<PAGE>
MetaMarkets.comFunds
[LOGO OF OPENFUND APPEARS HERE]
OpenFund Annual To return to the site, please use the "back" button
Report on your browser
July 31, 2000
Advised by
MetaMarkets Investments LLC
Table of Contents
<TABLE>
<S> <C>
Shareholder Letter
------------------
Growth of $10,000 Graph
-----------------------
Schedule of Portfolio Investments
---------------------------------
Statement of Assets and Liabilities
-----------------------------------
Statement of Operations
-----------------------
Statement of Changes in Net Assets
----------------------------------
Financial Highlights
--------------------
Notes to Financial Statements
-----------------------------
Report of Independent Accountants
---------------------------------
</TABLE>
Financial reporting standards requires the statement "See Notes to Financial
Statements" to appear at the bottom of each page of these financial statements.
This statement has not been included in these financials due to differences in
various technologies which may be used to print this report. As such, the
required statement is incorporated herein by reference.
================================================================================
Shareholder Letter
<PAGE>
Fellow OpenFund shareholders,
The eleven months since the inception of OpenFund have reminded us that the life
of an investor is never a dull one. The stock market's volatility and resilience
were both evident throughout the entire period. New Economy and technology
stocks experienced an intense plunge during April and May, and healed their
wounds through June and July, then gradually recovered and finally staged a
breakout as summer drew to a close. OpenFund shared in both the lows and highs
of the six-month stretch since the semi-annual report.
To summarize how OpenFund dealt with the market action over the past eleven
months seems almost unnecessary, considering that the Fund's portfolio and its
adviser's trading activity are available for all to see live on the Internet, as
they happen in real-time. Yet there are rules we must abide by. In that spirit
we present you with this annual report, which captures the Fund's entire
portfolio at the end of day on July 31, 2000. From the beginning, the fund has
sought to identify the companies spearheading the New Economy. Since our semi-
annual report, as the names of some of the leaders have changed, our challenge
has been to remain agile. Companies that ended 1999 with nearly transcendent
status, like wireless stalwarts Qualcomm and Nokia, have been knocked down a few
pegs. Other companies, such as fiber-optics firms Corning and JDS Uniphase,
emerged as dominant leaders. Meanwhile, New Economy linchpins like networker Sun
Microsystems and database developer Oracle, kept their standing -- and up-trends
-- intact.
Of particular interest over the past six months has been the Fund's investments
in the biotech sector. The Fund management team has closely followed the ongoing
triumphs in the science of genomics, highlighted by Celera Genomics' June
announcement that it has sequenced the human genome. We anticipate that the
breakthroughs of genomics will someday be held in the same scientific regard as
the first moon landing and Einstein's theory of relativity. The mastery of
living matter will revolutionize health care, and we will continue to scour the
biotech landscape for the companies at the advance guard of this revolution.
Investment Outlook
As fund manager, we maintain our bullish outlook for New Economy companies, and
for Old Economy companies that are welcoming innovation and adapting their
businesses to new realities. We expect some bumps in the road -- they will
always be there. Yet we're convinced that we are indeed living during one of
history's greatest investment opportunities. Sure, there are risks, there always
are. But we feel that the opportunities for innovation and wealth creation in
the New Economy have barely been tapped.
If you have any questions, or are curious to see what's going on with your
investment, please don't hesitate to visit us online.
<PAGE>
Sincerely,
The MetaMarkets Investments Portfolio Management Team
This report is accompanied by a fund prospectus. Current fund holdings are
---------------
subject to change and are available online. BISYS Fund Services, Distributor.
================================================================================
Growth of $10,000 Graph
MetaMarkets.com OpenFund
Growth of a $10,000 Investment
[GRAPH APPEARS HERE]
The chart represents a historical investment of $10,000 in
the MetaMarkets.com OpenFund from 8/31/99 to 7/31/00, and
represents the reinvestment of dividends and capital gains
in the Fund.
Past performance is no guarantee of future returns. The
investment return and NAV will fluctuate so that an
investor's shares, when redeemed, may be worth more or less
than the original cost.
* Period from August 31, 1999 (commencement of operations)
to July 31, 2000.
