METAMARKETS.COM FUNDS
PROSPECTUS
AUGUST 27, 1999
o OPENFUND
o COMMUNICATIONS TECHNOLOGY FUND
o MEDIA TECHNOLOGY FUND
o OPENFUND II
ADVISED BY
METAMARKETS INVESTMENTS LLC
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
FUND SHARES OR DETERMINED WHETHER THIS PROSPECTUS IS TRUTHFUL OR COMPLETE.
ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A CRIME.
<PAGE>
TABLE OF CONTENTS
DESCRIPTION OF THE FUNDS - OVERVIEW, OBJECTIVES, RISK/RETURN AND
EXPENSES
ADDITIONAL INFORMATION ON INVESTMENT STRATEGIES AND RISKS
FUND MANAGEMENT
SHAREHOLDER INFORMATION
BACK COVER
<PAGE>
DESCRIPTION OF THE FUNDS
OVERVIEW
- -------------------------------------------------------------------------------
THE FUNDS The MetaMarkets.com Funds consist of four
separate Funds, each with its own investment
strategy and risk/return profile. All four Funds
seek capital growth and invest principally in
common stocks of companies characterized as
"growth" companies. The differences in investment
strategy among the Funds affect the degree of risk
each Fund is subject to and its return. The Funds
are actively managed and, thus, are subject to the
risk that a Fund's portfolio management practices
might not achieve their goals. Because you could
lose money by investing in a Fund, be sure to read
all risk disclosure carefully before investing.
Each Fund invests in securities of companies
which, in the opinion of the Fund's investment
adviser, are innovative growth companies at the
leading edge of technological, social and economic
change. These are companies which define the "New
Economy." They demonstrate the ability to
innovate, continuously learn and productively
change. Through innovative use of technology or
the imaginative use of organizational techniques
or marketing methods, they are redefining the way
goods and services are provided in the economy.
These are companies that make us more efficient at
work, and change the way we relax and play.
The Funds' investments may range from small
companies developing new technologies or
practicing innovative methods to provide consumer
services, to large blue chip companies with
established track records of developing and
marketing these advances.
Much is being written about the New Economy. Visit
the Web site at http://www.MetaMarkets.com if you
want to find out where you can read more about it.
The Funds' investment adviser intends to operate
OpenFund and OpenFund II as interactive mutual
funds integrating real time investor participation
with the investment process. Each of these Funds
intends to post on its Web site updates of its
holdings in real time, to the extent practicable.
In addition, part of the investment adviser's Web
site will display completed Fund trading activity
in real time, to the extent practicable. It also
will support communication technologies such as
discussion boards, chat rooms, webcams, and
on-line polls through which Fund shareholders and
others may interact with the Funds' portfolio
managers and each other to share ideas about the
Funds, stocks, market conditions and other related
topics.
<PAGE>
OBJECTIVES, RISK/RETURN AND EXPENSES
- -------------------------------------------------------------------------------
OPENFUND
INVESTMENT OBJECTIVE The Fund seeks to provide investors with capital
growth.
PRINCIPAL INVESTMENT The Fund invests principally in the common stocks
STRATEGIES of companies that the investment adviser believes
derive strategic advantage from trends caused by
the development of the "New Economy."
The Fund will engage in frequent portfolio trading
in an attempt to take advantage of short-term
trends in valuation and momentum.
To implement the Fund's strategy, the adviser will
select from those companies based in the U.S. or,
to a limited extent, in foreign countries that
provide or are expected to benefit from advances
and improvements in technology, consumer services
or business practices. These companies may include
those that develop, produce or distribute products
or services in the Internet, electronics,
communications, healthcare, biotechnology, and
computer software and hardware sectors, as well as
the consumer marketing, media, entertainment and
financial services sectors. The Fund's investments
may range from small companies (including those
with market capitalizations below $500 million) to
large blue chip companies. The Fund also may
invest in the preferred stocks and convertible
securities (including those rated below investment
grade, so-called junk bonds) of these companies
and engage in short selling and, from time to
time, leverage, futures and options transactions.
PRINCIPAL INVESTMENT Stocks fluctuate in price, often based on factors
RISKS unrelated to the issuers' value. The value of
your investment in the Fund will fluctuate in
response to movements in the stock market and the
activities of individual portfolio companies. As a
result, you could lose money by investing in the
Fund, particularly if there is a sudden decline in
the share prices of the Fund's holdings or an
overall decline in the stock market.
The Fund will engage in short-term trading, which
could produce higher brokerage costs and taxable
distributions than a fund with low portfolio
turnover.
The Fund will invest in companies in the
technology sector, including those with small
capitalizations, which carry additional risks.
These companies typically have less predictable
earnings than other companies. In addition,
small-cap stocks trade less frequently and in more
limited volume than those of larger, more
established companies. As a result, technology and
small-cap stocks may fluctuate significantly more
in value than other stocks. Thus, the Fund's share
price should be expected to fluctuate
significantly more than the share prices of many
other types of mutual funds.
The Fund is non-diversified and may invest a
greater percentage of its assets in a particular
company compared with other funds. Accordingly,
the Fund's portfolio may be more sensitive to
changes in the market value of a single company or
industry.
The Fund may invest in lower-rated convertible
securities which have speculative characteristics
and higher credit risk. With this type of
investment, a greater likelihood exists that
adverse economic changes can result in a weakened
capacity to make interest and principal payments
on a timely basis.
Foreign securities involve special risks, such as
exposure to currency exchange rate fluctuations,
and tend to be more volatile than U.S. securities.
The Fund may not always be able to close out an
established short position at any particular time
or at an acceptable price.
The Fund can buy securities with borrowed money (a
form of leverage), which could have the effect of
magnifying the Fund's gains or losses.
Successful use of options and futures is subject
to the adviser's ability to predict correctly
movements in the direction of the market. A
relatively small investment could have a large
impact on the Fund's performance.
<PAGE>
PERFORMANCE BAR CHART AND TABLE
Because the Fund is new, it has no performance as of the date of this
prospectus.
FEES AND EXPENSES
If you purchase and hold shares of OpenFund, you will pay certain fees and
expenses, which are described in the tables. Annual Fund operating expenses are
paid out of Fund assets, and are reflected in the share price.
- ------------------------------------------
Annual Fund operating expenses
(fees paid from Fund assets)
- ------------------------------------------
Management fee 1.00%
- ------------------------------------------
Distribution (12b-1) fee .25%
- ------------------------------------------
Other expenses(1) .20%
- ------------------------------------------
Total annual Fund
operating expenses1 1.45%
- ------------------------------------------
- -----------------------
1 Other expenses are based on estimated amounts for the current fiscal year.
To the extent actual expenses are higher, the investment adviser has
contractually agreed to reimburse the Fund to the extent such other
expenses exceed .20% of the Fund's average daily net assets for the fiscal
year ending July 31, 2000. In addition, the investment adviser has agreed
to waive its fees and pay all Fund expenses through February 28, 2000.
EXPENSE EXAMPLE
Use the example at right to help you OPENFUND 1 3
compare the cost of investing in the Year Years
Fund with the cost of investing in other $148 $459
mutual funds. It illustrates the amount --------------------------------
of fees and expenses you would pay,
assuming the following:
o $10,000 investment
o 5% annual return
o No changes in the Fund's operating expenses
o Reinvestment of all dividends and distributions
o Redemption at the end of each period shown
Your actual costs may be higher or
lower. The example does not reflect the
waiver of a portion of fund operating
expenses described above.
<PAGE>
OBJECTIVES, RISK/RETURN AND EXPENSES
- -------------------------------------------------------------------------------
COMMUNICATIONS TECHNOLOGY FUND
INVESTMENT OBJECTIVE The Fund seeks to provide investors with
capital growth.
PRINCIPAL INVESTMENT The Fund invests principally in the common stocks
STRATEGIES of companies that the investment adviser believes
derive strategic advantage from the development of
global telecommunications for voice and data
traffic.
To implement the Fund's strategy, the adviser will
select from those companies based in the U.S. or,
to a limited extent, in foreign countries that
develop, manufacture or sell communications and
networking services or equipment, or that provide
Internet and media services to such companies. The
Fund will invest at least 65% of its total assets
in such companies. The Fund's investments may
range from small companies (including those with
market capitalizations below $500 million) to
large blue chip companies. The Fund also may
invest in the preferred stocks and convertible
securities (including those rated below investment
grade, so-called junk bonds) of these companies
and engage in short selling and, from time to
time, leverage, futures and options transactions.
PRINCIPAL INVESTMENT Stocks fluctuate in price, often based on factors
RISKS unrelated to the issuers' value. The value of
your investment in the Fund will fluctuate in
response to movements in the stock market and the
activities of individual portfolio companies. As a
result, you could lose money by investing in the
Fund, particularly if there is a sudden decline in
the share prices of the Fund's holdings or an
overall decline in the stock market.
Because the Fund's investments are concentrated in
the telecommunications industries, the value of
its shares will be affected by factors peculiar to
those industries and may fluctuate more widely
than that of a fund which invests in a broad range
of industries. Many of these companies are subject
to both federal and state regulation affecting
permitted rates of return and the kinds of
services that may be offered. Their products and
services may quickly become outdated. Some are
engaged in fierce competition for a share of the
market for their products and their securities are
subject to increased price volatility.
