30/1998 $ 18,148.57 $ 35,175.37 $ 23,008.39
12/31/1998 $ 18,703.98 $ 37,201.02 $ 23,931.15
1/29/1999 $ 19,071.09 $ 38,756.06 $ 24,392.53
2/26/1999 $ 18,373.59 $ 37,551.74 $ 23,720.31
3/31/1999 $ 19,254.64 $ 39,053.74 $ 24,311.19
4/30/1999 $ 19,878.72 $ 40,566.08 $ 25,025.05
5/28/1999 $ 19,529.97 $ 39,609.51 $ 24,586.52
6/30/1999 $ 20,282.53 $ 41,805.98 $ 25,302.86
7/30/1999 $ 20,209.11 $ 40,502.55 $ 24,853.84
8/31/1999 $ 20,300.89 $ 40,302.03 $ 24,627.25
9/30/1999 $ 19,456.55 $ 39,198.55 $ 24,359.93
10/29/1999 $ 19,750.23 $ 41,678.00 $ 25,000.98
----------------------------------------------------------------------
AVERAGE ANNUAL PERFORMANCE FOR THE PERIODS ENDED
OCTOBER 31, 1999
----------------------------------------------------------------------
INCEPTION FIVE YEAR ONE YEAR
--------- --------- --------
MegaTrends Fund
(Inception 10/21/91) 8.85% 11.92% 12.85%
S&P 500 Index 19.53% 26.00% 25.66%
Lipper Flexible Portfolio
Fund Index 12.14% 14.79% 13.12%
--------------------
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 value. The
Lipper Flexible Portfolio Fund Index allocates investments across
various asset classes, including domestic common stocks, bonds, and
money market instruments with a focus on total returns.
9
<PAGE>
- --------------------------------------------------------------------------------
MEGATRENDS FUND
- --------------------------------------------------------------------------------
THE YEAR IN REVIEW - THE BIG PICTURE ECONOMIC AND POLITICAL ISSUES THAT AFFECTED
THE MARKETS
The past year was one of transition and marked the end of a remarkable period in
U.S. economic history. Between 1995 and the first quarter of 1999, the U.S.
benefited from an unprecedented combination of strong economic growth and
declining commodity prices. Most commodity price indices bottomed in March 1999;
however, they are now moving upward. The significance is that economic growth
will no longer be painless, but will be accompanied by rising commodity prices
and very likely rising inflation. It is hard to overestimate what rising
commodity prices and inflation will do to the market.
Over the past five years, approximately 60 percent of the S&P 500's gain came
from rising P/E (price-to-earnings) ratios. The other 40 percent came from
rising earnings. Historically, one of the strongest correlations with P/E is
commodity prices. When commodities are falling, P/E's tend to rise and vice
versa. Therefore, if commodity prices have begun a long-term rise--and many
signs suggest they have--then P/E's have probably risen as far as they are going
to rise. They may even fall in the years ahead. The major implication for
investors is that slow growth will no longer win the race. Investors are going
to have to invest in companies whose earnings are highly leveraged to major
economic trends.
INVESTMENT HIGHTLIGHTS
The MegaTrends Fund is focused on three groups that we believe can deliver
significant growth over the next five years. The first group is energy,
particularly oil drillers. Oil is still the world's leading commodity. The surge
in oil prices was one of the major investment stories in 1999, and it signaled
that OPEC firmly controls the world's oil market. The political and economic
case for oil drillers, the group most leveraged to rising oil prices, is,
therefore, very strong.
The fund is also highly weighted in property and casualty (P&C) insurers. Too
much money in the industry has put downward pressure on prices. Consequently,
profits have been weak over the past several years, despite very strong balance
sheets. Worldwide property damages have soared to record levels over the past
two years as a result of an increasingly unpredictable and erratic environment.
These damages drained excess capital from the industry.
10
<PAGE>
- --------------------------------------------------------------------------------
MEGATRENDS FUND
- --------------------------------------------------------------------------------
The fund also has a high, though less than market, weighting in technology and
telecommunication companies. Technology stocks are among the fastest growing,
and fast growth is essential for strong performance. But fast growth is not
priceless. Many technology stocks are currently trading at an unprecedented
three or more times their growth rates. They will continue to command very high
premiums until there are indications that the growth rates are slowing. At that
point, the ensuing correction could be severe. The prospect for a correction is
a major reason we have not taken a larger weighting in the group. In fact, we
may reduce our investment in this industry in the new year.
CURRENT OUTLOOK
Going forward, we expect the major market averages to remain in a trading range.
Rising interest rates and the declining dollar will likely rule out a big move
to the upside. Strong worldwide growth will protect stocks on the downside. The
key to success in any market--and especially one in a trading range--is finding
stocks with above average growth prospects. In addition to the companies
leveraged to rising commodity prices, such as the oil drillers, we also expect
property insurers, one of the worst performing groups in 1999, to grow in excess
of 20 percent over the next five years. We will continue to overweigh these
groups.
11
<PAGE>
- --------------------------------------------------------------------------------
MEGATRENDS FUND
- --------------------------------------------------------------------------------
--------------------------------------------------------------------
TOP 10 HOLDINGS BASED ON TOTAL INVESTMENTS
--------------------------------------------------------------------
BERKSHIRE HATHAWAY, INC 11.03%
HOLDING COMPANY
--------------------------------------------------------------------
UNITED STATES TREASURY COUPON STRIPS 5.63%
UNITED STATES GOVERNMENT OBLIGATION
--------------------------------------------------------------------
PIMCO ADVISORS HOLDINGS, L.P. 3.99%
FINANCIAL SERVICES
--------------------------------------------------------------------
NOBLE DRILLING CORP 3.83%
OIL & GAS EXTRACTION & SERVICES
--------------------------------------------------------------------
SONY CORP 3.68%
COMMUNICATIONS EQUIPMENT
--------------------------------------------------------------------
NABORS INDUSTRIES, INC 3.26%
OIL & GAS EXTRACTION & SERVICES
--------------------------------------------------------------------
DIAMOND OFFSHORE DRILLING, INC 3.20%
OIL & GAS EXTRACTION & SERVICES
--------------------------------------------------------------------
ACE LTD 2.80%
INSURANCE
--------------------------------------------------------------------
CHASE MANHATTAN CO 2.76%
BANKS
--------------------------------------------------------------------
PFIZER, INC 2.73%
HEALTHCARE EQUIPMENT
--------------------------------------------------------------------
TOP 5 INDUSTRIES BASED ON TOTAL INVESTMENTS
--------------------------------------------------------------------
HOLDING COMPANY 11.03%
OIL & GAS EXTRACTION & SERVICES 10.29%
UNITED STATES GOVERNMENT OBLIGATION 5.63%
FINANCIAL SERVICES 5.62%
BANKS 5.17%
12
<PAGE>
- --------------------------------------------------------------------------------
REGENT EASTERN EUROPEAN FUND
- --------------------------------------------------------------------------------
FUND MANAGER'S PERSPECTIVE
A MESSAGE FROM DOMINIC BOKOR-INGRAM
INTRODUCTION
The investment objective of the Regent Eastern European Fund is to achieve
capital growth by investing in a diversified portfolio of Eastern European
securities. The fund currently focuses its investments in companies located in
Poland, the Czech Republic and Hungary, and, to a lesser extent, Russia and the
Slovak Republic.
