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U.S. GLOBAL ACCOLADE FUNDS
ANNUAL REPORT
OCTOBER 31, 2000
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U.S. GLOBAL ACCOLADE FUNDS
ANNUAL REPORT
OCTOBER 31, 2000
TABLE OF CONTENTS
LETTER TO SHAREHOLDERS .................................................... 1
FUND MANAGER'S PERSPECTIVE ................................................ 4
PORTFOLIOS OF INVESTMENTS ................................................. 16
STATEMENTS OF ASSETS AND LIABILITIES ...................................... 26
STATEMENTS OF OPERATIONS .................................................. 27
STATEMENTS OF CHANGES IN NET ASSETS ....................................... 28
NOTES TO FINANCIAL STATEMENTS ............................................. 30
FINANCIAL HIGHLIGHTS ...................................................... 36
REPORT OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS .................................................. 39
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P.O. Box 781234
San Antonio, Texas 78278-1234
Tel 1*800*US*FUNDS
Fax 210*308*1217
www.usfunds.com
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Dear Shareholder:
We have just witnessed history in the making, and [ we [GRAPHIC: Picture of
have reaffirmed our fundamental faith in the integrity Frank Holmes, CEO]
of the United States' political system. People will
talk of the 2000 Presidential election for years to
come. Authors will include its unprecedented legal
maneuverings in their textbooks, and you can bet that
election laws and procedures nationwide will change as
a result.
As the United States moves beyond this experience and prepares to inaugurate our
new President, the financial markets should start to settle into more familiar
territory. We can all get back to the day-to-day business that characterizes the
"normal" transition of leadership in this country, realizing that recent
regulatory and judicial actions have impacted the stock market in two
significant ways. First, the Federal Reserve's actions in increasing interest
rates have served to slow down the economy. Second, the role of the courts--both
Florida and federal--in resolving the Presidential election dispute may
contribute to increased market volatility. The delays in certifying some states'
presidential vote outcomes has led to generalized uncertainty for investors and
may precipitate a hard economic landing, with a possible gross domestic product
growth of as little as 2 percent to start this new year.
Despite the unprecedented political events of the last two months, we have
weathered these unsettled market ups-and-downs before and will outlast this
current volatile period. The historical trend is that the stock markets--both
domestically and abroad--continue their gradual upward climb over time. The
10-year-long economic expansion has cast a longer shadow than normal on
investors' expectations and the economy in general. Yet, the fundamentals of
investing continue to hold true.
The serious investor has thoughtfully considered his or her ultimate financial
goals and plans to remain invested for the long term, continues to invest often
and diversifies potential risks through holdings in different asset classes. The
serious investor also routinely adjusts personal investment portfolio holdings
to better match current circumstances and changes in risk tolerance, using tools
such as the asset allocation model found at www.usfunds.com.
Realistically, investors do get swept up in emotional buying and selling from
time to time, as financial analysts and the media do their best to sway
audiences toward or away from the latest, hottest investment fad. We continue to
advocate a balanced approach incorporating elements of safety, income and
growth--in proportion to your own comfort level and financial goals--for
long-term investors.
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THE 5 E'S
The market's volatility has been significant due to the convergence of five
issues that concern stock prices, with the most significant being earnings. The
other e's are economy, energy, euro and election. These issues call to mind
other concerns. What are the critical success factors for powerful earnings?
Will rising rates create a "hard economic landing?" Will higher energy prices
hurt earnings? Will the falling euro hurt international companies' earnings?
What are the best/worst sectors to be invested in, given the new Presidential
administration's planned initiatives?
In light of these 5 e's, our position remains that a key benefit of mutual fund
investing is the ability to leave analysis and buy/sell decisions up to
professional investment managers. These portfolio team members understand what
it takes to deftly manage a fund, even in a shakeout such as the one we are
experiencing now. They can focus on potential investments' earnings growth, as
well as other significant factors.
MARKET SHIFTS BENEFIT FUNDS
Our MegaTrends Fund takes a flexible approach to growth and capital
preservation. Portfolio Manager and Personal Finance newsletter editor Dr.
Stephen Leeb, author of four books on the subject of investing, looks for
undervalued corporate stocks that are currently out of favor with the markets.
Leeb's 20-plus years of experience in market psychology make him qualified to
detect future financial trends, and his flexible portfolio fund has benefited
from this contrarian philosophy.
The Bonnel Growth Fund, managed by 30-year market veteran Art Bonnel, just
reached its sixth anniversary and continues to garner accolades for its
no-nonsense growth and earnings approach to selecting stocks. Currently, Bonnel
finds suitable buys in the healthcare, technology and telecommunications sectors
but does not hesitate to switch gears if the road ahead looks rough for a
particular industry or group.
The maturation of the economies of Eastern Europe has been marked by fits and
starts but has already overcome much of its communist past to look forward to an
eventual union with its western European counterparts. Portfolio Manager Andrew
Wiles' commentary indicates that, for the first time, all of the Regent Eastern
European Fund's key markets are experiencing economic expansion simultaneously.
While still modest, the estimated 3.5 percent regional growth rate is a positive
sign in the midst of very mixed global indicators.(1)
The ongoing political stabilization process in Eastern Europe continues to have
a favorable effect on the economic climate in markets--Poland, the Czech
Republic, Hungary, Russia, Slovakia and others--where broad
2
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privatization has put thousands of companies once owned by the state in the
hands of private investors, who now have a direct stake in the financial success
of these companies.
Opportunities abound for the wise investor who is willing to accept that
economic cycles are just part of the process of investing. Our family of funds
offers you many investment options, from mid-cap growth stocks focused on U.S.
companies to global emerging markets, from precious metals to U.S. government
money markets.
VOLATILE MARKET DRIVES HOME NEED FOR DIVERSIFICATION
We continue to advocate a disciplined approach to investing by diversifying your
investments into different asset classes and building your equity by investing
regularly. It is impossible to accurately and consistently guess the peak in
interest rates, the bottom of the stock market, or the revenue of a company.
However, it is possible to navigate through this uncertainty by using the ABC
Investment Plan(R) and diversifying your investment classes.(2)
Every economic downturn has been followed, at some point in time, by an upturn.
Look upon this downturn as a time to regroup, reallocate your resources and
reinvest in some excellent values.
Please accept my best wishes for health, happiness and peace of mind in 2001 for
you and your family.
Sincerely,
/s/ Frank Holmes
Frank Holmes
Chairman, CEO & Shareholder
For more information and a prospectus, including charges and ongoing expenses,
call 1-800-US-FUNDS or visit www.usfunds.com. Please read the prospectus
carefully before investing.
(1) Foreign and emerging market investing involves special risks such as
currency fluctuation and less public disclosure, as well as economic and
political risk.
(2) A program of regular investing doesn't assure a profit or protect against
loss in a declining market. 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 in periods of rising
prices.
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BONNEL GROWTH FUND
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FUND MANAGER'S PERSPECTIVE
A Message from Art Bonnel
INTRODUCTION
The Bonnel Growth Fund currently focuses on small- and mid-cap growth issues and
primarily invests in a diversified portfolio of common stocks. Portfolio Manager
Art Bonnel believes that 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 RUSSELL 2000 S&P MID-CAP
FUND S&P 500 INDEX INDEX 400 INDEX
------------- ------------- ------------- -------------
10/17/1994 ......... $ 10,000.00 $ 10,000.00 $ 10,000.00 $ 10,000.00
10/31/1994 ......... $ 10,010.00 $ 10,087.64 $ 10,008.08 $ 10,121.22
11/30/1994 ......... $ 10,030.00 $ 9,720.72 $ 9,603.89 $ 9,665.05
12/30/1994 ......... $ 10,090.00 $ 9,864.72 $ 9,861.92 $ 9,753.44
1/31/1995 ......... $ 9,859.31 $ 10,120.37 $ 9,737.49 $ 9,855.38
2/28/1995 ......... $ 10,491.19 $ 10,514.39 $ 10,142.56 $ 10,371.73
3/31/1995 ......... $ 10,942.53 $ 10,824.15 $ 10,317.24 $ 10,551.43
4/28/1995 ......... $ 11,423.97 $ 11,142.64 $ 10,546.65 $ 10,763.08
5/31/1995 ......... $ 11,594.47 $ 11,587.32 $ 10,727.99 $ 11,022.51
6/30/1995 ......... $ 12,677.69 $ 11,855.99 $ 11,284.51 $ 11,471.01
7/31/1995 ......... $ 14,121.99 $ 12,248.99 $ 11,934.56 $ 12,069.18
8/31/1995 ......... $ 14,252.38 $ 12,279.56 $ 12,181.45 $ 12,292.03
9/29/1995 ......... $ 14,874.22 $ 12,797.49 $ 12,398.95 $ 12,590.02