** The S&P 500 Index is an unmanaged index generally
representative of the domestically traded common stocks of
mid to large-size
<TABLE>
<CAPTION>
8/31/99 9/30/99 10/31/99 11/30/99 12/31/99 1/31/00 2/29/00 3/31/00 4/30/00 5/31/00 6/30/00 7/31/00
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Open Fund 10,000.00 10,112.00 11,296.00 13,800.00 19,115.55 20,216.83 27,523.82 23,367.92 19,429.05 15,908.19 18,609.13 17,218.47
S&P500 10,000.00 9,725.86 10,341.32 10,553.82 11,173.06 10,611.63 10,410.75 11,429.23 11,085.37 10,857.93 11,125.61 10,951.67
</TABLE>
<PAGE>
companies.
An investor cannot directly invest in an index.
The total return set forth may reflect the waiver of a
portion of the Fund's fees for certain periods. Without the
waiver of fees, returns would have been lower. Fee waivers
are voluntary and may be modified or terminated at anytime.
================================================================================
Schedule of Portfolio Investments
July 31, 2000
Shares Market Value
------ ------------
Common Stocks (101.9%)
Banking (2.4%)
Northern Trust Corp. 4,500 $ 336,938
Wells Fargo Co. 10,000 413,125
-----------
750,063
Biotechnology & Medical (7.5%)
Abgenix, Inc. (b) 11,000 551,375
Cell Genesys, Inc. (b) 15,000 319,688
Genentech, Inc. (b) 4,000 608,499
Hyseq, Inc. (b) 10,000 323,125
Immunex Corp. (b) 11,000 557,563
-----------
2,360,250
Computer Equipment (13.2%)
EMC Corp. (b) 8,500 723,563
Intel Corp. 20,000 1,335,000
NVIDIA Corp. (b) 7,000 420,000
Rambus Inc. (b) 9,500 696,469
Sun Microsystems, Inc. (b) (c) 9,500 1,001,656
-----------
4,176,688
Computer Software & Services (13.3%)
Akamai Technologies, Inc. (b) 3,000 236,578
Brocade Communications Systems, Inc. (b) 3,700 660,912
CacheFlow, Inc. (b) 4,000 272,000
Cisco Systems, Inc. (b) 17,000 1,112,437
<PAGE>
Oracle Corp. (b) (c) 9,000 676,687
Siebel Systems, Inc. (b) 4,000 580,000
StorageNetworks, Inc. (b) 2,000 218,250
Wave Systems Corp. (b) 25,500 460,594
-----------
4,217,458
Electronic Components/Instruments (10.7%)
Applied Micro Circuits Corp. (b) 2,500 373,125
Atmel Corp. (b) 15,000 449,063
Broadcom Corp. (b) 3,000 672,750
SDL, Inc. (b) 2,600 902,362
Texas Instruments, Inc. (c) 10,000 586,875
Vishay Intertechnology, Inc. (b) 12,000 371,250
-----------
3,355,425
Energy & Electrical Technology (7.5%)
C&D Technologies, Inc. 11,500 465,750
Capstone Turbine Corp. (b) 6,500 357,500
General Electric Co. 17,500 900,156
Mechanical Technology, Inc. (b) 49,000 624,750
-----------
2,348,156
Instruments - Scientific (1.3%)
Varian, Inc. (b) 10,000 421,250
Insurance (2.1%)
American International Group 7,500 657,656
Internet (0.4%)
Xcelera.com, Inc. (b) 9,000 137,250
Manufacturing (0.8%)
Nanophase Technologies Corp. (b) 27,800 244,988
Networking Products (7.1%)
ADC Telecommunications, Inc. (b) 17,000 712,937
Extreme Networks, Inc. (b) 4,500 628,383
Juniper Networks, Inc. (b) 3,000 427,313
<PAGE>
Redback Networks, Inc. (b) 3,500 455,000
-----------
2,223,633