PERFORMANCE
[Linear graph plotted from data in table below]
----------------------------------------------------------------------
REGENT EASTERN EUROPEAN FUND
----------------------------------------------------------------------
REGENT ING BARINGS
EASTERN S&P EMERGING MARKETS
EUROPEAN 500 (EASTERN EUROPEAN
DATE FUND INDEX EUROPEAN INDEX)
--------- ----------- ----------- -----------
3/27/1997 $ 10,000.00
3/31/1997 $ 10,000.00 $ 10,000.00 $ 10,000.00
4/30/1997 $ 10,360.00 $ 10,596.46 $ 10,083.67
5/30/1997 $ 10,440.00 $ 11,241.13 $ 10,275.93
6/30/1997 $ 11,190.00 $ 11,744.45 $ 11,255.04
7/31/1997 $ 11,950.00 $ 12,678.42 $ 12,429.98
8/29/1997 $ 11,750.00 $ 11,968.68 $ 12,215.76
9/30/1997 $ 12,480.00 $ 12,623.80 $ 12,762.88
10/31/1997 $ 11,190.00 $ 12,202.67 $ 11,279.37
11/28/1997 $ 10,190.00 $ 12,767.09 $ 9,425.59
12/31/1997 $ 11,237.00 $ 12,986.19 $ 10,782.70
1/30/1998 $ 10,272.11 $ 13,129.69 $ 8,797.18
2/27/1998 $ 11,166.64 $ 14,076.11 $ 10,327.56
3/31/1998 $ 11,508.38 $ 14,796.35 $ 10,846.78
4/30/1998 $ 11,860.16 $ 14,945.14 $ 11,022.43
5/29/1998 $ 9,960.53 $ 14,688.60 $ 7,991.34
6/30/1998 $ 9,819.81 $ 15,284.81 $ 7,622.83
7/31/1998 $ 10,453.02 $ 15,122.46 $ 8,173.51
8/31/1998 $ 7,447.78 $ 12,938.32 $ 4,724.66
9/30/1998 $ 7,266.86 $ 13,767.20 $ 4,445.17
10/30/1998 $ 8,060.89 $ 14,886.04 $ 5,179.80
11/30/1998 $ 8,070.94 $ 15,787.88 $ 5,442.68
12/31/1998 $ 8,392.57 $ 16,697.06 $ 5,568.48
1/29/1999 $ 8,663.95 $ 17,395.01 $ 5,792.78
2/26/1999 $ 7,890.02 $ 16,854.47 $ 5,046.88
3/31/1999 $ 8,261.91 $ 17,528.62 $ 5,313.32
4/30/1999 $ 8,925.27 $ 18,207.41 $ 5,796.34
5/28/1999 $ 9,126.29 $ 17,778.07 $ 6,175.53
6/30/1999 $ 9,679.10 $ 18,763.92 $ 6,659.74
7/30/1999 $ 10,050.98 $ 18,178.90 $ 6,995.61
8/31/1999 $ 9,809.76 $ 18,088.89 $ 6,692.38
9/30/1999 $ 8,462.93 $ 17,593.62 $ 5,774.98
10/29/1999 $ 8,704.15 $ 18,706.48 $ 5,961.90
----------------------------------------------------------------------
AVERAGE ANNUAL PERFORMANCE FOR THE PERIODS ENDED
OCTOBER 31, 1999
----------------------------------------------------------------------
INCEPTION ONE YEAR
--------- --------
Regent Eastern European Fund
(Inception 3/31/97) (5.21)% 7.98%
S&P 500 Index 27.46% 25.66%
ING Barings Emerging Markets -
Eastern European Index (18.16)% 15.10%
--------------------
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 value. The ING
Barings Emerging Markets - Eastern European Index is comprised of
individual companies representative of the Eastern European markets.
13
<PAGE>
- --------------------------------------------------------------------------------
REGENT EASTERN EUROPEAN FUND
- --------------------------------------------------------------------------------
THE YEAR IN REVIEW - THE BIG PICTURE ECONOMIC AND POLITICAL ISSUES THAT AFFECTED
THE MARKETS
This has been a year of contrasting performances among the stock markets of the
Eastern European region. The Russian equity market, one of the world's best
performing markets, rose over 120%, while the developing markets of Central
Europe failed to recover the losses suffered in 1998. Although the conflict in
Kosovo depressed asset prices across the region, the fund did not suffer any
direct losses because our exposure to former Yugoslavia was minimal.
The Russian recovery has been driven by the realization that the doomsday
economic and political scenarios predicted last year by many market commentators
have not materialized. Although there have been three different Russian
governments since the simultaneous default and devaluation of the local currency
debt in August 1998, there has not been much in the way of policy
differentiation between them.
A succession of Russian prime ministers has emphasized the short-term nature of
Russian politics, but the lack of continuity has not, at least on the surface,
led to deterioration in economic stability. The lack of severe political
disruption and favorable external conditions have led to a positive shift in
investor perception. High international oil prices have contributed positively
to Russia's external position, while also providing exceptional operating
conditions for Russia's oil companies. It is these companies that have attracted
the largest share of foreign investment capital, as investor attention has
focussed on companies with strong cash-flow generation, combined with decent
corporate governance records. The fund has retained exposure to this sector via
its investment in Lukoil. We are optimistic that the high price of crude offers
room for significant capital appreciation from this position.
INVESTMENT HIGHLIGHTS
The fund has remained heavily exposed to the Polish and Hungarian markets. We
believe that these countries will be among the first to be accepted into the
enlarged European Union (EU). Both countries have made significant progress in
achieving the economic criteria necessary for membership. They also remain
firmly committed to implementing further structural reform. This commitment has
attracted vital foreign investment, which has helped drive economic growth. EU
companies have invested heavily in securing cheap production facilities that are
well positioned to serve both the local and EU market. In fact, EU countries
have accounted
14
<PAGE>
- --------------------------------------------------------------------------------
REGENT EASTERN EUROPEAN FUND
- --------------------------------------------------------------------------------
for 64% of foreign direct investment into the Baltic and Central and Eastern
European (CEE) states since 1993.
The Russian crisis did have a detrimental impact on exports. However, both
Poland and Hungary generated real GDP growth close to 5% in 1998, compared to
2.2% for Germany and 3.4% for France. A similar rate is expected this year.
Although the EU entry timetable remains uncertain, it seems that existing
members are determined to expand eastwards. This is good news for the region, as
qualifying countries will be entitled to pre-accession funding, which should
ease the transition process and lead to significant gains for portfolio
investors.
Another reason for focusing on Poland and Hungary is liquidity. Investors are
paying a high premium for liquidity. In a fund like the Regent Eastern European
Fund, we believe it is prudent to maintain liquidity both in terms of cash
position and underlying investments.
Hungary is ahead of the other Central European countries in its ability to
generate economic growth and convert this growth into corporate earnings.
Hungarian corporate governance and company management is the best in the region.
The combination of these two factors has led to an increase in shareholder
value. We believe this situation will continue. There have been very few cases
of shareholder rights abuses in Hungary, and with the diversified nature of the
market, we believe that we can gain exposure to a broad spectrum of Hungarian
industries in large, liquid blue-chip companies. Our weighting in Hungary as of
October 31, 1999, was 42% of the total fund. We are comfortable with this
position and do not expect to reduce it unless liquidity is required to
facilitate redemptions.
The Polish market is the other Central European market where we see huge
potential. Polish economic growth has been very strong for the last four years.
In fact, Poland is now the leading CEE country in terms of real GDP growth. A
failure to convert this economic growth into earnings is the main reason for
poor stock market returns. In order for the Polish market to perform, this needs
to change. The current wave of strategic investment in Polish financial assets
could well prove to be the catalyst for the corporate restructuring that needs
to take place. All twelve Polish regional banks have a foreign strategic
shareholder. Consolidation in this competitive market is expected to intensify.
Given the pivotal role of the banking sector in the reform process, we believe
that the successful privatization of these assets will generate long-term
returns for investors in the Polish economy.
15
<PAGE>
- --------------------------------------------------------------------------------
REGENT EASTERN EUROPEAN FUND
- --------------------------------------------------------------------------------
CURRENT OUTLOOK
Going forward, we believe that political events in Russia could lead to a sharp
increase in asset prices. Based on current polls, the December 1999 Duma
elections may lead to a more centrist-leaning government. This in turn opens the
door for the election of a more reform-minded president in 2000. Although the
presidential contenders are unknown at this time, there is a belief that an
extremist candidate is unlikely to find favor with Russian voters. The markets
of Central Europe will be driven by growth prospects in Western Europe and
progress with regard to EU enlargement. The December 1999 EU Helsinki meeting
should clear the way for prospective EU members to move toward full accession.
We believe the fund is well positioned to take advantage of these developments.