10/31/1995 ......... $ 14,523.18 $ 12,751.77 $ 11,844.44 $ 12,266.14
11/30/1995 ......... $ 14,804.02 $ 13,310.92 $ 12,342.04 $ 12,801.43
12/29/1995 ......... $ 14,653.02 $ 13,567.32 $ 12,667.72 $ 12,769.41
1/31/1996 ......... $ 14,442.94 $ 14,028.55 $ 12,654.14 $ 12,954.23
2/29/1996 ......... $ 15,031.16 $ 14,159.06 $ 13,048.50 $ 13,394.39
3/29/1996 ......... $ 15,734.93 $ 14,295.38 $ 13,314.12 $ 13,554.81
4/30/1996 ......... $ 17,604.63 $ 14,505.95 $ 14,026.00 $ 13,968.39
5/31/1996 ......... $ 19,085.69 $ 14,879.41 $ 14,578.77 $ 14,157.12
6/28/1996 ......... $ 17,552.11 $ 14,936.14 $ 13,980.12 $ 13,944.84
7/31/1996 ......... $ 15,734.93 $ 14,276.63 $ 12,759.01 $ 13,001.67
8/30/1996 ......... $ 16,564.74 $ 14,578.22 $ 13,499.84 $ 13,751.31
9/30/1996 ......... $ 18,014.29 $ 15,397.99 $ 14,027.42 $ 14,350.40
10/31/1996 ......... $ 17,909.25 $ 15,822.51 $ 13,811.23 $ 14,392.16
11/29/1996 ......... $ 18,746.40 $ 17,017.45 $ 14,380.29 $ 15,202.51
12/31/1996 ......... $ 18,746.40 $ 16,680.35 $ 14,757.16 $ 15,219.17
1/31/1997 ......... $ 18,884.24 $ 17,721.89 $ 15,052.08 $ 15,790.29
2/28/1997 ......... $ 17,219.54 $ 17,861.03 $ 14,687.12 $ 15,660.69
3/31/1997 ......... $ 16,318.27 $ 17,128.51 $ 13,994.10 $ 14,994.00
4/30/1997 ......... $ 16,593.95 $ 18,150.16 $ 14,033.10 $ 15,382.60
5/30/1997 ......... $ 18,385.89 $ 19,254.38 $ 15,594.28 $ 16,726.86
6/30/1997 ......... $ 19,552.24 $ 20,116.50 $ 16,262.62 $ 17,196.62
7/31/1997 ......... $ 21,386.58 $ 21,716.24 $ 17,019.34 $ 18,898.53
8/29/1997 ......... $ 21,715.28 $ 20,500.57 $ 17,408.73 $ 18,875.52
9/30/1997 ......... $ 23,178.52 $ 21,622.68 $ 18,682.98 $ 19,960.01
10/31/1997 ......... $ 20,877.63 $ 20,901.36 $ 17,862.23 $ 19,092.24
11/28/1997 ......... $ 20,873.45 $ 21,868.13 $ 17,746.70 $ 19,375.11
12/31/1997 ......... $ 20,680.06 $ 22,243.42 $ 18,057.32 $ 20,126.65
1/30/1998 ......... $ 20,821.88 $ 22,489.20 $ 17,772.35 $ 19,743.40
2/27/1998 ......... $ 22,381.91 $ 24,110.28 $ 19,086.48 $ 21,378.54
3/31/1998 ......... $ 23,323.09 $ 25,343.94 $ 19,873.66 $ 22,342.29
4/30/1998 ......... $ 23,556.23 $ 25,598.79 $ 19,983.63 $ 22,749.90
5/29/1998 ......... $ 22,295.22 $ 25,159.39 $ 18,907.36 $ 21,727.10
6/30/1998 ......... $ 23,894.24 $ 26,180.61 $ 18,947.15 $ 21,863.35
7/31/1998 ......... $ 23,218.23 $ 25,902.53 $ 17,413.30 $ 21,016.64
8/31/1998 ......... $ 19,708.19 $ 22,161.41 $ 14,031.99 $ 17,107.63
9/30/1998 ......... $ 21,216.21 $ 23,581.16 $ 15,130.10 $ 18,704.34
10/30/1998 ......... $ 21,034.21 $ 25,497.57 $ 15,747.16 $ 20,373.86
11/30/1998 ......... $ 23,010.23 $ 27,042.29 $ 16,572.20 $ 21,390.63
12/31/1998 ......... $ 26,293.20 $ 28,599.58 $ 17,597.71 $ 23,973.07
1/29/1999 ......... $ 28,175.12 $ 29,795.07 $ 17,831.57 $ 23,040.15
2/26/1999 ......... $ 25,540.43 $ 28,869.20 $ 16,387.31 $ 21,834.19
3/31/1999 ......... $ 27,825.62 $ 30,023.92 $ 16,643.14 $ 22,444.14
4/30/1999 ......... $ 27,664.32 $ 31,186.58 $ 18,134.49 $ 24,213.62
5/31/1999 ......... $ 27,422.35 $ 30,451.19 $ 18,399.38 $ 24,318.79
6/30/1999 ......... $ 29,949.51 $ 32,139.80 $ 19,231.39 $ 25,620.15
7/30/1999 ......... $ 29,519.36 $ 31,137.74 $ 18,703.70 $ 25,076.21
8/31/1999 ......... $ 30,702.28 $ 30,983.58 $ 18,011.49 $ 24,216.89
9/30/1999 ......... $ 31,266.86 $ 30,135.25 $ 18,015.43 $ 23,470.20
10/29/1999 ......... $ 33,834.34 $ 32,041.41 $ 18,088.39 $ 24,665.32
11/30/1999 ......... $ 37,705.74 $ 32,692.71 $ 19,168.44 $ 25,959.82
12/31/1999 ......... $ 47,707.86 $ 34,617.04 $ 21,338.30 $ 27,501.37
1/31/2000 ......... $ 48,451.36 $ 32,878.00 $ 20,995.64 $ 26,727.29
2/29/2000 ......... $ 64,715.41 $ 32,256.29 $ 24,462.77 $ 28,596.70
3/31/2000 ......... $ 61,447.11 $ 35,409.85 $ 22,849.92 $ 30,988.76
4/28/2000 ......... $ 55,049.92 $ 34,344.89 $ 21,474.93 $ 29,906.21
5/31/2000 ......... $ 48,141.57 $ 33,640.22 $ 20,197.60 $ 29,491.62
6/30/2000 ......... $ 50,495.98 $ 34,469.56 $ 21,938.78 $ 29,901.25
7/31/2000 ......... $ 46,004.01 $ 33,930.66 $ 21,235.10 $ 30,348.12
8/31/2000 ......... $ 52,447.67 $ 36,038.24 $ 22,815.09 $ 33,695.31
9/29/2000 ......... $ 48,497.83 $ 34,135.66 $ 22,114.38 $ 33,441.46
10/31/2000 ......... $ 44,935.23 $ 33,991.35 $ 21,109.50 $ 32,284.56
AVERAGE ANNUAL PERFORMANCE FOR THE PERIODS ENDED
OCTOBER 31, 2000
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INCEPTION FIVE YEAR ONE YEAR
--------- --------- --------
Bonnel Growth Fund
(Inception 10/17/94) ...... 28.23% 25.34% 32.81%
S&P 500 Index ............... 22.44% 21.66% 6.09%
S&P Mid-Cap 400 Index ....... 21.40% 21.35% 30.89%
Russell 2000 Index .......... 13.16% 12.25% 16.70%
The performance information shown is historical. 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. Recent market volatility may have caused returns to
fluctuate. Investing in small- and mid-cap stocks may be more risky
and more volatile than investing in large-cap stocks. 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
consists of the 2000 smallest companies and the Russell 3000(R)
Index, a widely-recognized small-cap index.
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THE YEAR IN REVIEW - THE BIG PICTURE ECONOMIC AND POLITICAL ISSUES THAT AFFECTED
THE MARKETS
This past year has not been a great year for equities. However, investors can
put this year's performance in perspective by realizing that the last time the
Dow Jones Industrial Index was down for the year was in 1990.
There were many news items that had an impact on stock prices this past year.
The main news was that the Federal Reserve continued to raise interest rates and
by May had raised them six consecutive times. The market also had to digest
these news items: President Boris Yeltsin resigned, the human genetic code was
deciphered, the Concorde crashed, cholera's genetic secrets were revealed, a
Russian nuclear sub sank, the USS Cole was attacked and the Presidential
candidates campaigned.
There is always something that can have an impact on investment decisions. Just
remember the real secret to investing is to recognize the direction of the trend
and not try to pick short-term market swings.
The Bonnel Growth Fund celebrated its sixth anniversary on October 17, 2000.
During the past six years, the market has had many major up and down moves. For
example, the Nasdaq Index has had seven corrections of more than 10 percent
during that time. In fact the correction in mid-1998 dropped the Nasdaq over 29
percent from 2014 to 1419.
The main question on investors' minds is, Is the sell-off over? Only time will
tell when it will end and how far down the market will go.
INVESTMENT HIGHLIGHTS
The fund has maintained diversity while looking for quality growth issues. For
example, we own stock in Southwest Airlines (1.75 percent of the fund's total
net assets as of 10/31/00). It is one of the largest domestic airlines,
specializing in low fares, no frills and short hauls. It services 57 cities in
29 states by using a more productive point-to-point system rather than the more
common hub-and-spoke model.
Another security in the fund is Harrah's Entertainment (1.89 percent of the
fund's total net assets as of 10/31/00). It owns and operates casino-resorts and
riverboats under the Harrah's, Showboat and Rio names in Nevada, New Jersey and
eight other states. It has 1,180,000 square feet of casino space and 11,700
hotel rooms. It acquired Players International in March of this year and the Rio
Hotel and Casino in 1999.
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In the healthcare area, we like Abbott Laboratories (1.49 percent of the fund's
total net assets as of 10/31/00). This company makes healthcare products
including drugs, diagnostic tests, intravenous solutions, laboratory and
hospital instruments, prepared infant formulas and nutritional products. Some of
the more familiar brand names include Biaxin, Hytrin, Murine and Selsun Blue.
Stryker Corp. (0.67 percent of the fund's total net assets as of 10/31/00)
develops, manufactures and markets orthopedic implants and medical/surgical
equipment. Orthopedic products include hip, knee, shoulder and spinal implants.
Medical/surgical equipment includes powered instruments, endoscopic systems and
other operating room devices, specialty stretchers and maternity beds.
In the technology area, we own Arrow Electronics (0.45 percent of the fund's
total net assets as of 10/31/00). It is the world's largest distributor of
electronic components and computer products to industrial and commercial
customers with 26 distribution centers and over 200 selling locations worldwide.
Another tech company we hold is Sun Microsystems (2.35 percent of the fund's
total net assets as of 10/31/00). It is a leading supplier of servers,
workstations, storage devices and network switches incorporating UltraSPARC
microprocessors and the Solaris operating system. The company also created the
Java programming language.
CURRENT OUTLOOK
The U.S. economy is slowing down, just what the Federal Reserve Board wants. It
does look like the Fed wants the economy to cool a bit more before letting up on
interest rates. If rates remain high, earnings growth could slow to around 5
percent on the S&P 500 for next year, which would hold the market back from
making new highs. If the Fed loosens interest rates, earnings could grow in 2001
by 10-12 percent. But no matter what the Fed does, the Bonnel Growth Fund will
continue to seek companies that have the foresight and products with the
opportunity to grow and prosper. The market acts like it wants to continue to
climb much higher, but investors must be patient and remember that it is not a
one-way street. There are always those "corrections" but they can be great
buying opportunities for the astute, patient long-term investor.
We have attempted to keep our eye on the ball, and we still believe the stock
market has a great deal of upside potential left in it. We watch the news and
keep abreast of current developments in a never-ending effort to select the very
best issues for the fund. Our long-term forecast on the Dow Jones Industrials is
still 20,000 by the year 2006.
