FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. 2 [X]
Post-Effective Amendment No. [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. [ ]
(Check appropriate box or boxes.)
METAMARKETS.COM FUNDS
(Exact Name of Registrant as Specified in Charter)
325M Sharon Park Drive, #325
Menlo Park, CA 94025 94025
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (650) 429-2112
Donald L. Luskin
325M Sharon Park Drive, #325
Menlo Park, CA 94025
(Name and Address of Agent for Service)
copy to:
Stuart H. Coleman Esq.
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038-4982
Approximate Date of Proposed Public Offering: As soon as practicable after this
Registration Statement is declared effective.
===============================================================================
The Registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the registration
statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
===============================================================================
METAMARKETS.COM FUNDS
PROSPECTUS
____________, 1999
o [NEW NAME] FUND
o AGGRESSIVE GROWTH FUND
o COMMUNICATIONS TECHNOLOGY FUND
o MEDIA TECHNOLOGY FUND
ADVISED BY
METAMARKETS INVESTMENTS LLC
AS WITH ALL MUTUAL FUNDS, 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>
OVERVIEW
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 are delivered 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 of consumer
services to large blue chip companies with
established track records of developing and
marketing these advances. A Fund may sell
securities for a variety of reasons, such as
to secure gains, limit losses, or redeploy
assets into more promising opportunities. The
Funds may sell short securities of companies
that the investment adviser believes will
underperform amidst the challenges of the New
Economy.
Much is being written about the New Economy.
Visit our Website at
http://www.MetaMarkets.com if you want to
find out where you can read more about it.
<PAGE>
OBJECTIVES, RISK/RETURN AND EXPENSES
[NEW NAME] FUND
INVESTMENT OBJECTIVE The Fund seeks to provide investors with
capital growth.
PRINCIPAL INVESTMENT The Fund invests principally in the common
STRATEGIES stocks 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, as well
as the consumer marketing, media,
entertainment and financial services sectors.
The Fund also may invest in the preferred
stocks and convertible securities (including
those rated below investment grade) of these
companies and engage in leverage, short
selling and futures and options transactions.
PRINCIPAL INVESTMENT Stocks fluctuate in price, often based on
RISKS factors 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 (below $500 million), 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.
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 [New Name] 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 .25%
- ---------------------------------------------
Total Annual Fund
Operating Expenses[2] 1.50%
- ---------------------------------------------
- -----------------------
1 Other expenses are based on estimated amounts for the current fiscal year.
[2 The expenses noted above do not reflect any fee waivers or expense
reimbursement arrangements that may be in effect. Any fee waiver or expense
reimbursement arrangement is voluntary and may be discontinued at any
time.]
EXPENSE EXAMPLE
Use the example at right to help [New Name] 1 3
you compare the cost of investing in the Fund Year Years
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
Your actual costs may be higher or lower.
[NEW NAME] FUND 1 3
Year Years
$--- $---
- ---------------------------------------------------------
<PAGE>
OBJECTIVES, RISK/RETURN AND EXPENSES
AGGRESSIVE GROWTH FUND
INVESTMENT OBJECTIVE The Fund seeks to provide investors with
capital growth.
PRINCIPAL INVESTMENT The Fund invests principally in the common
STRATEGIES stocks 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 aggressive 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. The
Fund also may invest in the preferred stocks
and convertible securities (including those
rated below investment grade) of these
companies and engage in leverage, short
selling and futures and options transactions.
PRINCIPAL INVESTMENT Stocks fluctuate in price, often based on
RISKS factors 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 (below $500 million), 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.
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 Aggressive Growth 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
(fee paid from Fund assets)
- ---------------------------------------------
Management Fee 1.00%
- ---------------------------------------------
Distribution (12b-1)
Fee .25%
- ---------------------------------------------
Other Expenses1 .25%
- ---------------------------------------------
Total Annual Fund
Operating Expenses[2] 1.50%
- ---------------------------------------------
- -----------------------
1 Other expenses are based on estimated amounts for the current fiscal year.
[2 The expenses notes above do not reflect any fee waivers or expense
reimbursement arrangements that may be in effect. Any fee waiver or expense
reimbursement arrangement is voluntary and may be discontinued at any
time.]
EXPENSE EXAMPLE
Use the example at right to help you Aggressive Growth 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 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
Your actual costs may be higher or lower.
<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
STRATEGIES stocks 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 also may
invest in the preferred stocks and
convertible securities (including those rated
below investment grade) of these companies
and engage in leverage, short selling and
futures and options transactions.
PRINCIPAL INVESTMENT Stocks fluctuate in price, often based on
RISKS factors 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 (at least 65% of its total
assets), 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.
The Fund will invest in companies in the
technology sector, including those with small
capitalizations (below $500 million), 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.
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 Expenses1 .25%
- ---------------------------------------------
Total Annual Fund
Operating Expenses[2] 1.50%
- ---------------------------------------------
- --------------------
1 Other expenses are based on estimated amounts for the current fiscal year.
[2 The expenses noted above do not reflect any fee waivers or expense
reimbursement arrangements that may be in effect. Any fee waiver or expense
reimbursement arrangement is voluntary and may be discontinued at any
time.]
EXPENSE EXAMPLE Communications 1 3
Technology Fund Year Years
Use the example at right 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
Your actual costs may be higher or lower.
<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
STRATEGIES of 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 also may
invest in the preferred stocks and
convertible securities (including those rated
below investment grade) of these companies
and engage in leverage, short selling and
futures and options transactions.
PRINCIPAL INVESTMENT Stocks fluctuate in price, often based on
RISKS factors 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 (at
least 65% of its total assets), 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.
The Fund will invest in companies in the
technology sector, including those with small
capitalizations (below $500 million), 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.
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) .25%
Fee
- ---------------------------------------------
Other Expenses1 .25%
- ---------------------------------------------
Total Annual Fund
Operating Expenses[2] 1.50%
- ---------------------------------------------
- ----------------------
1 Other expenses are based on estimated amounts for the current fiscal year.
[2 The expenses noted above do not reflect any fee waivers or expense
reimbursement arrangements may be in effect. Any fee waiver or expense
reimbursement arrangement is voluntary and may be discontinued at any
time.]
EXPENSE EXAMPLE Media Technology Fund 1 3
Year Years
Use the example at right 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
Your actual costs may be higher or lower.
<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 (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.
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,
or non-hedging purposes, such as to take advantage of an anticipated decline in
the price of a security. In these transactions, the Fund sells 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 give 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.
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
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.
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.
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 that those used in calculating the
Fund's net asset value.
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.
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. The personnel of the investment
adviser, however, have substantial experience in managing investment companies,
separately managed accounts and private investment funds. 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.
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 Website 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 Website.
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 $10 to
cover the costs of printing, shipping and handling. 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) $_____ $_____
Retirement (IRA) $_____ $_____
Automatic
Investment Plan $_____ $_____
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 Funds 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.
o VERIFYING TELEPHONE REDEMPTIONS
MetaMarkets.com Funds make every effort 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.
o 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.
o 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.
o 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.
o 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 _______ exchanges between investment
portfolios offered by Fund management in a year, or more than _______ 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.
DIVIDENDS, DISTRIBUTIONS AND TAXES
All dividends and distributions will be automatically reinvested in Fund shares
unless you request otherwise. 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.
<PAGE>
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 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 REPORTS AND 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
E-MAIL:________________
INTERNET: HTTP://WWW.METAMARKETS.COM
TELEPHONE: 1-800-___-___
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 a
separate document that is incorporated by reference into this Prospectus.
Youcan 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 Website at http://www.sec.gov.
Investment Company Act file no. 811-09351.
<PAGE>
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 Website, and follow the
instructions.
2. Make check, bank draft or money order payable to "MetaMarkets.com Funds."
3. Mail your payment and a signed copy of the
completed account application to: MetaMarkets.com Funds
[address]
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
[address]
or, for Overnight Service, send it to:
MetaMarkets.com Funds
[address]
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 1-800-___-____. Your account can generally be set up for
electronic purchases within 15 days.
Call 1-800-___-____ 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 a wire transfer confirmation number, or call 1-800-___-____. Follow the
instructions below after receiving your confirmation number.
Instruct your bank to wire transfer your investment to:
[Name of Bank]
Routing Number: ABA #__________
DDA#__________
Include:
Your name
Your confirmation number
After instructing your bank to wire the funds, call 1-800-___-____ 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 change 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 1-800-___-____ with instructions as to
(UNLESS YOU HAVE DECLINED how you wish to receive your funds (mail,
TELEPHONE SALES PRIVILEGES) 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.
<PAGE>
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
[New Name] Fund
Aggressive Growth Fund
Communications Technology Fund
Media Technology Fund
STATEMENT OF ADDITIONAL INFORMATION
__________, 1999
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus for
[New Name] Fund, Aggressive Growth Fund, Communications Technology Fund and
Media Technology Fund (each, a "Fund" and collectively, the "Funds") of
MetaMarkets.com Funds (the "Company"), dated __________, 1999, as it may be
revised from time to time. To obtain a copy of the Prospectus, please access the
Company's Website at http://www.MetaMarkets.com, click on the Fund Prospectus
icon and follow the instructions, or call 1-800-___-____. When investing in the
Funds, you will be asked to consent to receive all information about the Funds
electronically.
TABLE OF CONTENTS
PAGE
Description of the Company and the Funds...................................B-2
Management of the Company..................................................B-15
Management Arrangements....................................................B-16
Purchase and Redemption of Shares..........................................B-19
Determination of Net Asset Value...........................................B-20
Shareholder Services and Privileges........................................B-21
Performance Information....................................................B-22
Dividends, Distribution and Taxes..........................................B-23
Portfolio Transactions.....................................................B-25
Information About the Company and the Funds................................B-26
Counsel and Independent Auditors...........................................B-27
Appendix ..................................................................B-28
Financial Statement and Report of Independent Auditors.....................B-37
<PAGE>
DESCRIPTION OF THE COMPANY AND THE FUNDS
GENERAL
The Company is a Massachusetts business trust that was formed on May 21,
1999. Each Fund is a separate portfolio of the Company, an open-end management
investment company, known as a mutual fund.
MetaMarkets Investments LLC (the "Adviser") serves as each Fund's
investment adviser.
BISYS Fund Services Ohio, Inc. ("BISYS") serves as each Fund's
administrator and distributor.
CERTAIN PORTFOLIO SECURITIES
The following information supplements and should be read in conjunction
with the Funds' Prospectus. The portfolio securities described below, other than
convertible securities, are not part of the Funds' principal investment
strategies.
CONVERTIBLE SECURITIES. (All Funds) While the Funds typically invest
principally in common stocks, part of their principal investment strategies from
time to time may include investing in convertible securities. Convertible
securities may be converted at either a stated price or stated rate into
underlying shares of common stock and, therefore, are deemed to be equity
securities for purposes of the Funds' management policies. Convertible
securities have characteristics similar to both fixed-income and equity
securities. Convertible securities generally are subordinated to other similar
but non-convertible securities of the same issuer, although convertible bonds,
as corporate debt obligations, enjoy seniority in right of payment to all equity
securities, and convertible preferred stock is senior to common stock, of the
same issuer. Because of the subordination feature, however, convertible
securities typically have lower ratings than similar non-convertible securities.
Although to a lesser extent than with fixed-income securities, the market
value of convertible securities tends to decline as interest rates increase and,
conversely, tends to increase as interest rates decline. In addition, because of
the conversion feature, the market value of convertible securities tends to vary
with fluctuations in the market value of the underlying common stock. A unique
feature of convertible securities is that as the market price of the underlying
common stock declines, convertible securities tend to trade increasingly on a
yield basis, and so may not experience market value declines to the same extent
as the underlying common stock. When the market price of the underlying common
stock increases, the prices of the convertible securities tend to rise as a
reflection of the value of the underlying common stock. While no securities
investments are without risk, investments in convertible securities generally
entail less risk than investments in common stock of the same issuer.
Convertible securities are investments that provide for a stable stream of
income with generally higher yields than common stocks. There can be no
assurance of current income because the issuers of the convertible securities
may default on their obligations. A convertible security, in addition to
providing fixed income, offers the potential for capital appreciation through
the conversion feature, which enables the holder to benefit from increases in
the market price of the underlying common stock. There can be no assurance of
capital appreciation, however, because securities prices fluctuate. Convertible
securities, however, generally offer lower interest or dividend yields than
non-convertible securities of similar quality because of the potential for
capital appreciation.
WARRANTS. (All Funds) A warrant is an instrument issued by a corporation
which gives the holder the right to subscribe to a specified amount of the
corporation's capital stock at a set price for a specified period of time.
INVESTMENT COMPANIES. (All Funds) A Fund may invest in securities issued by
other investment companies. Under the Investment Company Act of 1940, as amended
(the "1940 Act"), a Fund's investment in such securities, subject to certain
exceptions, currently is limited to (i) 3% of the total voting stock of any one
investment company, (ii) 5% of the Fund's total assets with respect to any one
investment company and (iii) 10% of the Fund's total assets in the aggregate.
Investments in the securities of other investment companies may involve
duplication of advisory fees and certain other expenses.
DEPOSITARY RECEIPTS. (All Funds) A Fund may invest in the securities of
foreign issuers in the form of American Depositary Receipts and American
Depositary Shares (collectively, "ADRs") and Global Depositary Receipts and
Global Depositary Shares (collectively, "GDRs") and other forms of depositary
receipts. These securities may not necessarily be denominated in the same
currency as the securities into which they may be converted. ADRs are receipts
typically issued by a United States bank or trust company which evidence
ownership of underlying securities issued by a foreign corporation. GDRs are
receipts issued outside the United States typically by non-United States banks
and trust companies that evidence ownership of either foreign or domestic
securities. Generally, ADRs in registered form are designed for use in the
United States securities markets and GDRs in bearer form are designed for use
outside the United States.
These securities may be purchased through "sponsored" or "unsponsored"
facilities. A sponsored facility is established jointly by the issuer of the
underlying security and a depositary, whereas a depositary may establish an
unsponsored facility without participation by the issuer of the deposited
security. Holders of unsponsored depositary receipts generally bear all the
costs of such facilities and the depositary of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited security or to pass through voting
rights to the holders of such receipts in respect of the deposited securities.
FOREIGN GOVERNMENT OBLIGATIONS; SECURITIES OF SUPRANATIONAL ENTITIES. (All
Funds) A Fund may invest in obligations issued or guaranteed by one or more
foreign governments or any of their political subdivisions, agencies or
instrumentalities that are determined by the Manager to be of comparable quality
to the other obligations in which the Fund may invest. Such securities also
include debt obligations of supranational entities. Supranational entities
include international organizations designated or supported by governmental
entities to promote economic reconstruction or development and international
banking institutions and related government agencies. Examples include the
International Bank for Reconstruction and Development (the World Bank), the
European Coal and Steel Community, the Asian Development Bank and the
InterAmerican Development Bank.
ILLIQUID SECURITIES. (All Funds) A Fund may invest up to 15% of the value
of its net assets in securities as to which a liquid trading market does not
exist, provided such investments are consistent with the Fund's investment
objective. These securities may include securities that are not readily
marketable, such as securities that are subject to legal or contractual
restrictions on resale, repurchase agreements providing for settlement in more
than seven days after notice, and certain privately negotiated, non-exchange
traded options and securities used to cover such options. As to these
securities, the Fund is subject to a risk that should the Fund desire to sell
them when a ready buyer is not available at a price the Fund deems
representative of their value, the value of the Fund's net assets could be
adversely affected.
CORPORATE DEBT SECURITIES. (All Funds) A Fund may invest in corporate debt
securities, which include corporate bonds, debentures, notes and other similar
instruments. Debt securities may be acquired with warrants attached. Corporate
income-producing securities also may include forms of preferred or preference
fixed, floating or variable, and may vary inversely with respect to a reference
rate. The rate of return or return of principal on some debt obligations may be
linked or indexed to the level of exchange rates between the U.S. dollar and a
foreign currency or currencies.
Variable and floating rate securities provide for a periodic adjustment in
the interest rate paid on the interest rate paid on the obligations. The terms
of such obligations may provide that interest rates are adjusted periodically
based upon an interest rate adjustment index as provided in the respective
obligations. The adjustment intervals may be regular, and range from daily up to
annually, or may be event based, such as based on a change in the prime rate.
The Fund may invest in floating rate debt instruments ("floaters"). The
interest rate on a floater is a variable rate which is tied to another interest
rate, such as a money-market index or Treasury bill rate. The interest rate on a
floater resets periodically, typically every six months. Because of the interest
rate reset feature, floaters provide the Fund with a certain degree of
protection against rises in interest rates, although the Fund will participate
in any declines in interest rates as well.
The Fund also may invest in inverse floating rate debt instruments
("inverse floaters"). The interest rate on an inverse floater resets in the
opposite direction from the market rate of interest to which the inverse floater
is indexed. An inverse floating rate security may exhibit greater price
volatility than a fixed rate obligation of similar credit quality.
MONEY MARKET INSTRUMENTS. (All Funds) In an attempt to respond to adverse
market, economic, political or other conditions, a Fund may take a temporary
defensive position that is inconsistent with its principal investment strategies
and invest some or all of its assets in money market instruments, including U.S.
Government securities, repurchase agreements, bank obligations and commercial
paper. Each Fund also may purchase money market instruments when it has cash
reserves or in anticipation of taking a market position.
INVESTMENT TECHNIQUES
In addition to the principal investment strategies discussed in the Funds'
Prospectus, the Funds also may engage in the investment techniques described
below.
LEVERAGE. (All Funds) Leveraging (that is, buying securities using borrowed
money) exaggerates the effect on net asset value of any increase or decrease in
the market value of a 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. For borrowings for investment purposes,
the 1940 Act requires a Fund to maintain continuous asset coverage (that is,
total assets including borrowings, less liabilities exclusive of borrowings) of
300% of the amount borrowed. If the required coverage should decline as a result
of market fluctuations or other reasons, the Fund may be required to sell some
of its portfolio holdings within three days to reduce the amount of its
borrowings and restore the 300% asset coverage, even though it may be
disadvantageous from an investment standpoint to sell securities at that time.
The Fund also may be required to maintain minimum average balances in connection
with such borrowing or pay a commitment or other fee to maintain a line of
credit; either of these requirements would increase the cost of borrowing over
the stated interest rate.
A Fund may enter into reverse repurchase agreements with banks, brokers or
dealers. This form of borrowing involves the transfer by the Fund of an
underlying debt instrument in return for cash proceeds based on a percentage of
the value of the security. The Fund retains the right to receive interest and
principal payments on the security. At an agreed upon future date, the Fund
repurchases the security at principal plus accrued interest. Except for these
transactions, a Fund's borrowings generally will be unsecured.
SHORT-SELLING. (All Funds) In these transactions, a Fund sells a security
it does not own in anticipation of a decline in the market value of the
security. 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. The
price at such time may be more or less than the price at which the security was
sold by the Fund, which would result in a loss or gain, respectively. A Fund
also may make short sales "against the box," in which the Fund enters into a
short sale of a security it owns. With respect to each Fund, securities will not
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 relevant
Fund's net assets.
Until a Fund closes its short position or replaces the borrowed security,
it will: (a) segregate permissible liquid assets in an amount which, together
with the amount deposited with the broker as collateral, always equals the
current value of the security sold short; or (b) otherwise cover its short
position.
DERIVATIVES. (All Funds) A Fund may invest in, or enter into, derivatives,
such as options and futures, for a variety of reasons, including to hedge
certain market risks, to provide a substitute for purchasing or selling
particular securities or to increase potential income gain. Derivatives may
provide a cheaper, quicker or more specifically focused way for the Fund to
invest than "traditional" securities would.