16
<PAGE>
- --------------------------------------------------------------------------------
REGENT EASTERN EUROPEAN FUND
- --------------------------------------------------------------------------------
--------------------------------------------------------------------
TOP 10 HOLDINGS BASED ON TOTAL INVESTMENTS
--------------------------------------------------------------------
KGHM POLSKA MIEDZ 11.54%
METALS MINING
--------------------------------------------------------------------
MOL MAGYAR OLAJ-ES GAZIPARI RT 10.34%
OIL & GAS EXTRACTION
--------------------------------------------------------------------
BORSODCHEM RT 7.26%
CHEMICALS
--------------------------------------------------------------------
LUKOIL HOLDINGS 6.24%
OIL & GAS EXTRACTION
--------------------------------------------------------------------
GEDEON RICHTER LTD 5.96%
PHARMACEUTICALS
--------------------------------------------------------------------
CENTRAL EUROPEAN GROWTH FUND 5.78%
INVESTMENT COMPANIES
--------------------------------------------------------------------
MAGYAR TAVKOZLESI RT 5.58%
COMMUNICATIONS
--------------------------------------------------------------------
BUDIMEX SA 5.57%
CONSTRUCTION
--------------------------------------------------------------------
ELEKTRIM SPOLKA AKCYJNA 5.54%
CONGLOMERATES
--------------------------------------------------------------------
OTP BANK 5.44%
COMMERCIAL BANKS
--------------------------------------------------------------------
TOP 5 INDUSTRIES BASED ON TOTAL INVESTMENTS
--------------------------------------------------------------------
OIL & GAS EXTRACTION 18.89%
PHARMACEUTICALS 13.52%
METALS MINING 11.54%
COMMERCIAL BANKS 11.40%
COMMUNICATIONS 7.42%
17
<PAGE>
- --------------------------------------------------------------------------------
BONNEL GROWTH FUND
- --------------------------------------------------------------------------------
----------------------------------------------------------------
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1999
----------------------------------------------------------------
COMMON STOCKS 99.61% SHARES VALUE
--------------------------------- ------ -----------
BEVERAGES 0.27%
Anheuser-Busch Companies, Inc. 5,000 $ 359,063
BUILDING PRODUCTS 1.30%
Home Depot, Inc. 23,000 1,736,500
BUSINESS SERVICES 3.25%
Concord EFS, Inc. 60,000 1,623,750*
Diamond Technology Partners, Inc. 20,000 1,292,500*
Scientific Atlanta, Inc. 25,000 1,431,250
-----------
4,347,500
COMMERCIAL SERVICES 1.09%
Abacus Direct Corp. 10,000 1,465,000*
COMPUTER DATA SECURITY 1.15%
Check Point Software Technologies Ltd. 5,000 578,438*
Entrust Technologies, Inc. 10,000 251,250*
RSA Security, Inc. 20,000 710,000*
-----------
1,539,688
COMPUTER SOFTWARE & HARDWARE 21.16%
Adobe Systems, Inc. 30,000 2,098,125
Advent Software, Inc. 45,000 2,705,625*
Citrix Systems, Inc. 33,000 2,116,125*
Computer Associates International, Inc. 20,000 1,130,000
Dell Computer Co. 20,000 802,500*
Legato Systems, Inc. 44,000 2,365,000*
Mercury Interactive Corp. 46,000 3,731,750*
Microchip Technology, Inc. 37,000 2,465,125*
Microsoft Corp. 21,000 1,943,812*
Midway Games, Inc. 10,000 199,375*
PC Connection, Inc. 20,000 415,000*
Peregrine Systems, Inc. 20,000 877,500*
Rational Software Co. 44,000 1,881,000*
Timberline Software Corp. 25,000 443,750
WebTrends Corp. 20,000 1,235,000*
Xilinx, Inc. 50,000 3,931,250*
-----------
28,340,937
COMPUTERS & DATA PROCESSING 10.13%
Advanced Digital Information 30,000 1,117,500*
CDW Computer Centers, Inc. 22,000 1,358,500*
Cisco Systems, Inc. 60,000 4,440,000*
FactSet Research Systems, Inc. 24,500 1,627,719
18
<PAGE>
- --------------------------------------------------------------------------------
BONNEL GROWTH FUND
- --------------------------------------------------------------------------------
----------------------------------------------------------------
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1999
----------------------------------------------------------------
COMMON STOCKS SHARES VALUE
--------------------------------- ------ -----------
COMPUTERS & DATA PROCESSING (CONT'D)
In Focus Systems, Inc. 20,000 $ 396,250*
Mercury Computer Systems, Inc. 10,000 448,750*
SanDisk Corp. 20,000 1,212,500*
Sun Microsystems, Inc. 28,000 2,962,750*
-----------
13,563,969
CONSUMER PRODUCTS 0.62%
Fossil, Inc. 30,000 828,750*
DIVERSIFIED MANUFACTURING 1.81%
United Technologies Corp. 40,000 2,420,000
ELECTRONICS & COMPONENTS 21.18%
Altera Corp. 20,000 972,500*
Broadcom Corp., Class A 15,000 1,917,188*
Burr-Brown Corp. 20,000 786,250*
EMC Co. 34,000 2,482,000*
Excel Technology, Inc. 10,000 156,875*
Galileo Technology Ltd. 10,000 228,750*
Gemstar International Group Ltd. 30,000 2,606,250*
Genrad, Inc. 10,000 191,250*
Intel Co. 6,000 464,625
Micrel, Inc. 10,000 543,750*
Optical Coating Lab, Inc. 20,000 2,137,500
Power Integrations, Inc. 40,000 4,077,500*
QLogic Co. 41,000 4,269,125*
Rambus, Inc. 10,000 676,250*
Sanmina Corp. 15,000 1,350,937*
Sawtek, Inc. 20,000 820,000*
Semtech Corp. 10,000 383,125*
Solectron Corp. 30,000 2,257,500*
Three-Five Systems, Inc. 20,000 676,250*
TriQuint Semiconductor, Inc. 10,000 800,000*
Zoran Corp. 20,000 577,500*
-----------
28,375,125
FIBER OPTICS 7.62%
E-Tek Dynamics, Inc. 38,000 2,531,750*
Harmonic Lightwaves, Inc. 45,000 2,671,875*
JDS Uniphase Corp. 30,000 5,006,250*
-----------
10,209,875
FOOD PRODUCTS 0.80%
Hormel Foods Corp. 25,000 1,078,125
19
<PAGE>
- --------------------------------------------------------------------------------
BONNEL GROWTH FUND
- --------------------------------------------------------------------------------
----------------------------------------------------------------
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1999
----------------------------------------------------------------
COMMON STOCKS SHARES VALUE
--------------------------------- ------ -----------
HOME FURNISHINGS 0.58%
Ethan Allen Interiors, Inc. 22,000 $ 782,375
INTERNET 1.33%
Network Solutions, Inc., Class A 15,000 1,777,500*
MANUFACTURING 1.76%
General Electric Co. 15,000 2,033,437
Mueller Industries, Inc. 10,000 319,375*
-----------
2,352,812
MEDICAL PRODUCTS 2.93%
Johnson & Johnson 25,000 2,618,750
St. Jude Medical, Inc. 25,000 684,375*
VISX, Inc. 10,000 625,625*
-----------
3,928,750
MOTION PICTURES & SERVICES 2.38%
Macrovision Corp. 50,000 2,831,250*
Zomax, Inc. 13,000 362,375*
-----------
3,193,625
NETWORKING PRODUCTS 0.92%
Black Box Corp. 15,000 761,250*
Proxim, Inc. 10,000 468,125*
-----------
1,229,375
PHARMACEUTICALS 8.02%
Amgen, Inc. 33,000 2,631,750*
Biovail Corp. 36,000 1,986,750*
IDEC Pharmaceuticals Corp. 25,000 2,904,687*
Immunex Corp. 20,000 1,260,000*
Jones Pharma, Inc. 10,000 310,000
King Pharmaceuticals, Inc. 10,000 302,500*
MedImmune, Inc. 5,000 560,000*
Pfizer, Inc. 20,000 790,000
-----------
10,745,687
RETAIL 4.35%
Gap, Inc. 5,000 185,625
Liz Claiborne 25,000 1,000,000
Tiffany & Co. 40,000 2,380,000
Wal-Mart Stores, Inc. 40,000 2,267,500
-----------
5,833,125
20
<PAGE>
- --------------------------------------------------------------------------------
BONNEL GROWTH FUND
- --------------------------------------------------------------------------------
----------------------------------------------------------------
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1999
----------------------------------------------------------------
COMMON STOCKS SHARES VALUE
--------------------------------- ------ -----------
SEMICONDUCTORS 0.80%
Applied Materials, Inc. 12,000 $ 1,077,750*
TELECOMMUNICATIONS 5.98%
ADTRAN, Inc. 20,000 742,500*
Clear Channel Communications, Inc. 15,000 1,205,625*
Linear Technology Corp. 20,000 1,398,750
Lucent Technologies, Inc. 25,000 1,606,250
PanAmSat Corp. 10,000 395,000*
Polycom, Inc. 20,000 1,000,000*
RF Micro Devices, Inc. 24,000 1,239,000*
Veramark Technologies, Inc. 30,000 421,875*
-----------
8,009,000
TRANSPORTATION 0.18%
Kansas City Southern Industries, Inc. 5,000 237,188
TOTAL COMMON STOCKS 133,431,719
===========
(cost $101,516,199)
PRINCIPAL
REPURCHASE AGREEMENT 0.84% AMOUNT
Joint Tri-Party Repurchase
Agreement, Donaldson, Lufkin &
Jenrette, 10/29/99, 5.22%, due
11/01/99, repurchase price
$1,124,790 collateralized by U.S.