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TOP 10 HOLDINGS BASED ON TOTAL INVESTMENTS OCTOBER 31, 2000
--------------------------------------------- ----------------
SANMINA CORP ................................ 4.68%
ELECTRONICS & COMPONENTS
FOREST LABORATORIES, INC .................... 4.22%
PHARMACEUTICALS
EXTREME NETWORKS, INC ....................... 3.40%
NETWORKING PRODUCTS
JOHNSON & JOHNSON ........................... 3.35%
MEDICAL PRODUCTS
MERCK & CO., INC ............................ 3.27%
PHARMACEUTICALS
NETWORK APPLIANCE, INC ...................... 3.25%
NETWORKING PRODUCTS
EMC CORPORATION ............................. 3.24%
ELECTRONICS & COMPONENTS
KING PHARMACEUTICALS, INC ................... 3.13%
PHARMACEUTICALS
POLYCOM, INC ................................ 2.96%
TELECOMMUNICATIONS
EMULEX CORP ................................. 2.67%
NETWORKING PRODUCTS
TOP 5 INDUSTRIES BASED ON TOTAL INVESTMENTS OCTOBER 31, 2000
------------------------------------------- ----------------
PHARMACEUTICALS ........................... 17.17%
ELECTRONICS & COMPONENTS .................. 15.88%
NETWORKING PRODUCTS ....................... 11.07%
TELECOMMUNICATIONS ........................ 8.62%
COMPUTERS & DATA PROCESSING ............... 5.59%
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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 holding among industries and
asset classes that reflect the manager's view of the major trends affecting the
world's economies. Because the fund is flexible, the fund may invest any portion
of its assets in the following three asset classes: stocks, bonds and money
market instruments. Unless the manager believes that a major recession is
imminent or likely, the fund will invest primarily in stocks in order to pursue
growth potential.
PERFORMANCE
[Linear graph plotted from data in table below.]
LIPPER
FLEXIBLE
MEGATRENDS PORTFOLIO
FUNDS S&P 500 INDEX FUND INDEX
------------- ------------- -------------
10/21/1991 ............... $ 10,000.00 $ 10,000.00
10/31/1991 ............... $ 9,990.00 $ 10,078.02 $ 10,000.00
11/29/1991 ............... $ 9,880.00 $ 9,673.06 $ 9,784.60
12/31/1991 ............... $ 10,423.30 $ 10,777.46 $ 10,624.72
1/31/1992 ................ $ 10,373.14 $ 10,576.87 $ 10,567.45
2/28/1992 ................ $ 10,503.56 $ 10,713.79 $ 10,683.28
3/31/1992 ................ $ 10,413.27 $ 10,505.67 $ 10,455.52
4/30/1992 ................ $ 10,503.56 $ 10,813.80 $ 10,478.30
5/29/1992 ................ $ 10,533.65 $ 10,866.67 $ 10,605.84
6/30/1992 ................ $ 10,550.31 $ 10,705.07 $ 10,495.22
7/31/1992 ................ $ 10,723.42 $ 11,142.04 $ 10,809.53
8/31/1992 ................ $ 10,703.06 $ 10,914.42 $ 10,704.76
9/30/1992 ................ $ 10,845.63 $ 11,042.73 $ 10,831.00
10/30/1992 ............... $ 10,947.47 $ 11,080.63 $ 10,831.65
11/30/1992 ............... $ 11,039.12 $ 11,456.89 $ 11,070.48
12/31/1992 ............... $ 11,071.08 $ 11,597.45 $ 11,226.65
1/29/1993 ................ $ 11,122.43 $ 11,694.31 $ 11,414.72
2/26/1993 ................ $ 11,142.97 $ 11,853.63 $ 11,442.05
3/31/1993 ................ $ 11,214.86 $ 12,103.58 $ 11,682.83
4/30/1993 ................ $ 11,112.16 $ 11,811.03 $ 11,563.09
5/31/1993 ................ $ 11,204.59 $ 12,126.19 $ 11,797.36
6/30/1993 ................ $ 11,266.21 $ 12,161.59 $ 11,887.81
7/30/1993 ................ $ 11,266.21 $ 12,112.62 $ 11,932.71
8/31/1993 ................ $ 11,390.93 $ 12,571.20 $ 12,338.78
9/30/1993 ................ $ 11,401.33 $ 12,474.79 $ 12,384.98
10/29/1993 ............... $ 11,370.15 $ 12,732.67 $ 12,564.59
11/30/1993 ............... $ 11,266.21 $ 12,611.31 $ 12,390.84
12/31/1993 ............... $ 11,388.75 $ 12,763.78 $ 12,655.69
1/31/1994 ................ $ 11,675.33 $ 13,197.30 $ 13,000.59
2/28/1994 ................ $ 11,473.66 $ 12,839.43 $ 12,716.21
3/31/1994 ................ $ 11,378.14 $ 12,280.74 $ 12,206.68
4/29/1994 ................ $ 11,208.31 $ 12,438.07 $ 12,254.83
5/31/1994 ................ $ 11,325.07 $ 12,641.40 $ 12,297.78
6/30/1994 ................ $ 11,096.87 $ 12,332.05 $ 12,039.44
7/29/1994 ................ $ 11,183.14 $ 12,736.70 $ 12,325.76
8/31/1994 ................ $ 11,323.33 $ 13,257.70 $ 12,675.21
9/30/1994 ................ $ 11,215.49 $ 12,933.76 $ 12,454.61
10/31/1994 ............... $ 11,247.85 $ 13,223.92 $ 12,544.41
11/30/1994 ............... $ 10,902.75 $ 12,742.92 $ 12,243.12
12/30/1994 ............... $ 11,037.55 $ 12,931.69 $ 12,317.30
1/31/1995 ................ $ 11,114.51 $ 13,266.82 $ 12,414.26
2/28/1995 ................ $ 11,444.32 $ 13,783.34 $ 12,775.43
3/31/1995 ................ $ 11,631.21 $ 14,189.41 $ 13,045.49
4/28/1995 ................ $ 11,895.05 $ 14,606.92 $ 13,290.17
5/31/1995 ................ $ 12,279.83 $ 15,189.85 $ 13,712.50
6/30/1995 ................ $ 12,450.23 $ 15,542.06 $ 13,994.27
7/31/1995 ................ $ 12,583.98 $ 16,057.23 $ 14,358.04
8/31/1995 ................ $ 12,617.42 $ 16,097.31 $ 14,479.73
9/29/1995 ................ $ 12,751.18 $ 16,776.27 $ 14,744.58
10/31/1995 ............... $ 12,795.76 $ 16,716.33 $ 14,635.91
11/30/1995 ............... $ 13,263.90 $ 17,449.32 $ 15,063.45
12/29/1995 ............... $ 13,710.52 $ 17,785.44 $ 15,223.53
1/31/1996 ................ $ 13,939.22 $ 18,390.07 $ 15,518.32
2/29/1996 ................ $ 13,984.96 $ 18,561.15 $ 15,599.01
3/29/1996 ................ $ 13,973.53 $ 18,739.86 $ 15,709.64
4/30/1996 ................ $ 14,293.71 $ 19,015.89 $ 15,945.86
5/31/1996 ................ $ 14,568.15 $ 19,505.46 $ 16,148.24
6/28/1996 ................ $ 14,579.35 $ 19,579.83 $ 16,123.51
7/31/1996 ................ $ 13,764.36 $ 18,715.27 $ 15,622.44
8/30/1996 ................ $ 14,165.39 $ 19,110.63 $ 15,892.50
9/30/1996 ................ $ 14,631.10 $ 20,185.27 $ 16,494.44
10/31/1996 ............... $ 15,355.54 $ 20,741.77 $ 16,792.48
11/29/1996 ............... $ 16,015.29 $ 22,308.22 $ 17,605.91
12/31/1996 ............... $ 15,821.25 $ 21,866.31 $ 17,370.34
1/31/1997 ................ $ 16,651.17 $ 23,231.68 $ 17,871.41
2/28/1997 ................ $ 16,308.66 $ 23,414.07 $ 17,846.03
3/31/1997 ................ $ 15,952.98 $ 22,453.81 $ 17,307.22
4/30/1997 ................ $ 16,203.28 $ 23,793.09 $ 17,761.44
5/30/1997 ................ $ 17,309.84 $ 25,240.62 $ 18,515.65
6/30/1997 ................ $ 17,745.88 $ 26,370.77 $ 19,060.97
7/31/1997 ................ $ 18,931.57 $ 28,467.88 $ 20,133.40
8/29/1997 ................ $ 18,312.38 $ 26,874.26 $ 19,500.88
9/30/1997 ................ $ 19,300.46 $ 28,345.24 $ 20,326.67
10/31/1997 ............... $ 18,286.03 $ 27,399.65 $ 19,899.13
11/28/1997 ............... $ 18,378.25 $ 28,667.00 $ 20,259.65
12/31/1997 ............... $ 18,287.35 $ 29,158.96 $ 20,539.47
1/30/1998 ................ $ 18,364.44 $ 29,481.16 $ 20,661.61
2/27/1998 ................ $ 19,382.12 $ 31,606.23 $ 21,663.17
3/31/1998 ................ $ 20,214.77 $ 33,223.44 $ 22,393.96
4/30/1998 ................ $ 20,538.57 $ 33,557.53 $ 22,534.46
5/29/1998 ................ $ 19,705.93 $ 32,981.52 $ 22,309.10
6/30/1998 ................ $ 19,736.77 $ 34,320.23 $ 22,739.31
7/31/1998 ................ $ 18,379.86 $ 33,955.70 $ 22,503.35
8/31/1998 ................ $ 15,666.06 $ 29,051.46 $ 20,293.62
9/30/1998 ................ $ 16,591.22 $ 30,912.61 $ 21,101.06
10/30/1998 ............... $ 17,500.96 $ 33,424.83 $ 22,101.13
11/30/1998 ............... $ 18,148.57 $ 35,449.82 $ 23,008.39
12/31/1998 ............... $ 18,703.98 $ 37,491.27 $ 23,931.15
1/29/1999 ................ $ 19,071.09 $ 39,058.44 $ 24,392.53
2/26/1999 ................ $ 18,373.59 $ 37,844.72 $ 23,720.31
3/31/1999 ................ $ 19,254.64 $ 39,358.44 $ 24,311.19
4/30/1999 ................ $ 19,878.72 $ 40,882.58 $ 25,025.05
5/31/1999 ................ $ 19,529.97 $ 39,918.55 $ 24,586.52
6/30/1999 ................ $ 20,282.53 $ 42,132.16 $ 25,302.86
7/30/1999 ................ $ 20,209.11 $ 40,818.56 $ 24,853.84
8/31/1999 ................ $ 20,300.89 $ 40,616.47 $ 24,627.25
9/30/1999 ................ $ 19,456.55 $ 39,504.38 $ 24,359.93
10/29/1999 ............... $ 19,750.23 $ 42,003.18 $ 25,000.98
11/30/1999 ............... $ 20,154.04 $ 42,856.97 $ 25,272.60
12/31/1999 ............... $ 21,927.91 $ 45,379.58 $ 26,282.94
1/31/2000 ................ $ 20,831.52 $ 43,099.87 $ 25,543.37
2/29/2000 ................ $ 21,014.25 $ 42,284.86 $ 25,767.16
3/31/2000 ................ $ 23,511.60 $ 46,418.87 $ 26,932.13
4/28/2000 ................ $ 23,430.38 $ 45,022.82 $ 26,384.98
5/31/2000 ................ $ 23,917.67 $ 44,099.06 $ 26,005.04
6/30/2000 ................ $ 22,983.71 $ 45,186.24 $ 26,558.94
7/31/2000 ................ $ 23,653.73 $ 44,479.79 $ 26,402.25
8/31/2000 ................ $ 25,501.36 $ 47,242.63 $ 27,653.71
9/29/2000 ................ $ 25,074.98 $ 44,748.53 $ 26,959.60
10/31/2000 ............... $ 25,115.59 $ 44,559.35 $ 26,819.41
AVERAGE ANNUAL PERFORMANCE FOR THE PERIODS ENDED
OCTOBER 31, 2000
---------------------------------------------------------------------
INCEPTION FIVE YEAR ONE YEAR
--------- --------- --------
MegaTrends Fund
(Inception 10/21/91) ...... 10.73% 14.44% 27.17%
S&P 500 Index ............... 17.99% 21.66% 6.09%
Lipper Flexible Portfolio
Fund Index ................ 11.57% 12.88% 7.27%
The performance information shown is historical. 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 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.