The Fund will invest in companies in the
technology sector, including those with small
capitalizations, which carry additional risks.
These companies typically have less predictable
earnings than other companies. In addition,
small-cap stocks trade less frequently and in more
limited volume than those of larger, more
established companies. As a result, technology and
small-cap stocks may fluctuate significantly more
in value than other stocks. Thus, the Fund's share
price should be expected to fluctuate
significantly more than the share prices of many
other types of mutual funds.
The Fund is non-diversified and may invest a
greater percentage of its assets in a particular
company compared with other funds. Accordingly,
the Fund's portfolio may be more sensitive to
changes in the market value of a single company or
industry.
The Fund may invest in lower-rated convertible
securities which have speculative characteristics
and higher credit risk. With this type of
investment, a greater likelihood exists that
adverse economic changes can result in a weakened
capacity to make interest and principal payments
on a timely basis.
Foreign securities involve special risks, such as
exposure to currency exchange rate fluctuations,
and tend to be more volatile than U.S. securities.
The Fund may not always be able to close out an
established short position at any particular time
or at an acceptable price.
The Fund can buy securities with borrowed money (a
form of leverage), which could have the effect of
magnifying the Fund's gains or losses.
Successful use of options and futures is subject
to the adviser's ability to predict correctly
movements in the direction of the market. A
relatively small investment could have a large
impact on the Fund's performance.
<PAGE>
PERFORMANCE BAR CHART AND TABLE
Because the Fund is new, it has no performance as of the date of this
prospectus.
FEES AND EXPENSES
If you purchase and hold shares of the Communications Technology Fund, you will
pay certain fees and expenses, which are described in the tables. Annual Fund
operating expenses are paid out of Fund assets, and are reflected in the share
price.
- ------------------------------------------
Annual Fund operating expenses
(fees paid from Fund assets)
- ------------------------------------------
Management fee 1.00%
- ------------------------------------------
Distribution (12b-1) fee .25%
- ------------------------------------------
Other expenses(1) .20%
- ------------------------------------------
Total annual Fund
operating expenses1 1.45%
- ------------------------------------------
- --------------------
1 Other expenses are based on estimated amounts for the current fiscal year.
To the extent actual expenses are higher, the investment adviser has
contractually agreed to reimburse the Fund to the extent other expenses
exceed .20% of the Fund's average daily net assets for the fiscal year
ending July 31, 2000. In addition, the investment adviser has agreed to
waive its fees and pay all Fund expenses through February 28, 2000.
EXPENSE EXAMPLE
Use the example at right to help you COMMUNICATIONS 1 3
compare the cost of investing in the TECHNOLOGY FUND Year Years
Fund with the cost of investing in other
mutual funds. It illustrates the amount $148 $459
of fees and expenses you would pay, ----------------------------------
assuming the following:
o $10,000 investment
o 5% annual return
o No changes in the Fund's operating expenses
o Reinvestment of all dividends and distributions
o Redemption at the end of each period shown
Your actual costs may be higher or
lower. The example does not reflect the
waiver of a portion of fund operating
expenses described above.
<PAGE>
OBJECTIVES, RISK/RETURN AND EXPENSES
- -------------------------------------------------------------------------------
MEDIA TECHNOLOGY FUND
INVESTMENT OBJECTIVE The Fund seeks to provide investors with capital
growth.
PRINCIPAL INVESTMENT The Fund invests principally in common stocks of
STRATEGIES companies that the investment adviser believes
derive strategic advantage from the development of
digital technologies used in the broadcast,
entertainment and other media industries.
To implement the Fund's strategy, the adviser will
select companies based in the U.S. or, to a
limited extent, in foreign countries that develop,
produce, sell or distribute goods or services used
in the media industries, such as Internet,
retailing, financial services, advertising,
broadcasting, film, publishing, cable television
and video, and cellular communications companies.
The Fund will invest at least 65% of its total
assets in such companies. The Fund's investments
may range from small companies (including those
with market capitalizations below $500 million) to
large blue chip companies. The Fund also may
invest in the preferred stocks and convertible
securities (including those rated below investment
grade, so-called junk bonds) of these companies
and engage in short selling and, from time to
time, leverage, futures and options transactions.
PRINCIPAL INVESTMENT Stocks fluctuate in price, often based on factors
RISKS unrelated to the issuers' value. The value of
your investment in the Fund will fluctuate in
response to movements in the stock market and the
activities of individual portfolio companies. As a
result, you could lose money by investing in the
Fund, particularly if there is a sudden decline in
the share prices of the Fund's holdings or an
overall decline in the stock market.
Because the Fund's investments are concentrated in
the media industries, the value of its shares will
be affected by factors peculiar to those
industries and may fluctuate more widely than that
of a fund which invests in a broad range of
industries. Some of these companies are undergoing
significant change because of federal deregulation
of cable and broadcasting. As a result,
competitive pressures are intense and the
securities of these companies are subject to
increased price volatility.
The Fund will invest in companies in the
technology sector, including those with small
capitalizations, which carry additional risks.
These companies typically have less predictable
earnings than other companies. In addition,
small-cap stocks trade less frequently and in more
limited volume than those of larger, more
established companies. As a result, technology and
small-cap stocks may fluctuate significantly more
in value than other stocks. Thus, the Fund's share
price should be expected to fluctuate
significantly more than the share prices of many
other types of mutual funds.
The Fund is non-diversified and may invest a
greater percentage of its assets in a particular
company compared with other funds. Accordingly,
the Fund's portfolio may be more sensitive to
changes in the market value of a single company or
industry.
The Fund may invest in lower-rated convertible
securities which have speculative characteristics
and higher credit risk. With this type of
investment, a greater likelihood exists that
adverse economic changes can result in a weakened
capacity to make interest and principal payments
on a timely basis.
Foreign securities involve special risks, such as
exposure to currency exchange rate fluctuations,
and tend to be more volatile than U.S. securities.
The Fund may not always be able to close out an
established short position at any particular time
or at an acceptable price.
The Fund can buy securities with borrowed money (a
form of leverage), which could have the effect of
magnifying the Fund's gains or losses.
Successful use of options and futures is subject
to the adviser's ability to predict correctly
movements in the direction of the market. A
relatively small investment could have a large
impact on the Fund's performance.
<PAGE>
PERFORMANCE BAR CHART AND TABLE
Because the Fund is new, it has no performance as of the date of this
prospectus.
FEES AND EXPENSES
If you purchase and hold shares of the Media Technology Fund, you will pay
certain fees and expenses, which are described in the tables. Annual Fund
operating expenses are paid out of Fund assets, and are reflected in the share
price.
- ------------------------------------------
Annual Fund operating expenses
(fees paid from Fund assets)
- ------------------------------------------
Management fee 1.00%
- ------------------------------------------
Distribution (12b-1) fee .25%
- ------------------------------------------
Other expenses1 .20%
- ------------------------------------------
Total annual Fund
operating expenses1 1.45%
- ------------------------------------------
- ----------------------
1 Other expenses are based on estimated amounts for the current fiscal year.
To the extent actual expenses are higher, the investment adviser has
contractually agreed to reimburse the Fund to the extent other expenses
exceed .20% of the Fund's average daily net assets for the fiscal year
ending July 31, 2000. In addition, the investment adviser has agreed to
waive its fees and pay all Fund expenses through February 28, 2000.
EXPENSE EXAMPLE
Use the example at right to help you MEDIA TECHNOLOGY FUND 1 3
compare the cost of investing in the Year Years
Fund with the cost of investing in other
mutual funds. It illustrates the amount $148 $459
of fees and expenses you would pay, ------------------------------------
assuming the following:
o $10,000 investment
o 5% annual return
o No changes in the Fund's operating expenses
o Reinvestment of all dividends and distributions
o Redemption at the end of each period shown
Your actual costs may be higher or
lower. The example does not reflect the
waiver of a portion of fund operating
expenses described above.
<PAGE>
OBJECTIVES, RISK/RETURN AND EXPENSES
- -------------------------------------------------------------------------------
OPENFUND II
INVESTMENT OBJECTIVE The Fund seeks to provide investors with capital
growth.
PRINCIPAL INVESTMENT The Fund invests principally in the common stocks
STRATEGIES of companies that the investment adviser believes
derive strategic advantage from trends caused by
the development of the "New Economy."
To implement the Fund's strategy, the adviser will
select from those companies based in the U.S. or,
to a limited extent, in foreign countries that
provide or are expected to benefit from advances
and improvements in technology, consumer services
or business practices. These companies may include
those that develop, produce or distribute products
or services in the Internet, electronics,
communications, healthcare, biotechnology, and
computer software and hardware sectors, as well as
the consumer marketing, media, entertainment and
financial services sectors. The Fund's investments
may range from small companies (including those
with market capitalizations below $500 million) to
large blue chip companies. The Fund also may
invest in the preferred stocks and convertible
securities (including those rated below investment
grade, so-called junk bonds) of these companies
and engage in short selling and, from time to
time, leverage, futures and options transactions.
