<PAGE>
Fellow OpenFund shareholders,
The six months following OpenFund's introduction have been exciting. We're
pleased with OpenFund's performance, and with the reaction your fund has
received with investors and in the media.
But the very idea of encapsulating the experience in a short letter to
shareholders, discussing a portfolio already months out of date, seems, frankly,
a bit out of place for OpenFund. Hopefully you've been experiencing OpenFund
with us, day by day on the fund's Web site, and on the site of the advisor,
MetaMarkets Investments LLC. You can find out far more information about what's
really been going on with the fund there than could ever be encapsulated here.
But rules are rules, so we present you with this semi-annual report. In it,
you'll find a snapshot of the fund's portfolio on January 31, 2000. There
you'll find the companies which we believe are making the dream of the New
Economy come true. You'll see technology companies spanning the frontier of
human creativity -- from Globalstar Telecommunications' launch of a global
orbiting wireless telephone infrastructure, to Celera Genomics' pathbreaking
mission into the very core of the human genetic code. You'll also see some
companies that may surprise you - WalMart, General Electric, Wells Fargo, Enron
- - each contributing in a unique way to the evolution of the New Economy.
But the real story in this early period hasn't been about stocks, it's been
about you. The value of interacting in real-time with shareholders in our
online community has been even higher than our expectations. It's been
rewarding to each of us personally, but has also enhanced the investment
process. Shareholders and community members have challenged our ideas, given us
new ones, and engaged us in a powerful dialogue as we have navigated the
turbulent and volatile waters since our fund's genesis on August 31, 1999.
Perhaps we should be using this space to simply say thank you.
Investment Outlook
Traditionally, this is the part of the semi-annual report where the portfolio
managers are supposed to impart, in a few words, the sum total of their future
vision for the next six months. Okay then, here's a shot: we remain bullish on
the New Economy, and bearish on the Old. While the pundits on Wall Street and
in the media continue to call the New Economy a "bubble," we think opportunities
remain for nimble investors to catch the right waves at the right time. Short
of catastrophic monetary, fiscal or regulatory blunders by government, we
believe that the New Economy will continue to power forward, changing the way we
live, the way businesses are run, and the way insight and inspiration are
developed and applied.
<PAGE>
We hope you'll join us in our online community as this great adventure unfolds.
We'll be there to talk to you and listen to you. So log on and help us manage
OpenFund, live in real-time on the Internet -- continue with us in this great
shared enterprise.
Sincerely,
The MetaMarkets Investments Portfolio Management Team
<PAGE>
MetaMarkets.com
OpenFund
Schedule of Portfolio Investments
January 31, 2000
(Unaudited)
<TABLE>
<CAPTION>
Market
Shares Value
------ ------
<S> <C> <C>
Common Stocks (92.2%)
Banking (0.7%)
Wells Fargo Co. 3,000 $ 120,000
---------
Biotechnology & Medical (12.2%)
Celera Genomics Group (b) 2,100 423,018
Cell Genesys, Inc. (b) 17,000 250,750
Emisphere Technologies, Inc. (b) 3,000 113,625
Genzyme Surgical Products (b) 28,000 283,500
Hologic, Inc. (b) 21,100 145,063
LJL Biosystems, Inc. (b) 11,000 165,000
Millenium Pharmaceuticals (b) 1,000 187,438
Neurocrine Biosciences, Inc. (b) 8,000 190,000
PE Biosystems Group 3,100 464,224
---------
2,222,618
---------
Computer Equipment (5.8%)
APEX, Inc. (b) 2,400 91,500
ECCS, Inc. (b) 19,500 374,156
EMC Corp. (b) 2,400 255,600
Sun Microsystems, Inc. (b) 4,200 329,963
---------
1,051,219
---------
Computer Software & Services (8.2%)