Treasury securities held in a joint
tri-party repurchase account (cost
$1,124,301) $1,124,301 1,124,301
TOTAL INVESTMENTS 100.45% 134,556,020
============
(cost $102,640,500)
Other assets and liabilities, net (0.45)% (607,049)
------------
NET ASSETS 100% $133,948,971
============
* Non-income producing security
See accompanying notes to portfolios of investments.
21
<PAGE>
- --------------------------------------------------------------------------------
MEGATRENDS FUND
- --------------------------------------------------------------------------------
----------------------------------------------------------------
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1999
----------------------------------------------------------------
COMMON STOCKS 72,78% SHARES VALUE
--------------------------------- ------ -----------
AEROSPACE 2.45%
AlliedSignal, Inc. 7,500 $ 427,031
BANKS 5.15%
Bank of New York Co., Inc. 10,000 418,750
Chase Manhattan Co. 5,500 480,562
-----------
899,312
BUILDING PRODUCTS 2.16%
Home Depot, Inc. 5,000 377,500
BUSINESS SERVICES 1.87%
Ciber, Inc. 20,000 326,250*
COMMUNICATIONS EQUIPMENT 3.66%
Sony Corp., ADR 4,000 639,000
COMPUTERS & DATA PROCESSING 4.88%
Cisco Systems, Inc. 6,000 444,000*
Hewlett Packard Co. 5,500 407,344
-----------
851,344
EDUCATIONAL SERVICES 1.67%
Sylvan Learning Systems, Inc. 22,500 291,094*
ELECTRONICS & COMPONENTS 2.66%
Intel Corp. 6,000 464,625
FINANCIAL SERVICES 5.60%
Fannie Mae 4,000 283,000
Pimco Advisors Holdings, L.P. 20,000 693,750
-----------
976,750
HEALTHCARE EQUIPMENT 2.71%
Pfizer, Inc. 12,000 474,000
HOLDING COMPANY 10.98%
Berkshire Hathaway, Inc., Class A 30 1,917,000*
INSURANCE 5.05%
ACE Ltd. 25,000 485,938
Unumprovident Corp. 12,000 395,250
-----------
881,188
22
<PAGE>
- --------------------------------------------------------------------------------
MEGATRENDS FUND
- --------------------------------------------------------------------------------
----------------------------------------------------------------
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1999
----------------------------------------------------------------
COMMON STOCKS SHARES VALUE
--------------------------------- ------ -----------
MANUFACTURING 1.27%
Arch Chemical, Inc. 15,000 $ 221,250
MEDICINE 1.92%
Elan Corp. plc, ADR 13,000 334,750*
METAL MINING 1.14%
Stillwater Mining Co. 9,875 198,734*
OIL & GAS EXTRACTION & SERVICES 10.25%
Diamond Offshore Drilling, Inc. 17,500 555,625
Nabors Industries, Inc. 25,000 567,187*
Noble Drilling Corp. 30,000 665,625*
-----------
1,788,437
REAL ESTATE INVESTMENT TRUSTS 5.07%
BRE Properties, Inc., Class A 13,000 294,938
Crescent Real Estate Equities Co. 16,700 278,681
New Plan Excel Realty Trust 18,000 311,625
-----------
885,244
RETAIL 1.83%
AutoZone, Inc. 12,000 318,750*
TELECOMMUNICATIONS 2.46%
MCI Worldcom, Inc. 5,000 429,063*
TOTAL COMMON STOCKS 12,701,322
===========
(cost $11,418,455)
UNITED STATES GOVERNMENT PRINCIPAL
OBLIGATION 5.60% AMOUNT
United States Treasury Coupon
Strips Due 08/15/21
(cost $948,385) $4,000,000 978,040
23
<PAGE>
- --------------------------------------------------------------------------------
MEGATRENDS FUND
- --------------------------------------------------------------------------------
----------------------------------------------------------------
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1999
----------------------------------------------------------------
PRINCIPAL
REPURCHASE AGREEMENT 21.21% AMOUNT VALUE
Joint Tri-Party Repurchase
Agreement, Donaldson, Lufkin &
Jenrette, 10/29/99, 5.22%, due
11/01/99, repurchase price
$3,703,961, collateralized by U.S.
Treasury securities held in a joint
tri-party repurchase account (cost
$3,702,350) $3,702,350 $3,702,350
TOTAL INVESTMENTS 99.59% 17,381,712
==========
(cost $16,069,190)
Other assets and liabilities, net 0.41% 71,020
-----------
NET ASSETS 100% $17,452,732
===========
ADR - American Depositary Receipt
* Non-income producing security
See accompanying notes to portfolios of investments.
24
<PAGE>
- --------------------------------------------------------------------------------
REGENT EASTERN EUROPEAN FUND
- --------------------------------------------------------------------------------
----------------------------------------------------------------
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1999
----------------------------------------------------------------
COMMON AND PREFERRED STOCKS 95.20% SHARES VALUE
---------------------------------- ------ -----------
AUTOMOTIVE 0.03%
KamAZ 25,000 $ 1,625*
CHEMICALS 7.29%
BorsodChem Rt., GDR 12,552 379,698
COMMERCIAL BANKS 11.44%
Bank Handlowy W. Warszawie 10,650 149,925
OTP Bank, GDR 4,777 215,085
OTP Bank, Preferred Stock 3,503 69,216
Powszechny Bank Kredytowy 1,217 22,064
Powszechny Bank Kredytowy, GDR 3,840 69,888*
SKB Banka, GDR 6,225 69,876
-----------
596,054
COMMUNICATIONS 7.44%
Magyar Tavkozlesi Rt., ADR 10,114 291,410
Rostelekom 109,900 96,162*
-----------
387,572
COMPUTERS & DATA PROCESSING 2.22%
Softbank SA, GDR 3,861 115,830
CONGLOMERATES 5.56%
Elektrim Spolka Akcyjna 33,922 289,416*
CONSTRUCTION 5.59%
Budimex SA 51,200 291,219*
ELECTRIC SERVICES 3.05%
Irkutskenergo 824,279 56,875
Irkutskenergo, ADR 14,090 49,315
Unified Energy Systems 910,285 52,706
-----------
158,896
INVESTMENT COMPANIES 5.79%
Central European Growth Fund 440,000 301,911*
MANUFACTURING 2.71%
Graboplast Rt 4,076 30,841*
Graboplast Rt., GDR 33,890 44,057*
Mostostal-Export 82,764 66,493
-----------
141,391
25
<PAGE>
- --------------------------------------------------------------------------------
REGENT EASTERN EUROPEAN FUND
- --------------------------------------------------------------------------------
----------------------------------------------------------------
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1999
----------------------------------------------------------------
COMMON AND PREFERRED STOCKS SHARES VALUE
---------------------------------- ------ -----------
METALS MINING 11.57%
Ashurst Technology Ltd., Units 93,470 $ 0*
KGHM Polska Miedz 51,998 295,758
KGHM Polska Miedz, GDR 24,535 307,301
-----------
603,059
OIL & GAS EXTRACTION 18.95%
Lukoil Holdings, ADR 10,270 326,072
MOL Magyar Olaj-es Gazipari Rt 11,000 221,647
MOL Magyar Olaj-es Gazipari Rt., GDR 15,948 318,960
Primagaz Hungaria Co., Ltd. 13,270 120,597
-----------
987,276
PHARMACEUTICALS 13.56%
EGIS Pharmaceuticals Ltd. 6,542 195,039
Gedeon Richter Ltd., GDR 6,930 311,330*
Pliva 18,393 200,024
-----------
706,393
-----------
TOTAL COMMON AND PREFERRED STOCKS 4,960,340
===========
(cost $6,529,178)
PRINCIPAL
REPURCHASE AGREEMENT 5.11% AMOUNT
JointTri-Party Repurchase
Agreement, Donaldson, Lufkin &
Jenrette, 10/29/99, 5.22%, due
11/01/99, repurchase price
$266,222, collateralized by U.S.