PRINCIPAL INVESTMENT Stocks fluctuate in price, often based on factors
RISKS unrelated to the issuers' value. The value of
your investment in the Fund will fluctuate in
response to movements in the stock market and the
activities of individual portfolio companies. As a
result, you could lose money by investing in the
Fund, particularly if there is a sudden decline in
the share prices of the Fund's holdings or an
overall decline in the stock market.
The Fund will invest in companies in the
technology sector, including those with small
capitalizations, which carry additional risks.
These companies typically have less predictable
earnings than other companies. In addition,
small-cap stocks trade less frequently and in more
limited volume than those of larger, more
established companies. As a result, technology and
small-cap stocks may fluctuate significantly more
in value than other stocks. Thus, the Fund's share
price should be expected to fluctuate
significantly more than the share prices of many
other types of mutual funds.
The Fund is non-diversified and may invest a
greater percentage of its assets in a particular
company compared with other funds. Accordingly,
the Fund's portfolio may be more sensitive to
changes in the market value of a single company or
industry.
The Fund may invest in lower-rated convertible
securities which have speculative characteristics
and higher credit risk. With this type of
investment, a greater likelihood exists that
adverse economic changes can result in a weakened
capacity to make interest and principal payments
on a timely basis.
Foreign securities involve special risks, such as
exposure to currency exchange rate fluctuations,
and tend to be more volatile than U.S. securities.
The Fund may not always be able to close out an
established short position at any particular time
or at an acceptable price.
The Fund can buy securities with borrowed money (a
form of leverage), which could have the effect of
magnifying the Fund's gains or losses.
Successful use of options and futures is subject
to the adviser's ability to predict correctly
movements in the direction of the market. A
relatively small investment could have a large
impact on the Fund's performance.
<PAGE>
PERFORMANCE BAR CHART AND TABLE
Because the Fund is new, it has no performance as of the date of this
prospectus.
FEES AND EXPENSES
If you purchase and hold shares of OpenFund II, you will pay certain fees and
expenses, which are described in the tables. Annual Fund operating expenses are
paid out of Fund assets, and are reflected in the share price.
- ------------------------------------------
Annual Fund operating expenses
(fees paid from Fund assets)
- ------------------------------------------
Management fee 1.00%
- ------------------------------------------
Distribution (12b-1) fee .25%
- ------------------------------------------
Other expenses1 .20%
- ------------------------------------------
Total annual Fund
operating expenses1 1.45%
- ------------------------------------------
- -----------------------
1 Other expenses are based on estimated amounts for the current fiscal year.
To the extent actual expenses are higher, the investment adviser has
contractually agreed to reimburse the Fund to the extent other expenses
exceed .20% of the Fund's average daily net assets for the fiscal year
ending July 31, 2000. In addition, the investment adviser has agreed to
waive its fees and pay all Fund expenses through February 28, 2000.
EXPENSE EXAMPLE
Use the example at right to help you OPENFUND II 1 3
compare the cost of investing in the Year Years
Fund with the cost of investing in other
mutual funds. It illustrates the amount $148 $459
of fees and expenses you would pay, ---------------------------
assuming the following:
o $10,000 investment
o 5% annual return
o No changes in the Fund's operating expenses
o Reinvestment of all dividends and distributions
o Redemption at the end of each period shown
Your actual costs may be higher or
lower. The example does not reflect the
waiver of a portion of fund operating
expenses described above.
<PAGE>
ADDITIONAL INFORMATION ON INVESTMENT STRATEGIES AND RISKS
PRINCIPAL STRATEGIES APPLICABLE TO ALL FUNDS
While the Funds typically invest principally in common stocks, they also may
invest in convertible securities and preferred stocks and other equity
securities having the characteristics of common stocks (generally, in each case
up to 10% of the Fund's assets). Convertible securities are exchangeable for
another form of the issuer's securities, and generally are subordinated to other
similar but non-convertible securities of the same issuer and, thus, typically
have lower credit ratings than similar non-convertible securities. Each Fund may
invest up to 10% of its assets in convertible securities rated below investment
grade (Baa/BBB) and as low as the lowest rating assigned by the rating agencies
(C/D) or the unrated equivalent as determined by the adviser. Preferred stock
has preference over common stock in the payment of dividends and the liquidation
of assets, but ordinarily does not carry voting rights.
Although the Funds will invest principally in securities of U.S. issuers, each
Fund may invest up to 20% of its total assets in the equity securities of
foreign issuers, including common stocks, preferred stocks, convertible
securities and depositary receipts, such as ADRs.
The Funds may sell short securities of companies that the investment adviser
believes will underperform amidst the challenges of the New Economy. In
addition, each Fund may engage in short-selling for hedging purposes, such as to
limit exposure to a possible market decline in the value of its portfolio
securities. Generally, the Fund would sell a security it does not own. To
complete the transaction, the Fund must borrow the security to make delivery to
the buyer. The Fund is obligated to replace the security borrowed by purchasing
it subsequently at the market price at the time of replacement. No securities
will be sold short if, after effect is given to any such short sale, the total
market value of all securities sold short would exceed 25% of the value of a
Fund's net assets.
Each Fund may invest some assets in options and futures contracts and, though
not part of its principal strategy, certain other derivatives such as equity
swaps. These instruments are used primarily to hedge the Fund's portfolio but
may be used to increase returns; however, they sometimes may reduce returns or
increase volatility. No Fund may invest in such contracts and options for
purposes other than hedging if the sum of the amount of initial margin deposits
and premiums paid for unexpired options with respect to such contracts, other
than for bona fide hedging purposes, exceeds 5% of the liquidation value of the
Fund's assets, after taking into account unrealized profits and unrealized
losses on such contracts and options.
Each Fund may borrow money from banks, brokers or dealers for investment
purposes. Borrowing for investment purposes is known as "leverage." To the
extent a Fund uses leverage, it would limit such leverage to 25% of its total
assets.
Each Fund, from time to time, may take temporary defensive positions that are
inconsistent with the Fund's principal investment strategies in an attempt to
respond to adverse market, economic, political, or other conditions and invest
some or all of its assets in money market instruments. During these periods, the
Fund may not achieve its investment objective.
PRINCIPAL RISKS APPLICABLE TO ALL FUNDS
MARKET AND MANAGEMENT RISK. Over time, growth companies are expected to increase
their earnings at an above-average rate. If these expectations are not met,
their stock prices can fall drastically--even if earnings show an absolute
increase.
Each Fund may purchase securities of companies in initial public offerings or
shortly thereafter. The prices of these companies' securities may be very
volatile. Each Fund may purchase securities of companies which have no earnings
or have experienced losses. The Fund generally will make these investments based
on a belief that actual or anticipated products or services will produce future
earnings. If the anticipated event is delayed or does not occur, or if investor
perceptions about the company change, the company's stock price may decline
sharply and its securities may become less liquid.
FOREIGN SECURITIES RISK. Securities of foreign issuers (including ADRs)
fluctuate in price, often based on factors unrelated to the issuers' value, and
such fluctuations can be pronounced. Foreign securities tend to be more volatile
than U.S. securities because they include special risks, such as exposure to
currency fluctuations, a lack of comprehensive company information, political
instability, and differing auditing and legal standards.
LOWER RATED SECURITIES RISK. Higher yielding (and, therefore, higher risk)
convertible securities, such as those rated below investment grade, may be
subject to certain risks with respect to the issuing entity and to greater
market fluctuations than lower yielding, higher rated convertible securities.
The retail secondary market for these securities may be less liquid than that of
higher rated securities; adverse conditions could make it difficult at times for
the Fund to sell these securities or could result in lower prices than those
used in calculating the Fund's net asset value.
RISK OF USING CERTAIN INVESTMENT TECHNIQUES. With respect to short sales, the
price at the time the Fund replaces the security borrowed may be more (and the
Fund would lose money) or less (and the Fund would make money) than the price at
which the security was sold by the Fund. The amount of any gain will be
decreased, and the amount of any loss increased, by the amount of any premium or
amounts in lieu of interest the Fund may be required to pay in connection with a
short sale.
The risks related to the use of options and futures contracts include: (i) the
correlation between movements in the market price of a Fund's investments (held
or intended for purchase) being hedged and in the price of the futures contract
or option may be imperfect; (ii) possible lack of a liquid secondary market for
closing out options or futures positions; and (iii) losses due to unanticipated
market movements.
Leveraging is a sophisticated investment technique that amplifies the effect on
net asset value of any increase or decrease in the market value of the Fund's
portfolio. These borrowings will be subject to interest costs which may or may
not be recovered by appreciation of the securities purchased; in certain cases,
interest costs may exceed the return received on the securities purchased.
INTERNET AND OTHER INTERACTIVE FUND RISKS. Since the Funds are designed
specifically for on-line investors, an interruption in transmissions over the
Internet generally or a problem in the transmission of the MetaMarkets.com Web
site in particular could result in a delay or interruption in your ability to
access the MetaMarkets.com Web site, place purchase or sale orders with the
Funds or otherwise interact with the Funds.
With respect to OpenFund and OpenFund II, since the investment adviser intends
to post updates of the Funds' holdings and completed trading activity in real
time, to the extent practicable, there is a risk that investors may use such
information to the detriment of the Funds. The Funds' Board has considered this
and determined that the investment adviser's use of the Web site is nonetheless
in the best interests of the Funds and their shareholders. The Board will
monitor the use of the Web site to determine that it continues to be in the best
interests of the Funds and their shareholders.