Oil & Gas Utility (0.9%)
Enron Corp. 4,000 294,500
Optical Networking (11.0%)
Avici Systems, Inc. (b) 4,000 393,500
Corning, Inc. 3,400 795,388
JDS Uniphase Corp. (b) 8,000 944,999
Metromedia Fiber Network, Inc. (b) 13,000 456,625
ONI Systems Corp. (b) 5,000 442,813
Sycamore Networks, Inc. (b) 3,500 431,594
-----------
3,464,919
Pharmaceuticals (3.3%)
Cubist Pharmaceuticals, Inc. (b) 9,000 406,125
Eli Lilly & Co. 6,000 623,250
-----------
1,029,375
Retail (2.2%)
Home Depot, Inc. 6,000 310,500
Wal-Mart Stores, Inc. 7,000 384,563
-----------
695,063
Semiconductors and Related Devices (6.5%)
Marvell Technology Group Ltd. (b) 11,000 502,562
Nova Measuring Instruments Ltd. (b) 31,100 478,163
PMC-Sierra, Inc. (b) 3,500 678,562
Silicon Laboratories, Inc. (b) 7,000 402,938
-----------
2,062,225
Surgical Appliances and Supplies (2.4%)
EndoSonics Corp. (b) 40,500 280,969
Intuitive Surgical, Inc. (b) 25,300 477,537
-----------
758,506
Telecom Equipment (3.0%)
Sonus Networks, Inc. (b) 2,500 466,094
Sunrise Telecom, Inc. (b) 10,000 465,000
-----------
931,094
Telecom Services (3.0%)
<PAGE>
Nuance Communications (b) 3,000 421,125
VoiceStream Wireless Corp. (b) 4,000 513,000
-----------
934,125
Wireless Communications (3.3%)
Nokia Corp., ADR 14,500 642,531
QUALCOMM, Inc. (b) (c) 6,000 389,625
-----------
1,032,156
Total Common Stocks (Cost $31,818,059) 32,094,780
Contracts Market Value
--------- ------------
Options (0.1%)
Nokia Corp., Call Option, expiring 75 46,875
September 2000, strike price $40 -----------
Total Options (Cost $39,519) 46,875
Total Investments (Cost
$31,857,578) (a) - 102.0% 32,141,655
Liabilities in excess of other assets
- (2.0)% (639,141)
-----------
NET ASSETS - 100.0% $31,502,514
Shares Market Value
------ ------------
Securities Sold Short -
(6.6%)
Common Stocks (1.7%)
Retail (1.7%)
Amazon.com, Inc. (b) 18,000 542,250
-----------
Total Common Stocks $ 542,250
Index-Linked Trusts (4.9%)
Internet Holders Trust (b) 15,000 1,549,688
-----------
Total Index-Linked Trusts $ 1,549,688
Total Securities Sold Short
<PAGE>
(Proceeds $2,123,022) (a) $ 2,091,938
____________
(a) Cost of investments and proceeds on securities sold short ("total cost and
short proceeds") of $33,980,600 for financial reporting purposes differs from
total cost and short proceeds for federal income tax purposes by the amount of
losses recognized for financial reporting purposes in excess of federal income
tax reporting of approximately $2,991,075. Total cost and short proceeds for
federal tax purposes differs from value by net unrealized appreciation of
investments and securities sold short as follows:
Unrealized appreciation - Investments $ 1,459,785
Unrealized appreciation - Short Sales 41,037
Unrealized depreciation - Investments (4,094,205)
Unrealized depreciation - Short Sales (82,531)
-----------
Net unrealized depreciation $(2,675,914)
(b) Non-income producing security.
(c) Security, or a portion thereof, designated as short-sale collateral.
