Registration No. 2-90810
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. __ [_]
Post-Effective Amendment No. 23 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 24
(Check appropriate box or boxes)
MONITREND MUTUAL FUND
(Exact name of registrant as specified in charter)
1299 Ocean Avenue, Suite 210
Santa Monica, CA 90401 90401
(Address of Principal (Zip Code)
Executive Offices)
Registrant's Telephone Number, including Area Code (310)393-1428
Joseph Lloyd McAdams, Jr., Chairman
Monitrend Mutual Fund
1299 Ocean Avenue, Suite 210
Santa Monica, CA 90401
(Name and address of Agent for Service)
Approximate date of proposed public offering: As soon as practicable
after the effective date of the registration statement.
It is proposed that this filing will become effective (check
appropriate box)
[X] immediately upon filing pursuant to paragraph (b)
[_] on April 4, 1995 pursuant to paragraph (b)
[_] 60 days after filing pursuant to paragraph (a)(1)
[_] on (date) pursuant to paragraph (a)(2) of rule 485
[_] 75 days after filing pursuant to paragraph (a)(2)
[_] on (date) pursuant to paragraph (a)(2) of rule 485
If appropriate, check the following box:
[_] this post-effective amendment designates a new effective date
for a previously filed post-effective amendment
Registrant has previously registered an indefinite number of its
shares of beneficial interest pursuant to Rule 24f-2 under the Investment
Company Act of 1940. Registrant filed its Rule 24f-2 Notice for the
fiscal year ended November 30, 1995 on January 29, 1996.
<PAGE>
MONITREND MUTUAL FUND
CROSS REFERENCE SHEET
(Pursuant to Rule 481 showing the location in the Prospectus and
the Statement of Additional Information of the responses to the Items of
Parts A and of Form N-1A.)
Caption or Subheading in Prospectus
Item No. on Form N-1A or Statement of Additional Information
Part A - INFORMATION REQUIRED IN PROSPECTUS
1. Cover Page Cover Page
2. Synopsis Fee Table; Summary
3. Condensed Financial Financial Highlights;
Performance Information
4. General Description Summary; Investment Objectives
of Registrant and Policies of the Monitrend Mutual
Funds; Investment Practices and Risks;
Principal Investment Restrictions
5. Management of the Management; Per Share Income and
Fund Capital Changes; General Information
5A. Management's Discussion Included in Annual Report to
Shareholders
of Fund Performance
6. Capital Stock and Dividends and Tax Status; General
Other Securities Information
7. Purchase of Securities How to Purchase Shares
Being Offered
8. Redemption or How to Redeem Shares
Repurchase
9. Legal Proceedings *
PART B - INFORMATION REQUIRED IN STATEMENT OF ADDITIONAL INFORMATION
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and Investment Objectives and Policies
History
13. Investment Objectives Investment Objectives and Policies;
and Policies Appendix
14. Management of the Fund Management
15. Control Persons and Management
Principal Holders
of Securities
16. Investment Advisory and Management; General
Other Services
17. Brokerage Allocation and Management
Other Practices
18. Capital Stock and Included in Prospectus under
Other Securities "General Information"; General
19. Purchase, Redemption Included in Prospectus under
and Pricing of Securities "How to Purchase Shares"; and
Being Offered "How to Redeem Shares"; Net
Asset Value; Shareholder Services
20. Tax Status Included in Prospectus under "Dividends
and Tax Status"; Shareholder Services
21. Underwriters General
22. Calculations of Per- Calculation of Performance Data
formance Data
23. Financial Statements Financial Statements
_______________
* Answer negative or inapplicable
<PAGE>
(MONITREND LOGO)
MUTUAL FUND
Prospectus
May 31, 1996
PROSPECTUS
(MONITREND LOGO)
MUTUAL FUND
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This Prospectus provides you with the basic information you should know before
investing in any Fund. You should read it and keep it for future reference. A
Statement of Additional Information dated May 31, 1996 containing additional
information about the Trust and the Funds has been filed with the Securities and
Exchange Commission and is incorporated by reference into this Prospectus in its
entirety. You may obtain a copy of the Statement of Additional Information
without charge by calling the Trust's Distributor at (800) 251-1970 or by
writing to the Distributor at 1299 Ocean Avenue, Suite 210, Santa Monica, CA
90401.
Monitrend Mutual Fund (the "Trust") is an open-end investment company having
seven separate portfolios (the "Funds"), each of which is a separate mutual fund
having its own objective or objectives, assets, liabilities and net asset value
per share. The seven Funds are: (1) the PIA Adjustable Rate Government
Securities Fund (the "Adjustable Rate Fund") whose objective is to provide a
high level of current income, consistent with low volatility of principal
through investing in adjustable rate securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities; (2) the PIA - Monitrend
Government Income Series (the "Government Income Fund" or "Government Fund"),
whose objectives are growth of capital, whether over the short or long-term,
income and preservation of capital; (3) the Gold Series (the "Gold Fund"), whose
objective is long-term growth of capital through investing primarily in equity
securities of domestic and foreign companies engaged in activities related to
gold and precious metals; (4) the Growth Series (the "Growth Fund"), whose
objective is long-term growth of capital; (5) the Gaming and Leisure Series (the
"Gaming Fund"), whose objective is long-term growth of capital through investing
primarily in equity securities of companies engaged in activities related to the
gaming and leisure industry; (6) the Technology Series (the "Technology Fund"),
whose objective is long-term growth of capital through investing primarily in
equity securities of companies that its investment adviser believes can produce
products or services that provide or benefit from advances in technology; and
(7) the Growth & Income Series (the "Growth & Income Fund"), whose objective is
to maximize total return through a combination of capital appreciation and
income. There is no assurance that any Fund will attain its objective or
objectives.
Not all portfolios of the Trust may be available in your state.
The date of this Prospectus is May 31, 1996.
<TABLE>
FEE TABLE
<CAPTION>
ADJUSTABLE GOVERNMENT GOLD GROWTH GAMING TECHNOLOGY GROWTH &
RATE FUND FUND FUND FUND FUND FUND INCOME FUND
--------- ---------- ---- ----- ----- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 1.25% 4.50% 4.50% 4.50% 4.50% 4.50% 4.50%
Maximum Sales Load Imposed
on Reinvested Dividends None None None None None None None
Deferred Sales Load None None None None None None None
Redemption Fees+<F1> 2% 2% 2% 2% 2% 2% 2%
Exchange Fee++<F2> None None None None None None None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees*<F3> 0.35% 0.40% 1.00% 1.00% 1.25% 1.00% 0.63%
12b-1 Fees 0.05% 0.10% 0.99% 0.99% 0.99% 0.99% 0.99%
Other Expenses (after expense reimbursement) 0.05% 0.60% 0.45% 0.45% 0.65% 0.45% 0.82%
------ ------ ------ ------ ------ ------ ------
Total Fund Operating Expenses
(after expense reimbursement)#<F4> 0.45% 1.10% 2.44% 2.44% 2.89% 2.44% 2.44%
+<F1>The 2% fee withheld from redemption proceeds of shares held for less than
60 days is paid to the Fund.
++<F2>Exchanges will be treated as redemptions for purposes of imposing
redemption fees.
*<F3>The management fees of the Gold Fund, Growth Fund, Gaming Fund and
Technology Fund are higher than that paid by most other investment companies.
#<F4>The total operating expenses of the Gaming Fund are higher than that paid
by most other investment companies.
</TABLE>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------ ------- --------
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at the end of each time period:
Adjustable Rate Fund $17 $27 $37 $68
Growth & Income Fund, Growth Fund
or Gold Fund $69 $118 $169 $310
Technology Fund $69 $118 $169 $310
Government Fund $56 $78 $103 $173
Gaming Fund $73 $130 $190 $352
The purpose of the table above is to assist the investor in understanding the
various costs and expenses that an investor in any of the Funds will bear
directly or indirectly. For a more complete description of the various costs and
expenses, see "Management" and "How to Purchase Shares." The Annual Fund
Operating Expenses for each of the Funds are based on actual expenses incurred
for the fiscal year ended November 30, 1995. If the Adviser had not reimbursed
each Fund (other than the Adjustable Rate Fund) for excess operating expenses,
the total operating expenses during the last fiscal year of the Growth & Income
Fund, the Government Fund, the Gold Fund, the Growth Fund, the Technology Fund
and the Gaming Fund would have been 6.08%, 5.73%, 12.52%, 11.44%, 18.74% and
9.96%, respectively. If the Government Fund Adviser had not reimbursed the
Adjustable Rate Fund for excess operating expenses, the total operating expenses
during the last fiscal year of the Adjustable Rate Fund would have been 2.01%.
The Example should not be considered a representation of past or future
expenses, and actual expenses may be greater or less than those shown. Long-term
investors may pay more than the economic equivalent of the maximum front-end
sales charges permitted by the Rules of Fair Practice of the National
Association of Securities Dealers, Inc.
SUMMARY
What are the Funds? ADJUSTABLE RATE FUND -- The Adjustable Rate Fund seeks to
provide investors with a high level of current income, consistent with low
volatility of principal through investing in adjustable rate U.S. Government
securities. Under normal circumstances at least 65% of the Adjustable Rate
Fund's total assets will consist of U.S. Government adjustable rate mortgage
pass-through securities and other securities representing an interest in or
collateralized by mortgages. The Adjustable Rate Fund will maintain a maximum
duration equal to that of a three-year U.S. Treasury security and a target
duration in a range approximately equal to that of a six-month to two-year U.S.
Treasury security. See "Investment Objectives and Policies of the Monitrend
Mutual Funds."
GOVERNMENT INCOME FUND -- The Government Income Fund invests at least 65% of
its total assets in securities of any maturity which are issued or guaranteed by
the U.S. Government or by any of its agencies or instrumentalities, including
U.S. Government-sponsored corporations ("U.S. Government securities"). The
average portfolio maturity of the Government Income Fund will depend on the
analysis of Pacific Income Advisers, Inc. (the "Government Fund Adviser"), the
Government Income Fund's investment adviser, as to the shape of the yield curve
and the relationship between expected and actual yield curves of government and
non-government securities. See "Investment Objectives and Policies of the
Monitrend Mutual Funds."
GOLD FUND -- The Gold Fund seeks to achieve long-term growth of capital by
investing primarily in equity securities of domestic and foreign companies
engaged in exploration, refinement, development, manufacture, production or
marketing of gold and other precious metals products. Under normal
circumstances, the Gold Fund's assets will be invested primarily in equity
securities of such companies whose activities are related to gold. Securities of
these companies have been subject to substantial price fluctuations and are
affected by various economic factors that normally do not affect other
investments, which in turn may subject the value of the Gold Fund's shares to
greater fluctuation. See "Investment Objectives and Policies of the Monitrend
Mutual Funds."
GROWTH FUND -- The Growth Fund seeks to achieve long-term growth of capital
principally by investing in common stocks of issuers that Monitrend Investment
Management, Inc. (the "Adviser"), the Trust's investment adviser, anticipates
will have both sales and earnings which grow at a higher than average rate per
year. Typically the companies in which the Growth Fund invests will be well-
financed issuers with proven records of profitability, although such companies
may not be the largest and best known companies in their industry groups.
Investing for capital growth involves possible risks as well as possible
rewards. Since the major portion of the Growth Fund's portfolio will normally
consist of common stocks, its net asset value may be subject to greater
fluctuations than a portfolio containing a substantial amount of fixed income
securities. See "Investment Objectives and Policies of the Monitrend Mutual
Funds."
GAMING FUND -- The Gaming Fund seeks to achieve long-term growth of capital
through investing at least 65% of its total assets in equity securities of
companies engaged in activities related to the gaming and leisure industry. The
gaming and leisure industry includes companies engaged in the design, production
or distribution of sporting goods, recreational equipment, toys, games
(including video and other electronic games), photographic equipment and
supplies, musical instruments and recordings. Also included in the gaming and
leisure industry are motion picture and broadcast companies (including cable
television companies), companies engaged in furnishing domestic and foreign
transportation by air, and companies engaged in operating hotels or motels,
sports arenas, gambling casinos, amusement or theme parks, or restaurants.
Securities of companies in the gaming and leisure industry may be considered
speculative, in particular, because of their unpredictable earnings. As a
consequence, securities of companies in the gaming and leisure industry
generally exhibit greater volatility than the overall market. See "Investment
Objectives and Policies of the Monitrend Mutual Funds."
TECHNOLOGY FUND -- The Technology Fund seeks to achieve long-term growth of
capital through investing primarily in equity securities of companies that the
Adviser believes can produce products or services that provide or benefit from
advances in technology. The Adviser interprets the term "technology" broadly to
include semiconductors and electronic components, computers, computer services,
computer peripherals and software, communications, multimedia, instruments,
office automation, factory automation, robotics, consumer electronics,
electronic games, cable television, pharmaceuticals, biotechnology, medical
devices, superconductivity, specialty materials, alternative energy and other
advances resulting from research and development programs. Competitive
pressures may have a significant effect on the financial condition of companies
in the technology sector. See "Investment Objectives and Policies of the
Monitrend Mutual Funds."
GROWTH & INCOME FUND -- The Growth & Income Fund seeks to maximize total
return through a combination of capital appreciation and income. The Growth
&Income Fund invests primarily in stocks in the Standard & Poor's 500 Index of
companies with market capitalizations in excess of $500,000,000 and low
price/earnings ratios that appear to be undervalued relative to their potential
growth rates. The Growth & Income Fund expects, but is not required, to invest
in a portfolio of about 90 such stocks. Since the major portion of the Growth &
Income Fund's portfolio will normally consist of common stocks, its net asset
value may be subject to greater fluctuations than a portfolio containing a
substantial amount of fixed income securities. See "Investment Objectives and
Policies of the Monitrend Mutual Funds."
Are there investment risks? Investing in the Funds involves certain risks.
Certain of the Funds invest in foreign securities. See "Investment Practices and
Risks -- Foreign Securities." The Adjustable Rate Fund may invest in
derivatives. See "Investment Objectives and Policies of the Monitrend Mutual
Funds." The Gold Fund, the Growth Fund, the Gaming Fund and the Technology Fund
are non-diversified. See "Principal Investment Restrictions." Certain of the
Funds invest in Mortgage-Backed Securities. See "Investment Practices and Risks
- --Principal Investment Risks." The Gold Fund and the Gaming Fund concentrate
their investments. See "Principal Investment Restrictions." The Adjustable Rate
Fund, Gaming Fund, Technology Fund and Growth & Income Fund may engage in
leverage. See "Investment Practices and Risks -- Borrowing." See also
"Investment Practices and Risks -- Principal Investment Risks."
Who provides professional management? The assets of the Growth Fund, the
Gaming Fund, the Technology Fund and the Gold Fund are managed by Monitrend
Investment Management, Inc., the Adviser. The assets of the Government Fund and
the Adjustable Rate Fund are managed by Pacific Income Advisers, Inc. (the
"Government Fund Adviser"), assisted by the Adviser as manager. The assets of
the Growth & Income Fund are managed by MidCap Associates, Inc. (the Growth &
Income Fund Adviser") assisted by the Adviser as sub-adviser. The Adjustable
Rate Fund pays the Government Fund Adviser a monthly fee at the annual rate of
0.35% of its daily net assets. The Government Fund Adviser is responsible for
compensating the Adviser for its services as manager to the Adjustable Rate
Fund. The Government Fund pays the Government Fund Adviser and the Adviser a
combined monthly fee at the annual rate of 2/5 of 1% of its daily net assets.
The Growth Fund pays the Adviser a monthly fee at the annual rate of 1% of its
daily net assets. The Adviser has retained Robert L. Bender, Inc. (the "Growth
Fund Sub-Adviser") to assist it in managing the assets of the Growth Fund. The
Adviser is responsible for compensating the Growth Fund Sub-Adviser. The Gaming
Fund pays the Adviser a monthly fee at the annual rate of 1.25% of its daily net
assets. The Technology Fund pays the Adviser a monthly fee at the annual rate of
1.0% of its daily net assets. The Adviser has retained Negative Beta Associates,
Inc. (the "Technology Fund Sub-Adviser") to assist it in managing the assets of
the Technology Fund. The Adviser is responsible for compensating the Technology
Fund Sub-Adviser. The Gold Fund pays the Adviser a monthly fee at the annual
rate of l% of its daily net assets. The Growth & Income Fund pays the Growth &
Income Fund Adviser and the Adviser a combined monthly fee at the annual rate of
0.625% of its daily net assets. The Growth & Income Adviser also receives a
fixed fee of $1,000 for each month in which the Growth & Income Fund's assets
are in excess of $7,000,000. The fees payable by the Gold Fund, the Growth
Fund, the Gaming Fund and the Technology Fund are higher than those charged to
most other mutual funds. With the exception of the Government Fund, the Gaming
Fund, the Technology Fund and the Adjustable Rate Fund, the fees payable by the
Funds are reduced at various asset levels for each Fund. American Data Services,
Inc. provides each Fund with administrative and fund accounting services, for a
monthly fee at the annual rate of 0.10% of each Fund's daily net assets, subject
to a minimum monthly fee of approximately $1,072 per Fund. See "Management."
How can you invest in a Fund? You can buy a Fund's shares through dealers who
have sales agreements with the Distributor, Syndicated Capital, Inc., at their
net asset value plus a sales charge. Except for the Adjustable Rate Fund, the
maximum sales charge is 4.50% of the offering price; this is equal to about
4.71% of the amount invested. The maximum sales charge for the Adjustable Rate
Fund is 1.25% of the offering price; this is equal to about 1.27% of the amount
invested. This sales charge is reduced for larger investments and may be
eliminated in some cases. Except for the Adjustable Rate Fund, the minimum
initial order is $1,000, except for qualified retirement plans and accounts
which establish pre-authorized check plans, for which the minimum initial order
is $100. The minimum subsequent order is $50. The minimum initial order for the
Adjustable Rate Fund is $5,000. There is no minimum for subsequent orders. The
Distributor can change these minimums at any time. Each Fund also reimburses the
Distributor for distribution expenses and for fees paid to certain other
organizations, pursuant to the Distribution Plan, of up to 0.99% of each Fund's
daily net assets (except with respect to the Government Fund and the Adjustable
Rate Fund where such fees and expenses may not exceed 0.10% and 0.05%,
respectively, of daily net assets). See "How to Purchase Shares."
How can you redeem your shares? You can sell back (redeem) your shares at
their net asset value. This will change with the changing value of the portfolio
securities of the Fund whose shares are being redeemed. To discourage short-term
trading each of the Funds impose a 2% redemption fee on shares that are
repurchased, redeemed or exchanged before they have been held for 60 days.
If the balance in your account (unless it is a qualified retirement plan)
falls below $500, the Trust may redeem the remaining shares and close the
account in certain circumstances. See "How to Redeem Shares."
What is the value of a share? The value of one of a Fund's shares is its net
asset value. This is simply that Fund's net assets divided by the number of its
shares outstanding. Net assets is the value of securities and other assets less
that Fund's liabilities. See "Net Asset Value."
What is the tax status of the Funds? The Trust intends for each Fund to
qualify as a "regulated investment company" under Subchapter M of the Internal
Revenue Code. See "Dividends and Tax Status."
FINANCIAL HIGHLIGHTS (for a share outstanding throughout the period)
The financial highlights for each of the Funds should be read in conjunction
with the Funds' audited financial statements and the notes thereto which appear
in the Statement of Additional Information. Further information about the
performance of the Funds is contained in the Funds' Annual Report to
Shareholders, copies of which may be obtained without charge upon request.
(Prior to February 1, 1995, the Adviser was the investment adviser to the Growth
& Income Fund and the investment objective of the Growth & Income Fund was long-
term total return from dividends and realized and unrealized capital gains from
stocks and options which exceeds that of the Standard & Poor's 100 Index
("Index") through investing in a portfolio of common stocks which approximately
parallels the composition of the Index and by engaging in various portfolio
strategies involving the liquidation of the portfolio or the use of options and
futures contracts to hedge protectively against adverse changes in stock market
values. Prior to November 1, 1992 the Adviser was the investment adviser to the
Government Fund and between February 1, 1991 and August 17, 1994, the investment
adviser to the Gold Fund was Kensington Capital Management, Inc.)
APRIL 22, 1994*<F5>
YEAR ENDED THROUGH
NOVEMBER 30, 1995 NOVEMBER 30, 1994
----------------- -----------------
ADJUSTABLE RATE SERIES:
Net asset value, beginning of period $9.98 $10.00
----- ------
Income from investment operations
- ---------------------------------
Net investment income 0.57 0.27
Net realized and unrealized gain
on investments 0.14 (0.02)
----- ------
Total from investment operations 0.71 0.25
----- ------
Less distributions
- ------------------
Dividends from net investment income (0.57) (0.27)
----- ------
Total distributions (0.57) (0.27)
----- ------
Net asset value, end of period $10.12 $9.98
----- ------
----- ------
Total return++<F7> 7.50% 2.50%#<F6>
- ------------
Ratios/supplemental data
- ------------------------
Net assets, end of period (000 omitted) 3,405 2,041
Ratio of expenses to average net assets +<F8> 0.46% 0.44%#<F6>
Ratio of net investment income (loss) to
average net assets +<F8> 5.71% 4.68%#<F6>
Portfolio turnover rate @<F9> 164% 210%
<TABLE>
<CAPTION>
OCTOBER
13, 1986*<F5>
THROUGH
YEARS ENDED NOVEMBER 30, NOVEMBER
----------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 30, 1986
---- ---- ---- ---- ---- ---- ---- ---- ---- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GOVERNMENT INCOME SERIES:
Net asset value,
beginning of period $12.76 $14.16 $13.13 $13.90 $13.53 $14.35 $13.95 $14.66 $15.02 $15.00
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income from investment operations
- ---------------------------------
Net investment income 0.81 0.87 0.72 0.56 0.77 0.81 1.00 0.76 0.82 0.04
Net realized and unrealized gain (loss)
on investments 1.12 (1.39) 1.08 (0.68) 0.32 (0.59) 0.22 (0.55) (0.63) (0.02)
------ ------ ------ ------ ------ ------ ------ ------- ------ ------
Total from investment operations 1.93 (0.52) 1.80 (0.12) 1.09 0.22 1.22 0.21 0.19 0.02
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Less distributions
- ------------------
Dividends to shareholders from net
investment income (0.81) (0.88) (0.77) (0.65) (0.72) (1.04) (0.82) (0.92) (0.55) 0.00
------ ------ ------ ------ ------ ------ ------ ------ ------ -----
Net asset value, end of period $13.88 $12.76 $14.16 $13.13 $13.90 $13.53 $14.35 $13.95 $14.66 $15.02
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total return++<F7> 15.56%(3.75%) 13.96%(0.93%) 8.28% 1.76% 9.06% 1.52% 1.27% 0.13%
- ------------
Ratios/supplemental data
- ------------------------
Net assets, end of
period (000 omitted) 947 882 1,280 1,894 3,050 3,641 2,806 3,830 2,969 569
Ratio of expenses to
average net assets +<F8> 1.10% 1.10% 1.10% 2.17% 2.50% 2.50% 2.50% 2.50% 2.17% 2.50%#<F6>
Ratio of net investment income to
average net assets +<F8> 6.04% 6.47% 5.14% 4.32% 5.60% 5.97% 7.02% 5.31% 5.78% 2.31%#<F6>
Portfolio turnover rate @<F9> 91% 66% 118% 159% 0% 543% 237% 242% 145% 0%
</TABLE>
<TABLE>
<CAPTION>
FEBRUARY 5,
1988*<F5>
THROUGH
YEARS ENDED NOVEMBER 30, NOVEMBER 30,
------------------------------------------------------------------
1995**<F11> 1994 1993 1992 1991 1990 1989 1988
------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GOLD SERIES:
Net asset value, beginning of period $5.87 $11.94 $9.84 $14.49 $15.65 $19.22 $16.60 $18.00
------ ------ ------ ------ ------ ------ ------ ------
Income from investment operations
- ---------------------------------
Net investment income (loss) (0.09) (0.15) (0.09) 0.01 0.00 0.29 0.48 0.10
Net realized and unrealized gain
(loss) on investments 0.13 (5.92) 2.20 (4.66) (0.76) (3.46) 2.28 (1.50)
------ ------ ------ ------ ------ ------ ------ ------
Total from investment operations 0.04 (6.07) 2.11 (4.65) (0.76) (3.17) 2.76 (1.40)
------ ------ ------ ------ ------ ------ ------ ------
Less distributions
- ------------------
Dividends to shareholders from
net investment income 0.00 0.00 (0.01) 0.00 (0.40) (0.40) (0.14) 0.00
------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of period $5.91 $5.87 $11.94 $9.84 $14.49 $15.65 $19.22 $16.60
------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------
Total return++<F7> 0.68% (50.84%) 21.47% (32.09%) (5.00%) (16.79%) 16.78% (7.78%)
- ------------
Ratios/supplemental data
- ------------------------
Net assets, end of period (000 omitted) 421 1,274 3,147 2,493 1,938 1,939 2,482 1,708
Ratio of expenses to average net assets+<F8> 2.44% 2.45% 2.43% 2.45% 2.50% 2.50% 2.50% 2.50%#<F6>
Ratio of net investment income (loss)
to average net assets +<F8> (1.57%) (1.26%) (0.84%) 0.06% (0.03%) 1.61% 3.37% 1.16%#<F6>
Portfolio turnover rate @<F9> 16% 229% 969% 626% 131% 256% 7% 163%
</TABLE>
APRIL 1, 1992*<F5>
YEARS ENDED NOVEMBER 30, THROUGH
--------------------------
1995**<F11> 1994 1993 NOVEMBER 30, 1992
GROWTH SERIES:
Net asset value, beginning
of period $11.12 $13.35 $13.59 $12.00
------ ------ ------ ------
Income from investment operations
- ---------------------------------
Net investment loss (0.24) (0.52) (0.20) (0.04)
Net realized and unrealized gain
(loss) on investments
4.48 (1.71) (0.04) 1.63
------ ------ ------ ------
Total from investment operations 4.24 (2.23) (0.24) 1.59
------ ------ ------ ------
Net asset value, end of period $15.36 $11.12 $13.35 $13.59
------ ------ ------ ------
------ ------ ------ ------
Total return++<F7> 38.13% (16.70%) (1.77%) 13.25%
- ------------
Ratios/supplemental data
- -------------------------
Net assets, end of period
(000 omitted) 526 610 1,261 557
Ratio of expenses to average
net assets +<F8> 2.44% 2.44% 2.44% 2.44%#<F6>
Ratio of net investment income
(loss) to average net assets+<F8>(2.21%) (2.22%) (2.02%) (1.31%)#<F6>
Portfolio turnover rate @<F9> 24% 27% 26% 3%
OCTOBER 21, 1993*<F5>
THROUGH
YEARS ENDED NOVEMBER 30,
1995**<F11> 1994 NOVEMBER 30, 1993
----- ----- -----------
GAMING SERIES:
Net asset value, beginning of period $6.12 $7.99 $8.00
------ ------ ------
Income from investment operations
- ---------------------------------
Net investment loss (0.15) (0.08) (0.01)
Net realized and unrealized gain
(loss) on investments 0.77 (1.79) 0.00
------ ------ ------
Total from investment operations 0.62 (1.87) 0.01
------ ------ ------
Net asset value, end of period $6.74 $6.12 $7.99
------ ------ ------
------ ------ ------
Total return++<F7> 10.13% (23.40%) (0.13%)
- ------------
Ratios/supplemental data
- ------------------------
Net assets, end of period (000 omitted) 400 824 634
Ratio of expenses to average net assets+<F8> 2.89% 2.89% 2.70%#<F6>
Ratio of net investment income
(loss) to average net assets +<F8> (2.18%) (1.18%) (2.03%)#<F6>
Portfolio turnover rate @<F9> 37% 27% 0
NOVEMBER 9, 1993*<F5>
THROUGH
YEARS ENDED NOVEMBER 30,
1995**<F11> 1994 NOVEMBER 30, 1993
------- ------ ----------
TECHNOLOGY SERIES:
Net asset value, beginning of period $14.35 $14.82 $15.00
------ ------ ------
Income from investment operations
- ---------------------------------
Net investment loss (0.32) (0.18) (0.01)
Net realized and unrealized gain
(loss) on investments 4.19 (0.29) (0.17)
------ ------ ------
Total from investment operations 3.87 (0.47) (0.18)
------ ------ ------
Less distributions
- ------------------
Dividends to shareholders from
capital gains (0.41) 0.00 0.00
------ ------ ------
Net asset value, end of period $17.81 $14.35 $14.82
------ ------ ------
------ ------ ------
Total return++<F7> 26.95% (3.17%) (1.20%)
- ------------
Ratios/supplemental data
- ------------------------
Net assets, end of period (000 omitted) 281 283 38
Ratio of expenses to average net assets+<F8> 2.44% 2.44% 1.70%#<F6>
Ratio of net investment income to
average net assets +<F8> (1.97%) (1.79%) (1.63%)#<F6>
Portfolio turnover rate @<F9> 41% 29% 0
<TABLE>
<CAPTION>
FEBRUARY
5, 1988*<F5>
THROUGH
YEARS ENDED NOVEMBER 30, NOVEMBER
----------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 30, 1988
---- ---- ---- ---- ----- ---- ---- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GROWTH & INCOME SERIES:
Net asset value, beginning of period $16.67 $17.20 $18.53 $19.20 $18.46 $19.00 $16.59 $18.00
------ ------ ------- ------ ------ ------ ------- -------
Income from investment operations
- ---------------------------------
Net investment income 0.02 0.09 0.07 0.16 0.14 0.23& 0.04 0.15
Net realized and unrealized gain
(loss) on investments 4.82 (0.58) (1.22) (0.67) 0.82 (0.68) 2.48 (1.56)
------ ------ ------- ------ ------ ------ ------- -------
Total from investment operations 4.84 (0.49) (1.15) (0.51) 0.96 (0.45) 2.52 (1.41)
------ ------ ------- ------ ------ ------ ------- -------
Less distributions
- ------------------
Dividends to shareholders from net
investment income (0.09) (0.04) (0.18) (0.16) (0.22) (0.09) (0.11) 0.00
------ ------ ------- ------ ------ ------ ------- -------
Net asset value, end of period $ 21.42 $ 16.67 $ 17.20 $ 18.53 $ 19.20 $ 18.46 $ 19.00 $ 16.59
------ ------ ------- ------ ------ ------ ------- -------
------ ------ ------- ------ ------ ------ ------- -------
Total return++<F7> 29.19% (2.86%) (6.26%) (2.68%) 5.26% (2.38%) 15.28% (7.83%)
- ------------
Ratios/supplemental data
- ------------------------
Net assets, end of period (000 omitted) 1,377 1,573 2,538 6,149 12,667 7,145 2,379 372
Ratio of expenses to average net assets+<F8> 2.44% 2.44% 2.44% 2.44% 2.50% 2.51%&<F10>2.50% 2.50%#<F6>
Ratio of net investment income to average
net assets +<F8> 0.10% 0.46% 0.21% 0.57% 0.90% 2.02% 1.98% 1.54%#<F6>
Portfolio turnover rate @<F9> 152% 0% 1.59% 4.52% 13.30% 110.00% 32.00% 291.00%
NOTES TO FINANCIAL HIGHLIGHTS
*<F5>Commencement of Operations.
#<F6>Annualized.
++<F7>Total return does not reflect sales loads charged by the Funds and is not
annualized for periods less than one year.
+<F8>Net of expense reimbursement. If the expense reimbursement had not been in
effect, the ratio of expenses to average net assets for the periods illustrated
for each Fund would have been as follows: for the Government Fund, 5.73%,
5.52%, 3.66%, 3.86%, 3.53%, 3.60%, 4.13%, 4.62%, 4.03% and 22.73%, respectively;
for the Gold Fund, 12.52%, 5.58%, 4.55%, 4.71%, 4.48%, 4.48%, 5.19% and 5.06%,
respectively; for the Growth Fund, 11.44%, 8.52%, 6.44% and 12.12%,
respectively; for the Technology Fund, 18.74%, 11.19% and 30.48%, respectively;
for the Gaming Fund, 9.96%, 6.40% and 5.19%, respectively, for the Growth &
Income Fund, 6.08%, 5.46%, 4.39%, 3.46%, 3.85%, 3.94%, 13.72% and 16.13%,
respectively; and for the Adjustable Rate Fund, 2.01%, 3.46%.
<F9> @An annual portfolio turnover rate is, in general, the percentage
computed by taking the lesser of purchases or sales of portfolio securities
(excluding certain short-term securities) for a year and dividing that amount by
the monthly average of the market value of such securities during the year.
&<F10>On a per share basis, includes taxes of $.01 and 0.01% expenses of
average net assets.
**<F11>Based on average shares outstanding.
INVESTMENT OBJECTIVES AND POLICIES OF THE MONITREND MUTUAL FUNDS
ADJUSTABLE RATE FUND
THE OBJECTIVE AND BASIC PORTFOLIO OF THE ADJUSTABLE
RATE FUND
The Adjustable Rate Fund's objective is to provide investors with a high level
of current income, consistent with low volatility of principal through investing
in adjustable rate and floating rate U.S. Government securities. Under normal
circumstances at least 65% of the Adjustable Rate Fund's portfolio will consist
of U.S. Government adjustable rate and floating rate mortgage pass-through
securities and other securities representing an interest in or collateralized by
mortgages.
The Adjustable Rate Fund will maintain a maximum duration approximately equal
to that of a three-year U.S. Treasury security. Under normal interest rate
conditions, the Adjustable Rate Fund's actual duration is expected to be in a
range approximately equal to that of a six-month to two-year U.S. Treasury
security. The Adjustable Rate Fund's duration is a measure of the price
sensitivity of the portfolio, including expected cash flow and mortgage
prepayments under a wide range of interest rate scenarios. Maturity measures
only the time until final payment is due on a bond or other debt security; it
does not take into account the pattern of a security's cash flows over time,
including how cash flow is affected by prepayments and by changes in interest
rates. In computing the duration of its portfolio, the Adjustable Rate Fund will
have to estimate the duration of obligations that are subject to prepayment or
redemption by the issuer taking into account the influence of interest rates on
prepayments and coupon flows. This method of computing duration is known as
option-adjusted duration. The Adjustable Rate Fund may use various techniques to
shorten or lengthen the option-adjusted duration of its portfolio including the
acquisition of debt obligations at a premium or discount, mortgage and interest
rate swaps and interest rate caps and floors. See "Other Investments and
Practices."
When interest rates decline, the value of a portfolio invested in fixed rate
obligations can be expected to rise. Conversely, when interest rates rise, the
value of a portfolio invested in fixed rate obligations can be expected to
decline. In contrast, as interest rates on adjustable rate mortgage loans are
reset periodically, yields of portfolio securities representing interests in
such loans will gradually align themselves to reflect changes in market interest
rates, causing the value of such a portfolio to fluctuate less dramatically in
response to interest rate fluctuations than would a portfolio of fixed rate
obligations. The Government Fund Adviser expects the Adjustable Rate Fund's net
asset value to be relatively stable during normal market conditions since the
Adjustable Rate Fund's portfolio will consist primarily of guaranteed adjustable
rate Mortgage-Backed Securities (as hereinafter defined below) and since it will
maintain a maximum duration approximately equal to that of a three-year U.S.
Treasury security and utilize certain interest rate hedging techniques. However,
a sudden and extreme increase in prevailing interest rates may cause a decline
in the Adjustable Rate Fund's net asset value. Conversely, a sudden and extreme
decline in interest rates could result in an increase in the Adjustable Rate
Fund's net asset value.
Because the Adjustable Rate Fund's investments are interest rate sensitive,
its performance will depend in large part upon the ability of the Government
Fund Adviser to anticipate and respond to fluctuations in market interest rates
and to utilize appropriate strategies to maximize returns to the Adjustable Rate
Fund, while attempting to minimize the associated risks to its invested capital.
Operating results will also depend upon the availability of opportunities for
the investment of the Adjustable Rate Fund's assets, including purchases and
sales of suitable securities.
MORTGAGE-BACKED SECURITIES
Mortgage-Backed Securities are securities that directly or indirectly represent
participations in, or are collateralized by and payable from, mortgage loans
secured by real property.
The investment characteristics of adjustable and fixed rate Mortgage-Backed
Securities differ from those of traditional fixed income securities. The major
differences include the payment of interest and principal on Mortgage-Backed
Securities on a more frequent (usually monthly) schedule, and the possibility
that principal may be prepaid at any time due to prepayments on the underlying
mortgage loans or other assets. These differences can result in significantly
greater price and yield volatility than is the case with traditional fixed
income securities. As a result, if the Adjustable Rate Fund purchases Mortgage-
Backed Securities at a premium, a faster than expected prepayment rate will
reduce both the market value and the yield to maturity from those which were
anticipated. A prepayment rate that is slower than expected will have the
opposite effect of increasing yield to maturity and market value. Conversely, if
the Adjustable Rate Fund purchases Mortgage-Backed Securities at a discount,
faster than expected prepayments will increase, while slower than expected
prepayments will reduce, yield to maturity and market value. The Government Fund
Adviser will seek to manage these potential risks and benefits by investing in a
variety of Mortgage-Backed Securities and by using certain hedging techniques.