YEAR 2000 RISK. Like other funds and business organizations around the world,
the Funds could be adversely affected if the computer systems used by the
investment adviser and the Funds' other service providers do not properly
process and calculate date-related information for the year 2000 and beyond.
Year 2000 issues may adversely affect the companies or other issuers in which
the Funds invest where, for example, such entities incur substantial costs to
address Year 2000 issues or suffer losses caused by the failure to adequately or
timely do so. Foreign markets may be less prepared to address Year 2000 issues
than U.S. ones.
The investment adviser and the Funds' other service providers have assured the
Funds that they have developed and are implementing clearly defined and
documented plans intended to minimize risks to services critical to the Funds'
operations associated with Year 2000 issues. The investment adviser and the
Fund's other service providers are likewise seeking assurances from their
respective vendors and suppliers that such entities are addressing Year 2000
issues.
While the ultimate costs or consequences of incomplete or untimely resolution of
Year 2000 issues cannot be accurately assessed at this time, the Funds currently
have no reason to believe that the Year 2000 plans of the investment adviser and
the Funds' other service providers will not be completed by December 31, 1999,
or that the anticipated costs associated with full implementation of their plans
will have a material adverse impact on either their business operations or
financial condition or those of the Funds. If any systems upon which the Funds
are dependent are not Year 2000 ready by December 31, 1999, administrative
errors and account maintenance failures would likely occur, which could result
in a decline in the value of the Funds' securities and return.
FUND MANAGEMENT
- -------------------------------------------------------------------------------
INVESTMENT ADVISER
MetaMarkets Investments LLC, located at 400 Oyster Point Blvd., Suite 414, South
San Francisco, California 94080, serves as each Fund's investment adviser. The
investment adviser is a newly formed entity and has no operating history upon
which investors can evaluate its performance. Donald L. Luskin, the investment
adviser's President and Chief Executive Officer, was formerly the Chief
Executive Officer of Barclays Global Mutual Funds and the Vice Chairman of
Barclays Global Investors, one of the world's largest investment management
organizations. The investment adviser is responsible for making investment
decisions for each Fund, placing purchase and sale orders and providing
research, statistical analysis and continuous supervision of each Fund's
investment portfolio. Investment decisions for each Fund are made by a team of
the investment adviser's portfolio managers; the team collaborates in making
portfolio recommendations and no individual is primarily responsible for making
recommendations to the team. Set forth below is the investment advisory fee rate
payable to the investment adviser by each Fund:
AVERAGE DAILY NET ANNUAL RATE OF
ASSETS OF THE FUND ADVISORY FEE
- ------------------ ---------------
On the first $250 million 1.00%
On the next $500 million .75%
On assets in excess of $750 million .50%
SHAREHOLDER INFORMATION
- -------------------------------------------------------------------------------
PRICING OF FUND SHARES
The per share net asset value (NAV) of each Fund is calculated by adding the
total value of the Fund's investments and other assets, subtracting its
liabilities and then dividing that figure by the number of outstanding shares.
Each Fund's NAV is determined and its shares are priced at the close of regular
trading on the New York Stock Exchange, normally at 4:00 p.m. Eastern time, on
days the Exchange is open, except Columbus Day and Veterans' Day. The New York
Stock Exchange is closed on weekends, national holidays and Good Friday. Foreign
securities held by a Fund may trade on days when the Fund does not calculate its
NAV and thus affect the Fund's NAV on days when investors will not be able to
purchase or redeem Fund shares.
Your order for purchase, sale or exchange of shares is priced at the next NAV
calculated after the Fund receives your completed order form.
Each Fund's investments are valued each business day generally by using
available market quotations or, if market quotations are not available, at fair
value determined by the Fund's Board or in accordance with procedures approved
by the Board. For further information regarding the methods employed in valuing
the Funds' investments, see the Statement of Additional Information (SAI).
The Funds' 12b-1 fees compensate the Funds' distributor and other dealers and
investment representatives for services and expenses relating to the sale and
distribution of the Funds' shares. Because 12b-1 fees are paid from Fund assets
on an ongoing basis, over time they will increase the cost of your investment
and may cost you more than paying other types of sales charges.
HOW TO BUY AND SELL SHARES
GENERAL
MetaMarkets.com Funds are designed specifically for on-line investors. You can
access the Funds at the MetaMarkets.com Web site on the Internet. By clicking
one of the Fund order icons, you can quickly and easily place a purchase or sale
order for shares. You will be prompted to enter your trading password whenever
you perform a transaction so that the Fund can be sure each purchase or sale is
secure. For your own protection, only you or your co-account holder(s) should
place orders through your Fund account. When you purchase shares, you will be
asked to: (1) affirm your consent to receive all Fund documentation
electronically, (2) provide your e-mail address and (3) affirm that you have
read the Prospectus. The Funds' current Prospectus will be readily available for
viewing and printing on the Web site.
To become a Fund shareholder, you will need to open an account and consent to
receive all shareholder information about the Funds electronically.
MetaMarkets.com Funds may deliver paper-based shareholder information in certain
circumstances at no extra cost to the investor. If you call or e-mail the Funds
to request paper-based shareholder information, or if you revoke your consent to
receive all shareholder information electronically, the Funds will deliver such
information to you and you may be charged a transaction fee of up to $12 to
cover the costs of printing, shipping and handling (a fee will not be charged
for delivery of confirmations or statements). Shareholder information includes
prospectuses, annual and semi-annual reports, proxy materials, confirmations and
statements.
PURCHASING AND ADDING TO YOUR SHARES
MINIMUM INVESTMENT
--------------------
ACCOUNT TYPE INITIAL SUBSEQUENT
Regular
(non-retirement) $1,000 $250
Retirement (IRA) $100 $50
Automatic
Investment Plan $250 $50
To make your initial investment, follow the instructions on the account
application at the end of this Prospectus. To make subsequent investments, click
the Fund Purchase Order icon and follow the instructions. The Funds offer an
Automatic Investment Plan and Directed Dividend Option, which are convenient
ways of buying Fund shares. These also are described on the account application
and in the SAI.
All purchases must be in U.S. dollars. A fee will be charged for any checks that
do not clear. Third-party checks are not accepted.
The Funds may waive the minimum purchase requirements or reject any purchase
order in whole or in part.
<PAGE>
SELLING YOUR SHARES
You may sell (i.e., redeem) your shares at any time. Your sales price will be
the next NAV after your sell order is received by the Fund, its transfer agent,
or your investment representative. Normally you will receive your proceeds
within a week after your request is received.
To sell Fund shares, click the Fund Sell Order icon and follow the instructions.
VERIFYING TELEPHONE REDEMPTIONS.
MetaMarkets.com Funds will make efforts to insure that telephone redemptions are
only made by authorized shareholders. All telephone calls are recorded for your
protection and you will be asked for information to verify your identity. Given
these precautions, unless you have specifically indicated on your application
that you do not want the telephone redemption feature, you may be responsible
for any fraudulent telephone orders. If appropriate precautions have not been
taken, the transfer agent may be liable for losses due to unauthorized
transactions.
REDEMPTIONS WITHIN 15 DAYS OF INITIAL INVESTMENT.
Before selling recently purchased shares, please note that if your initial
investment was by check, the Fund may delay sending you the proceeds until the
check has cleared (which may take up to 15 days from the date of purchase). You
can avoid this delay by purchasing shares with a certified check.
DELAYING PAYMENT OF REDEMPTION PROCEEDS.
Payment for shares may be delayed under extraordinary circumstances or as
permitted by the SEC in order to protect remaining shareholders.
REDEMPTION IN KIND.
The Fund reserves the right to make payment in securities rather than cash,
known as "redemption in kind." This could occur under extraordinary
circumstances, such as a very large redemption that could affect Fund operations
(for example, more than 1% of the Fund's net assets). Redemption in kind would
consist of securities equal in market value to your shares. When you convert
these securities to cash, you might have to pay brokerage charges.
CLOSING OF SMALL ACCOUNTS.
If your account falls below $500, the Fund may ask you to increase your balance.
If it is still below $500 after 30 days, the Fund may close your account and
send you the proceeds at the current NAV.
EXCHANGING YOUR SHARES
You can exchange your shares in one Fund for shares of another Fund. No
transaction fees are charged for exchanges.
You must exchange shares worth $500 or more and meet the minimum investment
requirements for the Fund into which you are exchanging. Exchanges from one Fund
to another are taxable.
To exchange your Fund shares, click the Fund Exchanges icon and follow the
instructions.
IMPORTANT INFORMATION ABOUT EXCHANGES. If Fund shares are purchased by check,
the shares cannot be exchanged until your check has cleared. This could take up
to 15 days from the date of purchase. The Funds may reject an exchange request
from a shareholder who has made more than eight exchanges between investment
portfolios offered by Fund management in a year, or more than four exchanges in
a calendar quarter. Although unlikely, the Funds may reject any exchanges or,
upon 60-days' notice to shareholders, change or terminate the exchange
privilege. The exchange privilege is available only in states where new Fund
shares may be sold. The registration and tax identification numbers of the two
accounts must be identical.