ADR - American Depositary Receipt
================================================================================
Statement of Assets and Liabilities
July 31, 2000
Assets:
Investments, at value (Cost $29,810,973) $30,037,832
Deposits with broker and custodian bank for securities sold
short (Cost $3,762,064, including cash or cash equivalents of
$1,715,459) 3,819,282
-----------
33,857,114
Interest and dividends receivable 5,697
Receivable for securities sold short 4,055,428
Receivable for investments sold 25,913,100
Receivable from affiliates 110,453
-----------
Total Assets 63,941,792
<PAGE>
Liabilities:
Securities sold short (proceeds $2,123,022) $ 2,091,938
Payable for investments purchased 30,224,488
Payable for capital shares redeemed 13,439
Accrued expenses and other payables:
Investment advisory fees 29,611
Distribution fees 7,403
Other 72,399
-----------
Total Liabilities 32,439,278
Net Assets:
Capital $34,814,862
Accumulated net realized (loss) from options, investments
and securities sold short (3,627,509)
Net unrealized appreciation from options and investments 284,077
Net unrealized appreciation from securities sold short 31,084
-----------
Net Assets $31,502,514
Shares of beneficial interest outstanding (unlimited number of
shares authorized, no par value) 1,470,823
Net asset value, offering price and redemption price per
share $ 21.42
================================================================================
Statement of Operations
For the eleven months ended July 31, 2000 (a)
Investment Income:
Interest income $ 25,313
Dividend income 27,635
-----------
Total Income 52,948
Expenses:
Investment advisory fees 210,691
<PAGE>
Distribution fees 52,673
Dividend expense for securities sold short 3,080
Other Expenses:
Administration fees 65,076
Legal fees 77,114
Audit fees 17,312
Transfer Agency fees 42,244
Custody fees 81,198
Trustee fees 6,938
Miscellaneous fees 70,164
-----------
Total expenses before voluntary fee reductions and
reimbursements 626,490
Expenses voluntarily reduced or reimbursed (407,634)
-----------
Net Expenses (b) 218,856
-----------
Net investment (loss) (165,908)
Realized/Unrealized Gain (Loss) from Investments,
Securities Sold Short and Written Options:
Net realized gain (loss) from:
Investment transactions (3,509,736)
Securities sold short 188,355
Written options (244,313)
----------
(3,565,694)
Change in unrealized appreciation from:
Investments 284,077
Securities sold short 31,084
-----------
315,161
Net Realized/Unrealized Loss from Investments, Securities
Sold Short, and Written Options (3,250,533)
-----------
Change in net assets resulting from operations $(3,416,441)
____________
(a) Period from August 31, 1999 (commencement of operations) to July 31, 2000.
(b) The Advisor has contractually agreed to reimburse the Fund to the extent
other expenses exceed 0.20% of the Fund's average daily assets for the period
ended July 31, 2000, limiting overall expenses of the Fund to a maximum of 1.45%
of the Fund's average daily net assets.
================================================================================
<PAGE>
Statement of Changes in Net Assets
For the eleven months ended July 31, 2000 (a)
From Investment Activities:
Operations
Net investment (loss) $ (165,908)
Net realized gain/(loss) on
Investments (3,509,736)
Securities sold short 188,355
Written options (244,313)
Net Change in unrealized appreciation on:
Investments 284,077
Securities sold short 31,084
------------
Change in net assets resulting from operations (3,416,441)
Distributions to Shareholders
In excess of net investment income (10,825)
In excess of net realized gains from investment transactions (63,593)
------------
Change in net assets from shareholder distributions (74,418)
Capital Transactions
Proceeds from shares issued 55,332,909
Dividends reinvested 73,812
Cost of shares redeemed (20,413,348)
------------
Change in net assets from capital transactions 34,993,373
Change in net assets 31,502,514
Net Assets
Beginning of period --
------------
End of period $ 31,502,514
Share Transactions
<PAGE>
Issued 2,279,528
Reinvested 3,133
Redeemed (811,838)
------------
Change in share transactions 1,470,823
__________
(a) Period from August 31, 1999 (commencement of operations) to July 31, 2000.
================================================================================
Financial Highlights
For the eleven months ended July 31, 2000 (a)
<TABLE>
<S> <C>
Net Asset Value, Beginning of Period $ 12.50
-------
Investment Activities
Net investment income (0.09) (e)
Net realized and unrealized gains from investments 9.13 (e)
-------
Investment Activities 9.04
-------
Distributions
In excess of net investment income (0.02)
In excess of net realized gains (0.10)
-------
Total Distributions (0.12)
-------
Net Asset Value, End of Period $ 21.42
Total Return 72.18% (b)
Ratios/Supplemental Data:
Net Assets at end of period (000) $31,503
Ratio of expenses (including dividend expense) to average net assets (d) 1.04% (c)
Ratio of expenses (excluding dividend expense) to average net assets (d) 1.02% (c)
Ratio of net investment loss to average net assets (0.79%) (c)
Ratio of expenses (including dividend expense) to average net assets* 2.97% (c)
Portfolio turnover rate 2,318%
</TABLE>
<PAGE>
_______
* During the period, certain fees were voluntarily reduced . If such voluntary
fee reductions had not occurred, the ratio would have been as indicated.