See "Other Investments and Practices."
Prepayments on a pool of mortgage loans are influenced by a variety of
factors, including economic conditions, changes in mortgagors' housing needs,
job transfer, unemployment, mortgagors' net equity in the mortgage properties
and servicing decisions. The timing and level of prepayments cannot be
predicted. Generally, however, prepayments on adjustable rate mortgage loans and
fixed rate mortgage loans will increase during a period of falling mortgage
interest rates and decrease during a period of rising mortgage interest rates.
Accordingly, the amounts of prepayments available for reinvestment by the
Adjustable Rate Fund are likely to be greater during a period of declining
mortgage interest rates. If general interest rates also decline, such
prepayments are likely to be reinvested at lower interest rates than the
Adjustable Rate Fund was earning on the Mortgage-Backed Securities that were
prepaid.
A significant portion of the mortgage loans underlying the Mortgage-Backed
Securities in which the Adjustable Rate Fund invests will be adjustable rate
mortgage loans ("ARMs"). ARMs eligible for inclusion in a mortgage pool will
generally provide for a fixed initial mortgage interest rate for a specified
period of time. Thereafter, the interest rates (the "Mortgage Interest Rates")
may be subject to periodic adjustment based on changes in the applicable index
rate (the "Index Rate"). The adjusted rate would be equal to the Index Rate plus
a gross margin, which is a fixed percentage spread over the Index Rate
established for each ARM at the time of its origination.
Adjustable interest rates can cause payment increases that some mortgagors may
find difficult to make. However, certain ARMs may provide that the Mortgage
Interest Rate may not be adjusted to a rate above an applicable lifetime maximum
rate or below an applicable lifetime minimum rate for such ARMs. Certain ARMs
may also be subject to limitations on the maximum amount by which the Mortgage
Interest Rate may adjust for any single adjustment period (the "Maximum
Adjustment"). Other ARMs ("Negatively Amortizing ARMs") may provide instead or
as well for limitations on changes in the monthly payment on such ARMs.
Limitations on monthly payments can result in monthly payments which are greater
or less than the amount necessary to amortize a Negatively Amortizing ARM by its
maturity at the Mortgage Interest Rate in effect in any particular month. In the
event that a monthly payment is not sufficient to pay the interest accruing on a
Negatively Amortizing ARM, any such excess interest is added to the principal
balance of the loan, causing negative amortization, and is repaid through future
monthly payments. It may take borrowers under Negatively Amortizing ARMs longer
periods of time to achieve equity and may increase the likelihood of default by
such borrowers. In the event that a monthly payment exceeds the sum of the
interest accrued at the applicable Mortgage Interest Rate and the principal
payment which would have been necessary to amortize the outstanding principal
balance over the remaining term of the loan, the excess (or "accelerated
amortization") further reduces the principal balance of the ARM. Negatively
Amortizing ARMs do not provide for the extension of their original maturity to
accommodate changes in their Mortgage Interest Rate. As a result, unless there
is a periodic recalculation of the payment amount (which there generally is),
the final payment may be substantially larger than the other payments. These
limitations on periodic increases in interest rates and on changes in monthly
payments protect borrowers from unlimited interest rate and payment increases.
Under normal circumstances at least 65% of the Adjustable Rate Fund's
investments in Mortgage-Backed Securities will be in U.S. Government Mortgage-
Backed securities or other securities collateralized by U.S. Government
securities, including Mortgage-Backed Securities representing ownership
interests in the underlying mortgage loans and providing for monthly payments
that are a "pass-through" of the monthly interest and principal payments
(including any prepayments) made by the individual borrowers on the pooled
mortgage loans, net of any fees paid to the guarantor of such securities and the
servicer of the underlying mortgage loans. Such Mortgage-Backed Securities will
include those issued or guaranteed by the Government National Mortgage
Association ("Ginnie Mae"), the Federal National Mortgage Association ("Fannie
Mae") and the Federal Home Loan Mortgage Association ("Freddie Mac"). Additional
information regarding Ginnie Mae certificates, Fannie Mae certificates and
Freddie Mac certificates is set forth in the Statement of Additional
Information.
The Adjustable Rate Fund may also invest in multiple class U.S. Government
securities, including guaranteed collateralized mortgage obligations ("CMOs")
and REMIC pass-through or participation certificates. A REMIC is a CMO that
qualifies for special tax treatment under the Code.
CMOs and REMIC certificates are issued in multiple classes. Each class of CMOs
or REMIC certificates, often referred to as a "tranche," is issued at a specific
adjustable or fixed interest rate and must be fully retired no later than its
final distribution date. Principal prepayments on the mortgage loans or other
assets ("Mortgage Assets") underlying the CMOs or REMIC certificates may cause
some or all of the class of CMOs or REMIC certificates to be retired
substantially earlier than their final distribution dates. Generally, interest
is paid or accrued on all classes of CMOs or REMIC certificates on a monthly
basis.
The principal of and interest on the Mortgage Assets may be allocated among
the several classes of CMOs or REMIC certificates in various ways. In certain
structures (known as "sequential pay" CMOs or REMIC certificates), payments of
principal, including any principal prepayments, on the Mortgage Assets generally
are applied to the classes of CMOs or REMIC certificates in the order of their
respective final distribution dates. Thus no payment of principal will be made
on any class of sequential pay CMOs or REMIC certificates until all other
classes having an earlier final distribution date have been paid in full.
Additional structures of CMOs and REMIC certificates include, among others,
"parallel pay" CMOs and REMIC certificates. Parallel pay CMOs or REMIC
certificates are those which are structured to apply principal payments and
prepayments of the Mortgage Assets to two or more classes concurrently on a
proportionate or disproportionate basis. These simultaneous payments are taken
into account in calculating the final distribution date of each class.
A wide variety of REMIC certificates may be issued in the parallel pay or
sequential pay structures. These securities include accrual certificates (also
known as "Z-Bonds"), which only accrue interest at a specified rate until all
other certificates having an earlier final distribution date have been retired
and are converted thereafter to an interest-payment security, and planned
amortization class ("PAC") certificates, which are parallel pay REMIC
certificates which generally require that specified amounts of principal be
applied on each payment date to one or more classes of REMIC certificates (the
"PAC Certificates"), even though all other principal payments and prepayments of
the Mortgage Assets are then required to be applied to one or more other classes
of the certificates. The scheduled principal payments for PAC Certificates
generally have the highest priority on each payment date after interest due has
been paid to all classes entitled to receive interest currently. Shortfalls, if
any, are added to the amount payable on the next payment date. The PAC
Certificate payment schedule is calculating the final distribution date of each
class of PAC. In order to create PAC tranches, one or more tranches generally
must be created that absorb most of the volatility in the underlying mortgage
assets. These tranches tend to have market prices and yields that are much more
volatile than the PAC classes.
The Adjustable Rate Fund may invest in stripped Mortgage-Backed U.S.
Government securities ("SMBS") which are derivative multiclass Mortgage-Backed
Securities. SMBS are usually structured with two classes that receive different
proportions of the interest and principal distributions from a pool of Mortgage
Assets. A common type of SMBS will have one class receiving all of the interest
from the Mortgage Assets, while the other class will receive all of the
principal. However, in some instances, one class will receive some of the
interest and most of the principal while the other class will receive most of
the interest and the remainder of the principal. If the underlying Mortgage
Assets experience greater than anticipated prepayments of principal, the
Adjustable Rate Fund may fail to fully recover its initial investment in these
securities. Although the market for such securities is increasingly liquid,
certain SMBS may not be readily marketable and will be considered illiquid for
purposes of the Adjustable Rate Fund's limitation on investments in illiquid
securities. Whether SMBS are liquid or illiquid will be determined in accordance
with guidelines established by the Trust's Board of Trustees. The market value
of the class consisting entirely of principal payments generally is unusually
volatile in response to changes in interest rates. The yields on a class of SMBS
that receives all or most of the interest from Mortgage Assets are generally
higher than prevailing market yields on other Mortgage-Backed Securities because
their cash flow patterns are more volatile and there is a greater risk that the
initial investment will not be fully recouped. The Government Fund Adviser will
seek to manage these risks (and potential benefits) by investing in a variety of
such securities and by using certain hedging techniques. See "Investment
Practices and Risks."
OTHER INVESTMENTS AND PRACTICES
In order to protect the value of the Adjustable Rate Fund's portfolio from
interest rate fluctuations and to hedge against fluctuations in the floating
rate market in which the Adjustable Rate Fund's investments are traded, the
Adjustable Rate Fund may enter into interest rate swaps and mortgage swaps or
purchase or sell interest rate caps or floors. The Adjustable Rate Fund expects
to enter into these hedging transactions primarily to preserve a return or
spread on a particular investment or portion of its portfolio and to protect
against any increase in the price of securities the Adjustable Rate Fund
anticipates purchasing at a later date. Interest rate swaps involve the exchange
by the Adjustable Rate Fund with another party of their respective commitments
to pay or receive interest, e.g., an exchange of floating rate payments for
fixed rate payments. Mortgage swaps are similar to interest rate swaps in that
they represent commitments to pay and receive interest. The notional principal
amount, however, is tied to a reference pool or pools of mortgages. The purchase
of an interest rate cap entitles the purchaser, to the extent that a specified
index exceeds a predetermined interest rate, to receive payments of interest on
a notional principal amount from the party selling such interest cap. The
purchase of an interest rate floor entitles the purchaser, to the extent that a
specified index falls below a predetermined interest rate, to receive payments
of interest on a notional principal amount from the party selling such interest
rate floor. The Adjustable Rate Fund will not enter into any mortgage swap,
interest rate swap, cap or floor transaction unless the unsecured commercial
paper, senior debt or the claims paying ability of the other party thereto is
rated either AA or A-1 or better by Standard & Poor's Corporation ("S&P") or Aa
or P-1 or better by Moody's Investors Service, Inc. ("Moody's").
The Adjustable Rate Fund may purchase securities on a when-issued basis. When-
issued transactions arise when securities are purchased by the Adjustable Rate
Fund with payment and delivery taking place in the future in order to secure
what is considered to be an advantageous price and yield to the Adjustable Rate
Fund at the time of entering into the transaction. The Adjustable Rate Fund may
also purchase securities on a forward commitment basis. In a forward commitment
transaction, the Adjustable Rate Fund contracts to purchase securities for a
fixed price at a future date beyond customary settlement time. The Adjustable
Rate Fund is required to hold and maintain in a segregated account until the
settlement date, cash, U.S. Government securities or liquid high-grade debt
obligations in an amount sufficient to meet the purchase price. Alternatively,
the Adjustable Rate Fund may enter into offsetting contracts for the forward
sale of other securities that it owns. The purchase of securities on a when-
issued or forward commitment basis involves a risk of loss if the value of the
security to be purchased declines prior to the settlement date. Although the
Adjustable Rate Fund would generally purchase securities on a when-issued or
forward commitment basis with the intention of actually acquiring securities for
its portfolio, the Adjustable Rate Fund may dispose of a when-issued security or
forward commitment prior to settlement if the Adviser deems it appropriate to do
so.
The Adjustable Rate Fund may enter into mortgage "dollar rolls" in which the
Adjustable Rate Fund sells Mortgage-Backed Securities for delivery in the
current month and simultaneously contracts to repurchase substantially similar
(same type, coupon and maturity) securities on a specified future date. During
the roll period, the Adjustable Rate Fund forgoes principal and interest paid on
the Mortgage-Backed Securities. The Adjustable Rate Fund is compensated by the
difference between the current sales price and the lower forward price for the
future purchase (often referred to as the "drop") as well as by the interest
earned on the cash proceeds of the initial sale. A "covered roll" is a specific
type of dollar roll for which there is an offsetting cash position or a cash
equivalent security position which matures on or before the forward settlement
date of the dollar roll transaction. The Adjustable Rate Fund will only enter
into covered rolls. Covered rolls are not treated as a borrowing or other senior
security and will be excluded from the calculation of the Adjustable Rate Fund's
borrowings and other senior securities.
The Adjustable Rate Fund may invest in U.S. Government securities of the same
types as the Government Fund. See "The Objectives, Basic Portfolio and
Allocation of Assets of the Government Income Fund." The Adjustable Rate Fund
will not invest more than 10% of the value of its net assets in illiquid
securities. The Adjustable Rate Fund may invest in leveraged 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 floater may be considered
leveraged to the extent that its interest rate varies by a magnitude that
exceeds the magnitude of the change in the index rate of interest. The higher
the degree of leverage in an inverse floater the greater the volatility in its
market value. Accordingly, the duration of an inverse floater may exceed its
stated final maturity. Certain inverse floaters may be deemed to be illiquid
securities.
In addition, the Adjustable Rate Fund may invest up to 35% of its total assets
in Mortgage-Backed Securities, corporate bonds and debentures rated A or better
by S&P or by Moody's and commercial paper master notes rated A-1 or better by
S&P or prime-1 by Moody's. A description of the foregoing ratings is set forth
in the Statement of Additional Information.
Finally, the Adjustable Rate Fund may leverage its investments and lend its
portfolio securities. See "Borrowing" and "Lending Portfolio Securities" below.
GOVERNMENT INCOME FUND
THE OBJECTIVES, BASIC PORTFOLIO AND ALLOCATION OF ASSETS OF THE GOVERNMENT
INCOME FUND
The objectives of the Government Income Fund are growth of capital, whether over
the short- or long-term, income and preservation of capital. The Government Fund
Adviser will seek to achieve the Government Income Fund's objectives by
investing, as a matter of fundamental policy, at least 65% of the total assets
in securities of any maturity which are issued or guaranteed by the U.S.
Government or by any of its agencies or instrumentalities, including U.S.
Government-sponsored corporations (which may be subject to repurchase
agreements), and in the hedging instruments discussed below. As also discussed
below, up to 35% of the portfolio assets of the Government Income Fund may be
invested in non-government securities which at the time of purchase are rated A
or better by S&P or by Moody's.
Obligations of certain agencies and instrumentalities of the U.S. Government,
such as those of the Federal Housing Administration, Farmers Home
Administration, Export-Import Bank of the United States, Small Business
Administration and the Government National Mortgage Association, are supported
by the full faith and credit of the U.S. Treasury; others, such as the Federal
Home Loan Banks, Federal Intermediate Credit Banks and the Tennessee Valley
Authority, are supported by the right of the issuer to borrow from the U.S.
Treasury; others, such as those of the Federal National Mortgage Association,
are supported by the discretionary authority of the U.S. Government to purchase
the agency's obligations; still others, such as those of the Student Loan
Marketing Association, are supported only by the credit of the instrumentality.
While the U.S. Government currently provides financial support to such U.S.
Government-sponsored instrumentalities, including U.S. Government-sponsored
corporations, no assurance can be given that it always will do so. The U.S.
Government, its agencies and instrumentalities, including U.S. Government-
sponsored corporations, do not guarantee the market value of their securities,
and consequently, the value of such securities may fluctuate.
The Government Income Fund may invest in zero coupon Treasury securities which
consist of Treasury Notes and Bonds that have been stripped of their unmatured
interest coupons by the U.S. Department of Treasury. A zero coupon Treasury
security pays no interest to its holders during its life and its value to an
investor consists of the difference between its face value at the time of
maturity and the price for which it was acquired, which is generally an amount
much less than its face value. Zero coupon Treasury securities are generally
subject to greater fluctuations in value in response to changing interest rates
than debt obligations that pay interest currently.
In addition, the Government Income Fund may invest up to 35% of its total
assets in non-government bonds and debentures rated A or better by S&P or by
Moody's and commercial paper master notes rated A-1 by S&P or Prime-1 by
Moody's. A description of the foregoing ratings is set forth in the Statement of
Additional Information.
The allocation between U.S. Government securities and non-government
securities is based on the Government Fund Adviser's analysis of the yield
differential between these sectors. When the yield differential between
government and non-government sectors is narrow, the Government Fund Adviser
will in most situations structure the portfolio so that the proportion of assets
invested in U.S. Government securities is above average. Conversely, when the
differential is high, the proportion invested in U.S. Government securities will
in most situations be below average.
The average portfolio maturity of the Government Income Fund, and thus the
allocation of its assets between longer term securities and shorter term
securities will depend on the Government Fund Adviser's outlook on the shapes of
the yield curves of Treasury securities and other major classi1/2cations of
fixed income securities, and thus on the market values of such securities. The
Government Fund Adviser's outlook is formulated through statistical analysis of
both fundamental economic indicators (interest rates, the Consumer Price Index,
the Index of Leading Indicators, the rate of growth of the money supply, etc.)
and technical market indicators (price trends, volume data, various sentiment
indicators and cyclical observations), and through statistical analyses of
technical market indicators relating to interest rates and bond prices (interest
rate movements, trends in bond prices, etc.).
The Government Fund Adviser maintains a data base of historical yield curve
shapes and has developed a methodology of analyzing such shapes. The Government
Fund Adviser believes that periodic deviations from the classical yield curve
provide investors with significant opportunities to achieve above average
portfolio yields on a risk-adjusted basis. The Government Fund Adviser will
generally seek to invest the Government Fund's assets in those securities which
are most likely to experience the most significant declines in relative yield
as their yield curves "spring back" to a more classical shape. When the yield
curves are relatively steep, the Government Fund's portfolio will likely consist
of securities having longer than average maturities. When the yield curves are
flat or inverted, such Fund's portfolio will likely consist of securities
having shorter than average maturities. There is no assurance that the
Government Fund Adviser's portfolio allocation, as described above, will be
correct. Incorrect allocation could result in the Government Income Fund's
having a long dollar-weighted average portfolio maturity when interest rates are
increasing, or the Government Income Fund could have a substantial portion of
its assets hedged in a short hedge when interest rates are declining.
See "Principal Investment Risks" for possible risks, and the Statement of
Additional Information for a description, of investing in U.S. Government
securities.
GOLD FUND
THE OBJECTIVE AND BASIC PORTFOLIO OF THE GOLD FUND
The Gold Fund's investment objective is long-term growth of capital. The Gold
Fund will attempt to achieve its objective by investing primarily in equity
securities of domestic and foreign companies engaged in exploration, refining,
development, manufacture, production or marketing of gold and other precious
metals products. Under normal circumstances, at least 65% of the Gold Fund's
assets will be invested in equity securities of such companies whose activities
are related to gold, or in call options where the underlying investments to
which the calls relate are such equity securities.
In addition to gold related investments, the Gold Fund may invest in
securities of companies whose activities are related to other precious metals,
such as silver, platinum and palladium, or in companies engaged in the
manufacture or production of products incorporating precious metals, such as
jewelry, photographic supplies, medical equipment and supplies and companies
engaged in marketing precious metals or precious metals products.
The Gold Fund will invest primarily in equity securities -- that is, common
stocks or securities having equity characteristics, such as warrants or in call
options as indicated above. At any time the Adviser deems it advisable for
temporary defensive purposes, the Gold Fund may invest all or a portion of its
assets in U.S. Government securities, principally expected to be Treasury Bills,
bank instruments or commercial paper master notes. See "Principal Investment
Risks" for possible risks, and the Statement of Additional Information for a
description, of U.S. Government securities. The Gold Fund may hedge its equity
holdings and write covered call and put options to generate income for liquidity
purposes (see "Hedging Instruments"). The Gold Fund may also lend its securities
as discussed below. (See "Lending Portfolio Securities").
The production and marketing of gold and precious metals may be affected by the
action of certain governments and changes in existing governments. For example,
the mining of gold is highly concentrated in a few countries. In current order
of magnitude of production of gold bullion, the five largest producers of gold
are the Republic of South Africa, the former U.S.S.R., Canada, Brazil and the
United States. It is expected that a majority of gold mining companies in which
the Gold Fund will invest will be located within the United States, Canada and
Australia.
The prices of gold and precious metals mining securities have been subject to
substantial price fluctuations over short periods of time and may be affected
by unpredictable international monetary and political developments such as
currency devaluations or revaluations, economic and social conditions within a
country, trade imbalances, or trade or currency restrictions between countries.
The use of gold or Special Drawing Rights (which are used by members of the
International Monetary Fund for international settlements) to settle net
de1/2cits and surpluses in trade and capital movements between nations subjects
the supply and demand, and therefore the price of gold, to a variety of economic
factors that normally do not affect other investments.
Since a substantial portion of the free world's gold reserves are located in
South Africa, the social upheaval and related economic difficulties there may
cause an increase in the share values of precious metals mining companies
located elsewhere and a decrease in South African securities, although the price
of gold remains relatively unaffected. Prior to March 31, 1992 the Gold Fund did
not invest in stocks or other securities of South African companies. Investors
should understand the special considerations and risks related to such an
investment emphasis and, accordingly, the potential effect on the Gold Fund's
value. Commencing March 31, 1992, the Gold Fund may invest in South African
issuers, which investments may be subject to greater risk due to the internal
conditions in the Republic of South Africa.
GROWTH FUND
THE OBJECTIVE AND BASIC PORTFOLIO OF THE GROWTH FUND
The Growth Fund's objective is long-term growth of capital. The Growth Fund will
attempt to achieve its objective by investing primarily in growth stocks. The
Adviser considers growth stocks to be common stocks of issuers who the Adviser
anticipates will grow at a higher than average rate per year in both sales and
earnings. Under normal circumstances, at least 65% of the Growth Fund's assets
will be invested in growth stocks.
The issuers of the growth stocks in which the Growth Fund invests may exhibit
some or all of the following characteristics: (i) a positive cash 3/4ow to allow
for self-financing growth; (ii) a return on equity of close to 20%; (iii) a
debt to equity ratio lower than that of the average public company; (iv) the
payment of taxes at normal tax rates; (v) a diversified customer and supplier
base; (vi) accounts receivable having an average maturity of less than 70 days;
and (vii) increasing operating margins and declining sales and administrative
expenses. Such companies may not be the largest and best known companies in
their industry groups. Frequently such companies will be in rapidly growing
sectors of the economy and often bring proprietary skills to a developing niche
in a particular market.
In selecting investments the Adviser will consider the public filings of
issuers with the Securities and Exchange Commission as well as research reports
of broker-dealers and trade publications. In appropriate situations, the Adviser
and/or Growth Fund Sub-Adviser may meet with management. Greater weight will be
given to internal factors such as product or service development than to
external factors such as interest rate changes and general stock market trends.
When the Adviser deems it advisable for temporary defensive purposes, the
Growth Fund may invest a portion of its assets in U.S. Government securities,
principally expected to be Treasury Bills, bank instruments or commercial paper
master notes. See "Principal Investment Risks" for possible risks, and the
Statement of Additional Information for a description of U.S. Government
securities. Additionally the Growth Fund may hedge some or all of its portfolio
of common stocks. See "Hedging Instruments."
Since the major portion of the Growth Fund's portfolio will normally be
invested in common stocks, the Growth Fund's net asset value may be subject to
greater fluctuations than a portfolio containing a substantial amount of fixed
income securities. There can be no assurance that the investment objective of
the Growth Fund will be realized. Nor can there be assurance that the Growth
Fund's portfolio will not decline in value.
The Growth Fund may invest in equity securities of smaller companies which are
judged by the Adviser to possess strong growth characteristics. Such companies
may be new, less well-known or undercapitalized companies. Securities of smaller
growth companies may be subject to more abrupt or erratic market movements than
those of larger, more established companies, in particular, because such
companies typically are subject to greater fluctuation in earnings and
prospects. In addition, securities of smaller companies may be subject to
liquidity risk.
GAMING FUND
THE OBJECTIVE AND BASIC PORTFOLIO OF THE GAMING FUND
The Gaming Fund's objective is long-term growth of capital through investing at
least 65% of its total assets in equity securities of companies engaged in
activities related to the gaming and leisure industry. The gaming and leisure
industry includes companies engaged in operating gambling casinos, the design,
production or distribution of gaming equipment, sporting goods, recreational
equipment, toys, games (including video and other electronic games),
photographic equipment and supplies, musical instruments and recordings. Also
included in the gaming and leisure industry are motion picture and broadcast
(including cable television companies) companies engaged in furnishing domestic
and foreign transportation by air, and companies engaged in operating hotels or
motels, sports arenas, amusement or theme parks, or restaurants.
Under normal circumstances, at least 65% of the Gaming Fund's total assets
will be invested in equity securities of companies engaged in activities related
to the gaming and leisure industry. The equity securities in which the Gaming
Fund may invest will consist of common stocks and preferred stocks, as well as
warrants to purchase such securities. The Gaming Fund does not intend to invest
in debt securities of companies engaged in activities relating to the gaming and
leisure industry, other than temporary investments in money market instruments
for defensive purposes as described below.
Securities of companies in the gaming and leisure industry may be considered
speculative. In particular, companies engaged in entertainment, gaming,
broadcasting and cable television have unpredictable earnings, due in part to
changing consumer tastes and intense competition. In addition many of the
products offered by companies engaged in the design, production or distribution
of video and electronic games are subject to risks of rapid obsolescence.
Finally operators of gambling casinos are highly regulated. As a consequence
securities of companies in the gaming and leisure industry generally exhibit
greater volatility than the overall market. The Gaming Fund may also invest in
equity securities of smaller companies which are judged by the Adviser to
possess strong growth characteristics. Such companies may be new, less well-
known or undercapitalized companies. Securities of smaller growth companies may
be subject to more abrupt or erratic market movements than those of larger, more
established companies, in particular, because such companies typically are
subject to greater fluctuation in earnings and prospects. In addition,
securities of smaller companies may be subject to liquidity risk.
When the Adviser deems it advisable for temporary defensive purposes, the
Gaming Fund may invest a portion of its assets in U.S. Government securities,
principally expected to be Treasury Bills, bank instruments or commercial paper
master notes. See "Principal Investment Risks" for possible risks, and the
Statement of Additional Information for a description of U.S. Government
securities. Additionally the Gaming Fund may hedge some or all of its portfolio
of common stocks. See "Hedging Instruments." The Gaming Fund may also leverage
its investments. See "Borrowing" below.
TECHNOLOGY FUND
THE OBJECTIVE AND BASIC PORTFOLIO OF THE TECHNOLOGY FUND
The Technology Fund's objective is long-term growth of capital through investing
primarily in equity securities of companies that the Adviser believes can
produce products or services that provide or benefit from advances in
technology. The Adviser interprets the term "technology" broadly to include
semiconductors and electronic components, computers, computer services, computer
peripherals and software, communications, multimedia, instruments, office
automation, factory automation, robotics, consumer electronics, electronic
games, cable television, pharmaceuticals, biotechnology, medical devices,
superconductivity, specialty materials, alternative energy and other advances
resulting from research and development programs.
Under normal circumstances, at least 65% of the Technology Fund's assets will
be invested primarily in equity securities of companies engaged in activities
related to the technology sector. The equity securities in which the Technology
Fund may invest will consist of common stocks, preferred stocks and convertible
securities, as well as warrants to purchase such securities. The Technology Fund
does not intend to invest in debt securities of companies engaged in activities
related to the technology sector, other than temporary investments in money
market instruments for defensive purposes as described below.
Competitive pressures may have a significant effect on the financial condition
of companies in the technology sector. Technology companies may become
increasingly sensitive to short product cycles and aggressive pricing.
When the Adviser deems it advisable for temporary defensive purposes, the
Technology Fund may invest a portion of its assets in U.S. Government
securities, principally expected to be Treasury Bills, bank instruments or
commercial paper master notes. See "Principal Investment Risks" for possible
risks, and the Statement of Additional Information for a description of U.S.
Government securities. Additionally the Technology Fund may hedge some or all
of its portfolio of common stocks. See "Hedging Instruments." The Technology
Fund also may leverage its investments and lend its portfolio securities. See
"Borrowing" and "Lending Portfolio Securities" below.
The Technology Fund may effect "short sales" of securities. A "short sale" is
made by selling a security the Fund does not own. Whenever the Technology Fund
effects a short sale, it will put in a segregated account cash or United States
government securities equal to the difference between (a) the market value of
the securities sold short and (b) any cash or United States government
securities required to be deposited as collateral with the broker in connection
with the short sale (but not including the proceeds of the short sale). Until
the Technology Fund replaces the security it borrowed to make the short sale, it
must maintain daily the segregated account at such a level that (a) the amount
deposited in it plus the amount deposited with the broker as collateral will
equal the current market value of the securities sold short, and (b) the amount
deposited in it plus the amount deposited with the broker will not be less than
the market value of the securities at the time they were sold short. No more
than 25% of the value of Technology Fund's net assets will be, when added
together, (a) deposited as collateral for the obligation to replace securities
borrowed to effect short sales, and (b) allocated to segregated accounts in
connection with short sales. The Technology Fund's ability to make short sales
may be limited by a requirement applicable to "regulated investment companies"
under Subchapter M of the Internal Revenue Code that no more than 30% of a
fund's gross income in any year may be the result of gains from the sale of
property held for less than three months. See "Dividends and Tax Policy."
GROWTH & INCOME FUND
THE OBJECTIVE AND BASIC PORTFOLIO OF THE GROWTH &INCOME FUND (FORMERLY SUMMATION
FUND)
The Growth & Income Fund's objective is to maximize total return through a
combination of capital appreciation and income. The Growth &Income Fund invests
primarily in common stocks of companies with market capitalizations in excess of
$500,000,000 and low price/earnings ratios that appear to be undervalued
relative to their potential growth rates. The Growth & Income Fund expects, but
is not required, to invest in approximately 90 stocks on the Standard & Poor's
500 Index ("S&P 500").
In selecting stocks for the Growth & Income Fund, the Growth & Income Fund
Adviser will examine the first 250 companies with price/earnings ratios below
the median of the S&P 500, eliminating any stock with a market capitalization of
less than $500 million. The Growth & Income Fund Adviser then will consider the
financial condition of the companies, including the 10-year earnings and
dividend record. The companies remaining after this review are subjected to
fundamental analysis. Generally the Growth & Income Fund Adviser will purchase
a stock that meets its price/earnings ratio range, market capitalization range,
volatility test, credit standard quality and fundamental judgment of
undervaluation. In determining undervaluation, the Growth & Income Fund Adviser
will consider a number of factors including enterprise franchise value, industry
competitive position and cash flow. The Growth & Income Fund Adviser will sell
a stock if it does not meet its purchase criteria or if there are stocks with a
lower price/earnings ratio that meet such criteria. Under normal market
conditions, it is expected that the Growth & Income Fund will have at least 80%
of its assets invested in common stocks.
When the Growth & Income Fund Adviser deems it advisable for temporary
defensive purposes, the Growth & Income Fund may invest up to 100% of its net
assets in U.S. Government securities, principally expected to be Treasury Bills,
bank instruments or commercial paper master notes. See "Principal Investment
Risks" for possible risks and the Statement of Additional Information for a
description of U.S. Government securities.
Investments in undervalued stocks may present the risk that improving
fundamentals of such companies may not be recognized as quickly as stocks of
more widely followed companies, or that economic conditions in general or in a
particular industry may not improve as quickly as forecasted. There is also the
possibility that the negative opinion held by the majority of investors may be
correct.
Since the major portion of the Growth & Income Fund's portfolio will normally
be invested in common stocks, the Growth & Income Fund's net asset value may be
subject to greater fluctuations than a portfolio containing a substantial amount
of fixed income securities. There can be no assurance that the investment
objective of the Growth & Income Fund will be realized. Nor can there be
assurance that the Growth & Income Fund's portfolio will not decline in value.
INVESTMENT PRACTICES AND RISKS
BORROWING
From time to time the Adjustable Rate Fund, Gaming Fund, Technology Fund and
Growth & Income Fund may increase their ownership of securities by borrowing on
a secured or unsecured basis at fixed and floating rates of interest and
investing the borrowed funds. It is not anticipated that the Adjustable Rate
Fund, Gaming Fund, Technology Fund or Growth & Income Fund will use its
borrowing power to an extent greater than 25% of the value of its assets.
Borrowings will be made only from banks and only to the extent that the value of
the assets of the Fund in question, less its liabilities other than borrowings,
is equal to at least 300% of all borrowings, including the proposed borrowing.
If the value of the assets of the Fund in question so computed should fail to
meet the 300% asset coverage requirement, the Fund is required within three days
to reduce its bank debt to the extent necessary to meet such 300% coverage.
Since substantially all of the assets of the Adjustable Rate Fund, Gaming Fund,
Technology Fund and Growth & Income Fund fluctuate in value, but borrowing
obligations are fixed, the net asset value per share of the Adjustable Rate
Fund, Gaming Fund, Technology Fund and Growth & Income Fund will correspondingly
tend to increase and decrease in value more than otherwise would be the case.
This speculative factor is known as "leverage."
LENDING PORTFOLIO SECURITIES
Each of the Adjustable Rate Fund, Gold Fund, Technology Fund and the Growth &
Income Fund may, to increase its income, lend its securities on a short- or
long-term basis to brokers,. dealers and financial institutions if (i) the loan
is collateralized in accordance with applicable regulatory guidelines (the
"Guidelines") and (ii) after any loan, the value of the securities loaned does
not exceed 25% of the value of its total assets. Under the present Guidelines
(which are subject to change) the loan collateral must be, on each business day,
at least equal to the value of the loaned securities and must consist of cash,.
bank letters of credit or U.S. Government securities. To be acceptable as
collateral, a letter of credit must obligate a bank to pay amounts demanded by
the Fund in question if the demand meets the terms of the letter. Such terms and
the issuing bank would have to be satisfactory to the Fund in question. Any loan
might be secured by any one or more of the three types of collateral.
The Fund in question receives amounts equal to the interest or other
distributions on loaned securities and also receives one or more of the
negotiated loan fees, interest on securities used as collateral or interest on
the securities purchased with such collateral, either of which type interest may
be shared with the borrower. The Adjustable Rate Fund, Gold Fund, Technology
Fund and Growth & Income Fund may also pay reasonable finder's, custodian's and
administrative fees but only to persons not affiliated with the Trust. The
terms of the loans will meet certain tests under the Internal Revenue Code (the
"Code") and permit the Adjustable Rate Fund, Gold Fund, Technology Fund and
Growth & Income Fund to terminate the loan and thus reacquire the loaned
securities on three days notice.
FOREIGN SECURITIES
From time to time a portion of the investments of the Gold Fund and Technology
Fund and up to 10% of the total assets of the Growth Fund may be in the
securities of foreign issuers. There are risks in investing in foreign
securities. Foreign economies may differ from the U.S. economy; individual
foreign companies may differ from domestic companies in the same industry;
foreign currencies may be stronger or weaker than the U.S. dollar.
An investment may be affected by changes in currency rates and in exchange
control regulations, and the Gold Fund, the Growth Fund and the Technology Fund
may incur transaction costs in exchanging currencies. For example, at times when
the assets of the Gold Fund, Growth Fund or Technology Fund are invested
primarily in securities denominated in foreign currencies, investors can expect
that their net asset values per share will tend to increase when the value of
U.S. dollars is decreasing against such currencies. Conversely a tendency toward
decline in net asset values per share can be expected when the value of U.S.
dollars is increasing against such currencies.
Foreign companies are frequently not subject to accounting and financial
reporting standards applicable to domestic companies, and there may be less
information available about foreign issuers. Foreign stock markets have
substantially less volume than the New York Stock Exchange, and securities of
foreign issuers are generally less liquid and more volatile than those of
comparable domestic issuers. There is frequently less government regulation of
exchanges, broker-dealers and issuers than in the United States. In addition,
investments in foreign countries are subject to the possibility of
expropriation, confiscatory taxation, political or social instability or
diplomatic developments that could adversely affect the value of those
investments. The Adviser believes that, given its expectation of investing a
majority of the assets of the Gold Fund, Growth Fund and Technology Fund in
securities of issuers in the U.S., Canada, Australia and other democratic
countries of the Pacific Rim and Western Europe, the likelihood of such
circumstances adversely affecting the portfolio securities of the Gold Fund,
Growth Fund or Technology Fund should be remote.
HEDGING
Hedging may be used in an attempt to (i) protect against declines or possible
declines in the market values of securities held in a Fund's portfolio ("short
hedging") or (ii) establish a position in the securities markets as a substitute
for purchase of individual securities ("long hedging"). The Adviser may cause a
Fund to engage in short hedging in an attempt to protect that Fund's value
against anticipated downward trends in the securities markets. The Adviser may
cause a Fund to engage in long hedging as a substitute for the purchase of
securities, which may then be purchased in an orderly fashion. It is expected
that when a Fund is engaging in long hedging, it would, in the normal course,
purchase securities and terminate the hedging position, but under unusual market
conditions such a hedging position may be terminated without the corresponding
purchase of securities.
HEDGING INSTRUMENTS
The various hedging instruments which the Funds may use are discussed below.
These instruments may be used only for hedging and not for speculative purposes.
Additionally the Gold Fund may write covered call and put options to generate
income for liquidity purposes. The Statement of Additional Information contains
further information as to the characteristics of and the risks of transactions
in, each of these instruments.
Stock Index Futures. The Growth Fund, the Gaming Fund and the Technology Fund
(but not the Government Fund, the Gold Fund or the Growth & Income Fund) may buy
and sell futures contracts on stock indices ("Stock Index Futures"). A stock
index, which cannot be purchased or sold directly, assigns relative values to
the common stocks included in the index, and the index fluctuates with the
changes in the market values of these common stocks. When a Fund buys a Stock
Index Future it agrees to take delivery of an amount of cash equal to a
specified dollar amount times the difference between the stock index value at
the close of the last trading day of the Stock Index Future and the price at
which the Stock Index Future was originally struck. No physical delivery of the
underlying stocks in the index is made. When a Fund sells a Stock Index Future,
it agrees to deliver such an amount of cash.