8
<PAGE>
MEGATRENDS FUND
--------------------------------------------------------------------------------
THE YEAR IN REVIEW - THE BIG PICTURE ECONOMIC AND POLITICAL ISSUES THAT AFFECTED
THE MARKETS
The market remains highly oversold even as it moves into a period of seasonal
strength. The monetary picture has brightened considerably with the economy
slowing and the pressure easing on the Federal Reserve. Positive divergences are
strong as ever, with small stocks, utilities and financial stocks outperforming.
The Middle East developments are on the back burner now, but they are soon to
come forward after the new president is decided. That part of the world is like
a powder keg that's sitting a foot away from a burning fire. Worries about oil
prices and the situation in the Middle East are likely to take over stock
investors' minds after the White House gets its new tenant for the next four
years.
INVESTMENT HIGHLIGHTS
In general, we remain diversified among those areas of the economy that can be
characterized as non-cyclical, while investing only in stocks whose valuations
are markedly less than that of the S&P 500.
The fund's investments in financial services, insurance and real estate comprise
approximately 21 percent of the net assets as of 10/31/00. From a valuation
perspective, insurers appear to have emerged from a generation-long downtrend.
In addition to its excellent longer-term growth prospects, the group represents
a hedge against lackluster financial markets. We believe that poorly performing
financial markets will hinder capital growth in the industry and result in much
less competitive pricing and, thus, faster profit growth.
The fund has a position of approximately 19 percent in the energy sector
including Duke Energy (5.35% of the fund's total net assets as of 10/31/00). Our
feeling is that, over the next 10 years, energy will represent a major growth
area because the U.S. is running low on fossil fuels--both oil and natural gas.
Technology and telecommunications comprise approximately 13 percent of the fund.
Although technology has been by far our most disappointing sector this year, we
continue to believe selected tech stocks represent strong long-term growth.
Moreover, some of the best values can now be found in selected tech stocks.
9
<PAGE>
MEGATRENDS FUND
--------------------------------------------------------------------------------
The fund has a position of approximately 13 percent in the healthcare and
pharmaceutical industries. An aging America and an ever-growing need for
healthcare in developing countries should keep earnings of well-positioned
healthcare providers in a steady long-term upward trend.
The platinum group element and silver stocks, both of which have been highly
cyclical historically, represent almost 12 percent of the fund. Because of their
potential role in alternative energies, we think that these metals represent
strong long-term growth opportunities.
CURRENT OUTLOOK
The most worrisome problem facing the markets--and our next President--may not
be the price of oil or natural gas but the dollar. The dollar has been in a
long-term upward trend and has risen more than 35 percent since the end of 1996.
But a rising greenback has another consequence: it increases our demand for
imported goods and raises our trade deficit. A weakening dollar would be a
nightmare for U.S. bonds and many U.S. stocks.
Currently, the fund has a position of about five percent in cash, somewhat
higher than over the past two years. That cash represents a slightly higher
probability of a recession. If these odds continue to grow, we not only will add
to cash but also will buy zero coupon bonds, which we believe represent the best
hedge against recessions and financial crises.
10
<PAGE>
MEGATRENDS FUND
--------------------------------------------------------------------------------
TOP 10 HOLDINGS BASED ON TOTAL INVESTMENTS OCTOBER 31, 2000
--------------------------------------------- ----------------
HONEYWELL INTERNATIONAL, INC ................ 5.77%
MANUFACTURING
DUKE ENERGY CORPORATION ..................... 5.37%
UTILITIES
CARDINAL HEALTH, INC ........................ 5.35%
HEALTHCARE
INTEL CORP .................................. 5.08%
ELECTRONICS & COMPONENTS
ST. PAUL COMPANIES, INC ..................... 5.07%
INSURANCE
NABORS INDUSTRIES, INC ...................... 4.60%
OIL & GAS EXTRACTION & SERVICES
ACE LIMITED ................................. 4.43%
INSURANCE
ELAN CORP. PLC .............................. 4.40%
PHARMACEUTICALS
CHEVRON CORP ................................ 3.94%
OIL & GAS EXTRACTION & SERVICES
J.P. MORGAN & CO. INCORPORATED .............. 3.83%
FINANCIAL SERVICES
TOP 5 INDUSTRIES BASED ON TOTAL INVESTMENTS OCTOBER 31, 2000
------------------------------------------- ----------------
OIL & GAS EXTRACTION & SERVICES ........... 13.57%
INSURANCE ................................. 12.89%
METAL MINING .............................. 11.71%
MANUFACTURING ............................. 8.02%
PHARMACEUTICALS ........................... 7.33%
11
<PAGE>
REGENT EASTERN EUROPEAN FUND
--------------------------------------------------------------------------------
FUND MANAGER'S PERSPECTIVE
A Message from Andrew Wiles
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 is positioned to benefit from rising values of companies,
currently trading at substantial discounts to their Western European peers, as a
result of expansion of the European Union.
PERFORMANCE
[Linear graph plotted from data in table below.]
ING BARINGS
EMERGING
MARKETS -
REGENT EASTERN EASTERN
EUROPEAN FUND S&P 500 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
5/31/1999 ................ $ 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
11/30/1999 ............... $ 9,025.78 $ 19,086.72 $ 6,203.42
12/31/1999 ............... $ 10,885.22 $ 20,210.19 $ 7,354.62
1/31/2000 ................ $ 11,387.76 $ 19,194.90 $ 7,996.08
2/29/2000 ................ $ 11,940.57 $ 18,831.93 $ 8,781.75
3/31/2000 ................ $ 13,217.04 $ 20,673.04 $ 9,319.96
4/28/2000 ................ $ 11,427.97 $ 20,051.30 $ 8,199.03
5/31/2000 ................ $ 10,633.94 $ 19,639.90 $ 7,809.16
6/30/2000 ................ $ 9,930.37 $ 20,124.08 $ 7,428.79
7/31/2000 ................ $ 9,980.63 $ 19,809.46 $ 7,543.32
8/31/2000 ................ $ 10,372.62 $ 21,039.91 $ 7,527.89
9/29/2000 ................ $ 9,267.01 $ 19,929.14 $ 6,654.40
10/31/2000 ............... $ 8,864.97 $ 19,844.89 $ 6,205.20
AVERAGE ANNUAL PERFORMANCE FOR THE PERIODS ENDED
OCTOBER 31, 2000
---------------------------------------------------------------------
INCEPTION THREE YEAR ONE YEAR
--------- ---------- --------
Regent Eastern European Fund
(Inception 3/31/97) ....... (3.29)% (7.47)% 1.85%
S&P 500 Index ............... 21.04% 17.60% 6.09%
ING Barings Emerging Markets -
Eastern European Index .... (12.45)% (18.06)% 4.08%
The performance information shown is historical. 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. Foreign and emerging market investing involves special risks
such as currency fluctuation and less public disclosure, as well as
economic and political risk. The ING Barings Emerging Markets -
Eastern European Index is comprised of individual companies
representative of the Eastern European markets.
12
<PAGE>
REGENT EASTERN EUROPEAN FUND
--------------------------------------------------------------------------------
YEAR IN REVIEW - THE BIG PICTURE ECONOMIC AND POLITICAL ISSUES THAT AFFECTED THE
MARKETS
The last 12 months have been a period of immense volatility in world markets.
The first six months of the fund's fiscal year were extremely favorable.
Confidence in world markets was high, resulting in record amounts of capital
flooding into higher risk assets. This was particularly evident in the U.S.,
where the Nasdaq rose by 84 percent during the same period.
The second half was a different story altogether. Growing risk aversion prompted
a large-scale withdrawal of foreign capital from emerging markets. Markets gave
up all of the gains made in the preceding six months. Credit spreads on
non-investment grade debt widened significantly, resulting in a high yield
market that is now effectively off-limits to new borrowers. The recent
150-basis-point rise in emerging market spreads could well threaten highly
leveraged borrowers such as Argentina and Brazil in the short term, due to large
near-term refinancing requirements. It should have a smaller impact on the
less-indebted Eastern European countries.
It is not all doom and gloom, however. The economic outlook across the Eastern
European region is very positive. For the first time ever, all of the fund's key
markets are experiencing a period of economic expansion with regional growth
expected to average 3.5 percent this year. The recent overthrow of the Milosevic
regime in Serbia will also have a positive impact on regional dynamics. The risk
profile of the whole region has improved, and this should manifest itself in the
form of lower sovereign spreads and reduced equity risk premiums.
INVESTMENT HIGHLIGHTS
Importantly, economic expansion is not being driven by domestic consumption.
Rising exports and increasing investment are driving growth. The large amount of
foreign direct investment (FDI) seen in the last two years is finally starting
to have an impact on increased output destined for the European export market.
Much of the improvement we have seen in regional current accounts is the result
of FDI manufacturing projects coming online.