Treasury securities held in a joint
tri-party repurchase account (cost
$266,106) $266,106 266,106
Total Investments 100.31% 5,226,446
==========
(cost $6,795,284)
Other assets and liabilities, net (0.31)% (16,224)
----------
NET ASSETS 100% $5,210,222
==========
ADR - American Depositary Receipt
GDR - Global Depositary Receipt *
Non-income producing security
See accompanying notes to portfolios of investments.
26
<PAGE>
----------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS OCTOBER 31, 1999
----------------------------------------------------------------
GLOBAL PORTFOLIO SECURITIES BY COUNTRY
--------------------------------------
PERCENTAGE
OF
TOTAL
COUNTRY VALUE INVESTMENTS
---------------------------- --------- -----------
REGENT EASTERN EUROPEAN FUND
Hungary $2,197,878 42.05%
Poland 1,538,008 29.43
Russia 652,631 12.49
United Kingdom 371,799 7.11
Croatia 200,024 3.83
United States - Repurchase
Agreements 266,106 5.09
---------- ------
TOTAL INVESTMENTS $5,226,446 100.00%
========== ======
JOINT TRI-PARTY REPURCHASE AGREEMENTS (SEE ALSO NOTE 1 TO FINANCIAL
STATEMENTS.)
The terms of the repurchase agreements and the securities held as
collateral in the tri-party joint repurchase agreements at October 31,
1999 were:
Donaldson, Lufkin & Jenrette repurchase agreement, 10/29/99, 5.22%,
due 11/01/99 (with a market value of $51,932,793)
$50,000,000 U.S. Treasury Strip, 8.125%, 05/15/21
$28,531,000 U.S. Treasury Strip, 8.75%, 05/15/17
$24,760,000 U.S. Treasury Strip, 0.00%, 05/15/23
$19,093,000 U.S. Treasury Strip, 0.00%, 11/15/15
$12,117,000 U.S. Treasury Bond, 11.75%, 02/15/01
$9,800,000 U.S. Treasury Strip, 0.00%, 08/15/21
$2,791,000 U.S. Treasury Note, 6.50%, 05/15/05
$571,000 U.S. Treasury Bond, 9.25%, 02/15/16
Total principal amount: $51,269,028; Total repurchase value:
$51,291,330
Other mutual funds managed by U.S. Global Investors, Inc. participate
in the tri-party joint repurchase agreements. Each owns an undivided
interest in the accounts.
27
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES OCTOBER 31, 1999
- --------------------------------------------------------------------------------
BONNEL GROWTH MEGATRENDS REGENT EASTERN
FUND FUND EUROPEAN FUND
------------ ----------- ----------
Investments, at
identified cost $102,640,500 $16,069,190 $6,795,284
============ =========== ==========
ASSETS
Investments, at
value:
Securities $133,431,719 $13,679,362 $4,960,340
Repurchase agreements 1,124,301 3,702,350 266,106
Cash 1,546 -- --
Receivables:
Investments sold 3,129,154 101,359 --
Dividends 5,925 17,661 3,816
Interest 489 1,610 116
Capital shares sold 143,147 177 50
From manager -- -- 6,450
Other assets 9,797 2,010 495
------------ ----------- ----------
TOTAL ASSETS 137,846,078 17,504,529 5,237,373
============ =========== ==========
LIABILITIES
Payables:
Investments purchased 3,529,382 -- --
Capital shares
redeemed 146,013 10 573
To manager and
affiliates 122,725 17,909 --
Accounts payable and
accrued expenses 98,987 33,878 26,578
------------ ----------- ----------
TOTAL LIABILITIES 3,897,107 51,797 27,151
============ =========== ==========
NET ASSETS $133,948,971 $17,452,732 $5,210,222
============ =========== ==========
NET ASSETS CONSIST OF:
Paid in capital $ 77,542,858 $14,483,065 $7,462,182
Undistributed net
investment loss -- -- (24,748)
Accumulated net
realized gain
(loss) on
investments and
foreign currencies 24,490,593 1,657,145 (658,375)
Net unrealized
appreciation
(depreciation) of
investments and
other assets and
liabilities
denominated in
foreign currencies 31,915,520 1,312,522 (1,568,837)
------------ ----------- ----------
Net assets applicable
to capital shares
outstanding $133,948,971 $17,452,732 $5,210,222
============ =========== ==========
Capital shares
outstanding, and
unlimited number of
no par shares
authorized 5,321,114 1,621,528 601,482
============ =========== ==========
NET ASSET VALUE,
PER SHARE $ 25.17 $ 10.76 $ 8.66
============ =========== ==========
See accompanying notes to financial statements.
28
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED OCTOBER 31, 1999
- --------------------------------------------------------------------------------
BONNEL GROWTH MEGATRENDS REGENT EASTERN
FUND FUND EUROPEAN FUND
------------ ----------- ---------
NET INVESTMENT
INCOME
INCOME:
Dividends $ 273,023 $ 216,374 $ 58,990
Foreign taxes withheld
on dividends (450) (1,029) (10,449)
------------ ----------- ---------
Net dividends 272,573 215,345 48,541
Interest and other 122,736 197,691 65,911
------------ ----------- ---------
TOTAL INCOME 395,309 413,036 114,452
EXPENSES:
Management fees 1,112,866 194,271 72,549
Transfer agent fees
and expenses 223,212 43,224 30,212
Accounting service fees and
expenses 51,751 42,159 35,562
Legal and professional fees 128,515 49,935 7,765
Distribution plan expenses 278,216 20,127 14,507
Custodian fees 39,355 16,555 37,305
Shareholder reporting
expenses 63,583 17,570 9,643
Registration fees 14,764 11,195 16,447
Trustees' fees and expenses 17,903 17,645 17,613
Interest expense 1,195 10 4
Miscellaneous expenses 37,732 9,829 11,822
------------ ----------- ---------
Total expenses before
reductions 1,969,092 422,520 253,429
Short-term trading fee (1,195) (10) (4)
Expenses offset (1,007) -- (851)
------------ ----------- ---------
NET EXPENSES 1,966,890 422,510 252,574
NET INVESTMENT LOSS (1,571,581) (9,474) (138,122)
============ =========== =========
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Realized gain (loss) from:
Securities 28,060,703 1,669,405 (283,514)
Foreign currency
transactions -- -- (804)
------------ ----------- ---------
NET REALIZED GAIN (LOSS) 28,060,703 1,669,405 (284,318)
------------ ----------- ---------
Net change in unrealized
appreciation
(depreciation) of:
Investments 25,165,059 846,486 849,945
Other assets and liabilities
denominated in foreign
currencies -- -- (13)
------------ ----------- ---------
NET UNREALIZED APPRECIATION 25,165,059 846,486 849,932
------------ ----------- ---------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS 53,225,762 2,515,891 565,614
============ =========== =========
NET INCREASE IN NET
ASSETS RESULTING FROM
OPERATIONS $ 51,654,181 $ 2,506,417 $ 427,492
============ =========== =========
See accompanying notes to financial statements.
29
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
BONNEL GROWTH FUND
------------------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, 1999 OCTOBER 31, 1998
---------------- ----------------
INCREASE (DECREASE) IN NET ASSETS
FROM INVESTMENT OPERATIONS:
Net investment loss $ (1,571,581) $ (1,214,899)
Net realized gain (loss) 28,060,703 2,500,611
Net unrealized appreciation
(depreciation) 25,165,059 557,231
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM INVESTMENT OPERATIONS 51,654,181 1,842,943
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income -- --
In excess of net investment income -- --
From net capital gains (3,150,077) (19,869,076)
In excess of net capital gains -- --
------------- -------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (3,150,077) (19,869,076)
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 36,732,366 41,181,987
Distributions reinvested 3,037,219 19,029,963
Paid-in capital portion of short-term
trading fee 26,232 35,700
------------- -------------
39,795,817 60,247,650
Cost of shares redeemed (42,101,926) (59,113,926)
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM CAPITAL SHARE TRANSACTIONS (2,306,109) 1,133,724
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS 46,197,995 (16,892,409)
============= =============
NET ASSETS
Beginning of year 87,750,976 104,643,385
END OF YEAR $ 133,948,971 $ 87,750,976
Undistributed net investment
income, end of year $ -- $ --
============= =============
CAPITAL SHARE ACTIVITY
Shares sold 1,786,758 2,421,759
Shares reinvested 177,511 1,148,488
Shares redeemed (2,067,277) (3,462,041)
------------- -------------
NET SHARE ACTIVITY (103,008) 108,206
============= =============
See accompanying notes to financial statements.