Call Options. The Gold Fund, the Growth Fund, the Gaming Fund and the Technology
Fund (but not the Government Fund or the Growth & Income Fund) may purchase call
options ("calls") and write (i.e., sell) calls but only if (i) the investments
to which the call relates (the "related investments") are (a) common stocks or
other securities that have equity characteristics ("equities"), (b) stock
indices, or (c) Stock Index Futures (except that the Gold Fund may not purchase
or write calls on Stock Index Futures); (ii) in the case of calls on equities
written by any of such Funds, such calls are "covered"; and (iii) the calls are
listed on a domestic securities or commodities exchange or quoted on the
automatic quotation system of the National Association of Securities Dealers,
Inc. ("NASDAQ"). For a call to be "covered," either (i) the Fund in question
must own the underlying equity or have an absolute and immediate right to
acquire that equity without payment of additional cash consideration, or for an
additional consideration held as set forth in (ii), upon conversion or exchange
of other securities held in its portfolio; or (ii) that Fund must maintain in a
segregated account cash or high quality, short-term readily marketable debt
obligations adequate to purchase the equities, in each case until the Fund
enters into a closing purchase transaction as to that call. Additionally calls
written by the Gold Fund are deemed to be covered if it holds on a share-for-
share basis a call on the same related investment as the call written where the
exercise price of the call held is either equal to or less than the exercise
price of the call written or, if greater, the marked-to-market excess is
maintained in a segregated account in cash or high quality, short-term readily
marketable debt obligations. The above limitations on calls the Funds may write
or purchase are fundamental policies, i.e., rules which may not be changed
unless the shareholders of the Fund in question vote to change them.
Put Options. The Gold Fund, the Growth Fund, the Gaming Fund and the Technology
Fund (but not the Government Fund or the Growth & Income Fund) may purchase put
options ("puts") but only if (i) the investments to which the put relates (the
"related investments") are (a) equities, (b) stock indices, or (c) Stock Index
Futures (except that the Gold Fund may not purchase puts on Stock Index
Futures); and (ii) the puts are listed on a domestic securities or commodities
exchange or quoted on NASDAQ. The Growth Fund, the Gaming Fund and the
Technology Fund may not write puts. The puts which the Growth Fund and the
Gaming Fund, but not the Technology Fund, purchase on equities must be
"protective," i.e., the Fund in question must own the related investments. The
Gold Fund may write covered puts on (a) equities and (b) stock indices. For a
put to be covered the Gold Fund must (i) maintain in a segregated account cash
or high quality, short-term readily marketable debt obligations equal to the
option price; or (ii) hold on a share-for-share basis a put on the same security
as the put written where the exercise price of the put held is either equal to
or greater than the exercise price of the put written or, if less, the marked-
to-market deficit is maintained in a segregated account in cash or high quality,
short-term readily marketable debt obligations. These limitations on puts are
fundamental policies.
Debt Futures and Options Thereon. The Government Fund may buy and sell futures
contracts on debt securities ("Debt Futures"). When the Government Fund buys a
Debt Future, it agrees to take delivery of a specific type of debt security at a
specific future date for a fixed price; when it sells a Debt Future, it agrees
to deliver a specific type of debt security at a specific future date for a
fixed price. Either obligation may be satisfied by the actual taking, delivering
or entering into an offsetting Debt Future to close out the futures position.
The Government Fund may purchase puts but only if (i) the investments to which
the puts relate are Debt Futures; and (ii) the puts are traded on a domestic
commodities exchange. Such puts need not be protective; i.e., the Government
Fund need not own the related Debt Futures. The Government Fund may not write
any puts. The Government Fund may purchase calls and write calls but only if (i)
the investments to which the call relates are Debt Futures; and (ii) the calls
are traded on a domestic commodities exchange.
The above limitations on puts and calls are fundamental policies; i.e., rules
which may not be changed until the shareholders of the Government Fund vote to
change them.
PORTFOLIO TURNOVER
See the last footnote to the Financial Highlights table above for the definition
of a portfolio turnover rate and the caption "Portfolio turnover rate" in that
table for the turnover rates of the Funds. High portfolio turnover (i.e., over
100%) may involve correspondingly greater brokerage commissions and other
transaction costs, which are borne directly by the Funds. In addition, high
portfolio turnover may result in increased short-term capital gains which, when
distributed to shareholders, are treated as ordinary income. The portfolio
turnover rate of each of the Funds may vary significantly from year to year as a
result of the presence or absence of the defensive investment positions taken by
the Adviser, the Government Fund Adviser or the Growth & Income Fund Adviser as
the case may be.
PRINCIPAL INVESTMENT RISKS
Puts, Calls and Futures. A Fund's use of puts, calls and Futures may entail
certain risks. Among others, they include the possibility that a liquid
secondary market may not exist at a time when a Fund may wish to close out an
option position. It is also possible that trading in options on stock indices or
Debt Futures might be halted at times when the securities markets generally were
to remain open. The price movements in the Gold Fund's, the Growth Fund's, the
Gaming Fund's and the Technology Fund's portfolios will not correlate perfectly
with changes in the levels of the indices on which futures and options are
based. Similarly, in the case of the Government Fund, the price movements in its
portfolio will not correlate perfectly with the price changes in Debt Futures
and options thereon. When the Gold Fund, the Growth Fund, Gaming Fund or the
Technology Fund has written a call, there is the risk that the market may
decline between the time when the call is exercised and the time when that Fund
is able to sell the stocks in its portfolio. A Fund's ability to purchase or
sell hedging instruments may be limited by a requirement applicable to
"regulated investment companies" under Subchapter M of the Internal Revenue Code
that no more than 30% of a Fund's gross income in any year may be the result of
gains from the sale of property held for less than three months. See "Dividends
and Tax Status." Additionally because of the foregoing and the costs associated
therewith, the use of puts, calls and Futures may increase the volatility of an
investment in a Fund.
Repurchase Agreements. Each Fund may enter into repurchase agreements, which
basically involve the purchase by that Fund of debt securities and their resale
at an agreed-upon price. While each Fund intends to be fully "collateralized" as
to such agreements, if the person obligated to repurchase from that Fund
defaults or enters bankruptcy, there may be possible delays and expenses in
liquidating the securities, decline in their value and loss of interest. See the
Statement of Additional Information under "Repurchase Agreements."
U.S. Government Securities. The U.S. Government securities which each of the
Funds may purchase may involve obligations of agencies and instrumentalities
which are not backed by the full faith and credit of the United States; see the
Statement of Additional Information under "U.S. Government Securities." In such
cases, a Fund must look principally to the agency or instrumentality issuing or
guaranteeing the obligation for ultimate repayment and may not be able to assert
a claim against the United States itself in the event the agency or
instrumentality does not meet its commitment.
Mortgage-Backed Securities. A Fund's investment in certain Mortgage-Backed
Securities, such as interest only SMBS, may be extremely sensitive to changes in
prepayments and interest rates. Even though such securities have been guaranteed
by an agency or instrumentality of the U.S. Government, under certain interest
rate or prepayment rate scenarios, the Fund may fail to fully recover its
investment in such securities. See the discussion of Mortgage-Backed Securities
under "The Objective and Basic Portfolio of the Adjustable Rate Fund."
In general, changes in both prepayment rates and interest rates will change
the yield on Mortgage-Backed Securities. The rate of principal prepayments with
respect to ARMs has fluctuated in recent years. As is the case with fixed rate
mortgage loans, ARMs may be subject to a greater rate of principal prepayments
in a declining interest rate environment. For example, if prevailing interest
rates fall significantly, ARMs could be subject to higher prepayment rates than
if prevailing interest rates remain constant because the availability of fixed
rate mortgage loans at competitive interest rates may encourage mortgagors to
refinance their ARMs to "lock-in" a lower fixed interest rate. Conversely, if
prevailing interest rates rise significantly, ARMs may prepay at lower rates
than if prevailing rates remain at or below those in effect at the time such
ARMs were originated. As with fixed rate mortgages, there can be no certainty as
to the rate of prepayments on the ARMs in either stable or changing interest
rate environments. In addition, there can be no certainty as to whether
increases in the principal balances of the ARMs due to the addition of deferred
interest may result in a default rate higher than that on ARMs that do not
provide for negative amortization. Other factors affecting prepayment of ARMs
include changes in mortgagors' housing needs, job transfers, unemployment,
mortgagors' net equity in the mortgage properties and servicing decisions.
A Fund's reinvestment of principal payments and prepayments received on a
mortgage pass-through security may be made at rates higher or lower than the
rate payable on such security, thus affecting the return realized by the Fund.
In addition, the receipt of interest payments monthly rather than semi-annually
by the Fund has a compounding effect that may increase the yield to the Fund
relative to debt obligations that pay interest semi-annually. Due to these
factors, Mortgage-Backed Securities may also be less effective than U.S.
Treasury securities of similar maturity at maintaining yields during periods of
changing interest rates. Prepayments may have a disproportionate effect on
certain Mortgage-Backed securities such as SMBS and certain other multiple class
pass-through securities that purchase Mortgage-Backed securities at a premium or
at a discount.
The market value of adjustable rate Mortgage-Backed Securities may be
adversely affected if interest rates increase faster than the rates of interest
payable on such securities or by the adjustable rate mortgage loans underlying
such securities. Furthermore, adjustable rate Mortgage-Backed Securities or the
mortgage loans underlying such securities may contain provisions limiting the
amount by which rates may be adjusted upward and downward and may limit the
amount by which monthly payments may be increased or decreased to accommodate
upward and downward adjustments in interest rates.
Certain adjustable rate mortgage loans may provide for periodic adjustments of
scheduled payments in order to fully amortize the mortgage loan by its stated
maturity. Other adjustable rate mortgage loans may permit such stated maturity
to be extended or shortened in accordance with the portion of each payment that
is applied to interest in accordance with the periodic interest rate
adjustments.
Although having less risk of decline during periods of rising interest rates,
adjustable rate Mortgage-Backed Securities have less potential for capital
appreciation than fixed rate Mortgage-Backed Securities because their coupon
rates will decline in response to market interest rate declines. The market
value of fixed rate Mortgage-Backed Securities may be adversely affected as a
result of increases in interest rates and, because of the risk of principal
prepayments, may benefit less than other fixed rate securities of similar
maturity from declining interest rates. Finally, to the extent Mortgage-Backed
Securities are purchased at a premium, mortgage foreclosures and unscheduled
principal prepayments may result in some loss of the Adjustable Rate Fund's
principal investment to the extent of the premium paid. On the other hand, if
the securities are purchased at a discount, both a scheduled payment of
principal and an unscheduled prepayment of principal will increase current and
total returns and will accelerate the recognition of income.
General Risks. Other risks are that the Adviser, the Government Fund Adviser or
the Growth & Income Fund Adviser as the case may be, would be incorrect in its
expectations as to the extent of various movements in securities prices or the
time within which the movements take place.
PRINCIPAL INVESTMENT RESTRICTIONS
The Trust is subject to certain investment restrictions which are fundamental
policies that cannot be changed without the approval of the holders of a
"majority," as defined in the Investment Company Act of 1940 (the "1940 Act"),
of the shares of the Fund as to which the policy change is being sought. Each
Fund's investment objective is such a policy, as are the policies as to hedging
instruments indicated above as being fundamental policies. Among the Trust's
other restrictions, (i) none of the Funds may purchase more than 10% of the
outstanding voting securities, or of any class of securities, of any one issuer,
(ii) each of the Gold Fund, the Growth Fund, the Gaming Fund and the Technology
Fund may not, with respect to 50% of its assets, invest more than 5% of its
total assets in the securities of any one issuer (other than U.S. Government
securities), (iii) the Growth Fund, the Technology Fund and the Growth &Income
Fund may not purchase any security if as a result 25% or more of its total
assets would be invested in securities of issuers in a single industry, and (iv)
none of the Funds may purchase any security restricted as to disposition under
federal securities laws. The Growth & Income Fund and the Government Fund and
the Adjustable Rate Fund are "diversified" as defined in the 1940 Act due to
their policies of investing primarily in a diversified portfolio of common
stocks and U.S. Government securities, respectively. The Gold Fund, the Growth
Fund, the Gaming Fund and the Technology Fund are "non-diversified" under the
1940 Act but each of such Funds must meet a diversification test as to 50% of
its assets under the Code. Additional information about, and a more detailed
statement of, the Trust's investment restrictions is contained in the Statement
of Additional Information.
In addition, due to requirements of the Commodities Futures Trading
Commission, those Funds which may use Futures or options on them will purchase
or sell Futures, or options on them, only for hedging purposes (except that
nonhedging positions may be established if the initial margin and premiums
required to establish such positions do not exceed 5% of a Fund's net assets),
and otherwise within the limits of a Rule of that Commission.
As indicated above the Funds will, in a number of situations, maintain in a
segregated account or accounts with its custodian cash or high quality, short-
term readily marketable obligations in the amounts indicated. Maintenance of
such segregated accounts reflect regulatory restrictions on the Trust and are
not fundamental policies; that is, such policies could change if the regulatory
requirements change without any vote of shareholders as to such change.
As discussed in the Statement of Additional Information, each Fund may,
within limits, engage in short sales but, except for the Technology Fund, only
those which are "against the box." Short sales against the box are a method of
locking in unrealized capital gains without current recognition of such gains
for tax purposes without additional costs.
MANAGEMENT
The Trust's Board of Trustees decides on matters of general policy and reviews
the activities of the Adviser, Government Fund Adviser, Growth & Income Fund
Adviser, Growth Fund Sub-Adviser, Technology Fund Sub-Adviser, Administrator
and Distributor, and the Trust's officers conduct and supervise the daily
business operations of the Trust.
THE ADVISER, THE GOVERNMENT FUND ADVISER, THE GROWTH & INCOME FUND ADVISER, THE
GROWTH FUND SUB-ADVISER AND THE TECHNOLOGY FUND SUB-ADVISER
Monitrend Investment Management, Inc. (the "Adviser"), 1299 Ocean Avenue, Suite
210, Santa Monica, CA 90401, acts as investment adviser to the Growth Fund, the
Gaming Fund, the Technology Fund and the Gold Fund subject to the control of
the Trust's Board of Trustees, and supervises and arranges the purchase and
sale of securities held in the portfolio of these Funds and the use of hedging
instruments. The organizational arrangements of the Adviser are such that all
investment decisions are made by a committee and no persons are primarily
responsible for making recommendations to that committee. The Adviser is a
public corporation and on May 8, 1996 filed a Form 8-K reporting that it had
entered into an agreement in principle with an investment group led by Lloyd
McAdams, Heather U. Baines, Pacific Income Advisers, Inc. and Capital Advisors,
Inc. which requires the investment group to make a capital investment in the
Adviser and provide facilities and management personnel. The transaction is
subject to approval by the shareholders of each of the Funds and the
shareholders of the Adviser.
Pacific Income Advisers, Inc. (the "Government Fund Adviser"), 1299 Ocean
Avenue, Suite 210, Santa Monica, CA 90401, acts as investment adviser to the
Government Fund and Adjustable Rate Fund, subject to the control of the Trust's
Board of Trustees, and supervises and arranges the purchase and sale of
securities held in the portfolio of the Government Fund and Adjustable Rate
Fund, and their use of hedging instruments. The organizational arrangements of
the Government Fund Adviser are such that all investment decisions are made by
a committee and no persons are primarily responsible for making recommendations
to that committee. The Adviser acts as manager to the Government Fund and the
Adjustable Rate Fund and as such furnishes statistical and other factual
information, as well as advice regarding economic factors and trends, to the
Government Fund Adviser and provides transaction processing and portfolio
monitoring services to the Government Fund and the Adjustable Rate Fund.
Although the Adviser in its capacity as manager to the Government Fund and the
Adjustable Rate Fund may furnish advice to the Government Fund Adviser as to
occasional transactions in specific securities, the Adviser does not generally
furnish advice or make recommendations regarding the purchase or sale of
securities. The Government Fund Adviser makes all decisions as to the
securities and hedging instruments to be purchased and sold for the Government
Fund and the timing of such purchases and sales.
MidCap Associates, Inc. (the "Growth & Income Fund Adviser"), 50 Broad
Street, 12th Floor, New York, NY 10004, acts as investment adviser to the
Growth & Income Fund, subject to the control of the Trust's Board of Trustees,
and supervises and arranges the purchase and sale of securities held in the
portfolio of the Growth & Income Fund. Peter F. Brennan, the Chairman and
Secretary of the Growth & Income Fund Adviser, and Philip Palmer, the President
and Treasurer of the Growth & Income Fund Adviser, are primarily responsible
for the day-to-day management of the Growth & Income Fund and have been
primarily responsible for so doing since February 1, 1995. Messrs. Brennan and
Palmer cofounded MidCap Associates, Inc. Concurrently, Mr. Brennan became a
registered representative at Noyes Partners Incorporated, a NASD registered
broker-dealer. From 1987 to 1989, Mr. Brennan was assistant to the Senior
Partner of Grayson, Burger & Company, an NASD registered broker-dealer. Mr.
Palmer was Vice President and Senior Portfolio Manager of Loomis, Sayles & Co.
from 1976 to 1989 where he managed corporate pension trusts, union retirement
trusts and funds for foundations, museums, hospitals and families. The Adviser
acts as sub-adviser to the Growth & Income Fund and as such furnishes regular
advice to the Growth & Income Fund Adviser regarding those economic and market
factors which influence the decisions of the Growth & Income Fund Adviser as to
the securities to be purchased or sold for the Growth & Income Fund. Although
the Adviser in its capacity as sub-adviser to the Growth & Income Fund will
furnish regular advice to the Growth & Income Fund Adviser, the Growth & Income
Adviser makes the final decision as to the securities to be purchased and sold
for the Growth & Income Fund and the timing of such purchases and sales.
Robert L. Bender, Inc. ( the "Growth Fund Sub-Adviser"), 525 Starlight Crest
Drive, La Canada, CA 91011, assists the Adviser by furnishing regular advice to
the Adviser with respect to securities and hedging instruments to be purchased
and sold by the Growth Fund. Although the Growth Fund Sub-Adviser makes
recommendations to the Adviser, the Adviser makes the final decision as to the
securities and hedging instruments to be purchased and sold for the Growth Fund
and the timing of such purchases and sales. Robert L. Bender, the President of
the Growth Fund Sub-Adviser is primarily responsible for making recommendations
to the Adviser and has been so responsible since the inception of the Growth
Fund. Mr. Bender has been President of the Growth Fund Sub-Adviser since 1978.
Negative Beta Associates, Inc. (the "Technology Fund Sub-Adviser") 225 South
Cabrillo Highway, #204-B, Half Moon Bay, CA 94019, assists the Adviser by
furnishing regular advice to the Adviser with respect to securities and hedging
instruments to be purchased and sold by the Technology Fund. Although the
Technology Fund Sub-Adviser makes recommendations to the Adviser, the Adviser
will make the final decision as to the securities and hedging instruments to be
purchased and sold by the Technology Fund and the timing of such purchases and
sales. John Michael Murphy, the President of the Technology Fund Sub-Adviser,
will be primarily responsible for making recommendations to the Adviser. Mr.
Murphy has been a portfolio manager since 1973 and a securities analyst since
1970. He has been the president of an investment newsletter publisher since
1981.
The Adviser is a corporation that was organized to act as the Trust's
investment adviser. There are four Investment Advisory Agreements, two Sub-
Advisory Agreements and one Management Agreement between the Trust and the
Adviser, each such agreement being applicable to one Fund. There is also a
Management Agreement between the Adviser and the Government Fund Adviser
applicable only to the Adjustable Rate Fund. The Government Fund Adviser is a
corporation that was organized in May 1986 to provide investment advice to
individual and institutional clients. It does not advise any other investment
companies. The Government Fund Adviser became the investment adviser to the
Government Fund on October 31, 1992 and the Adjustable Rate Fund on March 31,
1994. There are two Investment Advisory Agreements between the Trust and the
Government Fund Adviser, one applicable to the Government Fund and the other
applicable to the Adjustable Rate Fund. The Growth Fund Sub-Adviser is a
corporation that was organized in 1978 to provide investment advice to
individual and institutional clients. There is one Sub-Advisory Agreement
between the Adviser and the Growth Fund Sub-Adviser, applicable only to the
Growth Fund. The Technology Fund Sub-Adviser is a corporation that was
organized in 1989 to provide investment advice to individual and institutional
clients. There is one Sub-Advisory Agreement between the Adviser and the
Technology Fund Sub-Adviser applicable only to the Technology Fund. The Growth
& Income Fund Adviser is a corporation that was organized in 1990 to provide
investment advice to individual and institutional clients. The Growth & Income
Fund Adviser became the investment adviser to the Growth & Income Fund on
February 1, 1995 and does not advise any other investment companies. There is
one Investment Advisory Agreement between the Trust and the Growth & Income
Fund Adviser, applicable only to the Growth & Income Fund. The Trust's Board of
Trustees has approved a Sub-Advisory Agreement between the Adviser and Orrell
and Company, Inc., which Sub-Advisory will take effect upon approval by the
shareholders of the Gold Fund.
Under the Agreements applicable to the Government Fund, the Trust pays the
Adviser and the Government Fund Adviser fees, computed daily and payable
monthly, at the following annual rate based on daily net assets:
FEE RATE
FEE RATE FOR GOVERNMENT TOTAL
ASSETS FOR ADVISER FUND ADVISER FEE RATE
0 to $50 million 0.20% 0.20% 0.40%
Over $50 million 0.10% 0.30% 0.40%
Notwithstanding the foregoing table, if in any month the average of the daily
net assets of the Government Fund is less than $10 million, the Government
Fund Adviser will not be entitled to any management fee for that month and the
Adviser will be entitled to a fee equal to one-twelfth of 0.40% of the average
of the daily net assets of the Government Fund for that month. Under the
Agreements applicable to the Growth & Income Fund, the Trust pays the Adviser
and the Growth & Income Fund Adviser total fees, computed daily and payable
monthly, at the following annual rates based on daily net assets:
ASSETS FEE RATE
0 to $150 million 0.625%
$150 million to $250 million 0.50%
Over $250 million 0.375%
The Trust pays the Growth & Income Fund Adviser and the Adviser 40% and 60%,
respectively, of the above fees with respect to the first $20 million of the
average daily net assets of the Growth & Income Fund, and 60% and 40%,
respectively, of the above fees with respect to average daily net assets of
the Growth & Income Fund in excess of $20 million. In addition, the Trust
pays the Growth & Income Fund Adviser a fee of $1,000 for each month in which
the net assets of the Growth & Income Fund as of the end of such month are in
excess of $7 million.
Under the Agreements applicable to the Gold Fund, the Trust pays the Adviser
fees, computed daily and payable monthly, at the following annual rates based
on daily net assets:
ASSETS FEE RATE
0 to $10 million 1%
$10 million to $50 million 1%
$50 million to $75 million 0.875%
$75 million to $100 million 0.75%
$100 million to $150 million 0.625%
$150 million to $250 million 0.50%
Over $250 million 0.375%
This fee is higher than that paid by most other investment companies. Under
the Investment Advisory Agreement applicable to the Growth Fund, the Trust
pays the Adviser a fee, computed daily and payable monthly, at the following
annual rate based on daily net assets:
ASSETS FEE RATE
0 to $50 million 1%
$50 million to $75 million 0.875%
$75 million to $100 million 0.75%
$100 million to $150 million 0.625%
$150 million to $250 million 0.50%
Over $250 million 0.375%
This fee is higher than that paid by most investment companies. Under the Sub-
Advisory Agreement between the Adviser and the Growth Fund Sub-Adviser, the
Adviser is responsible for compensating the Growth Fund Sub-Adviser. Under the
Investment Advisory Agreement applicable to the Gaming Fund, the Trust pays the
Adviser a fee, computed daily and payable monthly, at the annual rate of 1.25%
of the Gaming Fund's daily net assets. This fee is higher than that paid by most
investment companies. Under the Investment Advisory Agreement applicable to the
Technology Fund, the Trust pays the Adviser a fee, computed daily and payable
monthly, at the annual rate of 1% of the Technology Fund's daily net assets.
This fee is higher than that paid by most investment companies. Under the Sub-
Advisory Agreement between the Adviser and the Technology Fund Sub-Adviser, the
Adviser is responsible for compensating the Technology Fund Sub-Adviser. Under
the Investment Advisory Agreement applicable to the Adjustable Rate Fund, the
Trust pays the Government Fund Adviser a fee, computed daily and payable
monthly, at the annual rate of 0.35% of the Adjustable Rate Fund's daily net
assets. Under the Management Agreement between the Government Fund Adviser and
the Adviser with respect to the Adjustable RateFund the Government Fund Adviser
is responsible for compensating the Adviser.
In addition to the fees payable to the Adviser, the Government Fund Adviser
and the Growth & Income Fund Adviser, the Trust, as to each Fund, is responsible
for each Fund's operating expenses, including: (i) interest and taxes; (ii)
brokerage commissions; (iii) insurance premiums; (iv) compensation and expenses
of Trustees other than those affiliated with the Adviser; (v) legal and audit
expenses; (vi) fees and expenses of the Trust's Administrator, custodian,
shareholder servicing or transfer agent and accounting services agent; (vii)
expenses incident to the issuance of its shares, including issuance on the
payment of, or reinvestment of, dividends; (viii) fees and expenses incident to
the registration under federal or state securities laws of the Trust or its
shares; (ix) expenses of preparing, printing and mailing reports and notices and
proxy material to shareholders of the Trust; (x) all other expenses incidental
to holding meetings of the Trust's shareholders; (xi) dues or assessments of or
contributions to the Investment Company Institute or any successor; (xii) such
non-recurring expenses as may arise, including litigation affecting the Trust
and the legal obligations which the Trust may have to indemnify its officers and
Trustees with respect thereto; and (xiii) all expenses which the Trust agrees to
bear in any distribution agreement or in any plan adopted by the Trust pursuant
to Rule 12b-1 under the 1940 Act. See the Statement of Additional Information
for the expense limitation in the Agreements and their provisions as to the
allocation of portfolio transactions, including provisions which authorize the
Adviser and the Government Fund Adviser to consider sales of shares as a factor
in the selection of brokers and dealers to execute portfolio transactions and
which authorize the Adviser and Government Fund Adviser to direct the Funds to
pay brokerage commission to Syndicated Capital, Inc., the Distributor of each of
the Funds.
THE ADMINISTRATOR
American Data Services, Inc., a corporation organized under the laws of the
State of New York, administers the day to day operations of each Fund and serves
as fund accountant to each Fund, subject to the overall supervision of the
Trust's Board of Trustees. The Administrator maintains each Fund's books and
records, other than those records maintained by the Fund's custodian, oversees
the Trust's insurance relationships, participates in the preparation of tax
returns, proxy statements and reports, prepares documents necessary for the
maintenance of the Trust's registration with the various states, responds or
oversees the response to communications from shareholders and broker-dealers,
oversees relationships between the Trust and its custodian, determines each
Fund's net asset value and directs any of the Administrator's directors,
officers or employees who may be elected as officers of the Trust to serve as
such. For its services as administrator and fund accountant, the Administrator
is paid a fee, computed daily and paid monthly, by each Fund at the rate of
0.10% per year of the average daily net assets of that Fund, subject to a
minimum monthly fee of approximately $1,072 per Fund.
See the Statement of Additional Information for more information as to the
Trust's Board of Trustees, officers and principal shareholders, the Adviser, the
Government Fund Adviser, the Growth & Income Fund Adviser, the Growth Fund Sub-
Adviser, the Technology Fund Sub-Adviser, and the Administrator.
HOW TO PURCHASE SHARES
Syndicated Capital, Inc., 1299 Ocean Avenue, Suite 210, Santa Monica, CA 90401,
is the Distributor of each Fund's shares. Shares of each Fund may be purchased
through brokers or dealers ("selected dealers") who have a sales agreement with
the Distributor at the offering price next determined after receipt of an order
in proper form; see "Net Asset Value." In certain circumstances, selected
dealers may be deemed "underwriters," in the opinion of the staff of the
Securities and Exchange Commission, for the purposes of the Securities Act of
1933. The offering price is the net asset value per share of the Fund the shares
of which are being purchased, plus a sales charge. The following table shows the
amount of the sales charge to a "person" (defined below) together with the
dealer discount paid to dealers and agency commissions paid to brokers
(collectively, the "commissions") with respect to purchases of the Funds (other
than the Adjustable Rate Fund):
SALES CHARGE AS COMMISSIONS
PERCENTAGE OF AS
OFFERING AMOUNT PERCENTAGE OF
AMOUNT OF PURCHASE PRICE INVESTED OFFERING PRICE
- ------------------ ------------ ------------ --------------
Less than $100,000 4.50% 4.71% 4.00%
$100,000 to $249,999 3.00 3.09 2.75
$250,000 to $499,999 2.50 2.56 2.25
$500,000 to $999,999 2.00 2.04 1.75
$1,000,000 or more 0 0 0
The following table shows the amount of the sales charge to a person together
with the commissions with respect to purchases of the Adjustable Rate Fund:
SALES CHARGE AS COMMISSIONS
PERCENTAGE OF AS
OFFERING AMOUNT PERCENTAGE OF
AMOUNT OF PURCHASE PRICE INVESTED OFFERING PRICE
- ------------------ ------------- --------- --------------
Less than $100,000 1.25% 1.27% 1.25%
$100,000 to $299,999 1.00 1.01 1.00
$300,000 to $499,999 0.75 0.76 0.75
$500,000 to $999,999 0.50 0.50 0.50
$1,000,000 or more 0 0 0
In addition to the commissions shown in the table above, the Distributor may
from time to time pay a bonus or other incentive to dealers which employ a sales
representative who sells a minimum dollar amount of shares of a Fund during a
specific time. Such bonus or other incentive may take the form of payment for
travel expenses, including lodging, incurred in connection with trips taken by
qualifying registered representatives and members of their families to places
within or without the United States. In no event will the value of such bonus or
other incentive paid by the Distributor to the dealer exceed the difference
between the sales charges and the concessions to dealers in respect of shares of
the Fund and/or such other funds sold by the qualifying registered
representative of such dealer.
Reduced sales charges apply to purchases of shares of one or more of the Funds
made at any one time by a "person," which means an individual, or an individual,
his or her spouse and children under the age of twenty one, purchasing
securities for his, her or their own accounts, or a trustee or other fiduciary
purchasing securities for a single trust estate or fiduciary account. In
addition, purchases of shares of one or more of the Funds made during a thirteen
month period pursuant to a written Statement of Intent are also eligible for a
reduced sales charge. Reduced sales charges are also applicable to subsequent
purchases by a "person," based on the aggregate of the amount currently being
invested and the value at offering price of shares owned at the time of the
subsequent investment. Information about a Statement of Intent as well as the
terms of reduced sales charges for fiduciaries is available in the Statement of
Additional Information or from the Distributor.
Investors may purchase shares of any Fund at net asset value to the extent
that this investment represents the proceeds from the redemption, within the
previous sixty days, of shares or interests (the purchase price of which shares
included a sales charge) of another mutual fund or a commodity pool. When making
a purchase at net asset value pursuant to this provision, the investor should
forward to the Trust's transfer agent either (i) the redemption check
representing the proceeds of the shares redeemed, endorsed to the order of the
Trust (i.e., Monitrend Mutual Fund) and indicating which Fund's shares are being
purchased, or (ii) a copy of the confirmation from the other fund, showing the
redemption transaction.
Former shareholders of the Trust may purchase shares of any Fund at net asset
value up to an amount not exceeding their prior investment in the Trust. When
making a purchase at net asset value pursuant to this provision, the former
shareholder should forward to the Trust's transfer agent a copy of an account
statement showing the prior investment in the Trust.
The Trust also permits its officers and Trustees and members of their
families, and officers, directors, consultants to and employees of the Adviser,
the Government Fund Adviser and its affiliates, the Growth & Income Fund
Adviser, the Growth Fund Sub-Adviser, the Technology Fund Sub-Adviser, the
Distributor and selected dealers and members of their families as well as
customers of the Adviser, the Government Fund Adviser and its affiliates, the
Growth & Income Fund Adviser, the Growth Fund Sub-Adviser, the Technology Fund
Sub-Adviser, or the Distributor to invest at net asset value. (Partners of
partnerships for which any of the foregoing or their affiliates is a general
partner are considered to be customers.) In addition, certain publishers of
investment advisory newsletters and their subscribers, certain investment
advisers on behalf of their discretionary accounts, segregated accounts of
credit unions and/or their members through associated accounts and segregated
accounts of banks, savings and loan associations and other banking institutions
may invest at net asset value. See the Statement of Additional Information.
Purchases at net asset value may be made through brokers, dealers or other
financial institutions who may charge investors a fee, either at the time of
purchase or redemption. The fee, if charged, is retained by the broker, dealer
or other financial institution and not remitted to the Trust or the Distributor.
The minimum initial investment in the Adjustable Rate Fund is $5,000. No
minimum amount is required for subsequent purchases. The minimum initial
investment in each of the other Funds is $1,000 except for qualified retirement
plans, for which the minimum initial investment is $100. Investors who initiate
a pre-authorized check plan may also open an account with a minimum investment
of $100. The minimum subsequent investment for all accounts is $50. The
Distributor reserves the right to reject any order.
Purchase orders may either be placed with selected dealers or submitted to the
Trust's custodian, as follows:
PURCHASE PLACED WITH SELECTED DEALERS
Selected dealers may place orders for shares of any Fund on behalf of clients
at the offering price next determined after receipt of the client's order by
calling the Distributor. If the order is placed by a client with a dealer prior
to 4:20 p.m. Eastern time on any day the New York Stock Exchange is open for
trading, and forwarded to the Distributor prior to 6:00 p.m. Eastern time on
that day, it will be confirmed to the selected dealer at the applicable
offering price determined that day. The selected dealer is responsible for
placing purchase orders promptly with the Distributor and for forwarding
payment within five business days.
PURCHASE SENT TO THE CUSTODIAN
Investors may mail an application form indicating the shares of which Fund are
to be purchased, together with a check payable to PIA Adjustable Rate Fund,
PIA-Monitrend Government Income Fund, Monitrend Gold Fund, Monitrend Growth
Fund, Monitrend Gaming and Leisure Fund, Monitrend Technology Fund or Growth &
Income Fund as appropriate, directly to the Trust's custodian, at the following
address:
Monitrend Mutual Funds
P.O. Box 640284
Cincinnati, OH 45264-0284
If the purchase being made is a subsequent investment, the shareholder should
send a stub from a confirmation previously sent by the transfer agent in lieu
of the application form. If no such stub is available, a brief letter giving
the registration of the account, the name of the Fund the shares of which are
being purchased and the account number should accompany the check. In addition,
the shareholder's account number should be written on the check. Checks do not
need to be certified but are accepted subject to face value in United States
dollars and must be drawn on United States banks. American Data Services, Inc.
will charge a $15 fee against a shareholder's account for any payment check
returned to the custodian. The shareholder will also be responsible for any
losses suffered by a Fund as a result.
Shares of each Fund will be purchased for the account of the investor by the
transfer agent as agent for the investor's selected dealer at the offering
price next determined after receipt by the custodian of the check together with
the appropriate form or other identifying information.
EXCHANGE PRIVILEGE AND OTHER SERVICES
Shares of any of the Funds may be exchanged for shares of any other Fund, based
on their respective net asset values. A 2% redemption fee will be imposed on
shares that are exchanged before they have been held for 60 days. See "How to
Redeem Shares." Otherwise shares will be exchanged at their next determined net
asset value. The Funds have also entered into an arrangement with the Portico
Money Market Fund and Portico Tax-Exempt Money Market Fund, under which
shareholders may purchase shares of these Portico Funds and repurchase shares
of the Funds at net asset value. The Portico Funds are not affiliated with the
Funds or the Distributor, and their shares are sold pursuant to a separate
prospectus that may be obtained by writing or calling the Distributor at the
address or information numbers set forth on the cover of this Prospectus. Where
shares of the Portico Funds that had been acquired through a direct purchase
rather than an exchange from a Fund are exchanged for shares of a Fund, the
applicable sales charge of the Fund will be imposed at the time of the exchange
on the amount being exchanged. The Distributor receives certain payments from
the Portico Funds in connection with exchanges of shares of the Funds for those
of the Portico Funds. Refer to the prospectus of the Portico Funds for
information regarding these payments.
A shareholder who has completed the appropriate section of the application
form may give instructions to make an exchange by calling the transfer agent at
(800) 628-9403 between 9:00 a.m. and 4:20 p.m. Eastern time on days the New
York Stock Exchange is open. Exchanges are subject to the minimum investment
requirements of the fund into which the exchange is being made, and such fund
may reject any exchange for its shares. Furthermore, exchanges will be made
only in those states where they may legally be made. For federal tax purposes,
an exchange is a taxable transaction upon which a gain or loss may be realized.