13
<PAGE>
REGENT EASTERN EUROPEAN FUND
--------------------------------------------------------------------------------
The Russian market has fallen by 30 percent since the end of August, because of
concerns over the impact of high oil prices on world growth. This does not make
much sense, because Russia is a natural beneficiary of high oil prices as the
second largest global oil producer after Saudi Arabia. Its six
million-barrel-a-day output represents an 11 percent share of global production.
Although the majority of this production is sold into the domestic market at a
level well below the international price, local producers have still been able
to increase exports at a time when export proceeds per barrel generate close to
U.S. $20/barrel of gross profit. These positive operating dynamics owe much to
the rapid fall in the real value of the ruble, which has left industrial wages
50 percent below their 1998 peak in hard currency terms. For these reasons, the
fund's largest sector allocation is oil and gas.
Because of strong oil prices, Russia is expected to generate a trade surplus of
U.S. $50 billion this year, ranking it third in terms of global surpluses in
absolute terms, but number one relative to overall economic output. Rising
exports and increasing investment have provided the platform for a 7.5 percent
increase in real gross domestic product (GDP) in the first half of this year.
This growth rate is set to continue in the second half of the year, given the
refusal of the oil market to move below U.S. $30 a barrel.
Russian corporations are choosing to reinvest in their domestic operations, with
the result that investment in fixed assets is up by 20 percent this year over
last. This is a very important indicator, suggesting that the country's business
elite is confident that the new Russia, led by President Putin, will be a
profitable place to do business. The Yeltsin era was characterized by companies
salting away hard currency revenues in offshore bank accounts. Such capital
flight, although still prevalent, shows signs of decline.
OUTLOOK
We believe that the underlying fundamentals across the region are now better
than at any time since the collapse of communism 10 years ago. Most of the key
countries in which the fund invests have now emerged from a painful period of
essential economic restructuring. This should enable them to move forward on a
path of sustainable economic growth. The region has good reason to look forward
to closer integration with the European Union, as it will bring many tangible
benefits, including greater economic prosperity.
14
<PAGE>
REGENT EASTERN EUROPEAN FUND
--------------------------------------------------------------------------------
TOP 10 HOLDINGS BASED ON TOTAL INVESTMENTS OCTOBER 31, 2000
--------------------------------------------- ----------------
LUKOIL HOLDINGS ............................. 11.07%
OIL & GAS EXTRACTION
MOL MAGYAR OLAJ-ES GAZIPARI RT .............. 10.14%
OIL & GAS EXTRACTION
NORILSK NICKEL .............................. 6.87%
METAL MINING
ELEKTRIM SPOLKA AKCYJNA S.A ................. 6.68%
ELECTRIC SERVICES & UTILITIES
SURGUTNEFTEGAZ .............................. 6.13%
OIL & GAS EXTRACTION
MAGYAR TAVKOZLESI RT ........................ 5.82%
COMMUNICATIONS
KGHM POLSKA MIEDZ S.A ....................... 5.18%
METAL MINING
UNIFIED ENERGY SYSTEMS ...................... 5.03%
ELECTRIC SERVICES & UTILITIES
PLIVA D.D ................................... 4.75%
PHARMACEUTICALS
BUDIMEX S.A ................................. 4.39%
CONSTRUCTION
TOP 5 INDUSTRIES BASED ON TOTAL INVESTMENTS OCTOBER 31, 2000
------------------------------------------- ----------------
OIL & GAS EXTRACTION ...................... 29.03%
COMMUNICATIONS ............................ 12.90%
METAL MINING .............................. 12.05%
ELECTRIC SERVICES & UTILITIES ............. 11.71%
FINANCIAL SERVICES ........................ 7.94%
15
<PAGE>
BONNEL GROWTH FUND
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS OCTOBER 31, 2000
--------------------------------------------------------------------------------
COMMON STOCKS 100.31% SHARES VALUE
AIRLINES 3.41%
Frontier Airlines, Inc. ...................... 150,000 $3,525,000*
Southwest Airlines Co. ....................... 130,000 3,705,000
----------
7,230,000
BUSINESS & CONSULTING SERVICES 1.55%
Plexus Corp. ................................. 30,000 1,891,875*
Pre-Paid Legal Services, Inc. ................ 30,000 1,316,250*
TRC Companies, Inc. .......................... 5,000 91,563*
----------
3,299,688
CHEMICALS 0.22%
OM Group, Inc. ............................... 10,000 462,500
COMPUTER SOFTWARE & HARDWARE 2.70%
BARRA, Inc. .................................. 25,000 1,528,125*
Check Point Software Technologies Ltd. ....... 20,000 3,167,500*
FileNET Corp. ................................ 25,000 662,500*
Mentor Graphics Corp. ........................ 5,000 117,187*
TALX Corp. ................................... 10,000 251,250*
----------
5,726,562
COMPUTERS & DATA PROCESSING 5.79%
Fiserv, Inc. ................................. 55,000 2,884,062*
InFocus Corp. ................................ 100,000 4,418,750*
Sun Microsystems, Inc. ....................... 45,000 4,989,375*
----------
12,292,187
CONSTRUCTION 0.63%
Lennar Corp. ................................. 30,000 963,750
Meritage Corp. ............................... 5,000 115,000*
Standard Pacific Corp. ....................... 5,000 93,750
The Ryland Group, Inc. ....................... 5,000 161,250
----------
1,333,750
ELECTRONICS & COMPONENTS 16.44%
Amphenol Corp., Class A ...................... 40,000 2,570,000*
Arrow Electronics, Inc. ...................... 30,000 960,000*
AVX Corp. .................................... 30,000 858,750
Bel Fuse, Inc., Class A ...................... 5,000 213,438*
Bell Microproducts, Inc. ..................... 50,000 1,300,000*
Cymer, Inc. .................................. 10,000 250,000*
EMC Corporation .............................. 80,000 7,125,000*
Jabil Circuit, Inc. .......................... 30,000 1,711,875*
L-3 Communications Holdings, Inc. ............ 25,000 1,648,437*
16
<PAGE>
BONNEL GROWTH FUND
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS OCTOBER 31, 2000
--------------------------------------------------------------------------------
COMMON STOCKS SHARES VALUE
ELECTRONICS & COMPONENTS (CONT'D)
Molex Incorporated ........................... 10,000 $ 540,000
Park Electrochemical Corp. ................... 80,000 5,285,000
Sanmina Corp. ................................ 90,000 10,288,125*
Vicor Corp. .................................. 40,000 2,160,000*
----------
34,910,625
FINANCIAL SERVICES 1.48%
Stilwell Financial, Inc. ..................... 70,000 3,136,875
HEALTHCARE EQUIPMENT & SERVICES 4.43%
CryoLife, Inc. ............................... 15,000 597,188*
Health Management Associates, Inc., Class A .. 20,000 396,250*
IDEXX Laboratories, Inc. ..................... 60,000 1,440,000*
Laboratory Corporation of America Holdings ... 20,000 2,697,500*
LifePoint Hospitals, Inc. .................... 5,000 193,750*
Orthodontic Centers of America, Inc. ......... 15,000 500,625*
Trigon Healthcare, Inc. ...................... 50,000 3,584,375*
----------
9,409,688
HOTEL 1.89%
Harrah's Entertainment, Inc. ................. 140,000 4,007,500*
INTERNET 2.22%
Avocent Corp. ................................ 60,000 4,256,250*
IntraNet Solutions, Inc. ..................... 10,000 465,000*
----------
4,721,250
MANUFACTURING 1.96%
Applied Films Corp. .......................... 10,000 340,000*
Parker-Hannifin Corp. ........................ 20,000 827,500
Precision Castparts Corp. .................... 70,000 2,642,500
Teleflex Incorporated ........................ 10,000 345,625
----------
4,155,625
MARKETING 0.09%
ADVO, Inc. ................................... 5,000 184,063*
MEDICAL PRODUCTS 4.14%
Johnson & Johnson ............................ 80,000 7,370,000
Stryker Corp. ................................ 30,000 1,413,750
----------
8,783,750
17
<PAGE>
BONNEL GROWTH FUND
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS OCTOBER 31, 2000
--------------------------------------------------------------------------------
COMMON STOCKS SHARES VALUE
NETWORKING PRODUCTS 11.46%
Aeroflex Incorporated ........................ 5,000 $ 297,500*
Cable Design Technologies Corp. .............. 75,000 1,729,687*
Emulex Corp. ................................. 40,000 5,875,000*
Extreme Networks, Inc. ....................... 90,000 7,464,375*
Network Appliance, Inc. ...................... 60,000 7,140,000*
Symbol Technologies, Inc. .................... 40,000 1,817,500
----------
24,324,062
OIL & GAS EXTRACTION & SERVICES 3.26%
Dynegy, Inc., Class A ........................ 120,000 5,557,500
Schlumberger Limited ......................... 5,000 380,625
Valero Energy Corp. .......................... 30,000 991,875
----------
6,930,000
PHARMACEUTICALS 17.78%
Abbott Laboratories .......................... 60,000 3,168,750
Amgen, Inc. .................................. 20,000 1,158,750*
Forest Laboratories, Inc. .................... 70,000 9,275,000*
IDEC Pharmaceuticals Corp. ................... 20,000 3,922,500*
King Pharmaceuticals, Inc. ................... 153,750 6,889,922*
Merck & Co., Inc. ............................ 80,000 7,195,000
Noven Pharmaceuticals, Inc. .................. 100,000 4,456,250*
Pharmaceutical Product Development, Inc. ..... 50,000 1,565,625*
Taro Pharmaceuticals Industries Ltd. ......... 5,000 121,250*
----------
37,753,047
PHOTOGRAPHIC EQUIPMENT 0.15%
Concord Camera Corp. ......................... 10,000 309,375*
METAL MINING 0.41%
Stillwater Mining Co. ........................ 30,000 870,000*
RESTAURANTS 0.21%
Darden Restaurants, Inc. ..................... 20,000 450,000
SEMICONDUCTORS 5.22%
All American Semiconductor, Inc. ............. 15,000 279,375*
Alpha Industries, Inc. ....................... 40,000 1,595,000*
Elantec Semiconductor, Inc. .................. 15,000 1,668,750*
Helix Technology Corp. ....................... 50,000 1,393,750
Pericom Semiconductor Corp. .................. 30,000 795,000*
Micrel, Inc. ................................. 40,000 1,810,000*
Semiconductor HOLDRS Trust ................... 30,000 1,974,000
STMicroelectronics N.V ....................... 30,000 1,558,125
----------
11,074,000
18
<PAGE>
BONNEL GROWTH FUND
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS OCTOBER 31, 2000
--------------------------------------------------------------------------------
COMMON STOCKS SHARES VALUE
TELECOMMUNICATIONS 8.93%
Celeritek, Inc. .............................. 30,000 $ 991,875*
Linear Technology Corp. ...................... 40,000 2,582,500
Newport Corp. ................................ 30,000 3,426,093
Plantronics, Inc. ............................ 30,000 1,368,750*
Polycom, Inc. ................................ 100,000 6,500,000*
Tollgrade Communications, Inc. ............... 40,000 3,830,000*
West TeleServices Corp. ...................... 10,000 255,000*
----------
18,954,218
UNIT INVESTMENT TRUST 4.71%
Nasdaq-100 Shares ............................ 70,000 5,719,217*
Standard & Poor's 500 Depositary Receipt ..... 30,000 4,288,593
----------
10,007,810
WHOLESALE & DISTRIBUTION 1.23%
SYSCO Corp. .................................. 50,000 2,609,375
TOTAL COMMON STOCKS .......................... 212,935,950
(cost $182,037,348)
PRINCIPAL
REPURCHASE AGREEMENT 3.24% AMOUNT
Joint Tri-Party Repurchase Agreement, Morgan
Stanley Dean Witter & Co., 10/31/00, 6.50%,
due 11/01/00, repurchase price $6,889,131,
collateralized by U.S. Treasury securities
held in a joint tri-party repurchase account
(cost $6,887,887) $6,887,887 6,887,887
TOTAL INVESTMENTS 103.55% 219,823,837
(cost $188,925,235)
Other assets and liabilities, net (3.55)% (7,543,234)
------------
NET ASSETS 100% $212,280,603
------------
* Non-income producing security
See accompanying notes to portfolios of investments.