BrightStar Information Technology Group, Inc. (b) 9,000 96,469
CSP, Inc. (b) 20,100 170,850
Exchange Applications, Inc. (b) 1,500 130,875
Rainmaker Systems, Inc. (b) 7,800 111,638
Red Hat, Inc. (b) 1,700 161,713
Seachange International, Inc. (b) 4,000 152,500
Veritas Software Corp. (b) 2,000 291,749
Viisage Technology, Inc. (b) 18,900 194,906
Wave Systems Corp. (b) 13,000 165,750
---------
1,476,450
---------
Electronic Components/Instruments (8.4%)
Applied Micro Circuits Corp. (b) 3,000 443,250
Atmel Corp. (b) 8,000 248,500
Broadcom Corp. (b) 1,300 376,106
Texas Instruments, Inc. 2,900 312,838
Xilinx, Inc. (b) 3,000 137,250
---------
1,517,944
---------
Energy & Electrical Technology (3.5%)
American Superconductor Corp. (b) 13,000 346,125
Avista Corp. 4,000 114,500
Electric Fuel Corp. (b) 14,000 172,375
---------
633,000
---------
Industrial (2.7%)
General Electric Co. 3,600 480,150
---------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value
------ ------
<S> <C> <C>
Insurance (0.9%)
American International Group 1,500 $ 156,188
---------
Internet (14.6%)
BroadVision, Inc. (b) 2,000 254,625
Commerce One, Inc. (b) 1,200 206,700
Exodus Communications, Inc. (b) 1,300 149,338
HearMe, Inc. (b) 4,000 101,250
Sciquest.com, Inc. (b) 2,000 113,250
Terra Networks SA, ADR (b) 1,300 114,156
Tumbleweed Communications Corp. (b) 4,000 200,875
Verio, Inc. (b) 2,500 160,938
VerticalNet, Inc. (b) 3,100 738,574
Vignette Corp. (b) 1,500 292,500
Yahoo, Inc. (b) 1,000 322,062
---------
2,654,268
---------
Investment Company (3.9%)
Ampal-American Israel Corp. (b) 16,500 241,313
CMGI, Inc. (b) 1,700 191,356
Harris & Harris Group, Inc. 22,600 265,550
---------
698,219
---------
Multimedia (0.5%)
Walt Disney Co. 2,500 90,781
---------
Oil & Gas Utility (1.0%)
Enron Corp. 2,700 182,081
---------
Optical Networking (3.8%)
JDS Uniphase Corp. (b) 3,400 693,388
---------
Retail (2.5%)
Home Depot, Inc. 5,500 311,438
Wal-Mart Stores, Inc. 2,500 136,875
---------
448,313
---------
Telecom Equipment (4.5%)
Conexant Systems, Inc. (b) 3,000 253,500
CrossKeys Systems Corp. (b) 7,000 68,250
Lucent Technologies, Inc. 2,500 138,125
Terayon Communication Systems, Inc. (b) 3,300 353,100
---------
812,975
---------
Telecom Services (9.4%)
ACT Teleconferencing, Inc. (b) 4,700 55,225
Clearworks.net, Inc. (b) 39,000 202,313
Fibernet Telecom Group, Inc. (b) 7,000 101,500
Global Crossing Ltd. (b) 8,500 431,374
Level 3 Communications, Inc. (b) 3,100 365,606
NEXTLINK Communications, Inc. (b) 2,700 227,813
Northeast Optic Network, Inc. (b) 3,300 323,400
---------
1,707,231
---------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value
------ -----
<S> <C> <C>
Wireless Communications (9.6%)
Globalstar Telecommunications Ltd. (b) 7,500 $ 247,031
Nokia Corp., ADR 2,000 366,000
QUALCOMM, Inc. (b) 5,200 660,075
Sonera Group Plc, ADR (b) 4,000 277,000
U.S. Wireless Corp. (b) 4,000 107,750
Wireless Facilities, Inc. (b) 2,000 100,750
----------
1,758,606
----------
Total Common Stocks (Cost $12,903,236) 16,703,431
----------
Index-Linked Trusts (5.6%)
Nasdaq 100 Share Index 1,000 178,875
S&P 500 Depositary Receipt 6,000 836,625
---------
Total Index-Linked Trusts (Cost $1,006,331) 1,015,500
---------
Options (0.8%)
Home Depot, Inc., Call Option, 20 12,750
expiring February 2000 @ 50
Nasdaq 100 Share Index, Put Option, 100 67,500
expiring February 2000 @ 176
Nasdaq 100 Share Index, Put Option, 70 60,375
expiring February 2000 @ 178
Seagate Technology, Inc., Call Option, 30 4,500
-------
expiring February 2000 @ 42.5
Total Options (Cost $216,810) 145,125
-------
Cash Sweep (1.0%)
IBT Cash Sweep 182,484 182,484
-------
Total Cash Sweep (Cost $182,484) 182,484
-------
Total Investments (Cost $14,308,861) (a) - 99.6% 18,046,540
Other assets in excess of liabilities - 0.4% 69,328
----------
TOTAL NET ASSETS - 100.0% $ 18,115,868
==========
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Market
Shares Value