(a) Period from August 31, 1999 (commencement of operations) to July 31, 2000.
(b) Not annualized.
(c) Annualized.
(d) The Advisor has contractually agreed to reimburse the Fund to the extent
certain operating expenses exceed 0.20% of the Fund's average daily assets for
the period ended July 31, 2000, limiting overall expenses of the Fund to a
maximum of 1.45% of the Fund's average daily net assets.
(e) The amount shown for a share outstanding throughout the period does not
accord with the earned income or the change in aggregate gains and losses in the
portfolio of securities during the period because of the timing of sales and
purchases of fund shares in relation to fluctuating market values during the
period.
================================================================================
Notes to Financial Statements
1. Organization:
OpenFund (the "Fund") is a series of the MetaMarkets.com Funds (the "Company"),
which was organized on May 21, 1999 as a Massachusetts business trust, and is
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as a non-diversified, open-end management investment company.
Effective August 31, 1999 the Company commenced operations and was authorized to
issue an unlimited number of shares of the Fund. The Fund's investment objective
is to provide investors with capital growth. To achieve its objective, the Fund
invests principally in the common stocks of companies that the Company's
Investment Adviser believes derive strategic advantage from trends caused by the
development of the "New Economy". These are companies which, in the opinion of
the Investment Adviser, are innovative growth companies at the leading edge of
technological, social and economic change.
2. Significant Accounting Policies:
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with accounting principles generally accepted in the
United States, which require management to make estimates and assumptions that
affect amounts reported herein. Actual results could differ from those
estimates.
Securities Valuation:
Investments in securities, including options, are valued at the last quoted
sale price as of the close of business on the day the valuation is made, or
if a sale is not reported for that day, at the average of the most recent
<PAGE>
closing bid and asked prices, except in the case of open short positions
where the asked price is used for valuation purposes. Price information for
listed securities is taken from the exchange where the securities are
primarily traded. Other securities for which no quotations or valuations
are readily available are valued at fair value as determined in good faith
by or under the direction of the Board of Trustees. Short-term investments
having maturities of 60 days or less are valued at amortized cost, which
approximates market 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. The difference between the cost and market values of
investments held by the Fund are reflected as either unrealized
appreciation or depreciation.
Security Transactions and Related Income:
Security transactions in the Fund are accounted for on the date the
security is purchased or sold ("trade date"). Interest income is recognized
on the accrual basis and includes, where applicable, the amortization of
premium or discount. Dividend income is recorded on the ex-dividend date.
Securities gains and losses are calculated on the specific identified cost
basis.
Repurchase Agreements:
The Fund may acquire repurchase agreements from financial institutions,
such as banks and broker-dealers which the Company's Investment Adviser
deems creditworthy, subject to the seller's agreement to repurchase such
securities at an agreed upon date and price. The repurchase price generally
equals the price paid by the Fund plus interest negotiated on the basis of
current short-term rates, which may be more or less than the rate on the
underlying securities. The seller, under a repurchase agreement, is
required to maintain the value of securities held as collateral under the
agreement at least equal to the repurchase price (including accrued
interest). Default by the seller would, however, expose the Fund to
possible loss because of adverse market action or delay in connection with
the disposition of the underlying obligations. Risks may arise from the
potential inability of counterparties to honor the terms of the repurchase
agreements. Accordingly, the Fund could receive less than the recorded
carrying value upon the sale of the underlying collateral securities.
Short Sales:
The Fund is authorized to engage in short selling. Short sales are
transactions in which the Fund sells a security it does not own, in
anticipation of a decline in the market value of that security. To complete
such a transaction, the Fund must borrow the security to deliver to the
buyer upon the short sale; the Fund then is obligated to replace the
security borrowed by purchasing it in the open market at some later date.