<PAGE>
INTERACTIVE FUNDS
For OpenFund and OpenFund II, the discussion boards, chat rooms and interactive
features, including the display of trading activity and Fund holdings, are
presented for information purposes only and may be discontinued at any time.
MetaMarkets.com Funds also may terminate the ability to buy and sell Fund shares
on its Web site at any time, in which case you may continue to buy and sell Fund
shares pursuant to the alternative procedures described in the "How to Buy, Sell
and Exchange Shares" pamphlet attached to this Prospectus. Prices and other data
posted during the day on the MetaMarkets.com Web site will be based on sources
believed reliable, but whose accuracy can not be assured.
DIVIDENDS, DISTRIBUTIONS AND TAXES
All dividends and distributions will be automatically reinvested in Fund shares.
Each Fund usually pays its shareholders dividends from its net investment income
and distributes any capital gains annually.
Dividends paid by a Fund are taxable to U.S. shareholders as ordinary income
(unless your investment is in an IRA or tax-advantaged account). Except for
tax-deferred accounts, any sale or exchange of Fund shares may generate a tax
liability. Of course, withdrawals or distributions from tax-deferred accounts
may be taxable when received.
Dividends are taxable in the year in which they are paid, even if they appear on
your account statement the following year. Dividends and distributions are
treated in the same manner for Federal income tax purposes whether you receive
them in cash or in additional shares.
DISTRIBUTIONS ARE MADE ON A PER SHARE BASIS REGARDLESS OF HOW LONG YOU'VE OWNED
YOUR SHARES. THEREFORE, IF YOU INVEST SHORTLY BEFORE THE DISTRIBUTION DATE, SOME
OF YOUR INVESTMENT WILL BE RETURNED TO YOU IN THE FORM OF A DISTRIBUTION.
You will be notified in January each year about the Federal tax status of
distributions made by the Fund. Depending on your residence for tax purposes,
distributions also may be subject to state and local taxes, including
withholding taxes. Foreign shareholders may be subject to special withholding
requirements. There is a penalty on certain pre-retirement distributions from
retirement accounts.
Because everyone's tax situation is unique, you should consult your tax
professional about Federal, state and local tax consequences.
For more information about the Funds, the following documents are available free
upon request:
STATEMENT OF ADDITIONAL INFORMATION (SAI):
The SAI provides more detailed information about the Funds, including their
operations and investment policies. It is incorporated by reference and is
legally considered a part of this Prospectus.
- -------------------------------------------------------------------------------
YOU CAN GET FREE COPIES OF THE SAI OR REQUEST OTHER INFORMATION AND DISCUSS
YOUR QUESTIONS ABOUT THE FUNDS ON THE FUNDS' INTERNET SITE OR BY E-MAIL:
METAMARKETS.COM FUNDS
INTERNET: HTTP://WWW.METAMARKETS.COM
TELEPHONE: 1-877-METAMKT (1-877-638-2658)
E-mail: [email protected]
SHAREHOLDERS WILL BE ALERTED BY E-MAIL WHEN A PROSPECTUS AMENDMENT, ANNUAL OR
SEMI-ANNUAL REPORT, OR PROXY MATERIALS ARE AVAILABLE.
- -------------------------------------------------------------------------------
Certain instructions on how to buy and sell Fund shares are provided in the "How
to Buy, Sell and Exchange Shares" pamphlet attached to this Prospectus.
You can review information about the Funds, including the Funds' SAI, at the
Public Reference Room of the Securities and Exchange Commission. You can get
text-only copies:
o For a fee, by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-6009, or calling 1-800-SEC-0330.
o Free from the Commission's Web site at http://www.sec.gov.
Distributed by BISYS Fund Services Limited Partnership
Investment Company Act file no. 811-09351.
HOW TO BUY, SELL AND EXCHANGE SHARES
INSTRUCTIONS FOR OPENING OR ADDING TO AN ACCOUNT
BY INTERNET
Initial Investment:
1. Carefully read and complete the account application at the end of the
Prospectus, or download it from the MetaMarkets.com Web site, and follow
the instructions.
2. Make check, bank draft or money order payable to "MetaMarkets.com Funds,
[Name of Fund]."
3. Mail your payment and a signed copy of the completed account application
to: MetaMarkets.com Funds, c/o BISYS Fund Services, P. O. Box 182208,
Columbus, Ohio 43218-2208
Subsequent Investment:
1. Provide the following information:
o Fund name
o Amount invested
o Account name
o Account number
2. Include your account number on your
check or money order and mail it to: MetaMarkets.com Funds
c/o BISYS Fund Services
P. O. Box 182208
Columbus, Ohio 43218-2208
or, for overnight service, send it to:
MetaMarkets.com Funds
c/o BISYS Fund Services
Attn: T.A. Operations
3435 Stelzer Road
Columbus, Ohio 43219
ELECTRONIC PAYMENTS
You may pay electronically if your U.S. bank participates in the Automated
Clearing House (ACH).
To establish an electronic purchase option, complete the account application as
directed, or call 1-877-META-MKT (1-877-638-2658). Your account can generally be
set up for electronic purchases within 15 days.
Call 1-877-META-MKT (1-877-638-2658) to arrange a transfer from your bank
account.
<PAGE>
WIRE TRANSFER PAYMENTS
To pay by wire transfer, complete the account application as directed and
request an account number by calling 1-877-META-MKT (1-877-638-2658). Follow the
instructions below after receiving your account number.
Instruct your bank to wire transfer your investment to:
Huntington National Bank
Routing Number: ABA # 044000024
DDA#01899622494
Include:
o Your fund number
o Your account number
After instructing your bank to wire the funds, call 1-877-META-MKT
(1-877-638-2658) to advise us of the amount being transferred and the name of
your bank.
ELECTRONIC VS. WIRE TRANSFER
Wire transfers allow financial institutions to
send funds to each other, almost instantaneously.
Your bank may charge a wire transfer fee. With an
electronic purchase or sale, the transaction is
made through the Automated Clearing House (ACH)
and may take up to eight days to clear. There is
generally no fee for ACH transactions.
You can add to your account by using the convenient options described in the
account application. For more information about these options, also see the SAI.
<PAGE>
INSTRUCTIONS FOR SELLING SHARES
By Internet Provide the following information:
o Your Fund and account number
o Amount you wish to sell
o Address where your check should be sent or
where your funds should be wired or
electronically transferred
- -------------------------------------------------------------------------------
By Telephone Call 1-877-META-MKT (1-877-638-2658) with
(UNLESS YOU HAVE DECLINED instructions as to how you wish to receive your
TELEPHONE SALES PRIVILEGES) funds (mail, wire, electronic transfer).
<PAGE>
TO RECEIVE YOUR REDEMPTION PROCEEDS BY WIRE TRANSFER, you must indicate this
option on your application. Your payment will be wired to your bank ordinarily
on the next business day. The Fund and your bank may charge a wire transfer fee.
TO RECEIVE YOUR REDEMPTION PROCEEDS ELECTRONICALLY, your bank must participate
in the Automated Clearing House (ACH) and must be a U.S. bank. Your payment will
be credited ordinarily within seven days. Your bank may charge for this service.
INSTRUCTIONS FOR EXCHANGING SHARES
To exchange your Fund shares, provide the following information:
o Your name and telephone number
o The exact name on your account and account number
o Taxpayer identification number (usually your Social Security
number)
o Dollar value or number of shares to be exchanged
o The name of the Fund from which the exchange is to be made
o The name of the Fund into which the exchange is being made
<PAGE>
METAMARKETS.COM FUNDS
PROSPECTUS
AUGUST 27, 1999
o OPENFUND
ADVISED BY
METAMARKETS INVESTMENTS LLC
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
FUND SHARES OR DETERMINED WHETHER THIS PROSPECTUS IS TRUTHFUL OR COMPLETE.
ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A CRIME.
<PAGE>
TABLE OF CONTENTS
DESCRIPTION OF THE FUND - OVERVIEW, OBJECTIVES, RISK/RETURN AND
EXPENSES
ADDITIONAL INFORMATION ON INVESTMENT STRATEGIES AND RISKS
FUND MANAGEMENT
SHAREHOLDER INFORMATION
BACK COVER
<PAGE>
DESCRIPTION OF THE FUND
OVERVIEW
- -------------------------------------------------------------------------------
THE FUND The Fund invests in securities of companies
which, in the opinion of the Fund's investment
adviser, are innovative growth companies at the
leading edge of technological, social and economic
change. These are companies which define the "New
Economy." They demonstrate the ability to
innovate, continuously learn and productively
change. Through innovative use of technology or
the imaginative use of organizational techniques
or marketing methods, they are redefining the way
goods and services are provided in the economy.
These are companies that make us more efficient at
work, and change the way we relax and play.
The Fund's investments may range from small
companies developing new technologies or
practicing innovative methods to provide consumer
services, to large blue chip companies with
established track records of developing and
marketing these advances.
Much is being written about the New Economy. Visit
the Web site at http://www.MetaMarkets.com if you
want to find out where you can read more about it.