------ -----
<S> <C> <C>
Securities Sold Short - (14.9%)
Common Stocks (10.8%)
Biotechnology & Medical (4.4%)
Biotech Holders Trust (b) 5,000 $ 803,750
Electronic Components/Instruments (3.2%)
Intel Corp. 4,500 445,219
Micron Technology Inc. (b) 2,000 124,375
---------
569,594
---------
Retail (1.9%)
Priceline.com Inc. (b) 6,000 348,000
Telecom Services (1.3%)
AT&T Corp. 4,500 237,375
---------
Total Common Stocks 1,958,719
---------
Index-Linked Trusts (4.1%)
Internet Holders Trust (b) 5,000 742,187
---------
Total Index-Linked Trusts 742,187
---------
Total Securities Sold Short (Proceeds $2,803,239) $ 2,700,906
=========
</TABLE>
- ---------------------------
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
Unrealized appreciation - Investments $4,142,427
Unrealized appreciation - Short Sales 137,019
Unrealized depreciation - Investments (404,747)
Unrealized depreciation - Short Sales (34,687)
----------
Net unrealized appreciation $3,840,012
==========
(b) Non-income producing security.
ADR - American Depositary Receipt
6
<PAGE>
MetaMarkets.com Funds
OpenFund
(Unaudited)
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the five
months ended
January 31,
2000 (a)
------------
<S> <C>
From Investment Activities:
Operations:
Net investment income $ 12,658
Net Realized Gain/(Loss) on:
Investments 4,225,902
Securities sold short (62,112)
Written options (244,312)
Net Change in Unrealized Appreciation/(Depreciation on:
Investments 3,737,680
Securities sold short 102,332
Written options -
------------
Change in net assets resulting from operations 7,772,148
------------
Distributions to Shareholders:
From net investment income (10,825)
From net realized gains from investment transactions (63,593)
------------
Change in net assets from shareholder distributions (74,418)
------------
Change in net assets from capital transactions 10,418,138
------------
Change in net assets 18,115,868
Capital Transactions
Proceeds from shares issued 12,959,212
Dividends reinvested 73,812
Cost of shares redeemed (2,614,886)
------------
Change in net assets from capital transactions 10,418,138
------------
Share Transactions
Issued 827,414
Reinvested 3,133
Redeemed (110,302)
------------
Change in share transactions 720,245
------------
Net Assets:
Beginning of period -
------------
End of period $ 18,115,868
============
</TABLE>
----------
(a) Period from September 1, 1999 (commencement of operations) to January 31,
2000.
See notes to financial statements
<PAGE>
MetaMarkets.com Funds
OpenFund
(Unaudited)
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the five
months ended
January 31,
2000 (a)
------------
<S> <C>
Net Asset Value, Beginning of Period $ 12.50
------------
Investment Activities
Net investment income 0.02
Net realized and unrealized gains from investments 12.75
------------
Total from Investment Activities 12.77
------------
Distributions
Net investment income (0.02)
Net realized gains (0.10)
------------
Total Distributions (0.12)
------------
Net Asset Value, End of Period $ 25.15
============
Total Return 102.17% (b)
Ratios/Supplemental Data:
Net Assets at end of period (000) $ 18,116
Ratio of expenses to average net assets 0.00% (c)(d)
Ratio of net investment income to average net assets 0.29% (c)
Ratio of expenses to average net assets* 3.75% (c)
Portfolio turnover rate 543%
</TABLE>
- -------
* 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 September 1, 1999 (commencement of operations) to January 31,
2000.
(b) Not annualized.
(c) Annualized.
(d) The Advisor has contractually agreed to reimburse the Fund to the extent
operating expenses exceed 0.20% of the Fund's average daily assets for
the fiscal year ending July 31, 2000, limiting overall expenses of the
Fund to a maximum of 1.45% of the Fund's average daily net assets. In
addition, the Advisor has agreed to waive its fees and pay all Fund
expenses through February 28, 2000.