Derivatives can be volatile and involve various types and degrees of risk,
depending upon the characteristics of the particular derivative and the
portfolio as a whole. Derivatives permit a Fund to increase or decrease the
level of risk, or change the character of the risk, to which its portfolio is
exposed in much the same way as the Fund can increase or decrease the level of
risk, or change the character of the risk, of its portfolio by making
investments in specific securities.
However, derivatives may entail investment exposures that are greater than
their cost would suggest, meaning that a small investment in derivatives could
have a large potential impact on a Fund's performance.
If a Fund invests in derivatives at inopportune times or judges market
conditions incorrectly, such investments may lower the Fund's return or result
in a loss. A Fund also could experience losses if its derivatives were poorly
correlated with its other investments, or if the Fund were unable to liquidate
its position because of an illiquid secondary market. The market for many
derivatives is, or suddenly can become, illiquid. Changes in liquidity may
result in significant, rapid and unpredictable changes in the prices for
derivatives.
Although neither the Company nor any Fund will be a commodity pool, certain
derivatives subject the Funds to the rules of the Commodity Futures Trading
Commission which limit the extent to which a Fund can invest in such
derivatives. A Fund may invest in futures contracts and options with respect
thereto for hedging purposes without limit. However, no Fund may invest in such
contracts and options for other purposes 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; provided, however,
that in the case of an option that is in-the-money at the time of purchase, the
in-the-money amount may be excluded in calculating the 5% limitation.
A Fund may purchase call and put options and write (i.e., sell) covered
call and put option contracts. When required by the Securities and Exchange
Commission, the Fund will segregate permissible liquid assets to cover its
obligations relating to its purchase of derivatives. To maintain this required
cover, the Fund may have to sell portfolio securities at disadvantageous prices
or times since it may not be possible to liquidate a derivative position at a
reasonable price.
Derivatives may be purchased on established exchanges or through privately
negotiated transactions referred to as over-the-counter derivatives.
Exchange-traded derivatives generally are guaranteed by the clearing agency
which is the issuer or counterparty to such derivatives. This guarantee usually
is supported by a daily payment system (i.e., variation margin requirements)
operated by the clearing agency in order to reduce overall credit risk. As a
result, unless the clearing agency defaults, there is relatively little
counterparty credit risk associated with derivatives purchased on an exchange.
By contrast, no clearing agency guarantees over-the-counter derivatives.
Therefore, each party to an over-the-counter derivative bears the risk that the
counterparty will default. Accordingly, the Adviser will consider the
creditworthiness of counterparties to over-the-counter derivatives in the same
manner as it would review the credit quality of a security to be purchased by a
Fund. Over-the-counter derivatives are less liquid than exchange-traded
derivatives since the other party to the transaction may be the only investor
with sufficient understanding of the derivative to be interested in bidding for
it.
FUTURES TRANSACTIONS--IN GENERAL. (All Funds) A Fund may enter into futures
contracts in U.S. domestic markets, such as the Chicago Board of Trade and the
International Monetary Market of the Chicago Mercantile Exchange, or on
exchanges located outside the United States, such as the London International
Financial Futures Exchange, the Deutsche Termine Borse and the Sydney Futures
Exchange Limited. Foreign markets may offer advantages such as trading
opportunities or arbitrage possibilities not available in the United States.
Foreign markets, however, may have greater risk potential than domestic markets.
For example, some foreign exchanges are principal markets so that no common
clearing facility exists and an investor may look only to the broker for
performance of the contract. In addition, any profits that a Fund might realize
in trading could be eliminated by adverse changes in the exchange rate, or the
Fund could incur losses as a result of those changes. Transactions on foreign
exchanges may include both commodities which are traded on domestic exchanges
and those which are not. Unlike trading on domestic commodity exchanges, trading
on foreign commodity exchanges is not regulated by the Commodity Futures Trading
Commission.
Engaging in these transactions involves risk of loss to a Fund which could
adversely affect the value of the Fund's net assets. Although each Fund intends
to purchase or sell futures contracts only if there is an active market for such
contracts, no assurance can be given that a liquid market will exist for any
particular contract at any particular time. Many futures exchanges and boards of
trade limit the amount of fluctuation permitted in futures contract prices
during a single trading day. Once the daily limit has been reached in a
particular contract, no trades may be made that day at a price beyond that limit
or trading may be suspended for specified periods during the trading day.
Futures contract prices could move to the limit for several consecutive trading
days with little or no trading, thereby preventing prompt liquidation of futures
positions and potentially subjecting the Fund to substantial losses.
Successful use of futures by a Fund also is subject to the Adviser's
ability to predict correctly movements in the direction of the relevant market
and, to the extent the transaction is entered into for hedging purposes, to
ascertain the appropriate correlation between the transaction being hedged and
the price movements of the futures contract. For example, if a Fund uses futures
to hedge against the possibility of a decline in the market value of securities
held in its portfolio and the prices of such securities instead increase, the
Fund will lose part or all of the benefit of the increased value of securities
which it has hedged because it will have offsetting losses in its futures
positions. Furthermore, if in such circumstances the Fund has insufficient cash,
it may have to sell securities to meet daily variation margin requirements. A
Fund may have to sell such securities at a time when it may be disadvantageous
to do so.
Pursuant to regulations and/or published positions of the Securities and
Exchange Commission, a Fund may be required to segregate permissible liquid
assets in connection with its commodities transactions in an amount generally
equal to the value of the underlying commodity. The segregation of such assets
will have the effect of limiting the Fund's ability otherwise to invest those
assets.
SPECIFIC FUTURES TRANSACTIONS. A Fund may purchase and sell stock index futures
contracts. A stock index future obligates a Fund to pay or receive an amount of
cash equal to a fixed dollar amount specified in the futures contract multiplied
by the difference between the settlement price of the contract on the contract's
last trading day and the value of the index based on the stock prices of the
securities that comprise it at the opening of trading in such securities on the
next business day.
A Fund may purchase and sell currency futures. A foreign currency future
obligates the Fund to purchase or sell an amount of a specific currency at a
future date at a specific price.
OPTIONS--IN GENERAL. (All Funds) A Fund may purchase and write (i.e., sell) call
or put options with respect to specific securities. A call option gives the
purchaser of the option the right to buy, and obligates the writer to sell, the
underlying security or securities at the exercise price at any time during the
option period, or at a specific date. Conversely, a put option gives the
purchaser of the option the right to sell, and obligates the writer to buy, the
underlying security or securities at the exercise price at any time during the
option period.
A covered call option written by a Fund is a call option with respect to
which the Fund owns the underlying security or otherwise covers the transaction
by segregating cash or other securities. A put option written by a Fund is
covered when, among other things, cash or liquid securities having a value equal
to or greater than the exercise price of the option are segregated to fulfill
the obligation undertaken. The principal reason for writing covered call and put
options is to realize, through the receipt of premiums, a greater return than
would be realized on the underlying securities alone. A Fund receives a premium
from writing covered call or put options which it retains whether or not the
option is exercised.
There is no assurance that sufficient trading interest to create a liquid
secondary market on a securities exchange will exist for any particular option
or at any particular time, and for some options no such secondary market may
exist. A liquid secondary market in an option may cease to exist for a variety
of reasons. In the past, for example, higher than anticipated trading activity
or order flow, or other unforeseen events, at times have rendered certain of the
clearing facilities inadequate and resulted in the institution of special
procedures, such as trading rotations, restrictions on certain types of orders
or trading halts or suspensions in one or more options. There can be no
assurance that similar events, or events that may otherwise interfere with the
timely execution of customers' orders, will not recur. In such event, it might
not be possible to effect closing transactions in particular options. If, as a
covered call option writer, a Fund is unable to effect a closing purchase
transaction in a secondary market, it will not be able to sell the underlying
security until the option expires or it delivers the underlying security upon
exercise or it otherwise covers its position.
SPECIFIC OPTIONS TRANSACTIONS. A Fund may purchase and sell call and put options
in respect of specific securities (or groups or "baskets" of specific
securities) or stock indices listed on national securities exchanges or traded
in the over-the-counter market. An option on a stock index is similar to an
option in respect of specific securities, except that settlement does not occur
by delivery of the securities comprising the index. Instead, the option holder
receives an amount of cash if the closing level of the stock index upon which
the option is based is greater than, in the case of a call, or less than, in the
case of a put, the exercise price of the option. Thus, the effectiveness of
purchasing or writing stock index options will depend upon price movements in
the level of the index rather than the price of a particular stock.
A Fund may purchase and sell call and put options on foreign currency.
These options convey the right to buy or sell the underlying currency at a price
which is expected to be lower or higher than the spot price of the currency at
the time the option is exercised or expires.
Successful use by a Fund of options will be subject to the Adviser's
ability to predict correctly movements in the prices of individual stocks, the
stock market generally, foreign currencies or interest rates. To the extent such
predictions are incorrect, a Fund may incur losses.
SWAP AGREEMENTS. (All Funds) A Fund may enter into swap agreements in an attempt
to obtain a particular return when it is considered desirable to do so, possibly
at a lower cost than if the Fund had invested directly in the asset that yielded
the desired return. Swap agreements are two-party contracts entered into
primarily by institutional investors for periods ranging from a few weeks to
more than a year. In a standard swap transaction, two parties agree to exchange
the returns (or differentials in rates of return) earned or realized on
particular predetermined investments or instruments, which may be adjusted for
an interest factor. The gross returns to be exchanged or "swapped" between the
parties are generally calculated with respect to a "notional amount," i.e., the
return on or increase in value of a particular dollar amount invested at a
particular interest rate, or in a "basket" of securities representing a
particular index.
A Fund may purchase cash-settled options on equity index swaps in pursuit
of its investment objective. Equity index swaps involve the exchange by the Fund
with another party of cash flows based upon the performance of an index or a
portion of an index of securities which usually includes dividends. A
cash-settled option on a swap gives the purchaser the right, but not the
obligation, in return for the premium paid, to receive an amount of cash equal
to the value of the underlying swap as of the exercise date. These options
typically are purchased in privately negotiated transactions from financial
institutions, including securities brokerage firms.
Most swap agreements entered into by the Fund would calculate the
obligations of the parties to the agreement on a "net basis." Consequently, the
Fund's current obligations (or rights) under a swap agreement generally will be
equal only to the net amount to be paid or received under the agreement based on
the relative values of the positions held by each party to the agreement (the
"net amount"). The risk of loss with respect to swaps is limited to the net
amount of interest payments that the Fund is contractually obligated to make. If
the other party to a swap defaults, the Fund's risk of loss consists of the net
amount of payments that the Fund contractually is entitled to receive.
FUTURE DEVELOPMENTS. (All Funds) A Fund may take advantage of opportunities
in the area of options and futures contracts and options on futures contracts
and any other derivatives which are not presently contemplated for use by the
Fund or which are not currently available but which may be developed, to the
extent such opportunities are both consistent with the Fund's investment
objective and legally permissible for the Fund. Before entering into such
transactions or making any such investment, the Fund will provide appropriate
disclosure in its Prospectus or Statement of Additional Information.
FORWARD COMMITMENTS. (All Funds) A Fund may purchase securities on a
forward commitment or when-issued basis, which means that delivery and payment
take place a number of days after the date of the commitment to purchase. The
payment obligation and the interest rate receivable on a forward commitment or
when-issued security are fixed when the Fund enters into the commitment but the
Fund does not make a payment until it receives delivery from the counterparty.
The Fund will commit to purchase such securities only with the intention of
actually acquiring the securities, but the Fund may sell these securities before
the settlement date if it is deemed advisable. The Fund will segregate
permissible liquid assets at least equal at all times to the amount of the
Fund's purchase commitments.
Securities purchased on a forward commitment or when-issued basis are
subject to changes in value (generally changing in the same way, i.e.,
appreciating when interest rates decline and depreciating when interest rates
rise) based upon the public's perception of the creditworthiness of the issuer
and changes, real or anticipated, in the level of interest rates. Securities
purchased on a forward commitment or when-issued basis may expose a Fund to
risks because they may experience such fluctuations prior to their actual
delivery. Purchasing securities on a when-issued basis can involve the
additional risk that the yield available in the market when the delivery takes
place actually may be higher than that obtained in the transaction itself.
Purchasing securities on a forward commitment or when-issued basis when a Fund
is fully or almost fully invested may result in greater potential fluctuation in
the value of the Fund's net assets and its net asset value per share.
LENDING PORTFOLIO SECURITIES. (All Funds) A Fund may lend securities from
its portfolio to brokers, dealers and other financial institutions needing to
borrow securities to complete certain transactions. In connection with such
loans, the Fund continues to be entitled to payments in amounts equal to the
dividends, interest or other distributions payable on the loaned securities
which affords the Fund an opportunity to earn interest on the amount of the loan
and at the same time to earn income on the loaned securities' collateral. Loans
of portfolio securities may not exceed 33-1/3% of the value of the Fund's total
assets, and the Fund will receive collateral consisting of cash, U.S. Government
securities or irrevocable letters of credit which will be maintained at all
times in an amount equal to at least 100% of the current market value of the
loaned securities. Such loans are terminable by the Fund at any time upon
specified notice. The Fund might experience risk of loss if the institution with
which it has engaged in a portfolio loan transaction breaches its agreement with
the Fund. In connection with its securities lending transactions, the Fund may
return to the borrower or a third party which is unaffiliated with the Fund, and
which is acting as a "placing broker," a part of the interest earned from the
investment of collateral received for securities loaned.
FOREIGN CURRENCY TRANSACTIONS. (All Funds) A Fund may enter into foreign
currency transactions for a variety of purposes, including: to fix in U.S.
dollars, between trade and settlement date, the value of a security the Fund has
agreed to buy or sell; to hedge the U.S. dollar value of securities the Fund
already owns, particularly if it expects a decrease in the value of the currency
in which the foreign security is denominated; or to gain exposure to the foreign
currency in an attempt to realize gains.
Foreign currency transactions may involve, for example, a Fund's purchase
of foreign currencies for U.S. dollars or the maintenance of short positions in
foreign currencies, which would involve the Fund agreeing to exchange an amount
of a currency it did not currently own for another currency at a future date in
anticipation of a decline in the value of the currency sold relative to the
currency the Fund contracted to receive in the exchange. A Fund's success in
these transactions will depend principally on the Adviser's ability to predict
accurately the future exchange rates between foreign currencies and the U.S.
dollar.
Currency exchange rates may fluctuate significantly over short periods of
time. They generally are determined by the forces of supply and demand in the
foreign exchange markets and the relative merits of investments in different
countries, actual or perceived changes in interest rates and other complex
factors, as seen from an international perspective. Currency exchange rates also
can be affected unpredictably by intervention by U.S. or foreign governments or
central banks, or the failure to intervene, or by currency controls or political
developments in the United States or abroad.
INVESTMENT RISKS
FOREIGN SECURITIES. (All Funds) Foreign securities markets generally are
not as developed or efficient as those in the United States. Securities of some
foreign issuers are less liquid and more volatile than securities of comparable
U.S. issuers. Similarly, volume and liquidity in most foreign securities markets
are less than in the United States and, at times, volatility of price can be
greater than in the United States.
Because evidences of ownership of foreign securities usually are held
outside the United States, a Fund investing in such securities will be subject
to additional risks which include possible adverse political and economic
developments, seizure or nationalization of foreign deposits and adoption of
governmental restrictions which might adversely affect or restrict the payment
of principal and interest on the foreign securities to investors located outside
the country of the issuer, whether from currency blockage or otherwise.
Moreover, foreign securities held by a Fund may trade on days when the Fund does
not calculate its net asset value and thus affect the Fund's net asset value on
days when investors have no access to the Fund.
Developing countries have economic structures that are generally less
diverse and mature, and political systems that are less stable, than those of
developed countries. The markets of developing countries may be more volatile
than the markets of more mature economies; however, such markets may provide
higher rates of return to investors. Many developing countries providing
investment opportunities for the Funds have experienced substantial, and in some
periods extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have adverse
effects on the economies and securities markets of certain of these countries.
Since foreign securities often are purchased with and payable in currencies
of foreign countries, the value of these assets as measured in U.S. dollars may
be affected favorably or unfavorably by changes in currency rates and exchange
control regulations.
FIXED-INCOME SECURITIES. (All Funds) A Fund may invest, to a limited
extent, in fixed-income securities, including those rated below investment grade
by Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's Ratings Group
("S&P"), Fitch IBCA, Inc. ("Fitch") or Duff & Phelps Credit Rating Co. ("Duff,"
and together with S&P, Moody's and Fitch, the "Rating Agencies"). Even though
interest-bearing securities are investments which promise a stable stream of
income, the prices of such securities generally are inversely affected by
changes in interest rates and, therefore, are subject to the risk of market
price fluctuations. The values of fixed-income securities also may be affected
by changes in the credit rating or financial condition of the issuer. Certain
securities that may be purchased by each Fund, such as those rated Baa or lower
by Moody's and BBB or lower by S&P, Fitch and Duff, may be subject to such risk
with respect to the issuing entity and to greater market fluctuations than
certain lower yielding, higher rated fixed-income securities. Once the rating of
a portfolio security has been changed, the Fund will consider all circumstances
deemed relevant in determining whether to continue to hold the security.
LOWER RATED SECURITIES. (All Funds) A Fund may invest in higher yielding
(and, therefore, higher risk) convertible securities and, to a limited extent,
in debt securities (junk bonds). These securities include those rated below Baa
by Moody's and below BBB by S&P, Fitch and Duff. These securities may be subject
to certain risks and to greater market fluctuations than lower yielding
investment grade securities. These securities are considered by the Rating
Agencies to be, on balance, predominantly speculative as to the payment of
principal and interest and generally involve more credit risk than investment
grade securities. The retail market for these securities may be less liquid than
that of investment grade securities. Adverse market conditions could make it
difficult for the Fund to sell these securities or could result in the Fund
obtaining lower prices for these securities which would adversely affect the
Fund's net asset value. See "Appendix" for a general description of the Rating
Agencies' ratings. Although ratings may be useful in evaluating the safety of
interest and principal payments, they do not evaluate the market value risk of
these securities. The Funds will rely on the Adviser's judgment, analysis and
experience in evaluating the creditworthiness of an issuer.
Companies that issue certain of these securities often are highly leveraged
and may not have available to them more traditional methods of financing.
Therefore, the risk associated with acquiring the securities of such issuers
generally is greater than is the case with the higher rated securities. For
example, during an economic downturn or a sustained period of rising interest
rates, highly leveraged issuers of these securities may not have sufficient
revenues to meet their interest payment obligations. The issuer's ability to
service its debt obligations also may be affected adversely by specific
corporate developments, forecasts, or the unavailability of additional
financing. The risk of loss because of default by the issuer is significantly
greater for the holders of these securities because such securities generally
are unsecured and often are subordinated to other creditors of the issuer.
Because there is no established retail secondary market for many of these
securities, a Fund may be able to sell such securities only to a limited number
of dealers or institutional investors. To the extent a secondary trading market
for these securities does exist, it generally is not as liquid as the secondary
market for higher rated securities. The lack of a liquid secondary market may
have an adverse impact on market price and yield and a Fund's ability to dispose
of particular issues when necessary to meet the Fund's liquidity needs or in
response to a specific economic event such as a deterioration in the
creditworthiness of the issuer. The lack of a liquid secondary market for
certain securities also may make it more difficult for a Fund to obtain accurate
market quotations for purposes of valuing the Fund's portfolio and calculating
its net asset value. Adverse publicity and investor perceptions, whether or not
based on fundamental analysis, may decrease the values and liquidity of these
securities. In such cases, judgment may play a greater role in valuation because
less reliable, objective data may be available.
These securities may be particularly susceptible to economic downturns. It
is likely that an economic recession could disrupt severely the market for such
securities and may have an adverse impact on the value of such securities. In
addition, it is likely that any such economic downturn could adversely affect
the ability of the issuers of such securities to repay principal and pay
interest thereon and increase the incidence of default for such securities.