19
<PAGE>
MEGATRENDS FUND
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS OCTOBER 31, 2000
--------------------------------------------------------------------------------
COMMON STOCKS 94.98% SHARES VALUE
BUILDING PRODUCTS 3.02%
Home Depot, Inc. ............................. 12,500 $ 537,500
COMPUTERS & DATA PROCESSING 4.24%
CIBER, Inc. .................................. 43,000 335,937*
Hewlett-Packard Co. .......................... 9,000 417,938
----------
753,875
ELECTRONICS & COMPONENTS 5.06%
Intel Corp. .................................. 20,000 900,000
FINANCIAL SERVICES 5.55%
Fannie Mae ................................... 4,000 308,000
J.P. Morgan & Co. Incorporated ............... 4,100 678,550
----------
986,550
HEALTHCARE 5.33%
Cardinal Health, Inc. ........................ 10,000 947,500
HOLDING COMPANY 3.58%
Berkshire Hathaway, Inc., Class A ............ 10 637,000*
INSURANCE 12.84%
ACE Limited .................................. 20,000 785,000
Everest Re Group, Ltd. ....................... 5,000 293,125
St. Paul Companies, Inc. ..................... 17,500 896,874
XL Capital Ltd., Class A ..................... 4,000 307,500
----------
2,282,499
MANUFACTURING 7.99%
Honeywell International, Inc. ................ 19,000 1,022,437
Tyco International Ltd. ...................... 7,000 396,813
----------
1,419,250
MEDIA 3.42%
Time Warner, Inc. ............................ 8,000 607,280
20
<PAGE>
MEGATRENDS FUND
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS OCTOBER 31, 2000
--------------------------------------------------------------------------------
COMMON STOCKS SHARES VALUE
METAL MINING 11.66%
Anglo American Platinum Corp. Ltd., ADR ...... 6,500 $ 243,262
Apex Silver Mines Limited .................... 60,000 547,500*
Impala Platinum Holdings Ltd., ADR ........... 5,000 209,610
North American Palladium Ltd. ................ 25,000 157,813*
Stillwater Mining Co. ........................ 22,000 638,000*
Trend Mining Co. ............................. 173,000 224,900*
Zimbabwe Platinum Mines Ltd. ................. 250,000 51,835*
----------
2,072,920
OIL & GAS EXTRACTION & SERVICES 13.52%
Chevron Corp. ................................ 8,500 698,062
Nabors Industries, Inc. ...................... 16,000 814,400*
Noble Drilling Corp. ......................... 15,000 623,438*
Western Gas Resources, Inc. .................. 12,200 267,638
----------
2,403,538
PHARMACEUTICALS 7.30%
Elan Corp. plc, ADR .......................... 15,000 779,063*
Pfizer, Inc. ................................. 12,000 518,250
----------
1,297,313
REAL ESTATE INVESTMENT TRUSTS 2.38%
BRE Properties, Inc., Class A ................ 7,000 221,375
Crescent Real Estate Equities Co. ............ 10,000 201,250
----------
422,625
TELECOMMUNICATIONS 3.74%
WorldCom, Inc. ............................... 28,000 665,000*
UTILITIES 5.35%
Duke Energy Corporation ...................... 11,000 950,813
TOTAL COMMON STOCKS .......................... 16,883,663
(cost $12,847,618)
21
<PAGE>
MEGATRENDS FUND
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS OCTOBER 31, 2000
--------------------------------------------------------------------------------
PRINCIPAL
REPURCHASE AGREEMENT 4.63% AMOUNT VALUE
Joint Tri-Party Repurchase Agreement, Morgan
Stanley Dean Witter & Co., 10/31/00, 6.50%,
due 11/01/00, repurchase price $823,107,
collateralized by U.S. Treasury securities
held in a joint tri-party repurchase account
(cost $822,958) $822,958 $ 822,958
TOTAL INVESTMENTS 99.61% 17,706,621
(cost $13,670,576)
Other assets and liabilities, net 0.39% 69,460
-----------
NET ASSETS 100%
$17,776,081
-----------
ADR - American Depositary Receipt
* Non-income producing security
See accompanying notes to portfolios of investments.
22
<PAGE>
REGENT EASTERN EUROPEAN FUND
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS OCTOBER 31, 2000
--------------------------------------------------------------------------------
COMMON AND PREFERRED STOCKS 97.18% SHARES VALUE
CHEMICALS 4.17%
BorsodChem Rt., GDR .......................... 6,052 $ 168,700
COMMUNICATIONS 13.02%
Magyar Tavkozlesi Rt., ADR ................... 10,114 237,679
Mobile Telesystems, Sponsored ADR ............ 3,501 96,715*
Rostelekom ................................... 14,831 20,764*
Telekomunikacja Polska S.A., GDR ............. 34,167 171,689
----------
526,847
COMPUTERS & DATA PROCESSING 2.30%
ComArch S.A .................................. 3,408 38,873*
Softbank S.A., GDR ........................... 3,866 54,027
----------
92,900
CONSTRUCTION 4.43%
Budimex S.A .................................. 36,200 179,189*
ELECTRIC SERVICES & UTILITIES 11.82%
Elektrim Spolka Akcyjna S.A .................. 33,922 273,041*
Unified Energy Systems ....................... 1,623,628 205,389
----------
478,430
FINANCIAL SERVICES 8.02%
Europejski Fundusz Leasingowy S.A., GDR ...... 600 8,070*
OTP Bank Rt., Preferred Stock ................ 3,503 103,268
SKB Banka, GDR ............................... 6,225 63,339*
Zagrebacka Banka d.d., GDR ................... 9,502 149,657
----------
324,334
MANUFACTURING 4.00%
Graboplast Rt ................................ 4,076 31,649*
Graboplast Rt., GDR .......................... 33,890 44,904*
Mostostal-Export S.A ......................... 82,764 85,320
----------
161,873
METAL MINING 12.17%
Ashurst Technology Ltd., Units ............... 93,470 0*
KGHM Polska Miedz S.A ........................ 38,998 211,503*
Norilsk Nickel ............................... 36,000 280,800
----------
492,303
23
<PAGE>
REGENT EASTERN EUROPEAN FUND
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS OCTOBER 31, 2000
--------------------------------------------------------------------------------
COMMON AND PREFERRED STOCKS SHARES VALUE
OIL & GAS EXTRACTION 29.31%
Lukoil Holdings, ADR ......................... 8,470 $ 452,298
MOL Magyar Olaj-es Gazipari Rt ............... 11,000 169,937
MOL Magyar Olaj-es Gazipari Rt., GDR ......... 15,948 244,403
Primagaz Rt .................................. 13,270 68,620
Surgutneftegaz ............................... 58,042 14,917
Surgutneftegaz, Preferred Stock .............. 1,784,814 235,595
----------
1,185,770
PHARMACEUTICALS 4.80%
Pliva d.d., GDR .............................. 18,393 194,046
RECYCLING 3.14%
Trooper Technologies, Inc. ................... 60,000 122,161*
Trooper Technologies, Inc. Warrants .......... 60,000 5,106*
----------
127,267
TOTAL COMMON & PREFERRED STOCKS .............. 3,931,659
(cost $5,018,631)
PRINCIPAL
REPURCHASE AGREEMENT 3.79% AMOUNT
Joint Tri-Party Repurchase Agreement, Morgan
Stanley Dean Witter & Co., 10/31/00, 6.50%,
due 11/01/00, repurchase price $153,179,
collateralized by U.S. Treasury securities
held in a joint tri-party repurchase account
(cost $153,151) $153,151 153,151
TOTAL INVESTMENTS 100.97% 4,084,810
----------
(cost $5,171,782)
Other assets and liabilities, net (0.97)% (39,045)
----------
NET ASSETS 100% $4,045,765
----------
ADR - American Depositary Receipt
GDR - Global Depositary Receipt
* Non-income producing security
See accompanying notes to portfolios of investments.
24
<PAGE>
NOTES TO PORTFOLIOS OF INVESTMENTS OCTOBER 31, 2000
--------------------------------------------------------------------------------
GLOBAL PORTFOLIO SECURITIES BY COUNTRY
PERCENTAGE
OF TOTAL
COUNTRY VALUE INVESTMENTS
---------- -----------
REGENT EASTERN EUROPEAN FUND
Russia ....................................... $1,306,478 31.98%
Hungary ...................................... 1,069,160 26.17
Poland ....................................... 1,021,712 25.01
Croatia ...................................... 343,703 8.42
United States ................................ 153,151 3.75
Canada ....................................... 127,267 3.12
Slovenia ..................................... 63,339 1.55
-----------
TOTAL INVESTMENTS ............................ $4,084,810 100.00%
-----------
JOINT TRI-PARTY REPURCHASE AGREEMENT (SEE ALSO NOTE 1 TO FINANCIAL STATEMENTS.)