See notes to financial statements
<PAGE>
MetaMarkets.com Funds
OpenFund
(Unaudited)
<TABLE>
<CAPTION>
Statements of Assets and Liabilities
January 31, 2000
<S> <C>
Assets:
Investments, at value (Cost $13,418,286) $ 16,455,700
Deposits with broker and custodian bank for securities
sold short (Cost $890,575) 1,590,840
-------------
18,046,540
Cash 3,232,418
Interest and dividends receivable 597
Receivable for capital shares issued 18,500
Receivable for investments sold short 2,803,239
Receivable for investments sold 1,940,078
-------------
Total Assets 26,041,372
-------------
Liabilities:
Securities sold short (proceeds $ 2,803,239) $ 2,700,906
Payable for investments purchased 5,224,598
-------------
Total Liabilities 7,925,504
-------------
Net Assets:
Capital $ 10,418,138
Accumulated undistributed net investment income 1,833
Accumulated undistributed net realized gain from security
transactions 3,855,885
Net unrealized appreciation from securities sold short,
options and investments 3,840,012
-------------
Net Assets $ 18,115,868
=============
Shares of beneficial interest outstanding (unlimited number
of shares Authorized, no par value) 720,245
Net asset value, offering price and redemption price per share $ 25.15
=============
</TABLE>
<TABLE>
<CAPTION>
Statements of Operations
For the five months ended January 31, 2000 (a)
<S> <C>
Investment Income:
Interest income $ 6,261
Dividend income 6,397
-------------
Total Income 12,658
-------------
Expenses:
Investment advisory fees $ 44,135
Administration fees 16,666
Distribution fees 11,034
Legal fees 56,818
Registration and filing fees 9,586
Dividend expense for securities sold short 990
Audit fees 8,182
Insurance 12,091
Other 6,564
------------
Total expenses before voluntary fee reductions 166,066
Expenses voluntarily reduced (166,066)
------------
Net Expenses (b) -
------------
Net investment income 12,658
------------
Realized/Unrealized Gain (Loss) from Investments,
Securities Sold Short and Written Options:
Net realized gain (loss) from:
Investment transactions 4,225,902
Securities sold short (62,112)
Written options (244,312)
------------
Change in Unrealized Appreciation/Depreciation from:
Investments 3,737,680
Securities sold short 102,332
------------
Net Realized/Unrealized Gain/(Loss) from
Investments, Securities Sold Short, and
Written Options 7,759,490
------------
Change in net assets resulting from operations $ 7,772,148
============
</TABLE>
___________
(a) Period from September 1, 1999 (commencement of operations) to January 31,
2000.
(b) The Advisor has contractually agreed to reimburse the Fund to the extent
operating expenses exceed 0.20% of the Fund's average daily assets for the
fiscal year ending July 31, 2000, limiting overall expenses of the Fund to a
maximum of 1.45% of the Fund's average daily net assets.In addition, the
Advisor has agreed to waive its fees and pay all Fund expenses through
February 28, 2000.
<PAGE>
Notes to Financial Statements
January 31, 2000
(Unaudited)
1. Organization:
The MetaMarkets.com 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 September 1, 1999 the Company commenced operations and was authorized
to issue unlimited shares of the Fund. The Fund's investment objective is to
provide investors with capital growth by investing principally in the common
stocks of companies that the Investment Advisor believes derive strategic
advantage from trends caused by the development of the "New Economy", that is
those innovative firms 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 generally accepted accounting principles, 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 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 mean between closing bid and asked prices.
Price information for listed securities is taken from the exchange where
the securities are primarily traded. Investments in futures and related
options, which are traded on commodities exchanges, are valued at their
last sale price as of the close of such exchanges. Other securities for
which no quotations 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.
Security Transactions and Investment 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 identified cost basis.
Repurchase Agreements:
The Fund may purchase instruments from financial institutions, such as
banks and broker-dealers, subject to the seller's agreement to repurchase
them at an agreed upon time and price ("repurchase agreements"). 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. Default by the seller would, however, expose the relevant
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 counter parities to honor the terms
of the repurchase agreements. Accordingly, the Fund could receive less than
the recorded
10
<PAGE>
Notes to Financial Statements
January 31, 2000
(Unaudited)
carrying value upon the sale of the underlying collateral securities.
Short Sales:
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 if the market price of the security increases
between the date of 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 Fund maintains collateral
relating to it's short selling activity in a segregated account with its
custodian, consisting of cash, equities, and or U.S. Government securities.