The Fund's investment adviser intends to operate
OpenFund as an interactive mutual fund
integrating real time investor participation with
the investment process. The Fund intends to post
on its Web site updates of its holdings in real
time, to the extent practicable. In addition, part
of the investment adviser's Web site will display
completed Fund trading activity in real time, to
the extent practicable. It also will support
communication technologies such as discussion
boards, chat rooms, webcams, and on-line polls
through which Fund shareholders and others may
interact with the Fund's portfolio managers and
each other to share ideas about the Fund, stocks,
market conditions and other related topics.
<PAGE>
OBJECTIVES, RISK/RETURN AND EXPENSES
- -------------------------------------------------------------------------------
INVESTMENT OBJECTIVE The Fund seeks to provide investors with capital
growth.
PRINCIPAL INVESTMENT The Fund invests principally in the common stocks
STRATEGIES of companies that the investment adviser believes
derive strategic advantage from trends caused by
the development of the "New Economy."
The Fund will engage in frequent portfolio trading
in an attempt to take advantage of short-term
trends in valuation and momentum.
To implement the Fund's strategy, the adviser will
select from those companies based in the U.S. or,
to a limited extent, in foreign countries that
provide or are expected to benefit from advances
and improvements in technology, consumer services
or business practices. These companies may include
those that develop, produce or distribute products
or services in the Internet, electronics,
communications, healthcare, biotechnology, and
computer software and hardware sectors, as well as
the consumer marketing, media, entertainment and
financial services sectors. The Fund's investments
may range from small companies (including those
with market capitalizations below $500 million) to
large blue chip companies. The Fund also may
invest in the preferred stocks and convertible
securities (including those rated below investment
grade, so-called junk bonds) of these companies
and engage in short selling and, from time to
time, leverage, futures and options transactions.
PRINCIPAL INVESTMENT Stocks fluctuate in price, often based on factors
RISKS unrelated to the issuers' value. The value of
your investment in the Fund will fluctuate in
response to movements in the stock market and the
activities of individual portfolio companies. As a
result, you could lose money by investing in the
Fund, particularly if there is a sudden decline in
the share prices of the Fund's holdings or an
overall decline in the stock market.
The Fund will engage in short-term trading, which
could produce higher brokerage costs and larger
taxable distributions than a fund with low
portfolio turnover.
The Fund will invest in companies in the
technology sector, including those with small
capitalizations, which carry additional risks.
These companies typically have less predictable
earnings than other companies. In addition,
small-cap stocks trade less frequently and in more
limited volume than those of larger, more
established companies. As a result, technology and
small-cap stocks may fluctuate significantly more
in value than other stocks. Thus, the Fund's share
price should be expected to fluctuate
significantly more than the share prices of many
other types of mutual funds.
The Fund is non-diversified and may invest a
greater percentage of its assets in a particular
company compared with other funds. Accordingly,
the Fund's portfolio may be more sensitive to
changes in the market value of a single company or
industry.
The Fund may invest in lower-rated convertible
securities which have speculative characteristics
and higher credit risk. With this type of
investment, a greater likelihood exists that
adverse economic changes can result in a weakened
capacity to make interest and principal payments
on a timely basis.
Foreign securities involve special risks, such as
exposure to currency exchange rate fluctuations,
and tend to be more volatile than U.S. securities.
The Fund may not always be able to close out an
established short position at any particular time
or at an acceptable price.
The Fund can buy securities with borrowed money (a
form of leverage), which could have the effect of
magnifying the Fund's gains or losses.
Successful use of options and futures is subject
to the adviser's ability to predict correctly
movements in the direction of the market. A
relatively small investment could have a large
impact on the Fund's performance.
<PAGE>
PERFORMANCE BAR CHART AND TABLE
Because the Fund is new, it has no performance as of the date of this
prospectus.
FEES AND EXPENSES
If you purchase and hold shares of OpenFund, you will pay certain fees and
expenses, which are described in the tables. Annual Fund operating expenses are
paid out of Fund assets, and are reflected in the share price.
- ------------------------------------------
Annual Fund operating expenses
(fees paid from Fund assets)
- ------------------------------------------
Management fee 1.00%
- ------------------------------------------
Distribution (12b-1)fee .25%
- ------------------------------------------
Other expenses1 .20%
- ------------------------------------------
Total annual Fund
operating expenses1 1.45%
- ------------------------------------------
- ---------
1 Other expenses are based on estimated amounts for the current fiscal year.
To the extent actual expenses are higher, the investment adviser has
contractually agreed to reimburse the Fund to the extent such other
expenses exceed .20% of the Fund's average daily net assets for the fiscal
year ending July 31, 2000. In addition, the investment adviser has agreed
to waive its fees and pay all Fund expenses through February 28, 2000.
EXPENSE EXAMPLE
Use the example below to help you
compare the cost of investing in the
Fund with the cost of investing in other
mutual funds. It illustrates the amount
of fees and expenses you would pay,
assuming the following:
o $10,000 investment
o 5% annual return
o No changes in the Fund's operating expenses
o Reinvestment of all dividends and distributions
o Redemption at the end of each period shown
Your actual costs may be higher or
lower. The example does not reflect the
waiver of a portion of fund operating
expenses described above.
ONE YEAR $148
THREE YEARS $459
<PAGE>
ADDITIONAL INFORMATION ON INVESTMENT STRATEGIES AND RISKS
PRINCIPAL STRATEGIES
While the Fund typically invests principally in common stocks, it also may
invest in convertible securities and preferred stocks and other equity
securities having the characteristics of common stocks (generally, in each case
up to 10% of the Fund's assets). Convertible securities are exchangeable for
another form of the issuer's securities, and generally are subordinated to other
similar but non-convertible securities of the same issuer and, thus, typically
have lower credit ratings than similar non-convertible securities. The Fund may
invest up to 10% of its assets in convertible securities rated below investment
grade (Baa/BBB) and as low as the lowest rating assigned by the rating agencies
(C/D) or the unrated equivalent as determined by the adviser. Preferred stock
has preference over common stock in the payment of dividends and the liquidation
of assets, but ordinarily does not carry voting rights.
Although the Fund will invest principally in securities of U.S. issuers, it may
invest up to 20% of its total assets in the equity securities of foreign
issuers, including common stocks, preferred stocks, convertible securities and
depositary receipts, such as ADRs.
The Fund may sell short securities of companies that the investment adviser
believes will underperform amidst the challenges of the New Economy. In
addition, the Fund may engage in short-selling for hedging purposes, such as to
limit exposure to a possible market decline in the value of its portfolio
securities. Generally, the Fund would sell a security it does not own. To
complete the transaction, the Fund must borrow the security to make delivery to
the buyer. The Fund is obligated to replace the security borrowed by purchasing
it subsequently at the market price at the time of replacement. No securities
will be sold short if, after effect is given to any such short sale, the total
market value of all securities sold short would exceed 25% of the value of the
Fund's net assets.
The Fund may invest some assets in options and futures contracts and, though not
part of its principal strategy, certain other derivatives such as equity swaps.
These instruments are used primarily to hedge the Fund's portfolio but may be
used to increase returns; however, they sometimes may reduce returns or increase
volatility. The Fund may not invest in such contracts and options for purposes
other than hedging if the sum of the amount of initial margin deposits and
premiums paid for unexpired options with respect to such contracts, other than
for bona fide hedging purposes, exceeds 5% of the liquidation value of the
Fund's assets, after taking into account unrealized profits and unrealized
losses on such contracts and options.
The Fund may borrow money from banks, brokers or dealers for investment
purposes. Borrowing for investment purposes is known as "leverage." To the
extent the Fund uses leverage, it would limit such leverage to 25% of its total
assets.
The Fund, from time to time, may take temporary defensive positions that are
inconsistent with the Fund's principal investment strategies in an attempt to
respond to adverse market, economic, political, or other conditions and invest
some or all of its assets in money market instruments. During these periods, the
Fund may not achieve its investment objective.
PRINCIPAL RISKS
MARKET AND MANAGEMENT RISK. The Fund is actively managed and, thus, is subject
to the risk that its portfolio management practices might not achieve its goals.
Over time, growth companies are expected to increase their earnings at an
above-average rate. If these expectations are not met, their stock prices can
fall drastically--even if earnings show an absolute increase.
The Fund may purchase securities of companies in initial public offerings or
shortly thereafter. The prices of these companies' securities may be very
volatile. The Fund may purchase securities of companies which have no earnings
or have experienced losses. The Fund generally will make these investments based
on a belief that actual or anticipated products or services will produce future
earnings. If the anticipated event is delayed or does not occur, or if investor
perceptions about the company change, the company's stock price may decline
sharply and its securities may become less liquid.
FOREIGN SECURITIES RISK. Securities of foreign issuers (including ADRs)
fluctuate in price, often based on factors unrelated to the issuers' value, and
such fluctuations can be pronounced. Foreign securities tend to be more volatile
than U.S. securities because they include special risks, such as exposure to
currency fluctuations, a lack of comprehensive company information, political
instability, and differing auditing and legal standards.
<PAGE>
LOWER RATED SECURITIES RISK. Higher yielding (and, therefore, higher risk)
convertible securities, such as those rated below investment grade, may be
subject to certain risks with respect to the issuing entity and to greater
market fluctuations than lower yielding, higher rated convertible securities.