A Fund may acquire these securities during an initial offering. Such
securities may involve special risks because they are new issues. No Fund has
any arrangement with any persons concerning the acquisition of such securities,
and the Adviser will review carefully the credit and other characteristics
pertinent to such new issues.
NON-DIVERSIFIED STATUS. (All Funds) The classification of each Fund as a
"non-diversified" investment company means that the proportion of the Fund's
assets that may be invested in the securities of a single issuer is not limited
by the 1940 Act. A "diversified" investment company is required by the 1940 Act
generally, with respect to 75% of its total assets, to invest not more than 5%
of such assets in the securities of a single issuer. Since a relatively high
percentage of the Fund's assets may be invested in the securities of a limited
number of issuers, some of which may be in the same industry, the Fund's
portfolio may be more sensitive to changes in the market value of a single
issuer or industry. However, to meet Federal tax requirements, at the close of
each quarter the Fund may not have more than 25% of its total assets invested in
any one issuer and, with respect to 50% of its total assets, not more than 5% of
its total assets invested in any one issuer. These limitations do not apply to
U.S. Government securities.
SIMULTANEOUS INVESTMENTS. (All Funds) Investment decisions for each Fund
are made independently from those of the other Funds. If, however, such other
Funds desire to invest in, or dispose of, the same securities as a Fund,
available investments or opportunities for sales will be allocated equitably to
each Fund. In some cases, this procedure may adversely affect the size of the
position obtained for or disposed of by the Fund or the price paid or received
by the Fund.
INVESTMENT RESTRICTIONS
Each Fund's investment objective is a fundamental policy, which cannot be
changed without approval by the holders of a majority (as defined in the 1940
Act) of the Fund's outstanding voting shares. In addition, each Fund has adopted
investment restrictions numbered 1 through 7 as fundamental policies. Each Fund
has adopted investment restrictions numbered 8 through 10 as non-fundamental
policies which may be changed by vote of a majority of the Company's Board
members at any time. No Fund may:
1. Invest more than 25% of the value of its total assets in the securities
of issuers in any single industry, provided that there shall be no limitation on
the purchase of obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities or, with respect to the Communications Technology
Fund and Media Technology Fund, securities issued by companies in the
telecommunications and media industries, respectively.
2. Invest in commodities, except that the Fund may purchase and sell
options, forward contracts, futures contracts, including those relating to
indices, and options on futures contracts or indices.
3. Purchase, hold or deal in real estate, or oil, gas or other mineral
leases or exploration or development programs, but the Fund may purchase and
sell securities that are secured by real estate or issued by companies that
invest or deal in real estate or real estate investment trusts.
4. Borrow money, except to the extent permitted under the 1940 Act (which
currently limits borrowing to no more than 33-1/3% of the value of the Fund's
total assets). For purposes of this Investment Restriction, the entry into
options, forward contracts, futures contracts, including those relating to
indices, and options on futures contracts or indices shall not constitute
borrowing.
5. Lend any securities or make loans to others, if, as a result, more than
33-1/3% of its total assets would be lent to others, except that this limitation
does not apply to the purchase of debt obligations and the entry into repurchase
agreements. However, the Fund may lend its portfolio securities in an amount not
to exceed 33-1/3% of the value of its total assets. Any loans of portfolio
securities will be made according to guidelines established by the Securities
and Exchange Commission and the Company's Board.
6. Act as an underwriter of securities of other issuers, except to the
extent the Fund may be deemed an underwriter under the Securities Act of 1933,
as amended, by virtue of disposing of portfolio securities.
7. Issue any senior security (as such term is defined in Section 18(f) of
the 1940 Act), except to the extent the activities permitted in Investment
Restriction Nos. 4, 6, 10 and 11 may be deemed to give rise to a senior
security.
8. Purchase securities on margin, but the Fund may make margin deposits in
connection with transactions in options, forward contracts, futures contracts,
including those relating to indices, and options on futures contracts or
indices.
9. Pledge, mortgage or hypothecate its assets, except to the extent
necessary to secure permitted borrowings and to the extent related to the
purchase of securities on a when-issued or forward commitment basis and the
deposit of assets in escrow in connection with writing covered put and call
options and collateral and initial or variation margin arrangements with respect
to options, forward contracts, futures contracts, including those relating to
indices, and options on futures contracts or indices.
10. Enter into repurchase agreements providing for settlement in more than
seven days after notice or purchase securities which are illiquid, if, in the
aggregate, more than 15% of the value of the Fund's net assets would be so
invested.
If a percentage restriction is adhered to at the time of investment, a
later change in percentage resulting from a change in values or assets will not
constitute a violation of such restriction. With respect to Investment
Restriction No. 4, however, if borrowings exceed 33-1/3% of the value of the
Fund's total assets as a result of a change in values or assets, the Fund must
take steps to reduce such borrowings at least to the extent of such excess.
MANAGEMENT OF THE COMPANY
The Company's Board is responsible for the management and supervision of
each Fund. The Board approves all significant agreements with those companies
that furnish services to the Funds. These companies are as follows:
MetaMarkets Investments LLC.................... Investment Adviser
BISYS Fund Services Ohio, Inc. ................ Distributor, Administrator and
Transfer Agent
Investors Bank & Trust Company ................ Custodian
Board members and officers of the Company, together with information as to
their principal business occupations during at least the last five years, are
shown below. Each Board member who is an "interested person" of the Company, as
defined in the 1940 Act, is indicated by an asterisk.
Name, Address Position(s) Held Principal Occupation(s)
AND AGE WITH COMPANY DURING PAST 5 YEARS
- ------------------------- ------------------------ -------------------
[To Come]
For so long as the Distribution Plan described in the section captioned
"Management Arrangements--Distribution Plan" remains in effect, the Board
members who are not "interested persons" of the Company, as defined in the 1940
Act, will be selected and nominated by the Board members who are not "interested
persons" of the Company.
The Company does not pay any remuneration to its officers and Board members
other than fees and expenses to those Board members who are not directors,
officers or employees of the Adviser or the Administrator or any of their
affiliates. The aggregate amount of compensation estimated to be paid to each
such Board member by the Company for the fiscal year ending December 31, 1999 is
as follows:
Total Compensation
Aggregate Pension or Retirement From Fund and
Name of Board Compensation from Benefits Accrued As Fund Complex
Member Company Part of Fund Expenses Paid to Board Members
[To Come]
MANAGEMENT ARRANGEMENTS
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 Adviser is a newly formed entity and has no
operating history upon which investors can evaluate its performance. The
personnel of the investment adviser, however, have substantial experience in
managing investment companies, separately managed accounts and private
investment funds.
[Additional Information to Come]
The Adviser provides investment advisory services pursuant to the
Investment Advisory Agreement (the "Agreement") dated July __, 1999 with the
Company. As to each Fund, the Agreement is subject to annual approval by (i) the
Company's Board or (ii) vote of a majority (as defined in the 1940 Act) of the
outstanding voting securities of such Fund, provided that in either event the
continuance also is approved by a majority of the Board members who are not
"interested persons" (as defined in the 1940 Act) of the Company or the Adviser,
by vote cast in person at a meeting called for the purpose of voting on such
approval. The Agreement was approved by the Company's sole shareholder on July
__, 1999. As to each Fund, the Agreement is terminable without penalty, on 60
days' notice, by the Company's Board or by vote of the holders of a majority of
such Fund's shares, or, on not less than 90 days' notice, by the Adviser. The
Agreement will terminate automatically, as to the relevant Fund, in the event of
its assignment (as defined in the 1940 Act).
Under the terms of the Agreement, the Company has agreed to pay the Adviser
a monthly fee at the annual rate set forth below as a percentage of the relevant
Fund's average daily net assets.
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%
From time to time, the Adviser may waive receipt of its fees and/or
voluntarily assume certain expenses of a Fund, which would have the effect of
lowering the overall expense ratio of that Fund and increasing yield to its
investors. The Fund will not pay the Adviser at a later time for any amounts it
may waive, nor will the Fund reimburse the Adviser for any amounts it may
assume.
ADMINISTRATOR. BISYS, located at 3435 Stelzer Road, Columbus, Ohio 43219,
provides certain administrative services pursuant to the Administration
Agreement (the "Administration Agreement") dated July __, 1999 with the Company.
Under the Administration Agreement with the Company, BISYS generally assists in
all aspects of the Funds' operations, other than providing investment advice,
subject to the overall authority of the Company's Board in accordance with
Massachusetts law. In connection therewith, BISYS provides the Funds with office
facilities, personnel, and certain clerical and bookkeeping services (e.g.,
preparation of reports to shareholders and the Securities and Exchange
Commission and filing of Federal, state and local income tax returns) that are
not being furnished by the Funds' custodian. As to each Fund, the Administration
Agreement will continue until ___________, 200__ and thereafter is subject to
annual approval by (i) the Company's Board or (ii) vote of a majority (as
defined in the 1940 Act) of the outstanding voting securities of such Fund,
provided that in either event the continuance also is approved by a majority of
the Board members who are not "interested persons" (as defined in the 1940 Act)
of the Company or BISYS, by vote cast in person at a meeting called for the
purpose of voting such approval. The Administration Agreement was approved by
the Company's Board, including a majority of the Board members who are not
"interested persons" of any party to the Administration Agreement, at a meeting
held on July __, 1999. As to each Fund, the Administration Agreement is
terminable without penalty, at any time if for cause, by the Company's Board or
by vote of the holders of a majority of such Fund's outstanding voting
securities, or, on not less than 90 days' notice, by BISYS. The Administration
Agreement will terminate automatically, as to the relevant Fund, in the event of
its assignment (as defined in the 1940 Act).
As compensation for BISYS' services, the Company has agreed to pay the
Administrator a monthly administration fee at the annual rate of ___% of the
value of each Fund's average daily net assets.
DISTRIBUTOR. BISYS also acts as the exclusive distributor of each Fund's
shares on a best efforts basis pursuant to a Distribution Agreement (the
"Distribution Agreement") dated July __, 1999, with the Company. Shares are sold
on a continuous basis by BISYS as agent, although BISYS is not obliged to sell
any particular amount of shares.
DISTRIBUTION PLAN. Rule 12b-1 (the "Rule") adopted by the Securities and
Exchange Commission under the 1940 Act provides, among other things, that an
investment company may bear expenses of distributing its shares only pursuant to
a plan adopted in accordance with the Rule. The Company's Board has adopted such
a plan (the "Distribution Plan") pursuant to which each Fund pays BISYS for
distribution-related services and shareholder servicing at an annual rate of
.25% of the value of the Fund's average daily net assets. Under the Distribution
Plan, BISYS may make payments to certain financial institutions, securities
dealers and other industry professionals that have entered into agreements with
BISYS ("Service Organizations") in respect of these services. BISYS determines
the amounts to be paid to Service Organizations. Service Organizations receive
such fees in respect of the average daily value of shares owned by their
clients. From time to time, BISYS may defer or waive receipt of fees under the
Distribution Plan while retaining the ability to be paid by the Fund under the
Distribution Plan thereafter. The fees payable to BISYS under the Distribution
Plan for advertising, marketing and distributing are payable without regard to
actual expenses incurred. The Company's Board believes that there is a
reasonable likelihood that the Distribution Plan will benefit each Fund and its
shareholders.
A quarterly report of the amounts expended under the Distribution Plan, and
the purposes for which such expenditures were incurred, must be made to the
Board members for their review. In addition, the Distribution Plan provides that
it may not be amended to increase materially the costs which shareholders may
bear for distribution pursuant to the Distribution Plan without shareholder
approval and that other material amendments of the Distribution Plan must be
approved by the Company's Board, and by the Board members who are neither
"interested persons" (as defined in the 1940 Act) of the Company nor have any
direct or indirect financial interest in the operation of the Distribution Plan
or in the related Distribution Plan agreements, by vote cast in person at a
meeting called for the purpose of considering such amendments. The Distribution
Plan and related agreements are subject to annual approval by such vote of the
Board members cast in person at a meeting called for the purpose of voting on
the Distribution Plan. The Distribution Plan was approved by the Company's sole
shareholder on July __, 1999. As to each Fund, the Distribution Plan is
terminable at any time by vote of a majority of the Board members who are not
"interested persons" and who have no direct or indirect financial interest in
the operation of the Distribution Plan or in the Distribution Plan agreements or
by vote of the holders of a majority of the Fund's outstanding shares. As to
each Fund, a Distribution Plan agreement is terminable without penalty, at any
time, by such vote of the Board members, upon not more than 60 days' written
notice to the parties to such agreement or by vote of the holders of a majority
of the Fund's outstanding shares. A Distribution Plan agreement will terminate
automatically, as to the relevant Fund, in the event of its assignment (as
defined in the 1940 Act).
TRANSFER AND DIVIDEND DISBURSING AGENT AND CUSTODIAN. BISYS is the
Company's transfer and dividend disbursing agent. Under a transfer agency
agreement with the Company, BISYS arranges for the maintenance of shareholder
account records for each Fund, the handling of certain communications between
shareholders and the Fund and the payment of dividends and distributions payable
by the Fund. For these services, BISYS receives a monthly fee computed on the
basis of the number of shareholder accounts it maintains for each Fund during
the month, and is reimbursed for certain out-of-pocket expenses.
Investors Bank & Trust Company (the "Custodian") acts as custodian of the
investments of each Fund. Under a custody agreement with the Company, the
Custodian provides for the holding of each Fund's securities and the retention
of all necessary accounts and records. For its custody services, the Custodian
receives a monthly fee based on the market value of the Funds' assets held in
custody and receives certain securities transactions charges.
EXPENSES. All expenses incurred in the operation of the Company are borne
by the Company, except to the extent specifically assumed by others. The
expenses borne by the Company include: taxes, interest, brokerage fees and
commissions, if any, fees of Board members who are not officers, directors,
employees or holders of 5% or more of the outstanding voting securities of the
Adviser or the Administrator or any of their affiliates, Securities and Exchange
Commission fees, state Blue Sky qualification fees, advisory and administration
fees, charges of custodians, transfer and dividend disbursing agents' fees,
certain insurance premiums, industry association fees, auditing and legal
expenses, costs of maintaining the Company's existence, costs of independent
pricing services, costs attributable to investor services (including, without
limitation, telephone and personnel expenses), costs of calculating the net
asset value of each Fund's shares, costs of shareholders' reports and corporate
meetings, costs of preparing and printing certain prospectuses and statements of
additional information, and any extraordinary expenses. Expenses attributable to
a Fund are charged against the assets of that Fund; other expenses of the
Company are allocated among the Funds on the basis determined by the Company's,
Board including, without limitation, proportionately in relation to the net
assets of each Fund.
PURCHASE AND REDEMPTION OF SHARES
GENERAL PURCHASE INFORMATION. The minimum initial investment for each Fund
is $_____, and subsequent investments must be at least $___. The minimum initial
investment is $___ for IRAs, and subsequent investments for IRAs must be at
least $__. For full-time or part-time employees of the Adviser or any of its
affiliates, the minimum initial investment is $___, and subsequent investments
must be at least $__. For full-time or part-time employees of the Adviser or any
of its affiliates who elect to have a portion of their pay directly deposited
into their Fund accounts, the minimum initial or subsequent investment must be
at least $__. The Adviser, its affiliates and Service Organizations may impose
initial or subsequent investment minimums which are higher or lower than those
specified above and may impose different minimums for different types of
accounts or purchase arrangements. In addition, purchases of shares made in
connection with certain shareholder privileges may have different minimum
investment requirements. The Company reserves the right to reject any purchase
order in whole or in part, including purchases made with foreign checks and
third party checks not originally made payable to the order of the investor.
Share certificates will not be issued.
REOPENING AN ACCOUNT. An investor may reopen an account with a minimum
investment of $____ without filing a new account application during the calendar
year the account is closed or during the following calendar year, provided the
information on the old account application is still applicable.
REDEMPTION COMMITMENT. Each Fund has committed itself to pay in cash all
redemption requests by any shareholder of record, limited in amount during any
90-day period to the lesser of $250,000 or 1% of the value of such Fund's net
assets at the beginning of such period. Such commitment is irrevocable without
the prior approval of the Securities and Exchange Commission. In the case of
requests for redemption in excess of such amount, the Company's Board reserves
the right to make payments in whole or in part in securities or other assets in
case of an emergency or any time a cash distribution would impair the liquidity
of the Fund to the detriment of the existing shareholders. In this event, the
securities would be valued in the same manner as the Fund is valued. If the
recipient sells such securities, brokerage charges would be incurred.
SUSPENSION OF REDEMPTIONS. The right of redemption may be suspended or the
date of payment postponed (a) during any period when the New York Stock Exchange
is closed (other than customary weekend and holiday closing), (b) when trading
in the markets the Fund normally utilizes is restricted, or when an emergency
exists as determined by the Securities and Exchange Commission so that disposal
of the Fund's investments or determination of its net asset value is not
reasonably practicable, or (c) for such other periods as the Securities and
Exchange Commission by order may permit to protect the Fund's shareholders.
DETERMINATION OF NET ASSET VALUE
GENERAL. Expenses and fees, including the advisory fee and fees paid
pursuant to the Distribution Plan, are accrued daily and taken into account for
the purpose of determining the net asset value of each Fund's shares.
Each Fund's securities, including covered call options written by the Fund,
are valued at the last sale price on the securities exchange or national
securities market on which such securities primarily are traded. Securities not
listed on an exchange or national securities market, or securities in which
there were no transactions, are valued at the average of the most recent bid and
asked prices, except in the case of open short positions where the asked price
is used for valuation purposes. Bid price is used when no asked price is
available. Any assets or liabilities initially expressed in terms of foreign
currency will be translated into dollars at the midpoint of the New York
interbank market spot exchange rate as quoted on the day of such translation by
the Federal Reserve Bank of New York or if no such rate is quoted on such date,
at the exchange rate previously quoted by the Federal Reserve Bank of New York
or at such other quoted market exchange rate as may be determined to be
appropriate by the Adviser. Forward currency contracts will be valued at the
current cost of offsetting the contract. Debt securities maturing in 60 days or
less generally are carried at amortized cost, which approximates value, except
where to do so would not reflect accurately their fair value, in which case such
securities would be valued at their fair value as determined under the
supervision of the Company's Board. Any securities or other assets for which
recent market quotations are not readily available are valued at fair value as
determined in good faith by the Company's Board.
Restricted securities, as well as securities or other assets for which
market quotations are not readily available, or are not valued by a pricing
service approved by the Company's Board are valued at fair value as determined
in good faith by the Board. The Company's Board will review the method of
valuation on a current basis. In making their good faith valuation of restricted
securities, the Board members generally will take the following factors into
consideration: restricted securities which are, or are convertible into,
securities of the same class of securities for which a public market exists
usually will be valued at market value less the same percentage discount at
which purchased. This discount will be revised periodically by the Company's
Board if the Board members believe that it no longer reflects the value of the
restricted securities. Restricted securities not of the same class as securities
for which a public market exists usually will be valued initially at cost. Any
subsequent adjustment from cost will be based upon considerations deemed
relevant by the Company's Board.
SHAREHOLDER SERVICES AND PRIVILEGES
The services and privileges described under this heading may not be
available to clients of certain Service Organizations, and some Service
Organizations may impose certain conditions on their clients which are different
from those described in the Prospectus or this Statement of Additional
Information. Such investors should consult their Service Organization in this
regard.
EXCHANGE PRIVILEGE. The Exchange Privilege enables you to purchase, in
exchange for shares of a Fund, shares of another Fund. The shares being
exchanged must have a current value of at least $500; furthermore, when
establishing a new account by exchange, the shares being exchanged must have a
value of at least the minimum initial investment required for the Fund into
which the exchange is being made.