The terms of the repurchase agreement at October 31, 2000 were:
Morgan Stanley Dean Witter & Co. repurchase agreement, 10/31/00, 6.50%, due
11/01/00:
Total principal amount: $53,556,531; Total repurchase value: $53,566,201
Collateral:
$53,570,000 U.S. Treasury Note, 6.00%, 08/15/09
(Total collateral market value of $54,237,536)
Other mutual funds managed by U.S. Global Investors, Inc. participate in the
tri-party joint repurchase agreement. Each owns an undivided interest in the
account.
25
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES OCTOBER 31, 2000
--------------------------------------------------------------------------------
REGENT
BONNEL EASTERN
GROWTH MEGATRENDS EUROPEAN
FUND FUND FUND
------------ ----------- ----------
Investments, at identified
cost $188,925,235 $13,670,576 $5,171,782
============ =========== ==========
ASSETS
Investments, at value:
Securities $212,935,950 $16,883,663 $3,931,659
Repurchase agreements 6,887,887 822,958 153,151
Receivables:
Investments sold 3,052,549 708,167 2,065
Dividends 11,045 8,528 2,414
Interest 1,245 149 27
Capital shares sold 234,178 110,744 4,929
Other assets 3,740 665 494
------------ ----------- ----------
TOTAL ASSETS 223,126,594 18,534,874 4,094,739
LIABILITIES
Payables:
Investments purchased 10,344,121 688,173 --
Capital shares redeemed 123,329 15,294 4,415
To manager and affiliates 196,005 17,212 5,441
Accounts payable and
accrued expenses 182,536 38,114 39,118
--------
TOTAL LIABILITIES 10,845,991 758,793 48,974
------------ ----------- ----------
NET ASSETS $212,280,603 $17,776,081 $4,045,765
============ =========== ==========
NET ASSETS CONSIST OF:
Paid-in capital $136,386,251 $12,278,877 $5,804,605
Undistributed net
investment loss -- (5,816) --
Accumulated net realized
gain (loss) on investments
and foreign currencies 44,995,750 1,466,975 (671,868)
Net unrealized appreciation
(depreciation) of
investments and other
assets and liabilities
denominated in foreign
currencies 30,898,602 4,036,045 (1,086,972)
---------- --------- --------
Net assets applicable to
capital shares outstanding $212,280,603 $17,776,081 $ 4,045,765
============ =========== ===========
Capital shares outstanding;
and unlimited number of no
par shares authorized 7,318,283 1,436,564 458,726
============ =========== ===========
NET ASSET VALUE, PER SHARE $ 29.01 $ 12.37 $ 8.82
============ =========== ===========
See accompanying notes to financial statements.
26
<PAGE>
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED
OCTOBER 31, 2000
--------------------------------------------------------------------------------
REGENT
BONNEL EASTERN
GROWTH MEGATRENDS EUROPEAN
FUND FUND FUND
------------ ----------- ----------
NET INVESTMENT INCOME
INCOME:
Dividends $ 443,748 $ 162,983 $ 30,179
Foreign taxes withheld on
dividends -- (230) (5,065)
----------- ---------- --------
Net dividends 443,748 162,753 25,114
Securities lending 71,052 1,178 210
Interest and other 593,791 121,285 17,449
----------- ---------- --------
TOTAL INCOME 1,108,591 285,216 42,773
EXPENSES:
Management fees 2,525,530 174,599 70,204
Transfer agent fees and
expenses 304,880 35,423 25,384
Accounting service fees and
expenses 110,007 40,000 40,000
Legal and professional fees 109,149 25,012 30,796
Distribution plan expenses 612,429 35,301 14,041
Custodian fees 55,200 21,238 44,921
Shareholder reporting
expenses 97,839 16,416 9,414
Registration fees 42,052 21,280 19,670
Trustees' fees and expenses 30,431 30,431 30,431
Interest expense 1,853 49 38
Miscellaneous expenses 16,790 5,323 3,695
----------- ---------- --------
Total expenses before
reductions 3,906,160 405,072 288,594
Short-term trading fee (1,853) (49) (38)
Expenses offset (19,053) (2,929) (228)
---------- --------- --------
NET EXPENSES 3,885,254 402,094 288,328
NET INVESTMENT LOSS (2,776,663) (116,878) (245,555)
----------- ---------- --------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Realized gain (loss) from:
Securities 48,067,335 1,577,999 106,140
Foreign currency
transactions -- (166) (14,567)
----------- ---------- --------
NET REALIZED GAIN 48,067,335 1,577,833 91,573
----------- ---------- --------
Net change in unrealized
appreciation
(depreciation) of:
Investments (1,016,918) 2,723,523 482,019
Other assets and
liabilities denominated in
foreign currencies -- -- (154)
----------- ---------- --------
NET UNREALIZED
APPRECIATION
(DEPRECIATION) (1,016,918) 2,723,523 481,865
----------- ---------- --------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS 47,050,417 4,301,356 573,438
----------- ---------- --------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $44,273,754 $4,184,478 $327,883
=========== ========== ========
See accompanying notes to financial statements.
27
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BONNEL GROWTH FUND
---------------------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, 2000 OCTOBER 31, 1999
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM INVESTMENT OPERATIONS:
Net investment loss $ (2,776,663) $ (1,571,581)
Net realized gain (loss) 48,067,335 28,060,703
Net unrealized appreciation (depreciation) (1,016,918) 25,165,059
------------ ------------
NET INCREASE IN NET ASSETS
FROM INVESTMENT OPERATIONS 44,273,754 51,654,181
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income -- --
From net capital gains (24,785,515) (3,150,077)
In excess of net capital gains -- --
------------ ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (24,785,515) (3,150,077)
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 198,268,763 36,732,366
Distributions reinvested 24,058,114 3,037,219
Paid-in capital portion of short-term trading
fee 71,094 26,232
------------ ------------
222,397,971 39,795,817
Cost of shares redeemed (163,554,578) (42,101,926)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM CAPITAL SHARE TRANSACTIONS 58,843,393 (2,306,109)
NET INCREASE (DECREASE) IN NET ASSETS 78,331,632 46,197,995
NET ASSETS
Beginning of year 133,948,971 87,750,976
END OF YEAR $212,280,603 $133,948,971
Undistributed net investment loss, end of year $ -- $ --
============ ============
CAPITAL SHARE ACTIVITY
Shares sold 5,943,908 1,786,758
Shares reinvested 978,370 177,511
Shares redeemed (4,925,109) (2,067,277)
------------ ------------
NET SHARE ACTIVITY 1,997,169 (103,008)
============ ============
</TABLE>
See accompanying notes to financial statements.
28
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
REGENT EASTERN
MEGATRENDS FUND EUROPEAN FUND
------------------------------- ---------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
2000 1999 2000 1999
----------- ----------- --------- ---------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM INVESTMENT OPERATIONS:
Net investment loss $ (116,878) $ (9,474) $(245,555) $(138,122)
Net realized gain (loss) 1,577,833 1,669,405 91,573 (284,318)
Net unrealized appreciation (depreciation) 2,723,523 846,486 481,865 849,932
----------- ----------- --------- ---------
NET INCREASE IN NET ASSETS
FROM INVESTMENT OPERATIONS 4,184,478 2,506,417 327,883 427,492
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income -- -- -- --
From net capital gains (1,656,853) (3,268,120) -- --
In excess of net capital gains -- -- -- --
----------- ----------- --------- ---------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (1,656,853) (3,268,120) -- --
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 1,293,168 1,151,502 1,924,810 1,558,408
Distributions reinvested 1,602,904 3,186,923 -- --
Paid-in capital portion of short-term trading
fee 588 278 21,317 12,305
----------- ----------- --------- ---------
2,896,660 4,338,703 1,946,127 1,570,713
Cost of shares redeemed (5,100,936) (6,863,801) (3,438,467) (2,464,106)
----------- ----------- --------- ---------
NET INCREASE (DECREASE) IN NET ASSETS
FROM CAPITAL SHARE TRANSACTIONS (2,204,276) (2,525,098) (1,492,340) (893,393)
NET INCREASE (DECREASE) IN NET ASSETS 323,349 (3,286,801) (1,164,457) (465,901)
NET ASSETS
Beginning of year 17,452,732 20,739,533 5,210,222 5,676,123
END OF YEAR $17,776,081 $17,452,732 $4,045,765 $5,210,222
Undistributed net investment loss, end of year $ (5,816) $ -- $ -- $ (24,748)
=========== =========== ========= =========
CAPITAL SHARE ACTIVITY
Shares sold 110,534 107,017 166,524 177,873
Shares reinvested 161,583 328,888 -- --
Shares redeemed (457,081) (642,295) (309,280) (284,245)
----------- ----------- --------- ---------
NET SHARE ACTIVITY (184,964) (206,390) (142,756) (106,372)
=========== =========== ========= =========
</TABLE>
29
<PAGE>
NOTES TO FINANCIAL STATEMENTS October 31, 2000
--------------------------------------------------------------------------------
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 accounting principles generally accepted in the
United States.
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 except that certain dividends from foreign
securities where the ex-dividend may have passed are recorded as soon as the
funds are informed of the ex-dividend data in the exercise of reasonable
diligence. 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.
Whereas the prospectus allows loans of portfolio securities up to one-third of
net assets for Bonnel Growth and Regent Eastern European Funds and up to 25% of
total assets for MegaTrends Fund, the trustees have imposed an internal limit
of 10% of net assets through May 24, 2000. This limit was increased to 15% on
May 25, 2000. The securities are loaned 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
30
<PAGE>
NOTES TO FINANCIAL STATEMENTS October 31, 2000
--------------------------------------------------------------------------------
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 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, 2000 was:
MARKET
FUND VALUE COLLATERAL
---------------------------- ---------- ----------
Bonnel Growth Fund $7,511,092 $7,730,000
MegaTrends Fund 671,938 689,000
Regent Eastern European Fund 96,688 101,500
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
31
<PAGE>
NOTES TO FINANCIAL STATEMENTS October 31, 2000
--------------------------------------------------------------------------------
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, 2000.
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
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 DISTRIBUTION 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 accounting principles generally accepted in the United
States. 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 accounting principles generally
accepted in the United States 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.
32
<PAGE>
NOTES TO FINANCIAL STATEMENTS October 31, 2000
--------------------------------------------------------------------------------
NOTE 2: RELATED PARTY TRANSACTIONS
U.S. Global Investors, Inc. (Adviser), under an investment advisory agreement
with the Trust in effect through March 8, 2001, 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.