At January 31, 2000, the value of securities sold short amounted to
$2,700,906, against which collateral of $1,590,840 was on deposit with the
Fund's custodian.
For financial statement purposes, an amount equal to the proceeds received
from a short sale is included in the Statement of Assets and Liabilities as
an asset and an equivalent liability. The amount of the liability is
subsequently marked-to-market to reflect the current value of the
securities sold short.
Options Transactions:
The Fund may write or purchase option contracts. These transactions are to
hedge against changes in interest rates, security prices, currency
fluctuations, and other market developments, or for the purposes of earning
additional income (i.e., speculation). 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 option activity for the five months
ended January 31, 2000:
11
<PAGE>
Notes to Financial Statements
January 31, 2000
(Unaudited)
<TABLE>
<CAPTION>
Number of
Options Premiums
Contracts Received
---------------- ---------------
<S> <C> <C>
Contracts outstanding at
September 1, 1999 - $ -
Options written 561 131,533
Options expired (235) (29,874)
Options closed (279) (82,468)
Options exercised (47) (19,191)
-------------- ---------------
Contracts outstanding at January 31, 2000 - $ -
============== ===============
</TABLE>
Dividends to Shareholders:
The Fund declares and distributes dividends from net investment income to
its shareholders annually. The fund's net realized capital gains, if any,
are distributed to shareholders at least annually. Additional distributions
may also be made to the Fund's shareholders to the extent necessary to
avoid the federal excise tax on certain undistributed income and net
capital gains of regulated investment companies.
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 generally accepted accounting principles. 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.
Federal Taxes:
It is the policy of the Fund to qualify or continue 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 relive it from all, or
substantially all, federal income taxes.
3. Related Party Transactions:
Investment advisory services are provided to the Fund by MetaMarkets Investments
LLC., ("Advisor"). Pursuant to the investment advisor's agreement with the Fund,
the Advisor 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%
In addition, the Advisor has contractually agreed to reimburse the Fund to the
extent operating
12
<PAGE>
Notes to Financial Statements
January 31, 2000
(Unaudited)
expenses exceed 0.20% of the Fund's average daily net assets for the fiscal year
ending July 31, 2000, limiting overall expenses of the Fund to a maximum of
1.45% of the Fund's average daily net assets. The Advisor has agreed to waive
its fees and pay 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 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 has voluntarily agreed to receive Administration fees earned
during the period September 1, 1999 through November 30, 1999 on a deferred
basis. Amounts deferred under this arrangement are payable to BISYS 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 will earn a fee accrued daily and paid monthly, based on the
market value of the Fund's assets held in custody and receive certain securities
transactions charges.
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.
BISYS Fund Services Limited Partnership ("BISYS" or "the Distributor"), an
indirect wholly-owned subsidiary of The BISYS Group, Inc., acts as the exclusive
distributor of the Fund's shares on a best efforts basis 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.
For the five month period from September 1, 1999 through January 31, 2000, the
Advisor voluntarily waived advisory fees totaling $44,135 and reimbursed other
Fund expenses of $110,897, including $16,666 of Administration fees. For the
five month period ended January 31, 2000, the Distributor waived fees of
$11,034.
13
<PAGE>
Notes to Financial Statements
January 31, 2000
(Unaudited)
4. Securities Transactions:
Cost of purchases and proceeds from sales of investment securities, excluding
securities sold short and short-term investments, were $57,635,776 and
$50,879,396, respectively, for the five months ended January 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. Results of Shareholder Meeting:
On January 14, 2000, a Special Meeting of the Shareholders was held to approve
the Investment Advisory Agreement between MetaMarkets.com Funds, on behalf of
the Fund, and MetaMarkets Investments LLC. This vote was required by the
Investment Company Act of 1940, as MetaMarkets Investments LLC raised capital in
a transaction that will permit the new investors to vote greater than 25% of its
parent company's shares.
<TABLE>
<CAPTION>
% of % of
Outstanding Shares
No. of Shares Shares Voted
------------- ----------- --------
<S> <C> <C> <C>
FOR: 567,786 78.83% 99.80%
AGAINST: 59 0.01% 0.01%
ABSTAIN: 1,058 0.15% 0.19%
---------- -------- --------
TOTAL: 568,903 78.99% 100.00%
---------- -------- --------
</TABLE>
14