The retail secondary market for these securities may be less liquid than that of
higher rated securities; adverse conditions could make it difficult at times for
the Fund to sell these securities or could result in lower prices than those
used in calculating the Fund's net asset value.
RISK OF USING CERTAIN INVESTMENT TECHNIQUES. With respect to short sales, the
price at the time the Fund replaces the security borrowed may be more (and the
Fund would lose money) or less (and the Fund would make money) than the price at
which the security was sold by the Fund. The amount of any gain will be
decreased, and the amount of any loss increased, by the amount of any premium or
amounts in lieu of interest the Fund may be required to pay in connection with a
short sale.
The risks related to the use of options and futures contracts include: (i) the
correlation between movements in the market price of the Fund's investments
(held or intended for purchase) being hedged and in the price of the futures
contract or option may be imperfect; (ii) possible lack of a liquid secondary
market for closing out options or futures positions; and (iii) losses due to
unanticipated market movements.
Leveraging is a sophisticated investment technique that amplifies the effect on
net asset value of any increase or decrease in the market value of the Fund's
portfolio. These borrowings will be subject to interest costs which may or may
not be recovered by appreciation of the securities purchased; in certain cases,
interest costs may exceed the return received on the securities purchased.
INTERNET AND OTHER INTERACTIVE FUND RISKS. Since the Fund is designed
specifically for on-line investors, an interruption in transmissions over the
Internet generally or a problem in the transmission of the MetaMarkets.com Web
site in particular could result in a delay or interruption in your ability to
access the MetaMarkets.com Web site, place purchase or sale orders with the Fund
or otherwise interact with the Fund.
Since the Fund's investment adviser intends to post updates of the Fund's
holdings and completed trading activity in real time, to the extent practicable,
there is a risk that investors may use such information to the detriment of the
Fund. The Fund's Board has considered this and determined that the investment
adviser's use of the Web site is nonetheless in the best interests of the Fund
and its shareholders. The Board will monitor the use of the Web site to
determine that it continues to be in the best interests of the Fund and its
shareholders.
YEAR 2000 RISK. Like other funds and business organizations around the world,
the Fund could be adversely affected if the computer systems used by the
investment adviser and the Fund's other service providers do not properly
process and calculate date-related information for the year 2000 and beyond.
Year 2000 issues may adversely affect the companies or other issuers in which
the Fund invests where, for example, such entities incur substantial costs to
address Year 2000 issues or suffer losses caused by the failure to adequately or
timely do so. Foreign markets may be less prepared to address Year 2000 issues
than U.S. ones.
The investment adviser and the Fund's other service providers have assured the
Fund that they have developed and are implementing clearly defined and
documented plans intended to minimize risks to services critical to the Fund's
operations associated with Year 2000 issues. The investment adviser and the
Fund's other service providers are likewise seeking assurances from their
respective vendors and suppliers that such entities are addressing Year 2000
issues.
While the ultimate costs or consequences of incomplete or untimely resolution of
Year 2000 issues cannot be accurately assessed at this time, the Fund currently
has no reason to believe that the Year 2000 plans of the investment adviser and
the Fund's other service providers will not be completed by December 31, 1999,
or that the anticipated costs associated with full implementation of their plans
will have a material adverse impact on either their business operations or
financial condition or those of the Fund. If any systems upon which the Fund is
dependent are not Year 2000 ready by December 31, 1999, administrative errors
and account maintenance failures would likely occur, which could result in a
decline in the value of the Fund's securities and return.
<PAGE>
FUND MANAGEMENT
- -------------------------------------------------------------------------------
Investment Adviser
MetaMarkets Investments LLC, located at 400 Oyster Point Blvd., Suite 414, South
San Francisco, California 94080, serves as the Fund's investment adviser. The
investment adviser is a newly formed entity and has no operating history upon
which investors can evaluate its performance. Donald L. Luskin, the investment
adviser's President and Chief Executive Officer was formerly the Chief Executive
Officer of Barclays Global Mutual Funds and the Vice Chairman of Barclays Global
Investors, one of the world's largest investment management organizations. The
investment adviser is responsible for making investment decisions for the Fund,
placing purchase and sale orders and providing research, statistical analysis
and continuous supervision of the Fund's investment portfolio. Investment
decisions for the Fund are made by a team of the investment adviser's portfolio
managers; the team collaborates in making portfolio recommendations and no
individual is primarily responsible for making recommendations to the team. Set
forth below is the investment advisory fee rate payable to the investment
adviser by the Fund:
AVERAGE DAILY NET ANNUAL RATE OF
ASSETS OF THE FUND ADVISORY FEE
- ------------------ ---------------
On the first $250 million 1.00%
On the next $500 million .75%
On assets in excess of $750 million .50%
SHAREHOLDER INFORMATION
- -------------------------------------------------------------------------------
PRICING OF FUND SHARES
The Fund's per share net asset value (NAV) is calculated by adding the total
value of the Fund's investments and other assets, subtracting its liabilities
and then dividing that figure by the number of outstanding shares.
The Fund's NAV is determined and its shares are priced at the close of regular
trading on the New York Stock Exchange, normally at 4:00 p.m. Eastern time, on
days the Exchange is open, except Columbus Day and Veterans' Day. The New York
Stock Exchange is closed on weekends, national holidays and Good Friday. Foreign
securities held by the Fund may trade on days when the Fund does not calculate
its NAV and thus affect the Fund's NAV on days when investors will not be able
to purchase or redeem Fund shares.
Your order for purchase, sale or exchange of shares is priced at the next NAV
calculated after the Fund receives your completed order form.
The Fund's investments are valued each business day generally by using available
market quotations or, if market quotations are not available, at fair value
determined by the Fund's Board or in accordance with procedures approved by the
Board. For further information regarding the methods employed in valuing the
Fund's investments, see the Statement of Additional Information (SAI).
The Fund's 12b-1 fees compensate the Fund's distributor and other dealers and
investment representatives for services and expenses relating to the sale and
distribution of the Fund's shares. Because 12b-1 fees are paid from Fund assets
on an ongoing basis, over time they will increase the cost of your investment
and may cost you more than paying other types of sales charges.
<PAGE>
HOW TO BUY AND SELL SHARES
GENERAL
The Fund is designed specifically for on-line investors. You can access the Fund
at the MetaMarkets.com Web site on the Internet. By clicking one of the Fund
order icons, you can quickly and easily place a purchase or sale order for
shares. You will be prompted to enter your trading password whenever you perform
a transaction so that the Fund can be sure each purchase or sale is secure. For
your own protection, only you or your co-account holder(s) should place orders
through your Fund account. When you purchase shares, you will be asked to: (1)
affirm your consent to receive all Fund documentation electronically, (2)
provide your e-mail address and (3) affirm that you have read the Prospectus.
The Fund's current Prospectus will be readily available for viewing and printing
on the Web site.
To become a Fund shareholder, you will need to open an account and consent to
receive all shareholder information about the Fund electronically. The Fund may
deliver paper-based shareholder information in certain circumstances at no extra
cost to the investor. If you call or e-mail the Fund to request paper-based
shareholder information, or if you revoke your consent to receive all
shareholder information electronically, the Fund will deliver such information
to you and you may be charged a transaction fee of up to $12 to cover the costs
of printing, shipping and handling (a fee will not be charged for delivery of
confirmations or statements). Shareholder information includes prospectuses,
annual and semi-annual reports, proxy materials, confirmations and statements.
<PAGE>
PURCHASING AND ADDING TO YOUR SHARES
MINIMUM INVESTMENT
--------------------
ACCOUNT TYPE INITIAL SUBSEQUENT
- ------------ --------------------
Regular
(non-retirement) $1,000 $250
Retirement (IRA) $100 $50
Automatic
Investment Plan $250 $50
To make your initial investment, follow the instructions on the account
application at the end of this Prospectus. To make subsequent investments, click
the Fund Purchase Order icon and follow the instructions. The Fund offers an
Automatic Investment Plan and Directed Dividend Option, which are convenient
ways of buying Fund shares. These also are described on the account application
and in the SAI.
All purchases must be in U.S. dollars. A fee will be charged for any checks that
do not clear. Third-party checks are not accepted.
The Fund may waive the minimum purchase requirements or reject any purchase
order in whole or in part.
SELLING YOUR SHARES
You may sell (i.e., redeem) your shares at any time. Your sales price will be
the next NAV after your sell order is received by the Fund, its transfer agent,
or your investment representative. Normally you will receive your proceeds
within a week after your request is received.
To sell Fund shares, click the Fund Sell Order icon and follow the instructions.
VERIFYING TELEPHONE REDEMPTIONS.
The Fund will make efforts to insure that telephone redemptions are only made by
authorized shareholders. All telephone calls are recorded for your protection
and you will be asked for information to verify your identity. Given these
precautions, unless you have specifically indicated on your application that you
do not want the telephone redemption feature, you may be responsible for any
fraudulent telephone orders. If appropriate precautions have not been taken, the
transfer agent may be liable for losses due to unauthorized transactions.
REDEMPTIONS WITHIN 15 DAYS OF INITIAL INVESTMENT.
Before selling recently purchased shares, please note that if your initial
investment was by check, the Fund may delay sending you the proceeds until the
check has cleared (which may take up to 15 days from the date of purchase). You
can avoid this delay by purchasing shares with a certified check.