Shares will be exchanged at the next determined net asset value. No fees
currently are charged shareholders directly in connection with exchanges
although the Company reserves the right, upon not less than 60 days' written
notice, to charge shareholders a nominal administrative fee in accordance with
rules promulgated by the Securities and Exchange Commission. The Company
reserves the right to reject any exchange request in whole or in part. The
Exchange Privilege may be modified or terminated at any time upon notice to
shareholders.
The exchange of shares of one Fund for shares of another is treated for
Federal income tax purposes as a sale of the shares given in exchange by the
shareholder and, therefore, an exchanging shareholder may realize a taxable gain
or loss.
AUTOMATIC INVESTMENT PLAN. The Automatic Investment Plan permits you to
purchase shares of a Fund (minimum initial investment of $_____ and minimum
subsequent investments of $___ per transaction) at regular intervals selected by
you. Provided your bank or other financial institution allows automatic
withdrawals, shares may be purchased by transferring funds from the bank account
designated by you. At your option, the account designated will be debited in the
specified amount, and shares will be purchased, once a month, on either the
first or fifteenth day, or twice a month, on both days. Only an account
maintained at a domestic financial institution which is an Automated Clearing
House member may be so designated. This service enables you to make regularly
scheduled investments and may provide you with a convenient way to invest for
long-term financial goals. You should be aware, however, that periodic
investment plans do not guarantee a profit and will not protect an investor
against loss in a declining market. To establish an Automatic Investment Plan
account, you must check the appropriate box and supply the necessary information
on the account application. You may cancel your participation in the Automatic
Investment Plan or change the amount of purchase at any time by accessing the
Company's Website at http://www.MetaMarkets.com and following the relevant
instructions, and your cancellation will be effective three business days
following receipt. The Company may modify or terminate the Automatic Investment
Plan at any time or charge a service fee. No such fee currently is contemplated.
DIRECTED DISTRIBUTION PLAN. The Directed Distribution Plan enables you to
invest automatically dividends and capital gain distributions, if any, paid by a
Fund in shares of another Fund of which you are a shareholder. Shares of the
other Fund will be purchased at the then-current net asset value. Minimum
subsequent investments do not apply. Investors desiring to participate in the
Directed Distribution Plan should check the appropriate box and supply the
necessary information on the account application. The Plan is available only for
existing accounts and may not be used to open new accounts. The Company may
modify or terminate the Directed Distribution Plan at any time or charge a
service fee. No such fee currently is contemplated.
PERFORMANCE INFORMATION
Average annual total return is calculated by determining the ending
redeemable value of an investment purchased with a hypothetical $1,000 payment
made at the beginning of the period (assuming the reinvestment of dividends and
distributions), dividing by the amount of the initial investment, taking the
"n"th root of the quotient (where "n" is the number of years in the period) and
subtracting 1 from the result.
Total return is calculated by subtracting the amount of a Fund's net asset
value per share at the beginning of a stated period from the net asset value per
share at the end of the period (after giving effect to the reinvestment of
dividends and distributions during the period), and dividing the result by the
net asset value per share at the beginning of the period.
From time to time, advertising materials for a Fund may refer to or discuss
current or past business, political, economic or financial conditions, such as
U.S. monetary or fiscal policies and actual or proposed tax legislation. In
addition, from time to time, advertising materials for a Fund may include
information concerning retirement and investing for retirement, average life
expectancy and pension and social security benefits. Comparative performance
information may be used from time to time in advertising or marketing each
Fund's shares, including data from Lipper Analytical Services, Inc.,
Morningstar, Inc., S&P 500 Index, Russell 2000 Index, EAFE Index, the Dow Jones
Industrial Average, CDA/Wiesenberger Investment Companies Service, Mutual Fund
Values; Mutual Fund Forecaster, Mutual Fund Investing and other industry
publications.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund intends to qualify as a "regulated investment company" under the
Internal Revenue Code of 1986, as amended (the "Code"), if such qualification is
in the best interests of its shareholders. To qualify as a regulated investment
company, the Fund must pay out to its shareholders at least 90% of its net
income (consisting of net investment income and net short-term capital gain),
and must meet certain asset diversification and other requirements.
Qualification as a regulated investment company relieves the Fund from any
liability for Federal income taxes to the extent its earnings are distributed in
accordance with the applicable provisions of the Code. If a Fund did not qualify
as a regulated investment company, it would be treated for tax purposes as an
ordinary corporation subject to Federal income tax. The term "regulated
investment company" does not imply the supervision of management or investment
practices or policies by any government agency.
Any dividend or distribution paid shortly after an investor's purchase may
have the effect of reducing the aggregate net asset value of his shares below
the cost of his investment. Such a distribution would be a return on investment
in an economic sense although taxable as stated in the Prospectus. In addition,
the Code provides that if a shareholder holds shares for six months or less and
has received a capital gain dividend with respect to such shares, any loss
incurred on the sale of such shares will be treated as a long-term capital loss
to the extent of the capital gain dividend received.
Depending upon the composition of a Fund's income, the entire amount or a
portion of the dividends paid by the Fund from net investment income may qualify
for the dividends received deduction allowable to qualifying U.S. corporate
shareholders ("dividends received deduction"). In general, dividend income from
a Fund distributed to qualifying corporate shareholders will be eligible for the
dividends received deduction only to the extent that such Fund's income consists
of dividends paid by U.S. corporations. However, Section 246(c) of the Code
generally provides that if a qualifying corporate shareholder has disposed of
Fund shares held for less than 46 days, which 46 days generally must be during
the 90-day period commencing 45 days before the shares become ex-dividend, and
has received a dividend from net investment income with respect to such shares,
the portion designated by the Fund as qualifying for the dividends received
deduction will not be eligible for such shareholder's dividends received
deduction. In addition, the Code provides other limitations with respect to the
ability of a qualifying corporate shareholder to claim the dividends received
deduction in connection with holding Fund shares.
Ordinarily, gains and losses realized from portfolio transactions will be
treated as capital gains and losses. However, a portion of the gain or loss
realized from the disposition of non-U.S. dollar denominated securities
(including debt instruments, certain financial futures and options, and certain
preferred stock) may be treated as ordinary income or loss under Section 988 of
the Code. Finally, all or a portion of the gain realized from engaging in
"conversion transactions" may be treated as ordinary income under Section 1258.
"Conversion transactions" are defined to include certain forward, futures,
option and "straddle" transactions, transactions marketed or sold to produce
capital gains, or transactions described in Treasury regulations to be issued in
the future.
Under Section 1256 of the Code, any gain or loss realized by the Fund from
certain financial futures and options transactions (other than those taxed under
Section 988 of the Code) will be treated as 60% long-term capital gain or loss
and 40% short-term capital gain or loss. Gain or loss will arise upon the
exercise or lapse of such futures and options as well as from closing
transactions. In addition, any such futures or options remaining unexercised at
the end of the Fund's taxable year will be treated as sold for their then fair
market value, resulting in additional gain or loss to the Fund characterized as
described above.
Offsetting positions held by a Fund involving financial futures and options
may constitute "straddles." Straddles are defined to include "offsetting
positions" in actively traded personal property. The tax treatment of straddles
is governed by Sections 1092 and 1258 of the Code, which, in certain
circumstances, override or modify the provisions of Sections 988 and 1256 of the
Code. If the Fund was treated as entering into straddles by reason of its
futures or options transactions, such straddles could be characterized as "mixed
straddles" if the futures or options transactions comprising such straddles were
governed by Section 1256. The Fund may make one or more elections with respect
to "mixed straddles." Depending upon which election is made, if any, the results
to the Fund may differ. If no election is made, to the extent the straddle rules
apply to positions established by the Fund, losses realized by the Fund will be
deferred to the extent of unrealized gain in any offsetting positions. Moreover,
as a result of the straddle rules, short-term capital loss on straddle positions
may be recharacterized as long-term capital loss, and long-term capital gain on
straddle positions may be treated as short-term capital gain or ordinary income.
The Taxpayer Relief Act of 1997 included constructive sale provisions that
generally apply if a Fund either (1) holds an appreciated financial position
with respect to stock, certain debt obligations, or partnership interests
("appreciated financial position") and then enters into a short sale, futures,
forward, or offsetting notional principal contract (collectively, a "Contract")
respecting the same or substantially identical property or (2) holds an
appreciated financial position that is a Contract and then acquires property
that is the same as or substantially identical to the underlying property. In
each instance, with certain exceptions, the Fund generally will be taxed as if
the appreciated financial position were sold at its fair market value on the
date the Fund enters into the financial position or acquires the property,
respectively. Transactions that are identified hedging or straddle transactions
under other provisions of the Code can be subject to the constructive sale
provisions.
Investment by a Fund in securities issued or acquired at a discount, or
providing for deferred interest or for payment of interest in the form of
additional obligations could under special tax rules affect the amount, timing
and character of distributions to shareholders by causing such Fund to recognize
income prior to the receipt of cash payments. For example, the Fund could be
required to accrue a portion of the discount (or deemed discount) at which the
securities were issued each year and to distribute such income in order to
maintain its qualifica tion as a regulated investment company. In such case, the
Fund may have to dispose of securities which it might otherwise have continued
to hold in order to generate cash to satisfy these distribution requirements.
PORTFOLIO TRANSACTIONS
The Adviser is responsible for the selection of brokers to effect
securities transactions and the negotiation of brokerage commissions, if any.
Purchases and sale of securities on a securities exchange are effected through
brokers who charge a negotiated commission for their services. Transactions are
allocated to various dealers by the Funds' investment personnel in their best
judgment. The primary consideration is prompt and effective execution of orders
at the most favorable price. Subject to that primary consideration, dealers may
be selected to act on an agency basis for research, statistical or other
services to enable the Adviser to supplement its own research and analysis with
the views and information of other securities firms. The allocation of brokerage
transactions also may take into account a broker's sales of Fund shares.
To the extent research services are furnished by brokers through which a
Fund effects securities transactions, the Adviser may use such information in
advising other funds or accounts it advises and, conversely, to the extent
research services are furnished to the Adviser by brokers in connection with
other funds or accounts the Adviser advises, the Adviser also may use such
information in advising the Funds. Although it is not possible to place a dollar
value on these services, if they are provided, it is the opinion of the Adviser
that the receipt and study of any such services should not reduce the overall
expenses of its research department.
The overall reasonableness of brokerage commissions paid is evaluated by
the Adviser based upon its knowledge of available information as to the general
level of commissions paid by other institutional investors for comparable
services. The Funds may pay commission rates in excess of those another broker
or dealer would have charged for effecting the same transaction, if the Adviser
determines in good faith that the commission paid is reasonable in relation to
the value of the brokerage and research services provided.
When transactions are executed in the over-the-counter market, the Adviser
will deal with the primary market makers unless a more favorable price or
execution otherwise is obtainable.
INFORMATION ABOUT THE COMPANY AND THE FUNDS
Each share has one vote and shareholders will vote in the aggregate, except
as otherwise required by law. Each Fund share, when issued and paid for in
accordance with the terms of the offering, is fully paid and non-assessable.
Shares have no preemptive, conversion or subscription rights and are freely
transferable.
Under Massachusetts law, shareholders could, under certain circumstances,
be held personally liable for the obligations of a Massachusetts business trust.
However, the Company's Agreement and Declaration of Trust ("Trust Agreement")
disclaims shareholder liability for acts or obligations of the Company and
requires that notice of such disclaimer be given in each agreement, obligation
or instrument entered into or executed by the Company or a Board member. The
Trust Agreement provides for indemnification from the Fund's property for all
losses and expenses of any shareholder held personally liable for the
obligations of the Fund. Thus, the risk of a shareholder's incurring financial
loss on account of shareholder liability is limited to circumstances in which
the Fund itself would be unable to meet its obligations, a possibility which
management believes is remote. Upon payment of any liability incurred by the
Fund, the shareholder paying such liability will be entitled to reimbursement
from the general assets of the Fund. The Company intends to conduct its
operations in such a way so as to avoid, as far as possible, ultimate liability
of the shareholders for liabilities of the Fund.
Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for the Company to hold annual meetings of shareholders. As a result,
shareholders may not consider each year the election of Board members or the
appointment of auditors. However, the holders of at least 10% of the shares
outstanding and entitled to vote may require the Company to hold a special
meeting of shareholders for purposes of removing a Board member from office.
Shareholders may remove a Board member by the affirmative vote of two-thirds of
the Company's outstanding voting shares. In addition, the Company's Board will
call a meeting of shareholders for the purpose of electing Board members if, at
any time, less than a majority of the Board members then holding office have
been elected by shareholders.
The Company is a "series fund," which is a mutual fund divided into
separate portfolios, each of which is treated as a separate entity for certain
matters under the 1940 Act and for other purposes. A shareholder of one
portfolio is not deemed to be a shareholder of any other portfolio. For certain
matters shareholders vote together as a group; as to others they vote separately
by portfolio. From time to time, other portfolios may be established and sold
pursuant to other offering documents.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted under the provisions of the 1940 Act or applicable state law or
otherwise, to the holders of the outstanding voting securities of an investment
company, such as the Company, will not be deemed to have been effectively acted
upon unless approved by the holders of a majority of the outstanding shares of
each series affected by such matter. Rule 18f-2 further provides that a series
shall be deemed to be affected by a matter unless it is clear that the interests
of each series in the matter are identical or that the matter does not affect
any interest of such series. However, the Rule exempts the election of board
members from the separate voting requirements of the Rule.
To date, four series have been authorized. All consideration received by
the Company for shares of one of the series, and all assets in which such
consideration is invested, belong to that series (subject only to the rights of
creditors of the Company) and will be subject to the liabilities related
thereto. The income attributable to, and expenses of, one series are treated
separately from those of the other series.
Each Fund will post its annual and semi-annual financial statements on the
MetaMarkets.com Website and e-mail notice of such postings to all its
shareholders.
COUNSEL AND INDEPENDENT AUDITORS
Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, New York
10038-4982, as counsel for the Company, has rendered its opinion as to certain
legal matters regarding the due authorization and valid issuance of the shares
being sold pursuant to the Prospectus.
_________________________________________, independent auditors, have been
selected as each Fund's auditors.
<PAGE>
APPENDIX
Description of S&P, Moody's, Fitch and Duff ratings:
S&P
BOND RATINGS
AAA
Bonds rated AAA have the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA
Bonds rated AA have a very strong capacity to pay interest and repay
principal an from the highest rated issues only in small degree.
A
Bonds rated A have a strong capacity to pay interest and repay principal
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than obligations in higher rated
categories.
BBB
Bonds rated BBB are regarded as having an adequate capacity to pay interest
and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than bonds in higher rated categories.
BB
Bonds rated BB have less near-term vulnerability to default than other
speculative grade debt. However, they face major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could lead
to inadequate capacity to meet timely interest and principal payments.
B
Bonds rated B have a greater vulnerability to default but presently have
the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions would likely impair capacity or
willingness to pay interest and repay principal.
Bonds rated CCC have a current identifiable vulnerability to default and
are dependent upon favorable business, financial and economic conditions to meet
timely payments of interest and repayment of principal. In the event of adverse
business, financial or economic conditions, they are not likely to have the
capacity to pay interest and repay principal.
CC
The rating CC is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC rating.
C
The rating C is typically applied to debt subordinated to senior debt which
is assigned an actual or implied CCC- debt rating.
D
Bonds rated D are in default, and payment of interest and/or repayment of
principal is in arrears.
S&P's letter ratings may be modified by the addition of a plus (+) or a
minus (-) sign designation, which is used to show relative standing within the
major rating categories, except in the AAA (Prime Grade) category.
COMMERCIAL PAPER RATING
An S&P commercial paper rating is a current assessment of the likelihood of
timely payment of debt having an original maturity of no more than 365 days.
Issues assigned an A rating are regarded as having the greatest capacity for
timely payment. Issues in this category are delineated with the numbers 1, 2 and
3 to indicate the relative degree of safety.
A-1
This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus (+)
designation.
A-2
Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues designated
A-1.
A-3
Issues carrying this designation have a satisfactory capacity for timely
payment. They are, however, somewhat more vulnerable to the adverse effects of
changes in circumstances than obligations carrying the higher designations.
B
Issues carrying this designation are regarded as having only speculative
capacity for timely payment.
C
This designation is assigned to short-term obligations with doubtful
capacity for payment.
D
Issues carrying this designation are in default, and payment of interest
and/or repayment of principal is in arrears.
Moody's
BOND RATINGS
Aaa
Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and generally are referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa
Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what generally are known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.
A
Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa
Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba
Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and, therefore, not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B
Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa
Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca
Bonds which are rated Ca present obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C
Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within the major rating categories, except in the Aaa category and in
the categories below B. The modifier 1 indicates a ranking for the security in
the higher end of a rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates a ranking in the lower end of a rating
category.
COMMERCIAL PAPER RATING
The rating Prime-1 (P-1) is the highest commercial paper rating assigned by
Moody's. Issuers of P-1 paper must have a superior capacity for repayment of
short-term promissory obligations, and ordinarily will be evidenced by leading
market positions in well established industries, high rates of return on funds
employed, conservative capitalization structures with moderate reliance on debt
and ample asset protection, broad margins in earnings coverage of fixed
financial charges and high internal cash generation, and well established access
to a range of financial markets and assured sources of alternate liquidity.
Issuers (or related supporting institutions) rated Prime-2 (P-2) have a
strong capacity for repayment of short-term promissory obligations. This
ordinarily will be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternate liquidity is
maintained.
Issuers (or related supporting institutions) rated Prime-3 (P-3) have an
acceptable capacity for repayment of short-term promissory obligations. The
effect of industry characteristics and market composition may be more
pronounced. Variability in earnings and profitability may result in changes in
the level of debt protection measurements and the requirements for relatively
high financial leverage. Adequate alternate liquidity is maintained.
Issuers (or related supporting institutions) rated Not Prime do not fall
within any of the Prime rating categories.
Fitch
BOND RATING
The ratings represent Fitch's assessment of the issuer's ability to meet
the obligations of specific debt issue or class of debt. The ratings take into
consideration special features of the issue, its relationship to other
obligations of the issuer, the current financial condition and operative
performance of the issuer and of any guarantor, as well as the political and
economic environment that might affect the issuer's future financial strength
and credit quality.
AAA
Bonds rated AAA are considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to pay interest
and repay principal, which is unlikely to be affected by reasonably foreseeable
events.
AA
Bonds rated AA are considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay principal is
very strong, although not quite as strong as bonds rated AAA. Because bonds
rated in the AAA and AA categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is generally
rated F1+.
A
Bonds rated A are considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is considered
to be strong, but may be more vulnerable to adverse changes in economic
conditions and circumstances than bonds with higher ratings.
BBB
Bonds rated BBB are considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have an adverse impact on these bonds
and, therefore, impair timely payment. The likelihood that the ratings of these
bonds will fall below investment grade is higher than for bonds with higher
ratings.
BB
Bonds rated BB are considered speculative. The obligor's ability to pay
interest and repay principal may be affected over time by adverse economic
changes. However, business and financial alternatives can be identified which
could assist the obligor in satisfying its debt service requirements.
B
Bonds rated B are considered highly speculative. While bonds in this class
are currently meeting debt service requirements, the probability of continued
timely payment of principal and interest reflects the obligor's limited margin
of safety and the need for reasonable business and economic activity throughout
the life of the issue.
CCC
Bonds rated CCC have certain identifiable characteristics, which, if not
remedied, may lead to default. The ability to meet obligations requires an
advantageous business and economic environment.
CC
Bonds rated CC are minimally protected. Default in payment of interest
and/or principal seems probable over time.
C
Bonds rated C are in imminent default in payment of interest or principal.
DDD, DD and D
Bonds rated DDD, DD and D are in actual default of interest and/or
principal payments. Such bonds are extremely speculative and should be valued on
the basis of their ultimate recovery value in liquidation or reorganization of
the obligor. DDD represents the highest potential for recovery on these bonds
and D represents the lowest potential for recovery.