Shareholders should read the prospectus of the fund into which an exchange is
being made, which may be obtained from selected dealers or the Distributor.
The Trust offers additional services to investors, including plans for the
systematic investment and withdrawal of money as well as prototype retirement
programs. Information about these services is also available in the Statement
of Additional Information or from the Distributor.
NET ASSET VALUE
Each Fund's net asset value per share is determined on each day that the New
York Stock Exchange is open for trading, as of 4:20 p.m. Eastern time. The net
asset value per share is the value of that Fund's assets, less its liabilities,
divided by the number of shares outstanding of that Fund. The value of that
Fund's portfolio securities will be the market value of such securities. See the
Statement of Additional Information for further information.
DISTRIBUTION PLAN
The Trust's Board of Trustees has adopted a Distribution Plan and Agreement (the
"Plan") under Section 12(b) of the 1940 Act and Rule 12b-1 thereunder applicable
to each Fund. In approving the Plan, the Trustees determined, in the exercise of
their business judgment and in light of their fiduciary duties, that there is a
reasonable likelihood that the Plan will benefit that Fund and its shareholders.
Pursuant to the Plan, broker-dealers and others, such as banks ("Qualified
Recipients"), that have rendered distribution assistance (whether direct,
administrative or both) may receive fees at rates determined by the Trust's
Trustees. Currently the Growth & Income Fund, Gold Fund, Growth Fund, Gaming
Fund and Technology Fund may pay broker-dealers fees at a rate not to exceed
0.75% per annum of the average daily net asset value of the Fund's shares
beneficially owned by the broker-dealer or its clients. Of such fees, 0.25% per
annum constitutes a service fee for purposes of the Rules of Fair Practice of
the NASD and the remaining fees constitute an asset-based sales charge. All
payments by the Government Fund and the Adjustable Rate Fund to Qualified
Recipients are service fees. In addition, the Distributor is authorized to
purchase advertising, sales literature and other promotional material and to
pay its own salespeople. Each Fund will reimburse the Distributor for these
expenditures during a fiscal year of the Fund and for fees paid to Qualified
Recipients during a fiscal year of the Fund, up to a limit of 0.99% on an
annual basis of that Fund's daily net assets (0.10% for the Government Fund and
0.05% for the Adjustable Rate Fund); no such reimbursement will be made for
expenditures or fees for fiscal years prior to the fiscal year in question or
in contemplation of future fees or expenditures. In addition, if and to the
extent that the fee the Trust pays the Adviser pursuant to the Investment
Advisory Agreement applicable to that Fund as well as other payments it makes
are considered as indirectly financing any activity which is primarily intended
to result in the sale of that Fund's shares, such payments are authorized under
the Plan. In addition to payments received pursuant to the Plan, Qualified
Recipients which are selected dealers will receive a portion of the sales
charge on any sale by them of Fund shares (see above), may charge commissions
on redemptions and repurchases of Fund shares (see below) and may receive
commissions on Fund portfolio transactions subject to the provisions of the
Investment Advisory Agreements (see the Statement of Additional Information).
The Glass-Steagall Act and other applicable laws, among other things,
prohibit banks from engaging in the business of underwriting, selling or
distributing securities. Accordingly, banks may only provide administration
assistance to the Funds under the Plan. However, judicial or administrative
decisions or interpretations of such laws, as well as changes in either federal
or state statutes or regulations relating to the permissible activities of
banks and their affiliates, could prevent a bank from continuing to act as a
Qualified Recipient. In that case, its shareholder clients would be permitted
to remain shareholders of a Fund, and alternative means for continuing the
servicing of such shareholders would be sought. It is not expected that
shareholders would suffer any adverse financial consequences as a result of any
of these occurrences.
HOW TO REDEEM SHARES
Each Fund will redeem for cash all of its full and fractional shares at the net
asset value per share next determined after receipt of a repurchase order or
redemption request in proper form, as described below. To discourage short-term
trading each of the Funds impose a 2% redemption fee on shares that are
repurchased, redeemed or exchanged before they have been held for 60 days. This
fee is paid to the Fund, not the Adviser or the Distributor. Solely for
purposes of calculating the 60-day holding period, each Fund uses the "first-
in, first-out" method. That is, the date of any repurchase, redemption or
exchange will be compared to the earliest purchase date. If this holding period
is less than 60 days, the fee will be imposed. The fee will be prorated if a
portion of the shares being repurchased, redeemed or exchanged has been held
for more than one year. The fee will not apply to dividend or capital gain
reinvestments.
REPURCHASES
The Trust has appointed the Distributor as its agent to repurchase shares of
each Fund at net asset value. Selected dealers may place orders for the
repurchase of shares of any Fund on behalf of clients by calling the
Distributor. If the order is placed by a client with a dealer prior to 4:20
p.m. Eastern time on any day the New York Stock Exchange is open for trading,
and forwarded to the Distributor prior to 6:00 p.m. Eastern time on that day,
it will be confirmed to the selected dealer at the net asset value determined
that day. The selected dealer is responsible for placing repurchase orders
promptly with the Distributor and for forwarding stock certificates, stock
powers and other necessary documents within five business days. The transfer
agent will transmit payment for shares repurchased promptly upon receipt of the
required documents. Payment will be sent to the selected dealer or the
shareholder, as specified by the selected dealer's instructions. Selected
dealers may charge a commission for effecting repurchases, which charge may be
avoided by an investor's redeeming shares directly, as described below.
REDEMPTIONS
A shareholder wishing to redeem shares may do so at any time by writing to the
Trust in care of its transfer agent at American Data Services, Inc., 24 West
Carver Street, Huntington, NY 11743 or by delivering instructions to the
transfer agent at such address. The instructions should specify the name of the
Fund, the number of shares to be redeemed and be signed by all registered
owners exactly as the account is registered; it will not be accepted unless it
includes all required documents in proper form, as described below.
PROPER FORM
In addition to written instructions, if any shares being redeemed or
repurchased are represented by stock certificates, the certificates must be
surrendered. The certificates must either be endorsed or accompanied by a stock
power signed by the registered owners, exactly as the certificates are
registered. Unless a shareholder has completed the appropriate section of the
application form, the signatures on the certificates or stock powers, as well
as the signatures on any redemption request concerning shares not represented
by certificates, must be guaranteed by a member of a national securities
exchange, commercial bank or other eligible guarantor institution. A signature
guarantee is not the same as notarization, and an acknowledgement by a notary
public is not acceptable as a substitute for a signature guarantee. Additional
documents may be required from corporations or other organizations, fiduciaries
or anyone other than the shareholder of record. Any questions concerning
documents needed should be directed to (800) 628-9403.
TELEPHONE REDEMPTIONS
Shareholders may redeem shares by telephone. To redeem shares by telephone, a
shareholder must check the appropriate box on the application form as the Trust
does not make this feature available to shareholders automatically. Once this
feature has been requested, shares may be redeemed by phoning the transfer
agent at (800) 628-9403 and giving the account name, account number and either
the number of shares or the dollar amount to be redeemed. Proceeds redeemed by
telephone will be mailed to the shareholder's address as shown on the records
of the Trust.
In order to arrange for telephone redemptions after a Fund account has been
opened, a written request must be sent to the transfer agent. The request must
be signed by each registered holder of the account with the signatures
guaranteed by a commercial bank or trust company in the United States, a member
firm of the New York Stock Exchange or other eligible guarantor institution.
Further documentation may be requested from corporations, executors,
administrators, trustees and guardians.
The Trust reserves the right to refuse a telephone redemption if it believes
it is advisable to do so. Procedures for redeeming shares of any Fund by
telephone may be modified or terminated by the Trust at any time. None of the
Trust, the Custodian or the transfer agent will be liable for following
instructions for telephone redemption transactions which they reasonably
believe to be genuine even if such instructions prove to be unauthorized or
fraudulent. They will employ reasonable procedures to confirm that instructions
received by telephone are genuine, including requiring the shareholder to
provide the shareholder's account number to verify ownership, tape recording
all instructions and providing written confirmation of such instructions, and
if they do not, they may be liable for losses due to unauthorized or fraudulent
instructions.
Shareholders should be aware that during periods of substantial economic or
market change, telephone redemptions may be difficult to implement. If an
investor is unable to contact the transfer agent by telephone, shares may also
be redeemed by delivering the redemption request to the transfer agent by mail
as described above.
SHAREHOLDER CHECKING PRIVILEGES
Shareholders of the Adjustable Rate Fund may request on the application form or
by later written request that the Adjustable Rate Fund provide Shareholder
Checks drawn on their Adjustable Rate Fund accounts to effect a redemption of
shares. Shareholder Checks may be made payable to the order of any person or
entity in the amount of $500 or more. Potential fluctuations in the net asset
value of the Adjustable Rate Fund's shares should be considered in determining
the amount of the check. Shareholder Checks should not be used to close a
shareholder's account. Shareholder Checks are free, but Star Bank, N.A. will
impose a fee for stopping payment of a Shareholder Check upon a shareholder's
request or if Star Bank, N.A. cannot honor a Shareholder Check due to
insufficient funds or other valid reason. Shares for which certificates have
been issued may not be redeemed by Shareholder Check. Shares held under any
Keogh Plans, IRAs or other retirement plans are not eligible for this
privilege. This privilege is only available to shareholders of the Adjustable
Rate Fund and may be modified or terminated at any time by the Adjustable Rate
Fund or Star Bank, N.A. upon notice to shareholders.
PAYMENTS
Payment for shares tendered will be made within seven days after receipt by the
transfer agent of instructions, certificates, if any, and other documents, all
in proper form. However, payment may be delayed under unusual circumstances, as
specified in the 1940 Act or as determined by the Securities and Exchange
Commission. Payment may also be delayed for any shares purchased by check for a
reasonable time (not to exceed 15 days from purchase date) necessary to
determine that the purchase check will be honored.
The Adjustable Rate Fund will arrange for the proceeds of redemptions
effected by any means to be wired as Federal Funds to the bank account
designated in the shareholder's Account Information Form. Redemption proceeds
will normally be wired on the next Business Day in Federal Funds(for a total
one-day delay) but may be paid up to seven (7) days after receipt of a properly
executed redemption request. Wiring of redemption proceeds may be delayed one
additional Business Day if the Federal Reserve Bank is closed on the day
redemption proceeds would ordinarily be wired. In order to change the bank
designated on the Account Information Form to receive redemption proceeds, a
written request must be received by the Transfer Agent. This request must be
signature guaranteed as set forth above. Further documentation may be required
for executors, trustees or corporations. Once wire transfer instructions have
been given, none of the Adjustable Rate Fund, the Custodian or the Transfer
Agent shall assume any further responsibility for the performance of
intermediaries of the shareholder's bank in the transfer process. If a problem
with such performance arises, the shareholder should deal directly with such
intermediaries or bank.
REDEMPTION IN KIND
If the Board of Trustees determines that it would be detrimental to the best
interests of the remaining shareholders of any Fund to make payment wholly or
partly in cash, the Trust may pay the redemption price in whole or in part by a
distribution in kind of securities from the portfolio of that Fund, in lieu of
cash, in conformity with applicable rules of the Securities and Exchange
Commission. The Trust, however, has elected to be governed by Rule 18f-1 under
the 1940 Act pursuant to which the Trust is obligated to redeem shares of any
Fund solely in cash up to the lesser of $250,000 or one percent of the net
assets of that Fund during any 90 day period for any one shareholder. Should
redemptions by any shareholder exceed such limitation, the Trust will have the
option of redeeming the excess in cash or in kind. If shares are redeemed in
kind, the distribution would be made in readily marketable securities upon
satisfaction of Rule 18f-1 under the 1940 Act and the redeeming shareholder
would incur brokerage costs in converting the assets into cash.
REDEMPTION OF SMALL ACCOUNTS
The Board of Trustees may, in order to reduce the expenses of a Fund, redeem all
of the shares of any shareholder (other than a qualified retirement plan) whose
account has declined to a net asset value of less than $500, as a result of a
transfer or redemption, at the net asset value determined as of the close of
business on the business day preceding the sending of notice of such redemption.
The Trust would give shareholders whose shares were being redeemed 60 days'
prior written notice in which to purchase sufficient shares to avoid such
redemption.
DIVIDENDS AND TAX STATUS
Each Fund is treated as a separate entity for purposes of determining federal
tax treatment. The Trust intends for each Fund to quality as a "regulated
investment company'' under Subchapter M of the Code and thus not be subject to
federal income taxes on amounts which it distributes to its shareholders. Each
so qualified during the last fiscal year.
All dividends from net investment income, together with distributions of
short-term capital gains (collectively, "income dividends"), will be taxable as
ordinary income to the shareholders, whether or not paid in additional shares.
The Growth & Income Fund, the Gold Fund, the Growth Fund, the Gaming Fund and
the Technology Fund expect to pay income dividends annually, and the Government
Fund expects to pay income dividends monthly.
The daily net investment income of the Adjustable Rate Fund is declared as a
dividend each day to shareholders of record. Shares purchased will begin earning
dividends the first business day following the day the purchase becomes
effective. Redeemed shares will participate in the dividend declared on the day
of redemption. If all shares in an account are redeemed, dividends credited to
the account since the beginning of the dividend period through the date of
redemption will be paid with the redemption proceeds. If less than all such
shares are redeemed, all dividends accrued but unpaid on the redeemed shares
will be distributed on the next payment date. For the purpose of calculating
dividends, net investment income consists of income accrued on portfolio assets,
less accrued expenses. Income earned on weekends, holidays and other days on
which the net asset value is not calculated will be declared as a dividend in
advance on the preceding business day.
Each Fund expects to pay an annual distribution of long-term capital gains
realized, if any. Such capital gains dividends will be taxable to shareholders
as net long-term capital gains, regardless of the length of time a shareholder
has owned his shares. Under current law, long-term capital gains, short-term
capital gains and ordinary income recognized by corporate shareholders are
subject to the same maximum federal income tax rate. However, for noncorporate
shareholders, long-term capital gains are subject to a maximum federal income
tax rate of 28%, while ordinary income recognized by such shareholders is
subject to a maximum federal income tax rate of 39.6%. In addition, both
corporate and noncorporate shareholders are subject to limitations on the extent
to which capital losses may be deducted from ordinary income. For the
convenience of investors, all dividends and distributions are paid in full and
fractional shares of the Fund making the payment based on the net asset value
per share at the close of business on the record date, unless the shareholder
has previously notified the transfer agent that dividends are to be paid in
cash. Dividends and distributions received in January of any calendar year will
be treated for tax purposes as if received in the prior calendar year, if
declared in October, November or December to shareholders of record in such
month. The Trust will notify each shareholder after the close of its fiscal year
both of the dollar amount and the tax status of that year's dividends and
distributions.
The Code provides for a 70% dividends-received deduction (the "deduction") by
corporations owning less than 20% of the value and voting power in the
distributing corporation. Since all or substantially all of the income of the
Government Fund and the Adjustable Rate Fund is derived from interest payments
to it, none of the dividends of these Funds will qualify for the deduction. The
basic test under the Code for determining whether and the extent to which the
dividends paid by the other Funds are eligible for the deduction is whether the
aggregate dividends received by that Fund from domestic corporations comprise
100% of the net investment company income taxable distributions made by the
Fund. If this percentage test is not met, there is a proportionate reduction of
the eligibility of those payments. Capital gains distributions are not eligible
for the deduction.
Gains realized from the sale of securities and options on securities will be
long- or short-term, depending on the length of time owned by the Fund.
Any gain or loss realized upon the sale or redemption of Fund shares will
generally be treated by a shareholder as long-term capital gain or loss if the
shares have been held more than one year and otherwise as short-term capital
gain or loss. Any such loss, however, will be treated as long-term capital loss
to the extent of any capital gains distributions received by the shareholder on
shares held for six months or less. In determining the amount of any capital
gain or loss for federal income tax purposes, a shareholder's basis in Fund
shares which are exchanged within 90 days of purchase pursuant to the exchange
privilege or reinvestment option will not include the sales charge paid with
respect thereto and such sales charge will be added to the basis of the shares
purchased pursuant to the exchange privilege or reinvestment option.
Under the Interest and Dividend Tax Compliance Act of 1983 the Trust may be
required to impose backup withholding at a rate of 31% from income dividends and
capital gains distributions and upon payment of redemption proceeds if
provisions of that law relating to the furnishing and certification of taxpayer
identification numbers and reporting of dividends are not complied with by a
shareholder.
Income received by the Gold Fund, the Growth Fund and the Technology Fund from
foreign sources may be subject to withholding and other taxes imposed by such
countries. It is impossible to determine in advance the effective rate of
foreign tax to which these Funds may be subject. If more than 50% of the total
assets of these Funds are invested in securities of foreign corporations at the
end of any fiscal year in which they qualify as a regulated investment company,
such Fund may elect the application of Section 853 of the Code, to permit its
shareholders to take a credit or a deduction for foreign taxes paid by the Fund.
See the Statement of Additional Information for further details.
PERFORMANCE INFORMATION
From time to time any of the Funds may quote its average annual total return
("standardized return") in advertisements or promotional materials.
Advertisements and promotional materials reflecting standardized return
("performance advertisements") will show percentage rates reflecting the average
annual change in the value of an assumed initial investment in that Fund of
$1,000 at the end of one, five and ten year periods, reduced by the maximum
applicable sales charge. If such periods have not yet elapsed, data will be
given as of the end of a shorter period corresponding to the duration of the
Fund. Standardized return assumes the reinvestment of all dividends and capital
gain distributions, but does not take into account any federal or state income
taxes that may be payable upon redemption.
The Government Fund and Adjustable Rate Fund also may refer in advertising and
promotional materials to their yield. The yield of each such Fund shows the rate
of income that it earns on its investments, expressed as a percentage of the net
asset value of such Fund's shares. Each of such Funds calculates yield by
determining the interest income it earned from its portfolio investments for a
specified thirty-day period (net of expenses), dividing such income by the
average number of Fund shares outstanding, and expressing the result as an
annualized percentage based on the net asset value at the end of that thirty day
period. Yield accounting methods differ from the methods used for other
accounting purposes; accordingly, the yields of such Funds may not equal the
dividend income actually paid to investors or the income reported in the
financial statements of such Funds.
In addition to standardized return, performance advertisements also may
include other total return performance data ("non-standardized return"). Non-
standardized return may be quoted for the same or different periods as those for
which standardized return is quoted and may consist of aggregate or average
annual percentage rates of return, actual year by year rates or any combination
thereof.
All data included in performance advertisements will reflect past performance
and will not necessarily be indicative of future results. The investment return
and principal value of an investment in a Fund will fluctuate, and an investor's
proceeds upon redeeming Fund shares may be more or less than the original cost
of the shares.
GENERAL INFORMATION
The Trust was organized on January 6, 1984 as a Massachusetts business trust.
Its Declaration of Trust contains an express disclaimer of shareholder liability
for its acts or obligations and requires that notice of such disclaimer be given
in each agreement, obligation or instrument entered into or executed by the
Trust or its Trustees. The Declaration of Trust provides for indemnification and
reimbursement of expenses out of the Trust's property for any shareholder held
personally liable for its obligations. The Declaration of Trust also provides
that the Trust shall, upon request, assume the defense of any claim made against
any shareholder for any act or obligation of the Trust and satisfy any judgment
thereon. Thus, while Massachusetts law permits a shareholder of a trust such as
this to be held personally liable as a partner under certain circumstances, the
risk of a shareholder incurring financial loss on account of shareholder
liability is highly unlikely and is limited to the relatively remote
circumstances in which the Trust would be unable to meet its obligations, which
obligations are limited by the 1940 Act.
The Declaration of Trust further provides that the Trustees will not be liable
for errors of judgment or mistakes of fact or law, but nothing in the
Declaration of Trust protects a Trustee against any liability to which he 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.
Shareholders are entitled to one vote for each full share held (and fractional
votes for fractional shares) and may vote in the election of Trustees and on
other matters submitted to meetings of shareholders. It is not contemplated that
regular annual meetings of shareholders will be held. Rule 18f-2 under the 1940
Act provides that matters submitted to shareholders be approved by a majority of
the outstanding securities of each Fund, unless it is clear that the interest of
each Fund in the matter are identical or the matter does not affect a Fund.
However, the rule exempts the ratification of the selection of accountants and
the election of Trustees from the separate voting requirements.
Income, direct liabilities and direct operating expenses of each Fund will be
allocated directly to each Fund, and general liabilities and expenses of the
Trust will be allocated among the Funds in proportion to the total net assets of
each Fund, on a pro rata basis among the Funds or as otherwise determined by the
Board of Trustees.
The By-Laws provide that the Trust's shareholders have the right, upon the
declaration in writing or vote of more than two-thirds of its outstanding
shares, to remove a Trustee. The Trustees will call a meeting of shareholders to
vote on the removal of a Trustee upon the written request of the record holders
of ten percent of the Trust's shares. In addition, ten shareholders holding the
lesser of $25,000 worth or one percent of the Trust's shares may advise the
Trustees in writing that they wish to communicate with other shareholders for
the purpose of requesting a meeting to remove a Trustee. The Trustees will then,
if requested by the applicants, mail at the applicants' expense the applicants'
communication to all other shareholders. No amendment may be made to the
Declaration of Trust without the affirmative vote of the holders of more than
50% of its outstanding shares. The holders of shares have no pre-emptive or
conversion rights. Shares when issued are fully paid and non-assessable, except
as set forth above. The Trust may be terminated upon the sale of its assets to
another issuer, if such sale is approved by the vote of the holders of more than
50% of the outstanding shares of each Fund, or upon liquidation and distribution
of its assets, if so approved. If not so terminated, the Trust will continue
indefinitely.
McGladrey & Pullen, LLP serves as the independent accountants of the Trust.
Star Bank, N.A., Cincinnati, OH, is the custodian of the Trust's assets. The
Administrator acts as accounting and shareholder servicing agent. Shareholder
inquiries should be directed to the Administrator.
(MONITREND LOGO)
MUTUAL FUND
INVESTMENT ADVISERS
Monitrend Investment Management, Inc.
1299 Ocean Avenue, Suite 210
Santa Monica, CA 90401
MidCap Associates, Inc.
50 Broad Street, 12th Floor
New York, NY 10004
Pacific Income Advisers, Inc.
1299 Ocean Avenue, Suite 210
Santa Monica, CA 90401
Negative Beta Associates, Inc.
225 South Cabrillo Highway, #204-B
Half Moon Bay, CA 94019
Robert L. Bender, Inc.
525 Starlight Crest Drive
La Canada, CA 91011
DISTRIBUTOR
Syndicated Capital, Inc.
1299 Ocean Avenue, Suite 210
Santa Monica, CA 90401
1-800-251-1970
COUNSEL
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, WI 53202
INDEPENDENT AUDITORS
McGladrey & Pullen, LLP
555 5th Avenue
New York, NY 10017
CUSTODIAN
Star Bank, N.A.
425 Walnut Street
Cincinnati, OH 45201
ADMINISTRATOR, TRANSFER AGENT
AND DIVIDEND DISBURSING AGENT
American Data Services, Inc.
24 West Carver Street
Huntington, NY 11743
TABLE OF CONTENTS
Fee Table 2
Summary 2
Financial Highlights 5
Investment Objectives and Policies
of the Monitrend Mutual Funds 9
Investment Practices and Risks 19
Principal Investment Restrictions 24
Management 24
How to Purchase Shares 28
How to Redeem Shares 31
Dividends and Tax Status 34
Performance Information 35
General Information 36
<PAGE>
MONITREND MUTUAL FUND
Statement of Additional Information dated May 31, 1996
This Statement of Additional Information is not a prospectus,
and it should be read in conjunction with the Prospectus of Monitrend
Mutual Fund (the "Trust") relating to the Growth & Income Series (the
"Growth & Income Fund") (formerly the Summation Fund), the PIA-Monitrend
Government Income Series (the "Government Income Fund" or "Government
Fund"), the Gold Series (the "Gold Fund"), the Growth Series (the "Growth
Fund"), the Gaming and Leisure Series (the "Gaming Fund"), the Technology
Series (the "Technology Fund") and the PIA Adjustable Rate Government
Securities Fund (the "Adjustable Rate Fund"), dated May 31, 1996; copies
of the Prospectus may be obtained from the Trust's Distributor, Syndicated
Capital, Inc. (the "Distributor", 1299 Ocean Avenue, Suite 210, Santa
Monica, CA 90401. (In this Statement of Additional Information, the
seven funds may be referred to collectively as "the Funds" or individually
as "a Fund.")
<PAGE>
TABLE OF CONTENTS
Cross-reference to
Page page in Prospectus
Investment Objectives and Policies B-3 9
Investment Restrictions B-3 24
Hedging Instruments B-6 20
Possible Tax and CFTC B-8 24
Limitations on Portfolio
and Hedging Strategies
Repurchase Agreements B-9 22
U.S. Government Securities B-10 22
Portfolio Turnover B-13 22
Management B-14 24
The Adviser, the Government B-17 24
Fund Adviser, the Growth & Income
Fund Adviser, the Growth Fund
Sub-Adviser, the Technology
Fund Sub-Adviser and the
Administrator
Portfolio Transactions B-21 28
and Brokerage
Distribution Plan B-23 31
Net Asset Value B-26 31
Shareholder Services B-27 29
Dividends and Tax Status B-30 34
General B-30 36
Calculation of Performance Data B-32 35
Appendix B-34
Description of Securities Ratings B-37
Financial Statements B-40
Investment Objectives and Policies
The investment objective of the Growth & Income Fund is to
maximize total return through a combination of capital appreciation and
income; the investment objectives of the Government Income Fund are growth
of capital, whether over the short- or long-term, income and preservation
of capital; the investment objective of the Gold Fund is long-term growth
of capital; the investment objective of the Growth Fund is long-term
growth of capital; the investment objective of the Gaming Fund is long-
term growth of capital; the investment objective of the Technology Fund is
long-term growth of capital; and the investment objectives of the
Adjustable Rate Fund are income with low volatility of principal. The
portfolio and strategies with respect to the composition of each Fund's
portfolio are described in the Prospectus. The Growth & Income Fund was
called the Summation Fund from March 30, 1993 through December 1, 1994,
and from July 10, 1989 through March 30, 1993 it was called the Summation
Index Fund and prior to July 10, 1989 it was called the Standard & Poor's
100 Index Fund. On May 31, 1991, an eighth series of the Trust, the Value
Allocation Series, was merged with and into the Growth & Income Fund.
Investment Restrictions
The Trust has adopted the following restrictions applicable to
the various Funds as indicated below (in addition to those indicated in
the Prospectus) as fundamental policies, which may not be changed without
the approval of the holders of a "majority," as defined in the Investment
Company Act of 1940 (the "1940 Act"), of the shares of the Fund as to
which the policy change is being sought. Under the 1940 Act, approval of
the holders of a "majority" of a Fund's outstanding voting securities
means the favorable vote of the holders of the lesser of (i) 67% of its
shares represented at a meeting at which more than 50% of its outstanding
shares are represented or (ii) more than 50% of its outstanding shares.
Each of the Funds may not purchase any security, other than
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities ("U.S. Government securities"), if as a result more than
5% of such Fund's total assets (taken at current value) would then be
invested in securities of a single issuer; provided, however, that 50% of
the total assets of each of the Gold Fund, the Growth Fund, the Gaming
Fund and the Technology Fund may be invested without regard to this
restriction and 25% of the total assets of the Growth & Income Fund, the
Government Fund and the Adjustable Rate Fund may be invested without
regard to this restriction.
No Fund may:
1. Purchase any security if as a result the Fund would then
hold more than 10% of any class of securities of an issuer (taking all
common stock issues of an issuer as a single class, all preferred stock
issues as a single class, and all debt issues as a single class) or more
than 10% of the outstanding voting securities of an issuer.
2. Purchase any security if as a result the Fund would then
have more than 5% of its total assets (taken at current value) invested in
securities of companies (including predecessors) less than three years
old.
3. Invest in securities of any issuer if, to the knowledge of
the Trust, any officer or Trustee of the Trust or officer or director of
the Fund's investment adviser owns more than 1/2 of 1% of the outstanding
securities of such issuer, and such officers, directors and Trustees who
own more than 1/2 of 1% own in the aggregate more than 5% of the
outstanding securities of such issuer.
4. Make investments for the purpose of exercising control or
management.
5. Act as underwriter except to the extent that, in connection
with the disposition of portfolio securities, it may be deemed to be an
underwriter under certain federal securities laws.
6. Purchase warrants if as a result the Fund would then have
more than 5% of its total assets (taken at current value) invested in
warrants.
7. Invest in securities of other registered investment
companies, except by purchases in the open market involving only customary
brokerage commissions and as a result of which not more than 5% of its
total assets (taken at current value) would be invested in such
securities, or except as part of a merger, consolidation or other
acquisition.
8. Invest in interests in oil, gas or other mineral leases or
exploration or development programs, although it may invest in the common
stocks of companies which invest in or sponsor such programs.
9. Purchase securities on margin (but each Fund may obtain
such short-term credits as may be necessary for the clearance of
transactions and may make margin payments in connection with transactions
in futures and options, and the Growth & Income Fund, the Gaming Fund, the
Technology Fund and the Adjustable Rate Fund may borrow money as set forth
in Investment Restriction No. 11).
10. Make short sales of securities or maintain a short
position, unless at all times when a short position is open it owns an
equal amount of such securities or securities convertible into or
exchangeable for, without payment of any further consideration, securities
of the same issue as, and equal in amount to, the securities sold short
(short sale against-the-box), and unless not more than 25% of that Fund's
net assets (taken at current value) is held as collateral for such sales
at any one time, except that the Technology Fund may effect short sales to
the extent set forth in the Prospectus.
11. Issue senior securities, borrow money or pledge its assets
except that each Fund may borrow from a bank for temporary or emergency
purposes in amounts not exceeding 5% (taken at the lower of cost or
current value) of its total assets (not including the amount borrowed) and
pledge its assets to secure such borrowings and the Growth & Income Fund,
the Gaming Fund, the Technology Fund and the Adjustable Rate Fund may
borrow for investment purposes on a secured or unsecured basis as
described in the Prospectus. (For the purpose of this restriction,
collateral arrangements with respect to the writing of options and with
respect to initial and variation margin for futures contracts are not
deemed to be a pledge of assets and neither such arrangements nor the
purchase or sale of futures contracts or purchase of related options or
the sale of options on indices are deemed to be the issuance of a senior
security.)
12. Buy or sell commodities or commodity contracts except
futures and related options as described under "Investment Practices" in
the Prospectus, or real estate or interests in real estate (including
limited partnership interests), although the Growth & Income Fund may
purchase and sell securities which are secured by real estate and
securities of companies which invest or deal in real estate. For purposes
of this restriction, Mortgage-Backed Securities as described in the
Prospectus are not considered real estate or interests in real estate.
13. Participate on a joint or joint and several basis in any
trading account in securities.
14. Purchase any security restricted as to disposition under
federal securities laws.
15. Make loans, except through repurchase agreements and the
loaning of portfolio securities by the Growth & Income Fund, the Gold
Fund, the Technology Fund and the Adjustable Rate Fund as described in the
Prospectus.
16. Purchase foreign securities or currencies; this restriction
does not apply to the Gold Fund, the Growth Fund, the Technology Fund or
the Growth & Income Fund.
The Trust has undertaken with certain state securities
commissions that (a) no Fund may write call options unless the Fund owns
the instrument subject to the call and the value of the instruments
underlying the calls does not exceed 25% of that Fund's net assets and (b)
no Fund's investments in warrants which are not listed on the New York or
American Stock Exchanges may exceed 2% of its net assets. Additionally
each of the Growth Fund and the Gaming Fund has undertaken to limit its
investments in options (puts, calls, straddles, spreads, and any
combination thereof), other than hedging positions or positions that are
covered by cash or securities, to no more than 5% of its total assets. A
Fund is subject to these restrictions only so long as its shares are
registered in those states.
It is the position of the Securities and Exchange Commission
(and an operating although not a fundamental policy of each Fund) that
open-end investment companies such as the Funds should not make
investments in illiquid securities if thereafter more than 15% of the
value of their assets would be so invested. The Adjustable Rate Fund has
limited its investments in illiquid securities to 10% of the value of its
net assets. The investments included as illiquid securities are (i) those
which cannot freely be sold for legal reasons (which the Funds do not
expect to own since none of the Funds will purchase securities restricted
as to disposition under federal securities laws); (ii) fixed time deposits
subject to withdrawal penalties, other than overnight deposits (which the
Government Fund may not own); (iii) repurchase agreements having a
maturity of more than seven days; and (iv) investments for which market
quotations are not readily available. The Funds do not expect to own any
investments for which market quotations are not available. However,
illiquid securities do not include obligations which are payable at
principal amount plus accrued interest within seven days after purchase.
Hedging Instruments
The various hedging instruments which the Funds may use are
discussed in the Prospectus and below. The Appendix to this Statement of
Additional Information contains further information as to the
characteristics of, and the risks of transactions in, each of them.
Call Options. Except for calls written by the Growth Fund, the
Gaming Fund, the Technology Fund and the Gold Fund on stock indices, when
a Fund writes a call, it receives a premium and agrees to sell the related
investments to a purchaser of a call during the call period (usually not
more than nine months) at a fixed exercise price (which may differ from
the market price of the related investments) regardless of market price
changes during the call period. If the call is exercised, the Fund
forgoes any gain from an increase in the market price over the exercise
price.
To terminate its obligation on a call which it has written, the
Fund which wrote the call may purchase a call in a "closing purchase
transaction." (As discussed below, each Fund (other than the Growth &
Income Fund and Government Fund) may also purchase calls other than as
part of such closing transactions.) A profit or loss will be realized
depending on the amount of option transaction costs and whether the
premium previously received is more or less than the price of the call
purchased. A profit may also be realized if the call lapses unexercised,
because the Fund which wrote the call retains the premium received. Any
such profits are considered short-term gains for federal income tax
purposes and, when distributed, are taxable as ordinary income. Except
for calls on stock indices purchased by the Growth Fund, the Gaming Fund,
the Technology Fund or the Gold Fund, when a Fund buys a call, it pays a
premium and has the right to buy the related investments from a seller of
a call during the call period at a fixed exercise price. The Fund which
bought the call benefits only if the market price of the related
investments is above the call price plus the premium paid during the call
period and the call is either exercised or sold at a profit. If the call
is not exercised or sold (whether or not at a profit), it will become
worthless at its expiration date, and that Fund will lose its premium
payments and the right to purchase the related investments.
Calls on stock indices (which may be written or purchased only
by the Growth Fund, the Gaming Fund, the Technology Fund and the Gold
Fund) are similar to calls on equities except that all settlements are in
cash and gain or loss depends on changes in the index in question rather
than on price movements in individual equities. When a Fund writes a call
on a stock index, it receives a premium and agrees that, during the call
period, a purchaser of a call upon exercise of the call will receive from
the Fund an amount of cash if the closing level of the stock index upon
which the call is based is greater than the exercise price of the call,
which amount of cash is equal to the difference between the closing price
of the index and the exercise price of the call times a specified multiple
(the "multiplier") which determines the total dollar value for each point
of such difference. When a Fund buys a call on a stock index it pays a
premium and has the same rights as to a writer of such a call as are
indicated above as its obligation when it writes such a call. The
multiplier for a call on a stock index performs a function similar to the
unit of trading for a call on an equity. It determines the total dollar
value per contract of each point in the difference between the exercise
price of a call and the current level of the underlying index. A
multiplier of 100 means that a one-point difference will yield $100.
Calls on different indices may have different multipliers.
Put Options. Except for puts bought by the Growth Fund, the
Gaming Fund, the Technology Fund and the Gold Fund on stock indices, when
a Fund buys a put, it pays a premium and has the right to sell the related
investments to a seller of a put during the put period (usually not more
than nine months) at a fixed exercise price. Buying a protective put
(which are the only puts which Growth Fund and Gaming Fund may purchase as
to equities) permits that Fund to protect itself during the put period
against a decline in the value of the related equity below the exercise
price by having the right to sell the equity through the exercise of the
put. The puts which the Gold Fund and Technology Fund may purchase, the
puts which the Growth Fund and the Gaming Fund may purchase as to stock
indices and Stock Index Futures and the puts which the Government Fund may
purchase as to Debt Futures may be protective or non-protective. The puts
which the Growth Fund, the Gaming Fund, the Technology Fund and the Gold
Fund may purchase as to stock indices cannot be protective, as it is
impossible to buy a stock index.
Puts on stock indices (which may be written or purchased only by
the Growth Fund, the Gaming Fund, the Technology Fund and the Gold Fund)
are similar to puts on equities except that all settlements are in cash
and gain or loss depends on changes in the index in question rather than
on price movements in individual equities. When a Fund buys a put on a
stock index, it pays a premium and has the right during the put period to
require a seller of such a put, upon the Fund's exercise of the put, to
deliver to the Fund an amount of cash if the closing level of the stock
index upon which the put is based is less than the exercise price of the
put, which amount of cash is determined by the multiplier, which performs
the same function as described above for calls. Buying such a put permits
the Fund, if cash is so deliverable to it during the period, either to
resell the put or to require such delivery of cash. If such cash is not so
deliverable, and, as a result the put is not exercised or resold (whether
or not at a profit) the put will become worthless at its expiration date.