The Fund will incur a loss, which could be substantial and potentially
unlimited, if the market price of the security increases between the date
of
<PAGE>
the short sale and the date on which the Fund replaces the borrowed
security. The Fund will realize a gain if the security declines in value
between those dates. The amount of the liability is subsequently marked-to-
market to reflect the current value of the short position. The Fund is also
at risk of incurring dividend expense if a security that has been sold
short declares a dividend. The Fund must pay the dividend to the lender of
the security. Securities sold short at July 31, 2000 and their related
market values and proceeds are set forth in the Schedule of Securities Sold
Short, which accompanies the Schedule of Portfolio Investments.
All short sales must be fully collateralized. Accordingly, the Fund
maintains the collateral in a segregated account with its custodian,
consisting of cash, equities and/or U.S. Government securities sufficient
to collateralize its obligation on the short positions. As of July 31,
2000, the value of securities sold short amounted to $2,091,938, against
which $3,819,282 in cash or cash equivalents and securities was segregated.
Options Transactions:
The Fund may write or purchase option contracts. The risk associated with
purchasing an option is that the Fund pays a premium whether or not the
option is exercised. Additionally, the Fund bears the risk of loss of
premium and change in market value should the counterparty not perform
under the contract. Put and call options purchased are accounted for in the
same manner as other securities owned. The cost of securities acquired
through the exercise of call options is increased by the premiums paid. The
proceeds from securities sold through the exercise of put options are
decreased by premiums paid.
In writing an option, the Fund contracts with a specified counterparty to
purchase (written put option) or sell (written call option) a specified
quantity (notional amount) of an underlying asset at a specified price
during a specified period upon demand of the counterparty. The risk
associated with writing an option is that the Fund bears the market risk of
an unfavorable change in the price of an underlying asset, and may be
required to buy or sell an underlying asset under the contractual terms of
the option at a price different from the current market value. Written
options involve financial risk which may exceed amounts reflected in the
accompanying financial statements.
The following is a summary of written options activity for the eleven-month
period ended July 31, 2000:
<PAGE>
Number of
Options Premiums
Contracts Received
Contracts outstanding at August 31, 1999 - $ -
Options written 561 131,533
Options expired (235) (29,874)
Options closed (279) (82,468)
Options exercised (47) (19,191)
Contracts outstanding at July 31, 2000 - $ -
Dividends to Shareholders:
Dividends from net investment income are declared and paid annually. The Fund's
distributable net realized capital gains, if any, are distributed to
shareholders at least annually.
The amount of distributions from net investment income and net realized gains
are determined in accordance with federal income tax regulations which may
differ from accounting principles generally accepted in the United States. These
"book/tax" differences are either considered temporary or permanent in nature.
To the extent these differences are permanent in nature, such amounts are
reclassified within components of net assets based on the federal tax-basis
treatment. Temporary differences do not require reclassification. Distributions
to shareholders which exceed net investment income and realized capital gains
for financial reporting purposes but not for tax purposes are reported as
dividends in excess of net investment income or distributions in excess of net
realized gains. To the extent they exceed net investment income and net realized
gains for tax purposes, they are reported as distributions of capital.
Federal Taxes:
It is the policy of the Fund to qualify as a regulated investment company by
complying with the provisions available to certain investment companies, as
defined in applicable sections of the Internal Revenue Code, and to make
distributions of net investment income and net realized capital gains sufficient
to relieve it from federal income taxes.
Other:
Costs of $204,649 incurred in connection with the organization of the Fund were
paid by the Investment Adviser and were not recognized as expenses of the Fund.