30
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MEGATRENDS FUND REGENT EASTERN EUROPEAN FUND
----------------------------------- ----------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 1999 OCTOBER 31, 1998 OCTOBER 31, 1999 OCTOBER 31, 1998
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM INVESTMENT OPERATIONS:
Net investment loss $ (9,474) $ (33,041) $ (138,122) $ (188,763)
Net realized gain (loss) 1,669,405 3,311,828 (284,318) (388,310)
Net unrealized appreciation
(depreciation) 846,486 (4,265,251) 849,932 (1,942,918)
------------ ------------ ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
FROM INVESTMENT OPERATIONS 2,506,417 (986,464) 427,492 (2,519,991)
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income -- -- -- --
In excess of net investment income -- (19,609) -- (6,642)
From net capital gains (3,268,120) (3,583,127) -- --
In excess of net capital gains -- -- -- (40,682)
------------ ------------ ----------- -----------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS
FROM CAPITAL SHARE TRANSACTIONS: (3,268,120) (3,602,736) -- (47,324)
Proceeds from shares sold 1,151,502 2,367,612 1,558,408 4,605,933
Distributions reinvested 3,186,923 3,496,527 -- 36,357
Paid-in capital portion of short-term
trading fee 278 2,685 12,305 37,949
------------ ------------ ----------- -----------
4,338,703 5,866,824 1,570,713 4,680,239
Cost of shares redeemed (6,863,801) (6,030,092) (2,464,106) (5,215,039)
------------ ------------ ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
FROM CAPITAL SHARE TRANSACTIONS (2,525,098) (163,268) (893,393) (534,800)
NET INCREASE (DECREASE) IN NET ASSETS (3,286,801) (4,752,468) (465,901) (3,102,115)
============ ============ =========== ===========
NET ASSETS
Beginning of year 20,739,533 25,492,001 5,676,123 8,778,238
END OF YEAR $ 17,452,732 $ 20,739,533 $ 5,210,222 $ 5,676,123
============ ============ =========== ===========
Undistributed net investment
income, end of year $ -- $ -- $ (24,748) $ --
============ ============ =========== ===========
CAPITAL SHARE ACTIVITY
Shares sold 107,017 188,788 177,873 443,625
Shares reinvested 328,888 294,817 -- 3,252
Shares redeemed (642,295) (489,698) (284,245) (523,317)
------------ ------------ ----------- -----------
NET SHARE ACTIVITY (206,390) (6,093) (106,372) (76,440)
============ ============ =========== ===========
</TABLE>
31
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1999
- --------------------------------------------------------------------------------
NOTE 1: SIGNIFICANT ACCOUNTING POLICIES
U.S. Global Accolade Funds (Trust), consisting of three separate funds (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, as amended.
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 or using quotes provided by principal market makers. Short-term
investments with effective maturities of sixty days or less at the date of
purchase may be valued at amortized cost, which approximates market value.
Securities for which market quotations are not readily available are valued at
their fair value as determined in good faith under consistently applied
procedures under the general supervision of the board of trustees.
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. Investment income is recorded net of
foreign taxes withheld where recovery of such taxes is uncertain.
The funds may purchase securities on a when-issued or delayed- delivery basis
and segregate on their books collateral with a value at least equal to the
amount of the commitment. Losses may arise due to the changes in the value of
the underlying securities or if the counterparty does not perform under the
contract.
Each fund may temporarily loan securities up to 10% of its total assets to
brokers, dealers or other financial institutions in exchange for a negotiated
lender's fee. These fees are securities lending income. The loans are
collateralized by cash, U.S. government securities, high quality money market
instruments or other securities that are maintained at all times in an amount
at least equal to the current market value of the loaned securities, plus a
margin depending on the types of securities loaned. The market value of the
loaned securities is determined at the close of business of the fund and any
additional required collateral is delivered to the fund
32
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1999
- --------------------------------------------------------------------------------
on the next business day. In the event of default or bankruptcy by the
borrower, retention of the collateral may be subject to legal proceedings.
The market value of securities on loan and the related collateral at October
31, 1999 was:
FUND MARKET VALUE COLLATERAL
------------------ ------------ ----------
Bonnel Growth Fund $476,785 $498,400
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 tri-party 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 account.
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 prevailing
exchange rate. Security transactions, income and expenses are converted at the
prevailing rate of exchange on the respective dates of the transactions. 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.
E. OPTIONS
Some funds may write or purchase options on securities to manage their exposure
to stock or commodity markets as well as fluctuations in interest and currency
conversion rates. Written options include a risk of loss in excess of the
option premium. The use of options carries the risks of a change in value of
the underlying instruments, an illiquid secondary market, or failure of the
counterparty to perform its obligations. The option premium is the basis for
recognition of unrealized or realized gain or loss on the option. The cost of
securities acquired or the proceeds from securities sold through the exercise
of the option is adjusted by the amount of the premium. There was no activity
in options written or purchased for the year ended October 31, 1999.
F. INCOME TAXES
The funds intend to continue to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
33
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1999
- --------------------------------------------------------------------------------
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 on
the fund's understanding of the tax rules and regulations in the foreign
markets.
G. 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,
which may differ from generally accepted accounting principles. Accordingly,
periodic reclassifications related to permanent book and tax basis differences
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.
H. 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 costs; any excess of short-term trading fees is treated
as paid-in capital. Expense offset arrangements have been made with the funds'
custodian so the custodian fees may be paid indirectly by credits earned on the
funds' cash balances. Such deposit arrangements are an alternative to overnight
investments.
I. 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
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
NOTE 2: RELATED PARTY TRANSACTIONS
U.S. Global Investors, Inc. (Adviser), under an investment advisory agreement
with the Trust in effect through March 8, 2000, 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 Adviser 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 Adviser.
34
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1999
- --------------------------------------------------------------------------------
For each fund, the Adviser has contracted with and compensates sub-advisers to
serve in the execution of the Adviser's investment responsibilities as follows:
Bonnel Growth Fund Bonnel, Inc.
MegaTrends Fund Money Growth Institute, Inc.
Regent Eastern European Fund Regent Fund Management, Ltd.
For the services of the Adviser, each fund pays a management fee at an annual
rate of 1.00% for Bonnel Growth Fund and MegaTrends Fund and 1.25% for Regent
Eastern European Fund based on their average net assets. Fees are accrued daily
and paid monthly.
United Shareholder Services, Inc. (USSI), a wholly-owned subsidiary of the
Adviser, is transfer 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. Additionally, the Adviser is reimbursed
at cost for in-house legal services pertaining to each fund. Effective November
1, 1997, the funds engaged Brown Brothers Harriman & Co. as the custodian, fund
accounting and administration service agent with a fee structure based on
average net assets of the funds.
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 0.25% of its
average net assets to be used for, or to reimburse the Adviser for,
expenditures in connection with sales and promotional services related to the
distribution of each fund's shares. A portion of this fee may be reallowed to
securities dealers, banks and other financial institutions for the distribution
of shares and providing shareholder support services.
Leeb Brokerage Services, a broker/dealer affiliate of Money Growth Institute,
Inc., received $17,917, representing 29.46%, of commissions paid by MegaTrends
Fund on purchases and sales of securities during the year ended October 31,
1999.
During the year ended October 31, 1999, A & B Mailers, Inc., a wholly-owned
subsidiary of the Adviser, was paid $44,491 for mailing services provided to
the funds.
The three independent trustees each receive $8,000 annually as compensation for
serving on the board, plus $2,000 per each quarterly meeting attended. The
Chairman and members of special committees receive additional compensation.