Except for closing transactions, only the Gold Fund may write
put options. When the Gold Fund writes a put option it receives a premium
and has the same obligations as to a purchaser of such a put as are
indicated above as its rights when it purchases such a put. A profit or
loss will be realized depending on the amount of option transaction costs
and whether the premium previously received is more or less than the put
purchased in a closing purchase transaction. A profit may also be realized
if the put lapses unexercised, because the Gold Fund retains the premium
received. Any such profits are considered short-term gains for federal
income tax purposes and, when distributed, are taxable as ordinary income.
Possible Tax and CFTC Limitations on Portfolio and Hedging Strategies
The Trust intends that each Fund qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code for
each taxable year. In order to so qualify, each Fund must, among other
things, derive less than 30% of its gross income from the sale or other
disposition of stock or securities (or options thereon) held less than
three months. Due to this limitation, each Fund will limit the extent to
which it engages in the following activities, but will not be precluded
from them: (i) selling investments, including Futures, held for less than
three months, whether or not they were purchased on the exercise of a
call; (ii) the writing of calls on investments held less than three
months; (iii) the writing or purchasing of calls or the purchasing of puts
which expire in less than three months; (iv) effecting closing
transactions with respect to calls written or purchased or puts purchased
less than three months previously; and (v) exercising certain puts or
calls held for less than three months.
The use of Futures and options thereon to attempt to protect
against the market risk of a decline in the value of portfolio securities
is referred to as having a "short futures position," and the use of such
instruments to attempt to protect against the market risk that portfolio
securities are not fully included in an increase in value is referred to
as having a "long futures position." Each Fund must operate within
certain restrictions as to its long and short positions in Futures and
options thereon under a rule ("CFTC Rule") adopted by the Commodity
Futures Trading Commission ("CFTC") under the Commodity Exchange Act (the
"CEA"), which excludes the Fund and the Trust from registration with the
CFTC as a "commodity pool operator" as defined in the CEA. Under the
restrictions, each Fund must use Futures and options thereon solely for
bona fide hedging purposes within the meaning and intent of the applicable
provisions under the CEA, provided that nonhedging positions may be
established if the initial margin and premiums required to establish such
positions do not exceed 5% of a Fund's net assets, with certain exclusions
as defined in the CFTC Rule.
Repurchase Agreements
Each Fund may enter into repurchase agreements. A repurchase
transaction occurs when, at the time a Fund purchases a security, that
Fund also resells it to the vendor (normally a commercial bank or a
broker-dealer) and must deliver the security (and/or securities
substituted for them under the repurchase agreement) to the vendor on an
agreed upon date in the future. Such securities, including any securities
so substituted, are referred to as the "Resold Securities". The Adviser
(hereinafter defined), the Government Fund Adviser (hereinafter defined)
and the Growth & Income Fund Adviser (hereinafter defined) will consider
the creditworthiness of any vendor of repurchase agreements. The resale
price is in excess of the purchase price in that it reflects an agreed
upon market interest rate effective for the period of time during which
the Fund's money is invested in the Resold Securities. The majority of
these transactions run from day to day, and the delivery pursuant to the
resale typically will occur within one to five days of the purchase. The
Fund's risk is limited to the ability of the vendor to pay the agreed-upon
sum upon the delivery date; in the event of bankruptcy or other default by
the vendor, there may be possible delays and expenses in liquidating the
instrument purchased, decline in its value and loss of interest. These
risks are minimized when the Fund holds a perfected security interest in
the Resold Securities and can therefore resell the instrument promptly.
Repurchase agreements can be considered as loans "collateralized" by the
Resold Securities, such agreements being defined as "loans" in the 1940
Act. The return on such "collateral" may be more or less than that from
the repurchase agreement. The Resold Securities will be marked to market
every business day so that the value of the "collateral" is at least equal
to the value of the loan, including the accrued interest earned thereon.
All Resold Securities will be held by the Fund's custodian or another bank
either directly or through a securities depository.
U.S. Government Securities
As used in this Statement of Additional Information, the term
"U.S. Government securities" means securities issued or guaranteed by the
U.S. Government or any of its agencies or instrumentalities.
Securities issued or guaranteed by the U.S. Government include a
variety of Treasury securities (i.e., securities issued by the U.S.
Government) that differ only in their interest rates, maturities and dates
of issuance. Treasury Bills have maturities of one year or less.
Treasury Notes have maturities of one to ten years, and Treasury Bonds
generally have maturities of greater than ten years at the date of
issuance. Zero coupon Treasury securities consist of Treasury Notes and
Bonds that have been stripped of their unmatured interest coupons.
U.S. Government agencies or instrumentalities which issue or
guarantee securities include, but are not limited to, the Federal Housing
Administration, Federal National Mortgage Association, Farmers Home
Administration, Export-Import Bank of the United States, Small Business
Administration, Government National Mortgage Association, General Services
Administration, Central Bank for Cooperatives, Federal Home Loan Banks,
Federal Home Loan Mortgage Corporation, Federal Intermediate Credit Banks,
Federal Land Banks, Maritime Administration, the Tennessee Valley
Authority, District of Columbia Armory Board, the Inter-American
Development Bank, the Asian Development Bank, the Student Loan Marketing
Association and the International Bank for Reconstruction and Development.
Except for U.S. Treasury securities, obligations of U.S.
Government agencies and instrumentalities may or may not be supported by
the full faith and credit of the United States. Some are backed by the
right of the issuer to borrow from the Treasury; others by discretionary
authority of the U.S. Government to purchase the agencies' obligations;
while still others, such as the Student Loan Marketing Association, are
supported only by the credit of the instrumentality. In the case of
securities not backed by the full faith and credit of the United States,
the investor must look principally to the agency or instrumentality
issuing or guaranteeing the obligation for ultimate repayment, and may not
be able to assert a claim against the United States itself in the event
the agency or instrumentality does not meet its commitment. Each Fund
investing in U.S. Government securities will invest in securities of such
instrumentality only when the Adviser is satisfied that the credit risk
with respect to any instrumentality is acceptable.
Among the U.S. Government securities that each Fund investing in
U.S. Government securities may purchase are "mortgage-backed securities"
of the Government National Mortgage Association ("Ginnie Mae" or "GNMA"),
the Federal Home Loan Mortgage Association ("Freddie Mac") and the Federal
National Mortgage Association ("Fannie Mae"). These mortgage-backed
securities include "pass-through" securities and "participation
certificates"; both are similar, representing pools of mortgages that are
assembled, with interests sold in the pool; the assembly is made by an
"issuer" which assembles the mortgages in the pool and passes through
payments of principal and interest for a fee payable to it. Payments of
principal and interest by individual mortgagors are "passed through" to
the holders of the interest in the pool. Thus, the monthly or other
regular payments on pass-through securities and participation certificates
include payments of principal (including prepayments on mortgages in the
pool) rather than only interest payments. Another type of mortgage-backed
security is the "collateralized mortgage obligation", which is similar to
a conventional bond (in that it makes fixed interest payments and has an
established maturity date) and is secured by groups of individual
mortgages. Timely payment of principal and interest on Ginnie Mae
pass-throughs is guaranteed by the full faith and credit of the United
States, but their yield is not guaranteed. Freddie Mac and Fannie Mae are
both instrumentalities of the U.S. Government, but their obligations are
not backed by the full faith and credit of the United States. It is
possible that the availability and the marketability (i.e., liquidity) of
these securities discussed in this paragraph could be adversely effected
by actions of the U.S. Government to tighten the availability of its
credit or to affect adversely the tax effects of owning them.
The average life of a GNMA certificate is likely to be
substantially less than the original maturity of the mortgage pools
underlying the securities. Prepayments of principal by mortgagors and
mortgage foreclosures will usually result in the return of the greater
part of principal investment long before the maturity of the mortgages in
the pool. Foreclosures impose no risk to principal investment because of
the GNMA guarantee. Because prepayment rates of individual mortgage pools
vary widely, it is not possible to predict accurately the average life of
a particular issue of GNMA certificates. However, statistics published by
the Federal Housing Administration indicate that the average life of
single-family dwelling mortgages with 25- to 30-year maturities, the type
of mortgage backing the vast majority of GNMA certificates, is
approximately 12 years. Therefore, it is customary to treat GNMA
certificates as 30-year mortgage backed securities which prepay fully in
the twelfth year. Prepayments may increase when interest rates decline.
Certain of the mortgage loans underlying the mortgage-backed
securities in which the Funds may invest will be adjustable rate mortgage
loans ("ARMs").
There are two main categories of indices which provide the basis
for rate adjustments on ARMs: those based on U.S. Treasury securities and
those derived from a calculated measure such as a cost of funds index or a
moving average of mortgage rates. Commonly utilized indices include the
one-year, three-year and five-year constant maturity Treasury rates, the
three-month Treasury Bill rate, the 180-day Treasury Bill rate, rates on
longer-term Treasury securities, the 11th District Federal Home Loan Bank
Cost of Funds, the National Median Cost of Funds, the one-month, three-
month, six-month or one year London Interbank Offered Rate ("LIBOR"), the
prime rate of a specific bank, or commercial paper rates. Some indices,
such as the one-year constant maturity Treasury rate, closely mirror
changes in market interest rate levels. Others, such as the 11th District
Federal Home Loan Bank Cost of Funds index, tend to lag behind changes in
market rate levels and tend to be somewhat less volatile. The degree of
volatility in the market value of a Fund's portfolio and therefore in the
net asset value of the Fund's shares will be a function of the length of
the interest rate reset periods and the degree of volatility in the
applicable indices.
The mortgage loans underlying other mortgage-backed securities
in which the Funds may invest will be fixed rate mortgage loans.
Generally, fixed rate mortgage loans eligible for inclusion in a mortgage
pool will bear simple interest at fixed annual rates and have original
terms to maturity ranging from 5 to 40 years. Fixed rate mortgage loans
generally provide for monthly payments of principal and interest in
substantially equal installments for the contractual term of the mortgage
note in sufficient amounts to fully amortize principal by maturity
although certain fixed rate mortgage loans provide for a large final
"balloon" payment upon maturity.
Mortgage loans are subject to a variety of state and federal
regulations designed to protect mortgagors, which may impair the ability
of the mortgage lender to enforce its rights under the mortgage documents.
These regulations include legal restraints on foreclosures, homeowner
rights of redemption after foreclosure, federal and state bankruptcy and
debtor relief laws, restrictions on enforcement of mortgage loan "due on
sale" clauses and state usury laws. Even though the Funds will invest in
Mortgage-Backed Securities which are U.S. Government securities, these
regulations may adversely affect a Fund's investments by delaying the
Fund's receipt of payments derived from principal or interest on mortgage
loans affected by such regulations.
Also included within the term U.S. Government securities are
deposits in banks (represented by certificates of deposit or other
evidence of deposit issued by such banks of varying maturities) to the
extent that the principal of such deposits is insured by the Federal
Deposit Insurance Corporation ("FDIC"); such deposits are referred to as
"Insured Deposits." Such insurance is currently limited to $100,000 per
bank; any interest above that amount is not insured. Insured Deposits may
have limited marketability, and a Fund will invest in them only within the
10% or 15% limit mentioned above under "Investment Restrictions" unless
such obligations are payable at principal amount plus accrued interest on
demand or within seven days after demand.
Portfolio Turnover
See "Per Share Income and Capital Changes" and "Portfolio
Turnover" in the Prospectus for the definition of a portfolio turnover
rate and for information on the past rates of the Funds. As indicated in
the Prospectus the portfolio turnover of each of the Funds may vary
significantly from year to year as a result of the presence or absence of
the defensive investment positions taken by the Adviser, the Government
Fund Adviser or the Growth & Income Fund Adviser, as the case may be.
Such a variance was evidenced during the most recent three fiscal years
where portfolio turnover was substantially higher for the Growth & Income
Fund in the fiscal year ended November 30, 1995 than the fiscal years
ended November 30, 1994 and November 30, 1993 and substantially lower for
the Gold Fund in the fiscal year ended November 30, 1995 than in the
fiscal years ended November 30, 1994 and November 30, 1993. With respect
to the Growth & Income Fund, portfolio turnover was higher in the fiscal
year ended November 30, 1995 than the fiscal years ended November 30, 1994
and November 30, 1993 because prior to February 1, 1995 the investment
objective of the Growth & Income Fund contemplated that it would hold a
portfolio of common stocks substantially parallel to the Standard & Poor's
100 Index and hedging instruments, which hedging instruments were excluded
for the purpose of calculating portfolio turnover. With respect to the
Gold Fund portfolio, turnover was lower during 1995 than 1994 and 1993
because of the lower volatility in the gold market in 1995 and because the
Adviser's investment approach involves less trading than that of the
Former Gold Fund Adviser. The Adviser became the investment adviser to
the Gold Fund on August 18, 1995.
Management
The Trustees and officers of the Trust are:
Position with Principal occupations
Name and Address Age Fund during past five years
Joseph Lloyd 50 Chairman and Chairman of Pacific
McAdams, Jr.* Trustee Income Advisers, Inc.;
1299 Ocean Avenue Chairman, Chief Executive
Suite 210 Officer and President of
Santa Monica, CA Syndicated Capital, Inc.
90401
Phillip R. Verrill* 50 Trustee President of Pallas
2000 Richard Jones Financial Services; prior
Road to May, 1996 President
Suite 123 and Chief Executive
Nashville, TN 37215 Officer of Monitrend
Investment Management,
Inc. and Pallas Financial
Corporation
Michael A. Licameli* 32 Trustee Senior Portfolio Manager
272 Closter Dock Rd. of Monitrend Investment
Closter, NJ 07624 Management, Inc. from
1989 to May, 1996; prior
to May 1996 Secretary and
Treasurer of Monitrend
Investment Management,
Inc.
Stephen E. Cole 36 Trustee Owner and Director of
230 West 97th Street Cole Animal Clinic since
Suite 1D 1984.
New York, NY 10025
Howard Mann 40 Trustee Chairman of the Board of
501 Broad Avenue Trimtex Company, Inc., a
Ridgefield, NJ 07657 textile manufacturing
company, since 1987; Vice
President of Carolace
Industries, Inc., a lace
and embroidery
manufacturer, since 1977;
Secretary-Treasurer of
Concorde Stud Farm, Inc.;
Member of Board of
Directors of D&P
Embroidery Company, Inc.
Beatrice P. Felix 37 Trustee Real estate sales agent
1011 4th Street, for Roland Land Realty
#218 since 1994; real estate
Santa Monica, CA sales agent for
90403 Prudential Realty from
1991-1994.
Heather U. Baines 54 President and President and Chief
1299 Ocean Avenue Treasurer Executive Officer of
Suite 210 Pacific Income Advisers,
Santa Monica, CA Inc.
90401
Kathie Hilton 49 Secretary Administrative Assistant
1299 Ocean Avenue for Pacific Income
Suite 210 Advisers, Inc.
Santa Monica, CA
90401
_________________________
* "Interested" trustee, as defined in the 1940 Act.
During the fiscal year ended November 30, 1995, the Trust paid
its Trustees who are not affiliated with the Adviser or the Distributor
fees aggregating $8,696. The trustees and officers of the Trust as a
group own less than 1% of the outstanding securities of each Fund.
Set forth below are the names and addresses of all holders of
shares of the Funds who as of May 15, 1996 beneficially owned more than 5%
of a Fund's then outstanding shares.
Government Fund
Name and Address of Number of Percent of
Beneficial Owner Shares Class
Dora Elena Walker, Trustee
Hortense Daniel Evans Living Trust
dated October 1, 1988
9431 Friendly Woods Lane
Whittier, California 90605 16,114 24.07%
Donaldson, Lufkin & Jenrette
Securities Corporation
P.O. Box 2052
Jersey City, New Jersey 07303 5,923 8.48%
Richard K. Moore and
Dorothy A. Moore
8 Lorraine Avenue
Binghampton, New York 13905 5,462 8.16%
Growth Fund
Name and Address of Number of Percent of
Beneficial Owner Shares Class
Angela Alberici and
Rosemary Alberici
4138 Maider Road
Clay, New York 13041 2,859 11.19%
Hobson Psychiatric Clinic Inc.
Profit Sharing Plan & Trust
2021 Hobson Road
Fort Wayne, Indiana 46805 1,450 5.67%
Technology Fund
Name and Address of Number of Percent of
Beneficial Owner Shares Class
Alain B. Schreiber, M.D.
P.O. Box 5005-26
Rancho Santa Fe, California 92067 2,620 10.62%
Franklin C. Geiger, Trustee
Franklin C. Geiger Revocable Trust
28 Moloaa Street
Honolulu, Hawaii 98625 2,189 8.87%
Irwin D. Zim and Carol A. Zim,
Trustees
Zim Family Trust
Box 1738
San Mateo, California 94401
1,686 6.83%
Margarita E. Stevens
Kensington Place
1580 Geary Road, Apt. #153
Walnut Creek, California 94596 1,474 5.98%
Charles S. Stevens
1015 Hampton Road
Lafayette, California 94549 1,233 5.00%
Adjustable Rate Fund
Name and Address of Number of Percent of
Beneficial Owner Shares Class
Ahmet O. Alfi
11 West Del Mar Blvd.
Pasadena, California 91105 103,015 25.12%
Imperial Trust Company, Custodian
Hunsaker & Associates, Retirement
Trust
201 North Figuero Street, #610
Los Angeles, California 90012 84,827 20.69%
The Aldeen Charitable
Remainder Unitrust No. 1
2042 Ashington Drive
Glendale, California 91206 43,183 10.53%
Gregory J. Davis, Trustee
David I. Koff Trust
16000 Venture Blvd. #806
Encino, California 91436 25,739 6.28%
Gregory J. Davis, Trustee
Stacy L. Koff Trust
16000 Venture Blvd. #806
Encino, California 91436 25,739 6.28%
Gold Fund
Name and Address of Number of Percent of
Beneficial Owner Shares Class
Zyrel Fox
240 Greenwich Avenue
Greenwich, Connecticut 06830 31,461 21.69%
Donaldson, Lufkin & Jenrette
Securities Corporation
P.O. Box 2052
Jersey City, New Jersey 07303 18,397 12.68%
No other person owns of record or beneficially 5% or more of the
outstanding securities of any Fund. By virtue of its stock ownership
Ahmed O. Alfi is deemed to "control" the Adjustable Rate Fund as that term
is defined in the 1940 Act. Ahmed O. Alfi does not control the Trust.
The Adviser, the Government Fund Adviser, the Growth & Income Fund
Adviser, the Growth Fund Sub-Adviser, the Technology Fund Sub-Adviser and
the Administrator
Monitrend Investment Management, Inc. (the "Adviser") acts as
the investment adviser to the Gold Fund (since August 18, 1994), the
Growth Fund, the Gaming Fund and the Technology Fund and since January 31,
1991, February 1, 1995, November 1, 1992 and March 31, 1994, respectively,
acts as sub-adviser to the Gold Fund and the Growth & Income Fund and
manager of the Government Fund and the Adjustable Rate Fund. (From
January 31, 1991 to August 17, 1994, Kensington Capital Management, Inc.
acted as investment adviser to the Gold Fund (the "Former Gold Fund
Adviser").) The Adviser is a public corporation and on May 8, 1996 filed
a Form 8-K reporting that it had entered into an agreement in principle
with an investment group led by Joseph Lloyd McAdams, Jr., Heather U.
Baines, Pacific Income Advisers, Inc. and Capital Advisors, Inc., which
requires the investment group to make a capital investment in the Adviser
and provides facilities and management personnel. The transaction is
subject to approval by the shareholders of each of the Fund and the
shareholders of the Adviser. The officers and directors of the Adviser
are: Joseph Lloyd McAdams, Jr., Chairman, CEO, Treasurer and a Director,
Heather U. Baines, President and Director, Kathie Hilton, Secretary and
Phillip R. Verrill, Director. Pacific Income Advisers, Inc. (the
"Government Fund Adviser") acts as the investment adviser to the
Government Fund and the Adjustable Rate Fund. (Prior to October 31, 1992,
the Adviser acted as investment adviser to the Government Fund.) The
Government Fund Adviser is controlled by Heather U. Baines and Lloyd
McAdams, who together own all of the outstanding shares of common stock of
the Government Fund Adviser. Robert L. Bender, Inc. (the "Growth Fund
Sub-Adviser") acts as sub-adviser to the Growth Fund. The Growth Fund
Sub-Adviser is controlled by Robert L. Bender, its President and sole
shareholder. Negative Beta Associates, Inc. (the "Technology Fund Sub-
Adviser") acts as sub-adviser to the Technology Fund. The Technology Fund
Sub-Adviser is controlled by Gaye Elizabeth Morgenthaler and John Michael
Murphy, who together beneficially own all of the outstanding shares of
common stock of the Technology Fund Sub-Adviser. MidCap Associates, Inc.
(the "Growth & Income Fund Adviser") acts as the investment adviser to the
Growth & Income Fund. (Prior to February 1, 1995, the Adviser acted as
investment adviser to the Growth & Income Fund.) The Growth & Income Fund
Adviser is controlled by Philip Palmer and Peter Brennan, who together
beneficially own all of the outstanding shares of stock of the Growth &
Income Fund Adviser.
The Government Fund pays the Adviser and the Government Fund
Adviser for the services performed a fee at the combined annual rate of
2/5 of 1% on the first $50,000,000 of that Fund's daily net assets (0.20%
to the Adviser and 0.20% to the Government Fund Adviser) and 2/5 of 1% on
daily net assets in excess of $50,000,000 (0.10% to the Adviser and 0.30%
to the Government Fund Adviser). Notwithstanding the foregoing, if in any
month the average of the daily net assets of the Government Fund is less
than $10 million, the Government Fund Adviser shall not be entitled to any
management fee for that month and the Adviser shall be entitled to a fee
equal to 0.40% of the average of the daily net assets of the Government
Fund for that month. The Growth Fund pays the Adviser for the services
performed a fee at the annual rate of 1% on the first $50,000,000 of that
Fund's daily net assets, 7/8 of 1% on the next $25,000,000, 3/4 of 1% on
the next $25,000,000, 5/8 of 1% on the next $50,000,000, 1/2 of 1% on the
next $100,000,000 and 3/8 of 1% on daily net assets in excess of
$250,000,000. The Adviser is responsible for compensating the Growth Fund
Sub-Adviser. The Gaming Fund pays the Adviser for the services performed
a fee at the annual rate of 1.25% of the Fund's daily net assets. The
Technology Fund pays the Adviser for the services performed a fee at the
annual rate of 1% of the Fund's daily net assets. The Adviser is
responsible for compensating the Technology Fund Sub-Adviser. The
Adjustable Rate Fund pays the Government Fund Adviser for the services
performed a fee at the annual rate of 0.35% of that Fund's daily net
assets. The Government Fund Adviser is responsible for compensating the
Adviser for the services it performs under the Management Agreement. The
Gold Fund pays the Adviser for the services performed a fee at the annual
rate of 1% on the first $10,000,000 of daily net assets, 1% on the next
$40,000,000, 7/8 of 1% on the next $25,000,000, 3/4 of 1% on the next
$25,000,000, 5/8 of 1% on the next $50,000,000, 1/2 of 1% on the next
$100,000,000 and 3/8 of 1% on daily net assets in excess of $250,000,000.
The Growth & Income Fund pays the Adviser and the Growth & Income Fund
Adviser for the services performed a fee at the combined annual rate of
5/8 of 1% on daily net assets up to $150,000,000, 1/2 of 1% on the next
$100,000,000 and 3/8 of 1% on daily net assets in excess of $250,000,000.
The Growth & Income Fund pays the Growth & Income Fund Adviser and the
Adviser 40% and 60% of such fees, respectively, with respect to the first
$20 million of the average daily net assets of the Growth & Income Fund
and 60% and 40% of such fees, respectively, with respect to average daily
net assets of the Growth & Income Fund in excess of $20 million. In
addition, the Trust pays the Growth & Income Fund Adviser a fee of $1,000
for each month in which the net assets of the Growth & Income Fund as of
the end of such month are in excess of $7 million. The fees paid by the
Growth Fund, the Gaming Fund, the Technology Fund and the Gold Fund are
higher than that paid by most other investment companies.
The Investment Advisory Agreements between the Trust and the
Adviser, the Trust and the Growth & Income Fund Adviser and the Trust and
the Government Fund Adviser with respect to the Adjustable Rate Fund, but
not the Government Fund, as the case may be, the Sub-Adviser Agreement
between the Trust and the Adviser with respect to the Growth & Income Fund
and the Management Agreement between the Trust and the Adviser with
respect to the Government Fund provide that in the event the expenses of a
Fund (including the fees of the Adviser, the Government Fund Adviser, the
Growth & Income Fund Adviser and the Administrator and amortization of
organization expenses but excluding interest, taxes, brokerage
commissions, extraordinary expenses and sales charges and, to the extent
permitted by applicable regulations of state securities commissions, fees
under the Fund's Distribution Plan) for any fiscal year exceed the limits
set by applicable regulations of state securities commissions, the
Adviser, the Government Fund Adviser, or the Growth & Income Fund Adviser,
as the case may be, will reduce its fee by the amount of such excess;
except that the Growth & Income Fund Adviser shall not reduce its fee by
more than $1,200 per month, unless the expense limitation was exceeded as
a result of specific action taken by the Growth & Income Fund Adviser.
Any such reductions are accrued and paid in the same manner as the
applicable investment advisory fee and are subject to readjustment during
the year. The Sub-Advisory Agreement between the Trust and the Adviser
with respect to the Gold Fund contains a similar provision which takes
effect only after the Adviser's investment advisory fee has been reduced
to $0.00. Currently, the Trust believes that all of the Funds are subject
to an expense limitation of a state securities commission, which
restriction is 2-1/2% on the first $30,000,000 of daily net assets, 2% on
the next $70,000,000, and 1-1/2% on a Fund's daily net assets in excess of
$100,000,000. Nevertheless, the Adviser and, with respect to the
Adjustable Rate Fund, the Government Fund Adviser, have voluntarily agreed
to reimburse all of the Funds for any such expenses incurred in excess of
2.44% for the Gold Fund, Growth Fund, Technology Fund and Growth & Income
Fund, 2.89% for the Gaming Fund, 1.10% for the Government Fund and 0.45%
for the Adjustable Rate Fund of daily net assets. As a result of the
expense limitation, no fees have been paid or accrued to the Adviser by
the Government Fund during the three fiscal years ended November 30, 1995,
and the Adviser reimbursed the Fund for an additional $39,367 in excess of
the limitation in the fiscal year ended November 30, 1995, $43,657 in
excess of the limitation in the fiscal year ended November 30, 1994 and
$43,535 in excess of the limitation in the fiscal year ended November 30,
1993. No fees were paid to the Government Fund Adviser by the Government
Fund during the three fiscal years ended November 30, 1995. For the three
fiscal years ended November 30, 1995, the Gold Fund paid no fee to the
Adviser or the Former Gold Fund Adviser, and the Former Gold Fund Adviser
and the Adviser reimbursed the Gold Fund an additional $44,462 in excess
of the limitation in the fiscal year ended November 30, 1995, an
additional $46,007 in the fiscal year ended November 30, 1994 and $63,105
in the fiscal year ended November 30, 1993. The Growth & Income Fund also
paid no fee to the Adviser for the three fiscal years ended November 30,
1995, and the Adviser reimbursed the Growth & Income Fund for an
additional $43,437 in excess of the limitation in the fiscal year ended
November 30, 1995, $45,254 in the fiscal year ended November 30, 1994 and
$73,795 in the fiscal year ended November 30, 1993. During the three
fiscal years ended November 30, 1995, the Growth Fund paid no fee to the
Adviser and the Adviser reimbursed the Growth Fund an additional $41,794
in excess of the limitation in the fiscal year ended November 30, 1995,
$43,697 in the fiscal year ended November 30, 1994 and $41,020 in the
fiscal year ended November 30, 1993. During the three fiscal years ended
November 30, 1995 the Gaming Fund paid no fee to the Adviser and the
Adviser reimbursed the Gaming Fund an additional $37,592 in excess of the
limitation in the fiscal year ended November 30, 1995, $21,409 in excess
of the limitation in the fiscal year ended November 30, 1994 and $650 in
the fiscal year ended November 30, 1993. During the three fiscal years
ended November 30, 1995 the Technology Fund paid no fee to the Adviser and
the Adviser reimbursed the Technology Fund an additional $40,101 in excess
of the limitation in the fiscal year ended November 30, 1995, $15,861 in
excess of the limitation in the fiscal year ended November 30, 1994 and
$444 in the fiscal year ended November 30, 1993. During the fiscal year
ended November 30, 1995 and November 30, 1994 the Adjustable Rate Fund
paid no fee to the Government Fund Adviser and the Government Fund Adviser
reimbursed the Adjustable Rate Fund an additional $26,878 in excess of the
limitation in the fiscal year November 30, 1995 and $9,448 in the fiscal
year ended November 30, 1994.
Each Investment Advisory Agreement and both the Sub-Advisory
Agreements and Management Agreement between the Trust and the Adviser
provide that the Adviser, the Government Fund Adviser or the Growth &
Income Fund Adviser, as the case may be, shall not be liable to the Fund
in question for any error of judgment by the Adviser, the Government Fund
Adviser or the Growth & Income Fund Adviser or for any loss sustained by
that Fund except in the case of wilful misfeasance, bad faith, gross
negligence or reckless disregard of duty.
During the fiscal year ended November 30, 1995, the Trust's
Administrator, American Data Services, Inc. received fees of $18,274,
$16,671, $13,939, $14,704. $14,954, $14,026 and $9,775 from the Growth &
Income Fund, Government fund, Gold Fund, Growth Fund, Gaming Fund,
Technology Fund and Adjustable Rate Fund, respectively. During the fiscal
year ended November 30, 1994, American Data Services, Inc., received fees
of $14,116, $14,076, $16,621, $13,431, $3,459, $784 and $600 from the
Growth & Income Fund, Government Fund, Gold Fund Growth Fund, Gaming Fund,
Technology Fund and Adjustable Rate Fund, respectively. During the fiscal
year ended November 30, 1993, American Data Services, Inc. received fees
of $18,325, $8,765, $15,697, $5,152, $24 and $1 from the Growth & Income
Fund, Government Fund, Gold Fund, Growth Fund, Gaming Fund and Technology
Fund, respectively.
Portfolio Transactions and Brokerage
Under each Investment Advisory Agreement, the Adviser, the
Government Fund Adviser or the Growth & Income Fund Adviser, as the case
may be, is responsible for decisions to buy and sell securities for the
Fund in question, broker-dealer selection, and negotiation of brokerage
commission rates, except that the Adviser and not the Growth & Income Fund
Adviser, is responsible for broker-dealer selection and negotiation of
brokerage commission rates for the Growth & Income Fund pursuant to its
Sub-Advisory Agreement with the Growth & Income Fund. (These activities
of the Adviser, the Government Fund Adviser and the Growth & Income Fund
Adviser are subject to the control of the Trust's Board of Trustees, as
are all of the activities of the Adviser, the Government Fund Adviser and
the Growth & Income Fund Adviser under the Investment Advisory Agreements,
the Sub-Advisory Agreements and the Management Agreement.) The primary
consideration of the Adviser and the Government Fund Adviser in effecting
a securities transaction will be execution at the most favorable
securities price. Each Agreement also contains the provisions summarized
below. The Trust understands that a substantial amount of the portfolio
transactions of the Fund in question may be transacted with primary market
makers acting as principal on a net basis, with no brokerage commissions
being paid by the Fund. Such principal transactions may, however, result
in a profit to market makers. In certain instances the Adviser and the
Government Fund Adviser may make purchases of underwritten issues for the
Fund at prices which include underwriting fees.
In selecting a broker-dealer to execute each particular
transaction, the Adviser and the Government Fund Adviser will take the
following into consideration: the best net price available; the
reliability, integrity and financial condition of the broker-dealers; the
size of and difficulty in executing the order; and the value of the
expected contribution of the broker-dealer to the investment performance
of the Fund on a continuing basis. Accordingly, the price to the Fund in
any transaction may be less favorable than that available from another
broker-dealer if the difference is reasonably justified by other aspects
of the portfolio execution services offered. Subject to such policies as
the Board of Trustees may determine, neither the Adviser nor the
Government Fund Adviser shall be deemed to have acted unlawfully or to
have breached any duty created by the Agreement in question or otherwise
solely by reason of its having caused the Fund to pay a broker or dealer
that provides brokerage or research services to the Adviser or the
Government Fund Adviser, as the case may be, an amount of commission for
effecting a portfolio transaction in excess of the amount of commission
another broker or dealer would have charged for effecting that
transaction, if the Adviser or the Government Fund Adviser, as the case
may be, determined in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer, viewed in terms of either that
particular transaction or the Adviser's or the Government Fund Adviser's,
as the case may be, overall responsibilities with respect to the Trust.
The Adviser and the Government Fund Adviser are further authorized to
allocate the orders placed by it on behalf of the Fund to such brokers or
dealers who also provide research or statistical material, or other
services, to the Trust, the Adviser or the Government Fund Adviser or any
affiliate of the foregoing. Such allocation shall be in such amounts and
proportions as the Adviser or the Government Fund Adviser, as the case may
be, shall determine, and the Adviser and the Government Fund Adviser shall
report on such allocations regularly to the Fund, indicating the
broker-dealers to whom such allocations have been made and the basis
therefor. The Adviser and the Government Fund Adviser are authorized to
consider sales of shares as a factor in the selection of brokers or
dealers to execute portfolio transactions, subject to the requirements of
best execution, i.e. that such brokers or dealers are able to execute the
order promptly and at the best obtainable securities price.
The investment advisory agreements permit the Adviser and the
Government Fund Adviser to direct brokerage to Syndicated Capital, Inc.,
the Distributor of each of the Funds, but only if they reasonably believe
the commissions and transaction quality are comparable to that available
from other brokers. Syndicated Capital, Inc. when acting as a broker for
the Funds in any of its portfolio transactions executed on a securities
exchange of which it is a member, will act in accordance with regulations
adopted by the Securities and Exchange Commission under Section 11(a) of
the Securities Exchange Act of 1934 and the rules of such exchanges. The
Distributor is wholly-owned by Joseph Lloyd McAdams, Jr. In the
Agreements, the term "broker" and "broker-dealer" includes futures
commission merchants.
The Government Fund did not pay any brokerage commissions during
the three fiscal years ended November 30, 1995. During the fiscal years
ended November 30, 1995, November 30, 1994 and November 30, 1993 the Gold
Fund paid brokerage commissions of $6,807, $22,812 and $574,593,
respectively, and the Growth & Income Fund paid brokerage commissions of
$14,152, $2,530 and $13,489, respectively. During the fiscal years ended
November 30, 1995, November 30, 1994 and November 30, 1993, the Growth
Fund paid brokerage commissions of $2,145, $3,271 and $4,261,
respectively. During the fiscal years ended November 30, 1995, November
30, 1994 and November 30, 1993 the Gaming Fund paid brokerage commissions
of $1,411, $4,721 and $175, respectively, and the Technology Fund paid
brokerage commissions of $1,550, $2,262 and $245, respectively. The
Adjustable Rate Fund did not pay any brokerage commissions during the
fiscal years ended November 30, 1995 and November 30, 1994. All of the
brokers to whom commissions were paid provided research services to the
Adviser or Former Gold Fund Adviser.
The research services discussed above may be in written form or
through direct contact with individuals and may include information as to
particular companies and securities as well as market economic or
institutional areas and information assisting the Fund in the valuation of
its investments.
Distribution Plan
The Trust's Distribution Plan and Agreement ("Plan") is the
written plan contemplated by Rule 12b-1 (the "Rule") under the 1940 Act.
The Plan contains the following definitions. "Qualified
Recipient" shall mean any broker-dealer or other "person" (as that term is
defined in the 1940 Act) which (i) has rendered distribution assistance
(whether direct, administrative or both) in the distribution of the
Trust's shares, (ii) furnishes the Distributor (on behalf of the Trust)
with such information as the Distributor shall reasonably request to
answer such questions as may arise and (iii) has been selected by the
Distributor to receive payments under the Plan. "Qualified Holdings"
means all shares of the Trust beneficially owned by (i) a Qualified
Recipient, (ii) the customers (brokerage or other) of a Qualified
Recipient, (iii) the clients (investment advisory or other) of a Qualified
Recipient, (iv) the accounts as to which a Qualified Recipient has a
fiduciary or custodial relationship, and (v) the members of a Qualified
Recipient, if such Qualified Recipient is an association or union;
provided that the Qualified Recipient shall have been instrumental in the
purchase of such shares by, or shall have provided administrative
assistance to, such customers, clients, accounts or members in relation
thereto. The Distributor is authorized to make final and binding
decisions as to all matters relating to Qualified Holdings and Qualified
Recipients, including but not limited to (i) the identity of Qualified
Recipients; (ii) whether or not any Trust shares are to be considered as
Qualified Holdings of any particular Qualified Recipient; and (iii) what
Trust shares, if any, are to be attributed to a particular Qualified
Recipient, to a different Qualified Recipient or to no Qualified
Recipient. "Qualified Trustees" means the Trustees of the Trust who are
not interested persons, as defined in the 1940 Act, of the Trust and who
have no direct or indirect financial interest in the operation of the Plan
or any agreement related to the Plan. While the Plan is in effect, the
selection and nomination of Qualified Trustees is committed to the
discretion of such Qualified Trustees. Nothing in the Plan shall prevent
the involvement of others in such selection and nomination if the final
decision on any such selection and nomination is approved by a majority of
such Qualified Trustees. "Permitted Payments" means payments by the
Distributor to Qualified Recipients as permitted by the Plan.