<PAGE>
3. Related Party Transactions:
Investment advisory services are provided to the Fund by MetaMarkets
Investments, LLC (the "Investment Adviser"). Pursuant to the investment advisory
agreement with the Fund, the Investment Adviser is entitled to an annual fee
accrued daily and paid monthly, based on the Fund's average daily net assets, in
accordance with the following schedule:
First $250 million 1.00%
Next $500 million 0.75%
Over $750 million 0.50%
The Investment Adviser has contractually agreed to reimburse the Fund to the
extent operating expenses exceed 0.20% of the Fund's average daily net assets
for the period ended July 31, 2000, limiting overall expenses of the Fund to a
maximum of 1.45% of the Fund's average daily net assets. The Investment Adviser
waived its fees and paid all Fund expenses through February 28, 2000.
BISYS Fund Services Ohio, Inc. ("BISYS Ohio") is the Fund's administrator, fund
accountant, and transfer and dividend disbursing agent. Under the terms of the
administration agreement, BISYS Ohio will earn on such services an annual fee
accrued daily and paid monthly, based on the Fund's average daily net assets, in
accordance with the following schedule:
First $500 million 0.130%
Next $250 million 0.100%
Next $250 million 0.085%
Over $1 billion 0.075%
Under the terms of the administration agreement, BISYS Ohio receives a minimum
annual fee of $75,000 for the first year under the administration agreement,
$162,500 for the second year and $187,500 for years three, four and five.
Further, BISYS Ohio has voluntarily agreed to receive administration fees earned
during the period August 31, 1999 through November 30, 1999 on a deferred basis.
Amounts deferred under this arrangement were paid by the Investment Adviser to
BISYS Ohio during the nine month period December 1, 1999 through August 31,
2000.
Investors Bank & Trust Company serves as the Fund's custodian. Investors Bank &
Trust Company earns a fee accrued daily and paid monthly, based on the market
value of the Fund's assets held in custody and receives certain securities
transactions charges.
BISYS Fund Services Limited Partnership ("BISYS" or the "Distributor"), an
indirect wholly-owned subsidiary of The BISYS Group, Inc., acts as the exclusive
<PAGE>
distributor of the Fund's shares pursuant to a distribution agreement (the
"Distribution Agreement") dated July 20, 1999, with the Company. Shares are sold
on a continuous basis by the Distributor as agent, although the Distributor is
not obliged to sell any particular amount of shares. 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 the Fund pays the Distributor for distribution-related services and
shareholder servicing at an annual rate of 0.25% of the value of the Fund's
average daily net assets.
Certain officers of the Fund are affiliated with BISYS and such officers and
affiliated Trustees receive no direct payments from the Fund for serving as
officers or Trustees.
For the eleven-month period ended July 31, 2000, the Investment Adviser
voluntarily waived advisory fees totaling $61,880 and reimbursed or paid other
Fund expenses of $534,933, including $25,000 of administration fees. For the
eleven-month period ended July 31, 2000, the Distributor waived fees of $15,470.
4. Securities Transactions:
Cost of purchases and proceeds from sales of investment securities, excluding
securities sold short and short-term investments, were $496,416,576 and
$463,879,185, respectively, for the eleven months ended July 31, 2000.
5. Non-diversified Status:
The Fund's classification 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. 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 diversification requirements of the Internal Revenue Code, 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.
6. Federal Income Tax Information (unaudited):
Post October Loss Deferral
Capital losses incurred after October 31 within the Funds' fiscal year are
deemed to arise on the first business day of the following fiscal year for
tax purposes. The Fund incurred and will elect to defer $639,886 in capital
losses.
<PAGE>
7. Subsequent Event:
The MetaMarkets IPO & New Era Fund commenced operations on September 11, 2000.
================================================================================
Report of Independent Accountants
To the Board of Trustees and Shareholders of MetaMarkets.com OpenFund
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of portfolio investments and schedule of securities sold short, and
the related statements of operations and of changes in net assets and the
financial highlights present fairly, in all material respects, the financial
position of MetaMarkets.com OpenFund (the "Fund") at July 31, 2000, the results
of its operations, the changes in its net assets and the financial highlights
for the period from August 31, 1999 (commencement of operations) through July
31, 2000, in conformity with accounting principles generally accepted in the
United States. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit of these financial
statements in accordance with auditing standards generally accepted in the
United States, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit, which included confirmation of securities at July 31, 2000 by
correspondence with the custodian and brokers, provides a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
San Francisco, California
September 20, 2000