Plus (+) and minus (-) signs are used with a rating symbol to indicate the
relative position of a credit within the rating category. Plus and minus signs,
however, are not used in the AAA category covering 12 to 36 months.
SHORT-TERM RATINGS
Fitch's short-term ratings apply to debt obligations that are payable on
demand or have original maturities of up to three years, including commercial
paper, certificates of deposit, medium-term notes, and municipal and investment
notes.
Although the credit analysis is similar to Fitch's bond rating analysis,
the short-term rating places greater emphasis than bond ratings on the existence
of liquidity necessary to meet the issuer's obligations in a timely manner.
F-1+
Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1
Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated F-1+.
F-2
Good Credit Quality. Issues carrying this rating have a satisfactory degree
of assurance for timely payments, but the margin of safety is not as great as
the F-1+ and F-1 categories.
F-3
Fair Credit Quality. Issues assigned this rating have characteristics
suggesting that the degree of assurance for timely payment is adequate; however,
near-term adverse changes could cause these securities to be rated below
investment grade.
F-S
Weak Credit Quality. Issues assigned this rating have characteristics
suggesting a minimal degree of assurance for timely payment and are vulnerable
to near-term adverse changes in financial and economic conditions.
D
Default. Issues assigned this rating are in actual or imminent payment
default.
Duff
BOND RATINGS
AAA
Bonds rated AAA are considered highest credit quality. The risk factors are
negligible, being only slightly more than for risk-free U.S. Treasury debt.
AA
Bonds rated AA are considered high credit quality. Protection factors are
strong. Risk is modest but may vary slightly from time to time because of
economic conditions.
A
Bonds rated A have protection factors which are average but adequate.
However, factors are more variable and greater in periods of economic stress.
BBB
Bonds rated BBB are considered to have below average protection factors but
still considered sufficient for prudent investment. There may be considerable
variability in risk for bonds in this category during economic cycles.
BB
Bonds rated BB are below investment grade but are deemed by Duff as likely
to meet obligations when due. Present or prospective financial protection
factors fluctuate according to industry conditions or company fortunes. Overall
quality may move up or down frequently within the category.
B
Bonds rated B are below investment grade and possess the risk that
obligations will not be met when due. Financial protection factors will
fluctuate widely according to economic cycles, industry conditions and/or
company fortunes. Potential exists for frequent changes in quality rating within
this category or into a higher or lower quality rating grade.
CCC
Bonds rated CCC are well below investment grade securities. Such bonds may
be in default or have considerable uncertainty as to timely payment of interest,
preferred dividends and/or principal. Protection factors are narrow and risk can
be substantial with unfavorable economic or industry conditions and/or with
unfavorable company developments.
DD
Defaulted debt obligations. Issuer has failed to meet scheduled principal
and/or interest payments.
Plus (+) and minus (-) signs are used with a rating symbol (except AAA) to
indicate the relative position of a credit within the rating category.
COMMERCIAL PAPER RATING
The rating Duff-1 is the highest commercial paper rating assigned by Duff.
Paper rated Duff-1 is regarded as having very high certainty of timely payment
with excellent liquidity factors which are supported by ample asset protection.
Risk factors are minor. Paper rated Duff-2 is regarded as having good certainty
of timely payment, good access to capital markets and sound liquidity factors
and company fundamentals. Risk factors are small. Paper rated Duff-3 is regarded
as having satisfactory liquidity and other protection factors. Risk factors are
larger and subject to more variation. Nevertheless, timely payment is expected.
Paper rated Duff-4 is regarded as having speculative investment characteristics.
Liquidity is not sufficient to insure against disruption in debt service.
Operating factors and market access may be subject to a high degree of
variation. Paper rated Duff-5 is in default. The issuer has failed to meet
scheduled principal and/or interest payments.
<PAGE>
FINANCIAL STATEMENT AND REPORT OF INDEPENDENT AUDITORS
METAMARKETS.COM FUNDS
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
______________, 1999
<TABLE>
<CAPTION>
Communications Media
[New Name] Aggressive Technology Technology
FUND GROWTH FUND FUND FUND
ASSETS
<S> <C> <C> <C> <C>
Cash................................... $ $ $ $
============= ============= ============= ===========
LIABILITIES AND CAPITAL:
NET ASSETS applicable to the
shares of beneficial
interest ($.001 par value)
issued and outstanding
(unlimited number of
shares authorized)..................... $ $ $ $
============= ============= ============= ============
SHARES OUTSTANDING.........................
NET ASSET VALUE
PER SHARE.............................. $ $ $ $
============= ============= ============= ============
</TABLE>
NOTE 1 - MetaMarkets.com Funds (the "Company") is organized as a Massachusetts
business trust and has had no operations as of the date hereof other than
matters relating to its organization and registration as an open-end investment
company under the Investment Company Act of 1940, as amended, and the Securities
Act of 1933, as amended, and the sale and issuance of __________ shares of
beneficial interest of each of the above-named series of the Company (each, a
"Fund") to MetaMarkets Investments LLC (the "Adviser").
Pursuant to an investment advisory agreement with the Adviser, the investment
advisory fee is computed at an annual rate based on the value of the average
daily net assets of each Fund and is payable monthly. Expenses related to the
organization of the Company have been borne by the Adviser.
NOTE 2 - Each Fund intends to qualify as a "regulated investment company" and as
such (and by complying with the applicable provisions of the Internal Revenue
Code of 1986, as amended) will not be subject to Federal income tax on taxable
income (including realized capital gain) that is distributed to shareholders.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
[TO COME]
<PAGE>
PART C. OTHER INFORMATION
Item 23.
(a) Agreement and Declaration of Trust.
(b) Bylaws.
(d)(1) Investment Advisory Agreement.
(2) Administration Agreement.*
(e) Distribution Agreement.*
(g) Custody Agreement.*
(i) Opinion and consent of Registrant's counsel.*
(j) Consent of Independent Auditors.*
(m) Plan of Distribution pursuant to Rule 12b-1.*
- -----------------------
* To be filed by amendment.
Item 24. Persons Controlled By or Under Common Control with Registrant
Not applicable.
Item 25. Indemnification
To be filed by amendment.
Item 26. Business and Other Connections of Investment Adviser
Registrant is fulfilling the requirement of this Item 26(a) to provide
a list of the officers and directors of MetaMarkets Investments LLC, the Fund's
investment adviser, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by
MetaMarkets Investments LLC or those of its officers and directors during the
past two years, by incorporating by reference the information contained in the
Form ADV filed with the SEC pursuant to the Investment Advisers Act of 1940 by
MetaMarkets Investments LLC (SEC File No. 801-56655).
Item 27. Principal Underwriters
(a) Other investment companies for which Registrant's principal
underwriter (exclusive distributor) acts as principal underwriter or exclusive
distributor:
American Performance Funds
AmSouth Mutual Funds
The ARCH Fund, Inc.
The BB&T Mutual Funds Group
The Coventry Group
The Empire Builder Tax Free Bond Fund
ESC Strategic Funds, Inc.
The Eureka Funds
Fountain Square Funds
Hirtle Callaghan Trust
HSBC Family of Funds
The Infinity Mutual Funds, Inc.
INTRUST Funds Trust
The Kent Funds
Magna Funds
Meyers Investment Trust
MMA Praxis Mutual Funds
M.S.D.&T. Funds
Pacific Capital Funds
Parkstone Group of Funds
The Parkstone Advantage Fund
Pegasus Funds
The Republic Funds Trust
The Republic Advisors Funds Trust
The Riverfront Funds, Inc.
SBSF Funds, Inc. dba Key Mutual Funds
Sefton Funds
The Sessions Group
Summit Investment Trust
Variable Insurance Funds
The Victory Portfolios
The Victory Variable Funds
Vintage Mutual Funds, Inc.
(b) The information required by this Item 27(b) regarding each director
or officer of BISYS Fund Services Limited Partnership is incorporated by
reference to Schedule A of Form BD filed pursuant to the Securities Exchange Act
of 1934 (SEC File No. 8-32480).
Item 28. Location of Accounts and Records
To be filed by amendment.
Item 29. Management Services
Not Applicable.
Item 30. Undertakings
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, and State of New York, on the 16th day of
July, 1999.
METAMARKETS.COM FUNDS
(Registrant)
By: /s/ Donald L. Luskin
DONALD L. LUSKIN, PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
/s/ Donald L. Luskin President and Treasurer
- --------------------------- (Principal Executive
DONALD L. LUSKIN Officer and Chief Financial
and Accounting Officer)
METAMARKET.COM FUNDS
Pre-Effective Amendment No. 1 to
Registration Statement on Form N-1A under
the Securities Act of 1933 and
the Investment Company Act of 1940
-----------
EXHIBITS
-----------
INDEX TO EXHIBITS
Page
(a) Agreement and Declaration of Trust
(b) By-Laws
(d)(1) Investment Advisory Agreement
EXHIBIT 23(a)
METAMARKETS.COM FUNDS
(formerly, SSL-1995-2)
Amended and Restated Agreement and Declaration of Trust
THIS AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST, made as
of the 20th day of May, 1999 by the Trustee hereunder (hereinafter with any
additional and successor trustees referred to as the "Trustees") and by the
holders of shares of beneficial interest to be issued hereunder as hereinafter
provided, hereby amends and restates in its entirety the Agreement and
Declaration of Trust dated July 24, 1995 made at Boston, Massachusetts.
W I T N E S S E T H :
WHEREAS, the Trustees have agreed to manage all property coming into
their hands as trustees of a Massachusetts business trust in accordance with the
provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they will hold all
cash, securities and other assets, which they may from time to time acquire in
any manner as Trustees hereunder IN TRUST to manage and dispose of the same upon
the following terms and conditions for the pro rata benefit of the holders from
time to time of Shares, whether or not certificated, in this Trust as
hereinafter set forth.
ARTICLE I
Name and Definitions
SECTION 1. NAME. This Trust shall be known as
"MetaMarkets.com Funds."
SECTION 2. DEFINITIONS. Whenever used herein, unless otherwise
required by the context or specifically provided:
(a) The term "Commission" shall have the meaning provided in the 1940
Act;
(b) The "Trust" refers to the Massachusetts business trust established
by this Agreement and Declaration of Trust, as amended from time to time;
(c) "Shareholder" means a record owner of Shares of the Trust;
(d) "Shares" means the equal proportionate transferable units of
interest into which the beneficial interest in the Trust shall be divided from
time to time or, if more than one series or class of Shares is authorized by the
Trustees, the equal proportionate transferable units into which each series or
class of Shares shall be divided from time to time, and includes a fraction of a
Share as well as a whole Share;
(e) The "1940 Act" refers to the Investment Company Act of 1940, and
the Rules and Regulations thereunder, all as amended from time to time;
(f) The term "Manager" is defined in Article IV, Section 5;
(g) The term "Person" shall mean an individual or any corporation,
partnership, joint venture, trust or other enterprise;
(h) "Declaration of Trust" shall mean this Agreement and Declaration
of Trust, as amended or restated from time to time;
(i) "By-Laws" shall mean the By-Laws of the Trust, as amended
from time to time;
(j) The term "series" or "series of Shares" refers to the one or more
separate investment portfolios of the Trust into which the assets and
liabilities of the Trust may be divided and the Shares of the Trust representing
the beneficial interest of Shareholders in such respective portfolios; and
(k) The term "class" or "class of Shares" refers to the division of
Shares representing any series into two or more classes as provided in Article
III, Section 1 hereof.
ARTICLE II
Purposes of Trust
This Trust is formed for the following purpose or purposes:
(a) to conduct, operate and carry on the business of an investment
company;
(b) to subscribe for, invest in, reinvest in, purchase or otherwise
acquire, hold, pledge, sell, assign, transfer, lend, write options on, exchange,
distribute or otherwise dispose of and deal in and with securities of every
nature, kind, character, type and form, including, without limitation of the
generality of the foregoing, all types of stocks, shares, futures contracts,
bonds, debentures, notes, bills and other negotiable or non-negotiable
instruments, obligations, evidences of interest, certificates of interest,
certificates of participation, certificates, interests, evidences of ownership,
guarantees, warrants, options or evidences of indebtedness issued or created by
or guaranteed as to principal and interest by any state or local government or
any agency or instrumentality thereof, by the United States Government or any
agency, instrumentality, territory, district or possession thereof, by any
foreign government or any agency, instrumentality, territory, district or
possession thereof, by any corporation organized under the laws of any state,
the United States or any territory or possession thereof or under the laws of
any foreign country, bank certificates of deposit, bank time deposits, bankers'
acceptances and commercial paper; to pay for the same in cash or by the issue of
stock, including treasury stock, bonds or notes of the Trust or otherwise; and
to exercise any and all rights, powers and privileges of ownership or interest
in respect of any and all such investments of every kind and description,
including, without limitation, the right to consent and otherwise act with
respect thereto, with power to designate one or more persons, firms,
associations or corporations to exercise any of said rights, powers and
privileges in respect of any said instruments;
(c) to borrow money or otherwise obtain credit and to secure
the same by mortgaging, pledging or otherwise subjecting as security the assets
of the Trust;
(d) to issue, sell, repurchase, redeem, retire, cancel, acquire, hold,
resell, reissue, dispose of, transfer, and otherwise deal in, Shares including
Shares in fractional denominations, and to apply to any such repurchase,
redemption, retirement, cancellation or acquisition of Shares any funds or other
assets of the appropriate series or class of Shares, whether capital or surplus
or otherwise, to the full extent now or hereafter permitted by the laws of The
Commonwealth of Massachusetts;
(e) to conduct its business, promote its purposes, and carry on its
operations in any and all of its branches and maintain offices both within and
without The Commonwealth of Massachusetts, in any and all States of the United
States of America, in the District of Columbia, and in any other parts of the
world; and
(f) to do all and everything necessary, suitable, convenient, or
proper for the conduct, promotion, and attainment of any of the businesses and
purposes herein specified or which at any time may be incidental thereto or may
appear conducive to or expedient for the accomplishment of any of such
businesses and purposes and which might be engaged in or carried on by a Trust
organized under the Massachusetts General Laws, and to have and exercise all of
the powers conferred by the laws of The Commonwealth of Massachusetts upon a
Massachusetts business trust.
The foregoing provisions of this Article II shall be construed both as
purposes and powers and each as an independent purpose and power.
ARTICLE III
Beneficial Interest
SECTION 1. SHARES OF BENEFICIAL INTEREST. The Shares of the Trust
shall be issued in one or more series as the Trustees may, without Shareholder
approval, authorize. Each series shall be preferred over all other series in
respect of the assets allocated to that series and shall represent a separate
investment portfolio of the Trust. The beneficial interest in each series at all
times shall be divided into Shares, with or without par value as the Trustees
may from time to time determine, each of which shall, except as provided in the
following sentence, represent an equal proportionate interest in the series with
each other Share of the same series, none having priority or preference over
another. The Trustees may, without Shareholder approval, divide Shares of any
series into two or more classes, Shares of each such class having such
preferences and special or relative rights and privileges (including conversion
rights, if any) as the Trustees may determine. The number of Shares authorized
shall be unlimited, and the Shares so authorized may be represented in part by
fractional shares. From time to time, the Trustees may divide or combine the
Shares of any series or class into a greater or lesser number without thereby
changing the proportionate beneficial interests in the series or class.
SECTION 2. OWNERSHIP OF SHARES. The ownership of Shares will be
recorded in the books of the Trust or a transfer agent. The record books of the
Trust or any transfer agent, as the case may be, shall be conclusive as to who
are the holders of Shares of each series and class and as to the number of
Shares of each series and class held from time to time by each. No certificates
certifying the ownership of Shares need be issued except as the Trustees may
otherwise determine from time to time.
SECTION 3. ISSUANCE OF SHARES. The Trustees are authorized, from time
to time, to issue or authorize the issuance of Shares at not less than the par
value thereof, if any, and to fix the price or the minimum price or the
consideration (in cash and/or such other property, real or personal, tangible or
intangible, as from time to time they may determine) or minimum consideration
for such Shares. Anything herein to the contrary notwithstanding, the Trustees
may issue Shares pro rata to the Shareholders of a series at any time as a stock
dividend, except to the extent otherwise required or permitted by the
preferences and special or relative rights and privileges of any classes of
Shares of that series, and any stock dividend to the Shareholders of a
particular class of Shares shall be made to such Shareholders pro rata in
proportion to the number of Shares of such class held by each of them.
All consideration received by the Trust for the issue or sale of
Shares of each series, together with all income, earnings, profits, and proceeds
thereof, including any proceeds derived from the sale, exchange or liquidation
thereof, and any funds or payments derived from any reinvestment of such
proceeds in whatever form the same may be, shall belong irrevocably to the
series of Shares with respect to which the same were received by the Trust for
all purposes, subject only to the rights of creditors, and shall be so handled
upon the books of account of the Trust and are herein referred to as "assets of"
such series.
Shares may be issued in fractional denominations to the same extent as
whole Shares, and Shares in fractional denominations shall be Shares having
proportionately to the respective fractions represented thereby all the rights
of whole Shares, including, without limitation, the right to vote, the right to
receive dividends and distributions, and the right to participate upon
liquidation of the Trust or of a particular series of Shares.
SECTION 4. NO PREEMPTIVE RIGHTS; DERIVATIVE SUITS. Shareholders shall
have no preemptive or other right to subscribe for any additional Shares or
other securities issued by the Trust. No action may be brought by a Shareholder
on behalf of the Trust or a series unless a prior demand regarding such matter
has been made on the Trustees and the Shareholders of the Trust or such series.
SECTION 5. STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY.
Shares shall be deemed to be personal property giving only the rights provided
in this instrument. Every Shareholder by virtue of having become a Shareholder
shall be held to have expressly assented and agreed to the terms hereof and to
have become a party hereto. The death of a Shareholder during the continuance of
the Trust shall not operate to terminate the same nor entitle the representative
of any deceased Shareholder to an accounting or to take any action in court or
elsewhere against the Trust or the Trustees, but only to the rights of said
decedent under this Trust. Ownership of Shares shall not entitle the Shareholder
to any title in or to the whole or any part of the Trust property or right to
call for a partition or division of the same or for an accounting, nor shall the
ownership of Shares constitute the Shareholders partners. Neither the Trust nor
the Trustees, nor any officer, employee or agent of the Trust shall have any
power to bind any Shareholder or Trustee personally or to call upon any
Shareholder for the payment of any sum of money or assessment whatsoever other
than such as the Shareholder at any time personally may agree to pay by way of
subscription for any Shares or otherwise. Every note, bond, contract or other
undertaking issued by or on behalf of the Trust shall include a recitation
limiting the obligation represented thereby to the Trust and its assets or the
assets of a particular series (but the omission of such a recitation shall not
operate to bind any Shareholder or Trustee personally).
ARTICLE IV
Trustees
SECTION 1. ELECTION. A Trustee may be elected either by the Trustees
or the Shareholders. The Trustees named herein shall serve until the first
meeting of the Shareholders or until the election and qualification of their
successors. Prior to the first meeting of Shareholders the initial Trustees
hereunder may elect additional Trustees to serve until such meeting and until
their successors are elected and qualified. The Trustees also at any time may
elect Trustees to fill vacancies in the number of Trustees. The number of
Trustees shall be fixed from time to time by the Trustees and, at or after the
commencement of the business of the Trust, shall be not less than three. Each
Trustee, whether referred to hereinafter or hereafter becoming a Trustee, shall
serve as a Trustee during the lifetime of this Trust, until such Trustee dies,
resigns, retires, or is removed, or, if sooner, until the next meeting of
Shareholders called for the purpose of electing Trustees and the election and
qualification of his successor. Subject to Section 16(a) of the 1940 Act, the
Trustees may elect their own successors and, pursuant to this Section, may
appoint Trustees to fill vacancies.