The Plan authorizes the Distributor to make Permitted Payments
to any Qualified Recipient on either or both of the following bases: (a)
as reimbursement for direct expenses incurred in the course of
distributing Trust shares or providing administrative assistance to the
Trust or its shareholders, including, but not limited to, advertising,
printing and mailing promotional material, telephone calls and lines,
computer terminals, and personnel; and/or (b) at a rate specified by the
Distributor with respect to the Qualified Recipient in question based on
the average value of the Qualified Holdings of such Qualified Recipient.
The Distributor may make Permitted Payments in any amount to any Qualified
Recipient, provided that (i) the total amount of all Permitted Payments
made during a fiscal year to all Qualified Recipients (whether made under
(a) and/or (b) above) do not exceed, in that fiscal year of the Trust, the
aggregate of 0.99% of the daily net assets of the Growth & Income Fund,
Gold Fund, Growth Fund, Gaming Fund and Technology Fund, 0.10% of the
daily net assets of the Government Fund and 0.05% of the daily net assets
of the Adjustable Rate Fund in that fiscal year; and (ii) a majority of
the Qualified Trustees may at any time decrease or limit the aggregate
amount of all Permitted Payments or decrease or limit the amount payable
to any Qualified Recipient. The Trust will reimburse the Distributor from
the assets of the Trust for such Permitted Payments within such limit, but
the Distributor shall bear any Permitted Payments beyond such limits.
The Plan also authorizes the Distributor to purchase advertising
for shares of the Trust, to pay for sales literature and other promotional
material, and to make payments to sales personnel affiliated with it. Any
such advertising and sales material may include references to other
open-end investment companies or other investments and any salesmen so
paid are not required to devote their time solely to the sale of Trust
shares. Any such expenses ("Permitted Expenses") made during a fiscal
year of the Trust shall be reimbursed or paid by the Trust from the assets
of the Trust, except that the combined amount of reimbursement or payment
of Permitted Expenses together with the Permitted Payments made pursuant
to the Plan by the Trust shall not, in the aggregate, in any fiscal year
of the Trust exceed 0.99% of the daily net assets of each Fund (0.10% for
the Government Fund and 0.05% of the Adjustable Rate Fund ) in such year
and the Distributor shall bear any such expenses beyond such limit. No
such reimbursement may be made for Permitted Expenses or Permitted
Payments for fiscal years prior to the fiscal year in question or in
contemplation of future Permitted Expenses or Permitted Payments.
The Plan states that if and to the extent that any of the
payments by the Trust from the assets of the Trust listed below are
considered to be "primarily intended to result in the sale of shares"
issued by the Trust within the meaning of the Rule, such payments by the
Trust are authorized without limit under the Plan and shall not be
included in the limitations contained in the Plan: (i) the costs of the
preparation, printing and mailing of all required reports and notices to
shareholders, irrespective of whether such reports or notices contain or
are accompanied by material intended to result in the sale of shares of
the Trust or other funds or other investments; (ii) the costs of
preparing, printing and mailing of all prospectuses to shareholders; (iii)
the costs of preparing, printing and mailing of any proxy statements and
proxies, irrespective of whether any such proxy statement includes any
item relating to, or directed other funds or other investments; (ii) the
costs of preparing, printing and mailing of all prospectuses to
shareholders; (iii) the costs of preparing, printing and mailing of any
proxy statements and proxies, irrespective of whether any such proxy
statement includes any item relating to, or directed toward, the sale of
the Trust's shares; (iv) all legal and accounting fees relating to the
preparation of any such reports, prospectuses, proxies and proxy
statements; (v) all fees and expenses relating to the qualification of the
Trust and/or its shares under the securities or "Blue-Sky" law of any
jurisdiction; (vi) all fees under the 1940 Act and the Securities Act of
1933, including fees in connection with any application for exemption
relating to or directed toward the sale of the Trust's shares; (vii) all
fees and assessments of the Investment Company Institute or any successor
organization, irrespective of whether some of its activities are designed
to provide sales assistance; (viii) all costs of preparing and mailing
confirmations of shares sold or redeemed or share certificates, and
reports of share balances; and (ix) all costs of responding to telephone
or mail inquiries of shareholders.
The Plan also states that it is recognized that the costs of
distribution of the Trust's shares are expected to exceed the sum of
Permitted Payments, Permitted Expenses and the portions of sales charges
on Trust shares retained by the Distributor ("Excess Distribution Costs")
and that the profits, if any, of the common owners of the Distributor and
the Adviser are dependent primarily on the advisory fees paid by the Funds
to the Adviser. If and to the extent that any investment advisory fees
paid by the Fund might, in view of any Excess Distribution Costs, be
considered as indirectly financing any activity which is primarily
intended to result in the sale of shares issued by the Fund, the payment
of such fees is authorized under the Plan. The Plan states that in taking
any action contemplated by Section 15 of the 1940 Act as to any investment
advisory contract to which a Fund is a party, the Board of Trustees,
including Trustees who are not "interested persons," as defined in the
1940 Act, shall, in acting on the terms of any such contract, apply the
"fiduciary duty" standard contained in Sections 36(a) and 36(b) of the
1940 Act.
The Plan requires that while it is in effect, the Distributor
shall report in writing at least quarterly to the Board of Trustees, and
the Board shall review, the following: (i) the amounts of all Permitted
Payments, the identity of the recipients of each such Payment; the basis
on which each such recipient was chosen as a Qualified Recipient and the
basis on which the amount of the Permitted Payment to such Qualified
Recipient was made; (ii) the amounts of Permitted Expenses and the purpose
of each such Expense; and (iii) all costs of the other payments specified
in the Plan (making estimates of such costs where necessary or desirable),
in each case during the preceding calendar or fiscal quarter.
The aggregate Permitted Payments and Permitted Expenses paid or
accrued by the Government Fund, the Gold Fund, the Growth & Income Fund,
the Growth Fund, the Gaming Fund, the Technology Fund and the Adjustable
Rate Fund during the fiscal year ended November 30, 1995 were $931,
$4,880, $14,362, $5,173, $6,414, $2,603 and $2,437, respectively. Of such
amounts $16,111 was paid to Qualified Recipients and the remaining $20,689
was paid to Pallas Financial Corporation, the distributor of each of the
Funds during the fiscal year ended November 30, 1995.
The Plan was approved (i) by a vote of the Board of Trustees and
of the Qualified Trustees, cast in person at a meeting called for the
purpose of voting on the Plan; and (ii) by a vote of holders of a
"majority" (as defined in the 1940 Act) of the outstanding voting
securities of each Fund. The Plan, unless terminated as hereinafter
provided, shall continue in effect from year to year only so long as such
continuance is specifically approved at least annually by the Board of
Trustees and its Qualified Trustees cast in person at a meeting called for
the purpose of voting on such continuance. The Plan may be terminated
with respect to a Fund at any time by a vote of a majority of the
Qualified Trustees or by the vote of the holders of a "majority" (as
defined in the 1940 Act) of the outstanding voting securities of the Fund.
The Plan may not be amended to increase materially the amount of payments
to be made without shareholder approval, as set forth in (ii) above, and
all amendments must be and have been approved in the manner set forth
under (i) above.
Net Asset Value
In determining the net asset value of a Fund's shares, common
stocks that are listed on national securities exchanges or the Nasdaq
National Market are valued at the last sale price as of 4:20 p.m., Eastern
time, or, in the absence of recorded sales, at the average of readily
available closing bid and asked prices on such exchanges. Unlisted
securities held by a Fund that are not included in such National Market
are valued at the average of the quoted bid and asked prices in the
over-the-counter market. Securities and other assets for which market
quotations are not readily available are valued by appraisal at their fair
value as determined in good faith by the Adviser under procedures
established by and under the general supervision and responsibility of the
Trust's Board of Trustees. Short-term investments which mature in less
than 60 days are valued at amortized cost (unless the Board of Trustees
determines that this method does not represent fair value), if their
original maturity was 60 days or less, or by amortizing the value as of
the 61st day prior to maturity, if their original term to maturity
exceeded 60 days. Options traded on national securities exchanges are
valued at the average of the closing quoted bid and asked prices on such
exchanges and Futures and options thereon, which are traded on commodities
exchanges, are valued at their last sale price as of the close of such
commodities exchanges.
When a Fund writes a call or the Gold Fund writes a put, an
amount equal to the premium received is included in the Statement of
Assets and Liabilities as an asset, and an equivalent amount is included
in the liability section. This amount is "marked-to-market" to reflect the
current market value of the call or put. If a call a Fund wrote is
exercised, the proceeds it receives on the sale of the related investment
by it are increased by the amount of the premium it received. If a put
the Gold Fund wrote is exercised, the amount it pays to purchase the
related investment is decreased by the amount of the premium received. If
a call a Fund purchased is exercised by it, the amount it pays to purchase
the related investment is increased by the amount of the premium it paid.
If a put a Fund purchased is exercised by it, the amount it receives on
its sale of the related investment is reduced by the amount of the premium
it paid. If a call written by a Fund or a put written by the Gold Fund
expires, it has a gain in the amount of the premium; if that Fund enters
into a closing transaction, it will have a gain or loss depending on
whether the premium was more or less than the cost of the closing
transaction.
Shareholder Services
Statement of Intent. Reduced sales charges are available to
purchasers who enter into a written Statement of Intent providing for the
purchase, within a thirteen-month period, of shares of a Fund. All shares
of any Fund previously purchased and still owned are also included in
determining the applicable reduction.
A Statement of Intent permits a purchaser to establish a total
investment goal to be achieved by any number of investments in a Fund over
a thirteen-month period. The investment made during the period will
receive the reduced sales commission applicable to the amount represented
by the goal, as if it were a single investment. Shares totaling 5% of the
dollar amount of the Statement of Intent will be held in escrow by the
Transfer Agent in the name of the purchaser. The effective date of a
Statement of Intent may be back-dated up to 90 days, in order that any
investments made during this 90-day period, valued at the purchaser's
cost, can be applied to the fulfillment of the Statement of Intent goal.
The Statement of Intent does not obligate the investor to
purchase, nor a Fund to sell, the indicated amount. In the event the
Statement of Intent goal is not achieved within the thirteen-month period,
the purchaser is required to pay the difference between the sales
commission otherwise applicable to the purchases made during this period
and sales charges actually paid. Such payment may be made directly to the
Distributor or, if not paid, the Distributor will liquidate sufficient
escrowed shares to obtain such difference. If the goal is exceeded in an
amount which qualifies for a lower sales commission, a price adjustment is
made by refunding to the purchaser the amount of excess sales commission,
if any, paid during the thirteen-month period. Investors electing to
purchase shares of a Fund pursuant to a Statement of Intent should
carefully read such Statement of Intent.
Systematic Withdrawal Plan. A Systematic Withdrawal Plan is
available for shareholders having shares of a Fund with a minimum value of
$10,000, based upon the offering price. The Systematic Withdrawal Plan
provides for monthly or quarterly checks in any amount not less than $100
(which amount is not necessarily recommended).
Dividends and capital gains distributions on shares held under
the Systematic Withdrawal Plan are invested in additional full and
fractional shares at net asset value. The Transfer Agent acts as agent
for the shareholder in redeeming sufficient full and fractional shares to
provide the amount of the periodic withdrawal payment. The Systematic
Withdrawal Plan may be terminated at any time, and, while no fee is
currently charged, the Distributor reserves the right to initiate a fee of
up to $5 per withdrawal, upon 30 days' written notice to the shareholder.
Withdrawal payments should not be considered as dividends,
yield, or income. If periodic withdrawals continuously exceed reinvested
dividends and capital gains distributions, the shareholder's original
investment will be correspondingly reduced and ultimately exhausted.
Furthermore, each withdrawal constitutes a redemption of shares,
and any gain or loss realized must be recognized for federal income tax
purposes. Although the shareholder may invest $2,500 or more in a
Systematic Withdrawal Plan, withdrawals made concurrently with purchases
of additional shares are inadvisable because of the sales charges
applicable to the purchase of additional shares.
Pre-authorized Check Investment. A shareholder who wishes to
make additional investments in a Fund on a regular basis may do so by
authorizing the Distributor to deduct a fixed amount each month from the
shareholder's checking account at his or her bank. This amount will
automatically be invested in that Fund on the same day that the
preauthorized check is issued. The shareholder will receive a
confirmation from the Fund, and the checking account statement will show
the amount charged. The form necessary to begin this service is available
from the Distributor.
Tax Sheltered Retirement Plans. Through the Distributor,
retirement plans are either available or expected to be available for use
by the self-employed (Keogh Plans), Individual Retirement Accounts
(including SEP-IRAs) and "tax-sheltered accounts" under Section 403(b)(7)
of the Code. Adoption of such plans should be on advice of legal counsel
or tax advisers.
For further information regarding plan administration, custodial
fees and other details, investors should contact the Distributor.
Investments at Net Asset Value. The Trust permits investors to
purchase shares of the Funds at net asset value, using the proceeds from
certain redemptions of shares of other mutual funds. The reason for
permitting such sales at net asset value is that the Distributor believes
that these investors have already become informed about the advantages of
investing in mutual funds and accordingly the sales effort is
significantly less. The Distribution Plan is expected to provide adequate
compensation to dealers for assisting these investors in purchasing shares
of the Funds.
As stated in the Prospectus, the Funds may sell shares at net
asset value to officers, Trustees of the Trust and certain other
affiliated persons and members of their families as well as customers of
the Adviser, the Government Fund Adviser, the Growth & Income Fund
Adviser, the Technology Fund Sub-Adviser, the Growth Fund Sub-Adviser or
the Distributor, and to certain publishers of investment advisory
newsletters and their subscribers, certain investment advisers on behalf
of their discretionary accounts, segregated accounts of credit unions
and/or their members through associated accounts and segregated accounts
of banks, savings and loan associations and other banking institutions.
The reason for permitting such investments without a sales charge is that
the Distributor incurs no material sales expense in connection therewith.
Former shareholders of the Trust may also purchase shares of any
Fund at net asset value up to an amount not exceeding their prior
investment in the Trust. When making a purchase at net asset value
pursuant to this provision, the former shareholder should forward to the
Trust's transfer agent a copy of an account statement showing the prior
investment in the Trust.
Dividends and Tax Status
If the Trust's management, in its sole discretion, deems it in
the best interest of the Gold Fund or the Technology Fund and their
respective shareholders to do so, the Gold Fund and Technology Fund may
each invest more than 50% of its total assets in securities of foreign
corporations. In that case, the Funds will be able to elect to take
advantage of the provisions of Section 853 of the Code. Under the
provisions of Section 853, a shareholder will be treated as receiving an
additional distribution from the Fund in the amount indicated in a notice
furnished to him as his pro rata portion of income taxes withheld by
foreign governments from interest and dividends paid on the Fund's
investments. However, the shareholder may, subject to certain
limitations, take the amount of such foreign taxes withheld as a credit
against his federal income tax (including the alternative minimum tax) or,
alternatively, may treat the foreign tax withheld as a deduction from his
gross income in computing his taxable income if that should be to his
advantage. In substance, this policy enables the shareholder to benefit
from the same foreign tax credit or deduction that he would have received
if he had directly owned the foreign securities and had paid foreign
income tax on the income therefrom. Such foreign tax credit is subject to
certain limitations, and each shareholder is referred to his tax adviser
with respect to the availability of the foreign tax credit to him.
General
The Trust's Declaration of Trust permits its Trustees to issue
an unlimited number of full and fractional shares of beneficial interest
and to divide or combine the shares into a greater or lesser number of
shares without thereby changing the proportionate beneficial interest in a
Fund. The share represents an interest in a Fund proportionately equal to
the interest of each other share. Upon the Trust's liquidation, all
shareholders of a Fund would share pro rata in its net assets available
for distribution to shareholders. If they deem it advisable and in the
best interests of shareholders, the Board of Trustees may create
additional classes of shares which may differ from each other only as to
dividends or (as is the case with the Funds) each of which has separate
assets and liabilities (in which case any such class would have a
designation including the word "Series"). Shares of each class (including
the Funds) are entitled to vote as a class only to the extent required by
the 1940 Act or as permitted by the Trustees. Income and operating
expenses are allocated fairly among the classes by the Trustees.
The Funds' custodian, Star Bank, N.A., Cincinnati, Ohio, is
responsible for holding the Funds' assets. American Data Services, Inc.,
the Trust's Administrator, maintains the Funds' accounting records and
calculates daily the net asset value of the Funds' shares.
The Trust's independent accountants, McGladrey & Pullen, LLP,
examine the Fund's annual financial statements and assist in the
preparation of certain reports to the Securities and Exchange Commission.
During the fiscal year ended November 30, 1995, the aggregate
dollar amount of sales charges on the sales of shares of the Government
Fund was $2,291, and the amount retained by Pallas Financial Corporation
was $201; during the fiscal year ended November 30, 1994 the aggregate
dollar amount of sales charges on the sales of shares of the Government
Fund was $4 and the amount retained by Pallas Financial Corporation was
$4; such amounts for the fiscal year ended November 30, 1993 were $8,780
and $1,234. During the fiscal year ended November 30, 1993 the aggregate
dollar amount of sales charges on the sales of shares of the Gold Fund was
$25,206, of which $221 was paid to an affiliate of the Former Gold Fund
Adviser, and $3,218 was retained by Pallas Financial Corporation; such
amounts for the fiscal year ended November 30, 1994 were $290 all of which
was retained by Pallas Financial Corporation; such amounts for the fiscal
year ended November, 1995 were $29 of which $3 was retained by Pallas
Financial Corporation. During the fiscal year ended November 30, 1993 the
aggregate dollar amount of sales charges on sales of shares of the Growth
& Income Fund was $1,493 and of which $208 was retained by Pallas
Financial Corporation; such amounts for the fiscal year ended November 30,
1994 were $79 and $79; such amounts for the fiscal year ended November 30,
1995 were $135 and $15. During the fiscal year ended November 30, 1993
the aggregate dollar amount of charges on sales of share of the Growth
Fund was $15,679 and the amount retained by Pallas Financial Corporation
was $2,044; such amounts for the fiscal year ended November 30, 1994 were
$241 and $241; such amounts for the fiscal year ended November 30, 1995
were $502 and $67. During the fiscal year ended November 30, 1993 the
aggregate dollar amount of sales charges on sales of shares of the Gaming
Fund was $4,391 and the amount retained by Pallas Financial Corporation
was $473; such amounts for the fiscal year ended November 30, 1994 were
$1,517 and $1,517; such amount for the fiscal year ended November 30, 1995
were $445 and $65. During the fiscal year ended November 30, 1993 the
aggregate dollar amount of sales charges on sales of shares of the
Technology Fund was $322 and the amount retained by Pallas Financial
Corporation was $35; such amounts for the fiscal year ended November 30,
1994 were $196 and $196; such amounts for the fiscal year ended November
30, 1995 were $158 and $17. During the fiscal years ended November 30,
1994 and November 30, 1995 there were no sales charges on sales of shares
of the Adjustable Rate Fund.
The Adviser entered into a Marketing Services Agreement with
Pallas Financial Corporation pursuant to which it paid Pallas Financial
Corporation $155,680 in the period from November 1, 1992 through October
31, 1993 for marketing services, $106,455.77 in the period from
November 1, 1993 through October 31, 1994 and $15,000 in the period from
November 1, 1994 through October 31, 1995. The Marketing Services
Agreement has been terminated.
Calculation of Performance Data
Growth & Income Fund
Average annual total return:
for the one-year period ended November 30, 1995: 23.44%
for the five-year period ended November 30, 1995: 3.06%
for the period February 5, 1988 - November 30, 1995: 2.43%
Government Fund
Average annual total return:
for the one-year period ended November 30, 1995: 10.39%
for the five-year period ended November 30, 1995: 5.58%
for the period October 13, 1986 - November 30, 1995: 4.53%
Gold Fund
Average annual total return:
for the one-year period ended November 30, 1995: (3.86)%
for the five-year period ended November 30, 1995: (17.84)%
for the period February 5, 1988 - November 30, 1995: (13.25)%
Growth Fund
Average annual total return:
for the one-year period ended November 30, 1995: 32.01%
for the period April 1, 1992 - November 30, 1995: 5.63%
Gaming Fund
Average annual total return:
for the one-year period ended November 30, 1995: 5.19%
for the period October 20, 1993 - November 30, 1995: (9.91)%
Technology Fund
Average annual total return:
for the one-year period ended November 30, 1995: 22.06%
for the period October 20, 1993 - November 30, 1995: 7.47%
PIA Adjustable Rate Government Securities Fund
Average annual total return:
for the one-year period ended November 30, 1995: 6.16%
for the period April 22, 1994 - November 30, 1995: 5.34%
Average total return is calculated according to the following
formula:
n
P(1+T) =ERV
where P=a hypothetical initial payment of $1,000; T=average annual total
return; n= number of years; and ERV = ending redeemable value of the
hypothetical initial payment of $1,000 made at the beginning of the period
shown. The maximum sales load was deducted from the initial $1,000
investment and all dividends and distributions were assumed to have been
reinvested at the appropriate net asset value per share.
The Government Fund's yield for the one-month period ended
November 30, 1995 was 5.28% and the Adjustable Rate Fund's yield for the
one month period ended November 30, 1995 was 5.07%. Yields will fluctuate
as market conditions change. The yield of the Government Fund and the
Adjustable Rate Fund is calculated according to the following formula:
a-b 6
YIELD = 2[(--- + 1) - 1]
cd
Where: a = interest earned during the period.
b = expenses accrued for the period (net of
reimbursements).
c = the average daily number of shares
outstanding during the period that were
entitled to receive dividends.
d = the maximum offering price per share on the
last day of the period.
All of the foregoing information (total return and yield)
reflect expense reimbursements made by the Adviser, the Former Gold Fund
Adviser or the Government Fund Adviser.
Appendix
Options on Securities
An option is a legal contract that gives the buyer (who then
becomes the holder) the right to buy, in the case of a call, or sell, in
the case of a put, a specified amount of the underlying security at the
option price at any time before the option expires. The buyer of a call
obtains, in exchange for a premium that is paid to a seller, or "writer,"
of a call, the right to purchase the underlying security. The buyer of a
put obtains the right to sell the underlying security to a writer of a
put, likewise in exchange for a premium. Options have standardized terms,
including the exercise price and expiration time; listed options are
traded on national securities exchanges that provide a secondary market in
which holders or writers can close out their positions by offsetting sales
and purchases. The premium paid to a writer is not a down payment; it is
a nonrefundable payment from a buyer to a seller for the rights conveyed
by the option. A premium has two components: the intrinsic value and the
time value. The intrinsic value represents the difference between the
current price of the securities and the exercise price at which the
securities will be sold pursuant to the terms of the option. The time
value is the sum of money investors are willing to pay for the option in
the hope that, at some time before expiration, it will increase in value
because of a change in the price of the underlying security.
One risk of any put or call that is held is that the put or call
is a wasting asset. If it is not sold or exercised prior to its
expiration, it becomes worthless. The time value component of the premium
decreases as the option approaches expiration, and the holder may lose all
or a large part of the premium paid. In addition, there can be no
guarantee that a liquid secondary market will exist on a given exchange,
in order for an option position to be closed out. Furthermore, if trading
is halted in an underlying security, the trading of options is usually
halted as well. In the event that an option cannot be traded, the only
alternative to the holder is to exercise the option.
Stock Index Futures and Debt Futures
A futures contract is a commitment to buy or sell a specific
product at a currently determined market price, for delivery at a
predetermined future date. The futures contract is uniform as to
quantity, quality and delivery time for a specified underlying product.
The commitment is executed in a designated contract market -- a futures
exchange -- that maintains facilities for continuous trading. The buyer
and seller of the futures contract are both required to make a deposit of
cash or U.S. Treasury Bills with their brokers equal to a varying
specified percentage of the contract amount; the deposit is known as
initial margin. Since ownership of the underlying product is not being
transferred, the margin deposit is not a down payment; it is a security
deposit to protect against nonperformance of the contract. No credit is
being extended, and no interest expense accrues on the non-margined value
of the contract. The contract is marked to market every day, and the
profits and losses resulting from the daily change are reflected in the
accounts of the buyer and seller of the contract. A profit in excess of
the initial deposit can be withdrawn, but a loss may require an additional
payment, known as variation margin, if the loss causes the equity in the
account to fall below an established maintenance level.
To liquidate a futures position before the contract expiration
date, a buyer simply sells the contract, and the seller of the contract
simply buys the contract, on the futures exchange. Stock Index Futures
are settled at maturity not by delivery of the stocks making up the index,
but by cash settlement. However, the entire value of the contract does
not change hands; only the gains and losses on the contract since the
preceding day are credited and debited to the accounts of the buyers and
sellers, just as on every other preceding trading day, and the positions
are closed out.
One risk in employing Futures to attempt to protect against
declines in the value of the securities held by a Fund is the prospect
that the prices of Futures will correlate imperfectly with the behavior of
the market value of that Fund's securities. The ordinary spreads between
prices in the cash and futures markets, due to differences in the natures
of those markets, are subject to distortions. First, all participants in
the futures market are subject to margin deposit and maintenance
requirements. Rather than meeting additional margin deposit requirements,
investors may close futures contracts through off-setting transactions
which could distort the normal relationship between the cash and futures
markets. Second, the liquidity of the futures market depends on
participants entering into offsetting transactions rather than making or
taking delivery. To the extent participants decide to make or take
delivery, liquidity in the futures market could be reduced, thus producing
distortion. The liquidity of the Futures being considered for purchase or
sale by a Fund will be a factor in their selection by the Adviser. Third,
from the point of view of speculators the deposit requirements in the
futures market are less onerous than margin requirements in the securities
market. Therefore, increased participation by speculators in the futures
market may cause temporary price distortions.
It is possible that, where a Fund has sold Futures in a short
hedge, the market may advance but the value of the securities held by the
Fund in question may decline. If this occurred, that Fund would lose
money on the Future and also experience a decline in the value of its
securities. Where Futures are purchased in a long hedge, it is possible
that the market may decline; if the Fund in question then concludes not to
invest in securities at that time because of concern as to possible
further market decline or for other reasons, that Fund will realize a loss
on the Future that is not offset by a reduction in the price of any
securities purchased.
Options on Stock Index Futures and Debt Futures
Options on Futures are similar to options on stocks, except that
the related investment is not a stock, but a Future. Thus, the buyer of a
call option obtains the right to purchase a Future at a specified price
during the life of the option, and the buyer of a put option obtains the
right to sell a Future at a specified price during the life of the option.
The options are traded on an expiration cycle based on the expiration
cycle of the underlying Future.
The risks of options on Futures are similar to those of options
on securities and also include the risks inherent in the underlying
Futures.
Stock Index Options
Options on stock indices (which may be purchased only by the
Growth Fund, Gaming Fund, Technology Fund and the Gold Fund) are based on
the same principles as listed stock options, described above. The main
difference is that the underlying instrument is a stock index, rather than
an individual stock. Furthermore, settlement of the option is made, not in
the stocks that make up the index, but in cash. The amount of cash is the
difference between the closing price of the index on the exercise date and
the exercise price of the option, expressed in dollars, times a specified
multiple (the "multiplier").
A variety of index options are currently available, and
proposals for several more are pending. Some options involve indices that
are not limited to any particular industry or segment of the market, and
such an index is referred to as a "broadly based stock market index."
Others, particularly the newer options, involve stocks in a designated
industry or group of industries, and such an index is referred to as an
"industry index" or "market segment index." In selecting an option to
hedge the Fund's portfolio, the Adviser may use either an option based on
a broadly based stock market index, or one or more options on market
segment indices, or a combination of both, in order to attempt to obtain
the proper degree of correlation between the indices and the Fund's
portfolio.
In addition to the risks of options generally and the risk of
imperfect correlation, discussed above, buyers and writers of index
options are subject to additional risks unique to index options. Because
exercises of index options are settled in cash, call writers cannot
provide precisely in advance for their potential settlement obligations by
holding the underlying securities. In addition, there is the risk that
the value of the Fund's portfolio may decline between the time that a call
written by that Fund is exercised and the time that it is able to sell
equities. Even if an index call written by it were "covered" by another
index call held by it, because a writer is not notified of exercise until
at least the following business day, the Fund is exposed to the risk of
market changes between the day of exercise and the day that it is notified
of the exercise. If a Fund holds an index option and chooses to exercise
it, the level of the underlying index may change between the time the Fund
exercises the option and the market closing.
Limitations on Options and Futures
Transactions in options by a Fund will be subject to limitations
established by each of the exchanges governing the maximum number of
options which may be written or held by a single investor or group of
investors acting in concert, regardless of whether the options are written
or held on the same or different exchanges or are written or held in one
or more accounts or through one or more brokers. Thus, the number of
options which a Fund may write or hold may be affected by options written
or held by other investment advisory clients of the Adviser and its
affiliates. Position limits also apply to Futures. An exchange may order
the liquidations of positions found to be in excess of these limits, and
it may impose certain sanctions.
Description of Securities Ratings
As set forth in the Prospectus, the Government Fund may invest
in corporate bonds and debentures rated A or better by Standard & Poor's
Corporation ("Standard & Poor's) or Moody's Investors Service, Inc.
("Moody's"). Each of the Funds may also invest in commercial paper and
commercial paper master notes rated A-1 or better by Standard & Poor's or
Prime-1 by Moody's. A brief description of the ratings symbols and their
meanings follows.
Standard & Poor's Debt Ratings. A Standard & Poor's corporate
debt rating is a current assessment of the creditworthiness of an obligor
with respect to a specific obligation. This assessment may take into
consideration obligors such as guarantors, insurers or lessees.
The debt rating is not a recommendation to purchase, sell or
hold a security, inasmuch as it does not comment as to market price or
suitability for a particular investor.
The ratings are based on current information furnished by the
issuer or obtained by Standard & Poor's from other sources it considers
reliable. Standard & Poor's does not perform any audit in connection with
any rating and may, on occasion, rely on unaudited financial information.
The ratings may be changed, suspended or withdrawn as a result of changes
in, or unavailability of, such information, or for other circumstances.
The ratings are based, in varying degrees, on the following
considerations:
I. Likelihood of default - capacity and willingness of
the obligor as to the timely payment of interest and
repayment of principal in accordance with the terms of
the obligation;
II. Nature of and provisions of the obligation; and
III. Protection afforded by, and relative position of the
obligation in the event of bankruptcy, reorganization
or other arrangement under the laws of bankruptcy and
other laws affecting creditors' rights.
AAA - Debt rated AAA has the highest rating assigned by
Standard & Poor's. Capacity to pay interest and repay
principal is extremely strong.
AA - Debt rated AA has a very strong capacity to pay
interest and repay principal and differs from the
higher rated issues only in small degree.
A - Debt rated A has a strong capacity to pay interest and
repay principal although it is somewhat more
susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in the
higher rated categories.
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 are generally referred to as "gilt edged."
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 are generally 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.
Moody's applies numerical modifiers 1, 2 and 3 in each generic
rating classification from Aa to B. The modifier 1 indicates that the
company ranks in the higher end of its generic rating category; the
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates
that the company ranks in the lower end of its rating generic category.
Standard & Poor's Commercial Paper Ratings. A Standard & Poor's
commercial paper rating is a current assessment of the likelihood of
timely payment of debt considered short-term in the relevant market.
Ratings are graded into several categories, ranging from A-1 for the
highest quality obligations to D for the lowest. These categories are as
follows:
A-1. This highest category indicates that the degree of safety
regarding timely payment is strong. Those issuers determined to possess
extremely strong safety characteristics are denoted with a plus sign (+)
designation.
A-2. Capacity for timely payment on issues with this
designation is satisfactory. However the relative degree of safety is not
as high as for issuers designed "A-1".
A-3. Issues carrying this designation have adequate capacity
for timely payment. They are, however, more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the higher
designation.
Moody's Short-Term Debt Ratings. Moody's short-term debt
ratings are opinions of the ability of issuers to repay punctually senior
debt obligations which have an original maturity not exceeding one year.
Obligations relying upon support mechanisms such as letters-of-credit and
bonds of indemnity are excluded unless explicitly rated.
Moody's employs the following three designations, all judged to
be investment grade, to indicate the relative repayment ability of rated
issuers:
Prime-1. Issuers rated Prime-1 (or supporting institutions)
have a superior ability for repayment of senior short-term debt
obligations. Prime-1 repayment ability will often be evidenced by many of
the following characteristics:
- Leading market positions in well-established industries.
- High rates of return on funds employed.
- Conservative capitalization structure with moderate reliance on
debt and ample asset protection.
- Broad margins in earnings coverage of fixed financial charges
and high internal cash generation.
- Well-established access to a range of financial markets and
assured sources of alternate liquidity.
Prime-2. Issuers rated Prime-2 (or supporting institutions)
have a strong ability for repayment of senior short-term debt obligations.
This will normally be evidenced by many of the characteristics cited above
but to a lesser degree. Earnings trends and coverage ratios, while sound,
may be more subject to variation. Capitalization characteristics, while
still appropriate, may be more affected by external conditions. Ample
alternate liquidity is maintained.
Prime-3. Issuers rated Prime-3 (or supporting institutions)
have an acceptable ability for repayment of senior short-term obligations.
The effect of industry characteristics and market compositions may be more
pronounced. Variability in earnings and profitability may result in
changes in the level of debt protection measurements and may require
relatively high financial leverage. Adequate alternate liquidity is
maintained.
FINANCIAL STATEMENTS
The following financial statements are incorporated by reference
to the Annual Report, dated November 30, 1995 of the Trust (File
No. 811-4010) as filed with the Securities and Exchange Commission on
May 31, 1996:
- Schedule of Investments for each Fund
- Statement of Assets and Liabilities
- Statement of Change in Net Assets for each Fund
- Statement of Operations for each Fund
- Notes to Financial Statements
- Financial Highlights for each Fund
- Independent Auditor's Report
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements:
The following financial statements for the Summation Fund (now
the Growth & Income Fund) are incorporated by reference into the Statement
of Additional Information constituting Part B of this Registration
Statement.
Audited Financial Statements
Schedule of Investments as of November 30, 1995
Statement of Assets and Liabilities as of November 30,
1995
Statement of Changes in Net Assets for the years
ended November 30, 1995 and November 30, 1994
Statement of Operations for the year ended November 30,
1995
Notes to Financial Statements
Financial Highlights
Independent Auditor's Report
The following financial statements for the Government Fund are
incorporated by reference into the Statement of Additional Information
constituting Part B of this Registration Statement.
Audited Financial Statements
Schedule of Investments as of November 30, 1995
Statement of Assets and Liabilities as of November 30,
1995
Statement of Changes in Net Assets for the years
ended November 30, 1995 and November 30, 1994
Statement of Operations for the year ended November 30,
1995
Notes to Financial Statements
Financial Highlights
Independent Auditor's Report
The following financial statements for the Gold Fund are
incorporated by reference into the Statement of Additional Information
constituting Part B of this Registration Statement.
Audited Financial Statements
Schedule of Investments as of November 30, 1995
Statement of Assets and Liabilities as of November 30,
1995
Statement of Changes in Net Assets for the years
ended November 30, 1995 and November 30, 1994
Statement of Operations for the year ended November 30,
1995
Notes to Financial Statements
Financial Highlights
Independent Auditor's Report
The following financial statements for the Growth Fund are
incorporated by reference into the Statement of Additional Information
constituting Part B of this Registration Statement.
Audited Financial Statements
Schedule of Investments as of November 30, 1995
Statement of Assets and Liabilities as of November 30,
1995
Statement of Changes in Net Assets for the years ended
November 30, 1995 and November 30, 1994
Statement of Operations for the year ended November 30,
1995
Notes to Financial Statements
Financial Highlights
Independent Auditor's Report
The following financial statements for the Gaming Fund are
incorporated by reference into the Statement of Additional Information
constituting Part B of this Registration Statement.
Audited Financial Statements
Schedule of Investments as of November 30, 1995
Statement of Assets and Liabilities as of November 30,
1995
Statement of Changes in Net Assets for the years ended
November 30, 1995 and November 30, 1994
Statement of Operations for the year ended November 30,
1995
Notes to Financial Statements
Financial Highlights
Independent Auditor's Report
The following financial statements for the Technology Fund are
incorporated by reference into the Statement of Additional Information
constituting Part B of this Registration Statement.
Audited Financial Statements
Schedule of Investments as of November 30, 1995
Statement of Assets and Liabilities as of November 30,
1995
Statement of Changes in Net Assets for the years ended
November 30, 1995 and November 30, 1994
Statement of Operations for the year ended November 30,
1995
Notes to Financial Statements
Financial Highlights
Independent Auditor's Report
The following financial statements for the Adjustable Rate Fund
are incorporated by reference into the Statement of Additional Information
constituting Part B of this Registration Statement.