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 Europe Asset 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. Brown Brothers
Harriman & Co. serves 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 $76,903, representing 92.04%, of commissions paid by MegaTrends
Fund on purchases and sales of securities during the year ended October 31,
2000.
During the year ended October 31, 2000, A & B Mailers, Inc., a wholly-owned
subsidiary of the Adviser, was paid $50,138 for mailing services provided to
the funds.
33
<PAGE>
NOTES TO FINANCIAL STATEMENTS October 31, 2000
--------------------------------------------------------------------------------
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.
Trustees 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.
NOTE 3: INVESTMENTS
Purchases and sales of long-term securities for the year ended October 31,
2000, are summarized as follows:
FUND PURCHASES SALES
----------------------- ------------ ------------
Bonnel Growth $695,886,319 $663,433,820
MegaTrends 26,469,761 27,545,011
Regent Eastern European 1,576,984 3,189,396
The following table presents the income tax basis of securities owned on
October 31, 2000, and the tax basis components of net unrealized appreciation
or depreciation:
<TABLE>
<CAPTION>
GROSS GROSS NET UNREALIZED
AGGREGATE UNREALIZED UNREALIZED APPRECIATION
FUND COST APPRECIATION DEPRECIATION (DEPRECIATION)
---------------------- ------------ ----------- ---------- -----------
<S> <C> <C> <C> <C>
Bonnel Growth $190,977,947 $30,348,218 $1,502,328 $28,845,890
MegaTrends 13,936,510 4,317,582 547,471 3,770,111
Regent Eastern European 5,270,054 380,756 1,566,000 (1,185,244)
</TABLE>
At October 31, 2000, Regent Eastern European Fund had capital loss carryovers
of $374,861 with an expiration date of 10/31/06, $185,242 with an expiration
date of 10/31/07 and $13,493 with an expiration date of 10/31/08.
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.
34
<PAGE>
NOTES TO FINANCIAL STATEMENTS October 31, 2000
--------------------------------------------------------------------------------
NOTE 4: REVOLVING DEMAND NOTES
On March 1, 2000, each of the U.S. Global Accolade Funds, along with other
funds under common management, 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 are collateralized by
any or all of the securities held by Brown Brothers Harriman & Co. as the
funds' custodian. Borrowings under these notes will be charged interest at the
current overnight Federal Funds Rate plus 2%. Each U.S. Global Accolade Fund
has a maximum borrowing limit of the lesser of 5% of its net asset value or
$10,000,000. There were no borrowings under the revolving demand notes at
October 31, 2000.
From March 1, 1999 to February 29, 2000, the U.S. Global Accolade Funds, along
with other funds under common management, participated in an $85 million
revolving credit facility (Facility) dated March 1, 1999. Commitment fees
related to the Facility were paid by the participating funds. A one-time fee
was paid on March 1, 1999. Additionally, an annual fee of $75,000 and quarterly
commitment fees totalling $127,500 were paid within each annual period. These
expenses were shared by all funds under common management. Borrowings under
this Facility were charged interest at the current overnight Federal Funds Rate
plus 2.00%.
NOTE 5: SHARES OF BENEFICIAL INTEREST
At October 31, 2000, individual shareholders holding 5% or more of outstanding
shares comprised 9.86% of Regent Eastern European Fund.
35
<PAGE>
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BONNEL GROWTH FUND
FOR A CAPITAL SHARE OUTSTANDING DURING THE:
PERIOD YEAR ENDED
YEAR ENDED OCTOBER 31, ENDED SEPTEMBER 30,
----------------------------- OCT. 31, ------------------
2000 1999 1998 1997* 1997 1996
-------- -------- ------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $25.17 $16.18 $19.68 $21.86 $17.15 $14.81
Investment Activities
Net investment loss (.38) (.30) (.23) (.03) (.21) (.14)
Net realized and unrealized gain
(loss) 7.97 9.87 .44 (2.15) 5.09 3.13
-------- -------- ------- -------- -------- -------
Total from investment activities 7.59 9.57 .21 (2.18) 4.88 2.99
-------- -------- ------- -------- -------- -------
Distributions
From net investment income -- -- -- -- -- --
From net realized gains (3.75) (.58) (3.71) -- (.17) --
In excess of net realized gains -- -- -- -- -- (.65)
-------- -------- ------- -------- -------- -------
Total distributions (3.75) (.58) (3.71) -- (.17) (.65)
NET ASSET VALUE, END OF YEAR $29.01 $25.17 $16.18 $19.68 $21.86 $17.15
TOTAL RETURN
(excluding account fees) (a) 32.81% 60.85% .80% (9.97)% 28.67% 21.27%
Ratios to Average Net Assets (b):
Net investment loss (1.10)% (1.41)% (1.19)% (1.43)% (1.18)% (1.32)%
Total expenses 1.55% 1.77% 1.85% 1.72% 1.77% 1.83%
Expenses reimbursed or offset (.01)% -- (.01)% -- -- --
Net expenses 1.54% 1.77% 1.84% 1.72% 1.77% 1.83%
Portfolio Turnover Rate 283% 197% 190% 52% 239% 212%
Net assets, end of year (in
thousands) $212,281 $133,949 $87,751 $104,643 $117,891 $90,696
* For the month ended October 31, 1997.
(a) Total returns for periods less than one year are not annualized. Assumes
investment at the net asset value at the beginning of the period,
reinvestment of all distributions and a complete redemption of the
investment at the net asset value at the end of the period.
(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 increase the net
investment loss ratio had such reductions not occurred.
</TABLE>
36
<PAGE>
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MEGATRENDS FUND
FOR A CAPITAL SHARE OUTSTANDING DURING THE:
PERIOD YEAR ENDED
YEAR ENDED OCTOBER 31, ENDED JUNE 30,
--------------------------- OCT. 31, -------------------
2000 1999 1998 1997* 1997** 1996
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $10.76 $11.35 $13.90 $13.45 $11.27 $11.17
Investment Activities
Net investment income (loss) (.08) (.01) (.02) .01 .01 .17
Net realized and unrealized gain
(loss) 2.74 1.27 (.51) .44 2.39 1.72
------- ------- ------- ------- ------- -------
Total from investment activities 2.66 1.26 (.53) .45 2.40 1.89
------- ------- ------- ------- ------- -------
Distributions
From net investment income -- -- -- -- (.01) (.17)
In excess of net investment income -- -- (.01) -- -- --
From net realized gains (1.05) (1.85) (2.01) -- (.21) (1.61)
In excess of net realized gains -- -- -- -- -- (.01)
------- ------- ------- ------- ------- -------
Total distributions (1.05) (1.85) (2.02) -- (.22) (1.79)
NET ASSET VALUE, END OF YEAR $12.37 $10.76 $11.35 $13.90 $13.45 $11.27
TOTAL RETURN
(excluding account fees) (a) 27.17% 12.85% (4.43)% 3.34% 20.72% 17.10%
Ratios to Average Net Assets (b):
Net investment income (loss) (.67)% (.05)% (.14)% .23% .09% 1.30%
Total expenses 2.32% 2.17% 2.06% 1.76% 1.97% 2.10%
Expenses reimbursed or offset (.01)% -- -- -- (.09)% (.60)%
Net expenses 2.31% 2.17% 2.06% 1.76% 1.88% 1.50%
Portfolio Turnover Rate 168% 76% 51% 13% 62% 115%
Net assets, end of year (in thousands) $17,776 $17,453 $20,740 $25,492 $25,160 $27,945
* For the four months ended October 31, 1997.
** Effective November 18, 1996, the fund changed to a new investment manager.
(a) Total returns for periods less than one year are not annualized. Assumes
investment at the net asset value at the beginning of the period,
reinvestment of all distributions and a complete redemption of the
investment at the net asset value at the end of the period.
(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.
</TABLE>
37
<PAGE>
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
REGENT EASTERN EUROPEAN FUND
FOR A CAPITAL SHARE OUTSTANDING DURING THE:
PERIOD
YEAR ENDED OCTOBER 31, ENDED
------------------------------ OCT. 31,
2000 1999 1998 1997*
------ ------ ------ ------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $8.66 $8.02 $11.19 $10.00
Investment Activities
Net investment loss (.55) (.23) (.27) (.01)
Net realized and unrealized gain (loss) .71 .87 (2.84) 1.20
------ ------ ------ ------
Total from investment activities .16 .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 $8.82 $8.66 $8.02 $11.19
TOTAL RETURN
(excluding account fees) (a) 1.85% 7.98% (27.96)% 11.90%
Ratios to Average Net Assets (b):
Net investment loss (4.37)% (2.38)% (2.38)% (.49)%
Total expenses 5.14% 4.36% 5.03% 4.98%
Expenses reimbursed or offset (.01)% (.01)% (.48)% (1.73)%
Net expenses 5.13% 4.35% 4.55% 3.25%
Portfolio Turnover Rate 30% 29% 97% 11%
Net assets, end of year (in thousands) $4,046 $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. Assumes
investment at the net asset value at the beginning of the period,
reinvestment of all distributions and a complete redemption of the
investment at the net asset value at the end of the period.
(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 increase the net
investment loss ratio had such reductions not occurred.
</TABLE>
38
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
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, 2000, the related
statements of operations for the year then ended, and the statements of changes
in net assets and the financial highlights for each of the two years in the
period 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
audits. The financial highlights for the four periods, three periods, and two
periods in the period ended October 31, 1998 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 highlights. The financial highlights of the
MegaTrends Fund for the year 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 audits in accordance with accounting principles generally
accepted in the United States. 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, 2000, 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
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective Funds constituting the U.S. Global Accolade Funds at October
31, 2000, the results of their operations for the year then ended, and the
changes in their net assets and the financial highlights for each of the two
years in the period then ended, in conformity with accounting principles
generally accepted in the United States.
/s/ Ernst & Young LLP
Boston, Massachusetts
December 13, 2000
39
<PAGE>
ADDITIONAL FEDERAL TAX INFORMATION
--------------------------------------------------------------------------------
The funds hereby designate the following approximate amounts as capital gain
dividends for the purpose of the dividends paid deduction:
Bonnel Growth $7,597,795
MegaTrends $1,065,232
In January 2001, the funds will report on Form 1099 the tax status of all
distributions made during the calendar year 2000. Shareholders should use the
information on Form 1099 for their income tax returns.
40
<PAGE>
NOTES
<PAGE>
NOTES