DELAYING PAYMENT OF REDEMPTION PROCEEDS.
Payment for shares may be delayed under extraordinary circumstances or as
permitted by the SEC in order to protect remaining shareholders.
REDEMPTION IN KIND.
The Fund reserves the right to make payment in securities rather than cash,
known as "redemption in kind." This could occur under extraordinary
circumstances, such as a very large redemption that could affect Fund operations
(for example, more than 1% of the Fund's net assets). Redemption in kind would
consist of securities equal in market value to your shares. When you convert
these securities to cash, you might have to pay brokerage charges.
CLOSING OF SMALL ACCOUNTS.
If your account falls below $500, the Fund may ask you to increase your balance.
If it is still below $500 after 30 days, the Fund may close your account and
send you the proceeds at the current NAV.
EXCHANGING YOUR SHARES
You can exchange your Fund shares for shares of another fund in the
MetaMarkets.com family of funds. No transaction fees are charged for exchanges.
You must exchange shares worth $500 or more and meet the minimum investment
requirements for the fund into which you are exchanging. Exchanges from one fund
to another are taxable.
To exchange your Fund shares, click the Fund Exchanges icon and follow the
instructions. Be sure to read the current prospectus for any fund into which you
are exchanging.
IMPORTANT INFORMATION ABOUT EXCHANGES. If Fund shares are purchased by check,
the shares cannot be exchanged until your check has cleared. This could take up
to 15 days from the date of purchase. The Fund may reject an exchange request
from a shareholder who has made more than eight exchanges between investment
portfolios offered by Fund management in a year, or more than four exchanges in
a calendar quarter. Although unlikely, the Fund may reject any exchanges or,
upon 60-days' notice to shareholders, change or terminate the exchange
privilege. The exchange privilege is available only in states where new Fund
shares may be sold. The registration and tax identification numbers of the two
accounts must be identical.
INTERACTIVE FUND
The discussion boards, chat rooms and interactive features of the Fund,
including the display of trading activity and Fund holdings, are presented for
information purposes only and may be discontinued at any time. MetaMarkets.com
Funds also may terminate the ability to buy and sell Fund shares on its Web site
at any time, in which case you may continue to buy and sell Fund shares pursuant
to the alternative procedures described in the "How to Buy, Sell and Exchange
Shares" pamphlet attached to this Prospectus. Prices and other data posted
during the day on the MetaMarkets.com Web site will be based on sources believed
reliable, but whose accuracy can not be assured.
DIVIDENDS, DISTRIBUTIONS AND TAXES
All dividends and distributions will be automatically reinvested in Fund shares.
The Fund usually pays its shareholders dividends from its net investment income
and distributes any capital gains annually.
Dividends paid by the Fund are taxable to U.S. shareholders as ordinary income
(unless your investment is in an IRA or tax-advantaged account). Except for
tax-deferred accounts, any sale or exchange of Fund shares may generate a tax
liability. Of course, withdrawals or distributions from tax-deferred accounts
may be taxable when received.
Dividends are taxable in the year in which they are paid, even if they appear on
your account statement the following year. Dividends and distributions are
treated in the same manner for Federal income tax purposes whether you receive
them in cash or in additional shares.
DISTRIBUTIONS ARE MADE ON A PER SHARE BASIS REGARDLESS OF HOW LONG YOU'VE OWNED
YOUR SHARES. THEREFORE, IF YOU INVEST SHORTLY BEFORE THE DISTRIBUTION DATE, SOME
OF YOUR INVESTMENT WILL BE RETURNED TO YOU IN THE FORM OF A DISTRIBUTION.
<PAGE>
You will be notified in January each year about the Federal tax status of
distributions made by the Fund. Depending on your residence for tax purposes,
distributions also may be subject to state and local taxes, including
withholding taxes. Foreign shareholders may be subject to special withholding
requirements. There is a penalty on certain pre-retirement distributions from
retirement accounts.
Because everyone's tax situation is unique, you should consult your tax
professional about Federal, state and local tax consequences.
For more information about the Fund, the following documents are available free
upon request:
STATEMENT OF ADDITIONAL INFORMATION (SAI):
The SAI provides more detailed information about the Fund, including its
operations and investment policies. It is incorporated by reference and is
legally considered a part of this Prospectus.
- -------------------------------------------------------------------------------
YOU CAN GET FREE COPIES OF THE SAI OR REQUEST OTHER INFORMATION AND DISCUSS
YOUR QUESTIONS ABOUT THE FUND ON THE FUND'S INTERNET SITE OR BY E-MAIL:
METAMARKETS.COM FUNDS
INTERNET: HTTP://WWW.METAMARKETS.COM
TELEPHONE: 1-877-METAMKT (1-877-638-2658)
E-mail: [email protected]
SHAREHOLDERS WILL BE ALERTED BY E-MAIL WHEN A PROSPECTUS AMENDMENT, ANNUAL OR
SEMI-ANNUAL REPORT, OR PROXY MATERIALS ARE AVAILABLE.
- -------------------------------------------------------------------------------
Certain instructions on how to buy and sell Fund shares are provided in the "How
to Buy, Sell and Exchange Shares" pamphlet attached to this Prospectus.
You can review information about the Fund, including the Fund's SAI, at the
Public Reference Room of the Securities and Exchange Commission. You can get
text-only copies:
o For a fee, by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-6009, or calling 1-800-SEC-0330.
o Free from the Commission's Web site at http://www.sec.gov.
Distributed by BISYS Fund Services Limited Partnership
Investment Company Act file no. 811-09351.
HOW TO BUY, SELL AND EXCHANGE SHARES
INSTRUCTIONS FOR OPENING OR ADDING TO AN ACCOUNT
BY INTERNET
Initial Investment:
1 Carefully read and complete the account application at the end of the
Prospectus, or download it from the MetaMarkets.com Web site, and follow
the instructions.
2 Make check, bank draft or money order payable to "MetaMarkets.com Funds,
OpenFund."
3 Mail your payment and a signed copy of the completed account application
to:
MetaMarkets.com Funds
c/o BISYS Fund Services
P. O. Box 182208
Columbus, Ohio 43218-2208
Subsequent Investment:
1. Provide the following information:
o Fund name
o Amount invested
o Account name
o Account number
2. Include your account number on your
check or money order and mail it to: MetaMarkets.com Funds
c/o BISYS Fund Services
P. O. Box 182208
Columbus, Ohio 43218-2208
or, for overnight service, send it to:
MetaMarkets.com Funds
c/o BISYS Fund Services
Attn: T.A. Operations
3435 Stelzer Road
Columbus, Ohio 43219
ELECTRONIC PAYMENTS
You may pay electronically if your U.S. bank participates in the Automated
Clearing House (ACH).
To establish an electronic purchase option, complete the account application as
directed, or call 1-877-META-MKT (1-877-638-2658). Your account can generally be
set up for electronic purchases within 15 days.
Call 1-877-META-MKT (1-877-638-2658) to arrange a transfer from your bank
account.
WIRE TRANSFER PAYMENTS
To pay by wire transfer, complete the account application as directed and
request an account number by calling 1-877-META-MKT (1-877-638-2658). Follow the
instructions below after receiving your account number.
Instruct your bank to wire transfer your investment to:
Huntington National Bank
Routing Number: ABA # 044000024
DDA#01899622494
Include:
o Your fund number (005)
o Your account number
After instructing your bank to wire the funds, call 1-877-638-2658 to advise us
of the amount being transferred and the name of your bank.
ELECTRONIC VS. WIRE TRANSFER
Wire transfers allow financial institutions to
send funds to each other, almost instantaneously.
Your bank may charge a wire transfer fee. With an
electronic purchase or sale, the transaction is
made through the Automated Clearing House (ACH)
and may take up to eight days to clear. There is
generally no fee for ACH transactions.
You can add to your account by using the convenient options described in the
account application. For more information about these options, also see the SAI.
<PAGE>
INSTRUCTIONS FOR SELLING SHARES
By Internet Provide the following information:
o Your Fund and account number
o Amount you wish to sell
o Address where your check should be sent or where
your funds should be wired or electronically
transferred
- -------------------------------------------------------------------------------
By Telephone Call 1-877-META-MKT (1-877-638-2658) with instructions
(UNLESS YOU HAVE as to how you wish to receive your funds (mail, wire,
DECLINED TELEPHONE electronic transfer).
SALES PRIVILEGES)
TO RECEIVE YOUR REDEMPTION PROCEEDS BY WIRE TRANSFER, you must indicate this
option on your application. Your payment will be wired to your bank ordinarily
on the next business day. The Fund and your bank may charge a wire transfer fee.
TO RECEIVE YOUR REDEMPTION PROCEEDS ELECTRONICALLY, your bank must participate
in the Automated Clearing House (ACH) and must be a U.S. bank. Your payment will
be credited ordinarily within seven days. Your bank may charge for this service.
INSTRUCTIONS FOR EXCHANGING SHARES
To exchange your Fund shares, provide the following information:
o Your name and telephone number
o The exact name on your account and account number
o Taxpayer identification number (usually your Social Security number)
o Dollar value or number of shares to be exchanged
o The name of the Fund from which the exchange is to be made
o The name of the Fund into which the exchange is being made