SECTION 2. POWERS. The Trustees shall have all powers necessary or
desirable to carry out the purposes of the Trust, including, without limitation,
the powers referred to in Article II hereof. Without limiting the generality of
the foregoing, the Trustees may adopt By-Laws not inconsistent with this
Declaration of Trust providing for the conduct of the business of the Trust and
may amend and repeal them to the extent that they do not reserve that right to
the Shareholders; they may fill vacancies in their number, including vacancies
resulting from increases in their own number, and may elect and remove such
officers and employ, appoint and terminate such employees or agents as they
consider appropriate; they may appoint from their own number and terminate any
one or more committees; they may employ one or more custodians of the assets of
the Trust and may authorize such custodians to employ subcustodians and to
deposit all or any part of such assets in a system or systems for the central
handling of securities, retain a transfer agent and a Shareholder servicing
agent, or both, provide for the distribution of Shares through a principal
underwriter or otherwise, set record dates, and in general delegate such
authority as they consider desirable (including, without limitation, the
authority to purchase and sell securities and to invest funds, to determine the
net income of the Trust for any period, the value of the total assets of the
Trust and the net asset value of each Share, and to execute such deeds,
agreements or other instruments either in the name of the Trust or the names of
the Trustees or as their attorney or attorneys or otherwise as the Trustees from
time to time may deem expedient) to any officer of the Trust, committee of the
Trustees, any such employee, agent, custodian or underwriter or to any Manager.
Without limiting the generality of the foregoing, the Trustees shall
have full power and authority:
(a) To invest and reinvest cash and to hold cash uninvested;
(b) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and deliver
proxies or powers of attorney to such person or persons as the Trustees shall
deem proper, granting to such person or persons such power and discretion with
relation to securities or property as the Trustees shall deem proper;
(c) To hold any security or property in a form not indicating any
trust whether in bearer, unregistered or other negotiable form or in the name of
the Trust or a custodian, subcustodian or other depository or a nominee or
nominees or otherwise;
(d) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or concern, any security of which is
held in the Trust; to consent to any contract, lease, mortgage, purchase or sale
of property by such corporation or concern, and to pay calls or subscriptions
with respect to any security held in the Trust;
(e) To join with other security holders in acting through a committee,
depositary, voting trustee or otherwise, and in that connection to deposit any
security with, or transfer any security to, any such committee, depositary or
trustee, and to delegate to them such power and authority with relation to any
security (whether or not so deposited or transferred) as the Trustees shall deem
proper, and to agree to pay, and to pay, such portion of the expenses and
compensation of such committee, depositary or trustee as the Trustees shall deem
proper;
(f) To compromise, arbitrate, or otherwise adjust claims in favor of
or against the Trust or any matter in controversy, including, but not limited
to, claims for taxes;
(g) Subject to the provisions of Article III, Section 3, to allocate
assets, liabilities, income and expenses of the Trust to a particular series of
Shares or to apportion the same among two or more series, provided that any
liabilities or expenses incurred by a particular series of Shares shall be
payable solely out of the assets of that series; and to the extent necessary or
appropriate to give effect to the preferences and special or relative rights and
privileges of any classes of Shares, to allocate assets, liabilities, income and
expenses of a series to a particular class of Shares of that series or to
apportion the same among two or more classes of Shares of that series;
(h) To enter into joint ventures, general or limited partnerships and
any other combinations or associations;
(i) To purchase and pay for entirely out of Trust property such
insurance as they may deem necessary or appropriate for the conduct of the
business, including, without limitation, insurance policies insuring the assets
of the Trust and payment of distributions and principal on its portfolio
investments, and insurance policies insuring the Shareholders, Trustees,
officers, employees, agents, investment advisers or Managers, principal
underwriters, or independent contractors of the Trust individually against all
claims and liabilities of every nature arising by reason of holding, being or
having held any such office or position, or by reason of any action alleged to
have been taken or omitted by any such person as Shareholder, Trustee, officer,
employee, agent, investment adviser or Manager, principal underwriter, or
independent contractor, including any action taken or omitted that may be
determined to constitute negligence, whether or not the Trust would have the
power to indemnify such person against such liability; and
(j) To pay pensions for faithful service, as deemed appropriate by the
Trustees, and to adopt, establish and carry out pension, profit-sharing, share
bonus, share purchase, savings, thrift and other retirement, incentive and
benefit plans, trusts and provisions, including the purchasing of life insurance
and annuity contracts as a means of providing such retirement and other
benefits, for any or all of the Trustees, officers, employees and agents of the
Trust.
Further, without limiting the generality of the foregoing, the
Trustees shall have full power and authority to incur and pay out of the
principal or income of the Trust such expenses and liabilities as may be deemed
by the Trustees to be necessary or proper for the purposes of the Trust;
PROVIDED, HOWEVER, that all expenses and liabilities incurred by or arising in
connection with a particular series of Shares, as determined by the Trustees,
shall be payable solely out of the assets of that series.
Any determination made in good faith and, so far as accounting matters
are involved, in accordance with generally accepted accounting principles by or
pursuant to the authority granted by the Trustees, as to the amount of the
assets, debts, obligations or liabilities of the Trust or a particular series or
class of Shares; the amount of any reserves or charges set up and the propriety
thereof; the time of or purpose for creating such reserves or charges; the use,
alteration or cancellation of any reserves or charges (whether or not any debt,
obligation or liability for which such reserves or charges shall have been
created shall have been paid or discharged or shall be then or thereafter
required to be paid or discharged); the price or closing bid or asked price of
any investment owned or held by the Trust or a particular series; the market
value of any investment or fair value of any other asset of the Trust or a
particular series; the number of Shares outstanding; the estimated expense to
the Trust or a particular series in connection with purchases of its Shares; the
ability to liquidate investments in an orderly fashion; and the extent to which
it is practicable to deliver a cross-section of the portfolio of the Trust or a
particular series in payment for any such Shares, or as to any other matters
relating to the issue, sale, purchase and/or other acquisition or disposition of
investments or Shares of the Trust or a particular series, shall be final and
conclusive, and shall be binding upon the Trust or such series and its
Shareholders, past, present and future, and Shares are issued and sold on the
condition and understanding that any and all such determinations shall be
binding as aforesaid.
SECTION 3. MEETINGS. At any meeting of the Trustees, a majority of the
Trustees then in office shall constitute a quorum. Any meeting may be adjourned
from time to time by a majority of the votes cast upon the question, whether or
not a quorum is present, and the meeting may be held as adjourned without
further notice.
When a quorum is present at any meeting, a majority of the Trustees
present may take any action, except when a larger vote is required by this
Declaration of Trust, the By-Laws or the 1940 Act.
Any action required or permitted to be taken at any meeting of the
Trustees or of any committee thereof may be taken without a meeting, if a
written consent to such action is signed by a majority of the Trustees or
members of any such committee then in office, as the case may be, and such
written consent is filed with the minutes of proceedings of the Trustees or any
such committee.
The Trustees or any committee designated by the Trustees may
participate in a meeting of the Trustees or such committee by means of a
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other at the same time.
Participation by such means shall constitute presence in person at a meeting.
SECTION 4. OWNERSHIP OF ASSETS OF THE TRUST. Title to all of the
assets of each series of Shares of the Trust at all times shall be considered as
vested in the Trustees.
SECTION 5. INVESTMENT ADVICE AND MANAGEMENT SERVICES. The Trustees
shall not in any way be bound or limited by any present or future law or custom
in regard to investments by trustees. The Trustees from time to time may enter
into a written contract or contracts with any person or persons (herein called
the "Manager"), including any firm, corporation, trust or association in which
any Trustee or Shareholder may be interested, to act as investment advisers
and/or managers of the Trust and to provide such investment advice and/or
management as the Trustees from time to time may consider necessary for the
proper management of the assets of the Trust, including, without limitation,
authority to determine from time to time what investments shall be purchased,
held, sold or exchanged and what portion, if any, of the assets of the Trust
shall be held uninvested and to make changes in the Trust's investments. Any
such contract shall be subject to the requirements of the 1940 Act with respect
to its continuance in effect, its termination and the method of authorization
and approval of such contract, or any amendment thereto or renewal thereof.
Any Trustee or any organization with which any Trustee may be
associated also may act as broker for the Trust in making purchases and sales of
securities for or to the Trust for its investment portfolio, and may charge and
receive from the Trust the usual and customary commission for such service. Any
organization with which a Trustee may be associated in acting as broker for the
Trust shall be responsible only for the proper execution of transactions in
accordance with the instructions of the Trust and shall be subject to no further
liability of any sort whatever.
The Manager, or any affiliate thereof, also may be a distributor for
the sale of Shares by separate contract or may be a person controlled by or
affiliated with any Trustee or any distributor or a person in which any Trustee
or any distributor is interested financially, subject only to applicable
provisions of law. Nothing herein contained shall operate to prevent any
Manager, who also acts as such a distributor, from also receiving compensation
for services rendered as such distributor.
SECTION 6. REMOVAL AND RESIGNATION OF TRUSTEES. The Trustees or the
Shareholders (by vote of 66-2/3% of the outstanding Shares entitled to vote
thereon) may remove at any time any Trustee with or without cause, and any
Trustee may resign at any time as Trustee, without penalty by written notice to
the Trust.
ARTICLE V
Shareholders' Voting Powers and Meetings
SECTION 1. VOTING POWERS. The Shareholders shall have power to vote
only (i) for the election of Trustees as provided in Article IV, Section 1, of
this Declaration of Trust; PROVIDED, HOWEVER, that no meeting of Shareholders is
required to be called for the purpose of electing Trustees unless and until such
time as less than a majority of the Trustees have been elected by the
Shareholders, (ii) for the removal of Trustees as provided in Article IV,
Section 6, (iii) with respect to any Manager as provided in Article IV, Section
5, (iv) with respect to any amendment of this Declaration of Trust as provided
in Article IX, Section 8, (v) with respect to the termination of the Trust or a
series of Shares as provided in Article IX, Section 5, and (vi) with respect to
such additional matters relating to the Trust as may be required by law, by this
Declaration of Trust, or the ByLaws of the Trust or any registration of the
Trust with the Commission or any state, or as the Trustees may consider
desirable. Each whole Share shall be entitled to one vote as to any matter on
which it is entitled to vote (except that in the election of Trustees said vote
may be cast for as many persons as there are Trustees to be elected), and each
fractional Share shall be entitled to a proportionate fractional vote.
Notwithstanding any other provision of this Declaration of Trust, on any matter
submitted to a vote of Shareholders, all Shares of the Trust then entitled to
vote shall be voted in the aggregate as a single class without regard to series
or classes of Shares, except (i) when required by the 1940 Act or when the
Trustees shall have determined that the matter affects one or more series or
classes differently Shares shall be voted by individual series or class and (ii)
when the Trustees have determined that the matter affects only the interests of
one or more series or classes then only Shareholders of such series or classes
shall be entitled to vote thereon. There shall be no cumulative voting in the
election of Trustees. Shares may be voted in person or by proxy. A proxy with
respect to Shares held in the name of two or more persons shall be valid if
executed by any one of them, unless at or prior to exercise of the proxy the
Trust receives a specific written notice to the contrary from any one of them. A
proxy purporting to be executed by or on behalf of a Shareholder shall be deemed
valid unless challenged at or prior to its exercise and the burden of proving
invalidity shall rest on the challenger. Whenever no Shares of any series or
class are issued and outstanding, the Trustees may exercise with respect to such
series or class all rights of Shareholders and may take any action required by
law, this Declaration of Trust or any By-Laws of the Trust to be taken by
Shareholders.
SECTION 2. MEETINGS. Meetings of the Shareholders may be called by the
Trustees or such other person or persons as may be specified in the By-Laws and
shall be called by the Trustees upon the written request of Shareholders owning
at least thirty percent (30%) of the outstanding Shares entitled to vote.
Shareholders shall be entitled to at least ten days' prior notice of any
meeting.
SECTION 3. QUORUM AND REQUIRED VOTE. Thirty percent (30%) of the
outstanding Shares shall be a quorum for the transaction of business at a
Shareholders' meeting, except that where any provision of law or of this
Declaration of Trust permits or requires that holders of any series or class
shall vote as a series or class, then thirty percent (30%) of the aggregate
number of Shares of that series or class entitled to vote shall be necessary to
constitute a quorum for the transaction of business by that series or class. Any
lesser number, however, shall be sufficient for adjournment and any adjourned
session or sessions may be held within 90 days after the date set for the
original meeting without the necessity of further notice. Except when a larger
vote is required by any provision of this Declaration of Trust or the By-Laws of
the Trust and subject to any applicable requirements of law, a majority of the
Shares voted shall decide any question and a plurality shall elect a Trustee,
provided that where any provision of law or of this Declaration of Trust permits
or requires that the holders of any series or class shall vote as a series or
class, then a majority of the Shares of that series or class voted on the matter
(or a plurality with respect to the election of a Trustee) shall decide that
matter insofar as that series or class is concerned.
SECTION 4. ACTION BY WRITTEN CONSENT. Any action required or permitted
to be taken at any meeting may be taken without a meeting if a consent in
writing, setting forth such action, is signed by a majority of Shareholders
entitled to vote on the subject matter thereof (or such larger proportion
thereof as shall be required by any express provision of this Declaration of
Trust) and such consent is filed with the records of the Trust.
SECTION 5. ADDITIONAL PROVISIONS. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters.
ARTICLE VI
Distributions and Redemptions
SECTION 1. DISTRIBUTIONS. The Trustees shall distribute periodically
to the Shareholders of each series of Shares an amount approximately equal to
the net income of that series, determined by the Trustees or as they may
authorize and as herein provided. Distributions of income may be made in one or
more payments, which shall be in Shares, cash or otherwise, and on a date or
dates and as of a record date or dates determined by the Trustees. At any time
and from time to time in their discretion, the Trustees also may cause to be
distributed to the Shareholders of any one or more series as of a record date or
dates determined by the Trustees, in Shares, cash or otherwise, all or part of
any gains realized on the sale or disposition of the assets of the series or all
or part of any other principal of the Trust attributable to the series. Each
distribution pursuant to this Section 1 shall be made ratably according to the
number of Shares of the series held by the several Shareholders on the record
date for such distribution, except to the extent otherwise required or permitted
by the preferences and special or relative rights and privileges of any classes
of Shares of that series, and any distribution to the Shareholders of a
particular class of Shares shall be made to such Shareholders pro rata in
proportion to the number of Shares of such class held by each of them. No
distribution need be made on Shares purchased pursuant to orders received, or
for which payment is made, after such time or times as the Trustees may
determine.
SECTION 2. DETERMINATION OF NET INCOME. In determining the net income
of each series or class of Shares for any period, there shall be deducted from
income for that period (a) such portion of all charges, taxes, expenses and
liabilities due or accrued as the Trustees shall consider properly chargeable
and fairly applicable to income for that period or any earlier period and (b)
whatever reasonable reserves the Trustees shall consider advisable for possible
future charges, taxes, expenses and liabilities which the Trustees shall
consider properly chargeable and fairly applicable to income for that period or
any earlier period. The net income of each series or class for any period may be
adjusted for amounts included on account of net income in the net asset value of
Shares issued or redeemed or repurchased during that period. In determining the
net income of a series or class for a period ending on a date other than the end
of its fiscal year, income may be estimated as the Trustees shall deem fair.
Gains on the sale or disposition of assets shall not be treated as income, and
losses shall not be charged against income unless appropriate under applicable
accounting principles, except in the exercise of the discretionary powers of the
Trustees. Any amount contributed to the Trust which is received as income
pursuant to a decree of any court of competent jurisdiction shall be applied as
required by the said decree.
SECTION 3. REDEMPTIONS. Any Shareholder shall be entitled to require
the Trust to redeem and the Trust shall be obligated to redeem at the option of
such Shareholder all or any part of the Shares owned by said Shareholder, at the
redemption price, pursuant to the method, upon the terms and subject to the
conditions hereinafter set forth:
(a) Certificates for Shares, if issued, shall be presented for
redemption in proper form for transfer to the Trust or the agent of the Trust
appointed for such purpose, and these shall be presented with a written request
that the Trust redeem all or any part of the Shares represented thereby.
(b) The redemption price per Share shall be the net asset value per
Share when next determined by the Trust at such time or times as the Trustees
shall designate, following the time of presentation of certificates for Shares,
if issued, and an appropriate request for redemption, or such other time as the
Trustees may designate in accordance with any provision of the 1940 Act, or any
rule or regulation made or adopted by any securities association registered
under the Securities Exchange Act of 1934, as amended, as determined by the
Trustees, less any applicable charge or fee imposed from time to time as
determined by the Trustees.
(c) Net asset value of each series or class of Shares (for the purpose
of issuance of Shares as well as redemptions thereof) shall be determined by
dividing:
(i) the total value of the assets of such series or class
determined as provided in paragraph (d) below less, to the extent
determined by or pursuant to the direction of the Trustees in
accordance with generally accepted accounting principles, all debts,
obligations and liabilities of such series or class (which debts,
obligations and liabilities shall include, without limitation of the
generality of the foregoing, any and all debts, obligations,
liabilities, or claims, of any and every kind and nature, fixed,
accrued and otherwise, including the estimated accrued expenses of
management and supervision, administration and distribution and any
reserves or charges for any or all of the foregoing, whether for
taxes, expenses, or otherwise, and the price of Shares redeemed but
not paid for) but excluding the Trust's liability upon its Shares and
its surplus, by
(ii) the total number of Shares of such series or class
outstanding.
The Trustees are empowered, in their absolute discretion, to establish
other methods for determining such net asset value whenever such other methods
are deemed by them to be necessary to enable the Trust to comply with applicable
law, or are deemed by them to be desirable, provided they are not inconsistent
with any provision of the 1940 Act.
(d) In determining for the purposes of this Declaration of Trust the
total value of the assets of each series or class of Shares at any time,
investments and any other assets of such series or class shall be valued in such
manner as may be determined from time to time by or pursuant to the order of the
Trustees.
(e) Payment of the redemption price by the Trust may be made either in
cash or in securities or other assets at the time owned by the Trust or partly
in cash and partly in securities or other assets at the time owned by the Trust.
The value of any part of such payment to be made in securities or other assets
of the Trust shall be the value employed in determining the redemption price.
Payment of the redemption price shall be made on or before the seventh day
following the day on which the Shares are properly presented for redemption
hereunder, except that delivery of any securities included in any such payment
shall be made as promptly as any necessary transfers on the books of the issuers
whose securities are to be delivered may be made and, except as postponement of
the date of payment may be permissible under the 1940 Act.
Pursuant to resolution of the Trustees, the Trust may deduct from the
payment made for any Shares redeemed a liquidating charge not in excess of an
amount determined by the Trustees from time to time.
(f) The right of any holder of Shares redeemed by the Trust as
provided in this Article VI to receive dividends or distributions thereon and
all other rights of such Shareholder with respect to such Shares shall terminate
at the time as of which the redemption price of such Shares is determined,
except the right of such Shareholder to receive (i) the redemption price of such
Shares from the Trust in accordance with the provisions hereof, and (ii) any
dividend or distribution to which such Shareholder previously had become
entitled as the record holder of such Shares on the record date for such
dividend or distribution.
(g) Redemption of Shares by the Trust is conditional upon the Trust
having funds or other assets legally available therefor.
(h) The Trust, either directly or through an agent, may repurchase its
Shares, out of funds legally available therefor, upon such terms and conditions
and for such consideration as the Trustees shall deem advisable, by agreement
with the owner at a price not exceeding the net asset value per Share as
determined by or pursuant to the order of the Trustees at such time or times as
the Trustees shall designate, less any applicable charge, if and as fixed by the
Trustees from time to time, and to take all other steps deemed necessary or
advisable in connection therewith.