Trustee's are also reimbursed for out-of-pocket expenses incurred while
attending meetings. Frank E. Holmes receives no compensation from the funds for
serving on the board.
35
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1999
- --------------------------------------------------------------------------------
NOTE 3: INVESTMENTS
Purchases and sales of long-term securities for the year ended October 31,
1999, are summarized as follows:
FUND PURCHASES SALES
----------------------- ------------ ------------
Bonnel Growth $216,996,927 $224,642,220
MegaTrends 12,455,375 21,050,741
Regent Eastern European 1,884,058 1,268,682
The following table presents the income tax basis of securities owned on
October 31, 1999, 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 $102,939,717 $32,684,110 $1,067,807 $ 31,616,303
MegaTrends 16,068,985 2,253,775 941,048 1,312,727
Regent Eastern
European 6,918,304 383,963 2,075,821 (1,691,858)
At October 31, 1999, Regent Eastern European Fund had capital loss carryovers
of $374,861 with an expiration date of October 31, 2006, and $185,242 with an
expiration date of October 31, 2007.
Regent Eastern European Fund may be exposed to risks not typically associated
with investment 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.
36
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1999
- --------------------------------------------------------------------------------
NOTE 4: REVOLVING DEMAND NOTES
From November 6, 1997, to February 28, 1999, each of the funds entered into
revolving demand notes with Brown Brothers Harriman & Co. as denoted below
subject to the borrowing limits as set forth in the funds' registration
statement. These notes were collateralized by any or all of the securities held
by Brown Brothers Harriman & Co. as the funds' custodian. Borrowings under
these notes were charged interest at the current overnight Federal Funds Rate
plus 1.75%. Each fund had $5,000,000 available under the revolving demand
notes.
The U.S. Global Accolade Funds, along with other funds under common management,
participate in an $85 million revolving credit facility (Facility) dated March
1, 1999. The Facility is intended to provide short-term financing if necessary,
subject to certain restrictions in connection with abnormal redemption
activity. Commitment fees related to the Facility are paid by the participating
funds. A one-time set up fee of $150,000 was paid on March 1, 1999.
Additionally, an annual fee of $75,000, and quarterly commitment fees totalling
$127,500 are paid within each annual period. These expenses are shared by all
funds under common management. Borrowings under these notes will be charged
interest at the current overnight Federal Funds Rate plus 2.00%. There were no
borrowings under the outstanding Facility as of October 31, 1999.
NOTE 5: SHARES OF BENEFICIAL INTEREST
At October 31, 1999, individual shareholders holding 5% or more of outstanding
shares comprised 25.90% of Regent Eastern European Fund including 6.27% held by
an affiliate of its sub-adviser.
37
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
BONNEL GROWTH FUND
FOR A CAPITAL SHARE OUTSTANDING DURING THE:
<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, YEAR ENDED SEPTEMBER 30,
------------------ PERIOD ENDED -----------------------------
1999 1998 OCT. 31, 1997* 1997 1996 1995**
-------- ------- ------------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $16.18 $19.68 $21.86 $17.15 $14.81 $10.02
Investment Activities
Net investment loss (.30) (.23) (.03) (.21) (.14) (.07)
Net realized and unrealized gain
(loss) 9.87 .44 (2.15) 5.09 3.13 4.91
-------- ------- -------- -------- ------- -------
Total from investment activities 9.57 .21 (2.18) 4.88 2.99 4.84
-------- ------- -------- -------- ------- -------
Distributions
From net investment income -- -- -- -- -- (.05)
From net realized gains (.58) (3.71) -- (.17) -- --
In excess of net realized gains -- -- -- -- (.65) --
-------- ------- -------- -------- ------- -------
Total distributions (.58) (3.71) -- (.17) (.65) (.05)
NET ASSET VALUE, END OF YEAR $25.17 $16.18 $19.68 $21.86 $17.15 $14.81
-------- ------- -------- -------- ------- -------
TOTAL RETURN
(excluding account fees) (a) 60.85% .80% (9.97)% 28.67% 21.27% 48.74%
Ratios to Average Net Assets (b):
Net investment loss (1.41)% (1.19)% (1.43)% (1.18)% (1.32)% (1.46)%
Total expenses 1.77% 1.85% 1.72% 1.77% 1.83% 2.50%
Expenses reimbursed or offset -- (.01)% -- -- -- (.02)%
Net expenses 1.77% 1.84% 1.72% 1.77% 1.83% 2.48%
Portfolio Turnover Rate 197% 190% 52% 239% 212% 145%
Net assets, end of year (in
thousands) $133,949 $87,751 $104,643 $117,891 $90,696 $24,673
<FN>
- --------------------
* For the month ended October 31, 1997.
** From October 17, 1994, commencement of operations.
(a) Total returns for period less than one year are not annualized.
(b) 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. These amounts
would decrease the net investment income ratio had such reductions not occurred.
</FN>
</TABLE>
38
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
MEGATRENDS FUND
FOR A CAPITAL SHARE OUTSTANDING DURING THE:
<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, YEAR ENDED JUNE 30,
----------------- PERIOD ENDED -----------------------------
1999 1998 OCT. 31, 1997* 1997** 1996 1995
------- ------- ------------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $11.35 $13.90 $13.45 $11.27 $11.17 $10.29
Investment Activities
Net investment income (loss) (.01) (.02) .01 .01 .17 .28
Net realized and unrealized gain
(loss) 1.27 (.51) .44 2.39 1.72 .95
------- ------- ------- ------- ------- -------
Total from investment activities 1.26 (.53) .45 2.40 1.89 1.23
------- ------- ------- ------- ------- -------
Distributions
From net investment income -- -- -- (.01) (.17) (.28)
In excess of net investment income -- (.01) -- -- -- --
From net realized gains (1.85) (2.01) -- (.21) (1.61) --
In excess of net realized gains -- -- -- -- (.01) (.07)
------- ------- ------- ------- ------- -------
Total distributions (1.85) (2.02) -- (.22) (1.79) (.35)
NET ASSET VALUE, END OF YEAR $10.76 $11.35 $13.90 $13.45 $11.27 $11.17
------- ------- ------- ------- ------- -------
TOTAL RETURN
(excluding account fees) (a) 12.85% (4.43)% 3.34% 20.72% 17.10% 12.20%
Ratios to Average Net Assets (b):
Net investment income (loss) (.05)% (.14)% .23% .09% 1.30% 2.36%
Total expenses 2.17% 2.06% 1.76% 1.97% 2.10% 1.98%
Expenses reimbursed or offset -- -- -- (.09)% (.60)% (.48)%
Net expenses 2.17% 2.06% 1.76% 1.88% 1.50% 1.50%
Portfolio Turnover Rate 76% 51% 13% 62% 115% 163%
Net assets, end of year (in thousands) $17,453 $20,740 $25,492 $25,160 $27,945 $32,976
<FN>
- ---------------------------
* For the four months ended October 31, 1997.
** Effective November 18, 1996, the fund changed to a new investment manager.
(a) Total returns for period less than one year are not annualized.
(b) 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. These amounts would
decrease the net investment income ratio had such reductions not occurred.
</FN>
</TABLE>
39
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
REGENT EASTERN EUROPEAN FUND
FOR A CAPITAL SHARE OUTSTANDING DURING THE:
YEAR ENDED
OCTOBER 31,
--------------------- YEAR ENDED
1999 1998 OCT. 31, 1997*
--------- --------- -------------
NET ASSET VALUE, BEGINNING OF YEAR $ 8.02 $ 11.19 $ 10.00
Investment Activities
Net investment loss (.23) (.27) .01)
Net realized and unrealized
gain (loss) .87 (2.84) 1.20
--------- --------- --------
Total from investment activities .64 (3.11) 1.19
--------- --------- --------
Distributions
From net investment income -- -- --
In excess of net investment income -- (.01) --
From net realized gains -- --
In excess of net realized gains -- (.05) --
--------- --------- ----------
Total distributions -- (.06) --
NET ASSET VALUE, END OF YEAR $ 8.66 $ 8.02 $ 11.19
--------- --------- ----------
TOTAL RETURN
(excluding account fees) (a) 7.98% (27.96)% 11.90%
Ratios to Average Net Assets (b):
Net investment loss (2.38)% (2.38)% (.49)%
Total expenses 4.36% 5.03% 4.98%
Expenses reimbursed or offset (.01)% (.48)% (1.73)%
Net expenses 4.35% 4.55% 3.25%
Portfolio Turnover Rate 29% 97% 11%
Net assets, end of year (in
thousands) $ 5,210 $ 5,676 $ 8,778
- --------------------
* From March 31, 1997, commencement of operations.