Audited Financial Statements
Schedule of Investments as of November 30, 1995
Statement of Assets and Liabilities as of November 30,
1995
Statement of Changes in Net Assets for the year ended
November 30, 1995 and the period April 22, 1994
(commencement of operations) through November 30, 1994
Statement of Operations for the year ended November 30,
1995
Notes to Financial Statements
Financial Highlights
Independent Auditor's Report
(b) Exhibits:
(1) (a) Declaration of Trust(1)
(b) Supplemental Declaration of Trust(3,4)
(2) By-laws(1)
(3) Specimen stock certificate(5)
(4) Not applicable
(5) (a) Investment Advisory Agreement (Gold Fund)(7)
(b) Sub-Advisory Agreement (Gold Fund)(7)
(c) None
(d) Investment Advisory Agreement (Growth & Income
Fund)(12)
(e) Sub-Advisory Agreement (Growth & Income Fund)(12)
(f) Investment Advisory Agreement (Growth Fund)(8)
(g) Sub-Advisory Agreement (Growth Fund)(8)
(h) Investment Advisory Agreement (Government Income
Fund)(9)
(i) Management Agreement (Government Income Fund)(9)
(j) Investment Advisory Agreement (Gaming Fund)(10)
(k) Sub-Advisory Agreement (Gaming Fund)(10)
(l) Investment Advisory Agreement (Technology
Fund)(10)
(m) Sub-Advisory Agreement (Technology Fund)(10)
(n) Investment Advisory Agreement (Adjustable Rate
Fund)(11)
(o) Management Agreement (Adjustable Rate Fund)(11)
(6) Distribution and Selling Agreements
(7) Not applicable
(8) Custodian Agreement(8)
(9) Administration Agreement(8)
(10) Opinion and Consent of Cole & Deitz(3)
(11) Consent of McGladrey & Pullen, LLP
(12) Not applicable
(13) Investment letters(3)
(14) Individual Retirement Account Application(3)
(15) Revised Distribution Plan(6)
(16) Schedule for computation of performance data
contained in Part B
(17) Financial Data Schedule
(18) None
_____________________
(1) Previously filed as an exhibit to the Registration Statement on Form
N-1A (File No. 2-90810) and incorporated by reference thereto.
(2) Previously filed as an exhibit to Pre-effective Amendment No. 1 to
the Registration Statement and incorporated by reference thereto.
(3) Previously filed as an exhibit to Pre-effective Amendment No. 2 to
the Registration Statement and incorporated by reference thereto.
(4) Previously filed as an exhibit to Post-effective Amendment No. 1 to
the Registration Statement and incorporated by reference thereto.
(5) Previously filed as an exhibit to Post-effective Amendment No. 2 to
the Registration Statement and incorporated by reference thereto.
(6) Previously filed as an exhibit to Post-effective Amendment No. 9 to
the Registration Statement and incorporated by reference thereto.
(7) Previously filed as an exhibit to Post-Effective Amendment No. 11 to
the Registration Statement and incorporated by reference thereto.
(8) Previously filed as an exhibit to Post-Effective Amendment No. 14 to
the Registration Statement and incorporated by reference thereto.
(9) Previously filed as an exhibit to Post-Effective Amendment No. 15 to
the Registration Statement and incorporated by reference thereto.
(10) Previously filed as an exhibit to Post-Effective Amendment No. 17 to
the Registration Statement and incorporated by reference thereto.
(11) Previously filed as an exhibit to Post-Effective Amendment No. 18 to
the Registration Statement and incorporated by reference thereto.
(12) Previously filed as an exhibit to Post-Effective Amendment No. 22 to
the Registration Statement and incorporated by reference thereto.
Item 25. Persons Controlled by or under Common Control with Registrant.
As of May 15, 1996, Registrant was not controlled by or under
common control with any other person.
Item 26. Number of Holders of Securities.
At May 15, 1996, the record holders of each class of shares of
beneficial interest of the Registrant were as follows:
(1) (2)
Title of Class Number of Record Holders
Government Series 52
Gold Series 176
Growth & Income Series 318
Growth Series 119
Gaming Series 138
Technology Series 58
Adjustable Rate Series 19
Item 27. Indemnification.
Section 12 of Article SEVENTH of Registrant's Declaration of
Trust, states as follows:
"(c) (1) As used in this paragraph the following terms shall
have the meanings set forth below:
"(i) the term "indemnitee" shall mean any present or former
Trustee, officer or employee of the Trust, any present or former
Trustee or officer of another trust or corporation whose
securities are or were owned by the Trust or of which the Trust
is or was a creditor and who served or serves in such capacity
at the request of the Trust, any present or former investment
adviser, sub-adviser or principal underwriter of the Trust and
the heirs, executors, administrators, successors and assigns of
any of the foregoing; however, whenever conduct by an indemnitee
is referred to, the conduct shall be that of the original
indemnitee rather than that of the heir, executor,
administrator, successor or assignee;
(ii) the term "covered proceeding" shall mean any threatened,
pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, to which an
indemnitee is or was a party or is threatened to be made a party
by reason of the fact or facts under which he or it is an
indemnitee as defined above;
(iii) the term "disabling conduct" shall mean willful
misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of the office in question;
(iv) the term "covered expenses" shall mean expenses (including
attorney's fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by an indemnitee in
connection with a covered proceeding; and
(v) the term "adjudication of liability" shall mean, as to any
covered proceeding and as to any indemnitee, an adverse
determination as to the indemnitee whether by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its
equivalent.
"(d) The Trust shall not indemnify any indemnitee for any
covered expenses in any covered proceeding if there has been an
adjudication of liability against such indemnitee expressly based on a
finding of disabling conduct."
"(e) Except as set forth in (d) above, the Trust shall indemnify
any indemnitee for covered expenses in any covered proceeding, whether or
not there is an adjudication of liability as to such indemnitee, if a
determination has been made that the indemnitee was not liable by reason
of disabling conduct by (i) a final decision of the court or other body
before which covered proceeding was brought; or (ii) in the absence of
such decision, a reasonable determination, based on a review of the facts,
by either (a) the vote of a majority of a quorum of Trustees who are
neither "interested persons", as defined in the 1940 Act nor parties to
the covered proceeding or (b) an independent legal counsel in a written
opinion; provided that such Trustees or counsel, in reaching such
determination, may but need not presume the absence of disabling conduct
on the part of the indemnitee by reason of the manner in which the covered
proceeding was terminated."
"(f) Covered expenses incurred by an indemnitee in connection
with a covered proceeding shall be advanced by the Trust to an indemnitee
prior to the final disposition of a covered proceeding upon the request of
the indemnitee for such advance and the undertaking by or on behalf of the
indemnitee to repay the advance unless it is ultimately determined that
the indemnitee is entitled to indemnification thereunder, but only if one
or more of the following is the case: (i) the indemnitee shall provide a
security for such undertaking; (ii) the Trust shall be insured against
losses arising out of any lawful advances; or (iii) there shall have been
a determination, based on a review of the readily available facts (as
opposed to a full trial-type inquiry) that there is a reason to believe
that the indemnitee ultimately will be found entitled to indemnification
by either independent legal counsel in a written opinion or by the vote of
a majority of a quorum of trustees who are neither "interested persons" as
defined in the 1940 Act nor parties to the covered proceeding."
"(g) Nothing herein shall be deemed to affect the right of the
Trust and/or any indemnitee to acquire and pay for any insurance covering
any or all indemnitees to the extent permitted by the 1940 Act or to
affect any other indemnification rights to which any indemnitee may be
entitled to the extent permitted by the 1940 Act."
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers and
controlling persons of Registrant pursuant to the foregoing provisions, or
otherwise, Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in that Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other
than the payment by Registrant of expenses incurred or paid by a trustee,
officer or controlling person of Registrant in the successful defense of
any action, suit or proceeding) is asserted by such trustee, officer or
controlling person in connection with the securities being registered,
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser.
Monitrend Investment Management, Inc. (the "Adviser") is the
investment adviser of the Registrant, except with respect to its
Government Income Fund, Growth & Income Fund and Adjustable Rate Fund
portfolios. For information as to the business, profession, vocation or
employment of a substantial nature of the Adviser, its directors and
officers, reference is made to Part B of this Registration Statement.
Pacific Income Advisers, Inc. (the "Government Fund Adviser") is the
investment adviser of the Registrant's Government Income Fund portfolio.
For information as to the business, profession, vocation or employment of
a substantial nature of the Government Fund Adviser, its directors and
officers, reference is made to Part B of this Registration Statement. For
information as to the business, profession, vocation or employment of a
substantial nature of Robert L. Bender, Inc. (the "Growth Fund Sub-
Adviser"), reference is made to Part B of the Registration Statement. Mr.
John Michael Murphy, the President of Negative Beta Associates, Inc. (the
"Technology Fund Sub-Adviser") is also president of Murenove, Inc., 225
South Cabrillo Highway, Half Moon Bay, CA 94019, a securities newsletter
publisher, and the managing general partner of the Gem Long Fund and the
Gem Short Fund, two California limited partnerships established to take
long and short positions in equity and other securities. Ms. Gaye
Elizabeth Morgenthaler, a principal owner of the Technology Fund Sub-
Adviser, is also a security analyst for Murenove, Inc. Mr. Peter Brennan,
Chairman and Secretary of MidCap Associates, Inc. (the "Growth & Income
Fund Adviser) is also a registered representative at Noyes Partners
Incorporated, New York, New York, an NASD registered broker-dealer. Mr.
Philip Palmer, President and Treasurer of the Growth & Income Fund
Adviser, is also the owner of Philip Palmer Capital, 50 Broad Street, New
York, New York.
Item 29. Principal Underwriters.
Syndicated Capital, Inc. is the distributor of the shares of the
Registrant.
(a) Not applicable
(b) The officers and directors of Syndicated Capital, Inc. are
as follows:
___________________________________________________________________
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
___________________________________________________________________
Joseph Lloyd McAdams, Jr. Chairman, Chairman
1299 Ocean Avenue CEO and and Trustee
Suite 210 President
Santa Monica, CA 90401
(c) Not applicable
Item 30. Location of Accounts and Records.
The accounts, books and other documents required to be
maintained by Registrant pursuant to Section 31(a) of the Investment
Company Act of 1940 and the rules promulgated thereunder are in the
possession of Registrant, Registrant's Custodian and Registrant's
Administrator as follows: the documents required to be maintained by
paragraphs (5), (6), (7), (10) and (11) of Rule 31a-1(b) will be
maintained by the Registrant, the documents required to be maintained by
paragraph (4) of Rule 31a-1(b) will be maintained by Registrant's
Administrator and all other records will be maintained by the Custodian.
Item 31. Management Services.
Not applicable.
Item 32. Undertakings.
Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest annual
report to shareholders, upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant certifies that it meets
all of the requirements of effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Santa Monica and
State of California on the 3rd day of May, 1996.
Monitrend Mutual Fund
(Registrant)
By:/s/ Lloyd McAdams
Lloyd McAdams
Chairman
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
Signature Title Date
/s/ Lloyd McAdams Principal Executive, May 3, 1996
Lloyd McAdams Financial and Accounting
Officer and Trustee
/s/ Stephen E. Cole Trustee May 20, 1996
Stephen E. Cole
______________________________ Trustee May __, 1996
Michael A. Licameli
/s/ Howard Mann Trustee May 14, 1996
Howard Mann
/s/ Phillip R. Verrill Trustee May 14, 1996
Phillip R. Verrill
/s/ Beatrice Patricia Felix Trustee May 7, 1996
Beatrice Patricia Felix
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit Page No.
(1) Declaration of Trust, as supplemented*
(2) Registrant's By-Laws, as amended*
(3) None
(4) Specimen Stock Certificate*
(5)(a) Investment Advisory Agreement (Gold Fund)*
(b) Sub-Advisory Agreement (Gold Fund)*
(c) None
(d) Investment Advisory Agreement
(Growth & Income Fund)*
(e) Sub-Advisory Agreement (Growth & Income Fund)*
(f) Investment Advisory Agreement
(Growth Fund)*
(g) Sub-Advisory Agreement (Growth Fund)*
(h) Investment Advisory Agreement (Government Income
Fund)*
(i) Management Agreement (Government Income Fund)*
(j) Investment Advisory Agreement (Gaming Fund)*
(k) Sub-Advisory Agreement (Gaming Fund)*
(l) Investment Advisory Agreement (Technology Fund)*
(m) Sub-Advisory Agreement (Technology Fund)*
(n) Investment Advisory Agreement (Adjustable Rate Fund)*
(o) Management Agreement (Adjustable Rate Fund)*
(6) Distribution and Selling Agreements
(7) None
(8) Custodian Agreement*
(9) Administration Agreement*
(10) Opinion and Consent of Counsel*
(11) Consent of McGladrey & Pullen, LLP
(12) None
(13) Investment Letters*
(14) Individual Retirement Account
Application*
(15) Distribution Plan*
(16) Schedule for Computation of
Performance Data Contained in
Part B
(17) Financial Data Schedule
(18) None
__________________
*Incorporated by reference
</TABLE>
DISTRIBUTION AGREEMENT
THIS AGREEMENT, made as of the 1st day of May, 1996, between
MONITREND MUTUAL FUND, a Massachusetts business trust (the "Fund"), and
SYNDICATED CAPITAL, INC., a California corporation (the "Distributor")
W I T N E S S E T H :
WHEREAS, the Fund is engaged in business as an open-end
management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "1940 Act") and it is in
the interest of the Fund to offer its shares for sale continuously; and
WHEREAS, the Distributor is registered as a broker-dealer under
the Securities Exchange Act of 1934, as amended (the "1934 Act"), and is a
member in good standing of the National Association of Securities Dealers,
Inc. (the "NASD"); and
WHEREAS, the Fund and the Distributor wish to enter into an
agreement with each other with respect to the continuous offering of the
Fund's Shares of Beneficial Interest (the "Shares"), no par value, to
commence after the effectiveness of its initial registration statement
filed pursuant to the Securities Act of 1933, as amended (the "1933 Act"),
and the 1940 Act.
NOW, THEREFORE, the parties agree as follows:
1. Appointment of Distributor. The Fund hereby appoints the
Distributor as its exclusive agent to sell and to arrange for the sale of
the Fund's Shares, on the terms and for the period set forth in this
Agreement, and the Distributor hereby accepts such appointment and agrees
to act hereunder directly and/or through the Fund's transfer agent in the
manner set forth in the Prospectus (as defined below). It is understood
and agreed that the services of the Distributor hereunder are not
exclusive, and the Distributor may act as principal underwriter for the
shares of any other registered investment company.
2. Services and Duties of the Distributor.
(a) The Distributor agrees to sell the Shares, as agent
for the Fund, from time to time during the term of this Agreement upon the
terms described in the Fund's Prospectus. As used in this Agreement, the
term "Prospectus" shall mean the prospectus and statement of additional
information included as part of the Fund's Registration Statement, as such
prospectus and statement of additional information may be amended or
supplemented from time to time, and the term "Registration Statement"
shall mean the Registration Statement most recently filed from time to
time by the Fund with the Securities and Exchange Commission and effective
under the 1933 Act and the 1940 Act, as such Registration Statement is
amended by any amendments thereto at the time in effect. The Distributor
shall not be obligated to sell any certain number of Shares.
(b) The Distributor will hold itself available to receive
orders, satisfactory to the Distributor, for the purchase of the Shares
and will accept such orders and will transmit such orders and funds
received by it in payment for such Shares as are so accepted to the Fund's
transfer agent or custodian, as appropriate, as promptly as practicable.
Purchase orders shall be deemed effective at the time and in the manner
set forth in the Prospectus. The Distributor shall not make any short
sales of Shares.
(c) The offering price of the shares shall be the net
asset value (as defined in the Declaration of Trust of the Fund and
determined as set forth in the Prospectus) per share of the Shares. The
Fund shall furnish the Distributor, with all possible promptness, an
advice of each computation of net asset value.
3. Duties of the Fund.
(a) Maintenance of Federal Registration. The Fund shall,
at its expense, take, from time to time, all necessary action and such
steps, including payment of the related filing fees, as may be necessary
to register and maintain registration of a sufficient number of Shares
under the 1933 Act. The Fund agrees to file from time to time such
amendments, reports and other documents as may be necessary in order that
there may be no untrue statement of a material fact in a registration
statement or prospectus, or necessary in order that there may be no
omission to state a material fact in the registration statement or
prospectus which omission would make the statements therein misleading.
(b) Maintenance of "Blue Sky" Qualifications. The Fund
shall, at its expense, use its best efforts to qualify and maintain the
qualification of an appropriate number of Shares for sale under the
securities laws of such states as the Distributor and the Fund may
approve, and, if necessary or appropriate in connection therewith, to
qualify and maintain the qualification of the Fund as a broker or dealer
in such states; provided that the Fund shall not be required to amend its
Declaration of Trust or by-Laws to comply with the laws of any state, to
maintain an office in any state, to change the terms of the offering of
the shares in any state from the terms set forth in its Prospectus, to
qualify as a foreign corporation in any state or to consent to service or
process in any state other than with respect to claims arising out of the
offering and sale of the Shares. The Distributor shall furnish such
information and other material relating to its affairs and activities as
may be required by the Fund in connection with such qualifications.
(c) Copies of Reports and Prospectus. The Fund shall, at
its expense, keep the Distributor fully informed with regard to its
affairs and in connection therewith shall furnish to the Distributor
copies of all information, financial statements and other papers which the
Distributor may reasonably request for use in connection with the
distribution of Shares, including such reasonable number of copies of its
Prospectus and annual and interim reports as the Distributor may request
and shall cooperate fully in the efforts of the Distributor to sell and
arrange for the sale of the Shares and in the performance of the
Distributor under this Agreement.
4. Conformity with Applicable Law and Rules. The Distributor
agrees that in selling Shares hereunder it shall confirm in all respects
with the laws of the United States and of any state in which Shares may be
offered, and with applicable rules and regulations of the NASD.
5. Independent Contractor. In performing its duties
hereunder, the Distributor shall be an independent contractor and neither
the Distributor, nor any of its officers, directors, employees or
representatives is or shall be an employee of the Fund in the performance
of the Distributor's duties hereunder. The Distributor shall be
responsible for its own conduct and the employment, control and conduct of
its agents and employees and for injury to such agents or employees or to
others through its agents or employees. The Distributor assumes full
responsibility for its agents and employees under applicable statutes and
agrees to pay all employee taxes thereunder.
6. Indemnification.
(a) Indemnification of Fund. The Distributor agrees to
indemnify and hold harmless the Fund and each of its present or former
trustees, officers, employees, representatives and each person, if any,
who controls or previously controlled the Fund within the meaning of
Section 15 of the 1933 Act against any and all losses, liabilities,
damages, claims or expenses (including the reasonable costs of
investigating or defending any alleged loss, liability, damage, claims or
expense and reasonable legal counsel fees incurred in connection
therewith) to which the Fund or any such person may become subject under
the 1933 Act, under any other statute, at common law or otherwise, arising
out of the acquisition of any Shares by any person which (i) may be based
upon any wrongful act by the Distributor or any of the Distributor's
directors, officers, employees or representatives; or (ii) may be based
upon any untrue statement or alleged untrue statement of a material fact
contained in a registration statement, prospectus, shareholder report or
other information covering Shares filed or made public by the Fund or any
amendment thereof or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading if such statement
or omission was made in reliance upon information furnished to the Fund by
the Distributor. In no case (i) is the Distributor's indemnity in favor
of the Fund, or any person indemnified to be deemed to protect the Fund or
such indemnified person against any liability to which the Fund or such
person would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence in the performance of his duties or by reason of
his reckless disregard of his obligations and duties under this Agreement;
or (ii) is the Distributor to be liable under its indemnity agreement
contained in this Paragraph with respect to any claim made against the
Fund or any person indemnified unless the Fund or such person, as the case
may be, shall have notified the Distributor in writing of the claim within
a reasonable time after the summons or other first written notification
giving information of the nature of the claim shall have been served upon
the Fund or upon such person (or after the Fund or such person shall have
received notice to such service on any designated agent). However,
failure to notify the Distributor of any such claim shall not relieve the
Distributor from any liability which the Distributor may have to the Fund
or any person against whom such action is brought otherwise than on
account of the Distributor's indemnity agreement contained in this
Paragraph.
The Distributor shall be entitled to participate, at its
own expense, in the defense, or, if the Distributor so elects, to assume
the defense of any suit brought to enforce any such claim, but, if the
Distributor elects to assume the defense, such defense shall be conducted
by legal counsel chosen by the Distributor and satisfactory to the Fund,
to the persons indemnified defendant or defendants, in the suit. In the
event that the Distributor elects to assume the defense of any such suit
and retain such legal counsel, the Fund, the persons indemnified defendant
or defendants in the suit, shall bear the fees and expenses of any
additional legal counsel retained by them. If the Distributor does not
elect to assume the defense of any such suit, the Distributor will
reimburse the Fund and the persons indemnified defendant or defendants in
such suit for the reasonable fees and expenses of any legal counsel
retained by them. The Distributor agrees to promptly notify the Fund of
the commencement of any litigation of proceedings against it or any of its
officers, employees or representatives in connection with the issue or
sale of any Shares.
(b) Indemnification of the Distributor. The Fund agrees
to indemnify and hold harmless the Distributor and each of its present or
former officers, employees, representatives and each person, if any, who
controls or previously controlled the Distributor within the meaning of
Section 15 of the 1933 Act against any and all losses, liabilities,
damages, claims or expenses (including the reasonable costs of
investigating or defending any alleged loss, liability, damage, claim or
expense and reasonable legal counsel fees incurred in connection
therewith) to which the Distributor or and such person may become subject
under the 1933 Act, under any other statute, at common law, or otherwise,
arising out of the acquisition of any Shares by any person which (i) may
be based upon any wrongful act by the Fund or any of the Fund's trustees,
officers, employees or representatives; or (ii) may be based upon any
untrue statement or alleged untrue statement of a material fact contained
in a registration statement, prospectus, shareholder report or other
information covering Shares filed or made public by the Fund or any
amendment thereof or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading unless such
statement or omission was made in reliance upon infirmation furnished to
the Fund by the Distributor. In no case (i) is the Fund's indemnity in
favor of the Distributor, or any person indemnified to be deemed to
protect the Distributor or such indemnified person against any liability
to which the Distributor or such person would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in the
performance of his duties or by reason of his reckless disregard of his
obligations and duties under this Agreement, or (ii) is the Fund to be
liable under its indemnity agreement contained in this Paragraph with
respect to any claim made against Distributor, or person indemnified
unless the Distributor, or such person, as the case may be, shall have
notified the Fund in writing of the claim within a reasonable time after
the summons or other first written notification giving information of the
nature of the claim shall have been served upon the Distributor or upon
such person (or after the Distributor or such person shall have received
notice of such service on any designated agent). However, failure to
notify the Fund of any such claim shall not relieve the Fund from any
liability which the Fund may have to the Distributor or any person against
whom such action is brought otherwise than on account of the Fund's
indemnity agreement contained in this Paragraph.
The Fund shall be entitled to participate, at its own
expense, in the defense, or, if the Fund so elects, to assume the defense
of any suit brought to enforce any such claim, but if the Fund elects to
assume the defense, such defense shall be conducted by legal counsel
chosen by the Fund and satisfactory to the Distributor, to the persons
indemnified defendant or defendants, in the suit. In the event that the
Fund elects to assume the defense of any such suit and retain such legal
counsel, the Distributor, the persons indemnified defendant or defendants
in the suit, shall bear the fees and expenses of any additional legal
counsel retained by them. If the Fund does not elect to assume the
defense of any such suit, the Fund will reimburse the Distributor and the
persons indemnified defendant or defendants in such suit for the
reasonable fees and expenses of any legal counsel retained by them. The
Fund agrees to promptly notify the Distributor of the commencement of any
litigation or proceedings against it or any of its trustees, officers,
employees or representatives in connection with the issue or sale of any
Shares.
7. Authorized Representations. The Distributor is not
authorized by the Fund to give on behalf of the Fund any information of to
make any representations in connection with the sale of Shares other than
the information and representations contained in a registration statement
or prospectus filed with the Securities and Exchange Commission ("SEC")
under the 1933 Act and/or the 1940 Act, covering Shares, as such
registration statement and prospectus may be amended or supplemented from
time to time, or contained in shareholder reports or other material that
may be prepared by or on behalf of the Fund for the Distributor's use.
This shall not be construed to prevent the Distributor from preparing and
distributing tombstone ads and sales literature or other material as it
may deem appropriate. No person other than Distributor is authorized to
act as principal underwriter (as such term is defined in the 1940 Act) for
the Fund.
8. Term of Agreement. The term of this Agreement shall begin
on the date first above written, and unless sooner terminated as
hereinafter provided, this Agreement shall remain in effect through
April 30, 1997. Thereafter, this Agreement shall continue in effect from
year to year, subject to the termination provisions and all other terms
and conditions thereof, so long as: (a) such continuation shall be
specifically approved at least annually by the Board of Trustees or by
vote of a majority of the outstanding voting securities of the Fund in
accordance with the requirements of the 1940 Act and, concurrently with
such approval by the Board of Trustees or prior to such approval by the
holders of the outstanding voting securities of the Fund, as the case may
be, by the vote, cast in person at a meeting called for the purpose of
voting on such approval, of a majority of the trustees of the Fund who are
not parties to this Agreement or interested persons of any such party; and
(b) the Distributor shall not have notified the Fund in writing, at least
60 days prior to April 30, 1997 or prior to April 30 of any year
thereafter, that it does not desire such continuation. The Distributor
shall furnish to the Fund, promptly upon its request, such information as
may reasonably be necessary to evaluate the terms of this Agreement or any
extension, renewal or amendment thereof.
9. Amendment and Assignment of Agreement. This Agreement may
not be amended without the approval of the board of trustees and
concurrently with such approval by the Board of Trustees, by approval by
the vote, cast in person at a meeting called for the purpose of voting on
such approval, of a majority of the trustees of the Fund who are not
parties to this Agreement or interested persons of any such party, and
this Agreement shall automatically and immediately terminate in the event
of its assignment.
10. Termination of Agreement. This Agreement may be terminated
by either party hereto, without the payment of any penalty, on not more
than 60 days' nor less than 30 days' prior notice in writing to the other
party; provided, that in the case of termination by the Fund such action
shall have been authorized by resolution of a majority of the trustees of
the Fund who are not parties to this Agreement or interested persons of
any such party, or by vote of a majority of the outstanding voting
securities of the Fund.
11. Miscellaneous. The captions in this Agreement are included
for convenience of reference only and in no way define or delineate any of
the provisions hereof or otherwise affect their construction or effect.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Nothing herein contained shall be deemed to require the Fund to
take any action contrary to its Declaration of Trust or By-Laws, or any
applicable statutory or regulatory requirement to which it is subject or
by which it is bound, or to relieve or deprive the Board of Trustees of
the Fund of its responsibility for and control of the conduct of the
affairs of the Fund.
12. Definition of Terms. Any question or interpretation of any
term or provisions of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act shall be resolved by
reference to such term or provision of the 1940 Act and to interpretation
thereof, if any, by the United States courts or, in the absence of any
controlling decision of any such court, by rules, regulations or orders of
the Securities and Exchange Commission validly issued pursuant to the 1940
Act. Specifically, the terms "vote of a majority of the outstanding
voting securities", "interested persons", "assignment" and "Affiliated
Person", as used in Paragraphs 8, 9 and 10 hereof shall have the meanings
assigned to them by Section 2(a) of the 1940 Act. In addition, where the
effect of a requirement of the 1940 Act reflected in any provision of this
Agreement is relaxed by a rule, regulation or order of the Securities and
Exchange Commission, whether of special or of general application, such
provision shall be deemed to incorporate the effect of such rule,
regulation or order.
13. Compliance with Securities Laws. The Fund represents that
it is registered as an open-end management investment company under the
1940 Act, and agrees that it will comply with all the provisions of the
1940 Act and of the rules and regulations thereunder. The Fund and the
Distributor each agree to comply with all of the applicable terms and
provisions on the 1940 Act, the 1933 Act and, subject to the provisions of
the 1940 Act, the 1933 Act and, subject to the provisions of Section 4(d),
all applicable "Blue Sky" laws. The Distributor agrees to comply with all
of the applicable terms and provisions of the Securities Exchange Act of
1934.
14. Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of California.
15. No Shareholder Liability. The Distributor understands that
the obligations of this Agreement are not binding upon any shareholder of
the Fund personally, but bind only the Fund's property; the Distributor
represents that it has notice of the provisions of the Fund's Declaration
of Trust disclaiming shareholder liability for acts or obligations of the
Fund.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their duly authorized representatives and their
respective corporate seals to be hereunto affixed, as of the day and year
first above written.
MONITREND MUTUAL FUND
By: _________________________________
SYNDICATED CAPITAL, INC.
By: _________________________________
<PAGE>
SYNDICATED CAPITAL, INC.
DISTRIBUTION PLAN AGREEMENT
This Agreement is entered into by and between Syndicated
Capital, Inc. (the "Distributor") and the undersigned (the "Qualified
Recipient").
WHEREAS, the Distributor is the principal underwriter of certain
open-end investment companies (or classes or series thereof having
separate portfolios); each such investment company (or such a class or
series) is hereafter referred to as a "Fund"; and
WHEREAS, each Fund has adopted a Distribution Plan (the "Plan")
pursuant to Rule 12b-1 (the "Rule") under the Investment Company Act of
1940, the Plan being described in the Fund's Statement of Additional
Information; and
WHEREAS, the Plan authorizes the Distributor to enter into
agreements such as this Agreement with Qualified Recipients (as that term
is defined in the Plan) selected by the Distributor, and the Qualified
Recipient has been so selected; and
WHEREAS, the Plan authorizes the Distributor to make Permitted
Payments (as defined in the Plan) at a rate specified in an agreement such
as this Agreement based on the average value of the Qualified Holdings (as
defined in the Plan) of the Qualified Recipient (such rate being
hereinafter referred to as the "Qualified Holdings Rate"); and
WHEREAS, this Agreement is a "related agreement" as that term is
used in the Rule and is subject to all of the provisions of the Rule as to
such agreements;
NOW, THEREFORE, the Distributor and the Qualified Recipient
agree as follows:
1. If so specified in Appendix B to this Agreement, the
Qualified Recipient shall be entitled to Permitted Payments to be paid by
the Distributor at the annual Qualified Holdings Rate set forth in such
Appendix after the end of each calendar quarter (pro-rated for any portion
of a calendar quarter during which this Agreement is in effect for less
than the full quarter); it is understood and agreed that the Plan
authorizes the Distributor to make final and binding determinations as to
a number of matters, including whether or not any Fund shares are to be
considered as Qualified Holdings of any particular Qualified Recipient and
what Fund shares, if any, are to be attributed to a particular Qualified
Recipient, to a different Qualified Recipient or to no Qualified
Recipient.
2. The Distributor shall have the right at any time and from
time to time on written notice to the Qualified Recipient to amend
Appendix B to this Agreement or to substitute a New Appendix B, such
amendment or substitution to be effective on receipt by the Qualified
Recipient of such written notice or on such later date as is set forth in
such notice. Such written notice need not be in the form of a formal
amendment to or substitution for this Agreement and/or Appendix B but may
be in the form of a letter or other written communication. Each such
notice shall upon effectiveness be deemed a part of this Agreement.
3. If, as permitted by the Plan, a majority of each Fund's
Qualified Trustees (as defined in the Plan) decrease or limit the amount
payable under this Agreement, such decrease or limit shall be effective
upon such action by such Qualified Trustee (unless such action
contemplates a later effectiveness for such decrease or limit); the
Distributor will notify the Qualified Recipient of such action as soon as
practicable.
4. This Agreement shall go into effect with respect to each
Fund on the later of the date set forth above or the date on which it is
approved by a vote of the Fund's Board of Trustees and of the Qualified
Trustees cast in person at a meeting called for the purpose of voting on
this Agreement and shall continue in effect (unless terminated) until the
December 31st next succeeding such effective date and will continue
thereafter only if such continuance is specifically approved at least
annually in the manner heretofore specified for initial approval. This
Agreement will terminate automatically in the event of its assignment (as
that term is used in the Rule) or if the Plan is terminated. This
Agreement with respect to any Fund may also be terminated at any time,
without the payment of any penalty, on sixty (60) days written notice to
the Qualified Recipient by vote of a majority (as that term is used in the
Rule) of the outstanding voting securities of that Fund.
IN WITNESS WHEREOF, this Agreement is executed as of the date
written below.
Date: ____________, 199_.
SYNDICATED CAPITAL, INC.
____________________________________ By: ___________________________
Qualified Recipient (Authorized Signature)
By: ______________________________
Authorized Signature
______________________________
Name and Title
APPENDIX A
The Funds referred to in the foregoing Sales Agreement and
Distribution Plan Agreement are:
Monitrend Mutual Fund
It is understood that this list may be revised at any time.
APPENDIX B
To Distribution Plan Agreement between Syndicated Capital, Inc. and the
Qualified Recipient
The Qualified Recipient shall be entitled to Permitted Payments
at the annual Qualified Holdings Rate of 0.75%.
Each quarterly Permitted Payment shall (unless pro-rated as
provided in the Agreement) be computed by multiplying the average value
during the quarter of the Qualified Holdings of the qualified Recipient by
one-fourth of the annual Qualified Holdings Rate set forth above.
<PAGE>
SYNDICATED CAPITAL, INC.
SALES AGREEMENT
From: ________________________
________________________
________________________
________________________
To: Syndicated Capital, Inc.
1299 Ocean Avenue, Suite 210
Santa Monica, California 90401
Gentlemen:
We desire to enter into an agreement with you for the sale and
distribution of the shares of each open-end investment company (or class
or series thereof having a separate portfolio) for which you act as
principal underwriter. Each such investment company (or such a class or
series) is hereafter referred to as a "Fund". A list of the Funds at the
present time is attached hereto as Appendix A. Upon acceptance of this
Agreement by you, we understand that we may offer and sell shares of each
of the Funds (whether or not listed in Appendix A), subject, however, to
all of the terms and conditions hereof and to your right, without notice,
to suspend and terminate the sale of the shares of any one or more of the
Funds.
5. We understand that the shares of each Fund will be offered
and sold at the current offering price in effect at the time an order for
such shares is confirmed and accepted by you. All purchase requests and
applications submitted by us are subject to acceptance or rejection in
your sole discretion, and, if accepted, each purchase will be deemed to
have been consummated at your office.
6. We certify that (a) we are a member of the National
Association of Securities Dealers, Inc. ("NASD") and agree to maintain
membership in the NASD or (b) we are a foreign dealer not eligible for
membership in the NASD. In either case, we agree to abide by all the
rules and regulations of the Securities and Exchange Commission and the
NASD that are binding upon underwriters and dealers in the distribution of
securities of open-end investment companies, including, without
limitation, Section 26 of Article III of the NASD Rules of Fair Practice,
all of which are incorporated herein as if set forth in full. We further
agree to comply with all applicable state and federal laws and the rules
and regulations of authorized regulatory agencies. We agree that we will
see or offer for sale shares of each Fund in those states or jurisdictions
whose laws permit the sales in question, whether or not such permission is
dependent on registration or qualification of a Fund or its shares under
such law.
7. We will offer and sell the shares of each Fund only in
accordance with the terms and conditions set forth in the then current
Prospectus relating to that Fund (which term "Prospectus" used herein
shall include any related Statement of Additional Information), and we
will make no representations not included in said Prospectus or in any
supplemental sales material authorized and supplied by you. We will use
our best efforts in the development and promotion of sales of shares of
each Fund and agree to be responsible for the proper instruction and
training of all sales personnel employed by or associated with us, in
order that such shares will be offered in accordance with the terms and
conditions of this Agreement and all applicable laws, rules and
regulations. We agree to hold you and/or each Fund harmless and indemnify
you and/or each Fund in the event that we, or any of our sales
representatives should violate any law, rule or regulation, or any
provisions of this Agreement, which violation may result in liability to
you and/or any of the Funds; and in the event that you and/or any Fund
determine to refund any amount paid by any investor by reason of any such
violation on our part, we shall return to you and/or that Fund any
commission previously paid or discounts allowed by you to us with respect
to the transaction for which the refund is made. All expenses which we
incur in connection with our activities under this Agreement shall be
borne by us.
8. We understand and agree that the sales charge and dealer
commission relative to any sales of shares of a Fund made by us will be in
an amount as set forth in the then current Prospectus relating to that
Fund or in separate written notice to us.
9. Payment for purchases of shares of each Fund made by wire
order from us shall be made to you or for your account and received by you
within five business days after the acceptance of our order or such
shorter time as may be required by law. If such payment is not received
by you, we understand that you reserve the right, without notice, to
cancel the sale, or, at your option, to sell the shares ordered by us back
to the applicable Fund, in which latter case we may be held responsible
for any loss, including loss of profit, suffered by you and/or that Fund
resulting from our failure to make the aforesaid payment. Where sales of
the shares of any of the Funds are contingent upon the receipt of payment
therefor, we will forward promptly to you any purchase orders and/or
payments received by us from investors.