(i) Shares purchased or redeemed by the Trust shall be cancelled or
held by the Trust for reissue, as the Trustees from time to time may determine.
(j) The obligations set forth in this Article VI may be suspended or
postponed, (1) for any period (i) during which the New York Stock Exchange is
closed other than for customary weekend and holiday closings, or (ii) during
which trading on the New York Stock Exchange is restricted, (2) for any period
during which an emergency exists as a result of which (i) the disposal by the
Trust of investments owned by it is not reasonably practicable, or (ii) it is
not reasonably practicable for the Trust fairly to determine the value of its
net assets, or (3) for such other periods as the Commission or any successor
governmental authority by order may permit.
Notwithstanding any other provision of this Section 3 of Article VI,
if certificates representing such Shares have been issued, the redemption or
repurchase price need not be paid by the Trust until such certificates are
presented in proper form for transfer to the Trust or the agent of the Trust
appointed for such purpose; however, the redemption or repurchase shall be
effective, in accordance with the resolution of the Trustees, regardless of
whether or not such presentation has been made.
SECTION 4. REDEMPTIONS AT THE OPTION OF THE TRUST. The Trust shall
have the right at its option and at any time to redeem Shares of any Shareholder
at the net asset value thereof as determined in accordance with Section 3 of
Article VI of this Declaration of Trust: (i) if at such time such Shareholder
owns fewer Shares than, or Shares having an aggregate net asset value of less
than, an amount determined from time to time by the Trustees; or (ii) to the
extent that such Shareholder owns Shares of a particular series or class of
Shares equal to or in excess of a percentage of the outstanding Shares of that
series or class determined from time to time by the Trustees; or (iii) to the
extent that such Shareholder owns Shares of the Trust representing a percentage
equal to or in excess of such percentage of the aggregate number of outstanding
Shares of the Trust or the aggregate net asset value of the Trust determined
from time to time by the Trustees; or (iv) if at such time such Shareholder
revokes consent to receive all Shareholder information about the Trust or any
series thereof electronically.
SECTION 5. DIVIDENDS, DISTRIBUTIONS, REDEMPTIONS AND REPURCHASES. No
dividend or distribution (including, without limitation, any distribution paid
upon termination of the Trust or of any series) with respect to, nor any
redemption or repurchase of, the Shares of any series shall be effected by the
Trust other than from the assets of such series.
ARTICLE VII
Compensation and Limitation of
Liability of Trustees
SECTION 1. COMPENSATION. The Trustees shall be entitled to reasonable
compensation from the Trust and may fix the amount of their compensation.
SECTION 2. LIMITATION OF LIABILITY. The Trustees shall not be
responsible or liable in any event for any neglect or wrongdoing of any officer,
agent, employee or Manager of the Trust, nor shall any Trustee be responsible
for the act or omission of any other Trustee, but nothing herein contained shall
protect any Trustee against any liability to which he or she would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his or her office.
Every note, bond, contract, instrument, certificate, share, or
undertaking and every other act or thing whatsoever executed or done by or on
behalf of the Trust or the Trustees or any of them in connection with the Trust,
shall be deemed conclusively to have been executed or done only in their or his
or her capacity as Trustees or Trustee, and such Trustees or Trustee shall not
be personally liable thereon.
ARTICLE VIII
Indemnification
SECTION 1. INDEMNIFICATION OF TRUSTEES, OFFICERS, EMPLOYEES AND
AGENTS. Each person who is or was a Trustee, officer, employee or agent of the
Trust or who serves or has served at the Trust's request as a director, officer
or trustee of another entity in which the Trust has or had any interest as a
shareholder, creditor or otherwise shall be entitled to indemnification out of
the assets of the Trust to the extent provided in, and subject to the provisions
of, the By-Laws, provided that no indemnification shall be granted by the Trust
in contravention of the 1940 Act.
SECTION 2. MERGED CORPORATIONS. For the purposes of this Article VIII
references to "the Trust" include any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger which, if
its separate existence had continued, would have had power and authority to
indemnify its directors, officers, employees or agents as well as the resulting
or surviving entity; so that any person who is or was a director, officer,
employee or agent of such a constituent corporation or is or was serving at the
request of such a constituent corporation as a trustee, director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise shall stand in the same position under the provisions of this
Article VIII with respect to the resulting or surviving entity as he or she
would have with respect to such a constituent corporation if its separate
existence had continued.
SECTION 3. SHAREHOLDERS. In case any Shareholder or former Shareholder
shall be held to be personally liable solely by reason of his or her being or
having been a Shareholder and not because of his or her acts or omissions or for
some other reason, the Shareholder or former Shareholder (or his or her heirs,
executors, administrators or other legal representatives or in the case of a
corporation or other entity, its corporate or other general successor) shall be
entitled out of the assets of the particular series of Shares of which he or she
is or was a Shareholder to be held harmless from and indemnified against all
losses and expenses arising from such liability. Upon request, the Trust shall
cause its counsel to assume the defense of any claim which, if successful, would
result in an obligation of the Trust to indemnify the Shareholder as aforesaid.
ARTICLE IX
Status of the Trust and Other General Provisions
SECTION 1. TRUST NOT A PARTNERSHIP. It is hereby expressly declared
that a trust and not a partnership is created hereby. Neither the Trust nor the
Trustees, nor any officer, employee or agent of the Trust shall have any power
to bind personally either the Trust's Trustees or officers or any Shareholders.
All persons extending credit to, contracting with or having any claim against
the Trust or a particular series of Shares shall look only to the assets of the
Trust or the assets of that particular series for payment under such credit,
contract or claim; and neither the Shareholders nor the Trustees, nor any of the
Trust's officers, employees or agents, whether past, present or future, shall be
personally liable therefor. Nothing in this Declaration of Trust shall protect
any Trustee against any liability to which such Trustee otherwise would be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of the office of
Trustee hereunder.
SECTION 2. TRUSTEE'S GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR
SURETY. The exercise by the Trustees of their powers and discretion hereunder
under the circumstances then prevailing, shall be binding upon everyone
interested. A Trustee shall be liable for his or her own willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee, and for nothing else, and shall not be liable
for errors of judgment or mistakes of fact or law. The Trustees may take advice
of counsel or other experts with respect to the meaning and operation of this
Declaration of Trust, and subject to the provisions of Section 1 of this Article
IX shall be under no liability for any act or omission in accordance with such
advice or for failing to follow such advice. The Trustees shall not be required
to give any bond as such, nor any surety if a bond is required.
SECTION 3. LIABILITY OF THIRD PERSONS DEALING WITH TRUSTEES. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees pursuant hereto
or to see to the application of any payments made or property transferred to the
Trust or upon its order.
SECTION 4. TRUSTEES, SHAREHOLDERS, ETC. NOT PERSONALLY LIABLE; NOTICE.
All persons extending credit to, contracting with or having any claim against
the Trust or a particular series of Shares shall look only to the assets of the
Trust or the assets of that particular series of Shares for payment under such
credit, contract or claim; and neither the Shareholders nor the Trustees, nor
any of the Trust's officers, employees or agents, whether past, present or
future, shall be personally liable therefor.
SECTION 5. TERMINATION OF TRUST. Unless terminated as provided herein,
the Trust shall continue without limitation of time. The Trust may be terminated
at any time by vote of Shareholders holding at least a majority of the Shares of
each series entitled to vote or by the Trustees by written notice to the
Shareholders. Any series of Shares may be terminated at any time by vote of
Shareholders holding at least a majority of the Shares of such series entitled
to vote or by the Trustees by written notice to the Shareholders of such series.
Upon termination of the Trust or of any one or more series of Shares,
after paying or otherwise providing for all charges, taxes, expenses and
liabilities, whether due or accrued or anticipated as may be determined by the
Trustees, the Trust shall reduce, in accordance with such procedures as the
Trustees consider appropriate, the remaining assets to distributable form in
cash or shares or other securities, or any combination thereof, and distribute
the proceeds to the Shareholders of the series involved, ratably according to
the number of Shares of such series held by the several Shareholders of such
series on the date of termination, except to the extent otherwise required or
permitted by the preferences and special or relative rights and privileges of
any classes of Shares of that series, provided that any distribution to the
Shareholders of a particular class of Shares shall be made to such Shareholders
pro rata in proportion to the number of Shares of such class held by each of
them.
SECTION 6. FILING OF COPIES, REFERENCES, HEADINGS. The original or a
copy of this instrument and of each amendment hereto and of each Declaration of
Trust supplemental hereto shall be kept at the office of the Trust where it may
be inspected by any Shareholder. A copy of this instrument and of each such
amendment and supplemental Declaration of Trust shall be filed by the Trust with
the Secretary of State of The Commonwealth of Massachusetts and the Boston City
Clerk, as well as any other governmental office where such filing may from time
to time be required. Anyone dealing with the Trust may rely on a certificate by
an officer of the Trust as to whether or not any such amendments or supplemental
Declarations of Trust have been made and as to matters in connection with the
Trust hereunder; and, with the same effect as if it were the original, may rely
on a copy certified by an officer of the Trust to be a copy of this instrument
or of any such amendment or supplemental Declaration of Trust. In this
instrument or in any such amendment or supplemental Declaration of Trust,
references to this instrument, and all expressions like "herein," "hereof," and
"hereunder," shall be deemed to refer to this instrument as amended or affected
by any such amendment or supplemental Declaration of Trust. Headings are placed
herein for convenience of reference only and in case of any conflict, the text
of this instrument, rather than the headings, shall control. This instrument may
be executed in any number of counterparts each of which shall be deemed an
original.
SECTION 7. APPLICABLE LAW. The Trust set forth in this instrument is
made in The Commonwealth of Massachusetts, and it is created under and is to be
governed by and construed and administered according to the laws of said
Commonwealth. The Trust shall be of the type commonly called a Massachusetts
business trust, and without limiting the provisions hereof, the Trust may
exercise all powers which are ordinarily exercised by such a trust.
SECTION 8. AMENDMENTS. This Declaration of Trust may be amended at any
time by an instrument in writing signed by a majority of the then Trustees when
authorized so to do by a vote of Shareholders holding a majority of the Shares
outstanding and entitled to vote, except that an amendment which shall affect
the holders of one or more series or class of Shares but not the holders of all
outstanding series or classes of Shares shall be authorized by vote of the
Shareholders holding a majority of the Shares entitled to vote of the series or
classes affected and no vote of Shareholders of a series or class not affected
shall be required. Amendments having the purpose of changing the name of the
Trust or of supplying any omission, curing any ambiguity or curing, correcting
or supplementing any defective or inconsistent provision contained herein shall
not require authorization by Shareholder vote.
IN WITNESS WHEREOF, the undersigned Trustee has hereunto signed this
instrument for the Trustee and the Trustee's assigns as of the day and year
first above written.
Donald L. Luskin, Trustee
Address: 400 Oyster Point Blvd.
Suite 414
South San Francisco, CA 94080
ADDRESS OF TRUST:
400 Oyster Point Blvd.
Suite 414
South San Francisco, CA 94080
ADDRESS OF RESIDENT AGENT:
CT Corporation System
2 Oliver Street
Boston, MA 02109
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
Before me personally came the above-named Trustee of the Fund, to me
known, and known to me to be the person described in and who executed the
foregoing instrument, and who duly acknowledged to me that the Trustee had
executed the same.
Notary Public
EXHIBIT 23(b)
BY-LAWS
OF
METAMARKETS.COM FUNDS
ARTICLE 1
Agreement and Declaration of Trust and Principal Office
1.1. AGREEMENT AND DECLARATION OF TRUST. These By-Laws shall be
subject to the Agreement and Declaration of Trust, as from time to time in
effect (the "Declaration of Trust"), of the above-captioned Massachusetts
business trust established by the Declaration of Trust (the "Trust").
1.2. PRINCIPAL OFFICE OF THE TRUST. The principal office of the Trust
shall be located in South San Francisco, California. Its resident agent in
Massachusetts shall be CT Corporation System, 2 Oliver Street, Boston,
Massachusetts 02109, or such other person as the Trustees from time to time may
select.
ARTICLE 2
Meetings of Trustees
2.1. REGULAR MEETINGS. Regular meetings of the Trustees may be held
without call or notice at such places and at such times as the Trustees from
time to time may determine, provided that notice of the first regular meeting
following any such determination shall be given to absent Trustees.
2.2. SPECIAL MEETINGS. Special meetings of the Trustees may be held at
any time and at any place designated in the call of the meeting when called by
the President or the Treasurer or by two or more Trustees, sufficient notice
thereof being given to each Trustee by the Secretary or an Assistant Secretary
or by the officer or the Trustees calling the meeting.
2.3. NOTICE OF SPECIAL MEETINGS. It shall be sufficient notice to a
Trustee of a special meeting to send notice by electronic mail at least
twenty-four hours before the meeting to the Trustee's last known electronic mail
address or by U.S. mail at least forty-eight hours or by telegram at least
twenty-four hours before the meeting addressed to the Trustee at his or her
usual or last known business or residence address or to give notice to him or
her in person or by telephone at least twenty-four hours before the meeting.
Notice of a meeting need not be given to any Trustee if a written waiver of
notice, executed by him or her before or after the meeting, is filed with the
records of the meeting, or to any Trustee who attends the meeting without
protesting prior thereto or at its commencement the lack of notice to him or
her. Neither notice of a meeting nor a waiver of a notice need specify the
purposes of the meeting.
2.4. NOTICE OF CERTAIN ACTIONS BY CONSENT. If in accordance with the
provisions of the Declaration of Trust any action is taken by the Trustees by a
written consent of less than all of the Trustees, then prompt notice of any such
action shall be furnished to each Trustee who did not execute such written
consent, provided that the effectiveness of such action shall not be impaired by
any delay or failure to furnish such notice.
ARTICLE 3
Officers
3.1. ENUMERATION; QUALIFICATION. The officers of the Trust shall be a
President, a Treasurer, a Secretary, and such other officers, if any, as the
Trustees from time to time may in their discretion elect. The Trust also may
have such agents as the Trustees from time to time may in their discretion
appoint. An officer may be but need not be a Trustee or shareholder. Any two or
more offices may be held by the same person.
3.2. ELECTION. The President, the Treasurer and the Secretary shall be
elected by the Trustees upon the occurrence of any vacancy in any such office.
Other officers, if any, may be elected or appointed by the Trustees at any time.
Vacancies in any such other office may be filled at any time.
3.3. TENURE. The President, Treasurer and Secretary shall hold office
in each case until he or she sooner dies, resigns, is removed or becomes
disqualified. Each other officer shall hold office and each agent shall retain
authority at the pleasure of the Trustees.
3.4. POWERS. Subject to the other provisions of these By-Laws, each
officer shall have, in addition to the duties and powers herein and in the
Declaration of Trust set forth, such duties and powers as commonly are incident
to the office occupied by him or her as if the Trust were organized as a
Massachusetts business corporation or such other duties and powers as the
Trustees may from time to time designate.
3.5. PRESIDENT. Unless the Trustees otherwise provide, the President
shall preside at all meetings of the shareholders and of the Trustees. Unless
the Trustees otherwise provide, the President shall be the chief executive
officer.
3.6. TREASURER. The Treasurer shall be the chief financial and
accounting officer of the Trust, and, subject to the provisions of the
Declaration of Trust and to any arrangement made by the Trustees with a
custodian, investment adviser or manager, or transfer, shareholder servicing or
similar agent, shall be in charge of the valuable papers, books of account and
accounting records of the Trust, and shall have such other duties and powers as
may be designated from time to time by the Trustees or by the President.
3.7. SECRETARY. The Secretary shall record all proceedings of the
shareholders and the Trustees in books to be kept therefor, which books or a
copy thereof shall be kept at the principal office of the Trust. In the absence
of the Secretary from any meeting of the shareholders or Trustees, an Assistant
Secretary, or if there be none or if he or she is absent, a temporary Secretary
chosen at such meeting shall record the proceedings thereof in the aforesaid
books.
3.8. RESIGNATIONS AND REMOVALS. Any Trustee or officer may resign at
any time by written instrument signed by him or her and delivered to the
President or Secretary or to a meeting of the Trustees. Such resignation shall
be effective upon receipt unless specified to be effective at some other time.
The Trustees may remove any officer elected by them with or without cause.
Except to the extent expressly provided in a written agreement with the Trust,
no Trustee or officer resigning and no officer removed shall have any right to
any compensation for any period following his or her resignation or removal, or
any right to damages on account of such removal.
ARTICLE 4
Committees
4.1. APPOINTMENT. The Trustees may appoint from their number an
executive committee and other committees. Except as the Trustees otherwise may
determine, any such committee may make rules for conduct of its business.
4.2. QUORUM; VOTING. A majority of the members of any Committee of the
Trustees shall constitute a quorum for the transaction of business, and any
action of such a Committee may be taken at a meeting by a vote of a majority of
the members present (a quorum being present).
ARTICLE 5
Reports
The Trustees and officers shall render reports at the time and in the
manner required by the Declaration of Trust or any applicable law. Officers and
Committees shall render such additional reports as they may deem desirable or as
may from time to time be required by the Trustees.
ARTICLE 6
Fiscal Year
The fiscal year of the Trust shall be fixed, and shall be subject to
change, by the Board of Trustees.
ARTICLE 7
Seal
The seal of the Trust shall consist of a flat-faced die with the word
"Massachusetts," together with the name of the Trust and the year of its
organization cut or engraved thereon but, unless otherwise required by the
Trustees, the seal shall not be necessary to be placed on, and in its absence
shall not impair the validity of, any document, instrument or other paper
executed and delivered by or on behalf of the Trust.
ARTICLE 8
Execution of Papers
Except as the Trustees generally or in particular cases may authorize
the execution thereof in some other manner, all deeds, leases, contracts, notes
and other obligations made by the Trustees shall be signed by the President, any
Vice President, or by the Treasurer and need not bear the seal of the Trust.
ARTICLE 9
Issuance of Share Certificates
9.1. SALE OF SHARES. Except as otherwise determined by the Trustees,
the Trust will issue and sell for cash or securities from time to time, full and
fractional shares of its shares of beneficial interest, such shares to be issued
and sold at a price of not less than net asset value per share, as from time to
time determined in accordance with the Declaration of Trust and these By-Laws
and, in the case of fractional shares, at a proportionate reduction in such
price. In the case of shares sold for securities, such securities shall be
valued in accordance with the provisions for determining value of assets of the
Trust as stated in the Declaration of Trust and these ByLaws. The officers of
the Trust are severally authorized to take all such actions as may be necessary
or desirable to carry out this Section 9.1.
9.2. SHARE CERTIFICATES. In lieu of issuing certificates for shares,
the Trustees or the transfer agent either may issue receipts therefor or may
keep accounts upon the books of the Trust for the record holders of such shares,
who shall in either case, for all purposes hereunder, be deemed to be the
holders of certificates for such shares as if they had accepted such
certificates and shall be held to have expressly assented and agreed to the
terms hereof.
The Trustees at any time may authorize the issuance of share
certificates. In that event, each shareholder shall be entitled to a certificate
stating the number of shares owned by him or her, in such form as shall be
prescribed from time to time by the Trustees. Such certificate shall be signed
by the President or Vice President and by the Treasurer or Assistant Treasurer.
Such signatures may be facsimile if the certificate is signed by a transfer
agent, or by a registrar, other than a Trustee, officer or employee of the
Trust. In case any officer who has signed or whose facsimile signature has been
placed on such certificate shall cease to be such officer before such
certificate is issued, it may be issued by the Trust with the same effect as if
he or she were such officer at the time of its issue.
9.3. LOSS OF CERTIFICATES. The Trust, or if any transfer agent is
appointed for the Trust, the transfer agent with the approval of any two
officers of the Trust, is authorized to issue and countersign replacement
certificates for the shares of the Trust which have been lost, stolen or
destroyed subject to the deposit of a bond or other indemnity in such form and
with such security, if any, as the Trustees may require.