(a) Total returns for periods less than one year are not annualized.
(b) Expenses reimbursed or offset reflect reductions to total expenses, as
discussed in the notes to the financial statements. These amounts would
decrease the net investment income ratio had such reductions not occurred.
40
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Board of Trustees and Shareholders of U.S. Global Accolade Funds
We have audited the accompanying statements of assets and liabilities of the
U.S. Global Accolade Funds (comprising, respectively, the Bonnel Growth Fund,
MegaTrends Fund, and Regent Eastern European Fund, collectively, the "Funds"),
including the portfolios of investments as of October 31, 1999, and the related
statements of operations, the statements of changes in net assets, and the
financial highlights for the year then ended. These financial statements and
financial highlights are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit. The statements of changes in net assets
for the year ended October 31, 1998, and the financial highlights for the five
periods, three periods, and two periods then ended for the Bonnel Growth Fund,
MegaTrends Fund, and Regent Eastern European Fund, respectively, were audited by
other auditors whose report dated December 17, 1998 expressed an unqualified
opinion on those financial statements and financial highlights. The financial
highlights of the MegaTrends Fund for each of the two years in the period ended
June 30, 1996 were audited by other auditors whose report dated July 19, 1996
expressed an unqualified opinion on those financial highlights.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements and
financial highlights. Our procedures included confirmation of securities owned
as of October 31, 1999 by correspondence with the custodian and brokers or by
other appropriate auditing procedures where replies from brokers were not
received. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective Funds constituting the U.S. Global Accolade Funds at October
31, 1999, the results of its operations, the changes in its net assets, and the
financial highlights for the year then ended in conformity with generally
accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
December 10, 1999
41
<PAGE>
- --------------------------------------------------------------------------------
ADDITIONAL FEDERAL TAX INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
The percentage of ordinary income dividends paid by the funds for the year
ended October 31, 1999, which qualify for the dividends received deduction
available to corporate shareholders was:
Bonnel Growth 1.55%
MegaTrends 15.33%
The funds hereby designate the following approximate amounts as capital gain
dividends for the purpose of the dividends paid deduction:
Bonnel Growth $2,783,941
MegaTrends 2,841,228
In January 2000, the funds will report on Form 1099 the tax status of all
distributions made during the calendar year 1999. Shareholders should use the
information on Form 1099 for their income tax returns.
42
<PAGE>
[U.S. Global Investors logo]
1-800-US-FUNDS (1-800-873-8637)
P.O. Box 781234 San Antonio, TX 78278-1234
E-mail: [email protected] Internet: www.usfunds.com
Distributed by U.S. Global Brokerage, Inc.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This Financial Data Schedule contains summary financial information extracted
from the annual report filed on Form N-SAR and is qualified in its entirety by
reference to such annual report on Form N-SAR.
</LEGEND>
<CIK> 0000902042
<NAME> U.S. GLOBAL ACCOLADE FUNDS
<SERIES>
<NAME> BONNEL GROWTH FUND
<NUMBER> 1
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-START> NOV-01-1998
<PERIOD-END> OCT-31-1999
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 102640500
<INVESTMENTS-AT-VALUE> 134556020
<RECEIVABLES> 3278715
<ASSETS-OTHER> 11343
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 137846078
<PAYABLE-FOR-SECURITIES> 3529382
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 367725
<TOTAL-LIABILITIES> 3897107
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 77542858
<SHARES-COMMON-STOCK> 5321114
<SHARES-COMMON-PRIOR> 5424122
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 24490593
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 31915520
<NET-ASSETS> 133948971
<DIVIDEND-INCOME> 272573
<INTEREST-INCOME> 122704
<OTHER-INCOME> 32
<EXPENSES-NET> 1966890
<NET-INVESTMENT-INCOME> (1571581)
<REALIZED-GAINS-CURRENT> 28060703
<APPREC-INCREASE-CURRENT> 25165059
<NET-CHANGE-FROM-OPS> 51654181
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (3150077)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1786758
<NUMBER-OF-SHARES-REDEEMED> 2067277
<SHARES-REINVESTED> 177511
<NET-CHANGE-IN-ASSETS> 46197995
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1151551
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1112866
<INTEREST-EXPENSE> 1195
<GROSS-EXPENSE> 1969092
<AVERAGE-NET-ASSETS> 111290487
<PER-SHARE-NAV-BEGIN> 16.18
<PER-SHARE-NII> (0.30)
<PER-SHARE-GAIN-APPREC> 9.87
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.58)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 25.17
<EXPENSE-RATIO> 1.77
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This Financial Data Schedule contains summary financial information extracted
from the annual report filed on Form N-SAR and is qualified in its entirety by
reference to such annual report on Form N-SAR.
</LEGEND>
<CIK> 0000902042
<NAME> U.S. GLOBAL ACCOLADE FUNDS
<SERIES>
<NAME> MEGATRENDS FUND
<NUMBER> 2
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-START> NOV-01-1998
<PERIOD-END> OCT-31-1999
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 16069190
<INVESTMENTS-AT-VALUE> 17381712
<RECEIVABLES> 120807
<ASSETS-OTHER> 2010
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 17504529
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 51797
<TOTAL-LIABILITIES> 51797
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 14483065
<SHARES-COMMON-STOCK> 1621528
<SHARES-COMMON-PRIOR> 1827918
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1657145
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1312522
<NET-ASSETS> 17452732
<DIVIDEND-INCOME> 215345
<INTEREST-INCOME> 142514
<OTHER-INCOME> 55177
<EXPENSES-NET> 422510
<NET-INVESTMENT-INCOME> (9474)
<REALIZED-GAINS-CURRENT> 1669405
<APPREC-INCREASE-CURRENT> 846486
<NET-CHANGE-FROM-OPS> 2506417
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (3268120)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 107017
<NUMBER-OF-SHARES-REDEEMED> 642295
<SHARES-REINVESTED> 328888
<NET-CHANGE-IN-ASSETS> (3286801)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 3265334
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 194271
<INTEREST-EXPENSE> 10
<GROSS-EXPENSE> 422510
<AVERAGE-NET-ASSETS> 19427118
<PER-SHARE-NAV-BEGIN> 11.35
<PER-SHARE-NII> (0.01)
<PER-SHARE-GAIN-APPREC> 1.27
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (1.85)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.76
<EXPENSE-RATIO> 2.17
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This Financial Data Schedule contains summary financial information extracted
from the annual report filed on Form N-SAR and is qualified in its entirety
by reference to such annual report on Form N-SAR.
</LEGEND>
<CIK> 0000902042
<NAME> U.S. GLOBAL ACCOLADE FUNDS
<SERIES>
<NUMBER> 4
<NAME> REGENT EASTERN EUROPEAN FUND
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-START> NOV-01-1998
<PERIOD-END> OCT-31-1999
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 6795284
<INVESTMENTS-AT-VALUE> 5226446
<RECEIVABLES> 10432
<ASSETS-OTHER> 495
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5237373
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 27151
<TOTAL-LIABILITIES> 27151
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7462182
<SHARES-COMMON-STOCK> 601482
<SHARES-COMMON-PRIOR> 707854
<ACCUMULATED-NII-CURRENT> (24748)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (658375)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (1568837)
<NET-ASSETS> 5210222
<DIVIDEND-INCOME> 48541
<INTEREST-INCOME> 65234
<OTHER-INCOME> 677
<EXPENSES-NET> 252574
<NET-INVESTMENT-INCOME> (138122)
<REALIZED-GAINS-CURRENT> (284318)
<APPREC-INCREASE-CURRENT> 849932
<NET-CHANGE-FROM-OPS> 427492
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 177873
<NUMBER-OF-SHARES-REDEEMED> 284245
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (465901)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (374861)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 72549
<INTEREST-EXPENSE> 4
<GROSS-EXPENSE> 253429
<AVERAGE-NET-ASSETS> 5803947
<PER-SHARE-NAV-BEGIN> 8.02
<PER-SHARE-NII> (0.23)
<PER-SHARE-GAIN-APPREC> 0.87
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.66
<EXPENSE-RATIO> 4.35
</TABLE>