10. We agree to purchase shares only from you or from our
customers. If we purchase shares from you, we agree that all such
purchases shall be made only to cover orders received by us from our
customers, or for our own bona fide investment. If we purchase shares
from our customers, we agree to pay such customers not less than the
redemption price as established by the then applicable current Prospectus.
11. Unless at the time of transmitting an order we advise you
to the contrary, you may consider the order to be the total holding of an
investor and assume that the investor is not entitled to any reduction in
sales price beyond that accorded to the amount of the purchase as
determined by the schedule set forth in the then applicable current
Prospectus.
12. We understand and agree that if any shares sold by us under
the terms of this Agreement are redeemed by a Fund or are repurchased by
you as agent for that Fund or are tendered to that Fund for redemption
within seven business days after the confirmation to us of our purchase
order for such shares, we will promptly refund to you the full amount of
the commission allowed to us on the original sale.
13. Your obligations to us under this Agreement are subject to
all provisions of any agreement entered into between you and the
applicable Fund (or investment company of which a Fund is a class or
series). We understand and agree that in performing our services covered
by this Agreement we are acting as principal, and you are in no way
responsible for the manner of our performance or for any of our acts or
omissions in connection therewith. Nothing in this Agreement shall be
construed to constitute us or any of our agents, employees or
representatives as your agent, partner or employee, or the agent or
employee of any Fund.
14. We may terminate this Agreement by notice in writing to
you, which termination shall become effective thirty days after the date
of mailing to you. We agree that you have and reserve the right, in you
sole discretion without notice, to suspend sales of shares of any of the
Funds, or to withdraw entirely the offering of shares of any of the Fund,
or, in your sole discretion, to modify, amend or cancel this Agreement
upon written notice to us of such modification, amendment or cancellation,
which shall be effective on the date stated in such notice. Without
limiting the foregoing, you may terminate this Agreement for cause on
violation by us of any of the provisions of this Agreement, said
termination to become effective on the date of mailing notice to us of
such termination. Without limiting the foregoing, any provision hereof to
the contrary notwithstanding, our expulsion from the NASD will
automatically terminate this Agreement without notice; our suspension from
the NASD or violation of applicable state or federal laws or rules or
regulations of authorized regulatory agencies will terminate this
Agreement effective upon the date of your mailing notice to us of such
termination. Your failure to terminate for any cause shall not constitute
a waiver of your right to terminate at a later date for any such cause.
All notices hereunder shall be to the respective parties at the address
listed hereon, unless changed by notice given in accordance with this
Agreement.
15. This Agreement shall become effective as of the date it is
executed and dated by you below. This Agreement may not be assigned or
transferred; provided, however, that you may assign or transfer this
Agreement to any successor firm or corporation which becomes the principal
underwriter or distributor of any of the Funds.
This Agreement is to be governed by and construed in accordance
with the laws of the State of California.
Date: ____________, 199_. ________________________
(Name of Dealer Firm)
By: _________________________
(Authorized Signature)
__________________________
(Name and Title)
Accepted:
SYNDICATED CAPITAL, INC.
By: ______________________________
(Authorized Signature)
McGLADREY & PULLEN, LLP
Certified Public Accountants and Consultants
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the use of our report dated December 28, 1995,
except for Note 6, as to which the date is April 25, 1996, on the
financial statements of the PIA Adjustable Rate Government Securities
Fund, the Government Income Fund, the Growth Fund, the Growth & Income
Fund, the Gold Fund, the Technology Fund and the Gaming and Leisure Fund,
series of Monitrend Mutual Fund referred to therein, which is incorporated
by reference in the Statement of Additional Information, in Post-Effective
Amendment No. 24 to the Registration Statement on Form N-1a as filed with
the Securities and Exchange Commission.
We also consent to the reference to our firm in the Prospectus under
the caption "General Information" and in the Statement of Additional
Information under the caption "General."
McGLADREY & PULLEN, LLP
New York, New York
May 20, 1996
GROWTH & INCOME FUND PERFORMANCE DATA
11/30/95 N-1A ENDING REDEEMABLE VALUE (ERV)
DATE OF INVESTMENT 12/01/94
INITIAL INVESTMENT (P) 10,000.00
SALES LOAD PERCENTAGE 4.50
NAV@ PURCHASE DATE 16.67
SHARES PURCHASED 572.885
TOTAL
DOLLAR REINVESTMENT ADDITIONAL SHARES
DIVIDENDS DATE RATE VALUE PRICE SHARES OWNED
12/94 0.09 51.56 16.71 3.086 575.971
ENDING DATE 11/30/95
ENDING SHARES OWNED 575.971
ENDING NAV 21.42
ENDING ERV 12,337.30
AVERAGE ANNUAL TOTAL RETURN PURSUANT TO SEC RULES
ACTIVE DATES:
BEGINNING= 01-DEC-94 P= 10,000.00
ENDING= 30-NOV-95 ERV= 12,337.30
N= 1.00
TOTAL RETURN= 23.4442%
ERV PROOF= 12,337.30
<PAGE>
GROWTH & INCOME FUND PERFORMANCE DATA
11/30/95 N-1A ENDING REDEEMABLE VALUE (ERV)
DATE OF INVESTMENT 12/01/90
INITIAL INVESTMENT (P) 10,000.00
SALES LOAD PERCENTAGE 3.50
NAV@ PURCHASE DATE 18.46
SHARES PURCHASED 522.752
TOTAL
DOLLAR REINVESTMENT ADDITIONAL SHARES
DIVIDENDS DATE RATE VALUE PRICE SHARES OWNED
12/90 0.22 115.01 18.35 6.267 529.019
12/91 0.17 87.29 19.58 4.458 533.477
12/92 0.18 96.03 18.26 5.259 538.736
12/93 0.04 21.55 17.23 1.251 539.987
12/94 0.09 48.60 16.71 2.908 542.895
ENDING DATE 11/30/95
ENDING SHARES OWNED 542.895
ENDING NAV 21.42
ENDING ERV 11,628.81
AVERAGE ANNUAL TOTAL RETURN PURSUANT TO SEC RULES
ACTIVE DATES:
BEGINNING= 01-DEC-90 P= 10,000.00
ENDING= 30-NOV-95 ERV= 11,628.81
N= 5.00
TOTAL RETURN= 3.0640%
ERV PROOF= 11,628.81
<PAGE>
GROWTH & INCOME FUND PERFORMANCE DATA
11/30/95 N-1A ENDING REDEEMABLE VALUE (ERV)
DATE OF INVESTMENT 02/05/88
INITIAL INVESTMENT (P) 10,000.00
SALES LOAD PERCENTAGE 3.50
NAV@ PURCHASE DATE 18.00
SHARES PURCHASED 536.11
TOTAL
DOLLAR REINVESTMENT ADDITIONAL SHARES
DIVIDENDS DATE RATE VALUE PRICE SHARES OWNED
12/88 0.11 58.97 16.66 3.540 539.651
12/89 0.09 48.57 19.02 2.554 542.204
12/90 0.22 119.28 18.35 6.501 548.705
12/91 0.17 90.54 19.58 4.624 553.329
12/92 0.18 99.60 18.26 5.455 558.783
12/93 0.04 22.35 17.23 1.297 560.081
12/94 0.09 50.41 16.71 3.017 563.097
ENDING DATE 11/30/95
ENDING SHARES OWNED 563.097
ENDING NAV 21.42
ENDING ERV 12,061.54
AVERAGE ANNUAL TOTAL RETURN PURSUANT TO SEC RULES
ACTIVE DATES:
BEGINNING= 05-FEB-88 P= 10,000.00
ENDING= 30-NOV-95 ERV= 12,061.54
N= 7.82
TOTAL RETURN= 2.4252%
ERV PROOF= 12,061.54
<PAGE>
GOLD FUND PERFORMANCE DATA
11/30/95 N-1A ENDING REDEEMABLE VALUE (ERV)
DATE OF INVESTMENT 12/01/94
INITIAL INVESTMENT (P) 10,000.00
SALES LOAD PERCENTAGE 4.50
NAV@ PURCHASE DATE 5.87
SHARES PURCHASED 1,626.917
TOTAL
DOLLAR REINVESTMENT ADDITIONAL SHARES
DIVIDENDS DATE RATE VALUE PRICE SHARES OWNED
NO DIVIDENDS DECLARED
ENDING DATE 11/30/95
ENDING SHARES OWNED 1,626.917
ENDING NAV 5.91
ENDING ERV 9,615.08
AVERAGE ANNUAL TOTAL RETURN PURSUANT TO SEC RULES
ACTIVE DATES:
BEGINNING= 01-DEC-94 P= 10,000.00
ENDING= 30-NOV-95 ERV= 9,615.08
N= 1.00
TOTAL RETURN= -3.8596%
ERV PROOF= 9,615.08
<PAGE>
GOLD FUND PERFORMANCE DATA
11/30/95 N-1A ENDING REDEEMABLE VALUE (ERV)
DATE OF INVESTMENT 12/01/90
INITIAL INVESTMENT (P) 10,000.00
SALES LOAD PERCENTAGE 3.50
NAV@ PURCHASE DATE 15.65
SHARES PURCHASED 616.613
TOTAL
DOLLAR REINVESTMENT ADDITIONAL SHARES
DIVIDENDS DATE RATE VALUE PRICE SHARES OWNED
12/90 0.40 246.65 15.33 16.089 632.702
12/93 0.01 6.33 9.62 0.658 633.360
ENDING DATE 11/30/95
ENDING SHARES OWNED 633.360
ENDING NAV 5.91
ENDING ERV 3,743.16
AVERAGE ANNUAL TOTAL RETURN PURSUANT TO SEC RULES
ACTIVE DATES:
BEGINNING= 01-DEC-90 P= 10,000.00
ENDING= 30-NOV-95 ERV= 3,743.16
N= 5.00
TOTAL RETURN= -17.8424%
ERV PROOF= 3,743.16
<PAGE>
GOLD FUND PERFORMANCE DATA
11/30/95 N-1A ENDING REDEEMABLE VALUE (ERV)
DATE OF INVESTMENT 02/05/88
INITIAL INVESTMENT (P) 10,000.00
SALES LOAD PERCENTAGE 3.50
NAV@ PURCHASE DATE 18.35
SHARES PURCHASED 525.886
TOTAL
DOLLAR REINVESTMENT ADDITIONAL SHARES
DIVIDENDS DATE RATE VALUE PRICE SHARES OWNED
12/88 0.14 73.62 16.29 4.520 530.405
12/89 0.40 212.16 18.26 11.619 542.024
12/90 0.40 216.81 15.33 14.143 556.167
12/93 0.01 5.56 9.62 0.578 556.745
ENDING DATE 11/30/95
ENDING SHARES OWNED 556.745
ENDING NAV 5.91
ENDING ERV 3,290.36
AVERAGE ANNUAL TOTAL RETURN PURSUANT TO SEC RULES
ACTIVE DATES:
BEGINNING= 05-FEB-88 P= 10,000.00
ENDING= 30-NOV-95 ERV= 3,290.36
N= 7.82
TOTAL RETURN= -13.2476%
ERV PROOF= 3,290.36
<PAGE>
MONITREND FUNDS PERFORMANCE DATA
11/30/95 N-1A ENDING REDEEMABLE VALUE (ERV)
GOVERNMENT
DATE OF INVESTMENT 12/01/90
INITIAL INVESTMENT (P) 1,000.00
SALES LOAD PERCENTAGE 3.50
NAV@ PURCHASE DATE 13.53
SHARES PURCHASED 71.323
TOTAL
DOLLAR REINVESTMENT ADDITIONAL SHARES
DIVIDENDS DATE RATE VALUE PRICE SHARES OWNED
12/28/90 0.27 19.26 13.46 1.431 72.754
03/26/91 0.07 5.09 13.63 0.374 73.127
06/27/91 0.20 14.63 13.53 1.081 74.208
09/19/91 0.18 13.36 13.82 0.967 75.175
12/27/91 0.28 21.05 13.93 1.511 76.686
04/25/92 0.15 11.50 13.31 0.864 77.550
07/14/92 0.08 6.20 13.53 0.459 78.009
10/15/92 0.09 7.02 13.28 0.529 78.537
11/17/92 0.05 3.93 13.13 0.299 78.836
12/28/92 0.12 9.46 13.22 0.716 79.552
02/17/93 0.06 4.77 13.63 0.350 79.902
03/15/93 0.03 2.40 13.78 0.174 80.076
04/29/93 0.13 10.41 13.75 0.757 80.833
05/27/93 0.06 4.85 13.69 0.354 81.188
06/30/93 0.06 4.87 14.08 0.346 81.533
07/30/93 0.06 4.89 14.12 0.346 81.880
08/31/93 0.06 4.91 14.46 0.340 82.220
09/30/93 0.06 4.93 14.48 0.341 82.560
10/29/93 0.06 4.95 14.46 0.343 82.903
11/30/93 0.07 5.80 14.16 0.410 83.313
12/31/93 0.08 6.67 14.09 0.473 83.786
01/31/94 0.06 5.03 14.15 0.355 84.141
03/01/94 0.07 5.89 13.75 0.428 84.569
03/31/94 0.07 5.92 13.45 0.440 85.010
04/29/94 0.07 5.95 13.26 0.449 85.458
05/31/94 0.07 5.98 13.2 0.453 85.912
06/30/94 0.08 6.87 13.1 0.525 86.436
07/29/94 0.08 6.91 13.23 0.523 86.959
08/31/94 0.08 6.96 13.17 0.528 87.487
09/30/94 0.07 6.12 12.97 0.472 87.959
10/31/94 0.08 7.04 12.97 0.543 88.502
11/30/94 0.07 6.20 12.76 0.486 88.987
12/30/94 0.07 6.23 12.75 0.489 89.476
01/31/95 0.08 7.16 12.86 0.557 90.032
02/28/95 0.07 6.30 13.16 0.479 90.511
03/31/95 0.08 7.24 13.16 0.550 91.062
04/30/95 0.07 6.37 13.25 0.481 91.543
05/31/95 0.07 6.41 13.61 0.471 92.014
06/30/95 0.05 4.60 13.66 0.337 92.350
07/31/95 0.07 6.46 13.49 0.479 92.830
08/31/95 0.06 5.57 13.54 0.411 93.241
09/30/95 0.07 6.53 13.6 0.480 93.721
10/31/95 0.06 5.62 13.73 0.410 94.130
11/30/95 0.06 5.65 13.88 0.407 94.537
ENDING DATE 11/30/95
ENDING SHARES OWNED 94.537
ENDING NAV 13.88
ENDING ERV 1,312.18
AVERAGE ANNUAL TOTAL RETURN PURSUANT TO SEC RULES
ACTIVE DATES:
BEGINNING= 01-DEC-90 P= 1000
ENDING= 30-NOV-95 ERV= 1312.18
N= 5.00
TOTAL RETURN= 5.5841%
ERV PROOF= 1312.18
<PAGE>
MONITREND FUNDS PERFORMANCE DATA
11/30/95 N-1A ENDING REDEEMABLE VALUE (ERV)
GOVERNMENT
DATE OF INVESTMENT 12/01/94
INITIAL INVESTMENT (P) 1,000.00
SALES LOAD PERCENTAGE 4.50
NAV@ PURCHASE DATE 12.76
SHARES PURCHASED 74.843
TOTAL
DOLLAR REINVESTMENT ADDITIONAL SHARES
DIVIDENDS DATE RATE VALUE RATE SHARES OWNED
12/30/94 0.07 5.24 12.75 0.411 75.254
01/31/95 0.08 6.02 12.86 0.468 75.722
02/28/95 0.07 5.30 13.16 0.403 76.125
03/31/95 0.08 6.09 13.16 0.463 76.588
04/30/95 0.07 5.36 13.25 0.405 76.992
05/31/95 0.07 5.39 13.61 0.396 77.388
06/30/95 0.05 3.87 13.66 0.283 77.672
07/31/95 0.07 5.44 13.49 0.403 78.075
08/31/95 0.06 4.68 13.54 0.346 78.421
09/30/95 0.07 5.49 13.6 0.404 78.824
10/31/95 0.06 4.73 13.73 0.344 79.169
11/30/95 0.06 4.75 13.88 0.342 79.511
ENDING DATE 11/30/95
ENDING SHARES OWNED 79.511
ENDING NAV 13.88
ENDING ERV 1,103.61
AVERAGE ANNUAL TOTAL RETURN PURSUANT TO SEC RULES
ACTIVE DATES:
BEGINNING= 01-DEC-94 P= 1000
ENDING= 30-NOV-95 ERV= 1103.61
N= 1.00
TOTAL RETURN= 10.3909%
ERV PROOF= 1103.61
<PAGE>
MONITREND FUNDS PERFORMANCE DATA
11/30/95 N-1A ENDING REDEEMABLE VALUE (ERV)
GOVERNMENT
DATE OF INVESTMENT 10/13/86
INITIAL INVESTMENT (P) 1,000.00
SALES LOAD PERCENTAGE 3.50
NAV@ PURCHASE DATE 15.00
SHARES PURCHASED 64.333
TOTAL
DOLLAR REINVESTMENT ADDITIONAL SHARES
DIVIDENDS DATE RATE VALUE PRICE SHARES OWNED
03/18/87 0.15 9.65 15.15 0.637 64.970
06/19/87 0.18 11.69 14.73 0.794 65.764
09/18/87 0.22 14.47 14.65 0.988 66.752
12/24/87 0.27 18.02 14.29 1.261 68.013
04/12/88 0.25 17.00 14.18 1.199 69.212
06/28/88 0.18 12.46 14.04 0.887 70.099
09/28/88 0.22 15.42 13.84 1.114 71.214
12/30/88 0.21 14.95 13.80 1.084 72.297
04/19/89 0.21 15.18 13.67 1.111 73.408
07/13/89 0.16 11.75 14.08 0.834 74.242
10/16/89 0.24 17.82 14.18 1.257 75.499
12/29/89 0.34 25.67 13.98 1.836 77.335
03/30/90 0.20 15.47 13.56 1.141 78.476
07/12/90 0.28 21.97 13.45 1.634 80.109
10/17/90 0.22 17.62 12.80 1.377 81.486
12/28/90 0.27 22.00 13.46 1.635 83.121
03/26/91 0.07 5.82 13.63 0.427 83.548
06/27/91 0.20 16.71 13.53 1.235 84.783
09/19/91 0.18 15.26 13.82 1.104 85.887
12/27/91 0.28 24.05 13.93 1.726 87.613
04/25/92 0.15 13.14 13.31 0.987 88.601
07/14/92 0.08 7.09 13.53 0.524 89.125
10/15/92 0.09 8.02 13.28 0.604 89.729
11/17/92 0.05 4.49 13.13 0.342 90.070
12/28/92 0.12 10.81 13.22 0.818 90.888
02/17/93 0.06 5.45 13.63 0.400 91.288
03/15/93 0.03 2.74 13.78 0.199 91.487
04/29/93 0.13 11.89 13.75 0.865 92.352
05/27/93 0.06 5.54 13.69 0.405 92.756
06/30/93 0.06 5.57 14.08 0.395 93.152
07/30/93 0.06 5.59 14.12 0.396 93.548
08/31/93 0.06 5.61 14.46 0.388 93.936
09/30/93 0.06 5.64 14.48 0.389 94.325
10/29/93 0.06 5.66 14.46 0.391 94.716
11/30/93 0.07 6.63 14.16 0.468 95.185
12/31/93 0.08 7.61 14.09 0.540 95.725
01/31/94 0.06 5.74 14.15 0.406 96.131
03/01/94 0.07 6.73 13.75 0.489 96.620
03/31/94 0.07 6.76 13.45 0.503 97.123
04/29/94 0.07 6.80 13.26 0.513 97.636
05/31/94 0.07 6.83 13.2 0.518 98.154
06/30/94 0.08 7.85 13.1 0.599 98.753
07/29/94 0.08 7.90 13.23 0.597 99.350
08/31/94 0.08 7.95 13.17 0.603 99.954
09/30/94 0.07 7.00 12.97 0.539 100.493
10/31/94 0.08 8.04 12.97 0.620 101.113
11/30/94 0.07 7.08 12.76 0.555 101.668
12/30/94 0.07 7.12 12.75 0.558 102.226
01/31/95 0.08 8.18 12.86 0.636 102.862
02/28/95 0.07 7.20 13.16 0.547 103.409
03/31/95 0.08 8.27 13.16 0.629 104.038
04/30/95 0.07 7.28 13.25 0.550 104.587
05/31/95 0.07 7.32 13.61 0.538 105.125
06/30/95 0.05 5.26 13.66 0.385 105.510
07/31/95 0.07 7.39 13.49 0.547 106.057
08/31/95 0.06 6.36 13.54 0.470 106.527
09/30/95 0.07 7.46 13.6 0.548 107.076
10/31/95 0.06 6.42 13.73 0.468 107.544
11/30/95 0.06 6.45 13.88 0.465 108.008
ENDING DATE 11/30/95
ENDING SHARES OWNED 108.008
ENDING NAV 13.88
ENDING ERV 1,499.16
AVERAGE ANNUAL TOTAL RETURN PURSUANT TO SEC RULES
ACTIVE DATES:
BEGINNING= 13-OCT-86 P= 1000
ENDING= 30-NOV-95 ERV= 1499.16
N= 9.14
TOTAL RETURN 4.5312%
ERV PROOF= 1499.16
<PAGE>
GROWTH FUND PERFORMANCE DATA
11/30/95 N-1A ENDING REDEEMABLE VALUE (ERV)
DATE OF INVESTMENT 12/01/94
INITIAL INVESTMENT (P) 10,000.00
SALES LOAD PERCENTAGE 4.50
NAV@ PURCHASE DATE 11.12
SHARES PURCHASED 858.813
TOTAL
DOLLAR REINVESTMENT ADDITIONAL SHARES
DIVIDENDS DATE RATE VALUE PRICE SHARES OWNED
NO DIVIDENDS DECLARED
ENDING DATE 11/30/95
ENDING SHARES OWNED 858.813
ENDING NAV 15.36
ENDING ERV 13,191.37
AVERAGE ANNUAL TOTAL RETURN PURSUANT TO SEC RULES
ACTIVE DATES:
BEGINNING= 01-DEC-94 P= 10,000.00
ENDING= 30-NOV-95 ERV= 13,191.37
N= 1.00
TOTAL RETURN= 32.0141%
ERV PROOF= 13,191.37
<PAGE>
GROWTH FUND PERFORMANCE DATA
11/30/95 N-1A ENDING REDEEMABLE VALUE (ERV)
DATE OF INVESTMENT 04/01/92
INITIAL INVESTMENT (P) 10,000.00
SALES LOAD PERCENTAGE 4.50
NAV@ PURCHASE DATE 12.00
SHARES PURCHASED 795.833
TOTAL
DOLLAR REINVESTMENT ADDITIONAL SHARES
DIVIDENDS DATE RATE VALUE PRICE SHARES OWNED
NO DIVIDENDS DECLARED
ENDING DATE 11/30/95
ENDING SHARES OWNED 795.833
ENDING NAV 15.36
ENDING ERV 12,224.00
AVERAGE ANNUAL TOTAL RETURN PURSUANT TO SEC RULES
ACTIVE DATES:
BEGINNING= 01-APR-92 P= 10,000.00
ENDING= 30-NOV-95 ERV= 12,224.00
N= 3.67
TOTAL RETURN= 5.6310%
ERV PROOF= 12,224.00
<PAGE>
GAMING & LEISURE FUND PERFORMANCE DATA
11/30/95 N-1A ENDING REDEEMABLE VALUE (ERV)
DATE OF INVESTMENT 12/01/94
INITIAL INVESTMENT (P) 10,000.00
SALES LOAD PERCENTAGE 4.50
NAV@ PURCHASE DATE 6.12
SHARES PURCHASED 1,560.458
TOTAL
DOLLAR REINVESTMENT ADDITIONAL SHARES
DIVIDENDS DATE RATE VALUE PRICE SHARES OWNED
NO DIVIDENDS DECLARED
ENDING DATE 11/30/95
ENDING SHARES OWNED 1,560.458
ENDING NAV 6.74
ENDING ERV 10,517.48
AVERAGE ANNUAL TOTAL RETURN PURSUANT TO SEC RULES
ACTIVE DATES:
BEGINNING= 01-DEC-94 P= 10,000.00
ENDING= 30-NOV-95 ERV= 10,517.48
N= 1.00
TOTAL RETURN= 5.1894%
ERV PROOF= 10,517.48
<PAGE>
GAMING & LEISURE FUND PERFORMANCE DATA
11/30/95 N-1A ENDING REDEEMABLE VALUE (ERV)
DATE OF INVESTMENT 10/21/93
INITIAL INVESTMENT (P) 10,000.00
SALES LOAD PERCENTAGE 4.75
NAV@ PURCHASE DATE 8.00
SHARES PURCHASED 1,190.625
TOTAL
DOLLAR REINVESTMENT ADDITIONAL SHARES
DIVIDENDS DATE RATE VALUE PRICE SHARES OWNED
NO DIVIDENDS DECLARED
ENDING DATE 11/30/95
ENDING SHARES OWNED 1,190.625
ENDING NAV 6.74
ENDING ERV 8,024.81
AVERAGE ANNUAL TOTAL RETURN PURSUANT TO SEC RULES
ACTIVE DATES:
BEGINNING= 21-OCT-93 P= 10,000.00
ENDING= 30-NOV-95 ERV= 8,024.81
N= 2.11
TOTAL RETURN= -9.9052%
ERV PROOF= 8,024.81
<PAGE>
TECHONOLOGY FUND PERFORMANCE DATA
11/30/95 N-1A ENDING REDEEMABLE VALUE (ERV)
DATE OF INVESTMENT 12/01/94
INITIAL INVESTMENT (P) 10,000.00
SALES LOAD PERCENTAGE 4.50
NAV@ PURCHASE DATE 14.35
SHARES PURCHASED 665.505
TOTAL
DOLLAR REINVESTMENT ADDITIONAL SHARES
DIVIDENDS DATE RATE VALUE PRICE SHARES OWNED
12/94 0.41 272.86 14.00 19.490 684.995
ENDING DATE 11/30/95
ENDING SHARES OWNED 684.995
ENDING NAV 17.81
ENDING ERV 12,199.76
AVERAGE ANNUAL TOTAL RETURN PURSUANT TO SEC RULES
ACTIVE DATES:
BEGINNING= 01-DEC-94 P= 10,000.00
ENDING= 30-NOV-95 ERV= 12,199.76
N= 1.00
TOTAL RETURN= 22.0643%
ERV PROOF= 12,199.76
<PAGE>
TECHNOLOGY FUND PERFORMANCE DATA
11/30/95 N-1A ENDING REDEEMABLE VALUE (ERV)
DATE OF INVESTMENT 10/21/93
INITIAL INVESTMENT (P) 10,000.00
SALES LOAD PERCENTAGE 4.75
NAV@ PURCHASE DATE 15.00
SHARES PURCHASED 635.000
TOTAL
DOLLAR REINVESTMENT ADDITIONAL SHARES
DIVIDENDS DATE RATE VALUE PRICE SHARES OWNED
12/94 0.41 260.35 14.00 18.596 653.596
ENDING DATE 11/30/95
ENDING SHARES OWNED 653.596
ENDING NAV 17.81
ENDING ERV 11,640.55
AVERAGE ANNUAL TOTAL RETURN PURSUANT TO SEC RULES
ACTIVE DATES:
BEGINNING= 21-OCT-93 P= 10,000.00
ENDING= 30-NOV-95 ERV= 11,640.55
N= 2.11
TOTAL RETURN= 7.4665%
ERV PROOF= 11,640.55
<PAGE>
MONITREND FUNDS PERFORMANCE DATA PIA ADJ RATE
11/30/95 N-1A ENDING REDEEMABLE VALUE (ERV)
DATE OF INVESTMENT 12/01/94
INITIAL INVESTMENT (P) 1,000.00
SALES LOAD PERCENTAGE 1.25
NAV@ PURCHASE DATE 9.98
SHARES PURCHASED 98.948
TOTAL
DOLLAR REINVESTMENT ADDITIONAL SHARES
DIVIDENDS DATE RATE VALUE PRICE SHARES OWNED
12/30/94 0.05 4.64 9.99 0.465 99.412
01/31/95 0.05 5.14 10.00 0.514 99.926
02/28/95 0.05 5.15 10.05 0.512 100.438
03/31/95 0.05 5.51 10.04 0.549 100.988
04/30/95 0.05 5.29 10.05 0.527 101.514
05/31/95 0.06 5.58 10.06 0.555 102.069
06/30/95 0.05 5.10 10.06 0.507 102.577
07/31/95 0.05 5.03 10.05 0.500 103.077
08/31/95 0.05 4.74 10.05 0.472 103.548
09/30/95 0.04 4.65 10.06 0.462 104.011
10/31/95 0.04 4.38 10.10 0.434 104.445
11/30/95 0.04 4.40 10.12 0.434 104.879
ENDING DATE 11/30/95
ENDING SHARES OWNED 104.879
ENDING NAV 10.12
ENDING ERV 1,061.38
AVERAGE ANNUAL TOTAL RETURN PURSUANT TO SEC RULES
ACTIVE DATES:
BEGINNING= 01-DEC-94 P= 1000.00
ENDING= 30-NOV-95 ERV= 1061.38
N= 1.00
TOTAL RETURN= 6.1554%
ERV PROOF= 1061.38
<PAGE>
MONITREND FUNDS PERFORMANCE DATA PIA ADJ RATE
11/30/95 N-1A ENDING REDEEMABLE VALUE (ERV)
DATE OF INVESTMENT 04/22/94
INITIAL INVESTMENT (P) 1,000.00
SALES LOAD PERCENTAGE 1.25
NAV@ PURCHASE DATE 10.00
SHARES PURCHASED 98.750
TOTAL
DOLLAR REINVESTMENT ADDITIONAL SHARES
DIVIDENDS DATE RATE VALUE PRICE SHARES OWNED
05/31/94 0.03 2.50 9.99 0.250 99.000
06/30/94 0.04 3.95 9.98 0.396 99.396
07/29/94 0.04 3.91 10.00 0.391 99.787
08/31/94 0.04 4.01 10.00 0.401 100.188
09/30/94 0.04 4.03 10.00 0.403 100.590
10/31/94 0.04 3.52 10.00 0.352 100.942
11/30/94 0.04 4.11 9.98 0.412 101.354
12/30/94 0.05 4.75 9.99 0.476 101.830
01/31/95 0.05 5.26 10.00 0.526 102.356
02/28/95 0.05 5.27 10.05 0.525 102.881
03/31/95 0.05 5.65 10.04 0.563 103.444
04/30/95 0.05 5.42 10.05 0.539 103.983
05/31/95 0.06 5.72 10.06 0.568 104.551
06/30/95 0.05 5.23 10.06 0.520 105.071
07/31/95 0.05 5.15 10.05 0.512 105.583
08/31/95 0.05 4.86 10.05 0.483 106.067
09/31/95 0.04 4.76 10.06 0.473 106.540
10/31/95 0.04 4.49 10.10 0.445 106.984
11/30/95 0.04 4.50 10.12 0.445 107.430
ENDING DATE 11/30/95
ENDING SHARES OWNED 107.430
ENDING NAV 10.12
ENDING ERV 1,087.19
AVERAGE ANNUAL TOTAL RETURN PURSUANT TO SEC RULES
ACTIVE DATES:
BEGINNING= 22-APR-94 P= 1000
ENDING= 30-NOV-95 ERV= 1087.19
N= 1.61
TOTAL RETURN= 5.3355%
ERV PROOF= 1087.19
<PAGE>
SEC YIELD CALCULATION
YIELD FORMULA
MONITREND PIA ADJUSTABLE RATE
YIELD= 2[((A-B/C*D)+1)^6-1]
A = DIVIDEND AND INTEREST INCOME
B = EXPENSES ACCRUED FOR THE PERIOD
C = AVERAGE DAILY NUMBER OF SHARES DURING THE PERIOD THAT
WERE ENTITLED TO DIVIDENDS
D = MAXIMUM OFFERING PRICE PER SHARE ON THE LAST DAY OF
THE PERIOD
YIELD= 5.0703624%
A 16,538.34
B 1,331.59
C 354,810.277
D 10.25
<PAGE>
SEC YIELD CALCULATION
YIELD FORMULA
MONITREND PIA ADJUSTABLE RATE
YIELD= 2[((A-B/C*D)+1)^6-1]
A = DIVIDEND AND INTEREST INCOME
B = EXPENSES ACCRUED FOR THE PERIOD
C = AVERAGE DAILY NUMBER OF SHARES DURING THE PERIOD THAT
WERE ENTITLED TO DIVIDENDS
D = MAXIMUM OFFERING PRICE PER SHARE ON THE LAST DAY OF
THE PERIOD
YIELD= 5.2755349%
A 5,166.61
B 851.35
C 68,293.498
D 14.53
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> GROWTH & INCOME FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 1110288
<INVESTMENTS-AT-VALUE> 1331497
<RECEIVABLES> 60347
<ASSETS-OTHER> 179
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1392023
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 14811
<TOTAL-LIABILITIES> 14811
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1493340
<SHARES-COMMON-STOCK> 64305
<SHARES-COMMON-PRIOR> 94402
<ACCUMULATED-NII-CURRENT> 906
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (338243)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 221209
<NET-ASSETS> 1377212
<DIVIDEND-INCOME> 31846
<INTEREST-INCOME> 4131
<OTHER-INCOME> 851
<EXPENSES-NET> 35398
<NET-INVESTMENT-INCOME> 1430
<REALIZED-GAINS-CURRENT> 394222
<APPREC-INCREASE-CURRENT> (24831)
<NET-CHANGE-FROM-OPS> 370821
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 8456
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 228
<NUMBER-OF-SHARES-REDEEMED> 30797
<SHARES-REINVESTED> 472
<NET-CHANGE-IN-ASSETS> (196609)
<ACCUMULATED-NII-PRIOR> 7932
<ACCUMULATED-GAINS-PRIOR> (732465)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 9067
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 87902
<AVERAGE-NET-ASSETS> 1446000
<PER-SHARE-NAV-BEGIN> 16.67
<PER-SHARE-NII> .02
<PER-SHARE-GAIN-APPREC> 4.82
<PER-SHARE-DIVIDEND> .09
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 21.42
<EXPENSE-RATIO> 2.44
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> GOVERNMENT FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 897855
<INVESTMENTS-AT-VALUE> 919632
<RECEIVABLES> 38344
<ASSETS-OTHER> 33
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 958009
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 11294
<TOTAL-LIABILITIES> 11294
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1218545
<SHARES-COMMON-STOCK> 68226
<SHARES-COMMON-PRIOR> 69075
<ACCUMULATED-NII-CURRENT> 447
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (294054)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 21777
<NET-ASSETS> 946715
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 66523
<OTHER-INCOME> 0
<EXPENSES-NET> 10240
<NET-INVESTMENT-INCOME> 56283
<REALIZED-GAINS-CURRENT> (12593)
<APPREC-INCREASE-CURRENT> 90339
<NET-CHANGE-FROM-OPS> 134029
<EQUALIZATION> 369
<DISTRIBUTIONS-OF-INCOME> 55964
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11849
<NUMBER-OF-SHARES-REDEEMED> 16488
<SHARES-REINVESTED> 3790
<NET-CHANGE-IN-ASSETS> 65113
<ACCUMULATED-NII-PRIOR> 497
<ACCUMULATED-GAINS-PRIOR> (281460)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3724
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 53331
<AVERAGE-NET-ASSETS> 931000
<PER-SHARE-NAV-BEGIN> 12.76
<PER-SHARE-NII> .81
<PER-SHARE-GAIN-APPREC> 1.12
<PER-SHARE-DIVIDEND> .81
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.88
<EXPENSE-RATIO> 1.10
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> GOLD FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 518404
<INVESTMENTS-AT-VALUE> 401708
<RECEIVABLES> 34583
<ASSETS-OTHER> 47
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 440338
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 19281
<TOTAL-LIABILITIES> 19281
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2852830
<SHARES-COMMON-STOCK> 71267
<SHARES-COMMON-PRIOR> 217226
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2315077)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (116696)
<NET-ASSETS> 421057
<DIVIDEND-INCOME> 1213
<INTEREST-INCOME> 2929
<OTHER-INCOME> 187
<EXPENSES-NET> 12027
<NET-INVESTMENT-INCOME> (7698)
<REALIZED-GAINS-CURRENT> (87795)
<APPREC-INCREASE-CURRENT> 115564
<NET-CHANGE-FROM-OPS> 20071
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3947
<NUMBER-OF-SHARES-REDEEMED> 149906
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (853123)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (2227282)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4929
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 61418
<AVERAGE-NET-ASSETS> 491000
<PER-SHARE-NAV-BEGIN> 5.87
<PER-SHARE-NII> (.09)
<PER-SHARE-GAIN-APPREC> .13
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
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<TABLE> <S> <C>
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<NAME> GROWTH FUND
<S> <C>
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<TABLE> <S> <C>
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<SERIES>
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<NAME> GAMING & LEISURE FUND
<S> <C>
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<TABLE> <S> <C>
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<SERIES>
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<NAME> TECHNOLOGY FUND
<S> <C>
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<TABLE> <S> <C>
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<SERIES>
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<NAME> PIA ADJ RATE GOVT FUND
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