9.4. DISCONTINUANCE OF ISSUANCE OF CERTIFICATES. The Trustees at any
time may discontinue the issuance of share certificates and by written notice to
each shareholder, may require the surrender of share certificates to the Trust
for cancellation. Such surrender and cancellation shall not affect the ownership
of shares in the Trust.
ARTICLE 10.
Indemnification
10.1. TRUSTEES, OFFICERS, ETC. The Trust shall indemnify each of its
Trustees and officers (including persons who serve at the Trust's request as
directors, officers or trustees of another organization in which the Trust has
any interest as a shareholder, creditor or otherwise) (hereinafter referred to
as a "Covered Person") against all liabilities and expenses, including but not
limited to amounts paid in satisfaction of judgments, in compromise or as fines
and penalties, and counsel fees reasonably incurred by any Covered Person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in which such Covered Person may be or may have been involved
as a party or otherwise or with which such person may be or may have been
threatened, while in office or thereafter, by reason of being or having been
such a Trustee or officer, except with respect to any matter as to which such
Covered Person shall have been finally adjudicated in a decision on the merits
in any such action, suit or other proceeding not to have acted in good faith in
the reasonable belief that such Covered Person's action was in the best
interests of the Trust and except that no Covered Person shall be indemnified
against any liability to the Trust or its Shareholders to which such Covered
Person would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
such Covered Person's office. Expenses, including counsel fees so incurred by
any such Covered Person (but excluding amounts paid in satisfaction of
judgments, in compromise or as fines or penalties), may be paid from time to
time by the Trust in advance of the final disposition or any such action, suit
or proceeding upon receipt of an undertaking by or on behalf of such Covered
Person to repay amounts so paid to the Trust if it is ultimately determined that
indemnification of such expenses is not authorized under this Article, PROVIDED
THAT (a) such Covered Person shall provide security for his or her undertaking,
(b) the Trust shall be insured against losses arising by reason of such Covered
Person's failure to fulfill his or her undertaking, or (c) a majority of the
Trustees who are disinterested persons and who are not Interested Persons (as
that term is defined in the Investment Company Act of 1940) (provided that a
majority of such Trustees then in office act on the matter), or independent
legal counsel in a written opinion, shall determine, based on a review of
readily available facts (but not a full trial-type inquiry), that there is
reason to believe such Covered Person ultimately will be entitled to
indemnification.
10.2. COMPROMISE PAYMENT. As to any matter disposed of (whether by a
compromise payment, pursuant to a consent decree or otherwise) without an
adjudication in a decision on the merits by a court, or by any other body before
which the proceeding was brought, that such Covered Person either (a) did not
act in good faith in the reasonable belief that such Covered Person's action was
in the best interests of the Trust or (b) is liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of such Covered
Person's office, indemnification shall be provided if (a) approved as in the
best interest of the Trust, after notice that it involves such indemnification,
by at least a majority of the Trustees who are disinterested persons and are not
Interested Persons (provided that a majority of such Trustees then in office act
on the matter), upon a determination, based upon a review of readily available
facts (but not a full trial-type inquiry) that such Covered Person acted in good
faith in the reasonable belief that such Covered Person's action was in the best
interests of the Trust and is not liable to the Trust or its Shareholders by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of such Covered Person's office, or (b)
there has been obtained an opinion in writing of independent legal counsel,
based upon a review of readily available facts (but not a full trial-type
inquiry) to the effect that such Covered Person appears to have acted in good
faith in the reasonable belief that such Covered Person's action was in the best
interests of the Trust and that such indemnification would not protect such
Covered Person against any liability to the Trust to which such Covered Person
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office. Any approval pursuant to this Section shall not prevent the recovery
from any Covered Person of any amount paid to such Covered Person in accordance
with this Section as indemnification if such Covered Person is subsequently
adjudicated by a court of competent jurisdiction not to have acted in good faith
in the reasonable belief that such Covered Person's action was in the best
interests of the Trust or to have been liable to the Trust or its shareholders
by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such Covered Person's office.
10.3. INDEMNIFICATION NOT EXCLUSIVE. The right of indemnification
hereby provided shall not be exclusive of or affect any other rights to which
any such Covered Person may be entitled. As used in this Article 10, the term
"Covered Person" shall include such person's heirs, executors and
administrators, and a "disinterested person" is a person against whom none of
the actions, suits or other proceedings in question or another action, suit, or
other proceeding on the same or similar grounds is then or has been pending.
Nothing contained in this Article shall affect any rights to indemnification to
which personnel of the Trust, other than Trustees and officers, and other
persons may be entitled by contract or otherwise under law, nor the power of the
Trust to purchase and maintain liability insurance on behalf of such person.
10.4. LIMITATION. Notwithstanding any provisions in the Declaration of
Trust and these By-Laws pertaining to indemnification, all such provisions are
limited by the following undertaking set forth in the rules promulgated by the
Securities and Exchange Commission:
In the event that a claim for indemnification is asserted by a
Trustee, officer or controlling person of the Trust in connection with
the registered securities of the Trust, the Trust will not make such
indemnification unless (i) the Trust has submitted, before a court or
other body, the question of whether the person to be indemnified was
liable by reason of willful misfeasance, bad faith, gross negligence,
or reckless disregard of duties, and has obtained a final decision on
the merits that such person was not liable by reason of such conduct
or (ii) in the absence of such decision, the Trust shall have obtained
a reasonable determination, based upon a review of the facts, that
such person was not liable by virtue of such conduct, by (a) the vote
of a majority of Trustees who are neither interested persons as such
term is defined in the Investment Company Act of 1940, nor parties to
the proceeding or (b) an independent legal counsel in a written
opinion.
The Trust will not advance attorneys' fees or other expenses
incurred by the person to be indemnified unless the Trust shall have
(i) received an undertaking by or on behalf of such person to repay
the advance unless it is ultimately determined that such person is
entitled to indemnification and one of the following conditions shall
have occurred: (x) such person shall provide security for his
undertaking, (y) the Trust shall be insured against losses arising by
reason of any lawful advances or (z) a majority of the disinterested,
non-party Trustees of the Trust, or an independent legal counsel in a
written opinion, shall have determined that based on a review of
readily available facts there is reason to believe that such person
ultimately will be found entitled to indemnification.
ARTICLE 11
Shareholders
11.1. MEETINGS. A meeting of the shareholders shall be called by the
Secretary whenever ordered by the Trustees, or requested in writing by the
holder or holders of at least 10% of the outstanding shares entitled to vote at
such meeting. If the meeting is a meeting of the shareholders of one or more
series or class of shares, but not a meeting of all shareholders of the Trust,
then only the shareholders of such one or more series or classes shall be
entitled to notice of and to vote at the meeting. If the Secretary, when so
ordered or requested, refuses or neglects for more than five days to call such
meeting, the Trustees, or the shareholders so requesting may, in the name of the
Secretary, call the meeting by giving notice thereof in the manner required when
notice is given by the Secretary.
11.2. ACCESS TO SHAREHOLDER LIST. Shareholders of record may apply to
the Trustees for assistance in communicating with other shareholders for the
purpose of calling a meeting in order to vote upon the question of removal of a
Trustee. When ten or more shareholders of record who have been such for at least
six months preceding the date of application and who hold in the aggregate
shares having a net asset value of at least $25,000 or at least 1% of the
outstanding shares, whichever is less, so apply, the Trustees shall within five
business days either:
(i) afford to such applicants access to a list of names and
addresses of all shareholders as recorded on the books of the Trust; or
(ii) inform such applicants of the approximate number of
shareholders of record and the approximate cost of mailing material to them and,
within a reasonable time thereafter, mail materials submitted by the applicants
to all such shareholders of record. The Trustees shall not be obligated to mail
materials which they believe to be misleading or in violation of applicable law.
11.3. RECORD DATES. For the purpose of determining the shareholders of
any series or class who are entitled to vote or act at any meeting or any
adjournment thereof, or who are entitled to receive payment of any dividend or
of any other distribution, the Trustees from time to time may fix a time, which
shall be not more than 90 days before the date of any meeting of shareholders or
the date of payment of any dividend or of any other distribution, as the record
date for determining the shareholders of such series or class having the right
to notice of and to vote at such meeting and any adjournment thereof or the
right to receive such dividend or distribution, and in such case only
shareholders of record on such record date shall have such right notwithstanding
any transfer of shares on the books of the Trust after the record date; or
without fixing such record date the Trustees may for any such purposes close the
register or transfer books for all or part of such period.
11.4. PLACE OF MEETINGS. All meetings of the shareholders shall be
held at the principal office of the Trust or at such other place within the
United States as shall be designated by the Trustees or the President of the
Trust.
11.5. NOTICE OF MEETINGS. A written notice of each meeting of
shareholders, stating the place, date and hour and the purposes of the meeting,
shall be given at least ten days before the meeting to each shareholder entitled
to vote thereat by electronic mail to such shareholder at his electronic mail
address as it appears in the records of the Trust or, from time to time, by
leaving such notice with him or at his residence or usual place of business or
by mailing it, postage prepaid, and addressed to such shareholder at his address
as it appears in the records of the Trust. Such notice shall be given by the
Secretary or an Assistant Secretary or by an officer designated by the Trustees.
No notice of any meeting of shareholders need be given to a shareholder if a
written waiver of notice, executed before or after the meeting by such
shareholder or his attorney thereunto duly authorized, is filed with the records
of the meeting.
11.6. BALLOTS. No ballot shall be required for any election unless
requested by a shareholder present or represented at the meeting and entitled to
vote in the election.
11.7. PROXIES. Shareholders entitled to vote may vote either in person
or by proxy in writing dated not more than six months before the meeting named
therein, which proxies shall be filed with the Secretary or other person
responsible to record the proceedings of the meeting before being voted. Unless
otherwise specifically limited by their terms, such proxies shall entitle the
holders thereof to vote at any adjournment of such meeting but shall not be
valid after the final adjournment of such meeting. The placing of a
shareholder's name on a proxy pursuant to telephonic or electronically
transmitted instructions obtained pursuant to procedures reasonably designed to
verify that such instructions have been authorized by such shareholder shall
constitute execution of such proxy by or on behalf of such shareholder.
ARTICLE 12
Amendments to the By-Laws
These By-Laws may be amended or repealed, in whole or in part, by a
majority of the Trustees then in office at any meeting of the Trustees, or by
one or more writings signed by such a majority.
Dated: May 20, 1999
EXHIBIT 23(d)(1)
INVESTMENT ADVISORY AGREEMENT
MetaMarkets.com Funds
400 Oyster Point Blvd., Suite 414
South San Francisco, California 94080
July 20, 1999
MetaMarkets Investments LLC
400 Oyster Point Blvd., Suite 414
South San Francisco, California 94080
Ladies and Gentlemen:
The above-named investment company (the "Fund") consisting of the
series named on Schedule 1 hereto, as such Schedule may be revised from time to
time (each, a "Series"), herewith confirms its agreement with you as follows:
The Fund desires to employ its capital by investing and reinvesting
the same in investments of the type and in accordance with the limitations
specified in its charter documents and in its Prospectus and Statement of
Additional Information as from time to time in effect, copies of which have been
or will be submitted to you, and in such manner and to such extent as from time
to time may be approved by the Fund's Board. The Fund desires to employ you to
act as its investment adviser.
In this connection it is understood that from time to time you will
employ or associate with yourself such person or persons as you may believe to
be particularly fitted to assist you in the performance of this Agreement. Such
person or persons may be officers or employees who are employed by both you and
the Fund. The compensation of such person or persons shall be paid by you and no
obligation may be incurred on the Fund's behalf in any such respect.
Subject to the supervision and approval of the Fund's Board, you will
provide investment management of each Series' portfolio in accordance with such
Series' investment objective and policies as stated in the Fund's Prospectus and
Statement of Additional Information as from time to time in effect. In
connection therewith, you will obtain and provide investment research and will
supervise each Series' investments and conduct a continuous program of
investment, evaluation and, if appropriate, sale and reinvestment of such
Series' assets. You will furnish to the Fund such statistical information, with
respect to the investments which a Series may hold or contemplate purchasing, as
the Fund may reasonably request. The Fund wishes to be informed of important
developments materially affecting any Series' portfolio and shall expect you, on
your own initiative, to furnish to the Fund from time to time such information
as you may believe appropriate for this purpose.
You shall exercise your best judgment in rendering the services to be
provided to the Fund hereunder and the Fund agrees as an inducement to your
undertaking the same that you shall not be liable hereunder for any error of
judgment or mistake of law or for any loss suffered by one or more Series,
provided that nothing herein shall be deemed to protect or purport to protect
you against any liability to the Fund or a Series or to its security holders to
which you would otherwise be subject by reason of willful misfeasance, bad faith
or gross negligence in the performance of your duties hereunder, or by reason of
your reckless disregard of your obligations and duties hereunder ("disabling
conduct").
The Fund will indemnify you against, and hold you harmless from, any
and all losses, claims, damages, liabilities or expenses (including reasonable
counsel fees and expenses), including any amounts paid in satisfaction of
judgments, in compromise or as fines or penalties, not resulting from your
disabling conduct. Indemnification shall be made only following: (i) a final
decision on the merits by a court or other body before whom the proceeding was
brought that you were not liable by reason of disabling conduct or (ii) in the
absence of such a decision, a reasonable determination, based upon a review of
the facts, that you were not liable by reason of disabling conduct by (a) the
vote of a majority of a quorum of directors of the Fund who are neither
"interested persons" (as defined in the Investment Company Act of 1940, as
amended (the "1940 Act")) of the Fund nor parties to the proceeding
("disinterested non-party directors") or (b) independent legal counsel in a
written opinion. You shall be entitled to advances from the Fund for payment of
the reasonable expenses incurred by you in connection with the matter as to
which you are seeking indemnification in the manner and to the fullest extent
permissible under Massachusetts law. You shall provide to the Fund a written
affirmation of your good faith belief that the standard of conduct necessary for
indemnification by the Fund has been met and a written undertaking to repay any
such advance if it should ultimately be determined that the standard of conduct
has not been met. In addition, at least one of the following additional
conditions shall be met: (a) you shall provide security in form and amount
acceptable to the Fund for its undertaking; (b) the Fund is insured against
losses arising by reason of the advance; or (c) a majority of a quorom of
disinterested non-party directors, or independent legal counsel in a written
opinion, shall have determined, based on a review of facts readily available to
the Fund at the time the advance is proposed to be made, that there is reason to
believe that you will ultimately be found to be entitled to indemnification.
In consideration of services rendered pursuant to this Agreement, the
Fund will pay you on the first business day of each month a fee at the rate set
forth opposite each Series' name on Schedule 1 hereto. Net asset value shall be
computed on such days and at such time or times as described in the Fund's
then-current Prospectus and Statement of Additional Information. The fee for the
period from the date of the commencement of the public sale of a Series' shares
to the end of the month during which such sale shall have been commenced shall
be pro-rated according to the proportion which such period bears to the full
monthly period, and upon any termination of this Agreement before the end of any
month, the fee for such part of a month shall be pro-rated according to the
proportion which such period bears to the full monthly period and shall be
payable upon the date of termination of this Agreement.
You will bear all expenses in connection with the performance of your
services under this Agreement. All other expenses to be incurred in the
operation of the Fund will be borne by the Fund, except to the extent
specifically assumed by you. The expenses to be borne by the Fund include,
without limitation, the following: organizational costs, taxes, interest, loan
commitment fees, interest and distributions paid on securities sold short,
brokerage fees and commissions, if any, fees of Board members who are not your
officers, directors or employees or holders of 5% or more of your outstanding
voting securities, Securities and Exchange Commission fees and state Blue Sky
qualification fees, advisory and administration fees, charges of custodians,
transfer and dividend disbursing agents' fees, certain insurance premiums,
industry association fees, outside auditing and legal expenses, costs of
independent pricing services, costs of maintaining the Fund's existence, costs
attributable to investor services (including, without limitation, telephone and
personnel expenses), costs of preparing and printing prospectuses and statements
of additional information for regulatory purposes and for distribution to
existing stockholders, costs of stockholders' reports and meetings, and any
extraordinary expenses. The Fund understands that from time to time hereafter
you may act as investment adviser to one or more other investment companies and
fiduciary or other managed accounts, and the Fund has no objection to your so
acting, provided that when the purchase or sale of securities of the same issuer
is suitable for the investment objectives of two or more companies or accounts
managed by you which have available funds for investment, the available
securities will be allocated in a manner believed by you to be equitable to each
company or account. It is recognized that in some cases this procedure may
adversely affect the price paid or received by one or more Series or the size of
the position obtainable for or disposed of by one or more Series.
In addition, it is understood that the persons employed by you to
assist in the performance of your duties hereunder will not devote their full
time to such service and nothing contained herein shall be deemed to limit or
restrict your right or the right of any of your affiliates to engage in and
devote time and attention to other businesses or to render services of whatever
kind or nature.
Any person, even though also your officer, director, partner, employee
or agent, who may be or become an officer, Board member, employee or agent of
the Fund, shall be deemed, when rendering services to the Fund or acting on any
business of the Fund, to be rendering such services to or acting solely for the
Fund and not as your officer, director, partner, employee or agent or one under
your control or direction even though paid by you.
As to each Series, this Agreement shall continue until the date set
forth opposite such Series' name on Schedule 1 hereto (the "Reapproval Date")
and thereafter shall continue automatically for successive annual periods ending
on the day of each year set forth opposite the Series' name on Schedule 1 hereto
(the "Reapproval Day"), provided such continuance is specifically approved at
least annually by (i) the Fund's Board or (ii) vote of a majority (as defined in
the 1940 Act) of such Series' outstanding voting securities, provided that in
either event its continuance also is approved by a majority of the Fund's Board
members who are not "interested persons" (as defined in the 1940 Act) of any
party to this Agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval. As to each Series, this Agreement is
terminable without penalty, on 60 days' notice, by the Fund's Board or by vote
of holders of a majority of such Series' shares or, upon not less than 90 days'
notice, by you. This Agreement also will terminate automatically, as to the
relevant Series, in the event of its assignment (as defined in the 1940 Act).
The Fund recognizes that from time to time your directors, officers
and employees may serve as directors, trustees, partners, officers and employees
of other business trusts, corporations, partnerships or other entities
(including other investment companies) and that such other entities may include
the name "MetaMarkets" as part of their name, and that your company or its
affiliates may enter into investment advisory or other agreements with such
other entities. If you cease to act as the Fund's investment adviser, the Fund
agrees that, at your request, the Fund will take all necessary action to change
the name of the Fund to a name not including "MetaMarkets" in any form or
combination of words.
This Agreement has been executed on behalf of the Fund by the
undersigned officer of the Fund in his capacity as an officer of the Fund. The
obligations of this Agreement shall only be binding upon the assets and property
of the Fund or the affected Series, as the case may be, and shall not be binding
upon any Board member, officer or shareholder of the Fund individually.
If the foregoing is in accordance with your understanding, will you
kindly so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
METAMARKETS.COM FUNDS
By:___________________________
Accepted:
METAMARKETS INVESTMENTS LLC
By: _____________________
<PAGE>
SCHEDULE 1
Annual Rate
of Fee as a
Percentage
of Average
Name of Daily Net Reapproval Reapproval
Series Assets Date Day
Communications * July 20, 2001 July 20th
Technology Fund
Media * July 20, 2001 July 20th
Technology Fund
Aggressive Growth Fund * July 20, 2001 July 20th
[New Name] Fund * July 20, 2001 July 20th
________________
* As to each Series, 1.00% on the first $250 million of average daily net
assets; .75% on the next $500 million of such assets; and .50% on assets in
excess of $750 million.
